Case Full Text 2016 July To Dec

Short Name: Pamaran vs.
Bank of Commerce
G.R. No. 205753. July 4, 2016.*
ROSA PAMARAN, substituted by her heirs, through their representative, ROSEMARY P.

BERNABE, petitioners, vs. BANK OF COMMERCE, respondent.
Remedial Law; Civil Procedure; Cause of Action; Elements of.—A cause of action is an act or
omission by which a person violates the right of another. Its essential elements are: (1) plaintiff’s
right, which arises from or is created by whatever means, and is covered by whatever law; (2)
defendant’s obligation not to violate such right; and (3) defendant’s act or omission in violation of
the such right and for which plaintiff’s may seek relief from defendant. When an action is filed,
the defendant may, nevertheless, raise the issue of want of cause of action through a proper motion
to dismiss. Thus, a distinction must be made between a motion to dismiss for failure to state a
cause of action under Section 1(g) of Rule 16, and the one under Rule 33 of the Rules of Court.
Same; Same; Real Actions; Words and Phrases; Section 1, Rule 4 of the Rules of Court, in relation
to Section 2 thereof, defines a real action as one “affecting title to or possession of real property
or interest therein”; and all other actions are personal actions.—Section 1, Rule 4 of the Rules
of Court, in relation to Section 2 thereof, defines a real action as one “affecting title to or possession
of real property or interest therein”; and all other actions are personal actions. A real action must
be filed in the proper court which has jurisdiction over the subject real property, while a personal
action may be filed where the plaintiff or defendant resides, or if the defendant is a nonresident,
where he may be found, at the election of the plaintiff. Personal actions include those filed for
recovery of personal property, or for enforcement of contract or recovery of damages for its breach,
or for the recovery of damages for injury committed to a person or property.
PETITION for review on certiorari of the orders of the Regional Trial Court of Olongapo City, Br.
75.
The facts are stated in the opinion of the Court.
Leonardo W. Bernabe for petitioners.
Perez, Calima, Maynigo, Roque & Amparo Law Offices for respondent.
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the December 10, 2012 and February 4, 2013
Orders1 of the Regional Trial Court of Olongapo City, Branch 75 (RTC Olongapo) granting the
motion to dismiss by way of affirmative defenses and accordingly dismissing the Complaint2 in
Civil Case No.
29-0-2012 for “Damages and Restitution of Value of a Residential House Unlawfully Taken.”
pg. 1
Factual Antecedents
In the Complaint dated February 27, 2012, Rosa Pamaran (Rosa) alleged that her children, Rhodora
Pamaran (Rhodora), and spouses Rosemary P. Bernabe (Rosemary) and Leonardo W. Bernabe
(spouses Bernabe), owned adjacent lots respectively covered by (a) Transfer Certificate of Title
(TCT) No. 213130, and (b) TCT No. 124149. These lots correspondingly covered 341 and 366
square meters and are located at Doña Rosario Bayview Subdivision, Sucat, Muntinlupa City.
Purportedly, in 1987, Rosa built her residential house on these lots with the consent of Rhodora
and spouses Bernabe.
Sometime in 1997 and 1998, Southmarine International Ltd. Co. (Southmarine) obtained loans
from the Bank of Commerce (Bankcom). To secure these loans, Rhodora and spouses Bernabe
constituted real estate mortgages (REM) on their lots. Rosa claimed that Bankcom neither included
her house in determining the loan amount nor obtained her consent to the REM. She added that
Bankcom was aware of the existence of her house on these lots.
Rosa asserted that eventually, these lots were foreclosed and their ownership was consolidated in
favor of Bankcom. Later, Bankcom filed petitions for issuance of writs of possession, which were
granted3 by the RTC of Muntinlupa City, Branch 206 (RTC Muntinlupa) on November 22, 2011
and December 21, 2011.
Rosa averred that because of these writs, she was dispossessed of her house in February 2012.
Thus, she prayed that Bankcom be ordered to pay her damages amounting to P3 million for the
value of her house, P300,000.00 for its violation of her right to due process and equal protection
of law, and P100,000.00 for attorney’s fees.
Bankcom, on its end, raised in its Answer4 with Compulsory Counterclaim the following
affirmative defenses: 1) Rosa has no cause of action against it; 2) the Complaint is a collateral
attack on its title and an interference with the jurisdiction of the RTC Muntinlupa; 3) Rosa was not
deprived of due process; and 4) the venue was improperly laid.
Bankcom contended that Rosa has no cause of action because she is not the owner of the subject
lots as well as the improvement thereon; and she was never a party to any contract between
Bankcom, and its mortgagors, Rhodora and spouses Bernabe. It also argued that this Complaint is
a collateral attack on its title because the REM and the Certificate of Sale indicated that they
covered not only the subject lots, but including the improvement thereon.
In addition, Bankcom insisted that the Complaint interfered with the jurisdiction of RTC
Muntinlupa, which already granted in its favor writs of possession over the properties. It argued
that while the Complaint is captioned as one for “Damages and Restitution of Value of Residential
House Unlawfully Taken,” the same is a real action because it concerns Rosa’s claim of ownership
over the subject house. It posited that the Complaint should have been filed before the RTC
Muntinlupa where such property is located.
pg. 2
In her Reply5 with Answer to Counterclaim and Comment6 to Bankcom’s Affirmative Defenses,
Rosa argued that she did not authorize her children to encumber her house. She also stated that the
REM was a contract of adhesion, thus, its stipulation that “the mortgage included all the buildings
and improvements [on the land]” pertained to improvements belonging to the mortgagors, not to
third persons.
Moreover, Rosa clarified that she does not question the writs of possession issued by the RTC
Muntinlupa. She, nonetheless, claimed that her Complaint concerns Bankcom’s use of these writs
to deprive her of her house. On this, she declared that this is not a collateral attack on Bankcom’s
title but a direct attack on its abuse of her right to due process by arrogating to itself her house,
which was not part of the REM.
Finally, Rosa contended that this a personal action because while she cited real properties situated
in Muntinlupa City, she is not asking to be the owner or possessor thereof but is merely praying
that Bankcom be ordered to pay her damages corresponding to the value of her house. She likewise
affirmed that the venue is proper since she resides in Olongapo City.
Because of Rosa’s demise on September 10, 2012, her heirs (petitioners) substituted8 her,
designating Rosemary as their representative in this case.
On December 10, 2012, the RTC Olongapo issued the first assailed Order granting Bankcom’s
motion to dismiss and accordingly, dismissing the Complaint.
Thereafter, petitioners filed a Motion for Reconsideration, which was denied by the RTC Olongapo
in the second assailed Order dated on February 4, 2013.
Issues
Hence, petitioners filed this Petition raising the following issues:
a) Whether x x x the court a quo erred in resolving the issue of lack of cause of action on the
basis of evidence aliunde put forth before it by the movant and not solely on the basis of the
complaint.
b) Whether x x x the court a quo erred in disregarding the jurisprudential rule that a movant to
dismiss on the ground of lack of cause of action is deemed to have hypothetically admitted
plaintiff’s factual representation in the complaint.
c) Whether x x x the court a quo committed error in procedure when it resolved a question of
fact in favor of [Bankcom] without first giving [p]etitioners the opportunity to present evidence on
a controversial fact, and used such conclusion of fact to justify the dismissal of a complaint on the
ground of lack of cause of action.
pg. 3
d) Whether x x x the court a quo erred in justifying its dismissal of [p]etitioners’ complaint on a
thesis that its initiation interfered with the exercise of jurisdiction of a coequal court in [e]x parte
proceedings for the issuance of writ of possession under Act 3135.9
Petitioners’ Arguments
Petitioners state that in resolving Bankcom’s motion to dismiss (by way of affirmative defenses)
on the ground of lack of cause of action, the RTC Olongapo should have exclusively considered
the averments in the Complaint, which are deemed hypothetically admitted. They added that RTC
Olongapo’s inquiry is limited to the determination of whether these allegations present a case on
which the relief may be granted.
Petitioners insist that the Complaint states a cause of action, which relates to Bankcom’s purported
unlawful taking of the house of the late Rosa; and such cause of action entitles petitioners to
recover damages corresponding to the value thereof. They submit that the RTC Olongapo’s
conclusion that the REM included the lots and the improvement thereon, without giving Rosa the
opportunity to prove the allegations in the Complaint is a procedural error tantamount to denial of
due process.
Finally, petitioners declare that the RTC Olongapo further justified the dismissal of the Complaint
on the ground that the Complaint interfered with the jurisdiction of the RTC Muntinlupa. They
stress that the petition for issuance of writ of possession filed with the RTC Muntinlupa and the
instant Complaint for damages are different actions and the reliefs sought for in them differ from
the other.
Respondent’s Arguments
For its part, Bankcom states that the RTC Olongapo properly dismissed the Complaint on the
ground of lack of cause of action. It reiterates that Rosa was never privy to any contract
between Bankcom and its mortgagors. It also avers that the Complaint is a collateral attack on its
title because if the value of the house is restituted to petitioners, such grant would diminish its title
over the properties subject of the writs of possession issued by the RTC Muntinlupa.
At the same time, Bankcom alleges that the RTC Olongapo correctly dismissed the complaint on
the ground of improper venue. It maintains that while the Complaint was denominated as one for
damages and restitution of value of a house unlawfully taken, the action is, in fact, a real action
because it is based on Rosa’s claim of ownership over the house built on the subject lots.
Our Ruling
pg. 4
The Court grants the Petition.
Petitioners come directly before the Court, on pure questions of law, essentially raising the issue
of whether the RTC Olongapo erred in dismissing the Complaint, without trial, and only upon
motion to dismiss by way of affirmative defenses raised in Bankcom’s Answer.
A cause of action is an act or omission by which a person violates the right of another. Its essential
elements are: (1) plaintiff’s right, which arises from or is created by whatever means, and is
covered by whatever law; (2) defendant’s obligation not to violate such right; and (3) defendant’s
act or omission in violation of the such right and for which plaintiff’s may seek relief from
defendant.10
When an action is filed, the defendant may, nevertheless, raise the issue of want of cause of action
through a proper motion to dismiss. Thus, a distinction must be made between a motion to dismiss
for failure to state a cause of action under
_______________
10 Soloil, Inc. v. Philippine Coconut Authority, 642 Phil. 337, 344; 628 SCRA 185, 190 (2010).
437
VOL. 795, JULY 4, 2016 437

Pamaran vs. Bank of Commerce
Section 1(g)11 of Rule 16, and the one under Rule 3312 of the Rules of Court.13
In the first situation, the motion must be made before a responsive pleading is filed; and it can be
resolved only on the basis of the allegations in the initiatory pleading. On the other hand, in the
second instance, the motion to dismiss must be filed after the plaintiff rested his case; and it can
be determined only on the basis of the evidence adduced by the plaintiff. In the first case, it is
immaterial if the allegations in the complaint are true or false; however, in the second situation,
the judge must determine the truth or falsity of the allegations based on the evidence presented.14
Stated differently, a motion to dismiss under Section 1(g) of Rule 16 is based on preliminary
objections made before the trial while the motion to dismiss under Rule 33 is a demurrer to
evidence on the ground of insufficiency of evidence, and is made only after the plaintiff rested his
case.15
_______________
pg. 5
11 Rules of Court, Rule 16, Section 1. Grounds.—Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of
the following grounds:
xxxx
(g) That the pleading asserting the claim states no cause of action.
12 Rules of Court, Rule 33, Section 1. Demurrer to Evidence.—After the plaintiff has
completed the presentation of his evidence, the defendant may move for dismissal on the ground
that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied, he
shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal
is reversed he shall be deemed to have waived the right to present evidence. (1a, R35)
13 Manila Banking Corporation v. University of Baguio, Inc., 545 Phil. 268, 275; 516 SCRA 371,
379 (2007).
14 Id., at pp. 275-276; pp. 379-380.
15 Id., at p. 276; p. 380.
438
438 SUPREME COURT REPORTS ANNOTATED

Here, Bankcom submitted its motion to dismiss by way of affirmative defenses. Clearly, there had
been no presentation of evidence made and Rosa had not yet rested her case. As Bankcom’s motion
was made before trial then, it falls within the first instance above discussed.
Moreover, Bankcom’s motion to dismiss must be resolved with reference to the allegations in the
Complaint assuming them to be true. The RTC Olongapo does not need to inquire on the
truthfulness of these allegations and declare them to be false. If it does, such court would be
denying the plaintiff (Rosa) of her right to due process of law. In other words, in determining
whether a complaint states or does not state a cause of action, the court must hypothetically admit
the truth of the allegations and determine if it may grant the relief prayed for based on them. The
court cannot consider external factors in determining the presence or the absence of a cause of
action other than the allegations in the complaint.16
Here, the pertinent portions of the Complaint read:
pg. 6
3. The instant suit is a personal action for the recovery of damages by the plaintiff (Rosa) from
the defendant (Bankcom) occasioned by defendant’s reckless violation of the constitutional right
of the former not to be deprived of her property without due process of law. The instant suit
is authorized under Article 32 of the Civil Code. x x x
xxxx
6. The plaintiff is the owner of a residential house that she ha[d] constructed in 1987, which
x x x has a current market value of at least Php3,000,000.00 constructed on 2 residential lots
covered by TCT No. 213130 x x x in the name of Rhodora Pamaran, x x x and TCT No. 124149
x x x in the name of Spouses Rosemary P. Bernabe and Leonardo W. Bernabe. x x x Both resi-
_______________
16 China Road and Bridge Corporation v. Court of Appeals, 401 Phil. 590, 599-600; 348 SCRA
401, 409 (2000).
439
VOL. 795, JULY 4, 2016 439

dential lots are located at Doña Rosario Bayview Subd., Sucat, Muntinlupa City. The plaintiff had
the residential house constructed x x x with the express consent of the lot owners, Rhodora
Pamaran and the spouses Rosemary and Leonardo Bernabe; who are her children. The residential
house is currently declared for taxation purposes in the name of the plaintiff. x x x
7. Sometime in 1997 and 1998, x x x Southmarine International Ltd. Co. x x x obtained loans
from defendant bank. [T]o secure the said loans, Rhodora Pamaran and Spouses Rosemary and
Leonardo Bernabe constituted real estate mortgages on the residential lots only.
8. The defendant bank was aware of the existence of [plaintiff’s] residential house. x x x
[P]laintiff never executed a real estate mortgage over her residential house in favor of the
defendant. x x x
9. [Later], the defendant bank foreclosed on the collateralized residential lots pursuant to
the real estate mortgages. x x x [I]n 1999, the ownership of the residential lots was consolidated
in favor of the defendants. x x x
10. After more than 10 years from the foreclosure sale x x x, the defendant initiated ex parte
petitions for issuance of writs of possession over the 2 residential lots. x x x [T]he RTC of
pg. 7
Muntinlupa City x x x issued the writs of possession x x x without any notice to the plaintiff whose
residential house would be necessarily affected.
11. By virtue of the[se] writs x x x, the plaintiff x x x was unceremoniously dispossessed [of
her house] by the defendant x x x without any due process of law. x x x
xxxx
16. The invasion or violation by the defendant of the constitutional right of the plaintiff
should entitle the latter to damages. x x x
xxxx
440

17. The defendant cannot just divest the plaintiff of her residential lot without adequate
compensation. Thus, it is only just and right that the defendant, for divesting the plaintiff of the
possession and enjoyment of her residential house, should compensate the plaintiff or restitute to
her the fair market value of her residential house. x x x 17 (Emphases supplied)
In fine, the allegations in the Complaint provide that: Rosa is the owner of a residential house built
on the lots owned by her children; by reason of the foreclosure of these lots, Bankcom acquired
the lots and also appropriated Rosa’s house; thus, Rosa seeks recovery of damages against
Bankcom.
Hypothetically admitting these allegations to be true, Rosa’s cause of action against Bancom
involves a) her right over her house; b) Bankcom’s obligation to respect Rosa’s right to enjoy her
house; and c) Bankcom’s violation of such right, which gave rise to this action for damages.
Notably, in granting Bankcom’s motion to dismiss, the RTC Olongapo took into consideration the
arguments set forth in the motion, and ignored the assertions in the Complaint, to wit:
Bankcom acquired title and possession of the subject properties by virtue of the real estate
mortgages executed by Rhodora Pamaran and Spouses Leonardo and Rosemary P. Bernabe in
favor of defendant (Bankcom). The mortgagors failed to settle their obligation; hence, defendant
foreclosed the properties and was declared the highest bidder. The corresponding Certificates of
Sale were issued in favor of defendant. Upon failure of the mortgagors to redeem their respective
pg. 8
properties, Bankcom filed [p]etitions for issuance of writs of possession over the two parcels of
land owned by the mortgagors, which were granted x x x and [c]orresponding titles were issued to
Bankcom. x x x Likewise, the real estate mort-
_______________
17 Records, pp. 3-5, 7.
441
VOL. 795, JULY 4, 2016 441

gages clearly provide that the subject thereof includes not only the parcels of land, but likewise
‘all the buildings and improvements now existing or may hereafter be erected or constructed
thereon.’ It is therefore safe to conclude that when the mortgagors executed and signed the
same, they were aware that the mortgage does not pertain to the land only but also to all the
buildings and improvements that may be found therein; otherwise, they should have refused
x x x the contracts.18 (Emphasis supplied)
Not only did the RTC Olongapo disregard the allegations in the Complaint, it also failed to
consider that the Bankcom’s arguments necessitate the examination of the evidence that can be
done through a full-blown trial. The determination of whether Rosa has a right over the subject
house and of whether Bankcom violated this right cannot be addressed in a mere motion to dismiss.
Such determination requires the contravention of the allegations in the Complaint and the full
adjudication of the merits of the case based on all the evidence adduced by the parties.19
In addition, the RTC supported its dismissal of the Complaint on the ground that the Complaint
interfered with the jurisdiction of the RTC Muntinlupa, which had previously issued writs of
possession to Bankcom. The RTC Olongapo decreed that since Rosa sought damages
corresponding the value of her alleged house, she is, in effect, asking the invalidation of the writs
of possession.
The position of the RTC Olongapo is unjustified.
In the Complaint, and in her Comment to Bankcom’s Affirmative Defenses, the late Rosa made it
clear that this is a personal action for damages arising from Bankcom’s violation of her right to
due process and equal protection; and her right to enjoy her house. She clarified that she does not
question the writs issued by the RTC Muntinlupa, but she assails Bankcom’s use thereof in
depriving her of the right
pg. 9
_______________
18 Id., at p. 191.
19 See Belle Corporation v. De Leon-Banks, 695 Phil. 467, 478-480; 681 SCRA 351, 362 (2012).
442

to enjoy said house. She also stressed that since this is a personal action, then it was properly filed
in RTC Olongapo, as she is a resident of Olongapo.
Section 1, Rule 4 of the Rules of Court, in relation to Section 2 thereof, defines a real action as one
“affecting title to or possession of real property or interest therein”; and all other actions are
personal actions. A real action must be filed in the proper court which has jurisdiction over the
subject real property, while a personal action may be filed where the plaintiff or defendant resides,
or if the defendant is a nonresident, where he may be found, at the election of the plaintiff. Personal
actions include those filed for recovery of personal property, or for enforcement of contract or
recovery of damages for its breach, or for the recovery of damages for injury committed to a person
or property.20
The Complaint (specifically allegations nos. 3 and 16 thereof) stated that this case is one for
recovery of damages relating to the injury committed by Bankcom for violating Rosa’s right to
due process, and right to enjoy her house. Rosa repeatedly averred that she does not seek recovery
of its possession or title. Her interest to the house is merely incidental to the primary purpose for
which the action is filed, that is, her claim for damages.
Clearly, this action involves Rosa’s interest in the value of the house but only insofar as to
determine her entitlement to damages. She is not interested in the house itself. Indeed, the primary
objective of the Complaint is to recover damages, and not to regain ownership or possession of the
subject property.21
_______________
20 Bank of the Philippine Islands v. Hontanosas, Jr., G.R. No. 157163, June 25, 2014.
21 See Saraza v. Francisco, G.R. No. 198718, November 27, 2013, 711 SCRA 95, 107.
pg. 10
443
VOL. 795, JULY 4, 2016 443

Hence, this case is a personal action properly filed in the RTC Olongapo, where Rosa resided.
Finally, this action does not interfere with the jurisdiction of the RTC Muntinlupa. First, the nature
of this action, which is for damages, is different from the petition before the RTC Muntinlupa,
which is for issuance of writs of possession. Second, the laws relied upon in these actions vary;
this damage suit is based on Rosa’s reliance on her right emanating from Article 3222 of the Civil
Code; while Bankcom’s Petition is pursuant to Act No. 3135,23 as amended. Third, this case
involves a claim arising from Bankcom’s alleged violation of Rosa’s right to due process, and to
the enjoyment of her house. On the other hand, the one for issuance of writs of possession involves
Bankcom’s application to be placed in possession of the subject properties. Last, as already
discussed, the former is a personal action while the latter is a real action affecting title to and
possession of a real property.
Given these, the RTC erred in dismissing the Complaint on the grounds of lack of cause of action,
and of improper venue.
WHEREFORE, the Petition is GRANTED. The December 10, 2012 and February 4, 2013 Orders
of the Regional Trial Court of Olongapo City, Branch 75 in Civil Case No. 29-0-2012 are
REVERSED and SET ASIDE. Accordingly, the Complaint is REINSTATED and this case is
REMANDED to the Regional Trial Court of Olongapo City, Branch 75, which is ordered to
resolve the case with dispatch.
_______________
22 Any public officer or employee, or any private individual, who directly or indirectly obstructs,
defeats, violates or in any manner impedes or impairs any of the following rights and liberties of
another person shall be liable to the latter for damages:
xxxx
(6) The right against deprivation of property without due process of law[.]
23 An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real
Estate Mortgage.
pg. 11
444

SO ORDERED.
Carpio** (Acting CJ., Chairperson), Brion and Leonen, JJ., concur.
Mendoza, J., On Official Leave.
Petition granted, orders reversed and set aside.
Notes.—Cause of action consists of three elements: (1) the plaintiff’s legal right in the matter; (2)
the defendant’s corresponding obligation to honor or respect such right; and (3) the defendant’s
subsequent violation of the right. (Del Rosario vs. Donato, Jr., 614 SCRA 332 [2010])
The venue for real actions is the court of the place where the real property is located. (Home
Guaranty Corporation vs. R-II Builders, Inc., 645 SCRA 219 [2011])
——o0o——
pg. 12
Case Short Name: Century Properties, Inc. vs. Babiano
G.R. No. 220978. July 5, 2016.*
CENTURY PROPERTIES, INC., petitioner, vs. EDWIN J. BABIANO and EMMA B.

CONCEPCION, respondents.
Civil Law; Contracts; Interpretation of Contracts; Article 1370 of the Civil Code provides that
“[i]f the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control.”—Article 1370 of the Civil Code
provides that “[i]f the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control.” In Norton Resources
and Development Corporation v. All Asia Bank Corporation, 605 SCRA 370 (2009), the Court
had the opportunity to thoroughly discuss the said rule as follows: The rule is that where the
language of a contract is plain and unambiguous, its meaning should be determined
without reference to extrinsic facts or aids. The intention of the parties must be gathered from
that language, and from that language alone. Stated differently, where the language of a
written contract is clear and unambiguous, the contract must be taken to mean that
which, on its face, it purports to mean
to show that the words should be understood in a different sense. Courts cannot make for the
parties better or more equitable agreements than they themselves have been satisfied to make, or
rewrite contracts because they operate harshly or inequitably as to one of the parties, or alter them
for the benefit of one party and to the detriment of the other, or by construction, relieve one of the
parties from the terms which he voluntarily consented to, or impose on him those which he did
not.
Labor Law; Employer-Employee Relationship; Control Test; The control test is commonly
regarded as the most important indicator of the presence or absence of an employer-employee
relationship.—Anent the nature of Concepcion’s engagement, based on case law, the presence of
the following elements evince the existence of an employer-employee relationship: (a) the power
to hire, i.e., the selection and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employer’s power to control the employee’s conduct, or the so called
“control test.” The control test is commonly regarded as the most important indicator of the
presence or absence of an employer-employee relationship. Under this test, an employer-employee
relationship exists where the person for whom the services are performed reserves the right to
control not only the end achieved, but also the manner and means to be used in reaching that end.
Same; Same; The existence of employer-employee relations could not be negated by the mere
expedient of repudiating it in a contract.—While the employment agreement of Concepcion was
denominated as a “Contract of Agency for Project Director,” it should be stressed that the existence
of employer-employee relations could not be negated by the mere expedient of repudiating it in a
contract. In the case of Insular Life Assurance Co., Ltd. v. NLRC (4th Division), 287 SCRA 476
(1998), it was ruled that one’s employment status is defined and prescribed by law, and not by
what the parties say it should be, viz.: It is axiomatic that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in the management contract and
pg. 13
providing therein that the “employee” is an independent contractor when the terms of the
agreement clearly show otherwise. For, the employment status of a person is defined and
prescribed by law and not by what the parties say it should be. In determining the status of the
man-
673
VOL. 795, JULY 5, 2016 673

Century Properties, Inc. vs. Babiano
agement contract, the “four-fold test” on employment earlier mentioned has to be applied.
(Emphasis and underscoring supplied) Therefore, the CA correctly ruled that since there exists an
employer-employee relationship between Concepcion and CPI, the labor tribunals correctly
assumed jurisdiction over her money claims.
Remedial Law; Civil Procedure; Appeals; As a general rule, a party who has not appealed cannot
obtain any affirmative relief other than the one granted in the appealed decision.—As a general
rule, a party who has not appealed cannot obtain any affirmative relief other than the one granted
in the appealed decision. However, jurisprudence admits an exception to the said rule, such as
when strict adherence thereto shall result in the impairment of the substantive rights of the parties
concerned. In Global Resource for Outsourced Workers (GROW), Inc. v. Velasco, 678 SCRA 751
(2012): Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to
it and can no longer obtain from the appellate court any affirmative relief other than what was
already granted under said judgment. However, when strict adherence to such technical rule
will impair a substantive right, such as that of an illegally dismissed employee to monetary
compensation as provided by law, then equity dictates that the Court set aside the rule to
pave the way for a full and just adjudication of the case.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
Divina Law for petitioner.
The Law Firm of Culvera & Associates for respondents.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
pg. 14
_______________
1 Rollo, pp. 10-32.
674

Decision2 dated April 8, 2015 and the Resolution3 dated October 12, 2015 of the Court of Appeals
(CA) in C.A.-G.R. S.P. No. 132953, which affirmed with modification the Decision4 dated June
25, 2013 and the Resolution5 dated October 16, 2013 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 05-001615-12, and ordered petitioner Century Properties, Inc. (CPI)
to pay respondents Edwin J. Babiano (Babiano) and Emma B. Concepcion (Concepcion;
collectively, respondents) unpaid commissions in the amounts of P889,932.42 and P591,953.05,
respectively.
The Facts
On October 2, 2002, Babiano was hired by CPI as Director of Sales, and was eventually6 appointed
as Vice President for Sales effective September 1, 2007. As CPI’s Vice President for Sales,
Babiano was remunerated with, inter alia, the following benefits: (a) monthly salary of
P70,000.00; (b) allowance of P50,000.00; and (c) 0.5% override commission for completed sales.
His employment contract7 also contained a “Confidentiality of Documents and Non-Compete
Clause”8 which, among others, barred him from disclosing confidential information, and from
working in any business enterprise that is in direct competition with CPI “while [he is] employed
and for a period
_______________
2 Id., at pp. 37-51. Penned by Associate Justice Florito S. Macalino, with Associate Justices
Mariflor P. Punzalan-Castillo and Zenaida T. Galapate-Laguilles, concurring.
3 Id., at pp. 53-56.
4 Id., at pp. 276-290. Penned by Commissioner Romeo L. Go, with Presiding Commissioner
Gerardo C. Nograles and Commissioner Perlita B. Velasco, concurring.
pg. 15
5 Id., at pp. 310-311.
6 Prior to his promotion as Vice President for Sales, Babiano was first promoted as Project
Director in June 2006. Id., at pp. 3 and 277.
7 Dated September 1, 2007. Id., at pp. 76-79.
8 Id., at p. 78.
675
VOL. 795, JULY 5, 2016 675

of one year from date of resignation or termination from [CPI].” Should Babiano breach any of
the terms thereof, his “forms of compensation, including commissions and incentives will be
forfeited.”9
During the same period, Concepcion was initially hired as Sales Agent by CPI and was
eventually10 promoted as Project Director on September 1, 2007.11 As such, she signed an
employment agreement, denominated as “Contract of Agency for Project Director”12 which
provided, among others, that she would directly report to Babiano, and receive a monthly subsidy
of P60,000.00, 0.5% commission, and cash incentives.13 On March 31, 2008, Concepcion
executed a similar contract14 anew with CPI in which she would receive a monthly subsidy of
P50,000.00, 0.5% commission, and cash incentives as per company policy. Notably, it was
stipulated in both contracts that no employer-employee relationship exists between Concepcion
and CPI.15
After receiving reports that Babiano provided a competitor with information regarding CPI’s
marketing strategies, spread false information regarding CPI and its projects, recruited CPI’s
personnel to join the competitor, and for being absent without official leave (AWOL) for five (5)
days, CPI, through its Executive Vice President for Marketing and Development, Jose Marco R.
Antonio (Antonio), sent Babiano a Notice to Explain16 on February 23, 2009 directing him to
explain why he should not be charged with disloyalty, conflict
_______________
9 Id.; pp. 38-39 and 277.
10 Prior to her promotion as Project Director, records show that Concepcion was first promoted
as Sales Officer in June 2003, and as Sales Director in August 2006. Id., at pp. 38 and 278.
pg. 16
11 Id., at pp. 38 and 279.
12 Id., at p. 115.
13 Id.
14 Id., at p. 114.
15 Id., at pp. 114 and 115.
16 Id., at p. 83.
676

of interest, and breach of trust and confidence for his actuations.17
On February 25, 2009, Babiano tendered18 his resignation and revealed that he had been accepted
as Vice President of First Global BYO Development Corporation (First Global), a competitor of
CPI.19 On March 3, 2009, Babiano was served a Notice of Termination20 for: (a) incurring
AWOL; (b) violating the “Confidentiality of Documents and Non-Compete Clause” when he
joined a competitor enterprise while still working for CPI and provided such competitor enterprise
information regarding CPI’s marketing strategies; and (c) recruiting CPI personnel to join a
competitor.21
On the other hand, Concepcion resigned as CPI’s Project Director through a letter22 dated
February 23, 2009, effective immediately.
On August 8, 2011, respondents filed a complaint23 for

nonpayment of commissions and damages against CPI and Antonio before the NLRC, docketed
as NLRC Case No. NCR-08-12029-11, claiming that their repeated demands for the payment and
release of their commissions remained unheeded.24
For its part, CPI maintained25 that Babiano is merely its agent tasked with selling its projects.
Nonetheless, he was afforded due process in the termination of his employment
_______________
17 Id., at pp. 83 and 226-227.
pg. 17
18 See Letter dated February 25, 2009; id., at pp. 361-362.
19 Id., at pp. 39 and 130.
20 Id., at p. 84.
21 Id.; p. 227.
22 Id., at p. 116.
23 Not attached to the Rollo.
24 See Rollo, p. 39. See also Position Paper dated November 19, 2011 filed by respondents; id.,
at p. 148.
25 See CPI’s Position Paper dated November 28, 2011; id., at pp. 118-144.
677
VOL. 795, JULY 5, 2016 677

which was based on just causes.26 It also claimed to have validly withheld Babiano’s
commissions, considering that they were deemed forfeited for violating the “Confidentiality of
Documents and Non-Compete Clause.”27 On Concepcion’s money claims, CPI asserted that the
NLRC had no jurisdiction to hear the same because there was no employer-employee relations
between them, and thus, she should have litigated the same in an ordinary civil action.28
The LA’s Ruling
In a Decision29 dated March 19, 2012, the Labor Arbiter (LA) ruled in CPI’s favor and,
accordingly, dismissed the complaint for lack of merit.30 The LA found that: (a) Babiano’s acts
of providing information on CPI’s marketing strategies to the competitor and spreading false
information about CPI and its projects are blatant violations of the “Confidentiality of Documents
and Non-Compete Clause” of his employment contract, thus, resulting in the forfeiture of his
unpaid commissions in accordance with the same clause;31 and (b) it had no jurisdiction over
Concepcion’s money claim as she was not an employee but a mere agent of CPI, as clearly
stipulated in her engagement contract with the latter.32
pg. 18
Aggrieved, respondents appealed33 to the NLRC.
_______________
26 Id., at p. 124.
27 Id., at pp. 125-130; p. 40.
28 Id., at pp. 137-139; p. 40.
29 Id., at pp. 220-237. Penned by LA Eduardo G. Magno.
30 Id., at p. 237.
31 Id., at pp. 230-233.
32 Id., at pp. 233-237.
33 See Memorandum of Appeal dated April 18, 2012; id., at pp. 238-246.
678

The NLRC’s Ruling
In a Decision34 dated June 25, 2013, the NLRC reversed and set aside the LA ruling, and entered
a new one ordering CPI to pay Babiano and Concepcion the amounts of P685,211.76 and
P470,754.62, respectively, representing their commissions from August 9, 2008 to August 8, 2011,
as well as 10% attorney’s fees of the total monetary awards.35
While the NLRC initially concurred with the LA that Babiano’s acts constituted just cause which
would warrant the termination of his employment from CPI, it, however, ruled that the forfeiture
of all earned commissions of Babiano under the “Confidentiality of Documents and Non-Compete
Clause” is confiscatory and unreasonable and hence, contrary to law and public policy.36 In this
light, the NLRC held that CPI could not invoke such clause to avoid the payment of Babiano’s
commissions since he had already earned those monetary benefits and, thus, should have been
released to him. However, the NLRC limited the grant of the money claims in light of Article 291
(now Article 306)37 of the Labor Code which provides for a prescriptive period of three (3) years.
pg. 19
Consequently, the NLRC awarded unpaid commissions only from August 9, 2008 to August 8,
2011 — i.e., which was the date when the complaint was filed.38 Meanwhile, contrary to the LA’s
finding, the NLRC ruled that Concepcion was CPI’s employee, considering that CPI: (a)
repeatedly hired and promoted her since 2002; (b) paid her wages despite referring to it as
“subsidy”; and (c) exercised the power of dismissal and
_______________
34 Id., at pp. 276-290.
35 Id., at p. 289.
36 Id., at p. 282.
37 See Department of Labor and Employment Department Advisory No. 01, Series of 2015,
entitled “Renumbering the Labor Code of the Philippines, as amended,” approved on July 21,
2015.
38 Id., at pp. 282-284.
679
VOL. 795, JULY 5, 2016 679

control over her.39 Lastly, the NLRC granted respondents’ claim for attorney’s fees since they
were forced to litigate and incurred expenses for the protection of their rights and interests.40
Respondents did not assail the NLRC findings. In contrast, only CPI moved for reconsideration,41
which the NLRC denied in a Resolution42 dated October 16, 2013. Aggrieved, CPI filed a petition
for certiorari43 before the CA.
The CA’s Ruling
In a Decision44 dated April 8, 2015, the CA affirmed the NLRC ruling with modification
increasing the award of unpaid commissions to Babiano and Concepcion in the amounts of
pg. 20
P889,932.42 and P591.953.05, respectively, and imposing interest of six percent (6%) per annum
on all monetary awards from the finality of its decision until fully paid.45
The CA held that Babiano properly instituted his claim for unpaid commissions before the labor
tribunals as it is a money claim arising from an employer-employee relationship with CPI. In this
relation, the CA opined that CPI cannot withhold such unpaid commissions on the ground of
Babiano’s alleged breach of the “Confidentiality of Documents and Non-Compete Clause”
integrated in the latter’s employment contract, considering that such clause referred to acts done
after the cessation of the employer-employee relationship or to the
_______________
39 Id., at pp. 284-287.
40 Id., at p. 288.
41 See motion for reconsideration dated July 10, 2013; id., at pp. 292-307.
42 Id., at pp. 310-311.
43 See Petition [with Extremely Urgent Application for Temporary Restraining Order and/or
Preliminary Injunction dated November 27, 2013]; id., at pp. 313-343.
44 Id., at pp. 37-51.
45 Id., at p. 50.
680

“post-employment” relations of the parties. Thus, any such supposed breach thereof is a civil law
dispute that is best resolved by the regular courts and not by labor tribunals.46
Similarly, the CA echoed the NLRC’s finding that there exists an employer-employee relationship
between Concepcion and CPI, because the latter exercised control over the performance of her
duties as Project Director which is indicative of an employer-employee relationship. Necessarily
therefore, CPI also exercised control over Concepcion’s duties in recruiting, training, and
developing directors of sales because she was supervised by Babiano in the performance of her
functions. The CA likewise observed the presence of critical factors which were indicative of an
employer-employee relationship with CPI, such as: (a) Concepcion’s receipt of a monthly salary
pg. 21
from CPI; and (b) that she performed tasks besides selling CPI properties. To add, the title of her
contract which was referred to as “Contract of Agency for Project Director” was not binding and
conclusive, considering that the characterization of the juridical relationship is essentially a matter
of law that is for the courts to determine, and not the parties thereof. Moreover, the totality of
evidence sustains a finding of employer-employee relationship between CPI and Concepcion.47
Further, the CA held that despite the NLRC’s proper application of the three (3)-year prescriptive
period under Article 291 of the Labor Code, it nonetheless failed to include all of respondents’
earned commissions during that time — i.e., August 9, 2008 to August 8, 2011 — thus,
necessitating the increase in award of unpaid commissions in respondents’ favor.48
_______________
46 Id., at pp. 44-47.
47 Id., at pp. 47-48.
48 Id., at pp. 46-47 (for Babiano) and pp. 48-49 (for Concepcion).
681
VOL. 795, JULY 5, 2016 681

Undaunted, CPI sought for reconsideration,49 which was, however, denied in a Resolution50
dated October 12, 2015; hence, this petition.
The Issue Before the Court
The core issue for the Court’s resolution is whether or not the CA erred in denying CPI’s petition
for certiorari, thereby holding it liable for the unpaid commissions of respondents.
The Court’s Ruling
pg. 22
The petition is partly meritorious.
I.
Article 1370 of the Civil Code provides that “[i]f the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall
control.”51 In Norton Resources and Development Corporation v. All Asia Bank Corporation,52
the Court had the opportunity to thoroughly discuss the said rule as follows:
The rule is that where the language of a contract is plain and unambiguous, its meaning
should be determined without reference to extrinsic facts or aids. The intention of the parties
must be
_______________
49 See motion for reconsideration [of the Decision dated 8 April 2015] dated May 14, 2015; id.,
at pp. 58-74.
50 Id., at pp. 53-56.
51 The Wellex Group, Inc. v. U-Land Airlines Co., Ltd., G.R. No. 167519, January 14, 2015, 745
SCRA 563, 601, citing Norton Resources and Development Corporation v. All Asia Bank
Corporation, 620 Phil. 381, 388; 605 SCRA 370, 376 (2009); further citation omitted.
52 Norton Resources and Development Corporation v. All Asia Bank Corporation, id.
682

gathered from that language, and from that language alone. Stated differently, where the
language of a written contract is clear and unambiguous, the contract must be taken to mean
that which, on its face, it purports to mean, unless some good reason can be assigned to show
that the words should be understood in a different sense. Courts cannot make for the parties
better or more equitable agreements than they themselves have been satisfied to make, or rewrite
contracts because they operate harshly or inequitably as to one of the parties, or alter them for the
benefit of one party and to the detriment of the other, or by construction, relieve one of the parties
pg. 23
from the terms which he voluntarily consented to, or impose on him those which he did not.53
(Emphases and underscoring supplied)
Thus, in the interpretation of contracts, the Court must first determine whether a provision or
stipulation therein is ambiguous. Absent any ambiguity, the provision on its face will be read as it
is written and treated as the binding law of the parties to the contract.54
In the case at bar, CPI primarily invoked the “Confidentiality of Documents and Non-Compete
Clause” found in Babiano’s employment contract55 to justify the forfeiture of his commissions,
viz.:
Confidentiality of Documents and Non-Compete Clause
All records and documents of the company and all information pertaining to its business or affairs
or that of its affiliated companies are confidential and no unauthorized disclosure or reproduction
or the same will be made by you any time during or after your employment.
_______________
53 Id., at pp. 388-389; p. 377; citations omitted.
54 See The Wellex Group, Inc. v. U-Land Airlines Co., Ltd., supra note 51 at pp. 601-602.
55 Rollo, pp. 76-79.
683
VOL. 795, JULY 5, 2016 683

And in order to ensure strict compliance herewith, you shall not work for whatsoever
capacity, either as an employee, agent or consultant with any person whose business is in
direct competition with the company while you are employed and for a period of one year
from date of resignation or termination from the company.
In the event the undersigned breaches any term of this contract, the undersigned agrees and
acknowledges that damages may not be an adequate remedy and that in addition to any other
remedies available to the Company at law or in equity, the Company is entitled to enforce its rights
pg. 24
hereunder by way of injunction, restraining order or other relief to enjoin any breach or default of
this contract.
The undersigned agrees to pay all costs, expenses and attorney’s fees incurred by the Company in
connection with the enforcement of the obligations of the undersigned. The undersigned also
agrees to pay the Company all profits, revenues and income or benefits derived by or accruing to
the undersigned resulting from the undersigned’s breach of the obligations hereunder. This
Agreement shall be binding upon the undersigned, all employees, agents, officers, directors,
shareholders, partners and representatives of the undersigned and all heirs, successors and assigns
of the foregoing.
Finally, if undersigned breaches any terms of this contract, forms of compensation including
commissions and incentives will be forfeited.56 (Emphases and underscoring supplied)
Verily, the foregoing clause is not only clear and unambiguous in stating that Babiano is barred to
“work for whatsoever capacity x x x with any person whose business is in direct competition with
[CPI] while [he is] employed and for a period of one year from date of [his] resignation or termina-
_______________
56 Id., at p. 78.
684

tion from the company,” it also expressly provided in no uncertain terms that should Babiano
“[breach] any term of [the employment contract], forms of compensation including commissions
and incentives will be forfeited.” Here, the contracting parties — namely Babiano on one side, and
CPI as represented by its COO-Vertical, John Victor R. Antonio, and Director for Planning and
Controls, Jose Carlo R. Antonio, on the other — indisputably wanted the said clause to be effective
even during the existence of the employer-employee relationship between Babiano and CPI,
thereby indicating their intention to be bound by such clause by affixing their respective signatures
to the employment contract. More significantly, as CPI’s Vice President for Sales, Babiano held a
highly sensitive and confidential managerial position as he “was tasked, among others, to
guarantee the achievement of agreed sales targets for a project and to ensure that his team has a
qualified and competent manpower resources by conducting recruitment activities, training
sessions, sales rallies, motivational activities, and evaluation programs.”57 Hence, to allow
Babiano to freely move to direct competitors during and soon after his employment with CPI
pg. 25
would make the latter’s trade secrets vulnerable to exposure, especially in a highly competitive
marketing environment. As such, it is only reasonable that CPI and Babiano agree on such
stipulation in the latter’s employment contract in order to afford a fair and reasonable protection
to CPI.58 Indubitably, obligations arising from contracts, including employment contracts, have
the force of law between the contracting parties and should be complied with in good faith.59
Corollary thereto, parties are bound by the stipulations, clauses, terms, and conditions they have
agreed to, provided that these stipulations, clauses,
_______________
57 Id., at p. 38.
58 See Tiu v. Platinum Plans Phils., Inc., 545 Phil. 702, 709-710; 517 SCRA 101, 108 (2007).
59 Global Resource for Outsourced Workers (GROW), Inc. v. Velasco, 693 Phil. 158, 168; 678
SCRA 751, 761 (2012).
685
VOL. 795, JULY 5, 2016 685

terms, and conditions are not contrary to law, morals, public order or public policy,60 as in this
case.
Therefore, the CA erred in limiting the “Confidentiality of Documents and Non-Compete Clause”
only to acts done after the cessation of the employer-employee relationship or to the “post-
employment” relations of the parties. As clearly stipulated, the parties wanted to apply said clause
during the pendency of Babiano’s employment, and CPI correctly invoked the same before the
labor tribunals to resist the former’s claim for unpaid commissions on account of his breach of the
said clause while the employer-employee relationship between them still subsisted. Hence, there
is now a need to determine whether or not Babiano breached said clause while employed by CPI,
which would then resolve the issue of his entitlement to his unpaid commissions.
A judicious review of the records reveals that in his resignation letter61 dated February 25, 2009,
Babiano categorically admitted to CPI Chairman Jose Antonio that on February 12, 2009, he
sought employment from First Global, and five (5) days later, was admitted thereto as vice
president. From the foregoing, it is evidently clear that when he sought and eventually accepted
the said position with First Global, he was still employed by CPI as he has not formally resigned
at that time. Irrefragably, this is a glaring violation of the “Confidentiality of Documents and Non-
Compete Clause” in his employment contract with CPI, thus, justifying the forfeiture of his unpaid
commissions.
pg. 26
_______________
60 See Magsaysay Maritime Corporation v. Simbajon, G.R. No. 203472, July 9, 2014, 729 SCRA
631, 642-643, citing Wallem Maritime Services, Inc. v. Tanawan, 693 Phil. 416, 426; 679 SCRA
255, 265 (2012).
61 Rollo, pp. 361-362.
686

II.
Anent the nature of Concepcion’s engagement, based on case law, the presence of the following
elements evince the existence of an employer-employee relationship: (a) the power to hire, i.e.,
the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the employee’s conduct, or the so called
“control test.” The control test is commonly regarded as the most important indicator of the
presence or absence of an employer-employee relationship.62 Under this test, an employer-
employee relationship exists where the person for whom the services are performed reserves the
right to control not only the end achieved, but also the manner and means to be used in reaching
that end.63
Guided by these parameters, the Court finds that Concepcion was an employee of CPI considering
that: (a) CPI continuously hired and promoted Concepcion from October 2002 until her resignation
on February 23, 2009,64 thus, showing that CPI exercised the power of selection and engagement
over her person and that she performed functions that were necessary and desirable to the business
of CPI; (b) the monthly “subsidy” and cash incentives that Concepcion was receiving from CPI
are actually remuneration in the concept of wages as it was regularly given to her on a monthly
basis without any qualification, save for the “complete submission of documents on what is a sale
policy”;65 (c) CPI had the power to discipline or even dismiss Concepcion as her engagement
_______________
62 See South Davao Development Company, Inc. v. Gamo, 605 Phil. 604, 613; 587 SCRA 524,
533 (2009).
pg. 27
63 Television and Production Exponents, Inc. v. Servaña, 566 Phil. 564, 572; 542 SCRA 578,
584-585 (2008).
64 Prior to her promotion as Project Director, records show that Concepcion was first promoted
as Sales Officer in June 2003, and as Sales Director in August 2006. See Rollo, pp. 38 and 278.
65 Id., at pp. 114-115.
687
VOL. 795, JULY 5, 2016 687

contract with CPI expressly conferred upon the latter “the right to discontinue [her] service
anytime during the period of engagement should [she] fail to meet the performance standards,”66
among others, and that CPI actually exercised such power to dismiss when it accepted and
approved Concepcion’s resignation letter; and most importantly, (d) as aptly pointed out by the
CA, CPI possessed the power of control over Concepcion because in the performance of her duties
as Project Director — particularly in the conduct of recruitment activities, training sessions, and
skills development of Sales Directors — she did not exercise independent discretion thereon, but
was still subject to the direct supervision of CPI, acting through Babiano.67
Besides, while the employment agreement of Concepcion was denominated as a “Contract of

Agency for Project Director,” it should be stressed that the existence of employer-employee
relations could not be negated by the mere expedient of repudiating it in a contract. In the case of
Insular Life Assurance Co., Ltd. v. NLRC (4th Division),68 it was ruled that one’s employment
status is defined and prescribed by law, and not by what the parties say it should be, viz.:
It is axiomatic that the existence of an employer-employee relationship cannot be negated by

expressly repudiating it in the management contract and providing therein that the “employee” is
an independent contractor when the terms of the agreement clearly show otherwise. For, the
employment status of a person is defined and prescribed by law and not by what the parties
say it should be. In determining the status of the management contract, the “four-fold test” on
employment earlier mentioned has to be applied.69 (Emphasis and underscoring supplied)
_______________
66 Id.
67 Id., at pp. 47-48; pp. 114-115.
pg. 28
68 350 Phil. 918; 287 SCRA 476 (1998).
69 Id., at p. 926; p. 483.
688

Therefore, the CA correctly ruled that since there exists an employer-employee relationship
between Concepcion and CPI, the labor tribunals correctly assumed jurisdiction over her money
claims.
III.
Finally, CPI contends that Concepcion’s failure to assail the NLRC ruling awarding her the amount
of P470,754.62 representing unpaid commissions rendered the same final and binding upon her.
As such, the CA erred in increasing her monetary award to P591,953.05.70
The contention lacks merit.
As a general rule, a party who has not appealed cannot obtain any affirmative relief other than the
one granted in the appealed decision. However, jurisprudence admits an exception to the said rule,
such as when strict adherence thereto shall result in the impairment of the substantive rights of the
parties concerned. In Global Resource for Outsourced Workers (GROW), Inc. v. Velasco:71
Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and
can no longer obtain from the appellate court any affirmative relief other than what was already
granted under said judgment. However, when strict adherence to such technical rule will
impair a substantive right, such as that of an illegally dismissed employee to monetary
compensation as provided by law, then equity dictates that the Court set aside the rule to
pave the way for a full and just adjudication of the case.72 (Emphasis and underscoring
supplied)
In the present case, the CA aptly pointed out that the NLRC failed to account for all the unpaid
commissions due to Concepcion for the period of August 9, 2008 to August 8, 2011.73 Indeed,
Concepcion’s right to her earned commissions is a substantive right which cannot be impaired by
an erroneous computation of what she really is entitled to. Hence, following the dictates of equity
pg. 29
and in order to arrive at a complete and just resolution of the case, and avoid a piecemeal
dispensation of justice over the same, the CA correctly recomputed Concepcion’s unpaid
commissions, notwithstanding her failure to seek a review of the NLRC’s computation of the same.
In sum, the Court thus holds that the commissions of Babiano were properly forfeited for violating
the “Confidentiality of Documents and Non-Compete Clause.” On the other hand, CPI remains
liable for the unpaid commissions of Concepcion in the sum of P591,953.05.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated April 8, 2015 and the
Resolution dated October 12, 2015 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 132953
are hereby MODIFIED in that the commissions of respondent Edwin J. Babiano are deemed
FORFEITED. The rest of the CA Decision stands.
SO ORDERED.
Leonardo-De Castro** (Acting Chairperson), Bersamin and Caguioa, JJ., concur.
Sereno, CJ., On Official Leave.
Petition partly granted, judgment and resolution modified.
Notes.—A basic rule in the interpretation of contracts is that the contract should be taken as a
whole. (Catungal vs. Rodriguez, 646 SCRA 130 [2011])
The so-called “control test” is commonly regarded the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. (Atok Big Wedge Company, Inc.
vs. Gison, 655 SCRA 193 [2011])
——o0o——
pg. 30
G.R. No. 221636. July 11, 2016.*
LAND BANK OF THE PHILIPPINES, petitioner, vs. THE COURT OF APPEALS and HEIRS
of MANUEL BOLAÑOS, respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review; The Supreme Court (SC) has
already settled in Land Bank of the Philippines v. De Leon, 388 SCRA 537 (2002), that the proper
mode Special Agrarian Courts (SACs) is by petition for review under Rule 42 of the Rules of Court
and not through an ordinary appeal under Rule 41.—We have already settled in Land Bank of the
Philippines v. De Leon, 388 SCRA 537 (2002), that the proper mode of appeal from decisions of
RTCs sitting as SACs is by petition for review under Rule 42 of the Rules of Court and not through
an ordinary appeal under Rule 41. Section 60 of Republic Act (RA) No. 6657 clearly and
categorically states that said mode of appeal should be adopted. So far, we have not prescribed any
rule expressly disallowing this procedure. In Land Bank of the Philippines v. Court of Appeals,
647 SCRA 561 (2011), we explained that the adoption of a petition for review as the mode of
appeal is justified in order to “hasten” the resolution of cases involving issues on just compensation
of expropriated lands under RA No. 6657.
Same; Same; Same; Considering that private respondents resorted to a wrong mode of appeal,
their notice of appeal did not toll the running of the reglementary period under Section 60 of
Republic Act (RA) No. 6657.—Considering that private respondents resorted to a wrong mode of
appeal, their notice of appeal did not toll the running of the reglementary period under Section 60
of RA No. 6657. Consequently, the decision of the SAC became final and executory. Although
appeal is an essential part of our judicial process, it has been held, time and again, that the right
thereto is not a natural right or a part of due process but is merely a statutory privilege. Thus, the
perfection of an appeal in the manner and within the period prescribed by law is not only
mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal
will render the judgment final and executory. While it is true that we have applied a liberal
application of the rules of procedure in a number of cases, we have stressed that this can be invoked
only in proper cases and under justifiable causes and circumstances. We agree with petitioner’s
contention that the CA and private respondents did not proffer a reasonable cause to justify
noncompliance with the rules besides the exhortation of circumspect leniency in order to give
private respondents a day in court. Private respondents tailed to specifically cite any justification
as to how and why a normal application of procedural rules would frustrate their quest for justice.
Indeed, private respondents have not been forthright in explaining why they chose the wrong mode
of appeal. The bare invocation of “the interest of substantial justice” line is not some magic wand
that will automatically compel us to suspend procedural rules. Procedural rules are not to be
belittled, let alone dismissed simply because their nonobservance may have resulted in prejudice
to a party’s substantial rights. Utter disregard of the rules cannot be justly rationalized by harping
on the policy of liberal construction.
SPECIAL CIVIL ACTIONS in the Supreme Court. Certiorari and Prohibition.
pg. 31
LBP Legal Services Group for LBP.
Grace Dela Torre for respondents.
JARDELEZA, J.:
This is a Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order or
Writ of Preliminary Injunction assailing the Resolutions of the Court of Appeals in C.A.-G.R. CV
No. 100894 dated May 21, 20151 and October 13, 2015.2 These Resolutions denied petitioner’s
motion to dismiss, which sought the dismissal of the appeal filed by private respondents for being
a wrong remedy.
The Facts
The Department of Agrarian Reform (DAR) subjected the 71.4715-hectare land of private
respondents to the coverage of the Comprehensive Agrarian Reform Program. Petitioner Land
Bank of the Philippines (LBP) valued the property in the amount of P1,620,750.72 based on DAR
Administrative Order (AO) No. 11, S. 1994.3 Private respondents rejected the valuation but
petitioner still deposited the amount in their favor. On March 11, 1996, farmer-beneficiaries were
awarded with certificates of land ownership.4
On October 29, 1998, private respondents filed before Branch 23 of the Regional Trial Court
(RTC) of Naga City, sitting as a Special Agrarian Court (SAC), a case for determination of just
compensation.5 The SAC ordered petitioner to revalue the property, which it did, coming up with
a new valuation of P1,803,904.76 based on DAR AO No. 5, S. 1998.6 The SAC upheld the new
valuation in its May 14, 2013 Decision.7
Private respondents filed a notice of appeal under Rule 41 before the SAC, which gave the notice
due course.8 On September 9, 2013, the Court of Appeals (CA) required them to file their brief.9
Petitioner filed a motion to dismiss on the ground that private respondents availed a wrong mode
of appeal. The CA did not immediately resolve the motion, prompting petitioner to file its brief
dated February 14, 2014 where it also reiterated the grounds raised in its motion to dismiss.10 On
May 21, 2015, the CA denied petitioner’s motion to dismiss on grounds of liberality in the
construction of the Rules of Court, to wit:
Rules of procedure are tools designed not to thwart but to facilitate the attainment of justice; thus,
their strict and rigid application may, for good and deserving reasons, have to give way to, and be
subordinated by, the need to aptly dispense substantial justice in the normal course. It is a far better
pg. 32
and more prudent course of action for the court to excuse a technical lapse and afford the parties a
review of the case on appeal to attain the ends of justice rather than dispose of the case on
technicality and cause a grave injustice to the parties, giving a false impression of speedy disposal
of cases while actually resulting in more delay, if not a miscarriage of justice. Circumspect
leniency will give the plaintiff-appellant “the fullest opportunity to establish the merits of his
complaint rather than to lose property on technicalities.”11
Petitioner filed a motion for reconsideration, but the CA also denied the same in a Resolution dated
October 13, 2015.12
The Petition
Hence, this Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order
and/or Preliminary Injunction,13 where petitioner imputes grave abuse of discretion on the CA
when it arbitrarily disregarded the long-standing jurisprudence that appeals from the decision of
by ordinary appeal. Petitioner points out that the CA gave no justifiable reason in relaxing the rule
and private respondents never explained why they did not file a petition for review. Thus, petitioner
argues that the SAC decision attained finality when private respondents failed to file a petition for
review.
In their Comment to the Petition,15 private respondents argue that the exercise of liberality by the
CA in allowing their ordinary appeal is in keeping with our recognition of the need of the
landowner to be paid pursuant to the value for value exchange.16 Private respondents cite the
emerging trend in our rulings of affording every party-litigant the amplest opportunity for the
proper and just determination of his cause, free from the constraints of technicalities.
We grant the petition.
We have already settled in Land Bank of the Philippines v. De Leon17 that the proper mode of
appeal from decisions of RTCs sitting as SACs is by petition for review under Rule 42 of the Rules
of Court and not through an ordinary appeal under Rule 41. Section 60 of Republic Act (RA) No.
6657 clearly and categorically states that said mode of appeal should be adopted.18 So far, we
have not prescribed any rule expressly disallowing this procedure.19
In Land Bank of the Philippines v. Court of Appeals,20 we explained that the adoption of a petition
for review as the mode of appeal is justified in order to “hasten” the resolution of cases involving
issues on just compensation of expropriated lands under RA No. 6657.21 Citing Land Bank of the
Philippines v. De Leon, we elaborated:
pg. 33
The reason why it is permissible to adopt a petition for review when appealing cases decided by
the Special Agrarian Courts in eminent domain case is the need for absolute dispatch in the
determination of just compensation. Just compensation means not only paying the correct amount
but also paying for the land within a reasonable time from its acquisition. Without prompt payment,
compensation cannot be considered “just” for the property owner is made to suffer the
consequences of being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his loss. Such objective is more
in keeping with the nature of a petition for review.
Unlike an ordinary appeal, a petition for review dispenses with the filing of a notice of appeal or
completion of records as requisites before any pleading is submitted. A petition for review hastens
the award of fair recompense to deprived landowners for the government-acquired property, an
end not foreseeable in an ordinary appeal. x x x2
Considering, therefore, that private respondents resorted to a wrong mode of appeal, their notice
of appeal did not toll the running of the reglementary period under Section 60 of RA No. 6657.
Consequently, the decision of the SAC became final and executory.23
Although appeal is an essential part of our judicial process, it has been held, time and again, that
the right thereto is not a natural right or a part of due process but is merely a statutory privilege.
Thus, the perfection of an appeal in the manner and within the period prescribed by law is not only
mandatory but also jurisdictional and failure of a party to conform to the rules regarding appeal
will render the judgment final and executory.24
While it is true that we have applied a liberal application of the rules of procedure in a number of
cases, we have stressed that this can be invoked only in proper cases and under justifiable causes
and circumstances.25 We agree with petitioner’s contention that the CA and private respondents
did not proffer a reasonable cause to justify noncompliance with the rules besides the exhortation
of circumspect leniency in order to give private respondents a day in court. Private respondents
tailed to specifically cite any justification as to how and why a normal application of procedural
rules would frustrate their quest for justice. Indeed, private respondents have not been forthright
in explaining why they chose the wrong mode of appeal.26 The bare invocation of “the interest of
substantial justice” line is not some magic wand that will automatically compel us to suspend
procedural rules. Procedural rules are not to be belittled, let alone dismissed simply because their
nonobservance may have resulted in prejudice to a party’s substantial rights. Utter disregard of the
rules cannot be justly rationalized by harping on the policy of liberal construction.27
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated May
21, 2015 and October 13, 2015 are SET ASIDE.
The Decision dated May 14, 2013 of Branch 23 of the Regional Trial Court of Naga City sitting
as a Special Agrarian Court in Civil Case No. 1998-4128 is deemed final and executory.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta and Perez, JJ., concur.
pg. 34
Reyes, J., On Official Leave.
Petition granted, resolutions set aside.
Notes.—A decision of the Regional Trial Court (RTC), rendered in its appellate jurisdiction, may
be appealed to the Court of Appeals via a Petition for Review under Rule 42 of the Revised Rules
of Court. (Espejo vs. Ito, 595 SCRA 192 [2009])
Notwithstanding petitioner’s wrong mode of appeal, the Court of Appeals should not have so easily
dismissed the petition, considering that the parties involved are local government units and that
what is involved is the determination of their respective territorial jurisdictions. (Barangay
Sangalang vs. Barangay Maguihan, 609 SCRA 57 [2009])
——o0o——
Case Short Name: Saguinsin vs. Liban
G.R. No. 189312. July 11, 2016.*
FE B. SAGUINSIN, petitioner, vs. AGAPITO LIBAN, CESARIO LIBAN, EDDIE

TANGUILAN, PACENCIA MACANANG, ISIDRO NATIVIDAD, TIMMY SIBBALUCA
and ISIDRO SIBBALUCA, respondents.
Remedial Law; Civil Procedure; Appeals; Agrarian Reform; In appeals in agrarian cases, it is a
long-standing rule that when the appellate court has confirmed that the findings of fact of the
agrarian courts are borne out by the records, such findings are conclusive and binding on the
Supreme Court (SC).—In appeals in agrarian cases, it is a long-standing rule that when the
appellate court has confirmed that the findings of fact of the agrarian courts are borne out by the
records, such findings are conclusive and binding on this Court. Further, the well-settled rule is
that only questions of law may be raised in a petition for review on certiorari under Rule 45 of the
Rules of Court, since “the Supreme Court is not a trier of facts.” It is not our function to review,
examine and evaluate or weigh the probative value of the evidence presented.
Same; Same; Same; Points of law, theories, issues and arguments not brought to the attention of
the trial court will not be and ought not to be considered by a reviewing court, as these cannot be
raised for the first time on appeal.—In the proceedings below, petitioner never alleged that the
pg. 35
property was not tenanted or outside the coverage of the OLT. This argument was raised only
before the CA in her petition for review. Neither did she assail the finding that the property is rice
and/or corn land. She alleged that respondents failed to prove that the land was devoted to the
production of rice and corn only in her Reply dated July 19, 2010. Points of law, theories, issues
and arguments not brought to the attention of the trial court will not be and ought not to be
considered by a reviewing court, as these cannot be raised for the first time on appeal. Basic
consideration of due process impels this rule.
Civil Law; Sales; Buyer in Good Faith; Words and Phrases; A purchaser in good faith is one who
buys a property without notice that some other person has a right to, or interest in, the property
and pays full and fair price at the time of purchase or before he has notice of the claim or interest
of other persons in the property.—Petitioner cannot use the defense of being a good faith buyer,
since she raised this issue only in the present petition for review. Nevertheless we cannot hold that
petitioner is a buyer in good faith. A purchaser in good faith is one who buys a property without
notice that some other person has a right to, or interest in, the property and pays full and fair price
at the time of purchase or before he has notice of the claim or interest of other persons in the
property. Petitioner in this case was aware that the property was tenanted at the time of sale.
Another factor which militates against petitioner’s claim is the very application for retention Isabel
filed which she substituted for. Isabel’s application for retention is an acknowledgment that the
property is covered by the OLT under PD No. 27, as in fact she indicated in her application that
the sale to petitioner was contrary to PD No. 27. In her Petition for Clarificatory Order, petitioner
claimed that retention should be granted in her favor being the recognized transferee of whatever
right Cristino might have had over the property. Thus, she also impliedly acknowledged that the
property is covered by PD No. 27. It is illogical for someone to invoke a right and at the same time
claim that the requisites for the exercise of the said right are not present. Petitioner cannot claim
retention rights and deny coverage under PD No. 27.
Same; Land Titles and Deeds; A certificate of title cannot always be considered as conclusive
evidence of ownership.—We have held that a certificate of title cannot always be considered as
conclusive evidence of ownership: Moreover, placing a parcel of land under the mantle of the
Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is
different from a certificate of title, the latter only serving as the best proof of ownership over
a piece of land. The certificate cannot always be considered as conclusive evidence of
ownership. In fact, mere issuance of the certificate of title in the name of any person does not
foreclose the possibility that the real property may be under co-ownership with persons not named
in the certificate, or that the registrant may only be a trustee, or that other parties may have acquired
interest over the property subsequent to the issuance of the certificate of title. Needless to say,
registration does not vest ownership over a property, but may be the best evidence thereof.
Remedial Law; Civil Procedure; Parties; Death of a Party; Substitution of Parties; When a party
to a pending action dies and the claim is not extinguished, the Rules of Court require a substitution
of the deceased in accordance with Section 16 of Rule 3.—When a party to a pending action dies
and the claim is not extinguished, the Rules of Court require a substitution of the deceased in
accordance with Section 16 of Rule 3. In De la Cruz v. Joaquin, 464 SCRA 576 (2005), we
explained the importance of the substitution of a deceased party: The rule on the substitution of
parties was crafted to protect every party’s right to due process. The estate of the deceased party
pg. 36
will continue to be properly represented in the suit through the duly appointed legal representative.
Moreover, no adjudication can be made against the successor of the deceased if the fundamental
right to a day in court is denied. Thus, in all proceedings, the legal representatives must appear to
protect the interests of the deceased. Because Isabel was never substituted by her heirs or legal
representative in this case, no adjudication can be had on Cristino’s right of retention as a matter
of due process.
JARDELEZA, J.:
This is a Petition for Review on Certiorari1 assailing the Decision2 and Resolution3 dated May
20, 2009 and August 25, 2009, respectively, of the Court of Appeals (CA) in C.A.-G.R. S.P. No.
98049. The CA affirmed the Decision4 of the Office of the President dated December 28, 2006 in
OP Case No. 06-H-301 which reversed and set aside the Orders of the Department of Agrarian
Reform (DAR) Secretary dated June 28, 20055 and June 22, 20066 granting the application for
retention of Isabel Sibbaluca (Isabel) as substituted by Fe Saguinsin (petitioner).
The Facts
On June 23, 1952, Cristino Sibbaluca (Cristino) purchased from one Pedro Espero a parcel of land
with an area of 10.9524 hectares, located in Bacayan, Baggao, Cagayan.7
On October 21, 1972, Presidential Decree (PD) No. 278 was promulgated. Under this law, the
Operation Land Transfer (OLT) was launched to implement and enforce the provisions on
transferring ownership to qualified tenant-farmers or farmer-beneficiaries of the rice or corn land
they are cultivating under a system of sharecrop or lease tenancy, with the landowner having
retention of not more than seven hectares of agricultural land.9 Cristino’s property was placed
under the coverage of the OLT.
On March 21, 1975, Cristino sold seven hectares of the lot covered by Transfer Certificate of Title
(TCT) No. T-1336 to
Lito Sibbaluca10 (Lito); and on October 12, 1976, he sold the remaining 3.9524-hectare property
(property) to petitioner.11 For the sale to petitioner, Cristino executed an Affidavit12 certifying
that the property was not tenanted (Affidavit of Non-Tenancy).
pg. 37
On December 4, 1987 and February 19, 1988, Emancipation Patents13 (EPs) were issued in favor
of the farmer-beneficiaries of the property including Agapito Liban, Cesario Liban, Frederito
Tanguilan, Eustaquio Macanang, Jr., Pacita Vda. de Macanang, Isidro Natividad, Saturnino
Sibbaluca and Isidro Sibbaluca.14
On May 24, 1991, Isabel, the widow of Cristino, filed an application for retention of the property15
sold to petitioner under Republic Act (RA) No. 6657.16 In her application, Isabel stated:
I have the honor to apply for retention of the landholding pursuant to R.A. 6657 particularly
described as Title No. T-36360 situated in Bacagan, Baggao, Cagayan containing an area of 3.9524
hectares which said lot was sold by my late husband, Cristino Sibbaluca in favor of Fe Sagionsin
[sic] sometime in 1976 [sic] in [sic] contrary to the provision of P.D. No. 27.17
In a Resolution18 dated October 7, 1991, the Provincial Agrarian Reform Office (PARO)
recommended the following: (1) granting the application of Isabel; (2) causing the recall and
cancellation of the Certificate of Land Transfer (CLT) and/or EPs awarded to the farmer-
beneficiaries; and (3) the execution of a leasehold contract between the landowner and the farmer-
beneficiaries.19 The PARO ruled that the sale of the property to petitioner does not affect the
coverage of the land under the OLT because the property still belonged to spouses Cristino and
Isabel in 1972 when PD No. 27 took effect.20
In an Order21 dated January 30, 1995, the DAR Regional Office (DARRO) OIC Director affirmed
the PARO Order and authorized Isabel to withdraw any amortization deposited by the tenants to
the Land Bank of the Philippines.22 In addition, he declared the sale between Cristino and
petitioner “null and void, x x x being contrary to the provisions of DAR Memo Circular No. 8,
Series of 1974, which prohibits the transfer of ownership of tenanted rice/corn lands after October
21, 1972.”23 In the same Order, the DARRO Director stated that the Municipal Agrarian Reform
Office (MARO) of Baggao, Cagayan placed the land under OLT “finding that [the property] is
devoted to the production of palay and [is] tenanted x x x.”24
Before the Order dated January 30, 1995 was issued, Isabel died and no heir substituted her in the
subsequent proceedings.25
On May 12, 1998, petitioner filed a Petition for Clarificatory Order26 with the DARRO, alleging
that she owns the property subject of Isabel’s application by virtue of a contract of sale dated
October 12, 1976.27 She prayed that the retention be granted in her favor since she is the transferee
of Cristino.28 The DARRO ruled in petitioner’s favor on August 24, 1998,29 affirming with
modification the Order dated January 30, 1995, but striking off Isabel as applicant and substituting
her with petitioner.30 According to the DARRO, the right to retention is available to petitioner
being the legal owner of the property.31
Respondents sought reconsideration,32 alleging that (1) no hearing and/or investigation was
conducted in the course of the petition for retention, thus their constitutional right to due process
was violated,33 and (2) the sale of the property to petitioner was void because it violated PD No.
27 and Memorandum Circular (MC) No. 18-81 in relation to MC No. 2-A.34 Thus, petitioner had
no personality to be granted the right of retention.35
pg. 38
The DARRO denied the motion for reconsideration.36 It declared that the property was not
tenanted at the time it was sold to petitioner as indicated in the contract of sale and the Affidavit
of Non-Tenancy. Thus, MC No. 2-A was not violated. Being the owner of the property, petitioner
had the personality to be granted a right of retention.37 Besides, the area of the property, being
only 3.9524 hectares, is well within the retention limit granted by law.38
Respondents appealed the resolution to the DAR,39 but the DAR Secretary dismissed the
appeal.40 He ruled that a violation of MC No. 8 is not one of the grounds to deprive a landowner
of her right to retention.41 Thus, even if the sale between Cristino and petitioner is null and void,
the land would still be deemed owned by Cristino for purposes of determining whether Cristino
and/or Isabel is entitled to retention.42 Since the DAR recognized the right of retention of Isabel
over the property, its sale to petitioner did not violate PD No. 27 and RA No. 6657. The tenants of
the property are not prejudiced by the act of selling the property because what was sold is part of
the retained area.43 The DAR Secretary also found that the property was within the coverage of
PD No. 27 for being tenanted rice and corn land.44 Respondents moved for the reconsideration of
the Order, but the DAR Secretary denied their motion for lack of merit.45
Respondents filed an appeal with the Office of the President (OP).46 They claimed that the earlier
sale by Cristino of the seven hectares to Lito was already an implied exercise of the retention limit
of spouses Cristino and Isabel. What was sold to petitioner is already over and above the retention
limit of seven hectares, and thus petitioner, as substitute for Isabel can no longer exercise the
retention right.47
In its Decision,48 the OP granted the appeal and denied the application for retention of Isabel as
substituted by petitioner. According to the OP, the right of retention granted to landowners is not
absolute, and the voluntary conveyance made after the effectivity of PD No. 27, such as the sale
in this case could be considered as an implied relinquishment of such right.49 The OP also found
that the Deed of Sale and Affidavit of Non-Tenancy stating that the property was not tenanted at
the time of sale were self-serving and could not overcome the findings of the DAR officials who
found that the property was occupied by farmer-beneficiaries.50
Petitioner thus appealed to the CA.51
On May 20, 2009, the CA affirmed the OP Decision.52 According to the CA, it was not proven
that Cristino had no knowledge of the OLT coverage of his property,53 and that Cristino may be
presumed to have already exercised his right of retention over the first seven hectares of land he
earlier sold to Lito.54 Thus, the subsequent sale of the property to petitioner should no longer form
part of the seven-hectare limit provided under PD No. 27.55 Further, the CA, like the OP, sustained
the findings of the agrarian reform officials that the property was tenanted,56 and thus, the sale
was prohibited under MC No. 18-81 in relation to MC No. 2-A.
On August 25, 2009, the CA denied petitioner’s motion for reconsideration.57 Hence, this petition.
Petitioner maintains that she has a right of retention over the property sold to her by Cristino
because: (a) the land is not covered by PD No. 27; (b) the land is within the retention limit and not
subject to distribution;58 (c) she is a purchaser in good faith;59 and (d) the property is already
pg. 39
registered in her name.60 Respondents, on the other hand, argue that petitioner has no right of
retention over the property, being a mere successor-in-interest resulting from an illegal conveyance
because: (a) the property is tenanted; and (b) Cristino had already exercised his right of retention
when he sold the seven hectares to Lito in 1975.61
We deny the petition.
Validity of the sale and peti-

tioner’s right of retention
The requisites for coverage under the OLT Program pursuant to PD No. 27 are the following: (a)
the land must be devoted to rice or corn crops; and (b) a system of sharecrop or lease-tenancy
obtains in the land.62
Petitioner insists that at the time of the sale on October 12, 1976, the property was not tenanted as
evidenced by the Deed of Sale and the Affidavit of Non-Tenancy executed by Cristino declaring
that the property was not tenanted.63 Moreover, she now claims that respondents failed to prove
that the land was primarily devoted to rice and corn.64 Therefore, the sale of the property in her
favor did not violate PD No. 27.
The existence of tenancy over the subject property has already been declared by the DAR, the OP
and the CA. It was only the DARRO which declared otherwise, solely relying on Cristino’s
declaration in the Affidavit of Non-Tenancy. Like the DAR, OP and the CA, we find that Cristino’s
Affidavit of Non-Tenancy is self-serving and merely executed to comply with the requisites for
the sale to petitioner. We note too, that per the MARO Memorandum dated October 16, 1990,65
petitioner acknowledged that respondents have been bona fide tenant-tillers of the property even
before its sale to her was consummated.66
In appeals in agrarian cases, it is a long-standing rule that when the appellate court has confirmed
that the findings of fact of the agrarian courts are borne out by the records, such findings are
conclusive and binding on this Court.67 Further, the well-settled rule is that only questions of law
may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, since “the
Supreme Court is not a trier of facts.”68 It is not our function to review, examine and evaluate or
weigh the probative value of the evidence presented.69
pg. 40
In the proceedings below, petitioner never alleged that the property was not tenanted or outside
the coverage of the OLT.70 This argument was raised only before the CA in her petition for
review.71 Neither did she assail the finding that the property is rice and/or corn land. She alleged
that respondents failed to prove that the land was devoted to the production of rice and corn only
in her Reply dated July 19, 2010.72 Points of law, theories, issues and arguments not brought to
the attention of the trial court will not be and ought not to be considered by a reviewing court, as
these cannot be raised for the first time on appeal. Basic consideration of due process impels this
rule.73
The existence of tenancy and the use of land for planting rice and/or corn having been established,
we find no reason to overturn the same. Thus, the land is within the coverage of the OLT under
PD No. 27.
Pursuant to PD No. 27, the DAR issued MC Nos. 274 and 2-A,75 Series of 1973, and MC No.
8,76 Series of 1974.77 MC No. 2-A which amended MC No. 2 provides the following explicit
prohibition, among others:
h. Transfer of ownership after October 21, 1972, except to the actual tenant-farmer
tiller. If transferred to him, the cost should be that prescribed by Presidential Decree No. 27.
(Emphasis supplied)
While MC No. 8 subsequently repealed or modified MC Nos. 2 and 2-A, and other circulars or
memoranda inconsistent with it, providing that:
4. No act shall be done to undermine or subvert the intent and provisions of Presidential
Decrees, Letters of Instructions, Memoranda and Directives, such as the following and/or
similar acts:
xxx
f) Transferring ownership to tenanted rice and/or corn lands after October 21,
1972, except to the actual tenant-farmers or tillers but in strict conformity to the
provisions of Presidential Decree No. 27 and the requirements of the DAR. (Emphasis
supplied)
Petitioner cannot use the defense of being a good faith buyer, since she raised this issue only in
the present petition for review. Nevertheless we cannot hold that petitioner is a buyer in good faith.
A purchaser in good faith is one who buys a property without notice that some other person has a
right to, or interest in, the property and pays full and fair price at the time of purchase or before he
has notice of the claim or interest of other persons in the property.78 Petitioner in this case was
aware that the property was tenanted at the time of sale.79
Another factor which militates against petitioner’s claim is the very application for retention Isabel
filed which she substituted for. Isabel’s application for retention is an acknowledgment that the
pg. 41
property is covered by the OLT under PD No. 27, as in fact she indicated in her application that
the sale to petitioner was contrary to PD No. 27.80 In her Petition for Clarificatory Order, petitioner
claimed that retention should be granted in her favor being the recognized transferee of whatever
right Cristino might have had over the property.81 Thus, she also impliedly acknowledged that the
property is covered by PD No. 27. It is illogical for someone to invoke a right and at the same time
claim that the requisites for the exercise of the said right are not present. Petitioner cannot claim
retention rights and deny coverage under PD No. 27.
Petitioner’s allegation that her title is conclusive evidence of her ownership of the property82 is
misplaced. We have held that a certificate of title cannot always be considered as conclusive
evidence of ownership:
Moreover, placing a parcel of land under the mantle of the Torrens system does not mean that
ownership thereof can no longer be disputed. Ownership is different from a certificate of title,
the latter only serving as the best proof of ownership over a piece of land. The certificate
cannot always be considered as conclusive evidence of ownership. In fact, mere issuance of the
certificate of title in the name of any person does not foreclose the possibility that the real property
may be under co-ownership with persons not named in the certificate, or that the registrant may
only be a trustee, or that other parties may have acquired interest over the property subsequent to
the issuance of the certificate of title. Needless to say, registration does not vest ownership over a
property, but may be the best evidence thereof.83 (Emphasis supplied)
In sum, the property, being tenanted rice and/or corn land, is under the coverage of the OLT, and
could not have been validly sold after October 21, 1972. The sale between Cristino and petitioner
on October 12, 1976, having been made in violation of PD No. 27 and its implementing guidelines
is void.84 Petitioner, not being the owner of the property, does not have the right of retention over
the property. Consequently, ownership reverts to Cristino.85
Cristino’s right of retention
The ownership reverting to Cristino notwithstanding, we cannot make a determination whether

Cristino, or his heirs may still exercise the right to retention. We take exception to the OP and the
CA’s findings that (1) Cristino’s heirs cannot exercise the right of retention because Cristino had
no intention to retain the property, and (2) Cristino is presumed to have already exercised his right
of retention over the first seven hectares sold to Lito.86
We find no basis for these declarations. Under Section 3 of DAR Administrative Order No. 4,
Series of 1991, cited by the CA, the heirs may exercise the original landowner’s right to retention
if they can prove that the decedent had no knowledge of OLT Coverage over the subject property.
As such, the intent must be proven by the heirs seeking to exercise the right. In this case, the heirs
did not have the opportunity to prove Cristino’s intent because the DARRO, without requiring
proof of such intent, granted the application for retention filed by Isabel, Cristino’s widow.
pg. 42
Further, Isabel, or Cristino’s heirs, if any, were not given the opportunity to present evidence when
the issue of intent to retain was raised in the proceedings below, since petitioner has already
substituted Isabel. The record shows that respondents presented no evidence or legal basis to prove
the so-called implied exercise of retention. This was a mere allegation on the part of the
respondents, a matter which Cristino’s heirs, if any, failed to rebut, as they were never part of the
proceedings. We note that Isabel died after she filed the application for retention,87 and no heir or
legal representative of Cristino participated in the proceedings thereafter.
When a party to a pending action dies and the claim is not extinguished, the Rules of Court require
a substitution of the deceased in accordance with Section 1688 of Rule 3. In De la Cruz v.
Joaquin,89 we explained the importance of the substitution of a deceased party:
The rule on the substitution of parties was crafted to protect every party’s right to due process. The
estate of the deceased party will continue to be properly represented in the suit through the duly
appointed legal representative. Moreover, no adjudication can be made against the successor of
the deceased if the fundamental right to a day in court is denied.90
Thus, in all proceedings, the legal representatives must appear to protect the interests of the
deceased.91 Because Isabel was never substituted by her heirs or legal representative in this case,
no adjudication can be had on Cristino’s right of retention as a matter of due process.
Cristino’s heirs, if there be any, may still apply for, and exercise the right of retention if they can
show entitlement thereto.
WHEREFORE, in view of the foregoing, the petition is DENIED for lack of merit. The Decision
and Resolution dated May 20, 2009 and August 25, 2009, respectively, rendered by the CA in
C.A.-G.R. S.P. No. 98049 are AFFIRMED only insofar as the CA ruled that petitioner Fe
Saguinsin has no right of retention over the 3.9524-hectare property.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta and Perez, JJ., concur.
Reyes, J., On Official Leave.
Petition denied, judgment and resolution affirmed.
Notes.—An action that affects primarily and principally property and property rights survives the
death of a party. (Suria vs. Heirs of Brigido M. Tomolin, 525 SCRA 278 [2007])
Settled is the rule that the burden of proving the status of a purchaser in good faith and for value
lies upon one who asserts that status. (Bitte vs. Jonas, 777 SCRA 489 [2015])
——o0o——
pg. 43
Case Short Name: Barrio Fiesta Restaurant vs. Beronia
G.R. No. 206690. July 11, 2016.*
BARRIO FIESTA RESTAURANT, LIBERTY ILAGAN, SUNSHINE ONGPAUCO-

IKEDA and MARICO CRISTOBAL, petitioners, vs. HELEN C. BERONIA, respondent.
Remedial Law; Motion for Reconsideration; Under Section 1, Rule 52 of the Rules of Court, a
motion for reconsideration of a judgment or final resolution should be filed within fifteen (15) days
from notice.—Under Section 1, Rule 52 of the Rules of Court, a motion for reconsideration of a
judgment or final resolution should be filed within fifteen (15) days from notice. If no appeal or
motion for reconsideration is filed within this period, the judgment or final resolution shall
forthwith be entered by the clerk in the book of entries of judgment as provided under Section 10
of Rule 51.
Same; Same; For purposes of determining its timeliness, a motion for reconsideration may
properly be treated as an appeal. As a step to allow an inferior court to correct itself before review
by a higher court, a motion for reconsideration must necessarily be filed within the period to
appeal. When filed beyond such period, the motion for reconsideration ipso facto forecloses the
right to appeal.—Without a motion for reconsideration of the CA’s June 21, 2012 decision duly
filed on time, the petitioners lost their right to assail the CA decision before this Court. “For
purposes of determining its timeliness, a motion for reconsideration may properly be treated as an
appeal. As a step to allow an inferior court to correct itself before review by a higher court, a
motion for reconsideration must neces-
_______________
* SECOND DIVISION.
258

Barrio Fiesta Restaurant vs. Beronia
sarily be filed within the period to appeal. When filed beyond such period, the motion for
reconsideration ipso facto forecloses the right to appeal.” In other words, the petitioners’ failure to
timely file the motion for reconsideration foreclosed any right which they may have had under the
rules not only to seek reconsideration of the CA’s June 21, 2012 decision; more importantly, the
failure foreclosed their right to assail the CA decision before this Court.
Same; Same; A motion for reconsideration on the ground of excusable negligence is addressed to
the sound discretion of the court which cannot be granted except upon a clear showing of
pg. 44
justifiable circumstances negating the effects of any negligence that might have been present.—A
motion for reconsideration on the ground of excusable negligence is addressed to the sound
discretion of the court which cannot be granted except upon a clear showing of justifiable
circumstances negating the effects of any negligence that might have been present. We emphasize
and reiterate that rules of procedure must be faithfully complied with and cannot be based solely
on the claim of substantial merit. Rules prescribing the time to do specific acts or to undertake
certain proceedings are considered absolutely indispensable to prevent needless delays and to the
orderly and prompt discharge of judicial business. By their very nature, these rules are mandatory.
In the present case, the only permissible consideration we can take is to determine whether
circumstances exist to excuse the petitioners’ delay in the filing of their motion for reconsideration.
If there are none, as indeed we find because the petitioners utterly failed to show us one, then the
delay is fatal.
Pleadings and Practice; As a rule, when a party to a proceeding is represented by counsel, it is

the counsel who signs any pleading filed in the course of the proceeding.—As a rule, when a party
to a proceeding is represented by counsel, it is the counsel who signs any pleading filed in the
course of the proceeding. The party represented does not have to sign the pleadings, save only in
the specific instances required by the rules; they appear before the court and participate in the
proceedings only when specifically required by the court or tribunal.
Remedial Law; Civil Procedure; Judgments; Immutability of Final Judgments; Once a decision
becomes final and executory, it is “immutable and unalterable, and can no longer be modified in
any
259
VOL. 796, JULY 11, 2016 259

respect, even if the modification is meant to correct what is perceived to be an erroneous

conclusion of fact or law, and regardless of whether the modification is attempted to be made by
the court rendering it or by the highest court of the land.”—“It is well-settled that judgments or
orders become final and executory by operation of law and not by judicial declaration. The finality
of a judgment becomes a fact upon the lapse of the reglementary period of appeal if no appeal is
perfected or [no] motion for reconsideration or new trial is filed.” “The court need not even
pronounce the finality of the order as the same becomes final by operation of law. In fact, it could
not even validly entertain a motion for reconsideration after the lapse of the period for taking an
appeal. x x x The subsequent filing of a motion for reconsideration cannot disturb the finality
of the judgment or order.” Once a decision becomes final and executory, it is “immutable and
unalterable, and can no longer be modified in any respect, even if the modification is meant to
correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether
the modification is attempted to be made by the court rendering it or by the highest court of the
land.”
pg. 45
Real, Brotarlo and Real for petitioners.
U.P. Office of Legal Aid for respondent.
BRION, J.:
In this petition for review on certiorari,1 we resolve the challenge to the June 21, 2012 decision2
and the April 5, 2013 resolution3 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 119458.
_______________
1 Rollo, pp. 10-32.
2 Penned by Associate Justice Mariflor P. Punzalan-Castillo and concurred in by Associate

Justices Franchito N. Diamante and Edwin D. Sorongon, id., at pp. 39-54.
3 Id., at p. 55.
260

The CA reversed and set aside the December 7, 2010 decision4 of the National Labor Relations
Commission (NLRC) and reinstated the May 31, 2010 ruling5 of the labor arbiter (LA) declaring
respondent Helen C. Beronia (Beronia) illegally dismissed.
The Antecedents
pg. 46
On August 17, 2009, Beronia filed a complaint6 for illegal dismissal, praying for backwages,
damages, and attorney’s fees against Barrio Fiesta Restaurant (Barrio Fiesta), its owner Liberty
Ilagan (Ilagan), General Manager Sunshine Ongpauco-Ikeda (Ikeda), and Personnel Officer
Marico Cristobal (Cristobal) (collectively referred to as petitioners).
Beronia claimed that on February 12, 1988, the spouses Rodolfo Ongpauco and Liberty Ilagan7
hired her as receptionist8 at one of their restaurants, the Mikimito. In 1989, they made her a cashier
and assigned her at the Bakahan at Manukan restaurants; in 1990, they also assigned her at two
branches of the Barrio Fiesta. She worked in these four restaurants until 1999 when she went on
absence without leave to take care of her sick daughter.
Beronia added that after seven months, she was called back to work and was again assigned at the
Barrio Fiesta. On September 5, 2008, Irene Molina (Molina), the cashier as-
_______________
4 Penned by Presiding Commissioner Herminio V. Suelo and concurred in by Commissioners

Angelo Ang Palana and Numeriano D. Villena, id., at pp. 238-246.
5 Issued by Labor Arbiter Virginia T. Luyas-Azarraga, id., at pp. 167-177.
6 Id., at pp. 95-96; p. 130; Beronia’s Position Paper, p. 3, par. 8.
7 The spouses Rodolfo Ongpauco and Liberty Ilagan owned the following restaurants: Mikimoto,
Bakahan at Manukan, Ihaw-Ihaw Kalde-Kaldero, and Barrio Fiesta restaurants.
8 Id., at pp. 77-78; Beronia’s application for employment dated February 11, 1988.
261
VOL. 796, JULY 11, 2016 261

signed to the shift preceding Beronia’s, failed to enter in the cash register (Omron machine) a sales
transaction worth P582.00. When Beronia began her shift (night shift), she failed to see Molina’s
handwritten note and her previous unrecorded sales transaction resulting in an excess of P582.00
in the cash register as compared to the amount recorded in the cash book.
Beronia argued that, in the following month, she used the P582.00 “overage” to offset the
“shortages” she incurred on three separate instances when she could not find the corresponding
receipts and vouchers despite diligent search. She believed in good faith that “offsetting” was
pg. 47
authorized as it was the “usual practice among the cashiers, as sanctioned by the secretaries
authorized to check the cashiers’ cash book regularly x x x.”9
She explained that this practice is based on the fact that, unlike in fast food chains and department
stores where money moves only in one direction (i.e., coming only from customer payments), the
money handled by Barrio Fiesta cashiers also includes money used by the restaurant for its regular
business expenses.10
On October 5, 2008, Ilagan’s secretary, Nora Olarte (Olarte), reported the offsetting to Cristobal.
Cristobal subsequently directed Beronia to submit a written explanation on the incident within 24
hours.11 Beronia submitted her explanation, written on a half sheet of pad paper dated October
10, 2008, admitting that she had applied the overage to her shortages.12
Cristobal then gave her a termination of employment memorandum13 dated October 17, 2008,
which she refused to accept because it was not signed by Ikeda. She received the
_______________
9 Id., at p. 130; Beronia’s Position Paper, p. 3, par. 8.
10 Id., at p. 111; Position Paper, p. 4, par. 15.
11 Id., at p. 88.
12 Id., at p. 89.
13 Id., at p. 90.
262

signed termination notice three weeks later; she stopped reporting for work starting November 15,
2008.
On February 3, 2009, Ilagan asked her to report back to work. She accepted the request as she was
in dire need of money to support her daughter. She signed a contract to work as waitress14 from
February 4 to July 30, 2009 during which she was made to train new cashiers. On July 30, 2009,
she was completely discharged.
pg. 48
The petitioners, through Atty. Richard Neil S. Chua (Chua) of Ligon Solis Mejia Florendo (Ligon,
et al.) law firm, denied the claimed liability. They confirmed Beronia’s employment as cashier at
Barrio Fiesta, noting that for a while, her performance was satisfactory. In 2007, however, her
work ethic changed; she was often late for work until she was suspended for seven days due to her
repeated tardiness.15 They added that Beronia was also suspended for two days for berating co-
employees who confronted her for pocketing tips without giving them their share.16
The worst among Beronia’s transgressions, the petitioners pointed out, involved acts that resulted
in the loss of their trust and confidence in her.
The first of these acts occurred on October 2, 2006, when Barrio Fiesta’s accounting department
discovered that Beronia withheld/took cash (“cash out”) from the sales of the restaurant and
released the amount to one Maribeth “Letlet” Echaluche without authority from the
management.17 They maintained that the act constituted qualified theft but they nonetheless gave
Beronia a chance and allowed her to continue her employment.
_______________
14 Id., at pp. 92-93.
15 Id., at p. 82.
16 Id., at p. 85.
17 Id., at pp. 86, 318.
263
VOL. 796, JULY 11, 2016 263

Beronia committed another act of qualified theft — the offsetting incident — which Beronia had
in fact admitted.18 The management discovered this act when Olarte reported on September 5,
2008 that Beronia applied (offset) the P594.00 (which she claimed was only P582.00 overage in
the sale transactions of the cashier previous to her shift) to the shortages in her (Beronia’s)
transactions during the night shift.19 The petitioners maintained that “offsetting” is a prohibited
act as it is an implied admission of taking the cash surplus for one day and applying it to cash
pg. 49
shortages for the previous days. They stressed that the cash involved was restaurant property, not
the cashier’s.
On November 17, 2008, Beronia reported for work for the last time; at the close of business hours,
the management dismissed Beronia for just cause.20 She left the work premises peacefully.
After three months (or sometime in February 2009), Beronia approached Ilagan and begged that
she be given any job at Barrio Fiesta. For humanitarian considerations, they granted Beronia’s
request, but told her that “due to her prior acts of theft, she would not be allowed to handle cash.”21
They advised her to apply for employment, which she did,22 and Barrio Fiesta employed her as
acting supervisor on a contractual basis for the period February 4, 2009 to July 30, 2009.23
Before the end of July 2009, the petitioners notified Beronia of the expiration of her contract on
July 30, 2009.24 She left the work premises peacefully on July 30, 2009, only to return sometime
in August asking that she be hired again.
_______________
18 Supra note 7. Id., at p. 89.
21 Id., at p. 101; petitioners’ Position Paper, p. 5, par. 7.
22 Id., at p. 301.
23 Id., at pp. 92-93.
24 Id., at p. 94.
264

They decided, however, not to employ her anymore. Beronia then filed the complaint for illegal
dismissal, which they believed she did to spite them for the termination of her employment in
November 2008.
pg. 50
In the decision25 dated May 31, 2010, the LA declared that Beronia had been illegally dismissed,
and ordered the petitioners to pay Beronia separation pay in lieu of reinstatement and backwages
from the date of dismissal up to the signing of the decision.
The LA ruled that the dismissal penalty the petitioners imposed on Beronia was grossly
disproportionate to the wrong she had committed as the petitioners failed to prove that Beronia
was motivated by bad faith. The P582.00 shortage was a negligible amount, thus, her alleged
violation of the unwritten policy on “offsetting of shortages” could be considered to have been
done in good faith.
The LA added that Beronia deserves compassion given her more or less twenty-year service in the
company as well as the fact that the “offsetting” incident was her first offense.
Finally, the LA ruled, the petitioners’ subsequent act of rehiring and assigning Beronia to a higher
position — as Acting Supervisor to train incoming cashiers — belie their charge of serious
misconduct and breach of trust and confidence.
The NLRC’s decision
On petitioners’ appeal,26 the NLRC reversed the LA’s ruling in its December 7, 2010 decision.27
The NLRC pointed out that Beronia was hired as cashier of Barrio Fiesta restaurant — a position
of utmost trust and confidence. Prior to the offsetting incident, she had already
_______________
25 Supra note 5.
26 Rollo, pp. 178-201.
27 Supra note 4.
265
VOL. 796, JULY 11, 2016 265

pg. 51
been warned for releasing cash to a person without prior authority from the management. While
she claimed that offsetting short amounts was a practice among cashiers with the implicit
authorization of the secretaries, she failed to show that she sought the authorization of the secretary
on duty before undertaking the offsetting. In fact, the secretary was the one who brought to
Cristobal’s attention her unauthorized offsetting.
Thus, the NLRC concluded that the wrong Beronia committed rendered her unworthy of the utmost
trust and confidence reposed on her by the petitioners justifying her dismissal from the service.
That the amount involved was “only” P594.00 did not mean that Beronia did not breach the
petitioners’ trust and confidence.
Beronia sought reconsideration28 of the NLRC’s December 7, 2010 decision. On January 13,
2011, the petitioners filed their opposition to Beronia’s motion for reconsideration;29 the
opposition was personally signed and filed by Ilagan and Ikeda.
The NLRC subsequently denied Beronia’s motion for reconsideration on February 24, 2010,30
prompting the latter to seek recourse before the CA via a petition for certiorari.31
The Proceedings before the CA
On August 1, 2011, the CA issued a resolution32 directing the petitioners to file their comment.
On September 16, 2011, the CA issued another resolution33 stating, among others, that “no
manifestation and comment has been filed by the [petitioners].”
_______________
28 Rollo, pp. 247-267.
29 Id., at pp. 268-279.
30 Id., at pp. 325-327.
31 Id., at pp. 328-377.
32 Id., at p. 380.
266
pg. 52
In a resolution34 dated March 2, 2012, the CA gave the petitioners a last opportunity to file their
comment to Beronia’s petition within ten days from notice.
Subsequently, in its June 8, 2012 resolution,35 the CA submitted the case for decision sans the
petitioners’ comment.
In the June 21, 2012 decision,36 the CA reinstated the LA’s May 31, 2010 decision, declaring that
Beronia had been dismissed without just cause and without the observance of due process.
The CA ruled that the petitioners’ basis for dismissing Beronia was unclear as they failed to show
or prove that the company prohibited the act of offsetting. The CA also pointed out that while the
petitioners submitted a copy of a memorandum dated June 22, 2004, requiring all cashiers to
explain in writing their shortages or overages, the memorandum was submitted for the first time
— together with their opposition to Beronia’s motion for reconsideration — and was neither an
original nor a certified copy.
The CA agreed that the value of the amount involved was immaterial, but pointed out that the
petitioners nonetheless failed to show that Beronia’s breach of confidence was willful.
The CA added that the petitioners in fact also failed to prove the theft Beronia allegedly committed
when she released, without prior consent and authority of the management, amounts of money to
a certain Marileth Echaluche. The violation report shows that they simply warned Beronia for her
failure to report the release of cash and not for committing theft. Thus, absent proof of bad faith
and ill motive in this release of money, the loss of trust and confidence simply has no basis.
_______________
33 Id., at p. 381.
34 Id., at p. 382.
35 Id., at p. 383.
36 Supra note 2.
267
VOL. 796, JULY 11, 2016 267
pg. 53
Finally, the CA noted that the petitioners’ subsequent rehiring of Beronia as acting supervisor
negates the charge of loss of trust and confidence. An employer would not likely require a
previously dismissed employee charged with theft to train its incoming cashiers.
On November 29, 2012, the petitioners, through Real Bartolo & Real law offices, filed with the
CA an Entry of Appearance with Manifestation and Motion for Reconsideration.37
In its April 5, 2013 resolution,38 the CA, among others: (1) merely noted the petitioners’
manifestation and motion for time within which to comply, pointing out that it has already received
the postal registry return receipt for the petitioners’ counsel on record — Ligon, et al. — showing
that the petitioners’ counsel has received a copy of the CA’s June 21, 2012 decision on June 29,
2012; (2) noted the petitioners’ termination of their counsel of record’s services on February 19,
2013; and (3) denied the petitioners’ motion for reconsideration for being 138 days late.
The records show that the petitioners, through their counsel of record, Ligon, et al., received copies
of the CA’s August 1, 2011; September 16, 2011; March 2, 2012; and June 8, 2012 resolutions
and of the June 21, 2012 decision.
The Petition
The petitioners seek the reversal of the CA rulings, arguing that the CA reversibly erred in
declaring that: (1) their motion for reconsideration was filed out of time; (2) Beronia was illegally
dismissed; and (3) she was denied due process.39
On the first assignment of error, the petitioners ask for a liberal application of the procedural rules,
reasoning that they
_______________
37 Signed by Emmanuel S. Bartolo for Real Bartolo & Real Law Offices, Rollo, pp. 56-73.
38 Supra note 3.
39 See Petition, supra note 1.
268
pg. 54
believed all the while that they were being represented by their former counsel, Ligon, et al.,
through Atty. Chua. Atty. Chua, however, alleged that he had ceased to be their lawyer since 2010
when his services “were disengaged” by mutual agreement with the petitioners40 after the appeal
to the NLRC was filed. The petitioners argue that the procedural lapse before the CA was clearly
due to a miscommunication with the law firm for which they should not be made to suffer, in the
interest of substantial justice.
On the illegal dismissal issue, the petitioners insist that Beronia was dismissed for just cause. They
argue that Beronia committed acts resulting in a breach of their trust that, together with her
previous infractions, justify the termination of her employment.
They reiterate in this regard that the most serious of Beronia’s infractions refers to the offsetting
of shortages in her sales transactions with the overage in sales handled by another cashier. Beronia
admitted the offsetting, stating in her explanation “yong over ko ay inoffset ko sa short ko.”41 They
stress that she was aware that the management never consented to the offsetting as there is an
existing policy on the matter.42 Thus, they contend that her admission serves as substantial
evidence of fraud and serious misconduct resulting in their loss of trust and confidence in her as a
cashier of the restaurant.
They add that, being equally protected under the law, they have the prerogative to discipline the
employees and to impose appropriate penalties on erring workers pursuant to company rules and
regulations. They likewise have the prerogative to hire dismissed employees out of compassion
for a
_______________
40 Id., at p. 386; letter dated February 25, 2013 of Atty. Richard Neil S. Chua to Liberty Ilagan.
41 Supra note 15, id., at p. 89.
42 Id., at p. 81.
269
VOL. 796, JULY 11, 2016 269

pg. 55
specific period; as they did in Beronia’s case when they hired her for the fixed period of February
4, 2009 to July 30, 2009.
On the due process issue, the petitioners argue that the essence of due process is simply an
opportunity to be heard or to explain one’s side as applied in administrative proceedings. In the
present case, they point out that Barrio Fiesta served the first notice (October 9, 2008
memorandum) on Beronia informing her of the charges against her and asking her for a written
explanation within 24 hours.
Initially, Beronia offered a verbal explanation on the offsetting incident, but when told that it
should be in writing, she wrote down her explanation on a half sheet of pad paper stating that she
had applied the overage to her shortages.43 They thus submit that they duly accorded Beronia the
required due process.
The Case for Beronia
Beronia prays that the petition “be denied for utter lack of merit.”44 She asserts that the CA
committed no error in denying the petitioners’ motion for reconsideration for late filing, a
procedural lapse admitted by the petitioners themselves, although they put the blame on their
former counsel — Ligon, et al. — for not informing them of its receipt of the June 21, 2012
decision of the CA.
She argues that the petitioners’ alleged miscommunication with their former counsel should not
be made an excuse for their failure to file their motion for reconsideration with the CA on time.
The documents the petitioners had in fact presented show that they and not their former counsel
have been negligent in handling their case.
Since the petitioners filed their motion for reconsideration only on November 29, 2012, or 138
days after the lapse of the
_______________
43 Supra note 8.
44 Comment dated October 16, 2013, Rollo, pp. 407-424.
270
pg. 56
reglementary period, the June 21, 2012 decision of the CA had already become final and executory.
On the main issue, Beronia argues that the CA correctly ruled that she was illegally dismissed as
the act of offsetting does not amount to fraud or willful breach that would justify termination of
employment for loss of trust and confidence. She insists that the petitioners failed to present
evidence to show that she willfully and deliberately misrepresented Barrio Fiesta’s sales record;
on the contrary, she sufficiently explained that it was Molina who failed to enter the sales
transaction in question. She adds that her subsequent rehiring by the petitioners negated loss of
trust as a basis for her dismissal.
Beronia bewails the petitioners’ reliance on her alleged past infractions as additional ground for
her dismissal, contending that there is likewise no evidence that she committed these infractions.
In any case, she argues that the alleged tip-pocketing, berating of co-employees, and failing to
release cash to a co-employee were offenses which had already been meted their corresponding
penalties; they also have no relation to the offense of “offsetting” for which she was charged in
the October 9, 2008 show-cause memorandum45 and for which she was eventually dismissed.
Finally, Beronia assails the petitioners’ failure to afford her due process in her petition for
dismissal. She argues that she was not given adequate opportunity to prepare for her defense as
she was given only 24 hours to submit her explanation and was not sufficiently informed of the
specific facts upon which the charge was based. Although a formal hearing is not required, she
adds, the employee should nevertheless be given ample time to be heard, which was absent in her
case, and the defect was not cured with the third notice (dated October 17, 2008) laying down
additional charges for her dismissal.
_______________
45 Id., at p. 88.
271
VOL. 796, JULY 11, 2016 271

The Issue
pg. 57
The core issues for the Court’s resolution are: (1) whether the CA reversibly erred in denying the
petitioners’ motion for reconsideration for belated filing; and (2) whether the CA erred in
reinstating the labor arbiter’s ruling finding Beronia dismissed without just cause and without due
process.
We resolve to DENY the petition.
The CA did not err in denying the petitioners’ motion for reconsideration for belated filing.
A. The petitioners’ motion for

reconsideration was filed
well beyond the fifteen-day
reglementary period.
There is no question that the petitioners filed their motion for reconsideration of the CA’s June 21,
2012 decision 138 days beyond the fifteen-day reglementary period for filing the motion. The
petitioners, through their former counsel, received the copy of this CA decision on June 29, 2012,
and had only until July 14, 2012 (or until July 16, 2012 since July 14, 2012 was a Saturday) to file
their motion for reconsideration. They filed this motion, through a new counsel, only on November
29, 2012.
Under Section 1, Rule 52 of the Rules of Court, a motion for reconsideration of a judgment or final
resolution should be filed within fifteen (15) days from notice. If no appeal or motion for
reconsideration is filed within this period, the judgment or final resolution shall forthwith be
entered by the clerk in the book of entries of judgment as provided under Section 10 of Rule 51.46
_______________
46 Section 10, Rule 51 of the Rules of Court provides in full:
pg. 58
272

The fifteen-day reglementary period for filing a motion for reconsideration is non-extendible.
In Ponciano, Jr. v. Laguna Lake Development Authority, et al.,47 the Court refused to admit a
motion for reconsideration filed only one day late, pointing out that the Court has, in the past,
similarly refused to admit belatedly filed motions for reconsideration.
Without a motion for reconsideration of the CA’s June 21, 2012 decision duly filed on time, the
petitioners lost their right to assail the CA decision before this Court. “For purposes of determining
its timeliness, a motion for reconsideration may properly be treated as an appeal. As a step to allow
_______________
SEC. 10. Entry of judgments and final resolutions.—If no appeal or motion for new trial
or reconsideration is filed within the time provided in these Rules, the judgment or final
resolution shall forthwith be entered by the clerk in the book of entries of judgments. The
date when the judgment or final resolution becomes executory shall be deemed as the date
of its entry. The record shall contain the dispositive part of the judgment or final resolution
and shall be signed by the clerk, with a certificate that such judgment or final resolution has
become final and executory.
See also Section 1, Rule VII of the 2009 Internal Rules of the Court of Appeals, which states:
Section 1. Entry of Judgment.—Unless a motion for reconsideration or new trial is

filed or an appeal is taken to the Supreme Court, judgments and final resolutions of the
Court shall be entered upon expiration of fifteen (15) days from notice to the parties.
xxxx
47 591 Phil. 194, 211; 570 SCRA 207, 223 (2008), citing Philippine Coconut Authority v.
Garrido, 424 Phil. 904, 909; 374 SCRA 154, 158 (2002), and Vda. de Victoria v. Court of Appeals,
G.R. No. 147550, January 26, 2005, 449 SCRA 319, 330-331.
273
VOL. 796, JULY 11, 2016 273

pg. 59
an inferior court to correct itself before review by a higher court, a motion for reconsideration must
necessarily be filed within the period to appeal. When filed beyond such period, the motion for
reconsideration ipso facto forecloses the right to appeal.”48
In other words, the petitioners’ failure to timely file the motion for reconsideration foreclosed any
right which they may have had under the rules not only to seek reconsideration of the CA’s June
21, 2012 decision; more importantly, the failure foreclosed their right to assail the CA decision
before this Court.
B. The supposed negligence of

the petitioners’ former counsel
was the result of their actions
and inactions, hence, is bind-
ing on the petitioners.
The petitioners claim that their former counsel — Ligon, et al. through Atty. Chua — did not
inform them of the CA’s August 1, 2011; September 16, 2011; March 2, 2012; and June 8, 2012
resolutions, and of the June 21, 2012 decision, this omission “effectively depriv[ing] [them] of
procedural and substantive due process of law.”49 They argue that their procedural lapse before
the CA was clearly due to a miscommunication with their former law firm and that the CA should
not have denied their motion for reconsideration in the interest of substantial justice.
We do not see any merit in this argument.
We are not unaware that in certain cases, this Court allowed the liberal application of procedural
rules. We stress,
_______________
48 Id., citing Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, No. L-
74191, December 21, 1987, 156 SCRA 740, 746.
49 Rollo, p. 21.
274

pg. 60
however, that these cases are the exceptions and were sufficiently justified by attendant
meritorious and exceptional circumstances.
A motion for reconsideration on the ground of excusable negligence is addressed to the sound
discretion of the court which cannot be granted except upon a clear showing of justifiable
circumstances negating the effects of any negligence that might have been present.
We emphasize and reiterate that rules of procedure must be faithfully complied with and cannot
be based solely on the claim of substantial merit. Rules prescribing the time to do specific acts or
to undertake certain proceedings are considered absolutely indispensable to prevent needless
delays and to the orderly and prompt discharge of judicial business. By their very nature, these
rules are mandatory.50
In the present case, the only permissible consideration we can take is to determine whether
circumstances exist to excuse the petitioners’ delay in the filing of their motion for reconsideration.
If there are none, as indeed we find because the petitioners utterly failed to show us one, then the
delay is fatal.
We note that on January 13, 2011, the petitioners filed an Opposition,51 dated January 5, 2011,
to the motion filed by Beronia seeking reconsideration of the NLRC’s December 7, 2010 decision.
Significantly, this January 5, 2011 opposition was signed personally by petitioners Ilagan and
Ikeda, on behalf of themselves and of petitioner Barrio Fiesta, instead of by Atty. Chua for Ligon,
et al. as the petitioners’ counsel.
_______________
50 Laguna Metts Corp. v. Court of Appeals, 611 Phil. 530,

534-535; 594 SCRA 139, 143 (2009). See also Prudential Guarantee and Assurance, Inc. v. Court
of Appeals, 480 Phil. 134, 140; 436 SCRA 478, 483 (2004); and Mejillano v. Lucillo, 607 Phil.
660, 668-669; 590 SCRA 1, 8 (2009).
51 Rollo, pp. 268-279.
275
VOL. 796, JULY 11, 2016 275

As a rule, when a party to a proceeding is represented by counsel, it is the counsel who signs any
pleading filed in the course of the proceeding. The party represented does not have to sign the
pg. 61
pleadings, save only in the specific instances required by the rules; they appear before the court
and participate in the proceedings only when specifically required by the court or tribunal.
In the petitioners’ case, they were themselves aware that Beronia sought reconsideration of the
NLRC decision as they had, in fact, personally opposed this motion instead of through their
counsel on record, Ligon, et al. Had they still been represented by their counsel, through Atty.
Chua as they claim, the latter would have signed and filed the opposition in their behalf.
Viewed in this light, the petitioners must have known that Ligon, et al. no longer represented them
in this case; this was true even at the NLRC level and before the case reached the CA.
This conclusion becomes unavoidable when we consider the February 25, 2013 letter of Atty. Chua
replying to Ilagan’s February 13, 2013 letter52 purportedly terminating the services of Ligon, et
al. in the case.
In the February 25, 2013 letter, Atty. Chua categorically pointed out that he had not been the
petitioners’ counsel since 2010 due to their mutual agreement. To quote this letter:
“February 25, 2013
xxxx
Dear Mrs. Liberty D. Ilagan,
I received your letter that you are terminating my services effectively immediately.
_______________
52 Id., at p. 385.
276

However, this is no longer possible since I have not been your counsel since 2010 due to our
mutual agreement to disengage all professional relationships after the appeal to the NLRC
was made in relation to your case.
pg. 62
You will recall, hopefully, that you even asked me for copies of a notice to withdraw as your
legal counsel to make way for your new lawyer, which I readily provided you through your
assistant Ms. Gerly who was then working in your Barrio Fiesta, Makati Branch. You and Gerly
were specifically instructed to sign the Conforme and file the same [with] the NLRC
simultaneously with the new counsel you alleged to have engaged already by that time.
I also gave Ms. Gerly all of the folders and documents relevant to this case.
As to whether or not you actually submitted my Notice to Withdraw as Counsel to the said quasi-
judicial body (NLRC) is already unknown to me, but the same was your responsibility to do since
it was upon your adamant request.
xxxx
I hope this clarifies the situation, and I wish you all the best.
Very truly yours,
RICHARD NEIL S. CHUA” [emphases and underscorings supplied]
Considered together, the January 5, 2011 opposition and the February 25, 2013 letter of Atty. Chua
more than sufficiently show that there could not have been any miscommunication between the
petitioners and their former counsel that could have reasonably prevented the petitioners from
immediately acting on Beronia’s certiorari petition before the CA. Their failure to act on Beronia’s
certiorari petition, therefore, was due solely to their own fault or negligence, not to their former
counsel’s as they claim.
277
VOL. 796, JULY 11, 2016 277
pg. 63
C. The CA decision became final

and executory which the CA
and even this Court could no
longer review.
As the petitioners failed to timely seek reconsideration or appeal within the fifteen-day
reglementary period, the CA’s June 21, 2012 decision automatically became final and executory
after the lapse of this fifteen-day period.
“It is well-settled that judgments or orders become final and executory by operation of law and not
by judicial declaration. The finality of a judgment becomes a fact upon the lapse of the
reglementary period of appeal if no appeal is perfected or [no] motion for reconsideration or new
trial is filed.”53 “The court need not even pronounce the finality of the order as the same becomes
final by operation of law. In fact, it could not even validly entertain a motion for reconsideration
after the lapse of the period for taking an appeal. x x x The subsequent filing of a motion for
reconsideration cannot disturb the finality of the judgment or order.”54
Once a decision becomes final and executory, it is “immutable and unalterable, and can no longer
be modified in any respect, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be
made by the court rendering it or by the highest court of the land.”55
The CA in this case lost jurisdiction when the petitioners failed to file the motion for
reconsideration within the fifteen-
_______________
53 Franco-Cruz v. Court of Appeals, 587 Phil. 307, 317; 565 SCRA 531, 539 (2008), citing
Testate Estate of Maria Manuel Vda. de Biascan v. Biascan, 401 Phil. 49, 59; 347 SCRA 621, 630
(2000). See also Cadena v. Civil Service Commission, 679 Phil. 165, 176-177; 663 SCRA 160,
169 (2012).
54 Id.
55 Guzman v. Guzman, 706 Phil. 319, 327; 693 SCRA 318, 326 (2013). (citation omitted)
278
pg. 64
day reglementary period. The petitioners’ subsequent filing of the motion for reconsideration 138
days after the deadline did not and could no longer disturb the finality of the June 21, 2012 decision
nor restore jurisdiction which had already been lost.56
Accordingly, the CA did not err in refusing to admit and act on the petitioners’ motion for
reconsideration. At the time the petitioners filed their motion for reconsideration, the decision
subject of this motion had already become final.
Consequently, we can no longer review nor modify in any way the CA’s June 21, 2012 decision.
With this conclusion, we see no reason for us to resolve the petitioners’ other issues.
WHEREFORE, we hereby DENY the petition as the decision dated June 21, 2012 and the
resolution dated April 5, 2013 of the Court of Appeals in C.A.-G.R. S.P. No. 119458, have lapsed
to finality and are beyond our power to review.
SO ORDERED.
Carpio (Chairperson), Del Castillo and Leonen, JJ., concur.
Petition denied, judgment and resolution have lapsed to finality.
Notes.—There are several exceptions where a petition for certiorari will lie without the prior filing
of a motion for reconsideration. (Delos Reyes vs. Flores, 614 SCRA 270 [2010])
Counsel’s failure to file the appeal in due time does not amount to excusable negligence. (Gonzales
vs. Pe, 655 SCRA 176 [2011])
——o0o——
pg. 65
Case Short Name: Heirs of Gamaliel Albano vs. Ravanes
G.R. No. 183645. July 20, 2016.*
HEIRS OF GAMALIEL ALBANO, represented by ALEXANDER ALBANO and all other

person living with them in the subject premises, petitioners, vs. SPS. MENA C. RAVANES
and ROBERTO RAVANES, respondents.
Remedial Law; Civil Procedure; Motion for Reconsideration; The filing of a second motion for
reconsideration is prohibited under Rule 52, Section 2 of the 1997 Rules of Civil Procedure, as
amended and the prevailing 1999 Internal Rules of the Procedure of the Court of Appeals
(IRCA).—The filing of a second motion for reconsideration is prohibited under Rule 52, Section
2 of the 1997 Rules of Civil Procedure, as amended and the prevailing 1999 Internal Rules of the
Procedure of the CA (IRCA). Being a prohibited pleading, a second motion for reconsideration
does not have any legal effect and does not toll the running of the period to appeal.
Same; Same; Appeals; An appeal is not a matter of right, but is one of sound judicial discretion.—
An appeal is not a matter of right, but is one of sound judicial discretion. It may only be availed of
in the manner provided by the law and the rules. A party who fails to question an adverse decision
by not filing the proper remedy within the period prescribed by law loses the right to do so as the
decision, as to him, becomes final and binding.
Supervening Events; Words and Phrases; A supervening event refers to facts which transpire after
judgment has become final and executory or to new circumstances which developed after the
judgment has acquired finality, including matters which the parties were not aware of prior to or
during the trial as they were not yet in existence at that time.—Petitioners allege that the execution
of the lease contract lent legitimacy to their occupation of the property, such that the CA Decision
is now mooted and should no longer be enforced because to do so would be inequitable. Petitioners
insist that the lease contract constitutes a supervening event justifying the stay of the CA Decision.
Petitioners’ contentions are untenable. A supervening event refers to facts which transpire after
during the trial as they were not yet in existence at that time. Here, the lease contract was executed
after the CA Decision was promulgated but before it attained finality. In fact, petitioners executed
the lease contract just six days after they received the adverse ruling of the CA.
Compromise Agreements; Words and Phrases; A compromise is a contract whereby the parties,
by making reciprocal concessions, avoid litigation or put an end to one already commenced.—To
our mind, instead of a supervening event, the execution of the lease contract partakes of the nature
of a compromise. A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced. It is an agreement between
two or more persons, who, for the purpose of preventing or putting an end to a lawsuit, adjust their
difficulties by mutual consent in the manner which they agree on, and which each party prefers
over the hope of gaining but balanced by the danger of losing. In the case before us, petitioners
claim that they executed the lease contract before notice of the CA Decision as an “amicable
pg. 66
settlement of the issues with reference to occupancy of the subject property.” Thus, petitioners’
intention to end the litigation by virtue of a compromise is evident.
Same; A compromise may be entered into at any stage of the case — pending trial, on appeal and
even after finality of judgment.—A compromise may be entered into at any stage of the case —
pending trial, on appeal and even after finality of judgment. Hence, petitioners may enter into a
compromise with the respondent-spouses, even after the CA Decision was rendered. However, the
validity of the agreement is determined by compliance with the requisites and the principles of
contracts, not by when it was entered into. Unfortunately for petitioners, the compromise that they
effected is wanting of one of the essential requisites of a valid and binding compromise — consent
of all the parties in the case. We have consistently ruled that a compromise agreement cannot bind
a party who did not voluntarily take part in the settlement itself and gave specific individual
consent.
Remedial Law; Special Civil Actions; Ejectment; Grounds for Judicial Ejectment.—The
controversy revolves on whether respondent-spouses’ satisfied the requisites of Section 5(c) of BP
877 as a ground for judicial ejectment. To recapitulate, the requisites are: (1) the owner’s/lessor’s
legitimate need to repossess the leased property for his own personal use or for the use of any of
his immediate family; (2) the owner/lessor does not own any other available residential unit
within the same city or municipality; (3) the lease for a definite period has expired; (4) there
was formal notice at least three (3) months prior to the intended date to repossess the
property; and (5) the owner must not lease or allow the use of the property to a third party for at
least one year.
Same; Same; Same; The right of respondent-spouses to eject petitioners cannot be negated by the
fact alone that the former have other residential units in Pasig City. The said properties must be
“available.”—While it is admitted by respondent-spouses that they have other residential units in
Pasig City, they were not available because they were occupied by tenants who pay their rentals
promptly. The keyword in the second requisite of Section 5(c) is the word “available.” The right
of respondent-spouses to eject petitioners cannot be negated by the fact alone that the former have
other residential units in Pasig City. The said properties must be “available.” Our ruling in Roxas
v. Intermediate Appellate Court, 157 SCRA 166 (1988), is enlightening, thus: It is important to
stress that even assuming any of petitioners own other residential units, what the
475
VOL. 797, JULY 20, 2016 475

Heirs of Gamaliel Albano vs. Ravanes
pg. 67
law requires is that the same is an available residential unit, for the use of such owner/lessor or
the immediate member of his family. Thus even if an owner/lessor owns another residential
unit, if the same is not available as for example the same is occupied or it is not suitable for
dwelling purposes, it is no obstacle to the ejectment of a tenant on the ground that the
premises is needed for use of the owner or immediate member of his family.
Civil Law; Lease; The lease between respondent-spouses and petitioners, although merely verbal,
is deemed to be one with a definite period which expires at the end of each month. The lease is on
a month-to-month basis because the rentals are paid monthly.—The lease between respondent-
spouses and petitioners, although merely verbal, is deemed to be one with a definite period which
expires at the end of each month. The lease is on a month-to-month basis because the rentals are
paid monthly. In this regard, we cite our ruling in Arquelada v. Philippine Veterans Bank, 329
SCRA 536 (2000), to wit: The question now is, has the verbal contract of lease between petitioners
and the Bank expired in order to call for the ejectment of the latter from the premises in question?
The Court rules in the affirmative. It is admitted that no specific period for the duration of the lease
was agreed upon between the parties. Nonetheless, payment of the stipulated rents were made
on a monthly basis and, as such, the period of lease is considered to be from month to month
in accordance with Article 1687 of the Civil Code. Moreover, a lease from month-to-month
is considered to be one with a definite period which expires at the end of each month upon a
demand to vacate by the lessor.
Remedial Law; Special Civil Actions; Ejectment; Notice to Vacate; The “formal notice”
requirement under Batas Pambansa (BP) Blg. 877 does not refer to a written notice only.—The
“formal notice” requirement under BP 877 does not refer to a written notice only. In the case of
Garcia v. Court of Appeals, 220 SCRA 264 (1993), we reckoned compliance with the 3-month
notice requirement from his verbal demand to vacate, viz.: x x x [E]ven assuming arguendo that
the appellate court’s premise is correct, petitioner did give notice on his own behalf. The trial court
found that soon after the sale of the properly to petitioner, or on October 10, 1979, the latter wrote
to
476

private respondent that he vacate the premises. After this and other subsequent demands were
ignored, he again made a demand on August 7, 1982 informing private respondent that he
wished to build his house on the property. After this last demand was again ignored, he brought
the matter before the Barangay Chairman who, on September 19, 1982, sent a summons to private
respondent, who, not only ignored it but in addition, refused to accept it when served upon him.
Petitioner finally filed an ejectment suit before the MTC on December 7, 1982, or four
months after his verbal demand on August 7, 1982. Thus, even disregarding the previous
pg. 68
demands soon after the sale, petitioner had complied with the requirement of three-month
notice.
Ricardo A. Castillo for petitioners.
Ernesto F. Bonifacio for respondents.
JARDELEZA, J.:
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking to
annul the August 29, 2007 Decision2 (CA Decision) and July 7, 2008 Resolution3 of the Court of
Appeals (CA) in C.A.-G.R. S.P. No. 96111. The CA Decision reversed the May 29, 2006
Decision4 of Branch 68, Regional Trial Court (RTC) of Pasig City and reinstated the
_______________
1 Rollo, pp. 7-23.
2 Penned by Associate Justice Marlene Gonzales-Sison and concurred in by Associate Justices

Juan Q. Enriquez, Jr. and Vicente S.E. Veloso. Id., at pp. 25-33.
3 Penned by Associate Justice Marlene Gonzales-Sison and concurred in by Associate Justices

Juan Q. Enriquez, Jr. and Vicente S.E. Veloso. Id., at pp. 42-43.
4 Id., at pp. 44-46.
477
VOL. 797, JULY 20, 2016 477

January 19, 2004 Decision5 of Branch 69, Metropolitan Trial Court (MeTC) of Pasig City. The
MeTC ordered petitioners to: (a) vacate the lot owned by respondent-spouses; and (b) pay the
monthly back rentals from the month of default until the leased premises are vacated.6
pg. 69
The Facts
Respondent Mena Ravanes (Mena), married to Roberto Ravanes (Roberto) (collectively, the
respondent-spouses), is the registered owner of a parcel of land covered by Transfer Certificate of
Title No. 57414 located in Caniogan, Pasig City.7 On about thirty-five (35) square meters of the
property stands the two-storey residential house of petitioners.8 Petitioners’ father, Gamaliel
Albano, purchased the house in 1986 from a certain Mary Ong Dee.9 Petitioners leased the
property from Mena with the agreement that they will vacate it, regardless of their rental payments,
when the latter and her family would need to use it.10
In March 2000, respondent-spouses informed petitioners that their daughter, Rowena, is getting
married and would need the property to build her house.11 However, petitioners refused to vacate
the property. Thus, respondent-spouses filed a complaint in the Office of the Barangay Captain of
Caniogan against petitioners.12 Having failed to reach an amicable
_______________
5 Id., at pp. 48-51.
6 Id., at p. 51.
7 CA Decision, Rollo, p. 26.
8 Answer, Records, p. 13.
9 Id., at p. 12.
10 Complaint, Records, p. 2.
11 Id.
12 Titled “Pagpapaalis sa paupahang lupa, dahil gagamitin ng anak.” Rollo, p. 153.
478
pg. 70
settlement, however, the Barangay issued a certificate to file action on June 22, 2000.13
On September 14, 2000, respondent-spouses filed a Complaint for Ejectment14 against petitioners
in the MeTC of Pasig City. Respondent-spouses cited Section 5(c) of Batas Pambansa Blg. 877
(BP 877)15 as a ground for ejectment:
Section 5. Grounds for Judicial Ejectment.—Ejectment shall be allowed on the following

grounds:
xxx
(c) Legitimate need of owner/lessor to repossess his property for his own use or for the use of
any immediate member of his family as a residential unit, such owner or immediate member not
being the owner of any other available residential unit within the same city or municipality:
Provided, however, That the lease for a definite period has expired: Provided, further, That the
lessor has given the lessee formal notice three (3) months in advance of the lessor’s intention to
repossess the properly: and Provided, finally, That the owner/lessor is prohibited from leasing the
residential unit or allowing its use by a third party for at least one year.
xxx
Respondent-spouses stated that their daughter needs the property to build her conjugal home.16
They pleaded that they do not own any other available residential units within Pasig
_______________
13 Katibayan Upang Makadulog sa Hukuman, attached as Annex B to the Complaint, Records,

p. 6.
14 Records, pp. 1-4.
15 An Act Providing for the Stabilization and Regulation of, Rentals of Certain Residential Units
for Other Purposes (1985). The effectivity of BP 877 was extended by Republic Act No. 6828
(from January 1, 1990 to December 31, 1992), Republic Act No. 7644 (from January 1, 1993, to
December 31, 1997) and Republic Act No. 8437 (from January 1, 1998 to December 31, 2001).
16 Complaint, Records, pp. 2-3.
pg. 71
479
VOL. 797, JULY 20, 2016 479

City or anywhere else. They also stated that the lease between them and petitioners had already
lapsed as of December 31, 1999. Respondent-spouses claimed they notified petitioners of their
intent to repossess the property at least three (3) months in advance. They prayed for the MeTC to
order petitioners to vacate the property and remove the improvements in it. They also sought
payment of petitioners’ rent for July 2000 and attorney’s fees.17
In their Answer dated October 4, 2000,18 petitioners countered that respondent-spouses and their
predecessors-in-interest assured them that they can stay in the property for as long as they are
paying the agreed monthly rentals.19 Petitioners claimed that their harmonious relationship with
respondent-spouses changed in February 2000 when the latter suddenly refused to accept the rental
payments for January to June 2000.20 They belied the claim that respondent-spouses do not own
other lots in Pasig City, asserting that respondent-spouses have other suitable residential houses
and apartment units in Pasig City as evidenced by photocopies of land titles attached to their
Answer.21 Consequently, petitioners argued that the Complaint should be dismissed because
respondent-spouses do not need the property for their personal use.22
Further, petitioners alleged respondent-spouses handed them the notice to vacate only on June 15,
2000. The notice demanded petitioners to vacate the premises on or before July 13, 2000. Thus,
they were given only a 28-day notice, which was short of the 3-month notice requirement under
BP 877.23
_______________
17 Id., at pp. 3-4.
18 Id., at pp. 10-20.
19 Answer, Records, pp. 10 & 13.
20 Id., at pp. 13-14.
21 Id., at pp. 15-16.
22 Id., at p. 17.
23 Id., at pp. 16-17.
pg. 72
480

By way of counterclaim, petitioners prayed that respondent-spouses be ordered to pay moral and
exemplary damages and attorney’s fees.24 Petitioners also asked that, in the event the MeTC ruled
in favor of respondent-spouses, they be ordered to reimburse petitioners the amount the latter
incurred for the repair of their house.25
In their Position Paper dated December 26, 2000,26 respondent-spouses admitted ownership of
several properties in Pasig City, but insisted that these properties were not available for their
daughter because they were on lease.27 Respondent-spouses explained that they chose to eject
petitioners rather than their other lessees because petitioners are delinquent in their rental
payments.28 Respondent-spouses also alleged that they complied with the 3-month notice
requirement because they waited for 91 days — from June 15, the date when petitioners received
the notice to vacate, until September 14, 2000 — to file the case for ejectment.29
In their Position Paper dated January 2, 2001,30 petitioners reiterated that respondent-spouses have
no legal ground to eject them on the basis of an alleged legitimate need for personal use of the
property because respondent-spouses own other available lots in Pasig City, and because the 3-
month notice requirement was not complied with.
Both parties raised the issue of whether petitioners can be legally ejected from the property under
Section 5(c) of BP 877.
_______________
24 Id., at p. 19.
25 Id., at pp. 18-19.
27 Id., at pp. 73-75.
28 Id., at p. 74.
29 Id., at p. 73.
pg. 73
30 Id., at pp. 162-176.
481
VOL. 797, JULY 20, 2016 481

The Ruling of the MeTC
In its Decision dated January 19, 2004,31 the MeTC found for respondent-spouses. The dispositive
portion of its Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs and

against defendants[s] who are hereby ordered to vacate immediately the leased premises
located at No. 19-A, A. Flores St., Caniogan, Pasig City, and to pay plaintiffs the monthly
[back rentals] of Php2,131.00 from the month of default until the premises are vacated.
Attorney’s fees are additionally awarded in favor of plaintiffs in the amount of Php10,000.00
the same being deemed just and equitable under the circumstances. No pronouncement as
to costs.
SO ORDERED.32
The MeTC held that the lease between respondent-spouses and petitioners is one in which no
period of lease has actually been fixed. Thus, under Article 1687 of the New Civil Code, the lease
is deemed to be on a month-to-month basis since rentals were paid monthly. Accordingly, the lease
expires every end of the month which gives respondent-spouses a ground for judicial ejectment.33
The MeTC declared as void and against public policy the interpretation of petitioners of their
contract that they were assured of a lifetime lease for as long as they are paying monthly rent. It
also explained that respondent-spouses’ ownership of other properties is immaterial because as
owners of the property, respondent-spouses
_______________
31 Penned by Judge Julia A. Reyes, Rollo, pp. 48-51.
32 Id., at p. 51.
pg. 74
33 Id., at p. 50.
482

have the right to repossess it after the monthly expiration of the lease between the parties.34
The MeTC also denied petitioners’ counterclaim on the ground that they do not have the right to
be paid the value of their house’s improvements since they built it at their own risk. Petitioners,
however, may remove the improvements if respondent-spouses refuse to reimburse one-half of its
total value.35
The Ruling of the RTC
On appeal before the RTC of Pasig City, petitioners took issue with the MeTC’s judgment that
respondent-spouses can eject petitioners on the ground of expiration of the lease contract. They
contended that the issue about the expiration of the lease was neither invoked by the respondent-
spouses in their Complaint nor raised as an issue in the pleadings. Thus, the MeTC should not have
departed from the sole issue defined by the parties during the preliminary conference in the MeTC.
Petitioners claimed they were denied due process because they were not given the opportunity to
meet the issue regarding the alleged expiration of lease.36
The RTC agreed with petitioner. In its Decision dated May 29, 2006,37 the RTC vacated the
decision of the MeTC and ordered the dismissal of the complaint for insufficiency of evidence.
The RTC opined that the issue in the case is whether respondent-spouses had satisfied the
requisites for ejectment under Section 5(c) of BP 877. It then answered the question in the negative,
thus:
Accordingly, the assailed decision is hereby RECONSIDERED and SET ASIDE on the ground
of de-
_______________
34 Id.
35 Id., at p. 51.
pg. 75
36 Appellant’s Memorandum in the RTC, Records, p. 283.
37 Penned by Judge Santiago G. Estrella, Rollo, pp. 44-46.
483
VOL. 797, JULY 20, 2016 483

nial of due process, and this Court is now tasked to look into the issue of whether or not the
plaintiffs have met the following requirements of Section 5, par. (c) of the Rental Law as amended:
a) A legitimate need of owner/lessor to repossess his property for his own use or for the use of any
immediate member of his family;
b) The need to repossess is for residential [purpose];
c) Such owner or immediate family member does not own any other available residential unit
within the city or municipality;
d) The lease agreement should be for a definite period;
e) The period of lease has expired;
f) The lessor has given the lessee a formal notice three (3) months in advance of the lessor’s
intention to repossess the property.
The assailed decision is unequivocal. It stated that “Clearly, this is a lease for which no period of
lease has actually been fixed x x x.” On this score alone, this case necessarily has to fail for the
lease covered under this provision of the Rental Law should be one with a definite period, and the
lease at bar as held by the lower court is not one with a definite period. But aside from this the
defendants also were able to show that the plaintiffs own other available residential units in Pasig
City, although the lower court alleged that it is of no moment. Similarly, the defendants were also
able to show that the three (3) months requirement notice was not complied with. The assailed
decision kept silent on this requirement but the very letter of demand dated June 9, 2000 of the
plaintiffs required the defendants to vacate the premises on or before July 13, 2000 or just about a
month and three (3) days from the date of the letter.38 (Emphasis in the original)
_______________
pg. 76
38 RTC Decision, id., at p. 46.
484

The Ruling of the CA
Respondent-spouses appealed to the CA, reiterating that they have complied with Section 5(c) of
BP 877.39
In its Decision dated August 29, 2007, the CA set aside the Decision of the RTC and reinstated the
Decision of the MeTC.40 The CA ruled that, contrary to the findings of the RTC, the lease between
respondent-spouses and petitioners is one with a period. Citing Dula v. Maravilla41 and Rivera v.
Florendo,42 the CA explained that a lease agreement without a fixed period is deemed to be from
month to month if the rentals are paid monthly. Thus, there is a definite period to speak of, and as
such, respondent-spouses can eject petitioners from the property on the ground of expiration of
their lease under Section 5(f) of BP 877. The CA thus stated:
In the instant case, it is undisputed that the rental on the lot was paid monthly. And based on the
previous rulings of the Court, it is clearly one with a definite period, which expires every month,
upon proper notice to the respondents [herein petitioners]. Thus, when petitioners [herein
respondent-spouses] sent a letter of demand dated June 9, 2000 for respondents to vacate the
leased premises on July 13, 2000, the lease contract is deemed to have expired as of the end
of that month. Upon the expiration of said period, the contract of lease would expire, giving
rise to the lessor’s right to file an action for ejectment against respondent.
Based on the foregoing, a legal ground for ejectment would still exist against respondents which
is the
_______________
39 See Petition for Review before the CA, CA Rollo, pp. 2-13.
40 Rollo, p. 33.
41 G.R. No. 134267, May 9, 2005, 458 SCRA 249.
42 No. L-60066, July 31, 1986, 143 SCRA 278.
pg. 77
485
VOL. 797, JULY 20, 2016 485

expiration of the lease, under paragraph (f) of Section 5.43 (Emphasis supplied)
The CA also held that petitioners failed to present concrete evidence that respondent-spouses have
other available properties in Pasig City. Further, the CA found that the respondent-spouses
substantially met the 3-month notice requirement since as early as March 2000, respondent-
spouses notified petitioners to vacate the property because their daughter needs it. The CA stressed
that petitioners participated in a barangay hearing regarding the matter.44
On September 19, 2007, petitioners filed a Manifestation and Motion to Stay the Execution of
Judgment dated August 29, 2007.45 They manifested that respondent Roberto entered into a lease
contract with petitioner Alexander Albano (Alexander) on September 10, 2007,46 which meant
that petitioners are now in lawful occupation of the property. The execution of the CA’s Decision
is no longer necessary because the judgment was mooted by a supervening event. Petitioners
averred that with the renewal of the expired lease contract, the ground for judicial ejectment relied
upon by the CA no longer exists.47
Further, petitioners claimed that the Contract of Lease operates as a novation of the previous
month-to-month lease between petitioners and respondent-spouses, and which renders inutile the
allegations that were passed upon in the trial courts below.48
Mena filed a Comment49 to petitioners’ manifestation and motion. Mena assailed the validity of
the lease contract be-
_______________
43 CA Decision, Rollo, p. 32.
44 Id., at p. 30.
45 CA Rollo, pp. 198-205.
46 Id., at p. 190.
47 Id., at pp. 200-202.
pg. 78
48 Id., at pp. 201-202.
49 Id., at pp. 218-222.
486

tween her husband, Roberto, and Alexander. She claimed that Roberto has no personality to
unilaterally enter into a lease contract with Alexander because the property is her paraphernal
property.50 She further questioned the wisdom of the lease because the monthly rental price of
P2,131.00 is the same rent existing in 1986.51
In its Resolution dated February 20, 2008,52 the CA denied petitioners’ manifestation and motion.
The CA held that its Decision dated August 29, 2007 attained finality on September 19, 2007.53
It found that the lease contract did not operate as a novation of its Decision because it was entered
into without the express consent of Mena.54
On March 7, 2008, petitioners filed a Motion for Reconsideration of the Resolution dated February
20, 2008.55 They contended that the Contract of Lease between Roberto and Alexander is valid
and binding upon Mena considering the conjugal nature of the property.56 The CA denied the
Motion for Reconsideration in its Resolution57 dated July 7, 2008. Hence, this petition for review.
Petitioners allege that the CA erred in reversing the RTC’s Decision. They aver that under BP 877,
the lessor should prove that he or his immediate family member is not the owner of any other
available residential unit within the same city or municipality.58 They also reiterate that the
execution of the lease contract between Roberto and Alexander on September 10, 2007 is a
supervening event that justifies the stay
_______________
50 Id., at p. 220.
51 Id., at pp. 218-219.
52 Rollo, pp. 34-38.
53 Id., at p. 36.
pg. 79
54 Id., at p. 37.
55 CA Rollo, pp. 301-310.
56 Id., at p. 305.
57 Rollo, p. 42.
58 Petition, Rollo, pp. 16-17.
487
VOL. 797, JULY 20, 2016 487

of execution of the CA Decision,59 and that Mena cannot assert the paraphernal nature of the
property for the first time in her Comment before the CA.60
In their Comment,61 respondent-spouses argue that the CA Decision became final and executory
on September 20, 2007 because petitioners neither filed a motion for reconsideration nor filed an
appeal before us.62 Accordingly, respondent-spouses plead that petitioners’ right to file this
petition before us had already lapsed.
The Issues
The issues before us are:
1. Whether the CA Decision is already final and executory;
2. Whether the execution of the lease contract is a supervening event that will justify the
stay of execution of the CA Decision; and
3. Whether the respondent-spouses complied with Section 5(c) of BP 877.
Our Ruling
pg. 80
The CA Decision is already

Final and Executory
The facts and material dates are undisputed. On September 4, 2007, petitioners received notice of
the CA Decision. On
_______________
59 Id., at pp. 17-18.
60 Id., at pp. 18-19.
61 Id., at pp. 176-181.
62 Id., at pp. 176-177.
488

September 19, 2007, they filed a Manifestation and Motion to Stay the Execution of Judgment,
which the CA denied in its February 20, 2008 Resolution. The petitioners received a copy of this
Resolution on February 22, 2008.
Thereafter, on March 7, 2008, petitioners filed a Motion for Reconsideration of the February 20,
2008 Resolution of the CA. The CA also denied this motion in its July 7, 2008 Resolution, a copy
of which was received by the petitioners on July 14, 2008.
Subsequently, petitioners filed before us a Motion for Additional Period to File Petition for
Review,63 which we granted. They prayed that they be given additional 30 days within which to
pg. 81
file their petition or from July 29, 2008 to August 28, 2008. Petitioners filed the petition for review
on August 28, 2008.
The above narration of material dates gives a semblance that the present petition was seasonably
filed. However, the records show that petitioners should have reckoned the 15-day period to appeal
from the receipt of the denial of the Manifestation and Motion to Stay Execution of Judgment, and
not from their receipt of the denial of the Motion for Reconsideration. Having failed to do so,
petitioners’ right to appeal by certiorari lapsed as early as March 9, 2008 when the assailed CA
Decision became final and executory.
Petitioners’ Manifestation and Motion to Stay Execution of Judgment is, in actuality, a motion for
reconsideration of the CA Decision. The said manifestation and motion so alleged:
10. In light of the foregoing, respondents are constrained to bring the matter of supervening
event to the attention of this Honorable Court and likewise in the manner of a motion for
reconsideration, by way of modification of the DECISION, if the same maybe deemed proper
and allowed and favora-
_______________
63 Id., at pp. 3-5.
489
VOL. 797, JULY 20, 2016 489

bly considered, for the Honorable Court to so hold that the execution of the judgment dated August
29, 2007 no longer necessary, as there appears NO MORE VALID GROUND TO EJECT
respondents from the leased premises or otherwise so hold that respondents are at the present time
in lawful occupation of leased premises.64 (Emphasis supplied)
Hence, contrary to the allegation of respondent-spouses and the finding of the CA, petitioners filed
a motion for reconsideration of the CA Decision, albeit in the guise of a “Manifestation and Motion
to Stay Execution of Judgment.” In fact, the relief prayed for by petitioners in this manifestation
and motion is the same relief obtained once a motion for reconsideration is filed on time. Rule 52,
Section 4 of the Rules of Court provides that generally, a motion for reconsideration filed on time
stays the execution of the judgment sought to be reconsidered. It thus baffles us why petitioners
captioned their motion as a “Manifestation and Motion to Suspend Execution of Judgment” when
pg. 82
the effect sought is one and the same — to stay the execution of judgment. This carelessness only
brought confusion to respondent-spouses and the CA.
Since the Manifestation and Motion to Stay Execution of Judgment is a motion for reconsideration
of the CA Decision, petitioners’ receipt of the resolution denying it triggers the running of the 15-
day period within which to file an appeal.65 Petitioners received a copy of the February 20, 2008
Resolution on February 22, 2008. Thus, counting 15 days from re-
_______________
64 CA Rollo, p. 202.
65 Under Rule 45, Section 2 of the Rules of Court, the petition for review should be filed within
15 days from notice of judgment appealed from or from notice of the denial of petitioner’s motion
for new trial or reconsideration.
490

ceipt, petitioners had only until March 8, 200866 to file a petition for review.
On March 7, 2008, however, petitioners filed a Motion for Reconsideration of the February 20,
2008 Resolution instead. This motion for reconsideration partakes of the nature of a second motion
for reconsideration. In Tagaytay City v. Sps. De Los Reyes,67 we ruled that a motion for
reconsideration, even if it was not designated as a second motion for reconsideration, is a disguised
second motion for reconsideration if it is merely a reiteration of the movant’s earlier arguments.68
Here, petitioners’ Motion for Reconsideration is just that — a mere rehash of the arguments raised
in their earlier Manifestation and Motion to Stay Execution of Judgment, which we found
previously to be their (first) motion for reconsideration.
The filing of a second motion for reconsideration is prohibited under Rule 52, Section 2 of the
1997 Rules of Civil Procedure, as amended69 and the prevailing 1999 Internal Rules of the
Procedure of the CA (IRCA).70 Being a prohibited pleading, a second motion for reconsideration
does not have any legal effect and does not toll the running of the period to appeal.71
_______________
pg. 83
66 2008 is a leap year. Counting 15 days from February 22, 2008, the last day for filing a petition
for review before the Court is March 8, 2008.
67 Resolution, G.R. No. 166679, January 27, 2010.
68 Id.
69 Rule 52, Section 2. Second Motion for Reconsideration.—No second motion for
reconsideration of a judgment or final resolution by the same party shall be entertained.
70 Rule 13, Section 3. Second Motion for Reconsideration.—No second motion for
reconsideration from the same party shall be entertained. However, if the decision or resolution is
reconsidered or substantially modified, the party adversely affected may file a motion for
reconsideration within fifteen (15) days from notice.
71 Securities and Exchange Commission v. PICOP Resources, Inc., G.R. No. 164314, September
26, 2008, 566 SCRA 451, 468,.
491
VOL. 797, JULY 20, 2016 491

In Securities and Exchange Commission v. PICOP Resources, Inc.,72 we explained why the period
to appeal should not be reckoned from the denial of a second motion for reconsideration:
To rule that finality of judgment shall be reckoned from the receipt of the resolution or order
denying the second motion for reconsideration would result to an absurd situation whereby courts
will be obliged to issue orders or resolutions denying what is a prohibited motion in the first place,
in order that the period for the finality of judgments shall run, thereby, prolonging the disposition
of cases. Moreover, such a ruling would allow a party to forestall the running of the period of
finality of judgments by virtue of filing a prohibited pleading; such a situation is not only illogical
but also unjust to the winning party.
The same principle is likewise applicable by analogy in the determination of the correct
period to appeal. Reckoning the period from the denial of the second motion for
reconsideration will result in the same absurd situation where the courts will be obliged to
issue orders or resolutions denying a prohibited pleading in the first place.73 (Emphasis
supplied)
pg. 84
An appeal is not a matter of right, but is one of sound judicial discretion. It may only be availed of
in the manner provided by the law and the rules.74 A party who fails to question an adverse
decision by not filing the proper remedy within the
_______________
citing Land Bank of the Philippines v. Ascot Holdings and Equities, Inc., G.R. No. 175163, October
19, 2007, 537 SCRA 396, 405
72 Id.
73 Id., at pp. 467-468, citing Dinglasan, Jr. v. Court of Appeals, G.R. No. 145420, September 19,
2006, 502 SCRA 253, 265.
74 Indoyon, Jr. v. Court of Appeals, G.R. No. 193706, March 12, 2013, 693 SCRA 201, 211-212,
citing Muñoz v. People, G.R. No. 162772, March 14, 2008, 548 SCRA 473.
492

period prescribed by law loses the right to do so as the decision, as to him, becomes final and
binding.75
Considering that petitioners reckoned the period to appeal on the date of notice of the denial
of the second motion for reconsideration on July 7, 2008, instead of the date of notice of the
denial of the first motion for reconsideration on February 22, 2008, the present petition filed
only on August 28, 2008 is evidently filed out of time. The petition, being 173 days late,
renders the CA Decision final and executory. Thus, we do not have jurisdiction to pass upon
the petition.
Our ruling in Tagle v. Equitable PCI Bank76 is illustrative:
In the case at bar, the Court of Appeals dismissed the petition of petitioner Alfredo in C.A.-G.R.
S.P. No. 90461 by virtue of a Resolution dated 6 September 2005. Petitioner Alfredo’s Motion for
Reconsideration of the dismissal of his petition was denied by the appellate court in its Resolution
dated 16 February 2006. Petitioner Alfredo thus had 15 days from receipt of the 16 February 2006
Resolution of the Court of Appeals within which to file a petition for review. The reckoning date
from which the 15-day period to appeal shall be computed is the date of receipt by petitioner
Alfredo of the 16 February 2006 Resolution of the Court of Appeals, and not of its 11 April 2006
Resolution denying petitioner Alfredo’s second motion for reconsideration, since the second
pg. 85
paragraph of Sec. 5, Rule 37 of the Revised Rules of Court is explicit that a second motion for
reconsideration shall not be allowed. And since a second motion for reconsidera-
_______________
75 Rivelisa Realty, Inc. v. First Sta. Clara Builders Corporation, G.R. No. 189618, January 15,
2014, 713 SCRA 618, 626 (Resolution), citing Building Care Corporation/Leopard Security &
Investigation Agency v. Macaraeg, G.R. No. 198357, December 10, 2012, 687 SCRA 643, 650,
also citing Ocampo v. Court of Appeals (Former Second Division), G.R. No. 150334, March 20,
2009, 582 SCRA 43, 49.
76 G.R. No. 172299, April 22, 2008, 552 SCRA 424.
493
VOL. 797, JULY 20, 2016 493

tion is not allowed, then unavoidably, its filing did not toll the running of the period to file
an appeal by certiorari. Petitioner Alfredo made a critical mistake in waiting for the Court
of Appeals to resolve his second motion for reconsideration before pursuing an appeal.
Another elementary rule of procedure is that perfection of an appeal within the reglementary
period is not only mandatory but also jurisdictional. For this reason, petitioner Alfredo’s
failure to file this petition within 15 days from receipt of the 16 February 2006 Resolution of
the Court of Appeals denying his first Motion for Reconsideration, rendered the same final
and executory, and deprived us of jurisdiction to entertain an appeal thereof.77 (Emphasis
supplied)
While there are instances when we relax the application of procedural rules, the present petition is
not one of them. Liberal application of the rules is an exception rather than the rule. In this case,
petitioners failed to address the issue of finality of the CA Decision when it was raised in
respondent Mena’s Comment to the Manifestation and Motion to Stay Execution in the CA. Upon
the denial of the manifestation and motion due to finality of the CA Decision, petitioners again
ignored the issue of finality in their Motion for Reconsideration. Up until respondent-spouses’
Comment before us, which again alleged the finality of the CA Decision, petitioners continued to
be mum on the issue. Petitioners’ silence as to the timeliness of their appeal is suspect. Thus, in
the absence of exceptional circumstances and effort on the part of petitioners to justify the liberal
application of the rules, we are constrained to deny the petition.
pg. 86
Nevertheless, even discounting the above procedural defect, we still find the present petition
unmeritorious.
_______________
77 Id., at pp. 445-446.
494

The Execution of the Lease

Contract is not a Superven-
ing Event
The assailed CA Decision was promulgated on August 29, 2007, and petitioners received notice
of it on September 4, 2007.78 The CA Decision ordered petitioners to vacate the property on the
ground of respondent-spouses’ legitimate need of the premises and expiration of the lease. On
September 10, 2007, petitioners entered into a 10-year lease contract with Roberto involving the
property.79
Consequently, petitioners allege that the execution of the lease contract lent legitimacy to their
occupation of the property, such that the CA Decision is now mooted and should no longer be
enforced because to do so would be inequitable. Petitioners insist that the lease contract constitutes
a supervening event justifying the stay of the CA Decision.80
Petitioners’ contentions are untenable. A supervening event refers to facts which transpire after
during the trial as they were not yet in existence at that time.81 Here, the lease contract was
executed after the CA Decision was promulgated but before it attained finality. In fact, petitioners
executed the lease contract just six days after they received the adverse ruling of the CA.
_______________
78 Petition, Rollo, p. 11.
pg. 87
79 Id., at p. 17.
80 Id., at p. 18.
81 Government Service Insurance System (GSIS) v. Group Management Corporation (GMC),

G.R. Nos. 167000 & 169771, June 8, 2011, 651 SCRA 279, 306, citing Natalia Realty, Inc. v.
Court of Appeals, G.R. No. 126462, November 12, 2002, 391 SCRA 370, 387.
495
VOL. 797, JULY 20, 2016 495

To our mind, instead of a supervening event, the execution of the lease contract partakes of the
nature of a compromise. A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced.82 It is an agreement
between two or more persons, who, for the purpose of preventing or putting an end to a lawsuit,
adjust their difficulties by mutual consent in the manner which they agree on, and which each party
prefers over the hope of gaining but balanced by the danger of losing.83 In the case before us,
petitioners claim that they executed the lease contract before notice of the CA Decision as an
“amicable settlement of the issues with reference to occupancy of the subject property.”84 Thus,
petitioners’ intention to end the litigation by virtue of a compromise is evident.
A compromise may be entered into at any stage of the case — pending trial, on appeal and even
after finality of judgment.85 Hence, petitioners may enter into a compromise with the respondent-
spouses, even after the CA Decision was rendered. However, the validity of the agreement is
determined by compliance with the requisites and the principles of contracts, not by when it was
entered into.86 Unfortunately for petitioners, the compromise that they effected is wanting of one
of the essential requisites87 of a valid and binding com-
_______________
82 Civil Code of the Philippines, Art. 2028.
83 Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, G.R.
No. 126745, July 26, 1999, 311 SCRA 143, 154, citing Rovero v. Amparo, 91 Phil. 228 (1952).
84 Manifestation and Motion to Stay Execution of the Judgment dated August 29, 2007, CA Rollo,
p. 199.
pg. 88
85 See Magbanua v. Uy, G.R. No. 161003, May 6, 2005, 458 SCRA 184, 193, citing Jesalva v.
Bautista and Premiere Productions, Inc., 105 Phil. 348 (1959).
86 Id., at p. 195.
87 The requisites of a valid compromise are as follows: (1) the consent of the parties to the
compromise, (2) an object certain that is the subject matter of the compromise, and (3) the cause
of the obliga-
496

promise — consent of all the parties in the case. We have consistently ruled that a compromise
agreement cannot bind a party who did not voluntarily take part in the settlement itself and gave
specific individual consent.88
It is undisputed that only Roberto entered into a lease contract with petitioners. Mena did not sign
it, but on the contrary, denounces its execution as being done in evident bad faith and without
authority from her as the sole owner of the property. Considering that Mena did not participate in
the execution of the lease contract, the compromise is not binding on her.
In addition, the compromise is also not valid even between petitioners and Roberto because the
records show that the land in question is indeed a paraphernal property of Mena. Petitioners
themselves admitted in their Answer89 and Position Paper90 before the MeTC that only Mena is
the registered owner of the property. Estoppel therefore lies against them. Petitioners cannot now
argue before us that the property is a conjugal property of the respondent-spouses, such that only
Roberto’s consent is necessary for the effectivity of the lease. Without an authorization showing
that Roberto is acting on behalf of Mena, he has no right and power to enter into a lease contract
involving Mena’s exclusive property.
Besides, even assuming that the property is conjugally owned by respondent-spouses, this does
not bestow upon
_______________
tion that is established. (Magbanua v. Uy, id., citing Article 1318 of the Civil Code)
pg. 89
88 Philippine Journalists, Inc. v. National Labor Relations Commission, G.R. No. 166421,
September 5, 2006, 501 SCRA 75, 93, citing Galicia v. NLRC (Second Division), G.R. No. 119649,
July 28, 1997, 276 SCRA 381. See also General Rubber and Footwear Corp. v. Drilon, G.R. No.
76988, January 31, 1989, 169 SCRA 808 and Republic v. National Labor Relations Commission,
G.R. No. 108544, May 31, 1995, 244 SCRA 564.
89 See paragraph 1, Records, p. 10.
90 See Statement of Facts, id., at p. 165.
497
VOL. 797, JULY 20, 2016 497

Roberto the power to enter into a lease contract without the consent of his wife. We have explained
in Roxas v. Court of Appeals,91 that consent of the wife is required for lease of a conjugal realty
for a period of more than one year, such lease being considered a conveyance and encumbrance
under the provisions of the Civil Code.92
Respondent-Spouses Complied
with Section 5(c) of BP 877
The controversy revolves on whether respondent-spouses’ satisfied the requisites of Section 5(c)
of BP 877 as a ground for judicial ejectment. To recapitulate, the requisites are:
(1) the owner’s/lessor’s legitimate need to repossess the leased property for his own personal use
or for the use of any of his immediate family;
(2) the owner/lessor does not own any other available residential unit within the same city
or municipality;
(3) the lease for a definite period has expired;
(4) there was formal notice at least three (3) months prior to the intended date to repossess
the property; and
pg. 90
(5) the owner must not lease or allow the use of the property to a third party for at least one
year.93 (Emphasis supplied)
The second, third and fourth requisites are the ones contested in this case. The RTC found that
respondent-spouses have other residential units within Pasig City. It also adjudged that the verbal
lease between the parties does not
_______________
91 G.R. No. 92245, June 26, 1991, 198 SCRA 541.
92 Id., at p. 547.
93 Dula v. Maravilla, supra note 41 at p. 257.
498

have a period and the 3-month notice requirement was not complied with.
We disagree with the RTC and affirm the CA.
First, while it is admitted by respondent-spouses that they have other residential units in Pasig
City, they were not available because they were occupied by tenants who pay their rentals
promptly.94 The keyword in the second requisite of Section 5(c) is the word “available.” The right
of respondent-spouses to eject petitioners cannot be negated by the fact alone that the former have
other residential units in Pasig City. The said properties must be “available.” Our ruling in Roxas
v. Intermediate Appellate Court95 is enlightening, thus:
It is important to stress that even assuming any of petitioners own other residential units, what the
law requires is that the same is an available residential unit, for the use of such owner/lessor or
the immediate member of his family. Thus even if an owner/lessor owns another residential
unit, if the same is not available as for example the same is occupied or it is not suitable for
dwelling purposes, it is no obstacle to the ejectment of a tenant on the ground that the
premises is needed for use of the owner or immediate member of his family.96 (Emphasis
supplied)
pg. 91
Respondent-spouses did not choose to eject petitioners arbitrarily and unreasonably. They asserted
that among their tenants, petitioners are delinquent in their rental payments. We cannot fault
respondent-spouses in choosing their other tenants, who are in good standing, over petitioners.
Second, the lease between respondent-spouses and petitioners, although merely verbal, is deemed
to be one with a definite period which expires at the end of each month. The
_______________
94 Plaintiff’s Position Paper, Records, pp. 73-76.
95 Nos. L-74279 & 74801-03, January 20, 1988, 157 SCRA 166.
96 Id., at p. 175.
499
VOL. 797, JULY 20, 2016 499

lease is on a month-to-month basis because the rentals are paid monthly. In this regard, we cite our
ruling in Arquelada v. Philippine Veterans Bank,97 to wit:
The question now is, has the verbal contract of lease between petitioners and the Bank expired in
order to call for the ejectment of the latter from the premises in question? The Court rules in the
affirmative.
It is admitted that no specific period for the duration of the lease was agreed upon between the
parties. Nonetheless, payment of the stipulated rents were made on a monthly basis and, as
such, the period of lease is considered to be from month to month in accordance with Article
1687 of the Civil Code. Moreover, a lease from month-to-month is considered to be one with
a definite period which expires at the end of each month upon a demand to vacate by the
lessor.98 (Citations omitted, emphasis supplied)
Third, respondent-spouses complied with the requirement of 3-month prior notice. Petitioners do
not dispute that they were verbally informed of respondent-spouses’ need of the property as early
as March 2000. In fact, barangay conciliation meetings were held regarding the matter. Petitioners,
however, insist that the reckoning period for the 3-month notice should be counted from their
pg. 92
receipt on June 15, 2000 of the letter to vacate. Consequently, they argue that they were given only
28 days from June 15 to July 13, 2000 to vacate the property.
We reject petitioners’ contention.
The “formal notice” requirement under BP 877 does not refer to a written notice only. In the case
of Garcia v. Court of
_______________
97 G.R. No. 139137, March 31, 2000, 329 SCRA 536.
98 Id., at pp. 553-554.
500

Appeals,99 we reckoned compliance with the 3-month notice requirement from his verbal demand
to vacate, viz.:
x x x [E]ven assuming arguendo that the appellate court’s premise is correct, petitioner did give
notice on his own behalf. The trial court found that soon after the sale of the properly to petitioner,
or on October 10, 1979, the latter wrote to private respondent that he vacate the premises. After
this and other subsequent demands were ignored, he again made a demand on August 7,
1982 informing private respondent that he wished to build his house on the property. After
this last demand was again ignored, he brought the matter before the Barangay Chairman who, on
September 19, 1982, sent a summons to private respondent, who, not only ignored it but in
addition, refused to accept it when served upon him. Petitioner finally filed an ejectment suit
before the MTC on December 7, 1982, or four months after his verbal demand on August 7,
1982. Thus, even disregarding the previous demands soon after the sale, petitioner had
complied with the requirement of three-month notice.100 (Emphasis supplied)
All told, the present petition is without merit both on technical and substantive grounds.
pg. 93
WHEREFORE, the Petition is DENIED. The Decision and Resolution of the Court of Appeals
dated August 29, 2007 and July 7, 2008, respectively, are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Perez and Reyes, JJ., concur.
_______________
99 G.R. No. 88632, March 22, 1993, 220 SCRA 264.
100 Id., at pp. 272-273.
501
VOL. 797, JULY 20, 2016 501

Notes.—The destruction of the building should not in any way be made a basis to exempt
petitioners from paying rent for the period they made use of the leased property. Otherwise, this
will be a clear case of unjust enrichment. (Golez vs. Nemeño, 771 SCRA 306 [2015])
When a lease contract contains a right of first refusal, the lessor is under a legal duty to the lessee
not to sell to anybody at any price until after he has made an offer to sell to the latter at a certain
price and the lessee has failed to accept it. (Osmeña III vs. Power Sector Assets and Liabilities
Management Corporation, 771 SCRA 559 [2015])
——o0o——
pg. 94
G.R. No. 218665. July 20, 2016.*
JULIUS BAUTISTA, ARSENIO LARANANG, REYNALDO BALDEMOR, CARMELITA

MANAYAN, NORMA FLORES, CONSUELO ESTIGOY, CARMELITA VALMONTE,
SIMEON MARTIN, MAGDALENA GADIAN, JOSE GINNO DELA MERCED, JOVEN
SILAN, JR., JULIO DIAZ, GIDEON ACOSTA, and WENCESLA BAUTISTA, petitioners, vs.
LT. COL. BENITO DONIEGO, JR., LT. COL. ALFREDO PATARATA, and MAJOR
GENERAL GREGORIO PIO CATAPANG, respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; The Rules of Court
require that in an appeal by way of a petition for review, the appeal is deemed perfected as to the
petitioner upon the timely filing of the petition and the payment of docket and other lawful fees.—
For appellate jurisdiction to attach, the following requisites must be complied with: (a) the
petitioner must have invoked the jurisdiction of the CA within the time for doing so; (b) he must
have filed his petition for review within the reglementary period; (c) he must have paid the
necessary docket fees; and (d) the other parties must have perfected their appeals in due time. In
this regard, the Rules of Court require that in an appeal by way of a petition for review, the appeal
is deemed perfected as to the petitioner upon the timely filing of the petition and the payment of
docket and other lawful fees. To perfect the appeal, the party has to file the petition for review and
to pay the docket fees within the prescribed period. The law and its intent are clear and unequivocal
that the petition is perfected upon its filing and the payment of the docket fees. Consequently,
without the petition, the CA cannot be said to have acquired jurisdiction over the case.
PETITION for review on certiorari of a resolution of the Court of Appeals.
_______________
* FIRST DIVISION.
725
VOL. 797, JULY 20, 2016 725

Bautista vs. Doniego, Jr.
pg. 95
Paner, Hosaka & Ypil for petitioners.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 is the Resolution2 dated June 16, 2015 rendered
by the Court of Appeals (CA) in C.A.-G.R. S.P. No. 139159-UDK noting without action: (a) the
Petition for Review filed before it on March 31, 2015 with payment of docket fees on even date;
(b) the Manifestation filed by herein respondents Lt. Col. Benito Doniego, Jr., Lt. Col. Alfredo
Patarata, and Major General Gregorio Pio Catapang (respondents) before the Regional Trial Court
of Palayan City, Branch 40 (RTC) copy furnished the CA by registered mail on April 6, 2015; (c)
the Urgent Motion for the Issuance of a Temporary Restraining Order (TRO) and/or Writ of
Preliminary Injunction filed by Julius Bautista (J. Bautista), Florentina Juan,3 Bienvinido
Baldemor,4 Carmelita Manayan, Rufino Flores,5 Elizarde Estigoy,6 Carmelita Valmonte,
Gervacio Aregando,7 Dalisay Gadian,8 Jose Ginno Dela Merced, Florentina Silan,9 Julio Diaz,
Gideon Acosta, and Wencesla Bautista (Bautista, et al.) on May 21, 2015; and (d) Bautista, et al.’s
Omnibus Motion for Clarification and Resolution (Re: Assigned Docket Numbers) filed on May
27, 2015.
_______________
1 Rollo (Vol. I), pp. 5-57.
2 Id., at p. 64. Signed by Division Clerk of Court Tammy Ann C. Reyes-Mendillo.
3 Represented by Arsenio Laranang.
4 Represented by Reynaldo Baldemor.
5 Represented by Norma Flores.
6 Represented by Consuelo Estigoy.
7 Represented by Simeon Martin.
8 Represented by Magdalena Gadian.
9 Represented by Joven Silan, Jr.
pg. 96
726

The Facts
On June 24, 2013, Bautista, et al. filed a complaint10 for forcible entry with prayer for the issuance
of a TRO and award of damages before the Municipal Trial Court in Cities11 of Palayan City
(MTCC) against respondents. They alleged that beginning March 2013, respondents, with the help
of soldiers from Fort Magsaysay, by means of stealth, strategy, force, threat, and intimidation,
entered the parcels of land located at Fort Magsaysay, Palayan City (subject land) which they have
been occupying in the concept of owner for more than ten (10) years.12
In defense, respondents denied13 the allegations and claimed that it was Bautista, et al. who
surreptitiously entered the subject land despite knowledge that it was part of the Fort Magsaysay
Military Reservation since December 19, 1955 pursuant to Presidential Proclamation No. 237, S.
195514 of then President Ramon Magsaysay.15 They also prayed for the award of moral and
exemplary damages.16
The MTCC’s Ruling
After due proceedings, the MTCC rendered its Decision17 dated October 8, 2013, directing the
respondents and all per-
_______________
10 Docketed as Civil Case No. 640 dated June 21, 2013. Rollo (Vol. I), pp. 65-70.
11 “Municipal Trial Court” in the complaint; id., at p. 65.
12 Id., at p. 66.
13 See Answer with Counterclaim dated June 29, 2013; id., at pp. 88-93.
pg. 97
14 Entitled “Reserving for Military Purposes a Portion of the Public Domain Situated in the
Municipalities of Papaya, Sta. Rosa, and Laur, Province of Nueva Ecija and Portion of Quezon
Province, Philippines” dated December 19, 1955; id., at pp. 94-95.
15 Id., at pp. 88-89.
16 Id., at p. 92.
17 Id., at pp. 323-338. Penned by Presiding Judge Angel M. Merez, Jr.
727
VOL. 797, JULY 20, 2016 727

sons acting on their behalf to vacate the subject land and to peacefully turn over the premises to
Bautista, et al.18 The MTCC ruled that Bautista, et al. were in prior possession of the subject land
and that respondents had no right to enter the same without authority and consent of the lawful
possessors. It found that the subject land had been segregated from the military reservation by
virtue of Presidential Proclamation No. 1033, S. 200619 issued by then President Gloria
Macapagal-Arroyo, which legally removed the administration and disposition of the subject land
from them and transferred the same to the National Housing Authority.20
Dissatisfied, respondents, through the Office of the Solicitor General (OSG), appealed21 to the
RTC, docketed as Civil Case No. 0760-P-13.22
The RTC’s Ruling and Subsequent Proceedings
In a Decision23 dated December 9, 2014, the RTC reversed and set aside the MTCC Decision.
Finding respondents to be the lawful possessors of the subject land, it ordered Bautista, et al. to
vacate and peacefully turn over the same to the for-
_______________
18 Id., at p. 338.
pg. 98
19 Entitled “Amending Proclamation No. 237, Series of 1955 by Excluding Certain Portion of the
Land Embraced therein Situated in the Municipalities of Gen. Tinio, Sta. Rosa, Laur and Gabaldon
and the City of Palayan, Province of Nueva Ecija and the Municipality of Dingalan, Province of
Aurora, Island of Luzon Reserving the Same for Off-Base Housing Site and Declaring Same Open
for Disposition to Qualified Beneficiaries” dated March 13, 2006; id., at pp. 97-98.
20 Id., at pp. 335-337.
21 See Notice of Appeal dated November 22, 2013; id., at

pp. 339-340.
22 Id., at p. 407.
23 Id., at pp. 407-416. Penned by Presiding Judge Evelyn A. Atienza-Turla.
728

mer.24 In so ruling, the RTC declared that Presidential Proclamation No. 1033, S. 2006 did not
state, expressly or impliedly, that the Armed Forces of the Philippines (AFP) was to be
dispossessed of the subject land and that the purpose thereof was merely changed from military
reservation to off-base housing.25
On January 28, 2015, herein petitioner J. Bautista, ostensibly for and on behalf of his co-petitioners
in the courts a quo, filed a Motion for Extension of Time to File a Petition for Review26 (Motion
for Extension) before the CA, copy furnished the RTC. In his motion, J. Bautista alleged that the
RTC’s Decision was received by Bautista, et al.’s counsel on January 16, 2015 and that they had
until January 31, 2015 within which to file a petition for review. However, because of their
counsel’s illness, they prayed for an additional period of thirty (30) days to secure a new counsel
and to file their petition for review.27
Subsequently, or on February 2, 2015, Bautista, et al. filed a Motion for Reconsideration28 of the
RTC’s Decision.
Initially, the RTC, in an Order29 dated February 9, 2015, deemed the said Motion for
Reconsideration as abandoned in view of the filing of the Motion for Extension.30 Subsequently,
however, after having clarified that the Motion for Extension was filed earlier than the Motion for
Reconsideration, the RTC issued an Order31 dated February 24, 2015 declaring that the Motion
for Reconsideration had superseded the Motion for Extension, which was deemed abandoned.32
pg. 99
_______________
24 Id., at p. 416.
25 Id., at p. 415.
26 Id., at pp. 417-419.
27 Id., at p. 417.
28 Dated February 2, 2015. Id., at pp. 420-425.
29 Id., at p. 426.
30 Id.
31 Id., at p. 434.
32 Id.
729
VOL. 797, JULY 20, 2016 729

Eventually, the RTC denied Bautista, et al.’s Motion for Reconsideration in an Order33 dated
March 10, 2015 for lack of merit.
In view of the RTC’s reversal of the MTCC Decision, respondents filed a Motion for the Issuance
of [a] Writ of Execution34 to implement the RTC’s December 9, 2014 Decision. In their
comment/opposition,35 Bautista, et al. contended that the immediate execution pending appeal of
the judgment of the RTC in forcible entry and unlawful detainer cases is applicable only if the
judgment is rendered against the defendants, i.e., herein respondents, which does not obtain in this
case, as the judgment was rendered against Bautista, et al., as plaintiffs.36
In an Order37 dated April 22, 2015, the RTC granted respondents’ motion for the issuance of a
writ of execution from which Bautista, et al. sought38 reconsideration.
The Proceedings Before the CA
pg. 100
Meanwhile, in a Resolution39 dated March 9, 2015, the CA acted on J. Bautista’s Motion for
Extension, docketed as C.A.-G.R. S.P. No. 139159-UDK, denying the same for failure to pay the
required docket fees within the reglementary period
_______________
33 Id., at p. 435.
34 Dated March 4, 2015. Rollo (Vol. II), pp. 857-859.
35 See Comment/Opposition (to the Motion for Issuance of the Writ of Execution) dated March
20, 2015; id., at pp. 860-862.
36 Id., at pp. 860-861.
37 Id., at p. 872.
38 See Omnibus Motion Ad Abundante Cautelam [(i) for Reconsideration of the Order dated April
22, 2015 and (ii) to Inhibit the Honorable Presiding Judge Evelyn Atienza-Turla from Taking
Cognizance of the Case] dated May 7, 2015; id., at pp. 873-881.
39 Id., at pp. 854-855. Penned by Associate Justice Zenaida T. Galapate-Laguilles, with Associate
Justices Mariflor P. Punzalan-Castillo and Florito S. Macalino, concurring.
730

without justifiable reason. Accordingly, it ordered the Motion for Extension expunged from the
records.40
Subsequently, or on March 31, 2015, Bautista, et al. filed a Petition for Review41 before the CA,
with appropriate payment42 of the prescribed docket fees, assailing the December 9, 2014
Decision of the RTC, as well as the March 10, 2015 Order denying the motion for reconsideration
thereof. The petition was docketed as C.A.-G.R. No. 139764.43 Later, or on May 21, 2015,
Bautista, et al. filed an Urgent Motion for the Issuance of a Temporary Restraining Order and/or
Writ of Preliminary Injunction44 (Urgent Motion for Issuance of TRO) seeking to enjoin the
pg. 101
enforcement of the RTC’s April 22, 2015 Order directing the issuance of a writ of execution in
favor of respondents.45
Finally, on May 27, 2015, Bautista, et al. filed an Omnibus Motion for Clarification and Resolution
(Re: Assigned Docket Numbers),46 seeking, inter alia, explanation from the CA on why their
Petition for Review, which was docketed as C.A.-G.R. No. 139764, was given the docket number
of J. Bautista’s abandoned Motion for Extension, C.A.-G.R. S.P. No. 139159.
On June 16, 2015, the CA issued its assailed Resolution47 merely noting without action, inter
alia: (a) Bautista, et al.’s Petition for Review with the payment of docket fees; (b) Bautista, et al.’s
Urgent Motion for the Issuance of a TRO; and (c) Bautista, et al.’s Omnibus Motion for
Clarification and Resolution (Re: Assigned Docket Numbers). The CA’s action
_______________
40 Id.
41 Dated March 18, 2015; id., at pp. 436-474.
42 Id., at pp. 852-853.
43 Id., at p. 436.
44 Dated May 19, 2015. Rollo (Vol. III), pp. 903-921.
45 Id., at p. 917.
46 Dated May 26, 2015. Id., at pp. 950-957.
47 Rollo (Vol. I), p. 64.
731
VOL. 797, JULY 20, 2016 731

was in connection with its earlier Resolution dated March 9, 2015 denying J. Bautista’s Motion
for Extension and consequently, expunged the case from the records.48
Aggrieved, herein petitioners49 elevated the matter before the Court via the instant petition.
pg. 102
The issue to be resolved by the Court is whether or not the CA erred in merely noting without
action Bautista, et al.’s Petition for Review and other subsequent pleadings, thus, denying them
due course.
Section 1, Rule 4250 of the Rules of Court provides:
Section 1. How appeal taken; time for filing.—A party desiring to appeal from a decision of the
Regional Trial Court rendered in the exercise of its appellate jurisdiction may file a verified
petition for review with the Court of Appeals, paying at the same time to the clerk of said court
the corresponding docket and other lawful fees, depositing the amount of P500.00 for costs, and
furnishing the Regional Trial Court and the adverse party with a copy of the petition. The petition
shall be filed and served within fifteen (15) days from notice of the decision
_______________
48 Id.
49 The petition before the Court was filed by Julius Bautista, Carmelita Manayan, Carmelita
Valmonte, Jose Ginno Dela Merced, Julio Diaz, Gideon Acosta, Wencesla Bautista, and the
representatives of the other petitioner in the courts a quo, i.e., Arsenio Laranang, Reynaldo
Baldemor, Norma Flores, Consuelo Estigoy, Simeon Martin, Magdalena Gadian, and Joven Silan,
Jr.
50 Petition for Review from the Regional Trial Courts to the Court of Appeals.
732
pg. 103
sought to be reviewed or of the denial of the petitioner’s motion for new trial or reconsideration
filed in due time after judgment. Upon proper motion and the payment of the full amount of the
docket and other lawful fees and the deposit for costs before the expiration of the reglementary
period, the Court of Appeals may grant an additional period of fifteen (15) days only within which
to file the petition for review. No further extension shall be granted except for the most compelling
reason and in no case to exceed fifteen (15) days.
Thus, for appellate jurisdiction to attach, the following requisites must be complied with: (a) the
petitioner must have invoked the jurisdiction of the CA within the time for doing so; (b) he must
have filed his petition for review within the reglementary period; (c) he must have paid the
necessary docket fees; and (d) the other parties must have perfected their appeals in due time.51
In this regard, the Rules of Court require that in an appeal by way of a petition for review, the
appeal is deemed perfected as to the petitioner upon the timely filing of the petition and the
payment of docket and other lawful fees.52 To perfect the appeal, the party has to file the petition
for review and to pay the docket fees within the prescribed period. The law and its intent are clear
and unequivocal that the petition is perfected upon its filing and the payment of the docket fees.53
Consequently, without the petition, the CA cannot be said to have acquired jurisdiction over the
case.
Applying the foregoing parameters, the appellate jurisdiction did not attach with the filing of J.
Bautista’s Motion for Extension. Notably, the pleading filed was a mere motion for extension and
not a petition for review, and there was no
_______________
51 Fernandez v. Court of Appeals, 497 Phil. 748, 756-757; 458 SCRA 454, 462-463 (2005).
52 Id., at p. 757; p. 463, citing the Minutes of the meeting of the Rules of Court Revision
Committee, September 18, 1991, p. 11.
53 Id.
733
VOL. 797, JULY 20, 2016 733

pg. 104
payment of the required docket fees. Besides, J. Bautista filed the motion ostensibly on behalf of
the rest of the petitioners in the courts a quo but records are bereft of evidence to show that they
had authorized him to do so. The Court also notes that J. Bautista filed the motion after receipt
only of the RTC’s December 9, 2014 Decision, from which all of the petitioners (Bautista, et al.)
seasonably filed their Motion for Reconsideration. Thus, in C.A.-G.R. S.P. No. 139159-UDK, the
CA did not acquire appellate jurisdiction for two (2) reasons: one, it was merely a Motion for
Extension and not a proper Petition for Review, and two, there was no payment of the required
docket fees.
However, the same does not hold true with respect to the Petition for Review subsequently filed
by Bautista, et al., which was originally docketed as C.A.-G.R. No. 139764. The said petition was
filed together with the payment of docket and other lawful fees and assailed not only the December
9, 2014 Decision of the RTC, but also the March 10, 2015 Order denying their Motion for
Reconsideration. Records show that Bautista, et al. filed their Petition for Review within the fifteen
(15)-day period after their receipt of the Order denying their Motion for Reconsideration. Clearly,
therefore, the Petition for Review was properly filed, and the CA acquired appellate jurisdiction
over the case.
In view of the foregoing, the CA committed reversible error in merely noting without action the
Petition for Review, as well as the subsequent pleadings that Bautista, et al. had filed. The Petition
for Review initially docketed as C.A.-G.R. No. 139764 was an entirely new and distinct pleading
assailing the RTC’s issuances and did not proceed from the Motion for Extension filed by J.
Bautista, which the CA had already ordered expunged from the records. As such, with the
expunction of J. Bautista’s Motion for Extension, the docket number previously assigned to it
should not have been reassigned to the properly and seasonably-filed Petition for Review. To note,
the CA would not have designated the appropriate
734

docket number to the Petition for Review had it not found the same to be in order.
In fine, considering that Bautista, et al. had duly perfected their appeal upon the timely filing of
their Petition for Review together with payment of the prescribed docket and other lawful fees, the
CA had already acquired appellate jurisdiction over the case. Consequently, it is only proper that
the CA reinstate and re-docket the same.
WHEREFORE, the petition is PARTLY GRANTED. The Court of Appeals is directed to

REINSTATE and RE-DOCKET the Petition for Review filed before it by Julius Bautista,
Florentina Juan (Arsenio Laranang), Bienvinido Baldemor (Reynaldo Baldemor), Carmelita
pg. 105
Manayan, Rufino Flores (Norma Flores), Elizarde Estigoy (Consuelo Estigoy), Carmelita
Valmonte, Gervacio Aregando (Simeon Martin), Dalisay Gadian (Magdalena Gadian), Jose Ginno
Dela Merced, Florentina Silan (Joven Silan, Jr.), Julio Diaz, Gideon Acosta, and Wencesla
Bautista.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Bersamin and Caguioa, JJ., concur.
Petition partly granted, Court of Appeals directed to reinstate and re-docket the Petition for
Review.
Notes.—The question regarding respondent’s tenancy status is factual in nature, which is not
proper in a petition for review. (Lumayog vs. Pitcock, 668 SCRA 200 [2012])
Section 8 of Rule 42 provides that the appeal is deemed perfected as to the petitioner “[u]pon the
timely filing of a petition for review and the payment of the corresponding docket and other lawful
fees.” (Boardwalk Business Ventures, Inc. vs. Villareal, Jr., 695 SCRA 468 [2013])
——o0o——
pg. 106
Case Short Name: Heirs of Babai Guiambangan vs. Municipality of Kalamansig, Sultan
Kudarat
G.R. No. 204899. July 27, 2016.*
HEIRS OF BABAI GUIAMBANGAN, namely, KALIPA B. GUIAMBANGAN, SAYA

GUIAMBANGAN DARUS, NENENG P. GUIAMBANGAN, and EDGAR P.
GUIAMBANGAN,1 petitioners, vs. MUNICIPALITY OF KALAMANSIG, SULTAN
KUDARAT, represented by its MAYOR ROLANDO P. GARCIA, members of its
SANGGUNIANG BAYAN, and its MUNICIPAL TREASURER,2 respondents.
Remedial Law; Civil Procedure; Parties; Misjoinder of Parties; Nonjoinder of Parties; In

Abdulrahman v. Office of the Ombudsman for Mindanao, 704 SCRA 124 (2013), the Supreme
Court (SC) held that “neither the misjoinder nor the nonjoinder of parties is a ground for the
dismissal of an action,” particularly a Petition for Certiorari under Rule 65; the Court of Appeals
(CA) should simply order that a party be impleaded in the case.—In Abdulrahman v. Office of the
Ombudsman for Mindanao, 704 SCRA 124 (2013), this Court held that “neither the misjoinder
nor the nonjoinder of parties is a ground for the dismissal of an action,” particularly a Petition for
Certiorari under Rule 65; the CA should simply order that a party be impleaded in the case.
Pleadings and Practice; Service of Pleadings; True it is that Rule 46, Section 3 mandates that a
copy of the petition should be served on the other party; and that proof of such service should be
filed with the petition in court. However, the rule was substantially complied with when service
was made to petitioner’s former counsel, Atty. Dennis Ancheta.—The CA dismissed the Petition
for lack of appropriate service of the Petition for Certiorari on the respondents as required by
Section 3, Rule 46 of the 1997 Rules, although the record indicates that a copy thereof was served
upon their counsel of record. While this is not sanctioned by the 1997 Rules, this Court has excused
it in the past, thus: True it is that Rule 46, Section 3 mandates that a copy of the petition should be
served on the other
_______________
* SECOND DIVISION.
1 See Rollo, pp. 13, 89, 506.
2 Id., at p. 14.
585
VOL. 798, JULY 27, 2016 585
pg. 107
Heirs of Babai Guiambangan vs. Municipality of Kalamansig, Sultan Kudarat
party; and that proof of such service should be filed with the petition in court. However, the rule
was substantially complied with when service was made to petitioner’s former counsel, Atty.
Dennis Ancheta. Without the benefit of a proper notice of petitioner’s substitution of counsel,
respondent had no recourse but to serve the copy of its petition to whom it knew and perceived as
being petitioner’s counsel of record. In faithful compliance and with no intention of delay, service
was made on Atty. Ancheta.
Remedial Law; Civil Procedure; Verification; While only one (1) of the heirs, Saya Guiambangan
Darus, verified the Court of Appeals’ (CA’s) Petition for Certiorari, without proof of authority to
file the same obtained from the other heirs, this is not fatal. As heirs, they all share a common
interest; indeed, even if the other heirs were not impleaded, the Petition may be heard, as any
judgment should inure to their benefit just the same.—While only one of the heirs, Saya
Guiambangan Darus, verified the CA Petition for Certiorari, without proof of authority to file the
same obtained from the other heirs, this is not fatal. As heirs, they all share a common interest;
indeed, even if the other heirs were not impleaded, the Petition may be heard, as any judgment
should inure to their benefit just the same. Or, quite simply, the CA could have ordered their
inclusion, as earlier stated above. x x x As such co-owners, each of the heirs may properly bring
an action for ejectment, forcible entry and detainer, or any kind of action for the recovery of
possession of the subject properties. Thus, a co-owner may bring such an action, even without
joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the
benefit of all.
Civil Law; Land Titles and Deeds; Reconstitution of Titles; Under Act No. 3110, the judicial
record shall be reconstituted to the extent that the parties agree; thereafter, the court shall
intervene and determine what proper action to take.—As far as the trial court and parties are
concerned, there is admittedly a Judgment dated March 4, 2002 rendered in favor of petitioners in
Civil Case No. 989; indeed, the trial court even cited the dispositive portion of said Judgment in
its December 16, 2010 Order, and respondents did the same in their Memorandum before this
Court; that said judgment became final and executory; and that the trial court directed the issuance
of a writ of execution. All these facts need not be further proved, and reconstitution of the record
is irrelevant and unnecessary on this score given
586

the admission of all concerned. The March 4, 2002 Judgment and May 2, 2002 Order of the trial
court directing issuance of a writ of execution are deemed reconstituted. It must be remembered
that under Act No. 3110, the judicial record shall be reconstituted to the extent that the parties
pg. 108
agree; thereafter, the court shall intervene and determine what proper action to take. It can
reconstitute only that part of the record which can stand on its own, and then continue proceedings
upon such record so reconstituted. In the present case, it can be said that the Judgment in Civil
Case No. 989 and record of subsequent actions taken are deemed reconstituted by agreement of
the parties and with the approval of the trial court.
PETITION for review on certiorari of the resolutions of the Court of Appeals.
Al May Sair F. Patangan for petitioners.
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari3 are the June 14, 2011 Resolution4 of the Court
of Appeals (CA) in C.A.-G.R. S.P. No. 04239 which dismissed the herein petitioners’ Petition for
Certiorari,5 and its September 10, 2012 Resolution6 which denied their Motion for
Reconsideration7 in said case.
_______________
3 Id., at pp. 12-27.
4 Id., at p. 38; issued by Associate Justices Rodrigo F. Lim, Jr., Pamela Ann A. Maxino and
Zenaida Galapate-Laguilles.
5 Id., at pp. 141-176.
6 Id., at pp. 33-37; penned by Associate Justice Marilyn B. Lagura-Yap and concurred in by
Associate Justices Edgardo A. Camello and Renato C. Francisco.
7 Id., at pp. 177-186.
587
VOL. 798, JULY 27, 2016 587

pg. 109
Factual Antecedents
Datu Eishmael Summagumbra (Eishmael), heir of the late Babai Guiambangan (Babai) and
ascendant and predecessor-in-interest of herein petitioners, Kalipa B. Guiambangan, Saya
Guiambangan Darus, Neneng P. Guiambangan, and Edgar P. Guiambangan, instituted before the
Regional Trial Court of Isulan, Sultan Kudarat (RTC Branch 19) Civil Case No. 989 against herein
respondents Municipality of Kalamansig, Sultan Kudarat, its Mayor, Members of its Sangguniang
Bayan, and its Municipal Treasurer. The case was for recovery of possession of real property,
rentals, damages, and attorney’s fees, with an additional prayer for injunctive relief, in connection
with a 422,129-square-meter parcel of land situated in Port Lebak, Kalamansig, Sultan Kudarat
which Eishmael claimed was registered in Babai’s name as Original Certificate of Title No. 995-
A (OCT 995-A).
On March 4, 2002, a Judgment8 was rendered in Civil Case No. 989, which decreed as follows:
WHEREFORE, upon all the foregoing considerations, judgment is hereby rendered:
(a) ordering the defendant, Municipality of Kalamansig, Sultan Kudarat, and those acting
for and in its behalf to vacate the portions used as market site in Lot 1534-A, Psd-12-031263
and the portion in Lot 1534-B, Psd-12-031263 where the ice plant structure is constructed,
and surrender the possession thereof to the plaintiff, Datu Eishmael Summagumbra, and for
the latter to appropriate the improvements built by the defendant on the said lot in question,
without paying indemnity;
_______________
8 Records, pp. 1-24; penned by Judge German M. Malcampo.
588

(b) ordering the defendant to pay back monthly rents to plaintiff for the use of the portion of
Lot 1534-A, Psd-12-031263, as marketplace from January 1997, until the finality of this
judgment, at a reasonable amount of P5,000.00;
(c) ordering the defendants to pay to the plaintiff:
1 moral damages in the reasonable amount of P30,000.00;
pg. 110
2 exemplary damages in the reasonable amount of P20,000.00;
3 P20,000.00, as reasonable amount of attorney’s fees; and
(d) ordering the defendant to pay the costs of suit.
For lack of merit, the counterclaim for damages interposed by the defendant should be, as it is
hereby dismissed.
IT IS SO ORDERED.9
The above March 4, 2002 Judgment became final and executory, and in a May 2, 2002 Order,10
the trial court directed the issuance of a writ of execution. On June 13, 2002, Sheriff Edwin
Cabug11 (Cabug) issued a Sheriff’s Notice12 to vacate the premises.
On March 26, 2007, Cabug issued a Sheriff’s Partial Return of Service,13 indicating that the writ
of execution was not enforced.
_______________
9 Id., at pp. 23-24.
10 Rollo, p. 66.
11 Also spelled as Cabog in some parts of the records.
12 Rollo, p. 67.
13 Id., at p. 73.
589
VOL. 798, JULY 27, 2016 589

On August 4, 2008, fire gutted the Hall of Justice where the files of Civil Case No. 989 was kept;
however, the record thereof was not reconstituted.
On September 17, 2010, Cabug issued another Sheriff’s Partial Return of Service14 and a Notice
of Garnishment15 which he sent to the Manager of the Land Bank of the Philippines Lebak, Sultan
pg. 111
Kudarat Branch, in an apparent attempt to execute the March 4, 2002 Judgment in Civil Case No.
989.
Respondents filed an Urgent Motion to Issue an Order to the Sheriff Prohibiting Him from
Executing an Alleged Judgment in the Above Entitled Case16 (Urgent Motion), seeking to restrain
Cabug from enforcing the decision in Civil Case No. 989 on the ground that since the record
thereof was not reconstituted, then there is no judgment in said case to be enforced; and that for
failure to reconstitute the record, petitioners have no other recourse but to file the case anew, as
Act No. 311017 requires. Petitioners filed their Omnibus Comment18 to the motion, and to this
respondents submitted their Comments/Reply.19
_______________
14 Id., at p. 74.
15 Id., at p. 75.
16 Id., at pp. 76-80.
17 “An Act to Provide an Adequate Procedure for the Reconstitution of the Records of Pending
Judicial Proceedings and Books, Documents, and Files of the Office of the Register of Deeds,
Destroyed by Fire or Other Public Calamities, and for Other Purposes,” approved on March 19,
1923, provides:
Sec. 29. In case the parties interested in a destroyed record fail to petition for the
reconstitution thereof within the six months next following the date on which they were
given notice in accordance with Section two hereof, they shall be understood to have waived
the reconstitution and may file their respective actions anew without being entitled to claim
the benefits of Section thirty-one hereof.
18 Rollo, pp. 81-88.
19 Id., at pp. 89-91.
590

On December 16, 2010, the trial court issued an Order20 granting respondents’ Urgent Motion,
stating as follows:
pg. 112
As shown by the available records of the case, only machine copies of the judgment dated March
4, 2002 (containing twenty-three [23] pages), Sheriff’s Partial Return of Service dated July 16,
2002, Sheriff’s Notice dated June 13, 2002, Order dated May 2, 2002, Order dated October 14,
2002, Certification issued by Arty. Heathcliff H. Leal, dated August 12, 1999, Entry of Judgment
dated August 23, 2002 were submitted when the subject motions were filed as the whole records
of the case were burned together with the other records of cases of the court on August 4, 2008
when the Hall of Justice housing it and the Offices of the Provincial Prosecutor, and the Public
Attorney’s Office was razed to the ground by a fire.
Clearly, after that Sheriff’s Notice dated June 13, 2002 and Sheriff’s Partial Return of Service
dated July 16, 2002 no other proceedings nor incident was taken by the court regarding the case.
xxx
xxxx
Then suddenly another Sheriff’s Partial Return of Service dated September 17, 2010 was issued
by Edwin Galor Cabug, Sheriff IV of the court, its content is also quoted as follows:
‘RESPECTFULLY RETURNED to ERLINDA P. LELIM, OIC-Clerk of Court, of this

Court, the herein Writ of Execution issued in the above entitled case that the same have [sic]
already been enforced and implemented and that the Kalamansig Public Market was already
turned over to DARUS BASMAN who is the representative of the Plaintiff per Special
Power of Attorney.
_______________
20 Id., at pp. 93-102; penned by Acting Presiding Judge Roberto L. Ayco.
591
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FOR YOUR INFORMATION AND READY REFERENCE.’
Aside from the said Sheriff’s Partial Return of Service dated September 17, 2010, Edwin Galor
Cabug, Sheriff IV of the Court also issued a Notice of Garnishment dated September 17, 2010
addressed to the Manager, Land Bank of the Philippines, Lebak Branch, Lebak, Sultan Kudarat.
xxx
xxxx
pg. 113
The above mentioned Sheriff’s Partial Return of Service and the Notice of Garnishment all dated
September 17, 2010 were issued by x x x Cabug x x x without the court knowing it. The court bad
not issued any Order directing the issuance of any alias writ of execution. This will only show that
the writ of execution referred to by him in his Sheriff’s Partial Return of Service was that writ of
execution directed by the court to be issued through its Order dated May 2, 2002 and the Notice
of Garnishment should have been based upon it likewise.
This being so, can it still be legally and lawfully done considering the period of time that had
elapsed? Why was there a need for Edwin Galor Cabug to issue another Sheriff’s Partial Return of
Service when he had issued a similar return on July 16, 2002?
This Acting Presiding Judge having assumed as such just lately, other than the documents forming
parts of the carpeta of the case furnished him, he does not personally know the reasons, why this
case was handled this way and in this manner.
Based however, upon said available documents, it is clear that after the Sheriff’s Partial Return of
Service was issued on July 16, 2002 no other move was ever adopted nor availed of by the Plaintiff
in order to enforce and satisfy the Judgment of the Court dated March 4, 2002. x x x
xxxx
The next that was done thereafter was only the issuance of another Sheriff’s Partial Return of
Service
592

dated September 17, 2010 and the issuance of a Notice of Garnishment, also on said day,
September 17, 2010.
The Sheriff’s Partial Return of Service dated July 16, 2002, only served a copy of the writ of
execution and Sheriff’s Notice upon Hon. Mayor and Hon. Vice Mayor at the Session Hall of the
Sangguniang Bayan of the Municipality of Kalamansig, Sultan Kudarat. It had never enforced nor
satisfy [sic] the subject Judgment of the court. It would then only show that the judgment of the
court in this case was never enforced nor satisfied even partially. There was only service of the
copy of the writ of execution and Sheriff’s Notice.
The records of the case including the original copy of the judgment of the court dated March 4,
2002 and that of the other records of the cases of the court were burned on August 4, 2008 and
nothing was salvaged by the court.
pg. 114
There was no attempt nor effort from either of the parties to have the records of the case
reconstituted in accordance with Section 3 of Act No. 3110 despite the Notice of Loss of Judicial
Records published in the Official Gazette on September 30, 2008 and in the newspapers both local
and national. The period of time provided by said law for the reconstitution of the records of this
case had long prescribed and may no longer be availed of. The parties in this case then are
considered to have waived their rights to avail of said reconstitution. It is therefore mandatory on
the part of the court to declare the records of this case to have been destroyed by fire and may no
longer be reconstituted in view of the apparent waiver of the parties.
Section 6 of Rule 39 of the 1997 Rules of Civil Procedure directs the manner on how a final and
executory judgment or order may be executed. It provides, as follows:
‘Execution by motion or by independent action.—A final and executory judgment or order

may be executed on motion within five (5) years from the date of its entry. After the
593
VOL. 798, JULY 27, 2016 593

lapse of such time, and before it is barred by the statute of limitations, a judgment may be
enforced by action. The revived judgment may also be enforced by motion within five (5)
years from the date of its entry and thereafter by action before it is barred by the statute of
limitations. (6a)’
This court believes that its judgment dated March 4, 2002 was never executed nor satisfied even
partially within the period provided by the pertinent rule above quoted.
Execution contemplates the usual situation where a judgment is susceptible of enforcement the
moment it acquires the character of finality x x x and a judgment becomes final and executory by
operation of law, not by judicial declaration x x x. Execution is fittingly called the fruit and end of
law, and aptly called the life of law x x x. Execution is the process of the court for carrying its
decree into effect. In an action to recover possession of lands, as in this case, if the judgment is for
the Plaintiff, the writ of execution will be an order to deliver the possession to the Plaintiff.
The judgment of the court in this case was never carried out nor enforced. The service of a copy
of the writ of execution and Sheriff’s Notice to the Mayor and Vice Mayor x x x did not in any
manner satisfy the said judgment. None of the matters decreed by the court in its judgment was
ever enforced.
As shown by the Certification issued by Atty. Heathcliff H. Leal, the Clerk of Court then, the said
judgment became final and executory on August 23, 2002.
pg. 115
The five (5) years period provided by Section 6 of Rule 39 of the Rules of Civil Procedure above
quoted had lapsed without the subject judgment being enforced even partially.
WHEREFORE, the court finds, as follows:
(a) the Sheriff’s Partial Return of Service and the Notice of Garnishment issued by Edwin Galor
Cabug,
594

Sheriff IV of the court were issued without apparent basis, hence, the same are hereby declared
null and void and of no effect at all;
(b) the judgment of the court dated March 4, 2002 was never enforced nor complied, even
partially and had become stale and can no longer be enforced by a mere motion unless the same is
revived in accordance with the rules; and
(c) the records of the case were among the records of cases of the court burned and razed by fire
on August 4, 2008, nothing was salvaged by the court, it were [sic] not reconstituted and the period
for its reconstitution had long lapsed.
SO ORDERED.21
Petitioners filed a Motion for Reconsideration,22 arguing that the court had no jurisdiction to pass
upon the Urgent Motion, invalidate Cabug’s actions, and declare stale its March 4, 2002 Judgment
for failure to reconstitute the records and failure to execute the decision within, the 5-year period
provided for under Rule 39 of the 1997 Rules of Civil Procedure (1997 Rules); that when the
March 4, 2002 Judgment became final and executory, the trial court lost its jurisdiction to entertain
respondents’ Urgent Motion, as it may no longer “decide or pass upon any issue that may thereafter
be raised by the parties,” including the issue of “validity or enforceability of the judgment”; that
as shown by Cabug’s March 26, 2007 Sheriff’s Partial Return of Service, the failure to execute the
March 4, 2002 Judgment is attributable to respondents’ act of delaying satisfaction by requesting
additional time to consult their lawyer and the members of the Sangguniang Bayan and other
municipal officials; that respondents’ delay did not therefore result in the expiration of the 5-year
period allowed for the execution of the March 4, 2002 Judgment by mere motion, but
_______________
pg. 116
21 Id., at pp. 94-102.
22 Id., at pp. 103-131.
595
VOL. 798, JULY 27, 2016 595

instead interrupted it, because a judgment debtor’s delay will extend the time within which the
writ of execution may be enforced, and the time during which execution is stayed or delayed by
him should be excluded from the computation of the 5-year period allowed for execution by mere
motion;23 that Act No. 3110 on reconstitution of court records applies only to “pending cases,”
and not to Civil Case No. 989 where the March 4, 2002 Judgment is already final and executory;
that assuming arguendo that Act No. 3110 applied to Civil Case No. 989, then the assailed
December 16, 2010 Order of the trial court in said case is null and void because it could not have
acted on a case whose record has not been properly reconstituted; that they and their counsel did
not receive any notice of loss of the record of Civil Case No. 989, which notice is required to be
sent under Act No. 3110, thus, they may not be blamed for failure to cause reconstitution of the
record; and that the enforcement of the writ of execution did not require the court’s permission, as
well as the issuance of an alias writ of execution, since under the 1997 Rules,24 alias writs of exe-
_______________
23 Citing Yau v. Silverio, Sr., 567 Phil. 493; 543 SCRA 520 (2008), and Regalado, Florenz D.,
Remedial Law Compendium, Volume I,
pp. 417-418, Sixth Revised Edition.
24 Rule 39, on EXECUTION, SATISFACTION AND EFFECT OF JUDGMENTS, states:
Sec. 14. Return of writ of execution.—The writ of execution shall be returnable to the
court issuing it immediately after the judgment has been satisfied in part or in full. If the
judgment cannot be satisfied in full within thirty (30) days after his receipt of the writ, the
officer shall report to the court and state the reason therefor. Such writ shall continue in
effect during the period within which the judgment may be enforced by motion. The officer
shall make a report to the court every thirty (30) days on the proceedings taken thereon until
the judgment is satisfied in full, or its effectivity expires. The returns or periodic reports
shall set forth the whole of the proceedings taken, and shall be filed with the court and copies
thereof promptly furnished the parties.
pg. 117
596

cution were done away with; the lifetime of a writ of execution is no longer 60 days, but the whole
5-year period during which a judgment may be enforced by motion, and all that the sheriff must
do is to make a monthly report/return to the court on the proceedings taken, and such report shall
be filed with the court and copies thereof furnished the parties.
However, in a May 3, 2011 Order,25 the trial court denied the motion for reconsideration.
Ruling of the Court of Appeals
Petitioners filed an original Petition for Certiorari26 before the CA, which was docketed as C.A.-
G.R. S.P. No. 04239. In a June 14, 2011 Resolution, however, the CA resolved to dismiss the
Petition, thus:
The Court RESOLVES to DISMISS the instant Petition for Certiorari for failing to strictly comply
with Rule 65 and other related provisions of the Rules of Court, particularly for:
(a) Failure to implead Public Respondent RTC Br. 19, Sultan Kudarat in the caption of the
case;
(b) Lack of appropriate service of the petition on adverse parties Municipality of Kalamansig
represented by Mayor Rolando P. Garcia, the Sangguniang Bayan Members and the
Municipal Treasurer of the said Municipality as required by Rule 46, Section 3;
(c) Being defective in substance as the verification and certification of non-forum shopping
is signed by Saya Guiambangan without any proof that she has been
_______________
25 Rollo, pp. 138-140.
26 Id., at pp. 141-175.
pg. 118
597
VOL. 798, JULY 27, 2016 597

duly authorized by the other heirs of Babai Guiambangan to file the petition on their behalf.27
Petitioners filed a Motion for Reconsideration,28 which the CA denied in its September 10, 2012
Resolution. The appellate court held:
Petitioners moved for reconsideration. They explain that it was only petitioner Saya Guiambangan
Summagumbra who signed the verification and certification against forum shopping, because she
is “the only substituted heir to the late Datu Eishmael Summagumbra.” They claim that this is
evident in the affidavit of Renato Consebit (Consebit), the previous counsel for the plaintiff in the
case a quo. The relevant portion of the affidavit reads:
3. That I will confirm and affirm the fact that when I accepted the position as one of the
Prosecutors in the Office of the National Prosecution Service, sometime in May 3, 2005, I
did not formally and officially filed [sic] my withdrawal as counsel for the Heirs of the late
Babai Guiambangan, but I am quite sure that sometime on October 9, 2003, I filed a Motion
to Substitute Datu Eishmael Summagumbra as representative of defendant Heirs of Babai
Guiambangan Summagumbra NAMING THEREIN SAYA GUIAMBANGAN DARUS AS
THE LEGAL REPRESENTATIVE OF THE HEIRS OF BABAI GUIAMBANGAN. x x x
Petitioners also alleged that although, they were not able to serve copies of the petition to private
respondents, they were able to serve it to private respondents’ alleged counsel in the case a quo.
They insists [sic] that
_______________
27 Id., at p. 38.
28 Id., at pp. 177-186.
598
pg. 119
when a party is represented by a counsel of record, the service of orders and notices must be made
upon such counsel.
Lastly, they claimed that their failure to implead public respondent was only a typographical error.
The motion is bereft of merit.
A petition involving two or more petitioners must be accompanied by a certification of non-forum

shopping accomplished by all petitioners, or by one who is authorized to represent them;
otherwise, the petition shall be considered as defective and may be dismissed, under the terms of
Section 3, Rule 46, in relation [sic] Section 1, Rule 65 of the Rules of Court.
In the title of their petition, petitioners referred [sic] themselves as the ‘Heirs of Babai
Guiambangan, represented by Saya Guiambangan Summagumbra.’
The records show that it was only petitioner Saya Guiambangan Summagumbra who signed the
certification of non-forum shopping. However, she failed to provide proof that she had authority
to sign for the other heirs of Babai Guiambangan (Guiambangan). This makes the petition
defective.
Admittedly, the infirmity is only formal. In appropriate cases, it has been waived to give the parties
a chance to argue their causes and defenses on the merits. But to justify the relaxation of the rules,
a satisfactory explanation and a subsequent fulfillment of the requirements have always been
required.
However, instead of securing the consent of the other heirs of Guiambangan, petitioner Saya
Guiambangan Summagumbra merely referred Us to the affidavit of Consebit. This did not help
their case. Firstly, petitioner Saya Guiambangan Summagumbra failed to establish that she and
Saya Guiambangan Darus, the person named in such affidavit, is [sic] the same person. Secondly,
the affidavit cannot certainly be the source of petitioner Saya Guiambangan Summagumbra’s
authority to represent the other heirs of Guiambangan because it merely narrated that Consebit
filed a motion in the case
599
VOL. 798, JULY 27, 2016 599

pg. 120
a quo. As it is, there is on record, no proof that petitioner Saya Guiambangan Summagumbra is
authorized to represent the other petitioners in this case. This makes the case dismissible.
With the foregoing disquisition, We find it unnecessary to discuss the other matters raised.
WHEREFORE, the motion for reconsideration is DENIED.
SO ORDERED.29
Hence, the present Petition.
In a June 9, 2014 Resolution,30 the Court resolved to give due course to the instant Petition.
Issues
In essence, petitioners raise the issue of whether their Petition for Certiorari before the CA was
properly dismissed due to mere procedural technicalities, when these defects should have been
overlooked given the circumstances and merit of their case.
Petitioners’ Arguments
In praying that the assailed CA dispositions be set aside and that the trial court’s December 16,
2010 and May 3, 2011 Orders be invalidated, petitioners contend, in their Petition and Reply,31
that the CA should not have dismissed their Petition for Certiorari on the ground of technicality,
and should have treated their case with more leniency and liberality; that while it was only
petitioner Saya Guiambangan Darus who executed the verification in the CA Petition, she did the
same in her personal capacity and as representative of the
_______________
29 Id., at pp. 34-37.
30 Id., at pp. 429-430.
31 Id., at pp. 418-426.
pg. 121
600

other petitioners who are her coheirs and co-owners; that even if the other heirs did not sign the
CA Petition and are not made party to the CA case as a result, still any judgment obtained will be
to their benefit as well, considering that they share a common interest in the action, as coheirs to
Babai and Eishmael, and as co-owners of the subject property; that even though the signatory to
the CA Petition was designated only as “Saya Guiambangan,” it refers to petitioner herein, Saya
Guiambangan Darus, who actually signed the said petition, thus, “Saya Guiambangan” and “Saya
Guiambangan Darus” refer to one and the same individual; that in any case, they attached a Special
Power of Attorney32 to the instant Petition in order to comply with the procedural requirement;
and that if the CA looked beyond the procedural aspect of the case, it would have realized the merit
in their cause.
Respondents’ Arguments
Respondents, on the other hand, essentially argue in their Comment33 that the CA committed no
error; that a party availing of the remedy of certiorari must strictly observe the procedural
requirements under the 1997 Rules, failing which his petition should be dismissed or rejected; and
that since petitioners’ CA Petition contained errors in violation of the 1997 Rules and circulars of
the Court requiring proper verification, impleading of parties, and service of pleadings, then the
appellate court was correct in exercising its discretion to dismiss the same. Thus, they pray for
denial.
In their Memorandum,34 respondents add that petitioners’ claim of ownership is based on OCT
995-A, which on its face is patently fake as found by the Land Registration Authority (LRA) itself;
that OCT 995-A is based on a Land Registration Commission record which actually pertains to a
piece of prop-
_______________
32 Id., at pp. 39-40.
33 Id., at pp. 393-406.
34 Id., at pp. 452-467.
pg. 122
601
VOL. 798, JULY 27, 2016 601

erty located in Manila; that petitioners were able to secure the title through defective reconstitution
proceedings, in that the trial court hastily allowed reconstitution even without awaiting the LRA’s
report on the title; and that as a result, the government filed Civil Case No. 1024 against petitioners
for the annulment/cancellation of petitioners’ title and reversion of the subject property, which
case is pending before the same court (Branch 19) handling Civil Case No. 989.35
Our Ruling
The Court grants the Petition.
The CA dismissed petitioners’ Certiorari Petition on three grounds: first, for failure to implead
the trial court as required by Section 5, Rule 65 of the 1997 Rules,36 which states as follows:
Sec. 5. Respondents and costs in certain cases.—When the petition filed relates to the acts or
omissions of a judge, court, quasi-judicial agency, tribunal, corporation, board, officer or person,
the petitioner shall join, as private respondent or respondents with such public respondent or
respondents, the person or persons interested in sustaining the proceedings in the court; and it shall
be the duty of such private respondents to appear and defend, both in his or their own behalf and
in behalf of the public respondent or respondents affected by the proceedings, and the costs
awarded in such proceedings in favor of the petitioner shall be against the private respondents
only, and not against the judge, court, quasi-judicial agency, tribunal, corporation, board, officer
or person impleaded as public respondent or respondents.
Unless otherwise specifically directed by the court where the petition is pending, the public
respondents
_______________
35 Id., at pp. 490-496; Amended Complaint in Civil Case No. 1024.
36 On Certiorari, Prohibition, and Mandamus.
pg. 123
602

shall not appear in or file an answer or comment to the petition or any pleading therein. If the case
is elevated to a higher court by either party, the public respondents shall be included therein as
nominal parties. However, unless otherwise specifically directed by the court, they shall not appear
or participate in the proceedings therein.
This, however, is not fatal. In Abdulrahman v. Office of the Ombudsman for Mindanao,37 this
Court held that “neither the misjoinder nor the nonjoinder of parties is a ground for the dismissal
of an action,”38 particularly a Petition for Certiorari under Rule 65; the CA should simply order
that a party be impleaded in the case. The Court made the following pronouncement in said case:
The acceptance of a petition for certiorari, and necessarily the grant of due course thereto, is
addressed to the sound discretion of the court. Thus, the court may reject and dismiss a petition for
certiorari (1) when there is no showing of grave abuse of discretion by any court, agency, or branch
of the government; or (2) when mere are procedural errors, such as violations of the Rules of Court
or Supreme Court circulars.
In this case, the CA dismissed petitioner’s special civil action for certiorari because of procedural
errors, namely: (1) failure to implead private respondent; (2) failure to attach copies of the
pleadings and documents relevant to the petition; (3) failure to file a motion for re-
_______________
37 G.R. No. 175977, August 28, 2013, 704 SCRA 124.
38 Citing Section 11, Rule 3 of the 1997 Rules, on Parties to Civil Actions, which state:
Sec. 11. Misjoinder and nonjoinder 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.
603
pg. 124
VOL. 798, JULY 27, 2016 603
consideration of the Order of Implementation; and consequently, (4) failure to allege material dates
in the petition.
Petitioner argues that the rules of procedure should be liberally construed when substantial issues
need to be resolved.
Indeed, the rules of procedure need not always be applied in a strict, technical sense, since they
were adopted to help secure and not override substantial justice. “In clearly meritorious cases, the
higher demands of substantial justice must transcend rigid observance of procedural rules.”
Thus, we have given due course to a petition because it was meritorious, even though we
recognized that the CA was correct in dismissing the petition for certiorari in the light of the failure
of petitioner to submit material documents. We have affirmed the CA when it granted a petition
for certiorari despite the litigant’s failure to file a motion for reconsideration beforehand. We have
also had occasion to excuse the failure to comply with the rule on the statement of material dates
in the petition, since the dates were evident from the records.39
Next, the CA dismissed the Petition for lack of appropriate service of the Petition for Certiorari
on the respondents as required by Section 3, Rule 46 of the 1997 Rules,40 although
_______________
39 Abdulrahman v. Office of the Ombudsman for Mindanao, supra note 37.
40 On Original Cases, which states:
Sec. 3. Contents and filing of petition; effect of noncompliance with requirements.—The

petition shall contain the full names and actual addresses of all the petitioners and
respondents, a concise statement of the matters involved, the factual background of the case,
and the grounds relied upon for the relief prayed for.
In actions filed under Rule 65, the petition shall further indicate the material dates showing
when notice of the judgment or final order or resolution subject thereof was received,
604
pg. 125
the record indicates that a copy thereof was served upon their counsel of record. While this is not
sanctioned by the 1997 Rules, this Court has excused it in the past, thus:
_______________
when a motion for new trial or reconsideration, if any, was filed and when notice of the
denial thereof was received.
It shall be filed in seven (7) clearly legible copies together with proof of service thereof on
the respondent with the original copy intended for the court indicated as such by the
petitioner, and shall be accompanied by a clearly legible duplicate original or certified true
copy of the judgment, order, resolution, or ruling subject thereof, such material portions of
the record as are referred to therein, and other documents relevant or pertinent thereto. The
certification shall be accomplished by the proper clerk of court or by his duly authorized
representative, or by the proper officer of the court, tribunal, agency or office involved or
by his duly authorized representative. The other requisite number of copies of the petition
shall be accompanied by clearly legible plain copies of all documents attached to the
original.
The petitioner shall also submit together with the petition a sworn certification that he has
not theretofore commenced any other action involving the same issues in the Supreme Court,
the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there
is such other action or proceeding, he must state the status of the same; and if he should
thereafter learn that a similar action or proceeding has been filed or is pending before the
Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or
agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency
thereof within five (5) days therefrom.
The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court
and deposit the amount of P500.00 for costs at the time of the filing of the petition.
The failure of the petitioner to comply with any of the foregoing requirements shall be
sufficient ground for the dismissal of the petition. (n)
605
VOL. 798, JULY 27, 2016 605

pg. 126
True it is that Rule 46, Section 3 mandates that a copy of the petition should be served on the other
party; and that proof of such service should be filed with the petition in court. However, the rule
was substantially complied with when service was made to petitioner’s former counsel, Atty.
Dennis Ancheta.
Without the benefit of a proper notice of petitioner’s substitution of counsel, respondent had no
recourse but to serve the copy of its petition to whom it knew and perceived as being petitioner’s
counsel of record. In faithful compliance and with no intention of delay, service was made on Atty.
Ancheta.41
Finally, while only one of the heirs, Saya Guiambangan Darus, verified the CA Petition for
Certiorari, without proof of authority to file the same obtained from the other heirs, this is not
fatal. As heirs, they all share a common interest; indeed, even if the other heirs were not impleaded,
the Petition may be heard, as any judgment should inure to their benefit just the same. Or, quite
simply, the CA could have ordered their inclusion, as earlier stated above.
x x x As such co-owners, each of the heirs may properly bring an action for ejectment, forcible
entry and detainer, or any kind of action for the recovery of possession of the subject properties.
Thus, a co-owner may bring such an action, even without joining all the other co-owners as co-
plaintiffs, because the suit is deemed to be instituted for the benefit of all.42
This ponente reiterated this principle in Heirs of Lazaro Gallardo v. Soliman,43 and later, in
Jacinto v. Gumaru, Jr.44
_______________
41 Okada v. Security Pacific Assurance Corporation, 595 Phil. 732, 747; 575 SCRA 124, 139-
140 (2008).
42 Iglesia ni Cristo v. Ponferrada, 536 Phil. 705, 722; 505 SCRA 828, 844 (2006).
43 708 Phil. 428; 695 SCRA 453 (2013).
44 G.R. No. 191906, June 2, 2014, 724 SCRA 343.
606
pg. 127
Indeed, the CA should not have forgotten the guidelines laid down by the Court regarding
verifications and certifications against forum shopping:
For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential
pronouncements already reflected above respecting noncompliance with the requirements
on, or submission of defective, verification and certification against forum shopping:
1) A distinction must be made between noncompliance with the requirement on or submission

of defective verification, and noncompliance with the requirement on or submission of defective
certification against forum shopping.
2) As to verification, noncompliance therewith or a defect therein does not necessarily

render the pleading fatally defective. The court may order its submission or correction or
act on the pleading if the attending circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one who has ample knowledge to
swear to the truth of the allegations in the complaint or petition signs the verification, and when
matters alleged in the petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, noncompliance therewith or a defect therein,

unlike in verification, is generally not curable by its subsequent submission or correction thereof,
unless there is a need to relax the Rule on the ground of ‘substantial compliance’ or presence of
‘special circumstances or compelling reasons.’
5) The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to the case.
Under reasonable or justifiable circumstances, however, as when all
607
VOL. 798, JULY 27, 2016 607

the plaintiffs or petitioners share a common interest and invoke a common cause of action
or defense, the signature of only one of them in the certification against forum shopping
substantially complies with the Rule.
pg. 128
6) Finally, the certification against forum shopping must be executed by the party-pleader, not
by his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to
sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his
behalf.45 (Emphasis supplied)
Regarding respondents’ argument that petitioners’ title is spurious and for this reason Civil Case
No. 1024 for annulment of title and reversion of the subject property was instituted, this cannot
justify the dismissal of petitioners’ Certiorari Petition before the CA; it is irrelevant to these
proceedings. As far as the trial court and parties are concerned, there is admittedly a Judgment
dated March 4, 2002 rendered in favor of petitioners in Civil Case No. 989; indeed, the trial court
even cited the dispositive portion of said Judgment in its December 16, 2010 Order, and
respondents did the same in their Memorandum before this Court;46 that said judgment became
final and executory; and that the trial court directed the issuance of a writ of execution. All these
facts need not be further proved, and reconstitution of the record is irrelevant and unnecessary on
this score given the admission of all concerned. The March 4, 2002 Judgment and May 2, 2002
Order of the trial court directing issuance of a writ of execution are deemed reconstituted. It must
be remembered that under Act No. 3110, the judicial record shall be reconstituted to the extent that
the parties agree; thereafter, the court shall intervene and determine what proper action to take. It
can reconstitute only that part of the record which can stand on
_______________
45 Altres v. Empleo, 594 Phil. 246, 261-262; 573 SCRA 583, 596-598 (2008); cited in Jacinto v.
Gumaru, Jr., id., at pp. 355-357.
46 Rollo, pp. 98, 453-454.
608

its own, and then continue proceedings upon such record so reconstituted.47 In the present case, it
can be said that the Judgment in Civil Case No. 989 and record of subsequent actions taken are
deemed reconstituted by agreement of the parties and with the approval of the trial court.
WHEREFORE, the Petition is GRANTED. The June 14, 2011 and September 10, 2012
Resolutions in C.A.-G.R. S.P. No. 04239 are REVERSED and SET ASIDE and the case is
REMANDED to the Court of Appeals for further proceedings.
pg. 129
SO ORDERED.
Carpio (Chairperson), Brion, Mendoza and Leonen, JJ., concur.
Petition granted, resolutions reversed and set aside.
Notes.—Neither misjoinder nor nonjoinder of parties is a ground for the dismissal of an action;
The proper remedy is to implead the indispensable party at any stage of the action. (Leonis
Navigation Co., Inc. vs. Villamater, 614 SCRA 182 [2010])
A reconstitution of title does not pass upon the ownership of land covered by the lost or destroyed
title but merely determines whether a re-issuance of such title is proper. (Republic vs. Pasicolan,
755 SCRA 495 [2015])
——o0o——
Case Short Name: Municipality of Alfonso Lista, Ifugao vs. Court of Appeals, Special Former
Sixth Division
G.R. No. 191442. July 27, 2016.*
THE MUNICIPALITY OF ALFONSO LISTA, IFUGAO, represented by CHARLES L.

CATTILING, in his capacity as Municipal Mayor and ESTRELLA S. ALIGUYON, in her
capacity as Municipal Treasurer, petitioners, vs. THE COURT OF APPEALS, SPECIAL
FORMER SIXTH DIVISION and SN ABOITIZ POWER-MAGAT, INC., respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; Under Rule 45 of the
Rules of Court, the proper remedy to reverse a judgment, final order, or resolution of the Court of
pg. 130
Appeals (CA) is to file a petition for review on certiorari, not a petition for certiorari under Rule
65.—Under Rule 45 of the Rules of Court, the proper remedy to reverse a judgment, final order,
or resolution of the CA is to file a petition for review on certiorari, not a petition for certiorari
under Rule 65. Certiorari is an extraordinary remedy of last resort; it is only available when there
is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. The
availability of an appeal precludes immediate resort to certiorari, even if the ascribed error was
lack or excess of jurisdiction or grave abuse of discretion. The municipality did not even bother to
explain this glaring defect in its petition.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.
The facts are stated in the resolution of the Court.
Hipolito Salatan and Reginald D. Buduhan for petitioners.
Puno and Puno for respondent.
RESOLUTION
BRION, J.:
We resolve the municipality of Alfonso Lista, Ifugao’s (the municipality) petition for certiorari
challenging the Court of
_______________
* SECOND DIVISION.
506

Municipality of Alfonso Lista, Ifugao vs. Court of Appeals, Special Former Sixth Division
Appeals’ (CA) decision1 and resolution2 in C.A.-G.R. S.P. No. 107926. The CA granted SN
Aboitiz Power-Magat, Inc.’s (SNAPM) petition for certiorari of the Regional Trial Court’s (RTC)
refusal to issue a temporary restraining order during the pendency of Special Civil Action Case
No. 17-09.3
pg. 131
Antecedents
SNAPM is a corporation engaged in the financing and acquisition of hydropower generating

facilities privatized by the Power Sector Assets and Liabilities Management Corporation
(PSALM).
On December 31, 2006, SNAPM entered into an agreement with PSALM to acquire the Magat
Power Plant located along the boundary of Alfonso Lista, Ifugao, and Ramon, Isabela.
SNAPM registered its power plant operation as a pioneer enterprise with the Board of Investments
(BOI). BOI approved the application on July 12, 2007.
The Local Government Code4 exempts BOI-registered pioneer enterprises from the payment of
local business taxes
(LBTs) for a period of 6 years from the date of registration. SNAPM however, overlooked this
exemption and paid its LBTs for the year 2007.
On January 20, 2009, SNAPM realized its mistake and notified the officials of Alfonso Lista,
Ifugao, of its exemption from paying LBTs until July 11, 2013.
However, the mayor of Alfonso Lista refused to recognize the exemption. He threatened to
withhold the issuance of a mayor’s Permit should SNAPM refuse to pay its LBTs.
On January 29, 2009, SNAPM paid its LBTs for the first quarter of 2009 under protest. In return,
the mayor of Alfonso Lista issued a temporary mayor’s permit effective only until March 15, 2009.
On February 16, 2009, SNAPM presented the Municipality with a letter from the BOI that
confirmed its exemption from paying LBTs for a period of six (6) years from July 12, 2007.
Nevertheless, the municipality refused to recognize SNAPM’s exemption.
On March 4, 2009, SNAPM filed an administrative claim with the Municipal Treasurer for a tax
refund or tax credit of its paid LBTs.
On March 6, 2009, SNAPM also filed a complaint for injunction (with an application for a
Temporary Restraining Order [TRO] and/or a writ of preliminary injunction) before the RTC
against the municipality, its Mayor, and its Municipal Treasurer. SNAPM sought to restrain: the
collection of LBTs, the mayor’s refusal to issue a mayor’s permit, the closure of the power plant,
and any other acts that would prevent it from operating its Alfonso Lista power plant. The
complaint was docketed as Special Civil Action Case No. 17-09.
SNAPM’s temporary mayor’s permit expired on March 15, 2009.
pg. 132
On March 18, 2009, the RTC denied SNAPM’s application for a TRO.5 The RTC ruled that at
that early stage of the proceedings, SNAPM’s entitlement to a tax exemption under the Local
Government Code was still “cloudy” and “vague.” It pointed out that SNAPM could avail of a tax
credit or refund later on if its complaint is found meritorious.
SNAPM filed a petition for certiorari before the CA questioning the RTC’s March 18, 2009 order.
Its petition was docketed as C.A.-G.R. S.P. No. 107926.
On June 9, 2009, the CA issued a temporary restraining order prohibiting the municipality from:
(1) assessing and collecting local business taxes from SNAPM; (2) refusing to issue a Mayor’s
permit; and (3) distraining or levying on SNAPM’s properties, closing the power plant, or
committing any other acts that would obstruct SNAPM’s operation of the power plant.6
On August 7, 2009, the CA granted the petition for certiorari and set aside the RTC’s order
denying SNAPM’s TRO application.7 It also made its July 9, 2009 TRO permanent, subject to the
RTC’s final determination of Special Civil Action Case No. 17-09.
The CA reasoned that the RTC gravely abused its discretion because SNAPM’s entitlement to an
injunctive writ is clear; Section 133 of the Local Government Code evidently limits the
municipality’s power to impose LBTs on BOI-registered enterprises.
The municipality moved for reconsideration, arguing: (1) that no supervening events took place
between June 5, 2009 and August 7, 2009, that warranted the permanent extension of the TRO;
and (2) that SNAPM’s one million-peso bond was insufficient considering it expected to assess
SNAPM with an annual 84 million pesos in LBTs.
On January 20, 2010, the CA clarified that it did not extend the TRO indefinitely.8 By making its
June 5, 2009 TRO “permanent subject to the final determination of the case,” it merely issued a
writ of injunction for the duration of the case. It concluded that justice and equity would be better
served if the status quo was preserved until the RTC resolved the merits of the case.9
It also brushed aside the municipality’s claim as to the sufficiency of the injunction bond for the
latter’s failure to justify its exorbitant assessment of 84 million pesos.
On March 16, 2010, the municipality filed the present petition for certiorari.
The Municipality’s Petition
The municipality claims that the CA acted with grave abuse of discretion and that there is no appeal
or any other speedy and adequate remedy in the ordinary course of law.10
pg. 133
Citing Rule 58 of the Rules of Court, it maintains that a TRO issued by the CA has a life span of
60 days and cannot exist indefinitely. It reiterated that no supervening events took place between
June 5, 2009 and August 7, 2009, that justified the indefinite extension of the TRO. Lastly, it insists
that SNAPM’s entitlement to a tax exemption from the local government was “cloudy” and
“vague.”
SNAPM’s Comment
SNAPM counters that the CA, by reversing and setting aside the RTC’s March 18, 2009 order
denying its application for a TRO and/or writ of preliminary injunction, effectively granted its
prayer for a preliminary injunction.11 Hence, the “temporary” restraining order was made
“permanent.” It was not, as the municipality suggested, extended.
SNAPM also argues that supervening events are not necessary to justify the CA’s act of making
the TRO “permanent.” The CA already explained that as a pioneer enterprise registered with the
BOI, SNAPM has a clear and unmistakable right to be exempt from paying LBTs under the Local
Government Code.
Lastly, SNAPM faults the municipality for resorting to certiorari when an appeal was available
under Rule 45.
On January 12, 2011, we required the municipality to file a reply to SNAPM’s comment.12
However, the municipality failed to comply due to changes in its administration from the 2013
elections.
On September 25, 2014, the new Municipal Mayor, Glenn D. Prudenciano, asked for a non-
extendible period of thirty days to file its reply due to their lack of a Municipal Legal Officer.13
We granted the motion on March 23, 2015. However, the newly appointed municipal legal officer
merely asked for another extension instead of filing a reply.14 The municipality has yet to file its
reply.
Considering the municipality’s repeated noncompliance with our orders, we consider the
municipality’s right to file a reply effectively waived. We thus proceed to rule on the merits of the
case.
Our Ruling
We DISMISS the petition for lack of merit.
pg. 134
First, as the respondent pointed out, the municipality could have appealed the CA’s verdict. Under
Rule 45 of the Rules of Court,15 the proper remedy to reverse a judgment, final order, or resolution
of the CA is to file a petition for review on certiorari, not a petition for certiorari under Rule 65.
Certiorari is an extraordinary remedy of last resort; it is only available when there is no appeal,
or any plain, speedy, and adequate remedy in the ordinary course of law. The availability of
an appeal precludes immediate resort to certiorari, even if the ascribed error was lack or excess
of jurisdiction or grave abuse of discretion.16 The municipality did not even bother to explain this
glaring defect in its petition.
Second, this petition stemmed from the CA’s grant of a writ of preliminary injunction against the
municipality from assessing and levying LBTs on SNAPM pending the RTC’s final determination
of SNAPM’s entitlement to a tax exemption. The petition has been rendered moot by the expiration
of SNAPM’s alleged six-year exemption from LBTs; the municipality acquired a clear and
unmistakable right to collect LBTs from SNAPM on July 12, 2013.
At this point, determining the propriety of the CA’s injunctive writ would be a useless academic
exercise. All that remains is for the RTC to make a final determination of SNAPM’s entitlement
to an exemption from LBTs for the years 2007 to 2013.
WHEREFORE, we DISMISS the petition for lack of merit.
SO ORDERED.
Carpio (Chairperson), Del Castillo, Mendoza and Leonen, JJ., concur.
Petition dismissed.
Notes.—Petitioner’s remedy from the adverse decision of the Court of Appeals would have been
to file a petition for review on certiorari under Rule 45 within 15 days after notice of denial of its
motion for partial reconsideration; Under section 5(f) of Rule 56 of the Rules of Court, an error in
the choice or mode of appeal, as in this case, merits an outright dismissal. (People vs. Court of
Appeals, 525 SCRA 160 [2007])
Proper recourse of an aggrieved party to assail the decisions of the Court of Appeals is to file a
petition for review on certiorari under Rule 45 of the Rules of Court. (Bausa vs. Heirs of Juan
Dino, 563 SCRA 533 [2008])
——o0o——
pg. 135
G.R. No. 192491. August 17, 2016.*
MARY JANE G. DY CHIAO, petitioner, vs. SEBASTIAN BOLIVAR, Sheriff IV, Regional
Trial Court, Branch 19, in Naga City, respondent.
Execution of Judgments; A losing party cannot seek relief from the execution of a final judgment
by bringing a separate action to prevent the execution of the judgment against her by the enforcing
sheriff.—A losing party cannot seek relief from the execution of a final judgment by bringing a
separate action to prevent the execution of the judgment against her by the enforcing sheriff. Such
action contravenes the policy on judicial stability. She should seek the relief in the same court that
issued the writ of execution.
Remedial Law; Civil Procedure; An appeal raising only questions of law brought to the Court of
Appeals (CA) shall be dismissed.—Pursuant to Section 2, Rule 50 of the Rules of Court, an appeal
raising only questions of law brought to the CA instead of to this Court shall be dismissed. The
same rule expressly forbids the erroneous appeal to be transferred to the Court.
Same; Same; Doctrine of Judicial Stability; Courts and tribunals with the same or equal authority
are not permitted to interfere with each other’s respective cases, much less their orders or
judgments therein.—To allow the petitioner’s action in the RTC (Branch 23) would disregard the
doctrine of judicial stability or noninterference, under which no court has the power to interfere by
injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction. Courts
and tribunals with the same or equal authority — even those exercising concurrent and coordinate
jurisdiction — are not permitted to interfere with each other’s respective cases, much less their
orders or judgments therein. This is an elementary principle of the highest importance essential to
the orderly administration of justice.
PETITION for review on certiorari of a resolution of the Court of Appeals.
Jeaneth C. Gaminde San Joaquin for petitioner.
P.M. Gerardo R. Borja for respondent.
BERSAMIN, J.:
A losing party cannot seek relief from the execution of a final judgment by bringing a separate
action to prevent the execution of the judgment against her by the enforcing sheriff. Such action
pg. 136
contravenes the policy on judicial stability. She should seek the relief in the same court that issued
the writ of execution.
The Case
The petitioner — a subsidiary judgment debtor — appeals the resolution promulgated on

November 12, 2009,1 whereby the Court of Appeals (CA) denied her Motion for Extension of
Time to File Verified Petition for Review on Certiorari filed in C.A.-G.R. S.P. No. 111113 entitled
Mary Jane G. Dy Chiao v. Sebastian Bolivar, Regional Trial Court of Naga City, and declared the
case closed and terminated, on the ground that her appeal by petition for review on certiorari could
only be brought to the Supreme Court.
Antecedents
The antecedents are not disputed. On March 31, 1999, the CA promulgated its decision in C.A.-
G.R. S.P. No. 44261 declaring the petitioner subsidiarily liable to pay the exact amount of
P5,711,164.00, to wit:
WHEREFORE, judgment is hereby rendered declaring the assailed decision dated December 13,
1993 of the respondent court as NULL and VOID and without legal force and effect. Co[r]ollarily,
the execution and the public auction sale held thereunder are likewise VOID.
The Clerk of Court of the Regional Trial Court of Naga City is directed to deliver within ten (10)
days from finality of this judgment the amount of P15,482,200.00 together with all interests earned
thereby, to the respondent court, which court is hereby directed to distribute the aggregate amount
to the buyers of the properties of Benito Dy Chiao, Sr., in proportion to the amounts they paid
therefor.
Benedick Arevalo, through his mother, Shirley Arevalo, is directed to turn over to the respondent
court within ten (10) days from finality of this judgment the amount of P5,711,164.00 which she
received from Sheriffs Rubio and Cledera, together with all other amounts she might have been
paid on the Compromise Agreement, without prejudice to the buyer’s right of recourse against
Mary Jane, who is hereby declared to be subsidiarily liable therefor. Upon receipt thereof, the
respondent court shall likewise return to the buyers the aggregate amount in the same proportion
as above stated.
Thereafter the properties shall be delivered to the intestate estate of Benito Dy Chiao, Jr. for proper
disposition by the intestate court.
Let a copy of this judgment be furnished the Office of the Court Administrator for whatever action
it might deem proper to take on the premises.
pg. 137
SO ORDERED.2
The decision in C.A.-G.R. S.P. No. 44261 was ultimately affirmed by the Court, and thus attained
finality. Execution proceedings followed in due course upon issuance of the writ of execution by
the RTC (Branch 19) as the court of origin, but respondent Branch Sheriff of the RTC (Branch 19)
filed a sheriff’s report to the effect that, one, the amount of P5,711,164.00 could not be satisfied
by principal obligor Benedick Arevalo because he had no assets that could be levied on execution;
and that, two, the liability could be paid out of the assets of the petitioner under her subsidiary
liability as decreed in the final judgment. Accordingly, the respondent recommended that an alias
writ of execution be issued against the properties of the latter.
On June 12, 2008, the RTC (Branch 19) issued the writ of execution and directed the respondent
to levy as much properties of the petitioner as would be sufficient to satisfy the amount of
P5,711,164.00, and to sell the properties at public auction.3
On November 21, 2008, the respondent proceeded with the public auction of the petitioner’s
levied properties, and sold two parcels of her realty with areas of 69 square meters and 85 square
meters, both located in Naga City, to the highest bidders for P8,000,000.00, namely: Jose R.
Rivero, Jessie Rivero, Jr. and Amalia Rivero Rañosa.4 In due course, the respondent issued a
provisional certificate of sale dated November 24, 2008.
The respondent, allegedly without any order from the Presiding Judge of the RTC (Branch 19),
or without an alias writ of execution being issued by the court, and without notice to the petitioner,
pursued further execution proceedings against the petitioner. She learned of such proceedings only
from Atty. Greta Paraiso, the Registrar of Deeds of Naga City.5
The notice of levy dated March 10, 2009 issued by the respondent, addressed to the petitioner,
identified the two parcels of land located in City registered in her name under Transfer Certificate
of Title (TCT) No. 8933 of the Register of Deeds of Camarines Sur. The first property had an area
of 386 square meters, while the second an area of 387 square meters.6 Although the notice stated
that it was being issued by virtue of a writ of execution, it did not bear the date of its issuance.
On May 8, 2009, the petitioner received a notice of sale of real property on execution dated April
15, 2009 stating that the two real properties of the petitioner were being levied to satisfy the sum
of P5,711,164.00; and that the public auction was set from 9:00 a.m. to 3:00 p.m. on May 15, 2009.
To fend off the public auction, the petitioner filed on May 13, 2009 a so-called Petition for
Prohibition with Application for Temporary Restraining Order and Preliminary Injunction. On
the same date, the Executive Judge of the RTC in Naga City issued at 72-hour temporary
restraining order (TRO) enjoining the respondent from conducting the scheduled public auction.7
The case was raffled to the RTC (Branch 23) in Naga City.
After receiving the respondent’s comment and opposition, the petitioner’s reply, and the
respondent’s rejoinder, the RTC (Branch 23) dismissed the case for lack of jurisdiction,8 opining
pg. 138
that the processes being undertaken by the respondent were deemed proceedings in the same civil
case assigned to and still pending before the RTC (Branch 19); and that the RTC (Branch 19)
continued to exercise general supervision and control over such proceedings.9
After the RTC (Branch 23) denied the petitioner’s Motion for Reconsideration, she filed in the
CA her Motion for Extension of Time to File Verified Petition for Review on Certiorari indicating
therein that she would be raising a question of law. The case was docketed as C.A.-G.R. S.P. No.
111113.
As stated, the CA promulgated the assailed resolution on November 12, 2009,10 pertinently
holding:
The motion must fail.
A motion praying for an extension of time to file a petition for review on certiorari filed before
this Court pursuant to Section 2 of Rule 45 of the Rules of Court raising only questions of law is
improper.
A petition for review on certiorari is governed by Section 1 of Rule 45, viz.:
“Section 1. Filing of petition with Supreme Court.—A party desiring to appeal by

certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may
file with the Supreme Court a verified petition for review on certiorari. The petition shall
raise only questions of law which must be distinctly set forth.”
Clearly therefore, the proper remedy under the aforequoted rule where only questions of law are
raised or involved, is a petition for review on certiorari which shall be filed with the Supreme
Court and not with this Court.
Thus, the instant motion praying for an extension of time to file a petition for review on certiorari
must be denied outright pursuant to Supreme Court Circular No. 2-90 dated March 9, 1990 which
mandates the dismissal of appeals involving pure questions of law erroneously brought to the Court
of Appeals, to wit:
“4. Erroneous appeals.—An appeal taken to either the Supreme Court or the Court of
Appeals by the wrong or inappropriate mode shall be dismissed.
(c) Raising issues purely of law in the Court of Appeals, or appeal by wrong mode.—If an
appeal under Rule 41 is taken from the Regional Trial Court to the Court of Appeals and
therein the appellant raises only questions of law, the appeal shall be dismissed, issues purely
of law not being reviewable by said court. . .
x x x x”
pg. 139
WHEREFORE, the instant motion praying for an extension of thirty (30) days to file a petition
for review on certiorari is hereby DENIED and the above entitled case is considered CLOSED
and TERMINATED.
SO ORDERED.11
The petitioner filed a Motion for Reconsideration, but the CA denied the motion on May 12,
2010.12
Hence, this appeal by the petitioner.
Issues
The petitioner hereby urges the Court to consider:
WHETHER IT WAS PROPER FOR THE APPELLATE COURT TO DENY PETITIONER’S

MOTION FOR EXTENSION, WHICH INDICATED THAT IT WOULD BE RAISING A
QUESTION OF LAW, ON THE GROUND THAT IT SHOULD HAVE BEEN FILED BEFORE
THE SUPREME COURT DESPITE THE RECOGNIZED PRINCIPLE OF HIERARCHY OF
COURTS.
WHETHER OR NOT IT WAS PROPER FOR THE ORIGINAL PETITION FOR PROHIBITION
BEFORE THE REGIONAL TRIAL COURT TO BE DENIED ON THE GROUND OF LACK
OF JURISDICTION.13
Ruling of the Court
We deny the petition for review on certiorari for its lack of merit.
First of all, the CA properly denied the petitioner’s Motion for Extension of Time to File Verified
Petition for Review on Certiorari and justifiably considered the case closed and terminated. The
petitioner was patently guilty of taking an erroneous appeal in view of her manifest intention to
limit her appeal to questions of law. Such an appeal would only be by petition for review on
certiorari, to be filed in this Court pursuant to Section 1, Rule 45 of the Rules of Court, as follows:
Section 1. Filing of petition with Supreme Court.—A party desiring to appeal by certiorari from
a judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
pg. 140
Supreme Court a verified petition for review on certiorari. The petition may include an
application for a writ of preliminary injunction or other provisional remedies and shall raise
only questions of law, which must be distinctly set forth. The petitioner may seek the same
provisional remedies by verified motion filed in the same action or proceeding at any time during
its pendency.
Pursuant to Section 2,14 Rule 50 of the Rules of Court, an appeal raising only questions of law
brought to the CA instead of to this Court shall be dismissed. The same rule expressly forbids the
erroneous appeal to be transferred to the Court.
Secondly, the petitioner, as the party appealing, had only a limited period of 15 days from notice
of the judgment or final order appealed from within which to perfect her appeal to the Court
pursuant to Section 2, Rule 45 of the Rules of Court, which states:
Section 2. Time for filing; extension.—The petition shall be filed within fifteen (15) days from
notice of the judgment or final order or resolution appealed from, or of the denial of the petitioner’s
motion for new trial or reconsideration filed in due time after notice of the judgment. On motion
duly filed and served, with full payment of the docket and other lawful fees and the deposit for
costs before the expiration of the reglementary period, the Supreme Court may for justifiable
reasons grant an extension of thirty (30) days only within which to file the petition. (1a, 5a)
The petitioner obviously failed to perfect her appeal from the dismissal by the RTC (Branch 23)
of the case commenced through her so-called Petition with Application for a Temporary
Restraining Order and Preliminary Injunction. The consequence of such failure to perfect the
appeal was to render the dismissal final and immutable. This meant that no court, including this
Court, could thereafter alter, modify or reverse the result. As such, her present appeal to this Court
cannot but be viewed and condemned as a futile attempt to resurrect the lost appeal.
And, lastly, the present appeal, even assuming that it was timely taken, would still fail for its lack
of merit. We would still uphold the dismissal of the case by RTC (Branch 23) considering that the
assailed action and processes undertaken by the respondent to levy the properties of the petitioner
were deemed proceedings in the same civil action assigned to the RTC (Branch 19) as the court
that had issued the writ of execution. Such proceedings, being incidents of the execution of the
final and executory decision of the RTC (Branch 19), remained within its exclusive control.
On the other hand, to allow the petitioner’s action in the RTC (Branch 23) would disregard the
doctrine of judicial stability or noninterference, under which no court has the power to interfere by
injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction.15
Courts and tribunals with the same or equal authority — even those exercising concurrent and
coordinate jurisdiction — are not permitted to interfere with each other’s respective cases, much
less their orders or judgments therein.16 This is an elementary principle of the highest importance
essential to the orderly administration of justice.17 Its observance is not required on the grounds
of judicial comity and courtesy alone; it is enforced to prevent unseemly, expensive, and dangerous
conflicts of jurisdiction and of processes.18 A contrary rule would dangerously lead to confusion
and seriously hamper the administration of justice.19
pg. 141
That the respondent was the sole party sought to be prevented from further acting in the execution
proceedings, or that the RTC (Branch 23) was not impleaded by the petitioner did not matter. The
effect is still an undue interference that disregarded the doctrine of judicial stability or noninter-
ference. The Court has made this unsettling situation quite clear when it explicitly observed in
Cabili v. Balindong:20
It is not a viable legal position to claim that a TRO against a writ of execution is issued against an
erring sheriff, not against the issuing Judge. A TRO enjoining the enforceability of a writ addresses
the writ itself, not merely the executing sheriff. The duty of a sheriff in enforcing writs is
ministerial and not discretionary. As already mentioned above, the appropriate action is to assail
the implementation of the writ before the issuing court in whose behalf the sheriff acts, and, upon
failure, to seek redress through a higher judicial body.
Indeed, the respondent was under the direct control and supervision of the RTC (Branch 19) as the
court that had issued the writ of execution enforcing the final decision of the CA against the
petitioner. The determination of whether or not the notice of levy was valid and proper rightfully
fell within the exclusive prerogative of the RTC (Branch 19) to ascertain and pronounce. If she
doubted the authority of the respondent to issue the notice of levy, she should have sought
clarification of the matter from the RTC (Branch 19), and should the outcome be adverse to her,
she could then have sought fitting redress from a superior court vested with authority to review
and reverse the action of the respondent instead of resorting to her action before the RTC (Branch
23).
WHEREFORE, the Court AFFIRMS the decision promulgated on November 12, 2009 in C.A.-
G.R. S.P. No. 111113; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Perlas-Bernabe and Caguioa, JJ., concur.
Judgment affirmed.
Note.—It is the dispositive portion that categorically states the rights and obligations of the parties
to the dispute as against each other. Thus, it is the dispositive portion which the entities charged
with the execution of a final judgment that must be enforced to ensure the validity of the execution.
(Session Delights Ice Cream and Fast Foods vs. Court of Appeals, 612 SCRA 10 [2010])
——o0o——
pg. 142
G.R. No. 170060. August 17, 2016.*
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. CLARGES REALTY

CORPORATION, respondent.
Remedial Law; Civil Procedure; The admission of a third party complaint lies within the sound
discretion of the trial court.—The admission of a third party complaint lies within the sound
discretion of the trial court. If leave to file a third party complaint is denied, then the proper remedy
is to file a separate case, not to insist on the admission of the third party complaint all the way up
to this Court.
Civil Law; Articles 1266 and 1267 of the Civil Code do not apply to obligations to give as when a
party is obliged to deliver a thing.—Petitioner cannot invoke Articles 1266 and 1267 of the Civil
Code. These provisions — which release debtors from their obligations if they become legally or
physical impossible or so difficult to be manifestly beyond the contemplation of the parties — only
apply to obligations to do. They do not apply to obligations to give as when a party is obliged to
deliver a thing which, in this case, is a certificate of title to a real property free from liens and
encumbrances.
Same; A lien is a legal claim or charge on property, either real or personal, as a collateral or
security for the payment of some debt or obligation.—A lien is a “legal claim or charge on
property, either real or personal, as a collateral or security for the payment of some debt or
obligation.” A lien, until discharged, follows the property. Hence, when petitioner acquired the
property, the bank also acquired the liabilities attached to it, among them being the tax liability to
the Bureau of Internal Revenue.
Attorney’s Fees; The award of attorney’s fees is proper since respondent was compelled to file an
action for specific performance and incurred expenses in doing so.—The award of attorney’s fees
and cost of suit is proper. Respondent was compelled to bring the action for specific performance
and incurred expenses in doing so. This ground is covered by Article 2208(2) of the Civil Code,
which allows for the
_______________
* SECOND DIVISION.
527
VOL. 800, AUGUST 17, 2016 527

Development Bank of the Philippines vs. Clarges Realty Corporation
pg. 143
recovery of attorney’s fees and expenses of litigation “[w]hen the defendant’s act or omission has
compelled. . . to incur expenses to protect his interest.”
PETITION for review on certiorari of a decision of the Court of Appeals.
Office of the Legal Counsel for petitioner.
Castillo, Laman, Tan, Pantaleon & San Jose for respondent.
LEONEN, J.:
The admission of a third party complaint lies within the sound discretion of the trial court. If leave
to file a third party complaint is denied, then the proper remedy is to file a separate case, not to
insist on the admission of the third party complaint all the way up to this Court.
This resolves a Petition for Review on Certiorari1 assailing the Court of Appeals’ Decision2 dated
June 22, 2005 in C.A.-G.R. CV No. 56570. The Court of Appeals affirmed the Regional Trial
Court Decision3 ordering the Development Bank of the Philippines to deliver to Clarges Realty
Corporation a clean title of the property subject of the Deed of Absolute Sale dated November 23,
1987.4
_______________
1 Rollo, pp. 33-70.
2 Id., at pp. 9-24. The Decision was penned by Associate Justice Japar B. Dimaampao and
concurred in by Associate Justices Renato C. Dacudao (Chair) and Edgardo F. Sundiam of the
Thirteenth Division, Court of Appeals, Manila.
3 Id., at pp. 92-99. The Decision was penned by Judge Delia H. Panganiban of Branch 64 of the
Regional Trial Court, Makati City.
4 Id., at p. 23.
528
pg. 144
The property is a 12,355-square-meter parcel of land located along Pasong Tamo Extension,
Makati City.5 It was covered by Transfer Certificate of Title (TCT) No. S-16279 and was
registered under the name of Marinduque Mining and Industrial Corporation.6
To secure a loan, Marinduque Mining and Industrial Corporation first mortgaged the property to
Caltex Philippines, Inc. A second mortgage was constituted over the property, this time in favor
of the Development Bank of the Philippines and the Philippine National Bank.7
When Marinduque Mining and Industrial Corporation failed to pay its loan obligations, the
Development Bank of the Philippines and the Philippine National Bank jointly instituted
extrajudicial foreclosure proceedings over the property sometime in July and August 1984.8 The
mortgagee banks emerged as the highest bidders during the public sale but were unable to redeem
the property because of Caltex Philippines, Inc.’s first mortgage.
On January 20, 1986, first mortgagee Caltex Philippines, Inc. foreclosed its mortgage on the
property.9 As second mortgagee, the Development Bank of the Philippines redeemed the property
from Caltex Philippines, Inc.10 and the property formed part of the Development Bank of the
Philippines’ physical assets.
_______________
5 Id., at p. 10.
6 Id.
7 Id. See Asset Privatization Trust v. Court of Appeals, 360 Phil. 768; 300 SCRA 579 (1998) [Per
J. Kapunan, Third Division]; and Uniland Resources v. Development Bank of the Philippines, 277
Phil. 839; 200 SCRA 751 (1991) [Per J. Gancayco, First Division].
8 See Development Bank of the Philippines v. Court of Appeals, 415 Phil. 538, 541; 363 SCRA
307, 311 (2001) [Per J. Kapunan, First Division].
9 Rollo, p. 10.
10 Id.
529
pg. 145
VOL. 800, AUGUST 17, 2016 529
The Development Bank of the Philippines then offered the property for public sale, where Clarges
Realty Corporation emerged as the highest bidder.11 Clarges Realty Corporation offered
P24,070,000.00 as payment for the property.12
On November 23, 1987, the Development Bank of the Philippines (as vendor) and Clarges Realty
Corporation (as vendee) executed a Deed of Absolute Sale13 for the property. The parties agreed
that all expenses to be incurred in connection with the transfer of title to Clarges Realty
Corporation would be borne by the Development Bank of the Philippines.14 Moreover, the
Development Bank of the Philippines bound itself under Clause 6 of the Deed of Absolute Sale to
deliver a title to the property “free from any and all liens and encumbrances on or before December
15, 1987.”15
The Development Bank of the Philippines succeeded in having the property registered under its
name. Marinduque Mining and Industrial Corporation’s TCT No. S-16279 was cancelled and, in
its place, TCT No. 151178 was issued.16
However, TCT No. 151178 contained annotations from the former TCT No. S-16279, specifically,
the mortgage lien of the Philippine National Bank and a tax lien for unpaid taxes incurred by
Marinduque Mining and Industrial Corporation. The annotations state:
Entry No. 761 – MORTGAGE in favor of PHILIPPINE NATIONAL BANK in the initial amount
of PHILIPPINE PESOS: FOUR BILLION (P4,000,000,000.00) and to secure any and all
obligations with PNB, whether contracted before, during or after the date of this instrument,
acknowledged before Notary Public Manila, Norma C. _______________
_______________
11 Id.
12 Id., at p. 204.
13 Id., at pp. 216-217.
14 Id., at p. 11.
15 Id.
16 Id., at p. 213.
pg. 146
530

[illegible in Rollo] Doc No. 284, Page No. 58, Book No. III, Series of 1981.
Date of instrument – July 13, 1981
Date of inscription – June 10, 1982
[sgd.]
VICENTE N. COLOYAN, Register of Deeds
x-x-x-x-x-x-x-x-x
Entry No. 24513/S-16279 – NOTICE OF TAX LIEN —
The registered owner of this title is under obligation to pay the government of the Republic of the
Philippines in the amount of SIXTY-EIGHT MILLION SEVEN HUNDRED FIFTY-EIGHT
THOUSAND EIGHT HUNDRED FIFTY-TWO & 51/100 (P68,758,852.51) PESOS in
accordance with the letter of Romulo M. Villa, deputy commissioner, BIR, QC.
Date of instrument – Aug. 28, 1986
Date of inscription – Oct. 10, 1986
[sgd.]
MILA G. FLORES, Register of Deeds17
December 15, 1987 passed, and the Development Bank of the Philippines delivered to Clarges
Realty Corporation the owner’s duplicate copy of TCT No. 151178 with the mortgage and tax
liens still annotated on it.18 Clarges Realty Corporation demanded a clean title from the
Development Bank of the Philippines, but the bank failed to deliver a clean title.19
Thus, Clarges Realty Corporation filed before the Regional Trial Court of Makati City a
Complaint20 for Specific Performance and Damages praying that the Development Bank of the
Philippines be ordered to deliver a title to the property free of
pg. 147
_______________
17 Id., at p. 215.
18 Id., at p. 12.
19 Id.
20 Id., at pp. 207-212.
531
VOL. 800, AUGUST 17, 2016 531

liens and encumbrances as provided in Clause 6 of the Deed of Absolute Sale.
The Development Bank of the Philippines answered21 the Complaint, contending that Clarges
Realty Corporation had no cause of action against it. Clarges Realty Corporation allegedly knew
that the payment of the tax liability and the corresponding cancellation of the tax lien had devolved
to the Asset Privatization Trust after the latter acquired the assets of the Development Bank of the
Philippines22 under Proclamation No. 50.23
Trial on the merits ensued. During the trial, Clarges Realty Corporation had the mortgage lien
cancelled, thus incurring P163,929.00 in expenses.24 For their part, the Development Bank of the
Philippines and the Asset Privatization Trust had the tax lien partially cancelled, with the tax
liability reduced from P68,758,852.51 to P24,311,997.41.25 TCT No. 151178 (under the name of
the Development Bank of the Philippines) was cancelled, and a new one was issued — TCT No.
162836 — under the name of Clarges Realty Corporation.26 Left annotated on TCT No. 162836
was the partially cancelled tax lien:
Entry No. 91584/S-16279 – PARTIAL CANCELLATION – By virtue of a Request of the Bureau

of Internal Revenue, the Notice of Tax Lien inscribed under Entry No. 24513 is hereby
PARTIALLY CANCELLED as to the amount of TWENTY-FOUR MILLION THREE
HUNDRED ELEVEN THOUSAND NINE HUNDRED NINETY-SEVEN PESOS AND
FORTY-ONE CENTAVOS
_______________
21 Id., at pp. 218-225.
22 Id., at p. 221.
pg. 148
23 Proclaiming and Launching a Program for the Expeditious Disposition and Privatization of
Certain Government Corporations and/or the Assets Thereof, and Creating the Committee on
Privatization and the Asset Privatization Trust (1986).
24 Rollo, p. 13.
25 Id.
26 Id.
532

(P24,311,997.41) signed JOSE U. ONG, Commissioner of Internal Revenue.
Date of Instrument – Oct. 16, 1989
Date of inscription – Jan. 19, 1990
[sgd.]
ANTONIO L. LEACHON III
DEPUTY REGISTER OF DEEDS II27
Clarges Realty Corporation had already rested its case when the Development Bank of the
Philippines moved for leave of court to file a third party complaint.28 The Development Bank of
the Philippines sought to implead the Asset Privatization Trust as a third party defendant and
maintained that the Asset Privatization Trust had assumed the “direct and personal”29 obligation
to pay for Marinduque Mining and Industrial Corporation’s tax liability and to have the partially
reduced tax lien cancelled.
Clarges Realty Corporation opposed the Motion for Leave.30 It argued that admitting the third
party complaint would cause unreasonable delay and entail unnecessary costs.31
Conceding that the Development Bank of the Philippines’ claim against the Asset Privatization
Trust was connected to the claim of Clarges Realty Corporation, the trial court nevertheless denied
the Motion for Leave in the Order32 dated January 11, 1994. According to the trial court, the
pg. 149
Development Bank of the Philippines “should have impleaded the Asset Privatization Trust during
the preparation of its answer if indeed a third party is liable to it for subrogation or
_______________
27 RTC Records, p. 318, Photocopy of TCT No. 162836, registered in the name of Clarges Realty
Corporation.
28 Rollo, pp. 471-473.
29 Id., at p. 477.
30 RTC Records, pp. 369-372.
31 Id.
32 Rollo, pp. 496-498.
533
VOL. 800, AUGUST 17, 2016 533

other relief.”33 The trial court added that “[t]he filing of a third party complaint [when the plaintiff
had already rested its case] would [have unjustly delayed the case] considering that summons must
be served on the third party defendant and the latter should still present its evidence to negate [the
defendant’s] claim against it.”34
The Development Bank of the Philippines moved to reconsider the Order denying the Motion for
Leave. However, the Motion for Reconsideration was denied in the Order35 dated March 21, 1994.
Development Bank of the Philippines then proceeded to present its evidence.36
The trial court ruled in favor of Clarges Realty Corporation, and in the Decision37 dated May 30,
1997, it granted the Complaint for Specific Performance and Damages. The trial court found that
the Development Bank of the Philippines breached Clause 6 of the Deed of Absolute Sale when it
failed to deliver to Clarges Realty Corporation a title to the property free from liens and
encumbrances on or before December 15, 1987.38
Regardless of whether the Asset Privatization Trust undertook to have the tax lien cancelled, the
trial court held that Clarges Realty Corporation could only demand the delivery of a clean title
from the Development Bank of the Philippines under the principle of relativity of contracts.39
pg. 150
The trial court declared the Development Bank of the Philippines liable for damages for breaching
Clause 6 of the Deed
_______________
33 Id., at p. 497.
34 Id., at pp. 497-498.
35 Id., at p. 505.
36 Id., at p. 14.
37 Id., at pp. 92-99. The Decision was penned by Presiding Judge Delia H. Panganiban.
38 Id., at pp. 95-96.
39 Id., at p. 96.
534

of Absolute Sale.40 It likewise ordered the bank to reimburse Clarges Realty Corporation the
amount of P163,929.00, representing the expenses incurred to have the mortgage lien cancelled.41
The dispositive portion of the May 30, 1997 Decision reads:
WHEREFORE, in view of the foregoing, defendant Development Bank of the Philippines is

ordered:
1. To remove or cause the removal of Entry No. 94584[sic]/S-16279 from TCT No. 162836
within thirty (30) days from finality of this Decision;
2. To pay plaintiff Clarges Realty Corporation the amount of P163,929 representing the fees
incurred by the latter for the cancellation of Entry No. 761, and the amount of P632.90 representing
miscellaneous and transportation expenses incurred by plaintiff’s representative in connection with
this case;
3. To pay P50,000.00 as attorney’s fees; and
pg. 151
4. To pay the costs of litigation.
SO ORDERED.42
The Development Bank of the Philippines filed an appeal before the Court of Appeals.
However, the Court of Appeals affirmed with modification the trial court’s Decision.43 Like the
trial court, the Court of Appeals held that the Development Bank of the Philippines breached its
obligation to deliver a clean title to the property to Clarges Realty Corporation.44 According to
the Court of Appeals, Clause 6 of the Deed of Absolute Sale is clear, leaving no doubt as to the
intention of the parties to the contract.45 The
_______________
40 Id., at p. 97.
41 Id., at p. 99.
42 Id.
43 Id., at p. 23.
44 Id., at pp. 17-19.
45 Id.
535
VOL. 800, AUGUST 17, 2016 535

Court of Appeals added that compliance with Clause 6 cannot be made to depend on the
willingness — or lack thereof — of the Asset Privatization Trust to assume the obligation of having
the tax lien cancelled, the Asset Privatization Trust being a nonparty to the contract of sale.46
Touching on the trial court’s denial of leave to admit the third party complaint, the Court of
Appeals held that the trial court did not gravely abuse its discretion. It found that granting leave
would have further delayed the case since Clarges Realty Corporation had already rested its case
when the Motion for Leave was filed.47
pg. 152
As to the amount of damages, the Court of Appeals deleted the award of P632.90, representing
miscellaneous and transportation expenses to Clarges Realty Corporation. The Court of Appeals
found that the reimbursement receipts presented in evidence were not the best evidence of the
miscellaneous and transportation expenses.48
The dispositive portion of the Court of Appeals’ June 22, 2005 Decision reads:
WHEREFORE, the Decision of the RTC of Makati City, Branch 64 in Civil Case No. 89-2895
is MODIFIED in that the award of damages in the amount of P632.90 representing miscellaneous
expenses and transportation expenses is hereby DELETED. In all other respects, the said
judgment is AFFIRMED.
SO ORDERED.49 (Emphasis in the original)
The Development Bank of the Philippines moved for partial reconsideration, but the Motion was
denied in the Resolution50 dated October 10, 2005.
_______________
46 Id.
47 Id., at p. 21.
48 Id., at p. 22.
49 Id., at p. 23.
50 Id., at pp. 26-27.
536

Petitioner Development Bank of the Philippines then filed before this Court its Petition for Review
on Certiorari.51 Respondent Clarges Realty Corporation filed a Comment,52 to which petitioner
filed a Reply.53
Upon the directive of this Court,54 petitioner55 and respondent56 filed their respective
Memoranda.
pg. 153
Petitioner insists that the Asset Privatization Trust should be impleaded as a third party
defendant.57 Under Proclamation No. 50, the Asset Privatization Trust acquired the assets of the
now defunct Marinduque Mining and Industrial Corporation, which had been mortgaged to
petitioner.58 By operation of law, the Asset Privatization Trust assumed the obligations and
liabilities attached to these assets, including the obligation to pay the unpaid taxes corresponding
to the tax lien.59 Thus, it became legally and physically impossible for petitioner to deliver a clean
title to respondent since the obligation had devolved to the Asset Privatization Trust.60
Consequently, the third party complaint against the Asset Privatization Trust should have been
admitted for an exhaustive disposition of this case.61
With respect to the actual damages, petitioner argues that they were erroneously awarded to
respondent. It was petitioner that secured a trial court order utilized by respondent to have the
mortgage lien cancelled.62
_______________
51 Id., at pp. 33-70.
52 Id., at pp. 107-124.
53 Id., at pp. 137-151.
54 Id., at pp. 153-154, Resolution dated November 15, 2006.
55 Id., at pp. 298-342.
56 Id., at pp. 383-417.
57 Id., at p. 318.
58 Id., at p. 332.
59 Id., at p. 333.
60 Id.
61 Id.
62 Id., at pp. 334-336.
537
pg. 154
VOL. 800, AUGUST 17, 2016 537
Lastly, petitioner claims that respondent is not entitled to attorney’s fees and costs of litigation for
lack of factual and legal basis.63
Respondent counters that the issues raised by petitioner involve factual questions that are not
proper in a petition for review on certiorari.64
Relying on the principle of relativity of contracts — that contracts bind only the parties to it —
respondent maintains that the Asset Privatization Trust is not a proper party to the suit because the
Deed of Absolute Sale was executed exclusively between petitioner and respondent.65 The
obligation to deliver a clean title remained with petitioner and cannot prejudice the Asset
Privatization Trust.66 The Motion for Leave was correctly denied, especially because it had been
more than four (4) years since the filing of the Answer on March 17, 1989 when the Motion for
Leave was filed on October 29, 1993.67
There is neither legal nor physical impossibility to pay the tax liability, according to respondent.
Article 126668 of the Civil Code, which releases the obligor from the prestation, only applies to
obligations to do, not obligations to give. In this case, the obligation involved is an obligation to
give, specifically, to deliver a clean title to the property in the Deed of Absolute Sale. Petitioner
cannot avoid its obligation.69
_______________
63 Id., at pp. 336-338.
64 Id., at pp. 394-396.
65 Id., at pp. 397-398.
66 Id.
67 Id., at p. 403.
68 Civil Code, Art. 1266 provides:
Art. 1266. The debtor in obligations to do shall also be released when the prestation becomes
legally or physically impossible without the fault of the obligor.
69 Rollo, pp. 406-407.
pg. 155
538

As for the P163,929.00 in actual damages awarded to respondent, respondent argues that there
would have been no need to file a petition for cancellation of lien had petitioner delivered a clean
title in the first place.70 When respondent utilized the trial court order secured by petitioner, the
corporation incurred expenses for the actual cancellation — registration fees, entry fee, legal
research fees, and other related fees — for which it must be reimbursed.71
Finally, respondent claims that it was correctly awarded attorney’s fees and costs of suit under
Article 2208(2)72 of the Civil Code because it was compelled to litigate.73
The issues for this Court’s resolution are:
First, whether the trial court erred in denying the Motion for Leave to File Third Party Complaint;
Second, whether the award to respondent of P163,929.00 in actual damages was proper; and
Lastly, whether respondent is entitled to attorney’s fees and costs of suit.
This Petition must be denied.
Rule 6, Section 11 of the Rules of Court governs the filing of third party complaints:
_______________
70 Id., at pp. 408-410.
71 Id.
72 Civil Code, Art. 2208(2) provides:
Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other judicial
costs, cannot be recovered, except:
....
pg. 156
(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interest[.]
73 Rollo, pp. 196-199.
539
VOL. 800, AUGUST 17, 2016 539

SEC. 11. Third, (fourth, etc.) party complaint.—A third (fourth, etc.) party complaint is a claim
that a defending party may, with leave of court, file against a person not a party to the action, called
the third (fourth, etc.) party defendant, for contribution, indemnity, subrogation or any other relief,
in respect of his opponent’s claim.
Based on this provision, the Asset Privatization Trust would have been a valid third party
defendant. As the trustee of the National Government to whom petitioner’s assets were transferred
under Proclamation No. 50,74 the Asset Privatiza-
_______________
74 Proc. No. 50 (1986), Sec. 24 provides:
SECTION 24. DEED OF ASSIGNMENT.—Each government institution from which assets are
to be transferred pursuant to this Proclamation shall and is hereby directed to execute, promptly
and in no event later than thirty days after the issuance by the President of the relevant instrument
referred to in Section 23 hereof, a deed of assignment in favor of the National Government, which
shall, in annexes thereto, describe, account by account, the nature and extent of such assets and to
deliver to the Committee such agreements, instruments, records and other papers in respect of such
assets as may be deemed by the Committee to be reasonably necessary or appropriate. Each such
deed of assignment shall constitute the Minister of Finance in representation of the National
Government as attorney-in-fact of the government institution empowered to take such action and
do such things as may be necessary on desirable to consolidate and perfect the title of the National
Government to such assets, exercising for the purpose, any and all rights and privileges
appertaining to the transferor-government institution, pursuant to the provisions of applicable law
or contract.
A copy of such deed of assignment, together with excerpts from its annexes describing particular
property to be transferred, duly certified to be true by the appropriate official before a notary public
or other official authorized by law to administer oaths, shall provide sufficient basis to registers of
pg. 157
deeds, transfer agents of corporations and other persons authorized to issue certificates of titles,
shares of stock and other evidence of title to issue new certificates, shares of stock or other
instruments evidencing title to the assets so described
540

tion Trust acquired the liabilities attached to those assets. The tax lien over the property here is
one such liability, and petitioner may ask, as it did the Asset Privatization Trust, for contribution
for the payment of the unpaid tax and the tax lien’s consequent cancellation.
However, petitioner need not await for contribution from the Asset Privatization Trust before it
can fulfill its obligation to deliver a clean title to the property to respondent. Petitioner, as
mortgagee of the property, can very well pay the tax liability and cause the cancellation of the tax
lien. There was no legal impossibility to speak of, as the proviso in Section 21975 of the National
Internal Revenue Code states that “any
_______________
to and in the name of the National Government or its duly authorized agent.
The transfer of any asset of government directly to the national government as mandated herein
shall be for the purpose of disposition, liquidation and/or privatization only, any import in the
covering deed of assignment to the contrary notwithstanding. Such transfer, therefore, shall not
operate to revert such assets automatically to the general fund or the national patrimony, and shall
not require specific enabling legislation to authorize their subsequent disposition, but shall remain
as duly appropriated public properties earmarked for assignment, transfer or conveyance under the
signature of the Minister of Finance or his duly authorized representative, who is hereby authorized
for this purpose, to any disposition entity approved by the Committee pursuant to the provisions
of this Proclamation.
75 Tax Code, Sec. 219 provides:
Sec. 219. Nature and Extent of Tax Lien.—If any person, corporation, partnership, joint-account
(cuentas en participacion), association or insurance company liable to pay an internal revenue tax,
neglects or refuses to pay the same after demand, the amount shall be a lien in favor of the
Government of the Philippines from the time when the assessment was made by the Commissioner
until paid, with interests, penalties, and costs that may accrue in addition thereto upon all property
and rights to property belonging to the taxpayer: Provided, That this lien shall not be valid against
any mortgagee, purchaser or judgment creditor until notice of such lien
pg. 158
541
VOL. 800, AUGUST 17, 2016 541

mortgagee, purchaser or judgment creditor” to whom no tax lien shall be valid until notice of the
lien is filed before the Register of Deeds. This suggests that the tax lien may be enforced against
any mortgagee.
Petitioner cannot invoke Articles 126676 and 126777 of the Civil Code. These provisions — which
release debtors from their obligations if they become legally or physical impossible or so difficult
to be manifestly beyond the contemplation of the parties — only apply to obligations to do.78
They do not apply to obligations to give as when a party is obliged to deliver a thing79 which, in
this case, is a certificate of title to a real property free from liens and encumbrances.
Interestingly, petitioner contends that it would have been liable for violating the Anti-Graft and
Corrupt Practices Act if it paid the tax liability of Marinduque Industrial and Mining Corporation
to cancel the tax lien on the property. According to petitioner:
[The Development Bank of the Philippines] is a government bank. To pay the taxes of a private
corporation out of its coffers, and when such account was already transferred to a Government
Liquidator, such as [the Asset
_______________
shall be filed by the Commissioner in the office of the Register of Deeds of the province or city
where the property of the taxpayer is situated or located.
Art. 1266. The debtor in obligations to do shall also be released when the prestation becomes
legally or physically impossible without the fault of the obligor.
Art. 1267. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in part.
78 See Philippine National Construction Corporation v. Court of Appeals, 338 Phil. 691, 700;
272 SCRA 183, 191 (1997) [Per J. Davide, Jr., Third Division].
79 Id.
pg. 159
542

Privatization Trust], would be a crime punishable under the Anti-Graft and Corrupt Practices Law,
at the very least not to mention the enormous amount of not less than P44 Million Pesos
involved.80 (Underscoring in the original)
This argument is wrong. A lien is a “legal claim or charge on property, either real or personal, as
a collateral or security for the payment of some debt or obligation.”81 A lien, until discharged,
follows the property. Hence, when petitioner acquired the property, the bank also acquired the
liabilities attached to it, among them being the tax liability to the Bureau of Internal Revenue. That
the unpaid taxes were incurred by the defunct Marinduque Industrial and Mining Corporation is
immaterial. In acquiring the property, petitioner assumed the obligation to pay for the unpaid taxes.
Thus, should petitioner pay the remaining P24,311,997.41 to the Bureau of Internal Revenue, it
would not be paying the taxes of a private corporation. It would be paying the liability attached to
its own property, and there would be no violation of the Anti-Graft and Corrupt Practices Act.
II
With petitioner capable of having the tax lien cancelled, it cannot insist on the admission of its
third party complaint against the Asset Privatization Trust. The admission of a third party
complaint requires leave of court; the discretion is with the trial court. If leave is denied, the proper
remedy is to file a complaint to be docketed as a separate case. As explained in Firestone Tire and
Rubber Company of the Philippines v. Tempongko:82
_______________
80 Rollo, p. 331.
81 People v. Regional Trial Court of Manila, 258-A Phil. 68, 76; 178 SCRA 299, 307 (1989) [Per
J. Sarmiento, Second Division].
pg. 160
82 137 Phil. 239; 27 SCRA 418 (1969) [Per J. Teehankee, En Banc].
543
VOL. 800, AUGUST 17, 2016 543

The third party complaint, is therefore, a procedural device whereby a “third party” who is neither
a party nor privy to the act or deed complained of by the plaintiff, may be brought into the case
with leave of court, by the defendant, who acts as third party plaintiff to enforce against such third
party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of
the plaintiff’s claim. The third party complaint is actually independent of and separate and distinct
from the plaintiff’s complaint. Were it not for this provision of the Rules of Court, it would have
to be filed independently and separately from the original complaint by the defendant against the
third party. But the Rules permit defendant to bring in a third party defendant or so to speak, to
litigate his separate cause of action in respect of plaintiff’s claim against a third party in the original
and principal case with the object of avoiding circuitry of action and unnecessary proliferation of
lawsuits and of disposing expeditiously in one litigation the entire subject matter arising from one
particular set of facts. Prior leave of Court is necessary, so that where the allowance of a third party
complaint would delay the resolution of the original case, such as when the third-party defendant
cannot be located or where matters extraneous to the issue of possession would unnecessarily
clutter a case of forcible entry, or the effect would be to introduce a new and separate controversy
into the action, the salutary object of the rule would not be defeated, and the court should in such
cases require the defendant to institute a separate action. When leave to file the third party
complaint is properly granted, the Court renders in effect two judgments in the same case, one on
the plaintiff’s complaint and the other on the third party complaint. When he finds favorably on
both complaints, as in this case, he renders judgment on the principal complaint in favor of plaintiff
against defendant and renders another judgment on the third party complaint in favor of defendant
as third party plaintiff, ordering the third party defendant to reimburse the defendant whatever
amount said defendant is ordered to pay plaintiff in the case. Failure of any of said parties in such
a case to ap-
544

pg. 161
peal the judgment as against him makes such judgment final and executory. By the same token, an
appeal by one party from such judgment does not inure to the benefit of the other party who has
not appealed nor can it be deemed to be an appeal of such other party from the judgment against
him.83 (Citations omitted)
There was no grave abuse of discretion in denying leave to admit the third party complaint against
the Asset Privatization Trust. As the Court of Appeals observed, the trial court would have wasted
time and effort had it admitted the third party complaint. Respondent, the original plaintiff, had
already rested its case when the Motion for Leave was filed. The original case would have dragged
on with the addition of a new party at a late stage of the trial. We agree with the following
discussion of the Court of Appeals:
While the Rules of Court does not provide a definite period in which a third party complaint may
be filed, Section 12, Rule 6 thereof requires leave of court before filing the same. Whether to grant
such leave is entrusted to the discretion of the court.
We do not find any abuse of discretion on the part of the court a quo in denying the leave. It bears
to emphasize that the rationale for permissive joinder of a third party defendant who may be liable
to the original defendant is judicial economy. This practice avoids multiplicity of actions and saves
time and reduplication of effort by trying all issues together in one action. However, there is little
economy in waiting to join the third party defendant after the original plaintiff rested its case, as
[the Development Bank of the Philippines] did in this case, especially when it tried to pass on its
liability to [the Asset Privatization Trust] at the very first instance. Not only will the probable delay
prejudice Clarges [Realty Corporation], there is also great possibility of prejudice to [the Asset
Privatization Trust]. This is because
_______________
83 Id., at pp. 243-244; pp. 422-424.
545
VOL. 800, AUGUST 17, 2016 545

the latter will be unable to defend against [Clarges Realty Corporation’s] claim upon which its
liability may depend.84
pg. 162
III
Actual damages were correctly awarded to respondent.85 The P163,929.00 that respondent
incurred in having the mortgage lien cancelled was duly evidenced by an Official Receipt that was
“a faithful reproduction of the original.”86 To reiterate, these expenses should not have been
incurred had petitioner delivered a clean title to respondent, as it obliged itself in Clause 6 of the
Deed of Absolute Sale.
The Court of Appeals correctly removed the Regional Trial Court’s award of P632.90 representing
miscellaneous expenses and transportation expenses.87 The official receipts supporting these
expenses were not presented during trial; hence, it cannot be considered as incidental expenses in
respondent’s acquisition of a clean title.
Finally, the award of attorney’s fees and cost of suit is proper. Respondent was compelled to bring
the action for specific performance and incurred expenses in doing so. This ground is covered by
Article 2208(2)88 of the Civil Code, which
allows for the recovery of attorney’s fees and expenses of litigation “[w]hen the defendant’s act or
omission has compelled . . . to incur expenses to protect his interest.”
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision dated June 22,
2005 of the Court of Appeals in C.A.-G.R. CV No. 56570 is AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Del Castillo and Mendoza, JJ., concur.
Brion, J., On Leave.
Petition denied, judgment affirmed.
Note.—The reason behind this compulsory joinder of indispensable parties is the complete
determination of all possible issues, not only between the parties themselves but also as regards
other persons who may be affected by the judgment. (Crisologo vs. JEWM Agro-Industrial
Corporation, 717 SCRA 644 [2014])
——o0o——
pg. 163
Case Short Name: Balibago Faith Baptist Church, Inc. vs. Faith in Christ Jesus Baptist
Church, Inc.
G.R. No. 191527. August 22, 2016.*
BALIBAGO FAITH BAPTIST CHURCH, INC. and PHILIPPINE BAPTIST S.B.C., INC.,
petitioners, vs. FAITH IN CHRIST JESUS BAPTIST CHURCH, INC. and REYNALDO
GALVAN, respondents.
Unlawful Detainer; Forcible Entry; Unlawful detainer and forcible entry are entirely distinct
causes of action, to wit: (a) action to recover possession founded on illegal occupation from the
beginning — forcible entry; and (b) action founded on unlawful detention by a person who
originally acquired possession lawfully — unlawful detainer.—It is then clear that unlawful
detainer and forcible entry are entirely distinct causes of action, to wit: (a) action to recover
possession founded on illegal occupation from the beginning — forcible entry; and (b) action
founded on unlawful detention by a person who originally acquired possession lawfully —
unlawful detainer.
Complaints; The rule is that the allegations in the complaint determine both the nature of the
action and the jurisdiction of the court.—The rule is that the allegations in the complaint determine
both the nature of the action and the jurisdiction of the court. The cause of action in a complaint is
not what the designation of the complaint states, but what the allegations in the body of the
complaint define and describe. The designation or caption is not controlling, more than the
allegations in the complaint themselves are, for it is not even an indispensable part of the
complaint.
Civil Procedure; Jurisdiction; Jurisdiction cannot be made to depend upon the defenses set up in
the answer, in a motion to dismiss or in a motion for reconsideration.—The complaint must
specifically allege the facts constituting unlawful detainer or forcible entry if the complaint filed
was for unlawful detainer, or forcible entry, respectively. It cannot be made to depend on the
exclusive characterization of the case by one of the parties, jurisdiction cannot be made to depend
upon the defenses set up in the answer, in a motion to dismiss or in a motion for reconsideration.
Same; Same; The complaint must show enough on its face the court’s jurisdiction without resort
to parol testimony.—To vest the court of jurisdiction to effect the ejectment of an occupant, it is
necessary that the complaint should embody such a statement of facts which brings the party
clearly within the class of cases for which the statutes provide a remedy, as these proceedings are
summary in nature. The complaint must show enough on its face the court’s jurisdiction without
resort to parol testimony.
Forcible Entry; The one (1)-year period within which to bring an action for forcible entry is
generally counted from the date of actual entry on the land, except that when entry was made
through stealth, the one-year period is counted from the time the plaintiff learned thereof.—The
one-year period within which to bring an action for forcible entry is generally counted from the
date of actual entry on the land, except that when entry was made through stealth, the one-year
period is counted from the time the plaintiff learned thereof. If the dispossession did not occur by
pg. 164
any of the means stated in Section 1, Rule 70, as in this case, the proper recourse is to file a plenary
action to recover possession with the Regional Trial Court.
Civil Procedure; Jurisdiction; Jurisdiction is conferred by law, and lack of it affects the very
authority of the court to take cognizance of and to render judgment on the action.—We likewise
reiterate that a court’s jurisdiction may be raised at any stage of the proceedings, even on appeal.
The reason is that jurisdiction is conferred by law, and lack of it affects the very authority of the
court to take cognizance of and to render judgment on the action. Indeed, a void judgment for want
of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any
obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect.
Hence, it can never become final and any writ of execution based on it is void.
Panlilio, Paras, Timbol & Panlilio for petitioners.
Raul C. Villanueva for respondents.
PERALTA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal
of the Decision1 dated March 5, 2010 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 97292.
The facts follow.
The instant petition originated from a Complaint2 for unlawful detainer and damages filed by
Balibago Faith Baptist Church, Inc. (BFBC) and Philippine Baptist S.B.C., Inc. (PBSBC) against
Faith in Christ Jesus Baptist Church, Inc. (FCJBC) and Reynaldo Galvan (Galvan) before the
Municipal Trial Court (MTC), Branch 2, Angeles City, docketed as Civil Case No. 02-388. The
complaint sought the ejectment of FCJBC from the subject parcel of land with improvements,
known as Lot 3, Blk. 35 of (LRC) PCS-2364, covered by Transfer
Certificate of Title (TCT) No. 82587,3 and located at 35-3 Sarita St., Diamond Subdivision,
Balibago, Angeles City, and owned by PBSBC.
On March 7, 1990, a contract of loan was entered into between PBSBC and BFBC where the latter
borrowed money from the former to enable it to purchase the subject property. Thereafter,
respondent BFBC took possession of the subject property and held therein their religious activities.
pg. 165
While BFBC was still in possession of the subject property, Galvan and his companions began
attending BFBC’s religious activities at the subject property. BFBC alleged that Galvan apparently
was interested on the property because after some time Galvan formed and incorporated FCJBC
and took control of the subject property.
Galvan’s actuations came to the attention of the Luzon Convention of Southern Baptist Churches,
Inc. (LCSBC). Thus, in a Letter4 dated September 5, 2001, LCSBC upheld BFBC’s right over the
subject property and recognized BFBC’s pastor, Rev. Rolando T. Santos, as its legitimate pastor.
However, FCJBC continued to occupy the subject property, thus, in a Demand Letter5 dated
September 4, 2002, BFBC demanded that FCJBC vacate the property within five (5) days from
notice and to pay the amount of P10,000.00 per month beginning October 2001 as reasonable
compensation for its use.
Due to noncompliance with its demand, on September 24, 2003, BFBC and PBSBC filed a
Complaint6 for unlawful detainer and damages against FCJBC and Galvan.
In its Answer, FCJBC and Galvan contend that it has been in existence since 1984. Allegedly, it
was formerly known as “Faith Baptist Church” (FBC) and held services at the Tacipit
family residence at 31-1 Doña Maria St., Diamond Subdivision, Angeles City. FBC eventually
moved to a building along MacArthur Highway in the same subdivision. Sometime in 1990, some
of the members of the FBC availed of the loan from the Church Loan Fund of Foreign Mission
Board, SBC, Philippine Baptist Mission for the purpose of purchasing the subject property. This
was embodied in a Contract of Simple Loan or Mutuum dated March 7, 1990.
Rolando Santos was the pastor of FBC from 1993 to 2000. Due to a misunderstanding within the
church group, Santos left FBC, together with some of its members. In February 2001, Santos’
group formed BFBC, an organization which was duly registered with the Securities and Exchange
Commission.
Meanwhile, FBC continued to occupy the subject property and, on January 9, 2001, organized
themselves into FCJBC.
On May 30, 2001, FCJBC paid installments due on the subject property in the sum of P10,000.00,
leaving a balance of P240,615.53. FCJBC alleged that since June 2001, they were willing and able
to pay the installments due on the subject property, however, PBSBC refused to accept any
payment from it. By September 9, 2002, the installments due had reached P47,232.00.
FCJBC further averred that, prior to BFBC’s filing of the present complaint, a Petition for
Consignation of Payment was already filed on October 9, 2002 with the RTC, Branch 62, Angeles
City entitled “Carlos Gelacio, et al. v. Foreign Mission Board, S.B.C. Philippine Baptist Mission,
now Philippine Baptist, S.B.C, Inc.” docketed as Civil Case No. 10713. FCJBC prayed that PBSBC
be required to accept the amount of P240,615.53 as full payment of the Contract of Simple Loan
or Mutuum.
pg. 166
On October 29, 2002, FCJBC filed a Motion seeking the suspension of proceedings in Civil Case
No. 02-388 pending resolution of the petition for consignation.
On February 9, 2004, the MTC rendered its Decision7 in favor of respondent BFBC in Civil Case
No. 02-388. The MTC ruled that the case was one of forcible entry and not unlawful detainer. The
dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff Balibago

Faith Baptist Church, Inc. and against the defendants Faith in Christ Jesus Baptist Church, Inc.,
Reynaldo Galvan and all persons claiming rights under them, ordering the latter the following:
1. To vacate and surrender possession of the subject property to plaintiff within three (3)
months from receipt of this Decision;
2. To pay the sum of P20,000.00 as reasonable attorney’s fees; and
3. To pay the costs of the suit.
Defendants’ counterclaim is hereby DISMISSED for lack of merit.
SO ORDERED.8
Both parties filed their respective appeal memoranda with the RTC. On April 19, 2006, the RTC
issued the assailed Decision9 which affirmed the Decision of the MTC. FCJBC moved for
reconsideration, but was denied on November 24, 2006. Thus, FCJBC filed a petition for review
on certiorari before the appellate court.10
In the disputed Decision11 dated March 5, 2010, the appellate court granted the petition, the
dispositive portion of which reads:
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed orders of the
Regional Trial Court, Branch 57, Angeles City, dated April 19, 2006 and November 24, 2006, are
REVERSED and SET ASIDE. The complaint for unlawful detainer is DISMISSED.
SO ORDERED.12
Undaunted, BFBC and PBSBC filed the instant petition for review on certiorari under Rule 45 of
the Rules of Court raising the following issues:
WHETHER THE COURT OF APPEALS ERRED IN DISMISSING THE COMPLAINT FOR

UNLAWFUL DETAINER AND RULING THAT THE MTC HAS NO JURISDICTION OVER
THE CASE.
II
pg. 167
WHETHER THE COURT OF APPEALS ERRED IN RAISING ISSUES ON THE
SUFFICIENCY OF THE COMPLAINT AND THE MTC JURISDICTION WHICH WERE NOT
BROUGHT OUT BY THE PARTIES.
III
WHETHER THE COURT OF APPEALS ERRED WHEN IT RULED TO DISMISS THE

COMPLAINT INSTEAD OF DECIDING THE CASE ON THE MERITS IN LIGHT OF
SECTION 8, RULE 140 OF THE RULES OF COURT.
In a nutshell, the main issue before us is whether the instant case is one of unlawful detainer or
forcible entry.
In Sumulong v. Court of Appeals,13 the Court differentiated the distinct causes of action in forcible
entry vis-á-vis unlawful detainer, to wit:
Forcible entry and unlawful detainer are two distinct causes of action defined in Section 1, Rule
70 of the Rules of Court. In forcible entry, one is deprived of physical possession of any land or
building by means of force, intimidation, threat, strategy, or stealth. In unlawful detainer, one
unlawfully withholds possession thereof after the expiration or termination of his right to hold
possession under any contract, express or implied. In forcible entry, the possession is illegal from
the beginning and the only issue is who has the prior possession de facto. In unlawful detainer,
possession was originally lawful but became unlawful by the expiration or termination of the right
to possess and the issue of rightful possession is the one decisive, for in such action, the defendant
is the party in actual possession and the plaintiffs cause of action is the termination of the
defendant’s right to continue in possession.14
From the foregoing, it is then clear that unlawful detainer and forcible entry are entirely distinct
causes of action, to wit: (a) action to recover possession founded on illegal occupation from the
beginning — forcible entry; and (b) action founded on unlawful detention by a person who
originally acquired possession lawfully — unlawful detainer.
The rule is that the allegations in the complaint determine both the nature of the action and the
jurisdiction of the court.15 The cause of action in a complaint is not what the designation of the
complaint states, but what the allegations in the body of the complaint define and describe. The
designation or caption is not controlling, more than the allegations in the complaint themselves
are, for it is not even an indispensable part of the complaint.16 The complaint must specifically
allege the facts constituting unlawful detainer or forcible entry if the complaint filed was for
unlawful detainer, or forcible entry, respectively. It cannot be made to depend on the exclusive
characterization of the case by one of the parties, jurisdiction cannot be made to depend upon the
defenses set up in the answer, in a motion to dismiss or in a motion for reconsideration.17
It should then be stressed that what determines the cause of action is the nature of defendants’
entry into the land. If entry is illegal, then the cause of action which may be filed against the
pg. 168
intruder within one year therefrom is forcible entry. If, on the other hand, entry is legal but
thereafter possession became illegal, the case is one of illegal detainer which must be filed within
one year from the date of the last demand.18
Indeed, to vest the court of jurisdiction to effect the ejectment of an occupant, it is necessary that
the complaint should embody such a statement of facts which brings the party clearly within the
class of cases for which the statutes provide a remedy, as these proceedings are summary in nature.
The complaint must show enough on its face the court’s jurisdiction without resort to parol
testimony.19 This is where petitioners’ cause of action fails.
In Cabrera, et al. v. Getaruela, et al.,20 the Court held that a complaint sufficiently alleges a cause
of action for unlawful detainer if it recites the following:
(1) initially, possession of property by the defendant was by contract with or by tolerance of the
plaintiff;
(2) eventually, such possession became illegal upon notice by plaintiff to defendant of the
termination of the latter’s right of possession;
(3) thereafter, the defendant remained in possession of the property and deprived the plaintiff of
the enjoyment thereof; and
(4) within one year from the last demand on defendant to vacate the property, the plaintiff
instituted the complaint for ejectment.21
In this case, BFBC presented the following allegations in support of its unlawful detainer
complaint:
xxxx
2. Plaintiff Philippine Baptist S.B.C., Inc. is the registered owner of a parcel of land with
improvements under Lot 3 Blk. 35 of (LRC) Pcs-2364 described under Transfer Certificate of Title
(TCT) No. 82587 issued by the Registry of Deeds of Angeles City, located at 35-3 Sarita St.,
Diamond Subd., Balibago, Angeles City, which is the subject matter of this case and hereinafter
referred to as subject premises. A copy of the title is hereto attached as Annex “A” and to form an
integral part hereof;
3. On March 7, 1990, plaintiff PBSBC granted a contract of simple loan to plaintiff BFBC for
the latter’s purchase of the subject premises and plaintiff BFBC started to possess the same and
hold their religious activities thereat;
4. While plaintiff BFBC was in possession of the subject premises, defendant Reynaldo
Galvan and his companions joined the regular religious services of plaintiff BFBC at the subject
premises;
pg. 169
5. It turned out that defendants have an interest in the subject premises and defendant
Reynaldo Galvan formed and incorporated the defendant FCJBC and took control of the
subject premises;
6. The take-over of the defendants was brought to the attention of the Luzon Convention of
Southern Baptist Churches, Inc., (LCSBC) and the latter, in letter dated September 5, 2001, has
affirmed the right of the plaintiff BFBC, headed by Rev. Rolando T. Santos, to occupy the subject
premises. A copy of LCSBC’s letter dated September 5, 2001 is hereto attached as Annex “B”;
7. Despite [LCSBC’s] letter and plaintiffs peaceful overtures for the defendants to turn over to
plaintiffs the subject premises, defendants ignored the same;
8. Due to exhaustion, expense and exasperation, plaintiffs were constrained to refer this matter
to the undersigned counsel and, accordingly, on September 4, 2002, a demand letter was sent to
the defendants for them to pay the reasonable compensation of TEN THOUSAND PESOS
(P10,000.00) per month beginning October 2001 for the use of the subject premises and to vacate
the same within five (5) [days upon] their receipt thereof. A copy of the demand letter is hereto
attached as Annex “C” and to form an integral part hereof;
9. Despite plaintiffs’ lawyer’s demand letter, defendants failed and refused to pay the reasonable
compensation for the subject premises and to vacate the subject premises;
x x x.22
A perusal of the above quoted allegations in the complaint would show that it contradicts the
requirements for unlawful detainer. In an unlawful detainer action, the possession of the defendant
was originally legal and its possession was tolerated or permitted by the owner through an express
or implied contract.
In this case, paragraphs 5 and 6 make it clear that FCJBC’s occupancy was unlawful from the start
and was bereft of contractual or legal basis. There was, likewise, no allegation that BFBC and
PBSBC tolerated FCJBC’s possession of the subject property. Neither was there any averment in
the complaint which shows any overt act on the part of BFBC and PBSBC indicative of permission
to occupy the land. In an unlawful detainer case, the defendant’s possession becomes illegal only
upon the plaintiffs demand for the defendant to vacate the property and the defendant’s subsequent
refusal. Here, paragraphs 7 and 8 characterize the defendant’s occupancy as unlawful even before
the formal demand letters were written by the petitioner’s counsel. Given 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.
This case would have to fall under the concept of forcible entry as it has been long settled that in
forcible entry cases, no force is really necessary. The act of going on the property and excluding
the lawful possessor therefrom necessarily implies the exertion of force over the property, and this
is all that is necessary.23 However, while BFBC sufficiently alleged that they had prior physical
possession of the subject property, nothing has been said on how FCJBC’s entry was effected or
when dispossession started. It is in this light that we rule that the present complaint is similarly
pg. 170
defective even if we are to treat the same as forcible entry as it failed to allege how and when entry
was effected. The bare allegation of BFBC that “[i]t turned out that defendants have an interest
in the subject premises and defendant Reynaldo Galvan formed and incorporated the defendant
FCJBC and took control of the subject premises,” would not suffice since it only shows that
FCJBC entered the land and occupied the house thereon without BFBC and PBSBC’s consent or
permission which are constitutive of forcible entry. Unfortunately, BFBC and PB SBC’s failure to
allege when the dispossession took place and how it was effected leaves the complaint wanting in
jurisdictional ground.
Suffice it to say, the one-year period within which to bring an action for forcible entry is generally
counted from the date of actual entry on the land, except that when entry was made through stealth,
the one-year period is counted from the time the plaintiff learned thereof.24 If the dispossession
did not occur by any of the means stated in Section 1, Rule 70, as in this case, the proper recourse
is to file a plenary action to recover possession with the Regional Trial Court.25 Consequently,
the MTC has no jurisdiction over the case.
We likewise reiterate that a court’s jurisdiction may be raised at any stage of the proceedings, even
on appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the very
authority of the court to take cognizance of and to render judgment on the action. Indeed, a void
judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right nor the
creator of any obligation. All acts performed pursuant to it and all claims emanating from it have
no legal effect. Hence, it can never become final and any writ of execution based on it is void.26
WHEREFORE, all premises considered, the instant petition is DENIED for lack of merit.
Accordingly, the Decision dated March 5, 2010 of the Court of Appeals in C.A.-G.R. S.P. No.
97292 is AFFIRMED in toto.
SO ORDERED.
Velasco, Jr. (Chairperson), Perez, Reyes and Jardeleza, JJ., concur.
Petition denied, judgment affirmed in toto.
Note.—The test of sufficiency of a complaint is whether or not, assuming the truth of the facts that
plaintiff alleges in it, the court can render judgment granting him the judicial assistance he seeks.
(Del Rosario vs. Donato, Jr., 614 SCRA 332 [2010])
——o0o——
pg. 171
G.R. No. 213187. August 24, 2016.*
HAIDE BULALACAO-SORIANO, petitioner, vs. ERNESTO PAPINA, represented by

ROSEMARY PAPINA-ZABALA, respondent.
Unlawful Detainer; Unlawful Detainer is an action to recover possession of real property from
one who illegally withholds possession after the expiration or termination of his right to hold
possession under any contract, express or implied.—Unlawful detainer is an action to recover
possession of real property from one who illegally withholds possession after the expiration or
termination of his right to hold possession under any contract, express or implied. The possession
by the defendant in unlawful detainer is originally legal but became illegal due to the expiration or
termination of the right to possess.
Same; Where the question of possession cannot be resolved without deciding the issue of
ownership, the courts have the power to provisionally resolve the issue of ownership but only for
determining the issue of possession.—The only issue involved in unlawful detainer proceedings is
as to who between the parties is entitled to physical or material possession of the premises.
Nevertheless, where the question of possession in ejectment proceedings cannot be resolved
without deciding the issue of ownership, the courts have the power to provisionally resolve the
issue of ownership but only for determining the issue of possession.
Miriam O. Dipasupil-Gestiada for petitioner.
Fernando Dialogo for respondent.
_______________
* THIRD DIVISION.
424

Bulalacao-Soriano vs. Papina
VELASCO JR., J.:
pg. 172
Nature of the Case
For resolution is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking
the reversal of the Court of Appeals (CA) Decision1 and Resolution, dated October 30, 2013 and
May 29, 2014, respectively, in C.A.-G.R. S.P. No. 113098 upholding the eviction of petitioner
from the lot over which the latter claims part ownership.
The Facts
Involved herein is a 201-sq. m. parcel of residential land situated in Barangay VII, Daet,
Camarines Norte, originally owned by a certain Tomas de Jesus (De Jesus), covered by Tax
Declaration (TD) No. 2172.2 The subject property was sold by the heirs of De Jesus to respondent
Ernesto Papina (Ernesto) and his brother, Manuel Papina (Manuel), for P15,000, as evidenced by
a document denominated as “Extrajudicial Settlement of Estate with Sale.”3 The tax declarations
covering the property, however, remained in the name of De Jesus.
_______________
1 Penned by Associate Justice Elihu A. Ybañez and concurred in by Associate Justices Japar B.
Dimaampao and Victoria Isabel A. Paredes.
2 Rollo, p. 58. The property is particularly described as follows: “A parcel of residential land
without improvements, containing an area of 250 square meters, more or less, situated in Vinzons
Avenue (Mercedes Road), Barangay 7, Daet, Camarines Norte. Bounded on the N. by the property
of Angel Racoma, on the E. by the property of Fructoso Suzara, on the S. by Mercedes Road and
on the W. by Rosario Vda. de Lukban with visible limits indicated by the concrete stone monument
on the corners then declared under Tax. Dec. No. 2172 Tomas de Jesus, assessed at P3,380.00
with market value of P11,250.00.”
3 Id., at p. 25.
425
VOL. 801, AUGUST 24, 2016 425
pg. 173
Thereafter, respondent’s father allowed petitioner Haide Bulalacao-Soriano (Haide) to stay and
build a house on the lot, on the condition that she would surrender possession thereof to the co-
owners should the latter need the property. In the meantime, Ernesto and Manuel agreed not to
partition the property and remain as co-owners thereof.4
In 1993, Ernesto and Manuel mortgaged the property to Haide to secure a P25,000 loan, payable
within five (5) years, for which they executed a Sanglaan ng Lupa na may Karapatan sa Nag
Mamay-ari (Sanglaan).5 By virtue of the Sanglaan,6 petitioner’s possession of the subject
property remained undisturbed.
Thereafter, sometime in 1998, Ernesto gave Manuel the amount necessary to pay the mortgage
loan. The latter, however, appropriated the money, resulting in their failure to pay the loaned
amount in full within the five-year period. Petitioner, nevertheless, did not foreclose the mortgage
on the property, but remained in possession thereof.
To rectify the situation, Manuel, on August 22, 2000, without Ernesto’s knowledge, sold his share
in the subject property to Haide for P100,000, payable on installment, with the understanding that
she would continue to occupy the premises.7 This agreement is embodied in the Kasunduan sa
Bilihan ng Lupa8 (Kasunduan) executed by petitioner and Manuel. The provisions of the contract
pertinently read:9
1. Sa paglagda ng kasunduang ito, ang halagang DALAWAMPUNG LIBONG PISO (P20,000.00)

at ang natitirang halagang WALUMPUNG LIBONG
_______________
4 Id., at p. 118.
5 Id.
6 Id., at p. 27.
7 Id., at p. 118.
8 CA Rollo, p. 130.
9 Rollo, p. 28.
426
pg. 174
PISO (P80,000.00) ay babayaran sa pamamagitan ng hulugan.
2. Na kung mabayaran na ng IKALAWANG PANIG ang kabuoang halagang napagkasunduan dito

ang UNANG PANIG ay obligadong magsagawa ng kasulatang bilihing tuluyan na pabor sa
IKALAWANG PANIG.
3. Na ang magbabayad sa kaukulang buwis ng lupa ay ang UNANG PANIG bago mailipat sa
IKALAWANG PANIG.
4. Na ang IKALAWANG PANIG ang siyang may karapatan na mamosesyon at makinabang sa

lugar na nasasaad sa itaas. (emphasis added)
Pursuant to the Kasunduan, Manuel received from petitioner the total amount of P91,500,
including the P25,000 consideration of the loan, leaving a balance of P8,500,10 with the last
installment made on June 27, 2001.11
Anent the balance, Haide alleges that per their contract, it was Manuel’s obligation to pay for the
taxes due on the property and to transfer the property in her name. Manuel, however, refused to
comply with his contractual obligation and instructed her instead to handle the transfers and that
any and all amounts to be paid by her in effecting such shall be deemed as payment of the P8,500
balance.12
Acting on Manuel’s alleged instruction, petitioner claims that she shelled out P20,780 beginning
on April 7, 2005 to defray real property and estate taxes as well as other assessments due the Estate
of De Jesus that were due since 1983.13 Said unpaid taxes, according to her, were not settled by
the Papina brothers after they purchased the subject property
_______________
11 Rollo, p. 40.
12 Id., at p. 11.
pg. 175
13 Id., at p. 106.
427
VOL. 801, AUGUST 24, 2016 427

from De Jesus. This amount of P20,780, according to petitioner, is more than enough to cover the
balance.
Meanwhile, respondent counters that said instruction pertaining to the balance is a mere
concoction, and maintains that the balance remains unpaid. There is no evidence, however, that
Manuel demanded payment of any unpaid balance.
In March 2002, intending to finally dissolve the co-ownership, the Papina brothers caused the
survey of the property. Three years later, or on October 27, 2005, they entered into a Subdivision
Agreement14 (Agreement) to partition the property into two (2) lots: respondent Ernesto’s lot, Lot
1, with an aggregate area of 80 sq. m.; and Manuel’s property, Lot 2, a 121-sq. m. tract.15 Per the
Agreement, the portion that became Lot 1, respondent Ernesto’s lot, was where petitioner Haide’s
house was located. The Papina brothers, thus, informed petitioner of said agreement and its effect
on her possession.
On March 19, 2006, respondent made a formal demand for petitioner to vacate the premises and
surrender possession thereof to him, which demand was left unheeded. Two (2) months later, or
on May 29, 2006, and because of petitioner’s refusal to vacate the property, respondent sought
judicial recourse via a Complaint for Ejectment before the Municipal Trial Court (MTC) of Daet,
Camarines Norte, docketed as Civil Case No. 2777.
Ruling of the Municipal Trial Court
On March 10, 2009, the MTC, in a Judgment,16 dismissed the complaint for lack of jurisdiction,
holding that an element of unlawful detainer is not present since respondent’s demand to vacate
was grounded on petitioner’s occupation of the portion that was not sold to her, and not on the
termination of her right to hold possession by virtue of a contract or for non-
_______________
14 Id., at p. 57.
pg. 176
15 Id., at p. 12.
16 CA Rollo, pp. 300-302. Penned By Judge Ramon A. Arejola.
428

payment of rent.17 The MTC likewise ruled “[t]he title to the land in question has been put in
issue in a manner necessarily affecting the cause of action of the plaintiff. It is necessary, in order
to settle the issue, that a determination of who between plaintiff and defendant, has the better right
and title to the land in question, which matter is beyond the authority of this court to settle.”18 It
then suggested that the proper remedy for respondent is either an accion publiciana or accion
reivindicatoria.
The dispositive portion of the MTC’s Decision provides:
WHEREFORE, for lack of jurisdiction of this court, the complaint in this case is ordered to be as
it is hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.19
Ruling of the Regional Trial Court
Upon elevation of the case, the Regional Trial Court, Branch 38 in Daet, Camarines Norte (RTC)
rendered a Decision20 on September 30, 2009 reversing the MTC’s ruling. The RTC disagreed
with the MTC and held that the elements for an action for unlawful detainer are present in the
instant case. Thus:
x x x the Complaint sufficiently alleges unlawful withholding of possession of Lot 1 by

[petitioner]. Although he initially never knew about Manuel allowing [petitioner] to stay in the
premises, [respondent] did not do anything until the relocation survey and partition on the property.
This is tolerance, which lasted until [re-
_______________
pg. 177
17 Id., at p. 301.
18 Rollo, p. 60.
20 Id., at pp. 160-168. Penned by Judge Roberto A. Escaro.
429
VOL. 801, AUGUST 24, 2016 429

spondent], verbally and in writing, demanded [petitioner] to vacate Lot 1. With these demands to
vacate, [petitioner’s] possession changed from tolerated occupancy to unlawful dispossession. The
formal demand to vacate was made on March 19, 2006 and the Complaint was filed on May 29,
2006. Clear enough, these allegations comprise the jurisdictional requisites for unlawful detainer
as laid down in Sections 1 and 2, Rule 70 of the Revised Rules of Court: (1) The defendant
unlawfully withholds the possession of a certain land and building; (2) The withholding of
possession must be after termination of the right of possession; and (3) The action should be
brought within one (1) year from the date of demand.21 x x x
The trial court likewise held that petitioner’s right to possess the portion she occupies naturally
expired when respondent and his brother executed the Subdivision Agreement.22 As a
consequence, petitioner’s right to possess had been confined to the area delineated and apportioned
as Lot 2 for Manuel. To the RTC, the sale between petitioner and Manuel is of no moment, since,
fully paid or not, the effect of the [petitioner’s] contract can only be limited to the portion to be
adjudicated to her predecessor-in-interest upon termination of the co-ownership.23
The fallo of the RTC Decision reads:
WHEREFORE, the judgment of the Municipal Trial Court dated March 10, 2009 in Civil Case
No. 2777 is hereby REVERSED and SET ASIDE. Appellee Haide Bulalacao-Soriano is ordered
to vacate the subject property, Lot 1, and surrender possession thereof to appellant Ernesto Papina.
_______________
21 Rollo, pp. 78-79.
pg. 178
23 Id., at p. 123.
430

SO ORDERED.24
Reconsideration of the above Decision was denied by the RTC in its December 28, 2009 Order.25
Ruling on petitioner’s appeal, the CA, in the assailed Decision of October 30, 2013, found the
petition to be bereft of merit and affirmed ruling of the RTC, thus:
WHEREFORE, premises considered, the instant Petition is DENIED. The challenged Decision
dated 30 September 2009 of the Regional Trial Court in Daet, Camarines Norte is AFFIRMED.
SO ORDERED.26
Agreeing with the RTC, the CA ruled that: (1) Civil Case No. 2777 is clearly, an unlawful detainer
suit; (2) that petitioner, as co-owner of the property by virtue of Manuel’s sale of his undivided
share in the co-ownership in her favor, only acquired a proportionate share in the lot, not a definite
portion thereof; and (3) a co-owner of an undivided interest cannot alienate or sell a specific or
determinate part of the thing owned in common, because such right over the thing is represented
by a mere aliquot or ideal portion thereof without any physical division.27
Aggrieved, petitioner filed a motion for reconsideration of the assailed CA Decision, which motion
was denied by the appellate court in its assailed Resolution28 of May 29, 2014.
_______________
pg. 179
24 Id., at p. 168.
25 Rollo, pp. 201-207.
26 Id., at p. 128.
27 Id., at pp. 126-128.
28 Id., at pp. 138-139.
431
VOL. 801, AUGUST 24, 2016 431

The Issues
The decisive issue in the case at bar is whether or not respondent has a case for unlawful detainer.
Petitioner, in the main, argues that the unlawful detainer action will not lie against her by virtue of
the sale in her favor of Manuel’s share, making her the new co-owner thereof, vesting in her the
right to possess the co-owned property subject of the instant dispute. She maintains that
participation in the subdivision of the property is properly the right of the buyer of the aliquot share
and not the seller thereof and that she was deprived of the said right when the Papina brothers
entered into the Agreement without her knowledge, consent, authorization, or participation.
To counter respondent’s assertion that ownership over Manuel’s share has not yet been transferred
to her for her failure to pay the full purchase price, she contends that the P8,500 balance had already
been covered by the expenses she incurred in the transfer of the Tax Declaration of the pro indiviso
share in her name, as per Manuel’s instruction, totalling P20,780. And so, insisting that it is she
who should have entered into the subdivision agreement with respondent and not Manuel after
acquiring the latter’s rights over his aliquot share in the co-ownership, petitioner refuses to vacate
Lot 1 and seeks the adjudication thereof in her favor.
Respondent, for his part, insists that petitioner’s right to possess the property ceased after
respondent and Manuel entered into the Agreement. According to him, this Agreement which
terminated the co-ownership ended petitioner’s right to possess said portion, and gave him the
right to have petitioner ejected from Lot 1. He maintains that the Subdivision Agreement is valid
since at the time that they entered into such, petitioner has yet to complete the payment for
pg. 180
Manuel’s share. Noting that the Kasunduan is a Contract to Sell, Manuel remained to be the owner
of his share in the co-ownership during the period material. He likewise posits that
432

petitioner was duly informed of the planned partition, to which no objection was raised by the
latter.
The petition is impressed with merit.
Unlawful detainer is an action to recover possession of real property from one who illegally
withholds possession after the expiration or termination of his right to hold possession under any
contract, express or implied. The possession by the defendant in unlawful detainer is originally
legal but became illegal due to the expiration or termination of the right to possess.29
The only issue involved in unlawful detainer proceedings is as to who between the parties is
entitled to physical or material possession of the premises. Nevertheless, where the question of
possession in ejectment proceedings cannot be resolved without deciding the issue of ownership,
the courts have the power to provisionally resolve the issue of ownership but only for determining
the issue of possession.30
In the case at bar, petitioner raised the issue of ownership, arguing that it was already she, not
Manuel, who was respondent’s co-owner at the time the disputed Agreement was entered into. She
claims that she acquired ownership of Manuel’s share upon payment of the purchase price.
Consequently, the Agreement entered into by Manuel, the former co-owner, is invalid.
Her postulation finds basis under Article 494 of the New Civil Code, which provides that “each
co-owner may demand at any time the partition of the thing owned in common, insofar as his share
is concerned.” The provision reveals that only co-owners have the capacity to enter into a subdivi-
_______________
pg. 181
29 Republic v. Sunvar Realty Development Corporation, G.R. No. 194880, June 20, 2012, 674
SCRA 320, 341, citing Delos Reyes v. Odones, G.R. No. 178096, March 23, 2011, 646 SCRA 328.
30 B.P. Blg. 129, Sec. 33(2).
433
VOL. 801, AUGUST 24, 2016 433

sion/partition agreement, dissolving the co-ownership in the process. Thus, for a partition
agreement to be valid, it should be entered into by the co-owners of the property. Any partition
agreement entered into by one who is not a co-owner or one who was not authorized by a co-owner
is null and void.31
In consonance therewith, the Court, in Del Campo v. CA, held that the buyer of an undivided
share became a co-owner at the time the sale was made in his or her favor.32 Upon
conveyance, the fully-paid seller, who had lost all rights and interests in the property by alienating
his entire undivided share, could no longer participate in the partition of the property.33
Instead, it is the vendee who steps into the shoes of the vendor as co-owner and acquires the latter’s
right over the property, including the right to enter into a partition agreement, by virtue of the
consummated sale.
Thus, the pivotal issue to resolve herein then is whether or not petitioner has fully paid the contract
price under the Kasunduan, which would render the subdivision agreement void, and uphold her
right to stay in the subject property. As earlier discussed, though a case for unlawful detainer is
concerned mainly with the determination of the parties’ right to possess the subject property, the
Court is not precluded from provisionally ruling on the issue of ownership to resolve the issue of
possession.
Here, petitioner insists that while it is clear from the third paragraph of the Kasunduan that the
obligation to pay the taxes on the property is borne by Manuel, the latter eventually instructed her
to perform the obligation in his stead and credit the same to her unpaid balance of P8,500. In
compliance with the new covenant, petitioner spent P20,780, which
_______________
31 See Heirs of William Sevilla v. Sevilla, G.R. No. 150179, April 30, 2003, 402 SCRA 501, 511-
512.
32 G.R. No. 108228, February 1, 2001, 351 SCRA 1, 8.
pg. 182
33 See Lopez v. Ilustre, 5 Phil. 567 (1906).
434

is more than enough to cover the balance, rendering the sale fully paid.
We agree with petitioner.
There is preponderant evidence that petitioner paid the said amount. She submitted in evidence
receipts of the amounts that she paid in having the Tax Declaration of half of the property in her
name.34
On the other hand, respondent failed to present any evidence that Manuel complied with his
obligation to fully settle the taxes due on the property. Too, it is well to note that petitioner began
paying the amount of P20,780 on April 7, 2005 — six months prior to the execution by Manuel
and Ernesto of the questioned subdivision agreement on October 27, 2005. Also, the fact of
petitioner’s payment of said amount was not contested by either Manuel or Ernesto.
The payments, duly supported by receipts, deserve greater weight over Manuel’s bare denial that
he instructed her to settle the unpaid taxes over the lot. It is elementary that bare allegations,
unsubstantiated by evidence, are not equivalent to proof.35
The foregoing circumstances, taken together with Manuel’s omission to make any demand from
petitioner for her to settle the unpaid portion of the purchase price, convince Us that herein
petitioner’s payment of said taxes due on the property was with Manuel’s knowledge and consent.
This being the case, and as a matter of equity, We find it proper to provisionally uphold petitioner’s
claim that the amount paid for taxes due on the subject property be credited to her balance in the
purchase price. As such, at the time Manuel entered into the Agreement, he no longer had the right
to do so, having been divested of any right or interest in
_______________
34 Rollo, pp. 48-55.
35 Manaloto v. Veloso III, G.R. No. 171365, October 6, 2010, 632 SCRA 347, 367.
pg. 183
435
VOL. 801, AUGUST 24, 2016 435

the co-owned property by virtue of the consummation of the sale. The subdivision agreement
between Ernesto and Manuel is, therefore, defective, if not invalid, and cannot defeat petitioner’s
right to acquire Manuel’s share in the property, his right to enter into the partition agreement, and
the right to use the property owned in common in accordance with the purpose to which it is
intended, i.e., as a residential property.
To rule differently in this case would result in injustice to petitioner who graciously loaned money
to herein respondent and his brother, and who even did not exercise her right to foreclose the
mortgage and obtain absolute ownership over the entire property, only to be later deceived by
Manuel and deprived of her real rights over the subject property.
Be that as it may, it is well to remind the parties herein that the Court is merely provisionally
resolving the issue of ownership as it is so closely intertwined with the issue of possession. Hence,
We are not precluding the subsequent definitive resolution of the issues surrounding the property’s
ownership — including whether or not petitioner has indeed fully paid her obligation under the
Kasunduan, whether or not she can validly offset her expenses against her indebtedness to Manuel,
and whether or not the partition agreement is fraudulent — in a more appropriate proceeding, with
Manuel impleaded as a party, and where the conflicting claims are best ventilated and the issues
threshed out.
WHEREFORE, premises considered, the instant petition is hereby GRANTED. Accordingly,

the Decision dated October 30, 2013 and Resolution dated May 29, 2014 of the Court of Appeals
in C.A.-G.R. S.P. No. 113098 are hereby REVERSED and SET ASIDE. The Decision of the
Municipal Trial Court of Daet, Camarines Norte in Civil Case No. 2777 dated March 10, 2009 is
hereby REINSTATED. The Complaint for Unlawful Detainer is DISMISSED.
SO ORDERED.
436

Peralta, Perez, Reyes and Jardeleza, JJ., concur.
pg. 184
Petition granted, judgment and resolution reversed and set aside.
Note.—A petition for relief from judgment in forcible entry and unlawful detainer cases, as in the
present case, is a prohibited pleading. The reason for this is to achieve an expeditious and
inexpensive determination of the cases subject of summary procedure. (Afdal vs. Carlos, 636
SCRA 389 [2010])
——o0o——
G.R. No. 208181. August 31, 2016.*
MANILA ELECTRIC COMPANY, petitioner, vs. N.E. MAGNO CONSTRUCTION, INC.,

respondent.
Remedial Law; Certiorari; Under Section 4, Rule 65 of the Rules of Court, as amended by A.M.
No. 07-7-12-SC, an aggrieved party has sixty (60) days from receipt of the assailed decision, order
or resolution within which to file a petition for certiorari.—Under Section 4, Rule 65 of the Rules
of Court, as amended by A.M. No. 07-7-12-SC, an aggrieved party has sixty (60) days from receipt
of the assailed decision, order or resolution within which to file a petition for certiorari.
Same; Same; Petition for Certiorari should be instituted within a period of sixty (60) days from
notice of the judgment, order or resolution sought to be assailed.—It is explicitly stated in the
above rules that certiorari should be instituted within a period of 60 days from notice of the
judgment, order or resolution sought to be assailed. The 60-day period is inextendible to avoid any
unreasonable delay that would violate the constitutional rights of parties to a speedy disposition of
their case.
pg. 185
Same; Same; In case of denial of the motion for reconsideration, the petition shall be filed within
sixty (60) days from the receipt of the notice of such denial.—The unmistakable import of Section
4, Rule 65 of the Rules of Court, as amended by A.M. No. 07-7-12-SC, mandates that in case of
denial of the motion for reconsideration, the petition shall be filed within 60 days from the
receipt of the notice of such denial. That the second motion for reconsideration raised fresh
arguments that need to be addressed anew by the court is of no moment, otherwise, there will be
no end in the litigation.
Same; It is a well-settled principle that rules of procedure are mere tools designed to facilitate the
attainment of justice.—It is a well-settled principle that rules of procedure are mere tools designed
to facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be
eschewed.
Same; Certiorari; Appeals; No one has a vested right to file an appeal or a petition for
certiorari.—No one has a vested right to file an appeal or a petition for certiorari. These are
statutory privileges which may be exercised only in the manner prescribed by law. Rules of
procedure must be faithfully complied with and should not be discarded with by the mere
expediency of claiming substantial merit.
Horatio Enrico M. Bona for petitioner.
Hector P. Corpuz for respondent.
PEREZ, J.:
For resolution of the Court is this Petition for Review on Certiorari filed by petitioner Manila
Electric Company (Meralco), seeking to reverse and set aside the Decision1 dated 23 October 2012
and the Resolution2 dated 26 June 2013 of the Court of Appeals (CA) in C.A.-G.R. S.P. No.
113883. The assailed decision and resolution dismissed the Petition for Certiorari of the petitioner
for having been filed beyond the 60-day reglementary period.
The Facts
pg. 186
Petitioner Meralco is a domestic corporation duly authorized by the Energy Regulatory
Commission (ERC) to distribute electricity to its consumers for a fee. Petitioner entered into a
Service Contract with respondent N.E. Magno Construction, Inc. wherein it was agreed that
petitioner will supply electricity to respondent’s ice plant located in Rosario, Cavite under Service
Identification No. 800100701.
Sometime in October 2002, petitioner’s representatives went to respondent’s ice plant operation
site in Rosario, Cavite to conduct an inspection of its metering facilities and they found that the
electric meters installed to record the energy usage of the respondent on the site were tampered.
The suspected theft of electricity was later on confirmed by the petitioner when a comparison of
the previous electric consumption of the respondent was made. To avert further pilferages of
electricity, petitioner temporarily severed the electric supply it was providing for the respondent.
The disconnection was made in the presence of respondent’s representative. To recover its lost
income from the purported pilferages, petitioner sent a differential billing to respondent demanding
for the payment of its unpaid electric consumption computed on the basis of the previous billings.
Due to the failure of respondent to settle its account, its electric services were permanently
removed after it was served a notice of disconnection.
Aggrieved by the turn of events, respondent initiated an action for Mandatory Injunction with
Damages against petitioner before the Regional Trial Court (RTC) of Bacoor, Cavite.3 The
complaint mainly prayed that petitioner be ordered to restore its electric services on the ground
that the disconnection was effected in an unlawful manner causing grave damage to respondent’s
business operations.4 To elaborate, respondent averred that the disconnection was made without
prior notice and in the absence of the respondent or its representatives.5 Respondent maintained
that it was faithfully complying with its obligation under the service contract by religiously paying
its monthly bill and insisted that it committed no manipulation of metering facilities within the
premises of its ice manufacturing site.6
For its part, petitioner contended that it has a contractual right to discontinue providing electric
services to the respondent after it was found that petitioner’s metering installation has been
tampered with; the manipulation resulted in the incorrect registration of the actual energy usage of
the respondent to the damage and prejudice of the petitioner.7 Petitioner asserted that it is not true
that no notice was served prior to the disconnection neither was there truth to respondent’s claim
that the removal of electric services was made without the presence of its representatives.8 As a
matter of fact, petitioner claimed, that the discontinuance of electric supply was only made after
respondent failed to settle its differential billing despite several demands.9
In an Order10 dated 1 February 2005, the RTC granted respondent’s application for preliminary
injunction upon posting of the bond in the amount of P1,000,000.00. The dispositive portion reads:
“WHEREFORE, premises considered, let a mandatory preliminary injunction be issued in favor

of the [respondent] and against the [petitioner]. [Petitioner] Meralco is hereby ordered to reconnect
the electrical supply of the [respondent] upon posting of an injunction bond in the amount of ONE
MILLION PESOS (P1,000,000.00).”
pg. 187
During the date scheduled for Pre-Trial Conference on 8 April 2005, neither petitioner nor its
counsel appeared before the RTC. Their absence impelled the court to receive the evidence of the
respondent ex parte and issued the foregoing Order11 of an even date:
“This is the second call of this case and it is now 3:00 o’clock in the afternoon, despite notice to
[petitioner] and counsel, this being pretrial, let [respondent] be allowed to present evidence ex
parte before the clerk of court of this court.
As prayed for by [respondent] thru counsel, let the evidence introduced in the petition for
injunction by the [respondent] be considered as reproduced in this case.
As prayed for by [respondent] thru counsel, let [respondent] be given five (5) days from today
within which to file its comment to the Motion for Reconsideration filed by defendant thru counsel.
After which time, consider the same submitted for the resolution of this court.”
The 8 April 2005 RTC Order was received by the petitioner on 19 April 2005. From the said
adverse Order of the court a quo, a Motion for Reconsideration (First Motion for Reconsideration)
was filed by the petitioner on 5 May 2005, which in turn, was opposed by the respondent on the
ground that it failed to comply with the three-day notice rule on motions as mandated by Section
4, Rule 15 of the Revised Rules of Court.12
Finding merit on the argument of the respondent, the RTC, in an Order13 dated 28 July 2008,
denied the Motion for Reconsideration of the petitioner and likewise ordered that it be expunged
on the record, viz.:
“For failure to [attach] the Affidavit of Mailing and the registry receipts which, as held by the
honorable Supreme Court in the case of Vede Cruz v. Court of Appeals, G.R. No. 123340,
constitutes [‘]no proof of service[’].
And likewise, for grossly violating the [‘]three (3) day rule[’] which is a mandatory requirement
in Section 4 of [R]ule 15 of the 1997 Rules of Civil Procedure thus rendering or comparing it as
[‘]a worthless piece of paper.[’] (Meralco v. La Campana Food Products, 247 SCRA 77)
Let the instant motion for reconsideration on the Court order dated April 8, 2005 be EXPUNGED
and DENIED for lack of merit.
SO ORDERED.” (Boldface omitted)
Petitioner received a copy of the 28 July 2008 RTC Order on 5 August 2008. It has therefore 60
days from the receipt of the Order denying its Motion for Reconsideration to file a Petition for
Certiorari before the CA. Instead of filing a petition for certiorari, however, petitioner filed a
“Very Respectful Motion for Leave to File Second Motion for Reconsideration”14 (Second Motion
pg. 188
for Reconsideration) on 20 August 2008 which was again denied by the RTC in an Order15 dated
23 February 2010. A copy of the said Order was received by the petitioner on 8 March 2010.
Finding no other recourse before the trial court, petitioner elevated the denial of its Second Motion
for Reconsideration by filing a Petition for Certiorari and Prohibition (With Prayer for Temporary
Restraining Order and Writ of Preliminary Injunction)16 before the CA on 6 May 2010. In the
main, the petitioner assailed the RTC Orders dated 8 April 2005, 28 July 2008 and 23 February
2010 for having been issued with grave abuse of discretion.
On 23 October 2012, the CA issued a Decision17 dismissing the petition of the petitioner for
having been filed beyond the 60-day reglementary period from the receipt of the order of the RTC
denying its First Motion for Reconsideration. According to the CA, it was admitted by the
petitioner that it received the RTC Order dated 28 July 2008 denying its initial Motion for
Reconsideration on 5 August 2008; it has, therefore, 60 days from 5 August 2008 or until before
4 October 2008 to assail the unfavorable ruling under Rule 65 of the Rules of Court. In conclusion,
the appellate court held that when the petitioner impugned the unfavorable RTC Orders for grave
abuse of discretion only on 6 May 2010 or seven months after the denial of its First Motion for
Reconsideration, the petition was clearly filed out of time.
For lack of merit, the CA denied the Motion for Reconsideration of the petitioner in a
Resolution.18
The Issue
Undeterred, petitioner is now before this Court via this instant Petition for Review on Certiorari19
assailing the CA’s Decision and Resolution on the following grounds:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE PETITION

FOR CERTIORARI AND PROHIBITION; AND
II.
WHETHER OR NOT THE ORDERS RENDERED BY THE RTC DATED 8 APRIL 2005, 28
JULY 2008 AND 23 FEBRUARY 2010 SHOULD BE DECLARED NULL AND VOID AND
SHOULD BE SET ASIDE.20
pg. 189
The core issue here is whether the CA erred in dismissing the appeal for petitioner’s failure to file
its Petition for Certiorari and Prohibition seasonably.
Petitioner insists that its petition was filed within the 60-day reglementary period and should
therefore be allowed by the CA. In justifying its position, petitioner urged the Court to reckon the
counting of the 60 days from the denial of the Second Motion for Reconsideration based on its
postulate that issues raised on the First Motion for Reconsideration is totally different from the
ones ventilated on the second motion.
The Court resolves to deny the petition.
Under Section 4, Rule 65 of the Rules of Court, as amended by A.M. No. 07-7-12-SC, an aggrieved
party has sixty (60) days from receipt of the assailed decision, order or resolution within which to
file a petition for certiorari, viz.:
Sec. 4. When and where to file the petition.—The petition shall be filed not later than sixty (60)
days from notice of the judgment, order or resolution. In case a motion for reconsideration or
new trial is timely filed, whether such motion is required or not, the petition shall be filed
not later than sixty (60) days counted from the notice of the denial of the motion.
If the petition relates to an act or an omission of a municipal trial court or of a corporation, a board,
an officer or a person, it shall be filed with the Regional Trial Court exercising jurisdiction over
the territorial area as defined by the Supreme Court. It may also be filed with the Court of Appeals
or with the Sandiganbayan, whether or not the same is in aid of the court’s appellate jurisdiction.
If the petition involves an act or an omission of a quasi-judicial agency, unless otherwise provided
by law or these rules, the petition shall be filed with and be cognizable only by the Court of
Appeals.
In election cases involving an act or an omission of a municipal or a regional trial court, the petition
shall be filed exclusively with the Commission on Elections, in aid of its appellate jurisdiction.
(Emphasis supplied)
It is explicitly stated in the above rules that certiorari should be instituted within a period of 60
days from notice of the judgment, order or resolution sought to be assailed.21 The 60-day period
pg. 190
is inextendible to avoid any unreasonable delay that would violate the constitutional rights of
parties to a speedy disposition of their case.22 While there are recognized exceptions to such strict
observance, there should be an effort on the part of the party invoking liberality to advance a
reasonable or meritorious explanation for his/her failure to comply with the rules.23
Aside from ardently insisting that the 60-day period for the filing of certiorari petition should be
reckoned from the denial of its second motion for reconsideration which found no basis in the rules
and jurisprudence, petitioner offered no other arguments that would compel us to relax the
technical rules to allow the petition of the petitioner to proceed. In its dire effort to bend the rules
for its benefit, petitioner harps that the issues raised on its first motion for reconsideration is
entirely different from the second one, and because the latter motion is not a mere rehash of the
previous one, then it is from the denial of the succeeding motion for reconsideration that the 60-
day period should be counted.
We do not agree.
The unmistakable import of Section 4, Rule 65 of the Rules of Court, as amended by A.M. No.
07-7-12-SC, mandates that in case of denial of the motion for reconsideration, the petition shall
be filed within 60 days from the receipt of the notice of such denial. That the second motion
for reconsideration raised fresh arguments that need to be addressed anew by the court is of no
moment, otherwise, there will be no end in the litigation. The finality of a decision is a
jurisdictional event which cannot be made to depend on the convenience of the parties.24 To rule
otherwise would completely negate the purpose of the rule on completeness of service, which is
to place the date of receipt of pleadings, judgment and processes beyond the power of the party to
determine at his pleasure.25
In Laguna Metts Corporation v. Court of Appeals,26 we categorically ruled that the present rule
now mandatorily requires compliance with the reglementary period. The period can no longer be
extended as previously allowed before the amendment, thus:
“As a rule, an amendment by the deletion of certain words or phrases indicates an intention to
change its meaning. It is presumed that the deletion would not have been made if there had been
no intention to effect a change in the meaning of the law or rule. The amended law or rule should
accordingly be given a construction different from that previous to its amendment.
If the Court intended to retain the authority of the proper courts to grant extensions under Section
4 of Rule 65, the paragraph providing for such authority would have been preserved. The removal
of the said paragraph under the amendment by A.M. No. 07-7-12-SC of Section 4, Rule 65 simply
meant that there can no longer be any extension of the 60-day period within which to file a petition
for certiorari.
The rationale for the amendments under A.M. No. 07-7-12-SC is essentially to prevent the use (or
abuse) of the petition for certiorari under Rule 65 to delay a case or even defeat the ends of justice.
Deleting the paragraph allowing extensions to file petition on compelling grounds did away with
the filing of such motions. As the Rule now stands, petitions for certiorari must be filed strictly
pg. 191
within 60 days from notice of judgment or from the order denying a motion for reconsideration.”
(Emphasis omitted)
Clearly, allowing a petition for certiorari, even if belatedly filed, should never be taken lightly.
The order attains finality by the lapse of the period for taking an appeal without such assailing the
said order. Decisions or resolutions must attain finality at some point and its attainment of finality
should not be made dependent on the will of a party.27
It is a well-settled principle that rules of procedure are mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in technicalities that
tend to frustrate rather than promote substantial justice, must always be eschewed. In deciding a
case, the appellate court has the discretion whether or not to dismiss the same, which discretion
must be exercised soundly and in accordance with the tenets of justice and fair play, taking into
account the circumstances of the case.28 No one has a vested right to file an appeal or a petition
for certiorari. These are statutory privileges which may be exercised only in the manner prescribed
by law. Rules of procedure must be faithfully complied with and should not be discarded with by
the mere expediency of claiming substantial merit.29
Having established that the Petition for Certiorari and Prohibition of the petitioner has been filed
beyond the reglementary period which inevitably resulted in the attainment of finality of the RTC
Orders dated 8 April 2005 and 28 July 2008, the Court finds it no longer necessary to delve into
the merits of the said RTC Orders.
WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta and Reyes, JJ., concur.
Brion,** J., On Leave.
Note.—Points of law, theories, issues and arguments not brought to the attention of the lower
court, administrative agency or quasi-judicial body, need not be considered by a viewing court, as
they cannot be raised for the first time at that late stage. Basic considerations of fairness and due
process impel this rule. Any issue raised for the first time on appeal is barred by estoppel. (S.C.
Megaworld Construction and Development Corporation vs. Parada, 705 SCRA 584 [2013])
——o0o——
pg. 192
Case Short Name: Cameron Granville 3 Asset Management, Inc. vs. UE Monthly Associates
G.R. No. 181387. September 5, 2016.*
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., petitioner, vs. UE

MONTHLY ASSOCIATES, UEAMI WORKERS UNION NFL AND ALFREDO BASI,
respondents.
Procedural Rules and Technicalities; Revisions to procedural rules are applicable to pending and
unresolved disputes, so long as no injustice results from the retroactive application.—It is settled
that revisions to procedural rules are applicable to pending and unresolved disputes, so long as no
injustice results from the retroactive application. In this case, the third-party claim was still
pending before the LA at the time the 2002 Manual on Execution of Judgment took effect. Hence,
Metrobank was obliged to comply with the new requirement as soon as it took effect. Notably, this
fact distinguishes the instant case from Jang Lim v. CA, 507 SCRA 38 (2006), which was cited by
petitioner to prove the applicability of Rule VI of the 1993 Manual to this case. We note, however,
that the third-party claim in Jang Lim was filed in 1999 and decided by the LA in 2000 before the
amendment of the 1993 Manual; hence, the revised rules were not applied to that case.
Labor Law; Formal Hearing; The decision of the Labor Arbiter (LA) not to conduct a formal
evidentiary hearing before resolving the case was justified, as the conduct of those hearings is not
mandatory in all instances, particularly in administrative proceedings.—The decision of the LA
not to conduct a formal evidentiary hearing before resolving the case was justified, as the conduct
of those hearings is not mandatory in all instances, particularly in administrative proceedings. At
its core, due process simply means giving both parties a fair and reasonable opportunity to be heard
or to explain their side of the controversy. Here, Metrobank was clearly granted this opportunity
through the written submissions it presented to the LA. That these submissions supposedly failed
to include all the pieces of evidence it intended to present is entirely its fault. In any case,
Metrobank was given additional opportunities to argue its case and present its evidence before the
NLRC and the CA. These subsequent proceedings were more than enough to rectify any alleged
procedural flaw and satisfy the requirements of due process.
Execution of Judgments; Third party Claims; Third party claimants in execution proceedings have
the burden of proving their right or title to the subject properties, if they want to defeat the
judgment lien.—It must be pointed out that third-party claimants in execution proceedings have
the burden of proving their right or title to the subject properties, if they want to defeat the
judgment lien. To do so, they must submit evidence not only of the basis of their entitlement, but
also of the fact that the properties they are claiming were indeed the subject of the execution.
Failure to submit that evidence will justify the denial of the thirdparty claim, as in this case.
Espina & Yumul-Espina for petitioner.
pg. 193
SERENO, CJ.:
In this Petition for Review on Certiorari,1 Cameron Granville 3 Asset Management, Inc.
(Cameron) assails the Court of Appeals (CA) Decision2 and Resolution3 in C.A.-G.R. S.P. No.
88049, which affirmed the levy and sale of certain personal properties allegedly mortgaged to
Metropolitan Bank and Trust Company (Metrobank), petitioner’s predecessor-in-interest. These
properties were sold by the Sheriff of the National Labor Relations Commission (NLRC) after
Labor Arbiter Joselito Cruz Villarosa (LA) denied Metrobank’s third-party claim on the ground of
insufficiency of evidence. Both the NLRC and the CA affirmed this ruling.
Factual Antecedents
The dispute in this case stemmed from the levy and execution sale made by NLRC Sheriff
Manolito G. Manuel.4 The subject of the execution were certain machinery, equipment, tools and
implements owned by UE Automotive Manufacturing, Inc. (UEAMI), and located at its
manufacturing plant at General Mascardo St., Caloocan City.5 The levy was made pursuant to a
final and executory NLRC judgment against UEAMI in an illegal dismissal case, in which it was
ordered to pay P53,729,534 to complainants UEAMI Monthly Associates and UE Automotive
Workers Union-NFL.6
On 6 September 2002, Metrobank filed an Affidavit of Third-Party Claim7 with the LA. Through
its Senior Manager Ramon S. Miranda, the bank claimed that the machines and equipment levied
upon by Sheriff Manuel were covered by three mortgage documents executed in favor of the bank
by UEAMI, i.e., a Mortgage Trust Indenture,8 an Amended Mortgage Trust Indenture,9 and a
Second Amended Mortgage Trust Indenture.10
As expected, respondents opposed Metrobank’s third party claim.11 They asserted that they were
not bound by the mortgage agreements cited by the bank, because the instruments were not
registered and consequently had no effect on third parties.12
On 3 October 2002, Metrobank filed with the LA a Reply to Comment to third party claim with
Motion to Set Hearing.13 Aside from emphasizing the superiority of its claim over the property,
the bank also manifested its intention to present evidence of its mortgage lien over the chattels.
Consequently, it requested that the third party claim be set for hearing. It appears from the records
that this motion was not acted upon by the LA.
The Ruling of the LA
In an Order dated 5 December 2002,15 the LA denied Metrobank’s third party claim:
After a careful perusal of the records of the case and contending positions of the protagonists, this
Office denies all the third party claims filed by claimants for failure to [establish] proof of their
pg. 194
actual ownership of the contested properties owned by respondent UE Automotive Manufacturing,
Inc.
At most, what can be easily discerned from the attachment of the third party claims are all
instruments which [have] been long overdue, and belatedly raised now, when the same has been
levied by the Sheriff of this Office.
After reviewing the entire records of the case, this Office finds and so holds that there is no more
compelling reasons not to proceed with the sale of the levied properties because this will
unlawfully [deprive] complainants, the prevailing party, of the fruits of the execution.16
However, in the interest of justice, the LA directed Metrobank and other third party claimants to
post a bond to defer the execution sale. The bank complied with the Order by posting a surety
bond.17 Thereafter, it filed a Notice of Appeal and a Memorandum of Appeal with the NLRC to
challenge the ruling of the LA.
Despite the pending appeal, the auction sale of the properties was carried out on 27 January 2003
following the submission of an indemnity bond by respondents.18 The properties were sold to
Alfredo B. Basi as the highest bidder with a bid price of P53,729,534, and a Sheriff’s Certificate
of Sale19 was later issued in his favor.
The Ruling of the NLRC
In a Resolution dated 19 May 2004,20 the NLRC affirmed the Order of the LA denying
Metrobank’s third party claim. In addition to the grounds cited by the LA, the NLRC rejected the
claim for the following reasons: (a) the bank’s failure to attach a board resolution showing that
Ramon S. Miranda was authorized by the board of directors to prepare and file its Affidavit of
Third-Party Claim;21 (b) absence of substantial evidence in support of the assertion that the
mortgage documents were duly registered with the Register of Deeds of Kalookan City, and that
the proper documentary stamp taxes were paid;22 and (c) failure to establish its right over the
properties as against respondents. On this third ground, the NLRC explained:
Furthermore, Metrobank failed to incorporate in its Third Party Claim and in its mortgage
documents a schedule, enumeration and/or description of the chattels supposedly covered by the
same.
Besides, Metrobank was not able to prove with any substantial documents that the chattels
allegedly covered by the mortgage documents are the very same properties attached and sold at
public auction. Indeed, how could it possibly do so, when it could not even incorporate in its
mortgage documents the required schedule, enumeration and or description they supposedly
cover?
Lastly but most significantly, Metrobank was not able to allege and prove with any substantial
evidence that it had already foreclosed the chattels by reason of the default of UEAMI, the
pg. 195
mortgagor in the mortgage documents, of its obligations in favor of Metrobank and the other
creditors beneficiaries in such documents. Correspondingly, still bereft of the right to possess such
chattels, Metrobank has likewise no right to claim the same by way of a third party claim.23
Metrobank sought reconsideration of the foregoing ruling.24 It asserted that the grounds cited by
the NLRC to deny the claim were never raised by the parties.25 The bank also contended that it
was deprived of due process because the LA resolved the third party claim without acting upon its
motion to set the case for hearing. This lack of due process allegedly resulted in its inability to
adduce the evidence necessary to prove its allegations. In its Motion for Reconsideration,
Metrobank declared:
If the third party claim was set for hearing, Metrobank would have adduced evidence to prove:
a) The authority of Atty. Ramon S. Miranda to represent Metrobank, as shown by the

Secretary’s Certificate dated August 2, 2002, machine copy of which is hereto attached as Annex
“G.”
b) Metropolitan Bank and Trust Company is the successor-in-interest of Philippine banking

Corporation.
c) The genuineness and due execution of the Chattel Mortgage, Amendment of Chattel Mortgage,
Mortgage Trust Indenture, Amended Mortgage Trust Indenture and the Second Amended Trust
Indenture, with the respective annexes thereto, and that said documents were duly registered
with the proper Registry of Deeds. It bears stressing that the Registry of Deeds will not allow
registration unless the documentary stamp taxes have been paid. Machine copies of the Chattel
Mortgage, Amendment of Chattel Mortgage, Mortgage Trust Indenture, Amended Mortgage Trust
Indenture and the Second Amended Trust Indenture are hereto attached as Annexes “H,” “1,”
“J,” “K,” and “L,” respectively.
d) The chattels levied upon and sold at public auction by NLRC Sheriff Manolito G Manuel
are included in the list of chattels annexed to the Chattel Mortgage and Amendment to
Chattel Mortgage and are properly described therein, Annexes “H” and “I.”
e) The genuineness and due execution of the Certificate of Sale dated January 12, 1999, showing
that the chattels were already foreclosed and sold at public auction by Metrobank, machine
copy of which is hereto attached as Annex “M.”
Aside from the foregoing, Metrobank was prevented from presenting evidence to prove that the
levy made by NLRC Sheriff Manuel over the chattels belonging to/owned by Metrobank was null
and void.26 (Emphases in the original)
The NLRC denied the motion notwithstanding the documentary evidence submitted by
Metrobank. In its Resolution,27 the former maintained that the Secretary’s Certificates and other
documents presented by Metrobank did not sufficiently prove Miranda’s authority to represent the
pg. 196
bank or the bank’s right to claim the properties. The NLRC likewise noted that all the pieces of
evidence Metrobank intended to present before the LA had already been passed upon on appeal;
hence, the issue of denial of due process had been rendered moot:
Thirdly, Metrobank has not, up to now, shown with substantial evidence that the properties
allegedly covered by the mortgage documents are the very same chattels levied and sold at public
auction by Sheriff Manolito G. Manuel. Although it resubmitted, in its Motion for Reconsideration,
copies of its mortgage documents, such documents are nevertheless merely photocopies, not
originals or certified true copies, and therefore probatively valueless for being unauthenticated.
Besides, they do not show similarity between the aforementioned two (2) sets of chattels.28
xxxx
Our sight is not lost of the fact that Metrobank asserts in its reconsideration motion that it was
deprived of due process because its third party claim was resolved without its motion to set such
claim for hearing (incorporated in its Reply to Comment to third party Claim dated October 3,
2002) having been passed upon, resulting in its failure to submit all its shreds (sic) of documentary
evidence in support of its claim.
xxxx
[T]his claim of due process deprivation is now academically moot, since all the documentary
proofs of Metrobank have already been passed upon by the Labor Arbiters below in the rendition
of their Orders and by Us in the rendition of Our Resolutions including this Resolution.29
The denial of its Motion for Reconsideration prompted Metrobank to elevate the matter to the CA
via a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure. It argued that the NLRC
committed grave abuse of discretion in (a) disregarding the fact that the third party claim of
petitioner was denied by the LA without the benefit of a hearing;30 and (b) resolving matters that
had not been raised as issues by the parties.31
Metrobank subsequently filed a Motion to Substitute/Join Cameron Granville 3 Asset

Management, Inc., as plaintiff.32
The former cited petitioner’s right as the transferee of the bank’s assignee Asia Recovery
Corporation. The CA granted the motion33 and allowed Cameron to join the suit as a plaintiff.
pg. 197
In a Decision34 dated 1 October 2007, the CA dismissed the Petition for Certiorari and ruled that
the NLRC did not act with grave abuse of discretion in affirming the LA’s denial of the third party
claim filed by Metrobank.35 The appellate court declared that under the Rules of Procedure of the
NLRC, the LA was not obligated to conduct a hearing before deciding the claim:
Petitioner anchored its claim on the provision of Section 2, Rule VI of the NLRC Manual on the
Execution of Judgment, promulgated on February 24, 1993, which reads, to wit:
x x x Upon receipt of the third party claim, all proceedings with respect to the execution of
the property subject of the third party claim shall automatically be suspended and the
Commission or Labor Arbiter who issued the writ shall conduct a hearing with due
notice to all parties concerned and resolve the validity of the claim within ten (10)
working days from receipt thereof. Where the decision is rendered by the Labor Arbiter,
it is appealable to the Commission within ten (10) working days from notice. The
Commission shall resolve the appeal within the same period. (Emphasis and underlining
supplied)
xxxx
The foregoing provision was, however, superseded by Section 9, Rule VIII of the Rules of
Procedure of the National Labor Relations Commission, as amended by Resolution No. 01-02,
Series of 2002, which provides, viz.:
Section 9. RESOLUTION OF THIRD PARTY CLAIM.—Should a third party claim be

filed during execution of the judgment award, the third party claimant shall execute an
affidavit stating his title to property or possession thereof with supporting evidence
and shall file the same with the sheriff and copies thereof served upon the Labor
Arbiter or proper officer issuing the writ. Upon receipt of the third party claim, all
proceedings, with respect to the execution of the property subject of the third party claim,
shall automatically be suspended. The Labor Arbiter who issued the writ may require
the third-party claimant to adduce additional evidence in support of his third party
claim and to post a cash or surety bond equivalent to the amount of his claim, as provided
for in Section 6, Rule VI, without prejudice to the posting by the prevailing party of a
supersedeas bond in an amount equivalent to that posted by the third party claimant, and
resolve the propriety of such claim within ten (10) working days from submission of the
claim for resolution. (Emphasis and underlining supplied)
The aforesaid provision of the NLRC Rules of procedure precludes the necessity of conducting a
hearing where, at the time of execution of its judgment, the labor arbiter is confronted with the
issue involving the resolution of a third party claim. Pursuant to the foregoing, it is sufficient if the
pg. 198
labor arbiter receives the third party claimant’s affidavit stating his title to property or possession
thereof with supporting evidence, and if necessary, the labor arbiter who issued the writ may
require the third party claimant to adduce additional evidence in support of his third party claim.
From thence, the labor arbiter is required to resolve the propriety of such claim within ten (10)
working days from submission of the claim for resolution. It is thus clear that the labor arbiter is
no longer required to conduct a hearing on the third-party claim for as long as the third party
claimant is allowed to submit his affidavit stating his claim of ownership or possession thereof
with supporting evidence and, if necessary, given the opportunity to adduce additional evidence.
Jurisprudential declarations are rich to the effect that the essence of due process is simply an
opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain
one’s side. A formal or trial type hearing is not at all times and in all instances essential to due
process, the requirements of which are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy.36 (Citations omitted; emphases in the original)
The CA also rejected the argument of Metrobank that the latter’s mortgage lien was a specially
preferred credit that was entitled to precedence over the labor claim of respondents.37
Petitioner and Metrobank sought reconsideration of the Decision. Their motion was, however,
denied by the CA.38
Proceedings Before This Court
Petitioner seeks the reversal of the assailed Decision and Resolution on the following grounds: (a)
the failure of the CA to adhere to Jang Lim v. CA,39 in which this Court purportedly applied the
NLRC Sheriff’s Manual on Execution, and not the NLRC Rules of Procedure, in resolving a third
party claim; and (b) the refusal of the CA to consider Metrobank’s mortgage lien as a specially
preferred credit.
In a Resolution40 dated 16 April 2008, this Court required respondents to comment on the Petition.
However, the repeated attempts to serve the Resolution on respondents failed. Accordingly, We
resolved to consider the Resolution to have been served upon respondents, and the latter to have
waived their right to comment on the Petition.41
Issues
This case presents the following issues for resolution:
(1) Whether the CA erred in applying the Revised Rules of Procedure of the NLRC, which does
not require the LA to conduct a hearing before deciding Metrobank’s third party claim.
(2) Whether the CA erred in denying Metrobank’s third party claim.
pg. 199
Our Ruling
We DENY the Petition.
This Court agrees with the CA that a hearing is not required before a third party claim can be
decided by the LA, albeit for a different reason than the supposed repeal of Rule IV, Section 2 of
the 1993 NLRC Manual on Execution of Judgment (1993 Manual). Furthermore, the Court
believes that Metrobank has failed to present sufficient evidence of the third party claim.
Third party claims may be resolved

even without a full-blown hearing
provided claimants are given an
opportunity to be heard.
Petitioner’s main argument concerns the supposed failure of the LA to conduct an evidentiary
hearing before resolving the third party claim. Petitioner insists that its right to due process was
violated, because such a hearing is required under Rule IV, Section 2 of the 1993 Manual.42 In
support of its assertion, it cites Jang Lim v. CA, in which this Court supposedly applied the 1993
Manual, instead of the contradictory provisions of the 2002 NLRC Revised Rules of Procedure
(2002 NLRC Rules).43
The CA, however, disagreed with petitioner’s stance. It refused to apply the 1993 Manual because
Section 9, Rule VIII of the 2002 NLRC Rules, had supposedly superseded the 1993 Manual’s
provisions on third party claims.44
While this Court sustains the conclusion that the 1993 Manual does not govern this dispute, it does
not agree that the 1993 Manual was repealed by the 2002 NLRC Rules. Our view is that Rule VI
of the 1993 Manual was superseded by a new version of the same manual enacted by the NLRC
in July 2002.45 Section 1, Rule VI of this 2002 Manual on Execution of Judgment, provides:
SECTION 1. Proceedings.—SHOULD A THIRD PARTY CLAIM BE FILED DURING

EXECUTION OF THE JUDGMENT AWARD, THE THIRD PARTY CLAIMANT shall
EXECUTE an affidavit STATING his title TO PROPERTY or possession thereof WITH
SUPPORTING EVIDENCE and shall file the same with the sheriff and copies thereof served upon
the Commission or Labor Arbiter who issued the writ and upon the prevailing party. Upon receipt
of the third party claim, all proceedings, with respect to the execution of the property subject of
the third party claim, shall automatically be suspended. The Commission or Labor Arbiter who
issued the writ MAY REQUIRE THE THIRD PARTY CLAIMANT TO ADDUCE
ADDITIONAL EVIDENCE IN SUPPORT OF HIS THIRD PARTY CLAIM AND TO POST A
CASH OR SURETY BOND EQUIVALENT TO THE AMOUNT OF HIS CLAIM AS
PROVIDED FOR IN SECTION 6, RULE VI, OF THE NLRC RULES OF PROCEDURE,
WITHOUT PREJUDICE TO THE POSTING BY THE PREVAILING PARTY OF A
SUPERSEDEAS BOND IN AN AMOUNT EQUIVALENT TO THAT POSTED BY THE
THIRD PARTY CLAIMANT. The PROPRIETY of the THIRD PARTY claim SHALL BE
pg. 200
RESOLVED within ten (10) working days from SUBMISSION OF THE CLAIM FOR
RESOLUTION. The decision of the Labor Arbiter is appealable to the Commission within ten
(10) working days from notice AND the Commission shall resolve the appeal within the same
period.
It is settled that revisions to procedural rules are applicable to pending and unresolved disputes, so
long as no injustice results from the retroactive application.46 In this case, the third party claim
was still pending before the LA at the time the 2002 Manual on Execution of Judgment took effect.
Hence, Metrobank was obliged to comply with the new requirement as soon as it took effect.
Notably, this fact distinguishes the instant case from Jang Lim v. CA,47 which was cited by
petitioner to prove the applicability of Rule VI of the 1993 Manual to this case. We note, however,
that the third party claim in Jang Lim was filed in 1999 and decided by the LA in 200048 before
the amendment of the 1993 Manual; hence, the revised rules were not applied to that case.
In the instant suit, Metrobank filed its third party claim on 6 September 2002,49 or 10 days before
16 September 2002 when the 2002 Manual took effect.50 This sequence of events explains why
no supporting evidence was attached to the bank’s Affidavit of Third-Party Claim. We note,
nevertheless, that the 2002 Manual was already in effect when Metrobank filed its Reply to
Comment to Third-Party Claim with Motion to Set Hearing51 on 3 October 2002. By then, it
should have realized that it was already required to submit supporting evidence of its claim under
the revised rule, and that it no longer needed to await the grant of its request for a hearing.
Furthermore, since the LA resolved the claim only on 5 December 2002, or three months after the
2002 Manual took effect, Metrobank had more than enough time to submit the required evidentiary
support of its alleged right to the property.
It must be emphasized that the amended provision gave the LA the discretion to determine whether
additional evidence needed to be presented before the third party claim could be resolved. Since
the claimant was already required to submit proof of his alleged title to the property, the LA was
allowed to decide the claim based only on the evidence submitted. Here, the LA decided that no
further hearing was necessary, given the failure of Metrobank to submit proof of its claim to the
properties. As will be further discussed, the Court finds no reason to overturn this conclusion.
We likewise find no merit in the assertion that petitioner was denied due process. The decision of
the LA not to conduct a formal evidentiary hearing before resolving the case was justified, as the
conduct of those hearings is not mandatory in all instances, particularly in administrative
proceedings.52 At its core, due process simply means giving both parties a fair and reasonable
opportunity to be heard or to explain their side of the controversy.53 Here, Metrobank was clearly
granted this opportunity through the written submissions it presented to the LA. That these
submissions supposedly failed to include all the pieces of evidence it intended to present is entirely
its fault.
In any case, Metrobank was given additional opportunities to argue its case and present its evidence
before the NLRC and the CA. These subsequent proceedings were more than enough to rectify
any alleged procedural flaw and satisfy the requirements of due process.54
pg. 201
Metrobank and petitioner failed to
prove their right to the properties.
At any rate, this Court sustains the conclusion of the CA with regard to the failure of Metrobank
to establish the latter’s third party claim. Our examination of the records of this case reveals that
the bank failed to present a single piece of evidence in support of a crucial point, i.e., that the
properties subject of the chattel mortgage in its favor were among those levied upon and sold by
the NLRC sheriff.
We cannot ignore the fact that Metrobank was repeatedly made aware of its failure to present the
required evidence and given the opportunity to rectify the error. Throughout the proceedings
before the LA, the NLRC and the CA, its claim was rejected because there was insufficient
evidence that the properties, subject of the levy, had indeed been mortgaged to the bank. However,
it never bothered to present proof of this assertion in its various submissions before the agencies
and the CA. In fact, even when the bank identified and attached copies of the documents it
allegedly intended to present in case an evidentiary hearing would be conducted,55 its own
enumeration did not include any evidence of this particular point. It merely submitted lists of the
chattels supposedly mortgaged to it without identifying which of these items were actually levied
upon and sold by the sheriff.
_______________
54 Nueva Ecija Electric Cooperative (NEECO) II v. National Labor Relations Commission, 499
Phil. 777; 461 SCRA 169 (2005).
55 Rollo, pp. 372-373.
172

Cameron Granville 3 Asset Management, Inc. vs. UE Monthly Associates
Petitioner also had an opportunity to prove the third party claim before this Court. It was aware
that the CA had denied Metrobank’s Petition for Certiorari due to the absence of proof that the
properties allegedly mortgaged to the bank were among those sold by the sheriff on execution. It
would have been a simple matter to identify the properties sold by the sheriff, as well as to prove
that these items were included in the list of properties mortgaged to Metrobank. Petitioner,
however, still opted to attach only a machine copy of the Notice of Levy/Sale on Execution of
pg. 202
Personal Property, without annexes,56 to its Petition for Review. For obvious reasons, this
machine copy will not suffice as evidence.
It must be pointed out that third party claimants in execution proceedings have the burden of
proving their right or title to the subject properties, if they want to defeat the judgment lien.57 To
do so, they must submit evidence not only of the basis of their entitlement, but also of the fact that
the properties they are claiming were indeed the subject of the execution. Failure to submit that
evidence will justify the denial of the third party claim, as in this case.
In view of the foregoing, this Court no longer finds it necessary to resolve the other issues raised
by the parties. There was sufficient justification for the LA to deny the third party claim, and for
the NLRC and the CA to affirm that ruling.
WHEREFORE, the Petition for Review is DENIED for lack of merit. The Court of Appeals’
Decision dated 1 October 2007 and Resolution dated 21 January 2008 are hereby AFFIRMED.
SO ORDERED.
Leonardo-De Castro, Perlas-Bernabe and Caguioa, JJ., concur.
Bersamin, J., On Official Leave.
Notes.—The holding of a formal hearing or trial is discretionary with the Labor Arbiter and is
something that the parties cannot demand as a matter of right. (Pepsi Cola Products Philippines,
Inc. vs. Santos, 551 SCRA 245 [2008])
Proceedings to resolve the possession of third-party claimants may proceed independently of the
action which said claimants may bring to enforce or protect their claim of ownership over the
property. (Bon-Mar Realty and Sport Corporation vs. De Guzman, 563 SCRA 737 [2008])
——o0o——
pg. 203
Case Short Name: Philippine National Bank vs. Heirs of the Late Ireneo and Caridad
Entapa
G.R. No. 215072. September 7, 2016.*
PHILIPPINE NATIONAL BANK, petitioner, vs. HEIRS OF THE LATE IRENEO AND
CARIDAD ENTAPA, namely: ROSARIO ENTAPA-ORPEZA, JULIANNE E. HAMM,1
CERINA G. ENTAPA, WINSTON G. ENTAPA (deceased) represented by his spouse,
NINFA LAMISTOZA-ENTAPA, FRANKLIN G. ENTAPA, MARINA E. SCHACHT, and
ELVIRA G. ENTAPA, respondents.
Remedial Law; Civil Procedure; Judgments; A court must state the factual and legal basis for its
are void.—A court must state the factual and legal basis for its decisions; otherwise, its decisions
are void.
Same; Same; Same; The constitutional requirement that the basis of the decision of our courts
should be clearly articulated and made legible to the parties does not merely assure fairness.—
The constitutional requirement that the basis of the decision of our courts should be clearly
articulated and made legible to the parties does not merely assure fairness. It is likewise crucial to
assure the public that the judiciary arrives at its conclusions on the basis of reasonable inference
from credible and admissible evidence and the text of law and our jurisprudence. Decisions of all
courts should not be based on any other considerations. Not only will fully coherent and cogent
reasons have greater chances to convince the litigants of their chances on appeal; they also make
appeals possible. After all, appellate courts cannot be assumed to have so much omniscience that
they can read what the trial judge has not written.
Obiter Dictum; Words and Phrases; Obiter dictum is “an opinion expressed by a court upon some
question of law which is not necessary to the decision of the case before it.”—Even if the Court
of Appeals had adjudicated upon the merits of the case, any discussion would have been considered
obiter dictum since the entire case was remanded to the trial court. Obiter dictum is “an opinion
expressed by a court upon some question of law which is not necessary to the decision of the case
before it.” It is a “a remark made, or opinion expressed . . . upon a point not necessarily involved
in the determination of the cause, or introduced by way of illustration, or analogy or argument.” It
“lacks the force of an adjudication and should not ordinarily be regarded as such.”
Administrative Law; Judges; Gross Ignorance of the Law; When the law is basic and the rules are
elementary, the duty of a judge is simply to apply it. Failure to do so constitutes gross ignorance
of the law.—We take this opportunity to remind judges and justices of their solemn duty to uphold
and defend the Constitution and the principles it embodies. This duty is so basic that it appears in
the Oath of Office of every public officer and employee and is stated only in the third whereas
clause of the New Code of Judicial Conduct. When the law is basic and the rules are elementary,
the duty of a judge is simply to apply it. Failure to do so constitutes gross ignorance of the law. It
entails additional expenses on the part of the party-litigants and creates an undeserved public
impression of the lack of competence of the entire judiciary.
pg. 204
Hannah Teisha C. Tan for petitioner PNB.
Rolando G. Ravina for respondents.
LEONEN, J.:
The Constitution requires that a court must state the factual and legal grounds on which its
decisions are based. Any decision that fails to adhere to this mandate is void.
The Philippine National Bank, through a Petition for Review on Certiorari,2 assails the
Decision3 dated June 4, 2013 and Resolution4 dated October 2, 2014 of the Court of Appeals,
which nullified the Decision5 of Branch 54 of the Regional Trial Court of Bacolod City. The Court
of Appeals nullified the Regional Trial Court’s Decision for failing to state the facts and law on
which it was based.6
On December 5, 1973, Caridad Entapa (Entapa) and her children, Julianna E. Hamm and Winston
Entapa, executed a Special Power of Attorney authorizing Joseph Gonzaga (Gonzaga) to enter into
legal transactions on their behalf.7
Entapa owned Lot No. 2665 with an area of 16.067 hectares and covered by Original Certificate
of Title No. P-6497.8 On January 3, 1974,9 Gonzaga executed a real estate mortgage over Lot No.
2665 in favor of the Philippine National Bank to guarantee his loan of P30,600.00.10
Gonzaga failed to pay the loan.11 The property was foreclosed and was sold at a public auction.
The Philippine National Bank emerged as the winning bidder.12 A Certificate of Sale was issued
in the bank’s favor on December 29, 1983.13
Entapa’s other heirs had no knowledge of Gonzaga’s Special Power of Attorney. They learned of
the foreclosure sale only after the public auction.14
Rosario Entapa Orpeza (Orpeza), representing Entapa’s other heirs, went to the Philippine
National Bank at Lacson Street, Bacolod City to ask about the repurchase of the
property.15 Despite knowledge that the property had already been foreclosed, she wrote a letter
dated March 15, 1995 to Raul Topacio, Assistant Vice President and Branch Manager, requesting
a restructuring and recomputation of Gonzaga’s loan in accordance with the guidelines of Republic
Act No. 7202.16
On May 2, 1996, the Philippine National Bank informed Orpeza that its Branch Credit Committee
approved her request and stated the terms and conditions of the Thirteen-Year Plan of
pg. 205
Payment.17 Two (2) of the seven (7) conditions were to deposit 20% of the total recomputed
amount and to pay the arrears of the realty taxes on the property.18
In compliance, Orpeza sent a bank transfer of 9,797 German Deutschmark equivalent to

P178,336.19, 20% of the recomputed amount.19 She also paid the realty taxes on the property.20
Orpeza alleged that after she deposited the amount, she discovered that five (5) families were
already residing and planting crops on Lot No. 2665, by virtue of Certificates of Land Ownership
(CLOA) issued by the Department of Agrarian Reform.21 She went to the Philippine National
Bank to ask for an explanation and to request the bank to file a case to annul the CLOAs.22 The
bank did not offer an explanation but only issued a certification declaring that according to their
records, there had been no transfer of Lot No. 2665 to the Department of Agrarian Reform.23
Orpeza went to the Department of Agrarian Reform, where she was able to secure copies of the
Deed of Sale, Deed of Transfer, and Voluntary Offer of Sale of Lot No. 2665 by the Philippine
National Bank to the Department of Agrarian Reform.24 Moreover, she was informed by Assistant
Regional Director Homer Tobias that Lot No. 2665 was already covered by the Comprehensive
Agrarian Reform Program, and CLOAs had been issued according to the law.25 He also explained
that the lot was voluntarily offered for Comprehensive Agrarian Reform Program coverage by
Philippine National Bank on September 30, 1989.26
As a result, Orpeza demanded the return of the down payment she made with the Philippine
National Bank and asked for the annulment of the CLOAs.27 “[The Philippine National Bank] did
not take any action.”28 As the bank still refused to refund the amount despite demand, Orpeza and
her siblings instituted a complaint for collection of sum of money against the Philippine National
Bank on October 5, 1998.29
In its defense, the Philippine National Bank insisted that before it approved Orpeza’s request for
restructuring and recomputation, it verified that Lot No. 2665 was not included in the transfer of
properties to the Department of Agrarian Reform.30 It also alleged that when Lot No. 2665 was
offered to the Department of Agrarian Reform on September 30, 1989, it had no knowledge nor
information as to the status of its application as it had not received any payment from the Land
Bank of the Philippines.31
The Philippine National Bank alleged that while there was a Voluntary Offer to Sell Lot No. 2665,
it did not acquire a record of the Voluntary Offer to Sell until 1998 and only came to know of the
existence of the CLOAs when Orpeza informed its officers.32
On April 31, 2006, the Regional Trial Court of Bacolod City ordered the Philippine National Bank
to return the initial down payment of P178,336.10, realty taxes of P56,421.30, exemplary damages
at P50,000.00, moral damages at P50,000.00, and attorney’s fees of 15% of the amount due, with
legal interest.33
The Regional Trial Court Decision reads:
pg. 206
This is a case for collection of sum of money with claims for damages, instituted by the heirs of
Ireneo and Caridad Entapa, namely: Rosario Entapa-Oropeza [sic], Julianna E. Wam, Cerina G.
Entapa, Winston G. Entapa represented . . . by his Spouse Ninfa Lamistoza-Entapa, Franklin G.
Entapa, Marina E. Schacht and Elvira Entapa.
Ireneo Entapa, deceased, died on December 7, 1967 in the city of Bago, survived by his widow,
Caridad Entapa and legitimate children herein before named. Ireneo Entapa was the registered
owner of two parcels of lands located in Barangay Ilijan, City of Bago, denominated as Lot No.
2664 covered by TCT No. T- and Lot No. 2666 covered by TCT No. T-[sic]. The wife and widow,
Caridad Entapa, now deceased was also a registered owner of Lot No. 2665, covered by TCT OCT
No. R-6497.
When Ireneo Entapa died, the lands devolved upon his heirs, the surviving wife, Caridad Entapa,
and their children.
During the lifetime of the wife, Caridad Entapa, together with the children: namely, Juliana E.
Ham and Winston Entapa as heirs-owners of the aforementioned lots, executed a Special Power
of Attorney in favor of Joseph Gonzaga, to mortgage the lot to banking institutions.
Joseph Gonzaga mortgaged the properties to the Philippine National Bank-Bacolod Branch.
The other children except the two who signed the Special Power of Attorney were working abroad
and they were unaware of the execution of the Special Power of Attorney in favor of Joseph
Gonzaga.
The loan was not paid by Joseph Gonzaga and the Philippine National Bank sold the lands in a
public auction. The bid was awarded to the mortgagee-bank, the Philippine National Bank. A
certificate of Sale issued to the Philippine National Bank marked in evidence as Exhibit [sic].
When the children heirs learned of the foreclosure of the properties while they were abroad, the
heirs headed by Rosario Entapa Orpeza, made representation with the Philippine National Bank to
purchase back the properties via restructuring of the loan under Republic Act No. 7202 otherwise
known as the Sugar Restitution Law.
Pursuant to the Sugar Restitution Law, the Philippine National Bank through its Vice President[,]
Mr. Topacio[,] accepted in principle the restructuring of the loan and for the heirs to purchase back
the properties with 20% percent [sic] down payment of the recomputed value which amounted to
Php178,336.50. In addition, the heirs were also required to update the realty taxes of the lots. The
heirs obliged by paying the realty taxes. The heirs through Rosario Entapa Orpeza paid the required
deposit of Php 178,336.50. It was paid in German Currency converted to Philippine peso prevailing
at the time. The heirs were happy that they could get back their ancestral lots where they grew up.
Rosario Entapa Orpeza who spearheaded the repurchase of the properties was based in the United
States of America working as an accountant. She stayed in the country abandoning meanwhile her
work in the USA just to consummate the repurchase of the properties and she lost income while
staying in the Philippines.
pg. 207
When Rosario Entapa Orpeza had paid for the realty taxes and the 20% down payment for the
repurchase, she wanted to visit the lands located on the mountainside in Upper Maao, Bago City.
She discovered that the properties are occupied by several families who are CARP beneficiaries
and are holding CLOA[s] issued by the Department of Agrarian Reform.
She confronted the PNB official, Mr. Raul Topacio on the alleged CARP coverage of the lots but
she was reassured that the PNB shall take care of it.
It was sometime on March 15, 1995 when Rosario Entapa Orpeza formally applied for
restructuring under the Sugar Restitution Law. On May 22, 1995, the Assistant Vice President
Raul G. Topacio informed Rosario Entapa Orpeza of the total obligations which required twenty
(20%) percent down payment and the account shall be payable in[ ]13 years.
The restructuring of the loan was officially approved by the Branch Committee on April 16, 1996.
Before approving the restructuring of the Entapa loan, the PNB verified if the properties have been
turned over to the Department of Agrarian Reform as required by[ ]law on acquired agricultural
assets of the bank. There was a list of properties transferred to the DAR (Exhibit 7) and the
properties of Caridad Entapa were not in the list indicating that the subject properties have not
been transferred for CARP coverage. The owner’s duplicate of the title is still with the PNB.
Rosario Entapa Orpeza signed “ACCEPTANCE” in the May 1996 letter of the PNB on the terms
of restructuring of the loan.
When the alleged CARP coverage was verified with the Department of Agrarian Reform,
documents cropped up indicating that the lot was sold by the PNB to the Department of Agrarian
Reform way back on September 30, 1989. The DAR sent a notice of Land Valuation (Exhibit 0)
dated March 6, 1992. The Department of Agrarian Reform processed the awards of the land and
CLOA[s] were issued and given to the beneficiaries.
From the evidence adduced, it appears that the Philippine National Bank was not meticulous in
allowing the Entapa Heirs to avail of the Sugar Restitution Law to repurchase their property. The
PNB agreed to grant the restitution because from the record they looked into, the Entapa property
was not among those transferred to the Department of Agrarian Reform, actually the property had
been offered to the DAR under the Voluntary Offer to Sell (VOS), and the valuation [had] been
determined and communicated to the Philippine National Bank as shown by subsequent check of
record.
The Certificate of Land Ownership Award (CLOA) have [sic] been issued and distributed to the
awardees; thus, it became legally impossible to go on with the repurchase of the property by the
Entapa Heirs under the Sugar Restitution Law or plain repurchase of the property.
With the situation that the Entapa Heirs could no longer work and hope to reacquire their property,
the plaintiffs-heirs formally demanded for the return of the 20% initial deposit paid to the PNB
and also the real property taxes paid when the property had already been divided and awarded to
the beneficiaries covered by CLOA[s].
pg. 208
The Philippine National Bank did not return the amount paid by the Entapa Heirs which led to the
filing of the instant case. Likewise, the Entapa Heirs suffered for the vain hope that they could get
back the properties with so much attachment or sentimental value.
The repurchase had not materialized; thus, the demand to return the amounts paid.
In a nutshell, the Entapa Heirs, who were working abroad in the United States and Germany, came
to know that the lot of the mother had been foreclosed and the redemption period had lapsed. The
heirs wanted to recover the property and one option was to repurchase the property under the Sugar
Restitution Law. The heirs were allowed in principle to repurchase the property under the
Restitution Law. The Philippine National Bank was under the impression that the subject property
still belonged to the PNB because the owner’s duplicate of the title was still on file and a check on
the list of properties transferred to the Department of Agrarian Reform, the Entapa property was
not among them — the acquired agricultural lands shall be turned over to the DAR for purposes
of the Land Reform program. The Philippine National Bank formally communicated to the Entapa
Heirs of the approval of the repurchase and the valuation wherein the former owners were required
initially the 20% of the valuation and the Entapa heirs did pay. The heirs were likewise required
to update the real property taxes which they complied.
When the Entapa heirs came to know that the subject lot had been earlier offered to the Department
of Agrarian Reform under the Voluntary Offer to Sell (VOS) scheme of the CARP, they were
aghast and their hope to be able to get back the property came to naught. The PNB tried to reassure
the heirs that the Certificate of Title is still in the name of the PNB and it would push through the
repurchase under the Sugar Restitution Law.
With the granting of the CLOA[s] to the beneficiaries who had been in actual occupation and
cultivation, there was no more possibility for the heirs to get back the land.
The Entapa heirs demanded for the return of the money they had paid for the value of the land and
the real property taxes they paid, for they could not repurchase the land. The PNB refused to timely
return the amounts paid by the heirs which finally led to the instant suit. Rosario Entapa Orpeza
had to delay her return to her work to the United States of America in order to consummate the
repurchase and getting back of the property. In the USA, she had a work which earned regularly
for her in dollars. Rosario claims moral and actual damages for the failure to get back the property
which has sentimental value to the children.
With the repurchase not carried, there is the duty to return the amounts paid by the Entapa heirs.
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant:
1. The defendant is ordered to return to the plaintiff the following amounts:
pg. 209
a. Php178,336.10 representing initial down payment for the repurchase of the lot plus
legal interests until paid;
b. Php56,421.30 representing realty taxes paid on the lot plus legal interests until paid;
c. Php50,000.00 as exemplary damages
d. Php50,000.00 as moral damages; and
e. Attorney’s fees of 15% of the amount due; and
f. To pay the costs of suit
SO ORDERED.34
The Philippine National Bank appealed to the Court of Appeals and argued that (1) the trial court’s
Decision violated the Constitution and the Rules of Civil Procedure when it failed to state the facts
and law on which its ruling was based, and (2) the trial court erred in ordering it to return the
payments.35
On June 4, 2013, the Court of Appeals nullified the Regional Trial Court Decision and remanded
the case to it for the rendition of judgment under the Constitution and Rules of Court.36
The Court of Appeals found that after a careful reading of the trial court’s Decision, the Decision
did not contain analysis of the evidence of the parties or reference to any legal basis to reach its
conclusions, contrary to the requirements of Article VIII, Section 1437 of the Constitution and
Rule 36, Section 138 of the Rules of Court.39
However, the Court of Appeals also pointed out that the Philippine National Bank could not raise
new arguments on appeal as its argument that it was entitled to apply Orpeza’s down payment to
Gonzaga’s outstanding loan constituted a change of theory, which should be disallowed on
appeal.40 The dispositive portion of the Court of Appeals’ Decision reads:
WHEREFORE, in view of all the foregoing, the appeal is GRANTED. The assailed 31 August
2006 Decision of the Regional Trial Court Branch 54 of Bacolod City in Civil Case No. 98-10510
is NULLIFIED as it does not conform with Section 14, Article VII [sic] of the 1987 Constitution
and Section 1, Rule 36 of the Rules of Court.
The records of the case are hereby remanded to the said Regional Trial Court for the rendition of
judgment in accordance with the mandate of the Constitution and the Rules of Court, with dispatch.
pg. 210
The Philippine National Bank moved for reconsideration, but the Motion was denied in the
Resolution dated October 2, 2014.42
Aggrieved, petitioner Philippine National Bank filed before this Court a Petition for Review on
Certiorari arguing that the Court of Appeals erred in rendering judgment on the merits despite
nullifying the Regional Trial Court Decision and remanding the case.43 It also argues that the
Court of Appeals should not have held them liable to pay respondents Heirs of Ireneo and Caridad
Entapa:
II. The Court of Appeals seriously erred when it held petitioner PNB liable to return the amount
of Php178,336.10 representing initial down payment of respondents plus legal interest effective
14 October 1998 until paid.
III. The Court of Appeals seriously erred when it held petitioner PNB liable to return the amount
of Php56,421.30 representing the realty taxes paid by respondents plus legal interest until paid.
....
IV. The Court of Appeals seriously erred when it held the Bank liable to pay moral damages,
exemplary damages, attorney’s fees and cost of suit to respondents.44
In their Comment,45 respondents argue that the Court of Appeals did not make any adjudication
on the merits of the case since the dispositive portion of the Decision did not actually state that
petitioner was liable to respondents for the stated amounts.46 Respondents further assert that the
Court of Appeals discussed the other issues because petitioner
raised these issues before the Court of Appeals, and if petitioner did not want the Court of Appeals
to discuss these issues, then it should not have raised them.47 Respondents argue that even
assuming that there was an adjudication on the merits, the Court of Appeals would not have erred
in finding petitioner liable since its bad faith was clear from the facts and the evidence.48
The issues before this Court are:
First, whether the Court of Appeals erred in nullifying the Regional Trial Court Decision; and
Second, whether the Court of Appeals adjudicated on the merits of the case despite ordering its
remand to the trial court.
The Petition is denied.
pg. 211
A court must state the factual and legal basis for its decisions; otherwise, its decisions are void.
Article VIII, Section 14 of the Constitution provides:
ARTICLE VIII
Judicial Department
...
SECTION 14. No decision shall be rendered by any court without expressing therein clearly
and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall be refused due
course or denied without stating the legal basis therefor.
Rule 36, Section 1 of the Rules of Court provides:
RULE 36
Judgments, Final Orders and Entry Thereof
SECTION 1. Rendition of judgments and final orders.—A judgment or final order determining
the merits of the case shall be in writing personally and directly prepared by the judge, stating
clearly and distinctly the facts and the law on which it is based, signed by him, and filed with the
clerk of the court.
The Court of Appeals, in nullifying the Decision of the trial court, stated that it “contained no
reference to any legal basis in reaching its conclusions”49 nor did it “cite any legal authority or
principle to support its conclusion that [the] bank is liable.”50 The Court of Appeals found that
the “trial court merely narrated the factual circumstances of the case and directly declared the
liability of the [bank] to pay [respondents] the amount she paid as down payment for the repurchase
of the subject land.”51
The Regional Trial Court Decision52 dated August 31, 2006 is four (4) pages long. Its first three
(3) pages state the facts of the case. The fourth page states:
The Entapa heirs demanded for the return of the money they had paid for the value of the land and
the real property taxes they paid, for they could not repurchase the land. The PNB refused to timely
return the amounts paid by the heirs which finally led to the instant suit. Rosario Entapa Orpeza
had to delay her return to her work to the United States of America in order to consummate the
repurchase and getting back of the property. In the USA, she had a work which earned regularly
for her in dollars. Rosario claims moral and actual damages for the failure to get back the property
which has sentimental value to the children.
pg. 212
With the repurchase not carried, there is the duty to return the amounts paid by the Entapa heirs.
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant:
1. The defendant is ordered to return to the plaintiff the following amounts:
a. Php178,336.10 representing initial down payment for the repurchase of the lot plus
legal interests until paid;
b. Php56,421.30 representing realty taxes paid on the lot plus legal interests until paid;
c. Php50,000.00 as exemplary damages;
d. Php50,000.00 as moral damages; and
e. Attorney’s fees of 15% of the amount due; and
f. To pay the costs of suit.
SO ORDERED.5
The trial court failed to cite any legal basis for declaration of petitioner’s liability. The Decision
merely contained a recitation of facts and a dispositive portion. Yao v. Court of Appeals54 nullified
a similar decision for failure of the court to state the legal basis for its ruling:
Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is
indisputably a paramount component of due process and fair play. It is likewise demanded by the
due process clause of the Constitution. The parties to a litigation should be informed of how it was
decided, with an explanation of the factual and legal reasons that led to the conclusions of the
court. The court cannot simply say that judgment is rendered in favor of X and against Y and just
leave it at that without any justification whatsoever for its action. The losing party is entitled to
know why he lost, so he may appeal to the higher court, if permitted, should he believe that the
decision should be reversed. A decision that does not clearly and distinctly state the facts and the
law on which it is based leaves the parties in the dark as to how it was reached and is precisely
prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review
by a higher tribunal. More than that, the requirement is an assurance to the parties that, in reaching
judgment, the judge did so through the processes of legal reasoning. It is, thus, a safeguard against
the impetuosity of the judge, preventing him from deciding ipse dixit. Vouchsafed neither the
sword nor the purse by the Constitution but nonetheless vested with the sovereign prerogative of
passing judgment on the life, liberty or property of his fellowmen, the judge must ultimately
depend on the power of reason for sustained public confidence in the justness of his decision.
Thus the Court has struck down as void, decisions of lower courts and even of the Court of Appeals
whose careless disregard of the constitutional behest exposed their sometimes cavalier attitude
not only to their magisterial responsibilities but likewise to their avowed fealty to the
Constitution.55 (Emphasis supplied, citations omitted)
pg. 213
In Yao, the assailed decision was nullified and the records of the case were remanded to the trial
court. The Court of Appeals in this case did the same.
The constitutional requirement that the basis of the decision of our courts should be clearly
articulated and made legible to the parties does not merely assure fairness. It is likewise crucial to
assure the public that the judiciary arrives at its conclusions on the basis of reasonable inference
from credible and admissible evidence and the text of law and our jurisprudence. Decisions of all
courts should not be based on any other considerations. Not only will fully coherent and cogent
reasons have greater chances to convince the litigants of their chances on appeal; they also make
appeals possible. After all, appellate courts cannot be assumed to have so much omniscience that
they can read what the trial judge has not written.
Petitioner likewise argues that the Court of Appeals should not have ruled that it was liable to
respondents.
This is erroneous.
Nothing in the Court of Appeals’ Decision ordered petitioner to return to respondents their down
payment and pay them damages. Petitioner brought the appeal before the Court of Appeals,
arguing, among others, that it should not have been held liable since it already applied Orpeza’s
down payment to Gonzaga’s outstanding loan.56 The Court of Appeals, in addressing petitioner’s
arguments, explained that it could not rule on these arguments since it was brought for the first
time on appeal:
While it is true that [petitioner] has the right to recover the deficiency of Gonzaga’s loan obligation
under the well-entrenched rule that a creditor is not precluded from recovering any unpaid balance
on the principal obligation if the extrajudicial foreclosure sale of the property subject of the real
estate mortgage results in a deficiency, still, such defenses could not be countenanced because it
was belatedly raised only on appeal, not during the trial before the court a quo.
Added to that, [petitioner] did not present any proof to substantiate its allegations. Their factual
allegations clearly required the presentation of additional evidence in order to properly address the
issues raised in the new theory. This, [petitioner] failed to do. Hence, this Court cannot give due
course to the new issues raised in the appeal for lack of evidence. Justice and fair play dictate that
[petitioner’s] change of theory of their case on appeal be disallowed.57 (Emphasis supplied)
Strangely, petitioner now comes before this Court and argues that the Court of Appeals should not
have adjudicated on the arguments that it had raised before it.
Even if the Court of Appeals had adjudicated upon the merits of the case, any discussion would
have been considered obiter dictum since the entire case was remanded to the trial court.
Obiter dictum is “an opinion expressed by a court upon some question of law which is not
necessary to the decision of the case before it.”58 It is a “a remark made, or opinion expressed . .
pg. 214
. upon a point not necessarily involved in the determination of the cause, or introduced by way of
illustration, or analogy or argument.”59 It “lacks the force of an adjudication and should not
ordinarily be regarded as such.”60
It was not necessary for the Court of Appeals to discuss the other issues that petitioner raised in
order to determine that the case must be remanded to the trial court. In any case, petitioner is not
precluded from presenting the same arguments before the trial court.
We take this opportunity to remind judges and justices of their solemn duty to uphold and defend
the Constitution and
the principles it embodies. This duty is so basic that it appears in the Oath of Office of every public
officer and employee61 and is stated only in the third whereas clause of the New Code of Judicial
Conduct.62 When the law is basic and the rules are elementary, the duty of a judge is simply to
apply it.63 Failure to do so constitutes gross ignorance of the law.64 It entails additional expenses
on the part of the party-litigants and creates an undeserved public impression of the lack of
competence of the entire judiciary.
WHEREFORE, the Petition is DENIED. The Decision dated June 4, 2013 and the Resolution
dated October 2, 2014 of the Court of Appeals in C.A.-G.R. CV No. 01895 are AFFIRMED.
A copy of this Decision shall be served on the Office of the Court Administrator, who
is DIRECTED to initiate proceedings against Presiding Judge Demosthenes L. Magallanes of
Branch 54 of the Regional Trial Court of Bacolod City for gross ignorance of the law and any
other violation of our Rules.
SO ORDERED.
Carpio (Chairperson), Del Castillo and Mendoza, JJ., concur.
Note.—Under Section 14, Article VIII of the Constitution, no decision shall be rendered by any
court without expressing therein clearly and distinctly the facts and the law on which it is based.
(Ola vs. People, 775 SCRA 698 [2015])
——o0o——
pg. 215
Case Short Name: Braga vs. Abaya
G.R. No. 223076. September 13, 2016.*
PILAR CAÑEDA BRAGA, PETER TIU LAVIÑA, ANTONIO H. VERGARA, BENJIE T.

