ALFEO D.

VIVAS, ON HIS BEHALF AND ON BEHALF OF THE SHAREHOLDERS OF EUROCREDIT

COMMUNITY BANK, PETITIONER,
vs.
THE MONETARY BOARD OF THE BANGKO SENTRAL NG PILIPINAS AND THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION, RESPONDENTS.
DECISION
MENDOZA, J.:
This is a petition for prohibition with prayer for the issuance of a status quo ante order or writ of preliminary
injunction ordering the respondents to desist from closing EuroCredit Community Bank, Incorporated (ECBI)
and from pursuing the receivership thereof. The petition likewise prays that the management and operation of
ECBI be restored to its Board of Directors (BOD) and its officers.
The Facts
The Rural Bank of Faire, Incorporated (RBFI) was a duly registered rural banking institution with principal
office in Centro Sur, Sto. Nio, Cagayan. Record shows that the corporate life of RBFI expired on May 31,
2005.1Notwithstanding, petitioner Alfeo D. Vivas (Vivas) and his principals acquired the controlling interest in
RBFI sometime in January 2006. At the initiative of Vivas and the new management team, an internal audit
was conducted on RBFI and results thereof highlighted the dismal operation of the rural bank. In view of those
findings, certain measures calculated to revitalize the bank were allegedly introduced. 2 On December 8, 2006,
the Bangko Sentral ng Pilipinas (BSP) issued the Certificate of Authority extending the corporate life of RBFI
for another fifty (50) years. The BSP also approved the change of its corporate name to EuroCredit
Community Bank, Incorporated, as well as the increase in the number of the members of its BOD, from five (5)
to eleven (11).3
Pursuant to Section 28 of Republic Act (R.A.) No. 7653, otherwise known as The New Central Bank Act, the
Integrated Supervision Department II (ISD II) of the BSP conducted a general examination on ECBI with the
cut-off date of December 31, 2007. Shortly after the completion of the general examination, an exit conference
was held on March 27, 2008 at the BSP during which the BSP officials and examiners apprised Vivas, the
Chairman and President of ECBI, as well as the other bank officers and members of its BOD, of the advance
findings noted during the said examination. The ECBI submitted its comments on BSPs consolidated findings
and risk asset classification through a letter, dated April 8, 2008. 4
Sometime in April 2008, the examiners from the Department of Loans and Credit of the BSP arrived at the
ECBI and cancelled the rediscounting line of the bank. Vivas appealed the cancellation to BSP.5 Thereafter,
the Monetary Board (MB) issued Resolution No. 1255, dated September 25, 2008, placing ECBI under Prompt
Corrective Action (PCA) framework because of the following serious findings and supervisory concerns noted
during the general examination: 1] negative capital of ?14.674 million and capital adequacy ratio of negative
18.42%; 2] CAMEL (Capital Asset Management Earnings Liquidity) composite rating of "2" with a Management
component rating of "1"; and 3] serious supervisory concerns particularly on activities deemed unsafe or
unsound.6 Vivas claimed that the BSP took the above courses of action due to the joint influence exerted by a
certain hostile shareholder and a former BSP examiner.7
Through its letter, dated September 30, 2008, the BSP furnished ECBI with a copy of the Report of
Examination (ROE) as of December 31, 2007. In addition, the BSP directed the banks BOD and senior
management to: 1] infuse fresh capital of ?22.643 million; 2] book the amount of ?28.563 million representing
unbooked valuation reserves on classified loans and other risks assets on or before October 31, 2008; and 3]
take appropriate action necessary to address the violations/exceptions noted in the examination. 8
Vivas moved for a reconsideration of Resolution No. 1255 on the grounds of non-observance of due process
and arbitrariness. The ISD II, on several instances, had invited the BOD of ECBI to discuss matters pertaining
to the placement of the bank under PCA framework and other supervisory concerns before making the
appropriate recommendations to the MB. The proposed meeting, however, did not materialize due to
postponements sought by Vivas.9

In its letter, dated February 20, 2009, the BSP directed ECBI to explain why it transferred the majority shares
of RBFI without securing the prior approval of the MB in apparent violation of Subsection X126.2 of the Manual
of Regulation for Banks (MORB).10 Still in another letter,11 dated March 31, 2009, the ISD II required ECBI to
explain why it did not obtain the prior approval of the BSP anent the establishment and operation of the banks
sub-offices.
Also, the scheduled March 31, 2009 general examination of the books, records and general condition of ECBI
with the cut-off date of December 31, 2008, did not push through. According to Vivas, ECBI asked for the
deferment of the examination pending resolution of its appeal before the MB. Vivas believed that he was being
treated unfairly because the letter of authority to examine allegedly contained a clause which pertained to the
Anti-Money Laundering Law and the Bank Secrecy Act. 12
The MB, on the other hand, posited that ECBI unjustly refused to allow the BSP examiners from examining
and inspecting its books and records, in violation of Sections 25 and 34 of R.A. No. 7653. In its letter, 13 dated
May 8, 2009, the BSP informed ECBI that it was already due for another annual examination and that the
pendency of its appeal before the MB would not prevent the BSP from conducting another one as mandated
by Section 28 of R.A. No. 7653.
In view of ECBIs refusal to comply with the required examination, the MB issued Resolution No. 726, 14 dated
May 14, 2009, imposing monetary penalty/fine on ECBI, and referred the matter to the Office of the Special
Investigation (OSI) for the filing of appropriate legal action. The BSP also wrote a letter,15 dated May 26, 2009,
advising ECBI to comply with MB Resolution No. 771, which essentially required the bank to follow its
directives. On May 28, 2009, the ISD II reiterated its demand upon the ECBI BOD to allow the BSP examiners
to conduct a general examination on June 3, 2009. 16
In its June 2, 2009 Letter-Reply,17 ECBI asked for another deferment of the examination due to the pendency
of certain unresolved issues subject of its appeal before the MB, and because Vivas was then out of the
country. The ISD II denied ECBIs request and ordered the general examination to proceed as previously
scheduled.18
Thereafter, the MB issued Resolution No. 823, 19 dated June 4, 2009, approving the issuance of a cease and
desist order against ECBI, which enjoined it from pursuing certain acts and transactions that were considered
unsafe or unsound banking practices, and from doing such other acts or transactions constituting fraud or
might result in the dissipation of its assets.
On June 10, 2009, the OSI filed with the Department of Justice (DOJ) a complaint for Estafa Through
Falsification of Commercial Documents against certain officials and employees of ECBI. Meanwhile, the MB
issued Resolution No. 1164,20 dated August 13, 2009, denying the appeal of ECBI from Resolution No. 1255
which placed it under PCA framework. On November 18, 2009, the general examination of the books and
records of ECBI with the cut-off date of September 30, 2009, was commenced and ended in December 2009.
Later, the BSP officials and examiners met with the representatives of ECBI, including Vivas, and discussed
their findings.21 On December 7, 2009, the ISD II reminded ECBI of the non-submission of its financial audit
reports for the years 2007 and 2008 with a warning that failure to submit those reports and the written
explanation for such omission shall result in the imposition of a monetary penalty.22 In a letter, dated February
1, 2010, the ISD II informed ECBI of MB Resolution No. 1548 which denied its request for reconsideration of
Resolution No. 726.
On March 4, 2010, the MB issued Resolution No. 276 23 placing ECBI under receivership in accordance with
the recommendation of the ISD II which reads:
On the basis of the examination findings as of 30 September 2009 as reported by the Integrated Supervision
Department (ISD) II, in its memorandum dated 17 February 2010, which findings showed that the Eurocredit
Community Bank, Inc. a Rural Bank (Eurocredit Bank) (a) is unable to pay its liabilities as they become due
in the ordinary course of business; (b) has insufficient realizable assets to meet liabilities; (c) cannot continue
in business without involving probable losses to its depositors and creditors; and (d) has willfully violated a
cease and desist order of the Monetary Board for acts or transactions which are considered unsafe and
unsound banking practices and other acts or transactions constituting fraud or dissipation of the assets of the
institution, and considering the failure of the Board of Directors/management of Eurocredit Bank to restore the

banks financial health and viability despite considerable time given to address the banks financial problems,
and that the bank had been accorded due process, the Board, in accordance with Section 30 of Republic Act
No. 7653 (The New Central Bank Act), approved the recommendation of ISD II as follows:

Vivas Availed of the Wrong Remedy

To prohibit the Eurocredit Bank from doing business in the Philippines and to place its assets and affairs under
receivership; and

To begin with, Vivas availed of the wrong remedy. The MB issued Resolution No. 276, dated March 4, 2010, in
the exercise of its power under R.A. No. 7653. Under Section 30 thereof, any act of the MB placing a bank
under conservatorship, receivership or liquidation may not be restrained or set aside except on a petition for
certiorari. Pertinent portions of R.A. 7653 read:

To designate the Philippine Deposit Insurance Corporation as Receiver of the bank.

Section 30.

Assailing MB Resolution No. 276, Vivas filed this petition for prohibition before this Court, ascribing grave
abuse of discretion to the MB for prohibiting ECBI from continuing its banking business and for placing it under
receivership. The petitioner presents the following
ARGUMENTS:
(a)

x x x x.
The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and
executory, and may not be restrained or set aside by the court except on petition for certiorari on the ground
that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack
or excess of jurisdiction. The petition for certiorari may only be filed by the stockholders of record representing
the majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of
the order directing receivership, liquidation or conservatorship.

It is grave abuse of discretion amounting to loss of jurisdiction to apply the general law embodied in Section 30
of the New Central Bank Act as opposed to the specific law embodied in Sections 11 and 14 of the Rural
Banks Act of 1992.

x x x x. [Emphases supplied]
Prohibition is already unavailing

(b)
Even if it assumed that Section 30 of the New Central Bank Act is applicable, it is still the gravest abuse of
discretion amounting to lack or excess of jurisdiction to execute the law with manifest arbitrariness, abuse of
discretion, and bad faith, violation of constitutional rights and to further execute a mandate well in excess of its
parameters.

Granting that a petition for prohibition is allowed, it is already an ineffective remedy under the circumstances
obtaining. Prohibition or a "writ of prohibition" is that process by which a superior court prevents inferior courts,
tribunals, officers, or persons from usurping or exercising a jurisdiction with which they have not been vested
by law, and confines them to the exercise of those powers legally conferred. Its office is to restrain subordinate
courts, tribunals or persons from exercising jurisdiction over matters not within its cognizance or exceeding its
jurisdiction in matters of which it has cognizance. 26 In our jurisdiction, the rule on prohibition is enshrined in
Section 2, Rule 65 of the Rules on Civil Procedure, to wit:

(c)
The power delegated in favor of the Bangko Sentral ng Pilipinas to place rural banks under receiverships is
unconstitutional for being a diminution or invasion of the powers of the Supreme Court, in violation of Section
2, Article VIII of the Philippine Constitution. 24
Vivas submits that the respondents committed grave abuse of discretion when they erroneously applied
Section 30 of R.A. No. 7653, instead of Sections 11 and 14 of the Rural Bank Act of 1992 or R.A. No. 7353.
He argues that despite the deficiencies, inadequacies and oversights in the conduct of the affairs of ECBI, it
has not committed any financial fraud and, hence, its placement under receivership was unwarranted and
improper. He posits that, instead, the BSP should have taken over the management of ECBI and extended
loans to the financially distrained bank pursuant to Sections 11 and 14 of R.A. No. 7353 because the BSPs
power is limited only to supervision and management take-over of banks.
He contends that the implementation of the questioned resolution was tainted with arbitrariness and bad faith,
stressing that ECBI was placed under receivership without due and prior hearing in violation of his and the
banks right to due process. He adds that respondent PDIC actually closed ECBI even in the absence of any
directive to this effect. Lastly, Vivas assails the constitutionality of Section 30 of R.A. No. 7653 claiming that
said provision vested upon the BSP the unbridled power to close and place under receivership a hapless rural
bank instead of aiding its financial needs. He is of the view that such power goes way beyond its constitutional
limitation and has transformed the BSP to a sovereign in its own "kingdom of banks." 25
The Courts Ruling
The petition must fail.

Sec. 2. Petition for prohibition - When the proceedings of any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that the
judgment be rendered commanding the respondent to desist from further proceedings in the action or matter
specified therein, or otherwise granting such incidental reliefs as the law and justice require.
x x x x.
Indeed, prohibition is a preventive remedy seeking that a judgment be rendered which would direct the
defendant to desist from continuing with the commission of an act perceived to be illegal. 27 As a rule, the
proper function of a writ of prohibition is to prevent the doing of an act which is about to be done. It is not
intended to provide a remedy for acts already accomplished. 28
Though couched in imprecise terms, this petition for prohibition apparently seeks to prevent the acts of closing
of ECBI and placing it under receivership. Resolution No. 276, however, had already been issued by the MB
and the closure of ECBI and its placement under receivership by the PDIC were already accomplished.
Apparently, the remedy of prohibition is no longer appropriate. Settled is the rule that prohibition does not lie to
restrain an act that is already a fait accompli.29
The Petition Should Have Been Filed in the CA
Even if treated as a petition for certiorari, the petition should have been filed with the CA. Section 4 of Rule 65
reads:

Section 4. When and where petition filed. The petition shall be filed not later than sixty (60) days from notice
of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether
such motion is required or not, the sixty (60) day period shall be counted from notice of the denial of said
motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a
corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area
as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid
of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the
acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these Rules, the petition
shall be filed in and cognizable only by the Court of Appeals. [Emphases supplied]
That the MB is a quasi-judicial agency was already settled and reiterated in the case of Bank of Commerce v.
Planters Development Bank And Bangko Sentral Ng Pilipinas. 30
Doctrine of Hierarchy of Courts
Even in the absence of such provision, the petition is also dismissible because it simply ignored the doctrine of
hierarchy of courts. True, the Court, the CA and the RTC have original concurrent jurisdiction to issue writs of
certiorari, prohibition and mandamus. The concurrence of jurisdiction, however, does not grant the party
seeking any of the extraordinary writs the absolute freedom to file a petition in any court of his choice. The
petitioner has not advanced any special or important reason which would allow a direct resort to this Court.
Under the Rules of Court, a party may directly appeal to this Court only on pure questions of law. 31 In the case
at bench, there are certainly factual issues as Vivas is questioning the findings of the investigating team.
Strict observance of the policy of judicial hierarchy demands that where the issuance of the extraordinary writs
is also within the competence of the CA or the RTC, the special action for the obtainment of such writ must be
presented to either court. As a rule, the Court will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate lower courts; or where exceptional and compelling circumstances, such
as cases of national interest and with serious implications, justify the availment of the extraordinary remedy of
writ of certiorari, prohibition, or mandamus calling for the exercise of its primary jurisdiction. 32 The judicial
policy must be observed to prevent an imposition on the precious time and attention of the Court.
The MB Committed No Grave Abuse of Discretion
In any event, no grave abuse of discretion can be attributed to the MB for the issuance of the assailed
Resolution No. 276.
Vivas insists that the circumstances of the case warrant the application of Section 11 of R.A. No. 7353, which
provides:
Sec. 11. The power to supervise the operation of any rural bank by the Monetary Board as herein indicated
shall consist in placing limits to the maximum credit allowed to any individual borrower; in prescribing the
interest rate, in determining the loan period and loan procedures, in indicating the manner in which technical
assistance shall be extended to rural banks, in imposing a uniform accounting system and manner of keeping
the accounts and records of rural banks; in instituting periodic surveys of loan and lending procedures, audits,
test-check of cash and other transactions of the rural banks; in conducting training courses for personnel of
rural banks; and, in general, in supervising the business operations of the rural banks.
The Central Bank shall have the power to enforce the laws, orders, instructions, rules and regulations
promulgated by the Monetary Board, applicable to rural banks; to require rural banks, their directors, officers
and agents to conduct and manage the affairs of the rural banks in a lawful and orderly manner; and, upon
proof that the rural bank or its Board of Directors, or officers are conducting and managing the affairs of the
bank in a manner contrary to laws, orders, instructions, rules and regulations promulgated by the Monetary
Board or in a manner substantially prejudicial to the interest of the Government, depositors or creditors, to take
over the management of such bank when specifically authorized to do so by the Monetary Board after due
hearing process until a new board of directors and officers are elected and qualified without prejudice to the

prosecution of the persons responsible for such violations under the provisions of Sections 32, 33 and 34 of
Republic Act No. 265, as amended.
x x x x.
The thrust of Vivas argument is that ECBI did not commit any financial fraud and, hence, its placement under
receivership was unwarranted and improper. He asserts that, instead, the BSP should have taken over the
management of ECBI and extended loans to the financially distrained bank pursuant to Sections 11 and 14 of
R.A. No. 7353 because the BSPs power is limited only to supervision and management take-over of banks,
and not receivership.
Vivas argues that implementation of the questioned resolution was tainted with arbitrariness and bad faith,
stressing that ECBI was placed under receivership without due and prior hearing, invoking Section 11 of R.A.
No. 7353 which states that the BSP may take over the management of a rural bank after due hearing. 33 He
adds that because R.A. No. 7353 is a special law, the same should prevail over R.A. No. 7653 which is a
general law.
The Court has taken this into account, but it appears from all over the records that ECBI was given every
opportunity to be heard and improve on its financial standing. The records disclose that BSP officials and
examiners met with the representatives of ECBI, including Vivas, and discussed their findings. 34 There were
also reminders that ECBI submit its financial audit reports for the years 2007 and 2008 with a warning that
failure to submit them and a written explanation of such omission shall result in the imposition of a monetary
penalty.35More importantly, ECBI was heard on its motion for reconsideration. For failure of ECBI to comply,
the MB came out with Resolution No. 1548 denying its request for reconsideration of Resolution No. 726.
Having been heard on its motion for reconsideration, ECBI cannot claim that it was deprived of its right under
the Rural Bank Act.
Close Now, Hear Later
At any rate, if circumstances warrant it, the MB may forbid a bank from doing business and place it under
receivership without prior notice and hearing. Section 30 of R.A. No. 7653 provides, viz:
Sec. 30. Proceedings in Receivership and Liquidation. Whenever, upon report of the head of the supervising
or examining department, the Monetary Board finds that a bank or quasi-bank:
(a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided,
That this shall not include inability to pay caused by extraordinary demands induced by financial
panic in the banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities; or
(c) cannot continue in business without involving probable losses to its depositors or creditors; or
(d) has wilfully violated a cease and desist order under Section 37 that has become final, involving
acts or transactions which amount to fraud or a dissipation of the assets of the institution; in which
cases, the Monetary Board may summarily and without need for prior hearing forbid the institution
from doing business in the Philippines and designate the Philippine Deposit Insurance Corporation
as receiver of the banking institution. [Emphases supplied.]
x x x x.
Accordingly, there is no conflict which would call for the application of the doctrine that a special law should
prevail over a general law. It must be emphasized that R.A .No. 7653 is a later law and under said act, the
power of the MB over banks, including rural banks, was increased and expanded. The Court, in several cases,
upheld the power of the MB to take over banks without need for prior hearing. It is not necessary inasmuch as

the law entrusts to the MB the appreciation and determination of whether any or all of the statutory grounds for
the closure and receivership of the erring bank are present. The MB, under R.A. No. 7653, has been invested
with more power of closure and placement of a bank under receivership for insolvency or illiquidity, or because
the banks continuance in business would probably result in the loss to depositors or creditors. In the case of
Bangko Sentral Ng Pilipinas Monetary Board v. Hon. Antonio-Valenzuela, 36 the Court reiterated the doctrine of
"close now, hear later," stating that it was justified as a measure for the protection of the public interest. Thus:
The "close now, hear later" doctrine has already been justified as a measure for the protection of the public
interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits. Unless
adequate and determined efforts are taken by the government against distressed and mismanaged banks,
public faith in the banking system is certain to deteriorate to the prejudice of the national economy itself, not to
mention the losses suffered by the bank depositors, creditors, and stockholders, who all deserve the
protection of the government. 37 [Emphasis supplied]

claims that the said provision was an undue delegation of legislative power. The contention deserves scant
consideration.
Preliminarily, Vivas attempt to assail the constitutionality of Section 30 of R.A. No. 7653 constitutes collateral
attack on the said provision of law. Nothing is more settled than the rule that the constitutionality of a statute
cannot be collaterally attacked as constitutionality issues must be pleaded directly and not collaterally. 41 A
collateral attack on a presumably valid law is not permissible. Unless a law or rule is annulled in a direct
proceeding, the legal presumption of its validity stands. 42
Be that as it may, there is no violation of the non-delegation of legislative power.1wphi1 The rationale for the
constitutional proscription is that "legislative discretion as to the substantive contents of the law cannot be
delegated. What can be delegated is the discretion to determine how the law may be enforced, not what the
law shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative cannot
be abdicated or surrendered by the legislature to the delegate." 43

In Rural Bank of Buhi, Inc. v. Court of Appeals,38 the Court also wrote that
x x x due process does not necessarily require a prior hearing; a hearing or an opportunity to be heard may be
subsequent to the closure. One can just imagine the dire consequences of a prior hearing: bank runs would be
the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out and
disillusionment will run the gamut of the entire banking community.39
The doctrine is founded on practical and legal considerations to obviate unwarranted dissipation of the banks
assets and as a valid exercise of police power to protect the depositors, creditors, stockholders, and the
general public.40 Swift, adequate and determined actions must be taken against financially distressed and
mismanaged banks by government agencies lest the public faith in the banking system deteriorate to the
prejudice of the national economy.
Accordingly, the MB can immediately implement its resolution prohibiting a banking institution to do business
in the Philippines and, thereafter, appoint the PDIC as receiver. The procedure for the involuntary closure of a
bank is summary and expeditious in nature. Such action of the MB shall be final and executory, but may be
later subjected to a judicial scrutiny via a petition for certiorari to be filed by the stockholders of record of the
bank representing a majority of the capital stock. Obviously, this procedure is designed to protect the interest
of all concerned, that is, the depositors, creditors and stockholders, the bank itself and the general public. The
protection afforded public interest warrants the exercise of a summary closure.

"There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz,
the completeness test and the sufficient standard test. Under the first test, the law must be complete in all its
terms and conditions when it leaves the legislature such that when it reaches the delegate the only thing he
will have to do is enforce it. Under the sufficient standard test, there must be adequate guidelines or stations in
the law to map out the boundaries of the delegate's authority and prevent the delegation from running riot.
Both tests are intended to prevent a total transference of legislative authority to the delegate, who is not
allowed to step into the shoes of the legislature and exercise a power essentially legislative." 44
In this case, under the two tests, there was no undue delegation of legislative authority in the issuance of R.A.
No. 7653. To address the growing concerns in the banking industry, the legislature has sufficiently empowered
the MB to effectively monitor and supervise banks and financial institutions and, if circumstances warrant, to
forbid them to do business, to take over their management or to place them under receivership. The
legislature has clearly spelled out the reasonable parameters of the power entrusted to the MB and assigned
to it only the manner of enforcing said power. In other words, the MB was given a wide discretion and latitude
only as to how the law should be implemented in order to attain its objective of protecting the interest of the
public, the banking industry and the economy.
WHEREFORE, the petition for prohibition is DENIED.
SO ORDERED.

In the case at bench, the ISD II submitted its memorandum, dated February 17, 2010, containing the findings
noted during the general examination conducted on ECBI with the cut-off date of September 30, 2009. The
memorandum underscored the inability of ECBI to pay its liabilities as they would fall due in the usual course
of its business, its liabilities being in excess of the assets held. Also, it was noted that ECBIs continued
banking operation would most probably result in the incurrence of additional losses to the prejudice of its
depositors and creditors. On top of these, it was found that ECBI had willfully violated the cease-and-desist
order of the MB issued in its June 24, 2009 Resolution, and had disregarded the BSP rules and directives. For
said reasons, the MB was forced to issue the assailed Resolution No. 276 placing ECBI under receivership. In
addition, the MB stressed that it accorded ECBI ample time and opportunity to address its monetary problem
and to restore and improve its financial health and viability but it failed to do so.
In light of the circumstances obtaining in this case, the application of the corrective measures enunciated in
Section 30 of R.A. No. 7653 was proper and justified. Management take-over under Section 11 of R.A. No.
7353 was no longer feasible considering the financial quagmire that engulfed ECBI showing serious conditions
of insolvency and illiquidity. Besides, placing ECBI under receivership would effectively put a stop to the
further draining of its assets.

PACIFIC ACE FINANCE LTD. (PAFIN),

G.R. No. 175303

Petitioner,

Present:

EIJI* YANAGISAWA,

Promulgated:
Respondent.

April 11, 2012

x-------------------------------------------------------------------x
DECISION
DEL CASTILLO, J.:

No Undue Delegation of Legislative Power

An undertaking not to dispose of a property pending litigation, made in open court and embodied in a court order, and
duly annotated on the title of the said property, creates a right in favor of the person relying thereon. The latter may seek the
annulment of actions that are done in violation of such undertaking.

Lastly, the petitioner challenges the constitutionality of Section 30 of R.A. No. 7653, as the legislature granted
the MB a broad and unrestrained power to close and place a financially troubled bank under receivership. He

Before us is a Petition for Review[1] of the August 1, 2006 Decision[2] of the Court of Appeals (CA) in CA-G.R. CV No.
78944, which held:

WHEREFORE, the Decision dated April 20, 2003 of the RTC, Branch 258, Paraaque
City, is hereby ANNULLED and SET ASIDE and a new one entered annulling the Real Estate
Mortgage executed on August 25, 1998 in favor of defendant Pacific Ace Finance Ltd.

For its defense, PAFIN denied prior knowledge of the October 2, 1996 Order against Evelyn. It admitted, however,
that it did not conduct any verification of the title with the Registry of Deeds of Paraaque City because x x x Evelyn was a
good, friendly and trusted neighbor.[16] PAFIN maintained that Eiji has no personality to seek the annulment of the REM
because a foreign national cannot own real properties located within the Philippines.[17]

SO ORDERED.[3]
Evelyn also denied having knowledge of the October 2, 1996 Order.[18] Evelyn asserted that she paid for the property
with her own funds[19] and that she has exclusive ownership thereof. [20]

Factual Antecedents
Respondent Eiji Yanagisawa (Eiji), a Japanese national, and Evelyn F. Castaeda (Evelyn), a Filipina, contracted
marriage on July 12, 1989 in the City Hall of Manila.[4]
On August 23, 1995, Evelyn purchased a 152 square-meter townhouse unit located at Bo. Sto. Nio,
Paraaque, Metro Manila (Paraaque townhouse unit).[5] The Registry of Deeds for Paraaque issued Transfer Certificate of
Title (TCT) No. 99791 to Evelyn P. Castaeda, Filipino, married to Ejie Yanagisawa, Japanese citizen[,] both of legal age.[6]
In 1996, Eiji filed a complaint for the declaration of nullity of his marriage with Evelyn on the ground of bigamy (nullity of
marriage case). The complaint, docketed as Civil Case No. 96-776, was raffled to Branch 149 of the Regional Trial Court of
Makati (Makati RTC). During the pendency of the case, Eiji filed a Motion for the Issuance of a Restraining Order against
Evelyn and an Application for a Writ of a Preliminary Injunction. He asked that Evelyn be enjoined from disposing or
encumbering all of the properties registered in her name.
At the hearing on the said motion, Evelyn and her lawyer voluntarily undertook not to dispose of the properties
registered in her name during the pendency of the case, thus rendering Eijis application and motion moot. On the basis of
said commitment, the Makati RTC rendered the following Order dated October 2, 1996:

Paraaque Regional Trial Court Decision[21]

The Paraaque RTC determined that the only issue before it is whether x x x [Eiji] has a cause of action against the
defendants and x x x is entitled to the reliefs prayed for despite the fact that he is not the registered owner of the property being
a Japanese national.[22]
The Paraaque RTC explained that Eiji, as a foreign national, cannot possibly own the mortgaged property. Without
ownership, or any other law or contract binding the defendants to him, Eiji has no cause of action that may be asserted against
them.[23] Thus, the Paraaque RTC dismissed Eijis complaint:
WHEREFORE, premises considered, for failure of the plaintiff to state a cause of action
against defendants, EVELYN CASTAEDA YANAGISAWA and Pacific Ace Finance Ltd. (PAFIN),
this case is DISMISSED.
The counterclaim and cross-claim are likewise DISMISSED.
SO ORDERED.[24]

ORDER
In view of the commitment made in open court by Atty. Lupo Leyva, counsel for the
defendant [Evelyn], together with his client, the defendant in this case, that the properties
registered in the name of the defendant would not be disposed of, alienated or encumbered in any
manner during the pendency of this petition, the Motion for the Issuance of a Restraining Order and
Application for a Writ of a Preliminary Injunction scheduled today is hereby considered moot and
academic.
[7]

SO ORDERED. (Emphasis supplied.)

Eiji appealed the trial courts decision arguing that the trial court erred in holding that his inability to own real estate
property in the Philippines deprives him of all interest in the mortgaged property, which was bought with his money. He added
that the Makati RTC has even recognized his contribution in the purchase of the property by its declaration that he is entitled to
half of the proceeds that would be obtained from its sale.
Eiji also emphasized that Evelyn had made a commitment to him and to the Makati RTC that she would not dispose
of, alienate, or encumber the properties registered in her name while the case was pending. This commitment incapacitates
Evelyn from entering into the REM contract.
Court of Appeals Decision[25]

The above Order was annotated on the title of the Paraaque townhouse unit or TCT No. 99791, thus:
The CA found merit in Eijis appeal.
Entry No. 8729 Order issued by Hon. Josefina Guevara Salonga, Judge, RTC, Branch 149,
Makati City, ordering the defendant in Civil Case No. 96-776 entitled Eiji Yanagisawa, Plaintiffversus-Evelyn Castaeda Yanagisawa, that the properties registered in the name of the
defendant would not be disposed of, alienated or encumbered in any manner during the
pendency of the petition, the Motion for the Issuance of a Restraining Order and Application for a
Writ of Preliminary Injunction is hereby considered moot and academic.
Date of Instrument October 2, 1996
Date of Inscription March 17, 1997 11:21 a.m.[8] (Emphasis supplied.)
Sometime in March 1997, Evelyn obtained a loan of P500,000.00 from petitioner Pacific Ace Finance Ltd. (PAFIN).
To secure the loan, Evelyn executed on August 25, 1998 a real estate mortgage (REM) [10] in favor of PAFIN over the
Paraaque townhouse unit covered by TCT No. 99791. The instrument was submitted to the Register of Deeds of
Paraaque City for annotation on the same date.[11]
[9]

At the time of the mortgage, Eijis appeal in the nullity of marriage case was pending before the CA. [12] The Makati
RTC had dissolved Eiji and Evelyns marriage,[13] and had ordered the liquidation of their registered properties, including the
Paraaque townhouse unit, with its proceeds to be divided between the parties. [14] The Decision of the Makati RTC did not lift
or dissolve its October 2, 1996 Order on Evelyns commitment not to dispose of or encumber the properties registered in her
name.
Eiji learned of the REM upon its annotation on TCT No. 99791. Deeming the mortgage as a violation of the Makati
RTCs October 2, 1996 Order, Eiji filed a complaint for the annulment of REM (annulment of mortgage case) against Evelyn
and PAFIN.[15] The complaint, docketed as Civil Case No. 98-0431, was raffled to Branch 258 of the Regional Trial Court of
Paraaque City (Paraaque RTC).

The CA noted that the Makati RTC ruled on Eijis and Evelyns ownership rights over the properties that were acquired
during their marriage, including the Paraaque townhouse unit. It was determined therein that the registered properties should
be sold at public auction and the proceeds thereof to be divided between Eiji and Evelyn.[26]
Contrary to this ruling, the Paraaque RTC ruled that Eiji has no ownership rights over the Paraaque townhouse unit
in light of the constitutional prohibition on foreign ownership of lands and that the subject property is Evelyns exclusive
property.[27]
The appellate court determined that the Paraaque RTCs Decision was improper because it violated the doctrine of
non-interference. Courts of equal jurisdiction, such as regional trial courts, have no appellate jurisdiction over each other.
[28]
For this reason, the CA annulled and set aside the Paraaque RTCs
decision to dismiss Eijis complaint.[29]
The CA then proceeded to resolve Eijis complaint. [30] The CA noted that Eiji anchored his complaint upon Evelyns
violation of her commitment to the Makati RTC and to Eiji that she would not dispose of, alienate, or encumber the properties
registered in her name, including the Paraaque townhouse unit. This commitment created a right in favor of Eiji to rely
thereon and a correlative obligation on Evelyns part not to encumber the Paraaque townhouse unit. Since Evelyns
commitment was annotated on TCT No. 99791, all those who deal with the said property are charged with notice of the
burdens on the property and its registered owner.[31]
On the basis of Evelyns commitment and its annotation on TCT No. 99791, the CA determined that Eiji has a cause
of action to annul the REM contract. Evelyn was aware of her legal impediment to encumber and dispose of the Paraaque
townhouse unit. Meanwhile, PAFIN displayed a wanton disregard of ordinary prudence when it admitted not conducting any
verification of the title whatsoever. The CA determined that PAFIN was a mortgagee in bad faith.[32]
Thus, the CA annulled the REM executed by Evelyn in favor of PAFIN.

The parties to the annulled mortgage filed separate motions for reconsideration on August 22, 2006, [33] which were
both denied for lack of merit by the appellate court in its November 7, 2006 Resolution.[34]

administration of the laws; and while its observance might be required on the grounds of judicial
comity and courtesy, it does not rest upon such considerations exclusively, but is enforced to
prevent unseemly, expensive, and dangerous conflicts of jurisdiction and of the process.[44]

PAFIN filed this petition for review.

Petitioners Arguments

Petitioner maintains that it was imperative for the Paraaque RTC to rule on the ownership issue because it was
essential for the determination of the validity of the REM.[45]

Petitioner seeks a reversal of the CA Decision, which allegedly affirmed the

Makati RTC ruling that Eiji is a co-owner of the mortgaged property. PAFIN insists that the CA sustained a violation of the
constitution with its declaration that an alien can have an interest in real property located in the Philippines.[35]
Petitioner also seeks the reinstatement of the Paraaque RTCs Decision dated April 20, 2003[36] and prays that this
Court render a decision that Eiji cannot have ownership rights over the mortgaged property and that Evelyn enjoys exclusive
ownership thereof. As the sole owner, Evelyn can validly mortgage the same to PAFIN without need of Eijis
consent. Corollarily, Eiji has no cause of action to seek the REMs annulment.[37]
Respondents Arguments
Respondent argues that he has an interest to have the REM annulled on two grounds: First, Evelyn made a
commitment in open court that she will not encumber the Paraaque townhouse unit during the pendency of the
case. Second, the Makati RTCs decision declared that he is entitled to share in the proceeds of the Paraaque townhouse
unit.[38]
Respondent also insists that petitioner is in bad faith for entering into the mortgage contract with Evelyn despite the
annotation on TCT No. 99791 that Evelyn committed herself not to encumber the same.[39]
Issues
Petitioner raises the following issues:[40]

The Court disagrees. A review of the complaint shows that Eiji did not claim ownership of the Paraaque townhouse
unit or his right to consent to the REM as his bases for seeking its annulment. Instead, Eiji invoked his right to rely on Evelyns
commitment not to dispose of or encumber the property (as confirmed in the October 2, 1996 Order of the Makati RTC), and
the annotation of the said commitment on TCT No. 99791.
It was Evelyn and PAFIN that raised Eijis incapacity to own real property as their defense to the suit. They
maintained that Eiji, as an alien incapacitated to own real estate in the Philippines, need not consent to the REM contract for its
validity. But this argument is beside the point and is not a proper defense to the right asserted by Eiji. This defense does not
negate Eijis right to rely on the October 2, 1996 Order of the Makati RTC and to hold third persons, who deal with the
registered property, to the annotations entered on the title. Thus, the RTC erred in dismissing the complaint based on this
defense.
Petitioner did not question the rest of the appellate courts ruling, which held that Evelyn and PAFIN executed the
REM in complete disregard and violation of the October 2, 1996 Order of the Makati RTC and the annotation on TCT No.
99791. It did not dispute the legal effect of the October 2, 1996 Order on Evelyns capacity to encumber the Paraaque
townhouse unit nor the CAs finding that petitioner is a mortgagee in bad faith.
The October 2, 1996 Order, embodying Evelyns commitment not to dispose of or encumber the property, is akin to
an injunction order against the disposition or encumbrance of the property. Jurisprudence holds that all acts done in violation of
a standing injunction order are voidable as to the party enjoined and third parties who are not in good faith. [46] The party, in
whose favor the injunction is issued, has a cause of action to seek the annulment of the offending actions. [47] The following is
instructive:

1. Whether a real property in the Philippines can be part of the community property of a Filipina and her foreigner
spouse;
2. Whether a real property registered solely in the name of the Filipina wife is paraphernal or conjugal;
3. Who is entitled to the real property mentioned above when the marriage is declared void?
4. Whether the Paraaque RTC can rule on the issue of ownership, even as the same issue was already ruled upon
by the Makati RTC and is pending appeal in the CA.
Our Ruling

An injunction or restraining order must be obeyed while it remains in full force and effect
until the injunction or restraining order has been set aside, vacated, or modified by the court which
granted it, or until the order or decree awarding it has been reversed on appeal. The injuction must
be obeyed irrespective of the ultimate validity of the order, and no matter how unreasonable and
unjust the injunction may be in its terms.[48]
In view of the foregoing discussion, we find no need to discuss the other issues raised by the petitioner.
WHEREFORE, premises considered, the Petition is DENIED for lack of merit. The August 1, 2006 Decision of the
Court of Appeals in CA-G.R. CV No. 78944 is AFFIRMED.

The petition has no merit.

SO ORDERED.
Contrary to petitioners stance, the CA did not make any disposition as to who between Eiji and Evelyn owns the
Paraaque townhouse unit. It simply ruled that the Makati RTC had acquired jurisdiction over the said question and should
not have been interfered with by the Paraaque RTC. The CA only clarified that it was improper for the Paraaque RTC to
have reviewed the ruling of a co-equal court.

FRANCISCO R. LLAMAS and

CARMELITA C. LLAMAS,

G.R. No. 149588

Petitioners,

The Court agrees with the CA. The issue of ownership and liquidation of properties acquired during the cohabitation of
Eiji and Evelyn has been submitted for the resolution of the Makati RTC, and is pending [41] appeal before the CA. The
doctrine of judicial stability or non-interference dictates that the assumption by the Makati RTC over the issue operates as an
insurmountable barrier to the subsequent assumption by the Paraaque RTC. [42] By insisting on ruling on the same issue,
the Paraaque RTC effectively interfered with the Makati RTCs resolution of the issue and created the possibility of conflicting
decisions. Cojuangco v. Villegas[43] states: The various branches of the [regional trial courts] of a province or city, having as
they have the same or equal authority and exercising as they do concurrent and coordinate jurisdiction, should not, cannot and
are not permitted to interfere with their respective cases, much less with their orders or judgments. A contrary rule would
obviously lead to confusion and seriously hamper the administration of justice. The matter is further explained thus:

- versus THE HONORABLE COURT OF APPEALS, BRANCH 66 OF

THEREGIONAL TRIAL COURT OFMAKATI CITY and THE PEOPLE OF
THE PHILIPPINES,
Respondents.

It has been held that "even in cases of concurrent jurisdiction, it is, also, axiomatic that
the court first acquiring jurisdiction excludes the other courts."

CORONA, C.J.,
Chairperson,
NACHURA,
BRION,
PERALTA, and
VILLARAMA*, JJ.
Promulgated:
August 16, 2010

x------------------------------------------------------------------------------------x
In addition, it is a familiar principle that when a court of competent jurisdiction acquires
jurisdiction over the subject matter of a case, its authority continues, subject only to the appellate
authority, until the matter is finally and completely disposed of, and that no court of co-ordinate
authority is at liberty to interfere with its action. This doctrine is applicable to civil cases, to criminal
prosecutions, and to courts-martial. The principle is essential to the proper and orderly

Present:

RESOLUTION
NACHURA, J.:

Before this Court is a Motion for Reconsideration filed by herein petitioner-spouses Francisco R.
Llamas and Carmelita C. Llamas. On September 29, 2009, this Court promulgated a Decision [1] in the abovecaptioned case, denying the petition for Annulment of Judgment and Certiorari, with Preliminary Injunction
filed by petitioners. Petitioners are assailing the decision of the Regional Trial Court (RTC)
of Makati City convicting them of the offense Other Forms of Swindling punishable under Article 316,
paragraph 2, of the Revised Penal Code (RPC).
Briefly, the antecedent facts are as follows:
On August 14, 1984, petitioners were charged before the Regional Trial Court
(RTC) of Makati with, as aforesaid, the crime of other forms of swindling in the
Information, docketed as Criminal Case No. 11787, which reads:

The Court initially dismissed on technical grounds the petition in the September
24, 2001 Resolution, but reinstated the same, on motion for reconsideration, in the
October 22, 2001 Resolution. [2]
In its September 29, 2009 Decision, this Court held that, following the ruling in People v. Bitanga,[3] the
remedy of annulment of judgment cannot be availed of in criminal cases. The Court likewise rejected
petitioners contention that the trial court had no jurisdiction over the case.
Petitioners are now before this Court seeking the reversal of the September 29, 2009 Decision
and, consequently, the annulment of their conviction by the trial court. In their Verified Motion for
Reconsideration,[4] petitioners ask this Court to revisit and take a second look at the issues in the case
without being unduly hampered by any perceived technical shortfalls of a beleaguered innocent litigant. In
particular, they raise the following issues:

That on or about the 20th day of November, 1978, in

the Municipality of Paraaque, Metro Manila, Philippines, and
within the jurisdiction of this Honorable Court, the above-named
accused, conspiring and confederating together and mutually
helping and aiding one another, well knowing that their parcel of
land known as Lot No. 11, Block No. 6 of the Subdivision Plan
(LRC) Psd 67036, Cadastral Survey of Paraaque, LRC
Record No. N-26926, Case No. 4896, situated at Barrio San
Dionisio, Municipality of Paraaque, Metro Manila, was
mortgaged to the Rural Bank of Imus, did then and there
willfully, unlawfully and feloniously sell said property to one
Conrado P. Avila, falsely representing the same to be free from
all liens and encumbrances whatsoever, and said Conrado P.
Avila bought the aforementioned property for the sum
of P12,895.00 which was paid to the accused, to the damage
and prejudice of said Conrado P. Avila in the aforementioned
amount of P12,895.00.

1.
WITH ALL DUE RESPECT, AND IN LIGHT OF THE CORRECT
APPLICATIONS OF DOCTRINAL JURISPRUDENCE, PETITIONERS HAD PURSUED
THEIR MORE THAN TWENTY FIVE (25) YEARS QUEST FOR JUSTICE AS
INNOCENT MEN, AND HAD HONESTLY MAINTAINED THAT THEIR RESORT TO
REVERSE, SET ASIDE AND/OR ANNUL, IS IN LINE WITH JURISPRUDENCE AND
LAW, ANY TECHNICAL SHORTFALLS [OR] DEFECTS NOTWITHSTANDING[;]
2.
WITH ALL DUE RESPECT, AGAIN IN LIGHT OF APPLICABLE
JURISPRUDENCE ON THE ISSUE OF JURISDICTION, PETITIONERS ARE NOT
BARRED FROM RAISING SUCH QUESTION OF JURISDICTION AT ANY TIME AND
IN FACT MAINTAIN THAT RESPONDNET COURTS HAD NO JURISDICTION IN LAW
AND ENLIGHTENING DOCTRINES TO TRY AND DECIDE THIS CASE;
3.
AGAIN WITH ALL DUE RESPECT AND UNFORTUNATELY, THE
VERY JUSTIFYING MERITS OF PETITIONERS APPROPRIATE INSTANT
REMEDY; HAD NOT CONSEQUENTLY BEEN PASSED UPON, TO UPHOLD THE
PARAMOUNT CONSTITUTIONAL CHERISED MANDATE, THE PRESUMPTION OF
INNOCENCE MUST BE UPHELD, EXCEPT ONLY UPON ESTABLISHED AND
ADMISSIBLE EVIDENCE BEYOND REASONABLE DOUBT; AND

Contrary to law.
After trial on the merits, the RTC rendered its Decision on June 30, 1994,
finding petitioners guilty beyond reasonable doubt of the crime charged and sentencing
them to suffer the penalty of imprisonment for two months and to pay the fine
of P18,085.00 each.

4.
PETITIONERS VERY HUMBLY BESEECH THIS HONORABLE
COURTS HIGHEST SENSE OF MAGNANIMITY, UNDERSTANDING, JUDICIOUS
WISDOM AND COMPASSION, SO THAT JUSTICE MAY TRULY AND JUSTLY BE
RENDERED IN FAVOR OF PETITIONERS AS IT MUST, GIVEN THE VERY UNIQUE
AND COMPELLING JUSTIFICATIONS HEREOF[.] [5]

On appeal, the Court of Appeals, in its February 19, 1999 Decision in CA-G.R.
No. CR No. 18270, affirmed the decision of the trial court. In its December 22, 1999
Resolution, the appellate court further denied petitioners motion for reconsideration.

Petitioners likewise pray for a referral of the case to the Court En Banc for oral argument or to be
allowed to submit written supplementary pleadings for them to state the compelling reasons why their motion
for reconsideration should be allowed.

Assailing the aforesaid issuances of the appellate court, petitioners filed before
this Court, on February 11, 2000, their petition for review, docketed as G.R. No.
141208. The Court, however, on March 13, 2000, denied the same for petitioners
failure to state the material dates. Since it subsequently denied petitioners motion for
reconsideration on June 28, 2000, the judgment of conviction became final and
executory.
With the consequent issuance by the trial court of the April 19, 2001 Warrant of
Arrest, the police arrested, on April 27, 2001, petitioner Carmelita C. Llamas for her to
serve her 2-month jail term. The police, nevertheless, failed to arrest petitioner
Francisco R. Llamas because he was nowhere to be found.
On July 16, 2001, petitioner Francisco moved for the lifting or recall of the
warrant of arrest, raising for the first time the issue that the trial court had no jurisdiction
over the offense charged.
There being no action taken by the trial court on the said motion, petitioners
instituted, on September 13, 2001, the instant proceedings for the annulment of the
trial and the appellate courts decisions.

In the interest of justice and for humanitarian reasons, the Court deems it necessary to re-examine
this case.
Admittedly, petitioners took many procedural missteps in this case, from the time it was pending in the
trial court until it reached this Court, all of which could serve as enough basis to dismiss the present motion for
reconsideration. However, considering petitioners advanced age, the length of time this case has been
pending, and the imminent loss of personal liberty as a result of petitioners conviction, the Court resolves to
grant pro hac vice the motion for reconsideration.
This Court has, on occasion, suspended the application of technical rules of procedure where matters of
life, liberty, honor or property, among other instances, are at stake. [6] It has allowed some meritorious cases to
proceed despite inherent procedural defects and lapses on the principle that rules of procedure are mere tools
designed to facilitate the attainment of justice. The strict and rigid application of rules that tend to frustrate
rather than promote substantial justice must always be avoided. It is far better and more prudent for the court
to excuse a technical lapse and afford the parties a review of the case to attain the ends of justice, rather than
dispose of the case on technicality and cause grave injustice to the parties. [7]
This Court notes that the case was allowed to run its course as a petition for certiorari, such that in
its April 12, 2004 Resolution, it said Considering the allegations, issues and arguments adduced in the
petition for review on certiorari x x x. Likewise, in its February 10, 2003 Resolution, [8] the Court said, It
appearing that Atty. Francisco R. Llamas, in his own behalf and as counsel for petitioners, has failed to file

their reply to the Solicitor Generals comment on the petition for review on certiorari within the extended period
x x x.

vs.
P/SENIOR INSPECTOR JOSE J. ASAYO, respondent.

Thus, the Court, at the first instance, had recognized that the petition, although captioned
differently, was indeed one for certiorari.
Since we have resolved to treat the petition as one for certiorari, the doctrine in People v. Bitanga[9] no
longer finds application in this case.
Next, we proceed to resolve the substantive issues raised by petitioners.
Article 316 (2) of the Revised Penal Code states:
ART. 316. Other forms of swindling. The penalty of arresto mayor in its
minimum and medium periods and a fine of not less than the value of the damage
caused and not more than three times such value, shall be imposed upon:
xxx
2. Any person who, knowing that real property is
encumbered, shall dispose of the same, although such
encumbrance be not recorded;
xxx
In every criminal prosecution, the State must prove beyond reasonable doubt all the elements of
the crime charged and the complicity or participation of the accused.[10]
For petitioners to be convicted of the crime of swindling under Article 316 (2) of the Revised Penal
Code, the prosecution had the burden to prove the confluence of the following essential elements of the crime:
1. that the thing disposed of be real property;
2. that the offender knew that the real property was encumbered,
whether the encumbrance is recorded or not;
3. that there must be express representation by the offender that the real property is
free from encumbrance; and
4. that the act of disposing of the real property be made to the damage of another. [11]
One of the essential elements of swindling under Article 316, paragraph 2, is that the act of
disposing the encumbered real property is made to the damage of another. In this case, neither the trial court
nor the CA made any finding of any damage to the offended party. Nowhere in the Decision of the RTC or that
of the CA is there any discussion that there was damage suffered by complainant Avila, or any finding that his
rights over the property were prejudiced.
On the contrary, complainant had possession and control of the land even as the cases were being
heard. His possession and right to exercise dominion over the property was not disturbed. Admittedly, there
was delay in the delivery of the title. This, however, was the subject of a separate case, which was eventually
decided in petitioners favor.[12]
If no damage should result from the sale, no crime of estafa would have been committed by the
vendor, as the element of damage would then be lacking. [13] The inevitable conclusion, therefore, is that
petitioners should be acquitted of the crime charged.
WHEREFORE, the foregoing premises considered, the Motion for Reconsideration is GRANTED.
The assailed Decision dated September 29, 2009 is SET ASIDE and a new one is
entered ACQUITTING petitioners of the crime charged on the ground of the prosecutions failure to prove their
guilt beyond reasonable doubt.
SO ORDERED.
G.R. No. 154243

December 22, 2007

DEPUTY DIRECTOR GENERAL ROBERTO LASTIMOSO, ACTING CHIEF PHILIPPINE NATIONAL

POLICE (PNP), DIRECTORATE FOR PERSONNEL AND RECORDS MANAGEMENT (DPRM), INSPECTOR
GENERAL, P/CHIEF SUPT. RAMSEY OCAMPO and P/SUPT. ELMER REJANO, petitioners,

RESOLUTION
AUSTRIA-MARTINEZ, J.:
Before the Court is respondents Motion for Reconsideration of the Decision promulgated on March 6, 2007. In
said Decision, the Court granted the petition, holding that the Philippine National Police (PNP) Chief had
jurisdiction to take cognizance of the civilian complaint against respondent and that the latter was accorded
due process during the summary hearing.
Respondent argues that the decision should be reconsidered for the following reasons:
1. The summary proceeding was null and void because no hearing was conducted; and
2. The evidence presented at the summary hearing does not prove that respondent is guilty of the
charges against him.
Respondent insists that the summary hearing officer did not conduct any hearing at all but only relied on the
affidavits and pleadings submitted to him, without propounding further questions to complainant's witnesses,
or calling in other witnesses such as PO2 Villarama. It should, however, be borne in mind that the fact that
there was no full-blown trial before the summary hearing officer does not invalidate said proceedings.
In Samalio v. Court of Appeals,1 the Court reiterated the time-honored principle that:
Due process in an administrative context does not require trial-type proceedings similar to
those in courts of justice. Where opportunity to be heard either through oral arguments or
through pleadings is accorded, there is no denial of procedural due process. A formal or trial-type
hearing is not at all times and in all instances essential. The requirements are satisfied where
the parties are afforded fair and reasonable opportunity to explain their side of the controversy at
hand. The standard of due process that must be met in administrative tribunals allows a certain
degree of latitude as long as fairness is not ignored. In other words, it is not legally
objectionable for being violative of due process for an administrative agency to resolve a
case based solely on position papers, affidavits or documentary evidence submitted by the
parties as affidavits of witnesses may take the place of their direct testimony.2(Emphasis
supplied)
The first issue presented by respondent must, therefore, be struck down.
To resolve the second issue, respondent would have the Court re-calibrate the weight of evidence presented
before the summary hearing officer, arguing that said evidence is insufficient to prove respondent's guilt of the
charges against him.
However, it must be emphasized that the action commenced by respondent before the Regional Trial Court is
one for certiorari under Rule 65 of the Rules of Court and as held in People v. Court of Appeals,3 where the
issue or question involved affects the wisdom or legal soundness of the decision not the jurisdiction of the
court to render said decision the same is beyond the province of a special civil action for certiorari.
Yet, respondent-movant's arguments and the fact that the administrative case against respondent was filed
way back in 1997, convinced the Court to suspend the rules of procedure.
The general rule is that the filing of a petition for certiorari does not toll the running of the period to appeal. 4

However, Section 1, Rule 1 of the Rules of Court provides that the Rules shall be liberally construed in order to
promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding.
InGinete v. Court of Appeals5 and Sanchez v. Court of Appeals,6 the Court saw it proper to suspend rules of
procedure in order to promote substantial justice where matters of life, liberty, honor or property, among other
instances, are at stake.
The present case clearly involves the honor of a police officer who has rendered years of service to the
country.
In addition, it is also understandable why respondent immediately resorted to the remedy of certiorari instead
of pursuing his motion for reconsideration of the PNP Chiefs decision as an appeal before the National
Appellate Board (NAB). It was quite easy to get confused as to which body had jurisdiction over his case. The
complaint filed against respondent could fall under both Sections 41 and 42 of Republic Act (R.A.) No. 6975 or
the Department of the Interior and Local Government Act of 1990. Section 41 states that citizens' complaints
should be brought before the People's Law Enforcement Board (PLEB), while Section 42 states that it is the
PNP Chief who has authority to immediately remove or dismiss a PNP member who is guilty of conduct
unbecoming a police officer.
It was only in Quiambao v. Court of Appeals,7 promulgated in 2005 or after respondent had already filed the
petition for certiorari with the trial court, when the Court resolved the issue of which body has jurisdiction
over cases that fall under both Sections 41 and 42 of R.A. No. 6975. The Court held that the PLEB and the
PNP Chief and regional directors have concurrent jurisdiction over administrative cases filed against
members of the PNP which may warrant dismissal from service, but once a complaint is filed with the PNP
Chief or regional directors, said authorities shall acquire exclusive original jurisdiction over the case.
With the foregoing peculiar circumstances in this case, respondent should not be deprived of the opportunity
to fully ventilate his arguments against the factual findings of the PNP Chief. He may file an appeal before the
NAB, pursuant to Section 45, R.A. No. 6925. It is a settled jurisprudence that in administrative proceedings,
technical rules of procedure and evidence are not strictly applied. 8 In Land Bank of the Philippines v.
Celada,9 the Court stressed thus:
After all, technical rules of procedure are not ends in themselves but are primarily devised to help
in the proper and expedient dispensation of justice. In appropriate cases, therefore, the rules may
be construed liberally in order to meet and advance the cause of substantial justice. 10
Thus, the opportunity to pursue an appeal before the NAB should be deemed available to respondent in the
higher interest of substantial justice.
WHEREFORE, respondent's Motion for Reconsideration is partly GRANTED. The Decision of the Court dated
March 6, 2007 is MODIFIED such that respondent is hereby allowed to file his appeal with the National
Appellate Board within ten (10) days from finality of herein Resolution.
SO ORDERED.
MAJOR GENERAL

June 22, 2005

x ------------------------------------------------------------------ x

DECISION

TINGA, J.:

Petitioner Major General Carlos F. Garcia was the Deputy Chief of Staff for Comptrollership, J6, of the
Armed Forces of the Philippines. Petitioner filed this Petition for certiorari and prohibition under Rule 65 to
annul and set aside public respondent Sandiganbayans Resolution[1]dated 29 October 2004 and Writ of
Preliminary Attachment[2] dated 2 November 2004, and to enjoin public respondents Sandiganbayan and
Office of the Ombudsman from further proceeding with any action relating to the enforcement of the assailed
issuances.

On 27 September 2004, Atty. Maria Olivia Elena A. Roxas, Graft Investigation and Prosecution Officer II
of the Field Investigation Office of the Office of the Ombudsman, after due investigation, filed a complaint
against petitioner with public respondent Office of the Ombudsman, for violation of Sec. 8, in relation to Sec.
11 of Republic Act (R.A.) No. 6713, [3] violation of Art. 183 of the Revised Penal Code, and violation of Section
52 (A)(1), (3) and (20) of the Civil Service Law. Based on this complaint, a case for Violations of R.A. No.
1379,[4] Art. 183 of the Revised Penal Code, and Sec. 8 in relation to Sec. 11 of R.A. No. 6713, docketed as
Case No. OMB-P-C-04-1132-I, was filed against petitioner.[5] Petitioners wife Clarita Depakakibo Garcia, and
their three sons, Ian Carl, Juan Paolo and Timothy Mark, all surnamed Garcia, were impleaded in the
complaint for violation of R.A. No. 1379 insofar as they acted as conspirators, conduits, dummies and fronts of
petitioner in receiving, accumulating, using and disposing of his ill-gotten wealth.

On the same day, 27 October 2004, the Republic of the Philippines, acting through public respondent
Office of the Ombudsman, filed before the Sandiganbayan, a Petition with Verified Urgent Ex Parte Application
for the Issuance of a Writ of Preliminary Attachment [6] against petitioner, his wife, and three sons, seeking the
forfeiture of unlawfully acquired properties under Sec. 2 of R.A. No. 1379, as amended. The petition was
docketed as Civil Case No. 0193, entitled Republic of the Philippines vs. Maj. Gen. Carlos F. Garcia, et al. It
was alleged that the Office of the Ombudsman, after conducting an inquiry similar to a preliminary
investigation in criminal cases, has determined that a prima facie case exists against Maj. Gen. Garcia and the
other respondents therein who hold such properties for, with, or on behalf of, Maj. Gen. Garcia, since during
his incumbency as a soldier and public officer he acquired huge amounts of money and properties manifestly
out of proportion to his salary as such public officer and his other lawful income, if any.[7]

G.R. No. 165835

CARLOS F. GARCIA,
Petitioner
SANDIGANBAYAN and

AZCUNA,

the OFFICE OF THE

TINGA,

OMBUDSMAN,

CHICO-NAZARIO, and

Respondents.

Promulgated:

GARCIA, JJ.

Acting on the Republics prayer for issuance of a writ of preliminary attachment, the Sandiganbayan
issued the questioned Resolutiongranting the relief prayed for. The corresponding writ of preliminary
attachment was subsequently issued on 2 November 2004 upon the filing of a bond by the Republic. On 17
November 2004, petitioner (as respondent a quo) filed a Motion to Dismiss[8] in Civil Case No. 0193 on the
ground of lack of jurisdiction of the Sandiganbayan over forfeiture proceedings under R.A. No. 1379. On even
date, petitioner filed the present Petition, raising the same issue of lack jurisdiction on the part of the
Sandiganbayan.
Petitioner argues in this Petition that the Sandiganbayan is without jurisdiction over the civil
action for forfeiture of unlawfully acquired properties under R.A. No. 1379, maintaining that such jurisdiction
actually resides in the Regional Trial Courts as provided under Sec. 2 [9] of the law, and that the jurisdiction of

the Sandiganbayan in civil actions pertains only to separate actions for recovery of unlawfully acquired
property against President Marcos, his family, and cronies as can be gleaned from Sec. 4 of Presidential
Decree (P.D.) No. 1606,[10] as amended, and Executive Orders (E.O.) Nos. 14 [11] and 14-A.[12]

Theorizing that the Sandiganbayan, under P.D. No. 1606 or the law creating it, was intended principally
as a criminal court, with no jurisdiction over separate civil actions, petitioner points to President Corazon C.
Aquinos issuances after the EDSA Revolution, namely: (1) E.O. No. 1 creating the Presidential Commission
on Good Government (PCGG) for the recovery of ill-gotten wealth amassed by President Ferdinand E.
Marcos, his family and cronies, (2) E.O. No. 14 which amended P.D. No. 1606 and R.A. No. 1379 by
transferring to the Sandiganbayan jurisdiction over civil actions filed against President Marcos, his family and
cronies based on R.A. No. 1379, the Civil Code and other existing laws, and (3) E.O. No. 14-A whch further
amended E.O. No. 14, P.D. No. 1606 and R.A. No. 1379 by providing that the civil action under R.A. No. 1379
which may be filed against President Marcos, his family and cronies, may proceed independently of the
criminal action.

(1) Officials of the executive branch occupying the positions of

regional director and higher, otherwise classified as Grade 27 and higher of
the Compensation and Position Classification Act of 1989 (Republic Act No.
6758), specifically including:

(d) Philippine army and air force colonels, naval captains, and
all officers of higher ranks;
As petitioner falls squarely under the category of public positions covered by the
aforestated law, the petition for forfeiture should be within the jurisdiction of the Sandiganbayan.

Petitioner gathers from the presidential issuances that the Sandiganbayan has been granted
jurisdiction only over the separate civil actions filed against President Marcos, his family and cronies,
regardless of whether these civil actions were for recovery of unlawfully acquired property under R.A. No.
1379 or for restitution, reparation of damages or indemnification for consequential damages or other civil
actions under the Civil Code or other existing laws. According to petitioner, nowhere in the amendments to
P.D. No. 1606 and R.A. No. 1379 does it provide that the Sandiganbayan has been vested jurisdiction over
separate civil actions other than those filed against President Marcos, his family and cronies. [13] Hence, the
Sandiganbayan has no jurisdiction over any separate civil action against him, even if such separate civil action
is for recovery of unlawfully acquired property under R.A. No. 1379.

Petitioner further contends that in any event, the petition for forfeiture filed against him is fatally defective
for failing to comply with the jurisdictional requirements under Sec. 2, R.A. No. 1379, [14] namely: (a) an inquiry
similar to a preliminary investigation conducted by the prosecution arm of the government; (b) a certification to
the Solicitor General that there is reasonable ground to believe that there has been violation of the said law
and that respondent is guilty thereof; and (c) an action filed by the Solicitor General on behalf of the Republic
of the Philippines.[15] He argues that only informations for perjury were filed and there has been no information
filed against him for violation of R.A. No. 1379. Consequently, he maintains, it is impossible for the Office of
the Ombudsman to certify that there is reasonable ground to believe that a violation of the said law had been
committed and that he is guilty thereof. The petition is also supposedly bereft of the required certification
which should be made by the investigating City or Provincial Fiscal (now Prosecutor) to the Solicitor General.
Furthermore, he opines that it should have been the Office of the Solicitor General which filed the petition and
not the Office of the Ombudsman as in this case. The petition being fatally defective, the same should have
been dismissed, petitioner concludes.

In their Comment,[16] respondents submit the contrary, noting that the issues raised by petitioner are not
novel as these have been settled in Republic vs. Sandiganbayan[17] which categorically ruled that there is no
issue that jurisdiction over violations of [R.A.] Nos. 3019 and 1379 now rests with the Sandiganbayan. [18]
Respondents argue that under the Constitution [19] and prevailing statutes, the Sandiganbayan is vested with
authority and jurisdiction over the petition for forfeiture under R.A. No. 1379 filed against petitioner.
Respondents point to Sec. 4.a (1) (d) of P.D. 1606, as amended, as the prevailing law on the jurisdiction of
the Sandiganbayan, thus:

Sec. 4. Jurisdiction.The Sandiganbayan shall exercise exclusive original

jurisdiction in all cases involving:

a.
Violations of Republic Act No. 3019, as amended, otherwise
known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter
II, Section 2, Title VII, Book II of the Revised Penal Code, where one or more of the
accused are officials occupying the following positions in the government, whether in a
permanent, acting or interim capacity, at the time of the commission of the offense:

Respondents also brush off as inconsequential petitioners argument that the petition for forfeiture is
civil in nature and the Sandiganbayan, having allegedly no jurisdiction over civil actions, therefore has no
jurisdiction over the petition, since the same P.D. No. 1606 encompasses all cases involving violations of R.A.
No. 3019, irrespective of whether these cases are civil or criminal in nature. The petition for forfeiture should
not be confused with the cases initiated and prosecuted by the PCGG pursuant to E.O. Nos. 14 and 14-A, as
these are dealt with under a separate subparagraph of P.D. No. 1606, as amended, in particular Sec. 4.c
thereof.[20] Further, respondents stress that E.O. Nos. 14 and 14-A exclusively apply to actions for recovery of
unlawfully acquired property against President Marcos, his family, and cronies. It would also not be accurate
to refer to a petition for forfeiture as a civil case, since it has been held that petitions for forfeiture are
deemed criminal or penal and that it is only the proceeding for its prosecution which is civil in nature. [21]

The Office of the Ombudsman filed a separate Comment,[22] likewise relying on Republic v.
Sandiganbayan to argue that the Sandiganbayan has jurisdiction over the petition for forfeiture filed against
petitioner. The Ombudsman explains that the grant to the Sandiganbayan of jurisdiction over violations of R.A.
No. 1379 did not change even under the amendments of R.A. No. 7975 [23] and R.A. No. 8294 [24], although it
came to be limited to cases involving high-ranking public officials as enumerated therein, including Philippine
army and air force colonels, naval captains, and all other officers of higher rank, to which petitioner belongs. [25]

In arguing that it has authority to investigate and initiate forfeiture proceedings against petitioner,
the Office of the Ombudsman refers to both the Constitution [26] and R.A. No. 6770.[27] The constitutional power
of investigation of the Office of the Ombudsman is plenary and unqualified; its power to investigate any act of
a public official or employee which appears to be illegal, unjust, improper or inefficient covers the unlawful
acquisition of wealth by public officials as defined under R.A. No. 1379. Furthermore, Sec. 15 (11)[28] of R.A.
No. 6770 expressly empowers the Ombudsman to investigate and prosecute such cases of unlawful
acquisition of wealth. This authority of the Ombudsman has been affirmed also in Republic vs.
Sandiganbayan.[29]

The Office of the Ombudsman then refutes petitioners allegation that the petition for forfeiture filed
against him failed to comply with the procedural and formal requirements under the law. It asserts that all the
requirements of R.A. No. 1379 have been strictly complied with. An inquiry similar to a preliminary
investigation was conducted by a Prosecution Officer of the Office of the Ombudsman. The participation of the
Office of the Solicitor General, claimed by petitioner to be necessary, is actually no longer required since the
Office of the Ombudsman is endowed with the authority to investigate and prosecute the case as discussed
above.[30]

In addition, the Office of the Ombudsman alleges that the present Petition should be dismissed for blatant
forum-shopping. Even as petitioner had filed a Motion to Dismiss as regards the petition for forfeiture
(docketed as Civil Case No. 0193) before the Sandiganbayan on the ground of the Sandiganbayans alleged

lack of jurisdiction, he filed the instant Petition raising exactly the same issue, even though the Motion to
Dismiss in Civil Case No. 0193 is still pending resolution. Worse, it appears that the Motion to Dismiss and
the instant Petition were filed on the same day, 17 November 2004.

Petitioner refutes these arguments in his Reply[31] and enunciates that the Sandiganbayans
criminal jurisdiction is separate and distinct from its civil jurisdiction, and that the Sandiganbayans jurisdiction
over forfeiture cases had been removed without subsequent amendments expressly restoring such civil
jurisdiction. His thesis is that R.A. No. 1379 is a special law which is primarily civil and remedial in nature, the
clear intent of which is to separate the prima facie determination in forfeiture proceedings from the litigation of
the civil action. This intent is further demonstrated by Sec. 2 of R.A. No. 1379 which grants the authority to
make an inquiry similar to a preliminary investigation being done by the City or Provincial Fiscal, and the
authority to file a petition for forfeiture to the Solicitor General.

Petitioner also points out in his Reply[32] to the Comment of the Office of the Ombudsman, that the use of
the phrase violations of [R.A.] Nos. 3019 and 1379 in P.D. No. 1606, as amended, implies jurisdiction over
cases which are principally criminal or penal in nature because the concept of violation of certain laws
necessarily carries with it the concept of imposition of penalties for such violation. Hence, when reference was
made to violations of [R.A.] Nos. 3019 and 1379, the only jurisdiction that can supposedly be implied is
criminal jurisdiction, not civil jurisdiction, thereby highlighting respondent Sandiganbayans lack of jurisdiction
over the civil case for forfeiture of ill-gotten wealth. Of course, petitioner does not rule out cases where the
crime carries with it the corresponding civil liability such that when the criminal action is instituted, the civil
action for enforcement of the civil liability is impliedly instituted with it, and the court having jurisdiction over the
criminal action also acquires jurisdiction over the ancillary civil action. However, petitioner argues that the
action for forfeiture subject of this case is not the ancillary civil action impliedly instituted with the criminal
action. Rather, the petition for forfeiture is an independent civil action over which the Sandiganbayan has no
jurisdiction. Petitioner points to P.D. No. 1606, as amended, which treats of independent civil actions only in
the last paragraph of Sec. 4 thereof:

Any provisions of law or Rules of Court to the contrary notwithstanding, the

criminal action and the corresponding civil action for the recovery of civil liability shall at
all times be simultaneously instituted with, and jointly determined in, the same
proceeding by the Sandiganbayan or the appropriate courts, the filing of the criminal
action being deemed to necessarily carry with it the filing of the civil action, and no right
to reserve the filing of such civil action separately from the criminal action shall be
recognized: Provided, however, That where the civil action had heretofore been filed
separately but judgment therein has not yet been rendered, and the criminal case is
hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall
be transferred to the Sandiganbayan or the appropriate court, as the case may be, for
consolidation and joint determination with the criminal action, otherwise the separate
civil action shall be deemed abandoned.

Petitioner however did not raise any argument to refute the charge of forum-shopping.

The issues for resolution are: (a) whether the Sandiganbayan has jurisdiction over petitions for forfeiture
under R.A. No. 1379; (b) whether the Office of the Ombudsman has the authority to investigate, initiate and
prosecute such petitions for forfeiture; and (c) whether petitioner is guilty of forum-shopping.

1379. Originally, it was the Solicitor General who was authorized to initiate forfeiture proceedings before the
then Court of First Instance of the city or province where the public officer or employee resides or holds office,
pursuant to Sec. 2 of R.A. No. 1379. Upon the creation of the Sandiganbayan pursuant to P.D. No. 1486,
[34]
original and exclusive jurisdiction over such violations was vested in the said court. [35] P.D. No. 1606[36] was
later issued expressly repealing P.D. No. 1486, as well as modifying the jurisdiction of the Sandiganbayan by
removing its jurisdiction over civil actions brought in connection with crimes within the exclusive jurisdiction of
said court.[37] Such civil actions removed from the jurisdiction of the Sandigabayan include those for restitution
or reparation of damages, recovery of instruments and effects of the crime, civil actions under Articles 32 and
34 of the Civil Code, and forfeiture proceedings provided for under R.A. No. 1379. [38]

Subsequently, Batas Pambansa Blg. 129 [39] abolished the concurrent jurisdiction of the
Sandiganbayan and the regular courts and expanded the exclusive original jurisdiction of the Sandiganbayan
over the offenses enumerated in Sec. 4 of P.D. No. 1606 to embrace all such offenses irrespective of the
imposable penalty. Since this change resulted in the proliferation of the filing of cases before the
Sandiganbayan where the offense charged is punishable by a penalty not higher than prision correccional or
its equivalent, and such cases not being of a serious nature, P.D. No. 1606 was again amended by P.D. No.
1860[40] and eventually by P.D. No. 1861.[41]

On the foregoing premises alone, the Court in Republic v. Sandiganbayan, deduced that jurisdiction over
violations of R.A. No. 3019 and 1379 is lodged with the Sandiganbayan. [42] It could not have taken into
consideration R.A. No. 7975 [43] and R.A. No. 8249[44] since both statutes which also amended the jurisdiction of
the Sandiganbayan were not yet enacted at the time. The subsequent enactments only serve to buttress the
conclusion that the Sandiganbayan indeed has jurisdiction over violations of R.A. No. 1379.

Under R.A. No. 8249, the Sandiganbayan is vested with exclusive original jurisdiction in all cases
involving violations of R.A. No. 3019, R.A. No. 1379, and Chapter II, Sec. 2, Title VII, Book II of the Revised
Penal Code, where one or more of the accused are officials occupying the following positions whether in a
permanent, acting or interim capacity, at the time of the commission of the offense: (1) Officials of the
executive branch occupying the positions of regional director and higher, otherwise classified as Grade '27'
and higher, of the Compensation and Position Classification Act of 989 (R.A. No. 6758), specifically including:
(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and provincial
treasurers, assessors, engineers, and other city department heads; (b) City mayor, vice-mayors, members of
the sangguniang panlungsod, city treasurers, assessors, engineers, and other city department heads; (c)
Officials of the diplomatic service occupying the position of consul and higher; (d) Philippine army and air force
colonels, naval captains, and all officers of higher rank; (e) Officers of the Philippine National Police while
occupying the position of provincial director and those holding the rank of senior superintended or higher; (f)
City and provincial prosecutors and their assistants, and officials and prosecutors in the Office of the
Ombudsman and special prosecutor; (g) Presidents, directors or trustees, or managers of government-owned
or controlled corporations, state universities or educational institutions or foundations; (2)
Members of
Congress and officials thereof classified as Grade '27' and up under the Compensation and Position
Classification Act of 1989; (3) Members of the judiciary without prejudice to the provisions of the Constitution;
(4) Chairmen and members of Constitutional Commission, without prejudice to the provisions of the
Constitution; and (5) All other national and local officials classified as Grade '27' and higher under the
Compensation and Position Classification Act of 1989. [45]

In the face of the prevailing jurisprudence and the present state of statutory law on the jurisdiction of the
Sandiganbayan, petitioners argumentthat the Sandiganbayan has no jurisdiction over the petition for
forfeiture it being civil in nature and the Sandiganbayan allegedly having no jurisdiction over civil actions
collapses completely.

The petition is patently without merit. It should be dismissed.

The seminal decision of Republic v. Sandiganbayan[33] squarely rules on the issues raised by petitioner
concerning the jurisdiction of the Sandiganbayan and the authority of the Office of the Ombudsman. After
reviewing the legislative history of the Sandiganbayan and the Office of the Ombudsman, the Court therein
resolved the question of jurisdiction by the Sandiganbayan over violations of R.A. No. 3019 and R.A. No.

The civil nature of an action for forfeiture was first recognized in Republic v. Sandiganbayan, thus:
[T]he rule is settled that forfeiture proceedings are actions in rem and, therefore, civil in nature.[46]
Then, Almeda, Sr.
v. Perez,[47] followed, holding that the proceedings under R.A. No. 1379 do not terminate in the imposition of a
penalty but merely in the forfeiture of the properties illegally acquired in favor of the State. It noted that the

procedure outlined in the law leading to forfeiture is that provided for in a civil action. [48]

However, the Court has had occasion to rule that forfeiture of illegally acquired property partakes
the nature of a penalty. In Cabal v. Kapunan, Jr.,[49] the Court cited voluminous authorities in support of its
declaration of the criminal or penal nature of forfeiture proceedings,viz:

In a strict signification, a forfeiture is a divestiture of property without

compensation, in consequence of a default or an offense, and the term is used in such
a sense in this article. A forfeiture, as thus defined, is imposed by way of punishment
not by the mere convention of the parties, but by the lawmaking power, to insure a
prescribed course of conduct. It is a method deemed necessary by the legislature to
restrain the commission of an offense and to aid in the prevention of such an offense.
The effect of such a forfeiture is to transfer the title to the specific thing from the owner
to the sovereign power. (23 Am. Jur. 599)

"In Black's Law Dictionary a 'forfeiture' is defined to be 'the incurring of a

liability to pay a definite sum of money as the consequence of violating the provisions
of some statute or refusal to comply with some requirement of law.' It may be said to be
a penalty imposed for misconduct or breach of duty.'" (Com. vs. French, 114 S.W. 255.)
.

"Generally speaking, informations for the forfeiture of goods that seek no

judgment of fine or imprisonment against any person are deemed to be civil
proceedings in rem. Such proceedings are criminal in nature to the extent that where
the person using the res illegally is the owner of rightful possessor of it the forfeiture
proceeding is in the nature of a punishment. They have been held to be so far in the
nature of

bearing on the substantial rights of respondents, particularly their constitutional right against self-incrimination.
[52]
This was reaffirmed and reiterated in Republic v. Agoncillo[53] and Katigbak v. Solicitor General.[54]

The Sandiganbayan is vested with jurisdiction over violations of R.A. No. 1379, entitled An Act
Declaring Forfeiture In Favor of the State Any Property Found to Have Been Unlawfully Acquired By Any
Public Officer or Employee and Providing For the Proceedings Therefor. What acts would constitute a
violation of such a law? A reading of R.A. No. 1379 establishes that it does not enumerate any prohibited acts
the commission of which would necessitate the imposition of a penalty. Instead, it provides the procedure for
forfeiture to be followed in case a public officer or employee has acquired during his incumbency an amount of
property manifestly out of proportion to his salary as such public officer or employee and to his lawful income
and income from legitimately acquired property. [55] Section 12[56] of the law provides a penalty but it is only
imposed upon the public officer or employee who transfers or conveys the unlawfully acquired property; it
does not penalize the officer or employee for making the unlawful acquisition. In effect, as observed
in Almeda, Sr. v. Perez, it imposes the penalty of forfeiture of the properties unlawfully acquired upon the
respondent public officer or employee. [57]

It is logically congruent, therefore, that violations of R.A. No. 1379 are placed under the jurisdiction of the
Sandiganbayan, even though the proceeding is civil in nature, since the forfeiture of the illegally acquired
property amounts to a penalty. The soundness of this reasoning becomes even more obvious when we
consider that the respondent in such forfeiture proceedings is a public officer or employee and the violation of
R.A. No. 1379 was committed during the respondent officer or employees incumbency and in relation to his
office. This is in line with the purpose behind the creation of the Sandiganbayan as an anti-graft courtto
address the urgent problem of dishonesty in public service. [58]

Following the same analysis, petitioner should therefore abandon his erroneous belief that the
Sandiganbayan has jurisdiction only over petitions for forfeiture filed against President Marcos, his family and
cronies.

We come then to the question of authority of

the Office of the Ombudsman to investigate, file
and prosecute petitions for forfeiture under R.A. No. 1379. This was the main issue resolved in Republic v.
[59]
Sandiganbayan.
criminal proceedings that a general verdict on several counts in an information is
upheld if one count is good. According to the authorities such proceedings, where the
owner of the property appears, are so far considered as quasicriminal proceedings as
to relieve the owner from being a witness against himself and to prevent the
compulsory production of his books and papers. . . ." (23 Am. Jur. 612)
.

Proceedings for forfeitures are generally considered to be civil and in the

nature of proceedings in rem. The statute providing that no judgment or other
proceedings in civil causes shall be arrested or reversed for any defect or want of form
is applicable to them. In some aspects, however, suits for penalties and forfeitures are
of quasi-criminal nature and within the reason of criminal proceedings for all the
purposes of . . . that portion of the Fifth Amendment which declares that no person
shall be compelled in any criminal case to be a witness against himself. The
proceeding is one against the owner, as well as against the goods; for it is his breach
of the laws which has to be proved to establish the forfeiture and his property is sought
to be forfeited." (15 Am. Jur., Sec. 104, p. 368)[50]

Cabal v. Kapunan modified the earlier ruling in Almeda, Sr. v. Perez.[51] The Court in Cabal held that the
doctrine laid down in Almedarefers to the purely procedural aspect of the forfeiture proceedings and has no

Under Sec. 2 of R.A. No. 1379, it was the Solicitor General who was authorized to initiate forfeiture
proceedings before the then Courts of First Instance. P.D. No. Decree No. 1486 was later issued on 11 June
1978 vesting the Sandiganbayan with jurisdiction over R.A. No. 1379 forfeiture proceedings. Sec. 12 of P.D.
No. 1486 gave the Chief Special Prosecutor the authority to file and prosecute forfeiture cases. This may be
taken as an implied repeal by P.D. No. 1486 of the jurisdiction of the former Courts of First Instance and the
authority of the Solicitor General to file a petition for forfeiture under Sec. 2 of R.A. No. 1379 by transferring
said jurisdiction and authority to the Sandiganbayan and the Chief Special Prosecutor, respectively. [60] An
implied repeal is one which takes place when a new law contains some provisions which are contrary to, but
do not expressly repeal those of a former law. [61] As a rule, repeals by implication are not favored and will not
be so declared unless it be manifest that the legislature so intended. Before such repeal is deemed to exist, it
must be shown that the statutes or statutory provisions deal with the same subject matter and that the latter be
inconsistent with the former. The language used in the latter statute must be such as to render it irreconcilable
with what had been formerly enacted. An inconsistency that falls short of that standard does not suffice. What
is needed is a manifest indication of the legislative purpose to repeal. [62]

P.D. No. 1486 contains a repealing clause which provides that [A]ny provision of law, order, rule or
regulation inconsistent with the provisions of this Decree is hereby repealed or modified accordingly. [63] This
is not an express repealing clause because it fails to identify or designate the statutes that are intended to be
repealed. Rather, it is a clause which predicates the intended repeal upon the condition that a substantial
conflict must be found in existing and prior laws.[64]

The conflict between P.D. No. 1486 and R.A. No. 1379 refers to the jurisdiction over the forfeiture
proceeding and the authority to file the petition for forfeiture. As P.D. No. 1486 grants exclusive jurisdiction
and authority to the Sandiganbayan and the Chief Special Prosecutor, the then Courts of First Instance and
Solicitor General cannot exercise concurrent jurisdiction or authority over such cases. Hence, P.D. No. 1486
and Sec. 2, R.A. No. 1379 are inconsistent with each other and the former should be deemed to have
repealed the latter.

On 11 June 1978, the same day that P.D. No. 1486 was enacted, P.D. No. 1487 [65] creating the Office of
the Ombudsman (then known as the Tanodbayan) was passed. The Tanodbayan initially had no authority to
prosecute cases falling within the jurisdiction of the Sandiganbayan as provided in Sec. 4 of P.D. No. 1486,
such jurisdiction being vested in the Chief Special Prosecutor as earlier mentioned.

On 10 December 1978, P.D. No. 1606 was enacted expressly repealing P.D. No. 1486. Issued on the
same date was P.D. No. 1607 [66]which amended the powers of the Tanodbayan to investigate administrative
complaints[67] and created the Office of the Chief Special Prosecutor.[68] P.D. No. 1607 provided said Office of
the Chief Special Prosecutor with exclusive authority to conduct preliminary investigation of all cases
cognizable by the Sandiganbayan, file informations therefor, and direct and control the prosecution of said
cases.[69] P.D. No. 1607 also removed from the Chief Special Prosecutor the authority to file actions for
forfeiture under R.A. No. 1379.[70]
The rule is that when a law which expressly repeals a prior law is itself repealed, the law first
repealed shall not be thereby revived unless expressly so provided. From this it may fairly be inferred that the
old rule continues in force where a law which repeals a prior law, not expressly but by implication, is itself
repealed; and that in such cases the repeal of the repealing law revives the prior law, unless the language of
the repealing statute provides otherwise. [71] Hence, the repeal of P.D. No. 1486 by P.D. No. 1606 necessarily
revived the authority of the Solicitor General to file a petition for forfeiture under R.A. No. 1379, but not the
jurisdiction of the Courts of First Instance over the case nor the authority of the Provincial or City Fiscals (now
Prosecutors) to conduct the preliminary investigation therefore, since said powers at that time remained in the
Sandiganbayan and the Chief Special Prosecutor.[72]

The Tanodbayans authority was further expanded by P.D. No. 1630 [73] issued on 18 July 1990. Among
other things, the Tanodbayan was given the exclusive authority to conduct preliminary investigation of all
cases cognizable by the Sandiganbayan, to file informations therefore and to direct and control the
prosecution of said cases.[74] The power to conduct the necessary investigation and to file and prosecute the
corresponding criminal and administrative cases before the Sandiganbayan or the proper court or
administrative agency against any public personnel who has acted in a manner warranting criminal and
disciplinary action or proceedings was also transferred from the Chief Special Prosecutor to the Tanodbayan.

(11) Investigate and initiate the proper action for the recovery of ill-gotten
and/or unexplained wealth amassed after 25 February 1986 and the prosecution of the
parties involved therein.[80]

Ostensibly, it is the Ombudsman who should file the petition for forfeiture under R.A. No. 1379.
However, the Ombudsmans exercise of the correlative powers to investigate and initiate the proper action for
recovery of ill-gotten and/or unexplained wealth is restricted only to cases for the recovery of ill-gotten and/or
unexplained wealth amassed after 25 February 1986.[81] As regards such wealth accumulated on or before
said date, the Ombudsman is without authority to commence before the Sandiganbayan such forfeiture action
since the authority to file forfeiture proceedings on or before 25 February 1986 belongs to the Solicitor
Generalalthough he has the authority to investigate such cases for forfeiture even before 25 February 1986,
pursuant to the Ombudsmans general investigatory power under Sec. 15 (1) of R.A. No. 6770.[82]

It is obvious then that respondent Office of the Ombudsman acted well within its authority in
conducting the investigation of petitioners illegally acquired assets and in filing the petition for forfeiture
against him. The contention that the procedural requirements under Sec. 2 of R.A. No. 1379 were not
complied with no longer deserve consideration in view of the foregoing discussion.

Now to the charge that petitioner is guilty of forum-shopping. Forum-shopping is manifest

whenever a party repetitively avail[s] of several judicial remedies in different courts, simultaneously or
successively, all substantially founded on the same transactions and the same essential facts and
circumstances, and all raising substantially the same issues either pending in, or already resolved adversely
by, some other court.[83] It has also been defined as an act of a party against whom an adverse judgment has
been rendered in one forum of seeking and possibly getting a favorable opinion in another forum, other than
by appeal or the special civil action of certiorari, or the institution of two or more actions or proceedings
grounded on the same cause on the supposition that one or the other court would make a favorable
disposition.[84] Considered a pernicious evil, it adversely affects the efficient administration of justice since it
clogs the court dockets, unduly burdens the financial and human resources of the judiciary, and trifles with and
mocks judicial processes.[85] Willful and deliberate forum-shopping is a ground for summary dismissal of the
complaint or initiatory pleading with prejudice and constitutes direct contempt of court, as well as a cause for
administrative sanctions, which may both be resolved and imposed in the same case where the forumshopping is found.[86]

There is ample reason to hold that petitioner is guilty of forum-shopping. The present petition was filed
accompanied by the requisiteVerification and Certification Against Forum Shopping [87] in which petitioner made
the following representation:

[75]

Thereafter, P.D. No. 1606 was amended by P.D. Nos. 1860 and 1861 [76] which granted the Tanodbayan
the same authority. The present Constitution was subsequently ratified and then the Tanodbayan became
known as the Office of the Special Prosecutor which continued to exercise its powers except those conferred
on the Office of the Ombudsman created under the Constitution. [77] The Office of the Ombudsman was
officially created under R.A. No. 6770. [78]

At present, the powers of the Ombudsman, as defined by R.A. No. 6770, corollary to Sec. 13, Art. XI of
the Constitution, include the authority, among others, to:

(1) Investigate and prosecute on its own or on complaint by any person,

any act or omission of any public officer or employee, office or agency, when such act
or omission appears to be illegal, unjust, improper or inefficient. It has primary
jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of this
primary jurisdiction, may take over, at any stage, from any investigatory agency of
Government, the investigation of such cases; [79]

3.] As Petitioner, I have not heretofore commenced any other action or proceeding in
the Supreme Court, the Court of Appeals, or any other tribunal or agency,
involving the same issues as that in the above-captioned case.

4.] To the best of my knowledge, no such action or proceeding is pending in the

Supreme Court, the Court of Appeals, or any other tribunal or agency.

5.] If I should hereafter learn that such proceeding has been commenced or is pending
before the Supreme Court, the Court of Appeals, or any other tribunal or agency,

I undertake to report that fact to this Honorable Court within five (5) days from
knowledge thereof.

BRION, J.:
We resolve the petition for review on certiorari,1 filed by Franklin Alejanctro (petitioneJ), assailing the February
21, 2006 decision2 and the June 15, 2006 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 88544.
The CA dismissed for prematurity the petitioner's appeal on the August 20, 2004 decision 4 of the Office of the
Deputy Ombudsman in OMB-C-A-03-0310-I finding him administratively liable for grave misconduct.

However, petitioner failed to inform the Court that he had filed a Motion to Dismiss[88] in relation to
the petition for forfeiture before the Sandiganbayan. The existence of this motion was only brought to the
attention of this Court by respondent Office of the Ombudsman in its Comment. A scrutiny of the Motion to
Dismiss reveals that petitioner raised substantially the same issues and prayed for the same reliefs therein as
it has in the instant petition. In fact, the Arguments and Discussion [89] in the Petition of petitioners thesis that
the Sandiganbayan has no jurisdiction over separate civil actions for forfeiture of unlawfully acquired
properties appears to be wholly lifted from the Motion to Dismiss. The only difference between the two is that
in the Petition, petitioner raises the ground of failure of the petition for forfeiture to comply with the procedural
requirements
of
R.A.
No.
1379,
and
petitioner
prays
for
the
annulment
of
the
Sandiganbayans Resolution dated 29 October 2004 andWrit of Preliminary Attachment dated 2 November
2004. Nevertheless, these differences are only superficial. Both Petition and Motion to Dismisshave the same
intent of dismissing the case for forfeiture filed against petitioner, his wife and their sons. It is undeniable that
petitioner had failed to fulfill his undertaking. This is incontestably forum-shopping which is reason enough to
dismiss the petition outright, without prejudice to the taking of appropriate action against the counsel and party
concerned.[90] The brazenness of this attempt at forum-shopping is even demonstrated by the fact that both
the Petition and Motion to Dismiss were filed on the same day, 17 November 2004. Petitioner should have
waited for the resolution of his Motion to Dismiss before resorting to the petition at hand.

Petitioners counsel of record, Atty. Constantino B. De Jesus, needs to be reminded that his
primary duty is to assist the courts in the administration of justice. As an officer of the court, his duties to the
court are more significant and important than his obligations to his clients. Any conduct which tends to delay,
impede or obstruct the administration thereof contravenes his oath of office. [91] Atty. De Jesus failed to accord
due regard, as he must, the tenets of the legal profession and the mission of our courts of justice. For this, he
should be penalized. Penalties imposed upon lawyers who engaged in forum-shopping range from severe
censure to suspension from the practice of law.[92] In the instant case, we deem the imposition of a fine in the
amount of P20,000.00 to be sufficient to make Atty. De Jesus realize the seriousness of his naked abuse of
the judicial process.

WHEREFORE, in view of the foregoing, the Petition is DISMISSED. Atty. Constantino B. De Jesus is
DECLARED in CONTEMPT of this Court and meted a fine of Twenty Thousand Pesos ( P20,000.00) to be paid
within ten (10) days from the finality of this Decision. Costs against petitioner.

The Factual Antecedents

On May 4, 2000, the Head of the Non-Revenue Water Reduction Department of the Manila Water Services,
Inc. (MWSI) received a report from an Inspectorate and Special Projects team that the Mico Car Wash
(MICO), owned by Alfredo Rap Alejandro, has been illegally opening an MWSI fire hydrant and using it to
operate its car-wash business in Binondo, Manila. 5
On May 10, 2000, the MWSI, in coordination with the Philippine National Police Criminal Investigation and
Detection Group (PNP-CIDG), conducted an anti-water pilferage operation against MICO. 6
During the anti-water pilferage operation, the PNP-CIDG discovered that MICOs car-wash boys indeed had
been illegally getting water from an MWSI fire hydrant. The PNP-CIDG arrested the car-wash boys and
confiscated the containers used in getting water. At this point, the petitioner, Alfredos father and the Barangay
Chairman or punong barangay of Barangay 293, Zone 28, Binondo, Manila, interfered with the PNP-CIDGs
operation by ordering several men to unload the confiscated containers. This intervention caused further
commotion and created an opportunity for the apprehended car-wash boys to escape. 7
On August 5, 2003, the respondent Office of the Ombudsman Fact-Finding and Intelligence Bureau, after
conducting its initial investigation, filed with the Office of the Overall Deputy Ombudsman an administrative
complaint against the petitioner for his blatant refusal to recognize a joint legitimate police activity, and for his
unwarranted intervention.8
In its decision9 dated August 20, 2004, the Office of the Deputy Ombudsman found the petitioner guilty of
grave misconduct and ordered his dismissal from the service. The Deputy Ombudsman ruled that the
petitioner cannot overextend his authority as Barangay Chairman and induce other people to disrespect
proper authorities. The Deputy Ombudsman also added that the petitioner had tolerated the illegal acts of
MICOs car-wash boys.10
The petitioner filed a motion for reconsideration which the Office of the Deputy Ombudsman denied in its
order11of November 2, 2004.

SO ORDERED.
The petitioner appealed to the CA via a petition for review under Rule 43 of the Rules of Court. In its
decision12dated February 21, 2006, the CA dismissed the petition for premature filing. The CA ruled that the
petitioner failed to exhaust proper administrative remedies because he did not appeal the Deputy
Ombudsmans decision to the Ombudsman.
The petitioner moved for the reconsideration of the CA ruling. On June 15, 2006, the CA denied the motion. 13
G.R. No. 173121

April 3, 2013

The Petition

FRANKLlN ALEJANDRO, Petitioner,

vs.
OFFICE OF THE OMBUDSMAN FACT-FINDING AND INTELLIGENCE BUREAU, represented by Atty.
Maria Olivia Elena A. Roxas, Respondent.
DECISION

The petitioner posits that the CA erred in dismissing his petition outright without considering Rule 43 of the
Rules of Court and Administrative Order No. 07 (otherwise known as the Rules of Procedure of the Office of
the Ombudsman),14 on the belief that the filing of a motion for reconsideration of the decision of the Office of
the Overall Deputy Ombudsman can already be considered as an exhaustion of administrative remedies. The
petitioner further argues that the Office of the Ombudsman has no jurisdiction to order his dismissal from the
service since under Republic Act No. (RA) 7160 (otherwise known as the Local Government Code of 1991),
an elective local official may be removed from office only by the order of a proper court. Finally, he posits that
the penalty of dismissal from the service is not warranted under the available facts.

The Office of the Deputy Ombudsman, through the Office of the Solicitor General, pointed out in its
Comment15that the petitioner failed to exhaust administrative remedies since he did not appeal the decision of
the Deputy Ombudsman to the Ombudsman. The Office of the Deputy Ombudsman maintained that under RA
677016 (The Ombudsman Act of 1989), the Office of the Ombudsman has disciplinary authority over all elective
and appointive officials. It also asserted that sufficient evidence exists to justify the petitioners dismissal from
the service.

all other cases where the penalty imposed is not one involving public censure or reprimand, suspension of not
more than one (1) month, or a fine equivalent to one (1) month salary. This post-judgment remedy is merely an
opportunity for the Office of the Deputy Ombudsman, or the Office of the Ombudsman, to correct itself in
certain cases. To our mind, the petitioner has fully exhausted all administrative remedies when he filed his
motion for reconsideration on the decision of the Deputy Ombudsman. There is no further need to review the
case at the administrative level since the Deputy Ombudsman has already acted on the case and he was
acting for and in behalf of the Office of the Ombudsman.

As framed by the parties, the case poses the following issues:

I.
WHETHER THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES REQUIRES A
REQUEST FOR RECONSIDERATION FROM THE OFFICE OF THE DEPUTY OMBUDSMAN TO
THE OMBUDSMAN FOR THE PURPOSE OF A RULE 43 REVIEW.

The Ombudsman has concurrent jurisdiction over administrative cases which are within the
jurisdiction of the regular courts or administrative agencies
The Office of the Ombudsman was created by no less than the Constitution. 18 It is tasked to exercise
disciplinary authority over all elective and appointive officials, save only for impeachable officers. While
Section 21 of The Ombudsman Act19 and the Local Government Code both provide for the procedure to
discipline elective officials, the seeming conflicts between the two laws have been resolved in cases decided
by this Court.20

II.
WHETHER THE OFFICE OF THE OMBUDSMAN HAS JURISDICTION OVER ELECTIVE
OFFICIALS AND HAS THE POWER TO ORDER THEIR DISMISSAL FROM THE SERVICE.

In Hagad v. Gozo-Dadole,21 we pointed out that "there is nothing in the Local Government Code to indicate
that it has repealed, whether expressly or impliedly, the pertinent provisions of the Ombudsman Act. The two
statutes on the specific matter in question are not so inconsistent x x x as to compel us to only uphold one and
strike down the other." The two laws may be reconciled by understanding the primary jurisdiction and
concurrent jurisdiction of the Office of the Ombudsman.

III.
WHETHER PETITIONERS ACT CONSTITUTES GRAVE MISCONDUCT TO WARRANT HIS
DISMISSAL.
The Courts Ruling
We deny the petition for lack of merit.
Preliminary Issues

The Ombudsman has primary jurisdiction to investigate any act or omission of a public officer or employee
who is under the jurisdiction of the Sandiganbayan. RA 6770 provides:
Section 15. Powers, Functions and Duties. The Office of the Ombudsman shall have the following powers,
functions and duties:
(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public
officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or
inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of this
primary jurisdiction, it may take over, at any stage, from any investigatory agency of Government, the
investigation of such cases. [italics supplied; emphasis and underscore ours]

The CA committed no reversible error in affirming the findings and conclusions of the Deputy Ombudsman.
No further need exists to exhaust administrative remedies from the decision of the Deputy
Ombudsman because he was acting in behalf of the Ombudsman
We disagree with the CAs application of the doctrine of exhaustion of administrative remedies which states
that when there is "a procedure for administrative review, x x x appeal, or reconsideration, the courts x x x will
not entertain a case unless the available administrative remedies have been resorted to and the appropriate
authorities have been given an opportunity to act and correct the errors committed in the administrative
forum."17
Section 7, Rule III of Administrative Order No. 07, dated April 10, 1990, provides that:
Section 7. FINALITY OF DECISION. Where the respondent is absolved of the charge and in case of
conviction where the penalty imposed is public censure or reprimand, suspension of not more than one (1)
month, or a fine equivalent to one (1) month salary, the decision shall be final and unappealable. In all other
cases, the decision shall become final after the expiration of ten (10) days from receipt thereof by the
respondent, unless a motion for reconsideration or petition for certiorari shall have been filed by him as
prescribed in Section 27 of RA 6770. [italics supplied; emphasis and underscore ours]
Administrative Order No. 07 did not provide for another appeal from the decision of the Deputy Ombudsman to
the Ombudsman. It simply requires that a motion for reconsideration or a petition for certiorari may be filed in

The Sandiganbayans jurisdiction extends only to public officials occupying positions corresponding to salary
grade 27 and higher.22
Consequently, as we held in Office of the Ombudsman v. Rodriguez, 23 any act or omission of a public officer or
employee occupying a salary grade lower than 27 is within the concurrent jurisdiction of the Ombudsman and
of the regular courts or other investigative agencies.24
In administrative cases involving the concurrent jurisdiction of two or more disciplining authorities, the body
where the complaint is filed first, and which opts to take cognizance of the case, acquires jurisdiction to the
exclusion of other tribunals exercising concurrent jurisdiction. 25 In this case, the petitioner is a Barangay
Chairman, occupying a position corresponding to salary grade 14. 26 Under RA 7160, the sangguniang
panlungsod or sangguniang bayan has disciplinary authority over any elective barangay official, as follows:
Section 61. Form and Filing of Administrative Complaints. A verified complaint against any erring local
elective official shall be prepared as follows:
xxxx
(c) A complaint against any elective barangay official shall be filed before the sangguniang panlungsod or
sangguniang bayan concerned whose decision shall be final and executory. [italics supplied]

Since the complaint against the petitioner was initially filed with the Office of the Ombudsman, the
Ombudsman's exercise of jurisdiction is to the exclusion of the sangguniang bayan whose exercise of
jurisdiction is concurrent.

and properties."38Examined side by side, police authority is superior to the punong barangays authority in a
situation where the maintenance of peace and order has metamorphosed into crime prevention and the arrest
of criminal offenders.

The Ombudsman has the power to impose administrative sanctions

In this case, a criminal act was actually taking place and the situation was already beyond the general
maintenance of peace and order. The police was, at that point, under the obligation to prevent the commission
of a crime and to effect the arrest, as it actually did, of criminal offenders.1wphi1

Section 15 of RA 677027 reveals the manifest intent of the lawmakers to give the Office of the Ombudsman
fulladministrative disciplinary authority. This provision covers the entire range of administrative activities
attendant to administrative adjudication, including, among others, the authority to receive complaints, conduct
investigations, hold hearings in accordance with its rules of procedure, summon witnesses and require the
production of documents, place under preventive suspension public officers and employees pending an
investigation, determine the appropriate penalty imposable on erring public officers or employees as warranted
by the evidence, and, necessarily, impose the corresponding penalty.28
These powers unmistakably grant the Office of the Ombudsman the power to directly impose administrative
sanctions; its power is not merely recommendatory. We held in Office of the Ombudsman v. Apolonio29 that:
It is likewise apparent that under RA 6770, the lawmakers intended to provide the Office of the Ombudsman
with sufficient muscle to ensure that it can effectively carry out its mandate as protector of the people against
inept and corrupt government officers and employees. The Office was granted the power to punish for
contempt in accordance with the Rules of Court. It was given disciplinary authority over all elective and
appointive officials of the government and its subdivisions, instrumentalities and agencies (with the
exception only of impeachable officers, members of Congress and the Judiciary). Also, it can preventively
suspend any officer under its authority pending an investigation when the case so warrants. 30 (italics supplied;
emphasis and underscore ours)
Substantive Issue
The petitioner is liable for grave misconduct
At the outset, we point out that the maintenance of peace and order is a function of both the police and the
Barangay Chairman, but crime prevention is largely a police matter. At the time when the police officers were
hauling the confiscated equipment, they were creating a commotion. As Barangay Chairman, the petitioner
was clearly in the performance of his official duty when he interfered. Under Section 389(b)(3) of RA 7160, the
law provides that a punong barangay must "maintain public order in the barangay and, in pursuance thereof,
assist the city or municipal mayor and the sanggunian members in the performance of their duties and
functions." The PNP-CIDGs anti-water pilferage operation against the car-wash boys was affecting the peace
and order of the community and he was duty-bound to investigate and try to maintain public order. 31
After the petitioner introduced himself and inquired about the operation, the police officers immediately
showed their identifications and explained to him that they were conducting an anti-water pilferage operation.
However, instead of assisting the PNP-CIDG, he actually ordered several bystanders to defy the PNP-CIDGs
whole operation. The petitioners act stirred further commotion that unfortunately led to the escape of the
apprehended car-wash boys.32

From another perspective, the peace and order function of the punong barangay must also be related to his
function of assisting local executive officials (i.e., the city mayor), under Section 389(b), Chapter III of the Local
Government Code.39 Local executive officials have the power to employ and deploy police for the maintenance
of peace and order, the prevention of crimes and the arrest of criminal offenders. 40 Accordingly, in the
maintenance of peace and order, the petitioner is bound, at the very least, to respect the PNP-CIDGs
authority even if he is not in the direct position to give aid. By interfering with a legitimate police operation, he
effectively interfered with this hierarchy of authority.1wphi1 Thus, we are left with no other conclusion other
than to rule that Alejandro is liable for misconduct in the performance of his duties.
Misconduct is considered grave if accompanied by corruption, a clear intent to violate the law, or a flagrant
disregard of established rules, which must all be supported by substantial evidence. 41 If the misconduct does
not involve any of the additional elements to qualify the misconduct as grave, the person charged may only be
held liable for simple misconduct. "Grave misconduct necessarily includes the lesser offense of simple
misconduct.''42
Sufficient records exist to justify the imposition of a higher penalty against the petitioner. His open interference
in a legitimate police activity. and defiance of the police's authority only show his clear i1itent to violate the law;
in fact, he reneged on his first obligation as the grassroot official tasked at the first level with the enforcement
of the law. The photographs, taken together with the investigation report of the Police Superintendent and the
testimonies of the witnesses, even lead to conclusions beyond interference and defiance; the petitioner
himself could have been involved in corrupt activities, although we cannot make this conclusive finding at this
point.43 We make this observation though as his son owns MICO whose car-wash boys were engaged in water
pilferage. What we can conclusively confirm is that the petitioner violated the law by directly interfering with a
legitimate police activity where his own son appeared to be involved. This act qualifies the misconduct as
grave. Section 52(A)(3), Rule IV of the Revised Uniform Rules on Administrative Cases in the Civil Service
provides that the penalty for grave misconduct is dismissal from the service.
WHEREFORE, in view of the foregoing, we hereby DENY the petition for lack of merit, and AFFIRM the
decision of the Court of Appeals in CA-G.R. SP No. 88544.
SO ORDERED.
G.R. No. 174908, June 17, 2013
DARMA MASLAG, Petitioner, v. AND ELIZABETH MONZON, WILLIAM GESTON, REGISTRY OF DEEDS
OF
BENGUET, Respondents.
DECISION

The petitioner, as Barangay Chairman, is tasked to enforce all laws and ordinances which are applicable
within the barangay, in the same manner that the police is bound to maintain peace and order within the
community. While the petitioner has general charge of the affairs in the barangay, the maintenance of peace
and order is largely a police matter, with police authority being predominant 33 especially when the police has
began to act on an enforcement matter.34 The maintenance of peace and order in the community is a general
function undertaken by the punong barangay. It is a task expressly conferred to the punong barangay under
Section 389(b)(3) of RA 7160.35 On the other hand, the maintenance of peace and order carries both general
and specific functions on the part of the police. Section 24 of RA 6975 (otherwise known as "the Department of
the Interior and Local Government Act of 1990"),36as amended,37 enumerates the powers and functions of the
police. In addition to the maintenance of peace and order, the police has the authority to "investigate and
prevent crimes, effect the arrest of criminal offenders, bring offenders to justice and assist in their
prosecution," and are charged with the enforcement of "laws and ordinances relative to the protection of lives

DEL CASTILLO, J.:

"It is incumbent upon x x x appellants to utilize the correct mode of appeal of the decisions of trial courts to the
appellate courts. In the mistaken choice of their remedy, they can blame no one but themselves." 1
This is a Petition for Review on Certiorari2 of the May 31, 2006 Resolution3 of the Court of Appeals (CA) in CAG.R. CV No. 83365, which dismissed petitioner Darma Maslags (petitioner) ordinary appeal to it for being an
improper remedy. The Resolution disposed of the case as follows:cralavvonlinelawlibrary
WHEREFORE,

the
4

Motion

to

Dismiss

SO ORDERED. nadcralavvonlinelawlibrary

is GRANTED,

and

the

Appeal

is

herebyDISMISSED.

The Petition also assails the CAs September 22, 2006 Resolution 5 denying petitioners Motion for
Reconsideration.6
Factual

Petitioner sought reconsideration. 20 She argued, for the first time, that the RTC rendered its May 4, 2004
Resolution in its original jurisdiction. She cited the earlier October 22, 2003 Order of the RTC declaring the
MTC
without
jurisdiction
over
the
case.

Antecedents
The CA denied petitioners Motion for Reconsideration in its September 22, 2006 Resolution: 21

In 1998, petitioner filed a Complaint 7 for reconveyance of real property with declaration of nullity of original
certificate of title (OCT) against respondents Elizabeth Monzon (Monzon), William Geston and the Registry of
Deeds of La Trinidad, Benguet. The Complaint was filed before the Municipal Trial Court (MTC) of La
Trinidad,
Benguet.
After trial, the MTC found respondent Monzon guilty of fraud in obtaining an OCT over petitioners property. 8 It
ordered her to reconvey the said property to petitioner, and to pay damages and costs of suit. 9
Respondents

appealed

to

the

Regional

Trial

Court

(RTC)

of

La

Trinidad,

A perusal of the May 4, 2004 Resolution of the RTC, which is the subject matter of the appeal, clearly reveals
that it took cognizance of the MTC case in the exercise of its appellate jurisdiction. Consequently, as We have
previously enunciated, the proper remedy, is a petition for review under Rule 42 and not an ordinary appeal
under
Rule
41.
WHEREFORE, premises considered, the instant Motion for Reconsideration is DENIED. The May 31, 2006
Resolution
of
this
Court
is
hereby AFFIRMED in
toto.

Benguet.
SO ORDERED.22

After going over the MTC records and the parties respective memoranda, the RTC of La Trinidad, Benguet,
Branch 10, through Acting Presiding Judge Fernando P. Cabato (Judge Cabato), issued its October 22, 2003
Order,10 declaring the MTC without jurisdiction over petitioners cause of action. It further held that it will take
cognizance of the case pursuant to Section 8, Rule 40 of the Rules of Court, which
reads:cralavvonlinelawlibrary

Hence this Petition wherein petitioner prays that the CA be ordered to take cognizance of her appeal. 23
Issues

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction . x x x
Petitioner set forth the following issues in her Petition:cralavvonlinelawlibrary
If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional
Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case
in accordance with the preceding section, without prejudice to the admission of amended pleadings and
additional evidence in the interest of justice.
Both parties acknowledged receipt of the October 22, 2003 Order, 11 but neither presented additional evidence
before the new judge, Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De Rivera). 12
On May 4, 2004, Judge Diaz De Rivera issued a Resolution 13 reversing the MTC Decision. The falloreads as
follows:cralavvonlinelawlibrary
WHEREFORE, the Judgment appealed from the Municipal Trial Court of La Trinidad, Benguet is set aside.
[Petitioner] is ordered to turn over the possession of the 4,415 square meter land she presently occupies to
[Monzon]. This case is remanded to the court a quo for further proceedings to determine whether [Maslag] is
entitled to the remedies afforded by law to a builder in good faith for the improvements she constructed
thereon.

WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN DISMISSING THE APPEAL FILED BY THE
PETITIONER, CONSIDERING THAT THE REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD,
BENGUET HELD THAT THE ORIGINAL COMPLAINT AS FILED BEFORE THE MUNICIPAL TRIAL COURT
OF LA TRINIDAD, BENGUET WAS DECIDED BY THE LATTER WITHOUT ANY JURISDICTION AND, IN
ORDERING THAT THE CASE SHALL BE DECIDED PURSUANT TO THE PROVISION OF SECTION 8 OF
RULE 40 OF THE RULES OF COURT, IT DECIDED THE CASE NOT ON ITS APPELLATE JURISDICTION
BUT
ON
ITS
ORIGINAL
JURISDICTION
WHAT WILL BE THE EFFECT OF THE DECISION OF THE REGIONAL TRIAL COURT, BRANCH 10 OF LA
TRINIDAD, BENGUET, WHEN IT DECIDED A CASE APPEALED BEFORE IT UNDER THE PROVISION OF
SECTION 8, RULE 40 OF THE RULES OF COURT OF THE PHILIPPINES, AS TO THE COURSE OF
REMEDY THAT MAY BE AVAILED OF BY THE PETITIONER A PETITION FOR REVIEW UNDER RULE 42
OR AN ORDINARY APPEAL UNDER RULE 41.24nadcralavvonlinelawlibrary

Our Ruling
No

pronouncement

as

to

damages

and

costs.

SO ORDERED.14
Petitioner

filed

Notice

of

Appeal 15 from

the

RTCs

May

4,

2004

Resolution.

Petitioner assailed the RTCs May 4, 2004 Resolution for reversing the MTCs factual findings and prayed
that the MTC Decision be adopted. Her prayer before the CA reads:cralavvonlinelawlibrary

In its October 22, 2003 Order, the RTC declared that the MTC has no jurisdiction over the subject matter of the
case based on the supposition that the same is incapable of pecuniary estimation. Thus, following Section 8,
Rule 40 of the Rules of Court, it took cognizance of the case and directed the parties to adduce further
evidence if they so desire. The parties bowed to this ruling of the RTC and, eventually, submitted the case for
its
decision
after
they
had
submitted
their
respective
memoranda.

16

We cannot, however, gloss over this jurisdictional faux pas of the RTC. Since it involves a question of
jurisdiction, we may motu proprio review and pass upon the same even at this late stage of the proceedings. 25

WHEREFORE, premises considered, it is most respectfully prayed that the decision of the Regional Trial
Court, Branch 10 of La Trinidad, Benguet, appealed from be reversed in toto and that the Honorable Court
adopt the decision of the Municipal Trial Court. Further reliefs just and equitable under the premises are
prayed for.17

In her Complaint26 for reconveyance of real property with declaration of nullity of OCT, petitioner claimed that
she and her father had been in open, continuous, notorious and exclusive possession of the disputed property
since the 1940s. She averred:cralavvonlinelawlibrary

Respondents moved to dismiss petitioners ordinary appeal for being the improper remedy. They asserted
that the proper mode of appeal is a Petition for Review under Rule 42 because the RTC rendered its May 4,
2004
Resolution
in
its
appellate
jurisdiction. 18

7. Sometime in the year 1987, Elizabeth Monzon, the owner of the adjacent parcel of land being occupied by
plaintiff [Maslag], informed the plaintiff that the respective parcels of land being claimed by them can now be
titled. A suggestion was, thereafter made, that those who were interested to have their lands titled, will
contribute to a common fund for the surveying and subsequent titling of the land;chanroblesvirtualawlibrary

Ruling

of

the

Court

of

Appeals

The CA dismissed petitioners appeal. It observed that the RTCs May 4, 2004 Resolution (the subject matter
of the appeal before the CA) set aside an MTC Judgment; hence, the proper remedy is a Petition for Review
under
Rule
42,
and
not
an
ordinary
appeal. 19

8. Since plaintiff had, for so long, yearned for a title to the land she occupies, she contributed to the amount
being
requested
by
Elizabeth
Monzon;chanroblesvirtualawlibrary
9. A subdivision survey was made and in the survey, the respective areas of the plaintiff and the defendants
were
defined
and
delimited

all
for
purposes
of
titling.
x
x
x

jurisdiction
10. But alas, despite the assurance of subdivided titles, when the title was finally issued by the Registry of
Deeds, the same was only in the name of Elizabeth Monzon and WILLIAM GESTON. The name of Darma
Maslag was fraudulently, deliberately and in bad faith omitted. Thus, the title to the property, to the extent of
18,295 square meters, was titled solely in the name of ELIZABETH MONZON.
As a relief, petitioner prayed that Monzon be ordered to reconvey the portion of the property which she
claimed was fraudulently included in Monzons title. Her primary relief was to recover ownership of real
property. Indubitably, petitioners complaint involves title to real property. An action "involving title to real
property," on the other hand, was defined as an action where "the plaintiffs cause of action is based on a
claim that [she] owns such property or that [she] has the legal rights to have exclusive control, possession,
enjoyment, or disposition of the same." 27 Under the present state of the law, in cases involving title to real
property, original and exclusive jurisdiction belongs to either the RTC or the MTC, depending on the assessed
value of the subject property.28 Pertinent provisions of Batas Pambansa Blg. (BP) 129, 29 as amended by
Republic Act (RA) No. 7691,30 provides:cralavvonlinelawlibrary
Sec. 19. Jurisdiction in civil cases.
jurisdiction:cralavvonlinelawlibrary

Regional

(1) In all civil actions in which

estimation;chanroblesvirtualawlibrary

the

subject

Trial
of

Courts
the

shall

litigation

exercise
is

exclusive

incapable

of

original

pecuniary

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where
the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions
in Metro Manila, where x x x the [assessed] value [of the property] exceeds Fifty thousand pesos
([P]50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original
jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit
Trial
Courts;chanroblesvirtualawlibrary
x

SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in
Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall
exercise:
x
x
x
x
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any
interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand
pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty
thousand pesos (P50,000.00) x x x.
In the case at bench, annexed to the Complaint is a Declaration of Real Property 31 dated November 12, 1991,
which was later marked as petitioners Exhibit "A", 32 showing that the disputed property has an assessed value
of P12,40033 only. Such assessed value of the property is well within the jurisdiction of the MTC. In fine, the
RTC, thru Judge Cabato, erred in applying Section 19(1) of BP 129 in determining which court has jurisdiction
over the case and in pronouncing that the MTC is divested of original and exclusive jurisdiction.
This brings to fore the next issue of whether the CA was correct in dismissing petitioners appeal.
Section 2, Rule 50 of the
appeal:cralavvonlinelawlibrary

Rules

of

Court

provides

for

the

dismissal

of

an

improper

exercised

by

the

RTC

in

the

Order

or

Decision

being

appealed.

As discussed above, the MTC has original and exclusive jurisdiction over the subject matter of the case;
hence, there is no other way the RTC could have taken cognizance of the case and review the court a
quos Judgment except in the exercise of its appellate jurisdiction. Besides, the new RTC Judge who penned
the May 4, 2004 Resolution, Judge Diaz de Rivera, actually treated the case as an appeal despite the October
22, 2003 Order. He started his Resolution by stating, "This is an appeal from the Judgment rendered by the
Municipal Trial Court (MTC) of La Trinidad Benguet" 35 and then proceeded to discuss the merits of the
"appeal." In the dispositive portion of said Resolution, he reversed the MTCs findings and conclusions and
remanded residual issues for trial with the MTC. 36 Thus, in fact and in law, the RTC Resolution was a
continuation of the proceedings that originated from the MTC. It was a judgment issued by the RTC in the
exercise of its appellate jurisdiction. With regard to the RTCs earlier October 22, 2003 Order, the same
should be disregarded for it produces no effect (other than to confuse the parties whether the RTC was
invested with original or appellate jurisdiction). It cannot be overemphasized that jurisdiction over the subject
matter is conferred only by law and it is "not within the courts, let alone the parties, to themselves determine or
coveniently set aside." 37 Neither would the active participation of the parties nor estoppel operate to confer
original and exclusive jurisdiction where the court or tribunal only wields appellate jurisdiction over the
case.38 Thus, the CA is correct in holding that the proper mode of appeal should have been a Petition for
Review under Rule 42 of the Rules of Court, and not an ordinary appeal under Rule 41.
Seeing the futility of arguing against what the RTC actually did, petitioner resorts to arguing for what the RTC
should have done. She maintains that the RTC should have issued its May 4, 2004 Resolution in its original
jurisdiction because it had earlier ruled that the MTC had no jurisdiction over the cause of action.
Petitioners argument lacks merit. To reiterate, only statutes can confer jurisdiction. Court issuances cannot
seize or appropriate jurisdiction. It has been repeatedly held that "any judgment, order or resolution issued
without [jurisdiction] is void and cannot be given any effect." 39 By parity of reasoning, an order issued by a
court declaring that it has original and exclusive jurisdiction over the subject matter of the case when under the
law it has none cannot likewise be given effect. It amounts to usurpation of jurisdiction which cannot be
countenanced. Since BP 129 already apportioned the jurisdiction of the MTC and the RTC in cases involving
title to property, neither the courts nor the petitioner could alter or disregard the same. Besides, in determining
the proper mode of appeal from an RTC Decision or Resolution, the determinative factor is the type of
jurisdiction actually exercised by the RTC in rendering its Decision or Resolution. Was it rendered by the RTC
in the exercise of its original jurisdiction, or in the exercise of its appellate jurisdiction? In short, we look at
what type of jurisdiction was actually exercised by the RTC. We do not look into what type of jurisdiction the
RTCshould have exercised. This is but logical. Inquiring into what the RTC should have done in disposing of
the case is a question which already involves the merits of the appeal, but we obviously cannot go into that
where
the
mode
of
appeal
was
improper
to
begin
with.
WHEREFORE, premises considered, the Petition for Review is DENIED for lack of merit. The assailed May
31, 2006 and September 22, 2006 Resolutions of the Court of Appeals in CA-G.R. CV No. 83365
are AFFIRMED.
SO ORDERED.
G.R. No. 190566

December 11, 2013

MARK
JEROME
S.
MAGLALANG, Petitioner,
vs.
PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR), as represented by its incumbent
Chairman EFRAIM GENUINO, Respondent.
DECISION

SECTION 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule 41 taken from the
Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of
law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for
review from the appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall
be dismissed outright. (Emphasis supplied)
There are two modes of appealing an RTC decision or resolution on issues of fact and law. 34 The first mode is
an ordinary appeal under Rule 41 in cases where the RTC exercised its original jurisdiction. It is done by
filing a Notice of Appeal with the RTC. The second mode is a petition for review under Rule 42 in cases
where the RTC exercised its appellate jurisdiction over MTC decisions. It is done by filing a Petition for
Review with the CA. Simply put, the distinction between these two modes of appeal lies in the type of

VILLARAMA, JR., J.:

Before this Court is a petition 1 for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, seeking the reversal of the Resolution 2 dated September 30, 2009 issued by the Court of Appeals
(CA) in CA"".G.R. SP No. 110048, which outrightly dismissed the petition for certiorari filed by herein petitioner
Mark Jerome S. Maglalang (petitioner). Also assailed is the appellate court's Resolution 3 dated November 26,
2009 which denied petitioner's motion for reconsideration.
The facts follow.
Petitioner was a teller at the Casino Filipino, Angeles City Branch, Angeles City, which was operated by
respondent Philippine Amusement and Gaming Corporation (PAGCOR), a government-owned or controlled
corporation existing by virtue of Presidential Decree (P.D.) No. 1869. 4

Petitioner alleged that in the afternoon of December 13, 2008, while he was performing his functions as teller,
a lady customer identified later as one Cecilia Nakasato 5 (Cecilia) approached him in his booth and handed to
him an undetermined amount of cash consisting of mixed P1,000.00 and P500.00 bills. There were
45 P1,000.00 and ten P500.00 bills for the total amount of P50,000.00. Following casino procedure, petitioner
laid the bills on the spreading board. However, he erroneously spread the bills into only four clusters instead of
five clusters worthP10,000.00 per cluster. He then placed markers for P10,000.00 each cluster of cash and
declared the total amount of P40,000.00 to Cecilia. Perplexed, Cecilia asked petitioner why the latter only
dished out P40,000.00. She then pointed to the first cluster of bills and requested petitioner to check the first
cluster which she observed to be thicker than the others. Petitioner performed a recount and found that the
said cluster contained 20 pieces of P1,000.00 bills. Petitioner apologized to Cecilia and rectified the error by
declaring the full and correct amount handed to him by the latter. Petitioner, however, averred that Cecilia
accused him of trying to shortchange her and that petitioner tried to deliberately fool her of her money.
Petitioner tried to explain, but Cecilia allegedly continued to berate and curse him. To ease the tension,
petitioner was asked to take a break. After ten minutes, petitioner returned to his booth. However, Cecilia
allegedly showed up and continued to berate petitioner. As a result, the two of them were invited to the
casinos Internal Security Office in order to air their respective sides. Thereafter, petitioner was required to file
an Incident Report which he submitted on the same day of the incident. 6

should come under the jurisdiction of the Merit System Protection Board and the Civil Service Commission,
conformably to the Administrative Code of 1987.

On January 8, 2009, petitioner received a Memorandum 7 issued by the casinos Branch Manager, Alexander
Ozaeta, informing him that he was being charged with Discourtesy towards a casino customer and directing
him to explain within 72 hours upon receipt of the memorandum why he should not be sanctioned or
dismissed. In compliance therewith, petitioner submitted a letter-explanation 8 dated January 10, 2009.

3. IN RESOLVING THE PETITION FOR CERTIORARI FILED BY PETITIONER IN A MANNER WHICH IS

UTTERLY CONTRARY TO LAW AND JURISPRUDENCE[;]

On March 31, 2009, petitioner received another Memorandum 9 dated March 19, 2009, stating that the Board
of Directors of PAGCOR found him guilty of Discourtesy towards a casino customer and imposed on him a 30day suspension for this first offense. Aggrieved, on April 2, 2009, petitioner filed a Motion for
Reconsideration10seeking a reversal of the boards decision and further prayed in the alternative that if he is
indeed found guilty as charged, the penalty be only a reprimand as it is the appropriate penalty. During the
pendency of said motion, petitioner also filed a Motion for Production 11 dated April 20, 2009, praying that he be
furnished with copies of documents relative to the case including the recommendation of the investigating
committee and the Decision/Resolution of the Board supposedly containing the latters factual findings. In a
letter-reply12 dated June 2, 2009, one Atty. Carlos R. Bautista, Jr. who did not indicate his authority therein to
represent PAGCOR, denied the said motion. Petitioner received said letter-reply on June 17, 2009.
Subsequently, on June 18, 2009, PAGCOR issued a Memorandum 13 dated June 18, 2009 practically
reiterating the contents of its March 19, 2009 Memorandum. Attached therewith is another
Memorandum14 dated June 8, 2009 issued by PAGCORs Assistant Vice President for Human Resource and
Development, Atty. Lizette F. Mortel, informing petitioner that the Board of Directors in its meeting on May 13,
2009 resolved to deny his appeal for reconsideration for lack of merit. Petitioner received said memoranda on
the same date of June 18, 2009.
On August 17, 2009, petitioner filed a petition 15 for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, as amended, before the CA, averring that there is no evidence, much less factual and legal basis
to support the finding of guilt against him. Moreover, petitioner ascribed grave abuse of discretion amounting
to lack or excess of jurisdiction to the acts of PAGCOR in adjudging him guilty of the charge, in failing to
observe the proper procedure in the rendition of its decision and in imposing the harsh penalty of a 30-day
suspension. Justifying his recourse to the CA, petitioner explained that he did not appeal to the Civil Service
Commission (CSC) because the penalty imposed on him was only a 30-day suspension which is not within the
CSCs appellate jurisdiction. He also claimed that discourtesy in the performance of official duties is classified
as a light offense which is punishable only by reprimand.
In its assailed Resolution 16 dated September 30, 2009, the CA outrightly dismissed the petition for certiorari for
being premature as petitioner failed to exhaust administrative remedies before seeking recourse from the CA.
Invoking Section 2(1), Article IX-B of the 1987 Constitution, 17 the CA held that the CSC has jurisdiction over
issues involving the employer-employee relationship in all branches, subdivisions, instrumentalities and
agencies of the Government, including government-owned or controlled corporations with original charters
such as PAGCOR. Petitioner filed his Motion for Reconsideration 18 which the CA denied in the assailed
Resolution19 dated November 26, 2009. In denying the said motion, the CA relied on this Courts ruling in Duty
Free Philippines v. Mojica 20 citing Philippine Amusement and Gaming Corp. v. CA, 21 where this Court held as
follows:
It is now settled that, conformably to Article IX-B, Section 2(1), [of the 1987 Constitution] government-owned or
controlled corporations shall be considered part of the Civil Service only if they have original charters, as
distinguished from those created under general law.
PAGCOR belongs to the Civil Service because it was created directly by PD 1869 on July 11, 1983.
Consequently, controversies concerning the relations of the employee with the management of PAGCOR

Section 16(2) of the said Code vest[s] in the Merit System Protection Board the power inter alia to:
a) Hear and decide on appeal administrative cases involving officials and employees of the Civil Service. Its
decision shall be final except those involving dismissal or separation from the service which may be appealed
to the Commission.
Hence, this petition where petitioner argues that the CA committed grave and substantial error of judgment
1. IN OUTRIGHTLY DISMISSING THE PETITION FOR CERTIORARI FILED BY PETITIONER AND IN
DENYING THE LATTERS MOTION FOR RECONSIDERATION[;]
2. IN RULING THAT THE CIVIL SERVICE COMMISSION HAS APPELLATE JURISDICTION OVER THE
SUSPENSION OF THE PETITIONER DESPITE THE FACT THAT THE PENALTY INVOLVED IS NOT MORE
THAN THIRTY (30) DAYS[;]

4. IN UNJUSTIFIABLY REFUSING TO RENDER A DECISION AS TO THE PROPRIETY OR VALIDITY OF

THE SUSPENSION OF THE PETITIONER BY THE RESPONDENT[;]
5. IN UNDULY REFUSING TO RENDER A DECISION DECLARING THAT THE ASSAILED
DECISIONS/RESOLUTIONS OF THE RESPONDENT ARE NOT SUPPORTED BY THE EVIDENCE ON
RECORD[; AND]
6. IN UNJUSTIFIABLY REFUSING TO RENDER A DECISION DECLARING THAT THE ASSAILED
DECISIONS/RESOLUTIONS OF RESPONDENT WERE ISSUED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION. 22
Petitioner claims that the CA clearly overlooked the applicable laws and jurisprudence that provide that when
the penalty involved in an administrative case is suspension for not more than 30 days, the CSC has no
appellate jurisdiction over the said administrative case. As authority, petitioner invokes our ruling in Geronga v.
Hon. Varela23 which cited Section 47,24 Chapter 1, Subtitle A, Title I, Book V of Executive Order (E.O.) No. 292
otherwise known as The Administrative Code of 1987. Said Section 47 provides that the CSC may entertain
appeals only, among others, from a penalty of suspension of more than 30 days. Petitioner asserts that his
case, involving a 30-day suspension penalty, is not appealable to the CSC. Thus, he submits that his case
was properly brought before the CA via a petition for certiorari. 25
On the other hand, PAGCOR alleges that petitioner intentionally omitted relevant matters in his statement of
facts. PAGCOR essentially claims that petitioner refused to apologize to Cecilia; that he treated Cecilias
complaint with arrogance; and that before taking the aforementioned 10-minute break, petitioner slammed the
cash to the counter window in giving it back to the customer. PAGCOR argues that the instant petition raises
questions of fact which are not reviewable in a petition for review on certiorari. PAGCOR maintains that the
CAs ruling was in accordance with law and jurisprudence. Moreover, PAGCOR counters that petitioners
remedy of appeal is limited as Section 37 of the Revised Uniform Rules on Administrative Cases in the Civil
Service provides that a decision rendered by heads of agencies whereby a penalty of suspension for not more
than 30 days is imposed shall be final and executory. PAGCOR opines that such intent of limiting appeals over
such minor offenses is elucidated in the Concurring Opinion of former Chief Justice Reynato S. Puno in CSC
v. Dacoycoy26 and based on the basic premise that appeal is merely a statutory privilege. Lastly, PAGCOR
submits that the 30-day suspension meted on petitioner is justified under its own Code of
Discipline.27 Prescinding from the foregoing, the sole question for resolution is: Was the CA correct in outrightly
dismissing the petition for certiorari filed before it on the ground of non-exhaustion of administrative remedies?
We resolve the question in the negative.
Our ruling in Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings,
Inc.28on the doctrine of exhaustion of administrative remedies is instructive, to wit:
Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the intervention
of the court, he or she should have availed himself or herself of all the means of administrative processes
afforded him or her. Hence, if resort to a remedy within the administrative machinery can still be made by
giving the administrative officer concerned every opportunity to decide on a matter that comes within his or her
jurisdiction, then such remedy should be exhausted first before the court's judicial power can be sought. The
premature invocation of the intervention of the court is fatal to ones cause of action. The doctrine of

exhaustion of administrative remedies is based on practical and legal reasons. The availment of administrative
remedy entails lesser expenses and provides for a speedier disposition of controversies. Furthermore, the
courts of justice, for reasons of comity and convenience, will shy away from a dispute until the system of
administrative redress has been completed and complied with, so as to give the administrative agency
concerned every opportunity to correct its error and dispose of the case.
However, the doctrine of exhaustion of administrative remedies is not absolute as it admits of the following
exceptions:
(1) when there is a violation of due process; (2) when the issue involved is purely a legal question; (3) when
the administrative action is patently illegal amounting to lack or excess of jurisdiction; (4) when there is
estoppel on the part of the administrative agency concerned; (5) when there is irreparable injury; (6) when the
respondent is a department secretary whose acts as an alter ego of the President bears the implied and
assumed approval of the latter; (7) when to require exhaustion of administrative remedies would be
unreasonable; (8) when it would amount to a nullification of a claim; (9) when the subject matter is a private
land in land case proceedings; (10) when the rule does not provide a plain, speedy and adequate remedy, and
(11) when there are circumstances indicating the urgency of judicial intervention, and unreasonable delay
would greatly prejudice the complainant; (12) where no administrative review is provided by law; (13) where
the rule of qualified political agency applies and (14) where the issue of non-exhaustion of administrative
remedies has been rendered moot. 29
The case before us falls squarely under exception number 12 since the law per se provides no administrative
review for administrative cases whereby an employee like petitioner is covered by Civil Service law, rules and
regulations and penalized with a suspension for not more than 30 days.
Section 37 (a) and (b) of P.D. No. 807, otherwise known as the Civil Service Decree of the Philippines,
provides for the unavailability of any appeal:
Section 37. Disciplinary Jurisdiction.
(a) The Commission shall decide upon appeal all administrative disciplinary cases involving the imposition of a
penalty of suspension for more than thirty days, or fine in an amount exceeding thirty days salary, demotion in
rank or salary or transfer, removal or dismissal from Office. A complaint may be filed directly with the
Commission by a private citizen against a government official or employee in which case it may hear and
decide the case or it may deputize any department or agency or official or group of officials to conduct the
investigation. The results of the investigation shall be submitted to the Commission with recommendation as to
the penalty to be imposed or other action to be taken.
(b) The heads of departments, agencies and instrumentalities, provinces, cities and municipalities shall have
jurisdiction to investigate and decide matters involving disciplinary action against officers and employees
under their jurisdiction. Their decisions shall be final in case the penalty imposed is suspension for not more
than thirty days or fine in an amount not exceeding thirty days salary. In case the decision rendered by a
bureau or office head is appealable to the Commission, the same may be initially appealed to the department
and finally to the Commission and pending appeal, the same shall be executory except when the penalty is
removal, in which case the same shall be executory only after confirmation by the department head.
(Emphasis supplied.)
Similar provisions are reiterated in the aforequoted Section 47 of E.O. No. 292 essentially providing that
cases of this sort are not appealable to the CSC. Correlatively, we are not unaware of the Concurring Opinion
of then Chief Justice Puno in CSC v. Dacoycoy,31 where he opined, to wit:
30

In truth, the doctrine barring appeal is not categorically sanctioned by the Civil Service Law. For what the law
declares as "final" are decisions of heads of agencies involving suspension for not more than thirty (30) days
or fine in an amount not exceeding thirty (30) days salary. But there is a clear policy reason for declaring these
decisions final. These decisions involve minor offenses. They are numerous for they are the usual offenses
committed by government officials and employees. To allow their multiple level appeal will doubtless
overburden the quasijudicial machinery of our administrative system and defeat the expectation of fast and
efficient action from these administrative agencies. Nepotism, however, is not a petty offense. Its deleterious
effect on government cannot be over-emphasized. And it is a stubborn evil. The objective should be to
eliminate nepotic acts, hence, erroneous decisions allowing nepotism cannot be given immunity from review,
especially judicial review. It is thus non sequitur to contend that since some decisions exonerating public
officials from minoroffenses can not be appealed, ergo, even a decision acquitting a government official from
a major offense like nepotism cannot also be appealed.
Nevertheless, decisions of administrative agencies which are declared final and unappealable by law are still
subject to judicial review. In Republic of the Phils. v. Francisco,32 we held:

Since the decision of the Ombudsman suspending respondents for one (1) month is final and
unappealable, it follows that the CA had no appellate jurisdiction to review, rectify or reverse the same. The
Ombudsman was not estopped from asserting in this Court that the CA had no appellate jurisdiction to review
and reverse the decision of the Ombudsman via petition for review under Rule 43 of the Rules of Court. This is
not to say that decisions of the Ombudsman cannot be questioned. Decisions of administrative or quasiadministrative agencies which are declared by law final and unappealable are subject to judicial
review if they fail the test of arbitrariness, or upon proof of gross abuse of discretion, fraud or error of
law. When such administrative or quasi-judicial bodies grossly misappreciate evidence of such nature as to
compel a contrary conclusion, the Court will not hesitate to reverse the factual findings. Thus, the decision of
the Ombudsman may be reviewed, modified or reversed via petition for certiorari under Rule 65 of the
Rules of Court, on a finding that it had no jurisdiction over the complaint, or of grave abuse of
discretion amounting to excess or lack of jurisdiction.It bears stressing that the judicial recourse petitioner
availed of in this case before the CA is a special civil action for certiorari ascribing grave abuse of discretion,
amounting to lack or excess of jurisdiction on the part of PAGCOR, not an appeal. Suffice it to state that an
appeal and a special civil action such as certiorari under Rule 65 are entirely distinct and separate from each
other. One cannot file petition for certiorari under Rule 65 of the Rules where appeal is available, even if the
ground availed of is grave abuse of discretion. A special civil action for certiorari under Rule 65 lies only when
there is no appeal, or plain, speedy and adequate remedy in the ordinary course of law. Certiorari cannot be
allowed when a party to a case fails to appeal a judgment despite the availability of that remedy, as the same
should not be a substitute for the lost remedy of appeal. The remedies of appeal and certiorari are mutually
exclusive and not alternative or successive.33
In sum, there being no appeal or any plain, speedy, and adequate remedy in the ordinary course of law in view
of petitioner's allegation that P AGCOR has acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, the CA's outright dismissal of the petition for certiorari on
the basis of non-exhaustion of administrative remedies is bereft of any legal standing and should therefore be
set aside.
Finally, as a rule, a petition for certiorari under Rule 65 is valid only when the question involved is an error of
jurisdiction, or when there is grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the court or tribunals exercising quasi-judicial functions. Hence, courts exercising certiorari jurisdiction should
refrain from reviewing factual assessments of the respondent court or agency. Occasionally, however, they are
constrained to wade into factual matters when the evidence on record does not support those factual findings;
or when too much is concluded, inferred or deduced from the bare or incomplete facts appearing on
record.34Considering the circumstances and since this Court is not a trier of facts, 35 remand of this case to the
CA for its judicious resolution is in order.
WHEREFORE, the petition is PARTLY GRANTED. The Resolutions dated September 30, 2009 and November
26, 2009 of the Court of Appeals in CA-G.R. SP No. 110048 are hereby REVERSED and SET ASIDE. The
instant case is REMANDED to the Court of Appeals for further proceedings.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 168771

July 25, 2012

ROBERTO
DIPAD
and
SANDRA
DIPAD, Petitioners,
vs.
SPOUSES ROLANDO OLIVAN and BRIGIDA OLIVAN, and BRIGIDA OLIVAN, and RUBIO GUIJON
MADRIGALLO, Respondents.
RESOLUTION
SERENO, J.:
Before this Court is a Rule 45 Petition, seeking to review the 6 May 2005 Regional Trial (RTC) Decision in
Special Civil Action No. RTC 2005-0032. In the Decision, the RTC dismissed petitioners Rule 65 Petition,
which assailed the directive of Judge Marvel C. Clavecilla requiring Roberto Dipad to submit the latters
Income Tax Returns (ITRs) for the years 2001 to 2003.
The pertinent facts are as follows: 1
Due to a collision between the car of petitioner spouses Dipad and the passenger jeep owned by respondents,
the former filed a civil action for damages before the sala of Municipal Trial Court (MTC) Judge Clavecilla.

During trial, Roberto Dipad mentioned in his direct testimony that because he was not able to make use of his
vehicle for his buy-and-sell business, he suffered damages by way of lost income for three months amounting
to P40,000.2 Then, during cross-examination, the defense required him to produce his personal copy of his
ITRs for the years 2001, 2002 and 2003. 3
Dipad vehemently objected on the ground of confidentiality of the ITRs. He also claimed that the demand
therefor was incriminatory and in the nature of a fishing expedition.
By reason of the opposition, Judge Clavecilla suspended the trial and required petitioners to show their basis
for invoking the confidentiality of the ITRs. After the parties submitted their respective Comments on the
matter, the MTC in its 3 February 2005 Order required the production of the ITRs.
Aggrieved, the spouses Dipad filed a Motion for Reconsideration, which was denied by Judge Clavecilla.
Thereafter, they instituted a Rule 65 Petition for Certiorari and Prohibition before the RTC, assailing the 3
February 2005 Order of the MTC for having been issued with grave abuse of discretion amounting to lack or
excess of jurisdiction. In that Petition, they opposed Judge Clavecillas ruling in this wise: 4
x x x The respondent Judge stated in his order dated February 3, 2005 (Annex "G") in Civil Case No. 11884
that the cited provision does not apply, stating that "what is being requested to be produced is plaintiffs copy
of their tax returns for the years 2001 to 2003 x x x," thereby ordering the plaintiffs therein, now the petitioners,
"to furnish defendants counsel within five (5) days from receipt of this order copy of their income tax returns
for the years 2001 to 2003, inclusive."
We beg to differ to such holding, because if a copy of a taxpayers return filed with the Bureau of Internal
Revenue can be open to inspection only upon the order of the President of the Philippines, such provision
presupposes the confidentiality of the document; and with more reason that the taxpayer cannot be compelled
to yield his copy of the said document. (Emphasis in the original)
xxx

xxx

However, under Section 11 of Regulation 33 of the Department of Finance the Commissioner of Internal
Revenue may furnish copies of income tax returns for use as evidence in court litigation "when the
government of the Philippine Islands is interested in the result."
Thus, in the case of Cu Unjieng vs. Posadas, 58 Phil. 360, which involves the production of income tax returns
in a criminal case, the Supreme Court held that copies of the returns can be furnished therein because a
criminal case is a sort of a case in which, above all others, the government, as a corporate representative of
all society, is highly and immediately interested.
But in a civil case where the government is not interested in the results, no income tax returns or tax census
statements may be furnished the courts even if the production thereof is in obedience to the court order (see
BIR Ruling No. 4, S. 1971).
RULING OF THE COURT
The appeal is lacking in merit.
Upon perusal of the reference, we find that petitioners inaccurately quoted the commentary. 10 The portions
they lifted from the annotation purport to explain Section 270 of the NIRC. 11
The provision prohibits employees of the Bureau of Internal Revenue (BIR) from divulging the trade secrets of
taxpayers. Section 270 obviously does not address the confidentiality of ITRs. Thus, petitioners cannot rely on
the inappropriate provision, the Decisions including the cited Cu Unjieng v. Posadas, 12 the rulings of the BIR,
or issuances of the Department of Finance that apply that provision.
Furthermore, in contrast to the interpretation by petitioners of the commentary that ITRs cannot be divulged,
their very reference characterizes Section 71 as an exception to the rule on the unlawful divulgence of trade
secrets:13

xxx
Exceptions or acts which do not constitute unlawful divulgence of trade secrets.

Thus, it is indubitable that compelling the petitioners to produce petitioner Roberto Dipads Income Tax
Returns and furnish copies thereof to the private respondents would be violative of the provisions of the
National Internal Revenue Code on the rule on confidentiality of Income Tax return as discussed above x x x.
(Underscoring supplied)

(a) Section 71 of the Tax Code makes income tax returns public records and opens them to inspection upon
order of the President of the Philippines. x x x.

In its 6 May 2005 Decision,5 the RTC dismissed the Rule 65 Petition for being an inappropriate remedy.
According to the trial court, the errors committed by Judge Clavecilla were, if at all, mere errors of judgment
correctible not by the extraordinary writ of certiorari, but by ordinary appeal.

This Court then reminds the counsels of their duty of candor, fairness and good faith when they face the court.
Canon 10.02 of the Code of Professional Responsibility instructs that a lawyer shall not knowingly misquote or
misrepresent the contents of a paper; the language or the argument of opposing counsel, or the text of a
decision or authority, or knowingly cite as law a provision already rendered inoperative by repeal or
amendment; or assert as a fact that which has not been proved.

Petitioners moved for reconsideration, but their motion was denied by the RTC. 6
Hence, this appeal.
The issue presented in this case is straightforward. Petitioners insist that that the RTC committed reversible
error in dismissing their Rule 65 Petition as an improper appeal, since grave abuse of discretion amounting to
excess of jurisdiction was committed by MTC Judge Clavecilla when he required the production of their ITRs. 7
In support of their claim and to prove the confidentiality of the ITRs they cite Section 71 of the National Internal
Revenue Code, which reads:8
Section 71. Disposition of Income Tax Returns, Publication of Lists of Taxpayers and Filers After the
assessment shall have been made, as provided in this Title, the returns, together with any corrections thereof
which may have been made by the Commissioner, shall be filed in the Office of the Commissioner and shall
constitute public records and be open to inspection as such upon the order of the President of the Philippines,
under rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the
Commissioner.
The Commissioner may, in each year, cause to be prepared and published in any newspaper the lists
containing the names and addresses of persons who have filed income tax returns.
They also quote from National Internal Revenue Code (2001) authored by Epifanio G. Gonzales and Celestina
M. Robledo-Gonzales: 9
The general rule is that despite a court order, copies of the income tax returns cannot be furnished in view of
the prohibition contained in Section 332 (now Section 286) of the Tax Code.

Nevertheless, we proceed to the contention of petitioners against the RTCs dismissal of their Rule 65 Petition.
In this regard, we stress that it is basic in our jurisdiction that a petition for certiorari under Rule 65 is not a
mode of appeal.14 The remedy, which is narrow in scope, 15 only corrects errors of jurisdiction.16 Thus, if the
issue involves an error of judgment, the error is correctible by an appeal via a Rule 45 petition, and not by a
writ of certiorari under Rule 65 of the Rules of Court.17
As defined in jurisprudence, errors of jurisdiction occur when the court exercises jurisdiction not conferred
upon it by law.18 They may also occur when the court or tribunal, although it has jurisdiction, acts in excess of it
or with grave abuse of discretion amounting to lack of jurisdiction. 19
On the contrary, errors of judgment are those that the court may commit in the exercise of its
jurisdiction.1wphi1 They include errors of procedure or mistakes in the courts findings 20 based on a mistake
of law or of fact.21
Here, it is patently clear that petitioners do not question whether the MTC has jurisdiction or authority to
resolve the issue of confidentiality of ITRs. Rather, they assail the wisdom of the MTCs very judgment and
appreciation of the ITR as not confidential. Specifically, they claim that the ruling violated the provisions of the
NIRC on the alleged rule on confidentiality of ITRs.
Based on the definitions above, we conclude similarly as the RTC that if there is an error to speak of the error
relates only to a mistake in the application of law, and not to an error of jurisdiction or grave abuse of
discretion amounting to excess of jurisdiction. The only error petitioners raise refers to Judge Clavecillas
mistake of not applying Section 71, which allegedly prohibits the production of ITRs because of confidentiality.
Certainly, as correctly posited by the court a quo, if every error committed by the trial court is subject to
certiorari, trial would never come to an end, and the docket will be clogged ad infinitum. 22

Therefore, given the issues raised by petitioners in their plea for the extraordinary writ of certiorari, the RTC
did not grievously err in dismissing the Rule 65 Petition as an improper appeal. This ruling is only in keeping
with the proper conduct of (xxx unread text) before the courts and the prompt administration of justice at every
level of the judicial hierarchy.23
IN VIEW THEREOF, the assailed 6 May 2005 Decision of the Regional Trial Court in Special Civil Action No.
RTC 2005-0032 is AFFIRMED. The 25 July 2005 Petition for Review filed by petitioners is hereby DENIED for
lack of merit.

During the pendency of Civil Case No. 5920, UCPB filed an ex parte petition for the issuance of a writ of
possession to recover possession of the property (Special Proceedings No. 5884). On September 5, 2000, the
RTC granted the ex parte petition of UCPB, 4 and issued on December 4, 2001 the writ of possession directing
the sheriff of the Province of Aklan to place UCPB in the actual possession of the property. The writ of
possession was served on the respondents on January 23, 2002 with a demand for them to peacefully vacate
on or before January 31, 2002. Although the possession of the property was turned over to UCPB on February
1, 2002, they were allowed to temporarily remain on the property for humanitarian reasons. 5
On February 14, 2002, the respondents filed inthe RTC handling Special Proceedings No. 5884 a petition to
cancel the writ of possession and to set aside the foreclosure sale. 6 They included an application for a writ of
preliminary injunction and temporary restraining order to prevent the implementation of the writ of possession.

SO ORDERED.

It is notable that Special Proceedings No. 5884 was consolidated with Civil Case No. 5920 on March 1, 2002. 7
On March 19, 2002, the RTC denied the respondents application for the issuance of a writ of preliminary
injunction.8 Aggrieved by the denial, the respondents brought a petition for certiorari and/or mandamus in the
CA(C.A.-G.R. SP No. 70261).
The CAs Ruling

G.R. No. 162757

December 11, 2013

UNITED COCONUT PLANTERS BANK, Petitioner,

vs.
CHRISTOPHER LUMBO and MILAGROS LUMBO, Respondents.
DECISION
BERSAMIN, J.:
The implementation of a writ of possession issued pursuant to Act No. 3135 at the instance of the purchaser at
the foreclosure sale of the mortgaged property in whose name the title has been meanwhile consolidated
cannot be prevented by the injunctive writ.
The Case
Petitioner United Coconut Planters Bank (UCPB) appeals the decision promulgated on November 27,
2003,1whereby the Court of Appeals (CA) reversed and set aside the order issued on March 19, 2002 by the
Regional Trial Court (RTC) of Kalibo, Aklan, Branch 8,2 denying the motion of respondents Christopher Lumbo
and Milagros Lumbo for the issuance of a writ of preliminary injunction to prevent the implementation of the
writ of possession issued against them.

On November 27, 2003, the CA resolved C.A.-G.R. SP No. 70261 by granting the respondents petition,
setting aside the assailed orders,and enjoining the RTC from implementing the writ of possession "pending the
final disposition of the petition for its cancellation and the annulment of the foreclosure sale." 9 It held as
follows:
A careful review of the records of this case reveals that the respondent judge committed glaring errors of
jurisdiction in his assailed order in denying the petitioners entreaty for injunctive relief pending the
determination of the propriety of the writ of possession and the adjudication of the action for the annulment of
the disputed foreclosure sale.
In the assailed order, the respondent judge opined, albeit erroneously, that the present petition for the
cancellation of the writ of possession is premature to avail of the remedies under Section 8 of Act 3135 as
amended by Act 4118 considering that the petitioners are still in possession of the foreclosed property.
Sec. 8 of Act 3135 as amended by Act 4118, provides:
"The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the
purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled,
specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in
accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with
the summary procedure provided for in section one hundred and twelve of Act numbered Four hundred and
ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the
bond furnished by the person who obtained possession. Either of the parties may appeal from the orderof the
judge in accordance with section fourteenof Act numbered Four hundred and ninety-six; but the order of
possession shall continue in effect during the pendency of the appeal."

Antecedents
The respondents borrowed the aggregate amount of P12,000,000.00 from UCPB. Tosecure the performance
of their obligation, they constituteda real estate mortgage on a parcel of land located in Boracay, Aklanand all
the improvements thereon that they owned and operated as abeach resort known as Titays South Beach
Resort. Upon theirfailure to settle the obligation, UCPB appliedon November 11, 1998 for the extrajudicial
foreclosure of the mortgage, and emerged as the highest bidder at the ensuing foreclosure sale held on
January 12, 1999. Thecertificate of sale was issued on the same day, andUCPB registered the sale in its
name on February 18, 1999. The title over the mortgaged property was consolidated in the name of UCPB
after the respondents failed to redeem the property within the redemption period.
On January 7, 2000, the respondents broughtagainst UCPB inthe RTC 3 an action for the annulment of the
foreclosure, legal accounting, injunction against the consolidation of title, and damages(Civil Case No. 5920).

As the records would show, although the petitioners are still in possession of the subject properties as they
were allowed to temporarily stay thereat by the respondent bank, it cannot be gainsaid that the latter has
already obtained the possession of the said properties. This being so, the petitioners have the legal recourse
to file a petition for the cancellation of the writ of possession based on the cited legal grounds, i.e. that the
mortgage was not violated or that the sale was not made in accordance with the provisions of the law. Clearly,
the respondent judge erred indeclaring that the said petition was prematurely filed.
Contrary to the dissertation of the respondent judge, the plain language of the law actually does not require
the debtor to file a petition to cancel the writ of possession only after the purchaser had obtained possession
of the foreclosed property subject of the writ. It merely states that the petition should not be filed later that thirty
(30) days after the purchaser was given possession. Neither does the law qualify whether the possession is
full or partial, nor permanent or temporary, as to justify the availability of the legal remedy to the mortgagor.

What the plain language of the law espouses is the right of the debtor to question the validity of the foreclosure
sale and the propriety of theissuance of the writ of possession.
Statutes, it must be stressed, should be construed in light of the objective to be achieved and the evil or
mischief to be suppressed. Equally notable is the well-established rule that when the law is clear and free from
any doubt or ambiguity, there is no room for construction or interpretation, only when the law is ambiguous or
of doubtful meaning may the court interpret or construe its true intent.
Sadly, the respondent judge, in erroneously interpreting Section 8 of Act 3135, failed to observe these
elementary rules considering that the law is clear and ambiguous (sic)and in fact explicitly manifest its true
intention to afford the debtor legal recourses. Instead of conforming to these rules, the respondent
judgeinterpreted the said law in a manner which betrays its true intent.
Admittedly, in this case, a writ of possession was issued against the petitioners and that the respondent bank
had already been given possession of the foreclosed property although the same is only partial. This being the
case, the petitioners clearly have the legal recourse to file the said petition.

In its petition for review,11 UCPB asserts thatthe CA did not rule in accordance with prevailing laws and
jurisprudence when it granted the respondents petition for certiorariand enjoined the implementation of the
writ of possession issued by the RTC in favor of UCPB;that the respondents were not entitled to the issuance
of an injunctive writ;that assuming, arguendo, that the CA was within its jurisdiction to issue the assailed
decision and resolution, no bond was posted to the effect that the respondents would pay to UCPBall the
damages that it would sustain by reason of the injunction should the Court finally decide that they were not
entitled to the injunctive writ;that the assailed decision and resolution were tantamount to a pre-judgment of
the respondents petition to cancel the writ of possession; andthat the respondents were illegally attempting to
wrest away its possession of the property.
In their comment,12 the respondents maintain that the rulethat"prohibition cannot lie against the implementation
of a writ of possession"13 was not absolute; and that the petition was infirm for raising mixed questions of fact
and of law.
Rulingof the Court
The petition is impressed with merit.

In fact, this disquisition of the respondent judge respecting the untimely filing of the petition for the cancellation
of the disputed writ completely contradicts the basis of his subsequent pronouncement that injunctive relief
cannot be made available to the petitioners since the act complained of is already fait accompli. On one hand,
when it comes to the issue of the timeliness of the petition, the disposition of the respondent judge is that the
respondents are yet to gain possession of the foreclosed properties. In contrast, when it respects the propriety
of the prayer for injunctive relief, he in turn declares that the act sought to be restrained is already fait
accomplice on the supposition that although the Sheriffs Return of Service dated 6 March 2002 is
denominated as a partial return, the possession of the said properties had already been given to the
respondent judge.
Peremptorily, the respondent judge gravely abused his discretion in bending his discourses on the matter of
possession depending upon what issue implores adjudication. What is undeniable, however, is the fact that
the petitioners are still in possession of the foreclosed property as they are admittedly allowed to temporarily
stay thereat and that irrespective thereof, they have every right under the law to question the propriety of the
issued writ by way of a petition.
Moreover, the respondent judge erred in declaring that he could not act on the application for injunctive relief
because the writ was issued by another court of coordinate jurisdiction. The petition was filed before the same
branch of the RTC of Kalibo, Aklan but was re-raffled to another branch and later on consolidated before the
branch of the respondent judge where the action for the annulment of the foreclosure sale is pending. Thus,
the case, which incidentally is a mere continuation of the de-parte proceeding before the same court though
not before the same branch.
What is more appalling is that by denying the petitioners prayer for injunctive relief, he in effect resolved the
main case before him, which is the petition for the cancellation of the writ of possession. The course of his
dissertation in the assailed order already manifests his predisposition to deny the petition for the cancellation
of the disputed writ. Considering that there is an urgent and paramount necessity for the writ to be issued in
order to prevent serious damage on the part of the petitioners pending the trial proceedings in the annulment
suit, especially so since the same is also pending before the respondent judge, the Resolution dated 22
October 2003 which temporarily enjoins the implementation of the writ of possession issued against the
petitioners is hereby made permanent awaiting the final disposition on the issues regarding the validity of the
foreclosure sale and the said writ of possession.10
UCPBsought thereconsiderationof the decision, butthe CA denied itsmotion for reconsiderationon March 8,
2004.
Hence, UCPB appeals by petition for review on certiorari.
Issues

To resolve the issue of whether the CA correctly granted the injunctive writ to enjoin the implementation of the
writ of possession the RTC had issued to place UCPB in the possession of the mortgaged property, it is
necessary to explain the nature of the writ of possession and the consequencesof its implementation.
A writ of possession commands the sheriff to place a person in possession of real property. It may be issued
inthe following instances, namely: (1) land registration proceedings under Section 17 of Act No. 496; (2)
judicial foreclosure, provided the debtor is in possession of the mortgaged property, and no third person, not a
party to the foreclosure suit, had intervened; (3) extrajudicial foreclosure of a real estate mortgage, pending
redemption under Section 7 of Act No. 3135, as amended by Act No. 4118; and (4) execution sales, pursuant
to the last paragraph of Section 33, Rule 39 of the Rules of Court. 14
With particular reference to an extra-judicial foreclosure of a real estate mortgageunder Act No. 3135, as
amended by Act No. 4118, the purchaser at the foreclosure sale may apply ex parte with the RTC of the
province or place where the property or any part of itis situated, to give the purchaser possession thereof
during the redemption period, furnishing bond in an amount equivalent to the useof the property for a period of
twelve months, to indemnify the debtor shouldit be shown that the sale was made without violating the
mortgage or without complying with the requirements of Act No. 3135; and the RTC, upon approval of the
bond, order that a writ of possession be issued, addressed to the sheriff of the province in which the property
is situated, who shallthenexecute said order immediately.15 We underscore that the application for a writ of
possessionby the purchaser in a foreclosure sale conducted under Act No. 3135 is ex parteand summary in
nature, brought for the benefit of one party only and without notice being sent by the court to any person
adverse in interest. The relief is granted even without giving an opportunity to be heard to the person against
whom the relief is sought.16 Its natureas an ex partepetition under Act No. 3135, as amended, renders the
application for the issuance of a writ of possessiona non-litigious proceeding. 17 Indeed, thegrant of the writ of
possession is but a ministerial act on the part of the issuing court, because its issuance is a matter of right on
the part of the purchaser.18 The judge issuing the orderforthegranting of the writ of possession pursuant to the
express provisions of Act No. 3135cannot be charged with having acted without jurisdiction or with grave
abuse of discretion.19
The reckoning of the period of redemption by the mortgagor or his successor-in-interest starts from the
registration of the sale in the Register of Deeds. Although Section 6 20 of Act No. 3135, as amended, specifies
that the period of redemption starts fromand afterthe date of the sale, jurisprudence has sincesettledthatsuch
period ismore appropriately reckoned from thedate of registration. In Mallari v. Government Service Insurance
System,21the Court explains the shift, viz:
In this regard, we clarify that the redemption period envisioned under Act 3135 is reckoned from the date of
the registration of the sale, not from and after the date of the sale, as the text of Act 3135 shows. Although the
original Rules of Court (effective on July 1, 1940) incorporated Section 464 to Section 466 of the Code of Civil
Procedureas its Section 25 (Section 464); Section 26 (Section 465); and Section 27 (Section 466) of Rule 39,
with Section 27 still expressly reckoning the redemption period to be "at any time within twelve months after
the sale;":and although the Revised Rules ofCourt (effective on January 1, 1964) continued to provide in
Section 30 of Rule 39 that the redemption be made from the purchaser "at any time within twelve (12) months
after the sale," the 12-month period of redemption came to be held as beginning "to run not from the date of

the sale but from the time of registration of the sale in the Office of the Register of Deeds." This construction
was due to the fact thatthe sheriffs sale of registered (andunregistered) lands did not take effect as a
conveyance, or did not bind the land, until the sale was registered in the Register of Deeds.
Desiring to avoid any confusion arising from the conflict between the texts of the Rules of Court(1940 and
1964) and Act No. 3135, on one hand, and the jurisprudence clarifying the reckoning of the redemption period
in judicial sales of real property, on the other hand, the Court has incorporated in Section 28 of Rule 39 of the
current Rules of Court(effective on July 1, 1997) the foregoing judicial constructionof reckoning the redemption
period from the date of the registration of the certificate of sale, to wit:
Sec. 28. Time and manner of, and amounts payable on, successive redemptions; notice to be given and filed.
The judgment obligor, or redemptioner, may redeem the property from the purchaser, at any time within one
(1) year from the date of the registration of the certificate of sale,by paying the purchaser the amount of his
purchase, with one per centumper monthinterest thereon in addition, up to the time of redemption, together
with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and
interest on such last named amount at the same rate; and if the purchaser be also a creditor having a prior lien
to that of the redemptioner, other than the judgment under which such purchase was made, the amount of
such other lien, with interest.

Otherweighty considerations justify resolvingthis appeal in favor of UCPB.

The first is that the CA did not properly appreciate the nature of the supposed error attributed to the RTC.
Assuming, though not conceding, that the RTC did err in denying the respondents applicationfor injunction to
prevent the implementation of the writ of possession, itserror related only to the correctapplication of the law
and jurisprudence relevant to the application for injunction. As such, the error amounted only to one of
judgment, not of jurisdiction.An error of judgment is one that the court may commit in the exercise of its
jurisdiction, and sucherror is reviewable only throughan appealtaken in due course.In contrast, an error of
jurisdiction is committed where the act complained of was issued by the court without or in excess of
jurisdiction, and sucherror is correctible only by the extraordinary writ ofcertiorari. 25
Considering that there is no question that the RTC had jurisdiction over bothCivil Case No. 5920 andSpecial
Proceedings No. 5884, it should follow that its consideration and resolution of the respondents application for
the injunctive writ filed in Special Proceedings No. 5884 were taken in the exercise of that jurisdiction. As
earlier made plain, UCPB as the registered owner of the property was at that point unquestionably entitled to
thefull implementation of the writ of possession. In the absence of any clear and persuasive showing that
itcapriciouslyor whimsicallydenied the respondents application,its denial of the application did not constitute
grave abuse of discretion amounting to either lack or excess of jurisdiction.

Property so redeemed may again be redeemed within sixty (60) days after the last redemption upon payment
of the sum paid on the last redemption, with two per centumthereon in addition, and the amount of any
assessments or taxes which the last redemptioner may have paid thereon after redemption by him, with
interest on such last-named amount, and in addition, the amount of any liens held by said last redemptioner
prior to his own, with interest. The property may be again, and as often as a redemptioner is so disposed,
redeemed from any previous redemptioner within sixty (60) days after the last redemption, on paying the sum
paid on the last previous redemption, with two per centumthereon in addition, and the amounts of any
assessments or taxes which the last previous redemptioner paid after the redemption thereon, with interest
thereon, and the amount of any liens held by the last redemptioner prior to his own, with interest.

It was of no consequence at all that UCPB made its ex parteapplication for the writ of possession the action
(Special Proceedings No. 5884) when Civil Case No. 5920 (in which the respondents were seeking the
annulment of the foreclosure and the stoppage of the consolidation of title, among other reliefs sought) was
already pending in the RTC, for the settled jurisprudence is to the effect that the pendency of an action for the
annulment of the mortgage or of the foreclosure sale doesnot constitute a legal ground to prevent the
implementation of a writof possession.26

Written notice of any redemption must be given to the officer who made the sale and a duplicate filed with the
registry of deeds of the place, and if any assessments or taxes are paid by the redemptioner or if he has or
acquires any lien other than that upon which the redemption was made, notice thereof must in like manner be
given to the officer and filed with the registry of deeds; if such notice be not filed, the property may be
redeemed without paying such assessments, taxes, or liens. (30a)

The second concerns the CAs reversing and undoing the RTCs denial of the respondents application for the
injunctive writ, andenjoining the RTC from implementing the writ of possession against the respondents
"pending the final disposition of the petition for its cancellation and the annulment of the foreclosure
sale."27 The CA effectively thereby granted the respondents application for the injunctive writ. In so doing,
however, the CA ignored the essential requirements for the grant of the injunctive writ, and disregarded the
patent fact that the respondents held noright in essethat the injunctive writ they were seeking would protect.
Thus, the CA committed another serious error.

Accordingly, the mortgagor or his successor-in-interest must redeem the foreclosed property within one year
from the registration of the sale with the Register of Deedsin order to avoid the title from consolidating in the
purchaser. x xx
If the redemption period expires without the mortgagor or his successor-in-interest redeeming the foreclosed
property within one yearfrom the registration of the sale with the Register of Deeds, the title over the property
consolidatesin the purchaser. The consolidation confirmsthe purchaserasthe owner entitled to the possession
of the property without any need for him to file thebondrequired under Section 7 of Act No. 3135. 22 The
issuance of a writ of possession to the purchaserbecomes a matter of right upon the consolidation of title in his
name,23whilethe mortgagor,by failing to redeem, loses all interest inthe property.24
The property was sold at the public auction on January 12, 1999, with UCPB as the highest bidder. The sheriff
issuedthe certificate of saleto UCPB on the same day of the sale. Considering that UCPB registered the
certificate of sale in its name on February 18, 1999,the period of redemption was one year from said date. By
virtue of the non-redemption by the respondents within said period, UCPB consolidated the title over the
property in its name.
It isclear enough, therefore, that the RTC committed no grave abuse of discretionbut acted inaccordance
withthe law and jurisprudence indenying the respondents application for the injunctive writ filed on February
14, 2002 in Special Proceedings No. 5884 to prevent the implementation of the writ of possession issued on
December 4, 2001.
Consequently, the CAgrossly erred in granting the respondents petition for certiorariand/ormandamus, and in
enjoining the RTC from implementing thewrit of possession in favor of UCPB.

A preliminary injunction is an order granted at any stage of an action or proceeding prior to the judgment or
final order requiring a party or a court, an agency, or a person to refrain from a particular a particular act or
acts. It may also require the performance of a particular act or acts, in which case it is known as a preliminary
mandatory injunction. Thus, a prohibitory injunctionis one that commands a party to refrain from doing a
particular act, while a mandatory injunctioncommands the performance of some positive act to correct a wrong
in the past.
Under Section 3, Rule 58 of the Rules of Court, the issuance of a writ of preliminary injunctionmay be justified
under any of the following circumstances, namely:
(a)Theapplicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining
the commission or continuance of the act or acts complained of, or in requiring the performance of an act or
acts, either for a limited period or perpetually;
(b)The commission, continuance or non-performance of the act or acts complained of during the litigation
would probably work injustice to the applicant; or
(c)A party, court, agency or a person is doing, threatening, or is attemptingto do, or is procuring or suffering to
bedone, some act or acts probably in violation of the rights of the applicant respecting the subject of the action
or proceeding, and tending to render the judgment ineffectual.
A right is in esseif it exists in fact. In the case of injunction, the right sought to be protected should at least be
shown to exist prima facie. Unless such a showing is made, the applicant is not entitled to an injunctive relief.

In City Government of Butuan v. Consolidated Broadcasting System (CBS), Inc., 28 the Court has stressed the
essential significance of the applicant for injunction holding a right in esse to be protected, stating:
As with all equitable remedies, injunction must be issued only at the instance of a party who possesses
sufficient interest in or title to the right or the property sought to be protected. It is proper only when the
applicant appears to be entitled to the relief demanded in the complaint, which must aver the existence of the
right and the violation of the right, or whose avcrmcnts must in the minimum constitute a prima facie showing
of a right to the final relief sought. Accordingly, the conditions for the issuance of the injunctive writ arc: (a) that
the right to be protected exists prima facie; (b) that the act sought to be enjoined is violative of that right; and
(c) that there is an urgent and paramount necessity for the writ to prevent serious damage. An injunction will
not issue to protect a right not in esse, or a right which is merely contingent and may never arise; or to restrain
an act which docs not give rise to a cause of action; or to prevent the perpetration of an act prohibited by
statute. Indeed, a right, to be protected by in.junction, means a right clearly founded on or granted by law or is
enforceable as a matter of law. (Bold underscoring supplied for emphasis)
However, the respondents made no such showing of their holding a right in esse. They could not do so simply
because their non-redemption within the period of redemption had lost for them any right in the property,
including its possession. The absence of a right in esse on their part furnishes a compelling reason to undo
the CA's reversal of the RTC's denial of their application for injunction as well as to strike down the injunctive
relief the CA afforded to the respondents. It cannot be otherwise, for they had no "right clearly founded on or
granted by law or is enforceable as a matter of law".
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES the decision promulgated
on November 27, 2003 and the resolution promulgated on March 8, 2004 in C.A.-G.R. SP. No. 70261;
DISMISSES the petition in C.A.-G.R. SP. No. 70261 for lack of factual and legal merits; DECLARES that there
is now no obstacle to the implementation of the writ of possession issued in favor of the petitioner; and
ORDERS the respondents to pay the costs of suit.

In support of this recommendation, the Ombudsman attached the Complaint 6 it filed against the Ligots for
perjury under Article 183 of the Revised Penal Code, and for violations of Section 8 7 of RA No. 67138 and RA
No. 3019 (Anti-Graft and Corrupt Practices Act).
The Ombudsmans Complaint
a. Lt. Gen. Ligot and immediate family
The Ombudsmans complaint alleges that Lt. Gen. Ligot served in the Armed Forces of the Philippines (AFP)
for 33 years and 2 months, from April 1, 1966 as a cadet until his retirement on August 17, 2004. 9 He and Mrs.
Ligot have four children, namely: Paulo Y. Ligot, Riza Y. Ligot,
George Y. Ligot and Miguel Y. Ligot, who have all reached the age of majority at the time of the filing of the
complaint.10
Lt. Gen. Ligot declared in his Statement of Assets, Liabilities, and Net Worth (SALN) that as of December 31,
2003, he had assets in the total amount of Three Million Eight Hundred Forty-Eight Thousand and Three
Pesos (P3,848,003.00).11 In contrast, his declared assets in his 1982 SALN amounted to only One Hundred
Five Thousand Pesos (P105,000.00).12
Aside from these declared assets, the Ombudsmans investigation revealed that Lt. Gen. Ligot and his family
had other properties and bank accounts, not declared in his SALN, amounting to at least Fifty Four Million One
Thousand Two Hundred Seventeen Pesos (P54,001,217.00). These undeclared assets consisted of the
following:

Undeclared Assets

SO ORDERED.

