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

PADILLA, J.:
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.
It appears that, on 20 November 1987, private respondents Id the abovementioned 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that the sale agreement would automatically be rescinded upon failure on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rescinded the sale under an instrument, Rescission of Memorandum of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."
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.
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 intra-corporate 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:
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.
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:
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.
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 coconut-based 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.
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
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).
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 end-user 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-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.
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.

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).
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 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 Authority
the 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?"
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. 360-362, Rollo)
Undoubtedly, the issues raised involve both actual and legal considerations
aside from requiring specialized and technical knowledge.
As the Solicitor General observed:
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 government-owned 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):
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. L-15414, 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

THE PROVINCE OF AKLAN, Petitioner,

vs.
JODY KING CONSTRUCTION AND DEVELOPMENT CORP., Respondent.
DECISION
VILLARAMA, JR., J.:
These consolidated petitions for review on certiorari seek to reverse and set
aside the following: (1) Decision1dated October 18, 2010 and
Resolution2 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.
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
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
After trial, the trial court rendered its Decision12 on August 14, 2009, the
dispositive portion of which reads:
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:
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[;]
8. ordering the [defendant] to pay to the plaintiff the sum of Php500,000.00
as moral damages;
9. ordering the defendant to pay to the plaintiff the sum of Php300,000.00 as
exemplary damages;
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 reconsideration14 on October 9, 2009 stating
that it received a copy of the decision on September 25, 2009. In its
Order15 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.
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.
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
In G.R. No. 197592, petitioner submits the following issues:
I.
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

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
Constitution27 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. 06-1122-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.

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

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 Quarters1 containing the following:
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.
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
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 05820 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.
Petitioner, upon arraignment on November 16, 2004, pleaded not guilty on
all the charges.
The Office of the Chief of Staff, through a Memorandum2 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.
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.
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:
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 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.

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:
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
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-inChief 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.

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
Resolution12 dated October 10, 2011, denied the petition for habeas corpus.
Petitioner filed a motion for reconsideration13 dated November 15, 2011, but
was denied14 by this Court on December 12, 2011.
Petitioner enumerates the following grounds to support his petition:
GROUNDS
A.
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.
B.
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.
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 2YEAR 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
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 counter-arguments:
I.
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.

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-INCHIEF OF THE AFP.
IV.
PETITIONER'S RIGHT TO A SPEEDY DISPOSITION OF HIS CASE WAS NOT
VIOLATED IN THIS CASE.
V.
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.
VI.
ACCORDINGLY, PUBLIC RESPONDENTS DID NOT ACT WITH GRAVE ABUSE OF
DISCRETION IN ISSUING AND IMPLEMENTING THE CONFIRMATION OF
SENTENCE.17
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)
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;
(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;
(d) All persons under sentence adjudged by courts-martial.
(As amended by Republic Acts 242 and 516).

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:
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:
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:
10. COURT-MARTIAL Jurisdiction in general Termination General Rules
The general rule is that court-martial 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.
Exceptions To this general rule there are, however, some exceptions,
among them the following:
xxxx
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 court-martial 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.)
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 courts-martial 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 Code29 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 1732 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 CourtMartial. 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. 680-682).

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 commonlaw 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 courtmartial 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-in-Chief, 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 Navotas-Malabon
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 noncompletion 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:

1) The Provincial Government shall source the funds and logistics needed for
the activation of the CEF;
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;
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
4. To conduct such other actions or police operations as may be necessary to
ensure public safety.
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.
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
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. PEAAmari,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.
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-inchief 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.
xxx

xxx

xxx

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.
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)
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.
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.
xxx

xxx

xxx

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.
xxx

xxx

xxx

Mr. de los Reyes: But in exceptional cases, even the operational control can
be taken over by the National Police Commission?
Mr. Natividad: If the situation is beyond the capacity of the local
governments.51 (Emphases supplied)

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.
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.
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
Government Code cannot be invoked to justify the powers enumerated
under Proclamation 1-09
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.
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:
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

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:
Section 465. The Chief Executive: Powers, Duties, Functions, and
Compensation.
xxx

xxx

xxx

(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:
xxx

xxx

xxx

(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:
xxx

xxx

xxx

(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.

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)
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.
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.
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.

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:
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
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.
G.R. No. 187107

January 31, 2012

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,
vs.
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.
DECISION
VELASCO, JR., J.:
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:
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. 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
xxxx
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.)
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
(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.
The Issues
Petitioners raise the following issues:
1. The NEA Board has no power to terminate all the NEA employees;
2. Executive Order No. 119 did not grant the NEA Board the power to
terminate all NEA employees; and
3. Resolution Nos. 46 and 59 were carried out in bad faith.
On the other hand, respondents argue in their Comment dated August 20,
2009 that:
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.
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. 2002124 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.
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-inCharge (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.
This must be answered in the affirmative.
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
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:
[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 the test 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;
(e) Where the removal violates the order of separation provided in Section 3
hereof. (Emphasis supplied.)
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).1wphi1 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.

Petitioners failed to prove such facts. Mere allegations without hard evidence
cannot be considered as clear and convincing proof.
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:
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:
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.)
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.

No costs.
SO ORDERED.
G.R. No. 185582

February 29, 2012

TUNA PROCESSING, INC., Petitioner,

vs.
PHILIPPINE KINGFORD, INC., Respondent.
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?
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 Resolution2 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 Award3 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
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),8pertinent 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.
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.
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.
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.
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
xxx
The parties likewise executed a Supplemental Memorandum of
Agreement10 dated 15 January 2003 and an Agreement to Amend
Memorandum of Agreement11 dated 14 July 2003.
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 to CLAIMANT 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 payCLAIMANT 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[;]
(B) For breach of the MOA in failing to cooperate with CLAIMANT TPI in
fulfilling the objectives of theMOA, RESPONDENT KINGFORD shall
pay CLAIMANT the total sum of TWO HUNDRED SEVENTY ONE
THOUSAND FOUR HUNDRED NINETY DOLLARS AND TWENTY CENTS
($271,490.20)[;]14 and
(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
xxx15
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
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 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:
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
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),22the 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 theAlternative Dispute Resolution Act of
2004, the New York Convention and the Model Law on the other?
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-aviz 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
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 theModel 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:
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.
xxx
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.
It also expressly adopted the Model Law, to wit:
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
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
(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
(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
(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:
(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.
Pertinent provisions of the Special Rules of Court on Alternative Dispute
Resolution,31 which was promulgated by the Supreme Court, likewise support
this position.
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
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
The remaining arguments of respondent Kingford are likewise unmeritorious.
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.1wphi1 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.46Surely, 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 theAlternative 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
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 REVERSED and SET ASIDE. The case is REMANDED to Branch 61
for further proceedings.
SO ORDERED.
G.R. No. 201112

October 23, 2012

ARCHBISHOP FERNANDO R. CAPALLA, OMAR SOLITARIO ALI and

MARY ANNE L. SUSANO, Petitioners,
vs.
THE HONORABLE COMMISSION ON ELECTIONS, Respondent.
x-----------------------x
G.R. No. 201121
SOLIDARITY FOR SOVEREIGNITY (S4S) represented by Ma. Linda
Olaguer; RAMON PEDROSA, BENJAMIN PAULINO SR., EVELYN
CORONEL, MA. LINDA OLAGUER MONTAYRE, and NELSON T.
MONTAYRE,Petitioners,
vs.
COMMISSION ON ELECTIONS represented by its Chairman,
Commissioner SIXTO S. BRILLANTES, JR.,Respondent.
x-----------------------x
G.R. No. 201127
TEOFISTO T. 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, Petitioners,
vs.
COMMISSION ON ELECTIONS and SMARTMATIC TIM
CORPORATION, Respondents.
x-----------------------x
G.R. No. 201413

TANGGULANG DEMOKRASYA (TAN DEM), INC., EVELYN L. KILA YKO,

TERESITA D. BALTAZAR, PILAR L. CALDERON and ELITA T.
MONTILLA, Petitioners,
vs.
COMMISSION ON ELECTIONS and SMARTMATIC-TIM
CORPORATION, Respondents.
RESOLUTION
PERALTA, J.:
Before the Court are the Motions for Reconsideration separately filed by
movants Teofisto T. 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 (herein referred
to as Guingona, et al.) in G.R. No. 201127;1 Solidarity for Sovereignty (S4S)
represented by Ma. Linda Olaguer, Ramon Pedrosa, Benjamin Paulino Sr.,
Evelyn Coronel, Ma. Linda Olaguer Montayre, and Nelson T. Montayre
(referred to as S4S, et al.) in G.R. No. 201121;2 and Tanggulang Demokrasya
(Tan Dem), Inc., Evelyn L. Kilayko, Teresita D.
Baltazar, Pilar L. Calderon and Elita T. Montilla (Tan Dem, et al. for brevity) in
G.R. No. 201413.3 Movants implore the Court to take a second look at the
June 13, 2012 Decision4 dismissing their petitions filed against respondents
Commission on Elections (Comelec), represented by its Chairman
Commissioner Sixto S. Brillantes, Jr. (Chairman Brillantes), and SmartmaticTIM Corporation (Smartmatic-TIM).
For a proper perspective, the facts as found by the Court in the assailed
decision are briefly stated below:
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 (AES Contract) which is a Contract
of Lease with Option to Purchase (OTP) the goods listed therein consisting of
the Precinct Count Optical Scan (PCOS), both software and hardware.5 The
Comelec was given until December 31, 2010 within which to exercise the
option but opted not to exercise the same except for 920 units of PCOS
machines with the corresponding canvassing/consolidation system (CCS) for
the special elections in certain areas in Basilan, Lanao del Sur and Bulacan.6
On March 6, 2012, the Comelec issued Resolution No. 9373 resolving to
seriously consider exercising the OTP subject to certain conditions.7 It issued