BADAL, DIOSDADO ANGELO A. MAHIPUS, and SAMAL CITY RESORT OWNERS
ASSOCIATION, INC. (SCROA), petitioners, vs. HON. JOSEPH EMILIO A. ABAYA, in
his capacity as SECRETARY of the DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS (DOTC), PRE-QUALIFICATION, BIDS AND AWARDS
COMMITTEE (PBAC) and PHILIPPINE PORTS AUTHORITY (PPA), respondents.
Environmental Law; Environmental Impact Assessment; Words and Phrases; Environmental

Impact Assessment (EIA) is the process of evaluating and predicting the likely impacts — including
cumulative impacts — of an undertaking on the environment.—Environmental Impact
Assessment (EIA) is the process of evaluating and predicting the likely impacts — including
cumulative impacts — of an undertaking on the environment. Its goal is to prevent or mitigate
potential harm to the environment and to protect the welfare of the affected community. To this
end, the process requires proponents to truthfully and responsibly disclose all relevant information
on the project through the EIS. This facilitates meaningful and informed public participation that
ensures the project’s social acceptability to the community.
Same; Environmental Impact Statement; The Environmental Impact Statement (EIS) contains a
detailed project description of the nature, configuration, the raw materials/natural resources to
be used, production system, waste generation and control, timelines, and all other related activities
of the proposed project.—The EIS contains a detailed project description of the nature,
configuration, the raw materials/natural resources to be used, production system, waste generation
and control, timelines, and all other related activities of the proposed project. It also includes an
Environmental Management Plan (EMP) detailing the proponent’s preventive, mitigating,
compensatory, and contingent measures to enhance the project’s positive impacts and minimize
ecological risks. Projects with potentially significant negative environmental impacts are further
required to conduct public consultations so that the environmental concerns of stakeholders are
addressed in formulating the EMP. The impact assessment concludes with EMB’s approval (in the
form of an ECC) or rejection (in the form of a denial letter). The ECC signifies that the proposed
project will not cause significant negative impact on the environment based on the proponent’s
representation. It also certifies that the proponent has complied with the EIS System and has
committed to implement its approved EMP. Accordingly, the ECC contains the specific measures
and conditions that the proponent must undertake to mitigate the identified environmental impacts.
Same; Same; Presidential Decree (PD) No. 1151 and PD No. 1586 requires all agencies and
instrumentalities of the national government, including government-owned or -controlled
corporations (GOCCs), and private corporations, firms, and entities to file the Environmental
Impact Statement (EIS) for every proposed project or undertaking that significantly affects the
quality of the environment.—P.D. 1151 and P.D. 1586 requires all agencies and instrumentalities
pg. 216
of national government, including GOCCs, and private corporations, firms, and entities to file the
EIS for every proposed project or undertaking that significantly affects the quality of the
environment.
Same; Same; Continuing Mandamus; Considering that the Project is still in the bidding stage, the
petition for continuing mandamus to compel the respondents to submit an Environmental Impact
Statement (EIS) and secure an environmental compliance certificate is premature.—Republic Act
No. 6957 as amended by R.A. 7718, commonly known as the Build-Operate-Transfer (BOT) Law,
identifies the proponent in a PPP project as “the private sector entity which shall have contractual
responsibility for the project.” Accordingly, there is yet no project proponent responsible for the
EIS and the ECC until the bidding process has concluded and the contract has been awarded.
Considering that the Project is still in the bidding stage, the petition or continuing mandamus to
compel the respondents to submit an EIS and secure an ECC is premature. It is also misplaced
because the public respondents DO NOT have the duty to submit the EIS or secure an ECC.
Same; Environmental Compliance Certificate; The issuance of the Environmental Compliance

Certificate (ECC) does not exempt the project from compliance with other relevant laws.—The
issuance of the ECC does not exempt the project from compliance with other relevant laws. The
LGC, in particular, requires the government agency authorizing the project to conduct local
consultation and secure prior consent for ecologically impactful projects. x x x The duty to consult
the concerned local government units and the stakeholders belongs to the national government
agency or GOCC authorizing or involved in the planning and implementation of the project — not
the private sector proponent. In this case, this refers to the DOTC.
Build-Operate-Transfer Law; The Build-Operate-Transfer (BOT) Law defines the proponent as

the private sector entity with the contractual responsibility over the project.—The BOT Law
defines the proponent as the private sector entity with the contractual responsibility over the
project. The contract to a project is executed between the concerned agency and the winning bidder
within seven (7) days from the latter’s receipt of the notice from the agency that all conditions
stated in the Notice of Award have been complied with. Upon the signing of the contract, the
winning bidder becomes the project proponent. Within another 7 days from the date of approval
or signing of the contract by the head of the Agency, the agency will issue a “Notice to Commence
Implementation” to the proponent. Interestingly enough, even this does not signal the start of the
implementation stage. Upon receipt of the Notice, the proponent is required to prepare detailed
engineering designs and plans based on the prescribed minimum design and performance standards
and specifications in the bid/tender documents. The agency shall review the detailed engineering
designs in terms of its compliance with the prescribed standards and specification. If the designs
are found acceptable, the agency shall approve them incorporation in the contract to be signed by
the proponent and the agency. The proponent shall construct the project based on the design and
performance standards and specifications in the detailed engineering design. The signing of the
finalized contract incorporating the detailed engineering design is the reckoning point when
implementation can begin. This is the start of the Construction Stage.
Remedial Law; Special Civil Actions; Continuing Mandamus; The purpose of a writ of continuing
mandamus is to compel the respondent to perform his duties under the law. This remedy is
available when any government agency, instrumentality, or officer unlawfully neglects a specific
pg. 217
legal duty in connection with the enforcement or violation of an environmental law, rule, or
regulation, or a right therein, or unlawfully excludes another from the use or enjoyment of such
right and there is no other plain, speedy and adequate remedy in the ordinary course of law.—
The purpose of a writ of continuing mandamus is to compel the respondent to perform his duties
under the law. This remedy is available when any government agency, instrumentality, or officer
unlawfully neglects a Specific legal duty in connection with the enforcement or violation of
an environmental law, rule, or regulation, or a right therein, unlawfully excludes another from
the use or enjoyment of such right and there is no other plain, speedy and adequate remedy in the
ordinary course of law. The writ cannot be resorted to when the respondent is not the person
obliged to perform the duty under the law (as is the case under the EIS System) or when the period
for the respondent to perform its legal duty has not yet expired (as is the case with the consultation
requirements of the LGC). Accordingly, we cannot issue a writ of continuing mandamus.
Environmental Law; Writ of Kalikasan; The writ of kalikasan is a remedy to anyone whose
constitutional right to a balanced and healthful ecology is violated or threatened with violation by
an unlawful act or omission.—The Court cannot issue a writ of kalikasan based on the petition.
The writ is a remedy to anyone whose constitutional right to a balanced and healthful ecology is
violated or threatened with violation by an lawful act or omission. However, the violation must
involve environmental damage of such magnitude as to prejudice the life, health, or property of
inhabitants in two or more cities or provinces in order to arrant the issuance of the writ.
SPECIAL CIVIL ACTION in the Supreme Court. Writ of Continuing Mandamus and/or Writ of
Kalikasan.
544

Braga vs. Abaya
H. Harry L. Roque, Jr. for petitioners.
The Solicitor General for respondents.
BRION, J.:
pg. 218
This is an Urgent Petition for a Writ of Continuing Mandamus and/or Writ of Kalikasan with a
prayer for the issuance of a temporary environmental protection order (TEPO). The petition is
directed against the Department of Transportation and Communications (DOTC) and the
Philippine Ports Authority’s (PPA) modernization project: the Davao Sasa Wharf (the project), a
30-year concession to develop, operate, and manage the port under the Public-Private Partnership
(PPP) scheme.
The project is allegedly being carried out without the necessary Environmental Compliance
Certificate (ECC) or Environmental Impact Statements required under Presidential Decree No.
(P.D.) 15861 and P.D. 1151.2 The project also allegedly failed to conduct local consultation and
to secure prior sanggunian approval as required by the Local Government Code.3
The Facts
The Port of Davao is a seaport located in Mindanao. It is compose of several ports, all within the
gulf of Davao, but its base port is the Sasa Wharf located at Barangay Sasa, Davao City.
In 2011, the Sasa Wharf was pegged for privatization under the PPP scheme.
In 2012, the PPA commissioned a feasibility study (PPA study) on the current condition of the
Sasa Wharf and its potential new targets in volume increase expansion. The study, which was
completed in 2012, was conducted by Science & Vision For Technology, Inc.
The PPA study estimated that the modernization project would cost an estimated 3.5 Billion pesos
for the purchase of new equipment and the installation of new facilities.4
However, the DOTC commissioned another firm, Hamburg port Consultants, to conduct a second
feasibility study (DOTC study) which was concluded in 2013. The DOTC study has a projected
cost of 18 billion pesos and requires the expansion of Sasa Wharf by 27.9 hectares.5
The DOTC study served as one of the primary considerations for current Sasa Wharf expansion
project.
On December 21, 2014, the Regional Development Council for Region XI (the Council) endorsed
the project through Resolution No. 118 subject to the following conditions that must be met before
its implementation:6
1. The DOTC shall immediately secure the acquisition of 6.4 hectares of right-of-way, per
recommendation of the National Economic and Development Authority-Investment
Coordination Committee (NEDA-ICC);
pg. 219
2. The DOTC shall ensure that appropriate compensation is paid to the owners of the
properties to be acquired as additional right-of-way;
3. The DOTC shall ensure the proper relocation/resettlement of the informal settlers affected
by the project; and
4. The DOTC shall ensure the project will also benefit the port users and the people of Davao
by providing better, more affordable service, and generating sustainable employment
opportunities.7
On April 10, 2015, the DOTC published an invitation to prequalify and bid for the Project.8
On March 15, 2016, the petitioners — all stakeholders from Davao City and Samal, Davao del
Norte — filed this Urgent Petition for a Writ of Continuing Mandamus and/or Writ of Kalikasan.
The Petition
The petitioners allege: (1) that the DOTC issued the notice of public bidding despite
noncompliance with Resolution No. 118; (2) that the DOTC did not conduct prior consultation and
public hearings nor secure the approval of the sanggunian concerned as required under Sections
26 and 27 of the LGC; (3) that the Davao City sanggunian had passed a resolution objecting to the
project for its noncompliance with the LGC; and (4) that the DOTC has not yet obtained an
Environmental Compliance Certificate (ECC) as required under P.D. 1586.
They argue that the DOTC’s implementation of the project — one that as a significant impact on
the environment — without preparing an Environmental Impact Statement, securing an ECC, or
consulting the affected stakeholders, violates their constitutional right to a healthy and balanced
ecology.
The petitioners seek to restrain the implementation of the Project — including its bidding and
award — until the respondents secure an ECC and comply with the LGC.
The Counterarguments
The respondents, through the Office of the Solicitor General (OSG), invoke the prematurity of the
petition. They argue that the Project is still in the bidding process; thus, there is still no proponent
to implement it.
pg. 220
The proponent — not the respondents — has the duty to initiate the Environmental Impact
Assessment (EIA) process and to apply for the issuance of the ECC.9 Until the bidding process is
concluded, the EIA process cannot be undertaken and it would be premature to impute
noncompliance with the Environmental Impact Statement System.10
Moreover, consultation with the stakeholders and the local government is premature and
speculative at this point because the proponent has not yet identified the actual details of the
project’s implementation. Again, compliance with the consultation requirements of the LGC
remains premature pending the award of the contract.
They further argue that the allegations do not warrant the issuance of a writ of kalikasan because
the petitioners failed to prove the threat of environmental damage of such magnitude as to
prejudice the life, health, or property of inhabitants in two or more cities or provinces.11
Our Ruling
The petition is premature.
To better understand our judgment, we must first delve into the relevant laws and their progression
over time.
On June 6, 1977, President Ferdinand Marcos enacted P.D. 1151, the Philippine Environmental
Policy. It required all agencies and instrumentalities of the national government, including
government-owned or -controlled corporations (GOCCs), as well as private corporations, firms,
and entities to prepare a detailed Environmental Impact Statement (EIS) for every project or
undertaking that significantly affects the quality of the environment.12
A year later on June 11, 1978, President Marcos issued P.D. 1586 which expounded on P.D. 1151
to institutionalized a more comprehensive EIS System.13 It introduced the ECC, a certificate
issued by the President (or his representative) to environmentally critical projects that have
sufficient safeguards to protect and preserve the environment. It also penalized those who violate
the Environmental Impact System, its implementing rules, or the conditions of their ECC.14
P.D. 1586 tasked the National Environmental Protection Council (the Council) to issue its
implementing rules and regulations (IRR). Environmental Management Bureau (EMB), a bureau
under the Department of Environment and Natural Resources (DENR), absorbed these powers later
on after the council was abolished.15
In 1991, Congress enacted the LGC which promoted public participation by requiring national
government agencies to consult stakeholders before undertaking programs with significant
ecological impact.
pg. 221
In 1996, President Fidel V. Ramos mandated the continuous Strengthening of DENR’s
Environmental Impact Assessment Capability.16 He also required project proponents to conduct
the environmental impact study and the feasibility study of proposed projects simultaneously in
order to maximize the use of resources.17
In an effort to further rationalize the EIS System and streamline the ECC application process,
President Gloria Macapagal-Arroyo directed the DENR Secretary to issue new guidelines in
2002.18
Consequently, the DENR issued Administrative Order (DAO) No. 2003-30, the current IRR for
the EIS System.
Impact Assessment and the EIS System
Environmental Impact Assessment (EIA) is the process of evaluating and predicting the likely
impacts — including cumulative impacts — of an undertaking on the environment.19 Its goal is
to prevent or mitigate potential harm to the environment and to protect the welfare of the affected
community. To this end, the process requires proponents to truthfully and responsibly disclose all
relevant information on the project through the EIS. This facilitates meaningful and informed
public participation that ensures the project’s social acceptability to the community.
_______________
16 Improving the Environmental Impact Statement System, E.O. 291, Series of 1996.
17 Section 2, E.O. 291, Series of 1996.
18 Rationalizing the Implementation of the Philippine Environmental Impact Statement (EIS)

System and Giving Authority, in Addition to the Secretary of the Department of Environment and
Natural Resources, to the Director and Regional Directors of the Environmental Management
Bureau to Grant or Deny the Issuance of Environmental Compliance Certificates, Administrative
Order No. 42, Series of 2002.
19 Article I, Sec. 3(h), Implementing Rules and Regulations for the Philippine Environmental
Impact Statement System, DENR Administrative Order No. (DAO) 30-2003, signed June 30, 2003.
The following are the key operating principles of the EIS System:
a. The EIS System is concerned primarily with assessing the direct and indirect impacts of a project
on the biophysical and human environment and ensuring that these impacts are addressed by
appropriate environmental protection and enhancement measures;
pg. 222
b. The EIS System aids proponents in incorporating environmental considerations in planning their
projects as well as in determining the environment’s impact on their project;
c. Project proponents are responsible for determining and disclosing all relevant information
necessary for a methodical assessment of the environmental impacts of their projects;
d. The review of the EIS by EMB shall be guided by three general criteria: (1) that environmental
considerations are integrated into the overall project planning, (2) that the assessment is technically
sound and proposed environmental mitigation measures are effective, and (3) that social
acceptability is based on informed public participation;
e. Effective regulatory review of the EIS depends largely on timely, full, and accurate
disclosure of relevant information by project proponents and other stakeholders in the EIA
process;
f. The social acceptability of a project is a result of meaningful public participation, which shall
be assessed as part of the Environmental Compliance Certificate (ECC) application, based on
concerns related to the project’s environmental impacts;
g. The timelines prescribed by this Order, within which an Environmental Compliance Certificate
must be issued, or denied, apply only to processes and actions within the Environmental
Management Bureau’s (EMB) control and do not include actions or activities that are the
responsibility of the proponent.20
Projects or undertakings that pose a potential significant impact to the environment are required to
undergo impact assessment in order to secure ECCs.21 The proponent initiates the application
process by filing a comprehensive EIS with the EMB. The EIS should at least have the following:
a. EIS Executive Summary;
b. Project Description
c. Matrix of the scoping agreement identifying critical issues and concerns, as validated by EMB;
d. Baseline environmental conditions focusing on the sectors (and resources) most significantly
affected by the proposed action
e. Impact assessment focused on significant environmental impacts (in relation to project

construction/commissioning, operation and decommissioning), taking into account cumulative
impacts;
f. Environmental Risk Assessment if determined by EMB as necessary during scoping;
pg. 223
g. Environmental Management Program/Plan;
h. Supporting documents; including technical/socio-economic data used/generated; certificate of

zoning viability and municipal land use plan; and proof of consultation with stakeholders;
i. Proposals for Environmental Monitoring and Guarantee Funds including justification of amount,
when required;
j. Accountability statement of EIA consultants and the project proponent; and
k. Other clearances and documents that may be determined and agreed upon during scoping.22
The EIS contains a detailed project description of the nature, configuration, the raw
materials/natural resources to be used, production system, waste generation and control, timelines,
and all other related activities of the proposed project.23 It also includes an Environmental
Management Plan (EMP) detailing the proponent’s preventive, mitigating, compensatory, and
contingent measures to enhance the project’s positive impacts and minimize ecological risks.24
Projects with potentially significant negative environmental impacts are further required to
conduct public consultations so that the environmental concerns of stakeholders are addressed in
formulating the EMP.25
The impact assessment concludes with EMB’s approval (in the form of an ECC) or rejection (in
the form of a denial letter).26 The ECC signifies that the proposed project will not cause significant
negative impact on the environment based on the proponent’s representation. It also certifies that
the proponent has complied with the EIS System and has committed to implement its approved
EMP. Accordingly, the ECC contains the specific measures and conditions that the proponent must
undertake to mitigate the identified environmental impacts.
The duty to comply with the EIS

System rests on the proponent.
The Sasa Wharf Modernization Project has the potential to significantly affect the quality of the
environment, putting it
within the purview of the EIS System. However, (1) who is responsible for preparing and filing
the EIS and (2) when does this duty arise?
P.D. 1151 and P.D. 1586 requires all agencies and instrumentalities of national government,
including GOCCs, and private corporations, firms, and entities to file the EIS for every proposed
pg. 224
project or undertaking that significantly affects the quality of the environment.27 Section 4 of P.D.
1151 reads:
Section 4. Environmental Impact Statements.—Pursuant to the above enunciated policies and

goals, all agencies and instrumentalities of the national government, including government-
owned or -controlled corporations, as well as private corporations, firms, and entities shall
prepare, file, and include in every action, project, or undertaking which significantly affects the
quality of the environment, a detailed statement on:
(a) the environmental impact of the proposed action, project or undertaking;
(b) any adverse environmental effect which cannot be avoided should the proposal be
implemented;
(c) alternative to the proposed action;
(d) a determination that the short-term uses of the resources of the environment are
consistent with the maintenance and enhancement of the long-term productivity of the same;
and
(e) whenever a proposal involve the use of depletable or nonrenewable resources, a finding
must be made that such use and commitment are warranted.
Before an environmental impact statement is issued by a lead agency, all agencies having
jurisdiction over, or special expertise on the subject matter involved shall comment on the draft
environmental impact statement made by the lead agency within thirty (30) days from receipt of
the same.28
On the other hand, P.D. 1586 states:
Section 2. Environmental Impact Statement System.—There is hereby established an

Environmental Impact Statement System founded and based on the environmental impact
statement required, under Section 4 of Presidential Decree No. 1151, of all agencies and
instrumentalities of the national government, including government-owned or -controlled
corporations, as well as private corporations, firms and entities, for every proposed project and
undertaking which significantly affect the quality of the environment.2
These provisions demonstrate the expansive scope of the EIS System. Unfortunately, they are also
ambiguous when it comes to identifying with particularity the responsible party in multilateral and
collaborative projects.
The IRR of the EIS System simply designates the responsible party as the proponent. Ordinarily,
the proponent is easy to identify — it is the natural or juridical person intending to implement the
project.30 But who are the proponents in PPP Projects which are a collaborative effort between
the government and the private sector?
pg. 225
Republic Act No. 695731 as amended by R.A. 7718, commonly known as the Build-Operate-
Transfer (BOT) Law, identifies the proponent in a PPP project as “the private sector entity which
shall have contractual responsibility for the project.”32 Accordingly, there is yet no project
proponent responsible for the EIS and the ECC until the bidding process has concluded and the
contract has been awarded.
Considering that the Project is still in the bidding stage, the petition or continuing mandamus to
compel the respondents to submit an EIS and secure an ECC is premature. It is also misplaced
because the public respondents DO NOT have the duty to submit the EIS or secure an ECC.
The LGC requires the lead agency

to conduct local consultation and
secure the approval of the con-
cerned sanggunian prior to the
implementation of the project.
The issuance of the ECC does not exempt the project from compliance with other relevant laws.
The LGC, in particular, requires the government agency authorizing the project to conduct local
consultation and secure prior consent for ecologically impactful projects:
Section 26. Duty of National Government Agencies in the Maintenance of Ecological

Balance.—It shall be the duty of every national agency or government-owned or -controlled
corporation authorizing or involved in the planning and implementation of any project or
program that may cause pollution, climatic change, depletion of nonrenewable resources, loss of
crop land, rangeland, or forest cover, and extinction of animal or plant species, to consult with the
local government units, nongovernmental organizations, and other sectors concerned and
explain the goals and objectives of the project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and the measures that will be
undertaken to prevent or minimize the adverse effects thereof.
Section 27. Prior Consultations Required.—No project or program shall be implemented by

government authorities unless the consultations mentioned in Sections 2(c) and 26 hereof are
complied with, and prior approval of the sanggunian concerned is obtained: Provided, That
occupants in areas where such projects are to be implemented shall not be evicted unless
appropriate relocation sites have been provided, in accordance with the provisions of the
Constitution.33
pg. 226
The duty to consult the concerned local government units and the stakeholders belongs to the
national government agency or GOCC authorizing or involved in the planning and implementation
of the project — not the private sector proponent. In this case, this refers to the DOTC.
The LGC does not prohibit the agency from acting through a medium such as the project
proponent.34 In fact, the required consultation under the LGC may overlap with the consultation
prescribed under the EIS System. Both are intended to measure a project’s social acceptability and
secure the community’s approval before the project’s implementation.
However, the agency is responsible for ensuring that: (1) the concerned LGUs and stakeholders
have been thoroughly and truthfully informed of the objectives of the program and its ecological
impact on the community; so that (2) the community, through their sanggunian, can intelligently
give their approval to socially acceptable projects and reject the unacceptable ones. These
requirements must be complied with before the project is implemented.
But when does implementation begin?
The BOT Law defines the proponent as the private sector entity with the contractual responsibility
over the project.35 The contract to a project is executed between the concerned agency and the
winning bidder within seven (7) days from the latter’s receipt of the notice from the agency that
all conditions stated in the Notice of Award have been complied with.36
Upon the signing of the contract, the winning bidder becomes the project proponent. Within
another 7 days from the date of approval or signing of the contract by the head of the Agency, the
agency will issue a “Notice to Commence Implementation” to the proponent.37 Interestingly
enough, even this does not signal the start of the implementation stage.
Upon receipt of the Notice, the proponent is required to prepare detailed engineering designs and
plans based on the prescribed minimum design and performance standards and specifications in
the bid/tender documents.38 The agency shall review the detailed engineering designs in terms of
its compliance with the prescribed standards and specification the designs are found acceptable,
the agency shall approve them incorporation in the contract to be signed by the proponent and the
agency.39
The proponent shall construct the project based on the design and performance standards and
specifications in the detailed engineering design.40 The signing of the finalized contract
incorporating the detailed engineering design is the reckoning point when implementation can
begin. This is the start of the Construction Stage.
The Sasa Wharf Modernization Project has not yet reached the construction stage. The bidding
process had not even been concluded when the present petition was filed. On this account, the
petition is also premature for the purpose of compelling the respondents to comply with Sections
26 and 27 of the LGC.
The purpose of a writ of continuing mandamus is to compel the respondent to perform his duties
under the law. This remedy is available when any government agency, instrumentality, or officer
pg. 227
unlawfully neglects a Specific legal duty in connection with the enforcement or violation of
an environmental law, rule, or regulation, or a right therein, unlawfully excludes another from
the use or enjoyment of such right and there is no other plain, speedy and adequate remedy in the
ordinary course of law.41
The writ cannot be resorted to when the respondent is not the person obliged to perform the duty
under the law (as is the case under the EIS System) or when the period for the respondent to
perform its legal duty has not yet expired (as is the case with the consultation requirements of the
LGC). Accordingly, we cannot issue a writ of continuing mandamus.
The petition does not warrant

a writ of Kalikasan.
Likewise, the Court cannot issue a writ of kalikasan based on the petition. The writ is a remedy to
anyone whose constitutional right to a balanced and healthful ecology is violated or threatened
with violation by a lawful act or omission. However, the violation must involve environmental
damage of such magnitude as to prejudice the life, health, or property of inhabitants in two or
more cities or provinces in order to arrant the issuance of the writ.42
The petitioners allege that the respondents have begun the process of transgressing their right to
health and a balanced ecology through the bidding process.43 They cite The Competitiveness of
Global Port-Cities: Synthesis Report44 to identify the four major negative impacts related to port
operations: 1) environmental impacts, 2) land use impacts, 3) traffic impacts, and 4) other impacts.
The synthesis report claims that most of these impacts affect the surrounding localities.
They claim that the environmental impacts of port operations “are within the field of air emissions,
water quality, soil, waste, biodiversity, noise and other impacts. These environmental impacts can
have consequences for the health of the population of the port city, especially the poorer parts of
port cities.”45
The petitioners also cite Managing Impacts of Development in Coastal Zone, a joint publication
of the DENR, the Bureau of Fisheries and Aquatic Resources (BFAR), the Department of the
Interior and Government (DILG), and the DENR Coastal Resource Management Project (CRMP)
that identified the effects of coastal construction and reclamation, including ports and offshore
moorings.46 The petition alleges that:
26. According to Managing Impacts, “Coastal construction has been the most widespread of
activities affecting coastal resources” since “Any construction that modifies the shoreline
will invariably change currents, wave action, tidal fluctuations, and the transport of
sediments along the coast” while “Coastal construction that restricts the circulation of
coastal water bodies can also degrade water quali[t]y and coastal ecosystems.”47
pg. 228
However, these allegations are insufficient to warrant a writ of kalikasan.
First, the petition failed to identify the particular threats from the Project itself. All it does is cite
the negative impacts of operating a port inside a city based on the Synthesis Report. However,
these impacts already exist because the Port of Davao has been operating since 1900. The Project
is not for the creation of a new port but the modernization of an existing one. At best, the allegations
in support of the application for the writ of kalikasan are hazy and speculative.
Second, the joint publication is titled Managing Impacts of Development in the Coastal Zone for a
reason; it identifies the potential environmental impacts and proposes mitigation measures to
protest the environment. The petition is misleading because it only identified the risks but
neglected to mention the existence and availability of mitigating measures.48
Moreover, this Court does not have the technical competence to assess the Project, identify the
environmental threats, and weigh the sufficiency or insufficiency of any proposed mitigation
measures. This specialized competence is lodged in the DENR, who acts through the EMB in the
EIA process. As we have already established, the application of the EIS System is premature until
a proponent is selected.
Further, we fail to see an environmental risk that threatens to prejudice the inhabitants of two or
more cities or municipalities if we do not restrain the conduct of the bidding process. The bidding
process is not equivalent to the implementation of the project. The bidding process itself cannot
conceivably cause any environmental damage.
Finally, it is premature to conclude that the respondents violated the conditions of Resolution No.
118 issued by the Regional Development Council of Region XI. Notably, the Resolution requires
compliance before the implementation of the project. Again, the project has not yet reached the
implementation stage.
WHEREFORE, we DENY the petition for its prematurity and lack of merit.
SO ORDERED.
Sereno (CJ.), Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Del Castillo, Perez, Mendoza,
Reyes, Perlas-Bernabe, Leonen, Jardeleza and Caguioa, JJ., concur.
Bersamin,** J., On Official Leave.
Petition denied.
Notes.—The concept of continuing mandamus was first introduced in Metropolitan Manila

Development Authority v. Concerned Residents of Manila Bay, 574 SCRA 661 (2008); Similar to
the procedure under Rule 65 of the Rules of Court for special civil actions for certiorari,
prohibition and mandamus, Section 4, Rule 8 of the Rules of Procedure for Environmental Cases
pg. 229
(A.M. No. 09-6-8-SC) requires that the petition filed should be sufficient in form and substance
before a court may take further action; otherwise, the court may dismiss the petition outright.
(Dolot vs. Paje, 703 SCRA 650 [2013])
The Rules on the Writ of Kalikasan, which is Part III of the Rules of Procedure for Environmental
Cases, was issued by the Court pursuant to its power to promulgate rules for the protection and
enforcement of constitutional rights, in particular, the individual’s right to a balanced and healthful
ecology. (Paje vs. Casiño, 749 SCRA 39 [2015])
——o0o——
_______________
** Per Special Order No. 2373 dated August 30, 2016.
Case Short Name: National Power Corporation vs. Asoque
G.R. No. 172507. September 14, 2016.*
NATIONAL POWER CORPORATION, petitioner, vs. SPS. MARGARITO ASOQUE and

TARCINIA ASOQUE, respondents.
Remedial Law; Civil Procedure; Ex Parte Hearing; Rule 18, Section 5 of the 1997 Rules of Civil
Procedure, provides that if it is the defendant who fails to appear, then the plaintiff may be allowed
“to present his evidence ex parte and the court to render judgment on the basis thereof.”—The
Regional Trial Court did not err in allowing respondents to present their evidence ex parte. The
action of the trial court is expressly allowed under Rule 18, Section 5 of the 1997 Rules of Civil
Procedure. Section 5 provides that if it is the defendant who fails to appear, then the plaintiff may
be allowed “to present his evidence ex parte and the court to render judgment on the basis thereof.”
Petitioner’s stance that it was deprived of due process because it was not given the reasonable
opportunity to attend the second pretrial setting is likewise untenable. Petitioner and its counsel
were absent during the first pretrial setting on May 8, 2000. Respondents’ counsel attended,
although he was late. Had petitioner and its counsel appeared on the first setting, they would have
been reasonably notified then and there of the second pretrial resetting on May 24, 2000 and would
have had the opportunity to ask for a later date. Nonetheless, petitioner’s counsel should have tried
to inquire from the court the next schedule of the pretrial.
pg. 230
Same; Same; Pretrial; Attendance by the party and its counsel during a pretrial conference is
mandatory as expressly stated under Rule 18, Section 4 of the 1997 Rules of Civil Procedure.—
Attendance by the party and its counsel during a pretrial conference is mandatory as expressly
stated under Rule 18, Section 4 of the 1997 Rules of Civil Procedure. Petitioner alleges that it filed
a motion for postponement of the first pretrial setting. This notwithstanding, it was still its duty to
appear at the pretrial first set on May 8, 2000. A motion for postponement should never be
presumed to be granted.
Same; Same; Motion for Postponement; A motion for postponement should be filed on or before
the lapse of the day sought to be postponed.—Petitioner does not refute respondents’ argument
that its Urgent Manifestation and Motion, although dated May 24, 2000, was filed only one (1)
day after the scheduled pretrial sought to be postponed, on May 25, 2000. The trial court was,
therefore, justified in denying petitioner’s motion for postponement for having been filed out of
time. A motion for postponement should be filed on or before the lapse of the day sought to be
postponed. In any case, “the matter of postponement of a hearing is addressed to the sound
discretion of the court [and] unless there is a grave abuse of discretion in the exercise thereof the
same should not be disturbed on review.”
Same; Same; Pretrial; A pretrial cannot be taken for granted for it serves a vital objective: the
simplification and expedition of the trial, if not its dispensation.—Under the circumstances,
petitioner cannot claim that it was denied due process. “Parties are presumed to have known the
governing rules and the consequences for the violation of such rules.” Moreover, the essence of
due process is an opportunity to be heard. Petitioner was given that opportunity. Yet, it failed to
appear at the two (2) pretrial settings. A pretrial cannot be taken for granted for it serves a vital
objective: the simplification and expedition of the trial, if not its dispensation. Nonappearance of
a party may only be excused for a valid cause. We see none in this case.
Same; Same; Appointment of Commissioners; The procedure of designating the clerk of court as
commissioner to receive and report evidence to the court is sanctioned by Rule 32, Sections 2 and
3 of the 1997 Rules of Civil Procedure.—The procedure of designating the clerk of court as
commissioner to receive and report evidence to the court is likewise sanctioned by Rule 32,
Sections 2 and 3 of the 1997 Rules of Civil Procedure.
Expropriation Proceedings; Easements; Easement of Right-of-Way; While expropriation normally

involves a taking of title to and possession of the property, an easement of right-of-way on a private
property can be considered a taking under eminent domain under certain conditions.—Petitioner
is liable to pay respondents just compensation and not merely an easement fee on the basis that its
acquisition of a right-of-way easement over the portion of respondents’ land was a taking under
the power of eminent domain. While expropriation normally involves a taking of title to and
possession of the property, an easement of right-of-way on a private property can be considered a
taking under eminent domain under certain conditions. In Republic v. PLDT, 26 SCRA 620 (1969):
Normally, of course, the power of eminent domain results in the taking or appropriation of title to,
and possession of, the expropriated property; but no cogent reason appears why the said power
may not be availed of to impose only a burden upon the owner of condemned property, without
loss of title and possession. It is unquestionable that real property may, through expropriation, be
subjected to an easement of right-of-way.
pg. 231
Same; Taking; Elements of.—There is taking in the context of the state’s power of eminent domain
when the following elements are present: (1) The expropriator enters a private property; (2) The
entrance into the private property is indefinite or permanent; (3) There is color of legal authority
in the entry into the property; (4) The property is devoted to public use or purpose; and (5) The
use of property for public use removed from the owner all beneficial enjoyment of the property.
Same; Easements; Easement of Right-of-Way; A right-of-way easement or burden becomes a

“taking” under eminent domain when there is material impairment of the value of the property or
prevention of the ordinary uses of the property for an indefinite period.—A right-of-way easement
or burden becomes a “taking” under eminent domain when there is material impairment of the
value of the property or prevention of the ordinary uses of the property for an indefinite period.
The intrusion into the property must be so immediate and direct as to subtract from the owner’s
full enjoyment of the property and to limit his or her exploitation of it.
Same; Same; Same; The right-of-way easement resulting in a limitation on property rights over
the land traversed by transmission lines also falls within the ambit of the term “expropriation.”—
The right-of-way easement resulting in a limitation on property rights over the land traversed by
transmission lines also falls within the ambit of the term “expropriation.”
Same; Just Compensation; Well-settled is the rule that the determination of just compensation for
property taken in expropriation is a judicial prerogative.—Due to the nature of the easement,
which will deprive the normal use of the land for an indefinite period and expose the property
owners’ lives and limbs to danger, just compensation must be based on the full market value of
the affected property. Section 3(a) of Republic Act No. 6395, as amended, states that only 10% of
the market value of the property is due the owner of the property subject to a right-of-way
easement. However, this rule is not binding on the Court. Well-settled is the rule that the
determination of just compensation for property taken in expropriation is a judicial prerogative.
Such discretion cannot be curtailed by legislation.
Same; Same; The value and character of the land at the time it was taken by government are the
criteria for determining just compensation.—Just compensation has been defined as the “fair and
full equivalent of the loss.” In National Power Corporation v. YCLA Sugar Development
Corporation, 712 SCRA 550 (2013): The word “just” is used to intensify the meaning of the word
“compensation” and to convey thereby the idea that the equivalent to be rendered for the property
to be taken shall be real, substantial, full and ample. The constitutional limitation of “just
compensation” is considered to be a sum equivalent to the market value of the property, broadly
defined as the price fixed by the seller in open market in the usual and ordinary course of legal
action and competition; or the fair value of the property; as between one who receives and one
who desires to sell it, fixed at the time of the actual taking by the government. The value and
character of the land at the time it was taken by government are the criteria for determining just
compensation. “All the facts as to the condition of the property and its surroundings, as well as its
improvements and capabilities, must thus be considered.” Some factors that have been previously
considered by the courts were acquisition cost, current value of like properties, its actual or
potential uses, its size, shape, and location, and the tax declarations on the property. In this regard,
the standards enumerated in statutes such as Section 5 of Republic Act No. 8974 are merely
recommendatory, and courts are not bound to consider all of them.
pg. 232
Office of the Solicitor General for petitioner.
Jose M. Mendiola for respondents.
LEONEN, J.:
Article III, Section 91 of the Constitution provides a substantive guarantee that private property
that is taken by the state for public use should be paid for with just compensation. If the state does
not agree with the property owner on a price, the state, through the competent government agency,
should file the proper expropriation action under Rule 67 of the Revised Rules of Court.
In case of a taking without the proper expropriation action filed, the property owner may file its
own action to question the propriety of the taking or to compel the payment of just compensation.
Among these inverse condemnation actions is a complaint for payment of just compensation and
damages.
When an inverse condemnation is filed, the provisions for the appointment of commissioners under
Rule 32 — not Sections 5, 6, 7, or 8 of Rule 67 of the Rules of Court — will be followed.
This resolves a Petition for Review on Certiorari2 filed by the National Power Corporation to
nullify and set aside the November 21, 2005 Decision3 and May 3, 2006 Resolution4 of the Court
of Appeals in C.A.-G.R. CV No. 76313. The assailed Decision affirmed with modification the
judgment of Branch 31 of the Regional Trial Court, Calbayog City, which, in turn, directed the
National Power Corporation to pay the value of the 4,352-square-meter portion of Spouses
Margarito and Tarcinia Asoque’s (Spouses Asoque) land utilized in its Leyte-Luzon Transmission
Line Project.5 The assailed Resolution denied the National Power Corporation’s Motion for
Reconsideration.6
Spouses Asoque are the registered owners of a parcel of coconut land located in Barangay
Bugtong, Calbayog City. The parcel of land has an area of 59,099 square meters and is covered by
Original Certificate of Title No. 2376.7
Sometime in November 1995, the National Power Corporation entered the Spouses Asoque’s land
to install transmission lines for its 350 KV Leyte-Luzon HVDC Power Transmission Line
Project.8 The National Power Corporation utilized 4,352 square meters for the project.9
Spouses Asoque allege that beforehand, they were made to understand that the National Power
Corporation would pay them the value of the portion of the land used and all improvements that
pg. 233
would be destroyed for the National Power Corporation’s project.10 Spouses Asoque incurred
actual damages as a result of the National Power Corporation’s cutting off some coconut trees and
other fruit- and non-fruit-bearing plants during the construction.11 They were also prohibited from
introducing on the 4,352-square-meter area any improvement that could rise by a few meters from
the ground.12
Upon Spouses Asoque’s demand for just compensation, the National Power Corporation only paid
for the improvements destroyed and refused to pay for the actual value of the 4,352-square-meter
area utilized for the project.13 The National Power Corporation claimed that it was only liable to
pay for right-of-way at 10% of the market value under Section 3-A of Republic Act No. 6395,14
as amended.15
On September 20, 1999, Spouses Asoque filed before the Regional Trial Court of Calbayog City
a Complaint16 for payment of just compensation and damages against the National Power
Corporation. The case was docketed as Civil Case No. 737 and was raffled to Branch 31.
In its Answer17 dated February 7, 2000, the National Power Corporation denied Spouses Asoque’s
claims that it had illegally utilized their property. It alleged that it entered the property with
Spouses Asoque’s consent, as shown by the acknowledgment receipt18 for P9,897.00 as payment
for damaged improvements and waiver of claims to improvements damaged.19 By virtue of the
acknowledgment receipt and the waiver, the National Power Corporation claimed that there was
no more need for it to institute an expropriation proceeding.20
When Civil Case No. 737 was called for pretrial on May 8, 2000, the case was ordered dismissed
by the trial court due to the nonappearance of both parties and their counsel.21 However, the case
was reinstated after Spouses Asoque’s counsel explained to the trial court the reason why he
arrived late. The pretrial of the case was reset to May 24, 2000.22
On May 24, 2000, the trial court, noting the absence of the National Power Corporation and its
counsel, allowed Spouses Asoque to present their evidence ex parte before a court-appointed
Commissioner. It simultaneously dismissed the National Power Corporation’s counterclaim.23
On June 6, 2000, the trial court denied National Power Corporation’s Urgent Manifestation and
Motion to Reset Pretrial, finding it to have been filed out of time and also moot and academic.24
National Power Corporation’s subsequent Motion for Reconsideration was denied in the trial
court’s Order dated June 21, 2000.25
“On June 22, July 24[,] and August 28, 2000, Spouses Asoque presented evidence ex parte before
Atty. Ferdinand S. Arpon, Branch Clerk of Court, who was appointed Commissioner by the trial
court.”26 Spouses Asoque then filed their Formal Offer of Documentary Exhibits27 on September
6, 2000, to which the National Power Corporation filed its Comment/Objection28 on October 13,
2000, citing the inadmissibility of the exhibits presented.29
On July 20, 2001, the Commissioner submitted to the trial court his Commissioner’s Report dated
July 19, 2001.30 He recommended that the fair market value of the land be placed at P800.00 per
square meter and that the schedule of prevailing market value of the trees, plants, and crops
pg. 234
prepared by the Office of the Provincial Agriculturist, Catbalogan, Samar be adopted to compute
the amount of compensation for the damaged improvements.31
On August 21, 2001, the trial court received the National Power Corporation’s
Comment/Opposition to Commissioner’s Report, to which Spouses Asoque filed their Rejoinder
on September 20, 2001.32
The National Power Corporation and Spouses Asoque filed their respective memoranda on
February 5, 2002 and April 1, 2002. Thereafter, the case was deemed submitted for decision.33
On June 25, 2002, the Regional Trial Court rendered the Decision34 in favor of Spouses Asoque
and ordered the National Power Corporation to pay them the amounts of:
(1) P3,481,600.00 as just compensation of the land containing an area of 4,352 square
meters at P800.00 per square meter, with legal interest from November 1995 until fully paid;
and
(2) P158,369.00 as compensation for the improvements on the land, with interest at the legal
rate from November 1995 until fully paid.
Aggrieved, the National Power Corporation filed an appeal before the Court of Appeals.35
The Court of Appeals denied36 the National Power Corporation’s appeal in its Decision dated
November 21, 2005. It affirmed with modification the Regional Trial Court Decision by deleting
the amount of P158,369.00 as compensation for the damaged improvements for lack of legal and
factual basis.37
The Court of Appeals found no impropriety on the part of the Regional Trial Court in allowing
Spouses Asoque to present their evidence ex parte and in appointing the Branch Clerk of Court as
Commissioner to receive Spouses Asoque’s evidence ex parte.38 It also found no irregularity in
the trial court’s adoption of the Commissioner’s report/recommendation, which was found to be
comprehensive and supported by evidence.39
Rejecting the National Power Corporation’s stance that only an easement of right-of-way was
acquired at 10% of the market value under Section 3-A of Republic Act No. 6395, the Court of
Appeals ruled that the determination of just compensation is a judicial function and cannot be
diminished by Republic Act No. 6395, as amended.40
Finally, the Court of Appeals found that Spouses Asoque have already been properly compensated
for the damaged improvements per disbursement vouchers in the total amount of P17,133.50, and
Spouses Asoque failed to present competent proof that they were entitled to an additional award
of actual damages.41
pg. 235
The National Power Corporation moved for reconsideration, but the Motion was denied in the
Resolution dated May 3, 2006.
Hence, petitioner National Power Corporation filed the present Petition, assigning the following
errors purportedly committed by the appellate court:
[1] The appellate court erred in affirming respondents’ presentation of evidence ex parte[;]
[2] The appellate court erred in affirming the trial court’s appointment of a commissioner, and
validating the proceedings he conducted[;]
[3] The appellate court erred in affirming the trial court’s directive to petitioner NPC to
compensate respondents for the value of the land notwithstanding that only an easement thereon
was acquired[;] [and]
[4] Assuming that petitioner NPC is liable to pay just compensation for the subject property and
the improvements thereon, the trial court nonetheless erred in the determination of the values
thereof.42
This Court outright denied the Petition for lack of a verified statement of material date of filing of
the Motion for Reconsideration of the assailed judgment under Rule 45, Sections 4(b) and 5, in
relation to Rule 56, Section 5(d).43 However, on petitioner’s Motion for Reconsideration,44 this
Court reinstated45 the Petition and required respondents to comment.
Respondents Spouses Margarito and Tarcinia Asoque filed their Comments46 on October 25,
2006, and petitioner filed its Reply47 on April 17, 2007. Pursuant to this Court’s Resolution48
dated June 25, 2007, petitioner and respondents filed their respective memoranda on December
14, 200749 and November 29, 2007.50
On February 11, 2008, this Court noted the memoranda of the parties.51
Petitioner contends that it was not given a reasonable opportunity to be heard, which is the essence
of due process.52 Only a very short notice was given to its counsel to attend the pretrial, even
though petitioner’s lawyers were based in Cebu.53 In contrast, respondents’ counsel held office in
Catbalogan City, where the trial court sits.54
The May 24, 2000 pretrial setting was allegedly too close to May 8, 2000, the date of the Order
that set it, as to afford petitioner a reasonable opportunity to make arrangements for it.55 The May
8, 2000 Order, which was served by registered mail, was received by petitioner only on May 22,
2000, just two (2) days before the pretrial on May 24, 2000.56 By then, both of petitioner’s lawyers
were out of town (one was in Manila and the other was in San Isidro, Northern Samar) on official
business.57 Petitioner contends that despite having been informed through the Urgent
Manifestation and Motion to Reset Pretrial dated May 24, 2000 and the Motion for
Reconsideration dated June 8, 2000 of the reason for the failure of petitioner’s counsel to appear
pg. 236
at the May 24, 2000 pretrial, the trial court refused to reconsider its default order; thus, the trial
court deprived petitioner of its right to due process.58
Petitioner further argues that the trial court’s appointment of a commissioner and the latter’s
appraisal of the fair market value of the property and the improvements made were defective and
ultra vires.59 It contends that Rule 18, Section 2(f) of the Rules of Court does not give the
Commissioner such authority but merely allows him to assist in defining the issues to be resolved
during the trial.60 Petitioner also points out that the May 8, 2000 Order merely designated a
commissioner to receive respondents’ evidence and nothing more.61 There is likewise no showing
that the Commissioner took an oath before performing his function, as required by the Rules.62
As to the third and fourth assigned errors, petitioner claims that it is liable to pay only an easement
fee under Section 3-A of its Charter, which is computed as 10% of the fair market value of the
affected portion of respondents’ land based on the valuation (P3.31 per square meter) specified in
Tax Declaration No. 96-03023-00104.63 Petitioner contends that the three (3) expropriation cases
decided in 1997 by other branches of the Regional Trial Court of Catbalogan City, which were
cited by the trial court in adopting the Commissioner’s recommendation, were not reliable bases
for determining the fair market value of respondents’ property. This is because the parcels of land
in the three (3) expropriation cases were located in other barangays of Calbayog City and there is
no showing that the decisions therein have attained finality.64 Finally, petitioner submits that the
City Assessor’s valuation of the subject property appearing in Tax Declaration No. 96-03023-
00104 should prevail over that determined by the Commissioner — the Branch Clerk of Court —
who does not have the expertise or competence to conduct property appraisals as required under
Rule 67, Section 5.65
Respondents aver that the trial court was justified in allowing them to present evidence ex parte
because (1) petitioner and its counsel failed to appear at the pretrial on May 24, 2000; and (2)
petitioner’s Urgent Manifestation and Motion to postpone the pretrial setting on May 24, 2000 was
filed late.66 They add that due process was satisfied in the court a quo as petitioner was afforded
the fair and reasonable opportunity to defend its side and to move for the reconsideration of the
trial court ruling.67
As to the appointment of the Branch Clerk of Court as Commissioner, respondents aver that this
was proper and sanctioned by the Rules; that the Commissioner’s preliminary determination of
just compensation was merely recommendatory and did not make the ex parte proceedings invalid;
and that the final determination of the amount of just compensation still rests on the trial judge.68
Lastly, respondents contend that Section 3-A of Republic Act No. 6395 cannot defeat the trial
court’s determination of the just compensation of their property; that the determination of just
compensation is a judicial function; and that it has been ruled in previous cases that the acquisition
of right-of-way easement is a taking under the power of eminent domain and the owner is entitled
to the money equivalent of the property expropriated.69
The issues for resolution are:
pg. 237
First, whether petitioner was deprived of due process when respondents were allowed to present
evidence ex parte;
Second, whether the appraisal of the property was valid and the court-appointed Commissioner
exceeded his authority when he conducted an appraisal of the property and recommended a
valuation for just compensation;
Third, whether petitioner should be made to pay simple easement fee or full compensation for the
land traversed by its transmission lines; and
Lastly, whether the trial court erred in its determination of the amount of just compensation to be
paid to respondents.
The Petition lacks merit.
The Regional Trial Court did not err in allowing respondents to present their evidence ex parte.
The action of the trial court is expressly allowed under Rule 18, Section 5 of the 1997 Rules of
Civil Procedure. Section 5 provides that if it is the defendant who fails to appear, then the plaintiff
may be allowed “to present his evidence ex parte and the court to render judgment on the basis
thereof.” Petitioner’s stance that it was deprived of due process because it was not given the
reasonable opportunity to attend the second pretrial setting is likewise untenable.
Petitioner and its counsel were absent during the first pre-trial setting on May 8, 2000.
Respondents’ counsel attended, although he was late. Had petitioner and its counsel appeared on
the first setting, they would have been reasonably notified
_______________
69 Id.
598

National Power Corporation vs. Asoque
pg. 238
then and there of the second pretrial resetting on May 24, 2000 and would have had the opportunity
to ask for a later date. Nonetheless, petitioner’s counsel should have tried to inquire from the court
the next schedule of the pretrial.
Attendance by the party and its counsel during a pretrial conference is mandatory as expressly
stated under Rule 18, Section 4 of the 1997 Rules of Civil Procedure.70 Petitioner alleges that it
filed a motion for postponement of the first pretrial setting. This notwithstanding, it was still its
duty to appear at the pretrial first set on May 8, 2000. A motion for postponement should never be
presumed to be granted.71
Petitioner does not refute respondents’ argument that its Urgent Manifestation and Motion,
although dated May 24, 2000, was filed only one (1) day after the scheduled pretrial sought to be
postponed, on May 25, 2000. The trial court was, therefore, justified in denying petitioner’s motion
for postponement for having been filed out of time. A motion for postponement should be filed on
or before the lapse of the day sought to be postponed.72 In any case, “the matter of post-
_______________
70 Rules of Court, Rule 18, Sec. 4 provides:
SECTION 4. Appearance of Parties.—It shall be the duty of the parties and their counsel
to appear at the pretrial. The nonappearance of a party may be excused only if a valid cause
is shown therefor or if a representative shall appear in his behalf fully authorized in writing
to enter into an amicable settlement, to submit to alternative modes of dispute resolution,
and to enter into stipulations or admissions of facts and of documents.
71 Intestate Estate of the Late Ricardo P. Presbitero, Sr. v. Court of Appeals, 291 Phil. 387, 395-
396; 217 SCRA 372, 380-381 (1993) [Per J. Davide, Jr., Third Division]. See also Heirs of Ramon
B. Gayares v. Pacific Asia Overseas Shipping Corporation, 691 Phil. 46, 55; 676 SCRA 450, 460
(2012) [Per J. Del Castillo, First Division], citing Ramos v. Dajoyag, Jr., 428 Phil. 267, 278; 378
SCRA 229, 236 (2002) [Per J. Mendoza, Second Division].
72 In Linis v. Rovira, 61 Phil. 137, 139 (1935) [Per J. Imperial, En Banc], the trial court denied
the motion for postponement of a
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ponement of a hearing is addressed to the sound discretion of the court [and] unless there is a grave
abuse of discretion in the exercise thereof the same should not be disturbed on review.”73
pg. 239
Petitioner’s counsel received the Regional Trial Court Order resetting the pretrial to May 24, 2000
on May 22, 2000. Assuming its counsel was unable to appear at the second pretrial setting,
petitioner could and should have sent a representative on May 24, 2000 to ask for postponement
of the second pretrial setting. During the second pretrial setting, it was not only petitioner’s counsel
who failed to appear, but petitioner as well.
_______________
hearing on the ground that it was presented out of time and the reason alleged therein was
insufficient. This Court affirmed the trial court, thus: “The postponement of the hearing of a case,
which had been previously set and of which the parties and their attorneys had already been
notified, is not an absolute right of the litigants nor of their attorneys. The granting of a motion for
postponement depends entirely upon the discretion of the courts, in the exercise of which all the
attending circumstances and the rights of all the parties appearing therein should be taken into
account. If the postponement would manifestly prejudice some of the parties, or, if the motion for
postponement had been presented too late to prevent them from notifying their witnesses not to
appear, thus causing them considerable trouble and expense, as probably would have happened in
the present case, it is the duty of the courts to deny it.”
In Macabingkil v. People’s Homesite and Housing Corporation, 164 Phil. 328, 341; 72 SCRA
326, 339 (1976) [Per J. Antonio, Second Division]: “These provisions of the Rules of Court
prescribing the time within which certain acts must he done, or certain proceedings taken, are
considered absolutely indispensable to the prevention of needless delays and to the orderly and
speedy discharge of judicial businesses. The time can be extended only if a motion for extension
is filed within the time or period provided therefor.”
73 Belstar Transportation, Inc. v. Board of Transportation, 260 Phil. 219, 223; 181 SCRA 209,
213 (1990) [Per J. Gancayco, First Division].
600

Under the circumstances, petitioner cannot claim that it was denied due process. “Parties are
presumed to have known the governing rules and the consequences for the violation of such
rules.”74 Moreover, the essence of due process is an opportunity to be heard. Petitioner was given
that opportunity. Yet, it failed to appear at the two (2) pretrial settings. A pretrial cannot be taken
for granted for it serves a vital objective: the simplification and expedition of the trial, if not its
dispensation. Nonappearance of a party may only be excused for a valid cause. We see none in
this case.
pg. 240
In Air Philippines Corporation v. International Business Aviation Services Philippines, Inc.,75 the
petitioner and its counsel did not appear during the scheduled pretrials and did not file a pretrial
brief even after filing a motion to extend the date for filing. Hence, the respondent was allowed to
adduce its evidence ex parte. The petitioner moved for reconsideration, but the motion was denied.
After the ex parte presentation of the respondent’s evidence, the trial court rendered a judgment in
favor of the respondent. The petitioner moved for new trial arguing that it was deprived of its day
in court due to the gross negligence of its counsel, but the trial court denied the motion. Affirming
the trial court, this Count ruled that the petitioner and its counsel’s lapses showed a plain disregard
of the duty imposed by law. Ruling that there was no denial of due process, this Court held:
“The essence of due process is to be found in the reasonable opportunity to be heard and submit
any evidence one may have in support of one’s defense.” Where the opportunity to be heard, either
through verbal arguments or pleadings, is accorded, and the party can “present its side” or defend
its “interest in due course,” “there
_______________
74 Paredes v. Verano, 535 Phil. 274, 285; 504 SCRA 264, 274 (2006) [Per J. Tinga, Third
Division].
75 481 Phil. 366; 438 SCRA 51 (2004) [Per J. Panganiban, Third Division].
601
VOL. 802, SEPTEMBER 14, 2016 601

is no denial of procedural due process.” Petitioner has been given its chance, and after being
declared in default, judgment has not been automatically “rendered in favor of the non-defaulting
party.” Rather, judgment was made only after carefully weighing the evidence presented.
Substantive and adjective laws do complement each other “in the just and speedy resolution of the
dispute between the parties.”76 (Citations omitted)
Similarly, petitioner in this case was not deprived of its day in court. Petitioner was able to file a
Motion for Reconsideration, participate in further proceedings, and was allowed to submit its
objections to respondents’ evidence and to the Commissioner’s recommendation before the trial
court rendered judgment. It must, therefore, bear the consequences of its lapses.
pg. 241
II
On the second issue, we likewise find petitioner’s arguments untenable.
The procedure of designating the clerk of court as commissioner to receive and report evidence to
the court is likewise sanctioned by Rule 32, Sections 2 and 3 of the 1997 Rules of Civil Procedure.
Section 3 of the same Rule, speaking of the authority that may be granted to a Commissioner,
provides:
RULE 32
Trial by Commissioner
....
SEC. 3. Order of reference; powers of the commissioner.—When a reference is made, the clerk
shall forthwith furnish the commissioner with a copy of the order of reference. The order may
specify or limit the powers of the commissioner, and may direct him to report only
_______________
76 Id., at p. 386; pp. 66-67.
602

upon particular issues, or to do or perform particular acts, or to receive and report evidence only,
and may fix the date for beginning and closing the hearings and for the filing of his report. Subject
to the specifications and limitations stated in the order, the commissioner has and shall exercise
the power to regulate the proceedings in every hearing before him and to do all acts and take all
measures necessary or proper for the efficient performance of his duties under the order. He may
issue subpoenas and subpoenas duces tecum, swear witnesses, and unless otherwise provided in
pg. 242
the order of reference, he may rule upon the admissibility of evidence. The trial or hearing before
him shall proceed in all respects as it would if held before the court.
Furthermore, after the hearing before the Commissioner, the Commissioner must file a written
report, which may contain his or her factual findings and conclusions of law:
RULE 32
Trial by Commissioner
....
SEC. 9. Report of commissioner.—Upon the completion of the trial or hearing or proceeding

before the commissioner, he shall file with the court his report in writing upon the matters
submitted to him by the order of reference. When his powers are not specified or limited, he shall
set forth his findings of fact and conclusions of law in his report. He shall attach thereto all exhibits,
affidavits, depositions, papers and the transcript, if any, of the testimonial evidence presented
before him.
With respect to the proceedings in the court a quo, the Court of Appeals observed that:
The report of the commissioner shows clearly that he received and evaluated [respondents’]
evidence which were adduced ex parte. His preliminary determination of the just compensation of
the property [in] issue would not
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necessarily render invalid the ex parte proceedings conducted by him. The valuations suggested
by the commissioner as just compensation for [respondents’] land that was utilized by [petitioner]
pg. 243
were merely recommendatory. The final determination of just compensation was left to the court
a quo as it rests within the exclusive domain of the latter. Simply stated, the court a quo was still
at liberty to reject or adopt the recommendations of the commissioner.77 (Emphasis in the original)
Hence, absent any express limitation in the order of reference, Branch Clerk of Court Atty.
Ferdinand S. Arpon, as the court-appointed Commissioner, may make factual findings and
recommendations on the valuation of the property. Indeed, the Commissioner’s recommendation
could have been necessarily rejected had it been an ultra vires act.
Besides, the proceedings before the Regional Trial Court were not for expropriation — for which
petitioner itself claims that there is no need — but were for recovery of just compensation and
damages initiated by respondents. Hence, Rule 67, Section 5 on the ascertainment of the just
compensation to be paid was no longer applicable. A trial before commissioners, for instance, was
dispensable.78
In Republic of the Philippines v. Court of Appeals,79 the National Irrigation Administration took
possession of the property without the benefit of expropriation proceedings. The property owner
subsequently filed a case for recovery of pos-
_______________
77 Rollo, p. 37.
78 National Power Corporation v. Vda. de Capin, 590 Phil. 665, 680; 569 SCRA 648, 664 (2008)
[Per J. Chico-Nazario, Third Division]; National Power Corporation v. Bongbong, 549 Phil. 93,
109; 520 SCRA 290, 306-307 (2007) [Per J. Callejo, Sr., Third Division]; and National Power
Corporation v. Court of Appeals, 479 Phil. 850, 867; 436 SCRA 195, 210 (2004) [Per J. Carpio,
First Division].
79 494 Phil. 494; 454 SCRA 516 (2005) [Per J. Carpio, First Division].
604

session or its value and damages. This Court held that Rule 67 presupposes a prior filing of a
complaint by the expropriator for eminent domain with the appropriate court. If no such complaint
is filed, the expropriator is considered to have violated procedural requirements and, hence, waived
pg. 244
the usual procedure prescribed in Rule 67. This includes the appointment of commissioners to
ascertain just compensation, thus:
NIA contends that it was deprived of due process when the trial court determined the compensation
due to respondent without the assistance of commissioners. NIA refers to the procedure found in
Section 5, Rule 67 of the 1964 Rules of Court applicable at the time[.]
....
Rule 67, however, presupposes that NIA exercised its right of eminent domain by filing a
complaint for that purpose before the appropriate court. Judicial determination of the propriety of
the exercise of the power of eminent domain and the just compensation for the subject property
then follows. The proceedings give the property owner the chance to object to the taking of his
property and to present evidence on its value and on the consequential damage to other parts of his
property.
Respondent was not given these opportunities, as NIA did not observe the procedure in Rule 67.
Worse, NIA refused to pay respondent just compensation. The seizure of ones property without
payment, even though intended for public use, is a taking without due process of law and a denial
of the equal protection of the laws. NIA, not respondent, transgressed the requirements of due
process.
When a government agency itself violates procedural requirements, it waives the usual procedure
prescribed in Rule 67. This Court ruled in the recent case of National Power Corporation (NPC)
v. Court of Appeals, to wit:
We have held that the usual procedure in the determination of just compensation is waived
605
VOL. 802, SEPTEMBER 14, 2016 605

when the government itself initially violates procedural requirements. NPC’s taking of
Pobre’s property without filing the appropriate expropriation proceedings and paying him
just compensation is a transgression of procedural due process.
pg. 245
Like in NPC, the present case is not an action for expropriation. NIA never filed expropriation
proceedings although it had ample opportunity to do so. Respondents’ complaint is an ordinary
civil action for the recovery of possession of the Property or its value, and damages. Under these
circumstances, a trial before commissioners is not necessary.80 (Emphasis in the original, citations
omitted)
We hold that the non-appointment of three (3) Commissioners in the court a quo does not render
infirm the entire proceedings. Neither do we find improper the trial court’s appointment of the
Branch Clerk of Court as Commissioner to receive and report on respondents’ evidence. The trial
court is not bound by the Commissioner’s recommended valuation of the property. It still has the
discretion on whether to adopt the Commissioner’s recommendation or to make its own
independent valuation as gathered from the evidence reported by the Commissioner.
III
Petitioner is liable to pay respondents just compensation and not merely an easement fee on the
basis that its acquisition of a right-of-way easement over the portion of respondents’ land was a
taking under the power of eminent domain.
While expropriation normally involves a taking of title to and possession of the property, an
easement of right-of-way
_______________
80 Id., at pp. 504-506; pp. 530-531.
606

on a private property can be considered a taking under eminent domain under certain conditions.
In Republic v. PLDT:81
Normally, of course, the power of eminent domain results in the taking or appropriation of title to,
and possession of, the expropriated property; but no cogent reason appears why the said power
pg. 246
may not be availed of to impose only a burden upon the owner of condemned property, without
loss of title and possession. It is unquestionable that real property may, through expropriation, be
subjected to an easement of right-of-way.82
There is taking in the context of the state’s power of eminent domain when the following elements
are present:
(1) The expropriator enters a private property;
(2) The entrance into the private property is indefinite or permanent;
(3) There is color of legal authority in the entry into the property;
(4) The property is devoted to public use or purpose; and
(5) The use of property for public use removed from the owner all beneficial enjoyment of
the property.83
A right-of-way easement or burden becomes a “taking” under eminent domain when there is
material impairment of the value of the property or prevention of the ordinary uses of the property
for an indefinite period.84 The intrusion into the
_______________
81 136 Phil. 20; 26 SCRA 620 (1969) [Per J. J.B.L. Reyes, En Banc].
82 Id., at pp. 29-30; p. 628.
83 Republic v. Vda. de Castellvi, 157 Phil. 329, 345-347; 58 SCRA 336, 346 (1974) [Per J.
Zaldivar, En Banc].
84 Heirs of Mateo Pidacan and Romana Eigo v. Air Transportation Office (ATO), 552 Phil. 48,
55-56, 524 SCRA 679, 687 (2007) [Per J. Quisumbing, Second Division]; Didipio Earth-Savers’
Multi-
607
VOL. 802, SEPTEMBER 14, 2016 607
pg. 247
property must be so immediate and direct as to subtract from the owner’s full enjoyment of the
property and to limit his or her exploitation of it.
In Republic v. Andaya,85 the enforcement by the Republic of its legal easement on Andaya’s
property for concrete levees and floodwalls would render the remaining property unusable and
uninhabitable. This Court held that there was a taking of the remaining area of Andaya’s property:
We are, however, unable to sustain the Republic’s argument that it is not liable to pay
consequential damages if in enforcing the legal easement on Andaya’s property, the remaining
area would be rendered unusable and uninhabitable. “Taking,” in the exercise of the power of
eminent domain, occurs not only when the government actually deprives or dispossesses the
property owner of his property or of its ordinary use, but also when there is a practical destruction
or material impairment of the value of his property. Using this standard, there was undoubtedly a
taking of the remaining area of Andaya’s property. True, no burden was imposed thereon and
Andaya still retained title and possession of the property. But, as correctly observed by the Board
and affirmed by the courts a quo, the nature and the effect of the floodwalls would deprive Andaya
of the normal use of the remaining areas. It would prevent ingress and egress to the property and
turn it into a catch basin for the floodwaters coming from the Agusan River.86 (Emphasis supplied,
citations omitted)
_______________
Purpose Association, Incorporated (DESAMA) v. Gozun, 520 Phil. 457, 480-481; 485 SCRA 586,
607 (2006) [Per J. Chico-Nazario, First Division].
85 552 Phil. 40; 524 SCRA 671 (2007) [Per J. Quisumbing, Second Division].
86 Id., at pp. 45-46; p. 676.
608

National Power Corporation v. Heirs of Macabangkit Sangkay87 held that the National Power
Corporation’s surreptitious construction of a tunnel underneath the respondents’ land adversely
affected the respondent’s rights and interests. This is because the National Power Corporation’s
subterranean intervention prevented the respondents from introducing any developments on the
pg. 248
surface and from disposing of the land or any portion of it. Hence, there was a taking of the land
as to entitle the owners to just compensation:
We agree with both the RTC and the CA that there was a full taking on the part of NPC,
notwithstanding that the owners were not completely and actually dispossessed. It is settled that
the taking of private property for public use, to be compensable, need not be an actual physical
taking or appropriation. Indeed, the expropriator’s action may be short of acquisition of title,
physical possession, or occupancy but may still amount to a taking. Compensable taking includes
destruction, restriction, diminution, or interruption of the rights of ownership or of the common
and necessary use and enjoyment of the property in a lawful manner, lessening or destroying its
value. It is neither necessary that the owner be wholly deprived of the use of his property, nor
material whether the property is removed from the possession of the owner, or in any respect
changes hands.88 (Citations omitted)
The right-of-way easement resulting in a limitation on property rights over the land traversed by
transmission lines also falls within the ambit of the term “expropriation.”89
_______________
87 671 Phil. 569; 656 SCRA 60 (2011) [Per J. Bersamin, First Division].
88 Id., at pp. 595-596; pp. 86-87.
89 See National Power Corporation v. Suarez, 589 Phil. 219; 568 SCRA 232 (2008) [Per J.
Carpio-Morales, Second Division]; National Power Corporation v. Tiangco, 543 Phil. 637; 514
SCRA 674 (2007) [Per J. Garcia, First Division]; National Power Corporation v. Manubay
609
VOL. 802, SEPTEMBER 14, 2016 609

In National Power Corporation v. Spouses Gutierrez,90 the petitioner argued that it should only
be made to pay easement fees instead of the full market value of the land traversed by its
transmission lines. In striking down the petitioner’s argument and ruling that the property owners
were entitled to the full market value of the land in question, the Court ruled that:
The trial court’s observation shared by the appellate court show that “x x x While it is true that
plaintiff [is] only after a right-of-way easement, it nevertheless perpetually deprives defendants of
their proprietary rights as manifested by the imposition by the plaintiff upon defendants that below
pg. 249
said transmission lines no plant higher than three (3) meters is allowed. Furthermore, because of
the high-tension current conveyed through said transmission lines, danger to life and limbs that
may be caused beneath said wires cannot altogether be discounted, and to cap it all, plaintiff only
pays the fee to defendants once, while the latter shall continually pay the taxes due on said affected
portion of their property.”
The foregoing facts considered, the acquisition of the right-of-way easement falls within the
purview of the power of eminent domain. Such conclusion finds support in similar cases of
easement of right-of-way where the Supreme Court sustained the award of just compensation for
private property condemned for public use[.]
....
In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent
domain. Considering the nature and effect of the installation of the 230 KV Mexico-Limay
transmission lines, the limita-
_______________
Agro-Industrial Development Corporation, 480 Phil. 470; 437 SCRA 60 (2004) [Per J.
Panganiban, Third Division]; Camarines Norte Electric Cooperative, Inc. v. Court of Appeals, 398
Phil. 886; 345 SCRA 85 (2000) [Per J. Pardo, First Division].
90 271 Phil. 1; 193 SCRA 1 (1991) [Per J. Bidin, Third Division].
610

tion imposed by NPC against the use of the land for an indefinite period deprives private
respondents of its ordinary use.91
In National Power Corporation v. Aguirre-Paderanga,92 despite the National Power

Corporation’s protestation that the traversed land could still be used for agricultural purposes,
pg. 250
subject only to its easement, this Court nevertheless held that the right-of-way easement was a
taking under the power of eminent domain:
From the Commissioners Report chronicling the following findings:
....
IMPROVEMENTS AFFECTED
Per ocular inspection made on lot own[ed] by PETRONA O. DILAO, et al. traversed by a
transmission line of NPC and with my verification as to the number of improvements, the
following trees had been damaged.
1. 55 coco trees productive
2. 10 mango trees productive
3. 30 cacao trees productive
4. 110 bananas
5. 400 ipil-ipil trees
....
it cannot be gainsaid that NPCs complaint merely involves a simple case of mere passage of
transmission lines over Dilao, et al.’s property. Aside from the actual damage done to the property
traversed by the transmission lines, the agricultural and economic activity normally undertaken on
the entire property is unquestiona-
_______________
91 Id., at pp. 6-7; p. 7.
92 502 Phil. 722; 464 SCRA 481 (2005) [Per J. Carpio-Morales, Third Division].
pg. 251
611
VOL. 802, SEPTEMBER 14, 2016 611

bly restricted and perpetually hampered as the environment is made dangerous to the occupants’
life and limb.93
In National Power Corporation v. Tiangco:94
While the power of eminent domain results in the taking or appropriation of title to, and possession
of, the expropriated property, no cogent reason appears why said power may not be availed of to
impose only a burden upon the owner of the condemned property, without loss of title and
possession. However, if the easement is intended to perpetually or indefinitely deprive the owner
of his proprietary rights through the imposition of conditions that affect the ordinary use, free
enjoyment and disposal of the property or through restrictions and limitations that are inconsistent
with the exercise of the attributes of ownership, or when the introduction of structures or objects
which, by their nature, create or increase the probability of injury, death upon or destruction of
life and property found on the land is necessary, then the owner should be compensated for the
monetary equivalent of the land, in accordance with our ruling in NPC v. Manubay Agro-
Industrial:
....
The evidence suggests that NPCs transmission line project that traverses the respondents’ property
is perpetual, or at least indefinite, in nature. Moreover, not to be discounted is the fact that the
high-tension current to be conveyed through said transmission lines evidently poses a danger to
life and limb; injury, death or destruction to life and property within the vicinity. As the Court held
in NPC v. Chiong, it is not improper to assume that NPC will erect structures for its transmission
lines within the property. What is sought to be expropriated in this case is, at its longest extent,
326.34 meters, and
through it may be built several structures, not simply one[.]95 (Emphasis supplied, citations
omitted)
pg. 252
Hence, due to the nature of the easement, which will deprive the normal use of the land for an
indefinite period and expose the property owners’ lives and limbs to danger, just compensation
must be based on the full market value of the affected property.96
Section 3(a) of Republic Act No. 6395, as amended, states that only 10% of the market value of
the property is due the owner of the property subject to a right-of-way easement. However, this
rule is not binding on the Court. Well-settled is the rule that the determination of just compensation
for property taken in expropriation is a judicial prerogative.97 Such discretion cannot be curtailed
by legislation.
In Export Processing Zone Authority v. Dulay:98
The determination of “just compensation” in eminent domain cases is a judicial function. The
executive department or the legislature may make the initial determinations but when a party
claims a violation of the guarantee in the Bill of Rights that private property may not be taken for
public use without just compensation, no statute, decree, or executive order can mandate that its
own determination shall prevail over the court’s findings. Much less can the courts be precluded
from looking into the “just-ness” of the decreed compensation.99 (Emphasis supplied)
Therefore, the Regional Trial Court was correct when it adjudged the National Power Corporation
liable to pay the value of the 4,352-square-meter portion of respondents’ land that was used for its
transmission line project.
IV
As regards the amount of just compensation, factual issues pertaining to the valuation of the
expropriated property are generally beyond the pale of review under a Rule 45 petition.100 Factual
findings of the trial and appellate courts will not be disturbed by this Court unless they are
grounded entirely on speculations, surmises, or conjectures, among others,101 which do not obtain
in this case.
Just compensation has been defined as the “fair and full equivalent of the loss.”102 In National
Power Corporation v. YCLA Sugar Development Corporation:103
The word “just” is used to intensify the meaning of the word “compensation” and to convey
thereby the idea that the equivalent to be rendered for the property to be taken shall be real,
substantial, full and ample. The constitutional limitation of “just compensation” is considered to
be a sum equivalent to the market value of the property, broadly defined as the price fixed by the
seller in open market in the usual and ordinary course of legal action and competition; or the fair
pg. 253
value of the property; as between one who receives and one who desires to sell it, fixed at the time
of the actual taking by the government.104
The value and character of the land at the time it was taken by government are the criteria for
determining just compensation.105 “All the facts as to the condition of the property and its
surroundings, as well as its improvements and capabilities, must thus be considered.”106
_______________
conclusions without citation of specific evidence on which they are based; (9) when the facts set
forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record.”
102 National Power Corporation v. Court of Appeals, supra note 78.
103 723 Phil. 616; 712 SCRA 550 (2013) [Per J. Reyes, First Division].
104 Id., at p. 623; p. 558. See Republic v. Rural Bank of Kabacan, Inc., 680 Phil. 247, 256-257;
664 SCRA 233, 244 (2012) [Per J. Sereno, Second Division].
105 National Power Corporation v. Chiong, 452 Phil. 649, 664; 404 SCRA 527, 539 (2003) [Per
J. Quisumbing, Second Division].
106 National Power Corporation v. Suarez, supra note 89; National Power Corporation v.
Manubay Agro-Industrial Development Corporation, supra note 89 at p. 480; p. 69.
615
VOL. 802, SEPTEMBER 14, 2016 615

Some factors that have been previously considered by the courts were acquisition cost, current
value of like properties, its actual or potential uses, its size, shape, and location, and the tax
declarations on the property.107 In this regard, the standards enumerated in statutes such as
Section 5108 of Republic Act No. 8974109 are merely recommendatory, and courts are not bound
to consider all of them.
In this case, the Branch Clerk of Court as Commissioner reported that an inquiry with the Register
of Deeds, Calbayog City involving transfer of realties from January 1998 to December 2000
pg. 254
showed that no transaction involved a parcel of land located at Barangay Bugtong or its adjacent
barangays of Tinaplacan and Caglanipao Sur.111 On the other hand, he found Exhibits F and G
not sufficient to prove respondents’ claim that their land was worth P1,000.00 per square meter as
the properties in Exhibits F and G were located several kilometers away from respondents’ land
and were of a different classification.112
Furthermore, the Branch Clerk of Court as Commissioner stated that one high-ranking personnel
of the City Assessor’s Office of Calbayog observed that the market value of respondents’ land in
the Tax Declaration is a very low appraisal.113 As such, when he made the recommendation, he
considered other factors such as the accessibility of the property, availability of basic services in
the area, land valuation trend in the City of Calbayog (which was somewhere between P600.00
and P3,000.00 per square meter),114 and interviews with some landowners of the adjacent lots
stating that they would not sell their lands lower than P500.00 per square meter.115
The Regional Trial Court found the amount recommended by the Commissioner as just
compensation for the property to be reasonable, thus:
[T]he Court finds the amount recommended by the commissioner as just compensation of the
property expropriated by defendant to be reasonable and fairly based on the evidence adduced by
plaintiff. Exhibits “F” and series, “G” and series, and “H” and series show the com-parative value
of the lands in Western Samar. The Court takes note that in the three cases of expropriation
involving lands in Catbalogan, Samar, the National Power Corporation was adjudged to pay the
value of the properties from Php2,000.00 to Php2,200.00 per square meter, and these were cases
decided in 1997. Likewise, this Court takes cognizance of the fact that the commissioner may avail
or consider certain factors in determining the fair market value of the property apart from the
preferred documentary evidences. Thus, the factors taken into account by the commissioner in
arriving at the recommended fair market value of the property at Php800.00 per square meter, aside
from the evidence available, were valid criteria or gauge in the determination of the just
compensation of the subject property.116
The determination of just compensation being a judicial function, we find no compelling reason to
disturb the valuation set by the Regional Trial Court and approved by the Court of Appeals. It has
not been sufficiently shown to be grossly exorbitant or otherwise unjustified.117
WHEREFORE, the Petition is DENIED. The November 21, 2005 Decision of the Court of
Appeals in C.A.-G.R. CV No. 76313 is AFFIRMED. Petitioner National Power Corporation is
ORDERED to pay respondents Spouses Margarito and Tarcinia Asoque the amount of
P3,481,600.00 as just compensation for the 4,352-square-meter property, with legal interest at 6%
per annum from November 1995 until fully paid. Upon petitioner’s payment of the full amount,
respondents are ORDERED to execute a Deed of Conveyance of the 4,352-square-meter property
in favor of petitioner.
SO ORDERED.
pg. 255
_______________
116 Id., at p. 210.
117 National Power Corporation v. Chiong, supra note 105 at p. 664; p. 540.
618

Carpio (Chairperson), Brion, Del Castillo and Mendoza, JJ., concur.
Notes.—We find petitioners’ concept of what is “adequate outlet” a complete disregard of the
well-entrenched doctrine that in order to justify the imposition of an easement of right-of-way,
there must be real, not fictitious or artificial, necessity for it. Mere convenience for the dominant
estate is not what is required by law as the basis of setting up a compulsory easement. (Dichoso,
Jr. vs. Marcos, 647 SCRA 495 [2011])
The convenience of the dominant estate has never been the gauge for the grant of compulsory
right-of-way. To be sure, the true standard for the grant of the legal right is “adequacy.” Hence,
when there is already an existing adequate outlet from the dominant estate to a public highway, as
in this case, even when the said outlet, for one reason or another, be inconvenient, the need to open
up another servitude is entirely unjustified. (Id.)
——o0o——
pg. 256
Case Short Name: Aleguela vs. Eastern Petroleum Corporation
G.R. No. 223852. September 14, 2016.*
EDNA ROQUE ALEGUELA, FELIPE GONZALES, DOLORES COCHESA, LUISA

CAGALINGAN, REYNALDO JUNSAY, BONIFACIA RODRIQUEZ, CONEY
CERDENA, and all persons claiming rights under them, petitioners, vs. EASTERN
PETROLEUM CORPORATION and J&M PROPERTIES AND CONSTRUCTION
CORPORATION, respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; It is not the Supreme
Court’s (SC’s) function to analyze or weigh all over again evidence already presented in the
proceedings below, since the Court’s jurisdiction is limited to reviewing errors of law that may
have been committed by the lower court.—The settled rule is that only questions of law may be
raised in a petition for review under Rule 45 of the Rules of Court. It is not the Court’s function to
analyze or weigh all over again evidence already presented in the proceedings below, since the
Court’s jurisdiction is limited to reviewing errors of law that may have been committed by the
lower court. The resolution of factual issues is the function of the lower courts, whose findings on
these matters are received with respect.
Same; Special Civil Actions; Ejectment; Urban Land Reform Act; In Medina v. Mayor Asistio, Jr.,
191 SCRA 218 (1990), the Supreme Court (SC) emphasized that “only legitimate tenants may be
extended the protective mantle of the decree cited to the exclusion of others.”—The basic rule is
that he who alleges a fact has the burden of proving it. Based on the records, the petitioners were
only able to prove that they were the lots’ possessors. Their possession, however, could be based
on the other modes specifically excluded by P.D. No. 1517 from its cover, namely, tolerance, force
or deceit. In Medina v. Mayor Asistio, Jr., 191 SCRA 218 (1990), the Court emphasized that “only
legitimate tenants may be extended the protective mantle of the decree cited to the exclusion of
others.” Where no contracts are presented to qualify persons as legitimate tenants, the protection
afforded therein cannot be rightfully invoked. The petitioners could not have simply relied on the
testimonial and documentary evidence presented by Cagalingan and Flores to prove their tenancy.
The nature of their possession was independent of the other defendants’ own agreement or lease
with the previous landowners.
Same; Civil Procedure; Res Judicata; The principle of res judicata does not apply because the
ejectment suits and the present complaint covered different causes of action.—Given the
foregoing, the CA was correct in ruling in favor of the respondents. Their rights to possess, use
and occupy the subject parcels of land, being the present registered owners thereof, have been
sufficiently established. Not even the petitioners’ reference to the prior dismissal by the MeTC of
the ejectment suits first filed against them by the respondents supports their assertion. The
principle of res judicata does not apply because the ejectment suits and the present complaint
covered different causes of action. Moreover, the ejectment suits were not decided on the merits.
These were dismissed mainly on the ground that the ownership issue was raised by the respondents,
pg. 257
a matter that was beyond the scope of the MeTC’s jurisdiction. The issue on the petitioners’
tenancy was not resolved in the said cases.
Castillo, Go and Associates Law Office for petitioners.
Andres, Padernal & Paras for respondents.
RESOLUTION
REYES, J.:
Before the Court is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court
by Edna Roque Aleguela, Felipe Gonzales, Dolores Cochesa,2 Luisa Cagalingan, Reynaldo
Junsay, Bonifacia Rodriguez, Coney Cerdena (collectively, the petitioners), and all persons
claiming rights under them against Eastern Petroleum Corporation (Eastern Petroleum) and J&M
Properties and Construction Corporation (J&M Properties) (collectively, the respondents),
assailing the Decision3 dated April 6, 2016 of the Court of Appeals (CA) in C.A.-G.R. CV No.
103391. The assailed CA decision affirmed the Decision4 dated June 11, 2014 of the Regional
Trial Court (RTC) of Pasig City, Branch 166, in Civil Case No. 72273, that ordered the petitioners
to vacate the disputed parcels of land registered under the names of the respondents, and to pay
reasonable compensation for the lots’ use.
The Antecedents
The petitioners are the occupants of the subject properties situated at J. B. Miguel Street, Barangay
Bambang, Pasig City, particularly, the parcel of land covered by Title No. PT-130608 under the
name of Eastern Petroleum, and the parcels of land covered by PT-140851 and PT-140844 under
the name of J&M Properties. Prior to the issuance of the three certificates of title, the properties
were covered by one title, TCT No. 314548. The respondents’ titles were issued by the Register
of Deeds following the presentation of a Deed of Absolute Sale dated January 27, 2006 that named
them as the lots’ purchasers.5
pg. 258
Subsequent to the sale, the respondents sought to take possession of the lots but the petitioners
refused to vacate the premises notwithstanding a monetary offer for their relocation by the
respondents. This prompted the respondents to institute ejectment suits with the Metropolitan Trial
Court (MeTC) of Pasig City, although these were dismissed by the MeTC.6
Thereafter, the respondents filed with the RTC of Pasig City an action for recovery of possession
with damages against the petitioners, along with their codefendants Placido “Eddie” Cagalingan
(Cagalingan) and Avelino Flores (Flores) who also occupied the subject lots.7
In their answer to the complaint, the petitioners contended that they had been occupying the lots
for more than 50 years. The properties had been declared part of the Areas for Priority
Development under Presidential Decree (P.D.) No. 1517, otherwise known as the Urban Land
Reform Act. The issuance of the certificates of title under the respondents’ names violated Sections
6 and 7 of P.D. No. 1517 and Section 2 of P.D. No. 2016,8 which read:
P.D. No. 1517

PROCLAIMING URBAN LAND REFORM IN THE PHILIPPINES AND PROVIDING FOR
THE
IMPLEMENTING MACHINERY THEREOF
Section 6. Land Tenancy in Urban Land Reform Areas.—Within the Urban Zones legitimate
tenants who have resided on the land for ten years or more who have built their homes on the land
and residents who have legally occupied the lands by contract, continuously for the last ten years
shall not be dispossessed of the land and shall be allowed the right of first refusal to purchase the
same within a reasonable time and at reasonable prices, under terms and conditions to be
determined by the Urban Zone Expropriation and Land Management Committee created by
Section 8 of this Decree.
Section 7. Acquisition of Residential Lands for Existing Tenants and Residents.—In cases where
the tenants and residents, referred to in Section 6 of this Decree, are unable to purchase the said
lands, the Government shall acquire the land and/or improvements thereon by expropriation or
other land acquisition technique provided for under Section 11 of this Decree.
xxxx
P.D. No. 2016

PROHIBITING THE EVICTION OF OCCUPANT FAMILIES FROM LAND IDENTIFIED
AND PROCLAIMED AS AREAS FOR PRIORITY DEVELOPMENT (APD) OR AS URBAN
pg. 259
LAND REFORM ZONES AND EXEMPTING SUCH LAND FROM PAYMENT OF REAL
PROPERTY TAXES
Section 2. No tenant or occupant family, residing for ten years or more reckoned from the date
of issuance of Presidential Decree No. 1517 otherwise known as the Urban Land Reform Law, in
land proclaimed as Areas for Priority Development or Urban Land Reform Zones or is a project
for development under the ZIP in Metro Manila and the SIR Program in the regional cities shall
be evicted from the land or otherwise dispossessed.
The petitioners contended that prior to the sale of the lots to the respondents, they were not afforded
the opportunity to exercise their right of first refusal.9
The respondents presented their witnesses during trial. When it was the petitioners’ turn to present
their evidence, their counsel failed to appear and to submit a judicial affidavit, prompting the RTC
to issue on November 11, 2013 an Order declaring the petitioners to have waived their right to
present evidence. Only Cagalingan and Flores were able to present additional evidence to support
their claims as possessors of the lots.10
Ruling of the RTC
On June 11, 2014, the RTC rendered its Decision11 against the defendants. The dispositive portion
of the RTC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered x x x.
Anent [the defendants], judgment is hereby rendered in favor of the [respondents] and against the
[defendants] by ordering them:
1. To vacate the premises and surrender peaceful possession to the [respondents] within
thirty (30) days from notice; and
2. To pay the amount of Php500.00 each defendant per month as reasonable compensation
for the use of the property starting November 2009, the date this complaint was filed, until
such time that they actually surrender possession of the properties to the [respondents].
pg. 260
No pronouncement as to cost.
SO ORDERED.12
The petitioners moved to reconsider, but their motion was denied by the RTC, in its Order13 dated
August 27, 2014. Dissatisfied, the petitioners appealed to the CA.
Ruling of the CA
The CA, in its Decision14 dated April 6, 2016, denied the appeal and affirmed the decision of the
RTC.
The CA explained that while the petitioners were the occupants of the properties within an urban
land reform zone, they failed to establish that they were legitimate tenants thereof. Section 3(f) of
P.D. No. 1517 defines a tenant as the rightful occupant of land and its structures, but does not
include those whose presence on the land is merely tolerated and without the benefit of contract,
those who enter the land by force or deceit, or those whose possession is under litigation.15
The mere fact that the petitioners had been the occupants of the disputed lots for more than 50
years failed to suffice. They had to provide evidence that could establish a valid contract of lease
with the lots’ former owners, with proof of payment of rentals as tenants. Otherwise, it could be
inferred that the petitioners’ possession was by mere tolerance.16
Hence, this petition for review on certiorari.
Present Petition
The petitioners insist that their possession of the disputed lots is by virtue of a contract of lease
with the person under whose name the disputed properties were formerly registered, specifically
Carlos L. Asuncion, his heirs and successors-in-interest. Their possession under such nature has
spanned more than 50 years already.17 Pursuant to pertinent statutes, the lots should have been
first offered for sale to them and in case a sale was not concluded, the government was to
expropriate the properties.
pg. 261
Ruling of the Court
The petition is denied.
_______________
15 Id., at pp. 71-72.
16 Id.
17 Id., at p. 19.
345
VOL. 803, SEPTEMBER 14, 2016 345

Aleguela vs. Eastern Petroleum Corporation
Considering the arguments presented by the petitioners to support their petition, it is evident that
they call upon the Court to make a review of the factual dispositions made by both the RTC and
the CA. Both courts, in particular, have ruled negatively on the petitioners’ ability to prove that
they are tenants, as contemplated in P.D. No. 1517 and P.D. No. 2016, who are entitled to the
benefits provided by law.
The settled rule is that only questions of law may be raised in a petition for review under Rule 45
of the Rules of Court. It is not the Court’s function to analyze or weigh all over again evidence
already presented in the proceedings below, since the Court’s jurisdiction is limited to reviewing
errors of law that may have been committed by the lower court. The resolution of factual issues is
the function of the lower courts, whose findings on these matters are received with respect.18
In any case, the Court finds no compelling reason to deviate from the factual findings of the RTC,
as affirmed by the CA. The law that applies to the issue on the petitioners’ entitlement to a right
of first refusal over the disputed properties is P.D. No. 1517, which grants legitimate tenants in
urban land reform areas certain benefits affecting land acquisition and ownership. In Estreller, et
al. v. Ysmael, et al.,19 the Court reiterated the rationale and the parameters that render P.D. No.
1517, along with P.D. No. 2016, applicable, to wit:
Section 6 of P.D. No. 1517 grants preferential rights to landless tenants/occupants to acquire land
within urban land reform areas, while Section 2 of P.D. No. 2016 prohibits the eviction of qualified
tenants/occupants.
pg. 262
In Dimaculangan v. Casalla, the Court was emphatic in ruling that the protective mantle of P.D.
No. 1517 and P.D. No. 2016 extends only to landless urban families who meet these qualifications:
a) they are ten-
_______________
18 Heirs of Pacencia Racaza v. Abay-Abay, 687 Phil. 584, 590-591; 672 SCRA 622, 627-628
(2012).
19 600 Phil. 292; 581 SCRA 247 (2009).
346

ants as defined under Section 3(f) of P.D. No. 1517; b) they built a home on the land they are
leasing or occupying; c) the land they are leasing or occupying is within an Area for Priority
Development and Urban Land Reform Zone; and d) they have resided on the land continuously
for the last 10 years or more.20 (Citation omitted)
Section 3 of P.D. No. 1517 referred to in the foregoing qualifications limits the cover of “tenants”
whom the law seeks to protect, particularly:
Sec. 3. Definitions.—x x x
xxxx
(f) Tenant refers to the rightful occupant of land and its structures, but does not include those
whose presence on the land is merely tolerated and without the benefit of contract, those who enter
the land by force or deceit, or those whose possession is under litigation.
xxxx
pg. 263
There is no dispute that the subject properties fall within the scope of P.D. No. 1517, after the
petitioners and their codefendants, Cagalingan and Flores, supplied sufficient proof on the lots’
nature. Maps and certifications issued by the Housing and Land Use Regulatory Board were
presented before the RTC. However, unlike Cagalingan and Flores who were able to submit proofs
of their respective tenancy arrangements with the lots’ previous owners, the petitioners opted not
to present their own contracts with the owners. Such failure was critical to their defense because
proof of tenancy is a vital condition that could render P.D. No. 1517 applicable to a case.
_______________
20 Id., at p. 301; p. 256.
347
VOL. 803, SEPTEMBER 14, 2016 347

The basic rule is that he who alleges a fact has the burden of proving it.21 Based on the records,
the petitioners were only able to prove that they were the lots’ possessors. Their possession,
however, could be based on the other modes specifically excluded by P.D. No. 1517 from its cover,
namely, tolerance, force or deceit. In Medina v. Mayor Asistio, Jr.,22 the Court emphasized that
“only legitimate tenants may be extended the protective mantle of the decree cited to the exclusion
of others.”23 Where no contracts are presented to qualify persons as legitimate tenants, the
protection afforded therein cannot be rightfully invoked.24
The petitioners could not have simply relied on the testimonial and documentary evidence
presented by Cagalingan and Flores to prove their tenancy. The nature of their possession was
independent of the other defendants’ own agreement or lease with the previous landowners.
Given the foregoing, the CA was correct in ruling in favor of the respondents. Their rights to
possess, use and occupy the subject parcels of land, being the present registered owners thereof,
have been sufficiently established. Not even the petitioners’ reference to the prior dismissal by the
MeTC of the ejectment suits first filed against them by the respondents supports their
assertion.25 The principle of res judicata does not apply because the ejectment suits and the
present complaint covered different causes of action. Moreover, the ejectment suits were not
decided on the merits. These were dismissed mainly on the ground that the ownership issue was
raised by the respondents, a matter that was beyond the
_______________
pg. 264
21 MZR Industries v. Colambot, 716 Phil. 617, 626; 704 SCRA 150, 159 (2013), citing Machica
v. Roosevelt Services Center, Inc., 523 Phil. 199, 209; 489 SCRA 534, 544-545 (2006).
22 269 Phil. 225; 191 SCRA 218 (1990).
23 Id., at p. 234; p. 226.
24 Id.
25 Rollo, pp. 22-24.
348

scope of the MeTC’s jurisdiction.26 The issue on the petitioners’ tenancy was not resolved in the
said cases.
WHEREFORE, the petition is DENIED. The Decision dated April 6, 2016 of the Court of
Appeals in C.A.-G.R. CV No. 103391 is AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Perez and Jardeleza, JJ., concur.
Notes.—For P.D. 1517 to apply, the tenants must have been a legitimate tenant for ten (10) years
who have built their homes on the disputed property. (Esteban vs. Marcelo, 703 SCRA 82 [2013])
Subject to certain exceptions, the Court will not review, analyze and weigh all over again evidence
already considered in the proceedings below. (Department of Education vs. Tuliao, 725 SCRA 560
[2014])
——o0o——
pg. 265
G.R. No. 183947. September 21, 2016.*
RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. TEODORO G.

BERNARDINO, respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; The Supreme Court’s
(SC’s) jurisdiction in a Rule 45 petition is limited to the review of pure questions of law;
Exceptions.—As a rule, we are not a trier of facts. Our jurisdiction in a Rule 45 petition is limited
to the review of pure questions of law. Factual findings of the lower court, especially when
affirmed by the appellate court, are usually binding to us. However, this rule admits of certain
exceptions, three of which apply in this case: 1) when the conclusion is a finding grounded entirely
on speculation, surmises and conjectures; 2) when the inference made is manifestly mistaken,
absurd or impossible; and 3) when the judgment is based on a misapprehension of facts. As such,
we find it warranted to depart from the general rule and reexamine the facts of the case.
Same; Evidence; Burden of Proof; It is a basic rule in evidence that the burden of proof lies upon
him who asserts it, not upon him who denies, since, by the nature of things, he who denies a fact
cannot produce any proof of it.—It is a basic rule in evidence that the burden of proof lies upon
him who asserts it, not upon him who denies, since, by the nature of things, he who denies a fact
cannot produce any proof of it. Thus, the party, whether plaintiff or defendant, who asserts the
affirmative of an issue has the onus to prove his assertion in order to obtain a favorable judgment.
For the plaintiff, the burden to prove its positive assertions never parts.
Same; Same; Preponderance of Evidence; Preponderance of evidence is the weight, credit, and
value of the aggregate evidence on either side and is usually considered to be synonymous with
the term “greater weight of evidence” or “greater weight of the credible evidence.”—
Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side
and is usually considered to be synonymous with the term “greater weight of evidence” or “greater
weight of the credible evidence.” Preponderance of evidence is a phrase which, in the last analysis,
means probability to truth. It is evidence which is more convincing to the court as worthier of
belief than that which is offered in opposition.
Same; Same; Witnesses; The failure of a witness to recall each and every detail of an occurrence
may even serve to strengthen rather than weaken his credibility because it erases any suspicion of
a coached or rehearsed testimony.—Although Rojas could not recall some details of the meetings,
We find these details innocuous and merely incidental. Rojas cannot be expected to remember
every single detail of the meeting with perfect recall. Far from adversely affecting his credibility,
his failure to recall every minute detail of what transpired even fortifies it. We have held that the
failure of a witness to recall each and every detail of an occurrence may even serve to strengthen
rather than weaken his credibility because it erases any suspicion of a coached or rehearsed
testimony. What is clear from the testimony of Rojas is that the surety agreement was discussed
and he was of the opinion, from the bank’s perspective, that such security was not enough.
Nowhere did he
pg. 266
588

Rizal Commercial Banking Corporation vs. Bernardino
state or admit that the parties agreed to, much less discussed, a subrogation agreement as a
condition precedent to the surety agreement.
Same; Same; Parol Evidence Rule; When the parties have reduced their agreement into writing,
they are deemed to have intended the written agreement to be the sole repository and memorial of
everything that they have agreed upon; Whatever is not found in the writing is understood to have
been waived and abandoned.—When the parties have reduced their agreement into writing, they
are deemed to have intended the written agreement to be the sole repository and memorial of
everything that they have agreed upon. All their prior and contemporaneous agreements are
deemed to be merged in the written document so that, as between them and their successors-in-
interest, such writing becomes exclusive evidence of its terms and any verbal agreement which
tends to vary, alter or modify it is not admissible. Whatever is not found in the writing is
understood to have been waived and abandoned. This must be so because an oral testimony on an
alleged prior or contemporaneous agreement, such as the subrogation agreement subject of
Bernardino’s testimony in this case, comes from a party who has an interest in the outcome of the
case and depends exclusively on human memory. Thus, it is not as reliable as written documentary
evidence. Spoken words could be notoriously undesirable unlike a written contract which speaks
of a uniform language.
Same; Same; Same; It is only where a party puts in issue in his pleadings the failure of the written
agreement to express the true intent of the parties that the party may present evidence to modify,
explain or add to the terms of the written agreement.—Be that as it may, the rule prohibiting the
presentation of parol evidence is not absolute. A party may present evidence to modify, explain or
add to the terms of the written agreement if he puts in issue in his pleading any of the following:
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement; (b) The failure of the
written agreement to express the true intent and agreement of the parties thereto; (c) The validity
of the written agreement; or (d) The existence of other terms agreed to by the parties or their
successors-in-interest after the execution of the written agreement. In his Complaint, however,
Bernardino did not plead any exception to the application of the parol evidence rule. All that he
pleaded was the alleged collateral agreement with which RCBC must first comply. We have
uniformly held that it is only where a party puts in issue in his pleadings the failure of the written
589
pg. 267
VOL. 803, SEPTEMBER 21, 2016 589
agreement to express the true intent of the parties that the party may present evidence to modify,
explain or add to the terms of the written agreement. The failure of Bernardino, therefore, should
have rendered the parol evidence inadmissible. However, no timely objection or protest was made
against its admission and RCBC, against whom it was presented, cross-examined the witnesses
who testified. Failure to object to the parol evidence constitutes a waiver to its admissibility.
Same; Same; Same; The exception to the parol evidence rule on the ground that the agreement
fails to express the true intent of the parties obtains only where the written contract is so
ambiguous or obscure in terms that the contractual intention of the parties cannot be understood
from a mere reading of the instrument.—The exception to the parol evidence rule on the ground
that the agreement fails to express the true intent of the parties obtains only where the written
contract is so ambiguous or obscure in terms that the contractual intention of the parties cannot be
understood from a mere reading of the instrument. As we have earlier pointed out, the surety
agreements are clear and unambiguous. The contractual intention of the parties to bind Bernardino
solidarity with MMC is readily understood from a reading of the surety agreements.
Civil Law; Suretyship; Although the contract of a surety is in essence secondary only to a valid
principal obligation, his liability to the creditor or promisee of the principal is said to be direct,
primary and absolute; in other words, he is directly and equally bound with the principal.—
Suretyship is a contractual relation resulting from an agreement whereby one person, the surety,
engages to be answerable for the debt, default or miscarriage of another, known as the principal.
The surety’s obligation is not an original and direct one for the performance of his own act, but
merely accessory or collateral to the obligation contracted by the principal. Nevertheless, although
the contract of a surety is in essence secondary only to a valid principal obligation, his liability to
the creditor or promisee of the principal is said to be direct, primary and absolute; in other words,
he is directly and equally bound with the principal. The surety therefore becomes liable for the
debt or duty of another although he possesses no direct or personal interest over the obligations
nor does he receive any benefit therefrom.
590

pg. 268
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Rico and Associates for respondent.
JARDELEZA, J.:
This is a Petition for Review on Certiorari1 assailing the Decision dated June 10, 20082 and the
Resolution dated July 22, 20083 of the Court of Appeals (CA) in C.A.-G.R. CV No. 88745. The
assailed Decision and Resolution affirmed the Decision dated June 30, 20064 of the Regional Trial
Court, Branch 59, Makati City in Civil Case No. 98-1851, which declared the comprehensive
surety agreements between Rizal Commercial Banking Corporation (RCBC) and Teodoro G.
Bernardino (Bernardino) unenforceable and having no effect for the reason that the subrogation
agreement, a condition precedent, was not executed.
The Facts
In 1995, Marcopper Mining Corporation (MMC) obtained an unsecured bridge loan from RCBC
in the amount of US$13.7 Million to finance the acquisition of twelve (12) Rig Mining Trucks and
one (1) Demag Excavator Shovel. Payment of the bridge loan was supposed to be sourced from
the proceeds of a long term loan MMC was seeking from Export-Import Bank (EXIM Bank).
EXIM Bank, however, failed to approve the long term loan due to a tailing spill in MMC’s mining
area in Marinduque which caused the stoppage of MMC’s operations.5
_______________
1 Rollo, pp. 13-76.
2 Id., at pp. 78-118. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices
Jose C. Mendoza (now a member of the Court) and Arturo G. Tayag, concurring.
3 Id., at p. 120.
4 Id., at pp. 459-486.
5 Id., at p. 79.
pg. 269
591
VOL. 803, SEPTEMBER 21, 2016 591

Concerned that the short term loan it extended to MMC was unsecured, RCBC negotiated with
MMC to provide collateral or security. MMC yielded to RCBC’s request and decided to mortgage
twelve (12) units of Rig Haul Trucks and one (1) Demag Hydraulic Excavator Shovel covered by
a Deed of Chattel Mortgage dated April 23, 1996.6 Additionally, MMC pledged shares of stocks
covered by Deeds of Pledge dated August 29, 19967 and September 9, 1997.8 RCBC later
expressed interest in substituting these collaterals with MMC’s residential property in Forbes Park
(Forbes Park property), which was mortgaged with the Asian Development Bank (ADB).9
In a letter dated July 1, 199710 to RCBC, MMC proposed two (2) options for the payment of its
loan, to wit:
1) Initiate a foreclosure on the mortgaged assets, thereby realizing a maximum cash proceeds of
about $11.6 Million. The balance will have to be relegated to the rank of unsecured obligations
whose repayment will solely depend on the timing and extent of cash proceeds to be generated
from the disposal of the company’s assets, or
2) Accept our proposal which calls for the involvement of [MMC’s] major shareholders.
The company may request the involvement of our major shareholders who could ensure a
definite repayment plan for the principal exposure of $13.7 Million. Said repayment plan
will consist of the following components:
a) Implementation of the assignment of the Forbes Park property for the previously agreed
amount of P235 Million;
_______________
6 Id., at pp. 252-255.
7 Id., at pp. 879-880.
8 Id., at pp. 877-878.
pg. 270
9 Id., at pp. 79-80.
10 Id., at pp. 140-143.
592

b) Payment of the amount of P71 Million, being the peso equivalent of the difference
between $11.6 Million and $8.9 Million (dollar equivalent of P235 Million) over a period
of one (1) year on a quarterly basis, plus interest; and
c) Payment of the balance of P55.4 Million (being the peso equivalent of the difference
between the entire principal obligation of $13.7 Million and $11.6 Million which is the sum
of Items a) and b) above), over a period of two (2) years payable quarterly.11
In the same letter, MMC encouraged RCBC to choose the second option, thus:
We believe that Option 2 above guarantees your full recovery of our principal obligation to you.
Since our major shareholders have already indicated their willingness to support this repayment
scheme, may we request you to accept this option for immediate implementation.12
On July 3, 1997, representatives of MMC and RCBC met: to discuss the details of MMC’s
proposals. RCBC was represented by its former vice presidents Filadelfo Rojas (Rojas), Felisa
Banzon (Banzon), Susan Santos (Santos), and Atty. Merlyn Dueñas (Atty. Dueñas). RCBC
representatives signified their intention to choose Option 2, but raised a concern on the issue of
accrued interest.13 MMC also informed them that Placer Dome, a major stockholder of MMC
which, as a guarantor, subsequently acquired the mortgage on the Forbes Park property, would
only agree to let go of the Forbes Park property if RCBC would release in its favor the mining
equipment mortgaged to RCBC.14 It was also discussed that
_______________
11 Id., at pp. 141-142.
pg. 271
12 Id., at p. 142.
13 Id., at p. 81.
14 Id., at pp. 82-83.
593
VOL. 803, SEPTEMBER 21, 2016 593

another condition for the second option was for a stockholder of MMC to act as a surety for two
(2) promissory notes intended to be executed between the parties.15
In a letter dated July 8, 1997,16 MMC made some revisions of the second option in view of RCBC
s concern regarding accrued interest, to wit:
We then agreed on the repayment of your principal exposure to us as follows:
1) The principal amount was to be revised, from the original principal of $13.7 million to $14,327
million, which includes interest that has been capitalized;
2) Implementation of the assignment of the Forbes Park property for the agreed amount of P235
million, equivalent to about $8,901,515;
3) Payment of the amount of $2,698,485 over a period of one (1) year payable quarterly plus
interest; and
4) Payment of the balance of $2,727,000 over a period of two (2) years, payable quarterly, without
interest.
RCBC, through Rojas and Santos, signed its conformity to the July 8, 1997 letter.17
pg. 272
On August 1, 1997, MMC forwarded four (4) documents to RCBC for signature.18 The cover
letter reads:
In connection with the transfer of our Forbes Park Property in your favor, we are transmitting to
you herewith the following documents:
1. Deed of Assignment dated August 1, 1997, for BIR purposes;
_______________
15 Id., at p. 83.
16 Id., at pp. 144-145.
17 Id., at p. 145.
18 Id., at p. 83.
594

2. Deed of Partial Release from Mortgage signed by the Attorney-in-Fact of MR Holdings Limited
releasing from their mortgage the above mentioned property; and
3. Copy of Secretary’s Certificate of a resolution passed by the Board of Directors of MR Holdings

Limited appointing as Attorney-in-Fact, Atty. Alma D. Fernandez-Mallonga. The original of said
Secretary’s Certificate is with Atty. Mallonga and will be presented to the Register of Deeds when
required[;]
4. Deed of Release from Mortgage to be signed by RCBC involving the release from your
mortgage six (6) units Rig Tracks and one (1) unit Demag Shovel.
pg. 273
Kindly note that the release of the above mentioned property by MR Holdings Limited from their
mortgage was made on the condition that a substitution thereof with other unencumbered and free
assets and properties of the mortgagor under a second Addendum Mortgage be effected. Inasmuch
as our only free and unencumbered assets will be those that will be released by you under the Deed
of Release from Mortgage mentioned under Item No. 4 above, may we therefore request that your
authorized signatories sign as soon as possible the said Deed of Release from Mortgage.19
RCBC only signed the Deed of Assignment of the Forbes Park property and returned the Deed of
Release from Mortgage of the six (6) Rig Haul Trucks and one (1) Demag Hydraulic Excavator
Shovel unsigned.20
In a letter dated August 22, 1997,21 MMC sent RCBC the surety agreements duly executed by
Bernardino, together with the two (2) promissory notes covering the remaining obligation of MMC
after effecting partial payment through the assignment of the Forbes Park property to RCBC. Non-
_______________
19 Id., at p. 266.
20 Id., at p. 85.
21 Id., at p. 164.
595
VOL. 803, SEPTEMBER 21, 2016 595

Negotiable Promissory Note No. 21-369722 was for the amount of US$2,698,485.00 payable
within one year with interest at 9% per annum and a first quarterly due date of November 24, 1997,
while Non-Negotiable Promissory Note No. 21-379723 was for the amount of US$2,727,000.00
payable within two years without interest and a first quarterly due date of November 24,
1997.24 The parties signed the promissory notes on August 26, 1997.25
In a letter dated September 12, 1997,26 MMC, through Banzon, acknowledged the transfer of
ownership of the Forbes Park property to RCBC. She, however, informed MMC that the bank
could still not commit to an approval of MMC’s request for the release of the six (6) Rig Haul
Trucks and one (1) Demag Hydraulic Excavator Shovel because it was still working on some
details of the request.
pg. 274
In a letter dated November 24, 1997,27 MMC requested RCBC to immediately release from
mortgage the mining equipment. MMC reminded RCBC that MR Holdings, Ltd., the successor-
in-interest of the ADB, agreed to release the Forbes Park property from its mortgage only upon
the assurance that RCBC will also release the mining equipment from their mortgage and turn
them over to MR Holdings, Ltd. MMC also informed RCBC that it likewise committed to
mortgage the shares of stocks subject of the Deeds of Pledge with MR Holdings, Ltd.
In a letter dated December 17, 1997,28 RCBC informed MMC that the release from mortgage of
the six (6) units of the Rig Haul Trucks and one (1) Demag Hydraulic Excavator
_______________
22 Id., at pp. 165-166.
23 Id., at pp. 167-168.
24 Id., at p. 25.
25 Id., at pp. 165 and 167.
26 Id., at p. 169.
27 Id., at pp. 170-171.
28 Id., at p. 173.
596

Shovel, as well as the release from pledge of the club shares, have been approved by its Executive
Committee subject to the condition that payment for the first amortization be made by MMC.29
MMC failed to settle the obligations which fell due on November 24, 1997, February 23, 1998 and
May 25, 1998.30 Final demand was sent to MMC on July 1, 1998, declaring the whole obligation
under the promissory notes due and payable and giving it five (5) days from receipt to settle the
whole obligation of US$5,726,660.28. Demand was also made on Bernardino, as surety for MMC,
to pay the amount plus P20,685,872.25 as penalty.31
On July 31, 1998, Bernardino instituted a Complaint32 for specific performance, and for the
declaration of nullity or unenforceability of surety agreements against RCBC. It was docketed as
pg. 275
Civil Case No. 98-185 and filed before Branch 59 of the Regional Trial Court (RTC) of Makati
City. Bernardino prayed that judgment be rendered declaring the surety agreements between him
and RCBC null and void and/or unenforceable, and that RCBC be held liable for damages.33
In its Answer with Compulsory Counterclaims,34 RCBC alleged that contrary to Bernardino’s
assertion, the parties did not agree to execute an agreement on Bernardino’s subrogation rights and
a release of mortgage and pledge over MMC’s properties. As its counterclaims, RCBC prayed that
Bernardino be declared jointly and severally liable with MMC to pay RCBC the principal amount
due under the promissory notes,
_______________
29 Id., at pp. 172-173.
30 Id., at p. 175.
31 Id., at pp. 174-176.
32 Id., at pp. 177-183.
33 Id., at p. 182.
597
VOL. 803, SEPTEMBER 21, 2016 597

including the interest and stipulated penalty therein, as well as attorney’s fees and damages.35
The Ruling of the Trial Court
Before resolving the complaint, the RTC, Branch 59, Makati City pointed out that a separate
complaint for specific performance docketed as Civil Case No. 98-1661 was filed by MMC against
RCBC before the RTC, Branch 57, Makati City. In that case, the issue involved was whether
RCBC may be ordered to execute a Deed of Partial Release of Mortgage. The RTC, Branch 57,
Makati City ruled in favor of MMC. On appeal, the CA affirmed the RTC Decision. Considering
pg. 276
that the issue had been passed upon in Civil Case No. 98-1661, which was then on appeal before
us, the RTC, Branch 59 limited the issue before it to the validity of the surety agreements executed
by Bernardino.36
Ruling in favor of Bernardino, the RTC, Branch 59, Makati City held that he was able to establish
his claim by preponderance of evidence. It ruled that the subrogation agreement was a condition
precedent before Bernardino may be held liable under the comprehensive surety agreements. Since
there was no subrogation agreement, the comprehensive surety agreements are unenforceable and
have no effect. The dispositive portion of the RTC Decision reads as follows:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of the

plaintiff, declaring that for RCBC’s unjust refusal to execute the necessary subrogation agreement
which is a condition precedent before plaintiff may be held liable under the comprehensive surety
agreements, the same are declared unenforceable and of no effect.
_______________
35 Id., at pp. 67-68.
36 Rollo, pp. 468-470.
598

Defendant is also ordered to pay plaintiff the following sums:
1) P100,000.00 as moral damages;
2) P100,000.00 as nominal and exemplary damages;
3) P957,540.94 as attorney’s fees;
4) P44,519.03 as litigation expenses; and
5) Costs of suit against herein defendant.
SO ORDERED.37
pg. 277
The Ruling of the Court of Appeals
The CA denied RCBC’s appeal and affirmed the RTC Decision. The CA agreed with the trial court
that MMC was led to believe that RCBC agreed to execute a subrogation agreement in favor of
Bernardino and to effect a release of the mortgage and pledge.
The CA also denied RCBC’s motion for reconsideration in a Resolution dated July 22,
2008.38 Hence, this petition, which raises the main issue of whether RCBC and Bernardino agreed
that a subrogation agreement be executed as a condition precedent before Bernardino can be held
liable under the surety agreements.
RCBC maintains that in affirming the Decision of the RTC, the CA, in grave error of law, blatantly
disregarded:
1) Article 1403 of the Civil Code on what constitutes unenforceable contracts. Nowhere in
the complaint nor in the evidence on record can one find any claim that the essential elements
needed for a contract to be considered unenforceable are missing;
_______________
37 Id., at p. 486.
38 Id., at p. 120.
599
VOL. 803, SEPTEMBER 21, 2016 599

2) The principle that in civil cases, the party having the burden of proof must produce a
preponderance of evidence thereon, with plaintiff having to rely on the strength of his own
evidence and not upon the weakness of the defendant’s;
3) The principle that inconsistencies as to minor details and peripheral matters do not affect
the credibility of witnesses nor the probative weight of their testimonies. While RCBC’s
witnesses may not have recalled certain details that took place long before they were called
to testify, they were clear on the threshold legal and factual issues in this case;
4) The hornbook rule on mutuality and interpretation of contracts that when the terms of
the agreement, as expressed in such, language, are clear, they are to be understood literally,
pg. 278
just as they appear on the face thereof. Bernardino failed to prove exceptional circumstances
when parol evidence can be received. He did not adduce any documentary evidence to
establish his self-serving contention that RCBC agreed to the release of a certain mortgage
and to the execution of any subrogation agreement. On the contrary, there is clear evidence
on record negating this alleged agreement;
5) Section 28, Rule 130 of the Rules of Court, or the res inter alios acta rule, which states
that the rights of a party cannot be prejudiced by an act, declaration, or omission of another.
The CA unduly relied on, and unfairly imputed acts of third parties against RCBC to
establish the supposed intention, state of mind and undertaking of RCBC; and
6) The settled rule that any person who seeks to be awarded damages due to acts of another
has the burden of proving that the latter acted in bad faith or with ill motive. The CA made
no finding of any spe-
600

cific act committed by RCBC that may constitute bad faith, much less one that could overcome
the presumption of good faith.39
Our Ruling
We clarify at the outset that the only issue We shall resolve here is whether there was a condition
precedent, a subrogation agreement, to the surety agreements Bernardino executed in favor of
RCBC. The issue on whether RCBC had agreed to a release of the six (6) Rig Haul Trucks, one
(1) Demag Hydraulic Excavator Shovel, and shares of stock in favor of MMC has already been
settled in Rizal Commercial Banking Corporation v. Marcopper Mining Corporation.40
As a rule, we are not a trier of facts. Our jurisdiction in a Rule 45 petition is limited to the review
of pure questions of law.41 Factual findings of the lower court, especially when affirmed by the
appellate court, are usually binding to us.42 However, this rule admits of certain
exceptions,43 three of which apply in this case: 1) when the conclusion is a finding grounded
entirely on speculation, surmises and conjectures; 2) when the inference made is manifestly
pg. 279
mistaken, absurd or impossible; and 3) when the judgment is based on a misapprehension of facts.
As such, we find it warranted to depart from the general rule and reexamine the facts of the case.
_______________
39 Id., at pp. 17-19.
40 G.R. No. 170738, September 12, 2008, 565 SCRA 125. Penned by Associate Justice Leonardo
A. Quisumbing.
41 Land Bank of the Philippines v. Yatco Agricultural Enterprises, G.R. No. 172551, January 15,
2014, 713 SCRA 370, 378-379.
42 Suliman v. People, G.R. No. 190970, November 24, 2014, 741 SCRA 477, 487.
43 Cirtek Employees Labor Union-Federation of Free Workers v. Cirtek Electronics, Inc., G.R.
No. 190515, June 6, 2011, 650 SCRA 656, 660.
601
VOL. 803, SEPTEMBER 21, 2016 601

Bernardino failed to establish

the existence of a subrogation
agreement, that operates as a
condition precedent to the surety
agreement.
It is a basic rule in evidence that the burden of proof lies upon him who asserts it, not upon him
who denies, since, by the nature of things, he who denies a fact cannot produce any proof of
it.44 Thus, the party, whether plaintiff or defendant, who asserts the affirmative of an issue has
the onus to prove his assertion in order to obtain a favorable judgment. For the plaintiff, the burden
to prove its positive assertions never parts.45
As plaintiff in the court a quo, therefore, it was imperative upon Bernardino to prove the
allegations in his complaint. The burden of proof will not vest on RCBC the obligation to prove
that the subrogation agreement was not a condition precedent before Bernardino may be held liable
under the comprehensive surety agreements. Bernardino, however, was unable to discharge this
pg. 280
burden. He was unable to establish his cause of action through preponderance of evidence which
is the degree of proof required in civil cases.46
Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side
and is usually considered to be synonymous with the term “greater weight of evidence” or “greater
weight of the credible evidence.”47 Preponderance of evidence is a phrase which, in the last
analysis,
_______________
44 MOF Company, Inc. v. Shin Yang Brokerage Corporation, G.R. No. 172822, December 18,
2009, 608 SCRA 521, 533, citing Acabal v. Acabal, G.R. No. 148376, March 31, 2005, 454 SCRA
555, 569.
45 Bank of the Philippine Islands v. Royeca, G.R. No. 176664, July 21, 2008, 559 SCRA 207,
215.
46 Rules of Court, Rule 133, Sec. 1.
47 Magdiwang Realty Corporation v. The Manila Banking Corporation, G.R. No. 195592,
September 5, 2012, 680 SCRA 251, 265.
602

means probability to truth.48 It is evidence which is more convincing to the court as worthier of
belief than that which is offered in opposition.49
Here, Bernardino asserted that the surety agreements he signed in favor of RCBC were ineffectual
because the subrogation agreement, which the parties had allegedly agreed to execute as a
condition precedent, were not executed.
Both the RTC and the CA gave credence to the testimonies of Bernardino and his witness, Nestor
Escalante (Escalante). True, findings by the trial court as to the credibility of witnesses are
accorded the greatest respect, and even finality by the appellate courts, since the former is in a
better position to observe their demeanor as well as their deportment and manner of testifying
during the trial.50 In this case, however, the RTC and the CA overlooked certain significant facts
in the testimonies of Bernardino’s witnesses.
pg. 281
Bernardino harped on the testimony of Atty. Dueñas that the parties indeed agreed to execute a
subrogation agreement. But Atty. Dueñas’ testimony is far from being corroborative to the
testimonies of Bernardino and Escalante. On the contrary, it is unreliable and inconclusive for
being unclear and ambiguous. We quote the pertinent testimony in full:
A: Subrogation of what rights?
ATTY. PEÑA:
Q: Of bank’s rights in case of this surety over all.
A: They could not have agreed upon that.
No, Sir.
There was.
On the subrogation itself, there is an agreement.
_______________
48 Chua v. Westmont Bank, G.R. No. 182650, February 27, 2012, 667 SCRA 56, 68.
49 Eulogio v. Apeles, G.R. No. 167884, January 20, 2009, 576 SCRA 561, 571-572.
50 Domingo v. Domingo, G.R. No. 150897, April 11, 2005, 455 SCRA 230, 238.
603
VOL. 803, SEPTEMBER 21, 2016 603

Q: So, there was no agreement on that[?]
A: No, Sir.51
The RTC and the CA are also one in saying that the testimony of Rojas was evasive and vacillating,
and thus, unworthy of credence. We disagree. Although Rojas could not recall some details of the
meetings, We find these details innocuous and merely incidental. Rojas cannot be expected to
remember every single detail of the meeting with perfect recall.52 Far from adversely affecting
pg. 282
his credibility, his failure to recall every minute detail of what transpired even fortifies it. We have
held that the failure of a witness to recall each and every detail of an occurrence may even serve
to strengthen rather than weaken his credibility because it erases any suspicion of a coached or
rehearsed testimony.53 What is clear from the testimony of Rojas is that the surety agreement was
discussed and he was of the opinion, from the bank’s perspective, that such security was not
enough. Nowhere did he state or admit that the parties agreed to, much less discussed, a
subrogation agreement as a condition precedent to the surety agreement.
In the same vein, Atty. Dueñas’ testimony shows that in a series of meetings, the parties discussed
a possible “arrangement on the transfer of the collateral” once Bernardino is called to pay the
obligation.54 Atty. Dueñas testified that Bernardino proposed “that collateral be given
him.”55 While this may pertain to the subrogation agreement Bernardino is claiming, what is
glaringly absent from the discussions is the final agreement reached by the parties. For an offer to
be binding, the acceptance must be absolute and must not qual-
_______________
51 Rollo, p. 1624.
52 Rivera v. People, G.R. No. 138553, June 30, 2005, 462 SCRA 350, 359.
53 Id.
54 Rollo, p. 1636.
55 Id., at p. 1635.
604

ify the terms of the offer.56 Where there is only a proposal and a counter-proposal that did not add
up to a final arrangement, there is no meeting of the minds between the parties.57 Thus, the surety
agreements remain unconditional and their validity stands.
More importantly, the terms of the surety agreements are clear. When the terms of a contract are
clear and unambiguous, they are to be read in their literal sense. When there is no ambiguity in the
language of a contract, there is no room for construction, only compliance.58 As we held
in Bautista v. Court of Appeals:59
pg. 283
The rule is that where the language of a contract is plain and unambiguous, its meaning
should be determined without reference to extrinsic facts or aids. The intention of the parties
must be gathered from that language, and from that language alone. Stated differently, where
the language of a written contract is clear and unambiguous, the contract must be taken to mean
that which, on its face, it purports to mean, unless some good reason can be assigned to show that
the words used should be understood in a different sense. Courts cannot make for the parties
better or more equitable agreements than they themselves have been satisfied to make, or
rewrite contracts because they operate harshly or inequitably as to one of the parties, or alter
them for the benefit of one party and to the detriment of the other, or by construction, relieve
one of the parties
_______________
56 Manila Metal Container Corporation v. Philippine National Bank, G.R. No. 166862,
December 20, 2006, 511 SCRA 444, 465.
57 Rizal Commercial Banking Corporation v. Marcopper Mining Corporation, G.R. No. 170738,
October 30, 2009, 604 SCRA 719, 735.
58 Insular Life Assurance Company, Ltd. v. Asset Builders Corporation, G.R. No. 147410,
February 5, 2004, 422 SCRA 148, 165, citing Leaño v. Court of Appeals, G.R. No. 129018,
November 15, 2001, 369 SCRA 36.
59 G.R. No. 123655, January 19, 2000, 322 SCRA 365.
605
VOL. 803, SEPTEMBER 21, 2016 605

from terms which he voluntarily consented to, or impose on him those which he did
not.60 (Citation omitted; emphasis ours)
The surety agreements do not include or refer to the execution of a subrogation agreement as a
condition precedent before Bernardino could be held liable. Bernardino cannot now come to court
asking for the enforcement of an agreement which clearly does not appear in the written contract
between him and RCBC.
The parol evidence rule, in general, restricts the evidence to the surety agreements between MMC
and RCBC. The first paragraph of Section 9, Rule 130 of the Revised Rules on Evidence provides:
pg. 284
Sec. 9. Evidence of written agreements.—When the terms of an agreement have been reduced
to writing, it is considered as containing all the terms agreed upon and there can be, between the
parties and their successors-in-interest, no evidence of such terms other than the contents of the
written agreement.
xxx
Under this rule, when the parties have reduced their agreement into writing, they are deemed to
have intended the written agreement to be the sole repository and memorial of everything that they
have agreed upon. All their prior and contemporaneous agreements are deemed to be merged in
the written document so that, as between them and their successors-in-interest, such writing
becomes exclusive evidence of its terms and any verbal agreement which tends to vary, alter or
modify it is not admissible.61 Whatever is not found in the writing is understood to have been
waived and aban-
_______________
60 Id., at p. 376.
61 Allied Banking Corporation v. Cheng Yong, G.R. Nos. 151040 & 154109, October 5, 2005,
472 SCRA 101, 111.
606

doned.62 This must be so because an oral testimony on an alleged prior or contemporaneous

agreement, such as the subrogation agreement subject of Bernardino’s testimony in this case,
comes from a party who has an interest in the outcome of the case and depends exclusively on
human memory. Thus, it is not as reliable as written documentary evidence. Spoken words could
be notoriously undesirable unlike a written contract which speaks of a uniform language.63
Be that as it may, the rule prohibiting the presentation of parol evidence is not absolute. A party
may present evidence to modify, explain or add to the terms of the written agreement if he puts in
issue in his pleading any of the following:
(a) An intrinsic ambiguity, mistake or imperfection in the written agreement;
pg. 285
(b) The failure of the written agreement to express the true intent and agreement of the parties
thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their successors-in-interest after the
execution of the written agreement.64
In his Complaint, however, Bernardino did not plead any exception to the application of the parol
evidence rule. All that he pleaded was the alleged collateral agreement with which RCBC must
first comply.65 We have uniformly held that it is only where a party puts in issue in his pleadings
the failure of the written agreement to express the true intent of the parties that the party may
present evidence to modify,
_______________
62 Edrada v. Ramos, G.R. No. 154413, August 31, 2005, 468 SCRA 597, 604.
63 Ortañez v. Court of Appeals, G.R. No. 107372, January 23, 1997, 266 SCRA 561, 565.
65 See Ortañez v. Court of Appeals, supra.
607
VOL. 803, SEPTEMBER 21, 2016 607

explain or add to the terms of the written agreement.66 The failure of Bernardino, therefore, should
have rendered the parol evidence inadmissible. However, no timely objection or protest was made
against its admission and RCBC, against whom it was presented, cross-examined the witnesses
who testified. Failure to object to the parol evidence constitutes a waiver to its admissibility.67
pg. 286
Nevertheless, while admissibility of evidence is an affair of logic and law, determined as it is by
its relevance and competence, the weight to be given to such evidence, once admitted, still depends
on judicial evaluation.68 Contrary to the findings of the lower courts, we hold that the parol
evidence fails to prove the existence of an alleged subrogation agreement between the parties.
Firstly, the correspondence exchanged by the parties show that no agreement on the execution of
the subrogation agreement was reached. Bernardino claims that discussions about the subrogation
agreement were held on a July 3, 1997 meeting, yet, when the surety agreements were transmitted
to RCBC on August 22, 1997,69 he had already duly executed them with nary a colatilla, an
addendum, or a disclaimer, about a subrogation agreement. In its letter dated November 24,
1997,70 MMC merely reminded RCBC that its restructured loan is covered by a surety issued by
Bernardino, in addition to the other mortgaged equipment. These letters also show that MMC was
only concerned with the release of the mining equipment and shares of stocks, but not with the
execution of a subrogation agreement. What is even telling is that in the
_______________
66 Sabio v. International Corporate Bank, Inc., G.R. No. 132709, September 4, 2001, 364 SCRA
385, 405.
67 Reyes v. Court of Appeals, G.R. No. 147758, June 26, 2002, 383 SCRA 471, 479-480.
68 Peñalber v. Ramos, G.R. No. 178645, January 30, 2009, 577 SCRA 509, 529-530.
69 Rollo, pp. 164-166.
70 Id., at pp. 170-171.
608

November 24, 1997 letter, MMC stated that the surety is in addition to the other collaterals
mortgaged with RCBC. This refutes Bernardino’s argument that these collaterals were meant to
be retained by RCBC for his ultimate benefit after he pays the obligation of MMC and is
subrogated to all the rights of RCBC as a creditor.
Secondly, significant parts in the testimonies of Rojas and Atty. Dueñas, as earlier discussed,
bolster RCBC’s argument that there was no meeting of the minds between the parties that a
subrogation agreement needs to be executed first before Bernardino can be held liable under the
surety agreements.
pg. 287
Lastly, the exception to the parol evidence rule on the ground that the agreement fails to express
the true intent of the parties obtains only where the written contract is so ambiguous or obscure in
terms that the contractual intention of the parties cannot be understood from a mere reading of the
instrument.71 As we have earlier pointed out, the surety agreements are clear and unambiguous.
The contractual intention of the parties to bind Bernardino solidarily with MMC is readily
understood from a reading of the surety agreements.
As surety, Bernardino is princi-

pally and solidarily liable for the
obligations arising from the
promissory notes.
In Rizal Commercial Banking Corporation v. Marcopper Mining Corporation,72 We reversed the

lower courts and found that MMC failed to prove that the parties agreed for RCBC to execute a
partial release of mortgage and pledge upon as-
_______________
71 Ortañez v. Court of Appeals, supra note 63 at p. 566.
72 Rizal Commercial Banking Corporation v. Marcopper Mining Corporation, supra note 40.
609
VOL. 803, SEPTEMBER 21, 2016 609

signment to it of the Forbes Park property.73 We also ruled favorably on the counterclaims of
RCBC, with respect to the principal amount of MMC’s promissory notes, the interest, penalties,
and attorney’s fees stipulated therein.74 We then directed MMC to pay the amounts expressly
stipulated in Non-Negotiable Promissory Notes No. 21-3697 and 21-3797. The complete fallo of
our Decision reads as follows:
WHEREFORE, the petition is GRANTED. The assailed Decision dated June 6, 2005 and the
Resolution dated December 8, 2005 of the Court of Appeals in C.A.-G.R. CV No. 77594 are
REVERSED and SET ASIDE. Marcopper is directed to pay RCBC the following amounts
expressly stipulated in the Non-Negotiable Promissory Note Nos. 21-3697 and 21-3797:
pg. 288
1. US$5,425,485.00 as the total principal amount due under Non-Negotiable Promissory
Note Nos. 21-3697 and 21-3797, including the interest due on US$2,698,845.00 under Non-
Negotiable Promissory Note No. 21-3697 at the rate of 9% per annum until fully paid.
2. Penalty equivalent to 36% per annum of the amount due and unpaid under Non-
Negotiable Promissory Note Nos. 21-3697 and 21-3797 until fully paid; and
3. Attorney’s fees equivalent to 20% of the total amount due.
RCBC’s claims for moral and exemplary damages are denied. It may, however, exercise its
rights, in accordance with law, to foreclose on the properties covered. No pronouncement as
to costs.
SO ORDERED.75
_______________
73 Id., at p. 141.
74 Id., at p. 137.
75 Id., at pp. 144-145.
610

The obligation of MMC having been settled in the above decision, which has already attained
finality when We denied MMC’s Motion for Reconsideration in our Resolution dated October 30,
2009,76 Bernardino, as surety, has also become liable for MMC’s obligation to RCBC or to its
successors-in-interest77 under the promissory notes.
pg. 289
Article 2047 of the Civil Code provides:
Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the
obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter
3, Title I of this Book shall be observed. In such case, the contract is called a suretyship.
Suretyship is a contractual relation resulting from an agreement whereby one person, the surety,
engages to be answerable for the debt, default or miscarriage of another, known as the
principal.78 The surety’s obligation is not an original and direct one for the performance of his
own act, but merely accessory or collateral to the obligation contracted by the principal.
Nevertheless, although the contract of a surety
_______________
76 Supra note 57.
77 In its Compliance dated February 24, 2016, RCBC, through its counsel, manifested that
MMC’s outstanding obligation was sold as a nonperforming loan to a special purpose vehicle,
Philippine Investment One (SPV-AMC), Inc. (Rollo, pp. 1779-1789). In a letter dated August 10,
2006 and which was attached to Bernardino’s Compliance dated February 10, 2016, MMC did not
object to the sale of its loan to SPV-AMC, Inc. SPV-AMC, Inc., however, opted not to substitute
RCBC in this case. Hence, RCBC continued to litigate the case on its behalf in accordance with
Section 19, Rule 3 of the Rules of Court. (Id., at pp. 1785-1791)
78 Garcia, Jr. v. Court of Appeals, G.R. No. 80201, November 20, 1990, 191 SCRA 493, 495.
611
VOL. 803, SEPTEMBER 21, 2016 611

is in essence secondary only to a valid principal obligation, his liability to the creditor or promisee
of the principal is said to be direct, primary and absolute;79 in other words, he is directly and
equally bound with the principal. The surety therefore becomes liable for the debt or duty of
another although he possesses no direct or personal interest over the obligations nor does he receive
any benefit therefrom.80
pg. 290
Bernardino cannot now renege on his obligation to pay the promissory notes under the claim that
there was a previous agreement between the parties for RCBC to execute a subrogation agreement
before Bernardino could be held liable under the surety agreements. We stress that the right to
subrogation of a paying surety is by operation of law. Article 2067 of the Civil Code provides in
part that the guarantor who, pays is subrogated to all the rights which the creditor had against the
debtor. Although Article 2067 explicitly pertains to guarantors, the right to subrogation extends as
well to sureties.81
Similarly, under Article 2071 of the Civil Code, a remedy available to a guarantor (or
surety),82 even before having paid, is to demand a security from the principal debtor that shall
protect the guarantor (or surety) from any proceedings by the creditor and the danger of insolvency
of the debtor in certain cases. Thus:
Article 2071. The guarantor, even before having paid, may proceed against the principal debtor:
(1) When he is sued for the payment;
_______________
79 Id., at pp. 495-496.
80 Id., at p. 496, citing Miner’s Merchants Bank v. Gidley, 144 SE 2d 711 (1965).
81 Escaño v. Ortigas, Jr., G.R. No. 151953, June 29, 2007, 526 SCRA 26, 46.
82 Autocorp Group v. Intra Strata Assurance Corporation, G.R. No. 166662, June 27, 2008, 556
SCRA 250, 263.
612

(2) In case of insolvency of the principal debtor;
(3) When the debtor has bound himself to relieve him from the guaranty within a specified period,
and this period has expired;
pg. 291
(4) When the debt has become demandable, by reason of the expiration of the period for payment;
(5) After the lapse of ten years, when the principal obligation has no fixed period for its maturity,
unless it be of such nature that it cannot be extinguished except within a period longer than ten
years;
(6) If there are reasonable grounds to fear that the principal debtor intends to abscond;
(7) If the principal debtor is in imminent danger of becoming insolvent.
xxx
It is clear, therefore, that whatever right to a security Bernardino may have can only be demanded
from MMC and not from RCBC.
WHEREFORE, the Petition for Review on Certiorari is hereby GRANTED. The Decision dated
June 10, 2008 and the Resolution dated July 22, 2008 affirming the RTC Decision dated June 30,
2006 are SET ASIDE. Teodoro G. Bernardino is hereby declared jointly and severally liable with
MMC to pay RCBC or its successors-in-interest the following:
1. US$5,425,485.00 as the principal amount due under Non-Negotiable Promissory Notes

No. 21-3697 and 21-3797, including the interest due on US$2,698,845.00 under Non-
Negotiable Promissory Note No. 21-3697 at the rate of 9% per annum until fully paid;
2. The stipulated penalty at the rate of 36% per annum of the amount due under Non-
Negotiable Promissory Notes No. 21-3697 and 21-3797 until fully paid; and
613
VOL. 803, SEPTEMBER 21, 2016 613
pg. 292
3. Attorney’s fees equivalent to 20% of the total amount due.
RCBC’s claims for moral and exemplary damages are denied for lack of merit.
SO ORDERED.
Brion,** Peralta (Acting Chairperson), Bersamin*** and Reyes, JJ., concur.
Petition granted, judgment and resolution set aside.
Notes.—A performance bond is a kind of suretyship agreement. A suretyship agreement is an

agreement “whereby a party, called the surety, guarantees the performance by another party, called
the principal or obligor, of an obligation or undertaking in favor of another party, called the
obligee.” (Stronghold Insurance Company, Inc. vs. Stroem, 746 SCRA 598 [2015])
In a contract of suretyship, one lends his credit by joining in the principal debtor’s obligation so
as to render himself directly and primarily responsible with him without reference to the solvency
of the principal. (Yulim International Company Ltd. vs. International Exchange Bank [now Union
Bank of the Philippines], 751 SCRA 129 [2015])
——o0o——
pg. 293
G.R. No. 220605. September 21, 2016.*
COCA-COLA FEMSA PHILIPPINES, INC.,** petitioner, vs. BACOLOD SALES FORCE

UNION-CONGRESS OF INDEPENDENT ORGANIZATION-ALU, respondent.
Labor Law; Arbitration; In the context of labor law, arbitration is the reference of a labor dispute
to an impartial third person for determination on the basis of evidence and arguments presented
by such parties who have bound themselves to accept the decision of the arbitrator as final and
binding.—In the context of labor law, arbitration is the reference of a labor dispute to an impartial
third person
_______________
* FIRST DIVISION.
** “Coca-Cola Bottlers Philippines, Inc.” in the CA proceedings (see Rollo, pp. 64 and 73). “Coca-
Cola Bottles Phils., Inc.” in the Department of Labor and Employment arbitration proceedings (id.,
at pp. 129 and 141).
140

Coca-Cola Femsa Philippines, Inc. vs. Bacolod Sales Force Union-Congress of Independent
Organization-ALU
for determination on the basis of evidence and arguments presented by such parties who have
bound themselves to accept the decision of the arbitrator as final and binding. However, in view
of the nature of their functions, voluntary arbitrators act in a quasi-judicial capacity; hence, their
judgments or final orders which are declared final by law are not so exempt from judicial review
when so warranted. “Any agreement stipulating that ‘the decision of the arbitrator shall be
final and unappealable’ and ‘that no further judicial recourse if either party disagrees with
the whole or any part of the arbitrator’s award may be availed of’ cannot be held to preclude
in proper cases the power of judicial review which is inherent in courts.”
Remedial Law; Civil Procedure; Appeals; Petition for Review; Voluntary Arbitrators; Case law
holds that the proper remedy to reverse or modify a Voluntary Arbitrators’ (VA’s) or a Panel of
Voluntary Arbitrators’ decision or award is to appeal the award or decision before the Court of
Appeals (CA) under Rule 43 of the Rules on questions of fact, of law, mixed questions of fact and
law, or a mistake of judgment.—Case law holds that the proper remedy to reverse or modify a
Voluntary Arbitrators’ or a Panel of Voluntary Arbitrators’ decision or award is to appeal the
pg. 294
award or decision before the CA under Rule 43 of the Rules on questions of fact, of law, mixed
questions of fact and law, or a mistake of judgment. However, in several cases, the Court allowed
the filing of a petition for certiorari from the VA’s judgment to the CA under Rule 65 of the same
Rules, where the VA was averred to have acted without or in excess of his jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction.
Viesca, Dones & Malang Law Offices for petitioner.
Bimbo D. Lavides for respondent.
141
VOL. 804, SEPTEMBER 21, 2016 141

Organization-ALU
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 assailing the Decision2 dated December
22, 2014 and the Resolution3 dated September 8, 2015 of the Court of Appeals (CA) in C.A.-G.R.
CEB-S.P. No. 06892, which denied petitioner Coca-Cola Femsa Philippines, Inc.’s (petitioner)
petition for review and upheld the Decision4 dated February 3, 2012 of the Panel of Voluntary
Arbitrators (VA) of the National Conciliation and Mediation Board (NCMB)-Department of Labor
and Employment in Case Nos. AC-777-RB6-06-01-10-2011, AC-782-RB6-06-01-10-2011, and
AC-960-RB6-06-01-10-2011 on the ground that the same had already attained finality.
The Facts
Petitioner is a corporation engaged in the manufacture of nonalcoholic beverages. Sometime in

2001, Cosmos Bottling Corporation (Cosmos) ceded its sales functions to petitioner which resulted
in the integration of a number of Cosmos’s salesmen, including Fernando T. Oquiana, Norman F.
Vinarta, and Santiago B. Espino, Jr. (Cosmos integrees) into petitioner’s workforce as route
pg. 295
salesmen. The Cosmos integrees were given salary adjustments that would align with that of
petitioner’s own route salesmen. At the time of integration, petitioner’s system of product
distribution was by direct selling, but it subsequently adopted the route-to-market (RTM) system
of distribution which led to the abolition of the route salesman position and its replacement by the
_______________
1 Id., at pp. 10-52.
2 Id., at pp. 64-70. Penned by Associate Justice Marilyn B. Lagura-Yap, with Associate Justices
Edgardo L. Delos Santos and Jhosep Y. Lopez, concurring.
3 Id., at pp. 73-75.
4 Id., at pp. 129-140. Penned by Chairman Jose I. Lapak, Jr., with Members Juvy A. Victoriano-
Dioso and Elias A. Gatanela, Jr., concurring.
142

Organization-ALU
account developer (AD) position. Thus, through an internal selection process, the Cosmos
integrees’ positions were eventually designated as ADs.5
Meanwhile, petitioner hired new ADs who were, however, subject to a different set of
qualifications from the Cosmos integrees. The newly-hired ADs received a higher basic monthly
pay although, allegedly, occupying the same position, job description, and functions as that of the
Cosmos integrees. Furthermore, the newly-hired ADs were given, upon union membership, a
monthly 45-kilogram (kg.) rice provision with a corresponding monthly deduction of the amount
of P550.00 from their salaries.6
Aggrieved by the difference in treatment, respondent Bacolod Sales Force Union-Congress of

Independent Organization-ALU, the recognized collective bargaining agent of the rank-and-file
sales personnel of petitioner’s Bacolod Plant7 (respondent), submitted its concerns to the grievance
machinery in accordance with the Collective Bargaining Agreement (CBA), demanding, among
others, that: (a) the salary rates of the Cosmos integrees be readjusted to equal to that of the newly-
hired ADs’ salary rates;8 (b) the conversion of the P550.00 monthly deduction from the salaries
of the Bacolod Plant sales personnel into a 45 kg. rice provision be declared as a violation of the
non-diminution rule under Article 1009 of
pg. 296
_______________
5 Id., at pp. 64-65; id., at pp. 129-130.
6 Id., at p. 65; id., at p. 130.
7 Id., at pp. 64 and 129.
8 Id., at p. 65.
9 Article 100 of the Labor Code reads:
Article 100. Prohibition Against Elimination or Diminution of Benefits.—Nothing in this

Book shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
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the Labor Code, as amended; and (c) the employees concerned be reimbursed for the amounts
illegally deducted.10
After the grievance process failed, the parties agreed to submit the unresolved matters to voluntary
arbitration pursuant to Article 5 of the CBA, and filed a preventive mediation case before the
NCMB raising the aforesaid issues.11
Respondent claimed that the Cosmos integrees were being discriminated against the newly-hired
ADs, in light of the disparity between their salaries12 and reiterated that the monthly P550.00
deduction from the basic salaries of the new union members constitutes a violation of the non-
diminution rule.13
For its part, petitioner maintained that the fixing of hiring rates is a management prerogative,
adding that the Cosmos integrees and the newly-hired ADs were not similarly situated due to the
apparent variance in the manner by which they were appointed and hired, as well as their
qualifications, skills, and responsibilities for the position.14 Further, it claimed that the Cosmos
integrees failed to meet all the basic qualifications for the AD position, such as age and educational
attainment.15 For another, it contended that the rice subsidy of P550.00 per month to nonunion
members was automatically converted into an actual 45 kg. sack of rice upon union membership,
pg. 297
which is, in reality, valued more than the amount of said subsidy and, thus, was not tantamount to
any diminution of benefits.16
_______________
10 See respondent’s position paper dated November 8, 2011; Rollo, p. 322.
11 Id., at p. 65; id., at pp. 160-161.
12 Id., at p. 131.
13 Id., at p. 133. See also discussions in respondent’s position paper; id., at pp. 317-319.
14 Id., at p. 132.
15 Id., at p. 133.
16 Id. See also discussions in petitioner’s position paper dated November 2, 2011; id., at pp. 165-
166, 170-171, and 174-175.
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The VA’s Ruling
In a Decision17 dated February 3, 2012 (VA Decision), the VA: (a) declared that the disparity in
the wages of the Cosmos integrees and the newly-hired ADs was discriminatory for lack of
substantial basis or valid criteria; (b) directed petitioner to realign or readjust the Cosmos
integrees’ basic salaries at par with that of the newly-hired ADs; (c) declared that the P550.00
deduction from the union members’ basic salary in lieu of one (1) 45 kg. sack of rice every month
was a violation of Article X18 of the CBA and Article 100 of the Labor Code, as amended; and
(d) directed petitioner to comply with Article X of the CBA by giving rice ration free of charge,
and to cease and desist from deducting P550.00 from the monthly salaries of the concerned
employees, effective February 2012.19
The VA held that the lower salary rate given to the Cosmos integrees smacks of discrimination
given that they hold the same position, perform the same work, share the same functions, and have
pg. 298
the same job description as that of the newly-hired ADs. Thus, under the principle of “equal pay
for equal work,” the Cosmos integrees’ failure to meet the new set of qualifications for ADs in
view of their “over-age and lack of educational attainment” did not justify their lower salary
rates.20 Moreover, the P550.00 deduction from a union member’s monthly salary and its
conversion into a 45 kg. sack of rice ration constituted: (a) noncompliance with Article X of
_______________
17 Id., at pp. 129-140.
18 Article X of the CBA, reads:
ARTICLE X – RICE RATION
The COMPANY shall continue the practice in connection with the granting of the rice ration
and the employee in active service shall, as heretofore, continue to receive, free of charge,
one (1) sack of rice (45 kilos) per month. (Id., at p. 191)
19 Id., at pp. 66 and 139-140.
20 Id., at pp. 135-137.
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the CBA, which clearly provides that the grant of rice ration to employees shall be free of charge;
and (b) a violation of the non-diminution rule under Article 100 of the Labor Code, as amended,
because the said benefit has become part of the employment contract.21
Petitioner moved for reconsideration,22 which was denied in a Resolution23 dated April 25, 2012
(VA Resolution).
The CA’s Proceedings
pg. 299
Petitioner received notice of the VA Resolution on May 21, 2012,24 and filed its petition for
review25 under Rule 43 of the Rules of Court (Rules) before the CA on June 5, 2012.26
Respondent countered,27 among others, that the VA Decision had become final and executory
after ten (10) calendar days from receipt thereof pursuant to Article 262-A28 of the
_______________
21 Id., at pp. 138-139.
22 See motion for reconsideration dated February 22, 2012; id., at pp. 353-375.
23 Id., at pp. 141-148. Signed by Panel Members Juvy A. Victoriano-Dioso and Elias A. Gatanela,
Jr. Panel Chairman Jose I. Lapak, Jr. filed a Separate Concurring Opinion dated April 27, 2012;
id., at pp. 149-155.
24 Id., at p. 77.
25 Dated June 4, 2012. Id., at pp. 76-119.
26 Id., at p. 76.
27 See Comments of the Respondent dated November 6, 2012; id., at pp. 389-394.
28 Article 262-A of the Labor Code, as amended (now Article 276 of the Labor Code, as
renumbered under Republic Act No. 10151 entitled “An Act Allowing the Employment of Night
Workers, Thereby Repealing Articles 130 and 131 of Presidential Decree Number Four Hundred
Forty-Two, as amended, Otherwise Known as the Labor Code of the Philippines” approved on
June 21, 2011; see also Department of Labor and Employment Department Advisory No. 01,
Series of 2015 entitled “Renumbering of the
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Labor Code, as amended; hence, the CA petition must, perforce, fail.29
Subsequently, a writ of execution30 dated July 26, 2013 was issued by the VA and served upon
petitioner. Thereafter, petitioner: (a) aligned the salaries of the Cosmos integrees with the newly-
hired ADs; (b) paid the corresponding wage differentials; (c) refunded the amounts deducted from
pg. 300
the union members’ salaries; and (d) stopped the P550.00 monthly deductions from their
salaries.31
In a Decision32 dated December 22, 2014, the CA denied the petition on the ground that the VA
Decision had attained finality pursuant to Section 5,33 Article 5 of the CBA, which
_______________
Labor Code of the Philippines, as amended,” approved on April 21, 2015) provides:
Art. 262-A. Procedures.—x x x.
xxxx
The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall
contain the facts and the law on which it is based. It shall be final and executory after ten
(10) calendar days from receipt of the copy of the award or decision by the parties.
xxxx
29 Rollo, p. 390.
31 See Affidavit dated December 14, 2015 of Cyrus U. Javelosa, a regular employee of petitioner
with a position of AD; Rollo, p. 463.
32 Id., at pp. 64-70.
33 Article 5 (Voluntary Arbitration), Section 5 of the CBA reads:
Section 5. During the effectivity of this Agreement, the Arbitration Committee shall have
no power to add, to subtract from, or modify any of the terms of this Agreement or any terms
made supplementary thereto. The decision of the Arbitration Committee shall be final
and binding upon the COMPANY and the UNION, and the employees and may be
enforced in any court of competent jurisdiction. (Emphasis supplied; id., at p. 187)
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pg. 301
explicitly provides that “[t]he decision of the Arbitration Committee shall be final and binding
upon the COMPANY and the UNION, and the employees and may be enforced in any court of
competent jurisdiction.”34
Petitioner filed its motion for reconsideration,35 which was, however, denied in a Resolution36
dated September 8, 2015; hence, this petition.
The essential issue for the Court’s resolution is whether or not the CA correctly held that the VA
Decision can no longer be the subject of its review for having attained finality pursuant to the
express provision under Section 5, Article 5 of the CBA.
In the context of labor law, arbitration is the reference of a labor dispute to an impartial third person
for determination on the basis of evidence and arguments presented by such parties who have
bound themselves to accept the decision of the arbitrator as final and binding.37 However, in view
of the nature of their functions, voluntary arbitrators act in a quasi-judicial capacity;38 hence, their
judgments or final orders which are declared final by law are not so exempt from
_______________
34 Id., at pp. 68-69.
35 See motion for reconsideration dated February 18, 2015; id., at pp. 411-442.
36 Id., at pp. 73-75.
37 Luzon Development Bank v. Association of Luzon Development Bank Employees, 319 Phil.
262, 266; 249 SCRA 162, 166 (1995).
38 Id., at p. 271; p. 168. See also Chung Fu Industries (Phils.), Inc. v. Court of Appeals, G.R. No.
96283, February 25, 1992, 206 SCRA 545, 556.
pg. 302
148

Organization-ALU
judicial review when so warranted.39 “Any agreement stipulating that ‘the decision of the
arbitrator shall be final and unappealable’ and ‘that no further judicial recourse if either
party disagrees with the whole or any part of the arbitrator’s award may be availed of’
cannot be held to preclude in proper cases the power of judicial review which is inherent in
courts.”40
Case law holds that the proper remedy to reverse or modify a Voluntary Arbitrators’ or a Panel of
Voluntary Arbitrators’ decision or award is to appeal the award or decision before the CA under
Rule 43 of the Rules41 on questions of fact, of law, mixed questions of fact and law,42 or a mistake
of judgment.43 However, in several cases, the Court allowed the filing of a
_______________
39 See Chung Fu Industries (Phils.), Inc. v. Court of Appeals, id.
40 See ABS-CBN Broadcasting Corp. v. World Interactive Network Systems (WINS) Japan Co.,
Ltd., 568 Phil. 282, 293; 544 SCRA 308, 319 (2008).
41 See Philippine Electric Corporation (PHILEC) v. Court of Appeals, G.R. No. 168612,
December 10, 2014, 744 SCRA 361, 377-378; Royal Plant Workers Union v. Coca-Cola Bottlers
Philippines, Inc.-Cebu Plant, 709 Phil. 350, 361; 696 SCRA 357, 368 (2013); Samahan ng mga
Manggagawa sa Hyatt (SAMASAH-NUWHRAIN) v. Magsalin, 665 Phil. 584, 594-595; 650 SCRA
445, 454 (2011); Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan, 601
Phil. 365, 370; 582 SCRA 369, 374 (2009); AMA Computer College-Santiago City, Inc. v. Nacino,
568 Phil. 465, 470; 544 SCRA 502, 507 (2008); Leyte IV Electric Cooperative, Inc. v. LEYECO
IV Employees Union-ALU, 562 Phil. 743, 754; 537 SCRA 154, 162 (2007); Centro Escolar
University Faculty and Allied Workers Union-Independent v. Court of Appeals, 523 Phil. 427,
436-437; 490 SCRA 61, 69 (2006); Manila Midtown Hotel v. Borromeo, 482 Phil. 137, 141-142;
438 SCRA 653, 656 (2004); and Sevilla Trading Company v. Semana, 472 Phil. 220, 229; 428
SCRA 239, 244 (2004). See also ABS-CBN Broadcasting Corp. v. World Interactive Network
Systems (WINS) Japan Co., Ltd., id., at pp. 292-294; pp. 318-319.
42 See Section 3, Rule 43 of the Rules.
43 Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of Appeals,
supra at p. 438; p. 70.
pg. 303
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petition for certiorari from the VA’s judgment to the CA under Rule 65 of the same Rules,44
where the VA was averred to have acted without or in excess of his jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction.45
In this case, petitioner availed of the correct mode of review of the VA Decision by filing a petition
for review with the CA under Rule 43 of the Rules, and in conformity with prevailing
jurisprudence. In said petition, petitioner assailed the arbitral award, first, on the ground that “[t]he
Panel seriously erred in declaring [that] the disparity between the wages of [the] Cosmos
[i]ntegrees and [the] newly-hired [ADs] as discriminatory, and [in] directing [petitioner] to
[realign] or [readjust] the basic salary rate of the Cosmos [i]ntegrees equivalent to that of the
newly-hired [ADs].”46 In this light, petitioner pointed out that the Cosmos [i]ntegrees “were not
hired by [petitioner] for the AD Position because they met the qualifications therefor. Rather they
were appointed as such because they passed the internal selection process which [petitioner]
specifically applied to them” and “[i]n fact, x x x all three (3) Cosmos [i]ntegrees failed to meet
all the basic qualifications for the AD position, such as age and educational attainment.”47 On the
other hand, the newly-hired ADs “were engaged on the basis of the qualifications they presented
to [petitioner] at the time they applied for the job,” and ‘‘were no longer required to undergo the
same selection process applied
_______________
44 See Mora v. Avesco Marketing Corporation, 591 Phil. 827, 834-836; 571 SCRA 226, 234
(2008); and Unicraft Industries International Corporation v. Court of Appeals, 407 Phil. 527, 538-
540; 355 SCRA 233, 238 (2001). See also Leyte IV Electric Cooperative, Inc. v. LEYECO IV
Employees Union-ALU, supra note 41 at pp. 754-756; p. 165.
45 See ABS-CBN Broadcasting Corp. v. World Interactive Network Systems (WINS) Japan Co.,
Ltd., supra note 40 at p. 294; p. 314; and Leyte IV Electric Cooperative, Inc. v. LEYECO IV
Employees Union-ALU, id., at p. 756; p. 165.
46 Rollo, p. 90.
47 Id., at p. 98.
150
pg. 304
Organization-ALU
to the Cosmos [i]ntegrees inasmuch as they already possessed, at the time of their application, the
minimum requirements for the job.”48 Based on the differences in the selection processes and
qualifications, petitioner claimed that the “doctrine [of] ‘equal pay for equal work’ x x x has no
application in the present case.”49 Further, it added that the measure of providing for higher salary
rates was not done arbitrarily and illegally to discriminate against the Cosmos [i]ntegrees.
Moreover, it claimed that “[b]eing an exercise of management prerogative, [petitioner] may very
well offer newly-hired ADs a more competitive compensation scheme in order to attract more
qualified candidates for the position.”50
In its petition before the Court, petitioner, citing certain cases on the matter,51 restated the same
position, postulating that “the unilateral adoption [of] an upgraded salary scale that increased
hiring rates of newly-hired employees without increasing the salary rates of the old employees
[should be treated as] a valid exercise of business judgment prerogative, based on the high
productivity of that particular group and the need to increase the company’s hiring rate[;]
otherwise[,] the employer’s hands would be completely tie[d], and [it would be] discourage[d]
from adjusting the salary rates for fear that it would result to x x x [the] demand [by] all employees,
for a similar increase, especially if the financial condition of the business cannot address an across
the board increase.”52
The Court sees the prima facie reasonableness of petitioner’s asseverations and finds that the
merits of its case, based on such argumentation, properly warrant judicial review. As such, the CA
should look into the soundness of the VA rulings in relation to the nuances averred, particularly,
the impact of the differences in the selection processes applied
_______________
48 Id.
49 Id.
50 Id., at p. 96.
51 Id.
52 Id., at pp. 38-39.
151
pg. 305
VOL. 804, SEPTEMBER 21, 2016 151
Organization-ALU
and relevant qualifications between the Cosmos integrees and the newly-hired ADs. Moreover, the
CA ought to determine the proper application of the “equal pay for equal work” principle vis-à-vis
the business decision of an employer to adopt a more competitive compensation scheme in light
of the demands in human resource. Thus, borrowing the language in Chung Fu Industries (Phils.),
Inc. v. CA53 — which similarly involved a restrictive stipulation on appeal from an arbitral award
the Court finds that the CA erred in refusing “to look into the merits of [this] case, despite [a]
prima facie showing of the existence of grounds warranting judicial review,” which, thus,
“effectively deprived petitione[r] of [the] opportunity to prove or substantiate [its] allegations.”54
In fact, aside from the above stated issue, the following separate issues were left untouched by the
CA: (a) as raised by petitioner, whether or not the conversion of the monthly P550.00 rice subsidy
into one (1) 45 kg. sack of rice upon union membership constitutes a violation of Article 100 of
the Labor Code, as amended, and noncompliance with Article X of the CBA;55 and (b) as raised
by respondent, whether or not the petition for review was filed out of time.56 The materiality of
these issues all the more reinforces the conclusion that the CA should not have refused to exercise
judicial review of the assailed VA rulings, notwithstanding the CBA stipulation that the decision
of the Arbitration Committee, i.e., the VA, shall be final and binding upon the parties. In fine, a
remand to the CA for the prompt resolution of all these issues, including any other ancillary issues
which the parties may have raised before it, is, therefore, in order. Verily, courts “should not shirk
from exercising their power to review, where under
_______________
53 Chung Fu Industries (Phils.), Inc. v. Court of Appeals, supra note 38.
54 Id., at p. 558.
55 Rollo, p. 107.
56 Id., at p. 390.
152

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pg. 306
applicable laws and jurisprudence, such power may be rightfully exercised,”57 as in this case.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated December 22, 2014
and the Resolution dated September 8, 2015 of the Court of Appeals (CA) in C.A.-G.R. CEB S.P.
No. 06892 are hereby SET ASIDE. The case is REMANDED to the CA for the prompt resolution
of the aforementioned issues, including any other ancillary issues which the parties may have
raised before it.
SO ORDERED.
Petition partly granted, judgment and resolution set aside. Case remanded to Court of Appeals.
Notes.—Arbitration, as an alternative mode of settling disputes, has long been recognized and
accepted in our jurisdiction. (Cargill Philippines, Inc. vs. San Fernando Regala Trading, Inc., 641
SCRA 31 [2011])
An arbitration agreement which forms part of the main contract shall not be regarded as invalid or
nonexistent just because the main contract is invalid or did not come into existence, since the
arbitration agreement shall be treated as a separate agreement independent of the main contract.
(Id.)
——o0o——
pg. 307
G.R. No. 221062. October 5, 2016.*
ELIZABETH SY-VARGAS, petitioner, vs. THE ESTATE OF ROLANDO OGSOS, SR.

and ROLANDO OGSOS, JR., respondents.
Remedial Law; Civil Procedure; Period; Since March 29, 2014 fell on a Saturday, petitioner and
Kathryn were completely justified in filing their motion for reconsideration on the next working
day: Monday, March 31, 2014.—The CA failed to take into consideration that March 29, 2014 fell
on a Saturday. In these situations, Section 1, Rule 22 of the Rules of Court provides that: Section
1. How to compute time.—In computing any period of time prescribed or allowed by these Rules,
or by order of the court, or by any applicable statute, the day of the act or event from which the
designated period of time begins to run is to be excluded and the date of performance included. If
the last day of the period, as thus computed, falls on a Saturday, a Sunday, or a legal holiday in the
place where the court sits, the time shall not run until the next working day. Since March 29, 2014
fell on a Saturday, petitioner and Kathryn were completely justified in filing their motion for
reconsideration on the next working day: Monday, March 31, 2014. Accordingly, the CA should
not have considered it filed out of time, and instead, resolved such motion on the merits. In such
an instance, court procedure dictates that
_______________
* FIRST DIVISION.
439
VOL. 805, OCTOBER 5, 2016 439

Sy-Vargas vs. The Estate of Rolando Ogsos, Sr.
the instant case be remanded to the CA for resolution on the merits. However, when there is already
enough basis on which a proper evaluation of the merits may be had — as in this case — the Court
may dispense with the time-consuming procedure of remand in order to prevent further delays in
the disposition of the case and to better serve the ends of justice. In view of the foregoing — as
well as the fact that petitioner prayed for the resolution of the substantive issues on the merits —
the Court finds it appropriate to resolve the substantive issues of this case.
Same; Same; Counterclaims; Docket Fees; The rule in permissive counterclaims is that for the
trial court to acquire jurisdiction, the counterclaimant is bound to pay the prescribed docket fees.
On the other hand, the prevailing rule with respect to compulsory counterclaims is that no filing
pg. 308
fees are required for the trial court to acquire jurisdiction over the subject matter.—Essentially,
the nature of a counterclaim is determinative of whether or not the counterclaimant is required to
pay docket fees. The rule in permissive counterclaims is that for the trial court to acquire
jurisdiction, the counterclaimant is bound to pay the prescribed docket fees. On the other hand, the
prevailing rule with respect to compulsory counterclaims is that no filing fees are required for the
trial court to acquire jurisdiction over the subject matter.
Same; Same; Same; Words and Phrases; In general, a counterclaim is any claim which a
defending party may have against an opposing party.—In general, a counterclaim is any claim
which a defending party may have against an opposing party. A compulsory counterclaim is one
which, being cognizable by the regular courts of justice, arises out of or is connected with the
transaction or occurrence constituting the subject matter of the opposing party’s claim and does
not require for its adjudication the presence of third parties of whom the court cannot acquire
jurisdiction. A compulsory counterclaim is barred if not set up in the same action. On the other
hand, a counterclaim is permissive if it does not arise out of or is not necessarily connected with
the subject matter of the opposing party’s claim. It is essentially an independent claim that may be
filed separately in another case.
Same; Same; Jurisdiction; Docket Fees; Counterclaims; Permissive Counterclaims; In view of the
finding that the counterclaim is permissive, and not compulsory as held by the courts a quo,
respon-
440

dents are required to pay docket fees. However, it must be clarified that respondents’ failure to
pay the required docket fees, per se, should not necessarily lead to the dismissal of their
counterclaim.—In view of the finding that the counterclaim is permissive, and not compulsory as
held by the courts a quo, respondents are required to pay docket fees. However, it must be clarified
that respondents’ failure to pay the required docket fees, per se, should not necessarily lead to the
dismissal of their counterclaim. It has long been settled that while the court acquires jurisdiction
over any case only upon the payment of the prescribed docket fees, its nonpayment at the time of
filing of the initiatory pleading does not automatically cause its dismissal provided that: (a) the
fees are paid within a reasonable period; and (b) there was no intention on the part of the claimant
to defraud the government.
Same; Same; Docket Fees; Counterclaims; The counterclaim should not be dismissed for
nonpayment of docket fees. Instead, the docket fees required shall constitute a judgment lien on
the monetary awards in respondents’ favor.—Verily, respondents’ reliance on the findings of the
courts a quo, albeit erroneous, exhibits their good faith in not paying the docket fees, much more
pg. 309
their intention not to defraud the government. Thus, the counterclaim should not be dismissed for
nonpayment of docket fees. Instead, the docket fees required shall constitute a judgment lien on
the monetary awards in respondents’ favor. In Intercontinental Broadcasting Corporation (IBC-
13) v. Alonzo-Legasto, 487 SCRA 339 (2006), citing Section 2, Rule 141 of the Rules of Court,
the Court held that in instances where a litigant’s nonpayment of docket fees was made in good
faith and without any intention of defrauding the government, the clerk of court of the court a quo
should be ordered to assess the amount of deficient docket fees due from such litigant, which will
constitute a judgment lien on the amount awarded to him, and enforce such lien, as in this case.
Semaco P. Sacmar & Associates for petitioner.
Cynthia M. Sulit-Portugaleza for respondents.
441
VOL. 805, OCTOBER 5, 2016 441

PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 28, 2014 and
the Resolution3 dated October 1, 2015 of the Court of Appeals (CA) in C.A.-G.R. CV No. 03710,
which affirmed with modification the Decision4 dated July 2, 2007 of the Regional Trial Court of
Dumaguete City, Branch 36 (RTC) in Civil Case No. 12708, thereby: (a) ordering petitioner
Elizabeth Sy-Vargas (petitioner) and her sister, Kathryn T. Sy (Kathryn), to pay respondents the
Estate of Rolando Ogsos, Sr. (Ogsos, Sr.) and Rolando Ogsos, Jr., (Ogsos, Jr.; collectively,
respondents) the amount of P10,391,981.76, representing the value of the sugar and molasses that
could have been produced from 1999 to 2004, if only respondents were not deprived by petitioner
and Kathryn of possession and enjoyment of the leased agricultural farm; and (b) deleting the
awards for moral and exemplary damages, as well as the attorney’s fees and costs of suit against
respondents.
The Facts
pg. 310
On February 10, 1994, Ogsos, Sr. and the Heirs of Fermina Pepico (Fermina), represented by their
Attorney-in-Fact, Catalino V. Noel, entered into a Contract of Lease5 (lease contract) covering
five (5) parcels of agricultural land owned by the latter, with an aggregate area of 23 hectares,
more or less, situated in Maaslum Manjuyod, Negros Oriental (leased premises). Based on the
contract, Ogsos, Sr. agreed to pay the
_______________
1 Rollo, pp. 15-44.
2 Id., at pp. 49-61. Penned by Associate Justice Ma. Luisa C. Quijano-Padilla, with Associate
Justices Ramon Paul L. Hernando and Carmelita Salandanan-Manahan, concurring.
3 Id., at pp. 63-65. Penned by Associate Justice Marilyn B. Lagura-Yap, with Associate Justices
Pamela Ann A. Maxino and Renato C. Francisco, concurring.
4 Id., at pp. 124-135. Penned by Judge Cesar Manuel U. Cadiz, Jr.
5 Id., at pp. 70-71.
442

Heirs of Fermina 230 piculs or 290.95 liquid-kilogram (lkg.) of centrifugal sugar every crop year,
starting from crop year 1994-1995 to crop year 2000-2001, as lease rental.6
On June 5, 1996, the term of the lease contract was extended for three (3) years, or until the end
of crop year 2004, due to Ogsos, Sr.’s introduction of improvements on the leased premises.7
Thereafter, or on December 30, 1996, the said contract was amended, modifying the lease rental
from 230 piculs or 290.95 lkg. of centrifugal sugar every crop year to P150,000.00 cash, beginning
the crop year 1996-1997.8
Petitioner and Kathryn, who are among the heirs of Fermina, claimed that the lease rentals from
crop year 1994-1995 to crop year 1998-1999 were not paid. Thus, on April 27, 2000,9 they filed a
Complaint10 for Specific Performance and Damages against respondents, before the RTC,
docketed as Civil Case No. 12708, to recover the unpaid lease rentals. Pertinently, they did not
include in their claim the lease rental for crop year 1999-2000 because respondents had already
abandoned the leased premises since the said crop year.11
pg. 311
Summons was served in May 2000, but respondent Ogsos, Jr. only filed a motion to admit
answer12 and answer13 to the complaint after more than two (2) years, or on December 17,
2002.14 Thus, petitioner and Kathryn filed on January 28, 2003, an opposition thereto, and moved
to declare respon-
_______________
6 See item 3 of the lease contract; id., at pp. 70; 52-53 and 126.
7 Id., at pp. 53 and 126.
8 Id.
9 Erroneously dated as “March 27, 2000” by the CA; id., at p. 50.
10 Dated April 26, 2000. Id., at pp. 66-69.
11 Id., at pp. 19 and 67.
13 See Answer with Counter-Claim and Prayer for Preliminary Injunction dated December 16,
2002; Rollo, pp. 72-84.
14 Id., at pp. 50-51 and 124.
443
VOL. 805, OCTOBER 5, 2016 443

dents in default, which the RTC granted in an Order dated March 7, 2003.15
Their motion for reconsideration having been denied by the RTC, respondents, then, elevated the
matter via a petition for certiorari to the CA, docketed as C.A.-G.R. S.P. No. 79463, wherein the
CA granted respondents petition and remanded the case to the RTC. The CA ordered the RTC to
admit respondents’ answer so as to give them the opportunity to be heard and to present their side
on the merits of the case.16
In their answer,17 respondents alleged that they had faithfully complied with their obligations as
embodied in the lease contract and its subsequent amendments.18 They denied abandoning the
leased premises and claimed that sometime in December 1998, petitioner and Kathryn unlawfully
pg. 312
took possession of the leased premises and appropriated for themselves the sugarcane ready for
harvest under the pretext that they would apply the proceeds thereof to the unpaid rent.19 They
likewise alleged that in the same year, Ogsos, Sr. and his wife fell ill, which incidents forced
respondents to obtain loans from several businessmen, namely: Emiliano “Nonette” Bacang, Zaldy
Roleda, and Pastor Domocol.20 The arrangement regarding the foregoing loans was that the said
creditors would be allowed to harvest the sugarcane from the leased premises and apply the
proceeds thereof to the loans.21 However, when the creditors were about to harvest the sugarcane,
they were prevented by petitioner and Kathryn; resulting in
_______________
15 Id. (Pleadings and Order mentioned are not attached to the Rollo).
16 Id., at pp. 51 and 124-125.
17 Id., at pp. 72-84.
18 Id., at p. 74.
19 Id., at p. 75.
20 Id., at p. 78.
21 Id.
444

respondents’ default in the payment of their debts.22 On March 22, 2000, Ogsos, Sr. died.23
Respondents also averred that since crop years 1994 to 1997-1998, the average production of
sugarcane is 1,308.68 lkg. of sugar and 30.409 tons of molasses per year, as computed on the basis
of the Planter’s Production Reports. Thus, when petitioner and Kathryn took possession of the
leased premises, respondents lost their profits equivalent to the aforesaid production starting from
crop year 1999-2000 until the termination of the lease contract on crop year 2003-2004.24
Accordingly, respondents filed a counterclaim for these lost profits plus damages.25
On June 6, 2005, respondents moved for the dismissal of the complaint in view of the absence of
the required Certificate of Non-Forum Shopping. In a Resolution dated November 9, 2005, the
RTC dismissed the case without prejudice.26
pg. 313
On December 15, 2005, respondents moved for the hearing of their counterclaim, to which the
RTC required petitioner and Kathryn to submit a comment, but none was filed. Hence, in an Order
dated February 9, 2006, the RTC set the case for reception of evidence on respondents’
counterclaim.27
On February 28, 2006, respondents filed an Ex-Parte Motion to Set Case for Pre-Trial, which was
granted by the RTC on March 1, 2006, setting the pretrial on March 30, 2006. Petitioner, Kathryn,
and their counsel failed to appear at the pretrial and to file their pretrial brief. Thus, respondents
filed a manifestation with motion to present evidence ex parte on June 7, 2006, praying that
petitioner and Kathryn be declared in default, and that respondents be allowed to present
_______________
22 Id., at pp. 54, 78-79.
23 Id., at pp. 75 and 80.
24 Id., at pp. 54 and 79.
25 Id., at pp. 79 and 83.
26 Id., at pp. 51 and 125.
27 Id.
445
VOL. 805, OCTOBER 5, 2016 445

evidence on their counterclaim ex parte, which the RTC granted in an Order dated June 28,
2006.28
Thereafter, or on August 16, 2006, petitioner and Kathryn moved to quash the June 28, 2006 Order,
which was, however, denied on September 1, 2006 on the ground that the period to ask for
reconsideration or for the lifting of the order had already lapsed.29
On October 17, 2006, petitioner and Kathryn filed a motion to dismiss respondents’ counterclaim
arguing that the same were permissive and that respondents had not paid the appropriate docket
fees.30 However, the RTC, in its November 16, 2006 Order,31 denied the said motion, declaring
respondents’ counterclaim as compulsory; thus, holding that the payment of the required docket
fees was no longer necessary.32
pg. 314
The RTC’s Ruling
In a Decision33 dated July 2, 2007, the RTC granted respondents’ counterclaim, and consequently,
ordered petitioner and Kathryn to pay respondents the following amounts: (a) P10,391,981.76
worth of sugar and molasses produced representing the value of 1,308.68 lkg. of sugar and 30.409
tons of molasses for each crop year that defendant and Ogsos, Sr. were deprived of possession and
enjoyment of the leased premises; (b) P500,000.00 as moral damages; (c) P100,000.00 as
exemplary damages; (d) P100,000.00 as attorney’s fees and P1,000.00 for each personal
appearance of respondents’ counsel before the RTC; and (e) P50,000.00 as costs of suit.34 In so
ruling, it found that Ogsos, Sr. faithfully paid the lease rent-
_______________
28 Id., at pp. 51-52 and 125.
29 Id., at pp. 52 and 125.
30 Id., at p. 52.
31 Id., at pp. 85-86. Issued by Judge Cesar Manuel U. Cadiz, Jr.
32 Id.
33 Id., at pp. 124-135.
34 Id., at p. 134.
446

als during the crop years 1994 to 199735 but eventually stopped their payments when petitioner
and Kathryn took possession and harvested the sugarcane in the leased premises sometime in
December 1998, despite respondents’ objection.36 Accordingly, petitioner and Kathryn reneged
on their obligation to maintain respondents’ peaceful and adequate enjoyment of the leased
premises when the former forcibly and unlawfully deprived the latter of possession thereof in
pg. 315
December 1998, despite payment of the lease rentals. Due to this, petitioner and Kathryn were
held liable for breach of the lease contract.37
Dissatisfied, petitioner and Kathryn appealed to the CA.38
The CA’s Ruling
In a Decision39 dated February 28, 2014 (CA Decision), the CA affirmed the ruling of the RTC
but deleted the awards for moral and exemplary damages, as well as the attorney’s fees and costs
of suit due to the absence of proof that petitioner and Kathryn acted fraudulently or in bad faith.40
The CA ruled that the RTC was correct in ruling that respondents’ counterclaim is not permissive
but compulsory; hence, payment of docket fees was not necessary.41 Further, the CA ruled that
even though the counterclaim was compulsory, the same would not be automatically dismissed
upon the dismissal of the action if the dismissal was caused by the fault of the plaintiff, as in this
case.42
_______________
35 Id., at p. 130.
36 Id., at p. 75.
37 Id., at p. 130.
38 See appellants’ brief dated December 21, 2011; id., at pp. 136-139.
39 Id., at pp. 49-61.
40 Id., at pp. 59-60.
41 Id., at p. 57.
42 Id., at pp. 58-59.
447
VOL. 805, OCTOBER 5, 2016 447
pg. 316
The counsel of petitioner and Kathryn received the CA Decision on March 14, 2014.43 On March
31, 2014, petitioner and Kathryn filed their motion for reconsideration,44 which was denied in the
Resolution45 dated October 1, 2015 for being filed out of time; hence, the instant petition solely
filed by petitioner.46
The Issues Before the Court
The essential issues for resolution in this case are whether or not the CA correctly ruled that: (a)
petitioner’s motion for reconsideration was filed out of time; (b) respondents’ counterclaim for
damages is compulsory and not permissive in nature, and thus, no payment of docket fees is
required; and (c) respondents are entitled to such counterclaim.
I.
Records bear out that in the assailed October 1, 2015 Resolution, the CA denied petitioner’s motion
for reconsideration for being purportedly filed out of time. The CA explained that since the registry
return receipt showed that petitioner and Kathryn’s counsel received the assailed March 14, 2014
Decision, it only had until March 29, 2014 to file a motion for reconsideration. However, they only
filed such motion on March 31, 2014, thus, rendering the assailed CA Decision final and executory.
Notably, however, the CA failed to take into consideration that March 29, 2014 fell on a Saturday.
In these situations, Section 1, Rule 22 of the Rules of Court provides that:
_______________
43 Id., at pp. 63 and 217.
44 Dated March 31, 2014. Id., at pp. 217-228.
45 Id., at pp. 63-65.
46 Kathryn T. Sy no longer filed an appealed.
pg. 317
448

Section 1. How to compute time.—In computing any period of time prescribed or allowed by
these Rules, or by order of the court, or by any applicable statute, the day of the act or event from
which the designated period of time begins to run is to be excluded and the date of performance
included. If the last day of the period, as thus computed, falls on a Saturday, a Sunday, or a legal
holiday in the place where the court sits, the time shall not run until the next working day.
Since March 29, 2014 fell on a Saturday, petitioner and Kathryn were completely justified in filing
their motion for reconsideration on the next working day: Monday, March 31, 2014. Accordingly,
the CA should not have considered it filed out of time, and instead, resolved such motion on the
merits. In such an instance, court procedure dictates that the instant case be remanded to the CA
for resolution on the merits. However, when there is already enough basis on which a proper
evaluation of the merits may be had — as in this case — the Court may dispense with the time-
consuming procedure of remand in order to prevent further delays in the disposition of the case
and to better serve the ends of justice.47 In view of the foregoing — as well as the fact that
petitioner prayed for the resolution of the substantive issues on the merits48 — the Court finds it
appropriate to resolve the substantive issues of this case.
II.
Essentially, the nature of a counterclaim is determinative of whether or not the counterclaimant is

required to pay docket fees. The rule in permissive counterclaims is that for the trial court to
acquire jurisdiction, the counterclaimant is
_______________
47 Gonzales v. Marmaine Realty Corporation, G.R. No. 214241, January 13, 2016, 781 SCRA
63, citing Real v. Sangu Philippines, Inc., 655 Phil. 68, 90; 640 SCRA 67, 89 (2011).
48 See Rollo, p. 43.
pg. 318
449
VOL. 805, OCTOBER 5, 2016 449

bound to pay the prescribed docket fees.49 On the other hand, the prevailing rule with respect to
compulsory counterclaims is that no filing fees are required for the trial court to acquire jurisdiction
over the subject matter.50
In general, a counterclaim is any claim which a defending party may have against an opposing
party. A compulsory counterclaim is one which, being cognizable by the regular courts of justice,
arises out of or is connected with the transaction or occurrence constituting the subject matter of
the opposing party’s claim and does not require for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction. A compulsory counterclaim is barred if not set up in
the same action.51
On the other hand, a counterclaim is permissive if it does not arise out of or is not necessarily
connected with the subject matter of the opposing party’s claim. It is essentially an independent
claim that may be filed separately in another case.52
In Spouses Mendiola v. CA,53 the Court had devised tests in determining whether or not a
counterclaim is compulsory or permissive:
_______________
49 Bungcayao, Sr. v. Fort Ilocandia Property Holdings and Development Corporation, 632 Phil.
391, 400; 618 SCRA 381, 390 (2010).
50 See Alba, Jr. v. Malapajo, G.R. No. 198752, January 13, 2016, 780 SCRA 534. In Korea
Technologies Co., Ltd. v. Lerma (566 Phil. 1, 20; 542 SCRA 1, 17 [2008]), it was held that
“effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket
fees are now required to be paid in compulsory counterclaim or cross-claims.” However, in OCA
Circular No. 96-2009 entitled “Docket Fees For Compulsory Counterclaims,” dated August 13,
2009, it was clarified that the rule on imposition of filing fees on compulsory counterclaims
has been suspended. Such suspension remains in force up to this day.
51 See Alba, Jr. v. Malapajo, id., citations omitted.
52 Id.
53 691 Phil. 244; 677 SCRA 27 (2012).
pg. 319
450

The four tests to determine whether a counterclaim is compulsory or not are the following, to wit:
(a) Are the issues of fact or law raised by the claim and the counterclaim largely the same?
(b) Would res judicata bar a subsequent suit on defendant’s claims, absent the compulsory
counterclaim rule? (c) Will substantially the same evidence support or refute plaintiff’s claim
as well as the defendant’s counterclaim? and (d) Is there any logical relation between the
claim and the counterclaim, such that the conduct of separate trials of the respective claims
of the parties would entail a substantial duplication of effort and time by the parties and the
court? Of the four, the one compelling test of compulsoriness is the logical relation between the
claim alleged in the complaint and that in the counterclaim. Such relationship exists when
conducting separate trials of the respective claims of the parties would entail substantial
duplication of time and effort by the parties and the court; when the multiple claims involve the
same factual and legal issues; or when the claims are offshoots of the same basic controversy
between the parties. If these tests result in affirmative answers, the counterclaim is
compulsory.54 (Emphases and underscoring supplied)
Based on the above mentioned standards, the Court finds that the counterclaim of respondents is
permissive in nature. This is because: (a) the issue in the main case, i.e., whether or not respondents
are liable to pay lease rentals, is entirely different from the issue in the counterclaim, i.e., whether
or not petitioner and Kathryn are liable for damages for taking over the possession of the leased
premises and harvesting and appropriating respondents’ crops planted therein; (b) since petitioner
and respondents’ respective causes of action arose from completely different occurrences, the latter
would not be barred by res judicata had they opted to litigate its counterclaim in a separate
proceeding; (c) the evidence required to
_______________
54 Id., at pp. 265-266; pp. 45-46.
451
VOL. 805, OCTOBER 5, 2016 451

pg. 320
prove petitioner’s claim that respondents failed to pay lease rentals is likewise different from the
evidence required to prove respondents’ counterclaim that petitioner and Kathryn are liable for
damages for performing acts in bad faith; and (d) the recovery of petitioner’s claim is not
contingent or dependent upon proof of respondents’ counterclaim, such that conducting separate
trials will not result in the substantial duplication of the time and effort of the court and the parties.
In view of the finding that the counterclaim is permissive, and not compulsory as held by the courts
a quo, respondents are required to pay docket fees. However, it must be clarified that respondents’
failure to pay the required docket fees, per se, should not necessarily lead to the dismissal of their
counterclaim. It has long been settled that while the court acquires jurisdiction over any case only
upon the payment of the prescribed docket fees, its nonpayment at the time of filing of the initiatory
pleading does not automatically cause its dismissal provided that: (a) the fees are paid within a
reasonable period; and (b) there was no intention on the part of the claimant to defraud the
government.55
Here, respondents cannot be faulted for nonpayment of docket fees in connection with their
counterclaim, primarily because as early as November 16, 2006, the RTC had already found such
counterclaim to be compulsory in nature.56 Such finding was then upheld in the July 2, 2007 RTC
Decision and affirmed on appeal by the CA in its assailed Decision. As such, the lower courts did
not require respondents to pay docket fees and even proceeded to rule on their entitlement thereto.
Verily, respondents’ reliance on the findings of the courts a quo, albeit erroneous, exhibits their
good faith in not paying the docket fees, much more their intention not to defraud the government.
Thus, the counterclaim should not be
_______________
55 See Unicapital, Inc. v. Consing, Jr., 717 Phil. 689, 707-708; 705 SCRA 511, 532 (2013).
56 See November 16, 2006 RTC Order; Rollo, pp. 85-86.
452

dismissed for nonpayment of docket fees. Instead, the docket fees required shall constitute a
judgment lien on the monetary awards in respondents’ favor. In Intercontinental Broadcasting
Corporation (IBC-13) v. Alonzo-Legasto,57 citing Section 2, Rule 14158 of the Rules of Court,
the Court held that in instances where a litigant’s nonpayment of docket fees was made in good
faith and without any intention of defrauding the government, the clerk of court of the court a quo
should be ordered to assess the amount of deficient docket fees due from such litigant, which will
constitute a judgment lien on the amount awarded to him, and enforce such lien,59 as in this case.
pg. 321
That being said, the Court now resolves whether or not respondents are indeed entitled to their
counterclaim.
III.
In this case, the RTC found that under the lease contract, petitioner and Kathryn were bound to
keep respondents in peaceful and adequate enjoyment of the leased premises for the entire duration
of the lease and that respondents faithfully paid their lease rentals for a period of four (4) years, or
until crop year 1998. Despite the foregoing, petitioner and Kathryn unlawfully took possession
(sometime in December 1998) and harvested respondents’ crops over their objections. The RTC
further found that due to such unlawful disposses-
_______________
57 Intercontinental Broadcasting Corporation (IBC-13) v. Alonzo-Legasto, 521 Phil. 469; 487

SCRA 339 (2006).
58 Section 2, Rule 141 of the Rules of Court states:
Section 2. Fees in lien.—Where the court in its final judgment awards a claim not alleged, or a
relief different from, or more than that claimed in the pleading, the party concerned shall pay the
additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk
of court shall assess and collect the corresponding fees.
59 Intercontinental Broadcasting Corporation (IBC-13) v. Alonzo-Legasto, supra at pp. 480-481;

p. 351.
453
VOL. 805, OCTOBER 5, 2016 453

sion of the leased premises, respondents were deprived of profits for six (6) crop years (i.e.,
from crop year 1999 to crop year 2004, which was the last crop year of the lease) in the
amount of P1,731,996.96 per year, or a grand total of P10,391,987.76.60 Such factual findings
were then affirmed by the CA in its assailed ruling. It has long been settled that factual findings of
the trial court, affirmed by the CA, are final and conclusive and may not be reviewed on appeal,61
pg. 322
save for certain exceptions,62 which petitioner failed to show in this case. As such, the grant of
said counterclaim is upheld.
_______________
60 See Rollo, pp. 130-132.
61 See Bacalso v. Aca-ac, G.R. No. 172919, January 13, 2016, 780 SCRA 308, citing Pascual v.
Coronel, 554 Phil. 351, 360; 527 SCRA 474, 483 (2007).
62 As a rule, only questions of law may be raised in a petition for review under Rule 45 of the
Rules of Court. In many instances, however, this Court has laid down exceptions to this general
rule, as follows: (1) When the factual findings of the Court of Appeals and the trial court are
contradictory; (2) When the conclusion is a finding grounded entirely on speculation, surmises or
conjectures; (3) When the inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd or impossible; (4) When there is grave abuse of discretion in the
appreciation of facts; (5) When the appellate court, in making its findings, went beyond the issues
of the case, and such findings are contrary to the admissions of both appellant and appellee; (6)
When the judgment of the Court of Appeals is premised on misapprehension of facts; (7) When
the Court of Appeals failed to notice certain relevant facts which, if properly considered, would
justify a different conclusion; (8) When the findings of fact are themselves conflicting; (9) When
the findings of fact are conclusions without citation of the specific evidence on which they are
based; and (10) When the findings of fact of the Court of Appeals are premised on the absence of
evidence but such findings are contradicted by the evidence on record. (Treñas v. People, 680 Phil.
368, 378; 664 SCRA 355, 363-364 [2012], citing Salcedo v. People, 400 Phil. 1302, 1308-1309;
347 SCRA 499, 504-505 [2000])
454

Nonetheless, the Court finds it proper to deduct from the counterclaim award of P10,391,987.76
the amount of P900,000.00, which represents the lease rentals that should have been paid by the
lessee, i.e., respondents, during the six (6) crop years (i.e., crop years 1999 to 2004) that they were
deprived possession of the leased premises. As the Court’s counterclaim award of lost profits
during the said period stems from the recognition that the lessor, i.e., petitioner and Kathryn,
should have complied with their obligations to keep respondents in peaceful and adequate
enjoyment of the leased premises for the entire duration of the lease, it is but fair and just that
respondents be also held to their obligations thereunder — that is, to pay the lease rentals for the
entire duration of the contract. Perceptibly, respondents’ gain of profits during such period
pg. 323
presupposes a valid and subsisting lease contract, which is rendered legally possible if only they
themselves discharged their own obligation to pay the lease rentals therefor.
WHEREFORE, the petition is DENIED. The Decision dated February 28, 2014 and the
Resolution dated October 1, 2015 of the Court of Appeals in C.A.-G.R. CV No. 03710 are hereby
AFFIRMED with MODIFICATION deducting from the counterclaim award of P10,391,987.76
in favor of the Estate of Rolando Ogsos, Sr. and Rolando Ogsos, Jr. (respondents) the amount of
P900,000.00, which represents the unpaid lease rentals for the crop years 1999 to 2004 as above
discussed. Moreover, a judgment lien shall be imposed on the monetary award given to
respondents corresponding to the unpaid docket fees on the permissive counterclaim. Accordingly,
the Clerk of Court of the Regional Trial Court of Dumaguete City, Branch 36, or his duly
authorized deputy, is hereby ordered to enforce the judgment lien and to assess and collect the
appropriate docket fees from respondents.
SO ORDERED.
455
VOL. 805, OCTOBER 5, 2016 455

Leonardo-De Castro** (Acting Chairperson), Bersamin and Caguioa, JJ., concur.
Sereno, CJ., On Official Business.
Petition denied, judgment and resolution affirmed with modification.
Notes.—It has long been settled that while the court acquires jurisdiction over any case only upon
the payment of the prescribed docket fees, its nonpayment at the time of the filing of the complaint
does not automatically cause the dismissal of the complaint provided that the fees are paid within
a reasonable period. (Unicapital, Inc. vs. Consing, Jr., 705 SCRA 511 [2013])
The petitioner’s counterclaim is a permissible direct attack to the validity of respondents’ torrens
title. (Firaza, Sr. vs. Ugay, 695 SCRA 26 [2013])
——o0o——
pg. 324
G.R. No. 212980. October 10, 2016.*
BUENAVISTA PROPERTIES, INC., and/or JOSEPHINE CONDE, petitioners, vs.

RAMON G. MARIÑO, represented by ATTY. OSWALDO F. GABAT as Attorney-in-Fact
and Counsel vice ATTY. AMADO DELORIA, former Attorney-in-Fact and Counsel,
respondent.
Remedial Law; Civil Procedure; Motion for Reconsideration; Section 2 of Rule 52 states that
“[n]o second motion for reconsideration of a judgment or final resolution by the same party shall
be entertained”; While the Rule provides for exceptions, the second motion for reconsideration
can still only be entertained “before the ruling sought to be reconsidered becomes final by
operation of law or by the Court’s declaration.”—Section 2 of Rule 52 states that “[n]o second
motion for reconsideration of a judgment or final resolution by the same party shall be
entertained.” Under Section 3 of Rule 15, the Court “shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of justice.
There is reconsideration ‘in the higher interest of justice’ when the assailed decision is not only
legally erroneous, but is likewise patently unjust and potentially capable of causing unwarranted
and irremediable injury or damage to the parties.” Note, however, that while the Rule provides
for exceptions, the second motion for reconsideration can still only be entertained “before the
ruling sought
_______________
* SECOND DIVISION.
549
VOL. 805, OCTOBER 10, 2016 549

Buenavista Properties, Inc. vs. Mariño
to be reconsidered becomes final by operation of law or by the Court’s declaration.”
Same; Same; Judgments; Immutability of Final Judgments; Once a judgment or order becomes
final, all the issues between the parties are deemed resolved and laid to rest. No additions can be
made to the decision, and no other action can be taken on it, except to order its execution.—
Jurisprudence has settled that a ‘“decision that has acquired finality becomes immutable and
unalterable[,] and may no longer be modified in any respect even if the modification is meant to
correct erroneous conclusions of fact or law and whether it [will be] made by the court that
rendered it or by the highest court of the land.’ ‘Once a judgment or order becomes final, all the
pg. 325
issues between the parties are deemed resolved and laid to rest.’ No additions can be made to the
decision, and no other action can be taken on it, except to order its execution.”
MOTION FOR RECONSIDERATION of a resolution of the Supreme Court.
Ibuyan, Garcia, Ibuyan Law Offices for petitioners.
Oswaldo F. Gabat for respondent.
RESOLUTION
BRION, J.:
Before us is the petitioners’ Motion for Reconsideration with Leave of Court addressing the
April 4, 2016 Resolution of this Court that denied “the motion with FINALITY, no substantial
argument having been adduced to warrant the reconsideration sought.” The previously denied
motion was the petitioners’ motion for reconsideration of our Resolution dated September 17,
2014, which denied the petition for review on certiorari.
550

I. Factual Backdrop of G.R. No. 212980
The Spouses Buencamino and Spouses San Juan (landowners) entered into a Joint Venture
Agreement (JVA) with La Savoie Development Corporation. The parties agreed that La Savoie
would develop the three (3) parcels of land located in San Rafael, Bulacan into a commercial and
residential subdivision (Buenavista Park Subdivision), and manage the project including its sales.
The pricing of the lots were to be determined jointly by the landowners and La Savoie.
pg. 326
The landowners subsequently sold their property to Josephine Conde (Conde) who assigned her
interests to Buenavista Properties, Inc. (BPI). Conde and BPI thereafter executed an
Addendum1 (to the JVA) extending the period of development to 1997.
Soon after, BPI, through Conde, wrote La Savoie several letters asking the latter “to stop selling
until [it has] put enough development to obtain the best prices,”2 and until they have agreed on the
revised prices. In a letter dated August 17, 1997, BPI reiterated its request and to “immediately
stop selling the subdivision lots until [they] have agreed on the prices x x x otherwise, [it] shall be
forced to invoke the termination clause of the JVA.”3 BPI’s requests were left unheeded.
On July 18, 1997, respondent Ramon G. Mariño (Mariño) and La Savoie, through its President
Jeanne Menguito (Menguito), entered into a Contract to Sell4 involving a parcel of land in
Buenavista Park Subdivision. Paragraph 4 of the
_______________
1 Rollo, pp. 212-215.
2 Letter dated September 30, 1996, id., at p. 218.
See also BPI’s July 22, 1996 and August 15, 1996 letters requesting La Savoie to suspend the sale
of the lots immediately upon receipt of the letter until such time as they have agreed on the new
pricing of the lots, id., at pp. 216-217 respectively.
3 Id., at p. 219.
4 Id., at pp. 142-146.
551
VOL. 805, OCTOBER 10, 2016 551

Contract provides that upon complete payment of the purchase price, La Savoie agrees to execute
a final deed of sale in favour of Mariño.
On February 28, 1998, BPI filed before the Regional Trial Court (RTC) a complaint against La
Savoie for the termination of the JVA, recovery of properties plus damages, with a prayer for a
temporary restraining order and a writ of preliminary injunction5 (JVA rescission case). The RTC
issued a writ of preliminary injunction on August 11, 1998, enjoining La Savoie from selling
the remaining unsold lots in the Buenavista Park Subdivision.6
pg. 327
Mariño completed the payment for the subdivision lot on September 19, 2001. La Savoie
thereafter transmitted the corresponding Deed of Absolute Sale to BPI for its execution.7 Despite
demands, BPI refused to sign the Deed and to deliver the title in favor of Mariño. BPI claimed that
La Savoie, in excess of authority, sold the subdivision lots in prices fixed unilaterally and without
BPI’s approval.
In a decision8 dated June 12, 2003, the RTC, among others: (1) terminated the JVA and the
Addendum to the JVA; and (2) ordered La Savoie to deliver to BPI the possession of the Buenavista
Park Subdivision together with all the improvements thereon.
Mariño subsequently filed before the Housing and Land Use Regulatory Board (HLURB) an action
for specific performance against the petitioners.
In its decision dated June 5, 2006, the HLURB-Legal Services Group ordered the petitioners to:
(1) deliver the title, covering the purchased subdivision lot, to Mariño under the latter’s name free
from all liens and encumbrances within
_______________
5 Docketed as Civil Case No. Q-98-33682.
6 Rollo, pp. 229-230.
7 October 9, 2002 letter, id., at p. 134.
8 Issued by Judge Lydia Querubin Layosa, id., at pp. 231-237.
552

thirty days from finality; and (2) pay the amount of P20,000.00 as exemplary damages, P30,000.00
as attorney’s fees, and P20,000.00 as cost of suit.
Meanwhile, in a decision9 dated August 10, 2006, the CA affirmed the June 12, 2003 decision of
the RTC in the JVA rescission case. The case eventually reached this Court, on La Savoie’s
appeal, which the Court denied in a Resolution10 dated February 19, 2007.
On September 17, 2007, the HLURB Commissioners affirmed the findings of facts and
conclusions of law contained in the decision of the HLURB-Legal Services Group.
pg. 328
The petitioners appealed the September 17, 2007 HLURB decision before the Office of the
President (OP) which the latter denied in its September 30, 2008 decision. The OP likewise
denied the petitioners’ motion for reconsideration in its May 7, 2009 decision.
The CA’s Ruling
In its September 30, 2013 decision, the CA affirmed the September 30, 2008 OP decision declaring
that:
First, La Savoie’s sale of the lot to Mariño is not ultra vires. The CA pointed out that Mariño does
not appear to have been aware of BPI’s letters to La Savoie asking the latter to stop the sale of the
lots until they have agreed on the price. Thus, BPI’s withdrawal of authority to sell cannot bind
Mariño.
Second, even if La Savoie had exceeded its authority to sell, BPI is solidarily liable for allowing
the former to act as though it had full powers following Article 1911 of the Civil Code.
Third, at the time of the execution of the Contract to Sell, no case had been filed by BPI to prevent
La Savoie from sell-
_______________
9 Docketed as C.A.-G.R. No. 79318, id., at pp. 238-251.
10 Id., at p. 584.
553
VOL. 805, OCTOBER 10, 2016 553

ing the property. BPI only filed a case for rescission of the JVA seven months after the execution
of sale to Mariño.
Fourth, Mariño is entitled to the delivery of the title as he had fully paid the purchase price pursuant
to Section 25 of Presidential Decree (PD) No. 957 (or the Subdivision and Condominium Buyers’
Protective Decree).
pg. 329
Fifth, La Savoie is not an indispensable party to the case who could have rendered the decision
void per Section 7, Rule 3 of the Rules of Court. According to the CA, La Savoie has already
transmitted the Deed of Absolute Sale over the subject lot to BPI. Since the title is in BPI’s name
and possession, it has the obligation to execute the Deed and deliver the title to Mariño; thus, BPI
is the indispensable party, not La Savoie and Menguito.
Lastly, the Court’s denial of La Savoie’s petition in the JVA rescission case was contained only in
a minute resolution. Thus, the CA concluded citing Deutsche Bank AG Manila Branch v.
Commissioner of Internal Revenue,11 the denial cannot be deemed a binding precedent to the case
especially when different issues and parties are involved.
II. The Petition
PI argued in its petition for review on certiorari before this Court that:
1. the authority to sell granted to La Savoie under the JVA was a limited authority to sell, i.e.,
only “by way of engaging the services of brokers”;
2. since La Savoie’s authority to sell was limited, its act of selling the lot to Mariño is ultra
vires;
_______________
11 G.R. No. 188550, August 28, 2013, 704 SCRA 216, citing Philippine Health Care Providers,
Inc. v. Commissioner of Internal Revenue, G.R. No. 167330, September 18, 2009, 600 SCRA 413,
446-447.
554

3. BPI and its President Conde were not parties to the Contract to Sell with Mariño, but
rather La Savoie and its President Menguito, thus, the Contract did not and could not bind
them;
4. as they were not parties to the Contract to Sell, Mariño did not have a cause of action
against them and the HLURB should have dismissed the latter’s case against it;
pg. 330
5. La Savoie and its President Menguito are indispensable parties in this case, hence,
Mariño’s failure to implead them rendered the decision of the HLURB void;
6. BPI filed a third party complaint against La Savoie in the former’s Answer to Mariño’s
Complaint;
7. Mariño is a buyer in bad faith because he failed to examine the title;
8. the duty of delivering the title to the buyer under Section 25 of Presidential Decree 957
cannot be imposed on a nonparty to a contract; and
9. the CA, which this Court affirmed, had previously decided a case, involving closely
identical facts, in favour of BPI; and the OP in fact had similarly dismissed the cases filed
against BPI for refusing to honor La Savoie’s unauthorized sale to buyers in similar
situations.
III. Incidents Subsequent to the

Filing of the Petition
The Court’s September 17,

2014 Minute Resolution
On September 17, 2014, the Court issued a minute resolution12 denying the petition for “failure
to sufficiently show
_______________
12 Rollo, pp. 304-305.
555
VOL. 805, OCTOBER 10, 2016 555

any reversible error in the assailed judgment to warrant the exercise of this Court’s discretionary
appellate jurisdiction, and for raising substantially factual issues.”
pg. 331
Petitioner’s motion for
reconsideration (1st MR)
On November 10, 2014, the petitioners sought reconsideration13 of the Court’s September 17,
2014 Resolution reiterating that:
1. the authority to sell BPI granted to La Savoie under the JVA was a limited authority to
sell, i.e., only “by way of engaging the services of brokers”;
2. BPI had already withdrawn this limited authority to sell on July 22, 1996, or almost one
year before La Savoie sold the subject subdivision lot to Mariño on July 18, 1997;
identical facts, in favour of BPI; and
4. there was no privity of contract between BPI and Mariño as the Contract to Sell was
entered into between La Savoie and Mariño.
Mr. Delfin V. Cruz’s November

25, 2014 Letter (1st Letter)
On November 25, 2014, Mr. Delfin V. Cruz wrote Associate Justices Arturo D. Brion and Mariano
C. Del Castillo identical letters14 bringing to the Justices’ attention the present case which he
believed was “railroaded and continue to be
_______________
13 Id., at pp. 306-312.
14 Dated November 25, 2014. The letter addressed to Associate Justice Mariano C. Del Castillo
is attached to the Rollo, pp. 317-326.
556
pg. 332
railroaded by prosecutors, judges, and justices because of money and influence.”15
_______________
15 Page 2 of Mr. Delfin’s letter. He also claimed that the case “did not undergo [the Justices’]
scrutiny because if it did, [they] would render an impartial decision based on evidence because
[they] are guided by ‘FAIRNESS’ and the sense of ‘HIYA’” and, in this regard, he accused the
Court’s Second Division of unjustifiably denying their Petition for Review on Certiorari of the
CA decision, which, he believed was way out of line since the CA concealed and vanished the
truth presented in evidence.
Thereafter, he added, the CA twisted the truth by falsely declaring that “[BPI] gave La Savoie
authority to sell to justify its decision favouring Mariño.” He pointed out that [BPI] never
authorized La Savoie to sell. Rather, the Special Power of Attorney [BPI] executed and presented
as evidence shows BPI merely authorized La Savoie to “engage the services of brokers,” which
authority [BPI] revoked about a year before La Savoie sold lots to Mariño and other buyers.
Further, he claimed that the “[CA’s] decision merely echoed La Savoie’s unsubstantiated
allegations,” and pointed out that “[Mrs. Menguito] misrepresented herself as a Filipino citizen
although she is a Vietnamese who holds French citizenship” while her children are foreigners
holding ACR’s. Thus, Mr. Delfin posits that since “La Savoie is not allowed by Philippine laws to
acquire land because it is 56% foreign-owned,” it cannot “claim ownership of properties registered
in the name of [BPI] and undertake to execute deeds of sale in favour of buyers.” These
notwithstanding, La Savoie sold [BPI’s] lots as owner pretending to have the power to execute a
deed of sale.
He continued that BPI was justified in refusing to deliver on La Savoie’s unauthorized sale.
Unfortunately, it was only BPI, the lot owner, that Mariño sued before the HLURB, despite the
fact that it was not even a party to the contract between the seller La Savoie and the buyer Mariño;
neither did it receive any part of the consideration Mariño paid La Savoie.
Additionally, he alleged that the CA even falsely declared that BPI did not implead La Savoie even
when the evidence shows otherwise as BPI had filed a third party complaint against La Savoie.
557
VOL. 805, OCTOBER 10, 2016 557

pg. 333
The Court’s April 4, 2016
Minute Resolution
On April 4, 2016, the Court issued a resolution16 denying with finality the petitioners’ motion for
reconsideration because “no substantial argument having been adduced to warrant the
reconsideration sought.”
Petitioners’ Motion for Re-

consideration with Leave of
Court (2nd MR)
On June 1, 2016, the petitioners filed a Motion for Reconsideration With Leave of Court17 from
the Court’s April 4, 2016 resolution denying with finality their 1st MR (the motion for
reconsideration of the Court’s September 17, 2014 Resolution); the present motion prayed that the
Court “take a second look at the many valid arguments and the overwhelming evidences presented
which prove that the [CA] twisted the facts and acted with grave abuse of discretion equivalent to
a capricious and whimsical exercise of judgment resulting in a x x x warped and one-sided
decision.”18
_______________
He effectively charged the Second Division of unjustly favoring an undeserving party claiming
that the CA “abused its power and someone in the Second Division is doing no less by allowing it
to deprive a property owner of its property without due process.” That the Second Division’s
resolution unjustly favors Mariño is exposed by the fact that despite our advertence to a decision
affirmed by the [Court] x x x in which the [CA] held that La Savoie’s promise to deliver 19 lots to
a complainant did not bind [BPI], the Second Division did not pay attention to it.” To Mr. Delfin,
“there exists a conspiracy among La Savoie, its lawyers, and buyer Mariño with the protection of
arbiters, prosecutors, and members of the judiciary, and even those who sit in judgment at the
[IBP].”
16 Rollo, p. 639.
17 Id., at pp. 640-657.
18 Id., at pp. 640-641.
pg. 334
558

The petitioners insist that:
1. the authority to sell BPI granted to La Savoie under the JVA was a limited authority to
sell, i.e., only “by way of engaging the services of brokers” which authority BPI already
withdrew on July 22, 1996, or almost one year before La Savoie sold the subject subdivision
lot to Mariño on July 18, 1997;
2. La Savoie and its President Menguito are indispensable parties in this case, hence,
Mariño’s failure to implead them rendered the decision of the HLURB void;
3. there was no privity of contract between BPI and Mariño as the Contract to Sell was
entered into between La Savoie and Mariño; and
identical facts, in favour of BPI.
Mr. Delfin Cruz’s June 21, 2016

Letter (2nd Letter)
On June 21, 2016, Mr. Delfin V. Cruz sent Associate Justice Brion a second letter relating that he
sent the 1st Letter “believing that [the] petition x x x did not undergo [J. Brion’s] scrutiny because
I was convinced by your public pronouncements that you are guided by the rule of ‘FAIRNESS’
and the sense of ‘HIYA’ and so you would never affirm a resolution upholding a [CA] decision
that is way out of line because it is not based on documentary evidence, law, and jurisprudence.”19
_______________
19 He also pointed out that he, however, “just learned that [J. Brion is] the ponente of the case,
subject of [the] letter x x x that it is not your intention to rig our case because you have made public
declarations of your resolve to ‘earn the trust, through our actions, of the society that has been
good to us and of the public we are sworn to serve’” quoting J. Brion’s October 25, 2014 speech
at the Greater Manila IBP Convention.
pg. 335
559
VOL. 805, OCTOBER 10, 2016 559

The Court’s July 13, 2016 Resolution
In a resolution dated July 13, 2016, the Court resolved to:
1. DEFER ACTION on the petitioners’ Motion for Reconsideration with Leave of Court
dated June 1, 2016;
2. DEFER ACTION on Delfin Cruz’s letters of June 21, 2016 and November 25, 2014 (the
latter having been simply previously noted);
3. REQUIRE Delfin V. Cruz to: (a) define his exact relationship with Buenavista Properties,
Inc.; (b) state if he had been authorized by Buenavista Properties, Inc. and/or its counsel to
write his letters dated November 25, 2014 and June 21, 2016 respectively, both within 10
days from receipt of this resolution; and
4. REQUIRE Buenavista Properties, Inc. and its counsel of record to state if they are aware
of the letters of Delfin V. Cruz; to confirm the exact relationship of Delfin V. Cruz with
Buenavista Properties, Inc. and if they authorized Delfin V. Cruz to write the above
mentioned letters, all within 10 days from receipt of this Resolution.
_______________
He further claimed that he “still wants to believe that the decision to dismiss [the] petition was
arrived at without malice and that all [J. Brion’s] pronouncements are authentic and sincere.”
Nonetheless, he effectively threatened to “resort to extrajudicial means such as telling Mr. Efren
S. Cruz x x x that his column of October 30, 2014, about [J. Brion] is one big mistake, or spreading
the news of this injustice on social media, or picketing your office with the press in tow to accuse
you and have the society judge the unfairness of your actions” because he cannot “accept an unjust
decision that is clearly not in accord with documentary evidence, law, and jurisprudence” and he
is “shocked by [the] resolution dismissing [the] petition.”
560
pg. 336
Mr. Delfin Cruz’s July 28, 2016

Letter (3rd Letter)
In his letter dated July 28, 2016 (with enclosed copy of the JVA between BPI and La Savoie)
addressed to J. Brion, Mr. Delfin Cruz reiterated that “there is no factual basis for the Court of
Appeals to say that La Savoie had the authority to sell, much less to promise to execute a deed of
sale in favour of Mr. Mariño, because the SPA does not endow such power to La Savoie.”
Mr. Delfin Cruz insists that the Court of Appeals’ decision, which compelled them to deliver the
title to Mariño, is anchored on the falsehood that BPI gave La Savoie the power to sell, hence, it
is “clearly not motivated by the ‘RULE OF FAIRNESS’ and the ‘SENSE OF HIYA’ that you
(referring to J. Brion) proclaim you are guided by x x x.” He implored J. Brion to “hand down a
decision in accordance with [his] ‘rule of fairness’ and the ‘sense of hiya.”
Mr. Delfin Cruz’s September 3, 2016

Letter (4th Letter)
In his letter dated September 3, 2016, addressed to J. Brion, Mr. Delfin Cruz stated that he was the
“Chairman of the Board of Buenavista while the case between it and Ramon G. Mariño was still
in the early stage” which made him intimately aware of the facts of the case.
He admitted that he wrote J. Brion merely as a concerned citizen “even if I was not specifically
authorized by either Buenavista or its lawyer, Atty. Ben I. Ibuyan, to write you” and reiterated the
reasons he stated in his previous three letters for writing J. Brion.
Finally, he apologized if his last letter appeared as a threat, emphasizing that it was not his intention
and was in fact, “careful in using the words: ‘I do not wish to resort to extrajudicial means. . . . .”
561
VOL. 805, OCTOBER 10, 2016 561

pg. 337
Petitioner Buenavista’s Compliance
For its part, the petitioner, thru counsel, complied with our July 13, 2016 Resolution by submitting
the joint affidavit of Cresencio R. Selispara and Gemma S. Buenafe attesting that they did not
authorize Mr. Delfin Cruz to write his letters to the Court and were not even aware till they received
the Court’s directive of July 13, 2013 that these letters were written.
The Court has already denied with

finality BPI’s motion for reconsid-
eration in its April 4, 2016 resolu-
tion; BPI’s June 1, 2016 Motion
for Reconsideration With Leave of
Court is a prohibited second mo-
tion for reconsideration.
We emphasize that the June 1, 2016 Motion for Reconsideration With Leave of Court that BPI
filed addressing the Court’s April 4, 2016 Resolution (denying with finality its November 10, 2014
motion for reconsideration) is a prohibited second motion for reconsideration pursuant to Section
2, Rule 52 in relation with Section 4, Rule 56, both of the Rules of Court, as well as pursuant to
Section 3, Rule 15 of the Internal Rules of the Supreme Court.
Section 2 of Rule 52 states that “[n]o second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained.”
Under Section 3 of Rule 15, the Court “shall not entertain a second motion for reconsideration,
and any exception to this rule can only be granted in the higher interest of justice. There is
reconsideration ‘in the higher interest of justice’ when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwar-
562
pg. 338
ranted and irremediable injury or damage to the parties.” Note, however, that while the Rule
provides for exceptions, the second motion for reconsideration can still only be entertained “before
the ruling sought to be reconsidered becomes final by operation of law or by the Court’s
declaration.”
The case does not present a situation that would justify the Court in granting BPI’s June 1, 2016
Motion for Reconsideration With Leave of Court — a second motion for reconsideration which
the Court should not entertain.
Moreover, jurisprudence has settled that a ‘“decision that has acquired finality becomes immutable
and unalterable[,] and may no longer be modified in any respect even if the modification is meant
to correct erroneous conclusions of fact or law and whether it [will be] made by the court that
rendered it or by the highest court of the land.’ ‘Once a judgment or order becomes final, all the
issues between the parties are deemed resolved and laid to rest.’ No additions can be made to the
decision, and no other action can be taken on it, except to order its execution.”20
As discussed above, the Court denied with finality BPI’s November 10, 2014 motion for
reconsideration in the April 4, 2016 resolution; the resolution likewise provided that “[n]o further
pleadings or motions shall be entertained in this case. Let entry of final judgment be made in due
course.”
In sum, these reasons sufficiently justify the Court in refusing to entertain BPI’s June 1, 2016
second motion for reconsideration.
_______________
20 See J. Brion’s Dissenting Opinion in Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and
Surety Corporation, G.R. Nos. 180880-81, September 18, 2012, 681 SCRA 44, 77 (citations
omitted).
563
VOL. 805, OCTOBER 10, 2016 563

In any event, the Court correctly

denied BPI’s petition for review
on certiorari and motion for
reconsideration.
pg. 339
In any event, the Court correctly denied BPI’s petition for review on certiorari, in its September
17, 2014 resolution, as well as its 1st MR in the April 4, 2016 resolution. The issues and arguments
BPI raised in its petition, as reiterated in its 1st and 2nd MRs, merely repeated the issues it has
previously raised before the HLURB, the OP, and the CA, which issues all three tribunals had duly
considered and uniformly ruled against BPI.
We point out that the issues BPI raised in its petition and MRs can be summed up into two: (1)
whether La Savoie had the authority to sell the subdivision lots pursuant to the JVA and its
Addendum; and (2) assuming arguendo that La Savoie had the authority to sell under the JVA,
whether such authority had already been rescinded prior to the execution of the Contract to Sell
with Mariño.
We find it clear from the pertinent provisions of the JVA, footnoted below, that contrary to BPI’s
claim, La Savoie was empowered to sell the Buenavista Park Subdivision lots, including the
subject lot it sold to Mariño.21
_______________
21 The JVA pertinently reads:
II. OBLIGATIONS OF THE DEVELOPER:
2.1 The DEVELOPER, furnishing all expenses, labor, materials, equipment, expertise and
supervision, shall convert/develop the land into a mixed-use subdivision with commercial and
residential phases in accordance with specifications, and designs and standards of the HOUSING
AND LAND USE REGULATORY BOARD and other government agencies concerned. The
DEVELOPER’s work and responsibilities, include:
564

_______________
xxxx
pg. 340
2.2 The DEVELOPER, in addition to the above shall provide and exercise general
management over the project, its development, promotion, advertisement, marketing and sales.
xxxx
III. DEVELOPER AS ATTORNEY-IN-FACT OF THE LANDOWNER:
3.1 For and in consideration of amounts received from the DEVELOPER and the interests of the
DEVELOPER in the accomplishment of his authority, the LANDOWNER hereby waives all
rights to appoint another attorney, or to do and perform by himself the powers and authority
herein conferred, and to revoke this authority except for causes mentioned herein, in a
manner that is binding even after his death to his heirs, executors or administrators, and designates
and appoints the DEVELOPER as Attorney-in-Fact with full power and authority to take full
possession of the subject realty, exercise all acts necessary to x x x; engage the services of
brokers.
IV. LIMITATIONS ON THE RIGHTS OF DEVELOPER:
xxxx
4.2 All Certifications of Title on lots shall be in the name and possession of the LANDOWNER
until they are sold, subject to the annotation of this agreement.
4.3 Pricing of lots and broker’s commission shall be determined jointly by the LANDOWNER
and the DEVELOPER.
xxxx
VI. PERIOD OF SALE/DEVELOPMENT:
xxxx
565
VOL. 805, OCTOBER 10, 2016 565

pg. 341
This conclusion proceeds from the examination of clauses 2.2, 3.1, and 6.2 of the JVA which states
that La Savoie had the power to, among others: (1) provide and exercise general
management over the project including its marketing and sales; (2) to act as BPI’s attorney-in-
fact with full power and authority to take full possession of the realty, including engaging the
services of brokers; and (3) sell the lots, within the specified period. Additionally, La Savoie
had the authority to receive and give receipts under its
_______________
6.2 The DEVELOPER shall sell all the lots in the project within three (3) years from the
execution of this agreement.
xxxx
VII. RECEIPT AND COLLECTION OF PAYMENTS:
7.1 The DEVELOPER as manager shall receive, collect and receipt in its name all
payments from the buyers subject to the obligation to account and remit to the LANDOWNER
its due at the thirtieth (30th) day of each month.
xxxx
VIII. PENALTIES
xxxx
8.1 In case the DEVELOPER violates any provision of this contract or otherwise fails and/or
refuses to go through with its commitment herein, the LANDOWNER, instead of suing for specific
performance, may elect to cancel this contract by means of a written communication set to
that effect to the DEVELOPER. In the event of said cancellation, the DEVELOPER shall, in
addition to rights granted the LANDOWNER by law, forfeit in favour of said LANDOWNER all
investments and/or improvements that shall have been introduced.
[emphases and underscoring supplied]
566

pg. 342
name, payments from buyers of the subdivision lots, per clause 7.1 of the JVA.
Likewise and contrary to BPI’s assertion, the Contract to Sell between La Savoie and Mariño was
executed before BPI categorically withdrew La Savoie’s authority to sell under the JVA. Note that
per clause 8.1 of the JVA, in case La Savoie fails or refuses to perform its obligations under the
JVA or violates any provisions of the JVA, BPI could either sue the former for specific
performance or cancel the contract via written communication to this effect.
In this case, BPI’s option to cancel the JVA, instead of suing for specific performance, became
categorically clear only on February 28, 1998 when it filed the JVA rescission case against La
Savoie. La Savoie and Mariño entered into the Contract to Sell on July 18, 1997 or seven (7)
months prior to the filing of the JVA rescission case; undoubtedly, La Savoie then still retained
the full authority under the JVA to enter into the Contract to Sell with Mariño.
While BPI wrote La Savoie several letters prior to the filing of the JVA rescission case, i.e., on
July 22, 1996, August 15, 1996, September 30, 1996, and August 15, 1997, requesting and/or
asking the latter to suspend or stop selling the subdivision lots until they have agreed on the selling
price, BPI never categorically terminated the JVA nor withdrew La Savoie’s authority to sell
through these letters.22
_______________
22 The pertinent provisions of BPI’s letters state:
 July 22, 1996 letter:
“x x x x
Since it has been more than four (4) years ago from the time you fixed the prices of our lots, it has
now become obvious that our prices are no longer realistic and prospective buyers might simply
take advantage of our low prices for speculation purposes. We must therefore insist that you
suspend the sale of our lots immediately
567
VOL. 805, OCTOBER 10, 2016 567

_______________
pg. 343
upon receipt hereof until such time as we have agreed on the new pricing of our lots.
x x x x”
 August 15, 1996 letter:
“x x x x
We suggest that this time you conduct the necessary investigation of the current prices of the lots
in nearby subdivisions, make a study, and submit to us your proposed pricing for our joint
evaluation and decision on the matter.
In the meantime, please stop selling until we have mutually agreed on the realistic pricing of
the lots.
x x x x”
 September 30, 1996 letter:
“x x x x
In view hereof, we regret that we cannot agree to your proposed prices. Instead we ask you to stop
selling until you have put enough development to obtain the best prices x x x.”
 August 15, 1997 letter
“x x x x
Also, we have learned that you have gone on with the sale of the developed lots, notwithstanding
our letters dated July 22, 1996, August 15, 1996 and March 17, 1997 asking you to desist from
any further sale until we have agreed on revised prices. Please be reminded that our JVA
specifically provides that pricing must be mutually agreed upon.
Please, therefore, immediately stop selling the subdivision lots until we have agreed on the
prices and remit to us the accumulated penalties within FIVE (5) days from receipt of this
letter; otherwise, we shall be forced to invoke the termination clause of our JVA.” [Emphases
supplied]
pg. 344
568

Notably, and again contrary to BPI’s claim, these letters show that it did not cancel the JVA prior
to the filing of the JVA rescission case because, as of its August 15, 1997 letter, it was still about
to invoke the termination clause of the JVA.
The above considerations are outlined to show the considerations the Court took into account in
denying the petition outright (aside from the reason that the issues raised were mostly factual issues
that a Rule 45 petition does not allow). Thus, this Court can only NOTE without action BPI’s June
1, 2016 Motion for Reconsideration With Leave of Court addressing the April 4, 2016 Resolution
of the Court (denying with finality its November 10, 2014 motion for reconsideration). It is a
second motion for reconsideration that is prohibited under Section 2, Rule 52 in relation with
Section 4, Rule 56, both of the Rules of Court, as well as under Section 3, Rule 15 of the Internal
Rules of the Supreme Court.
The Court NOTES Mr. Delfin Cruz’s compliance, through his September 3, 2016 Letter, with the
Court’s July 13, 2016 Resolution, among others, requiring him to: (a) define his exact relationship
with Buenavista Properties, Inc.; (b) state if he had been authorized by Buenavista Properties
and/or its counsel to write his letters dated November 25, 2014 and June 21, 2016 respectively.
Since he is not a formal party to the case, the Court cannot recognize the representations Mr. Delfin
Cruz has made before this Court — through his letters dated November 25, 2014, June 21, 2016,
July 28, 2016, and September 3, 2016 — in relation with the present case.
In line with this position, the Court likewise chooses to gloss over the observations that Mr. Delfin
Cruz has made in his various letters against the Court and its Members.
The Court, however, observes that interventions of the kind that Mr. Delfin Cruz undertook are
the kind of interference that only delays the resolution of cases in this Court; hence, our rule that
parties should always speak through their counsels. If we do not penalize the counsels of record in
this case at all, it is only because they promptly replied that they did not know of the intervention
of Mr. Delfin Cruz who is no longer an official of their client company.
The Court likewise warns Mr. Delfin Cruz in the strongest terms that any further word from him,
whether directly made to this Court or its Members or in the social media (as he had
threatened), tending to interfere with the processes of the present case, to malign this Court
or its Members, to disparage their reputation or to impugn their integrity, shall be dealt with
severely and without consideration of Mr. Delfin Cruz’ age or age-related infirmities.
WHEREFORE, premises considered, the Court resolves to:
1. NOTE without action Buenavista Properties’ Inc.’s June 1, 2016 Motion for
Reconsideration With Leave of Court, filed to challenge the Court’s April 4, 2016
pg. 345
Resolution that DENIED WITH FINALITY its November 10, 2014 Motion for
Reconsideration; and
2. NOTE the letter dated September 3, 2016 (filed in compliance with the Court’s directive
to explain in the July 13, 2016 Resolution) and the other previous letters of Mr. Delfin Cruz.
The Court, however, WARNS in the strongest terms that any further word from Mr. Delfin
Cruz, whether directly made to this Court or its Members or in the social media (as Mr. Cruz
had threatened), tending to interfere with the processes of the present case, to malign the
Court or its Members, to disparage their reputation or to impugn their integrity, shall be dealt
with severely and without consideration of Mr. Delfin Cruz’ age or age-related infirmities.
No further pleadings shall be entertained in this case.
SO ORDERED.
Carpio** (Acting CJ., Chairperson), Del Castillo, Mendoza and Leonen, JJ., concur.
Motion for Reconsideration noted without action; and Letter dated September 3, 2016 and the
other previous letters of Mr. Delfin Cruz likewise noted, with warning in strongest terms that any
further word from Mr. Delfin Cruz, shall be dealt with severely and without consideration of his
age or age-related infirmities.
Notes.—The Court is not precluded from rectifying errors of judgment if blind and stubborn
adherence to the doctrine of immutability of final judgments would involve the sacrifice of justice
for technicality. (FGU Insurance Corporation vs. Regional Trial Court of Makati City, Branch 66,
644 SCRA 50 [2011])
Taken in conjunction with Rule 56, Section 2 of the Rules of Court, Rule 52, Section 2 disallowing
a second motion for reconsideration of a judgment or final resolution, is also applicable to original
cases filed before the Supreme Court, which includes disciplinary proceedings against judges.
(Verginesa-Suarez vs. Dilag, 655 SCRA 454 [2011])
——o0o——
pg. 346
G.R. No. 196134. October 12, 2016.*
VALENTIN S. LOZADA, petitioner, vs. MAGTANGGOL MENDOZA, respondent.
Corporations; Liability of Corporate Officers; Obligations incurred as a result of the acts of the
directors and officers as the corporate agents are not their personal liability but the direct
responsibility of the corporation they represent.—A corporation, as a juridical entity, may act only
through its directors, officers and employees. Obligations incurred as a result of the acts of the
directors and officers as the corporate agents are not their personal liability but the direct
responsibility of the corporation they represent. As a general rule, corporate officers are not held
solidarily liable with the corporation for separation pay because the corporation is invested by law
with a personality separate and distinct from those of the persons composing it as well as from that
of any other legal entity to which it may be related. Mere ownership by a single stockholder or by
another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality. To hold a director or officer personally
liable for corporate obligations, two requisites must concur, to wit: (1) the complaint must allege
that the director or officer assented to the patently unlawful acts of the corporation, or that the
director or officer was guilty of gross negligence or bad faith; and (2) there must be proof that the
director or officer acted in bad faith.
Labor Law; Termination of Employment; Closure of Business Operations; Unless the closure is
clearly demonstrated to be deliberate, malicious and in bad faith, the general rule that a
corporation has, by law, a personality separate and distinct from that of its owners should hold
sway.—The records of this case do not warrant the application of the exception. The rule, which
requires malice or bad faith on the part of the directors or officers of the corporation, must still
prevail. The petitioner might have acted in behalf of LB&C Services Corporation but the
corporation’s failure to operate could not be hastily equated to bad faith on his part. Verily, the
closure of a business can be caused by a host of reasons, including mismanagement, bankruptcy,
lack of demand, negligence, or lack of business foresight. Unless the closure is clearly
demonstrated to be deliberate, malicious and in bad faith, the general rule that a corporation has,
by law, a personality separate and distinct from that of its owners should hold sway. In view of the
dearth of evidence indicating that the petitioner had acted deliberately, maliciously or in bad faith
in handling the affairs of LB&C Services Corporation, and such acts had eventually resulted in the
closure of its business, he could not be validly held to be jointly and solidarily liable with LB&C
Services Corporation.
Remedial Law; Civil Procedure; Judgments; Doctrine of Immutability of Final Judgments; The
only recognized exceptions to the immutability of the decision are the corrections of clerical
errors, the making of so-called nunc pro tunc entries that cause no prejudice to any party, and
where the judgment is void.—By declaring that the petitioner’s liability as solidary, the Labor
Arbiter modified the already final and executory February 23, 2005 decision. The modification
was impermissible because the decision had already become immutable, even if the modification
was intended to correct erroneous conclusions of fact and law. The only recognized exceptions to
the immutability of the decision are the corrections of clerical errors, the making of so-called nunc
pro tunc entries that cause no prejudice to any party, and where the judgment is void. None of such
exceptions applied herein.
pg. 347
Genaro S. Jacosalem for petitioner.
Public Attorney’s Office for respondent.
BERSAMIN, J.:
This appeal seeks the reversal of the decision promulgated on September 28, 2010,1 whereby the
Court Appeals (CA), in C.A.-G.R. S.P. No. 111722, set aside the decision of the National Labor
Relations Commission (NLRC) upon finding that the NLRC had gravely abused its discretion
amounting to lack or excess of jurisdiction in reversing the ruling of the Labor Arbiter dated
February 24, 2009,2 and reinstated such ruling in favor of the respondent holding the petitioner
liable for the satisfaction of the money judgment in favor of the respondent.
Antecedents
The factual and procedural antecedents are as follows:
On October 13, 1997, the petitioner Magtanggol Mendoza was employed as a technician by VSL
Service Center, a single proprietorship owned and managed by Valentin Lozada.
Sometime in August 2003, the VSL Service Center was incorporated and changed its business
name to LB&C Services Corporation. Subsequently, the petitioner was asked by respondent
Lozada to sign a new employment contract. The petitioner did not accede because the respondent
company did not consider the number of years of service that he had rendered to VSL Service
Center. From then on, the petitioner’s work schedule was reduced to one to three days a week.
In December 2003, the petitioner was given his regular working schedule by the respondent
company. However, on January 12, 2004, the petitioner was advised by the respondent company’s
Executive Officer, Angeline Aguilar, not to report for work and just wait for a call from the
respondent company regarding his work schedule.
The petitioner patiently waited for the respondent company’s call regarding his work schedule.
However, he did not receive any call from it. Considering that his family depends on him for
support, he asked his wife to call the respondent company and inquire on when he would report
back to work. Still, the petitioner was not given any work schedule by the respondent company.
pg. 348
Aggrieved, the petitioner filed a complaint against the respondent company on January 21, 2004
for illegal dismissal with a prayer for the payment of his 13th month pay, service incentive leave
pay, holiday pay and separation pay and with a claim for moral and exemplary damages, and
attorney’s fees. The case was docketed as NLRC NCR Case No. 00-01-00968-2004.
A mandatory conciliation conference was conducted, but to no avail, thus, they were ordered by
the Labor Arbiter to submit their respective position papers.
In his Position paper dated March 2, 2004, the petitioner alleged that he was constructively
dismissed as he was not given any work assignment for his refusal to sign a new contract of
employment. He was dismissed from his work without any valid authorized cause. He was not
given any separation pay for the services that he rendered for almost six (6) years that he worked
with VSL Service Center. He thus claimed that his termination from employment was effected
illegally, hastily, arbitrarily and capriciously.
In its Position paper, dated March 9, 2004, the respondent company vehemently denied the
allegation of the petitioner that he was dismissed from employment. The petitioner was still
reporting for work with the respondent company even after he filed a complaint with the arbitration
board of the NLRC up to February 10, 2004. It also denied that the petitioner was its employee
since 1997. The truth of the matter, according to the respondent company, was that it employed
the petitioner only on August 1, 2003 because the respondent company started its corporate
existence only on August 27, 2002 and started its business operation on August 1, 2003. It further
averred that respondent Valentin Lozada was not an officer or employee of the respondent
company nor (sic) its authorized representative. The respondent company finally claimed that it
was the petitioner who severed his relationship with it.3
On February 23, 2005, the Labor Arbiter declared the dismissal of the petitioner from employment
as illegal, disposing thusly:
WHEREFORE, premises considered, judgment is rendered declaring the dismissal of complainant

as illegal and ordering his reinstatement with full backwages plus payment of his 13th month pay
(less P500.00 pesos) and service incentive leave pay all computed three years backward, as
follows:
xxxx
SO ORDERED.4
pg. 349
LB&C Services Corporation appealed, but the NLRC dismissed the appeal for non-perfection
thereof due to failure to deposit the required cash or surety bond. Thus, the Labor Arbiter’s decision
attained finality on August 4, 2006, and the entry of judgment was issued by the NLRC on August
16, 2006.
The respondent moved for the issuance of the writ of execution, which the Labor Arbiter granted
on November 21, 2006.
The petitioner and LB&C Services Corporation filed a motion to quash the writ of execution,5
alleging that there was no employer-employee relationship between the petitioner and the
respondent; and that LB&C Services Corporation “has been closed and no longer in operation due
to irreversible financial losses.”6
The Labor Arbiter denied the motion to quash the writ of execution on April 16, 2007.7 In due
course, the sheriff garnished P5,767.77 in the petitioner’s deposit under the account of Valor
Appliances Services at the Las Piñas Branch of the First Macro Bank.
On November 19, 2007, the Labor Arbiter directed the sheriff to proceed with further execution
of the properties of the petitioner for the satisfaction of the monetary award in favor of the
respondent.8
On December 19, 2007, the sheriff issued to the petitioner a notice of levy upon realty. The sheriff
notified the Registry of
Deeds of Las Piñas City on the levy made on the petitioner’s real property with an area of 31.30
square meters covered by Transfer Certificate of Title No. T-43336 of that office.
LB&C Services Corporation moved for the lifting of the levy because the real property levied upon
had been constituted by the petitioner as the family home;9 and that the decision of the Labor
Arbiter did not adjudge the petitioner as jointly and solidarily liable for the obligation in favor of
the respondent.
After the Labor Arbiter denied its motion for the lifting of the levy on February 24, 2009,10 LB&C
Services Corporation appealed the denial to the NLRC, which, on May 29, 2009, reversed the
Labor Arbiter, as follows:
WHEREFORE, premises considered, respondents’ appeal is hereby GRANTED. Accordingly, the

order of the labor arbiter is hereby REVERSED and SET ASIDE.
As prayed for by the respondents, the levy constituted over such Las Piñas property which is
covered by Transfer Certificate of Title No. (sic) is hereby LIFTED.
SO ORDERED.11
pg. 350
The respondent assailed the reversal by motion for reconsideration, which the NLRC thereafter
denied.
Thence, a petition for certiorari was filed in the CA to assail the ruling of the NLRC on the ground
of grave abuse of discretion amounting to lack or excess of jurisdiction.
As stated, the CA promulgated the assailed decision on September 28, 2010 granting the petition
for certiorari, and reinstating the Labor Arbiter’s decision. It opined that the petitioner was still
liable despite the fact that the Labor Arbiter’s decision had not specified his being jointly and
severally liable for the monetary awards in favor of the respondent; that LB&C Services
Corporation, being an artificial being, must have an officer who could be presumed to be the
employer, being the person acting in the interest of the corporate employer;12 that with LB&C
Services Corporation having already ceased its operation, the respondent could no longer recover
the monetary benefits awarded to him, thereby rendering the entire procedure and the award
nugatory; and that the petitioner was the corporate officer liable by virtue of his having acted on
behalf of the corporation.
Issue
Was the petitioner liable for the monetary awards granted to the respondent despite the absence of
a pronouncement of his being solidarily liable with LB&C Services Corporation?
Ruling of the Court
The appeal is meritorious.
A corporation, as a juridical entity, may act only through its directors, officers and employees.
Obligations incurred as a result of the acts of the directors and officers as the corporate agents are
not their personal liability but the direct responsibility of the corporation they represent.13 As a
general rule, corporate officers are not held solidarily liable with the corporation for separation
pay because the corporation is invested by law with a personality separate and distinct from those
of the persons composing it as well as from that of any other legal entity to which it may be related.
Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not of itself sufficient ground for disregarding the separate corporate
personality.14
pg. 351
To hold a director or officer personally liable for corporate obligations, two requisites must concur,
to wit: (1) the complaint must allege that the director or officer assented to the patently unlawful
acts of the corporation, or that the director or officer was guilty of gross negligence or bad faith;
and (2) there must be proof that the director or officer acted in bad faith.15
A perusal of the respondent’s position paper and other submissions indicates that he neither
ascribed gross negligence or bad faith to the petitioner nor alleged that the petitioner had assented
to patently unlawful acts of the corporation. The respondent only maintained that the petitioner
had asked him to sign a new employment contract, but that he had refused to do the petitioner’s
bidding. The respondent did not thereby clearly and convincingly prove that the petitioner had
acted in bad faith. Indeed, there was no evidence whatsoever to corroborate the petitioner’s
participation in the respondent’s illegal dismissal. Accordingly, the twin requisites of allegation
and proof of bad faith necessary to hold the petitioner personally liable for the monetary awards
in favor of the respondent were lacking.
The CA reinstated the Labor Arbiter’s decision by relying on the pronouncement in Restaurante
Las Conchas v. Llego,16 where the Court held that when the employer corporation was no longer
existing and the judgment rendered in favor of the employees could not be satisfied, the officers
of the corporation should be held liable for acting on behalf of the corporation.17
A close scrutiny of Restaurante Las Conchas shows that the pronouncement applied the exception
instead of the general rule. The Court opined therein that, as a rule, the officers and members of
the corporation were not personally liable for acts done in the performance of their duties;18 but
that the exception instead of the general rule should apply because of the peculiar circumstances
of the case. The Court observed that if the general rule were to be applied, the employees would
end up with an empty victory inasmuch as the restaurant had been closed for lack of venue, and
there would be no one to pay its liability because the respondents thereat claimed that the restaurant
had been owned by a different entity that had not been made a party in the case.19
It is notable that the Court has subsequently opted not to adhere to Restaurante Las Conchas in
the cases of Mandaue Dinghow Dimsum House, Co., Inc. v. National Labor Relations
Commission-Fourth Division20 and Pantranco Employees Association (PEA-PTGWO) v.
National Labor Relations Commission.21
In Mandaue Dinghow Dimsum House, Co., Inc., the Court declined to follow Restaurante Las
Conchas because there was showing that the respondent therein, Henry Uytengsu, had acted in
bad faith or in excess of his authority. It stressed that every corporation was invested by law with
a personality separate and distinct from those of the persons composing it as well as from that of
any other legal entity to which it might be related; and that the doctrine of piercing the veil of
corporate fiction must be resorted to with caution.22 The Court noted that corporate directors and
officers were solidarily liable with the corporation for the termination of employees done with
malice or bad faith; and declared that bad faith did not connote bad judgment or negligence, but a
dishonest purpose or some moral obliquity and conscious doing of wrong, or meant a breach of a
known duty through some motive or interest or ill will, or partook of the nature of fraud.
pg. 352
In Pantranco Employees Association, the Court rejected the invocation of Restaurante Las
Conchas and refused to pierce the veil of corporate fiction, explaining:
As between PNB and PNEI, petitioners want us to disregard their separate personalities, and insist
that because the company, PNEI, has already ceased operations and there is no other way by which
the judgment in favor of the employees can be satisfied, corporate officers can be held jointly and
severally liable with the company. Petitioners rely on the pronouncement of this Court in A.C.
Ransom Labor Union-CCLU v. NLRC and subsequent cases.
This reliance fails to persuade. We find the aforesaid decisions inapplicable to the instant case.
For one, in the said cases, the persons made liable after the company’s cessation of operations
were the officers and agents of the corporation. The rationale is that, since the corporation is an
artificial person, it must have an officer who can be presumed to be the employer, being the person
acting in the interest of the employer. The corporation, only in the technical sense, is the employer.
In the instant case, what is being made liable is another corporation (PNB) which acquired the
debtor corporation (PNEI).
Moreover, in the recent cases Carag v. National Labor Relations Commission and McLeod v.
National Labor Relations Commission, the Court explained the doctrine laid down in AC Ransom
relative to the personal liability of the officers and agents of the employer for the debts of the latter.
In AC Ransom, the Court imputed liability to the officers of the corporation on the strength of the
definition of an employer in Article 212(c) (now Article
684

Lozada vs. Mendoza
212[e]) of the Labor Code. Under the said provision, employer includes any person acting in the
interest of an employer, directly or indirectly, but does not include any labor organization or any
of its officers or agents except when acting as employer. It was clarified in Carag and McLeod that
Article 212(e) of the Labor Code, by itself, does not make a corporate officer personally liable for
the debts of the corporation. It added that the governing law on personal liability of directors or
officers for debts of the corporation is still Section 31 of the Corporation Code.
More importantly, as aptly observed by this Court in AC Ransom, it appears that Ransom,
foreseeing the possibility or probability of payment of backwages to its employees, organized
Rosario to replace Ransom, with the latter to be eventually phased out if the strikers win their case.
The execution could not be implemented against Ransom because of the disposition posthaste of
its leviable assets evidently in order to evade its just and due obligations. Hence, the Court
pg. 353
sustained the piercing of the corporate veil and made the officers of Ransom personally liable for
the debts of the latter.
Clearly, what can be inferred from the earlier cases is that the doctrine of piercing the corporate
veil applies only in three (3) basic areas, namely: 1) defeat of public convenience as when the
corporate fiction is used as a vehicle for the evasion of an existing obligation; 2) fraud cases or
when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter
ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of
a person, or where the corporation is so organized and controlled and its affairs are so conducted
as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. In the
absence of malice, bad faith, or a specific provision of law making a corporate officer liable,
such corporate officer cannot be made personally liable for corporate liabilities.23 [Bold
emphasis supplied]
The records of this case do not warrant the application of the exception. The rule, which requires
malice or bad faith on the part of the directors or officers of the corporation, must still prevail. The
petitioner might have acted in behalf of LB&C Services Corporation but the corporation’s failure
to operate could not be hastily equated to bad faith on his part. Verily, the closure of a business
can be caused by a host of reasons, including mismanagement, bankruptcy, lack of demand,
negligence, or lack of business foresight. Unless the closure is clearly demonstrated to be
deliberate, malicious and in bad faith, the general rule that a corporation has, by law, a personality
separate and distinct from that of its owners should hold sway. In view of the dearth of evidence
indicating that the petitioner had acted deliberately, maliciously or in bad faith in handling the
affairs of LB&C Services Corporation, and such acts had eventually resulted in the closure of its
business, he could not be validly held to be jointly and solidarily liable with LB&C Services
Corporation.
The CA imputed bad faith to LB&C Services Corporation in respect of the cessation of its
operations because it still filed an appeal to the NLRC,24 which the CA construed as evincing its
intent to evade liability. For that reason, the CA deemed it mandatory to pierce the corporate fiction
and then identified the petitioner as the person responsible for the payment of the respondent’s
money claims. However, the CA pointed out nothing else in the records that showed the petitioner
as being responsible for the acts complained of. At the very least, we consider it to be highly
improbable that LB&C Services Corporation deliberately ceased its operations if only to evade the
payment of the monetary awards adjudged in favor of a single employee like the respondent.
In reinstating the decision of the Labor Arbiter, the CA, although conceding that the petitioner was
not among those
who should be liable for the monetary award, still went on to pierce the veil of corporate fiction
and to declare as follows:
Undoubtedly, respondent Lozada cannot be absolved from his liability as corporate officer.
Although, as a rule, the officers and members of a corporation are not personally liable for the acts
done in the performance of their duties, this rule admits of exceptions one of which is when the
employer corporation is no longer existing and is unable to satisfy the judgment in favor of the
pg. 354
employee. The corporate officer in such case should be held for acting on behalf of the corporation.
Here, the respondent company already ceased its business operation.
xxxx
x x x The petitioner’s claim that respondent Lozada was the real owner of the LB&C Corporation
is thus correct and tenable. The conclusion is bolstered by the fact that the respondent company
never revealed who were the officers of the LB&C Corporation if only to pinpoint responsibility
in the closure of the company that resulted in the dismissal of the petitioner from employment.
Respondent Lozada is, therefore, personally liable for the payment of the monetary benefits due
to the petitioner, its former employee.25
The Labor Arbiter did not render any findings about the petitioner perpetrating the wrongful act
against the respondent, or about the petitioner being personally liable along with LB&C Services
Corporation for the monetary award. The lack of such findings was not assailed by the respondent.
On its part, the NLRC did not discuss the matter at all in its decision of May 31, 2006, which
ultimately attained finality. To hold the petitioner liable after the decision had become final and
executory would surely alter the tenor of the decision in a manner that would exceed its terms.
Moreover, by declaring that the petitioner’s liability as solidary, the Labor Arbiter modified the
already final and executory
February 23, 2005 decision. The modification was impermissible because the decision had already
become immutable, even if the modification was intended to correct erroneous conclusions of fact
and law. The only recognized exceptions to the immutability of the decision are the corrections of
clerical errors, the making of so-called nunc pro tunc entries that cause no prejudice to any party,
and where the judgment is void.26 None of such exceptions applied herein.
It is fully warranted, therefore, that we quash and lift the alias writ of execution as a patent nullity
by virtue of its not conforming to, or of its being different from and going beyond or varying the
tenor of the judgment that gave it life. To insist on its validity would be defying the constitutional
guarantee against depriving any person of his property without due process of law.
In sum, there was no justification for holding the petitioner jointly and solidarily liable with LB&C
Services Corporation to pay to the respondent the adjudged monetary award. To start with, the
respondent had not alleged the petitioner’s act of bad faith, whether in his complaint or in his
position paper, or anywhere else in his other submissions before the Labor Arbiter, that would
have justified the piercing of the veil of corporate identity. Hence, we reverse the CA.
pg. 355
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and
SETS ASIDE the decision promulgated by the Court of Appeals on September 28, 2010;
ANNULS and SETS ASIDE the order issued on April 16, 2007 by Labor Arbiter Antonio R.
Macam; QUASHES and LIFTS the alias writ of execution; and DIRECTS the National Labor
Relations Commission Labor Arbiter to implement with utmost dispatch the final and executory
decision rendered on May 31, 2006 against the assets of LB&C Service Corporation only.
No pronouncement on costs of suit.
SO ORDERED.
Leonardo-De Castro** (Acting Chairperson), Perlas-Bernabe and Caguioa, JJ., concur.
Sereno, CJ., On Leave.
Petition granted, judgment reversed and set aside.
Notes.—As a general rule, the officers and members of a corporation are not personally liable for
acts done in the performance of their duties. (Eyana vs. Philippine Transmarine Carriers, Inc.,
748 SCRA 429 [2015])
The Supreme Court (SC) has ruled that corporate officers and/or agents may be held individually
liable for a crime committed under the Intellectual Property Code (IPC). (ABS-CBN Corporation
vs. Gozon, 753 SCRA 1 [2015])
——o0o——
pg. 356
G.R. No. 196670. October 12, 2016.*
ALLIED BANKING CORPORATION, petitioner, vs. SPOUSES RODOLFO and

GLORIA MADRIAGA, respondents.
Remedial Law; Civil Procedure; Dismissal of Actions; There are three (3) instances when the trial
court may dismiss an action motu proprio, namely: 1) where the plaintiff fails to appear at the
time of the trial; 2) where he fails to prosecute his action for an unreasonable length of time; and
3) when he fails to comply with the rules or any order of the court.—Under Section 3, Rule 17 of
Civil Procedure, as amended, the failure on the part of the plaintiff, without any justifiable cause,
to comply with any order of the court or the Rules, or to prosecute his action for an unreasonable
length of time, may result in the dismissal of the complaint either motu proprio or on motion by
the defendant. There are three (3) instances when the trial court may dismiss an action motu
proprio, namely: 1) where the plaintiff fails to appear at the time of the trial; 2) where he fails to
prosecute his action for an unreasonable length of time; and 3) when he fails to comply with the
rules or any order of the court. The failure of a plaintiff to prosecute the action without any
justifiable cause within a reasonable period of time will give rise to the presumption that he is no
longer interested to obtain from the court the relief prayed for in his complaint; hence, the court is
authorized to order the dismissal of the complaint on its own motion or on motion of the
defendants. The presumption is not, however, by any means, conclusive because the plaintiff, on
a motion for reconsideration of the order of dismissal, may allege and establish a justifiable cause
for such failure.
Same; Same; Same; Failure to Prosecute; Pretrial; The failure of respondents to promptly set the
case for pretrial, without justifiable reason, is tantamount to failure to prosecute.—Section 1, Rule
18 of the 1997 Rules of Civil Procedure, as amended, mandates that after the last pleading has
been served and filed, it is the duty of the plaintiff to promptly move ex parte that the case be set
for pretrial. In this case, respondents should have set the case for pretrial right after their receipt of
the Bank’s Rejoinder in May 2002. Instead, respondents sought to delay the proceedings by
manifesting that an amended complaint will be filed. Respondents’ offered excuse that their
financial status forced the successive withdrawals of their counsels deserves scant consideration.
PAO even admitted that respondents failed the indigency test. The failure of respondents to
promptly set the case for pretrial, without justifiable reason, is tantamount to failure to prosecute.
Respondents cannot blame their counsels because they too had been remiss in their duty to
diligently pursue the case when they failed to secure the services of a counsel within the given
period. Respondents’ laxity in attending to their case ultimately led to its dismissal. Indeed,
respondents were in the brink of losing their property to foreclosure. This situation should all the
more pursue the case relentlessly. The law aids the vigilant, not
690
pg. 357
Allied Banking Corporation vs. Madriaga
those who slumber on their rights. Vigilantibus, sed non dormientibus Jura subverniunt.
Same; Same; Same; Same; The question of whether a case should be dismissed for failure to
prosecute is mainly addressed to the sound discretion of the trial court.—The question of whether
a case should be dismissed for failure to prosecute is mainly addressed to the sound discretion of
the trial court. The true test for the exercise of such power is whether, under the prevailing
circumstances, the plaintiff is culpable for want of due diligence in failing to proceed with
reasonable promptitude. As to what constitutes “unreasonable length of time,” this Court has ruled
that it depends on the circumstances of each particular case and that “the sound discretion of the
court” in the determination of the said question will not be disturbed, in the absence of patent
abuse.
Oracion, Barlis & Associates for petitioner.
PEREZ, J.:
This petition for review challenges the reinstatement and remand of Civil Case No. 2059 to the
Regional Trial Court (RTC) of Bangued, Abra, Branch 2 by the Court of Appeals in its
Decision1 dated 19 October 2010 in C.A.-G.R. CV No. 83413. The RTC had earlier dismissed the
case for respondents’ failure to prosecute.
The factual background is as follows:
Respondent Spouses Rodolfo and Gloria Madriaga obtained a P750,000.00 loan from Allied Bank
(the Bank) secured by a
_______________
1 Rollo, pp. 100-110; penned by Associate Justice Rosalinda Asuncion-Vicente, with Associate
Justices Romeo F. Barza and Jane Aurora C. Lantion, concurring.
pg. 358
691
VOL. 805, OCTOBER 12, 2016 691

real estate mortgage on their property. Respondents alleged to have religiously paid the loan from
June 1996 to August 1999 through Leo Nolasco (Nolasco), the Bank’s Creditor
Investigator/Appraiser, in the aggregate amount of P628,953.96. In July 1999, respondents
converted the remaining balance of their loan, including interest, in the amount of P380,000.00 to
a term loan. Payments were regularly coursed to Nolasco.
On 25 May 2001, respondents received a demand letter from the Bank for the payment of
P399,898.56. Upon further inquiry, respondents discovered that said amount represented their
unpaid obligation from June 2000 to May 2001. Respondents claimed to have paid for the same.
They requested for a copy of the ledger and/or record of their loan obligation but the Bank ignored
the same.
On 1 January 2002, the Bank filed a petition for extrajudicial foreclosure of mortgage over
respondents’ property. Respondents, through Atty. Wilfredo Santos (Atty. Santos), countered with
a Complaint for Specific Performance with prayer for a Writ of Preliminary Injunction, before the
RTC of Bangued, Abra, to enjoin the extrajudicial foreclosure and to compel the Bank to allow
them to examine their loan record. The Bank, in turn, filed its Answer with Compulsory
Counterclaim.
On 22 April 2002, Atty. Eliseo Cruz (Atty. Cruz) entered his appearance as new counsel of
respondents and requested leave of court to amend the Complaint. The RTC gave the new counsel
fifteen (15) days from receipt of the order, or until 21 May 2002, to file their Amended
Complaint.2 Instead, Atty. Cruz filed a Reply and Answer to the Bank’s Counterclaim on 21 April
2002. On 10 May 2002, the Bank filed a Rejoinder.
Respondents failed to file their Amended Complaint within the given period. During the 24 June
2002 hearing, Atty. Cruz explained that he just received the receipts from the original
_______________
2 Id., at p. 40.
692

pg. 359
counsel, Atty. Santos; thus, he requested an extension. The case was reset to 5 August 2002.3
On 5 August 2002, a new counsel, Atty. Meliton Balagtey (Atty. Balagtey) appeared in behalf of
respondents and requested additional time to study the case. Upon agreement of the parties, the
case was reset to 21 October 2002.4
Claiming that no amended complaint had yet been filed, the Bank filed a Motion to Dismiss on 8
October 2002 on the ground of failure of respondents to comply with the Orders of the trial
court.5 Hence, respondents’ counsel was directed by the trial court to file his
Opposition/Comment.6
On 31 October 2002, respondents filed their Comment to Motion to Dismiss with Apology
essentially stressing that the fault of the former counsel should not bind the present counsel and
that the case should be heard on the merits. Atty. Balagtey also manifested he could not yet file
the Amended Complaint.7
On 4 December 2002, Atty. Balagtey filed a Motion withdrawing his appearance as counsel for
respondents. In said motion, Atty. Balagtey also asked that an order be issued to compel the Bank
to produce the following documents in court: 1) Original copy of the loan ledger with Main Office
of Allied Bank and that the copy of the loan ledger with Allied Bank Branch at Bangued, Abra; 2)
Contracts of loan; 3) Promissory Notes; 4) Copy of the withdrawal and deposit slips; and 5)
Duplicate copy of receipts of payment made.8
During the 24 March 2003 hearing, the trial court granted the motion of Atty. Balagtey to withdraw
from the case and gave respondents forty-five (45) days to secure the services of new counsel.9
In the 28 July 2003 hearing, respondents announced Atty. Narciso Bolislis of the Public Attorney’s
Office (PAO) as their new counsel but the latter did not enter his appearance on record.
On 7 August 2003, the trial court dismissed the case on the grounds of failure on the part of
respondents to prosecute the case and to comply with the orders of the trial court. The dispositive
portion of the Order10 reads:
IN VIEW HEREOF and as prayed for by [the Bank] this case is dismissed pursuant to Sec. 3 Rule
17 of the Rules of Court.11
Respondents, through their new counsel, the Public Attorney’s Office (PAO), moved to reconsider
the above order. The PAO stressed that the failure of respondents to present evidence was due to
successive withdrawals and changes of their counsels. The PAO also explained its belated
appearance was due to failure of respondents to meet the indigency test.12
On 15 April 2004, the trial court denied the motion for reconsideration for lack of merit. The trial
court ruled that respondents’ failure to prosecute their case for an unreasonable length of time
cannot be justified by the successive withdrawals and changes of their counsel. The trial court held
pg. 360
that respondents have blatantly abused the judicial system, and the leniency of the trial court and
the Bank.13
Aggrieved, respondent appealed to the Court of Appeals arguing that the trial court gravely erred
in dismissing the case for failure to prosecute considering that the successive withdrawals and
changes of their counsels were not their fault; their engagement of PAO to provide them assistance
was a manifest indication of their desire to prosecute the action; and their subsequent counsels
were under no obligation to amend the complaint.
In a Decision dated 19 October 2010, the Court of Appeals reversed the trial court’s 15 April 2004
Order affirming its earlier order dismissing the case. The dispositive portion reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The Regional Trial
Court’s Order dated April 15, 2004 is REVERSED and SET ASIDE. The case (Civil Case No.
2059) is REINSTATED and REMANDED to the court of origin for continuance of the
proceedings. The trial court is hereby directed to order its branch clerk of court to immediately set
the case for pretrial.14
The Court of Appeals found that the trial court’s dismissal of the case was precipitate and
unwarranted. The Court of Appeals observed that all previous resettings of the case were granted
by the trial court without the objection of the Bank. The Court of Appeals found the dismissal of
the Complaint too harsh and that the trial court should have, at most, waived the right of
respondents to amend the Complaint. The Court of Appeals also did not find the delay of five (5)
or eight (8) months before the setting of pretrial as unreasonable.
The Court of Appeals also denied the motion for reconsideration filed by the Bank.
The Bank contends that respondents failed to exercise their utmost diligence and reasonable
promptitude in prosecuting their action for an unreasonable length of time. The Bank points out
that respondents did not promptly set the case for pretrial; that they did not promptly amend their
Complaint despite being given ample chances; that they did not also promptly engage the services
of a counsel. The Bank expounds that respondents must promptly move ex parte that the case be
set for pretrial within five (5) days after the last pleading joining the issues has been filed and
served. The Bank asserts that respondents’ failure to file their announced Amended Complaint
despite being given two chances to do so is inexcusable. The Bank emphasizes that respondents’
dilatory tactics were meant to thwart the foreclosure of their property.
For their part, respondents insist that the delay in the proceeding was caused by the successive
withdrawals and changes in their counsels which are beyond their control.
The Bank adds in its Reply that respondents failed to obey the following orders of the trial court:
1. 22 April 2002 Order giving Atty. Cruz fifteen (15) days to file the Amended Complaint;
pg. 361
2. 24 June 2002 Order for Atty. Cruz to file the Amended Complaint; and
3. 24 March 2003 Order for respondents to engage the services of new counsel.15
The lone issue to be resolved is whether the trial court correctly dismissed respondents’ complaint
for failure to prosecute. Stated otherwise, was the Court of Appeals correct in reinstating the case?
The petition is meritorious.
Under Section 3, Rule 17 of the 1997 Rules of Civil Procedure, as amended, the failure on the part
of the plaintiff, without any justifiable cause, to comply with any order of the court or the Rules,
or to prosecute his action for an unreasonable length of time, may result in the dismissal of the
complaint either motu proprio or on motion by the defendant. There are three (3) instances when
the trial court may dismiss an action motu proprio, namely: 1) where the plaintiff fails to appear
at the time of the trial; 2) where he fails to prosecute his action for an unreasonable length of time;
and 3) when he fails to comply with the rules or any order of the court.16
The failure of a plaintiff to prosecute the action without any justifiable cause within a reasonable
period of time will give rise to the presumption that he is no longer interested to obtain from the
court the relief prayed for in his complaint; hence, the court is authorized to order the dismissal of
the complaint on its own motion or on motion of the defendants. The presumption is not, however,
by any means, conclusive because the plaintiff, on a motion for reconsideration of the order of
dismissal, may allege and establish a justifiable cause for such failure.17
True, there is nothing in the Rules that sanctions the non-filing of an Amended Complaint. But the
dismissal of the complaint by the trial court was not per se due to the non-filing of an amended
complaint. A scrutiny of the records shows that the commitment to file the amended complaint
was but a mere ruse to delay the proceedings. It was respondents themselves through Atty. Cruz
who sought leave of court to file an amended complaint on 22 April 2002. At that time, the Bank
had already filed its Answer to the original Complaint. And despite filing their Reply, respondents
pursued their intention to file the amended complaint during the 24 June 2002 hearing. Come 5
August 2002, a new counsel, Atty. Balagtey, entered his appearance for respondents. Atty.
Balagtey requested additional time to study the case, without however abandoning respondents’
intention to file the amended complaint. The case was reset, not once but thrice in a span of four
(4) months because respondents made repeated requests for time to file the amended complaint.
Instead of filing the amended complaint for which additional time had been frequently requested,
Atty. Balagtey filed a motion for issuance of an order requiring the Bank to produce certain
records. In the same motion for which additional time had been requested as frequently done
before, Atty. Balagtey surprisingly prayed for his withdrawal from the case. Respondents appeared
during the 24 March 2003 hearing without counsel. At that juncture, enough events have transpired
indications that respondents have abandoned the filing of the amended complaint and shifted to a
different strategy. The trial court was kind enough to give respondents forty-five (45) days to
secure the services of another counsel. But this leniency was once again abused by respondents
when they failed to secure the services of a new counsel within the 45-day period. It is of record
pg. 362
that, respondents’ alleged new counsel did not enter his appearance during the 28 July 2003
hearing. This prompted the trial court, upon motion of the Bank, to issue an order dismissing the
case for failure to prosecute. It can be inferred from respondents’ actuations that they were not
serious in pursuing the case. In fact, we lend credence to the Bank’s claim that respondents were
employing dilatory tactics to thwart the foreclosure of their property.
Apart from the failure to file the amended complaint as manifested and the numerous changing of
counsels, respondents are deemed to have failed to comply with the order of the court to secure a
new counsel within forty-five (45) days.
Respondents’ failure to prosecute is indicated, underscored even, by their failure to set the case for
pretrial.
Section 1, Rule 18 of the 1997 Rules of Civil Procedure, as amended, mandates that after the last
pleading has been served and filed, it is the duty of the plaintiff to promptly move ex parte that the
case be set for pretrial.
In this case, respondents should have set the case for pretrial right after their receipt of the Bank’s
Rejoinder in May 2002. Instead, respondents sought to delay the proceedings by manifesting that
an amended complaint will be filed. Respondents’ offered excuse that their financial status forced
the successive withdrawals of their counsels deserves scant consideration. PAO even admitted that
respondents failed the indigency test. The failure of respondents to promptly set the case for
pretrial, without justifiable reason, is tantamount to failure to prosecute. Respondents cannot blame
their counsels because they too had been remiss in their duty to diligently pursue the case when
they failed to secure the services of a counsel within the given period. Respondents’ laxity in
attending to their case ultimately led to its dismissal. Indeed, respondents were in the brink of
losing their property to foreclosure. This situation should all the more pursue the case relentlessly.
The law aids the vigilant, not those who slumber on their rights. Vigilantibus, sed non dormientibus
Jura subverniunt.18
Finally, the question of whether a case should be dismissed for failure to prosecute is mainly
addressed to the sound discretion of the trial court. The true test for the exercise of such power is
whether, under the prevailing circumstances, the plaintiff is culpable for want of due diligence in
failing to proceed with reasonable promptitude. As to what constitutes “unreasonable length of
time,” this Court has ruled that it depends on the circumstances of each particular case and that
“the sound discretion of the court” in the determination of the said question will not be disturbed,
in the absence of patent abuse.19
Finding no patent abuse on the part of the trial court, we grant the petition.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated 19
October 2010 and Resolution dated 7 April 2011 of the Court of Appeals in C.A.-G.R. CV No.
83413 are hereby REVERSED and SET ASIDE. The 7 August 2003 Order of the Regional Trial
Court, Branch 2 in Bangued, Abra, in Civil Case No. 2059 dismissing the Complaint is
hereby REINSTATED.
pg. 363
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Reyes and Jardeleza, JJ., concur.
Notes.—If the absent party at the pretrial is the plaintiff, then his case shall be dismissed. If it is
the defendant who fails to appear, then the plaintiff is allowed to present his evidence ex parte and
the court shall render judgment based on the evidence presented. (Salvador vs. Rabaja, 749 SCRA
654 [2015])
The delay or failure to prosecute contemplated under Section 3, Rule 17 of the 1997 Rules must
be for an “unreasonable length of time.” (Laurel vs. Vardeleon, 765 SCRA 362 [2015])
——o0o——
G.R. No. 167952. October 19, 2016.*
GONZALO PUYAT & SONS, INC., petitioner, vs. RUBEN ALCALDE (deceased),
substituted by GLORIA ALCALDE, representative of the Farmer-Beneficiaries,
respondent.
Remedial Law; Civil Procedure; Motion for Reconsideration; Having filed its motion for
reconsideration only on September 14, 2001, way beyond the fifteen (15)-day reglementary period,
the order sought to be reconsidered by petitioner has already attained finality.—The June 8, 2001
Order of the DAR has already attained finality for several reasons. First, as aptly observed by the
CA, petitioner’s motion for reconsideration of the June 8, 2001 Order of the DAR was filed only
on September 14, 2001, after an order of finality has already been issued by the DAR. In its Motion
to Lift Order of Finality dated August 20, 2001, petitioner’s counsel expressly admitted that he
received said order only on August 17, 2001. Granting that petitioner’s counsel was forthright in
pg. 364
making such an admission, then petitioner had only until September 1, 2001 within which to tile
its motion for reconsideration. Having filed its motion for
_______________
* SPECIAL THIRD DIVISION.
424

Gonzalo Puyat ###amp### Sons, Inc. vs. Alcalde
reconsideration only on September 14, 2001, way beyond the 15-day reglementary period, the
order sought to be reconsidered by petitioner has already attained finality. Second, even if this
Court overlooks the admission of petitioner’s counsel that he already received the June 8, 2001
Order on August 17, 2001, still, said order was already deemed to have been served upon petitioner
when it failed to notify DAR of its counsel’s change of address.
Attorneys; Negligence of Counsel; Failure of petitioner’s counsel to officially notify the

Department of Agrarian Reform (DAR) of its change of address is an inexcusable neglect which
binds his client.—Failure of petitioner’s counsel to officially notify the DAR of its change of
address is an inexcusable neglect which binds his client. In Karen and Kristy Fishing Industry v.
CA, 536 SCRA 243 (2007), this rule has been clearly elucidated by the Court, to wit: The records
show that the failure of Atty. Dela Cruz, petitioners’ counsel of record, to receive a copy of the
Court of Appeals decision was caused by his failure to inform the appellate court of the change of
his address of record. Thus, the Clerk or Court had to resend a copy of the decision, this time to
the address on record of spouses Tuvilla. If counsel moves to another address without
informing the take of that change, such omission or neglect is inexcusable and will stay the
finality of the decision. The court cannot be expected to take judicial notice of the new
address of a lawyer who has moved or to ascertain on its own whether or not the counsel of
record has been changed and who the new counsel could possibly be or where he probably
resides or holds office. Jurisprudence is replete with pronouncements that clients are bound by
the actions of their counsel in the conduct of their case. If it were otherwise, and a lawyer’s mistake
or negligence were admitted as a reason for the opening of a case, there would be no end to
litigation so long as counsel had not been sufficiently diligent or experienced or learned.
Remedial Law; Civil Procedure; Notices; The Supreme Court (SC) is not unaware of the time-
honored principle that “actual knowledge” is equivalent to “notice.”—This Court is not unaware
of the time-honored principle that “actual knowledge” is equivalent to “notice.” Thus, when
petitioner, through its counsel, filed its Motion to Lift Order of Finality dated August 20, 2001
with the DAR, this indubitably indicates that petitioner and its counsel already had
pg. 365
425
VOL. 806, OCTOBER 19, 2016 425

prior “actual knowledge” of the June 8, 2001 Order, which “actual knowledge” is equivalent to
“notice” of said order. As a matter of fact, in the said motion, petitioner even quoted the dispositive
portion of the June 8, 2001 Order of the DAR. Inevitably, this leads to no other conclusion than
that petitioner already had actual knowledge of the denial of its petition at the time said motion
had been drafted and/or filed. Since the motion to lift order of finality was drafted and/or filed on
August 20, 2001, it can be said that at the latest, petitioner had until September 4, 2001 within
which to file its motion for reconsideration. Consequently, the filing of the motion for
reconsideration only on September 14, 2001 was certainly way beyond the reglementary period
within which to file the same.
Peralta, J., Dissenting Opinion:
Agrarian Reform; View that it must be stressed that the assailed Decision did not determine
whether or not the subject property could be placed under the coverage of the Comprehensive
Agrarian Reform Program (CARP).—At the outset, it must be stressed that the assailed Decision
did not determine whether or not the subject property could be placed under the coverage of the
Comprehensive Agrarian Reform Program (CARP). It does not resolve the parties’ respective
contentions that the subject landholdings are either industrial or agricultural. Rather, the Court
found that the administrative process in the acquisition proceedings has not yet run its regular
course and that due process was not accorded to petitioner. As clearly discussed in the assailed
Decision of the Court, an examination of the pertinent pleadings and documents reveal that, indeed,
petitioner was not properly served with a copy of the Order dated June 8, 2001. The DAR Secretary
confirmed this fact in his Order denying petitioner’s motion for reconsideration, dated November
5, 2001, when he categorically stated that petitioner was not furnished a copy of the June 8, 2001
Order, the pertinent part of which reads: This Office notes of the Certification of B. De Paz,
Officer-in Charge of this Department’s Records Management Division stating that petitioner-
movant’s counsel was not served a copy of the disputed 8 June 2001 Order due to change in
address. In any case, this matter has been addressed with the service of said Order upon petitioner-
movant’s counsel at his new address.
pg. 366
426

Same; Comprehensive Agrarian Reform Program; View that before a piece of land could be
placed under the coverage of the Comprehensive Agrarian Reform Program (CARP), there must
first be a showing that the land is an agricultural land or one devoted or suitable for agricultural
purposes.—To recapitulate, before a piece of land could be placed under the coverage of the
CARP, there must first be a showing that the land is an agricultural land or one devoted or suitable
for agricultural purposes. In the instant case, there is no final determination yet whether the subject
property may be placed under the coverage of the CARP. Verily, the procedural requirements that
would validate the taking of land for the purposes of the CARP were not complied with. To be
sure, such steps and procedures are part of due process. No less than the Bill of Rights provides
that “[n]o person shall be deprived of life, liberty or property without due process of law.”
Same; Police Power; Expropriation Proceedings; View that as an exercise of police power, the
expropriation of private property under Republic Act (RA) No. 6657 puts the landowner, not the
government, in a situation where the odds are practically against him.—As an exercise of police
power, the expropriation of private property under Republic Act No. 6657 puts the landowner, not
the government, in a situation where the odds are practically against him. Nevertheless, the
Comprehensive Agrarian Reform Law was not intended to take away property without due process
of law. The exercise of the power of eminent domain requires that due process be observed in the
taking of private property. Thus, the directive of the Office of the President for the Department of
Agrarian Reform to ascertain whether or not petitioner’s landholdings may be placed under the
CARP was just and proper. In fine, the taking of properties for agrarian reform purposes should
not be at the undue expense of landowners who are also entitled to protection under the
Constitution and agrarian reform laws.
MOTION FOR RECONSIDERATION and SUPPLEMENT TO RESPONDENT’S MOTION

FOR RECONSIDERATION of a decision of the Supreme Court.
Esguerra & Blanco for petitioner.
425
VOL. 806, OCTOBER 19, 2016 425

pg. 367
Defensor, Villamor, Tolentino and Zamora collaborating counsel for petitioner.
Arnel D. Naidas for respondent.
RESOLUTION
VELASCO, JR., J.:
This resolves the Motion for Reconsideration and the Supplement to Respondent’s Motion for
Reconsideration filed by respondents praying that the Decision of the Court dated February 1,
2012 be set aside and reconsidered and that the Decision dated February 1, 2005 and Resolution
dated April 25, 2005 of the Court of Appeals in C.A.-G.R. S.P. No. 86069 be reinstated.
To recall, the Court, by its Decision dated February 1, 2012, reversed and set aside the Decision1
dated February 1, 2005 and the Resolution2 dated April 25, 2005 of the Court of Appeals (CA),
and reinstated the Decision3 dated August 8, 2003 and the Order4 dated July 2, 2004 of the Office
of the President (OP). In turn, the said Orders of the OP set aside the Orders5 dated June 8, 2001
and November 5, 2001 of the Department of Agrarian Reform (DAR) Secretary and lifted the
Notice of Coverage dated April 14, 1998 and Notice of Land Valuation and Acquisition dated
November 15, 1998 over the 37.7353-hectare portion of petitioner Gonzalo Puyat & Sons, Inc.’s
property (subject landholding).
_______________
1 Rollo, pp. 30-42. Penned by Associate Justice Remedios A. Salazar-Fernando and concurred in
by Associate Justices Rosmari D. Carandang and Monina Arevalo-Zenarosa.
2 Id., at pp. 44-45.
3 Id., at pp. 117-121
4 Id., at pp. 136-137.
5 Id., at pp. 70-72.
428
pg. 368
The facts of the case, as stated in this Court’s Decision dated February 1, 2012, are as follows:
On April 14, 1998, the Municipal Agrarian Reform Officer (MARO) issued a Notice of Coverage
over the subject landholding informing petitioner that the subject properties were being considered
for distribution under the government’s agrarian reform program. Thereafter on November 15,
1998, the corresponding Notice of Valuation and Acquisition was issued informing petitioner that
a 37.7353-hectare portion of its property is subject to immediate acquisition and distribution to
qualified agrarian reform beneficiaries and that the government is offering P7,071,988.80 as
compensation for the said property.
Petitioner then filed a Petition before the Department of Agrarian Reform (DAR), wherein it argues
that the properties were bought from their previous owners in good faith; that the same remains
(sic) uncultivated, unoccupied, and untenanted up to the present; and, that the subject landholdings
were classified as industrial, thus, exempt from the coverage of the Comprehensive Agrarian
Reform Program (CARP). Petitioner prayed, among other things, that the Notice of Coverage and
Notice of Acquisition be lifted and that the properties be declared exempt from the coverage of
CARP.
Respondents on their part countered, among other things, that the classification of the land as
industrial did not exempt it from the coverage of the CARP considering that it was made only in
1997; the HLURB certification that the Municipality of Biñan, Laguna does not have any approved
plan/zoning ordinance to date; that they are not among those farmer-beneficiaries who executed
the waivers or voluntary surrender: and, that the subject landholdings were planted with palay.
On June 8, 2001, then DAR Secretary Hernani A. Braganza, issued an Order in favor of the
respondent declaring that the subject properties are agricultural land; thus, falling within the
coverage of the CARP, the decretal portion of which reads:
429
VOL. 806, OCTOBER 19, 2016 429

WHEREFORE, premises considered, Order is hereby issued dismissing the petition. The
MARO/PARO concerned is directed to immediately proceed with the acquisition of subject
landholdings under CARP, identify the farmer-beneficiaries and generate/issue the
corresponding Certificates of Land Ownership Awards pursuant to Section 16 of RA 6657.
pg. 369
SO ORDERED.
On July 24, 2001, respondents filed a Motion for the Issuance of an Order of Finality of Judgment
praying that an Order of Finality be issued for petitioner’s failure to interpose a motion for
reconsideration or an appeal from the order of the DAR Secretary.
On August 3, 2001 the DAR issued an Order granting the motion and directing that an Order of
Finality be issued. Consequently, on August 6, 2001, an Order of Finality quoting the dispositive
portion of the June 8, 2001 Order of the DAR Secretary was issued.
On August 17, 2001, petitioner received a copy of the Orders dated August 3 and 6, 2001.
Thereafter, on August 20, 2001, petitioner filed a Motion to Lift Order of Finality.
On August 28, 2001, petitioner’s counsel filed a Manifestation with Urgent Ex Parte Motion for
Early Resolution informing the DAR of his new office address and praying that the petition be
resolved at the earliest convenient time and that he be furnished copies of dispositions and notices
at his new and present address.
In a Letter sent to the new address of petitioner’s counsel, dated September 4, 2001, Director Delfin
B. Samson of the DAR informed petitioner’s counsel that the case has been decided and an order
of finality has already been issued, copies of which were forwarded to his last known address.
Nevertheless, Director Samson attached copies of the Order dated June 8, 2001 and the Order of
Finality dated August 6, 2001 for his reference.
430

On September 14, 2001, petitioner filed a Motion for Reconsideration with Manifestation,
questioning the orders dated June 8, 2001 and August 6, 2001 and praying that the said orders be
set aside and a new one issued granting the petition.
On September 21, 2001, the DAR issued an order directing the parties to submit their respective
memoranda.
On November 5, 2001, the DAR issued an order denying the motion for reconsideration, which
was received by petitioner’s counsel on November 15, 2001.
Aggrieved, petitioner filed an appeal before the Office of the President which was received by the
latter on November 21, 2001. The case was docketed as O.P. Case No. 01-K-184.
pg. 370
On August 8, 2003, the Office of the President rendered a Decision in favor of petitioner, the
WHEREFORE, premises considered, the Orders dated 08 June 2001 and 05 November
2001 of the DAR Secretary are hereby SET ASIDE and the Notice of Coverage dated April
14, 1998 and Notice of Acquisition dated November 15, 1998 issued over the subject land
LIFTED, without prejudice to the conduct of an ocular inspection to determine the
classification of the land.
Parties are to INFORM this Office, within five (5) days from notice, of the dates of their
receipt of this Decision.
SO ORDERED.
On March 24, 2004, there being no appeal or motion for reconsideration interposed despite clear
showing that both parties had received their copies of the August 8, 2003 Decision. The Office of
the President issued an Order declaring that the decision has become final and executory.
431
VOL. 806, OCTOBER 19, 2016 431

Subsequently, respondents filed a Petition for Relief seeking that the above Decision and Order of
the Office of the President be set aside and the Orders of the DAR Secretary reinstated.
On July 2, 2004, the Office of the President treating the Petition for Relief as a motion for
reconsideration, issued an Order dismissing the same, to wit:
WHEREFORE premises considered, the “Petition for Relief” dated 3 May 2004, which is
treated herein as a motion for reconsideration, filed by Ruben Alcaide is hereby
DISMISSED. No further motions or reconsideration or other pleadings of similar import
shall be entertained.
SO ORDERED.
Respondents then sought recourse before the CA assailing the Decision dated August 8, 2003 and
Order dated July 2, 2004 of the Office of the President. In support of the petition, respondents
raised the following errors:
I. THE HONORABLE OFFICE OF THE PRESIDENT COMMITTED A REVERSIBLE

ERROR WHEN IT REVERSED AND/OR SET ASIDE THE ORDERS DATED JUNE 8,
pg. 371
AND NOVEMBER 5, 2001 OF THE DAR SECRETARY DESPITE THE FINALITY OF
THE SAID ORDERS;
II. THE HONORABLE OFFICE OF THE PRESIDENT ERRED WHEN IT RULED THAT
THE SUBJECT PROPERTY IS NOT AGRICULTURAL.
On February 1, 2005, the CA rendered a Decision granting the petition in favor of the respondents,
the decretal portion of which reads:
WHEREFORE, in view of the foregoing, the petition for review is hereby GRANTED.
The decision dated August 8,
432

2003 and the order dated July 2, 2004 of the Office of the President in O.P. CASE No. 01-
K-184 are SET ASIDE for being null and void. The orders dated June 8, 2001 and August
6, 2001 of the DAR Secretary are hereby REINSTATED.
SO ORDERED.
Ruling in favor of the respondents, the CA opined that the Order of the DAR Secretary dated June
8, 2001 has become final and executory by petitioner’s failure to timely interpose his motion for
reconsideration. Consequently, when petitioner filed his motion for reconsideration on September
14, 2001 the order sought to be reconsidered has attained finality. Thus, the Office of the President
had no jurisdiction to reevaluate more so reverse the findings of the DAR Secretary in its Order
dated June 8, 2001. (emphasis in the original; citations omitted)
Inevitably, petitioner filed a Petition for Review on Certiorari before this Court seeking to reverse
the February 1, 2005 Decision of the CA and its April 25, 2005 Resolution denying petitioner’s
motion for reconsideration.
As mentioned above, the Court, in its Decision dated February 1, 2012 (assailed Decision), ruled
in favor of petitioner and reinstated the August 8, 2003 Decision and the July 2, 2004 order of the
OP, the decretal portion of which reads as follows:
WHEREFORE, premises considered, the petition is GRANTED. The Decision and the
Resolution of the Court of Appeals in C.A.-G.R. S.P. No. 86069 are REVERSED and SET
pg. 372
ASIDE. The Decision dated August 8, 2003 and the Order dated July 2, 2004 of the Office of the
President are REINSTATED. (emphasis in the original)
433
VOL. 806, OCTOBER 19, 2016 433

In this recourse, respondents urge the Court to reconsider its assailed Decision, interposing the
following grounds:
THIS HONORABLE COURT ERRED IN MAKING (sic) RULING THAT THE ORDER OF
THE DAR DATED JUNE 8, 2001 HAS NOT BECOME FINAL AND EXECUTORY.
II
THIS HONORABLE COURT ERRED WHEN IT MADE A RULING THAT THE MARO
[MUNICIPAL AGRARIAN REFORM OFFICER] FAILED TO COMPLY WITH THE
PREOCULAR INSPECTION REQUIREMENTS OF DAR ADMINISTRATIVE ORDER NO.
01, SERIES OF 1998 JUST BECAUSE THE MARO FAILED TO CHECK THE BOX/ES AS TO
WHETHER OR NOT THE LAND IS “PRESENTLY BEING CULTIVATED/SUITABLE TO
AGRICULTURE.”6
In other words, respondents raised the following issues for Our consideration: (1) whether the June
8, 2001 Order of the DAR has become final and executory; and (2) whether the MARO had indeed
failed to comply with the preocular inspection requirements under DAR Administrative Order No.
01, Series of 1998, which call for the lifting of the notice of coverage and the notice of land
valuation and acquisition issued by the DAR.
Finality of the June 8, 2001 Order
pg. 373
In order to have a better understanding of the instant case, let us recall, in clear chronological order,
the relevant events that took place prior to the promulgation of the assailed Decision by this Court:
_______________
6 Id., at pp. 488-489.
434

December 20, 2000: Petitioner filed its Petition7 dated December 15, 2000 before the DAR
praying, inter alia, that the notice of coverage and notice of land valuation and acquisition
be lifted and that the subject landholding be declared exempt from the coverage of the
comprehensive agrarian reform program (CARP).
February 5, 2001: Respondents filed its Reply (To Petition dated 15 December 2000).8
June 8, 2001: Then DAR Secretary Hernani A. Braganza (DAR Sec. Braganza) issued the
Order9 dismissing the petition and declaring that the subject landholding is an agricultural
land, thus, falling within the CARP coverage.
July 24, 2001: Respondents filed their Motion for the Issuance of an Order of Finality of
Judgment10 of even date praying that an order of finality be issued for petitioner’s failure
to interpose an appeal or motion for reconsideration from the June 8, 2001 Order of the DAR
Secretary.
August 3, 2001: DAR issued its Order11 granting the motion for the issuance of an order of
finality of judgment and directing that an order of finality be issued.
August 6, 2001: DAR, through Director Delfin B. Samson (Dir. Samson), issued the Order
of Finality.12
August 17, 2001: Petitioner received a copy of the Orders dated August 3 and 6, 2001.
_______________
7 Id., at pp. 63-65.
8 Id., at pp. 68-69.
pg. 374
9 Id., at pp. 70-72.
10 Id., at pp. 65-73.
11 Id., at pp. 76-77.
12 Id., at pp. 87-88.
435
VOL. 806, OCTOBER 19, 2016 435

August 20, 2001: Petitioner filed a Motion to Lift Order of Finality13 of even date.
August 28, 2001: Petitioner’s counsel filed a Manifestation with Urgent Ex Parte Motion
for Early Resolution14 of even date manifesting that said counsel changed his office address
and praying that its motion to lift order of finality be resolved at the earliest opportunity as
the delay in its resolution will likely delay petitioner’s plan to develop the subject area for
low cost social housing.
September 4, 2001: DAR, through a letter15 issued by Dir. Samson, informed petitioner’s
counsel that the case has been decided and that an order of finality has already been issued.
September 14, 2001: Petitioner filed its motion tor reconsideration16 questioning the June
8, 2001 and August 6, 2001 Orders of the DAR and praying that said orders be set aside.
September 21, 2001: DAR issued its Order directing the parties to submit their respective
memoranda.
November 5, 2001: DAR issued its order denying petitioner’s motion for reconsideration.
November 21, 2001: Petitioner filed its Notice of Appeal17 dated November 19, 2001 before
the OP.
As can be derived from the foregoing, the June 8, 2001 Order of the DAR has already attained
finality for several reasons. First, as aptly observed by the CA, petitioner’s motion
_______________
pg. 375
13 Id., at pp. 82-83.
14 Id., at p. 85.
15 Id., at p. 86.
16 Id., at pp. 92-93.
17 Id., at p. 103.
436

for reconsideration of the June 8, 2001 Order of the DAR was filed only on September 14, 2001,
after an order of finality has already been issued by the DAR.18
In its Motion to Lift Order of Finality dated August 20, 2001, petitioner’s counsel expressly
admitted that he received said order only on August 17, 2001.19 Granting that petitioner’s counsel
was forthright in making such an admission, then petitioner had only until September 1, 2001
within which to file its motion for reconsideration. Having filed its motion for reconsideration only
on September 14, 2001, way beyond the 15-day reglementary period, the order sought to be
reconsidered by petitioner has already attained finality.
Second, even if this Court overlooks the admission of petitioner’s counsel that he already received
the June 8, 2001 Order on August 17, 2001, still, said order was already deemed to have been
served upon petitioner when it failed to notify DAR of its counsel’s change of address. On this
point, the DAR issued an Order dated August 3, 2001,20 stating, inter alia:
Per certification of the Records Management Division, the counsel of petitioner has moved out
without leaving any forwarding address and the petitioner’s address is insufficient that it
could not be located despite diligent efforts.
WHEREFORE, premises considered, the Order of June 8, 2001 is deemed to have been served
and let Order of Finality be issued.
SO ORDERED.21 (emphasis supplied)
pg. 376
Failure of petitioner’s counsel to officially notify the DAR of its change of address is an
inexcusable neglect which binds
_______________
18 Id., at p. 38.
19 Id., at p. 81.
20 Id., at pp. 79-80.
21 Id., at p. 79.
437
VOL. 806, OCTOBER 19, 2016 437

his client. In Karen and Kristy Fishing Industry v. CA,22 this rule has been clearly elucidated by
the Court, to wit:
The records show that the failure of Atty. Dela Cruz, petitioners’ counsel of record, to receive a
copy of the Court of Appeals decision was caused by his failure to inform the appellate court of
the change of his address of record. Thus, the Clerk or Court had to resend a copy of the decision,
this time to the address on record of spouses Tuvilla.
If counsel moves to another address without informing the take of that change, such omission
or neglect is inexcusable and will stay the finality of the decision. The court cannot be
expected to take judicial notice of the new address of a lawyer who has moved or to ascertain
on its own whether or not the counsel of record has been changed and who the new counsel
could possibly be or where he probably resides or holds office.
Jurisprudence is replete with pronouncements that clients are bound by the actions of their counsel
in the conduct of their case. If it were otherwise, and a lawyer’s mistake or negligence were
admitted as a reason for the opening of a case, there would be no end to litigation so long as counsel
had not been sufficiently diligent or experienced or learned.
In Macondray & Co., Inc. v. Provident Insurance Corporation, petitioner’s previous counsel
moved to a new address without informing the appellate court, eventually causing the appellate
court’s decision to become final and executory. The Court ruled that the counsel’s omission was
an inexcusable neglect binding upon petitioner therein for the following reasons:
pg. 377
In the present case, there is no compelling reason to overturn well-settled jurisprudence or
to interpret the rules liberally in favor of petitioner, who is not entirely blame-
_______________
22 G.R. Nos. 172760-61, October 15, 2007, 536 SCRA 243, 248-251.
438

less. It should have taken the initiative of periodically keeping in touch with its counsel,
checking with the court, and inquiring about the status of its case. In so doing, it could have
taken timely steps to neutralize the negligence of its chosen counsel and to protect its
interests. Litigants represented by counsel should not expect that all they need to do is sit
back, relax and await the outcome of their case.
As pointed out by respondent, after the death of petitioner Tuvilla’s husband, more than a year had
elapsed before the promulgation of the Court of Appeals decision, but she failed to coordinate with
the counsel of record and check the status of the case in the interim.
Moreover, the general rule is that when a party is represented by counsel of record, service of
orders and notices must be made upon said attorney and notice to the client and to any other lawyer
than the counsel of record is not notice in law. The Court of Appeals did not strictly apply this rule
and was even liberal when it did not consider the service on the counsel of record as notice to
petitioner. It even counted the 15-day reglementary period for filing a motion of reconsideration
from the later receipt by petitioner Aquilina Tuvilla of a copy of the decision instead of from the
earlier service on petitioner’s counsel of record. Unfortunately, she squandered the new period as
she failed to file the motion for reconsideration within the said period.
Thus, the Court of Appeals did not commit grave abuse of discretion when it denied petitioners’
motion for additional time to file the motion for reconsideration in accordance with the well-settled
principle that on extension for filing said motion may be granted. As a rule, periods prescribed
to do certain acts must be followed with fealty as they are designed primarily to speed up the
final disposition of the case. Such reglementary periods are indispensable interdictions
against needless delays and for an orderly dis-
pg. 378
439
VOL. 806, OCTOBER 19, 2016 439

charge of judicial business. Deviations from the rules cannot be tolerated. More importantly,
their observance cannot be left to the whims and caprices of the parties. What is worrisome is
that parties who fail to file their pleading within the periods provided for by the Rules of Court,
through their counsel’s inexcusable neglect, resort to beseeching the Court to bend the rules in
the guise of a plea for a liberal interpretation thereof thus, sacrificing efficiency and order. (citation
omitted; emphasis supplied)
Considering that petitioner’s counsel moved out of its previous address without leaving any
forwarding address, the DAR was correct in issuing the Order dated August 3, 2001 where it was
ruled that “the Order of June 8, 2001 is deemed to have been served” upon petitioner and which
correspondingly led to the issuance of the order of finality. To be sure, such omission or neglect
on the part of petitioner’s counsel is inexcusable and binding upon petitioner.
And third, this Court is not unaware of the time-honored principle that “actual knowledge” is
equivalent to “notice.” Thus, when petitioner, through its counsel, filed its Motion to Lift Order of
Finality dated August 20, 2001 with the DAR, this indubitably indicates that petitioner and its
counsel already had prior “actual knowledge” of the June 8, 2001 Order, which “actual knowledge”
is equivalent to “notice” of said order.23 As a matter of fact, in the said motion, petitioner even
quoted the dispositive portion of the June 8, 2001 Order of the DAR. Inevitably, this leads to no
other conclusion than that petitioner already had actual knowledge of the denial of its petition at
the time said motion had been drafted and/or filed. Since the motion to lift order of finality was
drafted and/or filed on August 20, 2001, it can be said that at the latest,
_______________
23 See Osmeña v. Commission on Audit, G.R. No. 188818, May 31, 2011, 649 SCRA 654, 662;
Quelnan v. VHF Philippines, G.R. No. 138500, September 16, 2005, 470 SCRA 73, 81-82; and
Samartino v. Raon, G.R. No. 131482, July 3, 2002, 383 SCRA 664, 673-674.
440

pg. 379
petitioner had until September 4, 2001 within which to file its motion for reconsideration.
Consequently, the filing of the motion for reconsideration only on September 14, 2001 was
certainly way beyond the reglementary period within which to file the same.
Significantly, when a decision becomes final and executory, the same can, and should, no longer
be disturbed. As this Court held in Zamboanga Forest Managers Corp. v. New Pacific Timber and
Supply Co.:24
Granted by the CA an extension of fifteen (15) days from 25 October, 2003 or until 9 November,
2003 within which to file its petition for review, it does not likewise help ZFMC’s cause any that
it was only able to do so on 24 November 2003. Although appeal is an essential part of our judicial
process, it has been held, time and again, that the right thereto is not a natural right or a part of due
process but is merely a statutory privilege. Thus, the perfection of an appeal in the manner and
within the period prescribed by law is not only mandatory but also jurisdictional and failure of a
party to conform to the rules regarding appeal will render the judgment final and executory. Once
a decision attains finality, it becomes the law of the case irrespective of whether the decision
is erroneous or not and no court — not even the Supreme Court — has the power to revise,
review, change or alter the same. The basic rule of finality of judgment is grounded on the
fundamental principle of public policy and sound practice that, at the risk of occasional
error, the judgment of courts and the award of quasi-judicial agencies must become final at
some definite date fixed by law. (citations omitted; emphasis supplied)
Considering the foregoing, it was clearly erroneous on the part of the OP to have taken cognizance
of the appeal filed by petitioner given that the June 8, 2001 Order of the DAR has
_______________
24 G.R. No. 173342, October 13, 2010, 633 SCRA 82, 92-93.
441
VOL. 806, OCTOBER 19, 2016 441

already attained finality and, thus, should no longer be

disturbed.
Determination by the DAR
pg. 380
Even if this Court sets aside petitioner’s procedural lapse, the case should still be dismissed based
on substantial grounds.
In upholding the August 8, 2003 Decision of the OP, the majority harped on the fact that the
MARO failed to mark any of the check boxes for “Land Use” to indicate whether the subject
properties were sugarland, cornland, unirrigated riceland, irrigated riceland, or any other
classification of agricultural land, and consequently arrived at the conclusion that no preliminary
ocular inspection was conducted and, hence, the lifting of the notice of coverage over the subject
landholding was proper, without prejudice to the conduct of an ocular inspection to determine the
classification of the land.
The conclusion arrived at by the majority is flawed for two reasons. First, the fact that the MARO
issued CARP Form No. 3.a, entitled “Preliminary Ocular Inspection Report,” belies the majority’s
conclusion that no preliminary ocular inspection was conducted by the DAR.25 Strikingly, almost
all the other details under said report were filled up or marked. Said report was also signed by the
persons who conducted the inspection and attested by Flordeliza DP Del Rosario, the MARO in
charge. In this regard, it should be noted that with the issuance of the Preliminary Ocular Inspection
Report, the MARO is presumed to have regularly performed his or her duty of conducting a
preliminary ocular inspection, in the absence of any evidence to overcome such presumption.26
_______________
25 Rollo, p. 230.
26 See Lercana v. Jalandoni, G.R. No. 132286, February 1, 2002, 375 SCRA 604, 611 and Sumalo
Homeowners Association of Hermosa, Bataan v. Litton, G.R. No. 146061, August 31, 2006, 500
SCRA 385, 392.
442

To my mind, the failure to mark the checkboxes pertaining to ‘‘Land Condition/Suitability to

Agriculture” and “Land Use” does not constitute as evidence that may overcome the presumption
of regularity in the performance of official duty. If at all, such failure merely constitutes
inadvertence that should not prejudice the farmers in the instant case.
Interestingly, a perusal of the Preliminary Ocular Inspection Report would reveal that the
checkboxes pertaining to the subcategories under “Land Condition/Suitability to Agriculture” and
pg. 381
“Land Use” do not negate the finding that the subject landholding is an agricultural land, which
led to the issuance of the notice of coverage over said property. Particularly, the following are the
subcategories and the checkboxes which the MARO failed to mark:
2. Land Condition/Suitability to Agriculture (Check Appropriate Parenthesis)
( ) Subject property is presently being cultivated/suitable to agriculture
( ) Subject property is presently idle/vacant
xxxx
4. Land Use (Check Appropriate Parenthesis)
( ) Sugar land ( ) Unirrigated Riceland
( ) Cornland ( ) Irrigated Riceland
( ) Others (Specify)______________27
Evidently, none of the above mentioned description of land would negate the determination of the
DAR that the subject landholding is indeed an agricultural land. Whether the subject landholding
is presently being cultivated or not or whether the same is sugarland, cornland, unirrigated or
inigated riceland is of no moment. The primordial consideration is whether the subject landholding
is an agricultural land which falls within the coverage of CARP.
_______________
27 Rollo, p. 230.
443
VOL. 806, OCTOBER 19, 2016 443

pg. 382
Moreover, any doubt as to the conduct of an ocular inspection and as to the nature and character
of the subject landholding should be obviated with the issuance of the Memorandum28 dated
March 3, 2005 addressed to Luis B. Bueno, Jr., Assistant Regional Director for Operations of DAR
Regional Office Region IV-A, and prepared by Catalina D. Causaren, Provincial Agrarian Reform
Officer (PARO) of Laguna, where it was stated that an ocular inspection has been conducted and
that the subject landholding is indeed an agricultural land. As stated:
We are called to tilt the balance in favor of these poor farmers, so the undersigned [PARO Catalina
D. Causaren] and Ms. Rosalinda M. Rivera, Legal Officer II, investigated and inspected the
properties. Hereunder are the following informations (sic) gathered to wit:
- The properties are bounded on the South by residential houses and large portion was
planted to palay; on the North planted also to palay; on the West and East small
portion with mixture of Horse Raising and Industrial establishment;
- The area surrounding the subject properties are mostly planted to palay;
- The CLOA Holders were prevented from entering the subject landholdings to
perform their farming activities thereon, thus, the same remains unoccupied;
- A big DAM is the main source of Irrigation Service throughout the municipality of
Biñan/Samahang Nagdadamayang Buklod ng Magpapatubig ng Biñan;
- No water supply in the irrigation facilities due to absence of agricultural activities

and not planted to any crops;
_______________
28 Id., at p. 272.
444

- There was no doubt that the landholdings are agricultural in nature in view of
the fact that large portion surrounding the area are planted to palay, the purpose of
which is agricultural production since palay is agricultural products (sic).29
(emphasis supplied)
pg. 383
Clearly, MARO’s failure to mark any of the check boxes for “Land Condition/Suitability to
Agriculture” and “Land Use” to indicate whether the subject properties were sugarland, comland,
unirrigated riceland, irrigated riceland, or any other classification of agricultural land leading to
the lifting of the notice of coverage over the subject landholding, without prejudice to the conduct
of an ocular inspection to determine the classification of the land, is totally uncalled for.
And second, petitioner has miserably failed to present any evidence that would support its
contention that the subject landholding has already been validly reclassified from “agricultural” to
“industrial” land. According to petitioner, the subject landholding has already been reclassified as
industrial land by the Sangguniang Bayan of the Municipality of Biñan, and that pursuant to such
reclassification, petitioner has been assessed, and is paying, realty taxes based on this new
classification.30
Indeed, the subject landholding had been reclassified under Kapasiyahan Blg. 03-(89)31 dated
January 7, 1989 of the Municipality of Biñan, Laguna. It is worth noting, however, that said
reclassification has not been approved by the Housing and Land Use Regulatory Board based on
its Certification32 dated October 16, 1997. As found by DAR Sec. Braganza in the June 8, 2001
Order:
_______________
29 Id., at pp. 272-273.
30 Id., at p. 6.
31 Id., at p. 57.
32 Id., at p. 62.
445
VOL. 806, OCTOBER 19, 2016 445