Jacinto Ligots undeclared assets

G.R. No. 176944

March 6, 2013

Jacinto Ligots childrens assets

RET. LT. GEN. JACINTO C. LIGOT, ERLINDA Y. LIGOT, PAULO Y. LIGOT, RIZA Y. LIGOT, and MIGUEL Y.
LIGOT, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY LAUNDERING
COUNCIL, Respondent.
DECISION
BRION, J.:
In this petition for certiorari,1 retired Lieutenant General (Lt. Gen.) Jacinto C. Ligot, Erlinda Y. Ligot (Mrs. Ligot),
Paulo Y. Ligot, Riza Y. Ligot, and Miguel Y. Ligot (petitioners) claim that the Court of Appeals (CA) acted with
grave abuse of discretion amounting to lack or excess of jurisdiction when it issued its January 12, 2007
resolution2 in CA G.R. SP No. 90238. This assailed resolution affirmed in toto the CAs earlier January 4, 2006
resolution3 extending the freeze order issued against the Ligots properties for an indefinite period of time.
BACKGROUND FACTS
On June 27, 2005, the Republic of the Philippines (Republic), represented by the Anti-Money Laundering
Council (AMLC), filed an Urgent Ex-Parte Application for the issuance of a freeze order with the CA against
certain monetary instruments and properties of the petitioners, pursuant to Section 10 4 of Republic Act (RA)
No. 9160, as amended (otherwise known as the Anti-Money Laundering Act of 2001). This application was
based on the February 1, 2005 letter of the Office of the Ombudsman to the AMLC, recommending that the
latter conduct an investigation on Lt. Gen. Ligot and his family for possible violation of RA No. 9160. 5

Amount
P 41,185,583.5313
1,744,035.6014

Tuition fees and travel expenses

P 2,308,047.8715

Edgardo Yambaos assets relative to the real properties

P 8,763,550.0016

Total

P 54,001,217.00

Bearing in mind that Lt. Gen. Ligots main source of income was his salary as an officer of the AFP,17 and given
his wife and childrens lack of any other substantial sources of income, 18 the Ombudsman declared the assets
registered in Lt. Gen. Ligots name, as well as those in his wifes and childrens names, to be illegally obtained
and unexplained wealth, pursuant to the provisions of RA No. 1379 (An Act Declaring Forfeiture in Favor of the
State Any Property Found to Have Been Unlawfully Acquired by Any Public Officer or Employee and Providing
for the Proceedings Therefor).
b. Edgardo Tecson Yambao
The Ombudsmans investigation also looked into Mrs. Ligots younger brother, Edgardo Tecson Yambao. The
records of the Social Security System (SSS) revealed that Yambao had been employed in the private sector
from 1977 to 1994. Based on his contributions to the SSS, Yambao did not have a substantial salary during his
employment. While Yambao had an investment with Mabelline Foods, Inc., the Ombudsman noted that this
company only had a net income of P5,062.96 in 2002 and P693.67 in 2003.19 Moreover, the certification from
the Bureau of Internal Revenue stated that Yambao had no record of any annual Individual Income
Tax Return filed for the calendar year 1999 up to the date of the investigation.
Despite Yambaos lack of substantial income, the records show that he has real properties and vehicles
registered in his name, amounting to Eight Million Seven Hundred Sixty Three Thousand Five Hundred Fifty

Pesos (P8,763,550.00), which he acquired from 1993 onwards. The Office of the Ombudsman further
observed that in the documents it examined, Yambao declared three of the Ligots addresses as his own.

Forfeiture Cases) took effect. Under this rule, a freeze order could be extended for a maximum period of six
months.

From these circumstances, the Ombudsman concluded that Yambao acted as a dummy and/or nominee of the
Ligot spouses, and all the properties registered in Yambaos name actually belong to the Ligot family.

On January 31, 2006, the Ligots filed a motion for reconsideration of the CAs January 4, 2006 resolution,
insisting that the freeze order should be lifted considering: (a) no predicate crime has been proven to support
the freeze orders issuance; (b) the freeze order expired six months after it was issued on July 5, 2005; and (c)
the freeze order is provisional in character and not intended to supplant a case for money laundering. When
the CA denied this motion in its resolution dated January 12, 2007, the Ligots filed the present petition.

Urgent Ex-Parte Freeze Order Application

As a result of the Ombudsmans complaint, the Compliance and Investigation staff (CIS) of the AMLC
conducted a financial investigation, which revealed the existence of the Ligots various bank accounts with
several financial institutions.20 On April 5, 2005, the Ombudsman for the Military and Other Law Enforcement
Officers issued a resolution holding that probable cause exists that Lt. Gen. Ligot violated Section 8, in relation
to Section 11, of RA No. 6713, as well as Article 183 21 of the Revised Penal Code.
On May 25, 2005, the AMLC issued Resolution No. 52, Series of 2005, directing the Executive Director of the
AMLC Secretariat to file an application for a freeze order against the properties of Lt. Gen. Ligot and the
members of his family with the CA.22 Subsequently, on June 27, 2005, the Republic filed an Urgent Ex-Parte
Application with the appellate court for the issuance of a Freeze Order against the properties of the Ligots and
Yambao.

THE PETITIONERS ARGUMENTS

Lt. Gen. Ligot argues that the appellate court committed grave abuse of discretion amounting to lack or excess
of jurisdiction when it extended the freeze order issued against him and his family even though no predicate
crime had been duly proven or established to support the allegation of money laundering. He also maintains
that the freeze order issued against them ceased to be effective in view of the 6-month extension limit of
freeze orders provided under the Rule in Civil Forfeiture Cases. The CA, in extending the freeze order, not
only unduly deprived him and his family of their property, in violation of due process, but also penalized them
before they had been convicted of the crimes they stand accused of.
THE REPUBLICS ARGUMENTS

The appellate court granted the application in its July 5, 2005 resolution, ruling that probable cause existed
that an unlawful activity and/or money laundering offense had been committed by Lt. Gen. Ligot and his family,
including Yambao, and that the properties sought to be frozen are related to the unlawful activity or money
laundering offense. Accordingly, the CA issued a freeze order against the Ligots and Yambaos various bank
accounts, web accounts and vehicles, valid for a period of 20 days from the date of issuance.
On July 26, 2005, the Republic filed an Urgent Motion for Extension of Effectivity of Freeze Order, arguing that
if the bank accounts, web accounts and vehicles were not continuously frozen, they could be placed beyond
the reach of law enforcement authorities and the governments efforts to recover the proceeds of the Ligots
unlawful activities would be frustrated. In support of its motion, it informed the CA that the Ombudsman was
presently investigating the following cases involving the Ligots:

In opposition, the Republic claims that the CA can issue a freeze order upon a determination that probable
cause exists, showing that the monetary instruments or properties subject of the freeze order are related to the
unlawful activity enumerated in RA No. 9160. Contrary to the petitioners claims, it is not necessary that a
formal criminal charge must have been previously filed against them before the freeze order can be issued.
The Republic further claims that the CAs September 20, 2005 resolution, granting the Republics motion to
extend the effectivity of the freeze order, had already become final and executory, and could no longer be
challenged. The Republic notes that the Ligots erred when they filed what is effectively a second motion for
reconsideration in response to the CAs January 4, 2006 resolution, instead of filing a petition for review on
certiorari via Rule 45 with this Court. Under these circumstances, the assailed January 4, 2006 resolution
granting the freeze order had already attained finality when the Ligots filed the present petition before this
Court.

e Number

Complainant(s)

Nature

B-P-C-05- 0523

Wilfredo Garrido

Plunder

B-P-C-05- 0003

AGIO Gina Villamor, et al.

Perjury

B-P-C-05- 0184

Field Investigation Office

B-P-C-05-0352

David Odilao

Violation of RA No. 3019, Section 3(b); Perjury under

Article 183, Revised Penal Code in relation to Section
I. Procedural aspect
11 of RA No. 6713; Forfeiture Proceedings in Relation
to RA No. 1379
a. Certiorari not proper remedy to assail freeze order; exception
Malicious Mischief; Violation of Section 20, RA No.
7856
Section 57 of the Rule in Civil Forfeiture Cases explicitly provides the remedy available in cases involving
freeze orders issued by the CA:

Finding merit in the Republics arguments, the CA granted the motion in its September 20, 2005 resolution,
extending the freeze order until after all the appropriate proceedings and/or investigations have been
terminated.
On September 28, 2005, the Ligots filed a motion to lift the extended freeze order, principally arguing that
there was no evidence to support the extension of the freeze order. They further argued that the extension not
only deprived them of their property without due process; it also punished them before their guilt could be
proven. The appellate court subsequently denied this motion in its January 4, 2006 resolution.
Meanwhile, on November 15, 2005, the "Rule of Procedure in Cases of Civil Forfeiture, Asset Preservation,
and Freezing of Monetary Instrument, Property, or Proceeds Representing, Involving, or Relating to an
Unlawful Activity or Money Laundering Offense under Republic Act No. 9160, as Amended" 23 (Rule in Civil

THE COURTS RULING

We find merit in the petition.

Section 57. Appeal. - Any party aggrieved by the decision or ruling of the court may appeal to the Supreme
Court by petition for review on certiorari under Rule 45 of the Rules of Court. The appeal shall not stay the
enforcement of the subject decision or final order unless the Supreme Court directs otherwise. [italics
supplied]
From this provision, it is apparent that the petitioners should have filed a petition for review on certiorari, and
not a petition for certiorari, to assail the CA resolution which extended the effectivity period of the freeze order
over their properties.
Even assuming that a petition for certiorari is available to the petitioners, a review of their petition shows that
the issues they raise (i.e., existence of probable cause to support the freeze order; the applicability of the 6-

month limit to the extension of freeze orders embodied in the Rule of Procedure in Cases of Civil Forfeiture)
pertain to errors of judgment allegedly committed by the CA, which fall outside the Courts limited jurisdiction
when resolving certiorari petitions. As held in People v. Court of Appeals: 24
In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to resolving only errors of
jurisdiction. It is not to stray at will and resolve questions or issues beyond its competence such as errors of
judgment. Errors of judgment of the trial court are to be resolved by the appellate court in the appeal by and of
error or via a petition for review on certiorari in this Court under Rule 45 of the Rules of Court. Certiorari will
issue only to correct errors of jurisdiction. It is not a remedy to correct errors of judgment. An error of judgment
is one in which the court may commit in the exercise of its jurisdiction, and which error is reversible only by an
appeal. Error of jurisdiction is one where the act complained of was issued by the court without or in excess of
jurisdiction and which error is correctible only by the extraordinary writ of certiorari. Certiorari will not be issued
to cure errors by the trial court in its appreciation of the evidence of the parties, and its conclusions anchored
on the said findings and its conclusions of law. As long as the court acts within its jurisdiction, any alleged
errors committed in the exercise of its discretion will amount to nothing more than mere errors of judgment,
correctible by an appeal or a petition for review under Rule 45 of the Rules of Court. 25 (citations omitted; italics
supplied)
Clearly, the Ligots should have filed a petition for review on certiorari, and not what is effectively a second
motion for reconsideration (nor an original action of certiorari after this second motion was denied), within
fifteen days from receipt of the CAs January 4, 2006 resolution. To recall, this resolution denied the petitioners
motion to lift the extended freeze order which is effectively a motion for reconsideration of the CA ruling
extending the freeze order indefinitely.26
However, considering the issue of due process squarely brought before us in the face of an apparent conflict
between Section 10 of RA No. 9160, as amended, and Section 53(b) of the Rule in Civil Forfeiture Cases, this
Court finds it imperative to relax the application of the rules of procedure and resolve this case on the merits in
the interest of justice.27
b. Applicability of 6-month extension period under the Rule in Civil Forfeiture Cases
Without challenging the validity of the fixed 6-month extension period, the Republic nonetheless asserts that
the Rule in Civil Forfeiture Cases does not apply to the present case because the CA had already resolved the
issues regarding the extension of the freeze order before the

On the other hand, the petitioners manifested that as of October 29, 2012, the only case filed in connection
with the frozen bank accounts is Civil Case No. 0197, for forfeiture of unlawfully acquired properties under RA
No. 1379 (entitled "Republic of the Philippines v. Lt. Gen. Jacinto Ligot, et. al."), pending before the
Sandiganbayan.
These subsequent developments and their dates are significant in our consideration of the present case,
particularly the procedural aspect. Under Section 56 of the Rule in Civil Forfeiture Cases which provides that
after the post-issuance hearing on whether to modify, lift or extend the freeze order, the CA shall remand the
case and transmit the records to the RTC for consolidation with the pending civil forfeiture proceeding. This
provision gives the impression that the filing of the appropriate cases in courts in 2011 and 2012 rendered this
case moot and academic.
A case is considered moot and academic when it "ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or value. Generally, courts
decline jurisdiction over such case or dismiss it on ground of mootness." 28 However, the moot and academic
principle is not an iron-clad rule and is subject to four settled exceptions, 29 two of which are present in this
case, namely: when the constitutional issue raised requires the formulation of controlling principles to guide
the bench, the bar, and the public, and when the case is capable of repetition, yet evading review.
The apparent conflict presented by the limiting provision of the Rule in Civil Forfeiture Cases, on one hand,
and the very broad judicial discretion under RA No. 9160, as amended, on the other hand, and the uncertainty
it casts on an individuals guaranteed right to due process indubitably call for the Courts exercise of its
discretion to decide the case, otherwise moot and academic, under those two exceptions, for the future
guidance of those affected and involved in the implementation of RA No. 9160, as amended.
Additionally, we would be giving premium to the governments failure to file an appropriate case until only after
six years (despite the clear provision of the Rule in Civil Forfeiture Cases) were we to dismiss the petition
because of the filing of the forfeiture case during the pendency of the case before the Court. The sheer length
of time and the constitutional violation involved, as will be discussed below, strongly dissuade us from
dismissing the petition on the basis of the "moot and academic" principle. The Court should not allow the
seeds of future violations to sprout by hiding under this principle even when directly confronted with the glaring
issue of the respondents violation of the petitioners due process right 30 - an issue that the respondent itself
chooses to ignore.
We shall discuss the substantive relevance of the subsequent developments and their dates at length below.

Rule in Civil Forfeiture Cases came into effect.

II. Substantive aspect
This reasoning fails to convince us.
a. Probable cause exists to support the issuance of a freeze order
Notably, the Rule in Civil Forfeiture Cases came into effect on December 15, 2005. Section 59 provides that it
shall "apply to all pending civil forfeiture cases or petitions for freeze order" at the time of its effectivity.
A review of the record reveals that after the CA issued its September 20, 2005 resolution extending the freeze
order, the Ligots filed a motion to lift the extended freeze order on September 28, 2005. Significantly, the CA
only acted upon this motion on January 4, 2006, when it issued a resolution denying it.

The legal basis for the issuance of a freeze order is Section 10 of RA No. 9160, as amended by RA No. 9194,
which states:
Section 10. Freezing of Monetary Instrument or Property. The Court of Appeals, upon application ex parte by
the AMLC and after determination that probable cause exists that any monetary instrument or property is in
any way related to an unlawful activity as defined in Section

While denominated as a Motion to Lift Extended Freeze Order, this motion was actually a motion for
reconsideration, as it sought the reversal of the assailed CA resolution. Since the Ligots motion for
reconsideration was still pending resolution at the time the Rule in Civil Forfeiture Cases came into effect on
December 15, 2005, the Rule unquestionably applies to the present case.

3(i) hereof, may issue a freeze order which shall be effective immediately. The freeze order shall be for a
period of twenty (20) days unless extended by the court. [italics supplied]

c. Subsequent events

The Ligots claim that the CA erred in extending the effectivity period of the freeze order against them, given
that they have not yet been convicted of committing any of the offenses enumerated under RA No. 9160 that
would support the AMLCs accusation of money-laundering activity.

During the pendency of this case, the Republic manifested that on September 26, 2011, it filed a Petition for
Civil Forfeiture with the Regional Trial Court (RTC) of Manila. On September 28, 2011, the RTC, Branch 22,
Manila, issued a Provisional Asset Preservation Order and on October 5, 2011, after due hearing, it issued an
Asset Preservation Order.

We do not see any merit in this claim. The Ligots argument is founded on a flawed understanding of probable
cause in the context of a civil forfeiture proceeding 31 or freeze order application.32

Based on Section 10 quoted above, there are only two requisites for the issuance of a freeze order: (1) the
application ex parte by the AMLC and (2) the determination of probable cause by the CA. 33 The probable
cause required for the issuance of a freeze order differs from the probable cause required for the institution of
a criminal action, and the latter was not an issue before the CA nor is it an issue before us in this case.

Section 53. Freeze order.

As defined in the law, the probable cause required for the issuance of a freeze order refers to "such facts and
circumstances which would lead a reasonably discreet, prudent or cautious man to believe that an unlawful
activity and/or a money laundering offense is about to be, is being or has been committed and that the account
or any monetary instrument or property subject thereof sought to be frozen is in any way related to said
unlawful activity and/or money laundering offense." 34

(b) Extension. On motion of the petitioner filed before the expiration of twenty days from issuance of a freeze
order, the court may for good cause extend its effectivity for a period not exceeding six months. [italics
supplied; emphasis ours]

xxxx

We find merit in this claim.

In other words, in resolving the issue of whether probable cause exists, the CAs statutorily-guided
determinations focus is not on the probable commission of an unlawful activity (or money laundering) that the
Office of the Ombudsman has already determined to exist, but on whether the bank accounts, assets, or other
monetary instruments sought to be frozen are in any way related to any of the illegal activities enumerated
under RA No. 9160, as amended.35 Otherwise stated, probable cause refers to the sufficiency of the relation
between an unlawful activity and the property or monetary instrument which is the focal point of Section 10 of
RA No. 9160, as amended. To differentiate this from any criminal case that may thereafter be instituted against
the same respondent, the Rule in Civil Forfeiture Cases expressly provides

A freeze order is an extraordinary and interim relief 37 issued by the CA to prevent the dissipation, removal, or
disposal of properties that are suspected to be the proceeds of, or related to, unlawful activities as defined in
Section 3(i) of RA No. 9160, as amended. 38 The primary objective of a freeze order is to temporarily preserve
monetary instruments or property that are in any way related to an unlawful activity or money laundering, by
preventing the owner from utilizing them during the duration of the freeze order.39 The relief is pre-emptive in
character, meant to prevent the owner from disposing his property and thwarting the States effort in building
its case and eventually filing civil forfeiture proceedings and/or prosecuting the owner.

SEC. 28. Precedence of proceedings. - Any criminal case relating to an unlawful activity shall be given
precedence over the prosecution of any offense or violation under Republic Act No. 9160, as amended,
without prejudice to the filing of a separate petition for civil forfeiture or the issuance of an asset preservation
order or a freeze order. Such civil action shall proceed independently of the criminal prosecution. [italics
supplied; emphases ours]

Our examination of the Anti-Money Laundering Act of 2001, as amended, from the point of view of the freeze
order that it authorizes, shows that the law is silent on the maximum period of time that the freeze order can
be extended by the CA. The final sentence of Section 10 of the Anti-Money Laundering Act of 2001 provides,
"the freeze order shall be for a period of twenty (20) days unless extended by the court." In contrast, Section
55 of the Rule in Civil Forfeiture Cases qualifies the grant of extension "for a period not exceeding six months"
"for good cause" shown.

Section 10 of RA No. 9160 (allowing the extension of the freeze order) and Section 28 (allowing a separate
petition for the issuance of a freeze order to proceed independently) of the Rule in Civil Forfeiture Cases are
only consistent with the very purpose of the freeze order, which specifically is to give the government the
necessary time to prepare its case and to file the appropriate charges without having to worry about the
possible dissipation of the assets that are in any way related to the suspected illegal activity. Thus, contrary to
the Ligots claim, a freeze order is not dependent on a separate criminal charge, much less does it depend on
a conviction.
That a freeze order can be issued upon the AMLCs ex parte application further emphasizes the laws
consideration of how critical time is in these proceedings. As we previously noted in Republic v. Eugenio,
Jr.,36 "to make such freeze order anteceded by a judicial proceeding with notice to the account holder would
allow for or lead to the dissipation of such funds even before the order could be issued."
It should be noted that the existence of an unlawful activity that would justify the issuance and the extension of
the freeze order has likewise been established in this case.
From the ex parte application and the Ombudsmans complaint, we glean that Lt. Gen. Ligot himself admitted
that his income came from his salary as an officer of the AFP. Yet, the Ombudsmans investigation revealed
that the bank accounts, investments and properties in the name of Lt. Gen. Ligot and his family amount to
more than Fifty-Four Million Pesos (P54,000,000.00). Since these assets are grossly disproportionate to Lt.
Gen. Ligots income, as well as the lack of any evidence that the Ligots have other sources of income, the CA
properly found that probable cause exists that these funds have been illegally acquired. On the other hand, the
AMLCs verified allegations in its ex parte application, based on the complaint filed by the Ombudsman against
Ligot and his family for violations of the Anti-Graft and Corrupt Practices Act, clearly sustain the CAs finding
that probable cause exists that the monetary instruments subject of the freeze order are related to, or are the
product of, an unlawful activity.
b. A freeze order, however, cannot be issued for an indefinite period
Assuming that the freeze order is substantively in legal order, the Ligots now assert that its effectiveness
ceased after January 25, 2006 (or six months after July 25, 2005 when the original freeze order first expired),
pursuant to Section 53(b) of the Rule in Civil Forfeiture Cases (A.M. No. 05-11-04-SC). This section states:

We observe on this point that nothing in the law grants the owner of the "frozen" property any substantive right
to demand that the freeze order be lifted, except by implication, i.e., if he can show that no probable cause
exists or if the 20-day period has already lapsed without any extension being requested from and granted by
the CA. Notably, the Senate deliberations on RA No. 9160 even suggest the intent on the part of our
legislators to make the freeze order effective until the termination of the case, when necessary.40
The silence of the law, however, does not in any way affect the Courts own power under the Constitution to
"promulgate rules concerning the protection and enforcement of constitutional rights xxx and procedure in all
courts."41 Pursuant to this power, the Court issued A.M. No. 05-11-04-SC, limiting the effectivity of an extended
freeze order to six months to otherwise leave the grant of the extension to the sole discretion of the CA,
which may extend a freeze order indefinitely or to an unreasonable amount of time carries serious
implications on an individuals substantive right to due process. 42 This right demands that no person be denied
his right to property or be subjected to any governmental action that amounts to a denial. 43 The right to due
process, under these terms, requires a limitation or at least an inquiry on whether sufficient justification for the
governmental action.44
In this case, the law has left to the CA the authority to resolve the issue of extending the freeze order it issued.
Without doubt, the CA followed the law to the letter, but it did so by avoiding the fundamental laws command
under its Section 1, Article III. This command, the Court under its constitutional rule-making power sought
to implement through Section 53(b) of the Rule in Civil Forfeiture Cases which the CA erroneously assumed
does not apply.
The Ligots case perfectly illustrates the inequity that would result from giving the CA the power to extend
freeze orders without limitations. As narrated above, the CA, via its September 20, 2005 resolution, extended
the freeze order over the Ligots various bank accounts and personal properties "until after all the appropriate
proceedings and/or investigations being conducted are terminated." 45 By its very terms, the CA resolution
effectively bars the Ligots from using any of the property covered by the freeze order until after an eventual
civil forfeiture proceeding is concluded in their favor and after they shall have been adjudged not guilty of the
crimes they are suspected of committing. These periods of extension are way beyond the intent and purposes
of a freeze order which is intended solely as an interim relief; the civil and criminal trial courts can very well
handle the disposition of properties related to a forfeiture case or to a crime charged and need not rely on the
interim relief that the appellate court issued as a guarantee against loss of property while the government is
preparing its full case. The term of the CAs extension, too, borders on inflicting a punishment to the Ligots, in
violation of their constitutionally protected right to be presumed innocent, because the unreasonable denial of
their property comes before final conviction.

In more concrete terms, the freeze order over the Ligots properties has been in effect since 2005, while the
civil forfeiture case per the Republics manifestation was filed only in 2011 and the forfeiture case under
RA No. 1379 per the petitioners manifestation was filed only in 2012. This means that the Ligots have not
been able to access the properties subject of the freeze order for six years or so simply on the basis of the
existence of probable cause to issue a freeze order, which was intended mainly as an interim preemptive
remedy.
As correctly noted by the petitioners, a freeze order is meant to have a temporary effect; it was never intended
to supplant or replace the actual forfeiture cases where the provisional remedy - which means, the remedy is
an adjunct of or an incident to the main action of asking for the issuance of an asset preservation order from
the court where the petition is filed is precisely available. For emphasis, a freeze order is both a preservatory
and preemptive remedy.
To stress, the evils caused by the laws silence on the freeze orders period of effectivity 46 compelled this Court
to issue the Rule in Civil Forfeiture Cases. Specifically, the Court fixed the maximum allowable extension on
the freeze orders effectivity at six months. In doing so, the Court sought to balance the States interest in
going after suspected money launderers with an individuals constitutionally-protected right not to be deprived
of his property without due process of law, as well as to be presumed innocent until proven guilty.
To our mind, the six-month extension period is ordinarily sufficient for the government to act against the
suspected money launderer and to file the appropriate forfeiture case against him, and is a reasonable period
as well that recognizes the property owners right to due process. In this case, the period of inaction of six
years, under the circumstances, already far exceeded what is reasonable.
We are not unmindful that the State itself is entitled to due process.1wphi1 As a due process concern, we do
not say that the six-month period is an inflexible rule that would result in the automatic lifting of the freeze
order upon its expiration in all instances. An inflexible rule may lend itself to abuse - to the prejudice of the
States legitimate interests - where the property owner would simply file numerous suits, questioning the
freeze order during the six-month extension period, to prevent the timely filing of a money laundering or civil
forfeiture case within this period. With the limited resources that our government prosecutors and investigators
have at their disposal, the end-result of an inflexible rule is not difficult to see.

As our last point, we commend the fervor of the CA in assisting the States efforts to prosecute corrupt public
officials. We remind the appellate court though that the governments anti-corruption drive cannot be done at
the expense of cherished fundamental rights enshrined in our Constitution. So long as we continue to be
guided by the Constitution and the rule of law, the Court cannot allow the justification of governmental action
on the basis of the noblest objectives alone. As so oft-repeated, the end does not justify the means. Of
primordial importance is that the means employed must be in keeping with the Constitution. Mere expediency
will certainly not excuse constitutional shortcuts.48
WHEREFORE, premises considered, we GRANT the petition and LIFT the freeze order issued by the Court of
Appeals in CA G.R. SP No. 90238. This lifting is without prejudice to, and shall not affect, the preservation
orders that the lower courts have ordered on the same properties in the cases pending before them. Pursuant
to Section 56 of A.M. No. 05-11-04-SC, the Court of Appeals is hereby ordered to remand the case and to
transmit the records to the Regional Trial Court of Manila, Branch 22, where the civil forfeiture proceeding is
pending, for consolidation therewith as may be appropriate.
SO ORDERED.

MEYNARDO SABILI,

G. R. No. 193261

Petitioner,
Present:

CORONA, C.J.,

We observe, too, that the factual complexities and intricacies of the case and other matters that may be
beyond the governments prosecutory agencies control may contribute to their inability to file the
corresponding civil forfeiture case before the lapse of six months. Given these considerations, it is only proper
to strike a balance between the individuals right to due process and the governments interest in curbing
criminality, particularly money laundering and the predicate crimes underlying it.

CARPIO,
VELASCO, JR.,

Thus, as a rule, the effectivity of a freeze order may be extended by the CA for a period not exceeding six
months. Before or upon the lapse of this period, ideally, the Republic should have already filed a case for civil
forfeiture against the property owner with the proper courts and accordingly secure an asset preservation
order or it should have filed the necessary information. 47 Otherwise, the property owner should already be able
to fully enjoy his property without any legal process affecting it. However, should it become completely
necessary for the Republic to further extend the duration of the freeze order, it should file the necessary
motion before the expiration of the six-month period and explain the reason or reasons for its failure to file an
appropriate case and justify the period of extension sought. The freeze order should remain effective prior to
the resolution by the CA, which is hereby directed to resolve this kind of motion for extension with reasonable
dispatch.

LEONARDO-DE CASTRO,
- versus -

PERALTA,
BERSAMIN,

In the present case, we note that the Republic has not offered any explanation why it took six years (from the
time it secured a freeze order) before a civil forfeiture case was filed in court, despite the clear tenor of the
Rule in Civil Forfeiture Cases allowing the extension of a freeze order for only a period of six months. All the
Republic could proffer is its temporal argument on the inapplicability of the Rule in Civil Forfeiture Cases; in
effect, it glossed over the squarely-raised issue of due process. Under these circumstances, we cannot but
conclude that the continued extension of the freeze order beyond the six-month period violated the Ligots
right to due process; thus, the CA decision should be reversed.
We clarify that our conclusion applies only to the CA ruling and does not affect the proceedings and whatever
order or resolution the RTC may have issued in the presently pending civil cases for forfeiture. We make this
clarification to ensure that we can now fully conclude and terminate this CA aspect of the case.

BRION,

DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
COMMISSION ON ELECTIONS and FLORENCIO LIBREA,

PEREZ,

Respondents.

MENDOZA,
SERENO,
REYES, and

Private respondent Florencio Librea (private respondent) filed a Petition to Deny Due Course and to Cancel
Certificate of Candidacy and to Disqualify a Candidate for Possessing Some Grounds for
Disqualification[3] against him before the COMELEC, docketed as SPA No. 09-047 (DC). Citing Section 78 in
relation to Section 74 of the Omnibus Election Code, [4]private respondent alleged that petitioner made material
misrepresentations of fact in the latters COC and likewise failed to comply with the one-year residency
requirement under Section 39 of the Local Government Code. [5] Allegedly, petitioner falsely declared under
oath in his COC that he had already been a resident of Lipa City for two years and eight months prior to the
scheduled 10 May 2010 local elections.
In support of his allegation, private respondent presented the following:

PERLAS-BERNABE, JJ.
1.
Promulgated:

April 24, 2012

x--------------------------------------------------x

DECISION

2.
2009 Tax Declarations for a house and lot (TCT Nos. 173355, 173356 and buildings thereon) in
Pinagtong-ulan, Lipa City registered under the name of Bernadette Palomares, petitioners common-law wife [7]
3.
Lipa City Assessor Certification of Property Holdings of properties under the name of Bernadette
Palomares[8]
4.

Affidavit executed by private respondent Florencio Librea [9]

5.

Sinumpaang Salaysay executed by Eladio de Torres[10]

6.

Voter Certification on petitioner issued by COMELEC Election Officer Juan D. Aguila, Jr.[11]

7.

1997 Voter Registration Record of petitioner[12]

8.

National Statistics Office (NSO) Advisory on Marriages regarding petitioner [13]

9.
Lipa City Assessor Certificate of No Improvement on Block 2, Lot 3, Brgy. Lood, Lipa City registered
in the name of petitioner[14]
10.

SERENO, J.:
Before us is a Petition for Certiorari under Rule 64 in relation to Rule 65 of the Rules of Court, seeking
to annul the Resolutions in SPA No. 09-047 (DC) dated 26 January 2010 and 17 August 2010 of the
Commission on Elections (COMELEC), which denied due course to and canceled the Certificate of Candidacy
(COC) of petitioner Meynardo Sabili (petitioner) for the position of Mayor of Lipa City for the May 2010
elections. At the

Petitioners COC for the 2010 elections filed on 1 December 2009 [6]

NSO Certificate of No Marriage of Bernadette Palomares [15]

11.
Lipa City Assessor Certificate of No Improvement on Block 2, Lot 5, Brgy. Lood, Lipa City registered in
the name of petitioner[16]
12.

Lipa City Permits and Licensing Office Certification that petitioner has no business therein [17]

13.

Apparent printout of a Facebook webpage of petitioners daughter, Mey Bernadette Sabili [18]

14.
Department of Education (DepEd) Lipa City Division Certification that the names Bernadette
Palomares, Mey Bernadette Sabili and Francis Meynard Sabili (petitioners son) do not appear on its list of
graduates[19]
heart of the controversy is whether petitioner Sabili had complied with the one-year residency requirement for
local elective officials.
When petitioner filed his COC[1] for mayor of Lipa City for the 2010 elections, he stated therein that he
had been a resident of the city for two (2) years and eight (8) months. Prior to the 2010 elections, he had been
twice elected (in 1995 and in 1998) as Provincial Board Member representing the 4 th District of Batangas.
During the 2007 elections, petitioner ran for the position of Representative of the 4 th District of Batangas, but
lost. The 4th District of Batangas includes Lipa City.[2] However, it is undisputed that when petitioner filed his
COC during the 2007 elections, he and his family were then staying at his ancestral home inBarangay (Brgy.)
Sico, San Juan, Batangas.

15.
Certification from the Office of the Election Officer of Lipa City that Bernadette Palomares, Mey
Bernadette Sabili and Francis Meynard Sabili do not appear in its list of voters [20]
16.

Affidavit executed by Violeta Fernandez[21]

17.

Affidavit executed by Rodrigo Macasaet[22]

18.

Affidavit Executed by Pablo Lorzano[23]

19.

Petitioners 2007 COC for Member of House of Representative [24]

For ease of later discussion, private respondents evidence shall be grouped as follows: (1) Certificates
regarding ownership of real property; (2) petitioners Voter Registration and Certification (common exhibits of
the parties); (3) petitioners COCs in previous elections; (3) Certifications regarding petitioners family
members; and (4) Affidavits of Lipa City residents.

For ease of later discussion, petitioners evidence shall be grouped as follows: (1) his Income Tax Returns and
corresponding Official Receipts for the years 2007 and 2008; (2) Certification from the barangay captain of
Pinagtong-ulan; (3) Affidavit of his common-law wife, Bernadette Palomares; and (4) Affidavits from a previous
property owner, neighbors, Certificate of Appreciation from the barangay parish and Memorandum from the
local chapter of Guardians Brotherhood, Inc.
The COMELEC Ruling

On the other hand, petitioner presented the following evidence to establish the fact of his residence in Lipa
City:
1.

Affidavit executed by Bernadette Palomares[25]

2.

Birth Certificate of Francis Meynard Sabili [26]

3.

Affidavit of Leonila Suarez (Suarez) [27]

4.

Certification of Residency issued by Pinagtong-ulan Barangay Captain, Dominador Honrade [28]

5.

Affidavit executed by Rosalinda Macasaet[29]

6.

Certificate of Appreciation issued to petitioner by the parish of Sto. Nino of Pinagtong-ulan [30]

Petitioner moved for reconsideration of the 26 January 2010 Resolution of the COMELEC, during the
pendency of which the 10 May 2010 local elections were held. The next day, he was proclaimed the duly
elected mayor of Lipa City after garnering the highest number of votes cast for the said position. He
accordingly filed a Manifestation[42] with the COMELEC en banc to reflect this fact.

7. Designation of petitioner in the Advisory Body (AB) of Pinagtong-ulan, San Jose/Lipa City Chapter of
Guardians Brotherhood, Inc.[31]
8.

COMELEC Voter Certification on petitioner issued by Election Officer Juan Aguila, Jr.

[32]

9. COMELEC Application for Transfer/Transfer with Reactivation dated 6 June 2009 signed by Election
Officer Juan Aguila, Jr.[33]
10.

Petitioners Income Tax Return for 2007[34]

11.

Official Receipt for petitioners income tax payment for 2007 [35]

12.

Petitioners Income Tax Return for 2008[36]

13.

Official Receipt for petitioners income tax payment for 2008 [37]

14.

Birth Certificate of Mey Bernadette Sabili [38]

15.

Affidavit executed by Jacinto Cornejo, Sr.[39]

In its Resolution dated 26 January 2010, [41] the COMELEC Second Division granted the Petition of
private respondent, declared petitioner as disqualified from seeking the mayoralty post in Lipa City, and
canceled his Certificate of Candidacy for his not being a resident of Lipa City and for his failure to meet the
statutory one-year residency requirement under the law.

In its Resolution dated 17 August 2010, [43] the COMELEC en banc denied the Motion for Reconsideration of
petitioner. Although he was able to receive his copy of the Resolution, no prior notice setting the date of
promulgation of the said Resolution was received by him. Meanwhile, Section 6 of COMELEC Resolution No.
8696 (Rules on Disqualification Cases Filed in Connection with the May 10, 2012 Automated National and
Local Elections) requires the parties to be notified in advance of the date of the promulgation of the
Resolution.
SEC. 6. Promulgation. The promulgation of a Decision or Resolution of the Commission or a Division shall
be made on a date previously fixed, notice of which shall be served in advance upon the parties or their
attorneys personally, or by registered mail, telegram, fax, or thru the fastest means of communication.
Hence, petitioner filed with this Court a Petition (Petition for Certiorari with Extremely Urgent Application for the
Issuance of a Status Quo Order and for the Conduct of a Special Raffle of this Case) under Rule 64 in relation
to Rule 65 of the Rules of Court, seeking the annulment of the 26 January 2010 and 17 August 2010
Resolutions of the COMELEC. Petitioner attached to his Petition a Certificate of Canvass of Votes and
proclamation of Winning Candidates for Lipa City Mayor and Vice-Mayor issued by the City/Municipal Board of
Canvassers,[44] as well as a copy of his Oath of Office.[45] He also attached to his Petition another Certification
of Residency[46] issued by Pinagtong-ulan Barangay Captain Dominador Honrade and sworn to before a notary
public.
On 7 September 2010, this Court issued a Status Quo Ante Order [47] requiring the parties to observe the status
quo prevailing before the issuance of the assailed COMELEC Resolutions. Thereafter, the parties filed their
responsive pleadings.

Issues
The following are the issues for resolution:
1. Whether the COMELEC acted with grave abuse of discretion when it failed to promulgate its Resolution
dated 17 August 2010 in accordance with its own Rules of Procedure; and
2. Whether the COMELEC committed grave abuse of discretion in holding that Sabili failed to prove
compliance with the one-year residency requirement for local elective officials.

16.
Joint Affidavit of twenty-one (21) Pinagtong-ulan residents, including past and incumbent
Pinagtong-ulan officials.[40]

The Courts Ruling

1. On whether the COMELEC acted with grave abuse of discretion when it failed to promulgate its
Resolution dated 17 August 2010 in accordance with its own Rules of Procedure

Let all resolutions be delivered to the Clerk of the Commission for immediate promulgation.

SO ORDERED.
Petitioner argues that the assailed 17 August 2010 COMELEC Resolution, which denied petitioners Motion for
Reconsideration, is null and void. The Resolution was allegedly not promulgated in accordance with the
COMELECs own Rules of Procedure and, hence, violated petitioners right to due process of law.
The rules governing the Petition for Cancellation of COC in this case is COMELEC Resolution No. 8696
(Rules on Disqualification of Cases Filed in Connection with the May 10, 2010 Automated National and Local
Elections), which was promulgated on 11 November 2009. Sections 6 and 7 thereof provide as follows:

Petitioner claims that he did not receive notice of the said suspension of Section 6 of COMELEC Resolution
No. 8696. Thus, his right to due process was still violated. On the other hand, the COMELEC claims that it has
the power to suspend its own rules of procedure and invokes Section 6, Article IX-A of the Constitution, which
gives it the power to promulgate its own rules concerning pleadings and practice before it or before any of its
offices.
We agree with the COMELEC on this issue.

SEC. 6. Promulgation. - The promulgation of a Decision or Resolution of the Commission or a Division shall be
made on a date previously fixed, notice of which shall be served in advance upon the parties or their attorneys
personally, or by registered mail, telegram, fax or thru the fastest means of communication.

SEC. 7. Motion for Reconsideration. - A motion to reconsider a Decision, Resolution, Order or Ruling of a
Division shall be filed within three (3) days from the promulgation thereof. Such motion, if not pro-forma,
suspends the execution for implementation of the Decision, Resolution, Order or Ruling.

Within twenty-four (24) hours from the filing thereof, the Clerk of the Commission shall notify the Presiding
Commissioner. The latter shall within two (2) days thereafter certify the case to the Commission en banc.

The Clerk of the Commission shall calendar the Motion for Reconsideration for the resolution of the
Commission en banc within three (3) days from the certification thereof.
However, the COMELEC Order dated 4 May 2010 [48] suspended Section 6 of COMELEC Resolution No. 8696
by ordering that all resolutions be delivered to the Clerk of the Commission for immediate promulgation in
view of the proximity of the Automated National and Local Elections and lack of material time. The Order
states:

In Lindo v. Commission on Elections,[49] petitioner claimed that there was no valid promulgation of a Decision
in an election protest case when a copy thereof was merely furnished the parties, instead of first notifying the
parties of a set date for the promulgation thereof, in accordance with Section 20 of Rule 35 of the COMELECs
own Rules of Procedure, as follows:
Sec. 20.
Promulgation and Finality of Decision. The decision of the court shall be promulgated on a
date set by it of which due notice must be given the parties. It shall become final five (5) days after
promulgation. No motion for reconsideration shall be entertained.
Rejecting petitioners argument, we held therein that the additional rule requiring notice to the parties prior to
promulgation of a decision is not part of the process of promulgation. Since lack of such notice does not
prejudice the rights of the parties, noncompliance with this rule is a procedural lapse that does not vitiate the
validity of the decision. Thus:
This contention is untenable. Promulgation is the process by which a decision is published, officially
announced, made known to the public or delivered to the clerk of court for filing, coupled with notice to the
parties or their counsel (Neria v. Commissioner of Immigration, L-24800, May 27, 1968, 23 SCRA 812). It is
the delivery of a court decision to the clerk of court for filing and publication (Araneta v. Dinglasan, 84 Phil.
433). It is the filing of the signed decision with the clerk of court (Sumbing v. Davide, G.R. Nos. 86850-51, July
20, 1989, En Banc Minute Resolution). The additional requirement imposed by the COMELEC rules of notice
in advance of promulgation is not part of the process of promulgation. Hence, We do not agree with
petitioners contention that there was no promulgation of the trial court's decision. The trial court did not deny
that it had officially made the decision public. From the recital of facts of both parties, copies of the decision
were sent to petitioner's counsel of record and petitioners (sic) himself. Another copy was sent to private
respondent.

ORDER

Considering the proximity of the Automated National and Local Elections and lack of material time, the
Commission hereby suspends Sec. 6 of Resolution No. 8696 promulgated on November 11, 2009, which
reads:

Sec. 6. Promulgation. The promulgation of a Decision or Resolution of the Commission or a Division shall be
made on a date previously fixed, notice of which shall be served upon the parties or their attorneys personally,
or by registered mail, telegram, fax or thru the fastest means of communication.

What was wanting and what the petitioner apparently objected to was not the promulgation of the decision but
the failure of the trial court to serve notice in advance of the promulgation of its decision as required by the
COMELEC rules. The failure to serve such notice in advance of the promulgation may be considered a
procedural lapse on the part of the trial court which did not prejudice the rights of the parties and did not vitiate
the validity of the decision of the trial court nor (sic) of the promulgation of said decision.
Moreover, quoting Pimping v. COMELEC,[50] citing Macabingkil v. Yatco,[51] we further held in the same case
that failure to receive advance notice of the promulgation of a decision is not sufficient to set aside the
COMELECs judgment, as long as the parties have been afforded an opportunity to be heard before judgment
is rendered, viz:
The fact that petitioners were not served notice in advance of the promulgation of the decision in the election
protest cases, in Our view, does not constitute reversible error or a reason sufficient enough to compel and

warrant the setting aside of the judgment rendered by the Comelec. Petitioners anchor their argument on an
alleged denial to them (sic) due process to the deviation by the Comelec from its own made rules. However,
the essence of due process is that, the parties in the case were afforded an opportunity to be heard.
In the present case, we read from the COMELEC Order that the exigencies attendant to the holding of the
countrys first automated national elections had necessitated that the COMELEC suspend the rule on notice
prior to promulgation, and that it instead direct the delivery of all resolutions to the Clerk of the Commission for
immediate promulgation. Notably, we see no prejudice to the parties caused thereby. The COMELECs Order
did not affect the right of the parties to due process. They were still furnished a copy of the COMELEC
Decision and were able to reckon the period for perfecting an appeal. In fact, petitioner was able to timely
lodge a Petition with this Court.

Clearly, the COMELEC validly exercised its constitutionally granted power to make its own rules of procedure
when it issued the 4 May 2010 Order suspending Section 6 of COMELEC Resolution No. 8696. Consequently,
the second assailed Resolution of the COMELEC cannot be set aside on the ground of COMELECs failure to
issue to petitioner a notice setting the date of the promulgation thereof.

2. On whether the COMELEC committed grave abuse of discretion in holding that Sabili failed to
prove compliance with the one-year residency requirement for local elective officials

As a general rule, the Court does not ordinarily review the COMELECs appreciation and evaluation of
evidence. However, exceptions thereto have been established, including when the COMELEC's appreciation
and evaluation of evidence become so grossly unreasonable as to turn into an error of jurisdiction. In these
instances, the Court is compelled by its bounden constitutional duty to intervene and correct the COMELEC's
error.[52]
In Mitra v. Commission on Elections, (G.R. No. 191938, 2 July 2010), we explained that the COMELECs use
of wrong or irrelevant considerations in deciding an issue is sufficient to taint its action with grave abuse of
discretion As a concept, grave abuse of discretion defies exact definition; generally, it refers to capricious or
whimsical exercise of judgment as is equivalent to lack of jurisdiction; the abuse of discretion must be patent
and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by
reason of passion and hostility. Mere abuse of discretion is not enough; it
must be grave. We have held, too, that the use of wrong or irrelevant considerations in deciding an issue is
sufficient to taint a decision-maker's action with grave abuse of discretion.

In exceptional cases, however, when the COMELEC's action on the appreciation and evaluation of
evidence oversteps the limits of its discretion to the point of being grossly unreasonable, the Court is not only
obliged, but has the constitutional duty to intervene. When grave abuse of discretion is present, resulting
errors arising from the grave abuse mutate from error of judgment to one of jurisdiction.
Before us, petitioner has alleged and shown the COMELECs use of wrong or irrelevant considerations
in deciding the issue of whether petitioner made a material misrepresentation of his residency qualification in
his COC as to order its cancellation. Among others, petitioner pointed to the COMELECs inordinate emphasis
on the issue of property ownership of petitioners declared residence in Lipa City, its inconsistent stance
regarding Palomaress relationship to the Pinagtong-ulan property, and its failure to consider in the first
instance the certification of residence issued by the barangay captain of Pinagtong-ulan. Petitioner bewails
that the COMELEC required more evidence to show the change in his residence, notwithstanding the various
pieces of evidence he presented and the fact that under the law, the quantum of evidence required in these
cases is merely substantial evidence and not clear and convincing evidence. Petitioner further ascribes grave
abuse of discretion in the COMELECs brushing aside of the fact that he has been filing his ITR in Lipa City
(where he indicates that he is a resident of Pinagtong-ulan) on the mere expedient that the law allows the filing
of the ITR not only in the place of legal residence but, alternately, in his place of business. Petitioner notes that
private respondents own evidence shows that petitioner has no business in Lipa City, leaving only his
residence therein as basis for filing his ITR therein.
Hence, in resolving the issue of whether the COMELEC gravely abused its discretion in ruling that petitioner
had not sufficiently shown that he had resided in Lipa City for at least one year prior to the May 2010 elections,
we examine the evidence adduced by the parties and the COMELECs appreciation thereof.
In the present case, the parties are in agreement that the domicile of origin of Sabili was Brgy. Sico, San Juan,
Batangas. He claims that he abandoned his domicile of origin and established his domicile of choice in Brgy.
Pinagtong-ulan, Lipa City, thereby making him qualified to run for Lipa City mayor. On the other hand,
respondent COMELEC held that no such change in domicile or residence took place and, hence, the entry in
his Certificate of Candidacy showing that he was a resident of Brgy. Pinagtong-ulan, Lipa City constituted a
misrepresentation that disqualified him from running for Lipa City mayor.
To establish a new domicile of choice, personal presence in the place must be coupled with conduct indicative
of the intention to make it one's fixed and permanent place of abode. [53] As in all administrative cases, the
quantum of proof necessary in election cases is substantial evidence, or such relevant evidence as a
reasonable mind will accept as adequate to support a conclusion. [54]

The ruling on private respondents evidence

We begin with an evaluation of the COMELECs appreciation of private respondents evidence.

Closely related with the limited focus of the present petition is the condition, under Section 5, Rule 64
of the Rules of Court, that findings of fact of the COMELEC, supported by substantial evidence, shall be final
and non-reviewable. Substantial evidence is that degree of evidence that a reasonable mind might accept to
support a conclusion.

In light of our limited authority to review findings of fact, we do not ordinarily review in a certiorari case
the COMELEC's appreciation and evaluation of evidence. Any misstep by the COMELEC in this regard
generally involves an error of judgment, not of jurisdiction.

a)

Petitioners Voter Certification, Registration and COCs in previous elections

Petitioners Voter Certification is a common exhibit of the parties. It states, among others, that petitioner is a
resident of Pinagtong-ulan, Lipa City, Batangas; that he had been a resident of Lipa City for two (2) years and
three (3) months; and that he was so registered on 31 October 2009. The information therein was certified
correct by COMELEC Election Officer Juan B. Aguila, Jr.
Private respondent presented this document as proof that petitioner misrepresented that he is a resident of
Lipa City. On the other hand, the latter presented this document as proof of his residency.

The COMELEC correctly ruled that the Voter Certification issued by the COMELEC Election Officer, Atty. Juan
B. Aguila, Jr., was not conclusive proof that petitioner had been a resident of Lipa City since April 2007. It
noted that Aguila is not the competent public officer to certify the veracity of this claim, particularly because
petitioners COMELEC registration was approved only in October 2009.
The Voter Registration Record of petitioner accomplished on 21 June 1997 showing that he was a resident of
Sico, San Juan, Batangas, as well as his various COCs dated 21 June 1997 and March 2007 indicating the
same thing, were no longer discussed by the COMELEC and rightly so. These pieces of evidence showing
that he was a resident of Sico, San Juan, Batangas on the said dates are irrelevant as, prior to April 2007,
petitioner was admittedly a resident of Sico, San Juan Batangas. Rather, the relevant time period for
consideration is that from April 2007 onwards, after petitioners alleged change of domicile.

Private respondent presented a Certification from the DepEd, Lipa City Division, indicating that the names
Bernadette Palomares, Mey Bernadette Sabili (petitioners daughter) and Francis Meynard Sabili (petitioners
son) do not appear on the list of graduates of Lipa City. Private respondent also presented a Certification from
the Office of the Election Officer of Lipa City that the names of these family members of petitioner do not
appear in its list of voters.
As the issue at hand is petitioners residence, and not the educational or voting record of his family, the
COMELEC properly did not consider these pieces of evidence in arriving at its Resolution.
The Dissent nevertheless asserts that because his children do not attend educational institutions in Lipa and
are not registered voters therein, and because petitioner does not maintain a business therein nor has
property
in his name, petitioner is unable to show the existence of real and substantial reason for his stay in Lipa City.

b)

Certificates regarding ownership of real property

The various certificates and tax declarations adduced by private respondent showed that the Lipa property
was solely registered in the name of petitioners common-law wife, Bernadette Palomares. In discussing the
import of this document, the COMELEC reasoned that, being a seasoned politician, he should have
registered the Lipa property (which he claimed to have purchased with his personal funds) in his own name.
Such action would have offered positive proof of intent to change actual residence from San Juan, Batangas
to Lipa City, considering that he had previously declared his ancestral home in San Juan, Batangas as his
domicile. Since Palomares and petitioner are common-law spouses not capacitated to marry each other, the
property relation between them is governed by Article 148 of the Family Code, [55] where only the parties actual
contributions are recognized. Hence, petitioner cannot prove ownership of a property and residence in Lipa
City through the registered ownership of the common-law wife of the property in Lipa City.
On the other hand, petitioner bewails the inordinate emphasis that the COMELEC bestowed upon the question
of whether the Lipa property could be considered as his residence, for the reason that it was not registered in
his name. He stresses that the issue should be residence, not property ownership.
It is true that property ownership is not among the qualifications required of candidates for local election.
[56]
Rather, it is a candidates residence in a locality through actual residence in whatever capacity. Indeed, we
sustained the COMELEC when it considered as evidence tending to establish a candidates domicile of choice
the mere lease (rather than ownership) of an apartment by a candidate in the same province where he ran for
the position of governor.[57] In the more recent case of Mitra v. Commission on Elections,[58] we reversed the
COMELEC ruling that a candidates sparsely furnished, leased room on the mezzanine of a feedmill could not
be considered as his residence for the purpose of complying with the residency requirement of Section 78 of
the Omnibus Election Code.[59]
The Dissent claims that the registration of the property in Palomaress name does not prove petitioners
residence as it merely showed donative intent without the necessary formalities or payment of taxes.
However, whatever the nature of the transaction might be, this point is immaterial for the purpose of
ascertaining petitioners residence. We have long held that it is not required that a candidate should have his
own house in order to establish his residence or domicile in a place. It is enough that he should live in the
locality, even in a rented house or that of a friend or relative. [60] What is of central concern then is that petitioner
identified and established a place in Lipa City where he intended to live in and return to for an indefinite period
of time.
Hence, while the COMELEC correctly ruled that, of itself, Palomares ownership of the Lipa property does not
prove that she or and in view of their common-law relations, petitioner resides in Lipa City, nevertheless,
the existence of a house and lot apparently owned by petitioners common-law wife, with whom he has been
living for over two decades, makes plausible petitioners allegation of bodily presence and intent to reside in
the area.
c)

Certifications regarding the family members of petitioner

As to the Dissents first assertion, it must be stressed that the children, like the wife, do not dictate the family
domicile. Even in the context of marriage, the family domicile is jointly decided by both husband and wife. [61] In
addition, we note that the transfer to Lipa City occurred in 2007, when petitioners children were already well
into college and could very well have chosen to study elsewhere than in Lipa City.
Also, it is petitioners domicile which is at issue, and not that of his children. But even assuming that it was
petitioner himself (rather than his children) who attended educational institutions or who registered as a voter
in a place other than Lipa City, we have held that absence from residence to pursue studies or practice a
profession or registration as a voter other than in the place where one is elected, does not constitute loss of
residence.[62] In fact, Section 117 of the Omnibus Election Code provides that transfer of residence to any
other place by reason of one's occupation; profession; employment in private and public service; educational
activities; work in military or naval reservations; service in the army, navy or air force, the constabulary or
national police force; or confinement or detention in government institutions in accordance with law is not
deemed as loss of residence.
As to the Dissents second assertion, petitioner apparently does not maintain a business in Lipa City. However,
apart from the Pinagtong-ulan property which both Suarez (the previous property owner) and Palomares
swear was purchased with petitioners own funds, the records also indicate that there are two other lots in Lipa
City, particularly in Barangay Lodlod, Lipa City[63] which are registered jointly in the name of petitioner and
Palomares. In fact, it was private respondent who presented the Lipa City Assessors Certificate to this effect.
Even assuming that this Court were to disregard the two Lodlod lots, it is well-established that property
ownership (and similarly, business interest) in the locality where one intends to run for local elective post is not
requirement of the Constitution. [64]
More importantly, we have gone so far as to rule that there is nothing wrong in an individual changing
residences so he could run for an elective post, for as long as he is able to prove with reasonable certainty
that he has

effected a change of residence for election law purposes for the period required by law. [65]
d)

Affidavits of Lipa City residents

Private respondent also presented the affidavits of Violeta Fernandez [66] and Rodrigo Macasaet,[67] who were
also residents of Pinagtong-ulan. Both stated that petitioner did not reside in Pinagtong-ulan, as they had
rarely seen him in the area. Meanwhile, Pablo Lorzano, [68] in his Affidavit, attested that although the Lipa
property was sometimes used for gatherings, he did not recall having seen petitioner in their barangay. On
the other hand, private respondent[69] and Eladio de Torres,[70] both residents of Brgy. Calamias, reasoned that
petitioner was not a resident of Lipa City because he has no work or family there.

The COMELEC did not discuss these Affidavits in its assailed Resolution. It was correct in doing so,
particularly considering that these Affidavits were duly controverted by those presented by petitioner.

We disagree with the COMELECs treatment of the Barangay Captains Certification and find the same tainted
with grave abuse of discretion.

Moreover, even assuming the truth of the allegation in the Affidavits that petitioner was rarely seen in the
area, this does not preclude the possibility of his residence therein. InFernandez v. House of Representatives
Electoral Tribunal,[71] we held that the averments of certain barangay health workers that they failed to see a
particular candidate whenever they made rounds of the locality of which he was supposed to be a resident is
of no moment. It is possible that the candidate was out of the house to attend to his own business at the time.
The law does not require a person to be in his
home twenty-four (24) hours a day, seven (7) days a week, to fulfill the residency requirement.

Even without being sworn to before a notary public, Honrades Certification would not only be
admissible in evidence, but would also be entitled to due consideration.

The ruling on petitioners evidence

We now evaluate how the COMELEC appreciated petitioners evidence:
a)

Rule 130, Section 44 of the Rules of Court provides:

SEC. 44. Entries in official records.Entries in official records made in the performance of his duty by a public
officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima
facie evidence of the facts therein stated.
In Country Bankers Insurance Corporation v. Lianga Bay and Community Multi-purpose Cooperative,
Inc.,[75] we explained that the following three (3) requisites must concur for entries in official records to be
admissible in evidence:

Petitioners Income Tax Returns for 2007 and 2008

(a)

The Income Tax Returns of petitioner presented below showed that petitioner had been paying his Income Tax
(2007 and 2008) to the Revenue District Office of Lipa City. In waving aside his Income Tax Returns, the
COMELEC held that these were not indications of residence since Section 51(B) of the National Internal
Revenue Code does not only state that it shall be filed in a persons legal residence, but that it may
alternatively be filed in a persons principal place of business.
In particular, Section 51(B) of the National Internal Revenue Code[72] provides that the Income Tax
Return shall be filed either in the place where a person resides or where his principal place of business is
located. However, private respondents own evidence a Certification from the City Permits and Licensing
Office of Lipa City showed that there was no business registered in the City under petitioners name.
Thus, COMELEC failed to appreciate that precisely because an individual income tax return may only be filed
either in the legal residence OR the principal place of business, as prescribed under the law, the fact that
Sabili was filing his Income Tax Returns in Lipa City notwithstanding that he had no business therein showed
that he had actively elected to establish his residence in that city.
The Dissent claims that since the jurisdiction of RDO Lipa City includes both San Juan and Lipa City,
petitioners filing of his ITR therein can also support an intent to remain in San Juan, Batangas - petitioners
domicile of origin.
However, a simple perusal of the Income Tax Returns and Revenue Official Receipts for 2007 and 2008
shows that petitioner invariably declares his residence to be Pinagtong-ulan, Lipa City, rather than San Juan,
Batangas.[73] Hence, while petitioner may be submitting his income tax return in the same RDO, the
declaration therein is unmistakable. Petitioner considers Lipa City to be his domicile.
b)

Certification from the Barangay Captain of Pinagtong-ulan

The COMELEC did not consider in the first instance the Certification issued by Pinagtongulan Barangay Captain Dominador Honrade[74] (Honrade) that petitioner had been residing in Brgy Pinagtongulan since 2007. When this oversight was raised as an issue in petitioners Motion for Reconsideration, the
COMELEC brushed it aside on the ground that the said Certification was not sworn to before a notary public
and, hence, cannot be relied on. Subsequently, petitioner presented another, substantially identical,
Certification from the said Pinagtong-ulan Barangay Captain, save for the fact that it had now been sworn to
before a notary public.

The entry was made by a public officer, or by another person specially enjoined by law to do so;

(b) It was made by the public officer in the performance of his duties, or by such other person in the
performance of a duty specially enjoined by law; and
(c)
The public officer or other person had sufficient knowledge of the facts stated by him, which facts must
have been acquired by him personally or through official information.
As to the first requisite, the Barangay Secretary is required by the Local Government Code to keep an
updated record of all inhabitants of the barangay. [76] Regarding the second requisite, we have explicitly
recognized in Mitra v. Commission on Elections,[77] that it is the business of a punong barangay to know who
the residents are in his own barangay. Anent the third requisite, the Barangay Captains exercise of powers
and duties[78] concomitant to his position requires him to be privy to these records kept by
the Barangay Secretary.
Accordingly, there is basis in faulting the COMELEC for its failure to consider Honrades Certification on the
sole ground that it was initially not notarized.
Meanwhile, the Dissent opines that the sworn affidavit of the barangay chair of Pinagtong-ulan that petitioner
is a resident of Lipa City does not help petitioners case because it was not shown that the term resident as
used therein carries the same meaning as domicile, that is, not merely bodily presence but also, animus
manendi or intent to return. This Court has ruled otherwise.
In Mitra v. Commission on Elections,[79] the declaration of Aborlans punong barangaythat petitioner resides in
his barangay was taken to have the same meaning as domicile, inasmuch as the said declaration was made
in the face of the Courts recognition that Mitra might not have stayed in Aborlan nor in Palawan for most of
2008 and 2009 because his office and activities as a Representative were in Manila.
Assuming that the barangay captains certification only pertains to petitioners bodily presence in Pinagtongulan, still, the COMELEC cannot deny the strength of this evidence in establishing petitioners bodily presence
in Pinagtong-ulan since 2007.
c)

Affidavit of petitioners common law wife

To substantiate his claim of change of domicile, petitioner also presented the affidavit of Palomares, wherein
the latter swore that she and petitioner began residing in Lipa City in 2007, and that the funds used to
purchase the Lipa property were petitioners personal funds. The COMELEC ruled that the Affidavit was selfserving for having been executed by petitioners common-law wife. Also, despite the presentation by petitioner
of other Affidavits stating that he and Palomares had lived in Brgy. Pinagtong-ulan since 2007, the latters
Affidavit was rejected by the COMELEC for having no independent collaboration.

Petitioner faults the COMELECs stand, which it claims to be inconsistent. He argues that since the property
regime between him and Palomares is governed by Article 148 of the Family Code (based on the parties
actual contribution) as the COMELEC stressed, then Palomaress Affidavit expressly stating that petitioners
money alone had been used to purchase the Lipa property (notwithstanding that it was registered in her name)
was not self-serving, but was in fact, a declaration against interest.
Petitioners argument that Palomaress affidavit was a declaration against interest is, strictly speaking,
inaccurate and irrelevant. A declaration against interest, under the Rules of Civil Procedure, refers to a
declaration made by a person deceased, or unable to testify against the interest of a declarant, if the fact
asserted in the declaration was at the time it was made so far contrary to declarants own interest, that a
reasonable man in his position would not have made the declaration unless he believed it to be true. [80] A
declaration against interest is an exception to the hearsay rule. [81] As such, it pertains only to the admissibility
of, not the weight accorded to, testimonial evidence. [82]
Nevertheless, we see the logic in petitioners claim that the COMELEC had committed grave abuse of
discretion in being inconsistent in its stand regarding Palomares, particularly regarding her assertion that the
Lipa property had been purchased solely with petitioners money. If the COMELEC accepts the registration of
the Lipa property in her name to be accurate, her affidavit disavowing ownership thereof in favor of petitioner
was far from self-serving as it ran counter to her (and her childrens) property interest.
The Dissent states that it was not unreasonable for the COMELEC to believe that Palomares may have
committed misrepresentations in her affidavit considering that she had perjured herself as an informant on the
birth certificates of her children with respect to the supposed date and place of her marriage to
petitioner. However, this was not the reason propounded by the COMELEC when it rejected Palomares
affidavit.
Moreover, it is notable that Palomares assertion in her affidavit that she and petitioner have been living
in the Pinagtong-ulan property since April 2007 is corroborated by other evidence, including the affidavits of
Pinagtong-ulan barangay officials and neighbors.

d) Affidavits from a previous property owner,neighbors, certificate from parish and designation from
socio-civic organization
The Affidavit issued by Leonila Suarez [83] (erstwhile owner of the Lipa house and lot) states that in April 2007,
after she received the down payment for the Lipa property and signed an agreement that petitioner would
settle her bank obligations in connection with the said transaction, he and Palomares actually started residing
at Pinagtong-ulan. The COMELEC brushed this Affidavit aside as one that merely narrates the circumstances
surrounding the sale of the property and mentions in passing that Sabili and Palomares lived in Pinagtongulan since April 2007 up to the present.[84]

As to the Dissents first argument, it must be remembered that a transfer of domicile/residence need not
be completed in one single instance. Thus, in Mitra v. Commission on Elections,[85] where the evidence
showed that in 2008, petitioner Mitra had leased a small room at Maligaya Feedmills located in Aborlan and, in
2009 purchased in the same locality a lot where he began constructing his house, we recognized that
petitioner transferred by incremental process to Aborlan beginning 2008 and concluded his transfer in early
2009 and thus, he transferred his residence from Puerto Princesa City to Aborlan within the period required
by law. We cannot treat the transfer to
the Pinagtong-ulan house any less than we did Mitras transfer to the Maligaya Feedmills room.
Moreover, the Joint Affidavit of twenty-one (21) Pinagtong-ulan residents, including former and incumbent
barangay officials, attests that petitioner had begun living in the Pinagtong-ulan house and lot before the May
2007 elections such that it was where his coordinators for the May 2007 elections went to meet him. [86] Jacinto
Cornejo Sr., the contractor who renovated the Pinagtong-ulan house when it was bought by petitioner, also
swore that petitioner and his family began living therein even while it was being renovated. [87]Another Affidavit
petitioner adduced was that of Rosalinda Macasaet, a resident of Brgy. Pinagtong-ulan, [88] who stated that she
also sold a lot she owned in favor of petitioner and Palomares. The latter bought her lot since it was adjacent
to the Lipa house and lot they had earlier acquired. Macasaet also swore that the couple had actually resided
in the house located in Pinagtong-ulan since April 2007, and that she knew this because her own house was
very near the couples own. Macasaets Affidavit is a positive assertion of petitioners actual physical presence
in Brgy. Pinagtong-ulan, Lipa City.
While private respondent had adduced affidavits of two Pinagtong-ulan residents (that of Violeta
Fernandez[89] and Rodrigo Macasaet)[90] attesting that petitioner could not be a resident of Pinagtong-ulan as
he was rarely seen in the area, these affidavits were controverted by the Joint affidavit of twenty-one (21)
Pinagtong-ulan residents who plainly accused the two of lying. Meanwhile, the affidavits of private
respondent[91] and Eladio de Torres[92] stating that petitioner is not a resident of Lipa City because he has no
work or family there is hardly worthy of credence since both are residents of Barangay Calamias, which is, and
private respondent does not contest this, about 15 kilometers from Pinagtong-ulan.
As to the Dissents second argument, the fact that the notarization of the deed of absolute sale of the property
was made months after April 2007 does not negate petitioners claim that he started residing therein in April
2007. It is clear from the Affidavit of the propertys seller, Leonila Suarez, that it was not yet fully paid in April
2007, so it was understandable that a deed of absolute sale was not executed at the time. Thus:
That initially, the contract to sell was entered into by and between Mr. & Mrs. Meynardo Asa Sabili and
Bernadette Palomares and myself, but eventually the spouses changed their mind, and after the couple settled
all my loan obligations to the bank, they requested me to put the name of Ms. Bernadette P. Palomares
instead of Mr. & Mrs. Meynardo Asa Sabili and Bernadette Palomares in the absolute deed of sale;

That it was Mr. Meynardo Asa Sabili who came to my former residence at Barangay Pinagtong-ulan sometime
in the month of April 2007. At that time, Mr. Meynardo Asa Sabili was still running for Representative
(Congressman) in the 4th District of Batangas;
We disagree with the COMELECs appreciation of the Suarez Affidavit. Since she was its owner, transactions
for the purchase of the Lipa property was within her personal knowledge. Ordinarily, this includes the
arrangement regarding who shall pay for the property and when, if ever, it shall be occupied by the buyers. We
thus consider that her statements impact positively on petitioners claim of residence.
The Dissent on the other hand argues that the claim that petitioner started living in the Lipa house and lot in
April 2007 is made dubious by the fact that (1) there might not be enough time to effect an actual and physical
change in residence a month before the May 2007 elections when petitioner ran for representative of the
4th District of Batangas; and (2) the Deed of Absolute Sale was notarized, and the subsequent transfer of
ownership in the tax declaration was made, only in August 2008.

That after payment of the down payment and signing of an agreement that Mr. Meynardo Asa Sabili will be the
one to settle my bank obligations, Mr. & Mrs. Meynardo A. Sabili and Bernadette Palomares had an actual
transfer of their residence at Barangay Pinagtong-ulan, Lipa City;

That they started living and residing in Pinagtong-ulan in the month of April, 2007 up to this point in time; xxx [93]
Before further discussing this, it is pertinent to point out that these were not the reasons adduced by the
COMELEC in the assailed Resolutions. Assuming that the above reasons were the unuttered considerations
of the COMELEC in coming up with its conclusions, such reasoning still exhibits grave abuse of discretion.

As to the rest of the documents presented by petitioner, the COMELEC held that the Memorandum
issued by the Guardians Brotherhood Inc. San Jose/Lipa City Chapter merely declares the designation of

petitioner in the organization, without any showing that residence in the locality was a requirement for that
designation. Meanwhile, the Certificate of Appreciation was nothing more than an acknowledgment
of petitioners material and financial support, and not an indication of residence.
We agree that considered separately, the Guardians Brotherhood Memorandum and the Pinagtong-ulan
Parish Certificate of Appreciation do not establish petitioners residence in Pinagtong-ulan, Lipa City.
Nevertheless, coupled with the fact that petitioner had twice been elected as Provincial Board Member
representing the Fourth District of Batangas, which encompasses Lipa City, petitioners involvement in the
religious life of the community, as attested to by the certificate of appreciation issued to him by the Pinagtongulan parish for his material and financial support as President of the Barangay Fiesta Committee in 2009, as
well as his assumption of a leadership role in the socio-civic sphere of the locality as a member of the advisory
body of the Pinagtong-ulan, San Jose/Lipa City Chapter of the Guardians Brotherhood Inc. , manifests a
significant level of knowledge of and sensitivity to the needs of the said community. Such, after all, is the
rationale for the residency requirement in our elections laws, to wit:
The Constitution and the law requires residence as a qualification for seeking and holding elective public
office, in order to give candidates the opportunity to be familiar with the needs, difficulties, aspirations,
potentials for growth and all matters vital to the welfare of their constituencies; likewise, it enables the
electorate to evaluate the office seekers qualifications and fitness for the job they aspire for xxx. [94]
Considering all of the foregoing discussion, it is clear that while separately, each evidence presented by
petitioner might fail to convincingly show the fact of his residence at Pinagtong-ulan since 2007, collectively,
these pieces of evidence tend to sufficiently establish the said fact.

In sum, we grant the Petition not only because petitioner sufficiently established his compliance with the oneyear residency requirement for local elective officials under the law. We also recognize that (a)bove and
beyond all, the determination of the true will of the electorate should be paramount. It is their voice, not ours or
of anyone else, that must prevail. This, in essence, is the democracy we continue to hold sacred. [99]
WHEREFORE, premises considered, the Petition is GRANTED. The assailed COMELEC Resolutions dated
26 January 2010 and 17 August 2010 in Florencio Librea v. Meynardo A. Sabili [SPA No. 09-047(DC)]
are ANNULLED. Private respondents Petition to cancel the Certificate of Candidacy of Meynardo A. Sabili
is DENIED. The Status Quo Ante Order issued by this Court on 7 September 2010 is MADE PERMANENT.
SO ORDERED.

AGG TRUCKING AND/OR ALEX ANG GAEID,

G.R. No. 195033

Petitioners,
Present:

Petitioners actual physical presence in Lipa City is established not only by the presence of a place
(Pinagtong-ulan house and lot) he can actually live in, but also the affidavits of various persons in Pinagtongulan, and the Certification of its barangay captain. Petitioners substantial and real interest in establishing his
domicile of choice in Lipa City is also sufficiently shown not only by the acquisition of additional property in the
area and the transfer of his voter registration, but also his participation in the communitys socio-civic and
religious life, as well as his declaration in his ITR that he is a resident thereof.

CARPIO, J.,
Chairperson,

We therefore rule that petitioner has been able to adduce substantial evidence to demonstrate compliance
with the one-year residency requirement for local elective officials under the law.

- versus -

In view of this Courts finding that petitioner has not misrepresented his residence at Pinagtong-ulan and the
duration thereof, there is no need to further discuss whether there was material and deliberate
misrepresentation of the residency qualification in his COC.

BRION,
SERENO,
REYES, and

As a final note, we do not lose sight of the fact that Lipa City voters manifested their own judgment regarding
the qualifications of petitioner when they voted for him, notwithstanding that the issue of his residency
qualification had been raised prior to the elections. Petitioner has garnered the highest number of votes
(55,268 votes as opposed to the 48,825 votes in favor of his opponent, Oscar Gozos) [95] legally cast for the
position of Mayor of Lipa City and has consequently been proclaimed duly elected municipal Mayor of Lipa
City during the last May 2010 elections[96]

PERLAS-BERNABE,* JJ.

MELANIO B. YUAG,
In this regard, we reiterate our ruling in Frivaldo v. Commission on Elections[97] that (t)o successfully challenge
a winning candidate's qualifications, the petitioner must clearly demonstrate that the ineligibility is so patently
antagonistic to constitutional and legal principles that overriding such ineligibility and thereby giving effect to
the apparent will of the people, would ultimately create greater prejudice to the very democratic institutions
and juristic traditions that our Constitution and laws so zealously protect and promote.
Similarly, in Japzon v. Commission on Elections,[98] we concluded that when the evidence of the alleged lack
of residence qualification of a candidate for an elective position is weak or inconclusive and it clearly appears
that the purpose of the law would not be thwarted by upholding the victor's right to the office, the will of the
electorate should be respected. For the purpose of election laws is to give effect to, rather than frustrate, the
will of the voters.

Promulgated:

Respondent.
October 12, 2011

x-----------------------------------------------------------x

DECISION

SERENO, J.:

In this Petition for Review on Certiorari under Rule 45 with Prayer for Issuance of Writ of Temporary
and/or Permanent Injunction, assailed is the 23 June 2010 Decision of the Court of Appeals (CA), Cagayan de
Oro City, in CA-G.R. SP No. 01854-MIN.[1] Reversing the 30 November 2006 Resolution of the National Labor
Relations Commission and reinstating, with modification, the 30 August 2006 Decision of the labor arbiter, the
CA disposed as follows:
WHEREFORE, premises considered, the instant Petition is hereby GRANTED, and the Resolution dated
November 30, 2006 is hereby REINSTATED subject to MODIFICATION, thus:

Private respondent Alex Ang Gaeid and/or AAG Trucking is hereby ORDERED to pay petitioner Melanio
B. Yuag or his heirs or assigns the following:

(1) FULL BACKWAGES, inclusive of all allowances, other benefits or their monetary equivalent
computed from the time petitioner's compensation was withheld from him starting December 6, 2004 until the
time he was employed by his new employer (Bernie Ragandang), instead of the date of his supposed
reinstatement which We no longer require as explained above.

Considering that a person's wage is his/her means of livelihood i.e., equivalent to life itself, this decision
is deemed immediately executory pending appeal, should the private respondent decide to elevate this case to
the Supreme Court.

SO ORDERED.[2]

The Motion for Reconsideration filed by petitioner was denied by the CA. [3] Hence, this Petition.
The facts of the case are simple. Petitioner Alex Ang Gaeid had employed respondent Melanio Yuag as
a driver since 28 February 2002. He alleged that he had a trucking business, for which he had 41 delivery
trucks driven by 41 drivers, one of whom was respondent.[4] His clients were Busco Sugar Milling Co., Inc.,
operating in Quezon, Bukidnon; and Coca-cola Bottlers Company in Davao City and Cagayan de Oro City.
[5]
Respondent received his salary on commission basis of 9% of his gross delivery per trip. He was assigned
to a ten-wheeler truck and was tasked to deliver sacks of sugar from the Busco Sugar Mill to the port of
Cagayan de Oro.[6] Petitioner noticed that respondent had started incurring substantial shortages since 30
September 2004, when he allegedly had a shortage of 32 bags, equivalent to 48,000; followed by 50 bags,
equivalent to 75,000, on 11 November 2004.[7] It was also reported that he had illegally sold bags of sugar
along the way at a lower price, and that he was banned from entering the premises of the Busco Sugar Mill.
[8]
Petitioner asked for an explanation from respondent who remained quiet. [9]
Alarmed at the delivery shortages, petitioner took it upon himself to monitor all his drivers, including
respondent, by instructing them to report to him their location from time to time through their mobile phones.
[10]
He also required them to make their delivery trips in convoy, in order to avoid illegal sale of cargo along the
way.[11]
Respondent, along with 20 other drivers, was tasked to deliver bags of sugar from Cagayan de Oro City
to Coca-Cola Bottlers Plant in Davao City on 4 December 2004. [12] All drivers, with the exception of Yuag who
could not be reached through his cellphone, reported their location as instructed. Their reported location gave
evidence that they were indeed in convoy.[13] Afterwards, everyone, except Yuag, communicated that the
delivery of their respective cargoes had been completed. [14] The Coca-Cola Plant in Davao later reported that
the delivery had a suspiciously enormous shortage. [15]

(2) SEPARATION PAY (in lieu of the supposed reinstatement) equivalent to one-half () month pay for
every year of service. A fraction of at least six (6) months shall be considered one (1) whole year.

(3) TEMPERATE DAMAGES in the amount of Five Thousand Pesos (Php5,000.00) for the financial loss
suffered by the petitioner when he was abruptly dismissed as a truck driver on December 6, 2004 (during or
around the Christmas season), although the exact amount of such damage is incapable of exact
determination); and

(4) EXEMPLARY DAMAGES in the amount of Five Thousand Pesos (Php5,000.00) as a corrective
measure in order to set out an example to serve as a negative incentive or deterrent against socially
deleterious actions.

Respondent reported to the office of the petitioner on 6 December 2004. Allegedly in a calm and polite
manner, petitioner asked respondent to explain why the latter had not contacted petitioner for two days, and
he had not gone in convoy with the other trucks, as he was told to do. [16] Respondent replied that the battery
of his cellphone had broken down.[17] Petitioner then confronted him allegedly still in a polite and
civilized manner, regarding the large shortages, but the latter did not answer.[18] Petitioner afterwards told him
to just take a rest or, in their vernacular, pahulay lang una.[19] This exchange started the dispute since
respondent construed it as a dismissal. He demanded that it be done in writing, but petitioner merely
reiterated that respondent should just take a rest in the meanwhile. [20] The former alleged that respondent had
offered to resign and demanded separation pay. At that time, petitioner could not grant the demand, as it
would entail computation which was the duty of the cashier.[21] Petitioner asked him to come back the next
day.
Instead of waiting for another day to go back to his employer, Respondent went to the Department of
Labor-Regional Arbitration Board X, that very day of the confrontation or on 6 December 2004. There he filed
a Complaint for illegal dismissal, claiming his separation pay and 13 th month pay.[22] Subsequently, after the
delivered goods to the Coca-Cola Plant were weighed on 9 December 2004, it was found out that there was a
shortage of 111 bags of sugar, equivalent to 166,000.[23]
Respondent argued that he was whimsically dismissed, just because he had not been able to answer his
employer's call during the time of the delivery.[24] His reason for not answering was that the battery pack of his

cellphone had broken down.[25] Allegedly enraged by that incident, his employer, petitioner herein, supposedly
shouted at him and told him, pahuway naka.[26] When he asked for a clarification, petitioner allegedly told
him, wala nay daghan istorya, pahulay na! This statement was translated by the CA thus: No more talking!
Take a rest![27] He then realized that he was being dismissed. When he asked for his separation pay,
petitioner refused.[28] Respondent thus filed a Complaint for illegal dismissal.

The NLRC further held thus:

Ruling of the Labor Arbiter

At best, complainant should be considered on leave of absence without pay pending his new
assignment. Not having been dismissed much less illegally, complainant is not entitled to the awarded benefits
of backwages and separation pay for lack of legal and factual basis. [35]
On 30 August 2006, labor arbiter Nicodemus G. Palangan rendered his Decision sustaining
respondent's Complaint for illegal dismissal. [29] The labor arbiter made a discourse on the existence of an
employer-employee relationship between the parties. In granting the relief sought by petitioner, the labor
arbiter held as follows:
For failure on the part of the respondent to substantially prove the alleged infraction (shortages)
committed by complainant and to afford him the due process mandated by law before he was eventually
terminated, complainant's dismissal from his employment is hereby declared illegal and the respondent is
liable to reinstate him with backwages for one (1) year but in view of the strained relationship that is now
prevailing between the parties, this Arbitration Branch finds it more equitable to grant separation pay instead
equivalent to one (1) month per year of service based on the average income for the last year of his
employment CY 2004 which is P9,974.51, as hereby computed: [30]

Thus, the labor arbiter awarded respondent separation pay and proportionate 13 th month pay for 2004
and 13th month pay differential for 2003.[31]
Petitioner appealed to the NLRC, alleging that the latter erred in finding that respondent had been
illegally dismissed and that the utterance of pahulay lang una meant actual dismissal. [32] He also alleged
that the pecuniary awards of separation pay, backwages, proportionate 13 th month pay and differential were
erroneous. He argued that pahulay lang unawas not an act of dismissal; rather, he merely wanted to give
respondent a break, since the companys clients had lost confidence in respondent. Thus, the latter allegedly
had to wait for clients other than Busco Sugar Mill and Coca-Cola, which had banned respondent from
entering their premises.
Ruling of the NLRC

In a Resolution dated 30 November 2006,[33] the NLRC reversed the labor arbiter's ruling, holding as
follows:
While the general rule in dismissal cases is that the employer has the burden to prove that the dismissal was
for just or authorized causes and after due process, said burden is necessarily shifted to the employee if the
alleged dismissal is denied by the employer, as in this case, because a dismissal is supposedly a positive and
unequivocal act by the employer. Accordingly, it is the employee that bears the burden of proving that in fact
he was dismissed. It was then incumbent upon complainant to prove that he was in fact dismissed from his job
by individual respondent Alex V. Ang Gaeid effective December 6, 2004 when the latter told him: Pahuway
naka! (You take a rest). Sadly, he failed to discharge that burden. Even assuming that Mr. Gaeid had the
intention at that time of dismissing complainant from his job when he uttered the said words to him, there is no
proof showing of any overt act subsequently done by Mr. Gaeid that would suggest he carried out such
intention. There is no notice of termination served to complainant. Literally construing the remarks of Mr.
Gaeid as having been dismissed from his job, complainant immediately filed the instant complaint for illegal
dismissal on the same day without first ascertaining the veracity of the same. The how, why and the wherefore
of his alleged dismissal should be clearly demonstrated by substantial evidence. Complainant failed to do so;
hence, he cannot claim that he was illegally dismissed from employment. [34]

The NLRC likewise held that the complainant was not entitled to 13 th month pay, since he was paid on
purely commission basis, an exception under Presidential Decree No. 851 the law requiring employers to
pay 13th month pay to their employees.[36]

Respondent moved for reconsideration,[37] in effect arguing that petitioner should not be allowed to
change the latters theory. Supposedly, the argument in the position paper of petitioner was that there was no
employer-employee relationship between them, and that he was compelled to dismiss respondent because of
the heavy losses the latter was bringing to petitioner. In this Motion for Reconsideration, respondent admitted
that his wife had received the Resolution on 12 January 2007, but that he learned of it much later, on 7
February 2007, justifying the untimely filing of the motion. [38]
The NLRC denied the Motion for Reconsideration for being filed out of time. [39] He and his counsel each
received notice of the NLRC's Resolution dated 30 November 2006, reversing the labor arbiters Decision on
11 January 2007,[40] but they only filed the motion 25 days after the period to file had already lapsed.
[41]
Respondent, thus, sought recourse from the CA through a Petition for a Writ of Certiorari under Rule 65.
The CA Ruling

On 23 June 2010, brushing aside the technicality issue, the CA proceeded to resolve the substantive
issues which it deemed important, such as whether there was an employer-employee relationship between
petitioner and respondent, and whether it was correct for the NLRC to declare that respondent was not illegally
dismissed.[42] It completely reversed the NLRC and came up with the dispositive portion mentioned at the
outset.
The Issues

Petitioner is now before us citing factual errors that the CA allegedly committed, such as not appreciating
petitioner's lack of intention to dismiss respondent. These factual errors, however, are beyond this Court to
determine, especially because the records of the proceedings at the level of the labor arbiter were not
attached to the Petition. The Court is more interested in the legal issues raised by petitioner and rephrased by
the Court as follows:
I
THE COURT OF APPEALS ERRED IN REVERSING THE NLRC WITHOUT ANY FINDING OF GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION;

II
THE COURT OF APPEALS ERRED IN ENTERTAINING RESPONDENT'S PETITION NOTWITHSTANDING
THE FACT THAT HIS MOTION FOR RECONSIDERATION OF THE NLRC'S DECISION WAS FILED OUT OF
TIME;

III
THE COURT OF APPEALS ERRED IN GRANTING AWARDS BEYOND WHAT WAS PRAYED FOR IN THE
COMPLAINT SUCH AS THE AWARD OF TEMPERATE AND EXEMPLARY DAMAGES

The Court's Ruling

We find the Petition impressed with merit.

A writ of certiorari is a remedy to correct errors of jurisdiction, for which reason it must clearly show that
the public respondent has no jurisdiction to issue an order or to render a decision. Rule 65 of the Rules of
Court has instituted the petition for certiorari to correct acts of any tribunal, board or officer exercising judicial
or quasi-judicial functions with grave abuse of discretion amounting to lack or excess of jurisdiction. This
remedy serves as a check on acts, either of excess or passivity, that constitute grave abuse of discretion of a
judicial or quasi-judicial function. This Court, in San Fernando Rural Bank, Inc. v. Pampanga Omnibus
Development Corporation and Dominic G. Aquino, [43] explained thus:
Certiorari is a remedy narrow in its scope and inflexible in character. It is not a general utility tool in the
legal workshop. Certiorari will issue only to correct errors of jurisdiction and not to correct errors of judgment.
An error of judgment is one which the court may commit in the exercise of its jurisdiction, and which error is
reviewable only by an appeal. Error of jurisdiction is one where the act complained of was issued by the court
without or in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari. As
long as the court acts within its jurisdiction, any alleged errors committed in the exercise of its discretion will
amount to nothing more than mere errors of judgment, correctible by an appeal if the aggrieved party raised
factual and legal issues; or a petition for review under Rule 45 of the Rules of Court if only questions of law are
involved.

A cert[iorari] writ may be issued if the court or quasi-judicial body issues an order with grave abuse of
discretion amounting to excess or lack of jurisdiction. Grave abuse of discretion implies such capricious and
whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other words, where the power is
exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent
or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to
act at all in contemplation of law. Mere abuse of discretion is not enough. Moreover, a party is entitled to a
writ of certiorari only if there is no appeal nor any plain, speedy or adequate relief in the ordinary course of law.

The raison detre for the rule is that when a court exercises its jurisdiction, an error committed while so
engaged does not deprive it of the jurisdiction being exercised when the error was committed. If it did, every
error committed by a court would deprive it of its jurisdiction and every erroneous judgment would be a void
judgment. In such a situation, the administration of justice would not survive. Hence, where the issue or
question involved affects the wisdom or legal soundness of the decision not the jurisdiction of the court to
render said decision the same is beyond the province of a special civil action for certiorari.[44](citations
omitted)
Petitioner is correct in its argument that there must first be a finding on whether the NLRC committed
grave abuse of discretion and on what these acts were. In this case, the CA seemed to have forgotten that its
function in resolving a petition for certiorari was to determine whether there was grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of public respondent NLRC. The CA proceeded to
review the records and to rule on issues that were no longer disputed during the appeal to the NLRC, such as
the existence of an employer-employee relationship. The pivotal issue before the NLRC was whether
petitioners telling respondent to take a rest, or to have a break, was already a positive act of dismissing
him. This issue was not discussed by the CA.
A reading of the assailed Decision will readily reveal the patent errors of the CA. On page 11 of its
Decision, it held as follows: The NLRC likewise concluded that petitioner was not entitled to separation pay
because he was not a regular employee of private respondent, he (the petitioner) being paid on purely
commission or pakyaw basis. The CA took off from that point to give a discussion on regular employment
and further held:
To Us, private respondent's advice to take a rest theory is nothing but a mere ploy to reinforce his
hypothesis that the petitioner is not a regular employee. What makes this worse is that the NLRC bought
private respondent's aforesaid theory hook, line and sinker and ruled that the petitioner was neither dismissed
from work, he (the petitioner) being considered merely on leave of absence without pay, nor is he (the
petitioner) entitled to separation pay on the ground that he was paid on purely commission or pakyaw basis
which is in legal parlance, in effect, implies that the petitioner is not a regular employee of the private
respondent, but a mere seasonal worker or independent contractor.

It is most disturbing to see how the CA regarded labor terms paid on commission, pakyaw and
seasonal worker as one and the same. In labor law, they are different and have distinct meanings, which we
do not need to elaborate on in this Petition as they are not the issue here. It should also be remembered that
a regular status of employment is not based on how the salary is paid to an employee. An employee may be
paid purely on commission and still be considered a regular employee. [45] Moreover, a seasonal employee
may also be considered a regular employee. [46]
Further, the appreciation by the CA of the NLRC Resolution was erroneous. The fact is that the refusal
by the NLRC to grant separation pay was merely consistent with its ruling that there was no dismissal. Since
respondent was not dismissed, much less illegally dismissed, separation pay was unnecessary. The CA
looked at the issue differently and erroneously, as it held that the NLRC refused to grant the award of
separation pay because respondent had not been found to be a regular employee. The NLRC had in fact
made no such ruling. These are flagrant errors that are reversible by this

Court. They should be corrected for the sake not only of the litigants, but also of the CA, so that it would
become more circumspect in its appreciation of the records before it.
We reviewed the NLRC Resolution that reversed the LA Decision and found nothing in it that was
whimsical, unreasonable or patently violative of the law. It was the CA which erred in finding faults that were
inexistent in the NLRC Resolution.

On the issue of the propriety of entertaining the Petition for Certiorari despite the prescribed Motion for
Reconsideration with the NLRC, we find another error committed by the CA. The pertinent provisions of the
2005 Rules of Procedure of the NLRC are as follows:
Rule VII, Section 14. Motions for Reconsideration. Motions for reconsideration of any order, resolution
or decision of the Commission shall not be entertained except when based on palpable or patent errors,
provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order,
resolution or decision, with proof of service that a copy of the same has been furnished, within the
reglementary period, the adverse party and provided further, that only one such motion from the same party
shall be entertained.

Rule VIII, Section 2. Finality of decisions of the Commission. (a) Finality of the decisions, resolutions
or orders of the Commission. Except as provided in Rule XI, Section 10, the decisions, resolutions orders of
the Commission/Division shall become executory after (10) calendar days from receipt of the same.

When respondent failed to file a Motion for Reconsideration of the NLRCs 30 November 2006
Resolution within the reglementary period, the Resolution attained finality and could no longer be modified by
the Court of Appeals. The Court has ruled as follows:
[I]t is a fundamental rule that when a final judgment becomes executory, it thereby becomes immutable and
unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or by the highest Court of the land. The only
recognized exceptions are the correction of clerical errors or the making of so-called nunc pro tunc entries
which cause no prejudice to any party, and, of course, where the judgment is void. Any amendment or
alteration which substantially affects a final and executory judgment is null and void for lack of jurisdiction,
including the entire proceedings held for that purpose. [47]

Similarly, a motion for reconsideration filed out of time cannot reopen a final and executory judgment of
the NLRC. Untimeliness in filing motions or petitions is not a mere technical or procedural defect, as leniency
regarding this requirement will impinge on the right of the winning litigant to peace of mind resulting from the
laying to rest of the controversy.
As to the third issue, since the CA could no longer modify the NLRC Resolution, it logically follows that
the modification of the award cannot be done either. Had the Resolution not yet attained finality, the CA could
have granted some other relief, even if not specifically sought by petitioner, if such ruling is proper under the
circumstances. Rule 65 of the Rules of Court provides:
Section. 8. Proceedings after comment is filed. After the comment or other pleadings required by the
court are filed, or the time for the filing thereof has expired, the court may hear the case or require the parties
to submit memoranda. If after such hearing or filing of memoranda or upon the expiration of the period for
filing, the court finds that the allegations of the petition are true, it shall render judgment for such relief to which
the petitioner is entitled.

However, the NLRC Resolution sought to be set aside had become final and executory 25 days before
respondent filed his Motion for Reconsideration. Thus, subsequent proceedings and modifications are not
allowed and are deemed null and void.
IN VIEW OF THE FOREGOING, the Petition is GRANTED. The assailed 23 June 2010 Decision of the
Court of Appeals and its 20 December 2010 Resolution are hereby SET ASIDE. The 30 November 2006 and
30 March 2010 Resolutions of the NLRC areAFFIRMED and sustained.
SO ORDERED.

PEOPLE OF THE PHILIPPINES,

G.R. No. 173396

Petitioner,
It cannot be argued that prescriptive periods are mere procedural rules and technicalities, which may be
brushed aside at every cry of injustice, and may be bent and broken by every appeal to pity. The Courts
ruling in Videogram Regulatory Board v. Court of Appeals finds application to the present case:
There are certain procedural rules that must remain inviolable, like those setting the periods for
perfecting an appeal or filing a petition for review, for it is doctrinally entrenched that the right to appeal is a
statutory right and one who seeks to avail of that right must comply with the statute or rules. The rules,
particularly the requirements for perfecting an appeal within the reglementary period specified in the law, must
be strictly followed as they are considered indispensable interdictions against needless delays and for orderly
discharge of judicial business. Furthermore, the perfection of an appeal in the manner and within the period
permitted by law is not only mandatory but also jurisdictional and the failure to perfect the appeal renders the
judgment of the court final and executory. Just as a losing party has the right to file an appeal within the
prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of
his/her case.

These periods are carefully guarded and lawyers are well-advised to keep track of their applications.
After all, a denial of a petition for being time-barred is a decision on the merits.

Present:

- versus

CARPIO, J., Chairperson,

VELASCO, JR., *
PERALTA,

HON. SANDIGANBAYAN (FIFTH DIVISION), ABELARDO P.

PANLAQUI, RENATO B. VELASCO, ANGELITO PELAYO and
WILFREDO CUNANAN,

BERSAMIN, ** and
ABAD, JJ.

Respondents.

Promulgated:

September 22, 2010

Barge with Clamshell and one (1) unit of Back Hoe on Barge for an unstipulated consideration for a period of
thirty (30) days, which equipment items were to be purportedly used for the deepening and dredging of the
Palto and Pakulayo Rivers in Sasmuan, Pampanga; thereafter accused caused it to appear that work on the
said project had been accomplished and 100% completed per the approved Program of Work and
Specifications and turned over to Barangay Malusac; as a result of the issuance of the Accomplishment
Report and Certificate of Project Completion and Turn-Over, payments ofP511,612.20 and P616,314.60 were
made to and received by accused WILFREDO CUNANAN notwithstanding the fact that no work had actually
been done on the Palto and Pakulayo Rivers considering that J.S. Lim Construction had no barge or any kind
of vessel registered with the First Coast Guard District and that no business license/permit had been granted
to the said company by the Municipal Treasurer's Office of Guagua, Pampanga, which acts of the accused
caused undue injury to the Government and granted unwarranted benefits to J.S. Lim Construction in the total
amount of ONE MILLION ONE HUNDRED TWENTY- SEVEN THOUSAND NINE HUNDRED TWENTY-SIX
AND 80/100 PESOS (P1,127,926.80), Philippine Currency.
CONTRARY TO LAW.[2]
Private respondents were duly arraigned on April 10, 1996, pleading not guilty to the charge against
them. Thereafter, trial on the merits ensued. Both the prosecution and the defense were able to present the
testimonies of their numerous witnesses and their respective documentary exhibits.
On May 19, 2006, the Sandiganbayan rendered the assailed Decision, [3] the dispositive portion of
which reads as follows:
WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond reasonable
doubt, accused ABELARDO P. PANLAQUI, RENATO B. VELASCO, ANGELITO PELAYO and WILFREDO
CUNANAN are hereby declared NOT GUILTY in Criminal Case No. 20637 for Violation of Section 3(e) of
Republic Act No. 3019. They are ordered ACQUITTED of the said offense charged against them.

x-----------------------------------------------------------------------------------------x
The cash bonds posted by all the aforesaid accused to obtain their provisional liberty are hereby
ordered returned to them, subject to the usual accounting and auditing procedures.

DECISION
PERALTA, J.:

The Hold Departure Order issued against the same accused are likewise ordered lifted.
This resolves the petition for certiorari under Rule 65 of the Rules of Court, praying that the
Decision[1] dated May 19, 2006, of the Sandiganbayan, acquitting private respondents Abelardo P. Panlaqui,
Renato B. Velasco, Angelito Pelayo and Wilfredo Cunanan, of the charge for Violation of Section 3(e) of
Republic Act (R.A.) No. 3019, as amended, be nullified and set aside.

There can be no pronouncement as to civil liability as the facts from which the same might arise were
not proven in the case at bar.

The antecedent facts are set forth hereunder.

Private respondents were charged in an Information dated February 24, 1994, reading as follows:
SO ORDERED.[
That on or about the 1st day of September, 1991, and for some time prior or subsequent thereto, in the
Municipality of Sasmuan, Province of Pampanga, Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, ABELARDO PANLAQUI being then the Municipal Mayor of Sasmuan,
Pampanga, RENATO B. VELASCO and ANGELITO PELAYO, being then the Municipal Planning and
Development Coordinator and the Municipal Treasurer, respectively, of Sasmuan, Pampanga, VICTORINO
MANINANG being then the Barangay Captain of Malusac, Sasmuan, Pampanga, and hence all public officers,
while in the performance of their official functions, taking advantage of their position, committing the offense in
relation to their office, and conspiring and confederating with one another and with WILFREDO CUNANAN,
the representative of J.S. Lim Construction, did then and there willfully, unlawfully, criminally and with evident
bad faith cause undue injury to the Government and grant unwarranted benefits to J.S. Lim Construction in the
following manner: accused ABELARDO P. PANLAQUI, without being authorized by the Sangguniang Bayan
of Sasmuan, Pampanga, entered into a Contract of Lease of Equipment with J.S. Lim Construction,
represented by accused WILFREDO CUNANAN, whereby the municipality leased seven (7) units of Crane on

The People, represented by the Office of the Ombudsman, through the Office of the Special Prosecutor, then
filed the present petition for certiorari, alleging that:
I
THE COURT A QUO ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF ITS JURISDICTION WHEN IT DISREGARDED THE MANDATORY PROVISIONS OF
PRESIDENTIAL DECREE (PD) NO. 1594 AND SUPPLIED A DEFENSE NOT INVOKED BY RESPONDENTS
AND ANCHORED ITS DECISION ON POSSIBILITIES, MERE ASSUMPTION OR CONJECTURE RATHER

THAN ON FACTS ESTABLISHED BY EVIDENCE ON RECORD, THEREBY VIOLATING PETITIONER'S

FUNDAMENTAL RIGHT TO DUE PROCESS OF LAW.
II

THE COURT A QUO ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF ITS JURISDICTION WHEN IT IGNORED THE EVIDENCE ADDUCED BY THE PETITIONER
AND DECLARED THAT THE PETITIONER FAILED TO PRESENT ANY EVIDENCE TO PROVE THAT SAID
RESPONDENTS VIOLATED THE PROVISIONS OF SECTION 3(e) OF R.A. 3019. [5]
The Court finds the petition unmeritorious.

1991 to October 2, 1991, when the dredging works were supposedly conducted, there was as yet no approved
plans and specifications as required by Presidential Decree (PD) No. 1594 before bidding for construction
contracts can proceed. Petitioner doubts that the proper procedure for bidding had been followed. Petitioner
then asks how the project could have proceeded on September 2, 1991 when the required plan was only
dated November 18, 1991.

The foregoing is essentially an issue involving an alleged error of judgment, not an error of
jurisdiction. Petitioner has not convincingly shown that the prosecution has indeed been deprived of due
process of law. There is no showing that the trial court hampered the prosecution's presentation of evidence
in any way. On the contrary, the prosecution was given ample opportunity to present its ten witnesses and all
necessary documentary evidence. The case was only submitted for decision after the parties had duly rested
their case. Respondent trial court clearly stated in its decision which pieces of evidence led it to its conclusion
that the project was actually undertaken, justifying payment to the contractor. Clearly, petitioner failed to show
that there was mistrial resulting in denial of due process.

It is fitting to reiterate the holding of the Court in People v. Tria-Tirona,[6] to wit:

x x x it is clear in this jurisdiction that after trial on the merits, an acquittal is immediately final and cannot
be appealed on the ground of double jeopardy. The only exception where double jeopardy cannot be
invoked is where there is a finding of mistrial resulting in a denial of due process. x x x x

x x x Certiorari will not be issued to cure errors by the trial court in its appreciation of the evidence of
the parties, and its conclusions anchored on the said findings and its conclusions of law. [7]

In People v. Tria-Tirona,[12] the Court held that when the trial court arrives at its decision only after all the
evidence had been considered, weighed and passed upon, then any error committed in the evaluation of
evidence is merely an error of judgment that cannot be remedied by certiorari.[13]

In sum, there being no mistrial in this case, the acquittal of private respondents can no longer be
reviewed by the Court as this would constitute a violation of the constitutional right against double
jeopardy. Moreover, since the alleged error is only one of judgment, petitioner is not entitled to the
extraordinary writ of certiorari.

The Court further expounded in First Corporation v. Former Sixth Division of the Court of Appeals,[8] thus:

It is a fundamental aphorism in law that a review of facts and evidence is not the province of the
extraordinary remedy of certiorari, which is extra ordinem - beyond the ambit of
appeal.In certiorari proceedings, judicial review does not go as far as to examine and assess the
evidence of the parties and to weigh the probative value thereof. It does not include an inquiry as to
the correctness of the evaluation of evidence. Any error committed in the evaluation of evidence is
merely an error of judgment that cannot be remedied bycertiorari. An error of judgment is one which the
court may commit in the exercise of its jurisdiction. An error of jurisdiction is one where the act complained of
was issued by the court without or in excess of jurisdiction, or with grave abuse of discretion, which is
tantamount to lack or in excess of jurisdiction and which error is correctible only by the extraordinary writ
ofcertiorari. Certiorari will not be issued to cure errors of the trial court in its appreciation of the evidence of the
parties, or its conclusions anchored on the said findings and its conclusions of law. It is not for this Court to
re-examine conflicting evidence, re-evaluate the credibility of the witnesses or substitute the findings
of fact of the court a quo. (Emphasis supplied.)[9]

The aim of the present petition is to overturn the Sandiganbayan's conclusion that there is no doubt that
dredging work was performed along the Palto and Pakulayo Rivers [10] and the project was actually
undertaken and accomplished by the said contractor x x x [h]ence the payment made to the latter was
justified.[11] From such finding, the trial court held that the prosecution failed to prove the presence of all the
elements of the offense charged, resulting in the acquittal of private respondents. Petitioner points out that
the lower court erred in arriving at such conclusion, since prosecution evidence shows that as of September 2,

WHEREFORE, the petition is DISMISSED for lack of merit. The Decision dated May 19, 2006 of the
Sandiganbayan is AFFIRMED.

SO ORDERED.

METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. REGINO T. VERIDIANO II,
Presiding Judge, RTCManila, Branch 31, and DOMINADOR ONG, respondents.
DECISION

DE LEON, JR., J.:

Challenged in this petition for certiorari is the Decision[1] dated November 28, 1994 of the Regional Trial Court
(RTC, for brevity) of Manila, Branch 31 in Criminal Case No. 92-111940. The RTC of Manila acquitted private
respondent Dominador Ong for violation of Presidential Decree No. 115 (P.D. No. 115, for brevity), otherwise
known as the Trust Receipts Law in relation to Article 315(1) (b) of the Revised Penal Code.
The Information dated October 30, 1992 charged the private respondent, Dominador Ong, in this wise, to wit:
That on or about and during the period comprised between September 6, 1989 and September 15, 1989, both
dates inclusive and for sometime prior and subsequent thereto, in the City of Manila, Philippines, the said
accused, as Treasurer of the Sun Ray Metal, Inc., a corporation duly organized under the laws of the
Philippines, did then and there willfully, unlawfully, and feloniously defraud the Metropolitan Bank and Trust
Company, a banking entity organized and doing business under the laws of the Philippines, with office situated
at Dasmarias corner Ugalde Streets, Binondo, this City, represented by LUCILA Y. UY, its Senior Manager, in
the following manner, to wit: the said accused, under trust Receipts dated September 6, 1989 and September
15, 1989 executed by the said Dominador Ong/Sun Ray Metal, Inc. in favor of the said Metropolitan Bank and
Trust Company, received in trust from the latter the following:
Date of

Articles

Amount

4 cases alu-

P155,733.00

Trust Receipt
September 6, 1989

On December 12, 1994, the public respondent promulgated a Decision, the dispositive portion of which reads:
WHEREFORE, the guilt of the accused not having been established beyond reasonable doubt, accused
DOMINADOR ONG, is hereby acquitted of the crime charged, with costs de officio.[5]
The public respondent ratiocinated that the private respondent was not duly authorized to represent Sun Ray
Metal, Inc. considering that there were other high-ranking officers who could have negotiated the contract; that
there was no written authority from the board of directors of the said corporation authorizing the private
respondent to execute the trust receipts in its behalf in favor of petitioner bank. Moreover, the defense
sufficiently proved that the restructuring agreement effectively novated the obligation under the trust receipts.
Hence, this petition with the following assignment of errors, viz:

The public respondent judge gravely abused his discretion in ruling that the private respondent is merely a
corporate treasurer and he cannot be considered to be the entrustee because there are other responsible
officers of the corporation.

Grade D1a 1MM

brass sheets

On June 13, 1994, the private respondent formally offered his exhibits in evidence. On the same day, the
prosecution presented Lucila Uy, as rebuttal witness to refute the claim of the defense that there has been a
novation of the obligation under the trust receipts. On August 5, 1994, the defense also called the private
respondent to the witness stand to testify on sur-rebuttal. Thereafter, both parties submitted their respective
memoranda.

minum wire EC

September 15, 1989

respondent also claimed that the contract between Sun Ray Metal, Inc. and the petitioner bank has been
novated when a representative of the bank verbally proposed to restructure the obligation under the trust
receipts, to which he agreed. Private respondent claimed that he paid thrice under the restructuring
agreement and showed as proof of the said novation a receipt evidencing one of his payments to the petitioner
bank.

P257,400.00
II

or all valued at P413,133.00 for the purpose of holding the said merchandise in trust under the express
obligation on his part to dispose of the same and turn over the proceeds of the sale to the said bank, if sold, or
to the account for or return the same, if unsold, on its due date or upon demand, but the said accused, once in
possession of the same, far from complying with his aforesaid obligation, failed and refused and still fails and
refuses to do so despite repeated demands made upon him to that effect and with intent to defraud, the said
accused did then and there willfully, unlawfully and feloniously misappropriate, misapply and convert the same
or the value thereof, to his own personal use and benefit, to the damage and prejudice of the said Metropolitan
Bank and Trust Company represented by LUCILA Y. UY in the total amount of P 413,133.00, Philippine
Currency.[2]

The public respondent judge gravely abused his discretion in ruling that the private respondent had no
authority to represent his corporation.
III
The public respondent judge gravely abused his discretion in ruling that the private respondent did not act in
his personal capacity in signing the trust receipts agreements subject of the case below, but rather merely in
his personal capacity as corporate treasurer.

On March 15, 1993, private respondent pleaded not guilty on arraignment.

IV
The prosecutions case showed that Sun Ray Metal, Inc. purchased brass metals and aluminum wires
separately through two (2) letters of credit [3] issued by the petitioner bank in favor of the supplier of the raw
materials. To secure the obligation by Sun Ray Metal, Inc. to the petitioner bank, the private respondent, in his
capacity as treasurer of Sun Ray Metal, Inc., executed two (2) trust receipts [4] in favor of the petitioner
bank. He likewise personally bound himself, jointly and severally with Sun Ray Metal, Inc., to petitioner bank in
connection therewith. However, despite repeated demands, the private respondent failed to pay the petitioner
bank the proceeds of the sale of the raw materials or to turn over the said materials in case of his failure to sell
the same.
After resting its case, the prosecution on November 3, 1993 formally offered its documentary evidence.
On December 1, 1993, the defense presented its evidence to show that herein private respondent signed the
trust receipts in blank and that he was acting only in his capacity as treasurer of Sun Ray Metal, Inc. Private

The public respondent judge gravely abused his discretion in ruling that petitioner, itself, recognizes that
indebtedness was the sole obligation of the corporation in his personal capacity.
V
The public respondent judge gravely abused his discretion in ruling that there was a restructuring of the trust
receipt agreements resulting in a novation.
VI

The public respondent judge gravely abused his discretion in ruling that the petitioner had the burden of proof
to show that there was no restructuring.
Petitioner contends that public respondent gravely abused his discretion amounting to lack or excess of
jurisdiction when the latter acquitted the private respondent. According to the petitioner, a nullification of the
said judgment will not violate the constitutional principle of double jeopardy on the ground that the case at bar
falls under one of the exceptions to the rule. Petitioner, citing several cases,[6] argues that no violation of the
double jeopardy rule is committed when the judgment was issued in grave abuse of discretion amounting to
lack or excess of jurisdiction tantamount to a violation of due process. With respect to the civil aspect of the
case, the petitioner ventilated the issues before the appellate court.
The petition is not meritorious.
We have thoroughly perused the records and carefully analyzed the cases relied upon by the petitioner and
found no cogent reason to depart from the judgment of the public respondent in the case at bar.
The cases relied upon by the petitioner are not squarely applicable to the case at bar.
In Gorion v. Regional Trial Court,[7] this Court ruled that the erroneous dismissal order of the criminal case
deprived the State of a fair opportunity to present and prove its case. The said order is null and void for being
violative of its right to due process. Hence, it cannot be pleaded to bar the subsequent annulment of the
judgment of the dismissal order or a reopening of the case on the ground of double jeopardy.

evidence, as argued by the petitioner in this petition, such are not jurisdictional matters that may be
determined and ruled upon in a certiorari proceeding. If at all, such alleged error by the public respondent was
merely an error of judgment, but not an error of jurisdiction.
The fairly recent case of Palu-ay v. Court of Appeals[13] is instructive, to wit:
In the case at bar, a hearing was held during which the prosecution and the defense were heard on their
evidence. Thereafter, judgment was rendered on the basis of the evidence presented. Consequently, any
error made by the trial court in the appreciation of the evidence was only an error of judgment but not of
jurisdiction so as to render the judgment void.
Indeed, the question raised by the petition for annulment of judgment is a factual question that cannot be
reviewed not only because the decision of the trial court is now final but also because a review of such
question at the instance of the prosecution would violate the right of the accused against being placed in
double jeopardy of punishment for the same act.[14]
Petitioner also contends that its petition for certiorari does not put the private respondent in double jeopardy
since the petition only seeks the nullification of the judgment of the public respondent and does not in any way
place the private accused on trial again. The defense of double jeopardy, according to the petitioner, is
therefore premature in these proceedings.
We do not agree.

In People v. Bocar,[8] this Court ruled that the order of dismissal given without receiving evidence for the
prosecution constitutes a veritable abuse of discretion which the court cannot permit. It cannot therefore be a
basis of double jeopardy.

In Palu-ay, this Court regarded the petition for annulment of judgment of acquittal as a sufficient basis to put
the accused in double jeopardy. Inasmuch as the petition for certiorari in the case at bar prays for the
nullification of the judgment, it likewise places the herein private respondent in double jeopardy.

In Portugal v. Reantaso,[9] the case was dismissed on motion of the accused therein and before the
prosecution could present its evidence. The records do not show that notice of hearing was given to the
prosecuting officer or to petitioner and his witnesses before the case was heard and tried on the merits on the
date mentioned in the notice. This Court ruled that the trial court committed grave abuse of discretion due to
the failure of the trial court to give the prosecution the opportunity to be heard.

It bears stressing that whenever a criminal case is prosecuted and the State is the offended party, the case
must always be prosecuted under the control and guidance of the State through its government prosecutors.
Accordingly, whenever there is an acquittal or dismissal of a criminal case and the private complainant intends
to question such an acquittal or dismissal, the same must likewise be undertaken by the State through the
Solicitor General. This, petitioner failed to comply. The present petition for certiorari before this Court was
filed by petitioner Metropolitan Bank and Trust Company. It was not initiated by the Solicitor General. In fact,
the Solicitor General intimated to this Court in his comment [15] that a reversal of the assailed judgment would
place the private respondent in double jeopardy. Thus, this petition for certiorari must be dismissed.

In Galman v. Sandiganbayan,[10] it was held that double jeopardy does not attach where the sham trial was but
a mock trial. In that case, the authoritarian president ordered respondents therein Sandiganbayan and
Tanodbayan to rig the trial and closely monitored the entire proceedings to assure a predetermined final
outcome of acquittal and total absolution of the respondents-accused therein of all the charges.
The above-mentioned cases show that the exception to the double jeopardy rule attaches only when the trial
court commits grave abuse of discretion due to a violation of due process, i.e., that the prosecution was
denied the opportunity to present its case or that the trial was a sham. Conversely, there cannot be a grave
abuse of discretion where the trial court gave both parties the opportunity to present their case and even
required them to submit memoranda from which its decision is based, as in this case. In other words, if there
is no denial of due process, there can be no grave abuse of discretion that would merit the application of the
exception to the double jeopardy rule.

We find the ruling in People v. Santiago[16] to be squarely in point wherein this Court ruled that:
It is well-settled that in criminal cases where the offended party is the State, the interest of the private
complainant or the private offended party is limited to the civil liability If a criminal case is dismissed by the
trial court or if there is an acquittal, an appeal therefrom on the criminal aspect may be undertaken only by the
State through the Solicitor General. Only the Solicitor General may represent the People of the Philippines on
appeal. The private offended party or complainant may not take such appeal. However, the said offended
party or complainant may appeal the civil aspect despite the acquittal of the accused (Underscoring Ours). [17]
The above pronouncement of this Court was reaffirmed in Palu-ay, to wit:

In the present case, inasmuch as the prosecution was never denied any opportunity to present its case and
that there is no indication or proof that the trial was a sham, a review and consequent setting aside of the trial
courts decision of acquittal will put the private respondent in double jeopardy. Double jeopardy attaches only:
(1) upon valid indictment; (2) before a competent court; (3) after arraignment; (4) when a valid plea has been
entered; and (5) when the defendant was acquitted or convicted or the case was dismissed or otherwise
terminated without the express consent of the accused. [11] Consequently in such an event, the conviction or
acquittal of the accused or the dismissal of the case shall be a bar to another prosecution for the offense
charged, or for any attempt to commit the same or a frustration thereof, or for any offense which is necessarily
included in the offense charged in the former complaint or information. [12]
The record shows that the court a quo allowed both parties an exhaustive presentation and offer of evidence
and submission of their respective memoranda. If indeed public respondent has misappreciated certain

Petitioner contends that the appellate court erred in ruling that a private complainant cannot file a petition for
annulment of judgment without the Solicitor Generals approval except only as to the civil aspect of the
case. He invokes the ruling in People v. Santiago [174 SCRA 143 (1989)] in which this Court sustained the
right of the private complainant in a criminal case to file a petition for certiorari to set aside the judgment
rendered in the criminal case on the ground that the prosecution had been deprived of due process. This
Court made it clear, however, that such action may be brought by the private complainant only insofar as the
civil aspect of the case is concerned:
It is well-settled that in criminal cases where the offended party is the State, the interest of the private
complainant or the private offended party is limited to the civil liability If a criminal case is dismissed by the
trial court or if there is an acquittal, an appeal therefrom on the criminal aspect may be undertaken only be the

State through the Solicitor General. Only the Solicitor General may represent the People of the Philippines on
appeal. The private offended party or complainant may appeal the civil aspect despite the acquittal of the
accused.

PEOPLE OF THE PHILIPPINES,

Petitioner,

xxx

Present:

In this case, petitioners action does not concern the civil aspect of the case but the validity of the judgment
itself. Indeed, petitioner does not actually question the award of damages. What he contends is that the trial
court decided the case outside the issues made out by the pleadings and thereby deprived the prosecution of
due process.
x x x.

G.R. No. 173089

Hon. ENRIQUE C. ASIS, in his capacity as Presiding Judge of

the Regional Trial Court of Biliran Province, Branch 16, and
JAIME ABORDO,

The very case of People v. Santiago cited by petitioner in support of his claim of standing refutes such claim
(Emphasis supplied).[18]

Respondents.

Promulgated:

August 25, 2010

In the prayer[19] of this petition in the case at bar, what is prayed for is that the decision of respondent Judge
dated November 28, 1994 acquitting the private respondent be reversed. Nothing therein is mentioned about
damages or the civil aspect of the case.
In fine, the instant petition should be dismissed not only for lack of merit but also for lack of legal personality
on the part of the petitioner to appeal the public respondents ruling on the criminal aspect of the case.
DECISION
WHEREFORE, the petition is hereby DISMISSED, with costs against the petitioner.
MENDOZA, J.:
SO ORDERED.
This is a petition for review on certiorari under Rule 45 filed by the Office of the Solicitor
General (OSG), representing the State, seeking to reverse and set aside the June 7, 2006 Resolution[1] of the
Court of Appeals (CA), in CA-G.R. SP No. 01289, which dismissed outright its petition for certiorari under Rule
65 for being the wrong remedy.
From the records, it appears that on October 7, 2002, at 12:30 oclock in the morning, respondent Jaime
Abordo (Abordo) was riding his motorcycle on his way home. He was met by private complainants Kennard
Majait (Majait), Joeniel Calvez (Calvez) and Jose Montes(Montes). An altercation ensued between them.
Abordo shot Majait in the leg while Calvez was hit in the lower left side of his abdomen. Montes escaped
unhurt.
Abordo was charged with two (2) counts of attempted murder in Criminal Case Nos. N-2212 and N-2213 and
one (1) count of frustrated murder in Criminal Case No. N-2211 before the Regional Trial Court, Biliran
Province, Branch 16 (RTC). The trial court found no treachery and evident premeditation. Thus, in its August
29, 2005 Decision,[2] the RTC held Abordo liable only for Serious Physical Injuries for shooting Calvez and
Less Serious Physical Injuries with regard to Majait. It also appreciated four (4) generic mitigating
circumstances in favor of Abordo. With respect to the complaint of Montes, Abordo was acquitted.
All three complainants moved for a reconsideration regarding the civil aspect. They filed a supplemental
motion to include moral damages. Calvez without the conformity of the Provincial Prosecutor, filed a notice of
appeal for both the civil and the criminal aspects. For said reason, Calvez later sought withdrawal of his
motion for reconsideration and its supplement.
On October 24, 2005, the trial court dismissed Majaits motion for reconsideration while Calvezs motion to
withdraw was granted. On said date, the trial court also dismissed Calvez appeal for not bearing the
conformity of the Provincial Prosecutor.
Acting on Chief State Prosecutor Jovencito R. Zunos Indorsement [3] of the October 11, 2005 letter[4] of
Assistant City Prosecutor Nida C. Tabuldan-Gravino, a relative of Calvez, the OSG filed a petition
for certiorari under Rule 65 before the CA based on the following grounds:

GROUNDS FOR THE ALLOWANCE

OF THE PETITION

such rule; however, we must point out that in filing this petition for certiorari, the accused is thereby
placed in double jeopardy. Such recourse is tantamount to converting the petition for certiorari into an
appeal, contrary to the express injunction of the Constitution, the Rules of Court and prevailing jurisprudence
on double jeopardy.

(Petition for Certiorari before the CA)

RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR

EXCESS OF JURISDICTION IN FINDING THAT PRIVATE RESPONDENT HAD NO INTENT TO KILL, IN
HOLDING HIM GUILTY OF ONLY SERIOUS PHYSICAL INJURIES AND LESS SERIOUS PHYSICAL
INJURIES INSTEAD OF FRUSTRATED MURDER AND ATTEMPTED MURDER IN CRIMINAL CASE NOS.
N-2211 AND N-2212, RESPECTIVELY, AND IN ACQUITTING HIM OF THE CRIME CHARGED IN
CRIMINAL CASE NO. N-2213.

II

We must emphasize that the prosecution cannot appeal a decision in a criminal case whether to reverse an
acquittal or to increase the penalty imposed in a conviction because it would place him in double
jeopardy. Hence, this petition is dismissible not only on the ground of wrong remedy taken by the
petitioner to question an error of judgment but also on the ground that such action places the
accused in double jeopardy.[6] [emphases and underscoring supplied]
Not in conformity, the OSG comes to this Court via this petition for review under Rule 45 presenting the
following:
GROUNDS RELIED UPON FOR THE ALLOWANCE OF THE PETITION
I
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISMISSING OUTRIGHT
THE PETITION FOR CERTIORARI SEEKING TO ANNUL THE JOINT JUDGMENT DATED AUGUST 29,
2005 OF HON. ENRIQUE C. ASIS, IN HIS CAPACITY AS PRESIDING JUDGE OF THE RTC OF BILIRAN,
BRANCH 16 IN CRIM. CASE NOS. N-2211, N-2212 AND N-2213 WHICH WAS CLEARLY SHOWN TO BE
CONTRARY TO THE EVIDENCE PRESENTED AND APPLICABLE LAW AND JURISPRUDENCE.
II

RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR

EXCESS OF JURISDICTION IN APPRECIATING FOUR (4) MITIGATING CIRCUMSTANCES IN FAVOR OF
PRIVATE RESPONDENT.[5]

The CA, in the assailed Resolution, dismissed the petition outright. According to the appellate court, the filing
of the petition for certiorari was the wrong remedy. As the State was questioning the verdict of acquittal and
findings of lesser offenses by the trial court, the remedy should have been an appeal. Moreover, the petition
for certiorari placed the accused in double jeopardy. Specifically, the CA wrote:

x x x. Even if the findings of the court are incorrect, as long as it has jurisdiction over the case, such correction
is normally beyond the province of certiorari. Where the error is not one of jurisdiction but an error of law or
fact a mistake of judgment appeal is the remedy. In view of the improper action taken by the herein
petitioner, the instant petition should be dismissed.

Moreover, Section 1, Rule 122 of the 2000 Rules of Criminal Procedure provides that any party may appeal
from a judgment or final order unless the accused will be placed in double jeopardy. In the instant petition, the
Solicitor General, representing the People of the Philippines is assailing the judgment of the public respondent
in finding the accused guilty of lesser crimes tha[n] the ones with which he was charged and of acquitting him
in another. It appears to us that the Solicitor General is also representing the interest of the private
complainant Calvez when it questioned the dismissal of the latters Notice of Appeal dated October 10, 2005
with respect to the civil aspect of the case. Although the Solicitor General is allowed to file an appeal under

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN THEREBY AFFIRMING IN
TOTO THE PLAINLY ERRONEOUS JUDGMENT DATED AUGUST 29, 2005 OF HON. ENRIQUE C. ASIS,
AS PRESIDING JUDGE OF THE RTC OF BILIRAN PROVINCE, BRANCH 16, IN CRIM. CASE NOS. N2211, N-2212 AND N-2213.[7]
On January 19, 2009, the petition was given due course and the parties were ordered to submit their
respective memoranda. The parties complied with the order.
We find that the appellate court erred in dismissing the petition outright.
A petition for certiorari under Rule 65, not appeal, is the remedy to question a verdict of acquittal whether at
the trial court or at the appellate level. In our jurisdiction, We adhere to the finality-of-acquittal doctrine, that is,
a judgment of acquittal is final and unappealable. [8] The rule, however, is not without exception. In several
cases,[9] the Court has entertained petitions for certiorari questioning the acquittal of the accused in, or the
dismissals of, criminal cases. Thus, in People v. Louel Uy,[10] the Court has held:
Like any other rule, however, the above said rule is not absolute. By way of exception, a judgment of acquittal
in a criminal case may be assailed in a petition for certiorari under Rule 65 of the Rules of Court upon clear
showing by the petitioner that the lower court, in acquitting the accused, committed not merely reversible
errors of judgment but also grave abuse of discretion amounting to lack or excess of jurisdiction or
a denial of due process, thus rendering the assailed judgment void. [Emphases and underscoring supplied]
In People v. Laguio, Jr.,[11] where the acquittal of the accused was via the grant of his demurrer to evidence,
We pointed out the propriety of resorting to a petition for certiorari. Thus:

By this time, it is settled that the appellate court may review dismissal orders of trial courts granting an
accuseds demurrer to evidence. This may be done via thespecial civil action of certiorari under Rule
65 based on the ground of grave abuse of discretion, amounting to lack or excess of jurisdiction. Such
dismissal order, being considered void judgment, does not result in jeopardy. Thus, when the order of
dismissal is annulled or set aside by an appellate court in an original special civil action via certiorari,
the right of the accused against double jeopardy is not violated. [Emphases supplied]

What the OSG is questioning, therefore, are errors of judgment. This, however, cannot be resolved without
violating Abordos constitutionally guaranteed right against double jeopardy. An appellate court in a petition for
certiorari cannot review a trial courts evaluation of the evidence and factual findings. Errors of judgment
cannot be raised in a Rule 65 petition as a writ of certiorari can only correct errors of jurisdiction or those
involving the commission of grave abuse of discretion. In the case of People v. Hon. Tria-Tirona,[18] it was
written:

In this petition, the OSG claims that Abordos acquittal in Criminal Case No. N-2213 was improper. Since
appeal could not be taken without violating Abordos constitutionally guaranteed right against double jeopardy,
the OSG was correct in pursuing its cause via a petition for certiorari under Rule 65 before the appellate
court. It was a serious error by the CA to have deprived the petitioner of its right to avail of that remedy.

Petitioner, via a petition for review on certiorari, prays for the nullification and the setting aside of the decision
of public respondent acquitting private respondent claiming that the former abused her discretion in
disregarding the testimonies of the NBI agents on the discovery of the illegal drugs. The petition smacks in the
heart of the lower court's appreciation of the evidence of the parties. It is apparent from the decision of public
respondent that she considered all the evidence adduced by the parties. Even assuming arguendo that public
respondent may have improperly assessed the evidence on hand, what is certain is that the decision was
arrived at only after all the evidence was considered, weighed and passed upon. In such a case, any error
committed in the evaluation of evidence is merely an error of judgment that cannot be remedied by certiorari.
An error of judgment is one in which the court may commit in the exercise of its jurisdiction. An error of
jurisdiction is one where the act complained of was issued by the court without or in excess of jurisdiction, or
with grave abuse of discretion which is tantamount to lack or in excess of jurisdiction and which error is
correctible only by the extraordinary writ of certiorari. Certiorari will not be issued to cure errors by the trial
court in its appreciation of the evidence of the parties, and its conclusions anchored on the said
findings and its conclusions of law. Since no error of jurisdiction can be attributed to public respondent in
her assessment of the evidence, certiorari will not lie. [Emphasis supplied]

As the case was summarily dismissed on a technicality, the merits of the petition for certiorari were not at all
discussed. Thus, the proper recourse would be a remand to the CA.
A review of the records, however, shows that the case need not be remanded to the CA for appropriate
proceedings. The OSGs petition for certiorari, which forms part of the records, would not merit a favorable
review even if it would be given due course simply because it is bereft of merit. For said reason, We deem that
a remand of the case would only prolong the disposition of the case. It is not without precedent. On many
occasions, the Court, in the interest of public service and for the expeditious administration of justice, has
resolved actions on the merits, instead of remanding them for further proceedings, as where the ends of
justice would not be sub-served by the remand of the case. [12]
The rule is that while certiorari may be availed of to correct an erroneous acquittal, the petitioner in such an
extraordinary proceeding must clearly demonstrate that the trial court blatantly abused its authority to a point
so grave as to deprive it of its very power to dispense justice. [13] The case of Galman v. Sandiganbayan,
[14]
presents an instructive exception to the rule on double jeopardy, that is, when the prosecution has been
denied due process of law. The rationale behind this exception is that a judgment rendered by the trial court
with grave abuse of discretion was issued without jurisdiction. It is, for this reason, void. Consequently, there is
no double jeopardy.[15]
A reading of the OSG petition for certiorari filed before the CA, however, fails to show that the prosecution was
deprived of its right to due process. Primarily, the OSG petition does not mention or even hint that there was a
curtailment of its right. Unlike in Galman, the prosecution in this case was never denied its day in court. Both
the prosecution and the defense were able to present their respective evidence, testimonial and
documentary. Both parties had their opportunity to cross-examine witnesses and scrutinize every piece of
evidence. Thereafter, the trial court exercising its discretion evaluated the evidence before it and rendered its
decision. Certainly, there was no mistrial.
The arguments proffered in the said petition call for a review of the evidence and a recalibration of the factual
findings. At the outset, the OSG faulted the trial court for giving full faith and credit to the testimonies of
Abordo and his witnesses. It wrote:

Summing them all up, the CA clearly erred in dismissing the petition for certiorari filed before it by the OSG on
the ground that it was the wrong remedy. There is, however, no need for the remand of the case to the CA as
the petition for certiorari, on its face, cannot be given due course.
WHEREFORE, the petition is PARTIALLY GRANTED. The June 7, 2006 Resolution of the Court of Appeals
in CA-G.R. SP No. 01289, dismissing the petition forcertiorari for being the wrong remedy is SET
ASIDE. Acting on the petition for certiorari, the Court resolves to DENY the same for lack of merit.
SO ORDERED.
[G.R. No. 130106. July 15, 2005]
PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. PERLITA J. TRIA-TIRONA, in her capacity as
Presiding Judge, Branch 102, Regional Trial Court, Quezon City and CHIEF INSPECTOR RENATO A.
MUYOT, respondents.
DECISION
CHICO-NAZARIO, J.:

In ruling that private respondent had no intent to kill private complainants, respondent judge thus accorded full
faith and credit to the testimonies of private respondent and his witnesses Julito Bernadas and Melquiades
Palconit. His findings, however, are contrary to law and the evidence. Therefore, he acted with grave abuse
of discretion amounting to lack or excess of jurisdiction. [16]
It further pointed out that the CA failed to notice certain relevant facts which, if properly considered, would
justify a different conclusion.[17] Subsequently, in its memorandum, it merely reiterated the purported errors of
the trial judge in appreciating and assessing the evidence of both the prosecution and the
defense. Apparently, it wants a review of the trial courts judgment which it claimed to be erroneous.
The OSG then proceeded to show how the evidence should have been appreciated by the trial court in its
favor and against Abordo to demonstrate that there was intent to kill on his part.

Can the government appeal from a judgment acquitting the accused after trial on the merits without violating
the constitutional precept against double jeopardy?
Before us is a petition for review on certiorari seeking the annulment of the decision[1] of respondent Judge
Perlita J. Tria-Tirona dated 11 August 1997 acquitting accused-private respondent Chief Inspector Renato A.
Muyot and in lieu thereof a judgment be issued convicting the latter of the crime charged.
Armed with two search warrants,[2] members of the National Bureau of Investigation (NBI) Anti-Organized
Crime Division, together with members of the NBI Special Investigation Division and the Presidential
Intelligence and Counter-Intelligence Task Force Hammer Head serving as security, conducted a search on
the house of accused-private respondent located on Banawe, Quezon City. The alleged finding of 498.1094
grams of methamphetamine hydrochloride (shabu) thereat led to the filing of an information charging private

respondent with Violation of Section 16, Article III of Republic Act No. 6425, [3] as amended by Rep. Act No.
7659. The information[4] reads:
That on or about October 15, 1996 in Quezon City and within the jurisdiction of this Honorable Court, above
named accused did then and there knowingly have in his possession, custody and control Four Hundred
Ninety-Eight point One Thousand Ninety-Four (498.1094) grams of methamphetamine hydroc(h)loride (shabu)
a regulated drug without any license, permit, prescription or authority coming from any government office,
bureau, agency, or department authorized to issue such license, permit, prescription or authority in blatant
violation of the Dangerous Drugs Act of 1972 as amended by RA 7659.
The case was raffled to the sala of public respondent -- Branch 102 of the Regional Trial Court of Quezon City.
When arraigned on 27 November 1996, private respondent, assisted by a counsel de parte, pleaded not guilty
to the crime charged.[5] After trial on the merits, public respondent rendered a decision [6] acquitting private
respondent on ground of reasonable doubt.
The decision, more particularly the acquittal of private respondent, is being assailed via a petition
for certiorari under Rule 65 of the Rules of Court. Petitioner contends that public respondent, in acquitting
private respondent, committed grave abuse of discretion by ignoring material facts and evidence on record
which, when considered, would lead to the inevitable conclusion of the latters guilt beyond reasonable doubt.
It added that the appealability of the trial courts decision of acquittal in the context of the constitutional
guarantee against double jeopardy should be resolved since it has two pending petitions [7] before the court
raising the same question.
Petitioner informs the Court that in its prior petition in People v. Velasco,[8] it has presented and extensively
discussed the now settled constitutional doctrine in the United States that the Double Jeopardy Clause does
permit a review of acquittals decreed by trial magistrates where, as in this case, no retrial will be required even
if the judgment should be overturned. It thus argues that appealing the acquittal of private respondent would
not be violative of the constitutional right of the accused against double jeopardy.

. . . Thus, emerging American consensus on jury acquittals notwithstanding, on solid constitutional bedrock is
well engraved our own doctrine that acquittals by judges on evidentiary considerations cannot be appealed by
government. The jurisprudential metes and bounds of double jeopardy having been clearly defined by both
constitution and statute, the issue of the effect of an appeal of a verdict of acquittal upon a determination of the
evidence on the constitutionally guaranteed right of an accused against being twice placed in jeopardy should
now be finally put to rest.
...
Philippine jurisprudence has been consistent in its application of the Double Jeopardy Clause such that it has
viewed with suspicion, and not without good reason, applications for the extraordinary writ questioning
decisions acquitting an accused on ground of grave abuse of discretion.
The petition at hand which seeks to nullify the decision of respondent judge acquitting the accused . . . goes
deeply into the trial courts appreciation and evaluation in esse of the evidence adduced by the parties. A
reading of the questioned decision shows that respondent judge considered the evidence received at trial . . .
While the appreciation thereof may have resulted in possible lapses in evidence evaluation, it nevertheless
does not detract from the fact that the evidence was considered and passed upon. This consequently
exempts the act from the writs limiting requirement of excess or lack of jurisdiction. As such, it becomes an
improper object of and therefore non-reviewable by certiorari. To reiterate, errors of judgment are not to be
confused with errors in the exercise of jurisdiction.
On 10 November 2004, the Court gave due course to the petition and required the parties to submit their
respective memoranda.[14]
Private respondent Muyot filed his memorandum on 4 March 2005. [15] Invoking the Rule of Double Jeopardy,
he prays that the petition be dismissed.
On 20 April 2005, petitioner filed its memorandum. It raised the following issues:

In a resolution dated 12 November 1997, the Court required private respondent to comment on the petition
within ten days from notice.[9] On 8 January 1998, the latter filed his Comment.[10]

On 26 January 1998, the Court required petitioner to file its reply.[11] It did on 13 November 1998.[12]

WHETHER OR NOT THE DECISION OF RESPONDENT COURT ACQUITTING PRIVATE RESPONDENT

CAN BE REVIEWED ON A PETITION FOR REVIEW ON CERTIORARI.

On 13 September 2000, the Court promulgated its decision in People v. Velasco.[13] In said case, the
government, by way of a petition for certiorari under Rule 65 of the Rules of Court, appealed the decision of
Hon. Tirso D.C. Velasco acquitting accused Honorato Galvez of the charges of murder and double frustrated
murder due to insufficiency of evidence, and of the charge of unauthorized carrying of firearm on the ground
that the act charged was not a violation of law. This Court dismissed the petition. We ruled:
. . . Therefore, as mandated by our Constitution, statutes and cognate jurisprudence, an acquittal is final and
unappealable on the ground of double jeopardy, whether it happens at the trial court level or before the Court
of Appeals.
In general, the rule is that a remand to a trial court of a judgment of acquittal brought before the Supreme
Court on certiorari cannot be had unless there is a finding of mistrial, as in Galman v. Sandiganbayan. . . .
...
Thus, the doctrine that double jeopardy may not be invoked after trial may apply only when the Court finds
that the criminal trial was a sham because the prosecution representing the sovereign people in the criminal
case was denied due process.
...

II
WHETHER OR NOT PRIVATE RESPONDENT SHOULD BE CONVICTED FOR VIOLATION OF THE
DANGEROUS DRUG ACT OF 1972 ON THE BASIS OF THE EVIDENCE PRESENTED BY THE
PROSECUTION.
On the first issue, petitioner argues that notwithstanding our decision in People v. Velasco,[16] the fact that we
gave due course to the petition means that the issue on the sufficiency of the evidence in this case may be
reviewed. It added that a petition for certiorari should be an available remedy to question the acquittal of the
accused.
On the second issue, petitioner maintains that respondent court abused its discretion in disregarding the
testimonies of the NBI agents on the discovery of the dangerous drug despite the absence of any evidence to
show that they were impelled by any improper motive.
To settle the issue of whether or not an acquittal can still be appealed, this Court pronounced in People v.
Velasco[17] that as mandated by the Constitution, statutes and jurisprudence, an acquittal is final and
unappealable on the ground of double jeopardy, whether it happens at the trial court level or before the Court
of Appeals. In general, the rule is that a remand to a trial court of a judgment of acquittal brought before the
Supreme Court on certiorari cannot be had unless there is a finding of mistrial, as in Galman v.
Sandiganbayan.[18] Only when there is a finding of a sham trial can the doctrine of double jeopardy be not
invoked because the people, as represented by the prosecution, were denied due process.

From the foregoing pronouncements, it is clear in this jurisdiction that after trial on the merits, an acquittal is
immediately final and cannot be appealed on the ground of double jeopardy. The only exception where double
jeopardy cannot be invoked is where there is a finding of mistrial resulting in a denial of due process.
We find petitioners argument that, despite our ruling in People v. Velasco, since we gave due course to the
petition, the issue on the sufficiency of the evidence may be reviewed, to be untenable. The fact that the
petition was given due course does not necessarily mean we have to look into the sufficiency of the evidence
since the issue to be resolved is the appealability of an acquittal. We have categorically ruled in People v.
Velasco[20] that, except when there is a finding of mistrial, no appeal will lie in case of an acquittal. There being
no mistrial in the case before us, we find no need to reexamine the evidence, because if we do so, we will be
allowing an appeal to be made on an acquittal which would clearly be in violation of the accuseds right against
double jeopardy.

T O TAL

6,000

=====

P600,000.00

=========

[19]

Petitioner, via a petition for review on certiorari, prays for the nullification and the setting aside of the decision
of public respondent acquitting private respondent claiming that the former abused her discretion in
disregarding the testimonies of the NBI agents on the discovery of the illegal drugs. The petition smacks in
the heart of the lower courts appreciation of the evidence of the parties. It is apparent from the decision of
public respondent that she considered all the evidence adduced by the parties. Even assuming arguendo that
public respondent may have improperly assessed the evidence on hand, what is certain is that the decision
was arrived at only after all the evidence was considered, weighed and passed upon. In such a case, any
error committed in the evaluation of evidence is merely an error of judgment that cannot be remedied
by certiorari. An error of judgment is one in which the court may commit in the exercise of its jurisdiction. [21] An
error of jurisdiction is one where the act complained of was issued by the court without or in excess of
jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of jurisdiction and which
error is correctible only by the extraordinary writ of certiorari.[22] Certiorari will not be issued to cure errors by
the trial court in its appreciation of the evidence of the parties, and its conclusions anchored on the said
findings and its conclusions of law.[23] Since no error of jurisdiction can be attributed to public respondent in her
assessment of the evidence, certiorari will not lie.

There were two stock dividend declarations, one on June 7, 1980 in the amount of P60,000.00 and another on
May 2, 1981 for P40,000.00. On May 15, 1986 Eugenio Flores, Jr. assigned/divested himself of his shares in
favor of Sonny Moreno, 1,050 shares; Arsenio Yang, Jr., 700 shares and Charles O. Sy, 700 shares. [1]
On June 11, 1987, the NMI sold and delivered to the Victorias Milling Company, Inc. (VMCI), in Victorias,
Negros Occidental, 77,500 pieces of empty white bags for the price ofP565,750.00. NMI issued Charge
Invoice No. 0809[2] dated June 11, 1987 to VMCI covering said sale. On June 18, 1987, VMCI purchased
100,000 pieces of empty white bags from NMI for P730,000.00 for which NMI issued Charge Invoice No.
0810.[3] On June 25, 1987, VMCI again purchased 28,000 pieces of empty white bags from NMI for the price
of P204,400.00 and the latter issued Charge Invoice No. 0811[4] dated June 25, 1987. In payment of said
purchases from NMI, VMCI drew and issued two Bank of the Philippine Islands (BPI) Checks: Check No.
068706 dated August 3, 1987 in the amount of P565,750.00[5] and Check No. 068993 dated August 19, 1987
in the amount of P934,400.00.[6] Both checks were payable to the order of NMI.
On October 13, 1987, stockholders owning two-thirds (2/3) of the subscribed capital stock of NMI voted to call
a stockholders meeting. One of the items in the agenda was the dissolution of the corporation.
Pursuant thereto, a special stockholders meeting was held on October 24, 1987 in Bacolod City. The following
stockholders, who were also directors, were present and voted to dissolve the corporation:
Name of Stockholders

Number of Shares

WHEREFORE, the petition for certiorari is hereby DISMISSED.

Arsenio Yang, Jr.

1,050

SO ORDERED.

Charles Sy

2,800

[G.R. No. 159288. October 19, 2004]

Lok Chun Suen

1,400

JOHNSON LEE, petitioner, vs. PEOPLE OF THE PHILIPPINES and NEUGENE MARKETING,
INC., respondents.

CALLEJO, SR., J.:

NEUGENE Marketing, Inc. (NMI) was incorporated on January 27, 1978 with funds provided by the Uy
Family. It had an authorized capital stock of P3 million divided into 30,000 shares with a par value of P100 per
share. The original incorporators, with their corresponding number of shares and the amounts thereof, are as
follows:
600

P 60,000.00

Lok Chun Suen

1,200

120,000.00

Charles O. Sy

1,800

180,000.00

Eugenio Flores, Jr.

2,100

210,000.00

300

30,000.00

Arsenio Yang, Jr.

5,250

Accordingly, notices were again sent to all stockholders of record, all of whom properly acknowledged the said
notices, that a meeting was to be held on November 30, 1987 to consider the dissolution of the corporation.
Again the stockholders who attended the October 24, 1987 meeting were present. Upon motion duly
seconded, the dissolution was approved. Per Resolution of the Board of Directors, the law firm of Reyes,
Treyes & Fudolin Law Office was appointed as trustee to collect all the receivables of the corporation.

DECISION

Johnson Lee

Total

At the time of the approval of the dissolution of the corporation on November 30, 1987, the shares of each
stockholder were as follows:
Name of Stockholders

Total as of Nov. 30.

Johnson Lee, 600 (subscription);

60 (June 7, 1980 stock dividend);
40 (May 2, 1981 stock dividend) --------Lok Chun Suen, 1,200 (subscription);

700 shares

120 (June 7, 1980 stock dividend);

80 (May 2, 1981 stock dividend) ----------

1,400 shares

Charles O. Sy, 1800 (subscription); 180

(June 7, 1980 stock dividend); 120
(May 2, 1981 stock dividend); 700
(acquisition from Eugenio Flores ----------

2,800 shares

During the trial, the original copies of Charge Invoice Nos. 0809, 0810 and 0811, and of BPI Check Nos.
068766 and 068993 were not in the custody of the prosecution.

30 (June 7, 1980 stock dividend); 20

(May 2, 1981 stock dividend); 700
1,050 shares

Sonny Moreno, 1,050 (acquisition

From Eugenio Flores) ----------------------Total ----------------------------------

Act contrary to law.[9]

The cases were docketed as Criminal Cases Nos. 10010 and 10011.

Arsenio Yang, Jr., 300 (subscription);

(acquisition from Eugenio Flores) --------

their collections to the herein offended party, Neugene Marketing, Inc., a corporation organized and existing by
and under the laws of the Philippines, represented herein by its Trustees, Roger Reyes, Ernesto Treyes, and
Eutiquio Fudolin, the said accused conspiring, confederating, and acting in concert far from complying with the
aforementioned obligation having collected the amount of P565,750.00 covered by BPI Check No.
068766 (sic) dated August 3, 1987 as payment of Victorias Milling Company, a customer of the herein
offended party, with intent of gain, and with unfaithfulness or abuse of confidence failed and refused to deliver
the aforementioned amount to the herein offended party, up to the present, in spite of proper demands, but
instead, did, then and there willfully, unlawfully and feloniously convert[ed] and/or misappropriated the same to
their personal use and benefit to the damage and prejudice of the herein offended party in the aforementioned
amount of FIVE HUNDRED SIXTY-FIVE THOUSAND SEVEN HUNDRED FIFTY (P565,750.00) PESOS,
Philippine Currency.

1,050 shares
7,000 shares

To prove the loss, destruction or non-availability of the original copies of the charge invoices and checks, as
well as the authenticity and due execution thereof, the prosecution presented Ban Hua Flores, who testified
that she saw the two checks in the office of the petitioner at the Singson Building, Plaza Moraga, Sta. Cruz,
Manila. Sometime in 1987, she went to the office of the VMCI and inquired if it still had copies of the two
checks and the clerk thereat informed her that it would be difficult to locate the checks as they were stored in
the bodega, where many other checks were kept.[10] Flores also testified that the signatures at the dorsal
portion of the checks were those of the petitioner, the President of NMI, with whom she had been working, and
that he indorsed and deposited the same on September 4, 1987 with the Solidbank, instead of the BPI Plaza
Cervantes branch in Manila, the official depository bank of NMI. According to Flores, she was able to secure
microfilm copies of the checks from Solidbank, and was sure that the copies of the checks and invoices were
faithful reproductions of the original copies thereof.[11]

Pursuant to Section 11 of the Corporation Code, the Securities and Exchange Commission approved the
dissolution of the corporation on March 1, 1988 subject to compliance of the requirements, such as the
sending of notices to stockholders and publication thereof in a newspaper of general circulation, among
others.

Testifying for the prosecution in obedience to a subpoena issued by the court, Merlita Bayaban, Manager for
Corporate Affairs of VMCI, declared that the records section of VMCI, which had custody of all checks and
other corporate records, was near her office. She testified that the checks, including their other records, were
lost during the flood in 1985.[12] She also testified on the Certification[13] issued by Carolina Diaz, the
Comptroller of VMCI, confirming the loss of the two checks. She, however, admitted that she did not see the
original copies of the checks[14] and that she was not a signatory thereto.[15]

On March 22, 1988, Johnson Lee, Sonny Moreno, Leoncio Tan and Nicanor Martin filed a petition with the
Securities and Investigation Clearing Department (SICD) of the Commission praying, among other things, for
the annulment or nullification of the Certification of Filing of Resolution of Voluntary Dissolution of NMI for
being contrary to law and its by-laws.

Thereafter, the prosecution formally offered in evidence the counter-affidavit of the petitioner during the
preliminary investigation, as well as the charge invoices and checks, viz.

In the meantime, the trustee wrote the petitioner, Johnson Lee, on March 8, 1988 requesting him to turn over
to it the P1,500,150.00 he received in payment of the empty bags sold by NMI to VCMI. However, he failed to
do so.[7]
A verified complaint for three (3) counts of estafa was filed against the petitioner and Sonny Moreno with the
City Prosecutors Office. Appended to the complaint were photocopies of Charge Invoice Nos. 0809, 0810,
and 0811, issued by NMI to VMCI.
During the requisite preliminary investigation, the petitioner and Moreno submitted their counter-affidavits.
The counter-affidavit of the petitioner consisted of five pages. [8] After the investigation, two (2) Amended
Informations were filed against the petitioner and Moreno, with the Regional Trial Court (RTC) of Negros
Occidental. Except as to the particulars of the checks, the accusatory portions of the two Informations are
identical, thus:
That sometime in the month of August 1987, in the City of Bacolod, Philippines, and within the jurisdiction of
this Honorable Court, the herein accused, Johnson Lee, being then the President and Sonny Moreno, the
General Manager of Neugene Marketing, Inc., with the duty and responsibility to collect, turn over and deliver

G NMI Charge Invoice No. 0809 dated

June 11, 1987

To prove that Victorias Milling Co., Inc. (VMC) ordered 77,500 pieces of
empty bags from NMI on June 11, 1987 and that these bags were delivere
to VMC.

H
NMI Charge Invoice No. 0810 dated
June 18, 1987

To prove that VMC ordered 100,000 pieces of empty bags from NMI on
June 18, 1987 and that these bags were delivered to VMC.

I
NMI Charge Invoice No. 0811 dated
June 25, 1987

To prove that VMC ordered 28,000 pieces of empty bags from NMI on Jun
25, 1987 and that these bags were delivered to VMC.

To prove that in 1988, NMI made a demand upon the accused for the

Demand letter dated March 8, 1988

signed by Atty. Roger Z. Reyes

delivery of the amount of of P1,500,150.00 representing VMCs payment forby Johnson Lee in B.C.-I.S. No. 88-347, consisting of 5 pages
the delivery of the empty bags mentioned in Exhibits G, H and I.

P1,500.150 are in the possession and contro

both refused to deliver the same to NMI des

J-1 Signature appearing above the

typewritten name Roger Z. Reyes duly
identified by the prosecution witness,
Mrs. Ban Hua Flores as the signature of
Atty. Roger Z. Reyes

To prove the genuineness, authenticity and due execution of Exhibit J.

O-1 Signature found on page 5 of Exhibit O above the typewritten

Name Johnson Lee

To prove the genuineness, due execution an

which both of the accused also admitted.

O-2 Paragraph 6 of Exhibit O found On page 2 thereof.17

Same purpose as in Exhibit O.

K
Bank of the Philippine Islands (BPI)
Legaspi Village Extension Check No.
068706 dated August3, 1987 in the amount
of P565,750.00

K-1 Signature found on the dorsal side of

Exhibit K which Mrs. Flores identified as
the signature of Accused Johnson Lee.

To prove that VMC made a check payable to NMI, in the amount of

P565,750, as payment to NMI for the delivery of the empty bags mentioned
The accused objected to the admission of the photocopies of the checks and charge invoices on the ground
in Exhibits G, H and I.
that the best evidence were the original copies thereof. On April 12, 2002, the trial court issued an Order
admitting the counter-affidavit of the petitioner, as well as the photocopies of the checks and charge invoices,
on the ground that the prosecution had adduced preponderant evidence that the original copies of the said
charges and checks were lost, destroyed or non-available.18 The accused filed a motion for reconsideration of
the order, claiming that the prosecution failed to prove the authenticity and due execution of the offered
To prove that the accused Lee received and was in possession of Exhibit documents, a prerequisite to the admission thereof as secondary evidence. They also filed a Motion for Leave
K and that he indorsed and deposited the same.
to File a Demurrer to Evidence. The trial court denied both motions.
In a petition for certiorari under Rule 65 of the Rules of Court filed with the Court of Appeals, the petitioner
alleged that -

K-2 Rubberstamp showing the name of

Solidbank appearing on the dorsal side of
Exhibit K

L
BPI Legaspi Village Extension Check
No. 068993 dated Aug. 19, 1987 in the
Amount of P934,400.00

Respondent judge committed grave abuse of discretion equivalent to lack or excess of jurisdiction, in admitting
in evidence the Peoples documentary evidence, consisting of mere unauthenticated photocopies, in flagrant
To prove that Exhibit K was deposited by accused Lee in the Solidbank violation of the Best Evidence Rule (Sec. 3, 4, 5 and 6, Rule 130), despite the repeated vehement objections
which is not the official depository bank of NMI, the official NMI depositoryof the petitioner, thereby wantonly refusing to exclude such clearly inadmissible evidence, which actuation as
bank being the BPI Plaza Cervantes Branch.
embodied in his two (2) assailed Orders, is capricious, whimsical and patently erroneous, as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law, and the remedy of ordinary appeal would not afford petitioner adequate and expeditious relief, for while
available eventually, such remedy is cumbersome for it requires petitioner to undergo a useless and timeconsuming trial, and thus becomes an oppressive exercise of judicial authority; hence, the imperative
To prove that VMC made a check payable to NMI in the amount of
necessity for the issuance of a temporary restraining order or preliminary injunction requiring respondent judge
P934,400, as payment to NMI for the delivery of the empty bags mentioned
to refrain from further proceeding with Crim. Cases Nos. 10010 and 10011 until the Petition shall have been
in Exhibits G, H and I.
disposed of, otherwise, failure of justice is sure to ensue. 19
On March 14, 2003, the Court of Appeals rendered judgment dismissing the petition for lack of merit. 20

L-1 Signature found on the dorsal side of

Exhibit L which Mrs. Flores identified as
the signature of accused Lee

L-2 Rubberstamp showing the name of

Solid bank appearing on dorsal side of
Exh. L

To prove that the accused Lee received and was in possession of Exhibit
L and that he indorsed and deposited the same.
The Court of Appeals ruled that the charge invoices and the checks were not the best evidence to prove
receipt by the accused of the amounts allegedly misappropriated; hence, the best evidence rule does not
apply. It also held that even if the contents of the checks were the subject of inquiry, based on the proofs
adduced by the prosecution, such checks are admissible in evidence. The Court of Appeals declared that, in
any event, the prosecution proved the loss or destruction or non-availability of the checks and charge
To prove that Exhibit L was deposited by accused Lee in the Solidbank invoices. The petitioners motion for reconsideration of the decision suffered the same fate.
which is not the official depository bank of NMI, the Official NMI depository
bank being the BPI Plaza Cervantes Branch.16
The petitioner then sought relief from this Court, in a petition for review on certiorari, and raises the following
issues:

The prosecution also offered in evidence the counter-affidavit of the petitioner during the preliminary
investigation, as follows:

Counter-Affidavit dated September 9, 1988 signed and submitted

1. CAN (sic) PRIVATE DOCUMENT OFFERED AS AUTHENTIC BE RECEIVED IN EVIDENCE WITHOUT

PROOF OF ITS DUE EXECUTION AND AUTHENTICITY?

2. CAN SECONDARY EVIDENCE BE ADMITTED WITHOUT PROOF OF ITS LOSS OR UNAVAILABILITY

AND EXECUTION OF THE ORIGINAL?
To prove that the proceeds of Exhibit K and L in the total amount of

3. DID THE COURT OF APPEALS ERR WHEN IT RULED THAT THE FAILURE TO PRODUCE THE
ORIGINAL OF A DOCUMENTARY EVIDENCE, CONSISTING OF PRIVATE INSTRUMENTS DOES NOT
VIOLATE THE BEST EVIDENCE RULE, INASMUCH AS RECEIPT BY THE PETITIONER OF THE AMOUNT
ALLEGEDLY MISAPPROPRIATED MAY BE PROVED BY EVIDENCE OTHER THAN THE ORIGINAL OF
THE SAID PRIVATE DOCUMENTS?

equivalent to lack of jurisdiction.26 Mere abuse of discretion is not enough. A remedy is plain, speedy and
adequate if it will promptly relieve the petitioner from the injurious effects of that judgment and the acts of the
tribunal or inferior court.27 A petition for certiorari cannot co-exist with an appeal or any other adequate
remedy. The existence and the availability of the right to appeal are antithetical to the availment of the special
civil action for certiorari. These two remedies are mutually exclusive.28

4. IS THE FINDING OF THE COURT OF APPEALS THAT THE FACT OF LOSS OR DESTRUCTION OF THE
CHECKS AND THE CHARGE INVOICES HAS BEEN ESTABLISHED BY OTHER EVIDENCE, DEVOID OF
SUPPORT BY THE EVIDENCE ON RECORD AND IS, THEREFORE, A BARE CONCLUSION OR A FINDING
BASED ON SURMISE AND CONJECTURES?

In a petition for certiorari, the jurisdiction of the court is narrow in scope. It is limited to resolving only errors of
jurisdiction. It is not to stray at will and resolve questions or issues beyond its competence such as errors of
judgment. Errors of judgment of the trial court are to be resolved by the appellate court in the appeal by and of
error or via a petition for review on certiorari under Rule 45 of the Rules of Court, as amended. Certiorari will
issue only to correct errors of jurisdiction. It is not a remedy to correct errors of judgment. 29 An error of
judgment is one in which the court may commit in the exercise of its jurisdiction, and which error is reversible
only by an appeal. Error of jurisdiction is one where the act complained of was issued by the court without or
in excess of jurisdiction and which error is correctible only by the extraordinary writ of certiorari. 30 Certiorari will
not be issued to cure errors made by the trial court in its appreciation of the evidence of the parties, its
conclusions anchored on the said findings and its conclusions of law thereon. 31 As long as the court acts within
its jurisdiction, any alleged errors committed in the exercise of its discretion will amount to nothing more than
mere errors of judgment, correctible by an appeal if the aggrieved party raised factual and legal issues; or a
petition for review under Rule 45 of the Rules of Court if only questions of law are involved. 32

5. IS ANOTHER FINDING, IN THE FORM OF ASSUMPTION, OF THE COURT OF APPEALS THAT SINCE
THE WITNESSES FOR THE PROSECUTION ARE OFFICERS WITH AUTHORITY TO KEEP THE
QUESTIONED DOCUMENTS, THEY NECESSARILY TOOK AND CONDUCTED A THOROUGH SEARCH
FOR THE MISSING DOCUMENTS, A MERE CONJECTURE OR SURMISE OR A FINDING GROUNDED
ENTIRELY ON SPECULATION?
6. DID THE COURT OF APPEALS VIOLATE THE DICTUM OF THE COLD NEUTRALITY OF AN
IMPARTIAL JUDGE WHEN IT DENIED PETITIONERS MOTION FOR INHIBITION GROUNDED ON ITS
DISPLAY OF UNDUE INTERESTS AND WHEN A MEMBER THEREOF HAS SEEN IT FIT AND
APPROPRIATE TO RECUSE HERSELF?21
The petitioner avers that the prosecution failed to prove the loss, destruction or non-availability of the original
copies of the checks and charge invoices; that diligent efforts were undertaken to locate the original copies of
the checks and invoices; and that said efforts were futile. He asserts that the witness competent to prove the
loss or destruction of the original of the checks would be the records custodian of VMCI. Bayaban was not a
competent witness thereon, considering that she merely testified that the clerk of the VMCI failed to locate the
original copies of the checks because the latter was lazy to search for the same. The petitioner posits that the
prosecution failed to prove the due execution and authenticity of the charge invoices and the two checks
through the testimonies of Flores and Bayaban. He contends that Bayaban even admitted that she was not
privy to and had no knowledge of the execution of the said checks and of the signatories of the checks. The
petitioner further avers that, although the appellate court held that the photocopies of the checks were
admissible in evidence based on other proofs adduced by the prosecution, it failed to specify the other proofs
adverted to by it.
In its Comment on the petition, the Office of the Solicitor General asserts that through the testimony of
Bayaban, the due execution and authenticity of the checks were proved by the prosecution as well as the
admissions of the petitioner in his counter-affidavit during the preliminary investigation. It further averred that
through the testimonies of Bayaban and Flores, it proved, with reasonable certainty, the loss or destruction of
the original copies of the checks and the charge invoices.
The issues for resolution are as follows: (a) whether or not the petition at bar is the proper remedy of the
petitioner; and (b) whether or not the trial court committed a grave abuse of its discretion amounting to excess
or lack of jurisdiction in admitting in evidence the photocopies of the checks and charge invoices in lieu of the
original copies thereof.
The Ruling of the Court
In People v. Court of Appeals,22 we held that for a petition for certiorari or prohibition to be granted, it must set
out and demonstrate, plainly and distinctly, all the facts essential to establish a right to a writ. 23 The petitioner
must allege in his petition and establish facts to show that any other existing remedy is not speedy or
adequate24 and that (a) the writ is directed against a tribunal, board or officer exercising judicial or quasijudicial functions; (b) such tribunal, board or officer has acted without or in excess of jurisdiction, or with grave
abuse of discretion amounting to excess or lack of jurisdiction; and, (c) there is no appeal or any plain, speedy
and adequate remedy in the ordinary course of law.25
The trial court acts without jurisdiction if it does not have the legal power to determine the case; there is
excess of jurisdiction where the respondent, being clothed with the power to determine the case, oversteps its
authority as determined by law. There is grave abuse of discretion where the public respondent acts in a
capricious, whimsical, arbitrary or despotic manner in the exercise of its judgment as to be said to be

In this case, there is no dispute that the RTC had jurisdiction over the cases filed by the public respondent
against the petitioner for estafa. The Order admitting in evidence the photocopies of the charge invoices and
checks was issued by the RTC in the exercise of its jurisdiction. Even if erroneous, the same is a mere error
of judgment and not of jurisdiction. Additionally, the admission of secondary evidence in lieu of the original
copies predicated on proof of the offeror of the conditions sine qua non to the admission of the said evidence
is a factual issue addressed to the sound discretion of the trial court. 33 Unless grave abuse of discretion
amounting to excess or lack of jurisdiction is shown to have been committed by the trial court, the resolution of
the trial court admitting secondary evidence must be sustained. The remedy of the petitioner, after the
admission of the photocopies of the charge invoices and the checks, was to adduce his evidence, and if after
trial, he is convicted, to appeal the decision to the appropriate appellate court. Moreover, under Rule 45 of the
Rules of Court, as amended, only questions of law may be properly raised.
In the final analysis, the threshold issue in this case is whether or not the prosecution adduced evidence,
testimonial and documentary, to prove the predication to the admission of the photocopies of the charge
invoices34 and of the checks.35 The petitioner posits that the prosecution failed to discharge its burden, in
contrast to the claim of the prosecution that it succeeded in doing so. In resolving the petition at bar, the court
will have to delve into and calibrate the testimonial and documentary evidence adduced by the parties in the
trial court, which the court is proscribed to do under Rule 45 of the Rules of Court. This was the ruling of the
Court in Johnson Lee v. People:36
In other words, certiorari will issue only to correct errors of jurisdiction and not to correct errors of procedure or
mistakes in the courts findings and conclusions. An interlocutory order may be assailed by certiorari or
prohibition only when it is shown that the court acted without or in excess of jurisdiction or with grave abuse of
discretion. However, this Court generally frowns upon this remedial measure as regards interlocutory orders.
To tolerate the practice of allowing interlocutory orders to be the subject of review by certiorari will not only
delay the administration of justice but will also unduly burden the courts.
We find that the allegations of the petitioners are not sufficient grounds to qualify as abuse of discretion
warranting the issuance of a writ of certiorari. The petitioners present factual contentions to absolve them
from the criminal charge of estafa. The criminal cases concern corporate funds petitioners allegedly received
as payment for plastic bought by Victorias Milling Corporation from NMI. They refused to turn over the money
to the trustee after NMIs dissolution on the ground that they were keeping the money for the protection of the
corporation itself. Thus, the elements of misappropriation and damage are absent. They argue that there is
no proof that, as officers of the corporation, they converted the said amount for their own personal benefit.
They likewise claim that they already turned the money over to the majority stockholder of the defunct
corporation.
Clearly, the said allegations are defenses that must be presented as evidence in the hearing of the criminal
cases. They are inappropriate for consideration in a petition for certiorari before the appellate court inasmuch
as they do not affect the jurisdiction of the trial court hearing the said criminal cases but instead are defenses
that might absolve them from criminal liability. A petition for certiorari must be based on jurisdictional grounds

because, as long as the respondent court acted with jurisdiction, any error committed by it in the exercise
thereof will amount to nothing more than an error of judgment which can be reviewed or corrected on appeal.

action or defense; or when a party uses a document to prove the existence of an independent fact, as to which
the writing is merely collated or incidental. 39

Moreover, the petition for certiorari before the Court of Appeals was premature for the reason that there were
other plain and adequate remedies at law available to the petitioners. Under Section 3(a) of Rule 117 of the
Revised Rules of Criminal Procedure, the accused can move to quash the information on the ground that the
facts do not constitute an offense. There is no showing that the petitioners, as the accused in the criminal
cases, ever filed motions to quash the subject informations or that the same were denied. It cannot then be
said that the lower court acted without or in excess of jurisdiction or with grave abuse of discretion to justify
recourse to the extraordinary remedy of certiorari or prohibition.

The offeror of secondary evidence is burdened to prove the predicates thereof: (a) the loss or destruction of
the original without bad faith on the part of the proponent/offeror which can be shown by circumstantial
evidence of routine practices of destruction of documents; 40 (b) the proponent must prove by a fair
preponderance of evidence as to raise a reasonable inference of the loss or destruction of the original copy;
and (c) it must be shown that a diligent and bona fide but unsuccessful search has been made for the
document in the proper place or places. 41 It has been held that where the missing document is the foundation
of the action, more strictness in proof is required than where the document is only collaterally involved. 42

But it must be stressed that, even if petitioners did file motions to quash, the denial thereof would not have
automatically given rise to a cause of action under Rule 65 of the Rules of Court. The general rule is that,
where a motion to quash is denied, the remedy is not certiorari but to go to trial without prejudice to reiterating
the special defenses involved in said motion, and if, after trial on the merits an adverse decision is rendered, to
appeal therefrom in the manner authorized by law. And, even in the exceptional case where such denial may
be the subject of a special civil action for certiorari, a motion for reconsideration must first be filed to give the
trial court an opportunity to correct its error. Finally, even if a motion for reconsideration was filed and denied,
the remedy under Rule 65 would still be unavailable absent any showing of the grounds provided for in
Section 1 thereof. The petition before the Court of Appeals, subject of this appeal, did not allege any of such
grounds.

If the document is one in which other persons are also interested, and which has been placed in the hands of
a custodian for safekeeping, the custodian must be required to make a search and the fruitlessness of such
search must be shown, before secondary evidence can be admitted. 43 The certificate of the custody of the
document is incompetent to prove the loss or destruction thereof. Such fact must be proved by some person
who has knowledge of such loss.44

Furthermore, a petition for review under Rule 45 of the 1997 Revised Rules of Civil Procedure before this
Court only allows questions of law. Inasmuch as petitioners defenses alleging circumstances that negate
misappropriation definitely require appreciation of facts, i.e., testimonial and documentary evidence, this Court
cannot assess the merit of the said claims.37
Moreover, the factual findings of the Court of Appeals are conclusive on the Court unless the petitioner is able
to establish that the findings of facts of the appellate court are not supported by or are contrary to the
evidence; or if the appellate court ignored, misconstrued or misinterpreted vital facts and circumstances,
which, if considered, could change or even reverse the outcome of the case. In this, the petitioner failed.
Rule 130, Section 3 of the Revised Rules of Court reads:
Original document must be produced; exceptions. When the subject of inquiry is the contents of a document,
no evidence shall be admissible other than the original document itself, except in the following cases:
(a) When the original has been lost or destroyed, or cannot be produced in court without bad faith on the part
of the offeror;
(b) When the original is in the custody or under the control of the party against whom the evidence is offered,
and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other documents which cannot be examined in court
without great loss of time and the fact sought to be established from them is only the general result of the
whole;
(d) When the original is a public record in the custody of a public officer or is recorded in a public office.
Before the onset of liberal rules of discovery, and modern technique of electronic copying, the best evidence
rule was designed to guard against incomplete or fraudulent proof and the introduction of altered copies and
the withholding of the originals. But the modern justification for the rule has expanded from the prevention of
fraud to a recognition that writings occupy a central position in the law. The importance of the precise terms of
writings in the world of legal relations, the fallibility of the human memory as reliable evidence of the terms,
and the hazards of inaccurate or incomplete duplicate are the concerns addressed by the best evidence rule. 38
The rule does not apply to proof of facts collateral to the issues such as the nature, appearance or condition of
physical objects or to evidence relating to a matter which does not come from the foundation of the cause of

The proponent is also burdened to prove the due execution or existence of the original as provided in Rule
130, Section 5 of the Revised Rules of Court:
When the original document is unavailable. When the original document has been lost or destroyed, or
cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its
unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in
some authentic document, or by the testimony of witnesses in the order stated.
Rule 132, Section 20 of the Revised Rules of Court provides the procedure on how the authenticity and due
execution of a private document which is offered as authentic may be proved:
Proof of private document. Before any private document offered as authentic is received in evidence, its due
execution and authenticity must be proved either:
(a) By anyone who saw the document executed or written; or
(b) By evidence of the genuineness of the signature or handwriting of the maker.
Any other private document need only be identified as that which it is claimed to be.
The testimony of an eyewitness as to the execution of a private document must be positive. He must state
that the document was actually executed by the person whose name is subscribed thereto. 45 The admission of
that party against whom the document is offered, of the authenticity and due execution thereof, is admissible
in evidence to prove the existence, authenticity and due execution of such document.
In this case, there is no dispute that the original copies of the checks were returned to VMCI after the same
were negotiated and honored by the drawee bank. The originals of the charge invoices were kept by VMCI.
There is also no dispute that the prosecution offered the photocopies of the invoices in evidence to prove the
contents thereof, namely that: (a) VMCI purchased 203,500 empty bags from NMI for the total price
of P1,500,150.00; (b) VMCI received the said goods in good order and condition; and (c) NMI charged VMCI
for the purchase price of said goods. The prosecution offered the checks to prove the contents thereof as well
as the following: (a) VMCI drew and delivered the checks to the NMI; (b) the said checks were endorsed by
the petitioner; and (c) the said checks were deposited by the petitioner with the Solidbank which was not the
official depository of NMI. Thus, the prosecution was burdened to prove the loss, destruction or its inability to
produce in court without bad faith on its part of the original copies of the said invoices and checks without bad
faith on its part.
We agree with the petitioner that the Certification signed by Carolina Diaz was inadmissible in evidence
against him because of the failure of the prosecution to present her as witness and to testify on said
certification.

However, the records show that, in obedience to the subpoena duces tecum and ad testificandum issued by
the trial court directing the VMCI to produce the originals of the checks and the charge invoices, Bayaban, the
Manager for Corporate Affairs of VMCI, testified that all its records, including the charge invoices and checks,
were destroyed seven years ago in a flash flood which occurred on November 28, 1995, and that such
loss/destruction was known to all the employees of VMCI, including herself:
FISCAL ESQUILLA:
Q Please inform this Honorable Court how were you able to appear this afternoon in connection with this
case?

A All our Bank Vouchers, some of our General Ledgers. Actually, I cannot memorize it, but in our
declaration to the Bureau of Internal Revenue (BIR) we have listings of those documents which were damaged
by flash flood.

Q Alright, Madam Witness. So, when this subpoena/subpoena (sic) duces tecum was received by Victorias
Milling Company, addressed to the Chief Operating Officer, do I get from you that this was referred to the
Legal Affairs of VICMICO?
A

Yes, Your Honor.

COURT:
A The Legal Department, through the instruction of our Chief Operating Officer, inquired from our
Accounting through our comptroller, Carolina S. Diaz to produce the original copies of the two (2) checks
which was mentioned in the subpoena issued by Prosecutor Esquilla. And then, through my direct Boss, the
Chief Accountant, Mrs. Melanie Roa, instructed me to look into the two (2) checks. And since the record is
under my Department, I immediately asked my subordinate to look for it. And, in fact, she was also under my
supervision when we looked for the document. And I have already knowledge during the November 28, 1995
due to flash flood, we lost our records. And in fact, we have declaration to the Bureau of Internal Revenue
(BIR). And we also exhausted some means to look for the documents, but we really cannot produce the
original copies of the checks, even the Xerox, no more copies of the checks as requested.

Slowly, the stenographer may not be able to catch up with you.

FISCAL ESQUILLA:
I see. Sorry, Your Honor. And from the Legal Affairs, where did it proceed, this subpoena or this was referred
to by the Legal Affairs to whom?

WITNESS:

Q Madam Witness, when you said that you instructed your subordinate to look for the record, specifically,
the records being asked in the subpoena, the original copies of the checks, these two (2) checks, will you
please inform this Honorable Court where these records in 1995 including these checks, of course, have been
kept by your office?

A It is kept at the Records Section Office just near my table. It is just over there. It is just over there. The
distance is very near. We have the vault power cards and all old records were kept are downstairs and the
new ones are kept upstairs. So, we dont anticipate the flood and because that was the first time that we were
hit by that flash flood.

You mentioned that she is your immediate Boss?

I have also, next to her, Mrs. Melanie Roa, and I am next to her.

And you are holding office there at VICMICO together with the Comptroller, Carolina Diaz?

Q So, you want to impress this Honorable Court that those records which were kept downstairs your office
were carried or destroyed by this flash flood which occurred in 1995 is that correct or is that what you mean?