another Resolution numbered 9376 resolving to exercise the OTP in

accordance with the AES Contract.8 On March 29, 2012, it issued Resolution
No. 9377 resolving to accept Smartmatic-TIMs offer to extend the period to
exercise the OTP until March 31, 2012.9 The Agreement on the Extension of
the OTP under the AES Contract (Extension Agreement) was eventually
signed on March 30, 2012.10 Finally, it issued Resolution No. 9378 resolving to
approve the Deed of Sale between the Comelec and
Smartmatic-TIM to purchase the latters PCOS machines to be used in the
upcoming 2013 elections.11 The Deed of Sale was forthwith executed.12
Claiming that the foregoing Comelec issuances and transactions entered
pursuant thereto are illegal and unconstitutional, movants filed separate
petitions for certiorari, prohibition and mandamus before the Court.
Movants failed to obtain a favorable decision when the Court rendered a
Decision13 on June 13, 2012 dismissing their petitions. Hence, the motions for
reconsideration based on the following grounds:
G.R. No. 201127
I. THE HONORABLE COURT, WITH ALL DUE RESPECT, ERRED IN HOLDING
THAT THE PERIOD OF THE OPTION TO PURCHASE HAS NOT EXPIRED;
II. THE HONORABLE COURT, WITH ALL DUE RESPECT, ERRED IN HOLDING
THAT THERE WAS NO SUBSTANTIAL AMENDMENT TO THE AES CONTRACT;
AND
II. THE HONORABLE COURT, WITH ALL DUE RESPECT, ERRED IN HOLDING
THAT THE SUBJECT AMENDMENT IS ADVANTAGEOUS TO THE PUBLIC.14
Movants Guingona, et al. disagree with the Courts interpretation of Article
2.2 of the AES Contract and insist that the use of the words "without
prejudice" and "surviving" explicitly distinguished the "period of the option to
purchase" from the "Term of this Contract." They thus conclude that the
warranty provision and the OTP are covered by a totally different period and
not by the term of the AES Contract.15 They also argue that the bid bulletins
relative to the AES Contract expressly stated the deadline for Comelec to
exercise the OTP16 and that the parties intended that the stated period be
definite and non-extendible.17 Movants likewise aver that the Court erred in
holding that there was no substantial amendment to the AES
Contract.18 Citing San Diego v. The Municipality of Naujan, Province of
Mindoro,19 as discussed in Justice Arturo D. Brions Dissenting Opinion,20 and

as allegedly reiterated in San Buenaventura v. Municipality of San Jose,

Camarines Sur, et al.,21 Guingona et al. points out that an extension, however
short, of the period of a publicly bidded out contract is a substantial
amendment that requires public bidding because the period in an OTP is a
vital and essential particular to the contract.22 Movants add that the Court
erred in holding that the subject amendment is advantageous to the public
as the extended option contract is void and thus can never be said to inure
to the benefit of the public.23 Lastly, movants claim that the Comelec still has
the time to conduct public bidding to procure the items necessary for the
2013 elections and that the needed budget could be provided by Congress.24
G.R. No. 201121
Petitioners humbly submit that the Order of this Honorable Court dismissing
the petition by upholding the validity of the extended option to purchase and
the constitutionality of the AES Contract implementation is contrary to law
and the Constitution.25
Movants S4S, et al. implore the Court to take a second look at the relevance
of the release of the performance security to the subject expired option
contract since it did not alter the fact of such expiration.26 They explain that
the Courts conclusion is a dangerous precedent, because it would encourage
circumvention of the laws and rules on government contracts since the
parties could enter into collusion to defer the release of the performance
security for the sole purpose of prolonging the effectivity of the
contract.27 They reiterate their argument that any extension of the option
period amounts to a new procurement which must comply with the
requirements of bidding under Republic Act (RA) No. 918428 and stress that
the March 31, 2012 Deed of Sale is not a special transaction which warrants
any exemption from the mandatory requirements of a public bidding.29 It is
likewise their view that time constraints, budgetary consideration and other
advantages in extending the option period are not plausible justifications for
non-compliance with the requirements of public bidding.30 Finally, movants
assail the constitutionality of the entire AES Contract and consequently of
the option contract because of its failure to provide that the mandatory
minimum system capabilities be complied with; and because of the provision
on shared responsibility between the Comelec and Smartmatic.31
G.R. No. 201413
I. THE NON-RELEASE OF THE SECURITY DEPOSIT BY COMELEC INDICATES THE
EXISTENCE OF UNFULFILLED OBLIGATIONS BY THE CONTRACTOR, AND

THEREFORE, IT IS ABSURD TO CITE THIS UNCURED BREACH BY THE

CONTRACTOR TO JUSTIFY THE GRANT OF MORE RIGHTS TO THE SAID
CONTRACTOR BY EXTENDING THE EXPIRED OPTION TO PURCHASE WHICH
EFFECTIVELY CIRCUMVENTS THE GOVERNMENT PROCUREMENT LAW.
II. THERE IS NO JUSTIFIABLE BASIS TO ACCEPT MERE ARGUMENTS THAT THE
PCOS IS CAPABLE OF RUNNING WITH DIGITAL SIGNATURES, SECURE[D] FROM
HACKING AND COMPLIANT WITH THE MINIMUM ACCURACY RATE OF 99.995%,
WHEN IN ACTUAL PERFORMANCE DURING MAY 2010 [ELECTIONS,] THE PCOS
OPERATED WITHOUT DIGITAL SIGNATURES, FOUND VULNERABLE TO
HACKING AND FAILED BY THE ACCURACY REQUIREMENT, AS SHOWN BY THE
APPLICABLE COMELEC RESOLUTIONS, TWG-RMA REPORT, AUDIT LOGS AND
PRINT LOGS.32
Movants Tan Dem, et al. convey their view on the absurdity of the Courts
decision in justifying the resurrection of the dead OTP with the continuing
effectivity of the stipulation on performance security notwithstanding the
presumed existence of uncured contractual breach by the contractor. 33 They
also express doubt that the PCOS machines are capable of running with
digital signatures compliant with the minimum accuracy rate.34
For their part, respondents offer the following comments:
COMELEC
The Comelec, on the other hand, argues that it validly exercised the OTP
because the period for its exercise was amended and accordingly extended
to March 31, 2012. It highlights the provision in the AES Contract on the right
to amend the contract which the parties did during its effectivity.35 It does
not agree with movants claim that the parties to the contract intended that
the option period be definite.36 Rather, it maintains that the parties are free
to extend the option period in the same way that they can amend the other
provisions of the contract.37 Moreover, the Comelec insists that the extension
of the option period is neither a material nor substantial amendment
considering that after the extension, the AES Contract taken as a whole still
contains substantially the same terms and conditions as the original contract
and does not translate to concrete financial advantages to SmartmaticTIM.38 It also argues that the extension of the option period could not have
affected the bid prices or financial proposals of the bidders since they
understood from the RFP that it had no separate price allocation.39 It
emphasizes that a longer period was not a benefit but a burden to the
bidders such that they would not have submitted a lower but in fact a higher

bid because they would have to give up the opportunity to lease or sell the
PCOS machines to third parties and it would also result in higher costs in
warehousing and security.40 The Comelec also opines that San Diego and San
Buenaventura, cited by movants, are not applicable because they involve
alterations of the essential terms and conditions of the main contract to the
disadvantage of the government unlike this case where there is an alteration
only with respect to the ancillary provision of the AES Contract and for the
benefit of the Comelec.41 The Comelec reiterates that the extension of the
option period is advantageous to it and burdensome for SmartmaticTIM.42 Lastly, it posits that the exercise of the OTP was the more prudent
choice for the Comelec taking into consideration the budget and time
constraints.43
SMARTMATIC-TIM
Smartmatic-TIM contends that the OTP is only an ancillary provision in the
subsisting AES Contract which has already satisfied the public bidding
requirements.44 It disagrees with petitioners that the extension of the option
period was unilateral and claims instead that it was mutual as the parties in
fact executed an agreement on the extension.45 Assuming that the option
period had already expired, the extension is not a substantial or material
amendment since it only pertains to a residual component of the AES
Contract.46 It also echoes the Comelecs argument that the San Diego and
San Buenaventura cases are not applicable to the present case because of
the difference in factual circumstances.47 Moreover, it reiterates its claim that
the extension is favorable to the Comelec and does not prejudice the other
bidders.48 Smartmatic-TIM explains that the retention of the performance
security is due to its residual continuing obligations to maintain the PCOS
machines and update the software in anticipation of their possible use for
elections after 2010, and not due to the existence of unfulfilled obligations as
provided in the AES Contract.49 It likewise points out that the alleged flaws
and deficiencies of the PCOS machines do not affect its compliance with the
requirements of RA 9369.50 It emphasizes that the use of digital signatures
and their availability for use in future elections have been adequately
established.51 It also defends PCOS machines compliance with the minimum
requirements under RA 9369 as found by the Court in Roque v. Comelec.52 As
to the alleged glitches, Smartmatic-TIM claims that they are not attributable
to any inherent defect in the PCOS machines and, in any case,
enhancements have already been made.53 Lastly, Smartmatic-TIM stresses
that the arguments challenging the validity and constitutionality of the AES

Contract and the performance by the Comelec of its mandate have already
been rejected with finality by the Court in Roque v. Comelec.54
We find no reason to disturb our June 13, 2012 Decision.
Clearly, under the AES Contract, the Comelec was given until December 31,
2010 within which to exercise the OTP the subject goods listed therein
including the PCOS machines. The option was, however, not exercised within
said period. But the parties later entered into an extension agreement giving
the Comelec until March 31, 2012 within which to exercise it. With the
extension of the period, the Comelec validly exercised the option and
eventually entered into a contract of sale of the subject goods. The extension
of the option period, the subsequent exercise thereof, and the eventual
execution of the Deed of Sale became the subjects of the petitions
challenging their validity in light of the contractual stipulations of
respondents and the provisions of RA 9184.
In our June 13, 2012 Decision, we decided in favor of respondents and placed
a stamp of validity on the assailed resolutions and transactions entered into.
Based on the AES Contract, we sustained the parties right to amend the
same by extending the option period. Considering that the performance
security had not been released to Smartmatic-TIM, the contract was still
effective which can still be amended by the mutual agreement of the parties,
such amendment being reduced in writing. To be sure, the option contract is
embodied in the AES Contract whereby the Comelec was given the right to
decide whether or not to buy the subject goods listed therein under the
terms and conditions also agreed upon by the parties. As we simply held in
the assailed decision:
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.55
In interpreting Article 2.2 of the AES Contract, movants claim that the use of
the word "surviving" and the phrase "without prejudice" suggests that the
warranty provision and the OTP are covered by a different period and not by
the term of the AES Contract.56

We cannot subscribe to said postulation. Article 2.2 of the AES Contract

reads:
Article 2
EFFECTIVITY
xxxx
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).
The provision means that the contract takes effect from the date of
effectivity until the release of the performance security. Article 8 thereof, on
the other hand, states when the performance security is released, to wit:
Article 8
Performance Security and Warranty
xxxx
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 abovementioned Performance Security without need of demand.
The performance security may, therefore, be released before December 31,
2010, the deadline set in the AES Contract within which the Comelec could
exercise the option. The moment the performance security is released, the
contract would have ceased to exist. However, since it is without prejudice to
the surviving provisions of the contract, the warranty provision and the
period of the option to purchase survive even after the release of the
performance security. While these surviving provisions may have different
terms, in no way can we then consider the provision on the OTP separate
from the main contract of lease such that it cannot be amended under Article
19.
In this case, the contract is still effective because the performance security
has not been released. Thus, not only the option and warranty provisions
survive but the entire contract as well. In light of the contractual provisions,
we, therefore, sustain the amendment of the option period.