The principal issue to be resolved is whether or not subject landholdings are subject to CARP
coverage.
We find no merit in the instant petition. Subject landholdings are still agricultural land and,
accordingly, fall within the CARP coverage. Department of Justice Opinion No. 44, Series of 1990,
is not applicable. As certified to by Ms. Carolina Casaje of HLURB on October 16, 1997, there is
no HLURB-approved Town Plan/Zoning Ordinance of the municipality of Biñan, Laguna,
reclassifying subject landholdings as industrial. The tax declaration presented by petitioner
pg. 384
indicating that subject landholdings is a proposed industrial area is not sufficient in law to effect
the reclassification insisted upon by petitioner. As exhaustively discussed in the above mentioned
DOJ Opinion, there should be a zoning ordinance and that the same must be approved before the
effectivity of RA 6657, i.e., July 15, 1988. Neither requirement obtains herein.
WHEREFORE, premises considered, Order is hereby issued dismissing the petition. The
MARO/PARO concerned is directed to immediately proceed with the acquisition of subject
landholdings under CARP, identify the farmer-beneficiaries and generate/issue the corresponding
Certificates of Land Ownership Awards pursuant to Section 16 of RA 6657.
SO ORDERED.33 (emphasis in the original)
Neither was there any showing that said reclassification has been authorized by the DAR as
required under Section 6534 of Republic Act No. 6657 of the Comprehensive Agrarian Reform
Law.35
_______________
33 Id., at pp. 71-72.
34 Sec. 65. Conversion of Land.—After the lapse of five (5) years from its award, when the
land ceases to be economically feasible and sound for agricultural purposes, or the locality has
become urbanized and the land will have greater economic value for residential, commercial or
industrial purposes, the DAR, upon application of the beneficiary or the landowner, with due notice
to the affected
446

Aside from the reclassification by the Sangguniang Bayan of the Municipality of Biñan, petitioner
also relies on the tax declaration purportedly reclassifying the subject landholding as industrial.
However, as petitioner itself admitted, what was indicated in said tax declaration was merely
“proposed industrial.”36 Evidently a “proposal” is quite different from “reclassification.” Thus,
petitioner cannot also rely on said tax declaration to bolster its contention that the subject
landholding has already been reclassified from “agricultural” to “industrial.”
pg. 385
WHEREFORE, respondent’s Motion for Reconsideration and the Supplement to Respondent’s
Motion for Reconsideration are GRANTED and the February 1, 2012 Decision of this Court is
RECONSIDERED and SET ASIDE.
The instant petition is hereby DENIED. The Decision dated February 1, 2005 and the Resolution
dated April 25, 2005 of the Court of Appeals in C.A.-G.R. S.P. No. 86069 are REINSTATED
and AFFIRMED and, consequently, the Orders dated June 8, 2001 and November 5, 2001 of the
Department of Agrarian Reform Secretary are REINSTATED.
SO ORDERED.
Mendoza, Reyes and Perlas-Bernabe, JJ., concur.
Peralta, J., See Dissenting Opinion.
_______________
parties, and subject to existing laws, may authorize the reclassification or conversion of the land
and its disposition: Provided, That the beneficiary shall have fully paid his obligation.
35 See Junio v. Garilao, G.R. No. 147146, July 29, 2005, 465 SCRA 173, 186.
36 Rollo, p. 64.
447
VOL. 806, OCTOBER 19, 2016 447

DISSENTING OPINION
PERALTA, J.:
Before this Court is a Motion for Reconsideration1 and Supplement to Respondent’s Motion for
Reconsideration2 filed by respondents of the Decision dated February 1, 2012, which reversed and
set aside the Decision dated February 17, 2005 of the Court of Appeals (CA) in C.A.-G.R. S.P. No.
86069, and reinstated the Order dated August 8, 2003 of the Office of the President in O.P. Case
No. 01-K-184.
pg. 386
Respondent seeks reconsideration of the Decision buttressed on the grounds that: (1) the Court
erred in ruling that the Order of the Department of Agrarian Reform (DAR), dated June 8, 2001,
has not become final and executory; and (2) the Court erred when it ruled that the Municipal
Agrarian Reform Officer (MARO) failed to comply with the Pre-Ocular inspection requirements
of DAR Administrative Order No. 01, Series of 1998.3
With due respect to my colleagues, the Motion for Reconsideration and the Supplement to
Respondent’s Motion for Reconsideration have no merit and should be denied.
At the outset, it must be stressed that the assailed Decision did not determine whether or not the
subject property could be placed under the coverage of the Comprehensive Agrarian Reform
Program (CARP). It does not resolve the parties’ respective contentions that the subject
landholdings are either industrial or agricultural. Rather, the Court found that the administrative
process in the acquisition proceedings has not yet run its regular course and that due process was
not accorded to petitioner.
_______________
1 Rollo, pp. 487-507.
2 Id., at pp. 509-545.
3 Id., at p. 488.
448

As clearly discussed in the assailed Decision of the Court, an examination of the pertinent
pleadings and documents reveal that, indeed, petitioner was not properly served with a copy of the
Order dated June 8, 2001.
The DAR Secretary confirmed this fact in his Order denying petitioner’s motion for
reconsideration, dated November 5, 2001, when he categorically stated that petitioner was not
furnished a copy of the June 8, 2001 Order, the pertinent part of which reads:
This Office notes of the Certification of B. De Paz, Officer-in-Charge of this Department’s

Records Management Division stating that petitioner-movant’s counsel was not served a copy of
the disputed 8 June 2001 Order due to change in address. In any case, this matter has been
addressed with the service of said Order upon petitioner-movant’s counsel at his new address.4
pg. 387
From the foregoing, it was clearly admitted that petitioner was not properly served a copy of the
disputed Order and this oversight by the DAR was rectified by subsequently serving a copy of the
Order upon petitioner’s counsel at his new address. This belated service to petitioner’s counsel
was coursed through a Letter5 dated September 4, 2001, from Director Delfin B. Samson of the
DAR informing him that the case has already been decided and an order of finality issued. Worthy
of note is the statement, “[a]ttached, for reference, are copies thereof being transmitted at your new
given address,” which, taken together with the statements made by the DAR Secretary in his
November 5, 2001 Order, was a manifest indication that petitioner was being served a copy of the
June 8, 2001 Order for the first time.
Thus, contrary to the conclusion of the CA, the June 8, 2001 Order of the DAR Secretary has not
attained finality.
_______________
4 CA Rollo, pp. 54-55. (Emphasis ours)
5 Rollo, p. 86.
449
VOL. 806, OCTOBER 19, 2016 449

The Office of the President, therefore, validly entertained petitioner’s appeal when the DAR
Secretary denied its motion for reconsideration.
Consequently, the determination of whether or not petitioner’s landholdings are agricultural land
is still pending resolution. As correctly found by the Office of the President in its August 8, 2003
Decision, before the DAR could place a piece of land under CARP coverage, there must first be a
showing that it is agricultural land, i.e., devoted or suitable for agricultural purposes. An essential
part in determining its classification is the procedure outlined in DAR Administrative Order No.
01, Series of 2003, or the 2003 Rules Governing Issuance of Notice of Coverage and Acquisition
of Agricultural Lands Under RA 6657.6 In the case at bar, it should be stressed that no proper
preliminary ocular inspection was conducted as required by the Administrative Order. The
importance of which cannot be understated, since it is one of the steps designed to comply with
the requirements of administrative due process. As correctly discussed by the Office of the
President in its Decision, viz.:
pg. 388
In other words, before the MARO sends a Notice of Coverage to the landowner concerned, he
must first conduct a preliminary ocular inspection to determine whether or not the property may
be covered under CARP. The foregoing undertaking is reiterated in the latest DAR AO No. 01, S.
of 2003, entitled “2003 Rules Governing Issuance of Notice of Coverage and Acquisition of
Agricultural Lands Under RA 6657.” Section 1[1.1] thereof provides that:
“1.1 Commencement by the Municipal Agrarian Reform Officer (MARO) — After

determining that a landholding is coverable under the CARP, and upon accomplishment of
the Pre-Ocular Inspection Report, the
_______________
6 Comprehensive Agrarian Reform Law of 1988.
450

MARO shall prepare the NOC (CARP Form No. 5-1).” (NOC stands for Notice of
Coverage)
Found on the records of this case is a ready-made form Preliminary Ocular Inspection Report
(undated) signed by the concerned MARO. Interestingly, however, the check box allotted for the
all-important items “Land Condition/Suitability to Agriculture” and “Land Use” was not filled up.
There is no separate report on the record detailing the result of the ocular inspection conducted.
These circumstances cast serious doubts on whether the MARO actually conducted an on-site
ocular inspection of the subject land. Without an ocular inspection, there is no factual basis for the
MARO to declare that the subject land is devoted to or suitable for agricultural purposes, more so,
issue Notice of Coverage and Notice of Acquisition.
The importance of conducting an ocular inspection cannot be understated. In the event that a piece
of land sought to be placed from CARP coverage is later found unsuitable for agricultural purposes,
the landowner concerned is entitled to, and the DAR is duty bound to issue, a certificate of
exemption pursuant to DAR Memorandum Circular No. 34, S. of 1997, entitled “Issuance of
Certificate of Exemption for Lands Subject of Voluntary Offer to Sell (VOS) and Compulsory
Acquisition (CA) Found Unsuitable for Agricultural Purposes.”
More importantly, the need to conduct ocular inspection to determine initially whether or not the
property may be covered under the CARP is one of the steps designed to comply with the
requirements of administrative due process. The CARP was not intended to take away property
without due process of law. (Development Bank of the Philippines v. Court of Appeals, 262 SCRA
pg. 389
245 [1996]) The exercise of the power of eminent domain requires that due process be observed
in the taking of private property. In Roxas & Co., Inc. v. Court of Appeals, 321 SCRA 106 [1999],
the Supreme Court nullified the CARP acquisition proceedings because of the DAR’s failure to
comply with administrative due process of sending Notice of Coverage and Notice of Acquisition
of the landowner concerned.
451
VOL. 806, OCTOBER 19, 2016 451

Considering the claim of appellant that the subject land is not agricultural because it is unoccupied
and uncultivated, and no agricultural activity is being undertaken thereon, there is a need for the
DAR to ascertain whether or not the same may be placed under CARP coverage.7
To recapitulate, before a piece of land could be placed under the coverage of the CARP, there must
first be a showing that the land is an agricultural land or one devoted or suitable for agricultural
purposes. In the instant case, there is no final determination yet whether the subject property may
be placed under the coverage of the CARP. Verily, the procedural requirements that would validate
the taking of land for the purposes of the CARP were not complied with. To be sure, such steps
and procedures are part of due process. No less than the Bill of Rights provides that “[n]o person
shall be deprived of life, liberty or property without due process of law.”
As an exercise of police power, the expropriation of private property under Republic Act No. 6657
puts the landowner, not the government, in a situation where the odds are practically against him.8
Nevertheless, the Comprehensive Agrarian Reform Law was not intended to take away property
without due process of law.9 The exercise of the power of eminent domain requires that due
process be observed in the taking of private property.10 Thus, the directive of the Office of the
President for the Department of Agrarian Reform to ascertain whether or not petitioner’s
landholdings may be placed under the CARP was just and proper. In fine, the taking of properties
for agrarian reform purposes should not be at the undue
_______________
7 Rollo, pp. 120-121.
8 Land Bank of the Philippines v. Orilla, 578 Phil. 663, 673; 556 SCRA 102, 114 (2008).
9 Development Bank of the Philippines v. Court of Appeals, 330 Phil. 801, 809; 253 SCRA 414,
419 (1996).
pg. 390
10 Roxas & Co., Inc. v. Court of Appeals, 378 Phil. 727, 763; 321 SCRA 106, 134 (1999).
452

expense of landowners who are also entitled to protection under the Constitution and agrarian
reform laws.11
Ultimately, the arguments raised by the respondent in the Motion for Reconsideration and
Supplement to Respondent’s Motion for Reconsideration were substantially answered and passed
upon in the assailed Decision and should, therefore, be DENIED.
Respondent’s Motion for Reconsideration and the Supplement to Respondent’s Motion for
Reconsideration granted and the February 1, 2012 judgment reconsidered and set aside.
Notes.—While the provisions of the Rules of Court apply to Special Agrarian Court proceedings,
it is clear that, unlike in expropriation proceedings under the Rules of Court, the appointment of a
commissioner or commissioners is discretionary on the part of the court or upon the instance of
one of the parties. (Land Bank of the Philippines vs. Gonzalez, 698 SCRA 400 [2013])
While it is settled that negligence of counsel binds the client, this rule is not without exception.
(People vs. Espinosa, 721 SCRA 53 [2014])
——o0o——
pg. 391
G.R. No. 217210. November 7, 2016.*
REPUBLIC OF THE PHILIPPINES, petitioner, vs. CAPITAL RESOURCES

CORPORATION, ROMEO ROXAS, and the REGISTER OF DEEDS OF THE
PROVINCE OF LA UNION, respondents.
Remedial Law; Civil Procedure; Issues not timely raised in the proceedings before the lower court
are barred by estoppel.—It has been a long-standing principle that issues not timely raised in the
proceedings before the lower court are barred by estoppel. As a rule, new issues can no longer be
considered by the appellate court because a party is not permitted to change his theory on appeal;
to allow him to do so would be offensive to the rules of fair play, justice and due process.
Same; Same; Basic is the rule that it is the allegations of the complaint and not the prayer that
determines the basis of the plaintiff’s relief.—Basic is the rule that it is the allegations of the
complaint and not the prayer that determines the basis of the plaintiffs relief. In the same vein, the
prayer will not be construed as enlarging the complaint so as to embrace a cause of action not
pleaded therein.
PETITION for review on certiorari of a decision of the Court of Appeals, Fourteenth Division.
The Solicitor General for petitioner.
The Law Firm of Tenefrancia & Associates for respondents.
CAGUIOA, J.:
This is an Appeal by Certiorari1 under Rule 45 of the Rules of Court (Petition) filed by petitioner
Republic of the Philippines (Republic) against the respondents herein, questioning the Decision
dated February 26, 20152 of the Court of Appeals-Fourteenth Division (CA) in C.A.-
_______________
* FIRST DIVISION.
1 Rollo, pp. 10-23.
pg. 392
2 Id., at pp. 25-40. Penned by Associate Justice Ramon M. Bato, Jr., with Associate Justices
Manuel M. Barrios and Maria Elisa Sempio-Diy, concurring.
148

Republic vs. Capital Resources Corporation
G.R. CV No. 98040 (questioned Decision), which affirmed the Decision dated May 31, 2011
rendered by the Regional Trial Court of Bauang, La Union, Branch 33 (RTC) in Civil Case No.
1844-BG.
In this case, petitioner Republic, through the Office of the Solicitor General, is seeking the
reversion of a parcel of land situated at Barangay Pugo, Bauang, La Union (Subject Property),
which is covered by Transfer Certificate of Title (TCT) No. T-23343 and registered in the name
of respondents Capital Resources Corporation (CRC) and Romeo Roxas (collectively,
Respondents). The reversion of a portion of the Subject Property declared as foreshore lands has
already been ordered by the RTC, and affirmed by the CA. The instant Petition is directed merely
towards the remainder of the Subject Property.
The Facts
The antecedents of this case are undisputed. The Court adopts the summary of the CA in the
questioned Decision:
Vitaliano Dumuk submitted Homestead Survey Plan H-6811 covering a parcel of land situated at
La Union with an area of 15.8245 hectares [hereafter referred to as the subject property] which
was approved by the Bureau of Lands on May 10, 1924. A Homestead Patent was granted to
Dumuk on July 26, 1924 which resulted in the issuance of Original Certificate of Title [OCT] No.
137 on August 25, 1924. OCT No. 137 was cancelled and superseded by Transfer Certificate of
Title (TCT) No. T-6603 in the name of spouses Cecilio and Laura Milo. Capital Resources
Corporation and Romeo Roxas [Capital Resources and Roxas are hereafter jointly referred to as
defendants-appellants] acquired the subject property from spouses Milo resulting in the
cancellation of TCT No. T-6603 and the issuance of TCT No. T-23343 on December 16, 1982.
Defendants-appellants then caused the subdivision of the subject property on May 27, 1985 via
the subdivision plan Psd-1-009891 prepared by Geodetic Engineer Rosario Mercado [Engr.
Mercado] and it was subdivided into several blocks, among which are Block 35 (18,079 sq. m.)
pg. 393
and Block 36 (16,856 sq. m.). The plan indicated that Block 35 is a “salvage zone” while a portion
of Block 36 appeared to overlap a portion of the China Sea. On July 15, 1988, subdivision
149
VOL. 807, NOVEMBER 7, 2016 149

plan Psd-1-009891 was approved but was subsequently cancelled pursuant to an Order of
Cancellation issued by DENR Regional Technical Director Josefino Daquioag on January 25,
2005.
It appears that sometime in 1987, the town of Bauang, La Union was cadastrally surveyed and
based on the Cadastral Survey Map, Block 35 (identified therein as Lot No. 400480) and Block 36
(identified therein as Lot No. 400475) were projected therein as part of the identified foreshore
land and seabed, respectively.
On March 13, 2003, Alberto Hidalgo [“Hidalgo”] filed a Foreshore Lease Application (FLA) No.
012209-02 over a parcel of land with an area of 0.9971 hectares located at Barangay Pugo, Bauang,
La Union. Defendants-appellants filed a formal protest, docketed as Claim Case No. 01-LU-046,
on the ground that the parcel of land being applied for encroaches upon a portion of the subject
property. In turn, Hidalgo filed a counter Protest assailing the validity of TCT No. T-23343 on the
ground that: (1) it covers foreshore land, salvage zone, and portions of the South China Sea; and
(2) his right to the foreshore land is prejudiced by the existence of this fraudulent title. The protest
and counter-protest were later consolidated under the same docket number and were assigned to
Land Management Officer Orlando “Mahar” Santos [Mahar Santos] for investigation.
Thereafter, a Panel of Investigators was organized by the DENR which recommended to the Office
of the Regional Executive Director to direct the OPLAN: Anti-Fake Title Investigation Unit to
determine the validity of TCT No. T-23343. Thus, a Regional Fact-Finding Committee [hereafter
referred to as the Committee] was established. The Committee sought the help of Engr. Santiago
Santiago [Engr. Santiago], Chief of the Field Network and Survey Party (FNSP) of the DENR,
who previously conducted a relocation survey of the subject property in the forcible entry case
involving defendants-appellants and Hidalgo filed before the RTC [Branch 67; Bauang, La Union;
Civil Case No. 1617-BG]. After receiving a copy of Engr. Santiago’s relocation survey report, the
Committee conducted an ocular inspection on February 26, 2007 and found that Blocks 35 and 36
are within the existing foreshore area.
In its Terminal Report, the Committee concluded that the submission by defendants-appellants of
subdivision plan Psd-1-009891 is tantamount to an admission that the northwestern portion of the
subject property was eaten up and eroded due to the adverse effects of sea waters. It also concluded
that the Order dated January
pg. 394
150

25, 2005 cancelling subdivision plan Psd-1-009891 is not valid since it was neither accompanied
by a standard investigation report nor by any evidence of payment. Further, it pointed out that
Capital Resources may not validly acquire the subject property pursuant to Section 119 of Act No.
2874 and the 1973 Constitution. Thus, the Committee recommended that an order be issued
revoking the Order of Cancellation dated January 25, 2005 and declaring Homestead Patent H-
6811 null and void. It also recommended the filing of appropriate reversion proceedings to effect
the cancellation of OCT No. 137 superseded by TCT No. T-6603 and TCT No. T-23343.
Accordingly, on July 27, 2007, DENR-Regional Executive Director Victor Ancheta rendered a
Decision recommending that an action be instituted for the cancellation of TCT No. T-23343 and
for the reversion of Blocks 35 and 36 to the State. Later on, a Joint Resolution was issued by
DENR-Regional Executive Director Ancheta denying Hidalgo’s foreshore lease application.
Consequently, the Republic of the Philippines, through the Office of the Solicitor General (OSG),
filed a Complaint for Cancellation of Title and Reversion against defendants-appellants and the
Register of Deeds of La Union before the Regional Trial Court [Bauang, La Union; Branch 33],
docketed as Civil Case No. 1844-BG. The Republic alleged that from the time that Homestead
Survey Plan H-6811 was approved in 1924 until the cadastral survey in 1987, the northwestern
portion of the subject property had been washed out and eaten up by the sea waters. Per the ocular
inspection, Blocks 35 to 36 formed part of the public domain. This fact is clearly supported by
subdivision plan Psd-1-009891 submitted by defendants-appellants wherein the area already
consumed by the sea has already been demarcated or isolated. Thus, the Republic prayed for
judgment: (a) declaring TCT No. T-23343 and its derivative titles as null and void; (b) ordering
defendants-appellants to surrender the owner’s duplicate of TCT No. T-23343 for cancellation; (c)
ordering the defendants, their heirs, agents, assigns or anyone acting in their behalf to cease and
desist from exercising acts of ownership over the subject property and to vacate the same, if they
are in possession thereof; and (d) ordering the reversion of the subject land to the public domain.
Defendants-appellants filed their Answer wherein they denied the allegations in the Complaint and
averred that they, as well as their predecessors-in-interest, had purchased the subject property
151
pg. 395
VOL. 807, NOVEMBER 7, 2016 151
for valuable consideration and in good faith. They insisted that the cadastral survey map did not
indicate that Blocks 35 and 36 had become foreshore land and formed part of the seabed. They
had not been washed out and eaten up by the sea though, for a brief period, they have been
inundated because of strong precipitation and typhoons. Contrary to what was projected in the
cadastral survey map, Blocks 35 and 36 are suitable for agricultural, residential, industrial and
commercial purposes and are not alternatively covered and uncovered by the movement of the
tide. Further, defendants-appellants posited that the action should be dismissed because it was not
filed at the behest of the Director of Lands and that there was a violation of the equal protection of
laws since there were other areas adjacent to the sea which were not subjected to reversion
proceedings.3
Ruling of the RTC
On May 31, 2011, after trial on the merits, the RTC rendered its Decision of even date, ordering
the cancellation of TCT No. T-23343 and the reversion of Blocks 35 and 36 to the public domain,
as follows:
WHEREFORE, in view of the foregoing considerations, the Court renders judgment in FAVOR
of [petitioner Republic] and AGAINST [Respondents]:
(1) DECLARING Blocks 35 and 36 embraced in TCT No. T-23343 (Exhibit ‘A’) in the
name of Capital Resources Corporation represented by its President Francisco Joaquin, Jr.
and Romeo Roxas as FORESHORE LANDS;
(2) ORDERING the Register of Deeds of the Province of La Union to cancel only the
portions pertaining to Blocks 35 and 36 embraced in said title which are hereby
declared null and void, and for this purpose, the private defendants are directed to surrender
the owner’s duplicate copy of TCT No. T-23343 to the Register of Deeds for cancellation;
(3) ORDERING the private defendants, their heirs, agents, assigns or anyone acting on their
behalf to cease and de-
_______________
3 Id., at pp. 26-29.
pg. 396
152

sist from exercising acts of ownership over Blocks 35 and 36 thereof; and
(4) ORDERING Blocks 35 and 36 of the Subdivision Plan Psd-1-009891 reverted to the
public domain.
SO ORDERED.4 (Emphasis supplied)
On June 30, 2011, petitioner Republic filed a Motion for Partial Reconsideration,5 raising the
following issues, inter alia: (i) that there were inconsistencies between TCT No. T-23343 and Psd-
1-009891 pertaining to the land area of the Subject Property; and (ii) that respondent CRC, being
a corporation, is ineligible to acquire the Subject Property under Act No. 2874, otherwise known
as the “Public Land Act.”6
Notably, the said issues were not included in the Complaint dated May 30, 20087 (Complaint)
filed by petitioner Republic as well as in the Pre-Trial Order dated January 19, 2009 issued by the
RTC. Hence, in its Order dated March 11, 2009,8 the RTC summed up the main issues as follows:
(i) whether or not Blocks 35 and 36 of the Subject Property as reflected in subdivision plan Psd-
1-009891 are foreshore lands; and (ii) whether or not Blocks 35 and 36 are salvaged zones and
should therefore be reverted to the public domain in accordance with law.9
Subsequently, in an Order dated October 17, 2011, the RTC modified its Decision dated May 31,
2011 to the extent that Respondents were further directed to surrender the owner’s duplicate copy
of TCT No.
T-23343 to the Register of Deeds for cancellation.10
Both parties appealed to the CA.11
On appeal, petitioner Republic sought the reversion of the remaining portion of the Subject
Property, again invoking the same issues raised in
_______________
4 Id., at p. 26.
5 Id., at p. 29.
6 Id., at p. 50.
7 Id., at pp. 56-68.
pg. 397
8 Id., at pp. 69-70.
9 Id., at p. 69.
10 Id., at pp. 29-30.
11 Id., at p. 30.
153
VOL. 807, NOVEMBER 7, 2016 153

its Motion for Partial Reconsideration dated June 30, 2011.12 Meanwhile, in their appeal, the
Respondents mainly disputed the findings of the RTC insofar as it ruled that Blocks 35 and 36
were foreshore lands and therefore appropriate subjects of an action for reversion.13
Ruling of the CA
On February 26, 2015, the CA rendered the questioned Decision, affirming the Decision of the
RTC dated May 31, 2011. In addition, the CA ordered the conduct of a resurvey of the Subject
Property to determine the actual area encompassed by the technical descriptions in TCT No. T-
23343 in order to effectively segregate Blocks 35 and 36 therefrom. The Register of Deeds of the
Province of La Union was likewise directed to cancel TCT No. T-23343 and thereafter issue a new
title reflecting the technical descriptions of the resurvey plan upon approval. The dispositive
portion of the questioned Decision stated:
WHEREFORE, the Decision dated May 31, 2011 of the Regional Trial Court of Bauang, La
Union, Branch 33 in Civil Case No. 1844-BG, is hereby AFFIRMED. However, prior to the
cancellation of TCT No. T-23343, the defendants-appellants Capital Resources Corporation
and Romeo Roxas are hereby ordered to cause the resurvey of the subject property
registered under TCT No. T-23343 to determine the actual area encompassed by the technical
descriptions on TCT No. T-23343 and to effectively segregate Blocks 35 and 36 therefrom. The
costs of the resurvey shall be shouldered by the defendants-appellants and the corresponding
resurvey plan shall be subject to the approval of the Land Management Bureau. Thereafter, the
Register of Deeds of the Province of La Union is hereby ordered to cancel TCT No. T-23343
and to issue a new title reflecting the technical descriptions appearing in the approved
resurvey plan.
pg. 398
SO ORDERED.14 (Emphasis supplied)
_______________
12 Id.
13 Id.
14 Id., at pp. 39-40.
154

Without moving for reconsideration, petitioner Republic filed the instant Petition. Parenthetically,
on April 6, 2015, Respondents filed a Motion for Reconsideration of the questioned Decision,15
which was eventually denied by the CA in a Resolution dated January 15, 2016.16
In its Petition, petitioner Republic harps on the same grounds alleged in its Motion for Partial
Reconsideration dated June 30, 2011, to wit: (i) that there were inconsistencies between TCT No.
T-23343 and Psd-1-009891 pertaining to the land area of the Subject Property; and (ii) that
respondent CRC, being a corporation, is ineligible to acquire the Subject Property under the Public
Land Act.17
Meanwhile, in their Comment dated October 7, 2015 (Comment),18 Respondents pointedly argue
that the issues raised in the Petition were not alleged in the Complaint and therefore can no longer
be considered on appeal. Particularly, Respondents claim that petitioner Republic raised the said
issues for the first time only in its Motion for Partial Reconsideration dated June 30, 2011 and
without amending the Complaint.19 Respondents further posit that the mere existence of the
alleged discrepancies in various public documents was not a ground to cancel TCT No. T-23343.20
Finally, anent the issue of ineligibility, Respondents argue that there was no violation of the Public
Land Act and that the CA correctly resolved such issue despite being belatedly raised by petitioner
Republic.21
On May 12, 2016, petitioner Republic filed its Reply dated April 19, 2016.22
_______________
15 Id., at p. 46.
16 Id., at pp. 78-79.
pg. 399
17 Id., at p. 14.
18 Id., at pp. 46-55.
19 Id., at p. 50.
20 Id., at p. 52.
21 Id., at pp. 52-53.
22 Id., at pp. 94-100.
155
VOL. 807, NOVEMBER 7, 2016 155

Issue
Stripped of verbiage, the core issues before the Court may be summed up as follows: (i) whether
or not the Court may consider the issues raised by petitioner Republic, and (ii) whether or not the
remaining portion of the Subject Property may be reverted to the public domain.
The Petition is unmeritorious.
It has been a long-standing principle that issues not timely raised in the proceedings before the
lower court are barred by estoppel.23 As a rule, new issues can no longer be considered by the
appellate court because a party is not permitted to change his theory on appeal; to allow him to do
so would be offensive to the rules of fair play, justice and due process.24
In this case, petitioner Republic does not dispute the fact that it failed to raise the contested issues
in its Complaint25 and pretrial brief. Instead, petitioner Republic argues that such issues are
“within the bounds x x x of the initial issues,” being “germane to the sole purpose of cancelling
[TCT No. T-23343] in its entirety.”26
pg. 400
Petitioner Republic’s contention is not well-taken.
A judicious review of the records reveals that while petitioner Republic’s Complaint prayed for
the reversion of the entire Subject Property, the allegations are predicated merely on their assertion
that Blocks 35 and 36 have become foreshore lands. In this regard, basic is the rule that it is the
allegations of the complaint and not the prayer that deter-
_______________
23 Lazaro v. Court of Appeals, 423 Phil. 554, 558; 372 SCRA 308, 311 (2001); see Espadera v.
Court of Appeals, 247-A Phil. 445, 448; 165 SCRA 364, 367 (1988).
24 Balitaosan v. Secretary of Education, Culture and Sports, 457 Phil. 300, 304; 410 SCRA 233,
235-236 (2003).
25 Rollo, pp. 56-68.
26 Id., at p. 94.
156

mines the basis of the plaintiffs relief.27 In the same vein, the prayer will not be construed as
enlarging the complaint so as to embrace a cause of action not pleaded therein.28 As stated in the
Complaint:
10. Based on the above findings, DENR Regional Executive Director Victor J. Ancheta, CESO
IV, rendered a Decision dated July 27, 2007, recommending that an action be instituted for the
cancellation of TCT No. T-23343 and for the reversion to the State of Blocks 35 and 36, the
portion of the subject land found to be within the foreshore area.
xxxx
14. From the time Homestead Survey Plan H-6811 was approved until the cadastral survey in
1987, the northwestern portion of the subject land had been washed out and eaten up by sea waters,
resulting to erosion. The ocular inspection revealed that the status of the washed out portion has
pg. 401
not changed. Thus, Blocks 35 and 36 of TCT No. T-23343 form part of the public domain.29
(Emphasis supplied)
Correspondingly, the Pre-Trial Order dated January 19, 2009 reflected only the following issues:
1. Whether or not the land covered by TCT No. 23343 more specifically blocks 35 and 36 of the
subdivision plan H-6811 [Psb(sic)-1-009891] are foreshore and therefore, should be reverted to
the public domain in accordance with law;
2. Whether or not the land covered by TCT No. 23343 more particularly blocks 35 and 36 of
the same subdivision plan are salvaged zones and therefore, should be reverted to the public
domain in accordance with law.30 (Emphasis supplied)
_______________
27 Asian Transmission Corporation v. Canlubang Sugar Estates, 457 Phil. 260, 285; 410 SCRA
202, 220 (2003); see Schenker v. Gemperle, 116 Phil. 194, 199; 5 SCRA 1042, 1046 (1962).
28 Id.
29 Rollo, pp. 61-63.
30 Id., at p. 69.
157
VOL. 807, NOVEMBER 7, 2016 157

Thus, after trial, in its Decision dated May 31, 2011, the RTC declared Blocks 35 and 36 as
foreshore lands and ordered the cancellation of the portions pertaining to Blocks 35 and 36
only and not of the entire Subject Property.31 In the same manner, the CA, in the questioned
Decision, affirmed the RTC’s Decision dated May 31, 2011 and likewise ordered the issuance of
a new title without Blocks 35 and 36 in favor of Respondents after conducting a resurvey of the
technical descriptions in TCT No. T-23343.32
As correctly underscored by the Respondents, when petitioner Republic filed its Motion for Partial
Reconsideration on June 30, 2011,33 it was only then that it tendered issues pertinent to the
reversion of the entire Subject Property, suddenly shifting the focus on alleged inconsistencies
between TCT No. T-23343 and Psd-1-009891 and respondent CRC’s purported ineligibility to
pg. 402
acquire the Subject Property.34 This, petitioner Republic cannot do without violating the basic
rules of fair play and due process as Respondents did not have the opportunity to counteract the
new issues.35
As already mentioned above, the allegations of the Complaint were limited to the claim that Blocks
35 and 36 were foreshore lands and/or salvaged zones. Nowhere in the Complaint did petitioner
Republic make mention of inconsistencies in TCT No. T-23343 or the ineligibility of respondent
CRC. On the basis thereof, only evidence tending to prove whether or not the said portion of the
Subject Property had indeed been consumed by the sea water was presented during trial.36
Perforce, Respondents were effectively deprived of the opportunity to meet the new allegations
and present countervailing evidence to support their defense. Thus, for its failure to timely raise
the contested issues, petitioner Republic can no longer rely on the same before this Court.
_______________
31 Id., at p. 26.
32 Id., at pp. 39-40.
33 Id., at p. 29.
34 Id., at p. 50.
35 See Marine Culture, Inc. v. Court of Appeals, G.R. No. 102417, February 19, 1993, 219 SCRA
148, 152.
36 Rollo, p. 34.
158

In sum, while the Complaint prayed for the reversion of the entire Subject Property,37 the
allegations contained therein pertained only to Blocks 35 and 36. Hence, considering that the body
of the Complaint merely supported the reversion of Blocks 35 and 36, it is of no moment that there
was a general prayer for the reversion of the entire Subject Property. Any relief granted beyond
the allegations of the Complaint would be baseless and would amount to grave abuse of
discretion.38
pg. 403
Accordingly, contrary to the asseverations of petitioner Republic in its Reply dated April 19,
2016,39 the issues raised in its Motion for Partial Reconsideration dated June 30, 2011 cannot be
considered as “within the bounds of the original issues.”40
Moreover, considering the non-inclusion of the contested issues in the Pre-Trial Order dated
January 19, 2009, such delimitation made by the RTC had effectively barred the consideration of
the said issues, whether during the trial or on appeal.41 In fact, as adverted to by the Respondents
in their Comment, petitioner Republic likewise failed to proffer such issues in its pretrial brief.42
In Villanueva v. Court of Appeals, where the petitioners failed to have the issue of prescription and
laches included in the pretrial order despite having raised it in their Answer, this Court held that
such issues could no longer be considered on appeal, the parties being bound by the stipulations
made during pretrial:
Petitioners argue that in past instances we have reviewed matters raised for the first time during
appeal. True, but we have done so only by way of exception involving clearly meritorious
situations. This case does not fall under any of those exceptions. The fact that the case proceeded
to trial, with the petitioners actively participating without raising the necessary objection, all
the more requires that they be bound by the stipulations they
_______________
37 Id., at p. 64.
38 See Bucal v. Bucal, G.R. No. 206957, June 17, 2015, 759 SCRA 262.
39 Rollo, pp. 94-100.
40 Id., at p. 94.
41 See Villanueva v. Court of Appeals, 471 Phil. 394, 406; 427 SCRA 439, 447 (2004).
42 Rollo, p. 50.
159
VOL. 807, NOVEMBER 7, 2016 159

made at the pretrial. Petitioners were well aware that they raised the defense of prescription
and laches since they included it in their answer. However, for reasons of their own, they did
not include this defense in the pretrial.
pg. 404
x x x Parties are not allowed to flip-flop. Courts have neither the time nor the resources to
accommodate parties who choose to go to trial haphazardly. Moreover, it would be grossly unfair
to allow petitioners the luxury of changing their mind to the detriment of private respondents
at this late stage. To put it simply, since petitioners did not raise the defense of prescription
and laches during the trial, they cannot now raise this defense for the first time on appeal.43
(Emphasis supplied)
Thus, following Villanueva, it would be highly inequitable for this Court to consider the contested
issues raised by petitioner Republic as it had effectively waived such grounds when it failed to
have them included in the Pre-Trial Order and in its pretrial brief On this score alone and
proceeding from the foregoing discussion, the instant Petition may already be denied.
Be that as it may, in light of the Court’s policy of deciding cases on the merits rather than
technicalities,44 the Court now proceeds to resolve the substantive aspect of this case.
Petitioner Republic insists that the CA erred in ordering only the reversion of the portion of the
Subject Property pertaining to Blocks 35 and 36, on the ground that: (i) there are inconsistencies
in the land area of the Subject Property, specifically between TCT No. T-23343 and subdivision
plan Psd-1-009891, and (ii) respondent CRC is ineligible to be a “transferor (sic)” of a homestead
patent.45 In its questioned Decision, the CA, in response to the first issue, ordered a resurvey of
the Subject Property. Likewise, it rejected the second issue and sustained the RTC’s Decision dated
May 31, 2011.
The Court agrees with, and accordingly affirms the ruling of, the CA.
Anent the first issue, petitioner Republic makes much of the fact that the land area of the Subject
Property reflected in TCT No. T-23343 is 158,345 square meters, while in subdivision plan Psd-
1-009891, the land area is 165,582 square meters.46 However, aside from such observations,
petitioner Republic failed to allege any legal basis that would warrant the outright cancellation of
TCT No. T-23343 and correspondingly, the reversion of the entire Subject Property.
In fact, such discrepancies were already directly addressed by the CA when it ordered the conduct
of a resurvey of the Subject Property to determine the actual area encompassed by the technical
descriptions on TCT No. T-23343 for the purpose of segregating Blocks 35 and 36 therefrom.47
Clearly, petitioner Republic’s prayer for the cancellation of TCT No. T-23343 based on mere
discrepancies is unfounded. Hence, as correctly observed by Respondents, the cancellation of TCT
No. T-23343 on such grounds is neither supported by law nor by jurisprudence.
With respect to the second issue, petitioner Republic insists that respondent CRC is ineligible to
acquire the Subject Property under the Public Land Act, which was the law in force at the time
OCT No. 137 was issued.48 Further, petitioner Republic argues that the transfer of the Subject
Property to respondent CRC is violative of Section 11 of the 1973 Constitution, which prohibits
private corporations from holding alienable lands of the public domain except through a lease
agreement.49
pg. 405
Petitioner Republic is mistaken.
On this issue, we adopt the following disquisition of the CA in the questioned Decision:
Anent the eligibility of Capital Resources to acquire the subject property, it should be noted that
under Section 121 of CA 141 (which superseded Section 119 of Act No. 2874) a corporation may
acquire land granted under the free patent or homestead only if it was with the consent of the
grantee and the approval of the Secretary of Natural Resources and the land will be used solely for
commercial, industrial, educational, religious or charitable purposes or for a right of way.
Nevertheless, as clarified in the case of Villaflor v. Court of Appeals, Section 121 pertains to
acquisitions of public land by a corporation from a grantee. In this particular case, the
original grantee was Vitaliano Dumuk and he subsequently transferred the subject property
to spouses Cecilio and Laura Milo. In turn, the spouses were the ones who sold the subject
property to Capital Resources and Romeo Roxas. Evidently, Capital Resources did not
acquire the subject property from the original grantee. Even if We were to assume that Capital
Resources is ineligible to be a transferee, the fact remains that the subject property was purchased
by Capital Resources and Romeo Roxas and the latter is an individual who is not barred from
acquiring the subject property.
As to the provision of the 1973 Constitution proscribing corporations from acquiring

“alienable lands” of the public domain, the consistent ruling of the Supreme Court is that the
prohibition will not apply if the property acquired by the corporation is private property
and not alienable lands of the public domain. The rule is that once a patent is registered and the
corresponding certificate of title is issued, the land covered by it ceases to be part of the public
domain and becomes private property. In the present case, the subject property became private
property upon the issuance of OCT No. 137 to Vitaliano Dumuk on August 25, 1924.
Necessarily, when the defendants-appellants acquired the subject property in 1982, the same
was no longer a part of the alienable lands of the public domain but a private property. Hence
the prohibition will not apply.50 (Emphasis supplied)
All told, after careful review, this Court finds no cogent reason to disturb the CA’s findings — for
while petitioner Republic was able to show its entitlement to the reversion of Blocks 35 and 36 to
the public domain, it failed to do the same with respect to the remaining portion of the Subject
Property.
_______________
50 Id., at pp. 32-33.
162
pg. 406
WHEREFORE, premises considered, we DENY the Petition for lack of merit and hereby
AFFIRM the Decision dated February 26, 2015 of the Court of Appeals-Fourteenth Division in
C.A.-G.R. CV No. 98040.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Bersamin and Perlas-Bernabe, JJ., concur.
Note.—As a rule, a party who deliberately adopts a certain theory upon which the case is tried and
decided by the lower court, will not be permitted to change theory on appeal. Points of law,
theories, issues and arguments not brought to the attention of the lower court need not be, and
ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time
at such late stage. (Maxicare PCIB Cigna Healthcare vs. Contreras, 689 SCRA 763 [2013])
——o0o——
pg. 407
G.R. No. 223290. November 7, 2016.*
WOODROW B. CAMASO, petitioner, vs. TSM SHIPPING (PHILS.), INC., UTKILEN,

and/or JONES TULOD, respondents.
Remedial Law; Civil Procedure; Docket Fees; Section 3, Rule 46 of the Rules of Court provides
that in original actions filed before the Court of Appeals (CA), such as a petition for certiorari,
the payment of the corresponding docket fees is required, and that the failure to comply with the
same shall be sufficient ground for the dismissal of such action.—Section 3, Rule 46 of the Rules
of Court provides that in original actions filed before the CA, such as a petition for certiorari, the
payment of the corresponding docket fees is required, and that the failure to comply with the same
shall be sufficient ground for the dismissal of such action.
Same; Same; Same; While the court acquires jurisdiction over any case only upon the payment of
the prescribed docket fees, its nonpayment at the time of filing of the initiatory pleading does not
automatically cause its dismissal provided that: (a) the fees are paid within a reasonable period;
and (b) there was no
_______________
* FIRST DIVISION.
205
VOL. 807, NOVEMBER 7, 2016 205

Camaso vs. TSM Shipping (Phils.), Inc.
intention on the part of the claimant to defraud the government.—The failure to pay the required
docket fees per se should not necessarily lead to the dismissal of a case. It has long been settled
that while the court acquires jurisdiction over any case only upon the payment of the prescribed
docket fees, its nonpayment at the time of filing of the initiatory pleading does not automatically
cause its dismissal provided that: (a) the fees are paid within a reasonable period; and (b) there
was no intention on the part of the claimant to defraud the government.
Linsangan, Linsangan & Linsangan Law Offices for petitioner.
pg. 408
Del Rosario & Del Rosario Law Offices for respondents.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Resolutions dated August 12, 20152 and
March 4, 20163 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 141278-UDK which
dismissed petitioner Woodrow B. Camaso’s (Camaso) petition for certiorari before it for
nonpayment of the required docket fees.
The Facts
Camaso alleged that on July 15, 2014, he signed a contract of employment with respondents TSM
Shipping (Phils.), Inc., Utkilen, and Jones Tulod (respondents) to work as a Second Mate onboard
the vessel “M/V Golfstraum,” for a period of six (6) months and with basic monthly salary of
US$1,178.00.4 On October 18, 2014, he joined his vessel of
_______________
1 Rollo, pp. 10-19.
2 Id., at p. 24. Minute Resolution signed by Special Thirteenth Division Clerk of Court Abigail S.
Domingo-Laylo.
3 Id., at pp. 25-28. Penned by Associate Justice Normandie B. Pizarro, with Associate Justices
Agnes Reyes-Carpio and Ma. Luisa C. Quijano-Padilla, concurring.
4 Id., at p. 12.
206

pg. 409
assignment.5 Prior to said contract, Camaso claimed to have been working for respondents for
almost five (5) years and boarded eight (8) of their vessels.6
Sometime in November 2013, Camaso complained of a noticeable obstruction in his throat which
he described as akin to a “fishbone coupled [with] coughing.”7 By February 2014, his situation
worsened as he developed lymph nodules on his jawline, prompting him to request for a medical
checkup while in Amsterdam. As Camaso was initially diagnosed with tonsillar cancer, he was
recommended for medical repatriation to undergo extensive treatment. Upon repatriation to the
Philippines on September 8, 2014, he reported at respondents’ office and was referred to a certain
Dr. Nolasco of St. Luke’s Medical Center for testing. After a series of tests, it was confirmed that
Camaso was indeed suffering from tonsillar cancer.8 Consequently, he underwent eight (8)
chemotherapy sessions and radiation therapy for 35 cycles which were all paid for by respondents.
He likewise received sickwage allowances from the latter.9 Thereafter, respondents refused to
shoulder Camaso’s medical expenses, thus, forcing the latter to pay for his treatment. Believing
that his sickness was work-related and that respondents remained silent on their obligation,
Camaso filed the instant complaint for disability benefits, sickwage allowance, reimbursement of
medical and hospital expenses, and other consequential damages before the National Labor
Relations Commission (NLRC), docketed as NLRC Case No. OFW (M) 07-09270-14. After
efforts for an amicable settlement between the parties failed, they were ordered to file their
respective position papers.10
The LA’s and NLRC’s Rulings
In a Decision11 dated November 28, 2014, the Labor Arbiter (LA) ruled in Camaso’s favor and,
accordingly, ordered respondents to pay
_______________
5 Id., at p. 13.
6 Id.
7 Id.
8 Id.
9 Id., at p. 14.
10 Id.
pg. 410
207
VOL. 807, NOVEMBER 7, 2016 207

him his total and permanent disability benefits in the amount of US$60,000.00, plus ten percent
(10%) of the total money claims as attorney’s fees. However, the LA dismissed his other monetary
claims for lack of merit.12
On appeal, docketed as NLRC LAC No. (OFW-M) 01-000088-15,13 the NLRC promulgated a
Decision14 dated March 19, 2015 reversing the LA ruling and, consequently, dismissed Camaso’s
complaint for lack of merit. Camaso moved for its reconsideration, but was denied in a
Resolution15 dated April 28, 2015. Aggrieved, he filed a petition for certiorari before the CA.16
The CA’s Ruling
In a Resolution17 dated August 12, 2015, the CA dismissed Camaso’s petition “for nonpayment
of the required docketing fees as required under Section 3, Rule 46 of the Revised Rules of
Court.”18
Dissatisfied, Camaso filed a Motion for Reconsideration19 dated August 29, 2015, arguing, inter
alia, that a check representing the payment of the required docket fees was attached to a copy of
his petition filed before the CA. He further claimed that upon verification of his counsel’s
messenger, the Division Clerk of Court admitted that it was simply overlooked.20
In a Resolution21 dated March 4, 2016, the CA denied Camaso’s motion for lack of merit. Citing
the presumption of regularity of official duties, the CA gave credence to the explanation of Myrna
D. Almira, Officer-in-Charge of the CA Receiving Section, that there was no cash,
_______________
12 See Rollo, pp. 14-15.
13 Id., at p. 26.
15 Id.
pg. 411
16 See Rollo, p. 15.
17 Id., at p. 24.
18 Id.
19 Id., at pp. 29-33.
20 Id., at p. 29.
21 Id., at pp. 25-28.
208

postal money order, or check attached to Camaso’s petition when it was originally filed before the
CA. In any event, the CA held that assuming that a check was indeed attached to the petition, such
personal check, i.e., Metrobank check dated July 6, 2015 under the personal account of a certain
Pedro L. Linsangan, is not a mode of payment sanctioned by the 2009 Internal Rules of the Court
of Appeals (2009 IRCA), which allows only payment in cash, postal money order, certified,
manager’s or cashier’s checks payable to the CA.22
Hence, this petition.
The primordial issue for the Court’s resolution is whether or not the CA correctly dismissed
Camaso’s petition for certiorari before it for nonpayment of docket fees.
pg. 412
Section 3, Rule 46 of the Rules of Court provides that in original actions filed before the CA, such
as a petition for certiorari, the payment of the corresponding docket fees is required, and that the
failure to comply with the same shall be sufficient ground for the dismissal of such action, viz.:
Section 3. Contents and filing of petition, effect of noncompliance with requirements.—The

petition shall contain the full names and actual addresses of all the petitioners and respondents, a
concise statement of the matters involved, the factual background of the case, and the grounds
relied upon for the relief prayed for.
In actions filed under Rule 65, the petition shall further indicate the material dates showing when
notice of the judgment or final order or resolution subject thereof was received, when a motion for
new trial or reconsideration, if any, was filed and when notice of the denial thereof was received.
_______________
22 Id., at pp. 27-28.
209
VOL. 807, NOVEMBER 7, 2016 209

xxxx
The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court
and deposit the amount of P500.00 for costs at the time of the filing of the petition.
The failure of the petitioner to comply with any of the foregoing requirements shall be
sufficient ground for the dismissal of the petition. (Emphases and underscoring supplied)
In Bibiana Farms & Mills, Inc. v. NLRC,23 the Court nevertheless explained that while
nonpayment of docket fees may indeed render an original action dismissible, the rule on payment
of docket fees may be relaxed whenever the attending circumstances of the case so warrant:
Under the foregoing rule, noncompliance with any of the requirements shall be a sufficient ground
for the dismissal of the petition. Corollarily, the rule is that a court cannot acquire jurisdiction
over the subject matter of a case, unless the docket fees are paid. And where the filing of the
initiatory pleading is not accompanied by payment of the docket fees, the court may allow
pg. 413
payment of the fee within a reasonable time but in no case beyond the applicable prescriptive
or reglementary period.
In several cases, however, the Court entertained certain exceptions due to the peculiar
circumstances attendant in these cases, which warrant a relaxation of the rules on payment of
docket fees. It was held in La Salette College v. Pilotin [463 Phil. 785 (2003)], that the strict
application of the rule may be qualified by the following: first, failure to pay those fees within
the reglementary period allows only discretionary, not automatic, dismissal; second, such
power should be used by the court in conjunction with its exercise of sound discretion in
accordance with the tenets of justice and fair play, as well as with a great deal of
circumspection in consideration of all attendant circumstances.
Thus, in Villamor v. [CA] [478 Phil. 728 (2004)], the Court sustained the decision of the CA to
reinstate the private respondents’
_______________
23 536 Phil. 430; 505 SCRA 588 (2006).
210

appeal despite having paid the docket fees almost one year after the notice of appeal was filed,
finding that there is no showing that the private respondents deliberately refused to pay the
requisite fee within the reglementary period and abandon their appeal. The Court also found that
it was imperative for the CA to review the ruling of the trial court to avoid a miscarriage of justice.
Thus, the Court concluded, “Under the circumstances obtaining in the case at bar, we see no
cogent reason to reverse the resolutions of the respondent court. It is the policy of the court
to encourage hearing of appeals on their merits. To resort to technicalities which the
petitioner capitalizes on in the instant petition would only tend to frustrate rather than
promote substantial justice.”24 (Emphases and underscoring supplied)
Verily, the failure to pay the required docket fees per se should not necessarily lead to the dismissal
of a case. It has long been settled that while the court acquires jurisdiction over any case only upon
the payment of the prescribed docket fees, its nonpayment at the time of filing of the initiatory
pleading does not automatically cause its dismissal provided that: (a) the fees are paid within a
reasonable period; and (b) there was no intention on the part of the claimant to defraud the
government.25
pg. 414
Here, it appears that when Camaso filed his certiorari petition through his counsel and via mail, a
Metrobank check dated July 6, 2015 under the account name of Pedro L. Linsangan was attached
thereto to serve as payment of docket fees.26 Although this was not an authorized mode of
payment under Section 6, Rule VIII27 of the 2009 IRCA, the attachment of such personal check
shows that Camaso exerted earnest efforts to pay the required docket fees. Clearly, this exhibits
good faith and evinces his intention not to defraud the government. In this relation, the assertion
of the Officer-in-Charge of the CA Receiving Section that there was no check attached to
Camaso’s certiorari petition is clearly belied by the fact that when it was examined at the Office
of the Division Clerk of Court, the check was found to be still stapled thereto.28
In light of the foregoing circumstances, the Court deems it appropriate to relax the technical rules
of procedure in the interest of substantial justice and, hence, remands the instant case to the CA
for the resolution of its substantial merits.29 Upon remand, the CA is directed to order Camaso to
pay the required docket fees within a reasonable period of thirty (30) days from notice of such
order.
WHEREFORE, the petition is GRANTED. The Resolutions dated August 12, 2015 and March
4, 2016 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 141278-UDK are hereby SET ASIDE.
Accordingly, the instant case is REMANDED to the CA for further proceedings as discussed in
this Decision.
SO ORDERED.
Petition granted, resolutions set aside.
Note.—Late payment of docket fees may be admitted when the party showed willingness to abide
by the rules through immediate payment of the required fees. (Republic vs. Lazo, 737 SCRA 1
[2014])
——o0o——
pg. 415
Case Short Name: Ayson vs. Fil-Estate Properties, Inc.
G.R. No. 223254. December 1, 2016.*
ROSALIE SY AYSON, petitioner, vs. FIL-ESTATE PROPERTIES, INC., and

FAIRWAYS AND BLUEWATER RESORT AND COUNTRY CLUB, INC., respondent.
G.R. No. 223269. December 1, 2016.*
FIL-ESTATE PROPERTIES, INC., and FAIRWAYS & BLUEWATER RESORT &

COUNTRY CLUB, INC., petitioners, vs. ROSALIE SY AYSON, respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; The findings of Fil-
Estate and Fairways’ bad faith, as well as their liability for moral damages, exemplary damages,
and attorney’s fees, are all factual matters which are not within the ambit of the instant petition
for review on certiorari under Rule 45 of the Rules of Court.—Verily, the finding of Fil-Estate and
Fairways’ bad faith as well as their liability for moral damages, exemplary damages, and attorney’s
fees, are all factual matters which are not within the ambit of the instant petition for review on
certiorari under Rule 45 of the Rules of Court. In this regard, it has long been settled that factual
findings of the trial court, affirmed by the CA, are final and conclusive and may not be reviewed
on appeal, save for certain exceptions, which Fil-Estate and Fairways failed to show in this case
— at least regarding this issue.
PETITIONS for review on certiorari of the decision and resolution of the Court of Appeals.
Tanjuatco & Partners Law Office for petitioner in G.R. No. 223254 and respondent in G.R. No.
223269.
Poblador, Bautista & Reyes for respondents in G.R. No. 223254 and petitioners in G.R. No.
223269.
_______________
* FIRST DIVISION.
pg. 416
521
VOL. 811, DECEMBER 1, 2016 521

Ayson vs. Fil-Estate Properties, Inc.
PERLAS-BERNABE, J.:
Assailed in these consolidated petitions for review on certiorari1 are the Decision2 dated March
1, 2013 and the Resolution3 dated February 22, 2016 of the Court of Appeals (CA) in C.A.-G.R.
CV No. 03010, which affirmed with modification the Decision4 dated March 1, 2004 and the
Order5 dated February 6, 2009 of the Regional Trial Court of Kalibo, Aklan, Branch 9 (RTC) in
Civil Case No. 5627 and, accordingly, ordered Fil-Estate Properties, Inc. (Fil-Estate) and Fairways
& Bluewater Resort & Country Club, Inc. (Fairways) to pay Rosalie Sy Ayson (Ayson), inter alia,
the amount of US$40,000.00 or its Philippine Peso equivalent, representing the value of the land
subject of litigation.
The Facts
The instant case arose from a Complaint6 for recovery of possession and damages filed by Ayson
against Fil-Estate and Fairways before the RTC, alleging that she is the registered owner of a
1,000-square-meter parcel of land, more or less, located in Yapak, Malay, Aklan, i.e., the
northwestern area of Boracay Island, denominated as Lot No. 14-S and covered by Transfer
Certificate of Title (TCT) No. T-245627 (subject land).
_______________
1 Rollo (G.R. No. 223254), pp. 8-47. Rollo (G.R. No. 223269),
pp. 16-59.
2 Rollo (G.R. No. 223269), pp. 61-78. Penned by Associate Justice Carmelita Salandanan-
Manahan, with Associate Justices Edgardo L. Delos Santos and Maria Elisa Sempio Diy,
concurring.
3 Id., at pp. 81-83. Penned by Associate Justice Edgardo L. Delos Santos, with Associate Justices
Edward B. Contreras and Geraldine C. Fiel-Macaraig, concurring.
4 Id., at pp. 185-195. Penned by Presiding Judge Dean R. Telan.
5 Id., at pp. 228-229. Penned by Acting Presiding Judge Ledelia P. Aragona-Biliran.
pg. 417
6 Dated October 20, 1998. Id., at pp. 170-174.
7 Id., at pp. 145-146.
522

Sometime in June 1997, she discovered that Fil-Estate and Fairways illegally entered into the
subject land and included it in the construction of its golf course without her prior consent and
authorization. Despite receipt of a Notice to Cease and Desist8 from Ayson, Fil-Estate and
Fairways continued their encroachment and development of the subject land making it now a part
of the entire golf course. Thus, she was constrained to file the instant complaint.9
In their defense,10 Fil-Estate and Fairways maintain that the subject land was formerly owned by
one Divina Marte Villanueva (Villanueva), with whom they entered into a Joint Venture
Agreement (JVA) for the development of the Fairways and Bluewater Resort Golf and Country
Club. Fil-Estate and Fairways explained that prior to the JVA, Villanueva sold portions of her
property to various buyers, including Ayson, with the caveat that such portions may be used in a
development project. In this light, Villanueva allegedly convinced her buyers to agree to a land
swap should such development push through. When the project commenced, the other buyers
readily agreed to said land swaps. Unfortunately, talks with Ayson stalled, prompting Fil-Estate
and Fairways to “exclude” development work on the subject land. Nevertheless, Fil-Estate and
Fairways commenced construction on the subject land, allegedly relying in good faith upon
Villanueva’s assurance that her other former buyers, e.g., Ayson, would eventually agree with the
land swap agreements. According to Fil-Estate and Fairways, Ayson only signified her objection
to the inclusion of the subject land in the development project when construction was almost
finished. Fil-Estate and Fairways further averred that they tried
_______________
9 See Rollo (G.R. No. 223269), pp. 170-173; 63-64.
10 See Answer (to the Complaint dated 20 October 1998) dated April 28, 1999; id., at pp. 176-
184.
pg. 418
523
VOL. 811, DECEMBER 1, 2016 523

to remedy the situation by negotiating with Ayson, but to no avail.11
The RTC’s Ruling
In a Decision12 dated March 1, 2004, the RTC ruled in Ayson’s favor and, accordingly, ordered
Fil-Estate and Fairways to pay her the following amounts: (a) US$100,000.00 or its Philippine
Peso equivalent, representing the value of the subject land, plus P50,000.00 monthly rentals for
the use and occupancy of said land starting December 1997 until the aforesaid value has been fully
paid; (b) P900,000.00 as actual damages; (c) P1,000,000.00 as moral damages; (d) P1,000,000.00
as exemplary damages; (e) P300,000.00 as attorney’s fees and other litigation expenses; and (f)
the costs of suit.13
The RTC found that contrary to Fil-Estate and Fairways’ assertions, Ayson never agreed to any
future land swapping arrangement with Villanueva, considering that Ayson already paid
Villanueva the amount of US$20,000.00 representing the purchase price of the subject land way
back April 1994 (albeit the Deed of Sale14 was only executed on April 15, 1996), while the
construction of the golf course was only conceptualized sometime in early 1995. As such, it was
error for Fil-Estate and Fairways to merely rely on Villanueva’s assurance that she will be able to
convince her buyers to enter into a land swapping arrangement, especially considering that the title
to the same was already in Ayson’s name. In this regard, the RTC opined that Fil-Estate and
Fairways should have first secured permission from Ayson to enter into the subject land before
proceeding with the construction of the golf course. Thus, the RTC concluded that Fil-Estate and
Fairways did not exercise the ordinary diligence of a good father of a family
_______________
11 Id., at pp. 64-69 and 177-182.
12 Id., at pp. 185-195.
13 Id., at pp. 194-195.
14 Id., at pp. 142-143.
pg. 419
524

before entering into the subject land, which caused damage to Ayson for which they should be
liable. The foregoing notwithstanding, the RTC no longer ordered the return of the subject land to
Ayson, ratiocinating that its exclusion from Fil-Estate and Fairways’ development project at this
late stage would lead to major replanning, rerouting, and relocation works, which in turn, would
massively prejudice the Fil-Estate and Fairways’ economic position, and affect its integrity and
reputation. Instead, the RTC ordered Fil-Estate and Fairways to pay Ayson the purported
reasonable value of the subject land, which it pegged at US$100,000.00, or her acquisition cost
multiplied by five, in view of the rapid increase of real estate properties in Boracay Island for the
past few years.15
Fil-Estate and Fairways moved for reconsideration,16 which was, however, denied in an Order17
dated February 6, 2009. Aggrieved, they appealed18 to the CA.
The CA’s Ruling
In a Decision19 dated March 1, 2013, the CA affirmed the RTC ruling with modification reducing
the award of damages as follows: (a) US$40,000.00 or its Philippine Peso equivalent, representing
the value of the subject land, plus P1,000.00 monthly rentals for the use and occupancy of said
land starting December 1997 until the aforesaid value has been fully paid; (b) P52,666.00 plus
US$4,316.06 or its Philippine Peso equivalent as actual damages; (c) P500,000.00 as moral
damages; (d) P300,000.00 as exemplary damages; and (e) P200,000.00 as attorney’s fees and other
litigation expenses.20
_______________
15 Id., at pp. 187-194.
16 See motion for reconsideration dated April 27, 2004; id., at pp. 196-227.
17 Id., at pp. 228-229.
18 See Brief for Defendant-Appellants dated January 6, 2010; id., at pp. 230-289.
19 Id., at pp. 61-78.
20 Id., at p. 77.
pg. 420
525
VOL. 811, DECEMBER 1, 2016 525

The CA held that despite recognizing Ayson as the registered owner of the subject land, Fil-Estate
and Fairways still entered into the same and included it in its golf course development project
without the former’s prior knowledge and consent. In this regard, it held that Fil-Estate and
Fairways should not have relied on Villanueva’s assurances that she would secure Ayson’s
acquiescence to a land swap arrangement, but instead, exercised due diligence and prudence in
taking steps to ensure that Ayson indeed agreed to the inclusion of her property in the golf course
development project. Further, the CA agreed with the RTC that the subject land should no longer
be returned to Ayson, and that Fil-Estate and Fairways should pay her its value instead. However,
absent any competent evidence on the valuation of the subject land, the CA fixed its value at
US$40,000.00, or the amount double its acquisition cost, and likewise reduced the rent to
P1,000.00 per month. In the same vein, the CA found it appropriate to reduce the other awards of
damages to Ayson in keeping with the evidence adduced in the case as well as the prevailing
circumstances.21
Dissatisfied, both parties separately moved for reconsideration22 assailing the valuation of the
subject land as well as the other monetary awards. Fil-Estate and Fairways likewise assailed the
CA’s failure to expressly state in its Decision that upon full payment of the value of the subject
land, Ayson should surrender her title over the same and that a new title be issued in their names.23
In a Resolution24 dated February 22, 2016, the CA denied the parties’ respective motions, holding
that: (a) in pegging
_______________
21 Id., at pp. 70-76.
22 See Fil-Estate and Fairways’ Motion for Partial Reconsideration (of the 1 March 2013
Decision) dated April 4, 2013 (id., at pp. 84-91); and Ayson’s motion for reconsideration dated
March 26, 2013 (id., at pp. 102- 105).
23 Id., at p. 31.
24 Id., at pp. 81-83.
pg. 421
526

the value of the subject land, it took judicial notice of the rapid increase and appreciation of the
value of the real estate properties in Boracay Island for the past years; (b) the amounts fixed
representing the awards for damages are correct, fair, and reasonable under the circumstances; and
(c) there is no more necessity to expressly declare that upon Fil-Estate and Fairways’ payment of
the value of the subject land, Ayson should surrender her title over the same and a new title must
be issued in their names, as such is a necessary consequence of its Decision.25
Hence, these consolidated petitions.
The Issues Before the Court
At the outset, the Court notes that the issues raised in the instant petition largely pertain only to
the propriety of the awards of moral damages, exemplary damages, and attorney’s fees in Ayson’s
favor and the corresponding amounts thereof, as well as the correctness of the valuation of the
subject land at US$40,000.00 and the monthly rental therefor. As such, the Court shall limit its
discussion on the foregoing and shall no longer delve on other matters not raised before it.
Essentially, Fil-Estate and Fairways contend that there is no basis to award moral damages,
exemplary damages, and attorney’s fees to Ayson as they were in good faith in relying on
Villanueva’s assurances that Ayson will agree on the land swap arrangement before they
proceeded with the golf course development project. They likewise contend that Ayson never
objected to the construction on the subject land until after the golf course had been completed.26
As to the valuation of the subject land, Fil-Estate and Fairways argue that the CA’s appraisal of
the same at US$40,000.00 (or even that of the RTC at US$100,000.00) does not have any basis as
no Estate
_______________
25 Id., at pp. 82-83.
26 Id., at pp. 38-45.
527
pg. 422
VOL. 811, DECEMBER 1, 2016 527
and Fairways insist that the value of the subject land is only P100,000.00, as stated in the Deed of
Sale27 executed by Ayson and Villanueva.28
On the other hand, Ayson disputes the reduction of the amounts of moral damages, exemplary
damages, and attorney’s fees awarded to her, justifying the RTC’s higher awards as just, proper,
and equitable in light of Fil-Estate’s gross and utter bad faith in entering into her property and
making it a part of its golf course without her knowledge and consent.29 In the same vein, Ayson
assails CA’s reduced valuation of the subject land as well as the monthly rent therefor, maintaining
that the RTC correctly took judicial notice of the rapid valuation of properties in Boracay Island.30
I.
To recapitulate, both the RTC and the CA found that Ayson is the undisputed owner of the subject
land, as evidenced by TCT No. T-24562. Despite such knowledge, Fil-Estate and Fairways
nevertheless chose to rely on Villanueva’s empty assurances that she will be able to convince
Ayson to agree on a land swap arrangement; and thereafter, proceeded to enter the subject land
and introduce improvements thereon. The courts a quo further found that since such acts were
without Ayson’s knowledge and consent, she, thus: (a) suffered sleepless nights and mental
anguish knowing that the property she and her husband had invested for their future retirement had
been utilized by Fil-Estate and Fairways for their own sake;
_______________
27 Id., at pp. 142-143.
28 Id., at pp. 33-37.
29 See Rollo (G.R. No. 223254), pp. 19-40.
30 Id., at pp. 17-19.
pg. 423
528

and (b) had to seek legal remedies to vindicate her rights. Thus, both lower courts concluded that
Fil-Estate and Fairways’ acts were done in bad faith and resulted in injury to Ayson; hence, they
are liable for, inter alia, moral damages, exemplary damages, and attorney’s fees.
Verily, the finding of Fil-Estate and Fairways’ bad faith,31 as well as their liability for moral
damages,32 exemplary damages,33 and attorney’s fees,34 are all factual matters which are
_______________
31 “[T]he existence of bad faith is a question of fact and is evidentiary; x x x it requires that the
reviewing court look into the evidence to find if indeed there is proof that is substantial enough to
show such bad faith.” (Meyr Enterprises Corporation v. Cordero, G.R. No. 197336, September 3,
2014, 734 SCRA 253, 265, citing Tabangao Shell Refinery Employees Association v. Pilipinas
Shell Petroleum Corporation, G.R. No. 170007, April 7, 2014, 720 SCRA 631, 649-650)
32 “While no proof of pecuniary loss is necessary in order that moral damages may be awarded,
the amount of indemnity being left to the discretion of the court, it is nevertheless essential that
the claimant should satisfactorily show the existence of the factual basis of damages and its causal
connection to defendants acts. This is so because moral damages, though incapable of pecuniary
estimation, are in the category of an award designed to compensate the claimant for actual injury
suffered and not to impose a penalty on the wrongdoer. x x x.” (Mahinay v. Velasquez, Jr., 464
Phil. 146, 149-150; 419 SCRA 118, 121 [2004], citing Keirulf v. Court of Appeals, 336 Phil. 414,
431-432; 269 SCRA 433, 451 [1997])
33 “Our jurisprudence sets certain conditions when exemplary damages may be awarded: First,
they may be imposed by way of example or correction only in addition, among others, to
compensatory damages, and cannot be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may be awarded to the claimant.
Second, the claimant must first establish his right to moral, temperate, liquidated or compensatory
damages. Third, the wrongful act must be accompanied by bad faith, and the award would be
allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.” (Mendoza v. Gomez, 736 Phil. 460, 482; 726 SCRA 505, 525 [2014])
pg. 424
529
VOL. 811, DECEMBER 1, 2016 529

not within the ambit of the instant petition for review on certiorari under Rule 45 of the Rules of
Court. In this regard, it has long been settled that factual findings of the trial court, affirmed by the
CA, are final and conclusive and may not be reviewed on appeal,35 save for certain exceptions,36
which Fil-Estate and Fairways failed to show in this case — at least regarding this issue.
Relatedly, the CA correctly reduced the awards for moral damages, exemplary damages, and
attorney’s fees to
_______________
34 “We have consistently held that an award of attorney’s fees under Article 2208 demands
factual, legal, and equitable justification to avoid speculation and conjecture surrounding the grant
thereof.” (Philippine National Construction Corporation v. APAC Marketing Corporation, 710
Phil. 389, 396; 697 SCRA 441, 450 [2013])
35 See Bacalso v. Aca-ac, G.R. No. 172919, January 13, 2016, 780 SCRA 308, 314, citing
Pascual v. Coronel, 554 Phil. 351, 360; 527 SCRA 474, 483 (2007).
36 As a rule, only questions of law may be raised in a petition for review under Rule 45 of the
Rules of Court. In many instances, however, this Court has laid down exceptions to this general
rule, as follows: (1) when the factual findings of the CA and the trial court are contradictory; (2)
when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (3)
when the inference made by the CA from its findings of fact is manifestly mistaken, absurd or
impossible; (4) when there is grave abuse of discretion in the appreciation of facts; (5) when the
appellate court, in making its findings, went beyond the issues of the case, and such findings are
contrary to the admissions of both appellant and appellee; (6) when the judgment of the CA is
premised on misapprehension of facts; (7) when the CA failed to notice certain relevant facts
which, if properly considered, would justify a different conclusion; (8) when the findings of fact
are themselves conflicting; (9) when the findings of fact are conclusions without citation of the
specific evidence on which they are based; and (10) when the findings of fact of the CA are
premised on the absence of evidence but such findings are contradicted by the evidence on record.
(Treñas v. People, 680 Phil. 368, 378; 664 SCRA 355, 363-364 [2012])
530
pg. 425
P500,000.00, P300,000.00, and P200,000.00, respectively, in light of the evidence adduced as well
as the prevailing circumstances of the instant case. It must be stressed that “[m]oral damages are
not meant to be punitive but are designed to compensate and alleviate the physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar harm unjustly caused to a person.”37 Similarly, exemplary damages
are imposed “by way of example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages” and are awarded “only if the guilty party acted
in a wanton, fraudulent, reckless, oppressive or malevolent manner.”38 Lastly, attorney’s fees
should be reasonable in all cases where an award thereof is warranted under the circumstances.39
In sum, Fil-Estate and Fairways’ liability for moral damages, exemplary damages, and attorney’s
fees, as well as the amounts thereof, must be upheld in light of the surrounding circumstances of
this case. In addition, a legal interest at the rate of six percent (6%) per annum should be imposed
on all monetary awards to Ayson from the time of the finality of this Decision until fully paid.40
II.
Anent the valuation of the subject land, the RTC deemed the amount of US$100,000.00 or its
Philippine Peso equivalent as its reasonable value “considering the rapid increase or appreciation
of the value of real estate properties in Boracay Island
_______________
37 Supra note 33 at p. 480; pp. 522-523.
38 Metropolitan Bank and Trust Company v. Rosales, 724 Phil. 66, 79; 713 SCRA 75, 89 (2014);
citations omitted.
39 See Article 2208 of the Civil Code.
40 See Nacar v. Gallery Frames, 716 Phil. 267, 278-283; 703 SCRA 439, 453-458 (2013).
531
VOL. 811, DECEMBER 1, 2016 531
pg. 426
for the past 10 years.”41 On the other hand, the CA pegged its value at US$40,000.00, or the
amount double the purchase price, “in consideration and after proper adjustment of the [RTC’s]
valuation which took judicial notice of the rapid increase and appreciation of the value of real
estate properties in Boracay Island for the past years and considering further that the property is
located in the prime tourist destination.”42
After a judicious perusal of the records, the Court views such valuations as grounded entirely on
speculation, surmises, or conjectures as there was no evidence presented by the parties supporting
the same. In fact, even the CA acknowledged the absence of any piece of evidence that would
provide a competent valuation of the subject land.43 Undoubtedly, such valuations, including the
amount of monthly rentals that Fil-Estate and Fairways must pay Ayson for the use of the subject
land, must be struck down.
In the same vein, the Court likewise finds untenable Fil-Estate and Fairways’ assertion that the
valuation of the subject land is only P100,000.00, as stated in the Deed of Sale44 executed by
Ayson and Villanueva in 1996.45 At the most, the value stated in said Deed would only reflect the
market value of the subject land at the time of its execution and is in no way indicative of the
current market value of the said land, which is the amount that Fil-Estate and Fairways should pay
Ayson.46
In view of the foregoing circumstances, the Court finds it prudent to remand the case back to the
RTC for the determination of the current market value of the subject land, as well as the reasonable
amount of monthly rental. Once the current market value as well as the reasonable rent has been
reasonably ascertained, the same shall be subjected to the appropriate interest rates.47 Moreover,
once the value of the subject land, monthly rentals, and applicable interests have been fully paid,
Ayson should execute the necessary documents to effectuate the transfer of the property to Fil-
Estate and Fairways.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated March 1, 2013 and
the Resolution dated February 22, 2016 of the Court of Appeals in C.A.-G.R. CV No. 03010 are
hereby AFFIRMED with MODIFICATION as follows:
(a) petitioners Fil-Estate Properties, Inc. and Fairways & Bluewater Resort & Country Club,
Inc. are ORDERED to jointly and solidarily pay Rosalie Sy Ayson the amounts of
P52,666.00 and US$4,316.06 or its Philippine Peso equivalent as actual damages,
P500,000.00 as moral damages, P300,000.00 as exemplary damages, and P200,000.00 as
attorney’s fees and litigation expenses, with legal interest at the rate of six percent (6%) per
annum on all amounts due from finality of judgment until fully paid;
(b) the issue of the proper valuation of Lot No. 14-S covered by Transfer Certificate of Title
No. T-24562 is REMANDED to the Regional Trial Court of Kalibo, Aklan, Branch 9 to
determine its current market value, reasonable monthly rental, and the applicable interest
rate thereon to be paid by
pg. 427
Fil-Estate Properties, Inc. and Fairways & Bluewater Resort & Country Club, Inc.; and
(c) upon full payment of the ascertained current market value, monthly rental, and interests,
Rosalie Sy Ayson shall execute the necessary documents to effectuate the transfer of Lot
No. 14-S covered by Transfer Certificate of Title No. T-24562 to Fil-Estate Properties, Inc.
and Fairways & Bluewater Resort & Country Club, Inc.
SO ORDERED.
Petition partly granted, judgment and resolution affirmed with modification.
Notes.—Factual matters cannot be raised before the Court in a petition for review on certiorari;
In the absence of a showing that the case falls under one of the exceptions, factual findings of the
Court of Appeals are conclusive on the parties and not reviewable by the Court. (Malison vs. Court
of Appeals, 527 SCRA 109 [2007])
An evaluation of factual matters is proscribed by Rule 45, Section 1 of the Rules of Court, which
states that an appeal by certiorari to the Supreme Court “shall raise only questions of law which
must be distinctly set forth.” (Garcia vs. Philippine Airlines, 558 SCRA 171 [2008])
——o0o——
pg. 428
G.R. No. 192318. December 5, 2016.*
REYNO C. DIMSON, petitioner, vs. GERRY T. CHUA, respondent.
Remedial Law; Civil Procedure; Summons; Service of Summons; The service of summons in cases
before the Labor Arbiters (LAs) shall be served on the parties personally or by registered mail,
provided that in special circumstances, service of summons may be effected in accordance with
the pertinent provisions of the Rules of Court.—Following the explicit language of the NLRC
Rules, notices or summons shall be served on the parties to the case personally. The same rule
allows under special circumstances, that service of summons may be effected in accordance with
the provisions of the Rules of Court. The service of summons in cases before the LAs shall be
served on the parties personally or by registered mail, provided that in special circumstances,
service of summons may be effected in accordance with the pertinent provisions of the Rules of
Court.
Labor Law; Labor Arbiters; Jurisdiction; It is basic that the Labor Arbiter (LA) cannot acquire
jurisdiction over the person of the respondent without the latter being served with summons.—It
is basic that the LA cannot acquire jurisdiction over the person of the respondent without the latter
being served with summons. However, if there is no valid service of summons, the court can still
acquire jurisdiction over the person of the defendant by virtue of the latter’s voluntary appearance.
In this case, since the respondent is one of the officers of SEASUMCO, service of summons must
be made to him personally or by registered mail. However, as borne by the records, it is evident
that no service of summons and notices were served on the respondent and he was not impleaded
in NLRC RAB Case No. 12-01-00005-03. He was hauled to the case after he reacted to the
improper execution of his properties and was actually dragged to court by mere motion of the
petitioner with whom he has no privity of contract and after the decision in the main case had
already become final and executory. The respondent only received the copy of the
_______________
* THIRD DIVISION.
631
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Dimson vs. Chua
assailed Order dated August 17, 2007 of the LA on September 5, 2007.
pg. 429
Remedial Law; Civil Procedure; Judgments; The validity of a judgment or order of a court or
quasi-judicial tribunal which has become final and executory may be attacked when the records
show that it lacked jurisdiction to render the judgment.—The respondent did not voluntarily
appear before the LA as to submit himself to its jurisdiction. Contrary to the petitioner’s position,
the validity of a judgment or order of a court or quasi-judicial tribunal which has become final and
executory may be attacked when the records show that it lacked jurisdiction to render the judgment.
For a judgment rendered against one in a case where jurisdiction over his person was not acquired
is void, and a void judgment maybe assailed or impugned at any time either directly or collaterally
by means of a petition filed in the same or separate case, or by resisting such judgment in any
action or proceeding wherein it is invoked.
Labor Law; Labor Arbiters; Jurisdiction; Considering that the respondent was never impleaded
as a party respondent and was never validly served with summons, the Labor Arbiter (LA) never
acquired jurisdiction over his person.—The CA properly concluded that the proceedings before
the LA deprived the respondent of due process. Considering that the respondent was never
impleaded as a party respondent and was never validly served with summons, the LA never
acquired jurisdiction over his person. Perforce, the proceedings conducted and the decision
rendered are nugatory and without effect. This utter lack of jurisdiction voids any liability of the
respondent for any monetary award or judgment in favor of the petitioner.
Procedural Rules and Technicalities; Due Process; Even if administrative tribunals exercising
quasi-judicial powers are not strictly bound by procedural requirements, they are still bound by
law and equity to observe the fundamental requirements of due process.—While it is true that the
LA and the NLRC are not bound by technical rules of evidence and procedure, such should not be
interpreted so as to dispense with the fundamental and essential right of every person to due process
of law. “At all events, even if administrative tribunals exercising quasi-judicial powers are not
strictly bound by procedural requirements, they are still bound by law and equity to observe the
fundamental requirements of due process.”
632

Dimson vs. Chua
Corporations; Words and Phrases; A corporation is a juridical entity with a legal personality
separate and distinct from those acting for and in its behalf and, in general, from the people
comprising it.—“A corporation is a juridical entity with a legal personality separate and distinct
from those acting for and in its behalf and, in general, from the people comprising it. Thus, as a
general rule, an officer may not be held liable for the corporation’s labor obligations unless he
acted with evident malice and/or bad faith in dismissing an employee.” Section 31 of the
Corporation Code is the governing law on personal liability of officers for the debts of the
corporation. To hold a director or officer personally liable for corporate obligations, two requisites
pg. 430
must concur: (1) it must be alleged in the complaint that the director or officer assented to patently
unlawful acts of the corporation or that the officer was guilty of gross negligence or bad faith; and
(2) there must be proof that the officer acted in bad faith.
Same; Piercing the Veil of Corporate Fiction; The Supreme Court (SC) had repeatedly emphasized
that the piercing of the veil of corporate fiction is frowned upon and can only be done if it has been
clearly established that the separate and distinct personality of the corporation is used to justify a
wrong, protect fraud, or perpetrate a deception.—The Court had repeatedly emphasized that the
piercing of the veil of corporate fiction is frowned upon and can only be done if it has been clearly
established that the separate and distinct personality of the corporation is used to justify a wrong,
protect fraud, or perpetrate a deception. To disregard the separate juridical personality of a
corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed.
Francis U. Ku for petitioner.
Tanada, Vivo & Tan for respondent.
633
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Dimson vs. Chua
REYES, J.:
This is a petition for review on certiorari1 assailing the Decision2 dated August 13, 2009 and
Resolution3 dated April 14, 2010 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 02575-MIN.
The appellate court nullified and set aside the Resolutions dated January 11, 20084 and July 31,
20085 of the National Labor Relations Commission (NLRC) in NLRC MAC-10-009909-2007,
which affirmed the Order6 dated August 16, 2007 of the Labor Arbiter (LA) in NLRC RAB Case
No. 12-01-00005-03, granting Reyno C. Dimson’s (petitioner) motion for the issuance of an
amended alias writ of execution7 to include Gerry T. Chua (respondent), as well as the other
corporate officers of South East Asia Sugar Mill Corporation (SEASUMCO) and Mindanao
Azucarera Corporation (MAC), to be held solidarily liable with the said corporations for the money
claims of the employees of SEASUMCO.
pg. 431
The Facts
The instant case filed by the petitioner, representing the other 14 complainants, against the
respondent, is an offshoot of the labor case entitled “Reyno Dimson, et al. v. SEASUMCO, MAC,
United Coconut Planters Bank (UPCB), and Cotabato Sugar Central Co., Inc. (COSUCECO).”
_______________
1 Rollo, pp. 3-28.
2 Penned by Associate Justice Rodrigo F. Lim, Jr., with Associate Justices Elihu A. Ybañez and
Ruben C. Ayson, concurring; id., at pp. 232-249.
3 Id., at pp. 277-278.
4 Id., at pp. 60-61.
5 Id., at pp. 63-65.
6 Rendered by Executive Labor Arbiter Tomas B. Bautista, Jr.; id., at p. 66.
7 Id., at p. 96.
634

Dimson vs. Chua
On September 22, 2003, the said labor case for illegal dismissal with monetary claims was decided
in favor of the complainants.8 Hence, SEASUMCO and MAC, as well as the members of their
board of directors, were ordered to pay jointly and severally the sum of Three Million Eight
Hundred Twenty-Seven Thousand Four Hundred Seventy Pesos and Fifty-One Centavos
(P3,827,470.51). The dispositive portion reads:
WHEREFORE, premises considered, judgment is hereby rendered:
a) Declaring that the Complainants were illegally separated from their employment, and
consequently, they are entitled to payment of separation pay equivalent to one month pay per year
of service and to payment of backwages reckoned from June 2000 until the finality of this decision
and to payment of Service Incentive Leave Pay and 13th month pay.
pg. 432
b) Declaring Respondents SEASUMCO and x x x MAC, including their respective presidents
and board of directors jointly and severally liable to all the monetary entitlements of all
Complainants as above granted.
c) Dismissing the complaints/claims against Respondents UCPB and COSUCECO for lack of
employer-employee relationship; and
d) Ordering Respondents SEASUMCO and MAC, its respective presidents and members of the
board of directors to pay jointly and severally the Complainants the amount of THREE
MILLION EIGHT HUNDRED TWENTY[-]SEVEN THOUSAND FOUR HUNDRED
SEVENTY & 51/100 (P3,827,470.51) covering the entitlements representing partial
computations of the complainants’ entitlement herein.
All other claims are dismissed for lack of legal and factual basis.
_______________
8 Id., at pp. 176-190.
635
VOL. 811, DECEMBER 5, 2016 635

Dimson vs. Chua
SO ORDERED.9
The LA’s decision became final and executory but the judgment remained unsatisfied.
Consequently, the petitioner filed an Ex-parte Motion10 for the issuance of an amended alias writ
of execution asking for the inclusion of the board of directors and corporate officers of
SEASUMCO and MAC to hold them liable for satisfaction of the said decision.
In an Order11 dated August 16, 2007, the LA granted the motion; hence, an amended alias writ of
execution12 was issued which now included the respondent.
Aggrieved, the respondent elevated the matter to the NLRC by filing a Memorandum of Appeal13
arguing that he was denied due process.
In a Resolution14 dated January 11, 2008, the NLRC dismissed the appeal for lack of merit and
sustained the findings of the LA.
pg. 433
The respondent filed a Motion for Reconsideration,15 but the NLRC Resolution16 dated July 31,
2008 denied his motion. Hence, he filed a petition for certiorari with application for temporary
restraining order (TRO)/preliminary injunction17 before the CA. He maintained that the labor
tribunals violated his right to due process when the LA authorized the issuance of the amended
alias writ of execution against him for the corporation’s judgment debt, although he has never
been a party to the underlying suit.
_______________
9 Id., at pp. 189-190.
10 Id., at pp. 103-104.
11 Id., at p. 66.
12 Id., at p. 96.
13 Id., at pp. 67-77.
14 Id., at pp. 60-61.
15 Id., at pp. 108-122.
16 Id., at pp. 63-65.
17 Id., at pp. 29-56.
636

Dimson vs. Chua
Meanwhile, upon the petitioner’s motion, a Second Alias Writ of Execution18 was issued on
November 3, 2008, since the previous writ dated August 17, 2007 has already expired. Pursuant
to this, on December 2, 2008, a Certificate of Sale/Award19 was issued to the petitioner upon the
levy on execution that was made over the shares of stocks belonging to the respondent at New
Frontier Sugar Corporation (NFSC) totaling 105,344 shares with the total amount of
P10,534,400.00.
On January 30, 2009, the CA denied the respondent’s application for a TRO and set the case for
hearing on the propriety of the issuance of a writ of preliminary injunction (WPI).20
pg. 434
In the Resolution21 dated April 16, 2009, the CA issued a WPI enjoining the NLRC, its sheriff
and any person acting for and its behalf from transferring in the names of the petitioner and other
private respondents in the NLRC case, the respondent shares of stocks with NFSC pending
resolution of the petition.
On August 13, 2009, the CA rendered the assailed judgment, which nullified and set aside the
rulings of the NLRC, and made the WPI permanent.22 The CA held that the respondent was indeed
denied due process based on the following ratiocination:
In the case at bar, the records clearly show that [the respondent] was never served summons with
respect to NLRC RAB Case No. 12-01- 00005-03. He, thus, cannot be made liable for any findings
of the LA respecting private respondents’ monetary claims. Moreover, as can likewise be gleaned
from the records, private respon-
_______________
18 Id., at p. 219.
19 Id., at pp. 223-225.
20 Id., at p. 238.
21 Id., at pp. 229-231.
22 Id., at pp. 232-249.
637
VOL. 811, DECEMBER 5, 2016 637

Dimson vs. Chua
dents’ monetary claims are claims against the corporation of which [the respondent] is merely an
officer.23
In overturning the NLRC’s decision, the CA emphasized that the LA cannot acquire jurisdiction
over the person of the respondent without the latter being served with summons, and in the absence
of service of summons or a valid waiver thereof, the hearings and judgment rendered by the LA
are null and void. The CA emphasized the rule that a corporation is clothed with a personality
distinct from that of its officers and the petitioner has not shown any ground that would necessitate
the piercing of the corporate veil and disregarding SEASUMCO’s corporate fiction. Furthermore,
pg. 435
the CA also noted with curiosity the respondent’s claim that Agosto Sia (Sia), a corespondent and
likewise similarly situated as him, allegedly appealed the Order dated August 16, 2007 of the LA
to the NLRC24 and yet the latter granted Sia’s appeal.25
Upset by the foregoing disquisition, the petitioner moved for reconsideration26 but it was denied
by the CA.27 Hence, the present petition for review on certiorari.
The Issue
The main issue in this case is whether the respondent can be held solidarily liable with the
corporation, of which he was an officer and a stockholder, when he was not served with summons
and was never impleaded as a party to the case.
Ruling of the Court
The petition has no merit.
_______________
23 Id., at p. 243.
24 Id., at pp. 194-206.
25 Id., at pp. 208-210.
26 Id., at pp. 250-267.
27 Id., at pp. 277-278.
638

Dimson vs. Chua
pg. 436
The issue of whether the respondent is personally liable for the monetary awards granted in favor
of the petitioner, arising from the complainants’ alleged illegal termination, while basically a
question of law pertinent for a Rule 45 review, nevertheless, hinges for its resolution on a factual
issue, the question of whether there had been improper service of summons upon the respondent
which renders the judgment by the LA against him null and void. Moreover, the inconsistent
rulings of the LA and the NLRC, on the one hand, and of the CA, on the other, in the present
petition, make this case fall within the ambit of this Court’s review.
Despite that, the issue posited in this case is not novel since a catena of cases involving the question
of denial of due process and the propriety of a corporate officers’ solidary liability with the
corporation has already come before this Court.
In the main, the crux of the petitioner’s argument focuses only on the liberal application of the
rules of procedure and evidence before the NLRC. The petitioner contends that lack of summons
is not indicative of lack of due process. Although expressly admitting that the respondent was not
named as party in the illegal dismissal case before the LA, the petitioner argues that it does not
mean that the respondent was denied due process since the latter was given the opportunity to
express his defenses before the labor tribunals.
On the other hand, the respondent questions his inclusion in the decision of the labor tribunals
below. He contends that the LA did not acquire jurisdiction over his person and emphasizes that
he was never impleaded as a party respondent to the case but was merely included in the order for
writ of execution of the money claims of the petitioner. He also questions his solidary liability with
the corporation.
639
VOL. 811, DECEMBER 5, 2016 639

Dimson vs. Chua
The respondent’s assertions are not without basis, as can be seen from Sections 328 and 629 of
Rule III of the 2005 Revised Rules of Procedure of the NLRC governing the issuance and services
of notices and resolutions, including summons, in cases filed before the LAs.
_______________
28 Sec. 3. Issuance of Summons.—Within two (2) days from receipt of a complaint or amended
complaint, the Labor Arbiter shall issue the required summons, attaching thereto a copy of the
complaint or amended complaint. The summons shall specify the date, time and place of the
mandatory conciliation and mediation conference in two (2) settings.
pg. 437
29 Sec. 6. Service of Notices and Resolutions.—a) Notices or summons and copies of orders,
shall be served on the parties to the case personally by the Bailiff or duly authorized public officer
within three (3) days from receipt thereof or by registered mail; Provided that in special
circumstances, service of summons may be effected in accordance with the pertinent provisions of
the Rules of Court; Provided, further, that in cases of decisions and final awards, copies thereof
shall be served on both parties and their counsel or representative by registered mail; Provided,
further, that in cases where a party to a case or his counsel on record personally seeks service of
the decision upon inquiry thereon, service to said party shall be deemed effected upon actual
receipt thereof; Provided, finally, that where parties are so numerous, service shall be made on
counsel and upon such number of complainants, as may be practicable, which shall be considered
substantial compliance with Article 224(a) of the Labor Code, as amended.
For purposes of appeal, the period shall be counted from receipt of such decisions, resolutions, or
orders by the counsel or representative of record.
b) The Bailiff or officer serving the notice, order, resolution or decision shall submit his return
within two (2) days from date of service thereof, stating legibly in his return his name, the names
of the persons served and the date of receipt, which return shall be immediately attached and shall
form part of the records of the case. In case of service by registered mail, the Bailiff or officer shall
write in the return, the names of persons served and the date of mailing of the resolution or
decision. If no service was effected, the service officer shall state the reason therefor in the return.
640

Dimson vs. Chua
Following the explicit language of the NLRC Rules, notices or summons shall be served on the
parties to the case personally. The same rule allows under special circumstances, that service of
summons may be effected in accordance with the provisions of the Rules of Court. The service of
summons in cases before the LAs shall be served on the parties personally or by registered mail,
provided that in special circumstances, service of summons may be effected in accordance with
the pertinent provisions of the Rules of Court.
Supplementary or applied by analogy to these provisions are the provisions and prevailing
jurisprudence in Civil Procedure. Where there is then no service of summons on or a voluntary
general appearance by the defendant, the court acquires no jurisdiction to pronounce a judgment
in the case.30
It is basic that the LA cannot acquire jurisdiction over the person of the respondent without the
latter being served with summons. However, if there is no valid service of summons, the court can
pg. 438
still acquire jurisdiction over the person of the defendant by virtue of the latter’s voluntary
appearance.31
In this case, since the respondent is one of the officers of SEASUMCO, service of summons must
be made to him personally or by registered mail. However, as borne by the records, it is evident
that no service of summons and notices were served on the respondent and he was not impleaded
in NLRC RAB Case No. 12-01-00005-03. He was hauled to the case after he reacted to the
improper execution of his properties and was actually dragged to court by mere motion of the
petitioner with whom he has no privity of contract and after the decision in the main case had
already become final and executory. The respondent only received the copy of the as-
_______________
30 Dynamic Signmaker Outdoor Advertising Services, Inc. v. Potongan, 500 Phil. 113, 124; 461
SCRA 328, 339 (2005).
31 Sy v. Fairland Knitcraft Co., Inc., 678 Phil. 265, 295; 662 SCRA 67, 93-94 (2011).
641
VOL. 811, DECEMBER 5, 2016 641

Dimson vs. Chua
sailed Order dated August 17, 2007 of the LA on September 5, 2007.32
It can be recalled that the petitioners’ original complaints for illegal dismissal with money claims
were only against SEASUMCO, MAC, UCPB and COSUCECO. For these complaints, the LA
issued summons to a conference for a possible settlement to the said corporations, including its
chairman Margarita Sia and Michael Angala. The Court scanned the records but found nothing to
indicate that summons with respect to the said complaints were ever served upon the respondent.
The petitioner in fact does not even dispute the respondent’s claim that no summons or notices
were ever issued and served on him either personally or through registered mail. True to his claim,
the respondent, indeed, was never summoned by the LA. Besides, even assuming that the
respondent has knowledge of a labor case against SEASUMCO, this will not serve the same
purpose as summons to him.
More so, the respondent did not voluntarily appear before the LA as to submit himself to its
jurisdiction. Contrary to the petitioner’s position, the validity of a judgment or order of a court or
quasi-judicial tribunal which has become final and executory may be attacked when the records
show that it lacked jurisdiction to render the judgment. For a judgment rendered against one in a
case where jurisdiction over his person was not acquired is void, and a void judgment maybe
assailed or impugned at any time either directly or collaterally by means of a petition filed in the
pg. 439
same or separate case, or by resisting such judgment in any action or proceeding wherein it is
invoked.33
Guided by the foregoing norms, the CA properly concluded that the proceedings before the LA
deprived the respondent of due process. Considering that the respondent was never impleaded as
a party respondent and was never validly served
_______________
32 Rollo, p. 71.
33 Supra note 30 at p. 123; pp. 338-339.
642

Dimson vs. Chua
with summons, the LA never acquired jurisdiction over his person. Perforce, the proceedings
conducted and the decision rendered are nugatory and without effect. This utter lack of jurisdiction
voids any liability of the respondent for any monetary award or judgment in favor of the petitioner.
It has not escaped the Court’s attention that the respondent’s co-officer, Sia, also filed an appeal
before the NLRC which the latter granted despite the fact that they were similarly situated. The
Court agrees with the finding of the CA on this matter:
Indeed, we find it strange, if not queer that [the respondent] who was similarly situated as that of
Sia, would have been treated differently by [NLRC]. Both were in the same, if not exact, situation.
[The respondent] and Sia, as the records show, were never impleaded as respondents in the
complaint filed before the [LA] and neither too were they served with summons to enable them to
file their answer before that level. Nevertheless, as the record shows, Sia’s appeal was granted
excluding him from liability for the reason that precisely he was not impleaded as a party to the
case nor summons served on him. Strangely, however, as aforestated, [the respondent’s] appeal
was denied and was held liable for the monetary claims of private respondents. It would thus,
clearly appear from the records that [NLRC] adopted two inconsistent positions in treating the
appeals interposed by [the respondent] and Sia. The records likewise show that both [the
respondent] and Sia were represented by the same counsel. For unknown reasons or for reasons
only known to [NLRC], [the respondent’s] and Sia’s appeal were treated differently
notwithstanding the identical situation they were in.34
pg. 440
While it is true that the LA and the NLRC are not bound by technical rules of evidence and
procedure, such should not be interpreted so as to dispense with the fundamental and
_______________
34 Rollo, pp. 247-248.
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Dimson vs. Chua
essential right of every person to due process of law.35 “At all events, even if administrative
tribunals exercising quasi-judicial powers are not strictly bound by procedural requirements, they
are still bound by law and equity to observe the fundamental requirements of due process.”36
Finally, the Court sustains the CA’s ruling that the respondent, as one of SEASUMCO’s corporate
officer and stockholder, should not be held solidarily liable with the corporation for its monetary
liabilities with the petitioner.
Here, the LA pierced the veil of corporate fiction of SEASUMCO and held the respondent, in his
personal capacity, jointly and severally liable with the corporation for the enforcement of the
monetary awards to the petitioner. Even assuming that the labor tribunals had jurisdiction over the
respondent, it was still improper to hold him liable for SEASUMCO’s obligations to its employees.
In the recent case of Jose Emmanuel P. Guillermo v. Crisanto P. Uson,37 the Court resolved the
twin doctrines of piercing the veil of corporate fiction and personal liability of company officers
in labor cases. According to the Court:
The common thread running among the aforementioned cases, however, is that the veil of
corporate fiction can be pierced, and responsible corporate directors and officers or even a separate
but related corporation, may be impleaded and held answerable solidarily in a labor case, even
after final judgment and on execution, so long as it is established that such persons have
deliberately used the corporate vehicle to unjustly evade the judgment obligation, or have resorted
to fraud, bad faith or malice in doing so. When the shield of a separate corporate identity is used
to commit wrongdoing and opprobri-
_______________
35 See Cada v. Time Saver Laundry/Leslie Perez, 597 Phil. 548; 577 SCRA 566 (2009).
36 Supra note 30 at p. 124; pp. 339-340.
pg. 441
37 G.R. No. 198967, March 7, 2016, 785 SCRA 543.
644

Dimson vs. Chua
ously elude responsibility, the courts and the legal authorities in a labor case have not hesitated to
step in and shatter the said shield and deny the usual protections to the offending party, even after
final judgment. The key element is the presence of fraud, malice or bad faith. Bad faith, in this
instance, does not connote bad judgment or negligence but imports a dishonest purpose or some
moral obliquity and conscious doing of wrong; it means breach of a known duty through motive
or interest or ill will; it partakes of the nature of fraud.
As the foregoing implies, there is no hard and fast rule on when corporate fiction may be
disregarded; instead, each case must be evaluated according to its peculiar circumstances. For the
case at bar, applying the above criteria, a finding of personal and solidary liability against a
corporate officer like Guillermo must be rooted on a satisfactory showing of fraud, bad faith or
malice, or the presence of any of the justifications for disregarding the corporate fiction. x x x.38
(Citations omitted)
“A corporation is a juridical entity with a legal personality separate and distinct from those acting
for and in its behalf and, in general, from the people comprising it. Thus, as a general rule, an
officer may not be held liable for the corporation’s labor obligations unless he acted with evident
malice and/or bad faith in dismissing an employee.”39 Section 3140 of
_______________
38 Id.
39 The Coffee Bean and Tea Leaf Philippines, Inc. v. Arenas, G.R. No. 208908, March 11, 2015,
753 SCRA 187, 196.
40 Sec. 31. Liability of directors, trustees or officers.—Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross
negligence or bad faith in directing the affairs of the corporation or acquire any personal or
pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and
severally for all damages resulting therefrom suffered by the corporation, its stockholders or
members and other persons.
pg. 442
xxxx
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Dimson vs. Chua
the Corporation Code is the governing law on personal liability of officers for the debts of the
corporation. To hold a director or officer personally liable for corporate obligations, two requisites
must concur: (1) it must be alleged in the complaint that the director or officer assented to patently
unlawful acts of the corporation or that the officer was guilty of gross negligence or bad faith; and
(2) there must be proof that the officer acted in bad faith.41
Based on the records, the petitioner and the private respondents in the NLRC case failed to
specifically allege either in their complaint or position paper that the respondent, as an officer of
SEASUMCO, willfully and knowingly assented to the corporations’ patently unlawful act of
closing the corporation, or that the respondent had been guilty of gross negligence or bad faith in
directing the affairs of the corporation. In fact, there was no evidence at all to show the
respondent’s participation in the petitioner’s illegal dismissal. Clearly, the twin requisites of
allegation and proof of bad faith, necessary to hold the respondent personally liable for the
monetary awards to the petitioner, are lacking.
The respondent is merely one of the officers of SEASUMCO and to single him out and require
him to personally answer for the liabilities of SEASUMCO are without basis. In the absence of a
finding that he acted with malice or bad faith, it was error for the labor tribunals to hold him
responsible.
The Court had repeatedly emphasized that the piercing of the veil of corporate fiction is frowned
upon and can only be done if it has been clearly established that the separate and distinct
personality of the corporation is used to justify a wrong, protect fraud, or perpetrate a deception.42
To disregard the separate juridical personality of a corporation, the wrong-
_______________
41 Supra note 39.
42 Heirs of Fe Tan Uy v. International Exchange Bank, 703 Phil. 477, 487; 690 SCRA 519, 528-
529 (2013).
pg. 443
646

Dimson vs. Chua
doing must be established clearly and convincingly. It cannot be presumed.
WHEREFORE, the petition is DENIED. The Decision dated August 13, 2009 and Resolution
dated April 14, 2010 of the Court of Appeals in C.A.-G.R. S.P. No. 02575-MIN are AFFIRMED.
SO ORDERED.
Notes.—Under the doctrine of “piercing the veil of corporate fiction,” the court looks at the
corporation as a mere collection of individuals or an aggregation of persons undertaking business
as a group, disregarding the separate juridical personality of the corporation unifying the group.
(Kukan International Corporation vs. Reyes, 631 SCRA 596 [2010])
Service of summons upon the defendant shall be by personal service first and only when the
defendant cannot be promptly served in person will substituted service be availed of. (Afdal vs.
Carlos, 636 SCRA 389 [2010])
——o0o——
pg. 444
Case Short Name: Majestic Plus Holdings International, Inc. vs. Bullion Investment and
Development Corporation
G.R. No. 201017. December 5, 2016.*
MAJESTIC PLUS HOLDINGS INTERNATIONAL, INC., petitioner, vs. BULLION

INVESTMENT AND DEVELOPMENT CORPORATION, respondent.
G.R. No. 215289. December 5, 2016.*
MAJESTIC PLUS HOLDINGS INTERNATIONAL, INC., petitioner, vs. BULLION

INVESTMENT AND DEVELOPMENT CORPORATION, GENESSON U. TECSON,
ROLAND M. LAUTCHANG, WILSON CHUNBON CHENG KOA, LUIS K. LOKIN, JR.,
JEFFERSON U. TECSON and ROSALINE C. CHING, respondents.
Remedial Law; Civil Procedure; Jurisdiction; Jurisdiction over the subject matter of a case is
conferred by law, whereas a court’s exercise of jurisdiction, unless provided by the law itself, is
governed by the Rules of Court or by the orders issued from time to time by the Supreme Court
(SC).—As a basic premise, the Court reiterates the principle that a court’s acquisition of
jurisdiction over a particular case’s subject matter is different from incidents pertaining to the
exercise of its jurisdiction. Jurisdiction over the subject matter of a case is conferred by law,
whereas a court’s exercise of jurisdiction,
_______________
* THIRD DIVISION.
92

Majestic Plus Holdings International, Inc. vs. Bullion Investment and Development Corporation
unless provided by the law itself, is governed by the Rules of Court or by the orders issued from
time to time by the Supreme Court. The matter of whether the RTC resolves an issue in the exercise
pg. 445
of its general jurisdiction or of its limited jurisdiction as a special court is only a matter of
procedure and has nothing to do with the question of jurisdiction.
Same; Same; Same; Courts; Special Commercial Courts; Special Commercial Courts (SCCs) are
still considered courts of general jurisdiction.—It should be noted that Special Commercial Courts
(SCCs) are still considered courts of general jurisdiction. Section 5.2 of R.A. No. 8799, otherwise
known as The Securities Regulation Code, directs merely the Supreme Court’s designation of RTC
branches that shall exercise jurisdiction over intra-corporate disputes. The assignment of intra-
corporate disputes to SCCs is only for the purpose of streamlining the workload of the RTCs so
that certain branches thereof like the SCCs can focus only on a particular subject matter. Nothing
in the language of the law suggests the diminution of jurisdiction of those RTCs to be designated
as SCCs. The RTC exercising jurisdiction over an intra-corporate dispute can be likened to an
RTC exercising its probate jurisdiction or sitting as a special agrarian court. The designation of the
SCCs as such has not in any way limited their jurisdiction to hear and decide cases of all nature,
whether civil, criminal or special proceedings.
Same; Same; Judgments; Summary Judgments; Summary judgments are proper when, upon
motion of the plaintiff or the defendant, the court finds that the answer filed by the defendant does
not tender a genuine issue as to any material fact and that one party is entitled to a judgment as a
matter of law. But if there be a doubt as to such facts and there be an issue or issues of fact joined
by the parties, neither one of them can pray for a summary judgment.—Summary judgment is a
procedural device resorted to in order to avoid long drawn out litigations and useless delays. Relief
by summary judgment is intended to expedite or promptly dispose of cases where the facts appear
undisputed and certain from the pleadings, depositions, admissions and affidavits. Summary
judgments are proper when, upon motion of the plaintiff or the defendant, the court finds that the
answer filed by the defendant does not tender a genuine issue as to any material fact and that one
party is entitled to a
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VOL. 812, DECEMBER 5, 2016 93

judgment as a matter of law. But if there be a doubt as to such facts and there be an issue or
issues of fact joined by the parties, neither one of them can pray for a summary judgment.
Where the facts pleaded by the parties are disputed or contested, proceedings for a summary
judgment cannot take the place of a trial.
Civil Law; Contracts; Rescission of Contracts; It is a settled rule that extrajudicial rescission has
a legal effect where the other party does not oppose it. Where it is objected to, a judicial
determination of the issue is still necessary.—As to the issue of rescission of the subject MOA,
Bullion contends that it rescinded the MOA because Majestic failed to pay several installments of
pg. 446
its obligations which are due thereunder, which failure gives Bullion the right to rescind the same.
On the other hand, Majestic opposes the rescission insisting that the MOA remains valid and
binding for Bullion’s failure to comply with the conditions of a valid rescission as set under the
MOA. Majestic likewise argues that it was, in fact, Bullion which violated the provisions of the
MOA. It is a settled rule that extrajudicial rescission has a legal effect where the other party does
not oppose it. Where it is objected to, a judicial determination of the issue is still necessary. Thus,
considering Majestic’s strong opposition to Bullion’s rescission of the MOA, and since both
parties allege that the other had violated the MOA, the Court agrees with the CA that the issue of
rescission necessitates judicial intervention which entails examination by the trial court of
evidence presented by the parties in a full-blown trial.
PETITIONS for review on certiorari of the decisions and resolutions of the Court of Appeals.
De Sagun Law Office for Majestic Plus Holdings, Int’l., Inc.
Ponce Enrile, Reyes & Manalastas for Bullion Investment and Dev’t. Corporation.
94

PERALTA,** J.:
Before the Court are two (2) consolidated petitions for review on certiorari under Rule 45 of the
Rules of Court.
In G.R. No. 201017, petitioner Majestic Plus Holdings International, Inc. (Majestic) seeks to
nullify the Decision1 dated November 2, 2011 and the Resolution2 dated March 14, 2012,
respectively, of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 121072.
In G.R. No. 215289, Majestic prays for the reversal and setting aside of the Decision3 dated
October 23, 2013 and the Resolution4 dated November 4, 2014, respectively, of the CA in C.A.-
G.R. CV No. 97537.
The factual and procedural antecedents follow.
pg. 447
In a Resolution passed on August 14, 2001, the City Council of Manila authorized its Mayor to
enter into a contract with any reputable corporation for the long term lease and development of a
4,808.40-square-meter non-income generating property of the City located within the vicinity of
Felipe II, Reina Regente and General La Chambre Streets in Binondo, Manila. Pursuant to such
authority, the Office of the City Mayor issued an Invitation to Prequalify and Bid for the said
development project. Subsequently, herein respondent company, Bullion Investment and
Development Corporation (Bullion) participated and won in the bidding.
_______________
** Designated Acting Chairperson.
1 Penned by Associate Justice Rodil Y. Zalameda, with Associate Justices Amelita G. Tolentino
and Normandie B. Pizarro, concurring; Rollo (G.R. No. 201017), pp. 58-82.
2 Id., at pp. 84-87.
3 Penned by Associate Justice Rosmari D. Carandang, with Associate Justices Ricardo R. Rosario
and Leoncia R. Dimagiba, concurring; Rollo (G.R. No. 215289), pp. 52-69.
4 Id., at pp. 71-74.
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VOL. 812, DECEMBER 5, 2016 95

Thus, on June 30, 2003, the City of Manila, through then City Mayor Joselito Atienza, and Bullion,
represented by its President Roland Lautachang, entered into a Contract5 for the lease of the said
property for a period of twenty-five (25) years. Under the Contract, Bullion, as lessee, agreed to
construct two 4-storey buildings, one of which shall be used as an extension office of the Manila
City Hall for its institutional services, while the other shall be used for commercial purposes.
Bullion then commenced construction and was able to finish and turn over the City Hall extension
building to the Manila City Government. However, Bullion was unable to finish the construction
of the commercial building. Bullion then sought the help of and was able to convince petitioner
corporation, Majestic Plus Holding International, Incorporation (Majestic), to invest in Bullion’s
business venture, particularly the completion of the construction of its commercial building which
was intended to be used as a mall (Meisic Mall).
pg. 448
On September 7, 2004, Bullion, represented by its President, entered into a Memorandum of
Agreement6 (MOA) with Majestic, which was represented by one Dionisio N. Yao. Pertinent
portions of the MOA read, thus:
1. SUBJECT MATTER
MAJESTIC agrees to acquire 80% equity interest in BULLION, subject to the following
terms and conditions, and the completion of the construction of the subject MALL by both
parties.
2. CONSIDERATION
2.1. MAJESTIC and BULLION agree that the present shareholdings and assets of
BULLION shall be valued at ONE HUNDRED TWENTY MILLION PESOS
(Php120,000,000.00).
_______________
5 Records (Vol. I), pp. 22-30.
6 Id., at pp. 31-37.
96

2.2. It is expressly agreed that the 80% equity interest to be acquired by MAJESTIC shall
correspond to NINETY-SIX MILLION PESOS (Php96,000,000.00), payable by
MAJESTIC under the following Terms of Payment provided in the succeeding section.
2.3. MAJESTIC agrees to infuse additional capital to cover the expenditure for the
completion of the construction of the MALL.
3. TERMS OF PAYMENT
The 80% equity interest, corresponding to NINETY-SIX MILLION PESOS

(Php96,000,000.00), shall be payable by MAJESTIC to the existing stockholders of
BULLION as follows:
3.1. Upon execution of this MOA, MAJESTIC shall pay THIRTY-FIVE MILLION
PESOS (Php35,000,000.00).
pg. 449
3.2. The balance of SIXTY-ONE MILLION PESOS (Php61,000,000.00) shall be payable
as follows:
3.2.1. TEN MILLION PESOS (Php10,000,000.00) within 75 days from the execution of
this MOA;
3.2.2. SIX MILLION PESOS (Php6,000,000.00) payable 30 days thereafter;
3.2.3. SIX MILLION PESOS (Php6,000,000.00) payable 30 days after 3.2.2;
3.2.6. ELEVEN MILLION PESOS (Php11,000,000.00) payable 30 days after 3.2.5;
97
VOL. 812, DECEMBER 5, 2016 97

3.2.7. EIGHT MILLION PESOS (Php8,000,000.00) payable 30 days after 3.2.6;
3.2.8. EIGHT MILLION PESOS (Php8,000,000.00) payable within two (2) years from
the execution of this MOA.
3.3 The above payments shall all be covered by postdated checks to be issued by
MAJESTIC in favor of BULLION and/or Bingson U. Tecson, duly-authorized
representative of existing stockholders.
4. TRANSFER OF SHARES
4.1. The shares representing the 30% equity of BULLION shall be ceded and transferred
to MAJESTIC only upon full payment of the amount of THIRTY-FIVE MILLION PESOS
(Php35,000,000.00), pursuant to Sec. 3.1.
4.2. Additional shares representing the 10% equity of BULLION shall be assigned and
transferred to MAJESTIC upon payment of the additional amount of TEN MILLION
PESOS (Php10,000,000.00) based on Sec. 3.2.1.
pg. 450
4.3. Upon payment of the additional amount of TWENTY-FOUR MILLION PESOS
(Php24,000,000.00) based on Secs. 3.2.2, 3.2.3, 3.2.4 and 3.2.5, additional shareholdings
representing 20% equity of BULLION shall be assigned and transferred to MAJESTIC.
4.4. The parties undertake to execute the necessary documents for the transfer of additional
shares corresponding to another 20% upon receipt of the full payment of the EIGHTY-
EIGHT MILLION PESOS (Php88,000,000.00).
4.5. BULLION shall provide and/or furnish MAJESTIC copies of all corporate records,
such as but not limited to [the] Article of Incorporation, Bylaws, Financial Statements,
General Information Sheets, Board Resolutions, etc.
98

5. CAPITAL INFUSION
5.1. The MAJESTIC shall infuse additional capital to cover the construction cost for the
full completion of the MALL. The additional funding for the construction cost and
completion of the MALL shall be converted to increased equity for MAJESTIC.
5.2. BULLION and MAJESTIC agree to amend the Authorized Capital Stock of
BULLION from the existing THIRTY MILLION PESOS (Php30,000,000.00)
to at least TWO HUNDRED MILLION PESOS (Php200,000,000.00) to reflect the actual
capital investments of the parties and for the construction and completion of the MALL.
5.3. In the event of any capital call and infusion, existing BULLION stockholders shall
have the option to maintain their 20% percent equity. In case any stockholder waives his
option to subscribe to any additional capital call or infusion, the other stockholders shall be
given the option to subscribe to the remaining unpaid subscription rights offering.
6. ACCELERATION CLAUSE
6.1. MAJESTIC shall have the option to accelerate the Terms of Payment under Sec. 3 in
order to expedite the implementation of Sec. 4.
6.2. In the event that MAJESTIC fails to pay, despite written demands, at least two (2)
installment dues within the period provided in this MOA, the full balance of the amount
unpaid shall become immediately due and demandable.
pg. 451
7. DEFAULT
7.1. Should MAJESTIC default in the payment of at least two (2) installment dues under
this contract, BULLION, at its sole option may elect to rescind the contract in which event
only half of the total amount paid by MAJESTIC shall be refunded to it without need of
demand. MAJESTIC shall be considered in default upon its failure to pay the full
99
VOL. 812, DECEMBER 5, 2016 99

amount of the outstanding obligation within fifteen (15) days from written demand of
BULLION.
7.2. In the event BULLION elects to rescind the contract under this provision, it shall
serve a written notice of the rescission to MAJESTIC.
7.3. In the event BULLION fails to comply with any of its undertaking under this contract,
a written demand shall likewise be made giving it 15 days to comply. Upon failure to do so,
MAJESTIC shall serve a written notice of rescission to BULLION. All sums paid by
MAJESTIC shall be refunded to it after written demand.
7.4. In the event that any of the parties should be compelled to seek judicial relief against
any of the parties, the aggrieved parties shall pay an amount equivalent to 10% of the total
amount claimed as attorney’s fees, plus cost of litigation and other expenses.
8. MANAGEMENT
Upon payment of Php35,000,000.00 by MAJESTIC, a joint management committee shall

be created and convened by the Board of Directors that will oversee the construction and
operation of the MALL for a period of six (6) months.
x x x7
Following the execution of the MOA, Majestic issued five (5) checks, on various dates, for an
aggregate amount of Fifty-Seven Million Pesos (P57,000,000.00) in favor of Bullion, as partial
payment of the 80% equity interest in the latter. Bullion acknowledged such payment. However,
it alleged that an additional four (4) checks, representing a total amount of P31,000,000.00, which
were subsequently issued by Majestic were dishonored because of “Stop Payment” orders.8 As a
pg. 452
_______________
7 Id., at pp. 32-35.
8 See Defendants’ Answer, Records (Vol. I), pp. 182-184; pp. 197-200.
100

result, Bullion sent letters to Majestic demanding payment in full of the latter’s outstanding
obligations, otherwise the former would be constrained to rescind the MOA.9 For Majestic’s
failure to heed Bullion’s demands, the latter sent another letter to the former, dated June 24, 2005,
informing it that Bullion had elected to rescind the MOA.10
Meanwhile, Majestic took over the supervision and eventually finished the construction of the
Meisic Mall, except with respect to some minor installations. Based on the Summary of
Payments,11 attached to its complaint, Majestic claims that, aside from the P57,000,000.00 it had
earlier paid to Bullion, it also incurred expenses for the purpose of sustaining the construction of
Meisic Mall and the acquisition of various equipment for use inside the mall in the sum of One
Hundred Thirty-Four Million Five Hundred Twenty-Two Thousand Eight Hundred Three Pesos
and Twenty-Two Centavos (P134,522,803.22).12 Thus, the aggregate amount alleged to have been
invested by Majestic is P191,522,803.22.
With the completion of major construction works and the installation of the aforementioned
equipment, the Meisic Mall became operational as early as May 2005. Majestic conducted business
therein by renting out the mall’s leasable spaces to stallholders and by employing personnel for
the security, maintenance and upkeep of the mall’s premises.13
However, in the morning of June 25, 2005, respondent, aided by several police personnel and
security guards, entered the premises and took physical possession and control of Meisic Mall.
_______________
10 Id., at pp. 205-206.
11 Id., at pp. 41-44.
12 See Complaint, id., at pp. 13-14.
pg. 453
13 Records (Vol. I), pp. 9 and 14.
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VOL. 812, DECEMBER 5, 2016 101

This prompted Majestic to file a Complaint14 for Specific Performance, Injunction and Damages
with a Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction against
Bullion, together with several other persons. Majestic alleged that it has become a majority
shareholder of Bullion by reason of its P191,522,803.22 investment, which comprises 95.76% of
the agreed P200,000,000.00 authorized capital stock of Bullion. Majestic also claims that the
subject MOA remains valid and binding and that Bullion failed to comply with its undertakings
thereunder.
In its Answer,15 Bullion denied the material allegations of Majestic’s complaint alleging the
defense that it was the latter which, in fact, violated the provisions of the MOA causing Bullion to
rescind the said agreement.
Initially, the instant case was treated as an intra-corporate dispute and raffled to Branch 24 of the
Regional Trial Court (RTC) of Manila, a commercial court, wherein several Orders were issued
against Bullion, and eventually, a Decision16 dated October 12, 2005 was rendered in favor of
Majestic. Bullion assailed the RTC Orders via a special civil action for certiorari filed with the
CA, docketed as C.A.-G.R. S.P. No. 91886, while respondent’s stockholders filed an appeal of the
RTC Decision, docketed as C.A.-G.R. CV No. 86167. These two (2) actions were subsequently
consolidated by the CA and in its Decision,17 promulgated on February 19, 2008, via a special
division of five, unanimously set aside the Decision of the commercial court and remanded the
case to Branch 24, RTC of Manila to be tried as an ordinary specific performance case. However,
on Majestic’s motion, the presiding judge of Branch 24 subsequently inhibited himself from the
case18 prompting
_______________
14 Id., at pp. 1-19.
15 Id., at pp. 176-196.
16 Records (Vol. II), pp. 18-23.
17 Id. (Vol. III), pp. 12-37.
18 See RTC Order dated June 15, 2010, id., at p. 120.
pg. 454
102

the executive judge to assign the same to Branch 46, RTC of Manila which is also a commercial
court.19 The parties did not question the jurisdiction of Branch 46.
In the ensuing proceedings before Branch 46, the parties jointly moved that the case be submitted
for summary judgment, to which the RTC acceded.20
On July 28, 2011, Branch 46, RTC of Manila rendered a Decision21 in favor of petitioner, the
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff

Majestic Plus Holding International, Inc. and against the herein defendants, ordering the latter to:
1. Strictly comply and implement in full the terms and conditions of the Memorandum of
Agreement, more particularly the acquisition of 80% shareholdings of defendant Bullion by
plaintiff Majestic;
2. Issue the shares of stock of defendant Bullion in favor of plaintiff Majestic corresponding
to 40% which has long been paid by plaintiff Majestic and record the same in its Stock and
Transfer Book;
3. Maintain/restore plaintiff Majestic in the physical possession and control of the entire
Meisic Mall premises;
4. Transfer the remaining shares of stock in the name of plaintiff Majestic up to the extent
of 80% shareholdings upon payment of the balance of P39,000,000.00
_______________
19 See RTC Order dated June 21, 2010, id., at p. 123.
20 See Amended Pre-Trial Order dated July 18, 2011, id., at p. 340.
21 Records (Vol. III), pp. 468-478.
pg. 455
103
VOL. 812, DECEMBER 5, 2016 103

and to record the same in the Stock and Transfer Book;
5. Furnish/provide plaintiff Majestic within reasonable time all of defendant Bullion’s

corporate records;
6. Immediately cause the amendment of the authorized capital stock of defendant Bullion
from P30,000,000.00 to P200,000,000.00 and reflect the increased equity of plaintiff
Majestic brought about by the expenses it incurred to complete the Meisic Mall; and
7. Pay the cost of this suit.
The counterclaims of the herein defendants are dismissed for lack of merit.
SO ORDERED.22
Bullion and its directors appealed the above RTC Decision with the CA.23
On August 22, 2011, Majestic filed a Motion for Execution Pending Appeal24 which was granted
by the RTC by virtue of a Special Order25 and two other related orders,26 all dated September 1,
2011. Consequently, a Writ of Execution Pending Appeal27 on even date was issued. Per Sheriff’s
Return dated September 2, 2011, the Writ was served on Bullion and was thereby immediately
implemented.28 In accordance with the Writ, the Sheriff was able to completely and successfully
_______________
22 Id., at pp. 477-478.
23 Id., at pp. 489 and 495.
24 Id., at pp. 479-488.
25 Id., at pp. 513-514.
26 Id., at pp. 515-516.
27 Id., at pp. 517-518.
28 Id., at pp. 519-520.
pg. 456
104

remove the physical possession and control of Meisic Mall from Bullion and deliver the same to
Majestic.29
In view thereof, Bullion filed a Petition for Certiorari30 before the CA seeking the nullification
of the: (1) Special Order granting the Motion for Execution Pending Appeal; (2) Order granting
police assistance to the implementing Sheriff; (3) Order granting the appointment of a Special
Sheriff; and (4) Writ of Execution Pending Appeal. Bullion also prayed for the issuance of a
Temporary Restraining Order and Mandatory Injunction.
In its Decision31 dated November 2, 2011, the CA granted the aforesaid Petition and annulled and
set aside the Special Order and the two (2) other assailed Orders, all dated September 1, 2011, the
dispositive portion of which states:
WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The assailed
Special Order and the two (2) other Orders, all dated 02 September 2011 rendered by the public
respondent judge are ANNULLED and SET ASIDE. Any and all acts committed in pursuance of
the said Orders are necessarily NULLIFIED.
Accordingly, let a writ of final prohibitory and mandatory injunction issue, as follows:
1. The public and private respondents, together with all persons acting for and in their
behalf are ENJOINED from proceeding with the implementation of the public respondent’s
Decision dated 28 July 2011 in Civil Case No. 05-113352 entitled, “Majestic Plus Holding
International, Inc. v. Bullion Investment and Development Corporation, Genesson U.
_______________
29 Id.
30 Rollo (G.R. No. 201017), pp. 259-275.
31 Id., at pp. 58-82.
pg. 457
105
VOL. 812, DECEMBER 5, 2016 105

Tecson, Roland M. Lautchang, Wilson Chun Bon Cheng Koa, Luis K. Lokin, Jr., Jefferson
U. Tecson and Rosalie C. Ching,” as well as the writ of execution pending appeal dated 01
September 2011; and
2. The public and private respondents, and all persons acting for and in their behalf, are
ORDERED to RESTORE the possession and control of the Meisic Mall to petitioner in
the same situation and condition immediately before the Decision dated 28 July 2011 in
Civil Case No. 05-113352 aforecited.
SO ORDERED.32
The CA basically ruled that the RTC committed grave abuse of discretion in granting Majestic’s
motion for execution pending appeal since the “good reasons” required by Rule 39 of the Rules of
Court are found to be absent in the instant case.
On November 14, 2011, Majestic filed a Motion for Reconsideration with the CA, which was
denied in its Resolution33 dated March 14, 2012. Thus, the filing of the present petition by
Majestic, docketed as G.R. No. 201017, raising the following grounds:
A.
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT RULED THAT

THE REQUISITE FILING OF A MOTION FOR RECONSIDERATION WOULD ONLY
DELAY THE URGENT NECESSITY TO RESOLVE THE TEMPORARY RESTRAINING
ORDER AS CONTAINED IN THE PETITION ITSELF.
_______________
32 Id., at pp. 81-82. (Emphasis in the original)
33 Id., at pp. 84-87.
106
pg. 458
B.
THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT

ACCEPTED A HIGHLY DEFECTIVE VERIFICATION AND CERTIFICATION AS WELL AS
SECRETARY’S CERTIFICATE SUBMITTED BY BULLION.
C.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN

DISREGARDING THE UNDISPUTED FACT THAT BULLION’S PETITION FOR
CERTIORARI PRESENTS ISSUES/MATTERS THAT ARE PROPER AND ALSO THE
SUBJECT OF THE APPEAL INTERPOSED BY BULLION.
D.
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT STRUCK

DOWN THE “GOOD REASONS” AS FOUND BY THE TRIAL COURT.
E.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE

RESTORATION OF THE POSSESSION AND CONTROL OF THE MEISIC MALL TO
BULLION.34
During the pendency of G.R. No. 201017, the CA promulgated its Decision35 on Bullion’s appeal
of the July 28, 2011 Decision of the RTC. The CA essentially ruled that since there are genuine
issues of fact in the present case which require the presentation of evidence, the RTC should have
proceeded to conduct a full-blown trial and should have refrained from issuing a summary
judgment. Hence, the assailed CA Decision disposed as follows:
_______________
34 Id., at p. 26.
pg. 459
35 Rollo (G.R. No. 215289), pp. 52-69.
107
VOL. 812, DECEMBER 5, 2016 107

WHEREFORE, the appealed July 28, 2011 Decision of the Regional Trial Court of Manila,
Branch 46, National Capital Judicial Region is hereby REVERSED AND SET ASIDE.
Accordingly, the portion of the Decision directing defendant-appellant Bullion Investment and
Development Corporation to maintain/restore plaintiff Majestic in the physical possession and
control of the entire Meisic Mall premises is declared to be of no force and effect. The right of
defendant-appellant Bullion Investment and Development Corporation to physically possess,
manage and control the Meisic Mall, now known as 11/88 Mall, is recognized. As to the other
aspects of the case, let this case be REMANDED to the RTC of Manila, to be re-raffled to a
regular court and not to a special commercial court, for further proceedings and proper disposition,
according to regular procedure.
SO ORDERED.36
Aggrieved by the CA Decision, Majestic comes to this Court via the instant petition, docketed as
G.R. No. 215289, on the following grounds:
I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE

DECISION OF THE REGIONAL TRIAL COURT BRANCH 46 OF MANILA.
II. THE REGIONAL TRIAL COURT BRANCH 46 OF MANILA HAS JURISDICTION

OVER THE CASE.
III. THE REGIONAL TRIAL COURT BRANCH 46 OF MANILA DID NOT EXCEED
JURISDICTION.
pg. 460
IV. THE REGIONAL TRIAL COURT BRANCH 46 OF MANILA DID NOT ERR IN
GRANTING MAJESTIC CLAIMS AND DISMISSING DEFENDANTS-APPELLANTS’
COUNTERCLAIM.
_______________
36 Id., at pp. 67-68. (Emphasis in the original)
108

V. THE HONORABLE COURT OF APPEALS ERRED WHEN IT DENIED MAJESTIC’S

MOTION FOR RECONSIDERATION.37
In a Resolution38 dated January 28, 2015, this Court resolved to consolidate G.R. Nos. 201017
and 215289.
The petitions lack merit.
At the outset, it behooves this Court to determine the issue of whether or not the RTC, Branch 46
of Manila has jurisdiction over the subject matter of the instant case. In its Comment in G.R. No.
215289, Bullion contends that neither Branch 24 nor Branch 46 of the RTC of Manila has
jurisdiction over the suit for specific performance filed by Majestic. Bullion argues that having
been designated as special commercial courts, the jurisdiction of Branches 24 and 46 is limited to
trying and deciding special commercial cases only. On the other hand, Majestic counters that the
designation of RTCs as special commercial courts has not, in any way, limited their jurisdiction to
hear and decide cases of all nature, whether civil, criminal or special proceedings.
As a basic premise, the Court reiterates the principle that a court’s acquisition of jurisdiction over
a particular case’s subject matter is different from incidents pertaining to the exercise of its
jurisdiction.39 Jurisdiction over the subject matter of a case is conferred by law, whereas a court’s
exercise of jurisdiction, unless provided by the law itself, is governed by the Rules of Court or by
the orders issued from time to time by the Supreme Court.40 The matter of whether the RTC
resolves an issue in the exercise of its general jurisdiction or of its
_______________
37 Id., at p. 22.
pg. 461
38 Rollo (G.R. No. 201017), p. 313.
39 Concorde Condominium, Inc. v. Baculio, G.R. No. 203678, February 17, 2016, 784 SCRA
263; Gonzales v. GJH Land, Inc. (formerly S.J. Land, Inc.), G.R. No. 202664, November 10, 2015,
774 SCRA 242.
40 Id.
109
VOL. 812, DECEMBER 5, 2016 109

limited jurisdiction as a special court is only a matter of procedure and has nothing to do with the
question of jurisdiction.41
Moreover, it should be noted that Special Commercial Courts (SCCs) are still considered courts
of general jurisdiction.42 Section 5.243 of R.A. No. 8799, otherwise known as The Securities
Regulation Code, directs merely the Supreme Court’s designation of RTC branches that shall
exercise jurisdiction over intra-corporate disputes. The assignment of intra-corporate disputes to
SCCs is only for the purpose of streamlining the workload of the RTCs so that certain branches
thereof like the SCCs can focus only on a particular subject matter.44 Nothing in the language of
the law suggests the diminution of jurisdiction of those RTCs to be designated as SCCs.45 The
RTC exercising jurisdiction over an intra-corporate dispute can be likened to an RTC exercising
its probate jurisdiction or sitting as a special agrarian court. The designation of the SCCs as such
has not in any way limited
_______________
41 Id.
42 GD Express Worldwide N.V. v. Court of Appeals (Fourth Division), 605 Phil. 406, 418; 587
SCRA 333, 344 (2009); Strategic Alliance Development Corporation v. Star Infrastructure
Development Corporation, 649 Phil. 669, 687; 635 SCRA 380, 398 (2010); Concorde
Condominium, Inc. v. Baculio, id.
43 5.2. The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The
Commission shall retain jurisdiction over pending cases involving intra-corporate disputes
submitted for final resolution which should be resolved within one (1) year from the enactment of
pg. 462
this Code. The Commission shall retain jurisdiction over pending suspension of
payment/rehabilitation cases filed as of 30 June 2000 until finally disposed.
44 GD Express Worldwide N. V. v. Court of Appeals (Fourth Dvision), supra at p. 419; p. 344.
45 Id.
110

their jurisdiction to hear and decide cases of all nature, whether civil, criminal or special
proceedings.46
Stated differently, in the ruling case of Gonzales, et al. v. GJH Land, Inc., et al.,47 this Court held
that:
x x x the fact that a particular branch x x x has been designated as a Special Commercial Court
does not shed the RTC’s general jurisdiction over ordinary civil cases under the imprimatur of
statutory law, i.e., Batas Pambansa Bilang (BP) 129. To restate, the designation of Special
Commercial Courts was merely intended as a procedural tool to expedite the resolution of
commercial cases in line with the court’s exercise of jurisdiction. This designation was not made
by statute but only by an internal Supreme Court rule under its authority to promulgate rules
governing matters of procedure and its constitutional mandate to supervise the administration of
all courts and the personnel thereof. Certainly, an internal rule promulgated by the Court cannot
go beyond the commanding statute. But as a more fundamental reason, the designation of Special
Commercial Courts is, to stress, merely an incident related to the court’s exercise of jurisdiction,
which, as first discussed, is distinct from the concept of jurisdiction over the subject matter. The
RTC’s general jurisdiction over ordinary civil cases is therefore not abdicated by an internal rule
streamlining court procedure.48
Hence, based on the foregoing, it is clear that Branch 46, RTC of Manila, despite being designated
as an SCC, has jurisdiction to hear and decide Majestic’s suit for specific performance.
Having disposed of the question of jurisdiction, the Court will now proceed to delve into the merits
of the present petitions.
_______________
pg. 463
46 Id.
47 Gonzales v. GJH Land, Inc. (formerly S.J., Land, Inc.), supra note 39.
48 Id.
111
VOL. 812, DECEMBER 5, 2016 111

There are two basic issues posed in these two petitions. First is the correctness of the July 28, 2011
Decision of the RTC via summary judgment. Second is the propriety of ordering the execution of
such Decision pending appeal. In turn, the Court notes that both these issues hinge on the
preliminary determination of whether or not the RTC was correct in considering the case
appropriate for summary judgment. The Court will, thus, follow the course taken by the CA and
proceed to determine first if it was proper for the RTC to render its assailed summary judgment.
Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations
and useless delays.49 Relief by summary judgment is intended to expedite or promptly dispose of
cases where the facts appear undisputed and certain from the pleadings, depositions, admissions
and affidavits.50 Summary judgments are proper when, upon motion of the plaintiff or the
defendant, the court finds that the answer filed by the defendant does not tender a genuine issue as
to any material fact and that one party is entitled to a judgment as a matter of law.51 But if there
be a doubt as to such facts and there be an issue or issues of fact joined by the parties, neither
one of them can pray for a summary judgment.52 Where the facts pleaded by the parties are
disputed or contested, proceedings for a summary judgment cannot take the place of a
trial.53
_______________
49 Villuga v. Kelly Hardware and Construction Supply, Inc., 691 Phil. 353, 364; 677 SCRA 131,
141 (2012).
50 YKR Corporation v. Philippine Agri-Business Center Corporation, G.R. No. 191838, October
20, 2014, 738 SCRA 577, 598.
51 Soller v. Heirs of Jeremias Ulayao, 691 Phil. 348, 351; 677 SCRA 124, 128 (2012), citing
Calubaquib v. Republic, 667 Phil. 653, 661; 652 SCRA 523, 531-532 (2011).
52 YKR Corporation v. Philippine Agri-Business Center Corporation, supra. (Emphasis ours)
pg. 464
53 Id. (Emphasis ours)
112

In Calubaquib, et al. v. Republic of the Philippines,54 this Court had the occasion to discuss the
nature of a summary judgment and to reiterate the conditions that should be met before it can be
resorted to, to wit:
xxxx
An examination of the Rules will readily show that a summary judgment is by no means a hasty
one. It assumes a scrutiny of facts in a summary hearing after the filing of a motion for summary
judgment by one party supported by affidavits, depositions, admissions, or other documents, with
notice upon the adverse party who may file an opposition to the motion supported also by
affidavits, depositions, or other documents x x x. In spite of its expediting character, relief by
summary judgment can only be allowed after compliance with the minimum requirement of
vigilance by the court in a summary hearing considering that this remedy is in derogation of
a party’s right to a plenary trial of his case. At any rate, a party who moves for summary
judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that
the issue posed in the complaint is so patently unsubstantial as not to constitute a genuine issue for
trial, and any doubt as to the existence of such an issue is resolved against the movant.
As mentioned above, a summary judgment is permitted only if there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a matter of law. The test of the
propriety of rendering summary judgments is the existence of a genuine issue of fact, as
distinguished from a sham, fictitious, contrived or false claim. A factual issue raised by a party is
considered as sham when by its nature it is evident that it cannot be proven or it is such that the
party tendering the same has neither any sincere intention nor adequate evidence to prove it. This
usually happens in denials made
_______________
54 Calubaquib v. Republic, supra note 51.
pg. 465
113
VOL. 812, DECEMBER 5, 2016 113

by defendants merely for the sake of having an issue and thereby gaining delay, taking advantage
of the fact that their answers are not under oath anyway.
In determining the genuineness of the issues, and hence the propriety of rendering a
summary judgment, the court is obliged to carefully study and appraise, not the tenor or
contents of the pleadings, but the facts alleged under oath by the parties and/or their
witnesses in the affidavits that they submitted with the motion and the corresponding
opposition. Thus, it is held that, even if the pleadings on their face appear to raise issues, a
summary judgment is proper so long as “the affidavits, depositions, and admissions presented by
the moving party show that such issues are not genuine.”
The filing of a motion and the conduct of a hearing on the motion are, therefore, important
because these enable the court to determine if the parties’ pleadings, affidavits and exhibits
in support of, or against, the motion are sufficient to overcome the opposing papers and
adequately justify the finding that, as a matter of law, the claim is clearly meritorious or
there is no defense to the action. The nonobservance of the procedural requirements of filing
a motion and conducting a hearing on the said motion warrants the setting aside of the
summary judgment.55
In the present case, it is true that both parties moved for the rendition of a summary judgment.56
However, it is apparent that the RTC did not comply with the procedural guidelines when it ordered
that the case be submitted for summary judgment without first conducting a hearing to determine
if there are indeed no genuine issues of fact that would necessitate
_______________
55 Id., at pp. 661-663; pp. 531-533, citing Viajar v. Estenzo, 178 Phil. 561, 572-573; 89 SCRA
684, 697 (1979). (Emphases supplied; citations omitted)
56 See RTC Order dated June 23, 2011, Records (Vol. III), p. 267.
114
pg. 466
trial. The trial court merely required the parties to submit their respective memoranda, together
with their affidavits and exhibits and, although the parties presented opposing claims, the RTC
hastily rendered a summary judgment. Thus, the trial court erred in cursorily issuing the said
judgment.
Undoubtedly, the case at bar may not, even by the most liberal or strained interpretation, be
considered as one not involving genuine issues of fact which necessitates presentation of evidence
to determine which of the two conflicting assertions is correct. A careful examination of the
pleadings will show that Majestic’s causes of action in its Complaint are anchored on Bullion’s
supposed violations of the provision of the subject MOA. On the other hand, Majestic’s allegations
are controverted by Bullion who, in a like manner, asserts that by virtue of Majestic’s failure to
comply with the provisions of the said MOA, it decided to rescind the same. These diametrically
opposed and conflicting claims present a factual dispute which can be resolved and settled only by
means of evidence presented during trial. The documents and memorandum submitted by the
parties all the more show that the facts pleaded are disputed or contested. It is true that the main
document from which the parties base their claims and defenses is the same MOA and that the
issue submitted for resolution before the RTC is which of the parties complied with or violated the
provisions of the said MOA. However, arising from this main issue are conflicting allegations
coming from both parties. In turn, these allegations tender genuine issues of fact necessitating the
presentation of evidence, thus, precluding the rendition of a summary judgment. Certainly, the
issue as to who violated the subject MOA, thus, raised by the parties and formulated by the RTC
in its Amended Pre-Trial Order, as well as the particular matters as to whether or not the said MOA
has been validly rescinded and whether or not Majestic has, in fact, incurred P134,522,803.22 in
completing the construction of and in maintaining the operation of the Meisic Mall, are issues
which may not be categorized as
115
VOL. 812, DECEMBER 5, 2016 115

frivolous and sham so as to dispense with the presentation of evidence in a formal trial.
As to the issue of rescission of the subject MOA, Bullion contends that it rescinded the MOA
because Majestic failed to pay several installments of its obligations which are due thereunder,
which failure gives Bullion the right to rescind the same. On the other hand, Majestic opposes the
rescission insisting that the MOA remains valid and binding for Bullion’s failure to comply with
the conditions of a valid rescission as set under the MOA. Majestic likewise argues that it was, in
fact, Bullion which violated the provisions of the MOA. It is a settled rule that extrajudicial
rescission has a legal effect where the other party does not oppose it.57 Where it is objected to, a
pg. 467
judicial determination of the issue is still necessary.58 Thus, considering Majestic’s strong
opposition to Bullion’s rescission of the MOA, and since both parties allege that the other had
violated the MOA, the Court agrees with the CA that the issue of rescission necessitates judicial
intervention which entails examination by the trial court of evidence presented by the parties in a
full-blown trial.
Also, the Court finds no error in the ruling of the CA that the aggregate sum of P134,522,803.22
alleged by Majestic as expenses it incurred in completing the construction of the Meisic Mall, as
well as in the acquisition of equipment and facilities used therein, is yet to be substantiated by
competent proof. The only evidence presented by Majestic to support its claims is an Affidavit59
executed by the Finance Comptroller of its allied corporation, accompanied by a summary of
Payments Made to Meisic Mall.60 Majestic has yet to present re-
_______________
57 Subic Bay Metropolitan Authority v. Universal International Group of Taiwan, 394 Phil. 691,
711; 340 SCRA 359, 377 (2000); Palay, Inc. v. Clave, 209 Phil. 530; 124 SCRA 638, 645-646
(1983).
58 Id.
59 Records (Vol. III), p. 387.
60 Id., at pp. 388-391.
116

ceipts or other competent documentary evidence to prove the said payments. Moreover, these
claims were specifically denied by Bullion in its Answer to the Complaint. In view of such denial,
Majestic’s claims are, thus, subject to confirmation and validation by proof during trial proper.
Moreover, in a Special Division composed of five (5) Justices, the CA in its February 19, 2008
Decision, which remanded the case to the RTC to be tried as an ordinary specific performance
case, held that Majestic’s Complaint raises many factual issues which, while refuted by Bullion’s
Answer, would still have to be disproved by evidence in further proceedings.61 Also, in its
presently assailed Decision dated November 2, 2011, another Division of the CA, which annulled
the RTC Order granting Majestic’s motion for execution pending appeal, expressed misgivings
with respect to the trial court’s disposition of the case by ratiocinating in this wise:
pg. 468
What is more, the Court is mystified [perplexed?] on how the public respondent judge came to rule
as to the actions sought to be implemented or enforced in the assailed Orders. Of course, the Court
is aware that the entry of private respondents shareholdings in the stock and transfer books, the
amendment of value of its investments and the award of physical possession of the Meisic Mall,
are all contained in the dispositive portion of the lower court’s Decision. However, it appears in
the very same Decision that the proceedings before the public respondent are summary in nature
and that the sole issue which the parties agreed upon is who between these parties violated the
Memorandum of Agreement. Nothing more, nothing less.62
Furthermore, a perusal of the records of the case would show that Majestic itself is not totally
convinced that the case
_______________
61 See Records (Vol. III), p. 36.
62 Rollo (G.R. No. 201017), p. 76.
117
VOL. 812, DECEMBER 5, 2016 117

is, indeed, ripe for summary judgment. In its Motion for Reconsideration of the May 13, 2010
Order of the RTC of Manila, which initially dismissed its Complaint on the ground of lack of cause
of action, Majestic argued for the need of a full-blown trial to thresh out the parties’ conflicting
claims, to wit:
xxxx
As regard[s] defendant Bullion’s alleged noncommission of any act or omission in violation of

[Majestic’s] rights and the failure of the latter to comply with its obligations, these are in no doubt,
evidentiary matters which have yet to be established in a full-blown trial. As the records would
show, the case has not even reached the pretrial hearing and therefore, it becomes too premature
for the Honorable Court to make a definite ruling on the alleged lack of cause of action.
Indeed, unless the parties have presented their respective evidence in chief, any findings on the
alleged lack of cause of action will be highly premature and speculative at best.63
pg. 469
In granting Majestic’s Motion for Reconsideration, the RTC agreed with Majestic’s above quoted
argument and ruled, thus:
xxxx
A perusal of the complaint hypothetically admitting all the facts and allegations in the subject
complaint [shows that] there [are] sufficient factual averments where this Court can render valid
judgments. Essentially, these causes of action raise many factual issues traversing on the
Memorandum of Agreement and the obligation of the defendant[s] to the plaintiff which indeed
have to be disproved by the defendants in a full-blown trial as this was refuted in the Answer. Even
the comment in the motion for reconsideration establishing
_______________
63 Records (Vol. III), p. 115.
118

the circumstances involving the rescission of the Memorandum of Agreement are clear factual
matters which should be proved and threshed out in a full-blown trial.64
On the basis of the foregoing, it is clear that the RTC erred in rendering its assailed summary
judgment. Thus, the CA did not commit error in setting aside the said summary judgment.
In view of this Court’s affirmance of the CA ruling which reversed and set aside the July 28, 2011
Decision of the RTC, there is no longer any RTC judgment that may be executed. Hence, the issue
as to whether or not there are “good reasons” to execute the assailed Decision of the RTC has
become moot and academic. This is in accordance with our ruling in Osmeña III v. Social Security
System of the Philippines,65 where we defined a moot and academic case or issue as follows:
pg. 470
A case or issue is considered moot and academic when it ceases to present a justiciable controversy
by virtue of supervening events, so that an adjudication of the case or a declaration on the issue
would be of no practical value or use. In such instance, there is no actual substantial relief which
a petitioner would be entitled to, and which would be negated by the dismissal of the petition.
Courts generally decline jurisdiction over such case or dismiss it on the ground of mootness —
save when, among others, a compelling constitutional issue raised requires the formulation of
controlling principles to guide the bench, the bar and the public; or when the case is capable of
repetition yet evading judicial review.66
_______________
64 See RTC Order dated January 11, 2011; id., at p. 146.
65 559 Phil. 723; 533 SCRA 313 (2007).
66 Id., at p. 735; p. 327, citing Province of Batangas v. Romulo, 473 Phil. 806; 429 SCRA 736
(2004); Olanolan v. Commission on Elections, 494 Phil. 749, 759; 454 SCRA 807, 816-817 (2005);
Paloma v. Court of Appeals, 461 Phil. 269, 276-277; 415 SCRA 590, 595 (2003). (Citations
omitted)
119
VOL. 812, DECEMBER 5, 2016 119

Consequently, this Court no longer finds any need to discuss and resolve the other issues raised in
G.R. No. 201017.
As to who between the parties has the right of possession, control and operation of the Meisic
Mall, suffice it to say that the Court agrees with the disquisition of the CA in its October 23, 2013
Decision in C.A.-G.R. CV No. 97537, which sustains the restoration of possession and control of
the Meisic Mall in favor of Bullion, to wit:
Basic is the rule in corporation law that the business and affairs of a corporation [are] handled by
a Board of Directors and not the controlling stockholder. All corporate powers are exercised, all
business conducted and all properties controlled by the Board of Directors. Hence, [even granting
that] Majestic has become the controlling stockholder of the Bullion x x x by itself alone, it cannot
have the physical possession and operate the business of the Meisic Mall.67
pg. 471
Finally, the Court agrees with the ruling of the CA which ordered the remand of the case to the
RTC of Manila to be re-raffled to a noncommercial court for further proceedings and proper
disposition.
WHEREFORE, the instant petitions are DENIED. The November 2, 2011 Decision and March
14, 2012 Resolution of the Court of Appeals in C.A.-G.R. S.P. No. 121072 are AFFIRMED. The
October 23, 2013 Decision and November 4, 2014 Resolution of the Court of Appeals in C.A.-
G.R. CV No. 97537 are, likewise, AFFIRMED. The Executive Judge of the Regional Trial Court
of Manila is hereby ORDERED to PROMPTLY RE-RAFFLE the case among the
noncommercial courts with a directive that the same be resolved with deliberate dispatch.
SO ORDERED.
_______________
67 Rollo (G.R. No. 215289), p. 67.
120

Perez, Reyes, Perlas-Bernabe*** and Jardeleza, JJ., concur.
Petitions denied, judgments and resolutions affirmed. Executive Judge of Regional Trial Court of
Manila ordered to re-raffle case among noncommercial courts.
Notes.—Basic is the rule that the right of rescission of a party to an obligation under Article 1191
of the Civil Code is predicated on a breach of faith by the other party who violates the reciprocity
between them. (Swire Realty Development Corporation vs. Yu, 752 SCRA 135 [2015])
The Securities and Exchange Commission’s (SEC’s) jurisdiction over rehabilitation cases had
already been transferred to the Regional Trial Courts (RTCs) acting as commercial courts by virtue
of Republic Act (RA) No. 8799 or the Securities Regulation Code. (Lexber, Inc. vs. Dalman, 756
SCRA 34 [2015])
——o0o——
pg. 472
G.R. No. 205951. July 4, 2016.*
UNION BANK OF THE PHILIPPINES, petitioner, vs. PHILIPPINE RABBIT BUS LINES, INC.,
respondent.
Remedial Law; Special Civil Actions; Ejectment; An ejectment case is not limited to lease
agreements or deprivations of possession by force, intimidation, threat, strategy, or stealth. It is
as well available against one who withholds possession after the expiration or termination of his
right of possession under an express or implied contract, such as a contract to sell.—It must have
escaped the atten-
_______________
* SECOND DIVISION.
445
VOL. 795, JULY 4, 2016 445

Union Bank of the Philippines vs. Philippine Rabbit Bus Lines, Inc.
tion of the MTCC, the RTC, and the CA that an ejectment case is not limited to lease agreements
or deprivations of possession by force, intimidation, threat, strategy, or stealth. It is as well
available against one who withholds possession after the expiration or termination of his right of
possession under an express or implied contract, such as a contract to sell. Under Section 1, Rule
70 of the 1997 Rules, “a x x x vendor, vendee, or other person against whom the possession of any
land or building is unlawfully withheld after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied, or the legal representatives or assigns of
any such lessor, vendor, vendee, or other person, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial
Court against the person or persons unlawfully withholding or depriving of possession, or any
person or persons claiming under them, for the restitution of such possession, together with
damages and costs.” In such cases, it is sufficient to allege in the plaintiff’s complaint that — 1.
The defendant originally had lawful possession of the property, either by virtue of a contract or by
tolerance of the plaintiff; 2. Eventually, the defendant’s possession of the property became illegal
or unlawful upon notice by the plaintiff to defendant of the expiration or the termination of the
defendant’s right of possession; 3. Thereafter, the defendant remained in possession of the property
and deprived the plaintiff the enjoyment thereof; and 4. Within one year from the unlawful
deprivation or withholding of possession, the plaintiff instituted the complaint for ejectment.
pg. 473
Civil Law; Contract to Sell; The full payment of the purchase price in a contract to sell is a positive
suspensive condition whose nonfulfillment is not a breach of contract, but merely an event that
prevents the seller from conveying title to the purchaser; in other words, the nonpayment of the
purchase price renders the contract to sell ineffective and without force and effect.—It was plainly
erroneous for the lower courts to require a demand to pay prior to filing of the ejectment case. This
is not one of the requisites in an ejectment case based on petitioner’s contract to sell with
respondent. As correctly argued by petitioner, the full payment of the purchase price in a contract
to sell is a positive suspensive condition whose nonfulfillment is not a breach of contract, but
merely an event that prevents the seller from conveying title to the purchaser; in other words, the
nonpayment of the purchase price renders the contract to sell inef-
446

fective and without force and effect. Respondent’s failure and refusal to pay the monthly
amortizations as agreed rendered the contract to sell without force and effect; it therefore lost its
right to continue occupying the subject property, and should vacate the same.
Oracion, Barlis and Associates for petitioner.
Nisce and Associates Law and Juan B. Valdez for respondent.
DEL CASTILLO, J.:
An ejectment case is not limited to lease agreements or deprivations of possession by force,

intimidation, threat, strategy, or stealth. It is as well an available remedy against one who withholds
possession after the expiration or termination of his right of possession under an express or implied
contract, such as a contract to sell.
This Petition for Review on Certiorari1 assails the July 31, 2012 Decision2 of the Court of Appeals
(CA) dismissing the Petition for Review3 in C.A.-G.R. S.P. No. 102065, and its January 25, 2013
Resolution4 denying reconsideration of the assailed Decision.
_______________
pg. 474
1 Rollo, pp. 9-35.
2 Id., at pp. 177-191; penned by Associate Justice Michael P. Elbinias and concurred in by
Associate Justices Isaias P. Dicdican and Nina G. Antonio-Valenzuela.
3 Id., at pp. 150-175.
4 Id., at pp. 193-194.
447
VOL. 795, JULY 4, 2016 447

Factual Antecedents
Petitioner Union Bank of the Philippines is the owner of two parcels of land totaling 1,181 square
meters, with improvements (subject property), in Poblacion, Alaminos, Pangasinan, covered by
Transfer Certificate of Title Nos. 21895 and 21896.5 Respondent Philippine Rabbit Bus Lines,
Inc. was the former owner of the lots but it lost the same by foreclosure to petitioner; nonetheless,
respondent continued to occupy the same.
On November 8, 2001, petitioner and respondent executed a Contract to Sell6 covering the subject
property for P12,208,633.57, payable within seven years in quarterly installments (principal and
interest) of P824,757,97. The contract to sell stipulated, among others, that “[a]ll payments
required under this Contract to Sell shall be made by the [buyer] without need of notice, demand,
or any other act or deed, at the principal office address of the [seller]”;7 and that should respondent
fail to fully comply with the agreement or in case the contract is canceled or rescinded, all its
installment payments “shall also be forfeited by way of penalty and liquidated damages”8 and
“applied as rentals for [its] use and possession of the property without need for any judicial action
or notice to or demand upon the [buyer] and without prejudice to such other rights as may be
available to and at the option of the [seller] such as, but not limited to bringing an action in court
to enforce payment of the Purchase Price or the balance thereof and/or for damages, or for any
causes of action allowed by law.”9
Respondent failed to fully pay the stipulated price in the contract to sell. Petitioner thus sent a
December 10, 2003
_______________
pg. 475
5 Id., at pp. 47-50.
6 Id., at pp. 51-54.
7 Id., at p. 51.
8 Id., at p. 52.
9 Id., at pp. 51-52.
448

notarized demand letter entitled “Demand to Pay with Rescission of Three (3) Contracts to Sell
dated November 8, 2001,”10 which stated among others that —
Our records show that you have failed to pay your past due quarterly installment payments for
August 31, 2003 and November 30, 2003 as per attached Statement of Account as of December
16, 2003 in the total amount of PESOS: NINE MILLION NINE HUNDRED FORTY
THOUSAND ONE HUNDRED NINETY-SEVEN & 36/100 (P9,940,197.36) x x x:
xxxx
Correspondingly, you are hereby given a period of thirty (30) days from receipt hereof within
which to pay your aforesaid past due installment payments, otherwise, your three (3) Contracts to
Sell with UNION BANK OF THE PHILIPPINES over the properties x x x are deemed
automatically rescinded effective thirty (30) days from the expiration of the 30-day period to
update your past due installment payments without further notice.11
Petitioner sent another letter-demand to vacate12 dated May 24, 2004 to respondent, stating as
follows:
We write in connection with your proposal to purchase back the properties that are the subject of
the three (3) Contracts to Sell executed on November 8, 200313 and were rescinded effective
February 28, 2004. x x x
pg. 476
As you are aware, we deferred the sending of the Demand to Vacate over the said properties
because of the three (3) postdated checks (PDC’s) with an aggregate amount of P1.5 Million which
you have tendered to the
_______________
10 Id., at p. 56.
11 Id.
12 Id., at p. 58.
13 Should be “2001.”
449
VOL. 795, JULY 4, 2016 449

bank, as well as your proposal to purchase again the said properties after the Rescission of the
Contracts to Sell last February 28, 2004. Unfortunately, out of the three (3) PDC’s submitted to
the bank, only one (1) check had cleared amounting to P500,000.00 which shall be applied as
rental payment as mentioned in our letter dated March 17, 2004.
Moreover, we wish to inform you that your proposal to purchase again the said properties as
contained in your letter dated April 16, 2004 was never finalized nor presented for approval given
that you failed to make good your promised payment of P1.5 Million. We have given you more
than enough time but there is still no relief in sight.
For this reason, the bank has decided to exercise its right to take physical possession of the above
mentioned properties. As such, we are giving you fifteen (15) days upon receipt of this letter within
which to vacate the said properties and surrender possession of the premises to the bank, otherwise,
we will be constrained to refer your account for proper legal action.14
Thus, it appears that after petitioner sent its December 10, 2003 letter-demand to pay the amount
of P9,940,197.36, respondent was unable to pay and petitioner rescinded the contract to sell on
February 28, 2004. Despite the fact that the contract to sell has been rescinded, respondent
proposed to continue with the same and issued and tendered to the petitioner three postdated checks
in the amount of P1.5 million as payment. However, only one check in the amount of P500,000.00
cleared. Petitioner thus sent another March 17, 2004 letter to respondent stating that the said
pg. 477
P500,000.00 has been applied as rental payment; respondent replied in an April 16, 2004 letter
proposing to proceed with the sale. Petitioner thereafter sent the above May 24, 2004 letter-demand
to vacate, which respondent received on May 26, 2004.
_______________
14 Rollo, p. 58.
450

Ruling of the Municipal Trial

Court in Cities (MTCC)
On May 26, 2005, petitioner filed an ejectment case against respondent before the MTCC of
Alaminos, Pangasinan, which was docketed as Civil Case No. 2171. The Complaint15 for
“Ejectment with Prayer for Fixation of Rentals” prayed that respondent be evicted from the subject
property, and that it be ordered to pay petitioner rental in arrears in the amount of P1.5 million,
P125,000.00 monthly rent from May 27, 2004 until respondent completely vacates the premises,
attorney’s fees, and costs.
In its Answer16 and Supplemental Answer,17 respondent prayed for dismissal, claiming that
petitioner had no cause of action for ejectment and the MTCC had no jurisdiction over the case
because it involved breach of contract and rescission of the contract to sell, which are cognizable
by the Regional Trial Courts (RTC); that since the case is one for rescission, there should be mutual
restitution, but the amounts involved — payments, interests and penalties — should be properly
computed; that the demand to vacate was not unequivocal and was improperly served; and that the
verification and certification on non-forum shopping in the Complaint were defective for lack of
proper authority.
After proceedings in due course, the MTCC issued on October 25, 2006 a Decision18 dismissing
Civil Case No. 2171 for lack of jurisdiction. It held that petitioner’s case is one for rescission and
enforcement of the stipulations in the contract to sell; that the demand to vacate and fixing of
rentals prayed for are consequences of petitioner’s unilateral cancellation of the contract and are
thus inextricably connected with rescis-
_______________
pg. 478
15 Id., at pp. 39-46.
16 Id., at pp. 61-62.
17 Id., at pp. 64-66.
18 Id., at pp. 100-110; penned by Judge Borromeo R. Bustamante.
451
VOL. 795, JULY 4, 2016 451

sion; and that there is “no definite expiration or termination of the [respondent’s] right to
possess”19 the subject property, and such right depended “upon its fulfillment of the stipulations
in the contract.”20
Ruling of the Regional Trial Court
Petitioner appealed before the RTC,21 which rendered a Decision22 on August 6, 2007, stating as
follows:
The demand required and contemplated in Sec. 2 of Rule 70 of the Revised Rules of Court is a
demand for the defendant to pay the rentals due or to comply with the conditions of the lease and
not only a demand to vacate the premises; and where the defendant does not comply with the said
demand within the period provided by Sec. 2 then his possession becomes unlawful. Consequently,
both demands to pay and to vacate are necessary to make the defendant a deforciant in order that
Ejectment suit may be filed and the fact of such demands must be alleged in the complaint,
otherwise the Inferior Court cannot acquire jurisdiction over the case.
Analyzing the above letter of demand sent by the plaintiff-appellant to the defendant-appellee, the
same did not demand for the payment of the defendant-appellee’s obligation. It was merely a
demand to vacate without the demand to pay.
Hence, the Court is of the considered opinion that such demand is not sufficient compliance with
Sec. 2 of Rule 70 of the Rules of Court. Furthermore, a Notice of Demand giving the lessee the
alternative whether to pay the rental or vacate the premises does not comply with the above rule.
(Vda. de Murga v. Chan, No. L-24680, Oc-
pg. 479
_______________
19 Id., at p. 109.
20 Id.
21 Branch 55.
22 Rollo, pp. 111-115; Decision in Civil Case No. A-3115 penned by Judge Elpidio N. Abella.
452

tober 7, 1968) In the said letter of demand itself, it says: “As such, we are giving you fifteen (15)
days upon receipt of this letter within which to vacate the said properties and surrender possession
of the premises to the bank, otherwise we will be constrained to refer your account for proper legal
action.” To the mind of the Court, this is not the final demand contemplated under the same rule,
because should the defendant fail to vacate, the plaintiff-appellant will still refer defendant-
appellee’s account for proper legal action which does not comply with the requirements of said
Sec. 2 of Rule 70 of the Rules of Court.
Moreover, it was ruled in the case of Penas, Jr. v. Court of Appeals, G.R. No. 112734, July 7,
1994, that an alternative demand on either to renew the expired lease contract or vacate is not a
definite demand to vacate and would be insufficient basis for the filing of an action for unlawful
detainer. Hence, the Court rules that the demand letter x x x is not a definite demand to vacate
because if it fails to vacate, the defendant-appellee’s account would still be referred for proper
legal action hence, insufficient basis for filing an action for unlawful detainer.
In such case, the jurisdictional requisite of demand to pay and to vacate was not complied with
and the lower court did not acquire jurisdiction over the unlawful detainer case, hence, it was
properly dismissed.
There is no more need to discuss the other issues raised as they are now moot and academic.
WHEREFORE, foregoing premises considered, the instant appeal is dismissed. Without cost.
SO ORDERED.23
pg. 480
Petitioner filed a Motion for Reconsideration,24 claiming that there was a previous demand to pay,
that is, its December 10, 2003 letter entitled “Demand to Pay with Rescission of
_______________
23 Id., at pp. 114-115.
24 Id., at pp. 116-124.
453
VOL. 795, JULY 4, 2016 453

Three (3) Contract to Sell dated November 8, 2001”; that even then, demand to pay was not
necessary because its cause of action for ejectment was not based on nonpayment of rent, but
rescission of the contract to sell for violation of its terms; and that the final and executory ruling
in C.A.-G.R. S.P. No. 115438 — which involved the same parties but a different contract to sell
over different properties, and where it was held that the inferior court has jurisdiction over the
ejectment case notwithstanding respondent’s claim that the case is one for rescission — should
guide the trial court in resolving the case. However, the RTC denied the motion in a November
29, 2007 Order.25
Petitioner filed before the CA a Petition for Review,26 docketed as C.A.-G.R. S.P. No. 102065,
advancing the same arguments in its Motion for Reconsideration of the RTC Decision, adding that
its demand to vacate was unequivocal as it contained a threat that if respondent does not heed the
demand, appropriate legal action will be taken; and that all the requisite allegations in a complaint
for ejectment were complied with. It prayed that the RTC’s August 6, 2007 Decision be set aside,
and that a new one be issued granting the reliefs prayed for in its Complaint.
On July 31, 2012, the CA rendered a Decision denying the Petition. It held that petitioner had a
cause of action for ejectment based on nonpayment of rentals and refusal to vacate since
respondent’s right to occupy the subject property terminated when it failed to honor the contract
to sell by not paying the agreed amortizations, and thereafter their agreement was converted into
a lease, but respondent failed to pay rent and did not vacate the premises; however, it failed to
comply with the jurisdictional requirement of demand to pay
pg. 481
_______________
25 Id., at pp. 147-149.
26 Id., at pp. 150-175.
454

and vacate under Section 2, Rule 70 of the 1997 Rules of Civil Procedure27 (1997 Rules). It found,
as the RTC did, that while there was a demand to vacate upon respondent, there was no prior
demand to pay made on the latter; that since both requisites — demand to pay and vacate — must
concur, the absence of one strips the lower court of jurisdiction over petitioner’s Complaint for
ejectment.
Petitioner moved to reconsider, but in its January 25, 2013 Resolution, the CA held its ground.
Hence, the present Petition.
Issues
Petitioner submits that —
SINCE THE CONTRACT TO SELL BETWEEN PETITIONER UBP AND RESPONDENT

PRBL WAS ALREADY CANCELED DUE TO PRBL’S FAILURE TO PAY THE PURCHASE
PRICE, IS IT STILL REQUIRED FOR THE PETITIONER UBP TO ISSUE A DEMAND TO
PAY PRIOR TO THE FILING OF THE EJECTMENT CASE?
IF SUCH DEMAND TO PAY IS REQUIRED, WAS THE PETITIONER UBP ABLE TO

COMPLY WITH THE SAME WHEN IT PREVIOUSLY MADE A DEMAND FOR THE
RESPONDENT TO PAY THE AMOUNT DUE (EXHIBIT “B”) BEFORE ISSUING THE
DEMAND TO VACATE (EXHIBIT “C”)?
_______________
27 Rule 70, Forcible Entry and Unlawful Detainer.
pg. 482
Sec. 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.
455
VOL. 795, JULY 4, 2016 455

ASSUMING EX GRATIA ARGUMENTI THAT NO DEMAND TO PAY WAS ISSUED BY THE

PETITIONER PRIOR TO THE FILING OF THIS CASE, WAS IT CORRECT FOR THE
HONORABLE COURT TO HAVE CONSIDERED SUCH ISSUE EVEN IF THE SAME WAS
NOT RAISED BY THE PARTIES DURING THE PRETRIAL CONFERENCE AND WAS
NEVER TOUCHED BY THE PARTIES IN THEIR PLEADINGS?
SINCE THE ISSUE REGARDING UBP’S RIGHT TO EJECT PRBL FROM THE PREMISES
HAD BEEN SETTLED WITH FINALITY IN ANOTHER CASE DECIDED BY THE
HONORABLE COURT OF APPEALS, CAN THE SAID COURT IGNORE THE FINAL
DECISION AND THEN RULE IN A CONTRARY MANNER?28
Petitioner’s Arguments
Petitioner essentially argues in its Petition and Reply29 that since the contract to sell was already
rescinded, it was no longer required to make a demand for payment prior to filing an ejectment
suit; that in Union Bank of the Philippines v. Maunlad Homes, Inc.,30 which involved a similar
Contract to Sell executed by it, this Court declared that in a contract to sell, the nonpayment of the
purchase price renders the agreement without force and effect, and the buyer’s act of withholding
installment payments deprived it of the right to continue possessing the property subject matter of
the agreement; that since its ejectment case is anchored not on failure to pay rent, but on violation
of the contract to sell, no demand for payment was required; and that, just the same, a demand to
pay was made on December 10, 2003. Petitioner thus prays for reversal of the assailed dispositions
and the granting of the reliefs prayed for in its Complaint.
_______________
28 Rollo, pp. 21-22.
pg. 483
29 Id., at pp. 256-261.
30 692 Phil. 667; 678 SCRA 539 (2012).
456

Respondent’s Arguments
In its Comment,31 respondent finds no cogent or compelling reason to reverse the CA Decision,
arguing that since there was no demand to pay, the MTCC did not acquire jurisdiction over the
petitioner’s ejectment case.
Our Ruling
The Petition must be granted.
It must have escaped the attention of the MTCC, the RTC, and the CA that an ejectment case is
not limited to lease agreements or deprivations of possession by force, intimidation, threat,
strategy, or stealth. It is as well available against one who withholds possession after the expiration
or termination of his right of possession under an express or implied contract, such as a contract
to sell. Under Section 1, Rule 70 of the 1997 Rules, “a x x x vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any
time within one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding
or depriving of possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.” In such cases, it is sufficient to allege in the
plaintiff’s complaint that —
1. The defendant originally had lawful possession of the property, either by virtue of a contract
or by tolerance of the plaintiff;
pg. 484
_______________
31 Rollo, pp. 242-245.
457
VOL. 795, JULY 4, 2016 457

2. Eventually, the defendant’s possession of the property became illegal or unlawful upon notice
by the plaintiff to defendant of the expiration or the termination of the defendant’s right of
possession;
3. Thereafter, the defendant remained in possession of the property and deprived the plaintiff the
enjoyment thereof; and
4. Within one year from the unlawful deprivation or withholding of possession, the plaintiff
instituted the complaint for ejectment.32
Upon an examination of the Complaint and evidence in Civil Case No. 2171, it appears that
petitioner complied with the above requirements. It alleged that respondent acquired the right to
occupy the subject property by virtue of the November 8, 2001 Contract to Sell; that respondent
failed to pay the required amortizations and thus was in violation of the stipulations of the
agreement; that petitioner made a written “Demand to Pay with Rescission of Three (3) Contracts
to Sell dated November 8, 2001,” but respondent was unable to heed the demand; that respondent
lost its right to retain possession of the subject property, and it was illegally occupying the
premises; that petitioner made another demand, this time a written demand to vacate on May 24,
2004, which respondent received on May 26, 2004; that respondent refused to vacate the premises;
that on May 26, 2005, or within the one-year period required by the Rules, the ejectment case was
filed; and that there is a need to determine the rents and damages owing to petitioner.
It was plainly erroneous for the lower courts to require a demand to pay prior to filing of the
ejectment case. This is not one of the requisites in an ejectment case based on petitioner’s contract
to sell with respondent. As correctly argued
_______________
32 Piedad v. Gurieza, G.R. No. 207525, June 18, 2014, 727 SCRA 71, 77; Union Bank of the
Philippines v. Maunlad Homes, Inc., supra note 30 at p. 676; pp. 545-546.
pg. 485
458

by petitioner, the full payment of the purchase price in a contract to sell is a positive suspensive
condition whose nonfulfillment is not a breach of contract, but merely an event that prevents the
seller from conveying title to the purchaser; in other words, the nonpayment of the purchase price
renders the contract to sell ineffective and without force and effect.33 Respondent’s failure and
refusal to pay the monthly amortizations as agreed rendered the contract to sell without force and
effect; it therefore lost its right to continue occupying the subject property, and should vacate the
same.
Having arrived at the foregoing conclusions, the Court finds no need to discuss the other points
raised in the Petition.
WHEREFORE, the Petition is GRANTED. The assailed July 31, 2012 Decision and January 25,
2013 Resolution of the Court of Appeals in C.A.-G.R. S.P. No. 102065 are REVERSED and SET
ASIDE.
Respondent Philippine Rabbit Bus Lines, Inc. is ORDERED TO: 1) IMMEDIATELY

VACATE the subject property upon the finality of this Decision, and 2) PAY petitioner Union
Bank of the Philippines all rentals-in-arrears and accruing rentals until it vacates the property.
The case is REMANDED to the Municipal Trial Court in Cities of Alaminos, Pangasinan, or to
any branch thereof or court handling Civil Case No. 2171, for the determination of the amount of
rentals; attorney’s fees and costs, if any; and interest, which are all due to petitioner.
SO ORDERED.
_______________
33 Union Bank of the Philippines v. Maunlad Homes, Inc., id.; Nabus v. Pacson, 620 Phil. 344;
605 SCRA 334 (2009); Almocera v. Ong, 569 Phil. 497; 546 SCRA 164 (2008); Ayala Life
Assurance, Inc. v. Ray Burton Development Corporation, 515 Phil. 431; 479 SCRA 462 (2006).
458
pg. 486
Notes.—In a contract to sell, the payment of the purchase price is a positive suspensive condition,
the failure of which is not a breach, casual or serious, but a situation that prevents the obligation
of the vendor to convey title from acquiring obligatory force. (Heirs of Cayetano Pangan and
Consuelo Pangan vs. Perreras, 597 SCRA 253 [2009])
Payment of the price is a positive suspensive condition, failure of which is not a breach but an
event that prevents the obligation of the vendor to convey title from becoming effective. (Garcia
vs. Court of Appeals, 619 SCRA 280 [2010])
——o0o——
_______________
** Per Special Order No. 2357 dated June 28, 2016.
pg. 487
G.R. No. 204222. July 4, 2016.*
NEPTUNE METAL SCRAP RECYCLING, INC., petitioner, vs. MANILA ELECTRIC

COMPANY and THE PEOPLE OF THE PHILIPPINES, respondents.
Remedial Law; Civil Procedure; Intervention; Words and Phrases; Intervention is a remedy by
which a third party, who is not originally impleaded in a proceeding, becomes a litigant for
purposes of protecting his or her right or interest that may be affected by the proceedings.—
Intervention is a remedy by which a third party, who is not originally impleaded in a proceeding,
becomes a litigant for purposes of protecting his or her right or interest that may be affected by the
proceedings. Intervention is not an absolute right but may be granted by the court when the movant
shows facts which satisfy the requirements of the statute authorizing intervention. The allowance
or disallowance of a motion to intervene is within the sound discretion of the court. Section 1, Rule
19 of the Rules provides that a court may allow intervention (a) if the movant has legal interest or
is otherwise qualified, and (b) if the intervention will not unduly delay or prejudice the adjudication
of rights of the original parties and if the intervenor’s rights may not be protected in a separate
proceeding. Both requirements must concur. Section 2, Rule 19 of the Rules requires a movant to
file the motion for intervention before the RTC’s rendition of judgment and to attach a pleading-
in-
_______________
* SECOND DIVISION.
419
VOL. 795, JULY 4, 2016 419

Neptune Metal Scrap Recycling, Inc. vs. Manila Electric Company
intervention. The court may allow intervention after rendition of judgment if the movant is an
indispensable party.
Same; Same; Same; A movant for intervention must have legal interest either (i) in the matter in
litigation, (ii) in the success of either of the parties, or (iii) against both parties.—A movant for
intervention must have legal interest either (i) in the matter in litigation, (ii) in the success of either
of the parties, or (iii) against both parties. The movant may also intervene if he or she is (iv) so
situated as to be adversely affected by a distribution or other disposition of property in the court’s
pg. 488
custody. Legal interest is present when the intervenor will either gain or lose as a direct effect of
the judgment. The legal interest must be actual and material, direct, and immediate. In a theft case,
the subject matter in litigation is the item alleged to have been stolen.
Same; Same; Same; The rules on intervention are procedural rules, which are mere tools designed
to expedite the resolution of cases pending in court.—The rules on intervention are procedural
rules, which are mere tools designed to expedite the resolution of cases pending in court. Courts
can avoid a strict and rigid application of these rules if such application would result in
technicalities that tend to frustrate rather than promote substantial justice. In the present case,
Neptune only filed a special appearance with a motion to inspect the container van before the RTC.
At that time, Neptune was still uncertain whether it owned or it had legal interest over the container
van’s contents. After the inspection, however, it ascertained that it indeed owned the scrap copper
wires and thus continued to participate in the case. Notably, the RTC allowed Neptune to appear,
file pleadings, and represent itself in the court proceedings. All these amount to intervention as
contemplated under the rules.
Nicolas & De Vega Law Offices for petitioner.
Horacio M. Bona for respondent Meralco.
420

BRION, J.:
We resolve the petition for review on certiorari challenging the March 20, 2012 and October 19,
2012 resolutions1 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 119642. The CA denied the
motion for leave to intervene and to admit the comment-in-intervention filed by Neptune Metal
Scrap Recycling, Inc. (Neptune) due to lack of legal interest to intervene and late filing of the
intervention.
The Facts
pg. 489
Neptune traces its roots to the criminal case filed against Rolando Flores (Flores) and Jhannery
Hupa (Hupa) (the accused). On August 10, 2010, the accused were driving a trailer truck with a
container van towards the Manila International Container Port when men from the Criminal
Investigation and Detection Group flagged them down on suspicion that they were illegally
transporting electric power transmission scrap copper wires owned by the Manila Electric
Company (Meralco). The police seized the truck with its contents and detained the accused.
The accused were charged before the Regional Trial Court (RTC) of Malabon with theft of electric
power transmission lines and materials under Section 3 of Republic Act (RA) No. 7832.2 The case
was docketed as Criminal Case No. 10-1419.
The accused filed a motion to quash the information alleging that the facts charged in the
information do not constitute an offense.
_______________
1 Rollo, pp. 78-84; penned by Associate Justice Japar B. Dimaampao and concurred in by
Associate Justices Michael P. Elbinias and Socorro B. Inting (March 20, 2012 resolution); and by
Associate Justices Elihu A. Ybañez and Victoria Isabel A. Paredes (October 19, 2012 resolution).
2 Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994. (December 8,

1994)
421
VOL. 795, JULY 4, 2016 421

Neptune filed its entry of special appearance with motion for leave to permit the inspection,
examination, and photographing of the seized container van (entry with motion). Neptune
argued that it owned the contents of the container van, specifically, the thirteen (13) bundles of
scrap copper wires worth around Eight Million Pesos (P8,000,000.00). Neptune presented several
documents to prove its claim of ownership.3
The RTC granted Neptune’s motion and ordered the inspection of the container van and its
contents. A second inspection was done to allow Meralco’s representatives to inspect the same.
Neptune continued to participate in the RTC proceedings. It filed several pleadings before the RTC
such as: (a) a manifestation on the results of the first inspection; (b) a motion to deposit the keys
to the container van with the court; (c) a supplement to the motion to deposit the keys; (d) a
pg. 490
memorandum of authorities on “birch cliff copper”; (e) a manifestation on the results of the second
inspection; (f) a motion for the release of the goods; and (g) the comment to Meralco’s
compliance.4 Neptune also took part in the clarificatory hearing on the inspection.
On January 3, 2011, the RTC ordered the quashal of the information.5 The RTC noted that no
Meralco power transmission scrap copper wires were found in the container van during the two
ocular inspections. The RTC also ordered the return of the keys and the container van to
Neptune. Neptune recovered three remaining bundles of scrap copper wires.
_______________
3 Rollo, p. 24: (a) purchase order from Trumet International to Neptune; (b) Neptune’s Export
Declaration to the Department of Trade and Industry; and (c) packing list.
4 Id., at pp. 24-27.
5 Id., at pp. 349-354.
422

Meralco filed a motion for reconsideration which the RTC denied. Meralco then filed a petition
for certiorari before the CA asking to reinstate the information; it did not include Neptune as a
party. Thus, Neptune filed a motion for leave to intervene and to admit its comment-in-
intervention. Meralco opposed this motion claiming that the subject matter of the offense, i.e., the
electric power transmission scrap copper wires, is different from the birch cliff copper wires
claimed by Neptune.
The CA denied Neptune’s motion for leave to intervene. The CA ruled that: (a) Neptune failed to
demonstrate its legal interest on the subject matter in litigation; (b) the intervention will unduly
delay or prejudice the case; and (c) Neptune failed to timely file a motion for intervention before
the RTC and to directly and actively participate in the RTC proceedings. The CA added that
Neptune may vindicate its rights in a separate action.
The CA also denied Neptune’s motion for reconsideration; hence, this petition.
The Parties’ Arguments
pg. 491
In its petition, Neptune argues that it has legal interest over the subject matter in litigation — the
scrap copper “birch cliff” found in the container van; in fact, it was persistent in asserting its right
of ownership even before the RTC. If the RTC’s order is reversed, Neptune stands to lose the three
recovered bundles of copper scrap worth approximately P2,000,000.00 because Articles 25 and 45
of the Revised Penal Code (RPC) provide for the forfeiture of the instruments and proceeds of an
offense in favor of the government. Neptune adds that the owner of a property subject of the
litigation has a right to intervene.
Neptune also argues that the intervention would not delay the adjudication of the parties’ rights,
and in fact would facili-
423
VOL. 795, JULY 4, 2016 423

tate the administration of justice in determining whether the accused are liable for the crime
charged.
Neptune stresses that its entry with motion was effectively a motion for intervention timely filed
before the RTC. The RTC, it adds, also recognized Neptune’s intervention by allowing it to
participate in the proceedings by filing numerous pleadings and appearing in court hearing.
Assuming that the motion for intervention was belatedly filed, Neptune argues, the CA should still
have allowed Neptune’s intervention. As a general rule, intervention is allowed only before or
during a trial. However, in several cases, the Court has allowed intervention even after rendition
of judgment if the facts and merits of the case warrant it.6
In its comment,7 the Office of the Solicitor General (OSG), representing the People of the
Philippines, argues: first, that Neptune’s petition raises questions of fact which are not allowed in
a Rule 45 petition. The issue of whether Neptune complied with the requirements for intervention
requires the Court to scrutinize the evidence.
Second, the OSG insists, that Neptune has no legal interest to justify the intervention for three
reasons: (1) Neptune has no legal interest in the subject matter of the case. The subject matter in
the present case is the transmission copper wires owned by Meralco, not the birch cliff copper
wires claimed by Neptune. (2) Neptune has no interest in the success of either party or against both
parties because it cannot be prejudiced by a court’s finding of guilt of the accused. (3) Neptune
cannot be adversely affected by the distribution or disposition of the property in the court’s
pg. 492
custody. The OSG notes that the container van is not in the court’s custody as it has not yet been
offered in evidence.
_______________
6 Office of the Ombudsman v. Miedes, Sr., G.R. No. 176409, February 27, 2008, 547 SCRA 148.
7 Rollo, pp. 396-429.
424

Third, the OSG argues that the motion for intervention was belatedly filed. It emphasizes that
Neptune filed only an entry with special appearance, not a motion for intervention, before the RTC.
The entry of special appearance could not be considered a motion for intervention because it had
no pleading-in-intervention attached to it as required under Section 19 of the Rules of Court
(Rules). The motion for leave to permit inspection, examination, and photographing of the seized
container van does not constitute a pleading-in-intervention. Thus, the RTC gravely abused its
discretion when it took cognizance of Neptune’s motions and pleadings despite the absence of
personality to take part in the proceedings.
In its reply,8 Neptune reiterates its arguments and adds that the legal question raised in the petition
is whether the entry and its accompanying motion were effectively a motion for intervention under
Rule 19 of the Rules. Even assuming that the petition raises a pure question of fact, the Court may
still take cognizance of the case as it falls under the two exceptions: (a) the CA’s findings of fact
are conclusions without citation of specific evidence; and (b) the CA’s findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on record.
Neptune also clarifies that the transmission wires claimed by Meralco are part of the scrap copper
wires claimed by Neptune. In fact, the RTC found no Meralco property inside the container van.
Meralco also failed to present any evidence to show that it owns the copper wires.
We find the petition meritorious.
pg. 493
The issue before the Court is whether the CA erred in denying Neptune’s motion for intervention.
_______________
8 Id., at pp. 426a-450.
425
VOL. 795, JULY 4, 2016 425

Intervention is a remedy by which a third party, who is not originally impleaded in a proceeding,
becomes a litigant for purposes of protecting his or her right or interest that may be affected by the
proceedings.9 Intervention is not an absolute right but may be granted by the court when the
movant shows facts which satisfy the requirements of the statute authorizing intervention.10 The
allowance or disallowance of a motion to intervene is within the sound discretion of the court.11
Section 1, Rule 19 of the Rules provides that a court may allow intervention (a) if the movant has
legal interest or is otherwise qualified, and (b) if the intervention will not unduly delay or prejudice
the adjudication of rights of the original parties and if the intervenor’s rights may not be protected
in a separate proceeding.12 Both requirements must concur.
Section 2, Rule 19 of the Rules requires a movant to file the motion for intervention before the
RTC’s rendition of judgment and to attach a pleading-in-intervention.13 The court may allow
intervention after rendition of judgment if the movant is an indispensable party.14
With these procedural rules as guidelines, we examine, first, whether Neptune has a legal interest
to intervene in the present case. Is Neptune’s ownership of the allegedly stolen items sufficient to
grant intervention?
_______________
9 Ongco v. Dalisay, G.R. No. 190810, July 18, 2012, 677 SCRA 232.
10 Executive Secretary v. Northeast Freight Forwarders, Inc., G.R. No. 179516, March 17, 2009,
581 SCRA 736.
11 Heirs of Geronimo Restrivera v. De Guzman, G.R. No. 146540, July 14, 2004, 434 SCRA 456.
12 Executive Secretary v. Northeast Freight Forwarders, Inc., supra.
13 Rules of Court, Rule 19, Section 2.
pg. 494
14 Looyuko v. Court of Appeals, G.R. No. 102696, July 12, 2001, 361 SCRA 150; and Pinlac v.
Court of Appeals, G.R. No. 91486, September 10, 2003, 410 SCRA 419.
426

A movant for intervention must have legal interest either (i) in the matter in litigation, (ii) in the
success of either of the parties, or (iii) against both parties.15 The movant may also intervene if he
or she is (iv) so situated as to be adversely affected by a distribution or other disposition of property
in the court’s custody.16 Legal interest is present when the intervenor will either gain or lose as a
direct effect of the judgment.17 The legal interest must be actual and material, direct, and
immediate.18 In a theft case, the subject matter in litigation is the item alleged to have been
stolen.19
In the present case, Neptune argues that it has a legal interest in the subject matter in litigation,
particularly, the scrap copper wires in the container van. The RTC found Neptune to be the owner
of the contents of the container van; hence, it released these contents to Neptune. The RTC also
noted that no Meralco transmission wires were found in the container van during the two ocular
inspections. Thus, the RTC quashed the information against the accused.
As the owner of the scrap copper wires, Neptune undoubtedly has legal interest in the subject
matter in litigation. The CA’s reversal of the RTC’s quashal of the information would necessarily
require Neptune to return the bundles of copper wire it had recovered. Undoubtedly, Neptune, as
the owner, has a legal interest in the subject matter in litigation before the CA.
Second, we determine whether Neptune’s intervention would unduly delay or prejudice the
adjudication of the rights of the accused and of the State. We also consider whether Neptune’s,
rights may be protected in a separate proceeding.
_______________
16 Id.
17 Cariño v. Ofilada, G.R. No. 102836, January 18, 1993, 217 SCRA 206.
18 Id.
19 BSB Group, Inc. v. Go, G.R. No. 168644, February 16, 2010, 612 SCRA 596.
pg. 495
427
VOL. 795, JULY 4, 2016 427

In one case,20 the Court effectively placed the burden on the oppositors to argue that the
intervention would delay the proceedings and that the intervenor’s rights would not be protected
in a separate case. The Court noted that the oppositors focused their arguments on the intervenor’s
lack of legal interest such that they failed to allege or present any evidence to meet the second
requirement in granting intervention.21 Thus, the Court has no basis to rule that the intervention
will delay the adjudication of rights of the original parties.22 Too, the intervention is more
beneficial and convenient for petitioners and the courts as it will avoid multiplicity of suits and
clogging of the court dockets.23
Similarly, in the present case, the OSG failed to allege or present any evidence showing that
Neptune’s intervention Will delay the proceedings and that Neptune may protect its rights in a
separate case.
Additionally, allowing Neptune’s intervention is even beneficial to the courts in ascertaining

whether theft indeed occurred. The information filed before the RTC alleges that the accused
committed theft against Meralco. Lack of owner’s consent is an essential element of the crime of
theft. Neptune’s intervention will assist the CA in ascertaining the owner of the scrap copper wires
— whether Meralco or Neptune — and in determining whether the rightful owner gave its consent
to the accused’s act of taking the scrap copper wires. It should be stressed, too, that granting the
intervention would reduce the suits filed in court.
Third, we verify whether Neptune timely filed its intervention. As we noted above, a would-be
intervenor must file the motion for intervention before the RTC renders its judgment.
_______________
20 Supra note 10 at pp. 749-750.
21 Id.
22 Id.
23 Id., at p. 750.
pg. 496
428

In the present case, Neptune filed a motion denominated as “motion for intervention” only before
the CA or only after the RTC had rendered its judgment. Neptune argues that the entry with motion
it filed with the RTC is tantamount to a motion for intervention. The OSG, on the other hand,
argues that the entry with motion cannot constitute as a motion for intervention because it lacked
the pleading-in-intervention required by the Rules.
We rule in Neptune’s favor and hold that the entry with motion effectively constitutes a motion
for intervention.
The rules on intervention are procedural rules, which are mere tools designed to expedite the
resolution of cases pending in court.24 Courts can avoid a strict and rigid application of these rules
if such application would result in technicalities that tend to frustrate rather than promote
substantial justice.25
In the present case, Neptune only filed a special appearance with a motion to inspect the container
van before the RTC. At that time, Neptune was still uncertain whether it owned or it had legal
interest over the container van’s contents. After the inspection, however, it ascertained that it
indeed owned the scrap copper wires and thus continued to participate in the case. Notably, the
RTC allowed Neptune to appear, file pleadings, and represent itself in the court proceedings. All
these amount to intervention as contemplated under the rules.
The lack of a pleading-in-intervention attached to the entry with motion is justified by Neptune’s
initial uncertainty as to the ownership of the container van’s contents. After the ocular inspections,
we note that Neptune filed manifestations, motions, and comment before the RTC to disprove
Meralco’s alleged ownership and to reclaim the scrap copper wires.
_______________
24 Al-Amanah Islamic Investment Bank of the Philippines v. Celebrity Travel and Tours,
Incorporated, G.R. No. 155524, August 12, 2004, 436 SCRA 356, 366.
25 Id.
429
VOL. 795, JULY 4, 2016 429
pg. 497
These pleadings were accepted and considered by the RTC in rendering its decision.
Undeniably, the RTC allowed Neptune to intervene in the case via the entry with motion, albeit
without filing a motion specifically denominated as a “motion for intervention.” Thus, Neptune
complied with the requirement of filing an intervention prior to the RTC’s rendition of judgment.
All told, the CA erred when it denied Neptune’s motion for intervention on the grounds that it
lacked legal interest to intervene and that it filed the intervention beyond the prescribed period.
WHEREFORE, we hereby GRANT the petition. The March 20, 2012 and October 19, 2012
resolutions of the Court of Appeals in C.A.-G.R. S.P. No. 119642 are hereby REVERSED and
SET ASIDE.
SO ORDERED.
Carpio** (Acting CJ., Chairperson), Del Castillo and Leonen, JJ., concur.
Notes.—Jurisprudence describes intervention as “a remedy by which a third party, not originally

impleaded in the proceedings, becomes a litigant therein to enable him, her or it to protect or
preserve a right or interest which may be affected by such proceedings.” (The Board of Regents of
the Mindanao State University vs. Osop, 666 SCRA 467 [2012])
Jurisdiction over an intervention is governed by jurisdiction over the main action. (Pulgar vs.
Regional Trial Court of Mauban, Quezon, Branch 64, 734 SCRA 527 [2014])
——o0o——
_______________
pg. 498
G.R. No. 191492. July 4, 2016.*
PATRICIA SIBAYAN, represented by TEODICIO SIBAYAN, petitioner, vs. EMILIO

COSTALES, SUSANA ISIDRO, RODOLFO ISIDRO, ANNO ISIDRO and ROBERTO
CERANE, respondents.
Remedial Law; Civil Procedure; Dismissal of Actions; Appellant’s Brief; The usage of the word
may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file the
appellant’s brief is not mandatory, but discretionary.—Expounding on the discretion of the
appellate court to dismiss or allow the appeal to proceed despite belated service and filing of the
required brief, the Court in Diaz v. People, 691 SCRA 139 (2013), held: The usage of the word
may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal upon failure to file the
appellant’s brief is not mandatory, but discretionary. Verily, the failure to serve and file the
required number of copies of the appellant’s brief within the time provided by the Rules of Court
does not have the immediate effect of causing the outright dismissal of the appeal. This means that
the discretion to dismiss the appeal on that basis is lodged in the CA, by virtue of which the CA
may still allow the appeal to proceed despite the late filing of the appellant’s brief, when the
circumstances so warrant its liberality. In deciding to dismiss the appeal, then, the CA is bound to
exercise its sound discretion upon taking all the pertinent circumstances into due consideration.
Attorney-Client Relationship; Negligence of Counsel; A litigant bears the responsibility to monitor

the status of his case, for no prudent party leaves the fate of his case entirely in the hands of his
lawyer.—We find no reason to disturb the appellate court’s exercise of discretion in dismissing
the appeal. We perused the explanation proffered by petitioner and we found nothing that would
compel us to reverse the appellate court. The attribution of negligence to the counsel does not
automatically shield the client from adverse consequence of her own negligence and relieve her
from the unfavorable result of such lapse. Truly, a litigant bears the responsibility to
_______________
* THIRD DIVISION.
388

Sibayan vs. Costales
monitor the status of his case, for no prudent party leaves the fate of his case entirely in the hands
of his lawyer. It is the client’s duty to be in contact with his lawyer from time to time in order to
pg. 499
be informed of the progress and developments of his case; hence, to merely rely on the bare
reassurances of his lawyer that everything is being taken care of is not enough.
Remedial Law; Civil Procedure; Dismissal of Actions; Appellant’s Brief; The failure to file
Appellant’s Brief, though not jurisdictional, results in the abandonment of the appeal which may
be the cause for its dismissal.—The failure to file Appellant’s Brief, though not jurisdictional,
results in the abandonment of the appeal which may be the cause for its dismissal. We must
emphasize that the right to appeal is not a natural right but a statutory privilege, and it may be
exercised only in the manner and in accordance with the provisions of the law. The party who
seeks to avail of the same must comply with the requirements of the Rules. Failing to do so, the
right to appeal is lost. In the present case, petitioner failed to file the required brief within the
period prescribed under Section 7, Rule 44 of the Rules. Thus, the appellate court rightly
considered her appeal abandoned and consequently dismissed the same.
Bince, Viray, Dinos, Cera & Peralta IV Law Offices for petitioner.
Rodrigo Gualberto for respondents.
RESOLUTION
PEREZ, J.:
For resolution of the Court is this Petition for Review on Certiorari1 filed by petitioner Patricia
Sibayan represented by
_______________
1 Rollo, pp. 7-25.
389
VOL. 795, JULY 4, 2016 389

pg. 500
Teodicio Sibayan, seeking to reverse and set aside the Resolutions dated 2 October 20092 and 26
February 20103 of the Court of Appeals (CA) in C.A.-G.R. CV No. 91399. The assailed
resolutions dismissed the appeal of the petitioner for failure to file her appellant’s brief within the
reglementary period.
The Facts
On 27 February 2003, petitioner initiated an action for Recovery of Possession and Ownership
with Damages against respondents Emilio Costales, Susana Isidro, Rodolfo Isidro, Marcelo Isidro,
and Roberto Cerane before the Regional Trial Court (RTC) of Urdaneta, Pangasinan, Branch 45.4
In her Complaint docketed as Civil Case No. U-7642, petitioner averred that she is the registered
owner of a parcel of land with an area of 5,726 square meters located in Brgy. Catablan, Urdaneta
City, Pangasinan and registered under Transfer Certificate of Title (TCT) No. 180130.5 Due to the
encroachment effected by respondents on her property, particularly on Lot Nos. 5 and 7 thereof
(subject property), petitioner was compelled to file a case against them to protect her rights thereon.
To support her claims, petitioner appended in her complaint a copy of the relocation survey
showing that the above mentioned lots are within the bounds of TCT No. 180130.6 Petitioner thus
prayed that the RTC declare her the rightful owner of the disputed portion and order respondents
to vacate the same and respect her right thereon.7
_______________
2 Id., at pp. 26-28; penned by Associate Justice Mariflor P. Punzalan-Castillo, with Associate
Justices Mario L. Guariña III and Jane Aurora C. Lantion, concurring.
3 Id., at pp. 29-31.
4 Id., at pp. 68-72.
5 Id.
6 Id.
7 Id.
390
pg. 501
For their part, respondents assailed the ownership of the petitioner on the disputed property and
asserted that they, as the lawful owners and occupants, have the right to cultivate the land and
enjoy the fruits accruing thereon.8 Respondents asserted that they, together with their
predecessors-in-interest, were in possession of the subject property for over 80 years already.9
That the spraying of insecticide on the mango trees found in the said property was merely in
exercise of their right of dominion as they were the ones who planted those mango trees.10
Respondents likewise denied having knowledge of any relocation survey conducted on the
property which was made the basis of the petitioner in filing her complaint.11
After the pretrial conference, trial on the merits ensued wherein the trial court received the
respective documentary and testimonial evidence of both parties. After respondents put their case
to rest, the case was submitted for decision.
On 24 April 2007, the RTC rendered a Decision12 dismissing Civil Case No. U-7642 filed by the
petitioner. It was found by the court a quo that respondents were occupying the disputed portion
for 52 years already and the action of the petitioner to remove them from the said lot is already
barred by laches. An examination of the relocation survey submitted by the petitioner and reception
of testimonial evidence from opposing sides reveals that there was no overlapping or encroachment
of properties in the case at bar that warrants the removal of cloud. The RTC thus disposed:
“WHEREFORE, IN VIEW OF THE FOREGOING, the Court renders judgment dismissing the
herein
_______________
8 Id., at pp. 76-79.
9 Id.
10 Id.
11 Id.
12 Id., at pp. 80-100.
pg. 502
391
VOL. 795, JULY 4, 2016 391

amended complaint filed by [petitioner] against [respondents].
SO ORDERED.”13
Petitioner timely filed a Motion for Reconsideration14 which was denied by the RTC in an
Order15 dated 2 August 2007.
Dissatisfied, petitioner elevated the adverse RTC Decision to the CA by filing a Notice of
Appeal16 before the lower court.
Pursuant to Section 7, Rule 44 of the Revised Rules of Court,17 the appellate court ordered
petitioner to file her corresponding Appellant’s Brief within 45 days from the receipt of the copy
of the notice. A copy of the said notice was received by petitioner’s counsel on 17 November 2008;
petitioner has therefore until 31 January 2009 to file the required brief. Unfortunately, petitioner
was able to file her Appellant’s Brief only on 19 June 2009 or 139 days after the lapse of the
reglementary period. This long delay prompted the CA to consider the appeal abandoned and
dismissed in a Resolution18 dated 2 October 2009, to wit:
“WHEREFORE, the Motion to Admit Appellant’s Brief is DENIED. The instant appeal is
considered ABANDONED and DISMISSED pursuant to Section 1(e) Rule 50 of the Revised
Rules of Court.”19
_______________
13 Id., at p. 100.
14 Id., at pp. 101-105.
15 Id., at pp. 110-111.
16 Id., at p. 113.
17 SEC. 7. Appellant’s brief.—It shall be the duty of the appellant to file with the court, within
forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and
documentary, are attached to the record, seven (7) copies of his legibly typewritten, mimeographed
or printed brief, with proof of service of two (2) copies thereof upon the appellee.
pg. 503
18 Rollo, pp. 26-31.
19 Id., at p. 31.
392

Faulting her counsel for the non-filing of the Appellant’s Brief within the reglementary period,
petitioner sought for the reconsideration of the earlier CA Resolution dismissing her appeal. She
averred that she should not be allowed to suffer from the consequences of her counsel’s negligence
and prayed for the liberality of the court to afford her the opportunity to ventilate her case on the
merits. To rule otherwise, the petitioner claimed, is tantamount to deprivation of her right to enjoy
her property without due process.
For failure of the petitioner to present persuasive arguments to merit the reinstatement of her
appeal, the CA denied her Motion for Reconsideration in its Resolution20 dated 26 February 2010.
The disquisition of the appellate court reads:
“In the case at bench, not only was there a considerable delay of one hundred thirty-nine (139)
days in the filing of appellants brief. No justifiable explanation therefor was proffered by
[petitioner] other than continuing pressure of work of her counsel or negligence of her counsel.
Such unexplained delay is not just a technical lapse which can be excused. Moreover, We thus
reiterate that a client is bound by [her] counsel’s conduct, negligence and mistakes in handling the
case, and the client [might not] be heard to complain that the result might have been different had
[her] lawyer proceeded differently. The only exceptions to the general rule which the Supreme
Court finds acceptable are when the reckless or gross negligence of counsel deprives the client of
due process of law, or when the application of the rule results in the outright deprivation of one’s
property through technicality. Failure to file the appellant’s brief can qualify as simple negligence,
but it does not amount to gross negligence. Also, there is no outright deprivation of property.
[Petitioner] actively participated in the proceedings before the lower court.”21 (Citations omitted)
_______________
20 Id., at pp. 29-31.
21 Id., at pp. 27-28.
pg. 504
393
VOL. 795, JULY 4, 2016 393

Unflinching, petitioner is now before this Court via this instant Petition for Review on Certiorari
assailing the CA’s Decision and Resolution on the following grounds:
The Issue
I.
THE COURT OF APPEALS ERRED IN DENYING THE MOTION TO ADMIT

APPELLANT’S BRIEF AND CONSIDERING THE APPEAL AS DISMISSED AND
ABANDONED;
II.
THE COURT OF APPEALS ERRED IN CLASSIFYING ONLY AS SIMPLE NEGLIGENCE

THE LONG DELAY OF HER COUNSEL IN FILING THE APPELLANT’S BRIEF THEREBY
BINDING HER TO THE AFORESAID NEGLIGENCE;
III.
THE COURT OF APPEALS ERRED IN DENYING PETITIONER HER RIGHT TO APPEAL

WHEN SHE STOOD TO LOSE HER RIGHT TO HER PROPERTY DUE TO THE
ERRONEOUS JUDGMENT OF THE RTC.22
The core issue here is whether the CA erred in dismissing the appeal for petitioner’s failure to file
the appellant’s brief seasonably.
In insisting that the dismissal of her appeal was erroneous, petitioner harps on the negligence of
her counsel which is gross and therefore should not bind her. She argues that her
_______________
22 Id., at p. 15.
pg. 505
394

right to exercise ownership over her property is at stake and the denial of the appeal would be
tantamount to deprivation of her right to property without due process of law. To not allow her to
ventilate her position on appeal would bind her to the RTC Decision which is patently erroneous.
The Court resolves to deny the petition.
Section 3, Rule 41 of the 1997 Rules of Civil Procedure provides:
Section 3. Period of ordinary appeal.—The appeal shall be taken within fifteen (15) days from
notice of the judgment or final order appealed from. Where a record on appeal is required, the
appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of
the judgment or final order.
The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No
motion for extension of time to file a motion for new trial or reconsideration shall be allowed.
The foregoing Rule should be read in consonance with Section 7, Rule 44, which states:
Section 7. Appellant’s brief.—It shall be the duty of the appellant to file with the court, within
forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and
documentary, are attached to the record, seven (7) copies of his legibly typewritten, mimeographed
or printed brief, with proof of service of two (2) copies thereof upon the appellee.
Corollarily, the CA has, under the foregoing provision, discretion to dismiss or not to dismiss
respondent’s appeal.
Section 1. Grounds for dismissal of appeal.—An appeal may be dismissed by the Court of
Appeals, on its
pg. 506
395
VOL. 795, JULY 4, 2016 395

own motion or on that of the appellee, on the following grounds:
xxxx
(e) Failure of the appellant to serve and file the required number of copies of his brief or
memorandum within the time provided by these Rules[.]23
Expounding on the discretion of the appellate court to dismiss or allow the appeal to proceed
despite belated service and filing of the required brief, the Court in Diaz v. People,24 held:
The usage of the word may in Section 1(e) of Rule 50 indicates that the dismissal of the appeal
upon failure to file the appellant’s brief is not mandatory, but discretionary. Verily, the failure to
serve and file the required number of copies of the appellant’s brief within the time provided by
the Rules of Court does not have the immediate effect of causing the outright dismissal of the
appeal. This means that the discretion to dismiss the appeal on that basis is lodged in the CA, by
virtue of which the CA may still allow the appeal to proceed despite the late filing of the appellant’s
brief, when the circumstances so warrant its liberality. In deciding to dismiss the appeal, then, the
CA is bound to exercise its sound discretion upon taking all the pertinent circumstances into due
consideration.
The CA in the case at bar opted to dismiss the appeal interposed by petitioner considering the
negligence of the counsel as merely simple which binds petitioner from the adverse consequence
thereof. Her invocation of outright deprivation of property did not carry her day before the
appellate court as it was observed that she actively participated in the proceedings before the trial
court and thus she was afforded therein the unfettered opportunity to ventilate her case.
_______________
23 Rules of Court, Rule 50, Sec. 1(e).
24 704 Phil. 146, 157; 691 SCRA 139, 148 (2013).
pg. 507
396

We find no reason to disturb the appellate court’s exercise of discretion in dismissing the appeal.
We perused the explanation proffered by petitioner and we found nothing that would compel us to
reverse the appellate court. The attribution of negligence to the counsel does not automatically
shield the client from adverse consequence of her own negligence and relieve her from the
unfavorable result of such lapse. Truly, a litigant bears the responsibility to monitor the status of
his case, for no prudent party leaves the fate of his case entirely in the hands of his lawyer.25 It is
the client’s duty to be in contact with his lawyer from time to time in order to be informed of the
progress and developments of his case; hence, to merely rely on the bare reassurances of his lawyer
that everything is being taken care of is not enough.26
The failure to file Appellant’s Brief, though not jurisdictional, results in the abandonment of the
appeal which may be the cause for its dismissal.27 We must emphasize that the right to appeal is
not a natural right but a statutory privilege, and it may be exercised only in the manner and in
accordance with the provisions of the law.28 The party who seeks to avail of the same must comply
with the requirements of the Rules. Failing to do so, the right to appeal is lost. In the present case,
petitioner failed to file the required brief within the period prescribed under Section 7, Rule 44 of
the Rules.29 Thus, the appellate court rightly considered her appeal abandoned and consequently
dismissed the same.
_______________
25 Torrecampo v. NLRC, G.R. No. 199617, September 2, 2015, 769 SCRA 23.
26 Id.
27 Beatingo v. Gasis, 657 Phil. 552, 559; 642 SCRA 539, 546 (2011).
28 Id.
29 Heirs of the Late Cruz Barredo v. Asis, 480 Phil. 642, 649; 437 SCRA 196, 199-200 (2004).
397
VOL. 795, JULY 4, 2016 397

pg. 508
WHEREFORE, premises considered, the petition is DENIED. The assailed Resolutions of the
Court of Appeals are hereby AFFIRMED.
SO ORDERED.
Petition denied, resolutions affirmed.
Notes.—The general rule is that the negligence of counsel binds the client, even mistakes in the
application of procedural rules. The exception to the rule is “when the reckless or gross negligence
of the counsel deprives the client of due process of law.” (Ong Lay Hin vs. Court of Appeals, 748
SCRA 198 [2015])
The power conferred upon the Court of Appeals (CA) to dismiss an appeal for failure to file an
appellant’s brief is discretionary. (Republic vs. Benigno, 753 SCRA 135 [2015])
——o0o——
pg. 509
G.R. No. 209264. July 5, 2016.*
DAMASO T. AMBRAY and CEFERINO T. AMBRAY, JR.,** petitioners, vs. SYLVIA A.

TSOUROUS, CARMENCITA AMBRAY-LAUREL, HEDY AMBRAY-AZORES, VIVIEN AMBRAY-
YATCO, NANCY AMBRAY-ESCUDERO, MARISTELA AMBRAY-ILAGAN, ELIZABETH
AMBRAY-SORIANO, MA. LUISA FE AMBRAY-ARCILLA, and CRISTINA AMBRAY-LABIT,
respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; As a general rule, a
reexamination of factual findings cannot be done by the Supreme Court (SC) acting on a petition
for review on certiorari because it is not a trier of facts and only reviews Questions of law;
Exceptions.—At the outset, it should be pointed out that, as a general rule, a reexamination of
factual findings cannot be done by the Court acting on a petition for review on certiorari because
it is not a trier of facts and only reviews questions of law. This rule, however, admits of certain
exceptions, namely: (1) when the findings are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3)
when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of
facts; (5) when the findings of facts are conflicting; (6) when in making its findings the Court of
Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both
the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed
by the respondent; (10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different
_______________
* FIRST DIVISION.
** Estela T. Ambray had already died on August 15, 2002. See Rollo p. 9.
628
pg. 510
Ambray vs. Tsourous
conclusion. Finding a confluence of certain exceptions in this case, the general rule that only legal
issues may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court does
not apply, and the Court retains the authority to pass upon the evidence presented and draw
conclusions therefrom.
Forgery; Burden of Proof; As a rule, forgery cannot be presumed and must be proved by clear,
positive and convincing evidence, and the burden of proof lies on the party alleging forgery.—As
a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence,
and the burden of proof lies on the party alleging forgery. One who alleges forgery has the burden
to establish his case by a preponderance of evidence, or evidence which is of greater weight or
more convincing than that which is offered in opposition to it. The fact of forgery can only be
established by a comparison between the alleged forged signature and the authentic and genuine
signature of the person whose signature is theorized to have been forged.
Remedial Law; Evidence; Handwritings; Manner of Proving Genuineness of Handwritings.—

Under Rule 132, Section 22 of the Rules of Court, the genuineness of handwriting may be proved
in the following manner: (1) by any witness who believes it to be the handwriting of such person
because he has seen the person write; or he has seen writing purporting to be his upon which the
witness has acted or been charged; (2) by a comparison, made by the witness or the court, with
writings admitted or treated as genuine by the party, against whom the evidence is offered, or
proved to be genuine to the satisfaction of the judge. Corollary thereto, jurisprudence states that
the presumption of validity and regularity prevails over allegations of forgery and fraud. As against
direct evidence consisting of the testimony of a witness who was physically present at the signing
of the contract and who had personal knowledge thereof, the testimony of an expert witness
constitutes indirect or circumstantial evidence at best.
Same; Same; Testimony at a Former Proceeding; Hearsay Evidence Rule; The reasons for the
admissibility of testimony taken at a former trial or proceeding are the necessity for the testimony
and its trustworthiness.—Notably, the admissibility of Estela’s former testimony in the present
case finds basis in Section 47, Rule 130 of the Rules on Evidence or the “rule on former testimony”
which provides: Section 47. Testimony or deposition at a former proceeding.—The
629
VOL. 795, JULY 5, 2016 629
pg. 511
Ambray vs. Tsourous
testimony or deposition of a witness deceased or unable to testify, given in a former case or

proceeding, judicial or administrative, involving the same parties and subject matter, may be given
in evidence against the adverse party who had the opportunity to cross-examine him. Case law
holds that for the said rule to apply, the following requisites must be satisfied: (a) the witness is
dead or unable to testify; (b) his testimony or deposition was given in a former case or proceeding,
judicial or administrative, between the same parties or those representing the same interests; (c)
the former case involved the same subject as that in the present case, although on different causes
of action; (d) the issue testified to by the witness in the former trial is the same issue involved in
the present case; and (e) the adverse party had an opportunity to cross-examine the witness in the
former case. The reasons for the admissibility of testimony taken at a former trial or proceeding
are the necessity for the testimony and its trustworthiness. However, before the former testimony
can be introduced in evidence, the proponent must first lay the proper predicate therefor, i.e., the
party must establish the basis for the admission of testimony in the realm of admissible evidence.
J.P. Villanueva & Associates for petitioners.
Carlos Mayorico E. Caliwara for respondent Nancy Escudero.
Balagtas P. Ilagan for respondent Sylvia Tsourous, et al.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated April 25, 2013 and the
Resolution3 dated Sep-
_______________
1 Rollo, pp. 7-29.
2 Id., at pp. 32-40. Penned by Associate Justice Amelita G. Tolentino, with Associate Justices
Ramon R. Garcia and Danton Q. Bueser, concurring.
3 Id., at pp. 42-43. Penned by Associate Justice Amelita G. Tolentino, with Associate Justices
Ramon R. Garcia and Manuel M. Barrios, concurring.
pg. 512
630

Ambray vs. Tsourous
tember 24, 2013 rendered by the Court of Appeals (CA) in C.A.-G.R. CV No. 95606, affirming
the Decision4 dated June 11, 2010 of the Regional Trial Court of San Pablo City, Branch 32 (RTC)
in Civil Case No. SP-5831(01).
The Facts
The subject matter of the present controversy is a parcel of land described as Lot 2-C of
subdivision plan Psd-04-009554, covered by Transfer Certificate of Title (TCT) No. T-413825 of
the Register of Deeds of San Pablo City (Lot 2-C) in the name of petitioners Damaso T. Ambray
(Damaso) and Ceferino T. Ambray, Jr. (Ceferino, Jr.; collectively, petitioners).
5 Folder of Exhibits, p. 6, including dorsal portion thereof.
Petitioners and respondents Sylvia A. Tsourous,6 Carmencita Ambray-Laurel, Hedy Ambray-

Azores, Vivien Ambray-Yatco, Nancy Ambray-Escudero, Maristela Ambray-Ilagan (Maristela),
Elizabeth Ambray-Soriano, Ma. Fe Luisa Ambray-Arcilla (Ma. Fe Luisa),7 and Cristina Ambray-
Labit are siblings. With the exception of Sylvia,8 they are the children of the late Ceferino Ambray
(Ceferino, Sr.) and Estela Trias (Estela), who passed away on February 5, 1987 and August 15,
2002, respectively.
During their lifetime, Ceferino, Sr. and Estela owned several properties, one of which was a parcel
of land located in San Pablo City, Laguna denominated as Lot 2 of subdivision
_______________
4 Id., at pp. 44-67. Penned by Judge Agripino G. Morga.
6 Sylvia A. Tsourous died during the pendency of the case before the RTC and was substituted
by her heirs, namely: Kristina Tsourous-Reyes, Mark Tsourous, Keith Tsourous, and Steven
Tsourous. See Records (Vol. I), pp. 156-159 and 163-164.
7 Also referred to in the records as “Ma. Luisa Fe.” During the proceedings before the RTC, she
withdrew as plaintiff, and the complaint was amended to implead her as codefendant of Damaso
and Ceferino, Jr. Id., at pp. 181-186.
8 Id., at p. 4.
pg. 513
631
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Ambray vs. Tsourous
plan Pcs-12441, with an area of 4,147 square meters, more or less, covered by TCT No. T-112599
of the Register of Deeds of San Pablo City (Lot 2). On December 28, 1977, Ceferino, Sr.
mortgaged Lot 2 with Manila Bank for the amount of P180,000.00. The mortgage was discharged
on September 16, 1984.10
Prior to the discharge of the mortgage or sometime in August 1984, Lot 2 was subdivided into
three (3) lots: Lot 2-A, Lot 2-B, and the subject property, Lot 2-C, resulting in the cancellation of
TCT No. T-11259. Lot 2-C was registered in Ceferino, Sr.’s name in accordance with his letter11
dated August 29, 1984 requesting the Register of Deeds of San Pablo City to register Lot 2-C in
his name. Thus, TCT No.
T-2274912 was issued covering the said parcel under the name of Ceferino, Sr., married to
Estela.13
In June 1996, Maristela discovered that TCT No. T-22749 covering Lot 2-C had been cancelled
and in its stead, TCT No. T-41382 was issued in the name of petitioners. It appears that by virtue
of a notarized Deed of Absolute Sale14 (Deed of Sale) dated January 16, 1978, Ceferino, Sr., with
the consent of Estela, allegedly sold “a portion of lot 2 of the consolidation subd. plan (LRC) Pcs-
12441”15 to petitioners for a consideration of P150,000.00. The Deed of Sale was registered with
the Register of Deeds of San Pablo City only on February 5, 1996.16
This prompted respondents to file a criminal case for falsification of public document against
petitioners, entitled “People of the Philippines v. Damaso T. Ambray and Ceferino T.
_______________
9 Folder of Exhibits, pp. 2-3.
10 Rollo, p. 34.
11 Folder of Exhibits, p. 4.
12 Folder of Exhibits, p. 5, including dorsal portion thereof.
13 Rollo, p. 34.
14 Id., at pp. 79-80.
pg. 514
15 Id., at p. 79.
16 Id., at pp. 34-35.
632

Ambray vs. Tsourous
Ambray” and docketed as Criminal Case No. 39153 (falsification case) before the Municipal Trial
Court in Cities (MTCC) of San Pablo City. In a Decision17 dated October 30, 2000, the MTCC
acquitted petitioners of the charge for failure of the prosecution to prove their guilt beyond
reasonable doubt.
Thereafter, respondents filed the instant complaint18 for annulment of title, reconveyance, and
damages against petitioners and Estela (defendants), docketed as Civil Case No. SP-5831(01),
alleging that TCT No. T-41382 and the Deed of Sale were null and void because the signatures of
Ceferino, Sr. and Estela thereon were forgeries.
In a motion to dismiss,19 defendants claimed that the issue on the authenticity of the signatures of
Ceferino, Sr. and Estela on the Deed of Sale had already been passed upon in the falsification case
where petitioners were eventually acquitted; hence, the matter was res judicata. In an Order20
dated June 6, 2002, the RTC granted the motion and dismissed the case on said ground.
On appeal,21 however, the CA reversed the said disposition in a Decision22 dated September 29,
2005 in C.A.-G.R. CV No. 75507, finding that res judicata does not apply. Thus, it remanded the
case to the RTC for further proceedings.
Before the RTC, petitioners filed their answer23 and disclosed the death of their codefendant and
mother, Estela, who
_______________
17 Id., at pp. 81-86. Penned by Judge Iluminado C. Monzon.
19 Id., at pp. 47-53.
20 Id., at pp. 99-102. Penned by Judge Zorayda Herradura-Salcedo.
21 See Notice of Appeal dated June 19, 2002; id., at p. 103.
pg. 515
22 Id., at pp. 105-117. Penned by Associate Justice Mariflor P. Punzalan-Castillo, with Associate
Justices Elvi John S. Asuncion and Mariano C. Del Castillo (now a member of this Court),
concurring.
23 Id., at pp. 123-128.
633
VOL. 795, JULY 5, 2016 633

Ambray vs. Tsourous
passed away on August 15, 2002.24 By way of defense, they averred, inter alia, that respondents
were aware of the conveyance of Lot 2-C to them through the Deed of Sale. They also claimed
that respondents’ action has prescribed, and maintained that it was barred by prior judgment and
res judicata.25
Subsequently, citing an Affidavit26 dated February 18, 2008 executed by Ma. Fe Luisa, the rest
of the respondents moved27 that she be dropped as a plaintiff, which the RTC granted.28
Thereafter, she was ordered29 impleaded as a party-defendant in respondents’ supplemental
complaint. Later, she adopted30 petitioners’ answer with counterclaim in response thereto.
The RTC’s Ruling
In a Decision31 dated June 11, 2010, the RTC nullified the Deed of Sale as well as TCT No. T-
41382 in the name of petitioners and rendered judgment in favor of respondents as follows:
a. Declaring Lot 2-C, Psd-04-009554, covered by Transfer Certificate of Title No. T-41382, as
common property of the Heirs of Ceferino Ambray, Sr. and Estela Trias, to be divided equally
among the heirs;
b. Declaring as null and void the Deed of Absolute Sale dated January 16, 1978, purportedly
executed between Ceferino Ambray and Estela Trias, as vendors, and Damaso T. Ambray and
Ceferino Ambray, Jr., as
_______________
24 See Order dated January 30, 2007; id., at pp. 145-146.
pg. 516
25 Id., at p. 124.
26 Id., at pp. 184-185.
27 Id., at pp. 181-186.
28 See Order dated April 28, 2008; id., at pp. 201-203.
29 Id., at pp. 263-265.
30 Id., at p. 287.
31 Rollo, pp. 44-67.
634

Ambray vs. Tsourous
vendees, of the portion of Lot 2, Pcs-12441, covered by Transfer Certificate of Title No. T-11259;
c. Declaring as null and void Transfer Certificate of Title No. T-41382 in the name of Damaso
T. Ambray, married to Mary Ann Loyola, and Ceferino T. Ambray, Jr.;
d. Directing the defendants Damaso T. Ambray and Ceferino T. Ambray, Jr. to reconvey Lot 2-
C, Psd-04-009554 covered by Transfer Certificate of Title No.
T-41382 to the co-ownership of the Heirs of Ceferino Ambray, Sr. and Estela Trias, for distribution
in equal shares among the said heirs; and
e. Directing the Register of Deeds of San Pablo City, to cancel Transfer Certificate of Title No.
T-41382 in the name of Damaso T. Ambray and Ceferino Ambray, Sr., and cause the issuance of
a new Transfer Certificate of Title, in the name of the Heirs of Ceferino Ambray, Sr. and Estela
Trias.
The RTC found that respondents were able to prove, by a preponderance of evidence, that the Deed
of Sale executed by Ceferino, Sr. conveying Lot 2-C in favor of petitioners was spurious and of
dubious origin.32 It held that at the time of its execution in 1978, Ceferino, Sr. could not have sold
a specific portion of Lot 2 to petitioners, considering that it was subdivided only in 1984.
Moreover, after the subdivision of Lot 2 in 1984, Ceferino, Sr. requested the Register of Deeds of
pg. 517
San Pablo City to register Lot 2-C in his name, which he would not have done had he already sold
Lot 2-C to petitioners.33
Furthermore, Ceferino, Sr. leased Lot 2-C to MB Finance Corporation from 1986 to 1989 in his
capacity as the owner of the subject property. Subsequent thereto, as administrator of Ceferino,
Sr.’s properties upon the latter’s death, Damaso executed a contract renewing the lease of Lot 2-C
to MB Fi-
_______________
32 Id., at p. 66.
33 Id., at p. 61.
635
VOL. 795, JULY 5, 2016 635

Ambray vs. Tsourous
nance Corporation. The RTC opined that the foregoing facts militate against petitioners’ purported
ownership of Lot 2-C pursuant to the Deed of Sale.34
Finally, when confronted with the belated registration of the Deed of Sale in 1996, petitioners
could only offer the excuse that their mother, Estela, kept the copy thereof until she became sickly
and finally gave the same to Damaso. The RTC declared the same to be a mere afterthought.35
With respect to the issue of forgery of the signatures of Ceferino, Sr. and Estela on the subject
Deed of Sale, the RTC took note of the CA’s opinion in C.A.-G.R. CV No. 75507 that the MTCC,
in the falsification case, made no categorical finding as to the existence of falsification. Instead,
the MTCC merely concluded that the prosecution failed to establish petitioners’ participation in
the alleged falsification.36
Petitioners and respondents separately appealed37 to the CA. Petitioners imputed error upon the
RTC in declaring null and void the subject Deed of Sale and TCT No. T-41382,38 while
respondents questioned the RTC’s refusal to grant damages and attorney’s fees in their favor.39
The CA’s Ruling
pg. 518
In a Decision40 dated April 25, 2013, the CA affirmed the RTC Decision and found that
respondents were able to sufficiently discharge the required burden of proof that the subject Deed
of Sale is spurious.
_______________
34 Id., at pp. 61-62.
35 Id., at p. 62.
36 Id., at pp. 63-64.
37 CA Rollo, pp. 82-106 and 136-152.
38 Id., at p. 139.
39 Id., at p. 87.
40 Rollo, pp. 32-40.
636

Ambray vs. Tsourous
The CA also denied the award of moral damages for lack of factual basis. Consequently, without
moral damages, it found that no exemplary damages may be given.41 Finally, the CA held that the
award of attorney’s fees was not warranted under the circumstances of the case, the same being an
exception and not the general rule.42
Both petitioners43 and respondents44 moved for reconsideration of the CA’s Decision, which
were denied in a Resolution45 dated September 24, 2014; hence, this petition.
The sole issue for the Court’s resolution is whether or not the CA erred in affirming the RTC’s
nullification of the Deed of Sale dated January 16, 1978 and TCT No. T-41382 covering Lot 2-C
in the name of petitioners.
pg. 519
At the outset, it should be pointed out that, as a general rule, a reexamination of factual findings
cannot be done by the Court acting on a petition for review on certiorari because it is not a trier
of facts and only reviews questions of law.46 This rule, however, admits of certain exceptions,
namely: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2)
when the inference made is manifestly mistaken, absurd or impossible; (3) when
_______________
41 Id., at pp. 38-39.
42 Id., at p. 39.
43 CA Rollo, pp. 236-243.
44 Id., at pp. 246-255.
45 Rollo, pp. 42-43.
46 See Maersk-Filipinas Crewing, Inc. v. Avestruz, G.R. No. 207010, February 18, 2015, 751
SCRA 161, 171, citing Jao v. BCC Products Sales, Inc., 686 Phil. 36, 41; 670 SCRA 38, 44 (2012).
637
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Ambray vs. Tsourous
there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts;
(5) when the findings of facts are conflicting; (6) when in making its findings the Court of Appeals
went beyond the issues of the case, or its findings are contrary to the admissions of both the
appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed
by the respondent; (10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; and (11) when the Court of Appeals
pg. 520
manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion.47 Finding a confluence of certain exceptions in
this case, the general rule that only legal issues may be raised in a petition for review on certiorari
under Rule 45 of the Rules of Court does not apply, and the Court retains the authority to pass
upon the evidence presented and draw conclusions therefrom.48
At the core of the present controversy is the validity of the Deed of Sale, the execution of which
purportedly conveyed Lot 2-C in favor of petitioners. To gauge the veracity thereof, it is imperative
to pass upon the genuineness of the signatures of the seller, Ceferino, Sr., and his wife, Estela, who
gave her consent to the sale, as appearing thereon, which respondents, in the present complaint,
assert to be forgeries.
As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing
evidence, and the burden of
_______________
47 New City Builders, Inc. v. NLRC, 499 Phil. 207, 212-213; 460 SCRA 220, 227 (2005), citing
The Insular Life Assurance Company, Ltd. v. Court of Appeals, G.R. No. 126850, April 28, 2004,
428 SCRA 79, 86.
48 Maersk-Filipinas Crewing, Inc. v. Avestruz, supra note 46 at p. 172.
638

Ambray vs. Tsourous
proof lies on the party alleging forgery. One who alleges forgery has the burden to establish his
case by a preponderance of evidence, or evidence which is of greater weight or more convincing
than that which is offered in opposition to it. The fact of forgery can only be established by a
comparison between the alleged forged signature and the authentic and genuine signature of the
person whose signature is theorized to have been forged.49
Under Rule 132, Section 22 of the Rules of Court, the genuineness of handwriting may be proved
in the following manner: (1) by any witness who believes it to be the handwriting of such person
because he has seen the person write; or he has seen writing purporting to be his upon which the
witness has acted or been charged; (2) by a comparison, made by the witness or the court, with
writings admitted or treated as genuine by the party, against whom the evidence is offered, or
proved to be genuine to the satisfaction of the judge.50 Corollary thereto, jurisprudence states that
the presumption of validity and regularity prevails over allegations of forgery and fraud. As against
pg. 521
direct evidence consisting of the testimony of a witness who was physically present at the signing
of the contract and who had personal knowledge thereof, the testi-
_______________
49 Gepulle-Garbo v. Garabato, G.R. No. 200013, January 14, 2015, 746 SCRA 189, 198-199.
50 Section 22. How genuineness of handwriting proved.—The handwriting of a person may be

proved by any witness who believes it to be the handwriting of such person because he has seen
the person write, or has seen writing purporting to be his upon which the witness has acted or been
charged, and has thus acquired knowledge of the handwriting of such person. Evidence respecting
the handwriting may also be given by a comparison, made by the witness or the court, with writings
admitted or treated as genuine by the party against whom the evidence is offered, or proved to be
genuine to the satisfaction of the judge.
639
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Ambray vs. Tsourous
mony of an expert witness constitutes indirect or circumstantial evidence at best.51
In this case, the only direct evidence presented by respondents to prove their allegation of forgery
is Questioned Documents Report No. 266-39752 dated March 24, 1997 issued by National Bureau
of Investigation (NBI) Document Examiner II Antonio R. Magbojos (Magbojos), stating that the
signatures of Ceferino, Sr. and Estela on the Deed of Sale, when compared to standard sample
signatures, are not written by one and the same person.
In refutation, petitioners offered in evidence, inter alia, the testimony of their mother, Estela, in
the falsification case where petitioners were previously acquitted. In the course thereof, she
identified53 the signatures on the Deed of Sale as hers and Ceferino, Sr.’s, which was fully
corroborated54 by Atty. Zosimo Tanalega (Atty. Tanalega), the notary public who notarized the
subject Deed of Sale and was present at the time the Ambray spouses affixed their signatures
thereon.
Between the Questioned Documents Report presented by respondents and the testimony given by
Estela in the falsification case in support of petitioners’ defense, the Court finds greater evidentiary
weight in favor of the latter. Hence, respondent’s complaint for annulment of title, reconveyance,
and damages in Civil Case No. SP-5831(01) should be dismissed.
While the principle of res judicata in the concept of conclusiveness of judgment, as espoused by
petitioners,55 is of doubt-
pg. 522
_______________
51 Bautista v. Court of Appeals, 479 Phil. 787, 792-793; 436 SCRA 141, 147 (2004), citing Vda.
de Bernardo v. Restauro, 452 Phil. 745, 751-752; 404 SCRA 599, 603 (2003).
52 Folder of Exhibits, pp. 9-10.
53 See Transcript of Stenographic Notes (TSN) dated September 10, 1998; Rollo, pp. 107-108.
54 Id., at pp. 89-91.
55 Id., at pp. 19-21.
640

Ambray vs. Tsourous
ful application in this case — considering that the MTCC, in the falsification case, failed to
categorically pronounce that the Deed of Sale was not falsified and merely concluded that
petitioners had no participation in any alleged falsification — the Court nonetheless observes that
petitioners, through the testimony of Estela thereat, were able to establish the genuineness and due
execution of the subject Deed of Sale which effectively conveyed title over Lot 2-C to them.
Estela’s testimony constitutes direct evidence of the authenticity of the signatures on the Deed of
Sale, having personal knowledge thereof, which undeniably prevails over the written findings of a
purported handwriting expert that can only be considered indirect or circumstantial evidence.
Notably, the admissibility of Estela’s former testimony in the present case finds basis in Section
47, Rule 130 of the Rules on Evidence or the “rule on former testimony” which provides:
Section 47. Testimony or deposition at a former proceeding.—The testimony or deposition of a

witness deceased or unable to testify, given in a former case or proceeding, judicial or
administrative, involving the same parties and subject matter, may be given in evidence against
the adverse party who had the opportunity to cross-examine him.
Case law holds that for the said rule to apply, the following requisites must be satisfied: (a) the
witness is dead or unable to testify; (b) his testimony or deposition was given in a former case or
proceeding, judicial or administrative, between the same parties or those representing the same
interests; (c) the former case involved the same subject as that in the present case, although on
different causes of action; (d) the issue testified to by the witness in the former trial is the same
pg. 523
issue involved in the present case; and (e) the adverse party had an opportunity to cross-examine
the witness in the former case.56
_______________
56 Samalio v. Court of Appeals, 494 Phil. 456, 463; 454 SCRA 462, 470 (2005).
641
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Ambray vs. Tsourous
The reasons for the admissibility of testimony taken at a former trial or proceeding are the necessity
for the testimony and its trustworthiness. However, before the former testimony can be introduced
in evidence, the proponent must first lay the proper predicate therefor, i.e., the party must establish
the basis for the admission of testimony in the realm of admissible evidence.57
Records show that Estela died during the pendency of these proceedings before the RTC or on
August 15, 2002. Her death transpired before the presentation of the parties’ evidence could ensue.
However, she was able to testify on direct and cross-examination in the falsification case and
affirmed that the alleged forged signatures appearing on the Deed of Sale were, indeed, hers and
her deceased husband, Ceferino, Sr.’s. The parties in the falsification case involved respondents
and petitioners herein, and the subject matter therein and in this case are one and the same, i.e., the
genuineness and authenticity of the signatures of Ceferino, Sr. and Estela.
Clearly, the former testimony of Estela in the falsification case, being admissible in evidence in
these proceedings, deserves significant consideration. She gave positive testimony that it was
Ceferino, Sr. himself who signed the Deed of Sale that conveyed Lot 2-C to petitioners. She
likewise verified her signature thereon. By virtue of these declarations, she confirmed the
genuineness and authenticity of the questioned signatures. Thus, it follows that the Deed of Sale
itself is valid and duly executed, contrary to the finding of the RTC, as affirmed by the CA, that it
was of spurious nature.
Further lending credence to the validity of the Deed of Sale is the well-settled principle that a duly
notarized contract enjoys the prima facie presumption of authenticity and due execution as well as
the full faith and credence attached to a public instrument. To overturn this legal presumption, evi-
_______________
57 See Republic v. Sandiganbayan (Fourth Division), 678 Phil. 358, 414; 662 SCRA 152, 201-
202 (2011).
pg. 524
643
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Ambray vs. Tsourous
dence must be clear, convincing, and more than merely preponderant to establish that there was
forgery that gave rise to a spurious contract.58
Hence, for the above stated reasons, whatever inferences the RTC had observed tending to defeat
the existence of a valid sale in favor of petitioners are rendered inconsequential.
In particular, the RTC noted, and found it puzzling, that the Deed of Sale did not specifically
mention the exact area that was being sold to petitioners, disposing only of “a portion of lot 2”
without specifying the metes and bounds thereof. As such, the RTC concluded that Ceferino, Sr.
could not have sold a specific portion of Lot 2 to petitioners, having been subdivided only in 1984.
However, Article 1463 of the Civil Code expressly states that “[t]he sole owner of a thing may sell
an undivided interest therein.” As Ceferino, Sr. was the sole owner of the original Lot 2 from
whence came Lot 2-C, he is therefore allowed by law to convey or sell an unspecified portion
thereof. Hence, the disposition of Lot 2-C to petitioners, a portion of Lot 2 yet to be subdivided in
1978, was therefore valid.
That Ceferino, Sr. requested the registration of the title of Lot 2-C in his name in 1984, while the
property was supposed to have already been sold to petitioners in 1978, was likewise fully
explained during trial. Damaso clarified59 that their parents were apprehensive that he and
Ceferino might mortgage or squander the property while they were still alive. Moreover, despite
knowledge of the sale, they did not demand for its immediate registration because during their
father’s lifetime, they never questioned his decisions. This further explains why, despite the
disposition in petitioners’ favor, it was Ceferino, Sr. himself who leased Lot 2-C to third parties,
_______________
58 Bautista v. Court of Appeals, supra note 51. See also Vda. de Rosales v. Ramos, 433 Phil. 8;
383 SCRA 498 (2002); and Manzano v. Perez, Sr., 414 Phil. 728; 362 SCRA 430 (2001).
59 TSN, August 3, 2009, pp. 14-15.
643
pg. 525
VOL. 795, JULY 5, 2016 643
Ambray vs. Tsourous
which Damaso renewed in his father’s name after the latter’s death. The delay in the transfer of
the title over Lot 2-C to petitioners was also occasioned by the fact that Estela kept the Deed of
Sale in her custody and gave it to petitioners only later on, by reason of her poor health.60 Be that
as it may, and to reiterate, the delay in the registration of the sale in favor of petitioners neither
affects nor invalidates the same, in light of the authenticity of the Deed of Sale itself.
In fine, the CA and the RTC both erred in finding that the Deed of Sale was of spurious origin.
The authenticity and due execution of the Deed of Sale must be upheld against the assumptions
made by the RTC in its Decision. Accordingly, TCT No. T-41382 covering Lot 2-C in the name
of petitioners remain valid.
WHEREFORE, the petition is GRANTED. The assailed April 25, 2013 Decision and the
September 24, 2013 Resolution of the Court of Appeals in C.A.-G.R. CV No. 95606 are hereby
REVERSED and SET ASIDE. The instant complaint for annulment of title, reconveyance, and
damages is DISMISSED.
SO ORDERED.
Leonardo-De Castro*** (Acting Chairperson), Bersamin and Caguioa, JJ., concur.
Notes.—Allegations of forgery, like all other allegations, must be proved by clear, positive, and
convincing evidence by
_______________
*** Per Special Order No. 2358 dated June 28, 2016.
644

Ambray vs. Tsourous
pg. 526
the party alleging it. It should not be presumed but must be established by comparing the alleged
forged signature with the genuine signatures. (Lim vs. Equitable PCI Bank, now known as the
Banco De Oro Unibank, Inc., 713 SCRA 555 [2014])
Settled is the rule that forgery cannot be presumed and must be proved by clear, positive and
convincing evidence by the party alleging the same. (Tolentino vs. Latagan, 759 SCRA 451
[2015])
——o0o——
pg. 527
G.R. Nos. 205963-64. July 7, 2016.*
AMANDO A. INOCENTES, petitioner, vs. PEOPLE OF THE PHILIPPINES, HON. ROLAND B.

JURADO, in his capacity as Chairperson, Sandiganbayan, Fifth Division, HON. CONCHITA CARPIO-
MORALES, in her capacity as OMBUDSMAN, as Complainant; and HON. FRANCIS H. JARDELEZA,
OFFICE OF THE SOLICITOR GENERAL (OSG), in its capacity as counsel for the People, respondents.
Criminal Law; Conspiracy; The Supreme Court (SC) had underscored before the fact that under
our laws conspiracy should be understood on two (2) levels, i.e., a mode of committing a crime or
a crime in itself.—On the contention that the informations did not detail Inocentes’ individual
participation in the conspiracy, we have underscored before the fact that under our laws conspiracy
should be understood on two levels, i.e., a mode of committing a crime or a crime in itself. In
Estrada v. Sandiganbayan, 377 SCRA 538 (2002), we explained that when conspiracy is charged
as a crime, the act of conspiring and all the elements must be set forth in the information, but when
it is not and conspiracy is considered as a mode of commit-
_______________
* SECOND DIVISION.
35
VOL. 796, JULY 7, 2016 35

Inocentes vs. People
ting the crime, there is less necessity of reciting its particularities in the information because
conspiracy is not the gravamen of the offense.
Remedial Law; Criminal Procedure; Jurisdiction; Courts; Sandiganbayan; Anti-Graft and

Corrupt Practices Act; The applicable law provides that violations of Republic Act (RA) No. 3019
committed by presidents, directors or trustees, or managers of government-owned or -controlled
corporations, and state universities shall be within the exclusive original jurisdiction of the
Sandiganbayan.—On the issue on jurisdiction, it is of no moment that Inocentes does not occupy
a position with a salary grade of 27 since he was the branch manager of the GSIS’ field office in
Tarlac City, a government-owned or -controlled corporation, at the time of the commission of the
offense, which position falls within the coverage of the Sandiganbayan’s jurisdiction. The
applicable law provides that violations of R.A. No. 3019 committed by presidents, directors or
trustees, or managers of government-owned or -controlled corporations, and state universities
pg. 528
shall be within the exclusive original jurisdiction of the Sandiganbayan. We have clarified the
provision of law defining the jurisdiction of the Sandiganbayan by explaining that the
Sandiganbayan maintains its jurisdiction over those officials specifically enumerated in (a) to (g)
of Section 4(1) of P.D. No. 1606, as amended, regardless of their salary grades. Simply put, those
that are classified as Salary Grade 26 and below may still fall within the jurisdiction of the
Sandiganbayan, provided they hold the positions enumerated by the law. In this category, it is the
position held, not the salary grade, which determines the jurisdiction of the Sandiganbayan.
Furthermore, as the Sandiganbayan correctly held, even low-level management positions fall
under the jurisdiction of the Sandiganbayan. We settled this point in Lazarte, Jr. v.
Sandiganbayan, 581 SCRA 431 (2009), and Geduspan v. People, 451 SCRA 187 (2005).
Same; Same; Same; It is well-settled that jurisdiction over the person of the accused is acquired
upon (1) his arrest or apprehension, with or without a warrant, or (2) his voluntary appearance
or submission to the jurisdiction of the court.—We are aware, however, that Inocentes availed of
this remedy after he had posted bail before the Sandiganbayan which, in our jurisdiction, is
tantamount to voluntary surrender. Simply put, questioning the findings of probable cause by the
Sandiganbayan at this point would be pointless as it
36

has already acquired jurisdiction over Inocentes. It is well-settled that jurisdiction over the person
of the accused is acquired upon (1) his arrest or apprehension, with or without a warrant, or (2) his
voluntary appearance or submission to the jurisdiction of the court. For this reason, in Cojuangco,
Jr. v. Sandiganbayan, 300 SCRA 367 (1998), we held that even if it is conceded that the warrant
issued was void (for nonexistence of probable cause), the accused waived all his rights to object
by appearing and giving a bond, viz.: On this score, the rule is well-settled that the giving or posting
of bail by the accused is tantamount to submission of his person to the jurisdiction of the court.
[...] By posting bail, herein petitioner cannot claim exemption from the effect of being subject to
the jurisdiction of respondent court. While petitioner has exerted efforts to continue disputing
the validity of the issuance of the warrant of arrest despite his posting bail, his claim has been
negated when he himself invoked the jurisdiction of respondent court through the filing of
various motions that sought other affirmative reliefs.
Constitutional Law; Due Process; Right to Speedy Disposition of Cases; The Office of the
Ombudsman, for its failure to resolve the criminal charges against Inocentes for seven (7) years,
violated Inocentes’ constitutional right to due process and to a speedy disposition of the case
against him, as well as its own constitutional duty to act promptly on complaints filed before it.—
The Office of the Ombudsman, for its failure to resolve the criminal charges against Inocentes for
seven (7) years, violated Inocentes’ constitutional right to due process and to a speedy disposition
pg. 529
of the case against him, as well as its own constitutional duty to act promptly on complaints filed
before it. A person’s right to a speedy disposition of his case is guaranteed under Section 16,
Article III of the Constitution: All persons shall have the right to a speedy disposition of their cases
before all judicial, quasi-judicial, or administrative bodies. This constitutional right is not limited
to the accused in criminal proceedings but extends to all parties in all cases, be it civil or
administrative in nature, as well as in all proceedings, either judicial or quasi-judicial. In this
accord, any party to a case may demand expeditious action of all officials who are tasked with the
administration of justice.
Same; Same; Same; Grave Abuse of Discretion; The Ombudsman gravely abused its discretion in
not acting on the case within a
37
VOL. 796, JULY 7, 2016 37

reasonable time after it had acquired jurisdiction over it.—Plainly, the delay of at least seven (7)
years before the informations were filed skews the fairness which the right to speedy disposition
of cases seeks to maintain. Undoubtedly, the delay in the resolution of this case prejudiced
Inocentes since the defense witnesses he would present would be unable to recall accurately the
events of the distant past. Considering the clear violation of Inocentes’ right to the speedy
disposition of his case, we find that the Ombudsman gravely abused its discretion in not acting on
the case within a reasonable time after it had acquired jurisdiction over it.
SPECIAL CIVIL ACTIONS in the Supreme Court. Certiorari, Prohibition and Mandamus.
Velasco, Madriaga Law Offices for petitioner.
BRION, J.:
We resolve the Petition1 filed under Rule 65 of the Rules of Court by petitioner Amando A.
Inocentes (Inocentes), assailing the Resolutions dated February 8, 20132 and October 24, 20123
of the Sandiganbayan in Criminal Case Nos. SB-12-CRM-0127-0128 entitled People of the
Philippines v. Amando A. Inocentes, et al.
pg. 530
The Factual Antecedents
Inocentes, together with four (4) others, was charged with violating Section 3(e) of Republic Act
(RA) No. 3019,4 as amended. The informations read:
_______________
1 For Certiorari, Prohibition, and Mandamus with Prayer for Temporary Restraining Order and
Preliminary Injunction. Rollo, pp. 3-23.
2 Id., at pp. 26-34; penned by Associate Justice Amparo M. Cabotaje-Tang and concurred in by
Associate Justices Roland B. Jurado and Alexander G. Gesmundo.
3 Id., at pp. 36-57.
4 Otherwise known as the Anti-Graft and Corrupt Practices Act.
38

That on or about October 2001 or immediately prior or subsequent thereto, in Tarlac City, Tarlac,
Philippines and within the jurisdiction of this Honorable Court, the above named accused, Amando
A. Inocentes, Celestino Cabalitasan, Ma. Victoria Leonardo and Jerry Balagtas, all public officers,
being the Branch Manager, Division Chief III, Property Appraiser III, and Senior General
Insurance Specialist, respectively, of the Government Service Insurance System, Tarlac City Field
Office, committing the crime herein charged in relation to and in taking advantage of their official
functions, conspiring and confederating with Jose De Guzman, through manifest partiality, evident
bad faith or gross inexcusable negligence; did then and there willfully, unlawfully and criminally
[gave] undue preference, benefit or advantage to accused Jose De Guzman by processing and
approving the housing loans of Four Hundred Ninety-One (491) borrowers of [Jose De Guzman]’s
housing project under the GSIS Bahay Ko Program, with a total amount of loans amounting to
Two Hundred Forty-One Million Fifty-Three Thousand Six Hundred Pesos (Php241,053,600.00),
knowing fully well that the said borrowers/grantees were not qualified and were not under the
territorial jurisdiction of the
Tarlac City Field Office, thereby giving said borrowers/grantees unwarranted benefit and causing
damage and prejudice to the government and to public interest in the aforesaid amount.
CONTRARY TO LAW.5
pg. 531
and
[...] processing, approving and granting loans under the GSIS Bahay Ko Program to Fifty-Three
(53) borrowers of [Jose De Guzman]’s land development project known as Teresa Homes
amounting to Fifty-Two Million and One Hundred Seven Thousand Pesos (Php52,107,000.00),
despite the knowledge of the fact that the lots covered were intended for commercial purposes and
by causing the
_______________
5 Rollo, pp. 60-62.
39
VOL. 796, JULY 7, 2016 39

over-appraisal in the amount of Thirty-Three Million Two Hundred Forty Thousand Eight
Hundred Forty-Eight Pesos and Thirty-Six Centavos (Php33,240,848.36) of the land and buildings
offered as collaterals, thus causing undue injury to the Government.
CONTRARY TO LAW.6
On May 10, 2012, the Sandiganbayan issued a minute resolution finding probable cause and
ordered the issuance of a warrant of arrest against all the accused.7 To avoid incarceration,
Inocentes immediately posted bail.
On July 10, 2012, Inocentes filed an omnibus motion (1) for judicial determination of probable
cause; (2) to quash the informations filed against him; and (3) to dismiss the case for violating his
right to the speedy disposition of this case (omnibus motion).8 In this motion, he argued as follows:
First, the informations filed against him were fatally defective because they did not allege the
specific acts done by him which would have constituted the offense. All that was alleged in the
informations was that he conspired and cooperated in the alleged crime.
Second, there is no evidence showing how he cooperated or conspired in the commission of the
alleged offense. The findings of the investigating unit revealed that the connivance was
perpetuated by the marketing agent and the borrowers themselves by misrepresenting their
qualifications. The GSIS Internal Audit Service Group Report even said that it was the marketing
pg. 532
agent who had the opportunity to tamper and falsify the documents submitted before Inocentes’
office.
Third, the informations filed against him should be quashed because the Sandiganbayan does not
have jurisdiction over the case. At the time of the commission of the alleged offense,
_______________
6 Id., at pp. 63-65.
7 Id., at p. 59.
8 Id., at pp. 68-81.
40

Inocentes held a position with a Salary Grade of 26. He likewise claims that he cannot fall under
the enumeration of managers of GOCCs because his position as department manager cannot be
placed in the same category as the president, general manager, and trustee of the GSIS.
Fourth, Innocentes insisted that the case against him must be dismissed because his right to the
speedy disposition of this case had been violated since seven (7) years had lapsed from the time of
the filing of the initial complaint up to the time the information was filed with the Sandiganbayan.
After the Office of the Special Prosecutor (OSP) filed its opposition and Inocentes filed his reply,
the Sandiganbayan issued the first assailed resolution. The Sandiganbayan maintained its
jurisdiction over the case because Section 4 of P.D. No. 1606, as amended by R.A. No. 8249,9
specifically includes managers of GOCCs — whose position may not fall under Salary Grade 27
or higher — who violate R.A. No. 3019. It also ruled that the informations in this case sufficiently
allege all the essential elements required to violate Section 3(e) of R.A. No. 3019.
Further, it said that it already determined the existence of probable cause when it issued the warrant
of arrest in its minute resolution dated May 10, 2012.
Lastly, it held that the delay in this case was excusable considering that the records of this case
were transferred from the Regional Trial Court in Tarlac City, where the case was first filed.
pg. 533
In his motion for reconsideration, Inocentes reiterated the same arguments he raised in his omnibus
motion. In addition, he asserted that the present case against him should be dismissed because the
Office of the Ombudsman dismissed the estafa case against him for the same transactions. He also
_______________
9 An Act Further Defining the Jurisdiction of the Sandiganbayan.
41
VOL. 796, JULY 7, 2016 41

filed a supplemental motion attaching a copy of the affidavit of a certain Monico Imperial to show
(1) that there existed political persecutions within the GSIS against the critics of then President
and General Manager Winston F. Garcia, and (2) that the GSIS branch manager relies on the
recommendation of his subordinates in approving or disapproving real estate loan applications.
The Sandiganbayan remained unconvinced. On the contents of the affidavit, it agreed with the
prosecution that these are matters of defense that must stand scrutiny in a full-blown trial. With
respect to the dismissal of the estafa case against him, the Sandiganbayan said that the dismissal
of that case does not necessarily result in the dismissal of the present case because the same act
may give rise to two (2) or more separate and distinct offenses.
To contest the denial of his motion for reconsideration, Inocentes filed the present petition
asserting, among others, that the quantum of evidence required to establish probable cause for
purposes of holding a person for trial and/or for the issuance of a warrant of arrest was not met in
this case. He argued that absent any allegation of his specific acts or evidence linking him to the
anomalous transactions, probable cause can hardly exist because it would be imprudent to
insinuate that Inocentes knew of the criminal design when all he did was only to approve the
housing loan applications. Obviously relying on his subordinates, Inocentes claimed that he could
not have conspired with them when he had no personal knowledge of any defect.
On April 10, 2013, we required the respondents to comment on Inocentes’ petition, and deferred
action on the issuance of a temporary restraining order and/or writ of preliminary injunction.
In its comment, the OSP counters that what Inocentes asks at this point is for this Court to examine
and weigh all the pieces of evidence and thereafter absolve him of all charges without undergoing
trial.
pg. 534
42

The OSP said that the Office of the Ombudsman did not act arbitrarily in conducting the
preliminary investigation and finding probable cause. Moreover, the Sandiganbayan likewise
found probable cause after considering all the pleadings and documents submitted before it and
saw no sound reason to set aside its finding.
On the other hand, the Office of the Solicitor General filed a manifestation saying that it will no
longer submit its comment as the OSP, pursuant to its expanded mandate under R.A. No. 6770,10
shall represent the People before this Court and the Sandiganbayan.
Our Ruling
We find the present petition meritorious.
Preliminary Considerations
The Constitution, under Section 1, Article VIII, empowers the courts to determine whether or not
there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government.11 This is an overriding authority that cuts
across all branches and instrumentalities of government and is implemented through the petition
for certiorari that Rule 65 of the Rules of Court provides.12
Inocentes, through this remedy, comes before this Court asserting that there was grave abuse on
the part of the Sandiganbayan when it exercised its discretion in denying his omnibus motion. This
extraordinary writ solely addresses lower court actions rendered without or in excess of jurisdic-
_______________
10 Otherwise known as the Ombudsman Act of 1989.
11 Reyes, Jr. v. Belisario, G.R. No. 154652, August 14, 2009, 596 SCRA 31, 45.
pg. 535
12 Id.
43
VOL. 796, JULY 7, 2016 43

tion or with grave abuse of discretion amounting to lack of jurisdiction. Grave abuse of discretion
is a circumstance beyond the legal error committed by a decision-making agency or entity in the
exercise of its jurisdiction; this circumstance affects even the authority to render judgment.13
Under these terms, if the Sandiganbayan merely legally erred while acting within the confines of
its jurisdiction, then its ruling, even if erroneous, is not the proper subject of a petition for
certiorari. If, on the other hand, the Sandiganbayan ruling was attended by grave abuse of
discretion amounting to lack or excess of jurisdiction, then this ruling is fatally defective on
jurisdictional ground and should be declared null and void.14
In the present case, the Sandiganbayan denied Inocentes’ omnibus motion (1) to judicially
determine the existence of probable cause; (2) quash the information that was filed against him;
and/or (3) dismiss the case against him for violation of his right to speedy trial. In determining
whether the Sandiganbayan committed grave abuse in the exercise of its discretion, we shall
review the Sandiganbayan’s judgment denying the omnibus motion in the light of each cited
remedy and the grounds presented by Inocentes to support them.
The Sandiganbayan hardly

committed any grave abuse
of discretion in denying the
motion to quash the infor-
mation.
Inocentes is unyielding in his position that the informations filed against him should be quashed
based on the following grounds: (1) that all the information alleged is that Ino-
_______________
13 Id., at pp. 46-47.
14 People v. Romualdez, 581 Phil. 462, 479; 559 SCRA 492, 508 (2008).
pg. 536
44

centes conspired and confederated with his co-accused without specifying how his specific acts
contributed to the alleged crime; and (2) that the Sandiganbayan has no jurisdiction over Inocentes
because he was occupying a position with a salary grade less than 27.
On the contention that the informations did not detail Inocentes’ individual participation in the
conspiracy, we have underscored before the fact that under our laws conspiracy should be
understood on two levels, i.e., a mode of committing a crime or a crime in itself.15
In Estrada v. Sandiganbayan,16 we explained that when conspiracy is charged as a crime, the act
of conspiring and all the elements must be set forth in the information, but when it is not and
conspiracy is considered as a mode of committing the crime, there is less necessity of reciting its
particularities in the information because conspiracy is not the gravamen of the offense, to wit:
To reiterate, when conspiracy is charged as a crime, the act of conspiring and all the elements of
said crime must be set forth in the complaint or information.
xxx xxx xxx
The requirements on sufficiency of allegations are different when conspiracy is not charged as a
crime in itself but only as the mode of committing the crime as in the case at bar. There is less
necessity of reciting its particularities in the information because conspiracy is not the gravamen
of the offense charged. The conspiracy is significant only because it changes the criminal liability
of all the accused in the conspiracy and makes them answerable as coprincipals regardless of the
degree of their participation in the crime. The liabilities of the conspira-
_______________
15 Lazarte, Jr. v. Sandiganbayan, 600 Phil. 475, 493; 581 SCRA 431, 447-448 (2009).
16 427 Phil. 820; 377 SCRA 538 (2002). See also Enrile v. People, G.R. No. 213455, August 11, 2015,
766 SCRA 1.
45
pg. 537
VOL. 796, JULY 7, 2016 45
tors is collective and each participant will be equally responsible for the acts of others, for the act
of one is the act of all. In People v. Quitlong, we ruled how conspiracy as the mode of committing
the offense should be alleged in the information, viz.:
A conspiracy indictment need not, of course, aver all the components of conspiracy or allege
all the details thereof like the part that each of the parties therein have performed, the
evidence proving the common design or the facts connecting all the accused with one
another in the web of conspiracy. Neither is it necessary to describe conspiracy with the
same degree of particularity required in describing a substantive offense. It is enough that
the indictment contains a statement of facts relied upon to be constitutive of the offense in
ordinary and concise language, with as much certainty as the nature of the case will admit,
in a manner that can enable a person of common understanding to know what is intended,
and with such precision that the accused may plead his acquittal or conviction to a
subsequent indictment based on the same facts.
xxx xxx xxx
Again, following the stream of our own jurisprudence, it is enough to allege conspiracy as a mode
in the commission of an offense in either of the following manner: (1) by use of the word,
“conspire,” or its derivatives or synonyms, such as confederate, connive, collude, etc.; or (2) by
allegations basic facts constituting the conspiracy in a manner that a person of common
understanding would know what is intended, and with such precision as would enable the accused
to competently enter a plea to a subsequent indictment based on the same facts.17 [italics supplied]
_______________
17 Id., at pp. 859-862; pp. 562-565.
46

With these guidelines in mind, Inocentes’ challenge with respect to the informations filed against
him necessarily fails as he could gather that he is one of those GSIS officials who conspired in
approving the anomalous transactions. Accordingly, the informations filed against Inocentes in
this case are valid because they adequately provide the material allegations to apprise him of the
nature and cause of the charge.
pg. 538
On the issue on jurisdiction, it is of no moment that Inocentes does not occupy a position with a
salary grade of 27 since he was the branch manager of the GSIS’ field office in Tarlac City, a
government-owned or -controlled corporation, at the time of the commission of the offense, which
position falls within the coverage of the Sandiganbayan’s jurisdiction.
The applicable law provides that violations of R.A. No. 3019 committed by presidents, directors
or trustees, or managers of government-owned or -controlled corporations, and state universities
shall be within the exclusive original jurisdiction of the Sandiganbayan.18 We have clarified the
provision of law defining the jurisdiction of the Sandiganbayan by explaining that the
Sandiganbayan maintains its jurisdiction over those officials specifically enumerated in (a) to (g)
of Section 4(1) of P.D. No. 1606, as amended, regardless of their salary grades.19 Simply put,
those that are classified as Salary Grade 26 and below may still fall within the jurisdiction of the
Sandiganbayan, provided they hold the positions enumerated by the law.20 In this category, it is
the position held, not the salary grade, which determines the jurisdiction of the Sandiganbayan.21
_______________
18 P.D. No. 1606, as amended by R.A. No. 8249, Section 4(1)(g).
19 Inding v. Sandiganbayan, 478 Phil. 506, 507; 434 SCRA 388, 398 (2004).
20 People v. Sandiganbayan (Third Division), 613 Phil. 407, 409; 596 SCRA 49, 60 (2009).
21 Alzaga v. Sandiganbayan (2nd Division), 536 Phil. 726, 731; 505 SCRA 848, 853 (2006).
47
VOL. 796, JULY 7, 2016 47

Furthermore, as the Sandiganbayan correctly held, even low-level management positions fall
under the jurisdiction of the Sandiganbayan. We settled this point in Lazarte, Jr. v.
Sandiganbayan22 and Geduspan v. People.23
Based on the foregoing, we find that the Sandiganbayan was correct in denying Inocentes’ motion
to quash; hence, there was no grave abuse in the exercise of its discretion regarding this matter.
pg. 539
A redetermination of a judicial
finding of probable cause is
futile when the accused volun-
tarily surrenders to the jurisdic-
tion of the court.
In the present case, the Office of the Ombudsman and the Sandiganbayan separately found that
probable cause exists to indict and issue a warrant of arrest against Inocentes. However, what
Inocentes brings before this Court right now is only the finding of the Sandiganbayan of probable
cause for the issuance of a warrant of arrest.
Under our jurisdiction, any person may avail of this remedy since it is well-established in
jurisprudence that the court may, in the protection of one’s fundamental rights, dismiss the case if,
upon a personal assessment of evidence, it finds that the evidence does not establish probable
cause.24
In People v. Castillo,25 we discussed the two kinds of determination of probable cause, thus:
_______________
22 Supra note 15.
23 G.R. No. 158187, February 11, 2005, 451 SCRA 187, 192-193.
24 Mendoza v. People, G.R. No. 197293, April 21, 2014, 722 SCRA 647.
25 607 Phil. 754, 755; 590 SCRA 95, 105-107 (2009).
48

There are two kinds of determination of probable cause: executive and judicial. The executive
determination of probable cause is one made during preliminary investigation. It is a function that
properly pertains to the public prosecutor who is given a broad discretion to determine whether
pg. 540
probable cause exists and to charge those whom he believes to have committed the crime as defined
by law and thus should be held for trial. Otherwise stated, such official has the quasi-judicial
authority to determine whether or not a criminal case must be filed in court. Whether or not that
function has been correctly discharged by the public prosecutor, i.e., whether or not he has made
a correct ascertainment of the existence of probable cause in a case, is a matter that the trial court
itself does not and may not be compelled to pass upon.
The judicial determination of probable cause, on the other hand, is one made by the judge to
ascertain whether a warrant of arrest should be issued against the accused. The judge must satisfy
himself that based on the evidence submitted, there is necessity for placing the accused under
custody in order not to frustrate the ends of justice. If the judge finds no probable cause, the judge
cannot be forced to issue the arrest warrant.
Corollary to the principle that a judge cannot be compelled to issue a warrant of arrest if he or she
deems that there is no probable cause for doing so, the judge in turn should not override the public
prosecutors’ determination of probable cause to hold an accused for trial on the ground that the
evidence presented to substantiate the issuance of an arrest warrant was insufficient. It must be
stressed that in our criminal justice system, the public prosecutor exercises a wide latitude of
discretion in determining whether a criminal case should be filed in court, and that courts must
respect the exercise of such discretion when the information filed against the person charged is
valid on its face, and that no manifest error or grave abuse of discretion can be imputed to the
public prosecutor.
Thus, absent a finding that an information is invalid on its face or that the prosecutor committed
manifest
49
VOL. 796, JULY 7, 2016 49

error or grave abuse of discretion, a judge’s determination of probable cause is limited only to the
judicial kind or for the purpose of deciding whether the arrest warrants should be issued against
the accused. [emphasis supplied; citations omitted]
Under this ruling, we made it clear that the judge does not act as an appellate court of the
prosecutor and has no capacity to review the prosecutor’s determination of probable cause; rather,
he makes a determination of probable cause independently of the prosecutor’s finding.26 Despite
the fact that courts should avoid reviewing an executive determination of probable cause, we are
pg. 541
not completely powerless to review this matter under our expanded judicial power under the
Constitution.
We are aware, however, that Inocentes availed of this remedy after he had posted bail before the
Sandiganbayan which, in our jurisdiction, is tantamount to voluntary surrender.27 Simply put,
questioning the findings of probable cause by the Sandiganbayan at this point would be pointless
as it has already acquired jurisdiction over Inocentes.
It is well-settled that jurisdiction over the person of the accused is acquired upon (1) his arrest or
apprehension, with or without a warrant, or (2) his voluntary appearance or submission to the
jurisdiction of the court. For this reason, in Cojuangco, Jr. v. Sandiganbayan,28 we held that even
if it is conceded that the warrant issued was void (for nonexistence of probable cause), the accused
waived all his rights to object by appearing and giving a bond, viz.:
On this score, the rule is well-settled that the giving or posting of bail by the accused is tantamount
to
_______________
26 Supra note 24.
27 See People v. Go, G.R. No. 168539, March 25, 2014, 719 SCRA 704.
28 G.R. No. 134307, December 21, 1998, 300 SCRA 367.
50

submission of his person to the jurisdiction of the court. [...]
By posting bail, herein petitioner cannot claim exemption from the effect of being subject to the
jurisdiction of respondent court. While petitioner has exerted efforts to continue disputing the
validity of the issuance of the warrant of arrest despite his posting bail, his claim has been
negated when he himself invoked the jurisdiction of respondent court through the filing of
various motions that sought other affirmative reliefs.29 [omission and emphasis ours]
Therefore, at this point, we no longer find it necessary to dwell on whether there was grave abuse
on the part of the Sandiganbayan in finding the existence of probable cause to issue a warrant of
pg. 542
arrest. Had Inocentes brought this matter before he posted bail or without voluntarily surrendering
himself, the outcome could have been different. But, for now, whether the findings of probable
cause was tainted with grave abuse of discretion — thereby making the warrant of arrest void —
does not matter anymore as even without the warrant the Sandiganbayan still acquired jurisdiction
over the person of Inocentes.
The Sandiganbayan should have

granted Inocentes’ motion to dismiss
for violation of his right to speedy
disposition of cases; it took seven
long years before the information
was filed before it.
The Office of the Ombudsman, for its failure to resolve the criminal charges against Inocentes for
seven (7) years, violated Inocentes’ constitutional right to due process and to a speedy disposition
of the case against him, as well as its own
_______________
29 Id., at p. 387.
51
VOL. 796, JULY 7, 2016 51

constitutional duty to act promptly on complaints filed before it.
A person’s right to a speedy disposition of his case is guaranteed under Section 16, Article III of
the Constitution:
All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.
This constitutional right is not limited to the accused in criminal proceedings but extends to all
parties in all cases, be it civil or administrative in nature, as well as in all proceedings, either
pg. 543
judicial or quasi-judicial.30 In this accord, any party to a case may demand expeditious action of
all officials who are tasked with the administration of justice.31
In Tatad v. Sandiganbayan,32 we held that the long delay of close to three (3) years in the
termination of the preliminary investigation conducted by the Tanodbayan constituted a violation
not only of the constitutional right of the accused under the broad umbrella of the due process
clause, but also of the constitutional guarantee to “speedy disposition” of cases as embodied in
Section 16 of the Bill of Rights, viz.:
We find the long delay in the termination of the preliminary investigation by the Tanodbayan
in the instant case to be violative of the constitutional right of the accused to due process.
Substantial adherence to the requirements of the law governing the conduct of preliminary
investigation, including substantial compliance with the time limitation prescribed by the
law for the resolution of the case by the prosecutor, is part of the proce-
_______________
30 Roquero v. Chancellor of UP-Manila, G.R. No. 181851, March 9, 2010, 614 SCRA 723; Binay v.
Sandiganbayan, 314 Phil. 413, 446-447; 316 SCRA 65, 92-93 (1999).
31 Id.
32 G.R. Nos. 72335-39, March 21, 1988, 159 SCRA 70.
52

dural due process constitutionally guaranteed by the fundamental law. Not only under the
broad umbrella of the due process clause, but under the constitutional guarantee of “speedy
disposition” of cases as embodied in Section 16 of the Bill of Rights (both in the 1973 and the
1987 Constitutions), the inordinate delay is violative of the petitioner’s constitutional rights.
A delay of close to three (3) years cannot be deemed reasonable or justifiable in the light of the
circumstance obtaining in the case at bar. We are not impressed by the attempt of the
Sandiganbayan to sanitize the long delay by indulging in the speculative assumption that “the
delay may be due to a painstaking and gruelling scrutiny by the Tanodbayan as to whether the
evidence presented during the preliminary investigation merited prosecution of a former high
ranking government official.” In the first place, such a statement suggests a double standard of
treatment, which must be emphatically rejected. Secondly, three out of the five charges against the
petitioner were for his alleged failure to file his sworn statement of assets and liabilities required
by Republic Act No. 3019, which certainly did not involve complicated legal and factual issues
pg. 544
necessitating such “painstaking and gruelling scrutiny” as would justify a delay of almost three
years in terminating the preliminary investigation. The other two charges relating to alleged
bribery and alleged giving of unwarranted benefits to a relative, while presenting more substantial
legal and factual issues, certainly do not warrant or justify the period of three years, which it took
the Tanodbayan to resolve the case.33 [Emphasis ours]
The Sandiganbayan insists that the delay in this case is justifiable because the informations were
initially filed before the RTC in Tarlac City. However, after going over the records of the case, we
find that the period of time in between the incidents that could have contributed to the delay were
unreasonable, oppressive, and vexatious.
_______________
33 Id., at p. 82.
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VOL. 796, JULY 7, 2016 53

According to the Sandiganbayan, the complaint in the case at bar was filed sometime in 2004.
After the preliminary investigation, on September 15, 2005, the Office of the Ombudsman issued
a resolution finding probable cause to charge Inocentes. Following the denial of his motion for
reconsideration on November 14, 2005, the prosecution filed the informations with the RTC of
Tarlac City. However, on March 14, 2006, the Office of the Ombudsman ordered the withdrawal
of the informations filed before the RTC. From this point, it took almost six (6) years (or only on
May 2, 2012) before the informations were filed before the Sandiganbayan.
To our mind, even assuming that transfers of records from one court to another oftentimes entails
significant delays, the period of six (6) years is too long solely for the transfer of records from the
RTC in Tarlac City to the Sandiganbayan. This is already an inordinate delay in resolving a
criminal complaint that the constitutionally guaranteed right of the accused to due process and to
the speedy disposition of cases. Thus, the dismissal of the criminal case is in order.34
Moreover, the prosecution cannot attribute the delay to Inocentes for filing numerous motions
because the intervals between these incidents are miniscule compared to the six-year transfer of
records to the Sandiganbayan.
pg. 545
The prosecution likewise blames Inocentes for not seasonably invoking his right to a speedy
disposition of his case. It claims that he has no right to complain about the delay when the delay
is because he allegedly slept on his rights.
We find this argument unworthy of merit, in the same way we did in Coscolluela v. Sandiganbayan
(First Division):
Records show that they could not have urged the speedy resolution of their case because they were
unaware that the investigation against them was still ongo-
_______________
34 Anchangco, Jr. v. Ombudsman, G.R. No. 122728, February 13, 1997, 268 SCRA 301, 304.
54

ing. They were only informed of the March 27, 2003 resolution and information against them only
after the lapse of six (6) long years, or when they received a copy of the latter after its filing with
the SB on June 19, 2009. In this regard, they could have reasonably assumed that the proceedings
against them have already been terminated. This serves as a plausible reason as to why petitioners
never followed up on the case altogether. Instructive on this point is the Court’s observation in
Duterte v. Sandiganbayan, to wit:
Petitioners in this case, however, could not have urged the speedy resolution of their case
because they were completely unaware that the investigation against them was still ongoing.
Peculiar to this case, we reiterate, is the fact that petitioners were merely asked to comment,
and not file counter-affidavits which is the proper procedure to follow in a preliminary
investigation. After giving their explanation and after four long years of being in the dark,
petitioners, naturally, had reason to assume that the charges against them had already been
dismissed.
On the other hand, the Office of the Ombudsman failed to present any plausible, special or
even novel reason which could justify the four-year delay in terminating its investigation.
Its excuse for the delay — the many layers of review that the case had to undergo and the
meticulous scrutiny it had to entail — has lost its novelty and is no longer appealing, as was
the invocation in the Tatad case. The incident before us does not involve complicated factual
and legal issues, specially (sic) in view of the fact that the subject computerization contract
had been mutually cancelled by the parties thereto even before the Anti-Graft League filed
its complaint.
pg. 546
Being the respondents in the preliminary investigation proceedings, it was not the petitioners’ duty
55
VOL. 796, JULY 7, 2016 55

to follow up on the prosecution of their case. Conversely, it was the Office of the
Ombudsman’s responsibility to expedite the same within the bounds of reasonable timeliness
in view of its mandate to promptly act on all complaints lodged before it. As pronounced in
the case of Barker v. Wingo:
A defendant has no duty to bring himself to trial; the State has that duty as well as the duty
of insuring that the trial is consistent with due process.35
Plainly, the delay of at least seven (7) years before the informations were filed skews the fairness
which the right to speedy disposition of cases seeks to maintain. Undoubtedly, the delay in the
resolution of this case prejudiced Inocentes since the defense witnesses he would present would
be unable to recall accurately the events of the distant past.
Considering the clear violation of Inocentes’ right to the speedy disposition of his case, we find
that the Ombudsman gravely abused its discretion in not acting on the case within a reasonable
time after it had acquired jurisdiction over it.
WHEREFORE, premises considered, Inocentes’ petition is GRANTED. The resolutions dated

February 8, 2013 and October 24, 2012 of the Sandiganbayan in Criminal Case Nos. SB-12-CRM-
0127-0128 are hereby REVERSED and SET ASIDE. For violating Inocentes’ right to a speedy
disposition of his case, the Sandiganbayan is hereby ORDERED to DISMISS the case against
him.
SO ORDERED.
_______________
35 G.R. No. 191411, July 15, 2013, 701 SCRA 188, 198-199.
pg. 547
56

Notes.—Violations of RA No. 3019 by a municipal mayor come within the exclusive original
jurisdiction of the Sandiganbayan because under RA No. 6758, otherwise known as the
Compensation and Position Classification Act of 1989, municipal mayors are local officials
classified as Grade “27.” (Caballero vs. Sandiganbayan, 534 SCRA 30 [2007])
A special appearance before the court — challenging its jurisdiction over the person through a
motion to dismiss even if the movant invokes other grounds — is not tantamount to estoppel or a
waiver by the movant of his objection to jurisdiction over his person, and, such is not constitutive
of a voluntary submission to the jurisdiction of the court. (Garcia vs. Sandiganbayan, 603 SCRA
348 [2009])
——o0o——
pg. 548
G.R. No. 212346. July 7, 2016.*
RICHARD V. FUNK, petitioner, vs. SANTOS VENTURA HOCORMA FOUNDATION, INC.,

FEDERICO O. ESCALER, JOSE M. ZARAGOZA, DOMINGO L. MAPA, ERNESTO C.
PEREZ and ARISTON ESTRADA, SR., respondents.
Remedial Law; Cost of Suit; To execute the costs of suit in superior courts (i.e., courts other than
the first level courts), Section 8 of Rule 142 does not require the prevailing party to notify the
adverse party within five (5) days from the entry of judgment.—To execute the costs of suit in
superior courts (i.e., courts other than the first level courts), Section 8 of Rule 142 does not require
the prevailing party to notify the adverse party within five days from the entry of judgment. What
Section 8 mandates is that the adverse party must be given at least five days written notice before
costs may be taxed or assessed. The obvious purpose of the notice is to give opportunity to the
adverse party to object to the costs. The clerk of court will thereafter tax or assess the costs, which
assessment may be appealed by either party to the court where execution is sought. Further, the
last sentence of Section 8 of Rule 142 contemplates a scenario where costs may be taxed or
assessed even, before the entry of judgment. This possibility contradicts the RTC and CA’s
conclusion that notice must be given within five days from the date of entry of judgment. In reality,
to require the prevailing party to move for the execution of costs within five days from the date of
entry would render nugatory the prescriptive periods for execution of judgments under Section 6
of Rule 39 of the Rules of Court. We elaborate on the significance of these periods vis-à-vis the
execution of costs in our discussion below.
Same; Civil Procedure; Judgments; Execution of Judgments; Under the rules, there are two (2)
modes by which a judgment may be executed: first, on motion if made within five (5) years from
the date of entry of the judgment sought to be executed; and second, by an independent action to
revive the judgment within the statute of limitations, which is ten (10) years from the date of
entry.—Under Section
_______________
* SECOND DIVISION.
70

Funk vs. Santos Ventura Hocorma Foundation, Inc.
6, Rule 39 of the Rules of Court, a final and executory judgment or order may be executed on
motion within five years from the date of its entry. After the lapse of such time, and before it is
pg. 549
barred by the statute of limitations, a judgment may be enforced by action. Thus, under the rules,
there are two modes by which a judgment may be executed: first, on motion if made within five
years from the date of entry of the judgment sought to be executed; and second, by an independent
action to revive the judgment within the statute of limitations, which is ten years from the date of
entry.
Same; Same; Same; Immutability of Final Judgments; No procedural rule is more settled than the
courts’ strict adherence to the fundamental principle that a decision or an order that has acquired
finality becomes immutable and unalterable.—On this note, we remind Atty. Funk that no
procedural rule is more settled than the courts’ strict adherence to the fundamental principle that a
decision or an order that has acquired finality becomes immutable and unalterable. A definitive
final judgment or final order, however erroneous, is no longer subject to change or revision. The
principle of immutability of judgments is the cornerstone of our justice system; without this iron
rule, litigations will not end. Indeed, the application of this principle is of utmost necessity both
for the parties as well as for the courts. While the rule on immutability of judgments admits of
exceptions, namely: (1) the correction of clerical errors; (2) the nunc pro tunc entries that cause no
prejudice to any party; (3) void judgments; and (4) whenever circumstances transpire after the
finality of the decision rendering its execution unjust and inequitable, none of these exceptions are
present in the present case.
Same; Same; Same; Execution of Judgments; Section 6, Rule 39 of the Rules of Court bars a second
or subsequent motion for execution that raise the same issues or the same items in the judgment
sought to be executed.—Section 6, Rule 39 of the Rules of Court bars a second or subsequent
motion for execution that raise the same issues or the same items in the judgment sought to be
executed. Section 6 of Rule 39 provides: Section 6. Execution by motion or by independent
action.—A final and executory judgment or order may be executed on motion within five (5)
years from the date of its entry. After the lapse of such time, and before it is barred by the statute
of limitations, a judgment may be enforced by action. The revived judgment may also be enforced
by motion within five (5)
71
VOL. 796, JULY 7, 2016 71

years from the date of its entry and thereafter by action before it is barred by the statute of
limitations. [emphasis and italics ours] To be clear, Section 6 of Rule 39 does not prohibit a second
motion for execution. We recognize that there may be instances where the prevailing party can
validly or reasonably file a second or subsequent motion for execution.
Same; Same; Same; Immutability of Judgment; Words and Phrases; Bar by prior judgment means
that when a right or fact had already been judicially tried on the merits and determined by a court
pg. 550
of competent jurisdiction, the final judgment or order shall be conclusive upon the parties and
those in privity with them and constitutes an absolute bar to subsequent actions involving the same
claim, demand, or cause of action.—The filing of a subsequent motion for execution cannot be
allowed if the denial of the first motion for execution had become final, and the subsequent motion
for execution raises the same issues or items already passed upon. By items, we mean the particular,
separable, and identifiable portions of the judgment. The concept of bar by prior judgment as
enunciated in Section 47(b) of Rule 39 of the Rules of Court applies. Bar by prior judgment means
that when a right or fact had already been judicially tried on the merits and determined by a court
of competent jurisdiction, the final judgment or order shall be conclusive upon the parties and
those in privity with them and constitutes an absolute bar to subsequent actions involving the same
claim, demand, or cause of action.
Same; Same; Same; Revival of Judgments; An action for revival of judgment is a procedural means
of securing the execution of a previous judgment which has become dormant after the passage of
five (5) years without it being executed upon motion of the prevailing party.—An action for revival
of judgment is a procedural means of securing the execution of a previous judgment which has
become dormant after the passage of five years without it being executed upon motion of the
prevailing party. After the lapse of the five-year period, the judgment is reduced to a mere right
of action, which judgment must be enforced, as all other ordinary actions, by the institution of a
complaint in the regular form. Such action must be filed within ten (10) years from the date the
judgment has become final. In concrete terms, the prevailing party, who for some reason or
another, failed to move for execution within five
72

years from the date of entry of the judgment, can file an ction to have the judgment revived. The
rule allowing the filing of an action within ten years from the date of entry merely gives substance
to the Civil Code provisions on the prescription of an action upon a judgment.
Same; Same; Same; Execution of Judgments; For the same reason that a second motion for
execution raising the same issues or items is barred by the denial of the first motion for execution,
so is an independent action raising the same issues or items is barred.—While Section 6 of Rule
39 does not expressly state that the two modes of execution are mutually exclusive, it is not difficult
to discern why no action upon a judgment can be filed once the prevailing party had availed of the
first mode of execution. For the same reason that a second motion for execution raising the same
issues or items is barred by the denial of the first motion for execution, so is an independent action
raising the same issues or items is barred. The bar by prior judgment principle would equally
apply. To be more specific, an independent action to execute the costs of suit and the taxes withheld
would be the same as the first motion for execution that had raised these issues. Since the denial
pg. 551
of the first motion for execution has become final and immutable, Atty. Funk is barred from filing
an independent action raising exactly the same issues.
David, Cui-David, Buenaventura and Ang Law Offices for respondents.
BRION, J.:
Before the Court is a petition for review on certiorari1 filed by Atty. Richard V. Funk (Atty. Funk)
to challenge the No-
_______________
1 Rollo, pp. 3-30. The petition is filed under Rule 45 of the Rules of Court.
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VOL. 796, JULY 7, 2016 73

vember 5, 2013 decision2 and the April 29, 2014 resolution3 of the Court of Appeals (CA) in C.A.-
G.R. CV No. 97527.
The CA denied Atty. Funk’s appeal from the order of the Regional Trial Court (RTC), Branch 66,
Makati City, denying his second motion for execution.4
Antecedents
pg. 552
In 1983, Atty. Funk represented Teodoro Santos (Santos) in a collection case against Philbank
Corporation and in a transfer of properties to respondent Santos Ventura Hocorma Foundation,
Inc. (the Foundation). The agreed attorney’s fees were 25% and 10% of the market value of the
properties.5
Teodoro Santos executed a special power of attorney (SPA) to authorize Atty. Funk to collect his
fees from the Foundation.6 The Foundation failed to fully pay the attorney’s fees despite demand.
Atty. Funk thus filed the case for the collection of his attorney’s fees with the RTC.7
_______________
2 Id., at pp. 33-44. Associate Justice Stephen C. Cruz penned the assailed decision and resolution
with the concurrence of Associate Justices Ramon M. Bato, Jr. and Myra V. Garcia-Fernandez
(Special Eleventh Division).
3 Id., at pp. 46-47.
4 RTC Civil Case 89-5622.
5 Rollo, pp. 33-34, see footnote 3 of the Court of Appeals’ November 5, 2013 decision.
6 Santos Ventura Hocorma Foundation, Inc. v. Funk, 539 Phil. 125, 127; 510 SCRA 68, 69
(2006). The facts revealed that Teodoro Santos hired Atty. Funk to “protect his other assets because
he was afraid that his properties might be the subject of attachments, garnishments and executions
should there be future litigations.” But it was not clear why the Foundation was established, or
how Teodoro Santos was related to the Foundation. The Foundation may have been set up to hold
Teodoro Santos’s assets for estate planning purposes. In any case, the Board of Trustees’
confirmation of the SPA rendered discussion on this matter superfluous.
7 Rollo, p. 34.
74

On February 14, 1994, the RTC ordered the Foundation to pay Atty. Funk attorney’s fees in the
amount of P150,000.00 for the collection case and P500,000.00 for the transfer of properties. On
Atty. Funk’s motion for reconsideration, the RTC increased the attorney’s fees to P918,919.50.
The RTC also declared Atty. Funk co-owner of 10% of the properties whose market values were
not established in court.8
pg. 553
On appeal, the CA affirmed the RTC decision but held that Atty. Funk had no right of co-
ownership over the properties. The Foundation appealed to this Court in a case docketed as G.R.
No. 131260 (mother case).9
On December 6, 2006, we denied the Foundation’s appeal and held that the issues it raised
(whether the Foundation’s Board of Trustees approved the SPA and whether the attorney’s fees
were reasonable) were questions of fact which we cannot review.10 We thus denied the
Foundation’s appeal and thereby effectively sustained the findings of the RTC and the CA.
Under these findings, the minutes of the Foundation’s board meetings indicated that: (1) the SPA
executed by Santos, when presented to the Board of Trustees on December 13, 1983, was
unanimously confirmed, acknowledged, and approved; and (2) the Foundation even undertook to
implement the retainer agreements between Atty. Funk and Santos.11
Our decision in the mother case became final and executory.12 Atty. Funk then filed a partial
motion for execution (the first motion for execution) with the RTC.13 During the hearing
_______________
8 Id.
9 Supra note 6.
10 Id., at p. 129; p. 72.
11 Id., at p. 130; p. 73.
12 Rollo, p. 42, see footnote 24 of the CA decision.
13 Dated August 31, 2007. Id., at p. 34.
75
VOL. 796, JULY 7, 2016 75

on the motion, the Foundation paid the attorney’s fees in the total amount of P1,450,501.02.14
pg. 554
The Foundation, however, remitted P167,735.48 to the Bureau of Internal Revenue (BIR) as
withholding taxes. It likewise withheld the bill of costs (filing fees, commissioner’s fee,
stenographer’s fee, and other court fees) in the total amount of P20,281.00.15
In an order dated February 16, 2009, the RTC upheld the remittance of the withholding of taxes,
and denied the inclusion of the bill of costs because of Atty. Funk’s supposed failure to comply
with Section 8, Rule 142 of the Rules of Court.16
Interpreting the February 16, 2009 RTC order as a command to directly elevate his case to this
Court, Atty. Funk
_______________
14 Id. The RTC heard the motion on June 18, 2008. The payments were made with manager’s
check amounting to P912,831.57, another check in the amount of P37,669.45, plus P500,000.00.
The amount of the checks represented Atty. Funk’s share in the market value of the properties. It
is unclear under the facts whether the P500,000.00 was paid in cash.
15 Id., at pp. 34-35. The bill of costs is itemized as follows: filing fees – P7,676.00;
commissioner’s fee – P5,000.00; stenographer’s fee – P3,000.00; costs in the RTC, CA & SC –
P4,605.00.
16 Section 8, Rule 142 of the Rules of Court, provides:
Section 8. Costs, how taxed.—In inferior courts, the costs shall be taxed by the justice of the
peace or municipal judge and included in the judgment. In superior courts, costs shall be taxed by
the clerk of the corresponding court on five days’ written notice given by the prevailing party to
the adverse party. With this notice shall be served a statement of the items of costs claimed by the
prevailing party, verified by his oath or that of his attorney. Objections to the taxation shall be
made in writing, specifying the items objected to. Either party may appeal to the court from the
clerk’s taxation. The costs shall be inserted in the judgment if taxed before its entry, and payment
thereof shall be enforced by execution.
76

filed with the Second Division an urgent motion for the Clerk of Court to include costs in the
execution.17
pg. 555
On March 30, 2009, we denied the urgent motion and resolved to expunge it from the record
because “the [mother case had] been decided on 06 December 2006 and entry of judgment [had]
been made on 14 June 2007. x x x”18 Atty. Funk moved but failed to obtain a reconsideration of
our March 30, 2009 Resolution.19
Atty. Funk went back to the RTC and filed an urgent motion for execution of costs (the second
motion for execution). The respondents opposed the motion. They argued that the February 16,
2009 RTC order denying the bill of costs and affirming the withholding of taxes had become final
since Atty. Funk did not move for its reconsideration nor file an appeal.20
The RTC’s Ruling
On October 23, 2009, the RTC denied Atty. Funk’s second motion for execution, stating among
others that:
Anent the amount withheld by the [respondents] and remitted to the [BIR], the same has been
sustained by the BIR itself in its Opinion (dated September 10, 2008) issued per [Atty. Funk’s]
request. Having obtained an unfavorable ruling, [he] cannot turn [his] back on the same for in
doing so, [he] not only defies the said ruling but contradicts [himself] in the process. Thusly, [the
respondents] are under no obligation to remit to [Atty. Funk] the Php167,735.48 they withheld
from the amount owing to [the latter] and remitted to the BIR as this act was upheld by the BIR
x x x.
_______________
17 Rollo, p. 35.
18 Id., at pp. 35-36.
19 Id., at p. 36.
20 Id.
77
VOL. 796, JULY 7, 2016 77

pg. 556
WHEREFORE, premises considered and for lack of merit, the instant Motion for Execution for
Costs in the amount of Php20,281.00 (covering the bill of costs) and Php167,735.48 (covering the
tax withheld and remitted to the BIR) are [sic] denied.
SO ORDERED.21
Atty. Funk moved but failed to secure a reconsideration of the RTC order. Hence, he appealed to
the CA.22
The CA’s Ruling
The CA upheld the denial of the second motion for execution and agreed with the RTC that: (1)
the February 16, 2009 RTC order denying the inclusion of the bill of costs had become final for
Atty. Funk’s failure to move for reconsideration or to appeal; (2) in any case, Atty. Funk did not
comply with Section 8, Rule 142 of the Rules of Court, i.e., the need to move for the execution of
the costs of suit after [sic] five days from the date the judgment had become final and executory;
and (3) the BIR’s opinion that the Foundation properly withheld P167,735.48 as taxes, is binding
on Atty. Funk.23
The CA denied Atty. Funk’s motion for reconsideration; thus, the present petition.24
The Petition
Atty. Funk posits in his petition that:
First, the CA erred in applying Section 8, Rule 142 of the Rules of Court.25
_______________
21 Id.
22 Id., at p. 37.
23 Id., at pp. 40-44.
24 Id., at pp. 45-47.
pg. 557
25 Id., at pp. 13-16.
78

Citing the 1960 case of Romulo v. Desalla,26 Atty. Funk points out that the finality of the decision
where costs were granted does not bar the execution of the costs “for the payment of [costs], the
law prescribes that certain steps be first taken, such as the assessment by the clerk of court, and
the appeal, if any, from that assessment to the court, and unless these steps are taken, the judgment
as to costs cannot be executed.”27
He contends that there is no basis in the RTC and CA’s holding that the “costs of suits should be
filed after five days when the decision becomes final and executory” and that the Rule only states
that “[i]n superior courts, costs shall be taxed by the clerk of the corresponding court on five days’
written notice given by the prevailing party to the adverse party.”28
Second, contrary to the CA ruling, the motions for execution were filed on time.29 Section 6, Rule
39 of the Rules of Court provides that a final and executory judgment or order may be executed
on motion within five years from the date of its entry.
Atty. Funk explains that the entry of judgment in the mother case was made on June 14, 2007, and
that he filed the first motion for execution on August 31, 2007, and the second motion for execution
in October 2009.30 Clearly, both motions were filed within the five-year period.
Third, the BIR’s opinion that the Foundation properly withheld and remitted the taxes on the
attorney’s fees is not binding on the courts.31
_______________
26 108 Phil. 346 (1960).
27 Id., at p. 350.
28 Rollo, pp. 15-16.
29 Id., at pp. 17-18.
30 Id., at p. 18. The records do not show the exact date when Atty. Funk filed the second motion
for execution. We note, however, that the RTC resolved to deny the motion on October 23, 2009.
pg. 558
31 Id., at pp. 23-29.
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Atty. Funk posits that his fees should not have been subjected to withholding taxes. Rather, the
sum withheld should have been included in his gross income for taxable year 2008. Only after
deductions of expenses should the resulting net income, if any, be taxed.32 Atty. Funk also
criticizes the CA and the RTC’s reliance on the BIR opinion without examining its correctness.33
Atty. Funk thus prays that we order the RTC to direct the respondents to pay the costs of suit and
refund the amount remitted to the BIR.34
The Respondents’ Comment
The respondents counter that the denial of the bill of costs is correct as Atty. Funk failed to comply
with Section 8, Rule 142 of the Rules of Court, i.e., he failed to raise the issue of the bill of costs
in a timely manner. They insist that the February 16, 2009 RTC order had become final because
of Atty. Funk’s failure to move for its reconsideration or to appeal.35
The respondents further contend that Atty. Funk is estopped from questioning the BIR opinion as
it was he who sought its issuance. It was only after the BIR opined against his interests did he
question the opinion’s correctness. In any case, the opinion of the BIR — the agency that has the
expertise on taxation — is entitled to great respect.36
Issues
The present petition brings to the fore two issues: (1) whether the costs of suit can still be executed;
and (2)
_______________
pg. 559
32 Id., at pp. 23-24. Atty. Funk’s arguments on this point are paraphrased for brevity and clarity.
33 Id., at pp. 25-29.
34 Id., at p. 29.
35 Id., at pp. 52-55.
36 Id., at pp. 55-56.
80

whether Atty. Funk can recover the amount withheld as taxes.
Our Ruling
The Execution of the Costs of Suit
To resolve the first issue, we examine the effects of the February 16, 2009 RTC order that denied
the first motion for execution.
The respondents point out and Atty. Funk does not dispute that he did not move for reconsideration
or appeal the February 16, 2009 RTC order. Still, he argues that the order did not become final
because the costs of suit may be executed under Section 6, Rule 39 of the Rules of Court. He also
cites Romulo, which purportedly held that costs may be executed despite the finality of the
judgment that awarded the costs. He insists that he could, as he did, file with the RTC the second
motion for execution.
pg. 560
The Denial of the First
Motion for Execution
The RTC held that Atty. Funk failed to comply with Section 8, Rule 142 of the Rules of Court,
which states:
Section 8. Costs, how taxed.—In inferior courts, the costs shall be taxed by the justice of the
peace or municipal judge and included in the judgment. In superior courts, costs shall be taxed
by the clerk of the corresponding court on five days’ written notice given by the prevailing
party to the adverse party. With this notice shall be served a statement of the items of costs
claimed by the prevailing party, verified by his oath or that of his attorney. Objections to the
taxation shall be made in writing, specifying the items objected to. Either
81
VOL. 796, JULY 7, 2016 81

party may appeal to the court from the clerk’s taxation. The costs shall be inserted in the
judgment if taxed before its entry, and payment thereof shall be enforced by execution.37
[Emphasis ours]
The RTC ruled that Atty. Funk should have given written notice to the respondents five days after
the decision became final and executory. Although the RTC used the word after, what it meant
was that Atty. Funk should have given the written notice within five days from the date the
judgment became final and executory, i.e., date of its entry.38 Hence, the RTC denied the first
motion for execution filed on August 31, 2007, or more than two months from the date of entry —
June 14, 2007 — of our judgment in the mother case. The CA affirmed the RTC ruling in toto.
The RTC and the CA incorrectly applied Section 8 of Rule 142.
To execute the costs of suit in superior courts (i.e., courts other than the first level courts), Section
8 of Rule 142 does not require the prevailing party to notify the adverse party within five days
from the entry of judgment. What Section 8 mandates is that the adverse party must be given at
least five days written notice before costs may be taxed or assessed. The obvious purpose of the
notice is to give opportunity to the adverse party to object to the costs. The clerk of court will
thereafter tax or assess the costs, which assessment may be appealed by either party to the court
where execution is sought.
pg. 561
Further, the last sentence of Section 8 of Rule 142 contemplates a scenario where costs may be
taxed or assessed even, before the entry of judgment. This possibility contradicts the RTC and
CA’s conclusion that notice must be given within five days from the date of entry of judgment.
_______________
37 Id., at p. 35.
38 Id., at p. 42. See footnote 24 of the CA decision.
82

In reality, to require the prevailing party to move for the execution of costs within five days from
the date of entry would render nugatory the prescriptive periods for execution of judgments under
Section 6 of Rule 39 of the Rules of Court. We elaborate on the significance of these periods vis-
à-vis the execution of costs in our discussion below.
The Denial of the Second

Motion for Execution
That the RTC and the CA erroneously denied the first motion for execution does not mean that the
denial of the second motion for execution was also incorrect. We sustain the denial of the second
motion for execution on the following grounds:
First, the February 16, 2009 RTC order was a final order. Atty. Funk’s failure to timely contest
the order resulted in its immutability.
Under Section 6, Rule 39 of the Rules of Court, a final and executory judgment or order may be
executed on motion within five years from the date of its entry. After the lapse of such time, and
before it is barred by the statute of limitations, a judgment may be enforced by action.39
Thus, under the rules, there are two modes by which a judgment may be executed: first, on motion
if made within five years from the date of entry of the judgment sought to be executed; and second,
by an independent action to revive the judgment within the statute of limitations, which is ten
years from the date of entry.40
pg. 562
_______________
39 Section 6, Rule 39 of the Rules of Court.
40 Article 1144 of the Civil Code provides, among others, that an action upon a judgment must
be brought within ten years from the time the right of action accrues. Under 1152 of the Civil
Code, the period for prescription of actions to demand the fulfillment of obligations declared by a
judgment commences from the time the
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VOL. 796, JULY 7, 2016 83

Atty. Funk availed of the first mode. However, the February 16, 2009 RTC order denying his first
motion for execution was a final order. His failure to move for reconsideration or appeal resulted
in the order’s finality or immutability.
A final order is one that disposes of the whole subject matter or terminates a particular proceeding
or action, leaving nothing to be done but to enforce by execution what has been determined.41 The
February 16, 2009 RTC order completely disposed of the issues of the execution of costs and
withholding of taxes.
To recall, the respondents had paid the attorney’s fees in the total amount of P1,450,501.02.42 The
only issues left unresolved were the propriety of the execution of the costs of suit and the
withholding of taxes. In its February 16, 2009 order, the RTC ruled that: (1) Atty. Funk could not
move for the execution of the costs of suit because he failed to comply with Section 8 of Rule 142;
and (2) the BIR opinion was binding on Atty. Funk.
In this way, the RTC resolved all pending matters when it denied the first motion for execution.
Atty. Funk’s remedy was either to move for reconsideration or appeal the February 16, 2009 RTC
order.
Section 1, Rule 41 of the Rules of Court provides:
Section 1. Subject of appeal.—An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to
be appealable. [emphasis ours]
_______________
pg. 563
judgment became final, which under Section 2 of Rule 36 of the Rules of Court, is the date of its
entry.
41 Republic v. Heirs of Enrique Oribello, Jr., 705 Phil. 614, 624; 692 SCRA 645, 654 (2013),
citing RCBC v. Magwin Marketing Corp., 450 Phil. 720, 737; 402 SCRA 592, 605 (2003).
42 Supra note 14.
84

We stress that the present case does not involve a litigant who filed a late motion for
reconsideration or appeal. Glaringly, Atty. Funk did not appeal or move for reconsideration.
Having failed to contest the February 16, 2009 RTC order, Atty. Funk cannot now question its
correctness.
On this note, we remind Atty. Funk that no procedural rule is more settled than the courts’ strict
adherence to the fundamental principle that a decision or an order that has acquired finality
becomes immutable and unalterable. A definitive final judgment or final order, however
erroneous, is no longer subject to change or revision. The principle of immutability of judgments
is the cornerstone of our justice system; without this iron rule, litigations will not end.43 Indeed,
the application of this principle is of utmost necessity both for the parties as well as for the
courts.44
While the rule on immutability of judgments admits of exceptions, namely: (1) the correction of
clerical errors; (2) the nunc pro tunc entries that cause no prejudice to any party; (3) void
judgments; and (4) whenever circumstances transpire after the finality of the decision rendering
its execution unjust and inequitable,45 none of these exceptions are present in the present case.
Further, Atty. Funk committed another procedural error when he directly elevated his case to this
Court by moving for execution with the Second Division. Not only did his failure to move for
reconsideration (with the RTC) or appeal (to the CA) result in the finality of the February 16, 2009
order; he also bypassed the hierarchy of courts.
Second, Section 6, Rule 39 of the Rules of Court bars a second or subsequent motion for execution
that raise the same
_______________
pg. 564
43 Apo Fruits Corporation v. Court of Appeals, 622 Phil. 215, 230-231; 607 SCRA 200, 213
(2009).
44 Id.
45 Id.
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VOL. 796, JULY 7, 2016 85

issues or the same items in the judgment sought to be executed.
Section 6 of Rule 39 provides:
Section 6. Execution by motion or by independent action.—A final and executory judgment or

order may be executed on motion within five (5) years from the date of its entry. After the lapse
of such time, and before it is barred by the statute of limitations, a judgment may be enforced
by action. The revived judgment may also be enforced by motion within five (5) years from the
date of its entry and thereafter by action before it is barred by the statute of limitations. [Emphasis
and italics ours]
To be clear, Section 6 of Rule 39 does not prohibit a second motion for execution. We recognize
that there may be instances where the prevailing party can validly or reasonably file a second or
subsequent motion for execution.
For example, the losing party in a damages suit may partially question the money judgment against
him. While he might agree with the award of actual damages, he may refuse to pay the unrealized
income claimed by the prevailing party. Thus, he will appeal the award of unrealized income and
let the award of actual damages become final and executory (assuming he does not pay the amount
of actual damages outright). In such case, the prevailing party can already move for the execution
of the actual damages within five years from the finality of the judgment on actual damages while
the award of unrealized income is on appeal.
If the award of unrealized income is later affirmed by the appellate court and the ruling becomes
final and executory, the prevailing party can file another motion for execution, this time to
implement the award of unrealized income within five years from the finality of the ruling on
unrealized income.
pg. 565
However, the filing of a subsequent motion for execution cannot be allowed if the denial of the
first motion for execu-
86

tion had become final, and the subsequent motion for execution raises the same issues or items
already passed upon. By items, we mean the particular, separable, and identifiable portions of the
judgment.
The concept of bar by prior judgment as enunciated in Section 47(b) of Rule 39 of the Rules of
Court46 applies. Bar by prior judgment means that when a right or fact had already been judicially
tried on the merits and determined by a court of competent jurisdiction, the final judgment or order
shall be conclusive upon the parties and those in privity with them and constitutes an absolute bar
to subsequent actions involving the same claim, demand, or cause of action.47
The requisites for res judicata under the concept of bar by prior judgment are:
(1) The former judgment or order must be final;
(2) It must be a judgment on the merits;
_______________
46 Supapo v. De Jesus, G.R. No. 198356, April 20, 2015, 756 SCRA 211. Res judicata has two
concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of the Rules of Civil
Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).
Section 47(b) of the Rules of Court provides:
SEC. 47. Effect of judgments or final orders.—The effect of a judgment or final

order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment
or final order, may be as follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation thereto, conclusive
between the parties and their successors-in-interest by title subsequent to the commencement
pg. 566
of the action or special proceeding, litigating for the same thing and under the same title and
in the same capacity.
xxxx
47 Id., citing Rizal Commercial Banking Corporation v. Royal Cargo Corporation, 617 Phil. 764,
774; 602 SCRA 545, 557 (2009).
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VOL. 796, JULY 7, 2016 87

(3) It 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 actions, identity of parties, subject matter, and
cause of action.48
The denial of the first motion for execution bars the second motion for execution because all the
requisites of bar by prior judgment are present, namely:
1. The February 16, 2009 order became final because Atty. Funk did not move for
reconsideration or appeal;
2. The February 16, 2009 order was a judgment on the merits because the RTC definitively
held: (a) that Atty. Funk was not entitled to the execution of the costs of suit because of his
failure to comply with the Section 8, Rule 142 of the Rules of Court; and (b) that the BIR
opinion was binding to him;
3. The RTC had the jurisdiction to resolve the first motion for execution because it was the
court of origin;49 and
4. The first and second motions for execution involved the same parties (Atty. Funk and the
respondents), subject matter (the costs of suit and withholding of taxes), and cause of action
(the execution of the costs of suit and taxes allegedly wrongly withheld).
Third, the case of Romulo is not applicable to the present case.
pg. 567
Atty. Funk invokes a line in Romulo stating that “even if the decision wherein costs were granted,
had already become
_______________
48 Id.
49 Section 1, Rule 39, Rules of Court.
88

final, that does not hold true for the costs x x x.”50 From this isolated reading of the decision, he
concludes that the costs of suit may be executed anytime within the periods provided under Section
6 of Rule 39.
Atty. Funk’s contention is inaccurate as he takes our holding in Romulo out of context.
We made the above observation because the clerk of court in that case issued the writ of execution,
which included the costs of suit, without assessing whether the bill of costs was accurate. The
adverse party was likewise not given the opportunity to contest the bill of costs. Thus, we nullified
the writ of execution.51
We held that even if the decision wherein costs were granted had already become final, that does
not hold true for the costs because it would be unfair for the losing party to shoulder the costs that
were not checked for accuracy by the clerk of court. This was the context of the line invoked by
Atty. Funk. We did not rule that the costs of suit may, in all instances, be executed anytime within
the periods under Section 6 of Rule 39.
Action to Revive Judgment
For the sake of judicial economy, we resolve a question that, although not raised by the parties,
will inevitably result from our discussions above: May Atty. Funk still file an independent action
(second mode) to execute the costs of suit and taxes withheld?
pg. 568
We answer in the negative.
An action for revival of judgment is a procedural means of securing the execution of a previous
judgment which has become dormant after the passage of five
_______________
50 Romulo v. Desalla, supra note 26 at p. 350.
51 Id., at p. 351.
89
VOL. 796, JULY 7, 2016 89

years without it being executed upon motion of the prevailing party.52 After the lapse of the five-
year period, the judgment is reduced to a mere right of action, which judgment must be enforced,
as all other ordinary actions, by the institution of a complaint in the regular form. Such action must
be filed within ten (10) years from the date the judgment has become final.53
In concrete terms, the prevailing party, who for some reason or another, failed to move for
execution within five years from the date of entry of the judgment, can file an action to have the
judgment revived. The rule allowing the filing of an action within ten years from the date of entry
merely gives substance to the Civil Code provisions on the prescription of an action upon a
judgment.54
While Section 6 of Rule 39 does not expressly state that the two modes of execution are mutually
exclusive, it is not difficult to discern why no action upon a judgment can be filed once the
prevailing party had availed of the first mode of execution. For the same reason that a second
motion for execution raising the same issues or items is barred by the denial of the first motion for
execution, so is an independent action raising the same issues or items is barred. The bar by prior
judgment principle would equally apply.
To be more specific, an independent action to execute the costs of suit and the taxes withheld
would be the same as the first motion for execution that had raised these issues. Since the denial
of the first motion for execution has become final
_______________
52 Saligumba v. Palanog, 593 Phil. 420, 426; 573 SCRA 8, 15 (2008), citing Panotes v. City
Townhouse Development Corporation, G.R. No. 154739, 23 January 2007, 512 SCRA 269;
pg. 569
Filipinas Investment and Finance Corporation v. Intermediate Appellate Court, G.R. Nos. 66059-
60, 4 December 1989, 179 SCRA 728; Azotes v. Blanco, 85 Phil. 90 (1949).
53 Terry v. People, 373 Phil. 444, 450; 314 SCRA 669, 673 (1999).
54 Supra note 38.
90

and immutable, Atty. Funk is barred from filing an independent action raising exactly the same
issues.
The Withholding of Taxes
We emphasize that the RTC squarely ruled on the issue of withholding of taxes in its February 16,
2009 order. Since the order had become final and immutable, it follows that the ruling on
withholding of taxes has likewise become final and immutable.
Finally, we note that the sum withheld has been remitted to the BIR. The money is already in the
hands of the Government. The Court would bypass established rules of procedure on refund of
taxes under the National Internal Revenue Code if we declare outright that Atty. Funk is entitled
to a refund.55
_______________
55 Section 229 of the National Internal Revenue Code states:
Section 229. Recovery of Tax Erroneously or Illegally Collected.—No suit or

proceeding shall be maintained in any court for the recovery of any national internal revenue
tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any
penalty claimed to have been collected without authority, of any sum alleged to have been
pg. 570
excessively or in any manner wrongfully collected without authority, or of any sum alleged
to have been excessively or in any manner wrongfully collected, until a claim for refund or
credit has been duly filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2)
years from the date of payment of the tax or penalty regardless of any supervening cause
that may arise after payment: Provided, however, That the Commissioner may, even without
a written claim therefor, refund or credit any tax, where on the face of the return upon which
payment was made, such payment appears clearly to have been erroneously paid.
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VOL. 796, JULY 7, 2016 91

WHEREFORE, premises considered, we DENY the petition and thereby AFFIRM the
November 5, 2013 decision and the April 29, 2014 resolution of the Court of Appeals in C.A.-
G.R. CV No. 97527.
SO ORDERED.
Notes.—Court frowns upon any delay in the execution of final and executory decisions as the
immediate enforcement of the parties’ rights, confirmed by a final decision, is a major component
of the ideal administration of justice. (Session Delights Ice Cream and Fast Foods vs. Court of
Appeals, 612 SCRA 10 [2010])
Once a judgment becomes final and executory, the prevailing party can have it executed as a matter
of right by mere motion within five years from the date of entry of judgment; After the lapse of
five years, the said judgment is reduced to a right of action which must be enforced by the
institution of a complaint in a regular court within ten years from the time the judgment becomes
final. (Villeza vs. German Management and Services, Inc., 627 SCRA 425 [2010])
——o0o——
pg. 571
_______________
pg. 572
____________________
G.R. No. 200042. July 7, 2016.*
FELIZARDO T. GUNTALILIB, petitioner, vs. AURELIO Y. DELA CRUZ and SALOME V.

DELA CRUZ, respondents.
Remedial Law; Civil Procedure; Amendment of Pleadings; Pleadings and Practice; Under the
1997 Rules, a party may amend his pleading once as a matter of right at any time before a
responsive pleading is served.—A party to a civil case is precisely given the opportunity to amend
his pleadings, under certain conditions, in order to correct the mistakes found therein; if one were
to follow petitioner’s reasoning, then the rule on amendment of pleadings
_______________
* SECOND DIVISION.

Guntalilib vs. dela Cruz
might just as well be scrapped, for then no pleading would be susceptible of amendment. In the
present case, respondents’ Complaint was amended even before petitioner could file any
responsive pleading thereto; under the 1997 Rules, a party may amend his pleading once as a
matter of right at any time before a responsive pleading is served. No motion to admit the same
was required; as the amendment is allowed as a matter of right, prior leave of court was
unnecessary. Indeed, even if such a motion was filed, no hearing was required therefor, because it
is not a contentious motion.
Civil Law; Land Titles and Deeds; Quieting of Titles; Annulment of Titles; The underlying
objectives or reliefs sought in both the quieting-of-title and the annulment-of-title cases are
essentially the same — adjudication of the ownership of the disputed lot and nullification of one
(1) of the two (2) certificates of title.—It has been held that “[t]he underlying objectives or reliefs
sought in both the quieting-of-title and the annulment-of-title cases are essentially the same —
adjudication of the ownership of the disputed lot and nullification of one of the two certificates of
pg. 573
title.” Nonetheless, petitioner should not have been so simplistic as to think that Civil Case No.
6975 is merely a quieting of title case. It is more appropriate to suppose that one of the effects of
cancelling Bernardo Tumaliuan’s unnumbered OCT would be to quiet title over Lot 421; in this
sense, quieting of title is subsumed in the annulment of title case.
Manuel Law Office for petitioner.
Dominica Dumangeng-Rosario for respondents.
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 seeks to set aside: 1) the August 10, 2011 Decision2 of
the Court of Appeals (CA) in
_______________
1 Rollo, pp. 10-51.
VOL. 796, JULY 7, 2016 3

C.A.-G.R. S.P. No. 115963 dismissing the Petition for Certiorari in said case and affirming the
January 12, 20103 and June 21, 20104 Orders of the Regional Trial Court (RTC) of Bayombong,
Nueva Vizcaya, Branches 28 and 27, respectively, in Civil Case No. 6975; and 2) the CA’s January
5, 2012 Resolution5 denying herein petitioner’s Motion for Reconsideration.
Factual Antecedents
pg. 574
On July 14, 2009, respondents Aurelio and Salome dela Cruz filed a Complaint6 for “Quieting of
Titles x x x; Annulment and Cancellation of Unnumbered OCT/Damages,” against petitioner
Felizardo Guntalilib and other heirs of Bernardo (or Bernardino) Tumaliuan. The case was
docketed as Civil Case No. 6975 and assigned to Branch 28 of the RTC of Bayombong, Nueva
Vizcaya.
The subject property is Lot 421 located in Nueva Vizcaya consisting of 8,991 square meters and
which, as respondents claimed in their Complaint, was originally registered on August 7, 1916 as
Original Certificate of Title (OCT) No. 213. Respondent Aurelio’s grandfather, Juan dela Cruz,
later acquired the property in 1919, and Transfer Certificate of Title No. (TCT) R-3 was issued in
his name; when he passed away, the property was inherited by Aurelio’s father, Leonor, and, in
lieu of TCT R-3, TCT 14202 was issued in Leonor’s favor. Later on, Leonor conveyed the property
to Aurelio and his brother, Joseph, and TCT T-46087 was then issued in their favor. In turn, Joseph
waived ownership in favor of Aurelio by deed of quitclaim dated December 31, 2001, in which
case a
_______________
2 Id., at pp. 53-61; penned by Associate Justice Ramon A. Cruz and concurred in by Associate
Justices Jose C. Reyes, Jr. and Antonio L. Villamor.
3 Id., at pp. 116-118; penned by Judge Fernando F. Flor, Jr.
4 Id., at pp. 140-142; penned by Judge Rogelio P. Corpuz.
5 Id., at pp. 62-63.
6 Id., at pp. 64-78.

new title, TCT T-126545, was issued in Aurelio’s name as sole owner.
Respondents claimed further that all this time, the dela Cruz family was in full possession,
occupation and enjoyment of the property, and petitioner and his coheirs have never set foot on
the property; that later on, Lot 421 was subdivided and new titles were issued in lieu of TCT T-
126545; and that Aurelio sold portions thereof to several individuals, but he remains the registered
owner of the remaining portion.
pg. 575
Respondents likewise alleged that on February 20, 2008, petitioner filed in court a petition,
docketed as LRC Case No. 6544 and assigned to the Bayombong, Nueva Vizcaya RTC, Branch
29, for reconstitution or issuance of a new certificate of title in lieu of an allegedly lost unnumbered
OCT which was issued on August 29, 1916 in the name of petitioner’s predecessor, Bernardo
Tumaliuan, and covering the very same property, or Lot 421, which they owned; that said petition
was eventually granted, and the Nueva Vizcaya Register of Deeds was ordered to issue another
owner’s duplicate copy of their predecessor’s supposed unnumbered OCT; and that said
unnumbered OCT constituted a cloud upon their titles that must necessarily be removed.
Petitioner and his codefendants filed a Motion to Dismiss7 Civil Case No. 6975, arguing that the
Complaint stated no cause of action; that the case constituted a collateral attack on their
unnumbered OCT; that respondents failed to implead all the heirs of Bernardo Tumaliuan, who
are indispensable parties to the case; and that the Complaint’s verification and certification on non-
forum shopping were defective.
Respondents filed a Motion for Admission of Amended Complaint,8 with attached Amended
Complaint9 for “Quieting of Titles x x x; Cancellation of Unnumbered OCT/Damages.”
_______________
7 Id., at pp. 79-87.
8 Id., at pp. 88-89.
9 Id., at pp. 90-106.
VOL. 796, JULY 7, 2016 5

Apart from incorporating the same allegations contained in their original Complaint, respondents
further alleged in said Amended Complaint that their mother title, OCT 213 which was issued on
August 7, 1916, should prevail over the petitioner’s unnumbered OCT which was issued only on
August 29, 1916; that petitioner and his coheirs had prior knowledge of the dela Cruzes’ previous
and existing titles, and were never in possession of Lot 421; and that through fraud, false
misrepresentations, and irregularities in the proceedings for reconstitution (LRC Case No. 6544),
petitioner was able to secure a copy of his predecessor’s supposed unnumbered OCT. Respondents
prayed, thus:
WHEREFORE, premises considered, it is most respectfully prayed that after trial in this case, this
Honorable Court issue a judgment in favor of Plaintiffs and against, defendants, as follows:
pg. 576
1. Quieting [of] title and ownership over Lot No. 421 and portions thereof, in favor of Plaintiffs,
particularly TCT No. 147078; TCT No. 142232; TCT No. 142233; TCT No. 142235; TCT No.
142236; TCT No. 142237; TCT No. 142239; and TCT Nos. 142241 thru 142245 and all such titles
of individuals who acquired title to portions of Lot No. 421 from Plaintiffs;
2. An order directing the cancellation of the Unnumbered Original Certificate of Title to Lot 421
in the name of Bernardo Tumaliuan;
3. An order directing defendants to pay plaintiffs moral damages in the amount of P100,000.00;
4. Ordering defendants to reimburse plaintiffs for their attorney’s fees, appearance fee and costs
of this suit;
5. Any such other relief as may be just and fair under the attendant circumstances.10
_______________
10 Id., at p. 104.

Petitioner and his codefendants opposed the Motion for Admission of Amended Complaint,
arguing in their Opposition (Ad Cautelam)11 that the motion was a mere scrap of paper because it
did not comply with Sections 4, 5 and 6 of Rule 15 of the 1997 Rules of Civil Procedure12 (1997
Rules), as no date of hearing was set and the motion was addressed to the Clerk of Court alone;
that the verification and certification on non-forum shopping contained in the original Complaint,
being defective, could not be cured by the subsequent filing of the Amended Complaint; and that
the Amended Complaint was improper and prohibited, as it is essentially aimed at setting aside the
Decision in LRC Case No. 6544 issued by a court of concurrent jurisdiction.
On January 12, 2010, the trial court in Civil Case No. 6975 issued an Order13 admitting
respondents’ Amended Complaint and denying petitioner’s Motion to Dismiss. It held that —
_______________
pg. 577
11 Id., at pp. 108-115.
12 On Motions.
Sec. 4. Hearing of motion.—Except for motions which the court may act upon without
prejudicing the rights of the adverse party, every written motion shall be set for hearing by the
applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be
served in such a its receipt by the other party at least three (3) days before the date of hearing,
unless the court for good cause sets the hearing on shorter notice.
Sec. 5. Notice of hearing.—The notice of hearing shall be addressed to all parties

concerned, and shall specify the time and date of the hearing which must not be later than ten (10)
days after the filing of the motion.
Sec. 6. Proof of service necessary.—No written motion set for hearing shall be acted
upon by the court without proof of service thereof.
13 Rollo, pp. 116-118.
VOL. 796, JULY 7, 2016 7

Assuming arguendo that this Court shall treat the Motion for Admission of Amended Complaint
as not filed, this Court is still duty-bound to recognize the right of herein plaintiff under Rule 10,
Section 2 where plaintiffs are allowed as a matter of right to file their amended complaint anytime
before a responsive pleading is filed. Considering that a Motion to Dismiss is not a responsive
pleading, this Court has no other recourse but to allow plaintiffs to submit their amended
complaint.
With respect to the contention of the defendants that the complaint did not raise any cause of
action, this Court x x x is in the belief that the plaintiff may be entitled to the relief sought for after
exhaustively trying the case on the merits. On that note, considering the quantum of documentary
evidence adduced by the plaintiff herein, this Court is inclined to try the case on the merits.
With respect to the contention of the defendants that the complaint failed to include and implead
all indispensable parties, this Court construes the cited case of Teresita V. Orbeta v. Paul B.
Sendiong x x x that the High Court contemplated “the absence of an indispensable party” and not
pg. 578
the “absence of all indispensable parties.” As this Court is in the belief that plaintiff had impleaded
some indispensable parties, then a trial on the merits should proceed.
Defendants likewise had raised as an issue that a Decision rendered by Regional Trial Court
Branch 29, Bayombong, Nueva Vizcaya, particularly LRC Case No. 6544 x x x rendered on July
21, 2008 should bar any inquiry with regard to the issue of the ownership of one of the parcels of
land subject of this instant case.
Placing a parcel [of land] under the mantle of the Torrens System does not mean that ownership
thereof can no longer be disputed. Ownership is different from a certificate of title x x x.
In LRC Case No. 6544, Regional Trial Court Branch 29 adjudicated on the issuance of another
Certificate of Title in favor of petitioner, now defendant in this

case, Felizardo T. Guntalilib. In this instant case, the issue of ownership is being brought to the
fore. This distinction should be heavily noted. Moreover, on closer inquiry, this Court notes the
point raised by the Registry of Deeds of Nueva Vizcaya in its Motion for Reconsideration to the
Decision rendered in LRC Case No. 6544 x x x:
xxxx
To this Court, it would appear that the issue of ownership remains unsettled and this instant case
will squarely address this issue.
To make out an action to quiet title under the foregoing provision (Article 476 of the Civil Code),
the initiatory pleading has only to set forth allegations showing that (1) the plaintiff has “title to
real property or any interest therein” and (2) the defendant claims an interest therein adverse to the
plaintiff’s arising from an instrument, record, claim, encumbrance, or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable or
unenforceable. x x x
A perusal of the allegations of the initiatory pleadings reveals that an action to quiet title is proper
and this Court shall properly proceed to try this case on the merits.
A reading of the Opposition by the defendants reveals alarming allegations and imputations.
pg. 579
Defendants aver that Mr. Aristotle Mercado, Legal Researcher of this Branch, is allegedly one of
the buyers of the property subject of this instance case from plaintiffs. Consequently, defendants
doubt if the Motion filed by the plaintiffs on September 17, 2009 had been read by the undersigned
Judge and as it appears was “kept from the Honorable presiding Judge and the defendants so that
the matter can be submitted for the Court’s consideration and approval immediately upon receipt
hereof.”
Defendants likewise aver that plaintiffs deliberately absented themselves in the proceedings of
September 22, 2009 for unknown reasons.
VOL. 796, JULY 7, 2016 9

This Court would like to remind defendants to exercise restraint and caution in imputing
allegations which are unsubstantiated. A perusal of the records would reveal that the plaintiffs had
furnished defendants with a copy of plaintiffs’ Motion filed on September 17, 2009 per Registry
Receipt No. 234.
To impute on Mr. Mercado as a buyer of the plaintiffs and of allegedly executing acts prejudicial
to defendants’ interest and of directly accusing plaintiffs of deliberately absenting themselves from
the proceedings of September 22, 2009 are reasons enough for this Court to warn defendants to
exercise restraint in accusing parties, be it adversary or court personnel.
WHEREFORE, premises considered, this Court hereby admits the Amended Complaint filed by
plaintiffs herein. The Motion to Dismiss filed by defendants is DENIED.
SO ORDERED.14
Petitioner filed a Motion for Reconsideration;15 meanwhile, the case was re-raffled to Branch 27
of the RTC of Bayombong, Nueva Vizcaya. On June 21, 2010, the trial court issued an Order16
denying petitioner’s Motion for Reconsideration and ordering the defendants in the case to file
their answer.
pg. 580
Petitioner filed an original Petition for Certiorari17 with prayer for injunctive relief before the
CA, which was docketed as C.A.-G.R. S.P. No. 115963. In seeking reversal of the trial court’s
January 12, 2010 and June 21, 2010 Orders, petitioner essentially reiterated the arguments
contained in his Motion to Dismiss, adding that the trial court should not have admit-
_______________
14 Id.
15 Id., at pp. 119-127.
16 Id., at pp. 140-142.
17 Id., at pp. 148-177.
10

ted respondents’ Amended Complaint since the original Complaint was a mere scrap of paper as
it was defective in form and substance; that since in the first instance the Complaint was a mere
scrap of paper, then there is no Complaint to be amended; and that the assailed Orders were null
and void.
On August 10, 2011, the CA issued the assailed Decision affirming the trial court’s assailed Orders,
pronouncing thus:
The RTC found the allegations in the initiatory pleading proper in the action to quiet title, thus,
was “inclined to try the merits of the case.” In a motion to dismiss for failure to state a cause of
action, the inquiry is into the sufficiency and not the veracity, of the material allegations. 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. Further, Section 3 of Rule 16 of the Rules of Court,
the rule in point, provides:
xxxx
pg. 581
Sec. 3. Resolution of motion.—After the hearing, the court may dismiss the action, or
claim, deny the motion, or order the amendment of the pleading.
xxxx
As gleaned from the above quoted provision, there are three (3) courses of action which the trial
court may take in resolving a motion to dismiss, i.e., to grant, to deny, or to allow amendment of
the pleading. We find no grave error on the part of the trial court in denying the motion to dismiss
as the allegations are sufficient to support a cause of action for quieting of title.
Parenthetically, under Rule 65 of the Revised Rules of Civil Procedure, for a certiorari proceeding
to prosper, there should be a concurrence of the essential requisites, to wit: (a) the tribunal, board
or officer exercising judicial functions has acted without or in excess of jurisdiction or
11
VOL. 796, JULY 7, 2016 11

with grave abuse of discretion amounting to lack or in excess of jurisdiction, and (b) there is no
appeal, nor any plain, speedy and adequate remedy in the ordinary course of law for the purpose
of annulling or modifying the proceeding.
Petitioner’s claim that it had no other plain, speedy and adequate remedy is baseless. He can still
file an answer, proceed to trial and meet the issues head-on. 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
is that the denial of a motion to dismiss cannot be questioned in a special civil action for certiorari
which is not intended to correct every controversial interlocutory ruling. 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.
Quite obviously, this petition filed by petitioner with us is not the proper remedy to assail the trial
court’s denial of his motion to dismiss. We reiterate that the special civil action of certiorari is a
remedy designed to correct errors of jurisdiction including commission of grave abuse of discretion
amounting to lack or excess of jurisdiction and not errors of judgment. The abuse of discretion
must be grave, that is, the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility. It must be so patent and gross as to amount to evasion of positive
duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of the
law. To justify the grant of such extraordinary remedy, the abuse of discretion must be grave and
patent, and it must be shown that discretion was exercised arbitrarily or despotically. In this case,
no such circumstances attended the denial of petitioner’s Motion to Dismiss.
pg. 582
Petitioner further alleged that the trial court committed a procedural infirmity when it gave due
course to the Motion for Admission of Amended Complaint despite noncompliance with Sections
4, 5 and 6 of the Rules of
12

Court and admitted private respondent’s Amended Complaint.
Private respondent’s amendment of the complaint was made pursuant to Section 2, Rule 10 of the
Rules of Court. Under the said provision, formal and substantial amendments to a pleading may
be made at anytime before a responsive pleading has been filed. Such amendment is a matter of
right. This means that prior to the filing of an answer, the plaintiff has the absolute right to amend
the complaint.
xxxx
For obvious reasons, petitioner has not filed an answer to controvert the allegations raised by
private respondent. A motion to dismiss is not a responsive pleading, thus, private respondent may
amend its complaint. It cannot be said that the petitioner’s rights have been violated by changes
made in the complaint if he has yet to file an answer thereto. In such an event, petitioner has not
presented any defense that can be altered or affected by the amendment of the complaint in
accordance with Section 2 of Rule 10.
Case law dictates that the right granted to the plaintiff under procedural law to amend the complaint
before an answer has been served is not precluded by the filing of a motion to dismiss or any other
proceeding contesting its sufficiency. Were we to conclude otherwise, the right to amend a
pleading under Section 2, Rule 10 will be rendered nugatory and ineffectual, since all that a
defendant has to do to foreclose this remedial right is to challenge the adequacy of the complaint
before he files an answer. Moreover, amendment of pleadings is favored and should be liberally
allowed in the furtherance of justice in order to determine every case as far as possible on its merits
without regard to technicalities. This principle is generally recognized to speed up trial and save
party litigants from incurring unnecessary expense, so that a full hearing on the merits of every
case may be had and multiplicity of suits avoided. Consequently, the amendment should be
allowed in this case as a matter of right in accordance with the rules.
pg. 583
13
VOL. 796, JULY 7, 2016 13

As for petitioner’s application for injunction, we find no compelling reason to pass upon it as
petitioner failed to convince us of the necessity of this relief.
WHEREFORE, premises considered, the petition under consideration is DISMISSED and the
assailed Order dated January 12, 2010 and the Order dated June 21, 2010 are hereby AFFIRMED.
SO ORDERED.18
Petitioner filed a Motion for Reconsideration,19 which the CA denied in its subsequent January 5,
2012 Resolution. Hence, the present Petition.
Meanwhile, on June 29, 2012, the trial court issued an Order,20 stating thus:
In this continuation of pretrial, Arty. Rosario and Atty. Manuel appeared. The spouses plaintiffs
and the representatives of the defendants, who are defendant [sic] themselves namely, Felizardo
and Mario Guntalilib were also around.
It is observed that in the previous proceedings, the court and the parties encountered difficulty in
knowing who are the registered owners in addition to the plaintiff spouses dela Cruz and also the
identification of the defendant heirs. To the mind of the court, it would be more convenient in
proceeding with the pretrial with the complete identification of the present registered owners and
also those heirs so that complete relief would accordingly be given to the parties. The court directed
the plaintiffs to amend the complaint within 30 days from today to identify the registered owners
and for the defendants to make available the names of the heirs. The counsels suggested that before
further proceedings could be had, the
_______________
18 Id., at pp. 56-59.
19 Id., at pp. 218-228.
20 Id., at p. 258.
14
pg. 584
plaintiffs should identify the other registered owners of the property and the defendants to identify
the heirs.
SO ORDERED.21
Issues
In a March 31, 2014 Resolution,22 this Court resolved to give due course to the instant Petition,
which contains the following assignment of errors:
I. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN

FAILING TO DECLARE THE COURT A QUO’S ORDERS NULL AND VOID BASED ON
THE FOLLOWING GROUNDS:
(i) THE RELIEF SOUGHT BY RESPONDENTS IN THE PRESENT ACTION, WHICH

IS, TO ANNUL AND REVERSE THE DECISION OF RTC-BRANCH 29, THAT
ORDERED THE ISSUANCE OF OCT WITH DECREE NO. 54584 IN THE NAME OF
BERNARDINO TUMALIUAN, IS IMPROPER FOR AN ACTION TO QUIET TITLE,
THUS, THE COMPLAINT STATES NO CAUSE OF ACTION, WARRANTING THE
PROMPT AND TIMELY DISMISSAL OF THE CASE.
(ii) THE ORIGINAL, AS WELL AS THE AMENDED COMPLAINT OF

RESPONDENTS FAILED TO INCLUDE ALL INDISPENSABLE PARTIES, THUS,
THE COURTS A QUO DO NOT HAVE JURISDICTION OVER THE PERSON OF
THESE OMITTED INDIVIDUALS, WARRANTING THE PROMPT DISMISSAL OF
THE CASE.
_______________
21 Id.
22 Id., at pp. 289-290.
15
pg. 585
VOL. 796, JULY 7, 2016 15
(iii) FOLLOWING THE DOCTRINE OF NONINTERFERENCE, THE COURTS A

QUO HAVE NO JURISDICTION TO INTERVENE WITH THE PROCEEDINGS OF A
COURT OF EQUAL JURISDICTION, MUCH LESS ANNUL THE FINAL JUDGMENT
OF A COEQUAL BRANCH, I.E., RTC-BRANCH 29. THUS RESPONDENTS’
COMPLAINT DESERVES OUTRIGHT DISMISSAL.
II. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW WHEN IT

DECLARED THAT THERE IS A PLAIN, SPEEDY AND ADEQUATE REMEDY
AVAILABLE TO PETITIONER IN THIS PRESENT CASE.
III. RESPONDENTS’ RIGHT TO AMEND THEIR COMPLAINT BY VIRTUE OF SECTION

2, RULE 20 MUST YIELD TO THE CLEAR AND CATEGORICAL DIRECTIVE OF SECTION
5, RULE 7 OF THE RULES OF COURT, WHICH STATES THAT FAILURE TO COMPLY
WITH THE REQUIREMENTS ON VERIFICATION AND CERTIFICATION AGAINST
FORUM SHOPPING SHALL NOT BE CURABLE BY MERE AMENDMENT OF THE
COMPLAINT BUT SHALL BE A CAUSE FOR THE DISMISSAL OF THE CASE WITHOUT
PREJUDICE.
IV. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW WHEN

IT DECLARED THAT AMENDMENT OF PLEADINGS IS FAVORED AND SHOULD BE
LIBERALLY ALLOWED IN CONTRAVENTION WITH THE CLEAR AND UNEQUIVOCAL
PROVISIONS OF THE RULES AND JURISPRUDENCE.23
_______________
23 Id., at pp. 26-28.
16

Petitioner’s Arguments
pg. 586
In his Petition and Counter-Manifestation24 seeking reversal of the assailed CA dispositions and
nullification of the January 12, 2010 and June 21, 2010 Orders in Civil Case No. 6975, petitioner
insists that respondents’ Complaint for quieting of title constitutes a prohibited collateral attack of
the unnumbered OCT of Bernardo Tumaliuan and an unjustified interference with and assault on
the Decision of a coequal court in LRC Case No. 6544; that for failure to implead all indispensable
parties, namely, the heirs of Bernardo Tumaliuan and subsequent buyers of portions of the subject
property sold by respondents, respondents’ case should be dismissed as all proceedings taken
therein are null and void, following the Court’s ruling in Dr. Orbeta v. Sendiong25 and Speed
Distributing Corporation v. Court of Appeals26 to the effect that the failure to implead all
indispensable parties to a case renders all actions of the court null and void; that Civil Case No.
6975 is in effect an attempt to annul the Decision in LRC Case No. 6544; that contrary to the CA’s
declaration, a Petition for Certiorari with the appellate court was the only speedy and adequate
remedy available to him, considering that the proceedings in Civil Case No. 6975 are
fundamentally null and void since the case is precisely being used to collaterally and illegally
attack Bernardo Tumaliuan’s title and the Decision in LRC Case No. 6544; and that the rule of
procedure on verification and certification against forum shopping should override the rule on
amendment; in other words, the trial court should not have admitted respondents’ Amended
Complaint since the original Complaint on which it was based was a mere scrap of paper as it
contained a defec-
_______________
24 Id., at pp. 260-269; the Court noted petitioner’s request that this Counter-Manifestation be
treated as his Reply to respondents’ Comment.
25 501 Phil. 479; 463 SCRA 180 (2005).
26 469 Phil. 739; 425 SCRA 691 (2004).
17
VOL. 796, JULY 7, 2016 17

tive verification and certification against forum shopping, and being so, there is no valid complaint
to speak, of which required amendment.
Respondents’ Arguments
pg. 587
In their Compliance with incorporated Comment27 and Memorandum,28 respondents contend that
the failure to implead all the heirs of Bernardo Tumaliuan was cured by the trial court’s June 29,
2012 Order which reflects the parties’ agreement arrived at during the pretrial that respondents
shall amend their complaint to include all the heirs upon being furnished the names thereof by
petitioner and his codefendants; directing respondents to further amend their complaint within 30
days in order to include the registered owners of the subject property; and for the defendants to
disclose the names of all heirs of Bernardo Tumaliuan. They add that an action by one party
asserting his own title to and seeking nullification of another title covering the same property is
deemed to be one for quieting of title,29 and the nullification of petitioner’s title is merely an
incidental result in such action; that since petitioner has not filed his Answer, they were entitled to
amend their complaint as a matter of right, and no motion to admit their Amended Complaint was
even necessary;30 and that the CA committed no reversible error in declaring that petitioner’s
resort to an original Petition for Certiorari was unwarranted.
_______________
27 Rollo, pp. 254-257.
28 Id., at pp. 327-350.
29 Citing Realty Sales Enterprises, Inc. v. Intermediate Appellate Court, 238 Phil. 317; 154 SCRA
328 (1987) and Galindo v. Heirs of Marciano A. Roxas, 489 Phil. 462; 448 SCRA 497 (2005).
30 Citing Marcos-Araneta v. Court of Appeals, 585 Phil. 38; 563 SCRA 41 (2008).
18

Our Ruling
The Court denies the Petition.
Petitioner’s claim that respondents’ Amended Complaint must be disallowed for failure to implead
all indispensable parties has been rendered moot by the parties’ agreement that respondents shall
further amend their complaint after petitioner and his codefendants furnish them with the complete
list of Bernardo Tumaliuan’s heirs. Pursuant to this agreement, the trial court issued its June 29,
2012 Order, which petitioner does not assail.
pg. 588
Next, petitioner’s claim that the trial court should not have admitted respondents’ Amended
Complaint since the original Complaint on which it was based is void for being a mere scrap of
paper as it contained a defective verification and certification against forum shopping, is
fundamentally absurd. A party to a civil case is precisely given the opportunity to amend his
pleadings, under certain conditions, in order to correct the mistakes found therein; if one were to
follow petitioner’s reasoning, then the rule on amendment of pleadings might just as well be
scrapped, for then no pleading would be susceptible of amendment. In the present case,
respondents’ Complaint was amended even before petitioner could file any responsive pleading
thereto; under the 1997 Rules, a party may amend his pleading once as a matter of right at any
time before a responsive pleading is served.31 No motion to admit the same was required; as the
amendment is allowed as a matter of right, prior leave of court was unnecessary.32 Indeed, even
if such a motion was filed, no hearing was required therefor, because it is not a contentious motion.
_______________
31 Rule 10, Section 2, on Amended and Supplemental Pleadings.
Sec. 2. Amendments as a matter of right.—A party may amend his pleading once as a
matter of right at any time before a responsive pleading is served or, in the case of a reply, at any
time within ten (10) days after it is served.
32 Supra note 30 at p. 56; p. 60.
19
VOL. 796, JULY 7, 2016 19

On the final procedural matter that must be tackled, suffice it to state, as the CA did, that as a
general rule, the denial of a motion to dismiss cannot be questioned through a special civil action
for certiorari.
An order denying a motion to dismiss is interlocutory and neither terminates nor finally disposes
of a case; it is interlocutory as it leaves something to be done by the court before the case is finally
decided on the merits.
The denial of a motion to dismiss generally cannot be questioned in a special civil action for
certiorari, as this remedy is designed to correct only errors of jurisdiction and not errors of
judgment. Neither can a denial of a motion to dismiss be the subject of an appeal which is available
only after a judgment or order on the merits has been rendered. Only when the denial of the motion
to dismiss is tainted with grave abuse of discretion can the grant of the extraordinary remedy of
certiorari be justified.33
pg. 589
Such a rule applies especially when, as in this case, the petition is completely lacking in merit.
Moving on to the substantive issues raised, the Court finds without merit petitioner’s claim that
respondents’ quieting of title case constitutes a prohibited attack on his predecessor Bernardo
Tumaliuan’s unnumbered OCT as well as the proceedings in LRC Case No. 6544. It is true that
“the validity of a certificate of title cannot be assailed in an action for quieting of title; an action
for annulment of title is the more appropriate remedy to seek the cancellation of a certificate of
title.”34 Indeed, it is settled that a certificate of title is not subject to collateral attack. However,
while respondents’ action is denominated as one for quieting of title, it is in reality an action to
annul and cancel Bernardo Tumaliuan’s unnum-
_______________
33 Biñan Rural Bank v. Carlos, G.R. No. 193919, June 15, 2015, 757 SCRA 459.
34 Leonero v. Barba, 623 Phil. 706, 710; 609 SCRA 51, 55 (2009).
20

bered OCT. The allegations and prayer in their Amended Complaint make out a case for annulment
and cancellation of title, and not merely quieting of title: they claim that their predecessor’s OCT
213, which was issued on August 7, 1916, should prevail over Bernardo Tumaliuan’s unnumbered
OCT which was issued only on August 29, 1916; that petitioner and his codefendants have
knowledge of OCT 213 and their existing titles; that through fraud, false misrepresentations, and
irregularities in the proceedings for reconstitution (LRC Case No. 6544), petitioner was able to
secure a copy of his predecessor’s supposed unnumbered OCT; and for these reasons, Bernardo
Tumaliuan’s unnumbered OCT should be cancelled. Besides, the case was denominated as one for
“Quieting of Titles x x x; Cancellation of Unnumbered OCT/Damages.”
It has been held that “[t]he underlying objectives or reliefs sought in both the quieting-of-title and
the annulment-of-title cases are essentially the same — adjudication of the ownership of the
disputed lot and nullification of one of the two certificates of title.”35 Nonetheless, petitioner
should not have been so simplistic as to think that Civil Case No. 6975 is merely a quieting of title
case. It is more appropriate to suppose that one of the effects of cancelling Bernardo Tumaliuan’s
unnumbered OCT would be to quiet title over Lot 421; in this sense, quieting of title is subsumed
in the annulment of title case.
WHEREFORE, the Petition is DENIED. The August 10, 2011 Decision and January 5, 2012
Resolution of the Court of Appeals in C.A.-G.R. S.P. No. 115963 are AFFIRMED.
pg. 590
SO ORDERED.
_______________
35 Pilar Development Corporation v. Court of Appeals, G.R. No. 155943, August 28, 2013, 704
SCRA 43, 53, citing Stilianopulos v. City of Legaspi, 374 Phil. 879, 897; 316 SCRA 523, 541
(1999).
21
VOL. 796, JULY 7, 2016 21

Notes.—An action for quieting of title with damages, an action involving real property, is an action
that survives pursuant to Section 1, Rule 87 as the claim is not extinguished by the death of a party.
(Saligumba vs. Palanog, 573 SCRA 8 [2008])
Amendments to pleadings are generally favored and should be liberally allowed in furtherance of
justice in order to speed up the trial of the case or prevent the circuity of action and unnecessary
expense. (Tiu vs. Philippine Bank of Communications, 596 SCRA 432 [2009])
——o0o——
pg. 591
G.R. No. 195641. July 11, 2016.*
TARCISIO S. CALILUNG, petitioner, vs. PARAMOUNT INSURANCE CORPORATION, RP

TECHNICAL SERVICES, INC., RENATO L. PUNZALAN and JOSE MANALO, JR.,
respondents.
Remedial Law; Civil Procedure; Judgments; Finality of Judgments; It is settled that upon the
finality of the judgment, the prevailing party is entitled, as a matter of right, to a writ of execution
to enforce the judgment, the issuance of which is a ministerial duty of the court.—It is settled that
upon the finality of the judgment, the prevailing party is entitled, as a matter of right, to a writ of
execution to enforce the judgment, the issuance of which is a ministerial duty of the court. The
judgment directed the respondents to pay to the petitioner the principal amount of P718,750.00,
plus interest of 14% per annum from October 7, 1987 until full payment; 5% of the amount due as
attorney’s fees; and the costs of suit. Being already final and executory, it is immutable, and can
no longer be modified or otherwise disturbed. Its immutability is grounded on fundamental
considerations of public policy and sound practice, which demand that the judgment of the courts,
at the risk of occasional errors, must become final at some definite date set by law or rule. Indeed,
the proper enforcement of the rule of law and the administration of justice require that litigation
must come to an end at some time; and that once the judgment attains finality, the winning party
should not be denied the fruits of his favorable result.
Interest Rates; The kinds of interest that may be imposed in a judgment are the monetary interest
and the compensatory interest.—An elucidation on the concept of interest is appropriate at this
juncture. The kinds of interest that may be imposed in a judgment are the monetary interest and
the compensatory interest. In this regard, the Court has expounded in Siga-an v. Villanueva, 576
SCRA 696 (2009): Interest is a compensation fixed by the parties for the use or forbearance of
money. This is referred to as monetary interest. Interest may also be imposed by law or by courts
as penalty or indem-
_______________
* FIRST DIVISION.
171
VOL. 796, JULY 11, 2016 171

Calilung vs. Paramount Insurance Corporation
pg. 592
nity for damages. This is called compensatory interest. The right to interest arises only by virtue
of a contract or by virtue of damages for delay or failure to pay the principal loan on which interest
is demanded. Article 1956 of the Civil Code, which refers to monetary interest, specifically
mandates that no interest shall be due unless it has been expressly stipulated in writing. As can be
gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there
was an express stipulation for the payment of interest; and (2) the agreement for the payment of
interest was reduced in writing. The concurrence of the two conditions is required for the payment
of monetary interest. Thus, we have held that collection of interest without any stipulation therefor
in writing is prohibited by law. x x x x There are instances in which an interest may be imposed
even in the absence of express stipulation, verbal or written, regarding payment of interest. Article
2209 of the Civil Code states that if the obligation consists in the payment of a sum of money, and
the debtor incurs delay, a legal interest of 12% per annum may be imposed as indemnity for
damages if no stipulation on the payment of interest was agreed upon. Likewise, Article 2212 of
the Civil Code provides that interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent on this point. All the same, the interest under
these two instances may be imposed only as a penalty or damages for breach of contractual
obligations. It cannot be charged as a compensation for the use or forbearance of money. In other
words, the two instances apply only to compensatory interest and not to monetary interest.
PETITION for review on certiorari of the orders of the Regional Trial Court of Pasig City, Br.
154.
Angelito C. Lo for petitioner.
Aceron, Punzalan, Vehemente, Avila & Del Prado Law Offices for respondent Renato Punzalan.
Soo, Gutierrez, Leogardo & Lee for respondent Paramount Insurance Corp.
172

BERSAMIN, J.:
The issue concerns the rate of interest on the debt decreed in a final and executory decision. This
issue has emerged during the stage of the execution of the judgment, and the petitioner as the
winning party sought compounded interest pursuant to Article 2212 of the Civil Code. The trial
pg. 593
court ultimately ruled that compounded interest should not be recovered because the final and
executory decision did not decree the compounding of interest. Thus, the petitioner has directly
come to the Court for recourse.
Antecedents
On March 16, 2005, the Court promulgated its resolution in G.R. No. 136326 entitled Paramount
Insurance Corporation v. Tarcisio S. Calilung and RP Technical Services, Inc., upholding the
judgment promulgated on August 14, 1998, whereby the Court of Appeals (CA) affirmed the
decision of the Regional Trial Court (RTC), Branch 154, in Pasig City holding the respondents
jointly and severally liable to pay to the petitioner the principal obligation of P718,750.00, with
interest at 14% per annum from October 7, 1987 until full payment, plus attorney’s fees equivalent
to 5% of the amount due, and the costs of suit.
The resolution of March 16, 2005 summarized the factual and procedural antecedents,1 as follows:
Sometime in 1987, Tarcisio S. Calilung, herein respondent, commissioned Renato Punzalan,

President of the RP Technical Services, Inc. (RPTSI), a domestic corporation, also impleaded as
respondent, of his desire to buy shares of stocks (sic) worth P1,000,000.00 from RPTSI.
_______________
1 Rollo, pp. 62-66.
173
VOL. 796, JULY 11, 2016 173

During the consultation meeting among the officers and stockholders of RPTSI, they did not agree
with Calilung’s proposal because he will be in complete control of the corporation. Instead, he
allowed to buy P2,820.00 worth of shares with the understanding that the remaining balance of
P718,750.00 would be invested to finance Shell Station Project in Batangas then being undertaken
by respondent RPTSI.
On October 9, 1987, respondent Punzalan, on behalf of RPTSI, executed a promissory note in

favor of Calilung in the amount of P718,750 with 14% interest per annum, payable on or before
April 9, 1988. The payment of this promissory note was guaranteed by petitioner Paramount
pg. 594
Insurance Corporation (Paramount) under Surety Bond No. G (16) 7003 dated October 27, 1987.
On the same date, Punzalan and Jose Manalo, Jr., another officer of RPTSI, executed an indemnity
agreement to the effect that Paramount would be reimbursed of all expenses it will incur under the
surety bond.
However, RPTSI failed to pay Calilung the amount stated in the promissory note when it fell due,
prompting him to file with the Regional Trial Court (RTC), Branch 154, Pasig City, a complaint
for sum of money against RPTSI and Paramount, docketed as Civil Case No. 56194. For its part,
Paramount filed a third party complaint against RPTSI and its corporate officers, Punzalan and
Manalo, Jr., seeking reimbursement for all expenses it may incur under the surety bond.
In its answer, RPTSI denied that it authorized Punzalan and Manalo, Jr. to execute the promissory
note and claimed that it did not profit from the loan obtained from Calilung.
Paramount, in its answer, alleged that the terms and conditions of the surety bond have been
novated when Calilung, without its consent, extended an extension to RPTSI to pay its obligation.
Hence, Paramount has no obligation to pay the amount of the promissory note.
174

In their answer to the third party complaint, both Punzalan and Manalo, Jr. denied any liability in
the indemnity agreement because they contracted it as officers of the corporation, not in their
personal capacities.
Paramount, RPTSI and its officers, Punzalan and Manalo, Jr., jointly challenged the validity of the
promissory note on the ground that the contract is simulated. RPTSI did not intend to be bound by
the promissory note. Paramount insisted that since no money was actually involved, the contract
is entirely fictitious.
After trial, the RTC rendered its Decision, the dispositive portion which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff (now respondent) and
against the defendants RP Technical Services, Incorporated (now respondent) and
Paramount Insurance Corporation (now petitioner), jointly and severally, to pay plaintiff the
following sums:
(1) P718,750.00 with interest at 14% per annum from October 7, 1987, until fully
paid;
pg. 595
(2) 5% of the amount due above as attorney’s fees; plus
(3) costs.
and in favor of defendant-third party plaintiff, Paramount Insurance Corporation against the
defendant RP Technical Services, Incorporated and third party defendants, Messrs. Renato
Punzalan and Jose M. Manalo, Jr. jointly and severally, to pay the former whatever sum it
shall pay to the plaintiff as above ordered.
SO ORDERED.
Paramount, Punzalan and Manalo, Jr., interposed an appeal to the Court of Appeals. In its Decision
dated August 14, 1998, the Appellate Court affirmed in toto the
175
VOL. 796, JULY 11, 2016 175

judgment of the trial court. Their motion for reconsideration was likewise denied in a Resolution
dated November 13, 1998.
Paramount, herein petitioner, contends that the Court of Appeals erred in holding that the
promissory note is valid. Petitioner insists that the note was simulated and that respondents
committed fraud in introducing it to execute a surety bond to secure payment of the said note.
Here, the issues of whether the promissory note is simulated or not is whether its execution was
attended with fraud evidently involved questions of fact and evidentiary matters which are not
proper in a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
as amended. It is basic that factual issues are beyond the province of this Court, for it is not its
function to weigh the evidence all [over] again. Factual findings of the trial court, when adopted
and affirmed by the Court of Appeals, as in this case, are binding and conclusive upon this Court
and generally will not be reviewed on appeal. There are exceptions to this general rule, but
petitioner failed to show that this case is one of them.
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals in C.A.-G.R. CV No. 43870 are AFFIRMED. Costs against petitioner.
SO ORDERED.
pg. 596
The March 16, 2005 resolution of the Court became final and executory on July 19, 2005, and was
recorded in the Court’s Book of Entries of Judgments on the same date.2 Thereafter, the decision
was remanded to the RTC for execution.
_______________
2 Id., at p. 67.
176

In the RTC, the petitioner moved for execution, and sought the recovery of compounded interest
on the judgment debt. Acting on the petitioner’s motion for execution, the RTC issued three orders.
The first order, dated July 28, 2009, reads:
After evaluating the respective submissions of the parties, the court hereby holds in favor of the
defendant. Indeed, the decision sought to be implemented awarded plaintiff the amount of
P718,750.00 with interest at 14% per annum from October 7, 1987 until fully paid. There is
nothing in the dispositive portion of the decision that would justify the conclusion that the 14%
interest imposed by the court should further earn interest of 12% per annum. As correctly pointed
out by the defendant, where the decision is clear there is no room for further interpretation or
adding to or subtracting therefrom.
xxxx
In this particular case, since the judgment or decision to be executed did not provide for any
compounding of interest, it is clear that the interest should be the simple interest of 14% per annum
counted from October 7, 1987.
Anent the parties’ reference to the case of Eastern Shipping, supra, the court is more inclined to
subscribe to the position taken by the defendant. Indeed, the 12% per annum finds application only
if the obligation breached is for the payment of a sum of money, i.e., loan or forbearance of money.
The Supreme Court in the same case held that the interest due (in case the obligation breached is
a loan or forbearance of money) shall itself earn interest from the time it is judicially demanded.
In the instant case, it can hardly be contended that the obligation of the defendant to the plaintiff
that was breached consisted in the payment of a sum of money or a loan or forbearance of money.
It is very clear that the obligation of the defendant arose from its liability under a surety bond that
pg. 597
it issued. Such obligation cannot by any stretch of imagination be considered a loan or forbearance
of money.
177
VOL. 796, JULY 11, 2016 177

Anent the second part of the Omnibus Motion for the consignment of the P2,993,152.65, let it be
noted that a check in the same amount has been tendered by the defendant to plaintiff, Atty.
Tarcisio S. Calilung, and the latter has duly received the same.
WHEREFORE, premises considered, order is hereby given fixing the amount of interest on the
principal claim of P718,750.00 at fourteen percent (14%) per annum from October 7, 1987 until
fully paid.
There will be no compounding of interest as this has no basis in law.
SO ORDERED.3
Through the second order, issued on September 1, 2010, the RTC reconsidered the first order upon
motion of the petitioner by allowing the recovery of compounded interest, viz.:
After going over the submission of the plaintiff in his Motion for Reconsideration and the
opposition thereto interposed by the defendant, the court is constrained to change its former
position and hold in favor of the plaintiff. A review of the facts of the case will show that while
the obligation of Paramount arose from its contract of surety with defendant RP Technical
Services, Inc., it is undeniable however that the obligation being secured or guaranteed by
defendant Paramount is a loan obligation of the defendant RP Technical Services, Inc. to the
plaintiff Calilung. As such, when the defendant RP Technical Services, Inc. defaulted in its
obligation, the guaranty ripened into a loan obligation. In other words, the obligation of defendant
Paramount to the plaintiff was transferred (sic) from one of suretyship agreement to an obligation
for the payment of a sum of money corresponding to the unpaid obligation of defendant RP
Technical Services, Inc. to the plaintiff Calilung, which obligation was guaranteed by the
defendant Paramount. Be it noted that as a surety obligation, the same became due and
_______________
3 Id., at pp. 37-38.
pg. 598
178

demandable upon the default of the principal debtor (RP Technical Services, Inc.) to pay its
obligation to plaintiff Calilune.
xxxx
In the instant case, since the principal debtor (RP Technical Services, Inc.) has defaulted in the
payment of its obligation to the plaintiff and the latter has made a demand upon the defendant
Paramount for the payment of the loan obligation of RP Technical Services, Inc., the surety
(defendant Paramount Insurance Corp.) effectively stepped into the shoes of principal debtor RP
Technical Services, Inc. and assumed the latter’s obligation to the plaintiff which obligation is one
for the payment of sum of money.
Following the ruling in Eastern Shipping, the interest due on RP Technical Services, Inc.’s
obligation to plaintiff shall itself earn interest from the time demand was made for its payment. As
ruled by the court, the interest shall commence to run on October 7, 1987.
WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED.