We are in the same building.

And does she has a cubicle of her own?

Yes, Your Honor.

And your table up to her cubicle, how far is your table from her cubicle?

To Mrs. Carolina Diaz, the Comptroller.

FISCAL ESQUILLA:

Yes, Your Honor.

Q And can you say that if these two (2) checks, subject of this case now, were there downstairs and was
destroyed by the 1995 flash flood, can you say that before this Honorable Court?
A

A They are very near. I can see from my place her office and I can see anytime she went in and out of the
room. Maybe from here up to that next room.

Yes, Your Honor.

COURT:

About 25 to 30 meters, more or less.

Q Aside from these checks downstairs which were destroyed by this flash flood, what were the other records
that were kept there that were lost also?

FISCAL ESQUILLA:

Q And, Madam Witness, may I know from you that who requested you to testify because this Certification
bears the signature of Mrs. Diaz?

And then the signature as identified by this witness, of her immediate Boss, be encircled and marked as
Exhibit X-1.

A Ah, Mrs. Diaz, in fact, ah there is a Memo from the Legal Affairs that we will submit the Certification to
the Honorable Court and the Memo was addressed to Mrs. Diaz. And there was a note from Mrs. Diaz to my
direct Boss, the Chief Accountant, and then I was tasked by my immediate Boss to attend to this.
Q

FISCAL ESQUILLA:

How were you able to secure a Certification?

COURT:
Mark it.
COURT INTERPRETER:

A A Certification was issued also upon our recommendation to the Chief Accountant that we cannot produce
anymore the original copies of the said document.

Your last Exhibit is Exhibit Y.

Who gave you that Certification so that you can bring that today in Court?

FISCAL ESQUILLA:

Marie Melanie G. Roa.

I will change my Exhibit from Exhibit X and X-1 to Z and Z-1. No further, Your Honor.

Do you have with you now the Certification?

COURT:

Yes, Your Honor.

Do you want to cross?

And you are showing the original copy of the Certification?

ATTY. MAGDAMIT:

Yes, Your Honor.

Yes, Your Honor.

Q I show to you the Certification dated December 6, 2001 issued by Carolina Diaz, Comptroller. Do you
know whose signature is this?

COURT:
Alright, cross for the accused Moreno. We will give the Manila lawyer the first shot.

That is the signature of Mrs. Carolina S. Diaz.

How do you know that this is her signature?

A Im very much familiar with her signature because in our day to day undertakings in the office, I can see
this in the checks she signed, and in the Office Memorandum. And, in fact, I also prepare some of the
communications for her signature.
Q For the record, Madam Witness, will you please read the first paragraph of that Certification issued by
Carolina Diaz?
A Victorias Milling Co., Inc. Certification. This is to certify that Victorias Milling Co., Inc. no longer have the
original copies of the BPI, Legaspi Village, Extension Office, Legaspi St., Makati, Metro Manila, Check No.
068766 dated August 3, 1987 and Check No. 068993 dated August 19, 1987 as the same were destroyed by
flash flood that hit the province of Negros Occidental particularly the City of Victorias on November 28, 1995.

CROSS-EXAMINATION OF THE WITNESS MERLITA T. BAYABAN CONDUCTED BY ATTY. SIMEON M.

MAGDAMIT.

ATTY. MAGDAMIT
Q Madam Witness, when you received the subpoena, it contained a photocopy of the checks that were
being requested, is that correct?
(At this juncture, there is no answer from the witness)
ATTY. MAGDAMIT: (Follow-up question)

FISCAL ESQUILLA:

Did it already contain a copy of the photocopy?

Your Honor, may I request that this Certification be marked as our Exhibit X temporarily.

Ah. Attached to the subpoena.

COURT:

Have you seen this photocopy when you received the subpoena? You did not see?

Mark it.

Ah, actually, the subpoena was directed to the Legal.

You did not see. You did not see the photocopy?

May I know the point of Compaero, Your Honor.

Yeah.

Q So, can you conclude that just upon receiving the subpoena and looking at the photocopy of the checks,
you would immediately know that this was among the files that was destroyed by the flood?

WITNESS: (Answers before Atty. Magdamit)

A

Yes, because of the date, 1995.

So, despite that knowledge, it still went through the process and you still looked for it, is that correct?

Yes, Your Honor.

So, despite of your knowledge that it was destroyed, you still looked for it?

I remember it was presented to me by Mrs. Diaz.

ATTY. MAGDAMIT
Q Mrs. Diaz. So, let me just clear this up. The subpoena did not immediately go to the Legal, it was
presented to you by Mrs. Diaz?
A

No, it was presented by the Legal to our Comptroller. Then . . .

A Yeah, we still looked for it because there might be some files to prove that it was really our check
issuance. So even our files, even our Bank Recon, we cannot produce it. 46

...
COURT:
Q

And then to?

And then to me.

There is an initial, MGR. Do you know who is that?

That is Mrs. Melanie G. Roa, our Chief Accountant.

And from then, when it reached you, you were the ones who sorted through the files, were you the one?

Ah, my subordinate.

Ah, you were not the one?

No, Your Honor.

Q Now, but you were certain I withdraw that question. When you received the subpoena with the attached
document, were you already aware that the records, the original, were destroyed or you were not yet aware?
A Very much aware that the records were destroyed by the flash flood because it was not only in that case
that we were tasked to look for the documents. There were also Examiners from the Bureau of Internal
Revenue who asked for the documents prior to 1995 and thats our reason, we cannot produce the
documents.
Q Now, wait. Were you the only one who was aware that this file was destroyed or was it a matter that was
known in your company?
A

It was known to everybody.

It was known?

Contrary to the claim of the petitioner, the prosecution adduced preponderant evidence to prove the existence,
the due execution and the authenticity of the said checks and charge invoices consisting of the admission of
no less than the petitioner in his counter-affidavit. The petitioner admitted therein that he received the total
amount of P1,500,150.00 from VMCI in full payment of the delivery and sale of the empty bags by NMI to
VMCI and that the said amount was in the custody of the said corporation, thus:
6. That the collection by the Corporation of the amount of P1,500,150.00 is a valid act of the corporation; that it
is the full and complete and just payment for the three deliveries of plastic materials by the Neugene
Marketing, Inc to Victorias Milling Company on June 11, 1987, June 18, 1987 and June 25, 1987 when I was
and I am still the President and Mr. Sonny Moreno, General Manager of the Neugene Marketing, Inc. and that
the said Victorias Milling Company paid in full and payments were made to the Corporation and it is only a
legitimate act of the Neugene Marketing, Inc. in the regular course of business to receive payment for the
obligations of its customers to the Corporation;
7. That with respect to the demand letter addressed to me to turn over aforesaid P1,500,150.00, the said
amount is money of the Neugene Marketing, Inc. and the corporation is the legitimate possessor thereof and
that Reyes, Treyes, and Fudolin Law Firm has no right or authority to make the demand letter; and that it is the
corporation that holds the money and that personally, neither I nor Sonny Moreno can just take the money to
give to Reyes, Treyes and Fudolin Law Firm which cannot be trusted and which is an unauthorized entity to
receive, hold and possess said funds or to file this case;
8. That the amount of P1,500,150.00 the corporate funds of the Neugene Marketing, Inc. unless authorized by
the members of the Board of Directors, neither I nor Sonny Moreno can dispose of the said sum of money and
it is the corporation that is holding the said amount and holding it to answer for corporation expenses on its
business operations and to answer for obligations to its creditors including the claims of Sonny Moreno and
myself for unpaid compensation, salaries, fringe benefits, allowances and shares in the profits of the
Corporation; and that therefore, it is beyond our authority or power to refuse the turn over or to turn over the
aforesaid amount; and that if there is evidence of the malicious and criminal intent to appropriate the same for
personal benefit that is more applicable to Reyes, Treyes and Fudolin who apparently without any legal
authority and illegally posing as a trustee when as a matter of fact, they have never been appointed or
designated a[s] trustee by the Neugene Marketing, Inc.; and therefore, complainants should be the one held
criminally responsible for the illegal dissolution of the Neugene Marketing, Inc., and for which they will be
charged with the corresponding action for falsification and perjury for having been able to secure a
Certification of Dissolution from the Securities and Exchange Commission by means of false pretenses and
representations;47
It bears stressing that the counter-affidavit of the petitioner was adduced in evidence by the prosecution
precisely to prove the existence, authenticity and due execution of the original of the said charge invoices and
checks and the trial court admitted the same for the said purpose.
By his counter-affidavit, the petitioner, in effect, admitted the allegations of the affidavit-complaint of the trustee
of NMI:

a. Sometime on June 11, 1987, June 18, 1987 and June 25, 1987, respectively, NEUGENE MARKETING,
INC. made three (3) deliveries of plastic materials to Victorias Milling Company, Victorias, Negros Occidental
totalling P1,500,150.00 covered by Charge invoices
b. Aforesaid charge invoices were subsequently paid by Victorias Milling Company in full and payments
delivered to Johnson Lee and/or Sonny Moreno, as President and General Manager of Neugene Marketing,
Inc.
c. As Trustee of Neugene Marketing, Inc., the Reyes, Treyes & Fudolin Law Firm sent a demand letter
addressed to Johnson Lee to turn over aforesaid P1,500,150.00.
d. As of the date of this Affidavit-Complaint, Johnson Lee and/or Sonny Moreno have failed to deliver aforesaid
sum to the herein trustee contrary to law.
4. Johnson Lee and/or Sonny Moreno have no authority whatsoever to withhold aforesaid sum
of P1,500,150.00 and their refusal to turn over aforesaid amount is evidence of a malicious and criminal intent
to appropriate the same for their own personal benefit. 48

The trial court denied the motion of the prosecution for having been filed out of time since the decision
sought to be modified had already attained finality. Indeed, petitioner had meanwhile applied for
probation. Upon motion of the prosecution, however, the trial court reconsidered its order and rendered an
amended decision, promulgated on 10 July 1998, concluding thusly:
WHEREFORE, premises considered, judgment is hereby rendered finding accused Willy Tan GUILTY beyond
reasonable doubt of the crime of Bigamy and applying the Indeterminate Sentence Law, is hereby sentenced
to suffer a minimum prison term of prision [correccional] TWO (2) YEARS, FOUR (4) MONTHS AND ONE (1)
DAY to a maximum prison term of EIGHT (8) YEARS AND ONE (1) DAY. [1]
On 13 July 1998, petitioner filed a notice of appeal with the trial court and elevated the case to the Court of
Appeals, contending that THE LOWER COURT ERRED IN AMENDING THE FIRST DECISION INCREASING THE PENALTY AFTER
THE SAME HAD ALREADY BECOME FINAL AND EXECUTORY.[2]

With the admissions of the petitioner in his counter-affidavit, the prosecution even no longer needed to adduce
evidence aliunde to prove the existence, due execution and the authenticity of the charge invoices and the
checks.

The Court of Appeals, in a decision, dated 18 August 2000, dismissed petitioners appeal on the ground that
petitioner raised a pure question of law. Citing Article VIII, Section 5(2)(e), of the Constitution, the appellate
court explained that jurisdiction over the case was vested exclusively in the Supreme Court and that, in
accordance with Rule 122, Section 3(e), of the Rules of Criminal Procedure, the appeal should have been
brought up by way of a petition for review on certiorari with this Court and not by merely filing a notice of
appeal before the trial court.

All told then, the prosecution mustered the requisite quantum of evidence to prove the predicates to the
admission of the photocopies of the charge invoices and checks.

Petitioner filed a motion for reconsideration which, on 18 May 2001, was denied by the appellate court. The
petition for review on certiorari before this Court raised the following issues:

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed decision of the Court of Appeals
is AFFIRMED. No costs.

I. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING SECTION 2, RULE 50 ON DISMISSAL OF

IMPROPER APPEAL TO THE COURT OF APPEALS AS THE SAID SECTION REFERS TO AN APPEAL
UNDER RULE 41 IN ORDINARY CIVIL ACTION BUT NOT TO AN APPEAL IN CRIMINAL CASES WHICH IS
GOVERNED BY RULE 122 OF THE REVISED RULES ON CRIMINAL PROCEDURE.

SO ORDERED.

II. THE COURT OF APPEALS ERRED IN HOLDING THAT THE SUPREME COURT HAS EXCLUSIVE
APPELLATE JURISDICTION ON PURE QUESTIONS OF LAW.
III. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT BECAUSE THE APPEAL RAISED
PURE QUESTIONS OF LAW, IT IS WITHOUT JURISDICTION TO RESOLVE THE ISSUE RAISED IN THE
APPEAL.
[G.R. No. 148194. April 12, 2002]
WILLY TAN y CHUA, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondents.
DECISION
VITUG, J.:
On 12 December 1996, petitioner Willy Tan was found guilty of bigamy by the Regional Trial Court, Branch 75,
of San Mateo, Rizal. He was sentenced to suffer a prison term of prision correccional in its medium period
ranging from two (2) years, four (4) months, and one (1) day, to four (4) years and two (2) months. On 23
December 1996, petitioner applied for probation. On 8 January 1997, the application was granted by the trial
court but the release order was withheld in view of the filing by the prosecution, on 21 January 1997, of a
motion for modification of the penalty. The prosecution pointed out that the penalty for bigamy under Article
349 of the Revised Penal Code was prision mayor and the imposable penalty, absent any mitigating nor
aggravating circumstance, should be the medium period of prision mayor, or from eight (8) years and one (1)
day to ten (10) years. Thus, the prosecution argued, petitioner was not eligible for probation.

IV. THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE APPEAL OUTRIGHT INSTEAD OF
DECLARING THE AMENDED DECISION VOID FOR UTTER WANT OF JURISDICTION.
V. THE COURT OF APPEALS ERRED IN HOLDING THAT RULE 65 IS THE PROPER REMEDY TO RAISE
THE ISSUE OF JURISDICTION AND IF SO IN NOT TREATING THE APPEAL AS A SPECIAL CIVIL ACTION
FOR CERTIORARI.[3]
In all criminal prosecutions, the accused shall have the right to appeal in the manner prescribed by law.
[4]
While this right is statutory, once it is granted by law, however, its suppression would be a violation of due
process, itself a right guaranteed by the Constitution. [5] Section 3(a), Rule 122 of the Rules of Criminal
Procedure states:
Section 3. How appeal is taken.
(a)
The appeal to the Regional Trial Court, or to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its original jurisdiction, shall be taken by filing a notice of appeal with the court
which rendered the judgment or final order appealed from and by serving a copy thereof upon the adverse
party. (Emphasis supplied).

The above rule is plain and unambiguous the remedy of ordinary appeal by notice of appeal, although not
necessarily preclusive of other remedies provided for by the rules, is open and available to petitioner.

SO ORDERED.
G.R. No. 178431

The notice of appeal was timely filed by petitioner on 13 July 1998, three days after the questioned decision
was promulgated.[6] It was a remedy that the law allowed him to avail himself of, and it threw the whole case
effectively open for review on both questions of law and of fact whether or not raised by the parties.
Neither the Constitution nor the Rules of Criminal Procedure exclusively vests in the Supreme Court the power
to hear cases on appeal in which only an error of law is involved. [7] Indeed, the Court of Appeals, under Rule
42 and 44 of the Rules of Civil Procedure, is authorized to determine errors of fact, of law, or both. [8] These
rules are expressly adopted to apply to appeals in criminal cases, [9] and they do not thereby divest the
Supreme Court of its ultimate jurisdiction over such questions.

November 12, 2012

V.C. PONCE COMPANY, INC., Petitioner,

vs.
MUNICIPALITY OF PARAAQUE and SAMPAGUITA HILLS HOMEOWNERS ASSOCIATION,
INC.,Respondents.
DECISION
DEL CASTILLO, J.:

Anent the argument that petitioner should have filed a petition for certiorari under Rule 65, it might be pointed
out that this remedy can only be resorted to when there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law.[10] Appeal, being a remedy still available to petitioner, a petition
for certiorari would have been premature.
In fine, petitioner had taken an appropriate legal step in filing a notice of appeal with the trial court. Ordinarily,
the Court should have the case remanded to the Court of Appeals for further proceedings. The clear
impingement upon petitioners basic right against double jeopardy,[11] however, should here warrant the
exercise of the prerogative by this Court to relax the stringent application of the rules on the matter. When the
trial court increased the penalty on petitioner for his crime of bigamy after it had already pronounced judgment
and on which basis he then, in fact, applied for probation, the previous verdict could only be deemed to have
lapsed into finality.

"It is a settled rule that relief will not be granted to a party x x x when the loss of the remedy at law was due to
his own negligence, or to a mistaken mode of procedure." 1
Before the Court is a Petition for Review2 on Certiorari of the March 23, 2007 Decision3 of the Court of Appeals
(CA), as well as its June 4, 2007 Resolution,4 in CA-G.R. SP No. 91791, which dismissed V.C. Ponce
Company, Inc.s (VCP) Petiton for Certiorari. The CA held that VCPs resort to a petition for certiorari under
Rule 65 of the Rules of Court was inappropriate and that the trial courts rejection of the commissioners
appraisal report did not amount to a grave abuse of its discretion. The fallo of the assailed Decision reads:
WHEREFORE, the petition is DISMISSED. Public respondent judges Decision dated 10 March 2005 and
Order dated 15 August 2005 in Civil Case No. 94-0009 for Expropriation are AFFIRMED.

Section 7, Rule 120, of the Rules on Criminal Procedure that states

SO ORDERED.5
Sec. 7. Modification of judgment. A judgment of conviction may, upon motion of the accused, be
modified or set aside before it becomes final or before appeal is perfected. Except where the death
penalty is imposed, a judgment becomes final after the lapse of the period for perfecting an appeal, or
when the sentence has been partially or totally satisfied or served, or when the accused has waived in
writing his right to appeal, or has applied for probationimplements a substantive provision of the Probation Law which enunciates that the mere filing of an
application for probation forecloses the right to appeal.
SEC. 4. Grant of Probation. Subject to the provisions of this Decree, the trial court may, after it shall have
convicted and sentenced a defendant, and upon application by said defendant within the period for perfecting
an appeal, suspend the execution of the sentence and place the defendant on probation for such period and
upon such terms and conditions as it may deem best: Provided, That no application for probation shall be
entertained or granted if the defendant has perfected the appeal from the judgment or conviction.
Probation may be granted whether the sentence imposes a term of imprisonment or a fine only. An
application for probation shall be filed with the trial court. The filing of the application shall be deemed a
waiver of the right to appeal.
An order granting or denying probation shall not be appealable. (As amended by PD 1257, and by PD 1990,
Oct. 5, 1985.)[12]
Such a waiver amounts to a voluntary compliance with the decision and writes finis to the jurisdiction of the
trial court over the judgment.[13] There is no principle better settled, or of more universal application, than that
no court can reverse or annul, reconsider or amend, its own final decree or judgment. [14] Any attempt by the
court to thereafter alter, amend or modify the same, except in respect to correct clerical errors, would be
unwarranted.
WHEREFORE, the petition is given due course. The assailed amendatory judgment of the trial court is SET
ASIDE and its decision of 12 December 1996 is REINSTATED. No costs.

The assailed June 4, 2007 Resolution denied VCPs Motions for Extension of Time to file motion for
reconsideration, and consequently, dismissed its Motion for Reconsideration for belated filing. 6
Factual Antecedents
On October 5, 1987, respondent Municipality (now City) of Paraaque (municipality) filed a complaint 7 against
petitioner VCP for the expropriation of its property, which is located in the municipalitys Barrio San Dionisio
and covered by Transfer Certificate of Title (TCT) No. 116554. 8 The municipality intended to develop the
property for its landless residents, in line with the Presidential Commission on Urban Poors classification of
the site as an area of priority development. 9 Respondent Sampaguita Hills Homeowners Association, Inc.
(SHHAI), consisting of the propertys actual occupants, who are also the intended beneficiaries of the action,
intervened in the case.10
On August 23, 2002, the Regional Trial Court (RTC) of Paraaque, Branch 274, sustained the municipalitys
right to expropriate the said property11 and to a writ of possession.12 The trial court also informed the parties in
the same Order of the reckoning period for the determination of just compensation, thus:
The defenses having thus been ruled upon, the Court hereby declares that the plaintiff has the lawful right to
take the property sought to be expropriated for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the taking of the property or the filing of the
complaint, whichever came first.13
The parties did not file any objection to the above Order and proceeded to submit the names of their
respective nominees for commissioner. On February 26, 2003, the trial court appointed three
commissioners14 to assist in ascertaining the just compensation. 15 The trial court defined the scope of the
commissioners work as follows:

(1) To undertake the evaluation for purposes of determining just compensation on the property as described
and delineated in paragraph 3 of the amended complaint, taking into consideration several factors for
assessment with reckoning time of the filing of the complaint and the taking of the property and incidental
periods reasonable and fair in determining just compensation; 16
On March 15, 2004, commissioners Bienvenido Reyes and Jose Marleo Del Rosario informed the trial court
that VCP did not participate in the meetings despite notification 17 and that, due to time constraints,18 the
commissioners denied19 VCPs request for an additional four months to submit its independent valuation of the
property.20 The commissioners also informed the court that Cenon Astudillo, VCPs choice for commissioner,
did not contribute to the commissions work due to his frequent absences. 21

recommitted the valuation to a new set of commissioners, instead of substituting its own judgment. 36 VCP
insisted that the trial courts own valuation of P75.00 per square meter is unrealistic and is unsupported by the
evidence.37 Lastly, VCP argued that the trial court committed grave abuse of discretion when it failed to impose
legal interests on the just compensation from the time of taking until VCP is fully paid. 38 It prayed for the
annulment of the trial courts Decision.39
After the parties had filed their respective memoranda, the CA received, on September 4, 2006, a Notice of
Withdrawal of Appearance from VCPs counsel, Atty. Candice Marie T. Bandong, which notice contained
VCPs conformity.40
Ruling of the Court of Appeals

On even date, the commissioners submitted their appraisal report, 22 stating that they considered sales data of
properties within the vicinity from the years 1994 to 2003, and tax declarations from the years 1996 to
2003.23Based on these, they determined the just compensation at P1,150.00 per square meter. 24
The trial court admitted the report into the records, after both parties manifested that they were not objecting
thereto,25 and declared the case submitted for decision. 26
Ruling of the Trial Court
On March 10, 2005, Judge Fortunito L. Madrona (Judge Madrona) rendered his Decision rejecting the report.
The trial court explained that just compensation, as Section 4 of Rule 67 of the Rules of Court provides, 27 must
reflect the value and character of the property sought to be expropriated, at the time it was taken or at the time
the complaint for expropriation was filed, whichever came first. Applying this rule to the facts of the case, the
reckoning period should have been the time of filing of the complaint in 1987 because it took place before the
taking of the property in 2002. The report violated this rule by using data from 1996 onwards.
The trial court then made an independent finding based on the evidence already on hand. It determined that
there exists, on record, a certification from the Office of the City Assessor, that the propertys market value for
the years 1985 to 1993 (which includes the year the complaint was filed) was P1,366,400.00. 28 This value
roughly translates to P75 per square meter, for a total of P1,372,350.00. The dispositive portion of the trial
courts Decision reads:
WHEREFORE, based then from [sic] the foregoing considerations, considering that the land was then a
rawland in 1987 at the time of the filing of the Amended Complaint for expropriation, it is the determination of
the Court that the just compensation for the expropriation of the parcel of land described as Lot No. 4598 of
the Cad. Survey of Paraaque, located in San Dionisio, Paraaque City, containing an area of 18,298 square
meters, registered under Transfer Certificate of Title No. 116554 of the Registry of Deeds of Paraaque City in
the name of the defendant V.C. Ponce Co., Inc., is hereby fixed at P75.00 per square meter, or for an
aggregate valuation of P1,372,350.00.

The CA then held that, even if it were to rule that certiorari is proper, it would still dismiss the petition for
certiorari. It held that grave abuse of discretion was not attendant in the trial courts rejection of the
commissioners report. The CA explained that the trial court has such authority as long as it finds just cause.
The reports contravention of the principle regarding the proper reckoning period for the determination of just
compensation is such a cause.42
Petitioner received the CA Decision on April 10, 2007. 43 On the 15th day from its receipt of the Decision, or on
April 25, 2007, it filed, through registered mail, a MOTEX of time to file a Motion for Reconsideration on the
ground that it has yet to engage the services of a new counsel. 44 On May 10, 2007, VCP again requested for
another 15 days to file its Motion for Reconsideration. 45
On May 25, 2007, which is 45 days since it received the CA Decision, VCP filed its Motion for Reconsideration
through its new counsel.46
The CA denied petitioners MOTEX in its Resolution dated June 4, 2007. It ratiocinated that the 15-day period
for filing a Motion for Reconsideration cannot be extended. Thus, it dismissed VCPs Motion for
Reconsideration for belated filing.47
Petitioners arguments
Petitioner contends that the CA was unreasonably rigid in denying its MOTEX and Motion for Reconsideration.
It urges the Court to appreciate its lack of counsel as a justification for its late filing. 48

xxxx
SO ORDERED.29
VCP moved for a reconsideration, which the trial court denied in its Order dated August 15, 2005.

At the outset, the CA observed that an ordinary appeal under Rule 41 was available to petitioner and would
have constituted a plain, speedy and adequate remedy to correct any perceived error in the RTC Decision.
VCP, for unknown reasons, failed to avail itself of the said remedy within the reglementary period. Having lost
its right to appeal, VCP resorted to a Petition for Certiorari in the hope that it could nevertheless, obtain a
reversal of the RTC Decision. The CA held that certiorari is unavailing as a substitute for a lost appeal. The CA
brushed aside as unfounded VCPs excuse that an appeal would be slow and inadequate. Such excuse, it
noted, would allow any litigant to avail itself of extraordinary remedies after they lose their right to appeal. 41

30

VCP maintains that the CA erred in holding that VCP should have appealed from the RTC Decision, instead of
resorting to certiorari. VCP contends that certiorari is proper because an appeal would have been inadequate,
and would have further prolonged the resolution of this case, which has already dragged for more than two
decades.49

VCP received its copy of the said Order on August 24, 2005. 31
Lastly, VCP insists that the CA erred in not finding the trial court guilty of grave abuse of discretion. 50
On October 21, 2005 or 58 days since VCP received the Order denying its Motion for Reconsideration, it filed
with the CA a Motion for Extension of Time (MOTEX) to File Petition for Certiorari, 32 which the CA granted.33
VCP filed its Petition for Certiorari on November 7, 2005.34 It justified its resort to the extraordinary remedy on
the ground that "there is no appeal or plain, speedy and adequate remedy in the course of law that is available
to the petitioner."35 It assailed the trial courts rejection of the appraisal report as a grave abuse of discretion.
VCP maintained that the appraisal, which is based on the propertys value at the time of its taking in 2002, is
correct. Assuming arguendo that the commissioners committed an error, the trial court should have

Respondents arguments
Respondents insist that the CA was correct in denying petitioners MOTEX to file Motion for Reconsideration.
Jurisprudence has consistently ruled that the period for filing a Motion for Reconsideration is not extendible.

Besides, petitioner does not have a valid excuse for its belated filing. It consented to the withdrawal of its
lawyer as early as August 29, 2006 (the date of the Notice of Withdrawal of Appearance). VCP then slept on
its rights for eight months until the reglementary period for filing its Motion for Reconsideration lapsed on April
25, 2007. The Court should not reward VCPs negligence with a relaxation of the rules. 51
Further, respondents insist that the CA is correct in dismissing VCPs petition for certiorari. The Rules provide
for an appeal of the RTC Decision but VCP neglected to avail of the said remedy within the reglementary
period. There is no merit to VCPs contention that an appeal would not have been a speedy and adequate
remedy considering that VCPs dilatory pleadings caused the protracted proceedings. 52
Respondents aver that the CA was correct in ruling that the trial court did not commit a grave abuse of
discretion. The trial court cannot accept an appraisal which disregards a basic legal principle. 53 Its action was
consistent with jurisprudence and the rules.54 Further, petitioner cannot claim that it was denied due process.
Both parties were sufficiently informed by the trial court, in its August 23, 2002 Order, that the just
compensation will be determined as of the date of filing of the complaint. 55 None of the parties objected to the
said Order.56
Issues
1. Is petitioners lack of counsel a justifiable excuse for the late filing of a Motion for Reconsideration?

It is incumbent upon the client to exert all efforts to retain the services of new counsel. 66 VCP knew since
August 29, 2006, seven months before the CA rendered its Decision, that it had no counsel. Despite its
knowledge, it did not immediately hire a lawyer to attend to its affairs. Instead, it waited until the last minute,
when it had already received the adverse CA Decision on April 10, 2007, to search for a counsel; and even
then, VCP did not rush to meet the deadline. It asked for an extension of 30 days to file a Motion for
Reconsideration.67 It finally retained the services of a new counsel on May 24, 2007, 68 nine months from the
time that its former counsel withdrew her appearance. VCP did not even attempt to explain its inaction. The
Court cannot grant equity where it is clearly undeserved by a grossly negligent party.69 As the Court
pronounced in another case:
x x x Both parties have a right to a speedy resolution of their case. Not only petitioners, but also the
respondents, have a right to have the case finally settled without delay.
Furthermore, the failure to file x x x on time was due primarily to petitioners unwise choices x x x. They hired
their subsequent lawyers too late.
It must be pointed out that petitioners had a choice of whether to continue the services of their original lawyer
or consent to let him go. x x x They delayed in engaging their replacement lawyer. Their poor choices and lack
of sufficient diligence x x x are the main culprits for the situation they now find themselves in. It would not be
fair to pass on the bad consequences of their choices to respondents. Petitioners low regard for the rules or
nonchalance toward procedural requirements x x x has in fact contributed much to the delay, and hence
frustration of justice, in the present case. 70

2. Is a Petition for Certiorari the proper remedy to correct alleged errors in the trial courts Decision?
Our Ruling
The petition has no merit.
Period for filing a Motion for
Reconsideration not extendible; failure
to file Motion for Reconsideration on
time renders the Decision final.
VCP received the CA Decision on April 10, 2007. Based on Rule 52 of the Rules of Court 57 and Rule 7 of the
2002 Internal Rules of the Court of Appeals (IRCA),58 VCP had 15 days from its receipt of the Decision, or until
April 25, 2007, to file a motion for reconsideration, an appeal, or a motion for new trial. Failure to file the
necessary pleading within the reglementary period would render the CA Decision final and executory. 59
Instead of filing a Motion for Reconsideration on April 25, 2007, VCP filed a MOTEX on the ground that its
lawyer had withdrawn from the case and it was still in the process of retaining a new counsel. The CA was
correct in denying petitioners MOTEX because the period to file a Motion for Reconsideration is not
extendible.60 The Court has pronounced strict adherence to the rule laid down in Habaluyas Enterprises, Inc. v.
Judge Japson61that "no motion for extension of time to file a motion for new trial or reconsideration may be
filed with the Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and the Intermediate Appellate
Court (now Court of Appeals)."62 Since the period to file a Motion for Reconsideration is not extendible, VCPs
MOTEX did not toll the reglementary period. 63 Thus, there being no Motion for Reconsideration as of April 25,
2007, the Decision of the CA dated March 23, 2007 became final and executory by operation of law. 64 The CA
was correct in denying the Motion for Reconsideration that VCP had belatedly filed on May 25, 2007 as its
lateness had rendered it moot.
There is no justification for the
application of equity and for the
relaxation of the rules.
VCP urges the Court to relax the rules on the reglementary period on the ground that it was impossible for it to
meet the deadline without the aid of counsel.
The Court, in the interest of equity and justice, sometimes allows a liberal reading of the rules, so long as the
petitioner is able to prove the existence of cogent reasons to excuse its non-observance. 65 The Court,
however, does not find a justification to warrant such relaxation in this instance.

This Court cannot ascribe good faith to

VCP as it had neglected reglementary
periods in the past.
Another reason that this Court is unable to accept VCPs plea for indulgence is its observation that VCP has a
penchant for disregarding procedural rules and the periods allotted to it for its action.
It did not attend the meetings before the commissioners for the initial and the final valuation of its property
despite notice. When the commissioners were finalizing their report to meet its deadline, VCP asked for an
additional four months to submit its independent valuation of the property. While the commissioners denied
VCPs request, VCPs action betrays its lack of consideration for deadlines.
Further, VCP did not file a timely appeal from the RTC Order denying its Motion for Reconsideration. VCP
received the said Order on August 24, 2005. Instead of appealing under Rule 41 of the Rules of Court, VCP
filed, on the 58th day from its receipt of the RTC Order, a MOTEX to file a Petition for Certiorari. While the CA
granted VCPs MOTEX,71 it was correct in ultimately denying VCPs Petition for Certiorari on the ground that
VCP cannot exploit the remedy of certiorari after it had lost its right to appeal.
Appeal is a sufficient and adequate
remedy unless the party proves
otherwise.
VCP attempts to extricate itself from the effects of its negligence by alleging that an appeal would not have
been speedy and adequate for its purpose. The Court, however, finds no merit in its contention.1wphi1
A court with appellate jurisdiction can review both the facts and the law, including questions of jurisdiction. 72 It
can set aside an erroneous decision and even nullify the same, if warranted. Appeal is a speedy remedy, as
an adverse party can file its appeal from a final decision or order immediately after receiving it. A party, who is
alleging that an appeal will not promptly relieve it of the injurious effects of the judgment, should establish facts
to show how the appeal is not speedy or adequate. 73 VCPs empty protestations, therefore, fail to impress.
There is no reason, and VCP cannot explain, why an appeal would not be speedy and adequate to address its
assigned errors.74 VCP cannot complain of delay because it was guilty of delay itself, and it even waited until
the 58th day of its receipt of the CA Decision before taking action. Clearly, petitioner resorted to certiorari as a
substitute for its lost appeal.75 The CA did not err in dismissing the same.

In sum, VCPs continued negligence, and its resort to the wrong remedy, placed all perceived errors in the
decisions below beyond the CAs and this Courts grasp.

singularly reared them: Alfred, from grade school to university, while Robert, upon finishing high school, went
back to Davao City to study medicine and lived with Alfredo.

WHEREFORE, premises considered, the petition is DENIED. The March 23, 2007 Decision of the Court of
Appeals in CA-G.R. SP No. 91791, as well as its June 4, 2007 Resolution, are AFFIRMED.

During that time his entire family was in the US, Alfredo never sent financial support. In fact, it was Rosa who
would remit money to Alfredo from time to time, believing that Alfredo had stopped womanizing. Rosa
continued to spend her annual vacation in Davao City.

SO ORDERED.
G.R. No. 196842

October 9, 2013

ALFREDO ROMULO A. BUSUEGO, Petitioner,

vs.
OFFICE OF THE OMBUDSMAN MINDANAO and ROSA S. BUSUEGO, Respondents.
DECISION
PEREZ, J.:
Before us is a petition for certiorari seeking to annul and set aside the Resolution of the Ombudsman dated 17
April 20091 and Order dated October 2010, 2 which directed the tiling of an Information for Concubinage under
Article 334 of the Revised Penal Code against petitioner Alfredo Romulo A. Busuego (Alfredo).
We chronicle the facts thus.
Private respondent Rosa S. Busuego (Rosa) filed a complaint for: (1) Concubinage under Article 334 of the
Revised Penal Code; (2) violation of Republic Act No. 9262 (Anti-Violence Against Women and Their
Children); and (3) Grave Threats under Article 282 of the Revised Penal Code, before the Office of the
Ombudsman against her husband, Alfredo, with designation Chief of Hospital, Davao Regional Hospital,
Apokon, Tagum City.

Sometime in 1997, Rosa learned that a certain Emy Sia (Sia) was living at their conjugal home. When Rosa
asked Alfredo, the latter explained that Sia was a nurse working at the Regional Hospital in Tagum who was in
a sorry plight as she was allegedly being raped by Rosas brother-in-law. To get her out of the situation,
Alfredo allowed Sia to live in their house and sleep in the maids quarters. At that time, Rosa gave Alfredo the
benefit of the doubt.
In October 2005, Rosa finally learned of Alfredos extra-marital relationships. Robert, who was already living in
Davao City, called Rosa to complain of Alfredos illicit affairs and shabby treatment of him. Rosa then rang up
Alfredo which, not surprisingly, resulted in an altercation. Robert executed an affidavit, corroborating his
mothers story and confirming his fathers illicit affairs:
1. In varying dates from July 1997 to January 1998, Robert found it strange that Sia slept with his father in the
conjugal bedroom.
2. He did not inform his mother of that odd arrangement as he did not want to bring trouble to their family.
3. Eventually, Sia herself confirmed to Robert that she was Alfredos mistress.
4. During this period of concubinage, Sia was hospitalized and upon her discharge, she and Alfredo resumed
their cohabitation.
5. The relationship between Alfredo and Sia ended only when the latter found another boyfriend. 6. His father
next took up an affair with Julie de Leon (de Leon) whom Robert met when de Leon fetched Alfredo on one
occasion when their vehicle broke down in the middle of the road.

In her complaint, Rosa painted a picture of a marriage in disarray.

She and Alfredo were married on 12 July 1975 at the Assumption Church, Davao City. Their union was
blessed with two (2) sons, Alfred and Robert, born in 1976 and 1978, respectively. Sometime in 1983, their
marriage turned sour. At this time, Rosa unearthed photographs of, and love letters addressed to Alfredo from,
other women. Rosa confronted Alfredo who claimed ignorance of the existence of these letters and innocence
of any wrongdoing.
Purportedly, Alfredo very rarely stayed at home to spend time with his family. He would come home late at
night on weekdays and head early to work the next day; his weekends were spent with his friends, instead of
with his family. Rosa considered herself lucky if their family was able to spend a solid hour with Alfredo.

7. Robert read various Short Message Service (SMS) exchanges between Julie and Alfredo on Alfredos
mobile phone.
8. On 23, 24, 30 and 31 December 2004, de Leon stayed in Rosas and Alfredos conjugal dwelling and stayed
in the conjugal room the entire nights thereof.
The househelpers, Melissa S. Diambangan and Liza S. Diambangan, likewise executed a joint affidavit in
support of Rosas allegations:
1. They had seen Sia sleep and stay overnight with Alfredo in the conjugal bedroom.

Around this time, an opportunity to work as nurse in New York City, United States of America (US) opened up
for Rosa. Rosa informed Alfredo, who vehemently opposed Rosas plan to work abroad. Nonetheless, Rosa
completed the necessary requirements to work in the US and was scheduled to depart the Philippines in
March 1985.
Before leaving, Rosa took up the matter again with Alfredo, who remained opposed to her working abroad.
Furious with Rosas pressing, Alfredo took his loaded gun and pointed it at Rosas right temple, threatening
and taunting Rosa to attempt to leave him and their family. Alfredo was only staved off because Rosas mother
arrived at the couples house. Alfredo left the house in a rage: Rosa and her mother heard gun shots fired
outside.
Because of that incident, Rosa acted up to her plan and left for the US. While in the US, Rosa became
homesick and was subsequently joined by her children who were brought to the US by Alfredo. Rosa

2. Sia herself, who called Alfredo "Papa," confirmed the twos sexual relationship.
3. On 23, 24, 30 and 31 December 2004, de Leon stayed in the conjugal dwelling and slept overnight with
Alfredo in the conjugal room.
As a result, Rosa and their other son Alfred forthwith flew to Davao City without informing Alfredo of their
impending return. Upon Rosas return, she gathered and consolidated information on her husbands sexual
affairs.
Pursuant to her charges of violation of Republic Act No. 9262 and Grave Threats, Rosa averred that during the
course of their marriage, apart from the marital infidelity, Alfredo physically and verbally abused her and her
family. On one occasion after Rosa confirmed the affairs, Alfredo threatened their family, including other

members of their household that he will gun them down should he chance upon them in Tagum City. Lastly, on
22 March 2006, Alfredo purportedly dismissed house helper Liza Diambangan and threatened her.
As expected, Alfredo, in his counter-affidavit, denied all accusations against him and alleged that:
1. Rosa, despite his pleas for them to remain and raise their family in the Philippines, chose to live in the US,
separate from him.
2. Rosas allegations that he had kept photographs of, and love letters from, other women, were only made to
create a cause of action for the suit for Legal Separation which Rosa filed sometime in 1998.
3. It was highly improbable that he committed acts of concubinage with Sia and de Leon since from the time
he became Chief of Hospital of the Davao Regional Hospital in Tagum City, he practically stayed all days of
the work week in the hospital. The instances he went home were few and far between, only to check on the
house and provide for household expenses.
4. When Robert returned to Davao City and lived with him, it became more impossible for him to have shacked
up with Sia and de Leon in the conjugal dwelling.

Rosa submitted an Ex-Parte Manifestation on the last known addresses of Julie de Leon and Emy Sia. x x x. 3
On 24 June 2008, the Ombudsman issued a Joint Order 4 impleading Sia and de Leon as party-respondents in
the complaint for Concubinage and directing them to submit their respective counter-affidavits within a period
of time. Copies of the Joint Order were mailed to Sias and de Leons last known addresses, as provided by
Rosa to the Ombudsman.
Sia and de Leon did not submit their respective counter-affidavits: a copy of the Joint Order sent to Sias last
known address was returned to the Ombudsman with the notation on the Registry Return Receipt No. 1624
"Return to Sender; removed," while a copy thereof to de Leon was received on 3 September 2008 by Ananias
de Leon.5
Apparently still opposed to the Ombudsmans ruling to simply amend the complaint and implead therein
Alfredos alleged mistresses, Alfredo filed his Comment to the 24 June 2008 Order with Motion to Dismiss
and/or Refer the charges to the Appropriate Provincial/City Prosecutor 6 praying for dismissal of the complaint
for: (1) failure to implead the two mistresses in violation of Article 344 of the Revised Penal Code; and in the
alternative, (2) referral of the complaint to the Office of the City Prosecutor as provided in OMB-DOJ Circular
No. 95-001.
Rosa filed a Reply to that latest pleading of Alfredo.

5. With respect to his alleged relationship with Sia, without admitting to anything, that Sia, for a time, may have
lived in his and Rosas conjugal house, staying at the maids quarters. However, at no instance did he keep
Sia as his mistress in the conjugal dwelling.

On 17 April 2009, the Ombudsman issued the herein assailed Resolution, disposing of the procedural issues:

6. As regards the dates of December 23, 24, 30 and 31, 2004 when he supposedly stayed with de Leon in the
conjugal room, Alfredo pointed out that said dates were busiest days of the year in the hospital where his
presence as Chief of Hospital is most required.

Before dwelling into the merits of the case, this Office finds an urgent need to resolve the ancillary issues
raised by petitioner Dr. Busuego on: 1.) the alleged legal infirmity of Rosass initiatory pleading by resorting to
a procedural short cut which would result to the delay in the disposition of this case; and 2.) the criminal
charges imputed are not in relation to office, hence, the Office of the Provincial/City Prosecutor shall
investigate and prosecute this case pursuant to OMB-DOJ Joint Circular No. 95-001, Series of 1995.

7. By Rosas own admission, she first learned of Alfredos alleged concubinage in 1997, and yet she still
continued with her yearly visits to Alfredo in Davao City. Those instances ought to be construed as
condonation of the concubinage.
8. Significantly, the alleged concubines, Sia and de Leon, were not impleaded along with Alfredo as partyrespondents in the complaint in violation of Article 344 of the Revised Penal Code.
Alfredo made short shrift of Rosas charges of violation of Republic Act No. 9262 and Grave Threats. He
claimed that, at no time, did he threaten, the lives or, to harm his wife, their family and members of their
household. He only berated the help for perpetrating gossip about his behavior and conduct.
In their subsequent exchange of responsive pleadings, Rosa maintained Alfredos culpability, and naturally,
Alfredo claimed innocence.
In the course thereof, the procedural issue of Rosas failure to implead Sia and de Leon as respondents
cropped up. Alfredo insisted that Rosas complaint ought to be dismissed for failure to implead his alleged
concubines as respondents.
Specifically to dispose of that issue, the Ombudsman scheduled a clarificatory hearing where both Rosa and
Alfredo were represented by their respective counsels:
x x x Rosa was apprised of the need to implead the two alleged mistresses in the complaint for Concubinage
pursuant to Article 344 of the Revised Penal Code. Although Alfredo objected to the amendment of the
complaint, at this point in time, due to the alleged procedural lapse committed by Rosa, this Office explained to
the parties that the position of Alfredo would just prolong the conduct of the preliminary investigation since
Rosa can just re-file her complaint. The doctrine of res judicata does not apply in the preliminary investigation
stage. Hence, the counsel for Rosa was directed to submit to this Office the addresses of the alleged
mistresses so that they could be served with the Order directing them to file their counter-affidavits.

On the first issue, this Office observed that Busuego had already pointed out in his counter-Affidavit the
alleged deficiency in the complaint. Rosa also explained in her Reply that the names of the mistresses were
categorically mentioned in the complaint. She averred that this Office is empowered to investigate and
prosecute any act or omission of a public official or employee to the exclusion of non-government employees.
She stated that the inclusion of the alleged concubines in the Information to be filed in court is a matter of
procedure, within the competence of the investigating prosecutor.
In order to clarify some matters, including the said issue, with the parties, the clarificatory hearing was
conducted. It was explained in the said hearing the need to implead the alleged concubines in this case
pursuant to Article 344 of the Revised Penal Code and to obviate the proceedings, Rosa was directed to
submit the addresses of the alleged concubines. Busuegos position that the said short cut procedure would
delay the proceedings is misplaced. If the case will be dismissed based on procedural infirmity, Rosa could still
amend her complaint and re-file this case since the doctrine of res judicata does not apply in the preliminary
investigation stage of the proceedings.
On the second issue, the motion of Busuego to refer this case to the Office of the City Prosecutor was
belatedly filed. Record would show that the motion praying for the referral of this case to the Office of the City
Prosecutor was filed on 17 July 2008, after the parties have already filed all their pleadings and the case is
now ripe for resolution. Further, referral to the said office is not mandatory as cited in the said Joint Circular. 7
In the same Resolution, the Ombudsman, ultimately, found probable cause to indict only Alfredo and Sia of
Concubinage and directed the filing of an Information against them in the appropriate court:
WHEREFORE, in view of the foregoing, this Office finds a prima facie case for violation of Article 334 of the
Revised Penal Code (concubinage) and that petitioner ALFREDO ROMULO BUSUEGO y ABRIO, and EMY
SIA, are probably guilty thereof.
Let the herewith Information be filed in the appropriate court.

The charges for: 1.) Concubinage against Alfredo Romulo Busuego y Abrio and Julie de Leon; 2.) Grave
Threats against Alfredo Romulo y Abrio; and 3.) violation of RA 9262 (Anti-Violence Against Women and
Children Act), are hereby DISMISSED for lack of merit.8

The offended party cannot institute criminal prosecution without including both the guilty parties, if they are
both alive, nor, in any case, if he shall have consented or pardoned the offenders.
Section 5. Who must prosecute criminal action. xxx.

Alfredo filed a Partial Motion for Reconsideration excepting to the Ombudsmans ruling on the automatic
inclusion of Sia as respondent in the complaint and their indictment for the crime of Concubinage. Alfredo is
adamant that Rosas complaint should have, at the outset, impleaded his alleged concubines. Failing such, the
Ombudsman cannot resort to automatic inclusion of party-respondents, erroneously finding him and Sia prima
facie culpable for Concubinage. For good measure, Alfredo pointed out that from Rosas own allegations, she
had condoned or pardoned Alfredos supposed concubinage. Alfredo likewise submitted Liza S. Diambangans
affidavit, recanting her previous affidavit corroborating Rosas charges.
Nonetheless, the Ombudsman stood pat on its ruling, declared that the Partial Motion for Reconsideration was
filed out of time, and gave scant attention to Liza S. Diambangans affidavit of recantation:
WHEREFORE, all the foregoing considered, this instant Motion for Reconsideration is hereby DENIED. The
findings in the questioned Resolution hereby remains undisturbed. Let the Information for Concubinage be
filed in the proper court against herein Busuego.9
Alfredo now comes to us on petition for certiorari alleging grave abuse of discretion in the Ombudsmans
finding of probable cause to indict him and Sia for Concubinage. Alfredos badges of grave abuse of discretion
are the following:

The crimes of adultery and concubinage shall not be prosecuted except upon a complaint filed by the offended
spouse. The offended party cannot institute criminal prosecution without including the guilty parties, if both are
alive, nor, in any case, if the offended party has consented to the offense or pardoned the offenders.
We do not agree.
The submission of Alfredo is belied by the fact that the Ombudsman merely followed the provisions of its Rules
of Procedure. Thus:
Rule II
PROCEDURE IN CRIMINAL CASES
xxxx
Section 2. Evaluation Upon evaluating the complaint, the investigating officer shall recommend whether it
may be:

1. The Ombudsman railroaded the inclusion of Sia and de Leon as party-respondents in the complaint;
a) dismissed outright for want of palpable merit;
2. The Ombudsman did not refer the complaint to the Department of Justice, considering that the offense of
Concubinage is not committed in relation to his office as Chief of Hospital;
3. The Ombudsman glossed over Rosas condonation of Alfredos supposed Concubinage when she alleged
in the complaint that she had known of Alfredos womanizing and believed him to have changed his ways;
4. The Ombudsman did not take into consideration the affidavit of recantation of Liza Diambangan; and
5. The Ombudsman found probable cause to indict Alfredo and Sia for Concubinage.
We sustain the Ombudsman.
The Ombudsman has full discretionary authority in the determination of probable cause during a preliminary
investigation.10 This is the reason why judicial review of the resolution of the Ombudsman in the exercise of its
power and duty to investigate and prosecute felonies and/or offenses of public officers is limited to a
determination of whether there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction. Courts are not empowered to substitute their judgment for that of the Ombudsman. 11
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment tantamount to lack
of jurisdiction.12 The abuse of discretion must be so patent and gross as to amount to an evasion of a positive
duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the
power is exercised in an arbitrary and despotic manner by reason of passion or hostility.13 In this regard,
petitioner failed to demonstrate the Ombudsman's abuse, much less grave abuse, of discretion.
First. Alfredo insists that the Ombudsmans automatic inclusion, over his vehement objections of Sia and de
Leon as party-respondents, violates Article 344 of the Revised Penal Code and Section 5, Rule 110 of the
Rules of Court, which respectively provide:
Art. 344. Prosecution of the crimes of adultery, concubinage, seduction, abduction, rape and acts of
lasciviousness. The crimes of adultery and concubinage shall not be prosecuted except upon a complaint
filed by the offended spouse.

b) referred to respondent for comment;

c) indorsed to the proper government office or agency which has jurisdiction over the case;
d) forwarded to the appropriate office or official for fact-finding investigation;
e) referred for administrative adjudication; or
f) subjected to a preliminary investigation.
xxxx
Section 4. Procedure The preliminary investigation of cases falling under the jurisdiction of the
Sandiganbayan and Regional Trial Courts shall be conducted in the manner prescribed in Section 3, Rule 112
of the Rules of Court, subject to the following provisions:
a) x x x
b) After such affidavits have been secured, the investigating officer shall issue an order, attaching thereto a
copy of the affidavits and other supporting documents, directing the respondents to submit, within ten (10)
days from receipt thereof, his counter-affidavits and controverting evidence with proof of service thereof on the
complainant. The complainant may file reply affidavits within ten (10) days after service of the counteraffidavits.
c) If the respondents does not file a counter-affidavit, the investigating officer may consider the comment filed
by him, if any, as his answer to the complaint. In any event, the respondent shall have access to the evidence
on record.
d) No motion to dismiss shall be allowed except for lack of jurisdiction.

Neither may a motion for a bill of particulars be entertained.

If respondent desires any matter in the complainants affidavit to be clarified, the particularization thereof may
be done at the time of the clarificatory questioning in the manner provided in paragraph (f) of this section.
e) If the respondents cannot be served with the order mentioned in paragraph 6 hereof, or having been
served, does not comply therewith, the complaint shall be deemed submitted for resolution on the basis of the
evidence on the record.
f) If, after the filing of the requisite affidavits and their supporting evidences, there are facts material to the
case which the investigating officer may need to be clarified on, he may conduct a clarificatory hearing during
which the parties shall be afforded the opportunity to be present but without the right to examine or crossexamine the witness being questioned. Where the appearance of the parties or witnesses is impracticable, the
clarificatory questioning may be conducted in writing, whereby the questions desired to be asked by the
investigating officer or a party shall be reduced into writing and served on the witness concerned who shall be
required to answer the same in writing and under oath.
g) Upon the termination of the preliminary investigation, the investigating officer shall forward the records of
the case together with his resolution to the designated authorities for their appropriate action thereon.
No information may be filed and no complaint may be dismissed without the written authority or approval of the
ombudsman in cases falling within the jurisdiction of the Sandiganbyan, or of the proper Deputy Ombudsman
in all other cases. (Emphasis supplied).
Notably, Rosas complaint contained not just the Concubinage charge, but other charges: violation of Republic
Act No. 9262 and Grave Threats. Upon the Ombudsmans perusal, the complaint was supported by affidavits
corroborating Rosas accusations. Thus, at that stage, the Ombudsman properly referred the complaint to
Alfredo for comment. Nonetheless, while the Ombudsman found no reason for outright dismissal, it deemed it
fit to hold a clarificatory hearing to discuss the applicability of Article 344 of the Revised Penal Code, the issue
having been insisted upon by Alfredo.
Surely the procedural sequence of referral of the complaint to respondent for comment and thereafter the
holding of a clarificatory hearing is provided for in paragraph b, Section 2 and paragraphs d and f, Section 4 of
Rule II, which we have at the outset underscored. Thus did the Ombudsman rule:
In order to clarify some matters, including the said issue, with the parties, the clarificatory hearing was
conducted. It was explained in the said hearing the need to implead the alleged concubines in this case
pursuant to Article 344 of the Revised Penal Code and to obviate the proceedings, Rosa was directed to
submit the addresses of the alleged concubines. Busuegos position that the said short cut procedure would
delay the proceedings is misplaced. If the case will be dismissed based on procedural infirmity, Rosa could still
amend her complaint and re-file this case since the doctrine of res judicata does not apply in the preliminary
investigation stage of the proceedings. 14
The Ombudsman merely facilitated the amendment of the complaint to cure the defect pointed out by Alfredo.
We agree with the Ombudsman that it would be superfluous to dismiss the complaint when amendment
thereof is allowed by its Rules of Procedure15 and the Rules of Court.16
Second. Alfredo claims that the Ombudsman should have referred Rosas complaint to the Department of
Justice (DOJ), since the crime of Concubinage is not committed in relation to his being a public officer. This is
not a new argument.

employees is concurrent with other government investigating agencies such as provincial, city and state
prosecutors. However, the Ombudsman, in the exercise of its primary jurisdiction over cases cognizable by the
Sandiganbayan, may take over, at any stage, from any investigating agency of the government, the
investigation of such cases.
In other words, respondent DOJ Panel is not precluded from conducting any investigation of cases against
public officers involving violations of penal laws but if the cases fall under the exclusive jurisdiction of the
Sandiganbayan, the respondent Ombudsman may, in the exercise of its primary jurisdiction take over at any
stage.
Thus, with the jurisprudential declarations that the Ombudsman and the DOJ have concurrent jurisdiction to
conduct preliminary investigation, the respective heads of said offices came up with OMB-DOJ Joint Circular
No. 95-001 for the proper guidelines of their respective prosecutors in the conduct of their investigations, to
wit:
OMB-DOJ JOINT CIRCULAR NO. 95-001
Series of 1995
ALL GRAFT INVESTIGATION/SPECIAL PROSECUTIONOFFICERS OF THE OFFICE OF THE
OMBUDSMAN
TO: ALL REGIONAL STATE PROSECUTORS AND THEIR ASSISTANTS, PROVINCIAL/CITY
PROSECUTORS AND THEIR ASSISTANTS, STATE PROSECUTORS ANDPROSECUTING ATTORNEYS
OF THE DEPARTMENT OFJUSTICE.
SUBJECT: HANDLING COMPLAINTS FILED AGAINST PUBLICOFFICERS AND EMPLOYEES, THE
CONDUCT OFPRELIMINARY INVESTIGATION, PREPARATION OFRESOLUTIONS AND INFORMATIONS
AND PROSECUTION OF CASES BY PROVINCIAL AND CITY PROSECUTORS AND THEIR ASSISTANTS.
x---------------------------------------------------------------------------------------x
In a recent dialogue between the OFFICE OF THE OMBUDSMAN and the DEPARTMENT OF JUSTICE,
discussion centered around the latest pronouncement of the SUPREME COURT on the extent to which the
OMBUDSMAN may call upon the government prosecutors for assistance in the investigation and prosecution
of criminal cases cognizable by his office and the conditions under which he may do so. Also discussed was
Republic Act No. 7975 otherwise known as "AN ACT TO STRENGTHEN THE FUNCTIONAL AND
STRUCTURAL ORGANIZATION OF THE SANDIGANBAYAN, AMENDING FOR THE PURPOSE
PRESIDENTIAL DECREE NO. 1606, AS AMENDED" and its implications on the jurisdiction of the office of the
Ombudsman on criminal offenses committed by public officers and employees.
Concerns were expressed on unnecessary delays that could be caused by discussions on jurisdiction between
the OFFICE OF THE OMBUDSMAN and the DEPARTMENT OF JUSTICE, and by procedural conflicts in the
filing of complaints against public officers and employees, the conduct of preliminary investigations, the
preparation of resolutions and informations, and the prosecution of cases by provincial and city prosecutors
and their assistants as DEPUTIZED PROSECUTORS OF THE OMBUDSMAN.
Recognizing the concerns, the OFFICE OF THE OMBUDSMAN and the DEPARTMENT OF JUSTICE, in a
series of consultations, have agreed on the following guidelines to be observed in the investigation and
prosecution of cases against public officers and employees:

The Ombudsmans primary jurisdiction, albeit concurrent with the DOJ, to conduct preliminary investigation of
crimes involving public officers, without regard to its commission in relation to office, had long been settled in
Sen. Honasan II v. The Panel of Investigating Prosecutors of DOJ, 17 and affirmed in subsequent cases:

1. Preliminary investigation and prosecution of offenses committed by public officers and employees IN
RELATION TO OFFICE whether cognizable by the SANDIGANBAYAN or the REGULAR COURTS, and
whether filed with the OFFICE OF THE OMBUDSMAN or with the OFFICE OF THE PROVINCIAL/CITY
PROSECUTOR shall be under the control and supervision of the office of the OMBUDSMAN.

The Constitution, Section 15 of the Ombudsman Act of 1989 and Section 4 of the Sandiganbayan Law, as
amended, do not give to the Ombudsman exclusive jurisdiction to investigate offenses committed by public
officers or employees. The authority of the Ombudsman to investigate offenses involving public officers or

2. Unless the Ombudsman under its Constitutional mandate finds reason to believe otherwise, offenses NOT
IN RELATION TO OFFICE and cognizable by the REGULAR COURTS shall be investigated and prosecuted
by the OFFICE OF THE PROVINCIAL/CITY PROSECUTOR, which shall rule thereon with finality.

3. Preparation of criminal information shall be the responsibility of the investigating officer who conducted the
preliminary investigation. Resolutions recommending prosecution together with the duly accomplished criminal
informations shall be forwarded to the appropriate approving authority.
4. Considering that the OFFICE OF THE OMBUDSMAN has jurisdiction over public officers and employees
and for effective monitoring of all investigations and prosecutions of cases involving public officers and
employees, the OFFICE OF THE PROVINCIAL/CITY PROSECUTOR shall submit to the OFFICE OF THE
OMBUDSMAN a monthly list of complaints filed with their respective offices against public officers and
employees.
xxxx
A close examination of the circular supports the view of the respondent Ombudsman that it is just an internal
agreement between the Ombudsman and the DOJ.
Sections 2 and 4, Rule 112 of the Revised Rules on Criminal Procedure on Preliminary Investigation, effective
December 1, 2000, to wit:
SEC. 2. Officers authorized to conduct preliminary investigations
The following may conduct preliminary investigations:
(a) Provincial or City Prosecutors and their assistants;
(b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Courts;
(c) National and Regional State Prosecutors; and
(d) Other officers as may be authorized by law.
Their authority to conduct preliminary investigation shall include all crimes cognizable by the proper court in
their respective territorial jurisdictions.
SEC. 4. Resolution of investigating prosecutor and its review. - If the investigating prosecutor finds cause to
hold the respondent for trial, he shall prepare the resolution and information. He shall certify under oath in the
information that he, or as shown by the record, an authorized officer, has personally examined the complainant
and his witnesses; that there is reasonable ground to believe that a crime has been committed and that the
accused is probably guilty thereof; that the accused was informed of the complaint and of the evidence
submitted against him; and that he was given an opportunity to submit controverting evidence. Otherwise, he
shall recommend the dismissal of the complaint.
Within five (5) days from his resolution, he shall forward the record of the case to the provincial or city
prosecutor or chief state prosecutor, or to the Ombudsman or his deputy in cases of offenses cognizable by
the Sandiganbayan in the exercise of its original jurisdiction. They shall act on the resolution within ten (10)
days from their receipt thereof and shall immediately inform the parties of such action.
No complaint or information may be filed or dismissed by an investigating prosecutor without the prior written
authority or approval of the provincial or city prosecutor or chief state prosecutor or the Ombudsman or his
deputy.
Where the investigating prosecutor recommends the dismissal of the complaint but his recommendation is
disapproved by the provincial or city prosecutor or chief state prosecutor or the Ombudsman or his deputy on
the ground that a probable cause exists, the latter may, by himself file the information against the respondent,
or direct another assistant prosecutor or state prosecutor to do so without conducting another preliminary
investigation.

If upon petition by a proper party under such rules as the Department of Justice may prescribe or motu
proprio, the Secretary of Justice reverses or modifies the resolution of the provincial or city prosecutor or chief
state prosecutor, he shall direct the prosecutor concerned either to file the corresponding information without
conducting another preliminary investigation, or to dismiss or move for dismissal of the complaint or
information with notice to the parties. The same Rule shall apply in preliminary investigations conducted by the
officers of the Office of the Ombudsman.
confirm the authority of the DOJ prosecutors to conduct preliminary investigation of criminal complaints filed
with them for offenses cognizable by the proper court within their respective territorial jurisdictions, including
those offenses which come within the original jurisdiction of the Sandiganbayan; but with the qualification that
in offenses falling within the original jurisdiction of the Sandiganbayan, the prosecutor shall, after their
investigation, transmit the records and their resolutions to the Ombudsman or his deputy for appropriate
action. Also, the prosecutor cannot dismiss the complaint without the prior written authority of the Ombudsman
or his deputy, nor can the prosecutor file an Information with the Sandiganbayan without being deputized by,
and without prior written authority of the Ombudsman or his deputy.
xxxx
To reiterate for emphasis, the power to investigate or conduct preliminary investigation on charges against any
public officers or employees may be exercised by an investigator or by any provincial or city prosecutor or their
assistants, either in their regular capacities or as deputized Ombudsman prosecutors. The fact that all
prosecutors are in effect deputized Ombudsman prosecutors under the OMB-DOJ circular is a mere
superfluity. The DOJ Panel need not be authorized nor deputized by the Ombudsman to conduct the
preliminary investigation for complaints filed with it because the DOJs authority to act as the principal law
agency of the government and investigate the commission of crimes under the Revised Penal Code is derived
from the Revised Administrative Code which had been held in the Natividad case citation omitted as not being
contrary to the Constitution. Thus, there is not even a need to delegate the conduct of the preliminary
investigation to an agency which has the jurisdiction to do so in the first place. However, the Ombudsman may
assert its primary jurisdiction at any stage of the investigation. (Emphasis supplied).
In Honasan II, although Senator Gregorio "Gringo" Honasan was a public officer who was charged with coup
detat for the occupation of Oakwood on 27 July 2003, the preliminary investigation therefor was conducted by
the DOJ. Honasan questioned the jurisdiction of the DOJ to do so, proferring that it was the Ombudsman
which had jurisdiction since the imputed acts were committed in relation to his public office. We clarified that
the DOJ and the Ombudsman have concurrent jurisdiction to investigate offenses involving public officers or
employees. Nonetheless, we pointed out that the Ombudsman, in the exercise of its primary jurisdiction over
cases cognizable by the Sandiganbayan, may take over, at any stage, from any investigating agency of the
government, the investigation of such cases. Plainly, applying that ruling in this case, the Ombudsman has
primary jurisdiction, albeit concurrent with the DOJ, over Rosas complaint, and after choosing to exercise
such jurisdiction, need not defer to the dictates of a respondent in a complaint, such as Alfredo. In other words,
the Ombudsman may exercise jurisdiction to the exclusion of the DOJ.
Third. Alfredo next argues that Rosa had pardoned his concubinage, having admitted to knowing of his
womanizing and yet continuing with their relationship as demonstrated in Rosas annual visits to him in Davao
City.
We are not convinced.
Old jurisprudence has held that the cynosure in the question of whether the wife condoned the concubinage
lies in the wifes "line of conduct under the assumption that she really believed [her husband] guilty of
concubinage:"
Condonation is the forgiveness of a marital offense constituting a ground for legal separation or, as stated in I
Bouver's Law Dictionary, p. 585, condonation is the conditional forgiveness or remission, by a husband or wife
of a matrimonial offense which the latter has committed.
xxxx

A detailed examination of the testimony of the plaintiff-husband, especially those portions quoted above,
clearly shows that there was a condonation on the part of the husband for the supposed acts of rank infidelity
amounting to adultery committed by defendant-wife. Admitting for the sake of argument that the infidelities
amounting to adultery were committed by the defendant, a reconciliation was effected between her and the
plaintiff. The act of the latter in persuading her to come along with him, and the fact that she went with him and
consented to be brought to the house of his cousin Pedro Bugayong and together they slept there as husband
and wife for one day and one night, and the further fact that in the second night they again slept together in
their house likewise as husband and wife all these facts have no other meaning in the opinion of this court
than that a reconciliation between them was effected and that there was a condonation of the wife by the
husband. The reconciliation occurred almost ten months after he came to know of the acts of infidelity
amounting to adultery.
In Shackleton vs. Shackleton, 48 N. J. Eq. 364; 21 Atl. 935, it has been held that condonation is implied from
sexual intercourse after knowledge of the other infidelity. Such acts necessarily implied forgiveness. It is
entirely consonant with reason and justice that if the wife freely consents to sexual intercourse after she has
full knowledge of the husband's guilt, her consent should operate as a pardon of his wrong.

Again, we are not swayed by Alfredos asseverations.

We have generally looked with disfavor upon retraction of testimonies previously given in court. Affidavits of
recantation are unreliable and deserve scant consideration. The asserted motives for the repudiation are
commonly held suspect, and the veracity of the statements made in the affidavit of repudiation are frequently
and deservedly subject to serious doubt. 21
In Firaza v. People, we intoned:
Merely because a witness says that what he had declared is false and that what he now says is true, is not
sufficient ground for concluding that the previous testimony is false. No such reasoning has ever crystallized
into a rule of credibility. The rule is that a witness may be impeached by a previous contradictory statement x x
x not that a previous statement is presumed to be false merely because a witness now says that the same is
not true. The jurisprudence of this Court has always been otherwise, i.e., that contradictory testimony given
subsequently does not necessarily discredit the previous testimony if the contradictions are satisfactorily
explained. [Citations omitted].

In Tiffanys Domestic and Family Relations, section 107 says:

Condonation. Is the forgiveness of a marital offense constituting a ground for divorce and bars the right to a
divorce. But it is on the condition, implied by the law when not express, that the wrongdoer shall not again
commit the offense; and also that he shall thereafter treat the other spouse with conjugal kindness. A breach of
the condition will revive the original offense as a ground for divorce. Condonation may be express or implied.
It has been held in a long line of decisions of the various supreme courts of the different states of the U. S. that
'a single voluntary act of sexual intercourse by the innocent spouse after discovery of the offense is ordinarily
sufficient to constitute condonation, especially as against the husband'. (27 Corpus Juris Secundum, section
61 and cases cited therein).
In the lights of the facts testified to by the plaintiff-husband, of the legal provisions above quoted, and of the
various decisions above-cited, the inevitable conclusion is that the present action is untenable.
Although no acts of infidelity might have been committed by the wife, We agree with the trial judge that the
conduct of the plaintiff-husband above narrated despite his belief that his wife was unfaithful, deprives him, as
alleged the offended spouse, of any action for legal separation against the offending wife, because his said
conduct comes within the restriction of Article 100 of the Civil Code.
The only general rule in American jurisprudence is that any cohabitation with the guilty party, after the
commission of the offense, and with the knowledge or belief on the part of the injured party of its commission,
will amount to conclusive evidence of condonation; but this presumption may be rebutted by evidence (60 L. J.
Prob. 73).18
Although the foregoing speaks of condonation of concubinage as a ground for legal separation, the holding
therein applies with equal force in a prosecution for concubinage as a felony. Indeed, Rosas admission was
that she believed her husband had stopped womanizing, not that she had knowledge of Alfredos specific acts
of concubinage with Sia and de Leon, specifically keeping them in the conjugal dwelling. This admission set
against the specific acts of concubinage listed in Article 334 19 of the Revised Penal Code does not amount to
condonation. Their continued cohabitation as husband and wife construed from Rosas annual visits to Davao
City is not acquiescence to Alfredos relations with his concubines. On that score, we have succinctly held:
We can find nothing in the record which can be construed as pardon or condonation. It is true that the
offended party has to a considerable extent been patient with her husband's shortcomings, but that seems to
have been due to his promises of improvement; nowhere does it appear that she has consented to her
husband's immorality or that she has acquiesced in his relations with his concubine. 20
Fourth. Alfredo next grasps at Liza S. Diambangans affidavit of recantation to eliminate his probable
culpability for concubinage.

Indeed, it is a dangerous rule to set aside a testimony which has been solemnly taken before a court of justice
in an open and free trial and under conditions precisely sought to discourage and forestall falsehood simply
because one of the witnesses who had given the testimony later on changed his mind. Such a rule will make
solemn trials a mockery and place the investigation of the truth at the mercy of unscrupulous witnesses.
Unless there be special circumstances which, coupled with the retraction of the witness, really raise doubt as
to the truth of the testimony given by him at the trial and accepted by the trial judge, and only if such testimony
is essential to the judgment of conviction, or its elimination would lead the trial judge to a different conclusion,
an acquittal of the accused based on such a retraction would not be justified. 22
In this case, Liza S. Diambangans testimony merely corroborates the still standing story of Robert and
Melissa Diambangan, the other helper in the Busuego household. Clearly, the twos consistent story may still
be the basis of the Ombudsmans finding of a prima facie case of concubinage against Alfredo and Sia.
Finally. Despite his vigorous arguments, Alfredo claims that there is simply no basis for indicting him and Sia
for concubinage.
Article 334 of the Revised Penal Code lists three (3) specific acts of concubinage by a husband:
(1) keeping a mistress in the conjugal dwelling; (2) sexual intercourse, under scandalous circumstances, with
a woman who is not his wife; and (3) cohabiting with a woman who is not his wife in any other place.
The Ombudsman found a prima facie case against Alfredo and Sia based on the testimony of Robert, Melissa
S. Diambangan and Liza S. Diambangan that Alfredo had kept Sia in the conjugal dwelling where Sia even
stayed at the conjugal room. We completely agree with the Ombudsmans disquisition:
x x x. It is ingrained in human behavior that a child has love, respect and loyalty to his family and would strive
to keep the family harmonious and united. This is the very reason why Robert did not inform his mother about
his fathers infidelities during the time when his father was keeping his mistress at the conjugal dwelling. A son
would never turn against his father by fabricating such a serious story which will cause his home to crumble, if
such is not true. His natural instinct is to protect his home, which he did when he kept silent for a long time.
What broke the camels back was the abusive treatment he allegedly suffered and the thought that things
would change for the better if his mom would intervene.
The story of Robert in his Affidavit was reinforced by the two house helpers Melissa S. Diambangan and Liza
S. Diambangan, who were employed by the family. Melissa was with the Busuego family in their conjugal
home in 1997. She left the family in 2005 but returned in 2006.1wphi1 Liza started working with the family in
2002. Melissa revealed that it was Emy Sia who recruited her to work with the Busuego family. They both
attested to the fact that Alfredo and Emy Sia slept together in the bedroom of Alfredo but Emy Sia would sleep
in the maids quarter when Rosa and Alfred came home for a visit in 1997. They recalled that Emy Sia calls
Alfredo "papa". They narrated that Emy Sia would even confide to them some private matters relating to her
sexual proclivities with Alfredo.23

We further note that the presence of Sia at the Busuego household and her interim residence thereat was not
disputed nor explained. Alfredo just cavalierly declares that Sia may have stayed in the conjugal dwelling, but
never as his mistress, and Sia supposedly slept in the maids quarters.
While such a claim is not necessarily preposterous we hold that such is a matter of defense which Alfredo
should raise in court given that Rosa s complaint and its accompanying affidavits have created a prima facie
case for Concubinage against Alfredo and Sia.
WHEREFORE the petition is DISMISSED The Resolutions of the Ombudsman dated 17 April 2009 and 11
October 2010 are AFFIRMED.
SO ORDERED.

as high as150 feet, with antennas and transmitters; as well as a power house open on three sides containing a
25KVA diesel power generator. Around and close to the cellular base station are houses, hospitals, clinics, and
establishments, including the properties of respondents Arsenio Aldecoa, Jose B. Torre, Conrado U. Pua,
Gregorio V. Mansano, Jerry Corpuz, and Estelita Acosta.
Respondents filed before the RTC on May 23, 2000 a Complaint against petitioner for abatement of nuisance
and injunction with prayer for temporary restraining order and writ of preliminary injunction, docketed as Civil
Case No. Br. 23-632-2000. Respondents alleged in their Complaint that:
5. Petitioners communications tower is 150 feet in height equivalent to a 15-storey building. It is a tripod-type
tower made of tubular steel sections and the last section, to which the huge and heavy antenna/transponder
array will be attached, about to be bolted on. Weight of the antenna mast is estimated at one (1) to three (3)
tons, more or less. As designed, the antenna/transponder array are held only by steel bolts without support of
guy wires;
6. This SMART tower is no different from the Mobiline tower constructed at Reina Mercedes, Isabela which
collapsed during a typhoon that hit Isabela in October 1998, an incident which is of public knowledge;
7. With its structural design, SMARTs tower being constructed at Vira, Roxas, Isabela, is weak, unstable, and
infirm, susceptible to collapse like the Mobiline tower which fell during a typhoon as earlier alleged, and its
structural integrity being doubtful, and not earthquake proof, this tower poses great danger to life and limb of
persons as well as their property, particularly, the respondents whose houses a but, or are near or within the
periphery of the communications tower;
8. This tower is powered by a standby generator that emitsnoxious and deleterious fumes, not to mention the
constant noise it produces, hence, a hazard to the health, not only of the respondents, but the residents in the
area as well;

G.R. No. 166330

September 11, 2013

SMART COMMUNICATIONS, INC., Petitioner,

vs.
ARSENIO ALDECOA, JOSE B. TORRE, CONRADO U. PUA, GREGORIO V. MANSANO, JERRY CORPUZ
and ESTELITAACOSTA, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioner
Smart Communications, Inc., seeking the reversal of the Decision 1 dated July 16, 2004 and Resolution2 dated
December 9, 2004 of the Court of Appeals in CA-G.R. CV No. 71337. The appellate court (I) reversed and set
aside the Order3 dated January 16, 2001 of the Regional Trial Court (RTC), Branch 23, of Roxas, Isabela, in
Civil Case No. Br. 23-632-2000 dismissing the complaint for abatement of nuisance and injunction against
petitioner, and (2) entered a new judgment declaring petitioner's cellular base station located in Barangay Vira,
Municipality of Roxas, Province of Isabela, a nuisance and ordering petitioner to cease and desist from
operating the said cellular base station.

9. When in operation, the tower would also pose danger to the life and health of respondents and residents of
the barangay, especially children, because of the ultra high frequency (UHF) radio wave emissions it radiates.
Only recently, Cable News Network (CNN) reported that cell phones, with minimal radiated power, are
dangerous to children, so more it is for this communications tower, whose radiated power is thousands of
times more than that of a cellphone;
10. Worse, and in violation of law, petitioner constructed the tower without the necessary public hearing,
permit of the barangay, as well as that of the municipality, the Environmental Compliance Certificate of the
[Department of Environment and Natural Resources (DENR)],construction permit, and other requirements of
the National Telecommunications Commission (NTC), and in fact committed fraud in its application by forging
an undated certification " that Barangay Vira does not interpose any objection to the proposed construction of
a 150 ft. tower & site development, " as this certification was never issued byrespondent Jose Torre, the
Barangay Captain of Vira, Roxas, Isabela, and without the official barangay seal, attached as Annex "A" and
Certification of the Barangay Officer of the Day that no public hearing was held, attached as Annex "B" made
integral part hereof;
11. Not being armed with the requisite permits/authority as above mentioned, the construction of the tower is
illegal and should be abated;
12. Respondents and petitioner should not wait for the occurrence of death, injuries and damage on account
of this structure and judicial intervention is needed to ensure that such event will not happen. 5
Respondents thus prayed for the RTC to:

The instant Petition arose from the following facts:

Petitioner is a domestic corporation engaged in the telecommunications business. On March 9, 2000,
petitioner entered into a contract of lease4 with Florentino Sebastian in which the latter agreed to lease to the
former a piece of vacant lot, measuring around 300 square meters, located in Barangay Vira, Roxas, Isabela
(leased property).Petitioner, through its contractor, Allarilla Construction, immediately constructed and installed
a cellular base station on the leased property. Inside the cellular base station is a communications tower, rising

1. Issue a temporary restraining order and after due hearing to issue a writ of preliminary mandatory
injunction;
2. Render judgment:

- Making the writ of preliminary mandatory injunction permanent;

- Declaring the construction of the SMART tower as a nuisance per se or per accidens;

In the end, petitioner sought the dismissal of respondents Complaint; the denial of respondents prayer for the
issuance of a temporary restraining order and writ of preliminary mandatory injunction; the award of moral,
nominal, and exemplary damages in the amounts which the court deem just and reasonable; and the award of
attorneys fees in the sum of P500,000.00 and litigation expenses as may be proven at the trial.

- Ordering the abatement of this nuisance by ordering the removal and/or demolition of petitioners
communication tower;

Respondents then contested petitioners allegations and averred in their Reply and Answer to Counterclaim
that:

- Condemning petitioner to pay respondents moral damages in the sum of P150,000.00 and exemplary
damages in the sum of P30,000.00;

- Petitioners cell site relay antenna operates on the ultra high frequency (UHF) band, or gigabyte band, that is
much higher than that of TV and radio broadcasts which operates only on the Very High Frequency (VHF)
band, hence, petitioners equipment generates dangerously high radiation and emission that is hazardous to
the people exposed to it like respondents, whose houses are clustered around petitioners cell site
antenna/communications tower;

- Ordering petitioner to pay attorneys fees in the amount of P20,000.00 plus trial honoraria ofP1,000.00 for
every appearance in Court;
- Ordering petitioner to refund to respondents litigation expenses in the amount of not less than P10,000.00;
3. And for such other reliefs as are just and equitable in the premises. 6
In its Answer/Motion to Oppose Temporary Restraining Order with Compulsory Counterclaim, petitioner raised
the following special and affirmative defenses:
13. Petitioner through its contractor, Allarilla Construction(hereafter Allarilla), applied for a Building Permit
through the office of Municipal engineer Virgilio A. Batucal on 13 April 2000 and subsequently received its
approval 17 April 2000. (a copy of the Official receipt and the Building Permit is hereto attached respectively
as Annex "A" and "B" and made an integral part hereof)
14. Petitioner, again through Allarilla applied for an Environmental Compliance Certificate (ECC) the approval
of which, at present, remains pending with the DENR-[Environment Management Bureau (EMB)].
15. Petitioner should not in anyway be liable for fraud or bad faith as it had painstakingly secured the consent
of majority of the residents surrounding the location of the Tower in order to seek their approval therewith. (a
copy of the list of residents who consented there to is attached herewith as Annex "C" and made an integral
part hereof)
16. Among the residents who signed the consent list secured by petitioner include the respondent Jose B.
Torre and a certain Linaflor Aldecoa, who is related to respondent Arsenio Aldecoa.
17. Petitioner did not forge the Barangay Certification but actually secured the consent of Barangay Captain
Jose Torre through the efforts of Sangguniang Bayan (SB) Board Member Florentino Sebastian.(a copy of the
Barangay Certification is attached herewith as Annex "D" and made an integral part hereof)
18. Petitioner Towers safety has been pre-cleared and is unlikely to cause harm in exposing the members of
the public to levels exceeding health limits considering that the antenna height of the Tower is 45.73 meters or
equivalent to 150 feet as stated in a Radio Frequency Evaluation report by Elizabeth H. Mendoza health
Physicist II, of the Department of Health Radiation Health Service dated 9 May 2000. (a copy is hereto
attached as Annex "E" and made an integral part hereof)
19. The structural stability and soundness of the Tower has been certified by Engr. Melanio A. Guillen Jr. of the
Engineering Consulting firm Microflect as contained in their Stress Analysis Report (a copy is hereto attached
as Annex "F" and made an integral part hereof)
20. petitioners impetus to push through with the construction of the Tower is spurred by the
Telecommunications Act of 1995 or Republic Act 7925 which states that the "expansion of the
telecommunications network shall give priority to improving and extending basic services to areas not yet
served." Article II, Sec. 4 par. B.(a copy of RA 7925 is hereto attached as Annex "G" and made an integral part
hereof)7

- As admitted, petitioner has not secured the required Environmental Compliance Certificate (ECC). It has not
even obtained the initial compliance certificate (ICC). In short,petitioner should have waited for these
documents before constructing its tower, hence, it violated the law and such construction is illegal and all the
more sustains the assertions of respondents;
- The alleged building permit issued to petitioner is illegal because of the lack of an ECC and that petitioners
application for a building permit covered only a building and not a cell site antenna tower. Moreover, the
petitioner failed to obtain a National Telecommunications Commission (NTC) Clearance to construct the
communications tower. As will be seen in the application and permit, the documents are dated April, 2000
while the construction begun in March, 2000;
- The technical data that served as the basis of the Radio Frequency Radiation Evaluation of petitioners
mobile telephone base station was provided solely by the petitioner and in fact misled the DOH Radiation
Health Service. It states an absurdly low transmitted power of twenty (20) watts for a dual band mobile phone
service such as petitioner Smarts GSM 900/1800 Dual Band which is the standard service it offers to the
public;
- The Stress Analysis Report is self-serving and tested against the communications tower, the structural
integrity is flawed;
- While respondents may yield to the mandate of Republic Act No.7925, otherwise known as the
Telecommunications Act of 1995,extending and improving or upgrading of basic services to are as not yet
served, this should not be taken as a license to gamble and/or destroy the health and well-being of the people;
- Petitioners alleged certification (Annex "D", should be Annex "4") is the very same certification appended to
respondents complaint which they have assailed as a forgery and which respondent Jose Torre, the Barangay
Captain of Vira, Roxas, Isabela, emphatically denies having signed and/or issued the same. Moreover, the
certification gives petitioner away because respondent Jose Torre has no technical education using the
telecommunications term "SMART GSM & ETACS project," in said falsified certification;
- Petitioners claim that it is not liable for fraud or bad faith, proudly stating that it has painstakingly secured the
consent of the majority of the residents surrounding the tower site, is belied by the alleged Conformity of Host
Community (Residential) Annex "C" should be Annex "3" where only a handful of residents signed the
document prepared by petitioner and the contents of which were misrepresented by a Sangguniang Bayan
Member in the person of Nick Sebastian who is an interested party being the owner of the land where the
tower is constructed. It was misrepresented to Linaflor Aldecoa, wife of respondent Arsenio Aldecoa that it was
already anyway approved and signed by Barangay Captain Jose Torre when in truth his signature was again
forged by the petitioner and/or its employees or agents or person working for said company. Also, there are
persons who are not residents of Vira, Roxas, Isabela who signed the document such as Melanio C. Gapultos
of Rizal, Roxas, Isabela, Carlito Castillo of Nuesa, Roxas, Isabela, and another, Gennie Feliciano from San
Antonio, Roxas, Isabela. Certainly six (6) persons do not constitute the conformity of the majority of the
residents of Vira, Roxas, Isabela, and those immediately affected by the cellsite tower like respondents. This
document is likewise flawed and cannot help petitioners cause. Besides, respondents and other residents,
sixty-two (62) of them, communicated their protest against the erection of the cell tower specifying their
reasons therefor and expressing their sentiments and fears about petitioners communications tower, xerox
copy attached as Annex "A" and made integral part hereof;

- Respondents likewise specifically deny the truth of the allegation in paragraph 12 of the answer, the truth
being that the lot leased to petitioner is owned by SB Member Nick Sebastian and that Florentino Sebastian is
dummying for the former in avoidance of possible anti-graft charges against his son concerning this project. It
is also further denied for lack of knowledge or information sufficient to form a belief as to the truth thereof.
Moreover, the lease contract, copy not annexed to petitioners answer, would automatically be terminated or
ended in the event of complaints and/or protests from the residents. 8
Civil Case No. Br. 23-632-2000 was set for pre-trial on September 28, 2000. 9
On September 11, 2000, petitioner filed its Pre-Trial Brief in which it identified the following issues:
4.1. Whether respondents have a cause of action against the petitioner SMART for this Honorable Court to
issue a Preliminary Mandatory Injunction over the SMART tower in Roxas, Isabela as it allegedly poses a
threat to the lives and safety of the residents within the area and if respondents are entitled to moral and
exemplary damages as well as attorneys fees and expenses of litigation.
4.2 Whether the complaint should be dismissed in that the claim or demand set forth in the Complaint is
fictitious, imaginary, sham and without any real basis.
4.3. What petitioner SMART is entitled under its compulsory counterclaim against respondents for moral and
exemplary damages, attorneys fees, and other expenses of litigation. 10

facts of their Complaint. They asserted that there was a need for a full blown trial to prove the allegations in
their Complaint, as well as the defenses put up by petitioner.13
In its Order14 dated September 28, 2000, the RTC indefinitely postponed the pre-trial until it has resolved
petitioners Motion for Summary Judgment. In the same Order, the RTC directed the counsels of both parties
to submit their memoranda, including supporting affidavits and other documents within 30 days.
Petitioner submitted its Memorandum 15 on October 26, 2000; while respondents, following several motions for
extension of time, filed their Memorandum 16 on November 22, 2000. In their Memorandum, respondents
additionally alleged that:
The cellsite base station is powered by a roaring 25 KVA power generator. Operated 24 hours since it started
more than a month ago, it has sent "jackhammers into the brains" of all the inhabitants nearby. Everyone is
going crazy. A resident just recently operated for breast cancer is complaining that the noise emanating from
the generator is fast tracking her appointment with death. She can no longer bear the unceasing and irritating
roar of the power generator.
For this, the residents, led by the respondents, sought a noise emission test of the power generator of
petitioner SMART Communications with the DENR. The test was conducted on November 14 and 15, 2000
and the result shows that the petitioners power generator failed the noise emission test, day and night time.
Result of this test was furnished the Municipal Mayor of Roxas, Isabela (See Communication of DENR
Regional Director Lorenzo C. Aguiluz to Mayor Benedicto Calderon dated November 16, 2000 and the
Inspection Monitoring Report).

On even date, petitioner filed a Motion for Summary Judgment that reads:
With these findings, the power generator is also a nuisance. It must also be abated. 17
Petitioner SMART Communications Inc., thru counsel, respectfully manifests that:
1. There is no need for a full-blown trial as the causes of action and issues have already been identified in all
the pleadings submitted to this Honorable court by both respondents and petitioner
2. There is clearly no genuine issue as to any material fact or cause in the action.
3. There is no extreme urgency to issue a Preliminary Mandatory Injunction as stated in an affidavit executed
by SMART Senior Supervisor Andres V. Romero in an affidavit hereto attached as Annex "A"
4. Petitioner seeks immediate declaratory relief from respondents contrived allegations as set forth in their
complaint;
Wherefore, it is most respectfully prayed of this Honorable Court that summary judgment be rendered
pursuant to Rule 35 of the Revised Rules of Court.11
Respondents filed their Pre-Trial Brief on September 21, 2000, proposing to limit the issues,
viz:
- Whether petitioners communications tower is a nuisance per se/per accidens and together with its standby
generator maybe abated for posing danger to the property and life and limb of the residents of Vira, Roxas,
Isabela more particularly the respondents and those whose houses are clustered around or in the periphery of
the cell site.
- Damages, attorneys fees, litigation expenses and other claims. 12
Respondents likewise filed on September 21, 2000 their Opposition to petitioners Motion for Summary
Judgment, maintaining that there were several genuine issues relating to the cause of action and material

On January 16, 2001, the RTC issued its Order granting petitioners Motion for Summary Judgment and
dismissing respondents Complaint. The RTC ruled as follows:
What is of prime importance is the fact that contrary to the respondents speculation, the radio frequency
radiation as found out by the Department of Health is much lower compared to that of TV and radio broadcast.
The respondents counter to this claim is that the Department of Health was misled. This is a mere conclusion
of the respondents.
The respondents in opposing the Smarts construction of their cellsite is anchored on the supposition that the
operation of said cellsite tower would pose a great hazard to the health of the alleged cluster of residents
nearby and the perceived danger that the said tower might also collapse in case of a strong typhoon that fell
the Mobiline Cellsite tower of Mobiline (sic). The structured built of the Smarts Cellsite tower is similar to that
of the Mobiline.
Now, as to the Courts assessment of the circumstances obtaining, we find the claim of the respondents to be
highly speculative, if not an isolated one. Elsewhere, we find several cellsite towers scattered (sic) allover,
both of the Smart, Globe, and others, nay even in thickly populated areas like in Metro Manila and also in key
cities nationwide, yet they have not been outlawed or declared nuisance as the respondents now want this
Court to heed. To the thinking of the Court, the respondents are harping imagined perils to their health for
reason only known to them perhaps especially were we to consider that the Brgy. Captain of Vira earlier gave
its imprimatur to this project. Noteworthy is the fact that the alleged cluster of residential houses that abut the
cellsite tower in question might be endangered thereby, the respondents are but a few of those residents. If
indeed, all those residents in Vira were adversely affected for the perceived hazards posed by the tower in
question, they should also have been joined in as respondents in a class suit. The sinister motive is perhaps
obvious.
All the foregoing reasons impel this Court to grant the petitioners motion for the dismissal of the complaint, the
perceived dangers being highly speculative without any bases in fact. Allegations in the complaint being more
imaginary than real, do not constitute factual bases to require further proceeding or a trial. As to the claim that
there is no certification or clearance from the DENR for the petitioner to lay in wait before the construction,
suffice it to say that no action as yet has been taken by said office to stop the ongoing operation of said cellsite
now in operation. There has been no hue and cry from among the greater majority of the people of Roxas,

Isabela, against it. Al contrario, it is most welcome to them as this is another landmark towards the progress of
this town.18

22.0 The Court of Appeals erred when it resolved an issue that was not submitted to it for resolution and in the
process had usurped a purely executive function.

The dispositive portion of the RTC Order reads:

23.0 The Court of Appeals erred in declaring Petitioners entire base station a nuisance considering that it was
only a small part of the base station, a generator that initially powered the base station, that was reportedly
producing unacceptable levels of noise.

WHEREFORE, in view of the foregoing considerations, the Court hereby renders judgment dismissing the
complaint as the allegations therein are purely speculative and hence no basis in fact to warrant further
proceedings of this case.
The Court finds no compelling grounds to award damages.

24.0 The Court of Appeals erred in not considering that the supervening event of shut down and pull out of the
generator in the base station, the source of the perceived nuisance, made the complaint for abatement of
nuisance academic.24

Respondents filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 71337.

The Petition is partly meritorious. While the Court agrees that the Court of Appeals should not have taken
cognizance of the issue of whether the locational clearance for petitioners cellular base station is valid, the
Court will still not reinstate the RTC Order dated January 16, 2001 granting petitioners Motion for Summary
Judgment and entirely dismissing Civil Case No. Br. 23-632-2000. The issues of (1) whether petitioners
cellular base station is a nuisance, and (2) whether the generator at petitioners cellular base station is, by
itself, also a nuisance, ultimately involve disputed or contested factual matters that call for the presentation of
evidence at a full-blown trial.

The Court of Appeals rendered its Decision on July 16, 2004. The appellate court declared the cellular base
station of petitioner a nuisance that endangered the health and safety of the residents of Barangay Vira,
Roxas, Isabela because: (1) the locational clearance granted to petitioner was a nullity due to the lack of
approval by majority of the actual residents of the

On the finding of the Court of

Appeals that petitioners locational
clearance for its cellular base station
is a nullity

barangay and a barangay resolution endorsing the construction of the cellular base station; and (2) the sound
emission of the generator at the cellular base station exceeded the Department of Environment and Natural
Resources (DENR) standards. Consequently, the Court of Appeals decreed:

Based on the principle of exhaustion of administrative remedies and its corollary doctrine of primary
jurisdiction, it was premature for the Court of Appeals to take cognizance of and rule upon the issue of the
validity or nullity of petitioners locational clearance for its cellular base station.

WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. A new one is entered declaring
the communications tower or base station of petitioner Smart Communications, Inc. located at Brigido Pascual
Street in Vira, Municipality of Roxas, Province of Isabela, a nuisance. Petitioner is ordered to cease and desist
from operating the said tower or station.21

The principle of exhaustion of administrative remedies and the doctrine of primary jurisdiction were explained
at length by the Court in Province of Zamboanga del Norte v. Court of Appeals, 25 as follows:

Without costs.19
In another Order20 dated February 27, 2001, the RTC denied respondents Motion for Reconsideration.

Petitioner filed its Motion for Reconsideration arguing that: (1) the basis for the judgment of the appellate court
that the cellular base station was a nuisance had been extinguished as the generator subject of the Complaint
was already removed; and (2) there had been substantial compliance in securing all required permits for the
cellular base station.22
The Court of Appeals, in a Resolution dated December 9, 2004,refused to reconsider its earlier Decision,
reasoning that:
Petitioner principally anchors its pleas for reconsideration on the Certification issued by Roxas, Isabela
Municipal Engineer Virgilio Batucal, declaring that upon actual inspection, no Denyo Generator Set has been
found in the companys cell site in Roxas, Isabela. We hold, however, that the certification dated August 12,
2004, taken on its own, does not prove Smarts allegation that it has abandoned using diesel- powered
generators since January 2002. Respondents current photographs of the cell site clearly shows (sic) that
Smart continues to use a mobile generator emitting high level of noise and fumes.
We have gone over [petitioners] other arguments and observed that they are merely repetitive of previous
contentions which we have judiciously ruled upon.23 (Citations omitted.)
Petitioner seeks recourse from the Court through the instant Petition, assigning the following errors on the part
of the Court of Appeals:
21.0 The Court of Appeals erred when it encroached upon an executive function of determining the validity of
a locational clearance when it declared, contrary to the administrative findings of the Housing Land Use and
Regulatory Board ("HLURB"), that the locational clearance of Petitioner was void.

The Court in a long line of cases has held that before a party is allowed to seek the intervention of the courts,
it is a pre-condition that he avail himself of all administrative processes afforded him. Hence, if a remedy within
the administrative machinery can be resorted to by giving the administrative officer every opportunity to decide
on a matter that comes within his jurisdiction, then such remedy must be exhausted first before the court's
power of judicial review can be sought. The premature resort to the court is fatal to one's cause of action.
Accordingly, absent any finding of waiver or estoppel, the case may be dismissed for lack of cause of action.
The doctrine of exhaustion of administrative remedies is not without its practical and legal reasons. Indeed,
resort to administrative remedies entails lesser expenses and provides for speedier disposition of
controversies. Our courts of justice for reason of comity and convenience will shy away from a dispute until the
system of administrative redress has been completed and complied with so as to give the administrative
agency every opportunity to correct its error and to dispose of the case.
xxxx
The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the authority to resolve a
controversy the jurisdiction over which is initially lodged with an administrative body of special competence.
We have held that while the administration grapples with the complex and multifarious problems caused by
unbridled exploitation of our resources, the judiciary will stand clear. A long line of cases establishes the basic
rule that the court will not interfere in matters which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under the special technical knowledge and training
of such agencies.
In fact, a party with an administrative remedy must not merely initiate the prescribed administrative procedure
to obtain relief, but also pursue it to its appropriate conclusion before seeking judicial intervention. The
underlying principle of the rule on exhaustion of administrative remedies rests on the presumption that when

the administrative body, or grievance machinery, is afforded a chance to pass upon the matter, it will decide
the same correctly. (Citations omitted.)

xxxx
h. Barangay Council Resolution endorsing the base station.

The Court again discussed the said principle and doctrine in Addition Hills Mandaluyong Civic & Social
Organization, Inc. v. Megaworld Properties & Holdings, Inc., et al., 26 citing Republic v. Lacap,27 to wit:
We have consistently declared that the doctrine of exhaustion of administrative remedies is a cornerstone of
our judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their
functions and discharge their responsibilities within the specialized areas of their respective competence. The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of
controversies. Comity and convenience also impel courts of justice to shy away from a dispute until the system
of administrative redress has been completed.
In the case of Republic v. Lacap, we expounded on the doctrine of exhaustion of administrative remedies and
the related doctrine of primary jurisdiction in this wise:

Correlatively, the HLURB provides administrative remedies for non-compliance with its requirements.
In 2000, when factual precedents to the instant case began to take place, HLURB Resolution No. R-586,
series of 1996, otherwise known as the 1996 HLURB Rules of Procedure, as amended, was in effect. The
original 1996 HLURB Rules of Procedure was precisely amended by HLURB Resolution No. R-655, series of
1999, "so as to afford oppositors with the proper channel and expeditious means to ventilate their objections
and oppositions to applications for permits, clearances and licenses, as well as to protect the rights of
applicants against frivolous oppositions that may cause undue delay to their projects. "Under the 1996 HLURB
Rules of Procedure, as amended, an opposition to an application for a locational clearance for a cellular base
station or a complaint for the revocation of a locational clearance for a cellular base station already issued, is
within the original jurisdiction of the HLURB Executive Committee. Relevant provisions read:

The general rule is that before a party may seek the intervention of the court, he should first avail of all the
means afforded him by administrative processes. The issues which administrative agencies are authorized to
decide should not be summarily taken from them and submitted to a court without first giving such
administrative agency the opportunity to dispose of the same after due deliberation.

RULE III

Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary jurisdiction; that is,
courts cannot or will not determine a controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact. (Citations omitted.)

xxxx

The Housing and Land Use Regulatory Board (HLURB)28 is the planning, regulatory, and quasi-judicial
instrumentality of government for land use development. 29 In the exercise of its mandate to ensure rational
land use by regulating land development, it issued HLURB Resolution No.R-626, series of 1998, Approving
the Locational Guidelines for Base Stations of Cellular Mobile Telephone Service, Paging Service, Trunking
Service, Wireless Loop Service and Other Wireless Communication Services (HLURB Guidelines). Said
HLURB Guidelines aim to protect" providers and users, as well as the public in general while ensuring efficient
and responsive communication services."

Commencement of Action, Summons and Answer

SECTION 2. Opposition to Application for Permit/License/ Clearance. When an opposition is filed to an

application for a license, permit or clearance with the Board or any of its Regional Field Office, the Regional
Officer shall make a preliminary evaluation and determination whether the case is impressed with significant
economic, social, environmental or national policy implications. If he/she determines that the case is so
impressed with significant economic, social, environmental or national policy implications, such as, but not
limited to:
1) Projects of national significance, for purposes of this rule, a project is of national significance if it is one or
falls under any of those enumerated in Rule III, Section 3 of these Rules, as amended;
2) Those involving zoning variances and exceptions;

Indeed, the HLURB Guidelines require the submission of several documents for the issuance of a locational
clearance for a cellular base station, including:

3) Those involving significant public interest or policy issues;

IV. Requirements and Procedures in Securing Locational Clearance

4) Those endorsed by the zoning administrators of local government units.

A. The following documents shall be submitted in duplicate:

The Regional Officer shall cause the records of the case to be transmitted to the Executive Committee which
shall assume original jurisdiction over the case, otherwise, the Regional Officer shall act on and resolve the
Opposition.

xxxx
g. Written Consent:
g.1 Subdivisions
xxxx
g. 1.2 In the absence of an established Homeowners Association, consent/affidavit of non-objection from
majority of actual occupants and owners of properties within a radial distance equivalent to the height of the
proposed base station measured from its base, including all those whose properties is adjoining the proposed
site of the base station.(Refer to Figure 2)

SECTION 3. A project is of national significance if it involves any of the following:

a) Power generating plants (e.g., coal-fired thermal plants)and related facilities (e.g., transmission lines);
b) Airport/seaports; dumping sites/sanitary landfills; reclamation projects;
c) Large-scale piggery and poultry projects;
d) Mining/quarrying projects;
e) National government centers;

f) Golf courses;
g) Fish ponds and aqua culture projects;
h) Cell sites and telecommunication facilities;
i) Economic zones, regional industrial centers, regional agro-industrial centers, provincial industrial centers;
j) All other industrial activities classified as high-intensity uses (1-3 Projects).
SECTION 4. Any party aggrieved, by reason of the elevation or non-elevation of any contested application by
the Regional Officer, may file a verified petition for review thereof within thirty (30) days from receipt of the
notice of elevation or non-elevation of the contested application with the Executive Committee which shall
resolve whether it shall assume jurisdiction thereon.
The contested application for clearance, permit or license shall be treated as a complaint and all other
provisions of these rules on complaints not inconsistent with the preceding section shall, as far as practicable,
be made applicable to oppositions except that the decision of the Board en banc on such contested
applications shall be final and executory as provided in Rule XIX, Section 2 of these Rules, as amended.

Committees Decision. Copy of such petition shall be furnished the other party and the Board of
Commissioners. No motion for reconsideration or mere notice of petition for review of the decision shall be
entertained.
Within ten (10) calendar days from receipt of the petition, the Regional Officer, or the Executive Committee, as
the case may be, shall elevate the records to the Board of Commissioner together with the summary of
proceedings before the Regional Office. The Petition for Review of a decision rendered by the Executive
Committee shall betaken cognizance of by the Board en banc.
RULE XVIII
Appeal from Board Decisions
SECTION 1.
Motion for Reconsideration. Within the period for filing an appeal from a Board decision, order or ruling of the
Board of Commissioners, any aggrieved party may file a motion for reconsideration with the Board only on the
following grounds: (1) serious errors of law which would result in grave injustice if not corrected; and (2) newly
discovered evidence.
Only one (1) motion for reconsideration shall be entertained.

The Rules pertaining to contested applications for license, permit or clearance shall, by analogy, apply to
cases filed primarily for the revocation thereof.

Motions for reconsideration shall be assigned to the division from which the decision, order or ruling
originated.

xxxx

SECTION 2. Appeal. Any party may upon notice to the Board and the other party appeal a decision rendered
by the Board of Commissioners en banc or by one of its divisions to the Office of the President within fifteen
(15) calendar days from receipt thereof, in accordance with P.D. No. 1344 and A.O. No. 18 Series of 1987.

RULE XVII
Proceedings Before the Board of Commissioners
xxxx
SECTION 15. The Executive Committee. The Executive Committee shall be composed of the four regular
Commissioners and the Ex-Officio Commissioner from the Department of Justice.
xxxx
The Executive Committee shall act for the Board on policy matters, measures or proposals concerning the
management and substantive administrative operations of the Board subject to ratification by the Board en
banc, and shall assume original jurisdiction over cases involving opposition to an application for license, permit
or clearance for projects or cases impressed with significant economic, social, environmental or national policy
implications or issues in accordance with Section 2, Rule II of these Rules, as amended. It shall also approve
the proposed agenda of the meetings of the Board en banc. (Emphases supplied.)
After the HLURB Executive Committee had rendered its Decision, the aggrieved party could still avail itself of
a system of administrative appeal, also provided in the 1996 HLURB Rules of Procedure, as amended:
RULE XII
Petition for Review
SECTION 1. Petition for Review. Any party aggrieved by the Decision of the Regional Officer, on any legal
ground and upon payment of the review fee may file with the Regional Office a verified Petition for Review of
such decision within thirty (30) calendar days from receipt thereof.
In cases decided by the Executive Committee pursuant to Rule II, Section 2 of these Rules, as amended, the
verified Petition shall be filed with the Executive Committee within thirty (30) calendar days from receipt of the

RULE XIX
Entry of Judgment
xxxx
SECTION 2. Rules on Finality. For purposes of determining when a decision or order has become final and
executory for purposes of entry in the Book of Judgment, the following shall be observed:
a. Unless otherwise provided in a decision or resolution rendered by the Regional Officer, the Executive
Committee, or the Board of Commissioners, as the case may be, the orders contained therein shall become
final as regards a party thirty (30) calendar days after the date of receipt thereof and no petition for review or
appeal therefrom has been filed within the said period. (Emphases supplied.)
There is no showing that respondents availed themselves of the afore-mentioned administrative remedies
prior to instituting Civil Case No. Br. 23-632-2000 before the RTC. While there are accepted exceptions to the
principle of exhaustion of administrative remedies and the doctrine of primary jurisdiction, 30 respondents never
asserted nor argued any of them. Thus, there is no cogent reason for the Court to apply the exceptions
instead of the general rule to this case.
Ordinarily, failure to comply with the principle of exhaustion of administrative remedies and the doctrine of
primary jurisdiction will result in the dismissal of the case for lack of cause of action. However, the Court herein
will not go to the extent of entirely dismissing Civil Case No. Br. 23-632-2000. The Court does not lose sight of
the fact that respondents Complaint in Civil Case No. Br. 23-632-2000 is primarily for abatement of nuisance;
and respondents alleged the lack of HLURB requirements for the cellular base station, not to seek nullification
of petitioners locational clearance, but to support their chief argument that said cellular base station is a
nuisance which needs to be abated. The issue of whether or not the locational clearance for said cellular base
station is valid is actually separate and distinct from the issue of whether or not the cellular base station is a
nuisance; one is not necessarily determinative of the other. While the first is within the primary jurisdiction of

the HLURB and, therefore, premature for the courts to rule upon in the present case, the latter is within the
jurisdiction of the courts to determine but only after trial proper.
On the declaration of the Court of
Appeals that petitioners cellular
base station is a nuisance that must
be abated
Article 694 of the Civil Code defines nuisance as:
ART. 694. A nuisance is any act, omission, establishment, business, condition of property, or anything else
which:
(1) Injures or endangers the health or safety of others; or
(2) Annoys or offends the senses; or
(3) Shocks, defies or disregards decency or morality; or
(4) Obstructs or interferes with the free passage of any public highway or street, or any body of water; or
(5) Hinders or impairs the use of property.
The term "nuisance" is so comprehensive that it has been applied to almost all ways which have interfered
with the rights of the citizens, either in person, property, the enjoyment of his property, or his comfort. 31
The Court, in AC Enterprises, Inc. v. Frabelle Properties Corporation, 32 settled that a simple suit for abatement
of nuisance, being incapable of pecuniary estimation, is within the exclusive jurisdiction of the RTC. Although
respondents also prayed for judgment for moral and exemplary damages, attorneys fees, and litigation
expenses, such claims are merely incidental to or as a consequence of, their principal relief.
Nonetheless, while jurisdiction over respondents Complaint for abatement of nuisance lies with the courts, the
respective judgments of the RTC and the Court of Appeals cannot be upheld.
At the outset, the RTC erred in granting petitioners Motion for Summary Judgment and ordering the dismissal
of respondents Complaint in Civil Case No. Br. 23-632-2000.
Summary judgments are governed by Rule 35 of the Rules of Court, pertinent provisions of which state:
SEC. 2. Summary judgment for defending party. A party against whom a claim, counterclaim, or cross-claim
is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits, depositions or
admissions for a summary judgment in his favor as to all or any part thereof.
SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten (10) days before the time
specified for the hearing. The adverse party may serve opposing affidavits, depositions, or admissions at least
three (3) days before the hearing. After the hearing, the judgment sought shall be rendered forthwith if the
pleadings, supporting affidavits, depositions, and admissions on file, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law. (Emphases supplied.)
In Rivera v. Solidbank Corporation,33 the Court discussed extensively when a summary judgment is proper:
For a summary judgment to be proper, the movant must establish two requisites: (a) there must be no genuine
issue as to any material fact, except for the amount of damages; and (b) the party presenting the motion for

summary judgment must be entitled to a judgment as a matter of law. Where, on the basis of the pleadings of
a moving party, including documents appended thereto, no genuine issue as to a material fact exists, the
burden to produce a genuine issue shifts to the opposing party. If the opposing party fails, the moving party is
entitled to a summary judgment.
A genuine issue is an issue of fact which requires the presentation of evidence as distinguished from an issue
which is a sham, fictitious, contrived or a false claim.
The trial court can determine a genuine issue on the basis of the pleadings, admissions, documents, affidavits
or counter affidavits submitted by the parties. When the facts as pleaded appear uncontested or undisputed,
then there is no real or genuine issue or question as to any fact and summary judgment called for. On the
other hand, where the facts pleaded by the parties are disputed or contested, proceedings for a summary
judgment cannot take the place of a trial. The evidence on record must be viewed in light most favorable to the
party opposing the motion who must be given the benefit of all favorable inferences as can reasonably be
drawn from the evidence.
Courts must be critical of the papers presented by the moving party and not of the papers/documents in
opposition thereto. Conclusory assertions are insufficient to raise an issue of material fact. A party cannot
create a genuine dispute of material fact through mere speculations or compilation of differences. He may not
create an issue of fact through bald assertions, unsupported contentions and conclusory statements. He must
do more than rely upon allegations but must come forward with specific facts in support of a claim. Where the
factual context makes his claim implausible, he must come forward with more persuasive evidence
demonstrating a genuine issue for trial. (Emphases supplied; citations omitted.)
Judging by the aforequoted standards, summary judgment cannot be rendered in this case as there are clearly
factual issues disputed or contested by the parties. As respondents correctly argued in their Opposition to
petitioners Motion for Summary Judgment:
1. Contrary to the claim of petitioner, there are several genuine issues as to the cause of action and material
facts related to the complaint. For one there is an issue on the structural integrity of the tower, the ultra high
frequency (UHF) radio wave emission radiated by the communications tower affecting the life, health and well
being of the[respondents] and the barangay residents, especially their children. Also, the noxious/deleterious
fumes and the noise produce[d] by the standby generator and the danger posted by the tower if it collapses in
regard to life and limb as well as the property of the [respondents] particularly those whose houses abut, or
are near/within the periphery of the communications tower. x x x 34
Likewise constituting real or genuine issues for trial, which arose from subsequent events, are the following:
whether the generator subject of respondents Complaint had been removed; whether said generator had
been replaced by another that produces as much or even more noise and fumes; and whether the generator is
a nuisance that can be abated separately from the rest of the cellular base station.
Furthermore, the Court demonstrated in AC Enterprises, Inc. the extensive factual considerations of a court
before it can arrive at a judgment in an action for abatement of nuisance:
Whether or not noise emanating from a blower of the air conditioning units of the Feliza Building is nuisance is
to be resolved only by the court in due course of proceedings.1wphi1 The plaintiff must prove that the noise
is a nuisance and the consequences thereof. Noise is not a nuisance per se. It may be of such a character as
to constitute a nuisance, even though it arises from the operation of a lawful business, only if it affects
injuriously the health or comfort of ordinary people in the vicinity to an unreasonable extent. Injury to a
particular person in a peculiar position or of especially sensitive characteristics will not render the noise an
actionable nuisance. In the conditions of present living, noise seems inseparable from the conduct of many
necessary occupations. Its presence is a nuisance in the popular sense in which that word is used, but in the
absence of statute, noise becomes actionable only when it passes the limits of reasonable adjustment to the
conditions of the locality and of the needs of the maker to the needs of the listener. What those limits are
cannot be fixed by any definite measure of quantity or quality; they depend upon the circumstances of the
particular case. They may be affected, but are not controlled, by zoning ordinances. The delimitation of
designated areas to use for manufacturing, industry or general business is not a license to emit every noise
profitably attending the conduct of any one of them.

The test is whether rights of property, of health or of comfort are so injuriously affected by the noise in question
that the sufferer is subjected to a loss which goes beyond the reasonable limit imposed upon him by the
condition of living, or of holding property, in a particular locality in fact devoted to uses which involve the
emission of noise although ordinary care is taken to confine it within reasonable bounds; or in the vicinity of
property of another owner who, though creating a noise, is acting with reasonable regard for the rights of those
affected by it.
Commercial and industrial activities which are lawful in themselves may become nuisances if they are so
offensive to the senses that they render the enjoyment of life and property uncomfortable. The fact that the
cause of the complaint must be substantial has often led to expressions in the opinions that to be a nuisance
the noise must be deafening or loud or excessive and unreasonable. The determining factor when noise alone
is the cause of complaint is not its intensity or volume. It is that the noise is of such character as to produce
actual physical discomfort and annoyance to a person of ordinary sensibilities, rendering adjacent property
less comfortable and valuable. If the noise does that it can well be said to be substantial and unreasonable in
degree, and reasonableness is a question of fact dependent upon all the circumstances and conditions. There
can be no fixed standard as to what kind of noise constitutes a nuisance.
The courts have made it clear that in every case the question is one of reasonableness. What is a reasonable
use of ones property and whether a particular use is an unreasonable invasion of anothers use and
enjoyment of his property so as to constitute a nuisance cannot be determined by exact rules, but must
necessarily depend upon the circumstances of each case, such as locality and the character of the
surroundings, the nature, utility and social value of the use, the extent and nature of the harm involved, the
nature, utility and social value of the use or enjoyment invaded, and the like.
Persons who live or work in thickly populated business districts must necessarily endure the usual
annoyances and of those trades and businesses which are properly located and carried on in the
neighborhood where they live or work. But these annoyances and discomforts must not be more than those
ordinarily to be expected in the community or district, and which are incident to the lawful conduct of such
trades and businesses. If they exceed what might be reasonably expected and cause unnecessary harm, then
the court will grant relief.
A finding by the LGU that the noise quality standards under the law have not been complied with is not a
prerequisite nor constitutes indispensable evidence to prove that the defendant is or is not liable for a
nuisance and for damages. Such finding is merely corroborative to the testimonial and/or other evidence to be
presented by the parties. The exercise of due care by the owner of a business in its operation does not
constitute a defense where, notwithstanding the same, the business as conducted, seriously affects the rights
of those in its vicinity.35(Citations omitted.)
A reading of the RTC Order dated January 16, 2001 readily shows that the trial court did not take into account
any of the foregoing considerations or tests before summarily dismissing Civil Case No. Br. 23-632-2000. The
reasoning of the RTC that similar cellular base stations are scattered in heavily populated areas nationwide
and are not declared nuisances is unacceptable. As to whether or not this specific cellular base station of
petitioner is a nuisance to respondents is largely dependent on the particular factual circumstances involved in
the instant case, which is exactly why a trial for threshing out disputed or contested factual issues is
indispensable. Evidently, it was the RTC which engaged in speculations and unsubstantiated conclusions.
For the same reasons cited above, without presentation by the parties of evidence on the contested or
disputed facts, there was no factual basis for declaring petitioner's cellular base station a nuisance and
ordering petitioner to cease and desist from operating the same.
Given the equally important interests of the parties in this case, i.e., on one hand, respondents' health, safety,
and property, and on the other, petitioner's business interest and the public's need for accessible and better
cellular mobile telephone services, the wise and prudent course to take is to remand the case to the RTC for
trial and give the parties the opportunity to prove their respective factual claims.
WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED. The Decision dated July
16, 2004 and Resolution dated December 9, 2004 of the Court of Appeals in CA-G.R. CV No. 71337 are
REVERSED and SET ASIDE. Let the records of the case be REMANDED to the Regional Trial Court, Branch
23, of Roxas, Isabela, which is DIRECTED to reinstate Civil Case No. Br. 23-632-2000 to its docket and
proceed with the trial and adjudication thereof with appropriate dispatch in accordance with this Decision.

SO ORDERED.
G.R. No. 166836

September 4, 2013

SAN MIGUEL PROPERTIES, INC., PETITIONER,

vs.
SEC. HERNANDO B. PEREZ, ALBERT C. AGUIRRE, TEODORO B. ARCENAS, JR., MAXY S. ABAD,
JAMES G. BARBERS, STEPHEN N. SARINO, ENRIQUE N. ZALAMEA, JR., MARIANO M. MARTIN,
ORLANDO O. SAMSON, CATHERINE R. AGUIRRE, AND ANTONIO V. AGCAOILI, RESPONDENTS.
DECISION
BERSAMIN, J.:
The pendency of an administrative case for specific performance brought by the buyer of residential
subdivision lots in the Housing and Land Use Regulatory Board (HLURB) to compel the seller to deliver the
transfer certificates of title (TCTs) of the fully paid lots is properly considered a ground to suspend a criminal
prosecution for violation of Section 25 of Presidential Decree No. 957 1 on the ground of a prejudicial question.
The administrative determination is a logical antecedent of the resolution of the criminal charges based on
non-delivery of the TCTs.
Antecedents
Petitioner San Miguel Properties Inc. (San Miguel Properties), a domestic corporation engaged in the real
estate business, purchased in 1992, 1993 and April 1993 from B.F. Homes, Inc. (BF Homes), then represented
by Atty. Florencio B. Orendain (Orendain) as its duly authorized rehabilitation receiver appointed by the
Securities and Exchange Commission (SEC),2 130 residential lots situated in its subdivision BF Homes
Paraaque, containing a total area of 44,345 square meters for the aggregate price of P106,248,000.00. The
transactions were embodied in three separate deeds of sale. 3 The TCTs covering the lots bought under the
first and second deeds were fully delivered to San Miguel Properties, but 20 TCTs covering 20 of the 41
parcels of land with a total area of 15,565 square meters purchased under the third deed of sale, executed in
April 1993 and for which San Miguel Properties paid the full price of P39,122,627.00, were not delivered to
San Miguel Properties.
On its part, BF Homes claimed that it withheld the delivery of the 20 TCTs for parcels of land purchased under
the third deed of sale because Atty. Orendain had ceased to be its rehabilitation receiver at the time of the
transactions after being meanwhile replaced as receiver by FBO Network Management, Inc. on May 17, 1989
pursuant to an order from the SEC.4
BF Homes refused to deliver the 20 TCTs despite demands. Thus, on August 15, 2000, San Miguel Properties
filed a complaint-affidavit in the Office of the City Prosecutor of Las Pias City (OCP Las Pias) charging
respondent directors and officers of BF Homes with non-delivery of titles in violation of Section 25, in relation
to Section 39, both of Presidential Decree No. 957 (I.S. No. 00-2256). 5
At the same time, San Miguel Properties sued BF Homes for specific performance in the HLURB (HLURB
Case No. REM-082400-11183),6 praying to compel BF Homes to release the 20 TCTs in its favor.
In their joint counter-affidavit submitted in I.S. No. 00-2256, 7 respondent directors and officers of BF Homes
refuted San Miguel Properties assertions by contending that: (a) San Miguel Properties claim was not legally
demandable because Atty. Orendain did not have the authority to sell the 130 lots in 1992 and 1993 due to his
having been replaced as BF Homes rehabilitation receiver by the SEC on May 17, 1989; (b) the deeds of sale
conveying the lots were irregular for being undated and unnotarized; (c) the claim should have been brought to
the SEC because BF Homes was under receivership; (d) in receivership cases, it was essential to suspend all
claims against a distressed corporation in order to enable the receiver to effectively exercise its powers free
from judicial and extra-judicial interference that could unduly hinder the rescue of the distressed company; and
(e) the lots involved were under custodia legis in view of the pending receivership proceedings, necessarily
stripping the OCP Las Pias of the jurisdiction to proceed in the action.

On October 10, 2000, San Miguel Properties filed a motion to suspend proceedings in the OCP Las
Pias,8 citing the pendency of BF Homes receivership case in the SEC. In its comment/opposition, BF Homes
opposed the motion to suspend. In the meantime, however, the SEC terminated BF Homes receivership on
September 12, 2000, prompting San Miguel Properties to file on October 27, 2000 a reply to BF Homes
comment/opposition coupled with a motion to withdraw the sought suspension of proceedings due to the
intervening termination of the receivership.9

11183 presented a prejudicial question that called for the suspension of the criminal action for violation of
Presidential Decree No. 957.

On October 23, 2000, the OCP Las Pias rendered its resolution, 10 dismissing San Miguel Properties criminal
complaint for violation of Presidential Decree No. 957 on the ground that no action could be filed by or against
a receiver without leave from the SEC that had appointed him; that the implementation of the provisions of
Presidential Decree No. 957 exclusively pertained under the jurisdiction of the HLURB; that there existed a
prejudicial question necessitating the suspension of the criminal action until after the issue on the liability of
the distressed BF Homes was first determined by the SEC en banc or by the HLURB; and that no prior resort
to administrative jurisdiction had been made; that there appeared to be no probable cause to indict
respondents for not being the actual signatories in the three deeds of sale.

From the foregoing, the conclusion that may be drawn is that the rule on prejudicial question generally applies
to civil and criminal actions only.

On February 20, 2001, the OCP Las Pias denied San Miguel Properties motion for reconsideration filed on
November 28, 2000, holding that BF Homes directors and officers could not be held liable for the non-delivery
of the TCTs under Presidential Decree No. 957 without a definite ruling on the legality of Atty. Orendains
actions; and that the criminal liability would attach only after BF Homes did not comply with a directive of the
HLURB directing it to deliver the titles.11
San Miguel Properties appealed the resolutions of the OCP Las Pias to the Department of Justice (DOJ), but
the DOJ Secretary denied the appeal on October 15, 2001, holding:
After a careful review of the evidence on record, we find no cogent reason to disturb the ruling of the City
Prosecutor of Las Pias City. Established jurisprudence supports the position taken by the City Prosecutor
concerned.
There is no dispute that aside from the instant complaint for violation of PD 957, there is still pending with the
Housing and Land Use Resulatory Board (HLURB, for short) a complaint for specific performance where the
HLURB is called upon to inquire into, and rule on, the validity of the sales transactions involving the lots in
question and entered into by Atty. Orendain for and in behalf of BF Homes.
As early as in the case of Solid Homes, Inc. vs. Payawal, 177 SCRA 72, the Supreme Court had ruled that the
HLURB has exclusive jurisdiction over cases involving real estate business and practices under PD 957. This
is reiterated in the subsequent cases of Union Bank of the Philippines versus HLURB, G.R. [No.] 953364,
June 29, 1992 and C.T. Torres Enterprises vs. Hilionada, 191 SCRA 286.
The said ruling simply means that unless and until the HLURB rules on the validity of the transactions
involving the lands in question with specific reference to the capacity of Atty. Orendain to bind BF Homes in
the said transactions, there is as yet no basis to charge criminally respondents for non-delivery of the subject
land titles. In other words, complainant cannot invoke the penal provision of PD 957 until such time that the
HLURB shall have ruled and decided on the validity of the transactions involving the lots in question.
WHEREFORE, the appeal is hereby DENIED.
SO ORDERED.12 (Emphasis supplied)

In its assailed decision promulgated on February 24, 2004 in C.A.-G.R. SP No. 73008, 14 the CA dismissed San
Miguel Properties petition, holding and ruling as follows:

However, an exception to this rule is provided in Quiambao vs. Osorio cited by the respondents. In this case,
an issue in an administrative case was considered a prejudicial question to the resolution of a civil case which,
consequently, warranted the suspension of the latter until after termination of the administrative proceedings.
Quiambao vs. Osorio is not the only instance when the Supreme Court relaxed the application of the rule on
prejudicial question.
In Tamin vs. CA involving two (2) civil actions, the Highest Court similarly applied the rule on prejudicial
question when it directed petitioner therein to put up a bond for just compensation should the demolition of
private respondents building proved to be illegal as a result of a pending cadastral suit in another tribunal.
City of Pasig vs. COMELEC is yet another exception where a civil action involving a boundary dispute was
considered a prejudicial question which must be resolved prior to an administrative proceeding for the holding
of a plebiscite on the affected areas.
In fact, in Vidad vs. RTC of Negros Oriental, Br. 42, it was ruled that in the interest of good order, courts can
suspend action in one case pending determination of another case closely interrelated or interlinked with it.
It thus appears that public respondent did not act with grave abuse of discretion x x x when he applied the rule
on prejudicial question to the instant proceedings considering that the issue on the validity of the sale
transactions x x x by x x x Orendain in behalf of BF Homes, Inc., is closely intertwined with the purported
criminal culpability of private respondents, as officers/directors of BF Homes, Inc., arising from their failure to
deliver the titles of the parcels of land included in the questioned conveyance.
All told, to sustain the petitioners theory that the result of the HLURB proceedings is not determinative of the
criminal liability of private respondents under PD 957 would be to espouse an absurdity. If we were to assume
that the HLURB finds BFHI under no obligation to delve the subject titles, it would be highly irregular and
contrary to the ends of justice to pursue a criminal case against private respondents for the non-delivery of
certificates of title which they are not under any legal obligation to turn over in the first place. (Bold emphasis
supplied)
On a final note, absent grave abuse of discretion on the part of the prosecutorial arm of the government as
represented by herein public respondent, courts will not interfere with the discretion of a public prosecutor in
prosecuting or dismissing a complaint filed before him. A public prosecutor, by the nature of his office, is under
no compulsion to file a criminal information where no clear legal justification has been shown, and no sufficient
evidence of guilt nor prima facie case has been established by the complaining party.
WHEREFORE, premises considered, the instant Petition for Certiorari and Mandamus is hereby DENIED. The
Resolutions dated 15 October 2001 and 12 July 2002 of the Department of Justice are AFFIRMED.

The DOJ eventually denied San Miguel Properties motion for reconsideration. 13
SO ORDERED. 15
Ruling of the CA
The CA denied San Miguel Properties motion for reconsideration on January 18, 2005. 16
Undaunted, San Miguel Properties elevated the DOJs resolutions to the CA on certiorari and mandamus
(C.A.-G.R. SP No. 73008), contending that respondent DOJ Secretary had acted with grave abuse in denying
their appeal and in refusing to charge the directors and officers of BF Homes with the violation of Presidential
Decree No. 957. San Miguel Properties submitted the issue of whether or not HLURB Case No. REM-082400-

Issues

Aggrieved, San Miguel Properties is now on appeal, raising the following for consideration and resolution, to
wit:
THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE ERRORS WHEN IT
DISMISSED PETITIONERS CERTIORARI AND MANDAMUS PETITION TO ORDER AND DIRECT
RESPONDENT SECRETARY TO INDICT RESPONDENTS FOR VIOLATION OF SECTION 25, PD. 957 IN
THAT:

Given its clear statutory mandate, the HLURBs decision to await for some forum to decide if ever one is
forthcoming the issue on the authority of Orendain to dispose of subject lots before it peremptorily resolves
the basic complaint is unwarranted, the issues thereon having been joined and the respective position papers
and the evidence of the parties having been submitted. To us, it behooved the HLURB to adjudicate, with the
usual dispatch, the right and obligation of the parties in line with its own appreciation of the obtaining facts and
applicable law. To borrow from Mabubha Textile Mills Corporation vs. Ongpin, it does not have to rely on the
finding of others to discharge this adjudicatory functions. 19

THE OBLIGATION OF PRIVATE RESPONDENTS TO DELIVER TO PETITIONER THE TITLES TO 20

FULLY-PAID LOTS IS MANDATED BY SECTION 25, PD 957. IN FACT, THE OFFICE OF THE PRESIDENT
HAD DULY CONFIRMED THE SAME PER ITS DECISION DATED 27 JANUARY 2005 IN O.P. CASE NO. 03E-203, ENTITLED "SMPI V. BF HOMES, INC.".

After its motion for reconsideration was denied, BF Homes appealed to the CA (C.A.-G.R. SP No. 83631),
raising as issues: (a) whether or not the HLURB had the jurisdiction to decide with finality the question of Atty.
Orendains authority to enter into the transaction with San Miguel Properties in BF Homes behalf, and rule on
the rights and obligations of the parties to the contract; and (b) whether or not the HLURB properly suspended
the proceedings until the SEC resolved with finality the matter regarding such authority of Atty. Orendain.

A FORTIORI, PRIVATE RESPONDENTS FAILURE AND/OR REFUSAL TO DELIVER TO PETITIONER THE

SUBJECT TITLES CONSTITUTES CRIMINAL OFFENSE PER SECTIONS 25 AND 39, PD 957 FOR WHICH
IT IS THE MINISTERIAL DUTY OF RESPONDENT SECRETARY TO INDICT PRIVATE RESPONDENTS
THEREFOR.

The CA promulgated its decision in C.A.-G.R. SP No. 83631, 20 decreeing that the HLURB, not the SEC, had
jurisdiction over San Miguel Properties complaint. It affirmed the OPs decision and ordered the remand of the
case to the HLURB for further proceedings on the ground that the case involved matters within the HLURBs
competence and expertise pursuant to the doctrine of primary jurisdiction, viz:

IN ANY EVENT, THE HLURB CASE DOES NOT PRESENT A "PREJUDICIAL QUESTION" TO THE
SUBJECT CRIMINAL CASE SINCE THE FORMER INVOLVES AN ISSUE SEPARATE AND DISTINCT FROM
THE ISSUE INVOLVED IN THE LATTER. CONSEQUENTLY, THE HLURB CASE HAS NO CORRELATION,
TIE NOR LINKAGE TO THE PRESENT CRIMINAL CASE WHICH CAN PROCEED INDEPENDENTLY
THEREOF.

[T]he High Court has consistently ruled that the NHA or the HLURB has jurisdiction over complaints arising
from contracts between the subdivision developer and the lot buyer or those aimed at compelling the
subdivision developer to comply with its contractual and statutory obligations.

IN FACT, THE CRIMINAL CULPABILITY OF PRIVATE RESPONDENTS EMANATE FROM THEIR MALA
PROHIBITA NON-DELIVERY OF THE TITLES TO TWENTY (20) FULLY-PAID PARCELS OF LAND TO
PETITIONER, AND NOT FROM THEIR NON-COMPLIANCE WITH THE HLURBS RULING IN THE
ADMINISTRATIVE CASE.
NONETHELESS, BY DECREEING THAT PETITIONERS CRIMINAL COMPLAINT IS PREMATURE, BOTH
THE COURT OF APPEALS AND RESPONDENT SECRETARY HAD IMPLIEDLY ADMITTED THE
EXISTENCE OF SUFFICIENT PROBABLE CAUSE AGAINST PRIVATE RESPONDENTS FOR THE CRIME
CHARGED.17
It is relevant at this juncture to mention the outcome of the action for specific performance and damages that
San Miguel Properties instituted in the HLURB simultaneously with its filing of the complaint for violation of
Presidential Decree No. 957. On January 25, 2002, the HLURB Arbiter ruled that the HLURB was inclined to
suspend the proceedings until the SEC resolved the issue of Atty. Orendains authority to enter into the
transactions in BF Homes behalf, because the final resolution by the SEC was a logical antecedent to the
determination of the issue involved in the complaint before the HLURB. Upon appeal, the HLURB Board of
Commissioners (HLURB Board), citing the doctrine of primary jurisdiction, affirmed the HLURB Arbiters
decision, holding that although no prejudicial question could arise, strictly speaking, if one case was civil and
the other administrative, it nonetheless opted to suspend its action on the cases pending the final outcome of
the administrative proceeding in the interest of good order.18

Hence, the HLURB should take jurisdiction over respondents complaint because it pertains to matters within
the HLURBs competence and expertise. The proceedings before the HLURB should not be suspended.
While We sustain the Office of the President, the case must be remanded to the HLURB. This is in recognition
of the doctrine of primary jurisdiction. The fairest and most equitable course to take under the circumstances is
to remand the case to the HLURB for the proper presentation of evidence. 21
Did the Secretary of Justice commit grave abuse of discretion in upholding the dismissal of San Miguel
Properties criminal complaint for violation of Presidential Decree No. 957 for lack of probable cause and for
reason of a prejudicial question?
The question boils down to whether the HLURB administrative case brought to compel the delivery of the
TCTs could be a reason to suspend the proceedings on the criminal complaint for the violation of Section 25 of
Presidential Decree No. 957 on the ground of a prejudicial question.
Ruling of the Court
The petition has no merit.
1.

Not content with the outcome, San Miguel Properties appealed to the Office of the President (OP), arguing
that the HLURB erred in suspending the proceedings. On January 27, 2004, the OP reversed the HLURB
Boards ruling, holding thusly:
The basic complaint in this case is one for specific performance under Section 25 of the Presidential Decree
(PD) 957 "The Subdivision and Condominium Buyers Protective."
As early as August 1987, the Supreme Court already recognized the authority of the HLURB, as successor
agency of the National Housing Authority (NHA), to regulate, pursuant to PD 957, in relation to PD 1344, the
real estate trade, with exclusive original jurisdiction to hear and decide cases "involving specific performance
of contractual and statutory obligation filed by buyers of subdivision lots against the owner, developer,
dealer, broker or salesman," the HLURB, in the exercise of its adjudicatory powers and functions, "must
interpret and apply contracts, determine the rights of the parties under these contracts and award[s] damages
whenever appropriate."

Action for specific performance, even if pending in the HLURB, an administrative agency, raises a prejudicial
question BF Homes posture that the administrative case for specific performance in the HLURB posed a
prejudicial question that must first be determined before the criminal case for violation of Section 25 of
Presidential Decree No. 957 could be resolved is correct.
A prejudicial question is understood in law to be that which arises in a case the resolution of which is a logical
antecedent of the issue involved in the criminal case, and the cognizance of which pertains to another tribunal.
It is determinative of the criminal case, but the jurisdiction to try and resolve it is lodged in another court or
tribunal. It is based on a fact distinct and separate from the crime but is so intimately connected with the crime
that it determines the guilt or innocence of the accused. 22 The rationale behind the principle of prejudicial
question is to avoid conflicting decisions. 23 The essential elements of a prejudicial question are provided in
Section 7, Rule 111 of the Rules of Court, to wit: (a) the previously instituted civil action involves an issue
similar or intimately related to the issue raised in the subsequent criminal action, and (b) the resolution of such
issue determines whether or not the criminal action may proceed.

The concept of a prejudicial question involves a civil action and a criminal case. Yet, contrary to San Miguel
Properties submission that there could be no prejudicial question to speak of because no civil action where
the prejudicial question arose was pending, the action for specific performance in the HLURB raises a
prejudicial question that sufficed to suspend the proceedings determining the charge for the criminal violation
of Section 2524 of Presidential Decree No. 957. This is true simply because the action for specific performance
was an action civil in nature but could not be instituted elsewhere except in the HLURB, whose jurisdiction
over the action was exclusive and original.25
The determination of whether the proceedings ought to be suspended because of a prejudicial question rested
on whether the facts and issues raised in the pleadings in the specific performance case were so related with
the issues raised in the criminal complaint for the violation of Presidential Decree No. 957, such that the
resolution of the issues in the former would be determinative of the question of guilt in the criminal case. An
examination of the nature of the two cases involved is thus necessary.
An action for specific performance is the remedy to demand the exact performance of a contract in the specific
form in which it was made, or according to the precise terms agreed upon by a party bound to fulfill
it.26 Evidently, before the remedy of specific performance is availed of, there must first be a breach of the
contract.27 The remedy has its roots in Article 1191 of the Civil Code, which reads:
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should
become impossible. x x x (Emphasis supplied)
Accordingly, the injured party may choose between specific performance or rescission with damages. As
presently worded, Article 1191 speaks of the remedy of rescission in reciprocal obligations within the context of
Article 1124 of the former Civil Code which used the term resolution. The remedy of resolution applied only to
reciprocal obligations, such that a partys breach of the contract equated to a tacit resolutory condition that
entitled the injured party to rescission. The present article, as in the former one, contemplates alternative
remedies for the injured party who is granted the option to pursue, as principal actions, either the rescission or
the specific performance of the obligation, with payment of damages in either case. 28
On the other hand, Presidential Decree No. 957 is a law that regulates the sale of subdivision lots and
condominiums in view of the increasing number of incidents wherein "real estate subdivision owners,
developers, operators, and/or sellers have reneged on their representations and obligations to provide and
maintain properly" the basic requirements and amenities, as well as of reports of alarming magnitude of
swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and
operators,29 such as failure to deliver titles to the buyers or titles free from liens and encumbrances.
Presidential Decree No. 957 authorizes the suspension and revocation of the registration and license of the
real estate subdivision owners, developers, operators, and/or sellers in certain instances, as well as provides
the procedure to be observed in such instances; it prescribes administrative fines and other penalties in case
of violation of, or non-compliance with its provisions.
Conformably with the foregoing, the action for specific performance in the HLURB would determine whether or
not San Miguel Properties was legally entitled to demand the delivery of the remaining 20 TCTs, while the
criminal action would decide whether or not BF Homes directors and officers were criminally liable for
withholding the 20 TCTs. The resolution of the former must obviously precede that of the latter, for should the
HLURB hold San Miguel Properties to be not entitled to the delivery of the 20 TCTs because Atty. Orendain did
not have the authority to represent BF Homes in the sale due to his receivership having been terminated by
the SEC, the basis for the criminal liability for the violation of Section 25 of Presidential Decree No. 957 would
evaporate, thereby negating the need to proceed with the criminal case.
Worthy to note at this juncture is that a prejudicial question need not conclusively resolve the guilt or
innocence of the accused. It is enough for the prejudicial question to simply test the sufficiency of the
allegations in the information in order to sustain the further prosecution of the criminal case. A party who raises
a prejudicial question is deemed to have hypothetically admitted that all the essential elements of the crime
have been adequately alleged in the information, considering that the Prosecution has not yet presented a
single piece of evidence on the indictment or may not have rested its case. A challenge to the allegations in

the information on the ground of prejudicial question is in effect a question on the merits of the criminal charge
through a non-criminal suit.30
2.
Doctrine of primary jurisdiction is applicable
That the action for specific performance was an administrative case pending in the HLURB, instead of in a
court of law, was of no consequence at all. As earlier mentioned, the action for specific performance, although
civil in nature, could be brought only in the HLURB. This situation conforms to the doctrine of primary
jurisdiction. There has been of late a proliferation of administrative agencies, mostly regulatory in function. It is
in favor of these agencies that the doctrine of primary jurisdiction is frequently invoked, not to defeat the resort
to the judicial adjudication of controversies but to rely on the expertise, specialized skills, and knowledge of
such agencies in their resolution. The Court has observed that one thrust of the proliferation is that the
interpretation of contracts and the determination of private rights under contracts are no longer a uniquely
judicial function exercisable only by the regular courts. 31
The doctrine of primary jurisdiction has been increasingly called into play on matters demanding the special
competence of administrative agencies even if such matters are at the same time within the jurisdiction of the
courts. A case that requires for its determination the expertise, specialized skills, and knowledge of some
administrative board or commission because it involves technical matters or intricate questions of fact, relief
must first be obtained in an appropriate administrative proceeding before a remedy will be supplied by the
courts although the matter comes within the jurisdiction of the courts. The application of the doctrine does not
call for the dismissal of the case in the court but only for its suspension until after the matters within the
competence of the administrative body are threshed out and determined. 32
To accord with the doctrine of primary jurisdiction, the courts cannot and will not determine a controversy
involving a question within the competence of an administrative tribunal, the controversy having been so
placed within the special competence of the administrative tribunal under a regulatory scheme. In that
instance, the judicial process is suspended pending referral to the administrative body for its view on the
matter in dispute. Consequently, if the courts cannot resolve a question that is within the legal competence of
an administrative body prior to the resolution of that question by the latter, especially where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience, and
services of the administrative agency to ascertain technical and intricate matters of fact, and a uniformity of
ruling is essential to comply with the purposes of the regulatory statute administered, suspension or dismissal
of the action is proper.33
3.
Other submissions of petitioner are unwarranted
It is not tenable for San Miguel Properties to argue that the character of a violation of Section 25 of
Presidential Decree No. 957 as malum prohibitum, by which criminal liability attached to BF Homes directors
and officers by the mere failure to deliver the TCTs, already rendered the suspension unsustainable. 34 The
mere fact that an act or omission was malum prohibitum did not do away with the initiative inherent in every
court to avoid an absurd result by means of rendering a reasonable interpretation and application of the
procedural law. Indeed, the procedural law must always be given a reasonable construction to preclude
absurdity in its application.35 Hence, a literal application of the principle governing prejudicial questions is to be
eschewed if such application would produce unjust and absurd results or unreasonable consequences.
San Miguel Properties further submits that respondents could not validly raise the prejudicial question as a
reason to suspend the criminal proceedings because respondents had not themselves initiated either the
action for specific performance or the criminal action.1wphi1 It contends that the defense of a prejudicial
question arising from the filing of a related case could only be raised by the party who filed or initiated said
related case.
The submission is unfounded. The rule on prejudicial question makes no distinction as to who is allowed to
raise the defense. Ubi lex non distinguit nec nos distinguere debemos. When the law makes no distinction, we
ought not to distinguish.36

WHEREFORE, the Court AFFIRMS the decision promulgated on February 24, 2004 by the Court of Appeals in
CA-G.R. SP NO. 73008; and ORDERS petitioner to pay the costs of suit.

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure of the
Decision[1] dated May 16, 2006 as well as the Resolution [2] dated October 5, 2006 of the Court of Appeals in
CA-G.R. CV No. 63439, entitled ADDITION HILLS MANDALUYONG CIVIC & SOCIAL ORGANIZATION INC.
vs. MEGAWORLD PROPERTIES & HOLDINGS, INC., WILFREDO I. IMPERIAL in his capacity as Director,
NCR, and HOUSING AND LAND USE REGULATORY BOARD, DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES. In effect, the appellate courts issuances reversed and set aside the
Decision[3] dated September 10, 1998 rendered by the Regional Trial Court (RTC) of Pasig City, Branch 158 in
Civil Case No. 65171.

SO ORDERED.

The facts of this case, as narrated in the assailed May 16, 2006 Decision of the Court of Appeals, are as
follows:
[Private respondent] MEGAWORLD was the registered owner of a parcel of land located along Lee
Street, Barangay Addition Hills, Mandaluyong City with an area of 6,148 square meters, more or less, covered
by Transfer Certificate of Title (TCT) No. 12768, issued by the Register of Deeds for Mandaluyong City.
Sometime in 1994, [private respondent] MEGAWORLD conceptualized the construction of a residential
condominium complex on the said parcel of land called the Wack-Wack Heights Condominium consisting of
a cluster of six (6) four-storey buildings and one (1) seventeen (17) storey tower.

ADDITION HILLS MANDALUYONG CIVIC & SOCIAL

ORGANIZATION, INC.,

G.R. No. 175039

Petitioner,
Present:

[Private respondent] MEGAWORLD thereafter secured the necessary clearances, licenses and
permits for the condominium project, including: (1) a CLV, issued on October 25, 1994, and a Development
Permit, issued on November 11, 1994, both by the [public respondent] HLURB; (2) an ECC, issued on March
15, 1995, by the Department of Environment and Natural Resources (DENR); (3) a Building Permit, issued on
February 3, 1995, by the Office of the Building Official of Mandaluyong City; and (4) a Barangay Clearance
dated September 29, 1994, from the office of the Barangay Chairman of Addition Hills.
Thereafter, construction of the condominium project began, but on June 30, 1995, the plaintiff-appellee
AHMCSO filed a complaint before the Regional Trial Court of Pasig City, Branch 158, docketed as Civil Case
No. 65171, for yo (sic) annul the Building Permit, CLV, ECC and Development Permit granted to
MEGAWORLD; to prohibit the issuance to MEGAWORLD of Certificate of Registration and License to Sell
Condominium Units; and to permanently enjoin local and national building officials from issuing licenses and
permits to MEGAWORLD.
On July 20, 1995, [private respondent] MEGAWORLD filed a Motion to Dismiss the case for lack of
cause of action and that jurisdiction over the case was with the [public respondent] HLURB and not with the
regular courts.

- versus -

On July 24, 1994, the RTC denied the motion to dismiss filed by [private respondent] MEGAWORLD.

Promulgated:
MEGAWORLD PROPERTIES & HOLDINGS, INC., WILFREDO I.
IMPERIAL, in his capacity as Director, NCR, and HOUSING AND
LAND USE REGULATORY BOARD, DEPARTMENT OF NATURAL
RESOURCES,

On November 15, 1995, pre-trial was commenced.

Thereafter, trial on the merits ensued.[4]

Respondents.
April 18, 2012

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION

On August 3, 1995, [private respondent] MEGAWORLD filed its Answer.

The trial court rendered a Decision dated September 10, 1998 in favor of petitioner, the dispositive portion of
which reads:
WHEREFORE, in view of the foregoing, the Certificate of Locational Viability, the Development Permit and the
Certificate of Registration and License to Sell Condominium Units, all issued by defendant Wilfredo I. Imperial,
National Capital Region Director of the Housing and Land Use Regulatory Boad (HLURB-NCR) are all
declared void and of no effect. The same goes for the Building Permit issued by defendant Francisco Mapalo
of Mandaluyong City. In turn, defendant Megaworld Properties and Holdings Inc. is directed to rectify its Wack

Wack Heights Project for it to conform to the requirements of an R-2 zone of Mandaluyong City and of the
Metro Manila Zoning Ordinance 81-01.

A. WHETHER OR NOT THE TRIAL COURT ERRED IN HOLDING THAT THE CLV WAS IMPROPERLY
AND IRREGULARLY ISSUED.

Costs against these defendants.[5]

1.
WHETHER OR NOT THE TRIAL COURT ERRED IN HOLDING THAT HLURB HAS NO POWER
TO GRANT AN EXCEPTION OR VARIANCE TO REQUIREMENTS OF METRO MANILA COMMISSION
ORDINANCE NO. 81-01.

Private respondent appealed to the Court of Appeals which issued the assailed May 16, 2006 Decision which
reversed and set aside the aforementioned trial court ruling, the dispositive portion of which reads:
WHEREFORE, premises considered, the September 10, 1998 Decision of the Regional Trial Court of Pasig
City, Branch 158, rendered in Civil Case No. 65171 is hereby REVERSED and SET ASIDE and a new one
entered DISMISSING the complaint.[6]
As can be expected, petitioner moved for reconsideration; however, the Court of Appeals denied the motion in
its assailed October 5, 2006 Resolution.
Hence, the petitioner filed the instant petition and submitted the following issues for consideration:
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT FOUND THAT PETITIONER FAILED TO
EXHAUST ADMINISTRATIVE REMEDIES BEFORE SEEKING JUDICIAL INTERVENTION FROM THE
COURTS.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT FOUND THAT THE CASE FILED
BEFORE AND DECIDED BY THE REGIONAL TRIAL COURT OF PASIG, BRANCH 158, DOES NOT FALL
UNDER ANY ONE OF THE EXCEPTIONS TO THE RULE ON EXHAUSTION OF ADMINISTRATIVE
REMEDIES.

2.
WHETHER OR NOT THE TRIAL COURT ERRED IN HOLDING THAT THE PROJECT DID NOT
MEET THE REQUIREMENTS OF SECTION 3(B), ARTICLE VII OF METRO MANILA COMMISSION
ORDINANCE NO. 81-01 TO QUALIFY FOR AN EXCEPTION OR DEVIATION.
B. WHETHER OR NOT THE TRIAL COURT ERRED IN HOLDING THAT THE DEVELOPMENT PERMIT
WAS IMPROPERLY AND IRREGULARLY ISSUED.
C. WHETHER OR NOT THE TRIAL COURT ERRED IN HOLDING THAT THE PROJECT DEPRIVES THE
ADJACENT PROPERTIES OF AIR.[9]
We find the petition to be without merit.
At the outset, the parties in their various pleadings discuss issues, although ostensibly legal, actually require
the Court to make findings of fact. It is long settled, by law and jurisprudence, that the Court is not a trier of
facts.[10] Therefore, the only relevant issue to be resolved in this case is whether or not the remedy sought by
the petitioner in the trial court is in violation of the legal principle of the exhaustion of administrative remedies.

WHETHER OR NOT THE COURT OF APPEALS (The Court) ERRED WHEN IT FOUND THAT PETITIONER
FAILED TO EXHAUST ADMINISTRATIVE REMEDIES BEFORE SEEKING JUDICIAL INTERVENTION FROM
THE COURTS.

We have consistently declared that the doctrine of exhaustion of administrative remedies is a cornerstone of
our judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their
functions and discharge their responsibilities within the specialized areas of their respective competence. The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of
controversies. Comity and convenience also impel courts of justice to shy away from a dispute until the
system of administrative redress has been completed.[11]

WHETHER OR NOT THE COURT OF APPEALS (The Court) ERRED WHEN IT CONCLUDED THAT THE
HLURB HAD JURISDICTION OVER ACTIONS TO ANNUL CERTIFICATES OF LOCATIONAL VIABILITY
AND DEVELOPMENT PERMITS.[7]

In the case of Republic v. Lacap,[12] we expounded on the doctrine of exhaustion of administrative remedies
and the related doctrine of primary jurisdiction in this wise:

On the other hand, private respondent put forth the following issues in its Memorandum [8]:
I
WHETHER OR NOT THE PETITION FOR REVIEW IS FATALLY DEFECTIVE FOR BEING IMPROPERLY
VERIFIED.
II
WHETHER OR NOT THE COURT OF APPEALS CORRECTLY ANNULLED AND SET ASIDE THE TRIAL
COURTS DECISION AND DISMISSED THE COMPLAINT FOR PETITIONERS FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES.
III
WHETHER OR NOT THE DECISION OF THE TRIAL COURT IS CONTRARY TO LAW AND THE FACTS.

The general rule is that before a party may seek the intervention of the court, he should first avail of all the
means afforded him by administrative processes. The issues which administrative agencies are authorized to
decide should not be summarily taken from them and submitted to a court without first giving such
administrative agency the opportunity to dispose of the same after due deliberation.
Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary jurisdiction; that is,
courts cannot or will not determine a controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience and
services of the administrative tribunal to determine technical and intricate matters of fact. [13]
It is true that the foregoing doctrine admits of exceptions, such that in Lacap, we also held:
Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary doctrine of primary
jurisdiction, which are based on sound public policy and practical considerations, are not inflexible
rules. There are many accepted exceptions, such as: (a) where there is estoppel on the part of the party
invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of
jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the
complainant; (d) where the amount involved is relatively small so as to make the rule impractical and
oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the courts
of justice; (f) where judicial intervention is urgent; (g) when its application may cause great and irreparable

damage; (h) where the controverted acts violate due process; (i) when the issue of non-exhaustion of
administrative remedies has been rendered moot; (j) when there is no other plain, speedy and adequate
remedy; (k) when strong public interest is involved; and, (l) in quo warranto proceedings. x x x.[14]
Upon careful consideration of the parties contentions, we find that none of the aforementioned exceptions
exist in the case at bar.
What is apparent, however, is that petitioner unjustifiably failed to exhaust the administrative remedies
available with the Housing and Land Use Regulatory Board (HLURB) before seeking recourse with the trial
court. Under the rules of the HLURB which were then in effect, particularly Sections 4 and 6 of HLURB
Resolution No. R-391, Series of 1987 (Adopting the 1987 Rules of Procedure of the Housing and Land Use
Regulatory Board),[15] a complaint to annul any permit issued by the HLURB may be filed before the Housing
and Land Use Arbiter (HLA). Therefore, petitioners action to annul the Certificate of Locational Viability (CLV)
and the Development Permit issued by the HLURB on October 25, 1994 and November 11, 1994,
respectively, in favor of private respondent for its Wack-Wack Heights Condominium Project should have been
properly filed before the HLURB instead of the trial court.
We quote with approval the Court of Appeals discussion of this matter:
In the case at bar, plaintiff-appellee AHMCSO failed to exhaust the available administrative remedies before
seeking judicial intervention via a petition for annulment. The power to act as appellate body over decisions
and actions of local and regional planning and zoning bodies and deputized official of the board was retained
by the HLURB and remained unaffected by the devolution under the Local Government Code.
Under Section 5 of Executive Order No. 648, series of 1981, the Human Settlement Regulatory Commission
(HSRC) later renamed as Housing and Land Use Regulatory Board (HLURB), pursuant to Section 1(c) of
Executive Order No. 90, series of 1986, has the power to:
f) Act as the appellate body on decisions and actions of local and regional planning and zoning bodies of the
deputized officials of the Commission, on matters arising from the performance of these functions.
In fact, Section 4 of E.O. No. 71 affirms the power of the HLURB to review actions of local government units
on the issuance of permits
Sec. 4. If in the course of evaluation of application for registration and licensing of projects within its
jurisdiction, HLURB finds that a local government unit has overlooked or mistakenly applied a certain law, rule
or standard in issuing a development permit, it shall suspend action with a corresponding advice to the local
government concerned, so as to afford it an opportunity to take appropriate action thereon. Such return and
advice must likewise be effected within a period of thirty (30) days from receipt by HLURB of the application.

Under the rules of the HLURB then prevailing at the time this case was filed, a complaint to annul any
permit issued by the HLURB may be filed before the Housing and Land Use Arbiter (HLA). The
decision of the HLA may be brought to the Board of Commissioners by Petition for Certiorari and the
decision of the Board of Commissioners [is] appealable to the Office of the President.[16](Citations
omitted; emphases supplied.)
It does not escape the attention of the Court that in its Reply, petitioner admitted that it had a pending
complaint with the HLURB involving private respondents the Development Permit, the Certificate of
Registration and License to Sell Condominium Units, aside from complaints with the Building Official of the
Municipality (now City) of Mandaluyong and the MMDA, when it instituted its action with the trial court. As
discussed earlier, a litigant cannot go around the authority of the concerned administrative agency and directly
seek redress from the courts. Thus, when the law provides for a remedy against a certain action of an
administrative board, body, or officer, relief to the courts can be made only after exhausting all remedies
provided therein. It is settled that the non-observance of the doctrine of exhaustion of administrative remedies
results in lack of cause of action, which is one of the grounds in the Rules of Court justifying the dismissal of
the complaint.[17]
In view of the foregoing discussion, we find it unnecessary to resolve the other issues raised by the parties.
To conclude, it is our view that the Court of Appeals committed no reversible error in setting aside the trial
court decision and dismissing said complaint.
WHEREFORE, premises considered, the petition is hereby DENIED. The assailed Decision dated May 16,
2006 and the Resolution dated October 5, 2006 of the Court of Appeals in CA-G.R. CV No. 63439
are AFFIRMED.
SO ORDERED.
G.R. No. 80879 March 21, 1988
HONORIO SAAVEDRA, JR., ESTER SAAVEDRA, CESAR SAAVEDRA, & ROEL BEJASA, petitioners,
vs.
SECURITIES & EXCHANGE COMMISSION, GREGORIO RAMOS, NAPOLEN RAMOS, CELSO
TINGCUNGCO, ARMANDO DOMINGO & CAROLINA SEBASTIAN, respondents.
RESOLUTION

Moreover, Section 18 and 19 of HSRC Administrative Order No. 20 provides:

PADILLA, J.:

Section 18. Oppossition to Application. Opposition to application shall be considered as a complaint, the
resolution of which shall be a prerequisite to any action on the application. Complaints and other legal
processes shall be governed by the Rules of Procedure of the Commission, and shall have the effect of
suspending the application.

The petitioners seek the reversal and/or setting aside of SEC orders dated 23 November 1987 and 11
December 1987 and other orders issued in Securities and Exchange Commission 'hereinafter, SEC) Case No.
3257 entitled "Gregorio Ramos. et al., vs. Honorio Saavedra, et al." Petitioners likewise seek to prohibit the
SEC from proceeding with said case.

Section 19. Complaints/Opposition Filed After the Issuance of Locational Clearance. Temporary issuance of
locational permit or land transaction approval shall be acted upon by the Office that issued the same. Such
complaint shall not automatically suspend the locational clearance, temporary use permit, development permit
or land transaction approval unless an order issued by the commission to that effect.

It appears that, on 20 November 1987, private respondents Id the above-mentioned case with the SEC,
alleging in then amended complaint that, on or above 2 July 1981, private respondents sold all their stocks,
lights and interests in Philippine Inc. to petitioners for the sum of P12 million payable in installments; that the
sale was evidenced by a Memorandum of Agreement and a Deed of Assignment, whereby under the former,
the parties agreed that the sale agreement would automatically be rescinded upon failure on the part of
petitioners to pay any amount due; that petitioners failed to pay the last sum due on the scheduled date, so
that private respondents rescinded the sale under an instrument, Rescission of Memorandum of Agreement.
Private respondents prayed, among others, that said instrument of rescission be declared as having been
made and executed -in accordance with law and that a Temporary Restraining Order be issued to enjoin
petitioners from ... "committing acts of disposal of the Company assets, merchandise stocks, equipment's,
machineries and other company paraphernalia."

The appropriate provisions of the Rules of Procedure governing hearings before the Commission shall be
applied in the resolution of said complaint as well as any motion for reconsideration that may be filed thereto,
provided that if the complaint is directed against the certificate of zoning compliance issued by the deputized
zoning administrator, the same shall be acted upon the Commissioner in Charge for adjudication.

As prayed for, the respondent SEC issued a Temporary Restraining Order on 23 November 1987.
On 2 December 1987, petitioners filed a Motion to Dismiss, alleging lack of jurisdiction over the case on the
part of the SEC. Private respondents opposed said Motion to Dismiss.
On 11 December 1987, the SEC issued an order denying the Motion to Dismiss.

In cases involving specialized disputes, the trend has been to refer the same to an administrative agency of
special competence. As early as 1954, the Court in Pambujan Sur United Mine Workers vs. Samar Mining Co.
Inc.3 held that under the sense-making and expeditious doctrine of primary jurisdiction " ... the courts cannot or
will not determine a controversy involving a question which is within the jurisdiction of the administrative
tribunal prior to the decision of that question by the administrative tribunal, where the question demands the
exercise of sound administrative discretion requiring the special knowledge, experience, and services of the
administrative tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential
to comply with the premises of the regulatory statute administered." Recently, this Court speaking thru Mr.
Chief Justice Claudio Teehankee said:

Hence, the present recourse by petitioners to this Court.

As aptly held by the SEC, the dispute at bar is an intra-corporate dispute that has arisen between and among
the principal stockholders of the corporation due to the refusal of the defendants (now petitioners) to fully
comply with what has been covenanted by the parties. Such dispute involves a controversy "between and
among stockholders,' specifically as to plaintiffs' right, as stockholders, over unpaid assignment of shares and
the validity of defendants' acquisition of the same. 1 In other words, the present case involves an intracorporate dispute as to who has the right to remain and act as owners-stockholders of the corporation.
Pursuant to PD No. 902-A, as amended, particularly Section 5(b) thereof, the primary and exclusive
jurisdiction over the present case properly belongs to the SEC. The pertinent provision reads:

In this era of clogged court dockets, the need for specialized administrative boards or commissions with the
special knowledge. experience and capability to hear and determine promptly disputes on technical matters or
essentially factual matters, subject to judicial review in case of grave abuse of discretion, has become well
nigh indispensable. 4
WHEREFORE. The petition is hereby DISMISSED. Without costs.
SO ORDERED.

SEC. 5. In addition to the regulatory and adjudicative function of the Securities and Exchange Commission
over corporations, partnership and other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:
5(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders,
members, or associates; between any and/or all of them and the corporation, partnership or association of
which they are stockholders, members or associates, respectively; and between such corporation, partnership
or association and the state insofar as it concerns their individual franchise or right to exist as such entity; ...
In Abejo vs. de la Cruz, 2 citing Philex Mining Corporation vs. Reyes, the Court held that "an intra-corporate
controversy is one which arises between stockholder and the corporation. There is no distinction, qualification,
nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between
stockholders and corporations."
In the same case of Abejo vs. de la Cruz, the Court expounded on the expanded jurisdiction of the SEC in line
with the government's policy of encouraging investments, and more active public participation in the affairs of
private corporations and enterprises through which desirable activities may be pursued for the promotion of
economic development, and to promote a wider and more meaningful equitable distribution of wealth. The
expanded jurisdiction of SEC includes absolute jurisdiction, supervision and control over all corporations,
partnerships or associations, who are the grantees of primary franchise and/or a license or permit issued by
the government to operate in the Philippines (Sec. 3, PD 902-A as amended); ... and, in addition to its
regulatory and adjudicative functions over corporations, partnerships and other forms of associations
registered with it as expressly granted under laws and decrees, original and exclusive jurisdiction to hear and
decide cases involving:
a) Devices or schemes employed by or any acts, of the board of directors, business associations, its officers
or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public
and/or of the stockholders, partners, members of associations or organizations registered with the
Commission.
b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders,
members, or associates; between any and/or all of them and the corporation, partnership or association of
which they are stockholders, members or associates, respectively; and between such corporation, partnership
or association and the state insofar as it concerns their individual franchise or right to exist sa such entity;
c) Controversies in the election or appointments of directors, trustees, officers or managers of such
corporations, partnerships or associations.

G.R. No. L-47051 July 29, 1988

BLUE BAR COCONUT PHILIPPINES; CAGAYAN DE ORO OIL CO; CENTRAL VEGETABLE OIL
MANUFACTURING CO.; COCONUT OIL MANUFACTURING (PHIL.) INC., GRANE EXPORT
CORPORATION; IMPERIAL VEGETABLE OIL CO., INTERNATIONAL OIL FACTORY; LEGASPI OIL CO.,
INC.; LIBERTY OIL FACTORY; LUCENA OIL FACTORY, INC., AND 14 OTHER
CORPORATIONS, petitioners,
vs.
THE HONORABLE FRANCISCO S. TANTUICO, JR., Acting Chairman of the Commission on Audit; and
DR. GREGORIO YU, Auditor of the Philippine Coconut Authority, respondents.
Teodulo R. Dino and Quiason, De Guzman, Makalintal, & Barot for petitioners.

GUTIERREZ, JR., J.:

This is a petition for certiorari, prohibition and mandamus with preliminary mandatory injunction to annul
certain actions of respondents, the then Acting Chairman of the Commission on Audit and the Auditor of the
Philippine Coconut Authority (PCA) to prevent them from doing specified acts and to compel them to allow the
payment by the PCA of the petitioners' subsidy claims.
On June 30, 1973, the then President of the Philippines issued Presidential Decree No. 232 creating a
Philippine Coconut Authority, with a governing board of eleven members, which was later reduced to nine by
Presidential Decree No. 271 and finally to only seven by Presidential Decree No. 623.
On August 20, 1973, the President issued Presidential Decree No. 276 establishing a coconut stabilization
fund. Under this decree, the Philippine Coconut Authority, in addition to its powers granted under Presidential
Decree No. 232, was authorized to formulate and immediately implement a stabilization scheme for coconutbased consumer goods, along the following general guidelines:

a) A levy, initially, of P15.00 per 100 kilograms of copra resecada or its equivalent in other coconut products,
shall be imposed on every first sale, in accordance with the mechanics established under R.A. 6260, effective
at the start of business hours on August 10, 1973.
The proceeds from the levy shall be deposited with the Philippine National Bank or any other to government
bank the account of the Coconut Consumers Stabilization Fund, as a separate trust fund which shall not form
part of the general fund of the government.
b) The Fund shall be utilized to subsidize the sale of coconut based products at prices set by the Price Control
Council, under rules and regulations to be promulgated by the Philippine Consumers Stabilization Committee.
(Section 1, subparagraphs a and b, P.D. 276).
Section I of the Rules and Regulations governing the collection and disposition of the Coconut Consumers
Stabilization Fund (CCSF) promulgated by the Coconut Consumer Stabilization Committee provides that the
collection of levy in every first sale of copra resecada or its equivalent in terms of whole nuts shall take effect
on August 10, 1973. Section 2 of the Rules also states:
Start of Collection. Starting Monday, August 20, 1973, all copra exporters, oil millers and desiccators
(hereinafter referred to as end-users) shall remit the collection of the levy to the Committee on the basis of
their receipt of delivery starting August 10, 1973 up to and including Friday August 17, 1973. Every Monday
thereafter, the end-user shall remit to the Committee all collections on their weekly receipt of deliveries from
Saturday through Friday. ...
Further, that contracts entered into on or before August 9, 1973 shall not be subject to levy;provided,
however, that balances undelivered to warehouses by September 10, 1973, and balances undelivered
shipside by September 30, 1973 of such contracts shall be subject to the levy (Annex "A" of petition)." (pp.
484-485, Rollo)
The petitioners are all end-users and as such, are levy-collectors and remitters.
On January 8, 1975, the Governing Board of the PCA issued Resolution No. 01-75 which reduced the rate of
levy from P70.00 to P40.00 per 100 kilograms of copra and P110.00 to P70.00 per metric ton of husked nuts.
The resolution was effective January 11, 1975.
In the meantime, on December 26, 1974, the President issued Presidential Decree No. 623 further amending
Presidential Decree No. 232, as amended, by reducing the number and changing the composition of the PCA
Governing Board to seven (7) members only.
On January 29, 1975, the same Governing Board of the PCA which issued the January 8, 1975 Resolution No.
01-75 issued Resolution No. 018-75 which deferred collection of the CCSF levies from the desiccated coconut
industry for a period not exceeding six (6) months.

were due to the Chairman's refusal to recognize the validity of the resolution passed in January 1975 by the
then Governing Board of the PCA.
A follow-up letter contesting the bases for the COA findings was sent by the petitioners to the respondent COA
Chairman on April 14,1977.
On March 11, 1977, PCA Administrator Luis R. Baltazar wrote the petitioners' counsel informing him that the
management of the PCA was willing to pay the disputed subsidy claims provided they are approved by the
representative of the Commission on Audit, herein respondent PCA Auditor.
The respondent PCA Auditor, however, refused to act on the matter on the ground that the petitioners' counsel
had already written the respondent Acting COA Chairman.
On April 4, 1977, the petitioners' counsel wrote respondent COA Chairman a letter stating their arguments
regarding the disputed subsidy claims.
On May 9, 1977, the petitioners' counsel wrote the respondent COA Chairman requesting early action on their
March 8, 1977 letter of reconsideration.
On July 15, 1977, the Chairman of the COA Issue Committee composed of the Philippine Coconut Oil
Producers Association, inc. (PCOPA) Coconut Oil Refiners Association (CORA), Association of Philippine
Coconut Desiccators (APCD), and Soap Detergent Association of the Philippines (SDAP) wrote a letter to PCA
Administrator Luis Baltazar requesting him to make representations with the COA to release the disputed
subsidy payments "pending resolution of the assessments" and proposing that they be allowed to put up an
appropriate bond equivalent to the amounts withheld. Baltazar indorsed the letter to the respondent COA
Chairman.
On August 24, 1977, the COA Chairman wrote PCA Administrator Baltazar that the COA had no objection to
the release of the subsidy payments pending final resolution of the issues involved in the claims provided that
the end-users posted a bond equal to the aggregate amount of the disputed claims, issued by a surety
company mutually acceptable to the COA and PCA and certified to be in good standing by the Insurance
Commission.
On September 5, 1977, the COA Chairman again wrote the PCA Administrator. In his letter, the COA Chairman
enumerated the following conditions under which the bonds to be posted by the coconut end-users companies
would be accepted:
a. That what will be covered by the bond shall pertain to the short levy relating to "ultra vires" void ab initio"
issued only. Deficiencies based on other reasons shall be settled immediately by direct payment to CCSF
or applying what has been withheld, if any.
b. That the amount of the bond shall be equivalent to the total short levy (not merely on the amounts withheld).

The reduced Governing Board of the PCA, constituted under PD No. 623, qualified only on February 26, 1975.
Sometime in 1976, the respondent Acting Chairman of the Commission on Audit initiated a special audit of
coconut end-user companies, which include herein petitioners, with respect to their Coconut Consumers
Stabilization Fund levy collections and the subsidies they had received. As a result of the initial findings of the
Performance Audit Office with respect only to the petitioners, respondent Acting COA Chairman directed the
Chairman, the Administrator, and the Military Supervisor of PCA and the Manager of the Coconut Consumers
Stabilization Fund, in various letters to them (Annexes G-2 H, I, J, L and N of petition) to collect the short
levies and overpaid subsidies, and to apply subsidy claims to the settlement of short levies should the
petitioners fail to remit the amount due.
Reacting to published reports in the issue of Bulletin Today dated March 5, 1977 regarding the above findings
of the respondent COA Chairman, the petitioners, as members of the Coconut Oil Refiners Association, Inc.,
and other allied associations, wrote on March 8, 1977 a letter to the said Chairman requesting reconsideration
of his action. The petitioners alleged that the supposed overpayments and/or deficiencies in their remittances

c. That the bond shall be issued by a surety company of good standing duly certified by the Insurance
Commissioner and acceptable to both the PCA and the COA.
d. That the bond shall have no expiry date but will be contingent upon the final decision of the issue by the
President of the Philippines.
e. That it shall be a condition in the bond that if the decision of the President is adverse to the coconut enduser companies, they shall unconditionally agree as principals to pay in cash immediately the full amount of
short levy.
f. That what has already been withheld as of July 13, 1977 and applied to the short levy shall not be refunded
the filing and approval of bond notwithstanding. (p. 34, Rollo)

A copy of the letter was sent to the United Coconut Association of the Philippines.
On September 20, 1977, the petitioners through the Chairman (COA Issue Committee,
SDAP/CORA/APCD/PCOPA) wrote the PCA Administrator informing him that in a meeting of all those
concerned, "it was the consensus that the terms and conditions set by Acting Chairman Tantuico are
unacceptable."
On the ground that their letter request for reconsideration dated March 8, 1977 was deemed denied by the
September 5, 1977 letter of the COA Chairman to PCA Administrator Baltazar, the petitioners instituted the
instant petition for certiorari, prohibition and mandamus with preliminary injunction.
The petitioners contend that the respondents, COA Acting Chairman Francisco Tantuico, Jr., and PCA Auditor
have absolutely no jurisdiction to--

Thereafter, the Solicitor General filed a motion praying that the matter in issue be remanded to the
Commission on Audit for appropriate action consistent with the intent behind PD No. 623 based on the
following ground:
xxx xxx xxx
After having been apprised by undersigned counsel that it was not the intention of the President of the
Philippines by the issuance of said P.D. No. 623 to abolish the Governing Board of the Philippine Coconut
Authority (PCA) as originally constituted but merely to reorganize it by including in its composition the required
management and financial expertise, and neither was it the intention to paralyze the conduct of PCA's
business and operations by rendering it without a Governing Board in the interim period, from the effectivity of
said P.D. No. 623 on December 26, 1974, until the formal organization on February 26, 1975 of the Board, as
reconstituted under said P.D. No. 623, the respondent Acting Chairman of the Commission on Audit informed
undersigned counsel that the Commission was reconsidering its earlier stand on the matter and that it would
take appropriate action in the premises consistent with its reconsidered position. (pp. 357-358, Rollo).