The amendment of a previously bidded contract is not per se invalid. For it to

be nullified, the amendment must be substantial such that the other bidders
were deprived of the terms and opportunities granted to the winning bidder
after it won the same and that it is prejudicial to public interest. In our
assailed decision, we found the amendment not substantial because no
additional right was made available to Smartmatic-TIM that was not
previously available to the other bidders; except for the extension of the
option period, the exercise of the option was still subject to same terms and
conditions such as the purchase price and the warranty provisions; and the
amendment is more advantageous to the Comelec and the public.
Movants seek the application of San Diego57 where we nullified the extension
of the lease agreement and considered said amendment substantial. We,
however, find the case inapplicable. The extension made in San Diego
pertained to the period of the main contract of lease while in this case, the
extension referred not to the main contract of lease of goods and services
but to the period within which to exercise the OTP. In extending the original
period of lease of five years to another five years without public bidding, the
Municipality of Naujan, Province of Mindoro acted in violation of existing law.
The period of lease undoubtedly was a vital and essential particular to the
contract of lease. In San Diego, the Municipality of Naujan was the lessor of
its municipal waters and the petitioner, the lessee. An extension of the lease
contract would mean that the lessee would be given undue advantage
because it would enjoy the lease of the property under the same terms and
conditions for a longer period. Moreover, prior to the extension of the lease
period, the rentals were reduced upon the request of the lessee. The end
result was that the municipality was deprived of income by way of rentals
because of the reduced rates and longer period of lease.
In this case, the extension of the option period means that the Comelec had
more time to determine the propriety of exercising the option. With the
extension, the Comelec could acquire the subject PCOS machines under the
same terms and conditions as earlier agreed upon.1wphi1 The end result is
that the Comelec acquired the subject PCOS machines with its meager
budget and was able to utilize the rentals paid for the 2010 elections as part
of the purchase price.
We maintain the view that the extension of the option period is an
amendment to the AES Contract authorized by Article 19 thereof. As held in
Agan, Jr. v. Philippine International Air Terminals Co., Inc.:58

While we concede that a winning bidder is not precluded from modifying or

amending certain provisions of the contract bidded upon, 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. Hence, 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 other bidders. The alterations and modifications in
the contract executed between the government and the winning bidder must
be such as to render such executed contract to be an entirely different
contract from the one that was bidded upon.59
It must be pointed out that public biddings are held for the best protection of
the public and to give the public the best possible advantages by means of
open competition between the bidders, and to change them without
complying with the bidding requirement would be against public
policy.60 What are prohibited are modifications or amendments which give
the winning bidder an edge or advantage over the other bidders who took
part in the bidding, or which make the signed contract unfavorable to the
government.61 In this case, as thoroughly discussed in our June 13, 2012
Decision, the extension of the option period and the eventual purchase of the
subject goods resulted in more benefits and advantages to the government
and to the public in general.
While movants may have apprehensions on the effect to government
contracts of allowing "advantage to the government" as justification for the
absence of competitive public bidding, it must be stressed that the same
reasoning could only be used under similar circumstances. The "advantage
to the government," time and budget constraints, the application of the rules
on valid amendment of government contracts, and the successful conduct of
the May 2010 elections are among the factors looked into in arriving at the
conclusion that the assailed Resolutions issued by the Comelec and the
agreement and deed entered into between the Comelec and Smartmatic-TIM,
are valid.
Lastly, we need not further discuss the issues raised by movants on the
alleged glitches of the subject PCOS machines, their compliance with the
minimum system capabilities required by law, and the supposed abdication
of the Comelecs exclusive power in the conduct of elections as these issues

have been either thoroughly discussed in the assailed decision or in the

earlier case of Roque, Jr. v. Commission on Elections.62
WHEREFORE, premises considered, the motions for reconsideration are
DENIED for lack of merit.
SO ORDERED.
G.R. No. 167174

September 23, 2013

SPOUSES CARMELITO and ANTONIA ALDOVER, Petitioners,

vs.
THE COURT OF APPEALS, SUSANA AHORRO,ARLINE SINGSON,
BIBIANA CAHIBAYBAYAN, LUMINADA ERQUIZA,1 ANGELITA ALBERT,
JOSELITO ACULA, SORAYDA ACULA, JOMAR ACULA, CECILIA
FAMORCA, CELESTE VASQUEZ, ALFONSO CABUWAGAN, CARMELITA
RIVERA, JESSIE CAHIBAYBAYAN, MA. ANA V. TAKEGUCHI, ROSEMARIE
BONIFACIO, ANGELINA FLORES, ALMACERES D. MISHIMA, AURELIA
CAHIBAYBAYAN, SONIA S. MALAQUE, NORA ANTONIO, REYNALDO
ANTONIO, REGINALD ANTONIO, RONALDO ANTONIO, JR., JUANITA
CHING,2 MARIETA PACIS, TITO PACIS, JOSE IBAYAN, ELSIE SISON,
LEONARDO SISON, MERCEDES ANTONIO, RICARDO
SARMIENTO,3 SERGIO TEGIO, CRISENCIA FAVILLAR, NELLY
FERNANDEZ, MARILYN DE VEGA, CELIA TUAZON, CELINE RAMOS,
EUTEMIO RAMOS, LUZVIMINDA VERUEN, NICANOR ORTEZA,
ADELAIDA CALUGAN,4 GLORIA AGBUSAC,5VIRGINIA GAON, REMIGIO
MAYBITUIN, LAURA GARCIA, CHARLES GARCIA, MA. CRISTINA
GARCIA,6RICARDO SARMIENTO, SR., ROBERTO TUAZON, GEMMA
TUAZON, ANALYN TUAZON, JOHN ROBERT TUAZON, ELJEROME
TUAZON, JEMMALYN TUAZON, MILAGROS TUBIGO,7 MARICAR
TUBIGO,8 MARISSA BITUIN,9 ROGER GOBRIN, MARCELINA RAMOS,
ESTRELLA RAMOS, ALFREDO RAMOS, ADORACION RAMOS, ERICSON
RAMOS, CAMILLE RAMOS, RAMIL MARQUISA,10 ROMEO PORCARE,
NIDA PORCARE, JEROME PORCARE, JONATHAN PORCARE, PILARCITA
ABSIN, JHON-JHON ABSIN, JASON ABSIN,11JAYSON ABSIN, EDWARDO
ABSIN, MAMRIA EDEN,12 ARNEL REUCAZA, ZENAIDA REUCAZA,
MICHELE REUCAZA, NALYN REUCAZA,13 MARICRIS REUCAZA, ABELLE
REUCAZA,14 JHON VILLAVECENCIO, CILLE VILLAVECENCIO, ARIEL
CAHIBAYBAYAN, JOHN EDWARD VILLAVECENCIO, ARCELITO
VILLAVECENCIO, FERMINA RIVERA, ANITA RIVERA,15 EDWIN
HOSMILLO, ESTER HOSMILLO, REGINE HOSMILLO, MARFIKIS

VENZON, CURT SMITH VENZON, ALBERTO VILLAVECENCIO, MARILYN

DE VEGA, JEFFREY DE VEGA, LIANA DE VEGA, RAMIL DE
VEGA,16 SHANE VENZON, RUFO SINGSON, ROSALIE BALINGIT, RAUL
SINGSON, HAZEL GARCIA, CRISTINE GARCIA, JASON GARCIA, ECY B.
TAN,17GREGORIO AURE, ICTORIA SARMIENTO,18 OSCAR
TUBIGO,19 JOVY SARMIENTO, BABYLYN SARMIENTO, JEAN
CAHIBAYBAYAN,20 RONALD CAHIBAYBAYAN,21 ALLAN CAHIBAYBAYAN,
AMELIA DEQUINA, DENNIS DEQUINA, IRMA DEQUINA, FREDERICK
DEQUINA, CRISTINE JOY DEQUINA, ENRIQUE LOPEZ,22NERY LOPEZ,
NERISSA LOPEZ, ERICA LOPEZ, VANESSA LOPEZ, LEO JIMENEZ,
MICHELLE JIMENEZ, MAYLEEN JIMENEZ, LEONARDO
JIMENEZ,23 FELICIANO MIRALLES, VIRGINIA ECIJA, LEONARDO
AHORRO, MA. GINA SORIO, ARNEL SORIO, JOENNY PAVILLAR,
SALVACION PAVILLAR, JOHNNY BALDERAMA, MARY JANE
BALDERAMA, FERDINAND MALAQUE, MARK ADELCHI MALAQUE, CLIO
JOY MALAQUE, IRISH MADLANGBAYAN, EFFERSON MADLANGBAYAN,
ROBERTO MALAQUE, HELARIA MALAQUE,24 ARBIE MAY
MALAQUEROY,25 GILBERT MALAQUE,26 SARRY LEGASPI, TERESITA
LEGASPI, ROSEANN CRUZ, SHE ANN CRUZ, EXELEN LEGASPI,
GREGORIO RAMOS, NENITA RAMOS, FELINO TEGIO, JOYZAIRRA
ACULA, JUANITO CALUGAY,27 GEMMA CALUGAY, CARLITO ANTONIO,
CELIA ANTONIO,28 PRINCES MARGARET,29 JOSE CECILIO,30 JEROME
CZAR,31 RAMON SISON, DANILO SISON, MARILOU SISON, ALEX
RIVERA, NARCISO DEL ROSARIO, BRIAN DEL ROSARIO,32 CHARLINE
DEL ROSARIO, CARMELA DEL ROSARIO, KEVIN DEL ROSARIO,
BEHNSIN JOHN DEL PACIS,33 MELRON ANTONIO,ANGEO
ANTONIO,34 DAISY ANN ANTONIO, IVAN ANTONIO, RAYMART
ANTONIO, PRESCILLA PAGKALIWANGAN, MARK KENNETH
PAGKALIWANGAN, MARK JULIUS PAGKALIWANGAN, VINCENT
PAGKALIWANGAN, DOLORES ORTEZA, JONECA ORTEZA, 35 YUMI
ORTEZA, NICANOR ORTEZA, RAUL BALINGINT, KATRINA CASSANDRA
BAES, CHRISTOPHER BAES, MARK GIL BAES, BIENVENIDO BAES,
ARTEMIO SANTOS, CATHERINE UMINGA, ROLANDO UMINGA, SR.,
ERLINDA TUAZON, CHRISTIAN TUAZON, ARGEL ANGELO SANTOS,
MONTANO PAGKALIWANGAN, in their own behalf and as members of
Samahang Magkakapitbahay ng Villa Reyes Compound
Association. Respondents.
DECISION
DEL CASTILLO, J.:

This Petition for Certiorari36 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 CAG.R. SP No. 86363, which granted herein respondents ancillary prayer for
injunctive relief: and (ii) the February 10, 2005 Writ of Preliminary
Injunction38 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.
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
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.
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 Opposition46 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.
In the meantime, Aldover also caused the consolidation of title over the
foreclosed property in her name. On December 17, 2003, TCT No. PT107508was cancelled and, in lieu thereof, TCT No. PT-12231147 was issued in
Aldovers name.
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 Possession49 was issued directing the
Branch Sheriff to place Aldover in possession of subject lot.
In compliance with the writ, the Branch Sheriff issued a Notice to
Vacate50 dated April 1, 2004. Then on April 23, 2004, he issued a Sheriffs
Partial Report51 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
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
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 Order55 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:

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 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 Injunction59 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.
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 September 23, 2004, the CA issued a Resolution62 outrightly dismissing
the Petition on procedural grounds.
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 ReRaffle 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 Resolution68 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 Reconsideration70 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 Injunction73 on February 10, 2005.
Petitioners subsequently filed a Motion for Inhibition of the CA Sixth (6th)
Division74 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.
Our Ruling
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 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:
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.
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
Report86 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 CAG.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.
SO ORDERED.
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.
DECISION
QUISUMBING, J.:
For review on certiorari are the D E C I S I O N1 dated March 30, 2001 of the
Court of Appeals in CA-G.R. SP No. 58191, and its Resolution2 dated October
18, 2001 denying the motion for reconsideration. The assailed decision
denied the petition to set aside the Resolution3 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 facts are as follows:
On March 19, 1997, private respondent Violeta Herrera filed 21
ejectment Complaints4 before the 16th MCTC, Jordan-Buenavista-Nueva
Valencia, Jordan, Guimaras. Private respondent alleged that she owns 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
the barangay conciliation failed, private respondent filed thecomplaints.
In their Answers,5 eight6 of the petitioners claimed that Lot 1227 was
formerly a shoreline which they developed when they constructed their
respective houses. Another eight7 maintained that their houses stood on Lot
1229 of the Cadastral Survey of Jordan, Guimaras. The other three8 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:
1. To vacate Lot 1227 of the Cadastral Survey of Jordan, Guimaras;
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

Petitioners appealed to the RTC, Branch 65, at Jordan, Guimaras, which

decided as follows:
WHEREFORE, premises considered, the decision in Civil Cases Nos. 0270-J,
0272-J, 0273-J, 0274-J, 0275-J, 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.
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 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 of possession 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 ruling25 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
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.
SO ORDERED.
G.R. No. 169380

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 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 decision1 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.
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

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
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
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
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
decision15 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
The RTC affirmed the MeTC decision of January 27, 2003. It issued its
decision17 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:
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 filed a motion for reconsideration,22 which the Court of Appeals
denied in its resolution23 of August 22, 2005. In the present appeal, the
petitioner raises before us the following issues:
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
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 Memorandum44 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 CAG.R. SP No. 80116.
SO ORDERED.
G.R. No. 192486

November 21, 2012

RUPERTA CANO VDA. DE VIRAY and JESUS CARLO GERARD

VIRAY, Petitioners,
vs.
SPOUSES JOSE USI and AMELITA USI, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Petitioners have availed of Rule 45 to assail and nullify the Decision1 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 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 plan4 (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

Lot 733-D

683 square meters

Proposed Road

Lot 733-E

677 square meters

Unsold

Lot 733-F

3,501 square
meters

Sold to Jesus Viray

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;
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;
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-A - - - - - - - To Emerencia M. Vda. Mallari;
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-RP9 for Lot 733-B to Sps. Usi; and TCT 1586-RP
for Lot 733-C to Mendoza.
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.
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.
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.)
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

Lot 733-C-2

1,000 square
meters

Sps. Alejandro & Juanita

Lacap

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

Lot 733-C-6

500 square meters

Ellen, McDwight,
Bismark, Beverly and
Georgenia Mendoza

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-C10

1,000 square
meters

Sps. Jose and Amelita

Usi

Lot 733-C11

668 square meters

Ellen, McDwight,
Bismark, Beverly and
Georgenia Mendoza

Lot 733-C12

550 square meters

Ellen, McDwight,
Bismark, Beverly and
Georgenia Mendoza

[Lot 733-C13]

[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.
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 733-F, respectively, from Mendoza.
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:

(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 733-A (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 Decision20 in favor of Jesus Viray, the
dispositive portion of which pertinently reads:
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.
xxxx
SO ORDERED.21
The Decision eventually became final and executory, the Usis having opted
not to appeal it.
(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 Decision22 dated June 29, 2000, the RTC
dismissed the petition to annul. The Usis appeal to the CA, docketed as CAG.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
Judgment24 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 dismissal26 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
Order28 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
Damages31 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., 2099-R.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)

Disposition

88-0265M

Sps. Usi v.
Sps. Viray

Annulment of 733-A
Deed of
(Fajardo
Absolute

Decision in
favor of
Sps. Viray.

Sale

88-0283M

91 (13)

Mendoza v.
Jesus Viray

Jesus Viray v.
Sps. Usi

Plan)

Decision is
now final.

Annulment of 733-F
Deed of
(Fajardo
Absolute
Plan)
Sale

Decision in
favor of
Sps. Viray.

Forcible
Entry

Judgment
in favor of
Viray. No
appeal.

733-F
(Fajardo
Plan)

Subject of
CA-G.R. CV
Nos.
24981-82
denied.
Subject of
G.R. No.
122287
petition
denied.

90-0914M Sps. Usi v.

Petition for
733-F
Vda. de Viray Annulment of
(Fajardo
MCTC
Plan)
Decision in
CC No. 91
(13)

RTC
dismissed
petition.

(02)1164(M)

Pending
before the
RTC.

Vda. de Viray Cancellation

v. Mendoza,
of Titles
et al.
before RTC,

Lots 733-C8

CA-G.R. CV
No. 67945
appeal
dismissed.
G.R. No.
154538
petition
denied.

Br. 55,
Pampanga

011118(M)

Sps. Usi v.
Petition for
Vda. de Viray
Accion
Publiciana
and
Reivindicator
ia before
RTC, Br. 55,
Pampanga

To 733-C-12
(Lot 733-F
(Fajardo
Plan)
733-B, 733C-

Petition
dismissed.

1 and 733C-

CA-G.R. CV
No. 90344
reversed
RTC
Decision.
Subject of
instant
case, G.R.
No.
192486

10 (Galang
Plan)

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 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 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.
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.

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. Usi32 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.
Following the denial of their motion for reconsideration per the RTCs
Order33 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. 733-B,
733-C-1 and 733-C-10 covered by TCT Nos. 1585-R.P., 2092-R.P, and 2101R.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 petitionersappellants of the said property as herein described and specified. Claims for
damages, however, are hereby denied x x x.
SO ORDERED.
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.
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 pro-indiviso 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.
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
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 coowners, 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 co-owners
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 Appeals50 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
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, 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.
Costs against respondents.
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
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 Decision 1 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:

WHEREFORE, judgment is rendered, finding the defendants Anita MonasterioPe, 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. T9699 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.
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 the defendants.
SO DECIDED.5
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.
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.
The Court is not persuaded.
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 attorney-in-fact who
instituted the action.12 Such circumstance constitutes reasonable cause to
allow the attorney-in-fact 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 attorneyin-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.
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.
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.
The Court does not agree.
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.

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 does not agree.
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.
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.
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 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
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.
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.
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.
SO ORDERED.
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.
DECISION
BERSAMIN, J.:
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.
The Case
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:
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;

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).
WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby
DENIED for lack of merit..
Accordingly, defendants are directed to file their Answers to the complaint
within the period still open to them, pursuant to the rules.
SO ORDERED.
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.
On June 29, 2001, the RTC denied petitioners motion for reconsideration.7 It
stated in respect of the service of summons, as follows:
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.
Furthermore, the CA ruled:
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.
The respondent Judge, in denying petitioners motion for reconsideration,
held that:
xxxx
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.
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.

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.
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
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.
WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, 2002;
and ORDERS petitioners to pay the costs of suit.
SO ORDERED.
G.R. No. 175799

November 28, 2011

NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, Petitioner,

vs.
LEPANTO CONSOLIDATED MINING COMPANY, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari assailing the Decision1 of the Court
of Appeals dated September 8, 2006 in CA-G.R. SP No. 94382 and its
Resolution2 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 Complaint3 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 20184 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

Dismiss5 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.
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.
On December 9, 2005, the trial court issued an Order6 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 Certiorari9 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 CAG.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.

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.
Our discussion of the issues raised by the parties follows:
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 Memorandum12 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
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.
Propriety of the Resort to a Petition for Certiorari with the Court of
Appeals
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:
[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 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
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 1617 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.
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.

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
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, andthey 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.)
In the case at bar, respondent asserts in the Complaint that the Hedging
Contracts are void for being contrary to Article 201825 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 is barred by estoppel or laches. As these

matters require 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 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 entitywhich 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:
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.
Respondent argues31 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:
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
Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd.
v. Dakila Trading Corporation33that:
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.
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.)
In Domagas v. Jensen,35 we held that:

[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
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

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
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 of affirmative defenses in an Answer (which
would notamount 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:
"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 order to conform to the ruling in La Naval, which was decided by this Court
in 1994, the former Section 23, Rule 1444 concerning voluntary appearance
was amended to include a second sentence in its equivalent provision in the
1997 Rules of Civil Procedure:
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.)
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.)1wphi1
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.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 190710

June 6, 2011

JESSE U. LUCAS, Petitioner,

vs.
JESUS S. LUCAS, Respondent.
DECISION
NACHURA, 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) Decision1 dated
September 25, 2009 and Resolution dated December 17, 2009.
The antecedents of the case are, as follows:
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.
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.
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 Order3 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.
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
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.
After learning of the September 3, 2007 Order, respondent filed a motion for
reconsideration.5 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.
On July 30, 2008, the RTC, acting on respondents motion for reconsideration,
issued an Order6 dismissing the case. The court remarked that, based on the
case of Herrera v. Alba,7 there are four significant procedural aspects of a
traditional paternity action which the parties have to face: a prima 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.
SO ORDERED.8
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 Order9 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.
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
SO ORDERED.10
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 Evidence11 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.
Respondent filed a Motion for Reconsideration of Order dated October 20,
2008 and for Dismissal of Petition,12reiterating 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
Aggrieved, respondent filed a petition for certiorari with the CA, questioning
the Orders dated October 20, 2008 and January 19, 2009.
On September 25, 2009, the CA decided the petition for certiorari in favor of
respondent, thus:
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.
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 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

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
one-time 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
Petitioner moved for reconsideration. On December 17, 2009, the CA denied
the motion for lack of merit.16
In this petition for review on certiorari, petitioner raises the following issues:
I.
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
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.
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.
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.
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 res is 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.
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 non-service 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.
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. Alba34 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.
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:
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;
(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
(e) The existence of other factors, if any, which the court may consider as
potentially affecting the accuracy or integrity of the DNA testing.
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.
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
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.371avvphi1
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.
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.
WHEREFORE, premises considered, the petition is GRANTED. The Court of
Appeals Decision dated September 25, 2009 and Resolution dated December
17, 2009 are REVERSED and SET ASIDE. The Orders dated October 20, 2008
and January 19, 2009 of the Regional Trial Court of Valenzuela City are
AFFIRMED.
SO ORDERED.
REPUBLIC OF THE PHILIPPINES,

G.R. No.
186027

Petitioner,
Present:

- versus -

CARPIO, J.,
Chairperso
n,
NACHURA,
PERALTA,
ABAD, and

MERLYN MERCADERA through her Attorney-in-Fact,

EVELYN M. OGA,

MENDOZA
, JJ.