Compounding of interest is allowed pursuant to the Eastern Shipping Lines ruling supra.
SO ORDERED.4
In the third order, dated February 10, 2011, however, the RTC, acting on the motion for
reconsideration of Paramount Insurance Corporation, reverted to its stance under the first order to
the effect that compounded interest on the judgment debt should not be recovered, to wit:
After a careful study of the respective positions forwarded by the parties and of the applicable
jurisprudence on the matter, the court is inclined to take the position of defendant Paramount
Insurance Corporation.
_______________
4 Id., at pp. 34-35.
pg. 599
179
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Indeed, the order of the court dated September 1, 2010 has to be reconsidered because it is not in
accord with the rule on immutability of decision (sic). In a long line of cases, it has been held that:
xxxx
In the present case, the decision of Honorable Ramon R. Buenaventura which has long become
final and executory and is the subject of plaintiff’s Motion for Execution did not mention anything
about the compounding of interest that was awarded in favor of the plaintiff. The decision only
said that it will earn interest at fourteen percent (14%) per annum.
WHEREFORE, in view of the foregoing the “Motion for Reconsideration” of the Order of the
court dated September 1, 2010 filed by Paramount Insurance Corporation is hereby GRANTED
and the court’s September 1, 2010 Order is SET ASIDE.
SO ORDERED.5
Issue
The petitioner argues that Article 2212 of the Civil Code and the rules set in Eastern Shipping
Lines v. Court of Appeals (234 SCRA 78) are applicable to the judgment award in his favor;6 that
the obligation of the respondents was a loan or forbearance of money;7 that the correct
computation of the judgment award as inclusive of compounded interest would not constitute a
modification or alteration of the judgment proscribed by the doctrine of the immutability of
judgments; and that considering the lengthy dilatory appeals resorted to
_______________
5 Id., at pp. 31-32.
6 Id., at p. 17.
pg. 600
7 Id., at p. 21.
180

by Paramount Insurance Corporation, restoring the stipulated 25% of the award as attorney’s fees
and imposing expenses of litigation should be appropriate.
Paramount Insurance Corporation counters8 that its obligation, having arisen only out of a surety
bond, was neither a loan nor a forbearance of money;9 that because its suretyship with RP
Technical Services, Inc. was separate and distinct from the petitioner’s loan contract with RP
Technical Services, Inc., the Eastern Shipping ruling and Article 2212 of the Civil Code did not
apply;10 that the compounding of interest would violate the immutability of judgments;11 that
restoring the petitioner’s claim for 25% of the award as attorney’s fees would also violate the
immutability of judgments; and that the stipulation on the amount of attorney’s fees in the
promissory note did not bind the respondent.12
Ruling of the Court
The appeal lacks merit.
It is settled that upon the finality of the judgment, the prevailing party is entitled, as a matter of
right, to a writ of execution to enforce the judgment, the issuance of which is a ministerial duty of
the court.13
The judgment directed the respondents to pay to the petitioner the principal amount of
P718,750.00, plus interest of 14% per annum from October 7, 1987 until full payment; 5% of the
amount due as attorney’s fees; and the costs of suit. Being already final and executory, it is
immutable, and can
_______________
8 Id., at pp. 101-109.
9 Id., at p. 101.
pg. 601
10 Id., at p. 103.
11 Id., at p. 105.
12 Id., at p. 108.
13 Adlawan v. Tomol, G.R. No. 63225, April 3, 1990, 184 SCRA 31, 39; Palma v. Court of
Appeals, G.R. No. 45158, June 2, 1994, 232 SCRA 714, 721.
181
VOL. 796, JULY 11, 2016 181

no longer be modified or otherwise disturbed.14 Its immutability is grounded on fundamental

considerations of public policy and sound practice, which demand that the judgment of the courts,
at the risk of occasional errors, must become final at some definite date set by law or rule.15
Indeed, the proper enforcement of the rule of law and the administration of justice require that
litigation must come to an end at some time; and that once the judgment attains finality, the
winning party should not be denied the fruits of his favorable result.
An elucidation on the concept of interest is appropriate at this juncture. The kinds of interest that
may be imposed in a judgment are the monetary interest and the compensatory interest. In this
regard, the Court has expounded in Siga-an v. Villanueva:16
Interest is a compensation fixed by the parties for the use or forbearance of money. This is referred
to as monetary interest. Interest may also be imposed by law or by courts as penalty or indemnity
for damages. This is called compensatory interest. The right to interest arises only by virtue of a
contract or by virtue of damages for delay or failure to pay the principal loan on which interest is
demanded.
Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no
interest shall be due unless it has been expressly stipulated in writing. As can be gleaned from the
foregoing provision, payment of monetary interest is allowed only if: (1) there was an express
stipulation for the payment of interest; and (2) the agreement for the payment of interest was
_______________
14 Policarpio v. RTC of Quezon City, Br. 83, G.R. No. 107167, August 15, 1994, 235 SCRA 314,
321; Industrial Timber Corp. v. NLRC, G.R. No. 111985, June 30, 1994, 233 SCRA 597, 601.
pg. 602
15 Government Service Insurance System (GSIS) v. Group Management Corporation (GMC),
G.R. No. 167000 and G.R. No. 169971, June 8, 2011, 651 SCRA 279, 305.
182

reduced in writing. The concurrence of the two conditions is required for the payment of monetary
interest. Thus, we have held that collection of interest without any stipulation therefor in writing
is prohibited by law.
xxxx
There are instances in which an interest may be imposed even in the absence of express stipulation,
verbal or written, regarding payment of interest. Article 2209 of the Civil Code states that if the
obligation consists in the payment of a sum of money, and the debtor incurs delay, a legal interest
of 12% per annum may be imposed as indemnity for damages if no stipulation on the payment of
interest was agreed upon. Likewise, Article 2212 of the Civil Code provides that interest due shall
earn legal interest from the time it is judicially demanded, although the obligation may be silent
on this point.
All the same, the interest under these two instances may be imposed only as a penalty or damages
for breach of contractual obligations. It cannot be charged as a compensation for the use or
forbearance of money. In other words, the two instances apply only to compensatory interest and
not to monetary interest.17 x x x
The only interest to be collected from the respondents is the 14% per annum on the principal
obligation of P718,750.00 reckoned from October 7, 1987 until full payment. There was no basis
for the petitioner to claim compounded interest pursuant to Article 221218 of the Civil Code
considering that the judgment did not include such obligation. As such, neither the RTC nor any
other court, including this Court, could apply Article 2212 of the Civil Code because doing so
would infringe the immutability of the judgment. Verily, the execution must
_______________
17 Id., at pp. 704-705, 707.
pg. 603
18 Article 2212. Interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent upon this point. (1109a)
183
VOL. 796, JULY 11, 2016 183

conform to, and not vary from, the decree in the final and immutable judgment.19
It is cogent to observe that under the express terms of the judgment, the respondents’ obligation to
pay the 14% interest per annum was joint and several. This meant that the respondents were in
passive solidarity in relation to the petitioner as their creditor, enabling him to compel either or
both of them to pay the entire obligation to him. Stated differently, each of the respondents was a
debtor of the whole as to the petitioner, but each respondent, as to the other, was only a debtor of
a part.20 Thus, Article 1216 of the Civil Code states:
Article 1216. The creditor may proceed against any one of the solidary debtors or some or all of
them simultaneously. The demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so long as the debt has not been fully
collected. (1144a)
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the orders
issued on July 28, 2009 and February 10, 2011 by the Regional Trial Court, Branch 154, in Pasig
City to the effect that the only interest to be collected from the respondents is 14% per annum
reckoned from October 7, 1987 until full payment; DIRECTS the Regional Trial Court to
forthwith issue the writ of execution to enforce the final and executory judgment in accordance
with the decree thereof; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
_______________
19 Nazareno v. Court of Appeals, G.R. No. 131641, February 23, 2000, 326 SCRA 338, 339.
pg. 604
20 Caguioa, Comments and Cases on Civil Law, Vol. IV, Premium Book Store, Manila, 1983
Revised Second Edition, p. 252.
184

Leonardo-De Castro** (Acting Chairperson), Perlas-Bernabe, Jardeleza*** and Caguioa, JJ.,

concur.
Petition denied, orders affirmed.
Notes.—Interest is a compensation fixed by the parties for the use or forbearance of money, and
this is referred to as monetary interest; Interest may also be imposed by law or by courts as penalty
or indemnity for damages, and this is called compensatory interest. (Siga-an vs. Villanueva, 576
SCRA 696 [2009])
A decision that has acquired finality becomes immutable and unalterable and may no longer be
modified in any respect even if the modification is meant to correct erroneous conclusions of fact
or law and whether it was made by the court that rendered it or by highest court of the land. (Genato
vs. Viola, 611 SCRA 677 [2010])
——o0o——
_______________
pg. 605
** Per Special Order No. 2355 dated June 2, 2016
*** Designated acting member, vice Chief Justice Maria Lourdes P.A. Sereno, who inhibited due
to close personal relations with one of the parties, per the Raffle of March 7, 2016.
pg. 606
G.R. No. 204620. July 11, 2016.*
ROWENA A. SANTOS, petitioner, vs. INTEGRATED PHARMACEUTICAL, INC. and

KATHERYN TANTIANSU, respondents.
Remedial Law; Civil Procedure; Appeals; As a rule, the Supreme Court (SC) does not analyze and
weigh again the evidence presented before the tribunals below because it is not a trier of facts.—
At the outset, we note that the Petition essentially assails the factual findings of the CA. As a rule,
this Court does not analyze and weigh again the evidence presented before the tribunals below
because it is not a trier of facts. The only issues it can pass upon in a Petition for Review on
Certiorari are questions of law. In view, however, of the conflicting findings of the labor tribunals
and the CA, this Court finds it compelling to make its own independent findings of facts.
Labor Law; Termination of Employment; Willful Disobedience; As a just cause for dismissal of
an employee under Article 282 of the Labor Code, willful disobedience of the employer’s lawful
orders
_______________
* SECOND DIVISION.
212

Santos vs. Integrated Pharmaceutical, Inc.
requires the concurrence of two (2) elements: “(1) the employee’s assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated
must have been reasonable, lawful, made known to the employee, and must pertain to the duties
which she had been engaged to discharge.”—Petitioner also committed willful disobedience of
reasonable and lawful orders of her employer. As a just cause for dismissal of an employee under
Article 282 of the Labor Code, willful disobedience of the employer’s lawful orders requires the
concurrence of two (2) elements: “(1) the employee’s assailed conduct must have been willful,
that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have
been reasonable, lawful, made known to the employee, and must pertain to the duties which she
had been engaged to discharge.”
pg. 607
Same; Same; Dishonesty; Serious Misconduct; Petitioner’s act of deliberately misdeclaring or
overstating her actual travelling expense constitutes dishonesty and serious misconduct, which are
lawful grounds for her dismissal under paragraphs (a) and (c) of Article 282 of the Labor Code.—
We are not also convinced with the labor tribunals’ ratiocination that petitioner should be absolved
for overcharging since there is no proof that she is not entitled to P10.00 travel expense or that she
pocketed the difference of P8.00. There is a difference between allotted transportation allowance
and actual transportation expense. Thus, to state an amount of actual transportation expense other
than the amount actually incurred for transportation is dishonesty. Elsewise put, just because
petitioner was allotted P10.00 transportation expense does not mean that she can keep the
remainder should she not exhaust the entire amount thereof. Petitioner’s act of deliberately
misdeclaring or overstating her actual travelling expense constitutes dishonesty and serious
misconduct, which are lawful grounds for her dismissal under paragraphs (a) and (c) of Article
282 of the Labor Code.
Waiver of Rights; To be valid and effective, the waiver must be couched in clear and unequivocal
terms leaving no doubt as to the intention of a party to give up a right or benefit which legally
pertains to it.—The fact that petitioner had been declaring P10.00 as her actual travelling expense
for quite some time cannot be interpreted as condonation of the offense or waiver of Integrated
Pharma to enforce its rules. “A waiver is a voluntary and intentional relin-
213
VOL. 796, JULY 11, 2016 213

quishment or abandonment of a known legal right or privilege.” To be valid and effective, the
waiver must be couched in clear and unequivocal terms leaving no doubt as to the intention of a
party to give up a right or benefit which legally pertains to it. Hence, the management prerogative
to discipline employees and impose punishment cannot, as a general rule, be impliedly waived.
Labor Law; Termination of Employment; While the law provides for a just cause to dismiss an
employee, the employer still has the discretion whether it would exercise its right to terminate the
employment or not.—Petitioner is guilty of dishonesty and serious misconduct. Based on Article
282 of the Labor Code, such offense may merit the termination of employment. However, while
the law provides for a just cause to dismiss an employee, the employer still has the discretion
whether it would exercise its right to terminate the employment or not. In other words, the
existence of any of the just or authorized causes enumerated in Articles 282 and 283 of the Labor
Code does not automatically result in the dismissal of the employee. The employer has to make a
decision whether it would dismiss the employee, impose a lighter penalty, or perhaps even condone
the offense committed by an erring employee. In making a decision, the employer may take into
consideration the employee’s past offenses. In this case, petitioner had been forewarned that her
failure to correct her poor behavior would be visited with stiffer penalty. However, she remained
recalcitrant to her superiors’ directives and warnings. Thus, respondents “have come to a forced
conclusion to terminate [her] employment.”
pg. 608
Same; Same; The existence of a just cause to terminate an employment is one thing; the manner
and procedure by which such termination should be effected is another.—The existence of a just
cause to terminate an employment is one thing; the manner and procedure by which such
termination should be effected is another. If the dismissal is based on a just cause under Article
282 of the Labor Code, as in this case, the employer must give the employee two written notices
and conduct a hearing. The first written notice is intended to apprise the employee of the particular
acts or omissions for which the employer seeks her dismissal; while the second is intended to
inform the employee of the employer’s decision to terminate him.
214

Same; Same; Due Process; Nominal Damages; In Agabon v. National Labor Relations
Commission, 442 SCRA 573 (2004), the Supreme Court (SC) held that if the dismissal was for
cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual. However, respondents’ violation of petitioner’s right to statutory due process warrants
the payment of indemnity in the form of nominal damages.—In Agabon v. National Labor
Relations Commission, 442 SCRA 573 (2004), the Court held that if the dismissal was for cause,
the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual.
However, respondents’ violation of petitioner’s right to statutory due process warrants the payment
of indemnity in the form of nominal damages. The amount of such damages is addressed to the
sound discretion of the Court, taking into account the relevant circumstances. Hence, the CA did
not err in awarding the amount of P30,000.00 to petitioner as and by way of nominal damages.
Subido, Pagente, Certeza, Mendoza & Binay for petitioner.
Ari N. Ancheta and Marie Therese Auriel L. Salvan for respondents.
DEL CASTILLO, J.:
Failure to comply strictly with the requirements of procedural due process for dismissing an
employee will not render such dismissal ineffectual if it is based on a just or an authorized cause.
pg. 609
The employer, however, must be held liable for nominal damages for noncompliance with the
requirements of procedural due process.1
_______________
1 Agabon v. National Labor Relations Commission, 485 Phil. 248, 281; 442 SCRA 573, 609
(2004).
215
VOL. 796, JULY 11, 2016 215

This Petition for Review on Certiorari2 assails the August 31, 2012 Decision3 of the Court of
Appeals (CA) in C.A.-G.R. S.P. No. 122180 that modified the July 14, 2011 Resolution4 of the
National Labor Relations Commission (NLRC). Said Resolution of the NLRC affirmed the April
1, 2011 Decision5 of the Labor Arbiter that, in turn, granted petitioner Rowena A. Santos’s
(petitioner) Complaint6 for illegal dismissal filed against respondents Integrated Pharmaceutical,
Inc. (Integrated Pharma) and/or Katheryn Tantiansu (Tantiansu).
Factual Antecedents
Integrated Pharma is a pharmaceutical marketing and distributing company. On February 26, 2005,
it engaged the services of petitioner as “Clinician,” tasked with the duty of promoting and selling
Integrated Pharma’s products. Petitioner’s work includes visiting doctors in different hospitals
located in Makati, Taguig, Pateros and Pasay.
On April 6, 2010, petitioner received a memorandum7 from Alicia E. Gamos (Gamos), her
immediate supervisor and District Manager of Integrated Pharma, relative to her failure to remit
her collections and to return the CareSens POP demonstration unit to the office, at a specified time.
On April 19, 2010, Maribel E. Suarez (Suarez), National Sales Manager for Pharmaceutical
Division of Integrated
pg. 610
_______________
2 Rollo, pp. 3-43.
3 Id., at pp. 45-52; penned by Associate Justice Manuel M. Barrios and concurred in by Associate
Justices Remedios A. Salazar-Fernando and Normandie B. Pizarro.
4 Id., at pp. 191-197; penned by Commissioner Gregorio O. Bilog III and concurred in by
Presiding Commissioner Alex A. Lopez and Commissioner Pablo C. Espiritu, Jr.
5 Id., at pp. 177-189; penned by Labor Arbiter Veneranda C. Guerrero.
6 Id., at pp. 150-152.
7 Id., at p. 363.
216

Pharma, called the petitioner to a meeting. Suarez informed petitioner that the management
discovered that instead of reporting P2.00 as the actual amount of her travelling expense in going
to the Fort Bonifacio Hospital, petitioner charged Integrated Pharma P10.00 as and for her
transportation expense.
Then in the morning of April 21, 2010, respondents attempted to serve upon petitioner a
memorandum8 denominated as Memo on Padding of Expense Report. It charged petitioner with
(i) attempting to coerce her immediate supervisor to pad her transportation expenses and (ii)
insubordination for not following the instructions of her immediate supervisor to report the true
amount of her transportation expenses. In the same memorandum, respondents required petitioner
to submit a written explanation within 24 hours in “aid [of] investigation.”
Petitioner, however, refused to accept said memorandum.
Subsequently, petitioner received through registered mail another memorandum9 likewise dated
April 21, 2010 but already denominated as Termination of Employment. It enumerated five
infractions which, allegedly, constrained respondents to terminate petitioner’s employment, viz.:
After weighing all the factors on the various infractions you have committed, to wit:
pg. 611
1. Overstating transportation expenses
2. Attempting to coerce your manager to overstate transportation expenses
3. Unpleasant attitude towards clients, coworkers and superiors
4. Failure to remit collection on time
_______________
8 Id., at p. 380.
9 Id., at p. 382.
217
VOL. 796, JULY 11, 2016 217

5. Insubordination (e.g., failure to arrive at appointed meeting time, failure to submit reports
at designated hour, and, ultimately, refusal to accept the memo asking for a written
explanation on the incidents in question after verbally admitting to committing the stated
offenses)
and despite considering your length of stay in the company, we have come to a forced conclusion
to terminate your employment. x x x10
Petitioner thus filed a complaint11 for illegal dismissal, nonpayment of salary, separation pay, and
13th month pay, with claims for moral and exemplary damages and attorney’s fees.
Ruling of the Labor Arbiter
In a Decision dated April 1, 2011,12 the Labor Arbiter ruled that respondents failed to comply
with the two-notice requirement as the offenses stated in the April 21, 2010 memorandum
terminating petitioner’s employment do not pertain to the same infractions enumerated in the April
6, 2010 memorandum. Hence, there is no proof that petitioner was properly informed of the
charges against her. With regard to the charge of insubordination (specifically her failure to remit
her collections and to return the CareSens POP demonstration unit on time), the Labor Arbiter
opined that petitioner had already been reprimanded for such offense.
pg. 612
The Labor Arbiter likewise ruled the respondents failed to establish that there was a just cause to
terminate petitioner’s employment; that petitioner is habitually tardy; and that petitioner was not
entitled to P10.00 travelling allowance or that she pocketed the P8.00 difference. The Labor
Arbiter
_______________
10 Id.
11 Id., at pp. 150-152.
12 Id., at pp. 177-189.
218

thus held Integrated Pharma liable for illegal dismissal and to pay petitioner separation pay,
backwages, unpaid salary, 13th month pay, and attorney’s fees. The dispositive portion of the
Labor Arbiter’s April 1, 2011 Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered finding respondent [sic] liable
for illegal dismissal and nonpayment of salary and 13th month pay. Respondent Integrated
Pharmaceutical, Inc., is ordered to pay complainant Rowena A. Santos the aggregate amount of
Two Hundred Twenty-Five Thousand Six Hundred Ninety-Eight Pesos and 23/100 (P225,698.23)
representing separation pay, backwages, salary for April 11-21, 2010 and 13th month pay for three
(3) years, plus ten percent (10%) thereof as and for attorney’s fees in the amount of P22,569.82.
All other claims are dismissed for lack of merit.13
Not satisfied, respondents appealed to the NLRC. They insisted that petitioner was validly
dismissed for cause and with due process of law.
Ruling of the National Labor

Relations Commission
pg. 613
In its Resolution14 dated July 14, 2011, the NLRC sustained the ruling of the Labor Arbiter that
the additional infractions mentioned in the April 21, 2010 memorandum cannot be used against
petitioner for lack of prior notice. The NLRC likewise affirmed the ruling of the Labor Arbiter
anent the charge of padding of transportation expenses.
Respondents filed a Motion for Reconsideration. In a Resolution15 dated August 23, 2011,
however, the NLRC likewise denied said motion.
_______________
13 Id., at pp. 188-189.
14 Id., at pp. 191-197.
15 Id., at pp. 209-210.
219
VOL. 796, JULY 11, 2016 219

Still unfazed by the adverse rulings of the labor tribunals, respondents filed before the CA a
Petition for Certiorari16 ascribing grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the NLRC in rendering its July 14, 2011 Resolution.
On August 31, 2012, the CA rendered its Decision17 modifying the NLRC’s Resolution. It held
that petitioner was not illegally dismissed and, therefore, not entitled to separation pay, backwages,
attorney’s fees, damages, and 13th month pay. It opined that there are just causes to terminate
petitioner’s employment because she was always late in district meetings and in the submission of
periodical reports, had committed acts of insubordination and dishonesty, and her sales
performance was far from satisfactory. The CA nonetheless agreed with the NLRC that
respondents failed to comply with the two-notice requirement. The fallo of the assailed CA
Decision reads:
WHEREFORE, premises considered, the petition is PARTLY GRANTED. The assailed Decision
dated 14 July 2011 of [the] National Labor Relations Commission is MODIFIED in that private
pg. 614
respondent was not illegally dismissed and, therefore, the awards of separation pay, backwages,
attorney’s fees, other damages and 13th month pay are deleted. For failure to comply with the twin
notice requirements of due process in effecting the just dismissal of private respondent, petitioner
is ordered to pay private respondent the amount of P30,000.00 as nominal damages.
SO ORDERED.18
_______________
16 Id., at pp. 70-149.
17 Id., at pp. 45-52.
18 Id., at p. 52.
220

Petitioner filed a Motion for Partial Reconsideration.19 In a Resolution20 promulgated on

November 5, 2012, however, the CA denied petitioner’s motion.
Issues
Feeling aggrieved, petitioner filed the instant Petition imputing upon the CA the following errors:
I.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THERE IS

SUFFICIENT PROOF TO SUPPORT THE VARIOUS INFRACTIONS COMMITTED BY
PETITIONER SANTOS.
II.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THE DISMISSAL
OF PETITIONER SANTOS WAS WITH JUST CAUSE.21
pg. 615
Petitioner contends that the CA erred in deviating from the uniform rulings of the labor tribunals
whose findings of facts are binding on the CA. She insists that the CA grievously erred in delving
into the factual issues of the case instead of limiting itself with the issue of jurisdiction.
Petitioner denies being habitually tardy. She claims that respondents failed to provide specific
instances where her alleged habitual tardiness could be deduced. Petitioner likewise faults the CA
in finding her guilty of insubordination since she was already reprimanded for the acts she
committed relative thereto. She maintains that she had dutifully abided with all the lawful orders
of Integrated Pharma.
As to her alleged dismal performance, petitioner argues that respondent Integrated Pharma has no
written policy as
_______________
19 Id., at pp. 56-68.
20 Id., at pp. 54-55.
21 Id., at p. 23.
221
VOL. 796, JULY 11, 2016 221

to the expected performance of its employees. Hence, it had no basis in concluding that her
performance was unsatisfactory.
Lastly, petitioner admits reporting the amount of P10.00 as her fare in going to the Fort Bonifacio
Hospital. Nevertheless, she denies overcharging respondents and maintains that she only reported
the actual amount she incurred in going to the said hospital. According to petitioner, to maximize
her time, she used to take tricycles and pay P10.00 for her fare, instead of multicabs for only P2.00.
After all, respondents neither forbade her from taking tricycles nor denied her claim for P10.00
tricycle fare. In fact, they allowed her to spend P10.00 for travel expenses for quite some time
already.
Respondents, on the other hand, argue that petitioner essentially assails the CA’s factual findings,
which cannot be done in a petition for review on certiorari. They point out that the Supreme Court
is not a trier of facts and only questions of law can be raised in a petition for review on certiorari.
pg. 616
Hence, the Decision of the CA finding sufficient proof that petitioner committed various
infractions deserves full faith and credence. Respondents contend that these infractions should be
taken collectively; not singly or separately. Viewed as a whole, the series of infractions committed
by the petitioner constitutes serious misconduct that justifies the termination of her employment.
Specifically, respondents claim that petitioner was guilty of habitual absenteeism and tardiness,
insubordination, and dishonesty. According to respondents, petitioner was habitually absent as
shown by the evaluation reports and affidavits22 of petitioner’s immediate supervisors who stated
that petitioner was always late in district meetings and in the submission of required reports. She
committed insubordination when she refused to heed to the reasonable instructions of her
supervisor to remit her collections and to bring the CareSens POP demonstration unit at the
particular
_______________
22 Id., at pp. 349-358.
222

time specified by her supervisor. And petitioner is guilty of dishonesty because she overstated her
travel expenses.
Respondents further contend that they did not reprimand respondent in the April 6, 2010
memorandum. Said memorandum is actually the first written notice in effecting termination of
employment.
Our Ruling
We dismiss the Petition.
At the outset, we note that the Petition essentially assails the factual findings of the CA. As a rule,
this Court does not analyze and weigh again the evidence presented before the tribunals below
because it is not a trier of facts.23 The only issues it can pass upon in a Petition for Review on
Certiorari are questions of law. In view, however, of the conflicting findings of the labor tribunals
and the CA, this Court finds it compelling to make its own independent findings of facts.24
pg. 617
Petitioner was guilty of gross
and habitual neglect of duty
for being excessively tardy.
Records reveal that petitioner was indeed habitually tardy. She was always late in district meetings
and in the submission of her periodic reports. These are borne out by the evaluation25 conducted
by petitioner’s former supervisor, Arnelo R. Peñaranda, on September 26, 2008 where it was
observed that petitioner was “[a]lways late during District Meetings and [in] passing x x x required
reports.”26 Corre-
_______________
23 Diokno v. Cacdac, 553 Phil. 405, 428; 526 SCRA 440, 454 (2007).
24 InterOrient Maritime Enterprises, Inc. v. Creer III, G.R. No. 181921, September 17, 2014, 735
SCRA 267, 281.
25 Rollo, pp. 349-351.
26 Id., at p. 349.
223
VOL. 796, JULY 11, 2016 223

spondingly, in a scale of 1-5 (5 being the highest), petitioner was given a low mark of 1.5 as to
punctuality. Despite such rock-bottom mark, however, the result on petitioner’s evaluation27
conducted barely two years later by her new supervisor did not show any sign of improvement.
She still failed “to report on time both in the office and during regular field work visits.”28
The memorandum29 dated April 6, 2010 also bears out petitioner’s lack of deep sense of duty and
punctuality. In that memorandum, petitioner was chastised for arriving in the office late in the
afternoon on March 22, 2010 when she was given the specific instruction to be at the office in the
morning of said date. Petitioner was also late for about 4 1/2 hours for her appointment on April
5, 2010. Her payslips also reveal several deductions from her salary due to tardiness and absences.
pg. 618
These pieces of documentary evidence already constitute substantial evidence (or that amount of
relevant evidence that a reasonable mind might accept as adequate to justify a conclusion) proving
petitioner’s habitual tardiness. Her tardiness is so excessive that it already affects the general
productivity and business of Integrated Pharma. It has amounted to gross and habitual neglect of
her duty, which is a just cause for terminating employment under Article 282 of the Labor Code.
Petitioner was guilty

of insubordination.
Petitioner also committed willful disobedience of reasonable and lawful orders of her employer.
As a just cause for dismissal of an employee under Article 282 of the Labor Code,
_______________
27 Id., at pp. 353-355.
28 Id., at p. 354.
29 Id., at p. 363.
224

willful disobedience of the employer’s lawful orders requires the concurrence of two elements:
“(1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful
and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known
to the employee, and must pertain to the duties which she had been engaged to discharge.”30
Both requisites are present in the instant case. It is clear from the April 6, 2010 memorandum that
petitioner was tasked to remit her collections to the office in the morning of March 22, 2010, a
Monday. In fact, it was upon her behest that instead of on March 19, 2010, the date when she got
her collections, petitioner would make the remittance on Monday morning. Come Monday,
however, petitioner arrived in her office late in the afternoon, thereby making it impossible for the
respondents to deposit her collections. While petitioner alleged that she attended first to her area
of coverage, the fact remains that she wantonly disobeyed the reasonable and lawful orders of her
employer to remit her collections in the morning of March 22, 2010, the specific time given by her
pg. 619
employer. In one case, this Court held that “the employer had the discretion to regulate all aspects
of employment, and that the workers had the corresponding obligation to obey company rules and
regulations. x x x [D]eliberately disregarding or disobeying the rules could not be countenanced,
and any justification that the disobedient employee might put forth would be deemed
inconsequential. The lack of resulting damages was unimportant, because the ‘heart of the charge
is the crooked and anarchic attitude of the employee towards his employer. Damage aggravates
the charge but its absence does not mitigate or negate the employee’s liability.’”31
_______________
30 R.B. Michael Press v. Galit, 568 Phil. 585, 597-598; 545 SCRA 23, 33 (2008).
31 Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado ng Wellcome-DFA (NEW-

DFA), 493 Phil. 410, 424-425; 453 SCRA 256, 271 (2005).
225
VOL. 796, JULY 11, 2016 225

Another instance of petitioner’s insubordination was when she did not bring the CareSens SOP
demonstration unit to the office at a particular given time. Petitioner does not dispute that
respondents instructed her to bring to the office said demonstration unit at 9:00 o’clock in the
morning as a fellow Clinician from Batangas would pick it up that same morning. However,
petitioner could not provide sensible justification why she failed to arrive at the appointed time.
Her failure to come on time without weighty reasons evinces her willful disregard of the clear and
simple instructions of her superiors.
Lastly, as early as January 2010 Gamos instructed petitioner to reflect in her expense report the
amount of P2.00, which is the actual amount she incurred as transportation expense in going to the
Fort Bonifacio Hospital. Petitioner, however, disobeyed her immediate supervisor and continued
to reflect the amount of P10.00 in her expense reports.
Petitioner is guilty of dishonesty.
Petitioner would also have this Court believe that she actually incurred P10.00 travel expense in
going to the Fort Bonifacio Hospital because she used to take tricycles. She avers that it is faster
to take the tricycle because it takes quite a while before multicabs are filled with passengers.
pg. 620
We cannot, however, give credence to petitioner’s excuses in light of the result of the investigation
Gamos conducted on the matter and petitioner’s own admission to Suarez that she overcharged
respondents. In her memorandum dated April 13, 2010, Gamos reported to Suarez that the only
means of public transportation to Fort Bonifacio Hospital at that time was by taking a multicab.
Thus:
[Petitioner] admitted that ever since she started covering FBH under her former DSM’s, she was
charging a tricycle fare of P10 on her way to the mentioned [hospital]. Further, she claimed that
[in] her previous Expense Reports she was declaring that the means of transportation
226

she regularly take is tricycle when in fact the only means of regular transportation to FBH is
actually a multicab.
But since I had no service car then, I went to the same route and discovered that there was no
tricycle ride since last year on the way to FBH[;] instead available for free to employees and
soldiers of Fort Bonifacio were multicabs with routes around the camp. The public or outsiders
were requested to pay the P2 amount only as donation for the unit’s maintenance and driver’s
salary and this was confirmed by the guards on the gate when I asked them about it that same
day.32 (Emphasis ours)
In her affidavit,33 Suarez stated that on April 19, 2010 she, together with Tantiansu, discussed the
matter of overcharging with petitioner. On said occasion, petitioner admitted that she overcharged
the transportation expense every time she would go to Fort Bonifacio Hospital.
We are not also convinced with the labor tribunals’ ratiocination that petitioner should be absolved
for overcharging since there is no proof that she is not entitled to P10.00 travel expense or that she
pocketed the difference of P8.00. There is a difference between allotted transportation allowance
and actual transportation expense. Thus, to state an amount of actual transportation expense other
than the amount actually incurred for transportation is dishonesty. Elsewise put, just because
petitioner was allotted P10.00 transportation expense does not mean that she can keep the
remainder should she not exhaust the entire amount thereof. Petitioner’s act of deliberately
misdeclaring or overstating her actual travelling expense constitutes dishonesty and serious
pg. 621
misconduct, which are lawful grounds for her dismissal under paragraphs (a) and (c) of Article
282 of the Labor Code.34 It provides:
_______________
32 Rollo, p. 360.
33 Id., at pp. 364-365.
34 San Miguel Corporation v. National Labor Relations Commission, 256 Phil. 271, 276; 174
SCRA 510, 515 (1989).
227
VOL. 796, JULY 11, 2016 227

ART. 282. Termination by employer.—An employer may terminate an employment for any of
the following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work.
xxxx
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative.
The fact that petitioner had been declaring P10.00 as her actual traveling expense for quite some
time cannot be interpreted as condonation of the offense or waiver of Integrated Pharma to enforce
its rules. “A waiver is a voluntary and intentional relinquishment or abandonment of a known legal
right or privilege.”35 To be valid and effective, the waiver must be couched in clear and
unequivocal terms leaving no doubt as to the intention of a party to give up a right or benefit which
legally pertains to it.36 Hence, the management prerogative to discipline employees and impose
punishment cannot, as a general rule, be impliedly waived.37
pg. 622
Past offense may be taken into
consideration in imposing the
appropriate penalty.
Petitioner further faults the CA in finding her guilty of insubordination since she was already
reprimanded for the acts she committed in relation thereto.
We agree with petitioner that she had already been reprimanded for the infractions stated in the
April 6, 2010 memo-
_______________
35 Supra note 30 at p. 596; p. 31.
36 Id.
37 Id.
228

randum. It undoubtedly dealt with her failure to remit her collections and to return the CareSens
POP demonstration unit, at the appointed time. Thus:
This memo is being issued to reprimand you for an offense you have repeated despite several
discussions in the hope that you will correct your bad habit and improve your performance.
However, it seems that our pleas have been unheard or disregarded because you continue to
commit the same infraction, to wit.38
The last paragraph of said Memorandum even contained a warning that a repetition of the same
offense in the future may result in the imposition of stiffer penalty of suspension or even
termination.
pg. 623
Your failure to comply with appointed tasks and schedules shows disobedience and a lack of
respect for authority and peers. This is clearly a form of insubordination. We have talked with you
time and again to help you realize this offense, but we have hardly seen any improvement. We
really hope that you will strive to correct this poor behavior. Otherwise, we will be constrained to
impose a suspension that may lead to eventual termination should the same offense happen
again.39
Hence, petitioner could no longer be punished for said offenses. Nevertheless, petitioner’s failure
to remit her collections and to return the CareSens POP demonstration unit on time may still be
considered in imposing the appropriate penalty for future offenses. In Philippine Rabbit Bus Lines,
Inc. v. National Labor Relations Commission,40 we held that that:
_______________
38 Rollo, p. 363.
39 Id.
40 344 Phil. 522; 279 SCRA 106 (1997).
229
VOL. 796, JULY 11, 2016 229

Nor can it be plausibly argued that because the offenses were already given the appropriate
sanctions, they cannot be taken against him. They are relevant in assessing private respondent’s
liability for the present violation for the purpose of determining the appropriate penalty. To sustain
private respondent’s argument that the past violation should not be considered is to disregard the
warnings previously issued to him.41
As discussed above, petitioner is guilty of dishonesty and serious misconduct. Based on Article
282 of the Labor Code, such offense may merit the termination of employment. However, while
the law provides for a just cause to dismiss an employee, the employer still has the discretion
pg. 624
whether it would exercise its right to terminate the employment or not. In other words, the
existence of any of the just or authorized causes enumerated in Articles 282 and 283 of the Labor
Code does not automatically result in the dismissal of the employee. The employer has to make a
decision whether it would dismiss the employee, impose a lighter penalty, or perhaps even condone
the offense committed by an erring employee. In making a decision, the employer may take into
consideration the employee’s past offenses. In this case, petitioner had been forewarned that her
failure to correct her poor behavior would be visited with stiffer penalty. However, she remained
recalcitrant to her superiors’ directives and warnings. Thus, respondents “have come to a forced
conclusion to terminate [her] employment.”42
Petitioner was not accorded

due process.
But the existence of a just cause to terminate an employment is one thing; the manner and
procedure by which such termination should be effected is another. If the dismissal is
_______________
41 Id., at pp. 530-531; p. 115.
42 Rollo, p. 382.
230

based on a just cause under Article 282 of the Labor Code, as in this case, the employer must give
the employee two written notices and conduct a hearing. The first written notice is intended to
apprise the employee of the particular acts or omissions for which the employer seeks her
dismissal; while the second is intended to inform the employee of the employer’s decision to
terminate him.43 In King of Kings Transport, Inc. v. Mamac,44 this Court elaborated on what
should be the contents of the first notice and the purpose thereof. Thus:
(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity
to submit their written explanation within a reasonable period. ‘Reasonable opportunity’ under the
Omnibus Rules means every kind of assistance that management must accord to the employees to
pg. 625
enable them to prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an opportunity to study
the accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the grounds
under Art. 282 is being charged against the employees.45
_______________
43 University of the Immaculate Conception v. Office of the Secretary of Labor and Employment,
G.R. Nos. 178085-178086, September 14, 2015, 770 SCRA 430.
44 553 Phil. 108; 526 SCRA 116 (2007).
45 Id., at pp. 115-116; p. 125.
231
VOL. 796, JULY 11, 2016 231

The employer bears the burden of proving compliance with the above two-notice requirement.46
In the present case, respondents presented two first written notices (memoranda dated April 6,
2010 and April 21, 2010) charging petitioner with various offenses. Both notices, however, fell
short of the requirements of the law. The April 6, 2010 memorandum did not apprise petitioner of
an impending termination from employment. It did not require her to submit within a specified
period of time her written explanation controverting the charges against her. Said memorandum
did not also specify the company rules allegedly violated by the petitioner or the cause of her
possible dismissal as provided under Article 282 of the Labor Code. After elaborating on the two
acts of insubordination, said memorandum merely reprimanded petitioner and warned her that a
commission of the same or similar offense in the future would be visited with stiffer penalty. It
reads:
This memo is being issued to reprimand you for an offense you have repeated despite several
discussions in the hope that you will correct your bad habit and improve your performance.
However, it seems that our pleas have been unheard or disregarded because you continue to
commit the same infraction, to wit:
pg. 626
1. On March 19, 2010, late in the afternoon, you informed our VP for operations that you
were able to collect some accounts and asked if you could postpone your remittance to the
office to Monday the following week. You were asked to report early on Monday morning,
so that your remittances may be deposited on the same day. Without notice, you appeared
close to 5:00 PM that day, thus the office was not able to deposit your remittances anymore.
Your explanation that you prioritized regular coverage in the morning is not acceptable. If
_______________
46 Supra note 43.
232

you had an important appointment that morning/day, you should have taken this up with our VP
for operations during your conversation on Friday or even during the weekend prior to Monday
morning to allow the office to think of a way to get the remittances from you and be able to deposit
them that morning. It was clear to you that you were tasked to bring them to the office during
opening hours on Monday, March 22, but you failed to do so.
2. Yesterday, you were asked to bring the CareSens POP demo unit to the office at 9:00 AM,
so that your fellow clinician from Batangas can pick it up for an urgent demo. Again, you
agreed, and it was clear to you what time you were expected at the office. However, you
arrived at 1:30 PM, claiming that you sent text messages today and explaining that you had
to go to PAL to cover doctors. While it is important to keep to your itinerary, the specific
instruction for you to deviate your morning schedule to deliver the demo unit should have
been your priority. If your visit to PAL office was very important, you should have brought
this up as you were being instructed yesterday. Your failure to surrender the unit to the
office resulted in a missed appointment for your fellow clinician, not to mention incurred
travel expenses and wasted time and effort. This was not only irresponsible but selfish on
your part.
Your failure to comply with appointed tasks and schedules shows disobedience and a lack of
respect for authority and peers. This is clearly a form of insubordination. We have talked with you
time and again to help you realize this offense, but we have hardly seen any improvement. We
really hope that you will strive to correct this poor behavior. Otherwise, we will be constrained to
im-
pg. 627
233
VOL. 796, JULY 11, 2016 233

pose a suspension that may lead to eventual termination should the same offense happen
again.47
With regard to the April 21, 2010 memorandum,48 respondents claim that they attempted to
furnish petitioner with a copy thereof, but that petitioner refused to receive the same. However,
respondents’ bare allegation that they attempted to furnish the petitioner with a copy of the April
21, 2010 memorandum is not sufficient. Proof of actual service is required.49 Also, the April 21,
2010 memorandum did not afford petitioner ample opportunity to intelligently respond to the
accusations hurled against her as she was not given a reasonable period of at least five days to
prepare for her defense. Notably, respondents terminated her employment through another
memorandum bearing the same date. Moreover, the April 21, 2010 memorandum did not also state
the specific company rule petitioner violated or the just cause for terminating an employment.
Nothing was likewise mentioned about the effect on petitioner’s employment should the charges
against her are found to be true.50
Lastly, it does not escape our attention that respondents never scheduled a hearing or conference
where petitioner could have responded to the charge and presented her evidence.51 Both the April
6, 2010 and the April 21, 2010 memo-
_______________
47 Rollo, p. 363.
48 Id., at p. 380.
49 Electro System Industries Corporation v. National Labor Relations Commission, 509 Phil. 187,
192-193; 472 SCRA 199, 204 (2005).
50 Maquiling v. Philippine Tuberculosis Society, Inc., 491 Phil. 43, 57-58; 450 SCRA 465, 477
(2005).
51 Pertinent portion of Section 2, Rule I, of the Implementing Rules of Book VI of the Labor
Code provides:
(d) In all cases of termination of employment, the following standards of due process shall
be substantially observed:
For termination of employment based on just cases as defined in Article 282 of the Labor
Code:
pg. 628
234

randa do not contain a notice setting a particular date for hearing or conference.
In Agabon v. National Labor Relations Commission,52 the Court held that if the dismissal was for
cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual. However, respondents’ violation of petitioner’s right to statutory due process warrants
the payment of indemnity in the form of nominal damages. The amount of such damages is
addressed to the sound discretion of the Court, taking into account the relevant circumstances.
Hence, the CA did not err in awarding the amount of P30,000.00 to petitioner as and by way of
nominal damages.
WHEREFORE, premises considered, the instant Petition is hereby DENIED and the assailed
August 31, 2012 Decision of the Court of Appeals in C.A.-G.R. S.P. No. 122180 is AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Brion and Leonen, JJ., concur.
_______________
(i) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to explain
his side.
(ii) A hearing or conference during which the employee concerned, with the assistance
of counsel if he so desires is given opportunity to respond to the charge, present his
evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
52 Supra note 1.
pg. 629
235
VOL. 796, JULY 11, 2016 235

Notes.—Not every case of insubordination or willful disobedience by an employee reasonably

deserves the penalty of dismissal — there must be a reasonable proportionality between the offense
and the penalty. (Philippine Long Distance Telephone Company vs. Teves, 634 SCRA 538 [2010])
Falsification of time records amounts to dishonesty. (Garcia vs. Reyes, 665 SCRA 217 [2012])
——o0o——
pg. 630
G.R. No. 180060. July 13, 2016.*
SPOUSES AUGUSTO and NORA NAVARRO, petitioners, vs. RURAL BANK OF TARLAC,
INC., respondent.
Remedial Law; Civil Procedure; Dismissal of Actions; Section 2, Rule 50 of the Rules of Court,
clearly mandates the outright dismissal of appeals made under Rule 41 thereof, if they only raise
pure questions of law.—Section 2, Rule 50 of the Rules of Court, clearly mandates the outright
dismissal of appeals made under Rule 41 thereof, if they only raise pure questions of law. The
pertinent provision of Rule 50 reads as follows: SECTION 2. Dismissal of improper appeal to the
Court of Appeals.—An appeal under Rule 41 taken from the Regional Trial Court to the Court
of Appeals raising only questions of law shall be dismissed, issues purely of law not being
reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for review
from the appellate judgment of a Regional Trial Court shall be dismissed. An appeal erroneously
taken to the Court of Appeals shall not be transferred to the appropriate court but shall be
dismissed outright. (Emphases supplied) There is a question of law when the issue does not call
for an examination of the probative value of the evidence presented or an evaluation of the truth
or falsity of the facts admitted. Here, the doubt revolves around the correct application of law and
jurisprudence on a certain set of facts or circumstances. The test for ascertaining whether a question
is one of law is to determine if the appellate court can resolve the issues without reviewing or
evaluating the evidence. Where there is no dispute as to the facts, the question of whether or not
the conclusions drawn from these facts are correct is considered a question of law. Conversely,
there is a question of fact when doubt or controversy arises as to the truth or falsity of the alleged
information or facts; the credibility of the witnesses; or the relevance of surrounding circumstances
and their relationship to each other.
Same; Same; Pleadings and Practice; Section 7, Rule 8 of the Rules of Court provides that
whenever a “defense is based upon a
_______________
* FIRST DIVISION.
492

Navarro vs. Rural Bank of Tarlac, Inc.
written instrument or document, the substance of such instrument or document shall be set forth
in the pleading, and the original or a copy thereof shall be attached to the pleading.—It may
pg. 631
appear that there is still a factual issue concerning the total amount of installment payments made
by petitioners. However, they have already been given numerous opportunities to present evidence
that they actually paid P161,137.69, or P68,815.49 more than the amount the bank admitted
receiving. We stress that their assertion of the amount paid is an affirmative defense under Section
5(b), Rule 6 of the Rules of Court, which they have the burden to substantiate. In turn, Section 7,
Rule 8 thereof, provides that whenever a “defense is based upon a written instrument or document,
the substance of such instrument or document shall be set forth in the pleading, and the original or
a copy thereof shall be attached to the pleading x x x.”
Same; Same; Cost of Suit; Section 1, Rule 142 of the Rules of Court, clearly states that the payment
of the costs of suit “shall be allowed to the prevailing party as a matter of course.”—Section 1,
Rule 142 of the Rules of Court, clearly states that the payment of the costs of suit “shall be allowed
to the prevailing party as a matter of course.” Therefore, the CA only needed to determine if the
lower court properly applied the provisions of the loan agreement, the law, the Rules of Court, and
jurisprudence to the award of attorney’s fees and costs of suit.
Concepcion Law Office for petitioners.
Mariemeir I. Marcos-Rivera for respondent.
SERENO, CJ.:
The case before this Court concerns the availability of the remedy of an ordinary appeal under
Rule 41 of the Rules of Court1 in challenging the decision of the Regional Trial Court
_______________
1 Petition for Review on Certiorari, pp. 9-10, Rollo, pp. 16-17.
493
VOL. 796, JULY 13, 2016 493

pg. 632
(RTC)2 to resolve a case by way of a summary judgment. The Court of Appeals (CA) dismissed3
the appeal outright in light of Section 2, Rule 50 of the Rules of Court. The provision directs the
dismissal of appeals filed through Rule 41 if they merely raise pure questions of law. Spouses
Augusto and Nora Navarro now come before this Court arguing that their appeal should not have
been dismissed, since the issues they raised included questions of fact.
Facts
This petition stems from the complaint for a sum of money filed by the Rural Bank of Tarlac, Inc.,
against Spouses Navarro. It is undisputed that petitioners obtained a bank loan in the amount of
P558,000 for the purchase of a motor vehicle, and that they were unable to complete the agreed
monthly installments. It is also uncontested that they surrendered their vehicle (a 1998 Kia
Advantage van) to the bank, so that the latter could sell it and apply the proceeds of the sale to
their obligations.4 The parties, however, disagreed as to the effect of the surrender of the vehicle
under that circumstance.
According to the bank, petitioners still had an unpaid balance of P315,677.80 excluding interests,
penalties, and liqui-
_______________
2 The Tarlac City (Br. 63) Regional Trial Court Decision in Civil Case No. 9381 was penned by
Judge Arsenio P. Adriano. RTC Decision, CA Rollo, pp. 19-21.
3 The Court of Appeals Decision dated 27 December 2006 and Resolution dated 03 October 2007
in C.A.-G.R. CV No. 80041 were penned by Associate Justice Mariflor P. Punzalan-Castillo and
concurred in by Associate Justices Andres B. Reyes, Jr. and Hakim S. Abdulwahid. See CA
Decision, Rollo, pp. 20-31; CA Resolution, Rollo, pp. 32-33.
4 See Petition for Review on Certiorari, pp. 2-3, Rollo, pp. 9-10; Appellants’ Brief, p. 2, CA
Rollo, p. 11; Answer with Counterclaim of Spouses Navarro, RTC Records, pp. 17-19; Motion for
Summary Judgment of Rural Bank of Tarlac, RTC Records, pp. 20-27.
494

pg. 633
dated damages even after the sale of the van.5 It claimed that their monthly installments amounted
to only P92,322.20,6 while it was able to sell the vehicle for only P150,000.00.7 Thus, it alleged
that it could only credit the total amount of P242,322.20 in their favor.8
Spouses Navarro did not deny that they had executed a Promissory Note in favor of the bank, and
that the terms were correctly reflected in the note.9 They claim, however, that when they
surrendered the vehicle, they understood that it would serve as complete satisfaction of their
remaining loan obligation by way of a dacion en pago.
In view of the spouses’ Answer, the bank filed a Motion for Summary Judgment under Section 1,
Rule 35 of the Rules of Court.10 It alleged that the only issue before the trial court was whether
the selling price of the vehicle was enough to satisfy the unpaid balance, interest, and other charges.
It argued that a summary judgment was proper, since there was no more genuine issue relating to
any material fact, and that the matter before the court was merely the computation of the remaining
balance. To support its motion, the bank presented the Promissory Note executed by the spouses
for the amount of P558,000,11 as well as the receipts for the sale of the vehicle
_______________
5 Motion for Summary Judgment of Rural Bank of Tarlac, RTC Records, pp. 20-27. According
to the bank, petitioners’ obligation would amount to P494,707.66 if interests, penalties, and
liquidated damages are computed.
6 Motion for Summary Judgment of Rural Bank of Tarlac, RTC Records, pp. 20-27. See RTC
Decision, p. 1; CA Rollo, p. 19.
7 Id.
8 Id.
9 Answer with Counterclaim of Spouses Navarro, RTC Records, pp. 17-19.
10 Motion for Summary Judgment of Rural Bank of Tarlac, RTC Records, pp. 20-27.
11 Annex “A” of the Complaint of Rural Bank of Tarlac, RTC Records, p. 4.
495
VOL. 796, JULY 13, 2016 495

pg. 634
to a certain Corazon Quesada for P150,000;12 and acknowledged the spouses’ total monthly
installments of P92,322.20.13 Based on its own accounting,14 the total payments amounted to
P242,322.20, while their total running balance was P315,677.80 excluding interests, penalties, and
liquidated damages.
Spouses Navarro opposed the motion.15 While they did not assail the amount for which the van
was sold, they nevertheless asserted that by surrendering the vehicle, their remaining obligation
must be deemed to have been fully paid. To prove their assertion, they presented an
acknowledgment receipt, which stated that the bank had “[r]eceived x x x one unit KIA
ADVANTAGE VAN, in good and running condition.”16 They argued that there still existed a
question of fact, since there must be a proper accounting of their correct balance. In the alternative,
they averred that the deductible amount for the sale of the van must be based on its value at the
time they surrendered it to the bank. They also claimed that their monthly installments had already
amounted to P161,137.69. The spouses, however, did not attach receipts or any other kind of
evidence to support this contention.
_______________
12 Receipts, Annexes “B” and “B-1” attached to the Motion for Summary Judgment of Rural
Bank of Tarlac, RTC Records, p. 25.
Decision, p. 1, CA Rollo, p. 19.
14 Annex “C” of the Motion for Summary Judgment of Rural Bank of Tarlac, RTC Records, p.
26.
15 Comment/Opposition to Plaintiff’s Motion for Summary Judgment, RTC Records, pp. 31-34.
16 Receipt dated 20 May 2002, Annex “1” of Spouses Navarro’s Comment/Opposition to

Plaintiff’s Motion for Summary Judgment, RTC Records, p. 34.
496

pg. 635
By way of a summary judgment, the RTC rendered a Decision17 in favor of the bank. It explained
that Spouses Navarro remained obligated to pay the remaining principal loan amount of
P315,677.80 plus legal interest and attorney’s fees.18 The trial court ruled:19
Defendants claimed they had paid the sum of P161,137.69 as of March 18, 2002, and had in fact
surrendered one Kia Van by way of “dacion en pago” thereby extinguishing the obligation.
If the intention of parties is to consider the surrender of the Kia Van as full payment, a receipt to
that effect should have been signed or acknowledged by the bank. There was none. Further, it is
the burden of defendants to prove that their payments to the bank amounted to P161,137.69 as of
March 18, 2002, which should be evidenced by receipts of payment to the bank.
Thus, the Court finds that the motion for summary judgment is proper. The Court agrees that the
obligation of the defendants or the principal balance is P315,677.80. However, the interest of 32%
per annum, the 12% penalty and 12% liquidated damages, all totaling 56% plus 25% attorney’s
fees may be [unconscionable], as the charges amounted to 81% of the principal balance. The Court
has to [reduce] this x x x. The legal rate of 12% per annum should be applied in this case, which
should be computed from December 7, 2002 on the balance of the principal amount which was
P315,677.80. The computation should be —
P315,677.80 x 1% (per month) x eight months from December 2002 up to July, 2003
= total interest due or P25,244.16
_______________
17 The Decision dated 03 July 2003 issued by the Tarlac City Regional Trial Court (Br. 63) in
Civil Case No. 9381 was penned by Judge Arsenio P. Adriano. CA Rollo, pp. 19-21.
18 CA Decision, pp. 3-4, Rollo, pp. 22-23.
19 RTC Decision, CA Rollo, pp. 19-21.
497
VOL. 796, JULY 13, 2016 497

Thus, the total amount to be paid is computed in this manner - - -
pg. 636
P315,677.80
Plus 25,244.16
P340,921.96
Plaintiff is entitled to a reasonable sum of P5,000.00 as attorney’s fees, there being a stipulation in
the contract.
Petitioners assailed the trial court’s Decision by filing an ordinary appeal under Rule 41 of the
Rules of Court20 and assigning the following errors:21
I. The lower court erred in finding that summary judgment is proper.
II. The lower court erred in rendering summary judgment when there existed genuine triable issues.
III. The lower court erred in not conducting a hearing to find out that defendant’s obligation had
already been extinguished.
IV. The lower court erred in awarding to plaintiff attorney’s fees and costs.
Spouses Navarro claimed22 that a factual controversy still existed concerning their remaining
indebtedness. They maintained that the conveyance of their motor vehicle already served to offset
the claims of the bank by means of dacion en pago. In any event, they averred that it could have
simply made a deficiency claim against them if the amount derived from the sale of the vehicle
was found insufficient. Consequently, they insisted that the RTC should not have granted
_______________
20 See Motion for Reconsideration of Petitioner before the CA, CA Rollo, pp. 59-63.
21 CA Decision, p. 5, Rollo, p. 24; Appellants’ Brief, p. 1, CA Rollo, p. 10.
22 Appellants’ Brief, CA Rollo, pp. 7-17.
498
pg. 637
the bank’s Motion for Summary Judgment, since there was still a need to hold a trial to ascertain
the amount of the unpaid balance. With regard to the last issue, petitioners argued that the RTC
erred in ordering them to pay attorney’s fees and costs of suit. They pointed out that there was no
basis for the grant, since there was no trial.
The CA dismissed the appeal outright, because petitioners availed themselves of the wrong
remedy. It held that the supposed errors of the RTC revolved around the propriety of resolving the
case through a summary judgment.23 According to the appellate court, since these issues involved
pure questions of law, the proper remedy to assail the judgment was to file a petition under Section
1, Rule 45 of the Rules of Court, instead of an ordinary appeal under Section 2, Rule 41 thereof.
Spouses Navarro are now before this Court through a Petition for Review under Rule 45. They
insist24 that the CA needed to resolve issues involving questions of fact, and that the determination
of whether their obligations have already been extinguished requires a full-blown trial. They also
argue that the issue relating to the award of attorney’s fees and costs of suit involves questions of
fact.
Issue
The issue to be resolved by the Court is whether Spouses Navarro resorted to the wrong remedy
of filing an ordinary appeal under Rule 41, instead of a petition under Rule 45 of the Rules of
Court, when they questioned the correctness of the decision of the RTC to resolve the dispute
through a summary judgment before the CA.
_______________
23 Rollo, pp. 24-25.
24 Reply to Comment, pp. 1-2, Rollo, pp. 52-53.
499
VOL. 796, JULY 13, 2016 499
pg. 638
Ruling
The petition is unmeritorious.
Section 2, Rule 50 of the Rules of Court, clearly mandates the outright dismissal of appeals made
under Rule 41 thereof, if they only raise pure questions of law.25 The pertinent provision of Rule
50 reads as follows:
SECTION 2. Dismissal of improper appeal to the Court of Appeals.—An appeal under Rule
41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law
shall be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal
by notice of appeal instead of by petition for review from the appellate judgment of a Regional
Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright. (Emphases supplied)
There is a question of law when the issue does not call for an examination of the probative value
of the evidence presented or an evaluation of the truth or falsity of the facts admitted.26 Here, the
doubt revolves around the correct application of law and jurisprudence on a certain set of facts or
circumstances.27 The test for ascertaining whether a question
_______________
25 See Heirs of Nicolas S. Cabigas v. Limbaco, 670 Phil. 274; 654 SCRA 643 (2011).
26 Id.; St. Mary of the Woods School, Inc. v. Office of the Registry of Deeds of Makati City, 596
Phil. 778; 576 SCRA 713 (2009); National Power Corporation v. Purefoods Corporation, 586
Phil. 587; 565 SCRA 17 (2008); First Bancorp, Inc. v. Court of Appeals, 525 Phil. 309; 492 SCRA
221 (2006); China Road and Bridge Corporation v. Court of Appeals, 401 Phil. 590; 348 SCRA
401 (2000).
27 Bases Conversion Development Authority v. Reyes, G.R. No. 194247, 19 June 2013, 699 SCRA
217.
500
pg. 639
is one of law is to determine if the appellate court can resolve the issues without reviewing or
evaluating the evidence.28 Where there is no dispute as to the facts, the question of whether or not
the conclusions drawn from these facts are correct is considered a question of law.29 Conversely,
there is a question of fact when doubt or controversy arises as to the truth or falsity of the alleged
information or facts; the credibility of the witnesses; or the relevance of surrounding circumstances
and their relationship to each other.30
Applying the above definition and test to the instant case, it is apparent that petitioners raised pure
questions of law in their ordinary appeal under Rule 41. From the Appellants’ Brief31 filed by
Spouses Navarro — vis-à-vis their Answer with Counterclaim32 and Comment/Opposition to
Plaintiff’s Motion for Summary Judgment33 before the RTC — and even from their Petition for
Review on Certiorari34 before this Court, it is clear that the crux of their appeal to the CA is the
supposed erroneous conclusions drawn by the trial court from the al-
_______________
28 Id.; Rivera v. United Laboratories, Inc., 604 Phil. 184; 586 SCRA 269 (2009); Central Bank
of the Philippines v. Castro, 514 Phil. 425; 478 SCRA 235 (2005); Cucueco v. Court of Appeals,
484 Phil. 254, 265; 441 SCRA 290, 299 (2004); China Road and Bridge Corporation v. Court of
Appeals, supra note 26.
29 Bases Conversion Development Authority v. Reyes, supra note 27; Cucueco v. Court of
Appeals, id.
30 Id.; Heirs of Nicolas S. Cabigas v. Limbaco, supra note 25;

St. Mary of the Woods School, Inc. v. Office of the Registry of Deeds
of Makati City, supra note 26; National Power Corporation v. Purefoods Corporation, supra
note 26; First Bancorp, Inc. v. Court of Appeals, supra note 26; China Road and Bridge
Corporation v. Court of Appeals, supra note 26.
33 Id., at pp. 31-32.
34 Petition for Review on Certiorari, Rollo, pp. 8-19.
pg. 640
501
VOL. 796, JULY 13, 2016 501

ready uncontested facts before the latter. These uncontested or uncontroverted facts are as follows:
1. Petitioners obtained a loan from the bank in the amount of P558,000, and the terms of the
loan were accurately reflected in the Promissory Note attached to respondent’s
complaint.35
2. The bank admitted that petitioners had already paid P92,322.20 as loan amortization.36
3. Petitioners surrendered the vehicle to the bank, so that the latter would be able to sell it and
apply the proceeds to their loan obligation.
4. The only written agreement pertaining to the surrender of the vehicle was the
acknowledgment receipt, which stated that the bank “[r]eceived from MR. AUGUSTO G.
NAVARRO of Barangay Sto. Domingo II Capas, Tarlac (1) one unit KIA ADVANTAGE
VAN, in good and running condition.”37
5. The van was sold for only P150,000 three months after it was surrendered.38
It may appear that there is still a factual issue concerning the total amount of installment payments
made by petitioners. However, they have already been given numerous opportunities to present
evidence that they actually paid P161,137.69, or P68,815.49 more than the amount the bank
_______________
35 Answer with Counterclaim of Spouses Navarro, RTC Records, p. 17.
Decision, p. 1; CA Rollo, p. 19.
37 Receipt dated 20 May 2002, Annex “1” of Spouses Navarro’s Comment/Opposition to

Plaintiff’s Motion for Summary Judgment, RTC Records, p. 34.
38 Receipts, Annexes “B” and “B-1” attached to the Motion for Summary Judgment of Rural
Bank of Tarlac, RTC Records, p. 25.
502
pg. 641
admitted receiving. We stress that their assertion of the amount paid is an affirmative defense under
Section 5(b), Rule 6 of the Rules of Court,39 which they have the burden to substantiate.40 In
turn, Section 7, Rule 8 thereof, provides that whenever a “defense is based upon a written
instrument or document, the substance of such instrument or document shall be set forth in the
pleading, and the original or a copy thereof shall be attached to the pleading x x x.”
We have perused the records of this case and found nothing attached or referenced that would
evidence additional payment in the amount of P68,815.49. Spouses Navarro failed to take
advantage of the clear opportunities to prove payment in their Answer with Counterclaim41 and
Comment/Opposition to Plaintiff’s Motion for Summary Judgment42 before the RTC; their
Appellants’ Brief43 and Motion for Reconsideration44 before the CA; and even their Petition for
Review on Certiorari,45 Reply to Comment,46 and Memorandum47 before this Court.
Consequently, the CA cannot be deemed to have com-
_______________
39 According to this provision, “An affirmative defense is an allegation of a new matter which,
while hypothetically admitting the material allegations in the pleading of the claimant, would
nevertheless prevent or bar recovery by him. The affirmative defenses include fraud, statute of
limitations, release, payment, illegality, statute of frauds, estoppel, former recovery, discharge in
bankruptcy, and any other matter by way of confession and avoidance.”
40 Philippine Commercial International Bank (now BDO Unibank, Inc.) v. Franco, G.R. No.
180069, 5 March 2014, 718 SCRA 90; Bank of the Philippine Islands v. Royeca, 581 Phil. 188;
559 SCRA 207 (2008); Jimenez v. National Labor Relations Commission, 326 Phil. 89; 256 SCRA
84 (1996).
42 Id., at pp. 31-34.
44 Appellants’ Motion for Reconsideration, CA Rollo, pp. 59-63.
45 Petition for Review on Certiorari, Rollo, pp. 8-19.
46 Reply to Comment, Rollo, pp. 52-55.
47 Memorandum, Rollo, pp. 62-72.
pg. 642
503
VOL. 796, JULY 13, 2016 503

mitted a reversible error in affirming the RTC decision to uphold the interest of judicial economy
and render a summary judgment, especially in the face of petitioners’ bare allegations.
We also note that petitioners did not seek to present any additional piece of evidence that would
substantiate their claim of a dacion en pago agreement with respect to the surrender of the Kia
Advantage van. Neither did they present before the RTC any basis for their assertion that a
different valuation must be used for the sale of the van. Instead, they eventually asked the trial
court to consider the conveyance of the vehicle as full payment of their loan obligation or, in the
alternative, that it order the bank to render an accounting to establish the correct loan balances.48
They argued before the CA in this wise:49
An examination of the pleadings, documents and affidavits on file immediately reveal that there is
controversy as to the claim of the plaintiff that the defendants are still indebted to it for the sum of
P315,677.80, plus interests, penalty charge, liquidated damages and attorney’s fees when the
obligation has already been fully extinguished with a Dacion En Pago over a motor vehicle
conveyed to the plaintiff. And even assuming, but without admitting that defendant still owed the
plaintiff, the same would just be one for deficiency claim with the total payments made and actual
value of the motor vehicle conveyed set off against total bank claims, so that, in such case, an
accounting is first needed to establish the correct balances thereon and the lack or absence thereof
necessarily renders plaintiff’s action premature. These contentious issues necessarily entail the
presentation of evidence.
_______________
48 Spouses Navarro’s Comment/Opposition to Plaintiff’s Motion for Summary Judgment, RTC

Records, p. 32.
504
pg. 643
Moreover, the Answer specifically denied the material allegations of the complaint on defendants’
default, refusal to pay their obligation that included interest, penalty charges, liquidated damages
and attorney’s fees.
The only way to ascertain the truth is obviously through the presentation of evidence by the parties.
Summary judgment is not proper where the defendant presented defenses tendering factual issues
which call for the presentation of evidence as where the defendant specifically denied the material
allegations in the complaint.
Thus, there are issues of facts pleaded and disputed rendering the case unripe for a summary
judgment. The Honorable Court should try the case on the merits. Until such time as the trial on
the merits of the case is done, it would be PREMATURE on the part of the Court to render
judgment on the case without hearing the parties on the merits of their respective sides.
The lower court said in its decision that “if the intention of the parties is to consider the surrender
of the Kia Van as full payment, a receipt to that effect should have been signed or acknowledged
by the bank. There was none.” It must be noted that the Answer alleges “bad faith” and abuse of
rights against the plaintiff [“in filing this case for collection when defendants’ obligation with it
had already been extinguished.”]50 It should hear and try the case because by the testimony and
other evidences to be presented, the court would be informed of the reason why there was no such
receipt and why the entire obligation has already been extinguished.
Defendant Augusto Navarro declared in his Affidavit that they “were compelled to surrender the
financed Kia Van upon an agreement forged with us by the bank that the surrender of said vehicle
(will) fully pay and extinguish our obligation”; that “in consideration of our said agreement, the
bank made us to sign IN BLANK a deed of sale over the same motor vehicle to leave to the
_______________
50 Answer with Counterclaim of Spouses Navarro, RTC Records, p. 18.
505
VOL. 796, JULY 13, 2016 505

bank full authority and control to dictate the price thereof; which price, were made to believe and
understand, will apply to the full payment and extinguishment of our said obligation.”
pg. 644
To support this claim of defendant Augusto Navarro is plaintiff’s own exhibit which appears to be
the “Deed of Sale” mentioned by said defendant.
Now, would the court be truly justified in rendering a summary judgment when by the appearance
of what is before it, it is bound by the dictates of justice and fair play to look into the transaction
so it could inform itself as to who among the plaintiff and the defendants are telling the truth?
From where we stand, it is very clear that, contrary to the finding of the lower court, the rendition
of a summary judgment in this case is not proper. There should be a trial to ferret out the truth.
Besides the lower court itself stated that “it is the burden of defendants to prove that their payments
to the bank amounted to P161,137.69 as of March 18, 2002, which would be evidenced by receipts
of payments to the bank.” Verily, if one party has the burden of proof, necessarily he is under
obligation to present such proof. So how can one present the proof required of him when he is
denied the opportunity to present the same? In effect, such denial is a negation of one’s right to be
heard and to due process. Under our Constitution, no person shall be deprived of life, liberty or
property without due process of law.
From the circumstances availing, there is really a very serious doubt as to the propriety of the
summary judgment. In case of such doubt, the doubt shall be resolved against the moving party.
The court should take that view of evidence most favorable to the party against whom it is directed
and give that party the benefit of all favorable inferences. (Citations omitted, emphases supplied)
Clearly, these matters do not entail a review of the facts or an evaluation of the probative value of
the evidence. The CA
506

was only required to examine if the admitted facts in the pleadings and the affidavits filed by the
movant warranted the trial court’s conclusions on the applicable law. The only factual issue
petitioners attempted to tender was the claim that they paid more than what the bank claimed as
total monthly installments. But even on this point, they failed to introduce any acceptable
evidentiary reference.
The same reasoning applies to the question relating to the payment of attorney’s fees and costs of
suit. Petitioners’ own arguments show that this question is, in the first place, dependent on the
resolution of the issue of the propriety of a summary judgment. It is undisputed that the loan
agreement between the parties provided for the award of attorney’s fees in favor of the bank, in
pg. 645
case it would be forced to file a collection suit.51 On the other hand, Section 1, Rule 142 of the
Rules of Court, clearly states that the payment of the costs of suit “shall be allowed to the prevailing
party as a matter of course.”52 Therefore, the CA only needed to determine if the lower court
properly applied the provisions of the loan agreement, the law, the Rules of Court, and
jurisprudence to the award of attorney’s fees and costs of suit.
_______________
51 RTC Decision, p. 3, CA Rollo, p. 21; Promissory Note, Annex “A” of Complaint, RTC
Records, p. 8. See Civil Code, Art. 2208.
52 See also: Star Electric Corporation v. R & G Construction Development and Trading, Inc.,
G.R. No. 212058, 7 December 2015, 776 SCRA 323; Mendoza v. Gomez, G.R. No. 160110, 18
June 2014, 726 SCRA 505; F.F. Cruz & Co., Inc. v. HR Construction Corp., 684 Phil. 330; 668
SCRA 302 (2012); Land Bank of the Philippines v. Rivera, 649 Phil. 575; 635 SCRA 285 (2010).
507
VOL. 796, JULY 13, 2016 507

Indeed, it is a settled rule53 that the determination of whether an appeal involves only questions
of law or of both law and fact is best left to the CA, and that all doubts as to the correctness of its
conclusions shall be resolved in its favor. We have nevertheless reviewed its determination and
found no reason to disturb its finding that petitioners only raised pure questions of law in their
ordinary appeal before it. The CA did not commit any reversible error when it dismissed Spouses
Navarro’s appeal outright.
WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals’
Decision dated 27 December 2006 and Resolution dated 3 October 2007, which outrightly
dismissed the ordinary appeal taken by petitioners in C.A.-G.R. CV No. 80041, are hereby
AFFIRMED.
SO ORDERED.
Leonardo-De Castro, Bersamin, Perlas-Bernabe and Caguioa, JJ., concur.
pg. 646
Notes.—A document is actionable when an action or defense is grounded upon such written
instrument or document; These documents need not be attached to or stated in the complaint as
these are evidentiary in nature. (Asian Construction and Development Corporation vs. Mendoza,
675 SCRA 284 [2012])
_______________
53 Heirs of Nicolas S. Cabigas v. Limbaco, supra note 25; St. Mary of the Woods School, Inc. v.
Office of the Registry of Deeds of Makati City, supra note 26; National Power Corporation v.
Purefoods Corporation, supra note 26, First Bancorp, Inc. v. Court of Appeals, supra note 26;
China Road and Bridge Corporation v. Court of Appeals, supra note 26; Philippine National Bank
v. Romillo, 223 Phil. 533; 139 SCRA 320 (1985).
508

An “actionable document” is a written instrument or document on which an action or defense is

founded. (Metropolitan Bank and Trust Company vs. Ley Construction and Development
Corporation, 743 SCRA 618 [2014])
——o0o——
pg. 647
G.R. No. 198925. July 13, 2016.*
SPOUSES ARCHIBAL LATOJA and CHARITO LATOJA, petitioners, vs. HONORABLE

ELVIE LIM, Presiding Judge, Branch 1, Regional Trial Court, Borongan, Eastern Samar, ATTY.
JESUS APELADO, Register of Deeds, Borongan, Eastern Samar, ALVARO CAPITO, as Sheriff,
Branch 2, Regional Trial Court, Borongan, Eastern Samar, and TERESITA CABE, represented by
ADELINA ZAMORA, respondents.
Remedial Law; Special Civil Actions; Certiorari; Motion for Reconsideration; It is a rule that a
motion for reconsideration of an assailed order is a condition precedent before filing a petition
for certiorari under Rule 65.—The Court enjoins the observance of the established policy on the
hierarchy of courts. Here, petitioners filed the present Petition for Certiorari directly before this
Court instead of the CA. Such a course of action ought to be disallowed. Moreover,
_______________
* FIRST DIVISION.
563
VOL. 796, JULY 13, 2016 563

Latoja vs. Lim
it is a rule that a motion for reconsideration of an assailed order is a condition precedent before
filing a petition for certiorari under Rule 65. In the present case, petitioners failed to file a motion
for reconsideration of the Order granting the Motion for the Issuance of Writ of Possession, thereby
depriving RTC-Br. 2 of the opportunity to correct an error it might have unwittingly committed.
Same; Civil Procedure; Judgments; Cases should as much as possible be resolved on the merits,
and not on technicalities rules of procedure must not get in the way of achieving substantial
justice.—Despite these procedural lapses, the Court deems it prudent to provide a resolution of the
substantial issues raised by the parties. The resolution of these issues is pursuant to the policy that
cases should as much as possible be resolved on the merits, and not on technicalities. Strict
adherence to rules of procedure must not get in the way of achieving substantial justice. The Court,
on compelling and meritorious grounds, has overlooked procedural flaws, such as (1) lack of a
motion for reconsideration prior to a Rule 65 petition; (2) non-exhaustion of administrative
remedies; (3) a disregard of the hierarchy of courts; and (4) an erroneous service of a petition on
the opposing party, instead of the counsel of record. Indeed, the exceptional circumstances in the
instant case demand that the Court forego a rigid application of the technicalities, so as to allow
the parties to determine their respective rights and liabilities under the law. In particular, we take
pg. 648
note of the fact that the case involved here has been dragging on for years, with the consolidation
case commencing as early as 1999. Further, the merits of the present case, as will be shown later,
justify the relaxation of procedural technicalities.
Same; Same; Same; Writs of Possession; Jurisprudence provides only these four (4) instances
when a writ of possession may issue: (1) land registration proceedings; (2) extrajudicial
foreclosure of mortgage of real property; (3) judicial foreclosure of property, provided that the
mortgagor has possession, and no third party has intervened; and (4) execution sales.—
Jurisprudence provides only these four instances when a writ of possession may issue: (1) land
registration proceedings; (2) extrajudicial foreclosure of mortgage of real property; (3) judicial
foreclosure of property, provided that the mortgagor has possession, and no third party has
intervened; and (4) execution sales. Here, respondent Cabe sought the writ as a consequence of the
trial court’s Decision ordering the consolidation of the
564

Latoja vs. Lim
title over the subject property and vesting absolute ownership thereof in her name. Since the instant
case clearly does not fall among the four instances enumerated above, the issuance of the Writ of
Possession was not proper.
Civil Law; Land Titles and Deeds; Consolidation of Titles; The consolidation of title prescribed
in Article 1607 of the Civil Code is merely for the purpose of registering and consolidating title to
the property in case of a vendor a retro’s failure to redeem.—The consolidation of title prescribed
in Article 1607 of the Civil Code is merely for the purpose of registering and consolidating title to
the property in case of a vendor a retro’s failure to redeem. Here, the trial court’s Decision
(affirmed by both the CA and the SC) merely resolved the issue of consolidation of ownership
over the subject property. Possession and ownership are distinct legal concepts. A judgment in
favor of ownership, therefore, does not necessarily include possession as a necessary incident. To
further seek possession of the land would violate the established rule that a writ of execution must
conform to the dispositive portion of the decision it seeks to enforce and cannot vary the terms
thereof. Otherwise, the execution is void. Since the Writ of Possession in this case was issued as
part of the execution process, it is likewise subject to this rule. Consequently, as the judgment
being executed does not involve a disposition on Cabe’s right of possession, the Writ of Possession
itself is a patent nullity.
Same; Sales; Pacto de Retro Sales; It is basic that in a pacto de retro sale, the title and ownership
of the property sold are immediately vested in the vendee a retro.—Judge Lim overlooked the
nature of the Pacto de Retro sale entered into by Cabe and Cardona II. It is basic that in a pacto de
retro sale, the title and ownership of the property sold are immediately vested in the vendee a
pg. 649
retro. As a result, the vendee a retro has a right to the immediate possession of the property sold,
unless otherwise agreed upon. Therefore, the right of respondent Cabe to possess the subject
property must be founded on the terms of the Pacto de Retro Sale itself, and not on the Decision
in the consolidation case. It would be erroneous to conclude that she is entitled as a matter of right
to possession of the subject property by virtue of the Decision on consolidation which has become
final and executory.
565
VOL. 796, JULY 13, 2016 565

Latoja vs. Lim
SPECIAL CIVIL ACTIONS in the Supreme Court. Certiorari, Prohibition and Mandamus.
Elmer C. Solidon for petitioners.
Abesamis Law Offices for private respondent Teresita Cabe.
SERENO, CJ.:
This is a Petition1 for Certiorari, Prohibition, and Mandamus under Rule 65 of the 1997 Revised
Rules of Court assailing the Order2 in Civil Case No. 3488 issued by Hon. Elvie P. Lim (Judge
Lim) as acting presiding judge of Regional Trial Court Branch 2 (RTC-Br. 2), Borongan, Eastern
Samar. The assailed Order granted the Motion for Issuance of Writ of Possession in favor of
respondent Teresita Cabe over the property covered by Original Certificate of Title (OCT) No. 41.
The Petition likewise prays for the issuance of a preliminary injunction and/or temporary
restraining order (TRO) to enjoin the execution of the assailed Order.
The Antecedent Facts
pg. 650
On 21 May 1997, respondent Cabe, together with Donato A. Cardona II (Cardona II), executed a
Deed of Sale with Pacto de Retro3 over a parcel of land covered by OCT No. 41, registered under
the “Heirs of Donato Cardona represented by Jovita T. Cardona.”4 The sale was with the
conformity of Jovita Cardona and spouses Rhodo and Myrna Cardona (Spouses Cardona), who
are Cardona II’s grandmother and parents, respectively.
_______________
1 Rollo, pp. 3-19.
2 Id., at pp. 20-21; Order dated 29 September 2011.
3 Id., at pp. 177-178.
4 Id., at pp. 22-23.
566

Latoja vs. Lim
For failure of Cardona II to repurchase the property from her within one year as agreed upon in
the deed, Cabe filed a Petition for Consolidation of Ownership5 over OCT No. 41 pursuant to
Article 1607 of the Civil Code.6 Docketed as Civil Case No. 3488 (consolidation case) and
assigned to RTC-Br. 2, the Petition was granted by the trial court through a Decision dated 20 May
2002.7
Cardona II questioned the trial court’s Decision by filing with the Court of Appeals (CA) a Rule
65 Petition for Certiorari8 which was dismissed by the CA.9 Cardona II further appealed to the
Supreme Court, but his appeal was also denied and, on 13 July 2005, an Entry of Judgment
issued.10
Pursuant to this Court’s Resolution denying Cardona II’s appeal, respondent Cabe filed a motion
for execution of the RTC Decision in the consolidation case11 which was granted.12
RTC-Br. 2 then issued a Writ of Execution.13 Pursuant thereto, the Register of Deeds cancelled
OCT No. 41 and is-
_______________
pg. 651
5 Id., at pp. 32-35.
6 Art. 1607 provides: “In case of real property, the consolidation of ownership in the vendee by
virtue of the failure of the vendor to comply with the provisions of Article 1616 shall not be
recorded in the Registry of Property without a judicial order, after the vendor has been duly heard.”
7 Rollo, pp. 110-119; the decision was penned by Hon. Arnulfo O. Bugtas as Presiding Judge of
RTC-Br. 2.
8 Docketed as C.A.-G.R. S.P. No. 77370.
9 CA Decision in C.A.-G.R. S.P. No. 77370 dated 23 June 2004, penned by CA Associate Justice
Estela M. Perlas-Bernabe (now a member of this Court) and concurred in by Associate Justices
Isaias P. Dicdican and Ramon M. Bato, Jr.; Rollo, pp. 124-126.
10 Id., at pp. 128-129.
11 Id., at p. 130.
12 Id., at pp. 137-138; the resolution was penned by Hon. Leandro C. Catalo as Presiding Judge
of RTC-Br. 2.
13 Id., at pp. 45-46; dated 22 October 2010.
567
VOL. 796, JULY 13, 2016 567

Latoja vs. Lim
sued, in lieu thereof, Transfer Certificate of Title No. 114-2011000028 under the name of
respondent Cabe.14
Thereafter, Cabe prayed for the issuance of a Writ of Possession. This was granted through the
assailed Order15 of Judge Lim as acting Presiding Judge of RTC-Br. 2.16 In accordance with the
assailed Order, a Writ of Possession was issued in favor of Cabe.17 Subsequently, a Notice of
Demand to Vacate18 was issued by the court sheriff of RTC-Br. 2 pursuant to the Writ of
Possession.
Petitioner-spouses Archibal and Charito Latoja (Spouses Latoja) now come to us alleging grave
abuse of discretion on the part of Judge Lim.19 They allege that in 2006, this same Judge Lim
rendered a Judgment by Compromise20 in an Action for Partition of Real Properties. This action
was filed by Spouses Latoja against Spouses Cardona, who are the parents of Cardona II,
pg. 652
respondent in the consolidation case.21 Among the properties included in the partition case was
OCT No. 41,22 the same property subject of the consolidation case. The Judgment by Compromise
awarded OCT No. 41 on a 50/50 pro indiviso ownership to Spouses Latoja and Spouses Cardona
pursuant to their Compromise Agreement.23
_______________
14 Id., at p. 53.
15 Dated 29 September 2011.
16 Rollo, pp. 20-21.
17 Id., at pp. 51-52.
18 Id., at p. 50.
19 On 28 August 2013, petitioners’ counsel filed a Notice of Substitution of Party dated 2 August
2013, stating that petitioner Archibal Latoja died on 13 October 2012 and requesting that his
children — Lindley Latoja, Liezl Latoja, Leslie Latoja, Archibal Latoja, Jr., and Lyndon Sixto
Latoja — be considered as substitutes of their late father; id., at pp. 262-263, 273.
20 Id., at pp. 36-37.
21 Id., at p. 8.
22 Id., at pp. 22-23.
23 Id., at pp. 36-37.
568

Latoja vs. Lim
Spouses Latoja contend that Judge Lim, as acting presiding judge of RTC-Br. 2, wrongly granted
the motion for the issuance of a Writ of Possession to Cabe despite the Judgment by Compromise
he had previously rendered in the partition case. Judge Lim was then the presiding judge of RTC-
Br. 1, Borongan, Eastern Samar when he awarded half of the same property to petitioners.24
Alleging that they are in possession of a portion of the subject property,25 petitioners also pray for
the issuance of a TRO to enjoin the implementation of the assailed Order in view of the issuance
pg. 653
of the Notice to Vacate issued by the court sheriff.26 In a Resolution dated 14 December 2011,
this Court granted the TRO prayed for.27
In her Comment,28 respondent Cabe contends that the Decision in the consolidation case had
become final on 13 July 2005 after this Court dismissed the appeal of Cardona II and before the
Judgment by Compromise was rendered in 2006. Therefore, Judge Lim was simply guided by the
rule on the finality of judgment when he issued the assailed Order. Cabe asserts that she is therefore
entitled to the writ of possession prayed for.29
The Issue
The crucial issue in this case is whether public respondent Judge Lim committed grave abuse of
discretion when he issued the Order granting the Motion for Issuance of Writ of Possession in
favor of private respondent Cabe in the consolidation case.
_______________
24 Id., at p. 11.
25 Id., at p. 194.
26 In the Notice of Demand to Vacate, Spouses Latoja were given until 18 November 2011 to
turn over the property to respondent Cabe.
27 Id., at p. 65.
28 Id., at pp. 81-103.
29 Id., at pp. 91-92.
569
VOL. 796, JULY 13, 2016 569

Latoja vs. Lim
pg. 654
We grant the Petition for reasons as follows.
The Petition warrants a

relaxation of procedural
rules.
At the outset, We note some procedural lapses in the Petition filed before Us.
The Court enjoins the observance of the established policy on the hierarchy of courts.30 Here,
petitioners filed the present Petition for Certiorari directly before this Court instead of the CA.
Such a course of action ought to be disallowed.31
Moreover, it is a rule that a motion for reconsideration of an assailed order is a condition precedent
before filing a petition for certiorari under Rule 65.32 In the present case, petitioners failed to file
a motion for reconsideration of the Order granting the Motion for the Issuance of Writ of
Possession, thereby depriving RTC-Br. 2 of the opportunity to correct an error it might have
unwittingly committed.33
Despite these procedural lapses, the Court deems it prudent to provide a resolution of the
substantial issues raised by the parties. The resolution of these issues is pursuant to the policy that
cases should as much as possible be resolved on
_______________
30 Diocese of Bacolod v. COMELEC, G.R. No. 205728, January 21, 2015, 747 SCRA 1.
31 Although the Court, the CA, and the RTC have concurrence of jurisdiction over the issuance
of writs of certiorari, petitioners cannot simply choose which among several courts their Petition
for Certiorari will be filed in. (Bañez, Jr. v. Concepcion, 693 Phil. 399; 679 SCRA 237 [2012])
32 Lepanto Consolidated Mining Company v. Lepanto Capataz Union, 704 Phil. 10; 691 SCRA
11 (2013).
33 Estate of Salvador Serra Serra v. Heirs of Primitivo Hernaez, 503 Phil. 736; 466 SCRA 120
(2005).
570
pg. 655
Latoja vs. Lim
the merits, and not on technicalities.34 Strict adherence to rules of procedure must not get in the
way of achieving substantial justice.35 The Court, on compelling and meritorious grounds, has
overlooked procedural flaws, such as (1) lack of a motion for reconsideration prior to a Rule 65
petition;36 (2) non-exhaustion of administrative remedies;37 (3) a disregard of the hierarchy of
courts;38 and (4) an erroneous service of a petition on the opposing party, instead of the counsel
of record.39
Indeed, the exceptional circumstances in the instant case demand that the Court forego a rigid
application of the technicalities, so as to allow the parties to determine their respective rights and
liabilities under the law. In particular, we take note of the fact that the case involved here has been
dragging on for years, with the consolidation case commencing as early as 1999.40 Further, the
merits of the present case, as will be shown later, justify the relaxation of procedural technicalities.
Judge Lim committed grave

abuse of discretion in grant-
ing the Motion for Issuance
of Writ of Possession.
We find that Judge Lim committed grave abuse of discretion when he issued the Order for the
issuance of the Writ of
_______________
34 Macedonio v. Ramo, G.R. No. 193516, 24 March 2014, 719 SCRA 647.
35 Morillo v. People, G.R. No. 198270, 9 December 2015, 777 SCRA 207.
36 Republic v. Bayao, 710 Phil. 279; 697 SCRA 313 (2013).
37 Buklod ng Kawaning EIIB v. Zamora, 413 Phil. 281; 360 SCRA 718 (2001).
38 Republic v. Caguioa, 704 Phil. 315; 691 SCRA 306 (2013).
39 Id.
40 Rollo, pp. 32-35.
pg. 656
571
VOL. 796, JULY 13, 2016 571

Latoja vs. Lim
Possession prayed for by respondent Cabe in the consolidation case. We make this finding on
grounds other than those posited by petitioners as will further be explained below.
Jurisprudence provides only these four instances when a writ of possession may issue: (1) land
registration proceedings; (2) extrajudicial foreclosure of mortgage of real property; (3) judicial
foreclosure of property, provided that the mortgagor has possession, and no third party has
intervened; and (4) execution sales.41
Here, respondent Cabe sought the writ as a consequence of the trial court’s Decision ordering the
consolidation of the title over the subject property and vesting absolute ownership thereof in her
name. Since the instant case clearly does not fall among the four instances enumerated above, the
issuance of the Writ of Possession was not proper.
It is apparent that Cabe availed herself of the wrong remedy in seeking possession of the property
via a Writ of Possession. She contends that she is entitled as a matter of right to the issuance of the
writ as she has in her favor a court judgment, a writ of execution, and a new TCT under her own
name.42 This contention lacks merit.
The consolidation of title prescribed in Article 160743 of the Civil Code is merely for the purpose
of registering and consolidating title to the property in case of a vendor a retro’s failure to
redeem.44 Here, the trial court’s Decision (affirmed by both the CA and the SC) merely resolved
the issue of consolidation of ownership over the subject property.45 Possession
_______________
41 Maglente v. Baltazar-Padilla, 546 Phil. 472; 517 SCRA 643 (2007), citing Canlas v. Court of
Appeals, 247 Phil. 118; 164 SCRA 160 (1988); see also Mabale v. Apalisok, 177 Phil. 189; 88
SCRA 234 (1979).
42 Rollo, p. 91.
43 Supra note 6.
44 Cruz v. Leis, 384 Phil. 303; 327 SCRA 570 (2000).
45 The dispositive portion of the Decision goes as follows:
pg. 657
572

Latoja vs. Lim
and ownership are distinct legal concepts.46 A judgment in favor of ownership, therefore, does
not necessarily include possession as a necessary incident.47
To further seek possession of the land would violate the established rule that a writ of execution
must conform to the dispositive portion of the decision it seeks to enforce and cannot vary the
terms thereof.48 Otherwise, the execution is void.49 Since the Writ of Possession in this case was
issued as part of the execution process,50 it is likewise subject to this rule. Consequently, as the
judgment being executed does not involve a disposition on Cabe’s right of possession, the Writ of
Possession itself is a patent nullity.
Deprived of possession, Cabe’s remedy is not a Writ of Possession, but any of the available actions
for the recovery of possession of real property, specifically the following: accion interdictal, when
the dispossession has not lasted for more than one year; accion publiciana, when the dispossession
has lasted for more than one year; or accion reivindicatoria, which
_______________
“WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of petitioner and
against respondent, consolidating the title so that real property covered by Original Certificate of
Title No. 41 vesting ownership upon petitioner Teresita Cabe; declaring null and void said OCT
No. 41; and ordering the Register of Deeds of Eastern Samar to cancel said OCT No. 41 and to
issue, in lieu thereof, another Certificate of title in favor of and in the name of TERESITA CABE.
SO ORDERED.” (Rollo, p. 119)
46 Heirs of Roman Soriano v. Court of Appeals, 415 Phil. 299; 363 SCRA 87 (2001).
47 Id.
48 Green Acres Holdings, Inc. v. Cabral, 710 Phil. 235; 697 SCRA 266 (2013).
49 Id.
50 Rollo, p. 20.
pg. 658
573
VOL. 796, JULY 13, 2016 573

Latoja vs. Lim
seeks the recovery of ownership and necessarily includes possession.51
Judge Lim overlooked the nature of the Pacto de Retro sale entered into by Cabe and Cardona II.
It is basic that in a pacto de retro sale, the title and ownership of the property sold are immediately
vested in the vendee a retro.52 As a result, the vendee a retro has a right to the immediate
possession of the property sold, unless otherwise agreed upon.53
Therefore, the right of respondent Cabe to possess the subject property must be founded on the
terms of the Pacto de Retro Sale itself, and not on the Decision in the consolidation case. It would
be erroneous to conclude that she is entitled as a matter of right to possession of the subject
property by virtue of the Decision on consolidation which has become final and executory.54
Judge Lim committed grave abuse of discretion in issuing the Order granting Cabe’s motion for
the issuance of a writ of possession, as he went against basic law and established jurisprudence.
It must be emphasized that this Petition is confined to the resolution of Judge Lim’s authority to
order the issuance of the assailed Writ of Possession. Any contention raised as to the validity of
the judgments, contracts, or titles involved in this case may be properly threshed out by the parties
in a proper action for that purpose.
WHEREFORE, the Petition for Certiorari under Rule 65 is GRANTED. Hereby SET ASIDE
are the (a) Order dated 29 September 2011 issued by Hon. Elvie P. Lim granting the
_______________
51 Suarez v. Emboy, Jr., G.R. No. 187944, 12 March 2014, 718 SCRA 677, citing Valdez v. Court
of Appeals, 523 Phil. 39; 489 SCRA 369 (2006).
52 Solid Homes, Inc. v. Court of Appeals, 341 Phil. 261; 275 SCRA 267 (1997).
53 Id.
54 Rollo, p. 20.
574
pg. 659
Latoja vs. Lim
Motion for Issuance of Writ of Possession; (b) the Writ of Possession dated 25 October 2011; and
(c) the Notice of Demand to Vacate dated 25 October 2011. Accordingly, the Court’s Temporary
Restraining Order dated 14 December 201155 is hereby made PERMANENT.
SO ORDERED.
Leonardo-De Castro, Bersamin, Perlas-Bernabe and Caguioa, JJ., concur.
Petition granted, order dated 29 September 2011, Writ of Possession dated 25 October 2011, and
Notice of Demand to Vacate dated 25 October 2011 set aside.
Notes.—When the vendor is in urgent need of money when he executes the sale, the alleged sale
with pacto de retro will be construed as an equitable mortgage. (Bautista vs. Unangst, 557 SCRA
256 [2008])
Cases should, as much as possible, be resolved on the merits, not on mere technicalities. (Asiatrust
Development Bank vs. First Aikka Development, Inc., 650 SCRA 172 [2011])
——o0o——
_______________
55 Id., at pp. 65-66.
pg. 660
A.M. No. 12-8-07-CA. July 26, 2016.*
RE: LETTER OF COURT OF APPEALS JUSTICE VICENTE S.E. VELOSO FOR

ENTITLEMENT TO LONGEVITY PAY FOR HIS SERVICES AS COMMISSION MEMBER
III OF THE NATIONAL LABOR RELATIONS COMMISSION.
A.M. No. 12-9-5-SC. July 26, 2016.*
RE: COMPUTATION OF LONGEVITY PAY OF COURT OF APPEALS JUSTICE ANGELITA

A. GACUTAN.
A.M. No. 13-02-07-SC. July 26, 2016.*
RE: REQUEST OF COURT OF APPEALS JUSTICE REMEDIOS A. SALAZAR-FERNANDO

THAT HER SERVICES AS MTC JUDGE AND AS COMELEC COMMISSIONER BE
CONSIDERED AS PART OF HER JUDICIAL SERVICE AND INCLUDED IN THE
COMPUTATION/ADJUSTMENT OF HER LONGEVITY PAY.
Executive Department; Longevity Pay; Salaries; Longevity pay under Section 42 of Batas
Pambansa (BP) Blg. 129 is treated as part of salary and extended to certain officials in the
Executive Department who are, by law, granted the same salary as their counterparts in the
Judiciary.—Herein ponente had already thoroughly and extensively discussed in her Concurring
and Dissenting Opinion to the Resolution dated June 16, 2015 the bases for her position — now
adopted by the Court — that longevity pay under Section 42 of Batas Pambansa Blg. 129 is treated
as part of salary and extended to certain officials in the Executive Department who are, by law,
granted the same salary as their counterparts in the Judiciary.
_______________
* EN BANC.
pg. 661
180

Re: Letter of Court of Appeals Justice Vicente S.E. Veloso for Entitlement to Longevity Pay for
his Services as Commission Member III of the National Labor Relations Commission
Same; Same; Same; It was Congress which enacted Republic Act (RA) Nos. 9417, 9347, and
10071, granting certain officials of the Executive Department the same salary as their respective
counterparts in the Judiciary, and “salary” refers to basic monthly pay plus longevity pay per the
plain language of Section 42 of Batas Pambansa (BP) Blg. 129.—Clearly, the foregoing
ratiocination does not constitute judicial legislation. It is firmly grounded on existing laws,
jurisprudence, and executive contemporaneous construction. It was Congress which enacted
Republic Act Nos. 9417, 9347, and 10071, granting certain officials of the Executive Department
the same salary as their respective counterparts in the Judiciary, and “salary” refers to basic
monthly pay plus longevity pay per the plain language of Section 42 of Batas Pambansa Blg. 129.
Justice Brion opines that the grant of longevity pay to executive officials would effectively be a
misplaced exercise of liberality at the expense of public funds and to the prejudice of sectors who
are more in need of these funds. It bears to stress though that it is irrefragably within the legislative
power of Congress to enact Republic Act Nos. 9417, 9347, and 10071, and it is beyond the judicial
power of the Court to question the wisdom behind said legislations.
Brion, J., Dissenting Opinion:
Remedial Law; Civil Procedure; Motion for Reconsideration; View that Justice Gacutan’s Motion
for Reconsideration does not present any new or compelling argument to justify the Supreme
Court’s (SC’s) reversal of its Decision.—I vote to DENY with finality Justice Gacutan’s Motion
for Reconsideration as it does not present any new or compelling argument to justify the Court’s
reversal of its Decision. The arguments Justice de Castro and Justice Velasco raised in their
dissents to the June 16, 2015 Resolution have been thoroughly deliberated upon by the Court in its
main ruling, and thus have already been sufficiently addressed.
Executive Department; Longevity Pay; Salaries; View that the Supreme Court (SC) clarified in
the June 16, 2015 Resolution that these laws do not expand the concept of longevity pay as
provided in Section 42 of Batas Pambansa (BP) Blg. 129, and do not operate to include services
in executive positions in determining the grant of longevity pay.—When the Court, in the June 16,
2015 Resolution, said
pg. 662
181
VOL. 798, JULY 26, 2016 181

that the judiciary is not in a position to determine past continuous, efficient, and meritorious service
in the Executive, it was not a personal attack on Justice Gacutan’s illustrious career in Government.
The observation was meant to expound on the concept that longevity pay for members of the
judiciary is confined to services rendered within the judiciary. In other words, the character of
her past executive service is not a material issue in the Court’s denial of her request. The grant of
longevity pay in the judiciary is based on Section 42 of Batas Pambansa Blg. 129 (BP 129) which
provides: Section 42. Longevity pay.—A monthly longevity pay equivalent to 5% of the monthly
basic pay shall be paid to the Justices and Judges of the courts herein created for each five years
of continuous, efficient, and meritorious service rendered in the judiciary; Provided, That in no
case shall the total salary of each Justice or Judge concerned, after this longevity pay is added,
exceed the salary of the Justice or Judge next in rank. Laws subsequent to BP 129 conferred the
same salaries and benefits granted to members of the judiciary, and to certain public officials in
the executive who had been given ranks equivalent to those granted in the judiciary. The Court
clarified in the June 16, 2015 Resolution that these laws do not expand the concept of longevity
pay as provided in Section 42 of BP 129, and do not operate to include services in executive
positions in determining the grant of longevity pay.
Longevity Pay; View that a plain reading of Section 42 shows that it grants longevity pay to a
judge or justice (and to none other) who has rendered five (5) years of continuous, efficient, and
meritorious service in the Judiciary.—The language and terms of Section 42 of BP 129 are very
clear and unambiguous. A plain reading of Section 42 shows that it grants longevity pay to a
judge or justice (and to none other) who has rendered five years of continuous, efficient, and
meritorious service in the Judiciary. The granted monthly longevity pay is equivalent to 5% of
the monthly basic pay. Notably, Section 42 of BP 129 on longevity pay is separate from the
provision on the salary of members of the judiciary found in Section 41 of BP 129. This separate
placement reflects the longevity pay’s status as a separate benefit for members of the judiciary
who have rendered “continuous, efficient and meritorious service in the judiciary”; longevity pay
is not part of the salary that judges and justices are granted under Section 41. In other words, all
182
pg. 663
judges and justices are entitled to the salary prescribed for them under Section 41 of BP 129, but
only those who have complied with the requisites of Section 42 are entitled to receive the additional
longevity pay benefit. Thus, when Section 42 of BP 129 required that the total salary of judges and
justices receiving longevity pay should not exceed the salary of those next in rank, it simply meant
that the addition of longevity pay cannot result in judges and justices of lower rank receiving a
bigger total compensation than those with higher rank.
Same; Judges; View that the salary of judges and justices depend on the salary grade (and
subsequent step increments) of their positions under the Compensation and Classification System
referred to in Section 41 of Batas Pambansa (BP) Blg. 129.—The salary of judges and justices
depend on the salary grade (and subsequent step increments) of their positions under the
Compensation and Classification System referred to in Section 41 of BP 129. The proviso in
Section 42 of the same law operates to limit the amount of longevity pay granted when it disrupts
the compensation system referred to in Section 41. It does not integrate longevity pay in the salary
due to judges and justices under the compensation system, as not all of them are entitled to receive
longevity pay in the first place.
Same; View that none of the laws that grant similarity of salaries and benefits between executive
officials and their counterparts in the judiciary mention that services in these executive positions
would be included in the computation of longevity pay in the judiciary.—The inclusion of past
services in another branch of government in the computation of longevity pay in the judiciary has
no express basis in law. None of the laws that grant similarity of salaries and benefits between
executive officials and their counterparts in the judiciary mention that services in these
executive positions would be included in the computation of longevity pay in the judiciary. In
Justice Gacutan’s case, her services as past National Labor Relations Commission Commissioner
(NLRC) places her under the operation of Republic Act No. 9347 (RA No. 9347), which amended
Article 216 of the Labor Code to read: ART. 216. Salaries, benefits and other emoluments.—The
Chairman and members of the Commission shall have the same rank, receive an annual salary
equivalent to, and be entitled to the same al-
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lowances, retirement and benefits as those of the Presiding Justice and Associate Justices of the
Court of Appeals, respectively. Labor Arbiters shall have the same rank, receive an annual salary
equivalent to and be entitled to the same allowances, retirement and other benefits and privileges
pg. 664
as those of the judges of the regional trial courts. In no case, however, shall the provision of this
Article result in the diminution of the existing salaries, allowances and benefits of the
aforementioned officials.
Same; View that National Labor Relations Commission (NLRC) commissioners may be granted
the longevity pay that judges and justices receive under Section 42 of Batas Pambansa (BP) Blg.
129, for the commissioners’ meritorious, efficient, and continuous service in the NLRC. But this is
for congress not for the Supreme Court (SC), to decide upon and grant.—The provision of the
same rank as CA Associate Justices to NLRC Commissioners in Article 216 of the Labor Code
simply meant that the latter shall have the same salary grade as the former. As an additional benefit,
NLRC commissioners may be granted the longevity pay that judges and justices receive under
Section 42 of BP 129, for the commissioners’ meritorious, efficient, and continuous service in the
NLRC. But this is for CONGRESS, NOT FOR THIS COURT, to decide upon and grant. The
grant to the members of the Executive Department of this kind of benefit is an act that the
Constitution exclusively assigns to Congress. This is an authority and prerogative that the
Constitution exclusively grants to Congress.
Same; Judges; View that the grant of an equivalent judicial rank does not (and cannot) make an
official in the executive a member of the judiciary; thus, benefits that accrue only to members of
the judiciary cannot be granted to executive officials.—The grant of an equivalent judicial rank
does not (and cannot) make an official in the executive a member of the judiciary; thus, benefits
that accrue only to members of the judiciary cannot be granted to executive officials. This is a
consequence of the separation of powers principle that underlies the Constitution. In more concrete
terms, incumbent judges and justices who had previous government service outside the judiciary
and who had been granted equivalent judicial rank under these previous positions, cannot credit
their past nonjudicial service as service in the judiciary for purposes of securing benefits ap-
184

plicable only and earned while a member of the judiciary, unless Congress by law says otherwise
and only for purposes of entitlement to salaries and benefits.
Same; Judicial Legislation; View that the grant of longevity pay for past services in the National
Labor Relations Commission (NLRC), based on the grant of longevity pay to judges and justices
of the judiciary, amounts to prohibited judicial legislation.—The grant of longevity pay for past
services in the NLRC, based on the grant of longevity pay to judges and justices of the judiciary,
amounts to prohibited judicial legislation. Section 42 of BP 129 is clear in requiring five years of
meritorious, efficient, and continuous services in the judiciary; subsequent legislation conferring
pg. 665
the same salary and benefits that judges and justices enjoy to designated counterparts in the
executive did not amend this requirement, expressly or impliedly. RA No. 9347, in particular, did
not specifically provide that the services in the NLRC may be tacked with the length of judicial
service for purposes of computing longevity pay in the judiciary. Neither can the tacking of these
periods be implied from the language of Article 216 of the Labor Code, as amended, as the
provision merely uses the salary and benefits of CA Associate justices as a yardstick for
determining the salary and benefits of NLRC commissioners.
Same; Same; View that the Court may not, in the guise of interpretation, enlarge the scope of a
statute or include, under its terms, situations that were not provided nor intended by the
lawmakers.—The Court should not forget that liberality is not a magic wand that can ward off the
clear terms and import of express legal provisions; it has a place only when, between two positions
that the law can both accommodate, the Court chooses the more expansive or more generous
option. It has no place where no choice is available at all because the terms of the law are clear
and do not at all leave room for discretion. In terms of the longevity pay’s purpose, liberality has
no place where service is not to the judiciary, as the element of loyalty — the virtue that longevity
pay rewards — is not at all present. I cannot overemphasize too that the policy of liberal
construction cannot and should not be to the point of engaging in judicial legislation — an act
that the Constitution ab-
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solutely forbids this Court to do. The Court may not, in the guise of interpretation, enlarge the
scope of a statute or include, under its terms, situations that were not provided nor intended by the
lawmakers. The Court cannot rewrite the law to conform to what it or certain of its Members
think should be the law.
MOTION FOR RECONSIDERATION of a resolution of the Supreme Court.
RESOLUTION
pg. 666
LEONARDO-DE CASTRO, J.:
The Resolution dated June 16, 2015, penned by Honorable Justice Arturo D. Brion (Brion), in
A.M. Nos. 12-8-07-CA, 12-9-5-SC, and 13-02-07-SC, resolved, among other matters, to deny the
request of Court of Appeals (CA) Justice Angelita A. Gacutan (Gacutan) to include her services
as Commissioner of the National Labor Relations Commission (NLRC) in the computation of her
longevity pay.
CA Justice Gacutan filed a Motion for Reconsideration of said ruling, praying that herein ponente’s
dissent to the Resolution dated June 16, 2015, joined by five other Justices, prevails. In addition,
CA Justice Gacutan submitted that the grant by the Court of her request that her services in the
NLRC (as of 2006) be included in computing her longevity pay would be a reward for her past
continuous services as a lifelong public servant who eventually retired from the judiciary, and that
“by granting her request, there is no judicial legislation — there is only the recognition of justice
and equity to which we in the judiciary stand for.”
After conscientious review, the Court resolves to grant CA Justice Gacutan’s Motion for
Reconsideration. CA Justice Gacutan’s services as NLRC Commissioner should be in-
186

cluded in the computation of her longevity pay, but only from August 26, 2006, when Republic
Act No. 9347, which amended Section 216 of the Labor Code, took effect.
Herein ponente had already thoroughly and extensively discussed in her Concurring and
Dissenting Opinion to the Resolution dated June 16, 2015 the bases for her position — now
adopted by the Court — that longevity pay under Section 42 of Batas Pambansa Blg. 129 is treated
as part of salary and extended to certain officials in the Executive Department who are, by law,
granted the same salary as their counterparts in the Judiciary. Pertinent parts of said Concurring
and Dissenting Opinion are worth reproducing below:
The Literal Language of the Law
pg. 667
Section 42 of Batas Pambansa Blg. 129, otherwise known as “The Judiciary Reorganization Act
of 1980,” as amended, provides:
SEC. 42. Longevity pay.—A monthly longevity pay equivalent to [five percent] 5% of the
monthly basic pay shall be paid to the Justices and Judges of the courts herein created for
each five years of continuous, efficient, and meritorious service rendered in the judiciary:
Provided, That in no case shall the total salary of each Justice or Judge concerned, after
this longevity pay is added, exceed the salary of the Justice or Judge next in rank.
(Emphasis supplied)
As a rule, therefore, the grant of longevity pay under Section 42 of Batas Pambansa Blg. 129 is
premised on the rendition of continuous, efficient, and meritorious service in the Judiciary, That
is the express language of the law.
Nonetheless, there are existing laws which expressly require the qualifications for appointment,
confer the rank, and grant the salaries, privileges, and benefits
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VOL. 798, JULY 26, 2016 187

of members of the Judiciary on other public officers in the Executive Department, such as the
following:
(a) the Solicitor General and Assistant Solicitor Generals of the Office of the Solicitor General
(OSG); and
(b) the Chief Legal Counsel and the Assistant Chief Legal Counsel, the Chief State Prosecutor,
and the members of the National Prosecution Service (NPS) in the Department of Justice.
The intention of the above laws is to establish a parity in qualifications required, the rank conferred,
and the salaries and benefits given to members of the Judiciary and the public officers covered by
the said laws. The said laws seek to give equal treatment to the specific public officers in the
executive department and the Judges and Justices who are covered by Batas Pambansa Blg. 129,
as amended, and other relevant laws. In effect, these laws recognize that public officers who are
expressly identified in the laws by the special nature of their official functions render services
which are as important as the services rendered by the Judges and Justices. They acknowledge the
respective roles of those public officers and of the members of the Judiciary in the promotion of
justice and the proper functioning of our legal and judicial systems.
pg. 668
Thus, the laws operate under the principle of “equal in qualifications and equal in rank, equal in
salaries and benefits received.” The reasonable and logical implication of this principle is that, in
the context of the dispute resolution mechanism in particular and of the justice system in general,
the services rendered by the public officers concerned and the members of the Judiciary are equal
in importance.
I respectfully submit the following arguments:
(1) The law is clear: the term “salary” covers basic monthly pay plus longevity pay.
(2) The concept of longevity pay as “salary” should not be confused with “rank.”
188

(3) The legislative intent of salary increases for certain Executive officials accords with
“salary” as inclusive of longevity pay.
(4) The Court’s long-standing interpretation of the term “longevity pay” as part of “salary”
is correct.
(5) The executive contemporaneous construction of longevity pay is consistent with the law,
as interpreted by the Supreme Court.
(6) Longevity pay is not a mere “benefit.”
Each of these arguments is discussed in detail below.
The law is clear: the term “salary”

covers basic monthly pay plus
longevity pay.
That the language of the law itself, in this case, Section 42 of Batas Pambansa Blg. 129, is the
starting and referential point of discussion of longevity pay under that law is not in dispute. It
provides:
pg. 669
SEC. 42. Longevity pay.—A monthly longevity pay equivalent to [five percent] 5% of the
monthly basic pay shall be paid to the Justices and Judges of the courts herein created for
each five years of continuous, efficient, and meritorious service rendered in the judiciary:
Provided, That in no case shall the total salary of each Justice or Judge concerned, after
this longevity pay is added, exceed the salary of the Justice or Judge next in rank.
(Emphases supplied)
There is disagreement, however, on the construction of the above quoted provision with other
relevant laws, such as Section 3 of Republic Act No. 9417, Article 216 of the Labor Code, as
amended by Republic Act No. 9347, and Section 16 of Republic Act No. 10071, which require the
qualifications for appointment, confer the
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VOL. 798, JULY 26, 2016 189

rank, and grant the same salaries, privileges, and benefits of members of the Judiciary on other
public officers in the Executive Department.
For Justice Brion, “salary” used in the aforesaid other laws should not include longevity pay. He
insists that Section 42 of Batas Pambansa Blg. 129 is clear and unequivocal, that longevity pay is
granted to a Judge or Justice who has rendered five years of continuous, efficient, and meritorious
service in the Judiciary. Service in the Judiciary within the required period is the only condition
for entitlement to longevity pay under Section 42 of Batas Pambansa Blg. 129.
The approach of Justice Brion on the matter is novel. It is, however, negated by the language and
intent of relevant laws, as well as by the long-standing interpretation of the Court and the Executive
Branch on the matter.
The concept of longevity pay

as “salary” should not to be
confused with “rank.”
Under Section 42 of Batas Pambansa Blg. 129, longevity pay is an amount equivalent to 5% of
the monthly basic pay given to Judges and Justices for each five years of continuous, efficient, and
pg. 670
meritorious service rendered in the Judiciary. It is not only an amount given as an addition to the
basic monthly pay but, more importantly, it forms part of the salary of the recipient thereof.
In other words, longevity pay is “salary” and it should not be confused with “rank.”
That is how this Court has treated the longevity pay under Section 42 of Batas Pambansa Blg. 129
since 1986, particularly in Re: Longevity Pay of the Associate Justices of the Sandiganbayan. It is
a treatment which reflects the Court’s reading of the text of the law and its understanding of the
law’s legislative intent.
xxxx
190

x x x [T]he settled meaning of “rank,” particularly that it does not include the privilege to use the
title of Judge or Justice should not be used to determine the import of the term “salary” as used in
the different laws. Otherwise, there would be no point in mentioning in the laws “rank” separately
from “salary.” “Rank” unquestionably has nothing to do with the amount of compensation or pay
an official is entitled to under the law. The said term pertains only to the “class” or “standing” in
an organization or societal structure.
The legislative intent of salary

increases for certain Executive
officials accords with “salary”
as inclusive of longevity pay.
In conferring upon certain officials in the Executive the same salaries, aside from their rank, as
those of their respective judicial counterparts, Congress intended to make the salaries of the former
at par with the latter. The legislative records support this.
In particular, the following portion of the interpellations in connection with Senate Bill No. 2035,
which became Republic Act No. 9347, is enlightening:
pg. 671
Asked by the Chair whether the proposed amendment (Section 4) to Article 216 of the Labor
Code means an increase in salaries, Senator Ejercito Estrada (J) clarified that the section
proposes that the arbiters be at par with the judges of the regional trial courts, and the
commissioners at par with the justices of the Court of Appeals. (Emphases supplied)
In his sponsorship speech of Senate Bill No. 2659, which became Republic Act No. 10071, Senator
Francis Joseph Escudero adopted as part of his sponsorship speech several explanatory notes of
related bills, including the explanatory note of Senator Edgardo Angara for
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Senate Bill No. 213. The relevant portion of the explanatory note reads:
At the heart of a strong justice system is the indispensable and complementary role of the
State’s prosecutorial and counselling arm. The National Prosecution Service [NPS] and the
Office of the Chief State Counsel [OCSC] are mandated to uphold the rule of law as a
component of the justice system.
It is sad to note, however, that our prosecutors and state counselors earn less than those in
the Judiciary. Such situation has produced a migratory effect. After spending a few years in
the NPS or the OCSC, they resign and join the ranks of the judiciary, x x x.
This bill seeks to correct the aforementioned inequities. The increase in salaries and the
granting of additional services and privileges to the members of the National Prosecution
Service and the Office of the Chief State Counsel, will place them at par with those in the
Judiciary [and] would deter the current practice of migration. x x x. (Emphases supplied)
This legislative intent to grant certain officials of the Executive Department the same salaries as
that of their respective judicial counterparts should be read in conjunction with how salary is
defined in the law and treated vis-à-vis longevity pay in prevailing case law. In enacting a statute,
the legislature is presumed to have been aware of, and have taken into account, prior laws and
jurisprudence on the subject of legislation. Manila Lodge No. 761 v. Court of Appeals instructs:
[I]t is presumed that when the lawmaking body enacted the statute, it had full knowledge of
prior and existing laws and leg-
pg. 672
192

islation on the subject of the statute and acted in accordance or with respect thereto. (Citation
omitted)
Thus, Congress knew, or is presumed to have known, the concept of longevity pay under Section
42 of Batas Pambansa Blg. 129 as part of the total salary of members of the Judiciary when it
enacted Republic Act Nos. 9417, 9347, and 10071, which granted certain officials of the OSG, the
NLRC, and the NPS, respectively, the same salary as their respective counterparts in the Judiciary.
Moreover, armed with that knowledge, Congress is presumed to have intended to adopt the
definition of “salary” (as constituting basic monthly salary plus longevity pay) when it enacted
Republic Act Nos. 9417, 9347, and 10071, which will be in keeping with the legislative intent to
equalize the salary of certain executive officials with members of the Judiciary. To do otherwise
will negate the express legislative intent.
As it is part of the salary of a member of the Judiciary, it should perforce be part of the salary of
the public officers granted by law with the same rank and salary as their counterparts in the
Judiciary. Accordingly, the increase in the salary of Judges and Justices by virtue of the longevity
pay should also result in the corresponding increase in the salary of the public officers who, under
relevant laws, enjoy the same rank and salary as their judicial counterparts. Otherwise, the law’s
express language and its intention to grant the same rank and salary of a member of the Judiciary
to the said public officers will be defeated.
xxxx
In other words, by enacting Republic Act Nos. 9417, 9347, and 10071, which granted certain
officials of the Executive Department the same salary as their respective counterparts in the
Judiciary, Congress manifested its intent to treat “salary” the way it has been treated in Batas
Pambansa Blg. 129 as interpreted by this Court, that is, basic monthly pay plus longevity pay.
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pg. 673
Since the above mentioned laws do not make any distinction with respect to the term “salary” as
it is expressly provided for in Section 42 of Batas Pambansa Blg. 129, we should not make any
distinction. Ubi lex non distinguit nee nos distinguere debemus.
It is in light of the legislative intent that the insistence of Justice Brion to strictly adhere to the
sentence structure of Section 42 of Batas Pambansa Blg. 129, without regard to other laws on the
matter, contradicts such legislative intent and constitutes judicial legislation, which will in effect
treat “salary” in a way that is not borne out by the language of the law and the established Court
rulings on the matter.
The longevity pay forms part of the salary of a Judge or Justice, since Section 42 of Batas
Pambansa Blg. 129 says it is “added” to the said salary. Thus, the salary of the members of the
Judiciary refers to their respective basic pay plus the longevity pay to which they may be entitled
by virtue of their continuous, efficient, and meritorious service in the Judiciary. That should also
be the definition of the “salary” of the concerned public officers who enjoy the same rank and
salary as Judges or Justices, if the word “same” employed in the laws pertaining to executive
officials is to be understood in its plain and ordinary meaning.
A narrow and restrictive approach which limits the longevity pay under Section 42 of Batas
Pambansa Blg. 129, as amended, to service rendered in the Judiciary only is to unduly restrict the
definition of salary, fixing it to the basic pay. To depart from the meaning expressed by the words,
is to alter the statute, to legislate and not to interpret. It is to amend the laws by judicial fiat, x x x.
The Court’s long-standing in-

terpretation of the term “lon-
gevity pay” as part of “salary”
is correct.
194

This Court has long recognized that the longevity pay under Section 42 of Batas Pambansa Blg.
129 is among the salaries and benefits enjoyed by members of the Judiciary that are extended to
the public officers conferred by law with the rank of Judges of the lower courts or Justices of the
Court of Appeals.
pg. 674
The Court’s Resolution dated September 12, 1985 in Request of Judge Fernando Santiago for the
Inclusion of His Services as Agrarian Counsel in the Computation of His Longevity Pay granted
Judge Santiago’s request and his longevity pay was computed “from the date of his assumption of
office as Agrarian Counsel on August 9, 1963 and not from the date he assumed office as Judge
of the Court of First Instance on June 1, 1970.” The basis of this is Section 160 of Republic Act
No. 3844 which provides:
Section 160. Creation of Office of Agrarian Counsel.—To strengthen the legal assistance
to agricultural lessees and agricultural owner-cultivators referred to in this Code, the
Tenancy Mediation Commission is hereby expanded and shall hereafter be known as the
Office of the Agrarian Counsel. The head of the Office shall hereafter be known as
Agrarian Counsel and shall have the rank, qualifications and salary of First Assistant
Solicitor General. He shall be assisted by a Deputy Agrarian Counsel, who shall have the
rank, qualifications and salary of Assistant Solicitor General. The Agrarian Counsel and
Deputy Agrarian Counsel shall be appointed by the President with the consent of the
Commission on Appointments of Congress and shall be under the direct supervision of the
Secretary of Justice. (Emphasis supplied)
Under Republic Act No. 335, as amended by Presidential Decree No. 478, the Assistant Solicitor
General
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has the “same rank, qualifications for appointment, and salary as a Judge of the Court of First
Instance,” now Regional Trial Court.
In the Resolution dated July 25, 1991 in In Re: Adjustment of Longevity Pay of Hon. Justice Emilio
A. Gancayco, this Court said:
The Court approved the request of Justice Emilio A. Gancayco for the adjustment of his
longevity pay not only for purposes of his retirement but also for his entire judicial service
by including as part thereof his period of service from August 9, 1963 to September 1, 1972
as Chief Prosecuting Attorney (Chief State Prosecutor) considering that under Republic Act
No. 4140, the Chief State Prosecutor is given the same rank, qualification and salary of a
Judge of the Court of First Instance. (Emphasis supplied)
pg. 675
In the Resolution dated November 19, 1992 in Re: Adjustment of Longevity Pay of former
Associate Justice Buenaventura S. dela Fuente, this Court adverted to the Santiago and Gancayco
Resolutions and said:
This refers to the letter of former Associate Justice Buenaventura S. dela Fuente, dated
September 27, 1992, requesting a recomputation of his longevity pay. It appears that former
Justice dela Fuente had been the Chief Legal Counsel, Department of Justice, since June 22,
1963 until his promotion to the Court of Appeals in 1974, the qualifications for the
appointment to which position as well as its rank and salary, pursuant to R.A. 2705, as
amended by R.A. 4152, shall be the same as those prescribed for the first and next ranking
assistant solicitors general. Accordingly, in line with the rulings of this Court in Re:
Adjustment of Longevity Pay of Hon. Justice Emilio A. Gancayco, dated July
196

25, 1991 and Administrative Matter No. 85-8-8334-RTC, Re: Request of Judge Fernando
Santiago for the inclusion of his services as Agrarian Counsel in the computation of his
longevity pay, dated September 12, 1985, the Court Resolved to (a) APPROVE the aforesaid
request of former Associate Justice Buenaventura S. dela Fuente[,] and (b) AUTHORIZE
the recomputation of his longevity pay from June 22, 1963, when he assumed office and
began discharging the functions of Chief Legal Counsel.
In Re: Request of Justice Josefina Guevara-Salonga, Court of Appeals, that Her Services as
Assistant Provincial Fiscal of Laguna be Credited as Part of Her Services in the Judiciary for
Purposes of Her Retirement, this Court stated:
[Republic Act No. 10071] validates the recognition of the services of Justice Emilio A.
Gancayco, whom we credited for his service as Chief Prosecuting Attorney (Chief State
Prosecutor), based on Republic Act No. 4140 which likewise grants his office (as Chief
Prosecuting Attorney) the rank, qualification and salary of a Judge of the Court of First
Instance. In the same manner, the current law also validates the crediting of past service to
Justice Buenaventura dela Fuente who was the Chief Legal Counsel of the Department of
Justice. (Citations omitted)
Also, in Guevara-Salonga, this Court granted the request of Court of Appeals Justice Guevara-
Salonga for the crediting of her services as Assistant Provincial Fiscal of Laguna as part of her
services in the Judiciary for purposes of her retirement pursuant to Sections 16 and 24 of Republic
Act No. 10071 which respectively provide:
pg. 676
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Sec. 16. Qualifications, Ranks and Appointments of Prosecutors and Other Prosecution
Officers.—x x x.
Prosecutors with the rank of Prosecutor IV shall have the same qualifications for
appointment, rank, category, prerogatives, salary grade and salaries, allowances,
emoluments and other privileges, shall be subject to the same inhibitions and
disqualifications, and shall enjoy the same retirement and other benefits as those of a
judge of the Regional Trial Court.
Prosecutors with the rank of Prosecutor III shall have the same qualifications for
disqualifications, and shall enjoy the same retirement and other benefits as those of a Judge
of the Metropolitan Trial Court.
Prosecutors with the rank of Prosecutor II shall have the same qualifications for
disqualifications, and shall enjoy the same retirement and other benefits as those of a Judge
of the Municipal Trial Court in cities.
Prosecutors with the rank of Prosecutor I shall have the same qualifications for appointment,
rank, category, prerogatives, salary grade and salaries, allowances, emoluments and other
privileges, shall be subject to the same inhibitions and disqualifications, and shall enjoy the
same retirement and other benefits as those of a Judge of the Municipal Trial Court in
Municipalities.
198
pg. 677
Sec. 24. Retroactivity.—The benefits mentioned in Sections 14 and 16 hereof shall be

granted to all those who retired prior to the effectivity of this Act. (Emphasis supplied)
The Resolutions in Santiago, Gancayco, Dela Fuente, and Guevara-Salonga reveal that this Court
has consistently approached and applied the longevity pay provision under Section 42 of Batas
Pambansa Blg. 129 liberally, that is, as applicable by statutory extension to those covered by the
same qualifications and given the same rank and salary as the members of the Judiciary. They
evince the view that the services rendered in their respective offices by the public officers required
by law to have the same qualifications, rank, and salary of their counterparts in the Judiciary are
considered to be substantially the same as service in the Judiciary for purposes of the said public
officers’ enjoyment of the longevity pay under Section 42 of Batas Pambansa Blg. 129.
xxxx
That the said laws manifest a liberal attitude towards the public officers they respectively cover is
reinforced by this Court’s treatment in Re: Longevity Pay of the Associate Justices of the
Sandiganbayan of the longevity pay under Section 42 of Batas Pambansa Blg. 129 as something
that “forms part of the salary of the recipient thereof.” In particular, the Court adopted a liberal
stance and ruled:
[L]ongevity pay once earned and enjoyed becomes a vested right and forms part of the
salary of the recipient thereof which may not be reduced, despite the subsequent
appointment of a justice or judge next higher in rank who is not entitled to longevity pay for
being new and not having acquired any longevity in the government service. Furthermore,
diminution or decrease of the salary of an incumbent justice or judge is prohibited by Section
10 of Article X of the Constitution;
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hence, such recipient may continue to earn and receive additional longevity pay as may be
warranted by subsequent services in the judiciary, because the purpose of the Longevity Pay
Law is to reward justices and judges for their long and dedicated service as such. The
provision of the law that the total salary of each justice or judge concerned, after adding his
longevity pay, should not exceed the salary plus longevity pay of the justice or judge next
pg. 678
higher in rank, refers only to the initial implementation of the law and does not proscribe a
justice or judge who is already entitled to longevity pay, from continuing to earn and receive
longevity pay for services rendered in the judiciary subsequent to such implementation, by
the mere accident of a newcomer being appointee to the position next higher in rank. x x x.
(Emphasis supplied)
Justice Brion, however, claims that the said cases are not controlling herein, as they are allegedly
a strained and erroneous application of Section 42 of Batas Pambansa Blg. 129 that should be
abandoned.
Such claim of grave mistake should be premised on a clear finding that prior rulings were wrong.
In this case, I do not find Justice Brion’s characterization of Santiago, Gancayco, Dela Fuente,
and Guevara-Salonga as “erroneous” and mere “aberrations” as proper.
x x x While certain members of the Judiciary may feel an exclusive franchise to the rank, salary,
and benefits accorded to them by law, we cannot impose our own views on Congress which has
ample power to enact laws as it sees fit, absent any grave abuse of discretion or constitutional
infraction on its part.
xxxx
200

The executive contemporaneous

construction of longevity pay is
consistent with the law, as in-
terpreted by the Supreme Court.
Contemporaneous construction is the interpretation or construction placed upon the statute by an

executive or administrative officer called upon to execute or administer the statute. It includes the
construction by the Secretary of Justice in his capacity as the chief legal adviser of the government.
In this connection, the contemporaneous construction by the Department of Justice and other
offices in the executive branch disclose a similar treatment of the longevity pay provision of Batas
Pambansa Blg. 129 as shown by the following pertinent portions of the 2nd Indorsement dated
November 21, 1988 by the then Secretary of Justice, Sedfrey A. Ordoñez:
pg. 679
1. Longevity pay forms part of the salary of the recipient (Resolution of the Supreme Court
in Adm. Matter No. 86-9-2394-0, Re: Longevity Pay of the Associate Justices of the
Sandiganbayan). Thus, when the law grants to certain officials of the executive
department the “rank and salary” of a member of the Judiciary, it should be deemed
to include longevity pay, which is part of salary; otherwise, the law’s intention to grant
the same rank and salary of a justice/judge to executive officials would be defeated or
nullified.
2. The statement x x x that those executive officials who were granted longevity pay “were
either justice or judge of the court at the time of the grant” is not entirely correct. Former
Chief State Counsel, now Court of Appeals Justice Minerva P.G. Reyes, was granted
longevity pay in 1985 when she was
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the incumbent Chief State Counsel. Assistant Solicitors General Ramon Barcelona, Romeo
dela Cruz, Zoilo Andin and Amado Aquino are presently receiving longevity pay for their
length of service as Assistant Solicitors General.
3. The Supreme Court computed the longevity pay of Judge Fernando Santiago “from the
date of his assumption of office as Agrarian Counsel [which was an executive office] on
August 9, 1963 and not from the date he assumed office as Judge of the Court of First
Instance on June 1, 1970” (Adm. Matter No. 85-8-8384-RTC). The same thing was done in
the case of Justices Vicente Mendoza, Santiago Kapunan, Jose Racela, Lorna L. de la Fuente
and Minerva P.G. Reyes, whose respective services in the Executive Department were
credited in their favor for purposes of the longevity pay.
It bears reiterating that in the case of Justice Reyes, she has been receiving longevity pay
since before her appointment in the Judiciary, that is, while she was, and on the basis of her
being, Chief State Counsel x x x. The inclusion by the Supreme Court of her services as
Assistant Chief State Counsel and[,] later, as Chief State Counsel in the computation of her
longevity pay as a member of the Judiciary constitutes a judicial affirmance by the highest
court of the land of the validity of the grant of longevity pay to her way back in 1985 while
she was still an official of the Executive Department. (Emphasis supplied)
To reiterate, the above opinion of then Justice Secretary Ordoñez constitutes contemporaneous
construction of the issue at hand.
pg. 680
202

Justice Brion asserts that administrative construction is merely advisory and is not binding upon
the courts. He is absolutely correct. That is the rule. In the same vein, that rule also means that
courts should respect the contemporaneous construction placed upon a statute by the executive
officers whose duty is to enforce it, and unless such interpretation is clearly erroneous will
ordinarily be controlled thereby.
As I have shown above, the contemporaneous construction of the then Justice Secretary is in
accordance with both statutory law and case law.
Longevity pay is not

a mere “benefit.”
xxxx
x x x [L]ongevity pay is not a mere benefit, but is salary, as it is a component of the “total salary.”
That is how this Court treated longevity pay as a contemporaneous interpretation of Section 42 of
Batas Pambansa Blg. 129. That is also how Congress presumably intended to treat longevity pay
when it granted a salary which is the same as that of members of the Judiciary to certain officials
in the Executive Department under relevant laws, including Republic Act Nos. 9417, 9347, and
10071, as Congress did not qualify or limit the term “salary” in these laws.
Section 42 of Batas Pambansa Blg. 129 clearly states that the longevity pay is “added” to the basic
monthly salary and forms part of the “total salary” of a Judge or Justice. Thus, the salary of the
members of the Judiciary refers to their respective basic pay plus the longevity pay to which they
may be entitled by virtue of their continuous, efficient, and meritorious service in the Judiciary.
That should also be the definition of the “salary” of the concerned public officers who enjoy the
same salary as Judges or Justices, if the word “same” employed in the laws pertaining to executive
officials is to be understood in its plain and ordinary meaning.
pg. 681
203
VOL. 798, JULY 26, 2016 203

xxxx
Therefore, longevity pay under Section 42 of Batas Pambansa Blg. 129 must be treated as salary
and to extend it to certain officials in the Executive Department who are, by law, granted the same
salary as their counterparts in the Judiciary. That is, after all, how Congress intended it to be. That
is how it was interpreted in Santiago, Gancayco, Dela Fuente, and Guevara-Salonga. (Citations
omitted)
CONCLUSION
xxxx
The Instant Requests Considered
Justices Veloso and Gacutan anchor their claim on Article 216 of the Labor Code, as amended by
Republic Act No. 9347, which reads:
Article 216. Salaries, Benefits and Emoluments.—The Chairman and Members of the
Commission shall have the same rank, receive an annual salary equivalent to, and be
entitled to the same allowances, retirement and benefits as those of the Presiding Justice
and Associate Justices of the Court of Appeals, respectively. Labor Arbiters shall have
the same rank, receive an annual salary equivalent to and be entitled to the same allowances,
retirement and other benefits and privileges as those of the Judges of the Regional Trial
Courts. In no case, however, shall the provision of this Article result in the diminution of
the existing salaries, allowances and benefits of the aforementioned officials. (Emphases
supplied)
Republic Act No. 9347 took effect on August 26, 2006. Prior to its amendment by Republic Act
No. 9347,
pg. 682
204

Article 216 of the Labor Code, as amended by Republic Act No. 6715, provides:
Article 216. Salaries, benefits and other emoluments.—The Chairman and members of
the Commission shall receive an annual salary at least equivalent to, and be entitled to
the same allowances and benefits as, those of the Presiding Justice and Associate
Justices of the Court of Appeals, respectively. The Executive Labor Arbiters shall receive
an annual salary at least equivalent to that of an Assistant Regional Director of the
Department of Labor and Employment and shall be entitled to the same allowances and
benefits as that of a Regional Director of said department. The Labor Arbiters shall receive
an annual salary at least equivalent to, and be entitled to the same allowances and benefits
as, that of an Assistant Regional Director of the Department of Labor and Employment. In
no case, however, shall the provision of this Article result in the diminution of existing
salaries, allowances and benefits of the aforementioned officials. (Emphases supplied)
xxxx
II. A.M. No. 12-9-5-SC
Justice Gacutan was still a Commissioner of the NLRC when Republic Act No. 9347 took effect.
From the date of effectivity of the law onwards, her services as NLRC Commissioner are therefore
covered by the beneficial effect of the amendment of Article 216 of the Labor Code by Republic
Act No. 9347, which gave the NLRC Commissioners the same rank and salary as Associate
Justices of the Court of Appeals. As Republic Act No. 9347 expresses the intent to place the NLRC
Commissioners in exactly the same footing as their counterparts
205
VOL. 798, JULY 26, 2016 205

in the Court of Appeals, and “salary” includes longevity pay, then Justice Gacutan’s longevity pay
should be reckoned from August 26, 2006, the date Republic Act No. 9347 took effect, at which
pg. 683
time she was still NLRC Commissioner. Thus, five years after that date, or on August 26, 2011,
she became entitled to receive longevity pay equivalent to 5% of her monthly basic pay at that
time; and, she is now entitled to adjustment of salary, allowances, and benefits only as of that date.
As regards her request that her entire services as NLRC Commissioner be credited as part of her
government service for the purpose of retirement under Republic Act No. 910, as amended by
Republic Act No. 9946, the same may be allowed as it is in accordance with Section 1 of Republic
Act No. 910, as amended by Republic Act No. 9946, which requires fifteen (15) years service in
the Judiciary or in any other branch of the Government as a condition for coverage of the said law.
Clearly, the foregoing ratiocination does not constitute judicial legislation. It is firmly grounded
on existing laws, jurisprudence, and executive contemporaneous construction. It was Congress
which enacted Republic Act Nos. 9417, 9347, and 10071, granting certain officials of the
Executive Department the same salary as their respective counterparts in the Judiciary, and
“salary” refers to basic monthly pay plus longevity pay per the plain language of Section 42 of
Batas Pambansa Blg. 129. Justice Brion opines that the grant of longevity pay to executive
officials would effectively be a misplaced exercise of liberality at the expense of public funds and
to the prejudice of sectors who are more in need of these funds. It bears to stress though that it is
irrefragably within the legislative power of Congress to enact Republic Act Nos. 9417, 9347, and
10071, and it is beyond the judicial power of the Court to question the wisdom behind said
legislations.
WHEREFORE, premises considered, the Court resolves to GRANT the Motion for
Reconsideration of CA Justice Gacutan
206

and MODIFY the Resolution dated June 16, 2015 in A.M. Nos. 12-8-07-CA, 12-9-5-SC, and 13-
02-07-SC, insofar as to GRANT CA Justice Gacutan’s request that her services as NLRC
Commissioner be included in the computation of her longevity pay, but reckoned only from August
26, 2006, when Republic Act No. 9347 took effect.
SO ORDERED.
Carpio, Velasco, Jr., Peralta, Bersamin, Del Castillo, Perez, Mendoza, Reyes and Caguioa, JJ.,
concur.
pg. 684
Sereno (CJ.) and Leonen, J., We join the dissent of J. Brion.
Brion, J., Please see my Dissenting Opinion.
Perlas-Bernabe, J., I join the Dissenting Opinion of

J. Brion.
Jardeleza, J., No part. Prior OSG action.
DISSENTING OPINION
BRION, J.:
I dissent from the ponencia’s grant of the Motion for Reconsideration filed by former Court of
Appeals (CA) Associate Justice Angelita Alberto-Gacutan (Justice Gacutan) asking the Court to
reconsider the portion of the Court’s Resolution1 in A.M. Nos. 12-8-07-CA,2 12-9-5-SC,3 and 13-
02-07-SC4 affecting her longevity pay.
_______________
1 Dated June 16, 2015.
2 Re: Letter of Court of Appeals Justice Vicente S.E. Veloso for Entitlement to Longevity Pay for
His Services as Commission Member III of the National Labor Relations Commission.
3 Re: Computation of Longevity Pay of Court of Appeals Justice Angelita A. Gacutan.
207
VOL. 798, JULY 26, 2016 207

On June 16, 2015, the Court had previously issued a Resolution, penned by Justice Arturo D.
Brion, addressing the letter-requests of several retired CA justices asking for the re-computation
pg. 685
of their longevity pay. These letter-requests had been consolidated, and the Court held in the
Resolution’s disposition:
(1) NOTE the Memorandum dated February 18, 2013 of Atty. Eden T. Candelaria and the Report
and Recommendation dated February 15, 2013 of Atty. Corazon G. Ferrer-Flores;
(2) GRANT the request of Associate Justice Remedios A. Salazar-Fernando that her services as
Judge of the Municipal Trial Court of Sta. Rita, Pampanga, be included in the computation of her
longevity pay;
(3) DENY the request of Associate Justice Remedios A. Salazar-Fernando that her services as
COMELEC Commissioner be included in the computation of her longevity pay;
(4) DENY the request of Associate Justice Angelita Gacutan that her services as NLRC
Commissioner be included in the computation of her longevity pay from the time she started
her judicial service;
(5) DENY with finality the motion for reconsideration of Associate Justice Vicente S.E. Veloso
for lack of merit; and
(6) DIRECT the Clerk of this Court to proceed with the handling of granted longevity pay
benefits under Section 42 of Batas Pambansa Blg. 129, pursuant to the guidelines and declarations
outlined in the Moving On portion of this Resolution. [emphasis supplied]
_______________
4 Re: Request of Court of Appeals Justice Remedios A. Salazar-Fernando that Her Services as
MTC Judge and as COMELEC Commissioner be considered as Part of Her Judicial Service and
Included in the computation/adjustment of Her longevity pay.
208

Justice Gacutan now asks the Court to reconsider the denial we decreed by including in the
computation of her longevity pay. She noted in her motion that two members of the Court (Justice
Teresita J. Leonardo-De Castro — the ponente of the present Resolution — and Justice Presbitero
J. Velasco, Jr.) issued Opinions that grant her request, and likewise adopted the arguments of these
dissenting justices.5
pg. 686
Justice Gacutan specifically responded to the June 16, 2015 ponencia’s ruling that the judiciary is
not in a position to recognize past services in the Executive, a different branch of government, and
cannot thus determine the continuous, efficient, and meritorious service that the grant of longevity
pay requires.6
According to Justice Gacutan, the determination of efficiency and meritorious service in her case
may not be solely determined by the judiciary. She then proceeded to enumerate her illustrious
career in the Executive, in the NLRC, and in the CA, and noted that the Judicial and Bar Council
would not have nominated her for the position of CA Justice if its members had not favorably
considered her intelligence, integrity, character, and experience.7
Reasons for my Dissent
I vote to DENY with finality Justice Gacutan’s Motion for Reconsideration as it does not present
any new or compelling argument to justify the Court’s reversal of its Decision. The arguments
Justice de Castro and Justice Velasco raised in their dissents to the June 16, 2015 Resolution have
been thoroughly deliberated upon by the Court in its main ruling, and thus have already been
sufficiently addressed.
_______________
5 Motion for Reconsideration of Court of Appeals Justice Angelita Alberto-Gacutan dated

September 21, 2015.
6 Motion for Reconsideration, p. 3.
7 Id., at pp. 4-5.
209
VOL. 798, JULY 26, 2016 209

The Petitioner’s Past Service in the

Executive is not a Material Issue.
pg. 687
When the Court, in the June 16, 2015 Resolution, said that the judiciary is not in a position to
determine past continuous, efficient, and meritorious service in the Executive, it was not a personal
attack on Justice Gacutan’s illustrious career in Government. The observation was meant to
expound on the concept that longevity pay for members of the judiciary is confined to services
rendered within the judiciary. In other words, the character of her past executive service is not a
material issue in the Court’s denial of her request.
The grant of longevity pay in the judiciary is based on Section 42 of Batas Pambansa Blg. 129
(BP 129)8 which provides:
Section 42. Longevity pay.—A monthly longevity pay equivalent to 5% of the monthly basic
pay shall be paid to the Justices and Judges of the courts herein created for each five years of
continuous, efficient, and meritorious service rendered in the judiciary; Provided, That in no case
shall the total salary of each Justice or Judge concerned, after this longevity pay is added, exceed
the salary of the Justice or Judge next in rank.
Laws subsequent to BP 129 conferred the same salaries and benefits granted to members of the
judiciary, and to certain public officials in the executive who had been given ranks equivalent to
those granted in the judiciary. The Court clarified in the June 16, 2015 Resolution that these laws
do not expand the concept of longevity pay as provided in Section 42 of BP 129, and do not operate
to include services in executive positions in determining the grant of longevity pay.
The Court reached this conclusion for the following reasons:
_______________
8 The Judiciary Reorganization Act of 1980.
210

1. The Grant of Longevity Pay

is only for Judges and Justices
for Service in the Judiciary.
pg. 688
The language and terms of Section 42 of BP 129 are very clear and unambiguous. A plain
reading of Section 42 shows that it grants longevity pay to a judge or justice (and to none other)
who has rendered five years of continuous, efficient, and meritorious service in the Judiciary. The
granted monthly longevity pay is equivalent to 5% of the monthly basic pay.
Notably, Section 42 of BP 129 on longevity pay is separate from the provision on the salary of
members of the judiciary found in Section 41 of BP 129.9 This separate placement reflects the
longevity pay’s status as a separate benefit for members of the judiciary who have rendered
“continuous, efficient and meritorious service in the judiciary”; longevity pay is not part of the
salary that judges and justices are granted under Section 41.
In other words, all judges and justices are entitled to the salary prescribed for them under Section
41 of BP 129, but only those who have complied with the requisites of Section 42 are entitled to
receive the additional longevity pay benefit.
_______________
9 According to Section 41, judges and justices shall “receive such compensation and allowances
as may be authorized by the President along the guidelines set forth in Letter of Implementation
No. 93 pursuant to Presidential Decree No. 985, as amended by Presidential Decree No. 1597.”
Presidential Decree No. 985 pertains to the government’s Position Classification Compensation
System, which provides for the salary schedule of government employees classified according to
their salary grade and corresponding salary rate. PD 985 has been subsequently replaced with
Republic Act No. 6758, which provides for the current the Compensation and Position
Classification System of the government.
211
VOL. 798, JULY 26, 2016 211

Thus, when Section 42 of BP 129 required that the total salary of judges and justices receiving
longevity pay should not exceed the salary of those next in rank, it simply meant that the addition
of longevity pay cannot result in judges and justices of lower rank receiving a bigger total
compensation than those with higher rank.
The salary of judges and justices depend on the salary grade (and subsequent step increments) of
their positions under the Compensation and Classification System referred to in Section 41 of BP
129. The proviso in Section 42 of the same law operates to limit the amount of longevity pay
granted when it disrupts the compensation system referred to in Section 41. It does not integrate
pg. 689
longevity pay in the salary due to judges and justices under the compensation system, as not all of
them are entitled to receive longevity pay in the first place.
2. Justice Gacutan’s Request

has no Basis in Law.
The inclusion of past services in another branch of government in the computation of longevity
pay in the judiciary has no express basis in law.
None of the laws that grant similarity of salaries and benefits between executive officials and
their counterparts in the judiciary mention that services in these executive positions would be
included in the computation of longevity pay in the judiciary.
In Justice Gacutan’s case, her services as past National Labor Relations Commission
Commissioner (NLRC) places her under the operation of Republic Act No. 934710 (RA No. 9347),
which amended Article 216 of the Labor Code to read:
_______________
10 An Act Rationalizing the Composition and Functions of the National Labor Relations
Commission.
212

ART. 216. Salaries, benefits and other emoluments.—The Chairman and members of the
Commission shall have the same rank, receive an annual salary equivalent to, and be entitled to
the same allowances, retirement and benefits as those of the Presiding Justice and Associate
Justices of the Court of Appeals, respectively. Labor Arbiters shall have the same rank, receive an
annual salary equivalent to and be entitled to the same allowances, retirement and other benefits
and privileges as those of the judges of the regional trial courts. In no case, however, shall the
provision of this Article result in the diminution of the existing salaries, allowances and benefits
of the aforementioned officials.
pg. 690
The “salary” that Article 216 of the Labor Code speaks of pertains to the “compensation and
allowances” under Section 41 of BP 129, as found in the salary schedule of the government’s
Compensation and Position Classification System. Thus, Article 216 provided NLRC
commissioners with the same salary received by Associate Justices of the Court of Appeals as
prescribed in the salary schedule found in the government’s Compensation and Position
Classification System.
The Compensation and Position Classification System prescribes the salary to be received by
government employees depending on the salary grade their positions are classified in.11
_______________
11 Section 10 of PD 985 describes the government’s Compensation in this wise:
Section 10. The Compensation Systems.—The Compensation System consists of (a) a

Salary Schedule; (b) a Wage Schedule; (c) policies relating to allowances, bonuses, pension
plans, and other benefits accruing to employees covered; and (d) the rules and regulations
which are herein provided, including those which may be promulgated thereafter for its
administration.
213
VOL. 798, JULY 26, 2016 213

Viewed in this light, the provision of the same rank as CA Associate Justices to NLRC
Commissioners in Article 216 of the Labor Code simply meant that the latter shall have the same
salary grade as the former.
As an additional benefit, NLRC commissioners may be granted the longevity pay that judges and
justices receive under Section 42 of BP 129, for the commissioners’ meritorious, efficient, and
continuous service in the NLRC. But this is for CONGRESS, NOT FOR THIS COURT, to decide
upon and grant. The grant to the members of the Executive Department of this kind of benefit is
an act that the Constitution
_______________
The Salary or Wage Schedules shall each consist of twenty-eight grades, with eight
prescribed steps within each grade. Each grade represents a level of work difficulty and
responsibility which distinguishes it from other grades in the Schedule. Each class of
position in the Position Classification System provided under this Decree shall be assigned
pg. 691
a salary or wage grade. The Salary and Wage Schedules shall be administered in accordance
with the rules provided in this Decree.
A similar system had been subsequently adopted through RA 6758, which provides:
Section 5. Position Classification System.—The Position Classification System shall

consist of classes of positions grouped into four main categories, namely: professional
supervisory, professional non-supervisory, sub-professional supervisory, and sub-
professional non-supervisory, and the rules and regulations for its implementation.
xxxx
Section 6. Index of Occupational Services, Position Titles and Salary Grades of the
Compensation and Position Classification System.—All positions in the government
covered under Section 4 hereof shall be allocated to their proper position titles and salary
grades in accordance with the Index of Occupational Services, Position Titles and Salary
Grades of the Compensation and Position Classification System which shall be prepared by
the DBM.
214

exclusively assigns to Congress. This is an authority and prerogative that the Constitution
exclusively grants to Congress.
To recapitulate, RA No. 9347 merely used the salary, allowances, and benefits received by CA
Justices as a yardstick for the salary, allowances, and benefits to be received by NLRC
commissioners. This is what RA No. 9347 meant when it granted NLRC commissioners the same
salary, allowances, and benefits as CA Associate Justices.
The grant of an equivalent judicial rank does not (and cannot) make an official in the executive a
member of the judiciary; thus, benefits that accrue only to members of the judiciary cannot be
granted to executive officials. This is a consequence of the separation of powers principle that
underlies the Constitution.
In more concrete terms, incumbent judges and justices who had previous government service
outside the judiciary and who had been granted equivalent judicial rank under these previous
positions, cannot credit their past nonjudicial service as service in the judiciary for purposes of
pg. 692
securing benefits applicable only and earned while a member of the judiciary, unless Congress by
law says otherwise and only for purposes of entitlement to salaries and benefits.
3. The Grant of Longevity Pay

Prayed for is an Act of Ju-
dicial Legislation.
The grant of longevity pay for past services in the NLRC, based on the grant of longevity pay to
judges and justices of the judiciary, amounts to prohibited judicial legislation.
Section 42 of BP 129 is clear in requiring five years of meritorious, efficient, and continuous
services in the judiciary; subsequent legislation conferring the same salary and benefits that judges
and justices enjoy to designated counterparts in the executive did not amend this requirement,
expressly or impliedly.
215
VOL. 798, JULY 26, 2016 215

RA No. 9347, in particular, did not specifically provide that the services in the NLRC may be
tacked with the length of judicial service for purposes of computing longevity pay in the judiciary.
Neither can the tacking of these periods be implied from the language of Article 216 of the Labor
Code, as amended, as the provision merely uses the salary and benefits of CA Associate justices
as a yardstick for determining the salary and benefits of NLRC commissioners.
It must be pointed out that the grant of the requested longevity pay can be a blow disastrous to the
reputation of the judiciary and to this Court’s role as the final authority in interpreting the
Constitution, when the public realizes that this Court engaged in judicial legislation, through
interpretation, to undeservedly favor its own judges and justices.
4. A Grant would effectively be a

Misplaced Exercise of Liberal-
ity at the Expense of Public
Funds and to the Prejudice of
pg. 693
Sectors who are More in Need
of these Funds.
The liberal approach does not allow the inclusion of the period of services in the NLRC (or any
executive office) to the period of judicial service to grant longevity pay in the judiciary. The law
is clear and unequivocal in its requirements for the grant of longevity pay, and cannot thus be
amended through a claimed liberal approach.
The Court should not forget that liberality is not a magic wand that can ward off the clear terms
and import of express legal provisions; it has a place only when, between two positions that the
law can both accommodate, the Court chooses the more expansive or more generous option. It has
no place where no choice is available at all because the terms of
216

the law are clear and do not at all leave room for discretion.12
In terms of the longevity pay’s purpose, liberality has no place where service is not to the judiciary,
as the element of loyalty — the virtue that longevity pay rewards — is not at all present.
I cannot overemphasize too that the policy of liberal construction cannot and should not be to
the point of engaging in judicial legislation — an act that the Constitution absolutely forbids
this Court to do. The Court may not, in the guise of interpretation, enlarge the scope of a statute
or include, under its terms, situations that were not provided nor intended by the lawmakers. The
Court cannot rewrite the law to conform to what it or certain of its Members think should be the
law.
Not to be forgotten is the effect of this Court’s grant on the use of public funds: funds granted
to other than the legitimate beneficiaries are misdirected funds that may be put to better use by
those sectors of society who need them more.
_______________
12 Where the law is clear and unambiguous, it must be taken to mean exactly what it says and the
court has no choice but to see to it that its mandate is obeyed. (Chartered Bank Employees
Association v. Ople, No. L-44717, August 28, 1985, 138 SCRA 273; Luzon Surety Co., Inc. v. De
pg. 694
Garcia, No. L-25659, October 31, 1969, 30 SCRA 111; Quijano v. Development Bank of the
Philippines, No. L-26419, October 16, 1970, 35 SCRA 270).
The same principle applies even in retirement laws, where all doubts are liberally construed and
administered in favor of persons intended to be benefited. Liberal interpretation is not warranted
where the law is clear and unambiguous. [Fetalino v. Commission on Elections, G.R. No. 191890,
December 04, 2012, 686 SCRA 813, citing In Re: Alfredo L. Noel, Adm. Matter No. 1155-CAR,
194 Phil. 9; 107 SCRA 9 (1981) and Re: Judge Alex Z. Reyes, Adm. Matter No. 91-6-007-CTA,
December 21, 1992, 216 SCRA 720]
217
VOL. 798, JULY 26, 2016 217

For these reasons, I vote to DENY with FINALITY the Motion for Reconsideration filed by
former Court of Appeals Associate Justice Angelita Alberto-Gacutan.
Motion for Reconsideration granted, Resolution dated June 16, 2015 in A.M. Nos. 12-8-07-CA,
12-9-5-SC, and 13-02-07-SC modified.
Notes.—The only service recognized for purposes of longevity pay under Section 42 of Batas
Pambansa (BP) Blg. 129 is service in the Judiciary, not service in any other branch of government.
The Commission on Elections (COMELEC) is an agency independent of the Judiciary; hence,
service in this agency cannot be considered as service rendered in the Judiciary. (Re: Letter of
Court of Appeals Justice Vicente S.E. Veloso for Entitlement to Longevity Pay for his Services as
Commission Member III of the National Labor Relations Commission, 758 SCRA 1 [2015])
Section 3 works to bridge the gap between the time the judge left his original appointment and his
reappointment to the judiciary, provided the gap in service was rendered in another branch of
government. (Id.)
——o0o——
pg. 695
A.M. No. MTJ-16-1869. July 27, 2016.*
MARIE CHRISTINE D. BANCIL, complainant, vs. HONORABLE RONALDO B. REYES,

Presiding Judge of Metropolitan Trial Court of San Juan City, Branch 58, respondent.
Remedial Law; Civil Procedure; Judgments; The Constitution expressly provides that all lower
courts should decide or resolve cases or matters within three (3) months from the date of
submission.—The Constitution expressly provides that all lower courts should decide or resolve
cases or matters within three months from the date of submission. Accordingly, Section 5, Canon
6 of the New Code of Judicial Conduct provides: Sec. 5. Judges shall perform all judicial duties,
including the delivery of reserved decisions, efficiently, fairly, and with reasonable promptness.
(Emphasis supplied) Accordingly, this Court has laid down certain guidelines to ensure the
compliance with this mandate. More particularly, Supreme Court Administrative Circular No. 13-
87 provides: 3. Judges shall observe scrupulously the periods prescribed by Article VIII,
Section 15 of the Constitution for the adjudication and resolution of all cases or matters
submitted in their courts. Thus, all cases or matters must be decided or resolved within twelve
months from date of submission by all lower collegiate courts while all other lower courts are
given a period of three months to do so. x x x x (Emphasis supplied) Supreme Court
Administrative Circular No. 1-88 further states: 6.1 All Presiding Judges must endeavor to act
promptly on all motions and interlocutory matters pending before their courts.
Administrative Law; Judges; Undue Delay in Disposition of Cases; Undue delay in the disposition
of cases and motions erodes the faith and confidence of the people in the judiciary and
unnecessarily blemishes its stature.—Time and again, we have stressed the importance of
reasonable promptness in relation to the administration of justice as justice delayed is justice
denied. Undue delay in the disposition of cases and motions erodes the faith and confidence of the
people in the judiciary and unnecessarily blemishes its stature. This
_______________
* SECOND DIVISION.
451
VOL. 798, JULY 27, 2016 451

Bancil vs. Reyes
is more so the case with trial judges who serve as the frontline officials of the judiciary expected
to act all times with efficiency and probity.
pg. 696
Same; Same; Same; Gross Inefficiency; The delay of a judge of a lower court in resolving motions
and incidents within the reglementary period as prescribed by the Constitution is not excusable
and constitutes gross inefficiency.—The Court, in view of the voluminous case load of some trial
court judges, generally allows for a reasonable extension of time to decide cases and the pending
incidents thereof. The judge merely has to request for such extension if he, for good reasons, is
unable to comply with the prescribed three-month period. We have also been consistent in holding
that the delay of a judge of a lower court in resolving motions and incidents within the
reglementary period as prescribed by the Constitution is not excusable and constitutes gross
inefficiency. In this case, Judge Reyes failed to act, within the prescribed period, on the case and
the motions filed by both Bancil and Krieger. Necessarily, an administrative sanction is in order.
Same; Same; Same; Under Section 9, Rule 140 of the Revised Rules of Court, undue delay in
rendering a decision or order is considered a less serious offense.—Under Section 9, Rule 140 of
the Revised Rules of Court, undue delay in rendering a decision or order is considered a less serious
offense which is punishable by: 1. Suspension from office without salary and other benefits for
not less than one (1) nor more than three (3) months; or 2. A fine of more than P10,000.00 but not
exceeding P20,000.00. In imposing the proper penalty, we note that Judge Reyes readily admitted
the fact of delay with a prayer for understanding and a fervent plea of good faith. He further stated
that this incident will serve as a wake-up call for him to be always fully alert in rendering decisions
or orders on time. Based on his candid admissions, we find that a penalty of fine is proper.
ADMINISTRATIVE MATTER in the Supreme Court. Gross Inefficiency and Undue Delay in
Rendering Decision/Order.
452

Bancil vs. Reyes
CARPIO, J.:
The Case
Before the Court is an administrative complaint filed by Marie Christine D. Bancil (Bancil) against
Judge Ronaldo B. Reyes (Judge Reyes), Presiding Judge of Metropolitan Trial Court of San Juan
City, Branch 58, for Gross Inefficiency and Undue Delay in Rendering a Decision/Order.
pg. 697
The Facts
This administrative complaint stems from Criminal Case No. 86928, entitled “People of the
Philippines v. Edward Randolph Krieger” which was pending before Judge Reyes in Branch 58,
Metropolitan Trial Court, San Juan City. Bancil was the private complainant in the said criminal
case for violation of Article 97 of Republic Act (RA) No. 7394 or the Consumer Act of the
Philippines.
Pursuant to the Resolution dated 22 August 20121 finding probable cause against Edward
Randolph Krieger (Krieger), the Information2 for violation of Article 97 of the Consumer Act of
the Philippines was filed against Krieger.
On 29 August 2012, Krieger filed an Omnibus Motion for (1) judicial determination of probable
cause and (2) suspension of proceedings.3 On 19 September 2012, Krieger filed a Motion to Defer
Proceedings in view of his intention to file a Petition for Review before the Department of Justice.4
On 24 September 2012, Bancil filed her Comment on the Omnibus Motion.5 Bancil no longer
filed an objection to the Motion to Defer Proceedings as she considered the suspension of the
_______________
1 Rollo, pp. 7-17.
2 Id., at pp. 18-19.
3 Id., at pp. 20-28.
4 Id., at pp. 55-57.
5 Id., at pp. 45-52.
453
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Bancil vs. Reyes
arraignment for a period of not exceeding 60 days within the rights of Krieger as accused under
Section 11, Rule 116 of the Revised Rules of Criminal Procedure.
pg. 698
On 7 February 2013, or almost five months from the filing of Krieger’s Motion to Defer
Proceedings, Bancil filed a Motion to Set Case for Trial with Entry of Appearance.6 This was not
acted upon by Judge Reyes. Given the inaction of Judge Reyes, on 25 October 2013, Bancil filed
a motion to set the case for arraignment.7
Despite the two motions filed by Bancil, Judge Reyes failed to act on the case. Even the Omnibus
Motion filed by Krieger remained not acted upon by Judge Reyes.
Bancil filed an administrative complaint dated 30 June 2014 against Judge Reyes for Gross
Inefficiency and Undue Delay in Rendering a Decision/Order. Bancil argued that Judge Reyes
failed to comply with Section 15(1), Article VIII of the Constitution, which provides that all cases
or matters filed must be decided or resolved by the lower courts within three months from the date
of submission. Moreover, Bancil alleged that Judge Reyes violated Section 6,8 Rule 112 of the
Revised Rules of Criminal Procedure as Judge Reyes failed to choose among the three options
given to a judge upon the filing of an Information — (1) dismiss the case if the evidence on record
clearly failed to establish probable cause; (2) if he or she finds probable cause, issue a warrant of
arrest; and (3) in case of doubt as to the existence of probable cause, order the prosecutor to present
additional evidence within five days from notice, the issue to be resolved by the court within 30
days from the filing of the Information.9 Further, Bancil alleged that there was a violation of Canon
6 of the New Code of
_______________
6 Id., at pp. 58-60.
7 Id., at pp. 61-63.
8 Now renumbered as Section 5, Rule 112 of the Revised Rules of Criminal Procedure.
9 See In Re: Mino v. Navarro, 558 Phil. 7; 531 SCRA 271 (2007).
454

Bancil vs. Reyes
Judicial Conduct10 which provides that judges shall perform all judicial duties, including the
delivery of reserved decisions, efficiently, fairly, and with reasonable promptness. Based on the
foregoing, Bancil argued that Judge Reyes clearly violated the fundamental law of acting on a case
within the mandated period which was evident of his gross ignorance/inefficiency.
pg. 699
On 10 October 2014, Judge Reyes filed his Comment to the administrative complaint, explaining
that the delay was due to plain oversight and not through inefficiency.11 He attributed the delay
to the big number of cases regularly coming in, including small claims cases which are required to
be acted upon within 24 hours, and the conduct of Judicial Dispute Resolution, which is mandated
in almost all cases.
The Recommendation of the OCA
The Office of the Court Administrator (OCA), upon evaluation of the administrative complaint,
found that Judge Reyes indeed failed to act on the motions within the reglementary period provided
in the Constitution. The OCA rejected the justifications for delay advanced by Judge Reyes finding
that he did not have a voluminous case load which would have truly incapacitated him to resolve
the pending incidents within the prescribed period. The OCA held:
Thus, the failure to decide cases and other matters within the reglementary period of ninety (90)
days, as fixed by the Constitution and the law, warrants the imposition of administrative sanction
against the erring judge.
In view of the foregoing, this Office finds that respondent Judge failed to act on the subject motions
within the reglementary period. It bears reiterating that respondent Judge himself admitted such
delay. To our
_______________
10 A.M. No. 03-05-01-SC, 1 June 2004.
11 Rollo, pp. 65-67.
455
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Bancil vs. Reyes
mind, the justifications advanced by him, such as the volume of cases pending and the number of
cases for JDR, cannot even be considered an excuse to absolve him from administrative liability.12
pg. 700
Even assuming arguendo that Judge Reyes had a good reason for not being able to comply with
the three-month period, no request for an extension of time was ever filed by Judge Reyes. Also,
the OCA noted that in addition to the delay in resolving the motions, Judge Reyes failed to arraign
Krieger after the Information was filed. Under the Speedy Trial Act, the arraignment of the accused
should be done within 30 days from the filing of the Information.13
Finding Judge Reyes guilty of undue delay in resolving pending motions, the OCA recommended
a fine of Five Thousand Pesos (P5,000) and a warning that a repetition of the same act shall be
dealt with more severely.14
The Ruling of the Court
The Court agrees with the findings of the OCA, subject to modification as to the penalty.
The Constitution expressly provides that all lower courts should decide or resolve cases or matters
within three months from the date of submission.15 Accordingly, Section 5, Canon 6 of the New
Code of Judicial Conduct16 provides:
Sec. 5. Judges shall perform all judicial duties, including the delivery of reserved decisions,
efficiently, fairly, and with reasonable promptness. (Emphasis supplied)
_______________
12 Id., at p. 70. Citations omitted.
13 See Section 7, RA No. 8493, 12 February 1998.
14 Rollo, p. 72.
15 Section 15, Article VIII, Constitution.
16 A.M. No. 03-05-01-SC, 1 June 2004.
456

Bancil vs. Reyes
pg. 701
Accordingly, this Court has laid down certain guidelines to ensure the compliance with this
mandate. More particularly, Supreme Court Administrative Circular No. 13-8717 provides:
3. Judges shall observe scrupulously the periods prescribed by Article VIII, Section 15 of
the Constitution for the adjudication and resolution of all cases or matters submitted in their
courts. Thus, all cases or matters must be decided or resolved within twelve months from date of
submission by all lower collegiate courts while all other lower courts are given a period of three
months to do so.
x x x x (Emphasis supplied)
Supreme Court Administrative Circular No. 1-8818 further states:
6.1 All Presiding Judges must endeavor to act promptly on all motions and interlocutory matters
pending before their courts.
Time and again, we have stressed the importance of reasonable promptness in relation to the
administration of justice as justice delayed is justice denied. Undue delay in the disposition of
cases and motions erodes the faith and confidence of the people in the judiciary and unnecessarily
blemishes its stature.19 This is more so the case with trial judges who serve as the frontline officials
of the judiciary expected to act all times with efficiency and probity.20 We have held:
As a frontline official of the Judiciary, a trial judge should at all times act with efficiency and
probity. He is duty-bound not only to be faithful to the law, but also to
_______________
17 Dated 1 July 1987.
18 Dated 28 January 1988.
19 Magtibay v. Indar, 695 Phil. 617; 681 SCRA 510 (2012).
20 Angelia v. Grageda, 656 Phil. 570; 641 SCRA 554 (2011).
457
VOL. 798, JULY 27, 2016 457
pg. 702
Bancil vs. Reyes
maintain professional competence. The pursuit of excellence ought always to be his guiding
principle. Such dedication is the least that he can do to sustain the trust and confidence that the
public have reposed in him and the institution he represents.
The Court cannot overstress its policy on prompt disposition or resolution of cases. Delay in the
disposition of cases is a major culprit in the erosion of public faith and confidence in the judicial
system, as judges have the sworn duty to administer justice without undue delay. Thus, judges
have been constantly reminded to strictly adhere to the rule on the speedy disposition of cases and
observe the periods prescribed by the Constitution for deciding cases, which is three months from
the filing of the last pleading, brief or memorandum for lower courts. To further impress upon
judges such mandate, the Court has issued guidelines (Administrative Circular No. 3-99 dated
January 15, 1999) that would insure the speedy disposition of cases and has therein reminded
judges to scrupulously observe the periods prescribed in the Constitution.21
This being said, the Court, in view of the voluminous case load of some trial court judges, generally
allows for a reasonable extension of time to decide cases and the pending incidents thereof. The
judge merely has to request for such extension if he, for good reasons, is unable to comply with
the prescribed three-month period.22
We have also been consistent in holding that the delay of a judge of a lower court in resolving
motions and incidents within the reglementary period as prescribed by the Constitu-
_______________
21 Re: Failure of Former Judge Antonio A. Carbonell to Decide Cases Submitted for Decision
and to Resolve Pending Motions in the Regional Trial Court, Branch 27, San Fernando, La Union,
713 Phil. 594, 597-598; 700 SCRA 806, 811 (2013). Citations omitted.
22 Office of the Court Administrator v. Reyes, 566 Phil. 325; 542 SCRA 330 (2008); Office of the
Court Administrator v. Javellana, 481 Phil. 315, 327; 438 SCRA 1, 12 (2004).
458

Bancil vs. Reyes
pg. 703
tion is not excusable and constitutes gross inefficiency.23 In this case, Judge Reyes failed to act,
within the prescribed period, on the case and the motions filed by both Bancil and Krieger.
Necessarily, an administrative sanction is in order.
Under Section 9, Rule 140 of the Revised Rules of Court, undue delay in rendering a decision or
order is considered a less serious offense which is punishable by:
1. Suspension from office without salary and other benefits for not less than one (1) nor more
than three (3) months; or
2. A fine of more than P10,000.00 but not exceeding P20,000.00.24
In imposing the proper penalty, we note that Judge Reyes readily admitted the fact of delay with a
prayer for understanding and a fervent plea of good faith.25 He further stated that this incident will
serve as a wake-up call for him to be always fully alert in rendering decisions or orders on time.
Based on his candid admissions, we find that a penalty of fine is proper.
WHEREFORE, we find Judge Ronaldo B. Reyes, Presiding Judge of Metropolitan Trial Court
of San Juan City, Branch 58, GUILTY of Undue Delay in Rendering an Order and impose on him
a FINE of Ten Thousand Pesos (P10,000). He is STERNLY WARNED that a repetition of the
same or similar act in the future shall merit a more severe sanction.
SO ORDERED.
Brion, Del Castillo, Mendoza and Leonen, JJ., concur.
_______________
23 Supra note 20, citing Visbal v. Buban, 443 Phil. 705, 708; 395 SCRA 584, 586-587 (2003).
24 Section 11, Rule 140, Revised Rules of Court.
25 Rollo, pp. 65-67.
459
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Bancil vs. Reyes
pg. 704
Judge Ronaldo B. Reyes meted with ten thousand pesos (P10,000.00) fine for undue delay in
rendering an order, with stern warning against repetition of similar act.
Notes.—Delay in resolving motions and incidents pending before a judge within the reglementary
period of ninety (90) days fixed by the Constitution and the law is not excusable and constitutes
gross inefficiency. (Soluren vs. Torres, 630 SCRA 449 [2010])
Procedural rules should be treated with utmost respect and due regard, since they are designed to
facilitate the adjudication of cases to remedy the worsening problem of delay in the resolution of
rival claims and in the administration of justice. (Castells vs. Saudi Arabian Airlines, 704 SCRA
206 [2013])
——o0o——
pg. 705
G.R. No. 192477. July 27, 2016.*
MOMARCO IMPORT COMPANY, INC., petitioner, vs. FELICIDAD VILLAMENA,

respondent.
Remedial Law; Civil Procedure; Jurisdiction; The filing of the formal entry of appearance on May
5, 1998 indicated that it already became aware of the complaint filed against it on September 23,
1997. Such act of counsel, because it was not for the purpose of objecting to the jurisdiction of the
trial court, constituted the petitioner’s voluntary appearance in the action, which was the
equivalent of the service of summons.—The filing of the formal entry of appearance on May 5,
1998 indicated that it already became aware of the complaint filed against it on September 23,
trial court, constituted the petitioner’s voluntary appearance in the action, which was the equivalent
of the service of summons. Jurisdiction over the person of the petitioner as the defendant became
thereby vested in the RTC, and cured any defect in the service of summons.
Same; Same; Default; Under Section 3, Rule 9 of the Rules of Court, the three (3) requirements to
be complied with by the claiming party before the defending party can be declared in default are:
(1) that the claiming party must file a motion praying that the court declare the defending party in
default; (2) the defending party must be notified of the motion to declare it in default; (3) the
claiming party must prove that the defending party failed to answer the complaint within the period
provided by the rule.—Under Section 3, Rule 9 of the Rules of Court, the three requirements to be
complied with by the claiming party before the defending party can be declared in default are: (1)
that the claiming party must file a motion praying that the court declare the defending party in
default; (2) the defending party must be notified of the motion to declare it in default; (3) the
claiming party must prove that the defending party failed to answer the complaint within the period
provided by the rule. It is plain, therefore, that the default of the defending party cannot be declared
motu proprio.
_______________
* FIRST DIVISION.
514

Momarco Import Company, Inc. vs. Villamena
Same; Same; Same; The petitioner’s logical remedy was to have moved for the lifting of the
declaration of its default but despite notice it did not do the same before the Regional Trial Court
pg. 706
(RTC) rendered the default judgment on August 23, 1999.—The petitioner’s logical remedy was
to have moved for the lifting of the declaration of its default but despite notice it did not do the
same before the RTC rendered the default judgment on August 23, 1999. Its motion for that
purpose should have been under the oath of one who had knowledge of the facts, and should show
that it had a meritorious defense, and that its failure to file the answer had been due to fraud,
accident, mistake or excusable negligence. Its urgent purpose to move in the RTC is to avert the
rendition of the default judgment. Instead, it was content to insist in its comment/opposition vis-à-
vis the motion to declare it in default that: (1) it had already filed its answer; (2) the order of default
was generally frowned upon by the courts; (3) technicalities should not be resorted to; and (4) it
had a meritorious defense. It is notable that it tendered no substantiation of what was its meritorious
defense, and did not specify the circumstances of fraud, accident, mistake, or excusable negligence
that prevented the filing of the answer before the order of default issued — the crucial elements in
asking the court to consider vacating its own order.
Constitutional Law; Right to be Heard; The courts have generally looked upon a default judgment
with disfavor because it is in violation of the right of a defending party to be heard.—The policy
of the law has been to have every litigated case tried on the merits. As a consequence, the courts
have generally looked upon a default judgment with disfavor because it is in violation of the right
of a defending party to be heard. As the Court has said in Coombs v. Santos, 24 Phil. 446 (1913):
A default judgment does not pretend to be based upon the merits of the controversy. Its existence
is justified on the ground that it is the one final expedient to induce defendant to join issue upon
the allegations tendered by the plaintiff, and to do so without unnecessary delay. A judgment by
default may amount to a positive and considerable injustice to the defendant; and the possibility
of such serious consequences necessitates a careful examination of the grounds upon which the
defendant asks that it be set aside.
515
VOL. 798, JULY 27, 2016 515

The Law Firm of Habitan, Ferrer, Chan, Tagapan, Habitan & Associates for petitioner.
Public Attorney’s Office for respondent.
BERSAMIN, J.:
pg. 707
A default judgment is frowned upon because of the policy of the law to hear every litigated case
on the merits. But the default judgment will not be vacated unless the defendant satisfactorily
explains the failure to file the answer, and shows that it has a meritorious defense.
The Case
Under challenge by the petitioner is the affirmance on January 14, 2010 by the Court of Appeals
(CA)1 of the trial court’s default judgment rendered against it on August 23, 1999 in Civil Case
No. C-18066 by the Regional Trial Court (RTC), Branch 126, in Caloocan City.2 The defendant
hereby prays that the default judgment be undone, and that the case be remanded to the RTC for
further proceedings, including the reception of its evidence.3
Antecedents
Civil Case No. C-18066 is an action the respondent initiated against the petitioner for the
nullification of a deed of
_______________
1 Rollo, pp. 20-24; penned by Associate Justice Arcangelita Romilla-Lontok (retired), with
Associate Justices Andres B. Reyes, Jr. (now Presiding Justice) and Priscilla J. Baltazar-Padilla,
concurring.
2 CA Rollo, pp. 10-12; penned by Judge Luisito C. Sardillo.
3 Rollo, p. 16.
516

pg. 708
absolute sale involving registered real property and its improvements situation in Caloocan City
as well as of the transfer certificate of title issued in favor of the latter by virtue of said deed of
absolute sale on the ground of falsification.
The following factual and procedural antecedents are summarized by the CA in its assailed
decision, to wit:
On September 23, 1997, plaintiff filed against defendant a complaint for “Nullification of Deed of
Sale and of the Title Issued” pursuant thereto alleging that she is the owner of a parcel of land with
improvements located in Caloocan City and covered by Transfer Certificate of Title No. 204755.
A letter from defendant corporation dated June 12, 1997, informed plaintiff that TCT No. 204755
over aforesaid property had been cancelled and TCT No. C-319464 was issued in lieu thereof in
favor of defendant corporation on the strength of a purported Special Power of Attorney executed
by Dominador Villamena, her late husband, appointing her, plaintiff Felicidad Villamena, as his
attorney-in-fact and a deed of absolute sale purportedly executed by her in favor of defendant
corporation on May 21, 1997, the same date as the Special Power of Attorney. The Special Power
of Attorney dated May 21, 1997 is a forgery. Her husband Dominador died on June 22, 1991. The
deed of sale in favor of defendant corporation was falsified. What plaintiff executed in favor of
Mamarco was a deed of real estate mortgage to secure a loan of P100,000.00 and not a deed of
transfer/conveyance.
xxxx
On August 19, 1998, plaintiff filed a motion to declare defendant corporation in default for failure
of aforesaid defendant to file its answer as of said date despite the filing of an Entry of Appearance
by its counsel dated May 4, 1998.
On September 10, 1998 defendant corporation filed its Answer with Counterclaim which denied
the allegations in the complaint; alleged that plaintiff and her daughter Lolita accompanied by a
real estate agent ap-
517
VOL. 798, JULY 27, 2016 517

proached the President of Momarco for a loan of P100,000.00; offered their house and lot as
collateral; and presented a Special Power of Attorney from her husband. She was granted said
loan. Aforesaid loan was not repaid. Interests accumulated and were added to the principal.
Plaintiff offered to execute a deed of sale over the property on account of her inability to pay.
Plaintiff presented to defendant corporation a deed of sale and her husband’s Special of Power
Attorney already signed and notarized.4
pg. 709
Under the order dated October 15, 1998, the petitioner was declared in default, and its answer was
ordered stricken from the records. Thereafter, the RTC allowed the respondent to present her
evidence ex parte.
On August 23, 1999, the RTC rendered the default judgment nullifying the assailed deed of
absolute sale and the transfer certificate of title issued pursuant thereto; and ordering the Register
of Deeds of Caloocan, City to cancel the petitioner’s Transfer Certificate of Title No. C-319464,
and to reinstate the respondent’s Transfer Certificate of Title No. 204755.5 It concluded that the
act of the petitioner’s counsel of formally entering an appearance in the case had mooted the issue
of defective service of summons; and that the respondent had duly established by preponderance
of evidence that the purported special power of attorney was a forgery.6
The petitioner appealed the default judgment to the CA, arguing that the RTC had gravely erred in
nullifying the questioned deed of absolute sale and in declaring it in default.
On January 14, 2010, the CA promulgated the assailed decision affirming the default judgment
upon finding that the RTC did not commit any error in declaring the petitioner in default and in
rendering judgment in favor of the respondent
_______________
4 Id., at pp. 21-22.
5 CA Rollo, p. 12.
6 Id., at pp. 10-12.
518

who had successfully established her claim of forgery by preponderance of evidence.7
On May 31, 2010, the CA denied the petitioner’s motion for reconsideration.8
pg. 710
Issue
The petitioner raises the lone issue of whether or not the CA gravely erred in upholding the default
judgment of the RTC; in ordering its answer stricken off the records; in allowing the respondent
to adduce her evidence ex parte; and in rendering the default judgment based on such evidence.9
Ruling of the Court
The appeal lacks merit.
The petitioner claims denial of its right to due process, insisting that the service of summons and
copy of the complaint was defective, as, in fact, there was no sheriff’s return filed; that the service
of the alias summons on January 20, 1998 was also defective; and that, accordingly, its
reglementary period to file the answer did not start to run.
The claim of the petitioner is unfounded. The filing of the formal entry of appearance on May 5,
1998 indicated that it already became aware of the complaint filed against it on September 23,
trial court, constituted the petitioner’s voluntary appearance in the
_______________
7 Rollo, pp. 20-24.
8 Id., at pp. 26-29; penned by Presiding Justice Andres B. Reyes, Jr., with the concurrence of
Associate Justices Priscilla J. Baltazar-Padilla and Jane Aurora C. Lantion.
9 Id., at p. 13.
519
VOL. 798, JULY 27, 2016 519

pg. 711
action, which was the equivalent of the service of summons.10 Jurisdiction over the person of the
petitioner as the defendant became thereby vested in the RTC, and cured any defect in the service
of summons.11
Under Section 3,12 Rule 9 of the Rules of Court, the three requirements to be complied with by
the claiming party before the defending party can be declared in default are: (1) that the claiming
party must file a motion praying that the court declare the defending party in default; (2) the
defending party must be notified of the motion to declare it in default; (3) the claiming party must
prove that the defending party failed to answer the complaint within the period provided by the
rule.13 It is plain, therefore, that the default of the defending party cannot be declared motu
proprio.14
Although the respondent filed her motion to declare the petitioner in default with notice to the
petitioner only on August 19, 1998, all the requisites for properly declaring the latter in
_______________
10 Rule 14, Section 20 of the Rules of Court provides:
Section 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.
11 Cezar v. Ricafort-Bautista, G.R. No. 136415, October 31, 2006, 506 SCRA 322, 334.
12 Section 3. Default; declaration of.—If the defending party fails to answer within the time
allowed therefor, the court shall, upon motion of the claiming party with notice to the defending
party, and proof of such failure, declare the defending party in default. Thereupon, the court shall
proceed to render judgment granting the claimant such relief as his pleading may warrant, unless
the court in its discretion requires the claimant to submit evidence. Such reception of evidence
may be delegated to the clerk of court.
13 Delos Santos v. Carpio, G.R. No. 153696, September 11, 2006, 501 SCRA 390, 398-399.
14 Trajano v. Cruz, No. L-47070, December 29, 1977, 80 SCRA 712, 715.
520

pg. 712
default then existed. On October 15, 1998, therefore, the RTC appropriately directed the answer
filed to be stricken from the records and declared the petitioner in default. It also received ex parte
the respondent’s evidence, pursuant to the relevant rule.15
The petitioner’s logical remedy was to have moved for the lifting of the declaration of its default
but despite notice it did not do the same before the RTC rendered the default judgment on August
23, 1999. Its motion for that purpose should have been under the oath of one who had knowledge
of the facts, and should show that it had a meritorious defense,16 and that its failure to file the
answer had been due to fraud, accident, mistake or excusable negligence. Its urgent purpose to
move in the RTC is to avert the rendition of the default judgment. Instead, it was content to insist
in its comment/opposition vis-à-vis the motion to declare it in default that: (1) it had already filed
its answer; (2) the order of default was generally frowned upon by the courts; (3) technicalities
should not be resorted to; and (4) it had a meritorious defense. It is notable that it tendered no
substantiation of what was its meritorious defense, and did not specify the circumstances of fraud,
accident, mistake, or excusable negligence that prevented the filing of the answer before the order
of default issued — the crucial elements in asking the court to consider vacating its own order.
The policy of the law has been to have every litigated case tried on the merits. As a consequence,
the courts have generally looked upon a default judgment with disfavor because it is in violation
of the right of a defending party to be heard. As the Court has said in Coombs v. Santos:17
_______________
15 Section 3, Rule 9, Rules of Court.
16 Montinola, Jr. v. Republic Planters Bank, No. L-66183, May 4, 1988, 161 SCRA 45, 52.
17 24 Phil. 446, 449-450 (1913).
521
VOL. 798, JULY 27, 2016 521

A default judgment does not pretend to be based upon the merits of the controversy. Its existence
is justified on the ground that it is the one final expedient to induce defendant to join issue upon
the allegations tendered by the plaintiff, and to do so without unnecessary delay. A judgment by
default may amount to a positive and considerable injustice to the defendant; and the possibility
of such serious consequences necessitates a careful examination of the grounds upon which the
defendant asks that it be set aside.
pg. 713
In implementation of the policy against defaults, the courts have admitted answers filed beyond
the reglementary periods but before the declaration of default.18
Considering that the petitioner was not yet declared in default when it filed the answer on
September 10, 1998, should not its answer have been admitted?
The petitioner raised this query in its motion for reconsideration in the CA, pointing out that the
RTC could no longer declare it in default and order its answer stricken from the records after it
had filed its answer before such declaration of default. However, the CA, in denying the motion
for reconsideration, negated the query, stating as follows:
Unfortunately, we find the foregoing arguments insufficient to reverse our earlier ruling. These
points do little to detract from the fact that Defendant-Appellant filed its Answer only after a period
of more than four months from when it entered its voluntary appearance in the case a quo, and
only after almost a month from when Plaintiff-Appellee moved to have it declared in default.
Verily, Defendant-Appellant’s temerity for delay is also betrayed (sic) by the fact that it had waited
for a judgment to be rendered by the court a quo before it challenged the order declaring it in
default. If it truly be-
_______________
18 Cathay Pacific Airways, Ltd. v. Romillo, Jr., No. L-64276, March 4, 1986, 141 SCRA 451,
455.
522

lieved that it had a “meritorious defense[,] which if properly ventilated could have yielded a
different conclusion [by the trial court],” then it could very well have moved to set aside the Order
of Default immediately after notice thereof or anytime before judgment. Under the circumstances,
that would have been the most expeditious remedy. Inauspiciously, Defendant-Appellant instead
elected to wager on a favorable judgment. Defeated, Defendant-Appellant would now have us set
aside the Order of Default on Appeal and remand the case for further proceedings. These we cannot
do.
While we are aware that we are vested with some discretion to condone Defendant-Appellant’s
procedural errors, we do not find that doing so will serve the best interests of justice. To remand
this case to the court a quo on the invocation that we must be liberal in setting aside orders of
default, would be to reward Defendant-Appellant with more delay. It bears stating that the Rules
pg. 714
of Procedure are liberally construed not to suit the convenience of a party, but “in order to promote
their objective of securing a just, speedy and inexpensive disposition of every action and
proceeding.” To this end, it has been rightly written:
Procedural rules are not to be disregarded as mere technicalities that may be ignored at will
to suit the convenience of a party. x x x.
It cannot be overemphasized that procedural rules have their own wholesome rationale in
the orderly administration of justice. Justice has to be administered according to the rules in
order to obviate arbitrariness, caprice and whimsicality.19
We concur with the CA’s justification. The RTC and the CA acted in accordance with the Rules
of Court and the pertinent jurisprudence. The petitioner was insincere in assailing the
_______________
19 Rollo, pp. 27-29.
523
VOL. 798, JULY 27, 2016 523

default judgment, and its insincerity became manifest from its failure to move for the lifting of the
order of default prior to the rendition of the default judgment. The CA rightly observed that the
petitioner had apparently forsaken its “expeditious remedy” of moving soonest for the lifting of
the order of default in favor of “wager[ing]” on obtaining a favorable judgment. The petitioner
would not do so unless it intended to unduly cause delay to the detriment and prejudice of the
respondent.
The sincerity of the petitioner’s actions cannot be presumed. Hence, it behooves it to allege the
suitable explanation for the failure or the delay to file the answer through a motion to lift the order
of default before the default judgment is rendered. This duty to explain is called for by the
philosophy underlying the doctrine of default in civil procedure, which Justice Narvasa eruditely
discoursed on in Gochangco v. CFI of Negros Occidental,20 to wit:
The underlying philosophy of the doctrine of default is that the defendant’s failure to answer the
complaint despite receiving copy thereof together with summons, is attributable to one of two
causes: either (a) to his realization that he has no defenses to the plaintiff’s cause and hence
resolves not to oppose the complaint, or (b) having good defenses to the suit, to fraud, accident,
pg. 715
mistake or excusable negligence which prevented him from seasonably filing an answer setting
forth those defenses. It does make sense for a defendant without defenses, and who accepts the
correctness of the specific relief prayed for in the complaint, to forego the filing of the answer or
any sort of intervention in the action at all. For even if he did intervene, the result would be the
same: since he would be unable to establish any good defense, having none in fact, judgment would
inevitably go against him. And this would be an acceptable result, if not being in his power to alter
or prevent it, provided that the judgment did not go
_______________
20 No. L-49396, January 15, 1988, 157 SCRA 40.
524

beyond or differ from the specific relief stated in the complaint. It would moreover spare him from
the embarrassment of openly appearing to defend the indefensible. On the other hand, if he did
have good defenses, it would be unnatural for him not to set them up properly and timely,
and if he did not in fact set them up, it must be presumed that some insuperable cause
prevented him from doing so: fraud, accident, mistake, excusable negligence. In this event,
the law will grant him relief; and the law is in truth quite liberal in the reliefs made available
to him: a motion to set aside the order of default prior to judgment, a motion for new trial
to set aside the default judgment; an appeal from the judgment by default even if no motion
to set aside the order of default or motion for new trial had been previously presented; a
special civil action for certiorari impugning the court’s jurisdiction.21
It is true that the RTC had the discretion to permit the filing of the answer even beyond the
reglementary period, or to refuse to set aside the default order where it finds no justification for
the delay in the filing of the answer.22 Conformably with the judicious exercise of such discretion,
the RTC could then have admitted the belated answer of the petitioner and lifted the order of
default instead of striking the answer from the records. However, the RTC opted not to condone
the inordinate delay taken by the petitioner, and went on to render the default judgment on August
23, 1999. Such actions were fully within its discretion.23 We uphold the default. While the courts
should avoid orders of default, and should be, as a rule,
_______________
21 Id., at pp. 54-55 (bold underscoring added for emphasis).
pg. 716
22 Malipol v. Tan, No. L-27730, January 21, 1974, 55 SCRA 202, 208.
23 Supra note 18.
525
VOL. 798, JULY 27, 2016 525

liberal in setting aside orders of default,24 they could not ignore the abuse of procedural rules by
litigants like the petitioner, who only had themselves to blame.
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision
of the Court of Appeals promulgated on January 14, 2010; and ORDERS the petitioner to pay the
costs of suit.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Perlas-Bernabe and Caguioa, JJ., concur.
Notes.—Default judgments are frowned upon, and the Supreme Court has been advising the courts
below to be liberal in setting aside default orders to give both parties every chance to present their
case fairly without resort to technicality; Judicial experience shows that resort to motions for bills
of particulars is sometimes intended for delay or, even if not so intended, actually result in delay
since the reglementary period for filing a responsive pleading is suspended and the subsequent
proceedings are likewise set back in the meantime. (Republic vs. Sandiganbayan, 540 SCRA 431
[2007])
The most basic tenet of due process is the right to be heard. Denial of due process means the total
lack of opportunity to be heard or to have one’s day in court. (Ylaya vs. Gacott, 689 SCRA 452
[2013])
——o0o——
_______________
pg. 717
24 Acance v. Court of Appeals, G.R. No. 159699, March 16, 2005, 453 SCRA 548, 563;
Montinola, Jr. v. Republic Planters Bank, supra note 16 at p. 54.
pg. 718
G.R. No. 210606. July 27, 2016.*
GRACE PARK** INTERNATIONAL CORPORATION and WOODLINK REALTY

CORPORATION, petitioners, vs. EASTWEST BANKING CORPORATION, SECURITY
BANKING CORPORATION, ALLIED BANKING CORPORATION, represented by the Trustee
and Attorney-in-Fact of EASTWEST BANKING CORPORATION TRUST DIVISION,
EMMANUEL L. ORTEGA, in his capacity as the Ex Officio Sheriff of the Regional Trial Court,
Malolos City, Bulacan, EDRIC C. ESTRADA, in his capacity as Sheriff IV of the Regional Trial
Court, Malolos City, Bulacan, respondents.
Remedial Law; Civil Procedure; Forum Shopping; Words and Phrases; Forum shopping is the
act of a litigant who repetitively availed of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the same transactions and the same
essential facts and circumstances, and all raising substantially the same issues, either pending in
or already resolved adversely by some other court, to increase his chances of obtaining a favorable
decision if not in one court, then in another.—At the outset, it must be emphasized that “[forum
shopping] is the act of a litigant who repetitively availed of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same transactions and the
same essential facts and circumstances, and all raising substantially the same issues, either pending
in or already resolved adversely by some other court, to increase his chances of obtaining a
favorable decision if not in one court, then in another. What is important in determining whether
[forum shopping] exists is 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.”
_______________
* FIRST DIVISION.
** Mentioned as “Gracepark” in the title of the petition.
645
VOL. 798, JULY 27, 2016 645

Grace Park International Corporation vs. Eastwest Banking Corporation
Same; Same; Same; Elements of.—In Heirs of Marcelo Sotto v. Palicte, 716 SCRA 175 (2014),
the Court held that “[t]he test to determine the existence of forum shopping is whether the elements
of litis pendentia are present, or whether a final judgment in one case amounts to res judicata in
pg. 719
the other. Thus, there is forum shopping when the following elements are present, namely:
(a) identity of parties, or at least such parties as represent the same interests in both actions;
(b) identity of rights asserted and reliefs prayed for, the relief being founded on the same
facts; and (c) the identity of the two preceding particulars, such that any judgment rendered
in the other action will, regardless of which party is successful, amounts to res judicata in the
action under consideration.”
Same; Same; Dismissal of Actions; Litis Pendentia; As a ground for the dismissal of a civil action,
litis pendentia refers to the situation where two (2) actions are pending between the same parties
for the same cause of action, so that one (1) of them becomes unnecessary and vexatious.—In
reference to the foregoing, litis pendentia is a Latin term, which literally means “a pending suit”
and is variously referred to in some decisions as lis pendens and auter action pendant. As a ground
for the dismissal of a civil action, it refers to the situation where two (2) actions are pending
between the same parties for the same cause of action, so that one (1) of them becomes unnecessary
and vexatious. It is based on the policy against multiplicity of suits.
Same; Same; Forum Shopping; Identity of Parties; Absolute identity of parties is not required,
shared identity of interest is sufficient to invoke the coverage of this principle.—Anent the first
requisite of forum shopping, “[t]here is identity of parties where the parties in both actions are the
same, or there is privity between them, or they are successors-in-interest by title subsequent to the
commencement of the action, litigating for the same thing and under the same title and in the same
capacity. Absolute identity of parties is not required, shared identity of interest is sufficient to
invoke the coverage of this principle. Thus, it is enough that there is a community of interest
between a party in the first case and a party in the second case even if the latter was not impleaded
in the first case.”
646

Same; Same; Same; Identity of Causes of Action; The test to determine whether the causes of
action are identical is to ascertain whether the same evidence will sustain both actions, or whether
there is an identity in the facts essential to the maintenance of the two (2) actions.—With respect
to the second and third requisites of forum shopping, “[h]ornbook is the rule that identity of causes
of action does not mean absolute identity; otherwise, a party could easily escape the operation of
res judicata by changing the form of the action or the relief sought. The test to determine whether
the causes of action are identical is to ascertain whether the same evidence will sustain both
actions, or whether there is an identity in the facts essential to the maintenance of the two actions.
If the same facts or evidence would sustain both, the two actions are considered the same, and a
judgment in the first case is a bar to the subsequent action. Hence, a party cannot, by varying the
form of action or adopting a different method of presenting his case, escape the operation of the
pg. 720
principle that one and the same cause of action shall not be twice litigated between the same parties
or their privies. Among the several tests resorted to in ascertaining whether two suits relate to a
single or common cause of action are: (1) whether the same evidence would support and sustain
both the first and second causes of action; and (2) whether the defenses in one case may be used
to substantiate the complaint in the other. Also fundamental is the test of determining whether the
cause of action in the second case existed at the time of the filing of the first complaint.”
Fajarito, Flores, Dagulpo & Associates for petitioners.
Valerio and Associates for respondents.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
_______________
1 Rollo, pp. 9-23.
647
VOL. 798, JULY 27, 2016 647

Decision2 dated May 22, 2013 and the Resolution3 dated December 27, 2013 of the Court of
Appeals (CA) in C.A.-G.R. CV No. 98880, which affirmed the Order4 dated April 25, 2012 of the
Regional Trial Court (RTC) of Malolos City, Bulacan, Branch 15 (RTC-Malolos) dismissing Civil
Case No. 543-M-2010 on the ground of forum shopping and/or litis pendentia.
The Facts
pg. 721
The instant case arose from an Amended Complaint for Injunction and Annulment of Foreclosure
Sale5 filed by petitioners Grace Park International Corporation (Gracepark) and Woodlink Realty
Corporation (Woodlink; collectively, petitioners) against respondents Eastwest Banking
Corporation (EBC), Allied Banking Corporation (Allied), and Security Banking Corporation
(Security), EBC Trust Division, Sheriff Emmanuel L. Ortega, and Sheriff Edric C. Estrada before
the RTC-Malolos, docketed as Civil Case No. 543-M-2010. In their complaint, petitioners alleged
that: (a) they entered into a Mortgage Trust Indenture6 (MTI) with EBC, Allied, Security, and
Banco De Oro Unibank (BDO), with EBC acting as trustee, in the aggregate amounts of
P162,314,499.00 and US$797,176.47;7 (b) under the MTI, BDO was the majority
_______________
2 Id., at pp. 28-37. Penned by Associate Justice Pedro B. Corales, with Associate Justices
Sesinando E. Villon and Florito S. Macalino, concurring.
3 Id., at pp. 38-39.
4 Id., at pp. 143-146. Penned by Judge Alexander P. Tamayo.
5 With prayer for temporary restraining order and/or preliminary injunction dated October 3,
2010. Id., at pp. 102-113.
6 Dated November 24, 2004. Id., at pp. 40-63.
7 Id., at pp. 29 and 104-105.
The aggregate amount is broken down as follows:
Name of Bank Value of the Mortgage % of

Participation Certificate owner-
ship
Allied Banking Php25,000,000.00 12.58%
Corporation
648

pg. 722
creditor with 58.04% ownership of the credit, with EBC, Allied, and Security having 18.33%,
12.58%, and 11.05% ownership, respectively;8 (c) as collaterals, petitioners mortgaged eight (8)
parcels of land, as well as the improvements found thereon, covered by Transfer Certificate of
Title Nos. 439068, 439069, 439070, 439071, 439072, 439073, 439074, and 439075 (collaterals);9
(d) under the MTI, EBC, as trustee, cannot commence foreclosure proceedings on any or all parts
of the collaterals without the written instructions from the majority creditors;10 (e) during the
pendency of the MTI, BDO’s majority share in the MTI was effectively paid for by Sherwyn Yao,
Jeremy Jerome Sy, and Leveric Ng (Sherwyn, et al.);11 (f) Sherwyn, et al. should have been
subrogated to BDO’s majority interest in the MTI; (g) EBC refused to honor the subrogation,
causing Sherwyn, et al. to file an action for subrogation and injunction12 before the RTC of Makati
City (RTC-Makati), docketed as Civil Case No. 10-323; and (h) EBC commenced foreclosure
proceedings without written instructions from the majority creditors under the MTI, which by
virtue of subrogation, should be Sherwyn, et al.13
_______________
Security Banking Php21,972,656.00 11.05%
Corporation
East West Bank- Usd797,176.47 18.33%
ing Corporation
Banco de Oro Php115,341,843.00 58.04%
Unibank
8 Id., at p. 105.
9 Id., at pp. 29 and 104.
10 Id., at pp. 30 and 107A-108. See Section 6, Item 6.05(b) of the MTI; id., at p. 53.
11 Id., at pp. 105-106.
12 See Complaint for Subrogation and Injunction with prayer for restraining order and/or
preliminary injunction dated March 30, 2010; id., at pp. 80-88.
13 Id., at pp. 107A-109; pp. 29-30.
649
pg. 723
VOL. 798, JULY 27, 2016 649
In their Answer14 and Motion to Dismiss,15 EBC, Allied, and Security contended that the
complaint before the RTC-Malolos should be dismissed on the grounds of forum shopping and
litis pendentia. They claimed that the action for subrogation pending before the RTC-Makati
basically involved the same parties, reliefs, and causes of action with the action pending before
the RTC-Malolos in that: (a) the individual plaintiffs in the RTC-Makati case, i.e., Sherwyn, et al.,
represent the same interests as the corporation plaintiffs, i.e., petitioners, in the RTC-Malolos case,
since they are the respective owners of petitioner corporations; (b) there were glaring similarities
in the complaints filed before the RTC-Makati and the RTC-Malolos; and (c) both complaints
essentially sought the injunction of the foreclosure sale, as well as the inclusion of the claims of
Sherwyn, et al. in the said foreclosure.16
In opposition to the Motion to Dismiss,17 petitioners insisted that the forum shopping and/or litis
pendentia are not attendant between Civil Case No. 543-M-2010 and Civil Case No. 10-323,
considering that there is no identity of parties and causes of action in both cases.18 Petitioners
likewise averred that the judgment in Civil Case No. 10-323 pending in the RTC-Makati will not
amount to res judicata in Civil Case No. 543-M-2010 pending in the RTC-Malolos because such
judgment can only be used as evidence in the latter case to prove that the requirements of the MTI
for the foreclosure of the collaterals were not complied with.19
_______________
14 Dated January 27, 2011. Id., at pp. 114-121.
15 Dated March 5, 2012. Id., at pp. 122-125.
16 Id., at p. 119; p. 31.
17 Dated March 12, 2012; id., at pp. 139-142.
18 Id., at p. 140.
19 Id., at p. 141.
650

pg. 724
The RTC-Malolos’ Ruling
In an Order20 dated April 25, 2012, the RTC-Malolos dismissed Civil Case No. 543-M-2010 on
the ground of forum shopping. It found that several similarities existed between the complaint filed
before it and that in Civil Case No. 10-323 pending in the RTC-Makati, i.e., (a) both complaints
dealt with the same collaterals under the MTI, and (b) both cases involved substantially the same
parties as the individual plaintiffs in Civil Case No. 10-323 (herein Sherwyn, et al.) and the
corporation plaintiffs in Civil Case No. 543-M-2010 (herein petitioners) represented a common
interest adverse to EBC, Allied, and Security.21 In this light, the RTC-Malolos concluded that the
determination of the validity of foreclosure would necessarily be intertwined with the issue of
whether or not Sherwyn, et al. should be subrogated to the rights of BDO under the MTI — an
issue already pending before the RTC-Makati.22
Aggrieved, petitioners appealed to the CA.23
The CA’s Ruling
In a Decision24 dated May 22, 2013, the CA upheld the RTC-Malolos’s dismissal of Civil Case
No. 543-M-2010 on the ground of forum shopping. It held that the elements of litis pendentia are
attendant in the said case, considering that: (a) there is a community of interests between the parties
in the cases pending before the RTC-Malolos and the RTC-Makati, in that the aforesaid cases were
instituted to protect the alleged respective rights of the individual and corporation plaintiffs over
the collaterals and both sought the identical
_______________
20 Id., at pp. 143-146.
21 Id., at p. 144.
22 Id., at pp. 144-145.
23 See appellant’s brief dated November 5, 2012; id., at pp. 147-161.
24 Id., at pp. 28-37.
pg. 725
651
VOL. 798, JULY 27, 2016 651

relief of enjoining the foreclosure thereof;25 (b) although both cases differ in form or nature, they
alleged the same facts and the same evidence would be required to substantiate the parties’ claim,
considering that the resolution of both cases would be based on the right of Sherwyn, et al. to be
subrogated to BDO’s rights under the MTI;26 and (c) the resolution of said issue in one case would
amount to res judicata in the other.27
Undaunted, petitioners moved for reconsideration,28 which was, however, denied in a

Resolution29 dated December 27, 2013; hence, this petition.
The core issue in this case is whether or not the CA correctly upheld the dismissal of Civil Case
No. 543-M-2010 pending before the RTC-Malolos on the ground of forum shopping in the concept
of litis pendentia.
At the outset, it must be emphasized that “[forum shopping] is the act of a litigant who repetitively
availed of several judicial remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same essential facts and circumstances, and
all raising substantially the same issues, either pending in or already resolved adversely by some
other court, to increase his chances of obtaining a favorable decision if not in one court, then in
another. What is important in determining
_______________
25 Id., at p. 34.
26 Id., at p. 35.
27 Id., at p. 36.
pg. 726
28 The motion for reconsideration is not attached to the Rollo.
29 Rollo, pp. 38-39.
652

whether [forum shopping] exists is 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.”30
In Heirs of Marcelo Sotto v. Palicte,31 the Court held that “[t]he test to determine the existence of
forum shopping is whether the elements of litis pendentia are present, or whether a final judgment
in one case amounts to res judicata in the other. Thus, there is forum shopping when the
following elements are present, namely: (a) identity of parties, or at least such parties as
represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed
for, the relief being founded on the same facts; and (c) the identity of the two preceding
particulars, such that any judgment rendered in the other action will, regardless of which
party is successful, amounts to res judicata in the action under consideration.”32
In reference to the foregoing, litis pendentia is a Latin term, which literally means “a pending suit”
and is variously referred to in some decisions as lis pendens and auter action pendant. As a ground
for the dismissal of a civil action, it refers to the situation where two actions are pending between
the same parties for the same cause of action, so that one of
_______________
30 Pentacapital Investment Corporation v. Mahinay, 637 Phil. 283, 308-309; 623 SCRA 284,
310-311 (2010), emphasis, italics, underscoring supplied and citations omitted.
31 G.R. No. 159691, February 17, 2014, 716 SCRA 175.
32 Id., at pp. 178-179; emphasis and underscoring supplied.
653
pg. 727
VOL. 798, JULY 27, 2016 653
them becomes unnecessary and vexatious. It is based on the policy against multiplicity of suits.33
Anent the first requisite of forum shopping, “[t]here is identity of parties where the parties in both
actions are the same, or there is privity between them, or they are successors-in-interest by title
subsequent to the commencement of the action, litigating for the same thing and under the same
title and in the same capacity. Absolute identity of parties is not required, shared identity of interest
is sufficient to invoke the coverage of this principle. Thus, it is enough that there is a community
of interest between a party in the first case and a party in the second case even if the latter was not
impleaded in the first case.”34
With respect to the second and third requisites of forum shopping, “[h]ornbook is the rule that
identity of causes of action does not mean absolute identity; otherwise, a party could easily escape
the operation of res judicata by changing the form of the action or the relief sought. The test to
determine whether the causes of action are identical is to ascertain whether the same evidence will
sustain both actions, or whether there is an identity in the facts essential to the maintenance of the
two actions. If the same facts or evidence would sustain both, the two actions are considered the
same, and a judgment in the first case is a bar to the subsequent action.
_______________
33 Benavidez v. Salvador, 723 Phil. 332, 342; 712 SCRA 238, 248 (2013). See also Section 1(e),
Rule 16 of the Rules of Court, which reads:
Section 1. Grounds.—Within the time for but before filing the answer to the complaint or
pleading asserting a claim, a motion to dismiss may be made on any of the following
grounds:
xxxx
(e) That there is another action pending between the same parties for the same cause[.]
34 Degayo v. Magbanua-Dinglasan, G.R. No. 173148, April 6, 2015, 755 SCRA 1, 13.
654

pg. 728
Hence, a party cannot, by varying the form of action or adopting a different method of presenting
his case, escape the operation of the principle that one and the same cause of action shall not be
twice litigated between the same parties or their privies. Among the several tests resorted to in
ascertaining whether two suits relate to a single or common cause of action are: (1) whether the
same evidence would support and sustain both the first and second causes of action; and (2)
whether the defenses in one case may be used to substantiate the complaint in the other. Also
fundamental is the test of determining whether the cause of action in the second case existed at the
time of the filing of the first complaint.”35
Here, it cannot be said that there is an identity of parties between Civil Case No. 10-323 pending
before RTC-Makati and Civil Case No. 543-M-2010 pending before RTC-Malolos because the
plaintiffs in the former, herein Sherwyn, et al., represent substantially different interests from the
plaintiffs in the latter, herein petitioners. This is because in Civil Case No. 10-323, Sherwyn, et
al.’s interest is to be subrogated into the shoes of BDO as one of the creditors under the MTI; on
the other hand, petitioners’ interest in Civil Case No. 543-M-2010 is the enforcement of their rights
as debtors to the MTI, i.e., ensuring that the foreclosure proceedings were in accord with the
foreclosure provisions of the MTI.
Secondly, the underlying circumstances surrounding the causes of action in both cases are likewise
substantially different in that: (a) in Civil Case No. 10-323, the cause of action arose from EBC’s
alleged unjust refusal to subrogate Sherwyn, et al. to the rights of BDO; while (b) in Civil Case
No. 543-M-2010, the cause of action stemmed from EBC’s purported breach of Section 6.0536 of
the MTI which provides that
_______________
35 Yap v. Chua, 687 Phil. 392, 401-402; 672 SCRA 419, 430 (2012).
36 See Rollo, p. 53. Section 6.05 of the MTI states:
655
VOL. 798, JULY 27, 2016 655

it should first secure a written instruction from the Majority Creditors37 before commencing
foreclosure proceedings against the collaterals.
Finally, a judgment in Civil Case No. 10-323 will not necessarily result in res judicata in Civil
Case No. 543-M-2010. Being principally a subrogation case which is an action in personam,38 a
judgment in Civil Case No. 10-323 will not bind
pg. 729
_______________
6.05. No foreclosure of the Collateral or any part thereof may be made by the TRUSTEE
unless:
(a) an Event of Default has been declared and has remained unremedied, as provided
for in Sections 6.02 and 6.03 hereof (except when sub-paragraphs [a] and [g] of
Section 6.01 is applicable); and
(b) the Majority Creditors shall have given their written instructions to the TRUSTEE
to foreclose the Collateral.
xxxx
37 Id., at p. 41. Section 1.08 of the MTI reads:
1.08. “Majority Creditors” shall mean the Creditor or Creditors holding more than
fifty percent (50%) of the aggregate principal amount of the Obligations outstanding
from time to time (with any Obligation denominated in foreign currency computed in
its Peso Equivalent) as of 11:00 a.m. (Philippine Time) on the date any decision or
determination by the Majority Creditors is required under this Indenture.
38 “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.” (Macasaet v. Co, Jr., 710 Phil. 167, 177;
656

any nonparties to it, such as the corporation plaintiffs and the other defendants (aside from EBC)
in Civil Case No. 543-M-2010 that represent interests separate and distinct from the parties in Civil
Case No. 10-323.39 At the most, a judgment in Civil Case No. 10-323 may only constitute the
factum probans (or evidentiary facts) by which the factum probandum (or the ultimate fact) sought
to be proven by petitioners in Civil Case No. 543-M-2010, i.e., EBC’s noncompliance with the
foreclosure provisions of the MTI, could be established.
pg. 730
In sum, both the RTC-Malolos and the CA erred in dismissing Civil Case No. 543-M-2010 on the
ground of forum shopping and/or litis pendentia. Hence, Civil Case No. 543-M-2010 stands to be
reinstated and remanded to the court a quo for further proceedings.
WHEREFORE, the petition is GRANTED. The Decision dated May 22, 2013 and the Resolution
dated December 27, 2013 of the Court of Appeals in C.A.-G.R. CV No. 98880 are hereby
REVERSED and SET ASIDE. Civil Case No. 543-M-2010 is REINSTATED and
REMANDED to the Regional Trial Court of Malolos City, Bulacan, Branch 15 for further
proceedings.
SO ORDERED.
_______________
697 SCRA 187, 199 [2013], citing Domagas v. Jensen, 489 Phil. 631, 641; 448 SCRA 663, 673-
674 [2005])
39 See Green Acres Holdings, Inc. v. Cabral, 710 Phil. 235,

250-251; 697 SCRA 266, 282 (2013), citing Muñoz v. Yabut, Jr., 665 Phil. 488, 509-510; 650
SCRA 344, 367 (2011). See also Dare Adventure Farm Corporation v. Court of Appeals, 695 Phil.
681, 690-691; 681 SCRA 580, 588-589 (2012).
657
VOL. 798, JULY 27, 2016 657

Notes.—Where the elements of litis pendentia are present, and where a final judgment in one case
will amount to res judicata in the other, there is forum shopping. (In Re: Reconstitution of Transfer
Certificates of Title Nos. 303168 and 303169 and Issuance of Owner’s Duplicate Certificates of
Title in Lieu of Those Lost, 624 SCRA 81 [2010])
Forum shopping does not exist where different orders were questioned, two distinct causes of
action and issues were raised, and two objectives were sought. (Id.)
——o0o——
pg. 731
G.R. No. 158464. August 2, 2016.*
JOCELYN S. LIMKAICHONG, petitioner, vs. LAND BANK OF THE PHILIPPINES,

DEPARTMENT OF AGRARIAN REFORM, represented by the SECRETARY OF AGRARIAN
REFORM, through the PROVINCIAL AGRARIAN REFORM OFFICER, respondents.
Remedial Law; Certiorari; The following requisites must concur for a petition for certiorari to
prosper, namely: (1) the writ is directed against a tribunal, a board or any officer exercising
judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in
excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction;
and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course of
law.—In that regard, the following requisites must concur for certiorari to prosper, namely: (1)
the writ is directed against a tribunal, a board or any officer exercising judicial or quasi-judicial
functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or
any plain, speedy and adequate remedy in the ordinary course of law. Without jurisdiction means
that the court acted with absolute lack of authority. There is excess of jurisdiction when the court
transcends its power or acts without any statutory authority. Grave abuse of discretion implies
such capricious and whimsical exercise of judgment as to be equivalent to lack or excess of
jurisdiction; in other words, power is exercised in an arbitrary or despotic manner by reason of
passion, prejudice, or personal hostility; and such exercise is so patent or so gross as to amount to
an evasion of a positive duty or to a virtual refusal either to perform the duty enjoined or to act at
all in contemplation of law.
Same; Same; Appeals; The availability of an appeal as a remedy is a bar to the bringing of the
petition for certiorari only where such appeal is in itself a sufficient and adequate remedy.—
Indeed, the Court has held that the availability of an appeal as a remedy is a
_______________
* EN BANC.
140

Limkaichong vs. Land Bank of the Philippines
pg. 732
bar to the bringing of the petition for certiorari only where such appeal is in itself a sufficient and
adequate remedy, in that it will promptly relieve the petitioner from the injurious effects of the
judgment or final order complained of.
Comprehensive Agrarian Reform Law; Expropriation; Eminent Domain; Just Compensation; The
determination of just compensation in eminent domain is a judicial function.—In all of the
foregoing rulings of the Court as well as in subsequent ones, it could not have been
overemphasized that the determination of just compensation in eminent domain is a judicial
function. However, the more recent jurisprudence uphold the preeminence of the pronouncement
in Philippine Veterans Bank v. Court of Appeals, 322 SCRA 139 (2000), to the effect that the
parties only have 15 days from their receipt of the decision/order of the DAR within which to
invoke the original and exclusive jurisdiction of the SAC; otherwise, the decision/order attains
finality and immutability.
Velasco, Jr., J., Separate Concurring Opinion:
Comprehensive Agrarian Reform Law; Expropriation; Eminent Domain; View that the
determination of just compensation is essentially a judicial function.—The determination of just
compensation is essentially a judicial function, consistent with the Court’s roles as the guardian of
the fundamental rights guaranteed by the due process and equal protection clauses, and as the final
arbiter over transgressions committed against constitutional rights.
Same; Same; Same; View that there is then neither rhyme nor reason to treat agrarian reform
cases differently insofar as the determination of just compensation is concerned.—To reiterate,
the concept of just compensation is uniform across all forms of exercise of eminent domain. There
is then neither rhyme nor reason to treat agrarian reform cases differently insofar as the
determination of just compensation is concerned. I therefore express my concurrence to the line of
cases that ruled that the land valuation by DAR is only preliminary and is not, by any means, final
and conclusive upon the landowner or any other interested party, for, in the end, the courts still
have the right to review with finality the determination in the exercise of what is admittedly a
judicial function.
141
VOL. 799, AUGUST 2, 2016 141

pg. 733
Same; Same; Same; Department of Agrarian Reform; View that although the Department of
Agrarian Reform (DAR) has the authority to promulgate its own rules of procedure, it cannot
modify the “original and exclusive jurisdiction” to settle the issue of just compensation accorded
the Special Agrarian Courts (SACs).—Although the DAR has the authority to promulgate its own
rules of procedure, it cannot modify the “original and exclusive jurisdiction” to settle the issue of
just compensation accorded the SACs. Stated in the alternative, the DAR is precluded from vesting
upon itself the power to determine the amount of just compensation to which a landowner is
entitled.
Same; Same; Same; Same; View that the Department of Agrarian Reform’s (DAR’s) valuation,
being preliminary in nature, could not attain finality, as it is only the courts that can resolve the
issue on just compensation.—The DAR’s valuation, being preliminary in nature, could not attain
finality, as it is only the courts that can resolve the issue on just compensation. Administrative
rules that impose a reglementary period for filing a petition before the SAC, consequently allowing
the DAR’s preliminary valuation to attain finality, unduly diminish the original and exclusive
jurisdiction of the SAC, and convert it into an appellate one.
Same; Same; Same; Same; View that the Department of Agrarian Reform’s (DAR’s) valuation
cannot be treated as the amount of just compensation the landowner is entitled to, notwithstanding
the lapse of fifteen (15) days from receipt of notice thereof.—All told, the DAR’s valuation cannot
be treated as the amount of just compensation the landowner is entitled to, notwithstanding the
lapse of 15 days from receipt of notice thereof. It is not in the nature of an award that was “finally
determined by the court,” for, aside from the DAR not being a court of law, the postulation would
render the subsequent petition before the SAC an appeal.
Same; Same; Same; Same; View that there is no basis for requiring the petition for the
determination of just compensation to be filed within fifteen (15) days from receipt of notice of the
Department of Agrarian Reform’s (DAR’s) valuation.—Succinctly put, there is no basis for
requiring the petition for the determination of just compensation to be filed within 15 days from
receipt of notice of the DAR’s valuation. The validity of Sec. 11, Rule XIII of the 1994 Rules, as
142

reincarnated in Sec. 6, Rule XIX of the 2009 Rules, cannot then be sustained and, instead, must be
struck down as void and of no legal effect.
Leonen, J., Separate Concurring Opinion:
pg. 734
Remedial Law; Comprehensive Agrarian Reform Law; Expropriation; Eminent Domain; View
that the original and exclusive jurisdiction of Special Agrarian Courts (SACs) to determine just
compensation should not be superseded by an executive determination.—The original and
exclusive jurisdiction of Special Agrarian Courts to determine just compensation should not be
superseded by an executive determination. Therefore, provisions that limit the period when
landowners can assert their right to just compensation should be struck down for being outside the
constitutional confines of the eminent domain powers of the state.
Same; Same; Same; Same; View that Regional Trial Courts (RTCs) sitting as Special Agrarian
Courts (SACs) have original and exclusive jurisdiction over all petitions for the determination of
just compensation to landowners.—Thus, Regional Trial Courts sitting as Special Agrarian Courts
have “original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners.” The jurisdiction is original, which means that petitions for
determination of just compensation may be initiated before Special Agrarian Courts. The
jurisdiction is exclusive, which means that no other court or quasi-administrative tribunal has the
same original jurisdiction over these cases.
Jardeleza, J., Separate Concurring Opinion:
Remedial Law; Judicial Power; Expropriation; Eminent Domain; View that the determination of
just compensation in cases of eminent domain is an actual controversy that calls for the exercise
of judicial power by the courts.—The determination of just compensation in cases of eminent
domain is an actual controversy that calls for the exercise of judicial power by the courts. This is
what the Court means when it said that “[t]he determination of ‘just compensation’ in eminent
domain cases is a judicial function.”
143
VOL. 799, AUGUST 2, 2016 143

Same; Same; Same; Same; Department of Agrarian Reform; Just Compensation; View that the
validity of the grant by Congress to the Department of Agrarian Reform (DAR) of the primary
jurisdiction to determine just compensation has been settled.—The validity of the grant by
Congress to the DAR of the primary jurisdiction to determine just compensation, under the
summary administrative process in Section 16 of RA 6657, has been settled by this Court more
pg. 735
than twenty-five (25) years ago in the landmark case of Association of Small Landowners in the
Philippines, Inc. v. Secretary of Agrarian Reform, 175 SCRA 343 (1989).
Same; Same; Same; Same; Same; Same; Comprehensive Agrarian Reform Law; View that
adjudication by the Department of Agrarian Reform (DAR) on just compensation is not an
executive recommendation or a superfluity to be blithely dismissed by the courts.—The
adjudication by the DAR on just compensation is not an executive recommendation or a superfluity
to be blithely dismissed by the courts. They are, rather, quasi-judicial decisions reached as a result
of what the Administrative Code of 1987 considers as a contested case, where “legal rights, duties
or privileges asserted by specific parties as required by the Constitution or by law are x x x
determined after hearing.”
Same; Same; Same; View that decisions of the Department of Agrarian Reform (DAR) become
final within fifteen (15) days from receipt of the decision unless brought to the Court of Appeals
(CA).—On top of Section 51, Sections 54 and 57, read together, provide that decisions of the DAR
become final within fifteen (15) days from receipt of the decision, unless brought to the Court of
Appeals under Section 54, or to the SAC under Section 57.
Same; Same; Same; Civil Law; Prescription; View that thirty (30)-year time limit to bring the
Department of Agrarian Reform (DAR) decision to the Special Agrarian Court (SAC) is
unreasonable.—A thirty-year period is unreasonable. It is oppressive to the landowner, to the DAR
and the Land Bank of the Philippines (LBP) because it violates the Constitution’s command that
“[a]ll persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.” It also defeats the primordial objective of the Revised Rules of
Court “of securing a just, speedy and inexpensive disposition of every action and proceeding.”
144

Yap-Siton Law Offices for petitioner.
Gonzales, Beramo & Associates for respondent LBP.
BERSAMIN, J.:
pg. 736
Being now assailed in this appeal are the decision promulgated by the Court of Appeals (CA) on
November 22, 2002 (dismissing the petitioner’s petition for certiorari for not being the proper
remedy, thereby affirming the dismissal of Civil Case No. 12558 by the trial court on the ground
of the valuation by the Department of Agrarian Reform (DAR) having already become final due
to her failure as the landowner to bring her action for judicial determination of just compensation
within 15 days from notice of such valuation),1 and the resolution promulgated on June 2, 2003
(denying her motion for reconsideration).2
Antecedents
The petitioner was the registered owner of agricultural lands with a total area of 19.6843 hectares
situated in Villegas, Guihulngan, Negros Oriental and covered by Original Certificate of Title No.
(OCT) FV-34400, OCT No. 34401, OCT No. 34402, and OCT No. 34403, all of the Register of
Deeds of Negros Oriental. For purposes of placing those lands
_______________
1 Rollo, pp. 165-169; penned by Associate Justice Perlita J. Tria Tirona (retired), with the
concurrence of Associate Justices Roberto A. Barrios (retired/deceased) and Edgardo F. Sundiam
(retired/deceased).
2 Id., at pp. 189-190.
145
VOL. 799, AUGUST 2, 2016 145

within the coverage of Republic Act No. 6657 (R.A. No. 6657),3 the Department of Agrarian
Reform Adjudication Board (DARAB), Office of the Provincial Adjudicator, in Dumaguete City
sent to her in 1998 several Notices of Land Valuation and Acquisition by which her lands were
valued for acquisition by the DAR as follows:
1. OCT FV-34400 – P177,074.93;4
pg. 737
2. OCT FV-34401 – P171,061.11;5
3. OCT FV-34402 – P167,626.62;6 and
4. OCT FV-34403 – P140,611.65.7
After the petitioner rejected such valuation of her lands, the DARAB conducted summary
administrative proceedings for the determination of just compensation.8 On May 28, 1999, the
DARAB issued its order affirming the valuation of the lands upon finding the valuation consistent
with existing administrative guidelines on land valuation.9
On August 19, 1999, the petitioner filed in the Regional Trial Court (RTC) in Dumaguete City a
complaint for the fixing of just compensation for her lands,10 impleading as defendant the Land
Bank of the Philippines (LBP) and the DAR, represented by the DAR Secretary, through the
Dumaguete Provincial Agrarian Reform Officer (PARO). Her complaint, docketed as Civil Case
No. 12558, prayed that the DARAB valuation be set aside and declared null and void,
_______________
3 Comprehensive Agrarian Reform Law, signed by President Corazon Aquino on June 10, 1988.
4 Rollo, pp. 69-70.
5 Id., at pp. 71-72.
6 Id., at p. 76.
7 Id., at pp. 73-74.
8 Docketed as DARAB Case Nos. VII-203-NO-98, VII-204-NO-98, VII-213-NO-98, and VII-

228-NO-98.
9 Rollo, pp. 98-103.
10 Id., at pp. 82-85.
146

pg. 738
and that in its stead the price of her lands be fixed based on the fair market value thereof.
After filing their answer, the respondents filed a manifestation and motion to dismiss,11 stating
that the petitioner’s failure to timely appeal the May 28, 1999 DARAB order had rendered the
order final and executory pursuant to Section 5112 of R.A. No. 6657. They attached to the motion
to dismiss a June 23, 2000 certification of finality issued by the Clerk of the DARAB,13 stating
that the May 28, 1999 order had become final and executory because there had been no appeal
filed within the reglementary period provided by law.
In her opposition to the respondents’ motion to dismiss,14 the petitioner admitted that Civil Case
No. 12558 was filed beyond the reglementary period, but insisted that the RTC sitting as special
agrarian court (SAC) was not barred from acquiring jurisdiction over the complaint for
determination of just compensation, because her cause of action was anchored on the respondents’
violation of her right to due process and their taking of her property without just compensation due
to the DARAB valuation being too low and having been arbitrarily arrived at. She claimed that the
RTC as the SAC should accord her the same treatment it had accorded to other landowners who
had been given the chance to be heard on their claim for revaluation despite the belated filing of
their complaints for just compensation.
On June 7, 2001, the RTC as the SAC granted the respondents’ motion to dismiss.15 Citing Section
51 and Section 5416
_______________
11 Id., at pp. 104-105.
12 Section 51. Finality of Determination.—Any case or controversy before it (DAR) shall be

decided within thirty (30) days after it is submitted for resolution. Only one (1) motion for
consideration shall be allowed. Any order, ruling or decision shall be final after the lapse of fifteen
(15) days from receipt of a copy thereof.
13 Rollo, p. 106.
14 Id., at pp. 107-110.
15 Id., at pp. 116-121.
147
VOL. 799, AUGUST 2, 2016 147

pg. 739
of R.A. No. 6657 and Section 11 of Rule XIII of the 1994 DARAB Rules of Procedure,17 it held
that the petitioner’s complaint should have been filed within 15 days from notice of the assailed
order. It dismissed her argument that the case was anchored on violations of her constitutional
rights to due process and just compensation, declaring that the controlling ruling was Philippine
Veterans Bank v. Court of Appeals,18 not Republic v. Court of Appeals.19 Thus, applying the
ruling in Philippine Veterans Bank, the RTC concluded that dismissal was proper because she had
filed Civil Case No. 12558 beyond the statutory 15-day period.
The petitioner moved for reconsideration,20 but to no avail.
Thus, on October 22, 2001, the petitioner brought her petition for certiorari in the CA assailing
the dismissal of Civil Case No. 12558.
On November 22, 2002, the CA rendered its decision affirming the dismissal of Civil Case No.
12558, opining that because the June 7, 2001 order of the RTC dismissing Civil Case No. 12558
was a final order, the petitioner’s remedy was
_______________
16 Section 54. Certiorari.—Any decision, order, award or ruling of the DAR on any agrarian
dispute or on any matter pertaining to the application, implementation, enforcement, or
interpretation of this Act and other pertinent laws on agrarian reform may be brought to the Court
of Appeals by certiorari except as otherwise provided in this Act within fifteen (15) days from
receipt of a copy thereof.
17 Section 11. Land Valuation and Preliminary Determination and Payment of Just
Compensation.—The decision of the Adjudicator on land valuation and preliminary determination
and payment of just compensation shall not be appealable to the Board but shall be brought directly
to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from
receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration.
19 G.R. No. 122256, October 30, 1996, 263 SCRA 758.
20 Rollo, pp. 122-135.
148

pg. 740
not the special civil action for certiorari but an appeal in the CA; that she chose the wrong remedy
because certiorari could not take the place of an appeal; and that the RTC thus committed no grave
abuse of discretion that warranted the issuance of the writ of certiorari.
Issue
The petitioner raises the following issue for resolution:
WHETHER OR NOT ON THE QUESTION OF CONSTITUTIONAL RIGHT TO EQUAL

PROTECTION OF LAW, THE COURT OF APPEALS’ DECISION DATED NOVEMBER 22,
2002 RULING THAT THE PETITION FOR CERTIORARI WAS NOT THE PROPER REMEDY
IS CONTRARY TO THE LAW AND JURISPRUDENCE AS APPLIED TO THE EVIDENCE
ON RECORD.21
The petitioner argues that she is entitled to equal protection and treatment accorded by the very
same trial court to other landowners whose landholdings were placed under agrarian reform
coverage, listing the cases involving other landowners who had been given the chance to be heard
on their claim for revaluation by the trial court.22 She justifies her resort to certiorari by claiming
that the RTC, in dismissing Civil Case No. 12558, acted whimsically and arbitrarily, and gravely
abused its discretion; and that certiorari was necessary to prevent irreparable damage and injury
to her resulting from the acquisition by the State of her lands based on wrongful valuation and
without paying her the proper and just compensation.
In their respective comments,23 the respondents counter that the petitioner’s reliance on the equal
protection clause of
_______________
21 Id., at p. 18.
22 Id., at pp. 19-24, 138-155.
23 Id., at pp. 215-228, 232-250.
149
pg. 741
VOL. 799, AUGUST 2, 2016 149
the fundamental law is misplaced and bereft of legal and factual basis; that, on the contrary, they
faithfully performed their task in relation to her landholdings, and in accordance with the agrarian
laws and guidelines issued in furtherance thereof; that the final and executory DARAB valuation
should no longer be disturbed by her frivolous claim of lack of due process; that her failure to
properly observe the rules of procedure relative to reglementary periods should not be concealed
by a trivial claim of violation of her constitutional rights; that pursuant to Section 6024 of RA
6657, the decision became final because an appeal by petition for review was not taken from the
decision of the RTC as the SAC within 15 days from notice of the decision; and that there was no
proof of service on the CA of a copy of the petition as required by Section 3, Rule 45 of the Rules
of Court and Circular No. 19-91, thereby warranting the outright dismissal of the petition.
Ruling of the Court
The petition for review is meritorious.
I
Certiorari was a proper remedy
despite the availability of appeal
The CA ruled that the proper remedy of the petitioner was not to bring the petition for certiorari
but to appeal the dismissal of Civil Case No. 12558 in accordance with the Rules of
_______________
24 Section 60. Appeals.—An appeal may be taken from the decision of the Special Agrarian
Courts by filing a petition for review with the Court of Appeals fifteen (15) days from receipt of
notice of the decision; otherwise, the decision shall become final.
An appeal from the decision of the Court of Appeals, or from any order, ruling or decision of DAR,
as the case may be, shall be by a petition for review with the Supreme Court within a non-
extendible period of fifteen (15) days from receipt of a copy of said decision.
pg. 742
150

Court; and that appeal as her proper remedy was already time-barred.
Ostensibly, the assailed dismissal by the RTC was an order that had finally disposed of Civil Case
No. 12558; hence, the petitioner’s proper recourse therefrom was an appeal taken in due course
because the order of dismissal was a final disposition of the case.25 In that situation, certiorari
would not have been appropriate.
However, the petitioner would not be prevented from assailing the dismissal by petition for
certiorari provided her resort complied with the requirements of the Rules of Court for the bringing
of the petition for certiorari. In that regard, the following requisites must concur for certiorari to
prosper, namely: (1) the writ is directed against a tribunal, a board or any officer exercising judicial
or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3)
there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.26
Without jurisdiction means that the court acted with absolute lack of authority. There is excess of
jurisdiction when the court transcends its power or acts without any statutory authority. Grave
abuse of discretion implies such capricious and whimsical exercise of judgment as to be equivalent
to lack or excess of jurisdiction; in other words, power is exercised in an arbitrary or despotic
manner by reason of passion, prejudice, or personal hostility; and such exercise is so patent or so
gross as to amount to an evasion of a positive duty or to a virtual refusal either to perform the duty
enjoined or to act at all in contemplation of law.27
_______________
25 Heirs of Spouses Teofilo M. Reterta and Elisa Reterta v. Lopez, G.R. No. 159941, August 17,
2011, 655 SCRA 580, 590-591.
26 Delos Santos v. Court of Appeals, G.R. No. 169498, December 11, 2008, 573 SCRA 690, 700.
27 Id.
151
VOL. 799, AUGUST 2, 2016 151

pg. 743
Indeed, the Court has held that the availability of an appeal as a remedy is a bar to the bringing of
the petition for certiorari only where such appeal is in itself a sufficient and adequate remedy, in
that it will promptly relieve the petitioner from the injurious effects of the judgment or final order
complained of.28 The Court does not hesitate or halt on its tracks in granting the writ of certiorari
to prevent irreparable damage and injury to a party in cases where the trial judge capriciously and
whimsically exercised his judgment, or where there may be a failure of justice;29 or where the
assailed order is a patent nullity; or where the grant of the writ of certiorari will arrest future
litigations; or for certain considerations, such as public welfare and public policy.30
Here, the petitioner laments that she had not been accorded equal protection and treatment by the
trial court which had awarded to other landowners a higher valuation of their property despite the
belated filing of their petitions. For sure, the petition for certiorari thereby plainly alleged that the
RTC had committed grave abuse of discretion by violating the petitioner’s constitutional right to
due process or equal protection. Such a petition should not be forthwith dismissed but should be
fully heard if only to ascertain and determine if the very serious allegations were true.
II
Dismissal of petitioner’s action was unfair and improper
Section 9, Article III of the 1987 Constitution provides that “[p]rivate property shall not be taken
for public use without
_______________
28 Metropolitan Bank and Trust Company, Inc. v. National Wages and Productivity Commission,
G.R. No. 144322, February 6, 2007, 514 SCRA 346, 358; Silvestre v. Torres and Oben, 57 Phil.
885, 890 (1933).
29 Rodriguez v. Court of Appeals, G.R. No. 85723, June 19, 1995, 245 SCRA 150, 152.
30 Bristol Myers Squibb (Phils.), Inc. v. Viloria, G.R. No. 148156, September 27, 2004, 439
SCRA 202, 211.
152

pg. 744
just compensation.” The determination of just compensation has been the subject of various
discordant rulings of the Court. Although some of the later rulings have supposedly settled the
controversy of whether the courts or the DAR should have the final say on just compensation, the
conflict has continued, and has caused some confusion to the Bench and the Bar, as well as to the
other stakeholders in the expropriation of agricultural landholdings.
Under existing law and regulation, respondent LBP is tasked with the responsibility of initially
determining the value of lands placed under land reform and the just compensation to be paid the
landowners for their taking.31 By way of notice sent to the landowner pursuant to Section 16(a)32
of R.A. No. 6657, the DAR makes an offer to acquire the land sought to be placed under agrarian
reform. If the concerned landowner rejects the offer, a summary administrative proceeding is held,
and thereafter the provincial adjudicator (PARAD), the regional adjudicator (RARAD) or the
central adjudicator (DARAB), as the case may be, fixes the price to be paid for the land, based on
the various factors and criteria as
_______________
31 Executive Order No. 405 (Vesting in the Land Bank of the Philippines the Primary
Responsibility to Determine the Land Valuation and Compensation for all Lands Covered Under
Republic Act No. 6657, Known as the Comprehensive Agrarian reform law of 1988), dated June
14, 1990.
32 Section 16. Procedure for Acquisition and Distribution of Private Lands.—For purposes of
acquisition of private lands, the following procedures shall be followed:
(a) After having identified the land, the landowners and the beneficiaries, the DAR shall send its
notice to acquire the land to the owners thereof, by personal delivery or registered mail, and post
the same in a conspicuous place in the municipal building and barangay hall of the place where
the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value
in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.
xxxx
153
VOL. 799, AUGUST 2, 2016 153

determined by law or regulation. Should the landowner disagree with the valuation, he/she may
bring the matter to the RTC acting as the SAC.33 This is the procedure for the determination of
just compensation under R.A. No. 6657.34
pg. 745
There appears to be no question on the respondents’ observance of the proper procedure for
acquisition of the petitioner’s lands. The remaining issue concerns whether the trial court’s
dismissal of her petition because of her failure to file it before the decision/order of the DARAB
became final and executory pursuant to Section 51 of R.A. No. 6657 was fair and proper.
We rule in the negative.
There have been divergent rulings on whether the courts or another agency of the government
could address the determination of just compensation in eminent domain, but the starting point is
the landmark 1987 ruling in Export Processing Zone Authority (EPZA) v. Dulay,35 which resolved
the challenge against several decrees promulgated by President Marcos. The decrees provided
certain measures to the effect that the just compensation for property under expropriation should
be either the assessment of the property by the Government or the sworn valuation of the property
by the owner, whichever was lower. In declaring the decrees unconstitutional, the Court cogently
held:
The method of ascertaining just compensation under the aforecited decrees constitutes
impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a
matter which under this Constitution is reserved to it for final determination.
Thus, although in an expropriation proceeding the court technically would still have the power to
determine
_______________
33 Section 51 of R.A. No. 6657; Section 11 of Rule XIII of the 1994 DARAB Rules of Procedure.
34 Republic v. Court of Appeals, supra note 19 at pp. 764-765.
35 No. L-59603, April 29, 1987, 149 SCRA 305.
154

the just compensation for the property, following the applicable decrees, its task would be
relegated to simply stating the lower value of the property as declared either by the owner or the
assessor. As a necessary consequence, it would be useless for the court to appoint commissioners
under Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the
taking of private property is seemingly fulfilled since it cannot be said that a judicial proceeding
was not had before the actual taking. However, the strict application of the decrees during the
pg. 746
proceedings would be nothing short of a mere formality or charade as the court has only to choose
between the valuation of the owner and that of the assessor, and its choice is always limited to the
lower of the two. The court cannot exercise its discretion or independence in determining what is
just and fair. Even a grade school pupil could substitute for the judge insofar as the determination
of constitutional just compensation is concerned.
xxxx
In the present petition, we are once again confronted with the same question of whether the courts
under P.D. No. 1533, which contains the same provision on just compensation as its predecessor
decrees, still have the power and authority to determine just compensation, independent of what is
stated by the decree and to this effect, to appoint commissioners for such purpose.
This time we answer in the affirmative.
xxxx
It is violative of due process to deny the owner the opportunity to prove that the valuation in the
tax documents is unfair or wrong. And it is repulsive to the basic concepts of justice and fairness
to allow the haphazard work of a minor bureaucrat or clerk to absolutely prevail over the judgment
of a court promulgated only after expert commissioners have actually viewed the property, after
evidence and arguments pro and con have been presented, and after all factors and considerations
essential
155
VOL. 799, AUGUST 2, 2016 155

to a fair and just determination have been judiciously evaluated.36
The Court has reiterated EPZA v. Dulay in its later decisions, stressing that such determination was
the function of the courts of justice that no other branch or official of the Government could usurp.
Upon the effectivity of R.A. No. 6657 in 1988, the DAR, as the central implementing agency of
the law, promulgated the DARAB Rules of Procedures in 1989, 1994, 2003, and 2009 pursuant to
the provisions of Section 4937 and Section 5038 of
_______________
pg. 747
36 Id., at pp. 311-316.
37 Section 49. Rules and Regulations.—The PARC and the DAR shall have the power to issue
rules and regulations, whether substantive or procedural, to carry out the objects and purposes of
this Act. Said rules shall take effect ten (10) days after publication in two (2) national newspapers
of general circulation.
38 Section 50. Quasi-Judicial Powers of the DAR.—The DAR is hereby vested with the
primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian reform except those
falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department
of Environment and Natural Resources (DENR).
It shall not be bound by technical rules of procedure and evidence but shall proceed to hear and
decide all cases, disputes or controversies in a most expeditious manner, employing all reasonable
means to ascertain the facts of every case in accordance with justice and equity and the merits of
the case. Toward this end, it shall adopt a uniform rule of procedure to achieve a just, expeditious
and inexpensive determination for every action or proceeding before it.
It shall have the power to summon witnesses, administer oaths, take testimony, require submission
of reports, compel the production of books and documents and answers to interrogatories and issue
subpoena, and subpoena duces tecum and to enforce its writs through sheriffs or other duly
deputized officers. It shall likewise have the power to punish direct and indirect contempt in the
156

R.A. No. 6657 vesting it with the power to issue rules and regulations, whether substantive or
procedural, to carry out the objects and purposes of the CARL. Moreover, Section 57 of the CARL
defines the jurisdiction of the RTC sitting as the SAC, viz.:
Section 57. Special Jurisdiction.—The Special Agrarian Courts shall have original and
exclusive jurisdiction over all petitions for the determination of just compensation to landowners,
and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all
proceedings before the Special Agrarian Courts unless modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction
within thirty (30) days from submission of the case for decision.
pg. 748
Republic v. Court of Appeals,39 which was principally relied upon by the petitioner herein,
reiterated that the determination of just compensation for the taking of lands under the CARL was
a power vested in the courts and not in administrative agencies, clarifying that the jurisdiction of
the SAC was not appellate but original and exclusive, to wit:
Apart from the fact that only a statute can confer jurisdiction on courts and administrative agencies
—
_______________
same manner and subject to the same penalties as provided in the Rules of Court.
Representatives of farmer leaders shall be allowed to represent themselves, their fellow farmers or
their organizations in any proceedings before the DAR: Provided, however, that when there are
two or more representatives for any individual or group, the representatives should choose only
one among themselves to represent such party or group before any DAR proceedings.
Notwithstanding an appeal to the Court of Appeals, the decision of the DAR shall be immediately
executory except a decision or portion thereof involving solely the issue of just compensation.
39 Rollo, pp. 122-135.
157
VOL. 799, AUGUST 2, 2016 157

rules of procedure cannot — it is noteworthy that the New Rules of Procedure of the DARAB,
which was adopted on May 30, 1994, now provide that in the event a landowner is not satisfied
with a decision of an agrarian adjudicator, the landowner can bring the matter directly to the
Regional Trial Court sitting as Special Agrarian Court. Thus Rule XIII, §11 of the new rules
provides:
§11. Land Valuation and Preliminary Determination and Payment of Just

Compensation.—The decision of the Adjudicator on land valuation and preliminary
determination and payment of just compensation shall not be appealable to the Board but
shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts
within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only
one motion for reconsideration.
This is an acknowledgment by the DARAB that the decision of just compensation cases for the
taking of lands under R.A. No. 6657 is a power vested in the courts.
pg. 749
xxxx
x x x. In accordance with it, the private respondent’s case was properly brought by it in the RTC,
and it was error for the latter court to have dismissed the case. In the terminology of §57, the RTC,
sitting as a Special Agrarian Court, has “original and exclusive jurisdiction over all petitions for
the determination of just compensation to landowners.” It would subvert this “original and
exclusive” jurisdiction of the RTC for the DAR to vest original jurisdiction in compensation cases
in administrative officials and make the RTC an appellate court for the review of administrative
decisions.
Consequently, although the new rules speak of directly appealing the decision of adjudicators to
the RTCs sitting as Special Agrarian Courts, it is clear from §57 that the original and exclusive
jurisdiction to determine such cases is in the RTCs. Any effort to transfer such jurisdiction to the
adjudicators and to convert the original jurisdiction of the RTCs into appellate jurisdiction would
158

be contrary to §57 and therefore would be void. What adjudicators are empowered to do is only to
determine in a preliminary manner the reasonable compensation to be paid to landowners, leaving
to the courts the ultimate power to decide this question.40
In the January 18, 2000 ruling in Philippine Veterans Bank,41 the Court, through Justice Vicente
V. Mendoza who had penned Republic v. Court of Appeals, upheld the DARAB rule to the effect
that the adjudicator’s preliminary determination of just compensation must be brought to the SAC
within 15 days from receipt of the notice thereof; otherwise, the parties would be concluded by the
result. The Court then declared:
As we held in Republic v. Court of Appeals, this rule is an acknowledgment by the DARAB that
the power to decide just compensation cases for the taking of lands under R.A. No. 6657 is vested
in the courts. It is error to think that, because of Rule XIII, §11, the original and exclusive
jurisdiction given to the courts to decide petitions for determination of just compensation has
thereby been transformed into an appellate jurisdiction. It only means that, in accordance with
settled principles of administrative law, primary jurisdiction is vested in the DAR as an
administrative agency to determine in a preliminary manner the reasonable compensation to be
paid for the lands taken under the Comprehensive Agrarian Reform Program, but such
determination is subject to challenge in the courts.
pg. 750
The jurisdiction of the Regional Trial Courts is not any less “original and exclusive” because the
question is first passed upon by the DAR, as the judicial proceedings are not a continuation of the
administrative determination. For that matter, the law may provide that the decision of the DAR is
final and unappealable. Nevertheless,
_______________
40 Id., at pp. 764-765.
41 Philippine Veterans Bank v. Court of Appeals, supra note 18.
159
VOL. 799, AUGUST 2, 2016 159

resort to the courts cannot be foreclosed on the theory that courts are the guarantors of the legality
of administrative action.
Accordingly, as the petition in the Regional Trial Court was filed beyond the 15-day period
provided in Rule XIII, §11 of the Rules of Procedure of the DARAB, the trial court correctly
dismissed the case and the Court of Appeals correctly affirmed the order of dismissal.42
However, in the 2007 ruling in Land Bank of the Philippines v. Suntay,43 the Court opined that
the RTC erred in dismissing the Land Bank’s petition for determination of just compensation on
the ground that it was filed beyond the
15-day period provided in Section 11, Rule XIII of the DARAB New Rules of Procedure. This
Court then emphatically reminded that the SAC’s jurisdiction over petitions for the determination
of just compensation was original and exclusive; that any effort to transfer such jurisdiction to the
adjudicators of the DARAB and to convert the original jurisdiction of the RTC into appellate
jurisdiction was void for being contrary to R.A. No. 6657; and that what DARAB adjudicators
were empowered to do was only to determine in a preliminary manner the reasonable
compensation to be paid to the landowners, leaving to the courts the ultimate power to decide this
question.44
To purge any uncertainties brought about by the conflicting jurisprudence on the matter, this Court
held in its July 31, 2008 resolution in Land Bank of the Philippines v. Martinez:45
pg. 751
On the supposedly conflicting pronouncements in the cited decisions, the Court reiterates its ruling
in this case that the agrarian reform adjudicator’s decision on land valuation attains finality
after the lapse of
_______________
42 Id., at pp. 146-147.
44 Id., at p. 617.
45 G.R. No. 169008, July 31, 2008, 560 SCRA 776.
160

the 15-day period stated in the DARAB Rules. The petition for the fixing of just compensation
should therefore, following the law and settled jurisprudence, be filed with the SAC within
the said period. This conclusion, as already explained in the assailed decision, is based on the
doctrines laid down in Philippine Veterans Bank v. Court of Appeals and Department of Agrarian
Reform Adjudication Board v. Lubrica.
xxxx
The Court notes that the Suntay ruling is based on Republic of the Philippines v. Court of Appeals,
decided in 1996 also through the pen of Justice Vicente V. Mendoza. In that case, the Court
emphasized that the jurisdiction of the SAC is original and exclusive, not appellate. Republic,
however, was decided at a time when Rule XIII, Section 11 was not yet present in the DARAB
Rules. Further, Republic did not discuss whether the petition filed therein for the fixing of just
compensation was filed out of time or not. The Court merely decided the issue of whether cases
involving just compensation should first be appealed to the DARAB before the landowner can
resort to the SAC under Section 57 of R.A. No. 6657.
To resolve the conflict in the rulings of the Court, we now declare herein, for the guidance of the
bench and the bar, that the better rule is that stated in Philippine Veterans Bank, reiterated in
Lubrica and in the August 14, 2007 Decision in this case. Thus, while a petition for the fixing of
just compensation with the SAC is not an appeal from the agrarian reform adjudicator’s
decision but an original action, the same has to be filed within the 15-day period stated in the
DARAB Rules; otherwise, the adjudicator’s decision will attain finality. This rule is not only in
pg. 752
accord with law and settled jurisprudence but also with the principles of justice and equity. Verily,
a belated petition before the SAC, e.g., one filed a month, or a year, or even a decade after the land
valuation of the DAR adjudicator, must not leave the dispossessed landowner in a state of uncer-
161
VOL. 799, AUGUST 2, 2016 161

tainty as to the true value of his property.46 (Emphasis supplied)
In all of the foregoing rulings of the Court as well as in subsequent ones, it could not have been
overemphasized that the determination of just compensation in eminent domain is a judicial
function. However, the more recent jurisprudence uphold the preeminence of the pronouncement
in Philippine Veterans Bank to the effect that the parties only have 15 days from their receipt of
the decision/order of the DAR within which to invoke the original and exclusive jurisdiction of
the SAC; otherwise, the decision/order attains finality and immutability.
It remains uncontested that the petitioner filed her complaint in the RTC for the determination of
just compensation after more than two and a half months had already elapsed from the time the
DARAB issued the assailed valuation. Following the pronouncement in Philippine Veterans Bank,
her failure to file the complaint within the prescribed 15-day period from notice would have surely
rendered the DARAB’s valuation order final and executory. As such, it would seem that there was
sufficient ground for the dismissal of the petitioner’s complaint for having been filed out of time.
However, we cannot fairly and properly hold that the petitioner’s complaint for the determination
of just compensation should be barred from being tried and decided on that basis. The prevailing
rule at the time she filed her complaint on August 19, 1999 was that enunciated in Republic v.
Court of Appeals on October 30, 1996.47 The pronouncement in Philippine Veterans Bank was
promulgated on January 18, 2000 when the trial was already in progress in the RTC. At any rate,
it would only be eight years afterwards that t, he Court En Banc unanimously resolved the
jurisprudential conun-
_______________
46 Id., at pp. 781-783.
47 Supra note 19.
pg. 753
162

drum through its declaration in Land Bank v. Martinez that the better rule was that enunciated in
Philippine Veterans Bank, The Court must, therefore, prospectively apply Philippine Veterans
Bank. The effect is that the petitioner’s cause of action for the proper valuation of her expropriated
property should be allowed to proceed. Hence, her complaint to recover just compensation was
properly brought in the RTC as the SAC, whose dismissal of it upon the motion of Land Bank
should be undone.
WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the decision
of the Court of Appeals dated November 22, 2002; and DIRECT the Regional Trial Court, Branch
30, in Dumaguete City to resume the proceedings in Civil Case No. 12558 for the determination
of just compensation of petitioner Jocelyn S. Limkaichong’s expropriated property.
SO ORDERED.
Sereno (CJ.), Leonardo-De Castro, Peralta, Del Castillo, Perez, Mendoza, Reyes, Perlas-Bernabe
and Caguioa, JJ., concur.
Carpio, J., I join the Separate Opinion of Justice Velasco, Jr.
Velasco, Jr., J., Please see Separate Concurring Opinion.
Leonen and Jardeleza, JJ., See Separate Concurring Opinion.
SEPARATE CONCURRING OPINION
VELASCO, JR., J.:
I concur with the well-crafted ponencia of my esteemed colleague, Associate Justice Lucas P.
Bersamin.
pg. 754
163
VOL. 799, AUGUST 2, 2016 163

While the grant of the petition is moored on the pronouncement in Republic v. Court of Appeals
(Republic),1 as reinforced later in Land Bank of the Philippines v. Suntay,2 I submit that the
petition should be granted on the ground that the fifteen (15)-day period to file the case with the
Special Agrarian Court (SAC) required by the 1994 DARAB Rules of Procedure (1994 DARAB
Rules) and adopted in the 2009 version is null and void, it being a gross breach of Section 57 of
Republic Act No. 6657 (RA 6657), otherwise known as the Comprehensive Agrarian Reform Law
(CARL).
I am in complete agreement with the ponencia’s application herein of the doctrine in Republic, as
reiterated in Suntay, to the end that there is no statutory period within which the issue of just
compensation must be brought before the proper Regional Trial Court (RTC) acting as the SAC.
But while the ponencia is of the position that the rulings in Republic and Suntay have already been
superseded, I respectfully submit that the doctrine is as valid and applicable now as it were before.
The issue in the case at bar originated from the petition of Jocelyn S. Limkaichong (Limkaichong)
for the determination of the amount of just compensation that she is entitled to under the CARL.
Pursuant to Sec. 16 of the law, the Department of Agrarian Reform (DAR) “shall conduct summary
administrative proceedings to determine the compensation for the land”3 if the landowner rejects
the initial offer of compensation from the government; and “[a]ny party who disagrees with the
decision may bring the matter to the court of proper jurisdiction for final determination of just
compensation.”4
None of the parties doubts that the proper court in this case is the RTC in Dumaguete City
designated as the SAC.
_______________
3 RA No. 6657, Sec. 16(d).
4 Id., Sec. 16(f).
pg. 755
164

Respondents postulate, however, that the judicial remedy is subject to a 15-day reglementary
period reckoned from the date of receipt of the DAR’s valuation, citing Sec. 54 of the CARL, as
well as Sec. 11, Rule XIII of the 1994 DARAB Rules. The rule provides:
Sec. 11. Land Valuation and Preliminary Determination and Payment of Just Compensation.—
The decision of the Adjudicator on land valuation and preliminary determination of just
compensation shall not be appealable to the Board but shall be brought directly to the Regional
Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the
notice thereof. Any party shall be entitled to only one motion for reconsideration.
Replicated in Sec. 6, Rule XIX of the 2009 DARAB Rules is the imposition of the 15-day
reglementary period. The provision reads:
Sec. 6. Filing of Original Action with the Special Agrarian Court for Final Determination.—
The party who disagrees with the decision of the Board/Adjudicator may contest the same by filing
an original action with the Special Agrarian Court (SAC) having jurisdiction over the subject
property within fifteen (15) days from his receipt of the Board/Adjudicator’s decision. (emphasis
added)
Since it was not disputed herein, as it was in fact admitted, that petitioner Limkaichong availed of
the judicial remedy after about two-and-a-half months had elapsed from receipt of notice,
respondents claim that the SAC ought to have dismissed her petition outright.
Respondents’ argument fails to persuade.
165
VOL. 799, AUGUST 2, 2016 165

pg. 756
Discussion
The determination of just

compensation is a judicial
function
The payment of just compensation is a constitutional limitation to the government’s exercise of

eminent domain. Despite making numerous appearances in various provisions of the fundamental
law,5 it was the understanding among the members of the Constitutional Commission that the
concept of “just compensation” would nevertheless bear the same jurisprudentially-settled
meaning throughout the document.6
_______________
5 Article III. Bill of Rights
Section 9. Private property shall not be taken for public use without just compensation.
Article XII. National Economy and Patrimony
Section 18. The State may, in the interest of national welfare or defense, establish and operate
vital industries and, upon payment of just compensation, transfer to public ownership utilities
and other private enterprises to be operated by the Government.
Article XIII. Social Justice and Human Rights
Section 4. The State shall, by law, undertake an agrarian reform program founded on the right
of farmers and regular farmworkers who are landless, to own directly or collectively the lands they
till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end,
the State shall encourage and undertake the just distribution of all agricultural lands, subject to
such priorities and reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-sharing. (emphasis
added)
6 Record of the Constitutional Commission Proceedings and Debates, Vol. 3, pp. 16-21; Minutes
of the Constitutional Commission dated August 7, 1986.
pg. 757
166

As settled, the term “just compensation” refers to the full and fair equivalent of the property taken
from its owner by the expropriator. The measure is not the taker’s gain, but the owner’s loss. The
word “just” is used to qualify the meaning of the word “compensation” and to convey thereby the
idea that the amount to be tendered for the property to be taken shall be real, substantial, full and
ample.7
The determination of just compensation is essentially a judicial function, consistent with the
Court’s roles as the guardian of the fundamental rights guaranteed by the due process and equal
protection clauses, and as the final arbiter over transgressions committed against constitutional
rights.8 This was the teaching in the landmark Export Processing Zone Authority v. Dulay
(Dulay)9 wherein the Court held that:
public use without just compensation, no statute, decree, or executive order can mandate that
its own determination shall prevail over the court’s findings. Much less can the courts be
precluded from looking into the “just-ness” of the decreed compensation. (Emphasis added)
Dulay involved an expropriation case for the establishment of an export processing zone. There,
the Court declared provi-
_______________
7 National Power Corporation v. Zabala, G.R. No. 173520, January 30, 2013, 689 SCRA 554,
citing Republic v. Rural Bank of Kabacan, Inc., G.R. No. 185124, January 25, 2012, 664 SCRA
233, 244; National Power Corporation v. Manubay Agro-Industrial Development Corporation,
480 Phil. 470, 479; 437 SCRA 60, 68 (2004).
8 Export Processing Zone Authority v. Dulay, No. L-59603, April 29, 1987, 149 SCRA 305.
9 Id.
167
pg. 758
VOL. 799, AUGUST 2, 2016 167
sions of Presidential Decree Nos. 76, 464, 794, and 1533 as unconstitutional for encroaching on
the prerogative of the judiciary to determine the amount of just compensation to which the affected
landowners were entitled. The Court further held that, at the most, the valuation in the decrees may
only serve as guiding principles or factors in determining just compensation, but it may not
substitute the court’s own judgment as to what amount should be awarded and how to arrive at
such amount.10
The seminal case of Dulay paved the way for similar Court pronouncements in other expropriation
proceedings. Thus, in National Power Corporation v. Zabala,11 as in the catena of cases that
preceded it,12 the Court refused to apply Sec. 3-A of Republic Act No. 6395, as amended,13 in
determining the
_______________
10 Id.
11 National Power Corporation v. Zabala, supra note 7.
12 Republic v. Libunao, G.R. No. 166553, July 30, 2009, 594 SCRA 363, 378; National Power
Corporation v. Tuazon, G.R. No. 193023, June 29, 2011, 653 SCRA 84, 91; and National Power
Corporation v. Saludares, G.R. No. 189127, April 25, 2012, 671 SCRA 266, 277-278.
13 Sec. 3-A. xxx
In determining the just compensation of the property or property sought to be acquired through
expropriation proceedings, the same shall:
(a) With respect to the acquired land or portion thereof, not to exceed the market value
declared by the owner or administrator or anyone having legal interest in the property, or
such market value as determined by the assessor, whichever is lower.
(b) With respect to the acquired right-of-way easement over the land or portion thereof,
not to exceed ten percent (10%) of the market value declared by the owner or administrator
or anyone having legal interest in the property, or such market value as determined by the
assessor whichever is lower.
xxxx
168
pg. 759
amount of just compensation to which the landowner therein was entitled. As held:
x x x The payment of just compensation for private property taken for public use is guaranteed no
less by our Constitution and is included in the Bill of Rights. As such, no legislative enactments
or executive issuances can prevent the courts from determining whether the right of the
property owners to just compensation has been violated. It is a judicial function that cannot
“be usurped by any other branch or official of the government.” Thus, we have consistently
ruled that statutes and executive issuances fixing or providing for the method of computing just
compensation are not binding on courts and, at best, are treated as mere guidelines in ascertaining
the amount thereof.
To reiterate, the concept of just compensation is uniform across all forms of exercise of eminent
domain. There is then neither rhyme nor reason to treat agrarian reform cases differently insofar
as the determination of just compensation is concerned. I therefore express my concurrence to the
line of cases that ruled that the land valuation by DAR is only preliminary and is not, by any means,
final and conclusive upon the landowner or any other interested party, for, in the end, the courts
still have the right to review with finality the determination in the exercise of what is admittedly a
judicial function.14
The jurisdiction of the SAC

is original and exclusive
Congress bestowed on the SACs “original and exclusive jurisdiction” over petitions for the
determination of just com-
_______________
14 Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines, G.R. No. 166461, April
30, 2010, 619 SCRA 609.
169
pg. 760
VOL. 799, AUGUST 2, 2016 169
pensation relating to government-taking of properties under the CARL. This could not be any
clearer from the language of Sec. 57 of the law, to wit:
exclusive jurisdiction over all petitions for the determination of just compensation to
landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall
apply to all proceedings before the Special Agrarian Courts, unless modified by this Act.
(Emphasis added)
The fundamental tenet is that jurisdiction can only be granted through legislative enactments,62
and once conferred cannot be diminished by the executive branch. It can neither be expanded nor
restricted by executive issuances in the guise of law enforcement. Thus, although the DAR has the
authority to promulgate its own rules of procedure,63 it cannot modify the “original and exclusive
jurisdiction” to settle the issue of just compensation accorded the SACs. Stated in the alternative,
the DAR is precluded from vesting upon itself the power to determine the amount of just
compensation to which a landowner is entitled.
This further finds support under Sec. 18 of the CARL, to wit:
Section 18. Valuation and Mode of Compensation.—The LBP shall compensate the
landowner in
_______________
62 Magno v. People, G.R. No. 171542, April 6, 2011, 647 SCRA 362, citing Machado v. Gatdula,
G.R. No. 156287, February 16, 2010, 612 SCRA 546, 559; Vargas v. Caminas, G.R. Nos. 137869
& 137940, June 12, 2008, 554 SCRA 305, 317; Metromedia Times Corporation v. Pastorin, G.R.
No. 154295, July 29, 2005, 465 SCRA 320, 335; and Dy v. National Labor Relations Commission,
229 Phil. 234, 242; 145 SCRA 211, 221-222 (1986).
63 RA No. 6657, Sec. 49.
170

pg. 761
such amounts as may be agreed upon by the landowner and the DAR and the LBP, in accordance
with the criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as
may be finally determined by the court, as the just compensation for the land. (Emphasis added)
As can be gleaned, the CARL contemplates of only two modes of fixing the proper amount of just
compensation: either by agreement of the parties, or by court ruling. Should the parties then fail to
agree, the only remaining option is to seek court intervention. Notably, the law does not leave to
any other body, not even the DAR, the final determination of just compensation. The jurisdiction
of the SAC on this matter, therefore, remains to be original and exclusive.
This is consistent with the oft-cited ruling that the taking of property under RA 6657 is an exercise
of the power of eminent domain by the State, and that the valuation of property or determination
of just compensation in eminent domain proceedings is essentially a judicial function which is
vested with the courts and not with administrative agencies.17 As held in Land Bank of the
Philippines v. Court of Appeals:18
It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners. This
original and exclusive jurisdiction of the RTC would be undermined if the DAR would vest
in administrative officials original jurisdiction in compensation cases and make the RTC an
appellate court for the review of
_______________
17 Land Bank of the Philippines v. Montalvan, G.R. No. 190336, June 27, 2012, 675 SCRA 380,
citing Land Bank of the Philippines v. Court of Appeals, 376 Phil. 252; 318 SCRA 144 (1999);
and Land Bank of the Philippines v. Celada, 515 Phil. 467; 479 SCRA 495 (2006).
18 Land Bank of the Philippines v. Court of Appeals, id.
171
VOL. 799, AUGUST 2, 2016 171

administrative decisions. Thus, although the new rules speak of directly appealing the decision
of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the
original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer
such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into
pg. 762
appellate jurisdiction would be contrary to Sec. 57 and therefore would be void. Thus, direct
resort to the SAC by private respondent is valid. (emphasis added)
The Court has applied this holding in numerous other cases. Heirs of Lorenzo and Carmen Vidad
v. Land Bank of the Philippines19 (Heirs of Vidad) summarized the Court’s jurisprudence on this
point thusly:
In Land Bank of the Philippines v. Wycoco,20 the Court upheld the RTC’s jurisdiction over
Wycoco’s petition for determination of just compensation even where no summary
administrative proceedings was held before the DARAB which has primary jurisdiction over
the determination of land valuation. x x x
In Land Bank of the Philippines v. Court of Appeals,21 the landowner filed an action for
determination of just compensation without waiting for the completion of DARAB’s
reevaluation of the land. x x x
In Land Bank of the Philippines v. Natividad,22 wherein Land Bank questioned the alleged failure
of private respondents to seek reconsideration of the DAR’s valuation, but instead filed a
petition to fix just compensation with the RTC x x x.
_______________
19 Supra note 14.
21 Land Bank of the Philippines v. Court of Appeals, supra note 17.
22 G.R. No. 127198, May 16, 2005, 458 SCRA 441.
172

In Land Bank of the Philippines v. Celada,23 where the issue was whether the SAC erred in
assuming jurisdiction over respondent’s petition for determination of just compensation despite
the pendency of the administrative proceedings before the DARAB x x x. (emphasis added)
pg. 763
In the cases cited in Heirs of Vidad, the Court has invariably upheld the original and exclusive
jurisdiction of the SACs over petitions for the determination of just compensation, notwithstanding
the seeming failure to exhaust administrative remedies before the DAR.
More recently, in Land Bank of the Philippines v. Montalvan,24 therein petitioner argued that the
landowner’s filing with the SAC of a separate complaint for the determination of just
compensation was premature because the revaluation proceedings in the DAR were still pending.
The Court ruled, however, that the pendency of the DAR proceedings could not have ousted the
SAC from its original and exclusive jurisdiction over the petition for judicial determination of just
compensation since “the function of fixing the award of just compensation is properly lodged with
the trial court and is not an administrative undertaking.”25
Direct resort to the SAC is, therefore, valid. The Court never considered the issuance of a prior
DAR valuation as neither a jurisdictional requirement nor a condition precedent, and in its absence,
as a fatal defect.
Allowing the DAR valuation

to attain finality diminishes
the jurisdiction of the SAC
_______________
23 Land Bank of the Philippines v. Celada, supra note 17.
24 Land Bank of the Philippines v. Montalvan, supra note 17.
25 Id.
173
VOL. 799, AUGUST 2, 2016 173

The dictum allowing the valuation by the DAR to attain finality if not brought before the SAC
within 15 days is inconsistent with the above disquisitions. The DAR’s valuation, being
preliminary in nature, could not attain finality, as it is only the courts that can resolve the issue on
just compensation.26 Administrative rules that impose a reglementary period for filing a petition
before the SAC, consequently allowing the DAR’s preliminary valuation to attain finality, unduly
diminish the original and exclusive jurisdiction of the SAC, and convert it into an appellate one.
pg. 764
To clarify, the doctrine of “finality of judgment” is reserved only to those rendered by judicial or
quasi-judicial bodies in the valid exercise of their jurisdiction. Dispositions of judicial and quasi-
judicial bodies on matters within their jurisdiction or competence to decide are valid and
binding.27 On the other hand, a judgment issued without jurisdiction is no judgment at all and
cannot attain finality no matter how long a period has elapsed.
The imposition of the 15-day reglementary period ought to then be construed as a claim of
jurisdiction. By decreeing that its valuation is capable of attaining finality, the DAR effectively
arrogated unto itself the power to make a final determination, a binding judgment, on the amount
of just compensation the landowner is entitled to, a power expressly bestowed exclusively upon
the courts under Secs. 18 and 57 of the CARL. Consequently, it rendered the proceedings before
the SACs appellate in nature, rather than originally commenced thereon.
Moreover, it contravened the Court’s doctrine in the landmark case of Dulay wherein we held that
the judicial branch
_______________
26 Supra note 14; citing Association of Small Landowners in the Philippines, Inc. v. Secretary of
Agrarian Reform, G.R. No. 78742, July 14, 1989, 175 SCRA 343, 382.
27 Vios v. Pantangco, Jr., G.R. No. 163103, February 6, 2009, 578 SCRA 129.
174

can never be barred from resolving the issue of just compensation. Apropos herein is a reproduction
of the Court’s holding in Dulay:
public use without just compensation, no statute, decree, or executive order can mandate that
its own determination shall prevail over the court’s findings. Much less can the courts be
precluded from looking into the “just-ness” of the decreed compensation. (emphasis added)
The Court’s pronouncement in Republic28 should, therefore, be upheld. There, the landowner filed
a petition for the determination of just compensation before the SAC beyond the reglementary
pg. 765
period mandated by the DAR rules. Nevertheless, the Court held that the outright dismissal of the
case was not warranted. Instead, it endeavored to preserve the original and exclusive jurisdiction
of the SACs in the following wise:29
In accordance with [the procedure for the determination of compensation cases under R.A. No.
6657], the private respondent’s case was properly brought by it in the RTC, and it was error for
the latter court to have dismissed the case. In the terminology of [Sec.] 57 [of the CARL], the RTC,
sitting as a Special Agrarian Court, has original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners. It would subvert this original and exclusive
jurisdiction of the RTC for the DAR to vest original jurisdiction in compensation cases in
administrative of-
_______________
28 Republic v. Court of Appeals, supra note 1.
29 Id.
175
VOL. 799, AUGUST 2, 2016 175

ficials and make the RTC an appellate court for the review of administrative decisions.
Consequently, although the new rules speak of directly appealing the decision of adjudicators to
the RTCs sitting as Special Agrarian Courts, it is clear from [Sec.] 57 that the original and
exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer such
jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into
appellate jurisdiction would be contrary to [Sec.] 57 and therefore would be void. What
adjudicators are empowered to do is only to determine in a preliminary manner the
reasonable compensation to be paid to landowners, leaving to the courts the ultimate power
to decide this question. (emphasis added)
Invoking this doctrine, the Court, in Suntay30 emphasized that the petition before the SAC is an
original action, and not an appeal. It echoed that “[a]ny effort x x x to convert the original
jurisdiction of the RTCs into appellate jurisdiction would be contrary to Section 57 and therefore
would be void.”31 Resultantly, the Court ruled that the filing of the petition beyond the 15-day
period in that case did not bar the SAC from exercising its original and exclusive jurisdiction in
resolving the issue of just compensation.
pg. 766
In line with this ruling, the Court resolved in Heirs of
Vidad32 that:
x x x RA 6657 does not make DARs valuation absolutely binding as the amount payable by LBP.
A reading of Section 18 of RA 6657 shows that the courts, and not the DAR, make the final
determination of just compensation. It is well-settled that the DAR’s land valuation
_______________
30 Land Bank of the Philippines v. Suntay, supra note 2.
31 Id.
32 Supra note 14.
176

is only preliminary and is not, by any means, final and conclusive upon the landowner or any
other interested party. The courts will still have the right to review with finality the determination
in the exercise of what is admittedly a judicial function. (Emphasis added)
All told, the DAR’s valuation cannot be treated as the amount of just compensation the landowner
is entitled to, notwithstanding the lapse of 15 days from receipt of notice thereof. It is not in the
nature of an award that was “finally determined by the court,” for, aside from the DAR not being
a court of law, the postulation would render the subsequent petition before the SAC an appeal.
This would, in turn, contravene the clear and categorical tenor of the law that the jurisdiction of
the SAC, with respect to the issue of just compensation, is original and exclusive.
The 15-day reglementary period

has no statutory basis
The inapplicability of the 15-day reglementary period is further bolstered by Sec. 16 of the CARL,
which outlined the procedure for the acquisition of private lands under the law.33
pg. 767
_______________
33 Section 16. Procedure for Acquisition of Private Lands.—For purposes of acquisition of

private lands, the following procedures shall be followed:
(a) After having identified the land, the landowners and the beneficiaries, the DAR shall send its
notice to acquire the land to the owners thereof, by personal delivery or registered mail, and post
the same in a conspicuous place in the municipal building and barangay hall of the place where
the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value
in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.
(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or
registered mail, the landowner, his administrator or representative shall inform the DAR of his
acceptance or rejection of the offer.
177
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While the provision states that the party who disagrees with the valuation by the DAR may bring
the issue to court,34 the law is silent as to the period for doing so.
It is plain error for respondents to claim that the 15-day period finds basis under Sec. 54 of the
CARL, which pertinently reads:
Section 54. Certiorari.—Any decision, order, award or ruling of the DAR on any agrarian
of Appeals by certiorari except as otherwise pro-
_______________
(c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines (LBP) shall
pay the landowner the purchase price of the land within thirty (30) days after he executes and
delivers a deed of transfer in favor of the government and surrenders the Certificate of Title and
other muniments of title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative
proceedings to determine the compensation for the land requiring the landowner, the LBP and
other interested parties to submit evidence as to the just compensation for the land, within fifteen
(15) days from the receipt of the notice. After the expiration of the above period, the matter is
pg. 768
deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is
submitted for decision.
(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified beneficiaries.
(f) Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.
34 RA No. 6657, Sec. 16(f).
178

vided in this Act within fifteen (15) days from the receipt of a copy thereof.
The title of the provision itself evinces that the period only applies to certiorari petitions before
the Court of Appeals (CA) for purposes of reviewing DAR rulings falling within its jurisdiction.
It serves to distinguish petitions for certiorari under the CARL from those filed under the Rules
of Court, which are allowed a 60-day leeway for filing.35
Moreover, any party desiring to appeal a ruling to the CA or to this Court is mandated to do so
within fifteen (15) days, as provided under Sec. 60 the CARL.36 Thus, if Congress intended for
the same period to likewise apply to the filing of petitions for the determination of just
compensation before the SAC, reckoned from the date of notice from the DAR ruling, then the
law would have expressly provided the same.
Succinctly put, there is no basis for requiring the petition for the determination of just
compensation to be filed within 15 days from receipt of notice of the DAR’s valuation. The validity
of Sec. 11, Rule XIII of the 1994 Rules, as reincarnated in Sec. 6, Rule XIX of the 2009 Rules,
cannot then be sustained and, instead, must be struck down as void and of no legal effect.
Aside from lacking statutory basis, the imposition of the 15-day reglementary period likewise
unduly diminishes the jurisdiction vested on the SACs, as earlier discussed. Guilty of
pg. 769
_______________
36 Section 60. Appeals.—An appeal may be taken from the decision of the Special Agrarian
Courts by filing a petition for review with the Court of Appeals within fifteen (15) days receipt of
notice of the decision; otherwise, the decision shall become final.
An appeal from the decision of the Court of Appeals, or from any order, ruling or decision of the
DAR, as the case may be, shall be by a petition for review with the Supreme Court within a non-
extendible period of fifteen (15) days from receipt of a copy of said decision.
179
VOL. 799, AUGUST 2, 2016 179

reiteration, the duty to fix just compensation is a judicial function, and the jurisdiction of the SACs
to set the appropriate value for it is original and exclusive. This is the clear import of Sec. 57 of
the CARL. These cardinal doctrines, however, are violated by the imposition of a 15-day
reglementary period under Sec. 11, Rule XIII of the 1994 Rules of Procedure and Sec. 6, Rule XIX
of the 2009 Rules of Procedure. These rules supplement the perceived silence of the CARL with a
provision that contradicts Sec. 57 thereof — vesting the DAR with the authority to render a binding
judgment on the valuation of the subject property, and converting the original action before the
SAC into an appellate one.
It is settled jurisprudence that a rule or regulation cannot offend or collide with a legal provision.
In cases of conflict between the law and the rules and regulations implementing the same, the law
must always prevail.37 The Court said as much in Miners Association of the Philippines, Inc. v.
Factoran, Jr.:38
We reiterate the principle that the power of administrative officials to promulgate rules and
regulations in the implementation of a statute is necessarily limited only to carrying into effect
what is provided in the legislative enactment. The principle was enunciated as early as 1908 in the
case of United States v. Barrias. The scope of the exercise of such rule-making power was clearly
expressed in the case of United States v. Tupasi Molina, decided in 1914, thus: “Of course, the
regulations adopted under legislative authority by a particular department must be in
harmony with the provisions of the law, and for the sole purpose of carrying into effect its
general provisions. By such regulations, of course, the law itself cannot be extended. So long,
however, as the regulations relate solely to carrying into
_______________
pg. 770
37 Commissioner of Internal Revenue v. Bicolandia Drug Corporation, G.R. No. 148083, July
21, 2006, 496 SCRA 176.
180

effect its general provisions. By such regulations, of course, the law itself cannot be extended. So
long, however, as the regulations relate solely to carrying into effect the provision of the law, they
are valid.” (emphasis added, citations omitted)
The spring cannot rise higher than its source. And just as a statute cannot be at variance with the
Constitution, so too must the implementing rules conform to the language of the law.39 Rules and
regulations cannot go beyond the terms and provisions of the basic law they seek to implement.
The power to promulgate Rules and Regulations cannot be extended to amending or expanding
the statutory requirements or to embrace matters not covered by the statute. Rules that subvert the
statute cannot be sanctioned.40
Such being the case, Sec. 11, Rule XIII of the 1994 Rules of Procedure and Sec. 6, Rule XIX of
the 2009 Rules of Procedure are null and void and of no legal effect. There is no period expressly
nor impliedly prescribed by RA 6657 within which landowners may bring an action with the SAC
for the determination of the just value of their lots.
Nevertheless, the government, in the interim, is not precluded from proceeding to take the property
in issue, provided that the necessary deposit has been made. Thus, while landowners may take
their sweet time to institute the said case, the fact that the DAR will proceed to cancel the title of
lot owners and replace the same with a Certificate of Land Own-
_______________
39 Republic v. Bajao, G.R. No. 160596, March 20, 2009, 582 SCRA 53.
40 People v. Maceren, No. L-32166, October 18, 1977, 79 SCRA 450, citing University of Santo
Tomas v. Board of Tax Appeals, 93 Phil. 376, 382 (1953), citing 12 C.J. 845-846. As to invalid
regulations, see El Colector de Rentas Internas v. Villaflor, 69 Phil. 319 (1940); Wise & Co. v.
Meer, 78 Phil. 655, 676 (1947); Del Mar v. The Philippine Veterans Administration, No. L-27299,
June 27, 1973, 51 SCRA 340, 349.
pg. 771
181
VOL. 799, AUGUST 2, 2016 181

ership is more than ample reason for them to file the case with the SAC posthaste. The
expropriation process is then, in a manner of speaking, self-policing since the landowners are
compelled to litigate and file a case for just compensation if they are unsatisfied with the
government’s deposit. The inapplicability of the 15-day reglementary period is, therefore, of no
moment.
In view of the foregoing, I respectfully register my vote to GRANT the instant petition. The 15-
day requirement under Sec. 11, Rule XIII of the 1994 DARAB Rules of Procedure and Sec. 6,
Rule XIX of the 2009 DARAB Rules of Procedure should be declared NULL and VOID and of
no legal effect for being contrary to Sec. 57 of the CARL.
LEONEN, J.:
I concur with the ponencia. The original and exclusive jurisdiction of Special Agrarian Courts to
determine just compensation should not be superseded by an executive determination. Therefore,
provisions that limit the period when landowners can assert their right to just compensation should
be struck down for being outside the constitutional confines of the eminent domain powers of the
state.
The ponencia correctly upheld the doctrine in Export Processing Zone Authority v. Dulay.1 The
valuation of the Department of Agrarian Reform is merely preliminary.2 It is even superfluous
since the determination of just compensation is a settled role of the judiciary.3 Nevertheless,
Section 16 of Re-
_______________
1 233 Phil. 313; 149 SCRA 305 (1987) [Per J. Gutierrez, Jr., En Banc].
2 Id., at p. 326; p. 314.
pg. 772
3 Id.
182

public Act No. 66574 allows the Department of Agrarian Reform to conduct a summary
administrative proceeding to determine just compensation. The most relevant portion of this
procedure is paragraph (f), which states that “[a]ny party who disagrees with the decision may
bring the matter to the court of proper jurisdiction for final determination of just compensation.”5
On the jurisdiction over petitions for the determination of just compensation, Section 57 of
Republic Act No. 6657 provides:
SECTION 57. Special Jurisdiction.—The Special Agrarian Courts shall have original and
proceedings before the Special Agrarian Courts, unless modified by this Act.
The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction
within thirty (30) days from submission of the case for decision. (Emphasis supplied)
Thus, Regional Trial Courts sitting as Special Agrarian Courts have “original and exclusive
jurisdiction over all petitions for the determination of just compensation to landowners.”6 The
jurisdiction is original, which means that petitions for determination of just compensation may be
initiated before Special Agrarian Courts. The jurisdiction is exclusive, which means that no other
court or quasi-administrative tribunal has the same original jurisdiction over these cases.7
_______________
4 Rep. Act No. 6657 is otherwise known as the Comprehensive Agrarian Reform Law of 1988.
5 Id., Sec. 16(f).
6 Id., Sec. 57.
7 Ong, Sr. v. Parel, 240 Phil. 734, 742-743; 156 SCRA 768, 776-777 (1987) [Per J. Gutierrez, Jr.,
Third Division].
pg. 773
183
VOL. 799, AUGUST 2, 2016 183

There are no ambiguities in Section 57. No administrative process can subvert this grant of original
and exclusive jurisdiction to Special Agrarian Courts.
The right to just compensation is constitutionally enshrined. Article III, Section 9 of the
Constitution states that “[p]rivate property shall not be taken for public use without just
compensation.” 8 Article XIII, Section 49 of the Constitution also recognizes the landowner’s right
to just compensation. As a constitutional right, the determination of just compensation is ultimately
a judicial matter. Thus, in Export Processing Zone Authority:
public use without just compensation, no statute, decree, or executive order can mandate that its
own determination shall prevail over the court’s findings. Much less can the courts be precluded
from looking into the “just-ness” of the decreed compensation.10
_______________
8 Const., Art. III, Sec. 9.
9 Id., Art. XIII, Sec. 4 provides:
SECTION 4. The State shall, by law, undertake an agrarian reform program founded on the
right of farmers and regular farmworkers, who are landless, to own directly or collectively the
lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into
account ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the right of small landowners.
The State shall further provide incentives for voluntary land-sharing.
10 Export Processing Zone Authority v. Dulay, supra note 1 at p. 326; p. 314.
pg. 774
184

Section 57, which vests in the courts original and exclusive jurisdiction to determine just
compensation, is consistent with the Constitution.
Although Section 54 of Republic Act No. 6657 states that “[a]ny decision, order, award or ruling
of the D[epartment] [of] A[grarian] R[eform] on any agrarian dispute or on any matter pertaining
to the application, implementation, enforcement, or interpretation of this Act . . . may be brought
to the Court of Appeals by certiorari,”11 this must be read in relation to Section 57.
Section 54 generally covers all decisions, orders, awards, or rulings of the Department of Agrarian
Reform. On the other hand, Section 57 is a more specific provision that expressly vests special
jurisdiction over the determination of just compensation in Special Agrarian Courts.
Further, agrarian dispute under Section 3 is defined as follows:
SECTION 3. Definitions.—. . .
(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether
leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including
disputes concerning farmworkers’ associations or representation of persons in negotiating,
fixing, maintaining, changing, or seeking to arrange terms or conditions of such tenurial
arrangements.
It includes any controversy relating to compensation of lands acquired under this Act and
other terms and conditions of transfer of ownership from landowners to farmworkers,
tenants and other agrarian reform beneficiaries, whether the disputants stand in the
proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and
lessee.
_______________
11 Rep. Act No. 6657 (1988), Sec. 54.
185
VOL. 799, AUGUST 2, 2016 185
pg. 775
An agrarian dispute generally refers to conflicts between farmers, or between farmers and their
landlords. The conflict between landowners and government, in instances of expropriation, is not
included.
Although “any controversy relating to compensation of lands acquired under this Act”12 is an
agrarian dispute under Section 3, paragraph 2 of Republic Act No. 6657, this cannot encompass
just compensation for a landowner. This contemplation would be in direct conflict with the
unambiguous text of Section 57, as well as the constitutional right to just compensation.
Moreover, there are two (2) types of compensation that may take place under agrarian reform. The
first is the just compensation that must be paid by government upon condemnation, or the taking
of land from a landowner. The second is the compensation that may be paid by farmer-beneficiaries
who acquire ownership over land through a certificate of land ownership award.13 Thus,
compensation under Section 3 refers only to the second type of compensation.
The ponencia described the nature of the original and exclusive jurisdiction of Special Agrarian
Courts.14 The original
_______________
12 Id., Sec. 3(d).
13 Id., Sec. 21 provides:
SEC. 21. Payment of Compensation by Beneficiaries Under Voluntary Land Transfer.—

Direct payment in cash or in kind may be made by the farmer-beneficiary to the landowner
under terms to be mutually agreed upon by both parties, which shall be binding upon them,
upon registration with and approval by the DAR. Said approval shall be considered given,
unless notice of disapproval is received by the farmer-beneficiary within 30 days from the
date of registration.
In the event they cannot agree on the price of the land, the procedure for compulsory
acquisition as provided in Section 16 shall apply. The LBP shall extend financing to the
beneficiaries for purposes of acquiring the land.
14 Ponencia, pp. 157-159.
186
pg. 776
jurisdiction of the Special Agrarian Court means that it is not exercising its appellate jurisdiction;
hence, it is not tasked with reviewing the executive’s determination of just compensation. The
Department of Agrarian Reform’s determination is, at best, recommendatory to the courts. The
courts have the discretion of disregarding the recommendation of the Department of Agrarian
Reform. Nothing in the Constitution mandates the judiciary to follow recommendations coming
from the executive.
Section 57 does not provide a time period for a landowner to file a petition for the determination
of just compensation, even in the context of agrarian reform. Ordinary rules on prescription should
apply. An action to recover just compensation over expropriated land constitutes a real action over
an immovable. Under Article 114115 of the Civil Code, this kind of action prescribes after 30
years.
Petitioner filed her Petition to determine just compensation within one (1) year after the
Department of Agrarian Reform released the Notice of Valuation and Acquisition.16 This Court
should not count prescription from the Department of Agrarian Reform’s final order on the
valuation of the property as it would shift the nature of the action as appellate.
It is when government showed that it would acquire petitioner’s property that petitioner’s right to
file an action relating to just compensation began. This action may be brought concurrently with
the proceedings before the Department of Agrarian Reform, assuming that the landowner no longer
challenges the right of government to expropriate.
_______________
ARTICLE 1141. Real actions over immovables prescribe after thirty years.
This provision is without prejudice to what is established for the acquisition of ownership
and other real rights by prescription.
16 Ponencia, pp. 145-146, citing Rollo, pp. 82-85.
187
VOL. 799, AUGUST 2, 2016 187

pg. 777
Petitioner’s action has not yet prescribed since she filed the Petition within one (1) year after
finding out that government would acquire her land. Hence, the Special Agrarian Court should not
have dismissed the case and proceeded to determine just compensation, as tasked under our
Constitution and the law.
In addition, the Court of Appeals erred in affirming the dismissal of Civil Case No. 12558 solely
on the ground that petitioner chose the wrong remedy. This Court has repeatedly ruled against the
dismissal of appeals based purely on strict application of technicalities.17 Instead of summarily
dismissing the case, the Court of Appeals should have treated the Petition for Certiorari as an
appeal filed under Rule 41 of the Rules of Court; it should have endeavored to resolve the case on
its merits:
[C]ases should be determined on the merits, after all parties have been given full opportunity to
ventilate their causes and defenses, rather than on technicalities or procedural imperfections. In
that way, the ends of justice would be served better. Rules of procedure are mere tools designed
to expedite the decision or resolution of cases and other matters pending in court. A strict and
rigid application of rules, resulting in technicalities that tend to frustrate rather than promote
substantial justice, must be avoided. In fact, Section 6 of Rule 1 states that the Rules [on Civil
Procedure] shall be liberally construed in order to promote their objective of ensuring the just,
speedy and inexpensive disposition of every action and proceeding.18 (Emphasis in the original)
_______________
17 Catindig v. Court of Appeals, 177 Phil. 624, 630; 88 SCRA 675, 681 (1979) [Per J. De Castro,
First Division].
18 Ching v. Cheng, G.R. No. 175507, October 8, 2014, 737 SCRA 610, 634-635 [Per J. Leonen,
Second Division], citing Posadas-Moya and Associates Construction Co., Inc. v. Greenfield
Development Corporation, 451 Phil. 647, 661; 403 SCRA 530, 541 (2003) [Per J. Panganiban,
Third Division], in turn citing Jaro v. Court of Appeals, 427 Phil. 532, 548; 377 SCRA 282, 298
(2002) [Per J. Carpio, Third
188

In cases that involve fundamental rights, such as this, the Court of Appeals should observe a
reasonable relaxation of the rules of procedure.
pg. 778
ACCORDINGLY, I vote to GRANT the Petition. The case is remanded to Branch 30 of the
Regional Trial Court of Dumaguete City for determination of just compensation over petitioner
Jocelyn S. Limkaichong’s expropriated property.
JARDELEZA, J.:
I concur with the ponencia of my esteemed colleague Associate Justice Lucas P. Bersamin who,
with his lucidity of exposition and fealty to the due process tenet of prospective application of new
doctrine, masterfully secured our unanimous vote today.
The ponencia reaffirms our unanimous En Banc declaration in Land Bank of the Philippines v.
Martinez1 that:
[T]he agrarian reform adjudicator’s decision on land valuation attains finality after the lapse of
the 15-day period stated in the DARAB Rules. The petition for the fixing of just compensation
should therefore, following the law and settled jurisprudence, be filed with the SAC within the
said period.
_______________
Division]; Paras v. Baldado, 406 Phil. 589, 596; 354 SCRA 141, 146 (2001) [Per J. Gonzaga-
Reyes, Third Division]; Cusi-Hernandez v. Diaz, 390 Phil. 1245, 1252; 336 SCRA 113, 120 (2000)
[Per J. Panganiban, Third Division]; Republic v. Court of Appeals, 354 Phil. 252, 260; 292 SCRA
243, 251-252 (1998) [Per J. Mendoza, Second Division]; Malonzo v. Zamora, 370 Phil. 240, 257;
311 SCRA 224, 237 (1999) [Per J. Romero, En Banc]; and Fortich v. Corona, 352 Phil. 461, 481-
482; 289 SCRA 624, 646-647 (1998) [Per J. Martinez, Second Division].
1 G.R. No. 169008, July 31, 2008, 560 SCRA 776.
189
VOL. 799, AUGUST 2, 2016 189

pg. 779
xxx
[W]hile a petition for the fixing of just compensation with the SAC is not an appeal from the
agrarian reform adjudicator’s decision but an original action, the same has to be filed within the
15-day period stated in the DARAB Rules; otherwise, the adjudicator’s decision will attain
finality.2 (Citations omitted, emphasis supplied)
In no uncertain terms, Justice Bersamin underscores that the Court made its declaration in Martinez
“to purge any uncertainties brought upon by the conflicting jurisprudence on the matter”3 and to
“unanimously resolve[d] [a] jurisprudential conundrum.”4 After today, there should be no more
doubt about the “preeminence of the pronouncement x x x that the parties only have 15 days from
their receipt of the decision/order of the DAR within which to invoke the original and exclusive
jurisdiction of the SAC; otherwise, the decision/order attains finality and immutability.”5
I write only to address the concurring opinions of Justice Presbitero J. Velasco and Justice Marvic
M. V. F. Leonen.
Article VIII, Section 1 of the 1987 Constitution6 provides that “(j)udicial power includes the duty
of the courts of justice
_______________
3 Id., at p. 160.
4 Id., at pp. 162-163.
5 Id., at p. 162, emphasis supplied.
6 Sec. 1. The judicial power shall be vested in one Supreme Court and in such lower courts as
may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of juris-
pg. 780
190

to settle actual controversies involving rights which are legally demandable and enforceable.”
The right of a landowner to just compensation for the taking of his or her private property is a
legally demandable and enforceable right guaranteed by no less than the Bill of Rights, under
Section 9, Article III of the Constitution.7 Thus, the determination of just compensation in cases
of eminent domain is an actual controversy that calls for the exercise of judicial power by the
courts. This is what the Court means when it said that “[t]he determination of ‘just compensation’
in eminent domain cases is a judicial function.”8
There is, however, no constitutional provision, policy, principle, value or jurisprudence that places
the determination of any justiciable controversy beyond the reach of Congress’ constitutional
power and prerogative to require, through a grant of primary jurisdiction, that a controversy be
first referred to an expert administrative agency for adjudication, subject to subsequent judicial
review.
The authority of Congress to create administrative agencies and grant them preliminary
jurisdiction flows not only from the exercise of its plenary legislative power9 but also from its
constitutional power to apportion and diminish the jurisdiction of courts inferior to the Supreme
Court.10
_______________
diction on the part of any branch or instrumentality of the Government.
7 This section provides: “Private property shall not be taken for public use without just
compensation.”
8 Export Processing Zone Authority (EPZA) v. Dulay, No. L-59603, April 29, 1987, 149 SCRA
305, 316.
9 Bank of Commerce v. Planters Development Bank, G.R. Nos. 154470-71 & 154589-90,
September 24, 2012, 681 SCRA 521.
10 Pambujan Sur United Mine Workers v. Samar Mining Co., Inc., 94 Phil. 932, 938 (1954). See
also Constitution, Article VIII, Sec. 2.
pg. 781
191
VOL. 799, AUGUST 2, 2016 191

In Tropical Homes, Inc. v. National Housing Authority,11 it has been settled that “[t]here is no
question that a statute may vest exclusive original jurisdiction in an administrative agency over
certain disputes and controversies falling within the agency’s special expertise.”12 Rule 43 of the
Revised Rules of Court, which provides for a uniform procedure for appeals from a long list of
quasi-judicial agencies to the Court of Appeals, is a loud testament to the power of Congress to
vest myriad agencies with the preliminary jurisdiction to resolve controversies within their
particular areas of expertise and experience.
On June 10, 1988, Congress enacted Republic Act No. 665713 (RA 6657) to implement a
comprehensive agrarian reform program. In sharp contrast to Presidential Decree No. 2714 (PD
27), which covered only rice and corn lands, RA 6657 sought to cover all private and public
agricultural lands. It is the Government’s most ambitious land reform program ever, subjecting an
estimated 7.8 million hectares of land for acquisition and redistribution to landless farmer and
farmworker beneficiaries.15
With a project of such scale, the Congress decided to, among others, vest the DAR with primary
jurisdiction to determine just compensation, subject, to final review by the courts. Thus, Section
16 of RA 6657 provides:
_______________
11 No. L-48672, July 31, 1987, 152 SCRA 540.
12 Id., at p. 548.
13 Comprehensive Agrarian Reform Law of 1988.
14 Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to them
the Ownership of the Land they Till and Providing the Instruments and Mechanism Therefor
(1972).
15 Q and A on CARP <http://www.dar.gov.ph/q-and-a-on-carp/english> (last accessed on August

5, 2016).
192
pg. 782
Section 16. Procedure for Acquisition of Private Lands.—For purposes of acquisition of private
lands, the following procedures shall be followed:
xxx
(d) In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land requiring the
landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of the notice. After the
expiration of the above period, the matter is deemed submitted for decision. The DAR shall
decide the case within thirty (30) days after it is submitted for decision. (Emphasis supplied)
In case a party disagrees with the DAR’s decision on the amount of compensation, Section 16 and
related provisions allow him to bring the matter to the courts for final determination, as follows:
Section 16. Procedure for Acquisition of Private Lands.—For purposes of acquisition of private
lands, the following procedures shall be followed:
xxx
(f) Any party who disagrees with the [DAR’s] decision may bring the matter to the
court of proper jurisdiction for final determination of just compensation.
xxx
Section 56. Special Agrarian Court.—The Supreme Court shall designate at least one (1) branch
of the Regional Trial Court (RTC) within each province to act as a Special Agrarian Court. x x x
pg. 783
193
VOL. 799, AUGUST 2, 2016 193

exclusive jurisdiction over all petitions for the determination of just compensation to
landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall
apply to all proceedings before the Special Agrarian Courts, unless modified by this Act. The
Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within
thirty (30) days from submission of the case for decision. (Emphasis supplied)
Appeals from SAC decisions may thereafter be taken to the Court of Appeals (and later the
Supreme Court) via a petition for review.16
The validity of the grant by Congress to the DAR of the primary jurisdiction to determine just
compensation, under the summary administrative process in Section 16 of RA 6657, has been
settled by this Court more than twenty-five (25) years ago in the landmark case of Association of
Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform.17 There, this Court
upheld the constitutionality of RA 6657 and, with specific reference to Section 16, declared:
Objection is raised, however, to the manner of fixing the just compensation, which it is
claimed is entrusted to the administrative authorities in violation of judicial prerogatives.
Specific reference is made to Section 16(d), which provides that in case of the
_______________
16 RA No. 6657, Sec. 60. Appeals.—An appeal may be taken from the decision of the Special
Agrarian Courts by filing a petition for review with the Court of Appeals within fifteen (15) days
receipt of notice of the decision; otherwise, the decision shall become final. An appeal from the
decision of the Court of Appeals, or from any order, ruling or decision of the DAR, as the case
may be, shall be by a petition for review with the Supreme Court within a non-extendible period
of fifteen (15) days from receipt of a copy of said decision.
17 G.R. No. 78742, July 14, 1989, 175 SCRA 343.
194
pg. 784
rejection or disregard by the owner of the offer of the government to buy his land —
x x x the DAR shall conduct summary administrative proceedings to determine the

compensation for the land by requiring the landowner, the LBP and other interested parties
to submit evidence as to the just compensation for the land, within fifteen (15) days from
the receipt of the notice. After the expiration of the above period, the matter is deemed
submitted for decision. The DAR shall decide the case within thirty (30) days after it is
submitted for decision.
To be sure, the determination of just compensation is a function addressed to the courts of

justice and may not be usurped by any other branch or official of the government. x x x
xxx
A reading of the aforecited Section 16(d) will readily show that it does not suffer from the
arbitrariness that rendered the challenged decrees [in EPZA v. Dulay] constitutionally
objectionable. Although the proceedings are described as summary, the landowner and other
interested parties are nevertheless allowed an opportunity to submit evidence on the real
value of the property. But more importantly, the determination of the just compensation by
the DAR is not by any means final and conclusive upon the landowner or any other interested
party, for Section 16(f) clearly provides:
Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.
The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality the
said determina-
195
VOL. 799, AUGUST 2, 2016 195

tion in the exercise of what is admittedly a judicial function.18 (Emphasis and underscoring
supplied)
pg. 785
At this point, it should be emphasized that Congress in RA 6657 provided for a heightened judicial
review of the DAR’s preliminary determination of just compensation pursuant to Section 16. In
case of a proper challenge, SACs are actually empowered to conduct a de novo review of the
DAR’s decision. Under RA 6657, a full trial is held where SACs are authorized to (1) appoint one
or more commissioners,19 (2) receive, hear, and retake the testimony and evidence of the parties,
and (3) make findings of fact anew. In other words, in exercising its exclusive and original
jurisdiction to determine just compensation under RA 6657, the SAC is possessed with exactly
the same powers and prerogatives of a Regional Trial Court (RTC) under Rule 67 of the Revised
Rules of Court.
In such manner, the SAC thus conducts a more exacting type of review, compared to the procedure
provided either under Rule 43 of the Revised Rules of Court, which governs appeals from decisions
of administrative agencies to the Court of Appeals, or under Book VII, Chapter 4, Section 2520 of
the
_______________
18 Id., at pp. 380-382.
19 RA No. 6657, Sec. 58.
20 This provision reads as follows:
Sec. 25. Judicial Review.—
(1) Agency decisions shall be subject to judicial review in accordance with this chapter and
applicable laws.
(2) Any party aggrieved or adversely affected by an agency decision may seek judicial
review.
(3) The action for judicial review may be brought against the agency, or its officers, and all
indispensable and necessary parties as defined in the Rules of Court.
(4) Appeal from an agency decision shall be perfected by filing with the agency within
fifteen (15) days from receipt of a copy thereof a notice of appeal, and with the reviewing
court a petition for review of the order. Copies of the
196
pg. 786
Administrative Code of 1987,21 which provides for a default administrative review process. In
both cases, the reviewing court decides based on the record, and the agency’s findings of fact are
held to be binding when supported by substantial evidence.22 The SAC, in contrast, retries the
whole case, receives new evidence, and holds a full evidentiary hearing.
_______________
petition shall be served upon the agency and all parties of record. The petition shall contain
a concise statement of the issues involved and the grounds relied upon for the review, and
shall be accompanied with a true copy of the order appealed from, together with copies of
such material portions of the records as are referred to therein and other supporting papers.
The petition shall be under oath and shall how, by stating the specific material dates, that it
was filed within the period fixed in this chapter.
(5) The petition for review shall be perfected within fifteen (15) days from receipt of the
final administrative decision. One (1) motion for reconsideration may be allowed. If the
motion is denied, the movant shall perfect his appeal during the remaining period for appeal
reckoned from receipt of the resolution of denial. If the decision is reversed on
reconsideration, the appellant shall have fifteen (15) days from receipt of the resolution to
perfect his appeal.
(6) The review proceeding shall be filed in the court specified by statute or, in the absence
thereof, in any court of competent jurisdiction in accordance with the provisions on venue
of the Rules of Court.
(7) Review shall be made on the basis of the record taken as a whole. The findings of fact
of the agency when supported by substantial evidence shall be final except when specifically
provided otherwise by law.
21 Executive Order No. 292.
22 See Section 25(7), Chapter 4, Book VII of the Administrative Code of 1987 and NGEI Multi-
Purpose Cooperative, Inc. v. Filipinas Palmoil Plantation, Inc., G.R. No. 184950, October 11,
2012, 684 SCRA 152, 163.
197
VOL. 799, AUGUST 2, 2016 197
pg. 787
In this light, until and unless this Court’s ruling in Association of Small Landowners is reversed, a
becoming modesty and respectful courtesy towards a coequal branch of government demand that
the Court defer to the Congress’ grant of primary jurisdiction to the DAR.
The grant of primary jurisdiction to administrative agencies over otherwise immediately justiciable
controversies is constitutionally permissible because, as explained in the case of Far East
Conference v. United States,23 courts and agencies are both instrumentalities of justice, with
complementary roles in the pursuit of similar ends:
[C]ourt and agency are not to be regarded as wholly independent and unrelated instrumentalities
of justice, each acting in the performance of its prescribed statutory duty without regard to the
appropriate function of the other in securing the plainly indicated objects of the statute. Court and
agency are the means adopted to attain the prescribed end, and, so far as their duties are
defined by the words of the statute, those words should be construed so as to attain that end
through coordinated action. Neither body should repeat in this day the mistake made by the
courts of law when equity was struggling for recognition as an ameliorating system of justice;
neither can rightly be regarded by the other as an alien intruder, to be tolerated if must be, but
never to be encouraged or aided by the other in the attainment of the common aim. (Citations
omitted, emphasis supplied)
II
Justice Velasco, citing Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines,24
opines that direct resort to the SAC is valid as the Court has never considered the issu-
_______________
23 Far East Conference v. United States, 342 U.S. 570 (1952).
24 G.R. No. 166461, April 30, 2010, 619 SCRA 609.
198

pg. 788
ance of a prior DAR valuation a jurisdictional requirement or condition precedent.25
Justice Leonen argues that the determination of the DAR is “superfluous,” being only
“recommendatory to the courts.”26 Since “nothing in the Constitution mandates the judiciary to
follow recommendations coming from the executive,” he asserts that the DAR’s determination can
even be disregarded by the courts.27
I disagree.
We read Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines differently. It held
that the determination by DAR of the amount of just compensation becomes final if not elevated
“on time” to SAC:
It must be emphasized that the taking of property under RA 6657 is an exercise of the State’s
power of eminent domain. The valuation of property or determination of just compensation in
eminent domain proceedings is essentially a judicial function which is vested with the courts and
not with administrative agencies. When the parties cannot agree on the amount of just
compensation, only the exercise of judicial power can settle the dispute with binding effect on the
winning and losing parties.On the other hand, the determination of just compensation in the
RARAD/DARAB requires the voluntary agreement of the parties. Unless the parties agree, there
is no settlement of the dispute before the RARAD/DARAB, except if the aggrieved party fails
to file a petition for just compensation on time before the RTC.28 (Citations omitted, emphasis
and underscoring supplied)
_______________
25 Dissenting Opinion of Justice Velasco, p. 173
26 Dissenting Opinion of Justice Leonen, pp. 182, 187.
27 Id., at p. 187.
28 Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines, supra note 24 at p. 630.
199
VOL. 799, AUGUST 2, 2016 199

Neither landowner nor agency can disregard the administrative process provided under RA 6657
without offending the constitutional prerogative of the Congress to grant primary jurisdiction to
the DAR.
pg. 789
x x x [I]n cases raising issues of fact not within the conventional experience of judges or cases
requiring the exercise of administrative discretion, agencies created by Congress for regulating the
subject matter should not be passed over. This is so even though the facts after they have been
appraised by specialized competence serve as a premise for legal consequences to be judicially
defined. Uniformity and consistency in the regulation of business entrusted to a particular
agency are secured, and the limited functions of review by the judiciary are more rationally
exercised, by preliminary resort for ascertaining and interpreting the circumstances
underlying legal issues to agencies that are better equipped than courts by specialization, by
insight gained through experience, and by more flexible procedure.29 (Emphasis supplied)
The adjudication by the DAR on just compensation is not an executive recommendation or a

superfluity to be blithely dismissed by the courts. They are, rather, quasi-judicial decisions reached
as a result of what the Administrative Code of 1987 considers as a contested case, where “legal
rights, duties or privileges asserted by specific parties as required by the Constitution or by law
are x x x determined after hearing.”30 These decisions become final and immutable if not timely
challenged before the SAC. The SAC, in resolving such challenge, must dispose, affirm or reverse
the administrative agency’s determination by way of a full decision, expressing
_______________
29 Far East Conference v. United States, supra note 23.
30 Sec. 2(5), Chapter I, Book VII of the Administrative Code of 1987.
200

“clearly and distinctly the facts and the law” on which the SAC decision is based.31
III
The requirement for a fifteen-day period to file with the SAC is expressly provided for in RA 6657
and its validity foreclosed by our ruling in Martinez.
pg. 790
Justice Velasco is, however, of the view that there is no statutory basis for the imposition of a
fifteen-day period and asserts that Section 11, Rule XIII of the 1994 Department of Agrarian
Reform Adjudication Board (DARAB) Rules of Procedure and Section 6, Rule XIX of the 2009
DARAB Rules of Procedure must be struck down as void and of no legal effect.32
Again, I disagree.
The fifteen-day period is provided for in Sections 51 and 54, in relation to Section 57, of RA 6657,
which provides as follows:
Section 51. Finality of Determination.—Any case or controversy before it shall be decided

within thirty (30) days after it is submitted for resolution. Only one (1) motion for reconsideration
shall be allowed. Any order, ruling or decision shall be final after the lapse of fifteen (15) days
from receipt of a copy thereof.
xxx
Section 54. Certiorari.—Any decision, order, award or ruling of the DAR on any agrarian
of Appeals by certiorari except as otherwise provided in this Act within fifteen (15) days from
the re-
_______________
31 Constitution, Art. VIII, Sec. 14.
32 Dissenting Opinion of Justice Velasco, p. 179.
201
VOL. 799, AUGUST 2, 2016 201

ceipt of a copy thereof. The findings of fact of the DAR shall be final and conclusive if based on
substantial evidence.
xxx
pg. 791
proceedings before the Special Agrarian Courts, unless modified by this Act. The Special Agrarian
Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days
from submission of the case for decision. (Emphasis supplied)
While Section 51 expressly provides for the fifteen-day period, Section 54 states that any decision
of the DAR on any agrarian dispute or matter pertaining to the implementation of the Act
(including, perforce, determination of just compensation) may be brought to the Court of Appeals
within fifteen (15) days from receipt of a copy of the DAR decision, “except as otherwise provided
in the Act.” The proviso refers to the exception provided under Section 57, namely, the special
jurisdiction of the SAC to determine just compensation. On top of Section 51, Sections 54 and 57,
read together, provide that decisions of the DAR become final within fifteen (15) days from receipt
of the decision, unless brought to the Court of Appeals under Section 54, or to the SAC under
Section 57.
Even assuming arguendo Justice Velasco is correct in stating that RA 6657 does not provide for
the fifteen-day period, the constitutional and statutory authority of the DAR to promulgate its own
rules of procedure is not in issue in this case. Neither is the validity of the DARAB Rules of
Procedure. The DARAB Rules of Procedure were promulgated under authority of Sections 49 and
50 of RA 6657, which grant the DAR the power to “issue rules and regulations, whether
202

substantive or procedural, to carry out”33 RA 6657 and “adopt a uniform rule of procedure to
achieve a just, expeditious and inexpensive determination for every action or proceeding before
it.”34
This Court, in Eastern Shipping Lines, Inc. v. Philippine Overseas Employment Administration,35
has recognized the power of administrative bodies to “fill in the details” to implement the policies
laid down in a statute through supplementary regulation.
More, the Administrative Code of 1987 which provides for, among others, a default uniform
procedure for the judicial review of decisions of administrative agencies, also provides that
decisions of administrative agencies become final after fifteen (15) days from receipt of the agency
order.36 The Administrative Code of 1987 provides, in pertinent part:
pg. 792
Book VII
Administrative Procedure
xxx
Chapter 3
Adjudication
xxx
Section 14. Decision.—Every decision rendered by the agency in a contested case shall be in
writing and shall state clearly and distinctly the facts and the law on which it is based. The agency
shall decide each case within thirty (30) days following its submission. The parties shall be notified
of the decision personally or by registered mail addressed to their counsel of record, if any, or to
them.
_______________
33 RA No. 6657, Sec. 49.
34 Id., Sec. 50.
35 No. L-76633, October 18, 1988, 166 SCRA 533.
36 Chapters 3 and 4, Book VII, Administrative Code of 1987.
203
VOL. 799, AUGUST 2, 2016 203

Section 15. Finality of Order.—The decision of the agency shall become final and executory
fifteen (15) days after the receipt of a copy thereof by the party adversely affected unless within
that period an administrative appeal or judicial review, if proper, has been perfected. One motion
for reconsideration may be filed, which shall suspend the running of the said period.
pg. 793
xxx
Chapter 4
Administrative Appeal in Contested Cases
xxx
Section 23. Finality of Decision of Appellate Agency.—In any contested case, the decision of
the appellate agency shall become final and executory fifteen (15) days after the receipt by the
parties of a copy thereof.
xxx
Section 25. Judicial Review.—
(1) Agency decisions shall be subject to judicial review in accordance with this chapter and
applicable laws.
(2) Any party aggrieved or adversely affected by an agency decision may seek judicial review.
(3) The action for judicial review may be brought against the agency, or its officers, and all
indispensable and necessary parties as defined in the Rules of Court.
(4) Appeal from an agency decision shall be perfected by filing with the agency within fifteen
(15) days from receipt of a copy thereof a notice of appeal, and with the reviewing court a
petition for review of the order. Copies of the petition shall be served upon the agency and all
parties of record. The petition shall contain a concise statement of the issues involved and the
grounds relied upon for the review, and shall be accompanied with a true copy of the order
appealed from, together with copies of such material portions
pg. 794
204

of the records as are referred to therein and other supporting papers. The petition shall be under
oath and shall show, by stating the specific material dates, that it was filed within the period fixed
in this chapter.
(5) The petition for review shall be perfected within fifteen (15) days from receipt of the final
administrative decision. One (1) motion for reconsideration may be allowed. If the motion is
denied, the movant shall perfect his appeal during the remaining period for appeal reckoned
from receipt of the resolution of denial. If the decision is reversed on reconsideration, the
appellant shall have fifteen (15) days from receipt of the resolution to perfect his appeal.
(6) The review proceeding shall be filed in the court specified by statute or, in the absence
thereof, in any court of competent jurisdiction in accordance with the provisions on venue of
the Rules of Court.
(7) Review shall be made on the basis of the record taken as a whole. The findings of fact of the
agency when supported by substantial evidence shall be final except when specifically provided
otherwise by law. (Emphasis supplied)
The Revised Rules of Court finally also provide, under Rule 43, Section 4, for a fifteen-day period
of finality for agency action.37
_______________
37 Rule 43, Sec. 4. Period of appeal.—The appeal shall be taken within fifteen (15) days from
notice of the award, judgment, final order or resolution, or from the date of its last publication, if
publication is required by law for its effectivity, or of the denial of petitioner’s motion for new
trial or reconsideration duly filed in accordance with the governing law of the court or agency a
quo. x x x
pg. 795
205
VOL. 799, AUGUST 2, 2016 205

IV
Justice Leonen suggests that the applicable time limit to bring the DAR decision to the SAC is the
thirty (30)-year prescriptive period over real actions provided under the Civil Code.38
I disagree.
A thirty-year period is unreasonable. It is oppressive to the landowner, to the DAR and the Land
Bank of the Philippines (LBP) because it violates the Constitution’s command that “[a]ll persons
shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or
administrative bodies.”39 It also defeats the primordial objective of the Revised Rules of Court
“of securing a just, speedy and inexpensive disposition of every action and proceeding.”40
A thirty-year period will also impermissibly erode the “justness” of the just compensation
inasmuch as just compensation requires that the payment be made closest to the taking:
The concept of just compensation embraces not only the correct determination of the amount to
be paid to the owners of the land, but also the payment of the land within a reasonable time
from its taking. Without prompt payment, compensation cannot be considered “just”
inasmuch as the property owner is being made to suffer the consequences of being immediately
deprived of his land while being made to wait for a decade or more before actually receiving
the amount necessary to cope with his loss.41 (Citations omitted, emphasis supplied)
_______________
38 Dissenting Opinion of Justice Leonen, p. 187.
39 Constitution, Art. III, Sec. 16.
41 Apo Fruits Corporation v. Court of Appeals, G.R. No. 164195, February 6, 2007, 514 SCRA
537, 557-558.
206
pg. 796
Finally, the constitutional guarantee of equal protection of the laws demands that a thirty-year
period should be available to both the landowner and the DAR/LBP. Under this regime,
landowners would be tempted to speculate on receiving interest if they postpone the filing of the
action to determine just compensation, thus, shifting the burden of the risk of inflation to the
Government. This, in turn, will disturb the Government’s budget process and consequently
increase the cost to be incurred by the Government in implementing land reform. Conversely,
unscrupulous DAR/LBP functionaries may be tempted to unduly delay appeal for corrupt reasons.
This will leave a landowner uncertain, for the duration of the thirty-year period, as to the true value
of his property, the very evil he is sought to be protected from by Martinez:
x x x This rule is not only in accord with law and settled jurisprudence but also with the principles
of justice and equity. Verily, a belated petition before the SAC, e.g., one filed a month, or a year,
or even a decade after the land valuation of the DAR adjudicator, must not leave the dispossessed
landowner in a state of uncertainty as to the true value of his property.42
I vote to GRANT the petition.
Petition granted, judgment reversed.
Note.—The taking of private lands under the agrarian reform program partakes of the nature of an
expropriation proceeding. Thus, the Special Agrarian Court is reminded to adhere strictly to the
doctrine that just compensation must be valued at the time of taking and not at the time of the
rendition of judgment. (Land Bank of the Philippines vs. Santiago, Jr., 682 SCRA 264 [2012])
——o0o——
_______________
42 Land Bank of the Philippines vs. Martinez, supra note 1 at p. 783.
pg. 797
G.R. No. 219783. August 3, 2016.*
SPOUSES ERNESTO TATLONGHARI and EUGENIA TATLONGHARI, petitioners, vs.