1. Assess the CCSF levy against petitioners and to make them personally liable for the payment thereof;
2. Cause the witholding of the payments of petitioner's subsidy reimbursement claims;
3. Set-off petitioners' subsidy reimbursement payments against alleged CCSF levy remittance shortages;
4. Institute a retention scheme of subsidy reimbursement claims which adversely affect even companies not
subject to levy;
5. Audit private corporations like petitioners;
6. Deny to the petitioners, in effect, their constitutional right to appeal to the Supreme Court an adverse
decision of the Commission on Audit. (p. 41, Rollo)
In a resolution dated August 2, 1978, the case was endorsed to the Court en banc which set the case for
hearing. However, before the actual hearing could be held, the Solicitor General filed a motion to cancel
hearing and suspend proceedings, stating:
This case is set for hearing on November 21, 1978 at 3:00 o'clock in the afternoon.
The principal issue in this case is whether, or not the two resolutions of the Philippine Coconut Authority
(Resolutions Nos. 01-75 and 018-75) issued by its governing board after December 26, 1974 when
Presidential Decree No. 623 was promulgated but before February 26, 1975 when the PCA Board was
formally reorganized under PD 623, are null and void, which issue is dependent on the intent behind said
Decree.

After considering the aforesaid motion and the petitioners comment that "instead of the case being remanded
to the Commission on Audit, the respondents just be given leave to take the "appropriate action," consistent
with the Presidential intent in enacting P.D. No. 623, they contemplate to do, and after the appropriate action
will have been taken by respondents, the parties shall submit to this Court the appropriate motion and
manifestation," as well as the reply of the respondents, we resolved to grant the motion. We directed the
Commission on Audit to review the matters raised in this case, to take appropriate action in the premises, and,
thereafter, to submit the appropriate action taken to the Court within thirty (30) days from notice of resolution.
The Solicitor General then filed a manifestation to the effect that:
xxx xxx xxx
2. In a Memorandum dated May 7, 1979, respondent Acting-Chairman of the Commission on Audit, thru the
Commission's General Counsel, directed the Corporate Auditor of the Philippine Coconut Authority "to release
the amount withheld from the subsidy claims of coconut end-user companies for their short levy deficiencies
as affected by the two resolutions in question," copy of which memorandum said respondent also furnished
the administrator of the Authority under a letter to him dated May 14, 1979.
3. The PCA Administrator had already ordered the department concerned to prepare the necessary vouchers.
For his part, the Auditor-in-Charge of the PCA informed the undersigned counsel that his office "would process
claims for the release of subsidy payments withheld" but that as of yesterday, May 31, 1979 "none has been
submitted for audit." He has, moreover, requested the proper officials of the COA Central Office to file
specimen signature cards with the PCA depository, United Coconut Planters Bank, since he anticipates that
the claims checks would, in some cases be beyond the counter-signing authority of the Resident Auditor." (pp.
374-375, Rollo).
xxx xxx xxx

The Solicitor General has consulted the President of the Philippines on the intent behind Presidential Decree
No. 623, which he has conveyed to the Commission on Audit, on the basis of which the Commission on Audit
is now reviewing the matter.
The undersigned counsel are therefore constrained to move, as they hereby move, that action on the instant
proceedings be suspended or held in abeyance until the COA shall have acted on the matter, which action the
undersigned counsel will bring to the Court's attention as soon as received, to aid the Court in the resolution of
this case. (pp. 345-346, Rollo).
The motion was granted. The petitioners had no objection but manifested that considering the length of time
that this case has been pending, the COA should be required to act and finish reviewing the matter within a
reasonable period of time.

The Solicitor General filed another manifestation that the petitioners have already started refiling their claims
and that about 50% of them had been/or are being processed by the Corporate Auditor's Office.
Because of the foregoing, the Solicitor General filed a motion to dismiss the petition giving two (2) grounds: (1)
the primary issue respecting the validity of the Resolutions Nos. 01-75 and 018-75 issued by the Governing
Board of the Philippine Coconut Authority is now moot and academic; and (2) the incidental issues are factual
in nature, the resolution of which requires presentation of evidence, and petitioners may file appropriate
pleadings with the Commission on Audit where they may adduce evidence relevant to the issues. The Solicitor
General manifested that on the basis of present evidence, or lack of it, the respondent COA Chairman is not in
a position to change his stand on the incidental issues.
It is to be noted that the petitioners opposed the motion to dismiss which was filed on the ground "that there
are no factual issues left. The remaining issues all revolve on the questionAfter the Philippine Coconut
Authoritythe authority vested by law to implement the stabilization scheme for the coconut industry under

P.D. 276, which includes the collection of the levy to support the Stabilization Fundhad acted, can the
Commission on Audit say that the rules and decisions of the PCA are erroneous and nullify them, to the
prejudice of petitioners who obediently complied with said rules and decisions?"

Undoubtedly, the issues raised involve both actual and legal considerations aside from requiring specialized
and technical knowledge.
As the Solicitor General observed:

The above issue was raised when the respondent COA Chairman disregarded the two resolutions (Resolution
Nos. 01-75 and 018-75) of the PCA Governing Board on the ground that the latter had no more authority to
issue such resolutions because of P.D. 623 which reduced the composition of the Governing Board. The
respondent COA Chairman contended that the questioned resolutions were ultra vires, hence cannot be
enforced. It was actually the refusal of the COA Chairman to recognize the two questioned resolutions which
led to the filing of this petition.
In short, whether or not the respondent COA Chairman was correct in disregarding the two resolutions of the
PCA Governing Board for being ultra vires is the main issue in this petition. This issue became academic when
the then President of the Philippines informed the Solicitor General that the Governing Board of the PCA
would continue to function until the formal organization of the new Governing Board. Following this ruling, the
respondent COA Chairman reconsidered his earlier stand and allowed the petitioners to get their subsidy
claims which he had earlier refused. In effect, the respondent COA Chairman eventually acknowledged the
validity of the two questioned PCA resolutions.
The issue, therefore, on whether or not the respondent COA Chairman may disregard the PCA rules and
decisions has become moot.
In their Comment to the motion of the Solicitor General praying that the matter in issue be remanded to the
Commission on Audit for appropriate action consistent with the aforementioned Presidential intent behind P.D.
623, and in their Memorandum, the petitioners listed the other issues involved in the petition as follows:
Whether or not the respondent Acting Chairman and respondent PCA Auditor acted without jurisdiction and/or
with grave abuse of discretion when they imposed the Coconut Consumers Stabilization Fund (CCFS) levy on
oral contracts which the PCA itself, the governemtn agency implementing P.D. 276, considered as exempt
because they were perfected prior to the levy;
Whether or not the respondents acted without jurisdiction and/or grave abuse of discretion in that they applied
and continued to apply the CCFS levy rate prevailing at the time of delivery, and refused to apply the rate
prevailing at the time of the perfection of the contract, as decided by PCA;
Whether or not the respondents acted without jurisdiction and/or with grave abuse of discretion when they
imposed the CCFS levy on a delivery under an exempt contract just because such delivery was slightly
delayed, whereas the PCA did not impose the levy under the circumstances in view of force majeure situation;
Whether or not the respondent Acting Chairman acted with lack of jurisdiction and/or with grave abuse of
discretion in disallowing the moisture content deduction on the ground that the moisture meter used by one of
the petitioners was not certified and in thus imposing the CCFS levy on such disallowed deduction, whereas
the PCA allowed the moisture content deduction and did not impose the levy on the ground that the
transaction was not the one contemplated in R.A. 1365, where a registered moisture meter is to be used;
Whether or not the respondent Acting Chairman acted without jurisdiction and/or grave abuse of discretion
when he declared that there were subsidy overpayments;
a) On deliveries beyond the allocation period, whereas delivery on these sales was authorized by the PCA
Military Supervisor, which authorization was approved by the Coconut Consumers Stabilization Committee,
such delivery beyond the allocation period being the practice; and because he insists that the settlement price
should be based on open market prices in all coconut trading areas, whereas the Price Settlement Committee
constituted by PCA, which is charged with the function of determining the settlement price, determines the
settlement price by considering the price in Metro Manila only, said practice having been adopted for reasons
of convenience and necessity; otherwise the PCA has to check the prices all over the Philippines." (pp. 360362, Rollo)

Not all the issues raised in the petition are purely legal. Thus, petitioners contend:
1. That respondents acted arbitrarily when they withheld 20% of subsidy reimbursement claims of petitioners
Liberty Oil Factory and Pacific Oil Products, Inc., since said petitioners were allegedly only refiners, and
therefore, not levy-remitters. The matter of whether or not said petitioners were only refiners is a question of
fact.
2. That respondents acted without jurisdiction and/or with grave abuse of discretion when they imposed levy
on alleged oral contracts which are exempt because the same were allegedly perfected prior to the imposition
of levy (pp. 60-61 of petition). Respondent COA Acting Chairman (thru his Audit Team) did not believe that
there were such oral contracts at all on or before August 9, 1973 on the sole basis of a purported certification
of the Manager of petitioner Royal Manufacturing Company, Inc., as to the existence of the alleged oral
contracts (pp. 6-7 of Annex G-2 of petition). Whether or not such alleged oral contracts really existed is a
question of fact that was likewise raised in petitioners' motion for reconsideration which should first be finally
resolved by respondents.
3. That respondents acted without jurisdiction and/or grave abuse of discretion when they imposed levy on a
delivery under an alleged exempt contract, "just because such delivery was slightly delayed" allegedly due to
"force majeure" (pp. 68-69 of petition). Whether or not the delay was really caused by "force
majeure" presents a factual issue.
4. That respondents acted without jurisdiction when they ruled that the settlement price of copra in some
provinces or places exceeds the open market price, which situation resulted in the overpayment of subsidy to
petitioners (pp. 74-75, Id.) Petitioners further contend that respondent COA Acting Chairman has no authority
to substitute his judgment on the settlement price since that is allegedly the sole prerogative of the Price
Settlement Committee constituted by PCA (pp. 74-75, Id.) But if this contention of petitioners is not upheld by
this Honorable Court, can this Honorable Court completely resolve the matter raised when there is no fact
admitted by the petitioners as to whether the settlement price of copra indeed exceeded the open market price
of the same and by how much? (pp. 490-491, Rollo)
It is readily apparent that we cannot resolve these is ues on the basis of what appears in this petition. There
must be substantial evidence on record from where the Court's conclusions may be drawn. As pointed out by
the Solicitor General, there are no established facts presented which are intimately related to the legal issues
raised by the petitioners. The well-settled principle is that this Court is not a trier of facts. "Its sole role is to
apply the law based on the findings of facts brought before it." (Aspacio v. Hon. Amado G. Inciong, et al. G.R.
No. L-49893, May 9,1988)
The petitioners also question the respondents' authority to audit them. They contend that they are outside the
ambit of respondents' "audit" power which is confined to government-owned or controlled corporations. This
argument has no merit. Section 2 (1) of Article IX-D of the Constitution provides that "The Commission on
Audit shall have the power, authority and duty to examine, audit, and settle all accounts pertaining to the
revenues and receipts of, and expenditures or uses of funds and property, owned or held in trust by or
pertaining to, the Government, or any of its subdivisions, agencies or instrumentalities, including governmentowned or controlled corporation with original charters, and on a post-audit basis. ... (d) such nongovernmental entities receiving subsidy or equity directly or indirectly from or through the Government which
are required by law or the granting institution to submit to such audit as a condition of subsidy or equity."
(Emphasis supplied) The Constitution formally embodies the long established rule that private entities who
handle government funds or subsidies in trust may be examined or audited in their handling of said funds by
government auditors.
In view of the above considerations, we apply the principle of primary jurisdiction:
In cases involving specialized disputes, the trend has been to refer the same to an administrative agency of
special competence. As early as 1954, the Court in Pambujan Sur United Mine Workers v. Samar Mining Co.,

Inc. (94 Phil. 932,941), held that under the sense-making and expeditious doctrine of primary jurisdiction ... the
courts cannot or will not determine a controversy involving a question which is within the jurisdiction of an
administrative tribunal prior to the decision of that question by the administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience, and
services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity of
ruling is essential to comply with the Purposes of the regulatory statute administered." Recently, this Court
specaking thru Mr. Chief Justice Claudio Teehankee said:
"In this era of clogged court dockets, the need for specialized administrative boards or commissions with the
special knowledge, experience and capability to hear and determine promptly disputes on technical matters or
essentially factual matters, subject to judicial review in case of grave abuse of discretion, has become well
nigh indispensable." (Abejo v. de la Cruz, 149 SCRA 654, 675). (Saavedra, Jr., et al. v. Securities and
Exchange Commission, et al., G.R. No. 80879, March 21, 1988)
It has also been the policy of the courts not to ignore or reject as incorrect the acts and determinations of
administrative agencies unless there is a clear showing of arbitrary action or palpable and serious error. Thus,
we ruled in the recent case of Beautifont, Inc., et. al. v. Court of Appeals, et al. (G.R. No. 50141, January
29,1988):

The Facts
On January 12, 1998, the Province of Aklan (petitioner) and Jody King Construction and Development Corp.
(respondent) entered into a contract for the design and -construction of the Caticlan Jetty Port and Terminal
(Phase I) in Malay, Aklan. The total project cost is P38,900,000: P 18,700,000 for the design and construction
of passenger terminal, and P20,200,000 for the design and construction of the jetty port facility.5 In the course
of construction, petitioner issued variation/change orders for additional works. The scope of work under these
change orders were agreed upon by petitioner and respondent. 6
On January 5, 2001, petitioner entered into a negotiated contract with respondent for the construction of
Passenger Terminal Building (Phase II) also at Caticlan Jetty Port in Malay, Aklan. The contract price for
Phase II is P2,475,345.54.7
On October 22, 2001, respondent made a demand for the total amount of P22,419,112.96 covering the
following items which petitioner allegedly failed to settle:
1. Unpaid accomplishments on additional works
undertaken - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 12,396,143.09

xxx xxx xxx

... The legal presumption is that official duty has been duly performed; (Sec. 5, m, 121 Rules of Court) and it is
"particularly strong as regards administrative agencies ...vested with powers said to be quasi-judicial in nature,
in connection with the enforcement of laws affecting particular fields of activity, the proper regulation and/or
promotion of which requires a technical or special training, aside from a good knowledge and grasp of the
overall conditions, relevant to said fields, containing in the nation (Pangasinan Transportation v. Public Utility
Commission, 70 Phil. 221). The consequent policy and practice underlying our Administrative Law is that
courts of justice should respect the findings of fact of said administrative agencies, unless there is absolutely
no evidence in support thereof or such evidence is clearly, manifestly and patently insubstantial (Heacock v.
NLU, 95 Phil. 553)." (Ganitano v. Secretary of Agriculture etc., 16 SCRA 543, citing Pajo v. Ago, G.R. No. L15414, June 30, 1960; see also, Central Bank v. Cloribel, 44 SCRA 307, 317; Macatangay vs. Sec. of Public
Works, 17 SCRA 31, citing Lovina v. Moreno, G.R. No. L-17821, Nov. 29,1963; Bachrach Transportation v.
Camunayan, 18 SCRA 920 citing cases: Santos v. Sec. of Public Works, 19 SCRA 637; Atlas Development
Corp. v. Gozon, 20 SCRA 886; Gravador v. Mamigo, 20 SCRA 742; Rio y Cia v. WCC, 20 SCRA 1196)."
In the case at bar, the petitioners have not shown through the laying down of concrete factual foundations that
the respondents' questioned acts were done with grave abuse of discretion amounting to lack of jurisdiction.
WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is hereby DISMISSED for lack of merit.
No costs.
SO ORDERED.
G.R. Nos. 197592 & 20262

November 27, 2013

2. Refund of taxes levied despite it not being

covered by original contract- - - - - - - - - - - - - - - - - - - - - - Php 884,098.59
3. Price escalation (Consistent with Section 7.5,
Original Contract- - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 1,291,714.98
4. Additional Labor Cost resulting [from]
numerous change orders issued sporadically - - - - - - - - Php 3,303,486.60
5. Additional Overhead Cost resulting [from]
numerous Orders issued sporadically - - - - - - - - - - - - - Php 1,101,162.60
6. Interest resulting [from] payment delays
consistent with Section 7.3.b of the Original
Contract - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 3,442,507.50. 8
On July 13, 2006, respondent sued petitioner in the Regional Trial Court (RTC) of Marikina City (Civil Case
No. 06-1122-MK) to collect the aforesaid amounts. 9 On August 17, 2006, the trial court issued a writ of
preliminary attachment.10
Petitioner denied any unpaid balance and interest due to respondent. It asserted that the sums being claimed
by respondent were not indicated in Change Order No. 3 as approved by the Office of Provincial Governor.
Also cited was respondents June 10, 2003 letter absolving petitioner from liability for any cost in connection
with the Caticlan Passenger Terminal Project.11

THE PROVINCE OF AKLAN, Petitioner,

vs.
JODY KING CONSTRUCTION AND DEVELOPMENT CORP., Respondent.

After trial, the trial court rendered its Decision12 on August 14, 2009, the dispositive portion of which reads:

DECISION

WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of plaintiff Jody King
Construction And Development Corporation and against defendant Province of Aklan, as follows:

VILLARAMA, JR., J.:

These consolidated petitions for review on certiorari seek to reverse and set aside the following: (1)
Decision1dated October 18, 2010 and Resolution 2 dated July 5, 2011 of the Court of Appeals (CA) in CA-G.R.
SP No. 111754; and (2) Decision3 dated August 31, 2011 and Resolution4 dated June 27, 2012 in CA-G.R. SP
No. 114073.

1. ordering the defendant to pay to the plaintiff the amount of Php7,396,143.09 representing the unpaid
accomplishment on additional works undertaken by the plaintiff;
2. ordering the defendant to refund to the plaintiff the amount of Php884,098.59 representing additional 2% tax
levied upon against the plaintiff;

3. ordering the defendant to pay to the plaintiff price escalation in the amount of Php1,291,714.98 pursuant to
Section 7.5 of the original contract;
4. ordering the defendant to pay to the plaintiff the amount of Php3,303,486.60 representing additional labor
cost resulting from change orders issued by the defendant;
5. ordering the defendant to pay to the plaintiff the sum of Php1,101,162.00 overhead cost resulting from
change orders issued by the defendant;
6. ordering the defendant to pay the sum of Php3,442,507.50 representing interest resulting from payment
delays up to October 15, 2001 pursuant to Section 7.3.b of the original contract;
7. ordering the defendant to pay interest of 3% per month from unpaid claims as of October 16, 2001 to date
of actual payment pursuant to Section 7.3.b[;]

By Decision dated October 18, 2010, the CAs First Division dismissed the petition in CA-G.R. SP No. 111754
as it found no grave abuse of discretion in the lower courts issuance of the writ of execution. Petitioner filed a
motion for reconsideration which was likewise denied by the CA. The CA stressed that even assuming as true
the alleged errors committed by the trial court, these were insufficient for a ruling that grave abuse of
discretion had been committed. On the matter of execution of the trial courts decision, the appellate court said
that it was rendered moot by respondents filing of a petition before the Commission on Audit (COA).
On August 31, 2011, the CAs Sixteenth Division rendered its Decision dismissing the petition in CA-G.R. SP
No. 114073. The CA said that petitioner failed to provide valid justification for its failure to file a timely motion
for reconsideration; counsels explanation that he believed in good faith that the August 14, 2009 Decision of
the trial court was received on September 25, 2009 because it was handed to him by his personnel only on
that day is not a justifiable excuse that would warrant the relaxation of the rule on reglementary period of
appeal. The CA also held that petitioner is estopped from invoking the doctrine of primary jurisdiction as it only
raised the issue of COAs primary jurisdiction after its notice of appeal was denied and a writ of execution was
issued against it.
The Cases

8. ordering the [defendant] to pay to the plaintiff the sum of Php500,000.00 as moral damages;
In G.R. No. 197592, petitioner submits the following issues:
9. ordering the defendant to pay to the plaintiff the sum of Php300,000.00 as exemplary damages;
I.
10. ordering the defendant to pay the plaintiff the sum of Php200,000.00, as and for attorneys fees; and
11. ordering the defendant to pay the cost of suit.
SO ORDERED.13
Petitioner filed its motion for reconsideration 14 on October 9, 2009 stating that it received a copy of the
decision on September 25, 2009. In its Order 15 dated October 27, 2009, the trial court denied the motion for
reconsideration upon verification from the records that as shown by the return card, copy of the decision was
actually received by both Assistant Provincial Prosecutor Ronaldo B. Ingente and Atty. Lee T. Manares on
September 23, 2009. Since petitioner only had until October 8, 2009 within which to file a motion for
reconsideration, its motion filed on October 9, 2009 was filed one day after the finality of the decision. The trial
court further noted that there was a deliberate attempt on both Atty. Manares and Prosecutor Ingente to
mislead the court and make it appear that their motion for reconsideration was filed on time. Petitioner filed a
Manifestation16 reiterating the explanation set forth in its Rejoinder to respondents comment/opposition and
motion to dismiss that the wrong date of receipt of the decision stated in the motion for reconsideration was
due to pure inadvertence attributable to the staff of petitioners counsel. It stressed that there was no intention
to mislead the trial court nor cause undue prejudice to the case, as in fact its counsel immediately corrected
the error upon discovery by explaining the attendant circumstances in the Rejoinder dated October 29, 2009.
On November 24, 2009, the trial court issued a writ of execution ordering Sheriff IV Antonio E. Gamboa, Jr. to
demand from petitioner the immediate payment of P67,027,378.34 and tender the same to the respondent.
Consequently, Sheriff Gamboa served notices of garnishment on Land Bank of the Philippines, Philippine
National Bank and Development Bank of the Philippines at their branches in Kalibo, Aklan for the satisfaction
of the judgment debt from the funds deposited under the account of petitioner. Said banks, however, refused
to give due course to the court order, citing the relevant provisions of statutes, circulars and jurisprudence on
the determination of government monetary liabilities, their enforcement and satisfaction. 17
Petitioner filed in the CA a petition for certiorari with application for temporary restraining order (TRO) and
preliminary injunction assailing the Writ of Execution dated November 24, 2009, docketed as CA-G.R. SP No.
111754.

WHETHER OR NOT THE DECISION DATED 14 AUGUST 2009 RENDERED BY THE REGIONAL TRIAL
COURT, BRANCH 273, MARIKINA CITY AND THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009
SHOULD BE RENDERED VOID FOR LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE
CASE.
II.
WHETHER OR NOT THE REGIONAL TRIAL COURT, BRANCH 273, MARIKINA CITY GRAVELY ABUSED
ITS DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RENDERING THE
DECISION DATED 14 AUGUST 2009 AND ISSUING THE WRIT OF EXECUTION DATED 24 NOVEMBER
2009 EVEN IT FAILED TO DISPOSE ALL THE ISSUES OF THE CASE BY NOT RESOLVING PETITIONERS
"URGENT MOTION TO DISCHARGE EX-PARTE WRIT OF PRELIMINARY ATTACHMENT" DATED 31
AUGUST 2006.
III.
WHETHER OR NOT THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 WHICH WAS HASTILY
ISSUED IN VIOLATION OF SUPREME COURT ADMINISTRATIVE CIRCULAR NO. 10-2000 SHOULD BE
RENDERED VOID.19
The petition in G.R. No. 202623 sets forth the following arguments:
Petitioner is not estopped in questioning the jurisdiction of the Regional Trial Court, Branch 273, Marikina City
over the subject matter of the case.20
The petition for certiorari filed before the CA due to the RTCs denial of petitioners Notice of Appeal was in
accord with jurisprudence.21
The Issues

On December 7, 2009, the trial court denied petitioners notice of appeal filed on December 1, 2009.
Petitioners motion for reconsideration of the December 7, 2009 Order was likewise denied. 18 On May 20,
2010, petitioner filed another petition for certiorari in the CA questioning the aforesaid orders denying due
course to its notice of appeal, docketed as CA-G.R. SP No. 114073.

The controversy boils down to the following issues: (1) the applicability of the doctrine of primary jurisdiction to
this case; and (2) the propriety of the issuance of the writ of execution.

Our Ruling
The petitions are meritorious.
COA has primary jurisdiction over private respondents money claims Petitioner is not estopped from raising
the issue of jurisdiction
The doctrine of primary jurisdiction holds that if a case is such that its determination requires the expertise,
specialized training and knowledge of the proper administrative bodies, relief must first be obtained in an
administrative proceeding before a remedy is supplied by the courts even if the matter may well be within their
proper jurisdiction.22 It applies where a claim is originally cognizable in the courts, and comes into play
whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have
been placed within the special competence of an administrative agency. In such a case, the court in which the
claim is sought to be enforced may suspend the judicial process pending referral of such issues to the
administrative body for its view or, if the parties would not be unfairly disadvantaged, dismiss the case without
prejudice.23
The objective of the doctrine of primary jurisdiction is to guide the court in determining whether it should refrain
from exercising its jurisdiction until after an administrative agency has determined some question or some
aspect of some question arising in the proceeding before the court. 24
As can be gleaned, respondent seeks to enforce a claim for sums of money allegedly owed by petitioner, a
local government unit.
Under Commonwealth Act No. 327,25 as amended by Section 26 of Presidential Decree No. 1445, 26 it is the
COA which has primary jurisdiction over money claims against government agencies and instrumentalities.
Section 26. General jurisdiction. The authority and powers of the Commission shall extend to and comprehend
all matters relating to auditing procedures, systems and controls, the keeping of the general accounts of the
Government, the preservation of vouchers pertaining thereto for a period of ten years, the examination and
inspection of the books, records, and papers relating to those accounts; and the audit and settlement of the
accounts of all persons respecting funds or property received or held by them in an accountable capacity, as
well as the examination, audit, and settlement of all debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends to all
government-owned or controlled corporations, including their subsidiaries, and other self-governing boards,
commissions, or agencies of the Government, and as herein prescribed, including non-governmental entities
subsidized by the government, those funded by donations through the government, those required to pay
levies or government share, and those for which the government has put up a counterpart fund or those partly
funded by the government. (Emphasis supplied.)
Pursuant to its rule-making authority conferred by the 1987 Constitution 27 and existing laws, the COA
promulgated the 2009 Revised Rules of Procedure of the Commission on Audit. Rule II, Section 1 specifically
enumerated those matters falling under COAs exclusive jurisdiction, which include "money claims due from or
owing to any government agency." Rule VIII, Section 1 further provides:
Section 1. Original Jurisdiction - The Commission Proper shall have original jurisdiction over:
a) money claim against the Government; b) request for concurrence in the hiring of legal retainers by
government agency; c) write off of unliquidated cash advances and dormant accounts receivable in amounts
exceeding one million pesos (P1,000,000.00); d) request for relief from accountability for loses due to acts of
man, i.e. theft, robbery, arson, etc, in amounts in excess of Five Million pesos (P5,000,000.00).
In Euro-Med Laboratories Phil., Inc. v. Province of Batangas, 28 we ruled that it is the COA and not the RTC
which has primary jurisdiction to pass upon petitioners money claim against respondent local government
unit. Such jurisdiction may not be waived by the parties failure to argue the issue nor active participation in the
proceedings. Thus:

This case is one over which the doctrine of primary jurisdiction clearly held sway for although petitioners
collection suit for P487,662.80 was within the jurisdiction of the RTC, the circumstances surrounding
petitioners claim brought it clearly within the ambit of the COAs jurisdiction.
First, petitioner was seeking the enforcement of a claim for a certain amount of money against a local
government unit. This brought the case within the COAs domain to pass upon money claims against the
government or any subdivision thereof under Section 26 of the Government Auditing Code of the Philippines:
The authority and powers of the Commission [on Audit] shall extend to and comprehend all matters relating to
x x x the examination, audit, and settlement of all debts and claims of any sort due from or owing to the
Government or any of its subdivisions, agencies, and instrumentalities. x x x.
The scope of the COAs authority to take cognizance of claims is circumscribed, however, by an unbroken line
of cases holding statutes of similar import to mean only liquidated claims, or those determined or readily
determinable from vouchers, invoices, and such other papers within reach of accounting officers. Petitioners
claim was for a fixed amount and although respondent took issue with the accuracy of petitioners summation
of its accountabilities, the amount thereof was readily determinable from the receipts, invoices and other
documents. Thus, the claim was well within the COAs jurisdiction under the Government Auditing Code of the
Philippines.
Second, petitioners money claim was founded on a series of purchases for the medical supplies of
respondents public hospitals. Both parties agreed that these transactions were governed by the Local
Government Code provisions on supply and property management and their implementing rules and
regulations promulgated by the COA pursuant to Section 383 of said Code. Petitioners claim therefore
involved compliance with applicable auditing laws and rules on procurement. Such matters are not within the
usual area of knowledge, experience and expertise of most judges but within the special competence of COA
auditors and accountants. Thus, it was but proper, out of fidelity to the doctrine of primary jurisdiction, for the
RTC to dismiss petitioners complaint.
Petitioner argues, however, that respondent could no longer question the RTCs jurisdiction over the matter
after it had filed its answer and participated in the subsequent proceedings. To this, we need only state that the
court may raise the issue of primary jurisdiction sua sponte and its invocation cannot be waived by the failure
of the parties to argue it as the doctrine exists for the proper distribution of power between judicial and
administrative bodies and not for the convenience of the parties. 29 (Emphasis supplied.)
Respondents collection suit being directed against a local government unit, such money claim should have
been first brought to the COA.30 Hence, the RTC should have suspended the proceedings and refer the filing
of the claim before the COA. Moreover, petitioner is not estopped from raising the issue of jurisdiction even
after the denial of its notice of appeal and before the CA.
There are established exceptions to the doctrine of primary jurisdiction, such as: (a) where there is estoppel on
the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal,
amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably
prejudice the complainant; (d) where the amount involved is relatively small so as to make the rule impractical
and oppressive; (e) where the question involved is purely legal and will ultimately have to be decided by the
courts of justice; (f) where judicial intervention is urgent; (g) when its application may cause great and
irreparable damage; (h) where the controverted acts violate due process; (i) when the issue of non-exhaustion
of administrative remedies has been rendered moot; (j) when there is no other plain, speedy and adequate
remedy; (k) when strong public interest is involved; and, (l) in quo warranto proceedings. 31 However, none of
the foregoing circumstances is applicable in the present case.
The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to resolve a
controversy the jurisdiction over which is initially lodged with an administrative body of special
competence.32 All the proceedings of the court in violation of the doctrine and all orders and decisions
rendered thereby are null and void. 33
Writ of Execution issued in violation of COAs primary jurisdiction is void

Since a judgment rendered by a body or tribunal that has no jurisdiction over the subject matter of the case is
no judgment at all, it cannot be the source of any right or the creator of any obligation. 34 All acts pursuant to it
and all claims emanating from it have no legal effect and the void judgment can never be final and any writ of
execution based on it is likewise void.35
Clearly, the CA erred in ruling that the RTC committed no grave abuse of discretion when it ordered the
execution of its judgment against petitioner and garnishment of the latters funds.
In its Supplement to the Motion for Reconsideration, petitioner argued that it is the COA and not the RTC
which has original jurisdiction over money claim against government agencies and subdivisions.1wphi1 The
CA, in denying petitioner's motion for reconsideration, simply stated that the issue had become moot by
respondent's filing of the proper petition with the COA. However, respondent's belated compliance with the
formal requirements of presenting its money claim before the COA did not cure the serious errors committed
by the RTC in implementing its void decision. The RTC's orders implementing its judgment rendered without
jurisdiction must be set aside because a void judgment can never be validly executed.
Finally, the RTC should have exercised utmost caution, prudence and judiciousness in issuing the writ of
execution and notices of garnishment against petitioner. The RTC had no authority to direct the immediate
withdrawal of any portion of the garnished funds from petitioner's depositary banks. 36 Such act violated the
express directives of this Court under Administrative Circular No. 10-2000, 37 which was issued "precisely in
order to prevent the circumvention of Presidential Decree No. 1445, as well as of the rules and procedures of
the COA."38 WHEREFORE, both petitions in G.R. Nos. 197592 and 202623 are GRANTED. The Decision
dated October 18, 2010 and Resolution dated July 5 2011 of the Court of Appeals in CA-G.R. SP No. 111754,
and Decision dated August 31, 2011 and Resolution dated June 27, 2012 in CA- G.R. SP No. 114073 are
hereby REVERSED and SET ASIDE. The Decision dated August 14 2009, Writ of Execution and subsequent
issuances implementing the said decision of the Regional Trial Court of Marikina City in Civil Case No. 061122-MK are all SET ASIDE. No pronouncement as to costs.
SO ORDERED.

G.R. No. 198554

July 30, 2012

MAJOR GENERAL CARLOS F. GARCIA, AFP (RET.), Petitioner,

vs.
THE EXECUTIVE SECRETARY, representing the OFFICE OF THE PRESIDENT; THE SECRETARY OF
NATIONAL DEFENSE VOLTAIRE T. GAZMIN; THE CHIEF OF STAFF, ARMED FORCES OF THE
PHILIPPINES, GEN. EDUARDO SL. OBAN, JR., and LT. GEN. GAUDENCIO S. PANGILINAN, AFP (RET.),
DIRECTOR, BUREAU OF CORRECTIONS, Respondents.
DECISION
PERALTA, J.:
For resolution of this Court is the Petition for Certiorari dated September 29, 2011 under Rule 65, Section 1 of
the Revised Rules of Civil Procedure which seeks to annul and set aside the Confirmation of Sentence dated
September 9, 2011, promulgated by the Office of the President.

1. Pursuant to Article of War 70 and the directive of the Acting Chief of Staff, AFP to the undersigned dtd 12
October 2004, you are hereby placed under Restriction to Quarters under guard pending investigation of your
case.
2. You are further advised that you are not allowed to leave your quarters without the expressed permission
from the Acting Chief of Staff, AFP.
3. In case you need immediate medical attention or required by the circumstance to be confined in a hospital,
you shall likewise be under guard.
Thereafter, a Charge Sheet dated October 27, 2004 was filed with the Special General Court Martial NR 2
presided by Maj. Gen. Emmanuel R. Teodosio, AFP, (Ret.), enumerating the following violations allegedly
committed by petitioner:
CHARGE 1: VIOLATION OF THE 96TH ARTICLE OF WAR (CONDUCT UNBECOMING AN OFFICER AND
GENTLEMAN).
SPECIFICATION 1: In that MAJOR GENERAL CARLOS FLORES GARCIA 0-5820 ARMED FORCES OF
THE PHILIPPINES, person subject to military law, did, on or about 16 March 2004, knowingly, wrongfully and
unlawfully fail to disclose/declare all his existing assets in his Sworn Statement of Assets and Liabilities and
Net Worth for the year 2003 as required by Republic Act No. 3019, as amended in relation to Republic Act
6713, such as the following: cash holdings with the Armed Forces Police Savings and Loans Association, Inc.
(AFPSLAI) in the amount of six million five hundred [thousand] pesos (P6,500,000.00); cash dividend received
from AFPSLAI from June 2003 to December 2003 in the amount of one million three hundred sixty-five
thousand pesos (P1,365,000.00); dollar peso deposits with Land Bank of the Philippines, Allied Banking
Corporation, Banco de Oro Universal Bank, Bank of Philippine Islands, United Coconut Planter's Bank and
Planter's Development Bank; motor vehicles registered under his and his wifes names such as 1998 Toyota
Hilux Utility Vehicle with Plate Nr. WRY-843, Toyota Car with Plate Nr. PEV-665, Toyota Previa with Plate Nr.
UDS-195, 1997 Honda Civic Car with Plate Nr. FEC 134, 1997 Mitsubishi L-300 Van with Plate Nr. FDZ 582
and 2001 Toyota RAV 4 Utility Vehicle with Plate Nr. FEV-498, conduct unbecoming an officer and gentleman.
SPECIFICATION 2: In that MAJOR GENERAL CARLOS FLORES GARCIA 0-5820 ARMED FORCES OF
THE PHILIPPINES, person subject to military law, did, on or about 11 March 2003, knowingly, wrongfully and
unlawfully fail to disclose/declare all his existing assets in his Sworn Statement of Assets and Liabilities and
Net worth for the year 2002 as required by Republic Act No. 3019, as amended in relation to Republic Act
6713, such as the following: his cash holdings with the Armed Forces Police Savings and Loans Association,
Inc. (AFPSLAI) in the amount of six million five hundred [thousand] pesos (P6,500,000.00); cash dividend
received form AFPSLAI in June 2002 and December 2002 in the total amount of one million four hundred
thirty-five thousand pesos (1,435,000.00), dollar and peso deposits with Land Bank of the Philippines, Allied
Banking Corporation, Banco de Oro Universal Bank, Bank of the Philippine Islands, United Coconut Planter's
Bank and Planter's Development Bank; motor vehicles registered under his and his wifes names such as
1998 Toyota Hilux Utility Vehicle with Plate Nr. WRY-843, Toyota Car with Plate Nr. PEV-665, Toyota Previa
with Plate Nr. UDS-195, 1997 Honda Civic Car with Plate Nr. FEC-134, 1997 Mitsubishi L-300 Van with Plate
Nr. FDZ-582, and 2001 Toyota RAV 4
Utility Vehicle with Plate Nr. FEV-498, conduct unbecoming an officer and gentleman.

The facts, as culled from the records, are the following:

SPECIFICATION 3: In that MAJOR GENERAL CARLOS FLORES GARCIA 0-5820 ARMED FORCES OF
THE PHILIPPINES, person subject to military law, did, while in the active military service of the Armed Forces
of the Philippines, knowingly, wrongfully and unlawfully violate his solemn oath as a military officer to uphold
the Constitution and serve the people with utmost loyalty by acquiring and holding the status of an
immigrant/permanent residence of the United

On October 13, 2004, the Provost Martial General of the Armed Forces of the Philippines (AFP), Col. Henry A.
Galarpe, by command of Vice-Admiral De Los Reyes, issued a Restriction to Quarters 1 containing the
following:

States of America in violation of the State policy governing public officers, thereby causing dishonor and
disrespect to the military professional and seriously compromises his position as an officer and exhibits him as
morally unworthy to remain in the honorable profession of arms.
CHARGE II: VIOLATION OF THE 97TH ARTICLE OF WAR (CONDUCT PREJUDICIAL TO GOOD ORDER
AND MILITARY DISCIPLINE).

SPECIFICATION 1: In that MAJOR GENERAL CARLOS FLORES GARCIA 0-5820 ARMED FORCES OF
THE PHILIPPINES, person subject to military law, did, on or about 16 March 2004, knowingly, wrongfully and
unlawfully make untruthful statements under oath of his true assets in his Statement of Assets and Liabilities
and Net worth for the year 2003 as required by Republic Act No. 3019, as amended in relation to Republic Act
6713, conduct prejudicial to good order and military discipline.
SPECIFICATION NO. 2: In that MAJOR GENERAL CARLOS FLORES GARCIA 0-5820 ARMED FORCES OF
THE PHILIPPINES, person subject to military law, did, on or about 11 March 2003, knowingly, wrongfully and
unlawfully make untruthful statements under oath of his true assts in his Statement of Assets and Liabilities
and Net worth for the year 2002 as required by Republic Act No. 3019, as amended in relation to Republic Act
6713, conduct prejudicial to good order and military discipline.

Allied Banking Corporation, Banco de Oro Universal Bank, Bank of the Philippine Islands, United Coconut
Planter's Bank and Planter's Development Bank; GUILTY on Charge 1, Specification 2 except the words dollar
deposits with Land Bank of the Philippines, dollar and peso deposits with Allied Banking Corporation, Banco
de Oro Universal Bank, Bank of the Philippine Islands, United Coconut Planters Bank and Planter's
Development Bank; GUILTY on Specification 3 of Charge 1; GUILTY on Charge 2 and all its specifications.
The sentence imposed by the Special GCM is to be dishonorably discharged from the service, to forfeit all pay
and allowances due and to become due; and to be confined at hard labor at such place the reviewing authority
may direct for a period of two (2) years. As it is, the sentence is proper and legal. Recommend that the
sentence be approved. The PNP custodial facility in Camp Crame, Quezon City, is the appropriate place of
confinement. The period of confinement from 18 October 2004 shall be credited in his favor and deducted
from the two (2) years to which the accused was sentenced. Thus, confinement will expire on 18 October
2006. Considering that the period left not served is less than one (1) year, confinement at the National
Penitentiary is no longer appropriate.

Petitioner, upon arraignment on November 16, 2004, pleaded not guilty on all the charges.
The Office of the Chief of Staff, through a Memorandum 2 dated November 18, 2004, directed the transfer of
confinement of petitioner from his quarters at Camp General Emilio Aguinaldo to the ISAFP Detention Center.
On the same day, petitioner, having reached the age of fifty-six (56), compulsorily retired from military service
after availing of the provisions of Presidential Decree (P.D.) No. 1650, 3 amending Sections 3 and 5 of P.D.
1638, which establishes a system of retirement for military personnel of the Armed Forces of the Philippines.

4. To carry this recommendation into effect, a draft "ACTION OF THE REVIEWING AUTHORITY" is hereto
attached.
In an undated document,7 the AFP Board of Military Review recommended the following action:
8. RECOMMENDED ACTION:

Pursuant to a Resolution4 dated June 1, 2005 of the Second Division of the Sandiganbayan, petitioner was
transferred from the ISAFP Detention Center to the Camp Crame Custodial Detention Center.
After trial, at the Special General Court Martial No. 2, on December 2, 2005, the findings or the After-Trial
Report5of the same court was read to the petitioner. The report contains the following verdict and sentence:
MGEN CARLOS FLORES GARCIA 0-5820 AFP the court in closed session upon secret written ballot 2/3 of all
the members present at the time the voting was taken concurring the following findings. Finds you:
On Specification 1 of Charge 1 Guilty except the words dollar deposits with Land Bank of the Phils, dollar
peso deposits with Allied Bank, Banco de Oro, Universal Bank, Bank of the Philippine Island, United Coconut
Planters Bank and Planters Development Bank.
On Specification 2 of Charge 1 Guilty except the words dollar deposits with Land Bank of the Phils, dollar
peso deposits with Allied Bank, Banco de Oro, Universal Bank, Bank of the Philippine Island, United Coconut
Planters Bank and Planters Development Bank.

A. Only so much of the sentence as provides for the mandatory penalty of dismissal from the military service
and forfeiture of pay and allowances due and to become due for the offenses of violation of AW 96 (Conduct
Unbecoming an Officer and a Gentleman) and for violation of AW 97 (Conduct Prejudicial to Good Order and
Military Discipline) be imposed upon the Accused.
B. The records of the instant case should be forwarded to the President thru the Chief of Staff and the
Secretary of National Defense, for final review pursuant to AW 47, the Accused herein being a General Officer
whose case needs confirmation by the President.
C. To effectuate the foregoing, attached for CSAFP's signature/approval is a proposed 1st
Indorsement to the President, thru the Secretary of National Defense, recommending approval of the attached
prepared "ACTION OF THE PRESIDENT."
After six (6) years and two (2) months of preventive confinement, on December 16, 2010, petitioner was
released from the Camp Crame Detention Center.8

On Specification 3 of Charge 1 Guilty

On Specification 1 of Charge 2 Guilty
On Specification 2 of Charge 2 Guilty
And again in closed session upon secret written ballot 2/3 all the members are present at the time the votes
was taken concurrently sentences you to be dishonorably [discharged] from the service, to forfeit all pay and
allowances due and to become due and to be confined at hard labor at such place the reviewing authority may
direct for a period of two (2) years. So ordered. (Emphases supplied)
Afterwards, in a document6 dated March 27, 2006, the Staff Judge Advocate stated the following
recommended action:

The Office of the President, or the President as Commander-in-Chief of the AFP and acting as the Confirming
Authority under the Articles of War, confirmed the sentence imposed by the Court Martial against petitioner.
The Confirmation of Sentence,9 reads in part:
NOW, THEREFORE, I, BENIGNO S. AQUINO III, the President as Commander-in-Chief of the Armed Forces
of the Philippines, do hereby confirm the sentence imposed by the Court Martial in the case of People of the
Philippines versus Major General Carlos Flores Garcia AFP:
a) To be dishonorable discharged from the service;
b) To forfeit all pay and allowances due and to become due; and
c) To be confined for a period of two (2) years in a penitentiary.

IV. RECOMMENDED ACTION:

The court, after evaluating the evidence, found accused: GUILTY on Charge 1, GUILTY on Specification 1 on
Charge 1 except the words dollar deposits with Land Bank of the Philippines, dollar and peso deposits with

FURTHER, pursuant to the 48th and 49th Articles of War, the sentence on Major General Carlos Flores Garcia
AFP shall not be remitted/mitigated by any previous confinement. Major General Carlos Flores Garcia AFP
shall serve the foregoing sentence effective on this date.

DONE, in the City of Manila, this 9th day of September, in the year of our Lord, Two Thousand and Eleven.
Consequently, on September 15, 2011, respondent Secretary of National Defense Voltaire T. Gazmin, issued a
Memorandum10 to the Chief of Staff, AFP for strict implementation, the Confirmation of Sentence in the Court
Martial Case of People of the Philippines Versus Major General Carlos Flores Garcia AFP.
On September 16, 2011, petitioner was arrested and detained, and continues to be detained at the National
Penitentiary, Maximum Security, Bureau of Corrections, Muntinlupa City.11
Aggrieved, petitioner filed with this Court the present petition for certiorari and petition for habeas corpus,
alternatively. However, this Court, in its Resolution 12 dated October 10, 2011, denied the petition for habeas
corpus. Petitioner filed a motion for reconsideration 13 dated November 15, 2011, but was denied 14 by this Court
on December 12, 2011.

PETITIONER'S DIRECT RECOURSE TO THE HONORABLE COURT VIOLATES THE DOCTRINE OF

HIERARCHY OF COURTS; HENCE, THE PETITION SHOULD BE OUTRIGHTLY DISMISSED.
II.
THE GENERAL COURT MARTIAL RETAINED JURISDICTION OVER PETITIONER DESPITE HIS
RETIREMENT DURING THE PENDENCY OF THE PROCEEDINGS AGAINST HIM SINCE THE SAID
TRIBUNAL'S JURISDICTION HAD ALREADY FULLY ATTACHED PRIOR TO PETITIONER'S RETIREMENT.
III.

Petitioner enumerates the following grounds to support his petition:

THE CONFIRMATION ISSUED BY THE OFFICE OF THE PRESIDENT DIRECTING PETITIONER TO BE

CONFINED FOR TWO (2) YEARS IN A PENITENTIARY IS SANCTIONED BY C. A. NO. 408 AND
EXECUTIVE ORDER NO. 178, PURSUANT TO THE PRESIDENT'S CONSTITUTIONAL AUTHORITY AS
THE COMMANDER-IN-CHIEF OF THE AFP.

GROUNDS

IV.

A.

PETITIONER'S RIGHT TO A SPEEDY DISPOSITION OF HIS CASE WAS NOT VIOLATED IN THIS CASE.

THE JURISDICTION OF THE GENERAL COURT MARTIAL CEASED IPSO FACTO UPON THE
RETIREMENT OF PETITIONER, FOR WHICH REASON THE OFFICE OF THE PRESIDENT ACTED
WITHOUT JURISDICTION IN ISSUING THE CONFIRMATION OF SENTENCE, AND PETITIONER'S
ARREST AND CONFINEMENT PURSUANT THERETO IS ILLEGAL, THUS WARRANTING THE WRIT OF
HABEAS CORPUS.

V.

B.

VI.

EVEN ASSUMING FOR THE SAKE OF ARGUMENT THAT PETITIONER REMAINED AMENABLE TO
COURT MARTIAL JURISDICTION AFTER HIS RETIREMENT, THE OFFICE OF THE PRESIDENT ACTED
WITH GRAVE ABUSE OF DISCRETION IN IMPOSING THE SENTENCE OF TWO (2) YEARS
CONFINEMENT WITHOUT ANY LEGAL BASIS, FOR WHICH REASON PETITIONER'S ARREST AND
CONFINEMENT IS ILLEGAL, THUS WARRANTING THE WRIT OF HABEAS CORPUS.

ACCORDINGLY, PUBLIC RESPONDENTS DID NOT ACT WITH GRAVE ABUSE OF DISCRETION IN
ISSUING AND IMPLEMENTING THE CONFIRMATION OF SENTENCE.17

C.
EVEN ASSUMING FOR THE SAKE OF ARGUMENT THAT THE PENALTY OF TWO (2) YEARS
CONFINEMENT MAY BE IMPOSED IN ADDITION TO THE PENALTIES OF DISMISSAL AND FORFEITURE,
THE SENTENCE HAD BEEN FULLY SERVED IN VIEW OF PETITIONER'S PREVENTIVE CONFINEMENT
WHICH EXCEEDED THE 2-YEAR SENTENCE, AND THE OFFICE OF THE PRESIDENT HAS NO
AUTHORITY TO REPUDIATE SAID SERVICE OF SENTENCE, FOR WHICH REASON PETITIONER'S
ARREST AND CONFINEMENT DESPITE FULL SERVICE OF SENTENCE IS ILLEGAL, THUS
WARRANTING THE WRIT OF HABEAS CORPUS.15

THE IMPOSITION OF THE PENALTY OF TWO (2) YEARS CONFINEMENT ON PETITIONER BY THE GCM,
AND AS CONFIRMED BY THE PRESIDENT OF THE PHILIPPINES, IS VALID.

Petitioner, in his Reply18 dated January 20, 2012, disagreed with the arguments raised by the OSG due to the
following:
(A)
THE CONFIRMATION OF THE COURT MARTIAL SENTENCE IS AN ACT BY THE PRESIDENT, AS THE
COMMANDER-IN-CHIEF, AND NOT MERELY AS THE HEAD OF THE EXECUTIVE BRANCH. THEREFORE,
THE HONORABLE COURT IS THE ONLY APPROPRIATE COURT WHERE HIS ACT MAY BE IMPUGNED,
AND NOT IN THE LOWER COURTS, I.E., REGIONAL TRIAL COURT ("RTC") OR THE COURT OF
APPEALS ("CA"), AS THE OSG ERRONEOUSLY POSTULATES.
(B)

In view of the earlier resolution of this Court denying petitioner's petition for habeas corpus, the above grounds
are rendered moot and academic. Thus, the only issue in this petition for certiorari under Rule 65 of the
Revised Rules of Civil Procedure, which was properly filed with this
Court, is whether the Office of the President acted with grave abuse of discretion, amounting to lack or excess
of jurisdiction, in issuing the Confirmation of Sentence dated September 9, 2011.
In its Comment16 dated October 27, 2011, the Office of the Solicitor General (OSG) lists the following counterarguments:
I.

ALTHOUGH THE GENERAL COURT MARTIAL ("GCM") RETAINED JURISDICTION "OVER THE PERSON"
OF PETITIONER EVEN AFTER HE RETIRED FROM THE ARMED FORCES OF THE PHILIPPINES ('AFP"),
HOWEVER, HIS RETIREMENT, CONTRARY TO THE STAND OF THE OSG, SEVERED HIS "JURAL
RELATIONSHIP" WITH THE MILITARY, THEREBY PLACING HIM BEYOND THE SUBSTANTIVE REACH OF
THE AFP'S COURT MARTIAL JURISDICTION.
(C)
UNDER ART. 29, REVISED PENAL CODE ("RPC"), PETITIONER'S COURT MARTIAL SENTENCE OF TWO
(2) YEARS IN CARCERATION HAD ALREADY BEEN SERVED IN FULL SINCE HE HAD ALREADY
SUFFERED PREVENTIVE IMPRISONMENT OF AT LEAST SIX (6) YEARS BEFORE THE SENTENCE

COULD BE CONFIRMED, WHICH MEANS THAT THE PRESIDENT HAD NO MORE JURISDICTION WHEN
HE CONFIRMED IT, THEREBY RENDERING THE "CONFIRMATION OF SENTENCE" A PATENT NULLITY,
AND, CONSEQUENTLY, INVALIDATING THE OSG'S POSITION THAT THE PRESIDENT STILL HAD
JURISDICTION WHEN HE CONFIRMED THE SENTENCE. 19
Petitioner raises the issue of the jurisdiction of the General Court Martial to try his case. According to him, the
said jurisdiction ceased ipso facto upon his compulsory retirement. Thus, he insists that the Office of the
President had acted without jurisdiction in issuing the confirmation of his sentence.
This Court finds the above argument bereft of merit.
Article 2 of the Articles of War20 circumscribes the jurisdiction of military law over persons subject thereto, to
wit:
Art. 2. Persons Subject to Military Law. - The following persons are subject to these articles and shall be
understood as included in the term "any person subject to military law" or "persons subject to military law,"
whenever used in these articles:
(a) All officers and soldiers in the active service of the Armed Forces of the Philippines or of the Philippine
Constabulary; all members of the reserve force, from the dates of their call to active duty and while on such
active duty; all trainees undergoing military instructions; and all other persons lawfully called, drafted, or
ordered into, or to duty or for training in, the said service, from the dates they are required by the terms of the
call, draft, or order to obey the same;
(b) Cadets, flying cadets, and probationary second lieutenants;

We have gone through the treatise of Colonel Winthrop and We find the following passage which goes against
the contention of the petitioners, viz.
3. Offenders in general Attaching of jurisdiction. It has further been held, and is now settled law, in regard to
military offenders in general, that if the military jurisdiction has once duly attached to them previous to the date
of the termination of their legal period of service, they may be brought to trial by court-martial after that date,
their discharge being meanwhile withheld. This principle has mostly been applied to cases where the offense
was committed just prior to the end of the term. In such cases the interests of discipline clearly forbid that the
offender should go unpunished. It is held therefore that if before the day on which his service legally
terminates and his right to a discharge is complete, proceedings with a view to trial are commenced against
him as by arrest or the service of charges, the military jurisdiction will fully attach and once attached may
be continued by a trial by court-martial ordered and held after the end of the term of the enlistment of the
accused x x x
Thus, military jurisdiction has fully attached to Gen. Gudani inasmuch as both the acts complained of and the
initiation of the proceedings against him occurred before he compulsorily retired on 4 October 2005. We see
no reason to unsettle the Abadilla doctrine. The OSG also points out that under Section 28 of Presidential
Decree No. 1638, as amended, "an officer or enlisted man carried in the retired list of the Armed Forces of the
Philippines shall be subject to the Articles of War x x x" To this citation, petitioners do not offer any response,
and in fact have excluded the matter of Gen. Gudani's retirement as an issue in their subsequent
memorandum.23
It is also apt to mention that under Executive Order No. 178, or the Manual for Courts-Martial, AFP, the
jurisdiction of courts-martial over officers, cadets, soldiers, and other military personnel in the event of
discharge or other separation from the service, and the exceptions thereto, is defined thus:

(c) All retainers to the camp and all persons accompanying or serving with the Armed Forces of the Philippines
in the field in time of war or when martial law is declared though not otherwise subject to these articles;

10. COURT-MARTIAL Jurisdiction in general Termination General Rules The general rule is that courtmartial jurisdiction over officers, cadets, soldiers and others in the military service of the Philippines ceases on
discharge or other separation from such service, and that jurisdiction as to any offense committed during a
period of service thus terminated is not revived by a reentry into the military service.

(d) All persons under sentence adjudged by courts-martial.

Exceptions To this general rule there are, however, some exceptions, among them the following:

(As amended by Republic Acts 242 and 516).

xxxx

It is indisputable that petitioner was an officer in the active service of the AFP in March 2003 and 2004, when
the alleged violations were committed. The charges were filed on October 27, 2004 and he was arraigned on
November 16, 2004. Clearly, from the time the violations were committed until the time petitioner was
arraigned, the General Court Martial had jurisdiction over the case. Well-settled is the rule that jurisdiction
once acquired is not lost upon the instance of the parties but continues until the case is
terminated.21 Therefore, petitioner's retirement on November 18, 2004 did not divest the General Court Martial
of its jurisdiction. In B/Gen. (Ret.) Francisco V. Gudani, et al. v. Lt./Gen. Generoso Senga, et al., 22 this Court
ruled that:

In certain case, where the person's discharge or other separation does not interrupt his status as a person
belonging to the general category of persons subject to military law, court-martial jurisdiction does not
terminate. Thus, where an officer holding a reserve commission is discharged from said commission by
reason of acceptance of a commission in the Regular Force, there being no interval between services under
the respective commissions, there is no terminating of the officer's military status, but merely the
accomplishment of a change in his status from that of a reserve to that of a regular officer, and that courtmartial jurisdiction to try him for an offense (striking enlisted men for example) committed prior to the
discharge is not terminated by the discharge. So also, where a dishonorable discharged general prisoner is
tried for an offense committed while a soldier and prior to his dishonorable discharge, such discharge does not
terminate his amenability to trial for the offense. (Emphases supplied.)

This point was settled against Gen. Gudani's position in Abadilla v. Ramos, where the Court declared that an
officer whose name was dropped from the roll of officers cannot be considered to be outside the jurisdiction of
military authorities when military justice proceedings were initiated against him before the termination of his
service. Once jurisdiction has been acquired over the officer, it continues until his case is terminated. Thus, the
Court held:
The military authorities had jurisdiction over the person of Colonel Abadilla at the time of the alleged offenses.
This jurisdiction having been vested in the military authorities, it is retained up to the end of the proceedings
against Colonel Abadilla. Well-settled is the rule that jurisdiction once acquired is not lost upon the instance of
the parties but continues until the case is terminated.
Citing Colonel Winthrop's treatise on Military Law, the Court further stated:

Petitioner also asserts that the General Court Martial's continuing jurisdiction over him despite his retirement
holds true only if the charge against him involves fraud, embezzlement or misappropriation of public funds
citing this Court's ruling in De la Paz v. Alcaraz,et al.24 and Martin v. Ve r.25 However, this is not true. The OSG
is correct in stating that in De la Paz,26 military jurisdiction over the officer who reverted to inactive status was
sustained by this Court because the violation involved misappropriation of public funds committed while he
was still in the active military service, while in Martin, 27 military jurisdiction was affirmed because the violation
pertained to illegal disposal of military property. Both cited cases centered on the nature of the offenses
committed by the military personnel involved, justifying the exercise of jurisdiction by the courts-martial. On the
other hand, in the present case, the continuing military jurisdiction is based on prior attachment of jurisdiction
on the military court before petitioner's compulsory retirement. This continuing jurisdiction is provided under
Section 1 of P.D. 1850,28 as amended, thus:
Section 1. Court Martial Jurisdiction over Integrated National Police and Members of the Armed Forces. - Any
provision of law to the contrary notwithstanding (a) uniformed members of the Integrated National Police

who commit any crime or offense cognizable by the civil courts shall henceforth be exclusively tried by courtsmartial pursuant to and in accordance with Commonwealth Act No. 408, as amended, otherwise known as the
Articles of War; (b) all persons subject to military law under article 2 of the aforecited Articles of War who
commit any crime or offense shall be exclusively tried by courts-martial or their case disposed of under the
said Articles of War; Provided, that, in either of the aforementioned situations, the case shall be disposed of or
tried by the proper civil or judicial authorities when court-martial jurisdiction over the offense has prescribed
under Article 38 of Commonwealth Act Numbered 408, as amended, or court-martial jurisdiction over the
person of the accused military or Integrated National Police personnel can no longer be exercised by virtue of
their separation from the active service without jurisdiction having duly attached beforehand unless otherwise
provided by law: Provided further, that the President may, in the interest of justice, order or direct, at any time
before arraignment, that a particular case be tried by the appropriate civil court. (Emphasis supplied.)
Having established the jurisdiction of the General Court Martial over the case and the person of the petitioner,
the President, as Commander-in-Chief, therefore acquired the jurisdiction to confirm petitioner's sentence as
mandated under Article 47 of the Articles of War, which states:
Article 47. Confirmation When Required. - In addition to the approval required by article forty-five,
confirmation by the President is required in the following cases before the sentence of a court-martial is
carried into execution, namely:
(a) Any sentence respecting a general officer;
(b) Any sentence extending to the dismissal of an officer except that in time of war a sentence extending to the
dismissal of an officer below the grade of brigadier general may be carried into execution upon confirmation by
the commanding general of the Army in the field;
(c) Any sentence extending to the suspension or dismissal of a cadet, probationary second lieutenant; and
(d) Any sentence of death, except in the case of persons convicted in time of war, of murder, mutiny, desertion,
or as spies, and in such excepted cases of sentence of death may be carried into execution, subject to the
provisions of Article 50, upon confirmation by the commanding general of the Army in the said field.
When the authority competent to confirm the sentence has already acted as the approving authority no
additional confirmation by him is necessary. (As amended by Republic Act No. 242). (Emphasis supplied.)
In connection therewith, petitioner argues that the confirmation issued by the Office of the President directing
him to be confined for two (2) years in the penitentiary had already been fully served in view of his preventive
confinement which had exceeded two (2) years. Therefore, according to him, the Office of the President no
longer has the authority to order his confinement in a penitentiary. On the other hand, the OSG opines that
petitioner cannot legally demand the deduction of his preventive confinement in the service of his imposed
two-year confinement in a penitentiary, because unlike our Revised Penal Code 29 which specifically mandates
that the period of preventive imprisonment of the accused shall be deducted from the term of his
imprisonment, the Articles of War and/or the Manual for Courts-Martial do not provide for the same deduction
in the execution of the sentence imposed by the General Court Martial as confirmed by the President in
appropriate cases.
On the above matter, this Court finds the argument raised by the OSG unmeritorious and finds logic in the
assertion of petitioner that Article 29 of the Revised Penal Code can be made applicable in the present case.
The OSG maintains that military commissions or tribunals are not courts within the Philippine judicial system,
citing Olaguer, et al. v. Military Commission No. 4, 30 hence, they are not expected to apply criminal law
concepts in their implementation and execution of decisions involving the discipline of military personnel. This
is misleading. In Olaguer, the courts referred to were military commissions created under martial law during
the term of former President Ferdinand Marcos and was declared unconstitutional by this Court, while in the
present case, the General Court Martial which tried it, was created under Commonwealth Act No. 408, as
amended, and remains a valid entity.

In Marcos v. Chief of Staff, Armed Forces of the Philippines,31 this Court ruled that a court-martial case is a
criminal case and the General Court Martial is a "court" akin to any other courts. In the same case, this Court
clarified as to what constitutes the words "any court" used in Section 17 32 of the 1935 Constitution prohibiting
members of Congress to appear as counsel in any criminal case in which an officer or employee of the
Government is accused of an offense committed in relation to his office. This Court held:
We are of the opinion and therefore hold that it is applicable, because the words "any court" includes the
General Court-Martial, and a court-martial case is a criminal case within the meaning of the above quoted
provisions of our Constitution.
It is obvious that the words "any court," used in prohibiting members of Congress to appear as counsel "in any
criminal case in which an officer or employee of the Government is accused of an offense committed in
relation to his office," refers, not only to a civil, but also to a military court or a Court-Martial. Because, in
construing a Constitution, "it must be taken as established that where words are used which have both a
restricted and a general meaning, the general must prevail over the restricted unless the nature of the subject
matter of the context clearly indicates that the limited sense is intended." (11 American Jurisprudence, pp. 680682).
In the case of Ramon Ruffy vs. Chief of Staff of the Philippine Army,* 43 Off. Gaz., 855, we did not hold that
the word "court" in general used in our Constitution does not include a Court-Martial; what we held is that the
words "inferior courts" used in connection with the appellate jurisdiction of the Supreme Court to "review on
appeal certiorari or writ of error, as the law or rules of court may provide, final judgments of inferior courts in all
criminal cases in which the penalty imposed is death or life imprisonment," as provided for in section 2, Article
VIII, of the Constitution, do not refer to Courts-Martial or Military Courts.
Winthrop's Military Law and Precedents, quoted by the petitioners and by this Court in the case of Ramon
Ruffy et al vs. Chief of Staff of the Philippine Army, supra, has to say in this connection the following:
Notwithstanding that the court-martial is only an instrumentality of the executive power having no relation or
connection, in law, with the judicial establishments of the country, it is yet, so far as it is a court at all, and
within its field of action, as fully a court of law and justice as is any civil tribunal. As a court of law, it is bound,
like any court, by the fundamental principles of law, and, in the absence of special provision of the subject in
the military code, it observes in general the rules of evidence as adopted in the common-law courts. As a court
of justice, it is required by the terms of its statutory oath, (art. 84.) to adjudicate between the U.S. and the
accused "without partiality, favor, or affection," and according, not only to the laws and customs of the service,
but to its "conscience," i.e. its sense of substantial right and justice unaffected by technicalities. In the words of
the Attorney General, court-martial are thus, "in the strictest sense courts of justice. (Winthrop's Military Law
and Precedents, Vol. 1 and 2, 2nd Ed., p. 54.)
In re Bogart, 3 Fed. Cas., 796, 801, citing 6 Op. Attys. Gen. 425, with approval, the court said:
In the language of Attorney General Cushing, a court-martial is a lawful tribunal existing by the same authority
that any other exists by, and the law military is a branch of law as valid as any other, and it differs from the
general law of the land in authority only in this: that it applies to officers and soldiers of the army but not to
other members of the body politic, and that it is limited to breaches of military duty.
And in re Davison, 21 F. 618, 620, it was held:
That court-martial are lawful tribunals existing by the same authority as civil courts of the United States, have
the same plenary jurisdiction in offenses by the law military as the latter courts have in controversies within
their cognizance, and in their special and more limited sphere are entitled to as untrammelled an exercise of
their powers.
And lastly, American Jurisprudence says:
SEC. 99. Representation by Counsel. It is the general rule that one accused of the crime has the right to be
represented before the court by counsel, and this is expressly so declared by the statues controlling the
procedure in court-martial. It has been held that a constitutional provision extending that right to one accused

in any trial in any court whatever applies to a court-martial and gives the accused the undeniable right to
defend by counsel, and that a court-martial has no power to refuse an attorney the right to appear before it if
he is properly licensed to practice in the courts of the state. (Citing the case of State ex rel Huffaker vs.
Crosby, 24 Nev. 115, 50 Pac. 127; 36 American Jurisprudence 253)
The fact that a judgment of conviction, not of acquittal, rendered by a court-martial must be approved by the
reviewing authority before it can be executed (Article of War 46), does not change or affect the character of a
court-martial as a court. A judgment of the Court of First Instance imposing death penalty must also be
approved by the Supreme Court before it can be executed.
That court-martial cases are criminal cases within the meaning of Section 17, Article VI, of the Constitution is
also evident, because the crimes and misdemeanors forbidden or punished by the Articles of War are offenses
against the Republic of the Philippines. According to section 1,
Rule 106, of the Rules of Court, a criminal action or case is one which involves a wrong or injury done to the
Republic, for the punishment of which the offender is prosecuted in the name of the People of the Philippines;
and pursuant to Article of War 17, "the trial advocate of a general or special court-martial shall prosecute (the
accused) in the name of the People of the Philippines."
Winthtrop, in his well known work "Military Law and Precedents' says the following:
In regard to the class of courts to which it belongs, it is lastly to be noted that the court-martial is strictly a
criminal court. It has no civil jurisdiction whatever; cannot enforce a contract, collect a debt, or award damages
in favor of an individual. . . . Its judgment is a criminal sentence not a civil verdict; its proper function is to
award punishment upon the ascertainment of guilt. (Winthrop's Military Law and Precedents, Vols. 1 & 2, 2nd
Ed., p. 55.)
In N. Y. it was held that the term "criminal case," used in the clause, must be allowed some meaning, and
none can be conceived, other than a prosecution for a criminal offense. Ex parte Carter. 66 S. W. 540, 544,
166 No. 604, 57 L.R.A. 654, quoting People vs. Kelly, 24 N.Y. 74; Counselman vs. Hitchcock, 12 S. Ct. 195;
142 U.S. 547, L. Ed. 111o. (Words and Phrases, Vol. 10, p. 485.)
Besides, that a court-martial is a court, and the prosecution of an accused before it is a criminal and not an
administrative case, and therefore it would be, under certain conditions, a bar to another prosecution of the
defendant for the same offense, because the latter would place the accused in jeopardy, is shown by the
decision of the Supreme Court of the United States in the case of Grafton vs. United States, 206 U. S. 333; 51
Law. Ed., 1088, 1092, in which the following was held:
If a court-martial has jurisdiction to try an officer or soldier for a crime, its judgment will be accorded the finality
and conclusiveness as to the issues involved which attend the judgments of a civil court in a case of which it
may legally take cognizance; x x x and restricting our decision to the above question of double jeopardy, we
judge that, consistently with the above act of 1902, and for the reasons stated, the plaintiff in error, a soldier in
the Army, having been acquitted of the crime of homicide, alleged to have been committed by him in the
Philippines, by a military court of competent jurisdiction, proceeding under the authority of the United States,
could not be subsequently tried for the same offense in a civil court exercising authority in that
territory.33 (Emphasis supplied.)
Hence, as extensively discussed above, the General Court Martial is a court within the strictest sense of the
word and acts as a criminal court. On that premise, certain provisions of the Revised Penal Code, insofar as
those that are not provided in the Articles of War and the Manual for Courts-Martial, can be supplementary.
Under Article 10 of the Revised Penal Code:
Art. 10. Offenses not subject to the provisions of this Code. - Offenses which are or in the future may be
punishable under special laws are not subject to the provisions of this Code. This Code shall be
supplementary to such laws, unless the latter should specially provide the contrary.
A special law is defined as a penal law which punishes acts not defined and penalized by the Revised Penal
Code.34 In the present case, petitioner was charged with and convicted of Conduct Unbecoming an Officer and

Gentleman (96th Article of War) and Violation of the 97th Article of War, or Conduct Prejudicial to Good Order
and Military Discipline, both of which are not defined and penalized under the Revised Penal Code. The
corresponding penalty imposed by the General Court Martial, which is two (2) years of confinement at hard
labor is penal in nature. Therefore, absent any provision as to the application of a criminal concept in the
implementation and execution of the General Court Martial's decision, the provisions of the Revised Penal
Code, specifically Article 29 should be applied. In fact, the deduction of petitioner's period of confinement to
his sentence has been recommended in the Staff Judge Advocate Review, thus:
x x x Recommend that the sentence be approved. The PNP custodial facility in Camp Crame, Quezon City, is
the appropriate place of confinement. The period of confinement from 18 October 2004 shall be credited in his
favor and deducted from the two (2) years to which the accused was sentenced. Thus, confinement will expire
on 18 October 2006. Considering that the period left not served is less than one (1) year, confinement at the
National Penitentiary is no longer appropriate.35 (Emphasis supplied.)
The above was reiterated in the Action of the Reviewing Authority, thus:
In the foregoing General Court-Martial case of People of the Philippines versus MGEN. CARLOS F. GARCIA
0-5820 AFP (now Retired), the verdict of GUILTY is hereby approved.
The sentence to be dishonorably discharged from the service; to forfeit all pay and allowances due and to
become due; and to be confined at hard labor at such place as the reviewing authority may direct for a period
of two (2) years is also approved.
Considering that the Accused has been in confinement since 18 October 2004, the entire period of his
confinement since 18 October 2004 will be credited in his favor. Consequently, his two (2) year sentence of
confinement will expire on 18 October 2006.
The proper place of confinement during the remaining unserved portion of his sentence is an official military
detention facility.1wphi1 However, the Accused is presently undergoing trial before the Sandiganbayan which
has directed that custody over him be turned over to the civilian authority and that he be confined in a civilian
jail or detention facility pending the disposition of the case(s) before said Court. For this reason, the Accused
shall remain confined at the PNP's detention facility in Camp Crame, Quezon City. The Armed Forces of the
Philippines defers to the civilian authority on this matter.
Should the Accused be released from confinement upon lawful orders by the Sandiganbayan before the
expiration of his sentence adjudged by the military court, the Provost Marshal General shall immediately take
custody over the Accused, who shall be transferred to and serve the remaining unserved portion thereof at the
ISAFP detention facility in Camp General Emilio Aguinaldo, Quezon City.36 (Emphasis supplied.)
Nevertheless, the application of Article 29 of the Revised Penal Code in the Articles of War is in accordance
with the Equal Protection Clause of the 1987 Constitution. According to a long line of decisions, equal
protection simply requires that all persons or things similarly situated should be treated alike, both as to rights
conferred and responsibilities imposed.37 It requires public bodies and institutions to treat similarly situated
individuals in a similar manner.38 The purpose of the equal protection clause is to secure every person within a
state's jurisdiction against intentional and arbitrary discrimination, whether occasioned by the express terms of
a statute or by its improper execution through the state's duly-constituted authorities. 39 In other words, the
concept of equal justice under the law requires the state to govern impartially, and it may not draw distinctions
between individuals solely on differences that are irrelevant to a legitimate governmental objective. 40 It,
however, does not require the universal application of the laws to all persons or things without distinction.
What it simply requires is equality among equals as determined according to a valid classification. Indeed, the
equal protection clause permits classification. Such classification, however, to be valid must pass the test of
reasonableness. The test has four requisites: (1) the classification rests on substantial distinctions; (2) it is
germane to the purpose of the law; (3) it is not limited to existing conditions only; and (4) it applies equally to
all members of the same class.41 "Superficial differences do not make for a valid classification." 42 In the
present case, petitioner belongs to the class of those who have been convicted by any court, thus, he is
entitled to the rights accorded to them. Clearly, there is no substantial distinction between those who are
convicted of offenses which are criminal in nature under military courts and the civil courts. Furthermore,
following the same reasoning, petitioner is also entitled to the basic and time-honored principle that penal
statutes are construed strictly against the State and liberally in favor of the accused. 43 It must be remembered
that the provisions of the Articles of War which the petitioner violated are penal in nature.

The OSG is correct when it argued that the power to confirm a sentence of the President, as Commander-inChief, includes the power to approve or disapprove the entire or any part of the sentence given by the court
martial. As provided in Article 48 of the Articles of War:
Article 48. Power Incident to Power to Confirm. - The power to confirm the sentence of a court-martial shall be
held to include:
(a) The power to confirm or disapprove a finding, and to confirm so much only of a finding of guilty of a
particular offense as involves a finding of guilty of a lesser included offense when, in the opinion of the
authority having power to confirm, the evidence of record requires a finding of only the lesser degree of guilt;
(b) The power to confirm or disapprove the whole or any part of the sentence; and
(c) The power to remand a case for rehearing, under the provisions of Article 50. (Emphasis supplied.)
In addition, the President also has the power to mitigate or remit a sentence. Under Article 49 of the Articles of
War:
Article 49. Mitigation or Remission of Sentence. - The power to order the execution of the sentence adjudged
by a court-martial shall be held to include, inter alia, the power to mitigate or remit the whole or any part of the
sentence.
Any unexpected portion of a sentence adjudged by a court-martial may be mitigated or remitted by the military
authority competent to appoint, for the command, exclusive of penitentiaries and Disciplinary Barracks of the
Armed Forces of the Philippines or Philippine Constabulary, in which the person under sentence is held, a
court of the kind that imposed the sentence, and the same power may be exercised by superior military
authority; but no sentence approved or confirmed by the President shall be remitted or mitigated by any other
authority, and no approved sentence of loss of files by an officer shall be remitted or mitigated by any authority
inferior to the President, except as provided in Article 52.
When empowered by the President to do so, the commanding general of the Army in the field or the area
commander may approve or confirm and commute (but not approve or confirm without commuting), mitigate,
or remit and then order executed as commuted, mitigated, or remitted any sentence which under those Articles
requires the confirmation of the President before the same may be executed. (As amended by Republic Act
No. 242).
Thus, the power of the President to confirm, mitigate and remit a sentence of erring military personnel is a
clear recognition of the superiority of civilian authority over the military. However, although the law (Articles of
War) which conferred those powers to the President is silent as to the deduction of the period of preventive
confinement to the penalty imposed, as discussed earlier, such is also the right of an accused provided for by
Article 29 of the RPC.
As to petitioner's contention that his right to a speedy disposition of his case was violated, this Court finds the
same to be without merit.
No less than our Constitution guarantees the right not just to a speedy trial but to the speedy disposition of
cases.44 However, it needs to be underscored that speedy disposition is a relative and flexible concept. A mere
mathematical reckoning of the time involved is not sufficient. Particular regard must be taken of the facts and
circumstances peculiar to each case.45 In determining whether or not the right to the speedy disposition of
cases has been violated, this Court has laid down the following guidelines: (1) the length of the delay; (2) the
reasons for such delay; (3) the assertion or failure to assert such right by the accused; and (4) the prejudice
caused by the delay.46
In this case, there was no allegation, whatsoever of any delay during the trial. What is being questioned by
petitioner is the delay in the confirmation of sentence by the President. Basically, the case has already been
decided by the General Court Martial and has also been reviewed by the proper reviewing authorities without
any delay. The only thing missing then was the confirmation of sentence by the President. The records do not
show that, in those six (6) years from the time the decision of the General Court Martial was promulgated until

the sentence was finally confirmed by the President, petitioner took any positive action to assert his right to a
speedy disposition of his case. This is akin to what happened in Guerrero v. Court of Appeals, 47 where, in spite
of the lapse of more than ten years of delay, the Court still held that the petitioner could not rightfully complain
of delay violative of his right to speedy trial or disposition of his case, since he was part of the reason for the
failure of his case to move on towards its ultimate resolution. The Court held, inter alia:
In the case before us, the petitioner merely sat and waited after the case was submitted for resolution in 1979.
It was only in 1989 when the case below was reraffled from the RTC of Caloocan City to the RTC of NavotasMalabon and only after respondent trial judge of the latter court ordered on March 14, 1990 the parties to
follow-up and complete the transcript of stenographic notes that matters started to get moving towards a
resolution of the case. More importantly, it was only after the new trial judge reset the retaking of the
testimonies to November 9, 1990 because of petitioner's absence during the original setting on October 24,
1990 that the accused suddenly became zealous of safeguarding his right to speedy trial and disposition.
xxxx
In the present case, there is no question that petitioner raised the violation against his own right to speedy
disposition only when the respondent trial judge reset the case for rehearing. It is fair to assume that he would
have just continued to sleep on his right a situation amounting to laches had the respondent judge not
taken the initiative of determining the non-completion of the records and of ordering the remedy precisely so
he could dispose of the case. The matter could have taken a different dimension if during all those ten years
between 1979 when accused filed his memorandum and 1989 when the case was reraffled, the accused
showed signs of asserting his right which was granted him in 1987 when the new constitution took effect, or at
least made some overt act (like a motion for early disposition or a motion to compel the stenographer to
transcribe stenographic notes) that he was not waiving it. As it is, his silence would have to be interpreted as a
waiver of such right.
While this Court recognizes the right to speedy disposition quite distinctly from the right to a speedy trial, and
although this Court has always zealously espoused protection from oppressive and vexatious delays not
attributable to the party involved, at the same time, we hold that a party's individual rights should not work
against and preclude the people's equally important right to public justice. In the instant case, three people
died as a result of the crash of the airplane that the accused was flying. It appears to us that the delay in the
disposition of the case prejudiced not just the accused but the people as well. Since the accused has
completely failed to assert his right seasonably and inasmuch as the respondent judge was not in a position to
dispose of the case on the merits due to the absence of factual basis, we hold it proper and equitable to give
the parties fair opportunity to obtain (and the court to dispense) substantial justice in the premises. 48
Time runs against the slothful and those who neglect their rights. 49 In fact, the delay in the confirmation of his
sentence was to his own advantage, because without the confirmation from the President, his sentence
cannot be served.
Anent petitioner's other arguments, the same are already rendered moot and academic due to the above
discussions.1wphi1
Grave abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to lack
of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion, as when the
power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be
so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law.50 Thus, applying, the earlier disquisitions, this Court finds that
the Office of the President did not commit any grave abuse of discretion in issuing the Confirmation of
Sentence in question.
WHEREFORE, the Petition for Certiorari dated September 29, 2011 of Major General Carlos F. Garcia, AFP
(Ret.) is hereby DISMISSED. However, applying the provisions of Article 29 of the Revised Penal Code, the
time within which the petitioner was under preventive confinement should be credited to the sentence
confirmed by the Office of the President, subject to the conditions set forth by the same law.
SO ORDERED.

G.R. No. 187298

July 03, 2012

JAMAR M. KULAYAN, TEMOGEN S. TULAWIE, HJI. MOH. YUSOP ISMI, JULHAJAN AWADI, and SPO1
SATTAL H. JADJULI, Petitioners,
vs.
GOV. ABDUSAKUR M. TAN, in his capacity as Governor of Sulu; GEN. JUANCHO SABAN, COL.
EUGENIO CLEMEN PN, P/SUPT. JULASIRIM KASIM and P/SUPT. BIENVENIDO G. LATAG, in their
capacity as officers of the Phil. Marines and Phil. National Police, respectively, Respondents.
DECISION
SERENO, J.:
On 15 January 2009, three members from the International Committee of the Red Cross (ICRC) were
kidnapped in the vicinity of the Provincial Capitol in Patikul, Sulu. 1 Andres Notter, a Swiss national and head of
the ICRC in Zamboanga City, Eugenio Vagni, an Italian national and ICRC delegate, and Marie Jean Lacaba,
a Filipino engineer, were purportedly inspecting a water and sanitation project for the Sulu Provincial Jail when
inspecting a water and sanitation project for the Sulu Provincial Jail when they were seized by three armed
men who were later confirmed to be members of the Abu Sayyaf Group (ASG). 2 The leader of the alleged
kidnappers was identified as Raden Abu, a former guard at the Sulu Provincial Jail. News reports linked Abu to
Albader Parad, one of the known leaders of the Abu Sayyaf.
On 21 January 2009, a task force was created by the ICRC and the Philippine National Police (PNP), which
then organized a parallel local group known as the Local Crisis Committee. 3 The local group, later renamed
Sulu Crisis Management Committee, convened under the leadership of respondent Abdusakur Mahail Tan, the
Provincial Governor of Sulu. Its armed forces component was headed by respondents General Juancho
Saban, and his deputy, Colonel Eugenio Clemen. The PNP component was headed by respondent Police
Superintendent Bienvenido G. Latag, the Police Deputy Director for Operations of the Autonomous Region of
Muslim Mindanao (ARMM).4
Governor Tan organized the Civilian Emergency Force (CEF), a group of armed male civilians coming from
different municipalities, who were redeployed to surrounding areas of Patikul. 5 The organization of the CEF
was embodied in a "Memorandum of Understanding" 6 entered into
between three parties: the provincial government of Sulu, represented by Governor Tan; the Armed Forces of
the Philippines, represented by Gen. Saban; and the Philippine National Police, represented by P/SUPT.
Latag. The Whereas clauses of the Memorandum alluded to the extraordinary situation in Sulu, and the
willingness of civilian supporters of the municipal mayors to offer their services in order that "the early and safe
rescue of the hostages may be achieved."7
This Memorandum, which was labeled secret on its all pages, also outlined the responsibilities of each of the
party signatories, as follows:
Responsibilities of the Provincial Government:

2) The AFP/PNP shall ensure the orderly deployment of the CEF in the performance of their assigned task(s);
3) The AFP/PNP shall ensure the safe movements of the CEF in identified areas of operation(s);
4) The AFP/PNP shall provide the necessary support and/or assistance as called for in the course of
operation(s)/movements of the CEF.8
Meanwhile, Ronaldo Puno, then Secretary of the Department of Interior and Local Government, announced to
the media that government troops had cornered some one hundred and twenty (120) Abu Sayyaf members
along with the three (3) hostages. 9 However, the ASG made
contact with the authorities and demanded that the military pull its troops back from the jungle area. 10 The
government troops yielded and went back to their barracks; the Philippine Marines withdrew to their camp,
while police and civilian forces pulled back from the terrorists stronghold by ten (10) to fifteen (15) kilometers.
Threatening that one of the hostages will be beheaded, the ASG further demanded the evacuation of the
military camps and bases in the different barangays in Jolo. 11 The authorities were given no later than 2:00
oclock in the afternoon of 31 March 2009 to comply.12
On 31 March 2009, Governor Tan issued Proclamation No. 1, Series of 2009 (Proclamation 1-09), declaring a
state of emergency in the province of Sulu. 13 It cited the kidnapping incident as a ground for the said
declaration, describing it as a terrorist act pursuant to the Human Security
Act (R.A. 9372). It also invoked Section 465 of the Local Government Code of 1991 (R.A. 7160), which
bestows on the Provincial Governor the power to carry out emergency measures during man-made and
natural disasters and calamities, and to call upon the appropriate national law enforcement agencies to
suppress disorder and lawless violence.
In the same Proclamation, respondent Tan called upon the PNP and the CEF to set up checkpoints and
chokepoints, conduct general search and seizures including arrests, and other actions necessary to ensure
public safety. The pertinent portion of the proclamation states:
NOW, THEREFORE, BY VIRTUE OF THE POWERS VESTED IN ME BY LAW, I, ABDUSAKUR MAHAIL TAN,
GOVERNOR OF THE PROVINCE OF SULU, DO HEREBY DECLARE A STATE OF EMERGENCY IN THE
PROVINCE OF SULU, AND CALL ON THE PHILIPPINE NATIONAL POLICE WITH THE ASSISTANCE OF
THE ARMED FORCES OF THE PHILIPPINES AND THE CIVILIAN EMERGENCY FORCE TO IMPLEMENT
THE FOLLOWING:
1. The setting-up of checkpoints and chokepoints in the province;
2. The imposition of curfew for the entire province subject to such Guidelines as may be issued by proper
authorities;
3. The conduct of General Search and Seizure including arrests in the pursuit of the kidnappers and their
supporters; and

1) The Provincial Government shall source the funds and logistics needed for the activation of the CEF;
4. To conduct such other actions or police operations as may be necessary to ensure public safety.
2) The Provincial Government shall identify the Local Government Units which shall participate in the
operations and to propose them for the approval of the parties to this agreement;
3) The Provincial Government shall ensure that there will be no unilateral action(s) by the CEF without the
knowledge and approval by both parties.
Responsibilities of AFP/PNP/ TF ICRC (Task Force ICRC):
1) The AFP/PNP shall remain the authority as prescribed by law in military operations and law enforcement;

DONE AT THE PROVINCIAL CAPITOL, PROVINCE OF SULU THIS

31STDAY OF MARCH 2009. Sgd. Abdusakur M. Tan Governor.14
On 1 April 2009, SPO1 Sattal Jadjuli was instructed by his superior to report to respondent P/SUPT. Julasirim
Kasim.15 Upon arriving at the police station, he was booked, and interviewed about his relationship to Musin,
Jaiton, and Julamin, who were all his deceased relatives. Upon admitting that he was indeed related to the
three, he was detained. After a few hours, former Punong Barangay Juljahan Awadi, Hadji Hadjirul Bambra,

Abdugajir Hadjirul, as well as PO2 Marcial Hajan, SPO3 Muhilmi Ismula, Punong Barangay Alano Mohammad
and jeepney driver Abduhadi Sabdani, were also arrested. 16 The affidavit17 of the apprehending officer alleged
that they were suspected ASG supporters and were being arrested under Proclamation 1-09. The following
day, 2 April 2009, the hostage Mary Jane Lacaba was released by the ASG.
On 4 April 2009, the office of Governor Tan distributed to civic organizations, copies of the "Guidelines for the
Implementation of Proclamation No. 1, Series of 2009 Declaring a State of Emergency in the Province of
Sulu."18These Guidelines suspended all Permits to Carry
Firearms Outside of Residence (PTCFORs) issued by the Chief of the PNP, and allowed civilians to seek
exemption from the gun ban only by applying to the Office of the Governor and obtaining the appropriate
identification cards. The said guidelines also allowed general searches and seizures in designated
checkpoints and chokepoints.
On 16 April 2009, Jamar M. Kulayan, Temogen S. Tulawie, Hadji Mohammad Yusop Ismi, Ahajan Awadi, and
SPO1 Sattal H. Jadjuli, residents of Patikul, Sulu, filed the present Petition for Certiorari and
Prohibition,19claiming that Proclamation 1-09 was issued with grave abuse of discretion amounting to lack or
excess of jurisdiction, as it threatened fundamental freedoms guaranteed under Article III of the 1987
Constitution.
Petitioners contend that Proclamation No. 1 and its Implementing Guidelines were issued ultra vires, and thus
null and void, for violating Sections 1 and 18, Article VII of the Constitution, which grants the President sole
authority to exercise emergency powers and calling-out powers as the chief executive of the Republic and
commander-in-chief of the armed forces.20 Additionally, petitioners claim that the Provincial Governor is not
authorized by any law to create civilian armed forces under his command, nor regulate and limit the issuances
of PTCFORs to his own private army.
In his Comment, Governor Tan contended that petitioners violated the doctrine on hierarchy of courts when
they filed the instant petition directly in the court of last resort, even if both the Court of Appeals (CA) and the
Regional Trial Courts (RTC) possessed concurrent jurisdiction with the
Supreme Court under Rule 65.21 This is the only procedural defense raised by respondent Tan. Respondents
Gen. Juancho Saban, Col. Eugenio Clemen, P/SUPT. Julasirim Kasim, and P/SUPT. Bienvenido Latag did not
file their respective Comments.1wphi1
On the substantive issues, respondents deny that Proclamation 1-09 was issued ultra vires, as Governor Tan
allegedly acted pursuant to Sections 16 and 465 of the Local Government Code, which empowers the
Provincial Governor to carry out emergency measures during calamities and disasters, and to call upon the
appropriate national law enforcement agencies to suppress disorder, riot, lawless violence, rebellion or
sedition.22Furthermore, the Sangguniang Panlalawigan of Sulu authorized the declaration of a state of
emergency as evidenced by Resolution No. 4, Series of 2009 issued on 31 March 2009 during its regular
session.23
The threshold issue in the present case is whether or not Section 465, in relation to Section 16, of the Local
Government Code authorizes the respondent governor to declare a state of emergency, and exercise the
powers enumerated under Proclamation 1-09, specifically the conduct of general searches and seizures.
Subsumed herein is the secondary question of whether or not the provincial governor is similarly clothed with
authority to convene the CEF under the said provisions.
We grant the petition.

doctrine provides that where the issuance of an extraordinary writ is also within the competence of the CA or
the RTC, it is in either of these courts and not in the Supreme Court, that the specific action for the issuance of
such writ must be sought unless special and important laws are clearly and specifically set forth in the petition.
The reason for this is that this Court is a court of last resort and must so remain if it is to perform the functions
assigned to it by the Constitution and immemorial tradition. It cannot be burdened with deciding cases in the
first instance.25
The said rule, however, is not without exception. In Chavez v. PEA-Amari, 26 the Court stated:
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The
principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts,
the Court cannot entertain cases involving factual issues. The instant case, however, raises constitutional
questions of transcendental importance to the public. The Court can resolve this case without determining any
factual issue related to the case. Also, the instant case is a petition for mandamus which falls under the
original jurisdiction of the Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary
jurisdiction over the instant case.27
The instant case stems from a petition for certiorari and prohibition, over which the Supreme Court possesses
original jurisdiction.28 More crucially, this case involves acts of a public official which pertain to restrictive
custody, and is thus impressed with transcendental public importance that would warrant the relaxation of the
general rule. The Court would be remiss in its constitutional duties were it to dismiss the present petition solely
due to claims of judicial hierarchy.
In David v. Macapagal-Arroyo,29 the Court highlighted the transcendental public importance involved in cases
that concern restrictive custody, because judicial review in these cases serves as "a manifestation of the
crucial defense of civilians in police power cases due to the diminution of their basic liberties under the guise
of a state of emergency." 30 Otherwise, the importance of the high tribunal as the court of last resort would be
put to naught, considering the nature of "emergency" cases, wherein the proclamations and issuances are
inherently short-lived. In finally disposing of the claim that the issue had become moot and academic, the
Court also cited transcendental public importance as an exception, stating:
Sa kabila ng pagiging akademiko na lamang ng mga isyu tungkol sa mahigpit na pangangalaga (restrictive
custody) at pagmonitor ng galaw (monitoring of movements) ng nagpepetisyon, dedesisyunan namin ito (a)
dahil sa nangingibabaw na interes ng madla na nakapaloob dito,
(b) dahil sa posibilidad na maaaring maulit ang pangyayari at (c) dahil kailangang maturuan ang kapulisan
tungkol dito.
The moot and academic principle is not a magical formula that can automatically dissuade the courts in
resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of
the Constitution; second, the exceptional character of the situation and the paramount public interest is
involved; third, when [the] constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public; and fourth, the case is capable of repetition yet evading review.
There is no question that the issues being raised affect the public interest, involving as they do the peoples
basic rights to freedom of expression, of assembly and of the press. Moreover, the
Court has the duty to formulate guiding and controlling constitutional precepts, doctrines or rules. It has the
symbolic function of educating the bench and the bar, and in the present petitions, the military and the police,
on the extent of the protection given by constitutional guarantees. And lastly, respondents contested actions
are capable of repetition. Certainly, the petitions are subject to judicial review.

I. Transcendental public Importance warrants a relaxation of the Doctrine of Hierarchy of Courts

We first dispose of respondents invocation of the doctrine of hierarchy of courts which allegedly prevents
judicial review by this Court in the present case, citing for this specific purpose, Montes v. Court of Appeals
and Purok Bagong Silang Association, Inc. v. Yuipco. 24 Simply put, the

Evidently, the triple reasons We advanced at the start of Our ruling are justified under the foregoing
exceptions. Every bad, unusual incident where police officers figure in generates public interest and people
watch what will be done or not done to them. Lack of disciplinary steps taken against them erode public
confidence in the police institution. As petitioners themselves assert, the restrictive custody of policemen under
investigation is an existing practice, hence, the issue is bound to crop up every now and then. The matter is
capable of repetition or susceptible of recurrence. It better be resolved now for the education and guidance of
all concerned.31 (Emphasis supplied)

Hence, the instant petition is given due course, impressed as it is with transcendental public importance.
II. Only the President is vested with calling-out powers, as the commander-in-chief of the Republic
i. One executive, one commander-in-chief
As early as Villena v. Secretary of Interior,32 it has already been established that there is one repository of
executive powers, and that is the President of the Republic. This means that when Section 1, Article VII of the
Constitution speaks of executive power, it is granted to the President and no one else. 33 As emphasized by
Justice Jose P. Laurel, in his ponencia in Villena:
With reference to the Executive Department of the government, there is one purpose which is crystal-clear and
is readily visible without the projection of judicial searchlight, and that is the establishment of a single, not
plural, Executive. The first section of Article VII of the Constitution, dealing with the Executive Department,
begins with the enunciation of the principle that "The executive power shall be vested in a President of the
Philippines." This means that the President of the Philippines is the Executive of the Government of the
Philippines, and no other.34
Corollarily, it is only the President, as Executive, who is authorized to exercise emergency powers as provided
under Section 23, Article VI, of the Constitution, as well as what became known as the calling-out powers
under Section 7, Article VII thereof.
ii. The exceptional character of Commander-in-Chief powers dictate that they are exercised by one president
Springing from the well-entrenched constitutional precept of One President is the notion that there are certain
acts which, by their very nature, may only be performed by the president as the Head of the State. One of
these acts or prerogatives is the bundle of Commander-in-Chief powers to which the "calling-out" powers
constitutes a portion. The Presidents Emergency Powers, on the other hand, is balanced only by the
legislative act of Congress, as embodied in the second paragraph of Section 23, Article 6 of the Constitution:
Article 6, Sec 23(2). In times of war or other national emergency, the Congress may, by law, authorize the
President, for a limited period and subject to such restrictions as it may prescribe, to exercise powers
necessary and proper to carry out a declared national policy. Unless sooner withdrawn by resolution of the
Congress, such powers shall cease upon the next adjournment thereof. 35
Article 7, Sec 18. The President shall be the Commander-in-Chief of all armed forces of the Philippines and
whenever it becomes necessary, he may call out such armed forces to prevent or suppress lawless violence,
invasion or rebellion. In case of invasion or rebellion, when the public safety requires it, he may, for a period
not exceeding sixty days, suspend the privilege of the writ of habeas corpus or place the Philippines or any
part thereof under martial law. Within forty-eight hours from the proclamation of martial law or the suspension
of the privilege of the writ of habeas corpus, the President shall submit a report in person or in writing to the
Congress. The Congress, voting jointly, by a vote of at least a majority of all its Members in regular or special
session, may revoke such proclamation or suspension, which revocation shall not be set aside by the
President. Upon the initiative of the President, the Congress may, in the same manner, extend such
proclamation or suspension for a period to be determined by the Congress, if the invasion or rebellion shall
persist and public safety requires it.
The Congress, if not in session, shall, within twenty-four hours following such proclamation or suspension,
convene in accordance with its rules without need of a call. 36
The power to declare a state of martial law is subject to the Supreme Courts authority to review the factual
basis thereof. 37 By constitutional fiat, the calling-out powers, which is of lesser gravity than the power to
declare martial law, is bestowed upon the President alone. As noted in Villena, "(t)here are certain
constitutional powers and prerogatives of the Chief Executive of the Nation which must be exercised by him in
person and no amount of approval or ratification will validate the exercise of any of those powers by any other
person. Such, for instance, is his power to suspend the writ of habeas corpus and proclaim martial law x x x. 38

Indeed, while the President is still a civilian, Article II, Section 339 of the Constitution mandates that civilian
authority is, at all times, supreme over the military, making the civilian president the nations supreme military
leader. The net effect of Article II, Section 3, when read with Article VII,
Section 18, is that a civilian President is the ceremonial, legal and administrative head of the armed forces.
The Constitution does not require that the President must be possessed of military training and talents, but as
Commander-in-Chief, he has the power to direct military operations and to determine military strategy.
Normally, he would be expected to delegate the actual command of the armed forces to military experts; but
the ultimate power is his.40 As Commander-in-Chief, he is authorized to direct the movements of the naval and
military forces placed by law at his command, and to employ them in the manner he may deem most
effectual.41
In the case of Integrated Bar of the Philippines v. Zamora, 42 the Court had occasion to rule that the calling-out
powers belong solely to the President as commander-in-chief:
When the President calls the armed forces to prevent or suppress lawless violence, invasion or rebellion, he
necessarily exercises a discretionary power solely vested in his wisdom. This is clear from the intent of the
framers and from the text of the Constitution itself. The Court, thus, cannot be called upon to overrule the
Presidents wisdom or substitute its own. However, this does not prevent an examination of whether such
power was exercised within permissible constitutional limits or whether it was exercised in a manner
constituting grave abuse of discretion. In view of the constitutional intent to give the President full discretionary
power to determine the necessity of calling out the armed forces, it is incumbent upon the petitioner to show
that the Presidents decision is totally bereft of factual basis.
There is a clear textual commitment under the Constitution to bestow on the President full discretionary power
to call out the armed forces and to determine the necessity for the exercise of such power.43 (Emphasis
supplied)
Under the foregoing provisions, Congress may revoke such proclamation or suspension and the Court may
review the sufficiency of the factual basis thereof. However, there is no such equivalent provision dealing with
the revocation or review of the Presidents action to call out the armed forces. The distinction places the calling
out power in a different category from the power to declare martial law and the power to suspend the privilege
of the writ of habeas corpus, otherwise, the framers of the Constitution would have simply lumped together the
three powers and provided for their revocation and review without any qualification. 44
That the power to call upon the armed forces is discretionary on the president is clear from the deliberation of
the Constitutional Commission:
FR. BERNAS. It will not make any difference. I may add that there is a graduated power of the President as
Commander-in-Chief. First, he can call out such Armed Forces as may be necessary to suppress lawless
violence; then he can suspend the privilege of the writ of habeas corpus, then he can impose martial law. This
is a graduated sequence.
When he judges that it is necessary to impose martial law or suspend the privilege of the writ of habeas
corpus, his judgment is subject to review. We are making it subject to review by the Supreme Court and
subject to concurrence by the National Assembly. But when he exercises this lesser power of calling on the
Armed Forces, when he says it is necessary, it is my opinion that his judgment cannot be reviewed by
anybody.
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MR. REGALADO. That does not require any concurrence by the legislature nor is it subject to judicial review.
The reason for the difference in the treatment of the aforementioned powers highlights the intent to grant the
President the widest leeway and broadest discretion in using the power to call out because it is considered as
the lesser and more benign power compared to the power to suspend the privilege of the writ of habeas
corpus and the power to impose martial law, both of which involve the curtailment and suppression of certain

basic civil rights and individual freedoms, and thus necessitating safeguards by Congress and review by this
Court.

Mr. de los Reyes: But in exceptional cases, even the operational control can be taken over by the National
Police Commission?

x x x Thus, it is the unclouded intent of the Constitution to vest upon the President, as Commander-in-Chief of
the Armed Forces, full discretion to call forth the military when in his judgment it is necessary to do so in order
to prevent or suppress lawless violence, invasion or rebellion. 45(Emphasis Supplied)

Mr. Natividad: If the situation is beyond the capacity of the local governments. 51 (Emphases supplied)

In the more recent case of Constantino, Jr. v. Cuisia,46 the Court characterized these powers as exclusive to
the President, precisely because they are of exceptional import:
These distinctions hold true to this day as they remain embodied in our fundamental law. There are certain
presidential powers which arise out of exceptional circumstances, and if exercised, would involve the
suspension of fundamental freedoms, or at least call for the supersedence of executive prerogatives over
those exercised by co-equal branches of government. The declaration of martial law, the suspension of the
writ of habeas corpus, and the exercise of the pardoning power, notwithstanding the judicial determination of
guilt of the accused, all fall within this special class that demands the exclusive exercise by the President of
the constitutionally vested power. The list is by no means exclusive, but there must be a showing that the
executive power in question is of similargravitas and exceptional import.47
In addition to being the commander-in-chief of the armed forces, the President also acts as the leader of the
countrys police forces, under the mandate of Section 17, Article VII of the Constitution, which provides that,
"The President shall have control of all the executive departments, bureaus, and offices. He shall ensure that
the laws be faithfully executed." During the deliberations of the Constitutional Commission on the framing of
this provision, Fr. Bernas defended the retention of the word "control," employing the same rationale of
singularity of the office of the president, as the only Executive under the presidential form of government. 48
Regarding the countrys police force, Section 6, Article XVI of the Constitution states that: "The State shall
establish and maintain one police force, which shall be national in scope and civilian in character, to be
administered and controlled by a national police commission. The authority of local executives over the police
units in their jurisdiction shall be provided by law." 49
A local chief executive, such as the provincial governor, exercises operational supervision over the
police,50 and may exercise control only in day-to-day operations, viz:
Mr. Natividad: By experience, it is not advisable to provide either in our Constitution or by law full control of the
police by the local chief executive and local executives, the mayors. By our experience, this has spawned
warlordism, bossism and sanctuaries for vices and abuses. If the national government does not have a
mechanism to supervise these 1,500 legally, technically separate police forces, plus 61 city police forces,
fragmented police system, we will have a lot of difficulty in presenting a modern professional police force. So
that a certain amount of supervision and control will have to be exercised by the national government.

Furthermore according to the framers, it is still the President who is authorized to exercise supervision and
control over the police, through the National Police Commission:
Mr. Rodrigo: Just a few questions. The President of the Philippines is the Commander-in-Chief of all the armed
forces.
Mr. Natividad: Yes, Madam President.
Mr. Rodrigo: Since the national police is not integrated with the armed forces, I do not suppose they come
under the Commander-in-Chief powers of the President of the Philippines.
Mr. Natividad: They do, Madam President. By law, they are under the supervision and control of the President
of the Philippines.
Mr. Rodrigo: Yes, but the President is not the Commander-in-Chief of the national police.
Mr. Natividad: He is the President.
Mr. Rodrigo: Yes, the Executive. But they do not come under that specific provision that the President is the
Commander-in-Chief of all the armed forces.
Mr. Natividad: No, not under the Commander-in-Chief provision.
Mr. Rodrigo: There are two other powers of the President. The
President has control over ministries, bureaus and offices, and supervision over local governments. Under
which does the police fall, under control or under supervision?
Mr. Natividad: Both, Madam President.
Mr. Rodrigo: Control and supervision.

For example, if a local government, a town cannot handle its peace and order problems or police problems,
such as riots, conflagrations or organized crime, the national government may come in, especially if requested
by the local executives. Under that situation, if they come in under such an extraordinary situation, they will be
in control. But if the day-to-day business of police investigation of crime, crime prevention, activities, traffic
control, is all lodged in the mayors, and if they are in complete operational control of the day-to-day business
of police service, what the national government would control would be the administrative aspect.
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Mr. de los Reyes: so the operational control on a day-to-day basis, meaning, the usual duties being performed
by the ordinary policemen, will be under the supervision of the local executives?
Mr. Natividad: Yes, Madam President.
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Mr. Natividad: Yes, in fact, the National Police Commission is under the Office of the President. 52
In the discussions of the Constitutional Commission regarding the above provision it is clear that the framers
never intended for local chief executives to exercise unbridled control over the police in emergency
situations.This is without prejudice to their authority over police units in their jurisdiction as provided by law,
and their prerogative to seek assistance from the police in day to day situations, as contemplated by the
Constitutional Commission. But as a civilian agency of the government, the police, through the NAPOLCOM,
properly comes within, and is subject to, the exercise by the President of the power of executive control. 53
iii. The provincial governor does not possess the same calling-out powers as the President
Given the foregoing, respondent provincial governor is not endowed with the power to call upon the armed
forces at his own bidding. In issuing the assailed proclamation, Governor Tan exceeded his authority when he
declared a state of emergency and called upon the Armed Forces, the police, and his own Civilian Emergency
Force. The calling-out powers contemplated under the Constitution is exclusive to the President. An exercise

by another official, even if he is the local chief executive, is ultra vires, and may not be justified by the
invocation of Section 465 of the Local Government Code, as will be discussed subsequently.

Section 465. The Chief Executive: Powers, Duties, Functions, and Compensation.
xxx

Respondents, however, justify this stance by stating that nowhere in the seminal case of David v. Arroyo,
which dealt squarely with the issue of the declaration of a state of emergency, does it limit the said authority to
the President alone. Respondents contend that the ruling in David expressly limits the authority to declare a
national emergency, a condition which covers the entire country, and does not include emergency situations in
local government units.54 This claim is belied by the clear intent of the framers that in all situations involving
threats to security, such as lawless violence, invasion or rebellion, even in localized areas, it is still the
President who possesses the sole authority to exercise calling-out powers. As reflected in the Journal of the
Constitutional Commission:
Thereafter, Mr. Padilla proposed on line 29 to insert the phrase OR PUBLIC DISORDER in lieu of "invasion or
rebellion." Mr. Sumulong stated that the committee could not accept the amendment because under the first
section of Section 15, the President may call out and make use of the armed forces to prevent or suppress not
only lawless violence but even invasion or rebellion without declaring martial law. He observed that by deleting
"invasion or rebellion" and substituting PUBLIC DISORDER, the President would have to declare martial law
before he can make use of the armed forces to prevent or suppress lawless invasion or rebellion.
Mr. Padilla, in reply thereto, stated that the first sentence contemplates a lighter situation where there is some
lawless violence in a small portion of the country or public disorder in another at which times, the armed forces
can be called to prevent or suppress these incidents. He noted that the Commander-in-Chief can do so in a
minor degree but he can also exercise such powers should the situation worsen. The words "invasion or
rebellion" to be eliminated on line 14 are covered by the following sentence which provides for "invasion or
rebellion." He maintained that the proposed amendment does not mean that under such circumstances, the
President cannot call on the armed forces to prevent or suppress the same. 55 (Emphasis supplied)
III. Section 465 of the Local

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(b) For efficient, effective and economical governance the purpose of which is the general welfare of the
province and its inhabitants pursuant to Section 16 of this Code, the provincial governor shall:
(1) Exercise general supervision and control over all programs, projects, services, and activities of the
provincial government, and in this connection, shall:
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(vii) Carry out such emergency measures as may be necessary during and in the aftermath of man-made and
natural disasters and calamities;
(2) Enforce all laws and ordinances relative to the governance of the province and the exercise of the
appropriate corporate powers provided for under Section 22 of this Code, implement all approved policies,
programs, projects, services and activities of the province and, in addition to the foregoing, shall:
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(vi) Call upon the appropriate national law enforcement agencies to suppress disorder, riot, lawless violence,
rebellion or sedition or to apprehend violators of the law when public interest so requires and the police forces
of the component city or municipality where the disorder or violation is happening are inadequate to cope with
the situation or the violators.

Respondent governor characterized the kidnapping of the three ICRC workers as a terroristic act, and used
this incident to justify the exercise of the powers enumerated under Proclamation 1-09. 56 He invokes Section
465, in relation to Section 16, of the Local Government Code, which purportedly allows the governor to carry
out emergency measures and call upon the appropriate national law enforcement agencies for assistance. But
a closer look at the said proclamation shows that there is no provision in the Local Government Code nor in
any law on which the broad and unwarranted powers granted to the Governor may be based.

Section 16. General Welfare. - Every local government unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and
effective governance, and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and support, among other things, the
preservation and enrichment of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and self-reliant scientific and
technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve the comfort and convenience of
their inhabitants. (Emphases supplied)

Petitioners cite the implementation of "General Search and Seizure including arrests in the pursuit of the
kidnappers and their supporters," 57 as being violative of the constitutional proscription on general search
warrants and general seizures. Petitioners rightly assert that this alone would be sufficient to render the
proclamation void, as general searches and seizures are proscribed, for being violative of the rights enshrined
in the Bill of Rights, particularly:

Respondents cannot rely on paragraph 1, subparagraph (vii) of Article 465 above, as the said provision
expressly refers to calamities and disasters, whether man-made or natural. The governor, as local chief
executive of the province, is certainly empowered to enact and implement emergency measures during these
occurrences. But the kidnapping incident in the case at bar cannot be considered as a calamity or a disaster.
Respondents cannot find any legal mooring under this provision to justify their actions.

The right of the people to be secure in their persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be seized. 58

Paragraph 2, subparagraph (vi) of the same provision is equally inapplicable for two reasons. First, the Armed
Forces of the Philippines does not fall under the category of a "national law enforcement agency," to which the
National Police Commission (NAPOLCOM) and its departments belong.

Government Code cannot be invoked to justify the powers enumerated under Proclamation 1-09

In fact, respondent governor has arrogated unto himself powers exceeding even the martial law powers of the
President, because as the Constitution itself declares, "A state of martial law does not suspend the operation
of the Constitution, nor supplant the functioning of the civil courts or legislative assemblies, nor authorize the
conferment of the jurisdiction on military courts and agencies over civilians where civil courts are able to
function, nor automatically suspend the privilege of the writ." 59
We find, and so hold, that there is nothing in the Local Government Code which justifies the acts sanctioned
under the said Proclamation. Not even Section 465 of the said Code, in relation to Section 16, which states:

Its mandate is to uphold the sovereignty of the Philippines, support the Constitution, and defend the Republic
against all enemies, foreign and domestic. Its aim is also to secure the integrity of the national territory. 60
Second, there was no evidence or even an allegation on record that the local police forces were inadequate to
cope with the situation or apprehend the violators. If they were inadequate, the recourse of the provincial
governor was to ask the assistance of the Secretary of Interior and Local Government, or such other
authorized officials, for the assistance of national law enforcement agencies.

The Local Government Code does not involve the diminution of central powers inherently vested in the
National Government, especially not the prerogatives solely granted by the Constitution to the President in
matters of security and defense.

Guidelines. The said proclamation and guidelines are hereby declared NULL and VOID for having been issued
in grave abuse of discretion, amounting to lack or excess of jurisdiction.
SO ORDERED.

The intent behind the powers granted to local government units is fiscal, economic, and administrative in
nature.1wphi1The Code is concerned only with powers that would make the delivery of basic services more
effective to the constituents,61 and should not be unduly stretched to confer calling-out powers on local
executives.
In the sponsorship remarks for Republic Act 7160, it was stated that the devolution of powers is a step towards
the autonomy of local government units (LGUs), and is actually an experiment whose success heavily relies
on the power of taxation of the LGUs. The underpinnings of the Code can be found in Section 5, Article II of
the 1973 Constitution, which allowed LGUs to create their own sources of revenue. 62 During the interpellation
made by Mr. Tirol addressed to Mr. de Pedro, the latter emphasized that "Decentralization is an administrative
concept and the process of shifting and delegating power from a central point to subordinate levels to promote
independence, responsibility, and quicker decision-making. (I)t does not involve any transfer of final
authority from the national to field levels, nor diminution of central office powers and responsibilities. Certain
government agencies, including the police force, are exempted from the decentralization process because
their functions are not inherent in local government units." 63
IV. Provincial governor is not authorized to convene CEF
Pursuant to the national policy to establish one police force, the organization of private citizen armies is
proscribed. Section 24 of Article XVIII of the Constitution mandates that:
Private armies and other armed groups not recognized by duly constituted authority shall be dismantled. All
paramilitary forces including Civilian Home Defense Forces (CHDF) not consistent with the citizen armed force
established in this Constitution, shall be dissolved or, where appropriate, converted into the regular force.
Additionally, Section 21of Article XI states that, "The preservation of peace and order within the regions shall
be the responsibility of the local police agencies which shall be organized, maintained, supervised, and utilized
in accordance with applicable laws. The defense and security of the regions shall be the responsibility of the
National Government."
Taken in conjunction with each other, it becomes clear that the Constitution does not authorize the
organization of private armed groups similar to the CEF convened by the respondent Governor. The framers of
the Constitution were themselves wary of armed citizens groups, as shown in the following proceedings:

UNITED CLAIMANTS
ASSOCIATION OF NEA (UNICAN),
represented by its representative
BIENVENIDO R. LEAL, in his
official capacity as its President and in
his own individual capacity,
EDUARDO R. LACSON, ORENCIO
F. VENIDA, JR., THELMA V.
OGENA, BOBBY M. CARANTO,
MARILOU B. DE JESUS, EDNA G.
RAA, and ZENAIDA P. OLIQUINO,
in their own capacities and in behalf
of all those similarly situated officials
and employees of the National
Electrification Administration,
Petitioners,
- versus NATIONAL ELECTRIFICATION
ADMINISTRATION (NEA), NEA
BOARD OF ADMINISTRATORS
(NEA BOARD), ANGELO T. REYES
as Chairman of the NEA Board of
Administrators, EDITHA S.
BUENO,
Ex-Officio Member and NEA
Administrator, and WILFRED L.
BILLENA, JOSPEPH D.
KHONGHUN, and FR. JOSE
VICTOR E. LOBRIGO, Members,
NEA Board,
Respondents.

MR. GARCIA: I think it is very clear that the problem we have here is a paramilitary force operating under the
cloak, under the mantle of legality is creating a lot of problems precisely by being able to operate as an
independent private army for many regional warlords. And at the same time, this I think has been the thrust,
the intent of many of the discussions and objections to the paramilitary units and the armed groups.
MR. PADILLA: My proposal covers two parts: the private armies of political warlords and other armed torces
not recognized by constituted authority which shall be dismantled and dissolved. In my trips to the provinces, I
heard of many abuses committed by the CHDF (Civilian Home Defense Forces), specially in Escalante,
Negros Occidental. But I do not know whether a particular CHDF is approved or authorized by competent
authority. If it is not authorized, then the CHDF will have to be dismantled. If some CHDFs, say in other
provinces, are authorized by constituted authority, by the Armed Forces of the Philippines, through the Chief of
Staff or the Minister of National Defense, if they are recognized and authorized, then they will not be
dismantled. But I cannot give a categorical answer to any specific CHDF unit, only the principle that if they are
armed forces which are not authorized, then they should be dismantled. 64 (Emphasis supplied)
Thus, with the discussions in the Constitutional Commission as guide, the creation of the Civilian Emergency
Force (CEF) in the present case, is also invalid.
WHEREFORE, the instant petition is GRANTED. Judgment is rendered commanding respondents to desist
from further proceedings m implementing Proclamation No. 1, Series of 2009, and its Implementing

x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:

G.R. No. 187107

Present:
CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,*
VILLARAMA, JR.,
PEREZ,
MENDOZA,**
SERENO,*
REYES, and
PERLAS-BERNABE, JJ.

Promulgated:
January 31, 2012

The Case
This is an original action for Injunction to restrain and/or prevent the implementation of Resolution Nos. 46 and
59, dated July 10, 2003 and September 3, 2003, respectively, otherwise known as the National Electrification
Administration (NEA) Termination Pay Plan, issued by respondent NEA Board of Administrators (NEA Board).
The Facts
Petitioners are former employees of NEA who were terminated from their employment with the implementation
of the assailed resolutions.
Respondent NEA is a government-owned and/or controlled corporation created in accordance with
Presidential Decree No. (PD) 269 issued on August 6, 1973. Under PD 269, Section 5(a)(5), the NEA Board is
empowered to organize or reorganize NEAs staffing structure, as follows:

(ii) With respect to NEA officials and employees, they shall be considered legally terminated and shall
be entitled to the benefits or separation pay provided in Section 3(a) herein when a restructuring of
NEA is implemented pursuant to a law enacted by Congress or pursuant to Section 5(a)(5) of
Presidential Decree No. 269. (Emphasis supplied.)
Meanwhile, on August 28, 2002, former President Gloria Macapagal- Arroyo issued Executive Order No. 119
directing the NEA Board to submit a reorganization plan. Thus, the NEA Board issued the assailed resolutions.
On September 17, 2003, the Department of Budget and Management approved the NEA Termination Pay
Plan.
Thereafter, the NEA implemented an early retirement program denominated as the Early Leavers Program,
giving incentives to those who availed of it and left NEA before the effectivity of the reorganization plan. The
other employees of NEA were terminated effective December 31, 2003.
Hence, We have this petition.

Section 5. National Electrification Administration; Board of Administrators; Administrator.

The Issues

(a) For the purpose of administering the provisions of this Decree, there is hereby established a public
corporation to be known as the National Electrification Administration. All of the powers of the corporation shall
be vested in and exercised by a Board of Administrators, which shall be composed of a Chairman and four (4)
members, one of whom shall be the Administrator as ex-officio member. The Chairman and the three other
members shall be appointed by the President of the Philippines to serve for a term of six years. x x x

Petitioners raise the following issues:

1.
2.
and
3.

The NEA Board has no power to terminate all the NEA employees;
Executive Order No. 119 did not grant the NEA Board the power to terminate all NEA employees;
Resolution Nos. 46 and 59 were carried out in bad faith.

xxxx
On the other hand, respondents argue in their Comment dated August 20, 2009 that:
The Board shall, without limiting the generality of the foregoing, have the following specific powers and duties.
1. To implement the provisions and purposes of this Decree;
xxxx
5. To establish policies and guidelines for employment on the basis of merit, technical competence and moral
character, and, upon the recommendation of the Administrator to organize or reorganize NEAs staffing
structure, to fix the salaries of personnel and to define their powers and duties. (Emphasis supplied.)

1.
The Court has no jurisdiction over the petition;
2.
Injunction is improper in this case given that the assailed resolutions of the NEA Board have long
been implemented; and
3.
The assailed NEA Board resolutions were issued in good faith.
The Courts Ruling
This petition must be dismissed.
The procedural issues raised by respondents shall first be discussed.

Thereafter, in order to enhance and accelerate the electrification of the whole country, including the
privatization of the National Power Corporation, Republic Act No. (RA) 9136, otherwise known as the Electric
Power Industry Reform Act of 2001 (EPIRA Law), was enacted, taking effect on June 26, 2001. The law
imposed upon NEA additional mandates in relation to the promotion of the role of rural electric cooperatives to
achieve national electrification. Correlatively, Sec. 3 of the law provides:
Section 3. Scope. - This Act shall provide a framework for the restructuring of the electric power industry,
including the privatization of the assets of NPC, the transition to the desired competitive structure, and the
definition of the responsibilities of the various government agencies and private entities. (Emphasis supplied.)
Sec. 77 of RA 9136 also provides:
Section 77. Implementing Rules and Regulations. - The DOE shall, in consultation with the electric power
industry participants and end-users, promulgate the Implementing Rules and Regulations (IRR) of this Act
within six (6) months from the effectivity of this Act, subject to the approval by the Power Commission.
Thus, the Rules and Regulations to implement RA 9136 were issued on February 27, 2002. Under Sec. 3(b)
(ii), Rule 33 of the Rules and Regulations, all the NEA employees and officers are considered terminated and
the 965 plantilla positions of NEA vacant, to wit:
Section 3. Separation and Other Benefits.
(a) x x x
(b) The following shall govern the application of Section 3(a) of this Rule:
xxxx

This Court Has Jurisdiction over the Case

Respondents essentially argue that petitioners violated the principle of hierarchy of courts, pursuant to
which the instant petition should have been filed with the Regional Trial Court first rather than with this Court
directly.
We explained the principle of hierarchy of courts in Mendoza v. Villas,[1] stating:
In Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. Secretary of Agrarian Reform, a
petition for certiorari filed under Rule 65 was dismissed for having been filed directly with the Court, violating
the principle of hierarchy of courts, to wit:
Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent jurisdiction
to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such
concurrence does not give the petitioner unrestricted freedom of choice of court forum. In Heirs of Bertuldo
Hinog v. Melicor, citing People v. Cuaresma, this Court made the following pronouncements:
This Courts original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court with
Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however, to be
taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court
to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is
determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates
that petitions for the issuance of extraordinary writs against first level (inferior) courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the

Courts time and attention which are better devoted to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Courts docket. (Emphasis supplied.)
Evidently, the instant petition should have been filed with the RTC. However, as an exception to this
general rule, the principle of hierarchy of courts may be set aside for special and important reasons. Such
reason exists in the instant case involving as it does the employment of the entire plantilla of NEA, more than
700 employees all told, who were effectively dismissed from employment in one swift stroke. This to the mind
of the Court entails its attention.
Moreover, the Court has made a similar ruling in National Power Corporation Drivers and Mechanics
Association (NPC-DAMA) v. National Power Corporation (NPC).[2] In that case, the NPC-DAMA also filed a
petition for injunction directly with this Court assailing NPC Board Resolution Nos. 2002-124 and 2002-125,
both dated November 18, 2002, directing the termination of all employees of the NPC on January 31, 2003.
Despite such apparent disregard of the principle of hierarchy of courts, the petition was given due course. We
perceive no compelling reason to treat the instant case differently.

xxxx
The Board shall, without limiting the generality of the foregoing, have the following specific powers and duties.
xxxx
5. To establish policies and guidelines for employment on the basis of merit, technical competence and moral
character, and, upon the recommendation of the Administrator to organize or reorganize NEAs staffing
structure, to fix the salaries of personnel and to define their powers and duties. (Emphasis supplied.)
Thus, petitioners argue that the power granted unto the NEA Board to organize or reorganize does not include
the power to terminate employees but only to reduce NEAs manpower complement.
Such contention is erroneous.
In Betoy v. The Board of Directors, National Power Corporation,[4] the Court upheld the dismissal of all
the employees of the NPC pursuant to the EPIRA Law. In ruling that the power of reorganization includes the
power of removal, the Court explained:

The Remedy of Injunction Is still Available

Respondents allege that the remedy of injunction is no longer available to petitioners inasmuch as the
assailed NEA Board resolutions have long been implemented.
Taking respondents above posture as an argument on the untenability of the petition on the ground of
mootness, petitioners contend that the principle of mootness is subject to exceptions, such as when the case
is of transcendental importance.
In Funa v. Executive Secretary,[3] the Court passed upon the seeming moot issue of the appointment of Maria
Elena H. Bautista (Bautista) as Officer-in-Charge (OIC) of the Maritime Industry Authority (MARINA) while
concurrently serving as Undersecretary of the Department of Transportation and Communications. There,
even though Bautista later on was appointed as Administrator of MARINA, the Court ruled that the case was
an exception to the principle of mootness and that the remedy of injunction was still available, explaining thus:
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening
events, so that a declaration thereon would be of no practical use or value. Generally, courts decline
jurisdiction over such case or dismiss it on ground of mootness. However, as we held in Public Interest Center,
Inc. v. Elma, supervening events, whether intended or accidental, cannot prevent the Court from rendering a
decision if there is a grave violation of the Constitution. Even in cases where supervening events had made
the cases moot, this Court did not hesitate to resolve the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar, and public.
As a rule, the writ of prohibition will not lie to enjoin acts already done. However, as an exception to
the rule on mootness, courts will decide a question otherwise moot if it is capable of repetition yet
evading review. (Emphasis supplied.)
Similarly, in the instant case, while the assailed resolutions of the NEA Board may have long been
implemented, such acts of the NEA Board may well be repeated by other government agencies in the
reorganization of their offices. Petitioners have not lost their remedy of injunction.
The Power to Reorganize Includes the Power to Terminate
The meat of the controversy in the instant case is the issue of whether the NEA Board had the power to
pass Resolution Nos. 46 and 59 terminating all of its employees.

[R]eorganization involves the reduction of personnel, consolidation of offices, or abolition thereof by reason of
economy or redundancy of functions. It could result in the loss of ones position through removal or
abolition of an office. However, for a reorganization for the purpose of economy or to make the
bureaucracy more efficient to be valid, it must pass thetest of good faith; otherwise, it is void ab initio.
(Emphasis supplied.)
Evidently, the termination of all the employees of NEA was within the NEA Boards powers and may not
successfully be impugned absent proof of bad faith.
Petitioners Failed to Prove that the NEA Board Acted in Bad Faith
Next, petitioners challenge the reorganization claiming bad faith on the part of the NEA Board.
Congress itself laid down the indicators of bad faith in the reorganization of government offices in Sec. 2 of RA
6656, an Act to Protect the Security of Tenure of Civil Service Officers and Employees in the Implementation
of Government Reorganization, to wit:
Section 2. No officer or employee in the career service shall be removed except for a valid cause and after
due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a
position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate
positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service
Law. The existence of any or some of the following circumstances may be considered as evidence of
bad faith in the removals made as a result of reorganization, giving rise to a claim for reinstatement or
reappointment by an aggrieved party:
(a) Where there is a significant increase in the number of positions in the new staffing pattern of the
department or agency concerned;
(b) Where an office is abolished and other performing substantially the same functions is created;
(c) Where incumbents are replaced by those less qualified in terms of status of appointment,
performance and merit;
(d) Where there is a reclassification of offices in the department or agency concerned and the reclassified
offices perform substantially the same function as the original offices;

This must be answered in the affirmative.

(e) Where the removal violates the order of separation provided in Section 3 hereof. (Emphasis supplied.)
Under Rule 33, Section 3(b)(ii) of the Implementing Rules and Regulations of the EPIRA Law, all NEA
employees shall be considered legally terminated with the implementation of a reorganization program
pursuant to a law enacted by Congress or pursuant to Sec. 5(a)(5) of PD 269 through which the
reorganization was carried out, viz:
Section 5. National Electrification Administration; Board of Administrators; Administrator.
(a) For the purpose of administering the provisions of this Decree, there is hereby established a public
corporation to be known as the National Electrification Administration. x x x

It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court ruled
in Culili v. Eastern Telecommunications, Inc.,[5] According to jurisprudence, basic is the principle that good
faith is presumed and he who alleges bad faith has the duty to prove the same. Moreover, in Spouses
Palada v. Solidbank Corporation,[6] the Court stated, Allegations of bad faith and fraud must be proved by
clear and convincing evidence.
Here, petitioners have failed to discharge such burden of proof.

In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs (b) and (c).
Petitioners have the burden to show that: (1) the abolished offices were replaced by substantially the same
units performing the same functions; and (2) incumbents are replaced by less qualified personnel.

TUNA PROCESSING, INC.,

Petitioners failed to prove such facts. Mere allegations without hard evidence cannot be considered as
clear and convincing proof.

G.R. No. 185582

Petitioner,

Next, petitioners state that the NEA Board should not have abolished all the offices of NEA and instead
made a selective termination of its employees while retaining the other employees.
Petitioners argue that for the reorganization to be valid, it is necessary to only abolish the offices or terminate
the employees that would not be retained and the retention of the employees that were tasked to carry out the
continuing mandate of NEA. Petitioners argue in their Memorandum dated July 27, 2010:

Present:

A valid reorganization, pursued in good faith, would have resulted to: (1) the abolition of old positions in
the NEAs table of organization that pertain to the granting of franchises and rate fixing functions as these
were all abolished by Congress (2) the creation of new positions that pertain to the additional mandates of the
EPIRA Law and (3) maintaining the old positions that were not affected by the EPIRA Law.
The Court already had the occasion to pass upon the validity of the similar reorganization in the NPC. In
the aforecited case of Betoy,[7] the Court upheld the policy of the Executive to terminate all the employees of
the office before rehiring those necessary for its operation. We ruled in Betoy that such policy is not tainted
with bad faith:

CARPIO, J.,
-versus-

Chairperson,
BRION,

It is undisputed that NPC was in financial distress and the solution found by Congress was to pursue a policy
towards its privatization. The privatization of NPC necessarily demanded the restructuring of its operations. To
carry out the purpose, there was a need to terminate employees and re-hire some depending on the
manpower requirements of the privatized companies. The privatization and restructuring of the NPC
was, therefore, done in good faith as its primary purpose was for economy and to make the
bureaucracy more efficient. (Emphasis supplied.)

PEREZ,
SERENO, and
REYES, JJ.

Evidently, the fact that the NEA Board resorted to terminating all the incumbent employees of NPC and,
later on, rehiring some of them, cannot, on that ground alone, vitiate the bona fides of the reorganization.
WHEREFORE, the instant petition is hereby DISMISSED. Resolution Nos. 46 and 59, dated July 10, 2003 and
September 3, 2003, respectively, issued by the NEA Board of Directors are hereby UPHELD.

PHILIPPINE KINGFORD, INC.,

Promulgated:

No costs.
Respondent.

SO ORDERED

February 29, 2012

x-----------------------------------------------------------------------------------------x

DECISION

PEREZ, J.:

Can a foreign corporation not licensed to do business in the Philippines, but which collects royalties from
entities in the Philippines, sue here to enforce a foreign arbitral award?
6. Ownership of TPI. TPI shall be owned by the Sponsors and Licensor. Licensor shall be assigned one
share of TPI for the purpose of being elected as member of the board of directors. The remaining shares of
TPI shall be held by the Sponsors according to their respective equity shares. [9]
In this Petition for Review on Certiorari under Rule 45,[1] petitioner Tuna Processing, Inc. (TPI), a foreign
corporation not licensed to do business in the Philippines, prays that the Resolution [2] dated 21 November
2008 of the Regional Trial Court (RTC) of Makati City be declared void and the case be remanded to the RTC
for further proceedings. In the assailed Resolution, the RTC dismissed petitioners Petition for Confirmation,
Recognition, and Enforcement of Foreign Arbitral Award [3] against respondent Philippine Kingford, Inc.
(Kingford), a corporation duly organized and existing under the laws of the Philippines, [4] on the ground that
petitioner lacked legal capacity to sue. [5]

xxx

The parties likewise executed a Supplemental Memorandum of Agreement [10] dated 15 January 2003 and an
Agreement to Amend Memorandum of Agreement[11] dated 14 July 2003.
The Antecedents

On 14 January 2003, Kanemitsu Yamaoka (hereinafter referred to as the licensor), co-patentee of U.S.
Patent No. 5,484,619, Philippine Letters Patent No. 31138, and Indonesian Patent No. ID0003911 (collectively
referred to as the Yamaoka Patent),[6] and five (5) Philippine tuna processors, namely, Angel Seafood
Corporation, East Asia Fish Co., Inc., Mommy Gina Tuna Resources, Santa Cruz Seafoods, Inc., and
respondent Kingford (collectively referred to as the sponsors/licensees) [7] entered into a Memorandum of
Agreement (MOA),[8] pertinent provisions of which read:

1.
Background and objectives. The Licensor, co-owner of U.S.Patent No. 5,484,619, Philippine Patent
No. 31138, and Indonesian Patent No. ID0003911 xxx wishes to form an alliance with Sponsors for purposes
of enforcing his three aforementioned patents, granting licenses under those patents, and collecting royalties.

Due to a series of events not mentioned in the petition, the licensees, including respondent Kingford, withdrew
from petitioner TPI and correspondingly reneged on their obligations. [12] Petitioner submitted the dispute for
arbitration before the International Centre for Dispute Resolution in the State of California, United States and
won the case against respondent. [13] Pertinent portions of the award read:

13.1 Within thirty (30) days from the date of transmittal of this Award to the Parties, pursuant to the terms of
this award, the total sum to be paid by RESPONDENT KINGFORD toCLAIMANT TPI, is the sum of ONE
MILLION SEVEN HUNDRED FIFTY THOUSAND EIGHT HUNDRED FORTY SIX DOLLARS AND TEN
CENTS ($1,750,846.10).
(A) For breach of the MOA by not paying past due assessments, RESPONDENT KINGFORD shall
pay CLAIMANT the total sum of TWO HUNDRED TWENTY NINE THOUSAND THREE HUNDRED AND
FIFTY FIVE DOLLARS AND NINETY CENTS ($229,355.90) which is 20% of MOA assessments since
September 1, 2005[;]

The Sponsors wish to be licensed under the aforementioned patents in order to practice the processes
claimed in those patents in the United States, the Philippines, and Indonesia, enforce those patents and
collect royalties in conjunction with Licensor.
(B) For breach of the MOA in failing to cooperate with CLAIMANT TPI in fulfilling the objectives of the MOA,
RESPONDENT KINGFORD shall pay CLAIMANT the total sum ofTWO HUNDRED SEVENTY ONE
THOUSAND FOUR HUNDRED NINETY DOLLARS AND TWENTY CENTS ($271,490.20)[;][14] and
xxx

4. Establishment of Tuna Processors, Inc. The parties hereto agree to the establishment of Tuna
Processors, Inc. (TPI), a corporation established in the State of California, in order to implement the
objectives of this Agreement.

(C) For violation of THE LANHAM ACT and infringement of the YAMAOKA 619 PATENT, RESPONDENT
KINGFORD shall pay CLAIMANT the total sum of ONE MILLION TWO HUNDRED FIFTY THOUSAND
DOLLARS AND NO CENTS ($1,250,000.00). xxx

xxx[15]
5. Bank account. TPI shall open and maintain bank accounts in the United States, which will be used
exclusively to deposit funds that it will collect and to disburse cash it will be obligated to spend in connection
with the implementation of this Agreement.

To enforce the award, petitioner TPI filed on 10 October 2007 a Petition for Confirmation, Recognition, and
Enforcement of Foreign Arbitral Award before the RTC of Makati City. The petition was raffled to Branch 150
presided by Judge Elmo M. Alameda.

At Branch 150, respondent Kingford filed a Motion to Dismiss. [16] After the court denied the motion for lack of
merit,[17] respondent sought for the inhibition of Judge Alameda and moved for the reconsideration of the order
denying the motion.[18] Judge Alameda inhibited himself notwithstanding [t]he unfounded allegations and
unsubstantiated assertions in the motion. [19] Judge Cedrick O. Ruiz of Branch 61, to which the case was reraffled, in turn, granted respondents Motion for Reconsideration and dismissed the petition on the ground that
the petitioner lacked legal capacity to sue in the Philippines. [20]

Herein plaintiff TPIs Petition, etc. acknowledges that it is a foreign corporation established in the State of
California and was given the exclusive right to license or sublicense the Yamaoka Patent and was
assigned the exclusive right to enforce the said patent and collect corresponding royalties in the
Philippines. TPI likewise admits that it does not have a license to do business in the Philippines.

There is no doubt, therefore, in the mind of this Court that TPI has been doing business in the Philippines, but
sans a license to do so issued by the concerned government agency of the Republic of the Philippines, when
it collected royalties from five (5) Philippine tuna processors[,] namely[,] Angel Seafood Corporation, East Asia
Fish Co., Inc., Mommy Gina Tuna Resources, Santa Cruz Seafoods, Inc. and respondent Philippine Kingford,
Inc. This being the real situation, TPI cannot be permitted to maintain or intervene in any action, suit or
proceedings in any court or administrative agency of the Philippines. A priori, the Petition, etc. extant of the
plaintiff TPI should be dismissed for it does not have the legal personality to sue in the Philippines. [21]

Petitioner TPI now seeks to nullify, in this instant Petition for Review on Certiorari under Rule 45, the order of
the trial court dismissing its Petition for Confirmation, Recognition, and Enforcement of Foreign Arbitral Award.

Issue

The core issue in this case is whether or not the court a quo was correct in so dismissing the petition on the
ground of petitioners lack of legal capacity to sue.

Our Ruling

The petitioner counters, however, that it is entitled to seek for the recognition and enforcement of the subject
foreign arbitral award in accordance with Republic Act No. 9285 (Alternative Dispute Resolution Act of 2004),
[22]
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards drafted during the United
Nations Conference on International Commercial Arbitration in 1958 (New York Convention), and the
UNCITRAL Model Law on International Commercial Arbitration (Model Law),[23] as none of these specifically
requires that the party seeking for the enforcement should have legal capacity to sue. It anchors its argument
on the following:

In the present case, enforcement has been effectively refused on a ground not found in the [Alternative
Dispute Resolution Act of 2004], New York Convention, or Model Law. It is for this reason that TPI has
brought this matter before this most Honorable Court, as it [i]s imperative to clarify whether the Philippines
international obligations and State policy to strengthen arbitration as a means of dispute resolution may be
defeated by misplaced technical considerations not found in the relevant laws. [24]
Simply put, how do we reconcile the provisions of the Corporation Code of the Philippines on one hand, and
the Alternative Dispute Resolution Act of 2004, the New York Convention and the Model Law on the other?

The petition is impressed with merit.

The Corporation Code of the Philippines expressly provides:

Sec. 133. Doing business without a license. - No foreign corporation transacting business in the Philippines
without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or
proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized
under Philippine laws.

It is pursuant to the aforequoted provision that the court a quo dismissed the petition. Thus:

In several cases, this Court had the occasion to discuss the nature and applicability of the Corporation Code
of the Philippines, a general law, viz-a-viz other special laws. Thus, in Koruga v. Arcenas, Jr.,[25] this Court
rejected the application of the Corporation Code and applied the New Central Bank Act. It ratiocinated:

Korugas invocation of the provisions of the Corporation Code is misplaced. In an earlier case with similar
antecedents, we ruled that:
The Corporation Code, however, is a general law applying to all types of corporations, while the New Central
Bank Act regulates specifically banks and other financial institutions, including the dissolution and liquidation
thereof. As between a general and special law, the latter shall prevail generalia specialibus non
derogant. (Emphasis supplied)[26]

Further, in the recent case of Hacienda Luisita, Incorporated v. Presidential Agrarian Reform Council, [27] this
Court held:

Without doubt, the Corporation Code is the general law providing for the formation, organization and regulation
of private corporations. On the other hand, RA 6657 is the special law on agrarian reform. As between a
general and special law, the latter shall prevailgeneralia specialibus non derogant.[28]

Following the same principle, the Alternative Dispute Resolution Act of 2004 shall apply in this case as
the Act, as its title - An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the
Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes - would
suggest, is a law especially enacted to actively promote party autonomy in the resolution of disputes or the
freedom of the party to make their own arrangements to resolve their disputes. [29] It specifically provides
exclusive grounds available to the party opposing an application for recognition and enforcement of the arbitral
award.[30]

Sec. 19. Adoption of the Model Law on International Commercial Arbitration. International commercial
arbitration shall be governed by the Model Law on International Commercial Arbitration (the Model Law)
adopted by the United Nations Commission on International Trade Law on June 21, 1985 xxx.

Now, does a foreign corporation not licensed to do business in the Philippines have legal capacity to sue
under the provisions of the Alternative Dispute Resolution Act of 2004? We answer in the affirmative.

Sec. 45 of the Alternative Dispute Resolution Act of 2004 provides that the opposing party in an application for
recognition and enforcement of the arbitral award may raise only those grounds that were enumerated under
Article V of the New York Convention, to wit:

Article V

Inasmuch as the Alternative Dispute Resolution Act of 2004, a municipal law, applies in the instant petition, we
do not see the need to discuss compliance with international obligations under the New York Convention and
the Model Law. After all, both already form part of the law.

In particular, the Alternative Dispute Resolution Act of 2004 incorporated the New York Convention in the Act
by specifically providing:

1. Recognition and enforcement of the award may be refused, at the request of the party against whom it
is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is
sought, proof that:
(a) The parties to the agreement referred to in article II were, under the law applicable to them, under
some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or,
failing any indication thereon, under the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the appointment of the
arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

SEC. 42. Application of the New York Convention. - The New York Convention shall govern the recognition
and enforcement of arbitral awards covered by the said Convention.

(c) The award deals with a difference not contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration,
provided that, if the decisions on matters submitted to arbitration can be separated from those not so
submitted, that part of the award which contains decisions on matters submitted to arbitration may be
recognized and enforced; or

xxx
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the
agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where
the arbitration took place; or
SEC. 45. Rejection of a Foreign Arbitral Award. - A party to a foreign arbitration proceeding may oppose an
application for recognition and enforcement of the arbitral award in accordance with the procedural rules to be
promulgated by the Supreme Court only on those grounds enumerated under Article V of the New York
Convention. Any other ground raised shall be disregarded by the regional trial court.

(e) The award has not yet become binding on the parties, or has been set aside or suspended by a
competent authority of the country in which, or under the law of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the
country where recognition and enforcement is sought finds that:

It also expressly adopted the Model Law, to wit:

(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that
country; or
(b)

The recognition or enforcement of the award would be contrary to the public policy of that country.

Clearly, not one of these exclusive grounds touched on the capacity to sue of the party seeking the recognition
and enforcement of the award.

Premises considered, petitioner TPI, although not licensed to do business in the Philippines, may seek
recognition and enforcement of the foreign arbitral award in accordance with the provisions of the Alternative
Dispute Resolution Act of 2004.

II
Pertinent provisions of the Special Rules of Court on Alternative Dispute Resolution,[31] which was promulgated
by the Supreme Court, likewise support this position.
The remaining arguments of respondent Kingford are likewise unmeritorious.
Rule 13.1 of the Special Rules provides that [a]ny party to a foreign arbitration may petition the court to
recognize and enforce a foreign arbitral award. The contents of such petition are enumerated in Rule 13.5.
[32]
Capacity to sue is not included. Oppositely, in the Rule on local arbitral awards or arbitrations in instances
where the place of arbitration is in the Philippines, [33] it is specifically required that a petition to determine any
question concerning the existence, validity and enforceability of such arbitration agreement [34] available to the
parties before the commencement of arbitration and/or a petition for judicial relief from the ruling of the arbitral
tribunal on a preliminary question upholding or declining its jurisdiction [35] after arbitration has already
commenced should state [t]he facts showing that the persons named as petitioner or respondent have legal
capacity to sue or be sued.[36]

Indeed, it is in the best interest of justice that in the enforecement of a foreign arbitral award, we
deny availment by the losing party of the rule that bars foreign corporations not licensed to do business in
the Philippines from maintaining a suit in our courts. When a party enters
into a contract containing a foreign arbitration clause and, as in this case, in fact submits itself to
arbitration, it becomes bound by the contract, by the arbitration and by the result of arbitration, conceding
thereby the capacity of the other party to enter into the contract, participate in the arbitration and cause the
implementation of the result. Although not on all fours with the instant case, also worthy to consider is the
wisdom of then Associate Justice Flerida Ruth P. Romero in her Dissenting Opinion in Asset Privatization
Trust v. Court of Appeals,[37] to wit:

xxx Arbitration, as an alternative mode of settlement, is gaining adherents in legal and judicial circles here and
abroad. If its tested mechanism can simply be ignored by an aggrieved party, one who, it must be stressed,
voluntarily and actively participated in the arbitration proceedings from the very beginning, it will destroy the
very essence of mutuality inherent in consensual contracts. [38]

Clearly, on the matter of capacity to sue, a foreign arbitral award should be respected not because it is favored
over domestic laws and procedures, but because Republic Act No. 9285 has certainly erased any conflict of
law question.

Finally, even assuming, only for the sake of argument, that the court a quo correctly observed that the Model
Law, not the New York Convention, governs the subject arbitral award,[39] petitioner may still seek recognition
and enforcement of the award in Philippine court, since the Model Law prescribes substantially identical
exclusive grounds for refusing recognition or enforcement.[40]

First. There is no need to consider respondents contention that petitioner TPI improperly raised a question of
fact when it posited that its act of entering into a MOA should not be considered doing business in the
Philippines for the purpose of determining capacity to sue. We reiterate that the foreign corporations capacity
to sue in the Philippines is not material insofar as the recognition and enforcement of a foreign arbitral award
is concerned.

Second. Respondent cannot fault petitioner for not filing a motion for reconsideration of the assailed
Resolution dated 21 November 2008 dismissing the case. We have, time and again, ruled that the prior filing
of a motion for reconsideration is not required in certiorari under Rule 45.[41]

Third. While we agree that petitioner failed to observe the principle of hierarchy of courts, which, under
ordinary circumstances, warrants the outright dismissal of the case, [42] we opt to relax the rules following the
pronouncement in Chua v. Ang,[43] to wit:

[I]t must be remembered that [the principle of hierarchy of courts] generally applies to cases involving
conflicting factual allegations. Cases which depend on disputed facts for decision cannot be brought
immediately before us as we are not triers of facts.[44] A strict application of this rule may be excused when the
reason behind the rule is not present in a case, as in the present case, where the issues are not factual but
purely legal. In these types of questions, this Court has the ultimate say so that we merely abbreviate the
review process if we, because of the unique circumstances of a case, choose to hear and decide the legal
issues outright.[45]

Moreover, the novelty and the paramount importance of the issue herein raised should be seriously
considered.[46] Surely, there is a need to take cognizance of the case not only to guide the bench and the bar,
but if only to strengthen arbitration as a means of dispute resolution, and uphold the policy of the State
embodied in the Alternative Dispute Resolution Act of 2004, to wit:

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to actively promote party
autonomy in the resolution of disputes or the freedom of the party to make their own arrangements to resolve

their disputes. Towards this end, the State shall encourage and actively promote the use of Alternative
Dispute Resolution (ADR) as an important means to achieve speedy and impartial justice and declog court
dockets. xxx

Fourth. As regards the issue on the validity and enforceability of the foreign arbitral award, we leave its
determination to the court a quo where its recognition and enforcement is being sought.

Fifth. Respondent claims that petitioner failed to furnish the court of origin a copy of the motion for time to file
petition for review on certiorari before the petition was filed with this Court.[47] We, however, find petitioners
reply in order. Thus:

26. Admittedly, reference to Branch 67 in petitioner TPIs Motion for Time to File a Petition for Review on
Certiorari under Rule 45 is a typographical error. As correctly pointed out by respondent Kingford, the order
sought to be assailed originated from Regional Trial Court, Makati City, Branch 61.

27. xxx Upon confirmation with the Regional Trial Court, Makati City, Branch 61, a copy of petitioner TPIs
motion was received by the Metropolitan Trial Court, Makati City, Branch 67. On 8 January 2009, the motion
was forwarded to the Regional Trial Court, Makati City, Branch 61. [48]

ARCHBISHOP FERNANDO R. CAPALLA, OMAR SOLITARIO ALI and MARY ANNE L. SUSANO,
Petitioners,

All considered, petitioner TPI, although a foreign corporation not licensed to do business in the Philippines, is
not, for that reason alone, precluded from filing the Petition for Confirmation, Recognition, and Enforcement of
Foreign Arbitral Award before a Philippine court.

WHEREFORE, the Resolution dated 21 November 2008 of the Regional Trial Court, Branch 61, Makati City in
Special Proceedings No. M-6533 is hereby REVERSEDand SET ASIDE. The case is REMANDED to Branch
61 for further proceedings.

- versus -

THE HONORABLE COMMISSION ON ELECTIONS,

DECISION

SO ORDERED.

PERALTA, J.:

Pursuant to its authority to use an Automated Election System (AES) under Republic Act (RA) No.
8436, as amended by RA No. 9369, or the Automation Law and in accordance with RA No. 9184, otherwise

known as the Government Procurement Reform Act, the Commission on Elections (Comelec) posted and
published an invitation to apply for eligibility and to bid for the 2010 Poll Automation Project [1] (the Project). On
March 18, 2009, the Comelec approved and issued a Request for Proposal [2] (RFP) for the Project consisting
of the following components:

Component 1: Paper-Based Automation Election System (AES)

the Comelec and Smartmatic-TIM in connection with the May 10, 2010 elections subject to the following
conditions: (1) the warranties agreed upon in the AES contract shall be in full force and effect; (2) the original
price for the hardware and software covered by the OTP as specified in the AES contract shall be maintained,
excluding the cost of the 920 units of PCOS and related peripherals previously purchased for use in the 2010
special elections; and (3) all other services related to the 2013 AES shall be subject to public bidding. On
March 29, 2012, the Comelec issued Resolution No. 9377 [10] resolving to accept Smartmatic-TIMs offer to
extend the period to exercise the OTP until March 31, 2012 and to authorize Chairman Brillantes to sign for
and on behalf of the Comelec the Agreement on the Extension of the OTP Under the AES
Contract[11] (Extension Agreement, for brevity). The aforesaid Extension Agreement was signed on March 30,
2012.[12] On even date, the Comelec issued Resolution No. 9378 [13] resolving to approve the Deed of Sale
between the Comelec and Smartmatic-TIM to purchase the latters PCOS machines (hardware and software)
to be used in the upcoming May 2013 elections and to authorize Chairman Brillantes to sign the Deed of Sale
for and on behalf of the Comelec. The Deed of Sale [14] was forthwith executed.

1-A. Election Management System (EMS)

1-B. Precinct Count Optical Scan (PCOS) System
Claiming that the foregoing issuances of the Comelec, as well as the transactions entered pursuant thereto,
are illegal and unconstitutional, petitioners come before the Court in four separate Petitions for Certiorari,
Prohibition, and Mandamus imputing grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the Comelec in issuing the assailed Resolutions and in executing the assailed Extension
Agreement and Deed.

1-C. Consolidation/Canvassing System (CCS)

Component 2: Provision for Electronic Transmission of Election Results using Public Telecommunications
Network
G.R. No. 201112

Component 3: Overall Project Management[3]

On June 9, 2009, the Comelec issued Resolution No. 8608 awarding the contract for the Project to respondent
Smartmatic-TIM.[4] On July 10, 2009, the Comelec and Smartmatic-TIM entered into a Contract for the
Provision of an Automated Election System for the May 10, 2010 Synchronized National and Local Elections,
[5]
(AES Contract, for brevity). The contract between the Comelec and Smartmatic-TIM was one of lease of
the AES with option to purchase (OTP) the goods listed in the contract. In said contract, the Comelec was
given until December 31, 2010 within which to exercise the option.

On September 23, 2010, the Comelec partially exercised its OTP 920 units of PCOS machines with
corresponding canvassing/consolidation system (CCS) for the special elections in certain areas in the
provinces of Basilan, Lanao del Sur and Bulacan.[6] In a letter[7] dated December 18, 2010, Smartmatic-TIM,
through its Chairman Cesar Flores (Flores), proposed a temporary extension of the option period on the
remaining 81,280 PCOS machines until March 31, 2011, waiving the storage costs and covering the
maintenance costs. The Comelec did not exercise the option within the extended period. Several extensions
were given for the Comelec to exercise the OTP until its final extension on March 31, 2012.

In G.R. No. 201112, petitioners Archbishop Fernando R. Capalla, Omar Solitario Ali and Mary Anne L. Susano
pray that a Temporary Restraining Order (TRO) be issued enjoining the Comelec from purchasing the PCOS
machines until after final judgment of the instant case; a writ of prohibition be issued against the Comelec for
the purchase of these defective PCOS machines; a writ of mandamus be issued compelling the Comelec to
conduct the necessary bidding for the equipment and facilities which shall be used for the 2013 National and
Local Elections; and to declare Comelec Resolution Nos. 9376, 9377, and 9378, on the purchase of PCOS
machines, null and void.

Petitioners argue that if there is a necessity to purchase the PCOS machines, the Comelec should follow RA
9184 requiring competitive public bidding. They likewise argue that the OTP clause embodied in the contract
with Smartmatic-TIM should be rendered invalid not only because the OTP has already lapsed but because of
the fact that the OTP clause is a circumvention of the explicit provisions of RA 9184. Petitioners add that the
current PCOS machines do not meet the rigorous requirements of RA 9369 that the system procured must
have demonstrated capability and should have been successfully used in a prior electoral exercise here or
abroad. Petitioners submit that there are intrinsic technical infirmities as regards the PCOS machines used
during the 2010 elections which rendered it incapable for future use. Lastly, petitioners claim that the Comelec
does not have the capability to purchase and maintain the PCOS machines, because of lack of trained
manpower and technical expertise to properly maintain the PCOS machines; thus, the purchase is unfavorable
to the general public.

G.R. No. 201121

[8]

On March 6, 2012, the Comelec issued Resolution No. 9373 resolving to seriously consider exercising the
OTP subject to certain conditions. On March 21, 2012, the Comelec issued Resolution No. 9376 [9] resolving to
exercise the OTP the PCOS and CCS hardware and software in accordance with the AES contract between

In G.R. No. 201121, petitioners Solidarity for Sovereignty (S4S), represented by Ma. Linda Olaguer,
Ramon Pedrosa, Benjamin Paulino, Sr., Evelyn Coronel, Ma. Linda Olaguer Montayre and Nelson T.
Montayre, pray that a TRO be issued directing the Comelec to desist from implementing the contract; that
Resolution No. 9376 be declared unconstitutional and all acts made pursuant thereto, including the purchase
of the PCOS machines unlawful and void; that an Injunction be issued prohibiting the Comelec from further
pursuing any act pursuant to Resolution No. 9376.[15]

Petitioners argue that the Comelecs act of exercising its OTP the PCOS machines from Smartmatic-TIM after
the period had already lapsed is illegal and unlawful. [16]They explain that the period within which the Comelec
may exercise the OTP could last only until December 31, 2010 without extension as provided in the Comelecs
bid bulletin.[17] They further assert that the Comelecs acceptance of Smartmatic-TIMs unilateral extension of
the option period constitutes substantial amendment to the AES contract giving undue benefit to the winning
bidder not available to the other bidders.[18] Petitioners also contend that the Comelecs decision to purchase
and use the PCOS machines is unconstitutional, as it allows the Comelec to abrogate its constitutional duty to
safeguard the election process by subcontracting the same to an independent provider (Smartmatic-TIM), who
controls the software that safeguards the entire election process. The purchase of the PCOS machines for use
in the May 2013 elections would be tantamount to a complete surrender and abdication of the Comelecs
constitutional mandate in favor of Smartmatic-TIM. The control of the software and process verification
systems places the Comelec at the end of the process as it merely receives the report of Smartmatic-TIM.
This, according to petitioners, amounts to a direct transgression of the exclusive mandate of the Comelec
completely to take charge of the enforcement and administration of the conduct of elections. [19] Lastly,
petitioners aver that the Comelecs act of deliberately ignoring the palpable infirmities and defects of the
PCOS machines, as duly confirmed by forensic experts, is in violation of Section 2, Article V of the
Constitution, as it fails to safeguard the integrity of the votes. They went on by saying that the subject PCOS
machines lack security features which can guaranty the secrecy and sanctity of our votes in direct
contravention of RA 9369 which requires that the automated election system must at least possess an
adequate security feature against unauthorized access. In deciding to purchase the PCOS machines despite
the above-enumerated defects, the Comelecs decision are claimed to be unconstitutional. [20]

G.R. No. 201127

In G.R. No. 201127, petitioners Teofisto Guingona, Bishop Broderick S. Pabillo, Solita Collas Monsod,
Maria Corazon Mendoza Acol, Fr. Jose Dizon, Nelson Java Celis, Pablo R. Manalastas, Georgina R. Encanto
and Anna Leah E. Colina pray that the Court issue a TRO enjoining and restraining respondents Comelec and
Smartmatic-TIM from implementing Comelec Resolution No. 9376 and the Deed of Sale for the acquisition
and purchase of the PCOS machines and related equipment; issue writ of preliminary injunction; declare
Comelec Resolution No. 9376 void and unconstitutional and annul the Deed of Sale; and direct the Comelec
to conduct public bidding soonest for the automated election system to be used for the 2013 elections. [21]

Petitioners fault the Comelec in totally disregarding the recommendation of the Comelec Advisory Council
(CAC) not to exercise the OTP. They point out that in its Resolution No. 2012-2003, the CAC resolved to
recommend that the Comelec should exert all efforts to procure the necessary AES only through public
bidding. The CAC likewise allegedly recommended that the OTP should not be exercised if as a
consequence, the rest of the system must come from the same vendor as the Comelec would lose the
opportunity to look for better technology; would prevent the Comelec from taking advantage of the best
possible technology available; would prevent other prospective vendors from competitively participating in the
bidding process; and may erode the public trust and confidence in the electoral process. In its report to the
Congressional Oversight Committee after the 2010 elections, the CAC supposedly concluded that the
Comelec does not need to use the same PCOS machines and that the Comelec would be better off not
exercising the OTP the PCOS machines so it can look for an even better solution for the May 2013 elections.

[22]

Like the other petitioners, it is their position that Comelec Resolution No. 9376 is totally null and void having
been issued in violation of the express provisions of RA 9184 and the AES contract. According to petitioners,
the Comelec itself provided in its bid bulletins for a fixed and determinate period, and such period ended on
December 31, 2010. Thus, Smartmatic-TIM could not have unilaterally extended the option period and the
Comelec could not have also given its consent to the extension. In extending the option period, it is
tantamount to giving the winning bidder a benefit that was not known and available to all bidders during the
bidding of the 2010 AES, which is a clear violation of the bidding rules and the equal protection clause of the
Constitution.[23] Considering that the option period already expired, the purchase of the PCOS machines
requires competitive public bidding. Lastly, petitioners claim that the Comelec committed grave abuse of
discretion in opting to buy the PCOS machines and allied paraphernalia of Smartmatic-TIM for the 2013
elections, despite incontrovertible findings of the glitches, malfunctions, bugs, and defects of the same. [24]

G.R. No. 201418

In G.R. No. 201418, petitioners Tanggulang Demokrasya (Tan Dem), Inc., Evelyn L. Kilayko, Teresita D.
Baltazar, Pilar L. Calderon and Elita T. Montilla pray that the Court annul Resolution No. 9376 and the March
30, 2012 Deed of Sale, and prohibit the Comelec and Smartmatic-TIM from implementing the same; and
declare said Resolution and Deed of Sale invalid for having been issued and executed by the Comelec with
grave abuse of discretion and for violating the provisions of R.A. 9184. [25]

Petitioners claim that the Comelec committed grave abuse of discretion amounting to lack or excess of
jurisdiction in contracting for the purchase of AES goods and services from Smartmatic-TIM in spite of the
below par performance of the latters PCOS machines, CCS and other software and hardware in the May
2010 elections and non-compliance with the minimum functional capabilities required by law. [26] They echo the
other petitioners contention that the Comelecs decision to buy the CCS, PCOS machines, software and
hardware of Smartmatic violates RA 9184s requirement of a prior competitive public bidding. Since the
Comelec is bent on pursuing the purchase of the subject goods, which is an entirely new procurement,
petitioners contend that there must be a public bidding. They argue that there is enough time to conduct public
bidding for the 2013 elections, considering that for the May 2010 elections, the Comelec only had 10 months
and they were able to conduct the public bidding. Petitioners are of the view that there is no more OTP to
speak of, because the option period already lapsed and could not be revived by the unilateral act of one of the
contracting parties.[27]

On April 24, 2012, the Court issued a TRO enjoining the implementation of the assailed contract of sale. The
consolidated cases were later set for Oral Arguments on the following issues:

I.
Whether or not the Commission on Elections may validly accept the extension of time unilaterally
given by Smartmatic-TIM Corporation within which to exercise the option to purchase under Article 4 of the
Contract for the Provision of an Automated Election System for the May 2010 Synchronized National and
Local Elections; and

II.
Whether or not the acceptance of the extension and the issuance of Comelec En Banc Resolution
No. 9376 violate Republic Act No. 9184 or the Government Procurement Reform Act and its Implementing
Rules, and Republic Act No. 9369 or the Automated Election Systems Act.

The parties were, thereafter, required to submit their Memoranda.

There can be no doubt that the coming 10 May 2010 [in this case, May 2013] elections is a matter of
great public concern. On election day, the country's registered voters will come out to exercise the sacred right
of suffrage. Not only is it an exercise that ensures the preservation of our democracy, the coming elections
also embodies our people's last ounce of hope for a better future. It is the final opportunity, patiently awaited
by our people, for the peaceful transition of power to the next chosen leaders of our country. If there is
anything capable of directly affecting the lives of ordinary Filipinos so as to come within the ambit of a public
concern, it is the coming elections, more so with the alarming turn of events that continue to unfold. The
wanton wastage of public funds brought about by one bungled contract after another, in staggering amounts,
is in itself a matter of grave public concern. [29]

The petitions are without merit.

Simply stated, petitioners assail the validity and constitutionality of the Comelec Resolutions for the purchase
of the subject PCOS machines as well as the Extension Agreement and the Deed of Sale covering said goods
mainly on three grounds: (1) the option period provided for in the AES contract between the Comelec and
Smartmatic-TIM had already lapsed and, thus, could no longer be extended, such extension being prohibited
by the contract; (2) the extension of the option period and the exercise of the option without competitive public
bidding contravene the provisions of RA 9184; and, (3) despite the palpable infirmities and defects of the
PCOS machines, the Comelec purchased the same in contravention of the standards laid down in RA 9369.

For its part, the Comelec defends the validity and constitutionality of its decision to purchase the subject
PCOS machines, pursuant to the OTP under the AES contract with Smartmatic-TIM, on the following grounds:
(1) Article 6.6 of the AES contract which states the option period was amended by the extension agreement;
(2) the exercise of the OTP is not covered by RA 9184, because it is merely an implementation of a previously
bidded contract; (3) taking into account the funds available for the purpose, exercising the OTP was the
prudent choice for the Comelec and is more advantageous to the government; and (4) the exercise of the OTP
is consistent with the technical requirements of RA 9369.

Stated in another way, Smartmatic-TIM insists on the validity of the subject transaction based on the following
grounds: (1) there is no prohibition either in the contract or provision of law for it to extend the option period;
rather, the contract itself allows the parties to amend the same; (2) the OTP is not an independent contract in
itself, but is a provision contained in the valid and existing AES contract that had already satisfied the public
bidding requirements of RA 9184; (3) exercising the option was the most advantageous option of the Comelec;
and (4) Smartmatic-TIM has an established track record in providing effective and accurate electoral solutions
and its satisfactory performance has been proven during the 2010 elections. The alleged glitches in the May
2010 elections, if at all, are not attributable to the PCOS machines.

Thus, in view of the compelling significance and transcending public importance of the issues raised by
petitioners, the technicalities raised by respondents should not be allowed to stand in the way, if the ends of
justice would not be subserved by a rigid adherence to the rules of procedure. [30]

Now on the substantive issues. In order to achieve the modernization program of the Philippine Electoral
System, which includes the automation of the counting, transmission and canvassing of votes for the May
2010 national and local elections with systems integration and over-all project management in a
comprehensive and well-managed manner,[31] the Comelec entered into an AES contract with Smartmatic-TIM
for the lease of goods and purchase of services under the contract, with option to purchase the goods.

The option contract between the Comelec and Smartmatic-TIM is embodied in Article 4.3 of the AES contract
to wit:

Article 4
Contract Fee and Payment

xxxx

We agree with respondents.

4.3. OPTION TO PURCHASE

At the outset, we brush aside the procedural barriers (i.e., locus standi of petitioners and the nonobservance of the hierarchy of courts) that supposedly prevent the Court from entertaining the consolidated
petitions. As we held in Guingona, Jr. v. Commission on Elections: [28]

In the event the COMELEC exercises its option to purchase the Goods as listed in Annex L, COMELEC shall
pay the PROVIDER an additional amount of Two Billion One Hundred Thirty Million Six Hundred Thirty- Five

Thousand Forty-Eight Pesos and Fifteen Centavos (Php2,130,635,048.15) as contained in the Financial
Proposal of the joint venture partners Smartmatic and TIM.

In case COMELEC should exercise its option to purchase, a warranty shall be required in order to assure that:
(a) manufacturing defects shall be corrected; and/or (b) replacements shall be made by the PROVIDER, for a
minimum period of three (3) months, in the case of supplies, and one (1) year, in the case of equipment, after
performance of this Contract. The obligation for the warranty shall be covered by retention money of ten
percent (10%) of every option to purchase payment made.

The retention money will be returned within five (5) working days after the expiration of the above warranty,
provided, however, that the goods supplied are in good operating condition free from patent and latent defects,
all the conditions imposed under the purchase contract have been fully met, and any defective machines,
except to those attributable to the COMELEC, have been either repaired at no additional charge or replaced or
deducted from the price under the Option to Purchase. [32]

We answer in the affirmative.

It is a basic rule in the interpretation of contracts that an instrument must be construed so as to give
effect to all the provisions of the contract. [34] In essence, the contract must be read and taken as a whole.
[35]
While the contract indeed specifically required the Comelec to notify Smartmatic-TIM of its OTP the subject
goods until December 31, 2010, a reading of the other provisions of the AES contract would show that the
parties are given the right to amend the contract which may include the period within which to exercise the
option. There is, likewise, no prohibition on the extension of the period, provided that the contract is still
effective.

Article 2 of the AES contract lays down the effectivity of the contract, viz.:
Article 2
EFFECTIVITY

Article 6.6 thereof, in turn provides for the period within which the Comelec could exercise the option, thus:
2.1. This Contract shall take effect upon the fulfillment of all of the following conditions:

Article 6
COMELECs Responsibilities

(a) Submission by the PROVIDER of the Performance Security;

(b) Signing of this Contract in seven (7) copies by the

xxxx

6.6. COMELEC shall notify the PROVIDER on or before 31 December 2010 of its option to purchase the
Goods as listed in Annex L.[33]

The Comelec did not exercise the option within the period stated in the above provision. Smartmatic, however,
unilaterally extended the same until its final extension on March 31, 2012. The Comelec, thereafter, accepted
the option and eventually executed a Deed of Sale involving said goods. Now, petitioners come before the
Court assailing the validity of the extension, the exercise of the option and the Deed of Sale. In light of the
AES contract, can Smartmatic-TIM unilaterally extend the option period? Can the Comelec accept the
extension?

parties; and

(c) Receipt by the PROVIDER of the Notice to Proceed.

2.2. The Term of this Contract begins from the date of effectivity until the release of the Performance
Security, without prejudice to the surviving provisions of this Contract, including the warranty
provision as prescribed in Article 8.3 and the period of the option to purchase (Emphasis supplied).[36]

Obviously, the contract took effect even prior to the 2010 elections. The only question now is whether its
existence already ceased. Pursuant to the above-quoted provision, it is important to determine whether or not
the performance security had already been released to Smartmatic-TIM. In Article 8 of the AES contract,
performance security was defined and the rules in releasing said security were laid down, to wit:

Article 8
Performance Security and Warranty

8.1. Within three (3) days from receipt by the PROVIDER of the formal Notice of Award from COMELEC, the
PROVIDER shall furnish COMELEC with a Performance Security in an amount equivalent to five percent (5%)
of the Contract Amount; which Performance Security as of this date has been duly received by COMELEC.

Public bidding aims to secure for the government the lowest possible price under the most favorable terms
and conditions, to curtail favoritism in the award of government contracts and avoid suspicion of anomalies,
and it places all bidders in equal footing. Any government action which permits any substantial variance
between the conditions under which the bids are invited and the contract executed after the award thereof is a
grave abuse of discretion amounting to lack or excess of jurisdiction which warrants proper judicial action. [48] If
this flawed process would be allowed, public bidding will cease to be competitive, and worse, government
would not be favored with the best bid. Bidders will no longer bid on the basis of the prescribed terms and
conditions in the bid documents but will formulate their bid in anticipation of the execution of a future contract
containing new and better terms and conditions that were not previously available at the time of the bidding.
Such a public bidding will not inure to the public good. [49]

Within seven (7) days from delivery by the PROVIDER to COMELEC of the Over-all Project Management
Report after successful conduct of the May 10, 2010 elections, COMELEC shall release to the PROVIDER the
above-mentioned Performance Security without need of demand. [37]

Smartmatic-TIM categorically stated in its Consolidated Comment to the petitions that the Comelec still
retains P50M of the amount due Smartmatic-TIM as performance security.[38] In short, the performance
security had not yet been released to Smartmatic-TIM which indicates that the AES contract is still effective
and not yet terminated. Consequently, pursuant to Article 19 [39] of the contract, the provisions thereof may still
be amended by mutual agreement of the parties provided said amendment is in writing and signed by the
parties. In light of the provisions of the AES contract, there is, therefore, nothing wrong with the execution of
the Extension Agreement.

Considering, however, that the AES contract is not an ordinary contract as it involves procurement by a
government agency, the rights and obligations of the parties are governed not only by the Civil Code but also
by RA 9184. In this jurisdiction, public bidding is the established procedure in the grant of government
contracts. The award of public contracts, through public bidding, is a matter of public policy.[40] The parties are,
therefore, not at full liberty to amend or modify the provisions of the contract bidded upon.

In Power Sector Assets and Liabilities Management Corporation (PSALM) v. Pozzolanic Philippines
Incorporated,[50] the Court nullified the right of first refusal granted to respondent therein in the Batangas
Contract for being contrary to public policy. The Court explained that the same violated the requirement of
competitive public bidding in the government contract, because the grant of the right of first refusal did not only
substantially amend the terms of the contract bidded upon so that resultantly the other bidders thereto were
deprived of the terms and opportunities granted to respondent therein after it won the public auction, but also
altered the bid terms by effectively barring any and all true bidding in the future. [51]

Also in Agan, Jr. v. Philippine International Air Terminals Co., Inc., (PIATCO), [52] this Court declared as null and
void, for being contrary to public policy, the Concession Agreement entered into by the government with
PIATCO, because it contained provisions that substantially departed from the Draft Concession Agreement
included in the bid documents. The Court considered the subject contracts a mockery of the bidding process,
because they were substantially amended after their award to the successful bidder on terms more beneficial
to PIATCO and prejudicial to public interest. [53]

The same conclusions cannot be applied in the present case.

The three principles of public bidding are: (1) the offer to the public; (2) an opportunity for competition;
and (3) a basis for the exact comparison of bids. [41] By its very nature, public bidding aims to protect public
interest by giving the public the best possible advantages through open competition. [42] Competition requires
not only bidding upon a common standard, a common basis, upon the same thing, the same subject matter,
and the same undertaking, but also that it be legitimate, fair and honest and not designed to injure or defraud
the government.[43] The essence of competition in public bidding is that the bidders are placed on equal footing
which means that all qualified bidders have an equal chance of winning the auction through their bids.
[44]
Another self-evident purpose of public bidding is to avoid or preclude suspicion of favoritism and anomalies
in the execution of public contracts.[45]

A winning bidder is not precluded from modifying or amending certain provisions of the contract bidded
upon. However, such changes must not constitute substantial or material amendments that would alter the
basic parameters of the contract and would constitute a denial to the other bidders of the opportunity to bid on
the same terms.[46] The determination of whether or not a modification or amendment of a contract bidded out
constitutes a substantial amendment rests on whether the contract, when taken as a whole, would contain
substantially different terms and conditions that would have the effect of altering the technical and/or financial
proposals previously submitted by the other bidders. The modifications in the contract executed between the
government and the winning bidder must be such as to render the executed contract to be an entirely different
contract from the one bidded upon. [47]

One. Smartmatic-TIM was not granted additional right that was not previously available to the other
bidders. Admittedly, the AES contract was awarded to Smartmatic-TIM after compliance with all the
requirements of a competitive public bidding. The RFP, Bid Bulletins and the AES contract identified the
contract as one of lease with option to purchase. The AES contract is primarily a contract of lease of
goods[54] listed in the contract and purchase of services[55] also stated in the contract. Section 4.3 thereof gives
the Comelec the OTP the goods agreed upon. The same provision states the conditions in exercising the
option, including the additional amount that the Comelec is required to pay should it exercise such right. It is,
therefore, undisputed that this grant of option is recognized by both parties and is already a part of the
principal contract of lease. Having been included in the RFP and the bid bulletins, this right given to the
Comelec to exercise the option was known to all the bidders and was considered in preparing their bids. The
bidders were apprised that aside from the lease of goods and purchase of services, their proposals should
include an OTP the subject goods. Although the AES contract was amended after the award of the contract to
Smartmatic-TIM, the amendment only pertains to the period within which the Comelec could exercise the
option because of its failure to exercise the same prior to the deadline originally agreed upon by the parties.
Unlike in PSALM, wherein the winning bidder was given the right of first refusal which substantially amended
the terms of the contract bidded upon, thereby depriving the other bidders of the terms and opportunities
granted to winning bidder after it won the public auction; and in Agan, Jr., wherein the Concession Agreement
entered into by the government with PIATCO contained provisions that substantially departed from the draft
Concession Agreement included in the bid documents; the option contract in this case was already a part of
the original contract and not given only after Smartmatic-TIM emerged as winner. The OTP was actually a
requirement by the Comelec when the contract of lease was bidded upon. To be sure, the Extension

Agreement does not contain a provision favorable to Smartmatic-TIM not previously made available to the
other bidders.