Respondent.

Promulgat
ed:

Dece
mber 8,
2010

X -------------------------------------------------------------------------------------- X

DECISION

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. R-3427 (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-in-Fact, Evelyn M. Oga (Oga), sought the
correction of her given name as it appeared in her Certificate of Live Birth from Marilyn L. Mercadera toMerlyn 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 Trial Court 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 onSeptember 5, 2005. On said day, there being
no opposition, counsel for Mercadera moved for leave of court to present
evidenceex 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. 00568MIN. 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]

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 affectingthe 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 clear-cut 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:

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 correctionunless 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]

Indeed, 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. In Labayo-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.

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
inHernandez, 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.

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 isAFFIRMED.
SO ORDERED.
G.R. No. 166730

March 10, 2010

SPOUSES FERNANDO TORRES and IRMA TORRES, Petitioners,

vs.
AMPARO MEDINA and the EX-OFFICIO SHERIFF of the RTC of Quezon
City, Respondents.
DECISION
PERALTA, J.:
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 Decision2 and
January 18, 2005 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No.
75847.
The facts of the case:
On July 28, 1994, respondent Amparo Medina (Medina) wrote a letter4 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 Mortgage5 dated December 20, 1993.
On May 27, 1997, the Office of the Ex-Officio Sheriff issued a Notice of
Sheriffs Sale6 and, on June 30, 1997, sold at public auction the subject

property to Medina being the highest bidder thereof. A Certificate of

Sale7 was thereafter issued to Medina.
On September 21, 1999, the Spouses Torres filed a Complaint8 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.
In their Complaint, the Spouses Torres raised the following causes of action,
to wit:
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 Dismiss10 raising the grounds of
res judicata and forum shopping. Medina argued that the Spouses Torres had
filed an earlier Complaint11 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 Decision12 dated March 7, 1997.
On December 27, 2001, the RTC issued an Order13 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.
SO ORDERED.15
The Spouses Torres then filed a Motion for Reconsideration16 dated August
30, 2004, which was, however, denied by the CA in the Resolution17 dated
January 18, 2005.
Hence, herein petition, with the Spouses Torres raising the following
assignment of errors, to wit:
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.

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;
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.
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 Decision19 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
The Spouses Torres appealed said Decision to the CA.
On February 18, 1998, the CA issued a Resolution21 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 Resolution23 dated August 6, 1998.
Aggrieved, the Spouses Torres then sought relief from this Court.
On July 5, 1999, the Courts First Division issued a Resolution24 denying the
petition of the Spouses Torres. On August 16, 1999, the First Division issued
another Resolution25 denying the motion for reconsideration. On September
7, 1999, an Entry of Judgment26 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:
(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;
(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
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. Q94-18962. 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.
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
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
In dismissing the Complaint, the RTC decision in Civil Case No. 94-18962 was
categorical in upholding the validity of the instrument, to wit:
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
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.
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-9418962 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 CAG.R. CV No. 75847 are AFFIRMED.
SO ORDERED.
G.R. No. 161034

June 30, 2009

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,
vs.
TRINIDAD SALAZAR AND ANICETA SALAZAR, Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari assailing the July 25, 2003
Decision1 of the Court of Appeals (CA) as well as its November 25, 2003
Resolution2 in CA-G.R. CV No. 70161, which reversed and set aside the
December 20, 2000 Decision3 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 all11 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
On September 14, 1989, the said court, apparently realizing its mistake,
issued an Order, stating thus:
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-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
Defendants filed three separate answers. Defendants Raymundo Macaraeg,
Martha Estacio (both deceased), Adelaida Macaraeg, Lucio Macaraeg,
represented by Eufracia Macaraeg Baluyot as attorney-in-fact, 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. 702-A 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
judgment21 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 reconsideration28 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.
We rule for petitioners.
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.
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.lawphil.net 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
prescribed45 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.
G.R. No. 170281

January 18, 2008

REPUBLIC OF THE PHILIPPINES, represented by the ANTI-MONEY

LAUNDERING COUNCIL, petitioner,
vs.
GLASGOW CREDIT AND COLLECTION SERVICES, INC. and CITYSTATE
SAVINGS BANK, INC., respondents.
DECISION
CORONA, J.:
This is a petition for review1 of the order2 dated October 27, 2005 of the
Regional Trial Court (RTC) of Manila, Branch 47, dismissing the complaint for
forfeiture3 filed by the Republic of the Philippines, represented by the AntiMoney 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
judge4 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. BalisiUmali) 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 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 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 alias summons 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
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. That there is failure to prosecute, in that, up to now, summons has yet to
be served upon Glasgow.5

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 Court6 (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)
At any rate, the trial court was a proper venue.
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 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;
(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) Glasgow has funds in the amount of P21,301,430.28 deposited with
[CSBI], under CA 005-10-000121-5;
(d) As events have proved, aforestated bank account is related to the
unlawful activities of Estafa and violation of Securities Regulation Code;
(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;

(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
(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-005-10-0001215 in the amount of P21,301,430.28 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.
(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.
In relation thereto, Rule 12.2 of the Revised Implementing Rules and
Regulations of RA 9160, as amended, states:

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.
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-005-10000121-5 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)
Finally, Section 27 of the Rule of Procedure in Cases of Civil Forfeiture
provides:
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 commencementor the
resolution of a petition for civil forfeiture. (emphasis supplied)
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 aliassummons
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 an ex 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 aliassummons.
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 aliassummons 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.
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 this Court ruled:
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.
Service Of Summons
May Be By Publication
In Republic v. Sandiganbayan,19 this Court declared that the rule is settled
that forfeiture proceedings are actionsin 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 orquasi 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
rem and 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.
G.R. No. 123346

March 31, 2009

MANOTOK REALTY, INC. and MANOTOK ESTATE

CORPORATION, Petitioners,
vs.
CLT REALTY DEVELOPMENT, CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 134385

March 31, 2009

ARANETA INSTITUTE OF AGRI-CULTURE, INC., Petitioner,

vs.
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.
RESOLUTION

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 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 Report3 (Report) on 26 November 2008.
The Special Division submitted the sealed Report to this Court.
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.
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, [Lot 25-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 1917.1avvphi1
CLT v. MANOTOK
CA-G.R. CV. No. 45255
[SC-G.R. No. 123346]
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"].

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 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 seventyseven (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.
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 dated 8 January
1996. After the denial of their Motion for Reconsideration, the MANOTOKS
filed a Petition for Review before the Supreme Court.
PROCEEDINGS BEFORE THE SUPREME COURT
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.
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.
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
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
In its Offer of Evidence,5 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
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 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. 994.89
III.

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:
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:
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?
iii. Whether the factual and legal bases of the 1966 Order of Judge MuozPalma 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 City on 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.
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. T-177013, 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 1917.1avvphi1
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
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-A2 of the said estate, the following were inscribed on the face of the
instrument.
"IT IS FURTHER CERTIFIED that said land was originally registered on the
19th 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 pageNA , 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-ininterest 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.
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. R15169 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
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:
"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.
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.
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.
xxxxxx
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 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.
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
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 8-27, 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 Torrens system. 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 Appeals34 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 court-appointed
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-17701336located 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. R1799437 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:
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.
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 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 4defendant) 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 T8692 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-J-1) 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.3940
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 predecessorin-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.
Date of Inscription Agosto 1, 1024 10:19 a.m.
SGD. GLICERIO OPINION, Register of deeds
Agosto 19, 192442
In accordance with the decree, RATO was issued on 1 August 1924, TCT No.
869243 which covers "Lote No. 25 A-3 del plano del subdivision, parte del Lote
No. 25-A, plano Psu-(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.T-8692,45 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. 869247 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
Psd-6589, 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. 2653849 and TCT No.
2653950 which were both issued in the name of Jose Ma. Rato y Tuazon on 17
September 1934.
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 Psd10114, 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. 619652 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.
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 25-A-3-C. It has an
aggregate area of 581,872 square meters.
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. 2653855 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.57It
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 Psd24962 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.
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.
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-in-interest
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
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
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. 2653869 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 nonexistence 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 Araneta76 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 issued81 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. 2640592 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
Custodio94 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. 2640795 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. 3390496 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. 25487599 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) Psd277091.105 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) psd-315272 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. 165119109 was issued to MRI by virtue of a Deed of Sale between
Spouses Francisca Labing-isa 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 Psd-13011152 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. Carmack117 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
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.
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.
xxx
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:
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.
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 25-A-3 as previously owned by RATO, had been well
substantiated and proven to be superior to that of DIMSON.
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:
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.
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 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.
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.
With regard to the following certificates of title, namely:
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) Pcs1828 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) psd315278, 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.
3.B. MANOTOK ESTATE CORPORATION
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:
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) TCT No. 7784 covering four (4) parcels of land with an aggregate area of
390,383 square meters.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 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.
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.
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.
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.
WHEREFORE, the Court hereby adopts the Report of the Special Division and
issues the following reliefs:
1) The certificates of title of the DIMSONs and CLT including other derivative
titles issued to their successors-in-interest, if any, are declared NULL and
VOID, thus invalidating their legal claims over the subject parcels of land;
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.
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) The following certificates of titles in the name of ARANETA are hereby
declared LEGAL and VALID, to wit:
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) TCT No. 7784 covering four (4) parcels of land with an aggregate area of
390,383 square meters.
4) On the following titles in the name of Manotok Realty, Inc. or Manotok
Estate Corporation, to wit:
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) Pcs1828 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) psd315278, 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
Costs against private respondents.
SO ORDERED.
REPUBLIC OF THE PHILIPPINES,
Petitioner,

- versus -

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,

G.R. No.

Respondents,
x-----------------------x
LAND TRADE REALTY CORPORATION,
Petitioner,

- versus -

NATIONAL POWER CORPORATION and NATIONAL TRANSMISSION

CORPORATION (TRANSCO),

G.R. No.

Respondents,
x-----------------------x
NATIONAL POWER CORPORATION,
Petitioner,

- versus -

HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan

de Oro City), and LAND TRADE REALTY CORPORATION,
Respondents,
x-----------------------x
REPUBLIC OF THE PHILIPPINES,

G.R. Nos

Petitioner,

versus -

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
NATIONAL TRANSMISSION CORPORATION,
Petitioner,

G.R. No.
- versus -

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,
x-----------------------x

LAND TRADE REALTY CORPORATION,

Peti

tioner,

- versus -

DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL

DEVELOPMENT CORPORATION,
Res
pondents,
x-----------------------x
TEOFILO CACHO and/or ATTY. GODOFREDO CABILDO,

Petitioner,

- versus -

DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL

DEVELOPMENT CORPORATION,
Respondents.

G.R. Nos

G.R. No.

G.R. No.