BANGKO KABAYAN-IBAAN RURAL BANK, INC., respondent.
Remedial Law; Civil Procedure; Amendment of Pleadings; Our rules of procedure allow a party
in a civil action to amend his pleading as a matter of right, so long as the pleading is amended
only once and before a responsive pleading is served.—Our rules of procedure allow a party in a
civil action to amend his pleading as a matter of right, so long as the pleading is amended only
once and before a responsive pleading is served (or, if the pleading sought to be amended is a
reply, within ten days after it is served). Otherwise, a party can only amend his pleading upon prior
leave of court.
Same; Same; Same; As long as it does not appear that the motion for leave was made with bad
faith or with intent to delay the proceedings, courts are justified to grant leave and allow the filing
of an amended pleading.—Jurisprudence states that bona fide amendments to pleadings should be
allowed in the interest of justice so that every case may, so far as possible, be determined on its
real facts and the multiplicity of suits thus be prevented. Hence, as long as it does not appear that
the motion for leave was made with bad faith or with intent to delay the proceedings, courts are
justified to grant leave and allow the filing of an amended pleading.
Richard S. Flores for petitioners.
Donato Javinar for respondent.
_______________
* FIRST DIVISION.
517
VOL. 799, AUGUST 3, 2016 517

Tatlonghari vs. Bangko Kabayan-Ibaan Rural Bank, Inc.
PERLAS-BERNABE, J.:
pg. 798
Assailed in this petition for review on certiorari1 are the Decision2 dated January 29, 2015 and
the Resolution3 dated August 5, 2015 rendered by the Court of Appeals (CA) in C.A.-G.R. S.P.
No. 126390, finding no grave abuse of discretion on the part of the Regional Trial Court of
Pallocan West, Batangas City, Branch 7 (RTC) in denying petitioners’ motion for leave to file
third amended complaint.
The Facts
On August 3, 2004, a certain Pedro V. Ilagan (Pedro) filed a complaint4 for annulment of special
power of attorney (SPA), promissory notes, and real estate mortgage (civil case) against
respondent Bangko Kabayan-Ibaan Rural Bank, Inc. (the bank) and the Provincial Sheriff of
Batangas Province (defendants) before the RTC.5 He alleged that the Office of the Ex Officio
Sheriff of the RTC had posted and published notices of Sheriff’s Sale against him as the attorney-
in-fact of a certain Matilde Valdez (Valdez), married to Crispin Brual (Brual), and herein
petitioners spouses Ernesto and Eugenia Tatlonghari (Sps. Tatlonghari), setting the auction sale of
properties belonging respectively to the said couples allegedly for the satisfaction of Pedro’s
indebtedness to the bank amounting to P3,000,000.00.6 Among others, Pedro denied that he
obtained a loan from the bank and that Sps. Tatlonghari or Valdez
_______________
1 Rollo, pp. 10-34.
2 Id., at pp. 36-45. Penned by Associate Justice Ramon A. Cruz, with Associate Justices Rebecca
De Guia-Salvador and Marlene Gonzales-Sison, concurring.
3 Id., at pp. 47-48. Penned by Associate Justice Ramon A. Cruz, with Associate Justices Marlene
Gonzales-Sison and Leoncia R. Dimagiba, concurring.
4 Dated August 3, 2004. Id., at pp. 49-56.
5 Id., at pp. 36-37.
6 Id., at pp. 50-51.
518
pg. 799
constituted him as an attorney-in-fact for the purpose of mortgaging their respective properties as
collateral to the bank.7
After the original complaint was filed, Pedro convinced Sps. Tatlonghari to join him in the civil
case against the bank. He informed them that the bank used a falsified SPA and made it appear
that they had authorized him to obtain a loan from it, secured by a real estate mortgage on their
property which was the subject of foreclosure proceedings.8 As Sps. Tatlonghari did not issue any
SPA or authorization in favor of Pedro, they agreed to join him as plaintiffs in the civil case against
the bank and likewise accepted the offer for Pedro’s counsel, Atty. Bienvenido Castillo (Atty.
Castillo), to represent them.9 On August 11, 2004, Sps. Tatlonghari and Pedro, together with
Valdez and Brual, as plaintiffs, filed an amended complaint10 (First Amended Complaint) against
defendants.
On September 21, 2004, the defendants filed their answer.11
On July 22, 2005, Atty. Eliseo Magno Salva (Atty. Salva) of the Salva Salva & Salva Law Office
entered12 the appearance of the law firm as collaborating counsel for plaintiffs. Thereafter,
plaintiffs, through Atty. Salva, filed a Manifestation and Motion for Leave to File and to Admit
Second Amended Complaint13 asserting the need to file a Second Amended Complaint for the
purpose of, inter alia, including as additional plaintiffs Sps. Tolentino A. Sandoval (Tolentino)
and Evelyn C. Sandoval (Evelyn; collectively, Sps. Sandoval), who had previously purchased the
mortgaged property of Valdez. Incidentally, Valdez and Brual had since died; thus, the Second
_______________
7 Id., at pp. 51-52.
8 Id., at p. 37.
9 Id.
10 Id., at pp. 61-69.
11 Id., at pp. 204-210.
12 Id., at pp. 74-75.
13 Id., at pp. 76-78.
pg. 800
519
VOL. 799, AUGUST 3, 2016 519

Amended Complaint also sought to include their estate and heirs as defendants, as the latter’s
consent to substitute their predecessors could not be secured.14 Additionally, Eugenia Ilagan
(Eugenia), Pedro’s spouse, was included as plaintiff.15
Subsequently, the RTC admitted the Second Amended Complaint.16
While the case was pending, Sps. Tatlonghari allegedly discovered evidence which led them to
believe that it was Tolentino, one of their co-plaintiffs, who was responsible for involving their
property in the purportedly anomalous transactions with the bank. As Attys. Castillo and Salva,
the collaborating counsels of record, were both hired by Pedro and Tolentino, Sps. Tatlonghari
decided to engage the services of their own counsel. Thus, on August 3, 2011, Atty. Marlito I.
Villanueva (Atty. Villanueva) entered17 his appearance as counsel for Sps. Tatlonghari.18
Subsequently, Atty. Villanueva filed a motion for leave to file third amended complaint19 on
behalf of Sps. Tatlonghari. In their motion, they alleged that the title to their property had already
been consolidated in favor of the bank, and that the original and amended complaints contained no
allegations or prayer pertaining specifically to their cause of action against the bank, which might
bar them from getting complete relief in the civil case. Particularly, the Third Amended
Complaint20 fully described the property in question and stated that it was an entirely different
property from the one covered by the real estate mortgage in favor of the bank. In view thereof,
Sps. Tatlonghari prayed, inter alia, for the re-
_______________
14 Id., at pp. 77-78.
15 Id., at p. 37.
16 Id.
17 Id., at pp. 111-113.
18 Id., at p. 38.
19 Id., at pp. 117-121.
20 Id., at pp. 122-144.
pg. 801
520

conveyance of their property, which the bank maliciously and unlawfully foreclosed and
transferred in its name, and for the award of damages.21
The RTC’s Ruling
In an Order22 dated December 5, 2011, the RTC denied Sps. Tatlonghari’s motion, explaining that
while it graciously allowed the second amendment of the complaint, it can no longer allow a third
amendment in view of the delay in the adjudication of the merits of the case. Moreover, it noted
that Sps. Tatlonghari’s motion did not bear the signature of Atty. Salva, the current counsel of
record of all the plaintiffs. Since records are bereft of evidence that Atty. Salva had withdrawn as
counsel, he is still the Sps. Tatlonghari’s counsel as far as the RTC was concerned, notwithstanding
Atty. Villanueva’s entry of appearance on behalf of Sps. Tatlonghari.23
Sps. Tatlonghari moved for reconsideration,24 which was, however, denied in the Order25 dated
August 6, 2012. Thus, they elevated the matter to the CA via petition for certiorari.26
The CA’s Ruling
In a Decision27 dated January 29, 2015, the CA found no grave abuse of discretion on the part of
the RTC in denying Sps. Tatlonghari’s motion, citing Section 3, Rule 10 of the Rules of Court,
which states in part:
_______________
21 Id., at p. 38.
22 Id., at pp. 270-271. Penned by Presiding Judge Aida C. Santos.
23 Id.
24 Id., at p. 39.
25 Id., at pp. 272-274.
pg. 802
27 Rollo, pp. 36-45.
521
VOL. 799, AUGUST 3, 2016 521

Section 3. Amendments by leave of court.—Except as provided in the next preceding section,

substantial amendments may be made only upon leave of court. But such leave may be refused if
it appears to the court that the motion was made with intent to delay. x x x
In view thereof, it found that the RTC did not commit grave abuse of discretion when it considered
inexcusable delay in denying Sps. Tatlonghari’s motion for leave of court to file third amended
complaint. Anent the issue of whether Atty. Villanueva had validly replaced Atty. Salva as Sps.
Tatlonghari’s counsel of record, the CA likewise concurred with the RTC in finding that Atty.
Salva had neither been relieved nor replaced; therefore, he remains the counsel of record of Sps.
Tatlonghari.28
Sps. Tatlonghari’s motion for reconsideration29 was denied in a Resolution30 dated August 5,
2015; hence, this petition.
The issue for the Court’s resolution is whether or not the CA erred in upholding the denial of Sps.
Tatlonghari’s motion for leave to file third amended complaint and in finding that there was no
valid substitution of counsels of record insofar as Sps. Tatlonghari were concerned.
The petition has merit.
pg. 803
Our rules of procedure allow a party in a civil action to amend his pleading as a matter of right, so
long as the pleading is amended only once and before a responsive pleading is served (or, if the
pleading sought to be amended is a reply,
_______________
28 Id., at p. 43.
30 Rollo, pp. 47-48.
522

within ten days after it is served). Otherwise, a party can only amend his pleading upon prior leave
of court.31
As a matter of judicial policy, courts are impelled to treat motions for leave to file amended
pleadings with liberality. This is especially true when a motion for leave is filed during the early
stages of proceedings or, at least, before trial. Jurisprudence states that bona fide amendments to
pleadings should be allowed in the interest of justice so that every case may, so far as possible, be
determined on its real facts and the multiplicity of suits thus be prevented. Hence, as long as it
does not appear that the motion for leave was made with bad faith or with intent to delay the
proceedings, courts are justified to grant leave and allow the filing of an amended pleading. Once
a court grants leave to file an amended pleading, the same becomes binding and will not be
disturbed on appeal unless it appears that the court had abused its discretion.32
In this case, Sps. Tatlonghari alleged33 that the First and Second Amended Complaints did not
contain certain material averments that were necessary to establish their own causes of action
against the bank, and that it did not contain a prayer seeking the reconveyance of their property
from the bank to them. Indeed, a meticulous inspection of the records reveal that other than the
allegation that they did not execute any SPA in favor of Pedro authorizing him to use their property
as collateral for his loan with the bank, the First and Second Amended Complaints are bereft of
any material allegations pertaining to their personal involvement in the case
_______________
31 Yujuico v. United Resources Asset Management, Inc., G.R. No. 211113, June 29, 2015, 760
SCRA 610, 620. See also Sections 2, 3, and 4, Rule 10 of the Rules of Court.
pg. 804
32 Id., at pp. 620-621, citing Torres v. Tomacruz, 49 Phil. 913, 915 (1927), Tiu v. Philippine Bank
of Communications, 613 Phil. 56, 68; 596 SCRA 432, 440 (2009), and Quirao v. Quirao, 460 Phil.
605, 611; 414 SCRA 430, 434 (2003).
33 See Motion for Leave to File Third Amended Complaint dated August 15, 2011, Rollo, pp.
228-230.
523
VOL. 799, AUGUST 3, 2016 523

against the bank. Although the First and Second Amended Complaints were replete with
allegations with regard to the causes of action of Pedro and Sps. Sandoval, it contained nothing
with respect to that of Sps. Tatlonghari. In fact, apart from the prayers seeking the declaration of
nullity of the SPA that Sps. Tatlonghari allegedly executed on behalf of Pedro and the award for
damages, the Second Amended Complaint did not seek any relief in favor of Sps. Tatlonghari;
instead, it prayed for specific relief only in favor of Sps. Sandoval, who were purportedly the true
and lawful owners of the property previously registered in the name of the deceased Valdez.
In view of the foregoing, it would have been more prudent on the part of the RTC, in the exercise
of its discretion, to allow the amendments proffered by Sps. Tatlonghari and to admit the Third
Amended Complaint. The RTC should have allowed such admission if only to prevent the circuitry
of action and the unnecessary expense of filing another complaint anew. Although it is true that
the RTC exercises discretion in this respect, it should have been more circumspect and liberal in
the exercise of its discretion. With the admission of the Third Amended Complaint, the ultimate
goal of determining the case on its real facts and affording complete relief to all the parties involved
in this case would then be realized.
Moreover, it appears from the records that the inexcusable delay upon which the denial of Sps.
Tatlonghari’s motion was grounded was not their fault nor was the same deliberately caused.
Records are bereft of evidence to show that such delay was attributable to them, or that in filing
their motion, they were impelled by bad faith. Thus, while it is true that inexcusable delay would,
under ordinary circumstances, justify the denial of their motion for leave to file third amended
complaint, such ground does not obtain in this case. Besides, Sps. Tatlonghari’s motion for leave
to file third amended complaint was filed before the trial of the case; hence, the real controver-
524
pg. 805
sies in this case would all have been presented with all the parties having ample time to prepare
for trial.
With respect to the lack of conforme of Atty. Salva on the Sps. Tatlonghari’s motion, there is no
rule requiring the written consent of a former attorney prior to his substitution. Section 26, Rule
138 of the Rules of Court provides:
Section 26. Change of attorneys.—An attorney may retire at any time from any action or special
proceeding, by the written consent of his client filed in court. He may also retire at any time from
an action or special proceeding, without the consent of his client, should the court, on notice to the
client and attorney, and on hearing, determine that he ought to be allowed to retire. In case of
substitution, the name of the attorney newly employed shall be entered on the docket of the
court in place of the former one, and written notice of the change shall be given to the adverse
party.
A client may at any time dismiss his attorney or substitute another in his place, but if the
contract between client and attorney has been reduced to writing and the dismissal of the attorney
was without justifiable cause, he shall be entitled to recover from the client the full compensation
stipulated in the contract. However, the attorney may, in the discretion of the court, intervene in
the case to protect his rights. For the payment of his compensation the attorney shall have a lien
upon all judgments for the payment of money, and executions issued in pursuance of such
judgment, rendered in the case wherein his services had been retained by the client.
Nowhere in the foregoing provision is it stated that the written consent of an attorney previously
engaged by a client should be obtained before substitution can be had; instead, what the rule
requires is mere notice to the adverse party. Moreover, a client may effect substitution of attorneys
at any time subject to certain conditions, none of which have been shown to be obtaining in the
present case. Indeed, it is the
525
VOL. 799, AUGUST 3, 2016 525

client’s — in this case, the Sps. Tatlonghari’s — sole prerogative whom to engage to represent
their interests and prosecute the case on their behalf, which prerogative cannot be negated or
pg. 806
supplanted by the nonexistent requirement of written consent of the previous attorney. Besides, an
attorney is presumed to be properly authorized to represent any cause in which he appears.34 As
such, Atty. Villanueva, who has entered his appearance on behalf of the Sps. Tatlonghari and filed
their motion for leave to file third amended complaint, should be recognized as their new counsel
of record who is fully authorized to act for and on their behalf.
WHEREFORE, the petition is GRANTED. The Decision dated January 29, 2015 and the
Resolution dated August 5, 2015 rendered by the Court of Appeals in C.A.-G.R. S.P. No. 126390
are hereby REVERSED and SET ASIDE. The Regional Trial Court of Batangas City, Branch 7
is directed to ADMIT petitioners’ third amended complaint and continue with the proceedings
with utmost dispatch.
SO ORDERED.
_______________
34 Section 21, Rule 138 of the Rules of Court provides:
Section 21. Authority of attorney to appear.—An attorney is presumed to be properly

authorized to represent any cause in which he appears, and no written power of attorney is
required to authorize him to appear in court for his client, but the presiding judge may, on
motion of either party and on reasonable grounds therefor being shown, require any attorney
who assumes the right to appear in a case to produce or prove the authority under which he
appears, and to disclose, whenever pertinent to any issue, the name of the person who
employed him, and may thereupon make such order as justice requires. An attorney wilfully
appearing in court for a person without being employed, unless by leave of the court, may
be punished for contempt as an officer of the court who has misbehaved in his official
transactions.
526

Note.—The courts should be liberal in allowing amendments to pleadings to avoid multiplicity of

suits and in order that the real controversies between the parties are presented and the case decided
on the merits without unnecessary delay. This rule applies with more reason and with greater force
when, as in the case at bar, the amendment sought to be made refers to a mere matter of form and
pg. 807
no substantial rights are prejudiced. (Bormaheco, Incorporated v. Malayan Insurance Company,
Incorporated, 625 SCRA 309 [2010])
——o0o——
G.R. No. 210218. August 17, 2016.*
NATIONAL POWER CORPORATION, petitioner, vs. HEIRS OF ANTONINA RABIE,

represented by ABRAHAM R. DELA CRUZ, respondents.
Execution Pending Appeal; Execution pending appeal, also called discretionary execution, is
allowed upon good reasons to be
_______________
* SECOND DIVISION.
74

National Power Corporation vs. Heirs of Antonina Rabie
stated in a special order after due hearing.—Execution pending appeal, also called discretionary
execution under Section 2(a), Rule 39 of the Rules of Court, is allowed upon good reasons to be
stated in a special order after due hearing.
Same; Prior to transmittal of the records of the case, the trial court does not lose jurisdiction over
the case and may issue an order for execution pending appeal.—Further, prior to transmittal of
the records of the case, the trial court does not lose jurisdiction over the case and in fact, may issue
an order for execution pending appeal.
Same; Discretionary execution does not apply to eminent domain proceedings.—While the trial
court still had jurisdiction when it issued the order granting execution pending appeal, the Court
holds that discretionary execution does not apply to eminent domain proceedings.
Same; It is basic that the trial court should make a finding on whether the allegations in the motion
for execution pending appeal constitute good reasons as required in Section 2 of Rule 39.—A
pg. 808
mere statement of “good reasons as stated in the motion” does not suffice to justify execution
pending appeal. It is basic that the trial court should make a finding on whether the allegations in
the motion for execution pending appeal constitute good reasons as required in Section 2 of Rule
39. The trial court should have expressed clearly and distinctly the facts and law on which the
order granting the motion for execution pending appeal was based, but it did not.
Alaricel L. Yang for respondents.
75
VOL. 801, AUGUST 17, 2016 75

CARPIO, J.:
The Case
This petition for review on certiorari1 assails the 28 November 2013 Decision2 of the Court of
Appeals in C.A.-G.R. S.P. No. 131335, dismissing the petition for certiorari filed by petitioner
National Power Corporation (NAPOCOR).
The Facts
NAPOCOR is a government-owned and -controlled corporation created pursuant to Republic Act

No. 6395,3 as amended. Under the EPIRA,4 NAPOCOR was tasked to perform the missionary
electrification function and to provide power generation and its associated power delivery systems
in areas that are not connected to the transmission system.
pg. 809
On 1 December 2009, NAPOCOR filed a complaint for expropriation5 against respondents Heirs
of Antonina Rabie (respondents) for the acquisition of the 822-square meter portion of Lot No.
1439, a residential lot located in Barangay Lewin, Lumban, Laguna consisting of 12,657 square
meters and covered by Original Certificate of Title No. P-9196, to be used as access road for the
Caliraya Hydro Electric Power Plant of the Caliraya-Botocan-Kalayaan Build Rehabilitate and
Operate Transfer Project of the NAPOCOR. The case was raffled to Regional Trial Court, Branch
91, Sta. Cruz, Laguna (trial court) and docketed as Civil Case No. SC-4842.
_______________
1 Under Rule 45 of the Rules of Court.
2 Rollo, pp. 46-59. Penned by Associate Justice Magdangal M. De Leon, with Associate Justices
Stephen C. Cruz and Myra V. Garcia-Fernandez, concurring.
3 An act Revising the Charter of the National Power Corporation.
4 Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001.
5 Rollo, pp. 91-95.
76

On 25 February 2010, respondents filed a Verified Answer,6 claiming that the then current market
value of the property was P10,000 per square meter on the inner portion and P12,000 per square
meter near the highway. Respondents prayed, among others, for a just compensation in the amount
of P1,250,700, representing the Bureau of Internal Revenue (BIR) zonal valuation for the “actual
area to be occupied” by NAPOCOR which is 2,274 square meters, instead of 822 square meters
only. In addition, respondents sought payment for NAPOCOR’s alleged unauthorized entry and
use of the property from 1940 to date.
On 5 July 2010, NAPOCOR deposited with the Land Bank of the Philippines (Land Bank) the
amount of P411,000 representing the BIR zonal valuation of the affected portion of the subject
property, which was P500 per square meter.
Respondents filed a Motion to Withdraw Deposit dated 15 November 2010,7 which the trial court
granted in an Order dated 17 November 2010.8
pg. 810
NAPOCOR filed a Motion to Issue Order of Expropriation dated 18 March 2011.9 NAPOCOR
also filed a Motion for Annotation/Registration of Partial Payment dated 7 June 2011.10
In an Order dated 5 October 2011,11 the trial court granted the motions and constituted the Board
of Commissioners to assist the trial court in the determination of just compensation for the affected
portion of the subject property.
On 8 February 2012, the Board of Commissioners submitted its Report. On 17 May 2012,
NAPOCOR filed its Comment/Opposition to the Commissioners’ Report objecting to
_______________
6 Id., at pp. 102-112.
7 Id., at pp. 113-115.
8 Id., at p. 117.
9 Id., at pp. 118-121.
10 Id., at pp. 122-125.
11 Id., at pp. 126-127.
77
VOL. 801, AUGUST 17, 2016 77

the recommendation that the affected portion of the subject property consists of 2,274 square
meters and that the value per square meter is P11,000. NAPOCOR also questioned the
Commissioners’ recommendation on the payment of rentals and the fact that NAPOCOR was not
given the opportunity to be heard and to argue as to the amount of just compensation.
On 29 January 2013, the trial court issued an Order, the dispositive portion of which reads:
WHEREFORE, the Eight Hundred Twenty-Two (822) square meters of the land owned by the
defendants is hereby expropriated in favor of the National Power Corporation effective December
2009 upon payment of the fair market value of the property at Eleven Thousand (P11,000.00)
Pesos per square meter or a total of Nine Million Forty-Two Thousand (P9,042,000.00) Pesos.
Defendants’ claim that said property was occupied by plaintiff since 1940 is unrebutted, hence,
pg. 811
reasonable rentals of Twelve Thousand Pesos (P12,000.00) yearly is hereby awarded to defendants
from the year 1940 to the present at a twelve percent (12%) annual interest rate, until fully paid.
SO ORDERED.12
On 8 March 2013, NAPOCOR filed a Motion for Reconsideration of the Order. However, the trial
court denied the motion in an Order dated 30 April 201313 which was received by NAPOCOR on
23 May 2013 and by respondents on 15 May 2013.
On 22 May 2013, respondents filed a Motion for Execution Pending Appeal.14 NAPOCOR filed
its Comment/Opposition thereto on 4 June 2013.
_______________
12 Id., at p. 151. Penned by Judge Divinagracia G. Bustos-Ongkeko.
13 Id., at p. 161.
14 Id., at pp. 162-170.
78

On 6 June 2013, NAPOCOR filed its Notice of Appeal and Record on Appeal.15
In an Order dated 18 June 2013,16 the trial court gave due course to NAPOCOR’s Notice of
Appeal and directed the transmittal of the records of the case to the Court of Appeals.
The trial court set for hearing respondents’ Motion for Execution Pending Appeal on 10 July 2013.
On 11 July 2013, the trial court issued an Order granting respondents’ Motion for Execution
Pending Appeal.17 The trial court held:
In determining the propriety of execution of its Order dated January 29, 2013, pending appeal,
showing good reasons as stated in the motion and while the Court has its jurisdiction over the case
and still in possession of original record thereof or the record on appeal, the Court grants the
“Motion for Execution Pending Appeal.”18
pg. 812
On 12 July 2013, the trial court’s Officer-in-Charge issued a Writ of Execution.19 Sheriff
Raymundo P. Claveria issued a Notice20 addressed to the President of NAPOCOR demanding
payment of P9,042,000 and P12,000 yearly rentals plus 12% interest from 1940 up to the present
until fully paid within ten days from receipt thereof.
On 30 July 2013, NAPOCOR received a letter from the LBP-NAPOCOR Extension Office
informing NAPOCOR of its receipt of a Notice of Garnishment in the amount of P14,873,999.28
issued by Sheriff Claveria.
_______________
15 Id., at pp. 184-190.
16 Id., at p. 191.
17 Id., at pp. 84-85.
18 CA Rollo, p. 29.
19 Rollo, pp. 86-87.
20 Id., at p. 88.
79
VOL. 801, AUGUST 17, 2016 79

Aggrieved, NAPOCOR filed with the Court of Appeals a petition for certiorari under Rule 65,
with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction.
On 28 November 2013, the Court of Appeals rendered a Decision dismissing the petition.
Hence, this petition filed on 23 January 2014.
On 22 October 2014, respondents filed an Omnibus Motion (to Dismiss and to Cite Petitioner in
Contempt), contending that NAPOCOR is guilty of forum shopping considering that there is
another petition21 filed by NAPOCOR before this Court (docketed as G.R. No. 214070).
Respondents alleged that G.R. No. 214070 involves the same parties and the same facts and seeks
the same relief of preventing the implementation of the trial court’s Order dated 11 July 2013
pg. 813
granting execution pending appeal and the Order dated 29 January 2013 ordering NAPOCOR to
pay just compensation to respondents.
In its 19 November 2014 Resolution, the Court noted the motion.
In its 29 September 2014 Resolution, the Court dismissed the petition in G.R. No. 214070 for
NAPOCOR’s failure to sufficiently show that the assailed resolutions of the Court of Appeals,
dated 15 April 2014 and 8 August 2014, are tainted with grave abuse of discretion. The 15 April
2014 Resolution of the Court of Appeals assailed in G.R. No. 214070 ordered NAPOCOR to
submit an affidavit containing a list of its assets and ordered Land Bank to submit a bank
certification containing a list of NAPOCOR’s bank deposits with Land Bank.
_______________
21 G.R. No. 214070 entitled National Power Corporation v. Court of Appeals (Former Second
Division) and Heirs of Antonina Rabie, represented by Abraham R. Dela Cruz.
80

The Court of Appeals’ Ruling
The Court of Appeals held that the trial court still had jurisdiction when respondents filed their
motion for execution pending appeal on 22 May 2013, or seven days after their receipt of the trial
court’s order denying their Motion for Partial Reconsideration. Hence, respondents’ motion for
execution pending appeal was timely filed.
The Court of Appeals ruled that there exists good reasons for the trial court’s order granting
execution pending appeal. The Court of Appeals agreed with respondents’ invocation of Borja v.
Court of Appeals,22 where petitioner’s advanced age, together with the posting of a supersedeas
bond, justified the execution pending appeal.
The Court of Appeals rejected NAPOCOR’s argument that the alleged physical and financial
conditions of respondents do not outweigh the damages that it would suffer in the event that the
Order subject of the writ of execution is later reversed, and that such conditions increase the risk
that respondents would not be able to reimburse the amounts fixed in the Order. The CA held that
“where the executed judgment is reversed, x x x the trial court may, on motion, issue such orders
of restitution or reparation of damages x x x.”23
pg. 814
The Court of Appeals also held that NAPOCOR’s funds may be garnished as “it would be absurd
to rule that petitioner’s funds may not be garnished x x x considering that the winning party would
not enjoy the fruits of his victory, x x x.”24 The Court of Appeals cited Cosculluela v. Court of
Appeals,25 where the Court held that “[i]t is arbitrary and capricious for a government agency to
initiate expropriation proceedings x x x and then refuse to pay on the ground that
_______________
22 274 Phil. 258; 196 SCRA 847 (1991).
23 Rollo, p. 57.
24 Id.
25 247 Phil. 359, 367; 164 SCRA 393, 401 (1988).
81
VOL. 801, AUGUST 17, 2016 81

there are no appropriations for the property earlier taken x x x.”26
The Issues
The issues in this case are: (1) whether the trial court still had jurisdiction when it ruled on the
Motion for Execution Pending Appeal; (2) whether there exists good reasons for the execution of
the trial court’s decision pending appeal; and (3) whether the NAPOCOR’s funds may be
garnished or be the subject of execution.
pg. 815
Trial court had jurisdiction to resolve
motion for discretionary execution
Execution pending appeal, also called discretionary execution under Section 2(a), Rule 39 of the
Rules of Court, is allowed upon good reasons to be stated in a special order after due hearing.
Section 2(a), Rule 39 provides:
SEC. 2. Discretionary execution.—
(a) Execution of a judgment or a final order pending appeal.—On motion of the prevailing party
with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is
in possession of either the original record or the record on appeal, as the case may be, at the time
of the filing of such motion, said court may, in its discretion, order execution of a judgment or
final order even before the expiration of the period to appeal.
_______________
26 Rollo, p. 58.
82

After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in
the appellate court.
Discretionary execution may only issue upon good reasons to be stated in a special order after due
hearing.
In this case, the motion for execution pending appeal was filed by respondents seven days after
their receipt of the trial court’s order denying the motions for reconsideration filed by both parties.
Clearly, respondents filed the motion for execution pending appeal before the lapse of the period
to file an appeal, which is fifteen days from notice of the order denying the motion for
pg. 816
reconsideration.27 Therefore, the trial court still had jurisdiction when respondents filed their
motion for execution pending appeal.
Further, prior to transmittal of the records of the case, the trial court does not lose jurisdiction over
the case and in fact, may issue an order for execution pending appeal. Section 9, Rule 41 of the
Rules of Court provides:
SEC. 9. Perfection of appeal; effect thereof.—A party’s appeal by notice of appeal is deemed
perfected as to him upon the filing of the notice of appeal in due time.
A party’s appeal by record on appeal is deemed perfected as to him with respect to the subject
matter
_______________
27 Section 3, Rule 41 of the Rules of Court provides:
SEC. 3. Period of ordinary appeal.—The appeal shall be taken within fifteen (15) days
from notice of judgment or final order appealed from. Where a record on appeal is required,
the appellants shall file a notice of appeal and a record on appeal within thirty (30) days
from notice of the judgment or final order. x x x.
The period of appeal shall be interrupted by a timely motion for new trial or reconsideration.
No motion for extension of time to file a motion for new trial or reconsideration shall be
allowed.
83
VOL. 801, AUGUST 17, 2016 83

thereof upon the approval of the record on appeal filed in due time.
In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the
appeals filed in due time and the expiration of the time to appeal of the other parties.
In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof
upon the approval of the records on appeal filed in due time and the expiration of the time to appeal
of the other parties.
In either case, prior to the transmittal of the original record or the record on appeal, the court
may issue orders for the protection and preservation of the rights of the parties which do not
pg. 817
involve any matter litigated by the appeal, approve compromises, permit appeals of indigent
litigants, order execution pending appeal in accordance with Section 2 of Rule 39, and allow
withdrawal of the appeal. (Emphasis supplied)
In this case, the trial court issued its Order granting the motion for execution pending appeal on
11 July 2013. That Order expressly stated that the trial court was still in possession of the original
record of the case at the time. In fact, the records were transmitted to the Court of Appeals on 19
July 2013.28 In other words, the trial court issued the Order granting the motion for execution
pending appeal before the transmittal of the records to the Court of Appeals. Hence, contrary to
NAPOCOR’s contention, the Court of Appeals correctly ruled that the trial court still had
jurisdiction when the motion for execution pending appeal was filed and when the trial court
resolved such motion.
_______________
28 CA Rollo (G.R. No. 214070), p. 4.
84

Discretionary execution does not apply

to eminent domain proceedings
While the trial court still had jurisdiction when it issued the order granting execution pending
appeal, the Court holds that discretionary execution does not apply to eminent domain proceedings.
In Spouses Curata v. Philippine Ports Authority,29 where movants alleged advanced age as ground
for their motion for discretionary execution, the Court found the trial court to have committed
grave abuse of discretion in issuing the order granting execution pending appeal. The Court held
that discretionary execution is not applicable to expropriation proceedings, thus:
The Court rules that discretionary execution of judgments pending appeal under Sec. 2(a) of Rule
39 does not apply to eminent domain proceedings.
As early as 1919 in Visayan Refining Co. v. Camus and Paredes, the Court held:
pg. 818
When the Government is plaintiff the judgment will naturally take the form of an order
merely requiring the payment of the award as a condition precedent to the transfer of the
title, as a personal judgment against the Government could not be realized upon execution.
In Commissioner of Public Highways v. San Diego, no less than the eminent Chief Justice Claudio
Teehankee explained the rationale behind the doctrine that government funds and properties
cannot be seized under a writ of execution, thus:
The universal rule that where the State gives its consent to be sued by private parties either
by general or special law, it may limit claimants action only up to the completion of
_______________
29 608 Phil. 9; 590 SCRA 214 (2009).
85
VOL. 801, AUGUST 17, 2016 85

proceedings anterior to the stage of execution and that the power of the Courts ends when
the judgment is rendered, since government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments, is based on obvious
considerations of public policy. Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The functions and public services rendered
by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects, as appropriated by law.
PPA’s monies, facilities and assets are government properties. Ergo, they are exempt from
execution whether by virtue of a final judgment or pending appeal.
PPA is a government instrumentality charged with carrying out governmental functions through
the management, supervision, control and regulation of major ports of the country. It is an attached
agency of the Department of Transportation and Communication pursuant to PD 505.
xxxx
Therefore, an undeniable conclusion is that the funds of PPA partake of government funds, and
such may not be garnished absent an allocation by its Board or by statutory grant. If the PPA
funds cannot be garnished and its properties, being government properties, cannot be levied
via a writ of execution pursuant to a final judgment, then the trial court likewise cannot
grant discretionary execution pending appeal, as it would run afoul of the established
pg. 819
jurisprudence that government properties are exempt from execution. What cannot be done
directly cannot be done indirectly.
From the above discussion, we find that the RTC committed grave abuse of discretion in its July
24, 2000 Order directing the execution of the First Compensation
86

Order (July 10, 2000 Order) pending appeal.30 (Emphasis supplied)
The Court of Appeals’ reliance on the case of Borja v. Court of Appeals31 is misplaced. Borja
involved a complaint for sum of money totalling P78,325 representing unpaid commissions and
damages. On the other hand, this case involves expropriation proceedings, where the trial court
fixed the just compensation for the subject property at P9,042,000 and yearly rentals at P12,000
since 1940 plus 12% interest per annum for a total award of P14,873,999.28. The difference in the
nature of the actions and the amounts involved in Borja and in this case justifies the non-
application of the rule on discretionary execution.
Nonexistence of good reasons for the

execution pending appeal
The trial court also committed grave abuse of discretion when it failed to specify and discuss any
good reason required for granting execution pending appeal.
In Villamor v. NAPOCOR,32 the Court discussed the requisites for execution pending appeal, thus:
Execution pending appeal requires the observance of the following requisites: (a) there must be a
motion therefor by the prevailing party; (b) there must be a good reason for issuing the writ of
execution; and (c) the good reason must be stated in a special order.
The prevailing doctrine as provided for in Section 2, paragraph 3 of Rule 39 of the Rules of Civil
Procedure is that discretionary execution is permissible only when good reasons exist for
immediately executing the judgment before finality or pending appeal or even before the
pg. 820
_______________
30 Id., at pp. 86-88; p. 291.
31 Supra note 22.
32 484 Phil. 298, 312-314; 441 SCRA 329, 341-343 (2004).
87
VOL. 801, AUGUST 17, 2016 87

expiration of the period to appeal. Good reasons consist of compelling circumstances justifying
immediate execution lest judgment becomes illusory, or the prevailing party after the lapse of time
be unable to enjoy it, considering the tactics of the adverse party who may have apparently no
cause but to delay. Such reasons must constitute superior circumstances demanding urgency which
will outweigh the injury or damages should the losing party secure a reversal of the judgment.
Were it otherwise, execution pending appeal may well become a tool of oppression and inequity
instead of an instrument of solicitude and justice.
The execution of judgment pending appeal is an exception to the general rule and must,
therefore, be strictly construed. So, too, it is not to be availed of and applied routinely, but
only in extraordinary circumstances.
This rule is strictly construed against the movant, for courts look with disfavor upon any
attempt to execute a judgment which has not acquired a final character. In the same vein,
the Court has held that such execution is “usually not favored because it affects the rights of
the parties which are yet to be ascertained on appeal.”
The exercise of the power to grant or deny immediate or advance execution is addressed to the
sound discretion of the trial court. However, the existence of good reasons is indispensable to the
grant of execution pending appeal. Absent any such good reason, the special order of execution
must be struck down for having been issued with grave abuse of discretion. (Emphasis supplied)
In this case, the trial court granted the motion for execution pending appeal based on “good reasons
as stated in the motion,” without identifying and discussing any of these alleged good reasons. A
mere statement of “good reasons as stated in the motion” does not suffice to justify execution
pending appeal. It is basic that the trial court should make a finding on whether the allegations in
the motion for execution
pg. 821
88

pending appeal constitute good reasons as required in Section 2 of Rule 39. The trial court should
have expressed clearly and distinctly the facts and law on which the order granting the motion for
execution pending appeal was based, but it did not. Without such finding, the allegations in the
motion for execution pending appeal remain as allegations. Consequently, the trial court
committed grave abuse of discretion in granting discretionary execution without stating and
explaining clearly the basis therefor.
In view of the foregoing, the Court deems it unnecessary to discuss the issue of garnishment of
NAPOCOR’s funds.
WHEREFORE, the petition is GRANTED. The 28 November 2013 Decision of the Court of
Appeals in C.A.-G.R. S.P. No. 131335 is SET ASIDE.
SO ORDERED.
Del Castillo, Mendoza and Leonen, JJ., concur.
Petition granted, judgment set aside.
Note.—A motion for execution pending appeal filed by the prevailing party shall contain a three-
day notice to the adverse party and execution pending appeal shall not issue without prior notice
and hearing. (Calo vs. Commission on Elections, 610 SCRA 342 [2010])
——o0o——
pg. 822
G.R. No. 189289. August 31, 2016.*
GLORIA ZOLETA-SAN AGUSTIN, petitioner, vs. ERNESTO SALES, respondent.
Remedial Law; Petition for Review on Certiorari; It is a well-settled principle that the findings of
fact of the Court of Appeals (CA) especially those upholding the trial court are final and conclusive
and cannot be reviewed on appeal to the Supreme Court (SC).—It is a well-settled principle that
the findings of fact of the CA especially those upholding the trial court are final and conclusive
and cannot be reviewed on appeal to the Supreme Court.
_______________
* THIRD DIVISION.
684

Zoleta-San Agustin vs. Sales
Family Law; Filiation; The legitimate filiation of a child may be established by any of the
following.—The legitimate filiation of a child may be established by any of the following: (1) The
record of birth appearing in the civil register or a final judgment; or (2) An admission of legitimate
filiation in a public document or a private handwritten instrument and signed by the parent
concerned. In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
(1) The open and continuous possession of the status of a legitimate child; or (2) Any other means
allowed by the Rules of Court and special laws.
Remedial Law; Findings of fact of trial courts are given weight on appeal because they are in a
better position to examine the real evidence, and observe the demeanor of the witnesses and
therefore discern whether they are telling the truth.—It is settled in a catena of cases that the
findings of fact of trial courts are given weight on appeal because they are in a better position to
examine the real evidence, and observe the demeanor of the witnesses and therefore discern
whether they are telling the truth.
Notary Public; Notarized Documents; A notarized document is a public document and as such it
enjoys the presumption of regularity which can only be overthrown by clear and convincing
evidence.—A notarized document is a public document and as such it enjoys the presumption of
pg. 823
regularity which can only be overthrown by clear and convincing evidence. It serves as a prima
facie evidence of the truth of the facts stated therein and a conclusive presumption of its existence
and due execution.
Family Law; Filiation; It is the law and only the law that determines who are the legitimate or
illegitimate children for one’s legitimacy or illegitimacy cannot ever be compromised.—The use
of Louis’ surname by his children during the lifetime of Marie Louise would run counter to his
intention to cover such relationship. It is no less than the putative father who voluntary recognized
that Teodoro and Ernesto are his illegitimate children. It is emphatically underscored that it is the
law and only the law that determines who are the legitimate or illegitimate children for one’s
legitimacy or illegitimacy cannot ever be compromised.
685
VOL. 801, AUGUST 31, 2016 685

Remedial Law; Petition for Review on Certiorari; A petition for review on certiorari covers only
questions of law.—There exists a question of law when the doubt arises as to what the law is
pertaining to a certain state of facts while a question of fact concerns itself with the truth or falsity
of the alleged facts. To reiterate, a petition for review on certiorari covers only questions of law.
Poblador, Bautista & Reyes for petitioner.
Jesus Paredes for respondent.
REYES, J.:
This Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure filed
by Gloria Zoleta-San Agustin (petitioner) assails the Decision2 dated May 29, 2009 and the
Resolution3 dated August 25, 2009 of the Court of Appeals (CA) in C.A.-G.R. CV No. 90302.
pg. 824
Factual Antecedents
On March 14, 1994, brothers Teodoro Sales (Teodoro) (now deceased) and Ernesto Sales (Ernesto)
(collectively, the plaintiffs) filed an action for the judicial approval of their recognition as the
illegitimate children of the late Louis C. Fernandez (Louis) before the Regional Trial Court (RTC)
of Quezon City, docketed as Civil Case No. Q-94-19781 and raffled to
_______________
1 Rollo, pp. 10-52.
2 Penned by Associate Justice Ricardo R. Rosario, with Associate Justices Vicente S.E. Veloso
and Estela M. Perlas-Bernabe (now a Member of this Court), concurring; id., at pp. 54-66.
3 Id., at pp. 68-68A.
686

Branch 110.4 Subsequently, an Amended Complaint was filed on March 13, 1996, before the RTC
of Quezon City, Branch 225, where it was alleged that Ernesto and Teodoro were born in Pasay
City on March 20, 1948 and October 22, 1943, respectively. They are the illegitimate children of
Louis and his common-law wife named Epitacia Sales (Epitacia) who was a house helper in the
Fernandez household. Louis5 and his legal wife, Marie Louise Fernandez (Marie Louise)6
(Spouses Fernandez), a French national, did not have any child. According to the plaintiffs, Louis
formally recognized them as his children by Epitacia in two public documents bearing his thumb
marks, viz.: (1) a notarized document dated November 11, 1980 jointly executed by Louis and
Epitacia formally recognizing the plaintiffs as their children; and (2) a document solely executed
by Louis on December 2, 1980, dominated as Acknowledgement of Children.7
The plaintiffs, having no knowledge of any relatives of Spouses Fernandez, directed the action
against unknown defendants. However, on May 30, 1994, the petitioner raised her opposition. She
alleged in her Amended Answer filed on July 26, 1994 that she is the niece of Louis and that the
Spouses Fernandez informally adopted her as their child when she was only 2 years old. She
insisted that the father of the plaintiffs is Corpus Micabalo (Corpus), the former houseboy of the
Fernandez household.8
pg. 825
One of the principal allegations in the amended answer of the petitioner is that the documents
presented by the plaintiffs to sustain the complaint were spurious. These documents of recognition
were forwarded by the RTC to the National Bureau of Investigation (NBI) for examination. Bayani
Palad (Palad), a Fingerprint Examiner of the NBI, compared the
_______________
4 Id., at pp. 18 and 463.
5 Died on January 1, 1987.
6 Died on October 23, 1983.
7 Rollo, pp. 157-158.
8 Id., at pp. 158 and 464.
687
VOL. 801, AUGUST 31, 2016 687

thumbprint of Louis on the documents of recognition with the other documents containing his
thumb marks. Thereafter, Palad concluded that all the thumbprints in the disputed documents
belong to Louis.9
On February 17, 2001, the petitioner filed a motion to allow deoxyribonucleic acid (DNA) Testing
on Louis who already died on January 1, 1987. The RTC, in its Resolution dated June 4, 2001,
denied the petitioner’s motion. Subsequently, the presentation of evidence proceeded.10
On April 15, 2002, the RTC issued an order denying the admission of the photographs presented
by the petitioner seeking to prove that she was treated by the Spouses Fernandez as their own child.
The petitioner filed a motion for reconsideration of the said order of denial, but it was denied by
the RTC on July 10, 2002.11 Thereafter, the petitioner filed a Petition for Certiorari and
Prohibition before the CA ascribing grave abuse of discretion amounting to lack or excess of
jurisdiction against the RTC judge for declaring the photographs irrelevant and immaterial to the
issue of recognition submitted before the RTC. In a Decision12 dated September 29, 2003, the CA
denied the petition for lack of merit. It ruled that even if the photographs were admitted, they
remained to be immaterial and irrelevant to the issue of recognition of the plaintiffs as the
illegitimate children of Louis.13
pg. 826
Teodoro died on July 23, 1997 and was substituted by his mother Epitacia who subsequently died
on March 19, 2004 leaving Ernesto the lone respondent in the present case.
_______________
9 Id., at pp. 159-160.
10 Id., at p. 465.
11 Id.
12 Penned by Associate Justice Eliezer R. De Los Santos, with Associate Justices B. A. Adefuin-
De La Cruz and Jose C. Mendoza (now a Member of this Court), concurring; id., at pp. 463-468.
13 Id., at p. 467.
688

Ruling of the RTC
After trial on the merits, the RTC in a Decision14 dated July 12, 2007 ruled in favor of the
recognition of the plaintiffs as the illegitimate children of Louis. The dispositive portion reads as
follows:
WHEREFORE, premises considered, the Court hereby GRANTS plaintiffs’ prayer for judicial
approval of the recognition made by [Louis] during his lifetime. Accordingly, [Ernesto] and
[Teodoro] (deceased) are hereby declared the illegitimate children of the deceased [Louis] with
the appurtenant rights of illegitimate children under the law.
SO ORDERED.15
The petitioner elevated the adverse judgment of the RTC before the CA. The parties filed their
respective briefs. The petitioner filed her Reply Brief (with Application for DNA Testing of
Louis).16 Ernesto filed his Comment17 objecting to the proposed DNA Testing. In a Resolution18
pg. 827
dated February 10, 2009, the CA deferred its determination of the petitioner’s application for DNA
Testing.
Ruling of the CA
In a Decision19 dated May 29, 2009, the CA found the appeal devoid of merit. The CA gave due
weight to the deeds of
_______________
14 Rendered by Presiding Judge Maria Elisa Sempio Dy; id., at pp. 157-174.
15 Id., at p. 174.
16 Id., at pp. 175-193.
17 Id., at pp. 194-205.
18 Penned by Associate Justice Noel G. Tijam, with Associate Justices Conrado M. Vasquez, Jr.
and Sesinando E. Villon, concurring; id., at pp. 207-208.
19 Id., at pp. 54-66.
689
VOL. 801, AUGUST 31, 2016 689

acknowledgment executed by Louis. The self-serving denial of the petitioner did not prevail over
the presumption of regularity accorded to the deeds of recognition in favor of the plaintiffs. Quoted
hereunder is the dispositive portion of the decision of the CA, to wit:
WHEREFORE, the appeal is DISMISSED and the Decision dated 12 July 2007 of the [RTC],
Branch 225, Quezon City in Civil Case No. Q-94-19781, is AFFIRMED in toto.
SO ORDERED.20
pg. 828
On June 22, 2009, the petitioner filed a Motion for Reconsideration21 contending that the CA
failed to act on her application for DNA Testing despite its previous Resolution on February 10,
2009 that it would treat the same as one of the assigned errors in the appeal. The CA denied the
motion for reconsideration in a Resolution22 dated August 25, 2009.
The Issues
Undaunted, the petitioner urges the allowance of her Petition for Review on Certiorari
enumerating the following as errors committed by the CA:
I.
THE CA GROSSLY MISAPPREHENDED THE FACTS AND MANIFESTLY IGNORED THE

UNDISPUTED AND OVERWHELMING EVIDENCE PRESENTED BY THE PETITIONER
WHICH, IF PROPERLY CONSIDERED, WOULD HAVE JUSTIFIED A DIFFERENT
CONCLUSION.
_______________
20 Id., at pp. 65-66.
21 Id., at pp. 69-82.
22 Id., at pp. 68-68A.
690

A. The CA gravely erred in giving weight and credence to the two “notarized” documents
submitted by Ernesto despite the petitioner’s overwhelming contrary documentary evidence.
pg. 829
B. The CA gravely erred in giving credence to the testimony of Ernesto’s so-called expert
witness.
II.
THE CA ARBITRARILY REFUSED AND/OR FAILED TO RULE ON THE PETITIONER’S

APPLICATION FOR DNA TESTING DESPITE ITS EARLIER PRONOUNCEMENT THAT IT
WILL RESOLVE THE SAME AS AN ASSIGNED ERROR.
A. The CA’s failure to act on the petitioner’s Application for DNA Testing is a substantial
departure from this Honorable Court’s decisions favoring DNA Testing. Moreover, it is
contrary to the CA’s very own Resolution dated February 10, 2009 wherein it undertook to
resolve the petitioner’s application in the resolution of the main appeal. The exercise of the
Court’s power of review and supervision is, thus, proper and necessary under the
circumstances.23
Ruling of the Court
The Court denies the instant petition and upholds the assailed decision and resolution of the CA.
The petitioner calls for the relaxation of the general rule that only questions of law may be raised
in a petition for review on certiorari. It is a well-settled principle that the findings of fact of the
CA especially those upholding the trial court are final and conclusive and cannot be reviewed on
appeal to the Supreme Court. The following are the recognized exceptions to the said rule:
_______________
23 Id., at p. 27.
691
VOL. 801, AUGUST 31, 2016 691
pg. 830
(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 [CA], 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 [CA] 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
[CA] 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 [CA] are premised on absence of evidence but are contradicted by the
evidence on record. x x x.24 (Citation omitted)
None of these enumerated exceptions exists in the case at bar. Nonetheless, the Court will take up
the petitioner’s other assignment of errors to the extent that they touch upon legal issues and in
order to support the Court’s ruling that the RTC and CA’s factual findings are sufficiently justified
by evidence and jurisprudence.
At the center of the present controversy are the documents executed by Louis evidencing his
voluntary recognition of Teodoro and Ernesto as his illegitimate children. The petitioner, in an
effort to oppose the judicial approval of Teodoro and Ernesto’s status as illegitimate children,
mainly argued that the subject documents are spurious. The legitimate filiation of a child may be
established by any of the following:
(1) The record of birth appearing in the civil register or a final judgment; or
_______________
24 Republic v. Mangotara, 638 Phil. 353, 421-422; 624 SCRA 360, 431 (2010).
692

(2) An admission of legitimate filiation in a public document or a private handwritten

instrument and signed by the parent concerned.
pg. 831
In the absence of the foregoing evidence, the legitimate filiation shall be proved by:
(1) The open and continuous possession of the status of a legitimate child; or
(2) Any other means allowed by the Rules of Court and special laws.25
These requirements likewise apply to establish the filiation of illegitimate children.26 In order to
cast doubt as to the authenticity of the documentary evidence presented by Ernesto, the petitioner
purported that the circumstances surrounding the execution and notarization of the said documents
are highly suspicious thereby warranting the overturn of the presumption of regularity in favor of
these documents. The petitioner claimed that during the execution and notarization of the
documents, Louis could still write, rendering incredible the mere affixing of his thumbprints to the
contested documents.27 However, Ernesto testified before the RTC that Louis was no longer
capable of writing his name as he was already blind and bedridden at the time he affixed his thumb
mark to the document dated November 11, 1980. The witnesses to the document were Margarita
Almeda, the hairdresser of Louis’ sister, and Romeo Gadones, Teodoro’s acquaintance.28 A
thumb mark has been repeatedly considered as a valid mode of signature. The Court, in the case
of Dr. Yason v. Arciaga,29
_______________
25 Family Code of the Philippines, Title IV (Paternity and Filiation), Chapter 2 (Proof of
Filiation), Article 172.
26 Id., Chapter 3 (Illegitimate Children), Article 175.
27 Rollo, p. 59.
28 Id., at p. 58.
29 490 Phil. 338; 449 SCRA 458 (2005).
693
pg. 832
VOL. 801, AUGUST 31, 2016 693
held that a signature may be made by a person’s cross or mark.30
There being no cogent reason to deviate from the conclusion of the RTC finding the testimony of
Ernesto worthy of belief, the Court adopts such testimony and considers it against the contention
of the petitioner. It is settled in a catena of cases that the findings of fact of trial courts are given
weight on appeal because they are in a better position to examine the real evidence, and observe
the demeanor of the witnesses and therefore discern whether they are telling the truth.31
The other inconsistencies cited by the petitioner are of no importance and insufficient to overcome
the presumption of regularity in favor of the notarized documents. A notarized document is a public
document and as such it enjoys the presumption of regularity which can only be overthrown by
clear and convincing evidence.32 It serves as a prima facie evidence of the truth of the facts stated
therein and a conclusive presumption of its existence and due execution.33 The bare allegations
of the petitioner cannot qualify as clear and convincing evidence to overturn such presumption.
The petitioner maintained that the real father of Teodoro and Ernesto is Corpus. She presented
various evidence like school report card and death certificate wherein Teodoro’s surname followed
that of Corpus. The use of Corpus’ surname by Teodoro does not in itself negate the illegitimate
filiation of Teodoro and Ernesto. As correctly observed by the CA, Louis’
_______________
30 Id., at p. 351; p. 471.
31 Castillo v. Court of Appeals, 329 Phil. 150, 160; 260 SCRA 374, 381 (1996), citing People v.
Cabalhin, 301 Phil. 494, 504; 231 SCRA 486, 497 (1994).
32 Heirs of Deceased Spouses Vicente S. Arcilla and Josefa Asuncion Arcilla v. Teodoro, 583
Phil. 540, 560; 561 SCRA 545, 564 (2008).
33 Chua v. Westmont Bank, 683 Phil. 56, 66; 667 SCRA 56, 66 (2012).
694

pg. 833
existing marriage to Marie Louise must have prevented him from making any declaration that
would have exposed his relationship with Epitacia. The use of Louis’ surname by his children
during the lifetime of Marie Louise would run counter to his intention to cover such relationship.
It is no less than the putative father who voluntary recognized that Teodoro and Ernesto are his
illegitimate children. It is emphatically underscored that it is the law and only the law that
determines who are the legitimate or illegitimate children for one’s legitimacy or illegitimacy
cannot ever be compromised.34
All told, the authenticity of the documents of recognition executed by Louis which is the core of
the present controversy, as well as the credibility of the expert witness in the person of Palad, are
questions of fact for they involve the examination of the probative value of the evidence presented
by the litigants. There exists a question of law when the doubt arises as to what the law is pertaining
to a certain state of facts while a question of fact concerns itself with the truth or falsity of the
alleged facts.35 To reiterate, a petition for review on certiorari covers only questions of law.
The petitioner sought the conduct of DNA Testing to resolve the issue of paternity. However, the
RTC already arrived at a definitive conclusion that Teodoro and Ernesto are the illegitimate
children of the deceased Louis rendering the petitioner’s request for DNA Testing immaterial.
WHEREFORE, premises considered, there being no reversible error committed by the Court of
Appeals, the petition is DENIED. The Decision dated May 29, 2009 and the Resolution dated
August 25, 2009 of the Court of Appeals in C.A.-G.R. CV No. 90302 are hereby AFFIRMED.
_______________
34 Concepcion v. Court of Appeals, 505 Phil. 529, 537; 468 SCRA 438, 447 (2005).
35 Bernales v. Heirs of Julian Sambaan, 624 Phil. 88, 97; 610 SCRA 90, 98 (2010).
695
VOL. 801, AUGUST 31, 2016 695

SO ORDERED.
pg. 834
Note.—An acknowledged illegitimate child is under no compulsion to use the surname of his
illegitimate father. The word “may” is permissive and operates to confer discretion upon the
illegitimate children. (Grande vs. Antonio, 716 SCRA 698 [2014])
——o0o——
pg. 835
G.R. Nos. 206808-09. September 7, 2016.*
LOCAL WATER UTILITIES ADMINISTRATION EMPLOYEES ASSOCIATION FOR

PROGRESS (LEAP), MELANIO B. CUCHAPIN II, GREARDO** G. PERU, ROLAND S.
CABAHUG, GLORIA P. VELASQUEZ, ERLINDA G. VILLANUEVA, TEODORO M.
REYNOSO, FERNANDO L. NICANDRO, JOSEPHINE P. SIMENE, LAMBERTO R. RIVERA,
REYNALDO M. VIDA, and RUCTICO*** B. TUTOL, petitioners, vs. LOCAL WATER
UTILITIES ADMINISTRATION (LWUA) and DEPARTMENT OF BUDGET AND
MANAGEMENT, respondents.
Remedial Law; Special Civil Actions; Certiorari; It is settled that a petition for certiorari under
Rule 65 of the Rules of Court is a pleading limited to correction of errors of jurisdiction or grave
abuse of discretion amounting to lack or excess of jurisdiction.—It is settled that a petition
for certiorari under Rule 65 of the Rules of Court is a pleading limited to correction of errors of
jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal
office is 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. It may
issue only when the following requirements are alleged in and established by the petition: (1) that
the writ is directed against a tribunal, a board or any officer exercising judicial or quasi-judicial
functions; (2) that such tribunal, board or officer has acted without or in excess of jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) that there is no
appeal or any plain, speedy and adequate remedy in the ordinary course of law.
Same; Same; Same; The extraordinary remedy of certiorari is not a substitute for a lost appeal; it
is not allowed when a party to a case fails to appeal a judgment to the proper forum, especially if
one’s
_______________
* THIRD DIVISION.
** Spelled as “Gerardo” in other parts of the Rollo and Records.
*** Spelled as “Rustico” in other parts of the Rollo and Records.
358

Local Water Utilities Administration Employees Association for Progress (LEAP) vs. Local
Water Utilities Administration (LWUA)
pg. 836
own negligence or error in one’s choice of remedy occasioned such loss or lapse.—This Court has
repeatedly held that a special civil action for certiorari under Rule 65 of the Rules of Court is
proper only when there is neither appeal nor plain, speedy and adequate remedy in the ordinary
course of law. The extraordinary remedy of certiorari is not a substitute for a lost appeal; it is not
allowed when a party to a case fails to appeal a judgment to the proper forum, especially if one’s
own negligence or error in one’s choice of remedy occasioned such loss or lapse.
Same; Civil Procedure; Appeals; Petition for Review on Certiorari; Section 1, Rule 45 of the Rules
of Court provides that the proper remedy to question a judgment, final order or resolution of the
Court of Appeals (CA) is a petition for review on certiorari regardless of the nature of the action
or proceeding involved.—Section 1, Rule 45 of the Rules of Court provides that the proper remedy
to question a judgment, final order or resolution of the CA, as in the present case, is a petition for
review on certiorari regardless of the nature of the action or proceeding involved. The petition
must be filed within fifteen (15) days from notice of the judgment, final order or resolution
appealed from; or of the denial of petitioner’s motion for reconsideration filed in due time after
notice of the judgment.
Same; Same; Same; Under Supreme Court Circular 2-90, an appeal taken to the Supreme Court
(SC) or to the Court of Appeals (CA) by a wrong or an inappropriate mode merits outright
dismissal.—This Court has ruled that because an appeal was available to the aggrieved party, the
action for certiorari would not be entertained. We emphasized in that case that the remedies of
appeal and certiorari are mutually exclusive, not alternative or successive. Where an appeal is
available, certiorari will not prosper, even if the ground is grave abuse of discretion. By filing the
present special civil action for certiorari under Rule 65, petitioners, therefore, clearly availed
themselves of the wrong remedy. Under Supreme Court Circular 2-90, an appeal taken to this
Court or to the CA by a wrong or an inappropriate mode merits outright dismissal. On this score
alone, the instant petition is dismissible.
Same; Provisional Remedies; Preliminary Injunction; Words and Phrases; A writ of preliminary
injunction is an order granted at any stage of an action or proceeding prior to the judgment or
final
359
VOL. 802, SEPTEMBER 7, 2016 359

order, requiring a party or a court, agency or a person to refrain from a particular act or acts.—
A writ of preliminary injunction is an order granted at any stage of an action or proceeding prior
to the judgment or final order, requiring a party or a court, agency or a person to refrain from a
particular act or acts. It is merely a provisional remedy, adjunct to the main case subject to the
pg. 837
latter’s outcome. It is not a cause of action in itself. The writ is provisional because it constitutes
a temporary measure availed of during the pendency of the action and it is ancillary because it is
a mere incident in and is dependent upon the result of the main action. Being an ancillary or
auxiliary remedy, it is available during the pendency of the action which may be resorted to by a
litigant to preserve and protect certain rights and interests therein pending rendition, and for
purposes of the ultimate effects, of a final judgment in the case. It is well-settled that the sole object
of a preliminary injunction, whether prohibitory or mandatory, is to preserve the status quo until
the merits of the case can be heard. It is usually granted when it is made to appear that there is a
substantial controversy between the parties and one of them is committing an act or threatening
the immediate commission of an act that will cause irreparable injury or destroy the status quo of
the controversy before a full hearing can be had on the merits of the case. It persists until it is
dissolved or until the termination of the action without the court issuing a final injunction.
Same; Civil Procedure; Exhaustion of Administrative Remedies; Under the doctrine of exhaustion
of administrative remedies, before a party is allowed to seek the intervention of the court, he or
she should have availed himself or herself of all the means of administrative processes afforded
him or her.—Under the doctrine of exhaustion of administrative remedies, before a party is
allowed to seek the intervention of the court, he or she should have availed himself or herself of
all the means of administrative processes afforded him or her. Hence, if resort to a remedy within
the administrative machinery can still be made by giving the administrative officer concerned
every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy
should be exhausted first before the court’s judicial power can be sought. The premature
invocation of the intervention of the court is fatal to one’s cause of action. The doctrine of
exhaustion of administrative remedies is based on practical and legal reasons. The availment of
administrative remedy entails lesser expenses and provides for a speedier disposition of
controversies.
360

Furthermore, the courts of justice, for reasons of comity and convenience, will shy away from a
dispute until the system of administrative redress has been completed and complied with, so as to
give the administrative agency concerned every opportunity to correct its error and dispose of the
case.
Same; Same; Doctrine of Primary Jurisdiction; Corollary to the doctrine of exhaustion of

administrative remedies is the doctrine of primary jurisdiction; that is, courts cannot or will not
determine a controversy involving a question which is within the jurisdiction of the administrative
tribunal prior to the resolution of that question by the administrative tribunal, where the question
pg. 838
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.—Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of
primary jurisdiction; that is, courts cannot or will not determine a controversy involving a question
which is within the jurisdiction of the administrative tribunal prior to the resolution of that question
by the administrative tribunal, where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of the administrative tribunal
to determine technical and intricate matters of fact.
Velasco & Madriaga Law Offices for petitioners.
Office of the Solicitor General for respondents.
PERALTA, J.:
Challenged in the present petition for certiorari under Rule 65 of the Rules of Court are the
Decision1 and Resolution2 of
_______________
1 Penned by Associate Justice Elihu A. Ybañez, with Associate Justices Japar B. Dimaampao and
Victoria Isabel A. Paredes, concurring; Annex “B” to “B-1” to Petition, Rollo, pp. 37-64.
2 Annex “A” to Petition, id., at pp. 34-36.
361
VOL. 802, SEPTEMBER 7, 2016 361

the Court of Appeals (CA), dated August 28, 2012 and January 15, 2013, respectively, in two (2)
consolidated cases docketed as C.A.-G.R. S.P. Nos. 100482 and 100662. The assailed CA Decision
reversed and set aside the: (1) December 7, 2006 Order3 of the Regional Trial Court (RTC) of
pg. 839
Quezon City, Branch 92 in SP. Proc. No. Q-06-59047, which granted petitioners’ prayer for the
issuance of a writ of preliminary injunction; and (2) the June 6, 2007 Resolution4 of the RTC
which denied respondents’ Motion for Reconsideration. The questioned CA Resolution denied
herein petitioners’ Motion for Reconsideration.
The facts of the case are as follows:
On February 2, 2004, former President Gloria Macapagal-Arroyo enacted Executive Order (E.O.)
No. 2795 for the purpose of reviewing and rationalizing the then existing financing policies for the
Philippine water supply and sewerage sector to allow for the efficient flow of resources thereto.
Under the said E.O., all concerned government agencies and instrumentalities of the water supply
and sewerage sector, which includes, among others, the Local Water Utilities Administration
(LWUA), were directed to pursue and implement reform objectives and policies. The said E.O.
particularly provided for the rationalization of LWUA’s organizational structure and operations.
On October 4, 2004, President Arroyo issued E.O. No. 366 directing all departments of the
executive branch and their component units/bureaus including government-owned and-controlled
corporations, boards, task forces, councils, com-
_______________
3 Annex “C” to Petition, id., at pp. 65-67.
4 Annex “D” to Petition, id., at pp. 68-70.
5 Entitled Instituting Reforms in the Financing Policies for the Water Supply and Sewerage Sector
and Water Service Providers and Providing for the Rationalization of the Local Water Utilities
Administration’s Organizational Structure and Operations in Support Thereof.
362

missions and all other agencies attached thereto or under the administrative supervision of a
Department, to conduct a strategic review of the operations and organization of the Executive
Branch and to prepare a rationalization plan which includes the phasing of activities and availment
of incentives by affected employees.
On April 13, 2005, President Arroyo issued E.O. No. 421,6 specifying LWUA’s core functions
and providing for shifts in its policy direction, functions, programs, activities and strategies.
pg. 840
Cognizant of the effect of the rationalization of the functions of LWUA, the E.O. gave affected
LWUA personnel the option to either remain or retire, or be separated from government service.
Pursuant to the provisions of E.O. No. 421, then LWUA Administrator Lorenzo Zamora came up
with Office Order No. 077-05 creating Task Force 421 and its Action Team. The said Task Force
was charged, among others, with the duty of preparing the LWUA’s staffing pattern and the
corresponding plantilla positions therein as directed by E.O. No. 421. The Action Team, on the
other hand, was given the responsibility of reporting to the Task Force and assisting it in the
execution of its duties and responsibilities. Among the appointed members of the Action Team
was herein petitioner Melanio Cuchapin II, who was then the Chairperson of petitioner LWUA
Employees’ Association for Progress (LEAP). Subsequently, Task Force 421 was able to come up
with a staffing pattern, consisting of 467 plantilla positions which it submitted to the LWUA Board
of Trustees for approval.
On April 18, 2006, the LWUA Board of Trustees issued Board Resolution No. 69 which approved
the staffing pattern proposed by Task Force 421. Thereafter, the approved staffing
_______________
6 Entitled Implementing the Refocusing of Functions and Organizational Structure of the Local
Water Utilities Administration under E.O. No. 279 and Providing Options and Benefits for
Employees Who May Be Affected Thereon.
363
VOL. 802, SEPTEMBER 7, 2016 363

pattern was submitted to the Department of Budget and Management (DBM) for review and
approval.
In its letter dated September 27, 2006, the DBM approved 447 plantilla positions out of the 467
proposed positions. Twenty (20) positions were excluded from the plantilla because they were
classified as coterminous with the members of the LWUA Board of Trustees and are not
considered critical in the agency’s operations.
On October 18, 2006, LWUA issued Office Order No. 168-06 requiring the immediate
implementation of the following: (a) posting of the DBM-approved staffing pattern; (b)
finalization by the Staffing Committee of the staffing guidelines to be submitted to the
Management and the Board of Trustees for approval; and (c) finalization by the Task Analysis
Committee of the job descriptions under the rationalized LWUA structure. The said Office Order
pg. 841
also provided that the guidelines for the implementation of the approved staffing pattern shall
include a general provision declaring that all employees may apply for a maximum of five
positions in the rationalized structure where they may qualify.
On October 19, 2006, petitioners filed a petition for certiorari, prohibition and mandamus with
prayer for temporary restraining order (TRO) and preliminary injunction with the RTC of Quezon
City. Alleging that LWUA and DBM acted with grave abuse of discretion in adopting and
implementing the reorganization plan of LWUA, petitioners prayed that LWUA and DBM be
restrained from implementing the following: (1) DBM-approved staffing pattern; (2) Resolution
No. 69 of the LWUA Board of Trustees, and (3) E.O. Nos. 279, 366 and 421, on the ground that
petitioners will suffer injustice and sustain irreparable injury as 233 LWUA employees face
immediate and outright dismissal from service.
Respondents filed their respective Oppositions to the petitioners’ prayer for TRO and/or
preliminary injunction.
364

After hearing, the RTC issued its assailed Order7 granting petitioners’ prayer for the issuance of a
writ of preliminary injunction, disposing as follows:
WHEREFORE, let a writ of preliminary injunction be issued, restraining the respondents from
enforcing and effecting the assailed questioned DBM-Approved Staffing Pattern dated 27
September 2006, LWUA Board Resolution No. 69, Series of 2006, and Executive Order Nos. 279,
366 and 421, including the issuance of any orders, resolutions and/or decisions relating to the same,
upon the filing of a bond in the amount of one hundred thousand (P100,000.00) pesos for any
damage that may be sustained by the respondents by reason of the injunction if the Court will
finally decide that the petitioners are not entitled thereto.
SO ORDERED.8
LWUA and DBM filed separate Motions for Reconsideration, but these were denied in the RTC’s
questioned Resolution9 dated June 6, 2007.
LWUA and DBM then filed separate special civil actions for certiorari with the CA questioning
the subject RTC Order and Resolution. These petitions were subsequently consolidated.
pg. 842
On August 28, 2012, the CA promulgated its presently disputed Decision, with the following
dispositive portion:
WHEREFORE, the instant petitions are GRANTED. Accordingly, the Order dated 07 December
2006 and the Resolution dated 06 June 2007 issued by Branch 92 of the Regional Trial Court in
Quezon City in SP Proc. No. Q-06-59047 are REVERSED and SET ASIDE. The Writ of
Preliminary Injunction issued by the said court pursu-
_______________
7 Annex “C” to Petition, Rollo, pp. 65-67.
8 Id., at p. 67. (Emphasis in the original)
9 Annex “D” to Petition, id., at pp. 68-70.
365
VOL. 802, SEPTEMBER 7, 2016 365

ant to its Order dated 07 December 2006 is LIFTED and SET ASIDE.
SO ORDERED.10
Petitioners filed a Motion for Reconsideration, but the CA denied it in its Resolution dated January
15, 2013.
Hence, the instant petition based on the following grounds:
6.1 THE HONORABLE FOURTEENTH DIVISION OF THE COURT OF APPEALS ACTED

WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION IN ISSUING THE RESOLUTION DATED 15 JANUARY 2013, DENYING
THE INSTANT MOTION FOR RECONSIDERATION FILED BY THE PETITIONERS AND
AFFIRMING THE DECISION PROMULGATED ON 28 AUGUST 2012, AND REVERSING
THE DECISION OF THE TRIAL COURT.
pg. 843
6.2 THE RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION IN HOLDING THAT THE
PETITIONERS ARE NOT ENTITLED TO THE [INJUNCTIVE] WRIT.
6.3 THERE IS NO APPEAL, OR ANY PLAIN AND SPEEDY REMEDY IN THE

ORDINARY COURSE OF LAW OTHER THA[N] THE INSTANT PETITION.11
At the outset, the Court notes that in its Decision12 dated December 27, 2012, the RTC dismissed
the petition for certiorari, mandamus and prohibition which was filed by petitioners on the ground
of lack of justiciable controversy and resort to a wrong remedy.
_______________
10 Rollo, p. 63. (Emphasis in the original)
11 Id., at p. 16.
12 Id., at pp. 105-121.
366

On this basis, the Court deems it proper to address the procedural matters raised by respondents as
it finds the instant petition dismissible for reasons to be discussed hereunder.
First, is the propriety of the remedy availed of by petitioners. Petitioners come to this Court
questioning the Decision and Resolution of the CA via a special civil action for certiorari
contending that there is “a very urgent need to resolve the issues presented herein and considering
that public respondents are hell-bent on proceeding with [the] removal and deprivation of
economic benefits, causing great injury to petitioners and LWUA employees, and having no other
plain, speedy and adequate remedy in the ordinary course of the law x x x.”13
It is settled that a petition for certiorari under Rule 65 of the Rules of Court is a pleading limited
to correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of
jurisdiction. Its principal office is to keep the inferior court within the parameters of its jurisdiction
pg. 844
or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of
jurisdiction. It may issue only when the following requirements are alleged in and established by
the petition: (1) that the writ is directed against a tribunal, a board or any officer exercising judicial
or quasi-judicial functions; (2) that such tribunal, board or officer has acted without or in excess
of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and
(3) that there is no appeal or any plain, speedy and adequate remedy in the ordinary course of
law.14
This Court has repeatedly held that a special civil action for certiorari under Rule 65 of the Rules
of Court is proper only when there is neither appeal nor plain, speedy and ade-
_______________
13 Id., at p. 9.
14 Tan v. Antazo, 659 Phil. 400, 403-404; 644 SCRA 337, 341-342 (2011).
367
VOL. 802, SEPTEMBER 7, 2016 367

quate remedy in the ordinary course of law. The extraordinary remedy of certiorari is not a
substitute for a lost appeal; it is not allowed when a party to a case fails to appeal a judgment to
the proper forum, especially if one’s own negligence or error in one’s choice of remedy occasioned
such loss or lapse.15
On the other hand, Section 1, Rule 45 of the Rules of Court provides that the proper remedy to
question a judgment, final order or resolution of the CA, as in the present case, is a petition for
review on certiorari regardless of the nature of the action or proceeding involved.16 The petition
must be filed within fifteen (15) days from notice of the judgment, final order or resolution
appealed from; or of the denial of petitioner’s motion for reconsideration filed in due time after
notice of the judgment.17
This Court has ruled that because an appeal was available to the aggrieved party, the action
for certiorari would not be entertained. We emphasized in that case that the remedies of appeal
and certiorari are mutually exclusive, not alternative or successive.18 Where an appeal is
available, certiorari will not prosper, even if the ground is grave abuse of discretion.19
By filing the present special civil action for certiorari under Rule 65, petitioners, therefore, clearly
availed themselves of the wrong remedy. Under Supreme Court Circular 2-90, an appeal taken to
pg. 845
this Court or to the CA by a wrong or an inappropriate mode merits outright dismissal. On this
score alone, the instant petition is dismissible.
_______________
15 Villalon v. Lirio, G.R. No. 183869, August 3, 2015, 764 SCRA 576.
16 Indoyon, Jr. v. Court of Appeals, 706 Phil. 200, 208; 693 SCRA 201, 207 (2013); Leynes v.
Former Tenth Division of the Court of Appeals, 655 Phil. 25, 44-45; 640 SCRA 25, 43 (2011).
17 Id.
18 Villalon v. Lirio, supra.
19 Id.
368

The second issue raised by respondents that the dismissal of petitioners’ principal action
for certiorari, prohibition and mandamus filed with the RTC results in the automatic dissolution
of the ancillary writ of preliminary injunction issued by the same court.
The Court agrees with respondents.
A writ of preliminary injunction is an order granted at any stage of an action or proceeding prior
to the judgment or final order, requiring a party or a court, agency or a person to refrain from a
particular act or acts.20 It is merely a provisional remedy, adjunct to the main case subject to the
latter’s outcome. It is not a cause of action in itself. The writ is provisional because it constitutes
a temporary measure availed of during the pendency of the action and it is ancillary because it is
a mere incident in and is dependent upon the result of the main action.21 Being an ancillary or
auxiliary remedy, it is available during the pendency of the action which may be resorted to by a
litigant to preserve and protect certain rights and interests therein pending rendition, and for
purposes of the ultimate effects, of a final judgment in the case.22
It is well-settled that the sole object of a preliminary injunction, whether prohibitory or mandatory,
is to preserve the status quo until the merits of the case can be heard.23 It is usually granted when
it is made to appear that there is a substantial controversy between the parties and one of them is
committing an act or threatening the immediate commission of an act that will cause irreparable
pg. 846
injury or destroy the status quo of the controversy before a full hearing can be had on the merits
of the case.24 It persists until it is dissolved
_______________
20 Buyco v. Baraquia, 623 Phil. 596, 600; 608 SCRA 699, 703 (2009).
21 Id., at p. 601; p. 704.
22 Id., at pp. 600-601; p. 704.
23 Id., at p. 601; p. 704.
24 Id.
369
VOL. 802, SEPTEMBER 7, 2016 369

or until the termination of the action without the court issuing a final injunction.25
Indubitably, in the present case, the writ of preliminary injunction was granted by the RTC based
on its finding that there was a need to protect petitioners’ rights to security of tenure during the
pendency of the principal action. After trial, however, the lower court found, among others, that,
in questioning the constitutionality of E.O. Nos. 279, 366 and 421 as well as Resolution No. 69 of
the LWUA Board of Trustees, petitioners failed to establish the existence of an actual case or
controversy which is ripe for judicial determination. Thus, the RTC dismissed the principal action
for certiorari, prohibition and mandamus.
The principal action having been heard and found dismissible as it was in fact dismissed, the writ
of preliminary injunction issued by the RTC is deemed lifted, its purpose as a provisional remedy
having been served, the appeal from the main case notwithstanding.26 In this regard, this Court’s
ruling in the case of Union Bank of the Philippines v. Court of Appeals27 is instructive, to wit:
x x x “a dismissal, discontinuance or nonsuit of an action in which a restraining order or temporary

injunction has been granted operates as a dissolution of the restraining order or temporary
injunction,” regardless of whether the period for filing a motion for reconsideration of the order
dismissing the case or appeal therefrom has expired. The rationale therefor is that even in cases
where an appeal is taken from a judgment dismissing an action on the merits, the appeal does not
suspend the judgment, hence
pg. 847
_______________
25 United Alloy Philippines Corporation v. United Coconut Planters Bank, G.R. No. 179257,
November 23, 2015, 775 SCRA 147.
26 Buyco v. Baraquia, supra note 20 at p. 601; p. 705; Arevalo v. Planters Development Bank,
686 Phil. 236, 246-247; 670 SCRA 252, 262 (2012).
27 370 Phil. 837; 311 SCRA 795 (1999).
370

the general rule applies that a temporary injunction terminates automatically on the dismissal of
the action.28
Finally, the Court agrees with the RTC and the CA that even assuming that petitioners have a valid
cause of action, in that their security of tenure may be violated as a result of their transfer or
termination from service, the law, particularly Republic Act No. 665629 (RA 6656), provides them
with ample remedies to address their alleged predicament, prior to filing an action in court.
Sections 7 and 8 of RA 6656 provide, thus:
Section 7. A list of the personnel appointed to the authorized positions in the approved staffing
pattern shall be made known to all the officers and employees of the department or agency. Any
of such officers and employees aggrieved by the appointments made may file an appeal with
the appointing authority who shall make a decision within thirty (30) days from the filling
thereof.
Section 8. An officer or employee who is still not satisfied with the decision of the
appointing authority may further appeal within ten (10) days from the receipt thereof to the
Civil Service Commission which shall render a decision thereon within thirty (30) days and
whose decision shall be final and executory.30
Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the
intervention of the court, he or she should have availed himself or herself of all
pg. 848
_______________
28 Id., at pp. 845-846; p. 803. (Citations omitted)
29 An Act to Protect the Security of Tenure of Civil Service Officers and Employees in the
Implementation of Government Reorganization.
30 Emphasis supplied.
371
VOL. 802, SEPTEMBER 7, 2016 371

the means of administrative processes afforded him or her.31 Hence, if resort to a remedy within
the administrative machinery can still be made by giving the administrative officer concerned
every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy
should be exhausted first before the court’s judicial power can be sought.32 The premature
invocation of the intervention of the court is fatal to one’s cause of action.33 The doctrine of
exhaustion of administrative remedies is based on practical and legal reasons. The availment of
administrative remedy entails lesser expenses and provides for a speedier disposition of
controversies.34 Furthermore, the courts of justice, for reasons of comity and convenience, will
shy away from a dispute until the system of administrative redress has been completed and
complied with, so as to give the administrative agency concerned every opportunity to correct its
error and dispose of the case.35
Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary

jurisdiction; that is, courts cannot or will not determine a controversy involving a question which
is within the jurisdiction of the administrative tribunal prior to the resolution of that question by
the administrative tribunal, where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of the administrative tribunal
to determine technical and intricate matters of fact.36
_______________
31 Maglalang v. Philippine Amusement and Gaming Corporation (PAGCOR), 723 Phil. 546, 556;
712 SCRA 472, 482 (2013).
32 Id.
33 Id.
pg. 849
34 Id., at pp. 556-557; pp. 482-483.
35 Id., at p. 557; p. 483.
36 Addition Hills Mandaluyong Civic & Social Organization, Inc. v. Megaworld Properties &
Holdings, Inc., 686 Phil. 76, 82; 670 SCRA 83, 90 (2012).
372

Thus, petitioners should have first brought their case to the appointing authority, which in this
case, is the LWUA Board of Trustees, and, thereafter, to the Civil Service Commission, which has
primary jurisdiction over the case. On the basis of the above quoted provisions, it is clear that
petitioners failed to exhaust the administrative remedies given them by law before resorting to the
filing of a petition for certiorari, prohibition and mandamus.
WHEREFORE, the instant petition is DISMISSED. The Decision and Resolution of the Court
of Appeals, dated August 28, 2012 and January 15, 2013, respectively, in C.A.-G.R. S.P. Nos.
100482 and 100662 are AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Perez and Leonen,**** JJ., concur.
Reyes, J., On Wellness Leave.
Petition dismissed, judgment and resolution affirmed.
Notes.—A petition for certiorari cannot be allowed when a party fails to appeal a judgment despite
the availability of that remedy as certiorari is not a substitute for a lost appeal. (Malayan
Employees Association-FFW vs. Malayan Insurance Company, Inc., 611 SCRA 392 [2010])
The principle of exhaustion of administrative remedies is not without exception. (Verzano, Jr. vs.
Paro, 627 SCRA 209 [2010])
——o0o——
pg. 850
_______________
**** Designated additional member, in lieu of Associate Justice Francis H. Jardeleza, per Raffle
dated September 1, 2014.
pg. 851
A.C. No. 11121. September 13, 2016.*
DELIA LIM, complainant, vs. ATTY. AQUILINO MEJICA, respondent.
Remedial Law; Civil Procedure; Forum Shopping; There is forum shopping whenever as a result
of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or
certiorari) in another.—“There is forum shopping whenever as a result of an adverse opinion in
one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another.” “The
test for determining forum shopping is whether in the two (or more) cases pending, there is an
identity of parties, rights or causes of action, and relief sought.”
Same; Same; Same; What is pivotal in determining whether forum shopping exists or not is 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 cases and/or grant the same or substantially
the same reliefs, in the process creating the possibility of conflicting decisions being rendered by
the different courts and/or administrative agencies upon the same issues.—It is clear that in the
present case, the exercise of the OPP of its investigative power to determine the existence of
probable cause to the complaint filed by Atty. Mejica is likewise different and distinct from the
power of the court to hold Lim for trial for the offense charged. Moreover, it is well-settled that
“[w]hat is pivotal in determining whether forum shopping exists or not is 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 cases and/or grant the same or substantially the same reliefs, in the
process creating the possibility of conflicting decisions being rendered by the different courts
and/or administrative agencies upon the same issues.” In the present case, however, there is no
sufficient evidence to prove that Atty. Mejica deliberately filed the two complaints for such
purpose. As aptly explained by him, the same was a result of a
_______________
* EN BANC.
433
VOL. 802, SEPTEMBER 13, 2016 433

Lim vs. Mejica
mere inadvertence and that the same was immediately rectified upon coming to his knowledge.
Same; Same; Same; Although it is the Municipal Circuit Trial Court (MCTC) that has jurisdiction
over the complaint filed by Atty. Mejica, he made a mockery of the judicial process and further
pg. 852
eroded public confidence in lawyers when he ignored the proceedings he initiated in the Office of
the Provincial Prosecutor (OPP).—The Court finds that Atty. Mejica failed to exercise candor
and courtesy to the court when he failed to inform the same of the pendency of his MR before the
OPP in connection with the same cause of action. Likewise, records show that he failed to
withdraw his MR before the OPP despite the subsequent filing of his complaint before the MCTC.
Although it is the MCTC that has jurisdiction over the complaint filed by Atty. Mejica, he made a
mockery of the judicial process and further eroded public confidence in lawyers when he ignored
the proceedings he initiated in the OPP. For these acts, the Court finds Atty. Mejica liable under
Canon 10 of the CPR for violating the lawyer’s duty to observe candor and fairness in his dealings
with the court. It states: CANON 10. A lawyer owes candor, fairness and good faith to the Court.
Clearly, Atty. Mejica committed an act of professional misconduct and thereby failed to live up to
the exacting ethical standards imposed on members of the Bar.
Attorneys; Disbarment; While the Supreme Court (SC) will not hesitate to remove an erring lawyer
from the Bar, where the evidence calls for it, the Court will also not disbar him where a lesser
penalty will suffice to accomplish the desired end.—The Court, however, repeatedly held “[t]hat
the supreme penalty of disbarment is meted out only in clear cases of misconduct that seriously
affect the standing and character of the lawyer as an officer of the court.” While the Court will not
hesitate to remove an erring lawyer from the Bar, where the evidence calls for it, the Court will
also not disbar him where a lesser penalty will suffice to accomplish the desired end.
Same; It is well-settled that “[t]he appropriate penalty to be imposed on an errant attorney

involves the exercise of sound judicial discretion based on the facts of the case.”—It is well-settled
that “[t]he appropriate penalty to be imposed on an errant attorney involves the exercise of sound
judicial discretion based on the facts of the case.” Under the circumstances, considering that there
was no
434

Lim vs. Mejica
bad faith or malice on the part of Atty. Mejica and that it was merely a result of his wrong notion
that the complaint for oral defamation is within the jurisdiction of the OPP, the Court finds it
appropriate to impose upon him the penalty of suspension from the practice of law for six (6)
months. This serves the purpose of protecting the interest of the court, the legal profession and the
public.
Same; Lawyers are bound by their oath to speak the truth and to conduct themselves according to
the best of their knowledge and discretion, and with fidelity to the courts and their clients.—
“Candor and fairness are demanded of every lawyer.” It is a cardinal requirement for every
practicing lawyer. “They are bound by their oath to speak the truth and to conduct themselves
pg. 853
according to the best of their knowledge and discretion, and with fidelity to the courts and their
clients.”
ADMINISTRATIVE CASE in the Supreme Court. Disbarment.
J. Vicente R.M. Opinion for complainant.
REYES, J.:
Before the Court is an administrative complaint1 for disbarment filed by complainant Delia Lim
(Lim) charging respondent Atty. Aquilino Mejica (Atty. Mejica) with violation of Rule 1.03 of
Canon 1, Rule 12.02 of Canon 12 and Rule 7.03 of Canon 7 of the Code of Professional
Responsibility (CPR).
The Facts
On July 16, 2008, Atty. Mejica filed a criminal action for grave oral defamation against Lim, then
incumbent Vice Mayor of Oras, Eastern Samar, before the Office of the Assistant Provincial
Prosecutor (OAPP) of Oras, Eastern Samar, docketed as I.S. No. 08-90-0. He alleged that Lim
uttered
_______________
1 Rollo, pp. 2-7.
435
VOL. 802, SEPTEMBER 13, 2016 435

Lim vs. Mejica
against him the following slanderous words at the Session Hall of the Sangguniang Bayan of Oras:
“HI AGUS BALDADO NAG KIHA KAN ATTY. AKI MEJICA HA IBP UG YANA HI ATTY.
pg. 854
MEJ[I]CA SUSPENDIDO HIT IYA KA ABOGADO SAKOP HIN UNOM KA BULAN, IPAN
NUMAT NIYO” (Mr. Agus Baldado filed a case against Atty. Mejica before the Integrated Bar of
the Philippines (IBP) and now Atty. Mejica is suspended from practice of his profession as a
lawyer for a period of six (6) months, you relay this information).2
On February 19, 2009, acting Provincial Prosecutor Cornelio M. Umil II issued a

Resolution3 dismissing the complaint of Atty. Mejica for lack of probable cause. A Motion for
Reconsideration4 (MR) was filed, but the same was denied in a Resolution5 dated May 20, 2009.
However, while Atty. Mejica’s MR was still pending before the Office of the Provincial Prosecutor
(OPP), he filed on March 31, 2009, for the second time, the same complaint6 before the Municipal
Circuit Trial Court (MCTC) of Oras, Eastern Samar, docketed as Criminal Case No. (0)2009-03.
On July 6, 2009, the MCTC issued an Order7 dismissing the complaint of Atty. Mejica on the
ground that the same had already prescribed. An MR was filed but the same was denied in an
Order8 dated September 14, 2009.
Consequently, Lim filed the instant case alleging that Atty. Mejica deliberately committed forum
shopping when he filed the same complaint with the same attachments with the
_______________
2 Id., at p. 8.
3 Id., at pp. 33-37.
4 Id., at pp. 47-54.
5 Id., at pp. 38-39.
6 Id., at p. 40.
7 Id., at pp. 56-57.
8 Id., at pp. 58-59.
436

Lim vs. Mejica
MCTC during the pendency of his MR to the dismissal of his complaint before the OPP.9
pg. 855
On November 16, 2009, the Commission on Bar Discipline (CBD) of the IBP issued an
Order10 directing Atty. Mejica to submit his answer to Lim’s complaint within 15 days from
receipt of the order.
In his Answer,11 Atty. Mejica argued that the filing of the case before the MCTC pending the
resolution of his MR before the OPP was made in good faith. He argued that he did not know that
an oral defamation case may be filed directly with the MCTC.12
According to Atty. Mejica, he consulted his friend, Atty. Emmanuel C. Apelado, a Public
Attorney’s Office lawyer, when he found out that the person drafting the pleadings of Lim was the
same person who was handling the case in the OPP. He alleged that he was advised, that an oral
defamation case is not subject to preliminary investigation and as such he could file the same
directly with the MCTC.13
Also, he argued that since the criminal complaint was filed before the OAPP, its resolution for
probable cause would not be a bar for the court’s judicial determination of probable cause
considering that in case of oral defamation, preliminary investigation is not required.14
On August 31, 2010, the IBP-CBD issued a Notice15 directing the parties to appear for a
mandatory conference. During the mandatory conference, however, only Lim and her counsel
appeared, while Atty. Mejica was absent.16
_______________
9 Id., at p. 6.
10 Id., at p. 60.
11 Id., at pp. 67-70.
12 Id., at p. 69.
13 Id.
14 Id.
15 Id., at p. 73.
16 Id., at p. 74.
437
pg. 856
VOL. 802, SEPTEMBER 13, 2016 437
Lim vs. Mejica
On January 10, 2011, the IBP-CBD issued an Order17 terminating the mandatory conference and
directing both parties to submit their respective position papers within a non-extendible period of
30 days upon receipt of the said order.
Recommendation and Resolutions of the IBP
On November 17, 2011, the IBP-CBD issued a Report and Recommendation18 finding Atty.
Mejica liable for violating Rule 12.02 of Canon 12 of the CPR, and recommended that he be
suspended for a period of six (6) months. Subsequently, the Report and Recommendation of the
IBP-CBD was adopted and approved by the IBP Board of Governors in a Resolution19 dated June
20, 2013. The IBP Board of Governors, however, modified the penalty by reducing the suspension
to three (3) months.
On October 23, 2013, an MR20 was filed by Atty. Mejica but the same was denied by the IBP
Board of Governors in a Resolution21 dated September 27, 2014. The IBP Board of Governors,
however, after considering this Court’s previous sanctions imposed against Atty. Mejica, increased
his suspension to five (5) years.
The Issue
Essentially, the case directly poses to the Court the question of whether the instant disbarment
complaint constitutes a sufficient basis to suspend Atty. Mejica from the practice of law for five
(5) years for violation of the CPR.
_______________
17 Id., at p. 98.
18 Id., at pp. 286-296.
19 Id., at p. 285.
20 Id., at pp. 297-312.
21 Id., at pp. 360-361.
pg. 857
438

Lim vs. Mejica
Ruling of the Court
There is no violation of the rule

against non-forum shopping
“There is forum shopping whenever as a result of an adverse opinion in one forum, a party seeks
a favorable opinion (other than by appeal or certiorari) in another.”22 “The test for determining
forum shopping is whether in the two (or more) cases pending, there is an identity of parties, rights
or causes of action, and relief sought.”23
In Yu v. Lim,24 the Court discussed the requisites of forum shopping as follows:
Forum shopping exists when the elements of litis pendentia are present or where a final judgment
in one case will amount to res judicata in another. Litis pendentia requires the concurrence of the
following requisites: (1) identity of parties, or at least such parties as those representing the same
interests in both actions; (2) identity of rights asserted and reliefs prayed for, the reliefs being
founded on the same facts; and (3) identity with respect to the two preceding particulars in the two
cases, such that any judgment that may be rendered in the pending case, regardless of which party
is successful, would amount to res judicata in the other case.25 (Citation omitted and italics in the
original)
_______________
22 Paredes, Jr. v. Sandiganbayan, Second Division, 322 Phil. 709, 728; 252 SCRA 641, 655
(1996), citing Crisostomo v. Securities and Exchange Commission, 258-A Phil. 725, 735; 179
SCRA 146, 155 (1989).
23 Citibank, N.A. (Formerly First National City Bank) v. Sabeniano, 535 Phil. 384, 408; 504
SCRA 378, 406 (2006).
24 645 Phil. 421; 631 SCRA 172 (2010).
25 Id., at p. 431; p. 184.
pg. 858
439
VOL. 802, SEPTEMBER 13, 2016 439

Lim vs. Mejica
In the present case, the Court finds that the second requisite of forum shopping does not exist since
there is no identity of relief in I.S. No. 08-90-0 filed before the OAPP of Oras, Eastern Samar and
in Criminal Case No. (0)2009-03 filed before the MCTC of the same place.
In I.S. No. 08-90-0, the complaint seeks for the finding by the prosecutor of probable cause against
Lim for Grave Oral Defamation so that the latter could be held for trial. Meanwhile, in Criminal
Case No. (0)2009-03, the complaint seeks for the conviction of Lim.
In Co v. Lim, et al.,26 the Court, for the purpose of determining the existence of forum shopping,
held that the determination made by the Secretary of Justice on whether there is a prima facie case
for the prosecution of the case is distinct from the judicial determination of the RTC that there is
no probable cause for the continued hearing of the criminal case. Moreover, the Court held that
these are two distinct actions which should be independently assailed. The former is pursuant to
the powers and functions of the Department of Justice as provided for under the Revised
Administrative Code while the latter is in accord to the judicial powers conferred by Section 1,
Article VIII of the 1987 Constitution.27
Applying the foregoing, it is clear that in the present case, the exercise of the OPP of its
investigative power to determine the existence of probable cause to the complaint filed by Atty.
Mejica is likewise different and distinct from the power of the court to hold Lim for trial for the
offense charged.
Moreover, it is well-settled that “[w]hat is pivotal in determining whether forum shopping exists
or not is 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 cases and/or grant the same or
substantially the same reliefs, in the process creating the possibility of
_______________
26 619 Phil. 704; 604 SCRA 702 (2009).
27 Id., at p. 718; pp. 716-717.
pg. 859
440

Lim vs. Mejica
conflicting decisions being rendered by the different courts and/or administrative agencies upon
the same issues.”28 In the present case, however, there is no sufficient evidence to prove that Atty.
Mejica deliberately filed the two complaints for such purpose. As aptly explained by him, the same
was a result of a mere inadvertence and that the same was immediately rectified upon coming to
his knowledge.
Assuming, however, that there is identity of relief, the complaint pending before the OPP cannot
be considered for purposes of determining if there was forum shopping. The power of the
prosecutor, pursuant to Section 3, Chapter 1, Title III, Book IV of the Administrative Code of
1987, is only investigatory in character. It states:
Section 3. Powers and Functions.—To accomplish its mandate, the Department shall have the
following powers and functions:
xxxx
(2) Investigate the commission of crimes, prosecute offenders and administer the probation
and correction system.
xxxx
Clearly, the prosecutor’s resolution does not constitute as a valid and final judgment because his
duty, should he find probable cause to prosecute the respondent, is to file the appropriate
information before the proper court.
As to the institution of the criminal action, Section 1, Rule 110 of the Revised Rules of Criminal
Procedure states:
Section 1. Institution of criminal actions.—Criminal actions shall be instituted as follows:
pg. 860
(a) For offenses where a preliminary investigation is required pursuant to Section 1 of Rule
112, by fil-
_______________
28 Yu v. Lim, supra note 24 at pp. 431-432; p. 184.
441
VOL. 802, SEPTEMBER 13, 2016 441

Lim vs. Mejica
ing the complaint with the proper officer for the purpose of conducting the requisite
preliminary investigation.
(b) For all other offenses, by filing the complaint or information directly with the
Municipal Trial Courts and Municipal Circuit Trial Courts, or the complaint with the office
of the prosecutor. In Manila and other chartered cities, the complaints shall be filed with the
office of the prosecutor unless otherwise provided in their charters.
The institution of the criminal action shall interrupt the running period of prescription of the
offense charged unless otherwise provided in special laws.
Moreover, Section 1, Rule 112 of the Revised Rules of Criminal Procedure, when preliminary
investigation shall be conducted, provides:
Section 1. Preliminary investigation defined; when required.—Preliminary investigation is an

inquiry or proceeding to determine whether there is sufficient ground to engender a well-founded
belief that a crime has been committed and the respondent is probably guilty thereof, and should
be held for trial.
Except as provided in Section 7 of this Rule, a preliminary investigation is required to be conducted

before the filing of a complaint or information for an offense where the penalty prescribed by law
is at least four (4) years, two (2) months and one (1) day without regard to the fine.
pg. 861
In the present case, considering that the crime charged is Grave Oral Defamation which is
punishable by arresto mayor in its maximum period to prisión correccional in its minimum
period, the complaint should clearly be filed directly with the MCTC pursuant to above quoted
provisions. Thus, the OPP of Oras, Eastern Samar did not acquire jurisdiction over the offense
charged.
442

Lim vs. Mejica
Atty. Mejica is liable for violation

of Canon 10 of the CPR
Nonetheless, the Court finds that Atty. Mejica failed to exercise candor and courtesy to the court
when he failed to inform the same of the pendency of his MR before the OPP in connection with
the same cause of action. Likewise, records show that he failed to withdraw his MR before the
OPP despite the subsequent filing of his complaint before the MCTC.
Although it is the MCTC that has jurisdiction over the complaint filed by Atty. Mejica, he made a
mockery of the judicial process and further eroded public confidence in lawyers when he ignored
the proceedings he initiated in the OPP.
For these acts, the Court finds Atty. Mejica liable under Canon 10 of the CPR for violating the
lawyer’s duty to observe candor and fairness in his dealings with the court. It states:
CANON 10. A lawyer owes candor, fairness and good faith to the Court.
Clearly, Atty. Mejica committed an act of professional misconduct and thereby failed to live up to
the exacting ethical standards imposed on members of the Bar.
Proper penalty to be imposed

against Atty. Mejica
pg. 862
As to the penalty, Section 27, Rule 138 of the Revised Rules of Court provides:
SEC. 27. Disbarment or suspension of attorneys by Supreme Court; grounds therefore.—A

member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court
for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or
by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath
443
VOL. 802, SEPTEMBER 13, 2016 443

Lim vs. Mejica
which he is required to take before admission to practice, or for a wilful disobedience of any lawful
order of a superior court, or for corruptly or wilfully appearing as an attorney for a party to a case
without authority so to do. The practice of soliciting cases at law for the purpose of gain, either
personally or through paid agents or brokers, constitutes malpractice.
In the present case, the IBP found that this is not Atty. Mejica’s first infraction. In Baldado v. Atty.
Mejica,29 the Court suspended him for three (3) months for his negligence in failing to protect the
interest of his client. Also, in Caspe v. Mejica,30 he was suspended for two (2) years for his corrupt
motive in facilitating the filing of cases against the complainant therein, in violation of the CPR.
The Court, however, repeatedly held “[t]hat the supreme penalty of disbarment is meted out only
in clear cases of misconduct that seriously affect the standing and character of the lawyer as an
officer of the court.”31 While the Court will not hesitate to remove an erring lawyer from the Bar,
where the evidence calls for it, the Court will also not disbar him where a lesser penalty will suffice
to accomplish the desired end.
Also, it is well-settled that “[t]he appropriate penalty to be imposed on an errant attorney involves
the exercise of sound judicial discretion based on the facts of the case.”32
Under the circumstances, considering that there was no bad faith or malice on the part of Atty.
Mejica and that it was merely a result of his wrong notion that the complaint for oral defamation
is within the jurisdiction of the OPP, the Court finds it appropriate to impose upon him the penalty
of suspension from the practice of law for six (6) months. This
_______________
29 706 Phil. 1; 693 SCRA 1 (2013).
pg. 863
30 A.C. No. 10679, March 10, 2015, 752 SCRA 203.
31 Kupers v. Hontanosas, 605 Phil. 397, 404; 587 SCRA 325, 331 (2009).
32 Macias v. Selda, 484 Phil. 10, 14; 441 SCRA 65, 68-69 (2004).
444

Lim vs. Mejica
serves the purpose of protecting the interest of the court, the legal profession and the public.
“Candor and fairness are demanded of every lawyer.”33 It is a cardinal requirement for every
practicing lawyer.34 “They are bound by their oath to speak the truth and to conduct themselves
according to the best of their knowledge and discretion, and with fidelity to the courts and their
clients.”35
As a final note, the Court emphasizes its reminder to all members of the bar in Belleza v. Atty.
Macasa,36 wherein it states:
Lawyers should always live up to the ethical standards of the legal profession as embodied in the
[CPR]. Public confidence in law and in lawyers may be eroded by the irresponsible and improper
conduct of a member of the bar. Thus, every lawyer should act and comport himself in a manner
that would promote public confidence in the integrity of the legal profession.37 (Citations omitted)
WHEREFORE, premises considered, the Resolution No. XXI-2014-595 dated September 27,
2014 of the Integrated Bar of the Philippines Board of Governors is hereby SET ASIDE.
The Court, however, finds Atty. Aquilino Mejica to have violated Canon 10 of the Code of
Professional Responsibility. He is hereby meted out the penalty of SUSPENSION from the
practice of law for SIX (6) MONTHS with WARNING that a similar offense by him will be dealt
with more severely.
_______________
33 Hueysuwan-Florido v. Florido, 465 Phil. 1, 6; 420 SCRA 132, 136 (2004).
34 Supra note 32 at p. 13; p. 68.
pg. 864
35 Philippine Association of Court Employees (PACE) v. Alibutdan-Diaz, A.C. No. 10134,
November 26, 2014, 742 SCRA 351, 357, citing Sonic Steel Industries, Inc. v. Chua, 714 Phil.
192, 203; 701 SCRA 340, 353 (2013).
36 611 Phil. 179; 593 SCRA 549 (2009).
37 Id., at p. 192; p. 562.
445
VOL. 802, SEPTEMBER 13, 2016 445

Lim vs. Mejica
Let copies of this Decision be entered in the personal record of Atty. Aquilino Mejica as a member
of the Philippine Bar and furnished the Office of the Bar Confidant, the Integrated Bar of the
Philippines and the Office of the Court Administrator for circulation to all courts in the country.
SO ORDERED.
Sereno (CJ.), Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta, Del Castillo, Perez,
Mendoza, Perlas-Bernabe, Leonen, Jardeleza and Caguioa, JJ., concur.
Resolution No. XXI-2014-595 dated September 27, 2014 set aside, Atty. Aquilino Mejica
suspended from practice of law for six (6) months for violation of Canon 10 of the Code of
Professional Responsibility, with warning against repetition of similar offense.
Notes.—Disbarment should not be decreed where any punishment less severe such as a reprimand,
suspension or fine, would accomplish the end desired. (Vargas vs. Ignes, 623 SCRA 1 [2010])
A disbarment proceeding is separate and distinct from a criminal action filed against a lawyer
despite having involved the same set of facts. (Bengco vs. Bernardo, 672 SCRA 8 [2012])
——o0o——
pg. 865
G.R. Nos. 190015 & 190019. September 14, 2016.*
GERALDINE MICHELLE B. FALLARME and ANDREA MARTINEZ-GACOS, petitioners, vs.

SAN JUAN DE DIOS EDUCATIONAL FOUNDATION, INC., CHONA M. HERNANDEZ,
VALERIANO ALEJANDRO III, SISTER CONCEPTION GABATINO, D.C., and SISTER
JOSEFINA QUIACHON, D.C., respondents.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; A petition for review
on certiorari under Rule 45 is limited to questions of law. However, an exception to this rule arises
when the findings of the Court of Appeals (CA) conflict with those of the labor authorities, in which
case the Supreme Court (SC) will not hesitate to review the evidence on record.—At the outset,
we note the general rule that a petition for review on certiorari under Rule 45 is limited to questions
of law. However, an exception to this rule arises when the findings of the CA conflict with those
of the labor authorities, in which case this Court will not hesitate to review the evidence on record.
In this case, the labor arbiter’s factual findings differ from those of the NLRC and the CA. The
labor arbiter found that the satisfactory service rendered by petitioners during their probationary
period warranted their regularization, while the NLRC and the CA found otherwise. These
conflicting findings of fact provide sufficient justification for our review of the facts involved.
Labor Law; Regular Employees; Teachers; As prescribed by the 1992 Manual, a teacher must
satisfy the following requisites to be entitled to regular faculty status: (1) must be a full-time
teacher; (2) must have rendered three (3) years of service (or six [6] consecutive semesters of
service for teachers on the tertiary level); and (3) that service must have been satisfactory.—It is
established that while the Labor Code provides general rules as to probationary employment, these
rules are supplemented by the Manual of Regulations for Private Schools with respect to the period
of probationary employment of private school teachers. As prescribed by the 1992 Manual, a
teacher must satisfy the following requisites to be entitled to regular
_______________
* FIRST DIVISION.
644

Fallarme vs. San Juan de Dios Educational Foundation, Inc.
faculty status: (1) must be a fulltime teacher; (2) must have rendered three years of service (or six
consecutive semesters of service for teachers on the tertiary level); and (3) that service must have
been satisfactory.
pg. 866
Same; Same; Same; Academic Freedom; The determination of whether the performance of
probationary teaching personnel has been sufficiently satisfactory as to warrant their
regularization lies in the hands of the school pursuant to its administrative prerogative, which is
an extension of its academic freedom under Section 5(2), Article XIV of the Constitution.—Indeed,
the determination of whether the performance of probationary teaching personnel has been
sufficiently satisfactory as to warrant their regularization lies in the hands of the school pursuant
to its administrative prerogative, which is an extension of its academic freedom under Section 5(2),
Article XIV of the Constitution. Academic freedom gives the school the discretion and the
prerogative to impose standards on its teachers and to determine whether these have been met upon
the conclusion of the probationary period. It must be pointed out that the school’s exercise of
administrative prerogative in this respect is not plenary as respondents would like us to believe.
The exercise of that prerogative is still subject to the limitations imposed by the Labor Code and
jurisprudence on valid probationary employment.
Same; Same; Same; Applying Article 281 of the Labor Code, a school must not only set reasonable
standards that will determine whether a probationary teacher rendered satisfactory service and is
qualified for regular status; it must also communicate these standards to the teacher at the start
of the probationary period. Should it fail to do so, the teacher shall be deemed a regular employee
from Day One.—With respect to the regularization of probationary teachers, the standards laid
down in Abbott Laboratories, Philippines v. Alcazar, 723 SCRA 25 (2014), apply to the third
requisite under the 1992 Manual: that they must have rendered satisfactory service. As observed
by this Court in Colegio del Santisimo Rosario v. Rojo, 705 scra 63 (2013), the use of the term
satisfactory “necessarily connotes the requirement for schools to set reasonable standards to be
followed by teachers on probationary employment. For how else can one determine if probationary
teachers have satisfactorily completed the probationary period if standards therefor are not
provided?” Therefore, applying Article 281 of the Labor Code, a school must not only set
reasonable standards
645
VOL. 802, SEPTEMBER 14, 2016 645

that will determine whether a probationary teacher rendered satisfactory service and is qualified
for regular status; it must also communicate these standards to the teacher at the start of the
probationary period. Should it fail to do so, the teacher shall be deemed a regular employee from
Day One.
Same; Termination of Employment; Insubordination; For there to be a valid cause, two (2)
elements must concur: (1) the employee’s assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the employee, and pertinent to the duties that the employee has
pg. 867
been engaged to discharge.—With respect to substantive due process, insubordination or willful
disobedience is one of the just causes of dismissal under Article 282 of the Labor Code. For there
to be a valid cause, two elements must concur: (1) the employee’s assailed conduct must have been
willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee, and pertinent to the duties that the
employee has been engaged to discharge. Moreover, to be considered as a valid cause analogous
to that specified in the law, it is simply required that the cause must be due to the voluntary or
willful act or omission of the employee.
Same; Same; Same; Teachers; The act of selling computerized final examination sheets to students
without respondent college’s permission, despite the prior advice of their subject area
coordinator, indicated a knowing disregard by petitioners of their superior’s express order not to
do so.—The act of selling computerized final examination sheets to students without respondent
college’s permission, despite the prior advice of their subject area coordinator, indicated a knowing
disregard by petitioners of their superior’s express order not to do so. We find that order to be
lawful as well as reasonable. Clearly, the school was not prohibiting the sale of those sheets per
se, but was only requiring that its permission be secured first. This order was made in consideration
of the supervision and control that the school was expected to exercise over all matters relevant to
its students and personnel. The order was also pertinent to their duties as teachers, as the sheets
were used in examinations administered in their classes.
646

Same; Same; Same; Same; Not just one (1) but three (3) infractions show that the continued service
of petitioners in respondent college was inimical to its interest, as their actions indicated lack of
respect for the school authorities.—All told, not just one but three infractions show that the
continued service of petitioners in respondent college was inimical to its interest, as their actions
indicated lack of respect for the school authorities. It is settled that an employer has the right to
dismiss its erring employees as a measure of self-protection against acts inimical to its interest.
With respect to schools, this right must be seen in light of their recognized prerogative to set high
standards of efficiency for its teachers. The exercise of that prerogative is pursuant to the mandate
of the Constitution for schools to provide quality education and its recognition of their academic
freedom to choose who should teach pursuant to reasonable standards. We find those standards to
be present in this case.
Same; Same; Two-Notice Rule; For termination based on a just cause, the law requires two (2)
written notices before the termination of employment.—For termination based on a just cause, as
in this case, the law requires two written notices before the termination of employment: (1) a
written notice served by the employer on the employee specifying the ground for termination and
pg. 868
giving a reasonable opportunity for that employee to explain the latter’s side; and (2) a written
notice of termination served by the employer on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify the latter’s
termination.
Emelito A. Licerio for petitioners.
Padilla Law Office for respondents.
647
VOL. 802, SEPTEMBER 14, 2016 647

SERENO, CJ.:
Before this Court is a Petition for Review on Certiorari under Rule 45, assailing the Decision1
and the Resolution2 of the Court of Appeals (CA) in C.A.-G.R. S.P. Nos. 105355 and 105361. The
CA affirmed the Decision3 and the Resolution4 of the National Labor Relations Commission
(NLRC), which had ruled in favor of the validity of the termination of Geraldine Michelle B.
Fallarme and Andrea Martinez-Gacos (petitioners) by San Juan de Dios Educational Foundation,
Inc., Chona M. Hernandez, Valeriano Alejandro III, Sr. Conception Gabatino, D.C., and Sr.
Josefina Quiachon, D.C. (respondents).
The Facts
Petitioners were hired by San Juan de Dios Educational Foundation, Inc. (respondent college), for
full-time teaching positions.5
The appointment of petitioner Fallarme was effective at the start of the first semester of School
Year (SY) 2003-20046 as signified by a memorandum7 issued by the school informing
pg. 869
_______________
1 Rollo, pp. 42-58; dated 31 July 2009 and penned by CA Associate Justice Myrna Dimaranan-
Vidal, with Associate Justices Portia Aliño-Hormachuelos and Arcangelita R. Lontok, concurring.
2 Id., at pp. 60-62; dated 20 October 2009 and penned by CA Associate Justice Myrna Dimaranan-
Vidal, with Associate Justices Portia Aliño-Hormachuelos and Isaias P. Dicdican (additional
member in the Resolution dated 20 October 2009 in lieu of J. Lontok per Office Order No. 700-
09), concurring.
3 Id., at pp. 81-92; dated 23 April 2008 and penned by Commissioner Raul T. Aquino, with
Commissioners Victoriano R. Calaycay and Angelica A. Gacutan, concurring.
4 Id., at pp. 93-94.
5 Id., at p. 347.
6 Id., at p. 44.
7 Id., at p. 117.
648

her that she had been hired. The memorandum did not specify whether she was being employed
on a regular or a probationary status. Aside from being appointed to a faculty position, she was
also appointed to perform administrative work for the school as personnel officer8 and to serve as
head of the Human Development Counseling Services.9
Despite having served as a faculty member since SY 2003-2004, Fallarme was asked only on 1
March 2006 to sign and submit to respondent Chona M. Hernandez, dean of general education, a
written contract on the nature of the former’s employment and corresponding obligations.10 The
contract was denominated as “Appointment and Contract for Faculty on Probation” (appointment
contract),11 and its effectivity period covered the second semester of SY 2005-2006 —
specifically from 4 November 2005 to 18 March 2006.12 The appointment contract specified the
status of Fallarme as a probationary faculty member.
After the expiration of the contract, respondent college informed her that it would not be renewed
for the first semester of SY 2006-2007.13 When she asked on what basis her contract would not
be renewed, she was informed that it was the school’s “administrative prerogative.”14
pg. 870
Petitioner Martinez-Gacos taught at respondent college from the start of SY 2003-2004 and
continued to do so for a total of six semesters and one summer.15 Her engagement as a faculty
member was signified by a memorandum16 issued by the school, which informed her that she had
been hired. The
_______________
8 Id., at p. 118.
9 Id., at p. 119.
10 Id., at p. 46.
11 Id., at p. 16.
12 Id.
13 Id., at p. 46.
14 Id.
15 Id., at p. 47.
16 Id., at p. 132.
649
VOL. 802, SEPTEMBER 14, 2016 649

memorandum, which was similar to that issued to Fallarme, did not specify whether Martinez-
Gacos was being employed on a regular or a probationary status.
Like Fallarme, even though Martinez-Gacos had been employed as a faculty member since SY
2003-2004, it was only on 1 March 2006 that the latter was ordered by respondent Valeriano
Alejandro III to sign and submit a written contract on the nature of her employment and
corresponding obligations.17 The terms of the contract were similar to those in the contract signed
by Fallarme. It was also denominated as “Appointment and Contract for Faculty on Probation,”18
and its effectivity period also covered the second semester of SY 2005-2006 — specifically from
4 November 2005 to 18 March 2006.19 Under the appointment contract, the probationary status
of Martinez-Gacos was likewise specified for the first time.
pg. 871
After the lapse of the contract’s effectivity, she was similarly informed that her contract would not
be renewed for the first semester of SY 2006-2007. She was also told that the nonrenewal of her
contract was made on the basis of “administrative prerogative.”20
Petitioners submitted a letter to respondent Hernandez,21 questioning the nonrenewal of their

respective employment contracts. Not satisfied with the reply,22 they filed a Complaint against
respondents for illegal dismissal, reinstatement, backwages, and damages before the labor
arbiter.23
In their defense, respondents claimed that petitioners had been remiss in their duties. Specifically,
both of them report-
_______________
17 Id., at p. 47.
18 Id., at p. 177.
19 Id.
20 Id., at p. 48.
21 Id., at pp. 145-146.
22 Id., at pp. 147-148.
23 Id., at p. 49.
650

edly sold computerized final examination sheets to their students without prior school approval.
Allegedly, Fallarme also sold sociology books to students, while MartinezGacos served as part-
time faculty in another school and organized out-of campus activities, all without the permission
of respondent college.24 These infractions supposedly prevented it from considering their services
satisfactory.
The Labor Arbiter’s Decision
pg. 872
The labor arbiter ruled that petitioners were regular employees who were entitled to security of
tenure.25 The former cited the 1992 Manual of Regulations for Private Schools (1992 Manual),
which provides that regularization must be given to a teacher who (i) is employed as a full-time
teacher; (ii) has rendered three consecutive years of service; and (iii) has performed satisfactorily
within that period.26 The labor arbiter held that petitioners had complied with these requisites for
their regularization and, contrary to respondents’ contention, performed satisfactorily within the
years of their probationary employment. Thus, the labor arbiter ordered respondent college to
reinstate petitioners and pay them their backwages as well as their 13th month pay.27
The NLRC’s Ruling
Upon respondents’ appeal, the NLRC reversed the Decision of the labor arbiter.28 It held that
petitioners had failed to meet the third requirement for regularization as prescribed by the 1992
Manual; that is, they had not served respondent college satisfactorily. The NLRC found that certain
actions
_______________
24 Id., at pp. 188-191.
25 Id., at pp. 243-256.
26 Id., at p. 251.
27 Id., at p. 255.
28 Id., at pp. 81-92.
651
VOL. 802, SEPTEMBER 14, 2016 651

they had done without the requisite approval of respondent college brought about their
unsatisfactory performance during their probationary period. However, given the failure of
pg. 873
respondent to observe due process, the NLRC ordered it to pay them P20,000 each as indemnity.
Upon the denial of their Motion for Reconsideration,29 petitioners proceeded to the CA.
The CA’s Ruling
The CA affirmed the NLRC Decision.30 It upheld respondent college’s administrative prerogative
to determine whether or not petitioners were entitled to regularization on the basis of respondents’
academic freedom.31 Furthermore, the award of P20,000 as indemnity to each of the petitioners
was upheld.
Upon the denial by the CA of their Motion for Reconsideration,32 petitioners have now come
before this Court via this Petition.
The Issues
We cull the issues as follows:
1. Were petitioners regular employees of respondent college?
2. Was petitioners’ dismissal for a valid cause?
3. If the dismissal of petitioners was for a valid cause, was the proper dismissal procedure
observed?
Our Ruling
We deny the Petition. While we agree with petitioners that they were regular employees of the
college, we differ on the
_______________
29 Id., at pp. 93-94.
30 Id., at pp. 51-57.
pg. 874
31 Id., at pp. 52-54.
32 Id., at pp. 60-62.
652

basis they invoke for their regularization. Nevertheless, we agree with respondents that as regular
employees, petitioners were dismissed for a valid cause. But due to respondents’ failure to observe
the proper procedure, petitioners are entitled to nominal damages.
The case calls for a review

of questions of fact.
At the outset, we note the general rule that a petition for review on certiorari under Rule 45 is
limited to questions of law. However, an exception to this rule arises when the findings of the CA
conflict with those of the labor authorities, in which case this Court will not hesitate to review the
evidence on record.33
In this case, the labor arbiter’s factual findings differ from those of the NLRC and the CA. The
labor arbiter found that the satisfactory service rendered by petitioners during their probationary
period warranted their regularization, while the NLRC and the CA found otherwise. These
conflicting findings of fact provide sufficient justification for our review of the facts involved.
We now proceed to the merits of the case.
Petitioners are deemed regular

employees.
While the parties did not contest the allegation that petitioners were employed as probationary
employees, a review of the records will show that they were considered regular employees since
Day One of their employment.
pg. 875
It is established that while the Labor Code provides general rules as to probationary employment,
these rules are
_______________
33 Sampaguita Auto Transport Corporation v. National Labor Relations Commission, 702 Phil.
701; 689 SCRA 777 (2013).
653
VOL. 802, SEPTEMBER 14, 2016 653

supplemented by the Manual of Regulations for Private Schools with respect to the period of
probationary employment of private school teachers.34
As prescribed by the 1992 Manual, a teacher must satisfy the following requisites to be entitled to
regular faculty status: (1) must be a fulltime teacher; (2) must have rendered three years of service
(or six consecutive semesters of service for teachers on the tertiary level); and (3) that service must
have been satisfactory.35
In this case, the first two requisites for regularization under the 1992 Manual — full-time faculty
status and completion of the probationary period — are conceded in favor of petitioners. However,
the parties disagree on the fulfillment of the third requisite:36 whether petitioners’ performance
within the probationary period was satisfactory.
It is with respect to the determination of whether petitioners’ performance was satisfactory that
respondent college invokes its “administrative prerogative.” As argued by respondents in their
Comment before this Court, the exercise of their administrative prerogative not to renew the
contracts was prompted by their dissatisfaction with the way petition-
_______________
34 Mercado v. AMA Computer College-Parañaque City, Inc., 632 Phil. 228; 618 SCRA 218
(2010); since petitioners were employed by respondent college in 2003, it is the 1992 version of
the Manual of Regulations for Private Schools that applies. However, the Commission on Higher
Education (CHED) later issued the 2008 Manual of Regulations for Private Higher Education
through CHED Memorandum Order No. 40, Series of 2008, which is now the applicable Manual
for all private higher education institutions.
35 1992 Manual of Regulations for Private Schools, §§92-93; Saint Mary’s University v. Court of
Appeals, 493 Phil. 232; 453 SCRA 61 (2005); La Consolacion College v. National Labor Relations
pg. 876
Commission, 418 Phil. 503; 366 SCRA 226 (2001); University of Sto. Tomas v. NLRC, 261 Phil.
483; 190 SCRA 758 (1990).
36 Rollo, p. 52.
654

ers conducted themselves in school.37 Specifically, respondent college asserts that appellants were
remiss in their fiduciary duty to the school when they engaged in various acts like selling books
and exam materials, as well as organizing extracurricular activities with students without its
permission.38 It contends that its administrative prerogative is part of its academic freedom under
the Constitution.39
These contentions are misplaced.
Indeed, the determination of whether the performance of probationary teaching personnel has been
sufficiently satisfactory as to warrant their regularization lies in the hands of the school40 pursuant
to its administrative prerogative, which is an extension of its academic freedom under Section 5(2),
Article XIV41 of the Constitution. Academic freedom gives the school the discretion and the
prerogative to impose standards on its teachers and to determine whether these have been met upon
the conclusion of the probationary period.42
It must be pointed out that the school’s exercise of administrative prerogative in this respect is not
plenary as respondents would like us to believe. The exercise of that preroga-
_______________
37 Id., at p. 358.
38 Id., at pp. 86-88
39 Id., at p. 346.
40 Herrera-Manaois v. St. Scholastica’s College, G.R. No. 188914, 11 December 2013, 712
SCRA 418; Colegio del Santisimo Rosario v. Rojo, G.R. No. 170388, 4 September 2013, 705
SCRA 63; Lacuesta v. Ateneo de Manila University, 513 Phil. 329; 477 SCRA 217 (2005); La
Salette of Santiago, Inc. v. National Labor Relations Commission, 272-A Phil. 33; 195 SCRA 80
(1991); Cagayan Capitol College v. National Labor Relations Commission, G.R. Nos. 90010-11,
267 Phil. 696; 189 SCRA 658 (1990).
pg. 877
41 Section 5(2), Article XIV provides: Academic freedom shall be enjoyed in all institutions of
higher learning.
42 Herrera-Manaois v. St. Scholastica’s College, supra.
655
VOL. 802, SEPTEMBER 14, 2016 655

tive is still subject to the limitations imposed by the Labor Code and jurisprudence on valid
probationary employment.43
In Abbott Laboratories, Philippines v. Alcaraz,44 this Court explained that valid probationary
employment under Art. 281 presupposes the concurrence of two requirements: (1) the employer
must have made known to the probationary employee the reasonable standard that the latter must
comply with to qualify as a regular employee; and (2) the employer must have informed the
probationary employee of the applicable performance standard at the time of the latter’s
engagement. Failing in one or both, the employee, even if initially hired as a probationary
employee, shall be considered a regular employee.45
_______________
43 In Mercado v. AMA Computer College-Parañaque City, Inc. (supra note 34), this Court
reconciled the Labor Code with the 1992 Manual by clarifying that other than in the matter of
probationary period, the following portion of Article 281 of the Labor Code still fully applies to
probationary teachers:
x x x The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.
We recognized then that if a reconciliation of the Labor Code with the 1992 Manual is not made,
the requirements of Article 281 on probationary status would be fully negated. Failure to reconcile
the two would have an unsettling effect on the existing equilibrium vis-à-vis the relations between
labor and management which the Constitution and the Labor Code have worked hard to establish.
(Colegio del Santisimo Rosario v. Rojo, supra note 40)
44 G.R. No. 192571, 22 April 2014, 723 SCRA 25.
pg. 878
45 Id.; see also Section 6, Rule I, Implementing Rules of Book VI of the Labor Code; Clarion
Printing House, Inc. v. National Labor Relations Commission, 500 Phil. 61; 461 SCRA 272
(2005); Cielo v. NLRC, 271 Phil. 433; 193 SCRA 410 (1991).
656

With respect to the regularization of probationary teachers, the standards laid down in Abbott
Laboratories apply to the third requisite under the 1992 Manual: that they must have rendered
satisfactory service. As observed by this Court in Colegio del Santisimo Rosario v. Rojo,46 the
use of the term satisfactory “necessarily connotes the requirement for schools to set reasonable
standards to be followed by teachers on probationary employment. For how else can one determine
if probationary teachers have satisfactorily completed the probationary period if standards therefor
are not provided?” Therefore, applying Article 281 of the Labor Code, a school must not only set
reasonable standards that will determine whether a probationary teacher rendered satisfactory
service and is qualified for regular status; it must also communicate these standards to the teacher
at the start of the probationary period. Should it fail to do so, the teacher shall be deemed a regular
employee from Day One.47
However, the records lack evidence that respondent college clearly and directly communicated to
petitioners, at the time they were hired, what reasonable standards they must meet for the school
to consider their performance satisfactory and for it to grant them regularization as a result.
Respondents claim that the standards were provided in the appointment contracts signed by
petitioners. Each of the contracts supposedly provided that it “incorporates by reference the school
policies, regulations, operational procedures and guidelines provided for in the Manual of
Operations of the School x x x.”48 However, this claim defeats respondents’ own defense, because
the appointment contracts invoked were
_______________
46 Colegio del Santisimo Rosario v. Rojo, supra note 40.
47 Id.
48 Rollo, p. 366.
pg. 879
657
VOL. 802, SEPTEMBER 14, 2016 657

signed by petitioners only at the start of the second semester of SY 2005-2006.49
Nonetheless, it is clear and undisputed that petitioners were hired by respondent college as early
as 2003, but were required to sign appointment contracts for the first time only in 2005. An
examination of the records will show that when they were hired in 2003, they each signed a mere
memorandum informing them that they had passed the qualifying examinations for faculty
members, and that they were being hired effective first semester of SY 2003-2004.50 The
memorandum did not indicate their status as probationary employees, the specific period of
effectivity of their status as such, and the reasonable standards they needed to comply with to be
granted regular status. The failure to inform them of these matters was in violation of the
requirements of valid probationary employment. It also violated Section 91 of the 1992 Manual,
which provides as follows:
Every contract of employment shall specify the designation, qualification, salary rate, the period
and nature of service and its date of effectivity, and such other terms and conditions of
employment as may be consistent with laws and the rules, regulations and standards of the school.
A copy of the contract shall be furnished the personnel concerned. (Emphasis supplied)
The appointment contracts invoked by respondents appear to be an afterthought, as they asked

petitioners to sign the contracts only when the latter’s three-year probationary period was about to
expire. Apparently, this act was an effort to put a stamp of validity on respondents’ refusal to renew
petitioners’ contracts.
Respondents were clearly remiss in their duty under the Labor Code to inform petitioners of the
standards for the
_______________
49 Id., at pp. 176-177.
50 Id., at pp. 117 & 132.
658
pg. 880
latter’s regularization. Consequently, petitioners ought to be considered as regular employees of

respondent college right from the start.
Petitioners’ dismissal
was for a valid cause.
Now that petitioners’ regular status has been settled, it is time to examine whether their contracts’
nonrenewal, which was effectively their dismissal, was valid.
Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due
process; and the legality of the manner of dismissal, which constitutes procedural due process.51
With respect to substantive due process, insubordination or willful disobedience is one of the just
causes of dismissal under Article 282 of the Labor Code. For there to be a valid cause, two elements
must concur: (1) the employee’s assailed conduct must have been willful, that is, characterized by
a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful,
made known to the employee, and pertinent to the duties that the employee has been engaged to
discharge.52
Moreover, to be considered as a valid cause analogous to that specified in the law, it is simply
required that the cause must be due to the voluntary or willful act or omission of the employee.53
_______________
51 Lopez v. Alturas Group of Companies, 663 Phil. 121; 647 SCRA 568 (2011).
52 The Coffee Bean and Tea Leaf Philippines, Inc. v. Arenas, G.R. No. 208908, 11 March 2015,
753 SCRA 187.
53 Nadura v. Benguet Consolidated, Inc., 116 Phil. 28; 5 SCRA 879 (1962).
659
VOL. 802, SEPTEMBER 14, 2016 659
pg. 881
Furthermore, under the 1992 Manual, the following has also been enumerated as one of the valid
causes for termination, in addition to those found in the Labor Code:
(f) The sale of tickets or the collection of any contributions in any form or for any purpose of
project whatsoever, whether voluntary or otherwise, from pupils, students and school personnel
x x x.
In this case, the records bear out the following misdemeanors of petitioners:
(1) Both petitioners were remiss in their obligation to secure respondent college’s consent
before they sold computerized final examination sheets to their students.54 They failed to
do so despite the prior advice of their subject area coordinator that the dean’s approval must
first be secured before examination sheets could be sold.55
(2) Petitioner Fallarme failed to secure respondent college’s consent before selling sociology
textbooks to her students during the second semester of SY 2005-2006.56 This rule was
violated even after it had been clearly discussed during their department’s general meeting
held at the opening of SY 2005-2006. The teachers were then told that they were prohibited
from transacting business with any publishing house or collecting any payment without
informing their respective area chairs.57
(3) Petitioner Martinez-Gacos organized out-of-campus activities with students, again

without respondent col-
_______________
54 Rollo, pp. 197, 204, 198-199.
55 Id., at p. 197.
56 Id., at pp. 203, 413-416.
57 Id., at p. 202.
660
pg. 882
lege’s permission and in violation of the school’s Student Handbook.58
The above infractions imputed by respondent college to petitioners were admitted by the latter in
their letters to respondents59 and in their Petition before this Court.60 They made that admission
in conjunction with their defense that the supposed infractions did not cause serious damage to
respondents and were but a part of their academic freedom and freedom of expression, among
others.
We find that these infractions committed by petitioners in connection with their jobs have been
established by substantial evidence61 and constitute willful disobedience or conduct analogous
thereto.
First, the act of selling computerized final examination sheets to students without respondent
college’s permission, despite the prior advice of their subject area coordinator, indicated a knowing
disregard by petitioners of their superior’s express order not to do so. We find that order to be
lawful as well as reasonable. Clearly, the school was not prohibiting the sale of those sheets per
se, but was only requiring that its permission be secured first. This order was made in consideration
of the supervision and control that the school was expected to exercise over all matters relevant to
its students
_______________
58 Id., at p. 207.
59 Id., at pp. 198-200, 205, 234.
60 Id., at pp. 36-37.
61 Well-entrenched is the principle that in order to establish a case before judicial and quasi-
administrative bodies, it is necessary that allegations must be supported by substantial evidence.
Substantial evidence is more than a mere scintilla but such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion. (Ledesma, Jr. v. National Labor Relations
Commission, 562 Phil. 939; 537 SCRA 358 [2007])
661
VOL. 802, SEPTEMBER 14, 2016 661
pg. 883
and personnel.62 The order was also pertinent to their duties as teachers, as the sheets were used
in examinations administered in their classes.
Furthermore, it is significant that petitioners’ act of collecting money from their students falls
under one of the valid causes for termination under the 1992 Manual as enumerated above.
There is no merit in the defense that petitioners were not aware of the policy regarding the
examination sheets.63 In their letters to respondent college, they in fact apologized and recognized
the fault they committed when they did not inform school authorities before selling the
computerized sheets.64 The apologies of petitioners indicate their awareness of this requirement.
Second, when petitioner Fallarme sold textbooks to her students without permission, even after
the act had been clearly prohibited in a general meeting, her act also indicated her willful disregard
of a school policy. That policy, which was made known to her beforehand, was lawful in light of
the recognized authority exercised by schools over their students and personnel.65
Moreover, we consider that policy to be in line with the fiduciary relationship between the school
and its professors, teachers, and instructors. They are merely the school’s agents in providing the
education it has contracted to deliver to its students.66 As such, they have an obligation to avoid
any conflict of interest with the school as their principal.67 Here, by selling textbooks without the
school’s authorization, petition-
_______________
62 University of the East v. Jader, 382 Phil. 697; 325 SCRA 804 (2000).
63 Rollo, p. 221.
64 Id., at pp. 198, 205.
65 University of the East v. Jader, supra.
66 Id.
67 Severino v. Severino, 44 Phil. 343 (1923).
662
pg. 884
ers were harboring a conflict of interest, inasmuch as it was commonplace for a school itself —
not its individual teachers — to sell the textbooks to its students.
Furthermore, the order was reasonable. As with the sale of examination sheets, the sale of books
was not being prohibited by the school, as it was only requiring teachers to first secure its
authorization. That such order was related to the duties of petitioner Fallarme as a teacher can be
easily discerned from the fact that the focus of the policy was the textbooks used in the classroom.
It is noteworthy that this misdemeanor was substantiated by the letters of Fallarme’s students
attesting to the fact before the school authorities.68 While she raised before the labor arbiter the
defense that some of the students had confided to her that they had written the letters involuntarily,
she failed to substantiate this self-serving claim with any proof.69
Third, petitioner Martinez-Gacos’ act of organizing out-of-campus activities without the consent
of respondent college and in violation of its Student Handbook likewise shows traces of
insubordination or acts analogous thereto. Martinez-Gacos undertook the activities complained of
in 2005,70 or two years after she was hired. Her awareness of the Student Handbook’s provisions,
which she cavalierly disregarded, can therefore be reasonable expected. It is notable that she never
disputed or debunked the existence of the Student Handbook provisions invoked by the Dean of
Student Services.
We find the defense invoked by petitioner — that the questioned activity was a personal trip71 —
insufficient to dispute an established fact. Specifically, while she was the publications adviser of
the school paper, she went on two out-of-town
_______________
68 Rollo, pp. 413-416.
69 Id., at p. 222.
70 Id., at p. 207.
71 Id., at p. 226.
663
VOL. 802, SEPTEMBER 14, 2016 663

pg. 885
trips with several students, whose stories later on appeared in that publication.72
It must be stressed that the rules and policies that were disobeyed by petitioners are necessary
incidents of the supervision and control schools exercise over teachers as well as students.73 The
exercise of such supervision has been declared to be an obligation of schools.74 In Miriam College
Foundation, Inc. v. Court of Appeals,75 this Court recognized that the establishment of an
educational institution requires rules and regulations necessary for the maintenance of an orderly
educational program and the creation of an educational environment conducive to learning. These
rules and regulations are also necessary for the protection of the students, faculty, and property.
Therefore, to disobey school rules and regulations, as petitioners did in this case, is to go against
this recognized mandate.
All told, not just one but three infractions show that the continued service of petitioners in
respondent college was inimical to its interest, as their actions indicated lack of respect for the
school authorities. It is settled that an employer has the right to dismiss its erring employees as a
measure of self-protection against acts inimical to its interest.76 With respect to schools, this right
must be seen in light of their recognized prerogative to set high standards of efficiency for its
teachers. The exercise of that prerogative is pursuant to the mandate of the Constitution for schools
to provide quality education77 and its recognition of their academic freedom to
_______________
72 Id., at p. 89.
73 University of the East v. Jader, supra note 62.
74 Palisoc v. Brillantes, 148-B Phil. 1029; 41 SCRA 548 (1971).
75 401 Phil. 431; 348 SCRA 265 (2000).
76 Mendoza v. National Labor Relations Commission, 369 Phil. 1113; 310 SCRA 846 (1999).
77 Peña v. National Labor Relations Commission, 327 Phil. 673; 258 SCRA 65 (1996).
664

choose who should teach pursuant to reasonable standards.78 We find those standards to be present
in this case.
pg. 886
Therefore, respondent college cannot be faulted for finding the performance of petitioners inimical
to its interest as a school after the cited infractions. As correctly pointed out by the NLRC,
petitioners were teachers who handled in their classrooms women and men at an impressionable
age, not mere inanimate and repeatable objects as in the manufacturing sector. Therefore, teachers
stand as role models for living out basic values, which include respect for authority.79 Because of
the failure of petitioners to live up to that standard, this Court finds that their dismissal was for a
valid cause.
Respondents failed to observe

the proper procedure in peti-
tioners’ dismissal.
Although the dismissal of petitioner was for a valid cause, we nevertheless find that respondent
college failed to comply with the proper procedure for their dismissal in violation of procedural
due process.
For termination based on a just cause, as in this case, the law requires two written notices before
the termination of employment: (1) a written notice served by the employer on the employee
specifying the ground for termination and giving a reasonable opportunity for that employee to
explain the latter’s side; and (2) a written notice of termination served by the employer on the
employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify the latter’s termination.80
_______________
78 Mercado v. AMA Computer College-Parañaque City, Inc., supra note 34.
79 Rollo, pp. 89-90.
80 Olympia Housing, Inc. v. Lapastora, G.R. No. 187691, 13 January 2016, 780 SCRA 449.
665
VOL. 802, SEPTEMBER 14, 2016 665

We find a complete deviation from the two-notice rule in this case. The records show that
respondent college effectively dismissed petitioners by sending them a written notice informing
pg. 887
them that the school would no longer renew their contracts for the forthcoming semester.81 We
find that the letters were abruptly sent and lacked any specification of the grounds for their
termination. Neither did the letters give petitioners the opportunity to explain their side. To
aggravate the matter, upon their inquiry into the reason behind their termination, all that respondent
college cited was its supposed “administrative prerogative,” which was misplaced as discussed
earlier.
In Agabon v. National Labor Relations Commission,82 this Court held that if the dismissal was
for a valid cause, failure to comply with the proper procedural requirements shall not nullify the
dismissal, but shall only warrant the payment of indemnity in the form of nominal damages. The
amount of damages is addressed to the sound discretion of the Court, taking into account the
relevant circumstances. Since Agabon, this Court has consistently pegged the award of nominal
damages at P30,000 in cases where the employee’s right to procedural due process has been
violated.83 It was held that the amount of nominal damages awarded is not intended to enrich the
employee, but to deter the employer from future violations of the procedural due process rights of
the former.84 Considering the circumstances in the present case and in
_______________
81 Rollo, pp. 126, 138.
82 485 Phil. 248, 288; 442 SCRA 573, 605 (2004).
83 See Sang-an v. Equator Knights Detective and Security Agency, Inc., 703 Phil. 492; 690 SCRA
534 (2013); Ancheta v. Destiny Financial Plans, Inc., 626 Phil. 550; 612 SCRA 648 (2010); Coca-
Cola Bottlers Philippines, Inc. v. Garcia, 567 Phil. 342; 543 SCRA 364 (2008); Challenge Socks
Corporation v. Court of Appeals, 511 Phil. 4; 474 SCRA 356 (2005).
84 Ancheta v. Destiny Financial Plans, id.
666

compliance with prevailing jurisprudence,85 we deem it appropriate for respondent college to pay
petitioners P30,000 each. This amount is in lieu of the P20,000 awarded to each petitioner by the
NLRC and the CA.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Court of Appeals’
Decision dated 31 July 2009 and Resolution dated 20 October 2009 in C.A.-G.R. S.P. Nos. 105355
and 105361 are hereby AFFIRMED with MODIFICATIONS, in that petitioners are each
pg. 888
awarded nominal damages of P30,000 for the violation of their right to procedural due process.
Legal interest at the rate of 6% per annum is imposed in the award of damages from the finality of
this Decision until full payment.
SO ORDERED.
Leonardo De-Castro, Perlas-Bernabe and Caguioa, JJ., concur.
Petition denied, judgment and resolution affirmed with modifications.
Notes.—Full-time teachers become regular or permanent employees once they have satisfactorily
completed the probationary period of three school years. (Colegio del Santisimo Rosario vs. Rojo,
705 SCRA 63 [2013])
In the case of Mercado v. AMA Computer College-Parañaque City, Inc., 618 SCRA 218 (2010),
the Supreme Court, speaking through Justice Arturo D. Brion, recognized the right of respondent
school to determine for itself that it shall use fixed-term employment contracts as its medium for
hiring
_______________
85 Id.; see also Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016, 796
SCRA 211; University of the Immaculate Conception v. Office of the Secretary of Labor and
Employment, G.R. Nos. 178085-178086, 14 September 2015, 770 SCRA 430.
667
VOL. 802, SEPTEMBER 14, 2016 667

its teachers. Nevertheless, the Court held that the teachers’ probationary status should not be
disregarded simply because their contracts were fixed-term. (Universidad de Sta. Isabel vs.
Sambajon, Jr., 720 SCRA 486 [2014])
——o0o——
pg. 889
G.R. No. 219815. September 14, 2016.*
J.O.S. MANAGING BUILDERS, INC. and EDUARDO B. OLAGUER, petitioners, vs. UNITED
OVERSEAS BANK PHILIPPINES (formerly known as Westmont Bank), EMMANUEL T.
MANGOSING and DAVID GOH CHAI ENG, respondents.
Remedial Law; Civil Procedure; Appeals; Section 2(c), Rule 41 of the Rules provides that in all
cases where only questions of law are raised or involved, the appeal shall be before the Supreme
Court (SC).—At the outset, we find no merit in the claim of respondents that petitioners’ direct
resort to us violates the hierarchy of courts. Section 2(c), Rule 41 of the Rules provides that in all
cases where only questions of law are raised or involved, the appeal shall be before us. Petitioners
question the grant of due course to respondents’ motion to dismiss filed after the filing of their
Answer Ad Cautelam, the grant of respondents’ motion to dismiss the contempt case on the ground
of mootness, and the grant of respondents’ motion to expunge petitioners’ MR on the ground of
violation of the three-day notice rule. In order to resolve these issues, we need not examine or
evaluate the evidence of the parties, but rely solely on what the law provides on the given set of
undisputed facts. Consequently, petitioners’ remedy for assailing the correctness of the Orders of
RTC Br. 87, involving as it does a pure question of law, indeed lies with us.
Same; Same; Motions; Three-day Notice Rule; The general rule is that the three (3)-day notice
requirement in motions under Section 4 of the Rules is mandatory.—The general rule is that the
three-day notice requirement in motions under Section 4 of the Rules is mandatory. It is an integral
component of procedural due process. The purpose of the three-day notice requirement, which was
established not for the benefit of the movant but rather for the adverse party, is to avoid surprises
upon the latter and to grant it sufficient time to study the motion and to enable it to meet the
arguments interposed therein.
_______________
* THIRD DIVISION.
265
VOL. 803, SEPTEMBER 14, 2016 265

J.O.S. Managing Builders, Inc. vs. United Overseas Bank Philippines (formerly known as
Westmont Bank)
pg. 890
Same; Same; Same; Same; When the adverse party had been afforded such opportunity, and has
been indeed heard through the pleadings filed in opposition to the motion, the purpose behind the
three (3)-day notice requirement is deemed realized. In such case, the requirements of procedural
due process are substantially complied with.—The test is the presence of opportunity to be heard,
as well as to have time to study the motion and meaningfully oppose or controvert the grounds
upon which it is based. When the adverse party had been afforded such opportunity, and has been
indeed heard through the pleadings filed in opposition to the motion, the purpose behind the three-
day notice requirement is deemed realized. In such case, the requirements of procedural due
process are substantially complied with.
Same; Same; Dismissal of Actions; Motion to Dismiss; Even after an answer has been filed, the
Supreme Court (SC) has allowed a defendant to file a motion to dismiss on the following grounds:
(1) lack of jurisdiction, (2) litis pendentia, (3) lack of cause of action, and (4) discovery during
trial of evidence that would constitute a ground for dismissal.—Petitioners fault RTC Br. 87 for
giving due course to respondents’ motion to dismiss. Respondents filed their second motion to
dismiss almost one (1) year and six (6) months after they submitted their Answer Ad
Cautelam. Thus, petitioners aver that respondents violated Section 1, Rule 16 of the Rules, stating
that a motion to dismiss must be filed “within the time for but before filing the answer to the
complaint or pleading asserting a claim.” Petitioners are incorrect. In Obando v. Figueras, 322
SCRA 148 (2000), we held that the period to file a motion to dismiss depends upon the
circumstances of the case: x x x Section 1 of Rule 16 of the Rules of Court requires that, in general,
a motion to dismiss should be filed within the reglementary period for filing a responsive pleading.
Thus, a motion to dismiss alleging improper venue cannot be entertained unless made within that
period. However, even after an answer has been filed, the Court has allowed a defendant to
file a motion to dismiss on the following grounds: (1) lack of jurisdiction, (2) litis pendentia, (3)
lack of cause of action, and (4) discovery during trial of evidence that would constitute a
ground for dismissal. Except for lack of cause of action or lack of jurisdiction, the grounds under
Section 1 of Rule 16 may be waived. If a particular ground for dismissal is not raised or if no
motion to dismiss is filed at all within the reglementary period, it is generally
266

Westmont Bank)
considered waived under Section 1, Rule 9 of the Rules. Applying this principle to the case at bar,
the respondents did not waive their right to move for the dismissal of the civil case based on
Petitioner Obando’s lack of legal capacity. It must be pointed out that it was only after he had
been convicted of estafa through falsification that the probate court divested him of his
representation of the Figueras estates. It was only then that this ground became available to
the respondents. Hence, it could not be said that they waived it by raising it in a Motion to
pg. 891
Dismiss filed after their Answer was submitted. Verily, if the plaintiff loses his capacity to
sue during the pendency of the case, as in the present controversy, the defendant should be
allowed to file a motion to dismiss, even after the lapse of the reglementary period for filing
a responsive pleading. (Emphasis supplied) In the same manner, respondents’ motion to dismiss
was based on an event that transpired after it filed its Answer Ad Cautelam. Consequently, there
was no violation of Section 1, Rule 16 of the Rules as they could not have possibly raised it as an
affirmative defense in their answer.
Same; Same; Moot and Academic; A case is moot when it ceases to present a justiciable
controversy by virtue of supervening events so that a declaration thereon would be of no practical
value.—A case is moot when it ceases to present a justiciable controversy by virtue of supervening
events so that a declaration thereon would be of no practical value. Courts decline jurisdiction over
it as there is no substantial relief to which petitioner will be entitled and which will anyway be
negated by the dismissal of the petition. Here, the consequent dissolution of the 2000 writ did not
render the contempt case moot and academic. Foremost, RTC Br. 87’s reliance in Golez v.
Leonidas, 107 SCRA 187 (1981) and Buyco v. Baraquia, 608 SCRA 699 (2009), is misplaced. As
correctly pointed out by petitioners, the facts and circumstances in the two cases differ from the
present petition. In Golez and Buyco, the alleged acts in violation of the writ of preliminary
injunction were committed AFTER the writ was lifted upon the dismissal of the main action, such
that a case for contempt on the ground of violation of the writ would be unavailing. In the case
before us, the sale of the properties — which is the act alleged to be in violation of the 2000 writ
— was conducted while the 2000 writ was still subsisting. In fact, the 2000 writ was issued on
May
267
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Westmont Bank)
17, 2000, while the sale was made on May 5, 2008. RTC Br. 98 annulled the sale in favor of
petitioners on June 12, 2008.
Same; Special Civil Actions; Indirect Contempt; Proceedings for indirect contempt of court
require normal adversarial procedures. It is not summary in character.—Section 5, Rule 71 of
the Rules provides that where the charge for indirect contempt has been committed against a
Regional Trial Court or a court of equivalent or higher rank, or against an officer appointed by it,
the charge may be filed with such court. Here, the petition for indirect contempt was correctly filed
with the RTC. The contempt case was however dismissed while it was only in the pretrial stage
and clearly before the parties could present their evidence. Proceedings for indirect contempt of
court require normal adversarial procedures. It is not summary in character. The proceedings for
the punishment of the contumacious act committed outside the personal knowledge of the judge
pg. 892
generally need the observance of all the elements of due process of law, that is, notice, written
charges, and an opportunity to deny and to defend such charges before guilt is adjudged and
sentence imposed.
PETITION for review on certiorari of the orders of the Regional Trial Court of Quezon City, Br.
87.
Nelson A. Clemente for petitioners.
Poblador, Bautista & Reyes for respondents.
JARDELEZA, J.:
Before us is a Petition for Review1 assailing the October 7, 20142 and July 20, 20153 Orders of
the Regional Trial Court of Quezon City (RTC-QC), Branch 87 (RTC Br. 87) in Civil Case No.
Q-11-69413. The first Order dismissed the petition for
_______________
1 Rollo, pp. 22-41.
2 Id., at pp. 44-46; penned by Judge Aurora A. Hernandez-Calledo.
3 Id., at pp. 50-51.
268

Westmont Bank)
contempt filed by J.O.S. Managing Builders, Inc. (J.O.S.) and Eduardo B. Olaguer4 (collectively,
petitioners) against United Overseas Bank Philippines (UOBP), Emmanuel T. Mangosing and
David Goh Chai Eng5 (collectively, respondents) on the ground of mootness. The second Order
expunged petitioners’ motion for reconsideration of the October 7, 2014 Order from the record of
the case due to violation of the three-day notice rule on motions.
pg. 893
Facts
On September 10, 1999, petitioners filed a Petition for Annulment of Extrajudicial Foreclosure
Sale (annulment case) against UOBP and Atty. Ricardo F. De Guzman in RTC-QC.6 The case was
raffled to RTC-QC, Branch 98 (RTC Br. 98) and docketed as Civil Case No. Q-99-38701.7 On
May 17, 2000, RTC Br. 98 issued a writ of preliminary injunction (2000 writ) against respondents
prohibiting them from: (a) consolidating title to the subject properties; and (b) committing any acts
prejudicial to petitioners.8 Eventually, on June 12, 2008, it also issued a decision annulling the
extrajudicial foreclosure and public auction sale of the properties.9 Respondents filed an appeal to
the Court of Appeals (CA) docketed as C.A.-G.R. CV No. 92414.10
_______________
4 Olaguer is the President/Chief Executive Officer of J.O.S.

Id., at p. 23.
5 Mangosing and Goh Chai Eng are the President/Chief Executive Officer and Vice
President/Deputy General Manager, respectively, of UOBP. Id.
6 Atty. De Guzman was the notary public who conducted the auction sale of the subject
properties. Id., at p. 62.
7 Id., at p. 72.
8 Id.
9 Id., at p. 55.
10 Id., at p. 117.
269
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Westmont Bank)
On May 5, 2008, while the annulment case was still pending, respondents sold the properties to
Onshore Strategic Assets, Inc.11 Thus, petitioners filed a Petition to Declare Respondents in
pg. 894
Contempt of Court12 (contempt case) in RTC-QC. The case was docketed as Civil Case No. Q-
11-69413 and raffled to RTC, Branch 220 (RTC Br. 220). Petitioners averred that respondents’
sale of the properties constitutes indirect contempt of court because it was done in violation of the
2000 writ issued by RTC Br. 98. Additionally, they prayed that respondents be ordered to pay
actual, moral and exemplary damages including attorney’s fees and cost of suit.
Respondents filed a Motion to Dismiss on the ground of failure to state a cause of action. They
countered that the sale of the properties did not violate the 2000 writ because petitioners did not
plead that the sale was prejudicial to them. Further, the petition did not allege that respondents
consolidated title to the properties. RTC Br. 220 denied the motion to dismiss. Respondents moved
for reconsideration, but it was denied.13 They elevated the case to the CA via a petition
for certiorari, but the CA also dismissed it.14
Respondents then filed an Answer Ad Cautelam15 in RTC Br. 220, contending that the 2000 writ
merely prohibited UOBP from consolidating title to the properties and did not enjoin it from selling
or transferring them to any person or entity.16 Respondents also asserted that the sale is not
prejudicial to the interest of petitioners because the 1997 Rules of Civil Procedure (the Rules)
recognizes and allows trans-
_______________
11 Id., at p. 62.
12 Id., at pp. 53-60.
13 Id., at pp. 64-65.
14 Id., at pp. 61-68. Docketed as C.A.-G.R. S.P. No. 128106; penned by Associate Justice Zenaida
T. Galapate-Laguilles, with Associate Justices Mariflor P. Punzalan-Castillo and Florito S.
Macalino, concurring.
15 Id., at pp. 89-97.
16 Id., at p. 93.
270

Westmont Bank)
pg. 895
fers pendente lite.17 By way of counterclaim, respondents prayed that petitioners be ordered to
pay moral and exemplary damages and attorney’s fees.18
In another turn of events, the contempt case was re-raffled to RTC Br. 87.19 On May 8, 2014,
respondents filed its second motion to dismiss.20 They argued that the decision of RTC Br. 98 in
the annulment case was reversed by the CA in its Decision dated November 28, 2013. They
claimed that the CA’s dismissal of the annulment case automatically dissolved or set aside the
2000 writ because a writ of preliminary injunction is merely ancillary to the main
case.21 Therefore, the contempt case which seeks to punish them for the alleged violation of the
2000 writ had become moot and academic.22 Petitioners opposed the motion but RTC Br. 87, in
its first assailed Order, granted respondent’s motion and dismissed the case. It ruled that “the writ
of preliminary injunction was rendered moot and academic with the [CA’s dismissal of the
annulment case] on the merits, which in effect automatically terminated the writ of preliminary
injunction issued therein, even if an appeal is taken from said judgment.”23
Petitioners filed a Motion for Reconsideration24 (MR) of the order of dismissal. Respondents filed
a Motion to Expunge25 the MR on the ground that petitioners violated the three-day notice rule
under Section 4, Rule 15 of the Rules. Respondents alleged that the hearing for petitioners’ MR
was set on November 7, 2014 but they received the notice only on
_______________
17 Id.
18 Id., at pp. 95-96.
19 Id., at p. 114.
20 Opposition To Declare Respondents in Default with Motion to Dismiss. Id., at pp. 115-120.
21 Id., at p. 117.
22 Id., at pp. 117-118.
23 Id., at p. 46.
24 Id., at pp. 11-12.
25 Id., at pp. 128-132.
271
pg. 896
VOL. 803, SEPTEMBER 14, 2016 271
Westmont Bank)
November 6 or one (1) day before the scheduled hearing. In its second assailed Order, RTC Br. 87
granted respondent’s motion to expunge.26
Petitioners now directly seek recourse to us via this petition for review on certiorari raising the
following issues:
1. Whether RTC Br. 87 erred in expunging petitioners’ MR from the record of the case;
2. Whether RTC Br. 87 erred in giving due course to respondents’ motion to dismiss filed after
their answer ad cautelam; and
3. Whether RTC Br. 87 erred in dismissing the contempt case on the ground of mootness.
Petitioners pray that we set aside the October 7, 2014 and July 20, 2015 Orders of RTC Br. 87,
declare respondents guilty of contempt of court, and order them to pay damages.27
Our Ruling
We partially grant the petition and reverse the challenged Orders of RTC Br. 87.
At the outset, we find no merit in the claim of respondents that petitioners’ direct resort to us
violates the hierarchy of courts. Section 2(c), Rule 41 of the Rules provides that in all cases where
only questions of law are raised or involved, the appeal shall be before us.28 Petitioners question
the grant of due course to respondents’ motion to dismiss filed after the filing of their Answer Ad
Cautelam, the grant of respondents’ motion to dismiss the contempt case on the ground of
mootness, and the grant of respondents’ motion to expunge peti-
_______________
26 Id., at pp. 50-51.
27 Id., at p. 38.
28 See Sevilleno v. Carilo, G.R. No. 146454, September 14, 2007, 533 SCRA 385.
pg. 897
272

Westmont Bank)
tioners’ MR on the ground of violation of the three-day notice rule. In order to resolve these issues,
we need not examine or evaluate the evidence of the parties, but rely solely on what the law
provides on the given set of undisputed facts.29 Consequently, petitioners’ remedy for assailing
the correctness of the Orders of RTC Br. 87, involving as it does a pure question of law, indeed
lies with us.30
RTC Br. 87 erred when it granted

respondent’s motion to expunge
petitioner’s MR from the records.
Section 4, Rule 15 of the Rules, provides that:
Sec. 4. Hearing of motion.—Except for motions which the court may act upon without
prejudicing the rights of the adverse party, every written motion shall be set for hearing by the
applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be served in
such a manner as to ensure its receipt by the other party at least three (3) days before the date of
hearing, unless the court for good cause sets the hearing on shorter notice.
The general rule is that the three-day notice requirement in motions under Section 4 of the Rules
is mandatory. It is an integral component of procedural due process. The purpose of the three-day
notice requirement, which was established not for the benefit of the movant but rather for the
adverse party, is to avoid surprises upon the latter and to grant it sufficient
_______________
29 See Far Eastern Surety and Insurance Co., Inc. v. People, G.R. No. 170618, November 20,
2013, 710 SCRA 358, 365.
30 See Dio v. Subic Bay Marine Exploratorium, Inc., G.R. No. 189532, June 11, 2014, 726 SCRA
244.
pg. 898
273
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Westmont Bank)
time to study the motion and to enable it to meet the arguments interposed therein.31
In Cabrera v. Ng,32 the facts of which are analogous to the present petition, we held that the three-
day notice requirement is not a hard-and-fast rule. A liberal construction of the procedural rules is
proper where the lapse in the literal observance of a rule of procedure has not prejudiced the
adverse party and has not deprived the court of its authority.33 We ruled:
It is undisputed that the hearing on the motion for reconsideration filed by the spouses Cabrera
was reset by the RTC twice with due notice to the parties; it was only on October 26, 2007 that the
motion was actually heard by the RTC. At that time, more than two months had passed since the
respondent received a copy of the said motion for reconsideration on August 21, 2007. The
respondent was thus given sufficient time to study the motion and to enable him to meet the
arguments interposed therein. Indeed, the respondent was able to file his opposition thereto on
September 20, 2007.
Notwithstanding that the respondent received a copy of the said motion for reconsideration four
days after the date set by the spouses Cabrera for the hearing thereof, his right to due process was
not impinged as he was afforded the chance to argue his position. Thus, the RTC erred in denying
the spouses Cabrera’s motion for reconsideration based merely on their failure to comply with the
three-day notice requirement.34
Thus, the test is the presence of opportunity to be heard, as well as to have time to study the motion
and meaningfully
_______________
31 See Cabrera v. Ng, G.R. No. 201601, March 12, 2014, 719 SCRA 199, 205.
32 Id.
33 Id., at p. 206.
34 Id., at pp. 207-208.
pg. 899
274

Westmont Bank)
oppose or controvert the grounds upon which it is based.35 When the adverse party had been
afforded such opportunity, and has been indeed heard through the pleadings filed in opposition to
the motion, the purpose behind the three-day notice requirement is deemed realized. In such case,
the requirements of procedural due process are substantially complied with.36
Here, respondents claimed to have actually received the notice for the November 7, 2014 hearing
only on November 6, 2014.37 On the supposed day of hearing, however, RTC Br. 87 issued
a Constancia38 resetting the hearing to December 5, 2014. Thereafter, on November 11, 2014,
respondent filed a motion to expunge petitioners’ MR.39 Clearly, respondents’ right to due process
was not violated as they were able to oppose petitioner’s MR in the form of their motion to
expunge.
RTC Br. 87 did not err in giving

due course to respondents’ mo-
tion to dismiss.
Petitioners fault RTC Br. 87 for giving due course to respondents’ motion to dismiss. Respondents
filed their second motion to dismiss almost one (1) year and six (6) months after they submitted
their Answer Ad Cautelam.40 Thus, petitioners aver that respondents violated Section 1, Rule 16
of the Rules, stating that a motion to dismiss must be filed “within the time for but before filing
the answer to the complaint or pleading asserting a claim.”
_______________
35 Id., at p. 207.
36 Id., at p. 206.
37 Rollo, p. 155.
38 Id., at p. 49.
pg. 900
39 Id., at p. 50.
40 The Answer Ad Cautelam was filed on November 27, 2012 (id., at p. 37) while the second
motion to dismiss was filed on May 8, 2014 (id., at p. 115).
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Westmont Bank)
Petitioners are incorrect. In Obando v. Figueras,41 we held that the period to file a motion to
dismiss depends upon the circumstances of the case:
x x x Section 1 of Rule 16 of the Rules of Court requires that, in general, a motion to dismiss
should be filed within the reglementary period for filing a responsive pleading. Thus, a motion to
dismiss alleging improper venue cannot be entertained unless made within that period.
However, even after an answer has been filed, the Court has allowed a defendant to file a
motion to dismiss on the following grounds: (1) lack of jurisdiction, (2) litis pendentia, (3) lack
of cause of action, and (4) discovery during trial of evidence that would constitute a ground
for dismissal. Except for lack of cause of action or lack of jurisdiction, the grounds under Section
1 of Rule 16 may be waived. If a particular ground for dismissal is not raised or if no motion to
dismiss is filed at all within the reglementary period, it is generally considered waived under
Section 1, Rule 9 of the Rules.
Applying this principle to the case at bar, the respondents did not waive their right to move for the
dismissal of the civil case based on Petitioner Obando’s lack of legal capacity. It must be pointed
out that it was only after he had been convicted of estafa through falsification that the probate
court divested him of his representation of the Figueras estates. It was only then that this
ground became available to the respondents. Hence, it could not be said that they waived it
by raising it in a Motion to Dismiss filed after their Answer was submitted. Verily, if the
plaintiff loses his capacity to sue during the pendency of the case, as in the present
controversy, the defendant should be allowed to file a motion to dismiss, even after the lapse
of the reglementary
_______________
pg. 901
276

Westmont Bank)
period for filing a responsive pleading.42 (Emphasis supplied)
In the same manner, respondents’ motion to dismiss was based on an event that transpired after it
filed its Answer Ad Cautelam. Consequently, there was no violation of Section 1, Rule 16 of the
Rules as they could not have possibly raised it as an affirmative defense in their answer.
While RTC Br. 87 did not err in giving due course to respondents’ motion to dismiss, the propriety
of granting it is an entirely different matter.
RTC Br. 87 erred when it dismissed

the contempt case for being moot
and academic.
In their motion to dismiss, respondents advance that the CA’s reversal of RTC Br. 98’s ruling is a
supervening event that renders the contempt case moot and academic. They argue that it would
now be absurd to restrain UOBP from exercising its rights under the Deed of Real Estate Mortgage
when it was found to have proceeded lawfully in the foreclosure proceedings. Respondents
maintain that it would be illogical to hold them in contempt for a lawful act.43
RTC Br. 87 agreed,44 citing the cases of Golez v. Leonidas45 and Buyco v. Baraquia,46 where
we held that a writ of preliminary injunction is deemed lifted upon dismissal of the main case, its
purpose as a provisional remedy having been served, despite the filing of an appeal.
_______________
42 Id., at pp. 156-157.
43 Rollo, p. 118.
44 Id., at p. 45.
45 No. L-56587, August 31, 1981, 107 SCRA 187.
pg. 902
277
VOL. 803, SEPTEMBER 14, 2016 277

Westmont Bank)
We are not persuaded. A case is moot when it ceases to present a justiciable controversy by virtue
of supervening events so that a declaration thereon would be of no practical value.47 Courts
decline jurisdiction over it as there is no substantial relief to which petitioner will be entitled and
which will anyway be negated by the dismissal of the petition.48 Here, the consequent dissolution
of the 2000 writ did not render the contempt case moot and academic. Foremost, RTC Br. 87’s
reliance in Golez and Buyco is misplaced. As correctly pointed out by petitioners, the facts and
circumstances in the two cases differ from the present petition. In Golez and Buyco, the alleged
acts in violation of the writ of preliminary injunction were committed AFTER the writ was lifted
upon the dismissal of the main action, such that a case for contempt on the ground of violation of
the writ would be unavailing. In the case before us, the sale of the properties —which is the act
alleged to be in violation of the 2000 writ —was conducted while the 2000 writ was
still subsisting. In fact, the 2000 writ was issued on May 17, 2000, while the sale was made on
May 5, 2008. RTC Br. 98 annulled the sale in favor of petitioners on June 12, 2008.49
The reversal by the CA of the ruling of RTC Br. 98 in the annulment case and the automatic
dissolution of the 2000 writ will not protect respondents from an action ascribing a violation of
the 2000 writ, which was committed while it was still in full force and effect. In Lee v. Court of
Appeals,50 we explained that:
_______________
47 Mendoza v. Villas, G.R. No. 187256, February 23, 2011, 644 SCRA 347, 357, citing Gunsi,
Sr. v. Commissioners, The, Commission on Elections, G.R. No. 168792, February 23, 2009, 580
SCRA 70, 76.
48 Philippine Ports Authority (PPA) v. Coalition of PPA Officers and Employees, G.R. No.
203142, August 26, 2015, 768 SCRA 280, 293, citing Korea Exchange Bank v. Gonzales, G.R.
No. 139460, March 31, 2006, 486 SCRA 166, 176.
49 Rollo, p. 55.
50 G.R. No. 147191, July 27, 2006, 496 SCRA 668.
pg. 903
278

Westmont Bank)
An injunction or restraining order which is not void must be obeyed while it remains in full force
and effect, and has not been overturned, that is, in general, until the injunction or restraining order
has been set aside, vacated, or modified by the court which granted it, or until the order or decree
awarding it has been reversed on appeal or error. The injunction must be obeyed irrespective of
the ultimate validity of the order, and no matter how unreasonable and unjust the injunction may
be in its terms. Defendant cannot avoid compliance with the commands, or excuse his violation,
of the injunction by simply moving to dissolve it, or by the pendency of a motion to modify it. The
fact that an injunction or restraining order has been dissolved or terminated, or has expired, does
not necessarily protect a person in a proceeding against him for a violation of the injunction or
order while it was in force, as by acts between granting of the injunction and its termination, at
least where the proceeding is one to punish for a criminal contempt.51
Notably, this is not to say that respondents are already guilty of indirect contempt. Whether
respondents violated the 2000 writ is not for us to decide. Section 5, Rule 71 of the Rules provides
that where the charge for indirect contempt has been committed against a Regional Trial Court or
a court of equivalent or higher rank, or against an officer appointed by it, the charge may be filed
with such court. Here, the petition for indirect contempt was correctly filed with the RTC. The
contempt case was however dismissed while it was only in the pretrial stage and clearly before the
parties could present their evidence. Proceedings for indirect contempt of court require normal
adversarial procedures. It is not summary in character. The proceedings for the punishment of the
contumacious act committed outside the personal knowledge of the judge generally need the
observance of all the elements of due process of law, that is, notice, written charges, and an oppor-
_______________
51 Id., at pp. 687-688.
279
VOL. 803, SEPTEMBER 14, 2016 279
pg. 904
Westmont Bank)
tunity to deny and to defend such charges before guilt is adjudged and sentence imposed.52
In this regard, we cannot grant petitioners’ prayer to declare respondents guilty of contempt of
court and order them to pay damages.
WHEREFORE, the petition is PARTIALLY GRANTED. The October 7, 2014 and July 20,
2015 Orders of the Regional Trial Court of Quezon City, Branch 87 in Civil Case No. Q-11-69413
are hereby REVERSED. The case is REMANDED to the court a quo for continuance of the trial
of the case.
SO ORDERED.
Petition partially granted, orders reversed.
Notes.—A motion that does not comply with the requirements of Sections 4 and 5 of Rule 15 of
the Rules of Court is a worthless piece of paper which the clerk of court has no right to receive
and which the court has no authority to act upon. (Acampado vs. Cosmilla, 771 SCRA 535 [2015])
Rule 15, Section 4 of the Rules of Court clearly makes it a mandatory rule that the adverse party
be given notice of hearing on the motion at least three (3) days prior. (Laude vs. Ginez-Jabalde,
775 SCRA 408 [2015])
——o0o——
_______________
52 Lorenzo Shipping Corporation v. Distribution Management Association of the Philippines,

G.R. No. 155849, August 31, 2011, 656 SCRA 331, 345, citing Provenzale v. Provenzale, 90 N.E.
2d 115, 339 Ill. App. 345; People ex rel. Andrews v. Hassakis, 129 N.E. 2d 9, 6 Ill. 2d 463; Van
Sweringen v. Van Sweringen, 126 A. 2d 334, 22 N.J. 440, 64 A.L.R. 2d 593; Ex parte Niklaus, 13
N.W. 2d 655, 144 Neb. 503; People ex rel. Clarke v. Truesdell, 79 N.Y.S. 2d 413.
pg. 905
G.R. No. 191170. September 14, 2016.*
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., petitioner, vs. FIDEL O. CHUA

and FILIDEN REALTY AND DEVELOPMENT CORP., respondents.
Remedial Law; Civil Procedure; Joinder of Parties; The rationale for allowing parties to join in
a proceeding that delves on a common question of law or fact concerning them is trial
convenience; i.e., to save the parties unnecessary work, trouble and expense.—The rationale for
allowing parties to join in a proceeding that delves on a common question of law or fact concerning
them is trial convenience; i.e., to save the parties unnecessary work, trouble and expense. In order
to meet the requirements of justice and convenience, the rule on the joinder of parties is construed
with considerable flexibility. Hence, courts are given broad discretion in determining who may
properly be joined in a proceeding. The rules also provide that in case of a transfer of interest, the
court, upon motion, may direct the person to whom the interest is transferred to be substituted in
the action or joined with the original party.
_______________
* FIRST DIVISION.
689
VOL. 802, SEPTEMBER 14, 2016 689

Cameron Granville 3 Asset Management, Inc. vs. Chua
Same; Same; Same; The transferee is joined or substituted in the pending action by operation of
law from the exact moment when the transfer of interest is perfected between the original party
and the transferee.—Indeed, a transferee pendente lite is a proper party that stands exactly in the
shoes of the transferor, the original party. Transferees are bound by the proceedings and judgment
in the case, such that there is no need for them to be included or impleaded by name. We have
even gone further and said that the transferee is joined or substituted in the pending action by
operation of law from the exact moment when the transfer of interest is perfected between the
original party and the transferee.
Same; Same; Same; The rule provides that parties may be dropped or added by order of the court
on motion of any party or on the court’s own initiative at any stage of the action and on such terms
as are just.—According to the CA, this statement allowed for a “provisional” joinder/substitution
of parties. It is difficult to fathom how the above statement of the trial court could have constituted
grave abuse of discretion when the ruling was in accordance with Section 11, Rule 3 of the Rules
of Court. The rule provides that parties may be dropped or added by order of the court on motion
pg. 906
of any party or on the court’s own initiative at any stage of the action and on such terms as are just.
For the CA to say that, as between Metrobank and petitioner, “only one of them is clothed with
the personality to actively participate in the proceedings below” is to show a regrettable lack of
understanding of the rules and an unwarranted restriction of the trial court’s discretion.
Mendoza, Navarro-Mendoza & Partners for petitioner.
Flores, Talens & Romanillos for respondents.
SERENO, CJ.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to nullify
the Court of Appeals’
690

(CA) Decision1 and Resolution2 in C.A.-G.R. S.P. No. 103809. The CA Decision annulled the
Orders3 of the Regional Trial Court of Parañaque City, Branch 258 (RTC Branch 258), which
joined petitioner as party-defendant in Civil Case No. 01-0207. The CA Resolution denied
petitioner’s motion for reconsideration.
Facts
In 1988, respondents obtained an initial loan of P4 million from the Metropolitan Bank and Trust
Co. (Metrobank). The loan was secured by a real estate mortgage constituted over three parcels of
land located in Parañaque City (subject property).4 The real estate mortgage was amended several
times to accommodate additional loans they incurred over the years.5 On 13 January 2000,
pg. 907
respondents and Metrobank restructured the obligation through a Debt Settlement Agreement over
the outstanding obligation of P88,101,093.98.6
For failure of respondents to pay, Metrobank sought the extrajudicial foreclosure of the real estate
mortgage over the
_______________
1 Rollo, pp. 69-83. The Decision dated 26 August 2009 issued by the Court of Appeals Special
Third Division was penned by Associate Justice Ricardo R. Rosario, with Associate Justices
Martin S. Villarama, Jr. (a retired member of this Court) and Pampio A. Abarintos, concurring.
2 Id., at pp. 66-67. The Resolution dated 11 February 2010 issued by the Court of Appeals Special
Former Special Third Division was penned by Associate Justice Ricardo R. Rosario, with
Associate Justices Pampio A. Abarintos and Mariflor Punzalan-Castillo (in lieu of J. Villarama,
Jr. per Raffle dated 24 November 2009), concurring.
3 Id., at pp. 85-87. The Orders dated 28 December 2007 and 9 April 2008 issued by the Regional
Trial Court of Parañaque City, Branch 258, in Civil Case No. 01-0207 were penned by Judge Raul
E. de Leon.
4 Id., at p. 89.
5 Id., at pp. 89-90.
6 Id., at pp. 111-114.
691
VOL. 802, SEPTEMBER 14, 2016 691

subject property. On 4 May 2001, it sent them a Notice of Sale7 setting the public auction on 31
May 2001. Seeking to stop the intended public auction, respondents filed a Complaint8 docketed
as Civil Case No. 01-0207 for injunction with prayer for the issuance of a temporary restraining
order (TRO), preliminary injunction and damages.
The Regional Trial Court of Parañaque City, Branch 257 (RTC Branch 257), issued a TRO.9
However, upon the expiration of the TRO, Metrobank scheduled another public auction on 8
November 2001. On the morning of that day, RTC Branch 257 issued an Order directing
Metrobank to reschedule the intended sale to a date after the resolution of the application for
preliminary injunction.10 However, the latter allegedly received the Order only on 12 November
pg. 908
2001 and pushed through with the scheduled public auction on 8 November 2001. A Certificate of
Sale11 was thereafter issued in its favor on 9 November 2001.
In an Order dated 6 March 2002,12 the application for preliminary injunction filed by respondents
was denied by RTC Branch 257 for mootness in view of the consummated public auction sale.
When their motion for reconsideration was denied,13 respondents filed a petition for certiorari
before the CA. The appellate court reversed and set aside the Order dated 6 March 2002 issued by
RTC Branch 257 and remanded Civil Case No. 01-0207 for further proceedings.14
_______________
7 Id., at pp. 116-117.
8 Id., at pp. 88-98.
9 Id., at pp. 127, 131.
10 Id., at p. 185.
11 Id., at pp. 235-237.
12 Id., at pp. 292-295.
13 Id., at p. 319.
14 Id., at pp. 386-397; Decision dated 26 July 2002 in C.A.-G.R. S.P. No. 70208. On 9 April 2003,
this Court found no reversible error in the CA ruling, and entry of judgment was made on 28 July
2003.
692

Upon motion of respondents, the presiding judge of RTC Branch 257 inhibited from further
hearing the case.15 The case was later re-raffled to RTC Branch 258.16
Meanwhile, respondents filed a Motion to Admit Amended Complaint17 with attached Amended
Verified Complaint18 for annulment of foreclosure of mortgage, declaration of nullity of
certificate of sale, and injunction.
pg. 909
On 17 October 2007, petitioner filed a Motion for Joinder of Party and/or Substitution.19 It alleged
that by virtue of a Deed of Absolute Sale dated 17 September 2003,20 Metrobank sold to Asia
Recovery Corporation (ARC) its credit against respondents including all rights, interests, claims
and causes of action arising out of the loan and mortgage agreements between Metrobank and
respondents. ARC, in turn, specifically assigned the credit to petitioner through a Deed of
Assignment dated 31 March 2006.21 Petitioner prayed that it be substituted in lieu of Metrobank
in the proceedings before RTC Branch 258.
Aside from its conforme to the motion filed by petitioner, Metrobank also filed a Comment22
stating that the bank had no objection to its substitution by petitioner. Metrobank explained that
the account of respondents had been declared a nonperforming loan pursuant to Republic Act No.
9182 (Special Purpose Vehicle Act of 2002 or SPY Act) and, as such, had been included among
the other accounts sold to ARC by virtue of the Deed of Absolute Sale.23
_______________
15 Id., at p. 443.
16 Id., at p. 445.
17 Id., at pp. 244-245.
18 Id., at pp. 246-260.
19 Id., at pp. 465-469.
20 Id., at pp. 470-474.
21 Id., at pp. 475-476.
22 Id., at pp. 478-479.
23 Id., at pp. 507-509.
693
VOL. 802, SEPTEMBER 14, 2016 693

The motion of petitioner was, however, vigorously opposed by respondents.24 They alleged that
they were entitled to a full disclosure of the details of the sale, as well as of the transfer and
pg. 910
assignment of their debt pursuant to their right of redemption under the SPY Act and Article
163425 of the Civil Code.
Ruling of the RTC
In an Order dated 28 December 2007,26 RTC Branch 258 granted the motion and ordered
petitioner to be joined as party-defendant, but without dropping Metrobank as defendant.
In the Order dated 9 April 2008,27 RTC Branch 258 denied respondents’ motion for
reconsideration. It ruled that petitioner was a necessary party to the final determination of the case.
Aggrieved, petitioners filed a special civil action for certiorari under Rule 65 of the Rules of Court
before the CA.
_______________
24 Id., at pp. 480-484.
25 Civil Code, Article 1634:
Article 1634. When a credit or other incorporeal right in litigation is sold, the debtor shall
have a right to extinguish it by reimbursing the assignee for the price the latter paid therefor,
the judicial costs incurred by him, and the interest on the price from the day on which the
same was paid.
A credit or other incorporeal right shall be considered in litigation from the time the
complaint concerning the same is answered.
The debtor may exercise his right within thirty days from the date the assignee demands
payment from him.
26 Rollo, p. 85.
27 Id., at pp. 86-87.
694
pg. 911
Ruling of the CA
In the assailed Decision dated 26 August 2009,28 the CA granted the petition and annulled the
Orders of RTC Branch 258.
The CA ruled that if it was true that Metrobank had divested itself of any interest in respondents’
debt, then the trial court should have forthwith ordered the bank’s exclusion from the
proceedings.29 According to the CA, the trial court provided for a provisional joinder/substitution
of parties — a practice that cannot be countenanced due to the basic rule that every action must be
prosecuted or defended in the name of the real party in interest.30
The appellate court also doubted whether substitution was proper, because the Deed of Absolute
Sale between Metrobank and ARC did not specify whether respondents’ debt was included in the
portfolio of nonperforming loans sold.31
At bottom, the CA ruled that petitioner could not substitute for Metrobank in the proceedings
before the trial court without first disclosing the consideration paid by petitioner for the transfer of
interest.32
Petitioner filed a motion for reconsideration, which the CA denied in the challenged Resolution
dated 11 February 2010.33
Issue
The issue to be resolved in this case is simple: whether petitioner may be joined as party-defendant
in Civil Case No. 01-0207.
_______________
28 Id., at pp. 69-83.
29 Id., at p. 75.
30 Id., at p. 76.
31 Id., at pp. 76-78.
32 Id., at pp. 78-81.
pg. 912
33 Id., at pp. 66-67.
695
VOL. 802, SEPTEMBER 14, 2016 695

Our Ruling
As stated at the outset, the instant petition seeks a Rule 45 review of a Rule 65 decision of the CA.
We stated in Montoya v. Transmed Manila Corp.34 that our task in these cases is not to determine
the correctness of the ruling of the trial court, but to examine whether the CA correctly determined
the existence of grave abuse of discretion in the Orders of RTC Branch 258 allowing the joinder
of petitioner in Civil Case No. 01-0207.
Section 6, Rule 3 of the Rules of Court, provides the rule on the joinder of parties:
Section 6. Permissive joinder of parties.—All persons in whom or against whom any right to
relief in respect to or arising out of the same transaction or series of transactions is alleged to exist,
whether jointly, severally, or in the alternative, may, except as otherwise provided in these Rules,
join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact
common to all such plaintiffs or to all such defendants may arise in the action; but the court may
make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or
put to expense in connection with any proceedings in which he may have no interest.
The rationale for allowing parties to join in a proceeding that delves on a common question of law
or fact concerning them is trial convenience; i.e., to save the parties unnecessary work, trouble and
expense.35 In order to meet the requirements of justice and convenience, the rule on the joinder of
_______________
34 613 Phil. 696; 597 SCRA 334 (2009).
35 Prudential Bank v. Intermediate Appellate Court, G.R. No. 74886, 8 December 1992, 216
SCRA 257.
pg. 913
696

parties is construed with considerable flexibility.36 Hence, courts are given broad discretion in
determining who may properly be joined in a proceeding.37
The rules also provide that in case of a transfer of interest, the court, upon motion, may direct the
person to whom the interest is transferred to be substituted in the action or joined with the original
party.38
Indeed, a transferee pendente lite is a proper party that stands exactly in the shoes of the transferor,
the original party.39 Transferees are bound by the proceedings and judgment in the case, such that
there is no need for them to be included or impleaded by name.40 We have even gone further and
said that the transferee is joined or substituted in the pending action by operation of law from the
exact moment when the transfer of interest is perfected between the original party and the
transferee.41
Nevertheless, “[w]hether or not the transferee should be substituted for, or should be joined with,
the original party is largely a matter of discretion.”42 That discretion is exercised in pursuance of
the paramount consideration that must be afforded for the protection of the parties’ interests and
right to due process.43
_______________
36 Balbastro v. Court of Appeals, 150-C Phil. 462; 48 SCRA 231 (1972).
37 Id.
39 Fetalino v. Sanz, 44 Phil. 691 (1923).
40 Id.
41 Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1; 391 SCRA 370 (2002).
42 Galace v. Bagtas, 120 Phil. 657, 663; 11 SCRA 687, 693 (1964).
43 Heirs of Francisca Medrano v. De Vera, 641 Phil. 228; 627 SCRA 108 (2010).
pg. 914
697
VOL. 802, SEPTEMBER 14, 2016 697

Notably, unless the exercise of that discretion is shown to be arbitrary, this Court is not inclined to
review acts committed by the courts a quo.44
In this case, part of the reason why the CA ascribed grave abuse of discretion to the trial court was
the latter’s statement in the Order dated 28 December 2007 as follows:
Thus, the Court hereby grants that [petitioner] be joined as party-defendant in this case without
dropping Metrobank at this stage conditioned, however, that if in the course of the trial, the Court
finds that based on the testimonial and documentary evidence to be presented by Metrobank that
it can be dropped, the same shall be effected pursuant to Section 11, Rule 3 of the 1997 Rules of
Civil Procedure.45
According to the CA, this statement allowed for a “provisional” joinder/substitution of parties. It
is difficult to fathom how the above statement of the trial court could have constituted grave abuse
of discretion when the ruling was in accordance with Section 11, Rule 3 of the Rules of Court. The
rule provides that parties may be dropped or added by order of the court on motion of any party or
on the court’s own initiative at any stage of the action and on such terms as are just. For the CA to
say that, as between Metrobank and petitioner, “only one of them is clothed with the personality
to actively participate in the proceedings below”46 is to show a regrettable lack of understanding
of the rules and an unwarranted restriction of the trial court’s discretion.
Contrary to the finding of the CA, there is enough evidence in the records to support the fact of
the transfer of interest between Metrobank and petitioner. The CA highlights only that it was not
clear whether respondents’ debt was included
_______________
44 Galace v. Bagtas, supra note 42.
45 Rollo, p. 85.
46 Id., at p. 76.
pg. 915
698

in the portfolio of nonperforming loans sold to ARC. The appellate court then turned a blind eye
to the representations of Metrobank before the trial court confirming the fact of the transfer of
interest to ARC and then later to petitioner. The admission by Metrobank sufficiently supplied
whatever was omitted by the non-presentation of the entire portfolio of nonperforming loans. The
non-presentation may be understandable in view of the sensitive nature of the portfolio and its
contents. At any rate, the Deed of Assignment clearly spelled out that all of the rights, title, and
interest over respondents’ loan, which had an outstanding principal balance of P88,101,093.98,
had been transferred by ARC to petitioner.
We observe that the CA effectively ruled that the disclosure of the consideration for the transfer
of rights was a condition precedent for the joinder of petitioner in the proceedings.
In order not to preempt judgment or make a pronouncement as to any matter other than the
pertinent issue before it, this Court will simply remind the CA and the parties that a disclosure of
the consideration for the transfer of interest is not among the following requirements for a party to
be joined in a proceeding: (1) the right to relief arises out of the same transaction or series of
transactions; (2) there is a question of law or fact common to all the parties; and (3) the joinder is
not otherwise prohibited by the rules on jurisdiction and venue.47
In fine, we find that the CA erred in ruling that RTC Branch 258 committed grave abuse of
discretion when the latter allowed the joinder of petitioner as party-defendant in Civil Case No.
01-0207. Under the rules, the trial court is given wide discretion and enough leeway to determine
who may be joined in a proceeding, or whether a party may properly be substituted by another due
to a transfer of interest.
_______________
47 Pantranco North Express, Inc. v. Standard Insurance Co., Inc., 493 Phil. 616; 453 SCRA 482
(2005).
699
VOL. 802, SEPTEMBER 14, 2016 699

pg. 916
Within the premises, the trial court’s grant of the joinder cannot be seriously assailed.
WHEREFORE, the petition is GRANTED. The Court of Appeals’ Decision dated 26 August
2009 and Resolution dated 11 February 2010 in C.A.-G.R. S.P. No. 103809 are REVERSED and
SET ASIDE.
The Orders dated 28 December 2007 and 9 April 2008 issued by the Regional Trial Court of
Parañaque City, Branch 258, are REINSTATED.
SO ORDERED.
Leonardo De-Castro, Perlas-Bernabe and Caguioa, JJ., concur.
Notes.—Rule 3, Sec. 11 states that neither misjoinder nor non-joinder of parties is a ground for
the dismissal of an action. (Cuyo vs. People, 659 SCRA 69 [2011])
Joinder of indispensable parties is compulsory being a sine qua non for the exercise of judicial
power. (Guy vs. Guy, 680 SCRA 214 [2012])
——o0o——
pg. 917
G.R. No. 221538. September 20, 2016.*
RIZALITO Y. DAVID, petitioner, vs. SENATE ELECTORAL TRIBUNAL and MARY GRACE
POE-LLAMANZARES, respondents.
Election Law; Electoral Tribunals; Jurisdiction; Exclusive, original jurisdiction over contests
relating to the election, returns, and qualifications of the elective officials falling within the scope
of their powers is, thus, vested in these electoral tribunals.—Exclusive, original jurisdiction over
contests relating to the election, returns, and qualifications of the elective officials falling within
the scope of their powers is, thus, vested in these electoral tribunals. It is only before them that
post-election challenges against the election, returns, and qualifications of Senators and
Representatives (as well as
_______________
* EN BANC.
436

David vs. Senate Electoral Tribunal
of the President and the Vice President, in the case of the Presidential Electoral Tribunal) may be
initiated. The judgments of these tribunals are not beyond the scope of any review. Article VI,
Section 17’s stipulation of electoral tribunals’ being the “sole” judge must be read in harmony with
Article VIII, Section 1’s express statement that “[j]udicial power includes the duty of the courts of
justice . . . to determine whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.”
Remedial Law; Special Civil Actions; Certiorari; A petition for certiorari is allowed in Article
VIII, Section 1 of the Constitution and described in the 1997 Rules of Civil Procedure as an
independent civil action.—A party aggrieved by the rulings of the Senate or House Electoral
Tribunal invokes the jurisdiction of this Court through the vehicle of a petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure. An appeal is a continuation of the proceedings in
the tribunal from which the appeal is taken. A petition for certiorari is allowed in Article VIII,
Section 1 of the Constitution and described in the 1997 Rules of Civil Procedure as an independent
civil action. The viability of such a petition is premised on an allegation of “grave abuse of
discretion.” The term “grave abuse of discretion” has been generally held to refer to such arbitrary,
capricious, or whimsical exercise of judgment as is tantamount to lack of jurisdiction.
pg. 918
Same; Same; Same; Grave Abuse of Discretion; There is grave abuse of discretion when a
constitutional organ such as the Senate Electoral Tribunal (SET) or the Commission on Elections
(COMELEC), makes manifestly gross errors in its factual inferences such that critical pieces of
evidence, which have been nevertheless properly introduced by a party, or admitted, or which
were the subject of stipulation, are ignored or not accounted for.—There is grave abuse of
discretion when a constitutional organ such as the Senate Electoral Tribunal or the Commission
on Elections, makes manifestly gross errors in its factual inferences such that critical pieces of
evidence, which have been nevertheless properly introduced by a party, or admitted, or which were
the subject of stipulation, are ignored or not accounted for. A glaring misinterpretation of the
constitutional text or of statutory provisions, as well as a misreading or misapplication of the
current state of jurisprudence, is also considered grave abuse
437
VOL. 803, SEPTEMBER 20, 2016 437

of discretion. The arbitrariness consists in the disregard of the current state of our law.
Same; Same; Same; Writs of certiorari have been issued: (a) where the tribunal’s approach to an
issue is premised on wrong considerations and its conclusions founded on a gross misreading, if
not misrepresentation, of the evidence; (b) where a tribunal’s assessment of a case is “far from
reasonable[,] [and] based solely on very personal and subjective assessment standards when the
law is replete with standards that can be used”; “(c) where the tribunal’s action on the
appreciation and evaluation of evidence oversteps the limits of its discretion to the point of being
grossly unreasonable”; and (d) where the tribunal invokes erroneous or irrelevant considerations
in resolving an issue.—Writs of certiorari have, therefore, been issued: (a) where the tribunal’s
approach to an issue is premised on wrong considerations and its conclusions founded on a gross
misreading, if not misrepresentation, of the evidence; (b) where a tribunal’s assessment of a case
is “far from reasonable[,] [and] based solely on very personal and subjective assessment standards
when the law is replete with standards that can be used”; “(c) where the tribunal’s action on the
grossly unreasonable”; and (d) where the tribunal invokes erroneous or irrelevant considerations
in resolving an issue.
Constitutional Law; Senators; Natural-born Citizens; Article VI, Section 3 of the 1987
Constitution spells out the requirement that “[n]o person shall be a Senator unless he [or she] is
a natural-born citizen of the Philippines.”—Article VI, Section 3 of the 1987 Constitution spells
out the requirement that “[n]o person shall be a Senator unless he [or she] is a natural-born citizen
of the Philippines.”
pg. 919
Same; Statutory Construction; Even when a reading of the plain text is already sufficient,
contemporaneous construction may still be resorted to as a means for verifying or validating the
clear textual or contextual meaning of the Constitution.—At the heart of this controversy is a
constitutional ambiguity. Definitely, foundlings have biological parents, either or both of whom
can be Filipinos. Yet, by the nature of their being foundlings, they may, at critical times, not know
their parents. Thus, this controversy must consider possibilities where parentage may be Filipino
but, due to no fault of the
438

foundling, remains unknown. Resolving this controversy hinges on constitutional interpretation.

Discerning constitutional meaning is an exercise in discovering the sovereign’s purpose so as to
identify which among competing interpretations of the same text is the more contemporarily viable
construction. Primarily, the actual words — text — and how they are situated within the whole
document — context — govern. Secondarily, when discerning meaning from the plain text (i.e.,
verba legis) fails, contemporaneous construction may settle what is more viable. Nevertheless,
even when a reading of the plain text is already sufficient, contemporaneous construction may still
be resorted to as a means for verifying or validating the clear textual or contextual meaning of the
Constitution.
Same; Same; Verba Legis Doctrine; Words must be given their ordinary meaning; this is
consistent with the basic precept of verba legis.—To the extent possible, words must be given their
ordinary meaning; this is consistent with the basic precept of verba legis. The Constitution is truly
a public document in that it was ratified and approved by a direct act of the People: exercising their
right of suffrage, they approved of it through a plebiscite. The preeminent consideration in reading
the Constitution, therefore, is the People’s consciousness: that is, popular, rather than technical-
legal, understanding. Thus: We look to the language of the document itself in our search for its
meaning. We do not of course stop there, but that is where we begin. It is to be assumed that the
words in which constitutional provisions are couched express the objective sought to be attained.
They are to be given their ordinary meaning except where technical terms are employed in which
case the significance thus attached to them prevails. As the Constitution is not primarily a lawyer’s
document, it being essential for the rule of law to obtain that it should ever be present in the
people’s consciousness, its language as much as possible should be understood in the sense they
have in common use. What it says according to the text of the provision to be construed compels
acceptance and negates the power of the courts to alter it, based on the postulate that the framers
and the people mean what they say. Thus, these are the cases where the need for construction is
reduced to a minimum.
pg. 920
Same; Same; The Constitution should be appreciated and read as a singular, whole unit — ut
magis valeat quam pereat.—Reading a constitutional provision requires awareness of its relation
with the
439
VOL. 803, SEPTEMBER 20, 2016 439

whole of the Constitution. A constitutional provision is but a constituent of a greater whole. It is

the framework of the Constitution that animates each of its components through the dynamism of
these components’ interrelations. What is called into operation is the entire document, not simply
a peripheral item. The Constitution should, therefore, be appreciated and read as a singular, whole
unit — ut magis valeat quam pereat. Each provision must be understood and effected in a way that
gives life to all that the Constitution contains, from its foundational principles to its finest fixings.
Same; Same; Our legal system is founded on the basic principle that “[j]udicial decisions applying
or interpreting the laws or the Constitution shall form part of [our] legal system.”—Reading a
certain text includes a consideration of jurisprudence that has previously considered that exact
same text, if any. Our legal system is founded on the basic principle that “judicial decisions
applying or interpreting the laws or the Constitution shall form part of [our] legal system.”
Jurisprudence is not an independent source of law. Nevertheless, judicial interpretation is deemed
part of or written into the text itself as of the date that it was originally passed. This is because
judicial construction articulates the contemporaneous intent that the text brings to effect.
Nevertheless, one must not fall into the temptation of considering prior interpretation as
immutable.
Same; Same; Contemporaneous construction and aids that are external to the text may be resorted
to when the text is capable of multiple, viable meanings.—Contemporaneous construction and aids
that are external to the text may be resorted to when the text is capable of multiple, viable
meanings. It is only then that one can go beyond the strict boundaries of the document.
Nevertheless, even when meaning has already been ascertained from a reading of the plain text,
contemporaneous construction may serve to verify or validate the meaning yielded by such
reading.
Same; Same; On an initial level, a plain textual reading readily identifies the specific provision,
which principally governs: the Constitution’s actual definition, in Article IV, Section 2, of
“natural-born citizens.” This definition must be harmonized with Section 1’s enumeration, which
includes a reference to parentage. These provisions must then be appreciated in relation to the
factual milieu of this case.—Though her parents are unknown, private respondent is a
pg. 921
440

Philippine citizen without the need for an express statement in the Constitution making her so. Her
status as such is but the logical consequence of a reasonable reading of the Constitution within its
plain text. The Constitution provides its own cues; there is not even a need to delve into the
deliberations of its framers and the implications of international legal instruments. This reading
proceeds from several levels. On an initial level, a plain textual reading readily identifies the
specific provision, which principally governs: the Constitution’s actual definition, in Article IV,
Section 2, of “natural-born citizens.” This definition must be harmonized with Section 1’s
enumeration, which includes a reference to parentage. These provisions must then be appreciated
in relation to the factual milieu of this case. The pieces of evidence before the Senate Electoral
Tribunal, admitted facts, and uncontroverted circumstances adequately justify the conclusion of
private respondent’s Filipino parentage.
Same; Citizenship; The core of citizenship is the capacity to enjoy political rights, that is, the right
to participate in government principally through the right to vote, the right to hold public office[,]
and the right to petition the government for redress of grievance.—Citizenship is a legal device
denoting political affiliation. It is the “right to have rights.” It is one’s personal and . . . permanent
membership in a political community. . . The core of citizenship is the capacity to enjoy political
rights, that is, the right to participate in government principally through the right to vote, the right
to hold public office[,] and the right to petition the government for redress of grievance.
Citizenship also entails obligations to the political community of which one is part. Citizenship,
therefore, is intimately tied with the notion that loyalty is owed to the state, considering the benefits
and protection provided by it. This is particularly so if these benefits and protection have been
enjoyed from the moment of the citizen’s birth.
Same; Same; Natural-born Citizens; A natural-born citizen is defined in Article IV, Section 2 as
one who is a citizen of the Philippines “from birth without having to perform any act to acquire
or perfect Philippine citizenship.” By necessary implication, a naturalized citizen is one who is
not natural-born.—A natural-born citizen is defined in Article IV, Section 2 as one who is a citizen
of the Philippines “from birth without having to perform any act to acquire or perfect Philippine
citizenship.” By necessary implication, a natural-
441
VOL. 803, SEPTEMBER 20, 2016 441
pg. 922
ized citizen is one who is not natural-born. Bengson III v. House of Representatives Electoral
Tribunal, 357 SCRA 545 (2001), articulates this definition by dichotomy: [O]nly naturalized
Filipinos are considered not natural-born citizens. It is apparent from the enumeration of who are
citizens under the present Constitution that there are only two classes of citizens: . . . A citizen
who is not a naturalized Filipino, i.e., did not have to undergo the process of naturalization to
obtain Philippine citizenship, necessarily is a natural-born Filipino. Former Associate Justice
Artemio Panganiban further shed light on the concept of naturalized citizens in his Concurring
Opinion in Bengson: naturalized citizens, he stated, are “former aliens or foreigners who had to
undergo a rigid procedure, in which they had to adduce sufficient evidence to prove that they
possessed all the qualifications and none of the disqualifications provided by law in order to
become Filipino citizens.”
Remedial Law; Evidence; Circumstantial Evidence; Although the Revised Rules on Evidence’s
sole mention of circumstantial evidence is in reference to criminal proceedings, the Supreme Court
(SC) has nevertheless sustained the use of circumstantial evidence in other proceedings.—
Although the Revised Rules on Evidence’s sole mention of circumstantial evidence is in reference
to criminal proceedings, this Court has nevertheless sustained the use of circumstantial evidence
in other proceedings. There is no rational basis for making the use of circumstantial evidence
exclusive to criminal proceedings and for not considering circumstantial facts as valid means for
proof in civil and/or administrative proceedings. In criminal proceedings, circumstantial evidence
suffices to sustain a conviction (which may result in deprivation of life, liberty, and property)
anchored on the highest standard or proof that our legal system would require, i.e., proof beyond
reasonable doubt. If circumstantial evidence suffices for such a high standard, so too may it suffice
to satisfy the less stringent standard of proof in administrative and quasi-judicial proceedings such
as those before the Senate Electoral Tribunal, i.e., substantial evidence.
Same; Same; Burden of Proof; Words and Phrases; Burden of proof is the duty of a party to
present evidence on the facts in issue necessary to establish his claim or defense by the amount of
evidence required by law.—“Burden of proof is the duty of a party to present evidence on the facts
in issue necessary to establish his claim or
442

defense by the amount of evidence required by law.” Burden of proof lies on the party making the
allegations; that is, the party who “alleges the affirmative of the issue” Burden of proof never shifts
from one party to another. What shifts is the burden of evidence. This shift happens when a party
makes a prima facie case in his or her favor. The other party then bears the “burden of going
pg. 923
forward” with the evidence considering that which has ostensibly been established against him or
her.
Constitutional Law; Citizenship; Foundlings; The presumption that all foundlings found in the
Philippines are born to at least either a Filipino father or a Filipino mother (and are thus natural-
born, unless there is substantial proof otherwise) arises when one reads the Constitution as a
whole, so as to “effectuate [its] whole purpose.”—The presumption that all foundlings found in
the Philippines are born to at least either a Filipino father or a Filipino mother (and are thus natural-
born, unless there is substantial proof otherwise) arises when one reads the Constitution as a whole,
so as to “effectuate [its] whole purpose.” As much as we have previously harmonized Article IV,
Section 2 with Article IV, Section 1(2), constitutional provisions on citizenship must not be taken
in isolation. They must be read in light of the constitutional mandate to defend the well-being of
children, to guarantee equal protection of the law and equal access to opportunities for public
service, and to respect human rights. They must also be read in conjunction with the Constitution’s
reasons for requiring natural-born status for select public offices. Further, this presumption is
validated by contemporaneous construction that considers related legislative enactments,
executive and administrative actions, and international instruments.
Same; Same; Same; Concluding that foundlings are not natural-born Filipino citizens is
tantamount to permanently discriminating against our foundling citizens; Concluding that
foundlings are not natural-born citizens creates an inferior class of citizens who are made to suffer
that inferiority through no fault of their own.—Concluding that foundlings are not natural-born
Filipino citizens is tantamount to permanently discriminating against our foundling citizens. They
can then never be of service to the country in the highest possible capacities. It is also tantamount
to excluding them from certain means such as professions and state scholarships, which will enable
the actualization of their aspirations. These conse-
443
VOL. 803, SEPTEMBER 20, 2016 443

quences cannot be tolerated by the Constitution, not least of all through the present politically
charged proceedings, the direct objective of which is merely to exclude a singular politician from
office. Concluding that foundlings are not natural-born citizens creates an inferior class of citizens
who are made to suffer that inferiority through no fault of their own.
Same; Equal Protection of the Laws; The equal protection clause serves as a guarantee that
“persons under like circumstances and falling within the same class are treated alike, in terms of
‘privileges conferred and liabilities enforced.’”—The equal protection clause serves as a
guarantee that “persons under like circumstances and falling within the same class are treated alike,
in terms of ‘privileges conferred and liabilities enforced.’ It is a guarantee against ‘undue favor
pg. 924
and individual or class privilege, as well as hostile discrimination or oppression of inequality.’”
Other than the anonymity of their biological parents, no substantial distinction differentiates
foundlings from children with known Filipino parents. They are both entitled to the full extent of
the state’s protection from the moment of their birth. Foundlings’ misfortune in failing to identify
the parents who abandoned them — an inability arising from no fault of their own — cannot be
the foundation of a rule that reduces them to statelessness or, at best, as inferior, second-class
citizens who are not entitled to as much benefits and protection from the state as those who know
their parents. Sustaining this classification is not only inequitable; it is dehumanizing. It condemns
those who, from the very beginning of their lives, were abandoned to a life of desolation and
deprivation.
Same; Citizenship; Foundlings; Until this, as well as the proceedings in the related case of Poe-
Llamanzares, private respondent’s natural-born status has been affirmed and reaffirmed through
various official public acts.—Our statutes on adoption allow for the recognition of foundlings’
Filipino citizenship on account of their birth. They benefit from this without having to do any act
to perfect their citizenship or without having to complete the naturalization process. Thus, by
definition, they are natural-born citizens. Specifically regarding private respondent, several acts of
executive organs have recognized her natural-born status. This status was never questioned
throughout her life; that is, until circumstances made it appear that she was a viable candidate for
President of the Philippines. Until this, as well as the proceedings in the related case of Poe-
Llamanzares, private respondent’s natural-born status has been affirmed and reaffirmed through
various official public acts. First, private respondent was issued a foundling certificate and
benefitted from the domestic adoption process. Second, on July 18, 2006, she was granted an order
of reacquisition of natural-born citizenship under Republic Act No. 9225 by the Bureau of
Immigration. Third, on October 6, 2010, the President of the Philip-
444

pines appointed her as MTRCB Chairperson — an office that requires natural-born citizenship.
Citizenship; Citizenship Retention and Reacquisition Act of 2003; Republic Act (RA) No. 9225
superseded Commonwealth Act No. 63 and RA No. 8171 specifically “to do away with the
provision in Commonwealth Act No. 63 which takes away Philippine citizenship from natural-
born Filipinos who become naturalized citizens of other countries.”—“Philippine citizenship may
be lost or reacquired in the manner provided by law.” Commonwealth Act No. 63, which was in
effect when private respondent was naturalized an American citizen on October 18, 2001, provided
in Section 1(1) that “[a] Filipino citizen may lose his citizenship . . . [b]y naturalization in a foreign
country.” Thus, private respondent lost her Philippine citizenship when she was naturalized an
American citizen. However, on July 7, 2006, she took her Oath of Allegiance to the Republic of
pg. 925
the Philippines under Section 3 of Republic Act No. 9225. Three (3) days later, July 10, 2006, she
filed before the Bureau of Immigration and Deportation a Petition for Reacquisition of her
Philippine citizenship. Shortly after, this Petition was granted. Republic Act No. 9225 superseded
Commonwealth Act No. 63 and Republic Act No. 8171 specifically “to do away with the provision
in Commonwealth Act No. 63 which takes away Philippine citizenship from natural-born Filipinos
who become naturalized citizens of other countries.”
Same; Same; Natural-born Citizens; Natural-born Philippine citizens who, after Republic Act
(RA) No. 9225 took effect, are naturalized in foreign countries “retain,” that is, keep, their
Philippine citizenship, although the effectivity of this retention and the ability to exercise the rights
and capacities attendant to this status are subject to certain solemnities (i.e., oath of allegiance
and other requirements for specific rights and/or acts, as enumerated in Section 5). On the other
hand, those who became citizens of another country before the effectivity of RA No. 9225
“reacquire” their Philippine citizenship and
445
VOL. 803, SEPTEMBER 20, 2016 445

may exercise attendant rights and capacities, also upon compliance with certain solemnities.—
Natural-born Philippine citizens who, after Republic Act 9225 took effect, are naturalized in
foreign countries “retain,” that is, keep, their Philippine citizenship, although the effectivity of this
retention and the ability to exercise the rights and capacities attendant to this status are subject to
certain solemnities (i.e., oath of allegiance and other requirements for specific rights and/or acts,
as enumerated in Section 5). On the other hand, those who became citizens of another country
before the effectivity of Republic Act No. 9225 “reacquire” their Philippine citizenship and may
exercise attendant rights and capacities, also upon compliance with certain solemnities. Read in
conjunction with Section 2’s declaration of a policy of immutability, this reacquisition is not a
mere restoration that leaves a vacuum in the intervening period. Rather, this reacquisition works
to restore natural-born status as though it was never lost at all.
Same; Same; Same; Requisites which Natural-born Filipinos who Have Been Naturalized
Elsewhere and Wish to Run for Elective Public Office Must Comply.—Natural-born Filipinos who
have been naturalized elsewhere and wish to run for elective public office must comply with all of
the following requirements: First, taking the oath of allegiance to the Republic. This effects the
retention or reacquisition of one’s status as a natural-born Filipino. This also enables the enjoyment
of full civil and political rights, subject to all attendant liabilities and responsibilities under existing
laws, provided the solemnities recited in Section 5 of Republic Act No. 9225 are satisfied. Second,
compliance with Article V, Section 1 of the 1987 Constitution, Republic Act No. 9189, otherwise
known as the Overseas Absentee Voting Act of 2003, and other existing laws. This is to facilitate
the exercise of the right of suffrage; that is, to allow for voting in elections. Third, “mak[ing] a
pg. 926
personal and sworn renunciation of any and all foreign citizenship before any public officer
authorized to administer an oath.” This, along with satisfying the other qualification requirements
under relevant laws, makes one eligible for elective public office.
Same; Same; Same; It is incorrect to intimate that private respondent’s having had to comply with
Republic Act (RA) No. 9225 shows that she is a naturalized, rather than a natural-born, Filipino
citizen.—It is incorrect to intimate that private respondent’s having
446

had to comply with Republic Act No. 9225 shows that she is a naturalized, rather than a natural-
born, Filipino citizen. It is wrong to postulate that compliance with Republic Act No. 9225
signifies the performance of acts to perfect citizenship. To do so is to completely disregard the
unequivocal policy of permanence and immutability as articulated in Section 2 of Republic Act
No. 9225 and as illuminated in jurisprudence. It is to erroneously assume that a natural-born
Filipino citizen’s naturalization elsewhere is an irreversible termination of his or her natural-born
status.
Same; Same; Same; Republic Act (RA) No. 9225 may involve extended processes not limited to
taking the Oath of Allegiance and requiring compliance with additional solemnities, but these are
for facilitating the enjoyment of other incidents to citizenship, not for effecting the reacquisition of
natural-born citizenship itself.—Although Bengson was decided while Commonwealth Act No.
63 was in force, its ruling is in keeping with Republic Act No. 9225’s policy of permanence and
immutability: “all Philippine citizens of another country shall be deemed not to have lost their
Philippine citizenship.” In Bengson’s words, the once naturalized citizen is “restored” or brought
back to his or her natural-born status. There may have been an interruption in the recognition of
this status, as, in the interim, he or she was naturalized elsewhere, but the restoration of natural-
born status expurgates this intervening fact. Thus, he or she does not become a Philippine citizen
only from the point of restoration and moving forward. He or she is recognized, de jure, as a
Philippine citizen from birth, although the intervening fact may have consequences de facto.
Republic Act No. 9225 may involve extended processes not limited to taking the Oath of
Allegiance and requiring compliance with additional solemnities, but these are for facilitating the
enjoyment of other incidents to citizenship, not for effecting the reacquisition of natural-born
citizenship itself. Therefore, it is markedly different from naturalization as there is no singular,
extended process with which the former natural-born citizen must comply.
PERLAS-BERNABE, J., Dissenting Opinion:
pg. 927
Grave Abuse of Discretion; View that an act of a court or tribunal can only be considered as
committed with grave abuse of discretion when such act is done in a capricious or whimsical
exercise of judgment as is equivalent to lack of jurisdiction.—An act of a court or
447
VOL. 803, SEPTEMBER 20, 2016 447

tribunal can only be considered as committed with grave abuse of discretion when such act is done
in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse
of discretion must be so patent and gross as to amount to an evasion of a positive duty or to a
virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where
the power is exercised in an arbitrary and despotic manner by reason of passion and hostility. In
this relation, “grave abuse of discretion arises when a lower court or tribunal patently violates
the Constitution, the law or existing jurisprudence.”
Citizenship; Jus Sanguinis Principle; View that in this case, respondent failed to present competent
and sufficient evidence to prove her blood relation to a Filipino parent which is necessary to
determine natural-born citizenship pursuant to the jus sanguinis principle.—In this case,
respondent failed to present competent and sufficient evidence to prove her blood relation to a
Filipino parent which is necessary to determine natural-born citizenship pursuant to the jus
sanguinis principle. This notwithstanding, the ponencia concludes that the following
circumstances are substantial evidence justifying the inference that respondent’s biological parents
are Filipino.
Same; View that the Supreme Court (SC) cannot make a definitive pronouncement on a
candidate’s citizenship when there is a looming possibility that he/she is not Filipino.—Case law
holds that “[m]atters dealing with qualifications for public elective office must be strictly complied
with.” The proof to hurdle a substantial challenge against a candidate’s qualifications must
therefore be solid. This Court cannot make a definitive pronouncement on a candidate’s citizenship
when there is a looming possibility that he/she is not Filipino. The circumstances surrounding
respondent’s abandonment (both as to the milieu of time and place), as well as her physical
characteristics, hardly assuage this possibility. By parity of reasoning, they do not prove that she
was born to a Filipino: her abandonment in the Philippines is just a restatement of her foundling
status, while her physical features only tend to prove that her parents likely had Filipino features
and yet it remains uncertain if their citizenship was Filipino. More so, the statistics cited —
assuming the same to be true — do not account for all births but only of those recorded. To my
mind, it is uncertain how “encompassing” was the Philippine’s civil registration system at that
time — in 1968 — to be able to conclude
pg. 928
448

that those statistics logically reflect a credible and representative sample size. And even assuming
it to be so, 1,595 were reflected as foreigners, rendering it factually possible that respondent
belonged to this class. Ultimately, the opposition against respondent’s natural-born citizenship
claim is simple but striking: the fact that her parents are unknown directly puts into question her
Filipino citizenship because she has no prima facie link to a Filipino parent from which she could
have traced her Filipino citizenship.
Same; Jus Sanguinis Principle; View that while the predicament of foundlings of having their
parents unknown would seem to entail the difficult, if not impossible, task of proving their Filipino
parentage, the current state of the law which requires evidence of blood relation to a Filipino
parent to establish natural-born citizenship under the jus sanguinis principle must be respected at
all costs.—While the predicament of foundlings of having their parents unknown would seem to
entail the difficult, if not impossible, task of proving their Filipino parentage, the current state of
the law which requires evidence of blood relation to a Filipino parent to establish natural-born
citizenship under the jus sanguinis principle must be respected at all costs. This is not to say that
the position of foundlings in relation to their endeavors for high public offices has been overlooked
in this discourse. Rather, the correction of this seeming “misfortune” — as the ponencia would
suppose — lies in legislative revision, not judicial supplication. For surely, it is not for this Court
to step in and supply additional meaning when clarity is evoked in the citizenship provisions of
the Constitution.
Same; Same; Foundlings; View that the jus sanguinis principle of citizenship established in the
1935 Constitution was subsequently carried over and adopted in the 1973 and 1987 Constitutions.
Thus, notwithstanding the existence of any treaty or generally accepted principle of international
law which purportedly evince that foundlings are accorded natural-born citizenship in the State
in which they are found, the same, nonetheless, could not be given effect as it would contravene
the Constitution.—It bears stressing that they jus sanguinis principle of citizenship established in
the 1935 Constitution was subsequently carried over and adopted in the 1973 and 1987
Constitutions. Thus, notwithstanding the existence of any treaty or generally accepted principle of
international law which purportedly evince that foundlings are accorded natural-born citizenship
in the
449
pg. 929
VOL. 803, SEPTEMBER 20, 2016 449
State in which they are found, the same, nonetheless, could not be given effect as it would
contravene the Constitution. To recall, should international law be adopted in this jurisdiction, it
would only form part of the sphere of domestic law. Being relegated to the same level as domestic
laws, they could not modify or alter, much less prevail, over the express mandate of the
Constitution. In this relation, I deem it fitting to echo the point made by Associate Justice Teresita
J. Leonardo-De Castro, likewise in her Separate Opinion before the SET: Citizenship is not
automatically conferred under the international conventions cited but will entail an affirmative
action of the State, by a national law or legislative enactment, so that the nature of citizenship, if
ever acquired pursuant thereto, is citizenship by naturalization. There must be a law by which
citizenship can be acquired. By no means can this citizenship be considered that of a natural-born
character under the principle of jus sanguinis in the Philippine Constitution.
Manuelito R. Luna for petitioner.
Poblador, Bautista & Reyes and George Erwin M. Garcia for respondent Mary Grace Poe-
Llamanzares.
LEONEN, J.:
The words of our most fundamental law cannot be read so as to callously exclude all foundlings
from public service.
When the names of the parents of a foundling cannot be discovered despite a diligent search, but
sufficient evidence is presented to sustain a reasonable inference that satisfies the quantum of proof
required to conclude that at least one or both of his or her parents is Filipino, then this should be
sufficient to establish that he or she is a natural-born citizen. When these inferences are made by
the Senate Electoral Tribunal in the exercise of its sole and exclusive prerogative to decide the
qualifications of the members of the Senate, then there is no grave abuse of discretion remediable
by either
450
pg. 930
Rule 65 of the Rules of Court or Article VIII, Section I of the Constitution.
This case certainly does not decide with finality the citizenship of every single foundling as
natural-born. The circumstances of each case are unique, and substantial proof may exist to show
that a foundling is not natural-born. The nature of the Senate Electoral Tribunal and its place in
the scheme of political powers, as devised by the Constitution, are likewise different from the other
ways to raise questions of citizenship.
Before this Court is a Petition for Certiorari1 filed by petitioner Rizalito Y. David (David). He
prays for the nullification of the assailed November 17, 2015 Decision and December 3, 2015
Resolution of public respondent Senate Electoral Tribunal in SET Case No. 001-15.2 The assailed
November 17, 2015 Decision3 dismissed the Petition for Quo Warranto filed by David, which
sought to unseat private respondent Mary Grace Poe-Llamanzares as a Senator for allegedly not
being a natural-born citizen of the Philippines and, therefore, not being qualified to hold such
office under Article VI, Section 34 of the 1987 Constitution. The assailed December 3, 2015
Resolution5 denied David’s Motion for Reconsideration.
Senator Mary Grace Poe-Llamanzares (Senator Poe) is a foundling whose biological parents are
unknown. As an infant, she was abandoned at the Parish Church of Jaro, Iloilo.6
_______________
1 Rollo, pp. 3-76. The Petition was filed under Rule 65 of the 1997 Rules of Civil Procedure.
2 Id., at p. 73.
3 Id., at pp. 227-258.
4 Const., Art. VI, Sec. 3 provides:
SECTION 3. No person shall be a Senator unless he is a natural-born citizen of the Philippines,

and, on the day of the election, is at least thirty-five years of age, able to read and write, a registered
voter, and a resident of the Philippines for not less than two years immediately preceding the day
of the election.
5 Rollo, pp. 80-83.
6 Id., at p. 8.
pg. 931
451
VOL. 803, SEPTEMBER 20, 2016 451

Edgardo Militar found her outside the church on September 3, 1968 at about 9:30 a.m.7 He later
turned her over to Mr. and Mrs. Emiliano Militar.8 Emiliano Militar reported to the Office of the
Local Civil Registrar that the infant was found on September 6, 1968.9 She was given the name
Mary Grace Natividad Contreras Militar.10 Local Civil Registrar issued a Certificate of Live
Birth/Foundling Certificate stating:
Circumstances: THE SUBJECT CHILD WAS FOUND IN THE PARISH CHURCHD [sic] OF
JARO, ON SEPTEMBER 3, 1968 AT ABOUT 9:30 A.M. BY EDGARDO MILITAR AND THE
SAID CHILD IS PRESENTLY IN THE CUSTODY OF MR. AND MRS. EMILIANO MILITAR
AT STA. ISABEL STREET, JARO . . .11
On May 13, 1974, the Municipal Court of San Juan, Rizal promulgated the Decision granting the
Petition for Adoption of Senator Poe by Spouses Ronald Allan Poe (more popularly known as
Fernando Poe, Jr.) and Jesusa Sonora Poe (more popularly known as Susan Roces).12 The
Decision also ordered the change in Senator Poe’s name from Mary Grace Natividad Contreras
Militar to Mary Grace Natividad Sonora Poe.13 October 27, 2005, Clerk of Court III Eleanor A.
Sorio certified that the Decision had become final in a Certificate of Finality.14
On April 11, 1980, the Office of Civil Registrar-Iloilo received the Decision of the San Juan Court
Municipal Court and noted on Senator Poe’s foundling certificate that she was
_______________
7 Id. See also Id., at p. 227, SET Decision.
8 Id.
9 Id., at p. 227.
10 Id., at p. 681, Poe Comment.
11 Id., at p. 8.
12 Id., at p. 681.
13 Id.
14 Id.
pg. 932
452

adopted by Spouses Ronald Allan and Jesusa Poe.15 This hand-written notation appears on
Senator Poe’s foundling certificate:
NOTE: Adopted child by the Spouses Ronald Allan Poe and Jesusa Sonora Poe as per Court Order,
Mun. Court, San Juan, Rizal, by Hon. Judge Alfredo M. Gorgonio dated May 13, 1974, under Sp.
Proc. No. 138.16
Senator Poe became a registered voter in Greenhills, San Juan, Metro Manila when she turned 18
years old.17 The Commission on Elections issued her a Voter’s Identification Card for Precinct
No. 196, Greenhills, San Juan, Metro Manila on December 13, 1986.18
On April 4, 1988, the Department of Foreign Affairs issued her a Philippine passport.19 Her
passport was renewed on April 5, 1993, May 19, 1998, October 13, 2009, December 19, 2013, and
March 18, 2014.20 Having become Senator, she was also issued a Philippine diplomatic passport
on December 19, 2013.21
Senator Poe took Development Studies at the University of the Philippines, Manila, but eventually
went to the United States in 1988 to obtain her college degree.22 In 1991, she earned a bachelor’s
degree in Political Science from Boston College, Chestnut Hill, Massachusetts.23
On July 27, 1991, Senator Poe married Teodoro Misael Daniel V. Llamanzares, both an American
and Filipino na-
_______________
15 Id.
16 Id.
17 Id., at p. 9.
18 Id.
19 Id.
pg. 933
20 Id., at p. 228.
21 Id., at p. 682.
22 Id., at pp. 9 and 682.
23 Id., at p. 9.
453
VOL. 803, SEPTEMBER 20, 2016 453

tional since birth.24 The marriage took place in Sanctuario de San Jose Parish, San Juan, Manila.25
On July 29, 1991, Senator Poe returned to the United States with her husband.26 For some time,
she lived with her husband and children in the United States.27
Senator Poe and her husband had three (3) children: Brian Daniel (Brian), Hanna MacKenzie
(Hanna), and Jesusa Anika (Anika).28 Brian was born in the United States on April 16, 1992.
Hanna was born on July 10, 1998, and Anika on June 5, 2004. Both Hanna and Anika were born
in the Philippines.29
Senator Poe was naturalized and granted American citizenship on October 18, 2001.30 She was
subsequently given a United States passport.31
Senator Poe’s adoptive father, Fernando Poe, Jr., ran for President of the Republic of the
Philippines in the 2004 National Elections.32 To support her father’s candidacy, Senator Poe and
her daughter Hanna returned to the Philippines on April 8, 2004.33 After the Elections, she
returned to the United States on July 8, 2004.34 It was during her stay in the Philippines that she
gave birth to her youngest daughter, Anika.35
Fernando Poe, Jr. was hospitalized on December 11, 2004 and eventually “slipped into a coma.”36
Senator Poe returned
_______________
24 Id., at pp. 682-683.
25 Id., at p. 228.
26 Id.
pg. 934
27 Id., at p. 9.
28 Id., at p. 683.
29 Id.
30 Id., at p. 9.
31 Id.
32 Id., at p. 683.
33 Id., at p. 9.
34 Id.
35 Id., at p. 683.
36 Id., at p. 10.
454

to the Philippines on December 13, 2004.37 On December 14, 2004, her father died.38 She stayed
in the country until February 3, 2005 to attend her father’s funeral and to attend to the settling of
his estate.39
In 2004, Senator Poe resigned from work in the United States. She never looked for work again in
the United States.40
Senator Poe decided to return home in 2005.41 After consulting her children, they all agreed to
return to the Philippines to support the grieving Susan Roces.42 In early 2005, they notified Brian
and Hanna’s schools Virginia, United States that they would be transferring to the Philippines the
following semester.43 She came back on May 24, 2005.44 Her children also arrived in the first
half of 2005.45 However, her husband stayed in the United States to “finish pending projects, and
to arrange for the sale of the family home there.”46
Following her return, Senator Poe was issued by the Bureau of Internal Revenue a Tax
Identification Number (TIN) on July 22, 2005.47
pg. 935
On July 7, 2006, Senator Poe took the Oath of Allegiance to Republic of the Philippines:48
I, Mary Grace Poe Llamanzares, solemnly swear that I will support and defend the Constitution of
the
_______________
37 Id.
38 Id.
39 Id.
40 Id., at p. 684.
41 Id., at p. 228.
42 Id., at p. 684.
43 Id.
44 Id., at p. 685.
45 Id.
46 Id.
47 Id., at p. 228.
48 Id., at p. 10.
455
VOL. 803, SEPTEMBER 20, 2016 455

Republic of the Philippines and obey the laws and legal orders promulgated by the duly constituted
authorities of the Philippines; and I hereby declare that I recognize and accept the supreme
authority of the Philippines and will maintain true faith and allegiance thereto; and that I impose
this obligation upon myself voluntarily without mental reservation or purpose of evasion.49
pg. 936
On July 10, 2006, Senator Poe filed a Petition for Retention and/or Re-acquisition of Philippine
Citizenship through Republic Act No. 9225.50 She also “filed applications for derivative
citizenship on behalf of her three children who were all below eighteen (18) years of age at that
time.”51
The Petition was granted by the Bureau of Immigration and Deportation on July 18, 2006 through
an Order signed by Associate Commissioner Roy M. Almoro for Commissioner Alipio F.
Fernandez, Jr.:52
A careful review of the documents submitted in support of the instant petition indicate that David
was a former citizen of the Republic of the Philippines being born to Filipino parents and is
presumed to be a naturalborn Philippine citizen; thereafter, became an American citizen and is
now a holder of an American passport; was issued an ACT and ICR and has taken her oath of
allegiance to the Republic of the Philippines on July 7, 2006 and so is thereby deemed to have
reacquired her Philippine Citizenship.53 (Emphasis in the original)
In the same Order, Senator Poe’s children were “deemed Citizens of the Philippines in accordance
with Section 4 of R[epublic] A[ct] No. 9225.”54 Until now, the Order “has not
_______________
49 Id., at p. 685.
50 Id., at p. 228.
51 Id., at p. 686.
52 Id., at p. 228.
53 Id., at p. 686.
54 Id.
456

been set aside by the Department of Justice or any other agency of Government.”55
pg. 937
On July 31, 2006, the Bureau of Immigration issued Identification Certificates in the name of
Senator Poe and her children.56 It stated that Senator Poe is a “citizen of the Philippines pursuant
to the Citizenship Retention and Re-acquisition Act of 2003 . . . in relation to Administrative Order
No. 91, Series of 2004 and Memorandum Circular No. AFF-2-005 per Office Order No. AFF-06-
9133 signed Associate Commissioner Roy M. Almoro dated July 18, 2006.”57
Senator Poe became a registered voter of Barangay Santa Lucia, San Juan City on August 31,
2006.58
Senator Poe made several trips to the United States of America between 2006 and 2009 using her
United States Passport No. 170377935.59 She used her passport “after having taken her Oath of
Allegiance to the Republic on 7 July 2006, but not after she has formally renounced her American
citizenship on 20 October 2010.”60 The following are the flight records given by the Bureau of
Immigration:
_______________
55 Id.
56 Id., at pp. 686-687.
57 Id., at p. 687.
58 Id.
59 Id., at p. 256.
60 Id.
457
VOL. 803, SEPTEMBER 20, 2016 457

Arrivals Flight No.

November 4, 2006 SQ076
July 23, 2007 PR731
November 5, 2007 PR337
May 8, 2008 PR103
pg. 938
October 5, 2008 PR359
May 21, 2009 PR105
August 3, 2009 PR733
November 15, 2009 PR10361
On October 6, 2010, President Benigno Simeon Aquino III appointed Senator Poe as Chairperson
of the Movie and Television Review and Classification Board (MTRCB).62 On October 20, 2010,
Senator Poe executed an Affidavit of Renunciation of Allegiance to the United States of America
and Renunciation of American Citizenship,63 stating:
I, MARY GRACE POE-LLAMANZARES, Filipino, of legal age, and presently residing at No.
107 Rodeo Drive, Corinthian Hills, Quezon City, Philippines, after having been duly sworn to in
accordance with the law, do hereby depose and state that with this affidavit, I hereby expressly
and voluntarily renounce my United States nationality/American citizenship, together with all
rights and privileges and all duties and allegiance and fidelity thereunto pertaining. I make this
renunciation intentionally, voluntarily, and of my own free will, free of any duress or undue
influence.64 (Emphasis in the original)
The affidavit was submitted to the Bureau of Immigration on October 21, 2010.65 On October 21,
2010, she took her Oath
_______________
61 Id.
62 Id., at p. 10.
63 Id., at p. 687.
64 Id., at pp. 687-688.
65 Id., at p. 688.
458
pg. 939
of Office as MTRCB Chairperson and assumed office on October 26, 2010.66 Her oath of office
stated:
PANUNUMPA SA KATUNGKULAN
Ako, si MARY GRACE POE LLAMANZARES, na itinalaga sa katungkulan bilang Chairperson,

Movie and Television Review and Classification Board, ay taimtim na nanunumpa na tutuparin ko
nang buong husay at katapatan, sa abot ng aking kakayahan, ang mga tungkulin ng aking
kasalukuyang katungkulan at ng mga iba pang pagkaraan nito’y gagampanan ko sa ilalim ng
Republika ng Pilipinas; na aking itataguyod at ipagtatanggol ang Saligan Batas ng Pilipinas; na
tunay na mananalig at tatalima ako rito; na susundin ko ang mga batas, mga kautusang lega, at
mga dekretong pinaiiral ng mga sadyang itinakdang may kapangyarihan ng Republika ng
Pilipinas; at kusa kong babalikatin ang pananagutang ito, nang walang ano mang pasubali o
hangaring umiwas.
Kasihan nawa ako ng Diyos.
NILAGDAAN AT PINANUMPAAN sa harap ko ngayong ika-21 ng Oktubre 2010, Lungsod ng

Maynila, Pilipinas.67 (Emphasis in the original)
Senator Poe executed an Oath/Affirmation of Renunciation of Nationality of the United States68

in the presence of Vice Consul Somer E. Bessire-Briers on July 12, 2011.69 On this occasion, she
also filled out the Questionnaire Information for Determining Possible Loss of U.S. Citizenship.70
On December 9, 2011, Vice Consul Jason Galian executed a Certificate of Loss of Nationality for
Senator Poe.71 The certificate was ap-
_______________
68 Id., at p. 229.
66 Id., at p. 229.
67 Id., at p. 689, Poe Comment.
69 Id.
70 Id.
pg. 940
71 Id.
459
VOL. 803, SEPTEMBER 20, 2016 459

proved by the Overseas Citizen Service, Department of State, on February 3, 2012.72
Senator Poe decided to run as Senator in the 2013 Elections.73 On September 27, 2012, she
executed a Certificate of Candidacy, which was submitted to the Commission on Elections on
October 2, 2012.74 She won and was declared as Senator-elect on May 16, 2013.75
David, a losing candidate in the 2013 Senatorial Elections, filed before the Senate Electoral
Tribunal a Petition for Quo Warranto on August 6, 2015.76 He contested the election of Senator
Poe for failing to “comply with the citizenship and residency requirements mandated by the 1987
Constitution.”77
Thereafter, the Senate Electoral Tribunal issued Resolution No. 15-01 requiring David “to correct
the formal defects of his petition.”78 David filed his amended Petition on August 17, 2015.79
On August 18, 2015, Resolution No. 15-02 was issued by the Senate Electoral Tribunal, through
its Executive Committee, ordering the Secretary of the Senate Electoral Tribunal to summon
Senator Poe to file an answer to the amended Petition.80
Pending the filing of Senator Poe’s answer, David filed a Motion Subpoena the Record of
Application of Citizenship Re-acquisition and related documents from the Bureau of Immigration
on August 25, 2015.81 The documents requested in-
_______________
72 Id.
73 Id.
74 Id.
75 Id.
76 Id.
77 Id.
pg. 941
78 Id., at p. 230.
79 Id.
80 Id.
81 Id.
460

cluded Senator Poe’s record of travels and NSO kept Birth Certificate.82 On August 26, 2015, the
Senate Electoral Tribunal issued Resolution No. 15-04 granting the Motion.83 The same
Resolution directed the Secretary of the Tribunal to issue a subpoena to the concerned officials of
the Bureau of Immigration and the National Statistics Office.84 The subpoenas ordered the
officials to appear on September 1, 2015 at 10:00 a.m. before the Office of the Secretary of the
Senate bearing three (3) sets of the requested documents.85 The subpoenas were complied with
by both the Bureau of Immigration and the National Statistics Office on September 1, 2015.86
On September 1, 2015, Senator Poe submitted her Verified Answer with (1) Prayer for Summary
Dismissal; (2) Motion for Preliminary Hearing on Grounds for Immediate Dismissal/Affirmative
Defenses; (3) Motion to Cite David for Direct Contempt of Court; and (4) Counterclaim for
Indirect Contempt of Court.87
On September 2, 2015, the Senate Electoral Tribunal issued Resolution No. 15-05 requiring the
parties to file a preliminary conference brief on or before September 9, 2015.88 The Resolution
also set the Preliminary Conference on September 11, 2015.89 During the Preliminary Conference,
the parties “agreed to drop the issue of residency on the ground of prescription.”90
Oral arguments were held by the Senate Electoral Tribunal on September 21, 2015.91 The parties
were then “required to
_______________
82 Id.
83 Id.
84 Id.
pg. 942
85 Id.
86 Id.
87 Id.
88 Id., at p. 231.
89 Id.
90 Id.
91 Id.
461
VOL. 803, SEPTEMBER 20, 2016 461

submit their respective [memoranda], without prejudice to the submission of DNA evidence by
[Senator Poe] within thirty (30) days from the said date.”92
On October 21, 2015, Senator Poe moved to extend for 15 days the submission of DNA test
results.93 The Senate Electoral Tribunal granted the Motion on October 27, 2015 through
Resolution No. 15-08.94 On November 5, 2015, Senator Poe filed a Manifestation regarding the
results of DNA Testing,95 which stated that “none of the tests that [Senator Poe] took provided
results that would shed light to the real identity of her biological parents.”96 The Manifestation
also stated that Senator Poe was to continue to find closure regarding the issue and submit any
development to the Senate Electoral Tribunal. Later, Senator Poe submitted “the issue of her
natural-born Filipino citizenship as a foundling for resolution upon the legal arguments set forth
in her submissions to the Tribunal.”97 On November 6, 2015, through Resolution No. 15-10, the
Senate Electoral Tribunal “noted the [M]anifestation and considered the case submitted for
resolution.”98
On November 17, 2015, the Senate Electoral Tribunal promulgated its assailed Decision finding
Senator Poe to be a natural-born citizen and, therefore, qualified to hold office as Senator.99 The
Decision stated:
We rule that Respondent is a natural-born citizen under the 1935 Constitution and continue to be
a natural-born citizen as defined under the 1987 Constitution,
_______________
pg. 943
92 Id.
93 Id.
94 Id.
95 Id.
96 Id.
97 Id.
98 Id.
99 Id., at p. 257.
462

as she is a citizen of the Philippines from birth, without having to perform any act to acquire or
perfect (her) Philippine citizenship.
....
In light of our earlier pronouncement that Respondent is a natural-born Filipino citizen,

Respondent validly reacquired her natural-born Filipino citizenship upon taking her Oath of
Allegiance to the Republic of the Philippines, as required under Section 3 of R.A. No. 9225.
Under Section 11 of B.I. Memorandum Circular No. AFF 05-002 (the Revised Rules
Implementing R.A. No. 9225), the foregoing Oath of Allegiance is the “final act” to reacquire
natural-born Philippine citizenship.
....
pg. 944
To repeat, Respondent never used her USA passport from the moment she renounced her American
citizenship on 20 October 2010. She remained solely a natural-born Filipino citizen from that time
on until today.
WHEREFORE, in view of the foregoing, the petition for quo warranto is DISMISSED.
SO ORDERED.100 (Citations omitted)
On November 23, 2015, David moved for reconsideration.101 The Senate Electoral Tribunal
issued Resolution No. 15-11 on November 24, 2015, giving Senator Poe five (5) days to comment
on the Motion for Reconsideration.102
Senator Poe filed her Comment/Opposition to the Motion for Reconsideration on December 1,
2015.103 David’s Motion for
_______________
100 Id., at pp. 253-257.
101 Id., at pp. 84-100.
102 Id., at p. 80, SET Resolution No. 15-12.
103 Id., at p. 81.
463
VOL. 803, SEPTEMBER 20, 2016 463

Reconsideration was denied by the Senate Electoral Tribunal on December 3, 2015:104
WHEREFORE, the Tribunal resolves to DENY the Verified Motion for Reconsideration (of the
Decision promulgated on 17 November 2015) of David Rizalito Y. David dated 23 November
2015.
pg. 945
The Tribunal further resolves to CONFIRM Resolution No. 15-11 dated 24 November 2015 issued
by the Executive Committee of the Tribunal; to NOTE the Comment/Opposition filed by counsel
for Respondent on 01 December 2015; to GRANT the motion for leave to appear and submit
memorandum as amici curiae filed by Dean Arturo de Castro [and to] NOTE the Memorandum
(for Volunteer Amicus Curiae) earlier submitted by Dean de Castro before the Commission on
Elections in SPA No. 15-139 (DC), entitled “Amado D. Valdez, Petitioner, versus Mary Grace
Natividad Sonora Poe Llaman[z]ares, Respondent.”
On December 8, 2015, the Senate Electoral Tribunal’s Resolution was received by David.106 On
December 9, 2015, David filed the present Petition for Certiorari before this Court.107
On December 16, 2015, this Court required the Senate Electoral Tribunal and Senator Poe to
comment on the Petition “within a non-extendible period of fifteen (15) days from notice.”108 The
Resolution also set oral arguments on January 19, 2016.109 The Senate Electoral Tribunal, through
the Office of the Solicitor General, submitted its Comment on December
_______________
104 Id., at pp. 80-83.
105 Id., at p. 82.
106 Id., at p. 7.
107 Id., at pp. 7-8.
108 Id., at p. 647, SET Comment.
109 Id.
464

30, 2015.110 Senator Poe submitted her Comment on January 4, 2016.111
pg. 946
This case was held in abeyance pending the resolution of the Commission on Elections case on the
issue of private respondent’s citizenship.
For resolution is the sole issue of whether the Senate Electoral Tribunal committed grave abuse of
discretion amounting to lack or excess of jurisdiction in dismissing petitioner’s Petition for Quo
Warranto based on its finding that private respondent is a natural-born Filipino citizen, qualified
to hold a seat as Senator under Article VI, Section 3 of the 1987 Constitution.
Petitioner comes to this Court invoking our power of judicial review through a petition for
certiorari under Rule 65 of the 1997 Rules of Civil Procedure. He seeks to annul the assailed
Decision and Resolution of the Senate Electoral Tribunal, which state its findings and conclusions
on private respondent’s citizenship.
Ruling on petitioner’s plea for post-judgment relief calls for a consideration of two (2) factors:
first, the breadth of this Court’s competence relative to that of the Senate Electoral Tribunal; and
second, the nature of the remedial vehicle — a petition for certiorari — through which one who
is aggrieved by a judgment of the Senate Electoral Tribunal may seek relief from this Court.
_______________
110 Id., at p. 669.
111 Id., at pp. 677-828.
465
VOL. 803, SEPTEMBER 20, 2016 465

I.A
The Senate Electoral Tribunal, along with the House of Representatives Electoral Tribunal, is a
creation of Article VI, Section 17 of the 1987 Constitution:112
pg. 947
ARTICLE VI
The Legislative Department
....
SECTION 17. The Senate and the House of Representatives shall each have an Electoral
Tribunal which shall be the sole judge of all contests relating to the election, returns, and
qualifications of their respective Members. Each Electoral Tribunal shall be composed of nine
Members, three of whom shall be Justices of the Supreme Court to be designated by the Chief
Justice, and the remaining six shall be Members of the Senate or the House of Representatives, as
the case may be, who shall be chosen on the basis of proportional representation from the political
parties and the parties or organizations registered under the party-list system represented therein.
The senior Justice in the Electoral Tribunal shall be its Chairman. (Emphasis supplied)
Through Article VI, Section 17, the Constitution segregates from all other judicial and quasi-
judicial bodies (particularly,
_______________
112 A counterpart electoral tribunal for the positions of President and Vice President was also
created by the seventh paragraph of Article VII, Section 4 of the 1987 Constitution.
Const., Art. VII, Sec. 4 provides:
SECTION 4. ...
....
The Supreme Court, sitting En Banc, shall be the sole judge of all contests relating to the
election, returns, and qualifications of the President or Vice President, and may promulgate
its rules for the purpose.
466
pg. 948
courts and the Commission on Elections)113 the power to rule on contests114 relating to the
election, returns, and qualifica-
_______________
113 Trial courts and the Commission on Elections still exercise jurisdiction over contests relating
to the election, returns, and qualifications of local elective offices.
Const., Art. IX-C, Sec. 2(2) provides:
SECTION 2. The Commission on Elections shall exercise the following powers and
functions:
....
(2) Exercise exclusive original jurisdiction over all contests relating to the elections,
returns, and qualifications of all elective regional, provincial, and city officials, and appellate
jurisdiction over all contests involving elective municipal officials decided by trial courts of
general jurisdiction or involving elective barangay officials decided by trial courts of limited
jurisdiction.
Decisions, final orders, or rulings of the Commission on election contests involving elective
municipal and barangay offices shall be final, executory, and not appealable.
114 The term “contest” refers to post-election disputes. In Tecson v. Commission on

Elections, 468 Phil. 421; 424 SCRA 277 (2004) [Per J. Vitug, En Banc], this Court referring
to the counterpart electoral tribunal for the President and Vice President — the Presidential
Electoral Tribunal — explained: “Ordinary usage would characterize a “contest” in
reference to a post election scenario. Election contests consist of either an election protest
or a quo warranto which, although two distinct remedies, would have one objective in view,
i.e., to dislodge the whining candidate from office. A perusal of the phraseology in Rule 12,
Rule 13, and Rule 14 of the “Rules of the Presidential Electoral Tribunal” promulgated by
the Supreme Court en banc on 18 April 1992, would support this premise. . . .
“The rules categorically speak of the jurisdiction of the tribunal over contests relating to the
election, returns and qualifications of the “President” or “Vice President,” of the Philippines,
and not of “candidates” for President or Vice President. A quo warranto proceeding is
generally defined as being an action against a person who usurps, intrudes into, or
unlawfully holds or exercises
pg. 949
467
VOL. 803, SEPTEMBER 20, 2016 467

tions of members of the Senate (as well as of the House of Representatives). These powers are
granted to a separate and distinct constitutional organ. There are two (2) aspects to the exclusivity
of the Senate Electoral Tribunal’s power. The power to resolve such contests is exclusive to any
other body. The resolution of such contests is its only task; it performs no other function.
The 1987 Constitution is not the first fundamental law to introduce into our legal system an
“independent, impartial and nonpartisan body attached to the legislature and specially created for
that singular purpose.”115 The 1935 Constitution similarly created an Electoral Commission,
independent from the National Assembly, to be the sole judge of all contests relating to members
of the National Assembly.116 This
_______________
a public office. In such context, the election contest can only contemplate a post
election scenario. In Rule 14, only a registered candidate who would have received either
the second or third highest number of votes could file an election protest. This rule again
presupposes a post election scenario.
“It is fair to conclude that the jurisdiction of the Supreme Court [sitting as the Presidential
Electoral Tribunal], defined by Section 4, paragraph 7, of the 1987 Constitution, would not
include cases directly brought before it, questioning the qualifications of a candidate for the
presidency or vice presidency before the elections are held.”
115 Lazatin v. House Electoral Tribunal, 250 Phil. 390, 399; 168 SCRA 391, 401 (1988). [Per J.
Cortes, En Banc].
116 Const. (1935), Art. VI, Sec. 4 provides:
SECTION 4. There shall be an Electoral Commission composed of three Justices of the

Supreme Court designated by the Chief Justice, and of six Members chosen by the National
Assembly, three of whom shall be nominated by the party having the largest number of
votes, and three by the party having the second largest number of votes therein. The senior
Justice in the Commission shall be its Chairman. The Electoral Commission shall be the sole
judge of all contests relating to the elec
468
pg. 950
was a departure from the system introduced by prior organic acts enforced under American
colonial rule — namely: the Philippine Bill of 1902 and the Jones Law of 1916 — which vested
the power to resolve such contests in the legislature itself. When the 1935 Constitution was
amended to make room for a bicameral legislature, a corresponding amendment was made for
there to be separate electoral tribunals for each chamber of Congress.117 The 1973 Constitution
did away with these electoral tribunals, but they have since been restored by the 1987 Constitution.
All constitutional provisions — under the 1935 and 1987 Constitutions — which provide for the
creation of electoral tribunals (or their predecessor, the Electoral Commission), have been
unequivocal in their language. The electoral tribunal shall be the “sole” judge.
In Lazatin v. House Electoral Tribunal:118
The use of the word “sole” emphasizes the exclusive character of the jurisdiction conferred. . . .
The exercise of the power by the Electoral Commission under the 1935 Constitution has been
described as “intended to be as
_______________
tion, returns, and qualifications of the Members of the National Assembly.
117 Const. (1935 amended), Art. VI, Sec. 11 provides:
SECTION 11. The Senate and the House of Representatives shall have an Electoral
Tribunal which shall be the sole judge of all contests relating to the election, returns, and
qualifications of their respective Members. Each Electoral Tribunal shall be composed of
nine Members, three of whom shall be Justices of the Supreme Court to be designated by
the Chief Justice, and the remaining six shall be Members of the Senate or the House of
Representatives, as the case may be, who shall be chosen by each House, three upon
nomination of the party having the largest number of votes and three of the party having the
second largest numbers of votes therein. The senior Justice in each Electoral Tribunal shall
be its Chairman.
118 Supra note 115.
469
VOL. 803, SEPTEMBER 20, 2016 469
pg. 951
complete and unimpaired as if it had remained originally in the legislature[.]” Earlier, this grant of
power to the legislature was characterized by Justice Malcolm as “full, clear and complete.” . . .
Under the amended 1935 Constitution, the power was unqualifiedly reposed upon the Electoral
Tribunal . . . and it remained as full, clear and complete as that previously granted the legislature
and the Electoral Commission. . . . The same may be said with regard to the jurisdiction of the
Electoral Tribunals under the 1987 Constitution.119
Exclusive, original jurisdiction over contests relating to the election, returns, and qualifications of
the elective officials falling within the scope of their powers is, thus, vested in these electoral
tribunals. It is only before them that post-election challenges against the election, returns, and
qualifications of Senators and Representatives (as well as of the President and the Vice President,
in the case of the Presidential Electoral Tribunal) may be initiated.
The judgments of these tribunals are not beyond the scope of any review. Article VI, Section 17’s
stipulation of electoral tribunals’ being the “sole” judge must be read in harmony with Article VIII,
Section 1’s express statement that “[j]udicial power includes the duty of the courts of justice . . .
to determine whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the Government.” Judicial review
is, therefore, still possible. In Libanan v. House of Representatives Electoral Tribunal:120
The Court has stressed that “. . . so long as the Constitution grants the [House of Representatives
Electoral Tribunal] the power to be the sole judge of all contests relating to the election, returns
and qualifications of members of the House of Representatives, any final ac-
_______________
119 Id., at pp. 399-400; p. 401.
120 347 Phil. 797; 283 SCRA 520 (1997) [Per J. Vitug, En Banc].
470

tion taken by the [House of Representatives Electoral Tribunal] on a matter within its jurisdiction
shall, as a rule, not be reviewed by this Court . . . the power granted to the Electoral Tribunal . . .
pg. 952
excludes the exercise of any authority on the part of this Court that would in any wise restrict it or
curtail it or even affect the same.”
The Court did recognize, of course, its power of judicial review in exceptional cases. In Robles v.
[House of Representatives Electoral Tribunal], the Court has explained that while the judgments
of the Tribunal are beyond judicial interference, the Court may do so, however, but only “in the
exercise of this Court’s so-called extraordinary jurisdiction, . . . upon a determination that the
Tribunal’s decision or resolution was rendered without or in excess of its jurisdiction, or with
grave abuse of discretion or paraphrasing Morrero, upon a clear showing of such arbitrary and
improvident use by the Tribunal of its power as constitutes a denial of due process of law, or upon
a demonstration of a very clear unmitigated error, manifestly constituting such grave abuse of
discretion that there has to be a remedy for such abuse.”
In the old, but still relevant, case of Morrero v. Bocar, the Court has ruled that the power of the
Electoral Commission “is beyond judicial interference except, in any event, upon a clear showing
of such arbitrary and improvident use of power as will constitute a denial of due process.” The
Court does not, to paraphrase it in Co v. [House of Representatives Electoral Tribunal], venture
into the perilous area of correcting perceived errors of independent branches of the Government;
it comes in only when it has to vindicate a denial of due process or correct an abuse of discretion
so grave or glaring that no less than the Constitution itself calls for remedial action.121 (Emphasis
supplied, citations omitted)
This Court reviews judgments of the House and Senate Electoral Tribunals not in the exercise of
its appellate juris-
_______________
121 Id., at pp. 804-805; pp. 529-530.
471
VOL. 803, SEPTEMBER 20, 2016 471

diction. Our review is limited to a determination of whether there has been an error in jurisdiction,
not an error in judgment.
I.B
pg. 953
A party aggrieved by the rulings of the Senate or House Electoral Tribunal invokes the jurisdiction
of this Court through the vehicle of a petition for certiorari under Rule 65 of the 1997 Rules of
Civil Procedure. An appeal is a continuation of the proceedings in the tribunal from which the
appeal is taken. A petition for certiorari is allowed in Article VIII, Section 1 of the Constitution
and described in the 1997 Rules of Civil Procedure as an independent civil action.122 The viability
of such a petition is premised on an allegation of “grave abuse of discretion.”123
_______________
122 See J. Leonen, Concurring Opinions in Rappler, Inc. v. Bautista, G.R. No. 222702, April 5,
2016, 788 SCRA 442, 462-463 [Per J. Carpio, En Banc] and in Villanueva v. Judicial and Bar
Council, G.R. No. 211833, April 7, 2015, 755 SCRA 182, 237 [Per J. Reyes, En Banc].
123 Rules of Court, Rule 65, Sec. 1 provides:
SECTION 1. Petition for certiorari.—When any tribunal, board or officer exercising

judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require.
The petition shall be accompanied by a certified true copy of the judgment, order or
resolution subject thereof, copies of all pleadings and documents relevant and pertinent
thereto, and a sworn certification of non-forum shopping as provided in the third paragraph
of Section 3, Rule 46.
472

The term “grave abuse of discretion” has been generally held to refer to such arbitrary, capricious,
or whimsical exercise of judgment as is tantamount to lack of jurisdiction:
[T]he abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or
a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as
pg. 954
where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility.
Mere abuse of discretion is not enough: it must be grave.124
There is grave abuse of discretion when a constitutional organ such as the Senate Electoral
Tribunal or the Commission on Elections, makes manifestly gross errors in its factual inferences
such that critical pieces of evidence, which have been nevertheless properly introduced by a party,
or admitted, or which were the subject of stipulation, are ignored or not accounted for.125
A glaring misinterpretation of the constitutional text or of statutory provisions, as well as a

misreading or misapplication of the current state of jurisprudence, is also considered grave abuse
of discretion.126 The arbitrariness consists in the disregard of the current state of our law.
Adjudication that fails to consider the facts and evidence or frivolously departs from settled
principles engenders a strong suspicion of partiality. This can be a badge of hostile intent against
a party.
_______________
124 Mitra v. Commission on Elections, 636 Phil. 753, 777; 622 SCRA 744, 765 (2010) [Per J.
Brion, En Banc].
125 Abosta Shipmanagement Corporation v. National Labor Relations Commission (First

Division), 670 Phil. 136, 151; 654 SCRA 505, 519 (2011) [Per J. Brion, Second Division].
126 Nightowl Watchman & Security Agency, Inc. v. Lumahan, G.R. No. 212096, October 14,
2015, 772 SCRA 638, 649 [Per J. Brion, Second Division].
473
VOL. 803, SEPTEMBER 20, 2016 473

Writs of certiorari have, therefore, been issued: (a) where the tribunal’s approach to an issue is
premised on wrong considerations and its conclusions founded on a gross misreading, if not
misrepresentation, of the evidence;127 (b) where a tribunal’s assessment of a case is “far from
reasonable[,] [and] based solely on very personal and subjective assessment standards when the
law is replete with standards that can be used”;128 “(c) where the tribunal’s action on the
grossly unreasonable”;129 and (d)
pg. 955
_______________
127 Mitra v. Commission on Elections, supra note 124 at pp. 777-778, 782; pp. 771-772, 778.
128 Id., at p. 787; p. 777.
129 Id., at p. 778; p. 767. In Mitra, this Court faulted the Commission on Elections for relying on
very select facts that appeared to have been appreciated precisely in such a manner as to make it
appear that the candidate whose residence was in question was not qualified. Viewing these facts
in isolation indicated a practically deliberate, ill-intentioned intent at sustaining a previously-
conceived myopic conclusion:
“In considering the residency issue, the [Commission on Elections] practically focused solely on
its consideration of Mitra’s residence at Maligaya Feedmill, on the basis of mere photographs of
the premises. In the [Commission on Elections’] view (expressly voiced out by the Division and
fully concurred in by the En Banc), the Maligaya Feedmill building could not have been Mitra’s
residence because it is cold and utterly devoid of any indication of Mitra’s personality and that it
lacks loving attention and details inherent in every home to make it one’s residence. This was the
main reason that the [Commission on Elections] relied upon for its conclusion.
“Such assessment, in our view, based on the interior design and furnishings of a dwelling as shown
by and examined only through photographs, is far from reasonable; the [Commission on Elections]
thereby determined the fitness of a dwelling as a person’s residence based solely on very personal
and subjective assessment standards when the law is replete with standards that can be used. Where
a dwelling qualifies as a residence — i.e., the dwelling where a person permanently intends to
return to and to remain — his or her capac
474

where the tribunal invokes erroneous or irrelevant considerations in resolving an issue.130
I.C
We find no basis for concluding that the Senate Electoral Tribunal acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction.
pg. 956
The Senate Electoral Tribunal’s conclusions are in keeping with a faithful and exhaustive reading
of the Constitution, one that proceeds from an intent to give life to all the aspirations of all its
provisions.
Ruling on the Petition for Quo Warranto initiated by petitioner, the Senate Electoral Tribunal was
confronted with a novel legal question: the citizenship status of children whose biological parents
are unknown, considering that the Constitution, in Article IV, Section 1(2) explicitly makes
reference to one’s father or mother. It was compelled to exercise its original jurisdiction in the face
of a constitutional ambiguity that, at that point, was without judicial precedent.
Acting within this void, the Senate Electoral Tribunal was only asked to make a reasonable
interpretation of the law while heedfully considering the established personal circum-
_______________
ity or inclination to decorate the place, or the lack of it, is immaterial.”
130 In Varias v. Commission on Elections, 626 Phil. 292, 314-315; 617 SCRA 214, 238-239
(2010) [Per J. Brion, En Banc], this Court, citing Pecson v. Commission on Elections, 595 Phil.
1214, 1226; 575 SCRA 634, 649 (2008) [Per J. Brion, En Banc] stated: “[A] court abuses its
discretion when it lacks jurisdiction, fails to consider and make a record of the factors relevant to
its determination, relies on clearly erroneous factual findings, considers clearly irrelevant or
improper factors, clearly gives too much weight to one factor, relies on erroneous conclusions of
law or equity, or misapplies its factual or legal conclusions.”
475
VOL. 803, SEPTEMBER 20, 2016 475

stances of private respondent. It could not have asked the impossible of private respondent, sending
her on a proverbial fool’s errand to establish her parentage, when the controversy before it arose
because private respondent’s parentage was unknown and has remained so throughout her life.
The Senate Electoral Tribunal knew the limits of human capacity. It did not insist on burdening
private respondent with conclusively proving, within the course of the few short months, the one
thing that she has never been in a position to know throughout her lifetime. Instead, it
conscientiously appreciated the implications of all other facts known about her finding. Therefore,
it arrived at conclusions in a manner in keeping with the degree of proof required in proceedings
before a quasi-judicial body: not absolute certainty, not proof beyond reasonable doubt or
preponderance of evidence, but “substantial evidence, or that amount of relevant evidence which
a reasonable mind might accept as adequate to justify a conclusion.”131
pg. 957
In the process, it avoided setting a damning precedent for all children with the misfortune of having
been abandoned by their biological parents. Far from reducing them to inferior, second-class
citizens, the Senate Electoral Tribunal did justice to the Constitution’s aims of promoting and
defending the well-being of children, advancing human rights, and guaranteeing equal protection
of the laws and equal access to opportunities for public service.
II
Article VI, Section 3 of the 1987 Constitution spells out the requirement that “[n]o person shall be
a Senator unless he [or she] is a natural-born citizen of the Philippines.”
Petitioner asserts that private respondent is not a natural-born citizen and, therefore, not qualified
to sit as Senator of
_______________
476

the Republic, chiefly on two (2) grounds. First, he argues that as a foundling whose parents are
unknown, private respondent fails to satisfy the jus sanguinis principle: that is, that she failed to
establish her Filipino “blood line,” which is supposedly the essence of the Constitution’s
determination of who are natural-born citizens of the Philippines. Proceeding from this first
assertion, petitioner insists that as private respondent was never a natural-born citizen, she could
never leave reverted to natural-born status despite the performance of acts that ostensibly comply
with Republic Act No. 9225, otherwise known as the Citizenship Retention and Re-acquisition
Act of 2003.
Petitioner’s case hinges on the primacy he places over Article IV, Section 1 of the 1987
Constitution and its enumeration of who are Filipino citizens, more specifically on Section 1(2),
which identifies as citizens “[t]hose whose fathers or mothers are citizens of the Philippines.”
Petitioner similarly claims that, as private respondent’s foundling status is settled, the burden to
prove Filipino parentage was upon her. With private respondent having supposedly failed to
discharge this burden, the supposed inevitable conclusion is that she is not a natural-born Filipino.
pg. 958
III
At the heart of this controversy is a constitutional ambiguity. Definitely, foundlings have

biological parents, either or both of whom can be Filipinos. Yet, by the nature of their being
foundlings, they may, at critical times, not know their parents. Thus, this controversy must consider
possibilities where parentage may be Filipino but, due to no fault of the foundling, remains
unknown.132 Resolving this controversy hinges on constitutional interpretation.
_______________
132 Const., Art. IV, Sec. 1(2):
SECTION 1. The following are citizens of the Philippines:
....
477
VOL. 803, SEPTEMBER 20, 2016 477

Discerning constitutional meaning is an exercise in discovering the sovereign’s purpose so as to

identify which among competing interpretations of the same text is the more contemporarily viable
construction. Primarily, the actual words — text — and how they are situated within the whole
document — context — govern. Secondarily, when discerning meaning from the plain text (i.e.,
verba legis) fails, contemporaneous construction may settle what is more viable. Nevertheless,
even when a reading of the plain text is already sufficient, contemporaneous construction may still
be resorted to as a means for verifying or validating the clear textual or contextual meaning of the
Constitution.
III.A
pg. 959
The entire exercise of interpreting a constitutional provision must necessarily begin with the text
itself. The language of the provision being interpreted is the principal source from which this Court
determines constitutional intent.133
To the extent possible, words must be given their ordinary meaning; this is consistent with the
basic precept of verba legis.134 The Constitution is truly a public document in that it was ratified
and approved by a direct act of the People: exercising their right of suffrage, they approved of it
through a plebiscite. The preeminent consideration in reading the Constitution, therefore, is the
People’s consciousness: that is, popular, rather than technical-legal, understanding. Thus:
_______________
(2) Those whose fathers or mothers are citizens of the Philippines[.]
133 Ang Bagong Bayani-OFW Labor Party v. Commission on Elections, 412 Phil. 308, 338; 359
SCRA 698, 724 (2001) [Per J. Panganiban, En Banc].
134 See J. Leonen, Dissenting Opinion in Chavez v. Judicial and Bar Council, 709 Phil. 478, 501-
523; 696 SCRA 496, 546 (2013) [Per J. Mendoza, En Banc].
478

We look to the language of the document itself in our search for its meaning. We do not of course
stop there, but that is where we begin. It is to be assumed that the words in which constitutional
provisions are couched express the objective sought to be attained. They are to be given their
ordinary meaning except where technical terms are employed in which case the significance thus
attached to them prevails. As the Constitution is not primarily a lawyer’s document, it being
essential for the rule of law to obtain that it should ever be present in the people’s consciousness,
its language as much as possible should be understood in the sense they have in common use. What
it says according to the text of the provision to be construed compels acceptance and negates the
power of the courts to alter it, based on the postulate that the framers and the people mean what
they say. Thus, these are the cases where the need for construction is reduced to a minimum.135
(Emphasis supplied)
Reading a constitutional provision requires awareness of its relation with the whole of the
Constitution. A constitutional provision is but a constituent of a greater whole. It is the framework
of the Constitution that animates each of its components through the dynamism of these
pg. 960
components’ interrelations. What is called into operation is the entire document, not simply a
peripheral item. The Constitution should, therefore, be appreciated and read as a singular, whole
unit — ut magis valeat quam pereat.136 Each provision must be understood and effected in a way
that gives life to all
_______________
135 Francisco, Jr. v. Nagmamalasakit na mga Manananggol ng mga Manggagawang Pilipino,

Inc., 460 Phil. 830, 885; 415 SCRA 44, 126 (2003) [Per J. Carpio-Morales, En Banc], citing J.M.
Tuason & Co., Inc. v. Land Tenure Administration, 142 Phil. 393; 31 SCRA 413 (1970) [Per J.
Fernando, Second Division]. This was also cited in Saguisag v. Ochoa, Jr., G.R. No. 212426,
January 12, 2016, 779 SCRA 241 [Per CJ. Sereno, En Banc].

Inc., id., at p. 886; p. 127.
479
VOL. 803, SEPTEMBER 20, 2016 479

that the Constitution contains, from its foundational principles to its finest fixings.137
The words and phrases that establish its framework and its values color each provision at the heart
of a controversy in an actual case. In Civil Liberties Union v. Executive Secretary:138
It is a well-established rule in constitutional construction that no one provision of the Constitution

is to be separated from all the others, to be considered alone, but that all the provisions bearing
upon a particular subject are to be brought into view and to be so interpreted as to effectuate the
great purposes of the instrument. Sections bearing on a particular subject should be considered and
interpreted together as to effectuate the whole purpose of the Constitution and one section is not
to be allowed to defeat another, if by any reasonable construction, the two can be made to stand
together.
In other words, the court must harmonize them, if practicable, and must lean in favor of
construction which will render every word operative, rather than one which may make the words
idle and nugatory.139 (Citations omitted)
Reading a certain text includes a consideration of jurisprudence that has previously considered that
exact same text, if any. Our legal system is founded on the basic principle that “judicial decisions
pg. 961
applying or interpreting the laws or the Constitution shall form part of [our] legal system.”140
Juris-
_______________
137 La Bugal-B’Laan Tribal Association, Inc. v. Ramos, 486 Phil. 754, 773; 445 SCRA 1, 79
(2004) (Resolution) [Per J. Panganiban, En Banc] states that “[t]he Constitution should be read in
broad, life-giving strokes.”
138 272 Phil. 147; 194 SCRA 317 (1991) [Per CJ. Fernan, En Banc].
139 Id., at p. 162; pp. 330-331, as cited in Macalintal v. Presidential Electoral Tribunal, 650 Phil.
326, 341; 635 SCRA 783, 798-799 (2010) [Per J. Nachura, En Banc].
140 Civil Code, Art. 8.
480

prudence is not an independent source of law. Nevertheless, judicial interpretation is deemed part
of or written into the text itself as of the date that it was originally passed. This is because judicial
construction articulates the contemporaneous intent that the text brings to effect.141 Nevertheless,
one must not fall into the temptation of considering prior interpretation as immutable.
Interpretation grounded on textual primacy likewise looks into how the text has evolved. Unless
completely novel, legal provisions are the result of the readoption — often with accompanying
recalibration — of previously existing rules. Even when seemingly novel, provisions are often
introduced as a means of addressing the inadequacies and excesses of previously existing rules.
One may trace the historical development of text by comparing its current iteration with prior
counterpart provisions, keenly taking note of changes in syntax, along with accounting for more
conspicuous substantive changes such as the addition and deletion of provisos or items in
enumerations, shifting terminologies, the use of more emphatic or more moderate qualifiers, and
the imposition of heavier penalties. The tension between consistency and change galvanizes
meaning.
Article IV, Section 1 of the 1987 Constitution, which enumerates who are citizens of the
Philippines, may be compared with counterpart provisions, not only in earlier Constitutions but
even in organic laws142 and in similar mechanisms143 in-
pg. 962
_______________
141 Senarillos v. Hermosisima, 100 Phil. 501, 504 (1956) [Per J. J.B.L. Reyes, En Banc].
142 The adoption of the Philippine Bill of 1902, otherwise known as the Philippine Organic Act
of 1902, crystallized the concept of “Philippine citizens.” See Tecson v. Commission on Elections,
supra note 114 at pp. 467-468; p. 331.
143 For example, the Civil Code of Spain became effective in the jurisdiction on December 18,
1889, making the first categorical
481
VOL. 803, SEPTEMBER 20, 2016 481

troduced by colonial rulers whose precepts nevertheless still resonate today.
Even as ordinary meaning is preeminent, a realistic appreciation of legal interpretation must

grapple with the truth that meaning is not always singular and uniform. In Social Weather Stations,
Inc. v. Commission on Elections,144 this Court explained the place of a holistic approach in legal
interpretation:
Interestingly, both COMELEC and petitioners appeal to what they (respectively) construe to be
plainly evident from Section 5.2(a)’s text on the part of COMELEC, that the use of the words
“paid for” evinces no distinction between direct purchasers and those who purchase via
subscription schemes; and, on the part of petitioners, that Section 5.2(a)’s desistance from actually
using the word “subscriber” means that subscribers are beyond its contemplation. The variance in
the parties’ positions, considering that they are both banking on what they claim to be the Fair
Election Act’s plain meaning, is the best evidence of an extant ambiguity.
Second, statutory construction cannot lend itself to pedantic rigor that foments absurdity. The
dangers of inordinate insistence on literal interpretation are commonsensical and need not be
belabored. These dangers are by no means endemic to legal interpretation. Even in everyday
conversations, misplaced literal interpretations are fodder for humor. A fixation on technical rules
of grammar is no less innocuous. A pompously doctrinaire approach to text can stifle, rather than
facilitate, the legislative wisdom that unbridled textualism purports to bolster.
Third, the assumption that there is, in all cases, a universal plain language is erroneous. In reality,
univer-
_______________
pg. 963
listing on who were Spanish citizens. See Tecson v. Commission on Elections, id., at p. 465; p.
329.
144 G.R. No. 208062, April 7, 2015, 755 SCRA 124 [Per J. Leonen, En Banc].
482

sality and uniformity in meaning is a rarity. A contrary belief wrongly assumes that language is
static.
The more appropriate and more effective approach is, thus, holistic rather than parochial: to
consider context and the interplay of the historical, the contemporary, and even the envisioned.
Judicial interpretation entails the convergence of social realities and social ideals. The latter are
meant to be effected by the legal apparatus, chief of which is the bedrock of the prevailing legal
order: the Constitution. Indeed, the word in the vernacular that describes the Constitution —
saligan — demonstrates this imperative of constitutional primacy.
Thus, we refuse to read Section 5.2(a) of the Fair Election Act in isolation. Here, we consider not
an abstruse provision but a stipulation that is part of the whole, i.e., the statute of which it is a part,
that is aimed at realizing the ideal of fair elections. We consider not a cloistered provision but a
norm that should have a present authoritative effect to achieve the ideals of those who currently
read, depend on, and demand fealty from the Constitution.145 (Emphasis supplied)
III.B
Contemporaneous construction and aids that are external to the text may be resorted to when the
text is capable of multiple, viable meanings.146 It is only then that one can go beyond the strict
boundaries of the document. Nevertheless, even when meaning has already been ascertained from
a reading of the plain text, contemporaneous construction may serve to verify or validate the
meaning yielded by such reading.
_______________
145 Id., at pp. 166-167.
pg. 964
146 Sobejana-Condon v. Commission on Elections, 692 Phil. 407, 421; 678 SCRA 267, 282
(2012) [Per J. Reyes, En Banc]: “Ambiguity is a condition of admitting two or more meanings, of
being understood in more than one way, or of referring to two or more things at the same time. For
a statute to be considered ambiguous, it must admit of two or more possible meanings.”
483
VOL. 803, SEPTEMBER 20, 2016 483

Limited resort to contemporaneous construction is justified by the realization that the business of
understanding the Constitution is not exclusive to this Court. The basic democratic foundation of
our constitutional order necessarily means that all organs of government, and even the People, read
the fundamental law and are guided by it. When competing viable interpretations arise, a justiciable
controversy may ensue requiring judicial intervention in order to arrive with finality at which
interpretation shall be sustained. To remain true to its democratic moorings, however, judicial
involvement must remain guided by a framework or deference and constitutional avoidance. This
same principle underlies the basic doctrine that courts are to refrain from issuing advisory opinions.
Specifically as regards this Court, only constitutional issues that are narrowly framed, sufficient to
resolve an actual case, may be entertained.147
When permissible then, one may consider analogous jurisprudence (that is, judicial decisions on
similar, but not the very same, matters or concerns),148 as well as thematically similar statutes
and international norms that form part of our legal system. This includes discerning the purpose
and aims of the text in light of the specific facts under consideration. It is also only at this juncture
— when external aids may be consulted — that the supposedly underlying notions of the framers,
as articulated through records of deliberations and other similar accounts, can be illuminating.
_______________
147 See, for example, In the Matter of: Save the Supreme Court Judicial Independence and Fiscal
Autonomy Movement v. Abolition of Judiciary Development Fund (JDF) and Reduction of Fiscal
Autonomy, UDK-15143, January 21, 2015, 746 SCRA 352 [Per J. Leonen, En Banc], citing J.
Leonen, Concurring Opinion in Belgica v. Ochoa, Jr., G.R. No. 208566, November 19, 2013, 710
SCRA 1, 278-279 [Per J. Perlas-Bernabe, En Banc].
148 Cf. what was previously discussed regarding previous judicial decisions on the very same
text.
pg. 965
484

III.C
In the hierarchy of the means for constitutional interpretation, inferring meaning from the supposed
intent of the framers or fathoming the original understanding of the individuals who adopted the
basic document is the weakest approach.
These methods leave the greatest room for subjective interpretation. Moreover, they allow for the
greatest errors. The alleged intent of the framers is not necessarily encompassed or exhaustively
articulated in the records of deliberations. Those that have been otherwise silent and have not
actively engaged in interpellation and debate may have voted for or against a proposition for
reasons entirely their own and not necessarily in complete agreement with those articulated by the
more vocal. It is even possible that the beliefs that motivated them were based on entirely
erroneous premises. Fathoming original understanding can also misrepresent history as it compels
a comprehension of actions made within specific historical episodes through detached, and not
necessarily better-guided, modern lenses.
Moreover, the original intent of the framers of the Constitution is not always uniform with the
original understanding of the People who ratified it. In Civil Liberties Union:
While it is permissible in this jurisdiction to consult the debates and proceedings of the
constitutional convention in order to arrive at the reason and purpose of the resulting Constitution,
resort thereto may be had only when other guides fail as said proceedings are powerless to vary
the terms of the Constitution when the meaning is clear. Debates in the constitutional convention
“are of value as showing the views of the individual members, and as indicating the reasons for
their votes, but they give us no light as to the views of the large majority who did not talk, much
less of the mass of our fellow citizens whose votes at the polls gave the instrument the force of
fundamental law. We think it safer to construe the constitution from what appears upon its face.”
The proper in-
485
VOL. 803, SEPTEMBER 20, 2016 485

pg. 966
terpretation therefore depends more on how it was understood by the people adopting it than in
the framer’s understanding thereof.149 (Emphasis supplied)
IV
Though her parents are unknown, private respondent is a Philippine citizen without the need for
an express statement in the Constitution making her so. Her status as such is but the logical
consequence of a reasonable reading of the Constitution within its plain text. The Constitution
provides its own cues; there is not even a need to delve into the deliberations of its framers and the
implications of international legal instruments. This reading proceeds from several levels.
On an initial level, a plain textual reading readily identifies the specific provision, which
principally governs: the Constitution’s actual definition, in Article IV, Section 2, of “natural-born
citizens.” This definition must be harmonized with Section 1’s enumeration, which includes a
reference to parentage. These provisions must then be appreciated in relation to the factual milieu
of this case. The pieces of evidence before the Senate Electoral Tribunal, admitted facts, and
uncontroverted circumstances adequately justify the conclusion of private respondent’s Filipino
parentage.
On another level, the assumption should be that foundlings are natural-born unless there is
substantial evidence to the contrary. This is necessarily engendered by a complete consideration
of the whole Constitution, not just its provisions on citizenship. This includes its mandate of
defending the well-being of children, guaranteeing equal protection of the law, equal access to
opportunities for public service, and respecting human rights, as well as its reasons for requiring
natural-
_______________

Inc., supra note 135 at p. 887; pp. 128-129, citing Civil Liberties Union v. Executive Secretary,
supra note 138 at pp. 169-170; pp. 337-338.
486

pg. 967
born status for select public offices. Moreover, this is a reading validated by contemporaneous
construction that considers related legislative enactments, executive and administrative actions,
and international instruments.
Private respondent was a Filipino citizen at birth. This status’ commencement from birth means
that private respondent never had to do anything to consummate this status. By definition, she is
natural-born. Though subsequently naturalized, she reacquired her natural-born status upon
satisfying the requirement of Republic Act No. 9225. Accordingly, she is qualified to hold office
as Senator of the Republic.
V.A
Article IV, Section 1 of the 1987 Constitution enumerates who are citizens of the Philippines:
Section 1. The following are citizens of the Philippines:
(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution;
(2) Those whose fathers or mothers are citizens of the Philippines;
(3) Those born before January 17, 1973, of Filipino mothers, who elect Philippine citizenship upon
reaching the age of majority; and
(4) Those who are naturalized in accordance with law.150
_______________
pg. 968
150 The 1935 Constitution was in effect when petitioner was born. However, the provisions are
now substantially similar to the present Constitution, except that the present Constitution provides
clarity for “natural-born” status. For comparison, the 1935 provisions state:
SECTION 1. The following are citizens of the Philippines.
487
VOL. 803, SEPTEMBER 20, 2016 487

Article IV, Section 2 identifies who are natural-born citizens:
Sec. 2. Natural-born citizens are those who are citizens of the Philippines from birth without
having to perform any act to acquire or perfect their Philippine citizenship. Those who elect
Philippine citizenship in accordance with paragraph (3), Section 1 hereof shall be deemed natural-
born citizens. (Emphasis supplied)
Section 2’s significance is self-evident. It provides a definition of the term “natural-born citizens.”
This is distinct from Section 1’s enumeration of who are citizens. As against Section 1’s generic
listing, Section 2 specifically articulates those who may count themselves as natural-born.
The weight and implications of this categorical definition are better appreciated when
supplemented with an understanding of how our concepts of citizenship and natural-born
citizenship have evolved. As will be seen, the term “natural-born citizen” was a transplanted, but
tardily defined, foreign concept.
V.B
Citizenship is a legal device denoting political affiliation. It is the “right to have rights.”151 It is
one’s personal and . . .
_______________
(1) Those who are citizens of the Philippine Islands at the time of the adoption of this
Constitution.
pg. 969
(2) Those born in the Philippine Islands of foreign parents who, before the adoption of this
Constitution, had been elected to public office in the Philippine Islands.
(3) Those whose fathers are citizens of the Philippines.
(4) Those whose mothers are citizens of the Philippines and, upon reaching the age of majority,
elect Philippine citizenship.
(5) Those who are naturalized in accordance with law.
SECTION 2. Philippine citizenship may be lost or reacquired in the manner provided by law.
151 CJ. Warren, Dissenting Opinion in Perez v. Brownwell, 356 U.S. 44 (1958).
488

permanent membership in a political community. . . . The core of citizenship is the capacity to

enjoy political rights, that is, the right to participate in government principally through the right to
vote, the right to hold public office[,] and the right to petition the government for redress of
grievance.152
Citizenship also entails obligations to the political community of which one is part.153 Citizenship,
therefore, is intimately tied with the notion that loyalty is owed to the state, considering the benefits
and protection provided by it. This is particularly so if these benefits and protection have been
enjoyed from the moment of the citizen’s birth.
Tecson v. Commission on Elections154 reckoned with the historical development of our concept
of citizenship, beginning under Spanish colonial rule.155 Under the Spanish, the native inhabitants
of the Philippine Islands were identified not as citizens but as “Spanish subjects.”156 Church
records show that native inhabitants were referred to as “indios.” The alternative identification of
native inhabitants as subjects or as indios demonstrated the colonial master’s regard for native
inhabitants as inferior.157 Natives were, thus, reduced to subservience in their own land.
Under the Spanish Constitution of 1876, persons born within Spanish territory, not just peninsular
Spain, were considered Spaniards, classification, however, did not extend to the Philippine Islands,
as Article 89 expressly mandated that the archipelago was to be governed by special laws.158 It
_______________
pg. 970
152 Go v. Republic of the Philippines, G.R. No. 202809, July 2, 2014, 729 SCRA 138, 149 [Per
J. Mendoza, Third Division], citing Bernas, The 1987 Constitution of the Republic of the
Philippines, A Commentary (2009 ed.).
153 Id.
154 Supra note 114.
155 Id., at pp. 464-470; p. 326.
156 Id., at p. 464; p. 330.
157 Id.
158 Id., at p. 465; p. 329.
489
VOL. 803, SEPTEMBER 20, 2016 489

was only on December 18, 1889, upon the effectivity in this jurisdiction of the Civil Code of Spain,
that there existed a categorical enumeration of who were Spanish citizens,159 thus:
(a) Persons born in Spanish territory,
(b) Children of a Spanish father or mother, even if they were born outside of Spain,
(c) Foreigners who have obtained naturalization papers,
(d) Those who, without such papers, may have become domiciled inhabitants of any town of the
Monarchy.160
pg. 971
1898 marked the end of Spanish colonial rule. The Philippine Islands were ceded by Spain to the
United States of America under the Treaty of Paris, which was entered into on December 10, 1898.
The Treaty of Paris did not automatically convert the native inhabitants to American citizens.161
Instead, it left the determination of the native inhabitants’ status to the Congress of the United
States:
Spanish subjects, natives of the Peninsula, residing in the territory over which Spain by the present
treaty relinquishes or cedes her sovereignty may remain in such territory or may remove therefrom
. . . . In case they remain in the territory they may preserve their allegiance to the Crown of Spain
by making . . . a declaration of their decision to preserve such allegiance; in default of which
declaration they shall be held to have renounced it and to have adopted the nationality of the
territory in which they may reside.
Thus —
_______________
159 Id.
160 Id., at pp. 465-466; p. 329, citing The Civil Code of Spain, Art. 17.
161 Id., at pp. 466-467; p. 329, citing Velayo, Ramon M., Philippine Citizenship and
Naturalization, pp. 22-23 (1965).
490

The civil rights and political status of the native inhabitants of the territories hereby ceded to the
United States shall be determined by Congress.162
Pending legislation by the United States Congress, the native inhabitants who had ceased to be
Spanish subjects were “issued passports describing them to be citizens of the Philippines entitled
to the protection of the United States.”163
The term “citizens of the Philippine Islands” first appeared in legislation in the Philippine Organic
Act, otherwise known as the Philippine Bill of 1902:164
pg. 972
Section 4. That all inhabitants of the Philippine Islands continuing to reside therein, who were
Spanish subjects on the eleventh day of April, eighteen hundred and ninety-nine, and then resided
in said Islands, and their children born subsequent thereto, shall be deemed and held to be citizens
of the Philippine Islands and as such entitled to the protection of the United States, except such
as shall have elected to preserve their allegiance to the Crown of Spain in accordance with the
provisions of the treaty of peace between the United States and Spain signed at Paris December
tenth, eighteen hundred and ninety-eight. (Emphasis supplied)
The Philippine Bill of 1902 explicitly covered the status of children born in the Philippine Islands
to its inhabitants who were Spanish subjects as of April 11, 1899. However, it did not account for
the status of children born in the Islands to parents who were not Spanish subjects. A view was
expressed that the common law concept of jus soli (or citizenship by place of birth), which was
operative in the United States, applied to the Philippine Islands.165
_______________
162 Id., at p. 466; p. 329, citing Velayo, Ramon M., id.
163 Id., at p. 467; p. 330.
164 Id., at pp. 467-468; p. 330.
165 Id.
491
VOL. 803, SEPTEMBER 20, 2016 491

On March 23, 1912, the United States Congress amended Section 4 of the Philippine Bill of 1902.
It was made to include a proviso for the enactment by the legislature of a law on acquiring
citizenship. This proviso read:
Provided, That the Philippine Legislature, herein provided for, is hereby authorized to provide by
law for the acquisition of Philippine citizenship by those natives of the Philippine Islands who do
not come within the foregoing provisions, the natives of the insular possessions of the United
States, and such other persons residing in the Philippine Islands who are citizens of the United
States, or who could become citizens of the United States under the laws of the United States if
residing therein.166
pg. 973
In 1916, the Philippine Autonomy Act, otherwise known as the Jones Law of 1916, replaced the
Philippine Bill of 1902. It restated the citizenship provision of the Philippine Bill of 1902, as
amended:167
Section 2. Philippine Citizenship and Naturalization—
That all inhabitants of the Philippine Islands who were Spanish subjects on the eleventh day of
April, eighteen hundred and ninety-nine, and then resided in said Islands, and their children born
subsequent thereto, shall be deemed and held to be citizens of the Philippine Islands, except such
as shall have elected to preserve their allegiance to the Crown of Spain in accordance with the
provisions of the treaty of peace between the United States and Spain, signed at Paris December
tenth, eighteen hundred and ninety-eight, and except such others as have since become citizens of
some other country: Provided, That the Philippine Legislature, herein provided for, is hereby
authorized to provide by law for the acquisition of Philippine citizenship by those natives of the
_______________
166 Id., at p. 468; p. 331.
167 Id.
492

Philippine Islands who do not come within the foregoing provisions, the natives of the insular
possessions of the United States, and such other persons residing in the Philippine Islands who are
citizens of the United States, or who could become citizens of the United States under the laws of
the United States if residing therein.
The Jones Law of 1916 provided that a native-born inhabitant of the Philippine Islands was deemed
to be a citizen of the Philippines as of April 11, 1899 if he or she was “(1) a subject of Spain on
April 11, 1899, (2) residing in the Philippines on said date, and (3) since that date, not a citizen of
some other country.”168
pg. 974
There was previously the view that jus soli may apply as a mode of acquiring citizenship. It was
the 1935 Constitution that made sole reference to parentage vis-à-vis the determination of
citizenship.169 Article III, Section 1 of the 1935 Constitution provided:
Constitution.
(2) Those born in the Philippines Islands of foreign parents who, before the adoption of this
(4) Those whose mothers are citizens of the Philippines and upon reaching the age of
majority, elect Philippine citizenship.
_______________
168 Id., at p. 469; p. 332.
169 Id.
493
VOL. 803, SEPTEMBER 20, 2016 493

pg. 975
The term “natural-born citizen” first appeared in this jurisdiction in the 1935 Constitution’s
provision stipulating the qualifications for President and Vice President of the Philippines. Article
VII, Section 3 read:
SECTION 3. No person may be elected to the office of President or Vice President, unless he
be a natural-born citizen of the Philippines, a qualified voter, forty years of age or over, and has
been a resident of the Philippines for at least ten years immediately preceding the election.
While it used the term “natural-born citizen,” the 1935 Constitution did not define the term.
Article II, Section 1(4) of the 1935 Constitution — read with the then civil law provisions that
stipulated the automatic loss of Filipino citizens lip by women who marry alien husbands — was
discriminatory towards women.170 The 1973 Constitution rectified this problematic situation:
(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution.
(2) Those whose fathers or mothers are citizens of the Philippines.
(3) Those who elect Philippine citizenship pursuant to the provisions of the Constitution of
nineteen hundred and thirty-five.
SECTION 2. A female citizen of the Philippines who marries an alien shall retain her Philippine
citizenship,
_______________
170 Id.
pg. 976
494

unless by her act or omission she is deemed, under the law, to have renounced her citizenship.171
The 1973 Constitution was the first instrument to actually define the term “natural-born citizen.”
Article III, Section 4 of the 1973 Constitution provided:
SECTION 4. A natural-born citizen is one who is a citizen of the Philippines from birth without
having to perform any act to acquire or perfect his Philippine citizenship.172
The present Constitution adopted most of the provisions of the 1973 Constitution on citizenship,
“except for subsection (3) thereof that aimed to correct the irregular situation generated by the
questionable proviso in the 1935 Constitution.”173
Article IV, Section 1 of the 1987 Constitution now reads:
(1) Those who are citizens of the Philippines at the time of the adoption of this Constitution;
(2) Those whose fathers or mothers are citizens of the Philippines;
(3) Those born before January 17, 1973, of Filipino mothers, who elect Philippine
citizenship upon reaching the age of majority; and
(4) Those who are naturalized in accordance with law.174
_______________
pg. 977
171 Const. (1973), Art. III, Secs. 1 and 2.
172 Id., Sec. 4.
173 Tecson v. Commission on Elections, supra note 114 at p. 470; p. 333.
174 The 1935 Constitution was in effect when petitioner was born. However, the provisions are
now substantially similar to the present Constitution, except that the present Constitution provides
495
VOL. 803, SEPTEMBER 20, 2016 495

Article IV, Section 2 also calibrated the 1973 Constitution’s previous definition of natural-born
citizens, as follows:
Sec. 2. Natural-born citizens are those who are citizens of the Philippines from birth without
having to perform any act to acquire or perfect their Philippine citizenship. Those who elect
Philippine citizenship in accordance with paragraph (3), Section 1 hereof shall be deemed natural-
born citizens. (Emphasis supplied)
Ironically, the concept of “natural-born” citizenship is a “foreign” concept that was transplanted
into this jurisdiction as part of the 1935 Constitution’s eligibility requirements for President and
Vice President of the Philippines.
In the United States Constitution, from which this concept originated, the term “natural-born
citizen” appears in only a single instance: as an eligibility requirement for the presidency.175 It is
not defined in that Constitution or in American laws. Its origins and rationale for inclusion as a
requirement for the presidency are not even found in the records of consti-
_______________
clarity for “natural-born” status. For comparison, the 1935 provisions state:
SECTION 1. The following are citizens of the Philippines.
Constitution.
pg. 978
(4) Those whose mothers are citizens of the Philippines and, upon reaching the age of majority,
elect Philippine citizenship.
SECTION 2. Philippine citizenship may be lost or reacquired in the manner provided by law.
175 See Charles Gordon, Who Can Be President of the United States: The Unresolved Enigma,
28 Md. L. Rev. 1, 5 (1968).
496

tutional deliberations.176 However, it has been suggested that, as the United States was under
British colonial rule before its independence, the requirement of being natural-born was introduced
as a safeguard against foreign infiltration in the administration of national government:
It has been suggested, quite plausibly, that this language was inserted in response to a letter sent
by John Jay to George Washington, and probably to other delegates, on July 25, 1787, which
stated:
Permit me to hint, whether it would be wise and seasonable to provide a strong check to the
admission of Foreigners into the administration of our national Government; and to declare
expressly that the Command in Chief of the American army shall not be given to nor devolve
on, any but a natural-born Citizen.
Possibly this letter was motivated by distrust of Baron Von Steuben, who had served valiantly in
the Revolutionary forces, but whose subsequent loyalty was suspected by Jay. Another theory is
that the Jay letter, and the resulting constitutional provision, responded to rumors that the
Convention was concocting a monarchy to be ruled by a foreign monarch.177
In the United States, however, citizenship is based on jus soli, not jus sanguinis.
pg. 979
V.C
Today, there are only two (2) categories of Filipino citizens: natural-born and naturalized.
A natural-born citizen is defined in Article IV, Section 2 as one who is a citizen of the Philippines
“from birth without
_______________
176 Id., at pp. 3-4.
177 Id., at p. 5.
497
VOL. 803, SEPTEMBER 20, 2016 497

having to perform any act to acquire or perfect Philippine citizenship.” By necessary implication,
a naturalized citizen is one who is not natural-born. Bengson III v. House of Representatives
Electoral Tribunal178 articulates this definition by dichotomy:
[O]nly naturalized Filipinos are considered not natural-born citizens. It is apparent from the
enumeration of who are citizens under the present Constitution that there are only two classes of
citizens: . . . A citizen who is not a naturalized Filipino, i.e., did not have to undergo the process
of naturalization to obtain Philippine citizenship, necessarily is a natural-born Filipino.179
Former Associate Justice Artemio Panganiban further shed light on the concept of naturalized
citizens in his Concurring Opinion in Bengson: naturalized citizens, he stated, are “former aliens
or foreigners who had to undergo a rigid procedure, in which they had to adduce sufficient
evidence to prove that they possessed all the qualifications and none of the disqualifications
provided by law in order to become Filipino citizens.”180
One who desires to acquire Filipino citizenship by naturalization is generally required to file a
verified petition.181 He or
pg. 980
_______________
178 409 Phil. 633; 357 SCRA 545 (2001) [Per J. Kapunan, En Banc].
179 Id., at p. 651; pp. 557-558.
180 Id., at p. 656; pp. 552-554.
181 See Rep. Act No. 9139 (2000), Sec. 5 provides:
SECTION 5. Petition for Citizenship.—(1) Any person desiring to acquire Philippine,

citizenship under this Act shall file with the Special Committee on Naturalization created
under Section 6 hereof, a petition of five (5) copies legibly typed and signed, thumbmarked
and verified by him/her, with the latter’s passport-sized photograph attached to each copy
of the petition, and setting forth the following:
....
498

she must establish among others, that he or she is of legal age, is of good moral character, and has
the capacity to adapt to Filipino culture, tradition, and principles, or otherwise has resided in the
Philippines for a significant period of time.182
_______________
Com. Act No. 473, Sec. 7 provides:
SECTION 7. Petition for Citizenship.—Any person desiring to acquire Philippine

citizenship shall file with the competent court, a petition in triplicate, accompanied by two
photographs of the petitioner, setting forth his name and surname; his present and former
places of residence; his occupation; the place and date of his birth; whether single or married
and if the father of children, the name, age, birthplace and residence of the wife and of the
children; the approximate date of his or her arrival in the Philippines, the name of the port
of debarkation, and, if he remembers it, the name of the ship on which he came; a declaration
that he has the qualifications required by this Act, specifying the same, and that he is not
disqualified for naturalization under the provisions of this Act; that he has complied with
the requirements of section five of this Act; and that he will reside continuously in the
Philippines from the date of the filing of the petition up to the time of his admission to
pg. 981
Philippine citizenship. The petition must be signed by the applicant in his own handwriting
and be supported by the affidavit of at least two credible persons, stating that they are
citizens of the Philippines and personally know the petitioner to be a resident of the
Philippines for the period of time required by this Act and a person of good repute and
morally irreproachable, and that said petitioner has in then opinion all the qualifications
necessary to become a citizen of the Philippines and is not in any way disqualified under the
provisions of this Act. The petition shall also set forth the names and post-office addresses
of such witnesses as the petitioner may desire to introduce at the hearing of the case. The
certificate of arrival, and the declaration of intention must be made part of the petition.
182 See Rep. Act No. 9139 (2000), Sec. 3 provides:
SECTION 3. Qualifications.—Subject to the provisions of the succeeding section, any

person desiring to avail of the benefits of this Act must meet the following qualifications:
499
VOL. 803, SEPTEMBER 20, 2016 499

_______________
(a) The applicant must be born in the Philippines and residing therein since birth;
(b) The applicant must not be less than eighteen (18) years of age, at the time of filing of
his/her petition;
(c) The applicant must be of good moral character and believes in the underlying principles
of the Constitution, and must have conducted himself/herself in a proper and irreproachable
manner during his/her entire period of residence in the Philippines in his relation with the
duly constituted government as well as with the community in which he/she is living;
(d) The applicant must have received his/her primary and secondary education in any
public school or private educational institution duly recognized by the Department of
Education, Culture and Sports, where Philippine history, government and civics are taught
and prescribed as part of the school curriculum and where enrollment is not limited to any
race or nationality: Provided, That should he/she have minor children of school age, he/she
must have enrolled them in similar schools;
(e) The applicant must have a known trade, business, profession or lawful occupation,
from which he/she derives income sufficient for his/her support and if he/she is married
and/or has dependents, also that of his/her family: Provided, however, That this shall not
pg. 982
apply to applicants who are college degree holders but are unable to practice their profession
because they are disqualified to do so by reason of their citizenship;
(f) The applicant must be able to read, write and speak Filipino or any of the dialects of
the Philippines; and
(g) The applicant must have mingled with the Filipinos and evinced a sincere desire to
learn and embrace the customs, traditions and ideals of the Filipino people.
Comm. Act No. 473, Sec. 2 provides:
SECTION 2. Qualifications.—Subject to section four of this Act, any person having the
following qualifications may become a citizen of the Philippines by naturalization:
First. He must be not less than twenty-one years of age on the day of the hearing of the
petition;
500

Further, the applicant must show that he or she will not be a threat to the state, to the public, and
to the Filipinos’ core beliefs.183
_______________
Second. He must have resided in the Philippines for a continuous period of not less than ten
years;
Third. He must be of good moral character and believes in the principles underlying the
Philippine Constitution, and must have conducted himself in a proper and irreproachable
manner during the entire period of his residence in the Philippines in his relation with the
constituted government as well as with the community in which he is living;
Fourth. He must own real estate in the Philippines worth not less than five thousand pesos,
Philippine currency, or must have some known lucrative trade, profession, or lawful
occupation;
Fifth. He must be able to speak and write English or Spanish and any of the principal
Philippine languages;
pg. 983
Sixth. He must have enrolled his minor children of school age, in any of the public schools
or private schools recognized by the Office of Private Education of the Philippines, where
Philippine history, government and civics are taught or prescribed as part of the school
curriculum, during the entire period of the residence in the Philippines required of him prior
to the hearing of his petition for naturalization as Philippine citizen.
183 Rep. Act No. 9139 (2000), Sec. 4 provides:
SECTION 4. Disqualifications.—The following are not qualified to be naturalized as

Filipino citizens under this Act:
(a) Those opposed to organized government or affiliated with any association or group of
persons who uphold and teach doctrines opposing all organized governments;
(b) Those defending or teaching the necessity of or propriety of violence, personal assault
or assassination for the success or predominance of their ideas;
(c) Polygamists or believers in the practice of polygamy;
(d) Those convicted of crimes involving moral turpitude;
(e) Those suffering from mental alienation or incurable contagious diseases;
501
VOL. 803, SEPTEMBER 20, 2016 501

V.D
Article IV, Section 1 of the 1987 Constitution merely gives an enumeration. Section 2 categorically
defines “natural-born citizens.” This constitutional definition is further clarified in
_______________
(f) Those who, during the period of their residence in the Philippines, have not mingled
socially with Filipinos, or who have not evinced a sincere desire to learn and embrace the
customs, traditions and ideals of the Filipinos;
pg. 984
(g) Citizens or subjects with whom the Philippines is at war, during the period of such
war; and
(h) Citizens or subjects of a foreign country whose laws do not grant Filipinos the right to
be naturalized citizens or subjects thereof.
Com. Act No. 473 (1939), Sec. 4 provides:
SECTION 4. Who are Disqualified.—The following cannot be naturalized as Philippine

citizens:
(a) Persons opposed to organized government or affiliated with any association or group
of persons who uphold and teach doctrines opposing all organized governments;
(b) Persons defending or teaching the necessity or propriety of violence, personal assault
or assassination for the success and predominance of their ideas;
(c) Polygamists or believers in the practice of polygamy;
(d) Persons convicted of crimes involving moral turpitude;
(e) Persons suffering from mental alienation or incurable contagious diseases;
(f) Persons who, during the period of their residence in the Philippines, have not mingled
socially with the Filipinos, or who have not evinced a sincere desire to learn and embrace
the customs, traditions, and ideals of the Filipinos;
(g) Citizens or subjects of nations with whom the United States and the Philippines are at
war, during the period of such war;
(h) Citizens or subjects of a foreign country other than the United States, whose laws do
not grant Filipinos the right to become naturalized citizens or subjects thereof.
502

jurisprudence, which delineates natural-born citizenship from naturalized citizenship. Consistent

with Article 8 of the Civil Code, this jurisprudential clarification is deemed written into the
interpreted text, thus establishing its contemporaneous intent.
pg. 985
Therefore, petitioner’s restrictive reliance on Section 1 and the need to establish bloodline is
misplaced. It is inordinately selective and myopic. It divines Section 1’s mere enumeration but
blatantly turns a blind eye to the succeeding Section’s unequivocal definition.
Between Article IV, Section 1(2), which petitioner harps on, and Section 2, it is Section 2 that is
on point. To determine whether private respondent is a natural-born citizen, we must look into
whether she had to do anything to perfect her citizenship. In view of Bengson, this calls for an
inquiry into whether she underwent the naturalization process to become a Filipino.
She did not.
At no point has it been substantiated that private respondent went through the actual naturalization
process. There is no more straightforward and more effective way to terminate this inquiry than
this realization of total and utter lack of proof.
At most, there have been suggestions likening a preferential approach to foundlings, as well as
compliance with Republic Act No. 9225, with naturalization. These attempts at analogies are
misplaced. The statutory mechanisms for naturalization are clear, specific, and narrowly devised.
The investiture of citizenship on foundlings benefits children, individuals whose capacity to act is
restricted.184 It is a glaring mis-
_______________
184 The Civil Code states:
Article 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent
in every natural person and is
503
VOL. 803, SEPTEMBER 20, 2016 503

take to liken them to an adult filing before the relevant authorities a sworn petition seeking to
become a Filipino, the grant of which is contingent on evidence that he or she must himself or
herself adduce. As shall later be discussed, Republic Act No. 9225 is premised on the immutability
of natural-born status. It privileges natural-born citizens and proceeds from an entirely different
premise from the restrictive process of naturalization.
So too, the jurisprudential treatment of naturalization vis-à-vis natural-born status is clear. It should
be with the actual process of naturalization that natural-born status is to be contrasted, not against
pg. 986
other procedures relating to citizenship. Otherwise, the door may be thrown open for the unbridled
diminution of the status of citizens.
V.E
Natural-born citizenship is not concerned with being a human thoroughbred.
_______________
lost only through death. Capacity to act, which is the power to do acts with legal effect, is acquired
and may be lost.
Article 38. Minority, insanity or imbecility, the state of being a deaf-mute, prodigality and civil
interdiction are mere restrictions on capacity to act, and do not exempt the incapacitated person
from certain obligations, as when the latter arise from his acts or from property relations, such as
easements.
Article 39. The following circumstances, among others, modify or limit capacity to act: age,
insanity, imbecility, the state of being a deaf-mute, penalty, prodigality, family relations, alienage,
absence, insolvency and trusteeship. The consequences of these circumstances are governed in this
Code, other codes, the Rules of Court, and in special laws. Capacity to act is not limited on account
of religious belief or political opinion.
A married woman, twenty-one years of age or over, is qualified for all acts of civil life, except in
cases specified by law.
503
VOL. 803, SEPTEMBER 20, 2016 503

Section 2 defines “natural-born citizens.” Section 1(2) stipulates that to be a citizen, either one’s
father or one’s mother must be a Filipino citizen.
That is all there is to Section 1(2). Physical features, genetics, pedigree, and ethnicity are not
determinative of citizenship.
pg. 987
Section 1(2) does not require one’s parents to be natural-born Filipino citizens. It does not even
require them to conform to traditional conceptions of what is indigenously or ethnically Filipino.
One or both parents can, therefore, be ethnically foreign.
Section 1(2) requires nothing more than one ascendant degree: parentage. The citizenship of
everyone else in one’s ancestry is irrelevant. There is no need, as petitioner insists, for a pure
Filipino bloodline.
Section 1(2) requires citizenship, not identity. A conclusion of Filipino citizenship may be
sustained by evidence adduced in a proper proceeding, which substantially proves that either or
both of one’s parents is a Filipino citizen.
V.F
Private respondent has done this. The evidence she adduced in these proceedings attests to how at
least one — if not both — of her biological parents were Filipino citizens.
Proving private respondent’s biological parentage is now practically impossible. To begin with,
she was abandoned as a newborn infant. She was abandoned almost half a century ago. By now,
there are only a handful of those who, in 1968, were able-minded adults who can still lucidly render
testimonies on the circumstances of her birth and finding. Even the identification of individuals
against whom DNA evidence may be tested is improbable, and by sheer economic cost,
prohibitive.
505
VOL. 803, SEPTEMBER 20, 2016 505

However, our evidentiary rules admit of alternative means for private respondent to establish her
parentage.
In lieu of direct evidence, facts may be proven through circumstantial evidence. In Suerte-Felipe
v. People:185
Direct evidence is that which proves the fact in dispute without the aid of any inference or
presumption; while circumstantial evidence is the proof of fact or facts from which, taken either
pg. 988
singly or collectively, the existence of a particular fact in dispute may be inferred as a necessary
or probable consequence.186
People v. Raganas187 further defines circumstantial evidence:
Circumstantial evidence is that which relates to a series of facts other than the fact in issue, which
by experience have been found so associated with such fact that in a relation of cause and effect,
they lead us to a satisfactory conclusion.188 (Citation omitted)
Rule 133, Section 4 of the Revised Rules on Evidence, for instance, stipulates when circumstantial
evidence is sufficient to justify a conviction in criminal proceedings:
Section 4. Circumstantial evidence, when sufficient.—Circumstantial evidence is sufficient for

conviction if:
(a) There is more than one circumstances;
(b) The facts from which the inferences are derived are proven; and
_______________
185 571 Phil. 170; 547 SCRA 462 (2008) [Per J. Chico-Nazario, Third Division].
186 Id., at pp. 189-190; p. 479, citing Lack County v. Neilon, 44 Or. 14, 21, 74, p. 212; State v.
Avery, 113 Mo. 475, 494, 21 S.W. 193; and Reynolds Trial Ev., Sec. 4, p. 8.
187 374 Phil. 810; 316 SCRA 457 (1999) [Per J. Quisumbing, Second Division].
188 Id., at p. 822; p. 468.
506

(c) The combination of all the circumstances is such as to produce a conviction beyond
reasonable doubt.
pg. 989
Although the Revised Rules on Evidence’s sole mention of circumstantial evidence is in reference
to criminal proceedings, this Court has nevertheless sustained the use of circumstantial evidence
in other proceedings.189 There is no rational basis for making the use of circumstantial evidence
exclusive to criminal proceedings and for not considering circumstantial facts as valid means for
proof in civil and/or administrative proceedings.
In criminal proceedings, circumstantial evidence suffices to sustain a conviction (which may result
in deprivation of life, liberty, and property) anchored on the highest standard or proof that our legal
system would require, i.e., proof beyond reasonable doubt. If circumstantial evidence suffices for
such a high standard, so too may it suffice to satisfy the less stringent standard of proof in
administrative and quasi-judicial proceedings such as those before the Senate Electoral Tribunal,
i.e., substantial evidence.190
Private respondent was found as a newborn infant outside the Parish Church of Jaro, Iloilo on
September 3, 1968.191 In
_______________
189 See Lua v. O’Brien, 55 Phil. 53 (1930) [Per J. Street, En Banc]; Vda. de Laig v. Court of
Appeals, 172 Phil. 283; 82 SCRA 294 (1978) [Per J. Makasiar, First Division]; Baloloy v. Hular,
481 Phil. 398; 438 SCRA 80 (2004) [Per J. Callejo, Sr., Second Division]; and Heirs of Amado
Celestial v. Heirs of Editha G. Celestial, 455 Phil. 704; 408 SCRA 291 (2003) [Per J. Ynares-
Santiago, First Division].
190 Ang Tibay v. Court of Industrial Relations, 69 Phil. 635 (1940) [Per J. Laurel, En Banc]. Also,
Rule 133, Section 5 of the Revised Rules on Evidence states:
Section 5. Substantial evidence.—In cases filed before administrative or quasi-judicial

bodies, a fact may be deemed established if it is supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.
191 Rollo, p. 8.
507
VOL. 803, SEPTEMBER 20, 2016 507

pg. 990
1968, Iloilo, as did most — if not all — Philippine provinces, had a predominantly Filipino
population.192 Private respondent is described as having “brown almond-shaped eyes, a low nasal
bridge, straight black hair and an oval-shaped face.”193 She stands at 5 feet and 2 inches tall.194
Further, in 1968, there was no international airport in Jaro, Iloilo.
These circumstances are substantial evidence justifying an inference that her biological parents
were Filipino. Her abandonment at a Catholic Church is more or less consistent with how a Filipino
who, in 1968, lived in a predominantly religious and Catholic environment, would have behaved.
The absence of an international airport in Jaro, Iloilo precludes the possibility of a foreigner
mother, along with a foreigner father, swiftly and surreptitiously coming in and out of Jaro, Iloilo
just to give birth and leave her offspring there. Though proof of ethnicity is unnecessary, her
physical features nonetheless attest to it.
In the other related case of Poe-Llamanzares v. Commission on Elections,195 the Solicitor General
underscored how it is statistically more probable that private respondent was born a Filipino citizen
rather than as a foreigner. He submitted the following table is support of his statistical
inference:196
Number of Foreign and Filipino Children Born in the Philippines: 1965-1975 and 2010-2014
Year Foreign children born in the philippines Filipino children born in the philippines
1965 1,479 795,415
1966 1,437 823,342
1967 1,440 840,302
_______________
192 See J. Leonen, Concurring Opinion in Poe-Llamanzares v. Commission on Elections, G.R.

Nos. 221698-700, March 8, 2016, 786 SCRA 1, 827-828 [Per J. Perez, En Banc].
193 Id.
194 Id.
195 Id.
196 Id., at p. 828.
508
pg. 991
196
1,595 898,570
8
196
1,728 946,753
9
197
1,521 966,762
0
197
1,401 963,749
1
197
1,784 968,385
2
197
1,212 1,045,290
3
197
1,496 1,081,873
4
197
1,493 1,223,837
5
201
1,244 1,782,877
0
201
1,140 1,746,685
1
201
1,454 1,790,367
2
201
1,315 1,751,523
3
201
1,351 1,748,782
4
Source: Philippine Statistics Authority

[illegible]197
Thus, out of the 900,165 recorded births in the Philippines in 1968, only 1,595 or 0.18% newborns
were foreigners. This translates to roughly 99.8% probability that private respondent was born a
Filipino citizen.
Given the sheer difficulty, if not outright impossibility, of identifying her parents after half a
century, a range of substantive proof is available to sustain a reasonable conclusion as to private
respondent’s parentage.
pg. 992
VI
Before a discussion on how private respondent’s natural-born status is sustained by a general

assumption on foundlings arising from a comprehensive reading and validated by a
contemporaneous construction of the Constitution, and considering that we have just discussed the
evidence pertaining to the circumstances of private respondent’s birth, it is opportune to consider
petitioner’s allegations that private
_______________
197 Id., at pp. 828-829.
509
VOL. 803, SEPTEMBER 20, 2016 509

respondent bore the burden of proving — through proof of her bloodline — her natural-born status.
Petitioner’s claim that the burden of evidence shifted to private respondent upon a mere showing
that she is a foundling is a serious error.
Petitioner invites this Court to establish a jurisprudential presumption that all newborns who have
been abandoned in rural areas in the Philippines are not Filipinos. His emphasis on private
respondent’s supposed burden to prove the circumstances of her birth places upon her an
impossible condition. To require proof from private respondent borders on the absurd when there
is no dispute that the crux of the controversy — the identity of her biological parents — is simply
not known.
“Burden of proof is the duty of a party to present evidence on the facts in issue necessary to
establish his claim or defense by the amount of evidence required by law.” Burden of proof lies on
the party making the allegations;198 that is, the party who “alleges the affirmative of the issue.”199
Burden of proof never shifts from one party to another. What shifts is the burden of evidence. This
shift happens when a party makes a prima facie case in his or her favor.200 The other party then
bears the “burden of going forward”201 with the evidence considering that which has ostensibly
been established against him or her.
pg. 993
In an action for quo warranto, the burden of proof necessarily falls on the party who brings the
action and who alleges that the respondent is ineligible for the office involved in the
_______________
198 Uytengsu III v. Baduel, 514 Phil. 1; 477 SCRA 621 (2005) [Per J. Tinga, Second Division].
199 Jison v. Court of Appeals, 350 Phil. 138; 164 SCRA 339 (1998) [Per J. Davide, Jr., First
Division].
200 Id.
201 Tañada v. Angara, 338 Phil. 546; 272 SCRA 18 (1997) [Per J. Panganiban, En Banc].
510

controversy. In proceedings before quasi-judicial bodies such as the Senate Electoral Tribunal, the
requisite quantum of proof is substantial evidence.202 This burden was petitioner’s to discharge.
Once the petitioner makes a prima facie case, the burden of evidence shifts to the respondent.
Private respondent’s admitted status as a foundling does not establish a prima facie case in favor
of petitioner. While it does establish that the identities of private respondent’s biological parents
are not known, it does not automatically mean that neither her father nor her mother is a Filipino.
The most that petitioner had in his favor was doubt. A taint of doubt, however, is by no means
substantial evidence establishing a prima facie case and shifting the burden of evidence to private
respondent.
Isolating the fact of private respondent’s being a foundling, petitioner trivializes other
uncontroverted circumstances that we have previously established as substantive evidence of
private respondent’s parentage:
(1) Petitioner was found in front of a church in Jaro, Iloilo;
(2) She was only an infant when she was found, practically a newborn;
(3) She was found sometime in September 1968;
(4) Immediately after she was found, private respondent was registered as a foundling;
pg. 994
(5) There was no international airport in Jaro, Iloilo; and
(6) Private respondent’s physical features are consistent with those of typical Filipinos.
Petitioner’s refusal to account for these facts demonstrates an imperceptive bias. As against
petitioner’s suggested con-
_______________
511
VOL. 803, SEPTEMBER 20, 2016 511

clusions, the more reasonable inference from these facts is that at least one of private respondent’s
parents is a Filipino.
VII
Apart from how private respondent is a natural-born Filipino citizen consistent with a reading that
harmonizes Article IV, Section 2’s definition of natural-born citizens and Section 1(2)’s reference
to parentage, the Constitution sustains a presumption that all foundlings found in the Philippines
are born to at least either a Filipino father or a Filipino mother and are thus natural-born, unless
there is substantial proof otherwise. Consistent with Article IV, Section 1(2), any such
countervailing proof must show that both — not just one — of a foundling’s biological parents are
not Filipino citizens.
VII.A
pg. 995
Quoting heavily from Associate Justice Teresita Leonardo-De Castro’s Dissenting Opinion to the
assailed November 17, 2015 Decision, petitioner intimates that no inference or presumption in
favor of natural-born citizenship may be indulged in resolving this case.203 He insists that it is
private respondent’s duty to present incontrovertible proof of her Filipino parentage.
Relying on presumptions is concededly less than ideal. Common sense dictates that actual proof
is preferable. Nevertheless, resolving citizenship issues based on presumptions is firmly
established in jurisprudence.
In 2004, this Court resolved Tecson on the basis of presumptions. Ruling on the allegations that
former presidential candidate Ronald Allan Poe (more popularly known as Fernando Poe, Jr.) was
not a natural-born Filipino citizen, this Court proceeded from the presumptions that: first, Fernando
_______________
203 Rollo, pp. 56-58.
512

Poe Jr.’s grandfather, Lorenzo Pou, was born sometime in 1870, while the country was still under
Spanish colonial rule;204 and second, that Lorenzo Pou’s place of residence, as indicated in his
death certificate, must have also been his place of residence before death, which subjected him to
the “en masse Filipinization,” or sweeping investiture of Filipino citizenship effected by the
Philippine Bill of 1902.205 This Court then noted that Lorenzo Pou’s citizenship would have
extended to his son and Fernando Poe Jr.’s father, Allan F. Poe. Based on these, Fernando Poe. Jr.
would then have been a natural-born Filipino as he was born while the 1935 Constitution, which
conferred Filipino citizenship to those born to Filipino fathers, was in effect:
In ascertaining, in G.R. No. 161824, whether grave abuse of discretion has been committed by the
COMELEC, it is necessary to take on the matter of whether or not respondent FPJ is a natural-
born citizen, which, in turn, depended on whether or not the father of respondent, Allan F. Poe,
would have himself been a Filipino citizen and, in the affirmative, whether or not the alleged
illegitimacy of respondent prevents him from taking after the Filipino citizenship of his putative
father. Any conclusion on the Filipino citizenship of Lorenzo Pou could only be drawn from the
presumption that having died in 1954 at 84 years old, when the Philippines was under Spanish
rule, and that San Carlos, Pangasinan, his place of residence upon his death in 1954, in the absence
of any other evidence, could have well been his place of residence before death, such that Lorenzo
Pou would have benefited from the “en masse Filipinization” that the Philippine Bill had effected
pg. 996
in 1902. That citizenship (of Lorenzo Pou), if acquired, would thereby extend to his son, Allan F.
Poe, father of respondent FPJ. The 1935 Constitution, during which regime respondent FPJ has
_______________
204 Tecson v. Commission on Elections, supra note 114 at pp. 473-474; p. 349.
205 Id., at pp. 473-474 and 488; p. 349.
513
VOL. 803, SEPTEMBER 20, 2016 513

seen first light, confers citizenship to all persons whose fathers are Filipino citizens regardless of
whether such children are legitimate or illegitimate.206
It is true that there is jurisprudence — Paa v. Chan207 and Go, Sr. v. Ramos208 (which merely
cites Paa) — to the effect that presumptions cannot be entertained in citizenship cases.
Paa, decided in 1967, stated:
It is incumbent upon the respondent, who claims Philippine citizenship, to prove to the satisfaction
of the court that he is really a Filipino. No presumption can be indulged in favor of the claimant,
of Philippine citizenship, and any doubt regarding citizenship must be resolved in favor of the
State.209 (Emphasis supplied)
These pronouncements are no longer controlling in light of this Court’s more recent ruling in
Tecson.
Moreover, what this Court stated in Paa was that “no presumption can be indulged in favor of the
claimant of Philippine citizenship.” This reference to “the claimant” was preceded by a sentence
specifically referencing the duty of “the respondent.” The syntax of this Court’s pronouncement
—using the definitive article “the” — reveals that its conclusion was specific only to Chan and to
his circumstances. Otherwise, this Court would have used generic language. Instead of the definite
article “the,” it could have used the indefinite article “a” in that same sentence: “no presumption
can be indulged in favor of a claimant of Philippine citizenship.” In the alternative, it could have
used other words that would show absolute or sweeping application, for instance: “no pre-
pg. 997
_______________
206 Id., at pp. 487-488; p. 349.
207 128 Phil. 815; 21 SCRA 753 (1967) [Per J. Zaldivar, En Banc].
208 614 Phil. 451, 479; 598 SCRA 266, 297 (2009) [Per J. Quisumbing, Second Division].
209 Paa v. Chan, supra at p. 825; p. 762
514

sumption can be indulged in favor of any/every claimant of Philippine citizenship”; or, “no
presumption can be indulged in favor of all claimants of Philippine citizenship.”
The factual backdrop of Paa is markedly different from those of this case. Its statements, therefore,
are inappropriate precedents for this case. In Paa, clear evidence was adduced showing that
respondent Quintin Chan was registered as an alien with the Bureau of Immigration. His father
was likewise registered as an alien. These pieces of evidence already indubitably establish foreign
citizenship and shut the door to any presumption. In contrast, petitioner in this case presents no
proof, direct or circumstantial, of private respondent’s or of both of her parents’ foreign
citizenship.
Go cited Paa, taking the same quoted portion but revising it to make it appear that the same
pronouncement was generally applicable:
It is incumbent upon one who claims Philippine citizenship to prove to the satisfaction of the court
that he is really a Filipino. No presumption can be indulged hi favor of the claimant of Philippine
citizenship, and any doubt regarding citizenship must be resolved in favor of the state.210
(Emphasis supplied)
Thus, Paa’s essential and pivotal nuance was lost in proverbial translation. In any case, Go was
decided by this Court sitting in Division. It cannot overturn Tecson, which was decided by this
Court sitting En Banc. Likewise, Go’s factual and even procedural backdrops are different from
those of this case. Go involved the deportation of an allegedly illegal and undesirable alien, not an
election controversy. In Go, copies of birth certificates unequivocally showing the Chinese
citizenship of Go and of his siblings were adduced.
pg. 998
_______________
210 Go, Sr. v. Ramos, supra note 208 at p. 479; p. 297.
515
VOL. 803, SEPTEMBER 20, 2016 515

VII.B
The presumption that all foundlings found in the Philippines are born to at least either a Filipino
father or a Filipino mother (and are thus natural-born, unless there is substantial proof otherwise)
arises when one reads the Constitution as a whole, so as to “effectuate [its] whole purpose.”211
As much as we have previously harmonized Article IV, Section 2 with Article IV, Section 1(2),
constitutional provisions on citizenship must not be taken in isolation. They must be read in light
of the constitutional mandate to defend the well-being of children, to guarantee equal protection
of the law and equal access to opportunities for public service, and to respect human rights. They
must also be read in conjunction with the Constitution’s reasons for requiring natural-born status
for select public offices. Further, this presumption is validated by contemporaneous construction
that considers related legislative enactments, executive and administrative actions, and
international instruments.
Article II, Section 13 and Article XV, Section 3 of the 1987 Constitution require the state to
enhance children’s well-being and to project them from conditions prejudicial to or that may
undermine their development. Fulfilling this mandate includes preventing discriminatory
conditions and, especially, dismantling mechanisms for discrimination that hide behind the veneer
of the legal apparatus:
ARTICLE II
....
pg. 999
State Policies
....
_______________
211 Civil Liberties Union v. Executive Secretary, supra note 138 at p. 162; p. 330.
516

SECTION 13. The State recognizes the vital role of the youth in nation-building and shall
promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall
inculcate in the youth patriotism and nationalism, and encourage their involvement in public and
civic affairs.
....
ARTICLE XV
The Family
....
SECTION 3. The State shall defend:
....
pg. 1000
(2) The right of children to assistance, including proper care and nutrition, and special
protection from all forms of neglect, abuse, cruelty, exploitation, and other conditions
prejudicial to their development[.] (Emphasis supplied)
Certain crucial government offices are exclusive to natural-born citizens of the Philippines. The
1987 Constitution makes the following offices exclusive to natural-born citizens:
(1) President;212
(2) Vice President;213
(3) Senator;214
_______________
212 Const., Art. VII, Sec. 2 provides:
ARTICLE VII. Executive Department
....
SECTION 2. No person may be elected President unless he is a natural-born citizen of

the Philippines, a registered voter, able to read and write, at least forty years of age on the
day of the election, and a resident of the Philippines for at least ten years immediately
preceding such election.
213 Const., Art. VII, Sec. 3.
ARTICLE VI. The Legislative Department
517
VOL. 803, SEPTEMBER 20, 2016 517

(4) Member of the House of Representatives;215
(5) Member of the Supreme Court or any lower collegiate court;216
pg. 1001
(6) Chairperson and Commissioners of the Civil Service Commission;217
_______________
....
SECTION 3. No person shall be a Senator unless he is a natural-born citizen of the

Philippines, and, on the day of the election, is at least thirty-five years of age, able to read
and write, a registered voter, and a resident of the Philippines for not less than two years
immediately preceding the day of the election.
....
SECTION 6. No person shall be a Member of the House of Representatives unless he is

a natural-born citizen of the Philippines and, on the day of the election, is at least twenty-
five years of age, able to read and write, and, except the party-list representatives, a
registered voter in the district in which he shall be elected, and a resident thereof for a period
of not less than one year immediately preceding the day of the election.
216 Const., Art. VIII, Sec. 7(1) provides:
ARTICLE VIII. Judicial Department
....
SECTION 7. (1) No person shall be appointed Member of the Supreme Court or any
lower collegiate court unless he is a natural-born citizen of the Philippines. A Member of
the Supreme Court must be at least forty years of age, and must have been for fifteen years
or more a judge of a lower court or engaged in the practice of law in the Philippines.
217 Const., Art. IX-B, Sec. 1(1) provides:
ARTICLE IX. Constitutional Commissions
....
B. The Civil Service Commission
SECTION 1. (1) The Civil Service shall be administered by the Civil Service
Commission composed of a Chairman and two Commissioners who shall be natural-born
citizens of the Philippines and, at the time of their appointment, at least thirty-
pg. 1002
518

(7) Chairperson and Commissioners of the Commission on Elections;218
(8) Chairperson and Commissioners of the Commission on Audit;219
(9) Ombudsman and his or her deputies;220
_______________
five years of age, with proven capacity for public administration, and must not have been
candidates for any elective position in the elections immediately preceding their
appointment.
218 Const., Art. IX-C, Sec. 1(1) provides:
....
C. The Commission on Elections
SECTION 1. (1) There shall be a Commission on Elections composed of a Chairman and

six Commissioners who shall be natural-born citizens of the Philippines and, at the time of
their appointment, at least thirty-five years of age, holders of a college degree, and must not
have been candidates for any elective position in the immediately preceding elections.
However, a majority thereof, including the Chairman, shall be Members of the Philippine
Bar who have been engaged in the practice of law for at least ten years.
219 Const., Art. IX-D, Sec. 1(1) provides:
....
D. Commission on Audit
SECTION 1. (1) There shall be a Commission on Audit composed of a Chairman and two
Commissioners, who shall be natural-born citizens of the Philippines and, at the time of
pg. 1003
men-appointment, at least thirty-five years of age, certified public accountants with not less
than ten years of auditing experience, or members of the Philippine Bar who have been
engaged in the practice of law for at least ten years, and must not have been candidates for
any elective position in the elections immediately preceding their appointment. At no time
shall all Members of the Commission belong to the same profession.
220 Const., Art. XI, Sec. 8 provides:
ARTICLE XI. Accountability of Public Officers
....
519
VOL. 803, SEPTEMBER 20, 2016 519

(10) Board of Governors of the Bangko Sentral ng Pilipinas;221 and
(11) Chairperson and Members of the Commission on Human Rights.222
_______________
SECTION 8. The Ombudsman and his Deputies shall be natural-born citizens of the
Philippines, and at the time of their appointment, at least forty years old, of recognized
probity and independence, and members of the Philippine Bar, and must not have been
candidates for any elective office in the immediately preceding election. The Ombudsman
must have for ten years or more been a judge or engaged in the practice of law in the
Philippines.
221 Const., Art. XII, Sec. 20 provides:
ARTICLE XII. National Economy and Patrimony
....
SECTION 20. The Congress shall establish an independent central monetary authority,
the members of whose governing board must be natural-born Filipino citizens, of known
probity, integrity, and patriotism, the majority of whom shall come from the private sector.
They shall also be subject to such other qualifications and disabilities as may be prescribed
by law. The authority shall provide policy direction in the areas of money, banking, and
credit. It shall have supervision over the operations of banks and exercise such regulatory
pg. 1004
powers as may be provided by law over the operations of finance companies and other
institutions performing similar functions.
222 Const., Art. XIII, Sec. 17(2) provides:
ARTICLE XIII. Social Justice and Human Rights
....
Human Rights
SECTION 17. . . .
(2) The Commission shall be composed of a Chairman and four Members who must be
natural-born citizens of the Philippines and a majority of whom shall be members of the Bar.
The term of office and other qualifications and disabilities of the Members of the
Commission shall be provided by law.
520

Apart from these, other positions that are limited to natural-born citizens include, among others,
city fiscals,223 assistant city fiscals,224 Presiding Judges and Associate Judges of the
Sandiganbayan, and other public offices.225 Certain professions are also limited to natural-born
citizens,226 as are other legally established benefits and incentives.227
_______________
223 Rep. Act No. 3537 (1963), Sec. 1. Section thirty-eight of Republic Act Numbered Four
hundred nine, as amended by Republic Act Numbered Eighteen hundred sixty and Republic Act
Numbered Three thousand ten, is further amended to read as follows:
Sec. 38. The City Fiscal and Assistant City Fiscals.—There shall be in the Office of the
City Fiscal one chief to be known as the City Fiscal with the rank, salary and privileges of
a Judge of the Court of First Instance, an assistant chief to be known as the first assistant
city fiscal, three second assistant city fiscals who shall be the chiefs of divisions, and fifty-
seven assistant fiscals, who shall discharge their duties under the general supervision of the
Secretary of Justice. To be eligible for appointment as City Fiscal one must be a natural-
born citizen of the Philippines and must have practiced law in the Philippines for a period
of not less than ten years or held during a like period of an office in the Philippine
pg. 1005
Government requiring admission to the practice of law as an indispensable requisite. To be
eligible for appointment as assistant fiscal one must be a natural born citizen of the
Philippines and must have practiced law for at least five years prior to his appointment or
held during a like period an office in the Philippine Government requiring admission to the
practice of law as an indispensable requisite. (Emphasis supplied)
224 Rep. Act No. 3537 (1963).
225 Examples of these are: the Land Transportation Office Commissioner, the Mines and
Geosciences Bureau Director, the Executive Director of Bicol River Basin, the Board Member of
the Energy Regulatory Commission, and the National Youth Commissioner, among others.
226 Examples of these are pharmacists and officers of the Philippine Coast Guard, among others.
227 Among these incentives are state scholarships in science and certain investment rights.
521
VOL. 803, SEPTEMBER 20, 2016 521

Concluding that foundlings are not natural-born Filipino citizens is tantamount to permanently
discriminating against our foundling citizens. They can then never be of service to the country in
the highest possible capacities. It is also tantamount to excluding them from certain means such as
professions and state scholarships, which will enable the actualization of their aspirations. These
consequences cannot be tolerated by the Constitution, not least of all through the present politically
charged proceedings, the direct objective of which is merely to exclude a singular politician from
office. Concluding that foundlings are not natural-born citizens creates an inferior class of citizens
who are made to suffer that inferiority through no fault of their own.
If that is not discrimination, we do not know what is.
The Constitution guarantees equal protection of the laws and equal access to opportunities for
public service:
ARTICLE II
....
pg. 1006
State Policies
....
SECTION 26. The State shall guarantee equal access to opportunities for public service, and
prohibit political dynasties as may be defined by law.
....
ARTICLE III
Bill of Rights
SECTION 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.
....
522

ARTICLE XIII
Social Justice and Human Rights
pg. 1007
SECTION 1. The Congress shall give highest priority to the enactment of measures that protect
and enhance the right of all the people to human dignity, reduce social, economic, and political
inequalities, and remove cultural inequities by equitably diffusing wealth and political power
for the common good. (Emphasis supplied)
The equal protection clause serves as a guarantee that “persons under like circumstances and
falling within the same class are treated alike, in terms of ‘privileges conferred and liabilities
enforced.’ It is a guarantee against ‘undue favor and individual or class privilege, as well as hostile
discrimination or oppression of inequality.’”228
Other than the anonymity of their biological parents, no substantial distinction229 differentiates
foundlings from children with known Filipino parents. They are both entitled to the full extent of
the state’s protection from the moment of their birth. Foundlings’ misfortune in failing to identify
the parents who abandoned them — an inability arising from no fault of their own — cannot be
the foundation of a rule that reduces them to statelessness or, at best, as inferior, second-class
citizens who are not entitled to as much benefits and protection from the state as those who know
their parents. Sustaining this classification is not only inequitable; it is dehumanizing. It condemns
those who, from the very beginning of their lives, were abandoned to a life of desolation and
deprivation.
_______________
228 Sameer Overseas Placement Agency, Inc. v. Cabiles, G.R. No. 170139, August 5, 2014, 732
SCRA 22, 57 [Per J. Leonen, En Banc].
229 People v. Cayat, 68 Phil. 12, 18 (1939) [Per J. Moran, First Division].
523
VOL. 803, SEPTEMBER 20, 2016 523

This Court does not exist in a vacuum. It is a constitutional organ, mandated to effect the
Constitution’s dictum of defending and promoting the well-being and development of children. It
is not our business to reify discriminatory classes based on circumstances of birth.
Even more basic than their being citizens of the Philippines, foundlings are human persons whose
dignity we value and rights we, as a civilized nation, respect. Thus:
pg. 1008
ARTICLE II
....
State Policies
....
SECTION 11. The State values the dignity of every human person and guarantees full respect
for human rights. (Emphasis supplied)
VII.C
Though the matter is settled by interpretation exclusively within the confines of constitutional text,
the presumption that foundlings are natural-born citizens of the Philippines (unless substantial
evidence of the foreign citizenship of both of the foundling’s parents is presented) is validated by
a parallel consideration or contemporaneous construction of the Constitution with acts of
Congress, international instruments in force in the Philippines, as well as acts of executive organs
such as the Bureau of Immigration, Civil Registrars, and the President of the Philippines.
Congress has enacted statutes founded on the premise that foundlings are Filipino citizens at birth.
It has adopted mechanisms to effect the constitutional mandate to protect children. Likewise, the
Senate has ratified treaties that put this mandate into effect.
524

pg. 1009
Republic Act No. 9344, otherwise known as the Juvenile Justice and Welfare Act of 2006,
provides:
SEC. 2. Declaration of State Policy.—The following State policies shall be observed at all
times:
....
(b) The State shall protect the best interests of the child through measures that will
ensure the observance of international standards of child protection, especially those to
which the Philippines is a party. Proceedings before any authority shall be conducted in the
best interest of the child and in a manner which allows the child to participate and to express
himself/herself freely. The participation of children in the program and policy formulation
and implementation related to juvenile justice and welfare shall be ensured by the concerned
government agency. (Emphasis supplied)
Section 4(b) of the Republic Act No. 9344 defines the “best interest of the child” as the “totality
of the circumstances and conditions which are most congenial to the survival, protection and
feelings of security of the child and most encouraging to the child’s physical, psychological and
emotional development.”
Consistent with this statute is our ratification230 of the United Nations Convention on the Rights
of the Child. This specifically requires the states-parties’ protection of: first, children’s rights to
immediate registration and nationality after birth; second, against statelessness; and third, against
discrimination on account of their birth status.231 Pertinent portions of the Convention read:
_______________
230 Ratified on August 21, 1990.
231 See United Nations Treaty Collection, Convention on the Rights of the Child (visited March
7, 2016).
525
VOL. 803, SEPTEMBER 20, 2016 525
pg. 1010
Preamble
The State Parties to the present Convention,
Considering that, in accordance with the principles proclaimed in the Charter of the United
Nations, recognition of the inherent dignity and of the equal and inalienable rights of all
members of the human family is the foundation of freedom, justice and peace in the world,
Bearing in mind that the peoples of the United Nations have, in the Charter, reaffirmed their faith
in fundamental human rights and in the dignity and worth of the human person, and have
determined to promote social progress and better standards of life in larger freedom,
Recognizing that the United Nations has, in the Universal Declaration of Human Rights and in the
International Covenants on Human Rights, proclaimed and agreed that everyone is entitled to all
the rights and freedoms set forth therein, without distinction of any kind, such as race, colour,
sex, language, religion, political or other opinion, national or social origin, property, birth or
other status,
Recalling that, in the Universal Declaration of Human Rights, the United Nations has proclaimed
that childhood is entitled to special care and assistance,
....
Have agreed as follows:
....
pg. 1011
Article 2
1. State parties shall respect and ensure the rights set forth in the present Convention to each
child within their jurisdiction without discrimination of any kind, irrespective of the
child’s or his or her parent’s or legal guardian’s race, colour, sex, language, religion,
political or other opinion, national, ethnic or social origin, property, disability, birth or
other status.
526

2. States Parties shall take appropriate measures to ensure that the child is protected
against all forms of discrimination or punishment on the basis of the status, activities,
expressed opinions, or beliefs of the child’s parents, legal guardians, or family members.
Article 3
1. In all actions concerning children, whether undertaken by public or private social

welfare institutions, courts of law, administrative authorities or legislative bodies, the best
interests of the child shall be a primary consideration.
2. States Parties undertake to ensure the child such protection and care as is necessary
for his or her well-being, taking into account the rights and duties of his or her parents,
legal guardians, or other individuals legally responsible for him or her, and, to this end, shall
take all appropriate legislative and administrative measures.
....
pg. 1012
Article 7
1. The child, shall be registered immediately after birth and shall have the right from birth
to a name, the right to acquire a nationality and as far as possible, the right to know and
be cared for by his or her parents.
2. States Parties shall ensure the implementation of these rights in accordance with their
national law and their obligations under the relevant international instruments in this field,
in particular where the child would otherwise be stateless. (Emphasis supplied)
The Philippines likewise ratified232 the 1966 International Covenant on Civil and Political Rights.
As with the Conven-
_______________
232 Ratified on October 23, 1986.
527
VOL. 803, SEPTEMBER 20, 2016 527

tion on the Rights of the Child, this treaty requires that children be allowed immediate registration
after birth and to acquire a nationality. It similarly defends them against discrimination:
Article 24. . . .
1. Every child shall have, without any discrimination as to race, colour, sex, language,
religion, national or social origin, property or birth, the right to such measures of protection as
are required by his status as a minor, on the part of his family, society and the State.
2. Every child shall be registered immediately after birth and shall have a name.
pg. 1013
3. Every child has the right to acquire a nationality.
....
Article 26. All persons are equal before the law and are entitled without any discrimination
to the equal protection of the law. In this respect, the law shall prohibit any discrimination and
guarantee to all persons equal and effective protection against discrimination on any ground
such as race, colour, sex, language, religion, political or other opinion, national or social origin,
property, birth or other status. (Emphasis supplied)
Treaties are “international agreement[s] concluded between states in written form and governed
by international law, whether embodied in a single instrument or in two or more related instruments
and whatever its particular designation.”233 Under Article VII, Section 21 of the 1987
Constitution, treaties require concurrence by the Senate before they became binding:
_______________
233 See Bayan (Bagong Alyansang Makabayan) v. Zamora, 396 Phil. 623, 657-660; 342 SCRA
449, 488-489 (2000) [Per J. Buena, En Banc], citing the Vienna Convention on the Laws of
Treaties.
528

SECTION 21. No treaty or international agreement shall be valid and effective unless concurred
in by at least two-thirds of all the Members of the Senate.
The Senate’s ratification of a treaty makes it legally effective and binding by transformation. It
then has the force and effect of a statute enacted by Congress. In Pharmaceutical and Health Care
Association of the Philippines v. Duque III, et al.:234
pg. 1014
Under the 1987 Constitution, international law can become part of the sphere of domestic law
either by transformation or incorporation. The transformation method requires that an
international law be transformed into a domestic law through a constitutional mechanism such as
local legislation. The incorporation method applies when, by mere constitutional declaration,
international law is deemed to have the force of domestic law.
Treaties become part of the law of the land through transformation pursuant to Article VII, Section
21 of the Constitution which provides that “[n]o treaty or international agreement shall be valid
and effective unless concurred in by at least two-thirds of all the members of the Senate.” Thus,
treaties or conventional international law must go through a process prescribed by the
Constitution for it to be transformed into municipal law that can be applied to domestic
conflicts.235 (Emphasis supplied)
Following ratification by the Senate, no further action, legislative or otherwise, is necessary.