Two. The amendment of the AES contract is not substantial. The approved budget for the contract
was P11,223,618,400.00[56] charged against the supplemental appropriations for election modernization. Bids
were, therefore, accepted provided that they did not exceed said amount. After the competitive public bidding,
Smartmatic-TIM emerged as winner and the AES contract was thereafter executed. As repeatedly stated
above, the AES contract is a contract of lease with OTP giving the Comelec the right to purchase the goods
agreed upon if it decides to do so. The AES contract not only indicated the contract price for the lease of
goods and purchase of services which isP7,191,484,739.48, but also stated the additional amount that the
Comelec has to pay if it decides to exercise the option which is P2,130,635,048.15. Except for the period
within which the Comelec could exercise the OTP, the terms and conditions for such exercise are maintained
and respected. Admittedly, the additional amount the Comelec needed to pay was maintained (less the
amount already paid when it purchased 920 units of PCOS machines with corresponding CCS for the special
elections in certain areas in the provinces of Basilan, Lanao del Sur and Bulacan) subject to the warranties
originally agreed upon in the AES contract. The contract amount not only included that for the contract of lease
but also for the OTP. Hence, the competitive public bidding conducted for the AES contract was sufficient. A
new public bidding would be a superfluity.

The Solicitor General himself clarified during the oral arguments that the purchase price of the
remaining PCOS machines stated in the assailed Deed of Sale was the price stated in Article 4.3 of the AES
contract. Therefore, the said amount was already part of the original amount bidded upon in 2009 for the AES
contract which negates the need for another competitive bidding. [57]

Third. More importantly, the amendment of the AES contract is more advantageous to the Comelec and the
public.

An option is a preparatory contract in which one party grants to the other, for a fixed period and under
specified conditions, the power to decide, whether or not to enter into a principal contract. It binds the party
who has given the option, not to enter into the principal contract with any other person during the period
designated and, within that period, to enter into such contract with the one to whom the option was granted, if
the latter should decide to use the option. It is a separate agreement distinct from the contract which the
parties may enter into upon the consummation of the option. [61]

In Adelfa Properties, Inc. v. CA,[62] the Court described an option as:

An option, as used in the law on sales, is a continuing offer or contract by which the owner stipulates
with another that the latter shall have the right to buy the property at a fixed price within a certain time, or
under, or in compliance with, certain terms and conditions, or which gives to the owner of the property the right
to sell or demand a sale. It is sometimes called an unaccepted offer. x x x [63]

From the foregoing jurisprudential pronouncements, an option is only a preparatory contract and a
continuing offer to enter into a principal contract. Under the set-up, the owner of the property, which is
Smartmatic-TIM, gives the optionee, which is the Comelec, the right to accept the formers offer to purchase
the goods listed in the contract for a specified amount, and within a specified period. Thus, the Comelec is
given the right to decide whether or not it wants to purchase the subject goods. It is, therefore, uncertain
whether or not the principal contract would be entered into. The owner of the property would then have to wait
for the optionee to make a decision. A longer option period would mean that more time would be given to the
optionee to consider circumstances affecting its decision whether to purchase the goods or not. On the part of
Smartmatic-TIM, it would have to wait for a longer period to determine whether the subject goods will be sold
to the Comelec or not, instead of freely selling or leasing them to other persons or governments possibly at a
higher price. This is especially true in this case as the terms and conditions for the exercise of the option
including the purchase price, had been included in the AES contract previously bidded upon. The parties are
bound to observe the limitations embodied therein, otherwise, a new public bidding would be needed.

The nature of an option contract was thoroughly explained in Eulogio v. Apeles,[58] to wit:

An option is a contract by which the owner of the property agrees with another person that the latter shall have
the right to buy the former's property at a fixed price within a certain time. It is a condition offered or contract
by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed
price within a certain time, or under, or in compliance with certain terms and conditions; or which gives to the
owner of the property the right to sell or demand a sale. An option is not of itself a purchase, but merely
secures the privilege to buy. It is not a sale of property but a sale of the right to purchase. It is simply a
contract by which the owner of the property agrees with another person that he shall have the right to buy his
property at a fixed price within a certain time. He does not sell his land; he does not then agree to sell it; but he
does sell something, i.e., the right or privilege to buy at the election or option of the other party. Its
distinguishing characteristic is that it imposes no binding obligation on the person holding the option, aside
from the consideration for the offer.[59]

Also in Carceller v. Court of Appeals,[60] the Court described an option in this wise:

We agree with respondents that the exercise of the option is more advantageous to the Comelec,
because the P7,191,484,739.48 rentals paid for the lease of goods and purchase of services under the AES
contract was considered part of the purchase price. For the Comelec to own the subject goods, it was required
to pay only P2,130,635,048.15. If the Comelec did not exercise the option, the rentals already paid would just
be one of the government expenses for the past election and would be of no use to future elections. Assuming
that the exercise of the option is nullified, the Comelec would again conduct another public bidding for the AES
for the 2013 elections with its available budget of P7 billion. Considering that the said amount is the available
fund for the whole election process, the amount for the purchase or lease of new AES will definitely be less
than P7 billion. Moreover, it is possible that Smartmatic-TIM would again participate in the public bidding and
could win at a possibly higher price. The Comelec might end up acquiring the same PCOS machines but now
at a higher price.

The advantage to the government of the exercise of the OTP was even recognized by petitioners,
shown during the oral arguments:

DEAN ESPEJO:
ASSOCIATE JUSTICE PERALTA:

Yes, Your Honor.

May I just ask you, do you know the total value of the subject matter of this contract?
ASSOCIATE JUSTICE PERALTA:
Okay. Now, in the original contract of July 10, 2009, the contract was not actually a purchase contract
but merely a lease contract.
DEAN ESPEJO:
Php1.8 billion pesos, Your Honor.
DEAN ESPEJO:
Yes, Your Honor.

ASSOCIATE JUSTICE PERALTA:

ASSOCIATE JUSTICE PERALTA:
Youre referring to the Deed of Sale.
And the lease contract is 7.1 billion.

DEAN ESPEJO:
DEAN ESPEJO:
Yes, Your Honor.
It says 7.1 billion.

ASSOCIATE JUSTICE PERALTA:

ASSOCIATE JUSTICE PERALTA:
The whole, the whole equipment, subject matter of the contract.
Okay. But it is here [denominated] as a lease contract.

DEAN ESPEJO:
DEAN ESPEJO:
I think roughly, the original contract something like 10 billion I am not sure, Your Honor.
Yes, Your Honor.

ASSOCIATE JUSTICE PERALTA:

ASSOCIATE JUSTICE PERALTA:
10 billion pesos.
So the value was 10 billion pesos then you just pay the difference between ten (10) and seven (7) you
get 3 billion pesos to purchase all of these equipment.

ASSOCIATE JUSTICE PERALTA:

DEAN ESPEJO:
Yes, Your Honor.

ASSOCIATE JUSTICE PERALTA:

Okay. Now, you look at your Deed of Sale, this is annexed to your petition, the value of the Deed of
Sale is something like two billion one hundred thirty million (Php2,130,000,000).

So thats practically less than the total value of the equipment, because according to you the total
value would come up to 10 billion pesos, you add up the Lease Contract of 7 billion and two billion, plus under
this Deed of Sale which is the subject matter of this petition, you will come up with a little more than 9 billion
pesos even less than the 10 billion pesos. Do you think that is disadvantageous to the government?

DEAN ESPEJO:
May I be allowed to explain?

ASSOCIATE JUSTICE PERALTA:

DEAN ESPEJO:

Go ahead, you go ahead, you have all the time.

Around that much, Your Honor.

DEAN ESPEJO:

ASSOCIATE JUSTICE PERALTA:

You add this at two [billion] one hundred thirty million and so to seven billion one ninety-one the subject
matter of your original contract; you come up with something like over 9 billion pesos.

It may appear advantageous, Your Honor please, but on the other hand, there are certain
disadvantages there. For one thing, these are not brand new machines; these are refurbished existing
machines which could be suffering from hardware or software problem. For the COMELEC to accept this, Your
Honor please, each machine will have to be checked as to its hardware and software. Eighty-two thousand
(82,000) PCOS machines, Your Honor please, what if half of them, [turn out] to be white elephants or
malfunctioning, Your Honor please, then we will be acquiring eighty-two thousand (82,000) with fifty percent
(50%) malfunctioning machines. There is a danger, Your Honor please, that does not appear to the naked eye.
In any event, with respect to the financial figures there appears to be some advantages, Your Honor, please.

DEAN ESPEJO:
Close to Ten, Your Honor.

ASSOCIATE JUSTICE PERALTA:

Close to Ten.

DEAN ESPEJO:
Yes, Your Honor.

ASSOCIATE JUSTICE PERALTA:

x x x these are merely speculative. Yourre only speculating that there are dangers, the dangers might not
come, in fact, it might even be void or favorable. Okay, now my other question is, do you think that if this was
bidden out under R.A. 9184 for the purchase of all these equipment, do you think that a bidder will come up
with a bid of less than 2 billion pesos for the whole equipment? When according to you, the equipment in 2009
is 10 billion, and elections are very near already 2013, the filing of certificates of candidacy will be on the
second to the last month of this year?

DEAN ESPEJO:
May I be allowed to answer that by way of a speculation, Your Honor.

ASSOCIATE JUSTICE PERALTA:

Go ahead, please.

DEAN ESPEJO:
Again, thats unfortunate thats my speculation.

DEAN ESPEJO:
I think bidder will find it difficult to match that.

ASSOCIATE JUSTICE PERALTA:

You will have first to go to Congress, then you go to Senate, and then you go to the President
discounting the possibility of filing a petition to question the allocation of additional amount for the 2013
elections, by the time that all of these exercises are finished then election is there already.

xxxx

ASSOCIATE JUSTICE PERALTA:

DEAN ESPEJO:

Okay. My other question is this. Okay, now you admitted that the original value is 10 billion. Are you also
aware that the budget of the COMELEC when they come up with this contract is 7 billion?

Well, Im hopeful, Your Honor please, that our Congressmen and our Senators will rise to the occasion
and move fast and appropriate the needed amount of 3 billion pesos to help the COMELEC acquire the proper
Automated election System.

DEAN ESPEJO:

x x x[64]

Yes, Your Honor.

ASSOCIATE JUSTICE PERALTA:

And the total value of the original contract is 10 billion. Do you think that the COMELEC will have
money to purchase equipment valued at 10 billion pesos with only 7 billion pesos for the elections of 2013?
Because the budget of 7 billion is not for the purpose only of the purchase of the equipment, but also includes
for the budget of the elections, pre, during and post elections expenses.

Another reason posed by petitioners for their objection to the exercise of the option and the eventual
execution of the March 30, 2012 Deed of Sale is the existence of the alleged defects, glitches, and infirmities
of the subject goods. The technology provided by Smartmatic-TIM was not perfect, because of some technical
problems that were experienced during the 2010 elections. Petitioners herein doubt that the integrity and
sanctity of the ballots are protected because of these defects.

We do not agree.
DEAN ESPEJO:
Well, Your Honor please, the shortfall of 3 billion pesos can be remedied if Congress will appropriate
additional amounts, if the President of this Republic will convince the legislature to appropriate an additional
amount, I see no problem why the shortfall of 3 billion cannot be remedied, Your Honor please.

ASSOCIATE JUSTICE PERALTA:

Oh, thats again speculative.

Prior to the execution of the Deed of Sale, the Comelec and Smartmatic-TIM had agreed that the latter would
undertake fixes and enhancements to the hardware and software to make sure that the subject goods are in
working condition to ensure a free, honest, and credible elections. As former Commissioner Augusto C.
Lagman admitted[65]during the oral arguments, there are possible software solutions to the alleged problems
on the PCOS machines and it is not inherently impossible to remedy the technical problems that have been
identified. While there is skepticism that Smartmatic-TIM would be able to correct the supposed defects prior
to the 2013 elections because of its inaction during the two years prior to the exercise of the option, we agree
with the opinion of Chairman Sixto S. Brillantes, Jr. that it is absurd to expect Smartmatic-TIM to invest time,
money and resources in fixing the PCOS machines to the specifications and requirements of the Comelec

when prior to the exercise of the OTP, they do not have the assurance from the Comelec that the latter will
exercise the option.[66]
JUSTICE CARPIO:
Yes, I understand that
Moreover, as to the digital signature which appears to be the major concern of petitioners, it has been clarified
during the oral arguments that the PCOS machines are capable of producing digitally-signed transmissions:

ATTY. LAZATIN:
JUSTICE CARPIO:

and the iButtons [interrupted]

I have some questions. Counsel, the law requires that the election returns that are electronically
transmitted must be digitally signed, correct?
JUSTICE CARPIO:

ATTY. LAZATIN:

because they are there, the machine is capable of producing digitally-signed transmissions. But you
just said that the BEI Chairman did not input their private keys because there was no time. It requires five (5)
months.

Thats right, Your Honor.

ATTY. LAZATIN:
JUSTICE CARPIO:
Now, but in the 2010 elections, all election returns electronically transmitted were NOT digitally signed,
correct?

Your Honor, as I said, there is a digital signature that was assigned to the BEIto the BEIs, your
Honor, okay. I am saying that there is digital signature. What I also said, Your Honor, is that there is also a
possibility that another digital certificate or signature can come from another certification authority xxx

ATTY. LAZATIN:

JUSTICE CARPIO:
No, thats a third partythats a third-party certifier, but thats an option. The law does not require a
third-party certification. It merely says that transmission must be digitally signed.

They were, Your Honors, please

ATTY. LAZATIN:
JUSTICE CARPIO:
Thats right.
Why? How?

JUSTICE CARPIO:
ATTY. LAZATIN:
Your Honor, as we explained in our presentation, the iButtons, Your Honor, contain the digital
signatures

Thats why Chairman Melo told Congress that it will cost one (1) billion to get a third-party certifier, but
the law does not require it even now, if you said in your presentation that the BEI Chairman could not input
their private key, thats generated because it takes five (5) months to do that and the list of BEI Chairman is
known only one (1) month before the election, then how could there be a digital signature?

Okay, let us define first what a digital signature means.

ATTY. LAZATIN:
Your Honor, as I mentioned it is anot a customized or personal digital signature. It is a digital
signature that is assigned by COMELEC.

JUSTICE CARPIO:

ATTY. LAZATIN:
The Rules of Court, Your Honor, defines digital signature as the first one it is electronic signature
consisting of a transformation of an electronic document or an electronic data message using an asymmetric
or public Cryptosystem such that a person having the initial untransformed electronic document and the
signers public key can accurately determine: (i) whether the transformation was created using the private key
that corresponds to the signers public key; and (ii) whether the initial electronic document has been altered
after the transformation was made.

Assigned by COMELEC? How canwho inputs that digital signature?

JUSTICE CARPIO:
ATTY. LAZATIN:
Therefore, digital signature requires private key and public key
It is cranked out, Your Honor, and

ATTY. LAZATIN:
JUSTICE CARPIO:
Yes, Your Honor.
No, yourit is trusted that the list of the BEI Chairman is known only one (1) month before, so how can
the BEI Chairman input their digital signature five (5) months before?

JUSTICE CARPIO:
ATTY. LAZATIN:

and this private key and public key are generated by an algorithm, correct?

As I said, Your Honor, it is not a personal or customized signature. It is just like

ATTY. LAZATIN:
JUSTICE CARPIO:

Yes, thats right, Your Honor.

It is a machine ID, in other words?

JUSTICE CARPIO:
ATTY. LAZATIN:

And there is another algorithm which, if you matchif you put together the private key and the
message, will generate the signature.

No, let me explain it this way, Your Honor. The best example I can give, Your Honor, is

ATTY. LAZATIN:
JUSTICE CARPIO:
Thats right, Your Honor.

JUSTICE CARPIO:

And the third algorithm, that if you put together the public key and the signature it will accept or reject
the message, thats correct?

Your Honor, allow me to explain, Your Honor. The names, Your Honor, or the private keys arewere
assigned to the BEIs Your Honor. In the same way, Your Honor, in the office my code name, Your Honor, or
assigned to me is 00 xxx

JUSTICE CARPIO:
You mean to say the private key is embedded in the machine?
ATTY. LAZATIN:

ATTY. LAZATIN:
No, Your Honor, it is embedded in the iButton and they are given a x x x
Thats correct, Your Honor.

JUSTICE CARPIO:
JUSTICE CARPIO:
Yes, in the machinethe iButton is in the machine.
Now, was that used in the 2010 elections?

ATTY. LAZATIN:
ATTY. LAZATIN:
No, Your Honor.
Yes, your Honor.

JUSTICE CARPIO:
JUSTICE CARPIO:
Where is it?
How was that private key generated?

ATTY. LAZATIN:
ATTY. LAZATIN:
Again, Your Honor, as I said

JUSTICE CARPIO:

It is a gadget, Your Honors, that is usedit is a separate gadget, your Honor xxx This is a sample of
an iButton, your Honor, and in fact we said that we are prepared to demonstrate, Your Honor, and to show to
this Court

xxxx

Did the BEI Chairman know what that private key is?

JUSTICE CARPIO:
ATTY. LAZATIN:

On election Day, where was the iButton placed? In the machine?

In the display?
ATTY. LAZATIN:
To start the machine, Your Honor, you have to put it on top of that Button xxx

ATTY. LAZATIN:
Yes, Your Honor.

JUSTICE CARPIO:
In other words, whoever is in possession of that iButton can make a digitally-transmitted election
return, correct?

JUSTICE CARPIO:
So, that iButton contains the private key?

ATTY. LAZATIN:
ATTY. LAZATIN:
Yes, Your Honor, thats my understanding.
Thats correct, Your Honor. Your Honor, together with the other BEIs because apart from this iButton,
Your Honor, for authentication the BEIs, three of them, Your Honor, have an 8-digit PIN, Your Honor.

JUSTICE CARPIO:
JUSTICE CARPIO:

And who controls the public key? Who control[led] the public key in the last election?

How is that 8-digit PIN given to them?

ATTY. LAZATIN:
ATTY. LAZATIN:

My understanding, Your honor, is COMELEC, your Honor.

In a sealed envelope, Your Honor, these are x x x

JUSTICE CARPIO:
JUSTICE CARPIO:

COMELEC had the public key?

And then they also input that in the keyboard?

ATTY. LAZATIN:
ATTY. LAZATIN:

Thats my understanding, Your Honor.

Yes, Your Honor.

JUSTICE CARPIO:
JUSTICE CARPIO:

And there was no certifying agency because it cost too much and the law did not require that?

Okay, so whoever wants to send it, he will have to get the private key from the BEI Chairman and the
PIN numbers from the other members
ATTY. LAZATIN:
Thats correct, Your Honor. But the machine, Your Honor, as I mentioned, is capable of accepting any
number of digital signatures whether self-generated or by a third-party certification authority, Your Honor.

ATTY. LAZATIN:
Yes, Your Honor.

JUSTICE CARPIO:
Okay. So, whoever is in possession of that iButton and in possession of the four (4) PINS, the set of
PINs, for the other BEI number, can send a transmission?

JUSTICE CARPIO:
before they can send the electronic transmission.

ATTY. LAZATIN:
ATTY. LAZATIN:
Yes, Your Honor.
Yes, Your Honor.

JUSTICE CARPIO:
JUSTICE CARPIO:
The moment you are in possession of the iButton and the four (4) sets of PINs
Okay. That clarifies things. x x x[67]

ATTY. LAZATIN:
Thats correct, Your Honor.

JUSTICE CARPIO:
If they can send an electronic transmission thats digitally signed and when received by the COMELEC
and matched with the public key will result with an official election return, correct?

ATTY. LAZATIN:

As the Comelec is confronted with time and budget constraints, and in view of the Comelecs mandate to
ensure free, honest, and credible elections, the acceptance of the extension of the option period, the exercise
of the option, and the execution of the Deed of Sale, are the more prudent choices available to the Comelec
for a successful 2013 automated elections. The alleged defects in the subject goods have been determined
and may be corrected as in fact fixes and enhancements had been undertaken by Smartmatic-TIM. Petitioners
could not even give a plausible alternative to ensure the conduct of a successful 2013 automated elections, in
the event that the Court nullifies the Deed of Sale.

WHEREFORE, premises considered, the petitions are DISMISSED. The Temporary Restraining Order
issued by the Court on April 24, 2012 is LIFTED.

Thats correct. In the same way, Your Honor, that even if someone keeps his key or private key, Your
Honor, if he is under threat he will also divulge it, Your Honor. Its the same.
SO ORDERED.

JUSTICE CARPIO:

G.R. No. 167174

September 23, 2013

SPOUSES CARMELITO and ANTONIA ALDOVER, Petitioners,

vs.
THE COURT OF APPEALS,

Reyeses sold to them portions of the lot they respectively occupy. Respondents insisted that petitioners were
aware of the lease and subsequent sale. Respondents also claimed that the REM is a fictitious transaction
because at the time of its execution the Reyeses were no longer the owners of the entire property subject
thereof. Hence, the mortgage as well as the subsequent foreclosure sale is null and void.
Respondents sought the issuance of a Temporary Restraining Order (TRO)and/or Writ of Preliminary
Injunction to immediately restrain petitioners from further committing acts of dispossession and prayed for the
cancellation of TCT No. PT-122311. On July 5, 2004, however, they filed a Motion to Admit Attached Amended
Complaint as a matter of right (with prayer for withdrawal of TRO and injunction). 53

DECISION
DEL CASTILLO, J.:
36

This Petition for Certiorari filed under Rule 65 of the Rules of Court seeks to annul: (i) the January 3, 2005
Resolution37 of the Court of Appeals (CA) in CA-G.R. SP No. 86363, which granted herein respondents
ancillary prayer for injunctive relief: and (ii) the February 10, 2005 Writ of Preliminary Injunction 38 issued
pursuant thereto. Said writ enjoined the Regional Trial Court (RTC), Branch 71, Pasig City from implementing
its August 9, 2004 Order39 directing the issuance of a Writ of Demolition against the respondents.

On July 26, 2004, Branch 268 issued an Order 54 denying respondents prayer for TRO on the ground that it
cannot interfere with the order of a coordinate court. This was followed by an Order 55 dated August 27, 2004
granting respondents Motion to Admit and admitting respondents Amended Complaint where they withdrew
their ancillary prayer for injunctive relief.
Meanwhile, in LRC Case No. R-6203, in view of the Sheriffs Partial Report, Aldover filed a Motion for Special
Order of Demolition.56 Branch 71granted the Motion in an Order57 dated August 9, 2004, thus:

Factual Antecedents
Siblings Tomas M. Reyes and Sidra M. Reyes and their father Alfredo Reyes (the Reyeses) were the
registered owners of a 4.044-square meter lot, (TCT) No. PT-107508. 40 On August 12, 1999, they obtained a
loan from AntoniaB. Aldover (Aldover) secured by a Real Estate Mortgage (REM) 41 over the said property.
When the Reyeses failed to pay, Aldover caused the extrajudicial foreclosure of mortgage. At the foreclosure
sale conducted, Aldover emerged as the winning bidder. A Certificate of Sale was issued in her favor which
was annotated at the back of TCT No. PT-107508 on September 2, 2002. 42

WHEREFORE, in view of the foregoing, the Motion for Special Order of Demolition is hereby GRANTED. Let a
writ issue.
The respondents and all other persons deriving rights from them are given sixty (60) days from receipt of this
Order to vacate the premises.
SO ORDERED.58

On December 12, 2003, the Reyeses filed a Motion to Recall and Lift Issuance of Writ of
Possession45 claiming, among others, that the mortgage and the auction sale of property are both null and
void as the mortgagee (Aldover) was not armed with a special power of attorney to foreclose the mortgaged
property extrajudicially. This drew Aldovers Opposition 46 where she also prayed for the issuance of the writ
sans the requisite bond as the property was not redeemed within the one-year redemption period.

On September 14, 2004, respondents filed before the CA a Petition for Certiorari, Prohibition, Injunction with
prayer for the issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction 59 against
the petitioners and the Reyeses, which they later on amended. 60 Respondents alleged that on August 23, 2004
they were surprised to receive the August 9, 2004 Order of demolition directing them to vacate the premises
within 60 days from notice since they were neither impleaded nor notified of the proceedings conducted in
LRC Case No. R-6203, as well as in the foreclosure sale. Respondents postulated that they are not, therefore,
bound by the August 9, 2004 Order of Branch 71 for want of jurisdiction over their persons. Respondents
reiterated their claim in Civil Case No. 69979 that they own the portions of subject lot which they respectively
occupy. Thus, the implementation of said Order would deprive them of their property without due process of
law and would render Civil Case No. 69979 pending before Branch 268 moot.

In the meantime, Aldover also caused the consolidation of title over the foreclosed property in her name. On
December 17, 2003, TCT No. PT-107508was cancelled and, in lieu thereof, TCT No. PT-12231147 was issued
in Aldovers name.

Respondents also asserted that the right they sought to be protected in their Petition is clear and unmistakable
and that the invasion of such right is material and substantial. They thus prayed for the issuance of a TRO
and/or Writ of Preliminary Injunction to enjoin the implementation of Branch 71s Order of demolition. 61

On March 17, 2004, Branch 71 issued an Order48 denying the Reyeses Motion to Recall and granting
Aldovers motion to dispense with the posting of a bond. On the same date, a Writ of Possession 49 was issued
directing the Branch Sheriff to place Aldover in possession of subject lot.

On September 23, 2004, the CA issued a Resolution 62 outrightly dismissing the Petition on procedural
grounds.

Thereafter, Aldover filed with the RTC of Pasig City a verified Petition for the Issuance of a Writ of Possession
docketed as LRC Case No. R-6203.43 On August 26, 2003, Branch 71 of the RTC of Pasig City issued a
Decision44 granting Aldovers Petition for Issuance of a Writ of Possession subject to the posting of a bond.

In compliance with the writ, the Branch Sheriff issued a Notice to Vacate 50 dated April 1, 2004. Then on April
23, 2004, he issued a Sheriffs Partial Report 51 informing the court that he cannot fully implement the writ
because there are several other persons who occupy portions of subject lot claiming to be the owners thereof.
On May 17, 2004, respondents filed before the RTC of Pasig City a Complaint for Declaration of Nullity of
Documents and Title, Reconveyance and Damages with Prayer for Temporary Restraining Order and/or
Preliminary Injunction52 against Aldover and her husband Carmelito (petitioners), the Reyeses, the Branch
Sheriff, and the Registrar of Deeds of Pasig City. In said Complaint docketed as Civil Case No. 69979 and
raffled to Branch 268 of said court, respondents alleged that they have been residing in the same lot subject of
LRC Case No. R-6203 since the 1960s by virtue of lease contracts wherein they were allowed by the
Reyeses to build their houses. Subsequently, their occupation became in the concept of owners after the

Invoking substantial justice and great and irreparable damage that may be caused by the impending
demolition of their homes, respondents filed an Omnibus Motion for Reconsideration and Motion to Admit
Attached Amended Petition.63 This was followed by an Extremely Urgent Omnibus Motion for Re-Raffle and for
Early Resolution64since the Justice to whom the case was assigned was then on official leave.
In a Resolution65 dated October 22, 2004, the CA reconsidered its resolution of dismissal and granted
respondents prayer for the issuance of a TRO. It restrained the implementation of the Order of demolition as
well as of the Notice to Vacate. In the same Resolution, the CA required petitioners to file their comment to the
Petition.

After the parties filing of pleadings66 and upon respondents motion,67 the CA set for hearing on January 4,
2005 the propriety of issuing a Writ of Preliminary Injunction. This hearing, however, did not push through
since the CA already issued the challenged January 3, 2005 Resolution 68 granting respondents ancillary
prayer for injunctive relief. It disposed thus:
WHEREFORE, we resolve to:
1. GRANT respondents prayer for the issuance of a writ of preliminary injunction enjoining petitioners from
enforcing the Notice to Vacate and Order of Demolition.
2. ORDER the respondents to file a bond in the amount of Three Hundred Thousand (P300,000.00) Pesos
within five (5) days from notice hereof, which shall answer for whatever damages petitioners may sustain by
reason of the injunction in the event that we finally decide that respondents were not entitled thereto.
3. CANCEL the hearing set on January 4, 2005.
4. CONSIDER the main petition submitted for decision.
SO ORDERED.69
On January 12, 2005, petitioners filed a Motion for Reconsideration 70 which was denied by the CA in its
January 24, 2005 Resolution.71 Then on February 8, 2005, respondents posted the required injunction
bond72 and the CA accordingly issued the Writ of Preliminary Injunction 73 on February 10, 2005.
Petitioners subsequently filed a Motion for Inhibition of the CA Sixth (6th) Division 74 which the CA granted in a
Resolution75 dated March 28, 2005. Thereafter, petitioners sought recourse before us via this Petition for
Certiorari ascribing grave abuse of discretion on the part of the CA for the following reasons:
Issues
I
THE COURT OF APPEALS, IN EFFECT, GAVE ITS IMPRIMATUR ONTHE VERY CLEAR ACT OF FORUM
SHOPPING DONE BY THEPRIVATE RESPONDENTS.
II
THE PETITION FOR CERTIORARI FILED BY PRIVATE RESPONDENTSBEFORE THE COURT OF
APPEALS WAS AN IMPROPER REMEDY.
III
IN ANY CASE, EVEN ASSUMING THE PETITION FOR CERTIORARIWAS A PROPER REMEDY THE SAME,
HOWEVER, WAS CLEARLYFILED OUT OF TIME.
IV
THE WRIT OF PRELIMINARY INJUNCTION THE COURT OF APPEALSISSUED GOES AGAINST
ESTABLISHED JURISPRUDENCE ON THEMATTER.VPRIVATE RESPONDENTS, EVEN ASSUMING THEIR
FACTUALCLAIMS TO BE TRUE, CANNOT HAVE A BETTER RIGHT OVER THESUBJECT PROPERTY
THAN HEREIN PETITIONERS.76

Petitioners Arguments
Petitioners contend that the CA gravely abused its discretion in issuing the assailed January 3, 2005
Resolution and the Writ of Preliminary Injunction. They maintain that the CA did not only condone respondents
clear and blatant act of forum shopping; it actually rewarded them for pursuing the same. According to the
petitioners, respondents Complaint in Civil Case No. 69979 pending before Branch 268 already included an
ancillary relief for TRO and/or Preliminary Injunction for the purpose of stopping Branch 71 from implementing
its Order of demolition and dispossessing them of the disputed property. However, since Branch 268 did not
favorably act on their prayer for such provisional remedy, respondents withdrew the same by amending their
Complaint, only to later on file an original action for certiorari, prohibition and injunction before the CA
practically raising the same issues, same cause of action, and the very same prayer to temporarily and then
permanently restrain Branch 71 from implementing its Order of demolition. Petitioners assert that what
respondents actually did was to split a single cause of action as they could have pursued their prayer for
injunction in CA-G.R. SP No. 86363 as a mere ancillary relief in Civil Case No. 69979 pending before Branch
268. Petitioners also accuse respondents of misleading the CA by concealing the fact that their Complaint in
Civil Case No. 69979 included an ancillary relief for injunction and by not attaching a copy thereof to their
Petition filed with the CA.
Petitioners likewise contend that respondents recourse to the CA was premature because they did not give
Branch 71 an opportunity to correct its alleged errors. Petitioners point out that before resorting to a special
civil action for certiorari before the CA, respondents should have first appealed or filed the appropriate motion
or pleading before Branch 71 so that said court could correct any of its perceived errors. But they did not.
Hence, no error or grave abuse of discretion can be attributed to Branch 71. And even assuming that
respondents Petition before the CA is not premature, petitioners assert that the same was filed out of time.
Respondents received the Notice to Vacate on April 1, 2004 and, therefore, had only until May 31, 2004 within
which to file a petition for certiorari. However, it was only on September 14, 2004 when they invoked the
certiorari jurisdiction of the CA. Petitioners maintain that respondents erroneously reckoned the 60-day period
for filing a petition for certiorari on the date they received the Order of demolition because the same was a
mere off shoot of the Writ of Possession and Notice to Vacate issued by Branch 71.
Petitioners further argue that the pendency of Civil Case No. 69979 will not bar the issuance and
implementation of the Writ of Possession in LRC Case No.R-6203.
Lastly, petitioners asseverate that respondents ancillary prayer for injunctive relief lacked basis as they have
no clear and unmistakable right that must be protected. Only 15 out of the 315 respondents are armed with
proof of ownership.77 And of these 15, only five have deeds of absolute sale; the remaining 10 have only
contracts to sell containing incomplete details of payment. In addition, the alleged proofs of ownership do not
bear the signatures of all the co-owners and some of those proofs are not even notarized. And assuming
further that the titles of these 15 respondents are true, their collective rights over the subject lot cannot prevail
over the rights of the petitioners. The total area they occupy constitute only about 1,371.66 square meters, or
a little over 30% of the disputed 4,432-square meter lot. 78 Above all, petitioners registered their claim as early
as January 3, 2000 while none of respondents alleged proofs of ownership were ever registered. 79
Respondents Arguments
Respondents, on the other hand, deny having misled the CA. They claim that on July 5, 2004 they filed their
Motion to Admit Attached Amended Complaint as a matter of right seeking the withdrawal of their prayer for
TRO and on August 27, 2004 Branch 268 issued its Order admitting their Amended Complaint. Thus, when
they filed their Petition in CA-G.R. SP No. 86363 on September 14, 2004, they found it unnecessary to state
that, previously, their Complaint in Civil Case No. 69979 contained a prayer for the issuance of a TRO.
With regard to the second and third assigned errors, respondents assert that the instant Petition for Certiorari
assails only the propriety of the CAs January 3,2005 Resolution and February 10, 2005 Writ of Preliminary
Injunction. This Court cannot thus pass upon the correctness of respondents recourse to the CA as well as the
prematurity and timeliness of such legal remedy, as the same is still pending with said court.
Respondents further assert that the issue of who have a better right over the property in question is an
extraneous matter that is totally irrelevant in the present controversy. They emphasize that the issue to be

resolved in this Petition for Certiorari is whether the CA committed grave abuse of discretion amounting to lack
or excess of jurisdiction in granting their ancillary prayer for injunction. They claim that the points raised by the
petitioners in support of their contention should be threshed out in Civil Case No. 69979 (declaration of nullity
of documents and title, reconveyance, and damages) pending before Branch 268.

place him in possession.84 This rule is clear from the language of Section 33, Rule 39 of the Rules of Court.
The same provision of the Rules, however, provides as an exception that when a third party is actually holding
the property adversely to the judgment debtor, the duty of the court to issue a Writ of Possession ceases to be
ministerial. Thus:

Our Ruling

SEC. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given.
If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the
purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60)
days have elapsed and no other redemption has been made, and notice thereof given, and the time for
redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases
the judgment obligor shall have the entire period of one (1) year from the date of the registration of the sale to
redeem the property. The deed shall be executed by the officer making the sale or by his successor in office,
and in the latter case shall have the same validity as though the officer making the sale had continued in office
and executed it.

The review we are bound to undertake

in this Petition for Certiorari is limited
to the determination of whether the CA
committed grave abuse of discretion in
granting respondents ancillary prayer
for preliminary injunction.
We stress at the outset that this Petition for Certiorari merely assails the CAs interlocutory resolutions granting
respondents ancillary prayer for injunctive relief. This does not pertain to the main action for certiorari ,
prohibition and injunction in CA-G.R. SP No. 86363, which is still pending before the CA. We will thus limit
ourselves to the determination of whether the CA gravely abused its discretion in issuing the questioned
Resolutions and avoid matters that will preempt or render moot whatever final decision it may render in CAG.R. SP No. 86363. More specifically, we will not touch on petitioners contentions that respondents are guilty
of forum shopping and that the latters filing of a Petition for Certiorari before the CA was premature and out of
time for the assailed CA Resolutions pertained only to the propriety of the issuance of the Writ of Preliminary
Injunction.
A Petition for Certiorari lies only to correct acts rendered without or in excess of jurisdiction or with grave
abuse of discretion. "Its principal office is only to keep the inferior court within the parameters of its jurisdiction
or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of
jurisdiction."80 "Grave abuse of discretion in the issuance of writs of preliminary injunction implies a capricious
and whimsical exercise of judgment that is equivalent to lack of jurisdiction, or where the power is exercised in
an arbitrary or despotic manner by reason of passion, prejudice or personal aversion amounting to an evasion
of positive duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law." 81
A Petition for Certiorari is not the proper remedy to review the intrinsic correctness of the public respondents
ruling. It is settled that as long as a court or quasi-judicial body acts within its jurisdiction, any alleged errors
committed in the exercise of its jurisdiction will amount to nothing more than errors of judgment which are not
reviewable in a special civil action of certiorari. Thus, whether the CA committed errors in proceedings,
misappreciated the facts, or misapplied the law is beyond our power of review in this Petition for Certiorari for
it cannot be used for any purpose except to limit the action of the respondent court within the bounds of its
jurisdiction.82
CA did not commit grave abuse of discretion
From our review of the case, nothing indicates that the CA acted without or in excess of jurisdiction or with
grave abuse of discretion in ordering the issuance of the Writ of Preliminary Injunction. Measured against
jurisprudentially established parameters, its disposition to grant the writ was not without basis and, hence,
could not have been arrived at capriciously, whimsically, arbitrarily or despotically. Respondents amply justified
the grant of the provisional relief they prayed for. A Writ of Preliminary Injunction is issued at any stage of an
action prior to judgment or final order to prevent threatened or continuous irremediable injury to some of the
parties before their claims can be thoroughly studied or adjudicated. To justify its issuance, the applicants must
prove the following requisites: (1) that they have a clear and unmistakable right to be protected, that is a right
in esse; (2) there is a material and substantial invasion of such right; (3)there is an urgent need for the writ to
prevent irreparable injury to the applicants; and, (4) there is no other ordinary, speedy, and adequate remedy
to prevent the infliction of irreparable injury.83
It is true that the buyer in a foreclosure sale becomes the absolute owner of the property if it is not redeemed
within one year from registration of the sale and title is consolidated in his name. "As the confirmed owner, the
purchasers right to possession becomes absolute. There is even no need for him to post a bond, and it
becomes the ministerial duty of the courts," upon application and proof of title, to issue a Writ of Possession to

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and
acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy.
The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless
a third party is actually holding the property adversely to the judgment obligor. (Emphasis supplied)
Jurisprudence abounds applying this exception to the ministerial duty of the court in issuing the Writ of
Possession.85
Here, respondents alleged in their CA Petition that they possess and own portions of the property subject of
the Writ of Demolition.1wphi1 In support thereof, they annexed to their Petition and Reply deeds of
conveyances, contracts to sell, receipts, etc. showing that the Reyeses already sold to them the portions of the
subject lot they respectively occupy. A number of these documents predate the REM which the Reyeses
executed in favor of Aldover while others were executed subsequent thereto. Respondents allegation of actual
possession is likewise confirmed by the Sheriffs Partial Report 86 which states that there are several other
persons who occupy portions of subject lot and claim to be the owners thereof. In fine, respondents have
indubitably shown that they are in actual possession of the disputed portions of subject property. Their
possession, under Article 433 of the Civil Code, raises a disputable presumption that they are the owners
thereof.87 Thus, petitioners cannot resort to procedural shortcut in ousting them by the simple expedient of
filing a Motion for Special Order of Demolition in LRC Case No. R-6203 for under the same Article 433
petitioners have to file the appropriate judicial process to recover the property from the respondents. This
"judicial process," as elucidated in Villanueva v. Cherdan Lending Investors Corporation, 88 "could mean no
less than an ejectment suit or a reinvindicatory action, in which the ownership claims of the contending parties
may be properly heard and adjudicated." Moreover, to dispossess the respondents based on the proceedings
taken in LRC Case No. R-6203 where they were not impleaded and did not take part would be tantamount to
taking of real property without due process of law.89
But petitioners downplayed respondents documentary evidence as unreliable for being unnotarized and
unregistered compared to their TCT No. PT-122311 which was duly issued after the Reyeses failed to redeem
the property and they (petitioners) consolidated their title thereto. However, "between an unrecorded sale of a
prior date and a recorded mortgage of a later date the former is preferred to the latter for the reason that if the
original owner had parted with his ownership of the thing sold then he no longer had the ownership and free
disposal of that thing so as to be able to mortgage it again." 90
In fine, the CA cannot be said to have acted capriciously, whimsically, arbitrarily or despotically in issuing its
January 3, 2005 Resolution and February10, 2005 Writ of Preliminary Injunction to prevent a threatened or
continuous irremediable injury. There is preliminary showing that respondents have clear and unmistakable
right over the disputed portions of the property which must be protected during the pendency of CA-G.R. SP
No. 86363. Indeed, the precipitate demolition of their houses would constitute material and substantial
invasion of their right which cannot be remedied under any standard compensation. Hence, the need for a Writ
of Preliminary Injunction.
Besides, it has been held that the trial court (or the CA in this case) has a wide latitude in determining the
propriety of issuing a Writ of Preliminary Injunction. The assessment and evaluation of evidence in the
issuance of a Writ of Preliminary Injunction involve findings of facts ordinarily left to it for its determination.

Hence, absent a clear showing of grave abuse of discretion, the trial courts disposition in injunctive matters is
not generally interfered with by the appellate courts. 91
Furthermore, we note that although the scheduled January 4, 2005 hearing on the propriety of issuing a Writ
of Preliminary Injunction did not push through, the parties were nonetheless amply heard thru their pleadings.
At the time the CA issued its challenged January 3, 2005 Resolution, petitioners had already filed their
Comment92 and Rejoinder93 where they argued at length why no injunctive relief should be granted in favor of
the respondents. In Land Bank of the Phils. v. Continental Watchman Agency, Inc, 94 we reiterated our ruling
that there can be no grave abuse of discretion on the part of the respondent court in issuing a Writ of
Preliminary Injunction when the parties were amply heard thereon. Thus:
We have consistently held that there is no grave abuse of discretion in the issuance of a Writ of Preliminary
Injunction where a party was not deprived of its day in court, as it was heard and had exhaustively presented
all its arguments and defenses. Hence, when contending parties were both given ample time and opportunity
to present their respective evidence and arguments in support of their opposing contentions, no grave abuse
of discretion can be attributed to the x x x court which issued the Writ of Preliminary Injunction, as it is given a
generous latitude in this regard, pursuant to Section 4, Rule 58 of the 1997 Rules of Civil Procedure, as
amended.
We emphasize though that the evidence upon which the CA based its January 3, 2005 Resolution is not
conclusive as to result in the automatic issuance of a final injunction. "The evidence submitted for purposes of
issuing a Writ of Preliminary Injunction is not conclusive or complete for only a sampling is needed to give the
x x x court an idea of the justification for the preliminary injunction pending the decision of the case on the
merits."95In the same vein, our Decision in this case is without prejudice to whatever final resolution the CA
and Branch 268 may arrive at in CA-G.R. SP No. 86363 and Civil Case Nos. 69979 and 69949, respectively.
WHEREFORE, the instant Petition for Certiorari is DISMISSED. The Resolutions dated January 3, 2005 and
January 24, 2005 of the Court of Appeals in CA-G.R. SP No. 86363 are AFFIRMED. This case is REMANDED
to the Court of Appeals for the immediate resolution of the main petition in CA-G.R. SP No. 86363.

Lot 1227 of the Cadastral Survey of Jordan, Guimaras, with an area of 43,210 square meters; that she
inherited the lot from her parents; and that she only tolerated petitioners to construct residential houses or
other improvements on certain portions of the lot without rental. Sometime in September or October 1996,
private respondent demanded that the petitioners vacate the lot and remove their houses and other
improvements thereon. Petitioners refused, despite offer of money by way of assistance to them. After
thebarangay conciliation failed, private respondent filed the complaints.
In their Answers,[5] eight[6] of the petitioners claimed that Lot 1227 was formerly a shoreline which they
developed when they constructed their respective houses. Another eight [7]maintained that their houses stood
on Lot 1229 of the Cadastral Survey of Jordan, Guimaras. The other three [8] asserted that Lot 1227 is a social
forest area.
At the preliminary conference, the parties agreed to designate two geodetic engineers as commissioners of
the MCTC to conduct a relocation survey of Lot 1227 and to identify who among the petitioners have houses
within the lot.[9]
The commissioners reported that: (1) the house of Henry Gabasa, defendant in Civil Case No. 288-J, is almost
outside Lot 1227; (2) the house of Ludovico Amatorio, defendant in Civil Case No. 289-J, diagonally traversed
the boundary; and (3) the houses of the 19 petitioners are inside Lot 1227. [10]
Eight months after herein petitioners failure to comment on the manifestation of private respondent to
terminate the preliminary conference, the MCTC terminated the preliminary conference. [11] Thereafter,
petitioners counsel Atty. Nelia Jesusa L. Gonzales failed to file her clients position papers and affidavits, even
after they sought a 30-day extension to file the same. [12]
Consequently, the MCTC decided the cases as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff whereby each of the
twenty-one (21) defendants are hereby ordered:

SO ORDERED.
1.

To vacate Lot 1227 of the Cadastral Survey of Jordan, Guimaras;

[G.R. No. 150755. June 28, 2005]

RENE GANILA,* EDUARDO DUMADA-OG, SR., RAFAEL GANILA, JOSE PASTRANA, LOURDES
GANILA, FLORENTINO GANILA, SERAFIN GANILA, LORETO ARELLANO, CONRADO GANILA,
VIVENCIO ALVIOR, EDUARDO GANTALA, AMPARO VILLANUEVA, ELEUTERIO SILVA, ADELINA
GANILA, FELIZARDO GANILA, SR., ENRIQUE GANILA, ABRAHAM TANONG, EMILIO ALFARAS, JR.,
BAPTIST CHRISTIAN LEARNING CENTER,petitioners, vs. HON. COURT OF APPEALS AND VIOLETA C.
HERRERA, respondents.

2. To pay Two Hundred Pesos (P200.00) per month from October, 1996 as compensation for the use of the
property until the same is vacated; and
3.

To pay Two Thousand Pesos (P2,000.00) as attorneys fees and litigation expenses.

SO ORDERED.[13]

DECISION

Petitioners appealed to the RTC, Branch 65, at Jordan, Guimaras, which decided as follows:

QUISUMBING, J.:

WHEREFORE, premises considered, the decision in Civil Cases Nos. 0270-J, 0272-J, 0273-J, 0274-J, 0275J, 0276-J, 0277-J, 0278-J, 0279-J, 0280-J, 0281-J, 0282-J, 0283-J, 0284-J, 0285-J, 0286-J, 0287-J, 0291-J
and 0292-J are hereby affirmed.

For review on certiorari are the Decision[1] dated March 30, 2001 of the Court of Appeals in CA-G.R. SP No.
58191, and its Resolution[2] dated October 18, 2001 denying the motion for reconsideration. The assailed
decision denied the petition to set aside the Resolution[3] of the Regional Trial Court (RTC) of San Miguel,
Jordan, Guimaras, Branch 65, affirming the Order of the Municipal Circuit Trial Court (MCTC) for the 19
petitioners to vacate the contested parcel of land.

The decision of the court below in Civil Cases Nos. 0288-J and 0289-J are set aside. Civil Cases Nos. 0288-J
and 0289-J are hereby DISMISSED.
SO ORDERED.[14]

The facts are as follows:

On March 19, 1997, private respondent Violeta Herrera filed 21 ejectment Complaints[4] before the
16th MCTC, Jordan-Buenavista-Nueva Valencia, Jordan, Guimaras. Private respondent alleged that she owns

The RTC ruled that the evidence showed the better right of private respondent to possess Lot 1227. Private
respondents position paper, affidavit and tax declaration supported her allegations. In addition, the
commissioners report and sketch plan showed that indeed petitioners occupy Lot 1227. On the other hand,

according to the RTC, the petitioners failed to present evidence which would show that they are entitled to
possess the lot.
Based on the sketch plan, the RTC dismissed the cases against Gabasa and Amatorio since their houses
occupy only a small area of Lot 1227. It declared that Gabasa and Amatorio believed in good faith that the
whole area they occupied was part of the seashore.
The 19 petitioners, who were ordered to vacate the lot, filed a joint petition for review with the Court of
Appeals. The appellate court denied the petition. Petitioners moved for reconsideration and filed an amended
petition. The Court of Appeals, however, affirmed the factual findings and conclusions arrived at by the trial
courts and denied the amended petition for lack of merit. [15] It also denied the motion for reconsideration.
Petitioners are now before us, on a petition for review, alleging that:
The Honorable Court of Appeals, with due respect and deference, committed a reversible error in the
interpretation/application of the law in the instant case and in the appreciation of the facts and evidence
presented. The Court of Appeals gravely abused its discretion when it denied and dismissed the petition filed
by the petitioners.[16]
After considering the parties submissions, we find three basic issues: (1) Did the MCTC err in taking
jurisdiction over and deciding the cases? (2) Did the RTC err in sustaining the MCTCs judgment? (3) Did the
CA err in denying the petition for review filed by the 19 petitioners ordered to be ejected?
Petitioners insist that private respondent should have filed an action to recover possession de jure, not a mere
complaint for ejectment, for two reasons. One, they possessed Lot 1227 in good faith for more than 30 years
in the concept of owners. And two, there was no withholding of possession since private respondent was not in
prior possession of the lot.
Private respondent states in her Comment before us that the allegations in her Complaints make out a clear
case of unlawful detainer which is cognizable by the MCTC. We are in agreement with her stance. There was
no error in the choice of the complainants remedy, a matter left to her determination as the suitor. And the
complaint itself is defined by the allegations therein, not the allegations of the defendants.
At the outset, we note that petitioners question the MCTCs jurisdiction yet they admit in their preliminary
statement that the Complaints filed are indeed for unlawful detainer, and that the only issue to be determined
is mere physical possession (possession de facto) and not juridical possession (possession de jure), much
less ownership.[17]
While petitioners assert that this case involves only deprivation of possession, they confuse the remedy of an
action for forcible entry with that of unlawful detainer. In unlawful detainer, prior physical possession by the
plaintiff is not necessary. It is enough that plaintiff has a better right of possession. Actual, prior physical
possession of a property by a party is indispensable only in forcible entry cases. In unlawful detainer cases,
the defendant is necessarily in prior lawful possession of the property but his possession eventually becomes
unlawful upon termination or expiration of his right to possess. [18] Thus, the fact that petitioners are in
possession of the lot does not automatically entitle them to remain in possession. And the issue of prior lawful
possession by the defendants does not arise at all in a suit for unlawful detainer, simply because prior lawful
possession by virtue of contract or other reasons is given or admitted. Unlike in forcible entry where
defendants, by force, intimidation, threat, strategy or stealth, deprive the plaintiff or the prior physical
possessor of possession. Here there is no evidence to show that petitioners entered the lot by any of these
acts.
If only to stress the fundamental principles related to present controversy, jurisdiction over unlawful detainer
suits is vested in municipal trial courts.[19] And in ejectment cases, the jurisdiction of the court is determined by
the allegations of the complaint. [20]

In this case for ejectment, private respondents allegations sufficiently present a case of unlawful detainer.
She alleged that (1) she owns Lot 1227; (2) she tolerated petitioners to construct their houses thereon; (3) she
withdrew her tolerance; and (4) petitioners refused to heed her demand to vacate the lot.
The Complaints were also filed within one year from the date of her demand. The cause of action for
unlawful detainer between the parties springs from the failure of petitioners to vacate the lot upon lawful
demand of the private respondent. When they refused to vacate the lot after her demand, petitioners
continued possession became unlawful. Her complaint for ejectment against respondent, to put it simply, is
not without sufficient basis.
Petitioners contention that private respondent should have filed an action to recover possession de jure with
the RTC is not supported by law or jurisprudence. The distinction between a summary action of ejectment and
a plenary action for recovery of possession and/or ownership of the land is settled in our jurisprudence.
What really distinguishes an action for unlawful detainer from a possessory action (accion publiciana) and
from a reinvindicatory action (accion reinvindicatoria) is that the first is limited to the question ofpossession de
facto. An unlawful detainer suit (accion interdictal) together with forcible entry are the two forms of an
ejectment suit that may be filed to recover possession of real property. Aside from the summary action of
ejectment, accion publiciana or the plenary action to recover the right of possession and accion
reinvindicatoria or the action to recover ownership which includes recovery of possession, make up the three
kinds of actions to judicially recover possession.[21]
It is not up to defendants, now petitioners herein, to dictate upon plaintiff, now the private respondent, what her
initial recourse should be. Her choice of an action for ejectment against so-called squatters is well within her
rights.
Petitioners cite the case of Bayubay v. Court of Appeals,[22] and argue that the MCTCs decision was without
jurisdictional or legal basis because the MCTC did not issue a preliminary conference order. They assert that
the 10-day period to file position papers and affidavits only starts after the parties had received a preliminary
conference order. They insist they were denied due process when the MCTC decided the cases based merely
on private respondents Complaints and affidavit, without considering their Answers.
For her part, private respondent maintains that there was substantial compliance with the rules in the MCTCs
conduct of the preliminary conference, hence there was no violation of due process nor disregard of its proper
jurisdiction.
Petitioners present contention was first raised only in their appeal to the RTC. Raising it before the appellate
tribunal is barred by estoppel.[23] They should have raised it in the proceedings before the MCTC. In our view,
this issue is a mere afterthought, when the MCTC decided against them. Basic rules of fair play, justice and
due process require that as a rule an issue cannot be raised by the petitioners for the first time on appeal. [24]
Besides, petitioners did not question initially the MCTCs Order dated February 19, 1999, when they moved for
an extension of time to file their position papers and affidavits. They wanted another 30 days on top of the 30
days set by the MCTC, which strictly should have been 10 days only. In this regard, petitioners could not claim
that they were denied sufficient time to file their position papers and affidavits before the trial court. Further,
they cannot validly invoke our ruling[25] in Bayubay, for in that case there was no order at all terminating the
preliminary conference and requiring the parties to submit position papers and affidavits.
We note with dismay petitioners insistence that we order the MCTC to conduct the requisite preliminary
conference. The summary character of ejectment suits will be disregarded if we allow petitioners to further
delay this case by allowing a second preliminary conference. Ejectment by way of forcible entry and unlawful
detainer cases are summary proceedings, designed to provide an expeditious means of protecting actual
possession or the right to possession over the property involved. It is a timely procedure designed to remedy
the delay in the resolution of such cases.[26]
Lastly, petitioners aver that private respondent failed to prove her allegation of ownership of Lot 1227 as it is
only based on a tax declaration which is not an evidence of ownership. They also claim that their possession

of the lot was not and could not be by mere tolerance. However, this is a factual matter best left to the trial
courts.
What we have now is sufficient evidence showing that private respondent has a better right to possess Lot
1227. The commissioners report and sketch plan show that the 19 petitioners occupy the lot, which
corroborate private respondents allegation and disprove petitioners defense that Lot 1227 is a shoreline; or
that Lot 1227 is a social forest area. While not a conclusive evidence of ownership, private respondents tax
declaration constitutes proof that she has a claim of title over the lot. It has been held that:
Although tax declarations or realty tax payment of property are not conclusive evidence of ownership,
nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind would be
paying taxes for a property that is not in his actual or at least constructive possession. They constitute at least
proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for
taxation purposes manifests not only ones sincere and honest desire to obtain title to the property and
announces his adverse claim against the State and all other interested parties, but also the intention to
contribute needed revenues to the Government. Such an act strengthens ones bona fide claim of acquisition
of ownership.[27]
The lower courts did not err in adjudicating the issue of possession. Mere absence of title over the lot is not a
ground for the courts to withhold relief from the parties in an ejectment case. Plainly stated, the trial court has
validly exercised its jurisdiction over the ejectment cases below. The policy behind ejectment suits is to
prevent breaches of the peace and criminal disorder, and to compel the party out of possession to respect and
resort to the law alone to obtain what she claims is hers. The party deprived of possession must not take the
law into his or her own hands.[28] For their part, herein petitioners could not be barred from defending
themselves before the court adequately, as a matter of law and right.
However, petitioners in their defense should show that they are entitled to possess Lot 1227. If they had any
evidence to prove their defenses, they should have presented it to the MCTC with their position papers and
affidavits. But they ignored the courts order and missed the given opportunity to have their defenses heard,
the very essence of due process.[29] Their allegations were not only unsubstantiated but were also disproved
by the plaintiffs evidence.
In sum, we find no reversible error much less any grave abuse of discretion committed by the Court of
Appeals. A person who occupies the land of another at the latters tolerance or permission, without any
contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing
which a summary action for ejectment is the proper remedy against him. [30] His status is analogous to that of a
lessee or tenant whose term of lease has expired but whose occupancy continued by tolerance of the owner.
In such a case, the date of unlawful deprivation or withholding of possession is to be counted from the date of
the demand to vacate.[31]

LOPEZ, RAMON MACAIRAN, DOMINGO NOLASCO, JR., FLORANTE NOLASCO, REGINA OPERARIO,
CARDING ORCULLO, FELICISIMO PACATE, CONRADO P AMINDALAN, JUN PARIL, RENE SANTOS,
DOMINADOR SELVELYEJO, VILLAR, JOHN DOE, JANE DOE and Unknown Occupants of Olivares
Compound, Phase II, Barangay San Dionisio, Paraaque City, Respondents.
DECISION
BRION, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the decision 1 dated
March 14, 2005 of the Court of Appeals in CA-G.R. SP No. 80166. The Court of Appeals decision reversed
the decisions of the Regional Trial Court (RTC) of Paraaque City, Branch 257, and of the Metropolitan Trial
Court (MeTC) of Paraaque City, Branch 77, by dismissing petitioner Fiorello R. Joses complaint for
ejectment against Roberto Alfuerto, Ernesto Bacay, Iluminado Bacay, Manuel Bantaculo, Letty Barcelo, Jing
Bermejo, Milna Bermejo, Pablo Bermejo, Jhonny Borja, Bernadette Buenafe, Alfredo Calagos, Rosauro
Calagos, Alex Chacon, Aida Consulta, Carmen Corpuz, Rodolfo De Vera, Ana Dela Rosa, Rudy Ding, Jose
Escasinas, Gorgonio Espadero, Demetrio Estrera, Rogelio Estrera, Eduardo Evardone, Antonio Gabaleo,
Arsenia Garing, Narcing Guarda, Nila Lebato, Andrade Ligaya, Helen Lopez, Ramon Macairan, Domingo
Nolasco, Jr., Florante Nolasco, Regina Operario, Carding Orcullo, Felicisimo Pacate, Conrado Pamindalan,
Jun Paril, Rene Santos, Dominador Selvelyejo, Rosario Ubaldo, Sergio Villar, John Doe, Jane Doe and
Unknown Occupants of Olivares Compound, Phase II, Barangay San Dionisio, Paraaque City (respondents),
on the ground that the petitioners cause of action was not for unlawful detainer but for recovery of possession.
The appellate court affirmed this decision in its resolution of August 22, 2005. 2
The dispute involves a parcel of land registered in the name of Rodolfo Chua Sing under Transfer Certificate
of Title No. 52594,3 with an area of 1919 square meters, located in Barangay San Dionisio, Paraaque City.
Chua Sing purchased the land in 1991. On April 1, 1999, Chua Sing leased the property to the petitioner. Their
contract of lease was neither notarized nor registered with the Paraaque City Registry of Deeds. 4
The lease contract provided that:
That the term of this lease shall be FIVE (5) years and renewable for the same period upon mutual agreement
of the parties to commence upon the total eviction of any occupant or occupants. The LESSOR hereby
transfers all its rights and prerogative to evict said occupants in favor of the LESSEE which shall be
responsible for all expenses that may be incurred without reimbursement from the LESSOR. It is understood
however that the LESSOR is hereby waiving, in favor of the LESSEE any and all damages that may be
recovered from the occupants.5 (Underscore ours)
Significantly, the respondents already occupied the property even before the lease contract was executed.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision of the Court of Appeals dated
March 30, 2001 and its Resolution dated October 18, 2001 are AFFIRMED.
Costs against petitioners.

The respondents refused to vacate and to pay rent. On October 20, 1999, the petitioner filed an ejectment
case against the respondents before Branch 77 of the Paraaque City MeTC, docketed as Civil Case No.
11344.7

SO ORDERED.
G.R. No. 169380

On April 28, 1999, soon after Chua Sing and the petitioner signed the lease contract, the petitioner demanded
in writing that the respondents vacate the property within 30 days and that they pay a monthly rental of
P1,000.00 until they fully vacate the property.6

November 26, 2012

FIORELLO R. JOSE, Petitioner,

vs.
ROBERTO ALFUERTO, ERNESTO BACAY, ILUMINADO BACAY, MANUEL BANTACULO, LETTY
BARCELO, JING BERMEJO, MILNA BERMEJO, PABLO BERMEJO, JHONNY BORJA, BERNADETTE
BUENAFE, ALFREDO CALAGOS, ROSAURO CALAGOS, ALEX CHACON, AIDA CONSULTA, CARMEN
CORPUZ, RODOLFO DE VERA, ANA DELA ROSA, RUDY DING, JOSE ESCASINAS, GORGONIO
ESPADERO, DEMETRIO ESTRERA, ROGELIO ESTRERA, EDUARDO EVARDONE, ANTONIO
GABALEO, ARSENIA GARING, NARCING GUARDA, NILA LEBATO, ANDRADE LIGAYA, HELEN

In this complaint, no mention was made of any proceedings before the barangay. Jose then brought the
dispute before the barangay for conciliation.8 The barangay issued a Certification to File Action on March 1,
2000.9 Jose was then able to file an amended complaint, incorporating the proceedings before the barangay
before the summons and copies of the complaint were served upon the named defendants. 10
In the Amended Complaint11 dated March 17, 2000, the petitioner claimed that as lessee of the subject
property, he had the right to eject the respondents who unlawfully occupy the land. He alleged that:

7. Defendants, having been fully aware of their unlawful occupancy of the subject lot, have defiantly erected
their houses thereat without benefit of any contract or law whatsoever, much less any building permit as
sanctioned by law, but by mere tolerance of its true, lawful and registered owner, plaintiffs lessor.12

WHEREFORE, the instant petition is GRANTED. The decision dated October 8, 2003 of the RTC, Branch 257,
Paraaque City, in Civil Case No. 03-0127, is REVERSED and SET ASIDE and the amended complaint for
ejectment is DISMISSED.21

The petitioner also stated that despite his written demand, the respondents failed to vacate the property
without legal justification. He prayed that the court order the respondents; (1) to vacate the premises; (2) to
pay him not less than P41,000.00 a month from May 30,1999 until they vacate the premises; and (3) to pay
him attorneys fees of no less than P50,000.00, and the costs of suit. 13

The petitioner filed a motion for reconsideration, 22 which the Court of Appeals denied in its resolution 23 of
August 22, 2005. In the present appeal, the petitioner raises before us the following issues:

In their Answer, the respondents likewise pointed out that they have been in possession of the land long
before Chua Sing acquired the property in 1991, and that the lease contract between the petitioner and Chua
Sing does not affect their right to possess the land. The respondents also presented a Deed of
Assignment,14 dated February 13, 2000, issued by David R. Dulfo in their favor. They argued that the MeTC
had no jurisdiction over the case as the issue deals with ownership of the land, and sought the dismissal of the
complaint for lack of cause of action and for lack of jurisdiction. They also filed a counterclaim for actual and
moral damages for the filing of a baseless and malicious suit.
After the required position papers, affidavits and other pieces of evidence were submitted, the MeTC resolved
the case in the petitioners favor. In its decision 15 of January 27, 2003, the MeTC held that the respondents
had no right to possess the land and that their occupation was merely by the owners tolerance. It further
noted that the respondents could no longer raise the issue of ownership, as this issue had already been
settled: the respondents previously filed a case for the annulment/cancellation of Chua Sings title before the
RTC, Branch 260, of Paraaque City, which ruled that the registered owners title was genuine and valid.
Moreover, the MeTC held that it is not divested of jurisdiction over the case because of the respondents
assertion of ownership of the property. On these premises, the MeTC ordered the respondents to vacate the
premises and to remove all structures introduced on the land; to each pay P500.00 per month from the date of
filing of this case until they vacate the premises; and to pay Jose, jointly and severally, the costs of suit and
P20,000.00 as attorneys fees.
On appeal before the RTC, the respondents raised the issue, among others, that no legal basis exists for the
petitioners claim that their occupation was by tolerance, "where the possession of the defendants was illegal
at the inception as alleged in the complaint, there can be no tolerance." 16

I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE CAUSE OF ACTION OF
THE SUBJECT COMPLAINT IS NOT FOR UNLAWFUL DETAINER BUT FOR RECOVERY OF POSSESSION
AND THEREFORE DISMISSIBLE
II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECIDING THE CASE BASED ON
RESPONDENTS MATERIAL CHANGE OF THEORY WHICH IS COMPLETELY INCONSISTENT WITH
THEIR DEFENSES INVOKED BEFORE THE MUNICIPAL TRIAL COURT
III
WHETHER OR NOT THIS HONORABLE COURT MAY DECIDE THIS CASE ON THE MERITS TO AVOID
CIRCUITOUS PROCEDURE IN THE ADMINISTRATION OF JUSTICE. 24
The Courts Ruling
We find the petition unmeritorious.
Unlawful detainer is not the proper

17

The RTC affirmed the MeTC decision of January 27, 2003. It issued its decision on October 8, 2003,
reiterating the MeTCs ruling that a case for ejectment was proper. The petitioner, as lessee, had the right to
file the ejectment complaint; the respondents occupied the land by mere tolerance and their possession
became unlawful upon the petitioners demand to vacate on April 28, 1999. The RTC, moreover, noted that the
complaint for ejectment was filed on October 20, 1999, or within one year after the unlawful deprivation took
place. It cited Pangilinan, et al. v. Hon. Aguilar, etc., et al. 18 and Yu v. Lara, et al.19 to support its ruling that a
case for unlawful detainer was appropriate.
On March 14, 2005, the Court of Appeals reversed the RTC and MeTC decisions. 20 It ruled that the
respondents possession of the land was not by the petitioner or his lessors tolerance. It defined tolerance not
merely as the silence or inaction of a lawful possessor when another occupies his land; tolerance entailed
permission from the owner by reason of familiarity or neighborliness. The petitioner, however, alleged that the
respondents unlawfully entered the property; thus, tolerance (or authorized entry into the property) was not
alleged and there could be no case for unlawful detainer. The respondents allegation that they had been in
possession of the land before the petitioners lessor had acquired it in 1991 supports this finding. Having been
in possession of the land for more than a year, the respondents should not be evicted through an ejectment
case.
The Court of Appeals emphasized that ejectment cases are summary proceedings where the only issue to be
resolved is who has a better right to the physical possession of a property. The petitioners claim, on the other
hand, is based on an accion publiciana: he asserts his right as a possessor by virtue of a contract of lease he
contracted after the respondents had occupied the land. The dispositive part of the decision reads:

remedy for the present case.

The key issue in this case is whether an action for unlawful detainer is the proper remedy.
Unlawful detainer is a summary action for the recovery of possession of real property. This action may be filed
by a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully
withheld after the expiration or termination of the right to hold possession by virtue of any contract, express or
implied. In unlawful detainer, the possession of the defendant was originally legal, as his possession was
permitted by the plaintiff on account of an express or implied contract between them. However, the
defendants possession became illegal when the plaintiff demanded that the defendant vacate the subject
property due to the expiration or termination of the right to possess under the contract, and the defendant
refused to heed such demand. A case for unlawful detainer must be instituted one year from the unlawful
withholding of possession.25
The allegations in the complaint determine both the nature of the action and the jurisdiction of the court. The
complaint must specifically allege the facts constituting unlawful detainer. In the absence of these allegations
of facts, an action for unlawful detainer is not the proper remedy and the municipal trial court or the MeTC
does not have jurisdiction over the case.26
In his amended complaint, the petitioner presents the following allegations in support of his unlawful detainer
complaint:

3. On April 1, 1999, plaintiff leased from lessor, Mr. Rudy Chuasing, that parcel of lot owned and registered in
the lessors name, covering the area occupied by the defendants.
xxxx
6. Plaintiffs lessor had acquired the subject property as early as 1991 through sale, thereafter the aforesaid
Transfer Certificate of Title was subsequently registered under his name.
7. Defendants, having been fully aware of their unlawful occupancy of the subject lot, have defiantly erected
their houses thereat without benefit of any contract or law whatsoever, much less any building permit as
sanctioned by law, but by mere tolerance of its true, lawful and registered owner, plaintiffs lessor.
8. By reason of defendants continued unlawful occupancy of the subject premises, plaintiff referred the matter
to his lawyer who immediately sent a formal demand upon each of the defendants to vacate the premises.
Copies of the demand letter dated 28 April 1999 are xxx hereto attached as annexes "C" to "QQ."
9. Despite notice, however, defendants failed and refused and continues to fail and refuse to vacate the
premises without valid or legal justification.27 (emphasis ours)
The petitioners allegations in the amended complaint run counter to the requirements for unlawful detainer. In
an unlawful detainer action, the possession of the defendant was originally legal and his possession was
permitted by the owner through an express or implied contract.
In this case, paragraph 7 makes it clear that the respondents occupancy was unlawful from the start and was
bereft of contractual or legal basis. In an unlawful detainer case, the defendants possession becomes illegal
only upon the plaintiffs demand for the defendant to vacate the property and the defendants subsequent
refusal. In the present case, paragraph 8 characterizes the defendants occupancy as unlawful even before
the formal demand letters were written by the petitioners counsel. Under these allegations, the unlawful
withholding of possession should not be based on the date the demand letters were sent, as the alleged
unlawful act had taken place at an earlier unspecified date.
The petitioner nevertheless insists that he properly alleged that the respondents occupied the premises by
mere tolerance of the owner. No allegation in the complaint nor any supporting evidence on record, however,
shows when the respondents entered the property or who had granted them permission to enter. Without
these allegations and evidence, the bare claim regarding "tolerance" cannot be upheld.
In Sarona, et al. v. Villegas, et al.,28 the Court cited Prof. Arturo M. Tolentinos definition and characterizes
"tolerance" in the following manner:
Professor Arturo M. Tolentino states that acts merely tolerated are "those which by reason of neighborliness or
familiarity, the owner of property allows his neighbor or another person to do on the property; they are
generally those particular services or benefits which ones property can give to another without material injury
or prejudice to the owner, who permits them out of friendship or courtesy." He adds that: "they are acts of little
disturbances which a person, in the interest of neighborliness or friendly relations, permits others to do on his
property, such as passing over the land, tying a horse therein, or getting some water from a well." And,
Tolentino continues, even though "this is continued for a long time, no right will be acquired by prescription."
Further expounding on the concept, Tolentino writes: "There is tacit consent of the possessor to the acts which
are merely tolerated. Thus, not every case of knowledge and silence on the part of the possessor can be
considered mere tolerance. By virtue of tolerance that is considered as an authorization, permission or license,
acts of possession are realized or performed. The question reduces itself to the existence or non-existence of
the permission. [citations omitted; italics supplied]
The Court has consistently adopted this position: tolerance or permission must have been present at the
beginning of possession; if the possession was unlawful from the start, an action for unlawful detainer would
not be the proper remedy and should be dismissed.29

It is not the first time that this Court adjudged contradictory statements in a complaint for unlawful detainer as
a basis for dismissal. In Unida v. Heirs of Urban, 30 the claim that the defendants possession was merely
tolerated was contradicted by the complainants allegation that the entry to the subject property was unlawful
from the very beginning. The Court then ruled that the unlawful detainer action should fail.
The contradictory statements in the complaint are further deemed suspicious when a complaint is silent
regarding the factual circumstances surrounding the alleged tolerance. In Ten Forty Realty Corporation v.
Cruz,31 the complaint simply stated that: "(1) defendant immediately occupied the subject property after its sale
to her, an action merely tolerated by the plaintiff; and (2) the respondents allegedly illegal occupation of the
premises was by mere tolerance." The Court expressed its qualms over these averments of fact as they did
not contain anything substantiating the claim that the plaintiff tolerated or permitted the occupation of the
property by the defendant:
These allegations contradict, rather than support, plaintiffs theory that its cause of action is for unlawful
detainer. First, these arguments advance the view that defendants occupation of the property was unlawful at
its inception. Second, they counter the essential requirement in unlawful detainer cases that plaintiffs
supposed act of sufferance or tolerance must be present right from the start of a possession that is later
sought to be recovered.
As the bare allegation of plaintiffs tolerance of defendants occupation of the premises has not been proven,
the possession should be deemed illegal from the beginning. Thus, the CA correctly ruled that the ejectment
case should have been for forcible entry an action that had already prescribed, however, when the
Complaint was filed on May 12, 1999. The prescriptive period of one year for forcible entry cases is reckoned
from the date of defendants actual entry into the land, which in this case was on April 24, 1998. 32
Similarly, in Go, Jr. v. Court of Appeals,33 the Court considered the owners lack of knowledge of the
defendants entry of the land to be inconsistent with the allegation that there had been tolerance.
In Padre v. Malabanan,34 the Court not only required allegations regarding the grant of permission, but proof
as well. It noted that the plaintiffs alleged the existence of tolerance, but ordered the dismissal of the unlawful
detainer case because the evidence was "totally wanting as to when and under what circumstances xxx the
alleged tolerance came about." It stated that:
Judging from the respondents Answer, the petitioners were never at all in physical possession of the premises
from the time he started occupying it and continuously up to the present. For sure, the petitioners merely
derived their alleged prior physical possession only on the basis of their Transfer Certificate of Title (TCT),
arguing that the issuance of said title presupposes their having been in possession of the property at one time
or another.35
Thus, the complainants in unlawful detainer cases cannot simply anchor their claims on the validity of the
owners title. Possession de facto must also be proved.
As early as the 1960s, in Sarona, et al. v. Villegas, et al., 36 we already ruled that a complaint which fails to
positively aver any overt act on the plaintiffs part indicative of permission to occupy the land, or any showing
of such fact during the trial is fatal for a case for unlawful detainer. As the Court then explained, a case for
unlawful detainer alleging tolerance must definitely establish its existence from the start of possession;
otherwise, a case for forcible entry can mask itself as an action for unlawful detainer and permit it to be filed
beyond the required one-year prescription period from the time of forcible entry:
A close assessment of the law and the concept of the word "tolerance" confirms our view heretofore
expressed that such tolerance must be present right from the start of possession sought to be recovered, to
categorize a cause of action as one of unlawful detainer not of forcible entry. Indeed, to hold otherwise
would espouse a dangerous doctrine. And for two reasons: First. Forcible entry into the land is an open
challenge to the right of the possessor. Violation of that right authorizes the speedy redress in the inferior
court provided for in the rules. If one year from the forcible entry is allowed to lapse before suit is filed, then
the remedy ceases to be speedy; and the possessor is deemed to have waived his right to seek relief in the
inferior court. Second. If a forcible entry action in the inferior court is allowed after the lapse of a number of

years, then the result may well be that no action of forcible entry can really prescribe. No matter how long such
defendant is in physical possession, plaintiff will merely make a demand, bring suit in the inferior court upon
plea of tolerance to prevent prescription to set in and summarily throw him out of the land. Such a
conclusion is unreasonable. Especially if we bear in mind the postulates that proceedings of forcible entry and
unlawful detainer are summary in nature, and that the one year time-bar to the suit is but in pursuance of the
summary nature of the action.37 (italics supplied)
Given these rulings, it would be equally dangerous for us to deprive the respondents of possession over a
property that they have held for at least eight years before the case was filed in 1999, by means of a summary
proceeding, simply because the petitioner used the word "tolerance" without sufficient allegations or evidence
to support it.
There was no change in the
respondents theory during
the appeal that would amount
to a deprivation of the petitioners
right to due process.
The petitioner alleges that the respondents had never questioned before the MeTC the fact that their
occupancy was by tolerance. The only issues the respondents allegedly raised were: (1) the title to the
property is spurious; (2) the petitioners predecessor is not the true owner of the property in question; (3) the
petitioners lease contract was not legally enforceable; (4) the petitioner was not the real party-in-interest; (5)
the petitioners predecessor never had prior physical possession of the property; and (6) the respondents right
of possession was based on the "Deed of Assignment of Real Property" executed by Dulfo. The respondents
raised the issue of tolerance merely on appeal before the RTC. They argue that this constitutes a change of
theory, which is disallowed on appeal.38
It is a settled rule that a party cannot change his theory of the case or his cause of action on appeal. Points of
law, theories, issues and arguments not brought to the attention of the lower court will not be considered by
the reviewing court. The defenses not pleaded in the answer cannot, on appeal, change fundamentally the
nature of the issue in the case. To do so would be unfair to the adverse party, who had no opportunity to
present evidence in connection with the new theory; this would offend the basic rules of due process and fair
play.39
While this Court has frowned upon changes of theory on appeal, this rule is not applicable to the present case.
The Court of Appeals dismissed the action due the petitioners failure to allege and prove the essential
requirements of an unlawful detainer case. In Serdoncillo v. Spouses Benolirao, 40 we held that:
In this regard, to give the court jurisdiction to effect the ejectment of an occupant or deforciant on the land, it is
necessary that the complaint must sufficiently show such a statement of facts as to bring the party clearly
within the class of cases for which the statutes provide a remedy, without resort to parol testimony, as these
proceedings are summary in nature. In short, the jurisdictional facts must appear on the face of the complaint.
When the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it does not
state how entry was effected or how and when dispossession started, the remedy should either be an accion
publiciana or accion reivindicatoria. (emphasis ours; italics supplied)
Regardless of the defenses raised by the respondents, the petitioner was required to properly allege and
prove when the respondents entered the property and that it was the petitioner or his predecessors, not any
other persons, who granted the respondents permission to enter and occupy the property. Furthermore, it was
not the respondents defense that proved fatal to the case but the petitioners contradictory statements in his
amended complaint which he even reiterated in his other pleadings. 41
Although the respondents did not use the word "tolerance" before the MeTC, they have always questioned the
existence of the petitioners tolerance. In their Answer to Amended Complaint, the respondents negated the
possibility of their possession of the property under the petitioner and his lessors tolerance when the
respondents alleged to have occupied the premises even before the lessor acquired the property in 1991.
They said as much in their Position Paper:

RODOLFO CHUA SING never had actual physical possession of his supposed property, as when he became
an owner of the 1,919 square meters property described in TCT No. 52594, the property had already been
occupied by herein DEFENDANTS since late 1970. Therefore, DEFENDANTS were already
occupants/possessors of the property from where they are being ejected by FIORELLO JOSE, a supposed
LESSEE of a property with a dubious title. The main thing to be proven in the case at bar is prior possession
and that the same was lost through force, intimidation, threat, strategy and stealth, so that it behooves the
court to restore possession regardless of title or even ownership xxx. In the case at bar, neither RODOLFO
CHUA SING nor herein PLAINTIFF ever had any actual physical possession of the property where
DEFENDANTS have already possessed for more than ten (10) years in 1991 when RODOLFO CHUA SING
got his fake title to the property.42(citation omitted)
In addition, whether or not it was credible, the respondents claim that their possession was based on the
Deed of Assignment executed by Dulfo, in behalf of the estate of Domingo de Ocampo, shows that they
considered the petitioner and his lessor as strangers to any of their transactions on the property, and could not
have stayed there upon the latters permission.
We note that even after the issue of tolerance had been directly raised by the respondents before the RTC,
the petitioner still failed to address it before the RTC, the Court of Appeals, and the Supreme Court. 43 At best,
he belatedly states for the first time in his Memorandum 44 before this Court that his lessor had tolerated the
respondents occupancy of the lot, without addressing the respondents allegation that they had occupied the
lot in 1970, before the petitioners lessor became the owner of the property in 1991, and without providing any
other details. His pleadings continued to insist on the existence of tolerance without providing the factual basis
for this conclusion. Thus, we cannot declare that the Court of Appeals had in anyway deprived the petitioner of
due process or had unfairly treated him when it resolved the case based on the issue of tolerance.
The Court cannot treat an ejectment
case as an accion publiciana or
accion reivindicatoria.
The petitioner argues that assuming this case should have been filed as an accion publiciana or accion
reivindicatoria, this Court should still resolve the case, as requiring him to properly refile the case serves no
other ends than to comply with technicalities.45
The Court cannot simply take the evidence presented before the MeTC in an ejectment case and decide it as
an accion publiciana or accion reivindicatoria. These cases are not interchangeable and their differences
constitute far more than mere technicalities.
In Regis, Jr. v. Court of Appeals,46 we ruled that an action for forcible entry cannot be treated as an accion
publiciana and summarized the reasons therefor. We find these same reasons also applicable to an unlawful
detainer case which bears the same relevant characteristics:
On the issue of whether or not an action for forcible entry can be treated as accion publiciana, we rule in the
negative. Forcible entry is distinct from accion publiciana. First, forcible entry should be filed within one year
from the unlawful dispossession of the real property, while accion publiciana is filed a year after the unlawful
dispossession of the real property. Second, forcible entry is concerned with the issue of the right to the
physical possession of the real property; in accion publiciana, what is subject of litigation is the better right to
possession over the real property. Third, an action for forcible entry is filed in the municipal trial court and is a
summary action, while accion publiciana is a plenary action in the RTC. [italics supplied]
The cause of action in ejectment is different from that in an accion publiciana or accion reivindicatoria. An
ejectment suit is brought before the proper inferior court to recover physical possession only or possession de
facto, not possession de jure. Unlawful detainer and forcible entry cases are not processes to determine actual
title to property. Any ruling by the MeTC on the issue of ownership is made only to resolve the issue of
possession, and is therefore inconclusive. 47 Because they only resolve issues of possession de facto,
ejectment actions are summary in nature, while accion publiciana (for the recovery of possession) and accion
reivindicatoria (for the recovery of ownership) are plenary actions. 48 The purpose of allowing actions for
forcible entry and unlawful detainer to be decided in summary proceedings is to provide for a peaceful, speedy
and expeditious means of preventing an alleged illegal possessor of property from unjustly taking and

continuing his possession during the long period it would take to properly resolve the issue of possession de
jure or ownership, thereby ensuring the maintenance of peace and order in the community; otherwise, the
party illegally deprived of possession might take the law in his hands and seize the property by force and
violence.49 An ejectment case cannot be a substitute for a full-blown trial for the purpose of determining rights
of possession or ownership. Citing Mediran v. Villanueva, 50 the Court in Gonzaga v. Court of
Appeals51 describes in detail how these two remedies should be used:
In giving recognition to the action of forcible entry and detainer the purpose of the law is to protect the person
who in fact has actual possession; and in case of controverted right, it requires the parties to preserve the
status quo until one or the other of them sees fit to invoke the decision of a court of competent jurisdiction
upon the question of ownership. It is obviously just that the person who has first acquired possession should
remain in possession pending the decision; and the parties cannot be permitted meanwhile to engage in a
petty warfare over the possession of the property which is the subject of dispute. To permit this would be
highly dangerous to individual security and disturbing to social order.1wphi1 Therefore, where a person
supposes himself to be the owner of a piece of property and desires to vindicate his ownership against the
party actually in possession, it is incumbent upon him to institute an action to this end in a court of competent
jurisdiction; and he cannot be permitted, by invading the property and excluding the actual possessor, to place
upon the latter the burden of instituting an action to try the property right. [italics supplied]
Thus, if we allow parties to file ejectment cases and later consider them as an accion publiciana or accion
reivindicatoria, we would encourage parties to simply file ejectment cases instead of plenary actions. Courts
would then decide in summary proceedings cases which the rules intend to be resolved through full-blown
trials. Because these "summary" proceedings will have to tackle complicated issues requiring extensive proof,
they would no longer be expeditious and would no longer serve the purpose for which they were created.
Indeed, we cannot see how the resulting congestion of cases, the hastily and incorrectly decided cases, and
the utter lack of system would assist the courts in protecting and preserving property rights.
WHEREFORE, we DENY the petition, and AFFIRM the Court of Appeals' decision dated March 14, 2005 and
resolution dated August 22, 2005 in CA-G.R. SP No. 80116.

The Facts
At the core of the present controversy are several parcels of land which form part of what was once Lot No.
733, Cad-305-D, Masantol Cadastre (Lot 733 hereinafter), registered in the name of Ellen P. Mendoza
(Mendoza), married to Moses Mendoza, under Transfer Certificate of Title No. (TCT) 141-RP of the Registry of
Deeds of Pampanga. With an area of 9,137 square meters, more or less, Lot 733 is located in Brgy. Bebe
Anac, Masantol, Pampanga.
On April 28, 1986, Geodetic Engineer Abdon G. Fajardo prepared a subdivision plan 4 (Fajardo Plan, for short)
for Lot 733, in which Lot 733 was divided into six (6) smaller parcels of differing size dimensions, designated
as: Lot 733-A, Lot 733-B, Lot 733-C, Lot 733-D, Lot 733-E, and Lot 733-F consisting of 336, 465, 3,445, 683,
677 and 3,501 square meters, respectively.
The following day, April 29, 1986, Mendoza executed two separate deeds of absolute sale, the first,
transferring Lot 733-F to Jesus Carlo Gerard Viray (Jesus Viray), 5 and the second deed conveying Lot 733-A
to spouses Avelino Viray and Margarita Masangcay (Sps. Viray). 6 The names McDwight Mendoza, Mendozas
son, and one Ernesto Bustos appear in both notarized deeds as instrumental witnesses. As of that time, the
Fajardo Plan has not been officially approved by the Land Management Bureau (LMB), formerly the Bureau of
Lands. And at no time in the course of the controversy did the spouses Viray and Jesus Viray, as purchasers
of Lots 733-A and 733-F, respectively, cause the annotations of the conveying deeds of sale on TCT 141-RP.
Herein petitioner, Ruperta Cano Vda. de Viray (Vda. de Viray), is the surviving spouse of Jesus Viray, who
died in April 1992.
As of April 29, 1986, the dispositions made on and/or the ownership profile of the subdivided lots appearing
under the Fajardo Plan are as follows:

Lot No.

Area

Conveyances by Mendoza

Lot 733-A

366 square meters

Sold to Sps. Avelino and Margarita Viray

Lot 733-B

465 square meters

Unsold

Lot 733-C

3,445 square meters

Unsold

RUPERTA CANO VDA. DE VIRAY and JESUS CARLO GERARD VIRAY, Petitioners,
vs.
SPOUSES JOSE USI and AMELITA USI, Respondents.

Lot 733-D

683 square meters

Proposed Road

DECISION

Lot 733-E

677 square meters

Unsold

Lot 733-F

3,501 square meters

Sold to Jesus Viray

SO ORDERED.

G.R. No. 192486

November 21, 2012

VELASCO, JR., J.:

The Case
Petitioners have availed of Rule 45 to assail and nullify the Decision 1 dated July 24, 2009, as effectively
reiterated in a Resolution2 of June 2, 2010, both rendered by the Court of Appeals (CA) in CA-G.R. CV No.
90344, setting aside the Decision3 dated June 21, 2007 of the Regional Trial Court (RTC), Branch 55 in
Macabebe, Pampanga, in Civil Case No. 01-1118(M), an accion publiciana/reivindicatoria, which respondents
commenced with, but eventually dismissed by, that court.

The aforementioned conveyances notwithstanding, Mendoza, Emerenciana M. Vda. de Mallari (Vda. de

Mallari) and respondent spouses Jose Usi and Amelita T. Usi (Sps. Usi or the Usis), as purported co-owners of
Lot 733, executed on August 20, 1990 a Subdivision Agreement, 7 or the

1st subdivision agreement (1st SA). Pursuant to this agreement which adopted, as base of reference, the
LMB-approved subdivision plan prepared by Geodetic Engineer Alfeo S. Galang (Galang Plan), Lot 733 was
subdivided into three lots, i.e., Lots A to C, with the following area coverage: Lots 733-A, 465 square meters,
733-B, 494 square meters, and 733-C, 6,838 square meters. In its pertinent parts, the 1st SA reads:
That the above-parties are the sole and exclusive owners of a certain parcel of land situated in the Bo. of Bebe
Anac, Masantol, Pampanga, which is known as Lot No. 733 under TCT No. 141 R.P. of the Registry of Deeds
of Pampanga, under Psd-No. 03-10-025242;

Consequent to the subdivision of Lot 733-C in line with the Galang Plan and its subsequent partition and
distribution to the respective allotees pursuant to the 2nd SA, the following individuals appeared as owners of
the subdivided units as indicated in the table below:

Lot No.

Land Area

Partitioned to:

Lot 733-C-1

200 square meters

Sps. Jose and Amelita Usi

That the parties hereto agreed to subdivided (sic) the above-mentioned property by Geodetic Engineer Alfeo
S. Galang, as per tracing cloth and blue print copy of plan Psd-03-025242 and technical description duly
approved by the Bureau of Lands, hereto Attached and made internal part of this instrument in the following
manner:

Lot 733-C-2

1,000 square meters

Sps. Alejandro & Juanita Lacap

Lot 733-A - - - - - - - To Emerencia M. Vda. Mallari;

Lot 733-C-3

300 square meters

Sps. Nestor & Herminia Coronel

Lot 733-C-4

500 square meters

Sps. Nestor & Herminia Coronel and Sps.

Bacani & Martha Balingit

Lot 733-C-5

400 square meters

Sps. Ruperto & Josefina Jordan

On April 5, 1991, Mendoza, McDwight P. Mendoza, Bismark P. Mendoza, Beverly P. Mendoza, Georgenia P.
Mendoza, Sps. Alejandro Lacap and Juanita U. Lacap, Sps. Nestor Coronel and Herminia Balingit, Sps.
Bacani and Martha Balingit, Sps. Ruperto and Josefina Jordan, and Sps.

Lot 733-C-6

500 square meters

Ellen, McDwight, Bismark, Beverly and

Georgenia Mendoza

Jose and Amelita Usi executed another Subdivision Agreement10 (2nd SA) covering and under which the
8,148-sq. m. Lot 733-C was further subdivided into 13 smaller lots (Lot 733-C-1 to Lot 733-C-13 inclusive).
The subdivision plan11 for Lot 733-C, as likewise prepared by Engr. Galang on October 13, 1990, was officially
approved by the LMB on March 1, 1991.

Lot 733-C-7

220 square meters

Ellen, McDwight, Bismark, Beverly and

Georgenia Mendoza

Lot 733-C-8

1,000 square meters

Ellen, McDwight, Bismark, Beverly and

Georgenia Mendoza

Lot 733-C-9

500 square meters

Ellen, McDwight, Bismark, Beverly and

Georgenia Mendoza

Lot 733-C-10

1,000 square meters

Sps. Jose and Amelita Usi

Lot 733-C-11

668 square meters

Ellen, McDwight, Bismark, Beverly and

Georgenia Mendoza

Lot 733-C-12

550 square meters

Ellen, McDwight, Bismark, Beverly and

That for the convenience of the parties hereto that the existing community of the said Lot be terminated and
their respective share be determined by proper adjudication;

Lot 733-B - - - - - - - To Sps. Jose B. Usi and Amelita B. Usi;

Lot 733-C - - - - - - - To Ellen P. Mendoza8 (Emphasis added.)
TCT 141-RP would eventually be canceled and, in lieu thereof, three derivative titles were issued to the
following, as indicated: TCT 1584-RP for Lot 733-A to Mallari; TCT 1585-RP 9 for Lot 733-B to Sps. Usi; and
TCT 1586-RP for Lot 733-C to Mendoza.

The 2nd SA partly reads:

1. That we are the sole and exclusive undivided co-owners of a parcel of land situated at Barrio Putat and
Arabia, Bebe Anac, Masantol, Pampanga, identified as Lot No. 733-C of Psd-No. 03-041669, containing an
area of 8,148 sq. meters and covered by T.C.T. No. 1586 R.P. of the
Register of Deeds of Pampanga;
2. That it is for the benefit and best interest of the parties herein that the [sic] their co-ownership relation over
the above-mentioned parcel of land be terminated and their respective share over the co-ownership be allotted
[sic] to them;
Wherefore, by virtue of the foregoing premises, we have agreed, as we hereby agree to subdivide our said
parcel of land x x x.12 (Emphasis added.)

Georgenia Mendoza

[Lot 733-C-13]

[1,310 square meters]

[Allotted for a proposed road]

In net effect, the two subdivision agreements paved the way for the issuance, under the Sps. Usis name, of
TCT Nos. 1585-RP,13 2092-RP,14 and 2101-RP,15 covering Lots 733-B, 733-C-1 and 733-C-10, respectively.

WHEREFORE, premises considered, judgment is hereby rendered for the plaintiff the late petitioner Jesus
Viray, and accordingly, the defendants Sps. Usi and any other persons claiming under them are hereby
ordered to vacate the subject premises, Lot 733-F embraced in T.C.T. No. 141-R.P., Register of Deeds
Pampanga, and Lot 733-A, both situated at Bebe Anac, Masantol, Pampanga and to remove at their own
expense, all structures or improvements they built and introduced thereon.
Defendants are likewise sentenced to pay plaintiff the amount of THREE HUNDRED (P300.00) PESOS per
month from November 19, 1991, until they vacate the premises, as reasonable compensation for the use and
occupation thereof x x x.

On the other hand, the subdivision of Lot 733, per the Galang Plan, and the two subdivision agreements
concluded based on that plan, virtually resulted in the loss of the identity of what under the Fajardo Plan were
Lot 733-A and Lot 733-F. The Sps. Viray and the late Jesus Viray, to recall, purchased Lot 733-A and Lot 733F, respectively, from Mendoza.

xxxx

Then came the ocular inspection and survey16 conducted on Lot 733, as an undivided whole, by Geodetic
Engr. Angelito Nicdao of the LMB. Some highlights of his findings:

The Decision eventually became final and executory, the Usis having opted not to appeal it.

(a) Lot 733-A of the Fajardo Plan with an area of 336 square meters that Sps. Viray bought is within Lot 733-B
(Galang Plan) allotted under 1st SA to Sps. Jose and Amelita Usi; and
(b) Lot 733-F of the Fajardo Plan with an area of 3,501 square meters is almost identical to the combined area
of Lots 733-C-8 to 733-C-12 awarded to Ellen Mendoza and her childrenMcDwight, Bismark, Beverly and
Georgenia, and a portion (1,000 square meters) of Lot 733-C-10 of the Galang Plan awarded to Sps. Jose and
Amelita Usi.
As to be expected, the foregoing overlapping transactions involving the same property or portions thereof
spawned several suits and counter- suits featuring, in particular, herein petitioners and respondents, viz:
(a) A suit for Annulment of Deed of Absolute Sale filed before the RTC, Branch 55 in Macabebe, Pampanga,
docketed as Civil Case No. 88-0265-M, in which the Usis and Mendoza, as plaintiffs, assailed the validity and
sought the annulment of the deed of absolute sale executed by Mendoza on April 29, 1986 conveying Lot 733A (Fajardo Plan) to defendants Sps. Viray.
(b) A similar suit for Annulment of Deed of Absolute Sale commenced by Mendoza against Jesus Viray before
RTC-Br. 55 in Macabebe, Pampanga, docketed as Civil Case No. 88-0283-M, entitled Ellen P. Mendoza v.
Jesus Carlo Gerard Viray, also seeking to nullify the April 29, 1986 Deed of Absolute Sale conveying Lot 733-F
(Fajardo Plan) to Jesus Viray and to declare the plaintiff as entitled to its possession.
The adverted Civil Case Nos. 88-0265-M and 88-0283-M were jointly tried by RTC-Br. 55, which, on August 1,
1989, rendered a Joint Decision17 finding for the Sps. Viray and Jesus Viray, as defendants, and accordingly
dismissing the separate complaints to annul the deeds of sale subject of the joint cases.
On appeal, the CA, in CA-G.R. CV Nos. 24981-82, and later this Court, in its Decision of December 11, 1995,
in G.R. No. 122287 in effect affirmed in toto the RTC dismissal decision. 18 The Court, via its Resolution of April
17, 1998, would eventually deny with finality19 Mendoza and the Usis motion for reconsideration of the
aforesaid December 11, 1995 Decision.
(c) A forcible entry case filed on November 19, 1991 by the late Jesus Viray against the Sps. Usi before the
Municipal Circuit Trial Court (MCTC) in Macabebe, Pampanga, docketed as Civil Case No. 91 (13), entitled
Jesus Carlo Gerard Viray v. Spouses Jose Usi and Emelita Tolentino, to eject the Usis from Lot 733-F (Fajardo
Plan).
On July 29, 1998, the MCTC rendered a Decision 20 in favor of Jesus Viray, the dispositive portion of which
pertinently reads:

SO ORDERED.21

(d) A Petition for Annulment of the MCTCs July 29, 1998 Decision filed by the Sps. Usi before the RTC,
docketed as Civil Case No. 99-0914M, entitled Sps. Jose & Amelita Usi v. Hon. Pres. Judge MCTC,
Macabebe, Pampanga, the Court Sheriff, MCTC, Macabebe, Pampanga and
Ruperta Cano Vda. de Viray, which decision placed Jesus Virays widow, Ruperta, in possession of Lot 733-F
of the Fajardo Plan.
As may be noted, the spouses Usi, instead of appealing from the July 29, 1998 MCTC Decision in Civil Case
No. 91 (13), sought, after its finality, its annulment before the RTC. By Decision 22 dated June 29, 2000, the
RTC dismissed the petition to annul. The Usis appeal to the CA, docketed as CA-G.R. CV No. 67945, merited
the same dismissal action.23 And finally, in G.R. No. 154538 (Spouses Jose and Amelita Usi v. Ruperta Cano
Vda. de Viray), the Court denied, on February 12, 2003, Sps. Usis petition for review of the CAs Decision.
The denial became final on April 8, 2003 and an Entry of Judgment 24 issued in due course.
(e) A Petition for Accion Publiciana/ Reivindicatoria 25 instituted on December 12, 2001 by Sps. Usi against the
late Jesus Viray, as substituted by Vda. de Viray, et al., before the RTC in Macabebe, Pampanga, docketed as
Civil Case No. 01-1118(M), involving Lots 733-B, 733-C-1 and 733-C-10 (Galang Plan) covered by TCT Nos.
1585-RP, 2092-RP and 2101-RP.
The execution of the July 29, 1998 MCTC Decision in Civil Case No. 91 (13), as the Sps. Usi asserted in their
petition, would oust them from their own in fee simple lots even though the dispositive portion of said forcible
entry Decision mentioned Lots 733-A and 733-F (Fajardo Plan) and not Lots 733-B, 733-C-1 and 733-C-10
(Galang Plan) which are registered in their names per TCT Nos. 1585-RP, 2092-RP and 2101-RP.
In time, Vda. de Viray moved for the dismissal 26 of these publiciana/ reivindicatoria actions on grounds, among
others, of litis pendentia and res judicata, on account of (1) the Sps. Usis appeal, then pending before the CA,
from the dismissal by the RTC of Civil Case No. 99-0914M;27 and (2) the August 1, 1989 RTC Decision in Civil
Case Nos. 88-0265-M and 88-0283-M, as effectively affirmed by the CA, and finally by the Court in G.R. No.
122287. This motion to dismiss would, however, be denied by the RTC through an Order 28 of March 8, 2002,
compelling Vda. de Viray to file an answer,29 again invoking in defense the doctrine of res judicata. Sps. Usis
Reply to Answer30 contained an averment that their titles over the subject lots are the best evidence of their
ownership.
(f) An action for Cancellation of Titles or Surrender of Original Titles with Damages 31 commenced by Vda. de
Viray, et al., against the Sps. Usi, Mendoza and eight others before the RTC, Branch 54 in Macabebe,
Pampanga, docketed as Civil Case No. (02)-1164(M), seeking the cancellation of TCT Nos. 3614-R.P., 2099R.P., 2101-R.P., 7502-R.P. and 2103-R.P. covering Lots 733-C-8 to 733-C-12 as subdivided under the 2nd SA
of April 5, 1991 which taken together is basically identical to Lot 733-F (Fajardo Plan) sold to Jesus Viray.

To recap, the six (6) cases thus filed involving portions of Lot 733 and their status are:

Civil Case No.

The Parties

Action/Suit for

Subject Lot(s)

88-0265-M

Sps. Usi v. Sps. Viray

Annulment of Deed of
Absolute Sale

733-A
(Fajardo Plan)

88-0283-M

Mendoza v. Jesus Viray

Annulment of Deed of
Absolute Sale

733-F

192486
Disposition

In sum, of the six (6) cases referred to above, the first four (4) have been terminated and the main issue/s
therein peremptorily resolved. To a precise point, the matter of the validity of the April 29, 1986 deeds of
absolute sale conveying Lots 733-A and 733-F under the Fajardo Plan to Sps. Viray and Vda. de Viray (vice
Jesus Viray), respectively, is no longer a contentious issue by force of the Courts Decision in G.R. No. 122287
Decision in favor of
Sps. Viray. Decision is effectively upholding the dismissal of the twin complaints to nullify the deeds aforementioned. Likewise, the
issue of who has the better possessory right independent of title over the disputed lots has been resolved in
now final.
favor of Vda. de Viray and the Sps. Viray and against the Usis and veritably put to rest by virtue of the Courts
final, affirmatory Decision in G.R. No. 154538.
Decision in favor of
Sps. Viray.

(Fajardo Plan)
Subject of CA-G.R.
CV Nos. 24981-82
denied. Subject of
G.R. No. 122287
petition denied.

91 (13)

Jesus Viray v. Sps. Usi

Forcible Entry

733-F

Judgment in favor of
Viray. No appeal.

Sps. Usi v. Vda. de Viray

Petition for Annulment of

MCTC

733-F

RTC dismissed
petition.

(Fajardo Plan)
Decision in CC No. 91
(13)

(02)-1164(M)

Vda. de Viray v.
Mendoza, et al.

Cancellation of Titles
before RTC, Br. 55,
Pampanga

CA-G.R. CV No.
67945 appeal
dismissed. G.R. No.
154538 petition
denied.

Lots 733-C-8

In the meantime, the Sps. Usi have remained in possession of what in the Galang Plan are designated as Lots
733-B, 733-C-1 and 733-C-10.
The Ruling of the RTC in Civil Case No. 01-1118(M)
As may be recalled, on June 21, 2007 in Civil Case No. 01-1118(M), the Macabebe, Pampanga RTC rendered
judgment dismissing the petition of the Sps. Usi 32 for Accion Publiciana/Reivindicatoria. In its dismissal action,
the RTC held that the Sps. Usi failed to establish by preponderance of evidence to support their claim of title,
possession and ownership over the lots subject of their petition.

(Fajardo Plan)

90-0914M

Only two cases of the original six revolving around Lot 733 remained unresolved. The first refers to the petition
for review of the decision of the CA in CA-G.R. CV No. 90344 which, in turn, is an appeal from the decision of
the RTC in Civil Case No. 01-1118(M), a Petition for Accion Publiciana/ Reivindicatoria and Damages, and the
second is Civil Case No. (02)-1164(M) for Cancellation of Titles or Surrender of Original Titles with Damages.
The first case is subject of the present recourse, while the second is, per records, still pending before the RTC,
Branch 54 in Macabebe, Pampanga, its resolution doubtless on hold in light of the instant petition.

Pending before the

RTC.

To 733-C-12
(Lot 733-F (Fajardo
Plan)

Following the denial of their motion for reconsideration per the RTCs Order 33 of September 25, 2007, the Sps.
Usi interposed an appeal before the CA, docketed as CA-G.R. CV No. 90344.
The Ruling of the CA
On July 24, 2009, the CA rendered the assailed decision, reversing and setting aside the appealed June 21,
2007 RTC decision. The fallo of the CA decision reads:
WHEREFORE, the instant appeal is GRANTED and the assailed Decision of the Regional Trial Court,
REVERSED and SET ASIDE. Judgment is hereby rendered declaring as legal and valid, the right of
ownership of petitioner-appellant respondents herein spouses Jose Usi and Amelita T. Usi over Lot Nos. 733B, 733-C-1 and 733-C-10 covered by TCT Nos. 1585-R.P., 2092-R.P, and 2101-R.P., respectively.
Consequently, respondents-appellees herein petitioners are hereby ordered to cease and desist from further
committing acts of dispossession or from disturbing possession and ownership of petitioners-appellants of the
said property as herein described and specified. Claims for damages, however, are hereby denied x x x.
SO ORDERED.

01-1118(M)

Sps. Usi v. Vda. de Viray

Petition for

733-B, 733-C-

Petition dismissed.

Accion Publiciana and

Reivindicatoria before
RTC, Br. 55, Pampanga

1 and 733-C-

CA-G.R. CV No.
90344 reversed
RTC Decision.
Subject of instant
case, G.R. No.

10 (Galang Plan)

The CA predicated its ruling on the interplay of the following premises and findings: (a) the validity of the two
(2) duly notarized subdivision agreements, or the 1st SA and 2nd SA, which the LMB later approved; (b) the
subdivisions of Lot 733 on the basis of the Galang Plan actually partook the nature of the partition of the
shares of its co-owners; (c) what Mendoza conveyed through the April 29, 1986 deeds of absolute sale is only
her ideal, abstract or pro-indiviso share of Lot 733 of which she had full ownership, the conveyance or sale
subject to the eventual delineation and partition of her share; (d) Vda. de Viray has not shown that fraud
surrounded the execution of the partition of Lot 733 through the subdivision agreements of August 20, 1990
and April 5, 1991; (e) the certificates of title of the Sps. Usi constitute indefeasible proof of their ownership of
Lots 733-B, 733-C-1 and 733-C-10; (f) said certificate entitled the Sps. Usi to take possession thereof, the right

to possess being merely an attribute of ownership; (g) Vda. de Viray can only go after the partitioned shares of
Mendoza in Lot 733; and (h) the issue of possessory right has been mooted by the judgment of ownership in
favor of the Sps. Usi over Lots 733-B, 733-C-1 and 733-C-10.

The subdivision agreements not partition of co-owners

Partition, in general, is the separation, division, and assignment of a thing held in common by those to whom it
may belong.35

Vda. de Viray sought but was denied reconsideration per the assailed June 2, 2010 CA Resolution.
Hence, We have this petition.
The Issue
WHETHER OR NOT THE COURT A QUO GRAVELY AND SERIOUSLY ERRED IN REVERSING AND
SETTING ASIDE THE DECISION OF THE RTC DISMISSING RESPONDENTS PETITION. 34
The Courts Ruling
In the main, the issue tendered in this proceeding boils down to the question of whether the two (2) subdivision
agreements dated August 20, 1990 and April 5, 1991, respectively, partake of a bona fide and legally binding
partition contracts or arrangements among co-owners that validly effectuated the transfer of the subject lots to
respondent spouses Usi. Intertwined with the main issue is the correlative question bearing on the validity of
the deeds of absolute sale upon which the petitioners hinged their claim of ownership and right of possession
over said lots.
The Court rules in favor of petitioners.
Petitioners contend first off that the CA erred in its holding that the partitions of Lot 733 and later of the divided
unit Lot 733-C following the Galang Plan were actually the partitions of the pro-indiviso shares of its co-owners
effectively conveying to them their respective specific shares in the property.
We agree with petitioners.
First, the CAs holding aforestated is neither supported by, nor deducible from, the evidentiary facts on record.
He who alleges must prove it. Respondents have the burden to substantiate the factum probandum of their
complaint or the ultimate fact which is their claimed ownership over the lots in question. They were, however,
unsuccessful in adducing the factum probans or the evidentiary facts by which the factum probandum or
ultimate fact can be established. As shall be discussed shortly, facts and circumstances obtain arguing against
the claimed co-ownership over Lot 733.
Second, the earlier sale of Lot 733-A and Lot 733-F (Fajardo Plan) on April 29, 1986 was valid and effective
conveyances of said portions of Lot 733. The subsequent transfers to the Sps. Usi of substantially the same
portions of Lot 733 accomplished through the subdivision agreements constitute in effect double sales of those
portions. This aberration was brought to light by the results of the adverted survey conducted sometime in
June 22, 1999 of Engr. Nicdao of the LMB.
Third, even granting arguendo that the subject subdivision agreements were in fact but partitions of the proindiviso shares of co-owners, said agreements would still be infirm, for the Sps. Viray and Vda. de Viray (vice
Jesus Viray) were excluded from the transaction. Like Vda. de Mallari, Sps. Viray and Jesus Viray had validly
acquired and, hence, owned portions of Lot 733 and are themselves co-owners of Lot 733.
And last, over and above the foregoing considerations, the instant petition must be resolved in favor of
petitioners, the underlying reinvindicatory and possessory actions in Civil Case No. 01-1118 (M) being barred
by the application of the res judicata principle. What is more, the issue of superior possessory rights of
petitioner Vda. de Viray over Lot 733-F (Fajardo Plan) has been laid to rest with finality in Civil Case No. 91
(13). Besides, Sps. Usis action to assail the final and executory July 29, 1998 MCTC Decision in Civil Case
No. 91 (13) has been denied with finality in G.R. No. 154538.

Contrary to the finding of the CA, the subdivision agreements forged by Mendoza and her alleged co-owners
were not for the partition of pro-indiviso shares of co-owners of Lot 733 but were actually conveyances,
disguised as partitions, of portions of Lot 733 specifically Lots 733-A and 733-B, and portions of the
subsequent subdivision of Lot 733-C.
Notably, after a full-blown trial in Civil Case No. 01-1118 (M) wherein the spouses Usi merged an accion
publiciana with an accion reinvindicatoria in one petition, the RTC held that Sps. Usi failed to prove their case.
However, in CA G.R. CV No. 90344, an appeal from said RTC decision, the CA, while acknowledging the
existence of the April 29, 1986 deeds of absolute sale, nonetheless accorded validity to the August 20, 1990
and April 5, 1991 subdivision agreements. This is incorrect. The CA held that the two (2) subdivision
agreements, as notarized, enjoy the presumption of regularity and effectuated the property transfers covered
thereby, obviously glossing over the mala fides attendant the execution of the two subdivision agreements. It
cannot be overemphasized enough that the two (2) deeds of absolute sale over portions of substantially the
same parcel of land antedated the subdivision agreements in question and their execution acknowledged too
before a notary public.
The appellate court found and so declared the subdivision agreements valid without so much as explaining, let
alone substantiating, its determination. The CA never elucidated how the Sps. Usi became, in the first place
co-owners, with Mendoza over Lot 733. On its face, TCT 141-RP covering Lot 733 was in the name of
spouses Ellen and Moses Mendoza only. Then too, the CA did not explain how under the 2nd SA the Sps. Usi,
the Sps. Lacap, the Sps. Balingit and the Sps. Jordan became co-owners with Mendoza over Lot 733-C, when
Mendoza, under the 1st SA, virtually represented herself as the sole owner of Lot 733-C.
A scrutiny of the records with a fine-tooth comb likewise fails to substantially show a partition of Lot 733 by its
co-owners. While the 1st and 2nd SAs purport to be deeds of partition by and among co-owners of the lot/s
covered thereby, partition as a fact is belied by the evidence extant on record. Consider:
It is undisputed that TCT 141 RP covering Lot 733 was originally in the name of Ellen P. Mendoza and
husband, Moses.36 The joint decision of the RTC in Civil Case Nos. 88-0265 and 88-0283-M narrated how the
couple came to own Lot 733, thus: "Lot 733 was acquired by Spouses Moses Mendoza and Ellen Mendoza
and Spouses Pacifico Bustos and Maria Roman from Donato Lacap for P5,000.00 (Exh. "1") in 1977. After two
years, Spouses Pacifico Bustos and Maria Roman sold one-half pro-indiviso portion of Lot 733 to spouses
Moses Mendoza and Ellen Mendoza for P6,000.00 (Exh. "2") and the acquisition cost of the whole lot is only
P8,500.00 and x x x."37
Mendoza and the Sps. Usi, in their separate complaints for annulment of deeds of sale, docketed as Civil
Case Nos. 88-0265 and 88-0283-M of the Macabebe, Pampanga RTC, alleged that Moses Mendoza
authorized Atty. Venancio Viray to sell the subject lot for at least PhP 200 per square meter, and that after his
(Moses) death on April 5, 1986, Lot 733 was included in the proceedings for the settlement of his estate
docketed as Sp. Proc. Case No. 86-0040-M of the RTC, Branch 55 in Macabebe, Pampanga, The events thus
alleged by Mendoza and the Usis can be gleaned from the final and executory joint decision in Civil Case Nos.
88-0265-M and 88-0283-M which petitioner Vda. de Viray attached as Annex "5" in her Answer with
Counterclaim38 to the Usis petition for accion publicana/reivindicatoria. Said Joint Decision amply shows, in
gist, the allegations39 of both the Sps. Usi and Mendoza in Civil Case Nos. 88-0265-M and 88-0283-M
asserting said facts. And these assertions, made in their complaints, are judicial admissions under Sec.
4,40 Rule 129 of the Rules of Court.
Unlike Vda. de Mallari who, per Vda. de Virays own admission, purchased the 416-square meter portion of
Lot 733 on February 14, 1984, thus constituting her (Vda. de Mallari) as co-owner of Mendoza to the extent of
said area purchased,41 the Sps. Usi have not been shown to be co-owners with Mendoza. There is simply
nothing in the records to demonstrate how the Sps. Usi became co-owners of Lot 733 before or after the death
of Moses Mendoza. Elsewise put, no evidence had been adduced to show how the alleged interest of the Sps.

Usi, as co-owner, came about, except for the bare assertions in the 1st and 2nd SAs that they co-owned Lot
733 and Lot 733-C (Galang Plan).
It is fairly clear that Lot 733, even from the fact alone of its being registered under the name of the late Moses
Mendoza and Ellen Mendoza, formed part of the couples conjugal property at the time Moses demise on April
5, 1986. Equally clear, too, is that Vda. de Mallari became a co-owner of Lot 733 by virtue of the purchase of
its 416-square meter portion on February 14, 1984, during the lifetime of Moses. Be that as it may and given
that the Sps. Usi have not been shown to be co-owners of Mendoza and Vda. de Mallari prior to the sale by
Mendoza on April 29, 1986 of Lots 733-A and 733-F (Fajardo Plan) to the Sps. Viray and Jesus Viray,
respectively, then the execution of the 1st SA on August 20, 1990 could not have been a partition by coowners of Lot 733. The same could be said of the 2nd SA of April 5, 1991 vis--vis Lot 733-C, for the records
are similarly completely bereft of any evidence to show on how the purported participating co-owners, namely
Sps. Usi, the Sps. Lacap, the Sps. Balingit and the Sps. Jordan became co-owners with Mendoza and her
children, i.e., McDwight, Bismark, Beverly and Georgenia.
The April 29, 1986 Deeds of Absolute Sale
of Lot 733-A and Lot 733-F are Valid
It must be noted that the RTC, in its decision in Civil Case Nos. 88-0265-M and 88-0283-M, upheld the validity
of the separate April 29, 1986 deeds of absolute sale of Lots 733-A and 733-F (Fajardo Plan). The combined
area of Lot 733-A (366 sq. m.) and Lot 733-F (3,501) is less than one half of the total area coverage of Lot 733
(9,137). The sale of one-half portion of the conjugal property is valid as a sale. It cannot be gainsaid then that
the deeds, executed as they were by the property owner, were sufficient to transfer title and ownership over
the portions covered thereby. And the aforesaid RTC decision had become final and executory as far back as
December 11, 1995 when the Court, in G.R. No. 122287, in effect, affirmed the RTC decision. Likewise, the
MCTCs decision in Civil Case No. 91 (13) for forcible entry, declaring Vda. de Viray, as successor-in-interest
of Jesus Viray, as entitled to the physical possession, or possession de facto, of Lot 733-F (Fajardo Plan), and
the RTCs decision in Civil Case No. 99-0914M, disposing of the belated appeal of the MCTC decision in the
forcible entry case, have become final and executory on February 12, 2003 under G.R. No. 154538.
In light of the convergence of the foregoing disposed-of cases, there can be no question as to the ownership
of the Sps. Viray and Vda. de Viray (vice Jesus Viray) over the specified and delineated portions of Lot 733
which they purchased for value from Mendoza. And Mendoza, as vendor, was bound to transfer the ownership
of and deliver, as well as warrant, the thing which is the object of the sale. 42
In the instant case, the April 29, 1986 deeds of absolute sale indeed included the technical description of that
part of Lot 733 subject of the transactions, thus clearly identifying the portions (Lots 733-A and 733-F under
the Fajardo Plan) sold by Mendoza to the Sps. Viray and Vda. de Viray (vice Jesus Viray). Hence, there can
be no mistaking as to the identity of said lots.
The deeds in question were, to reiterate, not only valid but constitute prior conveyances of the disputed
portions of Lot 733. Accordingly, the subsequent conveyances in 1990 and 1991 to the Sps. Usi through
transfer contracts, styled as subdivision agreements, resulted, in effect, in a double sale situation involving
substantially the same portions of Lot 733.
The survey report of LMB surveyor, Engr. Nicdao, would support a finding of double sale. His report, as earlier
indicated, contained the following key findings: (1) Lot 733-A (Fajardo Plan) with an area of 336 square meters
thus sold to the Sps. Viray is within Lot 733-B (Galang Plan), the part assigned to Sps. Usi under the division;
and (2) Lot 733-F (Fajardo Plan) with an area of 3,501 square meters is almost identical to the combined area
of Lots 733-C-8 to 733-C-12 awarded to Ellen Mendoza and her children, McDwight, Bismark, Beverly and
Georgenia, and a portion (1,000 square meters) of Lot 733-C-10 (Galang Plan) adjudicated to Sps. Usi.
A double sale situation, which would call, if necessary, the application of Art. 1544 of the Civil Code, arises
when, as jurisprudence teaches, the following requisites concur:
(a) The two (or more) sales transactions must constitute valid sales;

(b) The two (or more) sales transactions must pertain to exactly the same subject matter;
(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent
conflicting interests; and
(d) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought
from the very same seller.43
From the facts, there is no valid sale from Mendoza to respondents Usi. The parties did not execute a valid
deed of sale conveying and transferring the lots in question to respondents. What they rely on are two
subdivision agreements which do not explicitly chronicle the transfer of said lots to them. Under the 1st SA, all
that can be read is the declaration that respondents, together with others, are the "sole and exclusive owners"
of the lots subject of said agreement. Per the 2nd SA, it simply replicates the statement in the 1st SA that
respondents are "sole and exclusive undivided co-owners" with the other parties. While respondents may
claim that the SAs of 1990 and 1991 are convenient conveying vehicles Mendoza resorted to in disposing
portions of Lot 733 under the Galang Plan, the Court finds that said SAs are not valid legal conveyances of the
subject lots due to non-existent prestations pursuant to Article 1305 which prescribes "a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give something or to render
some service." The third element of cause of the obligation which is established under Art. 1318 of the Civil
Code is likewise visibly absent from the two SAs. The transfer of title to respondents based on said SAs is
flawed, irregular, null and void. Thus the two SAs are not "sales transactions" nor "valid sales" under Art. 1544
of the Civil Code and, hence, the first essential element under said legal provision was not satisfied.1wphi1
Given the above perspective, the Sps. Viray and Vda. de Viray (vice Jesus Viray) have, as against the Sps.
Usi, superior rights over Lot 733-A and Lot 733-F (Fajardo Plan) or portions thereof.
Res Judicata Applies
Notably, the Sps. Viray and Vda. de Viray, after peremptorily prevailing in their cases supportive of their claim
of ownership and possession of Lots 733-A and 733-F (Fajardo Plan), cannot now be deprived of their rights
by the expediency of the Sps. Usi maintaining, as here, an accion publiciana and/or accion reivindicatoria, two
of the three kinds of actions to recover possession of real property. The third, accion interdictal, comprises two
distinct causes of action, namely forcible entry and unlawful detainer,44 the issue in both cases being limited to
the right to physical possession or possession de facto, independently of any claim of ownership that either
party may set forth in his or her pleadings,45 albeit the court has the competence to delve into and resolve the
issue of ownership but only to address the issue of priority of possession. 46 Both actions must be brought
within one year from the date of actual entry on the land, in case of forcible entry, and from the date of last
demand to vacate following the expiration of the right to possess, in case of unlawful detainer.47
When the dispossession or unlawful deprivation has lasted more than one year, one may avail himself of
accion publiciana to determine the better right of possession, or possession de jure, of realty independently of
title. On the other hand, accion reivindicatoria is an action to recover ownership which necessarily includes
recovery of possession.48
Now then, it is a hornbook rule that once a judgment becomes final and executory, it may no longer be
modified in any respect, even if the modification is meant to correct an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by the court rendering it or by the highest court
of the land, as what remains to be done is the purely ministerial enforcement or execution of the
judgment.49 Any attempt to reopen a close case would offend the principle of res judicata.
Res judicata embraces two concepts or principles, the first is designated as "bar by prior judgment" and the
other, "conclusiveness of judgment." Tiongson v. Court of Appeals 50 describes the effects of res judicata, as a
bar by prior judgment, in the following manner:
There is no question that where as between the first case where the judgment is rendered and the second
where such judgment is invoked, there is identity of parties, subject matter and cause of action, the judgment
on the merits in the first case constitutes an absolute bar to the subsequent action not only as to every matter

which was offered and received to sustain or defeat the claim or demand, but also as to any other admissible
matter which might have been offered for that purpose and to all matters that could have been adjudged in
that case. x x x
Res judicata operates as bar by prior judgment if the following requisites concur: (1) the former judgment or
order must be final; (2) the judgment or order must be on the merits; (3) the decision must have been rendered
by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first
and second action, identity of parties, of subject matter and of causes of action. 51 All the requisites are present
in the instant case.
The better right to possess and the right of ownership of Vda. de Viray (vice Jose Viray) and the Sps. Viray
over the disputed parcels of land cannot, by force of the res judicata doctrine, be re-litigated thru actions to
recover possession and vindicate ownership filed by the Sps. Usi. The Court, in G.R. No. 122287 (Ellen P.
Mendoza and Jose and Amelita Usi v. Spouses Avelino Viray and Margarita Masangcay and Jesus Carlo
Gerard Viray), has in effect determined that the conveyances and necessarily the transfers of ownership made
to the Sps. Viray and Vda. de Viray (vice Jose Viray) on April 29, 1986 were valid. This determination operates
as a bar to the Usis reivindicatory action to assail the April 29, 1986 conveyances and precludes the
relitigation between the same parties of the settled issue of ownership and possession arising from ownership.
It may be that the spouses Usi did not directly seek the recovery of title or possession of the property in
question in their action for annulment of the deed sale of sale. But it cannot be gainsaid that said action is
closely intertwined with the issue of ownership, and affects the title, of the lot covered by the deed. The
prevalent doctrine, to borrow from Fortune Motors, (Phils.), Inc. v. Court of Appeals, 52 "is that an action for the
annulment or rescission of a sale of real property does not operate to efface the fundamental and prime
objective and nature of the case, which is to recover said real property."
And lest it be overlooked, the Court, in G.R. No. 154538 (Spouses Jose and Amelita Usi v. Ruperta Cano Vda.
de Viray), again in effect ruled with finality that petitioner Vda. de Viray has a better possessory right over Lot
733-F (Fajardo Plan). Thus, the Courts decision in G.R. No. 122287 juxtaposed with that in G.R. No. 154538
would suffice to bar the Sps. Usis accion publiciana, as the spouses had invoked all along their ownership
over the disputed Lot 733-F as basis to defeat any claim of the right of possessiOn. While an accion
reivindicatoria is not barred by a judgment in an ejectment case, such judgment constitutes a bar to the
institution of the accion publiciana, because the matter of possessioq between the same parties has become
res judicata and cannot be delved into in a new action. 53

PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal
and nullification of the Decision1 and Order,2 respectively dated October 24, 2001 and January 18, 2002, of the
Regional Trial Court (RTC) of Iloilo City, Branch 24.
The instant petition stemmed from an action for ejectment filed by herein respondent Jose Juan Tong (Tong)
through his representative Jose Y. Ong (Ong) against herein petitioners Anita Monasterio-Pe (Anita) and the
spouses Romulo Tan and Editha Pe-Tan (Spouses Tan). The suit was filed with the Municipal Trial Court in
Cities (MTCC), Branch 3, Iloilo City and docketed as Civil Case No. 2000(92).
In the Complaint, it was alleged that Tong is the registered owner of two parcels of land known as Lot Nos. 40
and 41 and covered by Transfer Certificate of Title (TCT) Nos. T-9699 and T-9161, together with the
improvements thereon, located at Barangay Kauswagan, City Proper, Iloilo City; herein petitioners are
occupying the house standing on the said parcels of land without any contract of lease nor are they paying any
kind of rental and that their occupation thereof is simply by mere tolerance of Tong; that in a letter dated
December 1, 1999, Tong demanded that respondents vacate the house they are occupying, but despite their
receipt of the said letter they failed and refused to vacate the same; Tong referred his complaint to the Lupon
of Barangay Kauswagan, to no avail.3
In their Answer with Defenses and Counterclaim, herein petitioners alleged that Tong is not the real owner of
the disputed property, but is only a dummy of a certain alien named Ong Se Fu, who is not qualified to own the
said lot and, as such, Tong's ownership is null and void; petitioners are the true and lawful owners of the
property in question and by reason thereof they need not lease nor pay rentals to anybody; a case docketed
as CA-G.R. CV No. 52676 (RTC Civil Case No. 20181) involving herein petitioner Pe and respondent is
pending before the Court of Appeals (CA) where the ownership of the subject property is being litigated;
respondent should wait for the resolution of the said action instead of filing the ejectment case; petitioners also
claimed that there was, in fact, no proper barangay conciliation as Tong was bent on filing the ejectment case
before conciliation proceedings could be validly made.4
On March 19, 2001, the MTCC rendered judgment in favor of herein respondent, the dispositive portion of
which reads as follows:

The doctrine of res judicata is a basic postulate to the end that controversies and issues once decided on the
merits by a court of competent jurisdiction shall remain in repose. It is simply unfortunate that the RTC, in Civil
Case No. 01-1118(M), did not apply the doctrine of res judicata to the instant case, despite petitioners, as
respondents below, had raised that ground both in their motion to dismiss and answer to the underlying
petition.

WHEREFORE, judgment is rendered, finding the defendants Anita Monasterio-Pe, and Spouses Romulo Tan
and Editha Pe-Tan to be unlawfully withholding the property in litigation, i.e., Lot. Nos. 40 and 41 covered by
TCT Nos. T-9699 and 9161, respectively, together with the buildings thereon, located at Brgy. Kauswagan,
Iloilo City Proper, and they are hereby ordered together with their families and privies, to vacate the premises
and deliver possession to the plaintiff and/or his representative.

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated July 24, 2009 and Resolution
dated June 2, 2010 of the Court of Appeals in CA-G.R. CV No. 90344 are REVERSED and SET ASIDE. The
Decision dated June 21, 2007 in Civil Case No. 01-1118(M) of the RTC, Branch 55 in Macabebe, Pampanga is
accordingly REINSTATED.

The defendants are likewise ordered to pay plaintiff reasonable compensation for the use and occupancy of
the premises in the amount of P15,000.00 per month starting January, 2000 until they actually vacate and
deliver possession to the plaintiff and attorney's fees in the amount of P20,000.00.

Costs against respondents.

SO DECIDED.5

SO ORDERED.
G.R. No. 151369

March 23, 2011

ANITA MONASTERIO-PE and the SPOUSES ROMULO TAN and EDITHA PE-TAN, Petitioners,
vs.
JOSE JUAN TONG, herein represented by his Attorney-in-Fact, JOSE Y. ONG, Respondent.
DECISION

Costs against the defendants.

Aggrieved by the above-quoted judgment, petitioners appealed the decision of the MTCC with the RTC of
Iloilo City.
In its presently assailed Decision, the RTC of Iloilo City, Branch 24 affirmed in its entirety the appealed
decision of the MTCC.
Hence, the instant petition for review on certiorari.

At the outset, it bears emphasis that in a petition for review on certiorari under Rule 45 of the Rules of Court,
only questions of law may be raised by the parties and passed upon by this Court. 6 It is a settled rule that in
the exercise of this Court's power of review, it does not inquire into the sufficiency of the evidence presented,
consistent with the rule that this Court is not a trier of facts. 7 In the instant case, a perusal of the errors
assigned by petitioners would readily show that they are raising factual issues the resolution of which requires
the examination of evidence. Certainly, issues which are being raised in the present petition, such as the
questions of whether the issue of physical possession is already included as one of the issues in a case earlier
filed by petitioner Anita and her husband, as well as whether respondent complied with the law and rules
on barangayconciliation, are factual in nature.
Moreover, the appeal under Rule 45 of the said Rules contemplates that the RTC rendered the judgment, final
order or resolution acting in its original jurisdiction. 8 In the present case, the assailed Decision and Order of the
RTC were issued in the exercise of its appellate jurisdiction.
Thus, petitioners pursued the wrong mode of appeal when they filed the present petition for review
on certiorariwith this Court. Instead, they should have filed a petition for review with the CA pursuant to the
provisions of Section 1,9 Rule 42 of the Rules of Court.

The Court takes judicial notice of the fact that the disputed properties, along with three other parcels of land,
had been the subject of two earlier cases filed by herein petitioner Anita and her husband Francisco against
herein respondent and some other persons. The first case is for specific performance and/or rescission of
contract and reconveyance of property with damages. It was filed with the then Court of First Instance (CFI) of
Iloilo City and docketed as Civil Case No. 10853. The case was dismissed by the CFI. On appeal, the
Intermediate Appellate Court (IAC) upheld the decision of the trial court. When the case was brought to this
Court,16 the decision of the IAC was affirmed. Subsequently, the Court's judgment in this case became final
and executory per Entry of Judgment issued on May 27, 1991.
Subsequently, in 1992, the Spouses Pe filed a case for nullification of contract, cancellation of titles,
reconveyance and damages with the RTC of Iloilo City. This is the case presently cited by petitioners.
Eventually, the case, docketed as Civil Case No. 20181, was dismissed by the lower court on the ground
of res judicata. The RTC held that Civil Case No. 10853 serves as a bar to the filing of Civil Case No. 20181,
because both cases involve the same parties, the same subject matter and the same cause of action. On
appeal, the CA affirmed the dismissal of Civil Case No. 20181. Herein petitioner Anita assailed the judgment of
the CA before this Court, but her petition for review on certiorari was denied via a Resolution17 dated January
22, 2003. On June 25, 2003, the said Resolution became final and executory. The Court notes that the case
was disposed with finality without any showing that the issue of ejectment was ever raised. Hence, respondent
is not barred from filing the instant action for ejectment.

On the foregoing bases alone, the instant petition should be denied.

In any case, the instant petition would still be denied for lack of merit, as discussed below.
In their first assigned error, petitioners contend that the RTC erred in holding that the law authorizes an
attorney-in-fact to execute the required certificate against forum shopping in behalf of his or her principal.
Petitioners argue that Tong himself, as the principal, and not Ong, should have executed the certificate against
forum shopping.

In any case, it can be inferred from the judgments of this Court in the two aforementioned cases that
respondent, as owner of the subject lots, is entitled to the possession thereof. Settled is the rule that the right
of possession is a necessary incident of ownership.18 Petitioners, on the other hand, are consequently barred
from claiming that they have the right to possess the disputed parcels of land, because their alleged right is
predicated solely on their claim of ownership, which is already effectively debunked by the decisions of this
Court affirming the validity of the deeds of sale transferring ownership of the subject properties to respondent.
Petitioners also contend that respondent should have filed an accion publiciana and not an unlawful detainer
case, because the one-year period to file a case for unlawful detainer has already lapsed.

The Court is not persuaded.

The Court does not agree.
It is true that the first paragraph of Section 5,10 Rule 7 of the Rules of Court, requires that the certification
should be signed by the "petitioner or principal party" himself. The rationale behind this is because only the
petitioner himself has actual knowledge of whether or not he has initiated similar actions or proceedings in
different courts or agencies.11 However, the rationale does not apply where, as in this case, it is the attorneyin-fact who instituted the action. 12 Such circumstance constitutes reasonable cause to allow the attorney-infact to personally sign the Certificate of Non-Forum Shopping. Indeed, the settled rule is that the execution of
the certification against forum shopping by the attorney-in-fact is not a violation of the requirement that the
parties must personally sign the same.13 The attorney-in-fact, who has authority to file, and who actually filed
the complaint as the representative of the plaintiff, is a party to the ejectment suit. 14 In fact, Section 1,15 Rule
70 of the Rules of Court includes the representative of the owner in an ejectment suit as one of the parties
authorized to institute the proceedings. In the present case, there is no dispute that Ong is respondent's
attorney-in-fact. Hence, the Court finds that there has been substantial compliance with the rules proscribing
forum shopping.

Sections 1 and 2, Rule 70 of the Rules of Court provide:

Section 1. Who may institute proceedings and when. Subject to the provisions of the next succeeding
section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is
unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract,
express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person,
may, at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of
possession, or any person or persons claiming under them, for the restitution of such possession, together
with damages and costs.

Petitioners also aver that the certificate against forum shopping attached to the complaint in Civil Case No.
2000(92) falsely stated that there is no other case pending before any other tribunal involving the same issues
as those raised therein, because at the time the said complaint was filed, Civil Case No. 20181 was, in fact,
still pending with the CA (CA-G.R. CV No. 52676), where the very same issues of ejectment and physical
possession were already included.

Section 2. Lessor to proceed against lessee only after demand. Unless otherwise stipulated, such action by
the lessor shall be commenced only after demand to pay or comply with the conditions of the lease and to
vacate is made upon the lessee, or by serving written notice of such demand upon the person found on the
premises, or by posting such notice on the premises if no person be found thereon, and the lessee fails to
comply therewith after fifteen (15) days in the case of land or five (5) days in the case of buildings.

Corollarily, petitioners claim that the MTCC has no jurisdiction over Civil Case No. 2000(92) on the ground that
the issue of physical possession raised therein was already included by agreement of the parties in Civil Case
No. 20181. As such, petitioners assert that respondent is barred from filing the ejectment case, because in
doing so he splits his cause of action and indirectly engages in forum shopping.

Respondent alleged in his complaint that petitioners occupied the subject property by his mere tolerance.
While tolerance is lawful, such possession becomes illegal upon demand to vacate by the owner and the
possessor by tolerance refuses to comply with such demand.19 Respondent sent petitioners a demand letter
dated December 1, 1999 to vacate the subject property, but petitioners did not comply with the demand. A
person who occupies the land of another at the latter's tolerance or permission, without any contract between
them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary
action for ejectment is the proper remedy against him.20 Under Section 1, Rule 70 of the Rules of Court, the
one-year period within which a complaint for unlawful detainer can be filed should be counted from the date of

The Court does not agree.

demand, because only upon the lapse of that period does the possession become unlawful. 21 Respondent
filed the ejectment case against petitioners on March 29, 2000, which was less than a year from December 1,
1999, the date of formal demand. Hence, it is clear that the action was filed within the one-year period
prescribed for filing an ejectment or unlawful detainer case.1avvphi1

DECISION

Neither is the Court persuaded by petitioners' argument that respondent has no cause of action to recover
physical possession of the subject properties on the basis of a contract of sale because the thing sold was
never delivered to the latter.

To warrant the substituted service of the summons and copy of the complaint, the serving officer must first
attempt to effect the same upon the defendant in person. Only after the attempt at personal service has
become futile or impossible within a reasonable time may the officer resort to substituted service.

It has been established that petitioners validly executed a deed of sale covering the subject parcels of land in
favor of respondent after the latter paid the outstanding account of the former with the Philippine Veterans
Bank.

The Case

Article 1498 of the Civil Code provides that when the sale is made through a public instrument, the execution
thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred. In the instant case, petitioners failed to present any
evidence to show that they had no intention of delivering the subject lots to respondent when they executed
the said deed of sale. Hence, petitioners' execution of the deed of sale is tantamount to a delivery of the
subject lots to respondent. The fact that petitioners remained in possession of the disputed properties does not
prove that there was no delivery, because as found by the lower courts, such possession is only by
respondent's mere tolerance.
Lastly, the Court does not agree with petitioners' assertion that the filing of the unlawful detainer case was
premature, because respondent failed to comply with the provisions of the law on barangay conciliation. As
held by the RTC, Barangay Kauswagan City Proper, through its Pangkat Secretary and Chairman, issued not
one but two certificates to file action after herein petitioners and respondent failed to arrive at an amicable
settlement. The Court finds no error in the pronouncement of both the MTCC and the RTC that any error in the
previous conciliation proceedings leading to the issuance of the first certificate to file action, which was alleged
to be defective, has already been cured by the MTCC's act of referring back the case to the Pangkat
Tagapagkasundo of Barangay Kauswagan for proper conciliation and mediation proceedings. These
subsequent proceedings led to the issuance anew of a certificate to file action.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Order of the Regional Trial Court of
Iloilo City, Branch 24, are AFFIRMED.

BERSAMIN, J.:

Petitioners defendants in a suit for libel brought by respondent appeal the decision promulgated on March
8, 20021 and the resolution promulgated on January 13, 2003, 2 whereby the Court of Appeals (CA)
respectively dismissed their petition for certiorari, prohibition and mandamus and denied their motion for
reconsideration. Thereby, the CA upheld the order the Regional Trial Court (RTC), Branch 51, in Manila had
issued on March 12, 2001 denying their motion to dismiss because the substituted service of the summons
and copies of the complaint on each of them had been valid and effective. 3
Antecedents
On July 3, 2000, respondent, a retired police officer assigned at the Western Police District in Manila, sued
Abante Tonite, a daily tabloid of general circulation; its Publisher Allen A. Macasaet; its Managing Director
Nicolas V. Quijano; its Circulation Manager Isaias Albano; its Editors Janet Bay, Jesus R. Galang and Randy
Hagos; and its Columnist/Reporter Lily Reyes (petitioners), claiming damages because of an allegedly libelous
article petitioners published in the June 6, 2000 issue of Abante Tonite. The suit, docketed as Civil Case No.
00-97907, was raffled to Branch 51 of the RTC, which in due course issued summons to be served on each
defendant, including Abante Tonite, at their business address at Monica Publishing Corporation, 301-305 3rd
Floor, BF Condominium Building, Solana Street corner A. Soriano Street, Intramuros, Manila. 4
In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the stated address to effect the
personal service of the summons on the defendants. But his efforts to personally serve each defendant in the
address were futile because the defendants were then out of the office and unavailable. He returned in the
afternoon of that day to make a second attempt at serving the summons, but he was informed that petitioners
were still out of the office. He decided to resort to substituted service of the summons, and explained why in
his sheriffs return dated September 22, 2005, 5 to wit:

SO ORDERED.
SHERIFFS RETURN
This is to certify that on September 18, 2000, I caused the service of summons together with copies of
complaint and its annexes attached thereto, upon the following:
1. Defendant Allen A. Macasaet, President/Publisher of defendant AbanteTonite, at Monica Publishing
Corporation, Rooms 301-305 3rd Floor, BF Condominium Building, Solana corner A. Soriano Streets,
Intramuros, Manila, thru his secretary Lu-Ann Quijano, a person of sufficient age and discretion working
therein, who signed to acknowledge receipt thereof. That effort (sic) to serve the said summons personally
upon said defendant were made, but the same were ineffectual and unavailing on the ground that per
information of Ms. Quijano said defendant is always out and not available, thus, substituted service was
applied;
G.R. No. 156759

June 5, 2013

ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY REYES, JANET BAY, JESUS
R. GALANG, AND RANDY HAGOS, Petitioners,
vs.
FRANCISCO R. CO, JR., Respondent.

2. Defendant Nicolas V. Quijano, at the same address, thru his wife Lu-Ann Quijano, who signed to
acknowledge receipt thereof. That effort (sic) to serve the said summons personally upon said defendant were
made, but the same were ineffectual and unavailing on the ground that per information of (sic) his wife said
defendant is always out and not available, thus, substituted service was applied;
3. Defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, at the same address,
thru Rene Esleta, Editorial Assistant of defendant AbanteTonite, a person of sufficient age and discretion

working therein who signed to acknowledge receipt thereof. That effort (sic) to serve the said summons
personally upon said defendants were made, but the same were ineffectual and unavailing on the ground that
per information of (sic) Mr. Esleta said defendants is (sic) always roving outside and gathering news, thus,
substituted service was applied.
Original copy of summons is therefore, respectfully returned duly served.
Manila, September 22, 2000.
On October 3, 2000, petitioners moved for the dismissal of the complaint through counsels special
appearance in their behalf, alleging lack of jurisdiction over their persons because of the invalid and ineffectual
substituted service of summons. They contended that the sheriff had made no prior attempt to serve the
summons personally on each of them in accordance with Section 6 and Section 7, Rule 14 of the Rules of
Court. They further moved to drop Abante Tonite as a defendant by virtue of its being neither a natural nor a
juridical person that could be impleaded as a party in a civil action.
At the hearing of petitioners motion to dismiss, Medina testified that he had gone to the office address of
petitioners in the morning of September 18, 2000 to personally serve the summons on each defendant; that
petitioners were out of the office at the time; that he had returned in the afternoon of the same day to again
attempt to serve on each defendant personally but his attempt had still proved futile because all of petitioners
were still out of the office; that some competent persons working in petitioners office had informed him that
Macasaet and Quijano were always out and unavailable, and that Albano, Bay, Galang, Hagos and Reyes
were always out roving to gather news; and that he had then resorted to substituted service upon realizing the
impossibility of his finding petitioners in person within a reasonable time.
On March 12, 2001, the RTC denied the motion to dismiss, and directed petitioners to file their answers to the
complaint within the remaining period allowed by the Rules of Court, 6 relevantly stating:
Records show that the summonses were served upon Allen A. Macasaet, President/Publisher of defendant
AbanteTonite, through LuAnn Quijano; upon defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy
Hagos and Lily Reyes, through Rene Esleta, Editorial Assistant of defendant Abante Tonite (p. 12, records). It
is apparent in the Sheriffs Return that on several occasions, efforts to served (sic) the summons personally
upon all the defendants were ineffectual as they were always out and unavailable, so the Sheriff served the
summons by substituted service.
Considering that summonses cannot be served within a reasonable time to the persons of all the defendants,
hence substituted service of summonses was validly applied. Secretary of the President who is duly
authorized to receive such document, the wife of the defendant and the Editorial Assistant of the defendant,
were considered competent persons with sufficient discretion to realize the importance of the legal papers
served upon them and to relay the same to the defendants named therein (Sec. 7, Rule 14, 1997 Rules of
Civil Procedure).

The allegations of the defendants that the Sheriff immediately resorted to substituted service of summons
upon them when he was informed that they were not around to personally receive the same is untenable.
During the hearing of the herein motion, Sheriff Raul Medina of this Branch of the Court testified that on
September 18, 2000 in the morning, he went to the office address of the defendants to personally serve
summons upon them but they were out. So he went back to serve said summons upon the defendants in the
afternoon of the same day, but then again he was informed that the defendants were out and unavailable, and
that they were always out because they were roving around to gather news. Because of that information and
because of the nature of the work of the defendants that they are always on field, so the sheriff resorted to
substituted service of summons. There was substantial compliance with the rules, considering the difficulty to
serve the summons personally to them because of the nature of their job which compels them to be always
out and unavailable. Additional matters regarding the service of summons upon defendants were sufficiently
discussed in the Order of this Court dated March 12, 2001.
Regarding the impleading of Abante Tonite as defendant, the RTC held, viz:
"Abante Tonite" is a daily tabloid of general circulation. People all over the country could buy a copy of "Abante
Tonite" and read it, hence, it is for public consumption. The persons who organized said publication obviously
derived profit from it. The information written on the said newspaper will affect the person, natural as well as
juridical, who was stated or implicated in the news. All of these facts imply that "Abante Tonite" falls within the
provision of Art. 44 (2 or 3), New Civil Code. Assuming arguendo that "Abante Tonite" is not registered with the
Securities and Exchange Commission, it is deemed a corporation by estoppels considering that it possesses
attributes of a juridical person, otherwise it cannot be held liable for damages and injuries it may inflict to other
persons.
Undaunted, petitioners brought a petition for certiorari, prohibition, mandamusin the CA to nullify the orders of
the RTC dated March 12, 2001 and June 29, 2001.
Ruling of the CA
On March 8, 2002, the CA promulgated its questioned decision, 8 dismissing the petition for certiorari,
prohibition, mandamus, to wit:
We find petitioners argument without merit. The rule is that certiorari will prosper only if there is a showing of
grave abuse of discretion or an act without or in excess of jurisdiction committed by the respondent Judge. A
judicious reading of the questioned orders of respondent Judge would show that the same were not issued in
a capricious or whimsical exercise of judgment. There are factual bases and legal justification for the assailed
orders. From the Return, the sheriff certified that "effort to serve the summons personally xxx were made, but
the same were ineffectual and unavailing xxx.
and upholding the trial courts finding that there was a substantial compliance with the rules that allowed the
substituted service.

WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby DENIED for lack of merit..

Furthermore, the CA ruled:

Accordingly, defendants are directed to file their Answers to the complaint within the period still open to them,
pursuant to the rules.

Anent the issue raised by petitioners that "Abante Tonite is neither a natural or juridical person who may be a
party in a civil case," and therefore the case against it must be dismissed and/or dropped, is untenable.

SO ORDERED.

The respondent Judge, in denying petitioners motion for reconsideration, held that:

Petitioners filed a motion for reconsideration, asserting that the sheriff had immediately resorted to substituted
service of the summons upon being informed that they were not around to personally receive the summons,
and that Abante Tonite, being neither a natural nor a juridical person, could not be made a party in the action.

xxxx

On June 29, 2001, the RTC denied petitioners motion for reconsideration. 7 It stated in respect of the service of
summons, as follows:

Abante Tonites newspapers are circulated nationwide, showing ostensibly its being a corporate entity, thus the
doctrine of corporation by estoppel may appropriately apply.

An unincorporated association, which represents itself to be a corporation, will be estopped from denying its
corporate capacity in a suit against it by a third person who relies in good faith on such representation.
There being no grave abuse of discretion committed by the respondent Judge in the exercise of his
jurisdiction, the relief of prohibition is also unavailable.

On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the property
of such persons to the discharge of the claims assailed. In an action quasi in rem, an individual is named as
defendant and the purpose of the proceeding is to subject his interests therein to the obligation or loan
burdening the property. Actions quasi in rem deal with the status, ownership or liability of a particular property
but which are intended to operate on these questions only as between the particular parties to the proceedings
and not to ascertain or cut off the rights or interests of all possible claimants. The judgments therein are
binding only upon the parties who joined in the action.

WHEREFORE, the instant petition is DENIED. The assailed Orders of respondent Judge are AFFIRMED.
SO ORDERED.9
On January 13, 2003, the CA denied petitioners motion for reconsideration. 10
Issues
Petitioners hereby submit that:
1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT THE TRIAL COURT
ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.
2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY SUSTAINING THE INCLUSION OF
ABANTE TONITE AS PARTY IN THE INSTANT CASE.11
Ruling
The petition for review lacks merit.
Jurisdiction over the person, or jurisdiction in personam the power of the court to render a personal judgment
or to subject the parties in a particular action to the judgment and other rulings rendered in the action is an
element of due process that is essential in all actions, civil as well as criminal, except in actions in rem or quasi
in rem. Jurisdiction over the defendantin an action in rem or quasi in rem is not required, and the court
acquires jurisdiction over an actionas long as it acquires jurisdiction over the resthat is thesubject matter of the
action. The purpose of summons in such action is not the acquisition of jurisdiction over the defendant but
mainly to satisfy the constitutional requirement of due process. 12
The distinctions that need to be perceived between an action in personam, on the one hand, and an action
inrem or quasi in rem, on the other hand, are aptly delineated in Domagas v. Jensen, 13 thusly:
The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem,
or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A
proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person
and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership
of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the
court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An action in
personam is said to be one which has for its object a judgment against the person, as distinguished from a
judgment against the property to determine its state. It has been held that an action in personam is a
proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits
for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v. Combs,
the appellate court held that proceedings to enforce personal rights and obligations and in which personal
judgments are rendered adjusting the rights and obligations between the affected parties is in personam.
Actions for recovery of real property are in personam.

As a rule, Philippine courts cannot try any case against a defendant who does not reside and is not found in
the Philippines because of the impossibility of acquiring jurisdiction over his person unless he voluntarily
appears in court; but when the case is an action in rem or quasi in rem enumerated in Section 15, Rule 14 of
the Rules of Court, Philippine courts have jurisdiction to hear and decide the case because they have
jurisdiction over the res, and jurisdiction over the person of the non-resident defendant is not essential. In the
latter instance, extraterritorial service of summons can be made upon the defendant, and such extraterritorial
service of summons is not for the purpose of vesting the court with jurisdiction, but for the purpose of
complying with the requirements of fair play or due process, so that the defendant will be informed of the
pendency of the action against him and the possibility that property in the Philippines belonging to him or in
which he has an interest may be subjected to a judgment in favor of the plaintiff, and he can thereby take
steps to protect his interest if he is so minded. On the other hand, when the defendant in an action in
personam does not reside and is not found in the Philippines, our courts cannot try the case against him
because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court. 14
As the initiating party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of the court by
the act of filing the initiatory pleading. As to the defendant, the court acquires jurisdiction over his person either
by the proper service of the summons, or by a voluntary appearance in the action. 15
Upon the filing of the complaint and the payment of the requisite legal fees, the clerk of court forthwith issues
the corresponding summons to the defendant.16 The summons is directed to the defendant and signed by the
clerk of court under seal. It contains the name of the court and the names of the parties to the action; a
direction that the defendant answers within the time fixed by the Rules of Court; and a notice that unless the
defendant so answers, the plaintiff will take judgment by default and may be granted the relief applied for. 17 To
be attached to the original copy of the summons and all copies thereof is a copy of the complaint (and its
attachments, if any) and the order, if any, for the appointment of a guardian ad litem. 18
The significance of the proper service of the summons on the defendant in an action in personam cannot be
overemphasized. The service of the summons fulfills two fundamental objectives, namely: (a) to vest in the
court jurisdiction over the person of the defendant; and (b) to afford to the defendant the opportunity to be
heard on the claim brought against him. 19 As to the former, when jurisdiction in personam is not acquired in a
civil action through the proper service of the summons or upon a valid waiver of such proper service, the
ensuing trial and judgment are void.20 If the defendant knowingly does an act inconsistent with the right to
object to the lack of personal jurisdiction as to him, like voluntarily appearing in the action, he is deemed to
have submitted himself to the jurisdiction of the court. 21 As to the latter, the essence of due process lies in the
reasonable opportunity to be heard and to submit any evidence the defendant may have in support of his
defense. With the proper service of the summons being intended to afford to him the opportunity to be heard
on the claim against him, he may also waive the process. 21 In other words, compliance with the rules regarding
the service of the summons is as much an issue of due process as it is of jurisdiction. 23
Under the Rules of Court, the service of the summons should firstly be effected on the defendant himself
whenever practicable. Such personal service consists either in handing a copy of the summons to the
defendant in person, or, if the defendant refuses to receive and sign for it, in tendering it to him. 24 The rule on
personal service is to be rigidly enforced in order to ensure the realization of the two fundamental objectives
earlier mentioned. If, for justifiable reasons, the defendant cannot be served in person within a reasonable
time, the service of the summons may then be effected either (a) by leaving a copy of the summons at his
residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copy at
his office or regular place of business with some competent person in charge thereof. 25 The latter mode of
service is known as substituted service because the service of the summons on the defendant is made
through his substitute.

It is no longer debatable that the statutory requirements of substituted service must be followed strictly,
faithfully and fully, and any substituted service other than that authorized by statute is considered
ineffective.26 This is because substituted service, being in derogation of the usual method of service, is
extraordinary in character and may be used only as prescribed and in the circumstances authorized by
statute.27 Only when the defendant cannot be served personally within a reasonable time may substituted
service be resorted to. Hence, the impossibility of prompt personal service should be shown by stating the
efforts made to find the defendant himself and the fact that such efforts failed, which statement should be
found in the proof of service or sheriffs return.28Nonetheless, the requisite showing of the impossibility of
prompt personal service as basis for resorting to substituted service may be waived by the defendant either
expressly or impliedly.29
There is no question that Sheriff Medina twice attempted to serve the summons upon each of petitioners in
person at their office address, the first in the morning of September 18, 2000 and the second in the afternoon
of the same date. Each attempt failed because Macasaet and Quijano were "always out and not available" and
the other petitioners were "always roving outside and gathering news." After Medina learned from those
present in the office address on his second attempt that there was no likelihood of any of petitioners going to
the office during the business hours of that or any other day, he concluded that further attempts to serve them
in person within a reasonable time would be futile. The circumstances fully warranted his conclusion. He was
not expected or required as the serving officer to effect personal service by all means and at all times,
considering that he was expressly authorized to resort to substituted service should he be unable to effect the
personal service within a reasonable time. In that regard, what was a reasonable time was dependent on the
circumstances obtaining. While we are strict in insisting on personal service on the defendant, we do not cling
to such strictness should the circumstances already justify substituted service instead. It is the spirit of the
procedural rules, not their letter, that governs.30

CORONA, C.J.,
Chairperson,
- versus -

LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

LEPANTO CONSOLIDATED MINING COMPANY,

Respondent.

In reality, petitioners insistence on personal service by the serving officer was demonstrably superfluous. They
had actually received the summonses served through their substitutes, as borne out by their filing of several
pleadings in the RTC, including an answer with compulsory counterclaim ad cautelam and a pre-trial brief ad
cautelam. They had also availed themselves of the modes of discovery available under the Rules of Court.
Such acts evinced their voluntary appearance in the action.
Nor can we sustain petitioners contention that Abante Tonite could not be sued as a defendant due to its not
being either a natural or a juridical person. In rejecting their contention, the CA categorized Abante Tonite as a
corporation by estoppel as the result of its having represented itself to the reading public as a corporation
despite its not being incorporated. Thereby, the CA concluded that the RTC did not gravely abuse its discretion
in holding that the non-incorporation of Abante Tonite with the Securities and Exchange Commission was of no
consequence, for, otherwise, whoever of the public who would suffer any damage from the publication of
articles in the pages of its tabloids would be left without recourse. We cannot disagree with the CA,
considering that the editorial box of the daily tabloid disclosed that basis, nothing in the box indicated that
Monica Publishing Corporation had owned Abante Tonite.

Promulgated:

November 28, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, 2002; and ORDERS petitioners to
pay the costs of suit.
SO ORDERED.
LEONARDO-DE CASTRO, J.:

NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED,

G.R. No. 175799

Petitioner,
Present:

This is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals dated September 8,
2006 in CA-G.R. SP No. 94382 and its Resolution [2] dated December 12, 2006, denying the Motion for
Reconsideration.

On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the Regional Trial Court
(RTC) of Makati City a Complaint[3] against petitioner NM Rothschild & Sons (Australia) Limited praying for a
judgment declaring the loan and hedging contracts between the parties void for being contrary to Article
2018[4] of the Civil Code of the Philippines and for damages. The Complaint was docketed as Civil Case No.
05-782, and was raffled to Branch 150. Upon respondents (plaintiffs) motion, the trial court authorized
respondents counsel to personally bring the summons and Complaint to the Philippine Consulate General in
Sydney, Australia for the latter office to effect service of summons on petitioner (defendant).

On October 20, 2005, petitioner filed a Special Appearance With Motion to Dismiss [5] praying for the dismissal
of the Complaint on the following grounds: (a) the court has not acquired jurisdiction over the person of
petitioner due to the defective and improper service of summons; (b) the Complaint failed to state a cause of
action and respondent does not have any against petitioner; (c) the action is barred by estoppel; and (d)
respondent did not come to court with clean hands.

Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent to answer some of the
questions in petitioners Interrogatories to Plaintiff dated September 7, 2006.

Notwithstanding the foregoing, petitioner filed the present petition assailing the September 8, 2006 Decision
and the December 12, 2006 Resolution of the Court of Appeals. Arguing against the ruling of the appellate
court, petitioner insists that (a) an order denying a motion to dismiss may be the proper subject of a petition
for certiorari; and (b) the trial court committed grave abuse of discretion in not finding that it had not validly
acquired jurisdiction over petitioner and that the plaintiff had no cause of action.

Respondent, on the other hand, posits that: (a) the present Petition should be dismissed for not being
filed by a real party in interest and for lack of a proper verification and certificate of non-forum shopping; (b)
the Court of Appeals correctly ruled that certiorari was not the proper remedy; and (c) the trial court correctly
denied petitioners motion to dismiss.

On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the deposition of Mr. Paul
Murray (Director, Risk Management of petitioner) before the Philippine Consul General; and (2) a Motion for
Leave to Serve Interrogatories on respondent.
Our discussion of the issues raised by the parties follows:

On December 9, 2005, the trial court issued an Order [6] denying the Motion to Dismiss. According to the trial
court, there was a proper service of summons through the Department of Foreign Affairs (DFA) on account of
the fact that the defendant has neither applied for a license to do business in the Philippines, nor filed with the
Securities and Exchange Commission (SEC) a Written Power of Attorney designating some person on whom
summons and other legal processes maybe served. The trial court also held that the Complaint sufficiently
stated a cause of action. The other allegations in the Motion to Dismiss were brushed aside as matters of
defense which can best be ventilated during the trial.

On December 27, 2005, petitioner filed a Motion for Reconsideration. [7] On March 6, 2006, the trial court
issued an Order denying the December 27, 2005 Motion for Reconsideration and disallowed the twin Motions
for Leave to take deposition and serve written interrogatories. [8]

On April 3, 2006, petitioner sought redress via a Petition for Certiorari[9] with the Court of Appeals, alleging that
the trial court committed grave abuse of discretion in denying its Motion to Dismiss. The Petition was
docketed as CA-G.R. SP No. 94382.

On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing the Petition
for Certiorari. The Court of Appeals ruled that since the denial of a Motion to Dismiss is an interlocutory order,
it cannot be the subject of a Petition for Certiorari, and may only be reviewed in the ordinary course of law by
an appeal from the judgment after trial. On December 12, 2006, the Court of Appeals rendered the assailed
Resolution denying the petitioners Motion for Reconsideration.

Whether petitioner is a real party in interest

Respondent argues that the present Petition should be dismissed on the ground that petitioner no longer
existed as a corporation at the time said Petition was filed on February 1, 2007. Respondent points out that as
of the date of the filing of the Petition, there is no such corporation that goes by the name NM Rothschild and
Sons (Australia) Limited. Thus, according to respondent, the present Petition was not filed by a real party in
interest, citing our ruling in Philips Export B.V. v. Court of Appeals,[10] wherein we held:

A name is peculiarly important as necessary to the very existence of a corporation (American Steel Foundries
vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First
National Bank vs. Huntington Distilling Co., 40 W Va 530, 23 SE 792). Its name is one of its attributes, an
element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to
corporations is that each corporation must have a name by which it is to sue and be sued and do all legal acts.
The name of a corporation in this respect designates the corporation in the same manner as the name of an
individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport
Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of the
corporate franchise as any other privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375,
276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial Association, 18 RI 165, 26 A 36). [11]

In its Memorandum[12] before this Court, petitioner started to refer to itself as Investec Australia Limited
(formerly NM Rothschild & Sons [Australia] Limited) and captioned said Memorandum
accordingly. Petitioner claims that NM Rothschild and Sons (Australia) Limited still exists as a corporation
under the laws of Australia under said new name. It presented before us documents evidencing the process in
the Australian Securities & Investment Commission on the change of petitioners company name from NM
Rothschild and Sons (Australia) Limited to Investec Australia Limited. [13]

The resolution of the present Petition therefore entails an inquiry into whether the Court of Appeals correctly
ruled that the trial court did not commit grave abuse of discretion in its denial of petitioners Motion to
Dismiss. A mere error in judgment on the part of the trial court would undeniably be inadequate for us to
reverse the disposition by the Court of Appeals.

Issues more properly ventilated during the trial of the case

We find the submissions of petitioner on the change of its corporate name satisfactory and resolve not to
dismiss the present Petition for Review on the ground of not being prosecuted under the name of the real
party in interest. While we stand by our pronouncement in Philips Export on the importance of the corporate
name to the very existence of corporations and the significance thereof in the corporations right to sue, we
shall not go so far as to dismiss a case filed by the proper party using its former name when adequate
identification is presented. A real party in interest is the party who stands to be benefited or injured by the
judgment in the suit, or the party entitled to the avails of the suit. [14] There is no doubt in our minds that the
party who filed the present Petition, having presented sufficient evidence of its identity and being represented
by the same counsel as that of the defendant in the case sought to be dismissed, is the entity that will be
benefited if this Court grants the dismissal prayed for.

Since the main objection of respondent to the verification and certification against forum shopping likewise
depends on the supposed inexistence of the corporation named therein, we give no credit to said objection in
light of the foregoing discussion.

As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the following grounds: (a) lack
of jurisdiction over the person of petitioner due to the defective and improper service of summons; (b) failure of
the Complaint to state a cause of action and absence of a cause of action; (c) the action is barred by estoppel;
and (d) respondent did not come to court with clean hands.

As correctly ruled by both the trial court and the Court of Appeals, the alleged absence of a cause of action (as
opposed to the failure to state a cause of action), the alleged estoppel on the part of petitioner, and the
argument that respondent is in pari delicto in the execution of the challenged contracts, are not grounds in a
Motion to Dismiss as enumerated in Section 1, Rule 16 [17] of the Rules of Court. Rather, such defenses raise
evidentiary issues closely related to the validity and/or existence of respondents alleged cause of action and
should therefore be threshed out during the trial.

Propriety of the Resort to a Petition for Certiorari with the Court of Appeals
As regards the allegation of failure to state a cause of action, while the same is usually available as a ground
in a Motion to Dismiss, said ground cannot be ruled upon in the present Petition without going into the very
merits of the main case.

We have held time and again that an order denying a Motion to Dismiss is an interlocutory order which neither
terminates nor finally disposes of a case as it leaves something to be done by the court before the case is
finally decided on the merits. The general rule, therefore, is that the denial of a Motion to Dismiss cannot be
questioned in a special civil action for Certiorari which is a remedy designed to correct errors of jurisdiction
and not errors of judgment.[15] However, we have likewise held that when the denial of the Motion to Dismiss is
tainted with grave abuse of discretion, the grant of the extraordinary remedy of Certiorari may be justified. By
grave abuse of discretion is meant:

It is basic that [a] cause of action is the act or omission by which a party violates a right of another. [18] Its
elements are the following: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to
respect the plaintiff's right, and (3) an act or omission of the defendant in violation of such right. [19] We have
held that to sustain a Motion to Dismiss for lack of cause of action, the complaint must show that the claim for
relief does not exist and not only that the claim was defectively stated or is ambiguous, indefinite or uncertain.
[20]

[S]uch capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction. The abuse of
discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or
to a virtual refusal to perform the duty enjoined by or to act all in contemplation of law. [16]

The trial court held that the Complaint in the case at bar contains all the three elements of a cause of
action, i.e., it alleges that: (1) plaintiff has the right to ask for the declaration of nullity of the Hedging Contracts
for being null and void and contrary to Article 2018 of the Civil Code of the Philippines; (2) defendant has the
corresponding obligation not to enforce the Hedging Contracts because they are in the nature of wagering or
gambling agreements and therefore the transactions implementing those contracts are null and void under
Philippine laws; and (3) defendant ignored the advice and intends to enforce the Hedging Contracts by
demanding financial payments due therefrom.[21]

The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of the material allegations of
the ultimate facts contained in the plaintiff's complaint.[22] However, this principle of hypothetical admission
admits of exceptions. Thus, in Tan v. Court of Appeals, [23] we held:

The flaw in this conclusion is that, while conveniently echoing the general rule that averments in the complaint
are deemed hypothetically admitted upon the filing of a motion to dismiss grounded on the failure to state a
cause of action, it did not take into account the equally established limitations to such rule, i.e., that a motion
to dismiss does not admit the truth of mere epithets of fraud; nor allegations of legal conclusions; nor an
erroneous statement of law; nor mere inferences or conclusions from facts not stated; nor mere conclusions
of law; nor allegations of fact the falsity of which is subject to judicial notice; nor matters of evidence; nor
surplusage and irrelevant matter; nor scandalous matter inserted merely to insult the opposing party; nor to
legally impossible facts; nor to facts which appear unfounded by a record incorporated in the pleading, or by a
document referred to; and, nor to general averments contradicted by more specific averments. A more
judicious resolution of a motion to dismiss, therefore, necessitates that the court be not restricted to the
consideration of the facts alleged in the complaint and inferences fairly deducible therefrom. Courts may
consider other facts within the range of judicial notice as well as relevant laws and jurisprudence which the
courts are bound to take into account, and they are also fairly entitled to examine records/documents
duly incorporated into the complaint by the pleader himself in ruling on the demurrer to the complaint.
[24]
(Emphases supplied.)

is barred by estoppel or laches. As these mattersrequire presentation and/or determination of facts,

they can be best resolved after trial on the merits.[28] (Emphases supplied.)

On the proposition in the Motion to Dismiss that respondent has come to court with unclean hands, suffice it to
state that the determination of whether one acted in bad faith and whether damages may be awarded is
evidentiary in nature. Thus, we have previously held that [a]s a matter of defense, it can be best passed upon
after a full-blown trial on the merits. [29]

Jurisdiction over the person of petitioner

Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the improper service
of summons. Summons was served on petitioner through the DFA, with respondents counsel personally
bringing the summons and Complaint to the Philippine Consulate General in Sydney, Australia.

In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are void for being contrary
to Article 2018[25] of the Civil Code. Respondent claims that under the Hedging Contracts, despite the express
stipulation for deliveries of gold, the intention of the parties was allegedly merely to compel each other to pay
the difference between the value of the gold at the forward price stated in the contract and its market price at
the supposed time of delivery.

Whether such an agreement is void is a mere allegation of a conclusion of law, which therefore cannot be
hypothetically admitted. Quite properly, the relevant portions of the contracts sought to be nullified, as well as
a copy of the contract itself, are incorporated in the Complaint. The determination of whether or not the
Complaint stated a cause of action would therefore involve an inquiry into whether or not the assailed
contracts are void under Philippine laws. This is, precisely, the very issue to be determined in Civil Case No.
05-782. Indeed, petitioners defense against the charge of nullity of the Hedging Contracts is the purported
intent of the parties that actual deliveries of gold be made pursuant thereto. Such a defense requires the
presentation of evidence on the merits of the case. An issue that requires the contravention of the allegations
of the complaint, as well as the full ventilation, in effect, of the main merits of the case, should not be within the
province of a mere Motion to Dismiss. [26] The trial court, therefore, correctly denied the Motion to Dismiss on
this ground.

It is also settled in jurisprudence that allegations of estoppel and bad faith require proof. Thus, in Paraaque
Kings Enterprises, Inc. v. Court of Appeals,[27] we ruled:

Having come to the conclusion that the complaint states a valid cause of action for breach of the right of first
refusal and that the trial court should thus not have dismissed the complaint, we find no more need to pass
upon the question of whether the complaint states a cause of action for damages or whether the complaint

In the pleadings filed by the parties before this Court, the parties entered into a lengthy debate as to whether
or not petitioner is doing business in the Philippines. However, such discussion is completely irrelevant in the
case at bar, for two reasons. Firstly, since the Complaint was filed on August 30, 2005, the provisions of the
1997 Rules of Civil Procedure govern the service of summons. Section 12, Rule 14 of said rules provides:

Sec. 12. Service upon foreign private juridical entity. When the defendant is a foreign private juridical
entity which has transacted business in the Philippines, service may be made on its resident agent
designated in accordance with law for that purpose, or, if there be no such agent, on the government official
designated by law to that effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.)

This is a significant amendment of the former Section 14 of said rule which previously provided:

Sec. 14. Service upon private foreign corporations. If the defendant is a foreign corporation, or a
nonresident joint stock company or association, doing business in the Philippines, service may be made on
its resident agent designated in accordance with law for that purpose, or if there be no such agent, on the
government official designated by law to that effect, or on any of its officers or agents within the Philippines.
(Emphasis supplied.)

The coverage of the present rule is thus broader.[30] Secondly, the service of summons to petitioner through
the DFA by the conveyance of the summons to the Philippine Consulate General in Sydney, Australia was
clearly made not through the above-quoted Section 12, but pursuant to Section 15 of the same rule which
provides:

Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd. v. Dakila Trading
Corporation[33] that:

Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi in
rem, but not if an action is in personam.
Sec. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and
the action affects the personal status of the plaintiff or relates to, or the subject of which is property within the
Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of
the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in
such places and for such time as the court may order, in which case a copy of the summons and order of the
court shall be sent by registered mail to the last known address of the defendant, or in any other manner the
court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be
less than sixty (60) days after notice, within which the defendant must answer.

When the case instituted is an action in rem or quasi in rem, Philippine courts already have jurisdiction to hear
and decide the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant
is not a prerequisite to confer jurisdiction on the court, provided that the court acquires jurisdiction over
the res. Thus, in such instance, extraterritorial service of summons can be made upon the defendant. The
said extraterritorial service of summons is not for the purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due process, so that the defendant will be informed of the
pendency of the action against him and the possibility that property in the Philippines belonging to him or in
which he has an interest may be subjected to a judgment in favor of the plaintiff, and he can thereby take
steps to protect his interest if he is so minded. On the other hand, when the defendant or respondent
does not reside and is not found in the Philippines, and the action involved is in personam, Philippine
courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his
person unless he voluntarily appears in court.[34] (Emphases supplied.)

Respondent argues[31] that extraterritorial service of summons upon foreign private juridical entities is not
proscribed under the Rules of Court, and is in fact within the authority of the trial court to adopt, in accordance
with Section 6, Rule 135:

In Domagas v. Jensen,[35] we held that:

Sec. 6. Means to carry jurisdiction into effect. When by law jurisdiction is conferred on a court or judicial
officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by
such court or officer; and if the procedure to be followed in the exercise of such jurisdiction is not specifically
pointed out by law or by these rules, any suitable process or mode of proceeding may be adopted which
appears comformable to the spirit of said law or rules.

Section 15, Rule 14, however, is the specific provision dealing precisely with the service of summons on a
defendant which does not reside and is not found in the Philippines, while Rule 135 (which is in Part V of the
Rules of Court entitled Legal Ethics) concerns the general powers and duties of courts and judicial officers.