Present:

CORONA,

VELASCO

LEONARD

DEL CAST

PEREZ, JJ.

Promulga

July 7, 20
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court are seven consolidated Petitions for

Review on Certiorari and a Petition for Certiorariunder 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 Certiorariand 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 (RTC-Branch 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 Decision[3] 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
Execution[8] dated August 10, 2004; (3) two Notices of Garnishment[9] both
dated August 11, 2004, and (4) Notification[10] 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 Resolution[12] dated June 30,
2006of 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 RTCBranch 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.

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) Order[14]dated
December 13, 2005 dismissing the Complaint in Civil Case No. 6686; and (2)
Order[15] dated May 16, 2006, denying the Motion for Reconsideration of the
Republic.

I
THE PRECEDING CASES

The consolidated seven cases have for their common genesis the 1914 case
of Cacho v. Government of the United States[16](1914 Cacho case).

The 1914 Cacho Case

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.

The application in GLRO Record No. 6908 covered Lot 1, the smaller
parcel of land. Doa Demetria allegedly acquiredLot 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

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.

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.

xxxx

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.

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.

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.)

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 theUnited 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-ininterest; 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
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:

[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).

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 re-issued Decree No. N-219465 in GLRO Record No. 6909.

II
THE ANTECENT FACTS
OF THE PETITIONS AT BAR

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 Resolution[23] 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 Appeals[26] (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 theISA 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, 2004[28] 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 Certiorariand 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.
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.
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.

3) ORDERING respondents Teofilo Cacho and Atty. Godofredo Cabildo to pay

petitioners, jointly and severally, the following:

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.

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 RTC-Branch 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.

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 successor-ininterest 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.

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.

 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.

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 sub-station, known as the Overton Sub-station, while
onLot 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 codefendant 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
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 RTCBranch 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 asupersedeas 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-ininterest 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 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 Appeal[44] 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 Notification[46] 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.

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 TRO[47] 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 Decision[48] 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 Resolution[52] 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 Resolution[54] 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 Comment-in-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.

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 0-1201 (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
Seventy-Eight 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

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 01201 (a.f.) cover property MUCH LARGER in area than that granted by the
land registration court inits corresponding decision, supra.

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:

(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 in 1914.

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.

x x x x

 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.

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.

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.

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 oneyear period within which to file an action for the review of a decree of
registration.

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.

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 Order[59] dated
May 16, 2006.

Assailing the Orders dated December 13, 2005 and May 16, 2006 of the RTCBranch 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:

(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
THEREGIONAL 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
Appeals[61] (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.

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 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. InNunez v. GSIS Family
Bank,[62] the Court elucidated:

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.

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.

But in the same case, the Court also held 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
onCertiorari 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.

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 RTCBranch 1 of the Complaint for Expropriation of the Republic.

The proper parties in the expropriation proceedings

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 RTCBranch 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.

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 Appeals[74]:

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 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 nonjoinder 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]

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 nonjoinder 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 nonparty 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 Reversion[78] 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.[80] Even 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 leastsuch 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 berendered in the pending case, regardless of which
party is successful, would amount to res judicata in the other case. Forumshopping 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.

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

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 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.

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:

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 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 RTC-Branch 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. 01200 (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 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.

 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.

Jurisdiction vis--vis exercise of jurisdiction

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. Palang[84]
(Agapay case) and Heirs of Guido Yaptinchay and Isabel Yaptinchay v. Del
Rosario[85] (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.

The aforementioned arguments fail to persuade.

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 of P35,398,920.00,[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 RTCBranch 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 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.

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.

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 GoldenBay 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 forCertiorari.

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,[92] cited 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.

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 Court expounded further in Spouses Portic v. Cristobal[96] 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 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:

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:

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 Appeals[102] (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 Appeals[103] (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 RTCBranch 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 RTCBranch 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 caseinvolved 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 existenceand
the subsequent loss of the two decrees, thus, entitling Teofilo to the reissuance 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 reissuance 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 RTCBranch 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 coowned 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 RTCBranch 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]

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 01201 (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]

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 reraffled) 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

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 RTCBranch 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 inPhilippine 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 feesincluding 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 CA-G.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, andsupersedeas 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. Santiago[128] 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 supersedeasbond 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 thestatus 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 Appeals[130] 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 Sub-station 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. 01200 (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 RTCBranch 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.[134] In Estate of the Late Jesus S. Yujuico v. Republic[135] (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 land[137] 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 the1914 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 01201 (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 existsres 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]

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.

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.

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. 01200 (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.

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 37.87hectare 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 ofres judicata.

Bar by prior judgment does not apply for lack of identity

of causes of action between the 1997 Cacho caseand 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.

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 reissuance 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:

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 fullblown 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.)

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]:

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.

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
forauter 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 factoproduce 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 inPiero 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.

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.

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. Republic[163]:

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
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. ItAFFIRMS 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 17356364 (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 ORDERS the 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 CA-G.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.

G.R. No. 161417

February 8, 2007

MA. TERESA CHAVES BIACO, Petitioner,

vs.
PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.
DECISION
TINGA, J.:
Petitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision1 of the
Court of Appeals in CA-G.R. No. 67489 dated August 27, 2003, which denied
her petition for annulment of judgment, and the Resolution2 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

P 65,000.00

Mar. 18, 1998

30,000.00

May 6, 1998

60,000.00

May 20, 1998

350,000.00

July 30, 1998

155,000.00

Sept. 8, 1998

40,000.00

Sept. 8, 1998

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 of September 30, 1999 had already reached
ONE MILLION EIGHTY THOUSAND SIX HUNDRED SEVENTY SIX AND FIFTY
CENTAVOS (P1,080,676.50).
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]
property is not enough to pay the outstanding obligation, the defendants are
ordered to pay any deficiency of the judgment as their personal liability.
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
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
Resolution6 dated August 18, 2004. Accordingly, petitioner filed her
Memorandum7 dated October 10, 2004, while respondent filed its
Memorandum for Respondent8 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
the defendant never had knowledge of the suit, being kept in ignorance by
the acts of the plaintiff; or where an attorney fraudulently or without
authority 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 the res 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.1awphil.net
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.
G.R. No. 155488

December 6, 2006

ERLINDA R. VELAYO-FONG, petitioner,

vs.
SPOUSES RAYMOND and MARIA HEDY VELAYO, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:
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 Decision1 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 Resolution2 dated October 1,
2002 which denied petitioner's motion for reconsideration.
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. Velayo-Fong (petitioner),

Rodolfo R. Velayo, Jr. (Rodolfo Jr.) and Roberto R. Velayo (Roberto). 3 Raymond
is the half-brother 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 co-defendants 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 petitioner's properties located in the
Philippines.
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
The Process Server submitted the Officer's 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 Erlinda Velayo as mentioned in the Order of this
Court dated September 13, 1993, finally, on the 23rd 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.
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 motions7 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 ex-parte 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:
1. the amount of P65,000.00 as actual damages;
2. the amount of P200,000.00 as moral damages;
3. Attorney's fees in the amount of P5,000,00 it being a judgment by default;
and
4. cost of suit.
SO ORDERED.9
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 Officer's 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 petitioner's Motion ruling
that the presumption of regularity in the discharge of the function of the
Process Server was not sufficiently overcome by petitioner's 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 Officer's 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 petitioner's co-defendant.16
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 CA's jurisdiction to resolve under Section 2 (c)
of Rule 41 of the Revised Rules of Court; that, in any case, petitioner's
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 RTC18 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 petitioner's 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 Officer's Return.
Petitioner filed a Motion for Reconsideration19 but the CA denied it in its
Resolution dated October 1, 2002.20
Hence, the present petition anchored on the following grounds:
I
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 non-resident; 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
Officer's 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.
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 petitioner's 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.
How may service of summons be effected on a non-resident?
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 defendant'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.
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-9317133 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 attorney's 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

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.
Was there a valid service of summons on petitioner? The answer is in the
affirmative.
Petitioner's bare allegation that the statement in the "Officer's Return that
she was personally served summons is inaccurate" is not sufficient. A
process server's 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 Officer's 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.
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.
Petitioner's 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

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.
WHEREFORE, the instant petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals areAFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 170783

June 18, 2012

LEGASPI TOWERS 300, INC., LILIA MARQUINEZ PALANCA, ROSANNA

D. IMAI, GLORIA DOMINGO and RAY VINCENT, Petitioners,
vs.
AMELIA P. MUER, SAMUEL M. TANCHOCO, ROMEO TANKIANG, RUDEL
PANGANIBAN, DOLORES AGBAYANI, ARLENEDAL A. YASUMA,
GODOFREDO M. CAGUIOA and EDGARDO M.
SALANDANAN,Respondents.
DECISION
PERALTA, J.:
This is a petition for review on certiorari of the Court of Appeals
Decision1 dated July 22, 2005 in CA-G.R. CV No. 87684, and its
Resolution2 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 Answer4 to the
Amended Complaint, alleging that the election on April 2, 2004 was lawfully
conducted. Respondents cited the Report5 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 partyplaintiff 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 Order7 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 filed a Motion for Reconsideration of the Orders dated July 21,
2004. In the Order10 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
RESPONDENT-APPELLEE 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.
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
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 3rd 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
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 partyplaintiff 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:
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?
Cua, Jr. v. Tan17 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
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
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.
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 via the 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. 04109655. 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.
SO ORDERED.
G.R. No. 152272

March 5, 2012

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,
vs.
FIL-ESTATE LAND, INC., FIL ESTATE ECOCENTRUM CORPORATION, LA

PAZ HOUSING AND DEVELOPMENT CORPORATION, WARBIRD

SECURITY AGENCY, ENRIQUE RIVILLA, MICHAEL E. JETHMAL and
MICHAEL ALUNAN, Respondents.
x-----------------------x
G. R. No. 152397
FIL-ESTATE LAND, INC., FIL ESTATE ECOCENTRUM CORPORATION, LA
PAZ HOUSING AND DEVELOPMENT CORPORATION, WARBIRD
SECURITY AGENCY, ENRIQUE RIVILLA, MICHAEL E. JETHMAL and
MICHAEL ALUNAN, Petitioners,
vs.
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.
DECISION
MENDOZA, J.:
Before the Court are two (2) consolidated petitions assailing the July 31,
2001 Decision1 and February 21, 2002 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 60543, which annulled and set aside the
March 3, 1999 Order3 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
Order4 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 complaint5 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 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.).

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.
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.
On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss7 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 comment8 on
the motion to dismiss to which respondents filed a reply.9
On March 3, 1999, the RTC issued an Order
JCHA, et al. to post a bond.