Thereafter, the whole of government — including the judiciary — is duty-bound to abide by the
treaty, consistent with the maxim pacta sunt servanda.
Accordingly, by the Constitution and by statute, foundlings cannot be the object of discrimination.
They are vested with
_______________
234 561 Phil. 386; 535 SCRA 265 (2007) [Per J. Austria-Martinez, En Banc].
235 Id., at pp. 397-398; p. 289.
529
VOL. 803, SEPTEMBER 20, 2016 529

the rights to be registered and granted nationality upon birth. To deny them these rights, deprive
them of citizenship, and render them stateless is to unduly burden them, discriminate them, and
undermine their development.
Not only Republic Act No. 9344, the Convention on the Rights of the Child, and the International
Covenant on Civil and Political Rights effect the constitutional dictum of promoting the well-being
pg. 1015
of children and protecting them from discrimination. Other legislative enactments demonstrate the
intent to treat foundlings as Filipino citizens from birth.
Republic Act No. 8552, though briefly referred to as the Domestic Adoption Act of 1998, is
formally entitled An Act Establishing the Rules and Policies on Domestic Adoption of Filipino
Children and for Other Purposes. It was enacted as a mechanism to “provide alternative protection
and assistance through foster care or adoption of every child who is neglected, orphaned, or
abandoned.”236
Foundlings are explicitly among the “Filipino children” covered by Republic Act No. 8552:237
_______________
236 Rep. Act No. 8552 (1998), Sec. 2(b) provides:
Section 2(b). In all matters relating to the care, custody and adoption of a child, his/her
interest shall be the paramount consideration in accordance with the tenets set forth in the
United Nations (UN) Convention on the Rights of the Child; UN Declaration on Social and
Legal Principles Relating to the Protection and Welfare of Children with Special Reference
to Foster Placement and Adoption, Nationally and Internationally; and the Hague
Convention on the Protection of Children and Cooperation in Respect of Intercountry
Adoption. Toward this end, the State shall provide alternative protection and assistance
through foster care or adoption for every child who is neglected, orphaned, or abandoned.
237 See also Rep. Act No. 9523 (2009), An Act Requiring the Certification of the Department of
Social Welfare and Development (DSWD) to Declare a “Child Legally Available for Adoption”
as a Prerequisite for Adoption Proceedings, Amending for
530

SECTION 5. Location of Unknown Parent(s).—It shall be the duty of the Department or the
child-placing or child-caring agency which has custody of the child to exert all efforts to locate
his/her unknown biological parent(s). If such efforts fail, the child shall be registered as a
foundling and subsequently be the subject of legal proceedings where he/she shall be declared
abandoned. (Emphasis supplied)
pg. 1016
Similarly, Republic Act No. 8043, though briefly referred to as the Inter-Country Adoption Act of
1995, is formally entitled An Act Establishing the Rules to Govern Inter-Country Adoption of
Filipino Children, and for Other Purposes. As with Republic Act No. 8552, it expressly includes
foundlings among “Filipino children” who may be adopted:
SECTION 8. Who May Be Adopted.—Only a legally free child may be the subject of inter-
country adoption. In order that such child may be considered for placement, the following
documents must be submitted: to the Board:
_______________
this Purpose Certain Provision of Rep. Act No. 8552, otherwise known as the Inter-country
Adoption Act of 1995, Pres. Decree No. 603, otherwise known as the Child and Youth Welfare
Code, and for Other Purposes.
Rep. Act No. 9523 (2009), Sec. 2 provides:
SECTION 2. Definition of Terms.—As used in this Act, the following terms shall mean:
(1) Department of Social Welfare and Development (DSWD) is the agency charged to
implement the provisions of this Act and shall have the sole authority to issue the
certification declaring a child legally available for adoption.
....
(3) Abandoned Child refers to a child who has no proper parental care or guardianship, or
whose parent(s) have deserted him/her for a period of at least three (3) continuous months,
which includes a foundling.
531
VOL. 803, SEPTEMBER 20, 2016 531

a) Child study;
b) Birth certificate/foundling certificate;
pg. 1017
c) Deed of voluntary commitment/decree of abandonment/death certificate of parents;
d) Medical evaluation/history;
e) Psychological evaluation, as necessary; and
f) Recent photo of the child. (Emphasis supplied)
In the case of foundlings, foundling certificates may be presented in lieu of authenticated birth
certificates to satisfy the requirement for the issuance of passports, which will then facilitate their
adoption by foreigners:
SECTION 5. If the applicant is an adopted person, he must present a certified true copy of the
Court Order of Adoption, certified true copy of his original and amended birth certificates as issued
by the OCRG. If the applicant is a minor, a Clearance from the DSWD shall be required. In case
the applicant is for adoption by foreign parents under R.A. No. 8043, the following, shall be
required:
a) Certified true copy of the Court Decree of Abandonment of Child, the Death Certificate
of the child’s parents, or the Deed of Voluntary Commitment executed after the birth of the
child.
b) Endorsement of child to the Intercountry Adoption Board by the DSWD.
c) Authenticated Birth or Foundling Certificate.238 (Emphasis supplied)
Our statutes on adoption allow for the recognition of foundlings’ Filipino citizenship on account
of their birth. They benefit from this without having to do any act to perfect their
_______________
pg. 1018
238 DFA Order No. 11-97, Implementing Rules and Regulations for Rep. Act No. 8239 (1997),
Philippine Passport Act.
532

citizenship or without having to complete the naturalization process. Thus, by definition, they are
natural-born citizens.
Specifically regarding private respondent, several acts of executive organs have recognized her
natural-born status. This status was never questioned throughout her life; that is, until
circumstances made it appear that she was a viable candidate for President of the Philippines. Until
this, as well as the proceedings in the related case of Poe-Llamanzares, private respondent’s
natural-born status has been affirmed and reaffirmed through various official public acts.
First, private respondent was issued a foundling certificate and benefitted from the domestic
adoption process. Second, on July 18, 2006, she was granted an order of reacquisition of natural-
born citizenship under Republic Act No. 9225 by the Bureau of Immigration. Third, on October
6, 2010, the President of the Philippines appointed her as MTRCB Chairperson — an office that
requires natural-born citizenship.239
_______________
239 Pres. Decree No. 1986, Sec. 2 provides:
Section 2. Composition; qualifications; benefits.—The BOARD shall be composed of a

Chairman, a Vice Chairman and thirty (30) members, who shall all be appointed by the President
of the Philippines. The Chairman, the Vice Chairman, and the members of the BOARD, shall hold
office for a term of one (1) year, unless sooner removed by the President for any cause; Provided,
That they shall be eligible for reappointment after the expiration of their term. If the Chairman, or
the Vice Chairman or any member of the BOARD fails to complete his term, any person appointed
to fill the vacancy shall serve only for the unexpired portion of the term of the BOARD member
whom he succeeds.
No person shall be appointed to the BOARD, unless he is a natural-born citizen of the Philippines,
not less than twenty-one (21) years of age, and of good moral character and standing in the
community; Provided, That in the selection of the members of the BOARD due consideration shall
be given to such qualifications as would produce a multi-sectoral combination of expertise in the
various areas of motion picture and television; Provided, further, That at least five (5) members of
the BOARD shall be members of the Phil-
pg. 1019
533
VOL. 803, SEPTEMBER 20, 2016 533

VIII
As it is settled that private respondent’s being a foundling is not a bar to natural-born citizenship,
petitioner’s proposition as to her inability to benefit from Republic Act No. 9225 crumbles. Private
respondent, a natural-born Filipino citizen, reacquired natural-born Filipino citizenship when,
following her naturalization as a citizen of the United States, she complied with the requisites of
Republic Act No. 9225.
VIII.A
“Philippine citizenship may be lost or reacquired in the manner provided by law.”240

Commonwealth Act No. 63, which was in effect when private respondent was naturalized an
American citizen on October 18, 2001, provided in Section 1(1) that “[a] Filipino citizen may lose
his citizenship . . . [b]y naturalization in a foreign country.” Thus, private respondent lost her
Philippine citizenship when she was naturalized an American citizen. However, on July 7, 2006,
she took her Oath of Allegiance to the Republic of the Philippines under Section 3 of Republic Act
No. 9225. Three (3) days later, July 10, 2006, she filed before the Bureau of Immigration and
Deportation a Petition for Reacquisition of her Philippine citizenship. Shortly after, this Petition
was granted.241
_______________
ippine Bar. Provided, finally, That at least fifteen (15) members of the BOARD may come from
the movie and television industry to be nominated by legitimate associations representing the
various sectors of said industry.
The Chairman, the Vice Chairman and the other members of the BOARD shall be entitled to
transportation, representation and other allowances which shall in no case exceed FIVE
THOUSAND PESOS (P5,000.00) per month.
pg. 1020
240 Const, Art. IV, Sec. 3.
241 Rollo, pp. 685-686.
534

Republic Act No. 9225 superseded Commonwealth Act No. 63242 and Republic Act No. 8171243
specifically “to do away with the provision in Commonwealth Act No. 63 which takes away
Philippine citizenship from natural-born Filipinos who become naturalized citizens of other
countries.”244
The citizenship regime put in place by Republic Act No. 9225 is designed, in its own words, to
ensure “that all Philippine citizens who become citizens of another country shall be deemed not to
have lost their Philippine citizenship.”245 This Court shed light on this in Calilung v. Commission
on Elections:246 “[w]hat Rep. Act No. 9225 does is allow dual citizenship to natural-born Filipino
citizens who have lost Philippine citizenship by reason of their naturalization as citizens of a
foreign country.”247
Republic Act No. 9225 made natural-born Filipinos’ status permanent and immutable despite
naturalization as citizens of other countries. To effect this, Section 3 of Republic Act No. 9225
provides:
SEC. 3. Retention of Philippine Citizenship.—Any provision of law to the contrary

notwithstanding, natural-born citizens of the Philippines who have lost their Philippine citizenship
by reason of their naturalization as
_______________
242 An Act Providing for the Ways in which Philippine Citizenship may be Lost or Reacquired.
243 An Act Providing for the Repatriation of Filipino Women who have Lost their Philippine
Citizenship by Marriage to Aliens and Natural-born Filipinos.
244 See Advocates and Adherents of Social Justice for School Teachers and Allied Workers
(AASJS) Member v. Datumanong, 551 Phil. 110, 117-118; 523 SCRA 108, 116 (2007) [Per J.
Quisumbing, En Banc] in which this Court stated that this was the clear intent of the legislature
when it enacted Republic Act No. 9225.
245 Rep. Act No. 9225 (2003), Sec. 2.
pg. 1021
246 Advocates and Adherents of Social Justice for School Teachers and Allied Workers (AASJS)
Member v. Datumanong, supra.
247 Id., at p. 118; p. 116.
535
VOL. 803, SEPTEMBER 20, 2016 535

citizens of a foreign country are hereby deemed to have reacquired Philippine citizenship upon
taking the following oath of allegiance to the Republic:
“I _________________________, solemnly swear (or affirm) that I will support and defend
the Constitution of the Republic of the Philippines and obey the laws and legal orders
promulgated by the duly constituted authorities of the Philippines; and I hereby declare that
I recognize and accept the supreme authority of the Philippines and will maintain true faith
and allegiance thereto; and that I impose this obligation upon myself voluntarily without
mental reservation or purpose of evasion.”
Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens of a
foreign country shall retain their Philippine citizenship upon taking the aforesaid oath.
Section 3’s implications are clear. Natural-born Philippine citizens who, after Republic Act No.
9225 took effect, are naturalized in foreign countries “retain,” that is, keep, their Philippine
citizenship, although the effectivity of this retention and the ability to exercise the rights and
capacities attendant to this status are subject to certain solemnities (i.e., oath of allegiance and
other requirements for specific rights and/or acts, as enumerated in Section 5). On the other hand,
those who became citizens of another country before the effectivity of Republic Act No. 9225
“reacquire” their Philippine citizenship and may exercise attendant rights and capacities, also upon
compliance with certain solemnities. Read in conjunction with Section 2’s declaration of a policy
of immutability, this reacquisition is not a mere restoration that leaves a vacuum in the intervening
period. Rather, this reacquisition works to restore natural-born status as though it was never lost
at all.
536
pg. 1022
VIII.B
Taking the Oath of Allegiance effects the retention or reacquisition of natural-born citizenship. It
also facilitates the enjoyment of civil and political rights, “subject to all attendant liabilities and
responsibilities.”248 However, other conditions must be met for the exercise of other faculties:
Sec. 5. Civil and Political Rights and Liabilities.—Those who retain or reacquire Philippine
citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant
liabilities and responsibilities under existing laws of the Philippines and the following conditions:
(1) Those intending to exercise their right of suffrage must meet the requirements under
Section 1, Article V of the Constitution, Republic Act No. 9189, otherwise known as “the
Overseas Absentee Voting Act of 2003” and other existing laws;
(2) Those seeking elective public office in the Philippines shall meet the qualifications for
holding such public office as required by the Constitution and existing laws and, at the time
of the filing of the certificate of candidacy, make a personal and sworn renunciation of
any and all foreign citizenship before any public officer authorized to administer an oath;
(3) Those appointed to any public office shall subscribe and swear to an oath of allegiance
to the Republic of the Philippines and its duly constituted authorities prior to their
assumption of office; Provided, That they renounce their oath of allegiance to the country
where they took that oath;
_______________
248 Rep. Act No. 9225 (2003), Sec. 5.
537
pg. 1023
VOL. 803, SEPTEMBER 20, 2016 537
(4) Those intending to practice their profession in the Philippines shall apply with the proper
authority for a license or permit to engage in such practice; and
(5) That the right to vote or be elected or appointed to any public office in the Philippines
cannot be exercised by, or extended to, those who:
a. are candidates for or are occupying any public office in the country of which they
are naturalized citizens; and/or
b. are in active service as commissioned or noncommissioned officers in the armed

forces of the country which they are naturalized citizens. (Emphasis supplied)
Thus, natural-born Filipinos who have been naturalized elsewhere and wish to run for elective
public office must comply with all of the following requirements:
First, taking the oath of allegiance to the Republic. This effects the retention or reacquisition of
one’s status as a natural-born Filipino.249 This also enables the enjoyment of full civil and political
rights, subject to all attendant liabilities and responsibilities under existing laws, provided the
solemnities recited in Section 5 of Republic Act No. 9225 are satisfied.250
_______________
249 Rep. Act No. 9225 (2003), Sec. 3, par. 2:
Section 3. Retention of Philippine Citizenship.—. . .
....
Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens
of a foreign country shall retain their Philippine citizenship upon taking the aforesaid oath.
250 Rep. Act No. 9225 (2003), Sec. 5 provides:
pg. 1024
Section 5. Civil and Political Rights and Liabilities.—Those who retain or reacquire
Philippine citizenship under this Act shall enjoy full civil and political rights and be subject
to all at-
538

Second, compliance with Article V, Section 1 of the 1987 Constitution,251 Republic Act No. 9189,
otherwise known as the Overseas Absentee Voting Act of 2003, and other existing laws. This is to
facilitate the exercise of the right of suffrage; that is, to allow for voting in elections.252
Third, “mak[ing] a personal and sworn renunciation of any and all foreign citizenship before any
public officer authorized to administer an oath.”253 This, along with satisfying the other
_______________
tendant liabilities and responsibilities under existing laws of the Philippines and the
following conditions:
....
251 Const., Art. V, Sec. 1 provides:
Section 1. Suffrage may be exercised by all citizens of the Philippines not otherwise
disqualified by law, who are at least eighteen years of age, and who shall have resided in the
Philippines for at least one year, and in the place wherein they propose to vote, for at least
six months immediately preceding the election. No literacy, property, or other substantive
requirement shall be imposed on the exercise of suffrage.
252 Rep. Act No. 9225 (2003), Sec. 5(1) provides:
to all attendant liabilities and responsibilities under existing laws of the Philippines and the
(1) Those intending to exercise their right of suffrage must meet the requirements under
Section 1, Article V of the Constitution, Republic Act No. 9189, otherwise known as “The
Overseas Absentee Voting Act of 2003” and other existing laws.
pg. 1025
253 Rep. Act No. 9225 (2003), Sec. 5(2) provides:
to all attendant liabilities and responsibilities under existing laws of the Philippines and the
....
(2) Those seeking elective public in the Philippines shall meet the qualification for holding
such public office as required by
539
VOL. 803, SEPTEMBER 20, 2016 539

qualification requirements under relevant laws, makes one eligible for elective public office.
As explained in Sobejana-Condon v. Commission on Elections,254 this required sworn

renunciation is intended to complement Article XI, Section 18 of the Constitution in that “[p]ublic
officers and employees owe the State and this Constitution allegiance at all times and any public
officer or employee who seeks to change his citizenship or acquire the status of an immigrant of
another country during his tenure shall be dealt with by law.”255 It is also in view of this that
Section 5(5) similarly bars those who seek or occupy public office elsewhere and/or who are
serving in the armed forces of other countries from being appointed or elected to public office in
the Philippines.
VIII.C
Private respondent has complied with all of these requirements. First, on July 7, 2006, she took
the Oath of Allegiance to the Republic of the Philippines.256 Second, on August 31, 2006, she
became a registered voter of Barangay Santa Lucia, San Juan.257 This evidences her compliance
with Article V, Section 1 of the 1987 Constitution. Since she was to vote within the country, this
dispensed with the need to comply with the Overseas Absentee Voting Act of 2003. Lastly, on
October 20, 2010, she executed an Affidavit of Renunciation of Allegiance to the United States of
America and Renunciation
pg. 1026
_______________
the Constitution and existing laws and, at the time of the filing of the certificate of candidacy,
make a personal and sworn renunciation of any and all foreign citizenship before any public
officer authorized to administer an oath;
254 Supra note 146.
255 Id., at p. 428; p. 288.
256 Rollo, p. 10.
257 Id., at p. 687.
540

of American Citizenship.258 This was complemented by her execution of an Oath/Affirmation of

Renunciation of Nationality of the United States259 before Vice Consul Somer E. Bessire-Briers
on July 12, 2011,260 which was, in turn, followed by Vice Consul Jason Galian’s issuance of a
Certificate of Loss of Nationality on December 9, 2011261 and the approval of this certificate by
the Overseas Citizen Service, Department of State, on February 3, 2012.262
Private respondent has, therefore, not only fully reacquired natural-born citizenship; she has also
complied with all of the other requirements for eligibility to elective public office, as stipulated in
Republic Act No. 9225.
VIII.D
It is incorrect to intimate that private respondent’s having had to comply with Republic Act No.
9225 shows that she is a naturalized, rather than a natural-born, Filipino citizen. It is wrong to
postulate that compliance with Republic Act No. 9225 signifies the performance of acts to perfect
citizenship.
To do so is to completely disregard the unequivocal policy of permanence and immutability as

articulated in Section 2 of Republic Act No. 9225 and as illuminated in jurisprudence. It is to
pg. 1027
erroneously assume that a natural-born Filipino citizen’s naturalization elsewhere is an irreversible
termination of his or her natural-born status.
To belabor the point, those who take the Oath of Allegiance under Section 3 of Republic Act No.
9225 reacquire natural-born citizenship. The prefix “re” signifies reference to the preceding state
of affairs. It is to this status quo ante that one
_______________
258 Id.
259 Id., at p. 229.
260 Id.
261 Id.
262 Id.
541
VOL. 803, SEPTEMBER 20, 2016 541

returns. “Re”-acquiring can only mean a reversion to “the way things were.” Had Republic Act
No. 9225 intended to mean the investiture of an entirely new status, it should not have used a word
such as “reacquire.” Republic Act No. 9225, therefore, does not operate to make new citizens
whose citizenship commences only from the moment of compliance with its requirements.
Bengson, speaking on the analogous situation of repatriation, ruled that repatriation involves the
restoration of former status or the recovery of one’s original nationality:
Moreover, repatriation results in the recovery of the original nationality. This means that a
naturalized Filipino who lost his citizenship will be restored to his prior status as a naturalized
Filipino citizen. On the other hand, if he was originally a natural-born citizen before he lost his
Philippine citizenship, he will be restored to his former status as a natural-born Filipino.263
(Emphasis supplied)
Although Bengson was decided while Commonwealth Act No. 63 was in force, its ruling is in
keeping with Republic Act No. 9225’s policy of permanence and immutability: “all Philippine
pg. 1028
citizens of another country shall be deemed not to have lost their Philippine citizenship.”264 In
Bengson’s words, the once naturalized citizen is “restored” or brought back to his or her natural-
born status. There may have been an interruption in the recognition of this status, as, in the interim,
he or she was naturalized elsewhere, but the restoration of natural-born status expurgates this
intervening fact. Thus, he or she does not become a Philippine citizen only from the point of
restoration and moving forward. He or she is recognized, de
_______________
263 Bengson III v. House of Representatives Electoral Tribunal, supra note 178 at p. 649; p. 556.
264 Rep. Act No. 9225 (2003), Sec. 2.
542

jure, as a Philippine citizen from birth, although the intervening fact may have consequences de
facto.
Republic Act No. 9225 may involve extended processes not limited to taking the Oath of
Allegiance and requiring compliance with additional solemnities, but these are for facilitating the
enjoyment of other incidents to citizenship, not for effecting the reacquisition of natural-born
citizenship itself. Therefore, it is markedly different from naturalization as there is no singular,
extended process with which the former natural-born citizen must comply.
IX
To hold, as petitioner suggests, that private respondent is stateless265 is not only to set a dangerous
and callous precedent. It is to make this Court an accomplice to injustice.
Equality, the recognition of the humanity of every individual, and social justice are the bedrocks
of our constitutional order. By the unfortunate fortuity of the inability or outright irresponsibility
of those gave them life, foundlings are compelled to begin their very existence at a disadvantage.
Theirs is a continuing destitution that can never be truly remedied by any economic relief.
pg. 1029
If we are to make the motives of our Constitution true, then we an never tolerate an interpretation
that condemns foundlings to an even greater misfortune because of their being abandoned. The
Constitution cannot be rendered inert and meaningless for them by mechanical judicial fiat.
Dura lex sed lex is not a callous and unthinking maxim to be deployed against other reasonable
interpretations of our basic law. It does command us to consider legal text, but always with justice
in mind.
_______________
265 Rollo, p. 35.
543
VOL. 803, SEPTEMBER 20, 2016 543

It is the empowering and ennobling interpretation of the Constitution that we must always sustain.
Not only will this manner of interpretation edify the less fortunate; it establishes us, as Filipinos,
as a humane and civilized people.
The Senate Electoral Tribunal acted well within the bounds of its constitutional competence when
it ruled that private respondent is a natural-born citizen qualified to sit as Senator of the Republic.
Contrary to petitioner’s arguments, there is no basis for annulling its assailed Decision and
Resolution.
WHEREFORE, the Petition for Certiorari is DISMISSED. Public respondent Senate Electoral
Tribunal did not act without or in excess of its jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction in rendering its assailed November 17, 2015 Decision
and December 3, 2015 Resolution.
Private respondent Mary Grace Poe-Llamanzares is a natural-born Filipino citizen qualified to hold
office as Senator of the Republic.
SO ORDERED.
Sereno (CJ.), Velasco, Jr., Peralta, Bersamin, Perez and Caguioa, JJ., concur.
Carpio, Leonardo-De Castro and Brion, JJ., No part.
Del Castillo, J., Not natural-born until proven otherwise.
pg. 1030
Mendoza, J., With some reservation.
Reyes, J., Dissenting.
Perlas-Bernabe, J., Please see Dissenting Opinion.
Jardeleza, J., In result.
544

DISSENTING OPINION
PERLAS-BERNABE, J.:
I dissent.
I respectfully submit that the Senate Electoral Tribunal (SET) committed grave abuse of discretion
in ruling that private respondent Mary Grace Poe-Llamanzares (respondent) was a natural-born
citizen and, thus, qualified to hold office as Senator of the Republic of the Philippines.1
An act of a court or tribunal can only be considered as committed with grave abuse of discretion
when such act is done in a capricious or whimsical exercise of judgment as is equivalent to lack
of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of
a positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic manner by
reason of passion and hostility.2 In this relation, “grave abuse of discretion arises when a lower
court or tribunal patently violates the Constitution, the law or existing jurisprudence.”3
The advent of the 1935 Constitution established the principle of jus sanguinis as basis for acquiring
Philippine citizenship.4 Following this principle, citizenship is conferred by virtue of blood
relationship to a Filipino parent.5
_______________
1 See Section 3, Article VI of the 1987 Constitution.
pg. 1031
2 Carpio-Morales v. Court of Appeals (Sixth Division), G.R. Nos. 217126-27, November 10,
2015, 774 SCRA 431, citing Yu v. Reyes-Carpio, 667 Phil. 474, 481-482; 652 SCRA 341, 348
(2011).
3 Id., citing Tagolino v. House of Representatives Electoral Tribunal, 706 Phil. 534, 558; 693
SCRA 574, 599-600 (2013).
4 Valles v. Commission on Elections, 392 Phil. 327, 336; 337 SCRA 543, 551 (2000).
5 Id.
545
VOL. 803, SEPTEMBER 20, 2016 545

It was admitted that respondent was a foundling with unknown facts of birth and parentage. On its
face, Section 1, Article IV of the 1935 Constitution — the applicable law to respondent’s case —
did not include foundlings in the enumeration of those who are considered Filipino citizens. It
reads:
Constitution.
(4) Those whose mothers are citizens of the Philippines and, upon reaching the age of
majority, elect Philippine citizenship.
pg. 1032
This case was originally a quo warranto proceeding before the SET.6 The initial burden, thus, fell
upon petitioner Rizalito Y. David to show that respondent lacked the qualifications of a Senator.
However, upon respondent’s voluntary admission that she was a foundling, the burden of evidence
was shifted to her. In his Dissenting Opinion before the SET, Associate Justice Arturo D. Brion
pertinently explains:
[I]n quo warranto, the petitioner who challenges the respondent’s qualification to office carries
the burden of proving, by preponderance of evidence, the facts constituting the disqualification.
Upon such proof, the burden
_______________
6 Docketed as SET Case No. 001-15.
546

shifts to the respondent who must now present opposing evidence constituting his or her defense
or establishing his or her affirmative defense.
xxxx
In the present case, the petitioner has alleged that the respondent is a foundling. He posits that, as
a foundling has no known parents from whom to trace the origins of her citizenship, the respondent
is not a Filipino citizen and is, therefore, not eligible for the position of senator.
Significantly, the respondent admitted her status as a foundling, thus, lifting the petitioner’s burden
of proving his claim that she is a foundling. With the admission, the fact necessary to establish the
petitioner’s claim is considered established.7
pg. 1033
In this case, respondent failed to present competent and sufficient evidence to prove her blood
relation to a Filipino parent which is necessary to determine natural-born citizenship pursuant to
the jus sanguinis principle. This notwithstanding, the ponencia concludes that the following
circumstances are substantial evidence justifying the inference that respondent’s biological parents
are Filipino:8
(a) Circumstances of abandonment: Respondent was found as a newborn infant outside the
Parish Church of Jaro, Iloilo on September 3, 1968. In 1968, Iloilo, as did most if not all other
Philippine provinces, had a predominantly Filipino population. In 1968, there was also no
international airport in Jaro, Iloilo.
(b) Physical features: She is described as having “brown almond-shaped eyes, a low nasal
bridge, straight black hair and an oval-shaped face.” She stands at only 5 feet and 2 inches tall.
_______________
7 See Dissenting Opinion of Justice Brion in David v. Poe-Llamanzares, SET Case No. 001-15,
November 17, 2015, pp. 12-13.
8 See ponencia, pp. 506-508.
547
VOL. 803, SEPTEMBER 20, 2016 547

(c) Statistical inference: in the related case of Poe-Llamanzares v. Commission on Elections,9

former Solicitor General Florin T. Hilbay underscored how it was statistically more probable that
respondent was born a Filipino citizen, submitting that out of 900,165 recorded births in the
Philippines in 1968, over 1,595 or 0.18% were foreigners. This translates to, roughly, a 99.8%
probability that respondent was born a Filipino citizen.
However, the foregoing “circumstantial evidence” do not adequately prove the determination
sought to be established: that is, whether or not respondent can trace her parentage to a Filipino
citizen. These circumstances can be easily debunked by contrary but likewise rationally-sounding
suppositions. Case law holds that “[m]atters dealing with qualifications for public elective office
must be strictly complied with.”10 The proof to hurdle a substantial challenge against a candidate’s
qualifications must therefore be solid. This Court cannot make a definitive pronouncement on a
candidate’s citizenship when there is a looming possibility that he/she is not Filipino. The
circumstances surrounding respondent’s abandonment (both as to the milieu of time and place), as
pg. 1034
well as her physical characteristics, hardly assuage this possibility. By parity of reasoning, they do
not prove that she was born to a Filipino: her abandonment in the Philippines is just a restatement
of her foundling status, while her physical features only tend to prove that her parents likely had
Filipino features and yet it remains uncertain if their citizenship was Filipino. More so, the statistics
cited — assuming the same to be true — do not account for all births but only of those recorded.
To my mind, it is uncertain how “encompassing” was the Philippine’s civil registration system at
that time — in 1968 — to be able to conclude that those statistics logi-
_______________
9 See G.R. Nos. 221697 and 221698-221700, March 8, 2016, 786 SCRA 1.
10 See Arnado v. Commission on Elections, G.R. No. 210164, August 18, 2015, 767 SCRA 168.
548

cally reflect a credible and representative sample size. And even assuming it to be so, 1,595 were
reflected as foreigners, rendering it factually possible that respondent belonged to this class.
Ultimately, the opposition against respondent’s natural-born citizenship claim is simple but
striking: the fact that her parents are unknown directly puts into question her Filipino citizenship
because she has no prima facie link to a Filipino parent from which she could have traced her
Filipino citizenship.
Absent satisfactory proof establishing any blood relation to a Filipino parent, and without any
mention in the 1935 Constitution that foundlings are considered or even presumed to be Filipino
citizens at birth, it is my view that, under the auspices of the 1935 Constitution, respondent could
not be considered a natural-born Filipino citizen. As worded, the provisions of Section 1, Article
IV of the 1935 Constitution are clear, direct, and unambiguous. This Court should therefore apply
the statutory construction principles of expressio unius est exclusio alterius and verba legis non
est recedendum. Consequently, it would be unnecessary to resort to the constitutional deliberations
or to examine the underlying intent of the framers of the 1935 Constitution. In Civil Liberties
Union v. The Executive Secretary,11 this Court remarked that:
Debates in the constitutional convention “are of value as showing the views of the individual
members, and as indicating the reasons for their votes, but they give us no light as to the views
of the large majority who did not talk, much less of the mass of our fellow citizens whose votes at
the polls gave that instrument the force of fundamental law. We think it [is] safer to construe the
constitution from what appears upon its face.”12
pg. 1035
_______________
11 272 Phil. 147; 194 SCRA 317 (1991).
12 Id., at pp. 169-170; p. 337.
549
VOL. 803, SEPTEMBER 20, 2016 549

In fact, it should be pointed out that the 1935 Constitution, as it was adopted in its final form, never
carried over any proposed provision on foundlings being considered or presumed to be
Filipino citizens. Its final exclusion is therefore indicative of the framers’ prevailing intent.13
The ponencia’s theorized “harmonization”14 of the constitutional provisions on citizenship with
the provisions on the promotion of children’s well-being,15 equal protection,16 public service,17
and even human dignity and human rights18 appears to be a tailor-fitted advocacy for allowing
_______________
13 Id., at p. 157; p. 329.
15 Section 13, Article II of the 1987 Constitution provides:
Section 13. The State recognizes the vital role of the youth in nation-building and shall
promote and protect their physical, moral, spiritual, intellectual, and social well-being. It
shall inculcate in the youth patriotism and nationalism, and encourage their involvement in
public and civic affairs.
Section 3, Article XV of the 1987 Constitution also provides:
Section 3. The State shall defend:
xxxx
(3) The right of children to assistance, including proper care and nutrition, and special
protection from all forms of neglect, abuse, cruelty, exploitation and other conditions
prejudicial to their development;
xxxx
pg. 1036
16 Section 1, Article III of the 1987 Constitution reads:
Section 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.
17 Section 26, Article II of the 1987 Constitution states:
Section 26. The State shall guarantee equal access to opportunities for public service and
prohibit political dynasties as may be defined by law.
18 Section 1, Article XIII of the 1987 Constitution provides:
Section 1. The Congress shall give highest priority to the enactment of measures that
protect and enhance the right of all
550

foundlings to run for key national posts that, quite frankly, stretches the import of these distinct
provisions to the separate and unique matter of citizenship. There seems to be an evident logical
problem with the argument that since the Constitution protects its children, and respects human
rights and equality to run for office, then ergo, foundlings should be presumed to be natural-born.
It appears that this approach aims to collate all possibly related constitutional text, albeit far-flung,
just to divine a presumption when unfortunately, there is none.
Moreover, as Senior Associate Justice Antonio T. Carpio (Justice Carpio) aptly pointed out in his
Dissenting Opinion before the SET, it would be insensible to suppose that the framers of the 1935
Constitution intended that foundlings be considered as natural-born citizens:
[N]one of the framers of the 1935 Constitution mentioned the term natural-born in relation to the
citizenship of foundlings. Again, under the 1935 Constitution, only those whose fathers were
Filipino citizens were considered natural-born citizens. Those who were born of Filipino mothers
and alien fathers were still required to elect Philippine citizenship, preventing them from being
natural-born citizens. If, as respondent would like us to believe, the framers intended that
foundlings be considered natural-born Filipino citizens, this would create an absurd situation
where a child with unknown parentage would be placed in a better position than child whose
mother is actually known to be a Filipino citizen. The
_______________
pg. 1037
the people to human dignity, reduce social, economic, and political inequalities, and remove
cultural inequities by equitably diffusing wealth and political power for the common good.
xxxx
Section 11, Article II of the 1987 Constitution states:
Section 11. The State values the dignity of every human person and guarantees full
respect for human rights.
551
VOL. 803, SEPTEMBER 20, 2016 551

framers of the 1935 Constitution could not have intended to create such absurdity.19
While the predicament of foundlings of having their parents unknown would seem to entail the
difficult, if not impossible, task of proving their Filipino parentage, the current state of the law
which requires evidence of blood relation to a Filipino parent to establish natural-born citizenship
under the jus sanguinis principle must be respected at all costs. This is not to say that the position
of foundlings in relation to their endeavors for high public offices has been overlooked in this
discourse. Rather, the correction of this seeming “misfortune” — as the ponencia would
suppose20 — lies in legislative revision, not judicial supplication. For surely, it is not for this Court
to step in and supply additional meaning when clarity is evoked in the citizenship provisions of
the Constitution.
For another, I would also like to express my reservations on the ponencia’s reliance on Tecson v.
Commission on Elections21 (Tecson) wherein this Court resolved that respondent’s adoptive
father, Ronald Allan Kelley Poe, more popularly known as Fernando Poe Jr. (FPJ), was qualified
to run for the presidential post during the 2004 National Elections which, according to
the ponencia,22 was based on the basis of “presumptions” that proved his status as a natural-born
citizen. In that case, the identity of FPJ’s parents, Allan F. Poe and Bessie Kelley, was never
questioned. More importantly, there was direct documentary evidence to trace Allan F. Poe’s
parentage to Lorenzo Pou, whose death certificate identified him to be a Filipino. Thus, by that
direct proof alone, there was a substantial trace of Allan F. Poe’s parentage to a Filipino (Lorenzo
Pou), which in turn, allowed the substantial tracing
_______________
pg. 1038
19 See Dissenting Opinion of Justice Carpio in David v. Poe-Llamanzares, SET Case No. 001-
15, November 17, 2015, pp. 28-29.
21 468 Phil. 421; 424 SCRA 277 (2004).
552

of FPJ’s parentage to a Filipino (Allan F. Poe). As such, FPJ was declared qualified to run for the
presidential post in 2004. The Court further explained that while the birth certificate of FPJ’s
grandfather, Lorenzo Pou, was not presented, it could be assumed that the latter was born in 1870
while the Philippines was still a colony of Spain. This inference was drawn from the fact that
Lorezo Pou died at the age of 84 years old in 1954. Thus, absent any evidence to the contrary, and
against petitioner therein’s bare allegation, Lorenzo Pou was deemed to be a resident of the
Philippines and hence, a Filipino citizen by operation of the Philippine Organic Act of 1902,23 on
the premise that the place of residence of a person at the time of his death was also his residence
before his death. In any event, the certified true copy of the original death certificate of Lorenzo
Pou reflecting that he was a Filipino citizen was enough basis to trace FPJ’s Filipino natural-born
citizenship. As the Court aptly cited, according to Section 44, Rule 130 of the Rules of Court,
“entries in official records made in the performance of his duty by a public officer of the
Philippines, or by a person in the performance of a duty specially enjoined by law, are prima
facie evidence of the facts therein stated.”
In contrast, by her admission as a foundling whose parents are unknown, and without presenting
any other evidence to show any substantial tracing of Filipino parentage similar to FPJ, the legal
and factual nuances of respondent’s case should be treated differently.
Accordingly, Tecson provides no authoritative jurisprudential anchorage to this case.
Finally, it bears stressing that they jus sanguinis principle of citizenship established in the 1935
Constitution was subsequently carried over and adopted in the 1973 and 1987 Con-
_______________
23 See Section 4 of the Philippine Organic Act of 1902, entitled “An Act Temporarily to Provide
for the Administration of the Affairs of Civil Government in the Philippine Islands, and for Other
Purposes.”
pg. 1039
553
VOL. 803, SEPTEMBER 20, 2016 553

stitutions.24 Thus, notwithstanding the existence of any treaty or generally accepted principle of
international law which purportedly evince that foundlings are accorded natural-born citizenship
in the State in which they are found, the same, nonetheless, could not be given effect as it would
contravene the Constitution. To recall, should international law be adopted in this jurisdiction, it
would only form part of the sphere of domestic law.25 Being relegated to the same level as
domestic laws, they could not modify or alter, much less prevail, over the express mandate of the
Constitution. In this relation, I deem it fitting to echo the point made by Associate Justice Teresita
J. Leonardo-De Castro, likewise in her Separate Opinion before the SET:
Citizenship is not automatically conferred under the international conventions cited but will entail
an affirmative action of the State, by a national law or legislative enactment, so that the nature of
citizenship, if ever acquired pursuant thereto, is citizenship by naturalization. There must be a law
by which citizenship can be acquired. By no means can this citizenship be considered that of a
natural-born character under the principle of jus sanguinis in the Philippine Constitution.26
For all these reasons, I unfortunately depart from the ruling of the majority and perforce submit
that the SET committed grave abuse of discretion in declaring respondent a natural-born citizen.
The majority ruling runs afoul of and even distorts the plain language of the Constitution which
firmly and consistently follows the jus sanguinis principle. In the final analysis, since respondent
has not presented any compe-
_______________
24 Supra note 4 at pp. 336-337; p. 551.
25 Pharmaceutical and Health Care Association of the Philippines v. Duque III, 561 Phil. 386,
397-398; 535 SCRA 265, 289 (2007).
26 See Separate Opinion of Justice De Castro in David v. Poe-Llamanzares, SET Case No. 001-
15, November 17, 2015, p. 18.
pg. 1040
554

tent and sufficient evidence to prove her blood relation to a Filipino parent in these proceedings,
she should not be deemed to be a natural-born citizen of the Philippines, which, thus, renders the
instant petition meritorious. Nonetheless, it is important to point out that respondent is not
precluded from later on proving her natural-born citizenship through such necessary evidence in
the appropriate proceeding therefor, considering that a decision determining natural-born
citizenship never becomes final.27 I reach these conclusions solely under the peculiar auspices of
this case and through nothing but my honest and conscientious assessment of the facts parallel to
the applicable legal principles. As a magistrate of this High Court, I am impelled to do no less than
fulfill my duty to faithfully interpret the laws and the Constitution, bereft of any politics or
controversy, or of any regard to the tides of popularity or gleam of any personality.
WHEREFORE, I vote to GRANT the petition.
Petition dismissed.
Notes.—Republic Act (RA) No. 9225, otherwise known as the “Citizenship Retention and
Reacquisition Act of 2003,” was signed into law by President Gloria Macapagal-Arroyo (PGMA)
on August 29, 2003. (David vs. Agbay, 753 SCRA 526 [2015])
In the case of those who became foreign citizens after Republic Act (RA) No. 9225 took effect,
they shall retain Philippine citizenship despite having acquired foreign citizenship provided they
took the oath of allegiance under the new law. (Id.)
——o0o——
_______________
27 See Dissenting Opinion of Justice Carpio in David v. Poe-Llamanzares, SET Case. No 001-
15, p. 35, citing Kilosbayan Foundation v. Ermita, 553 Phil. 331, 343-344; 526 SCRA 353, 366-
367 (2007).
pg. 1041
G.R. No. 184237. September 21, 2016.*
HENRY H. TENG, petitioner, vs. LAWRENCE C. TING, EDMUND TING and ANTHONY
TING, respondents.
Remedial Law; Special Proceedings; Partition; Section 2, Rule 90 of the Rules of Court states that
“questions as to advancement made, or alleged to have been made, by the deceased to any heir
may be heard and determined by the court having jurisdiction of the estate proceedings; and the
final order of the court thereon shall be binding on the person raising the questions and on the
heir.”—In the guise of raising a legal issue, petitioner urges the court a quo to resolve once again
an ownership issue. Section 2, Rule 90 of the Rules of Court states that “questions as to
advancement made, or alleged to have been made, by the deceased to any heir may be heard and
determined by the court having jurisdiction of the estate proceedings; and the final order of the
court thereon shall be binding on the person raising the questions and on the heir.” But the rule, as
correctly interpreted by respondent, presupposes a genuine issue of advancement.
Civil Law; Succession; Legitime; Words and Phrases; Legitime is defined as that part of the
testator’s property which he cannot dispose of because the law has reserved it for certain heirs
who are, therefore, called compulsory heirs.—Legitime is defined as that part of the testator’s
property which he cannot dispose of because the law has reserved it for certain heirs who are,
therefore, called compulsory heirs. Petitioner essentially asserts that properties were actually
owned by Teng Ching Lay, and that Arsenio was merely a trustee of the said properties. Verily,
petitioner is claiming that Teng Ching Lay owned the Malate property and therefore, it should be
considered part of the legitime. This brings us precisely to the purpose of an inclusion/exclusion
proceeding. Where a party in a probate proceeding prays for the inclusion in, or exclusion from,
the inventory of a piece of property, the court may provisionally pass upon the question without
prejudice to its final determination in a separate action.
_______________
* THIRD DIVISION.
615
VOL. 803, SEPTEMBER 21, 2016 615

Teng vs. Ting
Remedial Law; Civil Procedure; Judgments; Res Judicata; Under the doctrine of res judicata, a
final judgment or decree on the merits rendered by a court of competent jurisdiction is conclusive
of the rights of the parties or their privies in all later suits and on all points and matters determined
pg. 1042
in the previous suit.—Under the doctrine of res judicata, a final judgment or decree, on the merits
rendered by a court of competent jurisdiction is conclusive of the rights of the parties or their
privies in all later suits and on all points and matters determined in the previous suit. The
foundation principle upon which the doctrine rests is that the parties ought not to be permitted to
litigate the same issue more than once; that when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, so long as it remains unreversed, it should be
conclusive upon the parties and those in privity with them in law or estate.
Same; Same; Conclusiveness of Judgments; Conclusiveness of judgment applies when a fact or

question has been squarely put in issue, judicially passed upon, and adjudged in a former suit by
a court of competent jurisdiction.—Conclusiveness of judgment applies when a fact or question
has been squarely put in issue, judicially passed upon, and adjudged in a former suit by a court of
competent jurisdiction. The fact or question settled by final judgment or order binds the parties, to
that action (and persons in privity with them or their successors-in-interest), and continues to bind
them while the judgment or order remains standing and unreversed by proper authority on a timely
motion or petition; the conclusively settled fact or question furthermore cannot again be litigated
in any future or, other action between the same parties or their privies and successors-in-interest,
in the same or in any other court of concurrent jurisdiction, either for the same or for a different
cause of action. Thus, only the identities of parties and issues are required for the operation of the
principle of conclusiveness of judgment.
Same; Same; Courts; Regional Trial Courts; Probate Courts; Jurisdiction; The jurisdiction of the
Regional Trial Court (RTC) as a probate court relates only to matters having to do with the
settlement of the estate and probate of a will of a deceased person, and does not extend to the
determination of a question of ownership that arises during the proceedings.—It is significant to
stress that the jurisdiction of the RTC as a probate court relates only to matters having to
616

Teng vs. Ting
do with the settlement of the estate and probate of a will of a deceased person, and does not extend
to the determination of a question of ownership that arises during the proceedings. This is true
whether or not the property is alleged to belong to the estate, unless the claimants to the property
are all heirs of the deceased and they agree to submit the question for determination by the probate
or administration court and the interests of third parties are not prejudiced; or unless the purpose
is to determine whether or not certain properties should be included in the inventory, in which case
the probate or administration court may decide prima facie the ownership of the property, but such
determination is not final and is without prejudice to the right of interested parties to ventilate the
question of ownership in a proper action. Otherwise put, the determination is provisional, not
conclusive, and is subject to the final decision in a separate action to resolve title by a court of
pg. 1043
competent jurisdiction. The separate action contemplated by the rule had in fact already been
instituted by herein petitioner in Hko Ah Pao through a petition for cancellation of title and
partition with damages, which essentially questions ownership of the Malate property. At this
juncture, we hold that there is no need to ventilate the issue of advanced legitime vis-à-vis
ownership in another forum because res judicata in the concept of conclusiveness of judgment has
already set in.
Pantaleon Law Office for respondents.
PEREZ, J.:
Assailed in this Petition for Review is the 2 May 2008 Decision1 of the Court of Appeals in C.A.-
G.R. S.P. No. 100224. The appellate court had affirmed two Orders2 issued by the
_______________
1 Rollo, pp. 26-42; penned by Associate Justice Celia C. Librea-Leagogo, with Associate Justices
Regalado E. Maambong and Augustin S. Dizon, concurring.
2 Id., at pp. 74-76 and 83-84.
617
VOL. 803, SEPTEMBER 21, 2016 617

Teng vs. Ting
Regional Trial Court (RTC) of Manila, Branch 21 directing the exclusion of certain properties
allegedly belonging to respondents.
Teng Ching Lay died intestate in 1989, leaving as heirs, her child from her first marriage, Arsenio
Ting (Arsenio) and from the second marriage, petitioner Henry Teng and Anna Teng. Arsenio
married Germana Chua and bore three (3) sons, respondents Lawrence, Edmund and Anthony
Ting. Arsenio predeceased his father.
pg. 1044
In the intestate proceedings for the settlement of Arsenio’s estate in 1975, then Court of First
Instance (CFI) of Agusan del Norte and Butuan City approved the project of partition which
included, among others, a residential property located at Dr. A. Vasquez Street in Malate, Manila
(Malate property), which was adjudicated in favor of respondents.
The subject property became the subject of a case dispute in Hko Ah Pao v. Ting, later docketed
as G.R. No. 153476.3 Petitioner claimed that said property is owned by Teng Ching Lay and the
latter merely entrusted the same to Arsenio. Eventually, on 27 September 2006, this Court had
ruled that Arsenio owned the subject property.
Meanwhile on 27 April 1992, petitioner filed a verified petition for the settlement of the estate of
Teng Ching Lay with the RTC of Manila. Petitioner was appointed as administrator of the estate
in 1999.
In a Manifestation4 dated 17 March 2005, petitioner submitted the Estate’s Inventory as of 31

December 2004 and its Statement of Income and Expenses for the period 30 January 1989 to 31
December 2004.5 The inventory included the Malate property and other properties entrusted to
Arsenio such as personal properties in the form of investments, cash and equipment, and other real
properties in Butuan City.
_______________
3 534 Phil. 679; 503 SCRA 551 (2006).
4 Rollo, pp. 52-54.
5 Id., at pp. 55-59.
618

Teng vs. Ting
Alleging that the properties belonging to Arsenio are included in the inventory, respondents filed
their Motion for Exclusion of Properties owned by Arsenio Ting and his Heirs. These properties
included the Malate properties and the properties were described as “Add: Other properties
entrusted to Arsenio Ting.”6 Petitioner opposed the exclusion arguing that these properties were
held by Arsenio in trust for Teng Ching Lay because of the constitutional prohibition against Teng
Ching Lay, an alien who cannot own lands in the Philippines. Respondents stressed that the
properties of Arsenio being claimed for the estate of Teng Ching Lay were acquired by them
through inheritance from their father Arsenio whose estate was judicially settled in 1975.
pg. 1045
In an Order7 dated 12 March 2007, the trial court, through Judge Amor A. Reyes, granted the
Motion for Exclusion. The dispositive portion of the Order reads:
WHEREFORE, premises considered, the Motion for Exclusion of Properties owned by Arsenio
Ting is hereby GRANTED. The properties included in the inventory which as early as October 23,
1975 had already been partitioned among the heirs of Arsenio Ting entitled In the matter of the
Intestate Estate of Arsenio O. Ting.8
The trial court found that the following properties had already been the subject of a judicial
partition in the intestate proceedings for Arsenio:
1. Residential lot covered by TCT No. 134412 located at 1723 A. Vasquez St. Malate, Manila;
2. Residential lot located at Maug, Butuan City covered by T.D. NR-03041-0291 in favor of
deceased Teng
_______________
6 Id., at pp. 56-58.
7 Id., at pp. 74-76.
8 Id., at p. 76.
619
VOL. 803, SEPTEMBER 21, 2016 619

Teng vs. Ting
Ching Lay and Jacinto Chua consisting of 18,989 sq. m. (50%) (no TCT available). Tax
Declaration only P474,675.00;
3. Industrial lot located at Maug, Butuan City, covered by T.D. No. NR-03-041-029 in favor of
Teng Ching Lay and Jacinto Chua consisting of 26,826 sq. m. (50%) (no TCT available). Tax
Declaration only P1,951,875.00; and
4. And those properties included in the Inventory as of December 31, 2004 filed by the
Administrator with the Statement “Add: other properties entrusted to Arsenio Ting.”9
pg. 1046
The trial court based its finding on the following: 1) Order dated 23 October 1975 of the then CFI
of Agusan Del Norte and Butuan City; 2) the Project of Partition dated 1975; 3) the complete
Inventory and appraisal of Real Properties of the Estate under Administration; and 4) other
documents relative to the judicial settlement of Estate of Arsenio Ting that does not form part of
the estate of Teng Ching Lay entitled “In the matter of Intestate Estate of Arsenio Ting Sp. Proc.
No. 384.”10
Petitioner filed a motion for reconsideration. It was partly granted by the trial court in an
Order11 dated 7 June 2007. The fallo reads:
WHEREFORE, premises considered, the Motion for Reconsideration is hereby partially

GRANTED. What remains the property of the estate are items 2 and 3 namely[:]
1) Residential lot located at Maug, Butuan City covered by T.D. NR-03041-0291 in favor
of deceased Teng Ching Lay and Jacinto Chua consisting of 18,989 sq. m. (50%) (no TCT
available). Tax Declaration only P474,675.00;
_______________
9 Id., at p. 75.
10 Id., at pp. 75-76.
11 Id., at pp. 83-84.
620

Teng vs. Ting
2) Industrial lot located at Maug, Butuan City, covered by T.D. No. NR-03-041-029 in
favor of Teng Ching Lay and Jacinto Chua consisting of 26,826 sq. m. (50%) (no TCT
available). Tax Declaration only P1,951,875.00.
Residential lot covered by TCT No. 134417 located at 1723 A. Vasquez St., Malate, Manila
and the properly included in the Inventory of December 31, 2004 filed by the Administrator
with statement; Add other properties entrusted to Arsenion Ting should be excluded in the
estate.
The petitioner’s allegation that the properties entrusted to Arsenio Ting are advanced legitime,
should be ventilated in another forum.12 (Emphasis supplied)
pg. 1047
Aggrieved, petitioner filed a petition for certiorari before the Court of Appeals.
On 2 May 2008, the Court of Appeals denied the petition for lack of merit. The Court of Appeals
found that the trial court did not act with grave abuse of discretion in issuing the assailed Orders
excluding some properties from the Estate of Teng Ching Lay. The appellate court ruled that the
trial court could determine whether or not properties may be included in the inventory to be
administered by the administrator and any dispute as to ownership may be resolved in another
forum. The appellate court affirmed the trial court’s basis for exclusion. The appellate court also
pointed out that in the case of Hko Ah Pao, the Court categorically ruled that the Malate property
belonged to the estate of Arsenio.
Petitioner solely argues that the advancement alleged to have been made by the deceased to any
heir should be heard and determined by the probate court, the RTC of Manila Branch 21 in this
case, in accordance with Section 2, Rule 90 of the Rules of Court.
_______________
12 Id., at p. 84.
621
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Teng vs. Ting
The petition is bereft of merit.
In the guise of raising a legal issue, petitioner urges the court a quo to resolve once again an
ownership issue. Section 2, Rule 90 of the Rules of Court states that “questions as to advancement
made, or alleged to have been made, by the deceased to any heir may be heard and determined by
the court having jurisdiction of the estate proceedings; and the final order of the court thereon shall
be binding on the person raising the questions and on the heir.” But the rule, as correctly interpreted
by respondent, presupposes a genuine issue of advancement.
Legitime is defined as that part of the testator’s property which he cannot dispose of because the
law has reserved it for certain heirs who are, therefore, called compulsory heirs.13 Petitioner
essentially asserts that properties were actually owned by Teng Ching Lay, and that Arsenio was
merely a trustee of the said properties. Verily, petitioner is claiming that Teng Ching Lay owned
the Malate property and therefore, it should be considered part of the legitime. This brings us
precisely to the purpose of an inclusion/exclusion proceeding. Where a party in a probate
proceeding prays for the inclusion in, or exclusion from, the inventory of a piece of property, the
pg. 1048
court may provisionally pass upon the question without prejudice to its final determination in a
separate action.14
The exclusion of the Malate property from the inventory of Teng Ching Lay’s estate is correctly
ordered by the trial court primarily because said issue had already become covered by the principle
of res judicata.
_______________
13 Article 886 of the Civil Code of the Philippines.
14 Lachenal v. Salas, 163 Phil. 252, 257; 71 SCRA 262, 266 (1976), citing Vasquez v. Garcia, 67
Phil. 353, 357 (1939); Guinguing v. Abuton, 48 Phil. 144, 147-148 (1925); Junquera v. Borromeo,
125 Phil. 1059, 1071; 19 SCRA 656, 667 (1967); Borromeo v. Canonoy, 125 Phil. 1089, 1092-
1093; 19 SCRA 667, 670 (1967).
622

Teng vs. Ting
Under the doctrine of res judicata, a final judgment or decree, on the merits rendered by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits and
on all points and matters determined in the previous suit. The foundation principle upon which the
doctrine rests is that the parties ought not to be permitted to litigate the same issue more than once;
that when a right or fact has been judicially tried and determined by a court of competent
jurisdiction, so long as it remains unreversed, it should be conclusive upon the parties and those in
privity with them in law or estate.15
There are two distinct concepts of res judicata. The first is bar by prior judgment under Rule 39,
Section 47(b), thus:
SEC. 47. Effect of judgments or final orders.—The effect of a judgment or final order rendered
by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be
as follows:
xxxx
pg. 1049
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or
as to any other matter that could have been raised in relation thereto, conclusive between the parties
and their successors-in-interest by title subsequent to the commencement of the action or special
proceeding, litigating for the same thing and under the same title and in the same capacity. x x x
and the second is conclusiveness of judgment under Rule 39, Section 47(c), thus:
(c) In any other litigation between the same parties or their successors-in-interest, that only is
deemed to have been adjudged in a former judgment or final order
_______________
15 Chu v. Cunanan, 673 Phil. 12, 22-23; 657 SCRA 379, 391 (2011).
623
VOL. 803, SEPTEMBER 21, 2016 623

Teng vs. Ting
which appears upon its face to have been so adjudged, or which was actually and necessarily
included therein or necessary thereto.
Pertinent to our case is the second concept, i.e., conclusiveness of judgment.
Conclusiveness of judgment applies when a fact or question has been squarely put in issue,
judicially passed upon, and adjudged in a former suit by a court of competent jurisdiction. The fact
or question settled by final judgment or order binds the parties, to that action (and persons in privity
with them or their successors-in-interest), and continues to bind them while the judgment or order
remains standing and unreversed by proper authority on a timely motion or petition; the
conclusively settled fact or question furthermore cannot again be litigated in any future or, other
action between the same parties or their privies and successors-in-interest, in the same or in any
other court of concurrent jurisdiction, either for the same or for a different cause of action. Thus,
only the identities of parties and issues are required for the operation of the principle of
conclusiveness of judgment.16
pg. 1050
While conclusiveness of judgment does not have the same barring effect as that of a bar by former
judgment that proscribes subsequent actions, the former nonetheless estops the parties from raising
in a later case the issues or points that were raised and controverted, and were determinative of the
ruling in the earlier case. In other words, the dictum laid down in the earlier final judgment or order
becomes conclusive and continues to be binding between the same parties, their privies and
successors-in-interest, as long as the facts on which that judgment was predicated continue to be
the facts of the case or incident before the court in a later case; the binding effect and enforceability
of that earlier dictum can no longer be relitigated in a later case since the issue has al-
_______________
16 Degayo v. Magbanua-Dinglasan, G.R. No. 173148, 6 April 2015, 755 SCRA 1, 12.
624

Teng vs. Ting
ready been resolved and finally laid to rest in the earlier case.17
In Hko Ah Pao, one of the petitioners therein, Henry Teng, is herein petitioner and therein
respondents are likewise herein respondents. For res judicata in the concept of conclusiveness of
judgment, identity of causes of action and subject matter is not required; it is the identity of issues
that is material.18 The issue presented in Hko Ah Pao is the ownership over the Malate property.
We held that petitioners failed to prove by preponderance of evidence that Teng Ching Lay was
the real owner of the Malate property. The Court of Appeals reiterated the pertinent ruling in Hko
Ah Pao, to wit:
It bears stressing that in the case of Hko Ah Pao, Henry Teng and Anna Teng v. Laurence Ting,
Anthony Ting and Edmund Ting with herein petitioner and private respondents as among the
parties therein, involving the same property located at 1723 Vasquez St., Malate, Manila, then
covered by Transfer Certificate of Title No. 63991 in the name of the late Arsenio, which was
subsequently cancelled and in lieu thereof TCT No. 134412 was issued in the name of herein
private respondents on 03 July 1979, the Supreme Court held that, “(t)he evidence on record
supports the assailed findings and conclusions specifically with regard to the ownership of the
property in question that is reflected in the Torrens title which was issued in the name of Arsenio
pursuant to the deed of sale.” x x x “Consequently, since petitioners failed to prove that Teng
Ching Lay was the real owner of the property involved therein, their proposition that a constructive
trust exists must likewise fail.”19
pg. 1051
In the instant case, petitioner’s assertion that the issue of advanced legitime should be ventilated
in another forum
_______________
17 Id., at pp. 12-13.
18 Layos v. Fil-Estate Golf and Development, Inc., 583 Phil. 72, 106; 561 SCRA 75, 107 (2008).
19 Rollo, p. 39.
625
VOL. 803, SEPTEMBER 21, 2016 625

Teng vs. Ting
touches upon the issue of ownership. To consider the disputed property as part of the legitime
presupposes that the testator owns the property. Disingenuously, petitioner is seeking to revive the
already settled issue of provisional ownership which has been settled in Hko Ah Pao. It is clear
that there is identity of parties and subject matter in the two cases.
Hko Ah Pao does not bar the institution of the probate case but the pronouncement of ownership
of the property belonging to Arsenio is conclusive upon the trial court a quo thereby precluding it
from relitigating the same issue.
It is significant to stress that the jurisdiction of the RTC as a probate court relates only to matters
having to do with the settlement of the estate and probate of a will of a deceased person, and does
not extend to the determination of a question of ownership that arises during the proceedings. This
is true whether or not the property is alleged to belong to the estate, unless the claimants to the
property are all heirs of the deceased and they agree to submit the question for determination by
the probate or administration court and the interests of third parties are not prejudiced; or unless
the purpose is to determine whether or not certain properties should be included in the inventory,
in which case the probate or administration court may decide prima facie the ownership of the
property, but such determination is not final and is without prejudice to the right of interested
parties to ventilate the question of ownership in a proper action. Otherwise put, the determination
is provisional, not conclusive, and is subject to the final decision in a separate action to resolve
title by a court of competent jurisdiction. The separate action contemplated by the rule had in fact
already been instituted by herein petitioner in Hko Ah Pao through a petition for cancellation of
title and partition with damages, which essentially questions ownership of the Malate property. At
this juncture, we hold that there is no need to ventilate the issue of advanced legitime vis-à-vis
ownership in another forum be-
pg. 1052
626

Teng vs. Ting
cause res judicata in the concept of conclusiveness of judgment has already set in.
WHEREFORE, the Petition is DENIED. The Court of Appeals’ 2 May 2008 Decision and 28
August 2008 Resolution in C.A.-G.R. S.P. No. 100224 are hereby AFFIRMED.
SO ORDERED.
Notes.—Article 1061 of the Civil Code required every compulsory heir and the surviving spouse,
to “bring into the mass of the estate any property or right which he (or she) may have received
from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous
title, in order that it may be computed in the determination of the legitime of each heir, and on the
account of the partition.” (Aranas vs. Mercado, 713 SCRA 194 [2014])
A person without compulsory heirs may dispose of his estate, either in part or in its entirety, in
favor of anyone capacitated to succeed him; if the testator has compulsory heirs, he can dispose of
his property provided he does not impair their legitimes. (Hacbang vs. Alo, 772 SCRA 38 [2015])
——o0o——
pg. 1053
G.R. No. 222424. September 21, 2016.*
FONTANA DEVELOPMENT CORPORATION, DENNIS PAK as General Manager, PASTOR

ISAAC as Director of Human Resources, CHRIS CHENG** as Deputy Group Financial
Controller, JESUS CHUA, Representative MICHAEL FELICIANO, ALMA EREDIANO,
LEILANI VALIENTE, MAN CHOI as Group Financial Controller, and JAIME VILLAREAL as
Chief Engineer, petitioners, vs. SASCHA VUKASINOVIC, respondent.
Remedial Law; Civil Procedure; Forum Shopping; There is forum shopping when a party
repetitively avails of several judicial remedies in different courts, simultaneously or successively,
all substantially founded on the same transactions and the same essential facts and circumstances,
and all raising substantially the same issues either pending in or already resolved adversely by
some other court.—There is forum shopping when a party repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances, and all raising substantially the same
issues either pending in or already resolved adversely by some other court. Forum shopping is an
act of malpractice that is prohibited and condemned because it trifles with the courts and abuses
their processes. It degrades the administration of justice and adds to the already congested court
dockets.
Same; Same; Same; Test for Determining the Existence of Forum Shopping.—The test for
determining the existence of forum shopping is whether a final judgment in one case amounts to
res judicata in another or whether the following elements of litis pendentia are present: (a) identity
of parties, or at least such parties as representing the same interests in both actions; (b) identity of
rights asserted and reliefs prayed for, the relief being founded on the same facts; and (c) the identity
of the two preceding particulars, such
_______________
* THIRD DIVISION.
** “Chris Chen” in some parts of the records.
154

Fontana Development Corporation vs. Vukasinovic
pg. 1054
that any judgment rendered in the other action will, regardless of which party is successful, amount
to res judicata in the action under consideration. Said requisites are also constitutive of the
requisites for auter action pendant or lis pendens.
Same; Same; Same; Dismissal of Actions; It is well-settled that once there is a finding of forum
shopping, the penalty is summary dismissal not only of the petition pending before this Court, but
also of the other case that is pending in a lower court.—It is well-settled that once there is a finding
of forum shopping, the penalty is summary dismissal not only of the petition pending before this
Court, but also of the other case that is pending in a lower court. This is so because twin dismissal
is the punitive measure to those who trifle with the orderly administration of justice.
Same; Same; Same; The purpose of the rule is to avoid multiplicity of suits and to prevent a party
from instituting two (2) or more actions or proceeding involving the same parties for the same
cause of action, either simultaneously or successively, on the supposition that one or the other
court would make a favorable disposition.—The rule essentially penalizes the forum shopper by
dismissing all pending actions on the same claim filed in any court. Because of the severity of the
penalty of the rule, an examination must first be made on the purpose of the rule. The purpose of
the rule is to avoid multiplicity of suits and to prevent a party from instituting two or more actions
or proceeding involving the same parties for the same cause of action, either simultaneously or
successively, on the supposition that one or the other court would make a favorable disposition.
What is critical is the vexation brought upon the courts and the litigants by a party who asks
different courts to rule on the same or related causes and grant the same or substantially the same
reliefs and in the process creates the possibility of conflicting decisions being rendered by the
different fora upon the same issues. Willful and deliberate violation of the rule against forum
shopping is a ground for summary dismissal of the case; it may also constitute direct contempt.
Same; Same; Same; Rule 7, Section 5 of the Rules of Court mandates that a willful and deliberate
forum shopping shall be a ground for summary dismissal of a case with prejudice.—Rule 7,
Section 5 of the Rules of Court mandates that a willful and deliberate forum shopping shall be a
ground for summary dismissal of a case with prejudice.
155
VOL. 804, SEPTEMBER 21, 2016 155

Actions; Survival of Actions; An illegal dismissal case is an action that does not survive the death
of the accused.—Respondent, per Manifestation of his counsel, Atty. Erick Nolan G. Mosuela
(Mosuela), died on July 19, 2016. Atty. Mosuela manifested that he has no information as to the
heirs of respondent, hence, his inability to substitute them, if any, in the place of respondent. The
instant case involves an illegal dismissal which is an action that does not survive the death of the
accused. The Court ruled in Bonilla v. Barcena, 71 SCRA 491 (1976), to wit: The question as to
pg. 1055
whether an action survives or not depends on the nature of the action and the damage sued for. In
the causes of action which survive, the wrong complained [of] affects primarily and principally
property and property rights, the injuries to the person being merely incidental, while in the causes
of action which do not survive, the injury complained of is to the person, the property and rights
of property affected being incidental. Since the property and property rights of the respondent is
only incidental to his complaint for illegal dismissal, the same does not survive his death.
Nonetheless, considering the foregoing disposition dismissing respondent’s petition before the CA
and ergo his complaint for illegal dismissal, the Court can proceed with the resolution of the
petition even without the need for substitution of the heirs of respondent.
Zambrano & Gruba Law Offices for petitioners.
Mosuela, Buan & Associates Law Offices for respondent.
VELASCO, JR., J.:
The Case
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision1 dated April 28,
_______________
1 Rollo, pp. 22-34. Penned by Associate Justice Victoria Isabel A. Paredes and concurred in by
Associate Justices Isaias P. Dicdican and Elihu A. Ybañez.
156

pg. 1056
2015 and the Resolution2 dated January 18, 2016 of the Court of Appeals (CA) in C.A.-G.R. S.P.
No. 125945.
The Facts
In July 2009, respondent Sascha Vukasinovic was hired by petitioner Fontana Development
Corporation (FDC) as its Director for Business Development for one year. His employment was
renewed for another year at the end of his first contract.3
Sometime in May 2010, he allegedly received a text message from one Jenny Mallari (Mallari)
informing him that Nestor Dischoso (Dischoso) and Chief Hotel Engineer Jaime Villareal (Engr.
Villareal), both officers of petitioner FDC, were receiving commissions from company
transactions.
Thereafter, respondent met with Mallari and offered her money in exchange for evidence that will
support her allegations. Mallari handed over to respondent a photocopy of a check issued to Engr.
Villareal, as proof of receiving commission. The check, however, had an alteration so respondent
asked Mallari to execute an affidavit and provide more proof. Respondent then paid Mallari the
total amount of fourteen thousand pesos (P14,000) on different occasions.
Mallari eventually gave respondent two invoices issued by one of the suppliers of petitioner FDC
as proof of her allegations. Again, respondent discovered discrepancies. Consequently, in his Inter-
Office Memorandum dated June 7, 2010, respondent recommended to Dennis Pak, petitioner
FDC’s General Manager, to conduct further investigations on the alleged corruptions of Engr.
Villareal.
On June 15, 2010, FDC’s Safety and Security Department brought Engr. Villareal and Mallari to
the National Bureau of
_______________
2 Id., at pp. 36-38.
3 Id., at p. 24.
157
VOL. 804, SEPTEMBER 21, 2016 157
pg. 1057
Investigation (NBI) Office for questioning.4 During the inquiry, Mallari denied that Engr. Villareal
asked for commissions from her and revealed that she merely fabricated the story against Engr.
Villareal so that she can ask money from respondent.
Following this turn of events, petitioner FDC received a complaint from Engr. Villareal claiming
that respondent paid Mallari a substantial amount of money to concoct a story depicting Engr.
Villareal as a corrupt employee.5
On October 2, 2010, respondent received a Show Cause/

Preventive Suspension Order from petitioner FDC’s Human Resources Department, informing
him of the complaint filed by Engr. Villareal and directing him to explain why no disciplinary
action should be taken against him for violating the provisions of the Company Code of Conduct
on Dishonesty.
Respondent did not deny the allegations against him and, instead, admitted that he gave money to
Mallari because “it is a common practice in Fontana to give money to informants for vital
information.”6
Thus, petitioner FDC approved the recommendation of the Investigating Panel and terminated
respondent’s employment after finding him guilty of acts of dishonesty in the form of “bribery in
any form or manner” under Rule 1, Section 4 of petitioner FDC’s Code of Conduct,7 which carries
the maximum penalty of dismissal. The Decision and the Notice of Termination were served on
November 2, 2010. Respondent, however, refused to acknowledge its receipt and, instead, filed a
complaint for illegal dismissal, illegal suspension, regularization, nonpayment of salaries, service
incentive leave, 13th month pay, actual, moral and exemplary damages, attorney’s fees and
demands for his reinstatement with full backwages
_______________
4 Id., at p. 4.
5 Id., at p. 25.
6 Id.
7 Id., at p. 26.
158
pg. 1058
against petitioner FDC and its officers. The case was docketed as NLRC Case No. RAB-III-11-
16967-10.
The Ruling of the Labor Arbiter
On June 27, 2011, Labor Arbiter Mariano L. Bactin (Bactin) dismissed the complaint for lack of
factual or legal basis, and ruled that respondent cannot be regularized as he is an employee with a
legal and valid fixed-term employment and that his dismissal was for a just cause. The dispositive
portion of the Decision reads:
WHEREFORE, premises considered, a Decision has been rendered DISMISSING this case with
prejudice for lack of merit.
His claim for regularization, as well as his money claims, damages and attorney’s fees must also
be dismissed with prejudice for lack of legal and factual basis.
SO ORDERED.8
Respondent appealed the said Decision to the National Labor Relations Commission (NLRC).
The Ruling of the NLRC
The NLRC rendered a Resolution9 dated March 15, 2012, dismissing the appeal and affirming the
Decision of Labor Arbiter Bactin, as follows:
WHEREFORE, premises considered, the appeal filed by complainant is DISMISSED. The

Decision of the Labor Arbiter Mariano L. Bactin dated June 27, 2011 is hereby AFFIRMED.
SO ORDERED.10
_______________
8 Id., at p. 54.
pg. 1059
9 Id., at pp. 56-63.
159
VOL. 804, SEPTEMBER 21, 2016 159

In so ruling, the NLRC noted that respondent had previously filed another complaint before the
same branch of the NLRC in San Fernando, Pampanga, involving the same facts, issues, and
prayer, entitled Sascha Vukasinovic v. Jimei International Ltd., Suk Man Choi, as Group Financial
Comptroller, and Chris Cheng, as Deputy Group Financial Comptroller, and docketed as NLRC
Case No. RAB III-09-18113-11. This previous case has been dismissed11 by Labor Arbiter
Reynaldo Abdon (Abdon) on the ground of forum shopping. The dismissal was eventually
sustained by both the NLRC and the CA. In its March 16, 2015 Decision in C.A.-G.R. S.P. No.
126225, the 13th Division of the CA affirmed that there was, indeed, forum shopping. The CA
Decision has become final there being no appeal interposed by respondent.
Respondent then filed a petition for certiorari with the CA which was docketed as C.A.-G.R. S.P.
No. 125945 and raffled to its 9th Division.
The CA agreed with the NLRC when it ruled that herein respondent’s employment had not ripened
into regular employment and that he was validly dismissed. Respondent, being a managerial
employee, can be terminated on the ground of loss of trust and confidence. However, contrary to
the Decision of the NLRC, the CA ordered the award of unpaid salaries to respondent. The CA
held that petitioner FDC failed to present evidence to show payment of the salaries of respondent
for the period claimed. The dispositive portion of the April 28, 2015 Decision reads:
WHEREFORE, premises considered, the assailed March 15, 2012 Resolution is AFFIRMED
with the MODIFICATION that petitioner’s salaries for July 2009
_______________
10 Id., at p. 63.
pg. 1060
11 On December 5, 2011.
160

to October 2009 and January 2010 to October 21, 2010 are hereby awarded.
This case is REMANDED to the Labor Arbiter for the computation, with dispatch, of the amounts
due.
SO ORDERED.12
Petitioners filed a petition for review before this Court, contending that the CA erred in not
dismissing outright respondent’s petition in C.A.-G.R. S.P. No. 125945. They claim that given the
final decision in C.A.-G.R. S.P. No. 126225, wherein all the elements of litis pendentia were found,
the CA should have refused to take cognizance of the case.
The Issue
The pivotal issue in this case is whether the CA gravely erred in not dismissing the petition in
C.A.-G.R. S.P. No. 125945 for deliberate forum shopping.
Respondent is guilty of forum shopping
pg. 1061
There is forum shopping when a party repetitively avails of several judicial remedies in different
same essential facts and circumstances, and all raising substantially the same issues either pending
in or already resolved adversely by some other court. Forum shopping is an act of malpractice that
is prohibited and condemned because it trifles with the courts and abuses their
_______________
12 Rollo, p. 34.
161
VOL. 804, SEPTEMBER 21, 2016 161

processes.13 It degrades the administration of justice and adds to the already congested court
dockets.14
In Gloria S. Dy v. Mandy Commodities Co., Inc.,15 this Court had the occasion to explain the
grave evil sought to be avoided by forum shopping, to wit:
The grave evil sought to be avoided by the rule against forum shopping is the rendition by two
competent tribunals of two separate and contradictory decisions. Unscrupulous party-litigants,
taking advantage of a variety of competent tribunals, may repeatedly try their luck in several
different fora until a favorable result is reached. To avoid the resultant confusion, this Court
adheres strictly to the rules against forum shopping, and any violation of these rules results in the
dismissal of a case. To stamp out this abominable practice, which seriously impairs the efficient
administration of justice, this Court promulgated Administrative Circulars No. 28-91 and No. 04-
94, which are now embodied as Section 5, Rule 7 of the Rules of Court, which reads:
SEC. 5. Certification against forum shopping.—The plaintiff or principal party shall

certify under oath in the complaint or other initiatory pleading asserting a claim for relief,
or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he
has not theretofore commenced any action or filed any claim involving the same issues in
any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other
action or claim is pending therein; (b) if there is such other pending ac-
_______________
pg. 1062
13 Heirs of Marcelo Sotto v. Palicte, G.R. No. 159691, February 17, 2014, 716 SCRA 175, citing
Chua v. Metropolitan Bank & Trust Company, G.R. No. 182311, August 19, 2009, 596 SCRA
524, 535.
14 Id., citing Executive Secretary v. Gordon, G.R. No. 134171, November 18, 1998, 298 SCRA
736, 741.
15 G.R. No. 171842, July 22, 2009, 593 SCRA 440.
162

tion 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 a cause for the dismissal of the
case without prejudice, unless otherwise provided, upon motion and after hearing. The
submission of a false certification of or noncompliance 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 a ground for summary dismissal
with prejudice and shall constitute direct contempt, as well as a cause for administrative
sanctions.
The test for determining the existence of forum shopping is whether a final judgment in one case
amounts to res judicata in another or whether the following elements of litis pendentia are present:
(a) identity of parties, or at least such parties as representing the same interests in both actions; (b)
identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and
(c) the identity of the two preceding particulars, such that any judgment rendered in the other action
will, regardless of which party is successful, amount to res judicata in the action under
consideration. Said
pg. 1063
163
VOL. 804, SEPTEMBER 21, 2016 163

requisites are also constitutive of the requisites for auter action pendant or lis pendens.16
In the instant case, there is no doubt that all the elements of litis pendentia have already been
established, as this was already settled with finality in C.A.-G.R. S.P. No. 126225. Yet, in his
Comment, respondent repeatedly claimed that there was no forum shopping and petitioners are
misleading this Court, making it appear that forum shopping exists when there is none at all.
Respondent’s position is without basis.
It should be noted that in his Decision in NLRC Case No. RAB III-09-18113-11, Labor Arbiter
Abdon observed that there is an identity of parties between NLRC Case No. RAB III-09-18113-
11 and NLRC Case No. RAB III-11-16967-10 which is the complaint incipient in the present
controversy. He pointed out that both complaints show that petitioners Chris Cheng and Man Choi
are similarly impleaded in their capacities as officers of petitioner FDC and that there is also an
identity of causes of action and reliefs prayed for by respondent.17 To reiterate, Labor Arbiter
Abdon’s Decision was affirmed by the NLRC and the CA. In particular, in its Decision in C.A.-
G.R. S.P. No. 126225 denying the petition for certiorari filed by respondent, the CA observed,
thus:
What is truly important to consider in determining whether forum shopping exists or not is 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.
_______________
16 Id.
17 Rollo, p. 76.
164

pg. 1064
In this case, it is undisputed that respondent filed two labor complaints: first, NLRC Case
No. RAB III-11-16967-10-P entitled “Sascha Vukasinovic v. Fontana Development
Corporation, Dennis Pak, Pastor Isaac, Chris Cheng, Jesus Chua, Michael Feliciano, Alma
Erediano, Leilani Valiente, Man Choi and Jaime Villareal” for illegal dismissal, illegal
suspension, regularization, nonpayment of salaries, service incentive leave pay, 13th month
pay, as well as actual, moral and exemplary damages and attorney’s fees, with prayer for
reinstatement and full backwages; and second, NLRC Case No. RAB III-09-18113-11
entitled “Sascha Vukasinovic v. National Labor Relations Commission, Labor Arbiter
Reynaldo B. Abdon, Jimei S. International, Ltd. (JSIL), Mr. Suk Man Choi in his capacity as
Group Financial Comptroller of JSIL, Chris Cheng in his capacity as Deputy Group Financial
Comptroller of JSIL,” for constructive (illegal) dismissal, regularization, nonpayment of
salaries, premium pay for holiday and rest days, service incentive leave pay, 13th month pay,
as well as damages and attorney’s fees and other monetary claims including bonuses and
travel expenses (repatriation expenses). It is also undisputed that the causes of action (illegal
dismissal and constructive dismissal) in the respective complaints in the two (2) cases
stemmed from the adverse decision in the administrative case filed against respondent that
resulted to his dismissal from employment.
In Jesse Yap v. Court of Appeals, it was held:
xxxx
The requisites of litis pendentia are: (a) the identity of parties, or at least such as representing
the same interests in both actions; (b) the identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity of the two cases such that
judgment in one, regard-
165
VOL. 804, SEPTEMBER 21, 2016 165

less of which party is successful, would amount to res judicata in the other.
All the elements of litis pendencia are present in this case.18 (emphasis supplied)
pg. 1065
Indeed, the existence of forum shopping has been duly proved in this case. As a result, petitioners
hinge this present appeal on the error committed by the CA in not dismissing outright the appeal
filed by respondent.
When there is forum shopping,

all pending claims on the same
claim must be dismissed
It is well-settled that once there is a finding of forum shopping, the penalty is summary dismissal
not only of the petition pending before this Court, but also of the other case that is pending in a
lower court. This is so because twin dismissal is the punitive measure to those who trifle with the
orderly administration of justice.19
The rule originated from the 1986 case of Buan v. Lopez, Jr.20 In the said case, petitioners therein
instituted before the Court a special civil action for prohibition and, almost a month earlier, another
special civil action for prohibition with preliminary injunction before the Regional Trial Court
(RTC) Manila. Finding petitioners guilty of forum shopping since all the elements of litis
pendentia were duly proved, the Court dismissed not only the action before it, but also the special
civil action still pending before the RTC, viz.:
Indeed, the petitioners in both actions x x x have incurred not only the sanction of dismissal of
their case before this Court in accordance with Rule 16 of the Rules of Court, but also punitive
measure of dismissal of
_______________
18 Id., at pp. 105-107.
19 Dy v. Mandy Commodities Co., Inc., supra note 15.
166

both their actions, that in this Court and that in Regional Trial Court as well.
pg. 1066
The rule essentially penalizes the forum shopper by dismissing all pending actions on the same
claim filed in any court. Because of the severity of the penalty of the rule, an examination must
first be made on the purpose of the rule.21 The purpose of the rule is to avoid multiplicity of suits
and to prevent a party from instituting two or more actions or proceeding involving the same parties
for the same cause of action, either simultaneously or successively, on the supposition that one or
the other court would make a favorable disposition.22
What is critical is the vexation brought upon the courts and the litigants by a party who asks
different courts to rule on the same or related causes and grant the same or substantially the same
reliefs and in the process creates the possibility of conflicting decisions being rendered by the
different fora upon the same issues.23 Willful and deliberate violation of the rule against forum
shopping is a ground for summary dismissal of the case; it may also constitute direct contempt.24
Furthermore, Rule 7, Section 5 of the Rules of Court mandates that a willful and deliberate forum
shopping shall be a ground for summary dismissal of a case with prejudice, thus:
Section 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
_______________
21 Ching v. Cheng, G.R. No. 175507, October 8, 2014, 737 SCRA 610.
22 Yap v. Chua, G.R. No. 186730, June 13, 2012, 672 SCRA 419.
23 Id., citing Top Rate Construction & General Services, Inc. v. Paxton Development
Corporation, 457 Phil. 740, 748; 410 SCRA 604, 606 (2003).
24 Id., citing Municipality of Taguig v. Court of Appeals, 506 Phil. 567, 582; 469 SCRA 588, 601
(2005).
167
VOL. 804, SEPTEMBER 21, 2016 167

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
pg. 1067
claim is pending therein; (b) if there is such other pending action or claim, a complete statement
of the present status thereof; and (c) if he should thereafter learn that the same or similar action or
claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the
court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or noncompliance 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 supplied)
Consequently, the CA should have dismissed the case outright without rendering a decision on the
merits of the case. Respondent should be penalized for willfully and deliberately trifling with court
processes. The purpose of the law will be defeated if respondent will be granted the relief prayed
for despite his act of deliberately committing forum shopping.
Respondent, per Manifestation of his counsel, Atty. Erick Nolan G. Mosuela (Mosuela), died on
July 19, 2016. Atty. Mosuela manifested that he has no information as to the heirs of respondent,
hence, his inability to substitute them, if any, in the place of respondent.
168

The instant case involves an illegal dismissal which is an action that does not survive the death of
the accused. The Court ruled in Bonilla v. Barcena,25 to wit:
The question as to whether an action survives or not depends on the nature of the action and the
damage sued for. In the causes of action which survive, the wrong complained [of] affects
primarily and principally property and property rights, the injuries to the person being merely
incidental, while in the causes of action which do not survive, the injury complained of is to the
person, the property and rights of property affected being incidental.
pg. 1068
Since the property and property rights of the respondent is only incidental to his complaint for
illegal dismissal, the same does not survive his death. Nonetheless, considering the foregoing
disposition dismissing respondent’s petition before the CA and ergo his complaint for illegal
dismissal, the Court can proceed with the resolution of the petition even without the need for
substitution of the heirs of respondent.
WHEREFORE, premises considered, the instant petition is GRANTED. The Decision dated
April 28, 2015 in C.A.-G.R. S.P. No. 125945 of the Court of Appeals is hereby REVERSED and
SET ASIDE. The petition for certiorari filed by respondent Sascha Vukasinovic with the CA is
ordered DISMISSED on the ground of deliberate forum shopping.
SO ORDERED.
Peralta, Perez, Reyes and Jardeleza, JJ., concur.
Petition granted, judgment reversed and set aside.
Notes.—By forum shopping, a party initiates two or more actions in separate tribunals, grounded
on the same cause,
_______________
25 No. L-41715, June 18, 1976, 71 SCRA 491.
169
VOL. 804, SEPTEMBER 21, 2016 169

trusting that one or the other tribunal would favorably dispose of the matter; Elements of forum
shopping. (Chavez vs. Court of Appeals, 610 SCRA 399 [2010])
There is forum shopping “when a party repetitively avails of several judicial remedies in different
same essential facts and circumstances, and all raising substantially the same issues either pending
in or already resolved adversely by some other court.” (Asia United Bank vs. Goodland Company,
Inc., 645 SCRA 205 [2011])
——o0o——
pg. 1069
G.R. No. 190187. September 28, 2016.*
THE PHILIPPINE GEOTHERMAL, INC. EMPLOYEES UNION, petitioner, vs. UNOCAL

PHILIPPINES, INC. (now known as CHEVRON GEOTHERMAL PHILIPPINES HOLDINGS,
INC.), respondent.
Remedial Law; Civil Procedure; Appeals; Raising a factual question for the first time on appeal
is not allowed.—Raising a factual question for the first time on appeal is not allowed. In Tan v.
Commission on Elections, 507 SCRA 352 (2006): The aforementioned issue is now raised only
for the first time on appeal before this Court. Settled is the rule that issues not raised in the
proceedings below (COMELEC En Banc) cannot be raised for the first time on appeal. Fairness
and due process dictate that evidence and issues not presented below cannot be taken up for the
first time on appeal.
Mercantile Law; Corporations; Mergers of Corporations; A merger is a consolidation of two (2)

or more corporations, which results in one (1) or more corporations being absorbed into one (1)
surviving corporation.—A merger is a consolidation of two or more corporations, which results in
one or more corporations being absorbed into one surviving corporation. The separate existence
of the absorbed corporation ceases, and the surviving corporation “retains its identity and takes
over the rights, privileges, franchises, properties, claims, liabilities and obligations of the absorbed
corporation(s).” If respondent is a subsidiary of Unocal California, which, in turn, is a subsidiary
of Unocal Corporation, then the merger of Unocal Corporation with Blue Merger and Chevron
does not affect respondent or any of its employees. Respondent has a separate and distinct
personality from its parent corporation.
Same; Same; Same; The effects of a merger are provided under Section 80 of the Corporation
Code.—The effects of a merger are provided under Section 80 of the Corporation Code: SEC. 80.
Effects of merger or consolidation.—The merger or consolidation, as pro-
_______________
* SECOND DIVISION.
287
VOL. 804, SEPTEMBER 28, 2016 287

Philippine Geothermal, Inc. Employees Union vs. Unocal Philippines, Inc. (now known as
Chevron Geothermal Philippines Holdings, Inc.)
pg. 1070
vided in the preceding sections shall have the following effects: 1. The constituent corporations
shall become a single corporation which, in case of merger, shall be the surviving corporation
designated in the plan of merger; and in case of consolidation, shall be the consolidated corporation
designated in the plan of consolidation; 2. The separate existence of the constituent corporations
shall cease, except that of the surviving or the consolidated corporation; 3. The surviving or the
consolidated corporation shall possess all the rights, privileges, immunities and powers and shall
be subject to all the duties and liabilities of a corporation organized under this Code; 4. The
surviving or the consolidated corporation shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of each of the constituent corporations; and all property,
real or personal, and all receivables due on whatever account, including subscriptions to shares
and other choses in action, and all and every other interest of, or belonging to, or due to each
constituent corporation, shall be taken and deemed to be transferred to and vested in such
surviving or consolidated corporation without further act or deed; and 5. The surviving or the
consolidated corporation shall be responsible and liable for all the liabilities and obligations of
each of the constituent corporations in the same manner as if such surviving or consolidated
corporation had itself incurred such liabilities or obligations; and any claim, action or proceeding
pending by or against any of such constituent corporations may be prosecuted by or against the
surviving or consolidated corporation, as the case may be. Neither the rights of creditors nor any
lien upon the property of any of such constituent corporations shall be impaired by such merger or
consolidation. (Emphasis supplied) Although this provision does not explicitly state the merger’s
effect on the employees of the absorbed corporation, Bank of the Philippine Islands v. BPI
Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, 658 SCRA 828 (2011),
has ruled that the surviving corporation automatically assumes the employment contracts of the
absorbed corporation, such that the absorbed corporation’s employees become part of the
manpower complement of the surviving corporation.
Same; Same; Same; The surviving corporation becomes bound by the employment contracts
entered into by the absorbed corporation.—Section 80 of the Corporation Code provides that the
surviving corporation shall possess all the rights, privileges, properties, and
288

receivables due of the absorbed corporation. Moreover, all interests of, belonging to, or due to the
absorbed corporation “shall be taken and deemed to be transferred to and vested in such surviving
or consolidated corporation without further act or deed.” The surviving corporation likewise
acquires all the liabilities and obligations of the absorbed corporation as if it had itself incurred
these liabilities or obligations. This acquisition of all assets, interests, and liabilities of the absorbed
corporation necessarily includes the rights and obligations of the absorbed corporation under its
pg. 1071
employment contracts. Consequently, the surviving corporation becomes bound by the
employment contracts entered into by the absorbed corporation. These employment contracts are
not terminated. They subsist unless their termination is allowed by law.
Same; Same; Same; Assuming respondent is a party to the merger, its employment contracts are
deemed to subsist and continue by “the combined operation of the Corporation Code and the
Labor Code under the backdrop of the labor and social justice provisions of the Constitution.”—
This Court found it necessary to interpret Section 80 of the Corporation Code and the constitutional
provisions on labor as to strengthen the “judicial protection of the right to security of tenure of
employees affected by a merger and [avoid] confusion regarding the status of various benefits.”
Thus, this Court ruled that the surviving corporation automatically assumes the employment
contracts of the absorbed corporation. The absorbed corporation’s employees are not impliedly
dismissed, but become part of the manpower complement of the surviving corporation. The merger
of Unocal Corporation with Blue Merger and Chevron does not result in an implied termination of
the employment of petitioner’s members. Assuming respondent is a party to the merger, its
employment contracts are deemed to subsist and continue by “the combined operation of the
Corporation Code and the Labor Code under the backdrop of the labor and social justice provisions
of the Constitution.”
Same; Same; Same; Although the absorbed employees are retained as employees of the merged
corporation, the employer retains the right to terminate their employment for a just or authorized
cause. Likewise, the employees are not precluded from severing their employment through
resignation or retirement.—Petitioner insists that this is contrary to its freedom to contract,
considering its mem-
289
VOL. 804, SEPTEMBER 28, 2016 289

bers did not enter into employment contracts with the surviving corporation. However, petitioner
is not precluded from leaving the surviving corporation. Although the absorbed employees are
retained as employees of the merged corporation, the employer retains the right to terminate their
employment for a just or authorized cause. Likewise, the employees are not precluded from
severing their employment through resignation or retirement. The freedom to contract and the
prohibition against involuntary servitude is still, thus, preserved in this sense. This is the manner
by which the consent of the employees is considered by the law.
Labor Law; Termination of Employment; Separation Pay; Voluntary Resignation; Separation

benefits are not granted to petitioner by law in case of voluntary resignation, or by any contract it
entered into with respondent.—Assuming respondent is a party to the merger, the merger still does
pg. 1072
not operate to effect a termination of the employment of respondent’s employees. Should they be
unhappy with the surviving corporation, the employees may retire or resign from employment.
Given these considerations, we rule that petitioner is not entitled to the separation benefits it claims
from respondent. Separation benefits are not granted to petitioner by law in case of voluntary
resignation, or by any contract it entered into with respondent.
Mercantile Law; Corporations; Mergers of Corporations; Separation Pay; Merger is not one of
the circumstances where the employees may claim separation pay.—Merger is not one of the
circumstances where the employees may claim separation pay. The only instances where
separation pay may be awarded to petitioner are: (a) reduction in workforce as a result of
redundancy; (b) retrenchment or installation of labor-saving devices; or (c) closure and cessation
of operations. Redundancy has been defined by this Court as follows: [W]e believe that
redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess
of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a
position is redundant where it is superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or undertaken by
the enterprise. The employer has no
290

legal obligation to keep in its payroll more employees than are necessary for the operation of its
business. (Citations omitted) Retrenchment, on the other hand, is the reduction of personnel to
save on costs on salaries and wages due to a considerable decline in the volume of business.
Cessation and closure of business contemplates the stopping of business operations of the
employer whether on the employer’s prerogative or on account of severe business losses.
Labor Law; Termination of Employment; Separation Pay; On the contention that petitioner must
be awarded the separation pay in the interest of social justice, the Supreme Court (SC) has held
that this award is granted only under the following exceptional cases: (1) the dismissal of the
employee was not for serious misconduct; and (2) it did not reflect on the moral character of the
employee.—On the contention that petitioner must be awarded the separation pay in the interest of
social justice, this Court has held that this award is granted only under the following exceptional
cases: (1) the dismissal of the employee was not for serious misconduct; and (2) it did not reflect
on the moral character of the employee. In this case, there is no dismissal of the employees on
account of the merger. Petitioner does not deny that respondent actually continued its normal
course of operations after the merger, and that its members, as employees, resumed their work
with their tenure, salaries, wages, and other benefits intact. Petitioner was even able to execute
pg. 1073
with respondent, after the merger, the Collective Bargaining Agreement from which it anchors its
claims. Given these circumstances, petitioner is not entitled to separation pay. Although the policy
of the state is to rule in favor of labor in light of the social justice provisions under the Constitution,
this Court cannot unduly trample upon the rights of management, which are likewise entitled to
respect in the interest of fair play.
PETITION for review on certiorari of the decision and resolution of the Court of Appeals, Eighth
Division.
Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles for respondent.
291
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LEONEN, J.:
The merger of a corporation with another does not operate to dismiss the employees of the
corporation absorbed by the surviving corporation. This is in keeping with the nature and effects
of a merger as provided under law and the constitutional policy protecting the rights of labor. The
employment of the absorbed employees subsists. Necessarily, these absorbed employees are not
entitled to separation pay on account of such merger in the absence of any other ground for its
award.
This resolves a Petition for Review on Certiorari1 filed by Philippine Geothermal, Inc. Employees
Union (Union) assailing the Decision2 dated July 23, 2009 and the Resolution3 dated November
9, 2009 of the Court of Appeals Eighth Division in Unocal Philippines, Inc. (now known as
Chevron Geothermal Philippines Holdings, Inc.) v. The Philippine Geothermal, Inc. Employees
Union. The assailed Decision granted Unocal Philippines, Inc.’s (Unocal Philippines) appeal and
reversed the Secretary of Labor’s award of separation benefits to the Union. The award was granted
on the premise that the merger of Unocal Philippines’ parent corporation with another corporation
impliedly terminated the employment of the Union’s members. The assailed Resolution denied the
Union’s Motion for Reconsideration.
_______________
pg. 1074
1 Rollo, pp. 9-25.
2 Id., at pp. 214-234. The Decision, docketed as C.A.-G.R. S.P. No. 102184, was penned by
Associate Justice Romeo F. Barza and concurred in by Associate Justices Josefina Guevara-
Salonga and Arcangelita M. Romilla-Lontok of the Eighth Division, Court of Appeals, Manila.
3 Id., at p. 238. The Resolution was penned by Associate Justice Romeo F. Barza and concurred
in by Associate Justices Josefina Guevara-Salonga and Arcangelita M. Romilla-Lontok of the
Eighth Division, Court of Appeals, Manila.
292

Philippine Geothermal, Inc. Employees Union is a legitimate labor union that stands as the
bargaining agent of the rank-and-file employees of Unocal Philippines.4
Unocal Philippines, formerly known as Philippine Geothermal, Inc., is a foreign corporation

incorporated under the laws of the State of California, United States of America, licensed to do
business in the Philippines for the “exploration and development of geothermal resources as
alternative sources of energy.”5 It is a wholly owned subsidiary of Union Oil Company of
California (Unocal California),6 which, in turn, is a wholly owned subsidiary of Union Oil
Corporation (Unocal Corporation).7 Unocal Philippines operates two (2) geothermal steam fields
in Tiwi, Albay and Makiling, Banahaw, Laguna, owned by the National Power Corporation.8
On April 4, 2005, Unocal Corporation executed an Agreement and Plan of Merger (Merger
Agreement) with Chevron Texaco Corporation (Chevron) and Blue Merger Sub, Inc. (Blue
Merger).9 Blue Merger is a wholly owned subsidiary of Chevron.10 Under the Merger Agreement,
Unocal Corporation merged with Blue Merger, and Blue Merger became the surviving
corporation.11 Chevron then became the parent corporation of the merged corporations.12 After
the merger, Blue Merger, as the surviving corporation, changed its name to Unocal Corporation.13
_______________
4 Id., at p. 10.
5 Id., at p. 215.
6 Id.
pg. 1075
7 Id.
8 Id., at p. 217.
9 Id., at p. 216.
10 Id.
11 Id.
12 Id.
13 Id.
293
VOL. 804, SEPTEMBER 28, 2016 293

On January 31, 2006, Unocal Philippines executed a Collective Bargaining Agreement with the
Union.14
However, on October 20, 2006, the Union wrote Unocal Philippines asking for the separation
benefits provided for under the Collective Bargaining Agreement. According to the Union, the
Merger Agreement of Unocal Corporation, Blue Merger, and Chevron resulted in the closure and
cessation of operations of Unocal Philippines and the implied dismissal of its employees.15
Unocal Philippines refused the Union’s request and asserted that the employee-members were not
terminated and that the merger did not result in its closure or the cessation of its operations.16
As Unocal Philippines and the Union were unable to agree, they decided to submit the matter to
the Department of Labor and Employment’s Administrative Intervention for Dispute Avoidance
Program.17 However, they were unable to arrive at “a mutually acceptable agreement.”18
On November 24, 2006, the Union claimed that Unocal Philippines was guilty of unfair labor
practice and filed a Notice of Strike.19 Later, the Union withdrew its Notice of Strike.20
On February 5, 2007, the parties agreed to submit their dispute for voluntary arbitration before the
Department of Labor and Employment, with the Secretary of Labor and Employment as Voluntary
Arbitrator.21 The case, entitled In
pg. 1076
_______________
14 Id., at p. 217.
15 Id.
16 Id., at pp. 217-218.
17 Id., at p. 218.
18 Id.
19 Id.
20 Id.
21 Id., at pp. 218-219.
294

Re: Labor Dispute at Philippines, Inc./Chevron, was docketed as OS-VA-2007-04.22
After the parties submitted their respective position papers, the Secretary of Labor rendered the
Decision23 on January 15, 2008 ruling that the Union’s members were impliedly terminated from
employment as a result of the Merger Agreement. The Secretary of Labor found that the merger
resulted in new contracts and a new employer for the Union’s members. The new contracts
allegedly required the employees’ consent; otherwise, there was no employment contract to speak
of.24 Thus, the Secretary of Labor awarded the Union separation pay under the Collective
Bargaining Agreement.25 The dispositive portion of the Decision reads:
WHEREFORE, this Office rules that Unocal and Chevron merged into one corporate entity and
the employees were impliedly terminated from employment. Accordingly, they are entitled to the
separation benefits provided under ARTICLE XII, SECTION 2 and ANNEX “B” of the
collective bargaining [agreement] between UNOCAL PHILIPPINES, INC. and the
PHILIPPINE GEOTHERMAL, INC. EMPLOYEES UNION.
pg. 1077
Pursuant to Section 7, Rule XIX of Department Order No. 40-03, Series of 2003, this Decision
shall be final and executory after ten (10) calendar days from receipt hereof and it shall not be
subject of a motion for reconsideration.
_______________
22 Id., at p. 83.
23 Id., at pp. 83-92. The Decision was penned by Former Secretary of Labor and Employment
(now Associate Justice of this Court) Arturo D. Brion.
24 Id., at pp. 90-91.
25 Id., at p. 91.
26 Id., at pp. 91-92.
295
VOL. 804, SEPTEMBER 28, 2016 295

Unocal Philippines filed before the Court of Appeals a Petition for Review27 questioning the
Secretary of Labor’s Decision. Unocal Philippines claimed that the Union was not entitled to
separation benefits given that Unocal Philippines was not a party to the merger,28 that it never
closed nor ceased its business, and that it did not terminate its employees after the merger.29 It
asserted that its operations continued in the same manner, and with the same manpower
complement.30 Likewise, the employees kept their tenure intact and experienced no changes in
their salaries and benefits.31
In the Decision32 dated July 23, 2009, the Court of Appeals granted the appeal of Unocal
Philippines and reversed the Decision of the Secretary of Labor.33 It held that Unocal Philippines
has a separate and distinct juridical personality from its parent company, Unocal Corporation,
which was the party that entered into the Merger Agreement.34 The Court of Appeals ruled that
Unocal Philippines remained undissolved and its employees were unaffected by the merger.35 It
found that this was evidenced by the Union’s assumption of its role as the duly recognized
bargaining representative of all rank-and-file employees a few months after the merger.36
pg. 1078
Moreover, the Court of Appeals found that although Unocal Corporation became a part of
Chevron, Unocal Philippines still remained as a wholly owned subsidiary of Unocal Cali-
_______________
27 Id., at pp. 440-494. The Petition was filed under Rule 43 of the Rules of Court.
28 Id., at pp. 461-466.
29 Id., at pp. 455-461.
30 Id., at p. 471.
31 Id.
32 Id., at pp. 214-234.
33 Id., at pp. 233-234.
34 Id., at pp. 226-228.
35 Id., at pp. 226-227.
36 Id.
296

fornia after the merger.37 It ruled that in any case, the Collective Bargaining Agreement only
provided for the payment of separation pay if a reduction in workforce results from redundancy,
retrenchment or installation of labor-saving devices, or closure and cessation of operations, all of
which did not occur in this case.38
The Court of Appeals also pointed out that the Union’s members merely wanted to discontinue
their employment with Unocal Philippines, but there was nothing in the Labor Code nor in the
parties’ Collective Bargaining Agreement that would sanction the payment of separation pay to
those who no longer wanted to work for Unocal Philippines as a result of the merger.39 The
dispositive portion of the Decision reads:
pg. 1079
WHEREFORE, premises considered, the Decision dated 15 January 2008, of the Department of
Labor and Employment (DOLE) in OS-VA-2007-04 is hereby REVERSED and SET ASIDE.
On November 9, 2009, the Court of Appeals denied the Union’s Motion for Reconsideration.41
Hence, this Petition42 was filed.
Petitioner Philippine Geothermal, Inc. Employees Union claims that respondent Unocal
Philippines, Inc. changed its theory of the case when, in the proceedings before the Secretary of
Labor, it claimed that it entered into a merger and not a sale, but later, in its appeal before the Court
of Appeals,
_______________
37 Id., at p. 230.
38 Id.
39 Id., at pp. 231-232.
40 Id., at pp. 233-234.
41 Id., at p. 238.
42 Id., at pp. 9-25.
297
VOL. 804, SEPTEMBER 28, 2016 297

argued that it was not a party to the merger.43 Petitioner asserts that the Court of Appeals erred in
allowing respondent to change its theory of the case on appeal and in deciding the case on the basis
of this changed theory.44
Petitioner further claims that the Court of Appeals erred in reversing the Decision of the Secretary
of Labor, who properly ruled that petitioner’s members are entitled to separation pay.45 It claims
pg. 1080
that the merger resulted in (a) “the severance of the juridical tie that existed between the employees
and its original employer, Unocal Corporation,”46 and (b) the implied termination of the
employment of the Union’s members, who had the right to waive their continued employment with
the absorbing corporation.47 Petitioner insists that the “cessation of operations” contemplated in
the Collective Bargaining Agreement and the Memorandum of Agreement must be liberally
interpreted to include mergers,48 and that doubts must be resolved in favor of labor.49
In the Resolution50 dated January 27, 2010, this Court directed respondent to comment on the
Petition.
Respondent filed its Comment51 on March 26, 2010. It argues that it did not change its theory on
appeal. It insists that it has been consistent in arguing before the Secretary of Labor and the Court
of Appeals that it was never a party to the merger between Unocal Corporation and Blue Merger
as it has always stated that it was Unocal Corporation who en-
_______________
43 Id., at p. 17.
44 Id.
45 Id., at p. 18.
46 Id., at p. 19.
47 Id.
48 Id., at pp. 18-20.
49 Id., at p. 20.
50 Id., at pp. 239-240.
51 Id., at pp. 251-297.
298

pg. 1081
tered into the Merger Agreement.52 Respondent argues that even assuming that it did change its
theory on appeal, it may do so as an exception to the rule since “a party may change [its] legal
theory when its factual bases would not require the presentation of further evidence by the adverse
party in order to meet the issue raised in the new theory.”53 It posits that the alleged new theory
would still be based on the evidence presented before the Secretary of Labor, hence, petitioner was
not placed at a disadvantage.54
Respondent further argues that in any case, petitioner’s members still did not lose their
employment as to warrant the award of separation pay.55 The Memorandum of Agreement, the
Collective Bargaining Agreement, and the contemporaneous acts of the parties show that
respondent shall pay separation pay only in case the employees actually lose their jobs due to
redundancy, retrenchment or installation of labor-saving devices, or closure and cessation of
operation.56 As these circumstances did not occur, respondent cannot grant petitioner’s members
separation pay.
Petitioner filed its Reply57 on July 6, 2010. It insists that respondent never claimed before the
Secretary of Labor that it was not covered by the merger.58 It maintains that respondent only
insisted on this argument when it obtained the unfavorable decision from the Secretary of Labor.59
Moreover, the Secretary of Labor was correct in ruling that, indeed,
_______________
52 Id., at pp. 271-272.
53 Id., at p. 294.
54 Id., at pp. 294-295.
55 Id., at p. 275.
56 Id., at pp. 280-281.
57 Id., at pp. 1292-1297.
58 Id., at p. 1293.
59 Id.
299
VOL. 804, SEPTEMBER 28, 2016 299
pg. 1082
there was a cessation of operations of respondent when it merged with Chevron.60
We resolve the following issues:
First, whether respondent changed the theory of its case on appeal;
Second, whether the Merger Agreement executed by Unocal Corporation, Blue Merger, and
Chevron resulted in the termination of the employment of petitioner’s members; and
Lastly, whether petitioner’s members are entitled to separation benefits.
As regards the first issue, we rule that respondent did, indeed, change the theory of its case on
appeal.
In its Petition before the Court of Appeals, respondent asserted that it was not a party to the merger
as it was a subsidiary of Unocal California and, thus, had a separate and distinct personality from
Unocal Corporation.
However, the following statement can be found in respondent’s Position Paper in the proceedings
before the Secretary of Labor:
3. . . . Following the merger, Blue Merger Sub, Inc. which as above stated is a wholly owned
subsidiary of Chevron Corporation changed its name to Unocal Corporation retaining Unocal
Philippines, Inc. as its Philippine Branch to continue to operate the aforenamed geothermal plants
as, in fact[.]61 (Emphasis supplied)
Respondent alleges that it is a branch of Unocal Corporation. Claiming that it is a branch is

inconsistent with its allegation (on appeal) that it is a subsidiary of another corporation. A branch
and a subsidiary differ in its corporate exis-
_______________
60 Id., at p. 1294.
61 Id., at p. 417.
300
pg. 1083
tence: a branch is not a legally independent unit, while a subsidiary has a separate and distinct
personality from its parent corporation.
In Philippine Deposit Insurance Corp. v. Citibank:62
The Court begins by examining the manner by which a foreign corporation can establish its
presence in the Philippines. It may choose to incorporate its own subsidiary as a domestic
corporation, in which case such subsidiary would have its own separate and independent legal
personality to conduct business in the country. In the alternative, it may create a branch in the
Philippines, which would not be a legally independent unit, and simply obtain a license to do
business in the Philippines.63 (Emphasis supplied, citations omitted)
Respondent likewise made the following assertions in its Position Paper in the proceedings before
the Secretary of Labor:
Based on the facts of this case, the Honorable Secretary of Labor would certainly appreciate that
the business transaction entered into by respondent employer was in law and in fact, a merger.
Hence, there is no basis to the union’s claim.
....
. . . In the present case, it is clear that the surviving corporation, i.e., Unocal Philippines, Inc. has
continued the business and operations of the absorbed corporation in an unchanged manner, and
using the same employees with their tenure intact and under the same terms and conditions of
employment.64 (Emphasis supplied)
_______________
62 685 Phil. 429; 669 SCRA 191 (2012) [Per J. Mendoza, Third Division].
63 Id., at p. 437; p. 199.
64 Rollo, pp. 413-421, respondent’s Position Paper.
pg. 1084
301
VOL. 804, SEPTEMBER 28, 2016 301

These statements reveal that not only did respondent fail to assert that it was not a party to the
Merger Agreement, but it also referred to itself as the party who entered into the transaction and
became the surviving corporation in the merger. Thus, the claim that respondent is not a party to
the merger is a new allegation raised for the first time on appeal before the Court of Appeals.
Raising a factual question for the first time on appeal is not allowed. In Tan v. Commission on
Elections:65
The aforementioned issue is now raised only for the first time on appeal before this Court. Settled
is the rule that issues not raised in the proceedings below (COMELEC En Banc) cannot be raised
for the first time on appeal. Fairness and due process dictate that evidence and issues not presented
below cannot be taken up for the first time on appeal.
Thus, in Matugas v. Commission on Elections, we reiterated this rule, saying:
The rule in appellate procedure is that a factual question may not be raised for the first time
on appeal, and documents forming no part of the proofs before the appellate court will not
be considered in disposing of the issues of an action. This is true whether the decision
elevated for review originated from a regular court or an administrative agency or quasi-
judicial body, and whether it was rendered in a civil case, a special proceeding, or a criminal
case. Piecemeal presentation of evidence is simply not in accord with orderly justice.
Moreover, in Vda. De Gualberto v. Go, we also held:
_______________
65 537 Phil. 510; 507 SCRA 352 (2006) [Per J. Velasco, Jr., En Banc].
301
VOL. 804, SEPTEMBER 28, 2016 301

pg. 1085
In Labor Congress of the Philippines v. NLRC, we have made it clear that “to allow
fresh issues on appeal is violative of the rudiments of fair play, justice and due
process.” Likewise, in Orosa v. Court of Appeals, the Court disallowed it because “it
would be offensive to the basic rule of fair play, justice and due process if it considered
[the] issue[s] raised for the first time on appeal.” We cannot take an opposite stance
in the present case.66 (Citations omitted)
Respondent did state that Unocal Corporation was the party to the Merger Agreement with Blue
Merger and Chevron. Nonetheless, it did not use this allegation to argue that it had a separate and
distinct personality from Unocal Corporation and is, thus, not a party to the Merger Agreement.
Respondent only raised this argument in its appeal before the Court of Appeals.
Respondent’s contention that it falls within the exception to the rule likewise does not lie.
Respondent cites Quasha Ancheta Peña and Nolasco Law Office v. LCN Construction Corp.67
and claims that it falls within the exception since it did not present any additional evidence on the
matter:
In the interest of justice and within the sound discretion of the appellate court, a party may change
his legal theory on appeal, only when the factual bases thereof would not require presentation of
any further evidence by the
_______________
66 Id., at pp. 532-534; pp. 373-375.
67 585 Phil. 416; 563 SCRA 426 (2008) [Per J. Chico-Nazario, Third Division].
303
VOL. 804, SEPTEMBER 28, 2016 303

adverse party in order to enable it to properly meet the issue raised in the new theory.68
However, this paragraph states that it is the adverse party that should no longer be required to
present additional evidence to contest the new claim, and not the party presenting the new theory
on appeal. Thus, it does not matter that respondent no longer presented additional evidence to
pg. 1086
support its new claim. The petitioner, as the adverse party, should not have to present further
evidence on the matter before the new issue may be considered. However, the issue of whether
respondent is a party to the Merger Agreement may be proven otherwise by petitioner, through the
presentation of evidence that respondent is merely a branch and not a subsidiary of Unocal
Corporation. Thus, respondent’s new allegation does not fall under the exception to the rule.
Petitioner was denied the opportunity to present evidence to disprove respondent’s new claim.
Therefore, the Court of Appeals erred in taking into consideration this argument.
As to the remaining issues, we rule in favor of respondent and dismiss the Petition.
Both the Secretary of Labor and the Court of Appeals found that what was entered into by Unocal
Corporation, Blue Merger, and Chevron is a merger. The primary issue is what the effects of this
merger on respondent’s employees are.
We find that, whether or not respondent is a party to the Merger Agreement, there is no implied
dismissal of its employees as a consequence of the merger.
A merger is a consolidation of two or more corporations, which results in one or more corporations
being absorbed into
_______________
68 Id., at p. 436; p. 444, as cited in Rollo, p. 294.
304

one surviving corporation.69 The separate existence of the absorbed corporation ceases, and the
surviving corporation “retains its identity and takes over the rights, privileges, franchises,
properties, claims, liabilities and obligations of the absorbed corporation(s).”70
If respondent is a subsidiary of Unocal California, which, in turn, is a subsidiary of Unocal

Corporation, then the merger of Unocal Corporation with Blue Merger and Chevron does not affect
respondent or any of its employees. Respondent has a separate and distinct personality from its
parent corporation.
Nonetheless, if respondent is indeed a party to the merger, the merger still does not result in the
dismissal of its employees.
pg. 1087
The effects of a merger are provided under Section 80 of the Corporation Code:
SEC. 80. Effects of merger or consolidation.—The merger or consolidation, as provided in the

preceding sections shall have the following effects:
1. The constituent corporations shall become a single corporation which, in case of merger,
shall be the surviving corporation designated in the plan of merger; and in case of
consolidation, shall be the consolidated corporation designated in the plan of consolidation;
2. The separate existence of the constituent corporations shall cease, except that of the
surviving or the consolidated corporation;
_______________
69 Bank of Commerce v. Radio Philippines Network, Inc., 733 Phil. 491, 510; 722 SCRA 520,
541 (2014) [Per J. Abad, Third Division].
70 Id.
305
VOL. 804, SEPTEMBER 28, 2016 305

3. The surviving or the consolidated corporation shall possess all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of a corporation
organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and thereafter possess
all the rights, privileges, immunities and franchises of each of the constituent corporations;
and all property, real or personal, and all receivables due on whatever account, including
subscriptions to shares and other choses in action, and all and every other interest of, or
belonging to, or due to each constituent corporation, shall be taken and deemed to be
transferred to and vested in such surviving or consolidated corporation without further act
or deed; and
5. The surviving or the consolidated corporation shall be responsible and liable for all the
liabilities and obligations of each of the constituent corporations in the same manner as if
such surviving or consolidated corporation had itself incurred such liabilities or
obligations; and any claim, action or proceeding pending by or against any of such
constituent corporations may be prosecuted by or against the surviving or consolidated
pg. 1088
corporation, as the case may be. Neither the rights of creditors nor any lien upon the property
of any of such constituent corporations shall be impaired by such merger or consolidation.
(Emphasis supplied)
Although this provision does not explicitly state the merger’s effect on the employees of the
absorbed corporation, Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank71 has ruled that the surviving corporation automatically
assumes the em-
_______________
71 674 Phil. 609, 617-618; 658 SCRA 828, 832 (2011) [Per J. Leonardo-De Castro, En Banc].
306

ployment contracts of the absorbed corporation, such that the absorbed corporation’s employees
become part of the manpower complement of the surviving corporation, thus:
Taking a second look on this point, we have come to agree with Justice Brion’s view that it is more
in keeping with the dictates of social justice and the State policy of according full protection to
labor to deem employment contracts as automatically assumed by the surviving corporation in a
merger, even in the absence of an express stipulation in the articles of merger or the merger plan.
In his dissenting opinion, Justice Brion reasoned that:
To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally

declared policies on work, labor and employment, and the specific FEBTC-BPI situation —
i.e., a merger with complete “body and soul” transfer of all that FEBTC embodied and
possessed and where both participating banks were willing (albeit by deed, not by their
written agreement) to provide for the affected human resources by recognizing continuity of
employment — should point this Court to a declaration that in a complete merger situation
where there is total takeover by one corporation over another and there is silence in the
merger agreement on what the fate of the human resource complement shall be, the latter
should not be left in legal limbo and should be properly provided for, by compelling the
surviving entity to absorb these employees. This is what Section 80 of the Corporation Code
commands, as the surviving corporation has the legal obligation to assume all the obligations
and liabilities of the merged constituent corporation.
pg. 1089
Not to be forgotten is that the affected employees managed, operated and worked on
307
VOL. 804, SEPTEMBER 28, 2016 307

the transferred assets and properties as their means of livelihood; they constituted a basic
component of their corporation during its existence. In a merger and consolidation situation,
they cannot be treated without consideration of the applicable constitutional declarations
and directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court
to read and interpret the law so that they are treated in accordance with the legal requirements
of mergers and consolidation, read in light of the social justice, economic and social
provisions of our Constitution. Hence, there is a need for the surviving corporation to take
responsibility for the affected employees and to absorb them into its workforce where no
appropriate provision for the merged corporation’s human resources component is made in
the Merger Plan.72 (Emphasis supplied, citations omitted)
The rationale for this ruling is anchored on the nature and effects of a merger as provided under
Section 80 of the Corporation Code, as well as the policies on work and labor enshrined in the
Constitution.73
To reiterate, Section 80 of the Corporation Code provides that the surviving corporation shall
possess all the rights, privileges, properties, and receivables due of the absorbed corporation.
Moreover, all interests of, belonging to, or due to the absorbed corporation “shall be taken and
deemed to be transferred to and vested in such surviving or consolidated corporation without
further act or deed.”74 The surviving corporation likewise acquires all the liabilities and
obligations of
_______________
72 Id. at pp. 617-618; pp. 833-834.
73 Id.
74 Corp. Code, Sec. 80.
pg. 1090
308

the absorbed corporation as if it had itself incurred these liabilities or obligations.75
This acquisition of all assets, interests, and liabilities of the absorbed corporation necessarily
includes the rights and obligations of the absorbed corporation under its employment contracts.
Consequently, the surviving corporation becomes bound by the employment contracts entered into
by the absorbed corporation. These employment contracts are not terminated. They subsist unless
their termination is allowed by law.
This interpretation is consistent with the constitutional provisions and policies on work and labor,
which provides:
ARTICLE II
....
State Policies
....
SECTION 18. The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.
....
pg. 1091
ARTICLE XIII
....
Labor
SECTION 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and
_______________
75 Id.
309
VOL. 804, SEPTEMBER 28, 2016 309

peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace.
pg. 1092
The State shall regulate the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of enterprises to reasonable returns
on investments, and to expansion and growth.
These constitutional provisions ensure that workers’ rights are protected as they are imbued with
public interest. They likewise prevent an interpretation of any law, rule, or agreement, which may
violate worker’s rights acquired during their employment.
Associate Justice Arturo D. Brion’s Dissenting Opinion in Bank of the Philippine Islands v. BPI
Employees Union-Davao Chapter-Federation of Unions in BPI Unibank76 was similarly premised
on the constitutional protection afforded to labor and the public interest carried by employment
contracts:
An employment contract or contract of service essentially has value because it embodies work —
the means of adding value to basic raw materials and the processes for producing goods, materials
and services that become the lifeblood of corporations and, ultimately, of the nation. Viewed from
this perspective, the employ-
_______________
76 642 Phil. 47, 138-158; 627 SCRA 590, 672-695 (2010) [Per J. Leonardo-De Castro, En Banc].
310

ment contract or contract of service is not an ordinary agreement that can be viewed in strictly
contractual sense. It embodies work and production and carries with it a very significant element
of public interest; thus, the Constitution, no less, accords full recognition and protection to workers
and their contribution to production.
....
pg. 1093
These constitutional statements and directives, aside from telling us to consider work, labor and
employment beyond purely contractual terms, also provide us directions on how our considerations
should be made, i.e., with an eye on the interests they represent — the individual, the corporate,
and more importantly, the national.77
Associate Justice Brion likewise discussed the nature of a merger agreement vis-à-vis the
employment contracts:
This recognition is not to objectify the workers as assets and liabilities, but to recognize — using
the spirit of the law and constitutional standards — their necessary involvement and need to be
provided for in a merger situation. Neither does this step, directly impacting on the employees’
individual employment contracts, detract from the in personam character of these contracts. For in
a merger situation, no change of employer is involved; the change is in the internal personality of
the employer rather than through the introduction of a new employer which would have novated
the contract. This conclusion proceeds from the nature of a merger as a corporate development
regulated by law and the merger’s implementation through the parties’ merger agreement.
....
In the BPI-FEBTC situation, these employment contracts are part of the obligations that the
merging
_______________
77 Id., at pp. 145-147; pp. 681-683.
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VOL. 804, SEPTEMBER 28, 2016 311

parties have to account and make provisions for under the Constitution and the Corporation Code;
in the absence of any clear agreement, these employment contracts subsist, subject to the right of
the employees to reject them as they cannot be compelled to render service but can only be made
to answer in damages if the rejection constitutes a breach. In other words, in mergers and
pg. 1094
consolidations, these contracts should be held to be continuing, unless rejected by the employees
themselves or declared by the merging parties to be subject to the authorized causes for
termination of employment under Sections 282 and 283 of the Labor Code. In this sense, the
merging parties’ control and business decision on how employees shall be affected, in the same
manner that the affected employees’ decision on whether to abide by the merger or to opt out,
remain unsullied.78 (Emphasis in the original)
Senior Associate Justice Antonio T. Carpio’s Dissenting Opinion79 likewise discusses the
constitutional and legal right to security of tenure as basis for ruling that the employment contracts
of the absorbed corporation subsist in case of a merger:
Upon merger, BPI, as the surviving entity, absorbs FEBTC and continues the combined business
of the two banks. BPI assumes the legal personality of FEBTC, and automatically acquires
FEBTC’s rights, privileges and powers, as well as its liabilities and obligations.
....
Among the obligations and liabilities of FEBTC is to continue the employment of FEBTC
employees. These employees have already acquired certain employment status, tenure, salary and
benefits. They are regular employees of FEBTC. Since after the merger, BPI has con-
_______________
78 Id., at pp. 148-152; pp. 684-688.
79 Id., at pp. 117-137; pp. 650-672.
312

tinued the business of FEBTC, FEBTC’s obligation to these employees is assumed by BPI, and
BPI becomes duty-bound to continue the employment of these FEBTC employees.
pg. 1095
Under Article 279 of the Labor Code, regular employees acquire security of tenure, and hence,
may not be terminated by the employer except upon legal grounds. . . Without any of these legal
grounds, the employer cannot validly terminate the employment of regular employees; otherwise,
the employees’ right to security of tenure would be violated.
The merger of two corporations does not authorize the surviving corporation to terminate the
employees of the absorbed corporation in the absence of just or authorized causes as provided in
Articles 282 and 283 of the Labor Code. . . . Once an employee becomes permanent, he is protected
by the security of tenure clause in the Constitution, and he can be terminated only for just or
authorized causes as provided by law.80
These theories were dissents to the Decision in Bank of the Philippine Islands. However, in the
Resolution resolving the Motion for Reconsideration in that case, this Court found it necessary to
interpret Section 80 of the Corporation Code and the constitutional provisions on labor as to
strengthen the “judicial protection of the right to security of tenure of employees affected by a
merger and [avoid] confusion regarding the status of various benefits.”81 Thus, this Court ruled
that the surviving corporation automatically assumes the employment contracts of the absorbed
corporation. The absorbed corporation’s employees are not impliedly dismissed, but be-
_______________
80 Id., at pp. 127-129; pp. 661-662.
81 Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of Unions

in BPI Unibank, supra note 71 at pp. 617-618; p. 834.
313
VOL. 804, SEPTEMBER 28, 2016 313

come part of the manpower complement of the surviving corporation.82
The merger of Unocal Corporation with Blue Merger and Chevron does not result in an implied
termination of the employment of petitioner’s members. Assuming respondent is a party to the
merger, its employment contracts are deemed to subsist and continue by “the combined operation
of the Corporation Code and the Labor Code under the backdrop of the labor and social justice
provisions of the Constitution.”83
pg. 1096
Petitioner insists that this is contrary to its freedom to contract, considering its members did not
enter into employment contracts with the surviving corporation. However, petitioner is not
precluded from leaving the surviving corporation. Although the absorbed employees are retained
as employees of the merged corporation, the employer retains the right to terminate their
employment for a just or authorized cause. Likewise, the employees are not precluded from
severing their employment through resignation or retirement. The freedom to contract and the
prohibition against involuntary servitude is still, thus, preserved in this sense.84 This is the manner
by which the consent of the employees is considered by the law.
Hence, assuming respondent is a party to the merger, the merger still does not operate to effect a
termination of the employment of respondent’s employees. Should they be unhappy with the
surviving corporation, the employees may retire or resign from employment.
_______________
82 Id.

in BPI Unibank, supra note 76 at p. 148; pp. 684-685.

in BPI Unibank, supra note 71 at pp. 617-618; p. 834.
314

Given these considerations, we rule that petitioner is not entitled to the separation benefits it claims
from respondent.
Separation benefits are not granted to petitioner by law in case of voluntary resignation,85 or by
any contract it entered into with respondent.
The Collective Bargaining Agreement86 between petitioner and respondent provides:
Article XII
pg. 1097
RESPONSIBILITIES OF THE PARTIES AND INDUS-
TRIAL PEACE
....
Section 2. ADDITIONAL RESPONSIBILITIES
....
In the event of closure, cessation of operations, retrenchment, redundancy or installation of labor

saving devices, the COMPANY will pay just and fair compensation for those who will be separated
from the COMPANY. The separation benefit is covered under a MEMORANDUM OF
AGREEMENT as agreed upon by both parties and shall serve as a part of this agreement (Annex
B).87
Likewise, the Memorandum of Agreement88 dated November 1, 2005 between petitioner and
respondent states:
WITHESSETH: That
WHEREAS, the COMPANY and the UNION recognize the possibility that UNOCAL
PHILIPPINES, INC. may undergo at its discretion reduction in work-
_______________
85 Labor Code, Art. 299.
86 Rollo, pp. 315-337.
87 Id., at p. 331.
88 Id., at pp. 310-314.
pg. 1098
315
VOL. 804, SEPTEMBER 28, 2016 315

force as a result of redundancy, retrenchment or installation of labor-saving devices, or closure

and cessation of operations.
WHEREAS, the COMPANY and the UNION agree that should any of the above cited conditions
occur that may directly affect the tenure of existing employees, the rights of the employees should
be respected and that the COMPANY will pay just and fair compensation for those who will be
separated from the COMPANY;
In view of the foregoing and in consideration of industrial peace and this covenant, the parties
hereby agree as follows:
....
2. The COMPANY will provide the following separation benefits for all regular and
probationary employees in the event that they lose their jobs as a result of the conditions cited
above;
a. Separation Pay: 2.5 months multiplied by the current monthly base pay plus monthly
equivalent of the 13th month and 14th month pay multiplied by the number of years
service.89
Merger is not one of the circumstances where the employees may claim separation pay. The only
instances where separation pay may be awarded to petitioner are: (a) reduction in workforce as a
result of redundancy; (b) retrenchment or installation of labor-saving devices; or (c) closure and
cessation of operations.
Redundancy has been defined by this Court as follows:
[W]e believe that redundancy, for purposes of our Labor Code, exists where the services of an
employee are in ex-
pg. 1099
_______________
89 Id., at pp. 310-311.
316

cess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put,
a position is redundant where it is superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as overhiring of workers, decreased volume of business,
or dropping of a particular product line or service activity previously manufactured or undertaken
by the enterprise. The employer has no legal obligation to keep in its payroll more employees than
are necessary for the operation of its business.90 (Citations omitted)
Retrenchment, on the other hand, is the reduction of personnel to save on costs on salaries and
wages due to a considerable decline in the volume of business.91
Cessation and closure of business contemplates the stopping of business operations of the
employer whether on the employer’s prerogative or on account of severe business losses.92
None of these instances are present here. The terms do not provide that a merger is one of the
instances where petitioner may claim separation benefits for its members. Neither can these
circumstances be interpreted as to contemplate a merger with another corporation. In any case, if
title parties intended that petitioner ought to be granted separation pay in case of a merger, it should
have been explicitly provided for in the contract. Absent this express intention, petitioner cannot
claim separation pay.
_______________
90 Wiltshire File Co., Inc. v. National Labor Relations Commission, 271 Phil. 694, 703; 193
SCRA 665, 672 (1991) [Per J. Feliciano, Third Division].
91 Manila Polo Club Employees’ Union (MPCEU) FUR-TUCP v. Manila Polo Club, Inc., 715
Phil. 18, 25; 702 SCRA 20, 29 (2013) [Per J. Peralta, Third Division].
92 Id.
pg. 1100
317
VOL. 804, SEPTEMBER 28, 2016 317

On the contention that petitioner must be awarded the separation pay in the interest of social
justice, this Court has held that this award is granted only under the following exceptional cases:
(1) the dismissal of the employee was not for serious misconduct; and (2) it did not reflect on the
moral character of the employee.93
In this case, there is no dismissal of the employees on account of the merger. Petitioner does not
deny that respondent actually continued its normal course of operations after the merger, and that
its members, as employees, resumed their work with their tenure, salaries, wages, and other
benefits intact. Petitioner was even able to execute with respondent, after the merger, the Collective
Bargaining Agreement from which it anchors its claims.
Given these circumstances, petitioner is not entitled to separation pay. Although the policy of the
state is to rule in favor of labor in light of the social justice provisions under the Constitution, this
Court cannot unduly trample upon the rights of management, which are likewise entitled to respect
in the interest of fair play.
WHEREFORE, the Decision dated July 23, 2009 and the Resolution dated November 9, 2009 of
the Court of Appeals in C.A.-G.R. S.P. No. 102184 are AFFIRMED. The Petition for Review is
DENIED considering that no reversible error was committed by the Court of Appeals.
SO ORDERED.
_______________
93 Unilever Philippines, Inc. v. Rivera, 710 Phil. 124, 132-133; 697 SCRA 136, 147 (2013) [Per
J. Mendoza, Third Division], citing Philippine Long Distance Telephone Co. v. National Labor
Relations Commission, 247 Phil. 641, 649; 164 SCRA 671, 682 (1988) [Per J. Cruz, En Banc].
See Cutamora v. Eastern Gold Corp., G.R. No. 220380 [Formerly UDK 15350], October 12, 2015
[Per Clerk of Court Notice Unsigned Resolution, First Division] (Notice).
318
pg. 1101
Leonardo-De Castro,** Mendoza (Acting Chairperson) and Jardeleza,*** JJ., concur.
Velasco, Jr.,**** J., I concur but this case is to be differentiated from G.R. No. 195615 (Bank of
Commerce vs. RPN).
Judgment and resolution affirmed; petition denied.
Notes.—The parties to a merger or consolidation are called constituent corporations; The surviving
or consolidated corporation assumes automatically the liabilities of the dissolved corporations,
regardless of whether the creditors have consented or not to such merger or consolidation. (McLeod
vs. National Labor Relations Commission, 512 SCRA 222 [2007])
Merger is a reorganization of two or more corporations that results in their consolidating into a
single corporation, which is one of the constituent corporations, one disappearing or dissolving
and the other surviving. (Bank of Commerce vs. Radio Philippines Network, Inc., 722 SCRA 520
[2014])
——o0o——
_______________
** Designated additional member per Raffle dated September 5, 2011.
*** Designated additional member per Raffle dated February 1, 2016.
**** Designated additional member per Raffle dated January 6, 2010.
pg. 1102
G.R. No. 208089. September 28, 2016.*
PHILIPPINE TRANSMARINE CARRIERS, INC., STEALTH MARITIME CORPORATION

and CARLOS SALINAS, petitioners, vs. CASIANO F. SALADAS, JR., respondent.
Remedial Law; Civil Procedure; Appeals; The Supreme Court (SC) does not review questions of
facts (where the doubt or controversy concerns the truth or falsehood of facts) unless necessary to
determine the correctness of the allegation that the National Labor Relations Commission (NLRC)
(in the decision the Court of Appeals [CA] reviewed) committed grave abuse of discretion.—
Underlying this jurisdictional limitation of our Rule 45 approach in labor cases is the general
jurisdictional limitation of a Rule 45 petition that restricts the Court’s inquiry to questions of law
— where the doubt or controversy concerns the correct application of law or jurisprudence to a
certain set of facts. We do not review questions of facts (where the doubt or controversy concerns
the truth or falsehood of facts) unless necessary to determine the correctness of the allegation that
the NLRC (in the decision the CA reviewed) committed grave abuse of discretion. In resolving the
present petition, therefore, we are bound by (1) the general factual-bar-rule under the Rule 45
petition directly before us, and (2) the intrinsic limitations of a certiorari proceeding (in the CA’s
review of the NLRC’s decision) as an extraordinary remedy aimed solely at correcting errors of
jurisdiction. The issue before us involves mixed questions of fact and law, with the real issue being
one of fact — whether Saladas met an accident on board the vessel and/or his heart condition
worsened during his employment. As a question of fact, we generally cannot address this issue.
By way of exception, we can address factual issues and, in the process review the factual findings
of the labor tribunals and the evidence, to determine whether, as essentially ruled by the CA, the
NLRC indeed grossly misread the facts and misappreciated the evidence — situations that we
consider as marks of grave abuse of discretion.
_______________
* SECOND DIVISION.
334

Philippine Transmarine Carriers, Inc. vs. Saladas, Jr.
Labor Law; Seafarers; Disability Benefits; The frequent reliance on the one hundred twenty (120)-
day period diverts the attention of labor tribunals from other equally important doctrines in
granting a disability claim.—The CA erroneously relied on the 120-day period because Saladas
failed to prove that his medical condition is work-related. The continuing reliance on the number
of days that a seafarer is unable to work has attracted much doubt as regards it fairness and
pg. 1103
relevance. We have reminded that this period cannot be used as a panacea for all maritime
compensation cases as labor tribunals should always take into account the contractual duties
between the parties. The frequent reliance on the 120-day period diverts the attention of labor
tribunals from other equally important doctrines in granting a disability claim. Such diversion
creates the risk of giving due course to otherwise premature claims; or worse, it may lead to an
award of benefits to claims that are entirely without merit based on the degree of proof required.
In this respect, one important doctrine that should be considered in this case is the element of work
relatedness between an illness or disability and the seafarer’s duties — a relation that is explicitly
required under the POEA-SEC. The focus on the length of time during which the seafarer is unable
to work may diminish the importance of establishing this connection. In effect, it undermines an
essential principle in labor cases, which is the need to prove allegations and claims with substantial
evidence. We must always remember that whether a seaman is entitled to disability benefits or not
is a matter governed not only by medical findings, but by law and by contract. Deemed
incorporated in every Filipino seafarer’s contract of employment is a set of standard provisions
established and implemented by the POEA, which contain the minimum requirements prescribed
by the government for the employment of Filipino seafarers. Under these standards, we held that
two (2) elements must concur for an injury or illness to be compensable: (a) the condition must be
work-related, and (b) it must have existed during the term of the seafarer’s employment contract.
Same; Same; Same; A seafarer must submit himself within three (3) days after repatriation due to
disability for the post-employment examination and treatment by the company-designated
physician. Failure to report within such time will result in the forfeiture of benefits.—The CA, as
well as the labor tribunals, prematurely considered the medical assessment of Saladas’ own doctors
without
335
VOL. 804, SEPTEMBER 28, 2016 335

taking into account that Saladas did not undergo the mandatory post-medical examination. A
seafarer must submit himself within three (3) days after repatriation due to disability for the post-
employment examination and treatment by the company-designated physician. Failure to report
within such time will result in the forfeiture of benefits. In the present case, Saladas alleged that
he reported to PTCI upon his arrival in the Philippines, informed them of the accidents he suffered
on board the vessel, and asked for compensation. Despite his repeated requests, PTCI denied the
claim because there was no endorsement from SMC. To our mind, PTCI’s refusal was to be
expected because there was no accident on board the vessel involving Saladas and, even if the
accident did occur, there was no single record of the accident. All told, we declare that Saladas’
rib fracture and heart condition, if they exist at all, are not work-related, and are therefore not
compensable. We stress that Saladas failed to prove, by substantial evidence, the work-relatedness
of his claims and his compliance with the parameters that the POEA-SEC provides for disability
pg. 1104
benefit claims. Therefore, the NLRC, under the present circumstances, committed grave abuse of
discretion in awarding disability benefits despite the absence of the element of work relatedness.
Accordingly, in affirming the NLRC’s decision, the CA committed a reversible error in not finding
that the NLRC committed an error of jurisdiction.
Del Rosario and Del Rosario Law Offices for petitioners.
Valmores and Valmores Law Office for respondent.
BRION,** J.:
We resolve the petition for review on certiorari under Rule 45 of the Rules of Court,1 filed by
petitioners Philippine Trans-
_______________
** Designated as Acting Chairperson per Special Order No. 2374 dated September 14, 2016.
336

marine Carriers, Inc. (PTCI), Stealth Maritime Corporation (SMC) and Carlos Salinas, as
President/General Manager of PTCI, to reverse and set aside the January 28, 2013 decision2 and
the July 1, 2013 resolution3 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 120532.
The Factual Antecedents
pg. 1105
Pursuant to a nine-month POEA standard employment contract dated July 9, 2008, the petitioners
hired Casiano F. Saladas, Jr. (Saladas) as Chief Cook on board M/V Gas Defiance. He joined the
vessel crew on July 29, 2008, after having been declared fit to work with restriction by the PTC
Health Metrics, Inc.4
Sometime in March 2009, while doing his chores, Saladas allegedly lost his balance and fell when
the vessel changed speed. His chest hit a trash can, but he ignored the pain. Another onboard
incident occurred when Saladas slipped from a ladder with his hip hitting the deck. After two (2)
days, he felt numbness and weakness in his right leg, thighs, chest, and neck areas. He claimed
that he requested from the Captain a medical checkup.
The petitioners claim that, while on board the vessel, Saladas did not experience any illness or
injury which hampered his functions as Chief Cook. He also did not report any unusual incident
concerning his health which could have indicated any illness or injury.
On April 6, 2009, Saladas disembarked at Brisbane, Australia because his contract had already
ended. While he was
_______________
1 Rollo, pp. 31-59.
2 Id., at pp. 14-26; penned by Associate Justice Magdangal M. De Leon and concurred in by
Associate Justices Stephen C. Cruz and Myra V. Garcia-Fernandez.
3 Id., at pp. 28-29.
4 Id., at p. 130; Saladas’ PEME shows that he has been hypertensive since 2005.
337
VOL. 804, SEPTEMBER 28, 2016 337

in Brisbane, Australia, Saladas underwent a medical check-up with Dr. David Bartholomeusz (Dr.
Bartholomeusz). The foreign doctor diagnosed that Saladas’ pain from the accident has been
symptomatic for two (2) weeks; found that his blood pressure was high but became normal after
two (2) hours; made him go through an electrocardiogram test (ECG); and prescribed him
maintenance drugs.
pg. 1106
Saladas alleged that he asked Dr. Bartholomeusz for a copy of his findings, with assessment and
diagnosis. Dr. Bartholomeusz, in turn, advised him that the results would be given through SMC’s
agent. However, Saladas never received his medical results before he left for the Philippines.
When Saladas arrived in the Philippines, he immediately reported to PTCI and informed them of
the accidents he suffered on board the vessel. Despite repeated requests for compensation, PTCI
denied these because there was no endorsement from SMC regarding this matter.
On November 12, 2009, Saladas consulted Dr. Efren Vicaldo (Dr. Vicaldo), an internist-
cardiologist at the Philippine Heart Center, who diagnosed him with diabetes mellitus, essential
hypertension, rib fracture with impediment Grade VII (41.80%). Dr. Vicaldo, nonetheless,
declared him unfit to resume work as a seaman in any capacity.
On October 16, 2009, Saladas filed a complaint for disability benefits, illness allowance,
reimbursement of medical expenses, and damages against the petitioners.
The Compulsory Arbitration Decisions
In his June 16, 2010 decision, Labor Arbiter Felipe P. Pati (LA Pati) ruled in favor of Saladas and
awarded permanent and/or total disability benefits in the amount of $60,000.00. Saladas was found
to have proven the following evidentiary facts, which LA Pati deemed as uncontroverted: (1) that
he went through an ECG test and was prescribed antihypertensive medications but did not receive
his medical results from
338

Dr. Bartholomeusz; (2) that PTCI denied his disability claims right after he arrived in the
Philippines; (3) that he had no choice but to seek consultation and treatment on his own from Dr.
Vicaldo; and (4) after having been thoroughly examined and diagnosed, he was given an unfit-to-
work assessment.
LA Pati said that the petitioners only gave unsubstantiated arguments and failed to prove with
substantial evidence that they were not liable for the disability claims. Their arguments were
considered “bare denials,” which appear bereft of any concrete evidence to thwart the claims
against the petitioners.
pg. 1107
On appeal, the NLRC dismissed the petitioners’ appeal and affirmed LA Pati’s decision in its
January 6, 2011 resolution, and denied their subsequent motion for reconsideration in its May 17,
2011 resolution.
The petitioners then filed a petition for certiorari before the CA alleging that the NLRC committed
grave abuse of discretion in affirming LA Pati’s award of disability benefits based on Saladas’
self-serving allegation that he suffered an injury on board the vessel, and that he complied with
the three-day reporting requirement under the POEA Standard Terms and Conditions. They also
insisted that his illnesses were not work-related. At any rate, they argued that Saladas disembarked
from the vessel not for medical reasons but due to finished contract.
The Assailed Decision
In its January 28, 2013 decision, the CA dismissed the petition for certiorari. The CA mainly held,
among others, that Saladas is entitled to permanent/total disability benefits because his injury was
work-related that existed during the effectivity of his employment contract. The CA appreciated
Saladas’ claim that he met an accident on board the M/V Gas Defiance because it was supported
by the medical report of Dr. Bartholomeusz on April 6, 2008. In addition, the pre-employment
medical examination Saladas underwent before
339
VOL. 804, SEPTEMBER 28, 2016 339

boarding the vessel showed that he was not suffering from rib fracture. Thus, after he
was medically repatriated on April 8, 2008, Saladas was unable to work for more than one hundred
twenty (120) days and could no longer pursue his usual work as a seaman.
On July 1, 2013, the CA denied petitioners’ motion for reconsideration; hence, they filed the
present petition.
Our Ruling
pg. 1108
We resolve to GRANT the petition.
In reviewing the CA decision in a labor case made under Rule 65 of the Rules of Court, we examine
the CA decision in the context that it determined the presence or the absence of grave abuse of
discretion in the NLRC decision before it, not on the basis of whether the NLRC decision, on the
merits of the case, committed errors of law. In other words, we have to be keenly aware that the
CA undertook a Rule 65 review, not a review on appeal, of the challenged NLRC decision.
Under this approach, the question that we ask is: Did the CA correctly determine whether the
NLRC committed grave abuse of discretion in ruling on the case?5
Underlying this jurisdictional limitation of our Rule 45 approach in labor cases is the general
jurisdictional limitation of a Rule 45 petition that restricts the Court’s inquiry to questions of law
— where the doubt or controversy concerns the correct application of law or jurisprudence to a
certain set of facts. We do not review questions of facts (where the doubt or controversy concerns
the truth or falsehood of facts) unless necessary to determine the correctness of the allegation that
the NLRC (in the decision the CA reviewed) committed grave abuse of discretion.
_______________
5 Montoya v. Transmed Manila Corporation, G.R. No. 183329, August 27, 2009, 597 SCRA 334,
342-343.
340

In resolving the present petition, therefore, we are bound by (1) the general factual-bar-rule under
the Rule 45 petition directly before us, and (2) the intrinsic limitations of a certiorari proceeding
(in the CA’s review of the NLRC’s decision) as an extraordinary remedy aimed solely at correcting
errors of jurisdiction.
The issue before us involves mixed questions of fact and law, with the real issue being one of fact
— whether Saladas met an accident on board the vessel and/or his heart condition worsened
during his employment. As a question of fact, we generally cannot address this issue.
By way of exception, we can address factual issues and, in the process review the factual findings
of the labor tribunals and the evidence, to determine whether, as essentially ruled by the CA, the
NLRC indeed grossly misread the facts and misappreciated the evidence — situations that we
consider as marks of grave abuse of discretion.
In the present case, we find that the CA committed a reversible error and that the labor tribunals
gravely abused their discretion because they totally disregarded the governing contract between
pg. 1109
the parties. They likewise grossly misappreciated the facts and even completely disregarded vital
pieces of evidence in resolving the case.
First, the CA erroneously relied on the 120-day period because Saladas failed to prove that his
medical condition is work-related. The continuing reliance on the number of days that a seafarer
is unable to work has attracted much doubt as regards it fairness and relevance. We have reminded
that this period cannot be used as a panacea for all maritime compensation cases as labor tribunals
should always take into account the contractual duties between the parties.6
_______________
6 See Splash Philippines, Inc. v. Ruizo, G.R. No. 193628, March 19, 2014, 719 SCRA 496, 505.
341
VOL. 804, SEPTEMBER 28, 2016 341

The frequent reliance on the 120-day period diverts the attention of labor tribunals from other
equally important doctrines in granting a disability claim. Such diversion creates the risk of giving
due course to otherwise premature claims; or worse, it may lead to an award of benefits to claims
that are entirely without merit based on the degree of proof required.
In this respect, one important doctrine that should be considered in this case is the element of work
relatedness between an illness or disability and the seafarer’s duties — a relation that is explicitly
required under the POEA-SEC. The focus on the length of time during which the seafarer is unable
to work may diminish the importance of establishing this connection. In effect, it undermines an
essential principle in labor cases, which is the need to prove allegations and claims with substantial
evidence.
We must always remember that whether a seaman is entitled to disability benefits or not is a matter
governed not only by medical findings, but by law and by contract. Deemed incorporated in every
Filipino seafarer’s contract of employment is a set of standard provisions established and
implemented by the POEA, which contain the minimum requirements prescribed by the
government for the employment of Filipino seafarers. Under these standards, we held that two (2)
elements must concur for an injury or illness to be compensable: (a) the condition must be work-
related, and (b) it must have existed during the term of the seafarer’s employment contract.7
In this case, Saladas failed to submit proof that his illness was work-related. In other words, the
evidence on record misses essential facts on how he contracted or developed his
_______________
pg. 1110
7 InterOrient Maritime Enterprises, Inc. v. Creer III, G.R. No. 181921, September 17, 2014, 735
SCRA 267, 283-284, citing Jebsens Maritime, Inc. v. Undag, G.R. No. 191491, December 14,
2011, 662 SCRA 670, 677.
342

illness, and how and why his working conditions aggravated this illness. In the absence of
substantial evidence, we cannot just presume that Saladas’ job caused his injury or aggravated any
preexisting condition he might have had.8
While Saladas alleged that he met two (2) accidents on board the vessel, these allegations remain
unsubstantiated by sufficient evidence. He failed to show that these incidents happened because
he did not present any kind of evidence to prove that the accidents occurred at all. There was no
record of any medical complaint lodged by Saladas during his employment on board the vessel.
He even claimed that his fellow crew members noticed him limping, yet the records do not show
any testimony, affidavit, or document that they, indeed, had witnessed such fact.
The only documents on record about this alleged accident on March 2009 were post-medical
reports of Saladas’ rib fracture9 and Dr. Bartholomeusz’s initial report when Saladas came to him
for a medical checkup in Brisbane, Australia.10 These documents, however, prove no more than
the fact that Saladas told Dr. Bartholomeusz that his ribs have been hurting for two (2) weeks
before he visited him, and that he has an existing rib fracture when he underwent medical
examinations in the Philippines. These two facts, taken together, are not enough to prove that
Saladas met an accident on board his vessel.
As for his heart condition, Saladas did not present evidence that the condition worsened during his
employment. Again, what he presented were post-medical reports about the tests he underwent,
the heart medications he was prescribed, and diagnosis of diabetes and hypertension.11 These
reports, how-
_______________
8 See Jebsen Maritime, Inc. v. Ravena, G.R. No. 200566, September 17, 2014, 735 SCRA 494.
9 Rollo, pp. 133-134, 148.
10 Id., at p. 132.
11 Id., at pp. 133-147.
pg. 1111
343
VOL. 804, SEPTEMBER 28, 2016 343

ever, were issued; long after Saladas had disembarked the vessel. Although he alleged that it was
the working conditions he had to undergo — i.e., stressful work onboard the ship, harsh sea
weather conditions, and constant exposure to harmful chemicals and varying changes in
temperature — that aggravated his heart condition, Saladas failed to adduce any kind of evidence
proving that he was indeed subject to these working conditions.
While the POEA-SEC considers a heart disease as occupational, Saladas failed to satisfy by
substantial evidence the condition laid down in the contract that if the heart disease was known to
have been present during employment, there must be proof that an acute exacerbation was clearly
precipitated by the unusual strain brought about by the nature of his work.12
Second, the CA failed to consider the fact that Saladas was NOT repatriated for medical reasons.
His nine-month contract with the petitioners started on July 9, 2008, which would have ended
sometime in April 2009. True enough, and as admitted by Saladas, he disembarked the vessel
because his employment had already ceased. In other words, it is logical to conclude that Saladas
was repatriated to the Philippines due to the completion of his employment contract and not on
account of his alleged accident and heart condition.
We have frequently recognized the fact of a “finished contract” as the reason for a seafarer’s
repatriation.13 In fact, we
_______________
12 See Villanueva, Sr. v. Baliwag Navigation, Inc., G.R. No. 206505, July 24, 2013, 702 SCRA
311, 315.
13 See Splash Philippines, Inc. v. Ruizo, supra note 6 at p. 507; InterOrient Maritime Enterprises,
Inc. v. Creer III, supra note 7 at p. 282; Villanueva, Sr. v. Baliwag Navigation, Inc., id.; Manota
v. Avantgarde Shipping Corporation, G.R. No. 179607, July 24, 2013, 702 SCRA 61, 71; Oriental
Shipmanagement Co., Inc. v. Nazal, G.R. No. 177103, June 3, 2013, 697 SCRA 51, 60.
344
pg. 1112
have used such circumstance as an indication that the injury or illness is not work-related.14
Third, the CA, as well as the labor tribunals, prematurely considered the medical assessment of
Saladas’ own doctors without taking into account that Saladas did not undergo the mandatory post-
medical examination. A seafarer must submit himself within three (3) days after repatriation due
to disability for the post-employment examination and treatment by the company-designated
physician.15 Failure to report within such time will result in the forfeiture of benefits.16
In the present case, Saladas alleged that he reported to PTCI upon his arrival in the Philippines,
informed them of the accidents he suffered on board the vessel, and asked for compensation.
Despite his repeated requests, PTCI denied the claim because there was no endorsement from
SMC. To our mind, PTCI’s refusal was to be expected because there was no accident on board the
vessel involving Saladas and, even if the accident did occur, there was no single record of the
accident.
All told, we declare that Saladas’ rib fracture and heart condition, if they exist at all, are not work-
related, and are therefore not compensable. We stress that Saladas failed to prove, by substantial
evidence, the work-relatedness of his claims and his compliance with the parameters that the
POEA-SEC provides for disability benefit claims. Therefore,
_______________
14 Villanueva, Sr. v. Baliwag Navigation, Inc.; Manota v. Avantgarde Shipping Corporation, id.
15 POEA-Standard Employment Contract, Section 20(B)(3).
16 Status Maritime Corporation v. Delalamon, G.R. No. 198097, July 30, 2014, 731 SCRA 390;
InterOrient Maritime Enterprises, Inc. v. Creer III, supra note 7 at pp. 282-283; Loadstar
International Shipping, Inc. v. Heirs of the Late Enrique C. Calawigan, G.R. No. 187337,
December 5, 2012, 687 SCRA 300; Wallem Maritime Services, Inc. v. Tanawan, G.R. No. 160444,
August 29, 2012, 679 SCRA 255; Philippine Transmarine Carriers, Inc. v. Nazam, G.R. No.
190804, October 11, 2010, 632 SCRA 576.
345
VOL. 804, SEPTEMBER 28, 2016 345

pg. 1113
the NLRC, under the present circumstances, committed grave abuse of discretion in awarding
disability benefits despite the absence of the element of work relatedness. Accordingly, in
affirming the NLRC’s decision, the CA committed a reversible error in not finding that the NLRC
committed an error of jurisdiction.
WHEREFORE, in the light of these considerations, we GRANT the petition for review
on certiorari filed by the petitioners. Accordingly, we REVERSE and SET ASIDE the January
28, 2013 decision and the July 1, 2013 resolution of the Court of Appeals in C.A.-G.R. S.P. No.
120532. The complaint filed by Casiano F. Saladas, Jr. is DISMISSED for lack of merit.
SO ORDERED.
Del Castillo, Mendoza and Leonen, JJ., concur.
Carpio (Chairperson), J., On Leave.
Notes.—The mandate of Section C(4)(c) of the 1989 POEA-Standard Employment Contract is to

make the post-employment examination within three (3) working days from the seafarer’s
arrival/repatriation to the Philippines compulsory, except when the seafarer is physically
incapacitated to do so, before a claim for disability or death benefits can validly prosper. (Crew
and Ship Management International, Inc. vs. Soria, 687 SCRA 491 [2012])
Jurisprudence is indeed replete with pronouncements that it is the company-designated physician’s

findings which should form the basis of any disability claim of the seafarer. (Licayan vs. Seacrest
Maritime Management, Inc., 775 SCRA 586 [2015])
——o0o——
pg. 1114
G.R. No. 222740. September 28, 2016.*
ST. LUKE’S COLLEGE OF MEDICINE-WILLIAM H. QUASHA MEMORIAL

FOUNDATION, DR. BRIGIDO L. CARANDANG, and DR. ALEJANDRO P. ORTIGAS,
petitioners, vs. SPOUSES MANUEL and ESMERALDA PEREZ and SPOUSES ERIC and
JURISITA QUINTOS, respondents.
Remedial Law; Civil Procedure; Parties; Indispensable Parties; Words and Phrases; An
indispensable party is defined by the Rules of Court as a party-in-interest without whom no final
determination can be had of an action.—An indispensable party is defined by the Rules of Court
as a party-in-interest without whom no final determination can be had of an action. In the present
case, respondents premise petitioners’ liability on their contractual obligation to their students and,
certainly, complete relief and a final judgment can be arrived at by weighing the claims and
defenses of petitioners and respondents, without need of evaluating the claims and defenses of the
Municipality of Cabiao. If at all, the Municipality of Cabiao is a necessary party whose
noninclusion in the case at bar shall not prevent the court from proceeding with the action.
Schools; Institutions of learning have the “built-in” obligation of providing a conducive

atmosphere for learning, an atmosphere where there are no constant threats to life and limb, and
one where peace and order are maintained.—The present case is one between a school and its
students, with their relationship being based on the enrollment contracts. In the illuminating case
of PSBA, et al. v. CA, et al., 205 SCRA 729 (1992), the Court had the opportunity to lay down the
principle that: When an academic institution accepts students for enrollment, there is established
a contract between them, resulting in bilateral obligations which both parties are bound to comply
with. For its part, the school undertakes to provide the student with an education that would
presumably suffice to equip him with the necessary tools and skills to pursue higher education or
a profession. On the other hand, the student covenants to abide by the school’s academic
requirements and observe its rules and regulations. Institu-
_______________
* THIRD DIVISION.
381
VOL. 804, SEPTEMBER 28, 2016 381

St. Luke’s College of Medicine-William H. Quasha Memorial Foundation vs. Perez
tions of learning must also meet the implicit or “built-in” obligation of providing their students
with an atmosphere that promotes or assists in attaining its primary undertaking of imparting
pg. 1115
knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or
explore the realm of the arts and other sciences when bullets are flying or grenades exploding in
the air or where there looms around the school premises a constant threat to life and limb.
Necessarily, the school must ensure that adequate steps are taken to maintain peace and order
within the campus premises and to prevent the breakdown thereof. Indubitably, institutions of
learning have the “built-in” obligation of providing a conducive atmosphere for learning, an
atmosphere where there are no constant threats to life and limb, and one where peace and order
are maintained.
Same; Although away from the main campus of the St. Luke’s, the students were still under the
same protective and supervisory custody of petitioners as the ones detailed in the main campus.—
In the case at bar, the Cabiao Community Clinic is to be considered as part of the campus premises
of St. Luke’s. In the course description of the clerkship program in preventive and community
medicine, it is stated that the Cabiao Community Clinic serves as the base operation of the
clerkship program. As such, petitioner had the same obligation to their students, even though they
were stationed in the Cabiao Community Clinic, and it was incumbent upon petitioners to ensure
that said Clinic was conducive for learning, that it had no constant threats to life and limb, and that
peace and order was maintained thereat. After all, although away from the main campus of St.
Luke’s, the students were still under the same protective and supervisory custody of petitioners as
the ones detailed in the main campus. In the performance of its contractual and inherent
obligations, the Court is mindful of the attendant difficulties on the part of institutions of learning,
and the Court recognizes that the latter cannot be an insurer of its students against all risks. Thus,
as also laid out in the PSBA case, “the school may still avoid liability by proving that the breach
of its contractual obligation to the students was not due to its negligence, here statutorily defined
to be the ‘omission of that degree of diligence which is required by the nature of the obligation
and corresponding to the circumstances of persons, time and place.”
382

Same; Torts and Damages; The victims were in the Cabiao Community Clinic because it was a
requirement of petitioners. The students were complying with an obligation under the enrollment
contract — they were rendering medical services in a community center as required by petitioners.
It was thus incumbent upon petitioners to comply with their own obligations under the enrollment
contract — to ensure that the community center where they would designate their students is safe
and secure, among others.—In the case at bar, it is well to remember that the victims were in the
Cabiao Community Clinic because it was a requirement of petitioners. The students were
complying with an obligation under the enrollment contract — they were rendering medical
services in a community center as required by petitioners. It was thus incumbent upon petitioners
to comply with their own obligations under the enrollment contract — to ensure that the
pg. 1116
community center where they would designate their students is safe and secure, among others.
Petitioners failed to take the necessary precautions to guard their students against foreseeable
harm. As correctly found by the CA, petitioners were remiss in inspecting the premises of the
Cabiao Community Clinic and in ensuring that the necessary permits were in order. These
precautions could have minimized the risk to the safety of the victims.
Same; Same; As held in Saludaga v. FEU, et al., 553 SCRA 741 (2008), a learning institution
should not be allowed to completely relinquish or abdicate matters of safety and security to a third
party as to do so would result to contracting away its inherent obligation of ensuring a safe
learning environment for its students.—The petitioners were obviously negligent in detailing their
students to a virtual fire trap. As found by the NBI, the Clinic was unsafe and was constructed in
violation of numerous provisions of the Revised Fire Code of the Philippines. It had no emergency
facilities, no fire exits, and had no permits or clearances from the appropriate government offices.
Petitioners additionally aver that the Clinic was built under the direction, supervision, management
and control of the Municipality of Cabiao, and that it ensured that there was an agreement for the
Municipality of Cabiao to provide 24-hour security to the Clinic. Petitioners, however, cannot
escape liability based on these arguments. As held in Saludaga v. FEU, et al., 553 SCRA 741
(2008), a learning institution should not be allowed to completely relinquish or abdicate matters
of safety and security to a third party as to do so
383
VOL. 804, SEPTEMBER 28, 2016 383

would result to contracting away its inherent obligation of ensuring a safe learning environment
for its students.
Same; Same; It is settled that in culpa contractual, the mere proof of the existence of the contract
and the failure of its compliance justify, prima facie, a corresponding right of relief.—We cannot
turn a blind eye on petitioners’ total reliance on the Municipality of Cabiao in ensuring the safety
and security of their students. The enrollment contract is between petitioners and the victims, and
petitioners cannot abdicate on their contractual obligation to provide their students a safe learning
environment, nor can it pass or contract away such obligation to a third party. Moreover, as to the
stipulation of 24-hour security in the Clinic, petitioners failed to present evidence that this
stipulation was actually enforced or that they took measures to ensure that it was enforced. This,
once more, shows petitioners’ propensity of relying on third parties in carrying out its obligations
to its students. It is settled that in culpa contractual, the mere proof of the existence of the contract
and the failure, of its compliance justify, prima facie, a corresponding right of relief.
pg. 1117
Quasha, Ancheta, Peña & Nolasco for petitioners.
The Law Firm of Sarmiento, Delson, Dakanay & Resurreccion for respondents.
PEREZ, J.:
Assailed in the present petition for review on certiorari is the Decision1 dated September 30, 2015
and the Resolution2 dated February 2, 2016 of the Court of Appeals (CA) in C.A.-
_______________
1 Rollo, pp. 379-400; penned by Associate Justice Agnes Reyes-Carpio, and concurred in by
Presiding Justice Andres B. Reyes, Jr. and Associate Justice Romeo F. Barza.
2 Id., at pp. 443-445.
384

G.R. CV No. 103529, which rulings reversed the Decision dated July 7, 20143 of the Regional
Trial Court (RTC), Branch 84, Malolos City, Bulacan in Civil Case No. 145-M-2012 and
remanded the case to the trial court for reception of evidence on the amount of damages to be
awarded.
As a backgrounder, in 2006, the Commission on Higher Education issued Memorandum Order

No. 10, Series of 2006 which required medical students to undergo rotating clinical clerkship in
their fourth year. As such, petitioner St. Luke’s College of Medicine (St. Luke’s) entered into a
Memorandum of Intent with the Municipality of Cabiao, Nueva Ecija for the construction of a
community clinic. The said facility consisted of a six-bed medical facility in the ground floor, and
a residential space for the medical staff in the second floor.
The undisputed facts, as amply summarized by the CA, are as follows:
pg. 1118
In February 2010, St. Luke’s sent four (4) of its 4th year medical students to the clinic, namely:
plaintiffs-appellants Spouses Perez’s daughter Jessa, plaintiffs-appellants Spouses Quintos’
daughter Cecille, Jerillie Ann Murillo (Murillo) and Miguel Rafael Ramos (Ramos). They were
tasked to complete a four-week clerkship rotation at the clinic and like the previous batches, they
were housed in the second floor of the clinic.
According to Ramos, he and his groupmates reported for duty at the Cabiao clinic at approximately
10 o’clock in the morning of February 8, 2010. When their shift ended at 5 o’clock that afternoon,
the group went for a jog and returned to the clinic at around 7 o’clock in the evening. They again
went out at 9 o’clock in the evening to buy beverages, cooking oil and other items needed for their
breakfast the next day and went to sleep sometime after midnight. Ramos admitted that one of the
beverages they bought was an alcoholic beverage called The
_______________
3 Id., at pp. 258-280; penned by Presiding Judge Wilfredo T. Nieves.
385
VOL. 804, SEPTEMBER 28, 2016 385

Bar, which consisted of either vodka or gin. He also admitted that only he and Cecille drank the
alcoholic beverage which they mixed with the soda and that they did not consume the whole bottle.
Ramos was awakened sometime between 3 o’clock and 3:30 in the morning of February 9, 2010
when he heard Murillo shouting from the other side of the room that there was a fire. Ramos
immediately ran to the door which led to the living room and when he opened the same, he saw
thick smoke coming from the left portion of the living room where there was a glow. He also felt
extreme heat, prompting him to run to the bathroom to get a pail of water with which he tried to
extinguish the fire. The girls, who had followed him to the bathroom, stayed behind. When Ramos’
attempt to put out the fire proved to be futile, he went back to the bathroom and poured water on
the girls in an attempt to alleviate the extreme heat coming from the fire.
According to Ramos, the smoke started to seep through the bathroom door and the group had
started shouting for help. After a considerable amount of time, he heard somebody outside
instructing him to get back from the window. When he did so, somebody broke the window and
started to dismantle the iron grills barring the same. By that time, Ramos had started losing
consciousness due to smoke inhalation and only remembered that he was being pulled out of the
building through the window.
pg. 1119
Unfortunately, the fire resulted in the deaths of the female medical students, including the
daughters of plaintiffs-appellants due to smoke inhalation resulting to asphyxia.
As a result of the deaths, defendant-appellee St. Luke’s compensated the parents of the three
deceased students in the amount of Php300,000.00 each from insurance proceeds. (Citations
omitted)
The Bureau of Fire Protection (BFP) conducted an investigation on the incident, and in a
Certification dated April 18,
386

2011, it certified that the fire was “purely accidental in nature due to unattended cooking,” to wit:4
THIS IS TO CERTIFY THAT as appearing on The Blotter Book No. 0304-0287, pages 17 and
18, the two storey Institutional building owned by Local Government Unit (LGU) Cabiao, Nueva
Ecija was partially razed by fire including all the contents of the second floor that transpired on or
about 090245H February 2010. The estimated cost of damage is two million pesos (P2,000,000.00)
more or less.
Result of investigation conducted by the Investigator on Case of this station, Bureau of Fire
Protection, Cabiao, Nueva Ecija, disclosed that the fire was purely ACCIDENTAL IN NATURE
due to UNATTENDED COOKING that occurred at the kitchen of said floor and no evidence were
gathered to show that the fire was intentionally, deliberately or maliciously set.
Respondents had their doubts. Thus:5
x x x. x x x, plaintiffs-appellants, requested for a meeting with defendant-appellee Dr. Alejandro

Ortigas, Associate Dean for Faculty and Student Affairs of St. Luke’s. During the meeting,
plaintiffs-appellants were surprised by the presence of defendants-appellees Dr. Brigido
Carandang, St. Luke’s Dean of Medicine, the Municipal Health Officer of Cabiao Dr. De Leon, as
well as Municipal Fire Marshall of Cabiao Baby Boy Esquivel, a Cabiao police officer and its
barangay captain.
pg. 1120
The officials informed plaintiffs-appellants that the fire was caused by the gas burner left open by
the victims which greatly disturbed plaintiffs-appellants. In a subsequent meeting, they were
informed that there was also evidence that the victims were drinking alcoholic bever-
_______________
4 Id., at pp. 277-278; as quoted in the RTC Decision.
5 Id., at pp. 383-384; CA Decision.
387
VOL. 804, SEPTEMBER 28, 2016 387

ages on the night of the fire which plaintiffs-appellants refused to accept.
Convinced that there was a cover-up, plaintiffs-appellants continued to question individual

defendants-appellees. Exasperated, defendant-appellee Dr. Carandang allegedly asked “Ano pa
bang gusto ninyo sa amin? Nakiramay na kami.”
Offended and still unconvinced, respondent Spouses Manuel and Esmeralda Perez, the parents of
Jessa, and respondent Spouses Eric and Jurisita Quintos, the parents of Cecille, sought the help of
the National Bureau of Investigation (NBI). In its Resolution dated August 3, 2010, the existence
of which is expressly admitted by petitioners, having quoted the contents6 and having attached a
copy thereof to the present petition,7 the NBI declared that the construction of the Cabiao
Community Clinic building was in violation of the provisions of Republic Act (RA) No. 9514 or
the Revised Fire Code of the Philippines, that the cause of the fire was due to faulty electrical
wiring, and that St. Luke’s negligence is criminal in nature. The pertinent parts of the said
Resolution reads:8
xxxx
2. The building structure of Cabiao Community Center
pg. 1121
The Cabiao Community Clinic/Center is a two-storey concrete building. The ground floor is used
as the municipality’s lie-in clinic or hospital during day time. The students and in particular the
victims use this facility together with the medical complement of the municipality for their
community medical service.
_______________
6 Id., at pp. 49-50.
7 Id., at pp. 62-68.
8 Id., at pp. 64-67.
388

On the 2nd floor was the office of Dr. LEON DE LEON, Cabiao Municipal Health Officer,
adjacent was a storage room for office and medical supplies and documents, the bedrooms for the
medical students rendering community service, a dining area, a kitchen, and the living-room. The
second floor, it may be said, is virtually dedicated for the board and lodging of the students while
on mission. These rooms and areas are separated from each other by wood panels made of plywood
including the wall in which the gas stove was located. All the windows at the second floor are
also covered by permanent iron grills. There are no fire exits, fire alarms, fire extinguishers,
sprinklers, emergency lights.
The community center is a virtual fire/death trap. During night time, medical students were
left alone inside the 2nd floor with the main gate locked from the outside and with no
apparent signs of fire alarms, fire sprinklers, fire exit plan, emergency lights, provisions of
confining the fire to its source, among others, for the occupants fire safety and protection
system. They were on their own at the second floor, without anyone (maid or security guard) to
attend to their needs while the ground floors and the adjoining building were uninhabited.
3. The electrical system of Cabiao Community Clinic;
pg. 1122
Engr. DAVID R. AOANAN, Chief Electrical Section of the (sic) and member of the NBI
investigating team observed that the facility has a main circuit breaker and the two distribution
panels, located at the ground floor, just above the comfort room of the 2nd floor. The main breaker
has a 500 amp capacity while the two distribution panels serving the 1st floor and the 2nd floor
has 200 amp capacity, each, as against the main electrical service wire with the size 14 mm.
The ratio between the capacity of the circuit breaker and the electrical service wire is out of
proportion and became electrically insensitive to
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VOL. 804, SEPTEMBER 28, 2016 389

overload and wire short circuits; thereby negating the very purpose the circuit breaker was
designed.
The size of service wire is small, suitable only for lighting purposes and not to supply two
buildings, dedicated for public use. Six years of use in overload capacity would have worn out
the wire and its strength and vitality, hence it will readily overheat, notwithstanding at the
time short circuits, only few bulbs were in use.
The electrical meter used is appropriate only to residential units and not to service the two buildings
intended for public which are [equipped] with modern medical equipment; the old NFA and the
[Cabiao] Community Clinic.
Both live service wire and secondary electrical wires were bundled together inside the same tube.
At the 2nd floor, visible signs of cut wires were found inside a tube, including the service wire
as it pass through going down to the main panel board and several cut wires of the secondary
breaker going to the second floor for power distribution.
pg. 1123
The main and secondary panel boards were wrongly situated at the ground floor, above
which is the location of a comfort room, where water could easily slip to the panel boards.
The installation of the secondary panel board at the ground floor distributing power to the
2nd floor defeats its purpose, considering that if electrical trouble happens at the 2nd floor
one has to go to the 1st floor to shut off the power.
4. The construction of the Cabiao Community Center building was in violation of the
provision of Republic Act No. 9514 (Revised Fire Code of the Philippines)
Owners, occupants or administrator of buildings or structures are required to incorporate and

provide fire safety construction, protective and warning systems. Investigation shows that a)
there were no fire protection
390

features such as sprinkler systems, hose boxes, hose reels or standpipe systems and other
firefighting equipment; fire alarm systems; b) no fire exit, fire exit plan for each floor of the
building showing the routes from each other [sic] room to appropriate exits, displayed
prominently on the door of such room; c) no properly marked and lighted exits with
provision for emergency light to adequately illuminate exit ways in case of power failure, and
d) no provisions for confining the fire at its source such as fire resistive floors and walls.
5. The Cabiao Bureau of Fire Protection failed to perform its mandate pursuant to RA No.
9514.
Under the Fire Code, the Bureau of Fire Protection is required to conduct fire safety inspections
as prerequisite to the grant of licenses and permits for the use and occupancy of buildings,
structures, facilities and their premises including the installation of fire protections and fire safety
pg. 1124
equipment and electrical systems in any building structure or facility; and the storage of explosives
or combustible, flammable, toxic and other hazardous materials.
The BFP is likewise responsible for designating fire inspectors who shall inspect every building at
least once a year, and every time the owner, administrator or occupant [renews] its business permit
or permit to occupy; to issue a business permit or permit to operate only after securing a Fire Safety
Inspection Certification (FSIC); require the building owner occupant to submit plans and
specifications and other pertinent documents of building/structure in order to ensure compliance
of applicable codes and standards and issue a written notice to the owner and/or contractor to stop
work on portion of any work due to absence or in violation of approved plans and specifications;
to inspect at reasonable time, any building, structure or premises and order the owner/occupant to
remove hazardous materials and/or stop operation if the standards are not met; to declare and
summarily abate hazardous conditions of the buildings or structures and/or declare the same as fire
hazards.
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VOL. 804, SEPTEMBER 28, 2016 391

It is worthy to note that despite the long period of time from the occurrence of the fire until the
termination of this investigation, the Cabiao BFP headed by FO3 ESQUIVEL has yet to submit its
report and findings. However, inasmuch as FO3 ESQUIVEL has bungled the investigation of
the fire by removing items from the scene of the fire and his failure to explain the
disappearance of other electrical debris, the opening and enlargement of the iron grill where
the sole survivor passed, the back door broken, and the non-recording of the investigations,
FO3 Esquivel’s action and behaviors are highly suspect of a massive cover up of the real
cause of the fire.
xxxx
7. St. Luke’s negligence is criminal in nature.
pg. 1125
St. Luke’s College of Medicine-William H. Quasha Memorial, Inc., being the owner and operator
of the Cabiao Community Clinic is not without liability for the fate of the fire victims. As a
learning institution, which sends out its students to rural areas to comply with its curriculum
requirement, St. Luke’s has the duty and responsibility to see to it that the premises to where
it sends its students are safe. It is significant to stress that the Cabiao Community Clinic was
established by the Municipality of Cabiao and the St. Luke’s College of Medicine in line with the
latter’s expansion of its Community Medicine undertaking to the rural areas in order to train its
students in health promotion and disease prevention as well as to provide medical service to
deserving population and to undertake clinical research on various health practices.
The victims were sent there as part of their community medicine module in the curriculum and
their assignments were determined by the officials of the College of Medicine.
8. The origin of fire.
The Cabiao BFP has manifested its prejudice and bias and thus, cannot be an independent,
reliable
392

and credible investigator of this fire incident. They could not even entertain any theory, other
than the gas burner, because in doing so would place themselves in jeopardy. They even resorted
to tampering of premises by removing all electrical wire debris, thinking that in its absence,
fire caused by short circuits cannot be proven.
It is highly probable that the origin of fire is electrical based on the Electrical Report No. 04-
10-001 submitted by Engr. DAVID R. AOANAN, Chief, Electrical Section, NBI because of the
following:
i. Presence of thick black smoke that indicates heat caused by short-circuit
ii. Explosion or tripping off of the transformer, then a black out — showing therefore that
the circuit breaker did not trip off
pg. 1126
iii. Inspection of the main circuit breaker and the secondary breakers show that these did not
trip off
iv. Presence of short circuited wires located at the 2nd floor, where buddle wires were found
v. Presence of numerous spliced wires or jumped wires in three different convenient outlets
vi. Mainboard panel is mismatched with the service wire
vii. Other defective wirings
It is a well done theory that the cause of the fire was due to faulty electrical wiring with two
reasons to support it, first is the physical manifestation as mentioned by Engr. DAVE
AOANAN who conducted evaluation/investigation on what is left on the building of the
Cabiao Community Clinic; second is the personal experience of MIGUEL RAFAEL
RAMOS y DAVID the lone survivor of the incident [who] narrated what he perceived during
last hour before he was rescued. MIGUEL[’s] narration contradict the theories laid down by Fire
Marshall
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VOL. 804, SEPTEMBER 28, 2016 393

BABY BOY ESQUIVEL that the fire was by the negligence of the victims [whom] he suspect[s]
to have left [burning a] gas stove. MIGUEL’s narration specifically pointed out that the fire was
primarily coming from the living room and not at the kitchen which is directly in front of their
door way. (Emphasis supplied)
Respondents then filed a Complaint for damages against petitioners St. Luke’s College of
Medicine-William H. Quasha Memorial Foundation, Dean of Medicine Brigido L. Carandang, and
Associate Dean for Faculty and Student Affairs Alejandro P. Ortigas, claiming that their
negligence caused the deaths of respondents’ daughters. Respondents maintained that, as a
learning institution which sends out its medical students to rural areas to comply with its
curriculum requirement, St. Luke’s has the contractual duty and legal responsibility to see to it that
the premises to where it sends its students are safe and that, in the case at bar, St. Luke’s refused
to recognize its obligations/liabilities.9 Respondents thus prayed as follows:10
WHEREFORE, premises considered, it is respectfully prayed that judgment be rendered in favor

of plaintiffs —
pg. 1127
1. Finding the defendants negligent and liable under their contractual and legal obligations
to Jessa and Cecille;
2. Directing defendants to pay plaintiffs, jointly and severally, actual, moral and
exemplary damages; and
3. Ordering defendants to pay the cost of suits and attorney’s fees.
_______________
9 Id., at p. 50; Complaint.
10 Id., at p. 55.
394

Plaintiffs further pray for such other reliefs as the Honorable Court may deem just and equitable
under the premises.
The RTC dismissed the complaint for lack of merit.11 It held that the Cabiao Community Clinic
was not a fire trap as there were two (2) fire exits, and that respondents failed to present any report
or finding by a competent authority that the said Clinic was not a safe and secure place for the
conduct of St. Luke’s clerkship program. The RTC did not take into consideration the NBI Report
as it was allegedly not presented.12
The RTC further held that the Clinic is owned by the Municipality of Cabiao, and that the latter
and/or its responsible officials should have been impleaded as indispensable parties.13
The RTC summarized its findings in this manner:14
Albeit the Court is saddened by what happened with the untimely death of Perez and Quintos who
are both very bright with promising future in the field of medicine, it cannot however close its eyes
on the evidence submitted before it by placing the blame on the cause of their death[s] to the
defendants just to put the fault on anybody in order to appease their grieving love[d] ones. For in
the mind of the Court, the omission of the defendants to secure a copy of the fire safety license of
the Clinic or verify if it has one prior to its construction before allowing their senior medical
students to occupy and reside therein is not per se a negligent act. Neither is the failure of the
pg. 1128
defendants to orient their senior medical students, who obviously are of legal ages already such as
the deceased, on how to take the necessary measures for their safety and security before retiring to
sleep in the
_______________
11 Id., at p. 280; RTC Decision.
12 Id., at p. 276.
13 Id., at p. 277.
14 Id., at pp. 279-280.
395
VOL. 804, SEPTEMBER 28, 2016 395

night considered negligent. Likewise, the failure of the dialogue between the parties is not a
legitimate ground to declare the defendants negligent. Put differently, the Court is not persuaded
that there is basis or justification to adjudge the defendants negligent for the accidental death of
Perez and Quintos.
Upon appeal, the CA reversed the RTC Decision and remanded the case to the RTC for reception
of evidence on the amount of damages to be awarded.15 Addressing the preliminary issues, the
CA held that the Municipality of Cabiao was not an indispensable party as the Complaint was one
for damages based on the allegations in the enrollment contract. It explained that:16
While there was indeed an allegation of St. Luke’s ownership of the clinic, bulk of the arguments
in the complaint were based on St. Luke’s duty to ensure its students’ safety based on its obligation
as a school. Not being contractually obligated to keep plaintiffs-appellants’ children safe from any
risk as a result of school-sanctioned activities, the Municipality of Cabiao cannot be considered an
indispensable party to the action as it was not a participant in the contract of enrollment.
Moreover, the CA held that although schools cannot be insurers of its students against all risks, in
the case at bar, the safety of the victims was within the reach of petitioners and the hazard of a fire
was not unforeseeable.17 Also, while the fire was beyond the control of petitioners, their decision
pg. 1129
to house their students in a place where there are no means of escape in case of such an emergency
shows a blatant disregard for the students’ welfare.18
_______________
15 Id., at pp. 399-400; CA Decision.
16 Id., at p. 393.
17 Id., at p. 394.
18 Id., at p. 395.
396

The CA elucidated as follows:19
The testimonies of Dr. Ortigas, Dr. Carandang and Dr. Macabulos all show a lack of effort on their
part to thoroughly inspect the conditions of the building in relation to the safety of their enrolled
medical student-clerks.
According to Dr. Ortigas and Dr. Macabulos,20 they considered the doors leading out from the
pantry and the bedrooms as fire exits. However, as doctors who presumably have a wider degree
of foresight than most, they failed to consider that a fire might break out in areas which would
block these doors that are merely ordinary exits. Further, Dr. Ortigas himself testified that permits
are not part of their consideration for safety and that they do not specifically look for the same
[x x x.]
xxxx
Dr. Ortigas admitted that, as a doctor, he was not concerned with the permits issued regarding the
construction and safety of the building. However, at the time he conducted the inspections of the
clinic, he was also the Associate Dean of St. Luke’s College of Medicine with the duty to ensure
that the building was safe for the security of the enrolled students of St. Luke’s College of Medicine
who would be assigned to the clinic during their clerkship and he admittedly did not consider the
same.
As Associate Dean for Student Affairs, it would be reasonable to expect Dr. Ortigas to show
concern for the safety and security of the students enrolled in the institution thus, ensure that the
pg. 1130
premises they were to reside in would be properly equipped in case of fires and other calamities.
He himself stated that his position as such put him “in charge of student and student affairs, x x x
and in general, the nonacademic matters involving students and the faculty.” Consequently, it is
safe to conclude that his task included the safety and welfare of the
_______________
19 Id., at pp. 395-398.
20 Dr. Edmyr Macabulos is the Community Coordinator of the Preventive and Community
Medicine Program.
397
VOL. 804, SEPTEMBER 28, 2016 397

students enrolled at St. Luke’s College of Medicine, one which he miserably failed to discharge.
Defendants-appellees also made a big deal out of the procedure of asking feedback from students
which led to the assumption that the clinic was safe and habitable. However, it must be
remembered that the students that gave the feedback were more concerned with passing their
course and presumably trusted that the school would not send them to a location which it has
independently determined to be unsafe.
xxxx
In relation, defendants-appellees defend their judgment to send plaintiffs-appellants’ daughters to

the community clinic by contending that there has been no untoward incident since the program
began in 2004. x x x.
xxxx
The same argument also runs contrary to defendants-appellees’ acceptance of the construction of
iron grills on the second floor windows of the clinic. According to Dr. Ortigas, the same were
constructed in order to prevent people from using the same to enter the building and not designed
to prevent egress therefrom. Dr. Ortigas was specifically questioned if there were prior incidents
of intrusion into the clinic to which he replied in the negative. If defendants-appellees’ logic of
“no untoward incident has happened” is to be applied then, the presence of the grills was
unnecessary in the same way that they found the inspection of fire safety permits to be unnecessary.
It baffles the Court, therefore, that defendants-appellees would accept the precaution against an
admittedly unlikely intrusion but ignore any safety measures against a fire which was a great
pg. 1131
possibility given that the clinic had flammable equipment such as a gas burner for cooking.
(Citations omitted)
Hence, the present petition for review on certiorari alleging that the CA committed reversible error
when it: (a) held that
398

the Municipality of Cabiao was not an indispensable party,21 (b) disregarded the findings of the
BFP that the fire was purely accidental and caused by unattended cooking,22 and (c) ruled that
petitioners were negligent.23
A perusal of the Complaint readily shows that respondents base their cause of action on petitioners’
breach of the contractual obligation, as an educational institution, of ensuring that their students,
in the performance of a required school activity, would be safe and secure. The Municipality of
Cabiao, not being a party to said enrollment contract, is not an indispensable party to the case.
An indispensable party is defined by the Rules of Court as a party-in-interest without whom no

final determination can be had of an action.24 In the present case, respondents premise petitioners’
liability on their contractual obligation to their students and, certainly, complete relief and a final
judgment can be arrived at by weighing the claims and defenses of petitioners and respondents,
without need of evaluating the claims and defenses of the Municipality of Cabiao. If at all, the
Municipality of Cabiao is a necessary party25 whose noninclusion in the case at bar shall not
prevent the court from proceeding with the action.
Indeed, the present case is one between a school and its students, with their relationship being
based on the enrollment contracts. In the illuminating case of PSBA, et al. v. CA, et al.,26 the Court
had the opportunity to lay down the principle that:
_______________
21 Rollo, p. 24.
22 Id., at p. 25.
pg. 1132
23 Id., at p. 29.
24 Revised Rules of Civil Procedure, Rule 3, Sec. 7.
25 Id., Rule 3, Sec. 8.
26 282 Phil. 759, 764-765; 205 SCRA 729, 733 (1992).
399
VOL. 804, SEPTEMBER 28, 2016 399

When an academic institution accepts students for enrollment, there is established a contract
between them, resulting in bilateral obligations which both parties are bound to comply with. For
its part, the school undertakes to provide the student with an education that would presumably
suffice to equip him with the necessary tools and skills to pursue higher education or a profession.
On the other hand, the student covenants to abide by the school’s academic requirements and
observe its rules and regulations.
Institutions of learning must also meet the implicit or “built-in” obligation of providing their
students with an atmosphere that promotes or assists in attaining its primary undertaking of
imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher
mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades
exploding in the air or where there looms around the school premises a constant threat to life and
limb. Necessarily, the school must ensure that adequate steps are taken to maintain peace and order
within the campus premises and to prevent the breakdown thereof.
Indubitably, institutions of learning have the “built-in” obligation of providing a conducive

atmosphere for learning, an atmosphere where there are no constant threats to life and limb, and
one where peace and order are maintained.
In the case at bar, the Cabiao Community Clinic is to be considered as part of the campus premises
of St. Luke’s. In the course description of the clerkship program in preventive and community
medicine, it is stated that the Cabiao Community Clinic serves as the base operation of the
clerkship program.27 As such, petitioner had the same obligation to their students, even though
they were stationed in the Cabiao Community Clinic, and it was incumbent upon petitioners to
ensure that said Clinic was conducive for learning, that it had
_______________
pg. 1133
27 Rollo, p. 518; DOJ Resolution dated January 9, 2012.
400

no constant threats to life and limb, and that peace and order was maintained thereat. After all,
although away from the main campus of St. Luke’s, the students were still under the same
protective and supervisory custody of petitioners as the ones detailed in the main campus.
In the performance of its contractual and inherent obligations, the Court is mindful of the attendant
difficulties on the part of institutions of learning, and the Court recognizes that the latter cannot be
an insurer of its students against all risks. Thus, as also laid out in the PSBA case, “the school may
still avoid liability by proving that the breach of its contractual obligation to the students was not
due to its negligence, here statutorily defined to be the omission of that degree of diligence which
is required by the nature of the obligation and corresponding to the circumstances of persons, time
and place.”28
Our next query, then, is, in relation to the fire incident, did petitioners commit a breach of contract
through negligence?
A review of the records compels the Court to answer in the affirmative.
In Mendoza, et al. v. Sps. Gomez,29 we defined negligence as “the failure to observe for the
protection of the interests of another person, that degree of care, precaution and vigilance which
the circumstances justly demand, whereby such other person suffers injury.”
In Gaid v. People,30 we enumerated the elements of simple negligence as follows: (1) that there
is lack of precaution on the part of the offender, and (2) that the damage impending to be caused
is not immediate or the danger is not clearly manifest. We explained that:
_______________
28 Philippine School of Business Administration v. Court of Appeals, supra note 26 at p. 767; p.

736.
29 736 Phil. 460, 474; 726 SCRA 505, 516-517 (2014).
30 602 Phil. 858; 584 SCRA 489 (2009).
pg. 1134
401
VOL. 804, SEPTEMBER 28, 2016 401

The standard test in determining whether a person is negligent in doing an act whereby injury or
damage results to the person or property of another is this: could a prudent man, in the position of
the person to whom negligence is attributed, foresee harm to the person injured as a reasonable
consequence of the course actually pursued? If so, the law imposes a duty on the actor to refrain
from that course or to take precautions to guard against its mischievous results, and the failure to
do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the
admonition born of this provision, is always necessary before negligence can be held to exist.31
In the case at bar, it is well to remember that the victims were in the Cabiao Community Clinic
because it was a requirement of petitioners. The students were complying with an obligation under
the enrollment contract — they were rendering medical services in a community center as required
by petitioners. It was thus incumbent upon petitioners to comply with their own obligations under
the enrollment contract — to ensure that the community center where they would designate their
students is safe and secure, among others.
Petitioners failed to take the necessary precautions to guard their students against foreseeable
harm. As correctly found by the CA, petitioners were remiss in inspecting the premises of the
Cabiao Community Clinic and in ensuring that the necessary permits were in order. These
precautions could have minimized the risk to the safety of the victims. Indeed, the CA had basis
in making the following pronouncement:32
In the instant case, as previously emphasized, defendants-appellees were aware that its medical
students
_______________
31 Id., at pp. 868-869; p. 497.
32 Rollo, p. 398.
402
pg. 1135
were residing at the second floor of the clinic. At the very least, during inspection, they should
have thoroughly inspected the building’s physical appearance and the documents pertinent to the
premises to make sure that the same minimized the risk to the safety of the students. There is no
record that any inquiry on the condition of the premises was even made by defendants-appellees
prior to the implementation of the program. In addition to such failure, defendants-appellees would
have this Court believe that their participation in the clinic was limited to providing the same with
medical personnel without considering that such personnel also included its students which St.
Luke’s was obliged to protect from unnecessary danger.
The petitioners were obviously negligent in detailing their students to a virtual fire trap. As found
by the NBI, the Clinic was unsafe and was constructed in violation of numerous provisions of the
Revised Fire Code of the Philippines. It had no emergency facilities, no fire exits, and had no
permits or clearances from the appropriate government offices.
Petitioners additionally aver that the Clinic was built under the direction, supervision, management
and control of the Municipality of Cabiao,33 and that it ensured that there was an agreement for
the Municipality of Cabiao to provide 24-hour security to the Clinic.34
Petitioners, however, cannot escape liability based on these arguments. As held in Saludaga v.
FEU, et al.,35 a learning institution should not be allowed to completely relinquish or abdicate
matters of safety and security to a third party as to do so would result to contracting away its
inherent obligation of ensuring a safe learning environment for its students.
_______________
33 Id., at p. 24; Petition.
34 Id.
35 576 Phil. 680, 689; 553 SCRA 741 (2008).
403
VOL. 804, SEPTEMBER 28, 2016 403

pg. 1136
In Saludaga, the Court chastised therein respondent Far Eastern University (FEU) for its total
reliance on a security agency as to the qualifications of its security guards, viz.:36
Respondents also failed to show that they undertook steps to ascertain and confirm that the security
guards assigned to them actually possess the qualifications required in the Security Service
Agreement. It was not proven that they examined the clearances, psychiatric test results, 201 files,
and other vital documents enumerated in its contract with Galaxy. Total reliance on the security
agency about these matters or failure to check the papers stating the qualifications of the guards is
negligence on the part of respondents. A learning institution should not be allowed to completely
relinquish or abdicate security matters in its premises to the security agency it hired. To do so
would result to contracting away its inherent obligation to ensure a safe learning environment for
its students.
Similarly, we cannot turn a blind eye on petitioners’ total reliance on the Municipality of Cabiao
in ensuring the safety and security of their students. The enrollment contract is between petitioners
and the victims, and petitioners cannot abdicate on their contractual obligation to provide their
students a safe learning environment, nor can it pass or contract away such obligation to a third
party.
Moreover, as to the stipulation of 24-hour security in the Clinic, petitioners failed to present
evidence that this stipulation was actually enforced or that they took measures to ensure that it was
enforced. This, once more, shows petitioners’ propensity of relying on third parties in carrying out
its obligations to its students.
It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure,
of its compliance
_______________
36 Id.
404

justify, prima facie, a corresponding right of relief.37 In Gilat Satellite Networks, Ltd. v. UCPB
General Insurance Co., Inc.,38 the Court expounded:
pg. 1137
x x x. The law, recognizing the obligatory force of contracts, will not permit a party to be set free
from liability for any kind of misperformance of the contractual undertaking or a contravention of
the tenor thereof. A breach upon the contract confers upon the injured party a valid cause for
recovering that which may have been lost or suffered. The remedy serves to preserve the interests
of the promissee that may include his “expectation interest,” which is his interest in having the
benefit of his bargain by being put in as good a position as he would have been in had the contract
been performed, or his “reliance interest,” which is his interest in being reimbursed for loss caused
by reliance on the contract by being put in as good a position as he would have been in had the
contract not been made; or his “restitution interest,” which is his interest in having restored to him
any benefit that he has conferred on the other party. Indeed, agreements can accomplish little,
either for their makers or for society, unless they are made the basis for action. The effect of every
infraction is to create a new duty, that is, to make RECOMPENSE to the one who has been injured
by the failure of another to observe his contractual obligation unless he can show extenuating
circumstances, like proof of his exercise of due diligence x x x or of the attendance of fortuitous
event, to excuse him from his ensuing liability. x x x. (Emphasis omitted)
In the case at bar, it was amply shown that petitioners and the victims were bound by the enrollment
contracts, and that petitioners were negligent in complying with their obligation under the said
contracts to ensure the safety and security of
_______________
37 Gilat Satellite Networks, Ltd. v. United Coconut Planters Bank General Insurance Co., Inc.,
G.R. No. 189563, April 7, 2014, 720 SCRA 726.
38 Id.
405
VOL. 804, SEPTEMBER 28, 2016 405

their students. For this contractual breach, petitioners should be held liable.
WHEREFORE, in view of the foregoing, the Court resolves to DENY the petition for review on
certiorari and AFFIRM the Court of Appeals’ Decision and Resolution.
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta and Jardeleza, JJ., concur.
pg. 1138
Reyes, J., On Leave.
Notes.—Where a student is enrolled in an educational institution, there is created a contractual

obligation between the two parties — the student is obliged to comply with the rules and
regulations of the school while the latter, as a learning institution, is mandated to impart knowledge
and equip its students with the necessary skills to pursue higher education or a profession, as well
as to ensure and take adequate steps to maintain peace and order within the campus. (Saludaga vs.
Far Eastern University, 553 SCRA 741 [2008])
For breach of contract due to negligence in providing a safe learning environment, an educational
institution is liable to petitioner for damages. (Id.)
——o0o——
pg. 1139
G.R. No. 205871. September 28, 2016.*
RUEL TUANO y HERNANDEZ, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent
Remedial Law; Civil Procedure; Death of a Party; Rule 3, Section 16 of the Rules of Court
provides that the counsel is duty-bound to report the death of a party to the court.—Rule 3, Section
16 of the Rules of Court provides that the counsel is duty-bound to report the death of a party to
the court, thus: RULE 3 Filing and Service of Pleadings, Judgments and Other Paper . . . . SEC.
16. Death of party; duty of counsel.—Whenever a party to a pending action dies, and the claim is
not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30)
days after such death of the fact thereof and to give the name and address of his legal
representative or representatives. Failure of counsel to comply with this duty shall be a ground for
disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased,
without requiring the appointment of an executor or administrator and the court may appoint a
guardian ad litem for the minor heirs. The court shall forthwith order said legal representative or
representatives to appear and be substituted within a period of thirty (30) days from notice. If no
legal representative is named by the counsel for the deceased party, or if the one so named shall
fail to appear within the specified period, the court may order the opposing party, within a specified
time, to procure the appointment of an executor or administrator for the estate of the deceased and
the latter shall immediately appear for and on behalf of the deceased. The court charges in
procuring such appointment, if defrayed by the opposing party, may be recovered as costs.
Same; Same; Same; Although Rule 3, Section 16 of the Rules of Court is directly applied more
often in civil actions for the substitution of the deceased party, the rule that the counsel of the
deceased party must inform the court of the death of his or her client also properly applies in
criminal actions.—Although Rule 3, Section 16 of the Rules of Court is directly applied more
often in civil actions for
_______________
* SECOND DIVISION.
320

Tuano vs. People
the substitution of the deceased party, the rule that the counsel of the deceased party must inform
the court of the death of his or her client also properly applies in criminal actions. Regardless of
the nature of the action, courts cannot be expected to assume the death of the party without the
pg. 1140
counsel’s proper manifestation. Furthermore, the rules presume that “the attorney for the deceased
party is in a better position than the attorney for the adverse party to know about the death of his
[or her] client[.]” As officers of the court and as protectors of the legal interests of their clients,
counsels have a duty to properly act in case of their clients’ death by notifying the Court of this
development. Counsels for accused were grossly remiss in this duty. Accused died on March 1,
2015. However, his counsels continued to file pleadings on his behalf, including a Motion for
Extension of Time to File Reply dated September 16, 2015 and a Reply dated September 22, 2015.
It was only through the July 15, 2016 letter of the Director General of the Bureau of Corrections
did this Court find out that accused had already died — one (1) year, four (4) months, and 15 days
after its occurrence.
Attorneys; Legal Ethics; Rule 14.04 of the Code of Professional Responsibility (CPR) provides
that “[a] lawyer who accepts the cause of a person unable to pay his professional fees shall
observe the same standard of conduct governing his relations with paying clients.”—This Court
notes that accused was represented by the Public Attorney’s Office. Notwithstanding their heavy
case workload and the free legal assistance they provide to indigents and low-income persons,
however, counsels from the Public Attorney’s Office are still obliged to pursue their cases with
competence and diligence. This is consistent with their commitment to public service. Rule 14.04
of the Code of Professional Responsibility provides that “[a] lawyer who accepts the cause of a
person unable to pay his professional fees shall observe the same standard of conduct governing
his relations with paying clients.”
Same; Same; Canon 2 of the Code of Professional Responsibility (CPR) explicitly states that “a
lawyer shall make his legal services available in an efficient and convenient manner compatible
with the independence, integrity and effectiveness of the profession.”—Canon 2 of the Code of
Professional Responsibility explicitly states that “a lawyer shall make his legal services available
in an efficient and convenient manner compatible with the independence, integrity and
321
VOL. 804, SEPTEMBER 28, 2016 321

Tuano vs. People
effectiveness of the profession.” Counsels for accused have shown inefficiency in the performance
of their duties. Relying on their representations in their pleadings, this Court was led to believe
that the criminal action against accused subsisted. Consequently, this Court issued a resolution
even after accused’s death. Had counsels for accused informed this Court earlier of the death of
their client, this Court would have been saved precious time, effort, and resources, which could
have been devoted to other pending cases that call for this Court’s resolution and judgment.
Likewise, the parties need not have filed the pleadings calling for the resolution of accused’s
Motion for Reconsideration. Given these circumstances, counsels for accused are directed to show
pg. 1141
cause why no disciplinary action should be taken against them in light of their failure to inform
this Court of accused’s death.
Criminal Law; Extinguishment of Criminal Liability; Death of the Accused; The death of accused
extinguishes his criminal liability; Likewise, the civil liability of the accused arising from his
criminal liability is extinguished upon his death.—This Court resolves to set aside its June 27,
2016 Resolution and dismiss this case. The death of accused extinguishes his criminal liability.
Article 89, paragraph 1 of the Revised Penal Code provides: Art. 89. How criminal liability is
totally extinguished.—Criminal liability is totally extinguished: 1. By the death of the convict, as
to the personal penalties; and as to pecuniary penalties, liability therefore is extinguished only
when the death of the offender occurs before final judgment[.] Likewise, the civil liability of the
accused arising from his criminal liability is extinguished upon his death. In People v. Bayotas,
236 SCRA 239 (1994): 1. Death of the accused pending appeal of his conviction extinguishes his
criminal liability as well as the civil liability based solely thereon. As opined by Justice Regalado,
in this regard, “the death of the accused prior to final judgment terminates his criminal liability
and only the civil liability directly arising from and based solely on the offense committed, i.e.,
civil liability ex delicto in senso strictiore.” 2. Corollarily, the claim for civil liability survives
notwithstanding the death of accused, if the same may also be predicated on a source of obligation
other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from
which the civil liability may arise as a result of the same act or omission: a) Law b) Contracts c)
Quasi-contracts d) . . . . e) Quasi-delicts 3. Where the civil liability survives, as explained in
Number 2 above, an action
322

Tuano vs. People
for recovery therefor may be pursued but only by way of filing a separate civil action and subject
to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil
action may be enforced either against the executor/administrator or the estate of the accused,
depending on the source of obligation upon which the same is based as explained above.
Public Attorney’s Office for petitioner.
Office of the Solicitor General for respondent.
pg. 1142
RESOLUTION
LEONEN, J.:
For our resolution is a Memorandum submitted by the Deputy Clerk of Court and Chief Judicial
Records Officer requesting instructions on the proper date of finality of a case in which this Court
issued a resolution acquitting the accused without having been informed of his prior death.
Accused Ruel Tuano y Hernandez was charged with violation of Article II, Section 11(3) of
Republic Act No. 9165 before Branch 13 of the Regional Trial Court of Manila for having in his
possession one (1) heat-sealed transparent plastic sachet with 0.064 grams of shabu.1
After trial on the merits, the Regional Trial Court convicted accused in the Decision2 dated May
4, 2010. The dispositive portion reads:
_______________
1 Rollo, p. 56, Regional Trial Court Decision.
2 Id., at pp. 56-60. The Decision was penned by Acting Presiding Judge Cicero D. Jurado, Jr.
323
VOL. 804, SEPTEMBER 28, 2016 323

Tuano vs. People
WHEREFORE, premises considered, RUEL TUANO y HERNANDEZ is found GUILTY beyond

reasonable doubt for Violation of Section 11(3), Article II of R.A. 9165 and is sentenced to suffer
imprisonment of twelve (12) years and one (1) day to twenty (20) years and a fine of Three hundred
thousand pesos (P300,000.00).
In the service of his sentence, the actual confinement under detention during the pendency of this
case shall be deducted from the said prison term in accordance with Article 29 of the Revised Penal
Code.
The evidence presented is ordered transferred to the Philippine Drug Enforcement Agency (PDEA)
for destruction.
pg. 1143
SO ORDERED.3
On appeal, the Court of Appeals affirmed in toto the ruling of the Regional Trial Court in the
Decision4 dated June 8, 2012, the dispositive portion of which reads:
WHEREFORE, premises considered, the appeal is hereby DENIED. The assailed 04 May 2010
Decision of the Regional Trial Court, Branch 13 of the City of Manila is AFFIRMED in toto.
Accused moved for reconsideration6 on July 4, 2012, but the Motion was denied by the Court of
Appeals in the Resolution7 dated February 12, 2013.
_______________
3 Id., at p. 60.
4 Id., at pp. 73-81. The Decision was penned by Associate Justice Samuel Gaerlan and concurred
in by Associate Justices Ramon R. Garcia and Ricardo R. Rosario of the Special Fifth Division,
Court of Appeals, Manila.
5 Id., at p. 81.
6 Id., at pp. 82-89.
7 Id., at p. 96. The Resolution was penned by Associate Justice Samuel Gaerlan and concurred in
by Associate Justices Ramon R.
324

Tuano vs. People
Garcia and Ricardo R. Rosario of the Special Fifth Division, Court of Appeals, Manila.
On April 16, 2013, accused filed before this Court a Petition for Review on certiorari8 questioning
the Court of Appeals’ June 8, 2012 Decision and February 12, 2013 Resolution.
pg. 1144
On June 23, 2014, this Court sustained the conviction of accused, thus affirming the ruling of the
Court of Appeals.9 The dispositive portion of this Court’s unsigned Resolution reads:
WHEREFORE, the June 8, 2012 decision and the February 12, 2013 resolution of the Court of
Appeals in C.A.-G.R. No. 33363 are AFFIRMED.10 (Emphasis in the original)
On August 7, 2014, accused moved for reconsideration, questioning this Court’s June 23, 2014
unsigned Resolution and praying for his acquittal.11
On February 25, 2015, this Court required respondent People of the Philippines, through the Office
of the Solicitor General, to file a comment on accused’s Motion for Reconsideration.12
Respondent filed a Motion for Extension of Time to File Comment13 dated March 27, 2015 and
a Comment14 dated April 20, 2015.
Accused, through the Public Attorney’s Office, filed a Motion for Extension of Time to File
Reply15 dated September 16, 2015 and a Reply16 on September 22, 2015.
_______________
8 Id., at pp. 9-28.
9 Id., at pp. 125-135.
10 Id., at p. 134.
11 Id., at pp. 138-147.
12 Id., at p. 149.
13 Id., at pp. 150-152.
14 Id., at pp. 153-160.
15 Id., at pp. 162-166.
16 Id., at pp. 167-173.
325
VOL. 804, SEPTEMBER 28, 2016 325
pg. 1145
Tuano vs. People
On June 27, 2016, this Court issued the Resolution17 reconsidering its June 23, 2014 unsigned
Resolution. This Court acquitted accused for failure of the prosecution to prove his guilt beyond
reasonable doubt. The dispositive portion of the Resolution reads:
WHEREFORE, the Resolution dated June 23, 2014 affirming the Court of Appeals’ June 8, 2012
Decision and February 12, 2013 Resolution in C.A.-G.R. CR No. 33363 is hereby
RECONSIDERED. Petitioner Ruel Tuano y Hernandez is hereby ACQUITTED for failure of
the prosecution to prove his guilt beyond reasonable doubt. He is ordered immediately
RELEASED from detention, unless he is confined for any other lawful cause.
Let a copy of this Resolution be furnished to the Director of the Bureau of Corrections for
immediate implementation. The Director of the Bureau of Corrections is directed to report to this
Court within five (5) days from receipt of this Resolution on the action taken. Copies shall also be
furnished to the Director General of the Philippine National Police and the Director General of the
Philippine Drug Enforcement Agency for their information.
Thus, an Order of Release19 was issued and sent to the Director of the Bureau of Corrections.
On July 22, 2016, this Court received from the Director General of the Bureau of Corrections a
letter20 dated July 15, 2016 informing this Court that accused died on March 1, 2015, prior to the
issuance of this Court’s June 27, 2016 Resolution. A certified machine copy of accused’s Death
Certificate was attached to the letter.21
_______________
17 Id., at pp. 178-185.
18 Id., at p. 184.
19 Id., at pp. 175-176.
20 Id., at p. 186.
21 Id., at p. 188.
326
pg. 1146
Tuano vs. People
On August 22, 2016, this Court received a memorandum from the Division Clerk of Court
requesting instructions on the proper date of finality of this Court’s June 27, 2016 Resolution, in
light of accused’s death prior to the Resolution’s issuance.22
This Court notes that counsels for accused should have informed this Court of the death of their
client.
Rule 3, Section 16 of the Rules of Court provides that the counsel is duty-bound to report the death
of a party to the court, thus:
RULE 3
Filing and Service of Pleadings, Judgments and Other

Paper
....
SEC. 16. Death of party; duty of counsel.—Whenever a party to a pending action dies, and the
claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within
thirty (30) days after such death of the fact thereof and to give the name and address of his legal
representative or representatives. Failure of counsel to comply with this duty shall be a ground for
disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, or if the one so named
shall fail to appear within the specified period, the court may order the opposing party, within a
specified time, to procure
_______________
22 Id., at pp. 192-193.
pg. 1147
327
VOL. 804, SEPTEMBER 28, 2016 327

Tuano vs. People
the appointment of an executor or administrator for the estate of the deceased and the latter shall
immediately appear for and on behalf of the deceased. The court charges in procuring such
appointment, if defrayed by the opposing party, may be recovered as costs. (Emphasis supplied)
Although Rule 3, Section 16 of the Rules of Court is directly applied more often in civil actions
for the substitution of the deceased party, the rule that the counsel of the deceased party must
inform the court of the death of his or her client also properly applies in criminal actions.
Regardless of the nature of the action, courts cannot be expected to assume the death of the party
without the counsel’s proper manifestation.23 Furthermore, the rules presume that “the attorney
for the deceased party is in a better position than the attorney for the adverse party to know about
the death of his [or her] client[.]”24
As officers of the court and as protectors of the legal interests of their clients, counsels have a duty
to properly act in case of their clients’ death by notifying the Court of this development.
Counsels for accused were grossly remiss in this duty. Accused died on March 1, 2015.25
However, his counsels continued to file pleadings on his behalf, including a Motion for Extension
of Time to File Reply dated September 16, 201526 and a Reply dated September 22, 2015.27 It
was only through the July 15, 2016 letter of the Director General of the Bureau
_______________
23 Ang Kek Chen v. Andrade, 316 Phil. 136, 143-144; 318 SCRA 11, 18 (1999) [Per J. Mendoza,
Second Division]; Florendo, Jr. v. Coloma, 214 Phil. 268, 274; 129 SCRA 304, 310 (1984) [Per
J. Gutierrez, Jr., First Division].
24 Id., at p. 144.
25 Rollo, p. 188, Death Certificate.
26 Id., at p. 163.
27 Id., at pp. 170-171.
pg. 1148
328

Tuano vs. People
of Corrections did this Court find out that accused had already died — one (1) year, four (4)
months, and 15 days after its occurrence.28
This Court notes that accused was represented by the Public Attorney’s Office. Notwithstanding
their heavy case workload and the free legal assistance they provide to indigents and low-income
persons, however, counsels from the Public Attorney’s Office are still obliged to pursue their cases
with competence and diligence. This is consistent with their commitment to public service.
Rule 14.04 of the Code of Professional Responsibility provides that “[a] lawyer who accepts the
cause of a person unable to pay his professional fees shall observe the same standard of conduct
governing his relations with paying clients.” In Endaya v. Oca:29
On top of all these is respondent’s employment as a lawyer of the Public Attorney’s Office which
is tasked to provide free legal assistance for indigents and low-income persons so as to promote
the rule of law in the protection of the rights of the citizenry and the efficient and speedy
administration of justice. Against this backdrop, respondent should have been more judicious in
the performance of his professional obligations. As we held in Vitriola v. Dasig[,] “lawyers in the
government are public servants who owe the utmost fidelity to the public service.” Furthermore, a
lawyer from the government is not exempt from observing the degree of diligence required in the
Code of Professional Responsibility. Canon 6 of the Code provides that “the canons shall apply to
lawyers in government service in the discharge of their official tasks.”
At this juncture, it bears stressing that much is demanded from those who engage in the practice
of law
_______________
28 Id., at p. 186.
29 457 Phil. 314; 410 SCRA 244 (2003) [Per J. Tinga, Second Division].
329
VOL. 804, SEPTEMBER 28, 2016 329
pg. 1149
Tuano vs. People
because they have a duty not only to their clients, but also to the court, to the bar, and to the public.
The lawyer’s diligence and dedication to his work and profession not only promote the interest of
his client, [they] likewise help attain the ends of justice by contributing to the proper and speedy
administration of cases, bring prestige to the bar and maintain respect to the legal profession.30
(Citations omitted)
Additionally, Canon 2 of the Code of Professional Responsibility explicitly states that “a lawyer
shall make his legal services available in an efficient and convenient manner compatible with the
independence, integrity and effectiveness of the profession.”
Counsels for accused have shown inefficiency in the performance of their duties. Relying on their
representations in their pleadings, this Court was led to believe that the criminal action against
accused subsisted. Consequently, this Court issued a resolution even after accused’s death. Had
counsels for accused informed this Court earlier of the death of their client, this Court would have
been saved precious time, effort, and resources, which could have been devoted to other pending
cases that call for this Court’s resolution and judgment. Likewise, the parties need not have filed
the pleadings calling for the resolution of accused’s Motion for Reconsideration.
Given these circumstances, counsels for accused are directed to show cause why no disciplinary
action should be taken against them in light of their failure to inform this Court of accused’s death.
This Court resolves to set aside its June 27, 2016 Resolution and dismiss this case.
The death of accused extinguishes his criminal liability. Article 89, paragraph 1 of the Revised
Penal Code provides:
_______________
30 Id., at p. 329; p. 255.
330

Tuano vs. People
Art. 89. How criminal liability is totally extinguished.—Criminal liability is totally

extinguished:
pg. 1150
1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties, liability
therefore is extinguished only when the death of the offender occurs before final judgment[.]
Likewise, the civil liability of the accused arising from his criminal liability is extinguished upon
his death. In People v. Bayotas:31
1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as
well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, “the
death of the accused prior to final judgment terminates his criminal liability and only the civil
liability directly arising from and based solely on the offense committed, i.e., civil liability ex
delicto in senso strictiore.”
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the
same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil
Code enumerates these other sources of obligation from which the civil liability may arise as a
result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) . . . .
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action and subject to Section 1,
Rule 111 of the 1985 Rules
_______________
31 G.R. No. 102007, September 2, 1994, 236 SCRA 239 [Per J. Romero, En Banc]; People v.
Egagamao, G.R. No. 218809, August 3, 2016, 799 SCRA 507 [Per J. Perlas-Bernabe, First
Division].
331
VOL. 804, SEPTEMBER 28, 2016 331
pg. 1151
Tuano vs. People
on Criminal Procedure as amended. This separate civil action may be enforced either against the
executor/administrator or the estate of the accused, depending on the source of obligation upon
which the same is based as explained above.32 (Emphasis supplied, citations omitted)
In People v. Paras,33 this Court rendered judgment in a criminal case without being informed
earlier that the accused had already passed away. Premised on the principle that the death of the
accused extinguishes his criminal liability, the Court set aside its decision and dismissed the
criminal case.
Considering accused’s death pending appeal extinguishes his criminal liability and civil liability
ex delicto, the criminal action must be dismissed since there is no longer a defendant to stand as
the accused.34
Therefore, when accused died on March 1, 2015 during the pendency of his appeal and prior to
this Court’s Resolution dated June 27, 2016, his criminal liability has already been extinguished.
From that point on, the criminal action had no defendant upon which the action is based.
This Court’s June 27, 2016 Resolution had become ineffectual and must be set aside. Likewise,
the criminal action must be dismissed.
WHEREFORE, this Court resolves to SET ASIDE its Resolution dated June 27, 2016 and
DISMISS Criminal Case No. 03-211976 before Branch 13 of the Regional Trial Court of Manila,
on account of the death of accused Ruel Tuano y Hernandez on March 1, 2015.
_______________
32 Id., at pp. 255-256, as cited in People v. Egagamao, id., at pp. 513-514.
33 G.R. No. 192912, October 22, 2014, 739 SCRA 179 [Per J. Leonardo-De Castro, Special First
Division].
34 Id., at p. 184.
332

Tuano vs. People
pg. 1152
Counsels for accused, however, are DIRECTED to show cause, within five (5) days of receipt of
this Resolution, why no disciplinary action should be taken against them for failing to inform this
Court of accused’s death.
SO ORDERED.
Brion** (Acting Chairperson), Del Castillo and Mendoza, JJ., concur.
Carpio, J., On Official Leave.
Resolution dated June 27, 2016 set aside, Criminal Case No. 03-211976 dismissed on account of
death of accused.
Notes.—Nowhere in People v. Bayotas, 236 SCRA 239 (1994), does it state that a criminal
complaint may continue and be prosecuted as an independent civil action. (ABS-CBN Broadcasting
Corporation vs. Office of the Ombudsman, 619 SCRA 130 [2010])
Upon the death of the accused pending appeal of his conviction, the criminal action is extinguished
inasmuch as there is no longer a defendant to stand as the accused; the civil action instituted therein
for recovery of civil liability ex delicto is ipso facto extinguished, grounded as it is on the criminal.
(People vs. Agacer, 688 SCRA 42 [2013])
——o0o——
_______________
** Per Special Order No. 2374 dated September 14, 2016.
pg. 1153
G.R. Nos. 177857-58. October 5, 2016.*
PHILIPPINE COCONUT PRODUCERS FEDERATION, INC. (COCOFED), MANUEL V. DEL

ROSARIO, DOMINGO P. ESPINA, SALVADOR P. BALLARES, JOSELITO A. MORALEDA,
PAZ M. YASON, VICENTE A. CADIZ, CESARIA DE LUNA TITULAR, and RAYMUNDO
C. DE VILLA, petitioners, vs. REPUBLIC OF THE PHILIPPINES, respondent.
WIGBERTO E. TAÑADA, OSCAR F. SANTOS, SURIGAO DEL SUR FEDERATION OF

AGRICULTURAL COOPERATIVES (SUFAC) and MORO FARMERS ASSOCIATION OF
ZAMBOANGA DEL SUR (MOFAZS), represented by ROMEO
_______________
* EN BANC.

Philippine Coconut Producers Federation, Inc. (COCOFED) vs. Republic
C. ROYANDOYAN, intervenors.
G.R. No. 178193. October 5, 2016.*
DANILO B. URSUA, petitioner, vs. REPUBLIC OF THE PHILIPPINES, respondent.
Constitutional Law; Due Process; It is elementary that every person must be heard and given his
day in court before a judgment involving his life, liberty or property issues against him.—It is
elementary that every person must be heard and given his day in court before a judgment involving
his life, liberty or property issues against him. This rule is enshrined no less in the very first section
of the Bill of Rights of our Constitution: SECTION 1. No person shall be deprived of life, liberty
or property without due process of law, nor shall any person be denied the equal protection of
the laws.
pg. 1154
Same; Same; Corporations; Corporate persons, needless to stress, are entitled to the due process
protection.—Corporate persons, needless to stress, are entitled to the due process protection. Thus,
in Palm Avenue Holding Co., Inc. v. Sandiganbayan, 732 SCRA 156 (2014), the Court echoed our
ruling in PCGG v. Sandiganbayan, 290 SCRA 639 (1998), that the failure to implead a corporation
in a suit for the recovery of ill-gotten wealth against its stockholders cannot bind the corporation
itself; otherwise, its fundamental right to due process will be violated, viz.: The Court’s ruling in
Presidential Commission on Good Government v. Sandiganbayan, which remains good law,
reiterates the necessity of the Republic to actually implead corporations as defendants in the
complaint, out of recognition for their distinct and separate personalities, failure to do so
would necessarily be denying such entities their right to due process. Here, the writ of
sequestration issued against the assets of the Palm Companies is not valid because the suit in
Civil Case No. 0035 against Benjamin Romualdez as shareholder in the Palm Companies is
not a suit against the latter. The Court has held, contrary to the assailed Sandiganbayan
Resolution in G.R. No. 173082, that failure to implead these corporations as defendants and
merely annexing a list of such corporations to the complaints is a violation of their right to due
process for it would be, in effect, disregard-
VOL. 805, OCTOBER 5, 2016 3

ing their distinct and separate personality without a hearing. Here, the Palm Companies were
merely mentioned as Item Nos. 47 and 48, Annex A of the Complaint, as among the corporations
where defendant Romualdez owns shares of stocks. Furthermore, while the writ of
sequestration was issued on October 27, 1986, the Palm Companies were impleaded in the
case only in 1997, or already a decade from the ratification of the Constitution in 1987, way
beyond the prescribed period.
Remedial Law; Civil Procedure; Execution of Judgments; The Supreme Court (SC) has held that
execution may issue only upon a person who is a party to the action or proceeding, and not against
one who did not have or was denied his day in court.—As a corollary rule, this Court has held that
execution may issue only upon a person who is a party to the action or proceeding, and not
against one who did not have or was denied his day in court. We said as much in Atilano II v.
Asaali, 680 SCRA 345 (2012): It is well-settled that no man shall be affected by any proceeding
to which he is a stranger, and strangers to a case are not bound by a judgment rendered by
the court. Execution of a judgment can only be issued against one who is a party to the action,
and not against one who, not being a party thereto, did not have his day in court. Due process
dictates that a court decision can only bind a party to the litigation and not against innocent third
parties.
pg. 1155
Same; Same; Judgments; In a plethora of cases, the Supreme Court (SC) has emphasized the well-
entrenched principle that a judgment rendered without jurisdiction cannot be the source of any
right nor the creator of any obligation.—In a plethora of cases, the Court has emphasized the well-
entrenched principle that a judgment rendered without jurisdiction cannot be the source of
any right nor the creator of any obligation. We said as much in Florete v. Florete, 781 SCRA
255 (2016) and Arcelona v. Court of Appeals, 280 SCRA 20 (1997): A void judgment for want
of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of
any obligation. All acts performed pursuant to it and all claims emanating from it have no legal
effect. Hence, it can never become final and any writ of execution based on it is void: “. . . it may
be said to be a lawless thing which can be treated as an outlaw and slain at sight, or ignored
wherever and whenever it exhibits its head.” The acknowledgment that the Court

has no jurisdiction over SMC in the present case is not “allow[ing] San Miguel Corporation to
keep these treasury shares under the guise of technicalities.” The question of jurisdiction, the
Court has repeatedly explained, is not a mere question of technicality or a simple matter of
procedure but an element of due process. Indeed, it is unsporting, nay the height of injustice and
a clear violation of the due process guarantee, to order SMC to comply with any decision rendered
in CC 0033-F when it was never given the opportunity to present, explain, and prove its claim over
the presently contested shares.
Constitutional Law; Due Process; The Supreme Court (SC) cannot set the benchmark of due
process at the lowest level by considering each pleading submitted by a party as enough to satisfy
the requirements of this Constitutional protection.—The Court cannot set the benchmark of due
process at the lowest level by considering each pleading submitted by a party as enough to satisfy
the requirements of this Constitutional protection. If this Court is to animate the spirit of the
Constitution and maintain in full strength the substance of the due process protection, it must afford
each party the full legal opportunity to be heard and present evidence in support of his or her
contentions. SMC must, therefore, be given full opportunity to proffer evidence on its claim of
ownership over the treasury shares in a proper case before the right court.
Estoppel; While the general rule is that the State cannot be put in estoppel by the mistakes or
errors of its officials or agents, it is established that “[t]he rule on non-estoppel of the government
is not designed to perpetrate an injustice.”—While the general rule is that the State cannot be put
in estoppel by the mistakes or errors of its officials or agents, it is established that “[t]he rule on
non-estoppel of the government is not designed to perpetrate an injustice.” Thus, several
exceptions to the Republic’s non-estoppel have been recognized. In Republic of the Philippines v.
Court of Appeals, 301 SCRA 366 (1999), the Court held: The general rule is that the State cannot
pg. 1156
be put in estoppel by the mistakes or errors of its officials or agents. However, like all general
rules, this is also subject to exceptions, viz.: “Estoppel against the public are little favored. They
should not be invoked except in rare and unusual circumstances and may not be invoked where
they would operate to defeat the effective operation of a polity adopted to protect the public. They
must be applied with cir-
VOL. 805, OCTOBER 5, 2016 5

cumspection and should be applied only in those special cases where the interests of justice clearly
require it. Nevertheless, the government must not be allowed to deal dishonorably or
capriciously with its citizens, and must not play an ignoble part or do a shabby thing; and
subject to limitations . . . the doctrine of equitable estoppel may be invoked against public
authorities as well as against private individuals.”
Sereno, CJ., Dissenting Opinion:
Civil Law; Contracts; Suspensive Condition; View that when a contract is subject to a suspensive
condition, its birth or effectivity can take place only if and when the condition happens or is
fulfilled.—When a contract is subject to a suspensive condition, its birth or effectivity can take
place only if and when the condition happens or is fulfilled. In this case, the Sandiganbayan has
not approved the Compromise Agreement or made any ruling thereon. Thus, without the
fulfillment of the condition that the imprimatur of the Sandiganbayan be obtained, the
Compromise Agreement can neither be considered effective nor the source of rights on the treasury
shares as invoked by SMC.
Remedial Law; Evidence; Admissions; Judicial Admissions; View that a party who judicially
admits a fact cannot later challenge that fact as judicial admissions are a waiver of proof;
production of evidence is dispensed with.—To my mind, SMC made a judicial admission, which
has been elucidated by this Court in this wise: A party who judicially admits a fact cannot later
challenge that fact as judicial admissions are a waiver of proof; production of evidence is dispensed
with. A judicial admission also removes an admitted fact from the field of controversy.
Consequently, an admission made in the pleadings cannot be controverted by the party making
such admission and are conclusive as to such party, and all proofs to the contrary or inconsistent
therewith should be ignored, whether objection is interposed by the party or not. The allegations,
pg. 1157
statements or admissions contained in a pleading are conclusive as against the pleader. A party
cannot subsequently take a position contrary of or inconsistent with what was pleaded.

Leonen, J., Dissenting Opinion:
Coconut Levy Funds; View that it is both illogical and absurd — and hence, a grave abuse of
discretion on the part of this Court — to declare that the shares purchased with “coco levy” funds
are government-owned yet remove 24.45 million shares of “treasury shares of San Miguel
Corporation” from its purview.—It is both illogical and absurd — and hence, a grave abuse of
discretion on the part of this Court — to declare that the shares purchased with “coco levy” funds
are government-owned yet remove 24.45 million shares of “treasury shares of San Miguel
Corporation” from its purview. Notably, the CIIF Companies sold these shares in March 1986 just
days after Former President Ferdinand E. Marcos (Former President Marcos) was deposed in the
People Power Revolution. It was the subject of a “Compromise Agreement” that was not approved
by the Sandiganbayan. It was also the subject of a Decision of this Court ordering San Miguel
Corporation to deliver it to the PCGG. Yet, there was no compliance by San Miguel Corporation.
Today, we reward the contumacy as well as complete deprivation of rights of coconut farmers.
Remedial Law; Civil Procedure; Judgments; Nunc Pro Tunc Orders; View that a nunc pro tunc
order merely supplies something that was present in the records but was omitted in the judgment
by mistake. It cannot correct judicial errors or supply a judicial action that was omitted by the
court.—A nunc pro tunc order merely supplies something that was present in the records but was
omitted in the judgment by mistake. It cannot correct judicial errors or supply a judicial action that
was omitted by the court. Lichauco, et al. v. Tan Pho, et al., 51 Phil. 862 (1923) explains: The
office of a judgment nunc pro tunc is to record some act of the court done at a former time which
was not then carried into the record, and the power of a court to make such entries is restricted to
placing upon the record evidence of judicial action which has been actually taken. It may be used
to make the record speak the truth, but not to make it speak what it did not speak but ought to have
spoken. If the court has not rendered a judgment that it might or should have rendered, or if it has
rendered an imperfect or improper judgment, it has no power to remedy these errors or omissions
by ordering the entry nunc pro tunc of a proper judgment. Hence a court in entering a judgment
nunc pro tunc has no power to construe what the judgment means, but only to enter of record such
judgment as had been formerly rendered, but
pg. 1158
7
VOL. 805, OCTOBER 5, 2016 7

which had not been entered of record as rendered. In all cases the exercise of the power to enter
judgments nunc pro tunc presupposes the actual rendition of a judgment, and a mere right to a
judgment will not furnish the basis for such an entry.
Constitutional Law; Due Process; View that due process is the right to be heard. It is, by its
simplest interpretation, to hear the other side of the argument before making a judgment.—Due
process is the right to be heard. It is, by its simplest interpretation, to hear the other side of the
argument before making a judgment. In Ynot v. Intermediate Appellate Court, 148 SCRA 659
(1987): The closed mind has no place in the open society. It is part of the sporting idea of fair play
to hear “the other side” before an opinion is formed or a decision is made by those who sit in
judgment. Obviously, one side is only one-half of the question; the other half must also be
considered if an impartial verdict is to be reached based on an informed appreciation of the issues
in contention. It is indispensable that the two sides complement each other, as unto the bow the
arrow, in leading to the correct ruling after examination of the problem not from one or the other
perspective only but in its totality. A judgment based on less that this full appraisal, on the pretext
that a hearing is unnecessary or useless, is tainted with the vice of bias or intolerance or ignorance,
or worst of all, in repressive regimes, the insolence of power. The essence of due process is to be
given an opportunity to be heard and the right to be able to present evidence on one’s behalf. The
opportunity to be heard may be accomplished through notice and hearing, or the submission of
pleadings.
Same; Coconut Levy Funds; Public Properties; View that the laws creating the “coco levy” funds
were declared unconstitutional and the funds were considered as public funds.—The laws creating
the “coco levy” funds were declared unconstitutional and the funds were considered as public
funds. As the CIIF Companies’ shares of stock were acquired using these funds, the CIIF
Companies could not have validly sold these shares to San Miguel Corporation since they could
not sell something they did not actually own. The parties to an illegal sale are considered to be
in pari delicto, and neither can seek any affirmative relief with the courts. In the January 24, 2012
Decision, this Court declared Presidential Decree Nos. 755, 961, and 1468 as unconstitutional
since public funds cannot be used to purchase shares of stock to be given for free to private
individuals. This
pg. 1159
Court found that this was a direct violation of Article VI, Section 29(3) of the Constitution.
Same; Same; Same; View that the Supreme Court (SC) stated that “any property purchased by
means of the coconut levy funds should likewise be treated as public funds or public property,
subject to burdens and restrictions attached by law to such property.”—This Court likewise stated
that “any property purchased by means of the coconut levy funds should likewise be treated as
public funds or public property, subject to burdens and restrictions attached by law to such
property.” The 33,133,126 San Miguel Corporation shares sold by the CIIF Companies in March
1986 are to be treated as public funds or public property. The CIIF Companies had no authority to
sell the shares of stock to any other private individual, including San Miguel Corporation. The sale
of the shares of stock was done one (1) month after the February 25, 1986 Revolution, on March
26, 1986. Former President Corazon Aquino already issued Executive Order No. 1, which created
the PCGG to recover all of Former President Marcos’ ill-gotten wealth, as well as the ill-gotten
wealth of his cronies. The sale occurred after the issuance of Executive Order No. 2, which
authorized the PCGG to freeze all assets and properties of Former President Marcos and his
cronies. Merely one (1) week prior to the sale, the PCGG sequestered all the shares of the United
Coconut Planter Banks purportedly issued to coconut farmers. Given the factual antecedents, it is
obvious that the sale was made in bad faith. The sale was clearly an attempt by the CIIF Companies
to dispose of their assets before the PCGG could sequester it.
Civil Law; Obligations; In Pari Delicto; View that parties in pari delicto cannot use for specific
performance, recover property previously sold and delivered, or ask for a refund of money
previously paid.—Both the CIIF Companies and San Miguel Corporation were in pari delicto
when it attempted the sale of 33,133,126 San Miguel Corporation shares of stock on March 26,
1986. San Miguel Corporation cannot now claim that it is entitled to the shares equivalent to the
P500 million it previously paid as a first installment. Parties in pari delicto cannot sue for specific
performance, recover property previously sold and delivered, or ask for a refund of money
previously paid. The law, as well as the courts, will not grant them any affirmative relief. If this
Omnibus Motion is denied and the fallo of the September 4, 2012 Resolution is allowed to stand,
this Court will have legitimized an illegal sale of public property.
VOL. 805, OCTOBER 5, 2016 9

Remedial Law; Civil Procedure; Judgments; View that it is simply unfair for a party to decline to
follow a final and executory order of the Supreme Court (SC) in one case and then cry due process
in another.—It is the duty of this Court to see through the elaborate legal machinations of parties
who have substantial resources by using the light of principle and the true spirit of our fundamental
pg. 1160
laws in order to achieve social justice. It is simply unfair for a party to decline to follow a final and
executory order of this Court in one case and then cry due process in another. Social justice is not
mere shibboleth. It is a constitutional fiat. Not only is it a juridical necessity; it is also the basis of
a humane society.
MANIFESTATION AND OMNIBUS MOTION in the Supreme Court.
Angara, Abello, Concepcion, Regala & Cruz for petitioners COCOFED, et al.
Gregorio S. Diño for petitioner Danilo B. Ursua.
Efren Moncupa and Wigberto E. Tañada for movants-intervenors in G.R. Nos. 177857-58.
Estelito P. Mendoza for San Miguel Corporation.
Cesar G. David and Francisco B.A. Saavedra for movant-intervenor UCPB.
RESOLUTION
VELASCO, JR., J.:
For consideration is the Manifestation and Omnibus Motion (Omnibus Motion) dated October 12,
2012 interposed by respondent Republic of the Philippines (Republic). In it, respondent claims
that the Court, in its September 4, 2012 Resolution, has not included as part of its assets to be
reconveyed to it the 25.45 million San Miguel Corporation (SMC)
10

shares subject of the Compromise Agreement dated March 20 and 22, 1990 entered into by and
between the SMC Group and the United Coconut Planters Bank (UCPB) Group that SMC
subsequently converted to treasury shares.
pg. 1161
Antecedents
On March 26, 1986, the Coconut Industry Investment Fund Holding Companies (“CIIF”) sold
33,133,266 SMC common shares to Andres Soriano III of the SMC Group for P3,313,326,600.00,
payable in four (4) installments. On April 1, 1986, the SMC Group paid the initial purchase price
of P500 million to the UCPB as administrator of the CIIF (the “UCPB Group”). The sale was
transacted through the stock exchange and the shares were then registered in the name of Anscor-
Hagedorn Securities, Inc. (AHSI).1
On April 7, 1986, the Presidential Commission on Good Government (PCGG) sequestered the
shares of stock. Due to the sequestration, the SMC Group suspended payment of the balance of
the purchase price of the subject stocks. In retaliation, the UCPB Group attempted to rescind the
sale by filing a complaint with the Regional Trial Court of Makati. The complaint, however, was
eventually ordered dismissed for lack of jurisdiction.2
Early 1989 developments saw the SMC and UCPB groups successfully threshing out their dispute
over the aborted sale of the over 33.1 million SMC shares which have meanwhile ballooned to
175,274,960 as a consequence of dividends and stock splits. But because any settlement required
PCGG’s intervention, Andres Soriano III, for SMC, and Ramon Y. Sy, for UCPB, in a joint letter
of October 31, 1989, informed the
_______________
1 See San Miguel Corporation v. Sandiganbayan, G.R. Nos. 104637-38, September 14, 2000, 340
SCRA 289, 295; and Republic v. Sandiganbayan, G.R. No. 118661, January 22, 2007, 512 SCRA
25, 34.
2 See Soriano III v. Yuzon, G.R. No. 74910, August 10, 1988, 164 SCRA 226.
11
VOL. 805, OCTOBER 5, 2016 11

PCGG about a proposal which would have the two groups give PCGG an “arbitration fee” in the
form of 5,500,000 SMC shares to support the Comprehensive Agrarian Reform Program (CARP).3
pg. 1162
PCGG approved the proposal. Thus, on March 20 and 22, 1990, SMC and UCPB representing the
CIIF signed a Compromise Agreement and Amicable Settlement (“Compromise Agreement”). Its
pertinent provisions state:
3.1. The sale of the shares covered by and corresponding to the first installment of the 1986 Stock
Purchase Agreement consisting of Five Million SMC Shares is hereby recognized by the parties
as valid and effective as of 1 April 1986. Accordingly, said shares and all stock and cash dividend
declared thereon after 1 April 1986 shall pertain, and are hereby assigned, to SMC. x x x
3.2. The First Installment Shares shall revert to the SMC treasury for dispersal pursuant to the
SMC Stock Dispersal Plan attached as Annex “A-1” hereof. The parties are aware that these First
Installment Shares shall be sold to raise funds at the soonest possible time for the expansion
program of SMC. x x x
3.3. The sale of the shares covered by and corresponding to the second, third and fourth
installments of the 1986 Stock Purchase Agreement is hereby rescinded effective 1 April 1986 and
deemed null and void, and of no force and effect. Accordingly, all stock and cash dividends
declared after 1 April 1986 corresponding to the second, third and fourth installments shall pertain
to CIIF Holding Corporations. x x x
On March 23, 1990, the SMC and the UCPB Groups filed with the Sandiganbayan a Joint Petition
for Approval of the
_______________
3 See Republic v. Sandiganbayan, supra note 1.
12

Compromise Agreement and Amicable Settlement (“Joint Petition”), docketed as CC No. 0102.4
On June 18, 1990, the PCGG joined the OSG in praying that the SMC and UCPB Groups’ Joint
Petition be treated as an incident of Civil Case (CC) No. 0033, a case for the recovery of ill-gotten
pg. 1163
wealth instituted by the PCGG with the Sandiganbayan against former President Ferdinand
Marcos, Eduardo Cojuangco, Jr. (“Cojuangco”), et al. on July 31, 1987. PCGG, however,
interposed no objection to the implementation of the Compromise Agreement subject to some
conditions.5
On July 4, 1991, the SMC and UCPB Groups filed a Joint Manifestation of Implementation of
Compromise Agreement and of Withdrawal of Petition therein stating that they have implemented
the Compromise Agreement with the conditions set by the PCGG and, accordingly, withdrawing
their Joint Petition. They informed the Sandiganbayan of the execution of the following corporate
acts:
a. On instructions of the SMC Group, the certificates of stock registered in the name of Anscor-
Hagedorn Securities, Inc. (AHSI) representing 175,274,960 SMC shares were surrendered to the
SMC corporate secretary.6
_______________
4 San Miguel Corporation v. Sandiganbayan, supra note 1.
5 One of the conditions stated, viz.: “5. The consent of PCGG to the transfer of the sequestered
shares of stock in accordance with the COMPROMISE, and to the lifting of the sequestration
thereon to permit such transfer, shall be effective only when approved by the Sandiganbayan. The
Commission makes no determination of the legal rights of the parties as against each other. The
consent it gives here conforms to its duty to care for the sequestered assets, and to its purpose to
prevent the repetition of the national plunder. It is not to be construed as indicating any recognition
of the legality or sufficiency of any act of any of the parties.” (emphasis supplied)
6 By 1991, the 33,133,266 shares have increased to 175,274,960 due to stock dividends and stock
splits.
13
VOL. 805, OCTOBER 5, 2016 13

b. The said SMC shares were reissued and registered in the record books of SMC in the following
manner: i) Certificates for 25,450,000 SMC shares were registered in the name of SMC, as
treasury; ii) Certificates for 144,324,960 SMC shares were registered in the name of the CIIF
Holding Companies; iii) Certificates for 5,500,000 SMC shares were registered in the name of the
PCGG.
pg. 1164
c. The UCPB Group has delivered to the SMC Group the amount of P500,000,000.00 in full
payment of the UCPB preferred shares.
d. The SMC Group delivered to the UCPB Group the amount of 481,628,055.99 representing
accumulated dividends (from April 1, 1986) on the shares reverted to the CIIF Holding Companies.
The PCGG, for its part, manifested that it has no objection to the action thus taken by the
SMC and UCPB Groups.7 COCOFED, et al. and Cojuangco filed their respective motions, both
dated July 4, 1991, to nullify the implementation of the Compromise Agreement. Acting on the
Joint Manifestation of Implementation of Compromise Agreement and of Withdrawal of Petition,
the Sandiganbayan on July 5, 1991 noted the same.8
On July 16, 1991, SMC filed its Manifestation where it declared that Stock Certificate Nos. A
0004129 and A 0015556 representing 25,450,000 shares were issued in the name of SMC as
treasury stocks.
On October 25, 1991, the Sandiganbayan issued a Resolution requiring SMC to deliver the 25.45
million SMC treasury shares to the PCGG.9 On March 18, 1992, the Sandiganbayan denied the
SMC Group’s Motion for Reconsideration.10
_______________
7 See San Miguel Corporation v. Sandiganbayan, supra note 1 at p. 303; and Republic v.
Sandiganbayan, supra note 1 at p. 41.
8 Id.
9 Id.
10 Id.
14

pg. 1165
Later, the Sandiganbayan ordered on December 8, 1994 that the causes of action in CC No. 0033
be divided and litigated separately. In Compliance, the Republic subdivided CC No. 0033 into
eight complaints, two of which became:
a. CC No. 0033-A, entitled Third Amended Complaint (Subdivided) [Re: Anomalous

Purchase and Use of First United Bank (now “United Coconut Planters Bank”)], the subject
matter of which is the sequestered shares of stock of UCPB registered in the names of the
coconut farmers (the UCPB shares) and of Cojuangco; and
b. CC No. 0033-F, entitled Third Amended Complaint (Subdivided) [Re: Acquisition of San
Miguel Corporation], the subject matter of which is the shares of stock of SMC registered
in the names of the CIIF Holding Companies (the SMC shares).
In a Resolution, the Sandiganbayan admitted the eight subdivided complaints on March 24,
1999.11
Meanwhile, respondent Republic filed in CC No. 0033-A a Motion for Partial Summary Judgment,
which the Sandiganbayan granted on 1 July 11, 2003 via a Partial Summary Judgment (PSJ)
holding that the coco levy fund is public in nature.
On February 2, 2004, SMC filed in CC No. 0033-F a Complaint-in-Intervention praying that

any judgment forfeiting the CIIF block of shares should exclude the “treasury shares.”
Herein respondent opposed the SMC’s motion to intervene in said case. By Resolution of May
6, 2004, the graft court denied the desired intervention.
The next day, the Sandiganbayan granted the Republic’s Motion for Judgment on the Pleadings
and/or Partial Sum-
_______________
11 Annex “W” of the Class Action Petition for Review on Certiorari.
15
VOL. 805, OCTOBER 5, 2016 15

mary Judgment in CC No. 0033-F in its May 7, 2004 PSJ, holding that “[t]he CIIF Companies
having been acquired with public funds, the 14 CIIF-Holding Companies and all their assets,
including the CIIF Block of SMC Shares, being public in character, belong to the government.”12
pg. 1166
In so ruling, the Sandiganbayan declared the 33,133,266 sequestered SMC shares subject of the
stock purchase agreement by the CIIF Holding Companies and Andres Soriano III as owned by
the Republic in trust for the coconut farmers.13
In its Resolution of May 11, 2007 in CC No. 0033-F, the Sandiganbayan held that there is no need
for further trial on the issue regarding the actual percentage of the sequestered CIIF Block of SMC
shares vis-à-vis the outstanding capital
12 PSJ dated May 7, 2004, p. 64.
13 Rollo (G.R. Nos. 177857-58), pp. 404-405. On the issue regarding the actual percentage of the
sequestered CIIF Block of SMC shares vis-à-vis the outstanding capital stock of SMC, the
Sandiganbayan stated in its May 7, 2004 PSJ, thus:
The subject matter of the Motion for Partial Summary Judgment is the CIIF block of San
Miguel Corporation shares or the shares of the 14 CIIF Holding Companies. While the
plaintiff (Republic) claims that this would constitute twenty-seven percent (27%) of the
SMC capital stock, COCOFED, et al. and Ballares, et al. claim that the said shares constitute
31.23% of the issued and outstanding capital stock of SMC based on the 33,133,266 SMC
shares owned by the 14 Holding Companies in 1983 which they alleged now total
880,720,162.71 SMC shares by reason of stock dividends that should have been declared
and delivered in the respective names of the 14 Holding Companies. Defendants Cojuangco,
et al. allege that a portion of the 27% SMC shares mentioned by plaintiff are now treasury
shares, possibly referring to the shares involved in the SMC Motion for Intervention, which
has already been denied by this Court. PSJ dated May 7, 2004, p. 46 (id., at p. 386).
16

stock of SMC, effectively deleting the last paragraph of the dispositive portion of its May 7, 2004
PSJ.14
_______________
14 The dispositive portion of the May 11, 2007 Sandiganbayan Resolution reads:
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL SUMMARY

JUDGMENT (RE: CIIF BLOCK OF SMC SHARES OF STOCK) dated August 8, of the
plaintiff is hereby denied for lack of merit. However, this Court orders the severance of this
particular claim of Plaintiff. The Partial Summary Judgment dated May 7, 2004 is now
pg. 1167
considered a separate final and appealable judgment with respect to the said CIIF Block of
SMC shares of stock.
The Partial Summary Judgment rendered in May 7, 2004 is modified by deleting the last
paragraph of the dispositive portion which will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants CIIF Companies, 14 Holding
Companies and Cocofed, et al.) filed by Plaintiff is hereby GRANTED. ACCORDINGLY,
the CIIF COMPANIES, NAMELY:
xxxx
AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:
xxxx
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC) SHARES OF

STOCK TOTALING 33,133,266 SHARES AS OF 1983, TOGETHER WITH ALL
DIVIDENDS DECLARED, PAID AND ISSUED THEREON AS WELL AS ANY
INCREMENTS THERETO ARISING FROM, BUT NOT LIMITED TO, EXERCISE OF
PREEMPTIVE RIGHTS ARE DECLARED OWNED BY THE GOVERNMENT IN
TRUST FOR ALL THE COCONUT FARMERS AND ORDERED RECONVEYED TO
THE GOVERNMENT.
The aforementioned Partial Summary Judgment is now deemed a separate appealable

judgment which finally disposes of the ownership of the CIIF Block of SMC
17
VOL. 805, OCTOBER 5, 2016 17

It is upon the foregoing factual backdrop and proceedings that herein petitioners have filed the
captioned consolidated Petitions for Review on Certiorari in May 2007.
Awaiting the decision thereon, COCOFED filed on July 24, 2009 an Urgent Motion to Approve
the Conversion of the SMC Common Shares into SMC Series 1 Preferred Shares15 praying for the
approval of the conversion of the Class “A” and Class “B” common shares registered in the name
of the 14 CIIF Holding Companies (listed in Annex “D” of the motion)16 into SMC Series 1
Preferred Shares.
pg. 1168
By then, the 14 CIIF Holding Companies’ registered shareholdings in SMC already totaled
753,848,312 shares after dividend yields and availment by the CIIF of stock rights offering on
April 11, 2005 of additional 28,645,672 shares.17
On September 17, 2009, this Court issued a Resolution18 approving with qualification the
conversion, viz.:
WHEREFORE, the Court APPROVES the conversion of the 753,848,312, SMC Common Shares
registered in the CIIF companies to SMC SERIES 1 PREFERRED SHARES of 753,848,312, the
converted shares to be registered in the names of the CIIF companies in accordance with the terms
and conditions specified in the conversion offer set forth in SMC’s Information Statement and ap-
_______________
Shares, without prejudice to the continuation of the proceedings with respect to the
remaining claims particularly those pertaining to the Cojuangco, et al. block of SMC shares.
15 Rollo (G.R. Nos. 177857-58), Vol. 3, pp. 1760-1775.
16 Id., at p. 1842.
17 With the stock dividends declared by SMC from 1991 to 2001, the SMC shares registered in
the name of the CIIF Holding Companies increased to 752,202,640. SMC conducted a stock rights
offering on April 11, 2005 and the CIIF Holding Companies subscribed to 28,645,672 shares
resulting in an increase to 753,848,312 shares. (Rollo [G.R. No. 178193, Vol. 3], p. 1596)
18 Rollo (G.R. Nos. 177857-58, Vol. 3), pp. 1881-1913.
18

pended as Annex “A” of COCOFED’s Urgent Motion to Approve the Conversion of the CIIF
SMC Common Shares into Series 1 Preferred Shares. The preferred shares shall remain in custodia
legis and their ownership shall be subject to the final ownership determination of the Court. Until
the ownership issue has been resolved, the preferred shares in the name of the CIIF Companies
shall be placed under sequestration and PCGG management.
xxxx
pg. 1169
Once the conversion is accomplished, the SMC Common Shares previously registered in the
names of the CIIF companies shall be released from sequestration.19
Notably, the Court’s September 17, 2009 Resolution was limited only to the 753,848,312 common
shares that were registered in the name of the CIIF Companies. To stress, a part of these shares
evolved from the 144,324,960 shares registered in the name of the CIIF Holding Companies
following the implementation of the Compromise Agreement and augmented by the 28,645,672
shares availed during the stock rights offering in April 2005. The September 17, 2009 Resolution
did not include the 25.45 million shares in the name of SMC as treasury shares. Neither did the
same Resolution encompass the “arbitration fee” shares which already amounted to 27,571,409
Class “A” and Class “B” shares as of July 30, 2009.20
On June 28, 2011, respondent Republic filed with the Court an Urgent Motion to Direct the San
Miguel Corporation (SMC) to Comply with the Final and Executory Resolutions dated October
24, 1991 and March 18, 1992 of the Sandiganbayan21
_______________
19 Id., at p. 1911. Underscoring supplied.
20 A separate Urgent Motion to Approve the Conversion of the PCGG-ITF-CARP-SMC Common

Shares into SMC Series 1 Preferred Shares September 30, 2009 was filed by the Republic, id., at
pp. 2103-2110. See also PCGG Resolution No. 2009-037-756, id., at p. 2004.
21 Id. (Vol. 4A), pp. 3322-3349.
19
VOL. 805, OCTOBER 5, 2016 19

praying that this Court direct SMC to comply with the Sandiganbayan’s October 25, 1991 and
March 18, 1992 Resolutions. In a Resolution dated July 5, 2011, this Court required SMC to file
a Comment on the Republic’s Urgent Motion.22
On January 24, 2012, this Court finally rendered judgment on the captioned consolidated petitions
and affirmed with modification the PSJs of the Sandiganbayan holding that the CIIF Companies
and the CIIF block of SMC shares are public funds/assets.
pg. 1170
Petitioners COCOFED, et al. interposed their Motion for Reconsideration dated February 14, 2012
of this Court’s January 24, 2012 Decision.
Pending the resolution of the petitioners’ motion for reconsideration, SMC filed its Comment on
the Urgent Motion to Direct the San Miguel Corporation (SMC) to Comply with the Final and
Executory Resolutions Dated October 24, 1991 and March 18, 1992 of the Sandiganbayan on
March 30, 2012 opposing the Republic’s motion on procedural and substantive grounds. In the
main, SMC argued that the Compromise Agreement whence it derives its right on the treasury
shares is effective and the Republic has no ground to assail it.
In its September 4, 2012 Resolution denying COCOFED’s motion for reconsideration, the Court
sought to reflect the current number of the shares registered in the name of the CIIF companies
and so held:
As of 1983, the Class A and B San Miguel Corporation (SMC) common shares in the names
of the 14 CIIF Holding Companies are 33,133,266 shares. From 1983 to November 19, 2009
when the Republic of the Philippines representing the Presidential Commission on Good
Government (PCGG) filed the “Motion To Approve Sale of CIIF SMC Series 1 Preferred Shares,”
the common shares of the CIIF Holding companies
_______________
22 Id., at pp. 3423A-B.
20

increased to 753,848,312 Class A and B SMC common shares.
Owing, however, to a certain development that altered the factual situation then obtaining in G.R.
Nos. 177857-58, there is, therefore, a compelling need to clarify the fallo of the January 24, 2012
Decision to reconcile it, vis-à-vis the shares of stocks in SMC which were declared owned by the
Government, with this development. We refer to the Resolution issued by the Court on
September 17, 2009 in the then consolidated cases docketed as G.R. Nos. 177857-58, G.R. No.
178193 and G.R. No. 180705. In that Resolution which has long become final and executory,
the Court, upon motion of COCOFED and with the approval of the Presidential Commission
on Good Government, granted the conversion of 753,848,312 Class “A” and Class “B” SMC
common shares registered in the name of the CIIF companies to SMC Series 1 Preferred
Shares of 753,848,312, subject to certain terms and conditions. The dispositive portion of the
aforementioned Resolution states:
pg. 1171
xxxx
The CIIF block of SMC shares, as converted, is the same shares of stocks that are subject matter
of, and declared as owned by the Government in, the January 24, 2012 Decision. Hence, the need
to clarify.
WHEREFORE, the Court resolves to DENY with FINALITY the instant Motion for
Reconsideration dated February 14, 2012 for lack of merit.
The Court further resolves to CLARIFY that the 753,848,312 SMC Series 1 preferred shares of
the CIIF companies converted from the CIIF block of SMC shares, with all the dividend earnings
as well as all increments arising from, but not limited to, the exercise of preemptive rights subject
of the September 17, 2009 Resolution, shall now be the subject matter of the January 24, 2012
Decision and shall be declared owned by the Government and be used only for the benefit of all
coconut farmers and for the development of the coconut industry.
21
VOL. 805, OCTOBER 5, 2016 21

As modified, the fallo of the January 24, 2012 Decision shall read, as follows:
WHEREFORE, the petitions in G.R. Nos. 177857-58 and 178793 are hereby DENIED.
The Partial Summary Judgment dated July 11, 2003 in Civil Case No. 0033-A as reiterated
with modification in Resolution dated June 5, 2007, as well as the Partial Summary
Judgment dated May 7, 2004 in Civil Case No. 0033-F, which was effectively amended in
Resolution dated May 11, 2007, are AFFIRMED with MODIFICATION, only with
respect to those issues subject of the petitions in G.R. Nos. 177857-58 and 178193.
However, the issues raised in G.R. No. 180705 in relation to Partial Summary Judgment
dated July 11, 2003 and Resolution dated June 5, 2007 in Civil Case No. 0033-A, shall be
decided by this Court in a separate decision.
The Partial Summary Judgment in Civil Case No. 0033-A dated July 11, 2003, is hereby
MODIFIED, and shall read as follows:
pg. 1172
xxxx
SO ORDERED.
The Partial Summary Judgment in Civil Case No. 0033-F dated May 7, 2004, is hereby
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL SUMMARY

JUDGMENT (RE: CIIF BLOCK OF SMC SHARES OF STOCK) dated August
8, 2005 of the plaintiff is hereby denied for lack of merit. However, this Court orders
the severance of this particular claim of Plaintiff. The Partial Summary Judgment
dated May 7, 2004 is now considered a separate final and appealable judgment with
respect to the said CIIF Block of SMC shares of stock.
22

The Partial Summary Judgment rendered on May 7, 2004 is modified by deleting the
last paragraph of the dispositive portion, which will now read, as follows:
The Motion for Partial Summary Judgment (Re: Defendants CIIF Companies, 14
Holding Companies and Cocofed, et al.) filed by Plaintiff is hereby GRANTED.
ACCORDINGLY, THE CIIF COMPANIES, NAMELY:
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
4. San Pablo Manufacturing Corp. (SPMC);
5. Granexport Manufacturing Corp. (GRANEX); and
6. Legaspi Oil Co., Inc. (LEGOIL),
pg. 1173
AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:
1. Soriano Shares, Inc.;
2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
4. Arc Investors, Inc.;
5. Toda Holdings, Inc.;
6. AP Holdings, Inc.;
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps, Inc.;
9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
23
VOL. 805, OCTOBER 5, 2016 23

AND THE CONVERTED SMC SERIES 1 PREFERRED SHARES TOTALING

753,848,312 SHARES SUBJECT OF THE RESOLUTION OF THE COURT
DATED SEPTEMBER 17, 2009 TOGETHER WITH ALL DIVIDENDS
DECLARED, PAID OR ISSUED THEREON AFTER THAT DATE, AS WELL
AS ANY INCREMENTS THERETO ARISING FROM, BUT NOT LIMITED
TO, EXERCISE OF PREEMPTIVE RIGHTS ARE DECLARED OWNED BY
THE GOVERNMENT TO BE USED ONLY FOR THE BENEFIT OF ALL
pg. 1174
COCONUT FARMERS AND FOR THE DEVELOPMENT OF THE
COCONUT INDUSTRY, AND ORDERED RECONVEYED TO THE
GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE

SANDIGANBAYAN ON JUNE 5, 2007 IN CIVIL CASE NO. 0033-A AND ON
MAY 11, 2007 IN CIVIL CASE NO. 0033-F, THAT THERE IS NO MORE
NECESSITY OF FURTHER TRIAL WITH RESPECT TO THE ISSUE OF
OWNERSHIP OF (1) THE SEQUESTERED UCPB SHARES, (2) THE CIIF
BLOCK OF SMC SHARES, AND (3) THE CIIF COMPANIES, AS THEY
HAVE FINALLY BEEN ADJUDICATED IN THE AFOREMENTIONED
PARTIAL SUMMARY JUDGMENTS DATED JULY 11, 2003 AND MAY 7,
2004.
SO ORDERED.
On October 15, 2012, respondent Republic filed the present Manifestation and Omnibus Motion
dated October 12, 2012 particularly asserting that the 753,848,312 SMC Series 1 Preferred Shares
mentioned in this Court’s September 4, 2012 Resolution does not equate to the 33,133,266 SMC
common shares specified in its January 24, 2012 Decision. The Republic posits that the 25.45
million SMC treasury shares form
24

part of the CIIF block of SMC shares totaling 33,133,266 shares as of 1983, which the Court has
declared to be owned by the Government. Hence, the Republic prays that a new resolution be
issued:
1. AMENDING the Resolution dated September 4, 2012 to include the “treasury shares” which
are part and parcel of the 33,133,266 CIIF Block of Shares as of 1983 decreed as owned by the
Government;
2. DIRECTING the San Miguel Corporation to comply with the Sandiganbayan’s Resolution
promulgated on October 24, 1991 and March 18, 1992 in Civil Case No. 0102 (integrated in Civil
Case No. 0033 [Civil Case No. 0033-F]) as affirmed by the Honorable Court in the consolidated
cases in G.R. Nos. 104037-38 and 109797 which directed the delivery to the [PCGG] of the
treasury shares, including all the accrued cash and stock dividends from 1986 up to the present;
pg. 1175
3. AWARDING actual damages in favor of the Republic of the Philippines in the form of legal
interest on the cash and cash value of the stock dividends and cash dividends which ought to have
accrued and delivered to the Republic and the PCGG by the SMC in compliance with the aforesaid
resolutions and decision of the Sandiganbayan and the Honorable Court.23
In its Comment24 dated December 2, 2013 on the above Manifestation and Omnibus Motion, SMC
maintains that the adverted SMC treasury shares belong to SMC pursuant to the March 20 and 22,
1990 Compromise Agreement and that this Court is without jurisdiction to order it to deliver the
25.45 million treasury shares to the Government since SMC’s intervention in CC No. 0033-F was
denied and so it is a nonparty in said case.
_______________
23 Rollo (G.R. No. 178193, Vol. 3), pp. 1443-1444.
24 Id., at pp. 1583-1696.
25
VOL. 805, OCTOBER 5, 2016 25

Our Ruling
No Jurisdiction over
SMC since it is not a
party to the case
It is elementary that every person must be heard and given his day in court before a judgment
involving his life, liberty or property issues against him. This rule is enshrined no less in the very
first section of the Bill of Rights of our Constitution:
SECTION 1. No person shall be deprived of life, liberty or property without due process of
law, nor shall any person be denied the equal protection of the laws. (emphasis supplied)
pg. 1176
Corporate persons, needless to stress, are entitled to the due process protection. Thus, in Palm
Avenue Holding Co., Inc. v. Sandiganbayan,25 the Court echoed our ruling in PCGG v.
Sandiganbayan26 that the failure to implead a corporation in a suit for the recovery of ill-gotten
wealth against its stockholders cannot bind the corporation itself; otherwise, its fundamental right
to due process will be violated, viz.:
The Court’s ruling in Presidential Commission on Good Government v. Sandiganbayan, which

remains good law, reiterates the necessity of the Republic to actually implead corporations
as defendants in the complaint, out of recognition for their distinct and separate
personalities, failure to do so would necessarily be denying such entities their right to due
process. Here, the writ of sequestration issued against the assets of the Palm Companies is
not valid because the suit in Civil Case No. 0035 against Benjamin Romualdez as shareholder
in the Palm Companies is not a suit against the lat-
_______________
25 G.R. Nos. 173082 and 195795, August 6, 2014, 732 SCRA 156.
26 353 Phil. 80, 92; 290 SCRA 639, 649 (1998).
26

ter. The Court has held, contrary to the assailed Sandiganbayan Resolution in G.R. No. 173082,
that failure to implead these corporations as defendants and merely annexing a list of such
corporations to the complaints is a violation of their right to due process for it would be, in
effect, disregarding their distinct and separate personality without a hearing. Here, the Palm
Companies were merely mentioned as Item Nos. 47 and 48, Annex A of the Complaint, as among
the corporations where defendant Romualdez owns shares of stocks. Furthermore, while the writ
of sequestration was issued on October 27, 1986, the Palm Companies were impleaded in the
case only in 1997, or already a decade from the ratification of the Constitution in 1987, way
beyond the prescribed period.
As a corollary rule, this Court has held that execution may issue only upon a person who is a
party to the action or proceeding, and not against one who did not have or was denied his day
in court. We said as much in Atilano II v. Asaali:27
pg. 1177
It is well-settled that no man shall be affected by any proceeding to which he is a stranger, and
strangers to a case are not bound by a judgment rendered by the court. Execution of a
judgment can only be issued against one who is a party to the action, and not against one who, not
being a party thereto, did not have his day in court. Due process dictates that a court decision can
only bind a party to the litigation and not against innocent third parties. (emphasis and underscoring
added)
_______________
27 G.R. No. 174982, September 10, 2012, 680 SCRA 345, 351, citing Fermin v. Esteves, G.R.
No. 147977, March 26, 2008, 549 SCRA 424, 428.
27
VOL. 805, OCTOBER 5, 2016 27

Even the Rules of Court provides that judgments can, in appropriate cases, only be executed
against a judgment obligor.28
_______________
28 SECTION 8. Issuance, form, and contents of a writ of execution.—The writ of execution

shall: (1) issue in the name of the Republic of the Philippines from the court which granted the
motion; (2) state the name of the court, the case number and title, the dispositive part of the
subject judgment or order; and (3) require the sheriff or other proper officer to whom it is directed
to enforce the writ according to its terms, in the manner hereinafter provided:
(a) If the execution be against the property of the judgment obligor, to satisfy the judgment, with
interest, out of the real or personal property of such judgment obligor;
(b) If it be against real or personal property in the hand of personal representatives, heirs,
devisees, legatees, tenants, or trustees, of the judgment obligor, to satisfy the judgment, with
interest, out of such property;
xxxx
SECTION 9. Execution of judgments for money, how enforced.—(a) Immediate payment on

demand.—The officers shall enforce an execution of a judgment for money by demanding from
the judgment obligor the immediate payment of the full amount, stated in the writ of execution
and all lawful fees. The judgment obligor shall pay in cash, certified bank check payable to the
judgment obligee, or any other form of payment acceptable to the latter, the amount of the
pg. 1178
judgment debt under proper receipt directly to the judgment obligee or his authorized
representative if present at the time of payment. x x x If the judgment obligee or his authorized
representative is not present to receive payment, the judgment obligor shall deliver the aforesaid
payment to the executing sheriff. x x x
(b) Satisfaction by levy.—If the judgment obligor cannot pay all or part of the obligation in
cash, certified bank check or other mode of payment acceptable to the judgment obligee, the officer
shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which
may be disposed of for value and otherwise exempt from execution x x x.
(c) Garnishment of debts and credits.—The officer may levy on debts due the judgment
obligor and other credits, including
28

As it were, SMC was never made a party to CC No. 0033-F filed by respondent Republic to
recover the SMC shares of stock registered in the name of the CIIF Holding Companies. It was
not given a chance to justify, let alone ventilate, its claim ever the 25.45 million shares it has in its
possession even when it had volunteered to participate and moved to intervene in the said case, as
will be expounded below.
Certainly, SMC cannot, under the premises, be considered as such judgment obligor in CC 0033-
F as it was not impleaded by respondent Republic as a party despite the clear mandate of the Rules
of Court that “parties-in-interest without whom no final determination can be had of an action shall
be joined as plaintiffs or defendants.”29
It has been advanced, however, that “[SMC] need not be [a party] because its interests have already
been clearly and finally addressed by this Court.”30
This view, however, fails to consider that SMC’s interests over these 25.45 million shares have
not yet been addressed31 precisely because SMC was not impleaded in the case when its legal
presence is an absolute prerequisite before a prejudicial and confiscatory decision can be issued
against it.32 In other words, the nonjoinder of SMC as a party in CC 0033-F did not confer upon
this Court jurisdiction over the juridical person of SMC and so the Court is without power to
order SMC to comply with any pronouncement made in the case involving, adversely at that,
its property.
_______________
pg. 1179
bank deposits, financial interests, royalties, commissions and other personal property not capable
of manual delivery in the possession or control of third parties. x x x (emphasis supplied)
30 Justice Leonen’s Dissent.
31 Id.
32 De Galicia v. Mercado, G.R. No. 146744, March 6, 2006, 484 SCRA 131, 136-137.
29
VOL. 805, OCTOBER 5, 2016 29

In a plethora of cases,33 the Court has emphasized the well-entrenched principle that a judgment
rendered without jurisdiction cannot be the source of any right nor the creator of any
obligation. We said as much in Florete, Jr. v. Florete, Sr.34 and Arcelona v. Court of Appeals:35
A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any
right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating
from it have no legal effect. Hence, it can never become final and any writ of execution based on
it is void: “. . . it may be said to be a lawless thing which can be treated as an outlaw and slain at
sight, or ignored wherever and whenever it exhibits its head.”36
The acknowledgment that the Court has no jurisdiction over SMC in the present case is not
“allow[ing] San Miguel Corporation to keep these treasury shares under the guise of
technicalities.”37 The question of jurisdiction, the Court has repeatedly explained, is not a
mere question of technicality or a simple matter of procedure but an element of due
process.38 Indeed, it is unsporting, nay the height of injustice and a clear violation of the due
process
_______________
33 See Metropolitan Bank & Trust Company v. Alejo, 417 Phil. 303; 364 SCRA 812 (2001);
Divinagracia v. Parilla, G.R. No. 196750, March 11, 2015, 753 SCRA 87; Macawadib v.
Philippine National Police Directorate for Personnel and Records Management, G.R. No.
186610, July 29, 2013, 702 SCRA 496; People v. Go, G.R. No. 201644, September 24, 2014, 736
SCRA 501; Valdez-Tallorin v. Heirs of Juanito Tarona, 620 Phil. 268; 605 SCRA 259 (2009).
pg. 1180
35 345 Phil. 250, 287; 280 SCRA 20, 57 (1997).
38 See David v. Paragas, Jr., G.R. No. 176973, February 25, 2015, 751 SCRA 648; and Sy v.
Court of Appeals, G.R. No. 94285, August 31, 1999, 313 SCRA 328.
30

guarantee, to order SMC to comply with any decision rendered in CC 0033-F when it was never
given the opportunity to present, explain, and prove its claim over the presently contested shares.
It may be that in Republic v. Sandiganbayan (First Division), Maria Clara Lobregat, et al.
(Lobregat),39 one of the cases that sprung forth from the sequestration made by PCGG of
properties suspected ill-gotten by former President Marcos and his cronies, including the CIIF
Companies and its SMC shares, the Court mentioned that there is no need to implead SMC in cases
seeking to recover sequestered SMC shares.40
Our pronouncements in Lobregat, however, are not applicable herein. Unlike in the foregoing
cases, SMC presently has a legitimate claim over the 25.45 million shares in its treasury by a
commercial transaction not otherwise alleged to be conducted under any “illicit or
anomalous conditions.” SMC and the CIIF Companies (through UCPB) entered into the
contract of sale in March 1986 and SMC paid P500 million on April 1, 1986 or several
_______________
40 The Court held, thus:
B. Impleading Unnecessary in Cases for Recovery of Shares of Stock or Bank Deposits.
As regards actions in which the complaints seek recovery of defendants’ shares of stock in
existing corporations (e.g., San Miguel Corporation, Benguet Corporation, Meralco, etc.)
because allegedly purchased with misappropriated public funds, in breach of fiduciary duty,
pg. 1181
or otherwise under illicit or anomalous conditions, the impleading of said firms would clearly
appear to be unnecessary. If warranted by the evidence, judgments may be handed down against
the corresponding defendants divesting them of ownership of their stock, the acquisition thereof
being illegal and consequently burdened with a constructive trust, and imposing on them the
obligation of surrendering them to the Government. (emphasis supplied)
31
VOL. 805, OCTOBER 5, 2016 31

days prior to the actual sequestration. The consequent transfer of the 5 million shares (now
26.45 million shares) to SMC vests in SMC the proprietary right over these shares. Put differently,
as the manner of SMC’s acquisition of these shares was arms-length and not made through public
funds, the present issue does not fall within the ambit of our pronouncements in Republic v.
Sandiganbayan, which refer to corporations as repositories of shares acquired by misappropriated
public funds or “ill-gotten wealth.”
More significantly, this Court, in PCGG v. Interco,41 Republic v. Sandiganbayan, Sipalay Trading
Corp. and Allied Banking Corp.42 and PCGG v. Sandiganbayan and Aerocom Investors and
Managers, Inc.43 effectively abrogated its ruling in Lobregat when it hewed to the lone dissent of
Justice Teodoro R. Padilla in the very same Lobregat, to wit:
. . . failure to implead these corporations as defendants and merely annexing a list of such
corporations to the complaints is a violation of their right to due process for it would in effect be
disregarding their distinct and separate personality without a hearing.
In cases where stocks of a corporation were allegedly the fruits of ill-gotten wealth, it should be
remembered that in most of these cases the stocks involved constitute a substantial if not
controlling interest in the corporations. The basic tenets of fair play demand that these
corporations be impleaded as defendants since a judgment in favor of the government will
undoubtedly substantially and decisively affect the corporations as distinct entities. The
judgment could strip them of everything without being previously heard as they are not parties to
the action in which the judgment is rendered.
. . . Holding that the ‘corresponding judicial action or proceeding’ contemplated by the

Constitution is any
_______________
41 G.R. No. 92755, July 26, 1991, En Banc Minute Resolution.
pg. 1182
42 G.R. Nos. 112708-09, March 29, 1996, 255 SCRA 438.
43 G.R. No. 125788, June 5, 1998, 290 SCRA 39.
32

action concerning or involving the corporation under sequestration is oversimplifying the solution,
the result of which is antagonistic to the principles of justice and fair play.
. . . the actions contemplated by the Constitution should be those which include the corporation
not as a mere annex to the complaint but as defendant. This is the minimum requirement of the
due process guarantee. Short of being impleaded, the corporation has no standing in the
judicial action. It cannot adequately defend itself. It may not even be heard.
On the . . . opinion that alternatively the corporations can be impleaded as defendants by

amendment of the complaint, Section 26, Article XVIII of the Constitution would appear to
preclude this procedure, for allowing amendment of the complaint to implead theretofore
unimpleaded corporations would in effect allow complaints against the corporation to be filed
beyond the periods fixed by said Section 26.
xxxx
While government efforts to recover illegally amassed wealth should have support from all its
branches, eagerness and zeal should not be allowed to run berserk, overriding in the process
the very principles that it is sworn to uphold. In our legal system, the ends do not always
justify the means. Wrongs are never corrected by committing other wrongs, and as above
discussed the recovery of ill-gotten wealth does not and should never justify unreasonable
intrusions into constitutionally forbidden grounds. . . .
Indeed, it is but in keeping with fair play that parties are allowed to present their respective
claims in a full-blown trial regarding the “sale” of the 25.45 million SMC shares for P500
pg. 1183
million. This is not, at the first instance, the appropriate case to make a final judgment over the
ownership of the 25.45 million shares.
33
VOL. 805, OCTOBER 5, 2016 33

Nonetheless, it is advanced that SMC had already been afforded an opportunity to air its side in
San Miguel Corporation v. Sandiganbayan44 and in this very case where it filed its Comment on
the Republic’s Omnibus Motion. With all due respect, the posture fails to consider that the issue
of ownership was never tackled in San Miguel and, certainly, the Comment filed by SMC in this
case, over its repeated manifestation that it is not party to the instant case45 and continuing
objection on
_______________
45 Prior to filing its Comment on the Omnibus Motion, a “Manifestation Re: “Resolution”
Dated November 20, 2012 dated December 17, 2012 was filed. It stated:
4.00 Second, SMC, which is being required to comment on the “Manifestation and Omnibus
Motion . . .” dated October 12, 2012, as well as the “Manifestation” dated October 4, 2012, is not
a party in the instant cases. Nor has it been furnished a copy of the Court’s Resolution.
Nonetheless, in light of the foregoing, although the suggestion may appear officious, if indeed
SMC is being required to comment on the matter subject of the “Resolution” of November 20,
2012, perhaps a copy of the “Resolution” should be furnished on SMC itself. (emphasis and
underscoring supplied; Rollo [G.R. Nos. 177857-58, Vol. 6], p. 5008)
In an Omnibus Motion dated September 3, 2013, SMC again emphasized, viz.:
“2. However, SMC has not been furnished with copies of the various pleadings in regard
which it is required to comment as enumerated above. It must be emphasized that SMC is
not a party in either G.R. Nos. 177857-58 (COCOFED, et al. v. Republic of the Philippines) or
G.R. No. 178193 (Danilo B. Ursua v. Republic of the Philippines)
xxxx
5. SMC is not a party in either G.R. Nos. 177857-58 (COCOFED, et al. v. Republic of the
Philippines) or G.R. No. 178193 (Danilo B. Ursua v. Republic of the Philippines). Preparation of
pg. 1184
the comment will require a study of the cases, the record of which are voluminous and cover a
long period of time. x x x (emphasis and underscoring supplied; id., at pp. 5056-5057)
34

this Court’s jurisdiction, is hardly enough to satisfy the requirements of due process.
The Court cannot set the benchmark of due process at the lowest level by considering each pleading
submitted by a party as enough to satisfy the requirements of this Constitutional protection. If this
Court is to animate the spirit of the Constitution and maintain in full strength the substance of the
due process protection, it must afford each party the full legal opportunity to be heard and present
evidence in support of his or her contentions. SMC must, therefore, be given full opportunity to
proffer evidence on its claim of ownership over the treasury shares in a proper case before the right
court.
In fact, SMC should have been allowed to participate and present its evidence in CC 0033-F. To
recall, SMC filed a “Motion to Intervene” with attached “Complaint-Intervention” dated February
2, 2004 with the Sandiganbayan.46 It alleged, among other things, that it had an interest in the
matter in dispute being the owner by purchase of a portion of the so-called “CIIF block of SMC
shares of stock” sought to be recovered by the Republic as alleged ill-gotten wealth.47 SMC
prayed, thus:
WHEREFORE, it is respectfully prayed that the SMC shares comprising the “compromise shares”
between SMC and defendant CIIF Companies, and covered by Certificate Nos. A0004129 and
B0015556, be adjudged excluded (a) from the “CIIF Block of SMC shares” subject of plaintiff’s
forfeiture action, and (b) from any judgment that may be rendered in this suit as to such forfeiture
claim.48
_______________
46 Decision, Republic v. Cojuangco, et al., CC No. 0033-F, November 28, 2007, p. 27; Rollo
(G.R. No. 178193, Vol. 1), p. 492.
47 Id.
48 Comment of San Miguel Corporation on the “Manifestation and Omnibus Motion,” p. 44.
pg. 1185
35
VOL. 805, OCTOBER 5, 2016 35

The Republic, however, opposed the intervention and found the same improper.49 COCOFED and
Ursua likewise posed their Opposition.50 On May 6, 2004, the Sandiganbayan promulgated a
Resolution finding SMC’s motion to intervene devoid of merit.51 SMC moved for reconsideration
but to no avail.52 Soon thereafter, or on May 7, 2004, the Sandiganbayan issued the Partial
Summary Judgment in CC 0033-F53 that was assailed in these consolidated petitions.
Undeniably, SMC was not given the proper chance to be heard and furnish proof on its claim of
ownership over the treasury shares. That was a denial of its right to due process. It should be
corrected.
The Clarification in the September

4, 2012 Resolution
A review of the past underlying transactions that led to the acquisition of the so-called “treasury
shares” would indicate that SMC had acquired colorable title to retain possession of the 25.45
million shares of what were once CIIF shares prior to the sequestration of these CIIF shares on
April 7, 1986 and the institution of CC Nos. 0033 and 0033-F on July 31, 1987.
It is worthy to consider that the original contract of sale between the SMC and UCPB Groups over
a block of SMC shares, which was later the subject of the Compromise Agreement, was executed
on March 26, 1986 and, as mentioned, SMC paid P500 million as first installment on April 1,
1986 or several days before the government sequestered the 33,133,266 shares, on April 7,
1986.
_______________
49 Decision, Republic v. Cojuangco, et al., CC No. 0033-F, November 28, 2007, supra note 46.
50 Id.
51 Id.
52 Id., at p. 28; Rollo (G.R. No. 178193, Vol. 1), p. 493.
53 Id.
pg. 1186
36

Because of differences regarding the implementation of the purchase agreement after the shares
were sequestered, SMC and UCPB (acting on behalf of the CIIF companies) entered into a
Compromise Agreement and Amicable Settlement in March 1990 wherein the P500 million first
installment paid by SMC was considered as full payment for 5 million SMC shares, which by then
had increased to 26,450,000 shares.
As a consequence of the implementation of this Compromise Agreement in July 1991, the CIIF-
SMC shares which then numbered 175,274,960 were, thus, distributed among the CIIF Holding
Companies, SMC-Treasury and the PCGG, which helped bring to reality the Compromise
Agreement and agreed to hold the “arbitration fees” in trust for the CARP. The following illustrates
the evolution of the CIIF shares before their sequestration until this Court’s September 4, 2012
Resolution:
_______________
54 The 144,324,960 increased to 725,202,640 from 1991 to 2001. In 2005, the CIIF subscribed to
28,645,672 shares when SMC conducted a stocks right offering. Thus, the total shares registered
in the name of the CIIF in 2009 reached
55 UCPB Group contributed 4,500,000 shares; SMC Group contributed 1,000,000 shares.
37
VOL. 805, OCTOBER 5, 2016 37

In sum, the 753,848,312 SMC shares now reflected in the fallo of the September 4, 2012
Resolution in these captioned cases, are the only remaining SMC shares in the name of the
CIIF companies that can be, and were in fact, declared as owned by the Government. Hence,
the need to clarify the Court’s January 2012 Decision.
pg. 1187
On this note, there was no mistake in the dispositive portion of the September 4, 2012 Resolution.
The fallo was clarified precisely to reflect the present number of shares registered in the name of
the CIIF companies. Thus, the 5.5 million shares with the PCGG, and the 25.45 million shares
with SMC, were no longer included therein.
There was never an equivalence made or implied between the 33,133,266 common shares and the
753,848,312 SMC Series 1 Preferred Shares. As observed, the current number of 753,848,312
SMC Series 1 Preferred Shares was taken from this Court’s September 17, 2009 Resolution, where
there was no mention of the original 33,133,266 common shares. The September 17, 2009
Resolution limited itself to the conversion of the shares remaining in the name of the CIIF
companies from common to Series 1 Preferred shares, i.e., those arising from the 144,324,960
shares registered in the name of CIIF companies following the implementation of the compromise
agreement and the additional 28,645,672 subscribed by them in April 1995 following SMC’s stock
rights offering. This is so considering that COCOFED’s “Urgent Motion: To Approve the
Conversion of the SMC Common Shares Into SMC Series 1 Preferred Shares” dated July 24, 2009
specifically asked for the exchange of “ALL THE SHARES OF STOCK OF SMC THAT ARE
PRESENTLY SEQUESTERED AND REGISTERED IN THE RESPECTIVE NAMES OF
THE 14 CIIF HOLDING COMPANIES IN THE TOTAL NUMBER OF 753,848,312.”56
COCOFED did not ask for the conversion of all the shares that arose from the original 33,133,266
SMC
_______________
38

Common Shares given the claim and possession of the remaining portion by the PCGG and the
SMC over the remainder.
In other words, COCOFED did not ask for the conversion of the 5.5 million arbitration shares
already in the name of PCGG because the shares were already transferred and registered in the
name of PCGG as of July 1991.57 Likewise, COCOFED did not ask for the conversion of the
SMC treasury shares because it had no claim on them anymore, as the same were already
transferred and registered in the name of SMC.58 As a matter of fact, certificates of stocks were
issued to SMC and PCGG, specifically: (1) Certificate Nos. 004127, 004128, and 015555 for
PCGG; and (2) Certificate Nos. 004129 and 015556 for SMC. Thus, the PCGG shares and the
SMC treasury shares were no longer included in the September 17, 2009
pg. 1188
_______________
57 On July 4, 1991, SMC and the UCPB Group filed a Joint Manifestation with the
Sandiganbayan that they have implemented the Compromise Agreement and Amicable Settlement
with the conditions set by the PCGG and accordingly, withdrew their Joint Petition. They informed
that they have executed the following corporate acts:
a. On instructions of the SMC Group, the certificates of stock registered in the name of
Anscor-Hagedorn Securities, Inc. (AHSI) representing 175,274,960 SMC shares were
surrendered to the SMC corporate secretary.
b. The said SMC shares were reissued and registered in the record books of SMC in
the following manner:
i) Certificates for 25,450,000 SMC shares were registered in the name of SMC, as
treasury;
ii) Certificates for 144,324,960 SMC shares were registered in the name of the CIIF
Holding Companies;
iii) Certificates for 5,500,000 SMC shares were registered in the name of the
PCGG. (emphasis supplied; San Miguel Corporation v. Sandiganbayan, supra note
1).
58 Id.
39
VOL. 805, OCTOBER 5, 2016 39

and September 4, 2012 Resolutions, which were limited to the 753,848,312 shares still registered
in the name of COCOFED.
There is no gainsaying that the treasury shares were originally derived from the more than 33.13
million shares acquired by the CIIF shares in 1983. However, SMC is persistent in its claim of
ownership over the 25.45 million shares following the events that transpired after the purchase by
the CIIF of the shares in 1983. Thus, it is not incompatible, much less “illogical,” to hold that the
original 33,133,266 SMC common shares were bought with public funds in 1983 and yet the
treasury shares may not now belong to the government given the foregoing events that supervened
after the purchase of these shares, which, as will be discussed, bore the imprimatur of the
government agency appointed to administer them.
pg. 1189
The Republic participated in
the Compromise Agreement
To sway this Court, the Republic relies on the fact that the Compromise Agreement between SMC
and the CIIF Companies ratifying the sale of the first installment shares had been submitted but
has not been approved by the Sandiganbayan. But note, neither has the Compromise Agreement
been disapproved by that or this Court. Nowhere in San Miguel Corporation v. Sandiganbayan59
did the Court rule on the validity of the Compromise Agreement, much less “indirectly [deny]
approval of the Compromise Agreement,”60 since it was not the issue presented for the Court’s
resolution.61
The absence of an explicit approval of the Compromise Agreement by the Sandiganbayan,

however, did not and does not preclude the PCGG from recognizing the agreement. In
_______________
59 Id.
61 Id.
40

fact, the PCGG exercised ownership over the arbitration shares by asking, through the OSG, for
the conversion of the PCGG shares into preferred shares per a Motion dated September 30, 2009.62
More importantly, it retained ownership of the said arbitration fee shares from 1991 up to the
present. Undoubtedly, the Republic, through the PCGG, implicitly recognized the validity of the
Compromise Agreement.
The graft court’s disinclination to explicitly approve the Compromise Agreement was, as admitted
in the Dissent, only intended to prevent any “prejudice [of] their eventual delivery to their lawful
owner or owners who will be determined at the close of the judicial proceeding.”63 In effect, the
Sandiganbayan intended to conserve the SMC shares for the party who will eventually be declared
the beneficial owner thereof.
pg. 1190
Per this Court’s January 2012 Decision, beneficial ownership of the shares pertains to the
Republic. But as things stood, the Republic was actually involved in the Compromise
Agreement and its implementation.
It is not lost on this Court that the PCGG, the government’s primary representative in sequestration
proceedings, virtually gave its consent to SMC’s continuous possession of the 25.45 million shares
by approving the Compromise Agreement on which SMC predicates its claim over the shares and
continuing its possession of the so-called “arbitration fee” shares that came out of the same
Compromise Agreement.
Put differently, the PCGG, the government agency empowered to exercise sequestration powers
over the 25.45 SMC treasury shares, gave its consent to SMC’s claim of ownership and possession
of the treasury shares by approving the Com-
_______________
62 Urgent Motion to Approve the Conversion of the PCGG-ITF-CARP SMC Common Shares
Into SMC Series 1 Preferred Shares dated September 30, 2009, Rollo (G.R. Nos. 177857-89, Vol.
3), pp. 2103-2110.
63 Justice Leonen’s Dissent; citing Rollo (G.R. Nos. 117857-58, Vol. 4A), pp. 3353-3354.
41
VOL. 805, OCTOBER 5, 2016 41

promise Agreement on which SMC predicates its claim and also asserting and exercising
ownership and possession of the so called “arbitration fees of 5.5 SMC shares that came out of the
Compromise Agreement.” This may be the real reason why PCGG did not implement the SB
orders dated October 25, 1991 and March 18, 1992 which ordered SMC to surrender the treasury
shares.
What is more, at the time the Compromise Agreement was signed, SMC’s board was dominated
by PCGG nominees and other government representatives.
The facts recited in Cojuangco, Jr. v. Roxas64 reveal that on April 18, 1989, the annual meeting
of SMC shareholders was held. Among the matters taken up was the election of fifteen (15)
members of the board of directors for the ensuing year. On such date, there were 140,849,970
shares outstanding, of which 133,224,130 shares, or 94.58%, were present at the meeting, either
in person or by proxy.
pg. 1191
Because of PCGG’s claim that the shares of stock were under sequestration, PCGG was allowed
to represent and vote 85,756,279 shares of stocks, or almost 2/3 of the actual votes cast. With
PCGG voting the 85,756,279 shares or 1,286,744,185 votes, the following were elected members
of the SMC Board:
1. Mr. Eduardo De Los Angeles
2. Mr. Feliciano Belmonte, Jr.
3. Mr. Teodoro L. Locsin
4. Mr. Domingo Lee
5. Mr. Philip Ella Juico
6. Mr. Patrick Pineda
7. Mr. Adolfo Azcuna
8. Mr. Edison Coseteng
9. Mr. Andres Soriano III
10. Mr. Eduardo Soriano
11. Mr. Francisco C. Eizmendi, Jr.
12. Mr. Benigno P. Toda, Jr.
_______________
64 G.R. No. 91925, April 16, 1991, 195 SCRA 797.
42

13. Mr. Antonio J. Roxas
14. Mr. Jose L. Cuisia, Jr.
pg. 1192
15. Mr. Oscar Hilado
Out of the 15 men elected to the board, eight (8) were PCGG nominees,65 one (1) was nominated
by SSS,66 one by GSIS, and only five (5) were nominated by nongovernment institutions and/or
individuals.67 Similar facts attended the election of the directors of the SMC Board on April 17,
1990. Hence, 10 out of the 15 members of the SMC Board were government-nominated and
elected.68
It would, therefore, be fair to state that the 10 men nominated and elected by the government to
the SMC Board for the years 1989-1990 and 1990-1991 have actually acted to advance the interest
of the Republic at the time that the Compromise Agreement was signed and implemented.
Without a doubt, the Republic had a hand in the transactions that eventually led to the designation
of the more than 25.45 million shares as SMC treasury shares. Indeed, it is not disputed that the
PCGG and, ergo, the Republic had an “influence” in the execution and eventual implementation
of the Compromise Agreement through their representatives in the SMC Board.
Furthermore, neither has the PCGG ever moved for the actual execution of the Sandiganbayan’s
October 25, 1991 and March 18, 1992 Orders now relied upon by the Republic in claiming its
renewed interest on the treasury shares. Twenty-four (24) years had elapsed and the Republic,
either through
_______________
65 Mr. Teodoro L. Locsin; Mr. Eduardo De Los Angeles; Mr. Domingo Lee; Mr. Patrick Pineda;
Mr. Philip Ella Juico; Mr. Oscar Hilado; Mr. Edison Coseteng; and Mr. Adolfo Azcuna.
66 Mr. Jose L. Cuisia, Jr.
67 Mr. Andres Soriano III; Mr. Benigno P. Toda, Jr.; Mr. Francisco C. Eizmendi, Jr.; Mr. Antonio
J. Roxas; Mr. Antonio J. Roxas; and Mr. Eduardo Soriano.
68 Cojuangco, Jr. v. Roxas, supra note 64.
43
VOL. 805, OCTOBER 5, 2016 43

pg. 1193
the OSG or the PCGG, has not lifted even a finger to execute and enforce the said Sandiganbayan
Orders. It should have filed a motion or instituted an action therefor within five (5) or ten (10)
years, as the case may be, as prescribed under the Rules of Court.69 At the very least, the Republic
should have asked for a citation of contempt. Regrettably, the Republic did nothing.
Certainly, the PCGG and, ergo, the Republic had no interest to do so given the 5.5 million, now
more than 27.5 million, shares it had accepted as “arbitration fees.” Evidently, whatever will be
the outcome of CC 0033-F, i.e., whether the courts grant the shares to the Republic, COCOFED,
or the coconut farmers, the Republic through the PCGG was already assured of a piece of the pie.
Indeed, for all intents and purposes, it is safe to state that SMC is an innocent bystander caught
between the conflict between the government, certain individuals, and COCOFED over the shares.
There is, therefore, no reason for the Court to now resolve the incident at bar to benefit the Republic
at the expense of SMC.
Unjust Enrichment and Estoppel

bar the Republic’s Motion
There is nothing on record that says that the government offered to return the P500 million to the
SMC Group. That is to say, while the respondent Republic is asking for the delivery and
reconveyance of the 25.45 million shares, it has not
_______________
69 Rules of Court, Rule 39, Sec. 6. Execution by Motion or by Independent Action.—A final
and executory judgment or order may be executed on motion within five (5) years from the date
of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a
judgment may be enforced by action. The revived judgment may also be enforced by motion within
five (5) years from the date of its entry and thereafter by action before it is barred by the statute of
limitations.
44

intimated its intention to return the P500 million it received (through the CIIF Companies now
declared as government-owned) for the same shares. The inevitable conclusion that can be made
pg. 1194
is the Republic plans to keep the P500 million along with the 25.45 million shares. Such retention
and acquisition of the P500 million would, in context, amount to a flagrant and arbitrary
deprivation of SMC’s property in violation of the company’s due process right. This act definitely
trenches on the sacred Constitutional guarantee of due process.
Elementary rules against unjust enrichment,70 if not the sporting idea of fair play, forbid the
Republic to retain the P500 million with the over 25.45 million shares it now claims. At the very
least, everyone has a reasonable expectation that the Republic follow its own laws, foremost of
which is the Constitution.
In sum, by keeping the P500 million first installment, approving through the PCGG the
Compromise Agreement, and even taking and keeping an “arbitration fee,” the government
descended to the level of an ordinary citizen and stripped itself of the vestiges of immunity that is
otherwise available to it in the performance of governmental acts.71 Clearly, it is now
_______________
70 The equitable principle against unjust enrichment is encapsulated in Article 22 of the Civil
Code, viz.:
Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him.
71 Republic of Indonesia v. Vinzon, G.R. No. 154705, June 26, 2003, 405 SCRA 126; Air
Transportation Office v. Ramos, G.R. No. 159402, February 23, 2011, 644 SCRA 36. See also
Minucher v. Court of Appeals, G.R. No. 142396, February 11, 2003, 397 SCRA 244; citing Maxis,
Gary L., “International Law, An Introduction,” University Press of America, p. 119 (1984); D.W.
Grieg, “International Law,” London Butterworths, p. 221 (1970).
45
VOL. 805, OCTOBER 5, 2016 45

vulnerable to the application of the principle of estoppel which militates against the grant of
respondent’s motion.
While the general rule is that the State cannot be put in estoppel by the mistakes or errors of its
officials or agents, it is established that “[t]he rule on non-estoppel of the government is not
designed to perpetrate an injustice.”72 Thus, several exceptions to the Republic’s non-estoppel
have been recognized. In Republic of the Philippines v. Court of Appeals,73 the Court held:
pg. 1195
The general rule is that the State cannot be put in estoppel by the mistakes or errors of its officials
or agents. However, like all general rules, this is also subject to exceptions, viz.:
“Estoppel against the public are little favored. They should not be invoked except in rare
and unusual circumstances and may not be invoked where they would operate to defeat the
effective operation of a policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases where the interests of
justice clearly require it. Nevertheless, the government must not be allowed to deal
dishonorably or capriciously with its citizens, and must not play an ignoble part or do
a shabby thing; and subject to limitations . . . the doctrine of equitable estoppel may be
invoked against public authorities as well as against private individuals.”
In Republic v. Sandiganbayan, the government, in its effort to recover ill-gotten wealth, tried to
skirt the application of estoppel against it by invoking a specific constitutional provision. The
Court countered:
_______________
72 Leca Realty Corporation v. Republic, G.R. No. 155605, September 27, 2006, 503 SCRA 563.
46

“We agree with the statement that the State is immune from estoppel, but this concept is
understood to refer to acts and mistakes of its officials especially those which are irregular
(Sharp International Marketing v. Court of Appeals, 201 SCRA 299, 306 [1991]; Republic
v. Aquino, 120 SCRA 186 [1983]), which peculiar circumstances are absent in the case at
bar. Although the State’s right of action to recover ill-gotten wealth is not vulnerable to
estoppel[;] it is non sequitur to suggest that a contract, freely and in good faith executed
between the parties thereto is susceptible to disturbance ad infinitum. A different
interpretation will lead to the absurd scenario of permitting a party to unilaterally
jettison a compromise agreement which is supposed to have the authority of res
judicata (Article 2037, New Civil Code), and like any other contract, has the force of
law between parties thereto. (Article 1159, New Civil Code; Hernaez v. Kao, 17 SCRA
296 [1966]; 6 Padilla, Civil Code Annotated, 7th ed., p. 711, 1987; 3 Aquino, Civil Code, p.
463, 1990 ed.) . . .”
pg. 1196
The Court further declared that “(t)he real office of the equitable norm of estoppel is limited to
supply[ing] deficiency in the law, but it should not supplant positive law.”74
The exception established in the foregoing cases is appropriate in the present case since the
Compromise Agreement partook of the nature of a bona fide proprietary business transaction of
the government and was not undertaken as an incident to any of its governmental functions.
Clearly, issues regarding SMC’s right over the 25.45 million treasury shares or the entitlement to
the alleged dividends on said shares or to the interests and increase in value
_______________
74 Citing 31 CJS 675-676; Republic v. Sandiganbayan, G.R. No. 108292, September 10, 1993,
226 SCRA 314. Emphasis and underscoring supplied.
47
VOL. 805, OCTOBER 5, 2016 47

of the P500 million remain unresolved. These issues are better ventilated and threshed out in a
proper proceeding before the right forum where SMC will be accorded due process.
With respect to the Republic’s “Urgent Motion to Direct the San Miguel Corporation (SMC) to
Comply with the Final and Executory Resolutions Dated October 24, 1991 and March 18, 1992 of
the Sandiganbayan,” the same is noted without action in view of the ruling of the Court that
jurisdiction has not been acquired over SMC.
WHEREFORE, the Republic of the Philippines’ Manifestation and Omnibus Motion dated
October 12, 2012 is DENIED without prejudice to the right of respondent Republic to institute the
appropriate action or proceeding where SMC’s alleged right over the 25.45 million SMC treasury
shares will be determined and finally resolved.
SO ORDERED.
Brion, Bersamin, Del Castillo, Perez and Reyes, JJ., concur.
Sereno,** CJ., On Official Business.
pg. 1197
Carpio,*** (Acting CJ.), Leonardo-De Castro, Peralta, Perlas-Bernabe, Jardeleza and Caguioa,
JJ., No part.
Mendoza, J., joining dissent of Justice Leonen.
Leonen, J., I dissent. See Separate Opinion.
DISSENTING OPINION
SERENO, CJ.:
The matter before the Court in these cases is the correctness of the modification made in the
Resolution dated 4 September 2012, to wit:
_______________
** As per ponencia, CJ. Sereno left her Dissenting Opinion.
*** Per Special Order No. 2386 dated September 29, 2016.
48

WHEREFORE, the Court resolves to DENY with FINALITY the instant Motion for
Reconsideration dated February 14, 2012 for lack of merit.
The Court further resolves to CLARIFY that the 753,848,312 SMC Series 1 preferred shares of
the CIIF companies converted from the CIIF block of SMC shares, with all the dividend earnings
as well as all increments arising from, but not limited to, the exercise of preemptive rights subject
of the September 17, 2009 Resolution, shall now be the subject matter of the January 24, 2012
Decision and shall be declared owned by the Government and be used only for the benefit of all
coconut farmers and for the development of the coconut industry.1
pg. 1198
According to the Republic,2 this Court ended up substantially modifying or altering the Decision
dated 24 January 2012, which equated the 753,848,312 SMC Series 1 Preferred Shares with the
33,133,266 CIIF block of San Miguel Corporation (SMC) shares as of 1983 and the stock
dividends accruing thereafter.3 This Court affirmed the Sandiganbayan resolutions directing the
SMC to deliver the treasury shares to the Presidential Commission on Good Government (PCGG)
in San Miguel Corporation v. Sandiganbayan.4 The Republic alleged that despite this ruling,
which had long become final and
_______________
1 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, 694 Phil. 43, 47-48;
679 SCRA 604, 609 (2012).
2 Rollo, pp. 4800-4822; Manifestation and Omnibus Motion: (1) To Amend the Resolution
promulgated on September 4, 2012 to include the “Treasury Shares” which are part and parcel of
the 33,133,266 Coconut Industry Investment Fund (CIIF) Block of San Miguel Corporation (SMC)
Shares as of 1983 Decreed by the Sandiganbayan, and Sustained by the Honorable Court, as
Owned by the Government; and (2) To Direct San Miguel Corporation (SMC) to Comply with the
Final and Executory Resolutions dated October 24, 1991 and March 18, 1992 of the
Sandiganbayan which were affirmed by the Honorable Court in G.R. Nos. 104637-38 dated 12
October 2012.
3 Id., at pp. 4810-4811.
4 394 Phil. 608; 340 SCRA 289 (2000).
49
VOL. 805, OCTOBER 5, 2016 49

executory, SMC obstinately refused and continued to refuse to deliver the treasury shares and all
the dividends therefrom.5
The Manifestation and Omnibus Motion of the Republic compelled me, as one of those who
concurred in the Resolution dated 4 September 2012, to reflect on whether this Court indeed made
a mistake in making the questioned modification. I humbly submit that it did.
The modification in the Resolution dated 4 September 2012 stemmed from that which was dated
17 September 2009, approving the conversion of the 753,848,312 SMC Common Shares registered
in the name of CIIF companies to the SMC Series 1 Preferred Shares of 753,848,312. It also
pg. 1199
ordered that the preferred shares remain in custodia legis, and that their ownership be subject to a
final ownership determination by the Court.
Notably, a thorough reading of the Resolution dated 17 September 2009 shows nowhere was there
any reference to the amount “33,133,266.”
What is clear, however, is the following statement in the Resolution dated 17 September 2009:
As records show, PCGG sequestered the 753,848,312 SMC common shares registered in the
name of CIIF companies on April 7, 1986. From that time on, these sequestered shares became
subject to the management, supervision, and control of PCGG, pursuant to Executive Order No.
(EO) 1, Series of 1986, creating that commission x x x6 (Emphasis supplied)
The first sentence above has for its reference Republic v. Sandiganbayan,7 the pertinent portion of
which reads:
_______________
5 Rollo, p. 4818.
6 Philippine Coconut Producers Federation, Inc. v. Republic, 616 Phil. 94, 108; 600 SCRA 102,
118 (2009).
7 541 Phil. 24; 512 SCRA 25 (2007).
50

On April 7, 1986, the PCGG sequestered the subject 33.1 Million SMC shares, the PCGG
noting in its letter to Soriano III that said shares came “from the shareholdings of Mr. Eduardo
Cojuangco, Jr. which are listed [as owned by the 14 CIIF Holding Companies].”8 (Emphasis
supplied)
The date “7 April 1986” is crucial here, because in San Miguel Corporation v. Sandiganbayan,9
that was the date when the PCGG sequestered the 33,133,266 shares. To be precise, this Court
ruled:
pg. 1200
It appears that on March 26, 1986, the Coconut Industry Investment Fund Holding Companies
(“CIIF” for brevity) sold 33,133,266 shares of the outstanding capital stock of San Miguel
Corporation to Andres Soriano III of the SMC Group payable in four (4) installments.
On April 1, 1986, Andres Soriano III paid the initial P500 million to the UCPB as administrator
of the CIIF. The sale was transacted through the stock exchange and the shares were registered in
the name of Anscor Hagedorn Securities, Inc. (AHSI).
On April 7, 1986, the Presidential Commission on Good Government (PCGG) then led by
the former President of the Senate, the Honorable Jovito R. Salonga, sequestered the shares
of stock subject of the sale.10 (Emphases supplied)
From the foregoing, the Resolution dated 17 September 2009 created equivalence between the
33,133,266 shares of the outstanding capital stock of SMC that were sold by the CIIF companies
to Andres Soriano III and eventually sequestered by the PCGG on 7 April 1986, on the one hand,
and the converted 753,848,312 SMC Series 1 Preferred Shares that
_______________
8 Id., at p. 36; p. 34.
10 Id., at pp. 620-621; pp. 295-296.
51
VOL. 805, OCTOBER 5, 2016 51

were registered in the name of the CIIF companies and ordered to remain in custodia legis, on the
other.
This supposed equivalence was repeated in the Resolution dated 4 September 2012, to wit:
As of 1983, the Class A and B San Miguel Corporation (SMC) common shares in the names of
the 14 CIIF Holding Companies are 33,133,266 shares. From 1983 to November 19, 2009 when
the Republic of the Philippines representing the Presidential Commission on Good Government
(PCGG) filed the “Motion to Approve Sale of CIIF SMC Series 1 Preferred Shares,” the common
pg. 1201
shares of the CIIF Holding companies increased to 753,848,312 Class A and B SMC common
shares.11 (Emphases supplied)
The use of the word “increased” connotes that by the mere passage of time and appreciation of
value, the former 33,133,266 shares became 753,848,312.
In fact, even the ponente cited12 this portion of the Resolution dated 4 September 2012 showing
that the 33,133,266 common shares in the names of the 14 CIIF companies “increased” to
753,848,312 Class A and B SMC common shares. Notably, there was no mention of any deduction
involving the 25.45 million treasury shares.
It thus became a matter of concern for me when, later in the Resolution, it was ruled that the
753,848,312 SMC Series 1 Preferred Shares as reflected in the fallo of the Resolution dated 4
September 2012 “are the only remaining shares in the name of the CIIF companies that can
be, and were in fact, declared as owned by the Government,”13 due to the deduction of the
25.45 million SMC treasury shares and the 5.5 million shares in the form of arbitration fees for the
PCGG.
_______________
11 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, supra note 1 at p.

46; p. 607.
12 Resolution dated 5 October 2016, p. 8.
13 Id., at pp. 18-19.
52

If the Court made a mistake in the modification of the Resolution dated 4 September 2012, it seems
the most opportune time to correct that inadvertence. The Court has always proceeded under the
assumption of equivalence between the 33,133,266 common shares and the 753,848,312 SMC
Series 1 Preferred Shares. If it is now apparent that there is no such equivalence, then this Court
may want to revisit the modification made in the Resolution dated 4 September 2012. Our Decision
dated 24 January 2012 should stand, in that the entire 33,133,266 common shares as of 1983 are
declared owned by the government and, as such, are to be used only for the benefit of all coconut
farmers and for the development of the coconut industry. Hence, the entire 33,133,266 common
pg. 1202
shares as of 1983 in whatever form they may now be — should be ordered reconveyed to the
government.
Approval of the Compromise

Agreement
We note the provisions of the Compromise Agreement and Amicable Settlement14 (Compromise
Agreement) forged between SMC, Neptunia Corporation Limited, Andres Soriano III, and
ANSCOR Hagedorn Securities, Inc. (SMC Group); and United Coconut Planters Bank, the 14
corporations collectively referred to as the CIIF Holding Corporations, and the 10 corporations
collectively referred to as the CIIF Copra Trading Companies (UCPB Group). The pertinent
provisions of the agreement are quoted as follows:
1. All the terms of this Agreement are subject to approval by the Presidential Commission
on Good Government (PCGG) as may be required by Executive Orders numbered 1, 14, and 14-
A. This Agreement and the PCGG approval thereof shall be submitted to the Sandiganbayan.
_______________
14 Rollo, pp. 1658-1667.
15
VOL. 805, OCTOBER 5, 2016 15

xxxx
3.1. The sale of the shares covered by and corresponding to the first installment of the
1986 Stock Purchase Agreement consisting of Five Million SMC Shares is hereby
recognized by the parties as valid and effective as of 1 April 1986. Accordingly, said
shares and all stock and cash dividends declared thereon after 1 April 1986 shall
pertain, and are hereby assigned, to SMC. x x x
3.2. The First Installment Shares shall revert to the SMC treasury for dispersal
pursuant to the SMC Stock Dispersal Plan attached as Annex “A-1” hereof. The
pg. 1203
parties are aware that these First Installment Shares shall be sold to raise funds at the
soonest possible time for the expansion program of SMC. x x x
3.3. The sale of the shares covered by and corresponding to the second, third and
fourth installments of the 1986 Stock Purchase Agreement is hereby rescinded
effective 1 April 1986 and deemed null and void, and of no force and effect.
Accordingly, all stock and cash dividends declared after 1 April 1986 corresponding
to the second, third and fourth installments shall pertain to CIIF Holding Corporations.
xxxx
5. Unless extended by mutual agreement of the parties, the “Delivery Date” shall be on the 10th
Day from and after receipt by any party of the notice of approval of this Compromise Agreement
and Amicable Settlement by the Sandiganbayan. Upon receipt of such notice, all other parties shall
be immediately informed.15 (Emphases supplied)
_______________
15 Id., at pp. 1659 and 1664; Compromise Agreement and Amicable Settlement, pp. 2 and 7.
54

The parties submitted the Compromise Agreement to the Sandiganbayan for approval on 23 March
1990.16 While the Republic opposed, the PCGG interposed no objection to the implementation
thereof, subject to certain conditions.17 Fore-
_______________
16 San Miguel Corporation v. Sandiganbayan, supra note 4 at p. 621; p. 297.
17 PCGG interposed no objection to the implementation of the Compromise Agreement subject

to the incorporation of the following provisions:
1. As stated in the COMPROMISE, the 5 million SMC shares (now 26,450,000) paid for by
the P500 million first installment shall be delivered to SMC, kept in treasury, and sold as
soon as feasible in accordance with a plan to be agreed upon by the Commission and SMC;
pg. 1204
provided, that SMC shall not unreasonably withhold its consent to a sales plan approved by
PCGG.
The P500 million paid by SMC as first installment shall be accounted for by UCPB and the
CIIF companies to the extent respectively received by them, and any portion thereof in
excess of the usual business needs of the possessor shall be delivered by it to the
Commission, to be held in escrow for the ultimate owner.
2. On Delivery Date, the stock certificates for the balance of the SHARES in the name of
the 14 holding companies shall be delivered to PCGG and deposited with the Central Bank
for safekeeping to await their sale in accordance with the plan of dispersal that PCGG and
UCPB shall agree to establish for them. As soon as practicable, but with proper account of
market conditions, all those shares shall be sold, and the proceeds thereof disposed as
provided below. UCPB shall not unreasonably withhold its consent to a sales plan approved
by PCGG in accordance with this paragraph.
3. So much of the proceeds of the sale as may be necessary shall be used a) to finance the
obligations of the CIIF Companies under the COMPROMISE, and b) to liquidate the
obligations of the CIIF Companies to UCPB for the purchase price of the SHARES. The
balance shall be kept by the PCGG in escrow to await final judicial determina-
55
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most among the conditions imposed by the PCGG is that its consent to the transfer of the
sequestered shares of stock and to the lifting of the sequestration to permit the transfer shall be
effective only when the Compromise Agreement is approved by the Sandiganbayan.
The SMC and UCPB Group filed a Joint Manifestation that they had implemented the Compromise
Agreement in accordance with the conditions set by the PCGG.18 On 5 July 1991, the
Sandiganbayan noted the implementation “with the observation that the PCGG, the UCPB Group
and the SMC Group shall always act with due regard to the sequestered character of the shares of
stock involved herein as well as the
_______________
tion of the ownership of the various coconut-related companies and of all the other assets
involved here. The cash dividends that have been declared on the SHARES may be applied
for the above purposes before proceeds from the sale of shares are realized. The balance of
such cash dividends shall be held in escrow in the same manner as the sales proceeds.
pg. 1205
4. All SHARES shall continue to be sequestered even beyond Delivery Date. Sequestration
on them shall be lifted as they are sold consequent to approval of the sale by the
Sandiganbayan, and in accordance with the dispersal plan approved by the Commission. All
of the SHARES that are unsold will continue to be voted by PCGG while still unsold.
5. The consent of PCGG to the transfer of the sequestered shares of stock in accordance with
the COMPROMISE, and to the lifting of the sequestration thereon to permit such transfer,
shall be effective only when approved by the Sandiganbayan. The Commission makes no
determination of the legal rights of the parties as against each other. The consent it gives
here conforms to its duty to care for the sequestered assets, and to its purpose to prevent the
repetition of the national plunder. It is not to be construed as indicating any recognition of
the legality or sufficiency of any act of any of the parties. (Id., at pp. 624-626; pp. 299-300)
56

fruits thereof, more particularly to prevent the loss or dissipation of their value”19 and “without
prejudice to whatever might be the resolution of this Court on the Motion to Nullify the
Compromise Agreement filed by Eduardo Cojuangco, Jr.”20
On 25 October 1991, the Sandiganbayan ordered SMC to deliver to the PCGG the 25.45 million
treasury shares, subject of the Compromise Agreement.21 On 18 March 1992, after denying the
motion for reconsideration filed by the SMC Group, the Sandiganbayan further ordered it to pay
dividends on the said treasury shares and to deliver these to the PCGG.22
When a contract is subject to a suspensive condition, its birth or effectivity can take place only if
and when the condition happens or is fulfilled.23 In this case, the Sandiganbayan has not approved
the Compromise Agreement or made any ruling thereon. Thus, without the fulfillment of the
condition that the imprimatur of the Sandiganbayan be obtained, the Compromise Agreement can
neither be considered effective nor the source of rights on the treasury shares as invoked by SMC.
When the Sandiganbayan Resolutions dated 25 October 1991 and 18 March 1992 were assailed
in a petition for certiorari, the Court — speaking through then Associate Justice, later Chief
Justice, Reynato S. Puno — ruled that there was no grave abuse of discretion on the part of the
Sandiganbayan when the latter ordered the SMC Group to deliver the treasury shares and pay the
corresponding dividends thereon to the PCGG.24
_______________
pg. 1206
19 Id., at p. 629; p. 303.
20 Id.
21 Id., at p. 631; p. 305.
22 Id.
23 Coronel v. Court of Appeals, G.R. No. 103577, 7 October 1996, 263 SCRA 15.
57
VOL. 805, OCTOBER 5, 2016 57

The Court ruled that the Compromise Agreement involved sequestered shares of stock, the
ownership of which was still under litigation. Because it is not yet known whether the sequestered
shares are part of the alleged ill-gotten wealth of former President Marcos and his “cronies,” any
disposition concerning these shares falls within the unquestionable jurisdiction of the
Sandiganbayan and is subject to its approval. Furthermore, its order regarding the treasury shares
is merely preservative in nature.
The Court quoted with approval the Sandiganbayan ruling with regard to the contention of the
SMC Group that the latter could no longer turn over the certificates of stock for the 25.45 million
sequestered shares, because they had become treasury shares.25 The Sandiganbayan ruled that
these sequestered shares can only become SMC’s treasury shares or reacquired property if the sale
between the UCPB Group and the SMC Group is allowed. Moreover, SMC cannot be deemed to
have reacquired the shares, because it is only one among several buyers thereof. Even assuming
that these have indeed become treasury shares, the Sandiganbayan ruled that they remain
sequestered and cannot be subject to acts that would remove them from custodia legis.
Considering the foregoing, the following pronouncements in the Resolution appears to be not in
order:
1. “[T]he Compromise Agreement partook of the nature of a bona fide proprietary business
transaction of the government.”26
pg. 1207
2. “[T]he PCGG, the government’s primary representative in sequestration proceedings,
virtually gave its consent to the SMC’s continuous possession of the 25.45 million shares
by approving the Compromise Agreement on which SMC predicates its
_______________
25 Id., at pp. 639-642; pp. 316-318.
58

claim over the shares and continuing its possession of the so-called ‘arbitration fee’ shares
that came out of the same Compromise Agreement.”27
3. “[T]he Republic had a hand in the transactions that eventually led to the designation of
the more than 25.45 million shares as SMC treasury shares.”28
The Compromise Agreement requires the Sandiganbayan’s approval for two things: (1) the
consent of the PCGG; and (2) the effectivity of the agreement in general. The SMC and UCPB
Group needed that approval in a form that was unequivocal, and not merely implied from a lack
of disapproval. Absent such approval, there is no Compromise Agreement to speak of. No rights
can emanate from that transaction, because its existence depends on the fulfillment of a condition
voluntarily imposed by the parties.
For the Court to require the Republic to return the P500 million to SMC at this time would be
tantamount to saying that the Compromise Agreement has been disapproved by the
Sandiganbayan. Again, there has been no pronouncement regarding the approval or disapproval
of the Compromise Agreement. Thus, the declaration that the Republic had been unjustly enriched
or was estopped from claiming ownership over the 25.45 million treasury shares may prove to be
too early if not unfair.
There seems to be no basis for the Court to conclude that “the Republic plans to keep the 500
million along with the 25.45 million shares.”29 Likewise without apparent basis is the statement
of the Court that to “resolve the incident at bar [would be] to benefit the Republic at the expense
of SMC.”30 These statements may be properly juxtaposed with the aver-
pg. 1208
_______________
27 Id., at p. 21.
28 Id., at p. 22.
29 Id., at p. 23.
30 Id.
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VOL. 805, OCTOBER 5, 2016 59

ment of the Republic that the present value of the shares is “17.65 billion pesos”31 had they not
been reverted to the SMC treasury pursuant to the implementation of the Compromise Agreement
without the imprimatur of the Sandiganbayan.
There should be an effort to distinguish between the government ownership of the CIIF companies
and the entire CIIF block of SMC shares on the one hand and the validity of the Compromise
Agreement on the other. The first has been unequivocally declared by this Court in the Decision
dated 24 January 2012. The second is still pending before the Sandiganbayan. The correctness of
the modification made in the Resolution dated 4 September 2012 bears heavily on the first, while
the question regarding the 5.5 million shares in the form of arbitration fees for the PCGG and the
25.45 million SMC treasury shares is dependent on the second. The first is our concern at the
moment; the second is not.
The Resolution has correctly stated that the issues regarding SMC’s right over the 25.45 million
treasury shares remain unresolved.32 As such, it is not proper for the Court to declare that the
753,848,312 SMC SMC Series 1 Preferred Shares are the only ones that remained of the
33,133,266 CIIF block of SMC shares, because the 5.5 million shares in the form of arbitration
fees for the PCGG and the 25.45 million SMC treasury shares should no longer be included therein.
The appropriate course of action is to order all 33,133,266 CIIF block of SMC shares to be
reconveyed to the government and then thresh out in a separate proceeding whether SMC had a
right over the 25.45 million shares allegedly bought under the Compromise Agreement. This
Resolution may even be utilized by SMC to invoke the principle of res judicata in that envisioned
separate action or proceeding to be instituted by the Republic.33
_______________
31 Rollo, p. 813.
pg. 1209
33 Id.
60

It is inconsistent for the Resolution to claim that “the manner of SMC’s acquisition of the shares
was arms-length and not made through public funds,”34 and yet point out that the SMC board was
dominated by PCGG nominees and other government representatives at the time the Compromise
Agreement was signed.35 That kind of influence, as illustrated by the Resolution, negates the
meaning of an arms-length transaction.
Furthermore, the circumstances surrounding the acquisition of the shares make it suspect. The sale
of the 33,133,266 common shares took place a month after the EDSA Revolution.36 On 1 April
1986 or six days before the PCGG sequestered the shares of stock subject of the sale, the initial
installment of P500 million was paid.37 The timing practically shows that the sale was made in
order to avoid scrutiny by the succeeding administration.
The Right of SMC to be Heard
I find myself unable to agree with the pronouncement in the Resolution that SMC “was not given
a chance to justify, let alone ventilate, its claim over the 25.45 million shares it has in its
possession.”38
Despite the denial by the Sandiganbayan of the Motion for Intervention filed by SMC in Civil
Case No. 0033-F, the latter was given many opportunities to air its side, albeit many chances also
to demonstrate its obstinate refusal to comply with the Sandiganbayan directives.
When SMC and UCPB filed a Joint Manifestation informing the anti-graft court that they had
implemented the Com-
_______________
34 Id., at p. 15.
pg. 1210
35 Id., at p. 21.
37 Id., at p. 621; pp. 296-297.
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VOL. 805, OCTOBER 5, 2016 61

promise Agreement; that the certificates of stocks were surrendered to the SMC Corporate
Secretary; and that the certificates for the 25.45 million shares were registered in the name of the
SMC as treasury shares, the anti-graft court issued the Resolution dated 23 July 1991 requiring
that all the certificates of stock representing all of the sequestered shares be physically deposited
with the PCGG.
Rather than comply with the directive, SMC instead filed yet another Manifestation and Motion
dated 21 August 1991 praying that it be allowed to keep the certificates of stock representing the
sequestered shares.
This eventually led to the issuance of Resolutions dated 24 October 1991 and 18 March 1992 by
the Sandiganbayan, the dispositive portions of which provide:
WHEREFORE, the Manifestation and Motion of the “SMC Group” dated August 21, 1991, which
in effect, seeks a reconsideration of this Court’s resolution of July 23, 1991 requiring that all
Certificates of Stock representing the sequestered shares in the SMC be physically deposited with
the Presidential Commission on Good Government is denied.
Additionally, the San Miguel Corporation is now ordered:
1) To inform this Court of the amount of the cash dividends due to or actually earned by the
25,450,000 shares of stock represented by the Stock Certificates No. A0004129 for
15,274,484 class “A” shares and No. B00015556 for 10,175,516 calls “B” shares; and
2) To deliver the check representing that amount to the Presidential Commission on Good
Government for the latter to deposit in or place with government bank offering at the best
terms and conditions.
pg. 1211
62

This deposit or placement shall be made in the name of the Presidential Commission on Good
Government in trust for whomever said shares of stock may eventually be adjudicated.
Future dividends, whether of cash and/or of stock, which may hereafter be declared on the shares
represented by the above stock certificates shall be similarly treated by the Presidential
Commission on Good Government until further orders from this Court.
Compliance hereon shall be reported to this Court:
a. By the San Miguel Corporation within ten (10) days from receipt hereof; and
b. By the Presidential Commission on Good Government, with regard to its receipt and
custody of the two certificates of stock above mentioned as well as with regard to its
placement or deposit of the cash dividends thereon, within twenty (20) days from receipt
hereof.
The individual Commissioners of the Presidential Commission on Good Government shall be

responsible to this Court for the care, custody and disposition of the dividends, subject matter
hereof.
SO ORDERED.39
xxxx
WHEREFORE, the San Miguel Corporation’s Motion for Reconsideration [of the Resolution
dated] October 24, 1991 is DENIED.
The San Miguel Corporation through its President and Corporate Secretary are now ordered:
1. To deliver to PCGG the 25.45 million shares represented by the following certificates of
stock:
A 0004129 15,274,484 shares
_______________
pg. 1212
39 Rollo, pp. 802-803.
63
VOL. 805, OCTOBER 5, 2016 63

B 0015556 10,175,516
and the other 1 million shares of stock forming part of the so-called First Installment Shares;
2. To deliver to PCGG the cash and/or stock dividends which have accrued to the above
shares of stock from March 26, 1986 to dates and which might have further accrued thereto
had not said shares of stock been declared Treasury Shares;
3. To report compliance therewith within fifteen (15) days from receipt hereof.
SO ORDERED.40
These Resolutions were later affirmed by this Court in San Miguel Corporation v. Sandiganbayan,
which in turn became final and executory on 27 June 2001.
Yet again, when the Republic filed its Urgent Motion41 before this Court to direct SMC to comply
with the above mentioned Sandiganbayan Resolutions, SMC once more ventilated its position as
it filed its Comment.42 It prayed that the Urgent Motion be denied for lack of merit and reasoned
that this Court has no jurisdiction to act on the motion since this Court never acquired jurisdiction
over case SB No. 0102;43 the Resolutions are merely interlocutory and have no life independent
of SB No. 0102 where no final judgment has been made rendering the said resolutions functus
officio;44 and in any case, the SMC treasury shares are not part of the shares adjudicated in Civil
Case No. 0033-F and have been validly
_______________
40 Id., at pp. 803-804.
41 Id., at pp. 794-820.
42 Id., at pp. 4583-4628.
43 Id., at p. 4596.
pg. 1213
44 Id., at p. 4605.
64

transferred from the CIIF Companies to the SMC on the basis of a perfected contract of sale and
an effective compromise.45
SMC also filed a Comment46 on the Republic’s Manifestation and Omnibus Motion opposing the
relief demanded by the Republic. Certainly, these pleadings and the reliefs SMC asked through
these pleadings cannot be overlooked.
More importantly, in that Comment, SMC in fact reiterated the following allegations it had made
in its Motion to Intervene in Civil Case No. 0033:
1.28. On top of all of the above, SMC filed before the Sandiganbayan in Civil Case No. 0033-F a
“Motion to Intervene” dated February 2, 2004 through a “Complaint-in-Intervention” of even date
in which it alleged, as follows:
2. SMC has an interest in the matter in dispute between plaintiff and defendants CIIF companies,
being the owner by purchase of a portion of the so-called “CIIF block of SMC shares of stock”
which plaintiff seeks to recover in this case as alleged ill-gotten wealth.47 (Emphasis supplied)
To my mind, SMC made a judicial admission, which has been elucidated by this Court in this wise:
A party who judicially admits a fact cannot later challenge that fact as judicial admissions are a
waiver of proof; production of evidence is dispensed with. A judicial admission also removes an
admitted fact from the field of controversy. Consequently, an admission made in the pleadings
cannot be controverted by the party making such admission and are conclusive as to such party,
and all proofs to the contrary or inconsistent therewith
_______________
45 Id., at p. 4606.
46 Id., at pp. 5180-5234.
pg. 1214
47 Id., at p. 5228; Comment of San Miguel Corporation on the Manifestation and Omnibus
Motion, p. 44.
65
VOL. 805, OCTOBER 5, 2016 65

should be ignored, whether objection is interposed by the party or not. The allegations, statements
or admissions contained in a pleading are conclusive as against the pleader. A party cannot
subsequently take a position contrary of or inconsistent with what was pleaded.48
SMC had its chances to be heard, asked for reliefs, and as discussed above, even admitted that the
treasury shares were part of the entire 33,133,266 SMC common shares that were sequestered and
kept under legal custody in Civil Case No. 0033.
On this score, I must point out that in the Decision dated 24 January 2012, the Court has already
made a pronouncement on the nature of the CIIF companies and the CIIF block of SMC shares as
follows:
Since the CIIF companies and the CIIF block of SMC shares were acquired using coconut levy
funds — funds, which have been established to be public in character — it goes without saying
that these acquired corporations and assets ought to be regarded and treated as government assets.
Being government properties, they are accordingly owned by the Government, for the coconut
industry pursuant to currently existing laws.
It may be conceded hypothetically, as COCOFED, et al. urge, that the 14 CIIF holding companies
acquired the SMC shares in question using advances from the CIIF companies and from UCPB
loans. But there can be no gainsaying that the same advances and UCPB loans are public in
character, constituting as they do assets of the 14 holding companies, which in turn are wholly-
owned subsidiaries of the 6 CIIF Oil Mills. And these oil mills were organized, capitalized and/or
financed using coconut levy funds. In net effect, the CIIF block of SMC shares are simply the
fruits of the coconut levy funds acquired at the expense of the coconut industry. In Repub-
_______________
48 Alfelor v. Halasan, 520 Phil. 982, 991; 486 SCRA 451, 459-460 (2006).
pg. 1215
66

lic v. COCOFED, the En Banc Court, speaking through Justice (later Chief Justice) Artemio
Panganiban, stated: “Because the subject UCPB shares were acquired with government funds, the
government becomes their prima facie beneficial and true owner.” By parity of reasoning, the
adverted block of SMC shares, acquired as they were with government funds, belong to the
government as, at the very least, their beneficial and true owner.
We thus affirm the decision of the Sandiganbayan on this point. But as We have earlier discussed,
reiterating our holding in Republic v. COCOFED, the States avowed policy or purpose in creating
the coconut levy fund is for the development of the entire coconut industry, which is one of the
major industries that promotes sustained economic stability, and not merely the livelihood of a
significant segment of the population. Accordingly, We sustain the ruling of the Sandiganbayan
in CC No. 0033-F that the CIIF companies and the CIIF block of SMC shares are public funds
necessary owned by the Government. We, however, modify the same in the following wise: These
shares shall belong to the Government, which shall be used only for the benefit of the coconut
farmers and for the development of the coconut industry.49
It was only because of the obstinate refusal of SMC to heed the Sandiganbayan’s directives to
deliver the shares, and its stark circumvention of the sequestration proceedings that the
Compromise Agreement was brazenly implemented despite the absence of the Sandiganbayan’s
approval. This Court cannot countenance these acts of SMC by holding it blameless and putting
the Republic in estoppel through the delayed action of its agents.
I therefore vote to GRANT the Republic’s motion.
_______________
49 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, 679 Phil. 508, 621-
622; 663 SCRA 514, 623-624 (2012).
67
VOL. 805, OCTOBER 5, 2016 67
pg. 1216
DISSENTING OPINION
LEONEN, J.:
This Court has just failed to do justice for millions of impoverished coconut farmers.
By denying the Manifestation and Omnibus Motion filed by the Republic of the Philippines, the
ponencia effectively reconsiders the long-settled cases of San Miguel Corporation, et al. v.
Sandiganbayan (First Division),1 COCOFED, et al. v. Republic,2 and Republic v. COCOFED, et
al.3 It also effectively weakens the claim of millions of impoverished coconut farmers to profitable
assets bought through exactions imposed on them throughout Martial Law. In the process, the rich
become richer; the poor, poorer.
Before this Court is a Manifestation and Omnibus Motion4 filed by the Republic of the Philippines,
alleging that this Court’s September 4, 2012 Resolution5 did not include 25.45 million San Miguel
Corporation treasury shares for reconveyance to the Republic as part of the “coco levy” funds. The
treasury shares were the subject of a “Compromise Agreement” dated March 20 and 22, 1990,
entered into by San Miguel Corporation and the United Coconut Planters Bank. San Miguel
Corporation subsequently converted these shares into treasury shares.6
_______________
1 394 Phil. 608; 340 SCRA 289 (2000) [Per J. Puno, En Banc].
2 679 Phil. 508; 663 SCRA 514 (2012) [Per J. Velasco, Jr., En Banc] and 694 Phil. 43; 679 SCRA
604 (2012) [Per J. Velasco, Jr., En Banc].
3 423 Phil. 735; 372 SCRA 462 (2001) [Per J. Panganiban, En Banc].
4 Rollo, pp. 4800-4855.
5 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, supra.
6 San Miguel Corporation v. Sandiganbayan (First Division), supra at p. 624; pp. 317, 319.
68
pg. 1217
The “Compromise Agreement” was never approved by the Sandiganbayan. The subject of the
“Compromise Agreement” now at issue was required by this Court to be transferred to the
Presidential Commission on Good Governance (PCGG). San Miguel Corporation refused to
transfer the certificates of the shares of stock and, in various comments filed before this Court, still
refused to transfer the shares in question.
A brief genesis of the “coco levy” funds must first be discussed in order to clarify which San
Miguel Corporation treasury shares are now being claimed by the Republic.
During the Marcos regime, a levy was instituted on the sale of coconut products, purportedly for
the benefit of the coconut industry. Four (4) different levy funds were created by various laws.
The first was the Coconut Investment Fund, created under Republic Act No. 6260.7 This Fund
was derived from the levy of P0.55 for the first domestic sale of every 100 kilograms of copra or
its equivalent coconut product. Fifty centavos (P0.50) would accrue to the Fund, three centavos
(P0.03) would go to the Philippine Coconut Administration, and two centavos (P0.02) would be
at the disposition of the Philippine Coconut Producers Federation (COCOFED).8 The Fund was
to be “used exclusively to pay the subscription by the Philippine Government for and in behalf of
the coconut farmers to the capital stock of [the Coconut Investment Company].”9
The Coconut Investment Company would “grant medium and long term loans to Filipino citizens
or enterprises”10 or
_______________
7 Rep. Act No. 6260 (1971), Coconut Investment Act.
8 Id., Sec. 8. See also Philippine Coconut Producers Federation, Inc. (COCOFED) v.
Presidential Commission on Good Government, 258-A Phil. 1; 178 SCRA 236 (1989) [Per J.
Narvasa, En Banc].
9 Id.
10 Id., Sec. 5(a).
69
VOL. 805, OCTOBER 5, 2016 69
pg. 1218
“invest in shares of stock of corporations”11 for “the establishment, development and expansion
of new and/or existing coconut agricultural, industrial or other productive enterprises with proven
profitability or great profit potential.”12 It was also empowered to do acts necessary for the
development of the coconut industry.13 The Fund collected from the levy would be used to pay
for shares of stock in the Coconut Investment Company, which were held by government on behalf
of the coconut farmers, the transfer of which would be upon “full payment of the authorized capital
stock . . . or upon termination of a ten-year period from the start of the collection of the levy as
provided in section eight hereof, whichever comes first.”14
The second was the Coconut Consumer Stabilization Fund, created by Presidential Decree No.
276.15 The Fund was derived from the levy of P15.00 for every 100 kilograms of copra resecada
or its equivalent product in order to “subsidize the sale of coconut-based products at prices set by
the Price Control Council.”16 The Fund was supposed to last only one (1) year;17 however,
Presidential Decree No. 41418 extended its duration indefinitely.
The third was the Coconut Industry Development Fund, created by Presidential Decree No.
582.19 The Fund
_______________
11 Id., Sec. 5(b).
12 Id., Sec. 5(a).
13 Id., Sec. 5.
14 Id., Sec. 7.
15 Pres. Decree No. 276 (1973), Establishing a Coconut Consumers Stabilization Fund.
16 Id., Sec. 1(b).
17 Id., Sec. 2.
18 Pres. Decree No. 414 (1974), Further Amending Presidential Decree No. 232 as amended.
Pres. Decree No. 232 created the Philippine Coconut Authority.
19 Pres. Decree No. 582 (1974), Further Amending Presidential Decree No. 232, as amended.
70
pg. 1219
was derived from the levy of “Twenty centavos (P0.20) per kilogram of copra resecada or its
equivalent out of its current collections of the coconut [consumer] stabilization levy”20 for the
“establishment, operation and maintenance of a hybrid coconut seednut farm.”21
The previous “coco levy” laws were codified into Presidential Decree No. 961, otherwise known
as the Coconut Industry Code,22 in 1976. The Coconut Industry Code was later amended in 1978
by Presidential Decree No. 1468, or the Revised Coconut Industry Code.23
Article III, Section 924 of the Revised Coconut Industry Code authorized the use of “the Coconut
Consumers Stabilization Fund and/or the Coconut Industry Development Fund not required to
finance the replanting program”25 for the pur-
_______________
20 Id., Sec. 2.
21 Id.
22 Pres. Decree No. 961 (1976).
23 Pres. Decree No. 1468 (1978).
SECTION 9. Investments for the Benefit of the Coconut Farmers.—Notwithstanding any

law to the contrary, the bank acquired for the benefit of the coconut farmers under PD 755
is hereby given full power and authority to make investments in the form of shares of stock
in corporations organized, for the purpose of engaging in the establishment and the operation
of industries and commercial activities and other allied business undertakings relating to the
coconut and other palm oils industry in all its aspects and the establishment of a research
into the commercial and industrial uses of coconut and other oil industry. For that purpose,
the Authority shall, from time to time, ascertain how much of the collections of the Coconut
Consumers Stabilization Fund and/or the Coconut Industry Development Fund is not
required to finance the replanting program and other purposes herein authorized and such
ascertained surplus shall be utilized by the bank for the investments herein authorized.
25 Pres. Decree No. 1468 (1978), Sec. 9.
71
pg. 1220
VOL. 805, OCTOBER 5, 2016 71
chase “of shares of stock in corporations organized, for the purpose of engaging in the
establishment and the operation of industries and commercial activities and other allied business
undertakings relating to the coconut and other palm oils industry in all its aspects.”26 These
investments were eventually referred to as the Coconut Industry Investment Fund.27 The First
United Bank was acquired and renamed as the United Coconut Planters Bank in order to make
investments using the Coconut Industry Investment Fund.28
The fourth fund created by the levies was the Coconut Industry Stabilization Fund, created by
Presidential Decree No. 1699.29 In 1980, the collection of the Coconut Consumer Stabilization
Fund and the Coconut Industry Development Fund were suspended due to the “drastic decline of
coconut prices.”30 In 1981, however, the collection of the levies was brought back31 with the
Coconut Consumer Stabilization Fund renamed as the Coconut Industry Stabilization Fund.32
The levy imposed was P50.00 for every 100 kilos copra resecada or its equivalent product.33 The
proceeds of the Fund were to be divided “[t]o finance the cost of the coconut hybrid replanting
program”;34 “[t]o defray the cost of the scholarship program for the deserving and gifted children
of the coconut farmers”;35 “[t]o defray the cost of the life and accident insur-
_______________
26 Id.
27 See Philippine Coconut Producers Federation, Inc. (COCOFED) v. Presidential Commission

on Good Government, supra note 8 at pp. 8-9; pp. 243-244.
28 See Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, supra note 2 at
p. 532; pp. 524-525.
29 Pres. Decree No. 1699 (1980).
30 Id.
31 See Pres. Decree No. 1841 (1981).
32 Id., Sec. 6.
33 Id., Sec. 1.
34 Id.
35 Id.
pg. 1221
72

ance on the lives of the coconut farmers”;36 ”[t]o defray the operating expenses of the Philippine
Coconut Producers Federation”;37 and “the Philippine Coconut Authority”; 38 and “[t]o defray
the costs of the coconut industry rationalization program.”39
The authoritarian Marcos regime ended with his sudden departure following major mobilizations
in what is now referred to as the People Power Revolution on February 24, 1986.40
On March 19, 1986, the PCGG sequestered, among others, shares of stock of the United Coconut
Planters Bank purportedly issued to 1,405,366 coconut farmers.41
The sequestration of the shares of stock became the subject of Case No. 0033 before the
Sandiganbayan First Division against Eduardo Cojuangco, Jr. (Cojuangco, Jr.) and the heads and
incorporators of the 14 Coconut Industry Investment Fund Companies (CIIF Companies).42
The complaint against Cojuangco, Jr. and CIIF Companies alleged that:
1) in 1975, with the active collaboration of his codefendants, Cojuangco manipulated the
purchase by the Philippine Coconut Authority (PCA) of 72.2% of the outstanding capital stock of
the First United Bank (FUB)
_______________
36 Id.
37 Id.
38 Id.
39 Id.
40 See Javier v. Commission on Elections, 228 Phil. 193; 144 SCRA 194 (1986) [Per J. Cruz, En
Banc].
41 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Presidential Commission on

Good Government, supra note 8 at p. 12; pp. 467-468.
42 Republic v. Sandiganbayan (First Division), 310 Phil. 401, 449-460; 240 SCRA 379, 417
(1995) [Per CJ. Narvasa, En Banc]. The 14 CIIF Companies are also referred to as the UCPB
Group.
pg. 1222
73
VOL. 805, OCTOBER 5, 2016 73

which was subsequently converted into a universal bank named United Coconut Planters Bank
(UCPB); this was accomplished by the use of P85,773,100.00 initially from the Coconut
Consumers Stabilization Fund (CCSF) levy — contrary to law and the specific purposes for which
said levy was imposed and collected under PD 276 — and under anomalous circumstances, to wit:
a) he (Cojuangco) used the coconut levy funds to exercise his private option to buy
controlling interest in FUB; claiming that the 72.2% of the outstanding capital stock of FUB
could only be purchased and transferred through the exercise of his “personal and exclusive
option to acquire the 144,000 shares” of said bank, he and the Philippine Coconut Authority
(PCA), represented by Maria Clara Lobregat, executed on May 26, 1975, a purchase
agreement providing, among others, for the cession to him as compensation thereof 95,383
shares worth P1,444,000.00, with the further condition that he shall manage and control the
bank as Director and President for a term of five (5) years renewable for another five (5)
years, and have authority to name for election three (3) persons of his choice as members of
the bank’s Board of Directors;
b) he caused the issuance by Pres. Marcos of PD 755: (a) declaring that the coconut levy
funds shall not be considered special fiduciary and trust funds and do not form part of the
general funds of the National Government — repealing for that purpose PD Nos. 276 and
414 declaring the character of the coconut levy funds as special fiduciary trust and
governmental funds, (b) confirming the agreement between him (Cojuangco) and PCA
regarding the purchase of FUB, by incorporating that private commercial agreement by
reference in PD 755;
c) to consolidate his control of UCPB, he (Cojuangco) imposed as a condition attendant

upon his purchase of its stock that he should receive and own one out of every nine shares
given to PCA; and
74

pg. 1223
d) to make use of the coconut levy funds to build his economic empire, to the prejudice of
the government, he (Cojuangco) caused the issuance by Pres. Marcos of PD 1468 requiring
the deposit with UCPB of all coconut levy funds, interest free;
2) again with the use of coconut levy funds, he (Cojuangco) created and/or funded various
corporations such as the Philippine Coconut Producers Federation, Inc. (COCOFED), Coconut
Investment Company (CIC), COCOFED Marketing Corporation (COCOMARK), and the United
Coconut Planters Life Assurance Corporation (COCOLIFE) with the active collaboration and
participation of his codefendants Juan Ponce Enrile, Maria Clara Lobregat, Rolando de la Cuesta,
Jose R. Eleazar, Jr., Jose Reynaldo Morente, Eladio Chatto, Domingo Espina, Anastacio Emanol
Sr., Bienvenido Marquez, Jose Gomez, Inaki Mendezona, Manuel del Rosario, Sulpicio Granada,
Jose Martinez Jr., Emmanuel Almeda, Danilo Ursua, Herminigildo Zayco and Celestino Zabate,
most of whom comprised the interlocking sets of officers and directors of said companies; and he
and his codefendants dissipated, misused and/or misappropriated a substantial part of said coconut
levy funds and allotted to themselves excessive salaries, allowances, bonuses and other
emoluments, for their own personal benefit, including huge cash advances in millions of pesos
which, to date remain unliquidated and unaccounted for; and finally, gained ownership and control
of the UCPB by misusing the names and/or identities of the so-called “more than one million
coconut farmers”;
3) he misappropriated, misused and dissipated P840 million of the Coconut Industry

Development Funds (CIDF) deposited with the National Industry Development Corporation
(NIDC) as administrator trustee of said shares and later with UCPB of which he (Cojuangco) was
the Chief Executive Officer in connection with the (1) development, improvement, operation and
maintenance of the Bugsuk Island Seed Garden (“Bugsuk”) with Agricultural Investors, Inc.
(“AII”) as developer (both Bugsuk and AII being beneficially held and controlled by Co-
75
VOL. 805, OCTOBER 5, 2016 75

juangco); (2) payment of liquidated damages in the amount of P640,856,878.67 and arbitration
fees of P150,000.00 pursuant to a decision rendered by a Board of Arbitration against UCPB for
alleged breach of contract;
4) he misappropriated and dissipated the coconut levy funds by withdrawing therefrom tens of
millions of pesos in order to pay damages adjudged against UNICOM, headed and controlled by
Cojuangco, as aforestated, in an anti-trust suit in California, USA;
pg. 1224
5) he established and caused to be funded with coconut levy funds, with the active collaboration
of Pres. Marcos (through the issuance of LOI 926) and of defendants Juan Ponce Enrile, Jose R.
Eleazar, Jr., Maria Clara Lobregat, Jose C. Concepcion, Inaki Mendoza, Douglas Luym, Teodoro
D. Regala, Emmanuel Almeda, Eduardo Escueta, Leo Palma and Rolando de la Cuesta, the United
Coconut Oil Mills, Inc. (UNICOM), a corporation beneficially controlled by him (Cojuangco),
and bought sixteen (16) other competing and/or nonoperating oil mills at exorbitant prices in the
total amount of P184,935 million, to control the prices of copra and other coconut products, and
assumed and paid the outstanding loan obligations of seven (7) of those purchased oil mills in the
total amount of P805,984 million with the express consent and approval of Pres. Marcos, thereby
establishing a coconut monopoly for their own benefit;
....
8) he misused, dissipated and unlawfully disbursed coconut levy funds with the active
collaboration and participation of defendants Maria Clara Lobregat, Juan Ponce Enrile, Jose
Eleazar Jr., Rolando de la Cuesta and Herminigildo Zayco for projects of Imelda Marcos, including
various donations made by PCA such as the amount of P400,000.00 and P10 million for social
services and Mrs. Marcos’ health and medical assistance projects; P125,000.00 for the yearly
Malang pasko project; P10 million to the Cultural Center of the Philippines; P5 million to the
Philippine Youth Health and Special Center; P50 million for the construction of the Tahanang
Maharlika Building, and
76

P6 million to COCOFED; and other donations made by the UCPB of P100,000.00 to the Manila
International Film Festival; P10 million to the UP Faculty Development Fund; P50,000.00 to the
Manila Symphony Foundation, Inc., a parcel of land located at Baguio City to the University of
Life and “other similar unlawful disbursements,” which remain unaccounted for to date;
pg. 1225
9) he misused coconut levy funds to buy out the majority of the outstanding shares of stock of
San Miguel Corporation in order to control the largest agri-business food and beverage company
in the country[.]43
On March 26, 1986, the CIIF Companies sold 33,133,266 shares of its outstanding capital stock
of San Miguel Corporation to Andres Soriano III (Soriano III) of the San Miguel Group. The shares
would be payable in four (4) installments and were subsequently registered in the name of Anscor
Hagedorn Securities, Inc.44
On April 1, 1986, Soriano III paid the initial P500 million to the United Coconut Planters Bank as
the administrator of the Coconut Industry Investment Fund.45
On April 21, 1986, the PCGG sequestered the shares of stock.46 As a consequence of the
sequestration, the San Miguel Group suspended the payment of the balance; hence, the United
Coconut Planters Bank rescinded the sale.47
The rescission became part of a civil case before the Regional Trial Court of Makati.48 The
rescission was not con-
_______________
43 Id., at pp. 450-453; pp. 417-420.
44 San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p. 620; p. 295.
45 Id., at p. 621; p. 295.
46 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Presidential Commission on

Good Government, supra note 8 at p. 12; p. 246.
47 San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p. 621; pp. 295-
296.
48 Soriano III v. Yuzon, 247 Phil. 191; 164 SCRA 226 (1988) [Per J. Narvasa, En Banc].
77
VOL. 805, OCTOBER 5, 2016 77

pg. 1226
firmed since this Court dismissed the rescission case without prejudice to the resolution of the
parties’ claims before the Sandiganbayan in the Decision dated August 10, 1988.49
On March 1990, San Miguel Corporation and the United Coconut Planters Bank signed a
“Compromise Agreement and Amicable Settlement” (the “Compromise Agreement”)
providing, in part:50
3.1. The sale of the shares covered by and corresponding to the first installment of the 1986 Stock
Purchase Agreement consisting of Five Million SMC Shares is hereby recognized by the parties
as valid and effective as of 1 April 1986. Accordingly, said shares and all stock and cash dividends
declared thereon after 1 April 1986 shall pertain, and are hereby assigned, to SMC. . . .
3.2. The First Installment Shares shall revert to the SMC treasury for dispersal pursuant to the
SMC Stock Dispersal Plan attached as Annex “A-1” hereof. The parties are aware that these First
Installment Shares shall be sold to raise funds at the soonest possible time for the expansion
program of SMC. . . .
3.3. The sale of the shares [co]vered by and corresponding to the second, third and fourth
installments of the 1986 Stock Purchase Agreement is hereby rescinded effective 1 April 1986 and
deemed null and void, and of no force and effect. Accordingly, all stock and cash dividends
declared after 1 April 1986 corresponding to the second, third and fourth installments shall pertain
to CIIF Holding Corporations.51
The parties also agreed to pay an “arbitration fee” of 5.5 million San Miguel Corporation shares
of stock to the PCGG, to be held in trust for the Comprehensive Agrarian Reform Program.52
_______________
49 Id., at p. 208; p. 242.
51 Id., at pp. 621-622; pp. 296-297.
52 Id., at p. 622; p. 297
pg. 1227
78

On March 23, 1990, San Miguel Corporation and the United Coconut Planters Bank filed before
the Sandiganbayan a Joint Petition for the Approval of the Compromise Agreement and Amicable
Settlement.53 On April 25, 1990, the Republic filed its Opposition to the Joint Petition alleging
that the sequestered shares were part of the “coco levy” funds under litigation.54
On June 18, 1990, the PCGG filed a Manifestation praying that the Joint Petition be treated as an
incident of Case No. 0033.55 However, it had no objection to the implementation of the
“Compromise Agreement,” subject to the following conditions:56
1. As stated in the COMPROMISE, the 5 million SMC shares (now 26,450,000) paid for by the
P500 million first installment shall be delivered to SMC, kept in treasury, and sold as soon as
feasible in accordance with a plan to be agreed upon by the Commission and SMC; provided, that
SMC shall not unreasonably withhold its consent to a sales plan approved by PCGG.
The P500 million paid by SMC as first installment shall be accounted for by UCPB and the CIIF
companies to the extent respectively received by them, and any portion thereof in excess of the
usual business needs of the possessor shall be delivered by it to the Commission, to be held in
escrow for the ultimate owner.
2. On Delivery Date, the stock certificates for the balance of the SHARES in the name of the 14
holding companies shall be delivered to PCGG and deposited with the Central Bank for
safekeeping to await their sale in accordance with the plan of dispersal that PCGG and UCPB shall
agree to establish for them. As soon as practicable, but with proper account of market conditions,
all
_______________
53 Id.
54 Id., at pp. 622-623; pp. 297-298.
55 Id., at p. 624; p. 299.
56 Id.
pg. 1228
79
VOL. 805, OCTOBER 5, 2016 79

those shares shall be sold, and the proceeds thereof disposed as provided below. UCPB shall not
unreasonably withhold its consent to a sales plan approved by PCGG in accordance with this
paragraph.
3. So much of the proceeds of the sale as may be necessary shall be used a) to finance the
obligations of the CIIF Companies under the COMPROMISE, and b) to liquidate the obligations
of the CIIF Companies to UCPB for the purchase price of the SHARES. The balance shall be kept
by the PCGG in escrow to await final judicial determination of the ownership of the various
coconut-related companies and of all the other assets involved here. The cash dividends that have
been declared on the SHARES may be applied for the above purposes before proceeds from the
sale of shares are realized. The balance of such cash dividends shall be held in escrow in the same
manner as the sales proceeds.
4. All SHARES shall continue to be sequestered even beyond Delivery Date. Sequestration on
them shall be lifted as they are sold consequent to approval of the sale by the Sandiganbayan, and
in accordance with the dispersal plan approved by the Commission. All of the SHARES that are
unsold will continue to be voted by PCGG while still unsold.
5. The consent of PCGG to the transfer of the sequestered shares of stock in accordance with
the COMPROMISE, and to the lifting of the sequestration thereon to permit such transfer, shall
be effective only when approved by the Sandiganbayan. The Commission makes no
determination of the legal rights of the parties as against each other. The consent it gives here
conforms to its duty to care for the sequestered assets, and to its purpose to prevent the repetition
of the national plunder. It is not to be construed as indicating any recognition of the legality or
sufficiency of any act of any of the parties.57 (Emphasis and underscoring supplied)
_______________
57 Id., at pp. 625-626; pp. 299-300.
pg. 1229
80

The Republic, through the Office of the Solicitor General, however, maintained its Opposition to
the Joint Petition.58
On June 3, 1991, the Sandiganbayan issued the Resolution that did not approve the “Compromise
Agreement”:
It appearing that the sequestered character of the shares of stock subject of the instant petition for
the approval of the compromise agreement, which are shares of stock in the San Miguel
Corporation in the name of the CIIF Corporations, is independent of the transaction involving the
contracting parties in the Compromise Agreement between what may be labeled as the “SMC
Group” and the “UCPB Group,” and it appearing further that the said sequestered SMC shares of
stock have not been physically seized nor taken over by the PCGG, so much so that the reversions
contemplated in said Compromise Agreement are without prejudice to the perpetuation of the
sequestration thereon, until such time as a judgment might be rendered on said sequestration
(which issue is not before this Court as [sic] this time), and it appearing finally that the PCGG has
not interposed any objection to the contractual resolution of the problems confronting the “SMC
Group” and the “UCPB Group” to the extent that the sequestered character of the shares in question
is not affected, this Court will await the pleasure of the Presidential Commission on Good
Government before consideration of the Compromise Agreement is reinstated in the Court’s
calendar.
While this is, in effect, a denial of the “UCPB Group’s” Motion to set consideration of the
Compromise Agreement herein, this denial is without prejudice to a reiteration of the motion or
any other action by the parties should developments hereafter justify the same.”59 (Emphasis
supplied)
_______________
58 Id., at p. 627; p. 301.
59 Id., at pp. 627-628; p. 302.
81
VOL. 805, OCTOBER 5, 2016 81

pg. 1230
Despite lack of approval, on July 4, 1991, San Miguel Corporation and the United Coconut Planters
Bank filed a Joint Manifestation that they had already implemented the “Compromise Agreement”
and were accordingly withdrawing their Joint Petition.60 They also manifested that the certificates
of stock previously registered in the name of Anscor-Hagedorn Securities
representing 175,274,960 San Miguel Corporation shares of stock have been divided as follows:
(a) 25,450,000 shares were registered in the name of San Miguel Corporation as treasury;
(b) 144,324,960 shares were registered in the name of 14 CIIF Companies; and
(c) 5,500,000 shares were registered in the name of the PCGG.61
On July 16, 1991, San Miguel Corporation and the United Coconut Planters Bank filed a
Manifestation declaring the 25,450,000 shares as treasury shares.62 The shares were marked
“sequestered” by San Miguel Corporation and were allegedly in the custody of the PCGG.63
On July 23, 1991, the Sandiganbayan noted the Manifestations.64 Upon motion for clarification
by the PCGG, the Sandiganbayan issued the Order dated August 5, 1991 requiring San Miguel
Corporation to deliver the certificates of stock to the PCGG.65 On October 25, 1991, it issued
another Resolution requiring San Miguel Corporation to deliver the 25,450,000 treasury shares to
the PCGG, and that dividends should be paid pending the resolution of Civil Case No. 0033.66
_______________
60 Id., at p. 628; p. 302.
61 Id.
62 Id. at p. 630; p. 304.
63 Id.
64 Id.
65 Id.
66 Id., at p. 631; p. 305.
82
pg. 1231
As a result, San Miguel Corporation and the United Coconut Planters Bank filed before this Court
a petition assailing the Sandiganbayan issuances, docketed as G.R. No. 104637-38 (San Miguel
Corporation v. Sandiganbayan).67
On September 14, 2000, this Court rendered the Decision holding that the Sandiganbayan’s order
for the delivery of the treasury shares were merely “preservative in nature”68 in view of “many
contested provisions”69 in the “Compromise Agreement.” It held that the shares should be in the
custody of the PCGG while the determination of its ownership was still under litigation.70
On December 30, 2001, this Court in Republic v. COCOFED, et al.71 declared that the “coco
levy” funds were prima facie public funds; thus, all sequestered shares of stock bought from these
levies were also prima facie public funds.
Subsequently, a class action suit was brought by COCOFED members and alleged coconut farmers
to this Court to assail the July 11, 2003 Partial Summary Judgment of the Sandiganbayan.72 In
particular, they assailed the Sandiganbayan’s declaration that the 64.98% shares of stock in the
United Coconut Planters Bank purportedly belonging to coconut farmers were conclusively owned
by the Republic.73 The case was docketed as G.R. Nos. 177857-58.
While the case was pending, COCOFED filed an Urgent Motion to Approve the Conversion of
SMC Common Shares
_______________
67 Id.
68 Id., at p. 639; p. 314.
69 Id., at p. 640; p. 314.
70 Id., at p. 645; p. 321.
71 Republic v. Philippine Coconut Producers Federation, Inc. (COCOFED), supra note 3.
72 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, supra note 2.
73 Id., at p. 614; p. 551.
83
pg. 1232
VOL. 805, OCTOBER 5, 2016 83
into SMC Series 1 Preferred Shares.74 The Urgent Motion sought the approval of the conversion
of 753,848,312 Class “A” shares and Class “B” common shares of San Miguel Corporation
registered in the name of the CIIF Companies.75
On September 17, 2009, this Court approved the conversion on the ground that the conversion
would guarantee an 8% dividend per annum, which was higher than the dividend rate of a common
share.76 Former Associate Justice Conchita Carpio-Morales, however, disagreed with the majority
and opined that since the prevailing market price was higher than the issue price, the PCGG would,
at the redemption period, be redeeming the shares below its actual market value.77
A Motion for Reconsideration was filed, but it was denied by this Court in the Resolution78 dated
February 11, 2010.
On January 24, 2012, this Court rendered its Decision in G.R. Nos. 177857-58.79 The Decision
declared that:
funds — funds,
_______________
74 Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, 616 Phil. 94, 102;
600 SCRA 102, 111 (2009) [Per J. Velasco, Jr., En Banc].
75 Id.
76 Id., at p. 140; p. 125. The common shares were valued at P53.50 and P54.00 as of June 1, 2009.
The conversion would place the issue price at P75.00.
77 See J. Carpio-Morales, Dissenting Opinion in Philippine Coconut Producers Federation, Inc.

(COCOFED) v. Republic, supra at pp. 135-141; pp. 146-152. The shares were redeemed at
P75.00, and the proceeds of the redemption were turned over to the Republic. See Rollo, pp. 5100-
5161, in compliance with this Court’s Resolution dated September 4, 2012 denying the Motion for
Reconsideration of the January 24, 2012 Decision.
78 Philippine Coconut Producers Federation, Inc. v. Republic, 626 Phil. 157; 612 SCRA 255
(2010) [Per J. Velasco, Jr. En Banc].

621; p. 623.
pg. 1233
84

which have been established to be public in character — it goes without saying that these acquired
corporations and assets ought to be regarded and treated as government assets. Being government
properties, they are accordingly owned by the Government, for the coconut industry pursuant to
currently existing laws.80
The dispositive portion of the Decision held, in part:
WHEREFORE, THE MOTION FOR EXECUTION OF PARTIAL SUMMARY JUDGMENT

(RE: CIIF BLOCK OF SMC SHARES OF STOCK) dated August 8, 2005 of the plaintiff is hereby
denied for lack of merit. However, this Court orders the severance of this particular claim of
Plaintiff. The Partial Summary Judgment dated May 7, 2004 is now considered a separate final
and appealable judgment with respect to the said CIIF Block of SMC shares of stock.
The Partial Summary Judgment rendered on May 7, 2004 is modified by deleting the last paragraph
of the dispositive portion, which will now read, as follows:
Companies and Cocofed, et al.) filed by Plaintiff is hereby GRANTED. Accordingly, the CIIF
Companies, namely:
_______________
80 Id.
pg. 1234
85
VOL. 805, OCTOBER 5, 2016 85

As well as the 14 Holding Companies, namely:
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC) SHARES OF STOCK
TOTALING 33,133,266 SHARES AS OF 1983 TOGETHER WITH ALL DIVIDENDS
DECLARED, PAID AND ISSUED THEREON AS WELL AS ANY INCREMENTS THERETO
pg. 1235
ARISING FROM, BUT NOT LIMITED TO, EXERCISE OF PREEMPTIVE RIGHTS ARE
DECLARED OWNED BY THE GOVERNMENT TO BE USED ONLY FOR THE BENEFIT
OF ALL COCONUT FARMERS AND FOR THE DEVELOPMENT OF THE COCONUT
INDUSTRY, AND ORDERED RECONVEYED TO THE GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE SANDIGANBAYAN ON JUNE

5, 2007 IN CIVIL CASE NO. 0033-A AND ON MAY 11, 2007 IN CIVIL CASE NO. 0033-F,
THAT THERE IS NO MORE NECESSITY OF FURTHER TRIAL WITH RESPECT TO THE
ISSUE OF OWNERSHIP OF (1) THE SEQUESTERED UCPB SHARES, (2) THE CIIF BLOCK
OF SMC SHARES, AND (3) THE CIIF COMPANIES AS THEY
86

HAVE FINALLY BEEN ADJUDICATED IN THE AFOREMENTIONED PARTIAL

SUMMARY JUDGMENTS DATED JULY 11, 2003 AND MAY 7, 2004.81
Upon motion for reconsideration, however, this Court issued its Resolution dated September 4,
2012 clarifying the fallo of the January 24, 2012 Decision that the San Miguel Corporation shares
to be reconveyed to the Republic were the 753,848,312 SMC Series 1 Preferred Shares, subject of
the Resolution dated September 17, 2009.82 The modified fallo states, in part:
WHEREFORE, the petitions in G.R. Nos. 177857-58 and 178793 are hereby DENIED. The Partial
Summary Judgment dated July 11, 2003 in Civil Case No. 0033-A as reiterated with modification
in Resolution dated June 5, 2007, as well as the Partial Summary Judgment dated
May 7, 2004 in Civil Case No. 0033-F, which was effectively amended in Resolution dated May
11, 2007, are AFFIRMED with MODIFICATION, only with respect to those issues subject of the
petitions in G.R. Nos. 177857-58 and 178193. However, the issues raised in G.R. No. 180705 in
relation to Partial Summary Judgment dated July 11, 2003 and Resolution dated June 5, 2007 in
Civil Case No. 0033-A, shall be decided by this Court in a separate decision.
The Partial Summary Judgment in Civil Case No. 0033-A dated July 11, 2003, is hereby
....
pg. 1236
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL SUMMARY JUDGMENT (RE:

CIIF BLOCK
_______________
81 Id., at pp. 638-640; pp. 641-642.