Breaking down Section 15, Rule 14, it is apparent that there are only four instances wherein a defendant who
is a non-resident and is not found in the country may be served with summons by extraterritorial service, to
wit: (1) when the action affects the personal status of the plaintiffs; (2) when the action relates to, or the
subject of which is property, within the Philippines, in which the defendant claims a lien or an interest, actual or
contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the defendant
from any interest in property located in the Philippines; and (4) when the defendant non-resident's property
has been attached within the Philippines. In these instances, service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other
manner the court may deem sufficient.[32]

[T]he aim and object of an action determine its character. Whether a proceeding is in rem, or in personam,
or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in
personam is a proceeding to enforce personal rights and obligations brought against the person and is based
on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific
property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The
purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or
liability directly upon the person of the defendant. Of this character are suits to compel a defendant to
specifically perform some act or actions to fasten a pecuniary liability on him. [36]

It is likewise settled that [a]n action in personam is lodged against a person based on personal liability; an
action in rem is directed against the thing itself instead of the person; while an action quasi in rem names a
person as defendant, but its object is to subject that persons interest in a property to a corresponding lien or
obligation.[37]

The Complaint in the case at bar is an action to declare the loan and Hedging Contracts between the
parties void with a prayer for damages. It is a suit in which the plaintiff seeks to be freed from its
obligations to the defendant under a contract and to hold said defendant pecuniarily liable to the plaintiff for
entering into such contract. It is therefore an action in personam, unless and until the plaintiff attaches a
property within the Philippines belonging to the defendant, in which case the action will be converted to
one quasi in rem.

Since the action involved in the case at bar is in personam and since the defendant, petitioner
Rothschild/Investec, does not reside and is not found in the Philippines, the Philippine courts cannot try any
case against it because of the impossibility of acquiring jurisdiction over its person unless it voluntarily appears
in court.[38]

This is not to say, however, that the petitioner's right to question the jurisdiction of the court over its
person is now to be deemed a foreclosed matter. If it is true, as Signetics claims, that its only involvement
in the Philippines was through a passive investment in Sigfil, which it even later disposed of, and that TEAM
Pacific is not its agent, then it cannot really be said to be doing business in the Philippines. It is a defense,
however, that requires the contravention of the allegations of the complaint, as well as a full ventilation, in
effect, of the main merits of the case, which should not thus be within the province of a mere motion to
dismiss. So, also, the issue posed by the petitioner as to whether a foreign corporation which has done
business in the country, but which has ceased to do business at the time of the filing of a complaint, can still
be made to answer for a cause of action which accrued while it was doing business, is another matter that
would yet have to await the reception and admission of evidence. Since these points have seasonably been
raised by the petitioner, there should be no real cause for what may understandably be its
apprehension, i.e., that by its participation during the trial on the merits, it may, absent an invocation
of separate or independent reliefs of its own, be considered to have voluntarily submitted itself to the
court's jurisdiction.[43] (Emphases supplied.)

In this regard, respondent vigorously argues that petitioner should be held to have voluntarily appeared before
the trial court when it prayed for, and was actually afforded, specific reliefs from the trial court. [39] Respondent
points out that while petitioners Motion to Dismiss was still pending, petitioner prayed for and was able to avail
of modes of discovery against respondent, such as written interrogatories, requests for admission, deposition,
and motions for production of documents. [40]

In order to conform to the ruling in La Naval, which was decided by this Court in 1994, the former Section 23,
Rule 14[44] concerning voluntary appearance was amended to include a second sentence in its equivalent
provision in the 1997 Rules of Civil Procedure:

Petitioner counters that under this Courts ruling in the leading case of La Naval Drug Corporation v. Court of
Appeals,[41] a party may file a Motion to Dismiss on the ground of lack of jurisdiction over its person, and at the
same time raise affirmative defenses and pray for affirmative relief, without waiving its objection to the
acquisition of jurisdiction over its person. [42]

SEC. 20. Voluntary appearance. The defendant's voluntary appearance in the action shall be equivalent to
service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. (Emphasis
supplied.)

It appears, however, that petitioner misunderstood our ruling in La Naval. A close reading of La Naval reveals
that the Court intended a distinction between the raising ofaffirmative defenses in an Answer (which
would not amount to acceptance of the jurisdiction of the court) and the prayer for affirmative
reliefs (which would be considered acquiescence to the jurisdiction of the court):

In the same manner that a plaintiff may assert two or more causes of action in a court suit, a defendant
is likewise expressly allowed, under Section 2, Rule 8, of the Rules of Court, to put up his own
defenses alternatively or even hypothetically. Indeed, under Section 2, Rule 9, of the Rules of Court,
defenses and objections not pleaded either in a motion to dismiss or in an answer, except for the failure to
state a cause of action, are deemed waived. We take this to mean that a defendant may, in fact, feel enjoined
to set up, along with his objection to the court's jurisdiction over his person, all other possible defenses. It thus
appears that it is not the invocation of any of such defenses, but the failure to so raise them, that can result in
waiver or estoppel. By defenses, of course, we refer to the grounds provided for in Rule 16 of the Rules
of Court that must be asserted in a motion to dismiss or by way of affirmative defenses in an answer.

Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and Freuhauf Electronics
Phils., Inc. (225 SCRA 737, 738), we lately ruled:

The new second sentence, it can be observed, merely mentions other grounds in a Motion to Dismiss aside
from lack of jurisdiction over the person of the defendant. This clearly refers to affirmative defenses, rather
than affirmative reliefs.

Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this Court, in several cases,
ruled that seeking affirmative relief in a court is tantamount to voluntary appearance therein. [45] Thus,
in Philippine Commercial International Bank v. Dy Hong Pi,[46] wherein defendants filed a Motion for Inhibition
without submitting themselves to the jurisdiction of this Honorable Court subsequent to their filing of a Motion
to Dismiss (for Lack of Jurisdiction), we held:

Besides, any lingering doubts on the issue of voluntary appearance dissipate when the respondents' motion
for inhibition is considered. This motion seeks a sole relief: inhibition of Judge Napoleon Inoturan from further
hearing the case. Evidently, by seeking affirmative relief other than dismissal of the case, respondents
manifested their voluntary submission to the court's jurisdiction. It is well-settled that the active
participation of a party in the proceedings is tantamount to an invocation of the court's jurisdiction and a
willingness to abide by the resolution of the case, and will bar said party from later on impugning the court's
jurisdiction.[47] (Emphasis supplied.)

Promulgated:
In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs from the trial court, is
deemed to have voluntarily submitted to the jurisdiction of said court. A party cannot invoke the jurisdiction of
a court to secure affirmative relief against his opponent and after obtaining or failing to obtain such relief,
repudiate or question that same jurisdiction.[48] Consequently, the trial court cannot be considered to have
committed grave abuse of discretion amounting to lack or excess of jurisdiction in the denial of the Motion to
Dismiss on account of failure to acquire jurisdiction over the person of the defendant.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated
September 8, 2006 and its Resolution dated December 12, 2006 in CA-G.R. SP No. 94382 are
hereby AFFIRMED.

JESUS S. LUCAS,
Respondent.

June 6, 2011

x----------------------------------------------------------------------------------------------x

No pronouncement as to costs.

SO ORDERED.

DECISION

NACHURA, J.:
JESSE U. LUCAS,

G.R. No. 190710

Petitioner,
Present:

CARPIO, J.,

Is a prima facie showing necessary before a court can issue a DNA testing order? In this petition for
review on certiorari, we address this question to guide the Bench and the Bar in dealing with a relatively new
evidentiary tool. Assailed in this petition are the Court of Appeals (CA) Decision [1] dated September 25, 2009
and Resolution dated December 17, 2009.

Chairperson,
- versus -

NACHURA,

The antecedents of the case are, as follows:

PERALTA,
ABAD, and
MENDOZA, JJ.

On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to Establish Illegitimate Filiation (with
Motion for the Submission of Parties to DNA Testing)[2] before the Regional Trial Court (RTC), Branch
72, Valenzuela City. Petitioner narrated that, sometime in 1967, his mother, Elsie Uy (Elsie), migrated
to Manila from Davao and stayed with a certain Ate Belen (Belen) who worked in a prominent nightspot
in Manila. Elsie would oftentimes accompany Belen to work. On one occasion, Elsie got acquainted with
respondent, Jesus S. Lucas, at Belens workplace, and an intimate relationship developed between the two.
Elsie eventually got pregnant and, on March 11, 1969, she gave birth to petitioner, Jesse U. Lucas. The name
of petitioners father was not stated in petitioners certificate of live birth. However, Elsie later on told petitioner

that his father is respondent. On August 1, 1969, petitioner was baptized at San Isidro Parish, Taft
Avenue, Pasay City. Respondent allegedly extended financial support to Elsie and petitioner for a period of
about two years. When the relationship of Elsie and respondent ended, Elsie refused to accept respondents
offer of support and decided to raise petitioner on her own. While petitioner was growing up, Elsie made
several attempts to introduce petitioner to respondent, but all attempts were in vain.

Attached to the petition were the following: (a) petitioners certificate of live birth; (b) petitioners
baptismal certificate; (c) petitioners college diploma, showing that he graduated from Saint Louis University in
Baguio City with a degree in Psychology; (d) his Certificate of Graduation from the same school; (e) Certificate
of Recognition from the University of the Philippines, College of Music; and (f) clippings of several articles from
different newspapers about petitioner, as a musical prodigy.

facie case, affirmative defenses, presumption of legitimacy, and physical resemblance between the putative
father and the child. The court opined that petitioner must first establish these four procedural aspects before
he can present evidence of paternity and filiation, which may include incriminating acts or scientific evidence
like blood group test and DNA test results. The court observed that the petition did not show that these
procedural aspects were present. Petitioner failed to establish a prima facie case considering that (a) his
mother did not personally declare that she had sexual relations with respondent, and petitioners statement as
to what his mother told him about his father was clearly hearsay; (b) the certificate of live birth was not signed
by respondent; and (c) although petitioner used the surname of respondent, there was no allegation that he
was treated as the child of respondent by the latter or his family. The court opined that, having failed to
establish a prima facie case, respondent had no obligation to present any affirmative defenses. The dispositive
portion of the said Order therefore reads:
WHEREFORE, for failure of the petitioner to establish compliance with the four procedural aspects of a
traditional paternity action in his petition, his motion for the submission of parties to DNA testing to establish
paternity and filiation is hereby DENIED. This case is DISMISSED without prejudice.

Respondent was not served with a copy of the petition. Nonetheless, respondent learned of the petition
to establish filiation. His counsel therefore went to the trial court on August 29, 2007 and obtained a copy of
the petition.
SO ORDERED.[8]

Petitioner filed with the RTC a Very Urgent Motion to Try and Hear the Case. Hence, on September 3,
2007, the RTC, finding the petition to be sufficient in form and substance, issued the Order [3] setting the case
for hearing and urging anyone who has any objection to the petition to file his opposition. The court also
directed that the Order be published once a week for three consecutive weeks in any newspaper of general
circulation in the Philippines, and that the Solicitor General be furnished with copies of the Order and the
petition in order that he may appear and represent the State in the case.

Petitioner seasonably filed a motion for reconsideration to the Order dated July 30, 2008, which the RTC
resolved in his favor. Thus, on October 20, 2008, it issued the Order [9] setting aside the courts previous order,
thus:

WHEREFORE, in view of the foregoing, the Order dated July 30, 2008 is hereby reconsidered and set aside.

On September 4, 2007, unaware of the issuance of the September 3, 2007 Order, respondent filed a
Special Appearance and Comment. He manifested inter alia that: (1) he did not receive the summons and a
copy of the petition; (2) the petition was adversarial in nature and therefore summons should be served on him
as respondent; (3) should the court agree that summons was required, he was waiving service of summons
and making a voluntary appearance; and (4) notice by publication of the petition and the hearing was improper
because of the confidentiality of the subject matter.[4]

Let the Petition (with Motion for the Submission of Parties to DNA Testing) be set for hearing on January 22,
2009 at 8:30 in the morning.

xxxx
On September 14, 2007, respondent also filed a Manifestation and Comment on Petitioners Very
Urgent Motion to Try and Hear the Case. Respondent reiterated that the petition for recognition is adversarial
in nature; hence, he should be served with summons.
SO ORDERED.[10]
After learning of the September 3, 2007 Order, respondent filed a motion for reconsideration.
Respondent averred that the petition was not in due form and substance because petitioner could not have
personally known the matters that were alleged therein. He argued that DNA testing cannot be had on the
basis of a mere allegation pointing to respondent as petitioners father. Moreover, jurisprudence is still
unsettled on the acceptability of DNA evidence.
[5]

On July 30, 2008, the RTC, acting on respondents motion for reconsideration, issued an
Order[6] dismissing the case. The court remarked that, based on the case ofHerrera v. Alba,[7] there are four
significant procedural aspects of a traditional paternity action which the parties have to face: a prima

This time, the RTC held that the ruling on the grounds relied upon by petitioner for filing the petition is
premature considering that a full-blown trial has not yet taken place. The court stressed that the petition was
sufficient in form and substance. It was verified, it included a certification against forum shopping, and it
contained a plain, concise, and direct statement of the ultimate facts on which petitioner relies on for his claim,
in accordance with Section 1, Rule 8 of the Rules of Court. The court remarked that the allegation that the
statements in the petition were not of petitioners personal knowledge is a matter of evidence. The court also

dismissed respondents arguments that there is no basis for the taking of DNA test, and that jurisprudence is
still unsettled on the acceptability of DNA evidence. It noted that the new Rule on DNA Evidence [11] allows the
conduct of DNA testing, whether at the courts instance or upon application of any person who has legal
interest in the matter in litigation.

the taking of a DNA test. If the DNA test in compulsory recognition cases is immediately available to the
petitioner/complainant without requiring first the presentation of corroborative proof, then a dire and absurd
rule would result. Such will encourage and promote harassment and extortion.

xxxx
Respondent filed a Motion for Reconsideration of Order dated October 20, 2008 and for Dismissal of Petition,
[12]
reiterating that (a) the petition was not in due form and substance as no defendant was named in the title,
and all the basic allegations were hearsay; and (b) there was no prima facie case, which made the petition
susceptible to dismissal.

The RTC denied the motion in the Order dated January 19, 2009, and rescheduled the hearing. [13]

At the risk of being repetitious, the Court would like to stress that it sees the danger of allowing an
absolute DNA testing to a compulsory recognition test even if the plaintiff/petitioner failed to establish prima
facie proof. x x x If at anytime, motu proprio and without pre-conditions, the court can indeed order the taking
of DNA test in compulsory recognition cases, then the prominent and well-to-do members of our society will be
easy prey for opportunists and extortionists. For no cause at all, or even for [sic] casual sexual indiscretions in
their younger years could be used as a means to harass them. Unscrupulous women, unsure of the paternity
of their children may just be taking the chances-just in case-by pointing to a sexual partner in a long past onetime encounter. Indeed an absolute and unconditional taking of DNA test for compulsory recognition case
opens wide the opportunities for extortionist to prey on victims who have no stomach for scandal. [15]

Aggrieved, respondent filed a petition for certiorari with the CA, questioning the Orders dated October 20,
2008 and January 19, 2009.

Petitioner moved for reconsideration. On December 17, 2009, the CA denied the motion for lack of merit. [16]
On September 25, 2009, the CA decided the petition for certiorari in favor of respondent, thus:

In this petition for review on certiorari, petitioner raises the following issues:
I.

WHEREFORE, the instant petition for certiorari is hereby GRANTED for being meritorious. The assailed
Orders dated October 20, 2008 and January 19, 2009 both issued by the Regional Trial Court, Branch 172 of
Valenzuela City in SP. Proceeding Case No. 30-V-07 are REVERSED and SET ASIDE. Accordingly, the case
docketed as SP. Proceeding Case No. 30-V-07 is DISMISSED. [14]

The CA held that the RTC did not acquire jurisdiction over the person of respondent, as no summons had
been served on him. Respondents special appearance could not be considered as voluntary appearance
because it was filed only for the purpose of questioning the jurisdiction of the court over respondent. Although
respondent likewise questioned the courts jurisdiction over the subject matter of the petition, the same is not
equivalent to a waiver of his right to object to the jurisdiction of the court over his person.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RESOLVED THE ISSUE OF LACK OF
JURISDICTION OVER THE PERSON OF HEREIN RESPONDENT ALBEIT THE SAME WAS NEVER
RAISED IN THE PETITION FOR CERTIORARI.

I.A
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RULED THAT JURISDICTION WAS NOT
ACQUIRED OVER THE PERSON OF THE RESPONDENT.

I.B
The CA remarked that petitioner filed the petition to establish illegitimate filiation, specifically seeking a DNA
testing order to abbreviate the proceedings. It noted that petitioner failed to show that the four significant
procedural aspects of a traditional paternity action had been met. The CA further held that a DNA testing
should not be allowed when the petitioner has failed to establish a prima facie case, thus:

While the tenor [of Section 4, Rule on DNA Evidence] appears to be absolute, the rule could not really have
been intended to trample on the substantive rights of the parties. It could have not meant to be an instrument
to promote disorder, harassment, or extortion. It could have not been intended to legalize unwarranted
expedition to fish for evidence. Such will be the situation in this particular case if a court may at any time order

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT FAILED TO REALIZE THAT THE
RESPONDENT HAD ALREADY SUBMITTED VOLUNTARILY TO THE JURISDICTION OF THE COURT A
QUO.

I.C

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ESSENTIALLY RULED THAT THE TITLE
OF A PLEADING, RATHER THAN ITS BODY, IS CONTROLLING.

II.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ORDERED THE DISMISSAL OF THE
PETITION BY REASON OF THE MOTION (FILED BY THE PETITIONER BEFORE THE COURT A QUO)
FOR THE CONDUCT OF DNA TESTING.

II.A
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT ESSENTIALLY RULED THAT DNA
TESTING CAN ONLY BE ORDERED AFTER THE PETITIONER ESTABLISHES PRIMA FACIE PROOF OF
FILIATION.

Finally, petitioner asserts that the motion for DNA testing should not be a reason for the dismissal of the
petition since it is not a legal ground for the dismissal of cases. If the CA entertained any doubt as to the
propriety of DNA testing, it should have simply denied the motion. [18] Petitioner points out that Section 4 of the
Rule on DNA Evidence does not require that there must be a prior proof of filiation before DNA testing can be
ordered. He adds that the CA erroneously relied on the four significant procedural aspects of a paternity case,
as enunciated in Herrera v. Alba.[19] Petitioner avers that these procedural aspects are not applicable at this
point of the proceedings because they are matters of evidence that should be taken up during the trial. [20]

In his Comment, respondent supports the CAs ruling on most issues raised in the petition
for certiorari and merely reiterates his previous arguments. However, on the issue of lack of jurisdiction,
respondent counters that, contrary to petitioners assertion, he raised the issue before the CA in relation to his
claim that the petition was not in due form and substance. Respondent denies that he waived his right to the
service of summons. He insists that the alleged waiver and voluntary appearance was conditional upon a
finding by the court that summons is indeed required. He avers that the assertion of affirmative defenses,
aside from lack of jurisdiction over the person of the defendant, cannot be considered as waiver of the defense
of lack of jurisdiction over such person.

The petition is meritorious.

III.
WHETHER OR NOT THE COURT OF APPEALS ERRED WITH ITS MISPLACED RELIANCE ON THE
CASE OF HERRERA VS. ALBA,

ESPECIALLY AS REGARDS THE FOUR SIGNIFICANT PROCEDURAL ASPECTS OF A TRADITIONAL

PATERNITY ACTION.[17]

Petitioner contends that respondent never raised as issue in his petition for certiorari the courts lack of
jurisdiction over his person. Hence, the CA had no legal basis to discuss the same, because issues not raised
are deemed waived or abandoned. At any rate, respondent had already voluntarily submitted to the jurisdiction
of the trial court by his filing of several motions asking for affirmative relief, such as the (a) Motion for
Reconsideration of the Order dated September 3, 2007; (b) Ex Parte Motion to Resolve Motion for
Reconsideration of the Order dated November 6, 2007; and (c) Motion for Reconsideration of the Order dated
October 20, 2008 and for Dismissal of Petition. Petitioner points out that respondent even expressly admitted
that he has waived his right to summons in his Manifestation and Comment on Petitioners Very Urgent Motion
to Try and Hear the Case. Hence, the issue is already moot and academic.

Petitioner argues that the case was adversarial in nature. Although the caption of the petition does not
state respondents name, the body of the petition clearly indicates his name and his known address. He
maintains that the body of the petition is controlling and not the caption.

Primarily, we emphasize that the assailed Orders of the trial court were orders denying respondents motion to
dismiss the petition for illegitimate filiation. An order denying a motion to dismiss is an interlocutory
order which neither terminates nor finally disposes of a case, as it leaves something to be done by the court
before the case is finally decided on the merits. As such, the general rule is that the denial of a motion to
dismiss cannot be questioned in a special civil action for certiorari, which is a remedy designed to correct
errors of jurisdiction and not errors of judgment. Neither can a denial of a motion to dismiss be the subject of
an appeal unless and until a final judgment or order is rendered. In a number of cases, the court has granted
the extraordinary remedy of certiorari on the denial of the motion to dismiss but only when it has been tainted
with grave abuse of discretion amounting to lack or excess of jurisdiction. [21] In the present case, we discern no
grave abuse of discretion on the part of the trial court in denying the motion to dismiss.

The grounds for dismissal relied upon by respondent were (a) the courts lack of jurisdiction over his person
due to the absence of summons, and (b) defect in the form and substance of the petition to establish
illegitimate filiation, which is equivalent to failure to state a cause of action.

We need not belabor the issues on whether lack of jurisdiction was raised before the CA, whether the court
acquired jurisdiction over the person of respondent, or whether respondent waived his right to the service of
summons. We find that the primordial issue here is actually whether it was necessary, in the first place, to
serve summons on respondent for the court to acquire jurisdiction over the case. In other words, was the
service of summons jurisdictional? The answer to this question depends on the nature of petitioners action,
that is, whether it is an action in personam, in rem, or quasi in rem.

An action in personam is lodged against a person based on personal liability; an action in rem is directed
against the thing itself instead of the person; while an action quasi in rem names a person as defendant, but

its object is to subject that person's interest in a property to a corresponding lien or obligation. A petition
directed against the "thing" itself or the res, which concerns the status of a person, like a petition for
adoption, annulment of marriage, or correction of entries in the birth certificate, is an action in rem.[22]
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try
and decide the case. In a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant is
not a prerequisite to confer jurisdiction on the court, provided that the latter has jurisdiction over
the res. Jurisdiction over the resis acquired either (a) by the seizure of the property under legal process,
whereby it is brought into actual custody of the law, or (b) as a result of the institution of legal proceedings, in
which the power of the court is recognized and made effective. [23]

The herein petition to establish illegitimate filiation is an action in rem. By the simple filing of the petition to
establish illegitimate filiation before the RTC, which undoubtedly had jurisdiction over the subject matter of the
petition, the latter thereby acquired jurisdiction over the case. An in rem proceeding is validated essentially
through publication. Publication is notice to the whole world that the proceeding has for its object to bar
indefinitely all who might be minded to make an objection of any sort to the right sought to be established.
[24]
Through publication, all interested parties are deemed notified of the petition.

If at all, service of summons or notice is made to the defendant, it is not for the purpose of vesting the court
with jurisdiction, but merely for satisfying the due process requirements. [25] This is but proper in order to afford
the person concerned the opportunity to protect his interest if he so chooses. [26] Hence, failure to serve
summons will not deprive the court of its jurisdiction to try and decide the case. In such a case, the lack of
summons may be excused where it is determined that the adverse party had, in fact, the opportunity to file his
opposition, as in this case. We find that the due process requirement with respect to respondent has been
satisfied, considering that he has participated in the proceedings in this case and he has the opportunity to file
his opposition to the petition to establish filiation.

In a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court
for determination is the sufficiency of the allegations made in the complaint to constitute a cause of action and
not whether those allegations of fact are true, for said motion must hypothetically admit the truth of the facts
alleged in the complaint.[30]
The inquiry is confined to the four corners of the complaint, and no other. [31] The test of the sufficiency of the
facts alleged in the complaint is whether or not, admitting the facts alleged, the court could render a valid
judgment upon the same in accordance with the prayer of the complaint. [32]

If the allegations of the complaint are sufficient in form and substance but their veracity and correctness
are assailed, it is incumbent upon the court to deny the motion to dismiss and require the defendant to answer
and go to trial to prove his defense. The veracity of the assertions of the parties can be ascertained at the trial
of the case on the merits.[33]

The statement in Herrera v. Alba[34] that there are four significant procedural aspects in a traditional paternity
case which parties have to face has been widely misunderstood and misapplied in this case. A party is
confronted by these so-called procedural aspects during trial, when the parties have presented their respective
evidence. They are matters of evidence that cannot be determined at this initial stage of the proceedings,
when only the petition to establish filiation has been filed. The CAs observation that petitioner failed to
establish a prima facie casethe first procedural aspect in a paternity caseis therefore misplaced. A prima
facie case is built by a partys evidence and not by mere allegations in the initiatory pleading.

Clearly then, it was also not the opportune time to discuss the lack of a prima facie case vis--vis the motion
for DNA testing since no evidence has, as yet, been presented by petitioner. More essentially, it is premature
to discuss whether, under the circumstances, a DNA testing order is warranted considering that no such order
has yet been issued by the trial court. In fact, the latter has just set the said case for hearing.
To address respondents contention that the petition should have been adversarial in form, we further hold that
the herein petition to establish filiation was sufficient in form. It was indeed adversarial in nature despite its
caption which lacked the name of a defendant, the failure to implead respondent as defendant, and the nonservice of summons upon respondent. A proceeding is adversarial where the party seeking relief has given
legal warning to the other party and afforded the latter an opportunity to contest it. [27] In this petitionclassified
as an action in remthe notice requirement for an adversarial proceeding was likewise satisfied by the
publication of the petition and the giving of notice to the Solicitor General, as directed by the trial court.

The petition to establish filiation is sufficient in substance. It satisfies Section 1, Rule 8 of the Rules of Court,
which requires the complaint to contain a plain, concise, and direct statement of the ultimate facts upon which
the plaintiff bases his claim. A fact is essential if it cannot be stricken out without leaving the statement of the
cause of action inadequate.[28] A complaint states a cause of action when it contains the following elements: (1)
the legal right of plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the
defendant in violation of said legal right. [29]

The petition sufficiently states the ultimate facts relied upon by petitioner to establish his filiation to respondent.
Respondent, however, contends that the allegations in the petition were hearsay as they were not of
petitioners personal knowledge. Such matter is clearly a matter of evidence that cannot be determined at this
point but only during the trial when petitioner presents his evidence.

At any rate, the CAs view that it would be dangerous to allow a DNA testing without corroborative proof is well
taken and deserves the Courts attention. In light of this observation, we find that there is a need to
supplement the Rule on DNA Evidence to aid the courts in resolving motions for DNA testing order, particularly
in paternity and other filiation cases. We, thus, address the question of whether a prima facie showing is
necessary before a court can issue a DNA testing order.

The Rule on DNA Evidence was enacted to guide the Bench and the Bar for the introduction and use of DNA
evidence in the judicial system. It provides the prescribed parameters on the requisite elements for reliability
and validity (i.e., the proper procedures, protocols, necessary laboratory reports, etc.), the possible sources of
error, the available objections to the admission of DNA test results as evidence as well as the probative value
of DNA evidence. It seeks to ensure that the evidence gathered, using various methods of DNA analysis, is
utilized effectively and properly, [and] shall not be misused and/or abused and, more importantly, shall
continue to ensure that DNA analysis serves justice and protects, rather than prejudice the public. [35]

Not surprisingly, Section 4 of the Rule on DNA Evidence merely provides for conditions that are aimed to
safeguard the accuracy and integrity of the DNA testing. Section 4 states:
The same condition precedent should be applied in our jurisdiction to protect the putative father from mere
harassment suits. Thus, during the hearing on the motion for DNA testing, the petitioner must present prima
facie evidence or establish a reasonable possibility of paternity.
SEC. 4. Application for DNA Testing Order. The appropriate court may, at any time, either motu
proprio or on application of any person who has a legal interest in the matter in litigation, order a DNA testing.
Such order shall issue after due hearing and notice to the parties upon a showing of the following:
(a) A biological sample exists that is relevant to the case;
(b) The biological sample: (i) was not previously subjected to the type of DNA testing now requested; or (ii)
was previously subjected to DNA testing, but the results may require confirmation for good reasons;

Notwithstanding these, it should be stressed that the issuance of a DNA testing order remains discretionary
upon the court. The court may, for example, consider whether there is absolute necessity for the DNA testing.
If there is already preponderance of evidence to establish paternity and the DNA test result would only be
corroborative, the court may, in its discretion, disallow a DNA testing.

(c) The DNA testing uses a scientifically valid technique;

(d) The DNA testing has the scientific potential to produce new information that is relevant to the proper
resolution of the case; and

WHEREFORE, premises considered, the petition is GRANTED. The Court of Appeals Decision dated
September 25, 2009 and Resolution dated December 17, 2009 areREVERSED and SET ASIDE. The Orders
dated October 20, 2008 and January 19, 2009 of the Regional Trial Court of Valenzuela City are AFFIRMED.

(e) The existence of other factors, if any, which the court may consider as potentially affecting the accuracy or
integrity of the DNA testing.
SO ORDERED.
This Rule shall not preclude a DNA testing, without need of a prior court order, at the behest of any party,
including law enforcement agencies, before a suit or proceeding is commenced.

This does not mean, however, that a DNA testing order will be issued as a matter of right if, during the hearing,
the said conditions are established.

REPUBLIC OF THEPHILIPPINES,
Petitioner,

Present:
- versus -

In some states, to warrant the issuance of the DNA testing order, there must be a show cause hearing wherein
the applicant must first present sufficient evidence to establish a prima facie case or a reasonable possibility of
paternity or good cause for the holding of the test. [36] In these states, a court order for blood testing is
considered a search, which, under their Constitutions (as in ours), must be preceded by a finding of probable
cause in order to be valid. Hence, the requirement of a prima facie case, or reasonable possibility, was
imposed in civil actions as a counterpart of a finding of probable cause. The Supreme Court of Louisiana
eloquently explained

G.R. No. 186027

MERLYN MERCADERA through her Attorney-in-Fact, EVELYN M.

OGA,
Respondent.

CARPIO, J., Chairperson,

NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:
December 8, 2010

X -------------------------------------------------------------------------------------- X
DECISION
Although a paternity action is civil, not criminal, the constitutional prohibition against unreasonable searches
and seizures is still applicable, and a proper showing of sufficient justification under the particular factual
circumstances of the case must be made before a court may order a compulsory blood test. Courts in various
jurisdictions have differed regarding the kind of procedures which are required, but those jurisdictions have
almost universally found that a preliminary showing must be made before a court can constitutionally order
compulsory blood testing in paternity cases. We agree, and find that, as a preliminary matter, before the court
may issue an order for compulsory blood testing, the moving party must show that there is a reasonable
possibility of paternity. As explained hereafter, in cases in which paternity is contested and a party to the action
refuses to voluntarily undergo a blood test, a show cause hearing must be held in which the court can
determine whether there is sufficient evidence to establish a prima facie case which warrants issuance of a
court order for blood testing.[37]

MENDOZA, J.:
This petition for review on certiorari assails the December 9, 2008 Decision[1] of the Court of Appeals (CA), in
CA G.R. CV No. 00568-MIN, which affirmed the September 28, 2005 Order of the Regional Trial Court of
Dipolog City, Branch 8 (RTC), in a petition for correction of entries, docketed as Special Proceedings No. R3427 (SP No. R-3427), filed by respondent Merlyn Mercadera (Mercadera) under Rule 108 of the Rules of
Court.
The Factual and Procedural Antecedents

On June 6, 2005, Merlyn Mercadera (Mercadera), represented by her sister and duly constituted Attorney-inFact, Evelyn M. Oga (Oga), sought the correction of her given name as it appeared in her Certificate of Live
Birth - from Marilyn L. Mercadera to Merlyn L. Mercadera before the Office of the Local Civil Registrar of
Dipolog City pursuant to Republic Act No. 9048 (R.A. No. 9048).[2]
Under R.A. No. 9048, the city or municipal civil registrar or consul general, as the case may be, is now
authorized to effect the change of first name or nickname and the correction of clerical or typographical errors
in civil registry entries. Under said law, jurisdiction over applications for change of first name is now primarily
lodged with administrative officers. The law now excludes the change of first name from the coverage of
Rules 103 until and unless an administrative petition for change of name is first filed and subsequently
denied[3] and removes correction or changing of clerical errors in entries of the civil register from the ambit of
Rule 108. Hence, what is left for the scope of operation of the rules are substantial changes and corrections
in entries of the civil register.[4]
The Office of the Local Civil Registrar of Dipolog City, however, refused to effect the correction unless a court
order was obtained because the Civil Registrar therein is not yet equipped with a permanent appointment
before he can validly act on petitions for corrections filed before their office as mandated by Republic Act
9048.[5]
Mercadera was then constrained to file a Petition For Correction of Some Entries as Appearing in the
Certificate of Live Birth under Rule 108 before the Regional TrialCourt of Dipolog City (RTC). The petition was
docketed as Special Proceedings No. R-3427 (SP No. R-3427). Section 2 of Rule 108 reads:
SEC. 2. Entries subject to cancellation or correction. Upon good and valid grounds, the following entries
in the civil register may be cancelled or corrected: (a) births; (b) marriages; (c) deaths; (d) legal separations;
(e) judgments of annulments of marriage; (f) judgments declaring marriages void from the beginning; (g)
legitimations; (h) adoptions; (i) acknowledgments of natural children; (j) naturalization; (k) election, loss or
recovery of citizenship; (l) civil interdiction; (m) judicial determination of filiation; (n) voluntary emancipation of
a minor; and (o) changes of name. [Underscoring supplied]
Upon receipt of the petition for correction of entry, the RTC issued an order, dated June 10, 2005, which reads:
Finding the petition sufficient in form and substance, notice is hereby given that the hearing of said petition is
set on JULY 26, 2005 at 8:30 oclock in the morning, at the Session Hall of Branch 8, this Court, Bulwagan ng
Katarungan, Dipolog City, on which date, time and place, anyone appearing to contest the petition shall state
in writing his grounds there[for], serving a copy thereof to the petitioner and likewise file copies with this Court
on or before the said date of hearing.
Let this order be published at the expense of petitioner once a week for three (3) consecutive weeks in a
newspaper edited and published in Dipolog City and of general circulation therein, the City of Dapitan and the
province of Zamboanga del Norte, and copies hereof be furnished to the Office of the Solicitor General of (sic)
134 Amorsolo St., Legaspi Village, Makati, Metro Manila, the City Civil Registrar of Dipolog, and posted on the
bulletin boards of the City Hall of Dipolog, the Provincial Capitol Building, and of this Court.
IT IS SO ORDERED.

The Office of the Solicitor General (OSG) entered its appearance for the Republic of the Philippines and
deputized the Office of the City Prosecutor to assist in the case only on the very day of the hearing. This
prompted the court to reset the hearing on September 5, 2005. On said day, there being no opposition,
counsel for Mercadera moved for leave of court to present evidence ex parte. Without any objection from the
City Prosecutor, the trial court designated the branch clerk of court to receive evidence for Mercadera.
On September 15, 2005, the testimony of Oga and several photocopies of documents were formally offered
and marked as evidence to prove that Mercadera never used the name Marilyn in any of her public or private
transactions. On September 26, 2005, the RTC issued an order[6] admitting Exhibits A to I[7] and their
submarkings, as relevant to the resolution of the case.
The following facts were gathered from documentary evidence and the oral testimony of Oga, as reported by
the lower court:
Petitioner Merlyn M. Mercadera was born on August 19, 1970 at Dipolog City. She is the daughter of spouses
Tirso U. Mercadera and Norma C. Lacquiao. The fact of her birth was reported to the Office of the City Civil
Registrar of Dipolog City on September 8, 1970. It was recorded on page 68, book no. 9, in the Registry of
Births of said civil registry. In the certification of birth dated May 9, 2005 issued by the same registry, her given
name appears as Marilyn and not Merlyn (Exhibit C).
On September 29, 1979, petitioner was baptized according to the rites and ceremonies of the United Church
of Christ in the Philippines. As reflected in her certificate of baptism issued by said church, she was baptized
by the name Merlyn L. Mercadera (Exhibit D).

In her elementary diploma issued by the Paaralang Sentral ng Estaka, Dipolog City; her high school diploma
issued by the Zamboanga del Norte School of Arts and Trades, Dipolog City; and college diploma issued by
the Silliman University, Dumaguete City, where she earned the degree of Bachelor of Secondary Education,
uniformly show her name as Merlyn L. Mercadera (Exhibits E, F, and G).
Presently, she is working in U.P. Mindanao, Buhangin, Davao City. Her certificate of membership issued by
the Government Service Insurance System also bears his [sic] complete name as Merlyn Lacquiao Mercadera
(Exhibit H).
When she secured an authenticated copy of her certificate of live birth from the National Statistics Office, she
discovered that her given name as registered is Marilyn and not Merlyn; hence, this petition.
In its September 28, 2005 Decision,[8] the RTC granted Mercaderas petition and directed the Office of the City
Civil Registrar of Dipolog City to correct her name appearing in her certificate of live birth, Marilyn Lacquiao
Mercadera, to MERLYN Lacquiao Mercadera. Specifically, the dispositive portion of the RTC Decision reads:
WHEREFORE, the petition is GRANTED. Accordingly, the Office of the City Civil Registrar of Dipolog City is
hereby directed to correct the given name of petitioner appearing in her certificate of live birth, from Marilyn
Lacquiao Mercadera to MERLYN Lacquiao Mercadera.
In a four-page decision, the RTC ruled that the documentary evidence presented by Mercadera
sufficiently supported the circumstances alleged in her petition. Considering that she had used Merlyn as her
given name since childhood until she discovered the discrepancy in her Certificate of Live Birth, the RTC was
convinced that the correction was justified.
The OSG timely interposed an appeal praying for the reversal and setting aside of the RTC decision. It mainly
anchored its appeal on the availment of Mercadera of the remedy and procedure under Rule 108. In its
Brief[9] filed with the CA, the OSG argued that the lower court erred (1) in granting the prayer for change of
name in a petition for correction of entries; and (2) in admitting the photocopies of documentary evidence and
hearsay testimony of Oga.
For the OSG, the correction in the spelling of Mercaderas given name might seem innocuous enough to grant
but it is in truth a material correction as it would modify or increase substantive rights. [10] What the lower
court actually allowed was a change of Mercaderas given name, which would have been proper had she filed
a petition under Rule 103 and proved any of the grounds therefor. The lower court, may not substitute one for
the other for purposes of expediency. [11] Further, because Mercadera failed to invoke a specific ground
recognized by the Rules, the lower courts order in effect allowed the change of ones name in the civil registry
without basis.
The CA was not persuaded. In its December 9, 2008 Decision, [12] the appellate court affirmed the questioned
RTC Order in CA-G.R. CV No. 00568-MIN. The CA assessed the controversy in this wise:
Appellants insistence that the petition should have been filed under Rule 103 and not Rule 108 of the Rules of
Court is off the mark. This Court does not entertain any doubt that the petition before the trial court was one for
the correction on an entry in petitioners Certificate of Live Birth and not one in which she sought
to change her name. In Co v. Civil Register of Manila, G.R. No. 138496, February 23, 2004, the High Court
reiterated the distinction between the phrases to correct and to change. Said the High Court:
To correct simply means "to make or set aright; to remove the faults or error from." To change means "to
replace something with something else of the same kind or with something that serves as a substitute. Article
412 of the New Civil Code does not qualify as to the kind of entry to be changed or corrected or distinguished
on the basis of the effect that the correction or change may be. Such entries include not only those clerical in
nature but also substantial errors. After all, the role of the Court under Rule 108 of the Rules of Court is to
ascertain the truths about the facts recorded therein.
That appellee sought to correct an entry and not to change her name is patent to the Court from the
allegations in her petition, specifically, paragraphs 7 and 8 thereof
xxxx
Anent the RTCs error in admitting the photocopies of Mercaderas documentary evidence and in vesting
probative value to Ogas testimony, the CA cited the well-established rule that evidence not objected to may
be admitted and may be validly considered by the court in arriving at its judgment. [13]
On March 6, 2009, the OSG filed the present petition. On behalf of Mercadera, the Public Attorneys Office
(PAO) filed its Comment[14] on July 3, 2009. The OSG declined to file a reply claiming that its petition already
contained an exhaustive discussion on the following assigned errors: [15]
I

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN GRANTING THE CHANGE IN

RESPONDENTS NAME UNDER RULE 103.

II
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN CONSIDERING SECONDARY
EVIDENCE.
Rule 103 procedurally governs judicial petitions for change of given name or surname, or both, pursuant to
Article 376 of the Civil Code.[16] This rule provides the procedure for an independent special proceeding in
court to establish the status of a person involving his relations with others, that is, his legal position in, or with
regard to, the rest of the community.[17] In petitions for change of name, a person avails of a remedy to alter
the designation by which he is known and called in the community in which he lives and is best
known.[18] When granted, a persons identity and interactions are affected as he bears a new label or
appellation for the convenience of the world at large in addressing him, or in speaking of, or dealing with
him.[19] Judicial permission for a change of name aims to prevent fraud and to ensure a record of the change
by virtue of a court decree.
The proceeding under Rule 103 is also an action in rem which requires publication of the order issued by the
court to afford the State and all other interested parties to oppose the petition. When complied with, the
decision binds not only the parties impleaded but the whole world. As notice to all, publication serves to
indefinitely bar all who might make an objection. It is the publication of such notice that brings in the whole
world as a party in the case and vests the court with jurisdiction to hear and decide it. [20]
Essentially, a change of name does not define or effect a change of ones existing family relations or in the
rights and duties flowing therefrom. It does not alter ones legal capacity or civil status. [21] However, there
could be instances where the change applied for may be open to objection by parties who already bear the
surname desired by the applicant, not because he would thereby acquire certain family ties with them but
because the existence of such ties might be erroneously impressed on the public mind. [22] Hence, in requests
for a change of name, what is involved is not a mere matter of allowance or disallowance of the request, but a
judicious evaluation of the sufficiency and propriety of the justifications advanced
x x x mindful of the
consequent results in the event of its grant x x x.[23]
Rule 108, on the other hand, implements judicial proceedings for the correction or cancellation of entries in the
civil registry pursuant to Article 412 of the Civil Code.[24] Entries in the civil register refer to acts, events and
judicial decrees concerning the civil status of persons, [25] also as enumerated in Article 408 of the same law.
[26]
Before, only mistakes or errors of a harmless and innocuous nature in the entries in the civil registry may
be corrected under Rule 108 and substantial errors affecting the civil status, citizenship or nationality of a party
are beyond the ambit of the rule. In the abandoned case of Chua Wee v. Republic,[27] this Court declared that,
x x x if Rule 108 were to be extended beyond innocuous or harmless changes or corrections of errors which
are visible to the eye or obvious to the understanding, so as to comprehend substantial and controversial
alterations concerning citizenship, legitimacy of paternity or filiation, or legitimacy of marriage, said Rule 108
would thereby become unconstitutional for it would be increasing or modifying substantive rights, which
changes are not authorized under Article 412 of the new Civil Code."
In the latter case of Wong v. Republic,[28] however, Justice Vicente Abad Santos, in a separate concurrence,
opined that Article 412, which Rule 108 implements, contemplates all kinds of issues and all types of
procedures because the provision does not say that it applies only to non-controversial issues and that the
procedure to be used is summary in nature. In Republic v. Judge De la Cruz,[29] the dissenting opinion
penned by Justice Pacifico De Castro echoed the same view:
It is not accurate to say that Rule 108 would be rendered unconstitutional if it would allow the correction of
more than mere harmless clerical error, as it would thereby increase or modify substantive rights which the
Constitution expressly forbids because Article 412 of the Civil Code, the substantive law sought to be
implemented by Rule 108, allows only the correction of innocuous clerical errors not those affecting the status
of persons. As was stressed in the dissent on the aforesaid Wong Case, Article 412 does not limit in its
express terms nor by mere implication, the correction authorized by it to that of mere clerical errors. x x x it
would be reasonable and justified to rule that Article 412 contemplates of correction of erroneous entry of
whatever nature, procedural safeguards having only to be provided for, as was the manifest purpose of Rule
108.
x x x proceedings for the correction of erroneous entry should not be considered as establishing one's status
in a legal manner conclusively beyond dispute or controversion, x x x the books making up the civil register

and all documents relating thereto x x x shall be prima facie evidence of the facts therein contained. Hence,
the status as corrected would not have a superior quality for evidentiary purpose. Moreover, the correction
should not imply a change of status but a mere rectification of error to make the matter corrected speak for the
truth. x x x
Finally in Republic v. Valencia,[30] the above stated views were adopted by this Court insofar as even
substantial errors or matters in a civil registry may be corrected and the true facts established, provided the
parties aggrieved avail themselves of the appropriate adversary proceeding. If the purpose of the petition is
merely to correct the clerical errors which are visible to the eye or obvious to the understanding, the court may,
under a summary procedure, issue an order for the correction of a mistake. However, as repeatedly
construed, changes which may affect the civil status from legitimate to illegitimate, as well as sex, are
substantial and controversial alterations which can only be allowed after appropriate adversary
proceedings depending upon the nature of the issues involved. Changes which affect the civil status or
citizenship of a party are substantial in character and should be threshed out in a proper action depending
upon the nature of the issues in controversy, and wherein all the parties who may be affected by the entries
are notified or represented and evidence is submitted to prove the allegations of the complaint, and proof to
the contrary admitted x x x.[31] Where such a change is ordered, the Court will not be establishing a
substantive right but only correcting or rectifying an erroneous entry in the civil registry as authorized by
law. In short, Rule 108 of the Rules of Court provides only the procedure or mechanism for the proper
enforcement of the substantive law embodied in Article 412 of the Civil Code and so does not violate the
Constitution.[32]
In the case at bench, the OSG posits that the conversion from MARILYN to MERLYN is not a correction of
an innocuous error but a material correction tantamount to a change of name which entails a modification or
increase in substantive rights. For the OSG, this is a substantial error that requires compliance with the
procedure under Rule 103, and not Rule 108.
It appears from these arguments that there is, to some extent, confusion over the scope and application of
Rules 103 and Rule 108. Where a change of name will necessarily be reflected by the corresponding
correction in an entry, as in this case, the functions of both rules are often muddled. While there is no clearcut rule to categorize petitions under either rule, this Court is of the opinion that a resort to the basic
distinctions between the two rules with respect to alterations in a persons registered name can effectively
clear the seeming perplexity of the issue. Further, a careful evaluation of circumstances alleged in the petition
itself will serve as a constructive guide to determine the propriety of the relief prayed for.
The change of name contemplated under Article 376 and Rule 103 must not be confused with Article 412
and Rule 108. A change of ones name under Rule 103 can be granted, only on grounds provided by law. In
order to justify a request for change of name, there must be a proper and compelling reason for the change
and proof that the person requesting will be prejudiced by the use of his official name. To assess the
sufficiency of the grounds invoked therefor, there must be adversarial proceedings. [33]
In petitions for correction, only clerical, spelling, typographical and other innocuous errors in the civil registry
may be raised. Considering that the enumeration in Section 2, Rule 108[34] also includes changes of name,
the correction of a patently misspelled name is covered by Rule 108. Suffice it to say, not all alterations
allowed in ones name are confined under Rule 103. Corrections for clerical errors may be set right under Rule
108.
This rule in names, however, does not operate to entirely limit Rule 108 to the correction of clerical errors in
civil registry entries by way of a summary proceeding. As explained above, Republic v. Valencia is the
authority for allowing substantial errors in other entries like citizenship, civil status, and paternity, to be
corrected using Rule 108 provided there is an adversary proceeding. After all, the role of the Court under
Rule 108 is to ascertain the truths about the facts recorded therein. [35]
A serious scrutiny of this petition reveals a glaring lack of support to the OSGs assumption that Mercadera
intended to change her name under Rule 103. All that the petition propounded are swift arguments on the
alleged procedural flaws of Mercaderas petition before the RTC. In the same vein, no concrete contention
was brought up to convince this Court that the dangers sought to be prevented by the adversarial proceedings
prescribed in Rule 103 are attendant in this case. Instead, the RTC found the documents presented by
Mercadera to have satisfactorily shown that she had been known as MERLYN ever since, discounting the
possibility that confusion, or a modification of substantive rights might arise. Truth be told, not a single
oppositor appeared to contest the petition despite full compliance with the publication requirement.
Thus, the petition filed by Mercadera before the RTC correctly falls under Rule 108 as it simply sought a
correction of a misspelled given name. To correct simply means to make or set aright; to remove the faults or
error from. To change means to replace something with something else of the same kind or with something
that serves as a substitute.[36] From the allegations in her petition, Mercadera clearly prayed for the lower
court to remove the faults or error from her registered given name MARILYN, and to make or set aright

the same to conform to the one she grew up to, MERLYN. It does not take a complex assessment of said
petition to learn of its intention to simply correct the clerical error in spelling. Mercadera even attempted to
avail of the remedy allowed by R.A. No. 9048 but she unfortunately failed to enjoy the expediency which the
law provides and was constrained to take court action to obtain relief. Thus, the petition was clear in stating:

SO ORDERED.

7. That as such, there is a need to correct her given name as appearing in her Certificate of Live Birth from
MARILYN to MERLYN to conform to her true and correct given name that she had been using and had
been known within the community x x x.
8. That herein petitioner went to the Office of the Local Civil Registrar of Dipolog City and requested them to
effect such correction in her Certificate of Live Birth, however, the Local Civil Registrar of Dipolog City will
not effect such correction unless an order is obtained by herein petitioner from this Honorable Court
because the Local Civil Registrar therein is not yet equipped with permanent appointment before he
can validly act on petitions for corrections filed before their office as mandated by Republic Act
9048, hence the filing of this petition. [Emphases supplied]

SPOUSES FERNANDO TORRES and IRMA TORRES,

Petitioners,

-versusIndeed, there are decided cases involving mistakes similar to Mercaderas case which recognize the same
a harmless error. In Yu v. Republic[37] it was held that to change Sincio to Sencio which merely involves the
substitution of the first vowel i in the first name into the vowel e amounts merely to the righting of a clerical
error. InLabayo-Rowe v. Republic,[38] it was held that the change of petitioners name from Beatriz
Labayo/Beatriz Labayu to Emperatriz Labayo was a mere innocuous alteration wherein a summary
proceeding was appropriate. In Republic v. Court of Appeals, Jaime B. Caranto and Zenaida P. Caranto, the
correction involved the substitution of the letters ch for the letter d, so that what appears as Midael as
given name would read Michael. In the latter case, this Court, with the agreement of the Solicitor General,
ruled that the error was plainly clerical, such that, changing the name of the child from Midael C. Mazon to
Michael C. Mazon cannot possibly cause any confusion, because both names can be read and pronounced
with the same rhyme (tugma) and tone (tono, tunog, himig).[39]
In this case, the use of the letter a for the letter e, and the deletion of the letter i, so that what appears as
Marilyn would read as Merlyn is patently a rectification of a name that is clearly misspelled. The similarity
between Marilyn and Merlyn may well be the object of a mix- up that blemished Mercaderas Certificate of
Live Birth until her adulthood, thus, her interest to correct the same.

AMPARO MEDINA and the EX-OFFICIO SHERIFF of the RTC of Quezon City,
Respondents.
G.R. No. 166730
Present:
CORONA, J., Chairperson,
VELASCO, JR.,
NACHURA,
PERALTA, and
MENDOZA, JJ.

The CA did not allow Mercadera the change of her name. What it did allow was the correction of her
misspelled given name which she had been using ever since she could remember.
It is worthy to note that the OSGs reliance on Republic vs. Hernandez[40] is flawed. In that case, this Court
said that a change in a given name is a substantial matter and that it cannot be granted by means of any
other proceeding that would in effect render it a mere incident or an offshoot of another special
proceeding. While this Court stands true to the ruling in Hernandez, the said pronouncement therein was
stated in a different tenor and, thus, inapplicable to this case. Hernandez was decided against an entirely
different factual milieu. There was a petition for adoption that must not have led to a corresponding change in
the adoptees given name because it would be procedurally erroneous to employ a petition for adoption to
effect a change of name in the absence of a corresponding petition for the latter relief at law. In the present
case, the issue is the applicability of either Rule 103 or Rule 108 and the relief sought by Mercadera can in
fact be granted under the latter. This Court finds no attempt on the part of Mercadera to render the
requirements under Rule 103 illusory as in Hernandez.

Promulgated:
March 10, 2010
x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:
Besides, granting that Rule 103 applies to this case and that compliance with the procedural requirements
under Rule 108 falls short of what is mandated, it still cannot be denied that Mercadera complied with the
requirement for an adversarial proceeding before the lower court. The publication and posting of the notice of
hearing in a newspaper of general circulation and the notices sent to the OSG and the Local Civil Registry are
sufficient indicia of an adverse proceeding. The fact that no one opposed the petition, including the OSG, did
not deprive the court of its jurisdiction to hear the same and did not make the proceeding less adversarial in
nature. Considering that the OSG did not oppose the petition and the motion to present its
evidence ex parte when it had the opportunity to do so, it cannot now complain that the proceedings in the
lower court were procedurally defective. Indeed, it has become unnecessary to further discuss the reasons
why the CA correctly affirmed the findings of the lower court especially in admitting and according probative
value to the evidence presented by Mercadera.
WHEREFORE, the December 9, 2008 Decision of the Court of Appeals in CA-G.R. CV No. 00568-MIN
is AFFIRMED.

Before this Court is a Petition for Review on certiorari,[1] under Rule 45 of the Rules of Court, seeking to set
aside the August 30, 2004 Decision[2] and January 18, 2005 Resolution[3] of the Court of Appeals (CA) in CAG.R. CV No. 75847.
The facts of the case:
On July 28, 1994, respondent Amparo Medina (Medina) wrote a letter[4] to the Office of the Sheriff, Regional
Trial Court (RTC) of Quezon City, applying for the extrajudicial foreclosure of mortgage of the property of
petitioner spouses Fernando and Irma Torres (Spouses Torres) which was covered by Transfer Certificate of
Title No. RT-61056 (354973) and which is subject of a Deed of Mortgage[5] dated December 20, 1993.
On May 27, 1997, the Office of the Ex-Officio Sheriff issued a Notice of Sheriffs Sale[6] and, on June 30,
1997, sold at public auction the subject property to Medina being the highest bidder thereof. A Certificate of
Sale[7] was thereafter issued to Medina.

On September 21, 1999, the Spouses Torres filed a Complaint[8] before the RTC of Quezon City for the
declaration of nullity of the extrajudicial foreclosure of mortgage conducted by the Ex-Officio Sheriff. The same
was docketed as Civil Case No. Q-99-38781.

A.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT IGNORED THAT THE CAUSE OF
ACTION IN CIVIL CASE NO. Q-99-38781 AROSE MUCH LATER THAN THE CAUSE OF ACTION IN CIVIL
CASE NO. Q-94-18962. HENCE, FORUM SHOPPING AND RES JUDICATA DO NOT APPLY.

In their Complaint, the Spouses Torres raised the following causes of action, to wit:

A-1. ASSUMING WITHOUT ADMITTING THAT RES JUDICATA EXISTS IN THIS CASE, THE SAME WILL
NOT BE HONORED IF ITS APPLICATION WOULD CONSTITUTE A SACRIFICE OF JUSTICE IN FAVOR OF
TECHNICALITY;

a)
the December 20, 1993 Deed of Real Estate Mortgage does not contain a period or term; hence,
performance of the obligation has not yet become due as there is a need for judicial determination of the
period or term;
b)
the June 28, 1994 Statement of Account is not the loan contemplated by law; therefore, it cannot
serve as basis to foreclose extrajudicially the mortgage;
c)
the credit transaction is either void or unenforceable due to breach of Section 6(a) of Republic Act
No. 3765, otherwise known as The Truth in Lending Act;
d)
Since appellee sued appellants for violation of Batas Pambansa Blg. 22, there could arise a situation
of double recovery of damages which is proscribed by law. If the extrajudicial foreclosure will be allowed and if
appellants will be made to pay the amount of the checks subject of the criminal suit under B.P. Blg. 22, it would
result in the unjust enrichment of appellee.[9]

On July 20, 2000, Medina filed a Motion to Dismiss[10] raising the grounds of res judicata and forum shopping.
Medina argued that the Spouses Torres had filed an earlier Complaint[11] praying for the annulment of the real
estate mortgage involving the same property and which was docketed as Civil Case No. Q-94-18962 before
the RTC of Quezon City, Branch 216. Medina contended that said complaint was already dismissed as
evidenced by the RTCs Decision[12] dated March 7, 1997.

B.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE
CAUSES OF ACTION CANNOT BE IDENTICAL IF THE CAUSE OF ACTION IN ONE AROSE AFTER THE
JUDGMENT IN THE OTHER;
C.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE
EXTRAJUDICIAL FORECLOSURE OF MORTGAGE INSTITUTED BY PRIVATE RESPONDENT AMPARO
MEDINA CONTRAVENES THE EQUITABLE PRINCIPLE OF UNJUST ENRICHMENT CODIFIED UNDER
ARTICLE 22 OF THE NEW CIVIL CODE, AND WOULD AMOUNT TO DOUBLE RECOVERY EVEN AS THE
B.P. BLG. 22 VIOLATIONS ARE STILL PENDING IN THE METROPOLITAN TRIAL COURT OF QUEZON
CITY;

D.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE
PRIVATE RESPONDENT AMPARO MEDINA HAS ELECTED HER REMEDY WHEN SHE SUED
PETITIONER FERNANDO TORRES ON A B.P. BLG. 22 VIOLATION, AND ENGAGED THE SERVICES OF A
PRIVATE PROSECUTOR TO PROSECUTE THE SAME. THE FILING OF THE B.P. BLG. 22 VIOLATION
BARS AND EXCLUDES THE REMEDY OF FORECLOSURE OF MORTGAGE.[18]

The petition is not meritorious.

On December 27, 2001, the RTC issued an Order[13] granting Medinas motion to dismiss the complaint. The
RTC ruled that res judicata was present and that the Spouses Torres were guilty of forum shopping, to wit:
Thus, it is plain from the foregoing that the present action is identical to the case filed by plaintiffs against the
defendant before the Regional Trial Court of Quezon City, Branch 216, hence, res judicata lies. The decision
of the Regional Trial Court of Quezon City, Branch 216, dated March 7, 1997, has become final; the aforesaid
court which rendered said decision had jurisdiction over the subject matter and the parties; the decision was
on the merits; and there is an identity of parties, subject matter and causes of action between the present
action and the case before the Regional Trial Court of Quezon City, Branch 216.
The Court also notes that while the plaintiffs here alleged separate causes of action in the instant complaint,
they are actually using the very same grounds they have brought before Branch 216 of this Court to support
their claim to annul the foreclosure proceedings. The validity of the real estate mortgage is again being
assailed to ask for the annulment of the foreclosure proceedings conducted over the mortgaged property. It
must be remembered that the validity of the real estate mortgage has been sustained by the decision in Civil
Case No. 94-18962 which decision has already attained finality. The test of identity of causes of action lies not
in the form of an action but on whether the same evidence would support and establish the former and present
causes of action. Plaintiffs cannot avoid the application of res judicata by simply varying the form of their
action or by adopting a different method in presenting it.[14]
The Spouses Torres appealed to the CA, which, in similar fashion, ruled that res judicata had already set in,
the dispositive portion of which reads:
WHEREFORE, the Order dated December 27, 2001 is hereby AFFIRMED and the appeal is DISMISSED.
Costs against appellants.

At the crux of the controversy is the determination of whether or not res judicata bars the filing of Civil
Case No. Q-99-38781.
Civil Case No. Q-94-18962 vis-a-vis Civil Case No. Q-99-38781
As borne from the records of the case, the Spouses Torres first instituted Civil Case No. Q-94-18962
before the RTC of Quezon City, Branch 216, which, among others, prayed for the nullity of the real estate
mortgage, dated December 20, 1993.
On March 7, 1997, the RTC issued a Decision[19] dismissing the complaint thereby upholding the
validity of the real estate mortgage, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1.

DISMISSING the plaintiffs complaint for lack of merit;

2.
Ordering the plaintiffs, spouses Fernando Torres and Irma Torres, to pay defendant Amparo
Medina, the sum of FIFTY THOUSAND (P50,000.00) PESOS as and by way of attorneys fees and to pay the
costs of suit.
SO ORDERED.[20]

SO ORDERED.[15]
The Spouses Torres then filed a Motion for Reconsideration[16] dated August 30, 2004, which was, however,
denied by the CA in the Resolution[17] dated January 18, 2005.
Hence, herein petition, with the Spouses Torres raising the following assignment of errors, to wit:

The Spouses Torres appealed said Decision to the CA.

On February 18, 1998, the CA issued a Resolution[21] dismissing the appeal, the dispositive portion of
which reads:

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the appellants motion for extension of time to file
appellants brief is hereby DENIED for being filed out of time. The appeal is hereby DISMISSED.
SO ORDERED.[22]

The Spouses Torres then filed a Motion for Reconsideration, which was, however, denied by the CA in
the Resolution[23] dated August 6, 1998.
Aggrieved, the Spouses Torres then sought relief from this Court.
On July 5, 1999, the Courts First Division issued a Resolution[24] denying the petition of the Spouses Torres.
On August 16, 1999, the First Division issued another Resolution[25] denying the motion for reconsideration.
On September 7, 1999, an Entry of Judgment[26] was rendered.
Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment."[27] Res judicata lays the rule that an existing final judgment or decree rendered
on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its
jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or
any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.[28]
The elements of res judicata are:

This Court has previously employed various tests in determining whether or not there is identity of causes of
action as to warrant the application of the principle of res judicata. One test of identity is the "absence of
inconsistency test" where it is determined whether the judgment sought will be inconsistent with the prior
judgment. If no inconsistency is shown, the prior judgment shall not constitute a bar to subsequent actions.[32]
This Court finds that the first three causes of action inevitably deal with the validity of the real estate mortgage.
Although the Spouses Torres do not admit it, the conclusion is certain in that any affirmative relief that this
Court may grant on said causes of action would affect the validity of the real estate mortgage; an issue which
could no longer be revived, as the same has been settled.
In Civil Case No. Q-94-18962, the Spouses Torres already assailed the validity of the Real Estate Mortgage
dated December 20, 1993 as evidenced from the reliefs sought for by them, to wit:
WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court to render judgment as
follows:
1.

Declaring the x x x Deed of Real Estate Mortgage dated 20 December 1993 (Exhibit E) void;

2. Declaring that x x x all RCBC checks issued pursuant to the Deed of Real Estate Mortgage dated 20
December 1993 as likewise void;
3. Directing defendant Register of Deeds of Quezon City to cancel the annotation of the real estate
mortgage in TCT No. RT-61056; x x x [33]

(1) the judgment sought to bar the new action must be final;
(2) the decision must have been rendered by a court having jurisdiction over the subject matter and the
parties;

In dismissing the Complaint, the RTC decision in Civil Case No. 94-18962 was categorical in upholding the
validity of the instrument, to wit:

(3) the disposition of the case must be a judgment on the merits; and
(4) there must be as between the first and second action identity of parties, subject matter, and causes of
action.[29]

The contention that the Deed of Real Estate Mortgage dated December 20, 1993 should also be annulled
being the fruit of the previous voidable contracts deserves scant consideration. The same was found to have
the essential elements of a valid contract x x x.
xxxx

In their petition, the Spouses Torres do not dispute the presence of the first three elements. They, however,
dispute the presence of the last element, specifically arguing that the evidence necessary to establish the
cause of action in Civil Case No. Q-99-38781 is different from that of Civil Case No. Q-94-18962. The
Spouses Torres conclude that the evidence is not identical so as to place the causes of action within the
prohibition based on res judicata.[30]
This Court is not persuaded.

Corollarily, the Deed of Real Estate Mortgage, dated December 20, 1993, being perfectly valid, defendant
Amparo Medina has the right to its registration in her favor. x x x [34]

It bears stressing that the doctrine of res judicata actually embraces two different concepts: (1) bar by former
judgment and (b) conclusiveness of judgment.

To reiterate, in Civil Case No. Q-99-38781, the Spouses Torres raised the following causes of action:
a)
the December 20, 1993 Deed of Real Estate Mortgage does not contain a period or term; hence,
performance of the obligation has not yet become due as there is a need for judicial determination of the
period or term;
b)
the June 28, 1994 Statement of Account is not the loan contemplated by law; therefore, it cannot serve
as basis to foreclose extrajudicially the mortgage;
c)
the credit transaction is either void or unenforceable due to breach of Section 6(a) of Republic Act No.
3765, otherwise known as The Truth in Lending Act;
d) Since appellee sued appellants for violation of Batas Pambansa Blg. 22, there could arise a situation of
double recovery of damages which is proscribed by law. If the extrajudicial foreclosure will be allowed and if
appellants will be made to pay the amount of the checks subject of the criminal suit under B.P. Blg. 22, it would
result in the unjust enrichment of appellee.[31]

The second concept conclusiveness of judgment states that a fact or question which was in issue in a
former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is
conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them
are concerned and cannot be again litigated in any future action between such parties or their privies, in the
same court or any other court of concurrent jurisdiction on either the same or different cause of action, while
the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one
action can be conclusive as to a particular matter in another action between the same parties or their privies, it
is essential that the issue be identical. If a particular point or question is in issue in the second action, and the
judgment will depend on the determination of that particular point or question, a former judgment between the
same parties or their privies will be final and conclusive in the second if that same point or question was in
issue and adjudicated in the first suit. Identity of cause of action is not required, but merely identity of issues.
[35]
Based on the foregoing, the validity of the real estate mortgage can no longer be attacked, more so because
the decision in Civil Case No. Q-94-18962 has become final and Entry of Judgment has already been entered
in our books.

It therefore goes without saying that the foreclosure of the mortgage is a right given to Medina as the same is
embodied in the Deed of Real Estate Mortgage, to wit:
xxxx
That it is further understood that if the MORTGAGOR shall well and truly perform the obligation above
contracted then this Mortgage shall be null and void; otherwise, it shall remain in full force and effect and may
be foreclosed extrajudicially under Act 3135 as amended.[36]

Thus, this Court finds no error in the decisions of the lower court and the appellate court declaring that there
exists, in fact, res judicata. As succinctly put in FELS Energy, Inc. v. Province of Batangas,[37] res judicata, as
a ground for dismissal, is based on two grounds, namely:
(1) public policy and necessity, which makes it to the interest of the State that there should be an end to
litigation --- republicae ut sit litium; and (2) the hardship on the individual of being vexed twice for the same
cause --- nemo debet bis vexari et eadem causa. A conflicting doctrine would subject the public peace and
quiet to the will and dereliction of individuals and prefer the regalement of the litigious disposition on the part of
suitors to the preservation of the public tranquility and happiness.[38]
Anent the fourth cause of action in Civil Case No. Q-99-38781, this Court finds that the Spouses Torres had
already raised, in Civil Case No. 94-18962, the fact that eleven (11) counts of Batas Pambansa Bilang (B.P.
Blg.) 22 violations are pending with Branch 36, Metropolitan Trial Court (MeTC), Quezon City.[39] Thus, the
RTC is correct in its observation that res judicata lies, as the Rizal Commercial Banking Corporation (RCBC)
checks referred to in the complaint in Civil Case No. Q-99-38781 are the very same documents subject of Civil
Case No. Q-94-18962.[40]
The foregoing findings notwithstanding, the Spouses Torres contend that the election of Medina from sue them
for violation of B.P Blg. 22 bars Medina from the remedy of foreclosure of mortgage. The Spouses Torres,
citing Bank of America NT & SA v. American Realty Corporation (Bank of America),[41] thus argue:
x x x the remedies available to the mortgage creditor are deemed alternative and not cumulative. Notably, an
election of one remedy operates as a waiver of the other. For this purpose, a remedy is deemed chosen upon
the fling of the suit for collection or upon the filing of the complaint in an action for foreclosure of mortgage,
pursuant to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such
remedy is deemed elected by the mortgage creditor upon filing of the petition not with any court of justice but
with the Office of the Sheriff of the province where the sale is to be made, in accordance with the provisions of
Act No. 3135, as amended by Act No. 4118.[42]

The argument of the Spouses Torres is misplaced. The doctrine found in Bank of America, and in related
cases, finds no application to the case at bar, as the filing of a B.P. Blg. 22 case is not the collection suit
contemplated by law and jurisprudence, which bars a mortgagee from later on electing to foreclose the
mortgaged property.
Section 1 of B.P. Blg. 22 provides:
Section 1. Checks without sufficient funds. - Any person who makes or draws and issues any check to apply
on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the
drawee bank for the payment of such check in full upon its presentment, which check is subsequently
dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the
same reason had not the drawer, without any valid reason, ordered the bank to stop payment, shall be
punished by imprisonment of not less than thirty days but not more than one (1) year or by a fine of not less
than but not more than double the amount of the check which fine shall in no case exceed Two Hundred
Thousand Pesos, or both such fine and imprisonment at the discretion of the court.

It bears stressing that in Que v. People,[43] this Court stated that the clear intention of the framers of B.P. Blg.
22 is to make the mere act of issuing a worthless check malum prohibitum. In prosecutions for violation of B.P.
Blg. 22 therefore, prejudice or damage is not a pre-requisite for conviction. In the later case of People v.
Nitafan,[44] this Court ruled that the agreement surrounding the issuance of the checks need not be first
looked into since the law has clearly provided that the mere issuance of any kind of check, regardless of the
intent of the parties, i.e., whether the check is intended merely to serve as a guarantee or deposit, but which
check is subsequently dishonored, makes the person who issued the check liable. The intent of the law is to
curb the proliferation of worthless checks as a means of payment of obligations.
That B.P. Blg .22 is not the collection suit contemplated by law can be seen by the fact that the law
seeks to punish the mere issuance of a bum check notwithstanding the presence of damage or prejudice to
the offended party.
Lastly, the Spouses Torres also argue that the equitable principle of unjust enrichment bars the
extrajudicial foreclosure of the mortgage, in the wise:
If private respondent Amparo Medina were to be allowed the extrajudicial foreclosure that she caused to be
conducted, and eventually owned the properties covered by TCT No. RT-61056 (354973) and at the same
time is awarded the sum of Php 4,730,000.00 (including interest) in the eleven (11) counts of B.P. Blg. 22
violations now pending at the Metropolitan Trial Court of Quezon City, Branch 36, then she would have
recovered twice the same loan transaction that took place in the first quarter of 1993. Private respondent
Amparo Medina will be twice richer.[45]

Again, these arguments are misplaced. In Lazaro v. Court of Appeals,[46] notwithstanding petitioner
Lazaros claim that she had already paid her obligation, this Court still found her liable for violation of B.P Blg.
22, thus:
That the obligation of Marlyn Lazaro to complainant Chua has been extinguished by the conveyance by the
former of her car to Chua does not also justify the cancellation of the indemnity awarded. It should be noted
that BP 22 provides that a fine of not less than but not more than double the amount of the dishonored check
may be imposed by the court. In the case of Esler vs. Ledesma, this Court stated that a fine is a pecuniary
punishment imposed by a lawful tribunal upon a person convicted of a crime. Clearly, the fine provided for in
BP 22 was intended as an additional penalty for the act of issuing a worthless check. This is the only logical
conclusion, since the law does not require that there be damage or prejudice to the individual complainant by
reason of the issuance of the worthless check.[47]

There can be no double compensation as the indemnity award is distinct from the underlying obligation of the
check. Thus, a person guilty of violating B.P Blg. 22 may be subject to imprisonment or a fine at the discretion
of the court and the fact that the underlying obligation has been paid is of no moment. There will be instances,
of course, that the court will also order the guilty party to pay the face value of the check if the underlying
obligation has not yet been satisfied; however, the same will not apply to the case at bar, as Medina has
already been compensated for the loan after foreclosing the mortgage. The Spouses Torres will, therefore,
only have to pay a fine or suffer imprisonment if found guilty in their pending cases for violation of B.P. Blg. 22
subject to the rule of preference embodied in Supreme Court Administrative Circular 12-2000.[48]
The Spouses Torres argue that res judicata should not apply if it will sacrifice justice to technicality.[49] Indeed,
as cited by the Spouses Torres, this Court has on occasion disregarded the application of res judicata,
however, this Court finds that the same consideration should not be given in herein petition.
In the first place, the Spouses Torres only filed their complaint in Civil Case No. Q-99-38781 after more than
two years had already lapsed from the time the ex-officio sheriff sold the property in question at public auction.
The foreclosure proceeding was an action in rem, and therefore, the Spouses Torres cannot feign knowledge
thereof. More importantly, the Spouses Torres were not completely left without any remedy as they still had the
right of redemption, which expired one year from and after the date of the registration of the Certificate of Sale.
In the absence of evidence to the contrary, this Court must assume that no attempt to redeem the property
was undertaken by the Spouses Torres and that they simply allowed their right and remedy to lapse by their
inaction.

In addition, the Spouses Torres have already lost their right to question the validity of the real estate
mortgage, for most part due to the negligence of their counsel.[50] More importantly, the decision upholding
the validity of the real estate mortgage is already final; hence, the same can no longer be questioned in
another proceeding by simply varying the form of the action, or adopting a different method of presenting their
case.[51]
WHEREFORE, premises considered, the petition is DENIED. The August 30, 2004 Decision and January 18,
2005 Resolution of the Court of Appeals in CA-G.R. CV No. 75847 are AFFIRMED.
SO ORDERED.

ZENAIDA ACOSTA, EDUARDO ACOSTA, ARNOLD ACOSTA, DELIA ACOSTA,

SPS. TEODULO MACHADO AND AURORA ORENZA, SPS. ROLDAN
PALARCA AND PACITA PANGILINAN, SPS. FROMENCIO JONATAS AND
LUCENA M. MARIANO, SPS. MARCIAL IGLESIA AND VIRGINIA LAPURGA,
ATTY.-IN-FACT FELINO MACARAEG, SPS. MANUEL MANGROBANG AND
VALERIANA SOTIO, SPS. VIRGINIA DELA ROSA AND ROMEO DELA ROSA,
SPS. PACIFICO SOTIO AND LOLITA SORIANO, JUAN DALINOC
(DECEASED), REPRESENTED BY DAUGHTER CONSUELO DALINOC, SPS.
MARIANO TORIO AND MAXIMA MACARAEG, REPRESENTED BY LEGAL
HEIRS TORIBIA TORIO AND MAYUMI MACARAEG, TEOFILO MOLINA AND
AVELINO DIZON,
Petitioners,
- versus -

G.R. No. 161034

Present:
YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

TRINIDAD SALAZAR AND ANICETA SALAZAR,

Respondents.

Promulgated:
June 30, 2009

x------------------------------------------------------------------------------------x

A to 702-V were taken, is non-existent and, thus, the court should cause the cancellation and revocation of
spurious and null and void titles and tax declarations. [16]
DECISION
NACHURA, J.:
This is a petition for review on certiorari assailing the July 25, 2003 Decision[1] of the Court of Appeals
(CA) as well as its November 25, 2003 Resolution [2] in CA-G.R. CV No. 70161, which reversed and set aside
the December 20, 2000 Decision[3] of the Regional Trial Court (RTC), Branch 64, Tarlac City in Civil Case No.
7256. Said RTC decision dismissed the complaint for quieting of title filed by herein respondents Trinidad
Salazar and Aniceta Salazar against petitioners.
Below are the facts.
On November 19, 1985, respondents Trinidad and Aniceta Salazar (hereinafter, Salazars), filed a
petition for the cancellation of the entries annotated at the back of Original Certificate of Title (OCT) No. 40287
registered in the names of spouses Juan Soriano and Vicenta Macaraeg, who died without issue. [4] The
Salazars claim that two of the entries Entry Nos. 19756 and 20102 annotated at the back of the aforesaid
title are void since no consolidation of rights appear in the Registry of Deeds (RD) of Tarlac to support the
entries; and that Transfer Certificate of Title (TCT) No. 9297, which supposedly cancelled OCT No. 40287, is
non-existent according to a certification issued by the RD.[5] On October 21, 1986, RTC Branch 63 of Tarlac
resolved to grant the petition and ordered the cancellation of Entry No. 20102. [6] No respondent was impleaded
in the said petition.
Subsequently, the Salazars filed an urgent motion praying for the issuance of an order to direct the RD
of Tarlac to recall all titles issued under Entry Nos. 19756 and 20102 and to cancel all the tax declarations
issued based thereon. The motion was granted in an Order issued on November 7, 1986. [7]
On November 20, 1986, the Salazars filed a second urgent motion praying that the owners of the
affected property be ordered to appear before the court to show cause why their titles should not be cancelled.
[8]

On October 20, 1987, the Salazars filed a new motion praying that the RD of Tarlac be ordered to
comply with the courts order issued on November 7, 1986. The RD, however, explained that to comply with
the said court order would remove the basis for the issuance of TCT No. 9297 which title had, in turn, been
cancelled by many other transfer certificates of title and would indubitably result in the deprivation of the right
to due process of the registered owners thereof.[9] On this basis, the RTC denied the motion and advised the
Salazars to elevate the matter en consulta to the Land Registration Commission (now Land Registration
Authority or LRA). After the Salazars moved for reconsideration, the RTC directed the RD of Tarlac to comply
with the October 21, 1986 and November 7, 1986 orders. Threatened with contempt, the RD elevated the
matter en consulta to the National Land Titles and Deeds Registration Administration, which, in turn, issued a
resolution directing the RD to comply with the RTCs orders.[10] On March 7, 1989, OCT No. 40287 was
reconstituted and TCT No. 219121 was issued in the names of the Salazars, sans Entry Nos. 19756 and
20102.
It was at this stage of the proceedings that herein petitioners together with other subsequent purchasers
for value of the disputed property twenty-seven (27) titleholders in all [11] filed their formal written comment
dated April 17, 1989.[12] In their comment, the oppositors contended, among others, that they had acquired
their titles in good faith and for value, and that the lower court, acting as a land registration court, had no
jurisdiction over issues of ownership.[13]

Defendants filed three separate answers. Defendants Raymundo Macaraeg, Martha Estacio (both
deceased), Adelaida Macaraeg, Lucio Macaraeg, represented by Eufracia Macaraeg Baluyot as attorney-infact, Gregorio Baluyut and Eligia Obcena (hereinafter, Macaraegs) maintained that the November 7, 1986
order of the RTC is null and void because the court did not acquire jurisdiction over the case. They also
argued that TCT No. 219121 issued in the name of the Salazars is void and that the case for quieting of title is
not a direct, but a collateral, attack against a property covered by a Torrens certificate.[17]
Defendants, now herein petitioners, for their part, maintained that the Plan of Consolidation Subdivision
Survey Pcs-396 had been an existing consolidation-subdivision survey plan annotated on OCT No. 40287
under Entry No. 20102 dated February 17, 1950 from which TCT No. 9297 was issued covering Lot Nos. 702A to 702-V, inclusive, in the names of the heirs of Juan Soriano. They argued that TCT No. 219121 issued in
the name of the Salazars is spurious and null and void from the beginning since it was acquired pursuant to an
illegal order issued by the court.[18] By way of special and affirmative defenses, they also alleged, among
others, (1) that the Salazars were not among the heirs of the late Juan Soriano, not within the fifth civil degree
of consanguinity, and hence, they have no right to inherit; (2) that TCT No. 219121 constitutes a cloud upon
the Torrens title of herein petitioners, and should therefore be cancelled and revoked; (3) that assuming,
without admitting, that the Salazars have any right over the lots in question their right to enforce such action
had already prescribed by laches or had been barred by prescription since more than forty (40) years had
lapsed since the heirs of Juan Soriano had registered the lots in question under TCT No. 9297 on February
17, 1950; and (4) that petitioners and/or their predecessors-in-interest acquired the lots in question in good
faith and for value from the registered owners thereof.[19]
Defendant spouses Francisco Jonatas and Lucena M. Mariano and spouses Manuel Mangrobang and
Valeriana Sotio filed their answers practically raising the same defenses. [20]
Meanwhile, on July 29, 1991, petitioners, together with the Macaraegs and Jonatas, et al., filed before
the CA a petition for annulment of judgment[21] rendered by RTC Branch 63 of Tarlac, Tarlac. The case,
docketed as CA-G.R. SP No. 25643, was, however, dismissed on the ground of litis pendencia.[22]
On December 20, 2000, Branch 64 of the RTC of Tarlac dismissed the complaint for quieting of title. The
trial court faulted the Salazars for failure to present proof that they are heirs of the late Juan Soriano. [23] It also
declared TCT No. 219121 issued in the name of the Salazars as null and void, and affirmed TCT No. 9297 as
well as all certificates of title derived therefrom.[24]
Unsatisfied, the Salazars appealed to the CA,[25] which ruled in their favor.
According to the CA, it was erroneous for Branch 64 of the RTC of Tarlac to reverse and declare as null
and void the decision of Branch 63, which is a court of equal rank. Such issue should have been properly
ventilated in an action for annulment of final judgment. Consequently, the orders issued by RTC Branch 63,
had become final and executory, hence, covered by res judicata.[26]
The CA also struck down the arguments raised by the appellees that the orders of RTC Branch 63 are
null and void for lack of proper notice. It ratiocinated that the proceeding is a land registration proceeding,
which is an action in rem. This being so, personal notice to the owners or claimants of the land sought to be
registered is not necessary in order to vest the court with jurisdiction over the res and over the parties.[27]
A motion for reconsideration[28] was filed, but the same was denied. [29] Hence, this petition.
Pivotal to the resolution of this case is the determination of the validity of the action taken by the
Salazars in Branch 63 of the RTC of Tarlac.

On September 14, 1989, the said court, apparently realizing its mistake, issued an Order, stating thus:
We rule for petitioners.
Upon motion of Atty. Alcantara and without objection on the part of Atty. Molina and Atty. Lamorena, all
the incidents in this case are hereby withdrawn without prejudice to the filing of an appropriate action in a
proper forum.
SO ORDERED.[14]
This prompted the Salazars to file a complaint for quieting of title impleading herein petitioners as well
as other individuals who claim to have purchased the said property from the heirs of Juan Soriano. The case
was docketed as Civil Case No. 7256 before Branch 64 of the RTC of Tarlac. [15] The complaint alleged that
TCT No. 219121 was issued in the names of the Salazars without Entry Nos. 19756 and 20102 at the back of
said title, but the previous TCTs issued by the RD of Tarlac as well as the tax declarations existing in the
Assessors Office have not been cancelled and revoked by the said government agencies to the detriment and
prejudice of the complainants (herein respondents). They also alleged that Pcs-395, from which Lot Nos. 702-

It is true that the registration of land under the Torrens system is a proceeding in rem and not in
personam. Such a proceeding in rem, dealing with a tangible res, may be instituted and carried to judgment
without personal service upon the claimants within the state or notice by mail to those outside of it. Jurisdiction
is acquired by virtue of the power of the court over the res. Such a proceeding would be impossible were this
not so, for it would hardly do to make a distinction between constitutional rights of claimants who were known
and those who were not known to the plaintiff, when the proceeding is to bar all. [30]
Interestingly, however, the proceedings instituted by the Salazars both in Branch 63 of the RTC of
Tarlac for the cancellation of entries in OCT No. 40287 and later in Branch 64 of the RTC of Tarlac for quieting
of title can hardly be classified as actions in rem. The petition for cancellation of entries annotated at the
back of OCT No. 40287 ought to have been directed against specific persons: namely, the heirs of Juan

Soriano as appearing in Entry No. 20102 and, indubitably, against their successors-in-interest who have
acquired different portions of the property over the years because it is in the nature of an action quasi in
rem. Accordingly, the Salazars should have impleaded as party defendants the heirs of Juan Soriano and/or
Vicenta Macaraeg as well as those claiming ownership over the property under their names because they are
indispensable parties. This was not done in this case.[31] Since no indispensable party was ever impleaded by
the Salazars in their petition for cancellation of entry filed before Branch 63 of the RTC of Tarlac, herein
petitioners are not bound by the dispositions of the said court. [32] Consequently, the judgment or order of the
said court never even acquired finality.

REPUBLIC OF THE
PHILIPPINES, represented
by the ANTI-MONEY
LAUNDERING COUNCIL,
Petitioner,

- versus Apparently realizing their mistake, the Salazars later on filed an action for quieting of title, also an
action quasi in rem, albeit this time before Branch 64 of the RTC of Tarlac. Because the Salazars miserably
failed to prove the basis for their claim, the RTC dismissed the complaint. [33] In fact, the RTC was bold enough
to have pronounced thus:
Who are the heirs of Juan Soriano who caused the consolidation and in whose favor TCT No. 9297 was
issued? Certainly, they are not the plaintiffs. If the plaintiffs claim that they are the only heirs, they should file a
case against those who executed the consolidation in whose favor [E]ntry [N]o. 20102 was made.
x x x In its order dated February 24, 2000, this Court ruled that it is necessary that plaintiffs should prove that
they are the heirs of Juan Soriano, the registered owners as indicated in OCT No. 40287 of (sic) Vicenta
Macaraeg, the late spouse. Despite the cue, the plaintiffs opted not to present evidence on how they became
the heirs of Juan Soriano or Vicenta Macaraeg. There being [no] evidence presented to prove that plaintiffs
are the heirs of the late Juan Soriano and Vicenta Macaraeg, they had no right and cause of action to
prosecute this case.[34]
Needless to say, the failure of the Salazars to implead indispensable party defendants in the petition for
cancellation of entries in OCT No. 40287 should have been a ground for the RTC to dismiss, or at least
suspend, the proceedings of the case. [35] Yet, although the action proceeded, any judgment or order issued by
the court thereon is still null and void for want of authority on the part of the court to act with respect to the
parties never impleaded in the action. [36] Thus, the orders issued by said court dated October 21, 1986 and
November 7, 1986 never acquired finality.[37] Quod ab initio non valet, in tractu temporis non convalescit.[38]
Paraphrasing by analogy this Courts ruling in Metropolitan Waterworks & Sewerage System v. Sison,[39] a
void order is not entitled to the respect accorded to a valid order. It may be entirely disregarded or declared
inoperative by any tribunal in which effect is sought to be given to it. It has no legal or binding effect or efficacy
for any purpose or at any place and thus cannot affect, impair or create rights. It is not entitled to enforcement
and is, ordinarily, no protection to those who seek to enforce the same. Accordingly, all proceedings founded
on the void court order are themselves regarded as invalid, and the situation is the same as it would be if there
was no order issued by the court. It leaves the party litigants in the same position they were in before the trial.
[40]
A void order, like any void judgment, may be said to be a lawless thing which can be treated as an outlaw
and slain at sight.[41]
More crucial is the fact that both parties in this case are dealing with property registered under
the Torrens system. To allow any individual, such as the Salazars in this case, to impugn the validity of a
Torrens certificate of title by the simple expediency of filing an ex parte petition for cancellation of entries would
inevitably erode the very reason why the Torrens system was adopted in this country, which is to quiet title to
land and to put a stop forever to any question on the legality of the title, except claims that were noted, at the
time of registration, in the certificate, or which may arise subsequent thereto. [42] Once a title is registered under
the Torrens system, the owner may rest secure, without the necessity of waiting in the portals of the courts or
sitting in the mirador su casa to avoid the possibility of losing his land.[43] Rarely will the court allow another
person to attack the validity and indefeasibility of a Torrens certificate, unless there is compelling reason to do
so and only upon a direct action filed in court proceeded in accordance with law. [44]
Finally, this Court also takes note of the fact that for more than 30 years from the time Entry No. 20102
was annotated at the back of OCT No. 40287 on February 17, 1950 until the time of the filing of the ex
parte petition for cancellation of entries on the said certificate of title on November 19, 1985 the Salazars
remained deafeningly quiet and never made any move to question the issue of ownership over the said land
before the proper forum. They also failed to ventilate their claim during the intestate proceeding filed by the
heirs of Juan Soriano sometime in 1939. Likewise, they miserably failed to stop the transfer of portions of the
property to petitioners who, for themselves, were able to secure TCTs in their own names. All of these would
lead to the inevitable conclusion that if there is any validity to the claim of the Salazars over the said property
although such issue is not the subject of the present case the same had already prescribed [45] or, at the very
least, had become stale due to laches.
WHEREFORE, the petition is GRANTED. The assailed July 25, 2003 Decision of the Court of Appeals
including its November 25, 2003 Resolution are hereby SET ASIDE. Accordingly, the December 20, 2000
Decision rendered by Branch 64 of the Regional Trial Court of Tarlac City, Tarlac is REINSTATED. Costs
against respondents. SO ORDERED.

GLASGOW CREDIT AND

COLLECTION SERVICES, INC.
and CITYSTATE SAVINGS
BANK, INC.,
Respondents.

G.R. No. 170281

Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.

Promulgated:

January 18, 2008

x---------------------------------------------------x
DECISION
CORONA, J.:
This is a petition for review[1] of the order[2] dated October 27, 2005 of the Regional Trial Court (RTC) of Manila,
Branch 47, dismissing the complaint for forfeiture [3]filed by the Republic of the Philippines, represented by the
Anti-Money Laundering Council (AMLC) against respondents Glasgow Credit and Collection Services, Inc.
(Glasgow) and Citystate Savings Bank, Inc. (CSBI).
On July 18, 2003, the Republic filed a complaint in the RTC Manila for civil forfeiture of assets (with urgent
plea for issuance of temporary restraining order [TRO] and/or writ of preliminary injunction) against the bank
deposits in account number CA-005-10-000121-5 maintained by Glasgow in CSBI. The case, filed pursuant to
RA 9160 (the Anti-Money Laundering Act of 2001), as amended, was docketed as Civil Case No. 03-107319.
Acting on the Republics urgent plea for the issuance of a TRO, the executive judge [4] of RTC Manila issued a
72-hour TRO dated July 21, 2003. The case was thereafter raffled to Branch 47 and the hearing on the
application for issuance of a writ of preliminary injunction was set on August 4, 2003.
After hearing, the trial court (through then Presiding Judge Marivic T. Balisi-Umali) issued an order granting the
issuance of a writ of preliminary injunction. The injunctive writ was issued on August 8, 2003.
Meanwhile, summons to Glasgow was returned unserved as it could no longer be found at its last known
address.
On October 8, 2003, the Republic filed a verified omnibus motion for (a) issuance of alias summons and (b)
leave of court to serve summons by publication. In an order dated October 15, 2003, the trial court directed the
issuance of alias summons. However, no mention was made of the motion for leave of court to serve
summons by publication.
In an order dated January 30, 2004, the trial court archived the case allegedly for failure of the Republic to
serve the alias summons. The Republic filed an ex parteomnibus motion to (a) reinstate the case and (b)
resolve its pending motion for leave of court to serve summons by publication.
In an order dated May 31, 2004, the trial court ordered the reinstatement of the case and directed the Republic
to serve the alias summons on Glasgow and CSBI within 15 days. However, it did not resolve the Republics
motion for leave of court to serve summons by publication declaring:
Until and unless a return is made on the alias summons, any action on [the Republics] motion for leave of
court to serve summons by publication would be untenable if not premature.
On July 12, 2004, the Republic (through the Office of the Solicitor General [OSG]) received a copy of the
sheriffs return dated June 30, 2004 stating that the aliassummons was returned unserved as Glasgow was
no longer holding office at the given address since July 2002 and left no forwarding address.

Meanwhile, the Republics motion for leave of court to serve summons by publication remained unresolved.
Thus, on August 11, 2005, the Republic filed a manifestation and ex parte motion to resolve its motion for
leave of court to serve summons by publication.
On August 12, 2005, the OSG received a copy of Glasgows Motion to Dismiss (By Way of Special
Appearance) dated August 11, 2005. It alleged that (1) the court had no jurisdiction over its person as
summons had not yet been served on it; (2) the complaint was premature and stated no cause of action as
there was still no conviction for estafa or other criminal violations implicating Glasgow and (3) there was failure
to prosecute on the part of the Republic.
The Republic opposed Glasgows motion to dismiss. It contended that its suit was an action quasi in
rem where jurisdiction over the person of the defendant was not a prerequisite to confer jurisdiction on the
court. It asserted that prior conviction for unlawful activity was not a precondition to the filing of a civil forfeiture
case and that its complaint alleged ultimate facts sufficient to establish a cause of action. It denied that it failed
to prosecute the case.
On October 27, 2005, the trial court issued the assailed order. It dismissed the case on the following grounds:
(1) improper venue as it should have been filed in the RTC of Pasig where CSBI, the depository bank of the
account sought to be forfeited, was located; (2) insufficiency of the complaint in form and substance and (3)
failure to prosecute. It lifted the writ of preliminary injunction and directed CSBI to release to Glasgow or its
authorized representative the funds in CA-005-10-000121-5.
Raising questions of law, the Republic filed this petition.
On November 23, 2005, this Court issued a TRO restraining Glasgow and CSBI, their agents, representatives
and/or persons acting upon their orders from implementing the assailed October 27, 2005 order. It restrained
Glasgow from removing, dissipating or disposing of the funds in account no. CA-005-10-000121-5 and CSBI
from allowing any transaction on the said account.
The petition essentially presents the following issue: whether the complaint for civil forfeiture was correctly
dismissed on grounds of improper venue, insufficiency in form and substance and failure to prosecute.
The Court agrees with the Republic.

THE COMPLAINT WAS FILED

IN THE PROPER VENUE

for civil forfeiture of Glasgows account in CSBI has not yet attained finality on account of the
pendency of this appeal. Thus, the Rule of Procedure in Cases of Civil Forfeiture applies to the Republics
complaint.[8] Moreover, Glasgow itself judicially admitted that the Rule of Procedure in Cases of Civil Forfeiture
is applicable to the instant case. [9]
Section 3, Title II (Civil Forfeiture in the Regional Trial Court) of the Rule of Procedure in Cases of Civil
Forfeiture provides:
Sec. 3. Venue of cases cognizable by the regional trial court. A petition for civil forfeiture shall be filed in any
regional trial court of the judicial region where the monetary instrument, property or proceeds
representing, involving, or relating to an unlawful activity or to a money laundering offense are
located; provided, however, that where all or any portion of the monetary instrument, property or proceeds is
located outside the Philippines, the petition may be filed in the regional trial court in Manila or of the judicial
region where any portion of the monetary instrument, property, or proceeds is located, at the option of the
petitioner. (emphasis supplied)
Under Section 3, Title II of the Rule of Procedure in Cases of Civil Forfeiture, therefore, the venue of civil
forfeiture cases is any RTC of the judicial region where the monetary instrument, property or proceeds
representing, involving, or relating to an unlawful activity or to a money laundering offense are located. Pasig
City, where the account sought to be forfeited in this case is situated, is within the National Capital Judicial
Region (NCJR). Clearly, the complaint for civil forfeiture of the account may be filed in any RTC of the NCJR.
Since the RTC Manila is one of the RTCs of the NCJR,[10] it was a proper venue of the Republics complaint for
civil forfeiture of Glasgows account.
THE COMPLAINT WAS SUFFICIENT IN FORM AND SUBSTANCE
In the assailed order, the trial court evaluated the Republics complaint to determine its sufficiency in form and
substance:
At the outset, this [c]ourt, before it proceeds, takes the opportunity to examine the [c]omplaint and determine
whether it is sufficient in form and substance.
Before this [c]ourt is a [c]omplaint for Civil Forfeiture of Assets filed by the [AMLC], represented by the Office
of the Solicitor General[,] against Glasgow and [CSBI] as necessary party. The [c]omplaint principally alleges
the following:
(a)
Glasgow is a corporation existing under the laws of the Philippines, with principal office address
at Unit 703, 7th Floor, Citystate Center [Building], No. 709 Shaw Boulevard[,] Pasig City;

In its assailed order, the trial court cited the grounds raised by Glasgow in support of its motion to dismiss:
1.
That this [c]ourt has no jurisdiction over the person of Glasgow considering that no [s]ummons
has been served upon it, and it has not entered its appearance voluntarily;
2.
That the [c]omplaint for forfeiture is premature because of the absence of a prior finding by any
tribunal that Glasgow was engaged in unlawful activity: [i]n connection therewith[,] Glasgow argues that the
[c]omplaint states no cause of action; and
3.
Glasgow.[5]

(b)
[CSBI] is a corporation existing under the laws of the Philippines, with principal office at Citystate
Center Building, No. 709 Shaw Boulevard, Pasig City;
(c)
000121-5;

Glasgow has funds in the amount of P21,301,430.28 deposited with [CSBI], under CA 005-10-

(d)
As events have proved, aforestated bank account is related to the unlawful activities of Estafa and
violation of Securities Regulation Code;

That there is failure to prosecute, in that, up to now, summons has yet to be served upon

But inasmuch as Glasgow never questioned the venue of the Republics complaint for civil forfeiture against it,
how could the trial court have dismissed the complaint for improper venue? In Dacoycoy v. Intermediate
Appellate Court[6] (reiterated in Rudolf Lietz Holdings, Inc. v. Registry of Deeds of Paraaque City),[7] this Court
ruled:
The motu proprio dismissal of petitioners complaint by [the] trial court on the ground of improper venue
is plain error. (emphasis supplied)

(e)

The deposit has been subject of Suspicious Transaction Reports;

(f)
After appropriate investigation, the AMLC issued Resolutions No. 094 (dated July 10, 2002), 096
(dated July 12, 2002), 101 (dated July 23, 2002), and 108 (dated August 2, 2002), directing the issuance of
freeze orders against the bank accounts of Glasgow;
(g)
Pursuant to said AMLC Resolutions, Freeze Orders Nos. 008-010, 011 and 013 were issued on
different dates, addressed to the concerned banks;

At any rate, the trial court was a proper venue.

(h)
The facts and circumstances plainly showing that defendant Glasgows bank account and deposit
are related to the unlawful activities of Estafa and violation of Securities Regulation Code, as well as to a
money laundering offense [which] [has] been summarized by the AMLC in its Resolution No. 094; and

On November 15, 2005, this Court issued A.M. No. 05-11-04-SC, the Rule of Procedure in Cases of Civil
Forfeiture, Asset Preservation, and Freezing of Monetary Instrument, Property, or Proceeds Representing,
Involving, or Relating to an Unlawful Activity or Money Laundering Offense under RA 9160, as amended
(Rule of Procedure in Cases of Civil Forfeiture). The order dismissing the Republics complaint

(i)
Because defendant Glasgows bank account and deposits are related to the unlawful activities of
Estafa and violation of Securities Regulation Code, as well as [to] money laundering offense as aforestated,
and being the subject of covered transaction reports and eventual freeze orders, the same should properly be
forfeited in favor of the government in accordance with Section 12, R.A. 9160, as amended. [11]

In a motion to dismiss for failure to state a cause of action, the focus is on the sufficiency, not the veracity, of
the material allegations.[12] The determination is confined to the four corners of the complaint and nowhere
else.[13]
In a motion to dismiss a complaint based on lack of cause of action, the question submitted to the court for
determination is the sufficiency of the allegations made in the complaint to constitute a cause of action and not
whether those allegations of fact are true, for said motion must hypothetically admit the truth of the facts
alleged in the complaint.
The test of the sufficiency of the facts alleged in the complaint is whether or not, admitting the facts
alleged, the court could render a valid judgment upon the same in accordance with the prayer of the
complaint.[14] (emphasis ours)
In this connection, Section 4, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:
Sec. 4. Contents of the petition for civil forfeiture. - The petition for civil forfeiture shall be verified and contain
the following allegations:
(a)
The name and address of the respondent;
(b)
A description with reasonable particularity of the monetary instrument, property, or proceeds, and their
location; and
(c)
The acts or omissions prohibited by and the specific provisions of the Anti-Money Laundering Act, as
amended, which are alleged to be the grounds relied upon for the forfeiture of the monetary instrument,
property, or proceeds; and
[(d)]

The reliefs prayed for.

Here, the verified complaint of the Republic contained the following allegations:
(a)
the name and address of the primary defendant therein, Glasgow; [15]
(b)
a description of the proceeds of Glasgows unlawful activities with particularity, as well as the
location thereof, account no. CA-005-10-000121-5 in the amount ofP21,301,430.28 maintained with CSBI;
(c)
the acts prohibited by and the specific provisions of RA 9160, as amended, constituting the
grounds for the forfeiture of the said proceeds. In particular, suspicious transaction reports showed that
Glasgow engaged in unlawful activities of estafa and violation of the Securities Regulation Code (under
Section 3(i)(9) and (13), RA 9160, as amended); the proceeds of the unlawful activities were transacted and
deposited with CSBI in account no. CA-005-10-000121-5 thereby making them appear to have originated from
legitimate sources; as such, Glasgow engaged in money laundering (under Section 4, RA 9160, as amended);
and the AMLC subjected the account to freeze order and
(d)
the reliefs prayed for, namely, the issuance of a TRO or writ of preliminary injunction and the
forfeiture of the account in favor of the government as well as other reliefs just and equitable under the
premises.
The form and substance of the Republics complaint substantially conformed with Section 4, Title II of the Rule
of Procedure in Cases of Civil Forfeiture.
Moreover, Section 12(a) of RA 9160, as amended, provides:
SEC. 12. Forfeiture Provisions.

RA 9160, as amended, and its implementing rules and regulations lay down two conditions when applying for
civil forfeiture:
(1)
when there is a suspicious transaction report or a covered transaction report deemed suspicious
after investigation by the AMLC and
(2)
the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument
or property, in whole or in part, directly or indirectly, related to said report.
It is the preliminary seizure of the property in question which brings it within the reach of the judicial process.
[16]
It is actually within the courts possession when it is submitted to the process of the court. [17] The injunctive
writ issued on August 8, 2003 removed account no. CA-005-10-000121-5 from the effective control of either
Glasgow or CSBI or their representatives or agents and subjected it to the process of the court.
Since account no. CA-005-10-000121-5 of Glasgow in CSBI was (1) covered by several suspicious
transaction reports and (2) placed under the control of the trial court upon the issuance of the writ of
preliminary injunction, the conditions provided in Section 12(a) of RA 9160, as amended, were satisfied.
Hence, the Republic, represented by the AMLC, properly instituted the complaint for civil forfeiture.
Whether or not there is truth in the allegation that account no. CA-005-10-000121-5 contains the proceeds of
unlawful activities is an evidentiary matter that may be proven during trial. The complaint, however, did not
even have to show or allege that Glasgow had been implicated in a conviction for, or the commission of, the
unlawful activities of estafa and violation of the Securities Regulation Code.
A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture
proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not an essential element of civil
forfeiture.
Section 6 of RA 9160, as amended, provides:
SEC. 6. Prosecution of Money Laundering.
(a)
Any person may be charged with and convicted of both the offense of money laundering and the
unlawful activity as herein defined.
(b)
Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of
any offense or violation under this Act without prejudice to the freezing and other remedies provided.
(emphasis supplied)
Rule 6.1 of the Revised Implementing Rules and Regulations of RA 9160, as amended, states:
Rule 6.1. Prosecution of Money Laundering
(a)
Any person may be charged with and convicted of both the offense of money laundering and the
unlawful activity as defined under Rule 3(i) of the AMLA.
(b)
Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of
any offense or violation under the AMLA without prejudice to the application ex-parte by the AMLC to the
Court of Appeals for a freeze order with respect to the monetary instrument or property involved therein
and resort to other remedies provided under the AMLA, the Rules of Court and other pertinent laws
and rules. (emphasis supplied)

(a) Civil Forfeiture. When there is a covered transaction report made, and the court has, in a petition filed for
the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or indirectly,
related to said report, the Revised Rules of Court on civil forfeiture shall apply.

Finally, Section 27 of the Rule of Procedure in Cases of Civil Forfeiture provides:

In relation thereto, Rule 12.2 of the Revised Implementing Rules and Regulations of RA 9160, as amended,
states:

Sec. 27. No prior charge, pendency or conviction necessary. No prior criminal charge, pendency of or
conviction for an unlawful activity or money laundering offense is necessary for the commencement or
the resolution of a petition for civil forfeiture. (emphasis supplied)

RULE 12
Forfeiture Provisions
xxx
xxx
xxx
Rule 12.2. When Civil Forfeiture May be Applied. When there is a SUSPICIOUS TRANSACTION REPORT
OR A COVERED TRANSACTION REPORT DEEMED SUSPICIOUS AFTER INVESTIGATION BY THE
AMLC, and the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or
property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on civil
forfeiture shall apply.

Thus, regardless of the absence, pendency or outcome of a criminal prosecution for the unlawful activity or for
money laundering, an action for civil forfeiture may be separately and independently prosecuted and resolved.
THERE WAS NO FAILURE
TO PROSECUTE

The trial court faulted the Republic for its alleged failure to prosecute the case. Nothing could be more
erroneous.
Immediately after the complaint was filed, the trial court ordered its deputy sheriff/process server to serve
summons and notice of the hearing on the application for issuance of TRO and/or writ of preliminary
injunction. The subpoena to Glasgow was, however, returned unserved as Glasgow could no longer be found
at its given address and had moved out of the building since August 1, 2002.
Meanwhile, after due hearing, the trial court issued a writ of preliminary injunction enjoining Glasgow from
removing, dissipating or disposing of the subject bank deposits and CSBI from allowing any transaction on,
withdrawal, transfer, removal, dissipation or disposition thereof.
As the summons on Glasgow was returned unserved, and considering that its whereabouts could not be
ascertained despite diligent inquiry, the Republic filed a verified omnibus motion for (a) issuance
of alias summons and (b) leave of court to serve summons by publication on October 8, 2003. While the trial
court issued an alias summons in its order dated October 15, 2003, it kept quiet on the prayer for leave of
court to serve summons by publication.
Subsequently, in an order dated January 30, 2004, the trial court archived the case for failure of the Republic
to cause the service of alias summons. The Republic filed anex parte omnibus motion to (a) reinstate the case
and (b) resolve its pending motion for leave of court to serve summons by publication.
In an order dated May 31, 2004, the trial court ordered the reinstatement of the case and directed the Republic
to cause the service of the alias summons on Glasgow and CSBI within 15 days. However, it deferred its
action on the Republics motion for leave of court to serve summons by publication until a return was made on
the alias summons.
Meanwhile, the Republic continued to exert efforts to obtain information from other government agencies on
the whereabouts or current status of respondent Glasgow if only to save on expenses of publication of
summons. Its efforts, however, proved futile. The records on file with the Securities and Exchange
Commission provided no information. Other inquiries yielded negative results.
On July 12, 2004, the Republic received a copy of the sheriffs return dated June 30, 2004 stating that
the alias summons had been returned unserved as Glasgow was no longer holding office at the given
address since July 2002 and left no forwarding address. Still, no action was taken by the trial court on the
Republics motion for leave of court to serve summons by publication. Thus, on August 11, 2005, the Republic
filed a manifestation and ex parte motion to resolve its motion for leave of court to serve summons by
publication.
It was at that point that Glasgow filed a motion to dismiss by way of special appearance which the Republic
vigorously opposed. Strangely, to say the least, the trial court issued the assailed order granting Glasgows
motion.

In Republic v. Sandiganbayan,[19] this Court declared that the rule is settled that forfeiture proceedings are
actions in rem. While that case involved forfeiture proceedings under RA 1379, the same principle applies in
cases for civil forfeiture under RA 9160, as amended, since both cases do not terminate in the imposition of a
penalty but merely in the forfeiture of the properties either acquired illegally or related to unlawful activities in
favor of the State.
As an action in rem, it is a proceeding against the thing itself instead of against the person. [20] In actions in
rem or quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to conferring jurisdiction
on the court, provided that the court acquires jurisdiction over the res.[21] Nonetheless, summons must be
served upon the defendant in order to satisfy the requirements of due process. [22] For this purpose, service
may be made by publication as such mode of service is allowed in actions in remand quasi in rem.[23]
In this connection, Section 8, Title II of the Rule of Procedure in Cases of Civil Forfeiture provides:
Sec. 8. Notice and manner of service. - (a) The respondent shall be given notice of the petition in the same
manner as service of summons under Rule 14 of the Rules of Court and the following rules:
1.
The notice shall be served on respondent personally, or by any other means prescribed in Rule
14 of the Rules of Court;
2.
The notice shall contain: (i) the title of the case; (ii) the docket number; (iii) the cause of action;
and (iv) the relief prayed for; and
3.
The notice shall likewise contain a proviso that, if no comment or opposition is filed within the
reglementary period, the court shall hear the case ex parte and render such judgment as may be warranted by
the facts alleged in the petition and its supporting evidence.
(b) Where the respondent is designated as an unknown owner or whenever his whereabouts are unknown
and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by
publication of the notice of the petition in a newspaper of general circulation in such places and for
such time as the court may order. In the event that the cost of publication exceeds the value or amount of
the property to be forfeited by ten percent, publication shall not be required. (emphasis supplied)

WHEREFORE, the petition is hereby GRANTED. The October 27, 2005 order of the Regional Trial Court of
Manila, Branch 47, in Civil Case No. 03-107319 is SET ASIDE. The August 11, 2005 motion to dismiss of
Glasgow Credit and Collection Services, Inc. is DENIED. And the complaint for forfeiture of the Republic of
the Philippines, represented by the Anti-Money Laundering Council, is REINSTATED.
The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 47 which shall forthwith
proceed with the case pursuant to the provisions of A.M. No. 05-11-04-SC. Pending final determination of the
case, the November 23, 2005 temporary restraining order issued by this Court is hereby MAINTAINED.
SO ORDERED.

Given these circumstances, how could the Republic be faulted for failure to prosecute the complaint for civil
forfeiture? While there was admittedly a delay in the proceeding, it could not be entirely or primarily ascribed to
the Republic. That Glasgows whereabouts could not be ascertained was not only beyond the Republics
control, it was also attributable to Glasgow which left its principal office address without informing the
Securities and Exchange Commission or any official regulatory body (like the Bureau of Internal Revenue or
the Department of Trade and Industry) of its new address. Moreover, as early as October 8, 2003, the
Republic was already seeking leave of court to serve summons by publication.
In Marahay v. Melicor,

[18]

MANOTOK REALTY, INC. and

MANOTOK ESTATE CORPORATION,
Petitioners,

Present:

this Court ruled:

- versus -

While a court can dismiss a case on the ground of non prosequitur, the real test for the exercise of such power
is whether, under the circumstances, plaintiff is chargeable with want of due diligence in failing to proceed with
reasonable promptitude. In the absence of a pattern or scheme to delay the disposition of the case or a
wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff, as in the
case at bar, courts should decide to dispense with rather than wield their authority to dismiss.
(emphasis supplied)
We see no pattern or scheme on the part of the Republic to delay the disposition of the case or a wanton
failure to observe the mandatory requirement of the rules. The trial court should not have so eagerly wielded
its power to dismiss the Republics complaint.

G.R. No. 123346

CLT REALTY DEVELOPMENT

CORPORATION,
Respondent.
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO
BRION, and
PERALTA, JJ.

PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
TINGA,
CHICO-NAZARIO,

Promulgated:
SERVICE OF SUMMONS
MAY BE BY PUBLICATION

March 31, 2009

x--------------------------------------------------------------------------------- x
ARANETA INSTITUTE OF AGRICULTURE, INC.,
Petitioner,

G.R. No. 134385

The Special Division proceeded to conduct hearings in accordance with the Resolution. The parties to
these cases, namely CLT Realty Development Corporation (CLT), Manotok Realty Inc. and Manotok Estate
Corporation (the Manotoks), the Heirs of Jose B. Dimson (Heirs of Dimson), and Araneta Institute of
Agriculture, Inc. (Araneta), were directed by the Special Division to present their respective evidence to the
Court of Appeals. Thereafter, the Special Division rendered a 70-page Report [3] (Report) on 26 November
2008. The Special Division submitted the sealed Report to this Court.

- versus HEIRS OF JOSE B. DIMSON, REPRESENTED BY

HIS COMPULSORY HEIRS: HIS SURVIVING
SPOUSE, ROQUETA R. DIMSON AND THEIR
CHILDREN, NORMA AND CELSA TIRADO, ALSON
AND VIRGINIA DIMSON, LINDA AND CARLOS
LAGMAN, LERMA AND RENE POLICAR, AND
ESPERANZA R. DIMSON; AND THE REGISTER
OF DEEDS OF MALABON,
Respondents.
x--------------------------------------------------------------------------------x
RESOLUTION

Before taking action on the Report itself, we dispose of a preliminary matter. On February 17, 2009, the
Manotoks filed a motion beseeching that copies of the report be furnished the parties so that they may submit
their comments and objections thereon in accord with the principle contained in Sec. 10, Rule 32 of the Rules
of Court. We deny the motion.
It is incorrect to presume that the earlier referral of these cases to the Court of Appeals for reception of
evidence was strictly in accordance with Rule 32. Notably, Section 1 of said Rule authorizes the referral of the
case to a commissioner by written consent of both parties, whereas in the cases at bar, the Court did not
endeavor to secure the consent of the parties before effectuating the remand to the Court of Appeals.
Nonetheless, our earlier advertence to Rule 32 remains proper even if the adopted procedure does not hew
strictly to that Rule, owing to our power under Section 6, Rule 135 to adopt any suitable process or mode of
proceeding which appears conformable to the spirit of the Rules to carry into effect all auxiliary processes and
other means necessary to carry our jurisdiction into effect.
Moreover, furnishing the parties with copies of the Sealed Report would not serve any useful purpose. It would
only delay the promulgation of the Courts action on the Sealed Report and the adjudication of these cases. In
any event, the present Resolution quotes extensively from the sealed Report and discusses its other
substantive segments which are not quoted.

TINGA, J.:
In the Courts Resolution dated 14 December 2007,[1] the Court constituted a Special Division of the
Court of Appeals to hear the instant case on remand. The Special Division was composed of three Associate
Justices of the Court of Appeals, with Justice Josefina Guevara-Salonga as Chairperson; Justice Lucas
Bersamin as Senior Member; and Associate Justice Japar B. Dimaampao as Junior Member. We instructed
the Special Division to proceed as follows:
The Special Division is tasked to hear and receive evidence, conclude the proceedings and submit to this
Court a report on its findings and recommended conclusions within three (3) months from finality of this
Resolution.
In ascertaining which of the conflicting claims of title should prevail, the Special Division is directed to make
the following determinations based on the evidence already on record and such other evidence as may be
presented at the proceedings before it, to wit:
i. Which of the contending parties are able to trace back their claims of title to OCT No. 994 dated 3 May
1917?
ii. Whether the imputed flaws in the titles of the Manotoks and Araneta, as recounted in the 2005 Decision,
are borne by the evidence? Assuming they are, are such flaws sufficient to defeat the claims of title of the
Manotoks and Araneta?
iii. Whether the factual and legal bases of 1966 Order of Judge Muoz-Palma and the 1970 Order of Judge
Sayo are true and valid. Assuming they are, do these orders establish a superior right to the subject properties
in favor of the Dimsons and CLT as opposed to the claims of Araneta and the Manotoks?
iv. Whether any of the subject properties had been the subject of expropriation proceedings at any point since
the issuance of OCT No. 994 on 3 May 1917, and if so what are those proceedings, what are the titles
acquired by the Government and whether any of the parties is able to trace its title to the title acquired by the
Government through expropriation.
v. Such other matters necessary and proper in ascertaining which of the conflicting claims of title should
prevail.
WHEREFORE, the instant cases are hereby REMANDED to the Special Division of the Court of Appeals for
further proceedings in accordance with Parts VI, VII and VIII of this Resolution.
SO ORDERED.[2]

The Report is a commendably exhaustive and pellucid analysis of the issues referred to the Special Division. It
is a more than adequate basis for this Court to make the following final dispositions in these cases.
I.
We adopt the succeeding recital of operative antecedents made by the Special Division in its Report.
THE PROCEDURAL ANTECEDENTS
DIMSON v. ARANETA
CA-G.R. CV. NO. 41883 & CA-G.R. SP No. 34819
[SC-G.R. No. 134385]
On 18 December 1979, DIMSON filed with the then Court of First Instance [CFI] of Rizal a complaint for
Recovery of Possession and Damages against ARANETA. On 7 May 1980, DIMSON amended his complaint
and included Virgilio L. Enriquez [ENRIQUEZ] as his co-plaintiff.
In said Amended Complaint, DIMSON claimed that he is the absolute owner of a 50-hectare land located in
Bo. Potrero, Malabon, Metro Manila covered by TCT No. R-15169, [Lot25-A-2] of the Caloocan Registry of
Deeds. Allegedly, DIMSON had transferred the subject property to ENRIQUEZ by way of an absolute and
irrevocable sale on 14 November 1979. Unfortunately though, DIMSON and ENRIQUEZ discovered that the
subject property was being occupied by ARANETA wherein an agricultural school house is erected and
that despite repeated demands, the latter refused to vacate the parcel of land and remove the improvements
thereon.

ARANETA, for its part, refuted said allegations and countered that it is the absolute owner of the land being
claimed by DIMSON and that the real properties in the Araneta Compound are properly documented and
validly titled. It maintained that it had been in possession of the subject parcel of land since 1974. For this
reason, the claims of DIMSON and ENRIQUEZ were allegedly barred by prescription.
During the trial, counsel for ARANETA marked in evidence, among others, certifications from the Land
Registration Commission attesting that TCTs Nos. 13574 and 26538, covering the disputed property, are in the
names of ARANETA and Jose Rato, respectively. ARANETA also offered TCT No. 7784 in evidence to prove
that it is the registered owner of the land described therein.

On 28 May 1993, the trial court rendered a Decision upholding the title of DIMSON over the disputed property
xxx
Undaunted, ARANETA interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV
No. 41883, which was later consolidated with CA-GR. SP No. 34819 in view of the inter-related issues of the
two cases.
In its 30 May 1997 Decision, the Court of Appeals, in CA-G.R. CV No. 41883, sustained the
RTC Decision in favor of DIMSON finding that the title of ARANETA to the disputed land in a nullity. In CA-GR.
SP No. 34819, the Court of Appeals likewise invalidated the titles of ARANETA, relying on the Supreme Court
ruling in Metropolitan Waterworks and Sewerage System v. Court of Appeals, which declared null and void
the certificates of title derived from OCT No. 994 registered on 3 may 1917. It was also held that ARANETA
failed to sufficiently show that the Order sought to be nullified was obtained through extrinsic fraud that would
warrant the annulment thereof.
Dissatisfied still, ARANETA filed a Motion for Reconsideration And/Or New Trial espousing therein as basis for
its entreaty the various letters from different government agencies and Department order No. 137 of the
Department of Justice, among others.
On 16 July 1998, the various Motions of ARANETA were denied by the Court of
Appeals. Nonetheless, the Court ordered DIMSON to maintain status quo until the finality of the aforesaid
judgment.

Consequently, ARANETA filed a petition before the Supreme Court. Refuting the factual finding
of the trial court and the Court of Appeals, ARANETA contended that there in only one OCT 994 covering the
Maysilo Estate issued on 3 May 1917 pursuant to the Decree No. 36455 issued by the Court of Land
Registration on 19 April 1917 and added that there were subsequent certifications issued by the government
officials, notably from the LRS, the DOJ Committee Report and the Senate Committees Joint Report which
attested that there is only one OCT 994, that which had been issued on 3 May 1917.

August 1918. TCT No. 4210 allegedly covered an approximate area of 19,565.43 square meters of Lot 26. On
even date, TCT No. 4211 was transferred to Francisco Gonzales on the strength of an Escritura de Venta
dated 3 March 1920 for which TCT No. T-5261, covering an area of 871,982 square meters was issued in the
name of one Francisco Gonzales, married to Rufina Narciso.
Thereafter, TCT No. T-35485, canceling TCT No. T-5261, was issued to Rufina Narcisa Vda. de Gonzales
which was later replaced with the names of Gonzales six (6) children. The property was then subdivided and
as a result of which, seven (7) certificates of titles were issued, six (6),under the names of each of the children
while the remaining title was held by all of them as co-owners.
Eventually, the properties covered by said seven certificates of title were expropriated by the Republic of
the Philippines. These properties were then later subdivided by the National Housing Authority [NHA], into
seventy-seven (77) lots and thereafter sold to qualified vendees. As it turned out, a number of said vendees
sold nineteen (19) of these lots to Manotok Realty, Inc. while one (1) lot was purchased by the Manotok Estate
Corporation.
During the pre-trial conference, the trial court, upon agreement of the parties, approved the creation of a
commission composed of three commissioners tasked to resolve the conflict in their respective
titles. Accordingly, the created Commission convened on the matter in dispute.
On 8 October 1993, Ernesto Erive and Avelino San Buenaventura submitted an exhaustive Joint Final Report
[THE MAJORITY REPORT] finding that there were inherent technical infirmities or defects on the face of
TCT No. 4211, from which the MANOTOKS derived their titles (also on TCT No. 4210), TCT No. 5261 and
TCT No. 35486. Teodoro Victoriano submitted his Individual Final Report [THE MINORITY REPORT]
dated 23 October 1993.
After the conduct of a hearing on these reports, the parties filed their respective comments/objections
thereto. Upon order of the trial court, the parties filed their respective memoranda.
Adopting the findings contained in the Majority Report, the RTC, on 10 May 1994, rendered a Decision, in
favor of CLT and ordered, among others, the cancellation of the certificates of title issued in the name of the
MANOTOKS.

CLT v. MANOTOK
CA-G.R. CV. No. 45255
[SC-G.R. No. 123346]

The MANOTOKS elevated the adverse RTC Decision on appeal before the Court of Appeals. In its Decision
dated 28 September 1995, the Court of Appeals affirmed the RTC Decision, except as to the award of
damages which was deleted. The MANOTOKS then moved for reconsideration, but said motion was denied
by said appellate court in its Resolution dated8 January 1996. After the denial of their Motion for
Reconsideration, the MANOTOKS filed a Petition for Review before the Supreme Court.

On 10 August 1992, CLT filed with the Regional Trial Court [RTC] A COMPLAINT FOR Annulment of Transfer
Certificates of Title, Recovery of Possession and Damages against the MANOTOKS and the Registry of
Deeds of Metro Manila District II (Calookan City, Metro Manila) [CALOOCAN RD].

PROCEEDINGS BEFORE THE SUPREME COURT

In its Complaint, CLT alleged that it is the registered owner of Lot 26 of the Maysilo Estate located
in Caloocan City and covered by Transfer Certificate of Title No. T- 177013, a derivative title of OCT No. 994.
As a basis of its proprietary claim, CLT averred that on 10 December 1988, it had acquired Lot 26 from its
former registered owner, Estelita I. Hipolito [HIPOLITO], by virtue of a Deed of Sale with Real Estate
Mortgage. HIPOLITOs title was , in turn, a direct transfer from DIMSON, the registered owner of TCT No.
15166, the latter having acquired the same by virtue of a Court Order dated 13 June 1966 issued by the Court
of First Instance of Rizal in Civil Case No. 4557.
On the other hand, the MANOTOKS maintained the validity of their titles, which were all derivatives of OCT
No. 994 covering over twenty (20) parcels of land located over a portion of Lot 26 in the Maysilo Estate. In
substance, it was contented that the title of CLT was an offspring of an ineffective grant of an alleged
undisputed portion of Lot 26 by way of attorneys fees to its predecessor-in- interest, Jose B. Dimson. The
MANOTOKS, in this connection, further contended that the portion of Lot 26, subject of the present
controversy, had long been disposed of in favor of Alejandro Ruiz and Mariano Leuterio and hence, there was
nothing more in said portion of Lot 26 that could have been validly conveyed to Dimson.

Tracing the legitimacy of their certificates of titles, the MANOTOKS alleged that TCT No. 4210, which
cancelled OCT No. 994, had been issued in the names of Alejandro Ruiz and Mariano Leuterio on Sept ember
1918 by virtue of an Escritura De Venta executed by Don Tomas Arguelles and Don Enrique Lopes on 21

Before the Supreme Court, the Petitioners for Review, separately filed by the MANOTOKS, ARANETA and
Sto. Nio Kapitbahayan Association, Inc., [STO. NIO], were consolidated.
Also submitted for consideration of the Supreme Court were the report of the Fact Finding Committee
dated 28 August 1997 and the Senate Committee Report No. 1031 dated 25 May 1998 which concluded that
there was only one OCT No. 994 issued, transcribed and registered on 3 May 1917.
THE SUPREME COURT DECISION
In its Decision dated 29 November 2005 [THE SUPREME COURT 2005 DECISION], the Supreme Court,
through its Third Division, affirmed the RTC Decision and Resolutions of the Court of Appeals, which declared
the titles of CLT and DIMSON as valid.
In invalidating the respective titles of the MANOTOKS and ARANETA, the Supreme Court, in turn, relied on
the factual and legal findings of the trial courts, which had heavily hinged on the imputed flaws in said
titles. Considering that these trial court findings had been affirmed by the Court of Appeals, the Supreme
Court highlighted the fact that the same were accorded the highest degree of respect and, generally, should
not be disturbed on appeal.
Emphasis was also made on the settled rule that because the Supreme Court was not a trier of facts, it was
not within its function to review factual issues and examine, evaluate or weigh the probative value of the
evidence presented by the parties.
THE SUPEME COURT RESOLUTION

Expectedly, the MANOTOKS and ARANETA filed their respective Motions for Reconsideration of the Supreme
Court 2005 Decision.
Resolving said motions for reconsideration, with the Office of the Solicitor General [OSG] intervening on
behalf of the Republic, the Supreme Court, in its Resolution of 14 December 2007 [THE SUPREME CCOURT
2007 RESOLUTION] reversed and nullified its 2005 Decision and categorically invalidated OCT No. 994
dated 19 April 1917, which was the basis of the propriety claims of CLT and DIMSON. However, the Supreme
Court resolved to remand the cases to this Special Division of the Court of Appeals for reception of evidence.
To guide the proceedings before this Special Division of the Court of Appeals, the Supreme Court made the
following binding conclusions:
First, there is only one OCT 994. As it appears on the record, that mother title was received for transcription
by the Register of Deeds on 3 May 1917, and that should be the date which should be reckoned as the ate of
registration of the title. It may also be acknowledged, as appears on the title, that OCT No. 994 resulted from
the issuance of the decree of registration on (19)* April 1917, although such dated cannot be considered as
the date of the title or the date when the title took effect.

plan of Lot 25-A-2, observations of Geodetic Engineer Reggie P. Garcia showing the relative positions of
properties within Lot 25-A; the Novation of Contract/Deed of Sale and Mortgage dated 15 January 1948
between Rato, Don Salvador Araneta and Araneta Institute of Agriculture; copies of various certificates of titles
to dispute some of the titles held by ARANETA; several letter-requests and official receipts.
ARANETA EVIDENCE
ARANETA, in turn, offered in evidence various certificates of title, specifically, OCT No. 994, TCT No. 8692;
TCT No. 21857; TCT No. 26538; TCT No. 26539; TCT No. (7784)-738 and TCT no. 13574. It also marked in
evidence the certified true copies of Decree No. 36577; the DOJ and Senate Reports; letters of
correspondence to the Land Registration Commission and the Register of Deeds of Malabon City; survey
plans of Lot 25-A and TCT r-15169 of Dimson and; the affidavit of Engineer Felino M. Cortez and his
curriculum vitae. ARANETA also offered the certified true copy of TCT No. 6196 in the name of Victoneta,
Inc.; TCT No. 13574 in the name of ARANETA; certifications issued by Atty. Josephine H. Ponciano, Acting
Register of Deeds of Malabon city-Navotas; certified true copy of Judge Palmas Order dated 16 August 1966
in Case No. 4557; Circular No. 17 (which pertains to the rules on reconstitution of titles as of 19 February
1947) and its official receipt and; the owners duplicate copy of OCT No. 994.[[8]][9]

Second. Any title that traces its source to OCT No. 994 dated (19) April 1917 is void, for such mother title is
inexistent. The fact that the Dimson and CLT titles made specific reference to an OCT
No. 994 dated (19) April 1917 casts doubt on the validity of such titles since they refer to an inexistent
OCT. This error alone is, in fact, sufficient to invalidate the Dimson and CLT claims over the subject property if
singular reliance is placed by them on the dates appearing on their respective titles.

III.

Third. The decision of this Court in MWSS v. Court of Appeals and Gonzaga v. Court of Appeals cannot apply
to the cases at bar, especially in regard to their recognition of an OCT No. 994 dated 19 April 1917, a title
which we now acknowledge as inexistent. Neither could the conclusions in MWSS or Gonzaga with respect to
an OCT No. 994 dated 19 April 1917 bind any other case operating under the factual setting the same as or
similar to that at bar.[4]

i.
Which of the contending parties are able to trace back their claims to Original Certificate of
Title (OCT) No. 994 dated 3 May 1917:

We now turn to the evaluation of the evidence engaged in by the Special Division. To repeat, the Special
Division was tasked to determine the following issues based on the evidence:

ii.
Whether the respective imputed flaws in the titles of the Manotoks and Araneta, as recounted
in the Supreme Court 2005 Decision, are borne by the evidence. Assuming they are, are such flaws sufficient
to defeat said claims?

II.
The parties were afforded the opportunity to present their evidence before the Special Division. The Report
names the evidence submitted to the Special Division for its evaluation:
CLT EVIDENCE
[5]

In its Offer of Evidence,[ ] CLT adopted the documentary exhibits and testimonial evidence of witnesses
submitted in the case filed by CLT against STO. NIO in Civil Case No. C-15491, [CLT-STO NIO
CASE]. These pieces of evidence include, among others, the Majority and Minority Reports, the Formal Offer
of Evidence in the presentation of the evidence-in-chief and rebuttal evidence in the CLT-STO NIO CASE
consisting of various certificates of titles, plans by geodetic engineer, tax declarations, chemistry report,
specimen signatures and letters of correspondence.
MANOTOKS EVIDENCE
The MANOTOKS sought admission of the following evidence: Senate and DOJ Committee Reports;
certificates of title issued to them and their vendees/assignees, i.e., Republic of the Philippines, the
Gonzalezes, Alejandro Ruiz and Mariano Leuterio, Isabel Gil del Sola and Estelita Hipolito; deeds of absolute
sale; contracts to sell; tax declarations and real property tax receipts; the Formal Officer of Evidence of
Philville Development & Housing Corporation; [PHILVILLE], in Civil Case No. 15045; this Court of Appeals
Decision in CA-G.R. CV. No. 52606 between CLT and PHILVILLE; the Orders of Judge Palma dated 13 June
1966 and 16 August 1966 in Case No. 4557 and the billing statements of SSHG Law Office. They also
submitted in evidence the Affidavits and Supplemental Affidavits of Rosa R. Manotok and Luisa T. Padora;
Affidavits of Atty. Felix B. Lerio, Atty. Ma. P.G. Ongkiko and Engineer Jose Marie P. Bernabe; a copy of a
photograph of BM No. 9; certified true copy of coordinates and reference point of L.M. No. 1 and BM No. 1 to
10 of Piedad Estate and TCT No. 177013 of CLT.[ [6]]

iii.
Whether the factual and legal bases of the 1966 Order of Judge Muoz-Palma and the 1970
Order of Judge Sayo are true and valid. Assuming they are, do these orders establish a superior right to the
subject properties in favor of the Dimsons and CLT as opposed to the claims of the Araneta and the
Manotoks?
iv.
Whether any of the subject properties had been the subject of expropriation proceedings at
any point since the issuance of OCT No. 994 on 3 May 1917, and if so, what are those proceedings, what are
the titles acquired by the Government, and is any of the parties able to trace its title acquired by the
government through expropriation?
v.
Such other matters necessary and proper in ascertaining which of the conflicting claims of title
should prevail.
The ultimate purpose of the inquiry undertaken by the Court of Appeals was to ascertain which of the four
groups of claimants were entitled to claim ownership over the subject properties to which they claimed title
thereto. One set of properties was disputed between CLT and the Manotoks, while the other set was disputed
between Araneta and the Heirs of Dimson.
As can be gleaned from the Report, Jose Dimson was able to obtain an order in 1977 issued by Judge
Marcelino Sayo of the Court of First Instance (CFI) of Caloocan Cityon the basis of which he was able to
register in his name properties belonging to the Maysilo Estate. Judge Sayos order in turn was sourced from a
1966 Order issued by Judge (later Supreme Court Associate Justice) Cecilia Muoz-Palma of the CFI of Rizal.
Dimsons titles reflected, as their mother title, OCT No. 994 dated 19 April 1917.[10] Among these properties
was a fifty (50)-hectare property covered by Transfer Certificate of Title (TCT) No. 151169, which apparently
overlapped with the property of Araneta covered by TCT No. 13574 and 26538. [11] Araneta was then and still is
in possession of the property. The Araneta titles state, as their mother title, OCT No. 994 dated 3 May 1917.
Consequently, Dimson filed an action for recovery of possession against Araneta.

DIMSON EVIDENCE
In their Consolidated Formal Offer of Evidence,[[7]] DIMSON submitted the previous decisions and resolutions
passed relative to these cases, various certifications of different government agencies, OCT 994, subdivision

Another property in Dimsons name, apparently taken from Lot 26 of the Maysilo Estate, was later sold to
Estelita Hipolito, who in turn sold the same to CLT. Said property was registered by CLT under TCT No. T177013, which also reflected, as its mother title, OCT No. 994 dated 19 April 1917.[12] Said property claimed by

CLT encroached on property covered by titles in the name of the Manotoks. The Manotoks traced their titles to
TCT Nos. 4210 and 4211, both issued in 1918 and both reflecting, as their mother title, OCT No. 994 dated 3
May 1917.
It is evident that both the Heirs of Dimson and CLT had primarily relied on the validity of OCT No. 994 dated 19
April 1917 as the basis of their claim of ownership. However, the Court in its 2007 Resolution held that OCT
No. 994 dated 19 April 1917 was inexistent. The proceedings before the Special Division afforded the Heirs of
Dimson and CLT alike the opportunity to prove the validity of their respective claims to title based on evidence
other than claims to title the inexistent 19 April 1917 OCT No. 994. Just as much was observed by the Special
Division:
Nonetheless, while the respective certificates of title of DIMSON and CLT refer to OCT 994 issued on 19 April
1917 and that their previous postulations in the present controversies had been anchored on the supposed
validity of their titles, that which emanated from OCT 994 of 19 April 1917, and conversely the invalidity of the
3 May 1917 OCT 994, the Supreme Court has yet again allowed them to substantiate their claims on the basis
of other evidentiary proofs:
Otherwise stated, both DIMSON and CLT bear the onus of proving in this special proceedings, by way of the
evidence already presented before and such other forms of evidence that are not yet of record, that either
there had only been an error in the course of the transcription or registration of their derivative titles, or that
other factual and legal bases existed to validate or substantiate their titles aside from the OCT No. 994 issued
on 19 April 1917.[13]

Thus, without proffering any plausible explanation as to what led to the erroneous entry of the registration
dated of OCT 994, DIMSON are left without any recourse but to substantiate their claim on the basis of other
evidence not presented during the proceedings below, which would effectively prove that they had a valid
proprietary claim over the disputed properties. This is specifically true because DIMSON had previously
placed reliance on the MWSS doctrine to prove the validity of their title. [17]

Absent such explanation, the Heirs of Dimson were particularly constrained to rely on the 1977 Order of
Judge Sayo, which was allegedly sourced from the 1966 Order of Judge Muoz Palma. On that issue, the
Special Division made the following determinations:
It should be recalled that in their appellees brief in
CA-G.R.CV No. 41883, therein appellee Jose Dimson
specifically denied the falsity of TCT No. R-15169 alleging that the contention is already moot and can be
determined by a controlling decision.[[18]] Jose Dimson expounded on his reliance as follows:
In Metropolitan Waterworks & Sewerage System (for brevity MWSS) case, Jose B. Dimsons (as
private respondent) title TCT No. 15167 issued for Lot 28 on June 8, 1978 derived from OCT No. 994
registered on April 19, 1917, is overlapping with MWSS title TCT No. 41028 issued on July 29, 1940 derived
from the same OCT 994, registered on May 3, 1917.
(Same facts in the case at bar; Jose B. Dimson (plaintiff-appellee) title TCT No. R-15169 issued for
Lot 25-A-2, on June 8, 1978, is overlapping with defendant-appellants title TCT Nos. 13574 and 21343, not
derived from OCT No. 994.[[19]]

Were they able to discharge such burden?

A.
We begin with the Heirs of Dimson. The Special Division made it clear that the Heirs of Dimson were heavily
reliant on the OCT No. 994 dated 19 April 1917.
[DIMSON], on the strength of Judge Sayos Order dated 18 October dated 18 October 1977, was issued
separate certificates of title, i.e., TCT Nos. 15166, 15167, 15168 and 15169, covering portions of the Maysilo
Estate. Pertinently, with respect to TCT No. 15169 of DIMSON, which covers Lot 25-A-2 of the said estate,
the following were inscribed on the face of the instrument.

So viewed, sans any proof of a mechanical error in the transcription or annotation on their
respective certificates of title, the present inquiry then hinges on whether the Order dated 13 June 1966 issued
by then Judge Cecilia Muoz-Palma of the Court of First Instance of Rizal in Civil Case No. 4557 [PALMA
ORDER] and Judge Sayos Order dated 18 October 1977 [SAYOS 18 OCTOBER 1977 ORDER], can be
validated and authenticated. It is so since the brunt of the proprietary claims of both DIMSON and CLT has its
roots on said Orders.
Perforce, in consideration of the foregoing, this leads Us to the THIRD ISSUE as presented by the
Supreme Court, to wit:

th

IT IS FURTHER CERTIFIED that said land was originally registered on the 19 day of April in the year
nineteen hundred and seventeen in the Registration Book of the Office of the Register of Deeds of Rizal,
Volume NA page NA , as Original Certificate of Title No. 994 pursuant to Decree No. 36455 issued in L.R.C.
Case No. 4429 Record No. ______
This Certificate is a transfer from Original Certificate of Title No. 994/NA, which is cancelled by virtue
hereof in so far as the above-described land is concerned.[[14]]

From the above accounts, it is clear that the mother title of TCT no. 15169, the certificate of title
of DIMSON covering the now disputed Lot 25-A-2, is OCT No. 994 registered on 19 April 1917. Manifestly, the
certificate of title issued to DIMSON, and as a matter of course, the derivative title later issued to CLT, should
both be voided inasmuch as the OCT which they emanated had already been declared inexistent. [15]
The Special Division noted that the Heirs of Dimson did not offer any explanation why their titles reflect
the erroneous date of 19 April 1917. At the same time, it rejected CLTs explanation that the transcription of the
erroneous date was a typographical error.
As can be gleaned from the records, both DIMSON and their successor-in-interest CLT, had
failed to present evidence before this Court to prove that there had been a mere typographical error in the
transcription of their respective titles with regard to the date of registration of OCT No. 994. CLT specifically
harps on this assertion that there had only been a typographical error in the transcription of its title.[ [16]] On the
other hand, while DIMSON had refused to categorically assert that there had been such a typographical error
causing the invalidity of their title, their failure to proffer any reason or argument which would otherwise justify
why their title reflects 19 April 1917 and not 3 May 1917 leads this Court to conclude that they simply had no
basis to support their proprietary claim.

Whether the factual and legal bases of Palmas 13 June 1966 Order and Sayos 18 October
1977 Order are true and valid. Assuming they are, do these orders establish a superior right to the
subject properties in favor of the Dimsons and CLT as opposed to the claims of Araneta and the
Manotoks?
As it is, in contending that their certificates of title could be validly traced from the 3 May 1917
OCT No. 994, DIMSON point out that their title was issued pursuant to a court order issued by Judge Palma in
Case No. 4557 and entered in the memorandum of Encumbrance of OCT No. 994. DIMSON also insist
that TCT Nos. 8692, 21857 and 26538 were mere microfilmed or certified copies and, therefore,
inadmissible. Lastly, DIMSON reiterated the flaws and irregularities which voided the titles of the ARANETA in
the previous proceedings and focused on the burden of ARANETA to present evidence to defeat their titles.
The foregoing contentions of DIMSON find to factual and legal basis. As we see it, Sayos 18
October 1977 Order, which apparently confirmed Palmas 13 June 1966 Order, raised serious questions as to
the validity of the manner by which it was arrived at.
It is worthy to note that as early as 25 August 1981, counsel for the ARANETA applied for
a subpoena duces tecum addressed to the Clerk of Court of CFI Pasig for the production of the records of
LRC Case No. 4557 for purposes of determining the genuineness and authenticity of the signature of Judge
Palma and also of her Order granting the confirmation. A certain Atty. Contreras, Officer-in-Charge of the said
court, appeared and manifested in open court that the records pertaining to the petition for Substitution of
names of Bartolome Rivera, et al. could no longer be located inasmuch as they had passed hands from one
court to another.
What is perplexing to this Court is not only the loss of the entire records of Case No. 4557 but
the admission of Judge Sayo that he had not seen the original of the Palma Order. Neither was the signature
of Judge Palma on the Order duly proven because all that was presented was an unsigned duplicate copy
with a stamped notation of original signed. Equally perplexing is that while CFI Pasig had a Case No. 4557
on file, said file pertained not to an LRC case but to a simple civil case.[ [20]] Thus:

Atty. Directo:
The purpose of this subpoena duces tecum is to present your Honor the Order Order (sic) of Judge
Palma in order to determine the genuineness and authenticity of the signature of Judge Palma in this court
order and which order was a basis of a petition in this court to be confirmed. That is the reason why we want
to see the genuineness of the signature of Judge Palma.
COURT:
No signature of Judge Palma was presented in this court. it was a duplicate copy not signed. There
is a stamp only of original signed.

with Rivera. It should be recalled that Palmas 13 June 1966 Order approved only the conveyance to Jose
Dimson of 25% of whatever share of Bartolome Rivera has over Lots 25, 26, 27, 28-B and 29 of OCT 994 x x
x subject to availability of undisposed portion of the said lots.[[22]]
In relation to this, We find it significant to note the observations contained in the Senate Committee Report No.
1031 that, based on the assumption that the value of the lots were equal, and (C)onsidering that the share of
Maria de la Concepcion Vidal was only 1-189/1000 percent of the Maysilo Estate, the Riveras who claimed to
be the surviving heirs of Vidal will inherit only 197, 405.26 square meters (16,602,629.53 m2 x 1.1890%) or
19.7 hectares as their share.[[23]] Even if we are to base the 25% of Jose Dimson on the 19.7 hectares
allotted to the Riveras, it would appear that Jose Dimson would only be entitled to more or less five
(5)hectares of the Maysilo Estate. Obviously, basing only on TCT No. 15169 of Dimson which covered a land
area of 50 hectares (500,000 square meters),[ [24]] it is undisputable that the total properties eventually
transferred to Jose Dimson went over and beyond his supposed 25% share.

Atty. Directo:
That is the reason why we want to see the original.
Court:
I did not see the original also. When the records of this case was brought here, I checked the records,
there were so many pages missing and the pages were re-numbered but then I saw the duplicate original and
there is a certification of a woman clerk of Court, Atty. Molo.
Atty. Directo:
That is the reason why we want to see this document, we are surprised why it is missing.
Court:
We are surprised also. You better ask Judge Muoz Palma.

What is more, Palmas 13 June 1966 Order specifically required that x x x whatever title is to
be issued herein in favor of Jose Dimson, the same shall be based on a subdivision plan duly certified by the
Land Registration Commission as correct and in accordance with previous orders issued in this proceedings,
said plan to be submitted to this court for final approval.
Interestingly however, despite such requirement, DIMSON did not submit Survey Plan LRC
(GLRO) Rec. No. 4429 SWO-5268 which allegedly was the basis of the segregation of the lands, if only to
prove that the same had been duly approved and certified correct by the Land Registration
Commission. What was submitted before the RTC and this Court was only the Subdivision Plan of Lot 25-A-2
which notably does not bear the stamp of approval of the LRC. Even an inspection of the exhibit for CLT does
not bear this Survey Plan, which could have, at the very least, proven the authenticity of the DIMSON title.
Indeed, We find the absence of this piece of evidence as crucial in proving the validity of the titles of DIMSON
in view of the allegation of contending parties that since the survey plan upon which the land titles were based
contained the notation SWO, meaning that the subdivision plan was only a product of a special work order,
the same could not have passed the LRC. Neither was it duly certified by the said office. [25]

Atty. Contreras:
May I make of record that in verifying our records, we found in our original vault LRC application no.
N-4557 but the applications were certain Feliciano Manuel and Maria Leao involving Navotas property
because I was wondering why they have the same number. There should be only one.
Atty. Directo:
Aside from that, are there other cases of the same number?
Atty. Contreras:
No, there should be only number for a particular case; that must be a petition after decree record.
Atty. Ignacio:
This 4557 is not an LRC Case, it is a simple civil case.
x
x
x
x
x
x
Moreover, both the MANOTOKS and ARANETA insist that Palmas 13 June 1966 Order had been recalled by
a subsequent Order dated 16 August 1966, [RECALL ORDER],[ [21]] wherein the trial court dismissed the
motion filed by DIMSON on the courts findings that x x x whatever portion of the property covered by OCT
994 which has not been disposed of by the previous registered owners have already been assigned and
adjudicated to Bartolome Rivera and his assignees, as a result of which there is no portion that is left to be
given to the herein supposed assignee Jose Dimson.
However, We are reluctant to recognize the existence and due execution of the Recall Order considering that
its original or even a certified true copy thereof had not been submitted by either of the two parties relying on it
despite having been given numerous opportunities to do so.

Be that as it may, even if We are to consider that no Recall Order was ever issued by then Judge Palma, the
validity of the DIMSON titles over the properties in the Maysilo Estate becomes doubtful in light of the fact that
the supposed share went beyond what was actually due to Jose Dimson under the Compromise Agreement

In addition, the Special Division took note of other irregularities attending Dimsons TCT No. R-15169.
[Firstly], OCT No. 994 showed that Lot 25-A of the Maysilo Estate was originally surveyed on September 827, 1911, October 4-21 and November 17-18, 1911. Yet, in said TCT No. R-15169, the date of the original
survey is reflected as Sept. 8-27, 1911 and nothing more.[ [26]] The variation in date is revealing considering
that DIMSONs titles are all direct transfers from OCT No. 994 and, as such, would have faithfully adopted the
mother lots data. Unfortunately, no explanation for the variance was ever offered.
Equally worthy of consideration is the fact that TCT No. 15169 indicates that not only was the date of original
registration inexistent, but the remarks thereon tend to prove that OCT No. 994 had not been presented prior
to the issuance of the said transfer certificate. This manifest from the notations NA on the face of DIMSONs
title meaning, not available. It bears emphasizing that the issuance of a transfer certificate of title to the
purchaser without the production of the owners duplicate is illegal (Rodriguez v. Llorente, 49 Phil. 826) and
does not confer any right to the purchaser (Philippine National Bank vs. Fernandez, 61 Phil. 448 [1935]). The
Registrar of Deeds must, therefore, deny registration of any deed or voluntary instrument if the owners
duplicate is not presented in connection therewith. (Director of Lands vs. Addison, 40 Phil. 19 [1926]; Hodges
vs. Treasurer of the Phil. 50 Phil. 16 [1927].[[27]]
In has also been held that, in cases where transfer certificates of title emanating from one common original
certificate of title were issued on different dates to different persons or entities covering the same land, it would
be safe to conclude that the transfer certificate issued at an earlier date along the line should prevail, barring
anomaly in the process of registration.[[28]] Thus, (w)here two certificates purport to include the same land,
the earlier in date prevails. X x x. In successive registration, where more than one certificate is issued in
respect of a particular estate or interest in land, the person is deemed to hold under the prior certificate who is
the holder or whose claim is derived directly from the person who was the holder of the earliest certificate
issued in respect thereof. x x x[[29]]
xxx
Still another indication of irregularity of the DIMSON title over Lot No. 25-A is that the issuance of the Sayo
Order allegedly confirming the Palma Order was in itself suspect. Gleaning from the records, DIMSON filed
the Motion only on 10 October 1977, or eleven (11) years after obtaining the supposed sanction for the
issuance of titles in this name. Besides, what was lodged by Jose Dimson before the sala of then Judge
Palma was not a simple land registration case wherein the only purpose of Jose Dimson was to establish his

ownership over the subject parcels of land, but, as reflected in the Palma Order, the subject of the case was
the confirmation of Jose Dimsons claim over the purported rights of Rivera in the disputed properties. The
case did not partake of the nature of a registration proceeding and thus, evidently did not observe the
requirements in land registration cases. Unlike in a land registration case, therefore, Jose Dimson needed to
file an action before Judge Sayo to seek confirmation of Palmas Order dated 13 June 1966.
So viewed the general rule proscribing the application of laches or the statute of limitations in land registration
cases,[[30]] as well as Section 6, Rule 39 of the Rules of Court, in relation to its provisions on revival of
judgment applies only to ordinary civil actions and not to other or extraordinary proceedings such as land
registration cases, is clearly not applicable in the present case. The legal consequences of laches as
committed by DIMSON and their failure to observe the provisions of Rule 39 should, therefore, find application
in this case and thus, the confirmation of DIMSONs title, if any, should fail.
Parenthetically, the allegations of DIMSON would further show that they derive the validity of their certificates
of title from the decreased Jose Dimsons 25% share in the alleged hereditary rights of Bartolome Rivera
[RIVERA] as an alleged grandson of Maria Concepcion Vidal [VIDAL]. However, the records of these
cases would somehow negate the rights of Rivera to claim from
Vidal. The Verification Report of the Land Registration
Commission dated 3 August 1981 showed that Rivera was 65 years old on 17 May 1963 (as gathered from
the records of Civil Case Nos. 4429 and 4496).[[31]] It can thus be deduced that, if Rivera was already 65
years old in 1963, then he must have been born around 1898. On the other hand, Vidal was only nine (9)
years in 1912; hence, she could have been born only on 1905. This alone creates an unexplained anomalous,
if not ridiculous, situation wherein Vidal, Riveras alleged grandmother, was seven (7) years younger than her
alleged grandson. Serious doubts existed as to whether Rivera was in fact an heir of Vidal, for him to claim a
share in the disputed portions of the Maysilo Estate. [32]
These findings are consonant with the observations raised by Justice Renato Corona in his Concurring and
Dissenting Opinion on our 2007 Resolution. To wit:
TCT No. T-177013 covers Lot 26 of the Maysilo Estate with an area of 891,547.43 sq. m. It was a transfer
from TCT No. R-17994 issued in the name of Estelita I. Hipolito. On the other hand, TCT No. R-17994 was a
transfer from TCT No. R-15166 in the name of Jose B. Dimson which, in turn, was supposedly a direct transfer
from OCT No. 994 registered on April 19, 1917.
Annotations at the back of Hipolito's title revealed that Hipolito acquired ownership by virtue of a court order
dated October 18, 1977 approving the compromise agreement which admitted the sale made by Dimson in
her favor on September 2, 1976. Dimson supposedly acquired ownership by virtue of the order dated June 13,
1966 of the CFI of Rizal, Branch 1 in Civil Case No. 4557 awarding him, as his attorney's fees, 25% of
whatever remained of Lots 25-A, 26, 27, 28 and 29 that were undisposed of in the intestate estate of the
decedent Maria de la Concepcion Vidal, one of the registered owners of the properties covered by OCT No.
994. This order was confirmed by the CFI of Caloocan in a decision dated October 13, 1977 and order
dated October 18, 1977 in SP Case No. C-732.
However, an examination of the annotation on OCT No. 994, particularly the following entries, showed:
AP-6665/0-994 Venta: Queda cancelado el presente Certificado en cuanto a una extencion superficial de
3,052.93 metros cuadrados y 16,512.50 metros cuadrados, y descrita en el lote no. 26, vendida a favor de
Alejandro Ruiz y Mariano P Leuterio, el primer casado con Deogracias Quinones el Segundo con Josefa
Garcia y se ha expedido el certificado de Titulo No; 4210, pagina 163 Libro T-22.
Fecha del instrumento Agosto 29, 1918
Fecha de la inscripcion September 9, 1918
10.50 AM
AP-6665/0-994 Venta: Queda cancelado el presente Certficado el cuanto a una extencion superficial de
871,982.00 metros cuadrados, descrita en el lote no. 26, vendida a favor de Alejandro Ruiz y Mariano P.
Leuterio, el primer casado con Deogracias Quinones el segundo con Josefa Garcia y se ha expedido el
certificado de Titulo No 4211, pagina 164, Libro T-22.
Fecha del instrumento Agosto 25, 1918
Fecha de la inscripcion September 9, 1918
10:50- AM

Based on the description of Lot No. 26 in OCT No. 994, it has an area of 891,547.43 sq. m. which corresponds
to the total area sold in 1918 pursuant to the above-cited entries. Inasmuch as, at the time the order of the CFI
of Rizal was made on June 13, 1966, no portion of Lot No. 26 remained undisposed of, there was nothing for
the heirs of Maria de la Concepcion Vidal to convey to Dimson. Consequently, Dimson had nothing to convey
to Hipolito who, by logic, could not transmit anything to CLT.
Moreover, subdivision plan Psd-288152 covering Lot No. 26 of the Maysilo Estate described in Hipolito's
certificate of title was not approved by the chief of the Registered Land Division as it appeared to be entirely
within Pcs-1828, Psd-5079, Psd-5080 and Psd-15345 of TCT Nos. 4210 and 4211. How Hipolito was able to
secure TCT No. R-17994 was therefore perplexing, to say the least.
All these significant facts were conveniently brushed aside by the trial and appellate courts. The
circumstances called for the need to preserve and protect the integrity of the Torrenssystem. However, the trial
and appellate courts simply disregarded them.[33]
The Court thus adopts these findings of the Special Division on the validity of Jose Dimsons titles, which he
obtained consequent to the 1977 Order of Judge Sayo. Consequently, we cannot give due legal recognition to
any and all titles supposedly covering the Maysilo Estate obtained by Dimson upon the authority of either the
purported 1966 Order of Judge Muoz-Palma or the 1977 Order of Judge Sayo.
B.
Indubitably, as between the titles of ARANETA and the MANOTOKS and their predecessors-in-interest, on one
hand, and those of DIMSON, on the other, the titles held by ARANETA and the MANOTOKS must prevail
considering that their titles were issued much earlier than the titles of the latter.
Our findings regarding the titles of Jose Dimson necessarily affect and even invalidate the claims of all
persons who seek to derive ownership from the Dimson titles. These include CLT, which acquired the
properties they laid claim on from Estelita Hipolito who in turn acquired the same from Jose Dimson. Just as
much was concluded by the Special Division as it evaluated CLTs claims.
For its part, CLT contended that even at the trial court level, it maintained that there was only one OCT No.
994 from where its claim emanates. It argued that its case against the MANOTOKS, including that of STO.
NIO, was never decided based on the doctrines laid down in Metropolitan Waterworks and Sewerage
System v. Court of Appeals[[34]] and Heirs of Gonzaga v. Court of Appeals.[[35]]
Before this Special Division, CLT insists that the MANOTOKS failed to submit new competent evidence and,
therefore, dwelling on the alleged flaws of the MANOTOKs titles, the findings and conclusions of the courtappointed commissioners as adopted by the trial court, then upheld by the Honorable Court in its Decision
dated 28 September 1995 and finally affirmed in the Supreme Courts Decision dated 29 November 2005,
therefore stand, as there is no reason to disturb them.
Furthermore, CLT contends that the Orders of Judge Palma and Judge Sayo are no longer open to attack in
view of their finality. Lastly, CLT asserts that the properties covered by the MANOTOKS titles and those
covered by the expropriation proceedings did not property pertain to and were different from Lot 26 owned by
CLT. Thus, it maintains that the MANOTOKS cannot use as basis for the validity of their titles the
expropriation undertaken by the Government as a means of staking their claims.
To restate, CLT claims the 891,547.43 square meters of land covered by TCT No. T-177013[ [36]] located in
Malabon, Caloocan City and designated as Lot 26, Maysilo Estate, LRC Swo-5268. TCT No. T-177013
shows that its mother titles is OCT No. 994 registered on 19 April 1917. Tracing said claim, Estelita Hipoloto
executed a Deed of Sale with Real Estate Mortgage in favor of CLT on 10 December 1988. By virtue of this
transfer, Hipolitos TCT No. R-17994[[37]] was cancelled and in lieu thereof, CLTs TCT No. 223677/R-17994 of
TCT No. R-17994. Hipolito, on the other hand, was a transferee of the deceased Dimson who was allegedly
the registered owner of the subject land on the basis of TCT No. 15166.
In view of the foregoing disquisitions, invalidating the titles of DIMSON, the title of CLT should also be declared
a nullity inasmuch as the nullity of the titles of DIMSON necessarily upended CLTs propriety claims. As
earlier highlighted, CLT had anchored its claim on the strength of Hipolitos title and that of DIMSONs TCT
No. 15166. Remarkably and curiously though, TCT No. 15166 was never presented in evidence for purposes
of tracing the validity of titles of CLT. On this basis alone, the present remand proceedings remain damning to
CLTs claim of ownership.
Moreover, considering that the land title of CLT carried annotations identical to those of DIMSON and
consequently included the defects in DIMSONs title, the fact that whatever typographical errors were not at
anytime cured by subsequent compliance with the administrative requirements or subjected to administrative

correction bolsters the invalidity of the CLT title due to its complete and sole dependence on the void DIMSON
title.[38]
IV.
The task of the Special Division was not limited to assessing the claims of the Heirs of Dimson and CLT. We
likewise tasked the Special Division to ascertain as well the validity of the titles held by the Manotoks and
Araneta, titles which had been annulled by the courts below. Facially, these titles of the Manotoks and Araneta
reflect, as their valid mother title, OCT No. 994 dated 3 May 1917. Nonetheless, particular issues were raised
as to the validity of the Manotok and Araneta titles independent of their reliance on the 3 May 1917 OCT No.
994 vis--vis the inexistent 19 April 1917 OCT No. 994.
A.
We begin by evaluating the Araneta titles. The Special Division quoted the observations of the trial
court, which upheld Dimsons claim over that of Araneta, citing the following perceived flaws of TCT Nos.
26538 and 26539, from which Araneta derived its titles, thus:
Let us now examine TCT 26538 and TCT 26539 both in the name of Jose Ma. Rato from where defendant
was said to have acquired TCT 13574 and TCT 7784 now TCT 21343 in the name of Araneta and the other
documents related thereto:

the encumbrances annotated in the Memorandum of Encumbrances affecting the said title (Exhibits 16, 16-A
and 16-N David & Santos)
9) In the encumbrances annotated at the back of TCT 26539 (Exhibit 4-defendant) there appears
under entry No. 450 T 6196 Victoneta, Incorporated covering parcel of land canceling said title (TCT 26539)
and TCT 6196 was issued ( x x x) which could have referred to the Deed (sic) of Sale and Mortgage of 8-23-47
(Exhibit 5-defendant) entered before Entry 5170 T-8692 Convenio Philippine Land Improvement Company,
with Date of Instrument: 1-10-29, and Date of Inscription: 9-21-29.

In TCT 26838 this Entry 5170 T-8692 Convenio Philippine Land Improvement Company (Exhibit 16-J1) appears, but the document, Novation of Contract, Deed of Sale & Mortgage dated November 13,
1947 (Exhibit M) does not appear.
Entry marked Exhibit 16-J-1 on TCT 26538 shows only the extent of the value of P42,000.00 invested
by Jose Ma. Rato in the Philippine Land Improvement Company. Said entry was also entered on TCT 26539.
The Court also wonders why it would seem that all the documents presented by defendant Araneta are
not in possession of said defendant, for according to witness Zacarias Quintan, the real estate officer of the
said defendant Araneta since 1970, his knowledge of the land now in possession of defendant Araneta was
acquired by him from all its documents marked in evidence which were obtained only lately when they needed
for presentation before this Court.[[39]][40]

1) Perusal of TCT 26538 shows that its Decree No. and Record No. are both 4429. In the same vein, TCT
26539 also shows that it has Decree No. 4429 and Record No. 4429.
However, Decree No. 4429 was issued by the Court of First Instance, Province of Isabela (Exhibit I) and
Record No. 4429, issued for Ordinary Land Registration Case, was issued on March 31, 1911 in CLR No.
5898, Laguna (Exhibit 8, 8-A Bartolome Rivera et al.)
How then could TCT No. 26538 and TCT No. 26539 both have Decree No. 4429 and Record No.
4429, which were issued in Court of First Instance, Province of Isabela and issued in Laguna, respectively.
2) TCT no. 26538 and TCT No. 26539 in the name of Jose Ma. Rato are not annotated in the Original
Certificate of Title 994, where they were said to have originated.
3) The Escritura de Incorporacion de Philippine Land Improvement Company (Exhibit I) executed on
April 8, 1925 was only registered and was stamped received by the Office of the Securities and Exchange
Commission only April 29, 1953 when the Deed of Sale & Mortgage was executed on August 23, 1947 (Exh. 5
defendant) and the Novation of Contract, Deed of Sale and Mortgage executed on November 13, 1947 (Exh.
M0. So, that when Philippine Land Improvement was allegedly given a special power of attorney by Jose Ma.
Rato to represent him in the execution of the said two (2) documents, the said Philippine Land Improvement
Company has not yet been duly registered.
4) TCT 26538 and 26538 and TCT 26539 both in the name of Jose Ma. Rato, both cancel 21857
which was never presented in Court if only to have a clear tracing back of the titles of defendant Araneta.
5) If the subject matter of the Deed of Sale & Mortgage (Exhibit 5 defendant) is TCT 26539, why is it
that TCT 13574 of defendant Araneta cancels TCT 6196 instead of TCT 26539. That was never
explained. TCT 6196 was not even presented in Court.

The Special Division then proceeded to analyze these factual contentions, and ultimately concluded that the
Araneta claim to title was wholly valid. We adopt in full the following factual findings of the Special Division,
thus:
As for the proprietary claim of ARANETA, it maintains that it has established by direct evidence that its titles
were validly derived from OCT No. 994 dated 3 May 1917. With regard to the imputed flaws, it asseverates
that these were unfounded and thus, labored to refute all of them. ARANETA further expounded on the nullity
of the Palma and Sayo Orders which was the basis of DIMSONs titles.
The documentary exhibits it proffered traced its certificates of title to OCT No. 994 registered on 3 May
1917. From the titles submitted, its predecessor-in-interest was Jose Ma. Rato y Tuazon [RATO], one of the
co-heirs named in OCT No. 994, who was allotted the share of nine and five hundred twelve one thousandths
(9-512/1000) percent share of the Maysilo Estate.[[41]] For this reason, to ascertain the legitimacy of the
derivative title of ARANETA, the origin and authenticity of the title of RATO need to be reassessed.
Verily, attesting to RATOs share on the property, Entry No. 12343/O-994 of the Owners Duplicate Copy of
OCT no. 994, records the following:
12343/O-994 Auto: Jose Rato y Tuason - - - Queda cancelado el presente seartificado en cuanto
a una estension superficial de 1,405,725.90 metro Cuadrados mas o menos descrita en el Lote No. 25-A-3,
an virtud del auto dictado por el Juzgado de Primera Instancia de Riza, de fecha 28 de Julio de 1924, y que
en au lugar se had expedido el Certificados de Titulo No. 8692, folio 492 del Tomo T-35 del Libro de
Certicadads de Transferencia.
Date of Instrument Julio 28, 1924.

6) How come TCT 26538 of Jose Ma. Rato with an area of 593,606.90 was cancelled by TCT 7784
with an area of only 390,282 sq.m.
7) How was defendant Araneta able to have TCT 7784 issued in its name, when the registration of the
document entitled Novation of Contract, Deed of Sale & Mortgage (Exhibit M) was suspended/denied (Exhibit
N) and no title was received by the Register of Deeds of Pasig at the time the said document was filed in the
said Office on March 4, 1948 (Exhibit N and N-1).
Under Sec. 55 of Land Registration Act (Act No. 496) now Sec. 53 of Presidential Decree No. 1529, no
new certificate of title shall be entered, no memorandum shall be made upon any certificate of title by the
register of deeds, in pursuance of any deed or other voluntary instrument, unless the owners duplicate
certificate is presented for such endorsement.
8) The sale by Jose Ma. Rato in favor of defendant Araneta is not reflected on the Memorandum of
Encumbrances of TCT 26538 (Exhibit 7-defendant) meaning that TCT 26538 still exists and intact except for

Date of Inscription Agosto 1, 1024 10:19 a.m.

SGD. GLICERIO OPINION, Register of deeds
Agosto 19, 1924[[42]]
In accordance with the decree, RATO was issued on 1 August 1924, TCT No. 8692[[43]] which covers Lote
No. 25 A-3 del plano del subdivision, parte del Lote No. 25-A, planoPsu-(not legible), Hacienda de Maysilo,
situado en el Munisipio de Caloocan, Provincia del Rizal x x x.[[44]] The parcel of land covers an approximate
area of UN MILLION CUATROCIENTOS CINCO MIL SETECIENTOS VEINTICINCO metros cuadrados con
NOVENTA decimetros cuadrados (1,405,725.90) mas o menos. As reflected under Entry No. 14517.T8692,[[45]] the parcel of land covered under this certificate of title was subdivided into five (5) lots under
subdivision plan Psd-6599 as per Order of the court of First Instance of Rizal. Consequently, TCT Nos. 21855,
21856, 21857, 21858 and 21859 were issued.

Focusing on TCT No. 21857 issued on 23 May 1932, this certificate of title issued in RATOs name,[ [46]]
cancelled TCT No. 8692[[47]] with respect to the property it covers. On its face, TCT No. 21857,[[48]] was a
derivative of OCT No. 994 registered on 3 May 1917. It covers Lot No. 25 A-3-C of subdivision plan Psd6589, being a portion of Lot No. 25-A-3, G.L.R.O Record No. 4429. Thereafter, TCT No. 21857 was
cancelled by TCT No. 26538[[49]] and TCT No. 26539[[50]] which were both issued in the name of Jose Ma.
Rato y Tuazon on 17 September 1934.

Explaining this discrepancy, ARANETA insisted that the same was a mere typographical error and did not have
any effect on the validity of their title. It further contended that the number 4429 was the case number of
Decree No. 36455 and was used interchangeably as the record number.

With respect to TCT No. 26539, the certificate of title showed that it covered a parcel of land designated as
Section No. 2 of the subdivision plan Psd-10114, being a portion of Lot 25-A-3-C having an approximate area
of 581,872 square meters.[[51]] Thereafter, TCT No. 26539 was cancelled by TCT No. 6196[[52]] whose
registered owner appears to be a certain Victoneta, Inc. This parcel of land has an area of 581,872 square
meters designated as section No. 2 of subdivision plan Psd-10114, being a portion of Lot 25-A-3-C.

This Court finds that the incorrect entry with respect to the Decree and Record Number appearing on the title
of ARANETAs predecessor-in-interest cannot, by itself, invalidate the titles of ARANETAs predecessors-ininterest and ultimately, that of ARANETA. To the mind of this Court, the incorrect entries alluded to would not
have the effect of rendering the previous titles void sans any strong showing of fraudulent or intentional
wrongdoing on the part of the person making such entries. Fraud is never presumed but must be established
by clear and convincing evidence.[[60]] The strongest suspicion cannot sway judgment or overcome the
presumption of regularity. The sea of suspicion has no shore, and the court that embarks upon it is without
rudder or compass.[[61]]

As shown on its face, TCT No. 6196 issued on 18 October 1947 in the name of Victoneta, Inc. and its mother
title were traced from OCT No. 994 registered on 3 May 1917. Later, TCT No. 6196 was cancelled, and in
lieu thereof, TCT No. 13574 was issued in favor of Araneta Institute of Agriculture on 20 May 1949.[[53]] It
covers a parcel of land designated as section No. 2 of subdivision plan Psd-10114, being a portion of Lot 25A-3-C. It has an aggregate area of 581,872 square meters.

The Supreme Court, in Encinas v. National Bookstore, Inc.[[62]] acknowledged that certain defects on a
certificate of title, specifically, the interchanging of numbers, may occur and it is certainly believable that such
variance in the copying of entries could be merely a typographical or clerical error. In such cases, citing with
approval the decision of the appellate court, the technical description in the title should prevail over the record
number.[[63]]

On the other hand, appearing under Entry No. 16086/T-No. 13574 of TCT No. 6196 is the following:
Entry No. 16086/T-No. 13574 SALE in favor of the ARANETA INSTITUTE OF AGRICULTURE,
vendee: Conveying the property described in this certificate of title which is hereby cancelled and issuing in
lieu thereof Transfer Certificate of Title No. 13574, page 74, Book T-345 in the name of the vendee. (Doc.
No. 149, page 98, Book II, S. of 1949 of Notary Public for Manila, Hospicio B. Bias).
Date of Instrument May 18, 1949
Date of the Inscription May 30, 1949 at 11:00 a.m.[[54]]
TCT No. 26538[[55]] in turn showed on its face that it covers a parcel of land designated as Section 1 of
subdivision plan Psd-10114 being a portion of Lot 25-A-3-C having an area of 592,606.90 square meters.[ [56]]
On 4 March 1948, TCT No. 26538 was cancelled by TCT No. 7784, which was issued in favor of Araneta
Institute of Agriculture. TCT No. 7784 covers four (4) parcels of land with an aggregate area of 390,282
square meters.[[57]] It would appear from the records of CA-G.R. SP No. 34819 consolidated with CA-G.R. CV
No. 41883 that TCT No. 7784 was eventually cancelled by TCT No. 21343.[[58]] As per attachment of
ARANETA in its Answer dated 6 march 1980 filed in Civil Case No. 8050, a mere copy of TCT No. 21343
showed that it covers a parcel of land designated as Lot 6-B of the subdivision plan Psd-24962 being a portion
of Lot 6, described as plan Psd-21943, G.L.R.O. Record No. 4429 with an approximate area of 333,377
square meters.[[59]] However, for reasons unknown, a copy of TCT No. 21343, whether original or certified true
copy thereof, was not submitted before this Court.
In summation, ARANETA had shown that RATO, as one of the co-owners of the property covered by OCT
NO. 994, was assigned Lot No. 25-A-3. His evidence of ownership is reflected on TCT No. 8692 issued in
his name. RATO held title to these parcels of land even after its subdivision in the 1930s. Further subdividing
the property, RATO was again issued TCT No. 21857, and later TCT Nos. 26538 and 26539, still covering Lot
No. 25 A-3-C. In all his certificates of title, including those that ultimately passed ownership to ARANETA, the
designation of the lot as either belonging to or portions of Lot 25-A-3 was retained, thereby proving identity of
the land.
More importantly, the documentary trail of land titles showed that all of them were derived from OCT No. 994
registered on 3 May 1917. For purposes of tracing ARANETAs titles to Oct No. 994, it would appear that the
evidence presented ultimately shows a direct link of TCT Nos. 7784 and 13574 to said mother title. Suffice it
to state, the origin and legitimacy of the proprietary claim of ARANETA had been well substantiated by the
evidence on record and on this note, said titles deserve validation.
Under the guidelines set, we shall now proceed to evaluate the imputed flaws which had been the previous
bases of the trial court in invalidating ARANETAs titles.
One of the flaws observed on the titles of ARANETAs predecessor-in-interest was that TCT No. 26538 and
TCT No. 26539 in Ratos name refer to Decree No. 4429 and Record No. 4429, as basis of their
issuance. This is being questioned inasmuch as Decree No. 4429 refers to a decree issued by the CFI of
Isabela while Record No. 4429 was issued for ordinary Land Registration Case No. 31 March 1911 in CLR
No. 5898 of Laguna.