10

granting the WPI and required

On March 19, 1999, Fil-Estate, et al. filed a motion for

reconsideration11 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
On July 31, 2001, the CA rendered the decision partially granting the petition,
the dispositive portion of which reads:
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.
SO ORDERED.14
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
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 fullblown 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 that La 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. T120008, 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.
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.
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) the legal right of the plaintiff,
(2) the correlative obligation of the defendant, and
(3) 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 in Bian, Laguna and other barangays in San Pedro, Laguna.
Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the Rules of
Court lays down the rules for the issuance thereof. Thus:
(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 acts complained of, or in 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, or agency or a person is doing, threatening, or
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.
A writ of preliminary injunction is available to prevent a threatened or
continuous irremediable injury to parties before their claims can be
thoroughly studied and adjudicated.25 The requisites for its issuance are: (1)
the existence of a clear and unmistakable right that must be protected; and
(2) an urgent and paramount necessity for the writ to prevent serious
damage.26 For the writ to issue, the right sought to be protected must be a
present right, a legal right which must be shown to be clear and
positive.27 This means that the persons applying for the writ must show that
they have an ostensible right to the final relief prayed for in their complaint.28
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.
Consequently, the case should be further heard by the RTC so that the
parties can fully prove their respective positions on the issues.1wphi1
Due process considerations dictate that the assailed injunctive writ is not a
judgment on the merits but merely 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 and distinct from the trial on the merits of the main
case. 29 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

ATTY. SYLVIA BANDA, CONSORICIA O. PENSON, RADITO V.

PADRIGANO, JEAN R. DE MESA, LEAH P. DELA CRUZ, ANDY V.
MACASAQUIT, SENEN B. CORDOBA, ALBERT BRILLANTES, GLORIA
BISDA, JOVITA V. CONCEPCION, TERESITA G. CARVAJAL, ROSANNA T.
MALIWANAG, RICHARD ODERON, CECILIA ESTERNON, BENEDICTO
CABRAL, MA. VICTORIA E. LAROCO, CESAR ANDRA, FELICISIMO
GALACIO, ELSA R. CALMA, FILOMENA A. GALANG, JEAN PAUL
MELEGRITO, CLARO G. SANTIAGO, JR., EDUARDO FRIAS, REYNALDO
O. ANDAL, NEPHTALIE IMPERIO, RUEL BALAGTAS, VICTOR R. ORTIZ,
FRANCISCO P. REYES, JR., ELISEO M. BALAGOT, JR., JOSE C.
MONSALVE, JR., ARTURO ADSUARA, F.C. LADRERO, JR., NELSON
PADUA, MARCELA C. SAYAO, ANGELITO MALAKAS, GLORIA RAMENTO,
JULIANA SUPLEO, MANUEL MENDRIQUE, E. TAYLAN, CARMELA BOBIS,

DANILO VARGAS, ROY-LEO C. PABLO, ALLAN VILLANUEVA, VICENTE R.

VELASCO, JR., IMELDA ERENO, FLORIZA M. CATIIS, RANIEL R. BASCO,
E. JALIJALI, MARIO C. CARAAN, DOLORES M. AVIADO, MICHAEL P.
LAPLANA, GUILLERMO G. SORIANO, ALICE E. SOJO, ARTHUR G.
NARNE, LETICIA SORIANO, FEDERICO RAMOS, JR., PETERSON
CAAMPUED, RODELIO L. GOMEZ, ANTONIO D. GARCIA, JR., ANTONIO
GALO, A. SANCHEZ, SOL E. TAMAYO, JOSEPHINE A.M. COCJIN,
DAMIAN QUINTO, JR., EDLYN MARIANO, M.A. MALANUM, ALFREDO S.
ESTRELLA, and JESUS MEL SAYO, Petitioners,
vs.
EDUARDO R. ERMITA, in his capacity as Executive Secretary, The
Director General of the Philippine Information Agency and The
National Treasurer, Respondents.
DECISION
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.
2851 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:
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.
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.)
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.
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 Church8 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 Desistance10 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.
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 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.)
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.
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.
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 for under the laws and which are not
specifically enumerated above, or which are not delegated by the President
in accordance with law. (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 in general 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:
"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.
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 Act19 the Presidents authority to
effect organizational changes in the department or agency under the
executive structure, thus:
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)
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, as
directed 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; and
implement 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.)
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
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 Proper allowing
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.)
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 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:
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:
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
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
Secretary25 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 Larin and 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.271avvphi1
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. Mison28 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. In Buklod 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.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
ANTONIO T. CARPIO
Associate Justice

RENATO C. CORONA
Associate Justice

CONCHITA CARPIO MORALES

Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ANTONIO EDUARDO B.
NACHURA
Associate Justice

ARTURO D. BRION
Associate Justice

DIOSDADO M. PERALTA
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

On official leave
ROBERTO A. ABAD*
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

JOSE P. PEREZ
Associate Justice

JOSE C. MENDOZA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court.
REYNATO S. PUNO
Chief Justice

Footnotes
*

On official leave.

ABOLISHING THE GENERAL SERVICES ADMINISTRATION AND TRANSFERRING

ITS FUNCTIONS TO APPROPRIATE GOVERNMENT AGENCIES.
2

328 Phil. 1187, 1204 (1996).

157 Phil. 551, 563-564 (1974).

Respondents Comment on the Manifestation of Desistance, rollo, p. 86.

Id. at 30-32.

Id. at 44.

444 Phil. 230, 257 (2003); citing 59 Am Jur 2d, 456 (1977).

12 Phil. 227, 241 (1908).

Rollo, p. 29.

10

Id. at 30-32.

11

DECLARING NATIONAL POLICY TO IMPLEMENT THE REFORMS MANDATED

BY THE PEOPLE, PROTECTING THEIR BASIC RIGHTS, ADOPTING A
PROVISIONAL CONSTITUTION, AND PROVIDING FOR AN ORDERLY TRANSITION
TO A GOVERNMENT UNDER A NEW CONSTITUTION.
12

413 Phil. 281 (2001).

13

Id. at 294-295.

14

Section 23, Chapter 8, Title II, Book III of the Administrative Code of 1987
provides:
Section 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.
15

Subsequently, in order to harmonize Executive Order No. 378 with other

executive issuances and laws relating to the printing of government forms,
President Arroyo, through the Executive Secretary, issued Memorandum
Circular No. 180 (dated August 13, 2009) to clarify the printing responsibility
of the NPO. The said issuance provided that the NPO had exclusive printing
jurisdiction over standard and accountable forms with money value and
specialized accountable forms, which may be contracted out to the NPOs
accredited private security printers under the guidelines therein provided. It
also affirmed the NPOs exclusive jurisdiction over the printing of election

forms and public documents, such as the Official Gazette, General

Appropriations Act, Philippine Reports and development information
materials of the Philippine Information Agency. It is only with respect to other
standard accountable forms and other government printing jobs that private
providers may be engaged in accordance with prescribed guidelines and
upon written waiver issued by the NPO.
16

G.R. No. 112745, October 16, 1997, 280 SCRA 713.

17

Id. at 729-730.

18

Supra note 12.

19

Republic Act 8760, signed into law on February 16, 2000.

20

Buklod ng Kawaning EIIB v. Zamora, supra note 12 at 293-294.

21

455 Phil. 761 (2003).

22

Id. at 775-772.

23

G.R. No. 167324, July 17, 2007, 527 SCRA 746.

24

Id. at 766-770.

25

G.R. No. 166052, August 29, 2007, 531 SCRA 583.

26

Id. at 596.

27

It is, however, highly debatable whether Executive Order No. 378 is a mere
implementation of the Government Procurement Reform Act, as Justice
Carpio proposes, since there is nothing in the said statute that authorizes
modification of the functions or appropriations of an executive office or
agency.
28

G.R. Nos. 81954, 81967, 82023, 83737, 85310, 85335 and 86241, August
8, 1989, 176 SCRA 84, 127.
29

Supra note 12.

30

Id.

31

Eureka Personnel & Management Services, Inc. v. Valencia, G.R. No.

159358, July 15, 2009, citingRepublic v. Orbecido III, G.R. No. 154380,
October 5, 2005, 472 SCRA 114; Noceda v. Court of Appeals,372 Phil. 383
(1999); Luxuria Homes, Inc. v. Court of Appeals, 361 Phil. 989 (1999).

The Lawphil Project - Arellano Law Foundation

SEPARATE CONCURRING OPINION

CARPIO, J.:
I concur in the result that Executive Order No. 378 (EO 378) is a valid
Presidential issuance, but not because it implements Section 31, Chapter 10,
Book II of the Administrative Code of 19871 (Section 31) or that it is
sanctioned by case law anchored on Presidential Decree No. 1416 (PD 1416),
but because EO 378 merely implements Republic Act No. 9184 (RA
9184)2 regulating government procurement activities.
EO 378 Exceeds the Parameters of Section 31
Section 31, an executive legislation,3 grants to the executive a narrow power
to reorganize ringed with limitations on two fronts: (1) the branch of the
government covered and (2) the scope of authority delegated:
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 Presidential 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. (Emphasis supplied)

Section 31 limits Executive discretion to reorganize the Office of the

President and the enumerated ancillary offices along the following functional
and structural lines: (1) restructuring the internal organization of the Office of
the President Proper by abolishing, consolidating or merging units thereof or
transferring functions from one unit to another; (2) transferring any function
under the Office of the President to any other Department/Agency or vice
versa; or (3) transferring any agency under the Office of the President to any
other Department/Agency or vice versa. This listing is closed and admits of
no other category of reorganization.
Tested against these three narrow categories of reorganization, EO 378 fails
to pass muster. EO 378 effects two changes to the National Printing Office
(NPO): first, it reduces the NPOs exclusive printing function to cover election
paraphernalia only, allowing private printing establishments to bid for the
right to print government standard and accountable forms and second, it
caps the NPOs annual appropriation to its income. Although EO 378s
narrowing of the NPOs functions arguably falls under Section 31(1)s ambit
authorizing abolition of units, this power is limited to the Office of the
President Proper, defined under the 1987 Administrative Code as consisting
of "the Private Office, the Executive Office, the Common Staff Support
System, and the President Special Assistants/Advisers System x x x."4 The
NPO is not part of the Office of the President Proper, being an agency
attached to the Office of the President, a bigger entity consisting "of the
Office of the President Proper and the agencies under it."5 Thus, Section
31(1) is no basis to declare that the President has the power to
"abolishagencies under the Office of the President."6 Section 31(1) limits this
power only to the Office of the President Proper.
Further, insofar as the "Office of the President" is concerned, the Presidents
reorganization powers are limited totransferring any function or any agency
from that office to any department or agency and vice versa. No amount of
etymological stretching can make reduction of function and capping of
budget fit under the narrow concept of "transferring any function or any
agency."
Case Law Cited No Authority to Validate EO 378
The cases the Decision cites furnish no bases to validate EO 378. The leading
case in this area, Larin v. Executive Secretary7 (reiterated in Buklod ng
Kawaning EIIB v. Hon. Sec. Zamora8 and Tondo Medical Center Employees