51; pp. 612-613.
87
VOL. 805, OCTOBER 5, 2016 87

OF SMC SHARES OF STOCK) dated August 8, 2005 of the plaintiff is hereby denied for lack of
merit. However, this Court orders the severance of this particular claim of Plaintiff. The Partial
Summary Judgment dated May 7, 2004 is now considered a separate final and appealable judgment
with respect to the said CIIF Block of SMC shares of stock. The Partial Summary Judgment
rendered on May 7, 2004 is modified by deleting the last paragraph of the dispositive portion,
which will now read, as follows:
Companies and Cocofed, et al.) filed by Plaintiff is hereby GRANTED. ACCORDINGLY, THE
CIIF COMPANIES, NAMELY:
pg. 1237
As well as the 14 Holding Companies, namely:
88

AND THE CONVERTED SMC SERIES 1 PREFERRED SHARES TOTALING 753,848,312

SHARES SUBJECT OF THE RESOLUTION OF THE COURT DATED SEPTEMBER 17, 2009
TOGETHER WITH ALL DIVIDENDS DECLARED, PAID OR ISSUED THEREON AFTER
pg. 1238
THAT DATE, AS WELL AS ANY INCREMENTS THERETO ARISING FROM, BUT NOT
LIMITED TO, EXERCISE OF PREEMPTIVE RIGHTS ARE DECLARED OWNED BY THE
GOVERNMENT TO REUSED ONLY FOR THE BENEFIT OF ALL COCONUT FARMERS
AND FOR THE DEVELOPMENT OF THE COCONUT INDUSTRY, AND ORDERED
RECONVEYED TO THE GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE SANDIGANBAYAN ON JUNE

5, 2007 IN CIVIL CASE NO. 0033-A AND ON MAY 11, 2007 IN CIVIL CASE NO. 0033-F,
THAT THERE IS NO MORE NECESSITY OF FURTHER TRIAL WITH RESPECT TO THE
ISSUE OF OWNERSHIP OF (1) THE SEQUESTERED UCPB SHARES, (2) THE CIIF BLOCK
OF SMC SHARES, AND (3) THE CIIF COMPANIES, AS THEY HAVE FINALLY BEEN
ADJUDICATED IN THE AFOREMENTIONED PARTIAL SUMMARY JUDGMENTS
DATED JULY 11, 2003 AND MAY 7, 2004.
SO ORDERED.83
On October 15, 2012, the Republic filed the present Manifestation and Omnibus Motion84 arguing
that the 753,848,312 SMC Series 1 Preferred Shares referred to in the September 4, 2012
Resolution should include the reconveyance of the 25.45 million San Miguel Corporation treasury
shares that were previously the subject of the “Compromise Agreement” between San Miguel
Corporation and the United Coconut
_______________
83 Id., at pp. 48-51; pp. 609-613.
84 Rollo, pp. 4800-4827.
89
VOL. 805, OCTOBER 5, 2016 89

Planters Bank.85 It points out that the exclusion of these treasury shares would result in
government losing billions that could have been otherwise used to benefit the coconut farmers and
develop the coconut industry.86
For its part, San Miguel Corporation insists that the disputed treasury shares already belong to it
as a result of the “Compromise Agreement.”87 It posits that the disputed treasury shares should
not be lumped together with the San Miguel Corporation shares of stock owned by the CIIF
pg. 1239
Companies since these shares were segregated by the “Compromise Agreement” as the result of
the P500 million down payment paid by Soriano III.88 It also argues that this Court has no
jurisdiction to direct it to deliver the treasury shares since its intervention in Civil Case No. 0033
was denied.89
From the arguments of the parties, the issue before us is whether the Resolution dated September
4, 2012 should have included the 25.45 million San Miguel Corporation treasury shares subject of
the “Compromise Agreement.”
The ponencia, in denying the Republic’s Omnibus Motion, makes three (3) points:
First, the September 4, 2012 Resolution on the 753,848,312 SMC Series 1 Preferred Shares
referred to the shares discussed in the September 17, 2009 Resolution.90 It did not include the
25.45 million treasury shares subject of a “Compromise Agreement”;91
_______________
85 Id., at pp. 4812-4814, Manifestation and Omnibus Motion.
86 Id.
87 Id., at p. 5191, Comment on the Manifestation and Omnibus Motion.
88 Id., at pp. 5194-5196.
89 Id., at p. 5213.
90 Ponencia, p. 37.
91 Id.
90

Second, the “Compromise Agreement” was valid because it was with the consent and participation
of the PCGG and indirectly approved by the Sandiganbayan;92 and
Lastly, San Miguel Corporation cannot be ordered to deliver the 25.45 million since it was never
a party to the case.93
pg. 1240
I
The September 4, 2012 Resolution should include reconveyance to the Republic of the 25.45
million San Miguel Corporation treasury shares.
To recall, on March 26, 1986, the CIIF Companies sold 33,133,266 shares of San Miguel
Corporation stock to Soriano III and the shares were subsequently registered in the name of
Anscor-Hagedorn Securities.94 These shares were sequestered on April 7, 1986.95
On July 4, 1991, San Miguel Corporation, the CIIF Companies, and United Coconut Planters Bank
submitted before the Sandiganbayan a Joint Manifestation Implementing the Compromise
Agreement. The parties manifested that 175,274,960 San Miguel Corporation shares of stock
owned by Anscor-Hagedorn Securities, Inc. were surrendered to the corporate secretary of San
Miguel Corporation. Of these shares, 25.45 million shares96 were registered in the name of San
Miguel Corporation as treasury, 144,324,960 shares were registered in the name of the CIIF
Companies, while 5,500,000 shares were registered in the name of the PCGG.97
_______________
92 Id., at pp. 39-43.
93 Id., at pp. 25-35.
95 Id., at p. 621; pp. 295-296.
96 The sale of P500 million shares to San Miguel Corporation was recognized by the parties as
valid in view of Soriano III’s payment of the first installment. Id., at p. 628; p. 303.
97 Id.
91
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pg. 1241
In other words, the 33,133,266 San Miguel Corporation shares of stock sold to Soriano III in 1986
and registered in the name of Anscor Hagedorn Securities, Inc. eventually became 175,274,960
shares by the time the parties submitted their Joint Manifestation to the Sandiganbayan in 1991.
It was the 33,133,266 San Miguel Corporation shares of stock (eventually 175,274,960 shares)
that were subject of the January 24, 2012 Decision98 in these cases. These were the shares that
this Court declared were government assets held in trust for the coconut industry:
funds — funds, which have been established to be public in character — it goes without saying
that these acquired corporations and assets ought to be regarded and treated as government assets.
industry pursuant to currently existing laws.99
However, despite the final Decision of this Court in G.R. Nos. 104637-38 and the lack of approval
of the “Compromise Agreement,” the 25.45 million shares were converted to treasury shares per
Manifestation of San Miguel Corporation and the CIIF Companies to the Sandiganbayan dated
July 16, 1991.100 These shares, valued by COCOFED in 2000 at nine billion pesos
(P9,000,000,000.00),101 are now the subject of the present Omnibus Motion.
To underscore, both groups of shares — that is, the treasury shares and the CIIF Company shares
— were the subject
_______________
99 Id., at p. 621; p. 623.
101 Id., at p. 653; p. 311.
92

pg. 1242
of the same “Compromise Agreement.” All these shares were derived from the 33,133,126 shares
sold to Soriano III in 1986, the same 33,133,126 shares that were the subject of this Court’s January
24, 2012 Decision.
According to footnote 54 of the ponencia, the 144,324,960 CIIF Companies shares increased from
144,324,960 to 725,202,640 from 1991 to 2001.102 It reached 753,848,312 shares by 2009.103
These shares were the subject of conversion to preferred shares in this Court’s September 19, 2009
Resolution and reconveyance to the Republic in the September 4, 2012 Resolution.
This Court denied the Motion for Reconsideration to its January 24, 2012 Decision dealing with
the 33,133,266 shares (which should have become 175,274,960 shares). Inexplicably, however, by
changing the nature of the shares and limiting the focus to only the 753,848,312 preferred shares,
the September 4, 2012 Resolution dropped the 25.45 million shares without changing the
ponencia.
In other words, nine billion pesos (P9,000,000,000.00) worth of San Miguel Corporation shares,
which was the subject of litigation before the Sandiganbayan and declared by this Court to be
owned by government in trust for millions of coconut farmers, was “lost” to them with a change
in the numbers in the fallo.
Thus, a Manifestation and Omnibus Motion104 dated October 12, 2012 was timely filed. San
Miguel Corporation filed its
_______________
102 Ponencia, p. 36.
103 Id.
104 The full title is Manifestation and Omnibus Motion 1) To amend the Resolution promulgated
on September 4, 2012 to include the “treasury shares” which are part and parcel of the 33,133,266
Coconut Industry Investment Fund (CIIF) block of San Miguel Corporation (SMC) shares as of
1983 decreed by the Sandiganbayan, and sustained by the Honorable Court, as owned by the
government; and 2) to direct San Miguel Corporation (SMC) to comply with the final and
executory Resolu-
93
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pg. 1243
Comment105 on December 3, 2013, fully ventilating its position on the issue in a 50-page
pleading.
It is both illogical and absurd — and hence, a grave abuse of discretion on the part of this Court
— to declare that the shares purchased with “coco levy” funds are government-owned yet remove
24.45 million shares of “treasury shares of San Miguel Corporation” from its purview.
Notably, the CIIF Companies sold these shares in March 1986 just days after Former President
Ferdinand E. Marcos (Former President Marcos) was deposed in the People Power Revolution. It
was the subject of a “Compromise Agreement” that was not approved by the Sandiganbayan. It
was also the subject of a Decision of this Court ordering San Miguel Corporation to deliver it to
the PCGG. Yet, there was no compliance by San Miguel Corporation. Today, we reward the
contumacy as well as complete deprivation of rights of coconut farmers.
I dissent.
II
It was erroneous for the ponencia to state that the 753,848,312 SMC 1 Preferred Shares were the
only remaining San Miguel Corporation shares that could be declared owned by the Republic106
since the 25.45 million treasury shares were already sold to San Miguel Corporation as part of the
“Compromise Agreement.”
This reasoning is a complete misinterpretation of San Miguel Corporation, et al. v. Sandiganbayan

(First Division), et al.107
_______________
tions dated October 24, 1991 and March 18, 1992 of the Sandiganbayan which were
affirmed by the Honorable Court in G.R. Nos. 104637-38.
105 Rollo, pp. 5185-5237.
107 San Miguel Corporation v. Sandiganbayan (First Division), supra note 1.
94
pg. 1244
In page 35 of the ponencia:
A review of past underlying transactions led to the acquisition of the so-called “treasury shares”
would indicate that SMC had acquired colorable title to retain possession of the 25.45 million
shares of what were once CIIF shares prior to the sequestration of these CIIF shares on April 7,
1986 and the institution of CC Nos. 0033 and 0033-F on July 31, 1987.108
In San Miguel:
On August 5, 1991, the Sandiganbayan issued an order requiring SMC to deliver the certificates
of stock representing the subject matter of the Compromise Agreement to the PCGG in view of
the oral manifestations of Commissioner Maceren seeking clarification of portions of
Sandiganbayan’s July 23, 1991 Resolution.
....
On October 25, 1991, the Sandiganbayan issued another Resolution requiring SMC to deliver the
25.45 million SMC treasury shares to the PCGG. On March 18, 1992, it denied petitioners’ Motion
for Reconsideration and further ordered SMC to pay dividends on the said treasury shares and to
deliver them to the PCGG.
....
The order of the Sandiganbayan regarding the subject treasury shares is merely preservative in
nature. When the petitioners and UCPB Group filed their Joint Manifestation of Implementation
of the Compromise Agreement and of Withdrawal of Petition, the Sandiganbayan cautioned that
“the PCGG, the UCPB and the SMC Group shall always act with due regard to the sequestered
character of the shares of stock involved as well as the fruits thereof, more particularly to prevent
the loss or dissipation of their value.” The caution was
_______________
pg. 1245
95
VOL. 805, OCTOBER 5, 2016 95

wisely given in view of the many contested provisions of the Compromise Agreement. For one,
the Sandiganbayan observed that the conversion of the SMC shares to treasury shares will result
in a change in the status of the sequestered shares in that:
1. When the SMC converts these common shares to treasury stock, it is converting those
outstanding shares into the corporation’s property for which reason treasury shares do not earn
dividends.
2. The retained dividends which would have accrued to those shares if converted to treasury
would go into the corporation and enhance the corporation as a whole. The enhancement to the
specific sequestered shares, however, would be only to the extent aliquot in relation to all the other
outstanding SMC shares.
3. By converting the 26.45 million shares of stock into treasury shares, the SMC has altered not
only the voting power of those shares of stock since treasury shares do not vote, but the SMC will
have actually enhanced the voting strength of the other outstanding shares of stock to the extent
that these 26.45 million shares no longer vote.109 (Emphasis supplied)
These Sandiganbayan Resolutions were the assailed judgments in San Miguel, which were
eventually upheld by this Court in its September 14, 2000 Decision in G.R. Nos. 104637-38.
Despite the Decision, San Miguel Corporation never actually surrendered these treasury shares to
the PCGG.
Sometime in 2003, Former PCGG Chair Haydee B. Yorac wrote to San Miguel Corporation
reminding San Miguel of this Court’s September 14, 2000 Decision and the order to deliver the
treasury shares.110 On January 20, 2004, San Miguel, through counsel, replied that the shares
were already validly sold to it since the “Compromise Agreement” proves that
_______________
109 San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at pp. 630-640; pp.
304-314.
110 Rollo, pp. 3413-3414.
pg. 1246
96

these shares were sold as of April 1, 1986, days before the sequestration on April 7, 1986.111
On June 16, 2011, the Republic eventually filed in this case an Urgent Motion to Direct San Miguel
Corporation (SMC) to Comply with the Final and Executory Resolutions dated October 24, 1991
and March 18, 1992 of the Sandiganbayan.112
It was similarly erroneous for the ponencia to state that:
More importantly, the PCGG, the government agency empowered to exercise sequestration powers
over the 25.45 [million] SMC treasury shares, gave its imprimatur to SMC’s ownership and
possession of said shares by approving the Compromise Agreement on which SMC predicates its
claim and further asserting its ownership and possession of the so-called “arbitration fees of 5.5
million SMC shares that came out of the Compromise Agreement.”113
In San Miguel, this Court denounced the payment as ‘“illegal, shocking and unconscionable”:114
For another, the payment to the PCGG of an arbitration fee in the form of 5,500,000 of SMC shares
is denounced as illegal, shocking and unconscionable. COCOFED, et al. have assailed the legal
right of PCGG to act as arbiter as well as the fairness of its acts as arbiter. COCOFED, et al.
estimate that the value of the SMC shares given to PCGG as arbitration fee which allegedly is not
deserved, can run to P1,966,635,000.00. This is a serious allegation and the Sandiganbayan cannot
be[ ]charged with grave abuse of discretion when it ordered that SMC should be temporarily
dispossessed of the subject treasury shares and that SMC should pay their dividends
_______________
111 Id., at pp. 3415-3416.
112 Id., at pp. 3322-3351.
pg. 1247
97
VOL. 805, OCTOBER 5, 2016 97

while the Compromise Agreement involving them is still under question.
....
. . . Petitioners cannot insist on their right to have their Compromise Agreement approved on the
ground that it bears the imprimatur of the PCGG. To be sure, the consent of the PCGG is a factor
that should be considered in the approval or disapproval of the subject Compromise Agreement
but it is not the only factor.115 (Emphasis supplied)
This Court also noted that even the parties admitted that the “Compromise Agreement” should be
with the consent of the PCGG, and its consent was “effective only when approved by the
Sandiganbayan”:116
1. The Compromise Agreement subject matter of this petition categorically states that “(a)ll the
terms of th(e) Agreement are subject to approval by the Presidential Commission on Good
Government (PCGG) as may be required by Executive Orders numbered 1, 2, 14 and 14-A. (T)he
Agreement and the PCGG approval thereof shall be submitted to the Sandiganbayan. . . .
PCGG has consented to the Compromise Agreement. But its consent is “effective only when
approved by the Sandiganbayan” (PCGG Resolution dated 15 June 1990, In Re: Compromise
Agreement between San Miguel Corporation, et al. and United Coconut Planters Bank, et
al.). Petitioners accepted this condition, and incorporated by [sic] reference such condition as an
integral part of the Compromise Agreement.117 (Emphasis supplied)
_______________
115 Id., at pp. 641-652; pp. 315-325.
116 Id., at p. 639; p. 312, citing the Manifestation dated March 15, 1991 of San Miguel
Corporation.
117 Id., at pp. 638-639; pp. 312-313, citing the Manifestation dated March 15, 1991 of San Miguel
Corporation.
pg. 1248
98

Clearly, the consent of the PCGG is only effective if the “Compromise Agreement” is actually
approved by the Sandiganbayan. Until then, even the PCGG is deemed not to have given its
consent to the “Compromise Agreement.”
Strangely, the ponencia erroneously concludes that the “Compromise Agreement” was “not
disapproved” by the Sandiganbayan and, therefore, must be deemed to have approved it:
To sway this Court, the Republic relies on the fact that the Compromise Agreement between SMC
and the CIIF Companies ratifying the sale of the first installment shares had been submitted but
has not been approved by the Sandiganbayan. But note, neither has the Compromise Agreement
been disapproved by that or this Court. Nowhere in San Miguel Corporation v. Sandiganbayan did
the Court rule on the validity of the Compromise Agreement, much less “indirectly [deny] approval
of the Compromise Agreement,” since it was not the issue presented for the Court’s Resolution.118
There are compromise agreements involving private interests where judicial approval is not
necessary.119 The “Compromise Agreement” in this case did not involve purely private interests.
The “Compromise Agreement” involved shares of stock sequestered by government under the
allegation that these were bought using the “ill-gotten wealth” by Former
_______________
119 See Civil Code, Art. 2028, in relation to Art. 2032, which provide:
Article 2028. A compromise is a contract whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already commenced.
....
Article 2032. The court’s approval is necessary in compromises entered into by

guardians, parents, absentee’s representatives, and administrators or executors of decedent’s
estates.
pg. 1249
99
VOL. 805, OCTOBER 5, 2016 99

President Marcos and his cronies. The parties recognized this and, therefore, made the consent of
the PCGG and the approval of the Sandiganbayan a condition sine qua non to its effectivity:
The cases at bar do not merely involve a compromise agreement dealing with private interest. The
Compromise Agreement here involves sequestered shares of stock now worth more than nine (9)
billions of pesos, per estimate given by COCOFED. Their ownership is still under litigation. It is
not yet known whether the shares are part of the alleged ill-gotten wealth of former President
Marcos and his “cronies.” Any Compromise Agreement concerning these sequestered shares falls
within the unquestionable jurisdiction of and has to be approved by the Sandiganbayan. The
parties themselves recognized this jurisdiction. In the Compromise Agreement itself, the
petitioners and the UCPB Group expressly acknowledged the need to obtain the approval by the
Sandiganbayan of its terms and conditions, thus:
5. Unless extended by mutual agreement of the parties, the ‘Delivery Date’ shall be on the
10th Day from and after receipt by any party of the notice of approval of this Compromise
Agreement and Amicable Settlement by the Sandiganbayan. Upon receipt of such notice, all
other parties shall be immediately informed.
The PCGG Resolution of June 15, 1990 also imposed the approval of the Sandiganbayan as a
condition sine qua non for the transfer of these sequestered shares of stock, viz.:
“4. All SHARES shall continue to be sequestered even beyond Delivery Date.
Sequestration on them shall be lifted as they are sold consequent to approval of the sale by
the Sandiganbayan, and in accordance with the dispersal plan approved by the Commission.
100

All of the SHARES that are unsold will continue to be voted by PCGG while still unsold.
pg. 1250
5. The consent of PCGG to the transfer of the sequestered shares of stock in accordance
with the COMPROMISE, and to the lifting of the sequestration thereon to permit such
transfer, shall be effective only when approved by the Sandiganbayan. The Commission
makes no determination of the legal rights of the parties as against each other. The consent
it gives here conforms to its duty to care for the sequestered assets, and to its purpose to
prevent the repetition of the national plunder. It is not to be construed as indicating any
recognition of the legality or sufficiency of any act of any of the parties.”120 (Emphasis
supplied)
The effectivity of the “Compromise Agreement” depends on whether the Sandiganbayan actually
gave its approval.
A closer look at the Sandiganbayan’s October 25, 1991 Resolution reveals that the Sandiganbayan
actually ordered that nothing should be done with the treasury shares “which might prejudice their
eventual delivery to their lawful owner or owners who will be determined at the close of the
Judicial proceeding”:121
At this time the Court has not approved any Compromise Agreement between the so-called
“UCPB” and the “SMC Group.” As of July 23, 1991, this Court has merely noted the
Manifestation of these two groups, as well as the PCGG’s and that of the SMC Corporate
Secretary, that the contending groups had executed a Compromise Agreement in resolution of their
difference.
_______________
120 San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at pp. 637-638; pp.
311-312.
121 Rollo, pp. 3351-3354.
101
VOL. 805, OCTOBER 5, 2016 101

Consistent with this Court’s earlier position as stated in its Resolution of June 3, 1991, this Court’s
continuing interest in the shares of stock subject of the Compromise Agreement between the so-
called SMC and UCPB Groups remains only with respect to those shares of stock which are
sequestered. These shares of stock are precisely the SMC shares owned by the CIIF Companies, as
well as the so-called “first installment shares” represented by the stock certificate No. A0004129
pg. 1251
representing 15,274,484 shares and stock certificate No. B0001556 representing 10,175,516
shares (for a total of 25,450,000 shares).
At issue is now the physical custody of these two certificates of stock.
As with all sequestered property, the true or final ownership of the shares of stock is still
unresolved at this time. Should San Miguel Corporation be found not to be entitled thereto in the
end, as when these shares are found to have been “ill-gotten property” after all (should things turn
out this way), these shares of stock and all their fruits must be turned over to the government.
Put differently, until the sequestration of these shares represented by the aforementioned stock
certificates has been lifted by this Court, their conversion to Treasury Shares of SMC and their
subsequent dispersal to SMC stockholders are merely a declaration of an intention made by the
parties to the Compromise Agreement.
These 25,450,000 shares of stock are today sequestered stock and at this time nothing may be done
with them which might prejudice their eventual delivery to their lawful owner or owners who will
be determined at the close of these judicial proceedings. Conversion of these shares of stock into
Treasury Shares (and their dispersal as intimated in the Compromise Agreement) could prevent
their delivery as well as the delivery of the fruits of these shares to anybody later found by the
Court to be entitled thereto.
The intended declaration of these shares as Treasury Shares is, therefore, not capable of
implementation
102

at this time and the rules governing Treasury Shares cannot yet be deemed enforceable over
them.122 (Emphasis supplied)
This Sandiganbayan Resolution was upheld by this Court in San Miguel. In San Miguel, this Court
upheld the Sandiganbayan’s finding that the provisions of the “Compromise
Agreement,” including those of the treasury shares, should remain ineffective until a definite
ruling on its ownership has been rendered by the courts. It did not outright say that it disapproved
the “Compromise Agreement” since the issue before this Court was the delivery of the treasury
shares, not the validity of the “Compromise Agreement.” Former Associate Justice Bernardo P.
Pardo’s Dissenting Opinion is telling in this regard:
pg. 1252
I regret to dissent from the majority decision upholding the disapproval of the compromise
agreement by the Sandiganbayan.
The resolutions of the Sandiganbayan, subject of the two (2) petitions for review on certiorari
before the Court would bar the implementation of a compromise agreement entered into by the
SMC Group and the UCPB Group regarding the thirty (30) million plus shares of SMC in the name
of the fourteen (14) holding companies of the CIIF Group of companies.123
On April 17, 2001, this Court issued a minute Resolution denying with finality the Motion for
Reconsideration filed by COCOFED in G.R. Nos. 104637-38.124 Entry of judgment of the
September 14, 2000 Decision in G.R. Nos. 104637-38 was made on August 7, 2001.125 To now
say, therefore, that the
_______________
122 Id.
123 J. Pardo, Dissenting Opinion in San Miguel Corporation v. Sandiganbayan (First Division),
supra note 1 at p. 654; pp. 327-328.
124 Rollo, p. 583.
125 Id., at p. 598.
103
VOL. 805, OCTOBER 5, 2016 103

“Compromise Agreement” was actually valid is a complete misinterpretation of San Miguel.
The nature of the ownership of these shares was resolved in these cases. Hence:
fund — funds, which have been established to be public in character — it goes without saying that
these acquired corporations and assets ought to be regarded and treated as government assets.
industry pursuant to currently existing laws.126
pg. 1253
III
The September 4, 2012 Resolution of this Court was a nunc pro tunc order that went beyond
the fallo it was clarifying.
The September 4, 2012 denied with finality the Motion for Reconsideration but sought to clarify
the fallo of the January 24, 2012 Decision in view of “a certain development that altered the factual
situation then obtaining in G.R. Nos. 177857-58,”127 which was referring to the September 17,
2009 Decision that converted the CIIF Companies’ 144,324,960 shares from common to preferred
shares. It was, in effect, a nunc pro tunc order affirming the January 24, 2012 Decision, but
correcting the fallo to include a fact previously omitted.
The “clarification” made, however, effectively overturned San Miguel. It also expanded the
January 24, 2012 Decision by indirectly implying that the “Compromise Agreement” was valid.
This is not within the competence of a nunc pro tunc order.
_______________
621; p. 623.
127 Philippine Coconut Producers Federation, Inc (COCOFED) v. Republic, supra note 2 at p.
46; p. 607.
104

A nunc pro tunc order merely supplies something that was present in the records but was omitted
in the judgment by mistake. It cannot correct judicial errors or supply a judicial action that was
omitted by the court. Lichauco, et al. v. Tan Pho, et al.128 explains:
The office of a judgment nunc pro tunc is to record some act of the court done at a former time
which was not then carried into the record, and the power of a court to make such entries is
restricted to placing upon the record evidence of judicial action which has been actually taken. It
may be used to make the record speak the truth, but not to make it speak what it did not speak but
ought to have spoken. If the court has not rendered a judgment that it might or should have
rendered, or if it has rendered an imperfect or improper judgment, it has no power to remedy these
errors or omissions by ordering the entry nunc pro tunc of a proper judgment. Hence a court in
pg. 1254
entering a judgment nunc pro tunc has no power to construe what the judgment means, but only
to enter of record such judgment as had been formerly rendered, but which had not been entered
of record as rendered. In all cases the exercise of the power to enter judgments nunc pro
tunc presupposes the actual rendition of a judgment, and a mere right to a judgment will not furnish
the basis for such an entry.
There can be no doubt that such an entry may operate so as to save proceedings which have been
had before it is made, but where no proceedings have been had and the jurisdiction of the court
over the subject has been withdrawn in the meantime, a court has no power to make a nunc pro
tunc order. If the court has omitted to make an order, which it might or ought to have made, it
cannot, at a subsequent term, be made nunc pro tunc. According to some authorities, in all cases
in which an entry nunc pro tunc is made, the record should show the facts which authorize the
entry, but other courts hold that in entering an order nunc pro tunc the court is not
_______________
128 51 Phil. 862 (1923) [Per J. Romualdez, En Banc].
105
VOL. 805, OCTOBER 5, 2016 105

confined to an examination of the judge’s minutes, or written evidence, but may proceed on any
satisfactory evidence, including parol testimony. In the absence of a statute or rule of court
requiring it, the failure of the judge to sign the journal entries or the record does not affect the force
of the order granted.
The phrase nunc pro tunc signifies ‘now for then,’ or that a thing is done now that shall have the
same legal force and effect as if done at the time it ought to have been done. A court may order an
act done nunc pro tunc when it, or some one of its immediate ministerial officers, has done some
act which for some reason has not been entered of record or otherwise noted at the time the order
or judgment was made or should have been made to appear on the papers or proceedings by the
ministerial officer.
The object of a judgment nunc pro tunc is not the rendering of a new judgment and the
ascertainment and determination of new rights, but is one placing in proper form on the record, the
judgment that had been previously rendered, to make it speak the truth, so as to make it show what
the judicial action really was, not to correct judicial errors, such as to render a judgment which the
court ought to have rendered, in place of the one it did erroneously render, nor to supply nonaction
by the court, however erroneous the judgment may have been.
pg. 1255
A nunc pro tunc entry in practice is an entry made now of something which was actually
previously done, to have effect as of the former date. Its office is not to supply omitted action by
the court, but to supply an omission in the record of action really had, but omitted through
inadvertence or mistake.
Except as to the rights of third parties, a judgment nunc pro tunc is retrospective, and has the same
force and effect, to all intents and purposes, as if it had been entered at the time when the judgment
was originally rendered.
It is competent for the court to make an entry nunc pro tunc after the term at which the transaction
oc-
106

curred, even though the rights of third persons may be affected. But entries nunc pro tunc will not
be ordered except where this can be done without injustice to either party, and as a nunc pro
tunc order is to supply on the record something which has actually occurred, it cannot supply
omitted action by the court. Record entries nunc pro tunc can properly be made only when based
on some writing in a cause which directly or by fair inference indicates the purpose of the entry so
sought to be made, or on the personal knowledge and recollection of the court; but in a case where
a statement of facts was filed after adjournment of the court for the term, but within the time
allowed by an order not entered in the minutes on an oral motion made therefore at the trial, the
court at a subsequent term was held to have jurisdiction to permit the filing of such order nunc pro
tunc on the recollection of the judge and other parol testimony that the order had been applied for
and granted during the previous term, without any memorandum or other written evidence thereof.
A nunc pro tunc entry will be treated as a verity where not appealed from.129 (Citations omitted)
The September 4, 2012 Resolution went beyond the Decision it was trying to correct. If this Court
intended to redefine the number of San Miguel Corporation shares of stock bought from the “coco
levy” funds, it should have issued a full resolution explaining the modification. It cannot, by way
of a nunc pro tunc order, overturn a long-decided Decision of this Court.
IV
pg. 1256
It is erroneous for the ponencia to conclude that San Miguel Corporation is not a party to this case.
The Omnibus Motion concerns the 25.45 million treasury shares subject to the “Compromise
Agreement” in San Miguel. In September 14, 2000, this Court upheld the Sandigan-
_______________
129 Id., at pp. 879-881.
107
VOL. 805, OCTOBER 5, 2016 107

bayan’s orders to San Miguel Corporation to deliver the certificates of stock of these shares to the
PCGG.
This Court ordered San Miguel Corporation to comment on the Omnibus Motion, which it did on
December 3, 2013.
Due process is the right to be heard.130 It is, by its simplest interpretation, to hear the other side
of the argument before making a judgment.131 In Ynot v. Intermediate Appellate Court:132
The closed mind has no place in the open society. It is part of the sporting idea of fair play to hear
“the other side” before an opinion is formed or a decision is made by those who sit in judgment.
Obviously, one side is only one-half of the question; the other half must also be considered if an
impartial verdict is to be reached based on an informed appreciation of the issues in contention. It
is indispensable that the two sides complement each other, as unto the bow the arrow, in leading
to the correct ruling after examination of the problem not from one or the other perspective only
but in its totality. A judgment based on less that this full appraisal, on the pretext that a hearing is
unnecessary or useless, is tainted with the vice of bias or intolerance or ignorance, or worst of all,
in repressive regimes, the insolence of power.133
The essence of due process is to be given an opportunity to be heard and the right to be able to
present evidence on one’s behalf.134 The opportunity to be heard may be accomplished through
notice and hearing, or the submission of pleadings.135
_______________
pg. 1257
130 Ynot v. Intermediate Appellate Court, 232 Phil. 615, 631; 148 SCRA 659, 674 (1987) [Per J.
Cruz, En Banc].
131 Id., at p. 624; p. 668.
132 Id.
133 Id.
134 Mutuc v. Court of Appeals, 268 Phil. 37, 43; 190 SCRA 43, 49 (1990) [Per J. Paras, Second
Division].
135 Id., citing Yap Say v. Intermediate Appellate Court, 242 Phil. 802; 159 SCRA 325 (1988) [Per
J. Sarmiento, Second Division].
108

Before the January 24, 2012 Decision was promulgated, the Republic filed an Urgent Motion to
Direct San Miguel Corporation (SMC) to Comply with the Final and Executory Resolutions dated
October 24, 1991 and March 18, 1992 of the Sandiganbayan.136 This Court directed San Miguel
Corporation to comment on the Urgent Motion.137 San Miguel Corporation’s Comment was noted
in the Resolution dated October 4, 2010.138
When the Republic filed its Omnibus Motion, San Miguel Corporation was able to file its
Comment139 on December 2, 2013, outlining its argument that these treasury shares were already
fully paid by the time the “Compromise Agreement was implemented. It also attached various
documents proving its allegations, from Annex “A” to Annex D-27.”140
San Miguel Corporation was given every opportunity to be heard in this case. It was able to convey
all its arguments and present evidence on its behalf, both before the January 24, 2012 Decision
was promulgated, and even after, when the Republic filed its Omnibus Motion. There can be no
deprivation of due process as long as a party is given the opportunity to defend its cause.141
pg. 1258
The laws creating the “coco levy” funds were declared unconstitutional and the funds were
considered as public funds. As the CIIF Companies’ shares of stock were acquired using these
funds, the CIIF Companies could not have validly sold
_______________
136 Rollo, pp. 3322-3350.
137 Id., at pp. 3423A-3423C.
138 Id., at p. 598.
139 Id., at pp. 5189-5237.
140 Id., at pp. 5238-5289.
141 See Dumo v. Espinas, 515 Phil. 685, 699; 480 SCRA 53, 68 (2006) [Per J. Austria-Martinez,
First Division], citing Estares v. Court of Appeals, 498 Phil. 640, 658-659; 459 SCRA 604, 623
(2005) [Per J. Austria-Martinez, Second Division].
109
VOL. 805, OCTOBER 5, 2016 109

these shares to San Miguel Corporation since they could not sell something they did not actually
own. The parties to an illegal sale are considered to be in pari delicto, and neither can seek any
affirmative relief with the courts.142
In the January 24, 2012 Decision,143 this Court declared Presidential Decree Nos. 755, 961, and
1468 as unconstitutional since public funds cannot be used to purchase shares of stock to be given
for free to private individuals. This Court found that this was a direct violation of Article VI,
Section 29(3) of the Constitution, which provides:
ARTICLE VI
Legislative Department
pg. 1259
....
SECTION 29. . . . .
....
(3) All money collected on any tax levied for a special purpose shall be treated as a special fund
and paid out for such purpose only. If the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the
Government.
This Court likewise stated that “any property purchased by means of the coconut levy funds should
likewise be treated as public funds or public property, subject to burdens and restrictions attached
by law to such property.”144 The 33,133,126 San Miguel Corporation shares sold by the CIIF
Companies in March 1986 are to be treated as public funds or public property. The CIIF
Companies had no authority to sell the
_______________
142 See Bough and Bough v. Cantiveros and Hanopol, 40 Phil. 209, 216 (1919) [Per J. Malcolm,
En Banc] and Rellosa v. Gaw Chee Hun, 93 Phil. 827, 832-833 (1953) [Per J. Bautista-Angelo, En
Banc].
144 Id., at p. 620; p. 622.
110

shares of stock to any other private individual, including San Miguel Corporation.
The sale of the shares of stock was done one (1) month after the February 25, 1986 Revolution, on
March 26, 1986. Former President Corazon Aquino already issued Executive Order No. 1,145
pg. 1260
which created the PCGG to recover all of Former President Marcos’ ill-gotten wealth, as well as
the ill-gotten wealth of his cronies. The sale occurred after the issuance of Executive Order No.
2,146 which authorized the PCGG to freeze all assets and properties of Former President Marcos
and his cronies. Merely one (1) week prior to the sale, the PCGG sequestered all the shares of the
United Coconut Planters Bank purportedly issued to coconut farmers.147 Given the factual
antecedents, it is obvious that the sale was made in bad faith. The sale was clearly an attempt by
the CIIF Companies to dispose of their assets before the PCGG could sequester it.
Ex dolo malo non oritur actio. In pari delicto potior est conditio defendentis.148
Both the CIIF Companies and San Miguel Corporation were in pari delicto when it attempted the
sale of 33,133,126 San Miguel Corporation shares of stock on March 26, 1986. San Miguel
Corporation cannot now claim that it is entitled to the shares equivalent to the P500 million it
previously paid as a first installment. Parties in pari delicto cannot sue for specific performance,
recover property previously sold and delivered, or ask for a refund of money previously paid.149
The law,
_______________
145 Enacted February 28, 1986.
146 Enacted March 12, 1986.
147 See Philippine Coconut Producers Federation, Inc. (COCOFED) v. Presidential Commission
on Good Government, supra note 8.
148 Bough and Bough v. Cantiveros and Hanopol, supra note 142 at p. 216: “[A] party to an
illegal contract cannot come into a court of law and ask to have his illegal objects carried out. . . .
The law will not aid either party to an illegal agreement; it leaves the parties where it finds them.”
149 See Rellosa v. Gaw Chee Hun, supra note 142 at pp. 823-833.
111
VOL. 805, OCTOBER 5, 2016 111

as well as the courts, will not grant them any affirmative relief.150 If this Omnibus Motion is
denied and the fallo of the September 4, 2012 Resolution is allowed to stand, this Court will have
legitimized an illegal sale of public property.
pg. 1261
It is the duty of this Court to see through the elaborate legal machinations of parties who have
substantial resources by using the light of principle and the true spirit of our fundamental laws in
order to achieve social justice. It is simply unfair for a party to decline to follow a final and
executory order of this Court in one case and then cry due process in another. Social justice is not
mere shibboleth. It is a constitutional fiat. Not only is it a juridical necessity; it is also the basis of
a humane society.
The majority’s position falls short of achieving this ideal. It has made it more difficult for
impoverished coconut farmers to gain what is truly owing to them after suffering the exactions of
the Martial Law years.
I dissent. I do so emphatically.
ACCORDINGLY, I vote to GRANT the Omnibus Motion.
Manifestation and Omnibus Motion denied without prejudice to the right of respondent Republic
to institute appropriate action or proceeding.
Notes.—Rule 41 of the Revised Rules of Court states that no appeal may be taken from an order
of execution; Exceptions. (Dela Cruz, Sr. vs. Fankhauser, 677 SCRA 744 [2012])
Execution of a judgment can only be issued against one who is a party to the action, and not against
one who, not being a party thereto, did not have his day in court. (Atilano II vs. Asaali, 680 SCRA
345 [2012])
——o0o——
_______________
150 Id.
pg. 1262
G.R. No. 174964. October 5, 2016.*
SANGGUNIANG PANLALAWIGAN OF BATAAN, petitioner, vs. CONGRESSMAN

ENRIQUE T. GARCIA, JR., MEMBERS OF THE FACULTY, CONCERNED STUDENTS
AND THE BOARD OF TRUSTEES OF THE BATAAN POLYTECHNIC STATE COLLEGE,
respondents.
Regalian Doctrine; National Patrimony; Reproducing almost verbatim from the 1973
Constitution, Section 2, Article XII of the 1987 Constitution provides that [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.—The State’s ownership of and control over all lands and resources of the public domain
are beyond dispute. Reproducing almost verbatim from the 1973 Constitution, Section 2, Article
XII of the 1987 Constitution provides that “[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.” In Section 1,
Article XIII of the Amended 1935 Constitution, it was also provided that “[a]ll agricultural timber,
and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils,
all forces of potential energy and other natural resources of the Philippines belong to the State
x x x.”
Same; Same; If the property is owned by the municipal corporation in its public and governmental
capacity, it is public and Congress has absolute control over it; but if the property is owned in its
private or proprietary capacity, then it is patrimonial and Congress has no absolute control, in
which case, the municipality cannot be deprived of it without due process and payment of just
compensation.—In The Province of Zamboanga del Norte v. City of Zamboanga, et al., 22 SCRA
1334 (1968), cited by the CA, the Province of Zamboanga del Norte sought to declare
unconstitutional R.A. No. 3039, which ordered the transfer of properties belonging to the Prov-
_______________
* THIRD DIVISION.
630

Sangguniang Panlalawigan of Bataan vs. Garcia, Jr.
pg. 1263
ince of Zamboanga located within the territory of the City of Zamboanga to the said City, for
depriving the province of property without due process and just compensation. In said case, the
Court classified properties of local governments as either (a) properties for public use, or (b)
patrimonial properties, and held that the capacity in which the property is held by a local
government is dependent on the use to which it is intended and for which it is devoted. If the
property is owned by the municipal corporation in its public and governmental capacity, it is public
and Congress has absolute control over it; but if the property is owned in its private or proprietary
capacity, then it is patrimonial and Congress has no absolute control, in which case, the
municipality cannot be deprived of it without due process and payment of just compensation. In
upholding the validity of R.A. No. 3 039, the Court noted that it affected “lots used as capitol site,
school sites and its grounds, hospital and leprosarium sites and the high school playground sites
— a total of 24 lots — since these were held by the former Zamboanga province in its governmental
capacity and therefore are subject to the absolute control of Congress.”
Same; Same; It is established doctrine that the act of classifying State property calls for the
exercise of wide discretionary legislative power which will not be interfered with by the courts.—
The Court ruled that, like R.A. No. 4118 in Salas v. Jarencio, 46 SCRA 734 (1972), R.A. No. 3120
was intended to implement the social justice policy of the Constitution and the government’s
program of land for the landless. Thus, the sale of the subdivided lots to the bona fide occupants
by authority of Congress was not an exercise of eminent domain or expropriation without just
compensation, which would have been in violation of Section 1(2), Article III of the 1935
Constitution, but simply a manifestation of its right and power to deal with State property. “It is
established doctrine that the act of classifying State property calls for the exercise of wide
discretionary legislative power which will not be interfered with by the courts.” In Rabuco v.
Villegas, 55 SCRA 656 (1974), the rule in Salas was reiterated that property of the public domain,
although titled to the local government, is held by it in trust for the State.
Political Law; Presidency; The Constitutions of 1935, 1973 and 1987 have uniformly
differentiated the President’s power of supervision over local governments and his power of
control of the executive departments, bureaus and offices.—Local autonomy and decentrali-
631
VOL. 804, OCTOBER 5, 2016 631

zation of State powers to the local political subdivisions are the results of putting restraints upon
the exercise by the Presidents of executive powers over local governments. Section 4, Article X of
the 1987 Constitution reads in part: “The President of the Philippines shall exercise general
supervision over local governments.” As with the counterpart provisions of our earlier
Constitutions, the aforesaid provision has been interpreted to exclude the President’s power of
control over local governments. The Constitutions of 1935, 1973 and 1987 have uniformly
pg. 1264
differentiated the President’s power of supervision over local governments and his power of
control of the executive departments, bureaus and offices.
Same; Same; Local autonomy and decentralization of State powers to the local political
subdivisions have for their object to make governance directly responsive at the local levels by
giving them a free hand to chart their own destiny and shape their future with minimum
intervention from central authorities, thereby rendering them accountable to their local
constituencies.—Local autonomy and decentralization of State powers to the local political
constituencies. Thus, “[h]and in hand with the constitutional restraint on the President’s power
over local governments is the state policy of ensuring local autonomy.” As farther explained in
Pimentel, Jr. v. Aguirre, 336 SCRA 201 (2000): Under the Philippine concept of local autonomy,
the national government has not completely relinquished all its powers over local governments,
including autonomous regions. Only administrative powers over local affairs are delegated to
political subdivisions. The purpose of the delegation is to make governance more directly
responsive and effective at the local levels. In turn, economic, political and social development at
the smaller political units are expected to propel social and economic growth and development.
But to enable the country to develop as a whole, the programs and policies effected locally must
be integrated and coordinated towards a common national goal. Thus, policy setting for the entire
country still lies in the President and Congress. As we stated in Magtajas v. Pryce Properties
Corp., Inc., municipal governments are still agents of the national government. (Citation omitted)
It is clear, then, that local autonomy and decentralization do not deal directly with
632

issues concerning ownership, classification, use or control of properties of the public domain held
by local governments. The State retains power over property of the public domain, exercised
through Congress.
Remedial Law; Special Civil Actions; Mandamus; Section 3, Rule 65 of the 1997 Rules of Civil
Procedure provides that a writ of mandamus shall issue where a tribunal, corporation, board,
officer or person unlawfully neglects the performance of an act which the law specifically enjoins
as a duty, to command the respondent to do the act required to be done to protect the rights of the
petitioner.—Section 3, Rule 65 of the 1997 Rules of Civil Procedure provides that a writ of
mandamus shall issue where a tribunal, corporation, board, officer or person unlawfully neglects
the performance of an act which the law specifically enjoins as a duty, to command the respondent
to do the act required to be done to protect the rights of the petitioner. Herein petitioner has argued
pg. 1265
that the mandamus applicants are not entitled thereto because they are not real parties-in-interest.
It is a rule reechoed in a long line of cases that every action must be prosecuted or defended in the
name of the real party-in-interest, meaning “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.”
Aurelio C. Angeles, Jr. for petitioner.
Emiliano S. Pomer for respondent Enrique T. Garcia, Jr.
REYES, J.:
Before this Court is a Petition for Review on Certiorari1 of the Decision2 dated February 7, 2006
of the Court of Appeals
_______________
1 Rollo, pp. 10-26.
2 Penned by Associate Justice Arcangelita M. Romilla-Lontok, with Associate Justices Marina L.

Buzon and Aurora Santiago-Lagman, concurring; CA Rollo, pp. 27-34.
633
VOL. 804, OCTOBER 5, 2016 633

(CA) in C.A.-G.R. S.P. No. 85902 upholding the Decision dated November 29, 2002 of the
Regional Trial Court (RTC) of Bataan which granted the petition for a writ of mandamus in Special
Civil Action No. 7043.
Antecedent Facts
pg. 1266
Lot Nos. 2193 and 2194 of the Bataan Cadastre, containing 1,222 square meters and 10,598 sq.
m., respectively, were registered in the name of the Province of Bataan. Both lots were embraced
in Original Certificate of Title (OCT) No. N-182, and occupied by the Bataan Community Colleges
(BCC) and the Medina Lacson de Leon School of Arts and Trades (MLLSAT), both State-run
schools.3
On February 26, 1998, the Congress of the Philippines passed Republic Act (R.A.) No. 8562,
authored by Congressman Enrique T. Garcia, Jr. (Cong. Garcia), converting the MLLSAT into a
polytechnic college, to be known as the Bataan Polytechnic State College (BPSC), and integrating
thereto the BCC.4 Section 24 of R.A. No. 8562 provides that:
All parcels of land belonging to the government occupied by the Medina Lacson de Leon School
of Arts and Trades and the Bataan Community Colleges are hereby declared to be the property of
the Bataan Polytechnic State College and shall be titled under that name: Provided, That should
the State College cease to exist or be abolished or should such parcels of land aforementioned be
no longer needed by the State College, the same shall revert to the Province of Bataan.
On the basis of the above provision, Cong. Garcia wrote to then Governor of Bataan Leonardo
Roman, and the Sangguniang Panlalawigan of Bataan (petitioner), requesting them
_______________
3 Rollo, p. 14.
4 Id., at pp. 14-15.
634

to cause the transfer of the title of the aforesaid lots to BPSC. No transfer was effected.5
Thus, Cong. Garcia, along with the faculty members and some concerned students of BPSC
(collectively, the respondents) filed a Special Civil Action for Mandamus with the RTC of
Balanga, Bataan against the Governor and the petitioner. Initially, the Board of Trustees of the
BPSC was impleaded as an unwilling plaintiff but was eventually included as co-petitioner in the
civil suit pursuant to Resolution No. 14, Series of 2000 of the BPSC.6
pg. 1267
In their Comment, the Governor and the petitioner took issue with the standing of the respondents,
arguing that they were not the real parties-in-interest who would be benefited or injured by the
judgment, or the party entitled to the avails of the suit. They asserted that the subject properties
were owned by the Province of Bataan and not the State, for them to be simply transferred to the
BPSC by virtue of the law.7
In its Decision dated November 29, 2002, the RTC granted the writ of mandamus. The fallo of the
RTC decision reads:
WHEREFORE, a writ of mandamus is hereby issued, ordering respondents to forthwith:
1. Deliver the owner’s duplicate copy of [OCX] No. N-182 to the Register of Deeds of Bataan,
free from any hen or encumbrance;
2. Execute the corresponding deed of conveyance of the parcels of land in issue in favor of the
[BPSC]; and
3. Cause the transfer and registration of the title to and in the name of the [BPSC].
SO ORDERED.8
_______________
5 Id., at p. 15.
6 CA Rollo, pp. 28-29.
7 Id., at p. 29.
8 Id., at p. 28.
635
VOL. 804, OCTOBER 5, 2016 635

The Governor and the petitioner appealed to the CA alleging that the subject lots were the
patrimonial properties of the Province of Bataan, and as such they cannot be taken by the National
Government without due process of law and without just compensation. They also pointed out that
certain loan obligations of the Province of Bataan to the Land Bank of the Philippines (LBP) were
secured with a mortgage on the lots; and since the mortgage lien was duly annotated on its title,
OCT No. N-182, the writ of mandamus violated the non-impairment clause of the Constitution.
pg. 1268
The Governor and the petitioner reiterated that the respondents had no legal standing since they
were not the real parties-in-interest.9
In the Decision10 dated February 7, 2006, the CA affirmed the RTC.
The CA rejected the claim that the subject lots were the patrimonial properties of the Province of
Bataan, declaring that the petitioner failed to provide proof that the Province of Bataan acquired
them with its own private or corporate funds, and for this reason the lots must be presumed to
belong to the State, citing Salas, et al. v. Hon. Jarencio, et al.11 Concerning the mortgage to the
LBP, the appellate court agreed with the RTC that the consent of the LBP to the transfer of title to
BPSC must be obtained, and the mortgage lien must be carried over to the new title. The CA also
held that BPSC is a real party-in-interest on the basis of Section 24 of R.A. No. 8562, and was
correctly impleaded as a co-petitioner. The subsequent motion for reconsideration was denied in
the CA Resolution12 dated September 20, 2006; hence, this petition.
_______________
9 Id., at pp. 12-20.
10 Id., at pp. 27-34.
11 150-B Phil. 670; 46 SCRA 734 (1972).
12 CA Rollo, pp. 56-57.
636

Issues
WHETHER OR NOT THE SUBJECT PARCELS OF LAND ARE PATRIMONIAL

PROPERTIES OF THE PROVINCE OF BATAAN WHICH CANNOT BE TAKEN WITHOUT
DUE PROCESS OF LAW AND WITHOUT JUST COMPENSATION.
pg. 1269
II
WHETHER OR NOT A WRIT OF MANDAMUS MAY BE ISSUED AGAINST THE

PETITIONER TO COMPEL THE TRANSFER OF THE SUBJECT PROPERTIES WITHOUT
DUE PROCESS OF LAW AND WITHOUT JUST COMPENSATION.13
The petitioner insists that the subject lots are not communal lands, or legua comunal as they were
known under the laws of colonial Spain, but are the patrimonial properties of the Province of
Bataan, which were issued a Torrens title by the Cadastral Court on August 11, 1969 in Cadastral
Case No. 5;14 that while in Salas,15 the title of the State over the disputed lot was expressly
recognized by the City of Manila, this is not so in the case at bar;16 that in the exercise of its
proprietary rights over the subject lots, the Province of Bataan has used them as collateral for its
loan obligations with the LBP;17 that in its Manifestation and Motion dated February 24, 2000,
the Board of Trustees of BPSC even acknowledged the titles of the Province of Bataan over the
subject properties.18
_______________
13 Rollo, pp. 154-155.
14 Id., at p. 163.
15 Salas v. Jarencio, supra note 11.
16 Rollo, pp. 163-165.
17 Id., at p. 165.
18 Id., at pp. 165-166.
637
VOL. 804, OCTOBER 5, 2016 637

In addition to the above contentions, the petitioner proffers an alleged novel argument that R.A.
No. 8562 infringes on the State’s underlying policy of local autonomy for its territorial and political
subdivisions, found in Article X of the 1987 Constitution (formerly Article XI, 1973 Constitution)
and now fleshed out in a landmark legislation, R.A. No. 7160, better known as the Local
pg. 1270
Government Code of 1991 (LGC). Thus, for this Court to still sustain its ruling in Salas would
render the State’s policy of local autonomy purely illusory.19
Ruling of the Court
The decision of the CA is affirmed.
A. Under the well-entrenched and

time-honored Regalian Doctrine,
all lands of the public domain are
under the absolute control and
ownership of the State.
The State’s ownership of and control over all lands and resources of the public domain are beyond
dispute. Reproducing almost verbatim from the 1973 Constitution,20 Section 2, Article XII of the
1987 Constitution provides that “[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.” In Section 1, Article XIII of the
Amended 1935 Constitution, it was also provided that “[a]ll agricultural timber, and mineral lands
of the public domain,
_______________
19 Id., at pp. 155-162.
20 Section 8, Article XIV of the 1973 Constitution states that “[a]ll lands of the public domain,
waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries,
wildlife, and other natural resources of the Philippines belong to the State. x x x.”
638

pg. 1271
waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy and other
natural resources of the Philippines belong to the State x x x.”
Thus, in Cariño v. Insular Government,21 a case of Philippine origin, the Supreme Court of the
United States of America acknowledged that “Spain in its earlier decrees embodied the universal
feudal theory that all lands were held from the Crown x x x.” In Lee Hong Hok v. David,22 citing
Cariño, the Court likewise said that the theory is a manifestation of the concept of the Regalian
Doctrine, or jura regalia,23 which is enshrined in our 1935, 1973, and 1987 Constitutions. As
adopted in our republican system, this medieval concept is stripped of royal overtones; and
ownership of all lands belonging to the public domain is vested in the State.24 Under this well-
entrenched and time-honored Regalian Doctrine, all lands of the public domain are under the
absolute control and ownership of the State.
B. Local government property

devoted to governmental purposes,
such as local administration, pub-
lic education, and public health,
as may be provided under special
laws, is classified as public.
In The Province of Zamboanga del Norte v. City of Zamboanga, et al.,25 cited by the CA, the
Province of Zamboanga del Norte sought to declare unconstitutional R.A. No. 3039, which ordered
the transfer of properties belonging to the Province of Zamboanga located within the territory of
the City of Zambo-
_______________
21 212 U.S. 449, 457 (1909).
22 150-C Phil. 542; 48 SCRA 372 (1972).
23 Id., at pp. 547-548; p. 377.
24 Bernas, S.J., The 1987 Constitution of the Philippines, pp. 1009-1010 (1996).
25 131 Phil. 446; 22 SCRA 1334 (1968).
639
pg. 1272
VOL. 804, OCTOBER 5, 2016 639
anga to the said City, for depriving the province of property without due process and just
compensation. In said case, the Court classified properties of local governments as either (a)
properties for public use, or (b) patrimonial properties, and held that the capacity in which the
property is held by a local government is dependent on the use to which it is intended and for
which it is devoted. If the property is owned by the municipal corporation in its public and
governmental capacity, it is public and Congress has absolute control over it; but if the property is
owned in its private or proprietary capacity, then it is patrimonial and Congress has no absolute
control, in which case, the municipality cannot be deprived of it without due process and payment
of just compensation.26 In upholding the validity of R.A. No. 3039, the Court noted that it affected
“lots used as capitol site, school sites and its grounds, hospital and leprosarium sites and the high
school playground sites — a total of 24 lots — since these were held by the former Zamboanga
province in its governmental capacity and therefore are subject to the absolute control of
Congress.”27
According to the Court, there are two established norms to determine the classification of the
properties: that of the Civil Code, particularly Articles 423 and 424 thereof, and that obtaining
under the law of Municipal Corporations. Articles 423 and 424 of the Civil Code provide, as
follows:
Art. 423. The property of provinces, cities and municipalities is divided into property for public
use and patrimonial property.
Art. 424. Property for public use, in the provinces, cities, and municipalities, consists of the
provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades,
and public works for public service paid for by said provinces, cities, or municipalities.
_______________
26 Id., at p. 454; p. 1341.
27 Id., at p. 456; p. 1343.
640

pg. 1273
All other property possessed by any of them is patrimonial and shall be governed by this Code,
without prejudice to the provisions of special laws.
In Province of Zamboanga del Norte,28 properties for the free and indiscriminate use of everyone
are classified under the Civil Code norm as for public use, while all other properties are patrimonial
in nature. In contrast, under the Municipal Corporations Law norm, to be considered public
property, it is enough that a property is held and devoted to a governmental purpose, such as local
administration, public education, and public health.29 Nonetheless, the Court clarified that the
classification of properties in the municipalities, other than those for public use, as patrimonial
under Article 424 of the Civil Code, is “without prejudice to the provisions of special laws,”30
holding that the principles obtaining under the Law of Municipal Corporations can be considered
as “special laws.”31
Moreover, in the 2009 case of Heirs of Mario Malabanan v. Republic of the Philippines,32 the
Court reiterated that Article 420(2) of the Civil Code makes clear that properties “which belong to
the State, without being for public use, and are intended for some public service or for the
development of the national wealth,” are public dominion property. For as long as the property
belongs to the State, although already classified as alienable or disposable, it remains property of
the public dominion when it is “intended for some public service or for the development of the
national wealth.”33
_______________
28 Id.
29 Id., at p. 455; p. 1342.
30 Id., at p. 459; p. 1346.
31 Id.
32 605 Phil. 244; 587 SCRA 172 (2009).
33 Id., at pp. 277-278; p. 203.
641
VOL. 804, OCTOBER 5, 2016 641

pg. 1274
C. Property registered in the
name of the municipal corpora-
tion but without proof that it
was acquired with its corporate
funds is deemed held by it in
trust for the State.
The Court takes instructions from the case, of Salas as to properties belonging to the municipal
government. In Salas, at issue was the constitutionality of R.A. No. 4118 passed on June 20,
1964,34 whereby Congress reserved a lot, long titled in the name of the City of Manila, as
communal property, and converted it into disposable land of the State for resale in small lots to its
bona fide occupants. On February 24, 1919, Lot No. 1, Block 557 of the Cadastre of the City of
Manila, containing 9,689.80 sq. m., was declared by the Court of First Instance of Manila, Branch
4, acting as a land registration court in Case No. 18, G.L.R.O. Record No. 111, as owned by the
City of Manila in fee simple. On August 21, 1920, OCT No. 4329 was issued in the name of the
City of Manila over the said lot. On various dates in 1924, the City of Manila sold portions of Lot
No. 1, Block 557 to a certain Pura Villanueva (Villanueva). OCT No. 4329 was cancelled, and
transfer certificates of title (TCT) were issued to Villanueva for the portions sold to her, while TCT
No. 22547 was issued to the City of Manila for the remainder of Lot No. 1 containing 7,490.10 sq.
m., now designated, as Lot No. 1-B-2-B of Block 557.35
On September 21, 1960, the local board of the City of Manila wrote to the President of the
Philippines seeking assistance in declaring the aforesaid lot as patrimonial property of the city for
the purpose of reselling the same in small lots to the actual occupants thereof. R.A. No. 4118 was
passed by Congress on June 20, 1964 for this purpose.36 On February 18,
_______________
34 Salas v. Jarencio, supra note 11 at p. 679; p. 742.
35 Id., at p. 675; p. 737.
36 Id., at pp. 675-679; pp. 740-741.
642

pg. 1275
1965, Manila Mayor Antonio Villegas (Mayor Villegas) was furnished a copy of a subdivision
plan for TCT No. 22547. He interposed no objection to the implementation of R.A. No. 4118, and
TCT No. 22547 was duly surrendered to the Land Authority.37
Inexplicably, now claiming that R.A. No. 4118 was unconstitutional, Mayor Villegas brought on
December 20, 1966 an action for injunction and/or prohibition with preliminary injunction, to
restrain, prohibit and enjoin the Land Authority and the Register of Deeds of Manila from
implementing R.A. No. 4118. On September 23, 1968, the RTC declared the said law
unconstitutional for depriving the City of Manila of its property without due process and just
compensation.38
Acting on the petition for review, the Court declared that Lot 1-B-2-B of Block 557 was a
communal property held in trust by the City of Manila for the State, and therefore subject to the
paramount power of Congress to dispose of. Thus:
[T]he City of Manila, although declared by the Cadastral Court as owner in fee simple, has not
shown by any shred of evidence in what manner it acquired said land as its private or patrimonial
property. It is true that the City of Manila as well as its predecessor, the Ayuntamiento de Manila,
could validly acquire property in its corporate or private capacity, following the accepted doctrine
on the dual character — public and private — of a municipal corporation. And when it acquires
property in its private capacity, it acts like an ordinary person capable of entering into contracts or
making transactions for the transmission of title or other real rights. When it comes to acquisition
of land, it must have done so under any of the modes established by law for the acquisition of
ownership and other real rights. In the absence of a title deed to any land claimed by the City of
Manila as its own, showing that it was acquired with its private or corporate funds,
_______________
37 Id., at pp. 680-681; p. 741.
38 Id., at pp. 681-682; p. 742.
643
VOL. 804, OCTOBER 5, 2016 643

the presumption is that such land came from the State upon the creation of the municipality (Unson
v. Lacson, et al., 100 Phil. 695). Originally the municipality owned no patrimonial property except
those that were granted by the State not for its public but for private use. Other properties it owns
are acquired in the course of the exercise of its corporate powers as a juridical entity to which
category a municipal corporation pertains.
pg. 1276
Communal lands or “legua comunal” came into existence when a town or pueblo was established
in this country under the laws of Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de
Indios). The municipalities of the Philippines were not entitled, as a matter of right, to any part of
the public domain for use as communal lands. The Spanish law provided that the usufruct of a
portion of the public domain adjoining municipal territory might be granted by the Government
for communal purposes, upon proper petition, but, until granted, no rights therein passed to the
municipalities, and, in any event, the ultimate title remained in the sovereign (City of Manila v.
Insular Government, 10 Phil. 327).
xxxx
It may, therefore, be laid down as a general rule that regardless of the source or classification of
land in the possession of a municipality, excepting those acquired with its own funds in its private
or corporate capacity, such property is held in trust for the State for the benefit of its inhabitants,
whether it be for governmental or proprietary purposes. It holds such lands subject to the
paramount power of the legislature to dispose of the same, for after all it owes its creation to it as
an agent for the performance of a part of its public work, the municipality being but a subdivision
or instrumentality thereof for purposes of local administration. Accordingly, the legal situation is
the same as if the State itself holds the property and puts it to a different use (2 Mc Quilin,
Municipal Corporations, 3rd ed., p. 197, citing Monagham vs. Armatage, 218 Minn. 27, 15 N. W.
2nd 241).
644

True it is that the legislative control over a municipal corporation is not absolute even when it
comes to its property devoted to public use, for such control must not be exercised to the extent of
depriving persons of their property or rights without due process of law, or in a manner impairing
the obligations of contracts. Nevertheless, when it comes to property of the municipality which it
did not acquire in its private or corporate capacity with its own funds, the legislature can transfer
its administration and disposition to an agency of the National Government to be disposed of
according to its discretion. Here it did so in obedience to the constitutional mandate of promoting
social justice to insure the well-being and economic security of the people.39 (Underscoring ours)
D. R.A. No. 8562 was not intended

to expropriate the subject lots titled
in the name of the Province of
Bataan, but to confirm their char-
pg. 1277
acter as communal land of the State
and to make them available for
disposition by the National Government.
The case of Rabuco v. Hon. Villegas,40 decided in 1974, is a virtual reprise of the 1968 case of
Salas. In Rabuco, the constitutionality of R.A. No. 312041 was challenged, which provided for the
subdivision of Lot No. 21-B, Block 610 of the Cadastre of the City of Manila, containing about
10,198 sq. m. into residential lots, and the sale thereof to the tenants and bona fide occupants. The
law declared Lot No. 21-B “reserved
_______________
39 Id., at pp. 686-688; pp. 746-748.
40 154 Phil. 615; 55 SCRA 656 (1974).
41 An Act Converting Certain Parcels of Land in the City of Manila which are Reserved as
Communal Property into Disposable or Alienable Lands of the State and Providing for their
Subdivision and Sale, enacted on June 17, 1961.
645
VOL. 804, OCTOBER 5, 2016 645

as communal property” and then ordered it converted into “disposable and alienable lands of the
State.”42
The Court ruled that, like R.A. No. 4118 in Salas, R.A. No. 3120 was intended to implement the
social justice policy of the Constitution and the government’s program of land for the landless.
Thus, the sale of the subdivided lots to the bona fide occupants by authority of Congress was not
an exercise of eminent domain or expropriation without just compensation, which would have
been in violation of Section 1(2),43 Article III of the 1935 Constitution, but simply a manifestation
of its right and power to deal with State property.44 “It is established doctrine that the act of
classifying State property calls for the exercise of wide discretionary legislative power which will
not be interfered with by the courts.”45 In Rabuco, the rule in Salas was reiterated that property
of the public domain, although titled to the local government, is held by it in trust for the State. It
stated:
pg. 1278
The Court [in Salas] reaffirmed the established general rule that “regardless of the source or
classification of land in the possession of a municipality, excepting those acquired with its own
funds in its private or corporate capacity, such property is held in trust for the State for the benefit
of its inhabitants, whether it be for governmental or proprietary purposes. It holds such lands
subject to the paramount power of the legislature to dispose of the same, for after all it owes its
creation to it as an agent for the performance of a part of its public work, the municipality being
but a subdivision or instrumentality thereof for purposes of local administration. Accordingly, the
legal situation is the same as if the State itself holds the property and puts it to a different use” and
_______________
42 Rabuco v. Villegas, supra note 40 at pp. 619, 623; p. 664.
43 Article III, Section 1(2) reads: “Private property shall not be taken for public use without just
compensation.”
44 Rabuco v. Villegas, supra note 40 at pp. 625-626; p. 666.
45 Id., at p. 624; p. 664.
646

stressed that “the property, as has been previously shown, was not acquired by the City of Manila
with its own funds in its private or proprietary capacity. That it has in its name a registered title is
not questioned, but this title should be deemed to be held in trust for the State as the land covered
thereby was part of the territory of the City of Manila granted by the sovereign upon its
creation.”46
E. The State’s policy to promote

local autonomy and to devolve the
powers of the National Government
to its political subdivisions has for
its purpose to improve the quality of
local governance.
pg. 1279
Sections 2 and 3, Article X of the 1987 Constitution, relied upon by the petitioner, provide:
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum, allocate among
the different local government units their powers, responsibilities, and resources, and provide for
the qualifications, election, appointment and removal, term, salaries, powers and functions and
duties of local officials, and all other matters relating to the organization and operation of the local
units.
Pursuant to its mandate, the Congress passed the LGC in 1991 to spell out the above declared
policy of the State, which
_______________
46 Id., at p. 625; p. 665.
647
VOL. 804, OCTOBER 5, 2016 647

is now amplified in Section 2 of R.A. No. 7160. It states, as follows:
Sec. 2. Declaration of Policy.—(a) It is hereby declared the policy of the State that the
territorial and political subdivisions of the State shall enjoy genuine and meaningful local
autonomy to enable them to attain their fullest development as self-reliant communities and make
them more effective partners in the attainment of national goals. Toward this end, the State shall
provide for a more responsive and accountable local government structure instituted through a
system of decentralization whereby local government units shall be given more powers, authority,
responsibilities, and resources. The process of decentralization shall proceed from the National
Government to the local government units.
xxxx
Also invoked by the petitioners are Sections 18 and 22 of the LGC, which state as follows:
pg. 1280
Sec. 18. Power to Generate and Apply Resources.—Local government units shall have the
power and authority to establish an organization that shall be responsible for the efficient and
effective implementation of their development plans, program objectives and priorities; to create
their own sources of revenues and to levy taxes, fees, and charges which shall accrue exclusively
for their use and disposition and which shall be retained by them; to have a just share in national
taxes which shall be automatically and directly released to them without need of any further action;
to have an equitable share in the proceeds from the utilization and development of the national
wealth and resources within their respective territorial jurisdictions including sharing the same
with the inhabitants by way of direct benefits; to acquire, develop, lease, encumber, alienate, or
otherwise dispose of real or personal property held by them in their proprietary capacity and to
apply their resources and assets for productive, developmental, or welfare purposes, in the exercise
648

or furtherance of their governmental or proprietary powers and functions and thereby ensure their
development into self-reliant communities and active participants in the attainment of national
goals.
Sec. 22. Corporate Powers.—x x x
xxxx
(d) Local government units shall enjoy full autonomy in the exercise of their proprietary
functions and in the management of their economic enterprises, subject to the limitations provided
in this Code and other applicable laws.
In the instant petition, it is essentially the petitioner’s assertion that the State’s policy of local
autonomy and decentralization endows the Province of Bataan with patrimonial rights to use or
dispose of the subject lots according to its own development plans, program objectives and
priorities.
The Court disagrees.
Local autonomy and decentralization of State powers to the local political subdivisions are the
results of putting restraints upon the exercise by the Presidents of executive powers over local
governments. Section 4, Article X of the 1987 Constitution reads in part: “The President of the
Philippines shall exercise general supervision over local governments.” As with the counterpart
pg. 1281
provisions of our earlier Constitutions, the aforesaid provision has been interpreted to exclude the
President’s power of control over local governments.47 The Constitutions of 1935, 1973 and 1987
have uniformly differentiated the President’s power of supervision over local governments and his
power of control of the executive departments, bureaus and offices.48 In Pimentel, Jr. v. Hon.
Aguirre,49 it was
_______________
47 National Liga ng Mga Barangay v. Paredes, 482 Phil. 331, 355; 439 SCRA 130, 151 (2004).
48 See 1935 Constitution, Art. VII, Sec. 10; 1973 Constitution, Art. II, Sec. 10; 1987 Constitution,
Art. VII, Sec. 17 and Art. X, Sec. 4.
649
VOL. 804, OCTOBER 5, 2016 649

held that Section 4 confines the President’s power over local governments to one of general
supervision, thus:
Under our present system of government, executive power is vested in the President. The members
of the Cabinet and other executive officials are merely alter egos. As such, they are subject to the
power of control of the President, at whose will and behest they can be removed from office; or
their actions and decisions changed, suspended or reversed. In contrast, the heads of political
subdivisions are elected by the people. Their sovereign powers emanate from the electorate, to
whom they are directly accountable. By constitutional fiat, they are subject to the President’s
supervision only, not control, so long as their acts are exercised within the sphere of their legitimate
powers. By the same token, the President may not withhold or alter any authority or power given
them by the Constitution and the law.50
On the other hand, local autonomy and decentralization of State powers to the local political
constituencies.51 Thus, “[h]and in hand with the constitutional restraint on the President’s power
over local governments is the state policy of ensuring local autonomy.”52 As further explained in
Pimentel, Jr.:
pg. 1282
Under the Philippine concept of local autonomy, the national government has not completely
relinquished all its powers over local governments, including autonomous
_______________
49 391 Phil. 84; 336 SCRA 201 (2000).
50 Id., at p. 100; p. 215.
51 Id., at pp. 101-102; p. 217, citing Limbona v. Mangelin, 252 Phil. 813, 825; 170 SCRA 786,
795 (1989).
52 Id., at p. 100; pp. 215-216.
650

regions. Only administrative powers over local affairs are delegated to political subdivisions. The
purpose of the delegation is to make governance more directly responsive and effective at the local
levels. In turn, economic, political and social development at the smaller political units are
expected to propel social and economic growth and development. But to enable the country to
develop as a whole, the programs and policies effected locally must be integrated and coordinated
towards a common national goal. Thus, policy setting for the entire country still lies in the
President and Congress. As we stated in Magtajas v. Pryce Properties Corp., Inc., municipal
governments are still agents of the national government.53 (Citation omitted)
It is clear, then, that local autonomy and decentralization do not deal directly with issues
concerning ownership, classification, use or control of properties of the public domain held by
local governments. The State retains power over property of the public domain, exercised through
Congress.
F. The grant of autonomy to local

governments, although a radical
policy change under the 1973 and
1987 Constitutions, does not affect
the settled rule that they possess
pg. 1283
property of the public domain in
trust for the State.
The 1973 Constitution devoted an entire Article, Article XI, consisting of five sections, to laying
down its policy for the empowerment of the local governments. The 1987 Constitution, in turn,
fully devotes all 21 sections of its Article X for local government. It introduces significant new
provisions, such as the establishment of autonomous regions (Section 18) and the guarantee of just
share of the local governments in the national taxes and equitable share in the proceeds from
_______________
53 Id., at p. 102; p. 217.
651
VOL. 804, OCTOBER 5, 2016 651

the utilization of the national wealth (Sections 6 and 7). It was unlike in the 1935 Constitution,
which simply provided in Section 10 of Article VII, dealing with the Executive Department, that
“[t]he President shall have control of all executive departments, bureaus or offices, exercise
general provision over all local governments as may be provided by law, and take care that the
laws be faithfully executed.”
The erudite Justice Enrique Fernando (Justice Fernando), in his highly instructive separate
concurring opinion in Rabuco,54 did at first admit to doubts as to the continuing authoritativeness
of Province of Zamboanga del Norte and Salas, both promulgated before the effectivity of the
1973 Constitution, in view of the significant innovations introduced therein pertaining to the
autonomy of local governments. He stated that the goal of the 1973 Constitution was “the fullest
autonomy to local government units consistent with the basic theory of a unitary, not a federal,
polity,”55 hoping thereby to attain “their fullest development as self-reliant communities.”56
According to him, under the 1973 Constitution, “[t]hings have changed radically,”57 noting that
under the 1935 Constitution, “[i]t could hardly be assumed x x x that x x x the [local governments]
could justifiably lay claim to real autonomy.”58 He observed thus:
We start with the declared principle of the State guaranteeing and promoting the autonomy of local
government units. We have likewise noted the earnestness of the framers as to the attainment of
such declared objective as set forth in the specific article on the matter. It is made obligatory on
the National Assembly to enact a local government code. What is more, unlike the general run of
statutes, it cannot be amended except by a major-
pg. 1284
_______________
54 Rabuco v. Villegas, supra note 40 at pp. 626-634; pp. 664-674.
55 Id., at p. 628; p. 668.
56 Id.
57 Id., at p. 630; p. 670.
58 Id.
652

ity vote of all its members. It is made to include “a more responsive and accountable local
government structure with an effective system of recall,” with an expressed reference to
“qualifications, election and removal, term, salaries, powers, functions, and duties of local
officials, [as well as] all other matters relating to the organization and operation of the local units.”
Mention is likewise made of the “powers, responsibilities, and resources,” items that are identified
with local autonomy. As if that were not enough, the last sentence of this particular provision
reads: “However, any change in the existing form of local government shall not take effect until
ratified by a majority of the votes cast in a plebiscite called for the purpose.” To the extent that the
last section requires that the creation, division, merger, abolition or alteration of a boundary of a
province, city, municipality, or barrio, must be in accordance with the criteria established in the
local government code and subject to the approval by a majority of the votes cast in a plebiscite in
such unit or units, the adherence to the basic principle of local self government is quite clear.
Equally significant is the stress on the competence of a province, city, municipality or barrio “to
create its own sources of revenue and to levy taxes subject to such limitations as may be provided
by law.” The care and circumspection with which the framers saw to the enjoyment of real local
self-government not only in terms of administration but also in terms of resources is thus manifest.
Their intent is unmistakable. Unlike the case under the 1935 Constitution, there is thus a clear
manifestation of the presumption now in favor of a local government unit. It is a well-nigh
complete departure from what was. Nor should it be ignored that a highly urbanized city “shall be
independent” not only of the national government but also of a province. Would it not follow then
that under the present dispensation, the moment property is transferred to it by the national
government, its control over the same should be as extensive and as broad as possible. x x x.59
(Citations omitted)
pg. 1285
_______________
59 Id., at pp. 630-631; pp. 670-671.
653
VOL. 804, OCTOBER 5, 2016 653

Up to that point, it could almost be presumed that Justice Fernando would dissent from the lucid
ponencia of Justice Claudio Teehankee (Justice Teehankee), borne of logical doubts as to whether
Province of Zamboanga del Norte and Salas still retained their unimpaired doctrinal force under
the then new 1973 Constitution. But two considerations kept him reined in, so to speak. One was
Justice Teehankee’s “reference to the ratio decidendi of [Salas] as to the trust character impressed
on communal property of a municipal corporation, even if already titled,”60 “regardless of the
source of classification of land in the possession of a municipality, excepting those acquired with
its own funds in its private or corporate capacity.”61 Justice Fernando acknowledged that the local
government “holds such [communal property] subject to the paramount power of the legislature to
dispose of the same, for after all it owes its creation to it as an agent for the performance of a part
of its public work, the municipality being but a subdivision or instrumentality thereof for purposes
of local administration.”62
Rabuco stressed that the properties in controversy were not acquired by the City of Manila with
its own private funds. Thus, according to Justice Fernando, “That [the City of Manila] has in its
name a registered title is not questioned, but this title should be deemed to be held in trust for the
State as the land covered thereby was part of the territory of the City of Manila granted by the
sovereign upon its creation.”63 This doctrine, according to Justice Fernando, has its basis in the
Regalian Doctrine and is unaffected by the grant of extensive local autonomy under the 1973
Constitution. “It is my view that under the [1973] Constitution, as was the case under the 1935
charter, the holding of a municipal corporation as a unit of state does not impair the plenary power
of the national
_______________
60 Id., at p. 632; p. 671.
61 Id.
62 Id.
63 Id.
pg. 1286
654

government exercising dominical rights to dispose of it in a manner it sees fit, subject to applicable
constitutional limitations as to the citizenship of the grantee.”64
The other consideration noted by Justice Fernando in the ponencia of Justice Teehankee in Rabuco
he found further compelling was “the even more fundamental principle of social justice, which
was given further stress and a wider scope in the present Constitution.”65 He concluded that R.A.
No. 3120, like R.A. No. 4118, was intended to implement the social justice policy of the
Constitution and the government program of land for the landless, and was not “intended to
expropriate the property involved but merely to confirm its character as communal land of the
State and to make it available for disposition by the National Government.”66
G. The Province of Bataan has the

duty to provide an adequate secu-
rity for its loans with the LBP, with-
out defeating BPSC’s right to hold
title to the contested lots.
The RTC ordered the Province of Bataan to deliver the owner’s duplicate copy of OCT No. N-182
to the Register of Deeds of Bataan, free from any lien or encumbrance, to execute the
corresponding deed of conveyance in favor of BPSC, and to cause the transfer and registration of
the title to and in the name of the said college. The Province of Bataan erroneously believed that
it could mortgage the subject lots, notwithstanding that it held the same in trust for the State and
despite the fact that the said lots were actually being occupied by two government schools. As the
RTC urged, then, the Province of Bataan must address this issue of security for its loans with LBP.
It cannot complain that its compliance with the
_______________
64 Id., at p. 633; p. 672.
65 Id., at pp. 633-634; p. 673.
66 Id., at p. 634; p. 673.
pg. 1287
655
VOL. 804, OCTOBER 5, 2016 655

order of the RTC might violate the non-impairment clause of the Constitution, since its duty to
provide a replacement security for its loans with LBP is clear.
H. BPSC is entitled to a writ of

mandamus.
Section 3, Rule 65 of the 1997 Rules of Civil Procedure provides that a writ of mandamus shall
issue where a tribunal, corporation, board, officer or person unlawfully neglects the performance
of an act which the law specifically enjoins as a duty, to command the respondent to do the act
required to be done to protect the rights of the petitioner. Herein petitioner has argued that the
mandamus applicants are not entitled thereto because they are not real parties-in-interest. It is a
rule reechoed in a long line of cases that every action must be prosecuted or defended in the name
of the real party-in-interest, meaning “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.”67
At issue in this petition is Section 24 of R.A. No. 8562, which directs that “[a]ll parcels of land
belonging to the government occupied by the [MLLSAT] and the [BCC] are hereby declared to be
the property of the [BPSC] and shall be titled under that name.” There is no dispute that the
Congress has expressly intended to entrust to BPSC the titles to the subject lots. Being the sole
beneficiary of Section 24 of R.A. No. 8562, BPSC is the real party-in-interest, and is entitled to
mandamus to enforce its right thereunder.68
_______________
67 Republic v. Agunoy, Sr., 492 Phil. 118, 131; 451 SCRA 735, 746 (2005).
68 Incidentally, on March 22, 2007, the Congress passed R.A. No. 9403, which further converted
the BPSC into a State University, to be known as the Bataan Peninsula State University, and
integrating therewith certain public schools land colleges in Bataan. Section 19 thereof also
declares that all parcels of land belonging to the
pg. 1288
656

WHEREFORE, in view of the foregoing, the petition for review on certiorari is DENIED. The
Decision of the Court of Appeals dated February 7, 2006 in C.A.-G.R. S.P. No. 85902 is
AFFIRMED.
SO ORDERED.
Notes.—While it is through a system of decentralization that the State shall promote a more
responsive and accountable local government structure, the concept of local autonomy does not
imply the conversion of local government units into “mini-states.” (Pimentel, Jr. vs. Ochoa, 676
SCRA 551 [2012])
The Supreme Court has held that while the power to merge administrative regions is not provided
for expressly in the Constitution, it is a power which has traditionally been lodged with the
President to facilitate the exercise of the power of general supervision over local governments.
(Republic vs. Bayao, 697 SCRA 313 [2013])
——o0o——
_______________
Government occupied by the BPSC, the BCC in the City of Balanga, the Bataan National School
for Filipino Craftsmen in the Municipality of Orani and the Bataan State College, are the property
of the University, and shall be titled under that name.
pg. 1289
G.R. No. 192282. October 5, 2016.*
A. NATE CASKET MAKER and/or ARMANDO and ANELY NATE, petitioners, vs. ELIAS V.
ARANGO, EDWIN M. MAPUSAO, JORGE C. CARIÑO, JERMIE MAPUSAO, WILSON A.
NATE, EDGAR A. NATE, MICHAEL A. MONTALES, CELSO A. NATE, BENJES A. LLONA
and ALLAN A. MONTALES, respondents.
Labor Law; Civil Procedure; Appeals; Petition for Review on Certiorari; In labor cases, a Rule
45 petition is limited to reviewing whether the Court of Appeals (CA) correctly determined the
presence or absence of grave abuse of discretion and deciding other jurisdictional errors of the
National Labor Relations Commission (NLRC).—A petition for review on certiorari under Rule
45 is a mode of appeal where the issue is limited to questions of law. In labor cases, a Rule 45
petition is limited to reviewing whether the Court of Appeals correctly determined the presence or
absence of grave abuse of discretion and deciding other jurisdictional errors of the National Labor
Relations Commission.
Same; Employment Contracts; Security of Tenure; A stipulation in an agreement can be ignored

as and when it is utilized to deprive the employee of his security of tenure.—In termination cases,
the burden of proving just and valid cause for dismissing an employee from his employment rests
upon the employer, and the latter’s failure to do so would result in a finding that the dismissal is
unjustified. Petitioners failed to discharge this burden. It must be emphasized that employers
cannot seek refuge under whatever terms of the agreement they had entered into with their
employees. The law, in defining their contractual relationship, does so, not necessarily or
exclusively upon the terms of their written or oral contract, but also on the basis of the nature of
the work of employees who had been called upon to perform. The law affords protection to an
employee, and it will not countenance any attempt to subvert its spirit and intent. A stipulation in
an agreement can be ignored as and when it is utilized to deprive the employee of his security of
tenure. The
_______________
* THIRD DIVISION.
170

A. Nate Casket Maker vs. Arango
sheer inequality that characterizes employer-employee relations, where the scales generally tip
against the employee, often scarcely provides him real and better options.
pg. 1290
Same; Regular Employees; A regular employment, whether it is one or not, is aptly gauged from
the concurrence, or the nonconcurrence, of the following factors — (a) the manner of selection
and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or
absence of the power of dismissal; and (d) the presence or absence of the power to control the
conduct of the putative employee or the power to control the employee with respect to the means
or methods by which his work is to be accomplished.—A regular employment, whether it is one
or not, is aptly gauged from the concurrence, or the nonconcurrence, of the following factors (a)
the manner of selection and engagement of the putative employee; (b) the mode of payment of
wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of
the power to control the conduct of the putative employee or the power to control the employee
with respect to the means or methods by which his work is to be accomplished. The “control test”
assumes primacy in the overall consideration. Under this test, an employment relation obtains
where work is performed or services are rendered under the control and supervision of the party
contracting for the service, not only as to the result of the work but also as to the manner and details
of the performance desired.
Same; Same; There is no dispute that the tasks performed by respondents as carpenters, painters,
and mascilladors were necessary and desirable in the usual business of petitioners who are
engaged in the manufacture and selling of caskets.—There is no dispute that the tasks performed
by respondents as carpenters, painters, and mascilladors were necessary and desirable in the usual
business of petitioners who are engaged in the manufacture and selling of caskets. We have to also
consider the length of time that respondents worked for petitioners, commencing on various dates
from 1998 to 2007. In addition, the power of control of petitioners over respondents is clearly
present in this case. Respondents follow the steps in making a casket, as instructed by the
petitioners, like carpentry, mascilla, rubbing and painting. They had their own notebooks where
they listed the work completed with their signature and the date finished. The same would be
checked by petitioners as basis for the compensa-
171
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tion for the day. Thus, petitioners wielded control over the respondents in the discharge of their
work.
Same; Same; Pakyaw Workers; Pakyaw workers are considered regular employees for as long as
their employers exercise control over them.—Pakyaw workers are considered regular employees
for as long as their employers exercise control over them. Thus, while respondents’ mode of
compensation was on a per-piece basis, the status and nature of their employment was that of
regular employees. As regular employees, respondents were entitled to security of tenure and could
pg. 1291
be dismissed only for just or authorized causes and after the observance of due process. The right
to security of tenure is guaranteed under Article XIII, Section 3 of the 1987 Constitution.
Same; Termination of Employment; Illegal Dismissals; Reinstatement; Backwages; Reinstatement

restores the employee who was unjustly dismissed to the position from which he was removed, that
is, to his status quo ante dismissal, while the grant of backwages allows the same employee to
recover from the employer that which he had lost by way of wages as a result of his dismissal.—
Under Article 279 of the Labor Code as aforestated, an employee unjustly dismissed from work is
entitled to reinstatement and backwages, among others. Reinstatement restores the employee who
was unjustly dismissed to the position from which he was removed, that is, to his status quo ante
dismissal, while the grant of backwages allows the same employee to recover from the employer
that which he had lost by way of wages as a result of his dismissal. These twin remedies —
reinstatement and payment of backwages — make the dismissed employee whole who can then
look forward to continued employment. Thus, do these two remedies give meaning and substance
to the constitutional right of labor to security of tenure. Respondents are, therefore, entitled to
reinstatement with full backwages pursuant to Article 279 of the Labor Code, as amended by R.A.
No. 6715.
Same; Same; Same; Same; Separation Pay; The accepted doctrine is that separation pay may avail
in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties.
Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be
reinstated.—On reinstatement, the CA ordered payment of separation pay in lieu of reinstatement.
The
172

accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no
longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides not to be reinstated. We defer to the findings of the
Court of Appeals and authorized under jurisprudence, that separation pay in lieu of reinstatement
is warranted in this case. Respondents filed their complaint in 2007. Nine (9) years are a substantial
period to bar reinstatement. The dispositive portion of the CA Decision is consistent with the
premise that the respondents were entitled to reinstatement by reason of their illegal dismissal, but
they could receive instead separation pay in lieu of reinstatement if reinstatement is no longer
practicable.
Same; Same; Backwages; Piece-rate Workers; As respondents are piece-rate workers being paid
by the piece, there is need to determine the varying degrees of production and days worked by
each worker.—The amount of backwages to which each respondent is entitled, however, cannot
pg. 1292
be fully settled at this time. As respondents are piece-rate workers being paid by the piece, there
is need to determine the varying degrees of production and days worked by each worker. Clearly,
this issue is best left to the NLRC. In Labor Congress of the Philippines v. NLRC, 290 SCRA 509
(1998), the Court was confronted with a situation wherein several workers paid on a piece-rate
basis were entitled to backwages by reason of illegal dismissal. The Court noted that as the piece-
rate workers had been paid by the piece, “there [was] a need to determine the varying degrees of
production and days worked by each worker,” and that “this issue is best left to the [NLRC].” We
believe the same result should obtain in this case, and the NLRC be tasked to conduct the proper
determination of the appropriate amount of backwages due to each of the respondents.
Nonetheless, even as the case should be remanded to the NLRC for the proper determination of
backwages, nothing in this decision should be construed in a manner that would impede the award
of separation pay to the respondents as previously rendered by the CA. In lieu of reinstatement
then, separation pay at the rate of one month for every year of service, with a fraction of at least
six (6) months of service considered as one (1) year, is in order.
Same; Same; Pakyaw Workers; Holiday Pay; Service Incentive Leave Pay; Since respondents
cannot be considered as “field personnel,” then they are not exempted from the grant of holiday
and service
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incentive leave (SIL) pay even as they were engaged on pakyaw or task basis.—Based on the
definition of field personnel under Article 82, respondents do not fall under the definition of “field
personnel.” First, respondents regularly performed their duties at petitioners’ place of business;
second, their actual hours of work could be determined with reasonable certainty; and third,
petitioners supervised their time and performance of their duties. Since respondents cannot be
considered as “field personnel,” then they are not exempted from the grant of holiday and SIL pay
even as they were engaged on pakyaw or task basis.
Same; Thirteenth Month Pay; Piece-rate Workers; Under Section 3(e) of Presidential Decree (PD)
No. 851, “employers of those who are paid on x x x task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the time consumed in the performance
thereof” are exempted.—With respect to the payment of 13th month pay, however, We find that
respondents are not entitled to such benefit. Again, as We ruled in the case of David v. Macasio,
729 SCRA 67 (2014): The governing law on 13th month pay is Presidential Decree No. 851. As
with holiday and SIL pay, 13th month pay benefits generally cover all employees; an employee
must be one of those expressly enumerated to be exempted. Section 3 of the Rules and Regulations
Implementing P.D. No. 851 enumerates the exemptions from the coverage of 13th month pay
benefits. Under Section 3(e), “employers of those who are paid on x x x task basis, and those who
pg. 1293
are paid a fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof” are exempted.
Same; It should be made clear that when the law tilts the scales of justice in favor of labor, it is in
recognition of the inherent economic inequality between labor and management.—All told, We
need to stress that the Constitution affords full protection to labor, and that in light of this
Constitutional mandate, We must be vigilant in striking down any attempt of the management to
exploit or oppress the working class. The law, in protecting the rights of the employees, authorizes
neither oppression nor self-destruction of the employer. It should be made clear that when the law
tilts the scales of justice in favor of labor, it is in recognition of the inherent economic inequality
between labor and management. The intent is to balance the scales of justice; to put the two parties
on relatively equal positions.
174

Enrique A. Joaquin for respondents.
PERALTA, J.:
Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court which seeks
the reversal of the Decision2 dated January 6, 2010, and Resolution3 dated May 13, 2010 of the
Court of Appeals (CA) in C.A.-G.R. S.P. No. 106965. The CA reversed and set aside the Decision4
of the National Labor Relations Commission (NLRC), Sixth Division, in NLRC NCR Case No.
00-02-01233-07 which affirmed the Decision5 of the Labor Arbiter dismissing the complaint for
illegal dismissal, underpayment of wages, and nonpayment of overtime pay, holiday pay, service
incentive leave pay and 13th month pay filed by respondents.
The factual antecedents are as follows:
Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker. They
employed respondents on various dates as carpenters, mascilladors and painters in their casket-
pg. 1294
making business from 1998 until their alleged termination in March 2007. Petitioners alleged in
their Position Paper6 that respondents are pakyaw workers
_______________
1 Rollo, pp. 3-15.
2 Penned by Associate Justice Hakim S. Abdulwahid, with Associate Justices Ramon M. Bato,
Jr. and Amy C. Lazaro-Javier, concurring; id., pp. 217-226.
3 Id., at pp. 239-240.
4 Id., at pp. 153-159.
5 Id., at pp. 123-129.
6 Id., at pp. 18-24.
175
VOL. 805, OCTOBER 5, 2016 175

who are paid per job order.7 Respondents are “stay-in” workers with free board and lodging, but
they would “always” drink, quarrel with each other on petty things such that they could not
accomplish the job orders on time. Hence, petitioners would then be compelled to “contract out”
to other workers for the job to be finished. On February 3, 2007, they met with respondents in
order to present a proposed employment agreement which would change the existing pakyaw
system to “contractual basis” and would provide for vacation leave and sick leave pay and other
benefits given to regular employees. Petitioners alleged that the proposed employment agreement
would be more beneficial to respondents.8
On the other hand, respondents alleged in their Position Paper,9 that they worked from Monday to
Saturday, from 7:00 a.m. to 10:00 p.m., with no overtime pay and any monetary benefits despite
having claimed for such. On March 15, 2007, they were called by petitioners and were made to
sign a Contract of Employment10 with the following terms and conditions: (1) they shall be
working on contractual basis for a period of five months; (2) renewal of employment contract after
such period shall be on a case-to-case basis or subject to respondents’ efficiency and performance;
(3) petitioners shall reserve the right to terminate their employment should their performance fall
below expectations or if the conditions under which they were employed no longer exist; (4) their
wages shall be on a piece-rate basis; (5) in the performance of their tasks, they shall be obliged to
strictly follow their work schedules; (6) they shall not be eligible to avail of sick leave or vacation
pg. 1295
leave, nor receive 13th month pay and/or bonuses, or any other benefits given to a regular
employee. Respondents
_______________
7 Petitioners presented as evidence several job orders for caskets dating from February 1, 2007
to February 8, 2007 which were attached as Annexes “A” to “E” in their Position Paper; id., at pp.
25-30.
8 Rollo, p. 20.
9 Id., at pp. 31-36.
10 Annex “A” of the Position Paper of Respondents; id., at p. 37.
176

then alleged that when they were adamant and eventually refused to sign the contract, petitioners
told them to go home because their employment has been terminated.
On February 8, 2007, respondents filed a Complaint for illegal dismissal and nonpayment of
separation pay against petitioners. On March 15, 2007, they amended the complaint to include
claims for underpayment of wages, nonpayment of overtime pay, holiday pay, 5-day service
incentive leave pay and 13th month pay.
On August 15, 2007, Labor Arbiter (LA) Eduardo J. Carpio, issued a Decision dismissing the
complaint for lack of merit. While the LA acknowledged that respondents being pakyaw workers
are considered regular employees, he ruled that petitioners did not terminate the services of
respondents and believed in the denial of petitioners that respondents were called to their office on
March 15, 2007 since respondents already initiated the present case on February 8, 2007. On the
issue of underpayment, the LA held that respondents were earning more than the minimum wage
per day; and as pakyaw workers, though they are deemed regular workers, they are not entitled to
overtime pay, holiday pay, service incentive leave pay and 13th month pay citing the case of field
personnel and those paid on purely commission basis.
Thereafter, respondents elevated the case before the NLRC, Sixth Division. On July 29, 2008, the
NLRC affirmed the Decision of the LA and held that no substantial evidence was presented to
show that petitioners terminated the employment of respondents. It stated that pakyaw workers are
not entitled to money claims because their work depends on the availability of job orders from
pg. 1296
petitioners’ clients. Also, there was no proof that overtime work was rendered by respondents. A
motion for reconsideration was filed by respondents but the same was denied.
Aggrieved, respondents filed a petition for certiorari before the CA. In a Decision dated January
6, 2010, the CA reversed and set aside the decision of the NLRC. The fallo states:
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VOL. 805, OCTOBER 5, 2016 177

WHEREFORE, the petition for certiorari is GRANTED. Public Respondent’s Decision dated July
29, 2008 and Resolution dated November 7, 2008 in NLRC LAC No. 12-003252-07 (NCR Case
No. 00-02-01233-07) are REVERSED AND SET ASIDE, and in lieu thereof, a new one is
ENTERED, declaring petitioners to have been illegally dismissed and ordering private respondents
to pay them backwages, separation pay and other monetary benefits as required by law. Upon the
finality of this decision and for the enforcement of the same, the Labor Arbiter of origin is directed
to conduct further proceedings for the purpose of determining the amount of backwages and
separation pay due petitioners.
SO ORDERED.11
A motion for reconsideration was filed by petitioners but the same was denied by the Court of
Appeals on May 13, 2010.
Hence, this petition, raising the following issues for resolution:
1. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DECLARING
THAT COMPLAINANTS WERE ILLEGALLY DISMISSED; [and]
2. THERE ARE SERIOUS ERRORS IN THE FINDINGS OF FACTS WHICH, IF NOT

CORRECTED, WOULD CAUSE GRAVE AND IRREPARABLE DAMAGE TO THE
PRIVATE RESPONDENTS.12
Petitioners emphasized in their petition that they had always agreed and admitted13 from the
beginning of the case the regular employment status of respondents. According to petitioners, what
they are insisting, contrary to the findings of
pg. 1297
_______________
11 Id., at pp. 225-226.
12 Id., at p. 8.
13 Id.
178

the CA, is the alleged fact that they never dismissed the respondents from their employment. They
argued that since petitioners’ business depended on the availability of job orders, necessarily the
duration of respondents’ employment is not permanent but coterminous with the completion of
such job orders. They further argued that since respondents are “pakyaw” workers or “paid by
result,” they are not entitled to their money claims.
In their Comment to the Petition, respondents countered that only questions of law may be raised
in a petition for review on certiorari and that the errors being raised by petitioners are questions
of fact.
A petition for review on certiorari under Rule 45 is a mode of appeal where the issue is limited to
questions of law. In labor cases, a Rule 45 petition is limited to reviewing whether the Court of
Appeals correctly determined the presence or absence of grave abuse of discretion and deciding
other jurisdictional errors of the National Labor Relations Commission.14
The case of Career Philippines Shipmanagement, Inc., et al. v. Serna,15 citing Montoya v.
Transmed Manila Corp./Mr. Ellena, et al.,16 is instructive on the parameters of judicial review
under Rule 45:
As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed the
particular parameters of a Rule 45 appeal from the CA’s Rule 65 decision on a labor case, as
follows:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast

with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule
45 limits us to the review of
_______________
pg. 1298
14 Fuji Television Network, Inc. v. Espiritu, G.R. Nos. 204944-45, December 3, 2014, 744 SCRA
31, 63.
15 700 Phil. 1, 9; 686 SCRA 676, 683-684 (2012).
16 613 Phil. 696, 707; 597 SCRA 334, 342-343 (2009).
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VOL. 805, OCTOBER 5, 2016 179

questions of law raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for certiorari it ruled upon
was presented to it; we have to examine the CA decision from the prism of whether it
correctly determined the presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC decision on the merits of the
case was correct. In other words, we have to be keenly aware that the CA undertook a Rule
65 review, not a review on appeal, of the NLRC decision challenged before it.17
Therefore, in this kind of petition, the proper question to be raised is, “Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling on the case?” In other
words, did the CA correctly determine whether the NLRC ruling had basis in fact and in law? In
Our Rule 45 review, this Court must deny the petition if it finds that the CA correctly acted. These
parameters shall be used in resolving the substantive issues in this petition.18
To resolve the issue of whether petitioners are guilty of illegal dismissal, We necessarily have to
determine the veracity of the parties’ allegations, a function we are ordinarily barred from
performing when deciding a Rule 45 petition. However, due to the conflicting factual findings of
the NLRC and the CA, we find the review of the evidence on record compelling and proper.19
_______________
17 Career Philippines Shipmanagement, Inc. v. Serna, supra note 15. (Emphasis in the original)
19 Philippine Rural Reconstruction Movement (PRRM) v. Pulgar, 637 Phil. 244, 252; 623 SCRA
244, 251 (2010).
pg. 1299
180

The crux of the dispute boils down to two issues, namely, (a) whether respondents’ employment
was terminated, and (b) whether respondents who are pakyaw workers and considered regular
workers are entitled to overtime pay, holiday pay, service incentive leave pay and 13th month pay.
Both issues are clearly factual in nature as they involved appreciation of evidence presented before
the NLRC.
There is no doubt that respondents have been under the employ of petitioners for some years. The
conflict arose when petitioners presented to respondents an employment contract hereunder
reproduced:
A. NATE CASKET MAKER
30 Espirito St. Pangulo
Malabon, Metro Manila
CONTRACT OF EMPLOYMENT
DATE: February 3, 2007
You are hereby assigned as worker/laborer at A. NATE CASKET MAKER. The following
constitute the terms and conditions under which the management of NATE CASKET MAKER
governs.
You will be working a 5-month contract basis. Your contract will be renewed on a case-to-case
basis or based upon the efficiency of your performance. The company also reserves the right to
discontinue or terminate your employment anytime if your performance does not come to
expectations or if the conditions under which you have been employed no longer exist.
pg. 1300
You will be receiving remuneration on a per item/piece basis [i.e., per casket made]. You are
obliged to follow strictly your schedules to work or perform your duty. During the period of your
employment, you will not [be] eligible to earn or receive any sick leave pay, [vacation] leave pay,
or any other benefits given to regular employees such as 13th month pay and bonuses.
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VOL. 805, OCTOBER 5, 2016 181

This contract and other conditions of your employment are governed further by existing company
policies and regulations, of which you have already been oriented into, and by future company
policies which may be issued from time to time.
Mr. and Mrs. Armando and Anely NATE
Proprietor Proprietress
I hereby accept this employment contract knowing and understanding fully well the terms and
conditions under which it shall be governed. I hereby acknowledge that I have been thoroughly
oriented and I fully understand the whole company policies, rules and regulations and thereby
agree to abide by them when employed.
DATE: February 3, 2007 EMPLOYEE/WORKER20
The said contract with a short term of five (5) months, renewable upon the terms set by petitioners,
was presented to respondents on February 3, 200721 (not February 8, 2007). Naturally,
respondents who had been continuously reporting to the petitioners since 1998 without any
interruption would have second thoughts on signing the said contract. Feeling disgruntled, they
filed a Complaint with the NLRC on February 8, 2016 for money claims. To their minds, it was a
way to protect their status of employment. It was explained in the Rejoinder they presented to the
LA that it was purely money claims but, not being learned nor assisted by a lawyer, they also
checked the box for “illegal dismissal.”22
pg. 1301
_______________
20 Rollo, p. 37.
21 Respondents’ (petitioners, herein) Reply to Complainants’ (respondents, herein) Position

Paper, id., at p. 41; Petition for Certiorari filed by herein respondents with the CA, id., at p. 213;
Petitioners’ Comment to the Petition for Review (filed by herein respondents with the CA), id., at
p. 245.
22 The Revised Rules of the NLRC provide under Sec. 3, Rule V, that parties should not be
allowed to allege facts not referred to or
182

When the petitioners received the summons on March 15, 2007 in connection with the complaint,
respondents were ordered by petitioners to go to the latter’s office.23 Because there was no
dismissal yet, and thinking perhaps that it was for an amicable settlement of their claims,
respondents went to the office of petitioners. However, respondents were presented with the same
contract. According to respondents, their refusal to sign the contract irated petitioners who then
told them to go home and not to report for work anymore.24 This prompted respondents to file an
amended complaint for illegal dismissal and money claims.
The meeting on March 15, 2007 was denied by petitioners as well as the dismissal of respondents.
It is worth noting, however, that in the Position Paper of petitioners, they alleged that their offer
of the said employment contract to respondents was caused by the alleged refusal/failure of the
latter to report for work as a result of the alleged drinking and petty quarrels:
8. Considering that the complainants refuse to do their work, a meeting was held on February 8,
2007, to have a proposal for a change of [pakyaw] system to that of contractual basis, giving them
the sample employment agreement for them to study. The herein respondents explained to them
that the change of work system to that of a contract basis which is beneficial to the complainants,
the employees will receive a vacation and sick leave, or any other benefits given to a regular
[employee] x x x.25
_______________
included in the complaint, or position paper, affidavits and other documents. This would mean that
although not contained in the complaint, any claim can still be averred in the position paper, as
pg. 1302
was done by the petitioners, or in an affidavit or other documents. (Garcia v. National Labor
Relations Commission, G.R. No. 110518, August 1, 1994, 234 SCRA 632, 638)
23 Rollo, p. 213.
24 Respondent’s (Complainant) Memorandum of Appeal with the NLRC, id., at p. 133.
25 Id., at p. 20. (Underlining supplied)
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VOL. 805, OCTOBER 5, 2016 183

Clearly, the aforequoted allegation in the Position Paper of petitioners is contrary to the terms and
conditions stated in the employment contract. It is specifically stated in the employment agreement
that during the period of employment, respondents would not be eligible to earn or receive any
sick leave pay, vacation leave pay, or any other benefits given to regular employees such as 13th
month pay and bonuses. Hence, the key to understanding petitioners’ motive in severing
respondents’ employment lies in the tenor of the contract itself which is the opposite to what is
alleged by petitioners in their position paper. Moreover, as correctly observed by the CA, there
was the absence of proof to show that petitioners conducted an investigation on the alleged
drinking and petty quarrelling of respondents nor did the petitioners provide respondents with an
opportunity to explain their side with respect to charges against them. The validity of the charge
must be established in a manner consistent with due process. These circumstances, taken together,
lead Us to conclude that petitioners indeed terminated respondents’ employment. The positive
assertion of respondents that they were dismissed by petitioners is more convincing than the mere
denial of petitioners.
In termination cases, the burden of proving just and valid cause for dismissing an employee from
his employment rests upon the employer, and the latter’s failure to do so would result in a finding
that the dismissal is unjustified. Petitioners failed to discharge this burden.26
It must be emphasized that employers cannot seek refuge under whatever terms of the agreement
they had entered into with their employees. The law, in defining their contractual relationship,
does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on
the basis of the nature of the work of employees who had been called upon to perform. The law
affords protection to an employee, and it
_______________
pg. 1303
26 Reno Foods, Inc. v. National Labor Relations Commission, 319 Phil. 500, 507-508; 249 SCRA
379, 386 (1995).
184

will not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can
be ignored as and when it is utilized to deprive the employee of his security of tenure. The sheer
inequality that characterizes employer employee relations, where the scales generally tip against
the employee, often scarcely provides him real and better options.27
Furthermore, petitioners agreed that respondents are regular employees. Article 280 of the Labor
Code provides:
Art. 280. Regular and Casual Employment.—The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph;

Provided, That, any employee who has rendered at least one year of service, whether such service
is continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity exist.
This provision classifies employees into regular, project, seasonal, and casual. It further classifies
regular employees into two kinds: (1) those “engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer”; and (2) casual employees
who have
_______________
27 Paguio v. National Labor Relations Commission, 451 Phil. 243, 252-253; 403 SCRA 190, 198
(2003).
pg. 1304
185
VOL. 805, OCTOBER 5, 2016 185

“rendered at least one year of service, whether such service is continuous or broken.”
A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the
nonconcurrence, of the following factors — (a) the manner of selection and engagement of the
putative employee; (b) the mode of payment of wages; (c) the presence or absence of the power of
dismissal; and (d) the presence or absence of the power to control the conduct of the putative
employee or the power to control the employee with respect to the means or methods by which his
work is to be accomplished. The “control test” assumes primacy in the overall consideration.
Under this test, an employment relation obtains where work is performed or services are rendered
under the control and supervision of the party contracting for the service, not only as to the result
of the work but also as to the manner and details of the performance desired.28
There is no dispute that the tasks performed by respondents as carpenters, painters, and
mascilladors were necessary and desirable in the usual business of petitioners who are engaged in
the manufacture and selling of caskets. We have to also consider the length of time that respondents
worked for petitioners, commencing on various dates from 1998 to 2007. In addition, the power
of control of petitioners over respondents is clearly present in this case. Respondents follow the
steps in making a casket, as instructed by the petitioners, like carpentry, mascilla, rubbing and
painting. They had their own notebooks where they listed the work completed with their signature
and the date finished. The same would be checked by petitioners as basis for the compensation for
the day. Thus, petitioners wielded control over the respondents in the discharge of their work.
It should be remembered that the control test merely calls for the existence of the right to control,
and not necessarily
_______________
28 Id., at pp. 250-251; p. 196.
186

pg. 1305
the exercise thereof. It is not essential that the employer actually supervises the performance of
duties by the employee. It is enough that the former has a right to wield the power.29 Hence,
pakyaw workers are considered regular employees for as long as their employers exercise control
over them. Thus, while respondents’ mode of compensation was on a per-piece basis, the status
and nature of their employment was that of regular employees.30
As regular employees, respondents were entitled to security of tenure and could be dismissed only
for just or authorized causes and after the observance of due process. The right to security of tenure
is guaranteed under Article XIII, Section 3 of the 1987 Constitution:
Article XIII. Social Justice and Human Rights

Labor
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law.31
Likewise, Article 279 of the Labor Code also provides for the right to security of tenure, thus:
Art. 279. Security of tenure.—In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or when authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement
_______________
29 Gapayao v. Fulo, 711 Phil. 179, 196; 698 SCRA 485, 502 (2013).
30 Labor Congress of the Philippines v. National Labor Relations Commission, 352 Phil. 1118,
1139; 290 SCRA 509, 528 (1998).
187
pg. 1306
VOL. 805, OCTOBER 5, 2016 187
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.32
Therefore, on the right to security of tenure, no employee shall be dismissed, unless there are just
or authorized causes and only after compliance with procedural and substantive due process.
Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides:
SEC. 2. Notice of Dismissal.—Any employer who seeks to dismiss a worker shall furnish him
a written notice stating the particular acts or omission constituting the grounds for his dismissal.
In cases of abandonment of work, the notice shall be served at the workers’ last known address.
Petitioners violated respondents’ rights to security of tenure and constitutional right to due process
in not even serving them with a written notice of termination which would recite any valid or just
cause for their dismissal. Respondents were merely told that their services are terminated. Thus,
the Court of Appeals correctly ruled that private respondents were illegally dismissed.
Under Article 279 of the Labor Code as aforestated, an employee unjustly dismissed from work is
entitled to reinstatement and backwages, among others. Reinstatement restores the employee who
was unjustly dismissed to the position from which he was removed, that is, to his status quo ante
dismissal, while the grant of backwages allows the same employee to recover from the employer
that which he had lost by way of wages as a result of his dismissal. These twin remedies —
reinstatement and payment of backwages — make the dismissed employee whole who can then
look forward to con-
_______________
188

pg. 1307
tinued employment. Thus, do these two remedies give meaning and substance to the constitutional
right of labor to security of tenure.33 Respondents are, therefore, entitled to reinstatement with full
backwages pursuant to Article 279 of the Labor Code, as amended by R.A. No. 6715.
On reinstatement, the CA ordered payment of separation pay in lieu of reinstatement. The accepted
doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer
practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise
be awarded if the employee decides not to be reinstated. We defer to the findings of the Court of
Appeals and authorized under jurisprudence, that separation pay in lieu of reinstatement is
warranted in this case.34 Respondents filed their complaint in 2007. Nine (9) years are a substantial
period35 to bar reinstatement. The dispositive portion of the CA Decision is consistent with the
premise that the respondents were entitled to reinstatement by reason of their illegal dismissal, but
they could receive instead separation pay in lieu of reinstatement if reinstatement is no longer
practicable.
_______________
33 Verdadero v. Barney Autolines Group of Companies Transport, Inc., 693 Phil. 646, 659; 679
SCRA 545, 559 (2012).
34 Velasco v. National Labor Relations Commission, 525 Phil. 749, 761; 492 SCRA 686, 699
(2006).
35 In Association of Independent Unions in the Philippines v. National Labor Relations

Commission (364 Phil. 697, 713; 305 SCRA 219, 235 [1999]) [Per J. Purisima, Third Division]),
this court considered “more than eight (8) years” as substantial. In San Miguel Properties
Philippines, Inc. v. Gucaban (669 Phil. 288, 302; 654 SCRA 18, 34 [2011]) [Per J. Peralta, Third
Division]), more than 10 years had lapsed. In G & S Transport Corporation v. Infante (559 Phil.
701, 716; 533 SCRA 288, 304 [2007]) [Per J. Tinga, Second Division]), 17 years had lapsed from
the time of illegal dismissal. In these cases, this court deemed it proper to award separation pay in
lieu of reinstatement. (Fuji Television Network, Inc. v. Espiritu, supra note 14 at p. 98.
189
VOL. 805, OCTOBER 5, 2016 189

That being said, the amount of backwages to which each respondent is entitled, however, cannot
be fully settled at this time. As respondents are piece-rate workers being paid by the piece, there
is need to determine the varying degrees of production and days worked by each worker. Clearly,
this issue is best left to the NLRC. In Labor Congress of the Philippines v. NLRC,36 the Court was
confronted with a situation wherein several workers paid on a piece-rate basis were entitled to
pg. 1308
backwages by reason of illegal dismissal. The Court noted that as the piece-rate workers had been
paid by the piece, “there [was] a need to determine the varying degrees of production and days
worked by each worker,” and that “this issue is best left to the [NLRC].” We believe the same
result should obtain in this case, and the NLRC be tasked to conduct the proper determination of
the appropriate amount of backwages due to each of the respondents.37
Nonetheless, even as the case should be remanded to the NLRC for the proper determination of
backwages, nothing in this decision should be construed in a manner that would impede the award
of separation pay to the respondents as previously rendered by the CA. In lieu of reinstatement
then, separation pay at the rate of one month for every year of service, with a fraction of at least
six (6) months of service considered as one (1) year, is in order.38
As to the other benefits, namely, holiday pay, 13th month pay, service incentive leave pay and
overtime pay which respondents prayed for in their complaint, We affirm the ruling of the CA that
respondents are so entitled to these benefits.
In the case of David v. Macasio,39 We held that workers engaged on pakyaw or “task basis” are
entitled to holiday and
_______________
36 Supra note 30 at p. 1138; p. 527.
37 Velasco v. National Labor Relations Commission, supra note 34 at p. 763; pp. 701-702.
38 Supra note 30 at p. 1138; p. 527.
39 G.R. No. 195466, July 2, 2014, 729 SCRA 67.
190

service incentive leave pay (SIL) provided they are not field personnel:
In short, in determining whether workers engaged on “pakyaw” or task basis” is entitled to holiday
and SIL pay, the presence (or absence) of employer supervision as regards the worker’s time and
performance is the key: if the worker is simply engaged on “pakyaw” or task basis, then the general
rule is that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions
specifically provided under Article 94 (holiday pay)40 and Article 95 (SIL pay)41 of the Labor
Code. However, if the
pg. 1309
_______________
40 The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the
IRR reads:
Art. 94. Right to holiday pay.—(a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than (10)
workers.
xxxx
SECTION 1. Coverage.—This Rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis,
or those who are paid a fixed amount for performing work irrespective of the time consumed in
the performance thereof.
41 Art. 95. Right to service incentive.—
(a) Every employee who has rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided,
those enjoying vacation leave with pay of at least five days and those employed in establishments
regularly employing less than ten employees or in establishments exempted from granting this
benefit by the Secretary of Labor and
191
VOL. 805, OCTOBER 5, 2016 191

worker engaged on pakyaw or task basis also falls within the meaning of “field personnel” under
the law, then he is not entitled to these monetary benefits.42
pg. 1310
Based on the definition of field personnel under Article 82,43 respondents do not fall under the
definition of “field personnel.” First, respondents regularly performed their duties at petitioners’
place of business; second, their actual hours of work could be determined with reasonable
certainty; and third, petitioners supervised their time and performance of their duties. Since
respondents cannot be considered as “field personnel,” then they are not exempted from the grant
of holiday and SIL pay even as they were engaged on pakyaw or task basis.
With respect to the payment of 13th month pay, however, We find that respondents are not entitled
to such benefit. Again, as We ruled in the case of David v. Macasio:44
The governing law on 13th month pay is Presidential Decree No. 851.45 As with holiday and SIL
pay, 13th month pay benefits generally cover all employees; an
_______________
Employment after considering the viability or financial condition of such establishment.
xxxx
Section 1. Coverage.—This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof. (Emphasis ours)
42 David v. Macasio, supra note 39 at p. 92. (Underscoring supplied)
43 “Field personnel” shall refer to nonagricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable certainty.
44 David v. Macasio, supra.
45 Enacted on December 16, 1975.
192

pg. 1311
employee must be one of those expressly enumerated to be exempted. Section 3 of the Rules and
Regulations Implementing P.D. No. 851 enumerates the exemptions from the coverage of 13th
month pay benefits. Under Section 3(e), “employers of those who are paid on x x x task basis, and
those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof” are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and
Regulations Implementing PD No. 851 exempts employees “paid on task basis” without any
reference to “field personnel.” This could only mean that insofar as payment of the 13th month
pay is concerned, the law did not intend to qualify the exemption from its coverage with the
requirement that the task worker be a “field personnel” at the same time.46
All told, We need to stress that the Constitution affords full protection to labor, and that in light of
this Constitutional mandate, We must be vigilant in striking down any attempt of the management
to exploit or oppress the working class. The law, in protecting the rights of the employees,
authorizes neither oppression nor self-destruction of the employer. It should be made clear that
when the law tilts the scales of justice in favor of labor, it is in recognition of the inherent economic
inequality between labor and management. The intent is to balance the scales of justice; to put the
two parties on relatively equal positions.47
WHEREFORE, the Petition is PARTIALLY GRANTED insofar as the payment of 13th month
pay to respondents is concerned. In all other aspects, the Court AFFIRMS the Decision dated
January 6, 2010 and the Resolution dated May 13, 2010 of the Court of Appeals in C.A.-G.R. S.P.
No. 106965.
_______________
46 David v. Macasio, supra note 39 at pp. 93-94.
47 Ledesma, Jr. v. National Labor Relations Commission, 562 Phil. 939, 952; 537 SCRA 358,
371 (2007).
193
VOL. 805, OCTOBER 5, 2016 193

SO ORDERED.
pg. 1312
Petition partially granted insofar as payment of 13th month pay, judgment and resolution affirmed
in all other aspects.
Notes.—The payment of an employee on task or pakyaw basis alone is insufficient to exclude one
from the coverage of Service Incentive Leave (SIL) and holiday pay. (David vs. Macasio, 729
SCRA 67 [2014])
Respondent’s act of hiring and rehiring petitioners for periods short of the legal probationary
period evidences its intent to thwart petitioner’s security of tenure, especially in view of an
awareness that ordinary workers, such as petitioners herein, are never on equal terms with their
employers. (Basan vs. Coca-Cola Bottlers Philippines, 749 SCRA 541 [2015])
——o0o——
pg. 1313
G.R. No. 198127. October 5, 2016.*
CO IT a.k.a. GONZALO CO IT, petitioner, vs. ANTHONY CO, MARY CO CHO, PETER CO
and LUCY SO HUA TAN CO, respondents.
Remedial Law; Civil Procedure; Judgments; Doctrine of Immutability of Final Judgments;

Nothing is more settled in law than that a judgment, once it attains finality, becomes immutable
and unalterable and can no longer be modified in any respect, regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the land.—
Indeed, nothing is more settled in law than that a judgment, once it attains finality, becomes
immutable and unalterable and can no longer be modified in any respect, regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the
land. Once a case is decided with finality, the controversy is settled and the matter is laid to
rest. Such a rule rests on public policy and sound practice that at the risk of occasional error, the
judgment of courts and the award of quasi-judicial agencies must become final at some definite
date fixed by law. All litigation must come to an end; any contrary posturing renders justice inutile
and reduces to futility the winning party’s capacity to benefit from a resolution of the case.
However, in one occasion, Sacdalan v. Court of Appeals, 428 SCRA 586 (2004), we specifically
affirmed the reinstatement of an appeal before the appellate court, which dismissal had likewise
become final and executory, considering the greater interest of justice.
_______________
* SPECIAL SECOND DIVISION.
246

Co It vs. Co
Same; Same; Same; Docket Fees; It is settled that failure to pay the appeal docket fee confers on
the court a mere directory power to dismiss an appeal which must be exercised with sound
discretion and with a great deal of circumspection considering all attendant circumstances.—
Appeal from this ruling of the appellate court reached us in Sacdalan v. Court of Appeals, 428
SCRA 586 (2004). Petitioners therein claimed that the first case before the IAC in AC-G.R. CV
No. 02883, which had become final and executory and remanded to the lower court for execution,
can no longer be reinstated. As had been stated, we affirmed the reinstatement of the appeal, thus:
The Court has recognized instances when reinstatement of an appeal was deemed just and proper
considering the greater interest of justice. This case is one of them. The IAC, on April 19, 1983,
dismissed Belen de Guia’s appeal for nonpayment of docket fees. It is settled however that failure
pg. 1314
to pay the appeal docket fee confers on the court a mere directory power to dismiss an appeal
which must be exercised with sound discretion and with a great deal of circumspection considering
all attendant circumstances. Dismissal of an appeal based on this ground is discretionary with the
appellate court and should be exercised wisely and prudently with a view to substantial justice. As
noted by the IAC in its decision dated May 21, 1984 in AC-G.R. CV No. 5524-UDK, Belen failed
to pay the appeal docket fee, not because of lack of interest, but because of lack of proper notice.
It was only upon the inquiry of Belen’s corroborating counsel that they found out, for the first
time, the dismissal of her appeal. The Court is aware of its ruling in Arambulo v. Court of Appeals,
that failure of the counsel to inquire from either the trial or the appellate court the status of their
appeal particularly as to the payment of docket fees, constitutes negligence sufficient to merit the
dismissal of the appeal. However, the fact that the appeal of Belen involved her claim that her
own son Carlos de Guia forged her signature in a deed of sale transferring to him the
ownership of her two parcels of land, the IAC did not commit any reversible error nor grave
abuse of discretion in reinstating the appeal. The interest of substantial justice far outweighs
whatever negligence Belen and her counsel might have committed.
MOTION TO REINSTATE Petition for Review on Certiorari in the Supreme Court.
247
VOL. 805, OCTOBER 5, 2016 247

Co It vs. Co
Ramon M. Maronilla for petitioner.
Estelito P. Mendoza for respondents.
RESOLUTION
PEREZ, J.:
We here have a case between members of the Co family, incorporating stockholders of Green
Cross, Inc., manufacturer of the ubiquitous Green Cross alcohol.
pg. 1315
We resolve the Respectful Motion to Reinstate Petition filed by petitioner Gonzalo Co It (Gonzalo)
which we had allowed to be withdrawn, upon motion of Gonzalo, by Minute Resolution1 dated 30
January 2012.
Previously, Gonzalo filed a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the Decision2 of the Court of Appeals in C.A.-G.R. CV No. 95095 which, in turn,
affirmed the Regional Trial Court, Branch 114, Pasay City’s dismissal of Gonzalo’s complaint for
Reconveyance with Damages against respondents Anthony Co (Anthony), Mary Co Cho (Mary),
Peter Co (Peter), Gonzalo’s siblings, and Lucy So Hua Tan Co, wife of Gonzalo’s deceased brother
Joseph Co (Joseph), involving shares of stock in the family-owned Green Cross, Inc.3
We have to consult the facts antecedent to the current events.
On 29 June 2009, Gonzalo filed the aforementioned complaint4 for Reconveyance with Damages
against respondents alleging that:
_______________
1 Rollo, p. 529.
2 Id., at pp. 192-208; penned by Associate Justice Hakim S. Abdulwahid, with Associate Justices
Ricardo R. Rosario and Samuel H. Gaerlan, concurring.
3 Id., at pp. 278-284.
4 Id., at pp. 214-225.
248

Co It vs. Co
1. In 1952, he established Gonzalo Laboratories, a sole proprietorship, formulator and maker of

Green Cross alcohol, with the trade mark and name registered in his name with the Philippine
Patent Office (PPO).5
2. He is the legitimate son and the eldest among the five children of the deceased spouses Co Ay
Tian and Ang Si. The other legitimate children of said spouses are respondents Anthony, Mary
and Peter.
pg. 1316
3. In 1971, he incorporated the business as Gonzalo Laboratories, Inc. (GLI), subscribing to 20%
of the authorized capital stock. To honor his parents, Gonzalo caused the registration of some GLI
shares in the name of his mother, Ang Si.
4. Moreover, to comply with the five-incorporator requirement set by law, Gonzalo caused the
registration of some GLI shares in the names of his siblings, herein respondents: 400 shares were
registered in the name of Anthony; while Ang Si, Joseph and Mary each had 200 shares.
Eventually, Gonzalo caused some shares to be registered in respondent Peter’s name.
5. He paid for all the shares of his mother and respondent-siblings, who all simply held the shares
in trust for him without payment of consideration therefor.
6. In 1977, he caused the registration of some of his shares in the name of his father, Co Ay Tian.
By 1978, Gonzalo held 500 shares; Anthony, 300 shares; Joseph, 300 shares; Peter, 300 shares;
Mary, 100 shares, Co Ay Tian, 250 shares; and Ang Si, 250 shares. At that time, Gonzalo was led
to believe that this additional transfer of shares to his siblings did not affect the initial “trust”
character thereof.
7. Through Gonzalo’s efforts, GLI flourished and became very profitable. However, upon the
increase in capital stock of GLI, respondents, taking advantage of their relationship as
_______________
5 Renamed as the Intellectual Property Office pursuant to Republic Act No. 8293.
249
VOL. 805, OCTOBER 5, 2016 249

Co It vs. Co
siblings, deceived Gonzalo into waiving his preemptive rights over the additional subscription
thereby reducing his shareholdings to a lone stock. Correspondingly, respondents increased their
shareholdings in GLI, to wit: Co Ay Tian held 759 shares; Ang Si, 910 shares; Anthony, 908
shares; Joseph, 1060 shares; Peter, 1060 shares; and Mary, 302 shares.
8. Respondents machinated the increase in GLI’s capital stock from 5,000 to 25,000 which
issuance of 20,000 additional stocks was subscribed to by respondents in total of 15,000 stocks,
further diluting Gonzalo’s share in GLI. The additional shares were distributed among
respondents, thus: Joseph and Peter for 3,180 shares, respectively; Anthony for 2,725; Ang Si for
2,730; Mary, 910; and Co Ay Tian received 2,275 shares. These subscriptions were paid for by
respondents through the unlawful distribution of dividends from transactions unknown to Gonzalo.
pg. 1317
9. In August 1989, the corporate name of GLI was changed to its present name Green Cross, Inc.
Within the same month, Ang Si died intestate. At the time of her death, she was the registered
owner of 3,640 shares in Green Cross with a par value of P100.00 per share or an aggregate of
P364,000.00.
10. At the time of Co Ay Tian’s death in 1991, he held 3,034 Green Cross shares in his name,
excluding his inchoate share in the stocks ostensibly owned by Ang Si at the time of her death. As
of date of filing of the complaint, both Ang Si’s and Co Ay Tian’s estates have yet to be settled.
11. In 1992, another family member, Joseph, died. By the year 1994, respondent Lucy transferred
all of Joseph’s shares in Green Cross in her name without proper documentation of the transfer
and without payment of taxes and fees.
12. In the same narrative of deception, respondents appropriated for themselves alone their
parents’ shares in Green Cross, to the exclusion of their sibling, Gonzalo.
250

Co It vs. Co
13. In any event, Gonzalo is a compulsory heir (as legitimate child) of his parents, entitling him
to a share equal that of other legitimate children in Green Cross stocks registered in Co Ay Tian’s
and Ang Si’s names.
Gonzalo, upon motion of respondents to the trial court, filed a Bill of Particulars. The RTC found
it sufficient and admitted it as part of Gonzalo’s complaint.
Thereafter, respondents filed a Motion to Dismiss the complaint on the following grounds: (1) the
RTC has no jurisdiction over the subject matter of the complaint; (2) the causes of action are barred
by the Statute of Limitations. In their motion to dismiss, respondents averred that: (1) only a
probate court can settle the estates of the decedents Co Ay Tian and Ang Si which cannot be settled
through the filing of an ordinary civil action; and (2) Gonzalo’s cause of action is barred by
prescription, respondents having acquired ownership of the shares of stock through eight years of
uninterrupted possession, reckoned from the registration of the shares of stock in their name upon
the death of the decedents in 1989 and 1991, respectively.
Gonzalo filed an Opposition to the Motion to Dismiss, contending that: (1) the motion is patently
dilatory; (2) jurisdiction depends on the allegations of the complaint; (3) prescription does not run
against a co-owner; (4) and movable possessed through a crime can never be acquired through
prescription.
pg. 1318
On 11 January 2010, the RTC granted respondents’ Motion to Dismiss on the ground that the
causes of action in the Complaint are barred by the Statute of Limitations. On the issue of whether
it has jurisdiction, the RTC ruled that the complaint properly pleaded a cause of action for
reconveyance and thus it had jurisdiction over the subject matter of the case. Subsequently, the
RTC denied Gonzalo’s Motion for Reconsideration thereof.
251
VOL. 805, OCTOBER 5, 2016 251

Co It vs. Co
On appeal by Gonzalo, the Court of Appeals affirmed the RTC’s dismissal of Gonzalo’s complaint.
As previously adverted to, Gonzalo appealed to us by certiorari on the lower courts’ uniform
dismissal of his complaint, positing the following Issues:
I.
THE COURT OF APPEALS ACTED NOT IN ACCORD WITH LAW AND APPLICABLE
JURISPRUDENCE OF THE HONORABLE COURT WHEN IT ISSUED
A DECISION WHICH DID NOT, AND STILL DOES NOT, CONFORM, WITH
EXISTING LEGAL AND JURISPRUDENTIAL REQUIREMENTS IN ISSUING
DECISIONS.
II.
JURISPRUDENCE OF THE HONORABLE COURT WHEN IT RULED THAT THE
COURT A QUO CORRECTLY ACQUIRED AND EXERCISED JURISDICTION OVER
PETITIONER’S COMPLAINT WHETHER IT BE FOR RECONVEYANCE WITH
DAMAGES OR FOR SETTLEMENT OF THE ESTATE OF A DECEASED PERSON.
III.
JURISPRUDENCE OF THE HONORABLE COURT WHEN IT RULED THAT
pg. 1319
PETITIONER IS ESTOPPED FROM ASSAILING THE JURISDICTION OF THE
COURT A QUO.
IV.
PETITIONER IS BARRED BY PRESCRIP-
252

Co It vs. Co
TION FROM DEMANDING THE RECONVEYANCE OF THE “TRUST SHARES.”
V.
PETITIONER IS BARRED BY PRESCRIPTION TO DEMAND THE SETTLEMENT OF
THE ESTATES OF HIS DECEASED PARENTS, CO AY TIAN AND ANG SI.
VI.
JURISPRUDENCE OF THE HONORABLE COURT WHEN IT RULED THAT THE
CERTIFICATE OF INCREASE OF CAPITAL STOCK OF GREEN CROSS DATED 28
OCTOBER 1996, AND/OR THE EXECUTION THEREOF, WAS A VALID AND
SUFFICIENT REPUDIATION OF THE TRUST FOR PURPOSES OF APPLYING THE
RULES ON ACQUISITVE PRESCRIPTION.6
In a Minute Resolution7 dated 23 November 2011, we required respondents to file their Comment
on the Petition.
pg. 1320
On 28 November 2011, Gonzalo filed the aforementioned Motion to Withdraw consisting of two
pages:
1.1 The Petition is a case among relatives, to wit:
(a) Respondents Anthony Co, Mary Co Cho and Peter Co are the siblings of [Gonzalo]; and
_______________
6 Rollo, pp. 52-53.
7 Id., at p. 512.
253
VOL. 805, OCTOBER 5, 2016 253

Co It vs. Co
(b) Lucy So Hua Tan Co is the sister-in-law of [Gonzalo], the former being the wife of [Gonzalo’s
deceased’ brother], Joseph Co.
2. However, in light of the upcoming yuletide season, not to mention [Gonzalo’s] own failing
health and advanced age, he honestly believes that it would be to his, his family and his relatives’
best interest that the instant appeal be withdrawn to pave the way for a long-delayed reconciliation
by and among blood relatives.
3. Thus, [Gonzalo], with utmost respect, most humbly moves for the withdrawal of
his Petition and the dismissal of the above captioned case.
4. This motion is being filed due solely to the foregoing reasons.8
On 16 January 2012, respondents filed a Manifestation (In Lieu of Comment on the Petition)
stating their receipt of: (1) our 23 November 2011 Resolution requiring them to file Comment on
the Petition and (2) Gonzalo’s Motion to Withdraw Petition. In view of the latter Motion,
pg. 1321
respondents manifested their lack of objection thereto and asked to be excused from the filing of
further Comment on the Petition, thus:
4. Respondents do not object to, in fact greatly appreciate, the “Motion to Withdraw” of Co It
[Gonzalo] as it will finally put to rest any misunderstanding among the parties.9
Consequently, we issued a Resolution dated 30 January 2012 resolving to:
1. GRANT [Gonzalo’s] motion to withdraw (re: the petition for review on certiorari dated 30
September 2011) with conformity of [Gonzalo], dated 28 November 2011, praying for the
withdrawal of the petition and the
_______________
8 Id., at pp. 513-514.
9 Id., at p. 521.
254

Co It vs. Co
dismissal of the case to pave the way for a long-delayed reconciliation by and among blood
relatives; and
2. INFORM the Court of Appeals and the parties that the judgment sought to be reviewed has
now become final and executory, and to DECLARE this case CLOSED and TERMINATED.
Accordingly, respondents’ manifestation (in lieu of comment to the petition) dated 16 January
2012 that they do not object to, in fact greatly appreciate, [Gonzalo’s] “Motion to Withdraw” as it
will finally put to rest any misunderstanding among the parties and that respondents be excused
from filing comment on the petition is NOTED WITHOUT ACTION.10
On 8 March 2012, our 30 January 2012 Resolution became final and executory and accordingly
recorded in the Book of Entries of Judgments.11 Corollary thereto, the Decision of the appellate
court in C.A.-G.R. CV No. 95095 affirming the trial court’s dismissal of Gonzalo’s complaint
pg. 1322
likewise became final and executory, ostensibly settling the issue of ownership of the subject
shares of stock in Green Cross, Inc.
Unexpectedly, in May 2014, we received several pleadings from Gonzalo’s front:
1. Notice of Withdrawal of Appearance dated 15 May 2014 stating that:
Please be notified that, upon the demand of Petitioner Co It a.k.a. Gonzalo Co It, the undersigned
is hereby formally withdrawing as counsel of record in the above captioned case. Petitioner’s
express conformity and consent is evidenced by Petitioner’s letters dated 22 April 2014 and 6 May
2014, attached hereto as ANNEX “A-SERIES” and made integral parts hereof.12
_______________
10 Id., at p. 529.
11 Id., at p. 531.
12 Id., at pp. 537-539.
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VOL. 805, OCTOBER 5, 2016 255

Co It vs. Co
2. Entry of Appearance of Gonzalo’s new counsel, Ramon M. Maronilla;13 and
3. Respectful Motion to Reinstate Petition narrating the events subsequent to Gonzalo’s

withdrawal of his Petition, to wit:
(06) [Gonzalo] was advised by his lawyers that respondents have decided to reconcile with
him in the spirit of Christmas and in consideration of his old age, and to settle the inheritance
problem amicably. Naturally, [Gonzalo] welcomed this information. Thus, [Gonzalo] was
expecting that the supposed reconciliation will bear fruit, and that his rightful share of the
inheritance will be, upon the assurance of his lawyer, give to him at last. Accordingly, and
upon the instruction and recommendation of his lawyers, [Gonzalo] signed his conformity to
the MOTION TO WITHDRAW. At that time, [Gonzalo] was ninety-one [91] years old
already. As of this writing, [Gonzalo] is ninety-four [94] years old. (Emphasis supplied)
(07) By way of its RESOLUTION promulgated on January 30, 2012, this Honorable Supreme
Court granted the aforesaid MOTION TO WITHDRAW and declared the instant case terminated.
Thereafter, the corresponding ENTRY OF JUDGMENT dated March 8, 2012 was issued.
pg. 1323
(08) To the utmost disappointment and disgust of [Gonzalo], the “long
delayed reconciliation by and among blood relatives” upon which the MOTION TO
WITHDRAW was based, never materialized.
(09) But before the Honorable Supreme Court granted the petition to withdraw the case,
[Gonzalo] had a meeting with respondents sometime January 16, 2012 at the Heritage Hotel to
finalize their amicable settlement. In said meeting, [Gonzalo] was shocked to learn
_______________
13 Id., at pp. 540-541.
256

Co It vs. Co
that respondents expressed no desire to amicably settle the case. Respondents even berated
[Gonzalo] for the cases [Gonzalo] filed against them. Worse, respondents demanded that
[Gonzalo] make a public apology to the chinese community in a chinese newspaper before they
even talk of reconciliation or compromise.
(10) Equally disturbing for [Gonzalo] was his realization that his lawyers, led him to believe in
a reconciliation that was never considered by respondents to begin with.
(11) As a consequence of the withdrawal of [Gonzalo’s] PETITION FOR REVIEW ON

CERTIORARI in G.R. No. 198127, respondents had their way with the inheritance from the
deceased parents of [Gonzalo]. Sadly, [Gonzalo] was left with virtually nothing from the
inheritance. [Gonzalo] is a victim of gross injustice which, regrettably, was visited upon him by
reason of the misplaced trust he reposed in his lawyers.
(12) It appears that at the time [Gonzalo] was made by his lawyers to sign his conformity to the
MOTION TO WITHDRAW dated November 28, 2011, his lawyers had absolutely nothing in their
possession, not even a single document, which will protect the interests of their client [the herein
petitioner Co It] in the event that respondents refused to reconcile with their client, or in the event
that no amicable settlement is reached by the parties.
(13) At the very least, [Gonzalo] respectfully submits that there was negligence on the part of
his lawyers when they advised [Gonzalo] to sign his conformity to the MOTION TO
WITHDRAW. [Gonzalo] maintain that his lawyers failed to protect the interests of their client
[Gonzalo].
pg. 1324
xxxx
(16) Undoubtedly, the withdrawal of the PETITION FOR REVIEW

ON CERTIORARI resulted in gross injustice to [Gonzalo] inasmuch as the reason for
withdrawal of the PETITION, which is, the reconciliation never materialized, hence, the
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Co It vs. Co
withdrawal was based on a nonexistent consideration. Certainly, [Gonzalo], did not intend to
cause such injustice to be visited upon himself. Being a nonlawyer and being a person of advance
age, (Gonzalo] completely relied on the advice given by his legal counsel. That is why he signed
his conformity to the MOTION TO WITHDRAW. [Gonzalo], therefore, humbly submits that the
withdrawal of the PETITION FOR REVIEW ON CERTIORARI was sought with excusable
improvidence.
xxxx
ALL TOLD, and in the interest of substantial justice, [Gonzalo] respectfully moves for the
reinstatement of the PETITION FOR REVIEW ON CERTIORARI dated September 30, 2011.14
Respondents filed an Opposition to Gonzalo’s motion to reinstate petition emphasizing that the
Decision of the appellate court in C.A.-G.R. CV No. 95095 had already attained finality with the
issuance of Entry of Judgment (dated 8 March 2012) in this case docketed as G.R. No. 198127.
Thus, with the finality of our 30 January 2012 Resolution, respondents point out that we had
already lost jurisdiction over the case. Specifically, respondents aver that the ruling of the trial
court dismissing Gonzalo’s complaint for Reconveyance of 333.7 shares in Green Cross, Inc. is
conclusive on Gonzalo who is ultimately estopped from further assailing the finding that his causes
of action are barred by prior final judgment.
pg. 1325
Curiously, respondents did not delve into the impetus for Gonzalo’s Motion to Withdraw
Petition, i.e., Gonzalo’s expectancy, albeit mistaken, of a reconciliation with respondents, his
siblings, and amicable settlement of their respective ownership of shares in Green Cross, Inc.
Respondents’ opposition simply dwelt on the consequences of Gonzalo’s conformity to the
withdrawal of his Petition and the finality of judgment
_______________
14 Id., at pp. 545-548.
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Co It vs. Co
thereon which precludes him from reinstating his appeal of the appellate court’s ruling in C.A.-
G.R. CV No. 95095.
Lastly, respondents argued that Gonzalo’s remedy is not through the filing of a motion to reinstate
appeal but via a petition for annulment of judgment under Rule 47 of the Rules of Court. However,
such remedy, respondents asseverate, is likewise not available to Gonzalo, without the occurrence
of extrinsic fraud and where such is not claimed by him, which fraud annuls a final and executory
judgment.
In his Reply (attached to his Motion for Leave to File Reply), Gonzalo points out that respondents
only discussed the general rule on finality of judgments and the consequences thereof. Gonzalo
insists that the rule on immutability of final judgments is not without exceptions: as when
circumstances which transpire after the finality of the decision renders its execution unjust and
inequitable; and blind adherence thereto will involve the sacrifice of justice for technicality.
Indeed, nothing is more settled in law than that a judgment, once it attains finality, becomes
immutable and unalterable and can no longer be modified in any respect, regardless of whether the
modification is attempted to be made by the court rendering it or by the highest court of the land.15
Once a case is decided with finality, the controversy is settled and the matter is laid to rest.16 Such
a rule rests on public policy and sound practice that at the risk of occasional error, the judgment of
courts and the award of quasi-judicial agencies must become final at some definite date fixed by
law.17 All litigation must come to an end; any contrary posturing ren-
_______________
15 De Ocampo v. RPN-9/Radio Philippines Network, Inc., G.R. No. 192947, 9 December 2015,
777 SCRA 183.
pg. 1326
16 Siy v. National Labor Relations Commission, 505 Phil. 265, 273; 468 SCRA 154, 161 (2005).
17 Filipro, Inc. v. Permanent Savings & Loan Bank, 534 Phil. 551, 560; 503 SCRA 430, 438
(2006).
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Co It vs. Co
ders justice inutile and reduces to futility the winning party’s capacity to benefit from a resolution
of the case.18
However, in one occasion, Sacdalan v. Court of Appeals,19 we specifically affirmed the

reinstatement of an appeal before the appellate court, which dismissal had likewise become final
and executory, considering the greater interest of justice.
The applicability of Sacdalan to the case and motion herein is unavoidable because of the
following common facts:
(1) Belen Vda. de Guia, original owner of two parcels of land registered in her name, filed a civil
case for cancellation of sale, reconveyance and damages against her son Carlos de Guia and two
(2) other subsequent sales of the subject real property;
(2) The trial court, formerly Court of First Instance, dismissed Belen’s complaint;
(3) On appeal by Belen to the then Intermediate Appellate Court, the latter dismissed the appeal
for nonpayment of docket fees;
(4) The dismissal became final and executory on 17 May 1983; an Entry of Judgment was issued
on June 21, 1983; records of the case were remanded to the CFI on July 6, 1983; and on motion of
one of the defendants therein, a writ of execution was issued;
(5) Subsequently, Belen’s counsel found out about the dismissal of Belen’s appeal for
nonpayment of docket fees, not having received notice of the dismissal. Forthwith, Belen filed
a motion to reinstate the appeal; and
(6) On 21 May 1984, the appellate court granted the reinstatement of the appeal grounded on the
interest of justice, and ordered the CFI to elevate the records of the case.
_______________
pg. 1327
18 Id.
19 472 Phil. 652; 428 SCRA 586 (2004).
260

Co It vs. Co
With the reinstatement of the appeal, the IAC ultimately reversed the lower court’s dismissal of
Belen’s complaint for reconveyance, cancelled the subsequent sales made by Belen’s son of the
subject property, and ordered the Register of Deeds of Bulacan to reinstate the Transfer Certificate
of Title in Belen’s name as “the true and valid title over the lands described therein.”
From this incident, other events transpired which branched out into cases: (1) for contempt filed
by Belen against subsequent possessors of the subject property; and (2) ejectment filed by Belen
against tenants of the subject property before the Department of Agrarian Reform and Adjudication
Board (DARAB).
The second case reached the appellate court after the DARAB denied Belen’s complaint for
ejectment and curiously, affirmed the titles of therein respondents-tenants over the same subject
property. The appellate court, in C.A.-G.R. S.P. No. 39315 reversed the DARAB’s ruling, ordered
the vacation of therein petitioners (tenants) from the property, and once again affirmed Belen’s
title over the subject property.
Appeal from this ruling of the appellate court reached us in Sacdalan v. Court of
Appeals.20 Petitioners therein claimed that the first case before the IAC in AC-G.R. CV No.
02883, which had become final and executory and remanded to the lower court for execution, can
no longer be reinstated. As had been stated, we affirmed the reinstatement of the appeal, thus:
The Court has recognized instances when reinstatement of an appeal was deemed just and proper
considering the greater interest of justice. This case is one of them. The IAC, on April 19, 1983,
dismissed Belen de Guia’s appeal for nonpayment of docket fees. It is settled however that failure
to pay the appeal docket fee confers on the court a mere directory power to dismiss an appeal
_______________
20 Id.
pg. 1328
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Co It vs. Co
which must be exercised with sound discretion and with a great deal of circumspection considering
all attendant circumstances. Dismissal of an appeal based on this ground is discretionary with the
appellate court and should be exercised wisely and prudently with a view to substantial justice.
As noted by the IAC in its decision dated May 21, 1984 in AC-G.R. CV No. 5524-UDK, Belen
failed to pay the appeal docket fee, not because of lack of interest, but because of lack of proper
notice. It was only upon the inquiry of Belen’s corroborating counsel that they found out, for the
first time, the dismissal of her appeal. The Court is aware of its ruling in Arambula v. Court of
Appeals that failure of the counsel to inquire from either the trial or the appellate court the status
of their appeal particularly as to the payment of docket fees, constitutes negligence sufficient to
merit the dismissal of the appeal. However, the fact that the appeal of Belen involved her claim
that her own son Carlos de Guia forged her signature in a deed of sale transferring to him
the ownership of her two parcels of land, the IAC did not commit any reversible error nor
grave abuse of discretion in reinstating the appeal. The interest of substantial justice far
outweighs whatever negligence Belen and her counsel might have committed.21 (Emphasis
supplied)
Clearly, we can draw a parallel from Sacdalan.
First, our grant and allowance of the Motion to Withdraw was based on the movant’s, Gonzalo’s,
prayer, which in turn, was grounded on his earnest belief of reconciliation with his family, siblings,
herein respondents. Consequently, we directed the finality of judgment of the appellate court in
C.A.-G.R. CV No. 95097. Such does not detract from the fact that the finality of judgment was
reached only because Gonzalo chose to withdraw his Petition based on his previous counsel’s
representations of a possible and long-awaited reconciliation
_______________
21 Id., at pp. 667-668; p. 597.
262

Co It vs. Co
pg. 1329
with his siblings. This finality of judgment was not based on our ruling on the propriety of the
appellate court’s decision to dismiss Gonzalo’s complaint before the RTC.
From Gonzalo’s motions, he clarifies that he would not have withdrawn his Petition had his
counsel fully and completely explained to him the legal consequences thereof where the
reconciliation is only, and remains, an expectancy, as respondents’ counsel have put it. In his
conformity to the Motion to Withdraw undeniably prepared by his then counsel, the tenor speaks
volume of Gonzalo’s desire to reconcile with his family and his commitment and sincerity in
offering the olive branch to pave the way for reconciliation. That is the sole focus of Gonzalo,
regrettably, without awareness of the accompanying cost it would have to his claims should
reconciliation not happen, as it did here.
Second, and in the same vein, the very same Motion to Withdraw does not specify the legal
consequences of such a withdrawal, including the consequence of no reconciliation with his
siblings and complete preclusion from pursuing all his legal remedies to claim his share of
ownership in Green Cross, Inc. It did not state that Gonzalo is aware that the Decision of the Court
of Appeals in C.A.-G.R. CV No. 95095 will attain finality and subsequently bar Gonzalo, the
original sole proprietor of Gonzalo Laboratories, formulator of Green Cross Rubbing Alcohol,
from staking his claim in Green Cross, Inc., in his own right, by virtue of his allegation of the
shares of his siblings being held simply in trust or, in the alternative, as a coheirs of his parents’
shares.
It appears that Gonzalo indeed received the raw end of the deal when his expected reconciliation
with his siblings did not materialize. We cannot countenance such an injustice and validate a stance
that our approval of a clearly lopsided Motion completely precludes Gonzalo from pursuing his
legal remedies.
More importantly, we are not unmindful of a lawyer’s fealty to his client. We observe that the
short Motion to With-
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Co It vs. Co
draw, if not for the aspiration of a good familial relationship for the remainder of Gonzalo’s
twilight years, was made without qualification. Respondents readily latched onto this and gave no
indication whatsoever that the reconciliation they are amenable to would only be on all terms
dictated by them. Given that reconciliation was not possible in the early stages of the case, before
the lower court and even in the appellate court,22 Gonzalo’s previous counsel should have advised
his client not to withdraw his Petition without any guarantee of reconciliation between Gonzalo
and his siblings.
pg. 1330
Indeed, Rule 19.03 of the Code of Professional Responsibility directs that:
Rule 19.03 – A lawyer shall not allow his client to dictate the procedure in handling the case.
We are not now resolving the merits of this case. Considering that the parties have not reconciled
and reached an agreement which petitioner was led to believe as possible, we simply allow the
reinstatement of the instant Petition to provide Gonzalo the opportunity to avail of, and pursue, all
his legal remedies concerning his supposed stake in Green Cross Incorporated, such issue not
having been definitively resolved by this Court. Considering all attendant circumstances,
especially that which has led to Gonzalo’s initial Motion to Withdraw Petition, the following issues
must be allowed to determine the respective rights of the herein parties:
1. Green Cross, originally a sole proprietorship, was established by Gonzalo who was advised to
incorporate as a better vehicle to handle his business.23 During incorporation, Gonzalo placed
incorporating shares in the name of his loved ones, his parents and siblings, who did not pay
consideration therefor and who held the shares merely in trust for Gonzalo.
_______________
22 The complaint of Gonzalo was dismissed after the grant of respondents’ Motion to Dismiss.
23 See Article 2 of the Corporation Code.
264

Co It vs. Co
2. The fraud allegedly effected by his parents and siblings, represented by herein respondents,
purportedly diluting Gonzalo’s shares in Green Cross reducing it to 1 share.
3. At the time of both Ang Si’s and Co Ay Tian’s death in 1989 and 1991, respectively, their
estates were never settled such that there was no actual partition thereof and distribution of the
proceeds to their heirs, the parties herein.
4. The subsequent transfer of the shares in respondents’ name does not denote actual knowledge
of Gonzalo that his share of inheritance in the shares of stocks in his parents’ name was being and
actually appropriated by his siblings, excluding him from that part of their parents’ respective
estates.
pg. 1331
5. In all, Gonzalo claims continuing and persistent fraud where the transactions on which the
transfer of the shares of the parties’ parents who allegedly did not actually own the Green Cross
shares in their names, is one for declaration of nullity of shares of stock in respondents’ names.
Thus, the action to declare their inexistence is imprescriptible.24
Palpably, the interest of substantial justice demand that Gonzalo be allowed to pursue his appeal,
reinstatement of the petition imperative to further thresh out the issues involved herein.
WHEREFORE, the Motion to Reinstate Petition is GRANTED. Respondents Anthony Co, Mary
Co Cho, Peter Co, Lucy So Hua Tan Co, likewise pursuant to our Resolution dated 23 November
2011, are ordered to file their COMMENT on the petition within ten (10) days from notice hereof.
SO ORDERED.
Carpio (Acting CJ., Chairperson), Reyes and Perlas-Bernabe, JJ., concur.
_______________
24 Article 1410 of the Civil Code.
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Co It vs. Co
Motion to Reinstate Petition granted.
Notes.—The immutability of judgment that has long become final and executory is the core, the
very essence of an effective and efficient administration of justice. (Heirs of Jolly R. Bugarin vs.
Republic, 678 SCRA 209 [2012])
Under the doctrine of finality of judgment or immutability of judgment, a decision that has
acquired finality becomes immutable and unalterable, and may no longer be modified in any
respect, even if the modification is meant to correct erroneous conclusions of fact and law, and
whether it be made by the court that rendered it or by the Highest Court of the land. (Escalante vs.
People, 688 SCRA 362 [2013])
——o0o——
pg. 1332
G.R. No. 195295. October 5, 2016.*
REPUBLIC OF THE PHILIPPINES, petitioner, vs. SANDIGANBAYAN, FOURTH DIVISION,

FERDINAND “BONGBONG” R. MARCOS, JR., MA. IMELDA “IMEE” R. MARCOS-
MANOTOC, GREGORIO MA. ARANETA III, and IRENE R. MARCOS-ARANETA,
respondents.
Actions; Lis Pendens; Rule 13, Section 14 of the Rules of Court provides that a notice of lis pendens
may be cancelled only upon order
_______________
* SECOND DIVISION.
194

Republic vs. Sandiganbayan, Fourth Division
of the court, after proper showing that the notice is to molest the adverse party, or that it is not
necessary to protect the right of the party who caused it to be recorded.—Rule 13, Section 14 of
the Rules of Court provides that a notice of lis pendens may be cancelled only upon order of the
court, after proper showing that the notice is to molest the adverse party, or that it is not necessary
to protect the right of the party who caused it to be recorded.
Procedural Rules and Technicalities; Ill-gotten Wealth; Executive Order (EO) No. 14, which
defines the jurisdiction over cases involving the ill-gotten wealth of Former President Marcos and
his family, associates, dummies, agents, and nominees, specifically states that the technical rules
of procedure and evidence shall not be strictly applied to the civil cases filed under it.—Executive
Order No. 14, which defines the jurisdiction over cases involving the ill-gotten wealth of Former
President Marcos and his family, associates, dummies, agents, and nominees, specifically states
that the technical rules of procedure and evidence shall not be strictly applied to the civil cases
filed under it. Thus, this Court has emphasized this provision and pointed out that strict adherence
to technical rules will hamper the efforts of the Presidential Commission on Good Government.
Same; Pleadings and Practice; Amendment of Pleadings; The procedural rule, which requires that
amendments to a pleading be indicated with appropriate marks, has for its purpose the
convenience of the Court and the parties.—The procedural rule, which requires that amendments
to a pleading be indicated with appropriate marks, has for its purpose the convenience of the Court
and the parties. It allows the reader to be able to immediately see the modifications. However,
pg. 1333
failure to use the appropriate markings for the deletions and intercalations will not affect any
substantive right. Certainly, its absence cannot cause the denial of any substantive right. The
Sandiganbayan’s view that a motion for leave to amend should be denied on the basis of the rule
on proper markings in an amended pleading displays an utter lack of understanding of the function
of this procedural rule.
Remedial Law; Provisional Remedies; Attachment; Rule 57, Section 1 of the Rules of Court allows
for the attachment of the property of the adverse party as security for any judgment that may be
recov-
195
VOL. 805, OCTOBER 5, 2016 195

ered.—Rule 57, Section 1 of the Rules of Court allows for the attachment of the property of the
adverse party as security for any judgment that may be recovered in the following cases, among
others: RULE 57 Attachment SECTION 1. Grounds Upon Which Attachment May Issue.—At the
commencement of the action or at any time before entry of judgment, a plaintiff or any proper
party may have the property of the adverse party attached as security for the satisfaction of any
judgment that may be recovered in the following cases: . . . . (b) In an action for money or property
embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer
of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as
such, or by any other person in a fiduciary capacity, or for a willful violation of duty; (c) In an
action to recover the possession of property unjustly or fraudulently taken, detained or converted,
when the property, or any part thereof, has been concealed, removed, or disposed of to prevent its
being found or taken by the applicant or an authorized person[.]
Procedural Rules and Technicalities; Procedural rules are not mere technicalities that can be
disregarded at whim by the parties or by our courts. Neither should they be applied so
mechanically without any appreciation of their purpose and object.—The Sandiganbayan should
have issued an order of preliminary attachment considering that the requisites of the law —
including that of Executive Order No. 14 — have been substantially met, and that there is factual
basis for the issuance of the preliminary attachment. The Sandiganbayan committed grave abuse
of discretion in denying petitioner’s Motion for issuance of a writ of preliminary attachment.
Procedural rules are not mere technicalities that can be disregarded at whim by the parties or by
our courts. Neither should they be applied so mechanically without any appreciation of their
purpose and object. Every part of our law — whether substantive or procedural — is the outcome
of reasonable deliberation. As the outcome of human agency, our laws are to be interpreted and
applied with meaning and purpose. The day that our courts cease to breathe life to this fundamental
principle is the day that we erode the public’s confidence in the ability of the law to render justice.
pg. 1334
196

Velasco, Jr., J., Dissenting Opinion:
Actions; Lis Pendens; View that due to the burden imposed on the property by the notice of lis
pendens, the property subjected to the notice must be the very same property covered by the main
action.—Due to the burden imposed on the property by the notice of lis pendens, the property
subjected to the notice must be the very same property covered by the main action. Otherwise, the
notice of lis pendens would unduly subject a property to a burden even if it is not involved in the
pending litigation. In fact, in Sps. Lim v. Vera Cruz, 356 SCRA 386 (2001), the Court had already
clarified that “only the particular property subject of litigation is covered by the notice of lis
pendens.” Conversely, properties not subject of litigation should not be covered by a notice of lis
pendens. It goes without saying, therefore, that before a court can order the annotation of a notice
of lis pendens over a property subject of litigation, the plaintiff must first show in the complaint
the nexus between the nature of the action, which must be an action involving title to or possession
of real property, on the one hand, and the real property sought to be annotated, on the other. Absent
such nexus, the annotation of lis pendens is not only ineffective to protect the rights of the plaintiff,
it also amounts to deprivation of property without due process of law.
Remedial Law; Civil Procedure; Jurisdiction; View that it is a long-standing rule that a court can
only acquire jurisdiction over the res by: (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.—Absent any
specific reference to the Cabuyao property in all the admitted Complaints, the Sandiganbayan
could not have acquired jurisdiction over the subject property. It is a long-standing rule that a court
can only acquire jurisdiction over the res by: (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. In the present case
for resolution, it is beyond cavil that the Sandiganbayan did not acquire jurisdiction over the
Cabuyao property through the first mode. As to the second mode, it also cannot be said that the
plaintiff, herein petitioners, instituted legal proceedings over the Cabuyao property, seeing as it
were that no specific reference to the Cabuyao property was
pg. 1335
197
VOL. 805, OCTOBER 5, 2016 197

mentioned in the complaint. The reasonable inference, therefore, is that the Sandiganbayan did
not acquire jurisdiction over the Cabuyao property.
Actions; Lis Pendens; View that if a notice of lis pendens may be cancelled when the annotation
is not necessary to protect the title of the party who caused it to be recorded, with more reason
should it be cancelled if the property subjected to the notice is beyond the jurisdiction of the
court.—That being the case, there is no reason why the Sandiganbayan included the Cabuyao
property among those properties over which notices of lis pendens were issued. Thus, while the
Omnibus Motion dated June 5, 1997 prayed for the cancellation of the notice of lis pendens, the
cancellation prayed for should not be interpreted as the same cancellation referred to in Rule 14,
Sec. 13, par. 2 of the Rules of Court. Instead, it should be interpreted as one raising a question of
propriety of issuance of a notice of lis pendens, for the simple reason that the property was
wrongfully subjected to the burden even if it is not included in the present litigation. If a notice of
lis pendens may be cancelled when the annotation is not necessary to protect the title of the party
who caused it to be recorded, with more reason should it be cancelled if the property subjected to
the notice is beyond the jurisdiction of the court.
Same; Same; View that the only reasonable conclusion is that the Sandiganbayan did not acquire
jurisdiction over the Cabuyao property because of the failure to include the property in the
Complaint, as admitted, and consequently, no notice of lis pendens may be annotated in its title,
insofar as the present case is involved.—The only issue presented is whether a notice of lis pendens
may be annotated to the TCT covering the Cabuyao property despite the fact that the
Sandiganbayan did not acquire jurisdiction over the Cabuyao property. To me, the only reasonable
conclusion is that the Sandiganbayan did not acquire jurisdiction over the Cabuyao property
because of the failure to include the property in the Complaint, as admitted, and consequently, no
notice of lis pendens may be annotated in its title, insofar as the present case is involved. In so
ruling, the Court is not in any way precluding the inclusion of the Cabuyao property in further
court proceedings. Neither is the Court making a determination of whether the Cabuyao property
is ill-gotten or not, for the precise reason that such a determination is premature. What the Court
would, in effect, uphold is the ruling that the notice of lis
198
pg. 1336
pendens must be cancelled, for the sole reason that the Sandiganbayan, in Civil Case No. 0002,
has not acquired jurisdiction over the Cabuyao property. Therefore, the Sandiganbayan exceeds
its jurisdiction when it issues any order covering the Cabuyao property.
MOST Law for respondent Ferdinand R. Marcos, Jr.
Mendoza, Dizon, Purugganan and Partners Law Offices for respondent Sps. Gregorio and Irene
Araneta.
LEONEN, J.:
This resolves a Petition1 for certiorari assailing the Sandiganbayan’s cancellation of a notice of
lis pendens issued over property alleged to be ill-gotten wealth of Former President Ferdinand E.
Marcos (Former President Marcos) and his associates.
Respondents Ferdinand “Bongbong” R. Marcos, Jr. (Marcos, Jr.), Maria Imelda R. Marcos (Imee),
and Irene Marcos Araneta (Irene) appear to be the registered owners of a parcel of land located in
the Municipality of Cabuyao, Laguna (Cabuyao property) and covered by Transfer Certificate of
Title (TCT) No. T-85026.2
On July 16, 1987, petitioner Republic of the Philippines, through the Presidential Commission on
Good Government, filed before the Sandiganbayan a Complaint for reversion, reconveyance,
restitution, accounting, and damages against Former President Marcos, Imelda R. Marcos, their
children,
_______________
1 Rollo, pp. 2-47. The Petition was filed under Rule 65 of the Rules of Court.
2 Id., at pp. 51-52, Resolution.
pg. 1337
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VOL. 805, OCTOBER 5, 2016 199

Marcos, Jr., Imee, and Irene, and their sons-in-law, Tomas Manotoc and Gregorio Ma. Araneta
III.3 This case was docketed as Civil Case No. 0002 (Civil Case).4 The Complaint principally
sought to recover ill-gotten wealth acquired by the Marcoses during their incumbency as public
officers in active collaboration with their cronies, dummies, and close business associates.5
On April 23, 1990, petitioner filed its Third Amended Complaint dated April 20, 1990, which was
admitted by the Sandiganbayan (admitted Complaint).6
On June 1, 1994, the Presidential Commission on Good Government caused the annotation of a
notice of lis pendens on TCT No. T-85026 in relation to the Civil Case,7 which reads:
Entry No. 268288 — NOTICE OF LIS PENDENS — filed by Commissioner Herminio A.

Mendoza for and in behalf of the Republic of the Philippines, entitled Republic of the Philippines
versus Ferdinand E. Marcos et al., in Civil Case No. 0002 for Reconveyance, Reversion,
Accounting, Restitution and Damages of Office of the President, Presidential Commission on
Good Government, filed in Env. No. T-85026.
Date of Instrument – June 1, 1994
Date of Inscription – June 13, 1994 at 4:10 p.m.
(signed)
Dante A. Ariola
Register of Deeds8
_______________
3 Id., at p. 5.
4 Id.
5 Id., at p. 6.
6 Id.
pg. 1338
7 Id., at p. 9.
8 Id., at pp. 61-62.
200

On June 13, 1994, the Register of Deeds of Cabuyao, Laguna, annotated the notice of lis pendens
on TCT No. T-85026.9
Marcos, Jr. filed an Omnibus Motion10 dated June 5, 1997 praying for the cancellation of the
notice of lis pendens and pointing out that the Cabuyao property was not specifically mentioned
in the original and amended Complaints or their annexes. Marcos, Jr. also prayed that petitioner
be directed to immediately vacate the property, cease from further interfering with and exercising
ownership over it, and return it to him and the other registered owners.11
On July 15, 1997, petitioner filed a Motion for Leave to Admit Fourth Amended Complaint;12
with an attached Fourth Amended Complaint.13 The Fourth Amended Complaint was
substantially identical to the admitted Complaint, but with the amended annex List of Assets and
Other Properties of Ferdinand E. Marcos, Imelda R. Marcos and Immediate Family.14 The list
specifically mentioned the Cabuyao property as one among the assets of the Marcoses.15
The Sandiganbayan denied the Motion to admit the Fourth Amended Complaint:
[F]or failure of the plaintiff-movant to comply with the provision of Section 7, Rule 12 of the 1997
Rules of Civil Procedure which provides:
“Section 7. Filing of amended pleadings.—When any pleading is amended, a new copy

of the entire pleading, incorporating the amendments which shall be indicated by appropriate
marks, shall be filed.”
_______________
9 Id., at p. 9.
10 Id., at pp. 124-132.
11 Id., at p. 9.
12 Id., at p. 145.
pg. 1339
13 Id., at pp. 149-170.
14 Id., at pp. 171-174.
15 Id., at p. 174.
201
VOL. 805, OCTOBER 5, 2016 201

and for further reason that the original complaint in this case was filed with this Court on July 16,
1987 yet, or more than 11 years ago, and this case has not even reached the pretrial stage because
not all of the defendants have been served with summons.16
Marcos, Jr. filed an Urgent Motion to Resolve dated July 29, 2002 seeking the immediate
resolution of the Omnibus Motion.17 Petitioner filed a Comment/Opposition18 seeking an order
of preliminary attachment over the Cabuyao property. In the Resolution19 dated January 11, 2010,
the Sandiganbayan ordered the cancellation of the annotation of lis pendens on TCT No. T-85026.
It directed petitioner to immediately cease from further interfering with and exercising ownership
over the Cabuyao property and to return its possession and control to the Marcoses.20 It held that
because the admitted Complaint did not specifically mention the Cabuyao property, the Cabuyao
property was not involved in the Civil Case; therefore, petitioner has over the property no
actionable claim that needs to be protected via a notice of lis pendens.21
On the writ of preliminary attachment, the Sandiganbayan held that petitioner’s allegations were
insufficient to support an application for a writ of attachment.22 The Cabuyao property was never
concealed, removed, or disposed of by the Marcoses.23 There was seemingly no particular
exigency warranting the attachment of the Cabuyao property, considering that
_______________
16 Id., at p. 194, Sandiganbayan Resolution dated September 2, 1998.
17 Id., at p. 11.
18 Id., at p. 202.
pg. 1340
19 Id., at pp. 51-74. The Resolution was penned by Associate Justice Gregory S. Ong (Chair) and
concurred in by Associate Justices Jose R. Hernandez and Roland B. Jurado of the Fourth Division,
Sandiganbayan.
20 Id., at p. 74.
21 Id., at p. 62.
22 Id., at p. 72.
23 Id., at p. 73.
202

the petitioner had been in exclusive possession of the property for more than a decade and yet it
did not promptly move for the issuance of a writ of preliminary attachment.24
Petitioner’s Motion for Reconsideration was denied in the Resolution25 dated December 1, 2010.
Hence, this Petition26 was filed.
In the Resolution27 dated February 21, 2011, this Court issued a temporary restraining order
enjoining respondents from implementing the assailed Sandiganbayan Resolutions in the Civil
Case, and directed respondents to comment.
Respondents Imelda R. Marcos,28 Marcos, Jr.,29 and Gregorio Ma. Araneta III and Irene30 filed
their respective Comments to the Petition. This Court dispensed with the filing of the comment of
respondent Imee.31 Petitioner filed its Replies32 to respondents’ Comments.
Petitioner argues that the Cabuyao property forms part of the assets alleged to have been
unlawfully acquired by Former President Marcos and his family during the Marcos regime. It is
sought to be reconveyed in favor of petitioner in the Civil Case and was, thus, properly subject of
the notice of lis pendens. Petitioner further argues that the allegations in the admitted Complaint
relate to all properties, real or personal,
_______________
24 Id., at pp. 73-74.
pg. 1341
25 Id., at pp. 77-85. The Resolution was penned by Associate Justice Gregory S. Ong (Chair) and
concurred in by Associate Justices Jose R. Hernandez and Roland B. Jurado of the Fourth Division,
Sandiganbayan.
26 Id., at pp. 2-47.
27 Id., at p. 253.
28 Id., at pp. 278-287.
29 Id., at pp. 288-313.
30 Id., at pp. 354-373.
31 Id., at p. 532.
32 Id., at pp. 510-528, Reply to respondents Gregorio Ma. Araneta III and Irene’s Comment; and
pp. 538-556, Reply to respondents Imelda R. Marcos’ and Marcos, Jr.’s Comments.
203
VOL. 805, OCTOBER 5, 2016 203

acquired by Former President Marcos and his family during the Marcos regime.33 The list of assets
and properties specified as forming part of the ill-gotten wealth of the Marcoses is preceded by the
words “include but are not limited” to those already enumerated:34
16. Among others, in furtherance of the plan and acting in the manner referred to above, in
unlawful concert with one another and with gross abuse of power and authority, Defendants
Ferdinand E. Marcos and Imelda Marcos:
....
(f) extorted, demanded and received improper payments in the form of, among others,
commissions, bribes and kickbacks from persons and corporations entering into contracts
with the Government or its agencies or instrumentalities for themselves, or for third persons,
permits, licenses or concessions which were then required in order to engage in particular
business activities;
pg. 1342
....
(i) engaged in other illegal and improper acts and practices designed to defraud Plaintiff
and the Filipino people, or otherwise misappropriated and converted to their own use, benefit
and enrichment the lawful patrimony and revenues of Plaintiff and the Filipino people.
....
17. Among the assets acquired by Defendants in the manner above described and discovered by
the Commission in the exercise of its official responsibilities are funds and other property listed in
Annex “A” hereof and made an integral part of the complaint.
_______________
33 Id., at p. 17.
34 Id., at p. 18.
204

18. Defendants, with the active collaboration of third persons who are subject of separate suits,
after acquiring ill-gotten wealth consisting of funds and other property as mentioned above:
....
19. As an integral element of their above mentioned scheme, acting upon the advice and retaining
the service of prominent lawyers, bankers, accountants and other persons, Defendants employed
numerous stratagems, schemes, artifices and devices to prevent disclosure, conceal and frustrate
recovery of their ill-gotten wealth or the manner by which it was acquired, including the use of (a)
pg. 1343
code names or pseudonyms, (b) trustees, dummies, nominees or agents, (c) societies and
foundations organized in, among others, Liechtenstein, and/or (d) layers of offshore companies
and corporations in various places such as Netherlands, Antilles, Panama, Hong Kong and the
Virgin Islands:
20. The assets and other properties of defendants in the Philippines include, but are not limited
to the following:
....
(b) Real Properties
....
28. (a) The 1935 Constitution, as well as the 1973 Marcos-promulgated Constitution, provides
that the President shall not be entitled to any emolument in addition to a fixed salary which shall
be neither increased nor diminished during the period for which he shall have been elected.
(b) All income received by Defendant Ferdinand E. Marcos during his incumbency as President
in excess of his salary constitutes illegal income, having been acquired in violation of the
provisions of a Constitution which he himself caused to be ratified.
29. Defendants Imelda (Imee) R. Marcos-Manotoc, Tomas Manotoc, Irene R. Marcos Araneta,
Gregorio Ma. Araneta III, and Ferdinand R. Marcos, Jr., actively col-
205
VOL. 805, OCTOBER 5, 2016 205
pg. 1344
laborated, with Defendants Ferdinand E. Marcos and Imelda R. Marcos among others, in
confiscating and/or unlawfully appropriating funds and other property, and in concealing the same
as described above. In addition, each of said Defendants, either by taking undue advantage of their
relationship with Defendants Ferdinand E. Marcos and Imelda R. Marcos, or by reason of the
above described active collaboration, unlawfully acquired or received property, shares of stocks
in corporations, illegal payments such as commissions, bribes or kick-backs, and other forms of
improper privileges, income, revenues and benefits[.]35
Moreover, petitioner claims that the grounds for cancelling a notice of lis pendens are not
present.36
In any case, petitioner also insists that the amendment of the Complaint to specifically include the
Cabuyao property is a formal amendment that may be done at any time. The Sandiganbayan should
have been more liberal in resolving the Motion to admit the Fourth Amended Complaint.37
Additionally, petitioner argues that the denial of a motion to admit an amended complaint is an
interlocutory one and cannot attain finality.38
As regards the entitlement to a writ of preliminary attachment, petitioner argues that it has
demonstrated entitlement to a writ of attachment over the Cabuyao property. Sequestration is akin
to preliminary attachment and is among the other provisional remedies available to the Presidential
Commission on Good Government, which was essentially founded on urgency and necessity to
preserve ill-gotten wealth amassed during the Marcos regime.39
_______________
35 Id., at pp. 15-17.
36 Id., at pp. 20-21.
37 Id., at pp. 518-519.
38 Id., at p. 517, Reply.
39 Id., at p. 520.
206
pg. 1345
The allegations in the admitted Complaint narrate in detail the manner by which the Cabuyao
property was amassed by the former dictator:
From the early years of his presidency, Defendant Ferdinand E. Marcos took advantage of his
powers as President all throughout the period from September 21, 1972 to February [25,] 1986, he
gravely abused his powers under martial law and ruled as Dictator under the 1973 Marcos-
promulgated Constitution. Defendant Ferdinand E. Marcos, together with other Defendants, acting
singly or collectively, in unlawful concert with one another, and with the active collaboration and
participation of third persons who are subject of separate suits, in flagrant breach of trust and of
their fiduciary obligations as public officers, with gross and scandalous abuse of right and power
and in brazen violation of the Constitution and laws of the Philippines, embarked on a systematic
plan to accumulate ill-gotten wealth [.]
....
. . . Defendants Imelda [Imee] R. Marcos-Manotoc, Tomas Manotoc, Irene R. [Marcos]-Araneta,

Gregorio Ma. Araneta III, and Ferdinand [R.] Marcos, Jr. actively collaborated with Defendants
Ferdinand E. Marcos and Imelda R. Marcos, among others, in confiscating and/or unlawfully
appropriating funds and other property, and in concealing the same as described above. . . . [E]ach
of the Defendants, either by taking undue advantage of their relationship with Defendants
Ferdinand E. Marcos and Imelda R. Marcos, or by reason of the above described active
collaboration, unlawfully acquired or received property, shares of stocks in corporations, illegal
payments such as commissions, bribes or kickbacks, and other forms of improper privileges,
income, revenues and benefits[.]40
_______________
40 Id., at pp. 6-9.
207
VOL. 805, OCTOBER 5, 2016 207

pg. 1346
Petitioner asserts that the Cabuyao property covers a vast and valuable 25 hectares of prime lot. It
is among the assets and properties acquired by the Marcoses between 1972 and 1986. During the
registration of the property, respondents were minors who had no legitimate source of income. The
registration of the property in their names was obviously done to conceal the truth that Former
President Marcos was the true owner. Finally, the Cabuyao property had been under the custody
and administration of the Government since 1986. Thus, respondents are guilty of laches for
having accepted said custody and administration for a long time.41
Respondents argue that the Petition should be dismissed outright for procedural defects.42 They
stress that the denial of the Motion to Admit the Fourth Amended Complaint has attained
finality.43 Further, the annotation of the notice of lis pendens was improper as the Civil Case did
not affect the Cabuyao property.44 The properties involved in the Civil Case were enumerated in
the Complaint and made no mention of the Cabuyao property.45 That the property is not part of
the res in Civil Case No. 0002 is apparent from petitioner’s failure to adduce any evidence
involving the Cabuyao property during the trial of the case.46
Additionally, respondents claim that the petitioner is not entitled to the preliminary remedy of
attachment, there being no factual allegations showing the ground relied upon exists.47
The Petition is granted.
_______________
41 Id., at pp. 39-42.
42 Id., at pp. 298-302, Comment.
43 Id., at p. 302.
44 Id., at p. 304.
45 Id.
46 Id., at p. 305.
47 Id., at p. 308.
208

pg. 1347
I
Rule 13, Section 14 of the Rules of Court provides that a notice of lis pendens may be cancelled
only upon order of the court, after proper showing that the notice is to molest the adverse party, or
that it is not necessary to protect the right of the party who caused it to be recorded:
RULE 13
Service and Filing of Pleadings and Other Papers
....
SEC. 14. Notice of Lis Pendens.—In an action affecting the title or the right of possession of
real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may
record in the office of the registry of deeds of the province in which the property is situated a notice
of the pendency of the action. Said notice shall contain the names of the parties and the object of
the action or defense, and a description of the property in that province affected thereby. Only from
the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected
thereby, be deemed to have constructive notice of the pendency of the action, and only of its
pendency against the parties designated by their real names.
The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court,
after proper showing that the notice is for the purpose of molesting the adverse party, or that it is
not necessary to protect the rights of the party who caused it to be recorded. (Emphasis supplied)
Although the Sandiganbayan found that the notice is not for the purpose of molesting the adverse
party, it cancelled the notice of lis pendens as it was not necessary to protect the right of petitioner:
Significantly, while there may be nothing on record to show that the notice of lis pendens was for
the purpose
209
pg. 1348
VOL. 805, OCTOBER 5, 2016 209
of molesting the defendants who are the registered owners of the subject property, the record shows
that plaintiff has no claim over the subject property that needs to be protected. In fact, plaintiff
does not have any actionable right over the subject property because the same is not involved in
the instant case. Accordingly, considering that the notice of lis pendens was erroneously annotated,
its cancellation is in order.48
The conclusion that the Cabuyao property is not involved in the Civil Case is based on the belief
that failure to specifically mention the property in the amended Complaint automatically renders
it beyond the scope of the Civil Case.
Executive Order No. 14, which defines the jurisdiction over cases involving the ill-gotten wealth
of Former President Marcos and his family, associates, dummies, agents, and nominees,
specifically states that the technical rules of procedure and evidence shall not be strictly applied to
the civil cases filed under it. Thus, this Court has emphasized this provision and pointed out that
strict adherence to technical rules will hamper the efforts of the Presidential Commission on Good
Government:
We note that the law governing the issues raised in this petition calls for the setting aside of
technical rules when necessary to achieve the purposes behind the PCGG’s creation.
It is to be reiterated that paragraph 2 of Section 3, of Executive Order No. 14 reads:
....
“The technical rules of procedure and evidence shall not be strictly applied to the civil cases
filed hereunder.”
Section 7 thereof also provides:
_______________
48 Id., at pp. 65-66.
210
pg. 1349
“SECTION 7. The provisions of this Executive Order shall prevail over any and all laws,
or parts thereof, as regards the investigation, prosecution, and trial of cases for violations of
laws involving the acquisition and accumulation of ill-gotten wealth as mentioned in
Executive Order Nos. 1 and 2.”
A settled rule on construction is found in the case of Leveriza v. Intermediate Appellate Court:
“. . . that another basic principle of statutory construction mandates that general legislation
must give way to special legislation on the same subject, and generally be so interpreted as
to embrace only cases in which the special provisions are not applicable, that a specific
statute prevails over a general statute and that where two statutes are of equal theoretical
application to a particular case, the one designed therefor specially should prevail.[”]
On this score alone, the Sandiganbayan’s rejection of the petitioner’s motion on the ground that
dropping Campos, Jr. as defendant in the civil case would amount to a violation of the Rules of
Court is based on shaky ground.
The Sandiganbayan’s objections will hamper PCGG efforts in this similar cases.49
_______________
49 Republic v. Sandiganbayan, 255 Phil. 71, 83-84; 173 SCRA 72, 84-85 (1989) [Per J. Gutierrez,
Jr., En Banc], citing Leveriza v. Intermediate Appellate Court, No. L-66614, January 25, 1988,
157 SCRA 282 [Per J. Bidin, Third Division], in turn citing Sto. Domingo v. De los Angeles, 185
Phil. 94; 96 SCRA 139 (1980) [Per J. Melencio-Herrera, First Division]; De Jesus v. People, 205
Phil. 663; 120 SCRA 760 (1983) [Per J. Escolin, En Banc]; and Wil Wilhemsen, Inc. v. Baluyut,
172 Phil. 406; 83 SCRA 38 (1978) [Per J. Guerrero, First Division].
211
VOL. 805, OCTOBER 5, 2016 211

The admitted Complaint was filed to recover, for the Republic of the Philippines, all the properties
that were illegally acquired by the Marcoses during their incumbency as public officers and that
were manifestly out of proportion to their salaries, other lawful income, and income from
legitimately acquired property.50
pg. 1350
The assailed Resolutions do not suggest that the Cabuyao property is not part of the property
illegally acquired by respondents. Thus, the conclusion that the Cabuyao property is not affected
by the Civil Case is based solely on an inference from a procedural detail.
The present issue could have been averted had the Sandiganbayan granted petitioner’s Motion for
Leave to Admit Fourth Amended Complaint. Unfortunately, petitioner inexplicably neither filed a
motion for reconsideration to seek reversal of the Sandiganbayan’s denial nor raised the issue in a
petition for certiorari. Nonetheless, an examination of the denial of the Motion to admit the
amended Complaint is necessary for a full and complete resolution of the issues raised in this
Petition.
The Sandiganbayan Resolution dated September 2, 1998 reads:
In Civil Case No. 0002 (Republic v. Ferdinand E. Marcos, et al.), the Court resolved to deny the
Motion for Leave to Admit Fourth Amended Complaint, dated July 8, 1997, filed by plaintiff,
through counsel (with a copy of the Fourth Amended Complaint thereto attached) for failure of
the plaintiff-movant to comply with the provision of Section 7, Rule 12 of the 1997 Rules of Civil
Procedure which provides:
“Section 7. Filing of amended pleadings.—When any pleading is amended, a new copy

of the entire pleading, incorporating the
_______________
50 Rollo, pp. 112-117.
212

amendments which shall be indicated by appropriate marks, shall be filed.”
and for further reason that the original complaint in this case was filed with this Court on July 16,
1987 yet, or more than 11 years ago, and this case has not even reached the pretrial stage because
not all of the defendants have been served with summons.
Considering the constitutional rights of the parties to a speedy disposition of this case, and the
necessity to expedite the resolution of this case, the parties, through cou[n]sel, are ordered to
pg. 1351
appear and attend a preliminary conference of this case to be held in this Court on September 28,
1998, at 10:45 in the morning.51 (Underscoring in the original)
This Resolution is based on patent errors of both fact and law.
The Sandiganbayan’s denial was primarily based on a purported failure to comply with a
requirement under Rule 10, Section 752 of the Rules of Court, that amendments in a pleading be
indicated by appropriate marks.
The procedural rule, which requires that amendments to a pleading be indicated with appropriate
marks, has for its purpose the convenience of the Court and the parties. It allows the reader to be
able to immediately see the modifications. However, failure to use the appropriate markings for
the deletions and intercalations will not affect any substantive right. Certainly, its absence cannot
cause the denial of any substantive right.53
The Sandiganbayan’s view that a motion for leave to amend should be denied on the basis of the
rule on proper markings in
_______________
51 Id., at p. 194.
52 Id. The provision cited should be Section 7 of Rule 10 of the Rules of Court, and not Rule 12,
as stated by the Sandiganbayan.
53 Gutierrez v. Valiente, 579 Phil. 486, 495-496; 557 SCRA 211, 227 (2008) [Per J. Austria-
Martinez, Third Division].
213
VOL. 805, OCTOBER 5, 2016 213

an amended pleading displays an utter lack of understanding of the function of this procedural rule.
More importantly, a reading of the Fourth Amended Complaint reveals that the Sandiganbayan’s
observation was patently wrong. Petitioner did not fail to comply with Rule 10, Section 7 of the
Rules of Court. There were no portions in the body of the Fourth Amended Complaint itself that
needed to be underscored or marked, considering that the text was identical to the text of the
admitted Complaint. Annex A to the Fourth Amended Complaint, the List of Assets and Other
pg. 1352
Properties of Ferdinand E. Marcos, Imelda R. Marcos and Immediate Family, reveals that it was
amended to include the Cabuyao property in the list of assets. That entry was underscored to reflect
the amendment.
This oversight is so palpable that it can reasonably be interpreted as grave and inexcusable
arbitrariness on the part of the Sandiganbayan. Had the Sandiganbayan simply read the proposed
amended pleading correctly, the inordinate time and resources expended by both parties in this
case would have been avoided.
II
Rule 57, Section 1 of the Rules of Court allows for the attachment of the property of the adverse
party as security for any judgment that may be recovered in the following cases, among others:
RULE 57
Attachment
SECTION 1. Grounds Upon Which Attachment May Issue.—At the commencement of the
action or at any time before entry of judgment, a plaintiff or any proper party may have the property
of the adverse party attached as security for the satisfaction of any judgment that may be recovered
in the following cases:
....
214

(b) In an action for money or property embezzled or fraudulently misapplied or converted to his
own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or
pg. 1353
clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or
for a wilful violation of duty;
(c) In an action to recover the possession of property unjustly or fraudulently taken, detained or
converted, when the property, or any part thereof, has been concealed, removed, or disposed of to
prevent its being found or taken by the applicant or an authorized person[.]
The Sandiganbayan held that “the allegations in support of the grounds for the issuance of a writ
of preliminary attachment [were] couched in general terms and devoid of particulars upon which
[to] discern whether or not to issue a writ.”54 In relation to Rule 57, Section 1(b) of the Rules of
Court, the Sandiganbayan required specific allegations of circumstances as to how the money or
property was allegedly embezzled or fraudulently misapplied or converted to their own use by the
respondents.55 As regards Section 1(c), it held that the Cabuyao property was never concealed,
removed, or disposed of by respondents since it remains registered in their names up to the
present,56 and petitioner “was easily able to identify and locate the property by the mere checking
of its title with the Registry of Deeds of the Province of Laguna.”57
The Sandiganbayan is mistaken. The allegations in the admitted Complaint fall within Section
1(b) and (c) of Rule 57. Given the peculiarities of the Marcos cases, the allegations of Former
President Marcos taking advantage of his powers as President, gravely abusing his powers under
martial law, and embarking on a systematic plan to accumulate ill-gotten wealth suffice to
constitute the case as one under Rule 57.
_______________
54 Rollo, p. 83.
55 Id., at p. 84.
56 Id.
57 Id.
215
VOL. 805, OCTOBER 5, 2016 215

pg. 1354
The allegation that the Cabuyao property was registered under the names of respondents — minors
at the time of registration — is sufficient to allege that the Cabuyao property was concealed, thus
satisfying Rule 57, Section 1(c) of the Rules of Court.
The Sandiganbayan should have issued an order of preliminary attachment considering that the
requisites of the law — including that of Executive Order No. 14 — have been substantially met,
and that there is factual basis for the issuance of the preliminary attachment. The Sandiganbayan
committed grave abuse of discretion in denying petitioner’s Motion for issuance of a writ of
preliminary attachment.
Procedural rules are not mere technicalities that can be disregarded at whim by the parties or by
our courts. Neither should they be applied so mechanically without any appreciation of their
purpose and object.
Every part of our law — whether substantive or procedural — is the outcome of reasonable
deliberation. As the outcome of human agency, our laws are to be interpreted and applied with
meaning and purpose. The day that our courts cease to breathe life to this fundamental principle is
the day that we erode the public’s confidence in the ability of the law to render justice.
WHEREFORE, the Petition for Certiorari is GRANTED. The assailed Resolutions dated
January 11, 2010 and December 1, 2010, insofar as they direct the cancellation of the notice of lis
pendens, are ANNULLED and SET ASIDE. The Register of Deeds of Cabuyao, Laguna is
ORDERED to re-annotate the notice of lis pendens on TCT No. T-85026.
SO ORDERED.
Del Castillo and Mendoza, JJ., concur.
Velasco, Jr.,** J., Please see Dissenting Opinion.
_______________
** Designated additional member per Raffle dated October 3, 2016.
216

pg. 1355
DISSENTING OPINION
VELASCO, JR., J.:
I respectfully register my dissent.
I cannot agree with the conclusion made by the ponencia that the Sandiganbayan committed grave
abuse of discretion in cancelling the notice of lis pendens over the subject property in Cabuyao,
Laguna, covered by TCT No. T-85026 (Cabuyao property).
The basic rule on lis pendens is found in Rule 13, Section 14 of the Rules of Court, which provides:
Section 14. Notice of lis pendens.—In an action affecting the title or the right of possession
of real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer,
may record in the office of the registry of deeds of the province in which the property is situated
notice of the pendency of the action. x x x
not necessary to protect the rights of the party who caused it to be recorded. (24a, R-14)
As early as Diaz v. Perez,1 this Court had already recognized that the effect of an annotation of lis
pendens is to:
x x x charge the stranger with notice of the particular litigations referred to in the notice; and if the
notice is effective, a third party who acquires the property affected by the
_______________
1 No. L-12053, May 30, 1958, 103 Phil. 1023.
217
VOL. 805, OCTOBER 5, 2016 217
pg. 1356
lis pendens takes subject to the eventually of the litigations.
And its purpose is “to hold property within the jurisdiction and control of the court pending
determination of the controversy, thereby preventing third persons from acquiring such interests
therein as would preclude giving effect to the judgment.”
From a plain reading of the above quoted provision, it can easily be inferred that due to the burden
imposed on the property by the notice of lis pendens, the property subjected to the notice must be
the very same property covered by the main action. Otherwise, the notice of lis pendens would
unduly subject a property to a burden even if it is not involved in the pending litigation. In fact, in
Sps. Lim v. Vera Cruz,2 the Court had already clarified that “only the particular property subject
of litigation is covered by the notice of lis pendens.” Conversely, properties not subject of litigation
should not be covered by a notice of lis pendens.
It goes without saying, therefore, that before a court can order the annotation of a notice of lis
pendens over a property subject of litigation, the plaintiff must first show in the complaint the
nexus between the nature of the action, which must be an action involving title to or possession of
real property, on the one hand, and the real property sought to be annotated, on the other. Absent
such nexus, the annotation of lis pendens is not only ineffective to protect the rights of the plaintiff,
it also amounts to deprivation of property without due process of law.
In the case here, there is no contest that the Cabuyao property was not specifically included in the
original Complaint up to the Third Amended Complaint. The Cabuyao property was only
specifically included in the Annex to the Fourth Amended Complaint. It is also undisputed that the
Sandiganbayan de-
_______________
2 G.R. No. 143646, April 4, 2001, 356 SCRA 386.
218

pg. 1357
nied the admission of the Fourth Amended Complaint, and that the denial of the motion for leave
to admit the Fourth Amended Complaint was not questioned by the petitioner in the same or in
another proceeding. In fact, the following observation in the ponencia is very well taken:
The foregoing issue could have been averted had the Sandiganbayan granted petitioner’s Motion
for Leave to Admit Fourth Amended Complaint. Unfortunately, petitioner inexplicably did not file
a motion for reconsideration seeking reversal of the Sandiganbayan’s denial, and did not raise the
issue in a petition for certiorari.
The fact remains that the Fourth Amended Complaint was not duly admitted by the
Sandiganbayan, and such denial is no longer subject to review by this Court. The ponencia,
therefore, should have stopped at that observation, and it need not have unduly addressed the issue
of whether the Fourth Amended Complaint should have been admitted by the Sandiganbayan.
That issue had been laid to rest when the petitioner did not file a motion for reconsideration or a
petition for certiorari against the order denying the motion for leave. All the more, the present
petition should not serve to revive an issue the resolution of which had already long been rendered
final. This Court cannot rule on an issue which the petitioner chose not to elevate to this Court.
The ponencia, however, inexplicably delved into the issue of the Sandiganbayan’s reasons for
denying the motion for leave, and even went on to observe that the denial was a result of an
oversight so palpable that it can reasonably be interpreted as grave and inexcusable arbitrariness
on the part of the Sandiganbayan.3 The ponencia only stopped short of annulling the denial of the
motion for leave.
To my mind, the ponencia’s obiter on the issue of the propriety of the denial of the motion for
leave is incorrect. Such
_______________
3 Ponencia, p. 213.
219
VOL. 805, OCTOBER 5, 2016 219

an issue is already beyond the scope of review of the Court. The Court cannot, in the present case,
resurrect the issue, much less imply that the Sandiganbayan exceeded its jurisdiction in denying
the motion.
pg. 1358
Instead, I believe a more rational ruling can be had if the Court were to take judicial notice of the
fact that the Fourth Amended Complaint was not, as it remains, admitted. Hence, whatever the
allegations there are in the Fourth Amended Complaint, including the annexes therein, are
considered not pleaded. In effect, the Sandiganbayan did not acquire jurisdiction over whatever
issues or allegations were raised in the Fourth Amended Complaint, except those that were also
impleaded in the Third Amended Complaint.
Going back to the issue on the propriety of the issuance of the notice of lis pendens over the
Cabuyao property, I am of the view that the issue should be resolved taking into mind that the
Cabuyao property was not specifically mentioned in the Complaint, as admitted by the
Sandiganbayan. The fact that the Cabuyao property was already included in the Fourth Amended
Complaint should have no bearing in the resolution of the issue, except in highlighting the fact that
the property was included in the unadmitted Fourth Amended Complaint and not in the original
Complaint, nor in the admitted amended Complaints.
Absent any specific reference to the Cabuyao property in all the admitted Complaints, the
Sandiganbayan could not have acquired jurisdiction over the subject property. It is a long-standing
rule that a court can only acquire jurisdiction over the res by: (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.4
In the present case for resolution, it is beyond cavil that
_______________
4 Biaco v. Philippine Countryside Rural Bank, G.R. No. 161417, February 8, 2007, 515 SCRA
106, citing Alba v. Court of Appeals, G.R. No. 164041, July 29, 2005, 465 SCRA 495.
220

the Sandiganbayan did not acquire jurisdiction over the Cabuyao property through the first mode.
As to the second mode, it also cannot be said that the plaintiff, herein petitioners, instituted legal
proceedings over the Cabuyao property, seeing as it were that no specific reference to the Cabuyao
property was mentioned in the complaint. The reasonable inference, therefore, is that the
Sandiganbayan did not acquire jurisdiction over the Cabuyao property.
That being the case, there is no reason why the Sandiganbayan included the Cabuyao property
among those properties over which notices of lis pendens were issued. Thus, while the Omnibus
Motion dated June 5, 1997 prayed for the cancellation of the notice of lis pendens, the cancellation
prayed for should not be interpreted as the same cancellation referred to in Rule 14, Sec. 13, par.
pg. 1359
2 of the Rules of Court.5 Instead, it should be interpreted as one raising a question of propriety of
issuance of a notice of lis pendens, for the simple reason that the property was wrongfully subjected
to the burden even if it is not included in the present litigation. If a notice of lis pendens may be
cancelled when the annotation is not necessary to protect the title of the party who caused it to be
recorded,6 with more reason should it be cancelled if the property subjected to the notice is beyond
the jurisdiction of the court.
Hence, I also cannot agree with the ponencia’s ruling that Executive Order No. 147 should be
applied, and that technical
_______________
5 The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court,
not necessary to protect the rights of the rights of the party who caused it to be recorded.
6 Reyes-Mesugas v. Reyes, G.R. No. 174835, March 22, 2010, 616 SCRA 345.
7 Section 3. Civil suits for restitution, reparation of damages, or indemnification for

consequential damages, forfeiture proceedings provided for under Republic Act No. 1379, or any
other civil actions
221
VOL. 805, OCTOBER 5, 2016 221

rules of procedure and evidence need not be applied strictly to the case here.8 On the contrary, I
find that the provision in Executive Order No. 14 is not applicable to the case at bar, because what
is involved is a question of jurisdiction, and not technical rules on procedure and evidence.
The only issue presented is whether a notice of lis pendens may be annotated to the TCT covering
the Cabuyao property despite the fact that the Sandiganbayan did not acquire jurisdiction over the
Cabuyao property. To me, the only reasonable conclusion is that the Sandiganbayan did not
acquire jurisdiction over the Cabuyao property because of the failure to include the property in the
Complaint, as admitted, and consequently, no notice of lis pendens may be annotated in its title,
insofar as the present case is involved.
In so ruling, the Court is not in any way precluding the inclusion of the Cabuyao property in further
court proceedings. Neither is the Court making a determination of whether the Cabuyao property
is ill-gotten or not, for the precise reason that such a determination is premature. What the Court
would, in effect, uphold is the ruling that the notice of lis pendens must be cancelled, for the sole
pg. 1360
reason that the Sandiganbayan, in Civil Case No. 0002, has not acquired jurisdiction over the
Cabuyao property. Therefore, the Sandiganbayan exceeds its jurisdiction when it issues any order
covering the Cabuyao property.
Given the foregoing, I find that the cancellation of the notice of lis pendens over the Cabuyao
property is proper.
_______________
under the Civil Code or other existing laws, in connection with Executive Order No. 1 dated
February 28, 1986 and Executive Order No. 2 dated March 12, 1986, may be filed separately from
and proceed independently of any criminal proceedings and may be proved by a preponderance of
evidence.
The technical rules of procedure and evidence shall not be strictly applied to the civil cases filed
hereunder.
8 Ponencia, p. 209.
222

I vote that the present Petition for Certiorari be DISMISSED for failing to show grave abuse
discretion amounting to lack or excess of jurisdiction on the part of the respondent Sandiganbayan.
Petition granted, resolutions annulled and set aside.
Notes.—Only a preponderance of evidence was needed to prove its demand for reconveyance or
recovery of ill-gotten wealth. (Republic vs. Reyes-Bakunawa, 704 SCRA 163 [2013])
While the Court acknowledges the Government’s admirable efforts to recover ill-gotten wealth
allegedly taken by the corporations, it cannot, however, choose to turn a blind eye to the demands
of the law, justice, and fairness. (Palm Avenue Holding Co., Inc. vs. Sandiganbayan 5th Division,
732 SCRA 156 [2014])
——o0o——
pg. 1361
G.R. No. 213939. October 12, 2016.*
LYLITH B. FAUSTO, JONATHAN FAUSTO, RICO ALVIA, ARSENIA TOCLOY, LOURDES

ADOLFO and ANECITA MANCITA, petitioners, vs. MULTI AGRI-FOREST AND
COMMUNITY DEVELOPMENT COOPERATIVE (formerly MAF CAMARINES SUR
EMPLOYEES COOPERATIVE, INC.), respondent.
Remedial Law; Civil Procedure; Courts; Metropolitan, Municipal, and Municipal Circuit Trial
Courts; Jurisdiction; The first adjustment in jurisdictional amount of first level courts outside of
Metro Manila from P100,000.00 to P200,000.00 took effect on March 20, 1999. Meanwhile, the
second adjustment from P200,000.00 to P300,000.00 became effective on February 22, 2004 in
accordance with Circular No. 65-2004 issued by the Office of the Court Administrator (OCA) on
May 13, 2004.—It was emphasized in Crisostomo v. De Guzman, 524 SCRA 513 (2007), that the
intent of R.A. No. 7691 was to expand the jurisdiction of the Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts by amending the pertinent provisions of BP 129
or the Judiciary Reorganization Act of 1980. Under Section 5 of the said law, the increase in
jurisdictional amount for all kinds of claims before first level courts outside of Metro Manila was
to be implemented in a staggered basis over a period of 10 years. The first adjustment was to take
place five years after the effectivity of the law. The second and final adjustment, on the other hand,
would be made five years thereafter. In particular, the first adjustment in jurisdictional amount of
first level courts outside of Metro Manila from P100,000.00 to P200,000.00 took effect on March
20, 1999. Meanwhile, the second adjustment from P200,000.00 to P300,000.00 became effective
on February 22, 2004 in accordance with Circular No. 65-2004 issued by the Office of the Court
Administrator on May 13, 2004. Considering that the complaints were filed in 2000, the
jurisdictional amount to be applied is P200,000.00, exclusive of interests, surcharges, damages,
attorney’s fees and litigation costs. This jurisdictional amount pertains to the totality of all the
claims between the parties embodied in the same
_______________
* THIRD DIVISION.
51
VOL. 806, OCTOBER 12, 2016 51

Fausto vs. Multi Agri-Forest and Community Development Cooperative (formerly MAF
Camarines Sur Employees Cooperative, Inc.)
complaint or to each of the several claims should they be contained in separate complaints.
pg. 1362
Mercantile Law; Cooperatives; Corporations; Both the Corporation Code and the Cooperative
Code recognize the authority of the board of directors, through a duly-issued board resolution, to
act and represent the corporation or the cooperative, as the case maybe, in the conduct of official
business.—That the applicable law should be the Cooperative Code and not the Corporation Code
is not sufficient to warrant a different resolution of this case. Verily, both codes recognize the
authority of the BOD, through a duly-issued board resolution, to act and represent the corporation
or the cooperative, as the case maybe, in the conduct of official business. In Section 23 of the
Corporation Code, it is provided that all corporate powers of all corporations formed under the
Code shall be exercised by the BOD. All businesses are conducted and all properties of
corporations are controlled and held by the same authority. In the same manner, under Section 39
of the Cooperative Code, the BOD is given the power to direct and supervise the business, manages
the property of the cooperative and may, by resolution, exercise all such powers of the cooperative.
The BOD, however, may authorize a responsible officer to act on its behalf through the issuance
of a board resolution attesting to its consent to the representation and providing for the scope of
authority.
Same; Same; Same; The lack of authority of a corporate officer to undertake an action on behalf
of the corporation or cooperative may be cured by ratification through the subsequent issuance of
a board resolution, recognizing the validity of the action or the authority of the concerned
officer.—The lack of authority of a corporate officer to undertake an action on behalf of the
corporation or cooperative may be cured by ratification through the subsequent issuance of a board
resolution, recognizing the validity of the action or the authority of the concerned officer. In
Yasuma v. Heirs of Cecilio S. de Villa, 499 SCRA 466 (2006), the Court emphasized, thus: [T]he
corporation may ratify the unauthorized act of its corporate officer. Ratification means that the
principal voluntarily adopts, confirms and gives sanction to some unauthorized act of its agent on
its behalf. It is this voluntary choice, knowingly made, which amounts to a ratification of what was
theretofore unauthorized and becomes the authorized act of the party so making the ratification.
The substance of the doctrine
52

is confirmation after conduct, amounting to a substitute for a prior authority. Ratification can be
made either expressly or impliedly. Implied ratification may take various forms — like silence or
acquiescence, acts showing approval or adoption of the act, or acceptance and retention of benefits
flowing therefrom.
Same; Same; Same; It is not mandatory to undergo mediation first before seeking recourse to
regular courts. This being the case, the respondent’s direct resort to the court is not fatal to its
pg. 1363
cases.—The petitioners likewise raised an issue with respect to the lack of effort on the part of the
respondent to resort to mediation before the CDA prior to filing the complaints in court. Indeed,
expressed in Section 121 of the Cooperative Code is the preference for the amicable settlement of
disputes before the CDA. It does not appear, however, that mediation or conciliation is a mandatory
requirement that is considered fatal to a case directly filed in a regular court. The provision reads
as follows: Sec. 121. Settlement of Disputes.—Disputes among members, officers, directors and
committee members, and intra-cooperative disputes shall, as far as practicable, be settled amicably
in accordance with the conciliation or mediation mechanisms embodied in the bylaws of the
cooperative, and in applicable laws. Should such a conciliation/mediation proceeding fail, the
matter shall be settled in a court of competent jurisdiction. The non-compulsory nature of the resort
to mediation is evident from the language of the provision. The decision to mediate depends on
the submission of one or both parties to undergo the procedure by requesting the CDA to mediate,
coupled with the parties’ mutual agreement to recognize its authority. The procedure therefore is
optional and rests on the parties’ agreement to submit to the same. Clearly, it is not mandatory to
undergo mediation first before seeking recourse to regular courts. This being the case, the
respondent’s direct resort to the court is not fatal to its cases.
Civil Law; Obligations; Solidary Obligations; A solidary or joint and several obligation is one in
which each debtor is liable for the entire obligation.—The petitioners cannot evade liability by
invoking that the stipulation on the waiver of notice applies only to the principal. It bears noting
that the promissory notes state that the petitioners bound themselves jointly and severally liable
with the principal debtor for the entire amount of the obligation. A solidary or joint and several
obligation is one in which each debtor is liable for
53
VOL. 806, OCTOBER 12, 2016 53

the entire obligation. The petitioners being comakers, their liability is immediate and absolute as
the principal debtor. The terms of the promissory notes apply to comakers in equal force as with
the principal debtors. This includes stipulation on the waiver of notice from the creditor before the
obligation becomes due and demandable.
Manuel P. Teoxon for petitioners.
Rolando Carandang for respondent.
pg. 1364
RESOLUTION
REYES, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, assailing the
Decision2 dated March 17, 2014 and the Resolution3 dated August 4, 2014 of the Court of Appeals
(CA) in C.A.-G.R. S.P. No. 123602.
Factual Antecedents
Multi Agri-Forest and Community Development Cooperative4 (respondent) is a registered credit

cooperative wherein Lylith Fausto (Lylith), Jonathan Fausto (Jonathan), Rico Alvia (Rico),
Arsenia Tocloy (Arsenia), Lourdes Adolfo (Lourdes) and
_______________
1 Rollo, pp. 45-60.
2 Penned by Associate Justice Agnes Reyes-Carpio, with Associate Justices Noel G. Tijam and
Priscilla J. Baltazar-Padilla, concurring; id., at pp. 11-29.
3 Id., at pp. 38-39.
4 Formerly MAF Camarines Sur Employees Cooperative.
54

Anecita Mancita (Anecita)5 (collectively, the petitioners) are active members.6
pg. 1365
On September 10, 1998, Lylith obtained a loan from the respondent in the amount of P80,000.00,
with due date on January 8, 1999.7 Subsequently, she secured another loan in the amount of
P50,000.00 which will fall due on March 14, 1999.8 Shortly thereafter, she procured a third loan
from the respondent also in the amount of P50,000.00.9 All of the mentioned transactions were
evidenced by separate promissory notes, with Anecita and Lourdes signing as comakers in the first
and second loans, and Rico and Glicerio Barce (Glicerio) in the third loan.
Similarly, on October 27, 1998, Jonathan obtained a loan from the respondent in the amount of
P60,000.00 to fall due on February 24, 1999, with Lylith and Glicerio as comakers.10 Thereafter,
on December 10, 1998, he obtained a second loan in the amount of P100,000.00, with Lylith and
Arsenia as his comakers.11 All five loans obtained by Lylith and Jonathan were imposed with an
interest of 2.3% per month, with surcharge of 2% in case of default in payment of any installment
due.
Lylith and Jonathan, however, failed to pay their loans despite repeated demands. Thus, on
December 12, 2000, the respondent, through its Acting Manager Ma. Lucila G. Nacario (Nacario),
filed five separate complaints12 for Collection of Sum of Money before the Municipal Trial Court
in Cities (MTCC) of Naga City against the petitioners.
_______________
5 Anicia Mancita in GSIS ID, see CA Rollo, p. 31.
6 Rollo, p. 12.
7 CA Rollo, p. 81.
8 Id., at p. 104.
9 Id., at p. 97.
10 Id., at p. 71.
11 Id., at p. 89.
12 Id., at pp. 69-70, 79-80, 87A-88, 95-96, 102-103.
55
VOL. 806, OCTOBER 12, 2016 55

pg. 1366
After the respondent rested its case, Rico, Glicerio, Lourdes, Arsenia and Anecita filed a motion
to dismiss by way of a demurrer to evidence on the ground of lack of authority of Nacario to file
the complaints and to sign the verification against forum shopping. They likewise claimed that the
complaints were prematurely filed since no demand letters were sent to them.13
The respondent filed an opposition to the demurrer to evidence alleging that the petitioners
expressly waived the need for notice or demand for payment in the promissory notes. It likewise
averred that there was a subsequent board resolution confirming the authority of Nacario to file
the complaints on behalf of the respondent.14
In an Order15 dated July 24, 2009, the MTCC of Naga City, Branch 1 denied the petitioners’
demurrer to evidence for lack of merit. It pointed out that the petitioners failed to raise the supposed
lack of authority of Nacario in their Answer; hence, the said defense was deemed waived. As
regards the lack of notice, it noted that the promissory notes evidencing the loans stipulated a
waiver on the need for notice or demand in case of default in payment of any installment due, in
which case the entire balance immediately becomes due and payable.
Subsequently, in a Decision16 dated August 1, 2011, the MTCC ruled in favor of the respondent
and held the petitioners liable for the payment of specified amount of loans, which include
interests, penalties and surcharges, plus 12% interest thereon. The dispositive portion of the
decision reads, as follows:
WHEREFORE, premises considered, the Court finds for the [respondent], ordering the following:
_______________
13 Id., at pp. 36-37.
14 Id., at p. 37.
15 Id., at p. 188.
16 Rendered by Presiding Judge Jose P. Nacional; id., at pp. 43-47.
56

pg. 1367
1. In Civil Case No. 11318, [Jonathan, Lylith and Glicerio] are hereby ordered jointly and
severally to pay to [the respondent] the amount of Php129,881.60 plus 12% interest thereon
from the filing of the case until the whole amount is fully paid.
2. In Civil Case No. 11319, [Lylith, Lourdes and Anecita] are hereby ordered jointly and
3. In Civil Case No. 11438, [Jonathan, Lylith and Arsenia] are hereby ordered jointly and
4. In Civil Case No. 11439, [Lylith, Rico and Glicerio] are hereby ordered jointly and
5. In Civil Case No. 11440, [Lylith, Lourdes and Anecita] are hereby ordered jointly and
SO ORDERED.17
Unyielding, the petitioners appealed the foregoing decision with the Regional Trial Court (RTC)
of Naga City. After the parties submitted their respective memoranda, the RTC ren-
_______________
17 Id., at pp. 46-47.
57
VOL. 806, OCTOBER 12, 2016 57

dered a Joint Decision18 dated December 12, 2011, affirming with modification the decision of
the MTCC. It reverted the liability of the petitioners to the original amount of the loan stated in
the promissory notes and reduced the interest and surcharge to 12% per annum, respectively. The
dispositive portion of the decision reads, thus:
pg. 1368
WHEREFORE, premises considered, the assailed August 1, 2011 joint decision of the [MTCC] of
Naga City, Branch 1 is hereby MODIFIED as follows:
1. In Civil Case No. 2011-0100 (MTCC 11318), [Jonathan, Lylith and Glicerio] are
ordered jointly and severally to pay [the respondent] the Principal of loan under promissory
note in the amount of P60,000.00 plus the following: a) 12% per annum on the said principal
as interest and b) 12% per annum on the said principal as surcharge, both to be computed
from the time of filing of this case until the whole amount is fully paid, AND c) attorney[’]s
fees in the amount of P6,000.00.
2. In Civil Case No. 2011-0101 (MTCC 11319), [Lylith, Lourdes and Anecita] are ordered
jointly and severally to pay the Principal of loan under promissory note in the amount of
P80,000.00 plus the following: a) 12% per annum on the said principal as interest and b)
12% per annum on the said principal as surcharge, both to be computed from the time of
filing of this case until the whole amount is fully paid, AND c) attorney[’]s fees in the amount
of P8,000.00.
3. In Civil Case No. 2011-0102 (MTCC 11438), [Jonathan & Lylith and Arsenia] are
ordered jointly and severally to pay [the respondent] the Principal of loan under promis-
_______________
18 Rendered by Presiding Judge Bernhard B. Beltran; id., at pp. 34-42.
58

sory note in the amount of P100,000.00 plus the following: a) 12% per annum on the said
principal as interest and b) 12% per annum on the said principal as surcharge, both to be
computed from the time of filing of this case until the whole amount is fully paid, AND c)
attorney[’]s fees in the amount of P10,000.00.
4. In Civil Case No. 2011-0103 (MTCC 11439), [Lylith, Rico and Glicerio] are hereby
ordered jointly and severally to pay [the respondent] the Principal of loan under promissory
note in the amount of P50,000.00 plus the following: a) 12% per annum on the said principal
as interest and b) 12% per annum on the said principal as surcharge, both to be computed
from the time of filing of this case until the whole amount is fully paid, AND c) attorney[’]s
fees in the amount of P5,000.00.
pg. 1369
5. In Civil Case No. 2011-0104 (MTCC 11440), [Lylith, Lourdes and Anecita] are ordered
to pay jointly and severally to pay [sic] [the respondent] the Principal of loan under
promissory note in the amount of P50,000.00 plus the following: a) 12% per annum on the
said principal as interest and b) 12% per annum on the said principal as surcharge, both to
be computed from the time of filing of this case until the whole amount is fully paid, AND c)
attorney[’]s fees in the amount of P5,000.00.
SO ORDERED.19
On December 28, 2011, the petitioners filed a motion for reconsideration of the decision of the
RTC. Thereafter, on February 2, 2012, the RTC issued a Joint Order,20 specifically
_______________
19 Id., at pp. 41-42.
20 Id., at pp. 32-33.
59
VOL. 806, OCTOBER 12, 2016 59

modifying its ruling in Civil Case No. 2011-0103, the dispositive portion of which reads, as
follows:
WHEREFORE, premises considered, with respect to a) Civil Case No. 2011-0100; b) Civil Case
No. 2011-0101; c) Civil Case No. 2011-0102; d) Civil Case No. 2011-0104, the instant motion for
reconsideration, dated December 27, 2011 is DENIED, and consequently, the joint decision, dated
December 12, 2011 in these cases is hereby AFFIRMED.
Nonetheless, the decision in Civil Case No. 2011-0103 (MTCC Civil Case No. 11439) is hereby
MODIFIED as to the Principal of loan from P50,000.00 to only P16,667.01. Consequently, with
respect to this case, [Lylith, Rico and Glicerio] are hereby ordered jointly and severally to pay
[the respondent] the Principal of loan under promissory note in the amount of P16,667.01, plus
the following: a) 12% per annum on the said principal as interest and b) 12% per annum on the
said principal as surcharge, both to be computed from the time of filing of this case until the whole
amount is fully paid, AND c) attorney[’]s fees in the amount of P1,667.70.
pg. 1370
SO ORDERED.21
On February 22, 2012, the petitioners filed a petition for review with the CA.22 They reiterated
their claim that Nacario lacked the authority to file the complaints on behalf of the respondent in
the absence of a board resolution authorizing her to do so. They farther questioned the respondent’s
failure to resort to mediation or conciliation before filing the cases in court.23 They also pointed
out that the RTC overlooked the fact that the respondent sent demand letters only to Lylith and
Jonathan, to the exclusion of their comakers.24 Finally, they
_______________
21 Id., at p. 33.
22 Id., at pp. 3-30.
23 Id., at p. 19.
24 Id., at p. 21.
60

contended that the MTCC had no jurisdiction over the complaints considering that the total amount
involved was way over its jurisdictional amount of P100,000.00 nor to the increase in the same in
the amount of P200,000.00, brought about by the amendment provided in Republic Act (R.A.) No.
7691.25
On March 17, 2014, the CA rendered a Decision,26 affirming the decision of the RTC, the
dispositive portion of which reads, as follows:
WHEREFORE, in view of the foregoing, the Petition for Review is DENIED. The Joint Decision
dated December 12, 2011, and Joint Order dated February 2, 2012, rendered by the [RTC] of Naga
City, Branch 24 in Civil Cases Nos. 2011-0100, 2011-0101, 2011-0102, 2011-0103 and 2011-
0104, are AFFIRMED.
SO ORDERED.27 (Citations omitted)
pg. 1371
The CA ruled that the MTCC had jurisdiction over the case considering that pursuant to R.A. No.
7691, the jurisdictional amount pertaining to its authority had been increased to P200,000.00, and
each of the complaints filed by the respondent are within this stated amount. It pointed out that the
totality rule raised by the petitioners does not apply since the respondent filed separate complaints
pertaining to different loan transactions.28 As regards the authority of Nacario to initiate the filing
of the complaints, the same had been confirmed by a board resolution recognizing her authority to
do so.29 It also ruled that the lack of mediation does not affect the cases since resort to conciliation
is not a prerequisite to the
_______________
25 Id., at p. 26.
26 Rollo, pp. 11-29.
27 Id., at p. 28.
28 Id., at pp. 19-20.
29 Id., at p. 21.
61
VOL. 806, OCTOBER 12, 2016 61

filing of a case in court.30 Finally, it dismissed the petitioners’ argument on the lack of
extrajudicial demand on each of the comakers, holding that the same was not necessary since there
was a stipulation in the promissory notes on the waiver of notice or demand.31
The petitioners filed a Motion for Reconsideration32 but the CA, in its Resolution33 dated August
4, 2014, denied the same.
On September 11, 2014, the petitioners interposed the present appeal with this Court. The
petitioners contend that the CA erred in upholding the jurisdiction of the MTCC to hear the cases
in contravention to the totality rule. They maintain that the MTCC has no jurisdiction over the
complaints since the total amount of the claims exceeds the jurisdictional amount that pertains to
the MTCC. They likewise point out the lack of authority of Nacario to act on behalf of the
respondent, there being no board resolution empowering her to do so at the time she filed the
pg. 1372
complaints. Further, they argue that the respondent failed to resort to mediation or conciliation
before filing the cases with the MTCC. Finally, they asseverate that the CA erred in overlooking
the lack of demand or notice upon the comakers of Lylith and Jonathan.
Ruling of the Court
The petition lacks merit.
The MTCC has jurisdiction

over the Complaints
A reading of the petition shows that the issues raised herein had been thoroughly discussed and
passed upon by the
_______________
30 Id., at pp. 24-25.
31 Id., at pp. 25-27.
32 Id., at pp. 30-36.
33 Id., at pp. 38-39.
62

CA. On the issue of jurisdiction, the CA correctly upheld the jurisdiction of the MTCC of Naga
City to hear the cases. R.A. No. 7691, which amended Section 33 of Batas Pambansa Bilang 129
(BP 129), increased the jurisdictional amount pertaining to the MTCC. Pertinently, Section 5 of
R.A. No. 7691 reads:
pg. 1373
Sec. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts mentioned
in Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as amended by this Act,
shall be adjusted to Two hundred thousand pesos (P200,000.00). Five (5) years thereafter, such
jurisdictional amounts shall be adjusted further to Three hundred thousand pesos (P300,000.00):
Provided, however, That in the case of Metro Manila, the above mentioned jurisdictional amounts
shall be adjusted after five (5) years from the effectivity of this Act to Four hundred thousand pesos
(P400,000.00).
It was emphasized in Crisostomo v. De Guzman,34 that the intent of R.A. No. 7691 was to expand
the jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts by amending the pertinent provisions of BP 129 or the Judiciary Reorganization Act
of 1980. Under Section 5 of the said law, the increase in jurisdictional amount for all kinds of
claims before first level courts outside of Metro Manila was to be implemented in a staggered basis
over a period of 10 years. The first adjustment was to take place five years after the effectivity of
the law. The second and final adjustment, on the other hand, would be made five years thereafter.35
In particular, the first adjustment in jurisdictional amount of first level courts outside of Metro
Manila from P100,000.00 to P200,000.00 took effect on March 20, 1999. Meanwhile, the second
adjustment from P200,000.00 to P300,000.00 became effective on February 22, 2004 in accor-
_______________
34 551 Phil. 951; 524 SCRA 513 (2007).
35 Id., at p. 959; p. 519.
63
VOL. 806, OCTOBER 12, 2016 63

dance with Circular No. 65-2004 issued by the Office of the Court Administrator on May 13,
2004.36
Considering that the complaints were filed in 2000, the jurisdictional amount to be applied is
P200,000.00, exclusive of interests, surcharges, damages, attorney’s fees and litigation costs. This
jurisdictional amount pertains to the totality of all the claims between the parties embodied in the
same complaint or to each of the several claims should they be contained in separate complaints.
This is the unequivocal meaning of the last proviso in Section 33(1) of B.P. 129, which reads:
pg. 1374
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in civil cases.—Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and
intestate, including the grant of provisional remedies in proper cases, where the value of the
personal property, estate, or amount of the demand does not exceed One hundred thousand
pesos (P100,000.00) or, in Metro Manila where such personal property, estate, or amount of
the demand does not exceed Two hundred thousand pesos (P200,000.00) exclusive of
interest damages of whatever kind, attorney’s fees, litigation expenses, and costs, the amount
of which must be specifically alleged: Provided, That where there are several claims or
causes of action between the same or different parties, embodied in the same complaint,
the amount of the demand shall be the totality of the claims in all the causes of action,
irrespective of whether the causes of action arose out of the same or different transactions[.]
x x x x (Emphasis ours)
_______________
36 Id.
64

Therefore, the CA correctly ruled that the totality rule does not apply in the case. As can be deduced
from the above stated provision, the totality of claims rule applies only when there are several
claims or causes of action between the same or different parties embodied in the same complaint,
in which case the total amount of the claims shall be determinative of the proper court which has
jurisdiction over the case. The instant case, however, does not call for the application of the rule
since there are five complaints, each pertaining to a distinct and separate claim not exceeding
P200,000.00. The petitioners’ act of lumping altogether the amount of the claims in all of the
complaints and arguing that the total amount of P1,216,342.91 exceeds the jurisdictional amount
that pertains to the MTCC is a gross misinterpretation of the provision.
pg. 1375
The Board of Directors (BOD)
ratified the acts of Nacario.
The petitioners asseverate that Nacario has no authority to file the complaints on behalf of the
respondent. They argue that it is only by the authority of a board resolution that Nacario may be
able to validly pursue acts in representation of the cooperative. They also contend that the
applicable law is R.A. No. 6938 or the Cooperative Code of the Philippines (Cooperative Code),37
and not the Corporation Code of the Philippines (Corporation Code).
That the applicable law should be the Cooperative Code and not the Corporation Code is not
sufficient to warrant a different resolution of this case. Verily, both codes recognize the authority
of the BOD, through a duly-issued board resolution, to act and represent the corporation or the
cooperative, as the case maybe, in the conduct of official business. In Sec-
_______________
37 R.A. No. 6938, approved on March 10, 1990, was the law in force at the time of filing of the
complaints. It was later amended by R.A. No. 9520 or the Philippine Cooperative Code of 2008
approved on February 17, 2009.
65
VOL. 806, OCTOBER 12, 2016 65

tion 2338 of the Corporation Code, it is provided that all corporate powers of all corporations
formed under the Code shall be exercised by the BOD. All businesses are conducted and all
properties of corporations are controlled and held by the same authority. In the same manner, under
Section 39 of the Cooperative Code, the BOD is given the power to direct and supervise the
business, manages the property of the cooperative and may, by resolution, exercise all such powers
of the cooperative. The BOD, however, may authorize a responsible officer to act on its behalf
through the issuance of a board resolution attesting to its consent to the representation and
providing for the scope of authority.
Nevertheless, there were instances when the Court recognized the authority of some officers to file
a case on behalf of the corporation even without the presentation of the board resolution. In
Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue,39 it was noted, thus:
pg. 1376
In a slew of cases, however, we have recognized the authority of some corporate officers to sign
the verifica-
_______________
38 Sec. 23. The board of directors or trustees.—Unless otherwise provided in this Code, the
corporate powers of all corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held by the board of directors or
trustees to be elected from among the holders of stocks, or where there is no stock, from among
the members of the corporation, who shall hold office for one (1) year until their successors are
elected and qualified.
Every director must own at least one (1) share of the capital stock of the corporation of which he
is a director, which share shall stand in his name on the books of the corporation. Any director
who ceases to be the owner of at least one (1) share of the capital stock of the corporation of which
he is a director shall thereby cease to be a director. Trustees of non-stock corporations must be
members thereof. A majority of the directors or trustees of all corporations organized under this
Code must be residents of the Philippines.
39 568 Phil. 572; 545 SCRA 10 (2008).
66

tion and certification against forum shopping. In Mactan-Cebu International Airport Authority v.
CA, we recognized the authority of a general manager or acting general manager to sign the
verification and certificate against forum shopping; in Pfizer v. Galan, we upheld the validity of a
verification signed by an “employment specialist” who had not even presented any proof of her
authority to represent the company; in Novelty Philippines, Inc. v. CA, we ruled that a personnel
officer who signed the petition but did not attach the authority from the company is authorized to
sign the verification and non-forum shopping certificate; and in Lepanto Consolidated Mining
Company v. WMC Resources International Pty. Ltd. (Lepanto), we ruled that the Chairperson of
the Board and President of the Company can sign the verification and certificate against non-forum
shopping even without the submission of the board’s authorization.
In sum, we have held that the following officials or employees of the company can sign the
verification and certification without need of a board resolution: (1) the Chairperson of the
Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting
pg. 1377
General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.40
(Citation omitted and emphasis ours)
In the above mentioned cases, however, the Court clarified that the determination of the sufficiency
of the authority of the concerned officers was done on a case to case basis. The rationale in
justifying the authority of corporate officers or representatives of the corporation to sign the
verification or certificate against forum shopping is that they are in the best position to verify the
truthfulness and correctness of the allegations in the petition.41 Nonetheless, this was not meant
to trump the established rule of issuing a board resolution and appending a copy thereof to the
complaint or petition so as to
_______________
40 Id., at p. 581; p. 18.
41 Id., at pp. 581-582; pp. 18-19.
67
VOL. 806, OCTOBER 12, 2016 67

preclude any question on the authority to file the petition, particularly in signing the verification
and certification against forum shopping.
Apart from the foregoing, the lack of authority of a corporate officer to undertake an action on
behalf of the corporation or cooperative may be cured by ratification through the subsequent
issuance of a board resolution, recognizing the validity of the action or the authority of the
concerned officer. In Yasuma v. Heirs of Cecilio S. de Villa,42 the Court emphasized, thus:
[T]he corporation may ratify the unauthorized act of its corporate officer. Ratification means that
the principal voluntarily adopts, confirms and gives sanction to some unauthorized act of its agent
on its behalf. It is this voluntary choice, knowingly made, which amounts to a ratification of what
was theretofore unauthorized and becomes the authorized act of the party so making the
ratification. The substance of the doctrine is confirmation after conduct, amounting to a substitute
for a prior authority. Ratification can be made either expressly or impliedly. Implied ratification
may take various forms — like silence or acquiescence, acts showing approval or adoption of the
act, or acceptance and retention of benefits flowing therefrom.43 (Citations omitted)
pg. 1378
In this case, the respondent expressly recognized the authority of Nacario to file the complaints in
Resolution No. 47, Series of 2008,44 in which the BOD resolved to recognize, ratify and affirm
as if the same were fully authorized by the BOD, the filing of the complaints before the MTCC of
Naga City by Nacario. In a similar issue raised in Swedish Match Philippines, Inc. v. The Treasurer
of the City of Manila,45 the
_______________
42 531 Phil. 62; 499 SCRA 466 (2006).
43 Id., at p. 68; p. 18.
45 713 Phil. 240; 700 SCRA 428 (2013).
68

Court upheld the subsequent issuance of a board resolution recognizing the authority of the
corporation’s finance manager as sufficient to acknowledge the authority of the said officer to file
a petition with the RTC on behalf of the corporation. It ratiocinated that, by virtue of the issuance
of the board resolution, the corporation ratified the authority of the concerned corporate officer to
represent it in the petition filed before the RTC and consequently to sign the verification and
certification of non-forum shopping on behalf of the corporation.46 Here, considering that
Nacario’s authority had been ratified by the BOD, there is no reason for the Court not to uphold
said authority.
Mediation before the Coop-

erative Development Author-
ity (CDA) is not Compulsory
pg. 1379
The petitioners likewise raised an issue with respect to the lack of effort on the part of the
respondent to resort to mediation before the CDA prior to filing the complaints in court.
Indeed, expressed in Section 121 of the Cooperative Code is the preference for the amicable
settlement of disputes before the CDA. It does not appear, however, that mediation or conciliation
is a mandatory requirement that is considered fatal to a case directly filed in a regular court. The
provision reads as follows:
Sec. 121. Settlement of Disputes.—Disputes among members, officers, directors and committee
members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in
accordance with the conciliation or mediation mechanisms embodied in the bylaws of the
cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of
competent jurisdiction.
_______________
46 Id., at pp. 248-251; p. 437.
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VOL. 806, OCTOBER 12, 2016 69

The non-compulsory nature of the resort to mediation is evident from the language of the provision.
The decision to mediate depends on the submission of one or both parties to undergo the procedure
by requesting the CDA to mediate, coupled with the parties’ mutual agreement to recognize its
authority. The procedure therefore is optional and rests on the parties’ agreement to submit to the
same. Clearly, it is not mandatory to undergo mediation first before seeking recourse to regular
courts. This being the case, the respondent’s direct resort to the court is not fatal to its cases.
The requirement for demand or

notice may be waived.
pg. 1380
Anent the petitioners’ claim that no notice or demand was sent to them, the CA correctly ruled that
the instant case falls under the exceptions to the necessity of demand. Specifically, Article 1169,
paragraph 1 of the Civil Code provides that demand is not necessary when the obligation or the
law expressly so declares. In the promissory notes signed by the petitioners, there is a uniform
provision which states that “[i]n case of default in payment of any installment due as herein agreed,
the entire balance of this note shall immediately become due and payable at the option of the
[respondent] without any notice or demand.” This amounts to the express waiver of the need for
demand before the debtor incurs in delay.
The petitioners cannot evade liability by invoking that the stipulation on the waiver of notice
applies only to the principal. It bears noting that the promissory notes state that the petitioners
bound themselves jointly and severally liable with the principal debtor for the entire amount of the
obligation. A solidary or joint and several obligation is one in which each debtor is liable for the
entire obligation.47 The petitioners be-
_______________
47 Inciong, Jr. v. Court of Appeals, 327 Phil. 364, 372; 257 SCRA 578, 587 (1996).
70

ing comakers, their liability is immediate and absolute as the principal debtor. The terms of the
promissory notes apply to comakers in equal force as with the principal debtors. This includes
stipulation on the waiver of notice from the creditor before the obligation becomes due and
demandable.
The interest imposed on the money

judgment must be modified to con-
form to prevailing jurisprudence.
The RTC, in its decision, ruled that the stipulated interest rates of 2.3% per month and 2%
surcharge per month are excessive and unconscionable as the combination of these rates already
amounted to 51.6% of the principal. Finding such stipulation void for being exorbitant and
therefore contrary to morals, if not against the law, it reduced the rate of interest and surcharge to
pg. 1381
1% per month or twelve percent (12%) per annum, which was then the prevailing rate of legal
interest.
Such ruling of the RTC finds support in a plethora of cases where this Court ruled that the
imposition of iniquitous and unconscionable interest rate renders the same void and warrants the
imposition of the legal interest rate. In Ruiz v. CA,48 the Court found the 3% interest imposed on
four promissory notes as excessive and equitably reduced the same to 12% per annum. Likewise,
in Chua, et al. v. Timan, et al.,49 the Court ruled that the stipulated interest rates of 7% and 5%
per month imposed on loans are excessive and reduced the same to the legal rate of 1% per month
or 12% per annum. And, in Macalinao v. Bank of the Philippine Islands,50 the Court further
reduced the 3% interest imposed by the CA on purchases made using Bank of the Philippine
Islands credit card to 1% per month, finding that 36% per annum of interest, which
_______________
48 449 Phil. 419; 401 SCRA 410 (2003).
49 584 Phil. 144; 562 SCRA 146 (2008).
50 616 Phil. 60; 600 SCRA 67 (2009).
71
VOL. 806, OCTOBER 12, 2016 71

even excludes penalty charges, is excessive and unconscionable.
In this case, the RTC correctly ruled that the stipulated interest rate of 2.3% per month on the
promissory notes and 2% per month surcharge are excessive, iniquitous, exorbitant and
unconscionable, thus, rendering the same void. Since the stipulation on the interest rate is void, it
is as if there was no express contract thereon, in which case, courts may reduce the interest rate as
reason and equity demand.51 Thus, it is only just and reasonable for the RTC to reduce the interest
to the acceptable legal rate of 1% per month or 12% per annum. This ruling was affirmed by the
CA.
In view, however, of the ruling of this Court in Nacar v. Gallery Frames, et al.,52 there is a need
to modify the rate of legal interest imposed on the money judgment in order to conform to the
prevailing jurisprudence. In the said case, the Court discussed the modification on the rules in the
imposition or computation of legal interest laid down in the landmark case of Eastern Shipping
Lines, Inc. v. Court of Appeals,53 brought about by Resolution No. 796 dated May 16, 2013 issued
pg. 1382
by the Bangko Sentral ng Pilipinas-Monetary Board. The pertinent portion in Nacar reads as
follows:
Recently, however, the Bangko Sentral ng Pilipinas-Monetary Board (BSP-MB), in its Resolution
No. 796 dated May 16, 2013, approved the amendment of Section 2 of Circular No. 905, Series of
1982 and, accordingly, issued Circular No. 799, Series of 2013, effective July 1, 2013, the pertinent
portion of which reads:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following
revisions governing the rate of interest in the absence of stipulation in loan contracts,
_______________
51 Id., at p. 69; p. 77.
52 716 Phil. 267; 703 SCRA 439 (2013).
53 G.R. No. 97412, July 12, 1994, 234 SCRA 78.
72

thereby amending Section 2 of Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods
or credits and the rate allowed in judgments, in the absence of an express
contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations

for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations
for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest
that would govern the parties, the rate of legal interest for loans or forbearance of any money,
goods or credits and the rate allowed in judgments shall no longer be twelve percent (12%)
per annum — as reflected in the case of Eastern Shipping Lines and Subsection X305.1 of
the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the
pg. 1383
Manual of Regulations for Non-Bank Financial Institutions, before its amendment by BSP-
MB Circular No. 799 — but will now be six percent (6%) per annum effective July 1,
2013. x x x.54 (Citations omitted and emphasis ours)
_______________
54 Nacar v. Gallery Frames, supra note 52 at pp. 279-281; pp. 455-456.
73
VOL. 806, OCTOBER 12, 2016 73

Consistent with the foregoing, the Court hereby reduces the rate of interest on the principal loans
to six percent (6%) per annum and the surcharge imposed thereon also to the prevailing legal rate
of six percent (6%) per annum.
WHEREFORE, premises considered, the Decision dated March 17, 2014 and the Resolution
dated August 4, 2014 of the Court of Appeals, in C.A.-G.R. S.P. No. 123602, are hereby
AFFIRMED with MODIFICATION in that the interest rate on the principal amount of the loans
stated in the promissory notes and the corresponding surcharge for default in payment are
respectively reduced to the prevailing legal rate of six percent (6%) per annum.
SO ORDERED.
Judgment and resolution affirmed with modification.
Notes.—A.M. No. 01-10-5-SC-PHILJA regards mediation as part of pretrial where parties are
encouraged to personally attend the proceedings. (Chan Kent vs. Micarez, 645 SCRA 176 [2011])
A solidary obligation is one in which each of the debtors is liable for the entire obligation, and
each of the creditors is entitled to demand the satisfaction of the whole obligation from any or all
of the debtors. (Navida vs. Dizon, Jr., 649 SCRA 33 [2011])
——o0o——
pg. 1384
G.R. No. 179566. October 19, 2016.*
SPOUSES LORETO G. NICOLAS and LOLITA SARIGUMBA, petitioners, vs. AGRARIAN

REFORM BENEFICIARIES ASSOCIATION (ARBA), and FARMERS ASSOCIATION OF
DAVAO CITY-KMPI, FELIPE RAMOS, HILARIO PASIOL, ROGELIO ASURO, ARTURO
ATABLANCO, RODRIGO ATABLANCO, BONIFACIO ATIMANA, PATRICIO AVILA,
CRISANTO BACUS, ERNESTO DONAHAN, SR., NESTOR LOCABERTE, MANILO
REYES, ANDRES SAROL, SHERLITO TAD-I, ANTONIO TANGARO, OLIGARIO
TANAGARO,** CRISITUTO TANGARO,*** FELICIANO TANGARO, GODOFREDO
NABASCA, WENNIE ALIGARME, PEDRO TATOY, JR., FELIPE UMAMALIN, PEDRO
TATOY, SR., ANTONIO YANGYANG, ROMEO GANTUANGCO, VICTOR ALIDON,
JAIME TATOY and JESUS TATOY, JR., respondents.
Remedial Law; Civil Procedure; Appeals; Rule 43 is the correct mode of appeal for decisions,
orders, or resolutions of the Department of Agrarian Reform (DAR) Secretary.—While we agree
that Rule 43 is the correct mode of appeal for decisions, orders, or resolutions of the DAR
Secretary, we find that the CA should not have easily dismissed the petition after petitioners pad
adequately explained and rectified their procedural lapses, which were neither gross nor
inexcusable. Captioning the petition as a Rule 45 instead of a Rule 43 was a clear inadvertence.
Apart from this error and the one on the attached decisions being mere photocopies, petitioners
have complied with all the other requirements of a Rule 43 petition.
Same; Same; Same; Dismissal of Actions; Procedural Rules and Technicalities; Dismissal of
appeals purely on technical grounds is
_______________
* THIRD DIVISION.
** Also referred to as Oligario Tangaro in some parts of the records.
*** Also referred to as Cristituto Tangaro in some parts of the records.
454

Nicolas vs. Agrarian Reform Beneficiaries Association (ARBA)
frowned upon where the policy of the court is to encourage hearings of appeals on their merits
and the rules of procedure ought not to be applied in a very rigid, technical sense; rules of
pg. 1385
procedure are used only to help secure, not override substantial justice.—More importantly, the
property rights at stake in this case, which will be discussed here shortly, should have merited
reconsideration from the CA to entertain the petition. Dismissal of appeals purely on technical
grounds is frowned upon where the policy of the court is to encourage hearings of appeals on their
merits and the rules of procedure ought not to be applied in a very rigid, technical sense; rules of
procedure are used only to help secure, not override substantial justice. It is a far better and more
prudent course of action for the court to excuse a technical lapse and afford the parties a review of
the case on appeal to attain the ends of justice rather than dispose of the case on technicality and
cause a grave injustice to the parties, giving a false impression of speedy disposal of cases while
actually resulting in more delay, if not a miscarriage of justice.
Moot and Academic; An issue is said to have become moot and academic when it ceases to present
a justiciable controversy, so that a declaration on the issue would be of no practical use or
value.—Preliminarily, it may seem at first blush that our ruling in G.R. No. 168394 on the Nicolas,
et al. Petition is a supervening event that has rendered this petition moot and academic. An issue
is said to have become moot and academic when it ceases to present a justiciable controversy, so
that a declaration on the issue would be of no practical use or value. In such cases, there is no
actual substantial relief to which the plaintiff would be entitled and which would be negated by
the dismissal of the complaint. Based on this definition, we hold that the petition has not been
mooted. For one, there is still a justiciable, live controversy between the parties despite our ruling
in G.R. No. 168394. In Intramuros Tennis Club, Inc. v. Philippine Tourism Authority, 341 SCRA
90 (2000), We did not find that the petition was rendered moot or illusory by the fact that execution
was effected and possession of the subject matter of the case was restored to private respondents.
We held that the resolution of the petition requires a determination of whether the CA gravely
abused its discretionary power to order execution pending appeal as prescribed in Section 2, Rule
39 of the 1997 Revised Rules of Court, and where such grave abuse of discretion is established,
the execution pending appeal
455
VOL. 806, OCTOBER 19, 2016 455

pursuant to the resolutions of the CA may be voided. Thus, We concluded that the petition
presented a live and justiciable controversy.
Remedial Law; Civil Procedure; Judgments; Stare Decisis; Words and Phrases; Stare decisis
means that for the sake of certainty, a conclusion reached in one case should be applied to those
that follow if the facts are substantially the same, even though the parties may be different.—To
begin with, not all elements of stare decisis and res judicata are present in this case. Stare decisis
means that for the sake of certainty, a conclusion reached in one case should be applied to those
that follow if the facts are substantially the same, even though the parties may be different. It
pg. 1386
proceeds from the first principle of justice that, absent any powerful countervailing considerations,
like cases ought to be decided alike. Thus, where the same questions relating to the same event
have been put forward by the parties similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the
same issue.
Same; Same; Same; Res Judicata; According to the doctrine of res judicata, 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.—According to the doctrine of res
judicata, an existing final judgment or decree rendered on the merits, and without fraud or
collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is
conclusive of the rights of the parties or their privies, in all other actions or suits in the same or
any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the
first suit. The doctrines of res judicata (which means a “matter adjudged”) and stare decisis non
quieta et movere (or simply, stare decisis which means “follow past precedents and do not disturb
what has been settled”) are general procedural law principles which both deal with the effects of
previous but factually similar dispositions to subsequent cases. Both doctrines speak of a first suit
that has been previously decided by a court with finality. Both doctrines bar the reliti-
456

gation of the same or similar issues raised in said first suit. In other words, the doctrines are applied
prospectively.
Same; Same; Appeals; Certiorari; One party may validly question the decision in a regular appeal
and at the same time assail the execution pending appeal via certiorari without violating the non-
forum shopping rule because the merits of the case would not be addressed in the petition dealing
with the execution and vice versa.—Our ratio decidendi in a number of cases where We allowed
the simultaneous filing of an appeal on the merits of the case and a petition for certiorari on the
grant of an execution pending appeal may be applied here. In these cases, We have held that one
party may validly question the decision in a regular appeal and at the same time assail the execution
pending appeal via certiorari without violating the non-forum shopping rule because the merits of
the case would not be addressed in the petition dealing with the execution and vice versa. We
stressed that although there is identity of parties, the causes of action and the reliefs sought are
different. The issue in these cases may have been whether there was forum shopping, but the logic
behind Our pronouncements applies here, considering that the test to determine whether a party
pg. 1387
violated the rule against forum shopping is whether the elements of litis pendentia are present, or
whether the final judgment in one case will amount to res judicata in another.
Same; Same; Execution of Judgments; The Rules provides that execution shall issue as a matter
of course upon the expiration of the period to appeal therefrom if no appeal has been duly
perfected.—The Rules provides that execution shall issue as a matter of course upon the expiration
of the period to appeal therefrom if no appeal has been duly perfected. Here, the Decision of the
Provincial Adjudicator in the Nicolas, et al. Petition was not yet final and executory when Nicolas
and Cruz executed the decision in their favor. ARBA, et al. and the DAR were able to perfect their
appeals. More importantly, the execution pending appeal was done in blatant violation of Section
2 of the Rules. Nicolas and Cruz did not file any motion for execution of the decision of the
Adjudicator pending appeal before the Board. There is also no order from the Board allowing the
execution pending appeal upon showing of good reasons. Simply put, the execution pending appeal
was done unilaterally and extrajudicially.
457
VOL. 806, OCTOBER 19, 2016 457

Same; Same; Same; Execution of Judgment Pending Appeal; Execution of a judgment pending
appeal is only an exception to the general rule; The rules do not specify the “good reasons” to
justify execution pending appeal; thus, it is the discretion of the court to determine what may be
considered as such.—We find the justifications of Nicolas and Cruz unacceptable. Execution of a
judgment pending appeal is only an exception to the general rule. Being an exception, the existence
of “good reasons” is essential. “Good reasons” has been held to consist of compelling
circumstances justifying the immediate execution lest judgment becomes illusory. Such reasons
must constitute superior circumstances demanding urgency which will outweigh the injury or
damages should the losing party secure a reversal of the judgment. The rules do not specify the
“good reasons” to justify execution pending appeal; thus, it is the discretion of the court to
determine what may be considered as such.
Civil Law; Damages; Nominal Damages; Article 2221 of the Civil Code provides that nominal
damages may be awarded in order that the plaintiff’s right, which has been violated or invaded by
the defendant, may be vindicated or recognized and not for the purpose of indemnifying the
plaintiff for any loss suffered.—Article 2221 of the Civil Code provides that nominal damages may
be awarded in order that the plaintiff’s right, which has been violated or invaded by the defendant,
may be vindicated or recognized and not for the purpose of indemnifying the plaintiff for any loss
suffered. We have laid down the concept of nominal damages in the following wise: Nominal
damages are ‘recoverable where a legal right is technically violated and must be vindicated against
an invasion that has produced no actual present loss of any kind or where there has been a breach
of contract and no substantial injury or actual damages whatsoever have been or can be shown.’
pg. 1388
Pacifico J. Abraham for petitioner.
Edgardo T. Mata for Farmers Assoc. of Davao City-KMPI.
458

Glocelito C. Jayma for respondents R. Asuro, et al.
JARDELEZA, J.:
This is a Petition for Review on Certiorari1 assailing the Resolutions of the Court of Appeals (CA)
in C.A.-G.R. S.P. No 01312-MIN dated November 16, 20062 and August 3, 2007.3 These
resolutions dismissed the appeal filed by Spouses Loreto G. Nicolas and Lolita Sarigumba
(Spouses Nicolas) from the Decision4 of the Department of Agrarian Reform Adjudication Board
(DARAB) in DARAB Case No. 10860 due to procedural infirmities.
The Facts
Respondent Agrarian Reform Beneficiaries Association (ARBA) is the registered owner of a

parcel of land, with an area of 429,314 square meters and located at Barangay Sto. Niño, Tugbok
District, Davao City.5 The land is covered by Transfer Certificate of Title (TCT) No. CL-143 and
Certificate of Land Ownership Award (CLOA) No. 00044912.6 The individual respondents7 are
among the named and registered ARBA beneficiaries of the land.8
_______________
pg. 1389
1 Rollo, pp. 4-25.
2 Id., at pp. 26-28. Ponencia by Associate Justice Rodrigo F. Lim, Jr., with Associate Justices
Teresita Dy-Liacco Flores and Mario V. Lopez, concurring.
3 Id., at pp. 29-31.
4 CA Rollo, pp. 20-26.
5 Id., at p. 21.
6 Id.
7 Felipe Ramos, Hilario Pasiol, Rogelio Asuro, Arturo Atablanco, Rodrigo Atablanco, Bonifacio
Atimana, Patricio Avila, Crisanto Bacus, Ernesto Donahan, Sr., Nestor Locaberte, Manilo Reyes,
Andres Sarol, Sherlito Tad-I, Antonio Tangaro, Oligario Tangaro, Cristituto Tangaro, Feliciano
Tangaro, Godofredo Nabasca, Wennie Alegarme, Pedro
459
VOL. 806, OCTOBER 19, 2016 459

On August 31, 1998, petitioner Loreto G. Nicolas (Nicolas) and Olimpio R. Cruz (Cruz) filed a
Petition for the “Cancellation of the Certificate of Land Ownership Award and Reinstatement of
Title”9 (Nicolas, et al. Petition) with the Office of the Provincial Adjudicator of the DARAB in
Davao.10 It was docketed as DARAB Case No. XI-1482-DC-98 and filed against the Department
of Agrarian Reform (DAR) Secretary, DAR-Region XI Regional Director, DAR-Davao City
Provincial Agrarian Reform Officer, ARBA, and the Farmers Association of Davao City-KMPI
(FADC-KMPI), et al. Nicolas and Cruz claimed that they are the lawful owners of two (2) parcels
of land covered by TCT Nos. T-162077 and T-162078, which were cancelled and included in TCT
No. CL-143. Nicolas and Cruz claimed they acquired the lands in 1994 through a deed of
assignment executed in their favor by Philippine Banking Corporation (PhilBanking). The lands
were erroneously included in the Comprehensive Agrarian Reform Program (CARP) though they
were already classified as within an urban zone and were, therefore, nonagricultural.11 Thus,
Nicolas and Cruz prayed that: (1) the compulsory acquisition proceedings relative to the lands
covered by TCT Nos. T-162077 and T-162078 be declared null and void; (2) the CLOA issued to
ARBA and FADC-KMPI, et al. be cancelled; and (3) TCT Nos. T-162077 and T-162078 be
transferred in their names.12 The Provincial Adjudicator granted the petition on May 14, 1999.13
_______________
pg. 1390
Tatoy, Jr., Felipe Umamalin, Pedro Tatoy, Sr., Antonio Yangyang, Romeo Gantuangco, Victor
Alidon, Jaime Tatoy, and Jesus Tatoy, Jr.
8 CA Rollo, p. 21.
9 DARAB Records, pp. 115-122.
10 CA Rollo, p. 21.
12 CA Rollo, p. 21; DARAB Records, pp. 4-5.
13 Id.; id., at pp. 30-36.
460

ARBA and the public respondents filed their separate appeals on June 30, 1999.14 However,
pending these appeals, Nicols and Cruz were able to execute the decision of the Provincial
Adjudicator.15 They were able to cause the cancellation of ARBA’s TCT No. CL-143 and the
reinstatement of TCT Nos. T-162077 and T-162078 in the name of PhilBanking.16 They thereafter
managed to cause the cancellation of TCT Nos. T-162077 and T-162078 and have them transferred
in their names and of their spouses under TCT Nos. T-320807 and T-320808.17 Subsequently,
these two (2) titles were subdivided into six (6) titles: TCT Nos. T-328623, T-328624, T-328625,
T-328626, T-328627, and T-328628.18 Nicolas and Cruz later sold the land covered by TCT No.
T-328626 to Spouses Marciano and Judith Tapiador (Spouses Tapiador), in whose names a new
title, TCT No. 332246, was issued.19
The foregoing acts of Nicolas and Cruz prompted ARBA, FADC-KMPI, and the individual
respondents (ARBA, et al.) to file a complaint for “Nullity of the Cancellation of TCT No. CL-
143; Nullity of the Reinstatement of TCT Nos. T-162077 and T-162078; Nullity of TCT Nos. T-
320807 and T-320808; Nullity of TCT Nos. T-328623, T-328624, T-328625, T-328626, T-328627
and T-328628; Reinstatement of TCT No. CL-143; Damages and Attorney’s Fee”20 (ARBA, et
al. Complaint). It was docketed as DARAB Case No. XI-1661-DC-2001 and filed against Spouses
Nicolas, Spouses Olimpio R. Cruz and Juliana Esteban (Spouses Cruz), and the Registry of Deeds
of Davao City. ARBA, et al. argued that the acts of Nicolas and Cruz pending the appeal of the
Nicolas, et al. Petition are void
_______________
pg. 1391
14 Id., at p. 22; id., at p. 6.
15 Id.
16 Id.; DARAB Records, p. 6.
17 Id.; Id., at p. 7.
18 DARAB Records, p. 7.
19 CA Rollo, p. 22.
461
VOL. 806, OCTOBER 19, 2016 461

ab initio or without effect.21 They cited that there was a violation of Rule 12, Section 1 of the
New Rules of Procedure of the DARAB because there was neither a certification by the proper
officer that a resolution has become final and executory nor has any been served on them or on
their counsel of record.22 They also cited that there was no writ of execution issued by the Board
of Adjudicator.23 ARBA, et al. also argued that under Rule 36, Section 2 of the 1977 Rules of
Civil Procedure, a decision will only become final and executory if it is entered in the Book of
Entries and a Certificate of Finality is issued by the Clerk of Court.24
On July 9, 2001, the Regional Adjudicator dismissed the complaint on the grounds of litis
pendentia and lack of jurisdiction.25 The Regional Adjudicator ruled that complainants should
have ventilated their case before the DARAB in the Nicolas, et al. Petition, which was still pending
at that time. He also ruled that the case being one for annulment of judgment, jurisdiction lies
before the regional trial courts.26
Meanwhile, on September 24, 2001, the DARAB in the Nicolas, et al. Petition reversed the
Provincial Adjudicator and upheld the validity of the CLOA issued in the name of ARBA and their
subsequent registration with the Register of Deeds.27 Nicolas and Cruz appealed before the CA
(C.A.-G.R. S.P. No. 70357), which reversed and set aside the decision of the DARAB in a decision
dated October 12, 2004.28 The dispositive portion of the CA decision reads:
_______________
21 Id., at p. 7.
pg. 1392
22 Id.
23 Id., at p. 8.
24 Id.
25 Id., at pp. 331-332.
26 Id., at p. 332.
27 CA Rollo, pp. 22-23.
28 Id., at pp. 7-8.
462

WHEREFORE, premises considered, the questioned Decision dated 24 September 2001 rendered
by the public respondent DARAB is hereby REVERSED and SET ASIDE and a new one entered:
1. Ordering the Register of Deeds of Davao City to Cancel TCT No. CL-143 (CLOA No.
00044912);
2. Ordering the Register of Deeds of Davao City to reinstate Transfer Certificate of Title
Nos. T-162077 and T-162078 in the name of PhilBanking;
3. Maintaining the private respondents members of the ARBA and Farmers Association of
Davao-KMPI in their peaceful possession and cultivation over their respective landholdings
in this case if they and/or predecessors[-]in-interest were already tenants over the same
period to June 15, 1988[;] and
4. Declaring the parcels of land in question as exempted from the coverage of CARL.29
From this decision, the DAR, ARBA, and Felipe Ramos (Ramos), representing a faction of ARBA,
filed separate petitions for review on certiorari before Us, docketed as G.R. No. 168206, G.R. No.
168394, and G.R. No. 168684, respectively.30 We denied the DAR and Ramos Petitions via
minute resolutions and both denials eventually attained finality.31 Meanwhile, the petition filed
by ARBA in G.R. No. 168394 was still pending at that time.32
pg. 1393
On the other hand, the DARAB in the ARBA, et al. Complaint reversed the Regional Adjudicator
and rendered a new
_______________
29 Id., at pp. 9-10.
30 Rollo, p. 10.
31 Id., at p. 11.
32 Id.
463
VOL. 806, OCTOBER 19, 2016 463

judgment33 on June 14, 2005 (DARAB Case No. 10860), the dispositive part of which reads:
WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE and a NEW
JUDGMENT is rendered as follows:
1. Declaring the cancellation of complainant-appellant ARBA’s TCT No. CL-143, as null and
void;
2. Declaring the reinstatement on September 28, 1999 of the previously cancelled TCT No. T-
162077 and TCT No. T-162078, under the name of Philippine Banking Corporation, as null and
void;
3. Declaring the transfer of TCT No. T-162077 and TCT No. 162078 under the names of
respondents-appellees Loreto G. Nicolas and Olimpio R. Cruz, and their respective spouses, in
TCT No. T-320807 and TCT No. T-320808, respectively, on September 1, 2000 as null and void;
4. Declaring the transfer of TCT No. T-320807 and TCT No. T-320808 under the names of
respondents appellees Loreto G. Nicolas and Olimpio R. Cruz, and their respective spouses, into
six (6) titles, to wit, TCT Nos. T-328623, T-328624, T-328625,
T-328626, T-328627, T-328628, on September 21, 2000, as null and void;
5. Declaring the sale or purchase of TCT No. T-328626 executed by respondents-appellees Loreto
G. Nicolas and Olimpio R. Cruz, and their respective spouses, in favor of spouses Marciano and
Judith Tapiador, as null and void;
pg. 1394
6. Declaring TCT Nos. T-162077, T-162078, T-320807, T-320808, T-328623, T-328624, T-
32865, T-328626,
_______________
33 CA Rollo, pp. 20-26.
464

T-328627, T-328628 and T-332246, as null and void; and
7. Ordering the Registry of Deeds of Davao City to reinstate complainant-appellant ARBA’s TCT
No. CL-143.
SO ORDERED.34
The DARAB stressed that in view of the Board’s ruling dated September 24, 2001 in the Nicolas,
et al. Petition in favor of ARBA, et al., all of the acts committed and/or caused to be committed
by Nicolas and Cruz pending appeal were contrary and should, therefore, be nullified.35
Citing its 2003 Rules of Procedure, the DARAB held that it was erroneous to execute the judgment
in the Nicolas, et al. Petition pending appeal. The DARAB found no good and urgent reason to
justify the execution pending appeal, which meant that Nicolas and Cruz were in bad faith when
they committed and/or caused to be committed the execution of the judgment to the prejudice of
individual respondents.36 Thus, Nicolas and Cruz have to suffer the adverse consequences of the
reversal of the decision previously rendered in their favor.37
The DARAB denied the Motion for Reconsideration filed by Spouses Nicolas, et al.38 Spouses
Nicolas filed a petition before the CA (C.A.-G.R. S.P. No. 01312-MIN), which was dismissed
because of procedural infirmities.39
_______________
34 Id., at pp. 24-25.
35 Id., at pp. 22-23.
pg. 1395
36 Id., at pp. 23-24.
37 Id., at p. 24.
38 Id., at pp. 30-32.
39 Id., at pp. 39-41.
465
VOL. 806, OCTOBER 19, 2016 465

The Petition
Spouses Nicolas now appeal the resolutions and argue that the CA erred in:
1) refusing due course to their petition when it was clearly apparent that the DARAB
decision has already been overtaken and superseded by subsequent decisions of the Supreme
Court; and
2) not recognizing that the issues addressed by the DARAB had already been settled by the
Supreme Court and subject to the doctrines of stare decisis and res judicata.40
Spouses Nicolas argue that the DARAB decision itself states that the only issue involved therein
was the appropriateness of the execution of judgment in favor of Spouses Nicolas pending
appeal.41 However, the DARAB treated its decision as final and executory, irrespective of the
subsequent outcome of further proceedings in the main action, the Nicolas, et al. Petition, which
was brought before the CA and Us.42
Spouses Nicolas point out the subsequent decision of the CA in their favor in the Nicolas, et al.
Petition.43 They argue that with our resolutions in G.R. No. 168206 and G.R. No. 168684 (the
DAR and Ramos Petitions), We have already affirmed with finality the findings of the CA that the
authority of the DAR is limited only to all public and private agricultural lands.44 Likewise, the
DARAB decision in the ARBA, et al. Complaint conflicts with the decisions in the Nicolas, et al.
Petition. Spouses Nicolas insist that the DARAB in the ARBA, et al. Complaint should have
confined the issue as to
pg. 1396
_______________
40 Rollo, p. 12.
41 Id., at p. 9.
42 Id.
43 Id.
44 Id., at pp. 12-13.
466

whether the execution of judgment pending appeal was appropriate. The decretal portion of its
decision, however, dwelled upon the very issues raised on appeal in the Nicolas, et al. Petition.45
Issues
1) Whether the CA correctly dismissed the appeal of petitioners in the ARBA, et al.
Complaint on procedural grounds.
2) Whether the issues addressed by the DARAB in the ARBA, et al. Complaint have already
been superseded and settled by our ruling in G.R. No. 168394,46 the Nicolas, et al. Petition.
pg. 1397
The CA erred in dismissing
the appeal of petitioners on
pure technicalities.
The CA dismissed the appeal of Spouses Nicolas on the following procedural grounds:
1) The petition was filed via Rule 45 of the Rules of Civil Procedure, which is cognizable
only by the Supreme Court, rather than Rule 43;47
2) Only photocopies, instead of duplicate original or certified true copies, of the assailed
decision and
_______________
45 Id., at p. 14.
46 Agrarian Reform Beneficiaries Association (ARBA) v. Nicolas, G.R. No. 168394, October 6,
2008, 567 SCRA 540.
47 Rollo, p. 27.
467
VOL. 806, OCTOBER 19, 2016 467

resolution of DARAB were attached to the petition;48 and
3) The Integrated Bar of the Philippines (IBP) Official Receipt number of their counsel
indicated in the petition is not current.49
Spouses Nicolas filed a Motion for Reconsideration and Leave of Court to File Amended Petition.
They insisted that their Petition for Review was erroneously captioned “Petition for Review on
Certiorari” and that the allegations in their pleading and the context in which it was filed show
that they intended to file a Petition for Review under Rule 43.50
Spouses Nicolas also explained that they inadvertently attached the original copies of the assailed
decision and resolution to one of the duplicate copies of the petition.51 Spouses Nicolas likewise
pg. 1398
attached a certified true copy of the assailed decision of DARAB in their Amended Petition and
furnished the CA a photocopy of their counsel’s current IBP Official Receipt number.52 Spouses
Nicolas implored the CA to resolve the petition on the merits and not on the formal deficiencies
so as not to render nugatory our final decision in G.R. No. 168394.53
Despite the explanation and compliance of Spouses Nicolas, the CA still denied their motion in its
Resolution54 dated August 3, 2007. The CA held that the Rules of Procedure of DARAB mandates
that judicial review of DARAB orders or decisions are governed by the Rules of Court, specifically
Rule 43. Since Spouses Nicolas availed of the wrong mode of appeal via
_______________
48 Id., at pp. 27-28.
49 Id., at p. 28.
50 Id., at p. 30.
51 CA Rollo, p. 49.
52 Id., at p. 112.
53 Id., at p. 51.
54 Rollo, pp. 29-31.
468

a petition for review on certiorari under Rule 45, it cannot be remedied by the mere filing of an
Amended Petition for Review under Rule 43. Hence, the wrong mode of appeal taken did not vest
jurisdiction on the CA over the petition. Accordingly, the period within which to file the petition
was not tolled.55
Finally, the CA ruled that pursuant to Section 4 of Supreme Court Circular No. 2-90,56 an appeal
taken to the CA by the wrong or inappropriate mode shall be dismissed.57
While we agree that Rule 43 is the correct mode of appeal for decisions, orders, or resolutions of
the DAR Secretary, we find that the CA should not have easily dismissed the petition after
petitioners had adequately explained and rectified their procedural lapses, which were neither gross
pg. 1399
nor inexcusable. Captioning the petition as a Rule 45 instead of a Rule 43 was a clear inadvertence.
Apart from this error and the one on the attached decisions being mere photocopies, petitioners
have complied with all the other requirements of a Rule 43 petition.
More importantly, the property rights at stake in this case, which will be discussed here shortly,
should have merited reconsideration from the CA to entertain the petition. Dismissal of appeals
purely on technical grounds is frowned upon where the policy of the court is to encourage hearings
of appeals on their merits and the rules of procedure ought not to be applied in a very rigid,
technical sense; rules of procedure are used only to help secure, not override substantial justice. It
is a far better and more prudent course of action for the court to excuse a technical lapse and afford
the parties a review of the case on appeal to attain the ends of justice rather than dispose of the
case on technicality and cause a grave injustice to the parties, giving a false impression of speedy
_______________
55 Id., at p. 31.
56 Guidelines to be Observed in Appeals to the Court of Appeals and to the Supreme Court (1990).
57 Rollo, p. 31.
469
VOL. 806, OCTOBER 19, 2016 469

disposal of cases while actually resulting in more delay, if not a miscarriage of justice.58
Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties’
right to due process.59 We further explained in City of Dumaguete v. Philippine Ports Authority:60
Procedural rules were conceived to aid the attainment of justice. If a stringent application of the
rules would hinder rather than serve the demands of substantial justice, the former must yield to
the latter. x x x
xxx
pg. 1400
Likewise, in Samoso v. CA, the Court ruled:
But time and again, the Court has stressed that the rules of procedure are not to be applied
in a very strict and technical sense. The rules of procedure are used only to help secure not
override substantial justice. (National Waterworks & Sewerage System v. Municipality of
Libmanan, 97 SCRA 138 [1980]; Gregorio v. Court of Appeals, 72 SCRA 120 [1976]) The
right to appeal should not be lightly disregarded by a stringent application of rules of
procedure especially where the appeal is on its face meritorious
_______________
58 Aguam v. Court of Appeals, G.R. No. 137672, May 31, 2000, 332 SCRA 784, 790.
59 Barangay Sangalang v. Barangay Maguihan, G.R. No. 159792, December 23, 2009, 609
SCRA 57, 68, citing Ong Lim Sing, Jr. v. FEB Leasing & Finance Corporation, G.R. No. 168115,
June 8, 2007, 524 SCRA 333, 343.
60 G.R. No. 168973, August 24, 2011, 656 SCRA 102.
470

and the interests of substantial justice would be served by permitting the appeal. (Siguenza
v. Court of Appeals, 137 SCRA 570 [1985]; Pacific Asia Overseas Shipping Corporation v.
National Labor Relations Commission, et al., G.R. No. 76595, May 6, 1998) x x x61
(Emphasis supplied)
The issue in the ARBA, et al.

Complaint has not been ren-
dered moot and academic.
pg. 1401
Preliminarily, it may seem at first blush that our ruling in G.R. No. 168394 on the Nicolas, et al.
Petition is a supervening event that has rendered this petition moot and academic. An issue is said
to have become moot and academic when it ceases to present a justiciable controversy, so that a
declaration on the issue would be of no practical use or value. In such cases, there is no actual
substantial relief to which the plaintiff would be entitled and which would be negated by the
dismissal of the complaint.62 Based on this definition, we hold that the petition has not been
mooted.
For one, there is still a justiciable, live controversy between the parties despite our ruling in G.R.
No. 168394. In Intramuros Tennis Club, Inc. v. Philippine Tourism Authority63 we did not find
that the petition was rendered moot or illusory by the fact that execution was effected and
possession of the subject matter of the case was restored to private respondents. We held that the
resolution of the petition requires a determination of whether the CA gravely abused its
discretionary power to order execution pending appeal as prescribed
_______________
61 Id., at pp. 117-118.
62 Ilusorio v. Baguio Country Club Corporation, G.R. No. 179571, July 2, 2014, 728 SCRA 592,
598.
63 G.R. No. 135630, September 26, 2000, 341 SCRA 90.
471
VOL. 806, OCTOBER 19, 2016 471

in Section 2, Rule 39 of the 1997 Revised Rules of Court, and where such grave abuse of discretion
is established, the execution pending appeal pursuant to the resolutions of the CA may be voided.
Thus, we concluded that the petition presented a live and justiciable controversy.64
We emphasize that the Nicolas, et al. Petition and the ARBA, et al. Complaint are two different
initiatory pleadings that raise two completely different issues but which are, at the same time,
intimately related. The issue in the Nicolas, et al. Petition is whether the parcels of land are under
the compulsory coverage of the Comprehensive Agrarian Reform Law65 (CARL). The heart of
the ARBA, et al. Complaint, on the other hand, is whether the acts of Nicolas and Cruz pending
appeal are valid and legal. We have ruled in favor of petitioners in G.R. No. 168394 and declared
that the parcels of land are outside the coverage of CARL. Accordingly, we also ordered the
cancellation of the CLOAs in favor of respondents and ordered the Register of Deeds to reinstate
the TCTs in the name of petitioners’ predecessor-in-interest, PhilBanking.66 The DARAB in the
pg. 1402
ARBA, et al. Complaint, meanwhile, ruled that the execution pending appeal was invalid and so
declared as void the cancellation of the CLOAs of respondents and the reinstatement of the TCTs
in the name of PhilBanking. It also ordered the Register of Deeds to reinstate respondents’ TCT
(CLOAs). Given these conflicting declarations, what petitioners are attempting to achieve in this
petition, therefore, is an annulment of the DARAB and CA decisions in the ARBA, et al.
Complaint in order to conform to our ruling in G.R. No. 168394. The non-application of the second
part of the definition of a moot and academic issue on the practical use or value of a declaration
on the dispute now comes into play. A declaration from Us sustaining petitioners’ position
_______________
64 Id., at p. 103.
65 Republic Act No. 6657 (1998).
66 Agrarian Reform Beneficiaries Association (ARBA) v. Nicolas, supra note 46 at pp. 547, 557.
472

and granting them their prayer for relief would still be of practical value to them. As we shall also
discuss and show shortly, our ruling here will also be of practical value to respondents.
In Pasig Printing Corporation v. Rockland Construction Company, Inc.,67 We decided the case
on the merits despite the finality of the main case because of peculiar circumstances. If We chose
not to, erroneous resolutions of the CA would have remained in force and would have prejudiced
the possessory rights of one of the parties.68 We also face the same dilemma here. If We were to
simply deny the petition on the ground of mootness, the conflicting decisions of Nicolas, et al.
Petition and the ARBA, et al. Complaint would subsist.
Further, there is another lingering issue that demands judicial review. Our ruling in G.R. No.
168394 effectively upholds the rights of petitioners over the land and consequently, also upholds
their legitimate exercise of such rights. But again, the conflicting decisions pose a problem, since
the DARAB in the ARBA, et al. Complaint also invalidated the following acts of Nicolas and Cruz
on the ground of bad faith:
1. The transfer of TCTs in the name of PhilBanking to petitioner Nicolas and Cruz and their
respective spouses;
pg. 1403
2. The transfer and subdivision of the TCTs in the names of petitioner Nicolas and Cruz and
their respective spouses; and
3. The sale of a parcel of land from the subdivided property (covered by TCT No. T-328626)
executed by petitioner Nicolas and Cruz and their respective spouses in favor of Spouses
Tapiador.
A question now arises as to the status of these acts. Will the invalidation by the DARAB stand or
must it be over-
_______________
68 Id., at p. 476.
473
VOL. 806, OCTOBER 19, 2016 473

turned? We note that at the same time, however, the validity of the foregoing acts is hinged on the
validity of the execution pending appeal. There is, therefore, a need to settle the actual controversy
surrounding these acts.
The doctrines of res judicata

and stare decisis do not ap-
ply in this case.
Petitioners posit that G.R. No. 168394 has finally settled the issues addressed by the DARAB in
the ARBA, et al. Complaint and the decision must no longer be disturbed owing to the doctrines
of stare decisis and res judicata. We do not agree.
To begin with, not all elements of stare decisis and res judicata are present in this case. Stare
decisis means that for the sake of certainty, a conclusion reached in one case should be applied
to those that follow if the facts are substantially the same, even though the parties may be
different. It proceeds from the first principle of justice that, absent any powerful countervailing
considerations, like cases ought to be decided alike. Thus, where the same questions relating to
pg. 1404
the same event have been put forward by the parties similarly situated as in a previous case
litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to
relitigate the same issue.69
According to the doctrine of res judicata, 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
_______________
69 Commissioner of Internal Revenue v. The Insular Life Assurance Co., Ltd., G.R. No. 197192,
June 4, 2014, 725 SCRA 94, 96-97. (Emphasis and underscoring supplied)
474

same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue
in the first suit.70
The doctrines of res judicata (which means a “matter adjudged”) and stare decisis non quieta et
movere (or simply, stare decisis which means “follow past precedents and do not disturb what has
been settled”) are general procedural law principles which both deal with the effects of previous
but factually similar dispositions to subsequent cases.71 Both doctrines speak of a first suit that
has been previously decided by a court with finality. Both doctrines bar the relitigation of the same
or similar issues raised in said first suit. In other words, the doctrines are applied prospectively.
Here, the first suit referred to is G.R. No. 168394, the Nicolas, et al. Petition, which decided with
finality the issue of whether the subject parcels of land are under the compulsory coverage of
CARL. The ARBA, et al. Complaint is not relitigating this issue and there is no subsequent suit
that is attempting to do so.
The case of Vda. de Salanga v. Alagar72 is on point. In that case, a controversy also arose as a
consequence of the execution pending appeal of a judgment in an ejectment case. While the
ejectment case was pending appeal before the CA, the Regional Trial Court ordered the execution
of the judgment of the Municipal Trial Court pending appeal. The auction sale of the properties
pushed through, prompting the private respondent to file a petition for its annulment. When the
ejectment case attained finality, plaintiff moved for the dismissal of the petition for annulment of
the public auction sale on the ground that it has been rendered moot and academic and barred by
the final and executory judgment in the ejectment
pg. 1405
_______________
70 Lee v. Lui Man Chong, G.R. No. 209535, June 15, 2015, 757 SCRA 577, 583. (Emphasis
supplied)
71 Belgica v. Ochoa, Jr., G.R. No. 208566, November 19, 2013, 710 SCRA 1, 100-101.
72 G.R. No. 134089, July 14, 2000, 335 SCRA 728.
475
VOL. 806, OCTOBER 19, 2016 475

case. Citing what We have laid down in Cagayan de Oro Coliseum, Inc. v. Court of Appeals,73
We disagreed with plaintiff that there was res judicata between the petition for annulment of the
public auction sale and the final judgment rendered in the ejectment case. We ruled that the
elements of identity of subject matter and causes of action were absent. The petition for annulment
of the public auction sale did not directly involve the property subject matter of the ejectment case.
It was concerned with the validity of the execution proceedings, specifically the validity of the
auction sale of private respondent’s properties to satisfy the money judgment in the ejectment case.
As such, said cases fail the test of identity of causes of action, i.e., whether the same facts or
evidence would support and establish the causes of action in each case.74
Similarly in this case, there is no identity of causes of action. To repeat, the issue in the Nicolas,
et al. Petition is whether the property is exempt from the coverage of CARL, while the issue in the
ARBA, et al. Complaint is whether the acts of petitioners pending appeal of the Nicolas, et al.
Petition are valid and legal. Clearly, they are distinct issues.
Further, Our ratio decidendi in a number of cases75 where We allowed the simultaneous filing of
an appeal on the merits of the case and a petition for certiorari on the grant of an execution pending
appeal may be applied here. In these cases, We have held that one party may validly question the
decision in a regular appeal and at the same time assail the execution pending appeal via certiorari
without violating the non-forum shopping rule because the merits of the case would not be
addressed in the petition dealing with the execution
_______________
74 Id., at pp. 735-738.
pg. 1406
75 See Paradero v. Abragan, G.R. No. 158917, March 1, 2004, 424 SCRA 155, 161, citing
Philippine Nails and Wires Corporation v. Malayan Insurance Company, Inc., G.R. No. 143933,
February 14, 2003, 397 SCRA 431 and International School, Inc. (Manila) v. Court of Appeals,
G.R. No. 131109, June 29, 1999, 309 SCRA 474.
476

and vice versa. We stressed that although there is identity of parties, the causes of action and the
reliefs sought are different. The issue in these cases may have been whether there was forum
shopping, but the logic behind our pronouncements applies here, considering that the test to
determine whether a party violated the rule against forum shopping is whether the elements of litis
pendentia are present, or whether the final judgment in one case will amount to res judicata in
another.76
The acts of Nicolas and Cruz

pending appeal were done in
violation of the 1994 DARAB
Rules of Procedure.
Rule XII of the 1994 DARAB Rules of Procedure (the Rules) on Execution provides:
RULE XII
Execution
Sec. 1. Execution Upon Final Order or Decision.—Execution shall issue upon an order,
resolution or decision that finally disposes of the action or proceeding. Such execution shall issue
as a matter of course and upon the expiration of the period to appeal therefrom if no appeal has
been duly perfected.
The Board or Adjudicator concerned may, upon certification by the proper officer that a resolution,
order or decision has been served to the counsel or representative on record and to the party
pg. 1407
himself, and has become final and executory, and, upon motion or motu propio, issue a writ of
execution ordering the DAR Sheriff or any DAR officer to enforce the same. In appropriate cases,
the Board or any of its Members or its Adjudicator shall deputize and direct the Philippine National
Police, Armed Forces of the
_______________
76 Id. (Emphasis supplied)
477
VOL. 806, OCTOBER 19, 2016 477

Philippines or any of their component units or other law enforcement agencies in the enforcement
of any final order, resolution or decision.
Sec. 2. Execution Pending Appeal.—Any motion for execution of the decision of the
Adjudicator pending appeal shall be filed before the Board, and the same may be granted upon
showing good reasons and under conditions which the Board may require.
Sec. 3. Applicability of the Uniform Rules of Procedure of the Court of Agrarian Relations
(CAR).—Rule XIX of the Uniform Rules of Procedure of the CAR, with respect to execution, shall
apply insofar as they are not inconsistent with these Rules.
The Rules provides that execution shall issue as a matter of course upon the expiration of the period
to appeal therefrom if no appeal has been duly perfected. Here, the Decision of the Provincial
Adjudicator in the Nicolas, et al. Petition was not yet final and executory when Nicolas and Cruz
executed the decision in their favor. ARBA, et al. and the DAR were able to perfect their appeals.
More importantly, the execution pending appeal was done in blatant violation of Section 2 of the
Rules. Nicolas and Cruz did not file any motion for execution of the decision of the Adjudicator
pending appeal before the Board. There is also no order from the Board allowing the execution
pending appeal upon showing of good reasons. Simply put, the execution pending appeal was done
unilaterally and extrajudicially.
To justify their acts, Nicolas and Cruz asserted in their Answer before the Regional Adjudicator
that the cancellation of TCT No. CL-143 and the reinstatement and transfer of the titles were
initiated by the Register of Deeds of Davao City in compliance with the decision of the Provincial
Adjudicator in the Nicolas, et al. Petition.77 They also faulted the DAR and
pg. 1408
_______________
77 DARAB Records, p. 221.
478

ARBA for failing to provide a copy of the Notice of Appeal to the Register of Deeds of Davao
City.78
Nicolas and Cruz further argued that they acted in accordance with law in safeguarding their
interest on the parcels of land after finally acquiring full ownership of the properties. They claimed
that they had to act expeditiously, but legally, to have the titles to the subject parcels of land
transferred in their name to frustrate the sinister moves of ARBA, et al. to dissipate the asset and
deny the lawful owners of taking actual possession of the property. According to Nicolas and Cruz,
the issuance of new titles in their name was the only viable option that will provide them adequate
protection against the bad intentions of ARBA, et al. They alleged that ARBA, et al. have already
demonstrated their capacity for committing illegal acts as evidenced by the rampant selling of
rights over the areas of cultivation awarded to them by their respective organizations, which started
in 1992 or not even a year after they were erroneously awarded the lands under CARP and have
been going on over the years. Nicolas and Cruz feared that if they will not have the titles registered
in their names, it is not farfetched that the illegal selling of rights by ARBA, et al. will continue,
and that the buyers will flock the area and occupy the lands to the detriment of the legitimate
owners.79
We find the justifications of Nicolas and Cruz unacceptable. Execution of a judgment pending
appeal is only an exception to the general rule. Being an exception, the existence of “good reasons”
is essential. “Good reasons” has been held to consist of compelling circumstances justifying the
immediate execution lest judgment becomes illusory. Such reasons must constitute superior
circumstances demanding urgency which will outweigh the injury or damages should the losing
party secure a reversal of the judgment. The rules do not specify the
_______________
78 Id., at p. 222.
79 Id., at p. 226.
pg. 1409
479
VOL. 806, OCTOBER 19, 2016 479

“good reasons” to justify execution pending appeal; thus, it is the discretion of the court to
determine what may be considered as such.80
We have allowed execution pending appeal in the following cases:
The execution of a judgment before becoming final by reason of appeal is recognized. However,
this highly exceptional case must find itself firmly founded upon good reasons warranting
immediate execution. For instance, execution pending appeal was granted by this Court where the
prevailing party is of advanced age and in a precarious state of health and the obligation in the
judgment is non-transmissible, being for support, or where the judgment debtor is insolvent.
Execution pending appeal was also allowed by this Court where defendants were exhausting their
income and have no other property aside from the proceeds of the subdivision lots subject of the
action.81
The justifications cited by Nicolas and Cruz do not meet the definition of “good reasons” for they
are not compelling enough. First, they cannot fault the DAR and ARBA for failing to provide a
copy of the Notice of Appeal to the Register of Deeds of Davao City. The Rules provides that to
perfect an appeal, the Notice of Appeal must be served on the adverse party.82 It is not required
to serve a copy on the Register of
_______________
80 Flexo Manufacturing Corporation v. Columbus Foods, Incorporated, G.R. No. 164857, April
11, 2005, 455 SCRA 272, 277.
81 Land Bank of the Philippines v. Gallego, Jr., G.R. No. 173226, January 20, 2009, 576 SCRA
680, 694.
82 Sec. 5, Rule XIII, 1994 DARAB Rules of Procedure. Section 5 reads:
Sec. 5. Requisites and Perfection of the Appeal.—
a) The Notice of Appeal shall be filed within the reglementary period as provided for in Section
1 of this Rule. It shall state the date when the appellant received the order or judgment appealed
from
pg. 1410
480

Deeds. Moreover, the Register of Deeds cannot, on his own initiative, cancel TCT No. CL-143,
reinstate the titles in the name of PhilBanking, and finally transfer the titles in the names of Spouses
Nicolas, Spouses Cruz and third persons. The DARAB or Adjudicator concerned must issue a writ
of execution ordering the DAR Sheriff or any DAR officer to execute the decision.83
Additionally, the fear of Nicolas and Cruz — that if they will not have the titles registered in their
names, ARBA, et al. shall sell their rights over the property and the buyers shall occupy the lots
to the detriment of the lawful owners — is not a “superior circumstance demanding urgency which
will outweigh the injury or damages should the losing party secure a reversal of the judgment.”84
In this case, both parties stand to lose the ownership of the subject parcels of land. If Nicolas and
Cruz wanted to protect their interest over the property, they could have recorded a notice of lis
pendens in the Registry of Deeds. What they did, on the contrary, were the very acts they feared
ARBA, et al. would do: Nicolas and Cruz
_______________
and the proof of service of the notice of the adverse party. x x x (Underscoring supplied)
83 Sec. 1, Rule XII, 1994 DARAB Rules of Procedure. Section 1 reads:
Sec. 1. Execution Upon Final Order or Decision.—x x x
The Board or Adjudicator concerned may, upon certification by the proper officer that a resolution,
order or decision has been served to the counsel or representative on record and to the party
himself, and has become final and executory, and, upon motion or motu propio, issue a writ of
execution ordering the DAR Sheriff or any DAR officer to enforce the same. In appropriate cases,
the Board or any of its Members or its Adjudicator shall deputize and direct the Philippine National
Police, Armed Forces of the Philippines or any of their component units or other law enforcement
agencies in the enforcement of any final order, resolution or decision.
84 Supra note 80.
481
pg. 1411
VOL. 806, OCTOBER 19, 2016 481
themselves hastily subdivided the properties and sold a parcel to third parties.
The execution pending appeal having been done in violation of the Rules, the acts taken pursuant
to it are, therefore, void and of no effect. We have ruled in Carpio v. Court of Appeals:85
In any case, we proceed to rule that because the writ of execution was void, all actions and
proceedings conducted pursuant to it were also void and of no legal effect. To recall, this Court
affirmed the Decision of the CA in C.A.-G.R. S.P. No. 84632, annulling the RTC’s Omnibus Order
granting the Motion for Immediate Execution pending appeal. We affirmed the CA Decision
because of the RTC’s failure to state any reason, much less good reason, for the issuance thereof
as required under Section 2, Rule 39. In the exercise by the trial court of its discretionary power to
issue a writ of execution pending appeal, we emphasize the need for strict compliance with the
requirement for the statement of a good reason, because execution pending appeal is the exception
rather than the rule.
Since the writ of execution was manifestly void for having been issued without compliance with
the rules, it is without any legal effect. In other words, it is as if no writ was issued at all.
Consequently, all actions taken pursuant to the void writ of execution must be deemed to have not
been taken and to have had no effect. Otherwise, the Court would be sanctioning a violation of the
right to due process of the judgment debtors-respondent-spouses herein.86
The foregoing, notwithstanding, we are aware of our decisions concerning the Nicolas, et al.
Petition in G.R. No. 168206, G.R. No. 168684, and G.R. No. 168394. Specifically, in G.R. No.
168394, we recognized Nicolas and Cruz as the
_______________
86 Id., at p. 172.
482

pg. 1412
lawful assignees and successors-in-interest of PhilBanking, the original owner of the lands
included in TCT No. CL-143. We agreed with the CA that these lands are outside the coverage of
CARL. Thus, we affirmed the decision of the CA, which had the following disposition:
1. Ordering the Register of Deeds of Davao City to cancel TCT No. CL-143 (CLOA No.
00044912);
2. Ordering the Register of Deeds of Davao City to reinstate Transfer Certificate of Title
Nos. T-162077 and T-162078 in the name of PhilBanking;
3. Maintaining the private respondents members of the ARBA and Farmers Association of
Davao-KMPI in their peaceful possession and cultivation over their respective landholdings
in this case if they and/or predecessors-in-interest were already tenants over the same prior
to June 15, 1988; and
4. Declaring the parcels of land in question as exempted from the coverage of CARL.87
Being final and executory, G.R. No. 168394 must now be respected. While the execution pending
appeal by Nicolas and Cruz was correctly declared invalid by the DARAB, to sustain its disposition
in the ARBA, et al. Complaint would run counter to G.R. No. 168394 and ultimately prejudice the
rights of Spouses Tapiador, who may be innocent purchasers for value. Thus, we are constrained
to reverse and set aside the decision of the DARAB in the ARBA, et al. Complaint.
ARBA, et al. are entitled

to nominal damages.
Article 2221 of the Civil Code provides that nominal damages may be awarded in order that the
plaintiff’s right, which
_______________
87 Supra note 46 at p. 547.
483
VOL. 806, OCTOBER 19, 2016 483
pg. 1413
has been violated or invaded by the defendant, may be vindicated or recognized and not for the
purpose of indemnifying the plaintiff for any loss suffered. We have laid down the concept of
nominal damages in the following wise:
Nominal damages are ‘recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind or where there
has been a breach of contract and no substantial injury or actual damages whatsoever have been or
can be shown.’88
In Locsin v. Hizon,89 we awarded the petitioner nominal damages in the amount of Seventy-Five
Thousand Pesos (P75,000.00) after recognizing that she was unduly deprived of her ownership
rights over the disputed property, and was compelled to litigate for almost ten (10) years. We
considered the amount of P75,000.00 as sufficient nominal damages, after taking into account the
length of time petitioner was deprived of her property and the bad faith attending respondents’
actuations in the case.90 Similarly in this case, petitioners acted in bad faith when they caused the
execution of the ruling of the Provincial Adjudicator pending appeal before the DARAB without
any recourse to the legal rules and procedure. With this blatant violation of the Rules on execution
pending appeal, petitioners trampled on the due process rights of ARBA, et al., to say the least.
Worse, the execution enabled them to prematurely subdivide the properties and sell them to third
persons. This fraudulent sale equally trampled on the potential property rights of ARBA, et al.,
which, at that time, were the subject of a pending litigation.
_______________
88 Seven Brothers Shipping Corporation v. DMC-Construction Resources, Inc., G.R. No. 193914,
November 26, 2014, 743 SCRA 33, 43.
90 Id., at p. 567.
484

pg. 1414
Thus, considering the bad faith petitioners exhibited in this case, we find them liable for nominal
damages in the amount of P75,000.00, which is in line with Locsin. Moreover, they are liable for
attorney’s fees in the amount of P75,000.00 and the costs of suit.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The Resolutions of
the Court of Appeals in C.A.-G.R. S.P. No. 01312-MIN dated November 16, 2006 and August 3,
2007 are REVERSED and SET ASIDE. Accordingly, the Decision of the Department of Agrarian
Reform Adjudication Board in DARAB Case No. 10860 is hereby ANNULLED and SET ASIDE.
Spouses Loreto G. Nicolas and Lolita Sarigumba are further ORDERED to pay respondents
Seventy-Five Thousand Pesos (P75,000.00) as nominal damages, P75,000.00 as attorney’s fees,
and the costs of suit.
SO ORDERED.
Notes.—Execution pending appeal does not bar the continuance of the appeal on the merits, for
the Rules of Court precisely provides for restitution according to equity in case the executed
judgment is reversed on appeal. (O. Ventanilla Enterprises Corporation vs. Tan, 691 SCRA 410
[2013])
In the exercise by the trial court of its discretionary power to issue a writ of execution pending
appeal, We emphasize the need for strict compliance with the requirement for the statement of a
good reason, because execution pending appeal is the exception rather than the rule. (Carpio vs.
Court of Appeals, 692 SCRA 162 [2013])
——o0o——
pg. 1415
G.R. No. 193321. October 19, 2016.*
TAKENAKA CORPORATION-PHILIPPINE BRANCH, petitioner, vs. COMMISSIONER OF

INTERNAL REVENUE, respondent.
Remedial Law; Civil Procedure; Jurisdiction; Well-settled is the rule that the issue of jurisdiction
over the subject matter may at any time either be raised by the parties or considered by the Court
motu proprio.—The Court deems it appropriate to determine the timeliness of the petitioner’s
judicial claim for refund in order to ascertain whether or not the CTA properly acquired jurisdiction
thereof. Well-settled is the rule that the issue of jurisdiction over the subject matter may at any
time either be raised by the parties or considered by the Court motu proprio. As such, the
jurisdiction of the CTA over the appeal could still be determined by this Court despite its not being
raised as an issue by the parties.
Taxation; Tax Refund; Tax Credit; Prescription; The two (2)-year prescriptive period refers to the
period within which the taxpayer can file an administrative claim, not the judicial claim with the
Court of Tax Appeals (CTA).—The petitioner timely filed its administrative claim on April 11,
2003, within the two-year prescriptive period after the close of the taxable quarter when the zero-
rated sales were made. The respondent had 120 days, or until August 9, 2003, to decide the
petitioner’s claim. Considering that the respondent did not act on the petitioner’s claim on or before
August 9, 2003, the latter had until September 8, 2003, the last day of the 30-day period, within
which to file its judicial claim. However, it brought its petition for review in the CTA only on
March 10, 2004, or 184 days after the last day for the filing. Clearly, the petitioner belatedly
brought its judicial claim for refund, and the CTA did not acquire jurisdiction over the petitioner’s
appeal. We note, however, that the petitioner’s judicial claim was brought well within the two-
year prescriptive period. Be that as it may, it must be stressed that the two-year prescriptive period
refers to the period within which the taxpayer can file an administrative claim, not the judicial
claim with
_______________
* FIRST DIVISION.
486

Takenaka Corporation-Philippine Branch vs. Commissioner of Internal Revenue
pg. 1416
the CTA. Accordingly, the CTA should have denied petitioner’s claim for tax refund or credit for
lack of jurisdiction.
Same; Same; The Court of Tax Appeals (CTA) did not err in denying the claim for refund on the
ground that the petitioner had not established its zero-rated sales of services to Philippine Air
Terminal Co., Inc. (PIATCO) through the presentation of official receipts.—The CTA did not err
in denying the claim for refund on the ground that the petitioner had not established its zero-rated
sales of services to PIATCO through the presentation of official receipts. In this regard, as evidence
of an administrative claim for tax refund or tax credit, there is a certain distinction between a
receipt and an invoice. The Court has reiterated the distinction in Northern Mindanao Power
Corporation v. Commissioner of Internal Revenue, 750 SCRA 733 (2015), in this wise: Section
113 of the NIRC of 1997 provides that a VAT invoice is necessary for every sale, barter or
exchange of goods or properties, while a VAT official receipt properly pertains to every lease of
goods or properties; as well as to every sale, barter or exchange of services. The Court has in fact
distinguished an invoice from a receipt in Commissioner of Internal Revenue v. Manila Mining
Corporation: A “sales or commercial invoice” is a written account of goods sold or services
rendered indicating the prices charged therefor or a list by whatever name it is known which
is used in the ordinary course of business evidencing sale and transfer or agreement to sell
or transfer goods and services. A “receipt” on the other hand is a written acknowledgment
of the fact of payment in money or other settlement between seller and buyer of goods, debtor
or creditor, or person rendering services and client or customer.
PETITION for review on certiorari of a decision of the Court of Tax Appeals En Banc.
Araneta & Faustino Law Offices for petitioner.
The Solicitor General for respondent.
487
VOL. 806, OCTOBER 19, 2016 487

BERSAMIN, J.:
The petitioner as taxpayer appeals before the Court the adverse decision entered on March 29,
20101 and the resolution issued on August 12, 20102 in C.T.A. E.B. No. 514, whereby the Court
of Tax Appeals (CTA) En Banc respectively denied its claim for refund of excess input value-
pg. 1417
added tax (VAT) arising from its zero-rated sales of services for taxable year 2002, and denied its
ensuing motion for reconsideration.
The factual and procedural antecedents, as narrated by the CTA En Banc, are quoted below:
Respondent Takenaka, as a subcontractor, entered into an On-Shore Construction Contract with

Philippine Air Terminal Co., Inc. (PIATCO) for the purpose of constructing the Ninoy Aquino
International Airport-International Passenger Terminal III (NAIA-IPT3).
PIATCO is a corporation duly organized and existing under the laws of the Philippines and was
duly registered with the Philippine Economic Zone Authority (PEZA), as an Ecozone
Developer/Operator under RA 7916.
Respondent Takenaka filed its Quarterly VAT Returns for the four quarters of taxable year 2002
on April 24, 2002, July 22, 2002, October 22, 2002 and January 22, 2003, respectively.
Subsequently, respondent Takenaka amended its quarterly VAT returns several times. In its final
amended Quarterly VAT Returns, the following were indicated thereon:
_______________
1 Rollo, pp. 49-67; penned by Associate Justice Olga Palanca-Enriquez (retired), with Associate
Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy and Caesar A. Casanova,
concurring; Presiding Justice Ernesto D. Acosta was on leave.
2 Id., at pp. 69-74; Presiding Associate Justice Acosta dissented, and was joined by Associate
Justice Casanova (id., at pp. 75-77).
488

On January 13, 2003, the BIR issued VAT Ruling No. 011-03 which states that the sales of goods
and services rendered by respondent Takenaka to PIATCO are subject to zero percent (0%) VAT
and requires no prior approval for zero rating based on Revenue Memorandum Circular 74-99.
On April 11, 2003, respondent Takenaka filed its claim for tax refund covering the aforesaid period
before the BIR Revenue District Office No. 51, Pasay City Branch.
For failure of the BIR to act on its claim, respondent Takenaka filed a Petition for Review with
this Court, docketed as C.T.A. Case No. 6886.
pg. 1418
After trial on the merits, on November 4, 2008, the Former First Division rendered a Decision
partly granting the Petition for Review and ordering herein petitioner CIR to refund to respondent
Takenaka the reduced amount of P53,374,366.52, with a Concurring and Dissenting Opinion from
Presiding Justice Ernesto D. Acosta.
Not satisfied, on November 26, 2008, respondent Takenaka filed a “Motion for Reconsideration.”
During the deliberation of respondent Takenaka’s “Motion for Reconsideration,” Associate Justice
Caesar A. Casanova changed his stand and concurred with Presiding Justice Ernesto D. Acosta,
while the original Ponente, Associate Justice Lovell R. Bautista, maintained his stand. Thus,
respondent Takenaka’s “Motion for Recon-
489
VOL. 806, OCTOBER 19, 2016 489

sideration” was granted by the Former First Division in its Amended Decision dated March 16,
2009, with a Dissenting Opinion from Associate Justice Lovell R. Bautista.
On April 7, 2009, petitioner CIR filed a “Motion for Reconsideration” of the Amended Decision,
which the Former First Division denied in a Resolution dated June 29, 2009, with Associate Justice
Lovell R. Bautista reiterating his Dissenting Opinion.3
Consequently, the respondent filed a petition for review in the CTA En Banc to seek the reversal
of the March 16, 2009 decision and the June 29, 2009 resolution of the CTA Former First
Division.4
On March 29, 2010, the CTA En Banc promulgated its decision disposing thusly:
WHEREFORE, premises considered, the present Petition for Review is hereby GRANTED.
Accordingly, the Amended Decision dated March 16, 2009 and Resolution dated June 29, 2009
rendered by the Former First Division are hereby REVERSED and SET ASIDE, and another one
is hereby entered DENYING respondent Takenaka’s claimed input tax attributable to its zero rated
sales of services for taxable year 2002 in the amount of P143,997,333.40.
SO ORDERED.5
pg. 1419
Later on, through the resolution dated August 12, 2010,6 the CTA En Banc denied the petitioner’s
motion for reconsideration.
_______________
3 Id., at pp. 52-54.
4 Id., at p. 50.
5 Id., at pp. 66-67.
6 Id., at pp. 69-74.
490

Issue
The lone issue is whether or not the sales invoices presented by the petitioner were sufficient as
evidence to prove its zero-rated sale of services to Philippine Air Terminal Co., Inc. (PIATCO),
thereby entitling it to claim the refund of its excess input VAT for taxable year 2002.
Ruling of the Court
We deny the appeal.
First of all, the Court deems it appropriate to determine the timeliness of the petitioner’s judicial
claim for refund in order to ascertain whether or not the CTA properly acquired jurisdiction
thereof. Well-settled is the rule that the issue of jurisdiction over the subject matter may at any
time either be raised by the parties or considered by the Court motu proprio. As such, the
jurisdiction of the CTA over the appeal could still be determined by this Court despite its not being
raised as an issue by the parties.7
pg. 1420
In Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue,8 the Court has
underscored that:
(1) An administrative claim must be filed with the CIR within two years after the close of the
taxable quarter when the zero-rated or effectively zero-rated sales were made.
(2) The CIR has 120 days from the date of submission of complete documents in support of the
administrative claim within which to decide whether to grant a refund or issue a tax credit
certificate. The 120-day period may extend beyond the two-year period from the filing of the
administrative claim if the claim is filed in the later part of the two-year pe-
_______________
7 Northern Mindanao Power Corporation v. Commissioner of Internal Revenue, G.R. No.