Thus, what is of utmost importance is that the designation and the technical description of the land, as stated
on the face of the title, had not been shown to be erroneous or otherwise inconsistent with the source of
titles. In ARANETAs case, all the titles pertaining to Lot No. 25 had been verified to be an offshoot of Decree
No. 36455 and are all located in Tinajeros, Malabon. At any rate, despite the incorrect entries on the title, the
properties, covered by the subject certificates of title can still be determined with sufficient certainty.
It was also opined that TCT No. 26538 and TCT No. 26539 in the name of RATO had not been annotated on
OCT No. 994 from which said titles had supposedly originated. It should be stressed that what partially
cancelled OCT No. 994 with respect to this subject lot were not TCT Nos. 26538 and 26539 but TCT
No. 8692 issued on 1 August 1924. In fact, TCT Nos. 26538 and 26539 are not even the immediate
predecessors of OCT No. 994 but were mere derivatives of TCT No. 21857. Logically therefore, these two
certificates of title could not have been annotated on OCT No. 994, they not being the preceding titles.
In any case, a perusal of OCT No. 994 shows an entry, which pertains to Jose Ma. Rato but, on account of
the physical condition of the copy submitted to this Court, the entry remains illegible for us to make a definite
conclusion.[[64]] On the other hand, Entry No. 12343/O-994 found on the Owners Duplicate Copy of OCT
No. 994 specifically recorded the issuance of TCT No. 8692 over Lot No. 25-A-3.[[65]]
The other flaws noted on ARANETAs certificates of title pertained to its failure to present TCT Nos. 21857,
6196 and 21343. As we have discussed, ARANETA offered in evidence a certified microfilm copy of TCT
No. 21857 and a certified true copy of TCT No. 6196 marked as Exhibits 5-A1A and 19-A1A,
respectively. However, it failed to submit a copy of said TCT No. 21343. Be that as it may, we will not hasten
to declare void TCT No. 7784 as a consequence of such omission, especially so since TCT No. 21343
appears to be a mere derivative of TCT No. 7784. Given that the validity of TCT No. 7784 had been
preponderantly proven in these proceedings, the authenticity of said title must be sustained. Besides,
ARANETAs failure to submit TCT No. 21343 had never been put into issue in these proceedings.
With respect to the difference in the area of more than 200,0000 square meters between TCT No. 7784 and
TCT No. 26538, we find that the trial court failed to consider the several conveyances of portions of TCT
No. 26538 before they finally passed on to ARANETA. Thus, on the Memorandum of Encumbrance of TCT
No. 26538, it is apparent that portions of this piece of land had been sold to various individuals before the
same were transferred to ARANETA on 4 march 1948. Naturally, since the subject land had been partially
cancelled with respect to the portion disposed of, it could not be expected that the area of TCT No. 26538 will
remain the same at the time of its transfer to ARANETA. Even assuming that the entire area covered by TCT
No. 26538 had been disposed of, this fact alone, cannot lend us to conclude that the conveyance was
irregular. An anomaly exists if the area covered under the derivative title will be much more than its
predecessor-in-interest. Evidently, this is not so in the case before us.
The trial court, relying on Exhibit N, further asserted that ARANETA should not have been issued TCT
No. 7784 considering that the registration of the Novation of Contract, deed of Sale & Mortgage was
suspended/denied and no title was received by the Register of Deeds of Pasig at the time the said document
was filed in the said Office on march 4, 1948. A perusal of Exhibit N submitted before the trial court, shows
that the suspension or denial was merely conditional considering that the person seeking registration had give
days within which to correct the defects before final denial thereof. As we see it, the Notice merely contained
a warning regarding the denial of the registration of the voluntary deed but, in no way, did it affect the vested
rights of ARANETA to be land. The fact that the title to the land was subsequently issued free from any
notation of the alluded defect creates a reasonable presumption that ARANETA was in fact able to comply

with the condition imposed. This is especially true since the notice itself contained a note, Just Completed,
written across the face of the letter.
Records also reveal the RTCs observation with regard to Aranetas failure to disprove the result of the plotting
made on the subject land (Exhibit K) to the effect that TCT 26538 overlaps portion of TCT 15159 and TCT
26539 also overlaps the other portion of said TCT R-15169. The trial court further noted that TCT R-15169
(Jose Dimson) and TCT 26539 (Jose Rato) and TCT 21343 (Araneta) are overlapping each other
within Lot 25-A. That portion of TCT R-15169 (Jose Dimson) along bearing distance points to 17 to 18 to 19 to
20 to 21 to 1 and 2 shaded in yellow color in the Plan is not covered by TCT 21343 (Araneta).[[66]]
Scrutinizing Exhibit K, it becomes apparent that the said evidence relied upon was only a private survey
conducted by Geodetic Engineer Reggie P. Garcia which had not been duly approved by the Bureau of Lands
and was based only on photocopies of relevant land titles.[ [67]] What is more, said geodetic engineer also
failed to adequately explain his observations, approach and manner of plotting the relative positions of the lots.
[[68]] From all indications, the conclusions reached by said geodetic engineer were anchored on unfounded
generalizations.
Another defect cited on ARANETAs title was the absence of any entry on the Memorandum of Encumbrances
of TCT No. 26538 of the alleged sale between RATO and ARANETA. As pointed out by ARANETA, the copy
of TCT No. 26538 submitted to the trial court contained entries only up to the year 1947, thus, explaining the
(1) lack of entry with regard to the issuance of TCT No. 7784 in favor of ARANETA considering that the same
was issued a year later and; (2) entry pertaining to Convenio Philippine Land Improvement Company which
was entered way back on 21 August 1929.
Nonetheless, it still cannot be denied that Rato and ARANETA together with Don Salvador Araneta, entered
into a voluntary agreement with the intention of transferring the ownership of the subject property. Moreover,
no conclusion should have been reached regarding the total cancellation of TCT No. 26538 inasmuch as TCT
No. 7784 cancelled the former certificate of title to the extent only of Three Hundred Ninety Thousand Two
Hundred Eighty Two (390,282) square meters.
Notably also, with the evident intent to discredit and refute the title of ARANETA, DIMSON submitted TCT
Nos. 26538[[69]] and 21857,[[70]] which are both derivatives of OCT No. 994 registered on 3 May 1917 and
cover parcels of land located in Malabon, Rizal. However, these certificates of title reflect different registered
owners and designation of the land covered.
Pertinently, Exhibit M-Dimson relating to TCT No. 26538, registered on 12 June 1952, points to one Angela
Bautista de Alvarez as the registered owner of a 240 square meter of land designated as Lot No. 19, Block 14
of the subdivision plan Psd-5254 being a portion of Lot No. 7-A-1-A. This certificate of title cancels TCT
No. 14112/T-348 and refers to a certain TCT No. 30473 on the inscriptions.
Exhibit N-Dimson, on the other hand, pertaining to TCT No. 21857 was issued on 30 March 1951 to one
Angela I. Tuason de Perez married to Antonio Perez. This certificate of Title covers a parcel of land described
as Lot No. 21, Block 16 of the consolidation and subdivision plan Pcs-140, G.L.R.O. Record No. 4429. It ahs
an area of 436 square meters and cancels TCT No. 21856.
Exhibit Q-Dimson[[71]] consisting of TCT No. 8692 covers two parcels of land designated as Lot Nos. 1 and 2
of Block No. 44 of the consolidation Subdivision Plan Pcs-188 with a total area of 3,372 square meters. It
was issued to Gregorio Araneta, Incorporated on 7 May 1948. This certificate of title cancelled TCT
No. 46118.
Comparing these titles to those of the ARANETA, it is apparent that no identity of the land could be found. The
Supreme Court, in the case of Alonso v. Cebu City Country Club, Inc.[[72]] agreeing with the Court of Appeals
dissertation in said case, ruled that there is nothing fraudulent for a certificate of title to bear the same number
as another title to another land. On this score, the Supreme Court elucidated as follows:
On the question that TCT No. RT-1310 (T-1151) bears the same number as another title to another land, we
agree with the Court of Appeals that there is nothing fraudulent with the fact that Cebu Country Club, Inc.s
reconstituted title bears the same number as the title of another parcel of land. This came about because
under General Land Registration Office (GLRO) Circular No. 17, dated February 19, 1947, and Republic Act
No. 26 and Circular No. 6, RD 3, dated August 5, 1946, which were in force at the time the title was
reconstituted on July 26, 1946, the titles issued before the inauguration of the Philippine Republic were
numbered consecutively and the titles issued after the inauguration were numbered also consecutively
starting with No. 1, so that eventually, the titles issued before the inauguration were duplicated by titles issued
after the inauguration of the Philippine Republic x x x.

Parenthetically, in their Motion for Partial Reconsideration of this Courts Resolution dated 30 October 2008,
DIMSON objected to the admissibility of Exhibits 4-A1A to 7-A1A on the ground that ARANETA failed to submit
the original copies of these certificates of title and contended that the originals contain different contents
from their own Exhibits M, N and Q.[[73]] The fact that the entries contained in ARANETAs pieces of evidence
are different from that of DIMSONs do not automatically make ARANETAs exhibits inferior replications or a
confirmation of their falsity. Interestingly, the objection regarding the non-submission of the original copy had
not been raised by DIMSON in their Comments/Objections to Consolidated Formal Offer of Evidence (Of
Araneta Institute of Agriculture, Inc.).[[74]] In any case, we find the objections unwarranted considering that
certified true copies or certified microfilm copies of Exhibits 4-A1A to 7-A1A had been submitted by ARANETA
in these proceedings.
Lastly, on the alleged non-registration of Philippine Land Improvement Company at the time the special power
of attorney was executed by Jose Ma. Rato to represent him in the execution of the deed of conveyances, the
same only proves that Philippine Land Improvement Company was not yet registered and this does not go as
far as proving the existence or non-existence of the company at which time it was executed. In effect, the
company was not precluded to enter into contracts and be bound by them but it will do so at the risk of the
adverse effects of non-registration under the law.
Ultimately, the question of whether the aforesaid certificates of title constitute as clouds on ARANETAs titles
are not for this Court to rule upon for purposes of the present remand. Needless to state, it is not for the Heirs
of Dimson to rely on the weakness of ARANETAs titles and profit from it. Rather, they should have focused on
the strength of their own titles since it is not within our office to decide in whose hands the contested lands
should go, our task being merely to trace back the parties claims to OCT No. 994 dated 3 May 1917.[75]
There is no question that the Araneta titles were derived from OCT No. 994 dated 3 May 1917, particularly
from the share of Jose Ma. Rato y Tuazon, one of the co-heirs named in OCT No. 994. The Special Division
correctly assessed, among others, the reference to Decree No. 4429 and Record No. 4429 in some of the
antecedent titles of Araneta[76] as mere clerical errors that could not have invalidated said titles, 4429 being
the case number of Decree No. 36455, and the designation and the technical description of the land on those
titles not having been shown to be erroneous or variant with the source title. The Special Division also
correctly considered that the trial court had failed to take into account the several conveyances of TCT No.
26538 before it was ultimately transferred to Araneta in 1948, which explain the difference in area between
TCT No. 7784 and TCT No. 26538. The imputed overlap of TCT No. 26538 and TCT No. 26539 with the titles
held by Dimson was based on a private survey which had not been duly approved by the Bureau of Lands.
The alleged absence of any entry on the Memorandum of Encumbrances of TCT No. 26538 of the sale of the
property between Rato and Araneta did not, according to the Special Division, discount the fact that Rato and
Araneta entered into a voluntary agreement with the intention of transferring the ownership of the subject
property. Finally, the Special Division noted that the titles derived from OCT No. 994, which Dimson had
submitted as evidence to discredit the Araneta claim, pertain to properties wholly different from those covered
by the Araneta titles.
There is no cause to dispute the factual findings and conclusions of the Special Division on the validity of the
Araneta titles, and we affirm the same.
B.
It appears that the claim to title of the Manotoks is somewhat more controversial. The Special Division did not
discount the fact that there could have been flaws in some of the intervening titles between the 3 May
1917 OCT No. 994 and the present titles of the Manotoks. However, the significant event was the
expropriation proceedings undertaken by the Republic of the Philippines sometime in 1947. At least some of
the titles in the name of the Manotoks were sourced from the titles issued to and subsequently distributed by
the Republic. The Special Division explained the milieu in full:
VALIDITY OF THE MANOTOK TITLES
The notation under Entry No. 6655/O-994, found on page 17 of OCT 994 of the Owners Duplicate Copy,
shows that Lot No. 26 had been a subject of sale in favor of Alejandro Ruiz and Mariano P. Leuterio.[ [77]] The
notations reads:
Ap. 6655/O-994 Venta: Queda Cancelado el presente Certificado en cuanto a una extension superficial de
3,052.93 Metros cuadrados y 16,512.50 metros Cuadrados y descrita en elLote No. 26 vendida a favor de
Alejandro Ruis y Mariano P. Leuterio, el primar casado con Diogracias Quinones y el Segundo con Josefa
Garcia y se be expedido el Certificado de Titulo No. 4210, Pagina 163, Libro T-22.

Date of the Instrument Aug. 29, 1918

Date of Inscription Sept. 9, 1918 10:50 a.m.
(GD) L. GARDUNIO, Register of Deeds
Ap. 6665/O-994-Venta: Queda Cancelado el presente Cerficiado en cuanto a una extension superficial de
871,982.00 metros cuadrados, descrita en el Lote No. 26, vendida a favor de Alejandro Ruiz y Mariano P.
Leuterio, el primar casado con Deogracias Quinones y el Segundo con Josefa Garcia y se be expedido el
Certificado de Titulo No. 4211, Pagina 164, Libro T-No. 22.
Date of Instrument Aug. 21, 1918
Date of Inscription Sept. 9, 1918 10:50 a.m.
(SGD.) L. GARDUNIO, Register of Deeds
As a result, TCT No. 4211 was cancelled by TCT No. 5261 which was issued in the name of Francisco
Gonzales. Inscribed on the Memorandum of the Incumbrances Affecting the Property
Described in this Certificate was the sale executed in favor of
Francisco Gonzales dated 3 March 1920. Thus, on 6 April 1920, TCT No. 5261 was issued in the name of
Francisco Gonzales.[[78]]
On 22 August 1938, TCT No. 5261 was cancelled by TCT No. 35486 in the names of Jose Gonzales y
Narciso married to Maria P. Gutierrez, Consuelo Susana Gonzales y Narciso married to Alfonso D. Prescilla;
Juana Francisco Gonzales y Narciso married to Fortunato de Leon; Maria Clara Gonzales y Narciso married
to Delfin Hilario; Francisco Felipe Gonzales y Narciso married to Pilar Narciso, and Concepcion Andrea
Gonzales y Narciso married to Melquiades M. Virata, Jr.
Appearing on the Memorandum of TCT No. 5261 is NOTA: Ap 2111 which reads as follows:[[79]]
A/2111 Adjudicado el torreno descrito en este certificado de titulo, a Rufina Narciso Vda. de Gonzales, a
cuenta de la participacion de osia esta en (not legible) los tienes de la eseledad de genanciales. Habida entre
la misma y el finado Francisco J. Gonzales, per una orden del Hon. Fernando Jugo, Juez del Juzgado de
Primera Instancia de Manila Sala II, dienada el 20 de Septiembre de 19 (not legible), en el Expidiente de
intestado del nombrado Francisco J. Gonzales, No. 49034, se cancela el presente certificado de tituto y se
expide otre a hombre decha Rufina Narciso, con (not legible) No. 35486, folio 86, Tomo T-168 del libro de
transferencias, archivando se la copia de dicha orden da que se ha heche referencia en al Legajo T-No.
35486.
(SGD) TEODORO GONZALES,
Registrado de Titulos.
The property was later subdivided into seven lots in accordance with subdivision plan Psd-21154.
[[80]] Partitioning the lots among the co-owners, TCT No. 35486 was eventually cancelled and in lieu thereof
six (6) certificates of titles were individually issued[[81]] to Francisco Gonzaless six (6) children, specifically,
TCT Nos. 1368-1373 while TCT No. 1374 was issued in favor of all the children.[[82]]
As previously mentioned, the properties covered by TCT Nos. 1368-1374 were expropriated by the Republic
of the Philippines and were eventually subdivided and sold to various vendees. Eighteen (18) lots were
obtained by MRI from the years 1965 to 1974, while it acquired the lot covered by TCT No. 165119 in
1988. On the other hand, MEC acquired from PhilVille Development Housing Corporation Lot No. 19-B by
virtue of Deed of Exchange executed in its favor for which, TCT No. 232568 was issue don 9 May 1991.
The 20 certificates of titles were traced by the MANOTOKS, as follows:
1)
TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidation-subdivision plan (LRC)
Pcs-1828 which has an area of 4,988 square meters. MRI purchased this lot from one Basilio Caina who was
issued TCT No. 7526 which cancelled TCT Nos. 36657-62 registered in the name of the Republic of
the Philippines.[[83]]
2)
TCT No. 7762, covering Lot 1-C, was obtained by MRI from one Narcisa Buenaventura. The Parcel of
land has an approximate area of 2,876 square meters. Buenaventuras ownership was evidenced by TCT
No. 7525,[[84]] deriving the same from TCT No. 36657-63.[[85]]

3)
TCT No. 8012 in the name of MRI covers Lot No. 12-1 having an area of 20,000 square meters.
[[86]] This certificate of title was traced from one Filemon Custodio who held TCT No. 7792. Custodio was in
turn a transferee of Guillermo Rivera, the latter having been issued TCT No. 7760 by virtue of sale between

him and then Peoples Homesite and Housing Corporation [PHHC]. The latter title eventually cancelled TCT
No. 36557-63 of the Republic.[[87]]
4)
TCT No. 9866 issued to MRI covers Lot No. 21 and has an approximate area of 23,979 square
meters. MRIs certificate of title was derived from TCT No. 9854 registered in the name of Filemon Custodio,
a transferee of Jose Dionisio, who was issued TCT No. 9853. Dionisios title in turn cancelled the Republics
TCT No. 36657-63.[[88]]
5)
TCT No. 21107 issued to MRI covers Lot 22 with an approximate area of 2,557 square meters. MRI
acquired the same by virtue of sale between him and Francisco Custodio, holder of TCT No.
21040. Francisco Custodio was a transferee of Lorenzo Caina, registered owner of TCT No. 21039 as
evidenced by a Deed of Sale between Caina and the PHHC, the latters certificate of title canceling TCT
No. 36557-63 of the Republic.[[89]]
6)
TCT No. 21485 was issued to MRI by virtue of sale between it and Francisco Custodio, registered owner
of TCT No. 21484. The certificate of title covers Lot 20 with an approximate area of 25,276 square meters
Custodio was in turn a transferee of Lorenzo Caina, the latter being the registered owner of TCT No. 21013
by reason of sale between him and PHHC.[[90]] Under Entry No. 6277/T-21485, it would appear that portions
of the property covered under TCT No. 21485 and TCT No. 232568 had been subject of an expropriation
proceedings to which the Manotok Estate Corporation, et al. interposed no objections subject to the payment
of just compensation.[[91]]

7)
TCT Nos. 26405[[92]] and 26406,[[93]] both registered in the name of MRI, cancelled TCT Nos. 9773 and
9774, respectively. TCT Nos. 9773 and 9774 were registered in the names of Romulo, Rosalina, Lucila, Felix
and Emilia all surnamed Jacinto, [JACINTOS], before the same were transferred to MRI by reason of sale in
favor of the latter. The JACINTOS certificates of title were in turn derived from TCT Nos. 8014 and 8015
issued in the name of Filemon Custodio[[94]] Both TCT Nos. 8014 and 8015 cancelled TCT 7792/T-39.
However, for purposes of tracing TCT No. 7792/T-39 to the Republics certificate of titles, this certificate of title
was not submitted in evidence.
8)
TCT No. 26407[[95]] issued to MRI was traced back to the title of Lourdes Mercado Cloribel who was the
registered owner of TCT No. 8404 by virtue of sale between the two, thereby transferring ownership to
MRI. On the fact of TCT No. 8404, it would show that it cancelled TCT No. 8013/T41 but there is no showing
in whose name TCT No. 8013 was registered and what certificate of title it cancelled.
9)
TCT No. 33904[[96]] of MRI cancelled TCT No. 8017 of Filemon Custodio by virtue of sale between the
latter and MRI.[[97]] We note that TCT No. 8017 cancelled TCT No. 7792/T-39 but there is no showing whether
the same could be traced back to the Republics certificates of title.
10) TCT No. 34255, covering Lot No. 11-Bm, Psd-75797 with an area of 11,000 square meters, reflects MRI
as the registered owner. This certificate of title cancels TCT No. 36557-63 of the Republic.[[98]]
11) TCT No. 254875[[99]] bears MRI as the registered owner of Lot 55-A with an area of approximately 1,910
square meters. This certificate of title cancelled TCT No. 41956 which covers Lot 55, also registered in the
name of MRI. It would appear that MRI acquired the lot covered under TCT No. 41956 from one Joaquin
Caina who was the registered owner of TCT No. 25715 being a vendee of PHHC.[[100]]
12) TCT No. 53268 of MRI covered Lot No. 15,[[101]] which was purchased by MRI from one Maria V.
Villacorta who held TCT No. 53155. Villacorta in turn acquired the same land from one Eufrocina Mackay
whose TCT No. 7827 was eventually cancelled by Villacortas land title.[ [102]] It would appear that TCT
No. 7827 cancelled TCT No. 7826/T-40 but there is no trace to whom the latter title was registered and what
certificate of title it cancelled.
13) TCT No. 55897 shows MRI as the registered owner of Lot 3 of the consolidation-subdivision plan (LRC)
Pcs-1828 of the Maysilo Estate covering an area of more or less 20,531 square meters. This certificate of title
cancelled TCT No. 53122 in the names of MRI (19,531 square meters) and one Silvestre Domingo (1,000
square meters). TCT No. 53122 in turn cancelled TCT No. 21347 registered in the names of Jesus Hipona
(19,531 square meters) and Silvestre Domingo (1,000 square meters). Notably, TCT No. 21347 cancelled
TCT No. 21315/T-107 but there is no indication to whom TCT No. 21315 was registered and what certificate
of title it cancelled.[[103]]
14) TCT No. C-17272 reflects MRI as the registered owner of Lot 6-C which has an approximate area of
27,850 square meters. MRIs certificate of title cancelled TCT No. C-17234 registered in the names of MRI
(27,750 square meters), Roberto S. David (3,0000 square meters) and Jose Madulid (500 square meters). It
would appear that TCT No. C-17234 cancelled TCT No. 53124 registered in the names of MRI, Spouses

Priscila and Antonio Sebastian and Jose Madulid.[ [104]] MRI also submitted in evidence a Deed of Partition
between itself, Roberto David and Madulid thereby subdividing the property into Lots 6-A, 6-B and 6-C as per
subdivision plan (LRC) Psd-277091.[[105]] Again, we note that TCT No. 53124 cancelled TCT No. 21350/T-107
but the records are bereft of any indication what certificate of title it cancelled and to whom the same was
registered.
15) TCT No. C-35267, covering Lot 56-B of subdivision plan (LRC) Psd-292683 with an approximate area of
9,707 square meters, was a by-product of TCT No. 25146, also registered in the name of MRI, after the same
was subdivided into two lots, namely, Lot Nos. 56-A and 56-B. TCT No. 25146 cancelled TCT No. 25145
registered in the name of Quirino Labing-isa by virtue of sale in favor of MRI. In turn, TCT No. 21545
cancelled TCT Nos. (36557) 12836 to (36563) 12842.[ [106]]
16) TCT No. T-121428, registered in the name of MRI covers Lot No. 5-C of subdivision plan (LRC) psd315272 which has an approximate area of 4,650 square meters. It was previously registered in the names of
MRI (4,650 square meters), Ricardo Cruz (941 square meters) and Conchita Umali (1,000 square meters)
under TCT No. 53123 by order of the Court of First Instance of Rizal, Caloocan City, Branch XII and as per
agreement of the parties in Civil Case No. C-424. TCT No. 53123 in turn cancelled TCT No. 21346 whose
registered owners were Conchita Umali (1,000 square meters), Ricardo Cruz (941 square meters) and Jesus
Hipona (4,650 square meters).[[107]] Like some of the other titles, TCT No. 21346 cancelled TCT No. 21316 but
there is no trace of this latter certificate of title.
17) TCT No. 163902, registered in the name of MRI, covers Lot No. 4-B-2 and has an area of more or less
6,354 square meters and a by-product of TCT No. 9022, also in the name of MRI, after the same was
subdivided under subdivision plan (LRC) Psd-334454. TCT No. 9022, in turn, cancelled TCT No. 8994/T-45
registered in the name of Filemon S. Custodio whose ownership thereon was transferred to MRI by virtue of a
voluntary sale.[[108]] TCT No. 8894 cancelled TCT No. 8846/T-45 but this latter certificate of title was not
submitted in evidence for purposes of tracing back to the Republics title.
18) TCT No. 165119[[109]] was issued to MRI by virtue of a Deed of Sale between Spouses Francisca Labingisa and Juan Ignacio [SPOUSES IGNACIO] and MRI, as a result of which, TCT No. C-36960 of the SPOUSES
IGNACIO was cancelled.[[110]] It would appear that TCT No. C-39690 cancelled TCT No. 35266/T-173 but
TCT No. 35266/T-173 was not submitted in evidence.
19) TCT No. T-232568 of the Manotok Estate Corporation, covering Lot No. 19-B of subdivision plan Psd13011152 with an area of 23,206 square meters, was derived from the certificate of title held by PhiVille
Development and Housing Corporation under TCT No. 197357. MEC acquired the subject parcel of land by
virtue of Deed of Exchange between it and PHILVILLE DATED 9 May 1991.[ [111]] TCT No. 197357 cancelled
TCT No. 195730/T-974 but there is no trace what certificate of title the latter title cancelled.
By and large, all the certificates of title submitted by the MANOTOKS, including their derivative titles, were all
traced to OCT No. 994 registered on 3 May 1917. Likewise, they declared all the lots covered by such titles
for taxation purposes. Without doubt, MRI had successfully traced back some of their certificates of title to the
valid OCT No. 994, they having acquired the lots from some of the vendees of the PHHC after the same were
expropriated by the Republic from the Gonzalezes.
The fact that these lots were subjected to expropriation proceedings sometime in 1947 under Commonwealth
Act No. 539 for resale to tenants is beyond question, as also enunciated by the Supreme Court in Republic of
the Philippines v. Jose Leon Gonzales, et al. To bolster this fact, paragraph r of the Majority Report noted
that the seven properties covered by TCT Nos. 1368 to 1374 were expropriated by the Republic from the
Gonzalezes.
The fact that these lots were subjected to expropriation proceedings sometime in 1947 under Commonwealth
Act No. 539 for resale to tenants is beyond question, as also enunciated by the Supreme Court in Republic of
the Philippines vs. Jose Leon Gonzaels, et al. To bolster this fact, paragraph r of the Majority Report noted
that the seven properties covered by TCT Nos. 1368 to 1374 were expropriated by the Peoples Homesite
and Housing Corporation which were later consolidated and subdivided into 77 lots for resale to tenants. No
sign of protest was ever raised by CLT on this point.[112]
The fact of expropriation is extremely significant, for titles acquired by the State by way of expropriation are
deemed cleansed of whatever previous flaws may have attended these titles. As Justice Vitug explained
in Republic v. Court of Appeals,[113] and then Associate Justice (now Chief Justice) Puno reiterated in Reyes v.
NHA:[114] In an rem proceeding, condemnation acts upon the property. After condemnation, the paramount title
is in the public under a new and independent title; thus, by giving notice to all claimants to a disputed title,
condemnation proceedings provide a judicial process for securing better title against all the world than may be
obtained by voluntary conveyance.[115] This doctrine was derived from the opinion of then Chief Judge (now
U.S. Supreme Court Justice) Stephen Breyer in Cadorette v. U.S.,[116] which in turn cited the pronouncement of

the U.S. Supreme Court in U.S. v. Carmack[117] that [b]y giving notice to all claimants to a disputed title,
condemnation proceedings provide a judicial process for securing better title against all the world than may be
obtained by voluntary conveyance.[118]
In annulling the Manotok titles, focus was laid on the alleged defects of TCT No. 4211 issued in September of
1918. However, TCT No. 4211 was issued decades before the property was expropriated. Thus, any and all
defects that may have attended that particular title would have been purged when the property covered by it
was subsequently acquired by the State through eminent domain. The Special Division noted as much:
As it is, the validity of most of MRIs certificates of title should be upheld because they were derived from the
Republics valid certificates of title. In fact, some of the MANOTOKS titles can be traced back to the
Governments titles as a result of the expropriation in 1947.
Relevantly, the titles of the Republic, as the predecessor-in-interest of the MANOTOKS, are presumed valid
by virtue of their acquisition resulting from the exercise of its inherent power of eminent domain that need not
be granted even by the fundamental law. Thus, the alleged flaws concerning the certificates of title issued
previous to the exercise of the State of its inherent power did not affect or render invalid the subsequent
transfers after the forced sale. Indeed, when land has been acquired for public use in fee simple
unconditionally, either by the exercise of eminent domain or by purchase, the former owner retains no rights in
the land, and the public use may be abandoned, or the land may be devoted to a different use, without any
impairment of the estate or title acquired or any reversion to the former owner.[119]
The Special Division also took exception to the majority report of the Commissioners (Majority Report) who
had been tasked by the trial court to examine the validity of the Manotok titles. The Majority Report
had arrived at several conclusions with respect to the TCTs from which the Manotok titles were derived.
[120]
The Special Division, however, concluded that such report was in fact tainted by the fact that it was
determined outside the scope of the issues framed and agreed upon by the parties. To wit:
In meeting the issue, the MANOTOKS disproved the opinion with regard to the alleged defects of their titles
inasmuch as the majority report submitted before the trial court was made outside the scope of the tasks
which the trial court confined them to perform. The MANOTOKS also argued that before this proceeding on
remand, CLT failed to introduce evidence of such flaws neither were the concerned geodetic engineers
presented as witnesses. Moreover, the MANOTOKS further maintained that CLT failed to submit any factual
or legal bases to prove the authenticity and validity of the Palma and Sayo Orders. They insisted that the
Palma Order was a void one for being conditional and having resulted to the issuance of duplicate certificates
of land title.
With respect to the imputed flaws on the MANOTOKS titles which were based on the Majority Report, we find
that the bases of the alleged defects proceeded from unreliable sources thus, tainting the veracity of the said
report.
The records of the case between CLT and the MANOTOKS reveal that the parties approved the creation of a
commission to resolve only these two issues, to wit:
x x x
These issues to be resolved by the 3 Commissioners are as follows:
1)
Whether or not the property covered by the Transfer Certificates of Title of defendants pertain to
or involve Lot No. 26 of the Maysilo Estate presently titled in the name of the plaintiff; and
2)
Whether or not the property covered by the title of the plaintiff and the property covered by the
titles of the defendants overlap.[[121]]
Scrutinizing the Majority Report upon which the trial courts conclusions were based, it would appear that the
findings therein were outside the scope of the issues framed and agreed upon by the parties. Specifically, the
deductions with regard to the technical infirmities and defects of TCT Nos. 4211, 4210, 5261 and 35486 do
not involve the question of whether or not the subject properties were identified as Lot No. 26 of the Maysilo
estate or whether there was overlapping of titles. Records bear out that the MANOTOKS took exception to the
procedure taken citing therein the ultra vires acts of the two Commissioners.
In addition, the majority report focused on the alleged flaws and inherent technical defects of TCT Nos. 4211,
5261 and 35486, ranging from the language of the technical descriptions, absence of subdivision plan, lot
number and survey plan. Evidently, these defects go only as far as the certificates of title issued prior to those
of the Republic. Remarkably, no specific flaw was found on the MANOTOKS titles indicating any irregularity
on their issuance. In fact, the Commissioners who signed the majority report even concluded that only TCT

Nos. 4211, 4210, 5261, 35486, 1368 thru 1324 (sic)[[122]] were irregularly and questionably issued without any
reference to the MANOTOKS certificates of title.[ [123]] Otherwise stated, the imputed flaws affect only those
certificates of title issued prior to those registered in the name of the Republic. No flaw had been specifically
identified or established in the proceedings below, which would taint the titles held by the MANOTOKS in so
far as the regularity of their issuance is concerned. [124]
At the same time, the Special Division was not prepared to uphold the validity of all of the Manotok titles. It
took issue with the particular titles which could not be retraced to the titles acquired by the Republic of
the Philippines by way of expropriation.
Although the MANOTOKS had traced their title from the vendees of PHHC, there are, however, some
certificates of title which could not be traced back to the titles previously held by the Republic specifically,
MRIs TCT Nos. 26405 and 26406, 26407, 33904, 53268, 55897, C-17272, T-121428, 163903, 165119 and
MECs TCT No. T-232568. As to these certificates of title, the MANOTOKS failed to make any specific
reference to the preceding certificates of title which they cancelled and to whose names they were
subsequently transferred and registered. Thus, we find no sufficient basis to make a conclusion as to their
origins.[125]

2. In view thereof and in addition to other grounds we have already discussed, the certificates of title of the
deceased Jose Dimson and his successor-in-interest, CLT, having been traced back to OCT 994 dated 19
April 1917, are NULL and VOID and thus vest no legal right or claim in favor of DIMSON and CLT.
3. The 13 June 1966 Palma Order and the 18 October 1977 Sayo Order, on which DIMSON and CLT anchor
the validity of their respective titles, do not substantiate their proprietary claims. While the existence of said
Orders are admitted, the legal import thereof nonetheless fails to confer a semblance of legality on the titles of
DIMSON and consequently, of CLT, more so, a superior right to defeat the titles of the MANOTOKS and
ARANETA, respectively.
4. Portions of Lot No. 26 pertinent to this controversy, particularly that being disputed by the MANOTOKs and
CLT, were expropriated by the Republic of the Philippines sometime in 1947 under Commonwealth Act No.
539 for resale to tenants. The MANOTOKS, thus as successor-in-interest of the Republic, were able to
establish that some of their certificates of title had indeed originated or were derived from said expropriated
parcels of land.
5. The evidence on record confirm that the certificates of title covering the land being claimed by ARANETA
were derived from OCT NO. 994 registered on 3 May 1917 thereby ultimately showing a direct link of TCT
Nos. 7784 and 13574 to said mother title. By reason of which, that is either belonging to or portions of Lot 25A-3 as previously owned by RATO, had been well substantiated and proven to be superior to that of DIMSON.

V.
The Special Division supplied the following precise and concise summary of its conclusions:
In prcis, the factual milieu of the present controversy and the evidence on record clearly establish the failure
of DIMSON and CLT to substantiate their titles and overcome the onus of proving that said titles are
derivatives of OCT 994 registered on 3 May 1917, and not 19 April 1917, as what is reflected in their titles. In
contrast, the MANOTOKS and ARANETA, both of which had consistently anchored their proprietary claims on
OCT No. 994 registered on 3 May 1917, have, in this remand proceeding, been able to support their claims of
ownership over the respective portions of the Maysilo Estate. Except in the case of the MANOTOKS which
had failed to substantiate the validity of some of their certificates of title, the MANOTOKS and ARANETA
presented evidence proving the identity, the extent and the origin of their titles.
Answering the issues assigned by the Supreme Court relative to the tenability of the respective imputed flaws
in the titles of the MANOTOKS and ARANETA and whether such flaws are sufficient to defeat said claims, this
Court finds that, as discussed above, such flaws are inconsequential and ineffectual in invalidating the
MANOTOKS and ARANETA titles.

6. For reasons above-stated and in view of the established rights of ownership of both the MANOTOKS and
ARANETA over the contested properties, we find that the imputed flaws on their titles cannot defeat the valid
claims of the MANOTOKS and ARANETA over the disputed portions of the Maysilo Estate. [126]
Inasmuch as we agree with the factual findings and evaluation of the Special Division, we likewise adopt the
above conclusions. As we earlier stated, it was incumbent on the Heirs of Dimson and/or CLT to establish their
claim to title for reasons other than the fact that OCT No. 994 dated 19 April 1917 is extant. They failed to do
so. It should be noted that the instant cases arose from separate actions filed by Jose Dimson and CLT
seeking the recovery of possession and/or annulment of title against Araneta and the Manotok Group. Thus,
the burden of evidence was on Dimson and CLT to establish the strength of their respective claims of
ownership, and not merely to rely upon whatever weaknesses in the claims of the Manotoks and Araneta for
their causes of action to prosper. The well-settled legal principle in actions for annulment or reconveyance of
title is that a party seeking it should establish not merely by a preponderance of evidence but by clear and
convincing evidence that the land sought to be reconveyed is his. [127] In an action to recover, the property must
be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendant's
claim.[128]
We now proceed to tackle the recommendations submitted by the Special Division. They are as follows:

Significantly, since the respective certificates of title of herein contending parties are contradictory to each
other and stand to refute the validity of their opposing titles, it cannot be gainsaid that said certificates of title
have correspondingly been subjected to dispute on the basis of separate and distinct imputed flaws. Still, the
crucial difference between the imputed flaws allegedly tainting said contending titles, DIMSON and CLT on
one hand, and the MANOTOKS and ARANETA, on the other, is that the imputed flaws purportedly
beleaguering the respective certificates of title of the MANOTOKS and ARANETA relate to the mechanical and
technical aspect of the transcription of their titles and are therefore inconsequential to the import and validity
thereof. Said imputed flaws do not depart from the fact that the predecessors-in-interest of the MANOTOKS
and ARANETA had been clothed with the right of ownership over the disputed portions of the Maysilo Estate.
On the other hand, the flaws attending the titles of DIMSON and CLT primarily stem from infirmities attending
or otherwise affecting the very crux of their claim of ownership. Having derived their titles from RIVERA,
whose title is questionable and dubious to the core, DIMSON and CLT cannot rightly insist on the validity of
their titles. Such flaws are hard to overcome as they delve into the substance of their proprietary claims. As
stated, DIMSON and CLT miserably failed to overcome their onus and instead opted to hap on the supposed
flaws of the adverse parties. For these reasons, the titles of DIMSON and CLT should be declared a nullity.

RECOMMENDATIONS
Apropos to said conclusions, this Court hereby respectfully makes the following recommendations regarding
the validity of the conflicting proprietary claims as interposed by the herein contending parties:
1. To declare with finality that the certificates of title of DIMSON and CLT including other derivative titles
issued to their successors-in-interest, if any, are NULL and VOID, thus invalidating their legal claims over the
subject parcels of land.
2. To declare LEGAL and VALID the proprietary claims the MANOTOKS over the parcels of land covered by
the following certificates of title:
a)
TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidation-subdivision plan
(LRC) Pcs-1828 which has an area of 4,988 square meters.

xxx

b)

TCT No. 7762 covering Lot 1-C, with an approximate area of 2,287 square meters.

From the foregoing evaluation and in conformity with the Supreme Court 2007 Resolution, this Court arrived at
the following conclusions as to the status of the original title and its subsequent conveyances:

c)

TCT No. 8012 covering Lot No. 12-1 having an area of 20,000 square meters.

d)

TCT No. 9866 covering Lot No. 21 and has an approximate area of 23,979 square meters.

e)

TCT No. 21107 covering Lot 22 with an approximate area of 2,557 square meters.

f)

TCT No. 21485 covering Lot 20 with an approximate area of 25,276 square meters.

g)

TCT No. 34255 covering Lot No. 11-Bm, Psd-75797 with an area of 11,000 square meters.

1. As categorically declared by the Supreme Court, there is only one OCT 994, the registration date of which
had already been decisively settled as 3 May 1917 and not 19 April 1917. OCT 994 which reflects the date
of 19 April 1917 as its registration date is null and void.

h)

should, from the cleansing effect the expropriation had on whatever flaws that attached to the previous
titles. However, although the Special Division did not concede the same benefit to the other Manotok titles
named in the third recommendation, at the same time it did not conclude that such titles were false or
fraudulently acquired. Absent such a finding, we are disinclined to take the ultimate step of annulling those
titles.

TCT No. 254875 covering Lot 55-A with an area of approximately 1,910 square meters.

i)
TCT No. C-35267 covering Lot 56-B of subdivision plan (LRC) Psd-292683 with an
approximate area of 9,707 square meters.
With regard to the following certificates of title, namely:

Said titles have as their origin what we have acknowledged to be a valid mother title OCT No. 994 dated 3
May 1917. This is in stark contrast with the titles of CLT, the oppositors to the Manotoks, which all advert to an
inexistent mother title. On their face, the Manotok titles do not reflect any error or fraud, and certainly the
Special Division do not point to any such flaw in these titles. Nothing on the face of the titles gives cause for
the Court to annul the same.

3.A. MANOTOK REALTY INC.

a)

TCT No. 26405 covering Lot No. 12-E with an area of 1,0000 square meters.

b)

TCT No. 26406 covering Lot No. 12-F with an area of 1,000 square meters.

c)

TCT No. 26407 covering Lot No. 12-B with an area of 1,000 square meters.

d)

TCT No. 33904 covering Lot No. 12-H with an area of 1,802 square meters.

e)
TCT No. 53268 covering Lot No. 15 purchased by MRI from one Maria V. Villacorta with an
approximate area of 3,163 square meters.
f)
TCT No. 55897 covering Lot 3 of consolidation-subdivision plan (LRC) Pcs-1828 of the Maysilo Estate
covering an area of more or less 20,531 square meters.
g)

It is worth mentioning that the Special Division refused to adopt the Majority Report earlier rendered in the
case between the Manotoks and CLT, said report having exhaustively listed the perceived flaws in the
antecedent TCTs from which the Manotoks derived their claim. The Special Division concluded that such
findings had been reached by the Commissioners in excess of their original mandate and, thus, ultra
vires. Assuming that such flaws were extant, they existed on the titles and anteceded the expropriation of the
properties by the Government. As stated earlier, such expropriation would have cleansed the titles of the prior
flaws. But even if the Manotok titles enumerated in the third recommendation could not be sourced from the
titles acquired by the Republic through expropriation, still the rejection of the Majority Report signifies that the
flaws adverted to therein could not form the basis for the annulment of the titles involved. Indeed, the Special
Divisions rejection of the Majority Report further diminishes any ground to annul the Manotok titles referred to
in the third recommendation.
Yet, the Court is cognizant that the inability to trace the Manotok titles specified in the third recommendation to
those titles acquired by the Government through expropriation puts such titles in doubt somehow. In addition,
the Court is aware that the ground utilized by the Special Division in rejecting the Majority Report that the
determinations were made outside the scope of the issues framed and agreed upon by the parties -- does not
categorically refute the technical findings made therein. Those circumstances, while insufficient for now to
annul the Manotoks titles listed in the third recommendation, should be sufficiently made public.

TCT No. C-17272 covering Lot 6-C which has an approximate area of 27,850 square meters.

h)
TCT No. T-121428 covering Lot No. 5-C of subdivision plan (LRC) psd-315278, which has an
approximate area of 4,650 square meters.
i)
TCT No. 163902 covering Lot No. 4-B-2 with an area of more or less 6,354 square meters allegedly a
by-product of TCT No. 9022, which in turn, cancelled TCT No. 8994/T-45 registered in the name of Filemon S
Custodio.
j)
TCT No. 165119 which allegedly cancelled TCT No. C-36960 of the SPOUSES IGNACIO by virtue of
a Deed of Sale between said Spouses and MRI.

Hence, in lieu of annulling the Manotok titles per the Special Divisions third recommendation, the Court
deems it sufficient to require the Registers of Deeds concerned to annotate this Resolution on said titles so as
to sufficiently notify the public of their unclear status, more particularly the inability of the Manotoks to trace
the titles without any gap back to OCT No. 994 issued on 3 May 1917. If there should be any cause for the
annulment of those titles from a proper partys end, then let the proper case be instituted before the
appropriate court.

3.B. MANOTOK ESTATE CORPORATION

WHEREFORE, the Court hereby adopts the Report of the Special Division and issues the following reliefs:
a) TCT No. T-232568 covering Lot No. 19-B of subdivision plan Psd-13011152 with an area of
23,206 square meters.
The foregoing certificates of title (3.A and 3.B), failing to make specific references to the particular certificates
of title which they cancelled and in whose name they were registered, may be declared NULL and VOID, or in
the alternative, subject the same to further technical verification.
4. To declare LEGAL and VALID the title of ARANETA respecting parcels of land covered by the following
certificates of title:

TCT No. 7784 covering four (4) parcels of land with an aggregate area of 390,383 square meters.

2. The proprietary claims of the MANOTOKS over the parcels of land covered by the following certificates of
title are declared LEGAL and VALID, to wit:
a) TCT No. 7528 registered in the name of MRI covers Lot No. 2 of consolidation-subdivision plan (LRC)
Pcs-1828 which has an area of 4,988 square meters.

a)
TCT No. 13574 covering a parcel of land designated as Section No. 2 of subdivision plan Psd-10114,
being a portion of Lot 25-A-3-C with an aggregate area of 581,872 square meters;
b)

1) The certificates of title of the DIMSONs and CLT including other derivative titles issued to their successorsin-interest, if any, are declared NULL and VOID, thus invalidating their legal claims over the subject parcels of
land;

[129]

The first, second and fourth recommendations are well taken as they logically arise from the facts and
conclusions, as determined by the Special Division, which this Court adopts.
The third recommendation that eleven (11) of the titles held by the Manotoks be declared null and void or
subjected to further technical verification warrants some analysis.
The Court has verified that the titles mentioned in the third recommendation do not, as stated by the Special
Division, sufficiently indicate that they could be traced back to the titles acquired by the Republic when it
expropriated portions of the Maysilo Estate in the 1940s. On the other hand, the Manotok titles that were
affirmed by the Special Division are traceable to the titles of the Republic and thus have benefited, as they

b)

TCT No. 7762 covering Lot 1-C, with an approximate area of 2,287 square meters.

c)

TCT No. 8012 covering Lot No. 12-1 having an area of 20,000 square meters.

d)

TCT No. 9866 covering Lot No. 21 and having an approximate area of 23,979 square meters.

e)

TCT No. 21107 covering Lot 22 with an approximate area of 2,557 square meters.

f)

TCT No. 21485 covering Lot 20 with an approximate area of 25,276 square meters.

g)

TCT No. 34255 covering Lot No. 11-Bm, Psd-75797 with an area of 11,000 square meters.

h)

TCT No. 254875 covering Lot 55-A with an area of approximately 1,910 square meters.

i)
TCT No. C-35267 covering Lot 56-B of subdivision plan (LRC) Psd-292683 with an approximate area of
9,707 square meters.

3)
wit:

The following certificates of titles in the name of ARANETA are hereby declared LEGAL and VALID, to
G.R. No. 170375

a) TCT No. 13574 covering a parcel of land designated as Section No. 2 of subdivision plan Psd-10114,
being a portion of Lot 25-A-3-C with an aggregate area of 581,872 square meters;
b)
4)

TCT No. 7784 covering four (4) parcels of land with an aggregate area of 390,383 square meters.

July 7, 2010

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
HON. MAMINDIARA P. MANGOTARA, in his capacity as Presiding Judge of the Regional Trial Court,
Branch 1, Iligan City, Lanao del Norte, and MARIA CRISTINA FERTILIZER CORPORATION, and the
PHILIPPINE NATIONAL BANK, Respondents,

On the following titles in the name of Manotok Realty, Inc. or Manotok Estate Corporation, to wit:
x - - - - - - - - - - - - - - - - - - - - - - -x

a)

TCT No. 26405 covering Lot No. 12-E with an area of 1,0000 square meters;

b)

TCT No. 26406 covering Lot No. 12-F with an area of 1,000 square meters;

c)

TCT No. 26407 covering Lot No. 12-B with an area of 1,000 square meters;

d)

TCT No. 33904 covering Lot No. 12-H with an area of 1,802 square meters;

G.R. No. 170505

e) TCT No. 53268 covering Lot No. 15 purchased by MRI from one Maria V. Villacorta with an approximate
area of 3,163 square meters;
f)
TCT No. 55897 covering Lot 3 of consolidation-subdivision plan (LRC) Pcs-1828 of the Maysilo Estate
covering an area of more or less 20,531 square meters;
g)

TCT No. C-17272 covering Lot 6-C which has an approximate area of 27,850 square meters;

h) TCT No. T-121428 covering Lot No. 5-C of subdivision plan (LRC) psd-315278, which has an
approximate area of 4,650 square meters;
i)
TCT No. 163902 covering Lot No. 4-B-2 with an area of more or less 6,354 square meters allegedly a
by-product of TCT No. 9022, which in turn, cancelled TCT No. 8994/T-45 registered in the name of Filemon
S. Custodio;
j)
TCT No. 165119 which allegedly cancelled TCT No. C-36960 of the SPOUSES IGNACIO by virtue of a
Deed of Sale between said spouses and MRI;
k) TCT No. T-232568 covering Lot No. 19-B of subdivision plan Psd-13011152 with an area of 23,206
square meters.
the Registers of Deeds concerned are ordered to annotate that as determined in the foregoing Resolution, the
registered owners of the said titles failed to make any specific reference to the preceding certificates of title
which they cancelled and to whose names they were subsequently transferred and registered, thereby
leading the Supreme Court to find no sufficient basis to make a conclusion as to their origins. [130]

LAND TRADE REALTY CORPORATION, Petitioner,

vs.
NATIONAL POWER CORPORATION and NATIONAL TRANSMISSION CORPORATION
(TRANSCO),Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 173355-56
NATIONAL POWER CORPORATION, Petitioner,
vs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND TRADE
REALTY CORPORATION, Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 173401
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
DEMETRIA CACHO, represented by alleged Heirs DEMETRIA CONFESOR VIDAL and/or TEOFILO
CACHO, AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION and LAND TRADE REALTY
CORPORATION,Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. Nos. 173563-64

Costs against private respondents.

NATIONAL TRANSMISSION CORPORATION, Petitioner,

vs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND TRADE
REALTY CORPORATION as represented by Atty. Max C. Tabimina, Respondents,

SO ORDERED.

x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178779
LAND TRADE REALTY CORPORATION, Petitioner,
vs.
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT
CORPORATION,Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178894
TEOFILO CACHO and/or ATTY. GODOFREDO CABILDO, Petitioner,
vs.
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT
CORPORATION,Respondents.
DECISION
LEONARDO-DE CASTRO, J.:

Before the Court are seven consolidated Petitions for Review on Certiorari and a Petition for Certiorari under
Rules 45 and 65 of the Rules of Court, respectively, arising from actions for quieting of title, expropriation,
ejectment, and reversion, which all involve the same parcels of land.
In G.R. No. 170375, the Republic of the Philippines (Republic), by way of consolidated Petitions for Review on
Certiorari and for Certiorari under Rules 45 and 65 of the Rules of Court, respectively, seeks to set aside the
issuances of Judge Mamindiara P. Mangotara (Judge Mangotara) of the Regional Trial Court, Branch 1 (RTCBranch 1) of Iligan City, Lanao del Norte, in Civil Case No. 106, particularly, the: (1) Resolution 1 dated July 12,
2005 which, in part, dismissed the Complaint for Expropriation of the Republic for the latters failure to implead
indispensable parties and forum shopping; and (2) Resolution 2 dated October 24, 2005, which denied the
Partial Motion for Reconsideration of the Republic.
G.R. Nos. 178779 and 178894 are two Petitions for Review on Certiorari under Rule 45 of the Rules of Court,
where Landtrade Realty Corporation (LANDTRADE), Teofilo Cacho, and/or Atty. Godofredo Cabildo assail the
Decision3 dated January 19, 2007 and Resolution 4 dated July 4, 2007 of the Court of Appeals in CA-G.R. CV
No. 00456. The Court of Appeals affirmed the Decision 5 dated July 17, 2004 of the Regional Trial Court,
Branch 3 (RTC-Branch 3) of Iligan City, Lanao del Norte, in Civil Case No. 4452, granting the Petition for
Quieting of Title, Injunction and Damages filed by Demetria Vidal and Azimuth International Development
Corporation (AZIMUTH) against Teofilo Cacho and Atty. Godofredo Cabildo.
G.R. No. 170505 is a Petition for Review on Certiorari under Rule 45 of the Rules of Court in which
LANDTRADE urges the Court to reverse and set aside the Decision 6 dated November 23, 2005 of the Court of
Appeals in CA-G.R. SP Nos. 85714 and 85841. The appellate court annulled several issuances of the
Regional Trial Court, Branch 5 (RTC-Branch 5) of Iligan City, Lanao del Norte, and its sheriff, in Civil Case No.
6613, specifically, the: (1) Order 7 dated August 9, 2004 granting the Motion for Execution Pending Appeal of
LANDTRADE; (2) Writ of Execution8 dated August 10, 2004; (3) two Notices of Garnishment9 both dated
August 11, 2004, and (4) Notification10 dated August 11, 2004. These issuances of the RTC-Branch 5 allowed
and/or enabled execution pending appeal of the Decision 11 dated February 17, 2004 of the Municipal Trial
Court in Cities (MTCC), Branch 2 of Iligan City, Lanao del Norte, favoring LANDTRADE in Civil Case No.
11475-AF, the ejectment case said corporation instituted against the National Power Corporation (NAPOCOR)
and the National Transmission Corporation (TRANSCO).
G.R. Nos. 173355-56 and 173563-64 are two Petitions for Certiorari and Prohibition under Rule 65 of the
Rules of Court with prayer for the immediate issuance of a Temporary Restraining Order (TRO) and/or Writ of
Preliminary Injunction filed separately by NAPOCOR and TRANSCO. Both Petitions seek to annul the
Resolution12 dated June 30, 2006 of the Court of Appeals in the consolidated cases of CA-G.R. SP Nos.
00854 and 00889, which (1) granted the Omnibus Motion of LANDTRADE for the issuance of a writ of
execution and the designation of a special sheriff for the enforcement of the Decision 13 dated December 12,
2005 of the RTC-Branch 1 in Civil Case No. 6613, and (2) denied the applications of NAPOCOR and
TRANSCO for a writ of preliminary injunction to enjoin the execution of the same RTC Decision. The Decision
dated December 12, 2005 of RTC-Branch 1 in Civil Case No. 6613 affirmed the Decision dated February 17,
2004 of the MTCC in Civil Case No. 11475-AF, favoring LANDTRADE.

The application in GLRO Record No. 6908 covered Lot 1, the smaller parcel of land. Doa Demetria allegedly
acquired Lot 1 by purchase from Gabriel Salzos (Salzos). Salzos, in turn, bought Lot 1 from Datto Darondon
and his wife Alanga, evidenced by a deed of sale in favor of Salzos signed solely by Alanga, on behalf of Datto
Darondon.
The application in GLRO Record No. 6909 involved Lot 2, the bigger parcel of land. Doa Demetria
purportedly purchased Lot 2 from Datto Bunglay. Datto Bunglay claimed to have inherited Lot 2 from his uncle,
Datto Anandog, who died without issue.
Only the Government opposed Doa Demetrias applications for registration on the ground that the two
parcels of land were the property of the United States and formed part of a military reservation, generally
known as Camp Overton.
On December 10, 1912, the land registration court (LRC) rendered its Decision in GLRO Record Nos. 6908
and 6909.
Based on the evidence, the LRC made the following findings in GLRO Record No. 6908:
6th. The court is convinced from the proofs that the small parcel of land sold by the Moro woman Alanga was
the home of herself and her husband, Darondon, and was their conjugal property; and the court so finds.
xxxx
As we have seen, the deed on which applicants title to the small parcel rests, is executed only by the Moro
woman Alanga, wife of Datto Darondon, which is not permitted either by the Moro laws or the Civil Code of the
Philippine Islands. It appears that the husband of Alanga, Datto Darondon, is alive yet, and before admitting
this parcel to registration it is ordered that a deed from Datto Darondon, husband of Alanga, be presented,
renouncing all his rights in the small parcel of land object of Case No. 6908, in favor of the
applicant.17(Emphases supplied.)
In GLRO Record No. 6909, the LRC observed and concluded that:
A tract of land 37 hectares in area, which is the extent of the land under discussion, is larger than is cultivated
ordinarily by the Christian Filipinos. In the Zamboanga cadastral case of thousands of parcels now on trial
before this court, the average size of the parcels is not above 3 or 4 hectares, and the court doubts very much
if a Moro with all his family could cultivate as extensive a parcel of land as the one in question. x x x
xxxx

I
THE PRECEDING CASES

The court is also convinced from the proofs that the small portion in the southern part of the larger parcel,
where, according to the proofs, Datto Anandog had his house and where there still exist some cocos and fruit
trees, was the home of the said Moro Datto Anandog; and the court so finds. As to the rest of the large parcel
the court does not find the title of Datto Bunglay established. According to his own declaration his residence on
this land commenced only a few days before the sale. He admitted that the coco trees he is supposed to have
planted had not yet begun to bear fruit at the time of the sale, and were very small. Datto Duroc positively
denies that Bunglay lived on the land, and it clearly appears that he was not on the land when it was first
occupied by the military. Nor does Datto Bunglay claim to have planted the three mango trees by the roadside
near point 25 of the plan. The court believes that all the rest of this parcel, not occupied nor cultivated by Datto
Anandog, was land claimed by Datto Duroc and also by Datto Anandog and possibly by other dattos as a part
of their general jurisdiction, and that it is the class of land that Act No. 718 prohibits the sale of, by the dattos,
without the express approval of the Government.

The consolidated seven cases have for their common genesis the 1914 case of Cacho v. Government of the
United States16 (1914 Cacho case).

It is also found that Datto Bunglay is the nephew of Dato Anandog, and that the Moro woman Alanga, grantor
of the small parcel, is the sister of Datto Anandog, and that he died without issue.

The 1914 Cacho Case

xxxx

Sometime in the early 1900s, the late Doa Demetria Cacho (Doa Demetria) applied for the registration of
two parcels of land: (1) Lot 1 of Plan II-3732, the smaller parcel with an area of 3,635 square meters or 0.36
hectares (Lot 1); and (2) Lot 2 of Plan II-3732, the larger parcel with an area of 378,707 square meters or
37.87 hectares (Lot 2). Both parcels are situated in what was then the Municipality of Iligan, Moro Province,
which later became Sitio Nunucan, then Brgy. Suarez, in Iligan City, Lanao del Norte. Doa Demetrias
applications for registration were docketed as GLRO Record Nos. 6908 and 6909.

It appears also that according to the provisions of the Civil Code as also the provisions of the Luwaran Code
of the Moros, the Moro woman Alanga has an interest in the portion of land left by her deceased brother, Datto
Anandog. By article LXXXV, section 3, of the Luwaran Code, it will be seen that the brothers and sisters of a
deceased Moro inherit his property to the exclusion of the more distant relatives. Therefore Datto Bunglay had
no legal interest whatever in the land to sell to the applicant, Doa Demetria Cacho. But the Moro woman,
Alanga, having appeared as a witness for the applicant without having made any claim to the land, the court
finds from this fact that she has ratified the sale made by her nephew.

G.R. No. 173401 involves a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by the
Republic, which raises pure questions of law and seeks the reversal of the following issuances of the Regional
Trial Court, Branch 4 (RTC-Branch 4) of Iligan City, Lanao del Norte, in Civil Case No. 6686, an action for
cancellation of titles and reversion: (1) Order14 dated December 13, 2005 dismissing the Complaint in Civil
Case No. 6686; and (2) Order15 dated May 16, 2006, denying the Motion for Reconsideration of the Republic.

The court therefore finds that the applicant Doa Demetria Cacho is owner of the portion of land occupied and
planted by the deceased Datto Anandog in the southern part of the large parcel object of expediente No. 6909

only; and her application as to all the rest of the land solicited in said case is denied. And it is ordered that a
new survey of the land be made and a corrected plan be presented, excluding all the land not occupied and
cultivated by Datto Anandog; that said survey be made and the corrected plan presented on or before the 30th
day of March, 1913, with previous notice to the commanding general of the Division of the Philippines.

18969. The Court found that such decrees had in fact been issued and had attained finality, as certified by the
Acting Commissioner, Deputy Clerk of Court III, Geodetic Engineer, and Chief of Registration of the then Land
Registration Commission, now National Land Titles and Deeds Registration Administration (NALTDRA). The
Court further reasoned that:

On the 8th day of December, the court was at Camp Overton and had another ocular inspection of the land for
the purpose of fixing the limits of the part cultivated by Datto Anandog, so often mentioned herein, with
previous notice to the applicant and her husband and representative, Seor Dionisio Vidal. Having arrived late,
Seor Vidal did not assist in the ocular inspection, which was fixed for 3 oclock, p.m. of the day mentioned.
But the court, nevertheless, set stakes marking the N.E., S.E., and S.W. corners of the land found to have
been cultivated by the deceased Anandog. The N.E. limit of said land is a brook, and the N.W. corner is the
point where the brook intersects the shore line of the sea, the other corners mentioned being marked with pine
stakes. And it is ordered that the new survey be made in accordance with the points mentioned, by tracing four
straight lines connecting these four points. Between the portion cultivated by Datto Anandog and the mouth of
the River Agus there is a high steep hill and the court does not believe it possible to cultivate said hill, it being
covered with rocks and forest.18 (Emphases supplied.)

[T]o sustain the Court of Appeals ruling as regards requiring petitioners to fulfill the conditions set forth in
Cacho vs. U.S. would constitute a derogation of the doctrine of res judicata. Significantly, the issuance of the
subject decrees presupposes a prior final judgment because the issuance of such decrees is a mere
ministerial act on part of the Land Registration Commission (now the NALTDRA), upon presentation of a final
judgment. It is also worth noting that the judgment in Cacho vs. U.S. could not have acquired finality without
the prior fulfillment of the conditions in GLRO Record No. 6908, the presentation of the corresponding deed of
sale from Datto Dorondon on or before March 30, 1913 (upon which Decree No. 10364 was issued on May 9,
1913); and in GLRO Record No. 6909, the presentation of a new survey per decision of Judge Jorge on
December 10, 1912 and affirmed by this Court on December 10, 1914 (upon which Decree No. 18969 was
issued on July 8, 1915).

The LRC additionally decreed at the end of its December 10, 1912 Decision:
It is further ordered that one-half of the costs of the new survey be paid by the applicant and the other half by
the Government of the United States, and that the applicant present the corresponding deed from Datto
Darondon on or before the above-mentioned 30th day of March, 1913. Final decision in these cases is
reserved until the presentation of the said deed and the new plan. 19
Apparently dissatisfied with the foregoing LRC judgment, Doa Demetria appealed to this Court. In its
Decision dated December 10, 1914, the Court affirmed in toto the LRC Decision of December 10, 1912, well
satisfied that the findings of fact of the court below were fully sustained by the evidence adduced during trial.
Eighty-three years later, in 1997, the Court was again called upon to settle a matter concerning the registration
of Lots 1 and 2 in the case of Cacho v. Court of Appeals 20 (1997 Cacho case).
The 1997 Cacho Case
On June 29, 1978, Teofilo Cacho (Teofilo), claiming to be the late Doa Demetrias son and sole heir, filed
before the RTC a petition for reconstitution of two original certificates of title (OCTs), docketed under the
original GLRO Record Nos. 6908 and 6909.
Teofilos petition was opposed by the Republic, National Steel Corporation (NSC), and the City of Iligan.
Acting on the motion for judgment on demurrer to evidence filed by the Republic and NSC, the RTC initially
dismissed Teofilos petition for reconstitution of titles because there was inadequate evidence to show the prior
existence of the titles sought to be restored. According to the RTC, the proper remedy was a petition for the
reconstitution of decrees since "it is undisputed that in Cases No. 6908 and 6909, Decrees No. 10364 and
18969, respectively, were issued." Teofilo sought leave of court for the filing and admission of his amended
petition, but the RTC refused. When elevated to this Court in Cacho v. Mangotara, docketed as G.R. No.
85495, the Court resolved to remand the case to the RTC, with an order to the said trial court to accept
Teofilos amended petition and to hear it as one for re-issuance of decrees.
In opposing Teofilos petition, the Republic and NSC argued that the same suffered from jurisdictional
infirmities; that Teofilo was not the real party-in-interest; that Teofilo was guilty of laches; that Doa Demetria
was not the registered owner of the subject parcels of land; that no decrees were ever issued in Doa
Demetrias name; and that the issuance of the decrees was dubious and irregular.
After trial, on June 9, 1993, the RTC rendered its Decision granting Teofilos petition and ordering the
reconstitution and re-issuance of Decree Nos. 10364 and 18969. The RTC held that the issuance of Decree
No. 10364 in GLRO No. 6908 on May 9, 1913 and Decree No. 18969 in GLRO Record No. 6909 on July 8,
1915 was sufficiently established by the certifications and testimonies of concerned officials. The original
issuance of these decrees presupposed a prior judgment that had become final.
On appeal, the Court of Appeals reversed the RTC Decision dated June 9, 1993 and dismissed the petition for
re-issuance of Decree Nos. 10364 and 18969 because: (1) re-issuance of Decree No. 18969 in GLRO Record
No. 6909 could not be made in the absence of the new survey ordered by this Court in the 1914 Cacho case;
(2) the heir of a registered owner may lose his right to recover possession of the property and title thereto by
laches; and (3) Teofilo failed to establish his identity and existence and that he was a real party-in-interest.
Teofilo then sought recourse from this Court in the 1997 Cacho case. The Court reversed the judgment of the
Court of Appeals and reinstated the decision of the RTC approving the re-issuance of Decree Nos. 10364 and

Requiring the submission of a new plan as a condition for the re-issuance of the decree would render the
finality attained by the Cacho vs. U.S. case nugatory, thus, violating the fundamental rule regarding res
judicata. It must be stressed that the judgment and the resulting decree are res judicata, and these are binding
upon the whole world, the proceedings being in the nature of proceedings in rem. Besides, such a requirement
is an impermissible assault upon the integrity and stability of the Torrens System of registration because it also
effectively renders the decree inconclusive.21
As to the issue of laches, the Court referred to the settled doctrine that laches cannot bar the issuance of a
decree. A final decision in land registration cases can neither be rendered inefficacious by the statute of
limitations nor by laches.
Anent the issue of the identity and existence of Teofilo and he being a real party-in-interest, the Court found
that these were sufficiently established by the records. The Court relied on Teofilos Affidavit of Adjudication as
Doa Demetrias sole heir, which he executed before the Philippine Consulate General in Chicago, United
States of America (U.S.A.); as well as the publication in the Times Journal of the fact of adjudication of Doa
Demetrias estate. Teofilo also appeared personally before the Vice Consul of the Philippine Consulate
General in Chicago to execute a Special Power of Attorney in favor of Atty. Godofredo Cabildo (Atty. Cabildo)
who represented him in this case. The Court stressed that the execution of public documents is entitled to the
presumption of regularity and proof is required to assail and controvert the same.
In the Resolution dated July 28, 1997,22 the Court denied the Motions for Reconsideration of the Republic and
NSC.
As a result of the 1997 Cacho case, the decrees of registration were re-issued bearing new numbers and
OCTs were issued for the two parcels of land in Doa Demetrias name. OCT No. 0-1200 (a.f.) was based on
re-issued Decree No. N-219464 in GLRO Record No. 6908, while OCT No. 0-1201 (a.f.) was based on reissued Decree No. N-219465 in GLRO Record No. 6909.
The dispute over Lots 1 and 2 did not end with the termination of the 1997 Cacho case. Another four cases
involving the same parcels of land were instituted before the trial courts during and after the pendency of the
1997 Cacho case. These cases are: (1) the Expropriation Case, G.R. No. 170375; (2) the Quieting of Title
Case, G.R. Nos. 178779 and 178894; (3) the Ejectment or Unlawful Detainer Case, G.R. No. 170505
(execution pending appeal before the RTC) and G.R. Nos. 173355-56 and 173563-64 (execution pending
appeal before the Court of Appeals); and (4) the Cancellation of Titles and Reversion Case, G.R. No. 173401.
These cases proceeded independently of each other in the courts a quo until they reached this Court via the
present Petitions. In the Resolution23 dated October 3, 2007, the Court consolidated the seven Petitions
considering that they either originated from the same case or involved similar issues.
Expropriation Case
(G.R. No. 170375)
The Complaint for Expropriation was originally filed on August 15, 1983 by the Iron and Steel Authority (ISA),
now the NSC, against Maria Cristina Fertilizer Corporation (MCFC), and the latters mortgagee, the Philippine
National Bank (PNB). The Complaint was docketed as Civil Case No. 106 and raffled to RTC-Branch 1,
presided over by Judge Mangotara.
ISA was created pursuant to Presidential Decree No. 2729 24 dated August 9, 1973, to strengthen, develop,
and promote the iron and steel industry in the Philippines. Its existence was extended until October 10, 1988.

On November 16, 1982, during the existence of ISA, then President Ferdinand E. Marcos issued Presidential
Proclamation No. 2239,25 reserving in favor of ISA a parcel of land in Iligan City, measuring 302,532 square
meters or 30.25 hectares, to be devoted to the integrated steel program of the Government. MCFC occupied
certain portions of this parcel of land. When negotiations with MCFC failed, ISA was compelled to file a
Complaint for Expropriation.
When the statutory existence of ISA expired during the pendency of Civil Case No. 106, MCFC filed a Motion
to Dismiss the case alleging the lack of capacity to sue of ISA. The RTC-Branch 1 granted the Motion to
Dismiss in an Order dated November 9, 1988. ISA moved for reconsideration or, in the alternative, for the
substitution of the Republic as plaintiff in Civil Case No. 106, but the motion was denied by RTC-Branch 1. The
dismissal of Civil Case No. 106 was affirmed by the Court of Appeals, thus, ISA appealed to this Court. In Iron
and Steel Authority v. Court of Appeals26 (ISA case), the Court remanded the case to RTC-Branch 1, which
was ordered to allow the substitution of the Republic for ISA as plaintiff. Entry of Judgment was made in the
ISA case on August 31, 1998. In an Order 27 dated November 16, 2001, the RTC-Branch 1 allowed the
substitution of the Republic for ISA as plaintiff in Civil Case No. 106.
Alleging that Lots 1 and 2 involved in the 1997 Cacho case encroached and overlapped the parcel of land
subject of Civil Case No. 106, the Republic filed with the RTC-Branch 1 a Motion for Leave to File
Supplemental Complaint dated October 7, 2004 and to Admit the Attached Supplemental Complaint dated
September 28, 200428 seeking to implead in Civil Case No. 106 Teofilo Cacho and Demetria Vidal and their
respective successors-in-interest, LANDTRADE and AZIMUTH.
MCFC opposed the Motion for leave to file and to admit the Supplemental Complaint on the ground that the
Republic was without legal personality to file the same because ISA was the plaintiff in Civil Case No. 106.
MCFC argued that the Republic failed to move for the execution of the decision in the ISA case within the
prescriptive period of five years, hence, the only remedy left was for the Republic to file an independent action
to revive the judgment. MCFC further pointed out that the unreasonable delay of more than six years of the
Republic in seeking the substitution and continuation of the action for expropriation effectively barred any
further proceedings therein on the ground of estoppel by laches.
In its Reply, the Republic referred to the Order dated November 16, 2001 of the RTC-Branch 1 allowing the
substitution of the Republic for ISA.
In an Order dated April 4, 2005, the RTC-Branch 1 denied the Motion of the Republic for leave to file and to
admit its Supplemental Complaint. The RTC-Branch 1 agreed with MCFC that the Republic did not file any
motion for execution of the judgment of this Court in the ISA case. Since no such motion for execution had
been filed, the RTC-Branch 1 ruled that its Order dated November 16, 2001, which effected the substitution of
the Republic for ISA as plaintiff in Civil Case No. 106, was an honest mistake. The Republic filed a Motion for
Reconsideration of the April 4, 2005 Order of the RTC-Branch 1.
MCFC then filed a Motion to Dismiss Civil Case No. 106 for: (1) failure of the Republic to implead
indispensable parties because MCFC insisted it was not the owner of the parcels of land sought to be
expropriated; and (2) forum shopping considering the institution by the Republic on October 13, 2004 of an
action for the reversion of the same parcels subject of the instant case for expropriation.
Judge Mangotara of RTC-Branch 1 issued a Resolution 29 on July 12, 2005, denying for lack of merit the
Motion for Reconsideration of the Order dated April 4, 2005 filed by the Republic, and granting the Motion to
Dismiss Civil Case No. 106 filed by MCFC. Judge Mangotara justified the dismissal of the Expropriation Case
thus:
What the Republic seeks [herein] is the expropriation of the subject parcels of land. Since the exercise of the
power of eminent domain involves the taking of private lands intended for public use upon payment of just
compensation to the owner x x x, then a complaint for expropriation must, of necessity, be directed against the
owner of the land subject thereof. In the case at bar, the decision of the Supreme Court in Cacho v.
Government of the United States x x x, decreeing the registration of the subject parcels of land in the name of
the late Doa Demetria Cacho has long attained finality and is conclusive as to the question of ownership
thereof. Since MCFC, the only defendant left in this case, is not a proper party defendant in this complaint for
expropriation, the present case should be dismissed.
This Court notes that the Republic [has filed reversion proceedings] dated September 27, 2004, involving the
same parcels of land, docketed as Case No. 6686 pending before the Regional Trial Court of Lanao del Norte,
Iligan City Branch 4. [The Republic], however, did not state such fact in its "Verification and Certification of
Non-Forum Shopping" attached to its Supplemental Complaint dated September 28, 2004. [It is therefore]
guilty of forum shopping. Moreover, considering that in the Reversion case, [the Republic] asserts ownership
over the subject parcels of land, it cannot be allowed to take an inconsistent position in this expropriation case
without making a mockery of justice.30

The Republic filed a Motion for Reconsideration of the Resolution dated July 12, 2005, insofar as it dismissed
Civil Case No. 106, but said Motion was denied by Judge Mangatora in a Resolution 31 dated October 24,
2005.
On January 16, 2006, the Republic filed with this Court the consolidated Petition for Review on Certiorari and
Petition for Certiorari under Rules 45 and 65 of the Rules of Court, respectively, docketed as G.R. No. 170375.
The Quieting of Title Case
(G.R. Nos. 178779 and 178894)
Demetria Vidal (Vidal) and AZIMUTH filed on November 18, 1998, a Petition 32 for Quieting of Title against
Teofilo, Atty. Cabildo, and the Register of Deeds of Iligan City, which was docketed as Civil Case No. 4452 and
raffled to RTC-Branch 3.
In the Petition, Vidal claimed that she, and not Teofilo, was the late Doa Demetrias sole surviving heir,
entitled to the parcels of land covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). She averred that she is the
daughter of Francisco Cacho Vidal (Francisco) and Fidela Arellano Confesor. Francisco was the only child of
Don Dionisio Vidal and Doa Demetria.
AZIMUTH, for its part, filed the Petition as Vidals successor-in-interest with respect to a 23-hectare portion of
the subject parcels of land pursuant to the Memorandum of Agreement dated April 2, 1998 and Deed of
Conditional Conveyance dated August 13, 2004, which Vidal executed in favor of AZIMUTH.
Teofilo opposed the Petition contending that it stated no cause of action because there was no title being
disturbed or in danger of being lost due to the claim of a third party, and Vidal had neither legal nor beneficial
ownership of the parcels of land in question; that the matter and issues raised in the Petition had already been
tried, heard, and decided by the RTC of Iligan City and affirmed with finality by this Court in the 1997 Cacho
case; and that the Petition was barred by the Statute of Limitations and laches.
LANDTRADE, among other parties, was allowed by the RTC-Branch 3 to intervene in Civil Case No. 4452.
LANDTRADE alleged that it is the owner of a portion of the subject parcels of land, measuring 270,255 square
meters or about 27.03 hectares, which it purportedly acquired through a Deed of Absolute Sale dated October
1, 1996 from Teofilo, represented by Atty. Cabildo. LANDTRADE essentially argued that Vidal's right as heir
should be adjudicated upon in a separate and independent proceeding and not in the instant Quieting of Title
Case.
During the pre-trial conference, the parties manifested that there was no possibility of any amicable settlement
among them.
Vidal and AZIMUTH submitted testimonial and documentary evidence during the trial before the RTC-Branch
3. Teofilo and Atty. Cabildo failed to present any evidence as they did not appear at all during the trial, while
LANDTRADE was declared by the RTC-Branch 3 to have waived its right to present evidence on its defense
and counterclaim.
On July 17, 2004, the RTC-Branch 3 rendered its Decision 33 in Civil Case No. 4452 in favor of Vidal and
AZIMUTH, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the petitioners and against the respondents and
intervenors:
1) DECLARING:
a.) Petitioner Demetria C. Vidal the sole surviving heir of the late Doa Demetria Cacho;
b.) Petitioner Demetria C. Vidal alone has the hereditary right to and interest in the Subject Property;
c.) Petitioner Azimuth International Development Corporation is the successor-in-interest of petitioner
Demetria C. Vidal to a portion of the Subject Property to the extent provided in their 2 April 1998 Memorandum
of Agreement and 13 August 1998 Deed of Conditional Conveyance;
d.) Respondent Teofilo Cacho is not a son or heir of the late Dona Demetria Cacho; and
e.) Respondent Teofilo Cacho, Godofredo Cabildo and any of their transferees/assignees have no valid right to
or interest in the Subject Property.
2) ORDERING:

a.) Respondent Register of Deeds of Iligan City, and any other person acting in his behalf, stop, cease and
desist:
i) From accepting or registering any affidavit of self- adjudication or any other document executed by
respondents Teofilo Cacho, Godofredo Cabildo and/or any other person which in any way transfers the title to
the Subject Property from Dona Demetria Cacho to respondent Teofilo Cacho, Godofredo Cabildo and/or any
of their transferees/assignees, including the intervenors.
ii) From cancelling the OCTs or any certificate of title over the Subject Property in the name of Demetria Cacho
or any successor certificate of title, and from issuing new certificates of title in the name of respondents Teofilo
Cacho, Godofredo Cabildo their transferees/assignees, including the intervenors.
b) Respondents Teofilo Cacho, Godofredo Cabildo, their transferees/assignees, and any other person acting
in their behalf, to stop, cease and desist:
i) From executing, submitting to any Register of Deeds, or registering or causing to be registered therein, any
affidavit of self-adjudication or any other document which in any way transfers title to the Subject Property
from Demetria Cacho to respondents Teofilo Cacho, Godofredo Cabildo and/or any of their
transferees/assignees, including the intervenors.

According to the Court of Appeals, the RTC-Branch 3 did not err in resolving the issue on Vidals status,
filiation, and hereditary rights as it is determinative of the issue on ownership of the subject properties. It was
indubitable that the RTC-Branch 3 had jurisdiction over the person of Teofilo and juridical personality of
LANDTRADE as they both filed their Answers to the Petition for Quieting of Title thereby voluntarily submitting
themselves to the jurisdiction of said trial court. Likewise, the Petition for Quieting of Title is in itself within the
jurisdiction of the RTC-Branch 3. Hence, where there is jurisdiction over the person and subject matter, the
resolution of all other questions arising in the case is but an exercise by the court of its jurisdiction. Moreover,
Teofilo and LANDTRADE were guilty of estoppel by laches for failing to assail the jurisdiction of the RTCBranch 3 at the first opportunity and even actively participating in the trial of the case and seeking affirmative
reliefs.
In addition, the Court of Appeals held that the 1997 Cacho case only determined the validity and efficacy of the
Affidavit of Adjudication that Teofilo executed before the Philippine Consulate General in the U.S.A. The
decision of this Court in the 1997 Cacho case, which had become final and executory, did not vest upon
Teofilo ownership of the parcels of land as it merely ordered the re-issuance of a lost duplicate certificate of
title in its original form and condition.

ii) From canceling or causing the cancellation of OCTs or any certificate of title over the Subject Property in the
name of Demetria Cacho or any successor certificate of title, and from issuing new certificates of title in the
name of respondent Teofilo Cacho, Godofredo Cabildo and/or any of their transferees/assignees, including the
intervenors.

The Court of Appeals agreed in the finding of the RTC-Branch 3 that the evidence on record preponderantly
supports Vidals claim of being the granddaughter and sole heiress of the late Doa Demetria. The appellate
court further adjudged that Vidal did not delay in asserting her rights over the subject parcels of land. The
prescriptive period for real actions over immovables is 30 years. Vidals rights as Doa Demetrias successorin-interest accrued upon the latters death in 1974, and only 24 years thereafter, in 1998, Vidal already filed the
present Petition for Quieting of Title. Thus, Vidals cause of action had not yet prescribed. And, where the
action was filed within the prescriptive period provided by law, the doctrine of laches was also inapplicable.

iii) From claiming or representing in any manner that respondent Teofilo Cacho is the son or heir of Demetria
Cacho or has rights to or interest in the Subject Property.

LANDTRADE, Teofilo, and Atty. Cabildo filed separate Motions for Reconsideration of the January 19, 2007
Decision of the Court of Appeals, which were denied in the July 4, 2007 Resolution 36 of the same court.

3) ORDERING respondents Teofilo Cacho and Atty. Godofredo Cabildo to pay petitioners, jointly and severally,
the following:

On August 24, 2007, LANDTRADE filed with this Court a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, which was docketed as G.R. No. 178779. On September 6, 2007, Teofilo and Atty. Cabildo
filed their own Petition for Review on Certiorari under Rule 45 of the Rules of Court, which was docketed as
G.R. No. 178894.

a) For temperate damages - P 80,000.00

b) For nominal damages - P 60,000.00
c) For moral damages - P500,000.00
d) For exemplary damages - P 500,000.00
e) For attorney's fees (ACCRA Law)-P1,000,000.00
f) For Attorney's fees - P500,000.00
(Atty. Voltaire Rovira)
g) For litigation expenses - P300,000.00
For lack of factual and legal basis, the counterclaim of Teofilo Cacho and Atty. Godofredo Cabildo is hereby
dismissed.
Likewise, the counterclaim of intervenor IDD/Investa is dismissed for lack of basis as the petitioners
succeeded in proving their cause of action.
On the cross-claim of intervenor IDD/Investa, respondents Teofilo Cacho and Atty. Godofredo Cabildo are
ORDERED to pay IDD/Investa, jointly and severally, the principal sum of P5,433,036 with 15% interest per
annum.
For lack of legal basis, the counterclaim of Intervenor Landtrade Realty Development Corporation is
dismissed.
Likewise, Intervenor Manguera's counterclaim is dismissed for lack of legal basis. 34
The joint appeal filed by LANDTRADE, Teofilo, and Atty. Cabildo with the Court of Appeals was docketed as
CA-G.R. CV No. 00456. The Court of Appeals, in its Decision 35 of January 19, 2007, affirmed in toto the
Decision dated July 17, 2004 of the RTC-Branch 3.

The Ejectment or Unlawful Detainer Case

(G.R. Nos. 170505, 173355-56, and 173563-64)
Three Petitions before this Court are rooted in the Unlawful Detainer Case instituted by LANDTRADE against
NAPOCOR and TRANSCO.
On August 9, 1952, NAPOCOR took possession of two parcels of land in Sitio Nunucan, Overton, Fuentes,
Iligan City, denominated as Lots 2029 and 2043, consisting of 3,588 square meters (or 0.36 hectares) and
3,177 square meters (or 0.32 hectares), respectively. On Lot 2029, NAPOCOR constructed its power substation, known as the Overton Sub-station, while on Lot 2043, it built a warehouse, known as the Agus 7
Warehouse, both for the use of its Agus 7 Hydro-Electric Power Plant. For more than 30 years, NAPOCOR
occupied and possessed said parcels of land pursuant to its charter, Republic Act No. 6395. 37 With the
enactment in 2001 of Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act
(EPIRA), TRANSCO assumed the functions of NAPOCOR with regard to electrical transmissions and took
over possession of the Overton Sub-station.
Claiming ownership of the parcels of land where the Overton Sub-station and Agus 7 Warehouse are located,
LANDTRADE filed with the MTCC on April 9, 2003 a Complaint for Unlawful Detainer against NAPOCOR and
TRANSCO, which was docketed as Civil Case No. 11475-AF.
In its Complaint, LANDTRADE alleged that it acquired from Teofilo, through Atty. Cabildo, two parcels of land
at Sitio Nunucan, Overton, Fuentes, Brgy. Maria Cristina, Iligan City, with a combined area of 270,255 square
meters or around 27.03 hectares, as evidenced by a Deed of Absolute Sale 38 dated October 1, 1996. Certain
portions of said parcels of land were being occupied by the Overton Sub-station and Agus 7 Warehouse of
NAPOCOR and TRANSCO, through the tolerance of LANDTRADE. Upon failure of NAPOCOR and
TRANSCO to pay rentals or to vacate the subject properties after demands to do so, LANDTRADE filed the
present Complaint for Unlawful Detainer, plus damages in the amount of P450,000.00 as yearly rental from
date of the first extra-judicial demand until NAPOCOR and TRANSCO vacate the subject properties.
In their separate Answers, NAPOCOR and TRANSCO denied the material allegations in the Complaint and
countered, by way of special and affirmative defenses, that the Complaint was barred by res judicata; that the
MTCC has no jurisdiction over the subject matter of the action; and that LANDTRADE lacked the legal
capacity to sue.

On February 17, 2004, the MTCC rendered its Decision 39 in favor of LANDTRADE. The MTCC disposed:
WHEREFORE, premises considered, judgment is hereby rendered in favor of Plaintiff Land Trade Realty
Corporation represented by Atty. Max C. Tabimina and against defendant National Power Corporation
represented by its President, Mr. Rogelio M. Murga and co-defendant TRANSCO represented by its President
Dr. Allan T. Ortiz and Engr. Lorrymir A. Adaza, Manager, NAPOCOR-Mindanao, Regional Center, Ma. Cristina,
Iligan City, ordering:
1. Defendants National Power Corporation and TRANSCO, their agents or representatives or any person/s
acting on its behalf or under its authority to vacate the premises;
2. Defendants NAPOCOR and TRANSCO to pay Plaintiff jointly and solidarily:
a. Php500,000.00 a month representing fair rental value or compensation since June 29, 1978 until defendant
shall have vacated the premises;
b. Php20,000.00 for and as attorneys fees and

land could not stay execution pending appeal of the MTCC judgment because NAPOCOR and TRANSCO
failed to post the required bond and pay the monthly rentals.
Five days later, on August 9, 2004, the RTC-Branch 5 issued another Order 43 granting the Motion of
LANDTRADE for execution of the MTCC judgment pending appeal.
The next day, on August 10, 2004, the Acting Clerk of Court, Atty. Joel M. Macaraya, Jr., issued a Writ of
Execution Pending Appeal44 which directed Sheriff IV Alberto O. Borres (Sheriff Borres) to execute the MTCC
Decision dated February 17, 2004.
A day later, on August 11, 2004, Sheriff Borres issued two Notices of Garnishment 45 addressed to PNB and
Land Bank of the Philippines in Iligan City, garnishing all the goods, effects, stocks, interests in stocks and
shares, and any other personal properties belonging to NAPOCOR and TRANSCO which were being held by
and under the possession and control of said banks. On even date, Sheriff Borres also issued a
Notification46 to NAPOCOR and TRANSCO for them to vacate the subject parcels of land; and to pay
LANDTRADE the sums of (a)P156,000,000.00, representing the total fair rental value for the said properties,
computed at P500,000.00 per month, beginning June 29, 1978 until June 29, 2004, or for a period of 26 years,
and (b) P20,000.00 as attorney's fees.

c. Cost of suit.
Execution shall issue immediately upon motion, unless an appeal has been perfected and the defendant to
stay execution files a sufficient supersedeas bond, approved by this Court and executed in favor of the
plaintiff, to pay the rents, damages, and costs accruing down to the time of judgment appealed from, and
unless, during the pendency of the appeal, defendants deposit with the appellate court the amount
of P500,000.00 per month, as reasonable value of the use and occupancy of the premises for the preceding
month or period on or before the tenth day of each succeeding month or period. 40
NAPOCOR and TRANSCO seasonably filed a Joint Notice of Appeal. Their appeal, docketed as Civil Case
No. 6613, was initially assigned to the RTC-Branch 5, presided over by Judge Maximino Magno Libre (Judge
Libre).
LANDTRADE filed on June 24, 2004 a Motion for Execution, asserting that NAPOCOR and TRANSCO had
neither filed a supersedeas bond with the MTCC nor periodically deposited with the RTC the monthly rental for
the properties in question, so as to stay the immediate execution pending appeal of the MTCC judgment.
However, the said Motion failed to comply with the required notice of hearing under Rule 15, Section 5 of the
Rules of Court. LANDTRADE then filed a Motion to Withdraw and/or Replace Notice of Hearing.
NAPOCOR and TRANSCO filed on July 13, 2004 a Joint Motion to Suspend Proceedings citing Amagan v.
Marayag,41 in which the Court ruled that if circumstances should require, the proceedings in an ejectment case
may be suspended in whatever stage it may be found. Since LANDTRADE anchors its right to possession of
the subject parcels of land on the Deed of Sale executed in its favor by Teofilo on October 1, 1996, the
ejectment case should be held in abeyance pending the resolution of other cases in which title over the same
properties are in issue, i.e., (1) Civil Case No. 6600, the action for the annulment of the Deed of Sale dated
October 1, 1996 filed by Teofilo against LANDTRADE pending before the RTC-Branch 4; and (2) Civil Case
No. 4452, the Quieting of Title Case filed by Vidal and AZIMUTH against Teofilo and Atty. Cabildo pending
before the RTC-Branch 3.
LANDTRADE filed on July 19, 2004 another Motion for Execution, which was heard together with the Joint
Motion to Suspend Proceedings of NAPOCOR and TRANSCO. After said hearing, the RTC-Branch 5 directed
the parties to file their memoranda on the two pending Motions.
LANDTRADE, in its Memorandum, maintained that the pendency of Civil Case No. 4452, the Quieting of Title
Case, should not preclude the execution of the MTCC judgment in the Unlawful Detainer Case because the
issue involved in the latter was only the material possession or possession de facto of the parcels of land in
question. LANDTRADE also reported that Civil Case No. 6600, the action for annulment of the Deed of Sale
dated October 1, 1996 instituted by Teofilo, was already dismissed given that the RTC-Branch 4 had approved
the Compromise Agreement executed between LANDTRADE and Teofilo.
NAPOCOR and TRANSCO likewise filed their respective Memoranda. Subsequently, NAPOCOR filed a
Supplement to its Memorandum to bring to the attention of the RTC-Branch 5 the Decision rendered on July
17, 2004 by the RTC-Branch 3 in Civil Case No. 4452, the Quieting of Title Case, categorically declaring
Teofilo, the predecessor-in-interest of LANDTRADE, as having no right at all to the subject parcels of land.
Resultantly, the right of LANDTRADE to the two properties, which merely emanated from Teofilo, was
effectively declared as non-existent too.
On August 4, 2004, the RTC-Branch 5 issued an Order 42 denying the Joint Motion to Suspend Proceedings of
NAPOCOR and TRANSCO. The RTC held that the pendency of other actions involving the same parcels of

Thereafter, NAPOCOR and TRANSCO each filed before the Court of Appeals in Cagayan de Oro City a
Petition for Certiorari, under Rule 65 of the Rules of Court, with prayer for the issuance of a TRO and writ of
preliminary injunction. The Petitions, docketed as CA-G.R. SP Nos. 85174 and 85841, were eventually
consolidated.
The Court of Appeals issued on August 18, 2004 a TRO47 enjoining the enforcement and implementation of
the Order of Execution and Writ of Execution Pending Appeal of the RTC-Branch 5 and Notices of
Garnishment and Notification of Sheriff Borres.
The Court of Appeals, in its Decision48 dated November 23, 2005, determined that public respondents did
commit grave abuse of discretion in allowing and/or effecting the execution of the MTCC judgment pending
appeal, since NAPOCOR and TRANSCO were legally excused from complying with the requirements for a
stay of execution specified in Rule 70, Section 19 of the Rules of Court, particularly, the posting of
a supersedeas bond and periodic deposits of rental payments. The decretal portion of said appellate court
Decision states:
ACCORDINGLY, the two petitions at bench are GRANTED; the Order dated 9 August 2004, the Writ of
Execution Pending Appeal dated 10 August 2004, the two Notices of Garnishment dated 11 August 2004, and
the Notification dated 11 August 2004, are ANNULLED and SET ASIDE. 49
Displeased, LANDTRADE elevated the case to this Court on January 10, 2006 via a Petition for Review on
Certiorari under Rule 45 of the Rules of Court, which was docketed as G.R. No. 170505.
In the meantime, with the retirement of Judge Libre and the inhibition 50 of Judge Oscar Badelles, the new
presiding judge of RTC-Branch 5, Civil Case No. 6613 was re-raffled to the RTC-Branch 1, presided over by
Judge Mangotara. The RTC-Branch 1 promulgated on December 12, 2005 a Decision 51 in Civil Case No. 6613
which affirmed in toto the February 17, 2004 Decision of the MTCC in Civil Case No. 11475-AF favoring
LANDTRADE.
NAPOCOR and TRANSCO filed with the RTC-Branch 1 twin Motions, namely: (1) Motion for Reconsideration
of the Decision dated December 12, 2005; and (2) Motion for Inhibition of Judge Mangotara. The RTC-Branch
1 denied both Motions in a Resolution dated January 30, 2006.
NAPOCOR and TRANSCO filed with the Court of Appeals separate Petitions for Review with prayer for TRO
and/or a writ of preliminary injunction, which were docketed as CA-G.R. SP Nos. 00854 and 00889,
respectively. In a Resolution dated March 24, 2006, the Court of Appeals granted the prayer for TRO of
NAPOCOR and TRANSCO.
With the impending lapse of the effectivity of the TRO on May 23, 2006, NAPOCOR filed on May 15, 2006 with
the Court of Appeals a Manifestation and Motion praying for the resolution of its application for preliminary
injunction.
On May 23, 2006, the same day the TRO lapsed, the Court of Appeals granted the motions for extension of
time to file a consolidated comment of LANDTRADE. Two days later, LANDTRADE filed an Omnibus Motion
seeking the issuance of (1) a writ of execution pending appeal, and (2) the designation of a special sheriff in
accordance with Rule 70, Section 21 of the Rules of Court.

In a Resolution52 dated June 30, 2006, the Court of Appeals granted the Omnibus Motion of LANDTRADE and
denied the applications for the issuance of a writ of preliminary injunction of NAPOCOR and TRANSCO. In
effect, the appellate court authorized the execution pending appeal of the judgment of the MTCC, affirmed by
the RTC-Branch 1, thus:
IN LIGHT OF THE ABOVE DISQUISITIONS, this Court resolves to grant the [LANDRADE]s omnibus motion
for execution pending appeal of the decision rendered in its favor which is being assailed in these consolidated
petitions for review. Accordingly, the [NAPOCOR and TRANSCOs] respective applications for issuance of writ
of preliminary injunction are both denied for lack of factual and legal bases. The Municipal Trial Court in Cities,
Branch 2, Iligan City, which at present has the custody of the records of the case a quo, is hereby ordered to
cause the immediate issuance of a writ of execution relative to its decision dated 17 February 2004 in Civil
Case No. 11475-AF.53
On July 20, 2006, NAPOCOR filed with this Court a Petition for Certiorari and Prohibition under Rule 65 of the
Rules of Court with an urgent plea for a TRO, docketed as G.R. No. 173355-56. On August 2, 2006,
TRANSCO filed with this Court its own Petition for Certiorari, docketed as G.R. No. 173563-64.
On July 21, 2006, NAPOCOR filed an Urgent Motion for the Issuance of a TRO in G.R. No. 173355-56. In a
Resolution54 dated July 26, 2006, the Court granted the Motion of NAPOCOR and issued a TRO, 55 effective
immediately, which enjoined public and private respondents from implementing the Resolution dated June 30,
2006 of the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889 and the Decision dated February 17, 2004
of the MTCC in Civil Case No. 11475-AF.
On July 31, 2006, Vidal and AZIMUTH filed a Motion for Leave to Intervene and to Admit Attached Commentin-Intervention, contending therein that Vidal was the lawful owner of the parcels of land subject of the
Unlawful Detainer Case as confirmed in the Decision dated July 17, 2004 of the RTC-Branch 3 in Civil Case
No. 4452. In a Resolution dated September 30, 2006, the Court required the parties to comment on the Motion
of Vidal and AZIMUTH, and deferred action on the said Motion pending the submission of such comments.

(i) The parcel "object of Case No. 6908 is small" (Cacho vs. Government of the United States, 28 Phil. 616, p.
619)
(ii) "The parcel of land claimed by the applicant in Case No. 6909 is the bigger of two parcels and contains
37.87 hectares"
11. More significantly, the technical description in Original Certificate of Title No. 0-1200 (a.f.) specifies the
date of survey as "August 31 to September 1, 1910," which is EARLIER than the date the Supreme Court, in
Cacho supra, resolved LRC (GLRO) Record No. 6909 (involving 37.87 hectares). In resolving the application
involving the 37.87 hectares, the Honorable Supreme Court declared that only the southern part of the 37.87
hectare property applied for is granted and that a new survey specifying the "southern part" thereof should be
submitted. Accordingly, any survey involving the "granted southern part" should bear a date subsequent to the
December 10, 1914 Supreme Court decision. x x x
xxxx
12. The Honorable Supreme Court further declared that the Decision in LRC (GLRO) Record No. 6909 was
reserved:
"Final decision in these case is reserved until the presentation of the new plan." (28 Phil. 616, p. 631;
Underscoring supplied)
In other words, as of December 10, 1914, when the Honorable Supreme Court rendered its Decision on
appeal in LRC (GLRO) Record No. 6909, "final decision" of the case was still reserved until the presentation of
a new plan. The metes and bounds of OCT No. 0-1200 (a.f.) could not have been the technical description of
the property granted by the court described as "the southern part of the large parcel object of expediente
6909 only" (Cacho vs. Government of the United States, 28 Phil. 617, 629). As earlier stated, the technical
description appearing in said title was the result of a survey conducted in 1910 or before the Supreme Court
decision was rendered in1914.

The Cancellation of Titles and Reversion Case

(G.R. No. 173401)
On October 13, 2004, the Republic filed a Complaint for the Cancellation of OCT Nos. 0-1200 (a.f.) and 01201 (a.f.) and Reversion against the late Doa Demetria, represented by her alleged heirs, Vidal and/or
Teofilo, together with AZIMUTH and LANDTRADE. The Complaint, docketed as Civil Case No. 6686, was
raffled to the RTC-Branch 4.
The Republic sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) and the reversion of the
parcels of land covered thereby to the Government based on the following allegations in its Complaint, under
the heading "Cause of Action":
5. On October 15, 1998, Original Certificates of Title (OCTs) Nos. 0-1200 (a.f.) and 0-1201 (a.f.) were issued in
the name of "Demetria Cacho, widow, now deceased" consisting of a total area of Three Hundred SeventyEight Thousand Seven Hundred and Seven (378,707) square meters and Three Thousand Seven Hundred
Thirty-Five (3,635) square meters, respectively, situated in Iligan City, x x x
xxxx
6. The afore-stated titles were issued in implementation of a decision rendered in LRC (GLRO) Record Nos.
6908 and 6909 dated December 10, 1912, as affirmed by the Honorable Supreme Court in Cacho v.
Government of the United States, 28 Phil. 616 (December 10, 1914),
7. The decision in LRC (GLRO) Record Nos. 6908 and 6909, upon which the titles were issued, did not grant
the entire area applied for therein. x x x
xxxx

13. In the same vein, Original Certificate of Title No. 0-1201 (a.f.) specifies LRC (GLRO) Record No. 6909 as
the basis thereof (see front page of OCT No. 0-1201 (a.f.)). Yet, the technical description makes, as its
reference, Lot 1, Plan II-3732, LR Case No. 047, LRC (GLRO) Record No. 6908 (see page 2 of said title). A
title issued pursuant to a decision may only cover the property subject of the case. A title cannot properly be
issued pursuant to a decision in Case 6909, but whose technical description is based on Case 6908.
14. The decision in LRC (GLRO) Record Nos. 6908 and 6909 has become final and executory, and it cannot
be modified, much less result in an increased area of the property decreed therein.
xxxx
16. In sum, Original Certificates of Title Nos. 0-1200 (a.f.) and 0-1201 (a.f.), as issued, are null and void since
the technical descriptions vis--vis the areas of the parcels of land covered therein went beyond the areas
granted by the land registration court in LRC (GLRO) Record Nos. 6908 and 6909. 56
Vidal and AZIMUTH filed a Motion to Dismiss dated December 23, 2004 on the grounds that (1) the Republic
has no cause of action; (2) assuming arguendo that the Republic has a cause of action, its Complaint failed to
state a cause of action; (3) assuming arguendo that the Republic has a cause of action, the same is barred by
prior judgment; (4) assuming further that the Republic has a cause of action, the same was extinguished by
prescription; and (4) the Republic is guilty of forum shopping.
Upon motion of the Republic, the RTC-Branch 4 issued an Order 57 dated October 4, 2005, declaring
LANDTRADE and Teofilo, as represented by Atty. Cabildo, in default since they failed to submit their
respective answers to the Complaint despite the proper service of summons upon them.
LANDTRADE subsequently filed its Answer with Compulsory Counterclaim dated September 28, 2005. It also
moved for the setting aside and reconsideration of the Order of Default issued against it by the RTC-Branch 4
on October 20, 2005.

9. As events turned out, the titles issued in connection with LRC (GLRO) Record Nos. 6908 and 6909 i.e.
OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) cover property MUCH LARGER in area than that granted by the
land registration court in its corresponding decision, supra.

On December 13, 2005, the RTC-Branch 4 issued an Order 58 dismissing the Complaint of the Republic in Civil
Case No. 6686, completely agreeing with Vidal and AZIMUTH.

10. While the LRC Decision, as affirmed by the Honorable Supreme Court, granted only the southern part of
the 37.87 hectare land subject of LRC (GLRO) Record Case No. 6909, the ENTIRE 37.87 hectares is
indicated as the property covered by OCT 0-1200 (a.f.). Worse, OCT No. 0-1200 (a.f.) made reference to Case
No. 6908 as basis thereof, yet, the decision in said case is clear:

The RTC-Branch 4 reasoned that the Republic had no cause of action because there was no showing that the
late Doa Demetria committed any wrongful act or omission in violation of any right of the Republic. Doa
Demetria had sufficiently proven her ownership over the parcels of land as borne in the ruling of the LRC in
GLRO Record Nos. 6908 and 6909. On the other hand, the Republic had no more right to the said parcels of

land. The Regalian doctrine does not apply in this case because the titles were already issued to Doa
Demetria and segregated from the mass of the public domain.
The RTC-Branch 4 likewise held that the Republic failed to state a cause of action in its Complaint. The
arguments of the Republic i.e., the absence of a new survey plan and deed, the titles covered properties
with much larger area than that granted by the LRC had been answered squarely in the 1997 Cacho case.
Also, the Complaint failed to allege that fraud had been committed in having the titles registered and that the
Director of Lands requested the reversion of the subject parcels of land.
The RTC-Branch 4 was convinced that the Complaint was barred by res judicata because the 1914 Cacho
case already decreed the registration of the parcels of land in the late Doa Demetrias name and the 1997
Cacho case settled that there was no merit in the argument that the conditions imposed in the first case have
not been complied with.

under Rule 45 of the Rules of Court are the appellant as petitioner and the appellee as respondent. The court
which rendered the judgment appealed from is not a party in said appeal. It is in the special civil action of
certiorari under Rule 65 of the Rules of Court where the court or judge is required to be joined as party
defendant or respondent. The Court, however, also acknowledged that there may be an instance when in an
appeal by certiorari under Rule 45, the petitioner-appellant would also claim that the court that rendered the
appealed judgment acted without or in excess of its jurisdiction or with grave abuse of discretion, in which
case, such court should be joined as a party-defendant or respondent. While the Court may have stated that in
such an instance, "the petition for review on certiorari under Rule 45 of the Rules of Court is at the same time
a petition for certiorari under Rule 65," the Court did not hold that consolidated petitions under both Rules 45
and 65 could or should be filed.
The Court, in more recent cases, had been stricter and clearer on the distinction between these two modes of
appeal. In Nunez v. GSIS Family Bank,62 the Court elucidated:

The RTC-Branch 4 was likewise persuaded that the cause of action or remedy of the Republic was lost or
extinguished by prescription pursuant to Article 1106 of the Civil Code and Section 32 of Presidential Decree
No. 1529, otherwise known as the Land Registration Decree, which prescribes a one-year period within which
to file an action for the review of a decree of registration.

In Ligon v. Court of Appeals where the therein petitioner described her petition as "an appeal under Rule 45
and at the same time as a special civil action of certiorari under Rule 65 of the Rules of Court," this Court, in
frowning over what it described as a "chimera," reiterated that the remedies of appeal and certiorari are
mutually exclusive and not alternative nor successive.

Finally, the RTC-Branch 4 found the Republic guilty of forum shopping because there is between this case, on
one hand, and the 1914 and 1997 Cacho cases, on the other, identity of parties, as well as rights asserted and
reliefs prayed for, as the contending parties are claiming rights of ownership over the same parcels of land.

To be sure, the distinctions between Rules 45 and 65 are far and wide. However, the most apparent is that
errors of jurisdiction are best reviewed in a special civil action for certiorari under Rule 65 while errors of
judgment can only be corrected by appeal in a petition for review under Rule 45.

The Republic filed a Motion for Reconsideration of the dismissal of its Complaint but the same was denied by
the RTC-Branch 4 in its Order59 dated May 16, 2006.

But in the same case, the Court also held that:

Assailing the Orders dated December 13, 2005 and May 16, 2006 of the RTC-Branch 4, the Republic filed on
August 11, 2006 a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which was docketed
as G.R. No. 173401.
III
ISSUES AND DISCUSSIONS
Expropriation Case
(G.R. No. 170375)
The Republic, in its consolidated Petitions challenging the Resolutions dated July 12, 2005 and October 24,
2005 of the RTC-Branch 1 in Civil Case No. 106, made the following assignment of errors:
RESPONDENT JUDGE GRAVELY ERRED IN ORDERING THE DISMISSAL OF THE EXPROPRIATION
COMPLAINT IN CIVIL CASE NO. 106 CONSIDERING THAT:

This Court, x x x, in accordance with the liberal spirit which pervades the Rules of Court and in the interest of
justice may treat a petition for certiorari as having been filed under Rule 45, more so if the same was filed
within the reglementary period for filing a petition for review.63
It is apparent in the case at bar that the Republic availed itself of the wrong mode of appeal by filing
Consolidated Petitions for Review under Rule 45 and for Certiorari under Rule 65, when these are two
separate remedies that are mutually exclusive and neither alternative nor successive. Nevertheless, the Court
shall treat the Consolidated Petitions as a Petition for Review on Certiorari under Rule 45 and the allegations
therein as errors of judgment. As the records show, the Petition was filed on time under Rules 45. Before the
lapse of the 15-day reglementary period to appeal under Rule 45, the Republic filed with the Court a motion for
extension of time to file its petition. The Court, in a Resolution 64 dated January 23, 2006, granted the Republic
a 30-day extension, which was to expire on December 29, 2005. The Republic was able to file its Petition on
the last day of the extension period.
Hierarchy of courts
The direct filing of the instant Petition with this Court did not violate the doctrine of hierarchy of courts.

(a) THE NON-JOINDER OF PARTIES IS NOT A GROUND FOR THE DISMISSAL OF AN ACTION
PURSUANT TO SECTION 11, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE;
(b) AN EXPROPRIATION PROCEEDING IS AN ACTION QUASI IN REM WHEREIN THE FACT THAT THE
OWNER OF THE PROPERTY IS MADE A PARTY TO THE ACTION IS NOT ESSENTIALLY
INDISPENSABLE;
(c) PETITIONER DID NOT COMMIT ANY FORUM SHOPPING WITH THE FILING OF THE REVERSION
COMPLAINT DOCKETED AS CIVIL CASE NO. 6686 WHICH IS PENDING BEFORE BRANCH 4 OF THE
REGIONAL TRIAL COURT OF ILIGAN CITY.60
Filing of consolidated petitions under both Rules 45 and 65
At the outset, the Court notes that the Republic filed a pleading with the caption Consolidated Petitions for
Review on Certiorari (Under Rule 45) and Certiorari (Under Rule 65) of the Rules of Court. The Republic
explains that it filed the Consolidated Petitions pursuant to Metropolitan Waterworks and Sewerage System
(MWSS) v. Court of Appeals61 (MWSS case).
The reliance of the Republic on the MWSS case to justify its mode of appeal is misplaced, taking the
pronouncements of this Court in said case out of context.

According to Rule 41, Section 2(c)65 of the Rules of Court, a decision or order of the RTC may be appealed to
the Supreme Court by petition for review on certiorari under Rule 45, provided that such petition raises only
questions of law.66
A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence
to a certain set of facts; or when the issue does not call for an examination of the probative value of the
evidence presented, the truth or falsehood of facts being admitted. 67 A question of fact exists when the doubt
or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole
evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific
surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the
situation.68
Here, the Petition of the Republic raises pure questions of law, i.e., whether Civil Case No. 106 should have
been dismissed for failure to implead indispensable parties and for forum shopping. Thus, the direct resort by
the Republic to this Court is proper.
The Court shall now consider the propriety of the dismissal by the RTC-Branch 1 of the Complaint for
Expropriation of the Republic.
The proper parties in the expropriation proceedings

The issue in the MWSS case was whether a possessor in good faith has the right to remove useful
improvements, and not whether consolidated petitions under both Rules 45 and 65 of the Rules of Court can
be filed. Therein petitioner MWSS simply filed an appeal by certiorari under Rule 45 of the Rules of Court, but
named the Court of Appeals as a respondent. The Court clarified that the only parties in an appeal by certiorari

The right of the Republic to be substituted for ISA as plaintiff in Civil Case No. 106 had long been affirmed by
no less than this Court in the ISA case. The dispositive portion of the ISA case reads:

WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated 8 October 1991 to the extent
that it affirmed the trial courts order dismissing the expropriation proceedings, is hereby REVERSED and SET
ASIDE and the case is REMANDED to the court a quo which shall allow the substitution of the Republic of the
Philippines for petitioner Iron Steel Authority for further proceedings consistent with this Decision. No
pronouncement as to costs.69
The ISA case had already become final and executory, and entry of judgment was made in said case on
August 31, 1998. The RTC-Branch 1, in an Order dated November 16, 2001, effected the substitution of the
Republic for ISA.
The failure of the Republic to actually file a motion for execution does not render the substitution void. A writ of
execution requires the sheriff or other proper officer to whom it is directed to enforce the terms of the
writ.70 The November 16, 2001 Order of the RTC-Branch 1 should be deemed as voluntary compliance with a
final and executory judgment of this Court, already rendering a motion for and issuance of a writ of execution
superfluous.
Besides, no substantive right was violated by the voluntary compliance by the RTC-Branch 1 with the directive
in the ISA case even without a motion for execution having been filed. To the contrary, the RTC-Branch 1
merely enforced the judicially determined right of the Republic to the substitution. While it is desirable that the
Rules of Court be faithfully and even meticulously observed, courts should not be so strict about procedural
lapses that do not really impair the administration of justice. If the rules are intended to insure the orderly
conduct of litigation it is because of the higher objective they seek which is the protection of the substantive
rights of the parties.71
The Court also observes that MCFC did not seek any remedy from the Order dated November 16, 2001 of the
RTC-Branch 1. Consequently, the said Order already became final, which even the RTC-Branch 1 itself cannot
reverse and set aside on the ground of "honest mistake."
The RTC-Branch 1 dismissed the Complaint in Civil Case No. 106 on another ground: that MCFC is not a
proper party to the expropriation proceedings, not being the owner of the parcels of land sought to be
expropriated. The RTC-Branch 1 ratiocinated that since the exercise of the power of eminent domain involves
the taking of private land intended for public use upon payment of just compensation to the owner, then a
complaint for expropriation must be directed against the owner of the land sought to be expropriated.
The Republic insists, however, that MCFC is a real party-in-interest, impleaded as a defendant in the
Complaint for Expropriation because of its possessory or occupancy rights over the subject parcels of land,
and not by reason of its ownership of the said properties. In addition, the Republic maintains that non-joinder
of parties is not a ground for the dismissal of an action.

November 16, 1982 expressly recognized that portions of the lands reserved by Presidential Proclamation No.
2239, also dated November 16, 1982, for the use and immediate occupation by the NSC, were then occupied
by an idle fertilizer plant/factory and related facilities of MCFC. It was ordered in the same Letter of Instruction
that:
(1) NSC shall negotiate with the owners of MCFC, for and on behalf of the Government, for the compensation
of MCFC's present occupancy rights on the subject lands at an amount of Thirty (P30.00) Pesos per square
meter or equivalent to the assessed value thereof (as determined by the City Assessor of Iligan), whichever is
higher. NSC shall give MCFC the option to either remove its aforesaid plant, structures, equipment, machinery
and other facilities from the lands or to sell or cede ownership thereof to NSC at a price equivalent to the fair
market value thereof as appraised by the Asian Appraisal Inc. as may be mutually agreed upon by NSC and
MCFC.
(2) In the event that NSC and MCFC fail to agree on the foregoing within sixty (60) days from the date hereof,
the Iron and Steel Authority (ISA) shall exercise its authority under Presidential Decree (PD) No. 272, as
amended, to initiate the expropriation of the aforementioned occupancy rights of MCFC on the subject lands
as well as the plant, structures, equipment, machinery and related facilities, for and on behalf of NSC, and
thereafter cede the same to NSC. During the pendency of the expropriation proceedings, NSC shall take
possession of the properties, subject to bonding and other requirements of P.D. 1533. (Emphasis supplied.)
Being the occupant of the parcel of land sought to be expropriated, MCFC could very well be named a
defendant in Civil Case No. 106. The RTC-Branch 1 evidently erred in dismissing the Complaint for
Expropriation against MCFC for not being a proper party.
Also erroneous was the dismissal by the RTC-Branch 1 of the original Complaint for Expropriation for having
been filed only against MCFC, the occupant of the subject land, but not the owner/s of the said property.
Dismissal is not the remedy for misjoinder or non-joinder of parties. According to Rule 3, Section 11 of the
Rules of Court:
SEC. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for
dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its
own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party
may be severed and proceeded with separately. (Emphasis supplied.)
MCFC contends that the aforequoted rule does not apply in this case where the party not joined, i.e., the
owner of the property to be expropriated, is an indispensable party.
An indispensable party is a party-in-interest without whom no final determination can be had of an action. 76

Rule 67, Section 1 of the then Rules of Court 72 described how expropriation proceedings should be instituted:
Section 1. The complaint. The right of eminent domain shall be exercised by the filing of a complaint which
shall state with certainty the right and purpose of condemnation, describe the real or personal property sought
to be condemned, and join as defendants all persons owning or claiming to own, or occupying, any part
thereof or interest therein, showing, so far as practicable, the interest of each defendant separately. If the title
to any property sought to be condemned appears to be in the Republic of the Philippines, although occupied
by private individuals, or if the title is otherwise obscure or doubtful so that the plaintiff cannot with accuracy or
certainty specify who are the real owners, averment to that effect may be made in the complaint. 73 (Emphases
supplied.)
For sure, defendants in an expropriation case are not limited to the owners of the property to be expropriated,
and just compensation is not due to the property owner alone. As this Court held in De Knecht v. Court of
Appeals74:
The defendants in an expropriation case are not limited to the owners of the property condemned. They
include all other persons owning, occupying or claiming to own the property. When [property] is taken by
eminent domain, the owner x x x is not necessarily the only person who is entitled to compensation. In the
American jurisdiction, the term owner when employed in statutes relating to eminent domain to designate the
persons who are to be made parties to the proceeding, refer, as is the rule in respect of those entitled to
compensation, to all those who have lawful interest in the property to be condemned, including a mortgagee, a
lessee and a vendee in possession under an executory contract. Every person having an estate or interest at
law or in equity in the land taken is entitled to share in the award. If a person claiming an interest in the land
sought to be condemned is not made a party, he is given the right to intervene and lay claim to the
compensation. (Emphasis supplied.)
At the time of the filing of the Complaint for Expropriation in 1983, possessory/occupancy rights of MCFC over
the parcels of land sought to be expropriated were undisputed. In fact, Letter of Instructions No. 1277 75 dated

Now, is the owner of the property an indispensable party in an action for expropriation? Not necessarily. Going
back to Rule 67, Section 1 of the Rules of Court, expropriation proceedings may be instituted even when "title
to the property sought to be condemned appears to be in the Republic of the Philippines, although occupied
by private individuals." The same rule provides that a complaint for expropriation shall name as defendants "all
persons owning or claiming to own, or occupying, any part thereof or interest" in the property sought to be
condemned. Clearly, when the property already appears to belong to the Republic, there is no sense in the
Republic instituting expropriation proceedings against itself. It can still, however, file a complaint for
expropriation against the private persons occupying the property. In such an expropriation case, the owner of
the property is not an indispensable party.
To recall, Presidential Proclamation No. 2239 explicitly states that the parcels of land reserved to NSC are part
of the public domain, hence, owned by the Republic. Letter of Instructions No. 1277 recognized only the
occupancy rights of MCFC and directed NSC to institute expropriation proceedings to determine the just
compensation for said occupancy rights. Therefore, the owner of the property is not an indispensable party in
the original Complaint for Expropriation in Civil Case No. 106.
Assuming for the sake of argument that the owner of the property is an indispensable party in the
expropriation proceedings, the non-joinder of said party would still not warrant immediate dismissal of the
complaint for expropriation. In Vda. De Manguerra v. Risos, 77 the Court applied Rule 3, Section 11 of the Rules
of Court even in case of non-joinder of an indispensable party, viz:
[F]ailure to implead an indispensable party is not a ground for the dismissal of an action. In such a case, the
remedy is to implead the non-party claimed to be indispensable. Parties may be added by order of the court,
on motion of the party or on its own initiative at any stage of the action and/or such times as are just. If the
petitioner/plaintiff refuses to implead an indispensable party despite the order of the court, the latter may
dismiss the complaint/petition for the petitioner's/plaintiff's failure to comply. (Emphasis supplied.)

In this case, the RTC-Branch 1 did not first require the Republic to implead the alleged owner/s of the parcel of
land sought to be expropriated. Despite the absence of any order from the Court, the Republic upon
becoming aware that the parcels of land involved in the 1914 Cacho case and 1997 Cacho case, claimed by
Teofilo and LANDTRADE, and Vidal and AZIMUTH, encroached into and overlapped with the parcel of land
subject of Civil Case No. 106 sought leave of court to file a Supplemental Complaint to implead these four
parties. The RTC-Branch 1 did not take the Supplemental Complaint of the Republic into consideration.
Instead, it dismissed outright the original Complaint for Expropriation against MCFC.
Forum shopping
The RTC-Branch 1 further erred in finding that the Republic committed forum shopping by (1) simultaneously
instituting the actions for expropriation (Civil Case No. 106) and reversion (Civil Case No. 6686) for the same
parcels of land; and (2) taking inconsistent positions when it conceded lack of ownership over the parcels of
land in the expropriation case but asserted ownership of the same properties in the reversion case.
There is no dispute that the Republic instituted reversion proceedings (Civil Case No. 6686) for the same
parcels of land subject of the instant Expropriation Case (Civil Case No. 106). The Complaint for Cancellation
of Titles and Reversion78 dated September 27, 2004 was filed by the Republic with the RTC on October 13,
2004. The records, however, do not show when the Supplemental Complaint for Expropriation 79 dated
September 28, 2004 was filed with the RTC. Apparently, the Supplemental Complaint for Expropriation was
filed after the Complaint for Cancellation of Titles and Reversion since the Republic mentioned in the former
the fact of filing of the latter.80Even then, the Verification and Certification of Non-Forum Shopping 81 attached to
the Supplemental Complaint for Expropriation did not disclose the filing of the Complaint for Cancellation of
Titles and Reversion. Notwithstanding such non-disclosure, the Court finds that the Republic did not commit
forum shopping for filing both Complaints.
In NBI-Microsoft Corporation v Hwang,82 the Court laid down the circumstances when forum shopping exists:
Forum-shopping takes place when a litigant files multiple suits involving the same parties, either
simultaneously or successively, to secure a favorable judgment.
Thus, it exists where the elements of litis pendentia are present,namely: (a) identity of parties, or at least such
parties who represent the same interests in both actions; (b)identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity with respect to the two preceding particulars in the
two cases is such that any judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case. Forum-shopping is an act of malpractice because it
abuses court processes. x x x.
Here, the elements of litis pendencia are wanting. There is no identity of rights asserted and reliefs prayed for
in Civil Case No. 106 and Civil Case No. 6686.

proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums awarded to
either the defendant or the court before the plaintiff can enter upon the property, or retain it for the public use
or purpose if entry has already been made. (Emphasis supplied.)
Hence, the filing by the Republic of the Supplemental Complaint for Expropriation impleading Teofilo, Vidal,
LANDTRADE, and AZIMUTH, is not necessarily an admission that the parcels of land sought to be
expropriated are privately owned. At most, the Republic merely acknowledged in its Supplemental Complaint
that there are private persons also claiming ownership of the parcels of land. The Republic can still
consistently assert, in both actions for expropriation and reversion, that the subject parcels of land are part of
the public domain.
In sum, the RTC-Branch 1 erred in dismissing the original Complaint and disallowing the Supplemental
Complaint in Civil Case No. 106. The Court reverses and sets aside the Resolutions dated July 12, 2005 and
October 24, 2005 of the RTC-Branch 1 in Civil Case 106, and reinstates the Complaint for Reversion of the
Republic.
The Quieting of Title Case
(G.R. Nos. 178779 and 178894)
Essentially, in their Petitions for Review on Certiorari under Rule 45 of the Rules of Court, LANDTRADE and
Teofilo, and/or Atty. Cabildo are calling upon this Court to determine whether the Court of Appeals, in its
Decision dated January 19, 2007 in CA-G.R. CV No. 00456, erred in (1) upholding the jurisdiction of the RTCBranch 3 to resolve the issues on Vidal's status, filiation, and heirship in Civil Case No. 4452, the action for
quieting of title; (2) not holding that Vidal and AZIMUTH have neither cause of action nor legal or equitable title
or interest in the parcels of land covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.); (3) finding the evidence
sufficient to establish Vidals status as Doa Demetrias granddaughter and sole surviving heir; and (4) not
holding that Civil Case No. 4452 was already barred by prescription.
In their Comment, Vidal and AZIMUTH insisted on the correctness of the Court of Appeals Decision dated
January 19, 2007, and questioned the propriety of the Petition for Review filed by LANDTRADE as it
supposedly raised only factual issues.
The Court rules in favor of Vidal and AZIMUTH.
Petitions for review under Rule 45
A scrutiny of the issues raised, not just in the Petition for Review of LANDTRADE, but also those in the
Petition for Review of Teofilo and/or Atty. Cabildo, reveals that they are both factual and legal.

The Republic is not engaging in contradictions when it instituted both expropriation and reversion proceedings
for the same parcels of land. The expropriation and reversion proceedings are distinct remedies that are not
necessarily exclusionary of each other.

The Court has held in a long line of cases that in a petition for review on certiorari under Rule 45 of the Rules
of Court, only questions of law may be raised as the Supreme Court is not a trier of facts. It is settled that as a
rule, the findings of fact of the Court of Appeals especially those affirming the trial court are final and
conclusive and cannot be reviewed on appeal to the Supreme Court. The exceptions to this rule are: (a) when
the conclusion is a finding grounded entirely on speculations, surmises or conjectures; (b) when the inference
made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d) when the
judgment is based on a misapprehension of facts; (e) when the findings of fact are conflicting; (f) when the
Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee; (g) where the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion;
and (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court, or are mere
conclusions without citation of specific evidence, or where the facts set forth by the petitioner are not disputed
by the respondent, or where the findings of fact of the Court of Appeals are premised on absence of evidence
but are contradicted by the evidence on record. 83 None of these exceptions exists in the Petitions at bar.

The filing of a complaint for reversion does not preclude the institution of an action for expropriation. Even if
the land is reverted back to the State, the same may still be subject to expropriation as against the occupants
thereof.

Be that as it may, the Court shall address in full-length all the issues tendered in the instant Petitions for
Review, even when factual, if only to bolster the conclusions reached by the RTC-Branch 3 and the Court of
Appeals, with which the Court fully concurs.

Also, Rule 67, Section 1 of the Rules of Court allows the filing of a complaint for expropriation even when "the
title to any property sought to be condemned appears to be in the Republic of the Philippines, although
occupied by private individuals, or if the title is otherwise obscure or doubtful so that the plaintiff cannot with
accuracy or certainty specify who are the real owners." Rule 67, Section 9 of the Rules of Court further
provides:

Jurisdiction vis--vis exercise of jurisdiction

Civil Case No. 106 was instituted against MCFC to acquire, for a public purpose, its possessory/occupancy
rights over 322,532 square meters or 32.25 hectares of land which, at the time of the filing of the original
Complaint in 1983, was not yet covered by any certificate of title. On the other hand, Civil Case No. 6686
sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), which was entered into registration on
December 4, 1998 in Doa Demetrias name, on the argument that the parcels of land covered by said
certificates exceeded the areas granted by the LRC to Doa Demetria in GLRO Record Nos. 6908 and 6909,
as affirmed by this Court in the 1914 Cacho case.
Expropriation vis--vis reversion

SEC. 9. Uncertain ownership; conflicting claims. If the ownership of the property taken is uncertain, or
there are conflicting claims to any part thereof, the court may order any sum or sums awarded as
compensation for the property to be paid to the court for the benefit of the person adjudged in the same

LANDTRADE, Teofilo, and/or Atty. Cabildo argue that the RTC-Branch 3 had no jurisidiction to resolve the
issues of status, filiation, and heirship in an action for quieting of title as said issues should be ventilated and
adjudicated only in special proceedings under Rule 90, Section 1 of the Rules of Court, pursuant to the ruling
of this Court in Agapay v. Palang84 (Agapay case) and Heirs of Guido Yaptinchay and Isabel Yaptinchay v. Del
Rosario85(Yaptinchay case). Even on the assumption that the RTC-Branch 3 acquired jurisdiction over their
persons, LANDTRADE, Teofilo, and/or Atty. Cabildo maintain that the RTC-Branch 3 erred in the exercise of its
jurisdiction by adjudicating and passing upon the issues on Vidals status, filiation, and heirship in the Quieting

of Title Case. Moreover, LANDTRADE, Teofilo, and/or Atty. Cabildo aver that the resolution of issues regarding
status, filiation, and heirship is not merely a matter of procedure, but of jurisdiction which cannot be waived by
the parties or by the court.

Register of Deeds to cancel the Transfer Certificates of Title (TCTs) over the subject property in the name of
Erlinda and to issue new ones in the names of Carlina and Herminia. Erlinda filed a Petition for Review with
this Court.

The aforementioned arguments fail to persuade.

In resolving Erlindas Petition, the Court held in the Agapay case that Article 148 of the Family Code applied to
Miguel and Erlinda. Article 148 specifically governs the property relations of a man and a woman who are not
capacitated to marry each other and live exclusively with each other as husband and wife without the benefit
of marriage or under a void marriage. Under said provision, only the properties acquired by both parties
through their actual joint contribution of money, property, or industry shall be owned by them in common in
proportion to their respective contributions. In this case, the Court found that the money used to buy the
subject properties all came from Miguel.

In the first place, jurisdiction is not the same as the exercise of jurisdiction. The Court distinguished between
the two, thus:
Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of jurisdiction,
jurisdiction is the authority to decide a cause, and not the decision rendered therein. Where there is
jurisdiction over the person and the subject matter, the decision on all other questions arising in the
case is but an exercise of the jurisdiction. And the errors which the court may commit in the exercise of
jurisdiction are merely errors of judgment which are the proper subject of an appeal. 86 (Emphasis supplied.)
Here, the RTC-Branch 3 unmistakably had jurisdiction over the subject matter and the parties in Civil Case No.
4452.
Jurisdiction over the subject matter or nature of the action is conferred only by the Constitution or by law. Once
vested by law on a particular court or body, the jurisdiction over the subject matter or nature of the action
cannot be dislodged by anybody other than by the legislature through the enactment of a law. The power to
change the jurisdiction of the courts is a matter of legislative enactment, which none but the legislature may
do. Congress has the sole power to define, prescribe and apportion the jurisdiction of the courts. 87
The RTC has jurisdiction over an action for quieting of title under the circumstances described in Section 19(2)
of Batas Pambansa Blg. 129, as amended:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
xxxx
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where
the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions
in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry
into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.
Records show that the parcels of land subject of Civil Case No. 4452 have a combined assessed value
ofP35,398,920.00,88 undisputedly falling within the jurisdiction of the RTC-Branch 3.
The RTC-Branch 3 also acquired jurisdiction over the person of Teofilo when he filed his Answer to the
Complaint of Vidal and AZIMUTH; and over the juridical personality of LANDTRADE when the said corporation
was allowed to intervene in Civil Case No. 4452.
Considering that the RTC-Branch 3 had jurisdiction over the subject matter and parties in Civil Case No. 4452,
then it can rule on all issues in the case, including those on Vidals status, filiation, and heirship, in exercise of
its jurisdiction. Any alleged erroneous finding by the RTC-Branch 3 concerning Vidals status, filiation, and
heirship in Civil Case No. 4452, is merely an error of judgment subject to the affirmation, modification, or
reversal by the appellate court when appealed.
The Agapay and Yaptinchay cases
LANDTRADE, Teofilo, and/or Atty. Cabildo cannot rely on the cases of Agapay and Yaptinchay to support their
position that declarations on Vidals status, filiation, and heirsip, should be made in special proceedings and
not in Civil Case No. 4452.
In the Agapay case, the deceased Miguel Agapay (Miguel) contracted two marriages. Miguel married Carlina
(sometimes referred to as Cornelia) in 1949, and they had a daughter named Herminia, who was born in 1950.
Miguel left for Hawaii a few months after his wedding to Carlina. When Miguel returned to the Philippines in
1972, he did not live with Carlina and Herminia. He married Erlinda in 1973, with whom he had a son named
Kristopher, who was born in 1977. Miguel died in 1981. A few months after Miguels death, Carlina and
Herminia filed a complaint for recovery of ownership and possession with damages against Erlinda over a
riceland and house and lot in Pangasinan, which were allegedly purchased by Miguel during his cohabitation
with Erlinda. The RTC dismissed the complaint, finding little evidence that the properties pertained to the
conjugal property of Miguel and Carlina. The RTC went on to provide for the intestate shares of the parties,
particularly of Kristopher, Miguels illegitimate son. On appeal, the Court of Appeals: (1) reversed the RTC
judgment; (2) ordered Erlinda to vacate and deliver the properties to Carlina and Herminia; and (3) ordered the

The Court then proceeded to address another issue in the Agapay case, more relevant to the one at bar:
The second issue concerning Kristopher Palangs status and claim as an illegitimate son and heir to Miguels
estate is here resolved in favor of respondent courts correct assessment that the trial court erred in making
pronouncements regarding Kristophers heirship and filiation "inasmuch as questions as to who are the heirs
of the decedent, proof of filiation of illegitimate children and the determination of the estate of the latter and
claims thereto should be ventilated in the proper probate court or in a special proceeding instituted for the
purpose and cannot be adjudicated in the instant ordinary civil action which is for recovery of ownership and
possession."89
The Yaptinchay case involved two parcels of land in Cavite which were supposedly owned by Guido and
Isabel Yaptinchay (spouses Yaptinchay). Upon the death of the spouses Yaptinchay, their heirs (Yaptinchay
heirs) executed an Extra-Judicial Settlement of the deceased spouses estate. However, the Yaptinchay heirs
discovered that the properties were already covered by TCTs in the name of Golden Bay Realty Corporation
(Golden Bay), prompting the Yaptinchay heirs to file with the RTC a complaint against Golden Bay for the
annulment and/or declaration of nullity of TCT Nos. 493363 to 493367 and all their derivatives, or in the
alternative, the reconveyance of realty with a prayer for a writ of preliminary injunction and/or restraining order
with damages. The Yaptinchay heirs later filed an amended complaint to include additional defendants to
whom Golden Bay sold portions of the subject properties. The RTC initially dismissed the amended complaint,
but acting on the motion for reconsideration of the Yaptinchay heirs, eventually allowed the same. Golden Bay
and its other co-defendants presented a motion to dismiss the amended complaint, which was granted by the
RTC. The Yaptinchay heirs came before this Court via a Petition for Certiorari.
The Court first observed in the Yaptinchay case that the Yaptinchay heirs availed themselves of the wrong
remedy. An order of dismissal is the proper subject of an appeal, not a petition for certiorari. Next, the Court
affirmed the dismissal of the amended complaint, thus:
Neither did the respondent court commit grave abuse of discretion in issuing the questioned Order dismissing
the Second Amended Complaint of petitioners, x x x.
xxxx
In Litam, etc., et al. v. Rivera, this court opined that the declaration of heirship must be made in an
administration proceeding, and not in an independent civil action. This doctrine was reiterated in Solivio v.
Court of Appeals where the court held:
"In Litam, et al. v. Rivera, 100 Phil. 364, where despite the pendency of the special proceedings for the
settlement of the intestate estate of the deceased Rafael Litam, the plaintiffs-appellants filed a civil action in
which they claimed that they were the children by a previous marriage of the deceased to a Chinese woman,
hence, entitled to inherit his one-half share of the conjugal properties acquired during his marriage to Marcosa
Rivera, the trial court in the civil case declared that the plaintiffs-appellants were not children of the deceased,
that the properties in question were paraphernal properties of his wife, Marcosa Rivera, and that the latter was
his only heir. On appeal to this Court, we ruled that such declarations (that Marcosa Rivera was the only heir
of the decedent) is improper, in Civil Case No. 2071, it being within the exclusive competence of the court in
Special Proceedings No. 1537, in which it is not as yet, in issue, and, will not be, ordinarily, in issue until the
presentation of the project of partition. (p. 378)."
The trial court cannot make a declaration of heirship in the civil action for the reason that such a declaration
can only be made in a special proceeding. Under Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil
action is defined as "one by which a party sues another for the enforcement or protection of a right, or the
prevention or redress of a wrong while a special proceeding is "a remedy by which a party seeks to establish
a status, a right, or a particular fact." It is then decisively clear that the declaration of heirship can be made
only in a special proceeding inasmuch as the petitioners here are seeking the establishment of a status or
right.90

LANDTRADE, Teofilo, and/or Atty. Cabildo missed one vital factual distinction between the Agapay and
Yaptinchay cases, on one hand, and the present Petitions, on the other, by reason of which, the Court shall
not apply the prior two to the last.
The Agapay and Yaptinchay cases, as well as the cases of Litam v. Rivera 91 and Solivio v. Court of
Appeals,92cited in the Yaptinchay case, all arose from actions for reconveyance; while the instant Petitions
stemmed from an action for quieting of title. The Court may have declared in previous cases that an action for
reconveyance is in the nature of an action for quieting of title, 93 but the two are distinct remedies.
Ordinary civil action for reconveyance vis-a-vis special proceeding for quieting of title
The action for reconveyance is based on Section 55 of Act No. 496, otherwise known as the Land Registration
Act, as amended, which states "[t]hat in all cases of registration procured by fraud the owner may pursue all
his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of
any innocent holder for value of a certificate of title."
The Court, in Heirs of Eugenio Lopez, Sr. v. Enriquez, 94 described an action for reconveyance as follows:
An action for reconveyance is an action in personam available to a person whose property has been
wrongfully registered under the Torrens system in anothers name. Although the decree is recognized as
incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens. As a
remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and not with
the land registration court. Reconveyance is always available as long as the property has not passed to an
innocent third person for value. x x x (Emphases supplied.)
On the other hand, Article 476 of the Civil Code lays down the circumstances when a person may institute an
action for quieting of title:
ART. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and
in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest
therein.

Rules of Court on declaratory relief and similar remedies. 97 Actions for declaratory relief and other similar
remedies are distinguished from ordinary civil actions because:
2. In declaratory relief, the subject-matter is a deed, will, contract or other written instrument, statute, executive
order or regulation, or ordinance. The issue is the validity or construction of these documents. The relief
sought is the declaration of the petitioners rights and duties thereunder.
The concept of a cause of action in ordinary civil actions does not apply to declaratory relief as this special civil
action presupposes that there has been no breach or violation of the instruments involved. Consequently,
unlike other judgments, the judgment in an action for declaratory relief does not essentially entail any
executional process as the only relief to be properly granted therein is a declaration of the rights and duties of
the parties under the instrument, although some exceptions have been recognized under certain situations. 98
Civil Case No. 4452 could not be considered an action for reconveyance as it is not based on the allegation
that the two parcels of land, Lots 1 and 2, have been wrongfully registered in another persons name. OCT
Nos. 0-1200 (a.f.) and 0-1201 (a.f.), covering the subject properties, are still in Doa Demetrias name. Vidal
and Teofilo each claims to have inherited the two parcels of land from the late Doa Demetria as said
decedents sole heir, but neither Vidal nor Teofilo has been able to transfer registration of the said properties to
her/his name as of yet.
Instead, Civil Case No. 4452 is indisputably an action for quieting of title, a special proceeding wherein the
court is precisely tasked to determine the rights of the parties as to a particular parcel of land, so that the
complainant and those claiming under him/her may be forever free from any danger of hostile claim. Vidal
asserted title to the two parcels of land as Doa Demetrias sole heir. The cloud on Vidals title, which she
sought to have removed, was Teofilos adverse claim of title to the same properties, also as Doa Demetrias
only heir. For it to determine the rights of the parties in Civil Case No. 4452, it was therefore crucial for the
RTC-Branch 3 to squarely make a finding as to the status, filiation, and heirship of Vidal in relation to those of
Teofilo. A finding that one is Doa Demetrias sole and rightful heir would consequently exclude and extinguish
the claim of the other.
Even assuming arguendo that the proscription in the Agapay and Yaptinchay cases against making
declarations of heirship in ordinary civil actions also extends to actions for quieting of title, the same is not
absolute.
In Portugal v. Portugal-Beltran 99 (Portugal case), the Court recognized that there are instances when a
declaration of heirship need not be made in a separate special proceeding:

In Calacala v. Republic,95 the Court elucidated on the nature of an action to quiet title:
Regarding the nature of the action filed before the trial court, quieting of title is a common law remedy for the
removal of any cloud upon or doubt or uncertainty with respect to title to real property. Originating in equity
jurisprudence, its purpose is to secure x x x an adjudication that a claim of title to or an interest in property,
adverse to that of the complainant, is invalid, so that the complainant and those claiming under him may be
forever afterward free from any danger of hostile claim. In an action for quieting of title, the competent court is
tasked to determine the respective rights of the complainant and other claimants, x x x not only to place things
in their proper place, to make the one who has no rights to said immovable respect and not disturb the other,
but also for the benefit of both, so that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvements he may desire, to use, and even
to abuse the property as he deems best x x x . (Emphases supplied.)

The common doctrine in Litam, Solivio and Guilas in which the adverse parties are putative heirs to the estate
of a decedent or parties to the special proceedings for its settlement is that if the special proceedings are
pending, or if there are no special proceedings filed but there is, under the circumstances of the case, a need
to file one, then the determination of, among other issues, heirship should be raised and settled in said special
proceedings. Where special proceedings had been instituted but had been finally closed and terminated,
however, or if a putative heir has lost the right to have himself declared in the special proceedings as co-heir
and he can no longer ask for its re-opening, then an ordinary civil action can be filed for his declaration as heir
in order to bring about the annulment of the partition or distribution or adjudication of a property or properties
belonging to the estate of the deceased.100
In the Portugal case itself, the Court directed the trial court to already determine petitioners status as heirs of
the decedent even in an ordinary civil action, i.e., action for annulment of title, because:

96

The Court expounded further in Spouses Portic v. Cristobal that:

Suits to quiet title are characterized as proceedings quasi in rem. Technically, they are neither in rem nor in
personam. In an action quasi in rem, an individual is named as defendant. However, unlike suits in rem, a
quasi in rem judgment is conclusive only between the parties.
Generally, the registered owner of a property is the proper party to bring an action to quiet title. However, it has
been held that this remedy may also be availed of by a person other than the registered owner because, in the
Article reproduced above, "title" does not necessarily refer to the original or transfer certificate of title. Thus,
lack of an actual certificate of title to a property does not necessarily bar an action to quiet title. x x x
(Emphases supplied.)
The Court pronounced in the Agapay and Yaptinchay cases that a declaration of heirship cannot be made in
an ordinary civil action such as an action for reconveyance, but must only be made in a special proceeding, for
it involves the establishment of a status or right.
The appropriate special proceeding would have been the settlement of the estate of the decedent.
Nonetheless, an action for quieting of title is also a special proceeding, specifically governed by Rule 63 of the

It appearing x x x that in the present case the only property of the intestate estate of Portugal is the Caloocan
parcel of land, to still subject it, under the circumstances of the case, to a special proceeding which could be
long, hence, not expeditious, just to establish the status of petitioners as heirs is not only impractical; it is
burdensome to the estate with the costs and expenses of an administration proceeding. And it is superfluous
in light of the fact that the parties to the civil casesubject of the present case, could and had already in fact
presented evidence before the trial court which assumed jurisdiction over the case upon the issues it defined
during pre-trial.
In fine, under the circumstances of the present case, there being no compelling reason to still subject
Portugals estate to administration proceedings since a determination of petitioners status as heirs could be
achieved in the civil case filed by petitioners, the trial court should proceed to evaluate the evidence presented
by the parties during the trial and render a decision thereon upon the issues it defined during pre-trial, x x x. 101
Another case, Heirs of Teofilo Gabatan v. Court of Appeals102 (Gabatan case), involved an action for recovery
of ownership and possession of property with the opposing parties insisting that they are the legal heirs of the
deceased. Recalling the Portugal case, the Court ruled:

Similarly, in the present case, there appears to be only one parcel of land being claimed by the contending
parties as their inheritance from Juan Gabatan. It would be more practical to dispense with a separate special
proceeding for the determination of the status of respondent as the sole heir of Juan Gabatan, specially in light
of the fact that the parties to Civil Case No. 89-092, had voluntarily submitted the issue to the RTC and
already presented their evidence regarding the issue of heirship in these proceeding. Also the RTC assumed
jurisdiction over the same and consequently rendered judgment thereon.
In Fidel v. Court of Appeals103 (Fidel case), therein respondents, the heirs of the late Vicente Espineli (Vicente)
from his first marriage, instituted an action to annul the sale of Vicentes property to therein petitioners, the
spouses Fidel. The subject property was sold to petitioners by Vicentes heirs from his second marriage. Even
though ones legitimacy can only be questioned in a direct action seasonably filed by the proper party, the
Court held that it was necessary to pass upon respondents relationship to Vicente in the action for annulment
of sale so as to determine respondents legal rights to the subject property. In fact, the issue of whether
respondents are Vicentes heirs was squarely raised by petitioners in their Pre-Trial Brief. Hence, petitioners
were estopped from assailing the ruling of the trial court on respondents status.
In Civil Case No. 4452, Teofilo and/or Atty. Cabildo themselves asked the RTC-Branch 3 to resolve the issue
of Vidal's legal or beneficial ownership of the two parcels of land. 104 During trial, Vidal already presented before
the RTC-Branch 3 evidence to establish her status, filiation, and heirship. There is no showing that Doa
Demetria left any other property that would have required special administration proceedings. In the spirit of
the Portugal, Gabatan, and Fidel cases, the Court deems it more practical and expeditious to settle the issue
on Vidals status, filiation, and heirship in Civil Case No. 4452.
"Title" in quieting of title
LANDTRADE, Teofilo, and/or Atty. Cabildo further contend that Vidal and AZIMUTH have no cause of action
for quieting of title since Vidal has no title to the two parcels of land. In comparison, Teofilos title to the same
properties, as Doa Demetrias only heir, was already established and recognized by this Court in the 1997
Cacho case.
Again, the Court cannot sustain the foregoing contention of LANDTRADE, Teofilo, and/or Atty. Cabildo.
It must be borne in mind that the concept of a cause of action in ordinary civil actions does not apply to
quieting of title. In declaratory relief, the subject-matter is a deed, will, contract or other written instrument,
statute, executive order or regulation, or ordinance. The issue is the validity or construction of these
documents. The relief sought is the declaration of the petitioners rights and duties thereunder. Being in the
nature of declaratory relief, this special civil action presupposes that there has yet been no breach or violation
of the instruments involved.105
In an action for quieting of title, the subject matter is the title sought to have quieted. "Title" is not limited to the
certificate of registration under the Torrens System (i.e., OCT or TCT). Pursuant to Article 477 of the Civil
Code, the plaintiff must have legal or equitable title to, or interest in, the real property subject of the action for
quieting of title. The plaintiff need not even be in possession of the property. If she is indeed Doa Demetrias
sole heir, Vidal already has equitable title to or interest in the two parcels of land by right of succession, even
though she has not yet secured certificates of title to the said properties in her name.
LANDTRADE, Teofilo, and/or Atty. Cabildo mistakenly believe that the 1997 Cacho case had conclusively
settled Teofilo's identity and existence as Doa Demetrias sole heir. They failed to appreciate that the 1997
Cacho case involved Teofilos petition for reconstitution of title, treated as a petition for the re-issuance of
Decree Nos. 10364 and 18969. The grant by the RTC of Teofilos petition, affirmed by this Court, only
conclusively established the prior issuance and existence and the subsequent loss of the two decrees, thus,
entitling Teofilo to the re-issuance of the said decrees in their original form and condition.
As the Court of Appeals pointed out in its assailed Decision dated January 19, 2007, the issue of Teofilos
heirship was not the lis mota of the 1997 Cacho case. It was addressed by the Court in the 1997 Cacho case
for the simple purpose of determining Teofilos legal interest in filing a petition for the re-issuance of the lost
decrees. The Court merely found therein that Teofilos Affidavit of Adjudication, executed in the U.S.A. before
the Philippine Consulate General, enjoyed the presumption of regularity and, thus, sufficiently established
Teofilos legal interest. The 1997 Cacho case, however, did not conclusively settle that Teofilo is indeed Doa
Demetrias only heir and the present owner, by right of succession, of the subject properties.
Factual findings of the RTC-Branch 3 and the Court of Appeals
LANDTRADE, Teofilo, and/or Atty. Cabildo additionally posit that the evidence presented by Vidal and
AZIMUTH were insufficient to prove the fact of Vidal's filiation and heirship to Doa Demetria. LANDTRADE,
Teofilo, and/or Atty. Cabildo particularly challenged the reliance of the RTC-Branch 3 on Vidals baptismal
certificate, arguing that it has no probative value and is not conclusive proof of filiation.

Alternative means of proving an individuals filiation have been recognized by this Court in Heirs of Ignacio
Conti v. Court of Appeals.106 The property in litigation in said case was co-owned by Lourdes Sampayo
(Sampayo) and Ignacio Conti, married to Rosario Cuario (collectively referred to as the spouses Conti).
Sampayo died without issue. Therein respondents, claiming to be Sampayos collateral relatives, filed a
petition for partition of the subject property, plus damages. To prove that they were collaterally related to
Sampayo through the latters brothers and sisters, respondents submitted photocopies of the birth certificates,
certifications on the non-availability of records of births, and certified true copies of the baptismal certificates of
Sampayos siblings. The spouses Conti questioned the documentary evidence of respondents filiation on the
ground that these were incompetent and inadmissible, but the Court held that:
Under Art. 172 of the Family Code, the filiation of legitimate children shall be proved by any other means
allowed by the Rules of Court and special laws, in the absence of a record of birth or a parents admission of
such legitimate filiation in a public or private document duly signed by the parent. Such other proof of ones
filiation may be a baptismal certificate, a judicial admission, a family Bible in which his name has been
entered, common reputation respecting his pedigree, admission by silence, the testimonies of witnesses and
other kinds of proof admissible under Rule 130 of the Rules of Court. By analogy, this method of proving
filiation may also be utilized in the instant case.
xxxx
The admissibility of baptismal certificates offered by Lydia S. Reyes, absent the testimony of the officiating
priest or the official recorder, was settled in People v. Ritter, citing U.S. v. de Vera (28 Phil. 105 [1914]), thus x x x the entries made in the Registry Book may be considered as entries made in the course of the business
under Section 43 of Rule 130, which is an exception to the hearsay rule. The baptisms administered by the
church are one of its transactions in the exercise of ecclesiastical duties and recorded in the book of the
church during the course of its business.
It may be argued that baptismal certificates are evidence only of the administration of the sacrament, but in
this case, there were four (4) baptismal certificates which, when taken together, uniformly show that Lourdes,
Josefina, Remedios and Luis had the same set of parents, as indicated therein. Corroborated by the
undisputed testimony of Adelaida Sampayo that with the demise of Lourdes and her brothers Manuel, Luis and
sister Remedios, the only sibling left was Josefina Sampayo Reyes, such baptismal certificates have acquired
evidentiary weight to prove filiation. 107
Thus, Vidals baptismal certificate is not totally bereft of any probative value. It may be appreciated, together
with all the other documentary and testimonial evidence submitted on Vidals filiation, to wit:
The first issue proposed by petitioners for resolution is whether or not petitioner Demetria C. Vidal is the sole
surviving heir of the late Doa Demetria Cacho. To prove that, indeed, she is the sole surviving heir of the late
Doa Demetria Cacho, she testified in open court and identified the following documentary evidence, to wit:
Exhibit "A" Birth Certificate of Demetria C. Vidal
Exhibit "B" Partida de Bautismo of Demetria C. Vidal
Exhibit "C" Certificate of Baptism Demetria C. Vidal
Exhibit "D" Cacho Family Tree
Exhibit "D-1" Branch of Demetria Cacho
Exhibit "F" Death Certificate of Demetria Cacho.
Exhibit "P" Drivers license of Demetria C. Vidal.
Exhibit "Q" to "Q5" The book entitled "CACHO", the introductory page on March 1988 when the data were
compiled, page 58 on the Vidal branch of the Cacho family, page 62 on Demetria Cacho and her descendants,
page 69 on the family member with the then latest birth day 26 March 1988, and page 77 with the picture of
Demetria Cacho Vidal, Dionisio Vidal and Francisco Vidal. 108
In contrast, LANDTRADE, Teofilo, and/or Atty. Cabildo failed to present any evidence at all in support of their
claims. According to the RTC-Branch 3:
Landtrade was also declared to have waived its right to present evidence on its defense and counterclaim in
the above-entitled case in view of its failure to present evidence on their scheduled trial date.

xxxx
Since respondents Teofilo Cacho and Atty. Godofredo Cabildo opted not to adduce evidence in this case as
they failed to appear during the scheduled trial dates, the court shall decide on the basis of the evidence for
the respondents-intervenor and petitioners. 109
Based on the evidence presented before it, the RTC-Branch 3 made the following factual findings:
From the evidence adduced, both testimonial and documentary, the court is convinced that petitioner Vidal is
the granddaughter of Demetria Cacho Vidal, the registered owner of the subject property covered by decree
Nos. 10364 & 18969, reissued as Decrees No. 19364 and No. 16869. Such being the case, she is an heir of
Demetria Cacho Vidal.
Petitioner Vidals Certificate of Birth (Exh. "A") shows that she was born on June 3, 1941, with the name
Demetria Vidal. [Her] father was Francisco Vidal and her mother was Fidela Confesor, Francisco Vidal is the
son of Dionisio Vidal and Demetria Cacho as shown by [his] Partida de Bautismo (Baptismal Certificate).
Moreover, it was shown in the same document that her godmother was Demetria Cacho. By inference, this
Demetria Cacho is actually Demetria Cacho Vidal because she was married to Dionisio Vidal, the father of
Francisco Vidal.
Now then, is Demetria Cacho Vidal the same person referred to in Cacho v. Government of the United States
(28 Phil. 616 [1914])? Page 618, Vol. 28 of the Philippine Reports would indicate that the applicant for
registration was Doa Demetria Cacho y Soriano (Exh. "R-1"). The Death Certificate of Demetria Cacho Vidal
shows that her mother was Candelaria Soriano (Exh. "F"). Necessarily, they are one and the same person.
This is further confirmed by the fact that the husband of Demetria Cacho Vidal, Seor Dionisio Vidal, was
quoted in pp. 629-630 of the aforecited decision as the husband of Demetria Cacho (Exh. "R-3").
The book "CACHO" (Exhs. "Q" to "Q-5") and the Cacho Family Tree (Exhs. "D" to "D-1") further strengthen the
aforecited findings of this Court.
It was established by petitioner Vidals own testimony that at the time of Doa Demetria Cacho's death, she
left no heir other than petitioner Vidal. Her husband, Don Dionisio, died even before the war, while her only
child, Francisco Cacho Vidal xxx Vidals father died during the war. Petitioners only sibling Francisco
Dionisio died at childbirth.
xxxx
The next factual issue proposed by petitioners is whether or not respondent Teofilo Cacho is the son or heir of
the late Doa Demetria Cacho. The following facts and circumstances negate the impression that he is the
son, as he claims to be, of Doa Demetria Cacho. Thus:
a) Doa Demetria Cacho was married to Don Dionisio Vidal, and thus her full name was Doa Demetria
Cacho Vidal. Her only child, expectedly, carried the surname Vidal (Francisco Cacho Vidal). Had Teofilo Cacho
actually been a son of Demetria Cacho, he would and should have carried the name "Teofilo Cacho Vidal", but
he did not.
b) Teofilo Cacho admits to being married to one Elisa Valderrama in the Special Power of Attorney he issued
to Atty. Godofredo [Cabildo] (Exh. "O"). Teofilo Cacho married Elisa Valderrama on 27 May 1953, in the Parish
of the Immaculate Conception, Bani, Pangasinan. The Certificate of Marriage shows that Teofilo Cacho is the
son of Agustin Cacho and Estefania Cordial, not Demetria Cacho. In his Certificate of Baptism (Exh. "G"), he
was born to Agustin Cacho and Estefania Cordial on May 1930 (when Doa Demetria Cacho was already 50
years old).
c) The Cacho Family Tree (Exh. "D") (that is, the Cacho Family to which Doa Demetria Cacho belonged) as
well as the book on the Cacho Family (Exh. "Q") are bereft of any mention of Teofilo Cacho or his wife Elisa
Valderrama, or even his real father Agustin Cacho, or mother Estefania Cordial. They are not known to be
related to the Cacho family of Doa Demetria Cacho.
d) Paragraph 1.11 of the Petition charges respondent Teofilo Cacho of having falsely and fraudulently claiming
to be the son and sole heir of the late Doa Demetria Cacho. In his answer to this particular paragraph, he
denied the same for lack of knowledge or information to form a belief. He should know whether this allegation
is true or not because it concerns him. If true, he should admit and if false, he opted to deny the charges for
lack of knowledge or information to form a belief. The Court considers his denial as an admission of the
allegation that he is falsely and fraudulently claiming to be the son and sole heir of the late Doa Demetria
Cacho.110

Considering the aforequoted factual findings, the RTC-Branch 3 arrived at the following legal conclusions,
quieting the titles of Vidal and AZIMUTH, viz:
The first proposed legal issue to be resolved had been amply discussed under the first factual issue. Certainly,
petitioner Vidal has hereditary rights, interest, or title not only to a portion of the Subject Property but to the
entire property left by the late Doa Demetria Cacho Vidal, subject, however, to the Deed of Conditional
Conveyance executed by petitioner Vidal of a portion of the Subject Property in favor of petitioner Azimuth
International Development Corporation (Exh. "J") executed pursuant to their Memorandum of Agreement (Exh.
"I"). Consequently, it goes without saying that petitioner Azimuth International Development Corporation has a
right, interest in, or title to a portion of the subject property.
As discussed earlier in this decision, Teofilo Cacho, not being the son, as he claims to be, of the late Doa
Demetria Cacho Vidal, has no hereditary rights to the Subject Property left by Doa Demetria Cacho Vidal. He
failed to show any evidence that he is the son of the late Doa Demetria Cacho Vidal as he and his co
respondent, Atty. Godofredo Cabildo, even failed to appear on the scheduled trial date.
It is, therefore, safe to conclude that respondents Teofilo Cacho and/or Atty. Godofredo Cabildo and their
transferees/assignees have no right, interest in, or title to the subject property.
Prescinding from the finding of this Court that respondent Teofilo Cacho is not the son of the registered owner
of the Subject Property, the late Doa Demetria Cacho Vidal, respondent Cacho committed false pretenses
and fraudulent acts in representing himself as son and sole heir of Doa Demetria Cacho (Vidal) in his petition
in court, which eventually led to the reconstitution of the titles of Doa Demetria Cacho (Vidal). Certainly, his
misrepresentation in the reconstitution case, which apparently is the basis of his claim to the subject property,
casts clouds on [respondents'] title to the subject property.
It is only right that petitioner Vidal should seek protection of her ownership from acts tending to cast doubt on
her title. Among the legal remedies she could pursue, is this petition for Quieting of Title under Chapter 3, Title
I, Book II of the Civil Code, Articles 476 to 481 inclusive. x x x. 111
The Court of Appeals affirmed in toto the judgment of the RTC-Branch 3. The appellate court even soundly
trounced Teofilos attack on the factual findings of the trial court:
[T]he material facts sought to be established by the afore-mentioned documentary evidence corroborated by
the testimony of VIDAL, whose testimony or credibility neither Teofilo and LANDTRADE even attempted to
impeach, only proves one thing, that she is the granddaughter of DOA DEMETRIA and the sole heiress
thereof.
xxxx
Hence, it is now too late for appellant TEOFILO to assail before Us the facts proven during the trial, which he
failed to refute in open court. Verily, TEOFILOs lackadaisical attitude in the conduct of his defense only shows
that he has no proof to offer in refutation of the evidence advanced by appellee VIDAL.
Otherwise stated, appellant TEOFILO is an impostor, a pretender and bogus heir of DOA DEMETRIA.
xxxx
Besides, it is quite unnatural and against human nature for a rightful heir, if TEOFILO is really one, to merely
stand still with folded arms, while the accusing finger of VIDAL is right on his very nose. In all likelihood, and
with all his might and resources, a rightful heir may even be expected to cross continents and reach distant
shores to protect his interest over the subject properties, which in this case is arguably worth more than a
Kings ransom.
It stands on record that TEOFILO CACHO has all along even prior to executing his Affidavit of Adjudication in
1985 in Chicago, United States of America, and in simultaneously executing a Special Power of Attorney in
favor of ATTY. CABILDO, had remained in the United States, and not for a single moment appeared in court
except through his agents or representatives. To Our mind, this fact alone adversely affects his pretension in
claiming to be an heir of DOA DEMETRIA. 112
As a rule, the findings of fact of the trial court when affirmed by the Court of Appeals are final and conclusive,
and cannot be reviewed on appeal by this Court as long as they are borne out by the record or are based on
substantial evidence. It is not the function of the Court to analyze or weigh all over again the evidence or
premises supportive of such factual determination. The Court has consistently held that the findings of the
Court of Appeals and other lower courts are, as a rule, accorded great weight, if not binding upon it, save for
the most compelling and cogent reasons.113 There is no justification for the Court to deviate from the factual
findings of the RTC-Branch 3 and the Court of Appeals which are clearly supported by the evidence on record.

Prescription
LANDTRADE finally asserts that the action for quieting of title of Vidal and AZIMUTH already prescribed since
LANDTRADE has been in possession of the two parcels of land in question. The prescriptive period for filing
said action lapsed in 1995, ten years from the time Teofilo executed his Affidavit of Adjudication in 1985. Yet,
Vidal and AZIMUTH instituted Civil Case No. 4452 only in 1998.
It is too late in the day for LANDTRADE to raise the issue of prescription of Civil Case No. 4452 for the first
time before this Court. In this jurisdiction, the defense of prescription cannot be raised for the first time on
appeal. Such defense may be waived, and if it was not raised as a defense in the trial court, it cannot be
considered on appeal, the general rule being that the Appellate Court is not authorized to consider and resolve
any question not properly raised in the lower court.114
But even if the Court takes cognizance of the issue of prescription, it will rule against LANDTRADE.
A real action is one where the plaintiff seeks the recovery of real property or, as indicated in what is now Rule
4, Section 1 of the Rules of Court, a real action is an action affecting title to or recovery of possession of real
property.115 An action for quieting of title to real property, such as Civil Case No. 4452, is indubitably a real
action.
Article 1141 of the Civil Code plainly provides that real actions over immovables prescribe after thirty years.
Doa Demetria died in 1974, transferring by succession, her title to the two parcels of land to her only heir,
Vidal. Teofilo, through Atty. Cabildo, filed a petition for reconstitution of the certificates of title covering said
properties in 1978. This is the first palpable display of Teofilos adverse claim to the same properties,
supposedly, also as Doa Demetrias only heir. When Vidal and AZIMUTH instituted Civil Case No. 4452 in
1998, only 20 years had passed, and the prescriptive period for filing an action for quieting of title had not yet
prescribed.
Nevertheless, the Court notes that Article 1411 of the Civil Code also clearly states that the 30-year
prescriptive period for real actions over immovables is without prejudice to what is established for the
acquisition of ownership and other real rights by prescription. Thus, the Court must also look into the
acquisitive prescription periods of ownership and other real rights.
Acquisitive prescription of dominion and real rights may be ordinary or extraordinary.

116

Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed
by law.117 In the case of ownership and other real rights over immovable property, they are acquired by
ordinary prescription through possession of 10 years. 118

Since the ordinary acquisitive prescription period of 10 years does not apply to LANDTRADE, then the Court
turns its attention to the extraordinary acquisitive prescription period of 30 years set by Article 1137 of the Civil
Code, which reads:
ART. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted adverse
possession thereof for thirty years, without need of title or of good faith.
LANDTRADE adversely possessed the subject properties no earlier than 1996, when it bought the same from
Teofilo, and Civil Case No. 4452 was already instituted two years later in 1998. LANDTRADE cannot tack its
adverse possession of the two parcels of land to that of Teofilo considering that there is no proof that the latter,
who is already residing in the U.S.A., adversely possessed the properties at all.
Thus, the Court of Appeals did not err when it affirmed in toto the judgment of the RTC-Branch 3 which
declared, among other things, that (a) Vidal is the sole surviving heir of Doa Demetria, who alone has rights
to and interest in the subject parcels of land; (b) AZIMUTH is Vidals successor-in-interest to portions of the
said properties in accordance with the 1998 Memorandum of Agreement and 2004 Deed of Conditional
Conveyance; (c) Teofilo is not the son or heir of Doa Demetria; and (d) Teofilo, Atty. Cabildo, and their
transferees/assignees, including LANDTRADE, have no valid right to or interest in the same properties.
The Ejectment or Unlawful Detainer Case
(G.R. Nos. 170505, 173355-56, and 173563-64)
The Petitions in G.R. Nos. 170505, 173355-56, and 173563-64 all concern the execution pending appeal of
the Decision dated February 17, 2004 of the MTCC in Civil Case No. 11475-AF, which ordered NAPOCOR
and TRANSCO to vacate the two parcels of land in question, as well as to pay rent for the time they occupied
said properties.
LANDTRADE filed its Petition for Review in G.R. No. 170505 when it failed to have the MTCC Decision dated
February 17, 2004 executed while Civil Case No. 6613, the appeal of the same judgment by NAPOCOR and
TRANSCO, was still pending before the RTC-Branch 5.
NAPOCOR and TRANSCO sought recourse from this Court through their Petitions for Certiorari and
Prohibition in G.R. Nos. 173355-56 and 173563-64 after the RTC-Branch 1 (to which Civil Case No. 6613 was
re-raffled) already rendered a Decision dated December 12, 2005 in Civil Case No. 6613, affirming the MTCC
Decision dated February 17, 2004. Expectedly, NAPOCOR and TRANSCO appealed the judgment of the
RTC-Branch 1 to the Court of Appeals. The Court of Appeals granted the motion for execution pending appeal
of LANDTRADE, and denied the application for preliminary injunction of NAPOCOR and TRANSCO.
The requirements of posting a supersedeas bond and depositing rent to stay execution

LANDTRADE cannot insist on the application of the 10-year ordinary acquisitive prescription period since it
cannot be considered a possessor in good faith. The good faith of the possessor consists in the reasonable
belief that the person from whom he received the thing was the owner thereof, and could transmit his
ownership.119
LANDTRADE came to possession of the two parcels of land after purchasing the same from Teofilo. The Court
stresses, however, that Teofilo is not the registered owner of the subject properties. The said properties are
still registered in Doa Demetrias name under OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). The Affidavit of
Adjudication, by which Teofilo declared himself to be the sole heir of Doa Demetrias estate, is not even
annotated on the OCTs. Worse, LANDTRADE is not dealing directly with Teofilo, but only with the latters
attorney-in-fact, Atty. Cabildo. It is axiomatic that one who buys from a person who is not a registered owner is
not a purchaser in good faith. 120
Furthermore, in its Complaint for Unlawful Detainer against NAPOCOR and TRANSCO, which was docketed
as Civil Case No. 11475-AF before the MTCC, LANDTRADE itself alleged that when it bought the two parcels
of land from Teofilo, portions thereof were already occupied by the Overton Sub-station and Agus 7
Warehouse of NAPOCOR and TRANSCO. This is another circumstance which should have prompted
LANDTRADE to investigate or inspect the property being sold to it. It is, of course, expected from the
purchaser of a valued piece of land to inquire first into the status or nature of possession of the occupants, i.e.,
whether or not the occupants possess the land en concepto de dueo, in concept of owner. As is the common
practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and
prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody
else other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the
purchaser to verify the extent of the occupants possessory rights. The failure of a prospective buyer to take
such precautionary steps would mean negligence on his part and would thereby preclude him from claiming or
invoking the rights of a "purchaser in good faith." 121

The pivotal issue in G.R. No. 170505 is whether LANDTRADE is entitled to the execution of the MTCC
Decision dated February 17, 2004 even while said judgment was then pending appeal before the RTC-Branch
5. The RTC-Branch 5 granted the motion for immediate execution pending appeal of LANDTRADE because of
the failure of NAPOCOR and TRANSCO to comply with the requirements for staying the execution of the
MTCC judgment, as provided in Rule 70, Section 19 of the Rules of Court. The Court of Appeals subsequently
found grave abuse of discretion on the part of RTC-Branch 5 in issuing the Order dated August 9, 2004 which
granted execution pending appeal and the Writ of Execution Pending Appeal dated August 10, 2004; and on
the part of Sheriff Borres, in issuing the Notices of Garnishment and Notification to vacate, all dated August 11,
2004. According to the appellate court, NAPOCOR and TRANSCO are exempt from the requirements of filing
a supersedeas bond and depositing rent in order to stay the execution of the MTCC judgment.
Rule 70, Section 19 of the Rules of Court lays down the requirements for staying the immediate execution of
the MTCC judgment against the defendant in an ejectment suit:
SEC. 19. Immediate execution of judgment; how to stay same. If judgment is rendered against the
defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and the
defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and
executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the
judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court
the amount of rent due from time to time under the contract, if any, as determined by the judgment of the
Municipal Trial Court. In the absence of a contract, he shall deposit with the Regional Trial Court the
reasonable value of the use and occupation of the premises for the preceding month or period at the rate
determined by the judgment of the lower court on or before the tenth day of each succeeding month or period.
The supersedeas bond shall be transmitted by the Municipal Trial Court, with the other papers, to the clerk of
the Regional Trial Court to which the action is appealed.