Association v. Court of Appeals9) relied on Section 20, Chapter 7, Book II of

the Administrative Code of 1987 in relation to PD 1416:
Another legal basis of E.O. No. 132 is Section 20, Book III of E.O. No. 292
which states:
"Sec. 20. Residual Powers. Unless Congress provides otherwise, the
President shall exercise such other powers and functions vested in the
President which are provided for under the laws and which are not
specifically enumerated above or which are not delegated by the President in
accordance with law." (italics ours)
This provision speaks of such other powers vested in the President under the
law. What law then which gives him the power to reorganize? It is
Presidential Decree No. 1772 which amended Presidential Decree No. 1416.
These decrees expressly grant the President of the Philippines the continuing
authority to reorganize the national government, which includes the power to
group, consolidate bureaus and agencies, to abolish offices, to transfer
functions, to create and classify functions, services and activities and to
standardize salaries and materials.10(Emphasis supplied)
Larin and its progeny cannot validate EO 378 because its statutory basis, PD
1416, is an undue delegation of legislative power.
It is an unquestioned attribute of the broad and undefined legislative power
of Congress to fashion Philippine bureaucracy by creating (and thus,
abolishing) public offices save for offices created by the Constitution. 11 This
power, including its ancillary to reorganize,12 is exercised by the other
branches only as allowed by Congress under valid statutory delegation. Even
then, the delegated power only partakes of the original legislative power as
the other branches can only implement the legislatures will.13 Thus, despite
their equally broad and undefined powers, neither the executive nor the
judiciary inherently possesses the power to reorganize its bureaucracy.14
A simple scanning of the list of powers PD 1416 vests on the Executive
shows that far from being a legislative delegation to implement
congressional will, PD 1416 surrenders to the Executive the core legislative
power to re-mold Philippine bureaucracy, with the ancillary privilege to
control funding, thus:
1. The President of the Philippines shall have continuing authority to
reorganize the administrative structure of the National Government.

2. For this purpose, the President may, at his discretion, take the following
actions:
(a) Group, coordinate, consolidate or integrate departments, bureaus, offices,
agencies, instrumentalities and functions of the government;
(b) Abolish departments, offices, agencies or functions which may not be
necessary, or create those which are necessary, for the efficient conduct of
government functions services and activities;
(c) Transfer functions, appropriations, equipment, properties, records and
personnel from one department, bureau, office, agency or instrumentality to
another;
(d) Create, classify, combine, split, and abolish positions; and
(e) Standardize salaries, materials and equipment. (Emphasis supplied)
Presidential Decree No. 1772 (PD 1772), amending PD 1416, enlarged the
scope of these powers by extending the Presidents power to reorganize "to x
x x all agencies, entities, instrumentalities, and units of the National
Government, including all government-owned or controlled corporations, as
well as the entire range of the powers, functions, authorities, administrative
relationships, and related aspects pertaining to these agencies, entities,
instrumentalities, and units."15 Further, PD 1772 clarified that the Presidents
power to "create, abolish, group, consolidate, x x x or integrate" offices
relates to "entities, agencies, instrumentalities, and units of the National
Government."16
The term "national government" has an established meaning in statutory and
case law. Under the statute governing Philippine bureaucracy, the
Administrative Code of 1987, "national government" refers to "the entire
machinery of the central government, as distinguished from the different
forms of local government."17Jurisprudence has interpreted this provision of
the Administrative Code to encompass "the three great departments: the
executive, the legislative, and the judicial."18 By delegating to the Executive
the "continuing authority to reorganize the administrative structure of the
National Government" including the power to "create, abolish, group,
consolidate, x x x or integrate" the "entities, agencies, instrumentalities, and
units of the National Government," PD 1416, as amended, places under the
Executive branch the vast and undeniably legislative power to constitute
the entire Philippine Government in the guise of "reorganization."

Capping the unprecedented siphoning of legislative power to the Executive,

PD 1416, as amended, authorizes the Executive to "transfer appropriations"
and "standardize salaries" in the national government. The authorization to
"transfer appropriations" is a complete repugnancy to the constitutional
proscription that "No law shall be passed authorizing any transfer of
appropriations. x x x."19 On the other hand, the Constitution mandates that
"The Congress shall provide for the standardization of compensation of
government officials and employees, x x x."20Indeed, Congress, with the
Executives acquiescence, has repeatedly exercised this exclusive power to
standardize public sector employees compensation by enacting a law to that
effect21 and exempting classes of employees from its coverage.22
Thus, much like the invalidated Section 68 of the previous Revised
Administrative Code delegating to the President the legislative power to
create municipalities,23 PD 1416, as amended, delegates to the President
that undefined legislative power to constitute the Philippine bureaucracy
which the sovereign people of this polity delegated to Congress only. This
subsequent delegation of the power to legislate offends the fundamental
precept in our scheme of government that delegated power cannot again be
delegated.24
The radical merger of legislative and executive powers PD 1416 sanctions
makes sense in a parliamentary system of merged executive and legislative
branches. Indeed, PD 1416, issued in 1979, three years after Amendment No.
6 vested legislative power to then President Marcos, was precisely meant to
operate within such system, as declared in PD 1416s last "Whereas" clause:
"WHEREAS, the transition towards the parliamentary form of government will
necessitate flexibility in the organization of the national government[.]"
When the Filipino people ratified the 1987 Constitution on 2 February 1987,
restoring the operation of the original tri-branch system of government, PD
1416s paradigm of merged executive and legislative powers ceased to have
relevance. Although then President Aquino, by her revolutionary ascension to
the Presidency, held and exercised these two powers under the Provisional
Constitution,25 her legislative powers ceased when the post-EDSA Congress
convened on 27 July 1987 following the 1987 Constitutions mandate that
"The incumbent President shall continue to exercise legislative powers until
the first Congress is convened."26 Thus, even though the demands of
modernity27 and the imperatives of checks and balances28 may have blurred
the demarcation lines among the three branches, we remain a government
of separated powers, rooted in the conviction that division not unity of
powers prevents tyranny.29 PD 1416, as amended, with its blending of

legislative and executive powers, is a vestige of an autrocratic era, totally

anachronistic to our present-day constitutional democracy.
Making sweeping statements that the Presidents power to reorganize
"pertains only to the Office of the President and departments, offices, and
agencies of the executive branch and does not include the Judiciary, the
Legislature or constitutionally created or mandated bodies" and that "the
exercise by the President of the power to reorganize x x x must be in
accordance with the Constitution, relevant laws and jurisprudence"30 will not
erase PD 1416 and PD 1772 from our statute books. If this Court found it
intolerable under our system of government for the President to demand
"obedience to all x x x decrees x x x promulgated by me personally or upon
my direction,"31 the same hostility should be directed against PD 1416s
authorization for the President to "reorganize x x x the National
Government," "transfer x x x appropriations" and "standardize salaries."
These issuances all vest on the President unadulterated legislative power.
Hence, PD 1416, being repugnant to the 1987 Constitution in several
aspects, can no longer be given effect. At the very least, the exercise of
legislative powers by the President under PD 1416 ceased upon the
convening of the First Congress, as expressly provided in Section 6, Article
XVIII of the 1987 Constitution.
Similarly, Anak Mindanao Party-List Group v. The Executive
Secretary32 (finding valid executive issuances transferring to a
department33 two offices under the Office of the President) is not in point
because that case involved a reorganization falling within the ambit of
Section 31(3) transferring offices from the Office of the President to another
department.
Nor is Canonizado v. Aguirre34 authority for the proposition that the power of
the President to reorganize under Section 31 involves the "alteration of the
existing structure of government offices or units therein, including the lines
of control, authority and responsibility between them" or the "reduction of
personnel, consolidation of offices, or abolition thereof by reason of economy
or redundancy of functions."35 Canonizado reviewed a legislative
reorganization (Republic Act No. 8851 reorganizing the Philippine National
Police) thus Section 31 never figured in its analysis. Accordingly, the vast
reach of Canonizados definition of the power to reorganize36 relates to
Congress, which is, after all, the original repository of such power, as incident
to its broad and all-encompassing power to legislate.

Doctrine of Presidential Control

Over the Executive Department No Basis
to Validate EO 378
The doctrine of presidential control over the executive department likewise
furnishes no basis to uphold the validity of EO 378. As distinguished from
supervision, the doctrine of control finds application in altering acts of the
Presidents subordinates. It does not sanction structural or functional
changes even within the executive department.37
EO 378 Valid for Implementing RA 9184
RA 9184 mandates the conduct of competitive bidding in all the procurement
activities of the government including the acquisition of "items, supplies,
materials, and general support services x x x which may be needed in the
transaction of the public businesses or in the pursuit of any government x x x
activity"38 save for limited transactions.39 By opening governments
procurement of standard and accountable forms to competitive bidding
(except for documents crucial to the conduct of clean elections which has to
be printed solely by government), EO 378 merely implements RA 9184s
principle of promoting "competitiveness by extending equal opportunity to
enable private contracting parties who are eligible and qualified to
participate in public bidding."40 Indeed, EO 378 is not so much a
"reorganization" move involving realignment of offices and personnel
movement as an issuance to "ensure that the government benefits from the
best services available from the market at the best price."41 EO 378s
capping of NPOs budget to its income is a logical by-product of opening
NPOs operations to the private sector with the entry of market forces,
there will expectedly be a decrease in its workload, lowering its funding
needs.
Accordingly, I vote to DISMISS the petition.
G.R. No. 125509

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.
The antecedent facts, as culled from the records of the case, are as follows:
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 620-megawatt nuclear power plant at Morong, Bataan and
to supply equipment, machineries and services therefor.1
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
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
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 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
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 Committee8 "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
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:
(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
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);
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;
RECOGNIZING that the present offer of Westinghouse will result in greater
net economic benefits to the Republic than any previous settlement offer;
xxxx
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 October 13, 1995, the Settlement Agreement reflected in the abovequestioned Resolution of the PC-BNPP was forged by the Republic and NPC on
one hand, and respondent Westinghouse corporations on the other.11
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 corporations13 was.
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 cases14 with causes of action
identical thereto.
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
On December 4, 1995, petitioners filed an Amended Complaint16 praying for
the following reliefs:
WHEREFORE, it is most respectfully prayed [that]:
xxxx
(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;
(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 forum-shopping; (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.
By Order of January 25, 1996, public respondent directed, among other
things, petitioners and the Republic and NPC to file their respective
memoranda.20
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.
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.
By the assailed Resolution of April 17, 1996, public respondent DISMISSED
petitioners complaint, holding as follows:
xxxx
I. that, with respect to the first cause of action
(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;
II. that, with respect to the second cause of action,
(i) this Court has no territorial jurisdiction over foreign and international
bodies situated abroad, more so, if such bodies are foreign and international
courts;
(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 forum-shopping since there is no identity of
parties and causes of action in the instant case and in the complaint filed
before the Manila RTC.
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;
(2) Whether petitioners are engaged in forum-shopping;
(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
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 enforcement25 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
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 that thereafter or on July 12, 1995, they filed a
petition for mandamus34 with the Court of Appeals praying for the following
reliefs:
. . . 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.
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
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
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.
Costs against petitioners.
SO ORDERED.