All amounts so paid to the appellate court shall be deposited with said court or authorized government
depositary bank, and shall be held there until the final disposition of the appeal, unless the court, by
agreement of the interested parties, or in the absence of reasonable grounds of opposition to a motion to
withdraw, or for justifiable reasons, shall decree otherwise. Should the defendant fail to make the payments
above prescribed from time to time during the pendency of the appeal, the appellate court, upon motion of the
plaintiff, and upon proof of such failure, shall order the execution of the judgment appealed from with respect
to the restoration of possession, but such execution shall not be a bar to the appeal taking its course until the
final disposition thereof on the merits.
After the case is decided by the Regional Trial Court, any money paid to the court by the defendant for
purposes of the stay of execution shall be disposed of in accordance with the provisions of the judgment of the
Regional Trial Court. In any case wherein it appears that the defendant has been deprived of the lawful
possession of land or building pending the appeal by virtue of the execution of the judgment of the Municipal
Trial Court, damages for such deprivation of possession and restoration of possession may be allowed the
defendant in the judgment of the Regional Trial Court disposing of the appeal. (Emphases supplied.)
The Court had previously recognized the exemption of NAPOCOR from filing a supersedeas bond. The Court
stated in Philippine Geothermal, Inc. v. Commissioner of Internal Revenue 122 that a chronological review of the
NAPOCOR Charter will show that it has been the lawmakers intention that said corporation be completely
exempt not only from all forms of taxes, but also from filing fees, appeal bonds, and supersedeas bonds in any
court or administrative proceedings. The Court traced the history of the NAPOCOR Charter, thus:
Republic Act No. 6395 (10 September 1971) enumerated the details covered by the exemptions by stating
under Sec. 13 that "The Corporation shall be non-profit and shall devote all its returns from its capital
investment, as well as excess revenues from its operation, for expansionthe Corporation is hereby declared
exempt from the payment of all taxes, duties, fees, imposts, charges, costs and service fees in any court or
administrative proceedings in which it may be a party, restrictions and duties to the Republic of the Philippines,
its provinces, cities, municipalities and other government agencies and instrumentalities . . ." Subsequently,
Presidential Decree No. 380 (22 January 1974), Sec. 10 made even more specific the details of the exemption
of NPC to cover, among others, both direct and indirect taxes on all petroleum products used in its operation.
Presidential Decree No. 938 (27 May 1976), Sec. 13 amended the tax exemption by simplifying the same law
in general terms. It succinctly exempts service fees, including filing fees, appeal bonds, supersedeas bonds, in
any court or administrative proceedings. The use of the phrase "all forms" of taxes demonstrate the intention
of the law to give NPC all the exemption it has been enjoying before. The rationale for this exemption is that
being non-profit, the NPC "shall devote all its return from its capital investment as well as excess revenues
from its operation, for expansion.123 (Emphases supplied.)
As presently worded, Section 13 of Republic Act No. 6395, the NAPOCOR Charter, as amended, reads:
SEC. 13. Non-profit Character of the Corporation; Exemption from All Taxes, Duties, Fees, Imposts and Other
Charges by the Government and Government Instrumentalities. The Corporation shall be non-profit and
shall devote all its returns from its capital investment as well as excess revenues from its operation, for
expansion. To enable the Corporation to pay its indebtedness and obligations and in furtherance and effective
implementation of the policy enunciated in Section One of this Act, the Corporation, including its subsidiaries,
is hereby declared exempt from the payment of all forms of taxes, duties, fees, imposts as well as costs and
service fees including filing fees, appeal bonds, supersedeas bonds, in any court or administrative
proceedings. (Emphasis supplied.)
In A.M. No. 05-10-20-SC, captioned In Re: Exemption of the National Power Corporation from Payment of
Filing/Docket Fees, the Court addressed the query of a Clerk of Court from the RTC of Urdaneta, Pangasinan
on whether NAPOCOR is exempt from the payment of filing fees and Sheriffs Trust Fund. In its Resolution
dated December 6, 2005, the Court, upon the recommendation of the Court Administrator, declared that
NAPOCOR is still exempt from the payment of filing fees, appeal bonds, and supersedeas bonds.
Consistent with the foregoing, the Court of Appeals rendered its Decision dated November 23, 2005 in CAG.R. SP Nos. 85714 and 85841 declaring that NAPOCOR was exempt from filing a supersedeas bond to stay
the execution of the MTCC judgment while the same was pending appeal before the RTC-Branch 5. The
appellate court also held that the exemption of NAPOCOR extended even to the requirement for periodical
deposit of rent, ratiocinating that:
On the whole, the posting of supersedeas bond and the making of the periodical deposit are designed
primarily to insure that the plaintiff would be paid the back rentals and the compensation for the use and
occupation of the premises should the municipal trial courts decision be eventually affirmed on appeal.
Elsewise stated, both the posting of the supersedeas bond and the payment of monthly deposit are required to
accomplish one and the same purpose, namely, to secure the performance of, or to satisfy the judgment
appealed from in case it is affirmed on appeal by the appellate court.

xxxx
Thus viewed, the inescapable conclusion is, and so We hold, that although the term "making of monthly
deposit in ejectment cases" is not expressly or specifically mentioned in Section 13 of R.A. 6395, however,
inasmuch as it has the same or similar function, purpose, and essence as a supersedeas bond, it should be
deemed included in the enumeration laid down under the said provision. This accords well with the principle of
ejusdem generis which says that where a statute uses a general word followed by an enumeration of specific
words embraced within the general word merely as examples, the enumeration does not restrict the meaning
of the general word which should be construed to include others of the same class although not enumerated
therein; or where a general word or phrase follows an enumeration of particular and specific words of the
same class or where the latter follow the former, the general word or phrase is to be construed to include
persons, things or cases akin to, resembling, or of the same kind or class as those specifically mentioned.
In a nutshell, We hold that petitioner NAPOCOR enjoys exemption not only from posting supersedeas bond in
courts in appealed ejectment cases, but also from periodically depositing the amount of the monthly rental or
the reasonable compensation of the use and occupancy of the property, as determined in the municipal trial
courts decision.124
The Court of Appeals further adjudged that the exemptions of NAPOCOR similarly applied to TRANSCO since
"[i]t is all too obvious that the interests of NAPOCOR and TRANSCO over the premises in litigation are so
interwoven and dependent upon each other, such that whatever is adjudged in regard to the former, whether
favorable or adverse, would ineluctably and similarly affect the latter[;]" and "[c]onsequently, x x x the stay of
the execution of the appealed decision insofar as NAPOCOR is concerned necessarily extends and inures to
its co-defendant TRANSCO, not by virtue of the formers statutory exemption privilege from filing supersedeas
bond and making periodic deposits, but by the indisputably operative fact that the rights and liabilities in litis of
BOTH defendants are so intimately interwoven, interdependent, and indivisible." 125
Only recently, however, the Court reversed its stance on the exemption of NAPOCOR from filing fees, appeal
bonds, and supersedeas bonds. Revisiting A.M. No. 05-10-20-SC, the Court issued Resolutions dated
October 27, 2009 and March 10, 2010, wherein it denied the request of NAPOCOR for exemption from
payment of filing fees and court fees for such request appears to run counter to Article VIII, Section 5(5) 126 of
the Constitution, on the rule-making power of the Supreme Court over the rules on pleading, practice and
procedure in all courts, which includes the sole power to fix the filing fees of cases in courts. The Court
categorically pronounced that NAPOCOR can no longer invoke its amended Charter as basis for exemption
from the payment of legal fees.
Nevertheless, in this case, the RTC-Branch 1 already promulgated its Decision in Civil Case No. 6613 on
December 12, 2005, denying the appeal of NAPOCOR and TRANSCO and affirming the MTCC judgment
against said corporations. NAPOCOR and TRANSCO presently have pending appeals of the RTC-Branch 1
judgment before the Court of Appeals.
Rule 70, Section 19 of the Rules of Court applies only when the judgment of a Municipal Trial Court (and any
same level court such as the MTCC) in an ejectment case is pending appeal before the RTC. When the RTC
had already resolved the appeal and its judgment, in turn, is pending appeal before the Court of Appeals, then
Rule 70, Section 21 of the Rules of Court governs.
The Court already pointed out in Northcastle Properties and Estate Corporation v. Paas 127 that Section 19
applies only to ejectment cases pending appeal with the RTC, and Section 21 to those already decided by the
RTC. The Court again held in Uy v. Santiago128 that:
[I]t is only execution of the Metropolitan or Municipal Trial Courts judgment pending appeal with the Regional
Trial Court which may be stayed by a compliance with the requisites provided in Rule 70, Section 19 of the
1997 Rules on Civil Procedure. On the other hand, once the Regional Trial Court has rendered a decision in
its appellate jurisdiction, such decision shall, under Rule 70, Section 21 of the 1997 Rules on Civil Procedure,
be immediately executory, without prejudice to an appeal, via a Petition for Review, before the Court of
Appeals and/or Supreme Court. (Emphases supplied.)
According to Rule 70, Section 21 of the Rules of Court, "[t]he judgment of the Regional Trial Court against the
defendant shall be immediately executory, without prejudice to a further appeal that may be taken therefrom."
It no longer provides for the stay of execution at such stage.
Thus, subsequent events have rendered the Petition of LANDTRADE in G.R. No. 170505 moot and academic.
It will serve no more purpose for the Court to require NAPOCOR and TRANSCO to still comply with the
requirements of filing a supersedeas bond and depositing rent to stay execution pending appeal of the MTCC
judgment, as required by Rule 70, Section 19 of the Rules of Court, when the appeal had since been resolved
by the RTC.

Preliminary injunction to stay execution of RTC judgment against defendant in an ejectment case
The issues raised by NAPOCOR and TRANSCO in their Petitions in G.R. Nos. 173355-56 and 173563-64 boil
down to the sole issue of whether the Court of Appeals committed grave abuse of discretion amounting to lack
or excess of jurisdiction in refusing to enjoin the execution of the Decision dated December 12, 2005 of the
RTC-Branch 1 in Civil Case No. 6613 while the same is pending appeal before the appellate court.
The Court of Appeals granted the issuance of a writ of execution in favor of LANDTRADE and denied the
application for writ of preliminary injunction of NAPOCOR and TRANSCO because Rule 70, Section 21 of the
Rules of Court explicitly provides that the RTC judgment in an ejectment case, which is adverse to the
defendant and pending appeal before the Court of Appeals, shall be immediately executory and can be
enforced despite further appeal. Therefore, the execution of the RTC judgment pending appeal is the
ministerial duty of the Court of Appeals, specifically enjoined by law to be done.
NAPOCOR and TRANSCO argue that neither the rules nor jurisprudence explicitly declare that Rule 70,
Section 21 of the Rules of Court bars the application of Rule 58 on preliminary injunction. Regardless of the
immediately executory character of the RTC judgment in an ejectment case, the Court of Appeals, before
which said judgment is appealed, is not deprived of power and jurisdiction to issue a writ of preliminary
injunction when circumstances so warrant.
There is merit in the present Petitions of NAPOCOR and TRANSCO.
The Court expounded on the nature of a writ of preliminary injunction in Levi Strauss & Co. v. Clinton
Apparelle, Inc. 129:
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of an
action prior to the judgment or final order requiring a party or a court, agency or a person to refrain from a
particular act or acts. Injunction is accepted as the strong arm of equity or a transcendent remedy to be used
cautiously as it affects the respective rights of the parties, and only upon full conviction on the part of the court
of its extreme necessity. An extraordinary remedy, injunction is designed to preserve or maintain the status
quo of things and is generally availed of to prevent actual or threatened acts until the merits of the case can be
heard. It may be resorted to only by a litigant for the preservation or protection of his rights or interests and for
no other purpose during the pendency of the principal action. It is resorted to only when there is a pressing
necessity to avoid injurious consequences, which cannot be remedied under any standard compensation. The
resolution of an application for a writ of preliminary injunction rests upon the existence of an emergency or of a
special recourse before the main case can be heard in due course of proceedings.
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring the performance of
an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance, or non-performance of the act or acts complained of during the litigation
would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject
of the action or proceeding, and tending to render the judgment ineffectual.
Under the cited provision, a clear and positive right especially calling for judicial protection must be shown.
Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect
a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of
action. There must exist an actual right. There must be a patent showing by the complaint that there exists a
right to be protected and that the acts against which the writ is to be directed are violative of said right.
Benedicto v. Court of Appeals130 sets forth the following elucidation on the applicability of Rule 58 vis--vis
Rule 70, Section 21 of the Rules of Court:
This section [Rule 70, Section 21] presupposes that the defendant in a forcible entry or unlawful detainer case
is unsatisfied with the judgment of the Regional Trial Court and decides to appeal to a superior court. It
authorizes the RTC to immediately issue a writ of execution without prejudice to the appeal taking its due
course. It is our opinion that on appeal the appellate court may stay the said writ should circumstances so
require.

In the case of Amagan v. Marayag, we reiterated our pronouncement in Vda. de Legaspi v. Avendao that the
proceedings in an ejectment case may be suspended in whatever stage it may be found. We further drew a
fine line between forcible entry and unlawful detainer, thus:
Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry, and the right
of the plaintiff to recover the premises is seriously placed in issue in a proper judicial proceeding, it is more
equitable and just and less productive of confusion and disturbance of physical possession, with all its
concomitant inconvenience and expenses. For the Court in which the issue of legal possession, whether
involving ownership or not, is brought to restrain, should a petition for preliminary injunction be filed with it, the
effects of any order or decision in the unlawful detainer case in order to await the final judgment in the more
substantive case involving legal possession or ownership. It is only where there has been forcible entry that as
a matter of public policy the right to physical possession should be immediately set at rest in favor of the prior
possession regardless of the fact that the other party might ultimately be found to have superior claim to the
premises involved thereby to discourage any attempt to recover possession thru force, strategy or stealth and
without resorting to the courts.
Patently, even if RTC judgments in unlawful detainer cases are immediately executory, preliminary injunction
may still be granted. There need only be clear showing that there exists a right to be protected and that the
acts against which the writ is to be directed violate said right. (Emphasis supplied.)
As in Benedicto, substantial considerations exist herein that compels the Court to issue a writ of preliminary
injunction enjoining the execution of the February 17, 2004 Decision of the MTCC, as affirmed by the
December 12, 2005 Decision of the RTC-Branch 1, until the appeal of latter judgment, sought by NAPOCOR
and TRANSCO, is finally resolved by the Court of Appeals.
First, the two parcels of land claimed by LANDTRADE are the subject of several other cases. In fact, Vidal and
AZIMUTH, who instituted the Quieting of Title Case against Teofilo and LANDTRADE (also presently before
the Court in G.R. Nos. 178779 and 178894) have filed a Motion For Leave to Intervene in the instant case,
thus, showing that there are other parties who, while strangers to the ejectment case, might be greatly affected
by its result and who want to protect their interest in the subject properties. And although cases involving title
to real property, i.e., quieting of title, accion publiciana, etc., are not prejudicial to and do not suspend an
ejectment case,131 the existence of such cases should have already put the Court of Appeals on guard that the
title of LANDTRADE to the subject properties on which it fundamentally based its claim of possessory right
is being fiercely contested.
Second, it is undisputed that TRANSCO and its predecessor, NAPOCOR, have been in possession of the
disputed parcels of land for more than 40 years. Upon said properties stand the TRANSCO Overton Substation and Agus 7 Warehouse. The Overton Sub-station, in particular, is a crucial facility responsible for
providing the power requirements of a large portion of Iligan City, the two Lanao Provinces, and other nearby
provinces. Without doubt, having TRANSCO vacate its Overton Sub-station, by prematurely executing the
MTCC judgment of February 17, 2004, carries serious and irreversible implications, primordial of which is the
widespread disruption of the electrical power supply in the aforementioned areas, contributing further to the
electric power crisis already plaguing much of Mindanao.
Lastly, allowing execution pending appeal would result in the payment of an astronomical amount in rentals
which, per Sheriff Borress computation, already amounted to P156,000,000.00 by August 11, 2004, when he
issued the Notices of Garnishment and Notification against NAPOCOR and TRANSCO; plus, P500,000.0
each month thereafter. Payment of such an amount may seriously put the operation of a public utility in peril,
to the detriment of its consumers.
These circumstances altogether present a pressing necessity to avoid injurious consequences, not just to
NAPOCOR and TRANSCO, but to a substantial fraction of the consuming public as well, which cannot be
remedied under any standard compensation. The issuance by the Court of Appeals of a writ of preliminary
injunction is justified by the circumstances.
The Court must emphasize though that in so far as the Ejectment Case is concerned, it has only settled herein
issues on the propriety of enjoining the execution of the MTCC Decision dated February 17, 2004 while it was
on appeal before the RTC, and subsequently, before the Court of Appeals. The Court of Appeals has yet to
render a judgment on the appeal itself. But it may not be amiss for the Court to also point out that in G.R. Nos.
178779 and 178894 (Quieting of Title Case), it has already found that Vidal, not Teofilo, is the late Doa
Demetrias sole heir, who alone inherits Doa Demetrias rights to and interests in the disputed parcels of land.
This conclusion of the Court in the Quieting of Title Case will inevitably affect the Ejectment Case still pending
appeal before the Court of Appeals since LANDTRADE is basing its right to possession in the Ejectment Case
on its supposed title to the subject properties, which it derived from Teofilo.
The Cancellation of Titles and Reversion Case

(G.R. No. 173401)

The Republic is assailing in its Petition in G.R. No. 173401 the (1) Order dated December 13, 2005 of the
RTC-Branch 4 dismissing Civil Case No. 6686, the Complaint for Cancellation of Titles and Reversion filed by
the Republic against the deceased Doa Demetria, Vidal and/or Teofilo, and AZIMUTH and/or LANDTRADE;
and (2) Order dated May 16, 2006 of the same trial court denying the Motion for Reconsideration of the
Republic, averring that:
With due respect, the trial court decided a question of substance contrary to law and jurisprudence in ruling:
(i) THAT PETITIONER HAD NO CAUSE OF ACTION IN INSTITUTING THE SUBJECT COMPLAINT FOR
CANCELLATION OF OCT NOS. 0-1200 (A.F.) AND 0-1201 (A.F.), INCLUDING ALL DERIVATIVE TITLES,
AND REVERSION.
(ii) THAT PETITIONERS COMPLAINT FOR CANCELLATION OF OCT NOS. 0-1200 (A.F.) AND 0-1201 (A.F.)
INCLUDING ALL DERIVATIVE TITLES, AND REVERSION IS BARRED BY THE DECISIONS IN CACHO VS
GOVERNMENT OF THE UNITED STATES (28 PHIL. 616 [1914] AND CACHO VS COURT OF APPEALS
(269 SCRA 159 [1997].
(iii) THAT PETITIONERS CAUSE OF ACTION HAS PRESCRIBED; AND
(iv) THAT PETITIONER IS GUILTY OF FORUM SHOPPING. 132
The Court finds merit in the present Petition.
Cause of action for reversion
The Complaint in Civil Case No. 6686 seeks the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), with
all their derivative titles, and reversion. The Complaint was dismissed by the RTC-Branch 4 in its Order dated
December 13, 2005, upon Motion of Vidal and AZIMUTH, on the ground that the State does not have a cause
of action for reversion. According to the RTC-Branch 4, there was no showing that the late Doa Demetria
committed any wrongful act or omission in violation of any right of the Republic. Additionally, the Regalian
doctrine does not apply to Civil Case No. 6686 because said doctrine does not extend to lands beyond the
public domain. By the own judicial admission of the Republic, the two parcels of land in question are privately
owned, even before the same were registered in Doa Demetrias name.
The Court disagrees.
Rule 2, Section 2 of the Rules of Court defines a cause of action as "the act or omission by which a party
violates a right of another." Its essential elements are the following: (1) a right in favor of the plaintiff; (2) an
obligation on the part of the named defendant to respect or not to violate such right; and (3) such defendants
act or omission that is violative of the right of the plaintiff or constituting a breach of the obligation of the former
to the latter.133
Reversion is an action where the ultimate relief sought is to revert the land back to the government under the
Regalian doctrine. Considering that the land subject of the action originated from a grant by the government,
its cancellation is a matter between the grantor and the
grantee.134http://www.lawphil.net/judjuris/juri2005/may2005/gr_157536_2005.html - fnt30 In Estate of the Late
Jesus S. Yujuico v. Republic135 (Yujuico case), reversion was defined as an action which seeks to restore
public land fraudulently awarded and disposed of to private individuals or corporations to the mass of public
domain. It bears to point out, though, that the Court also allowed the resort by the Government to actions for
reversion to cancel titles that were void for reasons other than fraud, i.e., violation by the grantee of a patent of
the conditions imposed by law;136 and lack of jurisdiction of the Director of Lands to grant a patent covering
inalienable forest land137 or portion of a river, even when such grant was made through mere oversight. 138 In
Republic v. Guerrero,139 the Court gave a more general statement that the remedy of reversion can be availed
of "only in cases of fraudulent or unlawful inclusion of the land in patents or certificates of title."
The right of the Republic to institute an action for reversion is rooted in the Regalian doctrine. Under the
Regalian doctrine, all lands of the public domain belong to the State, and that the State is the source of any
asserted right to ownership in land and charged with the conservation of such patrimony. This same doctrine
also states that all lands not otherwise appearing to be clearly within private ownership are presumed to
belong to the State.140 It is incorporated in the 1987 Philippine Constitution under Article XII, Section 2 which
declares "[a]ll lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces
of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned
by the State. x x x" No public land can be acquired by private persons without any grant, express or implied,
from the government; it is indispensable that there be a showing of the title from the State. 141

The reversion case of the Republic in Civil Case No. 6686 rests on the main argument that OCT Nos. 0-1200
(a.f.) and 0-1201 (a.f.), issued in Doa Demetrias name, included parcels of lands which were not adjudicated
to her by the Court in the 1914 Cacho case. Contrary to the statement made by the RTC-Branch 4 in its
December 13, 2005 Order, the Republic does not make any admission in its Complaint that the two parcels of
land registered in Doa Demetrias name were privately owned even prior to their registration. While the
Republic does not dispute that that two parcels of land were awarded to Doa Demetria in the 1914 Cacho
case, it alleges that these were not the same as those covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.)
issued in Doa Demetrias name 84 years later. If, indeed, the parcels of land covered by said OCTs were not
those granted to Doa Demetria in the 1914 Cacho case, then it can be presumed, under the Regalian
doctrine, that said properties still form part of the public domain belonging to the State.
Just because OCTs were already issued in Doa Demetrias name does not bar the Republic from instituting
an action for reversion. Indeed, the Court made it clear in Francisco v. Rodriguez 142 that Section 101 of the
Public Land Act "may be invoked only when title has already vested in the individual, e.g., when a patent or a
certificate of title has already been issued[,]" for the basic premise in an action for reversion is that the
certificate of title fraudulently or unlawfully included land of the public domain, hence, calling for the
cancellation of said certificate. It is actually the issuance of such a certificate of title which constitutes the third
element of a cause of action for reversion.
The Court further finds that the Complaint of the Republic in Civil Case No. 6686 sufficiently states a cause of
action for reversion, even though it does not allege that fraud was committed in the registration or that the
Director of Lands requested the reversion.
It is a well-settled rule that the existence of a cause of action is determined by the allegations in the complaint.
In the resolution of a motion to dismiss based on failure to state a cause of action, only the facts alleged in the
complaint must be considered. The test in cases like these is whether a court can render a valid judgment on
the complaint based upon the facts alleged and pursuant to the prayer therein. Hence, it has been held that a
motion to dismiss generally partakes of the nature of a demurrer which hypothetically admits the truth of the
factual allegations made in a complaint. 143 The hypothetical admission extends to the relevant and material
facts well pleaded in the complaint and inferences fairly deducible therefrom. Hence, if the allegations in the
complaint furnish sufficient basis by which the complaint can be maintained, the same should not be
dismissed regardless of the defense that may be assessed by the defendants. 144
In Vergara v. Court of Appeals,145 the Court additionally explained that:
In determining whether allegations of a complaint are sufficient to support a cause of action, it must be borne
in mind that the complaint does not have to establish or allege facts proving the existence of a cause of action
at the outset; this will have to be done at the trial on the merits of the case. To sustain a motion to dismiss for
lack of cause of action, the complaint must show that the claim for relief does not exist, rather than that a claim
has been defectively stated, or is ambiguous, indefinite or uncertain.
The Republic meticulously presented in its Complaint the discrepancies between the 1914 Cacho case, on
one hand, which granted Doa Demetria title to two parcels of land; and OCT Nos. 0-1200 (a.f.) and 0-1201
(a.f.), on the other, which were supposedly issued pursuant to the said case. In paragraphs 9 and 16 of its
Complaint, the Republic clearly alleged that OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) cover properties much
larger than or areas beyond those granted by the land registration court in GLRO Record Nos. 6908 and 6909.
Thus, the Republic was able to satisfactorily allege the unlawful inclusion, for lack of an explicit grant from the
Government, of parcels of public land into Doa Demetrias OCTs, which, if true, will justify the cancellation of
said certificates and the return of the properties to the Republic.
That the Complaint in Civil Case No. 6686 does not allege that it had been filed by the Office of the Solicitor
General (OSG), at the behest of the Director of Lands, does not call for its dismissal on the ground of failure to
state a cause of action. Section 101 of Commonwealth Act No. 141, otherwise known as the Public Land Act,
as amended, simply requires that:
SEC. 101. All actions for the reversion to the Government of lands of the public domain or improvements
thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the
name of the Republic of the Philippines. (Emphasis supplied.)
Clear from the aforequoted provision that the authority to institute an action for reversion, on behalf of the
Republic, is primarily conferred upon the OSG. While the OSG, for most of the time, will file an action for
reversion upon the request or recommendation of the Director of Lands, there is no basis for saying that the
former is absolutely bound or dependent on the latter.
RTC-Branch 4 cited Sherwill Development Corporation v. Sitio Nio Residents Association, Inc. 146 (Sherwill
case), to support its ruling that it is "absolutely necessary" that an investigation and a determination of fraud
should have been made by the Director of Lands prior to the filing of a case for reversion. The Sherwill case is

not in point and does not constitute a precedent for the case at bar. It does not even involve a reversion case.
The main issue therein was whether the trial court properly dismissed the complaint of Sherwill Development
Corporation for quieting of title to two parcels of land, considering that a case for the declaration of nullity of its
TCTs, instituted by the Sto. Nio Residents Association, Inc., was already pending before the Land
Management Bureau (LMB). The Court recognized therein the primary jurisdiction of the LMB over the
dispute, and affirmed the dismissal of the quieting of title case on the grounds of litis pendentia and forum
shopping.
Res judicata
Public policy and sound practice enshrine the fundamental principle upon which the doctrine of res
judicata rests that parties ought not to be permitted to litigate the same issues more than once. It is a general
rule common to all civilized system of jurisprudence, that the solemn and deliberate sentence of the law,
pronounced by its appointed organs, upon a disputed fact or a state of facts, should be regarded as a final and
conclusive determination of the question litigated, and should forever set the controversy at rest. Indeed, it has
been well said that this maxim is more than a mere rule of law; more even than an important principle of public
policy; and that it is not too much to say that it is a fundamental concept in the organization of every jural
system. Public policy and sound practice demand that, at the risk of occasional errors, judgments of courts
should become final at some definite date fixed by law. The very object for which courts were constituted was
to put an end to controversies.147
The doctrine of res judicata comprehends two distinct concepts - (1) bar by former judgment, and (2)
conclusiveness of judgment. For res judicata to serve as an absolute bar to a subsequent action, the following
requisites must concur: (1) the former judgment or order must be final; (2) the judgment or order must be on
the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and parties;
and (4) there must be between the first and second actions, identity of parties, of subject matter, and of causes
of action. When there is no identity of causes of action, but only an identity of issues, there exists res judicata
in the concept of conclusiveness of judgment. Although it does not have the same effect as res judicata in the
form of bar by former judgment which prohibits the prosecution of a second action upon the same claim,
demand, or cause of action, the rule on conclusiveness of judgment bars the relitigation of particular facts or
issues in another litigation between the same parties on a different claim or cause of action. 148

Reconstitution denotes a restoration of the instrument which is supposed to have been lost or destroyed in its
original form or condition. The purpose of the reconstitution of title or any document is to have the same
reproduced, after observing the procedure prescribed by law, in the same form they were when the loss or
destruction occurred.151 Reconstitution is another special proceeding where the concept of cause of action in
an ordinary civil action finds no application.
The Court, in the 1997 Cacho case, granted the reconstitution and re-issuance of the decrees of registration
considering that the NALTDRA, through then Acting Commissioner Santiago M. Kapunan, 152 its Deputy Clerk
of Court III, the Head Geodetic Engineer, and the Chief of Registration, certified that "according to the Record
Book of Decrees for Ordinary Land Registration Case, Decree No. 18969 was issued in GLRO Record No.
6909 and Decree No. 10364 was issued in GLRO Record No. 6908[;]" 153 thus, leaving no doubt that said
decrees had in fact been issued.
The 1997 Cacho case only settled the issuance, existence, and subsequent loss of Decree Nos. 10364 and
18969. Consequently, said decrees could be re-issued in their original form or condition. The Court, however,
could not have passed upon in the 1997 Cacho case the issues on whether Doa Demetria truly owned the
parcels of land covered by the decrees and whether the decrees and the OCTs subsequently issued pursuant
thereto are void for unlawfully including land of the public domain which were not awarded to Doa Demetria.
The following pronouncement of the Court in Heirs of Susana de Guzman Tuazon v. Court of Appeals 154 is
instructive:

The 1914 Cacho case does not bar the Complaint for reversion in Civil Case No. 6686 by res judicata in either
of its two concepts.

Precisely, in both species of reconstitution under Section 109 of P.D. No. 1529 and R.A. No. 26, the nature of
the action denotes a restoration of the instrument which is supposed to have been lost or destroyed in its
original form and condition. The purpose of the action is merely to have the same reproduced, after proper
proceedings, in the same form they were when the loss or destruction occurred, and does not pass upon the
ownership of the land covered by the lost or destroyed title. It bears stressing at this point that ownership
should not be confused with a certificate of title. Registering land under the Torrens System does not create or
vest title because registration is not a mode of acquiring ownership. A certificate of title is merely an evidence
of ownership or title over the particular property described therein. Corollarily, any question involving the issue
of ownership must be threshed out in a separate suit, which is exactly what the private respondents did when
they filed Civil Case No. 95-3577 before Branch 74. The trial court will then conduct a full-blown trial wherein
the parties will present their respective evidence on the issue of ownership of the subject properties to enable
the court to resolve the said issue. x x x. (Emphases supplied.)

There is no bar by prior judgment because the 1914 Cacho case and Civil Case No. 6686 do not have the
same causes of action and, even possibly, they do not involve identical subject matters.

Whatever findings the Court made on the issue of ownership in the 1997 Cacho case are mere obiter dictum.
As the Court held in Amoroso v. Alegre, Jr.155:

Land registration cases, such as GLRO Record Nos. 6908 and 6909, from which the 1914 Cacho case arose,
are special proceedings where the concept of a cause of action in ordinary civil actions does not apply. In
special proceedings, the purpose is to establish a status, condition or fact; in land registration proceedings, the
ownership by a person of a parcel of land is sought to be established. 149 Civil Case No. 6686 is an action for
reversion where the cause of action is the alleged unlawful inclusion in OCT Nos. 0-1200 (a.f.) and 0-1201
(a.f.) of parcels of public land that were not among those granted to Doa Demetria in the 1914 Cacho case.
Thus, Civil Case No. 6686 even rests on supposition that the parcels of land covered by the certificates of title
in Doa Demetrias name, which the Republic is seeking to have cancelled, are different from the parcels of
land that were the subject matter of the 1914 Cacho case and adjudged to Doa Demetria.

Petitioner claims in his petition that the 3 October 1957 Decision resolved the issue of ownership of the lots
and declared in the body of the decision that he had "sufficiently proven uncontroverted facts that he had been
in possession of the land in question since 1946 x x x [and] has been in possession of the property with
sufficient title." However, such findings made by the CFI in the said decision are mere obiter, since the
ownership of the properties, titles to which were sought to be reconstituted, was never the issue in the
reconstitution case. Ownership is not the issue in a petition for reconstitution of title. A reconstitution of title
does not pass upon the ownership of the land covered by the lost or destroyed title.

Res judicata in the concept of conclusiveness of judgment, likewise, does not apply as between the 1914
Cacho case and Civil Case No. 6686. A careful study of the Complaint in Civil Case No. 6686 reveals that the
Republic does not seek to re-litigate any of the issues resolved in the 1914 Cacho case. The Republic no
longer questions in Civil Case No. 6686 that Doa Demetria was adjudged the owner of two parcels of land in
the 1914 Cacho case. The Republic is only insisting on the strict adherence to the judgment of the Court in the
1914 Cacho case, particularly: (1) the adjudication of a smaller parcel of land, consisting only of the southern
portion of the 37.87-hectare Lot 2 subject of Doa Demetrias application in GLRO Record No. 6909; and (2)
the submission of a new technical plan for the adjudicated southern portion of Lot 2 in GLRO Record No.
6909, and the deed executed by Datto Darondon, husband of Alanga, renouncing all his rights to Lot 1, in
GLRO Record No. 6908, in Doa Demetrias favor.150
Similarly, the 1997 Cacho case is not an obstacle to the institution by the Republic of Civil Case No. 6686 on
the ground of res judicata.
Bar by prior judgment does not apply for lack of identity of causes of action between the 1997 Cacho case and
Civil Case No. 6686. The 1997 Cacho case involves a petition for re-issuance of decrees of registration. In the
absence of principles and rules specific for such a petition, the Court refers to those on reconstitution of
certificates of title, being almost of the same nature and granting closely similar reliefs.

It may perhaps be argued that ownership of the properties was put in issue when petitioner opposed the
petition for reconstitution by claiming to be the owner of the properties. However, any ruling that the trial court
may make on the matter is irrelevant considering the courts limited authority in petitions for reconstitution. In a
petition for reconstitution of title, the only relief sought is the issuance of a reconstituted title because the
reconstituting officers power is limited to granting or denying a reconstituted title. As stated earlier, the
reconstitution of title does not pass upon the ownership of the land covered by the lost or destroyed title, and
any change in the ownership of the property must be the subject of a separate suit. (Emphases supplied.)
The Court concedes that the 1997 Cacho case, by reason of conclusiveness of judgment, prevents the
Republic from again raising as issues in Civil Case No. 6686 the issuance and existence of Decree Nos.
10364 and 18969, but not the validity of said decrees, as well as the certificates of title issued pursuant
thereto.
Forum shopping
Forum shopping is the filing of multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable judgment. A party violates the rule
against forum shopping if the elements of litis pendentia are present; or if a final judgment in one case would
amount to res judicata in the other.156

There is forum shopping when the following elements are present: (a) identity of parties, or at least such
parties as represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity of the two preceding particulars, is such that any
judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in
the action under consideration; said requisites are also constitutive of the requisites for auter action pendant or
lis pendens.157
Given the preceding disquisition of the Court that the 1914 and 1997 Cacho cases do not constitute res
judicata in Civil Case No. 6686, then the Court also cannot sustain the dismissal by the RTC-Branch 4 of the
Complaint of the Republic in Civil Case No. 6686 for forum shopping.
Prescription
According to the RTC-Branch 4, the cause of action for reversion of the Republic was already lost or
extinguished by prescription, citing Section 32 of the Property Registration Decree, which provides:
SEC. 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not
be reopened or revised by reason of absence, minority, or other disability of any person adversely affected
thereby, nor by any proceeding in any court for reversing judgment, subject, however, to the right of any
person, including the government and the branches thereof, deprived of land or of any estate or interest
therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First
Instance a petition for reopening and review of the decree of registration not later than one year from and after
the date of the entry of such decree of registration, but in no case shall such petition be entertained by the
court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be
prejudiced. Whenever the phrase "innocent purchaser of value" or an equivalent phrase occurs in this Decree,
it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall
become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his
remedy by action for damages against the applicant or any other persons responsible for the fraud.
Decree No. 10364 in GLRO Record No. 6908 was issued on May 9, 1913, while Decree No. 18969 in GLRO
Record No. 6909 was issued on July 8, 1915. In the course of eight decades, the decrees were lost and
subsequently reconstituted per order of this Court in the 1997 Cacho case. The reconstituted decrees were
issued on October 15, 1998 and transcribed on OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). The reconstituted
decrees were finally entered into the Registration Book for Iligan City on December 4, 1998 at 10:00 a.m.
Almost six years had elapsed from entry of the decrees by the time the Republic filed its Complaint in Civil
Case No. 6686 on October 13, 2004.
Nonetheless, elementary is the rule that prescription does not run against the State and its subdivisions. When
the government is the real party in interest, and it is proceeding mainly to assert its own right to recover its
own property, there can as a rule be no defense grounded on laches or prescription. Public land fraudulently
included in patents or certificates of title may be recovered or reverted to the State in accordance with Section
101 of the Public Land Act. The right of reversion or reconveyance to the State is not barred by prescription. 158
The Court discussed lengthily in Republic v. Court of Appeals 159 the indefeasibility of a decree of
registration/certificate of title vis--vis the remedy of reversion available to the State:
The petitioner invokes Republic v. Animas, where this Court declared that a title founded on fraud may be
cancelled notwithstanding the lapse of one year from the issuance thereof. Thus:
x x x The misrepresentations of the applicant that he had been occupying and cultivating the land and residing
thereon are sufficient grounds to nullify the grant of the patent and title under Section 91 of the Public Land
Law which provides as follows:
"The statements made in the application shall be considered as essential conditions or parts of any
concession, title or permit issued on the basis of such application, and any false statement thereon or
omission of facts, changing, or modifying the consideration of the facts set forth in such statement, and any
subsequent modification, alteration, or change of the material facts set forth in the application shall ipso facto
produce the cancellation of the concession, title or permit granted. x x x"

A certificate of title that is void may be ordered cancelled. A title will be considered void if it is procured through
fraud, as when a person applies for registration of the land under his name although the property belongs to
another. In the case of disposable public lands, failure on the part of the grantee to comply with the conditions
imposed by law is a ground for holding such title void. The lapse of the one year period within which a decree
of title may be reopened for fraud would not prevent the cancellation thereof, for to hold that a title may
become indefeasible by registration, even if such title had been secured through fraud or in violation of the
law, would be the height of absurdity. Registration should not be a shield of fraud in securing title.
This doctrine was reiterated in Republic v. Mina, where Justice Relova declared for the Court:
A certificate of title that is void may be ordered cancelled. And, a title will be considered void if it is procured
through fraud, as when a person applies for registration of the land on the claim that he has been occupying
and cultivating it. In the case of disposable public lands, failure on the part of the grantee to comply with the
conditions imposed by law is a ground for holding such title void. x x x The lapse of one (1) year period within
which a decree of title may be reopened for fraud would not prevent the cancellation thereof for to hold that a
title may become indefeasible by registration, even if such title had been secured through fraud or in violation
of the law would be the height of absurdity. Registration should not be a shield of fraud in securing title.
Justifying the above-quoted provision, the Court declared in Piero, Jr. v. Director of Lands:
It is true that under Section 122 of the Land Registration Act, a Torrens title issued on the basis of a free patent
or a homestead patent is as indefeasible as one judicially secured. And in repeated previous decisions of this
Court that indefeasibility has been emphasized by Our holding that not even the Government can file an action
for annulment, but at the same time, it has been made clear that an action for reversion may be instituted by
the Solicitor General, in the name of the Republic of the Philippines. It is to the public interest that one who
succeeds in fraudulently acquiring title to a public land should not be allowed to benefit therefrom, and the
State should, therefore, have an even existing authority, thru its duly authorized officers, to inquire into the
circumstances surrounding the issuance of any such title, to the end that the Republic, thru the Solicitor
General or any other officer who may be authorized by law, may file the corresponding action for the reversion
of the land involved to the public domain, subject thereafter to disposal to other qualified persons in
accordance with law. In other words, the indefeasibility of a title over land previously public is not a bar to an
investigation by the Director of Lands as to how such title has been acquired, if the purpose of such
investigation is to determine whether or not fraud had been committed in securing such title in order that the
appropriate action for reversion may be filed by the Government.
Private respondent PNB points out that Animas involved timberland, which is not alienable or disposable
public land, and that in Piero the issue raised was whether the Director of Lands would be enjoined by a writ
of prohibition from investigating allegations of fraud that led to the issuance of certain free patents.
Nevertheless, we find that the doctrine above quoted is no less controlling even if there be some factual
disparities (which are not material here), especially as it has been buttressed by subsequent jurisprudence.
In Director of Lands v. Jugado, upon which the appellate court based its ruling, the Court declared
meaningfully that:
There is, however, a section in the Public Land Law (Sec. 101 of Commonwealth Act 141), which affords a
remedy whereby lands of the public domain fraudulently awarded may be recovered or reverted back to its
original owner, the Government. But the provision requires that all such actions for reversion shall be instituted
by the Solicitor General or the officer acting in his stead, in the proper courts, in the name of the Republic of
the Philippines (See Director of Lands v. De Luna, supra). As the party in interest in this case is the Director of
Lands and not the Republic of the Philippines, the action cannot prosper in favor of the appellant.
The reference was to the Public Land Law which authorizes the reversion suit under its Sec. 101, thus:
Sec. 101. All actions for the reversion to the Government of lands of the public domain or improvements
thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts, in the
name of the Republic of the Philippines.
This remedy was recently affirmed by the Court in Heirs of Gregorio Tengco v. Heirs of Jose and Victoria
Aliwalas,thus:
x x x Title to the property having become incontrovertible, such may no longer be collaterally attacked. If
indeed there had been any fraud or misrepresentation in obtaining the title, an action for reversion instituted by
the Solicitor General would be the proper remedy.
It is evident from the foregoing jurisprudence that despite the lapse of one year from the entry of a decree of
registration/certificate of title, the State, through the Solicitor General, may still institute an action for reversion
when said decree/certificate was acquired by fraud or misrepresentation. Indefeasibility of a title does not

attach to titles secured by fraud and misrepresentation. Well-settled is the doctrine that the registration of a
patent under the Torrens system does not by itself vest title; it merely confirms the registrants already existing
one. Verily, registration under the Torrens system is not a mode of acquiring ownership. 160
But then again, the Court had several times in the past recognized the right of the State to avail itself of the
remedy of reversion in other instances when the title to the land is void for reasons other than having been
secured by fraud or misrepresentation. One such case is Spouses Morandarte v. Court of Appeals, 161 where
the Bureau of Lands (BOL), by mistake and oversight, granted a patent to the spouses Morandarte which
included a portion of the Miputak River. The Republic instituted an action for reversion 10 years after the
issuance of an OCT in the name of the spouses Morandarte. The Court ruled:
Be that as it may, the mistake or error of the officials or agents of the BOL in this regard cannot be invoked
against the government with regard to property of the public domain. It has been said that the State cannot be
estopped by the omission, mistake or error of its officials or agents.
It is well-recognized that if a person obtains a title under the Public Land Act which includes, by oversight,
lands which cannot be registered under the Torrens system, or when the Director of Lands did not have
jurisdiction over the same because it is a public domain, the grantee does not, by virtue of the said certificate
of title alone, become the owner of the land or property illegally included. Otherwise stated, property of the
public domain is incapable of registration and its inclusion in a title nullifies that title.1avvphi1
Another example is the case of Republic of the Phils. v. CFI of Lanao del Norte, Br. IV,162 in which the
homestead patent issued by the State became null and void because of the grantees violation of the
conditions for the grant. The Court ordered the reversion even though the land subject of the patent was
already covered by an OCT and the Republic availed itself of the said remedy more than 11 years after the
cause of action accrued, because:
There is merit in this appeal considering that the statute of limitation does not lie against the State. Civil Case
No. 1382 of the lower court for reversion is a suit brought by the petitioner Republic of the Philippines as a
sovereign state and, by the express provision of Section 118 of Commonwealth Act No. 141, any transfer or
alienation of a homestead grant within five (5) years from the issuance of the patent is null and void and
constitute a cause for reversion of the homestead to the State. In Republic vs. Ruiz, 23 SCRA 348, We held
that "the Court below committed no error in ordering the reversion to plaintiff of the land grant involved herein,
notwithstanding the fact that the original certificate of title based on the patent had been cancelled and another
certificate issued in the names of the grantee heirs. Thus, where a grantee is found not entitled to hold and
possess in fee simple the land, by reason of his having violated Section 118 of the Public Land Law, the Court
may properly order its reconveyance to the grantor, although the property has already been brought under the
operation of the Torrens System. And, this right of the government to bring an appropriate action for
reconveyance is not barred by the lapse of time: the Statute of Limitations does not run against the State."
(Italics supplied). The above ruling was reiterated in Republic vs. Mina, 114 SCRA 945.
If the Republic is able to establish after trial and hearing of Civil Case No. 6686 that the decrees and OCTs in
Doa Demetrias name are void for some reason, then the trial court can still order the reversion of the parcels
of land covered by the same because indefeasibility cannot attach to a void decree or certificate of title. The
RTC-Branch 4 jumped the gun when it declared that the cause of action of the Republic for reversion in Civil
Case No. 6686 was already lost or extinguished by prescription based on the Complaint alone.

Demetrias name, and the burden of proof falls upon the Republic to establish by clear and convincing
evidence that said decrees and certificates of title are null and void.
IV
DISPOSITIVE PART
WHEREFORE, premises considered, the Court renders the following judgment in the Petitions at bar:
1) In G.R. No. 170375 (Expropriation Case), the Court GRANTS the Petition for Review of the Republic of the
Philippines. It REVERSES and SETS ASIDE the Resolutions dated July 12, 2005 and October 24, 2005 of the
Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte. It further ORDERS the reinstatement of the
Complaint in Civil Case No. 106, the admission of the Supplemental Complaint of the Republic, and the return
of the original record of the case to the court of origin for further proceedings. No costs.
2) In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the Court DENIES the consolidated Petitions for
Review of Landtrade Realty Corporation, Teofilo Cacho, and/or Atty. Godofredo Cabildo for lack of merit. It
AFFIRMS the Decision dated January 19, 2007 and Resolution dated July 4, 2007 of the Court of Appeals in
CA-G.R. CV. No. 00456, affirming in toto the Decision dated July 17, 2004 of the Regional Trial Court, Branch
3 of Iligan City, Lanao del Norte, in Civil Case No. 4452. Costs against Landtrade Realty Corporation, Teofilo
Cacho, and Atty. Godofredo Cabildo.
3) In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case execution pending appeal before the
Regional Trial Court), the Court DENIES the Petition for Review of Landtrade Realty Corporation for being
moot and academic given that the Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte had already
rendered a Decision dated December 12, 2005 in Civil Case No. 6613. No costs.
4) In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or Unlawful Detainer Case execution pending
appeal before the Court of Appeals), the Court GRANTS the consolidated Petitions for Certiorari and
Prohibition of the National Power Corporation and National Transmission Corporation. It SETS ASIDE the
Resolution dated June 30, 2006 of the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889 for having been
rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. It further ORDERSthe
Court of Appeals to issue a writ of preliminary injunction enjoining the execution of the Decision dated
December 12, 2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte, in Civil Case No.
6613, while the same is pending appeal before the Court of Appeals in CA-G.R. SP Nos. 00854 and 00889. It
finally DIRECTS the Court of Appeals to resolve without further delay the pending appeals before it, in CAG.R. SP Nos. 00854 and 00889, in a manner not inconsistent with this Decision. No costs.
5) In G.R. No. 173401 (Cancellation of Titles and Reversion Case), the Court GRANTS the Petition for Review
of the Republic of the Philippines. It REVERSES and SETS ASIDE the Orders dated December 13, 2005 and
May 16, 2006 of the Regional Trial Court, Branch 4 of Iligan City in Civil Case No. 6686. It further ORDERS
the reinstatement of the Complaint in Civil Case No. 6686 and the return of the original record of the case to
the court of origin for further proceedings. No costs.
SO ORDERED.
MA. TERESA CHAVES BIACO,
Petitioner,

Present:

All told, the Court finds that the RTC-Branch 4 committed reversible error in dismissing the Complaint for
Cancellation of Titles and Reversion of the Republic in Civil Case No. 6686. Resultantly, the Court orders the
reinstatement of said Complaint. Yet, the Court also deems it opportune to recall the following statements in
Saad-Agro Industries, Inc. v. Republic163:

QUISUMBING, J.,
Chairperson,
- versus -

It has been held that a complaint for reversion involves a serious controversy, involving a question of fraud and
misrepresentation committed against the government and it is aimed at the return of the disputed portion of
the public domain. It seeks to cancel the original certificate of registration, and nullify the original certificate of
title, including the transfer certificate of title of the successors-in-interest because the same were all procured
through fraud and misrepresentation. Thus, the State, as the party alleging the fraud and misrepresentation
that attended the application of the free patent, bears that burden of proof. Fraud and misrepresentation, as
grounds for cancellation of patent and annulment of title, should never be presumed but must be proved by
clear and convincing evidence, mere preponderance of evidence not even being adequate. It is but judicious
to require the Government, in an action for reversion, to show the details attending the issuance of title over
the alleged inalienable land and explain why such issuance has deprived the State of the claimed property.
(Emphasis supplied.)
It may do well for the Republic to remember that there is a prima facie presumption of regularity in the
issuance of Decree Nos. 10364 and 18969, as well as OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), in Doa

G.R. No. 161417

TINGA, and
VELASCO, JR., JJ.
PHILIPPINE COUNTRYSIDE RURAL
BANK,
Respondent.

CARPIO,
CARPIO MORALES,

Promulgated:
February 8, 2007

x----------------------------------------------------------------------------x
DECISION
TINGA, J.:

property is not enough to pay the outstanding obligation, the defendants are ordered to pay any deficiency of
the judgment as their personal liability.
Petitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision [1] of the Court of Appeals in CAG.R. No. 67489 dated August 27, 2003, which denied her petition for annulment of judgment, and the
Resolution[2] dated December 15, 2003 which denied her motion for reconsideration.
The facts as succinctly stated by the Court of Appeals are as follows:
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While employed in the Philippine
Countryside Rural Bank (PCRB) as branch manager, Ernesto obtained several loans from the respondent
bank as evidenced by the following promissory notes:
Feb. 17, 1998
Mar. 18, 1998
May 6, 1998
May 20, 1998
July 30, 1998
Sept. 8, 1998
Sept. 8, 1998

P 65,000.00
30,000.00
60,000.00
350,000.00
155,000.00
40,000.00
120,000.00

As security for the payment of the said loans, Ernesto executed a real estate mortgage in favor of the bank
covering the parcel of land described in Original Certificate of Title (OCT) No. P-14423. The real estate
mortgages bore the signatures of the spouses Biaco.
When Ernesto failed to settle the above-mentioned loans on its due date, respondent bank through counsel
sent him a written demand on September 28, 1999. The amount due as ofSeptember 30, 1999 had already
reached ONE MILLION EIGHTY THOUSAND SIX HUNDRED SEVENTY SIX AND FIFTY CENTAVOS
(P1,080,676.50).

SO ORDERED.
On July 12, 2000, the sheriff personally served the above-mentioned judgment to Ernesto Biaco at his office at
Export and Industry Bank. The spouses Biaco did not appeal from the adverse decision of the trial court.
On October 13, 2000, the respondent bank filed an ex parte motion for execution to direct the sheriff to sell the
mortgaged lot at public auction. The respondent bank alleged that the order of the court requiring the
spouses Biaco to pay within a period of 90 days had passed, thus making it necessary to sell the mortgaged
lot at public auction, as previously mentioned in the order of the court. The motion for execution was granted
by the trial court per Order dated October 20, 2000.
On October 31, 2000, the sheriff served a copy of the writ of execution to the spouses Biaco at their residence
in #92 9th Street, Nazareth, Cagayan de Oro City. The writ of execution was personally received by Ernesto.
By virtue of the writ of execution issued by the trial court, the mortgaged property was sold at public auction in
favor of the respondent bank in the amount of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00).
The amount of the property sold at public auction being insufficient to cover the full amount of the obligation,
the respondent bank filed an ex parte motion for judgment praying for the issuance of a writ of execution
against the other properties of the spouses Biaco for the full settlement of the remaining obligation. Granting
the motion, the court ordered that a writ of execution be issued against the spouses Biaco to enforce and
satisfy the judgment of the court for the balance of ONE MILLION THREE HUNDRED SIXTY NINE
THOUSAND NINE HUNDRED SEVENTY FOUR PESOS AND SEVENTY CENTAVOS (P1,369,974.70).
The sheriff executed two (2) notices of levy against properties registered under the name of petitioner Ma.
Teresa Chaves Biaco. However, the notices of levy were denied registration because Ma. Teresa had already
sold the two (2) properties to her daughters on April 11, 2001.[3]

The written demand, however, proved futile.

On February 22, 2000, respondent bank filed a complaint for foreclosure of mortgage against the spouses
Ernesto and Teresa Biaco before the RTC of Misamis Oriental. Summons was served to the spouses Biaco
through Ernesto at his office (Export and Industry Bank) located at Jofelmor Bldg., Mortola Street, Cagayan de
Oro City.
Ernesto received the summons but for unknown reasons, he failed to file an answer. Hence, the spouses
Biaco were declared in default upon motion of the respondent bank. The respondent bank was allowed to
present its evidence ex parte before the Branch Clerk of Court who was then appointed by the court as
Commissioner.

Arturo Toring, the branch manager of the respondent bank, testified that the spouses Biaco had been
obtaining loans from the bank since 1996 to 1998. The loans for the years 1996-1997 had already been paid
by the spouses Biaco, leaving behind a balance of P1,260,304.33 representing the 1998 loans. The amount
being claimed is inclusive of interests, penalties and service charges as agreed upon by the parties. The
appraisal value of the land subject of the mortgage is only P150,000.00 as reported by the Assessors Office.
Based on the report of the Commissioner, the respondent judge ordered as follows:
WHEREFORE, judgment is hereby rendered ordering defendants spouses ERNESTO R. BIACO and MA.
THERESA [CHAVES] BIACO to pay plaintiff bank within a period of not less than ninety (90) days nor more
than one hundred (100) days from receipt of this decision the loan of ONE MILLION TWO HUNDRED SIXTY
THOUSAND THREE HUNDRED FOUR PESOS and THIRTY THREE CENTAVOS (P1,260,304.33) plus
litigation expenses in the amount of SEVEN THOUSAND SIX HUNDRED FORTY PESOS (P7,640.00) and
attorneys fees in the amount of TWO HUNDRED FIFTY TWO THOUSAND THIRTY PESOS and FORTY
THREE CENTAVOS (P252,030.43) and cost of this suit.
In case of non-payment within the period, the Sheriff of this Court is ordered to sell at public auction the
mortgaged Lot, a parcel of registered land (Lot 35802, Cad. 237 {Lot No. 12388-B, Csd-10-002342-D}),
located at Gasi, Laguindingan, Misamis Oriental and covered by TCT No. P-14423 to satisfy the mortgage
debt, and the surplus if there be any should be delivered to the defendants spouses ERNESTO and MA.
THERESA [CHAVES] BIACO. In the event however[,] that the proceeds of the auction sale of the mortgage[d]

Petitioner sought the annulment of the Regional Trial Court decision contending that extrinsic fraud prevented
her from participating in the judicial foreclosure proceedings. According to her, she came to know about the
judgment in the case only after the lapse of more than six (6) months after its finality. She claimed that
extrinsic fraud was perpetrated against her because the bank failed to verify the authenticity of her signature
on the real estate mortgage and did not inquire into the reason for the absence of her signature on the
promissory notes. She moreover asserted that the trial court failed to acquire jurisdiction because summons
were served on her through her husband without any explanation as to why personal service could not be
made.
The Court of Appeals considered the two circumstances that kept petitioner in the dark about the judicial
foreclosure proceedings: (1) the failure of the sheriff to personally serve summons on petitioner; and (2)
petitioners husbands concealment of his knowledge of the foreclosure proceedings. On the validity of the
service of summons, the appellate court ruled that judicial foreclosure proceedings are actions quasi in
rem. As such, jurisdiction over the person of the defendant is not essential as long as the court acquires
jurisdiction over the res. Noting that the spouses Biaco were not opposing parties in the case, the Court of
Appeals further ruled that the fraud committed by one against the other cannot be considered extrinsic fraud.
Her motion for reconsideration having been denied, petitioner filed the instant Petition for Review, [4] asserting
that even if the action is quasi in rem, personal service of summons is essential in order to afford her due
process. The substituted service made by the sheriff at her husbands office cannot be deemed proper service
absent any explanation that efforts had been made to personally serve summons upon her but that such
efforts failed. Petitioner contends that extrinsic fraud was perpetrated not so much by her husband, who did
not inform her of the judicial foreclosure proceedings, but by the sheriff who allegedly connived with her
husband to just leave a copy of the summons intended for her at the latters office.
Petitioner further argues that the deficiency judgment is a personal judgment which should be deemed void for
lack of jurisdiction over her person.
Respondent PCRB filed its Comment, [5] essentially reiterating the appellate courts ruling. Respondent avers
that service of summons upon the defendant is not necessary in actions quasi in rem it being sufficient that the
court acquire jurisdiction over the res. As regards the alleged conspiracy between petitioners husband and
the sheriff, respondent counters that this is a new argument which cannot be raised for the first time in the
instant petition.
We required the parties to file their respective memoranda in the Resolution [6] dated August 18,
2004. Accordingly, petitioner filed her Memorandum [7] dated October 10, 2004, while respondent filed its
Memorandum for Respondent[8] dated September 9, 2004.

Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases as where there
is no available or other adequate remedy. Jurisprudence and Sec. 2, Rule 47 of the 1997 Rules of Civil
Procedure (Rules of Court) provide that judgments may be annulled only on grounds of extrinsic fraud and
lack of jurisdiction or denial of due process.[9]
Petitioner asserts that extrinsic fraud consisted in her husbands concealment of the loans which he obtained
from respondent PCRB; the filing of the complaint for judicial foreclosure of mortgage; service of summons;
rendition of judgment by default; and all other proceedings which took place until the writ of garnishment was
served.[10]
Extrinsic fraud exists when there is a fraudulent act committed by the prevailing party outside of the trial of the
case, whereby the defeated party was prevented from presenting fully his side of the case by fraud or
deception practiced on him by the prevailing party.[11] Extrinsic fraud is present where the unsuccessful
party had been prevented from exhibiting fully his case, by fraud or deception practiced on him by
his opponent, as by keeping him away from court, a false promise of a compromise; or where
thedefendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an
attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where
the attorney regularly employed corruptly sells out his clients interest to the other side. The overriding
consideration is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in
court.[12]
With these considerations, the appellate court acted well in ruling that there was no fraud perpetrated by
respondent bank upon petitioner, noting that the spouses Biaco were co-defendants in the case and shared
the same interest. Whatever fact or circumstance concealed by the husband from the wife cannot be
attributed to respondent bank.
Moreover, petitioners allegation that her signature on the promissory notes was forged does not evince
extrinsic fraud. It is well-settled that the use of forged instruments during trial is not extrinsic fraud because
such evidence does not preclude the participation of any party in the proceedings. [13]
The question of whether the trial court has jurisdiction depends on the nature of the action, i.e., whether the
action is in personam, in rem, or quasi in rem. The rules on service of summons under Rule 14 of the Rules
of Court likewise apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An action in rem is an
action against the thing itself instead of against the person. An action quasi in rem is one wherein an individual
is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or
lien burdening the property.[14]
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try
and decide the case. In a proceeding in rem or quasi in rem,jurisdiction over the person of the defendant is not
a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over
the res. Jurisdiction over theres is acquired either (1) by the seizure of the property under legal process,
whereby it is brought into actual custody of the law; or (2) as a result of the institution of legal proceedings, in
which the power of the court is recognized and made effective. [15]
Nonetheless, summons must be served upon the defendant not for the purpose of vesting the court with
jurisdiction but merely for satisfying the due process requirements. [16]
A resident defendant who does not voluntarily appear in court, such as petitioner in this case, must be
personally served with summons as provided under Sec. 6, Rule 14 of the Rules of Court. If she cannot be
personally served with summons within a reasonable time, substituted service may be effected (1) by leaving
copies of the summons at the defendants residence with some person of suitable age and discretion then
residing therein, or (2) by leaving the copies at defendants office or regular place of business with some
competent person in charge thereof in accordance with Sec. 7, Rule 14 of the Rules of Court.
In this case, the judicial foreclosure proceeding instituted by respondent PCRB undoubtedly vested the trial
court with jurisdiction over the res. A judicial foreclosure proceeding is an action quasi in rem. As such,
jurisdiction over the person of petitioner is not required, it being sufficient that the trial court is vested with
jurisdiction over the subject matter.
There is a dimension to this case though that needs to be delved into. Petitioner avers that she was not
personally served summons. Instead, summons was served to her through her husband at his office without
any explanation as to why the particular surrogate service was resorted to. The Sheriffs Return of Service
dated March 21, 2000 states:
xxxx

That on March 16, 2000, the undersigned served the copies of Summons, complaint and its annexes to the
defendants Sps. Ernesto R. & Ma. Teresa Ch. Biaco thru Ernesto R. Biaco[,] defendant of the above-entitled
case at his office EXPORT & INDUSTRY BANK, Jofelmore Bldg.[,] Mortola St., Cagayan de Oro City and he
acknowledged receipt thereof as evidenced with his signature appearing on the original copy of the Summons.
[17]
[Emphasis supplied]
Without ruling on petitioners allegation that her husband and the sheriff connived to prevent summons from
being served upon her personally, we can see that petitioner was denied due process and was not able to
participate in the judicial foreclosure proceedings as a consequence. The violation of petitioners
constitutional right to due process arising from want of valid service of summons on her warrants the
annulment of the judgment of the trial court.
There is more, the trial court granted respondent PCRBs ex-parte motion for deficiency judgment and ordered
the issuance of a writ of execution against the spouses Biaco to satisfy the remaining balance of the award. In
short, the trial court went beyond its jurisdiction over the res and rendered a personal judgment against the
spouses Biaco. This cannot be countenanced.
In Sahagun v. Court of Appeals,[18] suit was brought against a non-resident defendant, Abelardo Sahagun, and
a writ of attachment was issued and subsequently levied on a house and lot registered in his name. Claiming
ownership of the house, his wife, Carmelita Sahagun, filed a motion to intervene. For failure of plaintiff to
serve summons extraterritorially upon Abelardo, the complaint was dismissed without prejudice.
Subsequently, plaintiff filed a motion for leave to serve summons by publication upon Abelardo. The trial court
granted the motion. Plaintiff later filed an amended complaint against Abelardo, this
time impleading Carmelita and Rallye as additional defendants. Summons was served on Abelardo through
publication in the Manila Evening Post. Abelardo failed to file an answer and was declared in
default. Carmelita went on certiorari to the Court of Appeals assailing as grave abuse of discretion the
declaration of default of Abelardo. The Court of Appeals dismissed the petition and denied reconsideration.
In her petition with this Court, Carmelita raised the issue of whether the trial court acquired jurisdiction over her
husband, a non-resident defendant, by the publication of summons in a newspaper of general circulation in
the Philippines. The Court sustained the correctness of extrajudicial service of summons by publication in
such newspaper.
The Court explained, citing El Banco Espaol-Filipino v. Palanca,[19] that foreclosure and attachment
proceedings are both actions quasi in rem. As such, jurisdiction over the person of the (non-resident)
defendant is not essential. Service of summons on a non-resident defendant who is not found in the country is
required, not for purposes of physically acquiring jurisdiction over his person but simply in pursuance of the
requirements of fair play, so that he may be informed of the pendency of the action against him and the
possibility that property belonging to him or in which he has an interest may be subjected to a judgment in
favor of a resident, and that he may thereby be accorded an opportunity to defend in the action, should he be
so minded.
Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et. al.[20] and Perkins v. Dizon, et al.
[21]
that in a proceeding in rem or quasi in rem, the only relief that may be granted by the court against a
defendant over whose person it has not acquired jurisdiction either by valid service of summons or by
voluntary submission to its jurisdiction, is limited to the res.
Similarly, in this case, while the trial court acquired jurisdiction over the res, its jurisdiction is limited to a
rendition of judgment on the res. It cannot extend its jurisdiction beyond the res and issue a judgment
enforcing petitioners personal liability. In doing so without first having acquired jurisdiction over the person of
petitioner, as it did, the trial court violated her constitutional right to due process, warranting the annulment of
the judgment rendered in the case.
WHEREFORE, the instant petition is GRANTED. The Decision dated August 27, 2003 and the Resolution
dated December 15, 2003 of the Court of Appeals in CA-G.R. SP No. 67489 are SET ASIDE. The Judgment
dated July 11, 2000 and Order dated February 9, 2001 of the Regional Trial Court of Cagayan de Oro City,
Branch 20, are likewise SET ASIDE.
SO ORDERED.

The Process Server submitted the Officers Return, to wit:

THIS IS TO CERTIFY, that after several failed attempts to serve the copy of summons and complaint issued in
the above-entitled case at the given addresses of defendant ErlindaVelayo as mentioned in the Order of this
Court dated September 13, 1993, finally, on the 23 rd day of September, 1993, at the instance of herein
plaintiffs through counsel, undersigned was able to SERVED (sic) personally upon
defendant Erlinda Velayo the copy of summons together with the thereto attached copy of the complaint, not at
her two (2) given addresses, but at the lobby of Intercontinental Hotel, Makati, Metro Manila, right in the
presence of lobby counter personnel by the name of Ms. A. Zulueta, but said defendant refused to sign in
receipt thereof.
ERLINDA R. VELAYO-FONG,
Petitioner,

G.R. NO. 155488

Present:

- versus -

PANGANIBAN, C.J.
(Chairperson)
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

SPOUSES RAYMOND and

MARIA HEDY VELAYO,
Respondents.

Promulgated:
December 6, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

I FURTHER CERTIFY, that on the 27th day of September, 1993, copy of the same WAS SERVED personally
upon the other defendant Rodolfo R. Velayo, Jr., at No. Block 57, Lots 17 and 19, G. Sanchez Street, BF
Resort Village, Las Pias, Metro Manila, but who also refused to sign in receipt thereof.
WHEREFORE, original copy of the summons is now being respectfully returned to the Honorable Court DULY
SERVED.
Quezon City, Philippines, September 30, 1993.[6]
Upon ex-parte motions[7] of respondents, the RTC in its Order dated November 23, 1993 and January 5, 1994,
declared petitioner and her co-defendant in default for failure to file an answer and ordered the exparte presentation of respondents evidence. [8]
On June 15, 1994, the RTC rendered its Decision in respondents favor, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the defendants to pay the
plaintiffs:

DECISION
1. the amount of P65,000.00 as actual damages;
AUSTRIA-MARTINEZ, J.:
2. the amount of P200,000.00 as moral damages;
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure
seeking the reversal of the Decision[1] of the Court of Appeals (CA) dated May 14, 2002 in CA-G.R. CV No.
54434 which affirmed the Decision of the Regional Trial Court, Branch 105, Quezon City (RTC) in Civil Case
No. Q-93-17133; and the CA Resolution[2] dated October 1, 2002 which denied petitioners motion for
reconsideration.

3. Attorneys fees in the amount of P5,000,00 it being a judgment by default; and

4. cost of suit.
SO ORDERED.[9]

The procedural antecedents and factual background of the case are as follows:
On August 9, 1993, Raymond Velayo (Raymond) and his wife, Maria Hedy Velayo (respondents) filed a
complaint for sum of money and damages with prayer for preliminary attachment against Erlinda R. VelayoFong (petitioner), Rodolfo R. Velayo, Jr. (Rodolfo Jr.) and Roberto R. Velayo (Roberto). [3] Raymond is the halfbrother of petitioner and her co-defendants.
In their Complaint, respondents allege that petitioner, a resident of 1860 Alamoana Boulevard, Honolulu,
Hawaii, USA, and her co-defendants, who are residents of the Philippines, made it appear that their common
father, Rodolfo Velayo, Sr. (Rodolfo Sr.) and petitioner had filed a complaint against Raymond before the
National Bureau of Investigation (NBI), accusing Raymond of the crimes of estafa and kidnapping a minor; that
petitioner and her co-defendants also requested that respondents be included in the Hold Departure List of the
Bureau of Immigration and Deportation (BID) which was granted, thereby preventing them from leaving the
country and resulting in the cancellation of respondents trips abroad and caused all of respondents business
transactions and operations to be paralyzed to their damage and prejudice; that petitioner and her codefendants also filed a petition before the Securities and Exchange Commission (SEC) docketed as Case No.
4422 entitled Rodolfo Velayo Sr. et al. v. Raymond Velayo et al. which caused respondents funds to be
frozen and paralyzed the latters business transactions and operations to their damage and prejudice. Since
petitioner was a non-resident and not found in the Philippines, respondents prayed for a writ of preliminary
attachment against petitioners properties located in the Philippines.

On September 1, 1994, petitioner filed a Motion to Set Aside Order of Default claiming that she was prevented
from filing a responsive pleading and defending herself against respondents complaint because of fraud,
accident or mistake; that contrary to the Officers Return, no summons was served upon her; that she has
valid and meritorious defenses to refute respondents material allegations. [10] Respondents opposed said
Motion.[11]
In its Order dated May 29, 1995, the RTC denied petitioners Motion ruling that the presumption of regularity in
the discharge of the function of the Process Server was not sufficiently overcome by petitioners allegation to
the contrary; that there was no evident reason for the Process Server to make a false narration regarding the
service of summons to defaulting defendant in the Officers Return. [12]
On September 4, 1995, respondents filed a Motion for Execution. [13] On September 22, 1995, petitioner filed
an Opposition to Motion for Execution contending that she has not yet received the Decision and it is not yet
final and executory as against her.[14]
In its Order dated January 3, 1996, the RTC, finding that the Decision dated June 15, 1994 and the Order
dated May 29, 1995 were indeed not furnished or served upon petitioner, denied respondents motion for
execution against petitioner and ordered that petitioner be furnished the said Decision and Order.[15]
On March 28, 1996, the RTC issued an Order directing the issuance of the writ of execution against
petitioners co-defendant.[16]

Before respondents application for a writ of preliminary attachment can be acted upon by the RTC,
respondents filed on September 10, 1993 an Urgent Motion praying that the summons addressed to petitioner
be served to her at Suite 201, Sunset View Towers Condominium, Roxas Boulevard, Pasay City and at No.
5040 P. Burgos Street, T. Towers Condominium, Makati. [4] In its Order dated September 13, 1993, the RTC
granted the said motion.[5]

On May 23, 1996, petitioner, through her counsel, finally received the Decision dated June 15, 1994 and the
Order dated May 29, 1995.[17]
Petitioner filed an appeal with the CA questioning the propriety and validity of the service of summons made
upon her. Respondents opposed the appeal, arguing that the petition should be dismissed since it raised pure

questions of law, which is not within the CAs jurisdiction to resolve under Section 2 (c) of Rule 41 of the
Revised Rules of Court; that, in any case, petitioners reliance on the rule of extraterritorial service is
misplaced; that the judgment by default has long been final and executory since as early as August 1994
petitioner became aware of the judgment by default when she verified the status of the case; that petitioner
should have filed a motion for new trial or a petition for relief from judgment and not a motion to set aside the
order of default since there was already a judgment by default.
On May 14, 2002, the CA rendered its Decision affirming the Decision and Order of the RTC [18] ruling that it
(CA) has jurisdiction since the petition raised a question of fact, that is, whether petitioner was properly served
with summons; that the judgment by default was not yet final and executory against petitioner since the
records reveal and the RTC Order dated January 3, 1996 confirmed that she was not furnished or served a
copy of the decision; that petitioner was validly served with summons since the
complaint for damages is an action in personam and only personal, not extraterritorial service, of
summons, within the forum, is essential for the acquisition of jurisdiction over her person; that petitioners
allegations that
she did not know what was being served upon her and that somebody just hurled papers at her were not
substantiated by competent evidence and cannot overcome the presumption of regularity of performance of
official functions in favor of the Officers Return.
Petitioner filed a Motion for Reconsideration [19] but the CA denied it in its Resolution dated October 1, 2002.[20]
Hence, the present petition anchored on the following grounds:

The first mode of appeal, governed by Rule 41, is taken to the Court of Appeals on questions of fact or
mixed questions of fact and law. The second mode of appeal, covered by Rule 42, is brought to the Court of
Appeals on questions of fact, of law, or mixed questions of fact and law. The third mode of appeal, provided
for by Rule 45, is elevated to the Supreme Court only on questions of law.
A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a
question of fact when the doubt arises as to the truth or falsity of the alleged facts. [24] For a question to be one
of law, the same must not involve an examination of the probative value of the evidence presented by the
litigants or any of them.[25] The resolution of the issue must rest solely on what the law provides on the given
set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question
posed is one of fact.[26] Thus, the test of whether a question is one of law or of fact is not the appellation given
to such question by the party raising the same; rather, it is whether the appellate court can
determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law;
otherwise it is a question of fact.[27]
Respondents claim that the issues raised by petitioner before the CA are pure legal questions is not tenable.
A scrutiny of petitioners petition before the CA reveals that it raised two issues: (a) the propriety of the service
effected on a non-resident; and (b) the validity of the service made upon her. The first is a question of
law. There is indeed a question as to what and how the law should be applied. The second is a question of
fact. The resolution of said issue entails a review of the factual circumstances that led the RTC to conclude
that service was validly effected upon petitioner. Therefore, petitioner properly brought the case to the CA via
the first mode of appeal under the aegis of Rule 41.

I
How may service of summons be effected on a non-resident?
THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING THAT PETITIONER WAS NOT VALIDLY
SERVED WITH SUMMONS.
II
THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING THAT PETITIONER WAS PREVENTED
FROM FILING RESPONSIVE PLEADING AND DEFENDING AGAINST RESPONDENTS COMPLAINT
BECAUSE OF FRAUD, ACCIDENT AND MISTAKE.[21]
Parties filed their respective Memoranda on September 8 and 9, 2005.
Petitioner argues that summons should have been served through extraterritorial service since she is a nonresident; that the RTC should have lifted the order of default since a default judgment is frowned upon and
parties should be given their day in court; that she was prevented from filing
a responsive pleading and defending against respondents complaint
through fraud, accident or mistake considering that the statement in the Officers Return that she
was personally served summons is inaccurate; that
she does not remember having been served with summons during the said date but remembers that a man
hurled some papers at her while she was entering the elevator and, not knowing what the papers were all
about, she threw back the papers to the man before the elevator closed; that she has a valid and meritorious
defense to refute the material allegations of respondents complaint.
On the other hand, respondents contend that petitioner was validly served with summons since the rules do
not require that service be made upon her at her place of residence as alleged in the complaint or stated in the
summons; that extraterritorial service applies only when the defendant does not reside and is not found in the
Philippines; that petitioner erred in filing a motion to set aside the order of default at the time when a default
judgment was already rendered by the RTC since the proper remedy is a motion for new trial or a petition for
relief from judgment under Rule 38; that the issue on summons is a pure question of law which the CA does
not have jurisdiction to resolve under Section 2 (c) of Rule 41 of the 1997 Rules of Civil Procedure. [22]
The Court finds it proper to resolve first whether the issue involved in the appeal filed with the CA is a question
of law and therefore not within the jurisdiction of the CA to resolve.
In Murillo v. Consul,[23] which was later adopted by the 1997 Rules of Civil Procedure, the Court clarified the
three modes of appeal from decisions of the RTC, namely: (a) ordinary appeal or appeal by writ of error, where
judgment was rendered in a civil or criminal action by the RTC in the exercise of original jurisdiction; (b)
petition for review, where judgment was
rendered by the RTC in the exercise of appellate jurisdiction; and (c) petition for review to the Supreme Court.

Section 17,[28] Rule 14 of the Rules of Court provides:

Section 17. Extraterritorial service When the defendant does not
reside and is not found in the Philippines and the action affects the
personal status of the plaintiff or relates to, or the subject of which, is
property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which relief demanded consists, wholly or in part, in excluding the
defendant from any interest therein, or the property of the defendant has been attached in the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service as under section
7; or by publication in a newspaper of general
circulation in such places and for such time as the court may order, in which case a copy of the summons and
order of the court shall be sent by registered mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant
must answer.
Under this provision, when the defendant is a nonresident and he is not found in the country, summons may
be served extraterritorially. There are only four instances when extraterritorial service of summons is proper,
namely: (a) when the action affects the personal status of the plaintiffs; (b) when the action relates to, or the
subject of which is property, within the Philippines, in which the defendant claims a lien or interest, actual or
contingent; (c) when the relief demanded in such action consists, wholly or in part, in excluding the defendant
from any interest in property located in the Philippines; and (d) when the defendants property has been
attached within the Philippines. In these instances, service of summons may be effected by (a) personal
service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any other manner
the court may deem sufficient.
Thus, extrajudicial service of summons apply only where the action is in rem, that is, an action against the
thing itself instead of against the person, or in an action quasi in rem, where an individual is named as
defendant and the purpose of the proceeding is to subject his interest therein to the obligation or loan
burdening the property. The rationale for this is that in in rem and quasi in rem actions, jurisdiction over the
person of the defendant is
not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res.[29]
Where the action is in personam, that is, one brought against a person
on the basis of her personal liability, jurisdiction over the person of the defendant is necessary for the
court to validly try and decide the case. When the defendant is a non-resident, personal service of summons
within the state is essential to the acquisition of jurisdiction over the person. [30] Summons on the defendant
must be served by handing a copy thereof to the defendant in person, or, if he refuses to receive it, by
tendering it to him.[31]This cannot be done, however, if the defendant is not physically present in the country,
and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the
case against him.[32]

In the present case, respondents cause of action in Civil Case No. Q-93-17133 is anchored on the claim that
petitioner and her co-defendants maliciously instituted a criminal complaint before the NBI and a petition
before the SEC which prevented the respondents from leaving the country and paralyzed the latters business
transactions. Respondents pray that actual and moral damages, plus attorneys fees, be awarded in their
favor. The action instituted by respondents affect the parties alone, not the whole world. Any judgment
therein is binding only upon the parties properly impleaded. [33] Thus, it is an action in personam. As such,
personal service of summons upon the defendants is essential in order for the court to acquire jurisdiction over
their persons.[34]

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals
are AFFIRMED.
Costs against petitioner.
SO ORDERED.

The Court notes that the complaint filed with the RTC alleged that petitioner is a non-resident who is not found
in the Philippines for which reason respondents initially prayed that a writ of preliminary attachment be issued
against her properties within the Philippines to confer jurisdiction upon the RTC. However, respondents did not
pursue its application for said writ when petitioner was subsequently found physically present in
the Philippines and personal service of summons was effected on her.

LEGASPI TOWERS 300, INC., LILIA MARQUINEZ

PALANCA, ROSANNA D. IMAI, GLORIA DOMINGO and RAY
VINCENT,
Petitioners,

Was there a valid service of summons on petitioner? The answer is in the affirmative.

- versus -

Petitioners bare allegation that the statement in the Officers Return that she was personally served
summons is inaccurate is not sufficient. A process servers certificate of service is prima facie evidence of the
facts as set out in the certificate.[35] Between the claim of non-receipt of summons by a party against the
assertion of an official whose duty is to send notices, the latter assertion is fortified by the presumption that
official duty has been regularly performed.[36] To overcome the presumption of regularity of performance of
official functions in favor of such Officers Return, the evidence against it must be clear and
convincing. Petitioner having been unable to come forward with the requisite quantum of proof to the contrary,
the presumption of regularity of performance on the part of the process server stands.

AMELIA P. MUER, SAMUEL M. TANCHOCO, ROMEO TANKIANG,

RUDEL PANGANIBAN, DOLORES AGBAYANI, ARLENEDAL A.
YASUMA, GODOFREDO M. CAGUIOA and EDGARDO M.
SALANDANAN,
Respondents.

G.R. No. 170783

Present:
PERALTA, J., Acting Chairperson,*
BERSAMIN,**
ABAD,
VILLARAMA, JR.,*** and
PERLAS-BERNABE, JJ.
Promulgated:
June 18, 2012

The Court need not make a long discussion on the propriety of the remedy adopted by petitioner in the RTC of
filing a motion to set aside the order of default at a time when there was already a judgment by default. As
aptly held by the CA, since petitioner was not furnished or served a copy of the judgment of default, there was
no notice yet of such judgment as against her. Thus, the remedy of filing a motion to set aside the order of
default in the RTC was proper.

x-----------------------------------------------------------------------------------------x

Petitioners argument that the RTC should have set aside the order of default and applied the liberal
interpretation of rules with a view of affording parties their day in court is not tenable. While indeed default
orders are not viewed with favor, the party seeking to have the order of default lifted must
first show that her failure to file an answer or any other responsive pleading was due to fraud, accident,
mistake, or excusable neglect and then she must show that she has a valid and meritorious defense. [37]

PERALTA, J.:

In this case, petitioner failed to show that her failure to file an answer was due to fraud, accident, mistake or
excusable neglect. Except for her bare unsupported allegation that the summons were only thrown to her at
the elevator, petitioner did not present any competent evidence to justify the setting aside of the order of
default.
Moreover, when a party files a motion to lift order of default, she must also show that she has a meritorious
defense or that something would be gained by having the order of default set aside. [38] The term meritorious
defense implies that the applicant has the burden of proving such a defense in order to have the judgment set
aside. The cases usually do not require such a strong showing. The test employed appears to be essentially
the same as used in considering summary judgment, that is, whether there is enough evidence to present
an issue for submission to the trier of fact, or a showing that on the undisputed facts it is not clear that the
judgment is warranted as a matter of law. [39] The defendant must show that she has a meritorious
defense otherwise the grant of her motion will prove to be a useless exercise. Thus, her motion must be
accompanied by a statement of the evidence which she intends to present if the motion is granted and
which is such as to warrant a reasonable belief that the result of the case would probably be otherwise
if a new trial is granted.[40]
In the present case, petitioner contented herself with stating in her affidavit of merit that the cases against
respondent Raymond were filed at the instance of her father.[41]Such allegation is a conclusion rather than a
statement of facts showing a meritorious defense. The affidavit failed to
controvert the facts alleged by the respondents. Petitioner has not shown
that she has a meritorious defense.
Thus, since petitioner failed to show that her failure file an answer was not due to fraud, accident,
mistake, or excusable neglect; and that she had a valid and meritorious defense, there is no merit to her
prayer for a liberal interpretation of procedural rules.

DECISION

This is a petition for review on certiorari of the Court of Appeals Decision[1] dated July 22, 2005 in CA-G.R. CV
No. 87684, and its Resolution[2] dated November 24, 2005, denying petitioners motion for reconsideration.
The Court of Appeals held that Judge Antonio I. De Castro of the Regional Trial Court (RTC) of Manila, Branch
3, did not commit grave abuse of discretion in issuing the Orders dated July 21, 2004 and September 24, 2004
in Civil Case No. 04-109655, denying petitioners Motion to Admit Second Amended Complaint.
The facts, as stated by the Court of Appeals, are as follows:
Pursuant to the by-laws of Legaspi Towers 300, Inc., petitioners Lilia Marquinez Palanca, Rosanna D. Imai,
Gloria Domingo and Ray Vincent, the incumbent Board of Directors, set the annual meeting of the members of
the condominium corporation and the election of the new Board of Directors for the years 2004-2005 on April
2, 2004 at 5:00 p.m. at the lobby of Legaspi Towers 300, Inc.
Out of a total number of 5,723 members who were entitled to vote, 1,358 were supposed to vote through their
respective proxies and their votes were critical in determining the existence of a quorum, which was at least
2,863 (50% plus 1). The Committee on Elections of Legaspi Towers 300, Inc., however, found most of the
proxy votes, at its face value, irregular, thus, questionable; and for lack of time to authenticate the same,
petitioners adjourned the meeting for lack of quorum.
However, the group of respondents challenged the adjournment of the meeting. Despite petitioners' insistence
that no quorum was obtained during the annual meeting held on April 2, 2004, respondents pushed through
with the scheduled election and were elected as the new Board of Directors and officers of Legaspi Towers
300, Inc.Subsequently, they submitted a General Information Sheet to the Securities and Exchange
Commission (SEC) with the following new set of officers: Amelia P. Muer, President; Samuel M. Tanchoco,
Internal Vice President; Romeo V. Tankiang, External Vice-President; Rudel H. Panganiban, Secretary;
Dolores B. Agbayani, Assistant Secretary; Arlenedal A. Yasuma, Treasurer; Godofredo M. Caguioa, Assistant
Treasurer; and Edgardo M. Salandanan, Internal Auditor.
On April 13, 2004, petitioners filed a Complaint for the Declaration of Nullity of Elections with Prayers for the
lssuance of Temporary Restraining Orders and Writ of Preliminary Injunction and Damages against
respondents with the RTC of Manila. Before respondents could file an Answer to the

original Complaint, petitioners filed anAmended Complaint, which was admitted by the RTC in an Order dated
April 14, 2004.
On April 20, 2004, before respondents could submit an Answer to the Amended
Complaint, petitioners again filed an Urgent Ex-Parte Motion to Admit Second Amended Complaint and for the
lssuance of Ex-Parte Temporary Restraining Order Effective only for Seventy-Two (72) Hours. It was stated in
the said pleading that the case was raffled to Branch 24, but Presiding Judge Antonio Eugenio, Jr. inhibited
himself from handling the case; and when the case was assigned to Branch 46, Presiding Judge Artemio S.
Tipon also inhibited himself from the case.
On April 21, 2004, Executive Judge Enrico A. Lanzanas of the RTC of Manila acted on the Motion for the
Issuance of an Ex Parte Temporary Restraining Order, and issued an Order disposing, thus:
WHEREFORE, pursuant to administrative Circular No. 20-95 of the Supreme Court, a seventy-two (72) hour
Temporary Restraining Order is hereby issued, enjoining defendants from taking over management, or to
maintain a status quo, in order to prevent further irreparable damages and prejudice to the corporation, as
day-to-day activities will be disrupted and will be paralyzed due to the legal controversy.[3]

On the same date, April 21, 2004, respondents filed their Answer [4] to the Amended Complaint, alleging that
the election on April 2, 2004 was lawfully conducted. Respondents cited the Report[5] of SEC Counsel Nicanor
P. Patricio, who was ordered by the SEC to attend the annual meeting of Legaspi Towers 300, Inc. on April 2,
2004. Atty. Patricio stated in his Report that at 5:40 p.m. of April 2, 2004, a representative of the Board of the
condominium corporation stated that the scheduled elections could not proceed because the Election
Committee was not able to validate the authenticity of the proxies prior to the election due to limited time
available as the submission was made only the day before. Atty. Patricio noted that the Board itself fixed the
deadline for submission of proxies at 5:00 p.m. of April 1, 2004. One holder of proxy stood up and questioned
the motives of the Board in postponing the elections. The Board objected to this and moved for a declaration
of adjournment. There was an objection to the adjournment, which was ignored by the Board. When the
Board adjourned the meeting despite the objections of the unit owners, the unit owners who objected to the
adjournment gathered themselves at the same place of the meeting and proceeded with the meeting. The
attendance was checked from among the members who stayed at the meeting. Proxies were counted and
recorded, and there was a declaration of a quorum out of a total of 5,721 votes, 2,938 were present either in
person or proxy. Thereafter, ballots were prepared, proxies were counterchecked with the number of votes
entitled to each unit owner, and then votes were cast. At about 9:30 p.m., canvassing started, and by 11:30
p.m., the newly-elected members of the Board of Directors for the years 2004-2005 were named.
Respondents contended that from the proceedings of the election reported by SEC representative, Atty.
Patricio, it was clear that the election held on April 2, 2004 was legitimate and lawful; thus, they prayed for the
dismissal of the complaint for lack cause of action against them.
This case was scheduled to be re-raffled to regular courts on April 22, 2004, and was assigned to Judge
Antonio I. De Castro of the RTC of Manila, Branch 3 (trial court).
On April 26, 2004, the trial court conducted a hearing on the injunction sought by petitioners, and issued an
Order clarifying that the TRO issued by Executive Judge Enrico A. Lanzanas, enjoining respondents from
taking over management, was not applicable as the current Board of Directors (respondents) had actually
assumed management of the corporation. The trial court stated that the status quo mentioned in the said TRO
shall mean that the current board of directors shall continue to manage the affairs of the condominium
corporation, but the court shall monitor all income earned and expenses incurred by the corporation. The trial
court stated:
Precisely this complaint seeks to annul the election of the Board due to alleged questionable proxy votes
which could not have produced a quorum. As such, there is nothing to enjoin and so injunction shall fail. As
an answer has been filed, the case is ripe for pre-trial and the parties are directed to file their pre-trial briefs
by May 3, 2004.
As plaintiffs second amended complaint is admitted by the Court, defendants are given up to May 3,
2004 to file a comment thereto. In the meantime, the banks and other persons & entities are advised to
recognize the Board headed by its president, Amelia Muer. All transactions made by the Board and its officers
for the corporation are considered legal for all intents and purposes. [6]

On May 3, 2004, respondents filed a Comment on the Motion to Amend Complaint, praying that the name of
Legaspi Towers 300, Inc., as party-plaintiff in the Second Amended Complaint, be deleted as the said inclusion
by petitioners was made without the authority of the current Board

of Directors, which had been recognized by the trial court in its Order dated April 26, 2004.
During the pre-trial conference held on July 21, 2004, the trial court resolved various incidents in the case and
other issues raised by the contending parties. One of the incidents acted upon by the trial court was
petitioners' motion to amend complaint to implead Legaspi Towers 300, Inc. as plaintiff, which motion was
denied with the issuance of two Orders both dated July 21, 2004. The first Order[7] held that the said motion
could not be admitted for being improper, thus:
xxxx
On plaintiffs motion to admit amended complaint (to include Legaspi Towers 300, Inc. as plaintiff), the Court
rules to deny the motion for being improper. (A separate Order of even date is issued.) As prayed for, movants
are given 10 days from today to file a motion for reconsideration thereof, while defendants are given 10 days
from receipt thereof to reply.[8]
The second separate Order,[9] also dated July 21, 2004, reads:
This resolves plaintiffs motion to amend complaint to include Legaspi Towers 300, Inc. as party-plaintiff and
defendants comment thereto. Finding no merit therein and for the reasons stated in the comment, the motion
is hereby DENIED.

Petitioners contend that the Court of Appeals erred in not finding that RTC Judge Antonio I. De Castro
committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying the admission of
the Second Amended Complaint in the Orders dated July 21, 2004 and September 24, 2004, despite the fact
that he had already ordered its admission in a previous Order dated April 26, 2004.
Petitioners contention is unmeritorious.
It is clear that in the Orders dated July 21, 2004, the trial court did not admit the Second Amended Complaint
wherein petitioners made the condominium corporation, Legaspi Towers 300, Inc., the party-plaintiff. In the
Order dated September 24, 2004, denying petitioners motion for reconsideration of the Orders dated July 21,
2004, the RTC explained its action, thus:
x x x The word admitted in the 3rd paragraph of the Order dated April 26, 2004 should read received for
which defendants were told to comment thereon as an answer has been filed. It was an oversight of the
clerical error in said Order.
The Order of July 21, 2004 states amended complaint in the 3 rd paragraph thereof and so it does not refer to
the second amended complaint. The amended complaint was admitted by the court of origin Br. 24 in its
Order of April 14, 2004 as there was no responsive pleading yet.
Nonetheless, admission of the second amended complaint is improper. Why should Legaspi Towers 300, Inc.
x x x be included as party-plaintiff when defendants are members thereof too like plaintiffs. Both parties
are deemed to be acting in their personal capacities as they both claim to be the lawful board of directors.
The motion for reconsideration for the admission of the second amended complaint is hereby DENIED. [12]

Petitioners filed a Motion for Reconsideration of the Orders dated July 21, 2004. In the Order[10] dated
September 24, 2004, the trial court denied the motion for reconsideration for lack of merit.
Petitioners filed a petition for certiorari with the Court of Appeals alleging that the trial court gravely abused its
discretion amounting to lack or excess of jurisdiction in issuing the Orders dated July 21, 2004 and September
24, 2004, and praying that judgment be rendered annulling the said Orders and directing RTC Judge De
Castro to admit their Second Amended Complaint.
In a Decision dated July 22, 2005, the Court of Appeals dismissed the petition for lack of merit. It held that
RTC Judge De Castro did not commit grave abuse of discretion in denying petitioners' Motion To Admit
Second Amended Complaint.
The Court of Appeals stated that petitioners complaint sought to nullify the election of the Board of Directors
held on April 2, 2004, and to protect and enforce their individual right to vote. The appellate court held that as
the right to vote is a personal right of a stockholder of a corporation, such right can only be enforced through a
direct action; hence, Legaspi Towers 300, Inc. cannot be impleaded as plaintiff in this case.
Petitioners motion for reconsideration was denied by the Court of Appeals in a Resolution dated November
24, 2005.
Petitioners filed this petition raising the following issues:
I
THE HONORABLE COURT OF APPEALS ERRED IN RESOLVING THAT PUBLIC RESPONDENTAPPELLEE DID NOT COMMIT ANY WHIMSICAL, ARBITRARY AND OPPRESSIVE EXERCISE OF
JUDICIAL AUTHORITY WHEN THE LATTER REVERSED HIS EARLIER RULING ALREADY ADMITTING
THE SECOND AMENDED COMPLAINT OF PETITIONERS-APPELLANTS.
II
THERE IS NO LEGAL BASIS FOR THE HONORABLE COURT OF APPEALS TO RESOLVE THAT
PETITIONERS-APPELLANTS HAVE NO RIGHT AS BOARD OF DIRECTORS TO BRING AN ACTION IN
BEHALF OF LEGASPI TOWERS 300, INC.

The courts have the inherent power to amend and control their processes and orders so as to make them
conformable to law and justice.[13] A judge has an inherent right, while his judgment is still under his control, to
correct errors, mistakes, or injustices.[14]
Next, petitioners state that the Court of Appeals seems to be under the impression that the action instituted by
them is one brought forth solely by way of a derivative suit. They clarified that the inclusion of Legaspi Towers
300, Inc. as a party-plaintiff in the Second Amended Complaint was, first and foremost, intended as a direct
action by the corporation acting through them (petitioners) as the reconstituted Board of Directors of Legaspi
Towers 300, Inc. Petitioners allege that their act of including the corporation as party-plaintiff is consistent with
their position that the election conducted by respondents was invalid; hence, petitioners, under their by-laws,
could reconstitute themselves as the Board of Directors of Legaspi Towers 300, Inc. in a hold-over capacity for
the succeeding term. By so doing, petitioners had the right as the rightful Board of Directors to bring the action
in representation of Legaspi Towers 300, Inc. Thus, the Second Amended Complaint was intended by the
petitioners as a direct suit by the corporation joined in by the petitioners to protect and enforce their common
rights.
Petitioners contend that Legaspi Towers 300, Inc. is a real party-in- interest as it stands to be affected the
most by the controversy, because it involves the determination of whether or not the corporations by-laws was
properly carried out in the meeting held on April 2, 2004, when despite the adjournment of the meeting for lack
of quorum, the elections were still conducted. Although petitioners admit that the action involves their right to
vote, they argue that it also involves the right of the condominium corporation to be managed and run by the
duly-elected Board of Directors, and to seek redress against those who wrongfully occupy positions of the
corporation and who may mismanage the corporation.
Petitioners argument is unmeritorious.
The Court notes that in the Amended Complaint, petitioners as plaintiffs stated that they are the incumbent
reconstituted Board of Directors of Legaspi Towers 300, Inc., and that defendants, herein respondents, are the
newly-elected members of the Board of Directors; while in the Second Amended Complaint, the plaintiff is
Legaspi Towers 300, Inc., represented by petitioners as the allegedly incumbent reconstituted Board of
Directors of Legaspi Towers 300, Inc.
The Second Amended Complaint states who the plaintiffs are, thus:

III
THERE IS NO LEGAL BASIS FOR THE HONORABLE COURT OF APPEALS TO RESOLVE THAT THE
ELECTIONS CONDUCTED IN LEGASPI TOWERS 300, INC. FOR THE PERIOD OF 2005 TO 2006 HAVE
RENDERED THE ISSUE IN CIVIL CASE NO. 04-10655 MOOT AND ACADEMIC. [11]

1.
That the plaintiffs are: LEGASPI TOWERS 300, INC., non-stock corporation xxx duly represented by
the incumbent reconstituted Board of Directors of Legaspi Towers 300, Inc., namely: ELIADORA FE
BOTE VERA xxx, as President; BRUNO C. HAMAN xxx, as Director; LILY MARQUINEZ PALANCA xxx, as
Secretary; ROSANNA DAVID IMAI xxx, as Treasurer; and members of the Board of Directors, namely:
ELIZABETH GUERRERO xxx, GLORIA DOMINGO xxx, and RAY VINCENT.[15]

The Court agrees with the Court of Appeals that the Second Amended Complaint is meant to be a derivative
suit filed by petitioners in behalf of the corporation. The Court of Appeals stated in its Decision that petitioners
justified the inclusion of Legaspi Towers 300, Inc. as plaintiff in Civil Case No. 0410655 by invoking the
doctrine of derivative suit, as petitioners specifically argued, thus:
xxxx
x x x [T]he sudden takeover by private respondents of the management of Legaspi Towers 300, Inc. has only
proven the rightfulness of petitioners move to include Legaspi Towers 300, Inc. as party-plaintiff. This is
because every resolution passed by private respondents sitting as a board result[s] in violation of Legaspi
Towers 300, Inc.s right to be managed and represented by herein petitioners.
In short, the amendment of the complaint [to include] Legaspi Towers 300, Inc. was done in order to protect
the interest and enforce the right of the Legaspi [Towers 300,] Inc. to be administered and managed [by
petitioners] as the duly constituted Board of Directors. This is no different from and may in fact be
considered as a DERIVATIVE SUIT instituted by an individual stockholder against those controlling the
corporation but is being instituted in the name of and for the benefit of the corporation whose right/s
are being violated.[16]
Is a derivative suit proper in this case?

c)
the cause of action actually devolves on the corporation, the wrongdoing or harm having been, or being
caused to the corporation and not to the particular stockholder bringing the suit.[21]
In this case, petitioners, as members of the Board of Directors of the condominium
corporation before the election in question, filed a complaint against the newly-elected members of the Board
of Directors for the years 2004-2005, questioning the validity of the election held on April 2, 2004, as it was
allegedly marred by lack of quorum, and praying for the nullification of the said election.
As stated by the Court of Appeals, petitioners complaint seek to nullify the said election, and to protect and
enforce their individual right to vote. Petitioners seek the nullification of the election of the Board of Directors
for the years 2004-2005, composed of herein respondents, who pushed through with the election even if
petitioners had adjourned the meeting allegedly due to lack of quorum. Petitioners are the injured party,
whose rights to vote and to be voted upon were directly affected by the election of the new set of board of
directors. The party-in-interest are the petitioners as stockholders, who wield such right to vote. The cause of
action devolves on petitioners, not the condominium corporation, which did not have the right to vote. Hence,
the complaint for nullification of the election is a direct action by petitioners, who were the members of the
Board of Directors of the corporation before the election, against respondents, who are the newly-elected
Board of Directors. Under the circumstances, the derivative suit filed by petitioners in behalf of the
condominium corporation in the Second Amended Complaint is improper.
The stockholders right to file a derivative suit is not based on any express provision of The Corporation Code,
but is impliedly recognized when the law makes corporate directors or officers liable for damages suffered by
the corporation and its stockholders for violation of their fiduciary duties, [22] which is not the issue in this case.

Cua, Jr. v. Tan[17] differentiates a derivative suit and an individual/class suit as follows:
A derivative suit must be differentiated from individual and representative or class suits, thus:
Suits by stockholders or members of a corporation based on wrongful or fraudulent acts of directors or other
persons may be classified into individual suits, class suits, and derivative suits. Where a stockholder or
member is denied the right of inspection, his suit would be individual because the wrong is done to
him personally and not to the other stockholders or the corporation. Where the wrong is done to a
group of stockholders, as where preferred stockholders' rights are violated, a class or representative
suit will be proper for the protection of all stockholders belonging to the same group. But where
the acts complained of constitute a wrong to the corporation itself, the cause of action belongs to the
corporation and not to the individual stockholder or member. Although in most every case of wrong to the
corporation, each stockholder is necessarily affected because the value of his interest therein would be
impaired, this fact of itself is not sufficient to give him an individual cause of action since the corporation is a
person distinct and separate from him, and can and should itself sue the wrongdoer. Otherwise, not only would
the theory of separate entity be violated, but there would be multiplicity of suits as well as a violation of the
priority rights of creditors. Furthermore, there is the difficulty of determining the amount of damages that
should be paid to each individual stockholder.
However, in cases of mismanagement where the wrongful acts are committed by the directors or
trustees themselves, a stockholder or member may find that he has no redress because the former
are vested by law with the right to decide whether or not the corporation should sue, and they will never be
willing to sue themselves. The corporation would thus be helpless to seek remedy. Because of the frequent
occurrence of such a situation, the common law gradually recognized the right of a stockholder to sue
on behalf of a corporation in what eventually became known as a "derivative suit." It has been proven to
be an effective remedy of the minority against the abuses of management. Thus, an individual stockholder
is permitted to institute a derivative suit on behalf of the corporation wherein he holds stock in order
to protect or vindicate corporate rights, whenever officials of the corporation refuse to sue or are the
ones to be sued or hold the control of the corporation. In such actions, the suing stockholder is
regarded as the nominal party, with the corporation as the party-in- interest.[18]

Further, petitioners change of argument before this Court, asserting that the Second Amended Complaint is a
direct action filed by the corporation, represented by the petitioners as the incumbent Board of Directors, is an
afterthought, and lacks merit, considering that the newly-elected Board of Directors had assumed their
function to manage corporate affairs. [23]
In fine, the Court of Appeals correctly upheld the Orders of the trial court dated July 21, 2004 and September
24, 2004 denying petitioners Motion to Admit Second Amended Complaint.
Lastly, petitioners contend that the Court of Appeals erred in resolving that the recent elections conducted
by Legaspi Towers, 300, Inc. have rendered the issue raised viathe special civil action for certiorari before the
appellate court moot and academic.
The Court of Appeals, in its Resolution dated November 24, 2005, stated:
x x x [T]he election of the corporations new set of directors for the years 2005-2006 has, finally, rendered the
petition at bench moot and academic. As correctly argued by private respondents, the nullification of the
orders assailed by petitioners would, therefore, be of little or no practical and legal purpose. [24]
The statement of the Court of Appeals is correct.
Petitioners question the validity of the election of the Board of Directors for the years 2004-2005, which
election they seek to nullify in Civil Case No. 04-109655. However, the valid election of a new set of Board of
Directors for the years 2005-2006 would, indeed, render this petition moot and academic.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 87684, dated
July 22, 2005, and its Resolution dated November 24, 2005 are AFFIRMED.
Costs against petitioners.

Since it is the corporation that is the real party-in-interest in a derivative suit, then the reliefs prayed for must
be for the benefit or interest of the corporation.[19] When the reliefs prayed for do not pertain to the corporation,
then it is an improper derivative suit. [20]
The requisites for a derivative suit are as follows:
a) the party bringing suit should be a shareholder as of the time of the act or transaction complained of, the
number of his shares not being material;
b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand on the board of directors for the
appropriate relief but the latter has failed or refused to heed his plea; and

SO ORDERED.

JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC.,

ANDRES C. BAUTISTA, BRIGIDO DIMACULANGAN, DOLORES P.
PRADO, IMELDA DE LA CRUZ, EDITHA C. DY, FLORENCIA M.
MERCADO, LEOVINO C. DATARIO, AIDA
A. ABAYON, NAPOLEON M. DIMAANO, ROSITA G. ESTIGOY and
NELSON A. LOYOLA,
Petitioners,

G.R. No. 152272

The complaint alleged that JCHA, et al. were regular commuters and motorists who constantly travelled
towards the direction of Manila and Calamba; that they used the entry and exit toll gates of South Luzon
Expressway (SLEX) by passing through right-of-way public road known as La Paz Road; that they had been
using La Paz Road for more than ten (10) years; that in August 1998, Fil-estate excavated, broke and
deliberately ruined La Paz Road that led to SLEX so JCHA, et al. would not be able to pass through the said
road; that La Paz Road was restored by the residents to make it passable but Fil-estate excavated the road
again; that JCHA reported the matter to the Municipal Government and the Office of the Municipal Engineer
but the latter failed to repair the road to make it passable and safe to motorists and pedestrians; that the act of
Fil-estate in excavating La Paz Road caused damage, prejudice, inconvenience, annoyance, and loss of
precious hours to them, to the commuters and motorists because traffic was re-routed to narrow streets that
caused terrible traffic congestion and hazard; and that its permanent closure would not only prejudice their
right to free and unhampered use of the property but would also cause great damage and irreparable injury.

- versus FIL-ESTATE LAND, INC.,

FIL ESTATE ECOCENTRUM CORPORATION, LA PAZHOUSING
AND DEVELOPMENT CORPORATION, WARBIRD SECURITY
AGENCY,
ENRIQUE RIVILLA,
MICHAEL E. JETHMAL
and MICHAEL ALUNAN,
Respondents.
x-------------------------------------------x
FIL-ESTATE LAND, INC.,
FIL ESTATE ECOCENTRUM CORPORATION, LA PAZHOUSING
AND DEVELOPMENT CORPORATION, WARBIRD SECURITY
AGENCY, ENRIQUE RIVILLA, MICHAEL E. JETHMAL and
MICHAEL ALUNAN,
Petitioners,
- versus JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC.,
ANDRES C. BAUTISTA, BRIGIDO DIMACULANGAN, DOLORES P.
PRADO, IMELDA DE LA CRUZ, EDITHA C. DY, FLORENCIA M.
MERCADO, LEOVINO C. DATARIO, AIDA
A. ABAYON, NAPOLEON M. DIMAANO, ROSITA G. ESTIGOY and
NELSON A. LOYOLA,
Respondents.

La Paz Road, against Fil-Estate Land, Inc. (Fil-Estate), Fil-estate Ecocentrum Corporation (FEEC), La Paz
Housing & Development Corporation (La Paz), and Warbird Security Agency and their respective
officers (collectively referred as Fil-Estate, et al.).

Accordingly, JCHA, et al. also prayed for the immediate issuance of a Temporary Restraining Order (TRO) or a
writ of preliminary injunction (WPI) to enjoin Fil-Estate, et al. from stopping and intimidating them in their use
of La Paz Road.
On February 10, 1999, a TRO was issued ordering Fil-Estate, et al, for a period of twenty (20) days, to stop
preventing, coercing, intimidating or harassing the commuters and motorists from using the La Paz Road. [6]
Subsequently, the RTC conducted several hearings to determine the propriety of the issuance of a WPI.
G. R. No. 152397
Present:
VELASCO, JR., J., Chairperson,
PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.

On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss [7] arguing that the complaint failed to state a
cause of action and that it was improperly filed as a class suit. On March 5, 1999, JCHA, et al. filed their
comment[8] on the motion to dismiss to which respondents filed a reply.[9]
On March 3, 1999, the RTC issued an Order [10] granting the WPI and required JCHA, et al. to post a bond.
On March 19, 1999, Fil-Estate, et al. filed a motion for reconsideration [11] arguing, among others, that JCHA, et
al. failed to satisfy the requirements for the issuance of a WPI. On March 23, 1999, JCHA, et al. filed their
opposition to the motion.[12]
The RTC then issued its June 16, 2000 Omnibus Order, denying both the motion to dismiss and the motion for
reconsideration filed by Fil-Estate, et al.
Not satisfied, Fil-Estate, et al. filed a petition for certiorari and prohibition before the CA to annul (1) the Order
dated March 3, 1999 and (2) the Omnibus Order dated June 16, 2000. They contended that the complaint
failed to state a cause of action and that it was improperly filed as a class suit. With regard to the issuance of
the WPI, the defendants averred that JCHA, et al. failed to show that they had a clear and unmistakable right
to the use of La Paz Road; and further claimed that La Paz Road was a torrens registered private road and
there was neither a voluntary nor legal easement constituted over it. [13]

Promulgated:
March 5, 2012

On July 31, 2001, the CA rendered the decision partially granting the petition, the dispositive portion of which
reads:

X -------------------------------------------------------------------------------------- X
DECISION

WHEREFORE, the petition is hereby partially GRANTED. The Order dated March 3, 1999 granting the writ of
preliminary injunction is hereby ANNULLED and SET ASIDE but the portion of the Omnibus Order dated June
16, 2000 denying the motion to dismiss is upheld.

MENDOZA, J.:

SO ORDERED.[14]

Before the Court are two (2) consolidated petitions assailing the July 31, 2001 Decision [1] and February 21,
2002 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 60543, which annulled and set aside the
March 3, 1999 Order[3] of the Regional Trial Court, Branch 25, Bian, Laguna (RTC), granting the application
for the issuance of a writ of preliminary injunction, and upheld the June 16, 2000 Omnibus Order [4] denying the
motion to dismiss.
The Facts:
On January 20, 1999, Juana Complex I Homeowners Association, Inc. (JCHA), together with individual
residents of Juana Complex I and other neighboring subdivisions(collectively referred as JCHA, et.
al.), instituted a complaint[5] for damages, in its own behalf and as a class suit representing the regular
commuters and motorists of Juana Complex I and neighboring subdivisions who were deprived of the use of

The CA ruled that the complaint sufficiently stated a cause of action when JCHA, et al. alleged in their
complaint that they had been using La Paz Road for more than ten (10) years and that their right was violated
when Fil-Estate closed and excavated the road. It sustained the RTC ruling that the complaint was properly
filed as a class suit as it was shown that the case was of common interest and that the individuals sought to be
represented were so numerous that it was impractical to include all of them as parties. The CA, however,
annulled the WPI for failure of JCHA, et al. to prove their clear and present right over La Paz Road. The CA
ordered the remand of the case to the RTC for a full-blown trial on the merits.
Hence, these petitions for review.
In G.R. No. 152272, JCHA, et al. come to this Court, raising the following issues:

(A)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT A FULL-BLOWN TRIAL ON THE MERITS
IS REQUIRED TO DETERMINE THE NATURE OF THE LA PAZ ROAD, HAD DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF
THE POWER OF SUPERVISION.
(B)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT THE PETITIONERS FAILED TO SATISFY
THE REQUIREMENTS FOR THE ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION, HAD DECIDED
NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT.[15]

Fil-Estate, et al., however, insist that the complaint did not sufficiently contain the ultimate facts to show a
cause of action. They aver the bare allegation that one is entitled to something is an allegation of a conclusion
which adds nothing to the pleading.
They likewise argue that the complaint was improperly filed as a class suit for it failed to show that JCHA, et al.
and the commuters and motorists they are representing have a well-defined community of interest over La Paz
Road. They claim that the excavation of La Paz Road would not necessarily give rise to a common right or
cause of action for JCHA, et al. against them since each of them has a separate and distinct purpose and
each may be affected differently than the others.
The Courts Ruling
The issues for the Courts resolution are: (1) whether or not the complaint states a cause of action; (2)
whether the complaint has been properly filed as a class suit; and (2) whether or not a WPI is warranted.

In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor their petition on the following issues:
I.
The Court of Appeals declaration that respondents Complaint states a cause of action is contrary to
existing law and jurisprudence.
II.
The Court of Appeals pronouncement that respondents complaint was properly filed as a class suit is
contrary to existing law and jurisprudence.
III.
The Court of Appeals conclusion that full blown trial on the merits is required to determine the nature
of the La Paz Road is contrary to existing laws and jurisprudence.[16]
JCHA, et al. concur with the CA that the complaint sufficiently stated a cause of action. They, however,
disagree with the CAs pronouncement that a full-blown trial on the merits was necessary. They claim that
during the hearing on the application of the writ of injunction, they had sufficiently proven that La Paz Road
was a public road and that commuters and motorists of their neighboring villages had used this road as their
means of access to the San Agustin Church, Colegio De San Agustin and to SLEX in going to Metro Manila
and to Southern Tagalog particularly during the rush hours when traffic at Carmona Entry/Exit and Susana
Heights Entry/Exit was at its worst.
JCHA, et al. argue that La Paz Road has attained the status and character of a public road or burdened by an
apparent easement of public right of way. They point out thatLa Paz Road is the widest road in the
neighborhood used by motorists in going to Halang Road and in entering the SLEX-Halang toll gate and that
there is no other road as wide as La Paz Road existing in the vicinity. For residents of San Pedro, Laguna, the
shortest, convenient and safe route towards SLEX Halang is along Rosario Avenue joining La Paz Road.
Finally, JCHA, et al. argue that the CA erred when it voided the WPI because the public nature of La Paz Road
had been sufficiently proven and, as residents of San Pedro and Bian, Laguna, their right to use La Paz
Road is undeniable.
In their Memorandum,[17] Fil-Estate, et al. explain that La Paz Road is included in the parcels of land covered
by Transfer Certificates of Title (TCT) Nos. T-120008, T-90321 and T-90607, all registered in the name of La
Paz. The purpose of constructing La Paz Road was to provide a passageway for La Paz to its intended
projects to the south, one of which was the Juana Complex I. When Juana Complex I was completed, La Paz
donated the open spaces, drainage, canal, and lighting facilities inside the Juana Complex I to the Municipality
of Bian. The streets within the subdivisions were then converted to public roads and were opened for use of
the general public. The La Paz Road, not being part of the Juana Complex I, was excluded from the donation.
Subsequently, La Paz became a shareholder of FEEC, a consortium formed to develop several real properties
in Bian, Laguna, known as Ecocentrum Project. In exchange for shares of stock, La Paz contributed some of
its real properties to the Municipality of Bian, including the properties constituting La Paz Road, to form part
of the Ecocentrum Project.
Fil-Estate, et al. agree with the CA that the annulment of the WPI was proper since JCHA, et al. failed to prove
that they have a clear right over La Paz Road. Fil-Estate, et al. assert that JCHA, et al. failed to prove the
existence of a right of way or a right to pass over La Paz Road and that the closure of the said road
constituted an injury to such right. According to them, La Paz Road is a torrens registered private road and
there is neither a voluntary nor legal easement constituted over it. They claim that La Paz Road is a private
property registered under the name of La Paz and the beneficial ownership thereof was transferred to FEEC
when La Paz joined the consortium for the Ecocentrum Project.

Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or omission by which a party
violates the right of another. A complaint states a cause of action when it contains three (3) essential elements
of a cause of action, namely:
(1)
(2)
(3)

the legal right of the plaintiff,

the correlative obligation of the defendant, and
the act or omission of the defendant in violation of said legal right. [18]

The question of whether the complaint states a cause of action is determined by its averments regarding the
acts committed by the defendant.[19] Thus, it must contain a concise statement of the ultimate or essential
facts constituting the plaintiffs cause of action.[20] To be taken into account are only the material allegations in
the complaint; extraneous facts and circumstances or other matters aliunde are not considered.[21]
The test of sufficiency of facts alleged in the complaint as constituting a cause of action is whether or not
admitting the facts alleged, the court could render a valid verdict in accordance with the prayer of said
complaint.[22] Stated differently, if the allegations in the complaint furnish sufficient basis by which the complaint
can be maintained, the same should not be dismissed regardless of the defense that may be asserted by the
defendant.[23]
In the present case, the Court finds the allegations in the complaint sufficient to establish a cause of
action. First, JCHA, et al.s averments in the complaint show a demandable right over La Paz Road. These
are: (1) their right to use the road on the basis of their allegation that they had been using the road for more
than 10 years; and (2) an easement of a right of way has been constituted over the said roads. There is no
other road as wide as La Paz Road existing in the vicinity and it is the shortest, convenient and safe route
towards SLEX Halang that the commuters and motorists may use. Second, there is an alleged violation of
such right committed by Fil-Estate, et al. when they excavated the road and prevented the commuters and
motorists from using the same. Third, JCHA, et al. consequently suffered injury and that a valid judgment
could have been rendered in accordance with the relief sought therein.
With respect to the issue that the case was improperly instituted as a class suit, the Court finds the opposition
without merit.
Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:
Sec. 12. Class suit. When the subject matter of the controversy is one of common or general interest to
many persons so numerous that it is impracticable to join all as parties, a number of them which the court finds
to be sufficiently numerous and representative as to fully protect the interests of all concerned may sue or
defend for the benefit of all. Any party in interest shall have the right to intervene to protect his individual
interest.
The necessary elements for the maintenance of a class suit are: 1) the subject matter of controversy is one of
common or general interest to many persons; 2) the parties affected are so numerous that it is impracticable to
bring them all to court; and 3) the parties bringing the class suit are sufficiently numerous or representative of
the class and can fully protect the interests of all concerned. [24]
In this case, the suit is clearly one that benefits all commuters and motorists who use La Paz Road. As
succinctly stated by the CA:
The subject matter of the instant case, i.e., the closure and excavation of the La Paz Road, is initially shown to
be of common or general interest to many persons. The records reveal that numerous individuals have filed
manifestations with the lower court, conveying their intention to join private respondents in the suit and
claiming that they are similarly situated with private respondents for they were also prejudiced by the acts of
petitioners in closing and excavating the La Paz Road. Moreover, the individuals sought to be represented by
private respondents in the suit are so numerous that it is impracticable to join them all as parties and be

named individually as plaintiffs in the complaint. These individuals claim to be residents of various barangays
ATTY. SYLVIA BANDA, CONSORICIA O. PENSON, RADITO V.
in Bian, Laguna and other barangays in San Pedro, Laguna.
PADRIGANO, JEAN R. DE MESA, LEAH P. DELA CRUZ, ANDY V.
MACASAQUIT, SENEN B. CORDOBA, ALBERT BRILLANTES,
Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the Rules of Court lays down the rules
GLORIA
for BISDA, JOVITA V. CONCEPCION, TERESITA G.
the issuance thereof. Thus:
CARVAJAL, ROSANNA T. MALIWANAG, RICHARD ODERON,
CECILIA ESTERNON, BENEDICTO CABRAL, MA. VICTORIA E.
(a)
That the applicant is entitled to the relief demanded, and the whole or part of such relief consists
LAROCO,
in
CESAR ANDRA, FELICISIMO GALACIO, ELSA R.
restraining the commission or continuance of the acts complained of, or in the performance of an act or
CALMA,
acts, FILOMENA A. GALANG, JEAN PAUL MELEGRITO,
either for a limited period or perpetually;
CLARO G. SANTIAGO, JR., EDUARDO FRIAS, REYNALDO O.
ANDAL, NEPHTALIE IMPERIO, RUEL BALAGTAS, VICTOR R.
(b)
That the commission, continuance or non-performance of the act or acts complained of during ORTIZ,
the
FRANCISCO P. REYES, JR., ELISEO M. BALAGOT, JR.,
litigation would probably work injustice to the applicant; or
JOSE C. MONSALVE, JR., ARTURO ADSUARA, F.C. LADRERO,
JR., NELSON PADUA, MARCELA C. SAYAO, ANGELITO
MALAKAS, GLORIA RAMENTO, JULIANA SUPLEO, MANUEL
(c)
That a party, court, or agency or a person is doing, threatening, or attempting to do, or is procuring
MENDRIQUE,
or
E. TAYLAN, CARMELA BOBIS, DANILO VARGAS,
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting theROY-LEO
subject C. PABLO, ALLAN VILLANUEVA, VICENTE R.
of the action or proceeding, and tending to render the judgment ineffectual.
VELASCO, JR., IMELDA ERENO, FLORIZA M. CATIIS, RANIEL R.
BASCO, E. JALIJALI, MARIO C. CARAAN, DOLORES M. AVIADO,
A writ of preliminary injunction is available to prevent a threatened or continuous irremediable injury toMICHAEL
parties P. LAPLANA, GUILLERMO G. SORIANO, ALICE E.
before their claims can be thoroughly studied and adjudicated. [25] The requisites for its issuance are: (1)
SOJO,
the ARTHUR G. NARNE, LETICIA SORIANO, FEDERICO
existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity
RAMOS, JR., PETERSON CAAMPUED, RODELIO L. GOMEZ,
for the writ to prevent serious damage. [26] For the writ to issue, the right sought to be protected must beANTONIO
a
D. GARCIA, JR., ANTONIO GALO, A. SANCHEZ, SOL E.
present right, a legal right which must be shown to be clear and positive. [27] This means that the persons
TAMAYO, JOSEPHINE A.M. COCJIN, DAMIAN QUINTO, JR.,
applying for the writ must show that they have an ostensible right to the final relief prayed for in their EDLYN MARIANO, M.A. MALANUM, ALFREDO S. ESTRELLA, and
complaint.[28]
JESUS MEL SAYO,
In the case at bench, JCHA, et al. failed to establish a prima facie proof of violation of their right to justify the
issuance of a WPI. Their right to the use of La Paz Road is disputable since they have no clear legal right
therein. As correctly ruled by the CA:
Here, contrary to the ruling of respondent Judge, private respondents failed to prove as yet that they have a
clear and unmistakable right over the La Paz Road which was sought to be protected by the injunctive writ.
They merely anchor their purported right over the La Paz Road on the bare allegation that they have been
using the same as public road right-of-way for more than ten years. A mere allegation does not meet the
standard of proof that would warrant the issuance of the injunctive writ. Failure to establish the existence of a
clear right which should be judicially protected through the writ of injunction is a sufficient ground for denying
the injunction.
EDUARDO R. ERMITA, in his capacity as Executive Secretary,THE
Consequently, the case should be further heard by the RTC so that the parties can fully prove their respective
DIRECTOR GENERAL OF THE PHILIPPINE INFORMATION
positions on the issues.
andTHE NATIONAL TREASURER,
Due process considerations dictate that the assailed injunctive writ is not a judgment on the merits but merely
Respondents.
an order for the grant of a provisional and ancillary remedy to preserve the status quo until the merits of
the
case can be heard. The hearing on the application for issuance of a writ of preliminary injunction is separate
[29]
and distinct from the trial on the merits of the main case.
The evidence submitted during the hearing of the
incident is not conclusive or complete for only a "sampling" is needed to give the trial court an idea of the
justification for the preliminary injunction pending the decision of the case on the merits. [30] There are vital facts
that have yet to be presented during the trial which may not be obtained or presented during the hearing on
the application for the injunctive writ. [31] Moreover, the quantum of evidence required for one is different from
that for the other.[32]
WHEREFORE, the petitions are DENIED. Accordingly, the July 31, 2001 Decision and February 21,
2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60543 are AFFIRMED.
SO ORDERED.

G.R. No. 166620

April 20, 2010

Present:

PUNO, C.J.,
CARPIO,
CORONA,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,

x--------------------------------------------------x

DEL CASTILLO,
ABAD,*

DECISION

VILLARAMA, JR.,
PEREZ, and
MENDOZA, JJ.

LEONARDO-DE CASTRO, J.:

The present controversy arose from a Petition for Certiorari and prohibition challenging the
constitutionality of Executive Order No. 378 dated October 25, 2004, issued by President Gloria Macapagal
Arroyo (President Arroyo). Petitioners characterize their action as a class suit filed on their own behalf and on
behalf of all their co-employees at the National Printing Office (NPO).

The NPO was formed on July 25, 1987, during the term of former President Corazon C. Aquino (President
Aquino), by virtue of Executive Order No. 285 [1] which provided, among others, the creation of the NPO from
the merger of the Government Printing Office and the relevant printing units of the Philippine Information
Agency (PIA). Section 6 of Executive Order No. 285 reads:

Promulgated:

SECTION 6. Creation of the National Printing Office. There is hereby created a National Printing Office
out of the merger of the Government Printing Office and the relevant printing units of the Philippine Information
Agency. The Office shall have exclusive printing jurisdiction over the following:

a.
Printing, binding and distribution of all standard and accountable forms of national, provincial, city and
municipal governments, including government corporations;

b.

Printing of officials ballots;

c.
Printing of public documents such as the Official Gazette, General Appropriations Act, Philippine
Reports, and development information materials of the Philippine Information Agency.

The Office may also accept other government printing jobs, including government publications, aside from
those enumerated above, but not in an exclusive basis.

Pursuant to Executive Order No. 378, government agencies and instrumentalities are allowed to source their
printing services from the private sector through competitive bidding, subject to the condition that the services
offered by the private supplier be of superior quality and lower in cost compared to what was offered by the
NPO. Executive Order No. 378 also limited NPOs appropriation in the General Appropriations Act to its
income.

Perceiving Executive Order No. 378 as a threat to their security of tenure as employees of the NPO,
petitioners now challenge its constitutionality, contending that: (1) it is beyond the executive powers of
President Arroyo to amend or repeal Executive Order No. 285 issued by former President Aquino when the
latter still exercised legislative powers; and (2) Executive Order No. 378 violates petitioners security of tenure,
because it paves the way for the gradual abolition of the NPO.

We dismiss the petition.

The details of the organization, powers, functions, authorities, and related management aspects of the Office
shall be provided in the implementing details which shall be prepared and promulgated in accordance with
Section II of this Executive Order.

The Office shall be attached to the Philippine Information Agency.

On October 25, 2004, President Arroyo issued the herein assailed Executive Order No. 378, amending
Section 6 of Executive Order No. 285 by, inter alia, removing the exclusive jurisdiction of the NPO over the
printing services requirements of government agencies and instrumentalities. The pertinent portions of
Executive Order No. 378, in turn, provide:

SECTION 1. The NPO shall continue to provide printing services to government agencies and
instrumentalities as mandated by law. However, it shall no longer enjoy exclusive jurisdiction over the
printing services requirements of the government over standard and accountable forms. It shall have
to compete with the private sector, except in the printing of election paraphernalia which could be
shared with the Bangko Sentral ng Pilipinas, upon the discretion of the Commission on Elections consistent
with the provisions of the Election Code of 1987.

SECTION 2. Government agencies/instrumentalities may source printing services outside NPO provided that:

2.1
The printing services to be provided by the private sector is superior in quality and at a lower cost than
what is offered by the NPO; and

2.2
The private printing provider is flexible in terms of meeting the target completion time of the
government agency.

SECTION 3. In the exercise of its functions, the amount to be appropriated for the programs, projects
and activities of the NPO in the General Appropriations Act (GAA) shall be limited to its income
without additional financial support from the government. (Emphases and underscoring supplied.)

Before proceeding to resolve the substantive issues, the Court must first delve into a procedural matter. Since
petitioners instituted this case as a class suit, the Court, thus, must first determine if the petition indeed
qualifies as one. In Board of Optometry v. Colet,[2] we held that [c]ourts must exercise utmost caution before
allowing a class suit, which is the exception to the requirement of joinder of all indispensable parties. For
while no difficulty may arise if the decision secured is favorable to the plaintiffs, a quandary would result if the
decision were otherwise as those who were deemed impleaded by their self-appointed representatives would
certainly claim denial of due process.

Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:

Sec. 12. Class suit. When the subject matter of the controversy is one of common or general interest to
many persons so numerous that it is impracticable to join all as parties, a number of them which the court finds
to be sufficiently numerous and representative as to fully protect the interests of all concerned may sue or
defend for the benefit of all. Any party in interest shall have the right to intervene to protect his individual
interest.

From the foregoing definition, the requisites of a class suit are: 1) the subject matter of controversy is one of
common or general interest to many persons; 2) the parties affected are so numerous that it is impracticable to
bring them all to court; and 3) the parties bringing the class suit are sufficiently numerous or representative of
the class and can fully protect the interests of all concerned.

In Mathay v. The Consolidated Bank and Trust Company,[3] the Court held that:

An action does not become a class suit merely because it is designated as such in the pleadings. Whether the
suit is or is not a class suit depends upon the attending facts, and the complaint, or other pleading initiating
the class action should allege the existence of the necessary facts, to wit, the existence of a subject matter
of common interest, and the existence of a class and the number of persons in the alleged class, in order
that the court might be enabled to determine whether the members of the class are so numerous as to
make it impracticable to bring them all before the court, to contrast the number appearing on the
record with the number in the class and to determine whether claimants on record adequately
represent the class and the subject matter of general or common interest. (Emphases ours.)

Here, the petition failed to state the number of NPO employees who would be affected by the assailed
Executive Order and who were allegedly represented by petitioners. It was the Solicitor General, as counsel
for respondents, who pointed out that there were about 549 employees in the NPO. [4] The 67 petitioners
undeniably comprised a small fraction of the NPO employees whom they claimed to represent. Subsequently,
32 of the original petitioners executed an Affidavit of Desistance, while one signed a letter denying ever
signing the petition,[5] ostensibly reducing the number of petitioners to 34. We note that counsel for the
petitioners challenged the validity of the desistance or withdrawal of some of the petitioners and insinuated
that such desistance was due to pressure from people close to the seat of power. [6] Still, even if we were to
disregard the affidavit of desistance filed by some of the petitioners, it is highly doubtful that a sufficient,
representative number of NPO employees have instituted this purported class suit. A perusal of the petition
itself would show that of the 67 petitioners who signed the Verification/Certification of Non-Forum Shopping,
only 20 petitioners were in fact mentioned in the jurat as having duly subscribed the petition before the notary
public. In other words, only 20 petitioners effectively instituted the present case.

Indeed, in MVRS Publications, Inc. v. Islamic Dawah Council of the Philippines, Inc.,[7] we observed that an
element of a class suit or representative suit is the adequacy of representation. In determining the question
of fair and adequate representation of members of a class, the court must consider (a) whether the interest of
the named party is coextensive with the interest of the other members of the class; (b) the proportion of those
made a party, as it so bears, to the total membership of the class; and (c) any other factor bearing on the
ability of the named party to speak for the rest of the class.

Previously, we held in Ibaes v. Roman Catholic Church[8] that where the interests of the plaintiffs and the
other members of the class they seek to represent are diametrically opposed, the class suit will not prosper.

It is worth mentioning that a Manifestation of Desistance, [9] to which the previously mentioned Affidavit of
Desistance[10] was attached, was filed by the President of the National Printing Office Workers Association
(NAPOWA). The said manifestation expressed NAPOWAs opposition to the filing of the instant petition in any
court. Even if we take into account the contention of petitioners counsel that the NAPOWA President had no
legal standing to file such manifestation, the said pleading is a clear indication that there is a divergence of
opinions and views among the members of the class sought to be represented, and not all are in favor of filing
the present suit. There is here an apparent conflict between petitioners interests and those of the persons
whom they claim to represent. Since it cannot be said that petitioners sufficiently represent the interests of the
entire class, the instant case cannot be properly treated as a class suit.

As to the merits of the case, the petition raises two main grounds to assail the constitutionality of Executive
Order No. 378:

First, it is contended that President Arroyo cannot amend or repeal Executive Order No. 285 by the mere
issuance of another executive order (Executive Order No. 378). Petitioners maintain that former President
Aquinos Executive Order No. 285 is a legislative enactment, as the same was issued while President Aquino
still had legislative powers under the Freedom Constitution; [11] thus, only Congress through legislation can
validly amend Executive Order No. 285.

It is a well-settled principle in jurisprudence that the President has the power to reorganize the offices and
agencies in the executive department in line with the Presidents constitutionally granted power of control over
executive offices and by virtue of previous delegation of the legislative power to reorganize executive offices
under existing statutes.

In Buklod ng Kawaning EIIB v. Zamora,[12] the Court pointed out that Executive Order No. 292 or the
Administrative Code of 1987 gives the President continuing authority to reorganize and redefine the functions
of the Office of the President. Section 31, Chapter 10, Title III, Book III of the said Code, is explicit:

Sec. 31. Continuing Authority of the President to Reorganize his Office. The President, subject to the
policy in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have
continuing authority to reorganize the administrative structure of the Office of the President. For this
purpose, he may take any of the following actions:

(1) Restructure the internal organization of the Office of the President Proper, including the immediate
Offices, the President Special Assistants/Advisers System and the Common Staff Support System, by
abolishing, consolidating or merging units thereof or transferring functions from one unit to another;

(2) Transfer any function under the Office of the President to any other Department or Agency as well
as transfer functions to the Office of the President from other Departments and Agencies; and

(3) Transfer any agency under the Office of the President to any other department or agency as well
as transfer agencies to the Office of the President from other Departments or agencies. (Emphases ours.)

Interpreting the foregoing provision, we held in Buklod ng Kawaning EIIB, thus:

But of course, the list of legal basis authorizing the President to reorganize any department or agency in the
executive branch does not have to end here. We must not lose sight of the very source of the power that
which constitutes an express grant of power. Under Section 31, Book III of Executive Order No. 292
(otherwise known as the Administrative Code of 1987), the President, subject to the policy in the Executive
Office and in order to achieve simplicity, economy and efficiency, shall have the continuing authority to
reorganize the administrative structure of the Office of the President. For this purpose, he may transfer the
functions of other Departments or Agencies to the Office of the President. In Canonizado v. Aguirre [323
SCRA 312 (2000)], we ruled that reorganization involves the reduction of personnel, consolidation of
offices, or abolition thereof by reason of economy or redundancy of functions. It takes place when
there is an alteration of the existing structure of government offices or units therein, including the
lines of control, authority and responsibility between them. The EIIB is a bureau attached to the
Department of Finance. It falls under the Office of the President. Hence, it is subject to the Presidents
continuing authority to reorganize. [13] (Emphasis ours.)

Second, petitioners maintain that the issuance of Executive Order No. 378 would lead to the eventual
abolition of the NPO and would violate the security of tenure of NPO employees.

Anent the first ground raised in the petition, we find the same patently without merit.

It is undisputed that the NPO, as an agency that is part of the Office of the Press Secretary (which in various
times has been an agency directly attached to the Office of the Press Secretary or as an agency under the
Philippine Information Agency), is part of the Office of the President. [14]

Pertinent to the case at bar, Section 31 of the Administrative Code of 1987 quoted above authorizes the
President (a) to restructure the internal organization of the Office of the President Proper, including the
immediate Offices, the President Special Assistants/Advisers System and the Common Staff Support System,
by abolishing, consolidating or merging units thereof or transferring functions from one unit to another, and (b)
to transfer functions or offices from the Office of the President to any other Department or Agency in the
Executive Branch, and vice versa.

Concomitant to such power to abolish, merge or consolidate offices in the Office of the President Proper and
to transfer functions/offices not only among the offices in the Office of President Proper but also the rest of the
Office of the President and the Executive Branch, the President implicitly has the power to effect less radical
or less substantive changes to the functional and internal structure of the Office of the President, including the
modification of functions of such executive agencies as the exigencies of the service may require.

Sec. 48. Scaling Down and Phase Out of Activities of Agencies Within the Executive Branch. The heads of
departments, bureaus and offices and agencies are hereby directed to identify their respective activities which
are no longer essential in the delivery of public services and which may be scaled down, phased out or
abolished, subject to civil [service] rules and regulations. x x x. Actual scaling down, phasing out or abolition
of the activities shall be effected pursuant to Circulars or Orders issued for the purpose by the Office of the
President.
Said provision clearly mentions the acts of "scaling down, phasing out and abolition" of offices
only and does not cover the creation of offices or transfer of functions. Nevertheless, the act of
creating and decentralizing is included in the subsequent provision of Section 62, which provides that:
Sec. 62. Unauthorized organizational changes. Unless otherwise created by law or directed by the
President of the Philippines, no organizational unit or changes in key positions in any department or agency
shall be authorized in their respective organization structures and be funded from appropriations by this Act.
The foregoing provision evidently shows that the President is authorized to effect
organizational changes including the creation of offices in the department or agency concerned.

In the case at bar, there was neither an abolition of the NPO nor a removal of any of its functions to be
transferred to another agency. Under the assailed Executive Order No. 378, the NPO remains the main
printing arm of the government for all kinds of government forms and publications but in the interest of greater
economy and encouraging efficiency and profitability, it must now compete with the private sector for certain
government printing jobs, with the exception of election paraphernalia which remains the exclusive
responsibility of the NPO, together with the Bangko Sentral ng Pilipinas, as the Commission on Elections may
determine. At most, there was a mere alteration of the main function of the NPO by limiting the exclusivity of
its printing responsibility to election forms. [15]

There is a view that the reorganization actions that the President may take with respect to agencies in the
Office of the President are strictly limited to transfer of functions and offices as seemingly provided in Section
31 of the Administrative Code of 1987.

The contention of petitioner that the two provisions are riders deserves scant consideration. Well
settled is the rule that every law has in its favor the presumption of constitutionality. Unless and until a specific
provision of the law is declared invalid and unconstitutional, the same is valid and binding for all intents and
purposes.[17] (Emphases ours)

Buklod ng Kawaning EIIB v. Zamora,[18] where the Court upheld as valid then President Joseph Estradas
Executive Order No. 191 deactivating the Economic Intelligence and Investigation Bureau (EIIB) of the
Department of Finance, hewed closely to the reasoning in Larin. The Court, among others, also traced from
the General Appropriations Act[19] the Presidents authority to effect organizational changes in the department
or agency under the executive structure, thus:

However, Section 20, Chapter 7, Title I, Book III of the same Code significantly provides:

Sec. 20.
Residual Powers. Unless Congress provides otherwise, the President shall exercise such
other powers and functions vested in the President which are provided forunder the laws and which are
not specifically enumerated above, or which are not delegated by the President in accordance with law.
(Emphasis ours.)

We adhere to the precedent or ruling in Larin that this provision recognizes the authority of the President
to effect organizational changes in the department or agency under the executive structure. Such a ruling
further finds support in Section 78 of Republic Act No. 8760. Under this law, the heads of departments,
bureaus, offices and agencies and other entities in the Executive Branch are directed (a) to conduct a
comprehensive review of their respective mandates, missions, objectives, functions, programs, projects,
activities and systems and procedures; (b) identify activities which are no longer essential in the delivery of
public services and which may be scaled down, phased-out or abolished; and (c) adopt measures that will
result in the streamlined organization and improved overall performance of their respective agencies.
Section 78 ends up with the mandate that the actual streamlining and productivity improvement in agency
organization and operation shall be effected pursuant to Circulars or Orders issued for the purpose by the
Office of the President. x x x.[20] (Emphasis ours)

Pursuant to Section 20, the power of the President to reorganize the Executive Branch under Section 31
includes such powers and functions that may be provided for under other laws. To be sure, an inclusive and
broad interpretation of the Presidents power to reorganize executive offices has been consistently supported
by specific provisions ingeneral appropriations laws.

In the oft-cited Larin v. Executive Secretary,[16] the Court likewise adverted to certain provisions of Republic Act
No. 7645, the general appropriations law for 1993, as among the statutory bases for the Presidents power to
reorganize executive agencies, to wit:

Section 48 of R.A. 7645 provides that:

Notably, in the present case, the 2003 General Appropriations Act, which was reenacted in 2004 (the year of
the issuance of Executive Order No. 378), likewise gave the President the authority to effect a wide variety of
organizational changes in any department or agency in the Executive Branch. Sections 77 and 78 of said Act
provides:

Section 77. Organized Changes. Unless otherwise provided by law or directed by the President of
the Philippines, no changes in key positions or organizational units in any department or agency shall be
authorized in their respective organizational structures and funded from appropriations provided by this Act.

Section 78. Institutional Strengthening and Productivity Improvement in Agency Organization and Operations
and Implementation of Organization/Reorganization Mandated by Law. The Government shall adopt
institutional strengthening and productivity improvement measures to improve service delivery and

enhance productivity in the government, asdirected by the President of the Philippines. The heads of
departments, bureaus, offices, agencies, and other entities of the Executive Branch shall accordingly
conduct a comprehensive review of their respective mandates, missions, objectives, functions, programs,
projects, activities and systems and procedures; identify areas where improvements are necessary;
andimplement corresponding structural, functional and operational adjustments that will result in
streamlined organization and operations and improved performance and productivity: PROVIDED, That
actual streamlining and productivity improvements in agency organization and operations, as authorized by
the President of the Philippines for the purpose, including the utilization of savings generated from such
activities, shall be in accordance with the rules and regulations to be issued by the DBM, upon consultation
with the Presidential Committee on Effective Governance: PROVIDED, FURTHER, That in the
implementation of organizations/reorganizations, or specific changes in agency structure, functions
and operations as a result of institutional strengthening or as mandated by law, the appropriation,
including the functions, projects, purposes and activities of agencies concerned may be realigned as
may be necessary: PROVIDED, FINALLY, That any unexpended balances or savings in appropriations may
be made available for payment of retirement gratuities and separation benefits to affected personnel, as
authorized under existing laws. (Emphases and underscoring ours.)

department by executive or administrative order is constitutionally and statutorily recognized. We held in that
case:

This Court has already ruled in a number of cases that the President may, by executive or
administrative order, direct the reorganization of government entities under the Executive
Department. This is also sanctioned under the Constitution, as well as other statutes.

Section 17, Article VII of the 1987 Constitution, clearly states: [T]he president shall have control of all
executive departments, bureaus and offices. Section 31, Book III, Chapter 10 of Executive Order No.
292, also known as the Administrative Code of 1987 reads:

SEC. 31. Continuing Authority of the President to Reorganize his Office - The President, subject to the policy
in the Executive Office and in order to achieve simplicity, economy and efficiency, shall have continuing
authority to reorganize the administrative structure of the Office of the President. For this purpose, he may
take any of the following actions:
Implicitly, the aforequoted provisions in the appropriations law recognize the power of the President to
reorganize even executive offices already funded by the said appropriations act, including the power to
implement structural, functional, and operational adjustments in the executive bureaucracy and, in so
doing, modify or realign appropriations of funds as may be necessary under such reorganization. Thus,
insofar as petitioners protest the limitation of the NPOs appropriations to its own income under Executive
Order No. 378, the same is statutorily authorized by the above provisions.

In the 2003 case of Bagaoisan v. National Tobacco Administration,[21] we upheld the streamlining of the
National Tobacco Administration through a reduction of its personnel and deemed the same as included in the
power of the President to reorganize executive offices granted under the laws, notwithstanding that such
streamlining neither involved an abolition nor a transfer of functions of an office. To quote the relevant portion
of that decision:
In the recent case of Rosa Ligaya C. Domingo, et al. vs. Hon. Ronaldo D. Zamora, in his capacity as
the Executive Secretary, et al., this Court has had occasion to also delve on the Presidents power to
reorganize the Office of the President under Section 31(2) and (3) of Executive Order No. 292 and the power
to reorganize the Office of the President Proper. x x x

xxxx

In Domingo v. Zamora [445 Phil. 7 (2003)], this Court explained the rationale behind the Presidents continuing
authority under the Administrative Code to reorganize the administrative structure of the Office of the
President. The law grants the President the power to reorganize the Office of the President in
recognition of the recurring need of every President to reorganize his or her office to achieve
simplicity, economy and efficiency. To remain effective and efficient, it must be capable of being shaped
and reshaped by the President in the manner the Chief Executive deems fit to carry out presidential directives
and policies.

The Administrative Code provides that the Office of the President consists of the Office of the
President Proper and the agencies under it. The agencies under the Office of the President are identified in
Section 23, Chapter 8, Title II of the Administrative Code:

xxxx
The first sentence of the law is an express grant to the President of a continuing authority to reorganize the
administrative structure of the Office of the President. The succeeding numbered paragraphs are not in
the nature of provisos that unduly limit the aim and scope of the grant to the President of the power to
reorganize but are to be viewed in consonance therewith. Section 31(1) of Executive Order No. 292
specifically refers to the Presidents power to restructure the internal organization of the Office of the
President Proper, by abolishing, consolidating or merging units hereof or transferring functions from one unit to
another, while Section 31(2) and (3) concern executive offices outside the Office of the
President Properallowing the President to transfer any function under the Office of the President to any other
Department or Agency and vice-versa, and the transfer of any agency under the Office of the President to any
other department or agency and vice-versa.
In the present instance, involving neither an abolition nor transfer of offices, the assailed action is a
mere reorganization under the general provisions of the law consisting mainly of streamlining the NTA
in the interest of simplicity, economy and efficiency. It is an act well within the authority of the
President motivated and carried out, according to the findings of the appellate court, in good faith, a factual
assessment that this Court could only but accept.[22] (Emphases and underscoring supplied.)

Sec. 23. The Agencies under the Office of the President.The agencies under the Office of the
President refer to those offices placed under the chairmanship of the President, those under the supervision
and control of the President, those under the administrative supervision of the Office of the President, those
attached to it for policy and program coordination, and those that are not placed by law or order creating them
under any specific department.

xxxx

The power of the President to reorganize the executive department is likewise recognized in general
appropriations laws. x x x.

xxxx
In the more recent case of Tondo Medical Center Employees Association v. Court of Appeals, [23] which
involved a structural and functional reorganization of the Department of Health under an executive
order, we reiterated the principle that the power of the President to reorganize agencies under the executive

Clearly, Executive Order No. 102 is well within the constitutional power of the President to issue. The
President did not usurp any legislative prerogative in issuing Executive Order No. 102. It is an exercise

of the Presidents constitutional power of control over the executive department, supported by the
provisions of the Administrative Code, recognized by other statutes, and consistently affirmed by this
Court.[24] (Emphases supplied.)

Subsequently, we ruled in Anak Mindanao Party-List Group v. Executive Secretary[25] that:

The Constitutions express grant of the power of control in the President justifies an executive action to
carry out reorganization measures under a broad authority of law.

In enacting a statute, the legislature is presumed to have deliberated with full knowledge of all existing
laws and jurisprudence on the subject. It is thus reasonable to conclude that in passing a statute which places
an agency under the Office of the President, it was in accordance with existing laws and jurisprudence on the
Presidents power to reorganize.

In establishing an executive department, bureau or office, the legislature necessarily ordains an executive
agencys position in the scheme of administrative structure. Such determination is primary, but subject to the
Presidents continuing authority to reorganize the administrative structure. As far as bureaus, agencies or
offices in the executive department are concerned, the power of control may justify the President to deactivate
the functions of a particular office. Or a law may expressly grant the President the broad authority to carry out
reorganization measures. The Administrative Code of 1987 is one such law.[26]

The issuance of Executive Order No. 378 by President Arroyo is an exercise of a delegated legislative power
granted by the aforementioned Section 31, Chapter 10, Title III, Book III of the Administrative Code of 1987,
which provides for the continuing authority of the President to reorganize the Office of the President, in order
to achieve simplicity, economy and efficiency. This is a matter already well-entrenched in jurisprudence. The
reorganization of such an office through executive or administrative order is also recognized in the
Administrative Code of 1987. Sections 2 and 3, Chapter 2, Title I, Book III of the said Code provide:

Sec. 2. Executive Orders. - Acts of the President providing for rules of a general or permanent
character in implementation or execution of constitutional or statutory powers shall be promulgated
in executive orders.

Sec. 3. Administrative Orders. - Acts of the President which relate to particular aspects of
governmental operations in pursuance of his duties as administrative head shall be promulgated
in administrative orders. (Emphases supplied.)

To reiterate, we find nothing objectionable in the provision in Executive Order No. 378 limiting the
appropriation of the NPO to its own income. Beginning with Larinand in subsequent cases, the Court has
noted certain provisions in the general appropriations laws as likewise reflecting the power of the President
to reorganize executive offices or agencies even to the extent of modifying and realigning appropriations for
that purpose.

Petitioners contention that the issuance of Executive Order No. 378 is an invalid exercise of legislative power
on the part of the President has no legal leg to stand on.

In all, Executive Order No. 378, which purports to institute necessary reforms in government in order to
improve and upgrade efficiency in the delivery of public services by redefining the functions of the NPO and
limiting its funding to its own income and to transform it into a self-reliant agency able to compete with the
private sector, is well within the prerogative of President Arroyo under her continuing delegated legislative
power to reorganize her own office. As pointed out in the separate concurring opinion of our learned
colleague, Associate Justice Antonio T. Carpio, the objective behind Executive Order No. 378 is wholly
consistent with the state policy contained in Republic Act No. 9184 or the Government Procurement Reform
Act to encourage competitiveness by extending equal opportunity to private contracting parties who are
eligible and qualified.[27]

To be very clear, this delegated legislative power to reorganize pertains only to the Office of the President and
the departments, offices and agencies of the executive branch and does not include the Judiciary, the
Legislature or the constitutionally-created or mandated bodies. Moreover, it must be stressed that the
exercise by the President of the power to reorganize the executive department must be in accordance with the
Constitution, relevant laws and prevailing jurisprudence.

In this regard, we are mindful of the previous pronouncement of this Court in Dario v. Mison[28] that:

Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good
faith. As a general rule, a reorganization is carried out in good faith if it is for the purpose of economy or to
make bureaucracy more efficient. In that event, no dismissal (in case of a dismissal) or separation actually
occurs because the position itself ceases to exist. And in that case, security of tenure would not be a Chinese
wall. Be that as it may, if the abolition, which is nothing else but a separation or removal, is done for political
reasons or purposely to defeat security of tenure, or otherwise not in good faith, no valid abolition takes place
and whatever abolition is done, is void ab initio. There is an invalid abolition as where there is merely a
change of nomenclature of positions, or where claims of economy are belied by the existence of ample funds.
(Emphasis ours.)

Stated alternatively, the presidential power to reorganize agencies and offices in the executive branch of
government is subject to the condition that such reorganization is carried out in good faith.

If the reorganization is done in good faith, the abolition of positions, which results in loss of security of tenure
of affected government employees, would be valid. InBuklod ng Kawaning EIIB v. Zamora,[29] we even
observed that there was no such thing as an absolute right to hold office. Except those who hold constitutional
offices, which provide for special immunity as regards salary and tenure, no one can be said to have any
vested right to an office or salary.[30]

This brings us to the second ground raised in the petition that Executive Order No. 378, in allowing
government agencies to secure their printing requirements from the private sector and in limiting the budget of
the NPO to its income, will purportedly lead to the gradual abolition of the NPO and the loss of security of
tenure of its present employees. In other words, petitioners avow that the reorganization of the NPO under
Executive Order No. 378 is tainted with bad faith. The basic evidentiary rule is that he who asserts a fact or
the affirmative of an issue has the burden of proving it. [31]

A careful review of the records will show that petitioners utterly failed to substantiate their claim. They failed to
allege, much less prove, sufficient facts to show that the limitation of the NPOs budget to its own income

would indeed lead to the abolition of the position, or removal from office, of any employee. Neither did
petitioners present any shred of proof of their assertion that the changes in the functions of the NPO were for
political considerations that had nothing to do with improving the efficiency of, or encouraging operational
economy in, the said agency.

In sum, the Court finds that the petition failed to show any constitutional infirmity or grave abuse of discretion
amounting to lack or excess of jurisdiction in President Arroyos issuance of Executive Order No. 378.

WHEREFORE, the petition is hereby DISMISSED and the prayer for a Temporary Restraining Order and/or a
Writ of Preliminary Injunction is hereby DENIED. No costs.

Subsequently or on October 4, 1995, President Ramos issued E.O. No. 265, which amended E.O. No. 315
dated January 1, 1988, creating the Presidential Committee on the Bataan Nuclear Power Plant (PC-BNPP
Committee).
E.O. No. 265 provided that the PC-BNPP Committee 8 "shall be the coordinating and policy-making body on
the BNPP, including policies arising from negotiations for a fair commercial settlement of all pending legal
claims that will provide a substantial net benefit to the country," which "shall submit its recommendations on
BNPP-related policies to the President for approval." 9
On October 11, 1995, the PC-BNPP Committee issued a "Resolution Adopting The Essential Terms And
Conditions Arrived At By The Government Panel And Westinghouse Representatives During The Exploratory
Discussions From September 29, 1995 To October 9, 1995 For A Compromise Settlement Of The BNPP
Controversy And Favorably Recommending Approval Thereof To His Excellency, The President," the salient
points of which Resolution follow:
xxxx

SO ORDERED.

G.R. No. 125509

NOTING that after a series of talks which started on September 29, 1995, the government panel and
Westinghouse representatives (Mr. Briskman and Mr. Robert Gross) on October 9,1995, eventually agreed in
principle on a settlement involving a package of more than $100 MILLION, consisting of the following:
January 31, 2007

PUBLIC INTEREST CENTER, INC., LAUREANO T. ANGELES, and JOCELYN P. CELESTINO Petitioners
vs.
HONORABLE VICENTE Q. ROXAS, in his capacity as Presiding Judge, Regional Trial Court of Quezon
City, Branch 227, REPUBLIC OF THE PHILIPPINES, NATIONAL POWER CORPORATION,
WESTINGHOUSE ELECTRIC CORPORATION, WESTINGHOUSE ELECTRIC S.A., WESTINGHOUSE
INTERNATIONAL PROJECTS COMPANY, Respondents.
DECISION
CARPIO MORALES, J.:
Challenged via petition for certiorari is the Quezon City Regional Trial Courts Resolution dated April 17, 1996
dismissing the Complaint of Public Interest Center, Inc., Laureano T. Angeles and Jocelyn P. Celestino
(petitioners) in Civil Case No. Q-95-25597, and Order dated June 18, 1996, denying petitioners motion for
reconsideration.

(1) $40 Million in cash (transferable by wire to a bank account specified by the Republic)
(2) Two (2) newly manufactured 501-F Econopac combustion turbines, FOB Houston, at 160 MW each or a
total of 320 MW valued at $30 Million each, or a total of $60 Million
(3) Relinquishment by Westinghouse of the right to recover more than $200,000 in attorneys fees previously
awarded by the New Jersey court.
NOTING that in exchange for the foregoing cash and utilities, the parties would secure a dismissal with
prejudice of the pending lawsuits, appeals and arbitration between the Republic and National Power
Corporation, on one hand, and Westinghouse, its affiliates and Burns & Roe, on the other hand, involving the
BNPP controversy and that the Republic would direct National Power Corporation and other government
agencies to lift the ban against Westinghouse equipment and technology;
xxxx

The antecedent facts, as culled from the records of the case, are as follows:

OBSERVING that the present offer of Westinghouse of $40 Million in cash plus two (2) 501-Fs worth $60
Million represents the highest cash offer (since its $10 Million cash offer in 1992) and the most advantageous
in kind offer (no discount/rebate component or any corresponding obligation on the side of the Republic);

On February 9, 1976, respondent National Power Corporation (NPC) entered into a contract (the Contract)
with respondent Westinghouse Electric S.A. (WESA), an affiliate or subsidiary of respondent Westinghouse
Electric Corporation (WESTINGHOUSE), whereby WESA undertook to construct in favor of the NPC a 620megawatt nuclear power plant at Morong, Bataan and to supply equipment, machineries and services
therefor.1

HAVING IN MIND the uncertainty of the results of the arbitration, the possibility that some of Westinghouses
counterclaims may partly offset any recovery, the prospect that even a favorable arbitration award could be
limited to the $40 million cap under the original BNPP contract and that even if the government eventually wins
the appeal of the New Jersey verdict, substantial costs would have to be incurred to pursue a new trial, which
result is also uncertain;

WESA subsequently executed a deed of assignment transferring all its rights and responsibilities in the
Contract to its construction arm-agent, respondent Westinghouse International Projects Company (WIPCO). 2

RECOGNIZING that the present offer of Westinghouse will result in greater net economic benefits to the
Republic than any previous settlement offer;

In 1986, President Corazon Aquino issued Executive Order (E.O.) No. 55, which was later amended by E.O.
No. 98, transferring ownership of the already constructed power plant, which had become known as the
Bataan Nuclear Power Plant (BNPP), its equipment, materials and facilities, records and uranium fuel, to the
National Government or its duly constituted agency.3 Pursuant to E.O. No. 55, as amended, the National
Government assumed all remaining foreign and local obligations incurred by the NPC in financing the
construction of the BNPP.4

xxxx

In 1988, the Aquino administration instituted a complaint against WESTINGHOUSE in New Jersey, U.S.A.
Westinghouse later filed an arbitration case in Geneva, Switzerland. 5

On October 13, 1995, the Settlement Agreement reflected in the above-questioned Resolution of the PCBNPP was forged by the Republic and NPC on one hand, and respondent Westinghouse corporations on the
other.11

On September 27, 1995, President Fidel Ramos authorized the following government officials as members of
a Government Panel to conduct exploratory discussions with WESTINGHOUSE for the possible settlement of
pending legal proceedings: Chief Presidential Legal Counsel Antonio T. Carpio, 6 Solicitor General Raul T.
Goco, Assistant Secretary Cyril Del Callar, General Counsel Alberto L. Pangcog, and Counsel Mark
Augenblick.7

NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED that PC-BNPP, with the endorsement
of the Republics lawyers and negotiating panel, adopts the foregoing essential terms of the settlement
agreement and respectfully recommends to His Excellency, President Fidel V. Ramos, the acceptance and
approval thereof.10(Underscoring supplied)

On November 14, 1995, petitioners, as taxpayers, filed with the Regional Trial Court (RTC) of Quezon City a
Complaint against herein private respondents, for declaration of nullity of the BNPP contract with application
for the issuance of a temporary restraining order and preliminary injunction. 12
Herein public respondent, Branch 227 of the Quezon City RTC, set the hearing of petitioners application for
the issuance of a temporary restraining order on November 28, 1995 on which date only petitioners and

respondents Republic and NPC appeared. No representative of the Westinghouse corporations having
showed up, public respondent directed petitioners to secure a certification from the Securities and Exchange
Commission (SEC) on who the resident agent, if any, of said corporations 13 was.

WIPCO soon filed a Motion to Dismiss21 petitioners Amended Complaint on the following grounds: (a)
petitioners have no legal capacity to sue; (b) the Amended Complaint states no cause of action; and (c)
assuming the existence of a cause of action, the same is nonetheless barred by the statute of limitations.

On the same scheduled date of hearing, the Solicitor General, on behalf of respondents Republic and NPC,
moved for the dismissal of the Complaint on the ground that petitioners were engaged in forum-shopping, their
counsel Atty. Crispin T. Reyes having previously filed cases 14 with causes of action identical thereto.

By the assailed Resolution of April 17, 1996, public respondent DISMISSED petitioners complaint, holding as
follows:
xxxx

While Atty. Reyes did not deny having previously filed, in Manila, a complaint, he argued that he was not
among the plaintiffs in the complaint filed in Quezon City. Nevertheless, he withdrew as counsel for the
plaintiffs herein petitioners.15

I. that, with respect to the first cause of action

On December 4, 1995, petitioners filed an Amended Complaint 16 praying for the following reliefs:

(i) plaintiffs have violated Supreme Court Administrative Circular 04-94, otherwise known as the Anti-Forum
Shopping Rule, which carries with it, among others, the penalty of dismissal of the action;

WHEREFORE, it is most respectfully prayed [that]:

II. that, with respect to the second cause of action,

xxxx

(i) this Court has no territorial jurisdiction over foreign and international bodies situated abroad, more so, if
such bodies are foreign and international courts;

(2) after due hearing, a preliminary mandatory injunction issue upon a bond executed to the party enjoined in
an amount to be fixed by the court ordering defendants National Power Corporation and the Republic of the
Philippines to stop and/or not to perform further implementation/execution of their obligation/undertaking under
the null and void [B]NPP Nuclear Plant Contract between the National Power Corporation and Westinghouse
executed on February 9, 1976 in Manila, Philippines; likewise, from further continuing the payments for the
contracted loans/interest based thereon unless otherwise securitized; and also from further
implementing/executing their undertaking/obligations under the Settlement Agreementbetween Republic of the
Philippines-National Power Corporation and Westinghouse negotiated on October 9, 1995 and allegedly
executed on October 13, 1995;
(3) after hearing on the merits, judgment be rendered declaring the [B]NPP Nuclear Plant Contractexecuted on
February 9, 1976 in Manila and all amendments thereto, together with the loan contractsbased thereon, as
well as the Settlement Agreement executed on October 13, 1995 by defendant Republic of the
Philippines/NAPOCOR with Westinghouse, as inexistent and void ab initio;
(4) ordering defendants NAPOCOR and the REPUBLIC OF THE PHILIPPINES to reconvey/turn over the
[B]NPP Nuclear Plant equipment and machineries to defendant WESTINGHOUSE ELECTRIC
CORPORATION and/or its corporate agents and to restitute or refund to the former all payments paid for the
[B]NPP Nuclear Plant to said Westinghouse, with legal interest from the filing of this complaint;
(5) making the preliminary mandatory injunction permanent, and ordering defendant jointly and severally to
pay plaintiffs reasonable attorneys fees pursuant to Article 2208 (2) and (11), Civil Code of the Philippines,
with costs against defendants; . . . (Underscoring supplied)
In essence, the Amended Complaint assailed the validity of and sought to nullify the following contracts:
(a) The BNPP Contract;

(ii) this Court has no original and exclusive jurisdiction over the issue of invalidating compromiseagreements
entered into in foreign and international courts to settle foreign lawsuits pending before such foreign and
international courts;
(iii) this Court has no jurisdiction to enjoin court proceedings relative to the compromise agreement entered
into in foreign and international courts to settle pending foreign lawsuits;
(iv) the application for preliminary mandatory injunction of plaintiffs is denied for lack of merit . . .
(v) the second cause of action did not allege constitutional, public interest, and judicial policy issues so as to
qualify plaintiffs under the relaxed rule, as having standing, . . .
(vi) this Court has not acquired jurisdiction over the persons of foreign defendants WELCO and WESA. . .
(Underscoring supplied)
Petitioners Motion for Reconsideration of public respondents Resolution dismissing their complaint having
been denied by the other assailed Order of June 18, 1996, they filed the present Petition for Certiorari and
Mandamus With Application for A Writ Of Preliminary Injunction And Prayer For A Temporary Restraining Order
directly with this Court in view of the "transcendental importance" of the issues involved.
Petitioners contend that in dismissing their Amended Complaint, public respondent abdicated its constitutional
duty to exercise judicial review over the validity of the BNPP Contract, the loan contracts, and the 1995
Settlement Agreement.
Petitioners further contend that, contrary to the finding of public respondent, petitioners did not commit forumshopping since there is no identity of parties and causes of action in the instant case and in the complaint filed
before the Manila RTC.

(b) The loan contracts entered into by the Republic and NPC to finance the construction of the BNPP; and
(c) The Settlement Agreement entered into by the Republic and NPC with Westinghouse on October 13, 1995
in settlement of the claims arising from the Contract.
The Republic filed a Motion to Dismiss (With Opposition to the Application for Preliminary Mandatory
Injunction)17to petitioners Amended Complaint on the following grounds: (a) lis pendens and/or forumshopping; (b) lack of legal capacity of petitioners to sue; and (c) lack of cause of action. 18
For its part, the NPC filed its Comment/Motion To Dismiss Plaintiffs Amended Complaint, 19 alleging that the
Amended Complaint failed to state a cause of action against it.

Finally, petitioners contend that they have sufficiently established that the injury caused to them by the
contracts are "actual, direct and immediate" to thus clothe them with standing.
The Solicitor General and WIPCO, opposing the petition, argue that no grave abuse of discretion attended the
issuance by public respondent of the assailed resolutions considering that, among other things, petitioners are
guilty of forum-shopping; petitioners have no legal standing; and the propriety of entering into a settlement
agreement involves a political question and is not subject to judicial review.
The issues then are:
(1) Whether petitioners have legal standing;

By Order of January 25, 1996, public respondent directed, among other things, petitioners and the Republic
and NPC to file their respective memoranda. 20

(2) Whether petitioners are engaged in forum-shopping;

On February 26, 1996, petitioners, in compliance with public respondents order, filed a manifestation that per
certification of the SEC, the new resident agent of WIPCO was ACCRA Agents, Inc. Summons was thereupon
served upon ACCRA Agents, Inc.

(3) Whether the validity of the Contract and the contracts of loan entered into by the Republic and NPC with
foreign banks to finance the construction of the BNPP, and the propriety of entering into a Settlement
Agreement are subject to judicial review; and
(4) Whether courts may set aside a final judgment rendered by a foreign court.

Legal Standing

that thereafter or on July 12, 1995, they filed a petition for mandamus 34 with the Court of Appeals praying for
the following reliefs:

In Integrated Bar of the Philippines v. Zamora, 22 this Court defined legal standing as follows:
"Legal standing" or locus standi has been defined as a personal and substantial interest in the case such that
the party has sustained or will sustain direct injury as a result of the governmental act that is being challenged.
The term "interest" means a material interest, an interest in issue affected by the decree, as distinguished from
mere interest in the question involved, or a mere incidental interest. The gist of the question of standing is
whether a party alleges "such personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court depends for illumination of
difficult constitutional questions." (Citations omitted; emphasis supplied)
In public suits, the plaintiff, representing the general public, asserts a "public right" in assailing an allegedly
illegal official action. The plaintiff may be a person who is affected no differently from any other person, and
could be suing as a "stranger," or as a "citizen" or "taxpayer." To invest him with locus standi, the plaintiff has
to adequately show that he is entitled to judicial protection and has a sufficient interest in the vindication of the
asserted public right.23
In the case of taxpayers suits, the party suing as a taxpayer must prove that he has sufficient interest in
preventing the illegal expenditure of money raised by taxation. Thus, taxpayers have been allowed to sue
where there is a claim that public funds are illegally disbursed or that public money is being deflected to any
improper purpose, or that public funds are wasted through the enforcement of an invalid or unconstitutional
law.24
More particularly, the taxpayer must establish that he has a personal and substantial interest in the case and
that he has sustained or will sustain direct injury as a result of its enforcement 25 or that he stands to be
benefited or injured by the judgment in the case, or is entitled to the avails of the suit. 26

. . . that a temporary restraining order be ISSUED ex-parte enjoining respondent NATIONAL POWER
CORPORATION and the REPUBLIC OF THE PHILIPPINES from paying the loans in question they
contracted with respondent banks and insurance companies for a period of TWENTY (20) DAYS from
date of issuance; that after notice to respondents and within said period, said temporary restraining order be
CONVERTED into a preliminary injunction with bond as may be fixed by the Court; that after hearing,
judgment be RENDERED making the preliminary injunction permanent and ordering respondent court to
reinstate Civil Case No. 93-66916 and to declare respondents WESTINGHOUSE ELECTRIC CORP.
(WELCO) and WESTINGHOUSE INTERNATIONAL PROJECTS CO. (WIPCO), respondents foreign banks
and insurances companies IN DEFAULT . . . (Emphasis supplied)
The above-said petition for mandamus was still pending before the appellate court when herein petitioners
filed their complaint, later amended, before the Quezon City RTC.
Petitioners do not deny that the first complaint and the petition for mandamus ("first set of cases") and their
complaint subject of the present petition involve the same causes of action, are founded upon the same set of
facts, and are taxpayers suits. Nevertheless, they argue that the first set of cases and the present case do not
have identity of parties since they were not among the petitioners in the former.
Furthermore, petitioners assert that a taxpayers suit is not a class suit, hence, judgment in one case does not
amount to res judicata in the other.
At all events, petitioners contend that there is no absolute identity of causes of action since their Amended
Complaint includes the nullification of the Settlement Agreement, which was not raised in the first set of cases.
Petitioners position does not impress.

Petitioners allegations in their Amended Complaint that the loan contracts entered into by the Republic and
NPC are serviced or paid through a disbursement of public funds are not disputed by respondents, hence,
they are invested with personality to institute the same.
Forum-Shopping
Forum shopping exists when, as a result of an adverse opinion in one forum, a party seeks a favorable opinion
(other than by appeal or certiorari) in another, or when he institutes two or more actions or proceedings
grounded on the same cause, on the gamble that one or the other court would make a favorable disposition. 27
As explained by this Court in First Philippine International Bank v. Court of Appeals, forum-shopping exists
where the elements of litis pendentia are present, and where a final judgment in one case will amount to res
judicata in the other. Thus, there is forum-shopping when, between an action pending before this Court and
another one, there exist: "a) identity of parties, or at least such parties as represent the same interests in both
actions, b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and c)
the identity of the two preceding particulars is such that any judgment rendered in the other action, will,
regardless of which party is successful amount to res judicata in the action under consideration; said requisites
also constitutive of the requisites for auter action pendant or lis pendens." . . . [W]here a litigant sues the same
party against whom another action or actions for the alleged violation of the same right and the enforcement of
the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final
judgment in one would constitute res judicata and thus would cause the dismissal of the rest." 28
In determining whether forum shopping exists, it is important to consider the vexation caused the courts and
parties-litigants by a party who asks different courts and/or administrative agencies to rule on the same or
related causes and/or grant the same or substantially the same reliefs, in the process creating the possibility of
conflicting decisions being rendered by the different fora upon the same issues.29
In the present case, it is evident that, vis a vis the above-mentioned complaint filed in Manila, there exists
identity of parties or interests represented, as well as identity of rights or causes of action and reliefs sought.
Thus, the first complaint which was instituted before the Manila RTC by the Anti-Graft League of the
Philippines, et al. as taxpayers suit, 30 "Anti-Graft League of the Philippines, Inc., et al. v. Westinghouse
Electric Corp., et al.," docketed as Civil Case No. 93-66916, sought to declare null and void the Contract, as
well as the same loan contracts entered into by herein respondents Republic and NPC with foreign banks, and
to restrain said respondents from making further payments in compliance with the loan contracts. 31
It appears that the first complaint was dismissed by the Manila RTC upon a motion to dismiss. 32 It further
appears that instead of filing an appeal, the therein petitioners Anti-Graft League of the Philippines, Inc. et al.
filed a petition for certiorari with this Court, which was dismissed by Resolution dated March 1, 1995, 33 and

A taxpayers action has been defined as follows:

A taxpayer's bill is essentially a class bill and can be filed only in the common interest of all the
taxpayers of the municipality, to prevent the wrongful expenditure of the money of the municipality or the
wasting of its assets. Schlanger v. West Berwick Borough, 261 Pa. 605, 608, 104 A. 764. A class bill, as its
name implies, is a bill by several members of a class, on behalf of themselves and all others in the
class, and no relief can be granted upon it, except upon a ground which is common to all the members of the
class. [Citing cases]. Ashcom v. Westmont Borough, 298 Pa. 203, 208, 148 A. 112, 114.35 (Emphasis
supplied)
As to plaintiffs, both suits are brought by the plaintiff as a citizen and taxpayer, besides as an individual, and
therefore they are taxpayer class actions. x x x,
In Holman v. Bridges, 165 Ga. 296(2), 140 S.E. 886, this court held: "Where a taxpayer or property owner
brings an action against a county or its officers upon a matter of public or general interest to all other
taxpayers of such political subdivision, and the action either expressly or by necessary implication is on their
behalf, they are equally bound by the adjudication , and a judgment is a bar to any subsequent proceeding
by them or any of them seeking similar relief upon the same facts. x x x"36 (Emphasis supplied)
The general principle of class actions that a judgment in favor of or against the parties representing the
general class is, under the doctrine of res judicata, in favor of or against all who are thus represented applies
to litigations instituted by taxpayers.
Accordingly, in a suit brought by citizens and taxpayers to determine a public right or a matter of public
interest, all citizens and taxpayers are regarded as parties to the proceedings by representation and are bound
by the judgment rendered therein. 37
The plaintiff there was another taxpayer of the city, suing in the status of citizen and taxpayer, and the city
itself was a co-defendant. The action was instituted September 3, 1958. The first count of the complaint, Inter
alia,charged the affiliation agreement here in question to be void, illegal and of no effect because the City
ignored the requirements of the local budget law, N.J.S. 40:2-1 et seq., particularly 40:2-29 and the law
pertaining to municipal contracts, particularly 40:50-6, as to the necessity for either budgeting the contract or
passing an appropriation ordinance * * *.' Subsequently the plaintiff in that action made a motion for summary
judgment on the first count alone, and defendants moved for summary judgment on all counts. We have
examined the briefs and affidavits submitted to the trial court on those motions, and it appears therefrom that
the matter of the alleged invalidity of the affiliation agreement for alleged noncompliance with N.J.S.A. 40:2-29
and 40:50-6 was argued to the court. The judgment of the court denied plaintiff's motion and granted those of
defendants. No appeal therefrom was taken.

xxxx
Petitioner first seeks to avoid the effect of the prior judgment on the ground that the subject matter of the two
respective proceedings differs. However, this is not, properly speaking, a case of different subject matter, but
of different causes of action. Such a difference is immaterial if a postulate of law essential to the success of
the party in the later proceeding has been distinctly put in issue and adjudicated Contra in the earlier,
particularly where, as here, the subject matter in both proceedings arises out of the same transaction.
See 30A Am.Jur., Judgments, s 360, p. 401; Restatement, Judgments, ss 68, 70, comment pp. 319, 320; N.J.
Highway Authority v. Renner, 18 N.J. 485, 493, 494, 114 A.2d 555 (1955); Mazzilli v. Accident, etc., Casualty
Ins. Co., etc., 26 N.J. 307, 314, 139 A.2d 741 (1958) (quotation from City of Paterson v. Baker, 51 N.J.Eq. 49,
26 A. 324 (Ch.1893)).
Nor will it avail petitioner that the taxpayer in the earlier action was one other than herself. A taxpayer
attacking governmental action in which he has no peculiar personal or special interest is taken to be
suing as a representative of all taxpayers as a class. The general rule is that in the absence of fraud or
collusion a judgment for or against a governmental body in such an action is binding and conclusive
on all residents, citizens and taxpayers with respect to matters adjudicated which are of general and
public interest. 50 C.J.S. Judgments s 796, p. 337; cf. Edelstein v. Asbury Park, 51 N.J.Super. 368, 389, 143
A.2d 860 (App.Div.1958); see also 18 McQuillin, Municipal Corporations (3d ed. 1950), s 52.50, pp. 124,
125; 52 Am.Jur., Taxpayers' Actions, s 38, p. 26.38 (Emphasis and underscoring supplied)
Hence, it is to no avail that petitioners invoke lack of identity of parties. For petitioners in the first set of cases
and in the instant case are suing under a common or general interest on a subject matter in a representative
capacity, for the benefit of all taxpayers as a class. As this Court has repeatedly ruled, identity of parties
needed to satisfy the requirement in lis pendens or res judicata requires only an identity of interest, not a literal
identity of parties.39

simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no
such other action or claim is pending therein; (b) if there is such pending action or claim, a complete statement
of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim
has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court,
without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary
dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions.
(Emphasis and underscoring supplied)
Granted that petitioners were initially unaware of the existence of the first set of cases, albeit their counsel was
one of the petitioners therein, such fact was already brought to their attention during the hearing of their
application for a temporary restraining order40 conducted after the filing of their Complaint. When petitioners
subsequently filed their Amended Complaint, however, they failed to report the pendency of the petition for
mandamus before the appellate court bearing on the dismissal by the Manila RTC of the complaint filed by the
Anti-Graft League of the Philippines, Inc. Public respondents dismissal of the Amended Complaint on the
ground of forum shopping is thus in order.
This leaves it unnecessary to pass on the rest of the issues.
WHEREFORE, the petition is DENIED.

As regards identity of causes of action, petitioners do not deny that the first set of cases the complaint filed
in Manila and the petition for mandamus filed before the Court of Appeals involves the same causes of
action grounded on the same set of facts as that of the Amended Complaint filed by them. Indeed, the petition
for mandamus essentially sought to review the Manila RTC order dismissing the first complaint. Petitioners
incorporation of an additional cause of action in their Amended Complaint filed before the Quezon City RTC,
occasioned merely by subsequent events, does not absolve petitioners from forum shopping.
Additionally, petitioners violated the requirement to report to the courts the fact that a similar action had been
filed or is already pending before the courts, regardless of who initiated such similar action. For Section 5,
Rule 7 of the Rules of Court requires:
SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and

Costs against petitioners.

SO ORDERED.