185115, February 18, 2015, 750 SCRA 733, 737.
8 G.R. Nos. 193301 and 194637, March 11, 2013, 693 SCRA 49, 89.
491
VOL. 806, OCTOBER 19, 2016 491

riod. If the 120-day period expires without any decision from the CIR, then the administrative
claim may be considered to be denied by inaction.
(3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s
decision denying the administrative claim or from the expiration of the 120-day period without
any action from the CIR.
(4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance
on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, as an exception
to the mandatory and jurisdictional 120+30 day periods.
In this case, the following dates are relevant to determine the timeliness of the petitioner’s claim
for refund, to wit:
pg. 1421
Amount Close of Last day Actual date Last day Actual
Claimed and quarter for filing of filing of for filing filing
Taxable Period when administra- administra- judicial of
covered sales tive claim tive claim claim judicial
were for refund for refund with CTA claim
made (2 years) (120+30) with
CTA
P51,515,532.05, March 31, March 31, April 11, September March
1st quarter of 2002 2004 2003 8, 2003 10,
2002 2004
P60,588,638.09, June 30, June 30,
2nd quarter of 2002 2004
2002
P55,234,736.15, September September
3rd quarter of 30, 2002 30, 2004
2002
P30,494,993.51, December December
4th quarter of 31, 2002 31, 2004
2002
492

Based on the foregoing, the petitioner’s situation is actually a case of late filing and is similar with
the case of Philex Mining Corporation in Commissioner of Internal Revenue v. San Roque Power
Corporation.9
The petitioner timely filed its administrative claim on April 11, 2003, within the two-year
prescriptive period after the close of the taxable quarter when the zero-rated sales were made. The
respondent had 120 days, or until August 9, 2003, to decide the petitioner’s claim. Considering
that the respondent did not act on the petitioner’s claim on or before August 9, 2003, the latter had
until September 8, 2003, the last day of the 30-day period, within which to file its judicial claim.
However, it brought its petition for review in the CTA only on March 10, 2004, or 184 days after
the last day for the filing. Clearly, the petitioner belatedly brought its judicial claim for refund, and
the CTA did not acquire jurisdiction over the petitioner’s appeal.
We note, however, that the petitioner’s judicial claim was brought well within the two-year
prescriptive period. Be that as it may, it must be stressed that the two-year prescriptive period
pg. 1422
refers to the period within which the taxpayer can file an administrative claim, not the judicial
claim with the CTA.10 Accordingly, the CTA should have denied petitioner’s claim for tax refund
or credit for lack of jurisdiction.
Nonetheless, the CTA did not err in denying the claim for refund on the ground that the petitioner
had not established its zero-rated sales of services to PIATCO through the presentation of official
receipts. In this regard, as evidence of an administrative claim for tax refund or tax credit, there is
a certain distinction between a receipt and an invoice. The Court has reiterated the distinction in
Northern Mindanao
_______________
9 G.R. Nos. 187485, 196113, and 197156, February 12, 2013, 690 SCRA 336, 390.
10 Id., at p. 391.
493
VOL. 806, OCTOBER 19, 2016 493

Power Corporation v. Commissioner of Internal Revenue11 in this wise:
Section 113 of the NIRC of 1997 provides that a VAT invoice is necessary for every sale, barter
or exchange of goods or properties, while a VAT official receipt properly pertains to every lease
of goods or properties; as well as to every sale, barter or exchange of services.
The Court has in fact distinguished an invoice from a receipt in Commissioner of Internal Revenue
v. Manila Mining Corporation:
A “sales or commercial invoice” is a written account of goods sold or services rendered

indicating the prices charged therefor or a list by whatever name it is known which is
used in the ordinary course of business evidencing sale and transfer or agreement to
sell or transfer goods and services.
A “receipt” on the other hand is a written acknowledgment of the fact of payment in

money or other settlement between seller and buyer of goods, debtor or creditor, or
person rendering services and client or customer.
pg. 1423
A VAT invoice is the seller’s best proof of the sale of goods or services to the buyer, while a VAT
receipt is the buyer’s best evidence of the payment of goods or services received from the seller.
A VAT invoice and a VAT receipt should not be confused and made to refer to one and the same
thing. Certainly, neither does the law intend the two to be used alternatively. (Bold underscoring
supplied for emphasis)
The petitioner submitted sales invoices, not official receipts, to support its claim for refund. In
light of the afore-
_______________
494

stated distinction between a receipt and an invoice, the submissions were inadequate for the
purpose thereby intended. The Court concurs with the conclusion of the CTA En Banc, therefore,
that “[w]ithout proper VAT official receipts issued to its clients, the payments received by
respondent Takenaka for providing services to PEZA-registered entities cannot qualify for VAT
zero-rating. Hence, it cannot claim such sales as zero-rated VAT not subject to output tax.”12
Under VAT Ruling No. 011-03, the sales of goods and services rendered by the petitioner to
PIATCO were subject to zero-percent (0%) VAT, and required no prior approval for zero rating
based on Revenue Memorandum Circular 74-99.13 This notwithstanding, the petitioner’s claim
for refund must still be denied for its failure as the taxpayer to comply with the substantiation
requirements for administrative claims for tax refund or tax credit. The Court explains why in
Western Mindanao Power Corporation v. Commissioner of Internal Revenue:14
In a claim for tax refund or tax credit, the applicant must prove not only entitlement to the grant
of the claim under substantive law. It must also show satisfaction of all the documentary and
evidentiary requirements for an administrative claim for a refund or tax credit. Hence, the mere
fact that petitioner’s application for zero-rating has been approved by the CIR does not, by
itself, justify the grant of a refund or tax credit. The taxpayer claiming the refund must
further comply with the invoicing and accounting requirements mandated by the NIRC, as
well as by revenue regulations implementing them. (Bold underscoring supplied for emphasis)
_______________
pg. 1424
12 Rollo, p. 64.
13 Id., at pp. 52-53.
14 G.R. No. 181136, June 13, 2012, 672 SCRA 350, 362.
495
VOL. 806, OCTOBER 19, 2016 495

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision
promulgated on March 29, 2010 in C.T.A. E.B. No. 514; and DIRECTS the petitioner to pay the
costs of suit.
SO ORDERED.
Leonardo-De Castro** (Acting Chairperson), Perlas-Bernabe, Jardeleza*** and Caguioa, JJ.,

concur.
Notes.—A taxpayer claiming a tax credit or refund has the burden of proof to establish the factual
basis of that claim. Tax refunds, like tax exemptions, are construed strictly against the taxpayer.
(Accenture, Inc. vs. Commissioner of Internal Revenue, 676 SCRA 325 [2012])
A consequence of failing to comply with the invoicing requirements is the denial of the claim for
tax refund or tax credit, as stated in Revenue Memorandum Circular No. 42-2003. (Eastern
Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue, 679 SCRA 305
[2012])
——o0o——
_______________
** Per Special Order No. 2383 dated September 27, 2016.
*** Designated acting member, in lieu of Chief Justice Maria Lourdes P. A. Sereno, who inhibited
for being a former counsel in a related case, per the Raffle of October 12, 2016.
pg. 1425
G.R. No. 201074. October 19, 2016.*
SPOUSES RAMON SY and ANITA NG, RICHARD SY, JOSIE ONG, WILLIAM SY and
JACKELINE DE LUCIA, petitioners, vs. WESTMONT BANK (now UNITED OVERSEAS
BANK PHILIPPINES) and PHILIPPINE DEPOSIT INSURANCE CORPORATION, as assignee
of UNITED OVERSEAS BANK PHILIPPINES, respondents.
Pleadings and Practice; Actionable Documents; Whenever an action or defense is based upon a
written instrument or document, the substance of such instrument or document shall be set forth
in the pleading, and the original or a copy thereof shall be attached to the pleading as an exhibit,
which shall be deemed to be a part of the pleading, or said copy may with like effect be set forth
in the pleading.—Whenever an action or defense is based upon a written instrument or document,
the substance of such instrument or document shall be set forth in the pleading, and the original or
a copy thereof shall be attached to the pleading as an exhibit, which shall be deemed to be a part
of the pleading, or said copy may with like effect be set forth in the pleading. The said instrument
or document is called an actionable document and Section 8 of Rule 8 provides the proper method
for the adverse party to deny its genuineness and due execution, to wit: Sec. 8. How to contest such
documents.—When an action or defense is founded upon a written instrument, copied in or
attached to the corresponding pleading as provided in the preceding Section, the genuineness and
due execution of the instrument shall be deemed admitted unless the adverse party, under oath,
specifically denies them, and sets forth what he claims to be the facts; but the requirement of
an oath does not apply when the adverse party does not appear to be a party to the instrument or
when compliance with an order for an inspection of the original instrument is refused. [Emphasis
supplied] Accordingly, to deny the genuineness and due execution of an actionable document: (1)
there must be a specific denial in the responsive pleading of the adverse party; (2) the said pleading
must be under oath; and (3) the adverse party must set forth what he claims to be the facts. Failure
to comply with
_______________
* SECOND DIVISION.
542

Sy vs. Westmont Bank (now United Overseas Bank Philippines)
the prescribed procedure results in the admission of the genuineness and due execution of the
actionable document.
pg. 1426
Same; Procedural Rules and Technicalities; A party-litigant is to be given the fullest opportunity
to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor,
or property on technicalities.—In fine, although Section 8 of Rule 8 provides for a precise method
in denying the genuineness and due execution of an actionable document and the dire
consequences of its noncompliance, it must not be applied with absolute rigidity. What should
guide judicial action is the principle that a party-litigant is to be given the fullest opportunity to
establish the merits of his complaint or defense rather than for him to lose life, liberty, honor, or
property on technicalities. In the present case, the actionable documents attached to the complaint
of Westmont were PN 5280 and PN 5285. The CA opined that petitioners failed to specifically
deny the genuineness and due execution of the said instruments because nowhere in their answer
did they “specifically deny” the genuineness and due execution of the said documents.
Civil Law; Credit Transactions; Loans; A simple loan is a real contract and it shall not be
perfected until the delivery of the object of the contract.—A simple loan or mutuum is a contract
where one of the parties delivers to another, either money or other consumable thing, upon the
condition that the same amount of the same kind and quality shall be paid. A simple loan is a real
contract and it shall not be perfected until the delivery of the object of the contract. Necessarily,
the delivery of the proceeds of the loan by the lender to the borrower is indispensable to perfect
the contract of loan. Once the proceeds have been delivered, the unilateral characteristic of the
contract arises and the borrower is bound to pay the lender an amount equal to that received.
Perez, Calima, Suratos, Maynigo & Roque Law Offices for petitioners.
543
VOL. 806, OCTOBER 19, 2016 543

Poblador, Bautista & Reyes for UOBP.
MENDOZA, J.:
This is a Petition for Review on Certiorari seeking to reverse and set aside the August 4, 2011
Decision1 and the March 19, 2012 Resolution2 of the Court of Appeals (CA) in C.A.-G.R. CV No.
pg. 1427
90425, which affirmed the November 9, 2007 Decision3 and February 6, 2008 Order4 of the
Regional Trial Court, Branch 12, Manila (RTC) in Civil Case No. 99-95945.
The Facts
The present case stemmed from a Complaint for Sum of Money,5 dated August 30, 1999, filed by
respondent Westmont Bank (Westmont), now United Overseas Bank Philippines (UOBP), against
petitioners Spouses Ramon Sy and Anita Ng, Richard Sy, Josie Ong, William Sy, and Jackeline
de Lucia (petitioners) before the RTC.
Westmont alleged that on October 21, 1997, petitioners, doing business under the trade name of
Moondrops General Merchandising (Moondrops), obtained a loan in the amount of P2,429,500.00,
evidenced by Promissory Note No. GP-52806 (PN 5280), payable on November 20, 1997. Barely
a month after, or on November 25, 1997, petitioners obtained another loan from Westmont Bank
in the amount of P4,000,000.00,
_______________
1 Penned by Associate Justice Samuel H. Gaerlan, with Associate Justices Ramon R. Garcia and
Socorro B. Inting, concurring; Rollo, pp. 34-43.
2 Id., at pp. 44-45.
3 Penned by Judge Ruben Reynaldo G. Roxas; id., at pp. 157-164.
4 Id., at pp. 198-204.
5 Id., at pp. 57-61.
6 Id., at p. 62.
544

evidenced by Promissory Note No. GP-52857 (PN 5285), payable on December 26, 1997.
Disclosure Statements on the Loan/Credit Transactions8 were signed by the parties. Earlier, a
pg. 1428
Continuing Suretyship Agreement,9 dated February 4, 1997, was executed between Westmont and
petitioners for the purpose of securing any future indebtedness of Moondrops.
Westmont averred that petitioners defaulted in the payment of their loan obligations. It sent a
Demand Letter,10 dated August 27, 1999, to petitioners, but it was unheeded. Hence, Westmont
filed the subject complaint.
In their Answer,11 petitioners countered that in August 1997, Ramon Sy and Richard Sy applied
for a loan with Westmont Bank, through its bank manager William Chu Lao (Lao). According to
them, Lao required them to sign blank forms of promissory notes and disclosure statements and
promised that he would notify them immediately regarding the status of their loan application.
In September 1997, Lao informed Ramon Sy and Richard Sy that their application was
disapproved. He, however, offered to help them secure a loan through Amado Chua (Chua), who
would lend them the amounts of P2,500,000.00 and P4,000,000.00, both payable within three (3)
months. Ramon Sy and Richard Sy accepted Lao’s offer and received the amounts of
P2,429,500.00 and P3,994,000.00, respectively, as loans from Chua. Petitioners claimed that they
paid Chua the total amount of their loans.
Petitioners insisted that their loan applications from Westmont were denied and it was Chua who
lent them the money. Thus, they contended that Westmont could not demand the payment of the
said loans.
_______________
7 Id., at p. 64.
8 Id., at pp. 63 and 65.
9 Id., at pp. 66-68.
10 Id., at pp. 69-70.
11 Id., at pp. 72-77.
545
VOL. 806, OCTOBER 19, 2016 545

In the pretrial conference, the parties agreed on one issue — whether or not the defendants obtained
loans from Westmont in the total amount of P6,429,500.00.12 During trial, Westmont presented,
pg. 1429
among others, its employee Consolacion Esplana, who testified that the proceeds of the loan were
credited to the account of Moondrops per its loan manifold.13 Westmont, however, never offered
such loan manifold in evidence.14
On the other hand, petitioners presented a Cashier’s Check,15 dated October 21, 1997, in the
amount of P2,429,500.00, purchased from Chua, to prove that the said loan was obtained from
Chua, and not from Westmont. The cashier’s check for the subsequent loan of P4,000,000.00 could
not have been obtained from Westmont.
The RTC’s Ruling
In its decision, dated November 9, 2007, the RTC ruled in favor of Westmont. It held that
Westmont’s cause of action was based on PN 5280 and PN 5285, the promissory notes executed
by petitioners. The RTC opined that petitioners admitted the genuineness and due execution of the
said actionable documents because they failed to make a specific denial in the answer. It added
that it should be presumed that the two (2) loan transactions were fair and regular; that the ordinary
course of business was followed; and that they were issued for a sufficient consideration.
The RTC underscored that Ramon Sy never took any steps to have the promissory notes cancelled
and annulled, which led to the conclusion that their obligations to Westmont were valid and
binding. The fallo of the decision reads:
_______________
12 Id., at p. 104.
13 TSN, January 11, 2002, p. 27.
14 Rollo, pp. 105-107.
15 Id., at p. 152.
546

pg. 1430
WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of
plaintiff WESTMONT BANK (now United Overseas Bank) and against defendants Spouses
Ramon Sy and Anita Ng, Richard Sy, Josie Ong, William Sy and Jackeline De Lucia, and to pay
plaintiff the following amounts, as follows:
1. P20,573,948.66, representing the outstanding amounts due on the aforementioned loan accounts
as of February 15, 2001;
2. Interests and penalty charges due thereon as stipulated under the respective promissory notes
from and after February 15, 2001, until fully paid;
3. 20% of the total outstanding sum, as and by way of attorney’s fees; and
4. Costs of suit.
SO ORDERED.16
Petitioners moved for reconsideration, arguing that it had sufficiently denied the genuineness and
due execution of the promissory notes in their answer.
In its Order, dated February 6, 2008, the RTC repeated that petitioners were deemed to have
admitted the genuineness and due execution of the actionable documents. It, however, modified
the dispositive portion of its decision as follow:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of

plaintiff WESTMONT BANK (now United Overseas Bank) and against defendants Spouses
Ramon Sy and Anita Ng, Richard Sy, Josie Ong, William Sy and Jackeline De Lucia, and to pay
plaintiff the following amounts, as follows:
1. On Promissory Note No. PN-GP 5280:
a) The sum of Two Million Four Hundred Twenty-Nine Thousand Five Hundred Pesos
(P2,429,500.00),
_______________
16 Id., at pp. 163-164.
547
pg. 1431
VOL. 806, OCTOBER 19, 2016 547
representing the principal amount of the promissory note;
b) The sum of Seven Hundred Twenty-Eight Thousand Eight Hundred Fifty Pesos
(P728,850.00), representing interest due on the promissory note payable on November 20,
1997;
c) The above amounts shall collectively earn interest at the rate of thirty-six (36) percent per
annum by way of liquidated damages, reckoned from November 20, 1997, until fully paid.
2. On Promissory Note No. PN-GP 5285:
a) The sum of Four Million Pesos (P4,000,000.00), representing the principal amount of the
promissory note;
b) The sum of One Million One Hundred Sixty Thousand Pesos (P1,160,000.00),
representing interest due on the promissory note payable on December 26, 1997;
c) The above amounts shall collectively earn interest at the rate of thirty-six percent (36%)
per annum by way of liquidated damages, reckoned from December 26, 1997, until fully
paid.
3. The sum equivalent to twenty percent (20%) of the total amount due (referred to in Items 1 and
2 hereof), by way of attorney’s fees; and costs of suit.
SO ORDERED.17
Aggrieved, petitioners elevated an appeal before the CA.
The CA’s Ruling
In its assailed August 4, 2011 decision, the CA affirmed the ruling of the RTC. It wrote that
petitioners failed to specifically deny the genuineness and due execution of the promissory notes
in their answer before the trial court. Accordingly,
_______________
17 Id., at pp. 202-203.
pg. 1432
548

the CA ruled that under Section 8, Rule 8 of the Rules of Court (Section 8 of Rule 8), the
genuineness and due execution of the promissory notes were deemed admitted by petitioners. It
added that the admission of the said actionable documents created a prima facie case in favor of
Westmont which dispensed with the necessity of presenting evidence that petitioners actually
received the loan proceeds. The CA disposed the case in this wise:
WHEREFORE, the instant appeal is DENIED. The assailed Decision dated November 9, 2007 as
amended by the assailed Order dated February 6, 2008 of the Regional Trial Court of Manila,
Branch 12, is hereby AFFIRMED.
SO ORDERED.18
Petitioners filed a motion for reconsideration, but it was denied by the CA in its assailed decision,
dated March 19, 2012.
Hence, this petition, raising the following:
Issues
I.
THE HONORABLE COURT OF APPEALS ERRONEOUSLY RULED, AS A MATTER

OF LAW, THAT PETITIONERS SPS. RAMON SY AND ANITA NG, RICHARD SY,
JOSIE ONG, WILLIAM SY AND JACKELINE DE LUCIA FAILED TO SPECIFICALLY
DENY THE ACTIONABLE DOCUMENTS UNDER OATH AND THUS, PETITIONERS
DEEMED TO HAVE ADMITTED THEIR GENUINENESS AND DUE EXECUTION.
_______________
pg. 1433
18 Id., at p. 43.
549
VOL. 806, OCTOBER 19, 2016 549

II.
THE HONORABLE COURT OF APPEALS FAILED TO RULE THAT THE PIECES OF

EVIDENCE PRESENTED AND FORMALLY OFFERED BY WESTMONT BANK ARE
INADMISSIBLE AND HENCE, SHOULD NOT HAVE BEEN CONSIDERED.19
Petitioners argue that: they specifically denied the allegations of Westmont under oath in their
answer filed before the RTC; although they signed blank forms of promissory notes, disclosure
statements and continuing suretyship agreements, they were informed that their loan application
were denied; these should be considered as sufficient compliance with Section 8 of Rule 8;
Westmont Bank failed to prove the existing loan obligations; and the original copy of the
promissory notes were never presented in court.
In a Resolution,20 dated July 4, 2012, the Court initially denied the petition for failure to show
any reversible error in the challenged decision and resolution of the CA. In a Resolution,21 dated
June 15, 2015, however, the Court granted petitioners’ motion for reconsideration, reinstated the
petition and required the respondents to file their comment.
In its Entry of Appearance with Compliance/Manifestation,22 dated October 19, 2015, UOBP,
formerly Westmont, informed the Court that all their interests in the present litigated case were
already transferred to the Philippine Deposit Insurance Corporation (PDIC).
In its Comment,23 dated September 23, 2015, the PDIC stated that the CA correctly ruled that
petitioners failed to specifically deny the actionable documents in their answer
_______________
19 Id., at p. 17.
pg. 1434
20 Id., at pp. 323-324.
21 Id., at pp. 383-384.
22 Id., at pp. 411-413.
23 Id., at pp. 401-408.
550

and were deemed to have admitted the genuineness and due execution thereof. Citing Permanent
Savings and Loan Bank v. Velarde,24 the PDIC underscored that the specific denial meant that the
defendant must declare under oath that he did not sign the document or that it was otherwise false
or fabricated.
In their Reply,25 dated November 2, 2015, petitioners insisted that they made a categorical specific
denial in their answer and never admitted the genuineness and due execution of the promissory
notes, disclosure statements and continuing surety agreements; the promissory notes presented by
Westmont were mere photocopies; and Westmont failed to establish that they received the
proceeds of any loan.
The Court finds the petition meritorious.
Whenever an action or defense is based upon a written instrument or document, the substance of
such instrument or document shall be set forth in the pleading, and the original or a copy thereof
shall be attached to the pleading as an exhibit, which shall be deemed to be a part of the pleading,
or said copy may with like effect be set forth in the pleading.26 The said instrument or document
is called an actionable document and Section 8 of Rule 8 provides the proper method for the
adverse party to deny its genuineness and due execution, to wit:
Sec. 8. How to contest such documents.—When an action or defense is founded upon a written
instrument, copied in or attached to the corresponding pleading as provided in the preceding
Section, the genuineness and due execution of the instrument shall be deemed admit-
pg. 1435
_______________
24 482 Phil. 193; 439 SCRA 1 (2004).
25 Rollo, pp. 420-424.
551
VOL. 806, OCTOBER 19, 2016 551

ted unless the adverse party, under oath, specifically denies them, and sets forth what he
claims to be the facts; but the requirement of an oath does not apply when the adverse party does
not appear to be a party to the instrument or when compliance with an order for an inspection of
the original instrument is refused. [Emphasis supplied]
Accordingly, to deny the genuineness and due execution of an actionable document: (1) there must
be a specific denial in the responsive pleading of the adverse party; (2) the said pleading must be
under oath; and (3) the adverse party must set forth what he claims to be the facts. Failure to
comply with the prescribed procedure results in the admission of the genuineness and due
execution of the actionable document.
In Toribio v. Bidin,27 the Court expounded that the purpose of specifically denying an actionable
document “appears to have been to relieve a party of the trouble and expense of proving in the first
instance an alleged fact, the existence or nonexistence of which is necessarily within the
knowledge of the adverse party, and of the necessity (to his opponent’s case) of establishing which
such adverse party is notified by his opponent’s pleading.”28 In other words, the reason for the
rule is to enable the adverse party to know beforehand whether he will have to meet the issue of
genuineness or due execution of the document during trial.29
In that said case, the petitioners therein failed to file a responsive pleading to specifically deny a
deed of sale, the actionable document, attached in the answer of the respondents therein. Despite
such failure, the Court held that Section 8, Rule 8, was sufficiently complied with because they
had already stated under oath in their complaint that they never sold, transferred, or disposed of
their shares in the inheri-
_______________
pg. 1436
27 219 Phil. 139; 134 SCRA 162 (1985).
28 Id.
29 Id.
552

tance to others. Thus, respondents therein were placed on adequate notice that they would be called
upon during trial to prove the genuineness or due execution of the disputed deeds of sale. Notably,
the Court exercised liberality in applying the rules of procedure so that substantial justice may be
served.
Similarly, in Titan Construction Corporation v. David, Sr.,30 the Court relaxed the rules of
procedure regarding Section 8 of Rule 8. In that case, the respondent failed to file a responsive
pleading under oath to specifically deny the special power of attorney, the actionable document
therein, which was attached to the answer of the petitioner therein. Notwithstanding such
deficiency, the Court ruled that there was substantial compliance because the respondent therein
consistently denied the genuineness and due execution of the actionable document in his complaint
and during trial.
In fine, although Section 8 of Rule 8 provides for a precise method in denying the genuineness and
due execution of an actionable document and the dire consequences of its noncompliance, it must
not be applied with absolute rigidity. What should guide judicial action is the principle that a party-
litigant is to be given the fullest opportunity to establish the merits of his complaint or defense
rather than for him to lose life, liberty, honor, or property on technicalities.
In the present case, the actionable documents attached to the complaint of Westmont were PN
5280 and PN 5285. The CA opined that petitioners failed to specifically deny the genuineness and
due execution of the said instruments because nowhere in their answer did they “specifically deny”
the genuineness and due execution of the said documents.
After a judicious study of the records, the Court finds that petitioners sufficiently complied with
Section 8 of Rule 8 and grants the petition.
_______________
30 629 Phil. 346; 615 SCRA 362 (2010).
pg. 1437
553
VOL. 806, OCTOBER 19, 2016 553

Petitioners specifically denied

the genuineness and due exe-
cution of the promissory notes
The complaint of Westmont alleged, among others, that:
3. On or about October 21, 1997, defendants Richard Sy and Ramon Sy, under the trade name
and style of “Moondrops General Merchandising,” obtained a loan from the plaintiff in the
principal amount of Two Million Four Hundred Twenty-Nine Thousand Five Hundred Pesos
(P2,429,500.00), Philippine Currency, in evidence of which said defendants executed in plaintiff’s
favor Promissory Note No. GP-5280. x x x
4. Again, on or about November 25, 1997, defendants Richard Sy and Ramon Sy, under the trade
name and style of “Moondrops General Merchandising,” applied for and were granted another
loan by the plaintiff in the principal amount of Four Million Pesos (P4,000,000.00), Philippine
Currency, in evidence of which said defendants executed in plaintiff’s favor Promissory Note No.
GP-5285. x x x
6. The defendants Anita Ng, Josie Ong, William Sy and Jackeline De Lucia, for purposes of
securing the payment of said loans, collectively executed a Continuing Suretyship Agreement,
x x x whereby they jointly and severally bound themselves to plaintiff for the payment of the
obligations of defendants Richard Sy and Ramon Sy/Moondrops General Merchandising thereto.
7. The defendants defaulted in the payment of the aforementioned loan obligations when the
same fell due and, despite demands, continue to fail and/or refuse to pay the same, to the prejudice
of the plaintiff. x x x
8. As of November 9, 1999, the defendants’ outstanding obligation to the plaintiff on both loans
amounted to Fifteen Million Six Hundred Thirty-Nine Thousand Five Hundred Eighty-Nine and
25/100 Pesos. x x x31
_______________
31 Rollo, pp. 57-59.
pg. 1438
554

On the other hand, petitioners alleged in the answer, under oath:
2. Paragraphs 3, 4, 5, 6, 7 and 8 are specifically denied, the truth of the matter being those alleged
in the Special and Affirmative Defenses hereunder.
3. Paragraph 9 is specifically denied for want of knowledge or information sufficient to form a

belief as to the truth or falsity thereof. Besides, the plaintiff has no one to blame except itself and
its personnel for maliciously filing the instant complaint for collection knowing fully well that the
alleged loan obligations were not consummated; and by way of —
SPECIAL AND AFFIRMATIVE DEFENSES
4. The complaint does not state a cause of action.
5. While the limited partnership Moondrops General Merchandising Co., Ltd. (Moondrops for
brevity) appears in the alleged loan documents to be the borrower and, therefore, the real party-in-
interest, it is not impleaded as a party. x x x
6. The alleged loan obligations were never consummated for want of consideration.
7. Sometime in August, 1997, Moondrops desperately needed additional working capital, thus it
applied for a loan of P6,500,000.00 with the plaintiff Westmont Bank through the Manager of
Grace Park Branch William Chu Lao.
8. Manager William Chu Lao required herein defendants to sign blank forms of plaintiff’s
promissory notes, Disclosure Statements and Continuing Suretyship Agreement.
9. Sometime in September, 1997, Manager William Chu Lao informed herein defendants that
the application of Moondrops for an additional working capital was disapproved by Westmont
Bank but that, however, he offered to lend the defendants, through Mr. Amado
pg. 1439
555
VOL. 806, OCTOBER 19, 2016 555

Chua, the initial amount of P2,500,000.00 payable in three (3) months, and then another
P4,000,000.00 likewise payable in three (3) months, against customers’ checks.
10. Since Moondrops desperately needed the additional working capital, defendants agreed to
and accepted the offer of Manager William Chu Lao, thus Mr. Amado Chua loaned to defendants
the amounts of P2,500,000.00 and P4,000,000.00.
11. Pursuant to the agreement between Mr. Amado Chua and the defendants, the latter delivered
to the former customers’ checks in the total amount of P6,500,000.00.
12. Defendants have fully paid Mr. Amado Chua the loan obligations in the amounts of
P2,500,000.00 and P4,000,000.00, including the interests thereon.32
The answer above readily shows that petitioners did not spell out the words “specifically deny the
genuineness and due execution of the promissory notes.” Nevertheless, when the answer is read as
whole, it can be deduced that petitioners specifically denied the paragraphs of the complaint
regarding the promissory notes. More importantly, petitioners were able to set forth what they
claim to be the facts, which is a crucial element under Section 8 of Rule 8. In particular, they
alleged that although Ramon Sy and Richard Sy signed blank forms of promissory notes and
disclosure statements, they were later informed that their loans were not approved. Such
disapproval led them to seek loans elsewhere, through Lao and Chua, but definitely not with the
bank anymore.
Verily, petitioners asserted throughout the entire proceedings that the loans they applied from
Westmont were disapproved, and that they never received the loan proceeds from the bank. Stated
differently, they insisted that the promissory notes and disclosure statement attached to the
complaint were false and different from the documents they had signed. These significant and
consistent denials by petitioners suffi-
_______________
32 Id., at pp. 72-74.
pg. 1440
556

ciently informed Westmont beforehand that it would have to meet the issue of genuineness or due
execution of the actionable documents during trial.
Accordingly, petitioners substantially complied with Section 8 of Rule 8. Although their answer
did not indicate the exact words contained in the said provision, the questionable loans and the
nondelivery of its proceeds compel the Court to relax the rules of procedure in the present case.
Law and jurisprudence grant to courts the prerogative to relax compliance with procedural rules
of even the most mandatory character, mindful of the duty to reconcile both the need to put an end
to litigation speedily and the parties’ right to an opportunity to be heard.33
Westmont failed to prove that

it delivered the proceeds of
the loan to petitioners
A simple loan or mutuum is a contract where one of the parties delivers to another, either money
or other consumable thing, upon the condition that the same amount of the same kind and quality
shall be paid.34 A simple loan is a real contract and it shall not be perfected until the delivery of
the object of the contract.35 Necessarily, the delivery of the proceeds of the loan by the lender to
the borrower is indispensable to perfect the contract of loan. Once the proceeds have been
delivered, the unilateral characteristic of the contract arises and the borrower is bound to pay the
lender an amount equal to that received.36
_______________
33 Hadji-Sirad v. Civil Service Commission, 614 Phil. 119, 134; 597 SCRA 475, 490 (2009).
34 Article 1933 of the New Civil Code.
35 Article 1934, id.
36 See Article 1953, id.
557
pg. 1441
VOL. 806, OCTOBER 19, 2016 557
Here, there were purported contracts of loan entered between Westmont and petitioners for the
amounts of P2,429,500.00 and P4,000,000.00, respectively. The promissory notes evidencing such
loans were denied by petitioners, thus, the genuineness and due execution of such documents were
not admitted. Petitioners averred that they never received such loans because their applications
were disapproved by the bank and they had to acquire loans from other persons. They presented a
cashier’s check, in the amount of P2,429,500.00, obtained from Chua, which showed that the latter
personally provided the loan, and not the bank. As the proceeds of the loan were not delivered by
the bank, petitioners stressed that there was no perfected contract of loan. In addition, they doubt
the reliability of the promissory notes as their original copies were not presented before the RTC.
Due to the doubtful circumstances surrounding the loan transactions, Westmont cannot rely on the
disputable presumptions that private transactions have been fair and regular and that the ordinary
course of business has been followed. The aforestated presumptions are disputable, meaning, they
are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence.37
At any rate, granting that they did execute the promissory note and other actionable documents,
still it was incumbent on Westmont, as plaintiff, to establish that the proceeds of the loans were
delivered to petitioners, resulting into a perfected contract of loan.38 Notably, these documents
also did not state that the loan proceeds had been delivered to petitioners, and that they had
acknowledged its receipt.
In civil cases, the burden of proof rests upon the plaintiff who is required to establish his case by
a preponderance of
_______________
37 Citibank, N.A. (Formerly First National City Bank) v. Sabeniano, 535 Phil. 384; 504 SCRA
378 (2006).
38 See Oliver v. Philippine Savings Bank, G.R. No. 214567, April 4, 2016, 788 SCRA 189.
558

evidence.39 As aptly stated by the RTC, the primordial issue that must be resolved is whether
petitioners obtained loans from Westmont in the total amount of P6,429,500.00.40
pg. 1442
The Court finds that Westmont miserably failed to establish that it released and delivered the
proceeds of the loans in the total amount of P6,429,500.00 to petitioners. Westmont could have
easily presented a receipt, a ledger, a loan release manifold, or a statement of loan release to
indubitably prove that the proceeds were actually released and received by petitioners. During trial,
Westmont committed to the RTC that it would submit as evidence a loan manifold indicating the
names of petitioners as recipients of the loans,41 but these purported documents were never
presented, identified or offered.42
As Westmont failed to prove that it had delivered the loan proceeds to respondents, then there is
no perfected contract of loan.
WHEREFORE, the petition is GRANTED. The August 4, 2011 Decision and the March 19,
2012 Resolution of the Court of Appeals in C.A.-G.R. CV No. 90425 are hereby REVERSED
and SET ASIDE. The Complaint, dated August 30, 1999, docketed as Civil Case No. 99-95945
filed before the Regional Trial Court, Branch 12, City of Manila, is DISMISSED.
SO ORDERED.
Carpio (Chairperson), Brion and Del Castillo, JJ., concur.
Leonen, J., On Official Leave.
_______________
39 De Leon v. Bank of the Philippine Islands, G.R. No. 184565, November 20, 2013, 710 SCRA
443, 453.
40 Rollo, p. 159.
41 TSN, January 11, 2002, pp. 27-29; id., at pp. 103 and 175.
42 Id., at pp. 105 and 155-156.
559
VOL. 806, OCTOBER 19, 2016 559

Notes.—In an action to enforce or rescind a written contract of lease, the lease contract is the basis
of the action and therefore a copy of the same must either be set forth in the complaint or its
pg. 1443
substance recited therein, attaching either the original or a copy to the complaint. The rule has been
held to be imperative, mandatory and not merely directory, though must be given a reasonable
construction and not be extended in its scope so as to work injustice. (Malayan Insurance Co., Inc.
vs. Regis Brokerage Corp., 538 SCRA 681 [2007])
A document is actionable when an action or defense is grounded upon such written instrument or
document; These documents need not be attached to or stated in the complaint as these are
evidentiary in nature. (Asian Construction and Development Corporation vs. Mendoza, 675 SCRA
284 [2012])
——o0o—–
pg. 1444
G.R. No. 207898. October 19, 2016.*
ERROL RAMIREZ, JULITO APAS, RICKY ROSELO and ESTEBAN MISSION, JR.,
petitioners, vs. POLYSON INDUSTRIES, INC. and WILSON S. YU, respondents.
Labor Law; Termination of Employment; To justify fully the dismissal of an employee, the
employer must, as a rule, prove that the dismissal was for a just or authorized cause and that the
employee was afforded due process prior to dismissal.—Due process under the Labor Code
involves two aspects: first is substantive, which refers to the valid and authorized causes of
termination of employment under the Labor Code; and second is procedural, which points to the
manner of dismissal. Thus, to justify fully the dismissal of an employee, the employer must, as a
rule, prove that the dismissal was for a just
_______________
* THIRD DIVISION.
560

Ramirez vs. Polyson Industries, Inc.
or authorized cause and that the employee was afforded due process prior to dismissal. As a
complementary principle, the employer has the onus of proving with clear, accurate, consistent,
and convincing evidence the validity of the dismissal.
Remedial Law; Civil Procedure; Appeals; The Supreme Court (SC) is not duty-bound to delve into
the accuracy of the factual findings of the National Labor Relations Commission (NLRC) in the
absence of clear showing that these were arbitrary and bereft of any rational basis.—The Court
finds no cogent reason to depart from the above findings, which were affirmed by the CA. The
Court is not duty-bound to delve into the accuracy of the factual findings of the NLRC in the
absence of clear showing that these were arbitrary and bereft of any rational basis. In the present
case, petitioners failed to convince this Court that the NLRC’s findings that they instigated the
slowdown on June 8, 2011 are not reinforced by substantial evidence. Verily, said findings have
to be maintained and upheld. This Court reiterates, as a reminder to labor leaders, the rule that
union officers are duty-bound to guide their members to respect the law. Contrarily, if the officers
urge the members to violate the law and defy the duly-constituted authorities, their dismissal from
the service is a just penalty or sanction for their unlawful acts.
pg. 1445
Same; Evidence; Witnesses; As between the affirmative assertions of unbiased witnesses and a
general denial and negative assertions on the part of petitioners, weight must be accorded to the
affirmative assertions.—Petitioners question the credibility of Tuting and Visca’s claims
contending that these are self-serving and that they were merely used by the management to
manufacture evidence against them. However, there is nothing on record to indicate any ulterior
motive on the part of Visca and Tuting to fabricate their claim that petitioners were the ones who
threatened or induced them not to work overtime. Absent convincing evidence showing any cogent
reason why a witness should testify falsely, his testimony may be accorded full faith and credit.
Moreover, petitioners’ defense consists of mere denials and negative assertions. As between the
affirmative assertions of unbiased witnesses and a general denial and negative assertions on the
part of petitioners, weight must be accorded to the affirmative assertions.
561
VOL. 806, OCTOBER 19, 2016 561

Labor Law; Strikes; Slowdown; Words and Phrases; Jurisprudence defines a slowdown as
follows: x x x a “strike on the installment plan”; as a willful reduction in the rate of work by
concerted action of workers for the purpose of restricting the output of the employer, in relation
to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard
production or their performance of duties and functions to compel management to grant their
demands.—The Court agrees with both the NLRC and the CA that petitioners are guilty of
instigating their co-employees to commit slowdown, an inherently and essentially illegal activity
even in the absence of a no-strike clause in a collective bargaining contract, or statute or rule.
Jurisprudence defines a slowdown as follows: x x x a “strike on the installment plan”; as a willful
reduction in the rate of work by concerted action of workers for the purpose of restricting the
output of the employer, in relation to a labor dispute; as an activity by which workers, without a
complete stoppage of work, retard production or their performance of duties and functions to
compel management to grant their demands. The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the employees
“continue to work and remain at their positions and accept the wages paid to them,” they at the
same time “select what part of their allotted tasks they care to perform of their own volition or
refuse openly or secretly, to the employer’s damage, to do other work”; in other words, they “work
on their own terms.”
Same; Same; Same; It is not necessary that any fixed number of employees should quit their work
in order to constitute the stoppage a strike, and the number of persons necessary depends in each
case on the peculiar facts in the case and no definite rule can be laid down.—The Court is not
persuaded by petitioners’ contention that they are not guilty of “illegal concerted activity” as they
claim that this term contemplates a “careful planning of a considerable number of participants to
insure that the desired result is attained.” Nothing in the law requires that a slowdown be carefully
pg. 1446
planned and that it be participated in by a large number of workers. The essence of this kind of
strike is that the workers do not quit their work but simply reduce the rate of work in order to
restrict the output or delay the production of the employer. It has been held that while a cessation
of work by the concerted action of a large number of employees may more easily accomplish the
object of the work stoppage than if it is
562

by one person, there is, in fact no fundamental difference in the principle involved as far as the
number of persons involved is concerned, and thus, if the act is the same, and the purpose to be
accomplished is the same, there is a strike, whether one or more than one have ceased to work.
Furthermore, it is not necessary that any fixed number of employees should quit their work in order
to constitute the stoppage a strike, and the number of persons necessary depends in each case on
the peculiar facts in the case and no definite rule can be laid down. As discussed above, petitioners
engaged in slowdown when they induced two of their coworkers to quit their scheduled overtime
work and they accomplished their purpose when the slowdown resulted in the delay and restriction
in the output of Polyson on June 8, 2011.
Same; Termination of Employment; Procedural Due Process; Notice and Hearing; With respect
to procedural due process, it is settled that in termination proceedings of employees, procedural
due process consists of the twin requirements of notice and hearing.—With respect to procedural
due process, it is settled that in termination proceedings of employees, procedural due process
consists of the twin requirements of notice and hearing. The employer must furnish the employee
with two written notices before the termination of employment can be effected: (1) the first
apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2)
the second informs the employee of the employer’s decision to dismiss him. The requirement of a
hearing is complied with as long as there was an opportunity to be heard, and not necessarily that
an actual hearing was conducted. In the present case, Polyson was able to establish that these
requirements were sufficiently complied with.
Same; Strikes; Illegal Strikes; The responsibility of the union officers, as main players in an illegal
strike, is greater than that of the members as the union officers have the duty to guide their
members to respect the law.—It cannot be overemphasized that strike, as the most preeminent
economic weapon of the workers to force management to agree to an equitable sharing of the joint
product of labor and capital, exert some disquieting effects not only on the relationship between
labor and management, but also on the general peace and progress of society and economic well-
being of the State. This weapon is so critical that the law imposes the supreme penalty of dismissal
on union officers who irresponsibly participate in an illegal
pg. 1447
563
VOL. 806, OCTOBER 19, 2016 563

strike and union members who commit unlawful acts during a strike. The responsibility of the
union officers, as main players in an illegal strike, is greater than that of the members as the union
officers have the duty to guide their members to respect the law. The policy of the State is not to
tolerate actions directed at the destabilization of the social order, where the relationship between
labor and management has been endangered by abuse of one party’s bargaining prerogative, to the
extent of disregarding not only the direct order of the government to maintain the status quo, but
the welfare of the entire workforce though they may not be involved in the dispute. The grave
penalty of dismissal imposed on the guilty parties is a natural consequence, considering the interest
of public welfare.
Rodolfo M. Capoquian for petitioners.
Nestor P. Ricolcol for respondents.
PERALTA, J.:
Before the Court is a petition for review on certiorari seeking to annul and set aside the Decision1
and Resolution2 of the Court of Appeals (CA), dated January 23, 2013 and June 17, 2013,
respectively, in C.A.-G.R. S.P. No. 125091. The assailed CA Decision affirmed the March 28,
2012 Resolution of the Fourth Division of the National Labor Relations Commission (NLRC),
which found that respondent corporation validly dismissed petitioners from their employment,
while the CA Resolution denied petitioners’ Motion for Reconsideration.
The facts of the case are as follows:
_______________
1 Penned by Associate Justice Isaias P. Dicdican, with the concurrence of Associate Justices
Michael P. Elbinias and Nina G. Antonio-Valenzuela, Annex “A” to Petition; Rollo, pp. 25-36.
pg. 1448
2 Id., at pp. 38-39.
564

Respondent Polyson Industries, Inc. (Polyson) is a duly organized domestic corporation which is
primarily engaged in the business of manufacturing plastic bags for supermarkets, department
stores and the like. Petitioners, on the other hand, were employees of Polyson and were officers of
Obrero Pilipino (Obrero), the union of the employees of Polyson.
The instant case arose from a labor dispute, between herein petitioners and respondent corporation,
which was certified by the Secretary of the Department of Labor and Employment (DOLE) to the
NLRC for compulsory arbitration.
In its Position Paper3 submitted to the NLRC, Polyson alleged that: on April 28, 2011, it received
a notice of hearing from the DOLE with respect to the petition for certification election filed by
Obrero; on May 31, 2011, Polyson, through counsel and management representative, met with the
officers of Obrero, led by the union president, herein petitioner Ramirez; Obrero asked that it be
voluntarily recognized by Polyson as the exclusive bargaining agent of the rank-and-file
employees of Polyson, but the latter refused and opted for a certification election; furious at such
refusal, the Obrero officers threatened the management that the union will show its collective
strength in the coming days; on June 7, 2011, Polyson received a rush order from one of its clients
for the production of 100,000 pieces of plastic bags; the management of Polyson informed the
operators of its Cutting Section that they would be needing workers to work overtime because of
the said order; based on the usual practice of the company, those who intend to perform overtime
work were expected to sign the “time sheet” indicating their willingness to work after their shift;
on June 7, 2011, the supervisors approached the operators but were told that they would be unable
to work overtime because they have other commitments after their shift; the supervisors then
requested that the operators set
_______________
3 Id., at pp. 132-138.
565
pg. 1449
VOL. 806, OCTOBER 19, 2016 565
aside their time for the following day to work beyond their regular shift; on June 8, 2011, five (5)
operators indicated their desire to work overtime;4 however, after their regular shift, three of the
five workers did not work overtime which resulted in the delay in delivery of the client’s order and
eventually resulted in the cancellation of the said order by reason of such delay;5 when
management asked the workers, who initially manifested their desire to work overtime, to indicate
in the time sheet the reason for their failure to do so, two of the three workers, namely, Leuland
Visca (Visca) and Samuel Tuting (Tuting) gave the same reason, to wit: “Ayaw nila/ng iba na mag-
OT [overtime] ako”;6 the management then conducted an investigation and a hearing where Visca
affirmed his previous claim that petitioners were the ones who pressured him to desist from
rendering overtime work;7 on even date, Tuting executed a written statement claiming that herein
petitioners induced or threatened them not to work overtime;8 the management then gave notices
to petitioners asking them to explain why no disciplinary action would be taken against them;9
petitioners submitted their respective explanations to the management denying their liability;10
after evaluation, the management informed petitioners that it has decided to terminate petitioners’
employment on the ground that they instigated an illegal concerted activity resulting in losses to
the company.11
In their Position Paper,12 petitioners denied the allegations of Polyson contending that they were
terminated from their
_______________
4 Id., at p. 142.
5 Id., at p. 147.
6 Id., at p. 142.
7 Id., at p. 144.
8 Id., at p. 145.
9 Id., at pp. 148-151.
10 CA Rollo, pp. 68-70, 72.
11 Rollo, pp. 152-155.
12 CA Rollo, pp. 81-92.
pg. 1450
566

employment not because they induced or threatened their co-employees not to render overtime
work but because they established a union which sought to become the exclusive bargaining agent
of the rank-and-file employees of Polyson; that their termination was undertaken without affording
them substantive and procedural due process; and that Polyson is guilty of unfair labor practice.
Subsequently, on June 29, 2011, Obrero filed a Notice of Strike with the National Conciliation and
Mediation Board (NCMB) which was predicated on various grounds, among which was the alleged
illegal dismissal of herein petitioners.
Thereafter, on July 21, 2011, the DOLE Secretary certified the labor dispute to the NLRC for
immediate compulsory arbitration where the parties were required to maintain the status quo, in
accordance with Article 263(g) of the Labor Code.13
On December 26, 2011, the NLRC rendered its Decision14 finding petitioners illegally dismissed
from their employment and ordering their reinstatement to their former positions without loss of
seniority rights and other privileges and benefits as well as to pay petitioners their backwages and
attorney’s fees. The NLRC ruled that, for failure of Polyson to submit in evidence petitioners’
supposed written explanations in answer to the company’s Notice to Explain, Polyson failed to
discharge its burden of proving that petitioners were indeed terminated for a valid cause and in
accordance with due process.
Polyson then filed a Motion for Reconsideration15 submitting, for the consideration of the NLRC,
the subject written explanations of petitioners and reiterating their position that petitioners were,
indeed, validly dismissed.
_______________
13 Id., at pp. 56-58.
14 Id., at pp. 28-35.
15 Id., at pp. 62-67.
567
VOL. 806, OCTOBER 19, 2016 567
pg. 1451
On March 28, 2012, the NLRC issued a Resolution16 granting Polyson’s Motion for
Reconsideration, thereby reversing and setting aside its December 26, 2011 Decision and
rendering a new judgment which declared petitioners as validly dismissed. In the said Resolution,
the NLRC found that Polyson was able to present sufficient evidence to establish that petitioners’
termination from employment was for a valid cause, as they were found guilty of inducing or
threatening their co-employees not to render overtime work, and that petitioners’ dismissal was in
conformity with due process requirements.
Aggrieved by the above Resolution, petitioners filed a special civil action for certiorari with the
CA assailing the said Resolution and praying for the reinstatement of the December 26, 2011
Decision of the NLRC.17
In its questioned Decision dated January 23, 2013, the CA denied petitioners’ petition for
certiorari and affirmed the March 28, 2012 Resolution of the NLRC. The CA ruled that
petitioners’ defense, which is anchored primarily on their denial of the allegations of Polyson,
cannot overcome the categorical statements of Polyson’s witnesses who identified petitioners as
the persons who induced or threatened them not to render overtime work.
Petitioners filed a Motion for Reconsideration,18 but the CA denied it in its Resolution dated June
17, 2013.
Hence, the present petition for review on certiorari based on the following grounds:
THE HONORABLE COURT OF APPEALS THIRTEENTH DIVISION, COMMITTED

GRAVE ABUSE OF DISCRETION IN RENDERING THE HEREIN ASSAILED DECISIONS.
_______________
16 Id., at pp. 44-55.
17 Id., at pp. 3-27.
18 Id., at pp. 172-183.
568

pg. 1452
THE THIRTEENTH DIVISION OF THE COURT OF APPEALS MISAPPRECIATED THE
ACTUAL FACTS OF THE INSTANT CASE. THUS, A REVIEW IS NECESSARY AND THE
ASSAILED DECISIONS VACATED.19
The basic issue in the instant case is whether petitioners’ dismissal from their employment was
valid.
Due process under the Labor Code involves two aspects: first is substantive, which refers to the
valid and authorized causes of termination of employment under the Labor Code; and second is
procedural, which points to the manner of dismissal.20 Thus, to justify fully the dismissal of an
employee, the employer must, as a rule, prove that the dismissal was for a just or authorized cause
and that the employee was afforded due process prior to dismissal.21 As a complementary
principle, the employer has the onus of proving with clear, accurate, consistent, and convincing
evidence the validity of the dismissal.22
Anent the substantive aspect, the question that should be resolved, in the context of the facts
involved in and the charges leveled against petitioners in the present case, is whether petitioners
are guilty of an illegal act and, if so, whether such act is a valid ground for their termination from
employment.
In its Resolution dated March 28, 2012, the NLRC ruled that “[t]he evidence on record clearly
establishes that herein [petitioners] resorted to an illicit activity. The act of inducing and/or
threatening workers not to render overtime work, given the circumstances surrounding the instant
case, was undoubtedly a calculated effort amounting to ‘overtime boycott’ or ‘work slowdown.’
[Petitioners], in their apparent at-
_______________
19 Rollo, p. 13.
20 King of Kings Transport, Inc. v. Mamac, 553 Phil. 108, 114; 526 SCRA 116, 123 (2007).
21 Aliling v. Feliciano, 686 Phil. 889, 909; 671 SCRA 186, 205 (2012).
22 Id.
569
pg. 1453
VOL. 806, OCTOBER 19, 2016 569
tempt to make a statement — as a response to [Polyson’s] refusal to voluntarily recognize Obrero

Pilipino-Polyson Industries Chapter as the sole and exclusive bargaining representative of the
rank-and-file employees, unduly caused [Polyson] significant losses in the aggregate amount of
Two Hundred Ninety Thousand Pesos (Php290,000.00).”23
The Court finds no cogent reason to depart from the above findings, which were affirmed by the
CA. The Court is not duty-bound to delve into the accuracy of the factual findings of the NLRC in
the absence of clear showing that these were arbitrary and bereft of any rational basis.24 In the
present case, petitioners failed to convince this Court that the NLRC’s findings that they instigated
the slowdown on June 8, 2011 are not reinforced by substantial evidence. Verily, said findings
have to be maintained and upheld. This Court reiterates, as a reminder to labor leaders, the rule
that union officers are duty-bound to guide their members to respect the law.25 Contrarily, if the
officers urge the members to violate the law and defy the duly-constituted authorities, their
dismissal from the service is a just penalty or sanction for their unlawful acts.26
In any case, a review of the records at hand shows that the evidence presented by Polyson has
proven that petitioners are indeed guilty of instigating two employees to abstain from working
overtime. In the Cutting Section Overtime Sheet27 dated June 8, 2011, employees Visca and
Tuting indicated that “ayaw nila/ng iba na mag-OT [overtime] ako” as the reason why they did
not render overtime work despite having earlier manifested their desire to do so. In the
Administrative
_______________
23 CA Rollo, p. 50.
24 Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations
Commission, Second Division, 562 Phil. 759, 798; 537 SCRA 171, 208-209 (2007).
25 Id.
26 Id.
27 Rollo, p. 142.
570
pg. 1454
Hearing28 conducted on June 9, 2011, Visca identified petitioners as the persons who pressured
them not to work overtime. In the same manner, Tuting, in his written statement,29 also pointed
to petitioners as the ones who told him not to work overtime.
Petitioners question the credibility of Tuting and Visca’s claims contending that these are self-
serving and that they were merely used by the management to manufacture evidence against them.
However, there is nothing on record to indicate any ulterior motive on the part of Visca and Tuting
to fabricate their claim that petitioners were the ones who threatened or induced them not to work
overtime. Absent convincing evidence showing any cogent reason why a witness should testify
falsely, his testimony may be accorded full faith and credit.30 Moreover, petitioners’ defense
consists of mere denials and negative assertions. As between the affirmative assertions of unbiased
witnesses and a general denial and negative assertions on the part of petitioners, weight must be
accorded to the affirmative assertions.31
In addition, the Court finds no error in the findings of the NLRC in its questioned Resolution that,
contrary to petitioners’ claims, the slowdown was indeed planned, to wit:
The above mentioned finding is bolstered by the Incident Report dated 10 June 2011 wherein it is
stated that upon inquiry by Respondent Wilson Yu as regards the reason for the non-rendering of
overtime work, [petitioner] Errol Ramirez retorted, thus: “[DI BA] SABI NINYO EIGHT (8)
HOURS LANG KAMI. EH DI EIGHT (8) NA LANG. KUNG MAG[-]OOVERTIME KAMI DAPAT
LAHAT MAY OVERTIME. AYAW KO MAGKAWA-
_______________
28 Id., at p. 144.
29 Id., at p. 145.
30 Arboleda v. National Labor Relations Commission, 362 Phil. 383, 391; 303 SCRA 38, 47
(1999).
31 Id.
571
VOL. 806, OCTOBER 19, 2016 571

pg. 1455
TAK WATAK ANG MGA TAO KO.” It is, therefore, unmistakably clear that [petitioners] were
completely aware of and, in fact, were responsible for what transpired during the scheduled
overtime. [Petitioners] cannot now feign ignorance and simply deny liability upon the implausible
pretext that the “overtime boycott” was undertaken without their knowledge and not upon their
prodding. Note that the exchange was witnessed by several other workers and, interestingly, was
never disputed by herein [petitioners].32
The Court agrees with both the NLRC and the CA that petitioners are guilty of instigating their
co-employees to commit slowdown, an inherently and essentially illegal activity even in the
absence of a no-strike clause in a collective bargaining contract, or statute or rule.33 Jurisprudence
defines a slowdown as follows:
x x x a “strike on the installment plan”; as a willful reduction in the rate of work by concerted
action of workers for the purpose of restricting the output of the employer, in relation to a labor
dispute; as an activity by which workers, without a complete stoppage of work, retard production
or their performance of duties and functions to compel management to grant their demands. The
Court also agrees that such a slowdown is generally condemned as inherently illicit and
unjustifiable, because while the employees “continue to work and remain at their positions and
accept the wages paid to them,” they at the same time “select what part of their allotted tasks they
care to perform of their own volition or refuse openly or secretly, to the employer’s damage, to do
other work”; in other words, they “work on their own terms.”34
_______________
32 Rollo, pp. 82-83. (Citation omitted)
33 Ilaw at Buklod ng Manggagawa v. NLRC, 275 Phil. 635, 649; 198 SCRA 586, 598-599 (1991).
34 Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc., 423 Phil. 948,
964; 372 SCRA 658, 673 (2001), citing Ilaw at Buklod ng Manggagawa v. NLRC, id., at pp. 649-
650; p. 598. (Emphases ours)
572

The Court is not persuaded by petitioners’ contention that they are not guilty of “illegal concerted
activity” as they claim that this term contemplates a “careful planning of a considerable number
of participants to insure that the desired result is attained.” Nothing in the law requires that a
pg. 1456
slowdown be carefully planned and that it be participated in by a large number of workers. The
essence of this kind of strike is that the workers do not quit their work but simply reduce the rate
of work in order to restrict the output or delay the production of the employer. It has been held that
while a cessation of work by the concerted action of a large number of employees may more easily
accomplish the object of the work stoppage than if it is by one person, there is, in fact no
fundamental difference in the principle involved as far as the number of persons involved is
concerned, and thus, if the act is the same, and the purpose to be accomplished is the same, there
is a strike, whether one or more than one have ceased to work.35 Furthermore, it is not necessary
that any fixed number of employees should quit their work in order to constitute the stoppage a
strike, and the number of persons necessary depends in each case on the peculiar facts in the case
and no definite rule can be laid down.36 As discussed above, petitioners engaged in slowdown
when they induced two of their co-workers to quit their scheduled overtime work and they
accomplished their purpose when the slowdown resulted in the delay and restriction in the output
of Polyson on June 8, 2011.
With respect to procedural due process, it is settled that in termination proceedings of employees,
procedural due process
_______________
35 83 C.J.S. 543, citing Sammons v. Hotel & Restaurant Emp. Local Union No. 363, Com. Pl., 93
N.E. 2D 301, 302.
36 83 C.J.S. 544, citing People on Complaint of Mandel v. Tapel, 3 N.Y.S. 2D 779, 781 and
Walter W. Oeflein, Inc. v. State, 188 N.W. 633, 635, 177 Wis. 394.
573
VOL. 806, OCTOBER 19, 2016 573

consists of the twin requirements of notice and hearing.37 The employer must furnish the
employee with two written notices before the termination of employment can be effected: (1) the
first apprises the employee of the particular acts or omissions for which his dismissal is sought;
and (2) the second informs the employee of the employer’s decision to dismiss him.38 The
requirement of a hearing is complied with as long as there was an opportunity to be heard, and not
necessarily that an actual hearing was conducted.39 In the present case, Polyson was able to
establish that these requirements were sufficiently complied with.
As to petitioners’ liability, the second paragraph of Article 264(a) of the Labor Code provides:
xxxx
pg. 1457
x x x Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike
may be declared to have lost his employment status: Provided, That mere participation of a
worker in a lawful strike shall not constitute sufficient ground for termination of his employment,
even if a replacement had been hired by the employer during such lawful strike.40
Finally, it cannot be overemphasized that strike, as the most preeminent economic weapon of the
workers to force management to agree to an equitable sharing of the joint product of labor and
capital, exert some disquieting effects not only on the relationship between labor and management,
but also on the general peace and progress of society and eco-
_______________
37 New Puerto Commercial v. Lopez, 639 Phil. 437, 445; 625 SCRA 422, 430-431 (2010).
38 Id.
39 Id.
574

nomic well-being of the State.41 This weapon is so critical that the law imposes the supreme
penalty of dismissal on union officers who irresponsibly participate in an illegal strike and union
members who commit unlawful acts during a strike.42 The responsibility of the union officers, as
main players in an illegal strike, is greater than that of the members as the union officers have the
duty to guide their members to respect the law.43 The policy of the State is not to tolerate actions
directed at the destabilization of the social order, where the relationship between labor and
management has been endangered by abuse of one party’s bargaining prerogative, to the extent of
disregarding not only the direct order of the government to maintain the status quo, but the welfare
of the entire workforce though they may not be involved in the dispute.44 The grave penalty of
dismissal imposed on the guilty parties is a natural consequence, considering the interest of public
welfare.45
pg. 1458
WHEREFORE, the instant petition is DENIED. The Decision and Resolution of the Court of
Appeals, dated January 23, 2013 and June 17, 2013, respectively, in C.A.-G.R. S.P. No. 125091
are AFFIRMED.
SO ORDERED.
_______________
41 Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA), 552

Phil. 432, 452; 525 SCRA 361, 381-382 (2007).
42 Id.
43 Id.
44 Id.
45 Id.
575
VOL. 806, OCTOBER 19, 2016 575

Notes.—It must be proved that the striking employee committed illegal acts during the strike and
the striker who participated in the commission of illegal acts must be identified. (Toyota Motor
Phils. Corp. Workers Association [TMPCWA] vs. National Labor Relations Commission, 537
SCRA 171 [2007])
There are six (6) categories of illegal strikes, viz.: first, when it is contrary to a specific prohibition
of law, such as strike by employees performing governmental functions, second, when it violates
a specific requirement of law, third, when it is declared for an unlawful purpose; fourth, when it
employs unlawful means in the pursuit of its objective, fifth, when it is declared in violation of an
existing injunction, and sixth, when it is contrary to an existing agreement, such as a no-strike
clause or conclusive arbitration clause. (Id.)
pg. 1459
——o0o——
G.R. No. 208535. October 19, 2016.*
LEO’S RESTAURANT AND BAR CAFÉ, MOUNTAIN SUITE BUSINESS APARTELLE,

LEO Y. LUA and AMELIA LUA, petitioners, vs. LAARNE1 C. BENSING, respondent.
Remedial Law; Civil Procedure; Appeals; As a rule, the findings of fact of the Court of Appeals
(CA) when fully supported by evidence are conclusive and binding on the parties and are not
reviewable by the Supreme Court (SC).—As a rule, the findings of fact of the CA when fully
supported by evidence are conclusive and binding on the parties and are not reviewable by the
Court. However, this rule admits of exceptions including such instance where the factual findings
of the CA are contrary to those of the labor tribunals. In this case, the LA and the NLRC are one
in ruling that respondent was validly dismissed from work. The CA ruled otherwise. Considering
these divergent positions, the Court deems it necessary to review, reevaluate, and reexamine the
findings of the CA as they are contrary to those of the LA and the NLRC.
Corporations; Piercing the Veil of Corporate Fiction; It is settled that where it shows that business
entities are owned, controlled, and conducted by the same parties, law and equity will disregard
the legal fiction that they are distinct and shall treat them as one entity in order to protect the
rights of third persons.—It is settled that where it shows that business entities are owned,
controlled, and conducted by the same parties, law and equity will disregard the legal fiction that
they are distinct and shall treat them as one entity in order to protect the rights of third persons.
Here, it is appearing that Kimwa, Leo, and Amelia owned, controlled and managed the Restobar
and the Apartelle, they are treated as a single entity accountable for the dismissal of respondent.
Labor Law; Termination of Employment; Loss of Trust and Confidence; To dismiss an employee
on the ground of loss of trust and confidence, two (2) requisites must concur: (a) the concerned
employee
_______________
* SECOND DIVISION.
1 Spelled as Laarni in some parts of the records.
597
VOL. 806, OCTOBER 19, 2016 597

Leo’s Restaurant and Bar Café vs. Bensing
pg. 1460
must be holding a position of trust; and (b) the loss of trust must be based on willful breach of
trust based on clearly established facts.—An employer has the right to dismiss an employee for
just causes, which include willful breach of trust and confidence reposed on him or her by the
employer. To temper such right to dismiss, and to reconcile it with the employee’s security of
tenure, it is the employer who has the burden to show that the dismissal of the employee is for a
just cause. Such determination of just cause must also be made with fairness, in good faith, and
only after observance of due process of law. Moreover, to dismiss an employee on the ground of
loss of trust and confidence, two requisites must concur: (a) the concerned employee must be
holding a position of trust; and (b) the loss of trust must be based on willful breach of trust based
on clearly established facts.
Same; Same; Same; Loss of confidence may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary. It must be genuine, not a mere afterthought to justify earlier action taken
in bad faith.—Loss of trust and confidence as a ground for dismissal is never intended for abuse
by reason of its subjective nature. It must be pursuant to a breach done willfully, knowingly and
purposely without any valid excuse. It must rest on substantial grounds and not on mere suspicion,
whims, or caprices of the employer. In fine, “loss of confidence should not be simulated. It should
not be used as a subterfuge for causes which are improper, illegal, or unjustified. Loss of
confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary.
It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.”
Same; Same; Same; Loss of trust and confidence must stem from dishonest, deceitful or fraudulent
acts. In the absence of such malicious intent or fraud on the part of respondent, she committed no
willful breach of trust against her employer.—Indeed, there was no malice or any fraudulent intent
on the part of respondent when she sighed the Pepsi contract. There is likewise no evidence that
she personally benefited therefrom. In fact, the Restobar itself received the items donated by Pepsi,
and the Restobar did not suffer any damage arising from the Pepsi contract. Loss of trust and
confidence must stem from dishonest, deceitful or fraudulent acts. In the absence of such malicious
intent or fraud on the part of respondent, she committed no willful breach of trust against her
employer.
598

Same; Same; Damages; Moral Damages; Moral damages is awarded to an illegally dismissed or
suspended employee when the employer acted in bad faith or fraud, or in such manner oppressive
to labor or contrary to morals, good customs or public policy.—Moral damages is awarded to an
illegally dismissed or suspended employee when the employer acted in bad faith or fraud, or in
such manner oppressive to labor or contrary to morals, good customs or public policy, as in this
case. As discussed, petitioners primarily charged respondent of having entered the contract with
pg. 1461
Pepsi without authority from the Owner or the Manager of the Restobar. Nevertheless, as also
established, Leo was well aware of this contract, as Pepsi itself attested. The Restobar also directly
received the Pepsi products. Moreover, despite respondent having explained herself, and Pepsi
having fully and timely clarified the matters surrounding the contract, petitioners still dismissed
respondent. It thus appears that such dismissal was predetermined by petitioners even before
respondent explained herself regarding the charges against her.
Same; Same; Loss of Trust and Confidence; In order to dismiss an employee on the ground of loss
of trust and confidence, the employee must be guilty of an actual and willful breach of duty duly
supported by substantial evidence.—In order to dismiss an employee on the ground of loss of trust
and confidence, the employee must be guilty of an actual and willful breach of duty duly supported
by substantial evidence. Since petitioners failed to show that respondent actually and willfully
breached their trust, then the CA properly ruled that petitioners dismissed her without any valid
cause. Henceforth, the CA properly set aside the NLRC Resolutions dated June 4, 2009 and July
31, 2009, and reinstated the NLRC Resolution dated November 28, 2008.
Mateo G. Delegencia Law Office and Associates for petitioners.
Pailagao Law Office for respondent.
599
VOL. 806, OCTOBER 19, 2016 599

DEL CASTILLO, J.:
This is a Petition for Review on Certiorari assailing the November 27, 2012 Decision2 of the
Court of Appeals (CA) in C.A.-G.R. S.P. No. 03222-MIN. The CA set aside the June 4, 20093 and
July 31, 20094 Resolutions of the National Labor Relations Commission (NLRC) in NLRC Case
No. MAC-02-010081-2008, and reinstated the November 28, 2008 NLRC Resolution5 finding
illegal respondent Laarne C. Densing’s (respondent) dismissal from work. Also assailed is the July
12, 2013 CA Resolution6 denying petitioners’ Motion for Reconsideration.
pg. 1462
Factual Antecedents
On January 2, 2002, Kimwa Construction & Development Corporation (Kimwa) employed

respondent as liaison officer.7 Allegedly, Kimwa also operated Leo’s Restaurant and Bar Cafe
(Restobar), and the Mountain Suite Business Apartelle (Apartelle); on July 4, 2005, it appointed
respondent as Administrative Officer/Human Resource (HR) Head of these establishments with a
salary of P15,000.00 per month; and said appointment took effect on October 18, 2005 when the
establishments became fully operational.8
_______________
2 CA Rollo, pp. 332-346; penned by Associate Justice Oscar V. Badelles and concurred in by
Associate Justices Edgardo A. Camello and Renato C. Francisco.
3 Id., at pp. 33-39; penned by Commissioner Dominador B. Medroso, Jr. and concurred in by
Presiding Commissioner Salic B. Dumarpa. Commissioner Proculo T. Sarmen, dissented.
4 Id., at pp. 41-42.
5 Id., at pp. 193-201; penned by Commissioner Proculo T. Sarmen and concurred in by Presiding
Salic B. Dumarpa and Commissioner Dominador B. Medroso, Jr.
6 Id., at pp. 367-368.
7 Id., at p. 333.
8 Id., at pp. 55-56.
600

Thereafter, Leo Y. Lua (Leo), the Manager of the Restobar and the Apartelle, issued upon
respondent a Memorandum9 requesting her to temporarily report at Kimwa’s Main Office starting
December 30, 2005.
On December 30, 2005, respondent received another Memorandum10 from Leo requiring her to
explain the circumstances surrounding the agreement between the Restobar and Pepsi Products
Philippines, Inc. (Pepsi), and the benefits she derived therefrom. Leo accused her of having signed
pg. 1463
said contract without authority from him and of not informing him of the benefits arising from the
contract. The Memorandum also indicated that Pepsi gave the Restobar 10 cases of soft drinks
during its opening night, and additional 67 cases for December 2005 but its records reflected
receiving only 20 out of said 67 cases.
In her Explanation,11 respondent stated that on October 24, 2005, in the presence of Jovenal12
Ablanque (Ablanque), Sales Manager of Pepsi, Leo verbally authorized her to sign the contract
with Pepsi on behalf of the Restobar. The following day, Ablanque, returned to the Restobar, and
respondent signed the contract pursuant to Leo’s verbal instruction. She gave no explanation anent
the benefits arising from the contract as she purportedly did not intervene in Leo and Ablanque’s
discussion on the matter. She added that the Restobar received only 10 and additional 20 cases of
Pepsi drinks, and she did not receive personal benefits arising from the contract.
On January 2, 2006, Leo issued another Memorandum13 requiring respondent to answer why she
signed the Pepsi contract even without authority to do so, and to explain whether
_______________
9 Id., at p. 57.
10 Id., at p. 58.
11 Id., at pp. 59-60.
12 Id., at p. 75.
13 Id., at p. 61.
601
VOL. 806, OCTOBER 19, 2016 601

her apology addressed to Leo was an acceptance of her fault on the charges against her.
In her Answer,14 respondent remained firm that she did not receive any personal benefits from
Pepsi. Also, she stated that she apologized to Leo because she knew that the latter had “feelings of
doubt” about her but it was not because she accepted the accusations against her.
Later, in a Memorandum15 dated January 3, 2006, respondent was required to answer these
charges: 1) she committed dishonesty when she charged to the Restobar’s account 50% of the food
she ordered therefrom without approval of its Owner or Manager; 2) she violated her duties when
pg. 1464
she did not inform Leo of the signing of the Pepsi contract; and 3) she failed to account for 47 soft
drinks cases that Pepsi gave the Restobar.
In her Explanation,16 respondent asserted that the charges of dishonesty was not related to the
Pepsi contract such that she opted not to answer said accusation. With regard to the alleged missing
Pepsi drinks, she affirmed that Pepsi clarified the matter already, particularly to where these soft
drinks were placed or given.
In a Letter17 dated January 4, 2006, Pepsi, through its Settlement and Credit Manager Jerome T.
Eslabon, certified that Pepsi gave the Restobar 10 cases of Pepsi products on its opening day, and
20 cases of Pepsi 12 oz. on December 7, 2005. It stressed that it did not give cash assistance or
cash equivalent to any staff of the Restobar. It also asked Leo to disregard the erroneous volume
of documents it inadvertently gave him, and assured him that Pepsi already adjusted his records to
reflect the correct figures.
_______________
14 Id., at p. 62.
15 Id., at p. 63.
16 Id., at p. 64.
17 Id., at pp. 67-68.
602

However, on January 12, 2006, on the ground of loss of trust and confidence, Leo terminated
respondent effective January 15, 2006.18
Respondent thus filed an Amended Complaint19 for illegal dismissal, illegal suspension,
nonpayment of 13th month pay, separation pay in lieu of reinstatement, moral and exemplary
damages, and attorney’s fees against Kimwa, and herein petitioners, the Restobar, the Apartelle,
Leo, and/or Amelia Y. Lua (Amelia).
In her Position Paper,20 respondent claimed that petitioners and Kimwa failed to establish that she
was dismissed for valid causes. She argued that as Administrative Officer/HR Head, she was
tasked to oversee the operations of the Restobar and the Apartelle, including the authority to sign
pg. 1465
the agreement with Pepsi. According to her, Leo also authorized her to sign the agreement in his
behalf, and such authority was communicated to her in the presence of the Sales Manager of Pepsi.
In addition, respondent emphasized that she received no personal benefits in connection with the
Pepsi contract, and there was no proof that she received anything from Pepsi. She also stressed
that Pepsi was delivering its products to the Restobar and the Apartelle, not to her. In fine, she
argued that her having entered the Pepsi contract was insufficient basis for petitioners and Kimwa
to lose their trust in her, and use the same to terminate her.
For their part, petitioners and Kimwa, in their Position Paper,21 argued that it was Amelia, Leo’s
sister, who owned the Restobar and the Apartelle. They averred that these establishments were
separate entities from Kimwa, and Leo was merely its Manager. They further claimed that on Octo-
_______________
18 Id., at p. 66.
19 Id., at p. 70.
20 Id., at pp. 43-53.
21 Id., at pp. 118-136.
603
VOL. 806, OCTOBER 19, 2016 603

ber 15, 2005, respondent resigned from Kimwa and transferred to the Restobar and the Apartelle
for higher pay.
In addition, petitioners and Kimwa asserted that respondent, was validly terminated as she
committed dishonesty, abuse of confidence, and breach of trust against her employer. They
explained that respondent entered into a contract with Pepsi, whereby the Restobar committed to
purchase 2,400 cases of Pepsi products per year for a period of two years or from October 2005 to
October 2007. They stressed that respondent entered this contract without prior authority from Leo
or Amelia, and without disclosure to them of the benefits arising therefrom. They also alleged that
respondent committed dishonesty when she charged some of her meals and offer/invitation
expenses to the Restobar, without approval of its Owner or Manager. They likewise stated that
respondent was given opportunity to explain her side before she was terminated.
pg. 1466
Furthermore, petitioners and Kimwa insisted that while under the employ of Kimwa, respondent
received advance payment of her benefits, separation pay and other claims. They added that having
received monetary benefits, respondent had no more cause of action against them.
Ruling of the Executive Labor Arbiter
On November 20, 2007, the Executive Labor Arbiter (LA) rendered a Decision22 dismissing the
Complaint for lack of merit. The LA, nonetheless, ordered petitioners and Kimwa to pay
respondent separation pay amounting to P15,000.00.
The LA decreed that petitioners and Kimwa validly dismissed respondent on the ground of loss of
trust and confidence. He pointed out that employers cannot be compelled to retain the services of
their employees who were guilty of acts
_______________
22 Id., at pp. 170-180; penned by Executive Labor Arbiter Noel Augusto S. Magbanua.
604

inimical to the interests of the employer; and the dismissal of an erring employee was a measure
of self-protection.
The LA also declared that respondent committed acts contrary to the interest of her employer when
she charged personal food consumption to the Restobar, entered into an exclusive contract with
Pepsi, and failed to account for the Pepsi products donated to the Restobar. He further stated that
petitioners and Kimwa complied with the required procedural due process when they issued
memoranda informing respondent of the charges against her and giving her notice of her dismissal.
Nevertheless, the LA granted respondent one-month salary as separation pay ratiocinating that
respondent entered the Pepsi contract in good faith and she presumed that she was authorized to
enter the same.
Respondent appealed the LA Decision.
pg. 1467
Ruling of the National Labor
Relations Commission
On November 28, 2008, the NLRC issued its Resolution23 finding respondent’s dismissal illegal.
It set aside the LA Decision and ordered petitioners to pay respondent backwages, separation pay,
moral and exemplary damages, 13th month pay differential, and attorney’s fees. The dispositive
portion of the NLRC Resolution reads:
WHEREFORE, premises laid, the appealed Decision of the Executive Labor Arbiter dated
November 20, 2007 is hereby set aside and a new one is entered finding complainant Laarne
Densing illegally dismissed and respondents Leo Restaurant and Bar Café and Mountain Suite
Apartelle and/or Leo Y. Lua and Amelia Y. Lua, proprietors of the said establishment, to be
solidarily liable to pay complainant Laarne Densing’s backwages, based on her latest salary, to be
computed from the date
_______________
23 Id., at pp. 193-201.
605
VOL. 806, OCTOBER 19, 2016 605

of her dismissal on January 15, 2006 up to the finality of this resolution; separation pay, based on
her latest salary, to be computed from the inception of her employment on January 2, 2002 up to
the finality of this Resolution; moral and exemplary damages in the amount of Fifty Thousand
(Php50,000.00) each; 13th month pay differential in the amount of Php1,250.00; and ten percent
(10%) attorney’s fees computed from the total monetary awards.
SO ORDERED.24
According to the NLRC, respondent’s claim that she had the authority to enter the contract with
Pepsi was supported by evidence, which included the Sworn Statement of the Sales Manager of
Pepsi, and a Certification from concerned Pepsi Managers that Pepsi donated only 10 cases of
softdrinks and additional 20 cases of Pepsi 12 oz. to the Restobar.
pg. 1468
The NLRC added that even assuming that respondent was without explicit authority from the
owner of the Restobar, she still validly entered the contract with Pepsi as the signing thereof was
within her duty as the one in charge of the operations of the Restobar. It also noted that there was
no showing that respondent was ill motivated in signing the Pepsi contract; and she signed it to the
best interest of the Restobar.
The NLRC ruled that the imputation that respondent charged food to the Restobar was related to
her representation privilege granted her by the Restobar; and there was no evidence that she abused
this privilege.
Petitioners and Kimwa moved for a reconsideration of the November 28, 2008 NLRC Resolution.
On June 4,2009, the NLRC granted the Motion for Reconsideration. It set aside its November 28,
2008 Resolution, and dismissed the Complaint for lack of merit.25
_______________
24 Id., at pp. 200-201.
25 Id., at pp. 33-39.
606

In reversing itself, the NLRC held that respondent’s functions did not include any authority to sign
or execute contracts for and in behalf of the Restobar. It added that even assuming that Leo verbally
authorized her to sign the Pepsi agreement, respondent signed the same in her name, as if she was
the Restobar’s owner. It also held that if not for the fact that respondent was suspended and later
dismissed, the whereabouts of the donated Pepsi products would not have been traced. It likewise
faulted respondent for charging 50% of her meals to the Restobar without approval from its Owner
or Chief Officer. It added that respondent was given opportunity to be heard when various
memoranda were issued to her.
On July 31, 2009, the NLRC denied26 respondent’s Motion for Reconsideration.
pg. 1469
Respondent filed with the CA a Petition for Certiorari essentially reiterating that she was illegally
dismissed.
On November 27, 2012, the CA rendered the assailed Decision27 setting aside the June 4, 2009
and July 31, 2009 Resolutions of the NLRC, and reinstating the November 28, 2008 NLRC
Resolution.
The CA reasoned that as Administrative Officer/HR Head, respondent held a position of trust and
confidence. Nevertheless, it explained that petitioners failed to prove that respondent committed
any of the following acts imputed against her: a) signing the Pepsi agreement on behalf of the
Restobar without authority from Leo; b) failure to account for the products donated by Pepsi to the
Restobar; and c) unauthorized charges of food on the account of the Restobar.
The CA stressed that the foregoing grounds had been adequately passed upon in the NLRC
November 28, 2008 Resolu-
_______________
26 Id., at pp. 41-42.
27 Id., at pp. 332-346.
607
VOL. 806, OCTOBER 19, 2016 607

tion before it reversed itself and issued its June 4, 2009 and July 31, 2009 Resolutions. It added
that even if respondent had no express authority to sign the agreement with Pepsi, her having
entered it was not sufficient to dismiss her from work, especially in the absence of malicious intent
or fraud on her part. It pointed out that the Restobar did not suffer damage because of respondent’s
act.
According to the CA, respondent even acted in good faith when she signed the contract with Pepsi
on the impression that it was part of her duties and responsibilities. It also quoted with approval
the November 28, 2003 NLRC Resolution declaring that there was no evidence that respondent
abused her representation privilege, which included the charging of food expense when
entertaining guests of the Restobar. Finally, it held that respondent did not deserve the penalty of
dismissal especially so since she committed no prior infractions in her more than three years of
service.
On July 12, 2013, the CA denied28 petitioners’ Motion for Reconsideration.
pg. 1470
Petitioners thus filed this Petition raising these grounds:
1. [T]he Honorable Appellate Court erred in [a]ccepting the [t]heory of the Respondent that
Kimwa Construction operated Leo’s Restobar or Leo’s Restaurant and Bar Café, Mountain
Suite Business Apartelle.29
2. [T]he Honorable Appellate Court erred when it [h]eld that x x x to justify the dismissal
of an employee base[d] on loss of trust and confidence, the acts of said employee should be
proven by substantial evidence and founded on clearly established facts.30
_______________
28 Id., at pp. 367-368.
29 Rollo, p. 17.
30 Id., at p. 18.
608

3. [T]he Petition for Review [r]aises a question of law and of facts that justif[y r]eview of
the Appellate Court’s Decision and its denial of the Motion for Reconsideration.31
4. [T]he Appellate Court also erred in [granting] Moral and Exemplary Damages [to
respondent].32
Petitioners argue that the CA erred in holding that Kimwa owned and operated the Restobar and
the Apartelle. They assert that these establishments are single proprietorships owned by Amelia
and managed by Leo. They also asseverate that there are sufficient bases to dismiss respondent as
she signed the exclusivity contract with Pepsi as if she was the owner of the Restobar, and she did
not account for the products donated by Pepsi to the latter. Finally, they submit that respondent is
not entitled to moral and exemplary damages as they did not act in bad faith in dismissing her.
Respondent, on her end, counters that although she held a position of trust and confidence, there
is no showing that she committed willful breach of trust against her employer. She argued that she
acted in good faith when she signed the exclusivity contract with Pepsi such that there is no reason
pg. 1471
to hold that she committed any dishonest conduct that would warrant her employer’s loss of trust
in her.
Issue
Whether respondent was validly dismissed on the ground of loss of trust and confidence.
Our Ruling
The Court denies the Petition.
_______________
31 Id., at p. 22.
32 Id.
609
VOL. 806, OCTOBER 19, 2016 609

As a rule, the findings of fact of the CA when fully supported by evidence are conclusive and
binding on the parties and are not reviewable by the Court. However, this rule admits of exceptions
including such instance where the factual findings of the CA are contrary to those of the labor
tribunals.33
In this case, the LA and the NLRC are one in ruling that respondent was validly dismissed from
work. The CA ruled otherwise, Considering these divergent positions, the Court deems it necessary
to review, reevaluate, and reexamine the findings of the CA as they are contrary to those of the LA
and the NLRC.34
First, petitioners deny that Kimwa owned and operated the Restobar and the Apartelle. They claim
that Amelia owned these establishments, and Leo only managed them.
pg. 1472
The Court is unconvinced.
As will be discussed hereunder, sufficient pieces of evidence show that Kimwa, Leo, and Amelia
owned, managed, and operated the Restobar and the Apartelle. They also continuously employed
respondent, previously as liaison officer and thereafter as Administrative Officer/HR Head of the
Restobar and the Apartelle.
On July 4, 2005, while respondent was still a liaison officer of Kimwa, Leo, as “Proprietor/Chief
Executive Officer of Kimwa Construction & Development Corp./Mountain Suite Business
Apartelle” appointed her as Administrative Officer/HR Head of the Restobar and the Apartelle to
be effective as soon as the establishments were officially operational.35 On October 19, 2005, Leo,
in the same capacity as cited above, confirmed the appointment of respondent and declared its
effectivity beginning October 18, 2005.36
_______________
33 Torres v. Rural Bank of San Juan, Inc., 706 Phil. 355, 368; 693 SCRA 357, 373-374 (2013).
34 Id.
35 CA Rollo, p. 55.
36 Id., at p. 56.
610

Moreover, in his January 2, 2006 Memorandum,37 while respondent was acting as Administrative
Officer/HR Head of the Restobar and the Apartelle, Leo required her to temporarily report at
Kimwa’s Main Office. Apart from this, all Memoranda38 to Explain issued by Leo to respondent
as well as the Notice39 of her Termination were written under the heading “Kimwa Construction
& Dev. Corp.” It is also worth noting that the Restobar is a namesake of Leo as the same is named
“Leo’s Restaurant and Bar Café.” As regards Amelia, petitioners repeatedly alleged that she is the
owner of the Restobar and the Apartelle and she never disputed this matter.
At the same time, it is settled that where it shows that business entities are owned, controlled, and
conducted by tfce same parties, Jaw and equity will disregard the legal fiction that they are distinct
and shall treat them as one entity in order to protect the rights of third persons. Here, it is appearing
that Kimwa, Leo, and Amelia owned, controlled and managed the Restobar and the Apartelle, they
are treated as a single entity accountable for the dismissal of respondent.40
pg. 1473
Based on the foregoing, petitioners continually employed respondent from the time she was
assigned in Kimwa until she was appointed Administrative Officer/HR Head of the Restobar and
the Apartelle.
Second, petitioners argue that respondent was validly terminated for loss of trust and confidence.
Such argument is without merit.
An employer has the right to dismiss an employee for just causes, which include willful breach of
trust and confidence reposed on him or her by the employer. To temper such right to dismiss, and
to reconcile it with the employee’s security of
_______________
37 Id., at p. 57.
38 Id. at pp. 57-58, 61, 63, 65.
39 Id., at p. 66.
40 See Vicmar Development Corporation v. Elarcosa, G.R. No. 202215, December 9, 2015, 777
SCRA 238.
611
VOL. 806, OCTOBER 19, 2016 611

tenure, it is the employer who has the burden to show that the dismissal of the employee is for a
just cause.41 Such determination of just cause must also be made with fairness, in good faith, and
only after observance of due process of law.42
Moreover, to dismiss an employee on the ground of loss of trust and confidence, two requisites
must concur: (a) the concerned employee must be holding a position of trust; and (b) the loss of
trust must be based on willful breach of trust based on clearly established facts.43
Loss of trust and confidence as a ground for dismissal is never intended for abuse by reason of its
subjective nature. It must be pursuant to a breach done willfully, knowingly and purposely without
any valid excuse. It must rest on substantial grounds and not on mere suspicion, whims, or caprices
of the employer.44
pg. 1474
In fine, “loss of confidence should not be simulated. It should not be used as a subterfuge for causes
which are improper, illegal, or unjustified. Loss of confidence may not be arbitrarily asserted in
the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to
justify earlier action taken in bad faith.”45
Here, respondent, as Administrative Officer/HR Head of the Restobar and the Apartelle, had the
following duties and functions:
1. Has the authority/information in all operation, administrative and functional matters.
2. Reports directly to the owner.
_______________
41 Supra note 33 at p. 369; p. 374.
42 Lima Land, Inc. v. Cuevas, 635 Phil. 36, 48; 621 SCRA 37, 45 (2010).
43 Supra note 33 at pp. 369-370; p. 374.
44 Lima Land, Inc. v. Cuevas, supra at pp. 49-50; pp. 47-48.
45 General Bank & Trust Co. v. Court of Appeals, 220 Phil. 243, 252; 135 SCRA 569, 578 (1985).
612

3. Oversees the entire operations of the business that includes overall property/furnitur[e]
maintenance & expenditures.
4. Handles all employees of the establishments.
5. Carries out HR policies & procedures[.]
6. Responsible in the recruitment, screening & selection of new employment for vacant
position.
7. Plans & conducts new employee orientation to foster positive attitude towards company
goals.
pg. 1475
8. Develops & maintains a human resourc[e] system that meets top management information
needs.
9. Wage and salary administration.
10. Labor & Employee relations, welfare & benefits.46
As far as the first requisite is concerned, respondent is shown to occupy a position of trust as her
managerial work was directly related to management policies, and generally required exercise of
discretion and independent judgment.47
Nonetheless, the second requirement is wanting since petitioners failed to prove that their loss of
trust on respondent was founded on clearly established facts.
Records show that on December 30, 2005, Leo required respondent to explain her supposed
infractions when she signed, without the approval of the owner, the contract between the Restobar
and Pepsi; and her failure to account the items Pepsi donated to the Restobar.
Respondent aptly explained these matters to Leo. According to her, Leo verbally authorized her to
sign the agreement with Pepsi. This verbal instruction was given in the presence of Ablanque,
Sales Manager of Pepsi.
_______________
46 CA Rollo, p. 74.
47 M+W Zander Philippines, Inc. v. Enriquez, 606 Phil. 591, 607; 588 SCRA 590, 603 (2009).
613
VOL. 806, OCTOBER 19, 2016 613

In his Affidavit48 dated February 9, 2006, Ablanque corroborated respondent’s assertion. He

certified that during his visits in the Restobar, he discussed with Leo his proposal of an exclusivity
contract between Pepsi and the Restobar. In the course of their negotiation in September 2005, Leo
agreed to the contract, and authorized respondent to sign the same.
Also, as declared by the CA, even granting for the sake of argument that respondent signed the
Pepsi contract without the express authority from Leo, her act was well within her functions. As
pg. 1476
above quoted, respondent 1) had the authority in all operational, administrative and functional
matters of the Restobar and the Apartelle; and 2) had the duty to oversee the entire operations of
the business, including the over-all property/furniture, maintenance and expenditures.49
Therefore, having entered the Pepsi contract is not sufficient basis for petitioners to lose their trust
in respondent. Leo authorized her to enter said agreement. Even assuming that there was no explicit
order for her to do so, respondent still acted within her authority as in charge of all operation,
administrative and functional matters of the establishments.
Notably, although the LA ruled that respondent was validly dismissed, the LA (in granting
separation pay), recognized that respondent acted in good faith when she entered into the Pepsi
contract, viz.:
[Respondent] x x x nonetheless entered into said agreement in good faith. [Respondent] presumed
that she was authorized to enter into said Exclusivity Agreement. In this regard, the undersigned
is inclined to grant [respondent’s] claim for separation pay considering that her dismissal is
premised on a vague authority. x x x50
_______________
48 CA Rollo, p. 75.
49 Id., at p. 74.
50 Id., at p. 179.
614

Indeed, there was no malice or any fraudulent intent on the part of respondent when she signed the
Pepsi contract. There is likewise no evidence that she personally benefited therefrom. In fact, the
Restobar itself received the items donated by Pepsi, and the Restobar did not suffer any damage
arising from the Pepsi contract.
Loss of trust and confidence must stem from dishonest, deceitful or fraudulent acts. In the absence
of such malicious intent or fraud on the part of respondent, she committed no willful breach of
trust against her employer.51
In addition, the Court finds that the charge that respondent failed to account for a certain number
of products Pepsi donated to the Restobar is without basis.
pg. 1477
On January 4, 2006, Pepsi clarified that it donated only 10 cases of its products on the opening
night of the Restobar, and an additional 20 cases of Pepsi 12 oz. on December 7, 2005. It added
that Pepsi gave no other donation to the Restobar or its staff. Pepsi admitted its lapses, and
apologized to Leo; it also requested him to disregard the inadvertent entries in the documents it
gave him.
Since Pepsi clarified the matter and as established, there is no unaccounted donation made by Pepsi
to the Restobar, then the allegation — that respondent committed loss of trust because of
unaccounted donation from Pepsi — is untenable. Indeed, petitioners’ loss of trust and confidence
was merely simulated. It was arbitrarily asserted despite sufficient evidence to the contrary.52
Moreover, the charge of dishonesty against respondent for purportedly charging 50% of the food
she personally ordered to the account of the Restobar is unsubstantiated. This accusation was cited
in Leo’s January 3, 2006 Memorandum but was not at all specified in the Notice of Termination
against
_______________
51 Supra note 42 at pp. 51-52; pp. 49-50.
52 Supra note 45.
615
VOL. 806, OCTOBER 19, 2016 615

respondent as said notice centered on respondent’s act of having entered the contract with Pepsi.
In any case, as correctly observed in the November 28, 2008 Resolution of the NLRC, Restobar
“was not really saddled by those entertainment expenses because the foods and meals were
eventually deducted against [respondent’s] salary, which for one reason or another [respondent]
offered no objection.”53
Finally, the Court sustains the grant of moral and exemplary damages, and attorney’s fees in favor
of respondent.
Moral damages is awarded to an illegally dismissed or suspended employee when the employer
acted in bad faith or fraud, or in such manner oppressive to labor or contrary to morals, good
customs or public policy,54 as in this case.
As discussed, petitioners primarily charged respondent of having entered the contract with Pepsi
without authority from the Owner or the Manager of the Restobar. Nevertheless, as also
pg. 1478
established, Leo was well aware of this contract, as Pepsi itself attested. The Restobar also directly
received the Pepsi products. Moreover, despite respondent having explained herself, and Pepsi
having fully and timely clarified the matters surrounding the contract, petitioners still dismissed
respondent. It thus appears that such dismissal was predetermined by petitioners even before
respondent explained herself regarding the charges against her.
For having shown bad faith or such “conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity,”55 petitioners are liable to pay respondent moral damages
amounting to P50,000.00. They are likewise liable to pay respondent exemplary damages
amounting to P50,000.00 as it is also shown that her dismissal was carried out in such a malicious
and oppressive manner. Such grant of
_______________
54 Montinola v. Philippine Airlines, G.R. No. 198656, September 8, 2014, 734 SCRA 439, 458.
55 Id.
616

exemplary damages is deemed necessary to deter employers from committing the same or similar
acts. The award of attorney’s fees is likewise sustained since exemplary damages is awarded here,
and considering further that respondent has been compelled to file this case and incurred expenses
to protect her interest.56
To recapitulate, in order to dismiss an employee on the ground of loss of trust and confidence, the
employee must be guilty of an actual and willful breach of duty duly supported by substantial
evidence.57 Since petitioners failed to show that respondent actually and willfully breached their
trust, then the CA properly ruled that petitioners dismissed her without any valid cause.
Henceforth, the CA properly set aside the NLRC Resolutions dated June 4, 2009 and July 31,
2009, and reinstated the NLRC Resolution dated November 28, 2008.
WHEREFORE, the Petition is DENIED. The Decision dated November 27, 2012 and Resolution
dated July 12, 2013 of the Court of Appeals in C.A.-G.R. S.P. No. 03222-MIN are AFFIRMED.
SO ORDERED.
pg. 1479
Carpio (Chairperson), Brion and Mendoza, JJ., concur.
Leonen, J., On Official Leave.
Notes.—The mere existence of a basis for the loss of trust and confidence justifies the dismissal
of the managerial employee because when an employee accepts a promotion to a managerial
position or to an office requiring full trust and confidence, such employee gives up some of the
rigid guaranties available to ordinary workers. (Manese vs. Jollibee Foods Corporation, 684
SCRA 34 [2012])
_______________
56 Id., at pp. 464-466.
57 Supra note 42 at p. 50; p. 48.
617
VOL. 806, OCTOBER 19, 2016 617

Under a variation of the doctrine of piercing the veil of corporate fiction, when two business
enterprises are owned, conducted and controlled by the same parties, both law and equity will,
when necessary to protect the rights of third parties, disregard the legal fiction that two
corporations are distinct entities and treat them as identical or one and the same. (Heirs of Fe Tan
Uy vs. International Exchange Bank, 690 SCRA 519 [2013])
——o0o——
pg. 1480
G.R. No. 221897. November 7, 2016.*
ISIDRO QUEBRAL, ALBERTO ESQUILLO, RENANTE SALINSAN, JEROME

MACANDOG, EDGARDO GAYORGOR, JIM ROBERT PERFECTO, NOEL PERFECTO,
DENNIS PAGAYON, and HERCULANO MACANDOG, petitioners, vs. ANGBUS
CONSTRUCTION, INC. and ANGELO BUSTAMANTE, respondents.
Remedial Law; Petition for Review on Certiorari; In a Rule 45 review, the Supreme Court (SC)
examines the correctness of the Court of Appeal’s (CA’s) Decision in contrast with the review of
jurisdictional errors under Rule 65.—In a Rule 45 review, the Court examines the correctness of
the CA’s Decision in contrast with the review of jurisdictional errors under Rule 65. Furthermore,
Rule 45 limits the review to questions of law.
Labor Law; Appeals; Grave Abuse of Discretion; In labor cases, grave abuse of discretion may
be ascribed to the National Labor Relations Commission (NLRC) when its findings and
conclusions are not supported by substantial evidence.—In labor cases, grave abuse of discretion
may be ascribed to the NLRC when its findings and conclusions are not supported by substantial
evidence, which refers to that amount of relevant evidence that a reasonable mind might accept as
adequate to justify a conclusion.
Remedial Law; Petition for Review on Certiorari; The issue of the timeliness of the filing of the
appeal is a factual issue that requires a review of the evidence presented on when the appeal was
actually filed, thus, generally not covered by a Rule 45 review.—On the procedural aspect, the
Court notes that the issue of the timeliness of the filing of the appeal is a factual issue that requires
a review of the evidence presented on when the appeal was actually filed. Thus, it is generally not
covered by a Rule 45 review.
Same; Civil Procedure; Section 3, Rule 13 of the Rules of Court provides that where pleadings are
filed by registered mail, the date of mailing as shown by the post office stamp on the envelope or
the registry receipt shall be considered as the date of filing.—Section 3, Rule 13 of the Rules of
Court provides that where pleadings are filed by registered mail, the date of mailing as shown by
the post office stamp on the envelope or the registry receipt shall be considered as the
_______________
* FIRST DIVISION.
177
VOL. 807, NOVEMBER 7, 2016 177
pg. 1481
Quebral vs. Angbus Construction, Inc.
date of filing. Based on this provision, the date of filing is determinable from two sources: (1) from
the post office stamp on the envelope or (2) from the registry receipt, either of which may suffice
to prove the timeliness of the filing of the pleadings.
Same; Same; When the photocopy of a registry receipt bears an earlier date but is not
authenticated, the later date stamped on the envelope shall be considered as the date of filing.—
The Court previously ruled that if the date stamped on one is earlier than the other, the former may
be accepted as the date of filing. This presupposes, however, that the envelope or registry receipt
and the dates appearing thereon are duly authenticated before the tribunal where they are presented.
When the photocopy of a registry receipt bears an earlier date but is not authenticated, the Court
held that the later date stamped on the envelope shall be considered as the date of filing.
Labor Law; Project Employees; Unlike regular employees who may only be dismissed for just
and/or authorized causes under the Labor Code, the services of employees who are hired as
project-based employees may be lawfully terminated at the completion of the project.—A project-
based employee is assigned to a project which begins and ends at determined or determinable
times. Unlike regular employees who may only be dismissed for just and/or authorized causes
under the Labor Code, the services of employees who are hired as project-based employees may
be lawfully terminated at the completion of the project.
Same; Same; Employers claiming that their workers are project-based employees have the burden
to prove that these two (2) requisites concur: (a) the employees were assigned to carry out a
specific project or undertaking; and (b) the duration and scope of which were specified at the time
they were engaged for such project.—To safeguard the rights of workers against the arbitrary use
of the word “project” to preclude them from attaining regular status, jurisprudence provides that
employers claiming that their workers are project-based employees have the burden to prove that
these two requisites concur: (a) the employees were assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time they were engaged
for such project.
Same; Same; When no other evidence is offered, the absence of employment contracts raises a
serious question of whether the employees were sufficiently apprised at the start of their
employment of their status as project employees.—The Court previously ruled that although the
absence of a written contract does not by itself grant regular status to the employees, it is evidence
that they were
178

pg. 1482
informed of the duration and scope of their work and their status as project employees at the start
of their engagement. When no other evidence is offered, the absence of employment contracts
raises a serious question of whether the employees were sufficiently apprised at the start of their
employment of their status as project employees.
Same; Section 11, Rule X, Book III of the Omnibus Rules Implementing the Labor Code requires
the employer to keep all employment records in the main or branch office where the employees
are assigned.—Section 11, Rule X, Book III of the Omnibus Rules Implementing the Labor Code
(Rules) requires the employer to keep all employment records in the main or branch office where
the employees are assigned. It also prohibits the keeping of employees’ records elsewhere.
Same; Project Employees; The submission of the termination report to the Department of Labor
and Employment (DOLE) “may be considered” only as an indicator of project employment.—It
is clear that the submission of the termination report to the DOLE “may be considered” only as an
indicator of project employment. By the provision’s tenor, the submission of this report, by and of
itself, is therefore not conclusive to confirm the status of the terminated employees as project
employees, especially in this case where there is a glaring absence of evidence to prove that
petitioners were assigned to carry out a specific project or undertaking, and that they were informed
of the duration and scope of their supposed project engagement, which are, in fact, attendant to the
first two (2) indicators of project employment in the same DOLE issuance above cited.
A.A. Marqueda Law Offices for petitioners.
Domingo, Visconde & Associates for respondents.
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated July 27, 2015 and the
Resolution3 dated November 2, 2015 of the
_______________
1 Rollo, pp. 3-21.
2 Id., at pp. 63-76. Penned by Associate Justice Franchito N. Diamante, with Associate Justices
Japar B. Dimaampao and Socorro B. Inting, concurring.
pg. 1483
179
VOL. 807, NOVEMBER 7, 2016 179

Court of Appeals (CA) in C.A.-G.R. S.P. No. 138885, which annulled and set aside the Decision4
dated December 26, 2013 of the National Labor Relations Commission (NLRC) in NLRC NCR
Case Nos. 07-10288-12, 07-10636-12, 07-10708-12, and 07-10992-12, declaring that petitioners
Isidro Quebral, Alberto Esquillo, Renante Salinsan, Jerome Macandog, Edgardo Gayorgor, Jim
Robert Perfecto, Noel Perfecto, Dennis Pagayon, and Herculano Macandog (petitioners) are
regular employees of respondent Angbus Construction, Inc. (Angbus) and were illegally dismissed
from employment.
The Facts
Petitioners alleged that Angbus employed them as construction workers on various dates from
2008 to 2011. They claimed to be regular employees since they were engaged to perform tasks
which are necessary and desirable to the usual business of Angbus, and that they have rendered
services to the latter’s construction business for several years already.5 They were, however,
summarily dismissed from work on June 28, 2012 and July 14, 2012 without any just or authorized
cause and due process. Thus, they filed consolidated cases for illegal dismissal with prayer for
reinstatement and payment of full backwages, salary differential, ECOLA, 13th month pay, service
incentive leave pay, overtime and holiday pay, including moral and exemplary damages as well as
attorney’s fees.6
For their part, respondents maintained that petitioners were first employed by Angelfe
Management and Consultancy (Angelfe) for a one time project only. Two or three years after the
completion of the Angelfe project, they were then hired by Angbus, which is a separate and distinct
business entity from the former. Thus, petitioners were hired only for two project employment
contracts — one each with Angelfe and Ang-
_______________
3 Id., at pp. 77-79.
4 Id., at pp. 32-42. Penned by Commissioner Isabel G. Panganiban-Ortiguerra, with Presiding

Commissioner Joseph Gerard E. Mabilog and Commissioner Nieves E. Vivar-De Castro,
concurring.
5 Id., at p. 34.
pg. 1484
6 Id.
180

bus. Respondents further stated that a long period of time between the first project employment
and the other intervened, which meant that petitioners were not rehired repeatedly and
continuously.7
However, respondents failed to present petitioners’ employment contracts, payrolls, and job
application documents either at Angelfe or Angbus. They averred that these documents were
completely damaged by the flood caused by the “habagat” on August 6 to 12, 2012, as evinced by
a Certification issued by the Chairman of Barangay Rosario, Pasig City, (Brgy. Rosario
Certification) where Angelfe and later, Angbus purportedly held offices.8
The LA’s Ruling
In a Decision9 dated March 27, 2013, the Labor Arbiter (LA) found that petitioners were not
illegally dismissed. The LA observed that despite the non-submission of the project employment
contracts between the parties (which were completely damaged by flood as stated in the Brgy.
Rosario Certification), there was still sufficient basis to support respondents’ claim that petitioners
were hired for specific projects with specific durations by two different companies, i.e., Angbus
and Angelfe. In this relation, the LA gave credence to the Establishment Employment Reports
submitted to the Department of Labor and Employment (DOLE Reports) which showed that the
cause for petitioners’ termination was project completion. Finally, the LA pointed out that the
hiring of petitioners for a definite period for a certain phase of a project was an industry practice
in the construction business.10
Separately, however, the LA ordered Angbus and Angelfe to pay petitioners their salary
differentials and claims for 13th month pay and holiday pay as these liabilities were admitted by
them. Meanwhile, individual respondent Angelo Bustamante, Jr. (Bustamante) was relieved of any
liability for want of basis.11
_______________
7 Id., at p. 35.
pg. 1485
8 Id.
9 Id., at pp. 25-30. Penned by LA Romelita N. Rioflorido.
10 Id., at pp. 28-29.
11 Id., at pp. 29-30.
181
VOL. 807, NOVEMBER 7, 2016 181

Aggrieved, petitioners filed an appeal to the NLRC.
The NLRC’s Ruling
In a Decision12 dated December 26, 2013, the NLRC reversed the LA’s ruling and declared that
petitioners were regular employees who were illegally dismissed on June 14, 2012; hence, they
are entitled to reinstatement and full backwages, including their other monetary claims.
The NLRC stressed that respondents had control over the company records but failed to present
the project employment contracts signed by the workers to rebut petitioners’ claim that they were
regular employees. The Brgy. Rosario Certification attempting to justify the contracts’ non-
submission was not given credence as respondents’ business address was in Quezon City and not
in Rosario, Pasig. Instead, the NLRC observed that a certification from the barangay captain of
the place where their business address is located should have been presented.13
Moreover, the NLRC noted that Angbus hired all the petitioners almost at the same time in 2012,
giving the impression that these workers were continuously hired in one project after another and
that their employment, first with Angelfe and then with Angbus, was uninterrupted. The NLRC
did not give any credence to the allegation that Angbus and Angelfe were separate and distinct
companies considering that they maintained the same business address, are owned by the same
owner, and are engaged in the same construction business, where petitioners were continuously
employed. Neither did the NLRC give merit to the DOLE Reports as these were not submitted
within 30 days prior to the displacement of the workers.14
pg. 1486
In a Resolution15 dated December 29, 2014, the NLRC denied the motion for reconsideration filed
by Angbus and Bustamante. On the allegation that petitioners’ appeal was filed out of time, the
NLRC pointed out that the dates appearing on the mailing envelope on record and on the
_______________
12 Id., at pp. 32-42.
13 Id., at pp. 38-39.
14 Id., at pp. 39-40.
15 Id., at pp. 53-62. Last page of the Resolution missing.
182

registry receipt show that the appeal memorandum was mailed on May 20, 2013, which was the
last day of the reglementary period. It gave credence to the certification of Postmaster Larry S.
Laureta (Laureta’s certification), the custodian of records at the Philippine Overseas Employment
Administration (POEA) Post Office at the time the mail matter was posted, that confirmed the said
mailing date.16
On the merits, the NLRC still refused to give weight to the Brgy. Rosario Certification. It added
that although the project site is in Pasig City, the employer is required to keep employment records
in its main office, not in the temporary project site or extension office. It also upheld the finding
that petitioners were regular employees in view of Angbus’ failure to substantiate its claim that
they were project employees. In examining the entries in the DOLE Reports, the NLRC deduced
that the real reason for petitioners’ termination from work is retrenchment and not project
completion. Thus, Angbus should have filed a notice of retrenchment to the DOLE thirty (30) days
prior to the employees’ actual termination in observance of procedural due process, failing in
which amounted to illegal dismissal.17
Dissatisfied, respondents elevated their case to the CA on certiorari.
The CA’s Ruling
pg. 1487
In a Decision18 dated July 27, 2015, the CA held that the NLRC gravely abused its discretion
when it: (a) gave due course to petitioners’ appeal even though it was filed out of time; and (b)
ruled that petitioners were regular employees of Angbus.
On the timeliness of the appeal’s filing, the CA ascribed no evidentiary value to Registry Receipt
No. 2468 (registry receipt) due to the lack of an authenticating affidavit by the person who mailed
it. Petitioners presented the registry receipt to prove that they filed their memorandum of appeal
together with the appeal fee on the last day of the regle-
_______________
16 Id., at pp. 55-59.
17 Id., at pp. 59-62.
18 Id., at pp. 63-76. Penned by Associate Justice Franchito N. Diamante, with Associate Justices
Japar B. Dimaampao and Socorro B. Inting, concurring.
183
VOL. 807, NOVEMBER 7, 2016 183

mentary period on May 20, 2013. The CA refused to give weight to Laureta’s certification that the
document covered by the registry return was indeed mailed at the POEA Post Office on the said
date. In so ruling, the CA explained that Laureta’s certification was issued without authority
because it was issued only on February 17, 2014 when Laureta was no longer assigned at the POEA
Office. Thus, the NLRC erred in considering the registry receipt as conclusive proof of petitioners’
timely filing of their appeal.19
On the substantive aspect, the CA reinstated the LA’s finding that petitioners were project
employees, noting that the absence of a project employment contract does not automatically confer
regular status to the employees. It also observed that the Brgy. Rosario Certification adequately
explained the non-submission of the employment contracts, and that the DOLE Reports showed
petitioners’ status as project employees. Likewise, the CA pointed out that the NLRC erred in
treating Angelfe and Angbus as one and the same entity just because the two companies have the
same business address, the same owner, and were engaged in the same construction business.
Consequently, it ordered respondents to return to petitioners whatever amount the former has
received by virtue of the NLRC Decision.20
Petitioners filed a motion for reconsideration, which was, however, denied in a Resolution21 dated
November 2, 2015; hence, this petition.
pg. 1488
The core issue for the Court’s resolution is whether the CA erred in (a) holding that petitioners’
appeal before the NLRC was filed out of time and (b) declaring petitioners as project employees
of Angbus and consequently, holding their dismissal to be valid.
_______________
19 Id., at pp. 69-71.
20 Id., at pp. 71-75.
21 Id., at pp. 77-79.
184

Preliminarily, the Court stresses the distinct approach in reviewing a CA’s ruling in a labor case.
In a Rule 45 review, the Court examines the correctness of the CA’s Decision in contrast with the
review of jurisdictional errors under Rule 65. Furthermore, Rule 45 limits the review to questions
of law. In ruling for legal correctness, the Court views the CA Decision in the same context that
the petition for certiorari was presented to the CA. Hence, the Court has to examine the CA’s
Decision from the prism of whether the CA correctly determined the presence or absence of grave
abuse of discretion in the NLRC decision.22
Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that
is tantamount to lack of jurisdiction. To be considered “grave,” discretion must be exercised in a
despotic manner by reason of passion or personal hostility, and must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to
act at all in contemplation of law.23
pg. 1489
In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and
conclusions are not supported by substantial evidence,24 which refers to that amount of relevant
evidence that a reasonable mind might accept as adequate to justify a conclusion.25 Thus, if the
NLRC’s ruling has basis in the evidence and the applicable law and jurisprudence, then no grave
abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition.26
_______________
22 Montoya v. Transmed Manila Corporation, 613 Phil. 696, 707; 597 SCRA 334, 343 (2009).
23 Gadia v. Sykes Asia, Inc., G.R. No. 209499, January 28, 2015, 748 SCRA 633, 641.
24 Id.
26 Fuji Television Network, Inc. v. Espiritu, G.R. Nos. 204944-45, December 3, 2014, 744 SCRA
31, 63, citing the Dissenting Opinion of Associate Justice Arturo D. Brion in Abbott Laboratories,
Philippines v. Alcaraz, 714 Phil. 510, 549; 701 SCRA 682, 724 (2013).
185
VOL. 807, NOVEMBER 7, 2016 185

Viewed from these lenses, the Court finds that the NLRC’s Decision in this case was supported by
substantial evidence and is consistent with law and jurisprudence as to the issues raised in the
petition. Hence, the CA incorrectly held that the NLRC gravely abused its discretion in giving due
course to petitioners’ appeal filed before it and in declaring that the petitioners were regular
employees of Angbus. Accordingly, the NLRC’s ruling must be reinstated.
On the procedural aspect, the Court notes that the issue of the timeliness of the filing of the appeal
is a factual issue that requires a review of the evidence presented on when the appeal was actually
filed.27 Thus, it is generally not covered by a Rule 45 review. In this case, however, the conflicting
findings of the CA and the NLRC on this matter pave the way for the Court to review this factual
issue even in a Rule 45 review.28
In this case, the CA held that the NLRC should not have given due course to petitioners’ appeal
for being filed out of time. Although both the registry receipt and the date stamped on the envelope
showed that the date of posting was May 20, 2013 or the last day of the reglementary period, the
CA was not convinced that the appeal was actually mailed on that date at the POEA Post Office.
The CA held that petitioners should have submitted, together with the registry receipt, an
pg. 1490
authenticating affidavit of the person who mailed the memorandum of appeal. It also refused to
give credence to Laureta’s certification on the ground that it was issued without authority, having
been issued only on February 17, 2014 when Laureta was no longer assigned at the POEA Post
Office. It therefore concluded that the NLRC erred in considering the registry receipt as conclusive
proof that May 20, 2013 is the date of filing the appeal.
After reviewing the evidence on record, the Court disagrees with the CA that the appeal was not
timely filed.
Section 3, Rule 13 of the Rules of Court provides that where pleadings are filed by registered mail,
the date of mailing as shown by the post
_______________
27 Eureka Personnel & Management Services, Inc. v. Valencia, 610 Phil. 444, 452; 593 SCRA
36, 43-44 (2009).
28 Raza v. Daikoku Electronics Phils., Inc., G.R. No. 188464, July 29, 2015, 764 SCRA 132, 150.
186

office stamp on the envelope or the registry receipt shall be considered as the date of filing. Based
on this provision, the date of filing is determinable from two sources: (1) from the post office
stamp on the envelope or (2) from the registry receipt, either of which may suffice to prove the
timeliness of the filing of the pleadings.29
The Court previously ruled that if the date stamped on one is earlier than the other, the former may
be accepted as the date of filing.30 This presupposes, however, that the envelope or registry receipt
and the dates appearing thereon are duly authenticated before the tribunal where they are
presented.31 When the photocopy of a registry receipt bears an earlier date but is not authenticated,
the Court held that the later date stamped on the envelope shall be considered as the date of
filing.32
In the present case, the petitioners submitted these pieces of evidence to show the timeliness of
their appeal: (a) the registry receipt; (b) a copy of the envelope that contained the memorandum of
appeal and appeal fee; and (c) Laureta’s certification. As the CA noted, all three documents
indicate May 20, 2013 as the date of mailing at the POEA Post Office in Mandaluyong City.
Considering that there is no variance in the dates stated on these documents, there is no reason for
the Court to mark another date as the date of mailing.
pg. 1491
Laureta’s certification corroborates the date of filing specified in the registry receipt and on the
envelope. The Court recognizes that, ideally, the incumbent postmaster in the POEA Post Office
should be the one to certify the date of mailing based on the post office records, considering that
he or she is the person duly authorized to do so. Nevertheless, the Court finds that Laureta’s
certification as the postmaster at the time of mailing, together with the pieces of evidence earlier
mentioned, constitutes substantial compliance with the authentication requirement.
_______________
29 Government Service Insurance System v. National Labor Relations Commission, 649 Phil. 538,
546; 635 SCRA 251, 257 (2010), citing San Miguel Corporation v. NLRC, 259 Phil. 765, 769; 180
SCRA 281, 286 (1989).
30 Id.
31 Id.
32 Id.
187
VOL. 807, NOVEMBER 7, 2016 187

On the substantive aspect, Article 29533 of the Labor Code,34 as amended, distinguishes a project
employee from a regular employee, to wit:
Art. 295 [280]. Regular and casual employment.—The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
x x x x (Emphasis and underscoring supplied)
pg. 1492
A project-based employee is assigned to a project which begins and ends at determined or
determinable times.35 Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as project-based
employees may be lawfully terminated at the completion of the project.36
To safeguard the rights of workers against the arbitrary use of the word “project” to preclude them
from attaining regular status, jurisprudence provides that employers claiming that their workers
are project-
_______________
33 Formerly Article 280. As renumbered pursuant to Section 5 of Republic Act No. 10151,
entitled “An Act Allowing the Employment of Night Workers, Thereby Repealing Articles 130
and 131 of Presidential Decree Number Four Hundred Forty-Two, as amended, Otherwise Known
as the Labor Code of the Philippines,” approved on June 21, 2011.
34 Presidential Decree No. 442 entitled “A Decree Instituting a Labor Code, Thereby Revising
and Consolidating Labor and Social Laws to Afford Protection to Labor, Promote Employment
and Human Resources Development and Insure Industrial Peace Based on Social Justice” (May 1,
1974).
35 Supra note 23, citing Omni Hauling Services, Inc. v. Bon, G.R. No. 199388, September 3,
2014, 734 SCRA 270, 278.
36 Id., at pp. 278-279.
188

based employees have the burden to prove that these two requisites concur: (a) the employees were
assigned to carry out a specific project or undertaking; and (b) the duration and scope of which
were specified at the time they were engaged for such project.37
In this case, Angbus failed to discharge this burden. Notably, Angbus did not state the specific
project or undertaking assigned to petitioners. As to the second requisite, not only was Angbus
unable to produce petitioners’ employment contracts, it also failed to present other evidence to
show that it informed petitioners of the duration and scope of their work.
The Court previously ruled that although the absence of a written contract does not by itself grant
regular status to the employees, it is evidence that they were informed of the duration and scope
pg. 1493
of their work and their status as project employees at the start of their engagement.38 When no
other evidence is offered, the absence of employment contracts raises a serious question of whether
the employees were sufficiently apprised at the start of their employment of their status as project
employees.39 Absent such proof, it is presumed that they are regular employees, thus, can only be
dismissed for just or authorized causes upon compliance with procedural due process.40
The Court agrees with the NLRC that the Brgy. Rosario Certification cannot be given credence as
it was issued by the barangay captain in Rosario, Pasig City rather than in Quezon City.
Section 11, Rule X, Book III of the Omnibus Rules Implementing the Labor Code41 (Rules)
requires the employer to keep all employment re-
_______________
37 Id., at p. 279.
38 Dacuital v. L.M. Camus Engineering Corporation, 644 Phil. 158, 171; 629 SCRA 702, 714
(2010).
39 Id.
40 Id., at pp. 171-172; p. 715.
41 SECTION 11. Place of records.—All employment records of the employees shall be kept
and maintained by the employer in or about the premises of the work place. The premises of a
workplace shall be understood to mean the main or branch office of the establishment, if any,
depending upon where the
189
VOL. 807, NOVEMBER 7, 2016 189

cords in the main or branch office where the employees are assigned. It also prohibits the keeping
of employees’ records elsewhere. In the present case, Angbus has consistently declared in its
pleadings, in its General Information Sheet, and the DOLE Reports that its main office is located
at 16 Pratt Street, Filinvest 2, Batasan Hills, Quezon City. As aptly ruled by the NLRC, the
extension office in the project site in Brgy. Rosario, Pasig City is not a branch office contemplated
by the Rules where employees’ records may be kept but merely a temporary office. Hence, the
Brgy. Rosario Certification, stating that petitioners’ employment records were destroyed by flood,
does not justify the non-presentation of the employment contracts. Besides, Angbus could still
pg. 1494
have presented other evidence to prove project employment but it did not do so, relying on the
convenient excuse that the documents were destroyed by flood.42
The Court further observes that the CA placed unwarranted emphasis on the DOLE Reports or
termination reports submitted by Angbus as basis to rule that petitioners were project employees.
Section 2.2 of Department Order No. 19, Series of 1993, entitled “Guidelines Governing the
Employment of Workers in the Construction Industry,” issued by the DOLE, provides that:
2.2 Indicators of project employment.—Either one or more of the following circumstances,

among others, may be considered as indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for which the worker is engaged is
reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in an

employment agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular
project/undertaking for which he is engaged.
_______________
employees are regularly assigned. The keeping of the employee’s records in another place is
prohibited. (Emphases supplied)
42 See Liganza v. RBL Shipyard Corporation, 535 Phil. 662, 670; 504 SCRA 678, 686 (2006).
190

(d) The employee, while not employed and awaiting engagement, is free to offer his services
to any other employer.
(e) The termination of his employment in the particular project/undertaking is reported to the
Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the
workplace within 30 days following the date of his separation from work, using the prescribed
form on employees’ terminations/dismissals/suspensions.
pg. 1495
(f) An undertaking in the employment contract by the employer to pay completion bonus to
the project employee as practiced by most construction companies. (Emphases supplied)
Based on the foregoing, it is clear that the submission of the termination report to the DOLE “may
be considered” only as an indicator of project employment. By the provision’s tenor, the
submission of this report, by and of itself, is therefore not conclusive to confirm the status of the
terminated employees as project employees, especially in this case where there is a glaring absence
of evidence to prove that petitioners were assigned to carry out a specific project or undertaking,
and that they were informed of the duration and scope of their supposed project engagement, which
are, in fact, attendant to the first two (2) indicators of project employment in the same DOLE
issuance above cited.
All told, since Angbus failed to discharge its burden to prove that petitioners were project
employees, the NLRC correctly ruled that they should be considered as regular employees. Thus,
the termination of petitioners’ employment should have been for a just or authorized cause, the
lack of which, as in this case, amounts to illegal dismissal.
As a final point, it may not be amiss to state that petitioners’ entitlement to their monetary claims,
such as salary differentials, thirteenth month pay, and holiday pay,43 was not contested further by
the parties. Neither did they question the NLRC’s computation of the monetary awards due to
petitioners. Hence, the Court finds no reason to disturb it.
WHEREFORE, the petition is GRANTED. The Decision dated July 27, 2015 and the Resolution
dated November 2, 2015 of the Court of
_______________
43 Rollo, pp. 35-36.
191
VOL. 807, NOVEMBER 7, 2016 191

Appeals in C.A.-G.R. S.P. No. 138885 are hereby REVERSED and SET ASIDE. The Decision
dated December 26, 2013 and the Resolution dated December 29, 2014 of the National Labor
Relations Commission in NLRC Case Nos. 07-10288-12, 07-10636-12, 07-10708-12 and 07-
10992-12 are REINSTATED.
SO ORDERED.
pg. 1496
Note.—It is widely known that in the construction industry, a project employee’s work depends
on the availability of projects, necessarily the duration of his employment. It is not permanent but
coterminous with the work to which he is assigned. (Malicdem vs. Marulas Industrial Corporation,
717 SCRA 563 [2014])
——o0o——
pg. 1497
G.R. No. 209303. November 14, 2016.*
NATIONAL POWER CORPORATION, petitioner, vs. THE PROVINCIAL TREASURER OF

BENGUET, THE PROVINCIAL ASSESSOR OF BENGUET, THE MUNICIPAL TREASURER
OF ITOGON, BENGUET and THE MUNICIPAL ASSESSOR OF ITOGON, BENGUET,
respondents.
Taxation; Local Taxation; Settled is the rule that should the taxpayer/real property owner question
the excessiveness or reasonableness of the assessment, Section 252 of the Local Government Code
(LGC) of 1991 directs that the taxpayer should first pay the tax due before his protest can be
entertained.—At the outset, settled is the rule that should the taxpayer/real property owner
question the excessiveness or reasonableness of the assessment, Section 252 of the LGC of 1991
directs that the taxpayer should first pay the tax due before his protest can be entertained.
Same; Same; It is only after the taxpayer has paid the tax due that he may file a protest in writing
within thirty (30) days from payment of the tax to the Provincial, City or Municipal Treasurer,
who shall decide the protest within sixty (60) days from receipt.—It is only after the taxpayer has
paid the tax due that he may file a protest in writing within 30 days from payment of the tax to the
Provincial, City or Municipal Treasurer, who shall decide the protest within sixty days from
receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been
paid.
_______________
* THIRD DIVISION.
596

National Power Corporation vs. Provincial Treasurer of Benguet
Same; Same; Chapter 3, Title Two, Book II of the Local Government Code (LGC) of 1991, Sections
226 to 231, provides for the administrative remedies available to a taxpayer or real property
owner who does not agree with the assessment of the real property tax sought to be collected.—
Chapter 3, Title Two, Book II of the LGC of 1991, Sections 226 to 231, provides for the
administrative remedies available to a taxpayer or real property owner who does not agree with
the assessment of the real property tax sought to be collected, particularly, the procedural and
substantive aspects of appeal before the LBAA and CBAA, including its effect on the payment of
real property taxes.
pg. 1498
Same; Same; Tax Exemptions; A claim for exemption from the payment of real property taxes does
not actually question the assessor’s authority to assess and collect such taxes, but pertains to the
reasonableness or correctness of the assessment by the local assessor, a question of fact which
should be resolved, at the very first instance, by the Local Board of Assessment Appeals (LBAA).—
As settled in jurisprudence, a claim for exemption from the payment of real property taxes does
not actually question the assessor’s authority to assess and collect such taxes, but pertains to the
reasonableness or correctness of the assessment by the local assessor, a question of fact which
should be resolved, at the very first instance, by the LBAA. The same may be inferred in Section
206 of the LGC of 1991.
Same; Same; Same; Section 206 of the Local Government Code (LGC) categorically provides that
every person by or for whom real property is declared, who shall claim exemption from payment
of real property taxes imposed against said property, shall file with the provincial, city or
municipal assessor sufficient documentary evidence in support of such claim.—Section 206 of the
LGC categorically provides that every person by or for whom real property is declared, who shall
claim exemption from payment of real property taxes imposed against said property, shall file with
the provincial, city or municipal assessor sufficient documentary evidence in support of such
claim. The burden of proving exemption from local taxation is upon whom the subject real property
is declared.
Fresh Period Rule; It is settled that the “fresh period rule” applies only to judicial appeals and
not to administrative appeals.—While it is evident in jurisprudence that the filing of motion for
597
VOL. 808, NOVEMBER 14, 2016 597

reconsideration before the LBAA is allowed, this Court finds that, inevitably, the filing of the
appeal before the CBAA through registered mail on November 16, 2006 was already late. It is
settled that the “fresh period rule” in the case of Domingo Neypes, et al. v. Court of Appeals, et al.,
469 SCRA 633 (2005), applies only to judicial appeals and not to administrative appeals.
PETITION for review on certiorari of a decision of the Court of Tax Appeals En Banc.
PERALTA,** J.:
pg. 1499
For this Court’s resolution is a petition for review on certiorari filed by petitioner National Power
Corporation (NPC) seeking to reverse and set aside the Decision1 dated September 12, 2013 of
the Court of Tax Appeals (CTA) En Banc in E.B. No. 891.
Below are the facts of the case.
NPC is a government-owned and -controlled corporation created and existing under and by virtue
of Republic Act (R.A.) No. 6395 with principal office address at NPC Office Building Complex,
corner Quezon Avenue and BIR Road, East Triangle, Diliman, Quezon City. NPC was created to
undertake the development of power generation and production from hydroelectric or other
sources, and may undertake the
_______________
** Designated Acting Chairperson per Special Order No. 2395 dated October 19, 2016.
1 Penned by Associate Justice Esperanza R. Fabon-Victorino, with Associate Justices Juanito C.

Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, and Cielito N. Mindaro-
Grulla, concurring; Roman G. Del Rosario, dissenting; Ma. Belen M. Ringpis-Liban, concurring
and dissenting; and Amelia R. Gotangco-Manalastas, on leave; Rollo pp. 32-45.
598

construction, operation and maintenance of power plants, dams, reservoirs, and other works. It
operates and maintains the Binga Hydro-Electric Power Plant.2
Respondents Provincial Treasurer, Provincial Assessor, Municipal Treasurer and Municipal

Assessor of Itogon are representatives of the province of Benguet, a local government unit.
Respondents issued the subject assessment in their official capacities.3
Sometime in May 2000, the Municipal Assessor of Itogon, Benguet assessed NPC the amount of
P62,645,668.80 real property tax for the following properties located within the Binga Hydro-
Electric Power Plant:
On March 17, 2006, NPC received a letter dated February 16, 2006 from OIC-Provincial Treasurer
of Benguet demanding the payment of real property tax delinquency in the amount of
P62,645,668.80.4
pg. 1500
On April 20, 2006, NPC challenged before the Local Board of Assessment Appeals (LBAA) the
legality of the assessment and the authority of the respondents to assess and collect real property
taxes from it when its properties are exempt pursuant to Section 234(b) and (c) of Republic Act
(R.A.) No. 7160, otherwise known as the Local Government Code (LGC) of
_______________
2 Id., at pp. 32-33.
3 Id., at p. 33.
4 Id.
599
VOL. 808, NOVEMBER 14, 2016 599

1991. In the letters dated September 3, 2000 and April 19, 2001, NPC filed its requests for
exemption, which the respondent Municipal Treasurer of Itogon, Benguet has not acted upon.5
In their Answer dated June 30, 2006, respondents alleged that NPC’s properties were not exempt
from tax since the properties were classified in their tax declarations as “industrial,” “for industrial
use,” or “machineries” and “equipment.” There was no evidence that the properties were being
used for generation and transmission of electric power. Respondents alleged that the period to
assess had not prescribed as the demand letter in 2006 was for collection of delinquency taxes, and
not an initial assessment which was issued in 2003 but was not settled by NPC. Respondents also
alleged that the appeal to the LBAA was filed out of time.6
In an Order dated July 28, 2006, the LBAA deferred the proceedings upon NPC’s payment under
protest of the assessed amount, or upon filing of a surety bond to cover the disputed amount of tax.
NPC moved to reconsider the Order on the ground of lack of legal basis, but the same was denied
in a Resolution dated October 3, 2006.7
NPC filed a petition for review before the Central Board of Assessment Appeals (CBAA) claiming
that payment under protest was not required before it could challenge the authority of respondents
to assess tax on tax exempt properties before the LBAA.8
In their Answer, respondents reiterated their contentions about the taxability of the subject
properties. They added that, pursuant to Section 252 of the LGC, payment under
_______________
pg. 1501
5 Id., at pp. 33-34.
6 Id., at p. 34.
7 Id.
8 Id., at p. 35.
600

protest was a necessary condition to a protest against the assessment issued by respondents.9
On July 28, 2011, the CBAA dismissed the appeal for being filed out of time, thus:
IN VIEW THEREOF, the instant appeal is hereby dismissed for having filed out of time.
(Petitioner) is advised to proceed under Section 206 of R.A. No. 7160 (the Local Government
Code of 1991) and take the necessary steps in support of its claim for exemption (sic) to be dropped
from the assessment roll.
SO ORDERED.10
The CBAA, in an Order dated February 23, 2012, denied NPC’s motion for reconsideration. It
ruled that it is incumbent upon NPC to pay under protest before the LBAA could entertain its
appeal as provided under Section 252 of the LGC. It also stressed that the meetings and ocular
inspection during the pendency of the case were all pursuant to R.A. 928511 or the Alternative
Dispute Resolution Act of 2004.
Undaunted, NPC appealed to the CTA En Banc by filing a Petition for Review dated April 13,
2012. The CTA En Banc denied the same for lack of merit.12 It ruled that as expressly provided
in Section 252 of the LGC, a written protest against the assessment may be filed before the LBAA
within thirty (30) days from payment under protest. NPC failed to pay under protest the contested
assessment, a condition sine qua non for invocation of LBAA’s appellate authority.13
_______________
9 Id.
pg. 1502
10 Id.
11 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.
12 Rollo, p. 45.
13 Id., at p. 40.
601
VOL. 808, NOVEMBER 14, 2016 601

Hence, NPC filed the instant petition raising the sole issue:
THE CTA EN BANC ERRED IN DISMISSING THE PETITION BASED ON PRESCRIPTION

AS SAID ISSUE WAS NEVER RAISED IN THE LBAA. IN FACT, WHEN PETITIONER
ELEVATED THE CASE BEFORE THE CBAA, THE LATTER EVEN CONCLUDED THAT
THE ONLY ISSUE TO BE RESOLVED THEREIN WAS WHETHER THE QUESTIONED
PROPERTIES ARE MACHINERIES AND EQUIPMENT THAT ARE ACTUALLY,
DIRECTLY AND EXCLUSIVELY USED BY NPC IN THE GENERATION AND
TRANSMISSION OF ELECTRIC POWER. THUS, THE CTA EN BANC SHOULD HAVE
RESOLVED THE CASE BASED ON THE ISSUE PRESENTED AND ON THE MERITS
CONSIDERING THE FAR-REACHING IMPLICATIONS OF ITS DECISION ON THE
OTHER PROPERTIES OF NPC WHICH ARE SIMILARLY SITUATED AS THE SUBJECT
PROPERTIES HEREIN, INSTEAD OF DENYING THE PETITION BASED ON
PRESCRIPTION.14
This Court finds the instant petition without merit.
At the outset, settled is the rule that should the taxpayer/real property owner question the
excessiveness or reasonableness of the assessment, Section 252 of the LGC of 1991 directs that
the taxpayer should first pay the tax due before his protest can be entertained, thus:
SEC. 252. Payment Under Protest.—(a) No protest shall be entertained unless the taxpayer
first pays the tax. There shall be annotated on the tax receipts the words “paid under protest.”
The protest in writing must be filed within thirty (30) days from payment of the tax to the
provincial, city treasurer, or municipal treasurer, in the case of a municipality within Metropolitan
Area, who shall decide the protest within sixty (60) days from receipt.
pg. 1503
_______________
14 Id., at pp. 14-15.
602

(b) The tax or a portion thereof paid under protest shall be held in trust by the treasurer
concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion
of the tax protested shall be refunded to the protestant, or applied as tax credits against his existing
or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty-day period
prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in
Chapter 3, Title Two, Book II of this Code.15
There shall be annotated on the tax receipts the words “paid under protest.” It is only after the
taxpayer has paid the tax due that he may file a protest in writing within 30 days from payment of
the tax to the Provincial, City or Municipal Treasurer, who shall decide the protest within sixty
days from receipt. In no case is the local treasurer obliged to entertain the protest unless the tax
due has been paid.16
Relevant thereto, Chapter 3, Title Two, Book II of the LGC of 1991, Sections 226 to 231,17
provides for the administrative
_______________
15 Emphases supplied.
16 Olivares v. Marquez, G.R. No. 155591, 482 Phil. 183; 438 SCRA 679 (2004).
17 SEC. 226. Local Board of Assessment Appeals.—Any owner or person having legal
interest in the property who is not satisfied with the action of the provincial, city or municipal
assessor in the assessment of his property may, within sixty (60) days from the date of receipt
of the written notice of assessment, appeal to the Board of Assessment Appeals of the
province or city by filing a petition under oath in the form prescribed for the purpose,
pg. 1504
together with copies of the tax declarations and such affidavits or documents submitted in support
of the appeal.
SEC. 229. Action by the Local Board of Assessment Appeals.—(a) The Board shall decide the
appeal within one hundred twenty (120) days from the date of receipt of such appeal. The Board,
after hearing, shall render its decision based on substantial evidence
603
VOL. 808, NOVEMBER 14, 2016 603

remedies available to a taxpayer or real property owner who does not agree with the assessment of
the real property tax sought to be collected, particularly, the procedural and substantive aspects of
appeal before the LBAA and CBAA, including its effect on the payment of real property taxes.
NPC alleges that payment under protest under Section 252 of the LGC is required when the
reasonableness of the amount assessed is being questioned. Challenging the very authority and
power of the assessor to impose the assessment and of the treasurer to collect the tax is an attack
on the very
_______________
or such relevant evidence on record as a reasonable mind might accept as adequate to support the
conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the powers to summon
witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena and
subpoena duces tecum. The proceedings of the Board shall be conducted solely for the purpose of
ascertaining the facts without necessarily adhering to technical rules applicable in judicial
proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal
interest therein and the provincial or city assessor with a copy of the decision of the Board. In case
the provincial or city assessor concurs in the revision or the assessment, it shall be his duty to
notify the owner of the property or the person having legal interest therein of such fact using the
form prescribed for the purpose. The owner of the property or the person having legal interest
therein or the assessor who is not satisfied with the decision of the Board may, within thirty
(30) days after receipt of the decision of said Board, appeal to the Central Board of
Assessment Appeals, as herein provided. The decision of the Central Board shall be final and
executory.
pg. 1505
SEC. 231. Effect of Appeal on the Payment of Real Property Tax.—Appeal on assessments of
real property made under the provisions of this Code shall, in no case, suspend the collection
of the corresponding realty taxes on the property involved as assessed by the provincial or
city assessor, without prejudice to subsequent adjustment depending upon the final outcome
of the appeal. (Emphases supplied)
604

validity on any increase and not merely on the amounts of increase in tax. Thus, such payment is
not a condition sine qua non for the LBAA to entertain the NPC’s challenge on the validity of the
tax imposed on its tax-exempt properties.18
We are not persuaded. As settled in jurisprudence, a claim for exemption from the payment of real
property taxes does not actually question the assessor’s authority to assess and collect such taxes,
but pertains to the reasonableness or correctness of the assessment by the local assessor, a question
of fact which should be resolved, at the very first instance, by the LBAA.19 The same may be
inferred in Section 206 of the LGC of 1991, to wit:
SEC. 206. Proof of Exemption of Real Property from Taxation.—Every person by or for whom
real property is declared, who shall claim tax exemption for such property under this Title shall
file with the provincial, city or municipal assessor within thirty (30) days from the date of the
declaration of real property sufficient documentary evidence in support of such claim including
corporate charters, title of ownership, articles of incorporation, bylaws, contracts, affidavits,
certifications and mortgage deeds, and similar documents.
If the required evidence is not submitted within the period herein prescribed, the property
shall be listed as taxable in the assessment roll. However, if the property shall be proven to
be tax-exempt, the same shall be dropped from the assessment roll.20
Section 206 of the LGC categorically provides that every person by or for whom real property is
declared, who shall claim exemption from payment of real property taxes imposed
_______________
18 Rollo, pp. 17-18.
pg. 1506
19 National Power Corporation v. Province of Quezon, 624 Phil. 738; 611 SCRA 71 (2010).
(Emphases supplied)
20 Emphases supplied.
605
VOL. 808, NOVEMBER 14, 2016 605

against said property, shall file with the provincial, city or municipal assessor sufficient
documentary evidence in support of such claim. The burden of proving exemption from local
taxation is upon whom the subject real property is declared. By providing that real property not
declared and proved as tax-exempt shall be included in the assessment roll, the above quoted
provision implies that the local assessor has the authority to assess the property for realty taxes,
and any subsequent claim for exemption shall be allowed only when sufficient proof has been
adduced supporting the claim. Thus, if the property being taxed has not been dropped from the
assessment roll, taxes must be paid under protest if the exemption from taxation is insisted
upon.21
As held in Camp John Hay Development Corp. v. Central Board of Assessment Appeals:22
x x x the restriction upon the power of courts to impeach tax assessment without a prior payment,
under protest, of the taxes assessed is consistent with the doctrine that taxes are the lifeblood of
the nation and as such their collection cannot be curtailed by injunction or any like action;
otherwise, the state or, in this case, the local government unit, shall be crippled in dispensing the
needed services to the people, and its machinery gravely disabled. The right of local government
units to collect taxes due must always be upheld to avoid severe erosion. This consideration is
consistent with the State policy to guarantee the autonomy of local governments and the objective
of RA No. 7160 or the LGC of 1991 that they enjoy genuine and meaningful local autonomy to
empower them to achieve their fullest development as self-reliant communities and make them
effective partners in the attainment of national goals. x x x23
_______________
21 Id.
22 718 Phil. 543; 706 SCRA 547 (2013).
23 Id.
pg. 1507
606

Records reveal that the petitioner sent a letter dated September 5, 2000 to the respondent Municipal
Treasurer seeking clarification on the assessment levels used by the Assessor in the billing taxes,
as well as claiming tax exemption on certain properties. It reiterated its claim of exemption in its
letter dated April 19, 2001. NPC received the final demand for payment of tax delinquency issued
by the Provincial Treasurer in a letter dated February 16, 2006. Thereafter, petitioner filed a
petition purportedly questioning the authority of the respondents to assess and to collect taxes
against some of its properties before the LBAA, without payment under protest of the assessed
real property taxes.
Nothing in the said petition before the LBAA supports petitioner’s claim regarding the
respondents’ alleged lack of authority. Instead, it raises the following issues, which involve a
question of fact: 1.) the properties such as reservoir, machineries and equipment which are actually,
directly and exclusively used by NPC in the generation and transmission of electricity, and the
school buildings are exempt from taxation; and 2.) regarding the escape revision which was made
retroactive from 1994, said taxes could no longer be assessed and collected since they should have
been assessed within five (5) years from the date they became due.24 Though couched in terms
which challenge the validity of the assessment and authority of the respondents, NPC, as a
government-owned and -controlled corporation engaged in the generation and transmission of
electric power, essentially anchors its petition based on a claim of exemption from real property
tax.
Records are bereft of evidence which proves that, within 30 days from the filing of its Tax
Declaration, NPC filed with the Municipal Assessor of Itogon, Benguet an application for
exemption or any documentary evidence of the exempt status of its properties. Respondent
Municipal Assessor assessed petitioner’s properties for real property tax since they were
_______________
24 LBAA Records, Folder 3, pp. 6-7.
607
VOL. 808, NOVEMBER 14, 2016 607

pg. 1508
not dropped from the assessment roll upon failure of NPC to comply with the requirements of the
law. As found by the CTA En Banc:
x x x Evidently, the two letters requesting exemption from payment of realty tax dated September
3, 2000 and April 19, 2001 addressed to respondent Municipal Assessor were filed beyond the
required thirty (30)-day period from the declaration of the subject properties for realty tax purposes
in May 2000. There is also no showing that petitioner submitted together with the said formal
requests sufficient documents in support of such claim. Significantly, in the proceedings below,
respondents categorically stated that petitioner failed to prove its claimed tax exemption. This
declaration remains undisputed to date. Precisely, the subject properties were listed as taxable in
the assessment roll giving respondents the authority to issue the assailed assessment. x x x25
Based on the foregoing backdrop and the above cited jurisprudence, it is evident that NPC’s failure
to comply with the mandatory requirement of payment under protest in accordance with Section
252 of the LGC was fatal to its appeal. We note that it is not the first occasion where this Court
ruled that the NPC, in claiming tax exemption, questions the reasonableness or correctness of the
assessment by the local assessor and not the legality of the assessment or his authority to assess
real property tax.26 As such, petitioner should have first complied with Section 252. Its failure to
prove that this requirement has been complied with renders its administrative protest under Section
226 of the LGC without any effect. No protest shall be entertained unless the taxpayer first pays
the tax.
_______________
25 Rollo, p. 39.
26 Supra note 19.
608

Notwithstanding such failure to comply therewith, the LBAA opted not to immediately dismiss
the case but instead deferred the hearing subject to the condition that payment of the real property
tax should first be made before proceeding, as provided for under Section 7,27 Rule V of the Rules
of Procedure of the LBAA. We held that, in requiring the payment under protest before proceeding
with the case, the LBAA simply recognized the importance of the requirement of “payment under
protest” before an appeal may be entertained, pursuant to Section 252, and in relation with Section
23128 of
pg. 1509
_______________
27 Section 7. Effect of Appeal on Collection of Taxes.—An appeal shall not suspend the
collection of the corresponding realty taxes on the real property subject of the appeal as assessed
by the Provincial, City or Municipal Assessor, without prejudice to the subsequent adjustment
depending upon the outcome of the appeal. An appeal may be entertained but the hearing thereof
shall be deferred until the corresponding taxes due on the real property subject of the appeal
shall have been paid under protest or the petitioner shall have given a surety bond, subject
to the following conditions:
(1) the amount of the bond must not be less than the total realty taxes and penalties due as
assessed by the assessor nor more than double said amount;
(2) the bond must be accompanied by a certification from the Insurance Commissioner (a) that
the surety is duly authorized to issue such bond; (b) that the surety bond is approved by and
registered with said Commission; and (c) that the amount covered by the surety bond is within the
writing capacity of the surety company; and
(3) the amount of the bond in excess of the surety company’s writing capacity, if any, must be
covered by Reinsurance Binder, in which case, a certification to this effect must likewise
accompany the surety bond. (Emphasis supplied)
28 SECTION 231. Effect of Appeal on the Payment of Real Property Tax.—Appeal on

assessments of real property made under the provisions of this Code shall, in no case, suspend the
collection of the corresponding realty taxes on the property involved as assessed
609
VOL. 808, NOVEMBER 14, 2016 609

the same Code as to non-suspension of collection of the realty tax pending appeal.29
NPC alleged that the filing of the motion for reconsideration before the LBAA, though not required
under Section 229(c) of the LGC, should not be taken against it for choosing to exhaust all the
means to prove that the properties are tax-exempt. It should not be deprived of its right to appeal
and ventilate its case before the courts where the decision on the issue of taxability of the properties
will have a far-reaching implication on its other properties similarly situated. It would have been
more prudent for the CBAA and the CTA En Banc to have resolved the case based on the evidence
and arguments advanced rather than dismiss the same on pure technicality and require NPC to
present all over again its evidence of exemption of its properties, which are already deemed exempt
during the proceedings before the CBAA.30
pg. 1510
In its statement of the timeliness of the appeal, the NPC alleged that as provided under Section
229(c) of the LGC, it has 30 days from its receipt of the assailed Order on October 16, 2006 to file
its appeal before the CBAA. However, the CBAA dismissed the same on the ground that it was
filed beyond the period of appeal, viz.:
x x x [NPC] failed to realize that the period of prescription starts from receipt of the Order of the
LBAA which deferred the hearing on the [NPC]’s Petition. By its own admission, said Order was
“received by [NPC] on August 9, 2006,” hence the period of appeal to the CBAA should have
prescribed thirty (30) days thereafter, or to be exact, on September 8, 2006.
_______________
by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the
final outcome of the appeal.
29 Camp John Hay Development Corporation v. Central Board of Assessment Appeals, supra
note 22.
30 Rollo, pp. 22-23.
610

The provision does not require [NPC] to file a Motion for Reconsideration. But if it does, it files
the same at its own risk as the Motion for Reconsideration does not stay the period of prescription.
To repeat therefore, [NPC] has thirty (30) days from August 9, 2006 or not later than September
8, 2006 within which to appeal to the Central Board of Assessment Appeals (CBAA). Clearly
timeliness has been considerably breached when the herein Appeal reached this Board on
November 22, 2006, seventy-five (75) days, way beyond the September 8, 2006 deadline. x x x31
On August 9, 2006, NPC received the LBAA’s Order dated July 28, 2009 postponing the hearing.
Thereafter, petitioner opted to file a motion for reconsideration before the LBAA on August 25,
2006, or on the sixteenth day from receipt of the Order.32 On October 17, 2006, NPC received the
Resolution of the LBAA dated October 3, 2006 denying its motion for reconsideration. Therefore,
NPC had the remaining period of 14 days, or until October 31, 2006, within which to appeal.
pg. 1511
While it is evident in jurisprudence that the filing of motion for reconsideration before the LBAA
is allowed,33 this Court finds that, inevitably, the filing of the appeal before the CBAA through
registered mail on November 16, 2006 was already late. It is settled that the “fresh period rule” in
the case of Domingo Neypes, et al. v. Court of Appeals, et al.34 applies only to judicial appeals
and not to administrative appeals.35
_______________
31 Id., at pp. 156-157.
32 CBAA Records, Folder 1, p. 12.
33 Camp John Hay Development Corporation v. Central Board of Assessment Appeals, supra
note 20.
35 San Lorenzo Ruiz Builders and Developers Group, Inc. v. Bayang, G.R. No. 194702, April 20,
2015, 765 SCRA 125.
611
VOL. 808, NOVEMBER 14, 2016 611

In Panolino v. Tajala,36 We elucidated that:
x x x The “fresh period rule” in Neypes declares:
To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to
file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing
a motion for a new trial or motion for reconsideration.
Henceforth, this “fresh period rule” shall also apply to Rule 40 governing appeals from the
Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the
Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to
the Court of Appeals; and Rule 45 governing appeals by certiorari to the Supreme Court. The new
pg. 1512
rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order
denying the motion for new trial, motion for reconsideration (whether full or partial) or any final
order or resolution.
xxx
As reflected in the above quoted portion of the decision in Neypes, the “fresh period rule” shall
apply to Rule 40 (appeals from the Municipal Trial Courts to the Regional Trial Courts); Rule 41
(appeals from the Regional Trial Courts to the Court of Appeals or Supreme Court); Rule 42
(appeals from the Regional Trial Courts to the Court of Appeals); Rule 43 (appeals from quasi-
judicial agencies to the Court of Appeals); and Rule 45 (appeals by certiorari to the Supreme
Court). Obviously, these Rules cover judicial proceedings under the 1997 Rules of Civil
Procedure.
Petitioner’s present case is administrative in nature involving an appeal from the decision or order
of the DENR regional office to the DENR Secretary. Such appeal is in-
_______________
36 636 Phil. 313; 622 SCRA 309 (2010).
612

deed governed by Section 1 of Administrative Order No. 87, Series of 1990. As earlier quoted,
Section 1 clearly provides that if the motion for reconsideration is denied, the movant shall perfect
his appeal “during the remainder of the period of appeal, reckoned from receipt of the resolution
of denial”; whereas if the decision is reversed, the adverse party has a fresh 15-day period to perfect
his appeal. 37 (Emphasis supplied) x x x
In the instant case, the subject appeal, i.e., appeal from a decision of the LBAA to the CBAA, is
not judicial but administrative in nature. Thus, the “fresh period rule” in Neypes does not apply.
pg. 1513
Contrary to NPC’s allegation that it has 30 days from receipt of the Order denying its motion for
reconsideration within which to appeal before the CBAA, it only has the remaining 14 days from
the 30-day period of appeal.
Considering that the LBAA has not resolved the merits of the case, the CBAA cannot rule on the
very issue of real property tax exemption of some of NPC’s properties as it has yet to acquire
jurisdiction. This Court, in compliance with the procedural steps prescribed in the law, cannot
delve on the issue of NPC’S alleged non-taxability on the ground of exemption. As such, this
Court’s role in addressing NPC’s concerns and the interests at stake is not all-encompassing. This
Court cannot tackle the feared far-reaching implication of the decision on the other properties of
NPC similarly situated as the subject properties, as discussed earlier, the LBAA has yet to decide
on the merits of the case. We can only resolve the current controversy through a reading and
interpretation of the law.
WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of Tax
Appeals En Banc in C.T.A. E.B. No. 891 is AFFIRMED. The case is REMANDED to the Local
Board of Assessment Appeals for further proceedings subject to payment under protest of the
assailed assessment.
_______________
37 Id., at pp. 317-319; pp. 313-315.
613
VOL. 808, NOVEMBER 14, 2016 613

SO ORDERED.
Leonardo-De Castro,*** Perez and Reyes, JJ., concur.
Velasco, Jr., J., On Official Leave.
Petition denied, judgment affirmed. Case remanded to Local Board of Assessment Appeals.
Note.—A VAT-registered person, whose sales are zero-rated or effectively zero-rated, may apply
for the issuance of a tax credit or refund creditable input tax due or paid attributable to such sales
within two years after the close of the taxable quarter when the sales were made. (Commissioner
of Internal Revenue vs. Toledo Power Company, 714 SCRA 276 [2014])
pg. 1514
——o0o——
_______________
*** Designated additional member, in lieu of Associate Justice Francis H. Jardeleza, per Raffle
dated September 8, 2014.
pg. 1515
G.R. No. 227146. November 14, 2016.*
RADIOWEALTH FINANCE COMPANY, INC., petitioner, vs. ROMEO T. NOLASCO and

REYNALDO T. NOLASCO, respondents.
Jurisdiction; Jurisdiction is the court’s authority to hear and determine a case. The court’s
jurisdiction over the nature and subject matter of an action is conferred by law.—It bears noting
that “‘[j]urisdiction’ is the court’s authority to hear and determine a case. The court’s jurisdiction
over the nature and subject matter of an action is conferred by law.”
Same; Venue; Jurisdiction and venue are not synonymous concepts. Primarily, jurisdiction is
conferred by law and not subject to stipulation of the parties. It relates to the nature of the case.
On the contrary, venue pertains to the place where the case may be filed.—Apparently, the RTC
mistook jurisdiction for the more lenient concept of venue. To clarify, jurisdiction and venue are
not synonymous concepts. Primarily, jurisdiction is conferred by law and not subject to stipulation
of the parties. It relates to the nature of the case. On the contrary, venue pertains to the place where
the case may be filed. Unlike jurisdiction, venue may be waived and subjected to the agreement of
the parties provided that it does not cause them inconvenience.
Venue; Stipulation on venue is permitted and must be recognized for as long as it does not defeat
the purpose of the Rules which primarily aims for the convenience of the parties to the dispute.—
Clearly, stipulation on venue is permitted and must be recognized for as long as it does not defeat
the purpose of the Rules which primarily aims for the convenience of the parties to the dispute. In
Unimasters Conglomeration, Inc. v. CA, 267 SCRA 759 (1997), the Court emphasized: Parties
may by stipulation waive the legal venue and such waiver is valid and effective being merely a
personal privilege, which is not contrary to public policy or prejudicial to third persons.
_______________
* THIRD DIVISION.
640

Radiowealth Finance Company, Inc. vs. Nolasco
Same; The Regional Trial Court (RTC) may not motu proprio dismiss the case on the ground of
improper venue.—Moreover, the Court has emphasized in several cases that the RTC may not
motu proprio dismiss the case on the ground of improper venue. It is a matter personal to the
pg. 1516
parties and without their objection at the earliest opportunity, as in a motion to dismiss or in the
answer, it is deemed waived.
PETITION for review on certiorari of the amended order and order of the Regional Trial Court of
San Mateo, Rizal, Br. 75.
Alquin Bugarin Manguera for petitioner.
Reyes and Co. Law Offices for respondents.
RESOLUTION
REYES, J.:
This is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court assailing the
Amended Order2 dated July 21, 2016 and Order3 dated September 1, 2016 of the Regional Trial
Court (RTC) of San Mateo, Rizal, Branch 75, in Civil Case No. 2806-15 SM, on pure questions
of law.
Factual Antecedents
Radiowealth Finance Company, Inc. (petitioner) is a domestic financing corporation duly

organized and existing under the laws of the Philippines, with principal address at 7th Floor, DMG
Center, Domingo M. Guevara Street, Manda-
_______________
1 Rollo, pp. 8-20.
2 Rendered by Presiding Judge Beatrice A. Caunan-Medina; id., at pp. 21-22.
3 Id., at p. 23.
pg. 1517
641
VOL. 808, NOVEMBER 14, 2016 641

luyong City. On the other hand, Romeo Nolasco and Reynaldo Nolasco (respondents) are obligors
of the petitioner who both maintain residence in Mandaluyong City.4
On March 31, 2014, the respondents secured a loan from the petitioner in the amount of
P1,908,360.00, payable in installments within a period of 36 months, as evidenced by a Promissory
Note5 executed on the same day. To secure the payment of the loan, the respondents constituted a
Chattel Mortgage6 over a Fuso Super Great Dropside Truck, 2001 Model.7
Unfortunately, the respondents defaulted in the payment of the installments which caused the
entire amount to become due and demandable. The petitioner repeatedly demanded from the
respondents the payment of the balance of the loan, but they would not take heed and even refused
to surrender the possession of the motor vehicle which stood as security for the loan. Thus, on
September 30, 2015, the petitioner filed a complaint8 for Sum of Money and Damages with
Application for Writ of Replevin with the RTC of San Mateo, Rizal, praying that the respondents
be ordered to pay their balance of P1,600,153.02 or, in the alternative, surrender the possession of
the motor vehicle subject of the Chattel Mortgage dated March 31, 2014 so that the same may be
put up on sale to answer for the obligation and the deficiency, if any, may be determined.
After an ex parte hearing, the RTC issued an Order9 dated March 28, 2016, directing the issuance
of the Writ of Replevin. Subsequently, however, the RTC of San Mateo, Rizal issued an Amended
Order10 dated July 21, 2016, dismissing
_______________
4 Id., at p. 27.
5 Id., at pp. 37-38.
6 Id., at pp. 39-40.
7 Id., at pp. 27-28.
8 Id., at pp. 27-32.
9 Id., at p. 43.
10 Id., at pp. 21-22.
pg. 1518
642

motu proprio the case for lack of jurisdiction. Citing Section 2, Rule 4 of the 1997 Rules of Civil
Procedure, it ruled that since neither the petitioner nor the respondents reside within the jurisdiction
of the trial court, that is, either in San Mateo or Rodriguez, Rizal, the case must be dismissed.11
On August 16, 2016, the petitioner filed a Motion for Reconsideration12 arguing that the RTC of
San Mateo, Rizal has jurisdiction over the case. It pointed out that the sum of money involved
amounting to P1,600,153.02 is well within the jurisdiction of the RTC. Further, the venue is also
proper, considering that there is a provision in the promissory note which states that any action to
enforce payment of any sums due shall exclusively be brought in the proper court within the
National Capital Judicial Region or in any place where the petitioner has a branch or office at its
sole option.
In an Order13 dated September 1, 2016, the RTC reiterated its earlier ruling and denied the
petitioner’s motion for reconsideration.
The petitioner now comes before this Court, challenging the order of the RTC on pure questions
of law. It contends that the RTC erred in concluding that it had no jurisdiction over the case and
in motu proprio dismissing the same on the ground of improper venue.
Ruling of the Court
A reading of the questioned orders shows that the RTC confused the terms jurisdiction and venue,
which are completely different concepts. There is no question that the RTC has jurisdiction over
the complaint filed by the petitioner considering the nature of the case and the amount involved.
_______________
11 Id., at p. 22.
12 Id., at pp. 44-47.
13 Id., at p. 23.
pg. 1519
643
VOL. 808, NOVEMBER 14, 2016 643

It bears noting that “‘[j]urisdiction’ is the court’s authority to hear and determine a case. The
court’s jurisdiction over the nature and subject matter of an action is conferred by law.”14 Section
19(8) of Batas Pambansa Bilang 129,15 as amended by Republic Act (R.A.) No. 7691, provides:
SEC. 19. Jurisdiction in civil cases.—Regional Trial Courts shall exercise exclusive original
jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind,
attorney’s fees, litigation expenses, and costs or the value of the property in controversy
exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila,
where the demand, exclusive of the above mentioned items, exceeds Two hundred thousand
pesos (P200,000.00).
This had been amended by Section 5 of R.A. No. 7691 which reads:
SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts
mentioned in Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as amended by
this Act, shall be adjusted to Two hundred thousand pesos (P200,000.00). Five (5) years thereafter,
such jurisdictional amounts shall be adjusted further to Three hundred thousand pesos
(P300,000.00); Provided, however, That in the case of Metro Manila, the above mentioned
jurisdictional amounts shall be adjusted after five (5) years from the effectivity of this Act to Four
hundred thousand pesos (P400,000.00).
_______________
14 Land Bank of the Philippines v. Villegas, 630 Phil. 613, 617; 616 SCRA 626, 630 (2010).
pg. 1520
644

The amount of P1,600,153.02 involved in the instant case is undoubtedly within the jurisdiction
of the RTC, as all money claims exceeding P400,000.00 are within its authority to hear and decide.
It is an error, therefore, for the RTC to claim lack of jurisdiction over the case.
At one point, the RTC anchored its ruling of dismissal on the fact that the complaint should have
been filed in Mandaluyong City where the petitioner holds its main office and where the
respondents both reside, and not in San Mateo, Rizal.
Apparently, the RTC mistook jurisdiction for the more lenient concept of venue. To clarify,
jurisdiction and venue are not synonymous concepts. Primarily, jurisdiction is conferred by law
and not subject to stipulation of the parties. It relates to the nature of the case. On the contrary,
venue pertains to the place where the case may be filed. Unlike jurisdiction, venue may be waived
and subjected to the agreement of the parties provided that it does not cause them inconvenience.
Section 2, Rule 4 of the 1997 Rules of Civil Procedure, which was relied upon by the RTC to
support its ruling of dismissal, reads as follows:
Section 2. Venue of personal actions.—All other actions may be commenced and tried where
the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal
defendants resides, or in the case of a nonresident defendant where he may be found, at the election
of the plaintiff. (Emphasis ours)
The foregoing provision is not restrictive. A plain reading of the provision shows that it is merely
permissive as manifested by the use of the term “may.” Moreover, the clear language of the ensuing
provision of Section 4 expressly allows the venue of personal actions to be subjected to the
stipulation of the parties. It reads, thus:
Section 4. When rule not applicable.—This Rule shall not apply.
645
pg. 1521
VOL. 808, NOVEMBER 14, 2016 645
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the action on the
exclusive venue thereof. (Emphasis ours)
Clearly, stipulation on venue is permitted and must be recognized for as long as it does not defeat
the purpose of the Rules which primarily aims for the convenience of the parties to the dispute. In
Unimasters Conglomeration, Inc. v. CA,16 the Court emphasized:
Parties may by stipulation waive the legal venue and such waiver is valid and effective being
merely a personal privilege, which is not contrary to public policy or prejudicial to third persons.
It is a general principle that a person may renounce any right which the law gives unless such
renunciation would be against public policy.
xxxx
Since convenience is the raison d’être of the rules of venue, it is easy to accept the proposition
that normally, venue stipulations should be deemed permissive merely, and that interpretation
should be adopted which most serves the parties’ convenience. In other words, stipulations
designating venues other than those assigned by Rule 4 should be interpreted as designed to make
it more convenient for the parties to institute actions arising from or in relation to their agreements;
that is to say, as simply adding to or expanding the venues indicated in said Rule 4.17 (Citations
omitted)
There is, therefore, nothing that prohibits the parties to decide on a different venue for any dispute
or action that may arise from their agreement. In this case, in the promissory note executed and
signed by the parties, there is a provision which states that “[a]ny action to enforce payment of any
_______________
16 335 Phil. 415; 267 SCRA 759 (1997).
17 Id., at pp. 424-425; pp. 767-768.
pg. 1522
646

sums due under this Note shall exclusively be brought in the proper court within the National
Capital Judicial Region or in any place where [the petitioner] has a branch/office, at its sole
option.”18 Thus, the petitioner’s filing of the case in San Mateo, Rizal, where it maintains a branch
is proper and should have been respected by the RTC especially when there appears no objection
on the part of the respondents.
Moreover, the Court has emphasized in several cases that the RTC may not motu proprio dismiss
the case on the ground of improper venue. It is a matter personal to the parties and without their
objection at the earliest opportunity, as in a motion to dismiss or in the answer, it is deemed waived.
The discussion in Dacoycoy v. Intermediate Appellate Court19 is squarely in point, viz.:
Dismissing the complaint on the ground of improper venue is certainly not the appropriate course
of action at this stage of the proceeding, particularly as venue, in inferior courts as well as in the
Courts of First Instance (now RTC), may be waived expressly or impliedly. Where defendant fails
to challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the
Rules of Court, and allows the trial to be held and a decision to be rendered, he cannot on appeal
or in a special action be permitted to challenge belatedly the wrong venue, which is deemed
waived.
Thus, unless and until the defendant objects to the venue in a motion to dismiss, the venue cannot
be truly said to have been improperly laid, as for all practical intents and purposes, the venue,
though technically wrong, may be acceptable to the parties for whose convenience the rules on
venue had been devised. The trial court cannot preempt the defendant’s prerogative to object to
the improper laying of the venue by motu proprio dismissing the case.20
_______________
18 Rollo, p. 38.
19 273 Phil. 1; 195 SCRA 641 (1991).
20 Id., at pp. 6-7; pp. 645-646.
pg. 1523
647
VOL. 808, NOVEMBER 14, 2016 647

In the present case, the RTC carelessly interfered with the parties’ agreement on the venue of their
dispute and interrupted what could have been an expeditious flow of the proceeding. To reiterate,
the choice of venue is a matter addressed to the sound judgment of the parties based on
considerations personal to them, i.e., convenience. It is only the parties who may raise objection
on the same. Absent such protest, it is an error for the RTC to decide that the venue was improperly
laid as it is tantamount to needlessly interfering to a mutually agreed term.
WHEREFORE, the petition is GRANTED. The Amended Order dated July 21, 2016 and Order
dated September 1, 2016 of the Regional Trial Court of San Mateo, Rizal, Branch 75, are
REVERSED and SET ASIDE and Civil Case No. 2806-15 SM is hereby ordered
REINSTATED. The RTC is ordered to proceed with dispatch in the disposition of the mentioned
case.
SO ORDERED.
Peralta** (Acting Chairperson), Perez and Jardeleza, JJ., concur.
Petition granted, amended order dated July 21, 2016 and order dated September 1, 2016 reversed
and set aside. Civil Case No. 2806-15 SM reinstated.
Note.—It is a well-settled rule that jurisdiction of the court is determined by the allegations in the
complaint and the character of the relief sought. (Surviving Heirs of Alfredo R. Bautista vs. Lindo,
718 SCRA 321 [2014])
——o0o——
_______________
** Per Special Order No. 2395 dated October 19, 2016.
pg. 1524
G.R. No. 189077. November 16, 2016.*
LINA M. BERNARDO, petitioner, vs. HONORABLE COURT OF APPEALS (FORMER

FOURTH DIVISION) and PEOPLE OF THE PHILIPPINES, respondents.
Doctrine of Finality of Judgments; A decision that has acquired finality can no longer be modified
in any respect or attacked directly or indirectly, even by the highest court of the land.—We have
consistently ruled that a decision that has acquired finality can no longer be modified in any respect
or attacked directly or indirectly, even by the highest court of the land. The doctrine of finality and
immutability of judgments is grounded on the fundamental considerations of public policy and
sound practice to the effect that, at the risk of occasional error, the judgments of the courts must
become final at some definite date set by law.
Entry of Judgments; It is only in rare cases that this Court resolves to recall an entry of judgment
such as for instance, to prevent a miscarriage of justice.—It is only in rare cases that this Court
resolves to recall an entry of judgment such as for instance, to prevent a miscarriage of justice. We
relax the rules of procedure in order to serve substantial justice considering (a) matters of life,
liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the merits
of the case, (d) a cause not entirely attributable to the fault or negligence of the party favored by
the suspension of the rules, (e) a lack of any showing that the review sought is merely frivolous
and dilatory, and (f) the other party will not be unjustly prejudiced thereby. None of these
circumstances obtain in this case.
Attorneys; Settled is the rule that the negligence and mistakes of the counsel are binding on the
client. The only exception, being when such counsel’s negligence, is so gross and palpable
resulting in a denial of due process to his client.—Settled is the rule that the negligence and
mistakes of the counsel are binding on the client. The only exception, being when such counsel’s
negligence, is so gross and
_______________
* THIRD DIVISION.
122

Bernardo vs. Court of Appeals (Former Fourth Division)
palpable resulting to a denial of due process to his client. Here, both elements are missing. Atty.
Ardaña’s negligence is not gross in character.
pg. 1525
Same; In Sofio v. Valenzuela, 666 SCRA 55 (2012), we held that the failure of the counsel to file a
motion for reconsideration amounts to simple negligence only.—In Sofio v. Valenzuela, 666 SCRA
55 (2012), we held that the failure of the counsel to file a motion for reconsideration amounts to
simple negligence only.
Doctrine of Finality of Judgments; The finality of a decision is a jurisdictional event, which cannot
be made to depend on the convenience of a party.—The finality of a decision is a jurisdictional
event, which cannot be made to depend on the convenience of a party.
JARDELEZA, J.:
This is a Petition for Certiorari1 of the September 22, 2008 Decision2 and May 13, 2009
Resolution3 of the Court of Appeals (CA) in C.A.-G.R. CR No. 30290. The CA found petitioner
Lina M. Bernardo (Bernardo) guilty beyond reasonable doubt in Criminal Case No. 02-120 for the
crime of estafa by means of false pretenses or fraudulent acts penalized under paragraph 2(a) of
Article 315 of the Revised Penal Code.4 For failure to file a motion for reconsideration within the
reglementary period, Bernardo’s conviction became final and was entered in the Book of Entries
of Judgments by the CA.
_______________
1 Under Rule 65 of the Rules of Court. Rollo, pp. 9-31.
2 Penned by Associate Justice Sesinando E. Villon with Associate Justices Andres B. Reyes, Jr.
and Jose Catral Mendoza (now a member of this Court), concurring. Id., at pp. 68-76.
3 Id., at pp. 91-92.
4 Act No. 3815 (1930).
123
VOL. 809, NOVEMBER 16, 2016 123

Bernardo now comes before us asking that the entry of judgment in the case be recalled.
pg. 1526
Facts
Bernardo was charged with three counts of estafa in the Regional Trial Court (RTC) of Angeles
City, Pampanga, Branch 61, docketed as Criminal Case Nos. 02-120, 02-121 and 02-122.5 The
accusatory portions of the three Informations read:
[Criminal Case No. 02-120]
That sometime in the month of September, 2000, in the City of Angeles, Philippines, and within
the jurisdiction of this Honorable Court, the above named accused, by means of false pretenses,
fraudulent acts and misrepresentations, defrauded the complainant, LUCY R. TANCHIATCO, in
the following manner, to wit: the accused falsely pretending to possess credit, indorsed and
rediscounted a Consumer Bank Check No. 0788549 dated December 31, 2000, in the amount of
P50,000.00, which appears to have been issued by one Marcial S. Sadie, Jr., the accused falsely
pretending that the said check was duly funded in her favor, and which representation was merely
intended to induce the complainant to rediscount the corresponding amount of the check, as in fact,
complainant did rediscount said check, and accused, once in possession of the said corresponding
amount and far from complying with her obligation, did then and there willfully, unlawfully, and
feloniously misappropriate, misapply and convert the said amount to her own personal use and
benefit, and despite demands made upon her to return or redeem the amount of the check, accused
failed and refused and still fails and refuses to comply with her obligation, to the damage and
prejudice of said complainant, LUCY R. TANCHIATCO, in the aforementioned
_______________
5 Rollo, pp. 68-70.
124

amount of FIFTY THOUSAND (P50,000.00) PESOS, Philippine Currency.
pg. 1527
CONTRARY TO LAW.
That sometime in the month of October, 2000, in the City of Angeles, Philippines, and within the
jurisdiction of this Honorable Court, the above named accused, by means of false pretense,
fraudulent acts and misrepresentations, defrauded the complainant, LUCY R. TANCHIATCO, in
the following manner, to wit: the accused obtained a loan from complainant, LUCY R.
TANCHIATCO, in the total amount of P75,000.00, by falsely pretending to possess properties in
an affidavit dated November 27, 2000, given to the complainant for security of said loan, which
affidavit states that accused was the owner of the stall and that the same could be transferred to
any assignee, when in truth and in fact, signatures of transferor were forged/falsified, and which
representation was merely intended to induce the complainant to allow accused to obtain a loan in
the amount of P75,000.00, as in fact, complainant gave the amount of P75,000.00 to accused as
loan, and accused once in possession of the said amount, did then and there willfully, unlawfully
and feloniously misappropriate, misapply and convert the said amount to her own personal use and
benefit, and despite demands made upon her to return the amount to complainant, accused failed
and refused and still fails and refuses to comply with her obligation, to the damage and prejudice
of said complainant, LUCY R. TANCHIATCO, in an aforementioned amount of SEVENTY FIVE
THOUSAND (P75,000.00) PESOS, Philippine Currency.
CONTARARY TO LAW.
That sometime in the month of November, 2000, in the City of Angeles, Philippines, and within
the jurisdiction of this Honorable Court, the above named accused,
125
VOL. 809, NOVEMBER 16, 2016 125

pg. 1528
by means of false pretenses, fraudulent acts and misrepresentations, defrauded the complainant,
LUCY R. TANCHIATCO, in the following manner, to wit: the accused obtained a loan from
complainant LUCY R. TANCHIATCO, in the amount of P200,000.00, by falsely pretending to
possess property in an affidavit dated November 27, 2000, given to the complainant for security
of said loan, which affidavit states that accused was the owner of the stall and that the same could
be transferred to any assignee, when in truth and in fact, the signature of transferor was
forged/falsified, and which representation was merely intended to induce the complainant to allow
accused to obtain a loan in the amount of P200,000.00, as in fact, complainant gave the amount of
P200,000.00 to accused as a loan, and accused once in possession of the said amount, did then and
there willfully, unlawfully and feloniously misappropriate, misapply and convert the said amount
to her own personal use and benefit, and despite demands made upon her to return the amount to
complainant, accused failed and refused and still fails and refuses to comply with her obligation,
to the damage and prejudice of said complainant, LUCY R. TANCHIATCO, in an amount of TWO
HUNDRED THOUSAND (P200,000.00) PESOS, Philippine Currency.
CONTRARY TO LAW.6
Bernardo pleaded “not guilty” to the offenses charged.7 Trial then ensued. Four witnesses8
testified for the prosecution, while the defense waived its right to present evidence.9
The testimony of the prosecution witnesses may be summarized as follows:
Complainant Lucy Tanchiatco (Tanchiatco) and Bernardo knew each other since 1982 or 1983, as
they were neighbors.
_______________
6 Id.
7 Id., at p. 70.
8 Complainant herself, Marcial Sadie, Carmelita Santos and Teresita Garcia, id., at pp. 49-51.
9 Id., at p. 51.
126

pg. 1529
They became close friends sometime in the year 2000.10 Tanchiatco usually buys from Bernardo
in the Pampang Public Market, while Bernardo visits Tanchiatco in the former’s house twice or
four times in a week.11
On September 19, 2000, Bernardo went to the house of Tanchiatco to borrow money. As security
for the loan, she offered the rediscounting of a Consumer Bank Check No. 00788549 in the amount
of P50,000. The check dated December 31, 2000 was drawn from the account of a certain Marcial
Sadie, Jr. (Sadie) and payable to the bearer. Tanchiatco did not personally know Sadie but upon
the guarantee of Bernardo, she rediscounted the check and gave the money to Bernardo on the
same day.12 Later on, Bernardo introduced Sadie to her, but she did not inquire about the check.13
On October 10 and 12, 2000, Bernardo obtained loans from Tanchiatco, in the amount of P50,000
and P25,000, respectively. As security, Bernardo gave Tanchiatco two affidavits of waiver of
market stalls purportedly executed by her sister Carmelita Santos (Carmelita) and by Sadie. She
promised Tanchiatco that in case she failed to pay her loan on December 31, 2000, the rights to
the market stalls shall be transferred to the latter.14 Bernardo further assured Tanchiatco that she
will take care of everything as one of the market administrators is her friend.15 Tanchiatco
believed that Bernardo owns the market stalls although they were registered in the names of Sadie
and Carmelita. There was a prohibition on owning more than one stall in the Pampang Public
Market, hence, Bernardo has to put the stalls in the name of other persons.16
_______________
10 Id., at p. 49.
11 Id.
12 Id., at p. 71.
13 Id., at pp. 49-50.
14 Id., at p. 48.
15 Id.
16 Id., at pp. 49-50.
127
VOL. 809, NOVEMBER 16, 2016 127
pg. 1530
Then on November 20, 21 and 22, 2000, Bernardo again borrowed money from Tanchiatco totaling
to P200,000. For the P170,000, she promised Tanchiatco that she would produce an affidavit of
waiver of market stall in the name of a certain Teresita Garcia (Teresita).17
Bernardo defaulted in her loan obligations despite demands for her to pay. Expecting that the
market stalls were already transferred in her name consistent with the affidavit of waivers given to
her by Bernardo, Tanchiatco went to see the administrator of the Pampang Public Market.
However, she learned that the market stalls were not transferred in her name. Sadie, Carmelita and
Teresita also denied the execution of the affidavits of waiver.18 Thus, Tanchiatco confronted
Bernardo where the latter admitted that she was, in fact, the one who executed the affidavits.19
Tanchiatco filed a complaint against Bernardo in their barangay. However, no settlement was
reached. Hence, she filed the present criminal complaints.20
During trial, Sadie testified that Bernardo was his co-vendor in the Pampang Public Market. He
admitted that he owned the Consumer Bank check used as security for Bernardo’s loan.21
However, he asserted that the signature appearing on the check does not belong to him. In fact, he
does not know how Bernardo came into possession of the check.22 He added, that his account
with Consumer Bank was already closed and that he did not issue the subject check.23
_______________
17 Id., at p. 48.
18 Id., at p. 49.
19 Id.
20 Id.
21 Id., at p. 50.
22 Id.
23 Id., at pp. 50-51.
128
pg. 1531
RTC’s Ruling
In its Decision24 dated February 27, 2006, the RTC found that Bernardo never denied that the
signature appearing at the dorsal side of the Consumer Bank check subject of Criminal Case No.
02-120 was hers.25 It held that Bernardo offered that check for rediscounting knowing that it was
a falsified check. The RTC declared that the rediscounting of the falsified check was done
simultaneously with the parting of P50,000. Bernardo’s assurance that the check was genuine and
was issued by Sadie in her favor, caused Tanchiatco to part with her money to her own damage
and prejudice,26 which act constitutes estafa under Article 315, paragraph 2(a), of the Revised
Penal Code.27 Thus, the RTC convicted
_______________
24 Id., at pp. 45-53, penned by Judge Bernardita Gabitan Erum.
25 Id., at p. 51.
26 Id., at p. 52.
27 2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence,

qualifications, property, credit, agency, business or imaginary transactions, or by
means of other similar deceits.
(b) By altering the quality, fineness or weight of anything pertaining to his art or business.
(c) By pretending to have bribed any Government employee, without prejudice to the
action for calumny which the offended party may deem proper to bring against the offender.
In this case, the offender shall be punished by the maximum period of the penalty.
(d) By postdating a check, or issuing a check in payment of an obligation when the

offender had no funds in the bank, or his funds deposited therein were not sufficient to cover
the amount of the check. The failure of the drawer of the check to deposit the amount
necessary to cover his check within three (3) days from receipt of notice from the bank
and/or the payee or holder that said check has been dishonored for lack or insufficiency of
pg. 1532
129
VOL. 809, NOVEMBER 16, 2016 129

Bernardo of estafa by means of false pretenses or fraudulent acts in Criminal Case No. 02-120.28
As to Criminal Case Nos. 02-121 and 02-122, the RTC acquitted Bernardo after finding that the
affidavits of waiver were not given prior to or simultaneous with the parting of the sums of
money.29 It ruled that the liability incurred by Bernardo for nonpayment of the loans secured by
the affidavits of waiver was purely civil in nature.30
Bernardo appealed her conviction to the CA. She took issue with the reliance of the RTC on the
lone testimony of Sadie as regards the rediscounting of the Consumer Bank check.31 She
maintained that in order to merit credence, the testimony of Sadie should have been corroborated
by other witnesses.32 Bernardo also pleaded that rediscounting bills and notes is a legitimate
transaction.33 She alleged that she could not be convicted of estafa by means of false pretenses or
fraudulent acts because the element of deceit was not proven. The prose-
_______________
funds shall be prima facie evidence of deceit constituting false pretense or fraudulent act.
(As amended by R.A. No. 4885, approved on June 17, 1967)
(e) By obtaining any food, refreshment or accommodation at a hotel, inn, restaurant,

boarding house, lodging house, or apartment house and the like without paying therefor,
with intent to defraud the proprietor or manager thereof, or by obtaining credit at hotel, inn,
restaurant, boarding house, lodging house, or apartment house by the use of any false
pretense, or by abandoning or surreptitiously removing any part of his baggage from a hotel,
inn, restaurant, boarding house, lodging house or apartment house after obtaining credit,
food, refreshment or accommodation therein without paying for his food, refreshment or
accommodation. (Emphasis supplied)
28 Rollo, p. 53.
29 Id., at p. 52.
30 Id.
31 Id., at p. 41.
32 Id., at p. 42.
33 Id.
pg. 1533
130

cution failed to prove that the check presented for rediscounting was spurious.34
The Office of the Solicitor General (OSG) countered that the non-presentation of a corroborating
witness is not fatal to the case because corroborative evidence is necessary only when there is a
suspicion that the witness falsified the truth.35 However, there is no reason to suspect the veracity
of Sadie’s testimony as it is clear and straightforward and Sadie does not harbor any ill feelings
towards Bernardo. Hence, his testimony deserves full credit and belief.36
On the element of deceit, the OSG maintained that Bernardo’s act of rediscounting a check that
does not belong to her in order to get money from Tanchiatco is in itself pure and simple deceit.37
While rediscounting is a legal transaction, the presence of deceit makes the act of the author
illegal.38
CA’s Ruling
In its Decision dated September 22, 2008, the CA held that the uncorroborated testimony of Sadie
is sufficient to sustain Bernardo’s conviction. Citing relevant jurisprudence, it stated that the
number of witnesses has nothing to do with the credibility of a witness.39 The CA ruled that Sadie
is a credible witness having testified in a clear and straightforward manner, with no traces of ill
motives against Bernardo.40 Further, it was proven that the signature appearing on the right bottom
of the Consumer Bank check was not Sadie’s signature as he even wrote his customary signature
three times in open
_______________
34 Id.
35 Id., at pp. 61-62.
36 Id., at p. 63.
37 Id., at pp. 63-64.
38 Id., at p. 64.
pg. 1534
39 Id., at pp. 72-73.
40 Id., at pp. 73-74.
131
VOL. 809, NOVEMBER 16, 2016 131

court for comparison.41 Thus, the CA affirmed the RTC’s Decision in toto and adjudged that all
the elements of estafa by means of false pretenses or fraudulent acts are present.
Bernardo, then represented by the Public Attorney’s Office (PAO), received the notice of the CA
Decision on September 25, 2008.42 However, no motion for reconsideration was filed within the
reglementary period. Hence, the CA Decision became final and executory on October 11, 2008.
The PAO received an Entry of Judgment of the CA Decision on March 12, 2009.43
On April 9, 2009, Bernardo filed a Motion to Recall Entry of Judgment with attached Urgent
Motion for Reconsideration44 in the CA. Atty. Benju V. Ardaña (Atty. Ardaña), the new PAO
lawyer assigned to the case of Bernardo, pleaded that he never received a copy of the CA Decision
although the same was duly stamped as received by PAO on September 25, 2008. Hence, he was
surprised that an Entry of Judgment was issued. Atty. Ardaña blamed Herminia Polo (Polo), a
receiving and filing clerk at the PAO Special and Appealed Cases Service, as well as the
secretary45 of Atty. Joey Dolores Pontejos (Atty. Pontejos), the previous PAO lawyer handling
the case, for taking upon herself to place a copy of the CA Decision inside its case folder without
informing him that there was already a decision.46 He alleged that the omission was unintentional
and was a simple inadvertence on the part of Polo as she was busy preparing for the official transfer
of Atty. Pontejos, who was reassigned to the PAO-Tacloban District Office.47 Atty. Ardaña
claimed that he relied on the
_______________
41 Id.
42 Id., at p. 79.
43 Id., at p. 77.
44 Id., at pp. 85-89.
45 Affidavit of Herminia Polo attached as Annex A to the Motion to Recall Entry of Judgment,
id., at pp. 83-84.
pg. 1535
46 Id., at p. 79.
47 Id., at pp. 79-80.
132

status of the case reflected in the “Inventory of Cases” submitted by Atty. Pontejos, which showed
that the case was “submitted for decision” in the CA. He asked for the CA’s indulgence “in behalf
of the erring staff.”48
Meanwhile, the attached Urgent Motion for Reconsideration merely reiterated the arguments that
Bernardo raised in his Appellant’s Brief.
In its Resolution dated May 13, 2009, the CA found that the Urgent Motion for Reconsideration
was filed 194 days from the PAO’s receipt of the CA Decision.49 The considerable lapse of time
was attributable not only to the negligence of Polo, but also to Atty. Ardaña, whose duty included
the proper disposition of the cases assigned to him.50 On the merits of the case, the CA held that
the grounds relied upon by Bernardo in the Urgent Motion for Reconsideration was just a rehash
of the issues raised in the petition.51 Accordingly, the CA denied the Motion to Recall Entry of
Judgment and the Urgent Motion for Reconsideration.
Hence, this petition, where Bernardo in her own behalf, raises the following issues:
1. Whether the CA erred in denying the Motion to Recall Entry of Judgment; and
2. Whether Bernardo should be convicted of the crime of estafa by means of false pretenses or
fraudulent acts.
Our Ruling
Bernardo ascribes grave abuse of discretion to the CA for denying her Motion to Recall Entry of
Judgment and Urgent Motion for Reconsideration on the ground of technicality. She
_______________
pg. 1536
48 Id., at p. 80.
49 Id., at p. 91.
50 Id., at p. 92.
51 Id.
133
VOL. 809, NOVEMBER 16, 2016 133

claims that strict adherence to the rules will definitely cause her injustice.52 She alleges that the
CA completely disregarded the explanation of her then PAO counsel that the late filing of the
motion for reconsideration was due to the simple inadvertence of the lawyer’s secretary.53 For the
sound administration of justice, Bernardo prays that the case be decided on its merit.
The OSG counters that Bernardo has no ground to move for the recall of the entry of judgment
because she received a copy of the Decision through her former counsel. It would have been
different if her counsel was not furnished at all with the copy of the Decision, which would be
tantamount to denial of due process.54
We find Bernardo’s contentions without merit and deny the petition.
Section 2, Rule 36 and Section 8, Rule 120 of the Rules of Court, respectively, state:
Rule 36. xxx
Sec. 2. Entry of judgments and final orders.—If no appeal or motion for new trial or
reconsideration is filed within the time provided in these Rules, the judgment or final order
shall forthwith be entered by the clerk in the book of entries of judgments. The date of finality
of the judgment or final order shall be deemed to be the date of its entry. The record shall contain
the dispositive part of the judgment or final order and shall be signed by the clerk, with a certificate
that such judgment or final order has become final and executory.
xxx
pg. 1537
Rule 120. xxx
_______________
52 Id., at p. 20.
53 Id., at p. 21.
54 Id., at p. 106.
134

Sec. 8. Entry of judgment.—After a judgment has become final, it shall be entered in accordance
with Rule 36. (Emphasis supplied)
Substantially the same rules are found in Sections 1 and 5, Rule VII of the 2002 Internal Rules of
Procedure of the CA (IRCA), to wit:
Sec. 1. Entry of Judgment.—Unless a motion for reconsideration or new trial is filed or an

appeal taken to the Supreme Court, judgments and final resolutions of the Court shall be
entered upon expiration of fifteen (15) days from notice to the parties.
(a) With respect to the criminal aspect, entry of judgment in criminal cases shall be made
immediately when the accused is acquitted or his withdrawal of appeal is granted. However, if the
motion withdrawing an appeal is signed by the appellant only, the Court shall first take steps to
ensure that the motion is made voluntarily, intelligently and knowingly or may require his counsel
to comment thereon.
When there are several accused in a case, some of whom appealed and others did not, entry of
judgment shall be made only as to those who did not appeal. The same rule shall apply where there
are several accused in a case, some of whom withdrew their appeal and others did not.
(b) Entry of Judgment in civil cases shall be made immediately when an appeal is withdrawn or
when a decision based on a compromise agreement is rendered. (Secs. 1 and 7, Rule 11, RIRCA
[a])
pg. 1538
xxx
Sec. 5. Entry of Judgment and Final Resolution.—If no appeal or motion for new trial or
reconsideration is filed within the time provided in these Rules, the judgment or final
resolution shall forthwith be entered by the clerk in the book of entries of judgments. The
date when the judgment or
135
VOL. 809, NOVEMBER 16, 2016 135

final resolution becomes executory shall be deemed as the date of its entry. The record shall contain
the dispositive part of the judgment or final resolution and shall be signed by the clerk, with a
certificate that such judgment or final resolution has become final and executory. (Emphasis
supplied)
Applying the Rules of Court and the IRCA, since Bernardo neither moved for reconsideration nor
appealed to this Court within the reglementary period, the CA Decision became final and
executory. Thus, the CA is duty-bound to enter it in the Book of Entries of Judgments.
Accordingly, this petition is a futile attempt to reopen a case, which has been laid to rest since
October 11, 2008.
We have consistently ruled that a decision that has acquired finality can no longer be modified in
any respect or attacked directly or indirectly, even by the highest court of the land. The doctrine
of finality and immutability of judgments is grounded on the fundamental considerations of public
policy and sound practice to the effect that, at the risk of occasional error, the judgments of the
courts must become final at some definite date set by law.55
It is only in rare cases that this Court resolves to recall an entry of judgment such as for instance,
to prevent a miscarriage of justice.56 We relax the rules of procedure in order to serve substantial
justice considering (a) matters of life, liberty, honor or property, (b) the existence of special or
compelling circumstances, (c) the merits of the case, (d) a cause not entirely attributable to the
fault or negligence of the party favored by the suspension of the rules, (e) a lack of any showing
that the review sought is merely frivolous and dilatory,
pg. 1539
_______________
55 Sofio v. Valenzuela, G.R. No. 157810, February 15, 2012, 666 SCRA 55, 65, citing Bañares II
v. Balising, G.R. No. 132624, March 13, 2000, 328 SCRA 36, 49-50.
56 See McBurnie v. Ganzon, G.R. Nos. 178034 & 178117, October 17, 2013, 707 SCRA 646,
667.
136

and (f) the other party will not be unjustly prejudiced thereby.57 None of these circumstances
obtain in this case.
That a motion for reconsideration was filed belatedly due to the “simple inadvertence” of Polo is
not a compelling reason to recall the entry of judgment, especially in the light of the admission of
Atty. Ardaña that the notice of the CA Decision was duly received by the PAO on September 25,
2008; albeit, he did not know of it because the secretary did not inform him. We concur with the
CA that Atty. Ardaña was negligent in failing to monitor the disposition of the case assigned to
him. In Ramos v. Lim,58 we stated that notice to counsel is an effective notice to the client.59 It is
incumbent upon the counsel, consistent with his duty to serve his client with competence and
diligence, to inquire from the court about the status of the case.60 Atty. Ardaña’s mere reliance on
Atty. Pontejo’s inventory of cases falls short of the diligence required of him.
Notably, Bernardo is bound by Atty. Ardaña’s negligence. Settled is the rule that the negligence
and mistakes of the counsel are binding on the client.61 The only exception, being when such
counsel’s negligence, is so gross and palpable resulting to a denial of due process to his client.62
Here, both
_______________
57 Barnes v. Padilla, G.R. No. 160753, September 30, 2004, 439 SCRA 675, 686-687, citing
Sanchez v. Court of Appeals, G.R. No. 152766, June 20, 2003, 404 SCRA 540, 546.
58 G.R. No. 133496, May 9, 2005, 458 SCRA 238.
59 Id., at p. 244, citing Lincoln Gerard, Inc. v. National Labor Relations Commission, G.R. No.
85295, July 23, 1990, 187 SCRA 701.
60 Id., at p. 247.
pg. 1540
61 Lagua v. Court of Appeals, G.R. No. 173390, June 27, 2012, 675 SCRA 176, 182, citing Sapad
v. Court of Appeals, G.R. No. 132153, December 15, 2000, 348 SCRA 304.
62 Pasiona, Jr. v. Court of Appeals, G.R. No. 165471, July 21, 2008, 559 SCRA 137, 147, citing
Grande v. University of the Philippines, G.R. No. 148456, September 15, 2006, 502 SCRA 67, 74;
Juani v. Alarcon, G.R. No. 166849, September 5, 2006, 501 SCRA 135, 154; GCP-Manny
Transport Services, Inc. v. Principe, G.R. No. 141484,
137
VOL. 809, NOVEMBER 16, 2016 137

elements are missing. Atty. Ardaña’s negligence is not gross in character. In Sofio v. Valenzuela,63
we held that the failure of the counsel to file a motion for reconsideration amounts to simple
negligence only.64 Further, Bernardo was not deprived of due process because she received a copy
of the CA Decision through her former counsel. She was also given the opportunity to present her
side of the story. She filed a Motion to Recall Entry of Judgment in the CA, coupled with a motion
for reconsideration. Where a party is given the opportunity to be heard either in pleadings or oral
arguments, there is no denial of due process.65
Meanwhile, Bernardo also had herself to blame. The record of the case is bereft of showing that
she made inquiries or follow-ups from Atty. Ardaña about the status of her case. It is the duty of
Bernardo to be in touch with her counsel as to the progress of the case. She cannot just sit back,
relax, and wait for the outcome of the case.66
The 194 days delay in the filing of the motion for reconsideration of the CA Decision67 is too long
a delay to merit the liberality of this Court. Since the counsel of Bernardo received the notice of
the CA Decision on September 25, 2008 and no motion for reconsideration or appeal to this Court
was filed within 15 days from receipt of the notice, the Decision inevitably reached its finality on
October 11, 2008. Thus, no grave abuse of discretion was committed by the CA when it denied
_______________
November 11, 2005, 474 SCRA 555, 562-563; Victory Liner, Inc. v. Gammad, G.R. No. 159636,
November 25, 2004, 444 SCRA 355, 361.
63 Supra note 55.
64 Id., at p. 68, citing Pasiona, Jr. v. Court of Appeals, supra note 62.
pg. 1541
65 Pasiona, Jr. v. Court of Appeals, supra note 62 at p. 148, citing Producers Bank of the
Philippines v. Court of Appeals, G.R. No. 126620, April 17, 2002, 381 SCRA 185, 194-195.
66 Manaya v. Alabang Country Club, Incorporated, G.R. No. 168988, June 19, 2007, 525 SCRA
140, 148, citing GCP-Manny Transport Services, Inc. v. Principe, supra note 62 at pp. 563-564.
67 See the May 13, 2009 Resolution of the CA, Rollo, p. 91.
138

the Motion to Recall Entry of Judgment and the motion for reconsideration. In fine, the finality of
a decision is a jurisdictional event, which cannot be made to depend on the convenience of a
party.68
Having affirmed the finality of the CA Decision, we shall no longer delve into the second issue
raised. Passing upon the propriety of Bernardo’s conviction would be inconsistent with our
declaration of the finality and immutability of the CA Decision.
WHEREFORE, the petition is DISMISSED for lack of merit. The September 22, 2008 Decision
and May 13, 2009 Resolution of the Court of Appeals in C.A.-G.R. CR No. 30290 are hereby
AFFIRMED.
SO ORDERED.
Peralta** (Acting Chairperson), Perez and Reyes, JJ., concur.
Velasco, Jr., J., On Leave.
Petition dismissed, judgment and resolution affirmed.
Note.—The attitude of judicial reluctance towards the annulment of a judgment, final order or
final resolution is understandable, for the remedy disregards the time-honored doctrine of
immutability and unalterability of final judgments, a solid corner stone in the dispensation of
justice by the courts. (Pinausukan Seafood House, Roxas Boulevard, Inc. vs. Far East Bank &
Trust Company, now Bank of the Philippine Islands, 714 SCRA 226 [2014])
——o0o——
pg. 1542
_______________
68 NIAConsult, Inc. v. National Labor Relations Commission, G.R. No. 108278, January 2, 1997,
266 SCRA 17, 22-23.
** Per Special Order No. 2395 dated October 19, 2016.
pg. 1543
G.R. No. 217956. November 16, 2016.*
REPUBLIC OF THE PHILIPPINES, represented by MACTAN-CEBU INTERNATIONAL

AIRPORT AUTHORITY (MCIAA), petitioner, vs. LIMBONHAI AND SONS, respondent.
Civil Procedure; The lower court’s findings of fact, particularly when affirmed by the Court of
Appeals (CA), are final and conclusive upon the Supreme Court (SC).—At the outset, the Court
has consistently held that the lower court’s findings of fact, particularly when affirmed by the CA,
are final and conclusive upon the Court. In this, as well as in other appeals, the Court, not being a
trier of facts, does not review their findings, especially when they are supported by the records or
based on substantial evidence. It is not the function of the Court to analyze or weigh evidence all
over again, unless there is a showing that the findings of the lower courts are absolutely devoid of
support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.
Eminent Domain; The right of eminent domain is usually understood to be an ultimate right of the
sovereign power to appropriate any property within its territorial sovereignty for a public
purpose.—The right of eminent domain is usually understood to be an ultimate right of the
sovereign power to appropriate any property within its territorial sovereignty for a public purpose.
_______________
* THIRD DIVISION.
244

Republic vs. Limbonhai and Sons
Same; The exercise of the right of eminent domain, whether directly by the State or by its
authorized agents, is necessarily in derogation of private rights. It is one of the harshest
proceedings known to the law.—The exercise of the right of eminent domain, whether directly by
the State or by its authorized agents, is necessarily in derogation of private rights. It is one of the
harshest proceedings known to the law. Consequently, when the sovereign delegates the power to
a political unit or agency, a strict construction will be given against the agency asserting the power.
Expropriation Proceedings; In an expropriation case, an essential element of due process is that

there must be just compensation whenever private property is to be taken for public use.—
Needless to say that in an expropriation case, an essential element of due process is that there must
be just compensation whenever private property is to be taken for public use. Accordingly, Section
9, Article III, of our Constitution mandates: “Private property shall not be taken for public use
pg. 1544
without just compensation.” Clearly, without full payment of just compensation, there can be no
transfer of title from the landowner to the expropriator.
Laches; Laches is the failure or neglect, for an unreasonable length of time to do that which by
exercising due diligence could or should have been done earlier; it is negligence or omission to
assert a right within a reasonable time warranting a presumption that the party entitled to assert
it has either abandoned it or has declined to assert it.—Laches is the failure or neglect, for an
unreasonable length of time to do that which by exercising due diligence could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable time warranting
a presumption that the party entitled to assert it has either abandoned it or has declined to assert it.
It has also been defined as such neglect or omission to assert a right taken in conjunction with the
lapse of time and other circumstances causing prejudice to an adverse party, as will operate as a
bar in equity.
Just Compensation; Without prompt payment, compensation cannot be considered “just”

deprived of the land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with the loss.—It succinctly
245
VOL. 809, NOVEMBER 16, 2016 245

explained that without prompt payment, compensation cannot be considered “just” inasmuch as
the property owner is being made to suffer the consequences of being immediately deprived of the
land while being made to wait for a decade or more before actually receiving the amount necessary
to cope with the loss. Thus, once just compensation is finally determined, the expropriator must
immediately pay the amount to the lot owner. Clearly, in this case, the government’s delay in the
payment of the just compensation for over 30 years is no longer reasonable as contemplated by the
law.
Innocent Purchaser for Value; In Cabuhat v. Court of Appeals, 366 SCRA 176 (2001), We have
said that even if the procurement of a certificate of title was tainted with fraud and
misrepresentation, such defective title may be the source of a completely legal and valid title in
the hands of an innocent purchaser for value.—In Cabuhat v. Court of Appeals, 366 SCRA 176
(2001), We have said that even if the procurement of a certificate of title was tainted with fraud
and misrepresentation, such defective title may be the source of a completely legal and valid title
in the hands of an innocent purchaser for value. Thus, where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the property the court cannot
disregard such rights and order the total cancellation of the certificate. The effect of such an
outright cancellation would be to impair public confidence in the certificate of title, for everyone
pg. 1545
dealing with property registered under the Torrens system would have to inquire in every instance
whether the title has been regularly or irregularly issued.
Evidence; Burden of Proof; In civil cases, the party having the burden of proof must establish his
case by a preponderance of evidence.—In civil cases, the party having the burden of proof must
establish his case by a preponderance of evidence. Preponderance of evidence is the weight, credit,
and value of the aggregate evidence on either side, and is usually considered to be synonymous
with the term greater weight of the evidence or greater weight of the credible evidence.
Preponderance of evidence is a phrase that means, in the last analysis, probability of the truth. It
is evidence that is more convincing to the court as worthy of belief than that which is offered in
opposition thereto.
246

Teogenes X. Velez for respondent.
PERALTA,** J.:
Before us is a petition for review on certiorari of the Court of Appeals’ Decision1 dated April 10,
2014 and its Resolution2 dated March 19, 2015, affirming the Decision3 of the Regional Trial
Court of Lapu-Lapu City, Branch 53, which dismissed the complaint for cancellation of title in
Civil Case No. 4575-L, entitled “Republic of the Philippines, represented by Mactan-Cebu
International Airport Authority v. Limbonhai and Sons Corporation.”
The facts are as follows:
Isidro Godinez (Godinez) was the original owner of Lot No. 2498, a 6,343-square-meter property
situated in Barrio Pusok, Lapu-Lapu City. Sometime in the 1960s, the said lot was among 27 lots,
covering more or less 36 hectares, which were the subjects of an expropriation case filed before
the then Court of First Instance (CFI) of Cebu by the government against several lot owners in
Civil Case No. R-8103 entitled “Republic of the Philippines, plaintiff v. Amparo Zosa, et al.”4
pg. 1546
_______________
** Designated Acting Chairperson per Special Order No. 2395 dated October 19, 2016.
1 Penned by Associate Justice Edgardo L. Delos Santos, with Associate Justices Marilyn B.
Lagura-Yap and Jhosep Y. Lopez, concurring.
2 Rollo, pp. 44-45.
3 Records, pp. 156-161.
4 Id., at p. 158.
247
VOL. 809, NOVEMBER 16, 2016 247

In an Order5 dated July 8, 1964, the CFI ordered the government to take possession of the subject
property upon deposit of the amount provisionally fixed by the court at P32,869.17, representing
partial payment of the expropriated lots. The court further stated that the sum is subject to
amendment or increase based on the report of the commissioners appointed by the court to appraise
the value of the lots. Subsequently, on January 7, 1967, the CFI issued an Order6 fixing the
reasonable value of the lots, including Lot No. 2498, at P1.50 per square meter.
Sometime in 1967, however, Godinez caused the judicial reconstitution of the Original Certificate
of Title (OCT) covering Lot No. 2498. Consequently, OCT No. RO-0608 was issued in the name
of Godinez.7 Later, Godinez sold the property to Tirso S. Limbonhai under his former name Sy
Tiong. Thus, on May 17, 1967, OCT No. RO-0608 was cancelled and Transfer Certificate of Title
(TCT) No. T-13178 was issued in the name of Tirso S. Limbonhai, under his former name Sy
Tiong. After a decade, Tirso S. Limbonhai, transferred the property to respondent corporation,
Limbonhai and Sons. As a consequence, TCT No. T-1317 was cancelled, and in lieu thereof, TCT
No. 82789 was issued in the name of respondent corporation.
Thereafter, in 1996 petitioner filed a Complaint for Cancellation of Title10 before the Regional
Trial Court (RTC), Lapu-Lapu City, claiming that it was the transferee and owner of subject Lot
No. 2498 because it was one of the several parcels of land allegedly expropriated by the
government for airport purposes in Civil Case No. 8103 entitled “Republic of the Philippines,
plaintiff v. Amparo Zosa, et al.” It also averred that
_______________
pg. 1547
5 Id., at pp. 92-93.
6 Rollo, pp. 46-49.
7 Records, p. 11.
8 Id., at p. 13.
9 Id., at p. 15.
10 Id., at pp. 1-6.
248

its predecessor-in-interest had been in the material, continuous and uninterrupted and adverse
possession of said lot, which was later transferred to Mactan-Cebu International Airport Authority
(MCIAA), by virtue of its charter, Republic Act No. (RA) 6958.11
MCIAA insisted that respondent corporation’s claim of ownership over Lot No. 2498 has no basis
in fact and law because the same lot had already been expropriated by the government as early as
1967. It added that the corporation merely holds the certificate of title in trust and is under legal
obligation to surrender the same for cancellation so that a new certificate of title can be issued in
the name of the MCIAA.
For its part, respondent corporation countered, among other things, that there was no valid
expropriation of Lot No. 2498 since even after more than Twenty-Nine (29) years from the order
of expropriation became final and executory, no payment of just compensation was ever made,
and the same lot was never used for the purpose for which it was intended. It, likewise, insisted
that the reconstitution of the title of Lot No. 2498 in favor of its predecessor-in-interest is valid,
and cannot be disturbed without violating the principle of res judicata. Respondent also claimed
that the reconstituted title cannot be disturbed, in the absence of a showing that the land registration
court had not acquired jurisdiction over the case and that there was actual fraud in securing the
title.12
On May 27, 2004, the trial court rendered a Decision13 in favor of respondent corporation and
dismissed the complaint for cancellation of title for lack of merit, thus:
_______________
pg. 1548
11 An Act Creating the Mactan-Cebu International Airport Authority, Transferring Existing
Assets of the Mactan International Airport and the Lahug Airport to the Authority, Vesting the
Authority with Power to Administer and Operate the Mactan International Airport and the Lahug
Airport, and for Other Purposes.
12 Rollo, pp. 60-64.
13 Records, pp. 156-161.
249
VOL. 809, NOVEMBER 16, 2016 249

WHEREFORE, in light of the foregoing considerations, judgment is hereby rendered in favor of

the defendant and against the plaintiff. Consequently, the above entitled case is hereby dismissed
for lack of merit.
SO ORDERED.14
The lower court found that although expropriation proceedings were initiated by the government
to acquire the subject property, the process did come into fruition and the property was never used
for the intended purpose. The RTC likewise reasoned that MCIAA’s action was already barred by
prescription and laches.
Aggrieved by the trial court’s decision, the Republic of the Philippines, represented by the
MCIAA, sought recourse before the Court of Appeals. On April 10, 2014,15 the appellate court
denied MCIAA’s appeal and affirmed the trial court’s decision.16
The CA opined that indeed, laches has already set in as correctly appreciated by the lower court.
Twenty-eight (28) years is a long time for the government to remain silent despite the fact that
respondent already fenced the entire property with hollow blocks. When the government built the
Matumbo Road which traversed the property, the area was already fenced. This should have alerted
the petitioner that some other entity is laying claim and possession over the subject property.
Moreover, even assuming that there was a valid expropriation, the record is bereft of any evidence
that the government had fully paid the just compensation for the properties it expropriated.
MCIAA filed a motion for reconsideration, but it was denied in the Resolution17 dated March 19,
2015.
pg. 1549
_______________
14 Id., at p. 161.
15 Supra note 1.
16 Rollo, pp. 31-42.
17 Id., at pp. 44-45.
250

Hence, this petition for review on certiorari raising the following issues:
I.
WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN

HOLDING THAT LACHES HAS SET IN THIS CASE AGAINST THE REPUBLIC.
II.
WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN FINDING

THAT RESPONDENT HAS A VALID TITLE OVER LOT NO. 2498.18
MCIAA argues that laches does not apply when the government sues as a sovereign or asserts
governmental rights. MCIAA asserts that by the clear and unequivocal disposition of the CFI
judgment that title to Lot No. 2498 is granted to the Republic of the Philippines, the reconstituted
OCT No. RO-0608 issued to the predecessor-in-interest of respondent conferred no enforceable
rights upon the latter as the same lot has already been expropriated by the government as early as
January 1967.
MCIAA insists that it should be adjudged the real and lawful owner of Lot No. 2498, having
validly acquired it through expropriation. MCIAA submits that although it was not able to prove
pg. 1550
full payment of the just compensation considering the lapse of time since 1967, such inability does
not detract from the fact that the expropriation case was concluded and had gained finality by
virtue of the Order issued on January 7, 1967. Assuming arguendo that the original owner of the
expropriated land has not been paid for his land, MCIAA insists that such fact does not affect the
propriety of the decision made in the expropriation proceedings awarding the land to the
expropriator.
On the other hand, respondent corporation points out that MCIAA failed to present any credible
evidence that there was
_______________
18 Id., at p. 16.
251
VOL. 809, NOVEMBER 16, 2016 251

a valid judgment of expropriation or payment of just compensation. It reiterates that MCIAA failed
to adduce evidence that its predecessor-in-interest did not comply with the law on reconstitution
of title. Finally, it claims that the petition has failed to show any reversible error in the assailed
judgment to warrant the exercise of the court’s appellate jurisdiction.
We find the petition to be unmeritorious.
At the outset, the Court has consistently held that the lower court’s findings of fact, particularly
when affirmed by the CA, are final and conclusive upon the Court. In this, as well as in other
appeals, the Court, not being a trier of facts, does not review their findings, especially when they
are supported by the records or based on substantial evidence.19 It is not the function of the Court
to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower
courts are absolutely devoid of support or are glaringly erroneous as to constitute palpable error or
grave abuse of discretion.20 However, We have carefully perused the records yet We found no
ground to apply the exception in the instant case because the findings and conclusions of the
appellate court are in full accord with those of the trial court.
Whether just compensation

over the property was paid.
pg. 1551
The right of eminent domain is usually understood to be an ultimate right of the sovereign power
to appropriate any property within its territorial sovereignty for a public purpose. The nature and
scope of such power has been comprehensively described as follows:21
_______________
19 FGU Insurance Corporation v. Court of Appeals, 494 Phil. 342, 355; 454 SCRA 337, 348
(2005).
20 Id., at p. 356; p. 349.
21 Jesus is Lord Christian School Foundation, Inc. v. Municipality (now City) of Pasig, Metro
Manila, 503 Phil. 845; 466 SCRA 235 (2005).
252

x x x It is an indispensable attribute of sovereignty; a power grounded in the primary duty of

government to serve the common need and advance the general welfare. Thus, the right of eminent
domain appertains to every independent government without the necessity for constitutional
recognition. The provisions found in modern constitutions of civilized countries relating to the
taking of property for the public use do not by implication grant the power to the government, but
limit the power which would, otherwise, be without limit. Thus, our own Constitution provides
that “[p]rivate property shall not be taken for public use without just compensation.”
Furthermore, the due process and equal protection clauses act as additional safeguards against the
arbitrary exercise of this governmental power.22
The exercise of the right of eminent domain, whether directly by the State or by its authorized
agents, is necessarily in derogation of private rights. It is one of the harshest proceedings known
to the law. Consequently, when the sovereign delegates the power to a political unit or agency, a
strict construction will be given against the agency asserting the power. The authority to condemn
is to be strictly construed in favor of the owner and against the condemnor. When the power is
granted, the extent to which it may be exercised is limited to the express terms or clear implication
of the statute in which the grant is contained.23
Corollarily, the Government, which is the condemnor, has the burden of proving all the essentials
necessary to show the right of condemnation. It has the burden of proof to establish that it has
pg. 1552
complied with all the requirements provided by law for the valid exercise of the power of eminent
domain such as the payment of just compensation.24
_______________
22 Id., at p. 862; p. 251, quoting Heirs of Alberto Suguitan v. City of Mandaluyong, 384 Phil. 676,
687-688; 328 SCRA 137, 144 (2000). (Emphasis ours)
23 Id.
24 Id., at pp. 862-863; p. 252.
253
VOL. 809, NOVEMBER 16, 2016 253

However, in the instant case, MCIAA is silent as to proving the payment of just compensation.
During trial, MCIAA failed to present any evidence of full payment of the just compensation for
the property. The only evidence on record consists of the Order of the Court, dated July 8, 1964
(Exhibit “B”), placing the government in possession of Lot No. 2498, among others, after
depositing P32,869.17, and the Order dated January 7, 1967 (Exhibit “A”) declaring the reasonable
value of the lots at P1.50 per square meter.25 Other than these two Orders, MCIAA failed to
produce any proof of payment of just compensation. Even MCIAA’s own witness, Michael
Bacarias, admitted during cross-examination, that he has no personal knowledge on whether or not
just compensation was fully paid by MCIAA in favor of Godinez, and whether Lot No. 2498 was
actually devoted for public use.26
Even assuming arguendo that the government deposited the amount of P32,869.17 as partial
payment for the 27 lots subject of the expropriation case, no evidence were presented to prove that
subsequent payment for the lots was made based on the adjusted rate of P1.50 per square meter.
Thus, considering MCIAA’s failure to prove payment either by documentary of testimonial
evidence, it can be logically surmised that there was indeed no actual payment of just
compensation.
The pertinent portion of the court a quo’s decision is noteworthy, to wit:
There is no question of the existence of the expropriation case of which Lot No. 2498 was among
the 27 lots involved. Plaintiff has however shown no evidence that compensation has at all been
paid for Lot No. 2498, nor has evidence been shown that plaintiff and its predecessors-in-
interest ever used the property for any purpose.
pg. 1553
_______________
25 Records, p. 158.
26 Id., at pp. 80-82.
254

It is clear that, though the expropriation of Lot No. 2498 was initiated, the government did not
follow through with the expropriation of this particular lot, probably because there was no more
need for it, considering that the property is located about five (5) kilometers from the airport.
This explains why Lot No. 2498 has been continuously possessed by defendant and its
predecessors-in-interest.
x x x27
Needless to say that in an expropriation case, an essential element of due process is that there must
be just compensation whenever private property is to be taken for public use. Accordingly, Section
9, Article III, of our Constitution mandates: “Private property shall not be taken for public use
without just compensation.” Clearly, without full payment of just compensation, there can be no
transfer of title from the landowner to the expropriator.28
Whether laches has set in

against the government.
Laches is the failure or neglect, for an unreasonable length of time to do that which by exercising
due diligence could or should have been done earlier; it is negligence or omission to assert a right
within a reasonable time warranting a presumption that the party entitled to assert it has either
abandoned it or has declined to assert it. It has also been defined as such neglect or omission to
assert a right taken in conjunction with the lapse of time and other circumstances causing prejudice
to an adverse party, as will operate as a bar in equity.29
pg. 1554
_______________
27 Emphasis ours.
28 Republic v. Lim, 500 Phil. 652, 665; 462 SCRA 265, 278 (2005).
29 Salandanan v. Court of Appeals, 353 Phil. 115, 120; 290 SCRA 671, 677-678 (1998).
255
VOL. 809, NOVEMBER 16, 2016 255

We have ruled in Catholic Bishop of Balanga v. Court of Appeals,30 that:
That principle of laches is a creation of equity which, as such, is applied not really to penalize
neglect or sleeping upon one’s right, but rather to avoid recognizing a right when to do so would
result in a clearly inequitable situation. As an equitable defense, laches does not concern itself
with the character of the defendant’s title, but only with whether or not by reason of the
plaintiff’s long inaction or inexcusable neglect, he should be barred from asserting this claim
at all, because to allow him to do so would be inequitable and unjust to the defendant.
The doctrine of laches or stale demands is based upon grounds of public policy which requires, for
the peace of society, the discouragement of stale claims and
. . . is principally a question of the inequity or unfairness of permitting a right or claim to be
enforced or asserted.
The time-honored rule anchored on public policy is that relief will be denied to a litigant whose
claim or demand has become “stale” or who has acquiesced for an unreasonable length of time,
or who has not been vigilant or who has slept on his rights either by negligence, folly or
inattention. In other words, public policy requires, for the peace of society, the discouragement of
claims grown stale for non-assertion; thus laches is an impediment to the assertion or enforcement
of a right which has become, under the circumstances, inequitable or unfair to permit.31
Corollarily, based on the foregoing, the government’s inaction in paying the just compensation for
the property for more than 30 years is fatal to their cause of action as laches has indeed already set
in.
_______________
pg. 1555
30 332 Phil. 206; 264 SCRA 181 (1996).
31 Id., at pp. 219-220; pp. 193-194. (Emphasis ours; citations omitted)
256

In the case of Apo Fruits Corporation, et al. v. Land Bank of the Philippines,32 just compensation
has been defined as “the full and fair equivalent of the property taken from its owner by the
expropriator.” However, in order for the payment to be “just,” it must be real, substantial,
full, and ample.33 The Court, in Estate of Salud Jimenez v. Philippine Export Processing Zone,34
stressed that not only must the payment be fair and correctly determined, but also, the
payment should be made within a “reasonable time” from the taking of the property. It
succinctly explained that without prompt payment, compensation cannot be considered “just”
deprived of the land while being made to wait for a decade or more before actually receiving the
amount necessary to cope with the loss.35 Thus, once just compensation is finally determined, the
expropriator must immediately pay the amount to the lot owner. Clearly, in this case, the
government’s delay in the payment of the just compensation for over 30 years is no longer
reasonable as contemplated by the law.
Thus, MCIAA’s neglect or omission to assert a supposed right for more than thirty (30) years is
too long a time as to warrant the presumption that it had abandoned such right to expropriate the
subject property. No evidence was presented to show that MCIAA ever took any action,
administrative or judicial, nor did it question or protest the corporation’s occupation of the subject
lot until its filing of the complaint in 1996, or more than 30 years. There was no evidence to show
_______________
32 647 Phil. 251, 271; 632 SCRA 727, 741 (2010), citing Land Bank of the Philippines v. Orilla,
578 Phil. 663, 676; 556 SCRA 102, 116-117 (2008).
33 Id.
34 402 Phil. 271, 295; 349 SCRA 240, 264 (2001); Land Bank of the Philippines v. Court of
Appeals, 327 Phil. 1047, 1054; 258 SCRA 404, 408-409 (1996), quoting Municipality of Makati
v. Court of Appeals, 268 Phil. 215; 190 SCRA 206 (1990).
35 Id., at p. 222; p. 264.
pg. 1556
257
VOL. 809, NOVEMBER 16, 2016 257

that MCIAA had even apprised defendant of its right and of its intention to assert it.
The application of laches is addressed to the sound discretion of the court as its application is
controlled by equitable considerations.36 In the instant case, with the foregoing considerations, it
is but just for MCIAA to face the consequence of its negligence or passivity after it had slept on
its rights for more than 30 years. Clearly, the inaction of MCIAA for over 30 years has reduced its
right to regain possession of the subject property to a stale demand. Indeed, the law helps the
vigilant but not those who sleep on their rights.37 For time is a means of destroying obligations
and actions, because time runs against the slothful and contemners of their own rights.38
Whether respondent has a valid

title over Lot No. 2498
The issue of whether or not the corporation acted in bad faith in the acquisition of the title of the
subject Lot No. 2498 is immaterial considering that the government did not complete the
expropriation process by its failure to pay just compensation. It failed to perfect its title over the
subject lot. Even assuming that the corporation was in bad faith, MCIAA will not have a better
title over the subject property because in the first place, MCIAA has no title to speak of. It would
have been a different story if MCIAA actually acquired title over the subject property. In such a
case, even if the corporation’s title was registered first, it would be the Republic’s title or right of
ownership that shall be upheld.
In Cabuhat v. Court of Appeals,39 We have said that even if the procurement of a certificate of
title was tainted with fraud
_______________
36 Insurance of the Philippine Islands Corporation v. Gregorio, 658 Phil. 36, 42; 642 SCRA 685,
692 (2011).
37 Supra note 29 at p. 121; p. 679.
38 Id.
pg. 1557
39 418 Phil. 451, 456; 366 SCRA 176, 182 (2001).
258

and misrepresentation, such defective title may be the source of a completely legal and valid title
in the hands of an innocent purchaser for value. Thus, where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the property the court cannot
whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of
the law as every person dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him to go behind the certificate
to determine the condition of the property. They are only charged with notice of the liens and
encumbrances on the property that are noted on the certificate.
During cross-examination, Tirso S. Limbonhai, recalled that while he can rely solely upon the face
of a Torrens Certificate of the Title and to dispense with the need of inquiring further, he
nonetheless diligently sought to inquire, investigate and verify the status of the subject property,
and conducted an ocular inspection of the subject property. He, however, found the title and the
subject property to be clean.40 Thus, considering that he purchased said subject lot on the
assurance that Godinez’ title thereto is clean and valid, he should not run the risk of being told
later that his acquisition was invalid.
In Peralta v. Heirs of Bernardina Abalon,41 citing Tenio-Obsequio v. Court of Appeals,42 We

explained the purpose of the Torrens system and its legal implications to third persons dealing with
registered land, as follows:
_______________
40 Rollo, pp. 105-109.
41 G.R. No. 183448, June 30, 2014, 727 SCRA 477, 490.
42 300 Phil. 588, 597-598; 230 SCRA 550, 556-557 (1994).
pg. 1558
259
VOL. 809, NOVEMBER 16, 2016 259

The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to
facilitate transactions relative thereto by giving the public the right to rely upon the face of a
Torrens certificate of title and to dispense with the need of inquiring further, except when the party
concerned has actual knowledge of facts and circumstances that should impel a reasonably
cautious man to make such further inquiry. Where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the property, the court cannot
as to whether the title has been regularly or irregularly issued by the court. Every person dealing
with registered land may safely rely on the correctness of the certificate of title issued therefor and
the law will in no way oblige him to go beyond the certificate to determine the condition of the
property.
The Torrens system was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim
of ownership is established and recognized. If a person purchases a piece of land on the assurance
that the seller’s title thereto is valid, he should not run the risk of being told later that his acquisition
was ineffectual after all. This would not only be unfair to him. What is worse is that if this were
permitted, public confidence in the system would be eroded and land transactions would have to
be attended by complicated and not necessarily conclusive investigations and proof of ownership.
The further consequence would be that land conflicts could be even more numerous and complex
than they are now and possibly also more abrasive, if not even violent. The Government,
recognizing the worthy purposes of the Torrens system, should be the first to accept the validity
of titles issued thereunder once the conditions laid down by the law are satisfied.
260

Moreover, MCIAA never presented proof that the corporation or its predecessors-in-interest who
had bought the subject lot from Godinez were buyers in bad faith. Nowhere in the records does it
show that the respondent was in bad faith. We have held that the determination of bad faith is
evidentiary in nature. Thus, an allegation of bad faith must be substantiated by clear and
convincing evidence as jurisprudence dictates that bad faith cannot be presumed.43 Consequently,
pg. 1559
since MCIAA failed to present any iota of evidence that the corporation or its predecessors-in-
interest were in bad faith in the acquisition of the subject property, their claim of good faith, thus,
prevails.
Verily, in civil cases, the party having the burden of proof must establish his case by a
preponderance of evidence. Preponderance of evidence is the weight, credit, and value of the
aggregate evidence on either side, and is usually considered to be synonymous with the term
greater weight of the evidence or greater weight of the credible evidence. Preponderance of
evidence is a phrase that means, in the last analysis, probability of the truth. It is evidence that is
more convincing to the court as worthy of belief than that which is offered in opposition thereto.44
In the case at bar, MCIAA failed to dispense its burden of proving by clear and convincing
evidence that it has a right to have the TCT issued in the name of respondent corporation cancelled.
WHEREFORE, the petition is hereby DENIED. The Court AFFIRMS the Decision promulgated
on April 10, 2014 by the Court of Appeals.
SO ORDERED.
Perez, Reyes and Leonen,*** JJ., concur.
_______________
43 See Arenas v. Court of Appeals, 399 Phil. 372; 345 SCRA 617 (2000).
44 Oño v. Lim, 628 Phil. 418, 430; 614 SCRA 514, 525 (2010).
*** Designated additional member, in lieu of Associate Justice Francis H. Jardeleza, per Raffle
dated November 16, 2016.
261
VOL. 809, NOVEMBER 16, 2016 261

Note.—Delineated roads and streets, whether part of a subdivision or segregated for public use,
remain private and will remain as such until conveyed to the government by donation or through
expropriation proceedings. (Republic vs. Ortigas and Company Limited Partnership, 717 SCRA
601 [2014])
pg. 1560
——o0o——
ANNOTATION
LIS PENDENS: PREVENTING REAL ESTATE
PROPERTIES FROM BEING PURLOINED
by
MAURICIO C. ULEP*
___________________
§ 1. Meaning of lis pendens, p. 619
§ 2. Purpose and essence of lis pendens, p. 620
§ 3. Nature of lis pendens, p. 621
§ 4. The essence of lis pendens, p. 622
§ 5. A notice of lis pendens is founded on public policy,

p. 624
§ 6. Who may file a notice of lis pendens, p. 624
§ 7. When to file a notice of lis pendens, p. 624
§ 8. Two-fold effects of a notice of lis pendens, p. 624
§ 9. Effect if there is no notice of lis pendens, p. 625
§ 10. Elements to annotate a notice of lis pendens, p. 626
pg. 1561
§ 11. Notice of lis pendens is not a lien on property, p. 626
§ 12. Scope of lis pendens, p. 627
§ 13. Constructive notice operates from registration date of notice of lis pendens, p. 627
§ 14. A notice of lis pendens may only be cancelled by the court, p. 628
_______________
* Former Associate Dean, UE College of Law; Professor of Law; Author of Law Books.
618

Lis Pendens: Preventing Real Estate Properties from being Purloined
§ 15. Grounds for cancellation of notice of lis pendens, p. 629
§ 16. A notice of lis pendens cannot be cancelled by posting a bond, p. 630
§ 17. The court’s power to cancel lis pendens is exercised only under exceptional
circumstances, p. 630
§ 18. Notice of lis pendens is permissible in guardianship proceedings, p. 631
§ 19. Lis pendens and receivership proceedings, p. 631
§ 20. Requisites for lis pendens as a ground for dismissal of a complaint, p. 632
§ 21. One who deals with a property subject of lis pendens cannot invoke the right of a buyer
in good faith, p. 632
§ 22. A notice of lis pendens does not preclude the sale of the property to an adventurous
buyer, p. 633
§ 23. A notice of lis pendens cannot be cancelled pending determination of a case. Exception,
p. 633
§ 24. Significance of a lis pendens, p. 634
pg. 1562
§ 25. Any decision in a land registration case binds only the parties unless notice of lis
pendens is recorded in the title, p. 634
§ 26. Proceedings connected with the issue on lis pendens must be liberally construed, p. 635
§ 27. Rule on cancellation of lis pendens, p. 636
§ 28. A notice of lis pendens cannot be sought as a principal action for relief, p. 637
§ 29. Only the particular property under litigation is covered by lis pendens, p. 637
§ 30. Pencil markings are not an accepted form of annotating a notice of lis pendens, p. 638
§ 31. Instances where the doctrine of lis pendens has no application, p. 638
§ 32. Damages may not be awarded if court orders cancellation of lis pendens, p. 639
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§ 33. There is no requirement that the right to a property subject of lis pendens, be proven
by the applicant,
p. 639
§ 34. A notice of lis pendens does not suffice to protect rights over the property, p. 639
§ 35. Effect of filing a notice of lis pendens as to third persons, p. 640
§ 36. Where must the annotation of lis pendens be made,

p. 641
§ 37. Expenses for notice of lis pendens is chargeable against the estate in a probate
proceeding, p. 641
§ 38. Effect of lis pendens in an unregistered land, p. 641
§ 39. What constitutes constructive notice to any purchaser of a property with lis pendens,
p. 642
§ 40. Cancellation of lis pendens is discretionary, p. 642
pg. 1563
§ 41. Lis pendens cannot affect decree of registration of a land, p. 643
§ 42. Lis pendens as a defense, p. 643
§ 43. The wife has the right to annotate a notice of lis pendens on properties alienated by the
husband,
p. 644
§ 44. Procedural matters, p. 645
___________________
§ 1. Meaning of lis pendens
Lis pendens is a Latin term which literally means a pending suit or a pending litigation while a
notice of lis pendens is an announcement to the whole world that a particular real property is in
litigation, serving as a warning that one who acquires an interest over the said property does so at
his own risk, or that he gambles on the result of the litigation over the said property. It is but a
signal to the intending buyer or
620

mortgagee to take care or beware and to investigate the prospect or non-prospect of the litigation
succeeding before he forks down his money. (People v. Regional Trial Court of Manila, 178 SCRA
299 [1989]; Gonzales v. Marmaine Realty Corporation, 781 SCRA 63 [2016])
A notice of lis pendens means that a certain property is involved in a litigation and serves as notice
to the whole world that one who buys the same does so at his own risk. (Rehabilitation Finance
Corporation v. Morales, 101 Phil. 171 [1957]. Cited in Heirs of Maria Marasigan v. Intermediate
Appellate Court, 152 SCRA 253 [1987]. See also Constantino v. Espiritu, 45 SCRA 557 [1972];
Dela Merced v. Government Service Insurance System (GSIS), 661 SCRA 83 [2011]; Lukang v.
Pagbilao Development Corporation, 718 SCRA 297 [2014])
pg. 1564
§ 2. Purpose and essence of lis pendens
The purpose of filing a notice of lis pendens is to charge strangers with notice of the particular
litigation referred to in the notice; and if the notice is effective, a third person who acquires the
property affected by the lis pendens takes same subject to the eventuality of the litigation. But
when the adverse right fails in such litigation, the lis pendens loses its efficacy.
Moreover, the lis pendens annotation, although considered a “general notice to all the world, x x x
it is not correct to speak of it as a part of the doctrine of notice; the purchaser pendente lite is
affected, not by notice, but because the law does not allow litigating parties to give to others,
pending the litigation, rights to the property in dispute so as to prejudice the opposite party. The
doctrine rests upon public policy, not notice. (Tirado v. Sevilla, 188 SCRA 321 [1990]. See also
Laroza v. Guia, 134 SCRA 341 [1985])
Lis pendens has been conceived to protect the real rights of the party causing the registration
thereof. (Jamora v. Duran, et. al., 69 Phil. 3 [1939]; Homeowners Savings and Loan Bank
621
VOL. 810, NOVEMBER 28, 2016 621

v. Felonia, 717 SCRA 358 [2014]) It is a notice which will bind any prospective buyer to the
outcome of the civil case pending before the trial court. (Knecht v. Court of Appeals, 228 SCRA 1
[1993]. See also Bijis v. Court of Appeals, 15 SCRA 157 [1965])
xxx xxx xxx
Moreover:
The annotation of lis pendens is sufficient to protect the rights of the private respondents for once
a notice of lis pendens has been duly entered, any cancellation or issuance of title of the land
involved as well as any subsequent transaction affecting the same, would have to be subject to the
outcome of the litigation. The rights of the private respondents are sufficiently protected since
pg. 1565
upon the termination of the litigation there can be no risk of losing the property or any part of it as
a result of any conveyance of the land or any encumbrance that may be made thereon posterior to
the filing of the notice of lis pendens. (Medelo v. Gorospe, 159 SCRA 248 [1988])
§ 3. Nature of lis pendens
The notice is but an incident in an action, an extrajudicial one, to be sure. It does not affect the
merits thereof. It is intended merely to constructively advise, or warn, all people who deal with the
property that they so deal with it at their own risk, and whatever rights they may acquire in the
property in any voluntary transaction are subject to the results of the action, and may well be
inferior and subordinate to those which may be finally determined and laid down therein. The
cancellation of such a precautionary notice is therefore also a mere incident in the action, and may
be ordered by the Court having jurisdiction of it at any given time. And its continuance or removal
— like the continuance or removal of a preliminary attachment or injunction — is not contingent
on the existence of a final judgment in the action, and ordinarily has
622

no effect on the merits thereof. (Magdalena Homeowners Association, Inc. v. Court of Appeals,
184 SCRA 325 [1990])
Moreover:
A notice of lis pendens is an announcement to the whole world that a particular real property is in
litigation, serving as a warning that one who acquires an interest over said property does so at his
own risk, or that he gambles on the result of the litigation over the said property. The filing of a
notice of lis pendens charges all strangers with a notice of the particular litigation referred to
therein and, therefore, any right they may thereafter acquire on the property is subject to the
eventuality of the suit. Notice of lis pendens has been conceived and more often than not, availed
of, to protect the real rights of the registrant while the case involving such rights is pending
resolution or decision. With the notice of lis pendens duly recorded, and while it remains
uncancelled, the registrant could rest secure that he would not lose the property or any part of it
during the litigation. (Po Lam v. Court of Appeals, 347 SCRA 86 [2000])
pg. 1566
Lastly:
A notice of lis pendens neither affects the merits of a case nor create a right or lien — it serves to
protect the real rights of a registrant while the case involving such rights is pending resolution, and
while the notice of lis pendens remains on a certificate of title, the registrant could rest secure that
he would not lose the property or any part of it during the litigation. (Vicente v. Avera, 576 SCRA
634 [2009]. See also AFP Mutual Benefit Assn., Inc. v. Court of Appeals, 327 SCRA 203 [2000])
§ 4. The essence of lis pendens
Sec. 76 of P.D. 1529 provides: Notice of lis pendens.—No action to recover possession of real
estate, or to quiet title thereto, or to remove clouds upon the title thereof, or for par-
623
VOL. 810, NOVEMBER 28, 2016 623

tition, or other proceedings of any kind in court directly affecting the title to land or the use or
occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or
reverse any judgment, shall have any effect upon registered land as against persons other than the
parties thereto, unless a memorandum or notice stating the institution of such action or proceeding
and the court wherein the same is pending, as well as the date of the institution thereof, together
with a reference to the number of the certificate of title, and an adequate description of the land
affected and the registered owner thereof, shall have been filed and registered.
Under said law, lis pendens may lie only where there is an action or proceeding in court, which
affects title to, or possession of real property. In other words, lis pendens is the jurisdiction, power,
or control which the court acquires over the property involved in the suit pending the continuance
of the action; and until its final judgment therein, it has for its object the keeping of the subject or
res within the power of the court until the judgment or decree shall be entered, to make it possible
for courts of justice to give effect to their judgments and decrees. This, in effect, is the essence of
the rule of lis pendens.
When a case is commenced involving any right to land registered under the Land Registration
Law, any decision therein will bind the parties only, unless a notice of the pendency of such action
pg. 1567
is registered on the title of the said land, in order to bind the whole world as well. Therefore, in
order that a notice of lis pendens may affect the right of a subsequent purchaser, such notice should
be annotated on the back of the certificate of title. (Dino v. Court of Appeals, 213 SCRA 422
[1992]. See also Felix Gochan & Sons Realty Corp. v. Cañada, 165 SCRA 207 [1988])
624

§ 5. A notice of lis pendens is founded on public policy
The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of
which is to keep the subject matter of the litigation within the power of the court until judgment
or decree shall have been entered; otherwise, by successive alienations pending the litigation, its
judgment or decree shall be rendered abortive and impossible of execution. Purchasers pendente
lite of the property subject of the litigation after the notice of lis pendens is inscribed in the Office
of the Register of Deeds are bound by the judgment against their predecessor. They will be held
to have bought the land in bad faith since they are charged with notice of the existence of the
litigation over the property in question. (Tanchoco v. Aquino, 154 SCRA 1 [1987]. See also Lim
v. Vera Cruz, 356 SCRA 386 [2001])
§ 6. Who may file a notice of lis pendens
The following may file a notice of lis pendens:
1. The plaintiff – at the time of the filing the complaint;
2. The defendant – at the time of filing his answer (when affirmative relief is claimed in such
answer); or at any time afterwards. (Villanueva v. Court of Appeals, 281 SCRA 298 [1997])
§ 7. When to file a notice of lis pendens
pg. 1568
A notice of lis pendens must be filed after filing the complaint or at any time before the decision
of the trial court is rendered.
§ 8. Two-fold effects of a notice of lis pendens
The filing of a notice of lis pendens has a two-fold effect.
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VOL. 810, NOVEMBER 28, 2016 625

First, it keeps the subject matter of the litigation within the power of the court until the entry of
the final judgment to prevent the defeat of the final judgment by successive alienations.
Second, it binds a purchaser, bona fide or not, of the land subject of the litigation to the judgment
or decree that the court will promulgate subsequently. However, the filing of a notice of lis pendens
does not create a right or lien that previously did not exist.
Without a notice of lis pendens, a third party who acquires the property after relying only on the
certificate of title is a purchaser in good faith. Against such third party, the supposed rights of a
litigant cannot prevail. (Heirs of Eugenio Lopez, Sr. v. Enriquez, 449 SCRA 173 [2005]. See
also Romero v. Court of Appeals, 458 SCRA 483 [2005])
Moreover:
The effect of the notice of lis pendens is not to establish an actual lien on the property affected.
All that it does is to give notice to third persons and to the whole world that any interest they may
acquire in the property pending litigation will be subject to the eventuality or result of the suit. It
follows to reason, therefore, that the mere failure to state in a public document, as a notarized deed
of sale, the existence of a notice of lis pendens does not constitute falsification of a public
document under Article 172 of the Revised Penal Code. (People v. Regional Trial Court of Manila,
178 SCRA 299 [1989])
§ 9. Effect if there is no notice of lis pendens
pg. 1569
Without a notice of lis pendens, a third party who acquires the property after relying only on the
certificate of title is a purchaser in good faith. Against such third party, the supposed rights of a
litigant cannot prevail, because the former is not bound by the property owner’s undertakings not
anno-
626

tated in the transfer certificate of title. (Heirs of Eugenio Lopez, Sr. v. Enriquez, 449 SCRA 173
[2005])
Likewise, an unrecorded mortgage of registered land has no legal effect as far as third parties in
good faith are concerned and rights acquired thereunder cannot prevail against rights based upon
properly recorded transactions. (Manalo v. Young and Sheriff of Rizal, 44 Phil. 261 [1922])
§ 10. Elements to annotate a notice of lis pendens
To annotate a notice of lis pendens, the following elements must be present:
(a) The property must be of such character as to be subject to the rule;
(b) The court must have jurisdiction both over the person and the res; and
(c) The property or res involved must be sufficiently described in the pleadings. (Villanueva v.
§ 11. Notice of lis pendens is not a lien on property
Well-settled is the rule that when the property sold is registered under the Torrens system,
registration is the operative act to convey or affect the land insofar as third persons are concerned.
pg. 1570
Thus, a person dealing with registered land is only charged with notice of the burdens on the
property which are noted on the register or certificate of title. While it is true that notices of lis
pendens in favor of other persons were earlier inscribed on the title, these did not have the effect
of establishing a lien or encumbrance on the property affected. Their only purpose was to give
notice to third persons and to the whole world that any interest they might acquire in the property
pending litigation would be subject to the result of the suit. (Agricultural and Home Extension
Development Group v. Court of Appeals, 213 SCRA 563 [1992])
627
VOL. 810, NOVEMBER 28, 2016 627

§ 12. Scope of lis pendens
Lis pendens applies to suits brought to establish an equitable estate, interest or right in specific real
property or to enforce any lien, charge or encumbrance against it. (Viewmaster Construction
Corporation v. Maulit, 326 SCRA 821 [2000]; Gochan v. Young, 354 SCRA 207 [2001]; Romero
v. Court of Appeals, 458 SCRA 483 [2005])
The annotation of a lis pendens on titles to properties is not proper in cases wherein the proceedings
instituted are actions in personam. (Atlantic Erectors, Inc. v. Herbal Cove Realty Corporation, 399
SCRA 409 [2003])
§ 13. Constructive notice operates from registration date of notice of lis pendens
In one case, the Supreme Court held:
Petitioner filed Civil Case No. Q-91-10071 way back in 1991. TCT Nos. 108070 and 108071 were
issued in Sarte’s name on May 13, 1994; TCT No. 122944 was issued in respondent’s name on
December 21, 1994. Petitioner had enough opportunity to have its adverse claim and a notice of
lis pendens annotated on Sarte’s title before the latter assigned the property to Evangelista, but it
did not do so. The adverse claim was annotated only on May 4, 1995 and the notice of lis pendens,
on May 31, 1995. While a notice of lis pendens “serves as a warning to a prospective purchaser or
incumbrancer that the particular property is in litigation; and that he should keep his hands off the
same, unless he intends to gamble on the results of the litigation,” such constructive notice operates
pg. 1571
as such from the date of the registration of the notice of lis pendens, which in this case, was, at the
earliest, on May 4, 1995. (National Housing Authority v. Evangelista, 458 SCRA 469 [2005])
628

The importance of a timely annotation of lis pendens was illustrated by the Supreme Court in
another case, to wit:
The land described in transfer certificate of title No. 207 formerly belonged to G. G sold the land
to A on January 24, 1920. On the same date, A mortgaged the land to G. On January 26, 1920, the
registrar of deeds issued transfer certificate of title No. 279 free from any encumbrance in the name
of A. On March 13, 1920, A mortgaged the land to R. On March 19, 1920, G instituted suit in
Manila to rescind the contract. On March 19, 1920, at 9:30 a.m., the mortgage of A in favor of R
was noted on certificate of title No. 279. At 11:11 a.m. of the same day, the registrar of deeds was
advised by telegraph of the pending suit in Manila. Lis pendens was received by the registrar of
deeds on March 24, 1920. Subsequently the deed of sale executed by G in favor of A was rescinded
by the Court of First Instance of Manila, and on appeal the Supreme Court affirmed judgment.
Subsequent to March 1920, also, R foreclosed the mortgage, and purchased the property at public
auction, the sale being confirmed by the Court of First Instance of Tarlac. It is thus noted that G
failed to register the mortgage executed by A in his favor, while R recorded the mortgage executed
by A in her favor. It is further noted that the lis pendens of G was received at 11:11 a.m. on March
19, 1920. Held: That R is an innocent purchaser for value and the owner of the property. (Martinez
de Gomez v. Jugo and Lopez de Jesus, 48 Phil. 118 [1925])
§ 14. A notice of lis pendens may only be cancelled by the court
In an action affecting the title or the right of possession of real property, the plaintiff and the
defendant, when affirmative relief is claimed in his answer, may record in the office of the registry
of deeds of the province in which the property is situated notice of the pendency of the action. Said
notice shall contain the names of the parties and the object of the action
629
pg. 1572
VOL. 810, NOVEMBER 28, 2016 629
or defense, and a description of the property in that province affected thereby. Only from the time
of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby,
be deemed to have constructive notice of the pendency of the action, and only of its pendency
against the parties designated by their real names.
not necessary to protect the rights of the party who caused it to be recorded. (Section 14, Rule 13,
1997 Rules of Civil Procedure)
The cancellation of lis pendens on a mere certification of case finality by a court personnel does
not appear in order. The rules dictate that cancellation of the notice should be done with judicial
authority. Then, too, by virtue of the notice of lis pendens, petitioner is bound by the outcome of
the litigation subject of the lis pendens. As a transferee pendente lite, he stands exactly in the shoes
of the transferor and must respect any judgment or decree which may be rendered for or against
the transferor. (Seveses v. Court of Appeals, 316 SCRA 605 [1999]; Office of the Court
Administrator v. De Guzman, Jr., 267 SCRA 291 [1997])
§ 15. Grounds for cancellation of notice of lis pendens
Sec. 14, Rule 13 of the Rules of Court expressly provides that courts can cancel a notice of lis
pendens only on two grounds: (a) after a proper showing that the notice is for the purpose of
molesting the adverse party; or (b) it is not necessary to protect the interest of the party who caused
it to be recorded.
Another ground to cancel a notice of lis pendens as established is, if it is for the purpose of
molesting the adverse party or that it is not necessary to protect the rights of the party who caused
it to be recorded. (Magdalena Homeowners Asso-
630

pg. 1573
ciation, Inc. v. Court of Appeals, 184 SCRA 325 [1990]; Reyes-Mesugas v. Reyes, 616 SCRA 345
[2010]). Thus, a notice of lis pendens may be ordered cancelled by the court if the properties
involved are subject to the supervision of the court and the said properties are under custodia legis.
(Vda de. Kilayko v. Tengco, 207 SCRA 600 [1992])
Lastly, lis pendens is not allowed if it is merely an anticipatory action or more appropriately, an
anticipatory defense against an expected suit — a clever move to steal the march from the
aggrieved party. (Victronics Computers, Inc. v. RTC, Br. 63, Makati, 217 SCRA 517 [1993])
§ 16. A notice of lis pendens cannot be cancelled by posting a bond
The law does not authorize a judge to cancel a notice of lis pendens pending litigation upon the
mere filing of a sufficient bond by the party on whose title said notice is annotated. (Tan v. Lantin,
142 SCRA 423 [2000]; Yared v. Ilarde, 337 SCRA 53 [2000]; Lim v. Vera Cruz, 356 SCRA 386
[2001])
§ 17. The court’s power to cancel lis pendens is exercised only under exceptional
circumstances
The trial court’s inherent power to cancel a notice of lis pendens is exercised only under
exceptional circumstances, such as: where such circumstances are imputable to the party who
caused the annotation; where the litigation was unduly prolonged to the prejudice of the other party
because of several continuances procured by petitioner; where the case which is the basis for the
lis pendens notation was dismissed for non prosequitur on the part of the plaintiff; or where
judgment was rendered against the party who caused such a notation. In such instances, said notice
is deemed ipso facto cancelled. (Fernandez v. Court of Appeals, 343 SCRA 184 [2000])
631
VOL. 810, NOVEMBER 28, 2016 631

Thus, a trial court commits grave abuse of discretion in ordering the cancellation of a notice of lis
pendens where there was no unnecessary delay attributable to plaintiff and his counsel in the
pg. 1574
resolution of the main case for annulment of the land title, especially when the cancellation was
ordered without notice to plaintiff’s counsel. (Sarmiento v. Ortiz, 10 SCRA 158 [1964])
Likewise, the order directing the cancellation of the notice of lis pendens should be set aside where
it was granted ex parte and the order dismissing the complaint had not yet become final. (Nataño
v. Esteban, 18 SCRA 481 [1966])
§ 18. Notice of lis pendens is permissible in guardianship proceedings
A notice of lis pendens is permissible in guardianship proceedings for it is precautionary measure

against instances wherein the incompetent may dispose of his properties in favor of persons who
may make undue advantage of the incompetent’s advanced age and weak mental and physical
condition. (Santos v. Dichoso, 84 SCRA 622 [1978]. See also Gonzales v. Ordoñez-Benitez, 181
SCRA 401 [1990])
§ 19. Lis pendens and receivership proceedings
Under Sections 173 and 174 of the Code of Civil Procedure, the appointment of a receiver lies
within the sound discretion of the court, it not being a matter of strict right to ask for an obtain it,
nor an imperative duty to grant it when it is sought. It follows from the foregoing that the judge
who has made the appointment may very well set aside, as was done by the respondent judge,
when in his opinion it is not justified by the facts and circumstances of the case.
The respondent judge, in acting as he did, was undoubtedly guided by the consideration that the
properties sought to be placed in the hands of a receiver were already in the posses-
632

sion of the defendants and the plaintiff himself; that it would be of no benefit to them to place the
properties in the hands of a receiver inasmuch as in case of lesion, there is the remedy of collation
provided for by the Civil Code; that the greater part of said properties consists in real estate which
pg. 1575
cannot be easily lost; and that the parties could very well protect their respective rights by merely
recording in the registry of deeds a notice of lis pendens. (Sanson v. Araneta, 64 Phil. 549 [1937])
§ 20. Requisites for lis pendens as a ground for dismissal of a complaint
The requisites for lis pendens as a ground for dismissal of a complaint are: 1) Identity of parties or
at least such as representing the same interests in both actions; 2) Identity of rights asserted and
prayed for, the relief being founded on the same facts; and 3) The identity in both cases is such
that the judgment that may be rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other case. (Salacup v. Maddela, Jr., 91 SCRA 275 [1979])
§ 21. One who deals with a property subject of lis pendens cannot invoke the right of a buyer
in good faith
Once annotated upon the original copy, the notice of lis pendens is “an announcement to the whole
world that a particular real property is in litigation, serving as a warning that one who acquires an
interest over said property does so at his own risk, or that he gambles on the result of the litigation
over said property.” One who deals with property subject of a notice of lis pendens cannot invoke
the right of a purchaser in good faith; neither can he have acquired better rights than those of his
predecessor-in-interest (Constantino v. Espiritu,
633
VOL. 810, NOVEMBER 28, 2016 633

45 SCRA 557 [1972]). (See also Yu v. Court of Appeals, 251 SCRA 509 [1995])
§ 22. A notice of lis pendens does not preclude the sale of the property to an adventurous
buyer
pg. 1576
A notice of lis pendens only serves to warn a prospective buyer or encumbrancer that the particular
property is under litigation and that he should avoid dealing with the same unless he wishes to
gamble on the result of the litigation. It does not however preclude the possibility of the said
property being sold or encumbered to an adventurous buyer or encumbrancer. (Sasan v. Court of
Appeals, 165 SCRA 711 [2000])
In fact, where the conveyance of the property subject of the litigation was made after the notice of
lis pendens of said action was inscribed in the office of the Register of Deeds, the vendees are
considered transferees pendente lite and are bound by the judgment against their predecessor.
(Correa v. Pascual, et al., 99 Phil. 696 [1956])
§ 23. A notice of lis pendens cannot be cancelled pending determination of a case. Exception
A notice of lis pendens cannot be cancelled while the action is pending and undetermined.
(Director of Lands v. Reyes, 68 SCRA 177 [1975])
Exception: The proper court has the discretionary power to cancel it under peculiar circumstances,
as for instance, where the evidence so far presented by the plaintiff does not bear out the main
allegations of his complaint, and where the continuances of the trial, for which the plaintiff is
responsible, are unnecessarily delaying the determination of the case to the prejudice of the
defendant. (Baranda v. Gustilo, 165 SCRA 757 [1988]. See also Victoriano v. Rovira, 55 Phil.
1000 [1930])
634

§ 24. Significance of a lis pendens
The notice of lis pendens in question was annotated on the back of the certificate of title as a
necessary incident of the civil action to recover the ownership of the property affected by it. The
mortgage executed in favor of petitioner corporation was annotated on the same title prior to the
annotation of the notice of lis pendens; but when petitioner bought the property as the highest
pg. 1577
bidder at the auction sale made as aftermath of the foreclosure of the mortgage, the title already
bore the notice of lis pendens. Held: While the notice of lis pendens cannot affect petitioner’s right
as mortgagee because the same was annotated subsequent to the mortgage, yet the said notice
affects its right as purchaser because notice of lis pendens simply means that a certain property is
involved in a litigation and serves as a notice to the whole world that one who buys the same does
not so at his own risk. Here, petitioner has not only a constructive knowledge of said litigation but
is a party to the case. Hence, it cannot demand for the cancellation of the said notice until the case
is finally terminated. (Rehabilitation Finance Corp. v. Morales, 101 Phil. 171 [1957], cited in
Homeowners Savings and Loan Bank v. Felonia, 717 SCRA 358, 370 [2014])
§ 25. Any decision in a land registration case binds only the parties unless notice of lis
pendens is recorded in the title
Sec. 76 of the Property Registration Law, P.D. 1529 provides: “No action to recover possession
of real estate, or to quiet the title thereto, or to remove clouds upon the title thereof, or for partition
or other proceeding of any kind in court affecting the title to real estate or the use and occupation
thereof or the buildings thereon, and no judgment or decree, and no proceeding to vacate or reverse
any judgment
635
VOL. 810, NOVEMBER 28, 2016 635

or decree, shall have any effect upon registered land as against persons other than the parties
thereto, unless a memorandum stating the institution of such action or proceeding and the court
wherein the same is pending, and the date of the institution thereof, containing also a reference to
the number of the certificate of title of the land affected and the volume and page of the registration
book where it is entered, shall be filed and registered. x x x” This is the essence of the rule on lis
pendens. Therefore, when a case is commenced involving any right to lands registered under the
Land Registration Law, any decision therein will bind the parties only, unless a notice of the
pendency of such action is registered on the title of the land, in order to bind the whole world as
well. (Felix Gochan & Sons Realty Corp. v. Cañada, 165 SCRA 207 [1988])
§ 26. Proceedings connected with the issue on lis pendens must be liberally construed
pg. 1578
In one analogous case, the Supreme Court held:
The court, however, seeing that it is a precept of the Code of Civil Procedure that “the provisions
of this code, and the proceedings under it, shall be liberally construed, in order to promote its object
and assist the parties in obtaining speedy justice”; and seeing moreover that it is of vital concern
to the stability of the law that what the res judicata covers be declared in a single judgment so that
it may produce its far-reaching effects, it is meet that for the sake of justice the case be restored to
the status of answer to the complaint and not shut the door upon the parties or fail to bring out
before the court the true nature of the action instituted, so that the question of lis pendens involved
in the defense and already raised, which is of capital importance in the case, may be decided. (Lazo
v. Lazo, 22 Phil. 380 [1912])
636

§ 27. Rule on cancellation of lis pendens
At any time after final judgment in favor of the defendant, or other disposition of the action such
as to terminate finally all rights of the plaintiff in and to the land and/or buildings involved, in any
case in which a memorandum or notice of lis pendens has been registered as provided in the
preceding section, the notice of lis pendens shall be deemed canceled upon the registration of a
certificate of the clerk of court in which the action or proceeding was pending stating the manner
of disposal thereof. (Sec. 77, P.D. 1529. See also Cunanan v. Jumping Jap Trading Corporation,
586 SCRA 620 [2009]; J. Casim Construction Supplies, Inc. v. Registrar of Deeds of Las Piñas,
622 SCRA 715 [2010])
Under Section 14, Rule 13 of the Rules of Court, a notice of lis pendens may be cancelled “after
proper showing that the notice is for the purpose of molesting the adverse party, or that it is not
necessary to protect the rights of the party who caused it to be recorded.”
In the same vein, case law likewise instructs that a notice of lis pendens may be cancelled in
situations where:
a) There are exceptional circumstances imputable to the party who caused the annotation;
pg. 1579
b) The litigation was unduly prolonged to the prejudice of the other party because of several
continuances procured by petitioner;
c) The case which is the basis for the lis pendens notation was dismissed for non prosequitor on
the part of the plaintiff; or
d) Judgment was rendered against the party who caused such a notation. (Gonzales v. Marmaine
Realty Corporation, 781 SCRA 63 [2016])
637
VOL. 810, NOVEMBER 28, 2016 637

§ 28. A notice of lis pendens cannot be sought as a principal action for relief
A notice of lis pendens is not and cannot be sought as a principal action for relief. “The notice is
but an incident to an action, an extrajudicial one to be sure. It does not affect the merits thereof. It
is intended merely to constructively advise, or warn, all people who deal with the property that
they so deal with it at their own risk, and whatever rights they may acquire in the property in any
voluntary transaction are subject to the results of the action, and may well be inferior and
subordinate to those which may be finally determined and laid down therein.” The notice of lis
pendens — that real property is involved in an action — is ordinarily recorded without the
intervention of the court where the action is pending. As a settled rule, notice of lis pendens may
be annotated only where there is an action or proceeding in court which affects title to or possession
of real property. (AFP Mutual Benefit Association, Inc. v. Court of Appeals, 327 SCRA 203 [2000])
§ 29. Only the particular property under litigation is covered by lis pendens
Lis pendens has been conceived to protect the real rights of the party causing the registration
thereof. With the lis pendens duly recorded, he could rest secure that he would not lose the property
or any part of it. For such notice serves as a warning to a prospective purchaser or incumbrancer
that the particular property is in litigation, and that he should keep his hands off the same unless
of course, he intends to gamble on the results of the litigation. Based on this principle as well as
the express provisions of Sec. 14, Rule 13 of the 1997 Rules of Civil Procedure, as amended, only
pg. 1580
the particular property subject of litigation is covered by the notice of lis pendens. (Lim v. Vera
Cruz, 356 SCRA 386 [2001])
638

§ 30. Pencil markings are not an accepted form of annotating a notice of lis pendens
Pencil markings are not an accepted from of annotating a notice of lis pendens. The Court cannot
accept the argument that such pencil annotation can be considered as a valid annotation of notice
of lis pendens, and thus an effective notice to the whole world as to the status of the title to the
land. The law requires proper annotation, not “provisional” annotation of a notice of lis pendens.
If we allow provisional annotations as a valid form of annotation of notice of lis pendens, we would
be eroding the very value of the indefeasibility of the torrens system. (AFP Mutual Benefit
Association, Inc. v. Court of Appeals, 364 SCRA 768 [2001])
§ 31. Instances where the doctrine of lis pendens has no application
Notice of lis pendens does not apply under the following instances:
(1) Where the case is concerned merely with the correctness of the denial by the probate court
of the motion for the removal of the special administratrix of the estate which does not involve the
title to or possession of real properties of the estate. (Garcia v. Vasquez, 32 SCRA 490 [1970])
(2) The doctrine of lis pendens has no application in the following cases: a) Preliminary
attachments; b) Proceedings for the probate of wills; c) Levies on execution; d) Proceedings for
administration of estate of deceased persons; and e) Proceedings in which the only object is the
recovery of a money judgment. (Tongohan v. Court of Appeals, 447 SCRA 384 [2004]; Gagoomal
v. Villacorta, 663 SCRA 444 [2012])
(3) A notice of lis pendens does not apply to actions involving title to or any right or shares in a
private nonstock corporation. (MR Holdings, Ltd. v. Bajar, 683 SCRA 336 [2012])
pg. 1581
639
VOL. 810, NOVEMBER 28, 2016 639

§ 32. Damages may not be awarded if court orders cancellation of lis pendens
Since in the case at bar the plaintiffs have no right whatsoever to the land involved in the two cases
before the court of first instance, because their claim is barred by a decree of registration and by
the statute of limitations, the partial cancellation of their notice of lis pendens in one of the said
cases — independently of the circumstances under which said partial cancellation had been
secured — caused them no damage whatsoever and they have no cause of action therefor against
the defendant. (Garcia v. Fenoy, 6 SCRA 486 [1982])
§ 33. There is no requirement that the right to a property subject of lis pendens, be proven
by the applicant
There is no requirement that the right to or the interest in the property subject of a lis pendens be
proven by the applicant. The Rule merely requires that an affirmative relief be claimed. A notation
of lis pendens neither affects the merits of a case nor creates a right or a lien. It merely protects the
applicant’s rights, which will be determined during the trial. (Alberto v. Court of Appeals, 334
SCRA 756 [2000]; Romero v. Court of Appeals, 458 SCRA 483 [2005])
§ 34. A notice of lis pendens does not suffice to protect rights over the property
A notice of lis pendens serves as an announcement to the whole world that a particular real property
is in litigation and as a warning that those who acquire an interest in the property do so at their
own risk — they gamble on the result of the litigation over it. However, the cancellation of such
notice may be ordered by the court that has jurisdiction over it at
pg. 1582
640

any given time. Its continuance or removal — like the continuance or the removal of a preliminary
attachment or injunction — is not contingent on the existence of a final judgment on the action
and ordinarily has no effect on the merits thereof. Thus, the notice of lis pendens does not suffice
to protect herein respondents’ rights over the property. It does not provide complete and ample
protection. (Los Baños Rural Bank, Inc. v. Africa, 384 SCRA 535 [2002]; Tangohan v. Court of
Appeals, 447 SCRA 384 [2004])
§ 35. Effect of filing a notice of lis pendens as to third persons
The effect of filing notice of lis pendens is to charge the stranger with notice of the particular
litigation referred to in the notice; and if the notice is effective, a third person who acquires the
property affected by the lis pendens takes subject to the eventuality of the litigation. But when the
adverse right fails in such litigation, the lis pendens loses its efficacy. (Atkins, Kroll & Co v.
Domingo, 46 Phil. 362 [1924]. See also Po Lam v. Court of Appeals, 347 SCRA 86 [2000])
Once a notice of lis pendens has been duly registered, any cancellation or issuance of the title of
the land involved as well as any subsequent transaction affecting the same, would have to be
subject to the outcome of the litigation. In other words, upon termination of the litigation there can
be no risk of losing the property or any part thereof as a result of any conveyance of the land or
any encumbrance that may be made thereon posterior to the filing of the notice of lis
pendens. (Unionbank of the Philippines v. Court of Appeals, 311 SCRA 795 [1999])
Moreover:
Transferees of title to land subject to the notice of lis pendens are bound by the judgment rendered
against their predecessors-in-interest. (Selph v. Vda. de Aguilar, 107 Phil. 443 [1960])
641
VOL. 810, NOVEMBER 28, 2016 641
pg. 1583
§ 36. Where must the annotation of lis pendens be made
The annotation of lis pendens is done on the original certificate of title which is on file with the
Register of Deeds. (Francisco Motors Corporation v. Court of Appeals, 505 SCRA 8 [2006])
It is not required that the annotation of lis pendens be also inscribed upon the owner’s copy because
such copy is usually unavailable to the registrant. It is normally in the hands of the adverse party.
(Yu v. Court of Appeals, 251 SCRA 509 [1995])
§ 37. Expenses for notice of lis pendens is chargeable against the estate in a probate
proceeding
Where, in order to gather all the assets of the estate and carry out the provisions of the will of the
deceased, the executor had to institute an action for the annulment of a deed of donation in favor
of a certain person, incurring expenses for the cost of the transcript of stenographic notes and the
cost of printing a brief in connection with the annotation of a notice of lis pendens, said expenses
are chargeable against the estate. (Bank of the Philippine Islands v. Gonzales, 106 Phil. 925 [1960])
§ 38. Effect of lis pendens in an unregistered land
The non-registration of the judgment within 60 days after the rendition thereof, as required by
Section 79 of the Land Registration Act, does not render the notice of lis pendens ineffective. Even
if it does, the judgment will not be binding only as against persons other than the parties to the
suit. It is still binding on the parties and their successors-in-interest.
One who buys land from a person who is not registered owner is not considered a subsequent
purchaser of registered
642
pg. 1584
land who takes the certificate of title for value and in good faith and who is protected against any
encumbrance except those noted on said certificate. (Rivera, etc. v. Tirona, et al., 109 Phil. 505
[1960])
§ 39. What constitutes constructive notice to any purchaser of a property with lis pendens
The filing of the notice of lis pendens in the office of the registrar of deeds and the notation thereof
on the back of the corresponding original certificate of title is what constitutes a constructive notice
to any purchaser or vendee of a lien upon the real property in litigation as to the parties-
litigant. (Jamora v. Duran et al., 69 Phil. 3 [1939])
§ 40. Cancellation of lis pendens is discretionary
While ordinarily a notice of pendency which has been filed in a proper case, cannot be cancelled
while the action is pending and undetermined, the proper court has the discretionary power to
cancel it under peculiar circumstances, as for instance, where the evidence so far presented by the
plaintiff does not bear out the main allegations of his complaint, and where the continuances of
the trial, for which the plaintiff is responsible, are unnecessarily delaying the determination of the
case to the prejudice of the defendant. (Municipal of Parañaque v. Court of First Instance, 70 Phil.
363 [1940])
Moreover:
While notice of lis pendens remains during the pendency of the action although same may be
cancelled under certain circumstances as where the case is prolonged unnecessarily or for failure
of the plaintiff to introduce evidence bearing out the allegations of the complaint.
643
VOL. 810, NOVEMBER 28, 2016 643
pg. 1585
It has even been held that a court, in the absence of a statute, has the inherent power to cancel a lis
pendens notice in a proper case, i.e., after the claim is adjudged invalid or unmeritorious by the
Court, acting either as a land registration court or one of general jurisdiction while passing upon a
case before it where the subject of the litigation is the same interest or right which is being secured
by the adverse claim. (Ty Sin Tei v. Lee Dy Piao, 103 Phil. 858 [1958])
The cancellation of a notice of lis pendens, being a mere incident to an action, may be ordered at
any given time by the court having jurisdiction over it. (Roxas v. Dy, 223 SCRA 643 [1993])
§ 41. Lis pendens cannot affect decree of registration of a land
The notice of lis pendens filed by the plaintiffs with the register of deeds cannot affect the decree
of registration issued upon the lands in question, since its object is to protect the rights which the
plaintiffs might have in the aforesaid lands, against third persons, and it does not relieve them from
the necessity of objecting to the application for registration filed by the defendant of the same lands
some two years previous to the filing and recording of said notice of lis pendens for the protection
of their rights. (Valmonte v. Villaroman, 52 Phil. 221 [1928])
Likewise, a notice of lis pendens could only apply to a property in litigation. An undivided interest
over half of a property which is not under litigation could not be affected. (Mercado v. Viardo, 5
SCRA 859 [1962])
§ 42. Lis pendens as a defense
644

pg. 1586
With respect to the defense of lis pendens, these facts are alleged: First, that on May 10, 1907, the
defendant brought suit against the plaintiff in the Court of First Instance of Nueva Ecija, for the
purpose of obtaining the rescission of this same contract, on the ground of plaintiff’s
noncompliance therewith; and second, that the plaintiff did not file the present suit against the
defendant until October 1907.
By such allegations the defendant endeavored to weaken plaintiff’s cause of action and prayed for
a dismissal of the complaint; but the court held that neither the answer nor the evidence appeared
to be sufficient to establish this defense and that, after all, it was not claimed that the suit was
prosecuted to final judgment and, consequently, it could not serve as a basis for the defense of res
adjudicata. (Kelly Springfield Road Roller Co. v. Sideco, 16 Phil. 345 [1910]. See also Cabillas v.
Apduhan, 14 Phil. 213 [1909])
§ 43. The wife has the right to annotate a notice of lis pendens on properties alienated by the
husband
Although, under the second paragraph of Article 1419 of the Civil Code, a widow is entitled to
charge against the husband, in the liquidation of the conjugal estate, the value of property alienated
by the husband in fraud of her rights, the failure to exercise this right is no obstacle to the
maintenance by the wife of an action to annul a conveyance made by the husband without
consideration and in fraud of the rights of the wife, with respect to property which is assigned to
the wife in the judicial liquidation of the estate, notice of the lis pendens created by the liquidation
proceedings having been noted on the transfer certificate issued to the grantee. (Gallion v. Gayares,
53 Phil. 43 [1929])
645
VOL. 810, NOVEMBER 28, 2016 645

§ 44. Procedural matters
1. With reference to an innocent purchaser in good faith, the date of the notice of the pendency
of an action is not that on which the notice was entered on the original certificate in the office of
pg. 1587
the registrar but the date on which such notice was entered on the owner’s duplicate certificate of
title presented by the purchaser. (Pineda v. Santos, 56 Phil. 583 [1932])
2. Where the vendor fails to deliver to the vendee the duplicate certificate of title, the vendee
should file immediately with the Register of Deeds an adverse claim under Section 110 of Act.
496, as amended. (Junio v. De los Santos, 132 SCRA 209 [1984])
3. The lower court’s orders cancelling the notice of lis pendens as regards certain specified
certificates of title covering a certain hacienda do not amount to abuse of discretion, especially
where the nature of the evidence introduced by petitioners apparently was not such as to impart to
respondent judge the impression that petitioner’s cause of action was sufficiently meritorious to
warrant a reconsideration of its first order of cancellation. (Montelibano v. De la Cruz, 10 SCRA
821 [1964]. See also Lising v. Plan, 133 SCRA 194 [1984])
4. Lis pendens is normally interposed as a defense when another case is pending upon the same
cause of action between the same parties in two complaints. It may also be interposed even if said
claim is set forth by way of a counterclaim since the latter partakes the nature of a complaint by
the defendant against the plaintiff. (Arceo v. Oliveros, 134 SCRA 308 [1985])
5. The desire of a party to annotate a notice of lis pendens in a civil case becomes moot once
said case is dismissed. (Gosiaco v. Tiu Po, 138 SCRA 448 [1985])
6. Before cancellation of a notice of lis pendens annotated on a title, notice to the party who
caused it to be recorded must be made so that he may be given a chance to be heard
646

and show to the court that the notice is not for the purpose of molesting the adverse party and that
it is necessary to protect his rights. (Punongbayan v. Pineda, 131 SCRA 496 [1984])
7. The refusal of a party to lift the notice of lis pendens does not affect the validity of a
compromise agreement. (Mayuga v. Court of Appeals, 154 SCRA 310 [1987])
8. The dismissal of a civil case made upon petition of the defendant by reason of the plaintiff’s
failure to appear, operates as a cancellation of the notation of lis pendens. (Lazaro v. Mariano, 59
Phil. 627 [1934])
pg. 1588
9. For lis pendens to be a valid ground for the dismissal of a case, the other case pending between
the same parties and having the same cause must be a court action. (Puma Sportschuhfabriken
Rudolf Dassler, K.G. v. Intermediate Appellate Court, 158 SCRA 233 [1988])
10. It is not required that the annotation of lis pendens be also inscribed upon the owner’s copy
because such copy is usually unavailable to the registrant. It is normally in the hands of the adverse
party. (Yu v. Court of Appeals, 251 SCRA 509 [1995])
11. The annotation of a notice lis pendens does not in any case amount nor can it be considered
as equivalent to a collateral attack of the certificate of title for a parcel of land. (Lee Tek Sheng v.
12. Denial of a lis pendens by the Register of Deeds can be appealed en consulta to the
Commissioner of Land Registration. From there, it may further be appealed to the Court of
Appeals. (AFP Mutual Benefit Association, Inc. v. Court of Appeals, 327 SCRA 203 [2000])
13. The order of a judge for the cancellation of a notice of lis pendens is an interference with the
business of the Court of Appeals if the case is already pending before the latter. (Brizuela v.
Mendiola, 335 SCRA 23 [2000])
——o0o——
pg. 1589
G.R. No. 184466. December 5, 2016.*
LUZ ANATOLIA E. CRISPINO, CARIDAD O. ECHAVES REESE and ZENAIDA ECHAVES

represented by their Attorney-in-Fact, REUBEN CAPILI ECHAVES, petitioners, vs. ANATOLIA
TANSAY as substituted by LILIAN YAP, respondent.
Remedial Law; Civil Procedure; Appeals; Doctrine of Finality of Judgments; A final judgment or
order, from which an appeal may be taken, is one that finally disposes of the case and leaves
nothing more to be done by the court (e.g., an adjudication on the merits of the case on the basis
of the evidence).—In determining the correct procedural remedy, aggrieved parties must first
ascertain the nature of the decision, order, or resolution they intend to challenge. A final judgment
or order, from which an appeal may be taken, is one that finally disposes of the case and leaves
nothing more to be done by the court (e.g., an adjudication on the merits of the case on the basis
of the evidence). In contrast, an interlocutory order is one that merely resolves incidental matters
and does not finally dispose of the case. When an interlocutory order is issued, the court is still
tasked with adjudicating on the merits of the case.
Same; Special Civil Actions; Certiorari; Interlocutory Orders; The remedy against an
interlocutory order is not appeal but a special civil action for certiorari under Rule 65 of the Rules
of Court.—The remedy against an interlocutory order is not appeal but a special civil action for
certiorari under Rule 65 of the Rules of Court. The reason for the prohibition is to prevent multiple
appeals in a single action that would unnecessarily cause delay during trial. In Rudecon v. Singson,
454 SCRA 612 (2005): The rule is founded on considerations of orderly procedure, to forestall
useless appeals and avoid undue inconvenience to the appealing party by having to assail orders
as they are promulgated by the court, when all such orders may be contested in a single appeal.
Faced with an interlocutory order, parties may instantly avail of the special civil action of
certiorari. This would entail compliance with the strict requirements
_______________
* SECOND DIVISION.
557
VOL. 811, DECEMBER 5, 2016 557

Crispino vs. Tansay
under Rule 65 of the Rules of Court. Aggrieved parties would have to prove that the order was
issued without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or
pg. 1590
excess of jurisdiction and that there is neither appeal nor any plain, speedy, and adequate remedy
in the ordinary course of law.
Same; Civil Procedure; Appeals; Court of Appeals; The Court of Appeals (CA), pursuant to its
expanded jurisdiction under Section 9 of Batas Pambansa (BP) Blg. 129, as amended, is
empowered to receive evidence to resolve factual issues raised in cases falling within its original
and appellate jurisdiction.—Clearly, the Court of Appeals, pursuant to its expanded jurisdiction
under Section 9 of Batas Pambansa Blg. 129, as amended, is empowered to receive evidence to
resolve factual issues raised in cases falling within its original and appellate jurisdiction. However,
Section 9 of Batas Pambansa Blg. 129, as amended, should be read and construed together with
the Court of Appeals’ internal rules.
Same; Courts; Court of Appeals; Jurisdiction; In actions falling within the original jurisdiction of
the Court of Appeals (CA), such as a special civil action for certiorari, the CA’s power to receive
evidence is unqualified. This does not hold true with respect to appeals in civil cases, criminal
cases, as well as appeals involving claims for damages.—The Internal Rules of the Court of
Appeals enumerates instances when the Court of Appeals may receive evidence depending on the
nature of the case filed. In a special civil action for certiorari, which is an action falling within the
Court of Appeals’ original jurisdiction, the Court of Appeals has “ample authority to make its own
factual determination” and may receive evidence for this purpose. In Maralit v. Philippine
National Bank, 596 SCRA 648 (2009): In a special civil action for certiorari, the Court of Appeals
has ample authority to receive new evidence and perform any act necessary to resolve factual
issues. Section 9 of Batas Pambansa Blg. 129, as amended, states that, “The Court of Appeals
shall have the power to try cases and conduct hearings, receive evidence and perform any and all
acts necessary to resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further proceedings.”
(Emphasis omitted) Thus, the 2009 Internal Rules of the Court of Appeals provide: SECTION 3.
Power of the Court to Receive Evidence.—The Court may receive evidence in the following
cases: (a) In ac-
558

Crispino vs. Tansay
tions falling within its original jurisdiction, such as: (1) certiorari, prohibition and mandamus
under Rules 46 and 65 of the Rules of Court; (2) annulment of judgment or final order; (3) quo
warranto; (4) habeas corpus; (5) amparo; (6) habeas data; (7) anti-money laundering; and (8)
application for judicial authorization under the Human Security Act of 2007. (Emphasis supplied)
As may be gleaned from above, in actions falling within the original jurisdiction of the Court of
Appeals, such as a special civil action for certiorari, the Court of Appeals’ power to receive
pg. 1591
cases, as well as appeals involving claims for damages.
Same; Civil Procedure; Appeals; In appeals in civil cases, the Court of Appeals (CA) may only
receive evidence when it grants a new trial based on newly discovered evidence.—Although the
Court of Appeals has the power to receive evidence pursuant to its expanded powers under Section
9 of Batas Pambansa Blg. 129, this power is not without limit. The Court of Appeals cannot simply
accept additional evidence from the parties. If the interpretation were otherwise, then there would
be no end to litigation. Hence, in appeals in civil cases, the Court of Appeals may only receive
evidence when it grants a new trial based on newly discovered evidence. This notwithstanding, the
Court of Appeals cannot accept any kind of evidence in a motion for new trial. A motion for new
trial under Rule 53 is limited to newly discovered evidence: SECTION 1. Period for filing;
ground.—At any time after the appeal from the lower court has been perfected and before the
Court of Appeals loses jurisdiction over the case, a party may file a motion for new trial on the
ground of newly discovered evidence which could not have been discovered prior to the trial in
the court below by the exercise of due diligence and which is of such character as would
probably change the result. The motion shall be accompanied by affidavits showing the facts
constituting the grounds therefor and the newly discovered evidence.
Same; Same; Same; New Trial; Newly Discovered Evidence; Under Rule 53 of the Rules of Court,
the following criteria must be satisfied for evidence to be considered newly discovered: (a) the
evidence could not have been discovered prior to the trial in the court below by exercise of due
diligence; and (b) it is of such character as would probably change the result.—Newly discovered
evidence has a
559
VOL. 811, DECEMBER 5, 2016 559

Crispino vs. Tansay
specific meaning under the law. Under Rule 53 of the Rules of Court, the following criteria must
be satisfied for evidence to be considered newly discovered: (a) the evidence could not have been
discovered prior to the trial in the court below by exercise of due diligence; and (b) it is of such
character as would probably change the result.
Zosa & Quijano Law Offices for petitioners.
Mercado, Cordero, Baelacuña & Sepulveda for respondent.
pg. 1592
LEONEN, J.:
The Court of Appeals’ power to receive evidence to resolve factual issues in cases falling within
its original and appellate jurisdiction is qualified by its internal rules. In an ordinary appeal, the
Court of Appeals may receive evidence when a motion for new trial is granted based on newly
discovered evidence.
This resolves the Petition for Review on Certiorari1 assailing the Court of Appeals’ Decision2
dated January 24, 2007 and Resolution3 dated August 28, 2008 in C.A.-G.R. CV No. 54832.
_______________
1 Rollo, pp. 3-19.
2 Id., at pp. 27-36. The Decision was penned by Associate Justice Agustin S. Dizon and concurred
in by Associate Justices Isaias P. Dicdican and Francisco P. Acosta of the Nineteenth Division,
Court of Appeals Cebu.
3 Id., at pp. 42-43. The Resolution was penned by Associate Justice Franciso P. Acosta and
concurred in by Associate Justices Amy C. Lazaro-Javier and Edgardo L. Delos Santos of the
Twentieth Division, Court of Appeals Cebu.
560

Crispino vs. Tansay
This case originated from Civil Case No. CEB-14547 filed by respondent Anatolia Tansay against
petitioners Luz Anatolia E. Crispino, Caridad O. Echaves, and Zenaida Echaves before the
Regional Trial Court of Cebu City, for Revocation of Trust, Declaration of Nullity of Transfer and
Cancellation of Titles.4
Respondent Anatolia Tansay, now deceased, was twice widowed.5 In 1947, Anatolia established
her residence in Oroquieta, Misamis Occidental.6 There, she met 20-year-old Zenaida Capili who
was then single.7 Anatolia took in Zenaida and treated her as her own child.8
Subsequently, Anatolia and Zenaida moved to Cebu City,9 where Anatolia acquired a 3,107 sq.
m. parcel of land (Lot No. 1048)10 known as the Tansay Compound.11 Anatolia subdivided the
compound into three lots: (1) Lot No. 1048-A-1 with an area of 617 sq. m., (2) Lot No. 1048-A-2
pg. 1593
with an area of 555 sq. m., and (3) Lot No. 1048-A-3 with an area of 1,845 sq. m.12 In 1957,
Anatolia constructed her abode over a portion of Lot No. 1048-A-3.13
Zenaida eventually got married to Ben Ricaredo Echaves and had several children, among whom
are petitioners Luz Anatolia E. Crispino and Caridad C. Echaves.14 Zenaida and her family lived
in Anatolia’s house.15 Anatolia had a close
_______________
4 Id., at p. 113.
5 Id., at p. 27.
6 Id.
7 Id.
8 Id.
9 Id., at pp. 27-28.
10 Id., at p. 9.
11 Id., at p. 29.
12 Id., at p. 9.
13 Id., at p. 28.
14 Id., at pp. 27-28.
15 Id., at p. 28.
561
VOL. 811, DECEMBER 5, 2016 561

Crispino vs. Tansay
relationship with the Echaves family.16 She was affectionately called “honey” by Zenaida and
“nanay” by Zenaida’s children.17 Through Anatolia’s efforts and connections, Zenaida’s husband
was able to find employment.18 She also paid for the education of Zenaida’s children.19
pg. 1594
By virtue of two deeds of sale, Anatolia allegedly sold Lot No. 1048-A-1 in favor of Zenaida on
July 6, 1981 and Lot No. 1048-A-3 in favor of Luz Anatolia and Caridad on July 11, 1989.20
In 1991, Zenaida returned from abroad and discovered that the titles of the lots were missing from
her room where she had left them.21 Hence, she filed a petition before the Regional Trial Court of
Cebu City for reconstitution of the certificates of title, which was granted.22
Meanwhile, Anatolia filed Civil Case No. CEB-14547 entitled Revocation of Trust, Declaration
of Nullity of Transfer, and Cancellation of Title before the Regional Trial Court of Cebu City.23
Zenaida alleged that Anatolia sold Lot No. 1048-A-1 in her favor for P6,170.00.24 One of
Zenaida’s daughters, Lourdes Echaves de Leon, testified that since 1975, her sisters, Luz Anatolia
and Caridad, deposited sums of money in Anatolia’s bank account for the purchase of Lot No.
1048-A-3.25 However,
_______________
16 Id.
17 Id.
18 Id.
19 Id.
20 Id., at pp. 99-100, Petitioner’s Memorandum.
21 Id., at p. 31.
22 Id.
23 Id., at p. 27.
24 Id., at p. 29.
25 Id., at p. 31.
562

Crispino vs. Tansay
pg. 1595
Anatolia merely turned over the sums she received to Zenaida since she was not in need of
money.26
Based on the evidence on record, the trial court found that Zenaida, Luz Anatolia, and Caridad did
not pay any monetary or other valuable consideration for the transfer of the properties in their
names.27 Hence, the deeds of sale could not have been valid. In addition, the trial court found that
Anatolia never intended to sell the lots despite executing the deeds of sale. Rather, she merely
constituted Zenaida, Luz Anatolia, and Caridad as trustees of the properties.28 The trial court also
questioned the validity of Zenaida’s Petition for Reconstitution of Titles considering that Anatolia
presented the Original Certificates of Title of the properties in court.29
On February 16, 1996, the Regional Trial Court rendered its Decision. The dispositive portion
reads:
WHEREFORE, in light of the foregoing, judgment is hereby rendered:
(1) Declaring plaintiff Anatolia Tansay as the lawful and rightful owner of Lot No.
1048-A-1 covered by TCT No. 81406, and Lot No. 1048-A-3 covered by TCT No.
101693; and
(2) Ordering the Register of Deeds of Ceb[u] City to cancel said TCT No. 1048-A-1
issued to defendant Zenaida Echave[s], and TCT No. 10963, issued to the defendants
Luz Anatolia Crispino and Caridad Echave[s], and to reinstate plaintiff Anatolia
Tansay’s title to said lots.
Cost against the defendants.30
_______________
26 Id., at p. 28.
27 Id., at p. 114.
28 Id., at pp. 114-116, Respondent’s Memorandum.
29 Id., at p. 116.
30 Id., at p. 118.
563
VOL. 811, DECEMBER 5, 2016 563
pg. 1596
Crispino vs. Tansay
Zenaida, Luz Anatolia, and Caridad appealed the Decision before the Court of Appeals.31
During the pendency of the appeal, Anatolia died on August 11, 2001 and was substituted by her
only known legal heir, Lilian Tan Yap.32
On August 16, 2001, Zenaida, Luz Anatolia, and Caridad filed an Urgent Motion to Remand
Records of the Case for the Re-Opening of Trial.33 They anchored their motion on an Affidavit
allegedly executed by Anatolia after the Regional Trial Court had rendered its Decision,34 which
reads:
CONFIRMATION OF PREVIOUS SALES
That I, ANATOLIA TANSAY, Filipino, of legal age, widow and a resident of Cebu City, hereby
declare and manifest, as follows:
1. That on July 6, 1981, I executed a deed of sale over Lot No. 1048-A-1 covered by TCT No.
17556 of the Register of Deeds of Cebu City in favor of Zenaida Echave[s];
2. That on July 11, 1989, I executed a deed of sale over Lot No. 1048-A-3 covered by TCT No.
81605 of [the] Register of Deeds of Cebu City in favor of Luz Anatolia E. Crispino and Caridad
C. Echave[s];
3. That by virtue of said sales, I paid the capital gains tax and other taxes due on the said sales so
that the titles could be transferred to the vendees in said sales;
4. That later on I filed in the Regional Trial Court of Cebu an action for revocation of trust,
declaration
_______________
31 Id.
32 Id., at p. 25, Court of Appeals Resolution dated October 18, 2001.
33 Id., at p. 47, Court of Appeals Resolution dated July 25, 2006.
34 Id., at p. 4.
564
pg. 1597
Crispino vs. Tansay
of nullity of transfer and for cancellation of titles against Zenaida Echave[s], Luz Anatolia Crispino
and Caridad C. Echave[s];
5. That after proper reflection, I now realize that the filing of said case was a mistake and that I
hereby confirm and affirm the validity of said sales.
IN WITNESS WHEREOF, I have hereunto set my signature this 15th day of January, 1998 in
Cebu City, Philippines.
ANATOLIA TANSAY35
In their Urgent Motion to Remand Records of the Case for the Re-Opening of Trial, Zenaida, Luz
Anatolia, and Caridad alleged:
1. That during the pendency of the appeal, the plaintiff-appellee, Anatolia Tansay died on August
11, 2001;
2. That it was discovered that on January 15, 1998, she executed a document denominated as
confirmation of previous sales.
3. That in view of the discovery of this document confirming the previous sales of Lot Nos. 1048-
A-1 and 1048-A-3 to defendants-appellants Zenaida C. Echave[s], Luz Anatolia E. Crispino and
Caridad C. Echave[s], it is necessary in the interest of substantial justice to remand the records of
the case to the trial court and reopen the trial of this case in order to enable the herein defendants
to present said document in evidence in order to avoid a grave miscarriage of justice.
WHEREFORE, in view of all the foregoing, it is most respectfully prayed that the records of this
case be
_______________
35 Id., at pp. 4-5.
565
VOL. 811, DECEMBER 5, 2016 565
pg. 1598
Crispino vs. Tansay
remanded to the lower court and that the trial of this case be ordered reopened.36
The Court of Appeals, in a Resolution37 dated July 25, 2006 denied the Urgent Motion to Remand
Records of the Case for the Re-Opening of Trial. The appellate court considered the same as a
motion for new trial based on newly discovered evidence under Rule 53 of the Rules of Court38
and ruled that the Confirmation of Previous Sales was “not the kind of newly discovered evidence
contemplated by the Rules that would warrant a [n]ew [t]rial.”39 The appellate court also noted
that the petitioners-appellants failed to attach an affidavit of merit as required by the rules and that
the Confirmation of Previous Sales attached to the motion was merely a photocopy.40
On January 24, 2007, the Court of Appeals rendered a Decision, which affirmed the Regional Trial
Court’s Decision in toto.41 Zenaida, Luz Anatolia, and Caridad moved for reconsideration.42
They assailed, among others, the propriety of the Court of Appeals’ Resolution in treating their
motion to remand as a motion for new trial. Their Motion for Reconsideration was denied in a
Resolution43 dated August 28, 2008.
Petitioners Zenaida, Luz Anatolia, and Caridad come to this Court through a Petition for Review
on Certiorari seeking a ruling on the power of the Court of Appeals to receive evi-
_______________
36 Id., at p. 44, Urgent Motion to Remand Records of the Case for Re-Opening of Trial.
37 Id., at pp. 47-49. The Resolution was penned by Associate Justice Agustin S. Dizon and
concurred in by Associate Justices Isaias P. Dicdican and Apolinario D. Bruselas, Jr. of the
Nineteenth Division of the Court of Appeals of Cebu City.
38 Id., at p. 48.
39 Id.
40 Id., at p. 49.
41 Id., at pp. 27-36.
42 Id., at pp. 37-40.
43 Id., at pp. 42-43.
pg. 1599
566

Crispino vs. Tansay
dence under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902.44
Respondent Anatolia, as substituted by Lilian Yap, filed her Comment45 on December 2, 2008.
Petitioners filed their Reply46 on March 19, 2009. On June 3, 2009, this Court gave due course to
the Petition and required the parties to submit their Memoranda.47
Petitioners argue that the Court of Appeals should have considered their Urgent Motion to Remand
Records of the Case for Re-Opening of Trial as a motion to receive further evidence under Section
9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902.48 According to the
petitioners, the Court of Appeals has the authority and power to “receive all kinds of evidence to
resolve factual issues within its original and appellate jurisdiction.”49 However, the appellate court
inadvertently treated their motion to remand as a motion for new trial under Rule 53 of the Rules
of Court.50 Assuming that the Court of Appeals was correct, petitioners contend that the Court of
Appeals’ power to conduct new trials is not limited to new trials based on newly discovered
evidence.51
Petitioners pray that the Court of Appeals’ Decision dated January 24, 2007 be vacated and that
the Court of Appeals be ordered to receive in evidence the affidavit denominated as Confirmation
of Previous Sales and render a new decision.52
_______________
44 Id., at p. 5.
45 Id., at pp. 52-62.
46 Id., at p. 93.
47 Id., at pp. 93-94.
48 Id., at p. 13.
49 Id., at p. 14.
50 Id., at p. 13.
51 Id.
52 Id., at p. 16.
pg. 1600
567
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Crispino vs. Tansay
Respondent alleges that it was unlikely for Anatolia to execute the affidavit because she requested
the early resolution of the appeal through two letters addressed to the appellate court.53 The first
letter was dated March 27, 2001, while the second letter was dated July 20, 2001, a month before
Anatolia died.54 Respondent suspects the timing of petitioner’s motion to remand since it was
filed just a few days after Anatolia’s death.55
Respondent argues that the Petition for Review is not the proper remedy considering that
petitioners are not disputing the factual findings or the ratio decidendi of the Court of Appeals’
Decision dated January 24, 2007.56 According to respondent, petitioners’ arguments are directed
against the Court of Appeals’ Resolution dated July 25, 2006, which denied the motion to remand,
which was an interlocutory order.57 Respondent adds that since the Resolution was not challenged
through an appeal or a motion for reconsideration, the same had already become final and could
no longer be assailed on appeal.58
This case presents the following substantive issues: (1) whether the Court of Appeals erred in
treating petitioners’ motion to remand as a motion for new trial under Rule 53 of the Rules of
Court; and (2) whether the Court of Appeals’ power to grant new trials is limited to motions based
on newly discovered evidence.59
On the other hand, respondent raises the procedural issue of whether an interlocutory order may
be assailed in an appeal of the appellate court’s Decision.60
_______________
53 Id., at p. 53, Comment.
54 Id.
55 Id.
56 Id., at pp. 129-130, Respondent’s Memorandum.
57 Id., at pp. 59-60.
58 Id.
59 Id., at p. 60.
60 Id., at p. 130.
pg. 1601
568

Crispino vs. Tansay
In determining the correct procedural remedy, aggrieved parties must first ascertain the nature of
the decision, order, or resolution they intend to challenge.61
A final judgment or order, from which an appeal may be taken, is one that finally disposes of the
case and leaves nothing more to be done by the court (e.g., an adjudication on the merits of the
case on the basis of the evidence).62 In contrast, an interlocutory order is one that merely resolves
incidental matters63 and does not finally dispose of the case.64 When an interlocutory order is
issued, the court is still tasked with adjudicating on the merits of the case.65
The remedy against an interlocutory order is not appeal but a special civil action for certiorari
under Rule 65 of the Rules of Court.66 The reason for the prohibition is to prevent multiple appeals
in a single action that would unnecessarily cause delay during trial.67 In Rudecon v. Singson:68
The rule is founded on considerations of orderly procedure, to forestall useless appeals and avoid
undue inconvenience to the appealing party by having to assail or-
_______________
61 Republic v. Sandiganbayan (Fourth Division), 678 Phil. 358, 387; 662 SCRA 152, 176 (2011)
[Per J. Brion, En Banc].
62 Investments, Inc. v. Court of Appeals, 231 Phil. 302, 306-309; 147 SCRA 334, 339-340 (1987)
[Per J. Narvasa, First Division].
63 Calderon v. Roxas, 701 Phil. 301, 310; 688 SCRA 330, 340 (2013) [Per J. Villarama, Jr., First
Division].
64 Investments, Inc. v. Court of Appeals, supra at pp. 306-309; pp. 340-341.
65 Id.
66 Rules of Court, Rule 41, Sec. 1(c).
pg. 1602
67 Pahila-Garrido v. Tortogo, 671 Phil. 320, 334-335; 655 SCRA 553, 567 (2011) [Per J.
Bersamin, First Division].
68 494 Phil. 581; 454 SCRA 612 (2005) [Per J. Callejo, Sr., Second Division].
569
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Crispino vs. Tansay
ders as they are promulgated by the court, when all such orders may be contested in a single
appeal.69
Faced with an interlocutory order, parties may instantly avail of the special civil action of
certiorari. This would entail compliance with the strict requirements under Rule 65 of the Rules
of Court. Aggrieved parties would have to prove that the order was issued without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction and that
there is neither appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.70
This notwithstanding, a special civil action for certiorari is not the only remedy that aggrieved
parties may take against an interlocutory order, since an interlocutory order may be appealed in an
appeal of the judgment itself.71 In Investments, Inc. v. Court of Appeals72 it was held:
Unlike a “final” judgment or order, which is appealable, as above pointed out, an “interlocutory”
order may not be questioned on appeal except only as part of an appeal that may eventually
be taken from the final judgment rendered in the case.73 (Emphasis supplied)
The Court of Appeals’ Resolution dated July 25, 2006, which denied petitioners’ motion to
remand, was an interlocutory order. It did not finally dispose of the case because the appellate
court still had to determine whether the deeds of sale executed by Anatolia were valid. Rather than
availing of the extraordinary remedy of certiorari under Rule 65, peti-
_______________
69 Id., at p. 596; p. 629.
pg. 1603
71 Supra note 67 at pp. 334-335; p. 567.
72 Supra note 62.
73 Id., at p. 308; pp. 340-341.
570

Crispino vs. Tansay
tioners opted to wait for the Court of Appeals to render its decision before challenging the July 25,
2006 Resolution.
Petitioners did not commit any procedural infirmity in assailing the interlocutory order in an appeal
of the Court of Appeals’ decision. Though petitioners could have filed a petition for certiorari,
they would have been burdened to prove that the Court of Appeals committed grave abuse of
discretion in denying their motion to remand. Moreover, petitioners still had the option to assail
the July 25, 2006 Resolution in an appeal of the Court of Appeals’ final decision.
II
As regards the first substantive issue raised, this Court finds that the Court of Appeals correctly
treated petitioners’ motion to remand as a motion for new trial under Rule 53 of the Rules of Court.
Essentially, petitioners sought the introduction of evidence pursuant to the Court of Appeals’
expanded power under Section 9 of Batas Pambansa Blg. 129, as amended.
Originally, Section 9, of Batas Pambansa Blg. 129, otherwise known as Judiciary Reorganization
Act, provides:
SECTION 9. Jurisdiction.—The Intermediate Appellate Court shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of
its appellate jurisdiction;
pg. 1604
(2) Exclusive original jurisdiction over actions for annulment of judgments of
Regional Trial Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, or awards of Regional Trial
571
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Crispino vs. Tansay
Courts and quasi-judicial agencies, instrumentalities, boards, or commissions, except

those falling within the appellate jurisdiction of the Supreme Court in accordance with
the Constitution, the provisions of this Act and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary
Act of 1948.
The Intermediate Appellate Court shall have the power to try cases and conduct hearings,
receive evidence and perform any and all acts necessary to resolve factual issues raised in cases
falling within its original and appellate jurisdiction, including the power to grant and conduct
new trials or further proceedings.
These provisions shall not apply to decisions and interlocutory orders issued under the Labor Code
of the Philippines and by the Central Board of Assessment Appeals. (Emphasis supplied)
Subsequently, Republic Act No. 790274 amended Section 9 of Batas Pambansa Blg. 129:
Sec. 9. Jurisdiction.—The Court of Appeals shall exercise:
(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of
its appellate jurisdiction;
_______________
74 An Act Expanding the Jurisdiction of the Court of Appeals, Amending for the Purpose Section
Nine of Batas Pambansa Blg. 129, As Amended, Known as the Judiciary Reorganization Act of
1980 (1995).
pg. 1605
572

Crispino vs. Tansay
(2) Exclusive original jurisdiction over actions for annulment of judgment of Regional
Trial Courts; and
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Social Security Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence
and perform any and all acts necessary to resolve factual issues raised in cases falling within its
original and appellate jurisdiction, including the power to grant and conduct new trials or
further proceedings. Trials or hearings in the Court of Appeals must be continuous and must be
completed within three (3) months, unless extended by the Chief Justice. (Emphasis supplied)
Clearly, the Court of Appeals, pursuant to its expanded jurisdiction under Section 9 of Batas
Pambansa Blg. 129, as amended, is empowered to receive evidence to resolve factual issues raised
in cases falling within its original and appellate jurisdiction. However, Section 9 of Batas
Pambansa Blg. 129,
573
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Crispino vs. Tansay
as amended, should be read and construed together with the Court of Appeals’ internal rules.75
pg. 1606
Thus, in Republic v. Mupas,76 the Court held that the power of the Court of Appeals to receive
evidence is qualified by its internal rules:
Under Section 3, Rule 6 of the Internal Rules of the CA, the CA may receive evidence in the
following cases:
(a) In actions falling within its original jurisdiction, such as (1) certiorari, prohibition and
mandamus, (2) annulment of judgment or final order, (3) quo warranto, (4) habeas corpus,
(5) amparo, (6) habeas data, (7) anti-money laundering, and (8) application for judicial
authorization under the Human Security Act of 2007;
(b) In appeals in civil cases where the Court grants a new trial on the ground of newly
discovered evidence, pursuant to Sec. 12, Rule 53 of the Rules of Court;
(c) In appeals in criminal cases where the Court grants a new trial on the ground of newly
discovered evidence, pursuant to Sec. 12, Rule 124 of the Rules of Court; and
(d) In appeals involving claims for damages arising from provisional remedies. (Emphasis
supplied)
This provision qualifies the CA’s power to receive evidence in the exercise of its original and
appellate jurisdiction under Section 9 of BP 129, as amended:
_______________
75 Republic v. Mupas, G.R. No. 181892, September 8, 2015, 769 SCRA 348, 552 [Per J. Brion,
En Banc].
76 Id. at pp. 551-552.
574

Crispino vs. Tansay
Sec. 9. Jurisdiction.—The Court of Appeals shall exercise:
....
pg. 1607
The Court of Appeals shall have the power to try cases and conduct hearings, receive
evidence, and perform any and all acts necessary to resolve factual issues raised in cases
falling within its original and appellate jurisdiction, including the power to grant and conduct
new trials or further proceedings. Trials or hearings in the Court of Appeals must be
continuous and must be completed within three (3) months, unless extended by the Chief
Justice.
Since Takenaka and Asahikosan filed an ordinary appeal pursuant to Rule 41 in relation to Rule
44 of the Rules of Court, the CA could only have admitted newly discovered evidence. Contrary to
Takenaka and Asahikosan’s claim, the attachments to the motions are not newly discovered
evidence. Newly discovered evidence is evidence that could not, with reasonable diligence, have
been discovered and produced at the trial, and which, if presented, would probably alter the
result.77 (Emphasis in the original, citations omitted)
The Internal Rules of the Court of Appeals enumerates instances when the Court of Appeals may
receive evidence depending on the nature of the case filed.
In a special civil action for certiorari, which is an action falling within the Court of Appeals’
original jurisdiction, the Court of Appeals has “ample authority to make its own fac-
_______________
77 Id., at pp. 551-553.
575
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Crispino vs. Tansay
tual determination”78 and may receive evidence for this purpose. In Maralit v. Philippine National
Bank:79
In a special civil action for certiorari, the Court of Appeals has ample authority to receive new
evidence and perform any act necessary to resolve factual issues. Section 9 of Batas Pambansa
Blg. 129, as amended, states that, “The Court of Appeals shall have the power to try cases and
conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues
raised in cases falling within its original and appellate jurisdiction, including the power to grant
and conduct new trials or further proceedings.”80 (Emphasis omitted)
pg. 1608
Thus, the 2009 Internal Rules of the Court of Appeals81 provide:
SECTION 3. Power of the Court to Receive Evidence.—The Court may receive evidence in the
following cases:
(a) In actions falling within its original jurisdiction, such as: (1) certiorari, prohibition and
mandamus under Rules 46 and 65 of the Rules of Court; (2) annulment of judgment or final
order; (3) quo warranto; (4) habeas corpus; (5) amparo; (6) habeas data; (7) anti-money
laundering; and (8) application for judicial authorization under the Human Security Act of 2007.
(Emphasis supplied)
_______________
78 Plastimer Industrial Corporation v. Gopo, 658 Phil. 627, 632-633; 643 SCRA 502, 509 (2011)
[Per J. Carpio, Second Division].
79 Maralit v. Philippine National Bank, 613 Phil. 270; 596 SCRA 648 (2009) [Per J. Carpio, First
Division].
80 Id., at pp. 287-289; p. 682. Also cited in Marcelo v. LBC Bank, 633 Phil. 67, 71-72; 647 SCRA
516, 522-523 (2011) [Per J. Carpio, Second Division].
81 Adm. Matter No. 09-11-11-CA (2009).
576

Crispino vs. Tansay
As may be gleaned from above, in actions falling within the original jurisdiction of the Court of
Appeals, such as a special civil action for certiorari, the Court of Appeals’ power to receive
cases, as well as appeals involving claims for damages.
In this case, petitioners filed an ordinary appeal from the Regional Trial Court’s Decision dated
February 16, 1996. At the time the Court of Appeals ruled on petitioners’ motion to remand,82 the
2002 Internal Rules of the Court of Appeals83 was in effect:
SECTION 3. Power of the Court to Receive Evidence.—The Court may receive evidence in the
following cases:
pg. 1609
(a) In actions falling within its original jurisdiction, such as: (1) certiorari, prohibition and
mandamus under Rules 46 and 65 of the Rules of Court; (2) action for annulment of
judgment or final order under Rule 46 of the Rules of Court; (3) quo warranto under Rule
66 of the Rules of Court; (4) habeas corpus under Sections 2 and 12, Rule 102 of the Rules
of Court;
(b) In appeals in civil cases where the court grants a new trial on the ground of newly
discovered evidence pursuant to Sec. 3, Rule 53 of the Rules of Court;
(c) In appeals in criminal cases where the court grants a new trial on the ground of newly
discovered evidence pursuant
_______________
82 Rollo, pp. 47-49, Court of Appeals’ Resolution dated July 25, 2006.
83 Adm. Matter No. 02-6-13-CA (2002).
577
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Crispino vs. Tansay
to Section 12, Rule 124 of the Rules of Court; and
(d) In appeals involving claims for damages arising from provisional remedies. (Emphasis
supplied)
Although the Court of Appeals has the power to receive evidence pursuant to its expanded powers
under Section 9 of Batas Pambansa Blg. 129, this power is not without limit. The Court of Appeals
cannot simply accept additional evidence from the parties. If the interpretation were otherwise,
then there would be no end to litigation.
Hence, in appeals in civil cases, the Court of Appeals may only receive evidence when it grants a
new trial based on newly discovered evidence.
This notwithstanding, the Court of Appeals cannot accept any kind of evidence in a motion for
new trial. A motion for new trial under Rule 53 is limited to newly discovered evidence:
pg. 1610
SECTION 1. Period for filing; ground.—At any time after the appeal from the lower court has
been perfected and before the Court of Appeals loses jurisdiction over the case, a party may file a
motion for new trial on the ground of newly discovered evidence which could not have been
discovered prior to the trial in the court below by the exercise of due diligence and which is of
such character as would probably change the result. The motion shall be accompanied by
affidavits showing the facts constituting the grounds therefor and the newly discovered evidence.
(Emphasis supplied)
The document petitioners seek to present before the appellate court does not fall under the concept
of newly discovered evidence.
Newly discovered evidence has a specific meaning under the law. Under Rule 53 of the Rules of
Court, the following
578

Crispino vs. Tansay
criteria must be satisfied for evidence to be considered newly discovered: (a) the evidence could
not have been discovered prior to the trial in the court below by exercise of due diligence; and (b)
it is of such character as would probably change the result.
The document denominated as Confirmation of Previous Sales was allegedly executed on January
15, 1998, three years after the Regional Trial Court rendered its decision.84 Hence, it could not
have been discovered by petitioners prior to trial by the exercise of due diligence.
However, the document is not of such character that would probably change the lower court’s
judgment. The nature of the deeds of sale executed would not have been affected even if the
Confirmation of Previous Sales was admitted in evidence since the validity of a contract is
determined by law and not by the stipulation of the parties. Furthermore, the Court of Appeals can
determine whether the deeds of sale were valid independent of said document. Thus, the Court of
Appeals correctly denied petitioners’ motion to have the Confirmation of Previous Sales admitted
in evidence.
WHEREFORE, the petition is DENIED. This Court hereby AFFIRMS the January 24, 2007
Decision and August 28, 2008 Resolution of the Court of Appeals in C.A.-G.R. CV No. 54832.
SO ORDERED.
pg. 1611
Carpio (Chairperson), Brion, Del Castillo and Mendoza, JJ., concur.
Notes.—The remedy against an interlocutory order not subject of an appeal is an appropriate

special civil action under Rule 65. (Pahila-Garrido vs. Tortogo, 655 SCRA 553 [2011])
_______________
84 Rollo, pp. 4-5.
579
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Crispino vs. Tansay
The Rules allows the courts to grant a new trial when there are errors of law or irregularities
prejudicial to the substantial rights of the accused committed during the trial, or when there exists
newly discovered evidence; Grant or denial of a new trial is, generally speaking, addressed to the
sound discretion of the court which cannot be interfered with unless a clear abuse thereof is shown.
(Ybiernas vs. Tanco-Gabaldon, 650 SCRA 154 [2011])
——o0o——
pg. 1612
G.R. No. 204719. December 5, 2016.*
POWER SECTOR ASSETS and LIABILITIES MANAGEMENT CORPORATION, petitioner,

vs. SEM-CALACA POWER CORPORATION, respondent.
Remedial Law; Civil Procedure; Appeals; It is general practice among the courts that the rulings
of administrative agencies like the Energy Regulatory Commission (ERC) are accorded great
respect, owing to a traditional deference given to such administrative agencies equipped with the
special knowledge, experience and capability to hear and determine promptly disputes on
technical matters.—It is general practice among the courts that the rulings of administrative
agencies like the ERC are accorded great respect, owing to a traditional deference given to such
administrative agencies equipped with the special knowledge, experience and capability to hear
and determine promptly disputes on technical matters. Factual findings of administrative agencies
that are affirmed by the Court of Appeals are generally conclusive on the parties and not reviewable
by this Court. Although there are instances when such a practice is not applied, such as when the
board or official has gone beyond its/his statutory authority, exercised unconstitutional powers or
clearly acted arbitrarily without regard to its/his duty or with grave abuse of discretion, or when
the actuation of the administrative official or administrative board or agency is tainted by a failure
to abide by the command of the law, none of such instances obtain in the present case which would
prompt this Court to reverse the findings of the tribunal below.
Energy Regulatory Commission; Jurisdiction; Electric Power Industry Reform Act of 2001; The
Supreme Court (SC) finds the Energy Regulatory Commission (ERC) to have acted within its
statutory powers as defined in Section 43(u), Republic Act (RA) No. 9136, or the Electric Power
Industry Reform Act of 2001 (EPIRA Law), which grants it original and exclusive jurisdiction
“over all cases involving disputes between and among participants or players in the energy
sector.”—We find the ERC to have acted within its statutory powers as defined in Section 43(u),
R.A. No. 9136, or the EPIRA Law, which grants it original and exclusive jurisdiction “over all
_______________
* THIRD DIVISION.
157
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Power Sector Assets and Liabilities Management Corporation vs. SEM-Calaca Power
Corporation
pg. 1613
cases involving disputes between and among participants or players in the energy sector.”
Jurisprudence also states that administrative agencies like the ERC, which were created to address
the complexities of settling disputes in a modern and diverse society and economy, count among
their functions the interpretation of contracts and the determination of the rights of parties, which
traditionally were the exclusive domain of the judicial branch.
Civil Law; Contracts; Interpretation of Contracts; Where the language of a written contract is
clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to
mean, unless some good reason can be assigned to show that the words should be understood in
a different sense.—Among the key principles in the interpretation of contracts is that espoused in
Article 1370, paragraph 1, of the Civil Code, quoted as follows: Art. 1370. If the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control. The rule means that the contract’s meaning should be determined from
its clear terms without reference to extrinsic facts or aids. The intention of the parties must be
gathered from the contract’s language, and from that language alone. Stated differently, where the
language of a written contract is clear and unambiguous, the contract must be taken to mean that
which, on its face, it purports to mean, unless some good reason can be assigned to show that the
words should be understood in a different sense.
Same; Same; Same; Jurisprudence dictates that when the intention of the parties cannot be
discerned from the plain and literal language of the contract, or where there is more than just one
way of reading it for its meaning, the court must make a preliminary inquiry of whether the
contract before it is an ambiguous one. A contract provision is ambiguous if it is susceptible of
two (2) reasonable alternative interpretations.—Discerning the parties’ true intent requires the
application of other principles of contract interpretation. Jurisprudence dictates that when the
intention of the parties cannot be discerned from the plain and literal language of the contract, or
where there is more than just one way of reading it for its meaning, the court must make a
preliminary inquiry of whether the contract before it is an ambiguous one. A contract provision is
ambiguous if it is susceptible of two reasonable alternative interpretations. In such case, its
interpretation is left to the court, or another tribunal with
158

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jurisdiction over it. More simply, “interpretation” is defined as the act of making intelligible what
was before not understood, ambiguous, or not obvious; it is a method by which the meaning of
language is ascertained. The “interpretation” of a contract is the determination of the meaning
attached to the words written or spoken which make the contract.
pg. 1614
Remedial Law; Civil Procedure; Appeals; Actions of an administrative agency may not be
disturbed nor set aside by the judicial department sans any error of law, grave abuse of power or
lack of jurisdiction, or grave abuse of discretion clearly conflicting with either the letter or spirit
of the law.—The Court has exhaustively examined the contract between the parties, including the
so-called Special Conditions of the MERALCO TSC, the Calaca Typical Hourly Customer’s Load
Profile and the Nomination Protocol between MERALCO and NPC of TSC Contract Energy, as
cited by PSALM in its petition, and specifically the provisions thereof quoted by the ERC, and
found the same to be consistent with the above conclusions of the said agency. As such, the Court
will not interfere with the same, mindful of the principle that actions of an administrative agency
may not be disturbed nor set aside by the judicial department sans any error of law, grave abuse
of power or lack of jurisdiction, or grave abuse of discretion clearly conflicting with either the
letter or spirit of the law.
Maria Luz L. Caminero and Cecilio B. Gellado, Jr. for petitioner Power Sector Assets and
Liabilities Management Corporation.
Puyat, Jacinto & Santos for respondent.
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to annul and set aside
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the Court of Appeals’ Decision1 dated September 4, 2012 and Resolution2 dated November 27,
2012 in C.A.-G.R. S.P. No. 123997, which affirmed the rulings of the Energy Regulatory
Commission (ERC) specifying respondent’s capacity allocation as a power producer.
The facts of the case follow.
pg. 1615
The Electric Power Industry Reform Act of 2001 (EPIRA), or Republic Act (R.A.) No. 9136, which
was signed into law by then President Gloria Macapagal-Arroyo on June 8, 2001, was intended to
provide a framework for the restructuring of the electric power industry, including the privatization
of the assets of the National Power Corporation (NPC), the transition to the desired competitive
structure and the definition of the responsibilities of the various government agencies and private
entities with respect to the reform of the electric power industry.3
The EPIRA also provided for the creation of petitioner Power Sector Assets and Liabilities
Management Corporation (PSALM), a government-owned and -controlled corporation which took
over ownership of the generation assets, liabilities, independent power producer (IPP) contracts,
real estate and other disposable assets of the NPC.4 PSALM’s principal purpose under the law is
to “manage the orderly sale, disposition, and privatization of NPC generation assets, real estate
and other disposable assets, and IPP contracts with the objective
_______________
1 Penned by Associate Justice Remedios A. Salazar-Fernando, with Associate Justices Normandie

B. Pizarro and Manuel M. Barrios, concurring; Rollo, pp. 59-73.
2 Penned by Associate Justices Remedios A. Salazar-Fernando, with Associate Justices

Normandie B. Pizarro and Leoncia R. Dimagiba, concurring; id., at pp. 74-75.
3 RA No. 9136, Sec. 3.
4 Id., Sec. 49.
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of liquidating all NPC financial obligations and stranded contract costs in an optimal manner.”5
Among the assets put on sale by PSALM was the 600-MW Batangas Coal-Fired Thermal Power
Plant in Calaca, Batangas (Calaca Power Plant).6 In July 2009, DMCI Holdings, Inc. (DMCI)
was declared the highest bidder in the sale.7 The sale was effected through an Asset Purchase
Agreement (APA) executed by PSALM and DMCI on July 29, 2009, and became effective on
August 3, 2009.8
On December 2, 2009, DMCI transferred all of its rights and obligations under the APA and the
Land Lease Agreement (also called Final Transaction Documents) to herein respondent SEM-
pg. 1616
Calaca Power Corporation (SCPC) by entering into an Amendment, Accession and Assumption
Agreement that was signed by PSALM, DMCI and SCPC.9 Under the agreement, SCPC took over
all the rights and obligations of DMCI under the said documents. SCPC also alleged that on that
same date, it took over the physical possession, operation and maintenance of the Calaca Power
Plant.10
Also on the same date, SCPC started providing electricity to customers listed in Schedule W of
the APA, among which is MERALCO.11
Schedule W is partially reproduced hereunder:
_______________
5 Id., Sec. 50.
6 Rollo, pp. 8, 458.
7 Id. The parties differ as to the actual date of the declaration of DMCI as winning bidder.
Petitioners state the date as July 8, 2009, while respondents put it on July 3, 2009.
8 Id., at pp. 8, 76-124, 458.
9 Id., at pp. 8, 459.
10 Id., at p. 459.
11 Id., at pp. 10, 459.
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SCHEDULE W12
POWER SUPPLY CONTRACTS
Part I: Description of the PSC
_______________
pg. 1617
12 Id., at pp. 125-126.
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Notes:
● All figures mentioned above are only indicative and will be based on the
hourly/daily/monthly nominated volume as per average monthly contract level. A typical
hourly customer’s load profile for Calaca is demonstrated in the attached Figure 1 of this
Schedule J (sic) (Power Supply Contract).
● The special conditions governing the assumption by the Buyer of the assignment of a
portion of the Contract Energy under Meralco TSC are contained in Part II of this Schedule
J (sic) (Power Supply Contract).
xxxx
Furthermore, in the event that the Purchased Assets (sic) is not able to supply the contracted power
under the aforesaid contracts due to the unavailability of coal or other causes, the Buyer may enter
into a back-to-back supply contract with other generators or buy directly from the market for the
deficiency.
Part II: Special Conditions of the MERALCO TSC
The following conditions, unique to the MERALCO-NPC contract, shall apply to the assigned
portion of the Contract Energy from the MERALCO TSC.
1. Neither the MERALCO TSC nor any portion thereof shall be assigned to the Buyer. It
is the Contract Energy specified in part I that is the subject of the assignment.
xxxx
SCPC contends that it is obliged to supply 10.841% of MERALCO’s total requirement but not to
exceed 169,000 kW
pg. 1618
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in any hourly interval.13 However, PSALM holds a different view and contends that SCPC is
bound to supply the entire 10.841% of what MERALCO requires, without regard to any cap or
limit.14
Thus, during a period of high demand, specifically in the summer of the year 2010, when SCPC
fell short of supplying the entire 10.841% of MERALCO’s requirements, the deficiency was filled
by supply from the Wholesale Electricity Spot Market (WESM).15 SCPC contends that this was
the consequence of NPC’s and PSALM’s nominations in excess of what SCPC claims to be the
169,000 kW cap or limit in its supply.16 PSALM disputes that there is such a cap or limit, noting
that SCPC was obligated to supply the entire 10.841% under Schedule W of the APA.17 Thus,
NPC and PSALM, who contend that they were merely following the Transition Supply Contract
(TSC) with MERALCO, billed the latter for the electricity delivered by SCPC and that supplied
through WESM.18 SCPC claims, however, that PSALM withheld MERALCO’s payments even
for the electricity that SCPC supplied without the latter’s knowledge nor consent.19 NPC also
allegedly replaced SCPC Power Bills to MERALCO with PSALM Power Bills, with instructions
that payments be remitted directly to PSALM instead of SCPC.20
On March 16, 2010, SCPC wrote a letter to PSALM insisting that the 169,000 kW supplied to
MERALCO “should be treated as the maximum limit of the MERALCO allocation which SCPC
is bound to supply under the APA in accordance
_______________
13 Id., at p. 459.
14 Id., at p. 11.
15 Id.
16 Id., at p. 461.
17 Id., at p. 11.
18 Id.
19 Id., at p. 461.
20 Id.
pg. 1619
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with Schedule W.”21 On April 20, 2010, SCPC wrote a demand letter formally asking both
PSALM and NPC to release MERALCO’s payments for the period of January 26, 2010 to
February 25, 2010 amounting to Php451,450,889.13 and to directly remit to SCPC all subsequent
amounts due from MERALCO.22
On May 13, 2010, PSALM replied through a letter reiterating that SCPC assumed the obligation
to supply 10.841% of MERALCO’s TSC and that the latter’s payments would be remitted to SCPC
only after deducting the cost of power supplied by WESM.23
Thus, PSALM proceeded to deduct from its remittances to SCPC the cost of the power that NPC
allegedly purchased from WESM.24 SCPC claims that for the months of January 2010 to June
2010, the amounts due it was Php1,894,028,305.00. Instead, PSALM paid it the amount of only
Php934,114,678.04, or short of Php959,913,626.96, which allegedly represents the cost of
electricity that PSALM charged against SCPC representing the power NPC supposedly obtained
from WESM to fill the alleged deficiency in SCPC’s supply to MERALCO.25
Eventually, following negotiations between the parties, PSALM agreed, through a letter dated June
21, 2010, to cap MERALCO’s nominations from the Calaca Power Plant “in any hour up to 169
MWh or 10.841% of each hourly energy nomination submitted by MERALCO to NPC under the
MERALCO TSC effective June 26, 2010.”26
However, as SCPC was insisting that the MERALCO cap should have taken effect much earlier,
or on December 2, 2009, i.e., the date of effectivity of the APA, and as the parties
_______________
21 Id.
22 Id., at pp. 11, 461-462.
23 Id., at pp. 12, 462.
24 Id., at p. 462.
25 Id.
pg. 1620
26 Id., at pp. 12, 462.
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failed to execute the Implementation, Agreement and Protocol (Implementation Agreement)

covering the parties’ responsibilities with regards to the supply of power to MERALCO, SCPC
made an offer to PSALM for the issues to be brought to the ERC for arbitration.27 The proposal,
however, was rejected by PSALM.28
Hence, SCPC initiated the instant case by filing a Petition for Dispute Resolution (with Prayer for
Provisional Remedies) before the Energy Regulatory Commission (ERC) against NPC and
PSALM.29
In its Decision30 dated July 6, 2011, the ERC ruled in favor of SCPC and against NPC and
PSALM, with the following dispositive portion:
WHEREFORE, the foregoing premises considered, the Commission hereby resolves the issues
raised in this instant dispute as follows:
1. SCPC’s obligation under Schedule W of the APA is to deliver 10.841% of MERALCO’s

energy requirements but not to exceed 169,000 kW capacity allocation, at any given hour;
2. The obligation to deliver 10.841% of MERALCO’s energy requirements, but not to

exceed 169,000 kW capacity, at any given hour, shall commence from
_______________
27 Id., at pp. 12-13, 462-463.
28 Id., at pp. 13, 463.
29 The petition was docketed as ERC Case No. 2010-058MC and entitled In the Matter of the
Petition for Dispute Resolution, with Application for the Issuance of Provisional Remedies, Sem-
Calaca Power Corporation, petitioner, v. National Power Corporation and Power Sector Assets
and Liabilities Management Corporation, respondents; id., at pp. 13, 463, 490-508.
30 Signed by Chairperson Zenaida G. Cruz-Ducut and Commissioners Rauf A. Tan, Alejandro Z.

Barin and Jose C. Reyes; id., at pp. 295-318.
pg. 1621
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December 2, 2009 when the physical possession, occupation and operation of the Calaca
Power Plant was formally turned over to SCPC;
3. The NPC and PSALM have no basis, in fact and in law, to charge against SCPC the
nominations beyond the 169,000 kW capacity which NPC allegedly purchased for
MERALCO from the WESM. There being no basis to charge SCPC, PSALM must return
all the payments of MERALCO which were withheld by PSALM, including the amount
representing the cost of electricity nominated and purchased by NPC beyond the 169,000
kW from the WESM for the period January 2010 to June 25, 2010;
4. The payment of interests on the amount to be returned by PSALM to SCPC is in order.

However, in the absence of a stipulation, the amount of interest shall be pegged at 6% per
annum; and
5. NPC shall continue to nominate for MERALCO’s energy requirements, in accordance

with the TSC between them. However, in nominating for MERALCO’s contract energy
under the APA, NPC shall consider the 169,000 kW capacity limit, in accordance with
Schedule W of the APA, considering the generating capacity of the Calaca Power Plant. In
the absence of an Implementation Agreement and Protocol, all nominations made for
MERALCO by SCPC in accordance with the APA, shall henceforth be billed through NPC
and payment thereof shall be collected directly from MERALCO by SCPC.
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Accordingly, the NPC is hereby enjoined from making nominations beyond the 169,000 kW of
MERALCO’s allocation. On the other hand, PSALM is hereby directed to (1) refrain from
pg. 1622
charging against SCPC the cost of power beyond the 169,000 kW of MERALCO’s allocation and
to (2) refrain from withholding all MERALCO payments for electricity supplied by SCPC.
The NPC, PSALM and SCPC are further directed to account for and reconcile the amounts charged
against the SCPC by PSALM, on account of the NPC’s nominations and purchases from the
WESM beyond the 169,000 kW capacity allocation during the period January 2010 to June 25,
2010. Thereafter, the parties are directed to submit to the Commission the reconciled computation
of the over-nominations and other MERALCO payments withheld by PSALM for the said period,
within ten (10) days from receipt of this Decision. Further, PSALM is hereby directed to return to
SCPC, the amount as computed and reconciled, including the interests thereon at the rate of 6%
per annum, within ten (10) days from the parties’ submission of the reconciled computation to the
Commission. Finally, the parties are directed to submit their Compliance with the foregoing
dispositions within thirty (30) days from receipt of this Decision.
SO ORDERED.31
PSALM filed a motion for reconsideration of the above decision. However, in an Order32 dated
February 13, 2012, the ERC denied the said motion.
Aggrieved, PSALM filed a Petition for Review of the ERC decision to the Court of Appeals
(CA).33
_______________
31 Id., at pp. 315-317.
32 Signed by Chairperson Zenaida G. Cruz-Ducut and Commissioners Jose C. Reyes, Maria

Teresa A.R. Castañeda and Gloria Victoria C. Yap-Taruc, id., at pp. 337-350.
33 Id., at pp. 351-373.
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In its assailed Decision34 dated September 4, 2012, the CA denied PSALM’s petition and upheld
the findings of the ERC. The dispositive portion of the decision states:
pg. 1623
WHEREFORE, premises considered, the petition is DENIED. The Decision dated July 6, 2011
and the Order dated February 13, 2012 of the Energy Regulatory Commission in ERC Case No.
2010-058 are hereby AFFIRMED.
SO ORDERED.35
The CA sustained the ERC’s interpretation of the APA that SCPC’s obligation was to supply
10.841% of MERALCO’s energy requirement, but not to exceed 169,000 kW at any given hour,
as such interpretation would reconcile the presence of the two figures in Schedule W and
harmonize the provisions of the said contract.36 Likewise, the appellate court upheld ERC in
explaining why a cap of 169,000 kW is placed on SCPC’s obligation to supply electricity to
MERALCO, the explanation being: unlike before the privatization when NPC, with all its
generation assets, was the sole supplier of MERALCO and, therefore, could obtain electricity from
any of those assets, in the current situation, SCPC is just one of many suppliers and SCPC’s asset
is only the Calaca Power Plant, which has a limited capacity.37 The CA likewise stated that the
findings of administrative or regulatory agencies on matters within their technical area of expertise
are generally accorded not only respect but finality if such findings are supported by substantial
evidence.38
_______________
34 Id., at pp. 69-73.
35 Id., at p. 72.
36 Id., at pp. 67-69.
37 Id., at pp. 69-71.
38 Id., at p. 71.
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PSALM filed a Motion for Reconsideration of the decision above, but the same was likewise
denied in a Resolution of the CA, dated November 27, 2012.39
Hence, PSALM goes to this Court via the present Petition for Review on Certiorari.
pg. 1624
PSALM contends that the CA erred in placing a cap of 169,000 kW on SCPC’s obligation to
supply 10.841% of MERALCO’s requirement. It insists that SCPC stepped into the shoes of NPC
and PSALM in terms of the fulfillment of the obligation of the latter to supply 10.841% of
MERALCO’s nominated volume.40 In PSALM’s view, SCPC is deemed to have assumed
PSALM’s rights and obligations under the Power Supply Contracts (PSCs) subject to the
conditions specified in Schedule W.41
Further, it adds that Schedule W is unambiguous and requires no construction or interpretation.42

Allegedly, the figure 169,000 kW is not meant to qualify the 10.841% of MERALCO’s energy
requirement; instead, Schedule W’s “Notes” portion supposedly explains that 169,000 kW and all
the other figures mentioned therein are only “indicative” and the supply of MERALCO’s energy
requirement “will still be based on the hourly/daily/monthly nominated volume per average
monthly contract level.”43 Thus, for PSALM, it was error for the ERC and CA to conclude that a
cap exists as to the 10.841% energy requirement of MERALCO.44
Petitioner PSALM additionally holds that the ERC erred in harmonizing only two figures in
Schedule W: the 10.841% and the 169,000 kW, since it claims that such figures are not the only
stipulations in the said Schedule, there being special
_______________
39 Id., at pp. 74-75.
40 Id., at pp. 19-20.
41 Id., at p. 20.
42 Id., at p. 23.
43 Id., at pp. 21-23.
44 Id., at p. 25.
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conditions such as the Notes which, had it been read together with the rest of the conditions, should
have led the ERC to a different conclusion.45 PSALM also cites additional stipulations such as
the so-called Special Conditions of the MERALCO TSC, the Calaca Typical Hourly Customer’s
pg. 1625
Load Profile and the Nomination Protocol between MERALCO and NPC of TSC Contract
Energy.46 Then, there is also a provision supposedly in Schedule W in which SCPC has the option
to enter into back-to-back supply contracts with other generators or purchase directly from the
market should it become unable to supply the contracted power under the contracts in Schedule
W.47 According to PSALM, these are clear indications that a cap on SCPC’s supply had not been
intended by the parties.48
PSALM also poses that even granting that Schedule W is ambiguous, the CA’s and ERC’s
interpretations were restrictive and incorrect.49 It also accuses the ERC of erroneously resorting
to extrinsic evidence in its interpretation, a method also erroneously concurred in by the CA.50
Allegedly, this was done when the ERC cited the testimony of a witness in interpreting Schedule
W.51 From the testimony, the ERC supposedly inferred that “prior to privatization, NPC did not
take into account the capacities of its assets” in relation to its supply contract with MERALCO,
meaning that before, NPC was the sole supplier and could make its various assets generate the
supply needed, unlike at present, where SCPC is just one of many suppliers with a single
generating asset, with a limited capacity.52 Allegedly, this led the ERC and the CA to
_______________
45 Id., at pp. 27-29.
46 Id., at p. 29.
47 Id., at pp. 29-30.
48 Id., at p. 30.
49 Id., at pp. 31-36.
50 Id., at pp. 32-33.
51 Id., at p. 33.
52 Id., at pp. 31-33.
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pg. 1626
erroneously conclude that a cap of 169,000 kW in SCPC’s supply obligations was indeed
intended.53
Thus, according to PSALM, given the allegedly erroneous rulings, the CA should not have relied
on the principle of upholding the findings of fact of administrative agencies, like the ERC, and
instead, should have reversed the latter’s findings.54
In its Comment, SCPC writes that PSALM’s own interpretation, while also self-serving and
inconsistent, would render the implementation of Schedule W impossible and absurd.55 For one,
SCPC posits that the figure 10.841%, when observed alone and literally applied, provides no
meaningful reference, because Schedule W itself does not state that the figure refers to 10.841%
of the actual volume nominated for MERALCO.56 It has no base value and is an incomplete
mathematical statement.57 Further, SCPC claims that observing the figure 10.841% alone
disregards all the other figures that appear in Schedule W, including the 169,000 kW which in fact
appears twice in the said schedule.58 And finally, it argues that mainly relying on the Notes and
its statement that the figures in the schedule are “indicative” would render all the figures in
Schedule W insignificant, as if concluding that SCPC’s supply obligations are unlimited.59
SCPC maintains that such interpretation by PSALM has no support from any principle of contract
interpretation, while it was the ERC and the CA that applied the correct rule of interpretation, such
as one found in the Civil Code, to wit:60
_______________
53 Id.
54 Id., at pp. 37-39.
55 Id., at p. 471.
56 Id.
57 Id.
58 Id.
59 Id.
60 Id.
172
pg. 1627
Corporation
Art. 1374. The various stipulations of a contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly.
SCPC also touts the ERC’s reason for not applying the Notes’ statement that the figures were
“indicative,” or mere estimates of the true value. The reason is that such would lead to an absurdity
as it would allocate more than 169,000 kW for MERALCO despite the limited actual generating
capacity of the Calaca Power Plant.61 Instead, the ERC allegedly employed the principle of
“reasonableness of results” in contract interpretation to avoid an unreasonable or absurd
outcome.62
As for the other clause in the Notes which grants SCPC the option to enter into back-to-back supply
contracts with other suppliers in order to fulfill its MERALCO obligations, SCPC again quotes the
ERC in stating that it is, in fact, NPC’s responsibility to fill any shortfall in supply to MERALCO,
and that the back-to-back supply contracts to be entered into by SCPC only refer to when the latter
is unable to supply MERALCO to the extent of 169,000 kW, which is the cap in its obligation;
shortages due to nominations by NPC in excess of 169,000 kW are no longer the contractual
obligation of SCPC.63
Further, SCPC states that the ERC sufficiently explained the implications of the Special Conditions
of the MERALCO TSC, clarifying that “NPC’s and PSALM’s obligation to supply the entire
energy contract to MERALCO, including the obligation to replace any curtailed energy, was not
passed on or assigned to SCPC,” rather, only such portion as defined in Part I of Schedule W was
assigned to SCPC, as clearly pro-
_______________
61 Id., at p. 473.
62 Id.
63 Id., at pp. 473-474.
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VOL. 812, DECEMBER 5, 2016 173
pg. 1628
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vided for under Part II of Schedule W.64 As for the Calaca Typical Hourly Customer’s Load
Profile and Nomination Protocol, ERC explained that previously, when NPC was the sole supplier
and had other existing assets, even if a particular allocation exceeded a plant’s capacity, NPC could
obtain supply from its other generating assets.65 ERC stated that such is no longer the situation in
the case at bar, where supply is supposed to come from a specific plant — the Calaca Power Plant
— which has a limited capacity.66
SCPC argues that the CA correctly considered the circumstances surrounding the execution of the
APA in interpreting Schedule W, i.e., the poor condition of the Calaca Power Plant which, at that
time only had a dependable capacity of 330 MW out of its 600 MW rated capacity.67 SCPC
narrates that the low dependable capacity is the reason why the contracted demand levels for
various customers listed in Schedule W were pegged at 322 MW only and, with a reserve of only
eight (8) MW, the plant is well short of providing NPC’s excess nominations which allegedly went
up to 25,531.93 kWh (25MW) during one billing period.68 SCPC asserts that DMCI, the original
purchaser of the Calaca Power Plant, then knew of the plant’s dependable capacity, which it saw
as consistent with the total demand listed in Schedule W, which was what prompted it to naturally
assume only the obligations spelled out in the said APA and Schedule W.69 Thus, SCPC states
that PSALM’s claim that the buyer also assumed “the risk of supplying energy considering the
diminishing capacity of the other plants” is absurd and unreasonable, as these could not have been
known despite the buyer’s due diligence.70 Besides,
_______________
64 Id., at p. 474.
65 Id., at p. 475.
66 Id.
67 Id., at pp. 476-477.
68 Id.
69 Id., at p. 477.
70 Id.
174
pg. 1629
Corporation
SCPC argues that any ambiguity should be interpreted against PSALM, the seller and the party
who prepared the APA.71
Lastly, SCPC contends that the witness, whose testimony was considered by the ERC in ruling
that the actual capacity of a power plant is material in determining its allocation, was PSALM’s
own witness, therefore, the latter party may not disavow her testimony.72
The singular issue now before the Court is: whether there was error in the CA’s affirmation of the
ERC’s interpretation of Schedule W of the so-called Asset Purchase Agreement (APA), i.e., the
contract between the parties PSALM and SCPC, to mean that SCPC’s obligation thereunder is to
deliver 10.841% of MERALCO’s energy requirements but not to exceed 169,000 kW capacity
allocation, at any given hour.
We resolve to deny the petition. No error attended the CA’s affirmation of the ruling of the ERC.
It is general practice among the courts that the rulings of administrative agencies like the ERC are
accorded great respect, owing to a traditional deference given to such administrative agencies
equipped with the special knowledge, experience and capability to hear and determine promptly
disputes on technical matters.73 Factual findings of administrative agencies that are affirmed by
the Court of Appeals are generally conclusive on the parties and not reviewable by this Court.74
Although there are instances when such a practice is not applied, such as when the board or official
has gone beyond its/his statutory authority, exercised unconstitutional powers or clearly acted
arbitrarily without regard to its/his
_______________
71 Id., at pp. 477-478.
72 Id., at pp. 478-479.
73 Globe Telecom, Inc. v. National Telecommunications Commission, 479 Phil. 1, 11; 435 SCRA
110, 124 (2004).
74 Herida v. F & C Pawnshop, 603 Phil. 385, 390; 585 SCRA 395, 401 (2006).
175
pg. 1630
VOL. 812, DECEMBER 5, 2016 175
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duty or with grave abuse of discretion, or when the actuation of the administrative official or
administrative board or agency is tainted by a failure to abide by the command of the law,75 none
of such instances obtain in the present case which would prompt this Court to reverse the findings
of the tribunal below.
On the contrary, We find the ERC to have acted within its statutory powers as defined in Section
43(u), RA 9136, or the EPIRA Law, which grants it original and exclusive jurisdiction “over all
cases involving disputes between and among participants or players in the energy sector.”76
Jurisprudence also states that administrative agencies like the ERC, which were created to address
the complexities of settling disputes in a modern and diverse society and economy, count among
their functions the interpretation of contracts and the determination of the rights of parties, which
traditionally were the exclusive domain of the judicial branch.77 Such broadened quasi-judicial
powers of administrative agencies are explained
_______________
75 Ruby Industrial Corporation v. Court of Appeals, 348 Phil. 480, 492; 284 SCRA 445, 455
(1998).
76 Sec. 43. Functions of the ERC.—
xxxx
(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates,
fees, fines and penalties imposed by the ERC in the exercise of the above mentioned powers,
functions and responsibilities and over all cases involving disputes between and among
participants or players in the energy sector. (Emphasis supplied)
An “Electric Power Industry Participant” is defined in Section 4 of the same law as referring to
“any person or entity engaged in the generation, transmission, distribution or supply of electricity.”
77 Christian General Assembly, Inc. v. Ignacio, 613 Phil. 629, 640-641; 597 SCRA 266, 281
(2009); Philippine International Trading Corporation v. Angeles, 331 Phil. 723, 748; 263 SCRA
421, 445 (1996).
176
pg. 1631
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in the case of Antipolo Realty Corporation v. NHA,78 which states:
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. Thus, in 1984, the Court noted that “between the
power lodged in an administrative body and a court, the unmistakable trend has been to refer it to
the former. x x x.”
xxxx
In general, the quantum of judicial or quasi-judicial powers which an administrative agency may
exercise is defined in the enabling act of such agency. In other words, the extent to which an
administrative entity may exercise such powers depends largely, if not wholly, on the provisions
of the statute creating or empowering such agency. In the exercise of such powers, the agency
concerned must commonly interpret and apply contracts and determine the rights of private
parties under such contracts. One thrust of the multiplication of administrative agencies is
that the interpretation of contracts and the determination of private rights thereunder is no
longer a uniquely judicial function, exercisable only by our regular courts.
As the foregoing imply, the ERC merely performed its statutory function of resolving disputes
among the parties who are players in the industry, and exercised its quasi-judicial and
administrative powers as outlined in jurisprudence by inter-
_______________
78 237 Phil. 389, 396-398; 153 SCRA 399, 406 (1987). (Emphasis ours; citations omitted)
177
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pg. 1632
preting the contract between the parties in the present dispute, the so-called APA and specifically
its Schedule W.
As for the correctness of the ERC’s interpretation and finding, this Court examined the records
and found no reason to depart from the rule that especially when supported by substantial evidence
and affirmed by the Court of Appeals, the findings of a quasi-judicial body like the ERC deserve
the highest respect, if not finality.79
The petitioner PSALM assails ERC’s holding that SCPC’s obligation is “to deliver 10.841% of
MERALCO’s energy requirements but not to exceed 169,000 kW capacity allocation, at any given
hour,” which the ERC based on its interpretation of the figures 169,000 kW and 10.841% found
in three columns of Schedule W.
We affirm the ERC’s interpretation, as upheld by the CA.
Among the key principles in the interpretation of contracts is that espoused in Article 1370,
paragraph 1, of the Civil Code, quoted as follows:
Art. 1370. If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control.
The rule means that the contract’s meaning should be determined from its clear terms without
reference to extrinsic facts or aids.80 The intention of the parties must be gathered from the
contract’s language, and from that language alone.81 Stated differently, where the language of a
written contract is clear and unambiguous, the contract must be taken to mean
_______________
79 Mount Carmel College Employees Union (MCCEU) v. Mount Carmel College, Incorporated,
G.R. No. 187621, September 24, 2014, 736 SCRA 381, 389.
80 Magoyag v. Maruhom, 640 Phil. 289, 298; 626 SCRA 247, 256 (2010).
81 Id.
178

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pg. 1633
that which, on its face, it purports to mean, unless some good reason can be assigned to show that
the words should be understood in a different sense.82
Thus, conversely, when the terms of the contract are unclear or are ambiguous, interpretation must
proceed beyond the words’ literal meaning. Paragraph 2 of the same Article 1370 provides:
If the words appear to be contrary to the evident intention of the parties, the latter shall prevail
over the former.
Discerning the parties’ true intent requires the application of other principles of contract
interpretation. Jurisprudence dictates that when the intention of the parties cannot be discerned
from the plain and literal language of the contract, or where there is more than just one way of
reading it for its meaning, the court must make a preliminary inquiry of whether the contract before
it is an ambiguous one.83 A contract provision is ambiguous if it is susceptible of two reasonable
alternative interpretations.84 In such case, its interpretation is left to the court, or another tribunal
with jurisdiction over it.85 More simply, “interpretation” is defined as the act of making
intelligible what was before not understood, ambiguous, or not obvious; it is a method by which
the meaning of language is ascertained.86 The “interpretation” of a contract is
_______________
82 Id., at pp. 298-299; p. 248.
83 Law Firm of Tungol & Tibayan v. Court of Appeals, 579 Phil. 717, 726; 557 SCRA 451, 459
(2008), citing Abad v. Goldloop Properties, Inc., 549 Phil. 641, 654; 521 SCRA 131, 144 (2007).
84 Id.
85 Id.
86 National Irrigation Administration v. Gamit, G.R. No. 85869, November 6, 1992, 215 SCRA
436, 453, citing Martin, Comments on the Rules of Court, Vol. V, p. 124, 1986 ed., citing Dick v.
King, 236 P. 1059, 73 Mont. 465.
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the determination of the meaning attached to the words written or spoken which make the
contract.87
pg. 1634
In the case at bar, the Court finds that ambiguity indeed surrounds the figures 10.841% and 169,000
kW found in the contract, the former because it does not indicate a base value with a specific
quantity and a definite unit of measurement and the latter because there is uncertainty as to whether
it is a cap or limit on the party’s obligation or not. These were similarly the findings of both the
ERC and the appellate court. Even to the casual observer, it is obvious that the plain language
alone of Schedule W does not shed light on these figures.
The ERC correctly explained and interpreted these provisions, in this wise:
It is worthy to note that Schedule W of the APA indicates the value “10.841%,” which is enclosed
in parenthesis, under the name of MERALCO in the first column, without any reference as to its
base value. The figure 10.841% simply written as it is (without reference on the base value), is an
incomplete mathematical sentence and, therefore, is susceptible to several interpretations. For
instance, it can be construed as 10.841% of the entire SCPC capacity (10.841% of 322 MW) or it
can also be taken to mean that 169,000 kW represents 10.841% of MERALCO’s contract energy.
A close scrutiny of Schedule W, however, indicates that 10.841% is not synonymous to 169,000
kW, i.e., 169,000 kW does not represent 10.841% of MERALCO’s energy requirement. To
complete its meaning, the figure 10.841% should have been followed by a reference value and
should have been written as “10.841% of . . .” a specific base reference. Thus, to use 10.841% as
the reference value alone for MERALCO’s contract energy at any given hour would not be
appropriate under the circumstances because SCPC
_______________
87 Id., at pp. 453-454, citing Dent v. Industrial Oil & Gas Co., Ark. 122 2d. 162, 164.
180

Corporation
would not have an idea of how much energy MERALCO would need at any given time and the
capacity that the power plant can generate may not match with it.
On the other hand, to use the nominal figure 169,000 kW alone in reference to MERALCO’s
contract energy would likewise not be appropriate under the circumstances because the “10.841%”
value written in parenthesis underneath the name “MERALCO” in the first column of Schedule
W cannot just simply be ignored.
To synthesize, the Commission believes that neither of the figures (10.841% or 169,000 kW) taken
alone should be controlling in reference to MERALCO’s contract energy under the APA. The
pg. 1635
10.841% value should be read and harmonized with the nominal figure 169,000 kW in order to
give meaning to both, consistent with and in relation to the APA. In giving meaning to the words
and intention of Schedule W, the Commission abides by the law stipulated under Article 1374 of
the New Civil Code, which provides:
ART. 1374. The various stipulations of a contract shall be interpreted together, attributing
to the doubtful ones that sense which may result from all of them taken jointly.88
The ambiguity in Schedule W partly lies in the figure “10.841%,” which lacks a base value and is
bereft of any specific quantity or number (in kilowatts or any other unit) to represent the generated
electricity that SCPC was obliged to deliver to MERALCO. A mere percentage below
MERALCO’s name without indicating what it is and what its base value is amounts to an
incomplete numerical statement. Then, on the right columns, specific quantities, including the
“160,000 kW,” are laid down which seem to correspond or add up to SCPC’s generating capacity
but which, in the “Notes” section of the schedule, are confusingly referred to as merely “indica-
_______________
88 Rollo, pp. 306-307.
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tive,” i.e., estimates, which do not help reduce the uncertainty.
Such a lack of clarity results in a perplexing situation wherein the obligation to deliver could be
interpreted as open-ended by one party — the obligee, but could be argued as “capped” or
“limited” by the other party — the obligor. Obviously, such divergence needed to be addressed by
a disinterested third party like the ERC.
Although how such confusion came about despite the presumed knowledge of both parties of both
the high and low ranges of MERALCO’s projected requirements, at any given time, as well as the
limited generating capacity of the Calaca Power Plant, the supplier’s sole generating asset, is
beyond the subject of this review, what is certain is that there is an ambiguity that, if left to stand
or to remain unresolved, would inevitably lead to interminable disputes. Thus, the Court sustains
the ERC’s decision to interpret the contract as well as its resulting interpretation and explanation.
pg. 1636
The ERC correctly cited another principle under the Civil Code in contract interpretation which
states:
Art. 1374. The various stipulations of a contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them taken jointly.89
Additionally, under the Rules on Evidence, it is required that:
RULE 130
xxxx
_______________
89 See also Licaros v. Gatmaitan, 414 Phil. 857; 362 SCRA 548 (2001); China Banking
Corporation v. Court of Appeals, 333 Phil. 158; 265 SCRA 327 (1996).
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Sec. 11. Instrument construed so as to give effect to all provisions.—In the construction of an
instrument where there are several provisions or particulars, such a construction is, if possible, to
be adopted as will give effect to all.
Then, case law is also settled on the rule that contracts should be so construed as to harmonize and
give effect to its different provisions.90 The legal effect of a contract is not determined alone by
any particular provision disconnected from all others, but from the whole read together.91
Following the above rules and principles, the ERC correctly interpreted the ambiguity in Schedule
W in a way that would render all of the contracts’ provisions effectual. Although there was
ambiguity, as earlier stated, in the figures 10.841% and 169,000 kW that appear on the said
schedule, the ERC properly harmonized both provisions. It did not just disregard or dispense with
either of the figures as such would have violated the principles that the “various stipulations of the
contract shall be interpreted together” and that the “doubtful provisions shall be attributed with the
sense which may result from all of them taken jointly.” Instead, it interpreted both in a way that
they would be preserved and work together. The parties clearly intended for the figures to be in
pg. 1637
the contract and bestowed such with meanings which the ERC had no power to just ignore or
remove.
As stated by the ERC, the 10.841% without any base reference is mathematically incomplete and
therefore opens itself up to various interpretations; thus, it is ambiguous. On the other hand, the
169,000 kW, which appears twice in Schedule W, if treated as merely “indicative” or just an
“estimate,” as
_______________
90 Mendros, Jr. v. Mitsubishi Motors Phils. Corporation (MMPC), 599 Phil. 1, 18; 579 SCRA
529, 544-545 (2009), citing Reparations Commission v. Northern Lines, Inc., 145 Phil. 24, 33; 34
SCRA 203, 211 (1970).
91 Id.
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PSALM alleges, would be rendered insignificant or as if it was not even written in the contract,
and the same could be said of all the other figures in the schedule including the 10.841%. Clearly,
this was not the intention of the parties. The parties clearly assigned a common meaning to the
figures and they were not mere estimates nor insignificant because, otherwise, the contract would
be ineffectual and without these figures, the contract would not have even been signed in the first
place.
It bears emphasis as well that the contract APA and its Schedule W appear to have been prepared
by PSALM, so that the interpretation of any obscure or ambiguous words or stipulations therein
should not favor it, as it is presumed to have caused such obscurity or ambiguity.92
Moreover, overturning the ERC’s and the CA’s interpretation would result in the absurd scenario
of requiring SCPC to supply more than 169,000 kW for MERALCO despite the fact that its
contracted demand levels for various customers listed in Schedule W were pegged at 322 MW
only and its dependable capacity is only 330 MW. As this Court has verified in the records, the
ERC correctly explained that the Calaca Power Plant only produces up to 322 MW in electricity
net of plant use; out of such produced, MERALCO obtains the biggest allocation of 169,000 kW
(169 M), whereas the rest of the customers share 153,000 kW (153MW).93 It would be highly
unreasonable to require SCPC to allocate even a marginal increase from 169,000 kW for
MERALCO when such would cause it to renege on its obligations to supply its other customers.
pg. 1638
Such an interpretation that would lead to an unreasonableness which is frowned upon, for another
oft-cited rule in the interpretation of contracts is that “the reasonableness
_______________
92 Civil Code, Art. 1377; Horrigan v. Troika Commercial, Inc., 512 Phil. 782, 785; 476 SCRA
421, 424 (2005).
93 Rollo, p. 308.
184

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of the result obtained, after analysis and construction of the contract, must also be carefully
considered.”94
PSALM also contends that other stipulations in the contract such as the Special Conditions of the
MERALCO TSC, as well as SCPC’s option to enter into back-to-back supply contracts with other
generators (or to purchase directly from the market), should it become unable to supply the
contracted power under Schedule W, clearly are indications that there is no cap in SCPC’s supply
obligations. The contention, however, has no merit and, upon this Court’s own examination of the
contracts, affirms as correct the ERC’s explanation in its Order95 dated March 12, 2012 dismissing
PSALM’s motion for reconsideration, to wit:
A. NPC/PSALM’s OBLIGATION UNDER THE TSC
Under the TSC contracted between MERALCO and NPC, the latter is obliged to deliver
MERALCO’s total energy requirements. As such, NPC is required to exhaust all means to find
other sources of power to replace any curtailed energy at no extra cost to MERALCO. Simply put,
NPC is directly responsible to make up for any shortfall under the MERALCO TSC. In fact,
in its “Motion for Reconsideration,” PSALM mentioned that “Undeniably, Respondent PSALM
under the MERALCO TSC is obligated to deliver the entire contracted energy as stated therein.
x x x” and that “Respondent PSALM’s obligation is to keep MERALCO whole.”
It must be emphasized that NPC and PSALM’s obligation to supply the entire energy contract
to MERALCO, including the obligation to replace any curtailed energy, was not passed on
or assigned to
pg. 1639
_______________
94 JMA House, Incorporated v. Sta. Monica Industrial and Development Corporation, 532 Phil.
233, 254; 500 SCRA 526, 546 (2006), citing Republic v. David, 480 Phil. 258, 266-267; 436 SCRA
577, 584 (2004); Carceller v. Court of Appeals, 362 Phil. 332, 340; 302 SCRA 718, 725 (1999).
95 Rollo, pp. 337-350.
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SCPC. Only the portion of the contract energy as defined in Part I of Schedule W was assigned to
SCPC. Such is clear under Part II of Schedule W, which states:
“Part II. Special Conditions of the MERALCO TSC
The following conditions, unique to the MERALCO-NPC contract, shall apply to the
assigned portion of the Contract Energy from the MERALCO TSC.
1. Neither the MERALCO TSC nor any portion thereof shall be assigned to the Buyer. It
is the Contract Energy specified in part I that is the subject of the assignment.”
B. SCPC’S OBLIGATION UNDER SCHEDULE W OF THE APA
On the other hand, under Schedule W of the APA, SCPC is legally obligated to deliver 10.841%
of MERALCO’s energy requirements but not to exceed 169,000 kW capacity allocation at any
given hour. Accordingly, SCPC is responsible for any shortfall and is under obligation to provide
and make up for curtailed energy if it fails to produce up to 169,000 kW capacity, at any given
hour.96
pg. 1640
The above explanation by the ERC states, in simple terms, that SCPC is not accountable for any
shortfall once it had delivered 169,000 kW at any given hour, the same being the responsibility of
NPC. SCPC becomes liable only whenever it fails to deliver whichever is lower of 169,000 kW or
10.841% of MERALCO’s requirements, at any given hour. The Court has exhaustively examined
the contract between the parties, including the so-called Special Conditions of the MERALCO
TSC,97 the Calaca Typical Hourly Customer’s Load Profile98
_______________
96 Id., at pp. 343-345. (Emphasis supplied; italics on the original)
97 Id., at p. 126.
98 Id., at p. 127.
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and the Nomination Protocol between MERALCO and NPC of TSC Contract Energy,99 as cited
by PSALM in its petition, and specifically the provisions thereof quoted by the ERC, and found
the same to be consistent with the above conclusions of the said agency. As such, the Court will
not interfere with the same, mindful of the principle that actions of an administrative agency may
not be disturbed nor set aside by the judicial department sans any error of law, grave abuse of
power or lack of jurisdiction, or grave abuse of discretion clearly conflicting with either the letter
or spirit of the law.100
WHEREFORE, the petition is DENIED. The Court of Appeals’ Decision dated September 4,
2012 and Resolution dated November 27, 2012 in C.A.-G.R. S.P. No. 123997 are AFFIRMED.
Costs against the petitioner.
SO ORDERED.
Notes.—The Electric Power Industry Reform Act (EPIRA) allows the caps to remain until
replaced by the caps to be determined by the Energy Regulatory Commission (ERC), pursuant to
its delegated authority under Section 43 of R.A. No. 9136 to prescribe new system loss caps, based
pg. 1641
on technical parameters such as load density, sales mix, cost of service, delivery voltage, and other
technical considerations it may promulgate. (Surigao del Norte Electric Cooperative, Inc.
[SURNECO] vs. Energy Regulatory Commission, 632 SCRA 96 [2010])
_______________
99 Id., at p. 128.
100 Eastern Shipping Lines, Inc. v. Court of Appeals, 353 Phil. 676, 685; 291 SCRA 485, 494
(1998).
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VOL. 812, DECEMBER 5, 2016 187

Corporation
A reading of the Electric Power Industry Reform Act of 2001 (EPIRA) shows that the Energy
Regulatory Commission’s (ERC’s) jurisdiction pertains to and is exercised in conjunction with the
ERC’s highly technical mandate. This is completely different from the National Electrification
Administration’s (NEA’s) own jurisdiction that is largely administrative and comparatively less
technical in character. (Zambales II Electric Cooperative, Inc. [ZAMECO II] Board of Directors
vs. Castillejos Consumers Association, Inc. [CASCONA], 738 SCRA 521 [2014])
——o0o——
pg. 1642
G.R. No. 207132. December 6, 2016.*
ASSOCIATION OF MEDICAL CLINICS FOR OVERSEAS WORKERS, INC. (AMCOW),

represented herein by its President, DR. ROLANDO VILLOTE, petitioner, vs. GCC APPROVED
MEDICAL CENTERS ASSOCIATION, INC. and CHRISTIAN CANGCO, respondents.
G.R. No. 207205. December 6, 2016. *
HON. ENRIQUE T. ONA, in his capacity as Secretary of the Department of Health, petitioner, vs.
GCC APPROVED MEDICAL CENTERS ASSOCIATION, INC. and CHRISTIAN E.
CANGCO, respondents.
Remedial Law; Special Civil Actions; Certiorari; Prohibition; Certiorari and prohibition — now
recognized and regulated as remedies under Rule 65 of our Rules of Court — have been
characterized as “supervisory writs” used by superior courts to keep lower courts within the
confines of their granted jurisdictions, thereby ensuring orderliness in lower courts’ rulings.—
The use of petitions for certiorari and prohibition under Rule 65 is a remedy that judiciaries have
used long before our Rules of Court existed. As footnoted below, these writs — now recognized
and regulated as remedies under Rule 65 of our Rules of Court — have been characterized a
“supervisory writs” used by superior courts to keep lower courts within the confines of their
granted jurisdictions, thereby ensuring orderliness in lower courts’ rulings.
Same; Same; Same; Same; That no specific procedural rule has been promulgated to enforce this
“expanded” constitutional definition of judicial power and because of the commonality of “grave
abuse of discretion” as a ground for review under Rule 65 and the courts’ expanded jurisdiction,
the Supreme Court (SC) — based on its power to relax its rules — allowed Rule 65 to be used as
the medium for petitions invoking the courts’ expanded jurisdiction based on its
_______________
* EN BANC.
453
VOL. 812, DECEMBER 6, 2016 453
pg. 1643
Association of Medical Clinics for Overseas Workers, Inc. (AMCOW) vs. GCC Approved
Medical Centers Association, Inc.
power to relax its Rules.—Meanwhile that no specific procedural rule has been promulgated to
enforce this “expanded” constitutional definition of judicial power and because of the
commonality of “grave abuse of discretion” as a ground for review under Rule 65 and the courts
expanded jurisdiction, the Supreme Court — based on its power to relax its rules — allowed Rule
65 to be used as the medium for petitions invoking the courts’ expanded jurisdiction based on its
power to relax its Rules. This is however an ad hoc approach that does not fully consider the
accompanying implications, among them, that Rule 65 is an essentially distinct remedy that cannot
simply be bodily lifted for application under the judicial power’s expanded mode. The terms of
Rule 65, too, are not fully aligned with what the Court’s expanded jurisdiction signifies and
requires.
Same; Jurisdiction; Expanded Jurisdiction; The Supreme Court’s (SC’s) expanded jurisdiction —
itself an exercise of judicial power — does not do away with the actual case or controversy
requirement in presenting a constitutional issue, but effectively simplifies this requirement by
merely requiring a prima facie showing of grave abuse of discretion in the assailed governmental
act.—Basic in the exercise of judicial power whether under the traditional or in the expanded
setting — is the presence of an actual case or controversy. For a dispute to be justiciable, a legally
demandable and enforceable right must exist as basis, and must be shown to have been violated.
Whether a case actually exists depends on the pleaded allegations, as affected by the elements of
standing (translated in civil actions as the status of being a “real party-in-interest,” in
criminal actions as “offended party” and in special proceedings as “interested party”),
ripeness, prematurity, and the moot and academic principle that likewise interact with one
another. These elements and their interactions are discussed m greater detail below. The Court’s
expanded jurisdiction — itself an exercise of judicial power — does not do away with the actual
case or controversy requirement in presenting a constitutional issue, but effectively simplifies this
requirement by merely requiring a prima facie showing of grave abuse of discretion in the assailed
governmental act.
Same; Same; Same; A basic feature of the expanded jurisdiction under the constitutional definition
of judicial power, is the authority
454

and command for the courts to act on petitions involving the commission by any branch or
instrumentality of government of grave abuse of discretion amounting to lack or excess of
pg. 1644
jurisdiction.—A basic feature of the expanded jurisdiction under the constitutional definition of
judicial power, is the authority and command for the courts to act on petitions involving the
commission by any branch or instrumentality of government of grave abuse of discretion
amounting to lack or excess of jurisdiction. This command distinctly contrasts with the terms of
Rule 65 which confines court certiorari action solely to the review of judicial and quasi-judicial
acts. These differing features create very basic distinctions that must necessarily result in
differences in the application of remedies. While actions by lower courts do not pose a significant
problem because they are necessarily acting judicially when they adjudicate, a critical question
comes up for the court acting on certiorari petitions when governmental agencies are involved —
under what capacity does the agency act? This is a critical question as the circumstances of the
present case show. When the government entity acts quasi-judicially, the petition for certiorari
challenging the action falls under Rule 65; in other instances, the petition must be filed based on
the courts’ expanded jurisdiction.
Same; Same; Same; Another distinction relates to the cited ground of a certiorari petition under
Rule 65 which speaks of lack or excess of jurisdiction or grave abuse of discretion amounting to
lack or excess of jurisdiction, as against the remedy under the courts’ expanded jurisdiction which
expressly only mentions grave abuse of discretion amounting to lack or excess of jurisdiction.—
Another distinction, a seeming one as explained below, relates to the cited ground of a certiorari
petition under Rule 65 which speaks of lack or excess of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction, as against the remedy under the courts’ expanded
jurisdiction which expressly only mentions grave abuse of discretion amounting to lack or excess
of jurisdiction. This distinction is apparently not legally significant when it is considered that
action outside of or in excess of the granted authority necessarily involves action with grave abuse
of discretion: no discretion is allowed in areas outside of an agency’s granted authority so that any
such action would be a gravely abusive exercise of power. The constitutional grant of power, too,
pointedly addresses grave abuse of discretion when it amounts to lack or excess of jurisdiction,
thus establish-
455
VOL. 812, DECEMBER 6, 2016 455

ing that the presence of jurisdiction is the critical element; failure to comply with this requirement
necessarily leads to the certiorari petition’s immediate dismissal.
Same; Same; Same; Where grave abuse of discretion is alleged to be involved, the expanded
jurisdiction is brought into play based on the express wording of the Constitution and
constitutional implications may be involved (such as grave abuse of discretion because of plain
oppression or discrimination), but this must likewise be filed with the lowest court of concurrent
pg. 1645
jurisdiction, unless the court highest in the hierarchy grants exemption.—Where grave abuse of
discretion is alleged to be involved, the expanded jurisdiction is brought into play based on the
express wording of the Constitution and constitutional implications may be involved (such as grave
abuse of discretion because of plain oppression or discrimination), but this must likewise be filed
with the lowest court of concurrent jurisdiction, unless the court highest in the hierarchy grants
exemption. Note that in the absence of express rules, it is only the highest court, the Supreme
Court, that can only grant exemptions. From these perspectives, the use of grave abuse of discretion
can spell the difference in deciding whether a case filed directly with the Supreme Court has been
properly filed.
Same; Exhaustion of Administrative Remedies; In every case, remedies within the agency’s
administrative process must be exhausted before external remedies can be applied.—In every
case, remedies within the agency’s administrative process must be exhausted before external
remedies can be applied. Thus, even if a governmental entity may have committed a grave abuse
of discretion, litigants should, as a rule, first ask reconsideration from the body itself, or a review
thereof before the agency concerned. This step ensures that by the time the grave abuse of
discretion issue reaches the court, the administrative agency concerned would have fully exercised
its jurisdiction and the court can focus its attention on the questions of law presented before it.
Same; Same; The failure to exhaust administrative remedies affects the ripeness to adjudicate the
constitutionality of a governmental act, which in turn affects the existence of the need for an actual
case or controversy for the courts to exercise their power of judicial re-
456

view.—The failure to exhaust administrative remedies affects the ripeness to adjudicate the
constitutionality of a governmental act, which in turn affects the existence of the need for an
actual case or controversy for the courts to exercise their power of judicial review. The need for
ripeness — an aspect of the timing of a case or controversy does not change regardless of whether
the issue of constitutionality reaches the Court through the traditional means, or through the
Court’s expanded jurisdiction. In fact, separately from ripeness, one other concept pertaining to
judicial review is intrinsically connected to it; the concept of a case being moot and academic.
Same; Jurisdiction; Expanded Jurisdiction; Existing Supreme Court (SC) rulings in the exercise
of its expanded jurisdiction have allowed the direct filing of petitions for certiorari and prohibition
with the Court to question, for grave abuse of discretion, actions or the exercise of a function that
violate the Constitution.—Under the traditional mode, plaintiffs question the constitutionality of
a governmental action through the cases they file before the lower courts; the defendants may
pg. 1646
likewise do so when they interpose the defense of unconstitutionality of the law under which they
are being sued. A petition for declaratory relief may also be used to question the constitutionality
or application of a legislative (or quasi-legislative) act before the court. For quasi-judicial actions,
on the other hand, certiorari is an available remedy, as acts or exercise of functions that violate
the Constitution are necessarily committed with grave abuse of discretion for being acts undertaken
outside the contemplation of the Constitution. Under both remedies, the petitioners should comply
with the traditional requirements of judicial review, discussed below. In both cases, the decisions
of these courts reach the Court through an appeal by certiorari under Rule 45. In contrast, existing
Court rulings in the exercise of its expanded jurisdiction have allowed the direct filing of
petitions for certiorari and prohibition with the Court to question, for grave abuse of discretion,
actions or the exercise of a function that violate the Constitution. The governmental action may be
questioned regardless of whether it is quasi-judicial, quasi-legislative, or administrative in nature.
The Court’s expanded jurisdiction does not do away with the actual case or controversy
requirement for presenting a constitutional issue, but effectively simplifies this requirement by
merely
457
VOL. 812, DECEMBER 6, 2016 457

requiring a prima facie showing of grave abuse of discretion in the exercise of the governmental
act.
Judicial Review; In constitutional cases where the question of constitutionality of a governmental

action is raised, the judicial power the courts exercise is likewise identified as the power of judicial
review — the power to review the constitutionality of the actions of other branches of
government.—In constitutional cases where the question of constitutionality of a governmental
action is raised, the judicial power the courts exercise is likewise identified as the power of judicial
review — the power to review the constitutionality of the actions of other branches of government.
As a rule, as required by the hierarchy of courts principle, these cases are filed with the lowest
court with jurisdiction over the matter. The judicial review that the courts undertake requires: 1)
there be an actual case or controversy calling for the exercise of judicial power; (2) the person
challenging the act must have “Standing” to challenge; he must have a personal and substantial
interest in the case such that he has sustained, or will sustain, direct injury as a result of its
enforcement; (3) the question of constitutionality must be raised at the earliest possible
opportunity; and (4) the issue of constitutionality must be the very lis mota of the case.
Same; Judicial power includes the duty of the courts to settle actual controversies involving rights
which are legally demandable and enforceable.—The necessity of a person’s standing to sue
derives from the very definition of judicial power. Judicial power includes the duty of the courts
pg. 1647
to settle actual controversies involving rights which are legally demandable and enforceable.
Necessarily, the person availing of a judicial remedy must show that he possesses a legal interest
or right to it, otherwise, the issue presented would be purely hypothetical and academic. This
concept has been translated into the requirement to have “standing” in judicial review, or to be
considered as a “real party-in-interest” in civil actions, as the “offended party” in criminal actions
and the “interested party” in special proceedings.
Same; Actual Case; A case or controversy exists when there is an actual dispute between parties
over their legal rights, which remains in conflict at the time the dispute is presented before the
458

court.—An actual case or controversy that calls for the exercise of judicial power necessarily
requires that the party presenting it possesses the standing to mount a challenge to a governmental
act. A case or controversy exists when there is an actual dispute between parties over their legal
rights, which remains in conflict at the time the dispute is presented before the court. Standing, on
the other hand, involves a personal and substantial interest in the case because the petitioner has
sustained, or will sustain, direct injury as a result of the violation of its right. With the element of
“standing” (or the petitioner’s personal or substantial stake or interest in the case) relaxed, the
practical effect is to dilute the need to show that an immediate actual dispute over legal rights did
indeed take place and is now the subject of the action before the court. In both the traditional and
the expanded modes, this relaxation carries a ripple effect under established jurisprudential rulings,
affecting not only the actual case or controversy requirement, but compliance with the doctrine of
hierarchy of courts, discussed in greater detail below.
Courts; Hierarchy of Courts; The Constitution itself has partially determined the judicial
hierarchy in the Philippine legal system by designating the Supreme Court (SC) as the highest
court with irreducible powers; its rulings serve as precedents that other courts must follow
because they form part of the law of the land.—Another requirement that a certiorari petition
carries, springs from the principle of “hierarchy of courts” which recognizes the various levels of
courts in the country as they are established under the Constitution and by law, their ranking and
effect of their rulings in relation with one another, and how these different levels of court interact
with one another. Since courts are established and given their defined jurisdictions by law, the
hierarchy of the different levels of courts should leave very little opening for flexibility (and
potential legal questions), but for the fact that the law creates courts at different and defined levels
but with concurrent jurisdictions. The Constitution itself has partially determined the judicial
hierarchy in the Philippine legal system by designating the Supreme Court as the highest court
with irreducible powers; its rulings serve as precedents that other courts must follow because they
pg. 1648
form part of the law of the land. As a rule, the Supreme Court is not a trial court and rules only on
questions of law, in contrast with the Court of Appeals (CA) and other intermediate courts which
rule on both questions of law and of fact. At the lowest level of courts are the municipal and the
regional trial courts
459
VOL. 812, DECEMBER 6, 2016 459

which handle questions of fact and law at the first instance according to the jurisdiction granted to
them by law.
Same; Same; As a general rule, under the hierarchy of courts principle, the petition must be
brought to the lowest court with jurisdiction; the petition brought to the higher courts may be
dismissed based on the hierarchy principle.—Petitions for certiorari and prohibition fall under the
concurrent jurisdiction of the regional trial courts and the higher courts, all the way up to the
Supreme Court (SC). As a general rule, under the hierarchy of courts principle, the petition must
be brought to the lowest court with jurisdiction; the petition brought to the higher courts may be
dismissed based on the hierarchy principle. Cases, of course, may ultimately reach the Supreme
Court through the medium of an appeal. The recognition of exceptions to the general rule is
provided by the Supreme Court through jurisprudence, i.e., through the cases that recognized the
propriety of filing cases directly with the Supreme Court. This is possible as the Supreme Court
has the authority to relax the application of its own rules.
Same; Same; Since the Department of Health (DOH) is part of the Executive Department and has
acted in its quasi-judicial capacity, the petition challenging its CDO letter should have been filed
before the Court of Appeals (CA).—Since the DOH is part of the Executive Department and has
acted in its quasi-judicial capacity, the petition challenging its CDO letter should have been filed
before the Court of Appeals. The Regional Trial Court (RTC) thus did not have jurisdiction over
the subject matter of the petitions and erred in giving due course to the petition for certiorari and
prohibition against the DOH CDO letters. In procedural terms, petitions for certiorari and
prohibition against a government agency are remedies available to assail its quasi-judicial acts,
and should thus have been filed before the CA. The provision in Section 4, Rule 65 requiring that
certiorari petitions challenging quasi-judicial acts to be filed with the CA is in full accord with
Section 9 of Batas Pambansa Blg. 129 on the same point.
Administrative Law; Department of Health Secretary; Under Chapter 8, Book IV of Executive

Order (EO) No. 292, Series of 1987, the Department of Health (DOH) Secretary “shall have
supervision
pg. 1649
460

and control over the bureaus, offices, and agencies under him” and “shall have authority over
and responsibility for x x x operation” of the Department.—Under Chapter 8, Book IV of
Executive Order (EO) No. 292, Series of 1987, the DOH Secretary “shall have supervision and
control over the bureaus, offices, and agencies under him” and “shall have authority over and
responsibility for x x x operation” of the Department. Section 1, Chapter 1, Title I, Book III of EO
No. 292 in relation with Article VII, Sections 1 and 17 of the Constitution, on the other hand,
provides that the “President shall have control of all the executive departments, bureaus, and
offices.” These provisions both signify that remedies internal to the Executive Branch exist before
resorting to judicial remedies: GCC Approved Medical Centers Association, Inc. (GAMCA) could
ask the DOH Secretary to reconsider or clarify its letter-order, after which it could appeal, should
the ruling be unfavorable, to the Office of the President.
Remedial Law; Exhaustion of Administrative Remedies; Judicial Review; Since the petitions for
certiorari and prohibition challenge a governmental act — i.e., action under the Department of
Health (DOH) CDO letters, as well as the validity of the instruments under which these letters
were issued — compliance with Section 1, Rule 65 and the doctrine of exhaustion of administrative
remedies that judicial review requires is also mandatory.—Noncompliance with the Section 1,
Rule 65 requirement that there be no other plain, speedy, and adequate remedy in law, on the other
hand, is more than just a pro-forma requirement in the present case. Since the petitions for
certiorari and prohibition challenge a governmental act — i.e., action under the DOH CDO letters,
as well as the validity of the instruments under which these letters were issued — compliance with
Section 1, Rule 65 and the doctrine of exhaustion of administrative remedies that judicial review
requires is also mandatory. To recall a previous discussion, the exhaustion of administrative
remedies is also an aspect of ripeness in deciding a constitutional issue.
Migrant Workers; Overseas Filipino Workers; Public interest justifies the State’s interference in
health matters, since the welfare of migrant workers is a legitimate public concern.—GCC
Approved Medical Centers Association, Inc. (GAMCA) further claims that its members made
substantial investments to upgrade their facilities and equipment. From this perspective, the
August 23, 2010 order constitutes taking of property without due process of law as its im-
461
pg. 1650
VOL. 812, DECEMBER 6, 2016 461
plementation would deprive GAMCA members of their property. Association of Medical Clinics
for Overseas Workers, Inc. (AMCOW) responded to these claims with the argument that the DOH
CDO letters implementing Republic Act (RA) No. 10022 are consistent with the State’s exercise
of the police power to prescribe regulations to promote the health, safety, and general welfare of
the people. Public interest justifies the State’s interference in health matters, since the welfare of
migrant workers is a legitimate public concern. The DOH thus merely performed its duty of
upholding the migrant workers’ freedom to consult their chosen clinics for the conduct of health
examinations.
Political Law; Police Power; By its very nature, the exercise of the State’s police power limits
individual rights and liberties, and subjects them to the “far more overriding demands and
requirements of the greater number.”—As defined, police power includes (1) the imposition of
restraint on liberty or property, (2) in order to foster the common good. The exercise of police
power involves the “state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare.” By its very nature, the exercise of the State’s
police power limits individual rights and liberties, and subjects them to the “far more overriding
demands and requirements of the greater number.” Though vast and plenary, this State power also
carries limitations, specifically, it may not be exercised arbitrarily or unreasonably. Otherwise, it
defeats the purpose for which it is exercised, that is, the advancement of the public good. To be
considered reasonable, the government’s exercise of police power must satisfy the “valid object
and valid means” method of analysis: first, the interest of the public generally, as distinguished
from those of a particular class, requires interference; and second, the means employed are
reasonably necessary to attain the objective sought and not unduly oppressive upon individuals.
Overseas Filipino Workers; The guarantee under Section 16 for Overseas Filipino Workers
(OFWs) to be given the option to choose a quality healthcare service provider — as expressed in
Section 16(c) of Republic Act (RA) No. 10022 — is guaranteed by the prohibition against the
decking practice and against monopoly practices in OFW health examinations.—The guarantee
under Section 16 for OFWs to be given the option to choose a quality healthcare service provider
—
462

pg. 1651
as expressed in Section 16(c) of RA No. 10022 — is guaranteed by the prohibition against the
decking practice and against monopoly practices in OFW health examinations. Section 16 likewise
requires employers to accept health examinations from any DOH-accredited health facility; a
refusal could lead to their temporary disqualification under pertinent rules to be formulated by the
Philippine Overseas Employment Authority (POEA). These rules are part of the larger legal
framework to ensure the Overseas Filipino Workers’ (OFWs’) access to quality healthcare
services, and to curb existing practices that limit their choices to specific clinics and facilities.
Separately from the Section 16 prohibition against the referral decking system, RA No. 10022 also
prohibits and penalizes the imposition of a compulsory exclusive arrangement requiring OFWs to
undergo health examinations only from specifically designated medical clinics, institutions,
entities or persons. Section 5, in relation to Section 6 of RA No. 10022, penalizes compulsory,
exclusive arrangements by imprisonment and fine and by the automatic revocation of the
participating medical clinic’s license.
Administrative Agencies; Department of Health; The Department of Health (DOH) has long made
the factual finding that the referral decking system hinders our Filipino seafarers’ access to quality
and affordable healthcare in its Administrative Order (AO) No. 106, Series of 2002.—The Court
furthermore, in several instances, has recognized that an administrative agency may issue an ex
parte cease and desist order, where vital public interests outweigh the need for procedural due
process. In these instances, the Court noted that the affected establishment may contest the ex parte
order, upon which the administrative agency concerned must conduct a hearing and allow the
establishment to be heard. While jurisprudence has so far used the “vital public interests” standard
to pollution cases, it had not been a grave abuse of discretion on the part of the DOH to consider
that GCC Approved Medical Centers Association, Inc.’s (GAMCA’s) referral decking practice
falls within this category. The DOH has long made the factual finding that the referral decking
system hinders our Filipino seafarers’ access to quality and affordable healthcare in its A.O. No.
106, Series of 2002.
Political Law; Principle of Sovereign Independence and Equality; While the principles of
sovereign independence and equality have
463
VOL. 812, DECEMBER 6, 2016 463

been recognized in Philippine jurisprudence, our recognition of this principle does not extend to
the exemption of States and their affiliates from compliance with Philippine regulatory laws.—
The Regional Trial Court’s (RTC’s) decision misapplied the principle of sovereign independence
and equality to the present case. While the principles of sovereign independence and equality have
pg. 1652
been recognized in Philippine jurisprudence, our recognition of this principle does not extend to
the exemption of States and their affiliates from compliance with Philippine regulatory laws.
Same; Same; While we recognized the principles of independence and equality of States to justify
a State’s sovereign immunity from suit, we also restricted state immunity to acts jus imperii, or
public acts. We said that once a State enters into commercial transactions (jus gestionis), then it
descends to the level of a private individual, and is thus not immune from the resulting liability
and consequences of its actions.—While we recognized the principles of independence and
equality of States to justify a State’s sovereign immunity from suit, we also restricted state
immunity to acts jus imperii, or public acts. We said that once a State enters into commercial
transactions (jus gestionis), then it descends to the level of a private individual, and is thus not
immune from the resulting liability and consequences of its actions. By this recognition, we
acknowledge that a foreign government acting in its jus imperii function cannot be held liable in a
Philippine court. Philippine courts, as part of the Philippine government, cannot and should not
take jurisdiction over cases involving the public acts of a foreign government. Taking jurisdiction
would amount to authority over a foreign government, and would thus violate the principle of
sovereign independence and equality. This recognition is altogether different from exempting
governments whose agents are in the Philippines from complying with our domestic laws. We
have yet to declare in a case that the principle of sovereign independence and equality exempts
agents of foreign governments from compliance with the application of Philippine domestic law.
Leonen, J., Concurring and Dissenting Opinion:
Remedial Law; Jurisdiction; Expanded Jurisdiction; View that the Constitution does not
distinguish the cause for grave abuse. Neither should this Court, unless, in the guise of
promulgating rules of
464

procedure, we wish to effect an amendment of the Constitution.—Neither would it be correct to

limit any of our certiorari powers, even on an “expanded” basis, to questions, which only raise
constitutional issues. An act of any government branch, agency, or instrumentality that violates a
statute or a treaty is grave abuse of discretion. The Constitution does not distinguish the cause for
grave abuse. Neither should this Court, unless, in the guise of promulgating rules of procedure, we
wish to effect an amendment of the Constitution. Finally, I express my reservations relating to the
absolute necessity for a decision of this Court before any other organ of government can act on its
rational belief in the bending nature of any customary international norms or a general principle
of international law. Our constitutional adherence to international law is by virtue of incorporation
pg. 1653
through Article II, Section 2 or Article VII, Section 21 of the Constitution. Judicial action is not
required for these norms to be binding. Neither of these modes of incorporation require it.
Judicial Review; View that fundamental to constitutional litigation is the assurance that judicial
review should only happen when there is an actual case or controversy.—Fundamental to
constitutional litigation is the assurance that judicial review should only happen when there is an
actual case or controversy. That is, the judiciary is not an advisory body to the President, Congress,
or any other branch, instrumentality, or agency of the government. Thus, absent any actual or
sufficiently imminent breach, which will cause an injury to a fundamental right, a provision of law
or an administrative regulation cannot be challenged. This Court is coequal with the other branches
of government. The Constitution is a legible, written document capable of being read by all. Its
ambiguity may only be clarified through judicial review when it becomes apparent through the
existence of an actual situation. The mere existence of subordinate norms — in the form of a statue,
treaty or administrative rule — is not enough. There has to be parties who tend to be directly and
substantially injured under a specific concrete set of facts.
Remedial Law; Certiorari; View that petitions for certiorari as provided in Rule 65 are available
only to correct acts done in a judicial or quasi-judicial procedure.—Petitions for certiorari as
provided in Rule 65 are available only to correct acts done in a judicial or quasi-judicial procedure.
This ensures that the power of judicial
465
VOL. 812, DECEMBER 6, 2016 465

review can only be exercised when there is an actual controversy. No judicial action can happen
without interested parties, who suffer injury and therefore ready to plead the facts that give actual
rise to their real injury. This is the same with quasi-judicial actions. Ministerial or administrative
actions, which will cause or threaten to cause injury can be corrected through a Writ of Prohibition,
not a Writ of Certiorari. In both cases, the requirement of the absence of a plain, speedy, and
adequate remedy in the ordinary course of the law conforms with the deferential nature of judicial
review in constitutional cases. The requirement in both cases that there be a clear finding of grave
abuse of discretion amounting to lack of jurisdiction is sufficient to meet the scope of all our
powers of judicial review.
PETITIONS for review on certiorari of the decision and order of the Regional Trial Court of Pasay
City, Br. 108.
pg. 1654
Amora, Del Valle & Associates Law Offices for petitioner in G.R. No. 207132.
Navarro, Jumamil, Escolin & Martinez Law Offices for respondents in G.R. No. 207205.
BRION, J.:
In these consolidated petitions for review on certiorari1 filed under Rule 45 of the Rules of Court,
by the Association of Medical Clinics for Overseas Workers, Inc. (AMCOW) in G.R. No. 207132,
and by Secretary Enrique T. Ona (Secretary Ona) of the Department of Health (DOH) in G.R. No.
207205,
_______________
1 G.R. No. 207132, Rollo, pp. 13-55; G.R. No. 207205, id., at pp. 8-37. G.R. No. 207132 is entitled
Association of Medical Clinics for Overseas Workers, Inc. (AMCOW) represented herein by its
President, Dr. Rolando Villote v. GCC Approved Medical Centers Association, Inc, et al.; while
G.R. No. 207205 is entitled Hon. Enrique T. Ona, in his capacity as Secretary of the Department
of Health v. GCC Approved Medical Centers Association, Inc. and Christian E. Cangco.
466

we resolve the challenge to the August 10, 2012 decision2 and the April 12, 2013 order3 of the
Regional Trial Court (RTC) of Pasay City, Branch 108, in Sp. Civil Action No. R-PSY-10-04391-
CV.4
The August 10, 2012 decision and April 12, 2013 order declared null and void ab initio the August
23, 2010 and November 2, 2010 orders issued by the DOH directing respondent GCC Approved
Medical Centers Association, Inc. (GAMCA) to cease and desist from implementing the referral
decking system (these orders shall be alternately referred to as DOH CDO letters).
I. The Antecedents
pg. 1655
On March 8, 2001, the DOH issued Administrative Order No. 5, Series of 20015 (AO 5-01)
which directed the decking or equal distribution of migrant workers among the several clinics
who are members of GAMCA.
AO 5-01 was issued to comply with the Gulf Cooperative Countries (GCC) States’ requirement
that only GCC-accredited medical clinics/hospitals’ examination results will be honored by the
GCC States’ respective embassies. It required an OFW applicant to first go to a GAMCA Center
which, in turn, will refer the applicant to a GAMCA clinic or hospital.
_______________
2 Penned by Judge Maria Rosario B. Ragasa, id., at pp. 56-66 (G.R. No. 207132) and pp. 38-48
(G.R. No. 207205).
3 Id., at p. 68 (G.R. No. 207132) and p. 49 (G.R. No. 207205).
4 The case was originally raffled to RTC, Branch 110 under Judge Petronilo A. Sulla, Jr.; it was
reraffled to Branch 108 alter Judge Sulla inhibited himself from the case on GAMCA’s petition
for inhibition (per the Republic’s petition in G.R. No. 207205), Rollo, p. 14). See G.R. No. 207132,
id., at pp. 223-228 for copy of the resolution on the motion for inhibition (dated June 2011) issued
by Judge Sulla.
5 Id., at p. 50 (G.R. No. 207205).
467
VOL. 812, DECEMBER 6, 2016 467

Subsequently, the DOH issued AO No. 106, Series of 20026 holding in abeyance the
implementation of the referral decking system. The DOH reiterated its directive suspending the
referral decking system in AO No. 159, Series of 2004.7
In 2004, the DOH issued AO No. 167, Series of 20048 repealing AO 5-01, reasoning that the
referral decking system did not guarantee the migrant workers’ right to safe and quality health
service. AO 167-04 pertinently reads:
WHEREAS, after a meticulous and deliberate study, examination, and consultation about the
GAMCA referral decking system, the DOH believes that its mandate is to protect and promote the
health of the Filipino people by ensuring the rights to safe and quality health service and reliable
pg. 1656
medical examination results through the stricter regulation of medical clinics and other health
facilities, which the referral decking system neither assures nor guarantees.
NOW, THEREFORE, for and in consideration of the foregoing, the DOH hereby withdraws,
repeals and/or revokes Administrative Order No. 5, Series of 2001, concerning the referral decking
system. Hence, all other administrative issuances, bureau circulars and memoranda related to A.O.
No. 5, Series of 2001, are hereby withdrawn, repealed and/revoked accordingly.
In Department Memorandum No. 2008-0210,9 dated September 26, 2008, then DOH Secretary
Francisco T. Duque III expressed his concern about the continued implementation of the referral
decking system despite the DOH’s prior
_______________
6 Dated April 26, 2002, G.R. No. 207205, Rollo, p. 52.
7 Dated July 16, 2004, id., at p. 53.
8 Dated August 30, 2004, id., at pp. 54-55.
9 Id., at pp. 349-350 (G.R. No. 207132) and pp. 56-57 (G.R. No. 207205).
468

suspension directives. The DOH directed the “OFW clinics, duly accredited/licensed by the DOH
and/or by the Philippine Health Insurance Corporation (PHILHEALTH) belonging to and
identified with GAMCA x x x to forthwith stop, terminate, withdraw or otherwise end the x x x
‘referral decking system.’”10
GAMCA questioned the DOH’s Memorandum No. 2008-0210 before the Office of the President
(OP). In a decision11 dated January 14, 2010, the OP nullified Memorandum No. 2008-0210.
On March 8, 2010, Republic Act (RA) No. 1002212 lapsed into law without the President’s
signature. Section 16 of RA No. 10022 amended Section 23 of RA No. 8042, adding two new
paragraphs — paragraphs (c) and (d). The pertinent portions of the amendatory provisions read:
pg. 1657
Section 16. Under Section 23 of Republic Act No. 8042, as amended, add new paragraphs (c)
and (d) with their corresponding subparagraphs to read as follows:
(c) Department of Health.—The Department of Health (DOH) shall regulate the activities
and operations of all clinics which conduct medical, physical, optical, dental, psychological
and other similar examinations, hereinafter referred to as health examinations, on Filipino
migrant workers as requirement for their overseas employment. Pursuant to this, the DOH
shall ensure that:
_______________
10 Id., at p. 349.
12 An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and
Overseas Filipinos Act of 1995, as amended, Further Improving the Standard of Protection and
Promotion of the welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress,
and for Other Purpose.
469
VOL. 812, DECEMBER 6, 2016 469

(c.1) The fees for the health examinations are regulated, regularly monitored and duly published
to ensure that the said fees are reasonable and not exorbitant;
(c.2) The Filipino migrant worker shall only be required to undergo health examinations when
there is reasonable certainty that he or she will be hired and deployed to the jobsite and only those
health examinations which are absolutely necessary for the type of job applied for or those
specifically required by the foreign employer shall be conducted;
(c.3) No group or groups of medical clinics shall have a monopoly of exclusively conducting
health examinations on migrant workers for certain receiving countries;
(c.4) Every Filipino migrant worker shall have the freedom to choose any of the DOH-
accredited or DOH-operated clinics that will conduct his/her health examinations and that his or
her rights as a patient are respected. The decking practice, which requires an overseas Filipino
worker to go first to an office for registration and then farmed out to a medical clinic located
elsewhere, shall not be allowed;
pg. 1658
(c.5) Within a period of three (3) years from the effectivity of this Act, all DOH regional and/or
provincial hospitals shall establish and operate clinics that can serve the health examination
requirements of Filipino migrant workers to provide them easy access to such clinics all over the
country and lessen their transportation and lodging expenses; and
(c.6) All DOH-accredited medical clinics, including the DOH operated clinics, conducting
health examinations for Filipino migrant workers shall observe the same standard operating
procedures and shall comply with internationally accepted standards in their operations to conform
with the requirements of receiving countries or of foreign employers/principals.
470

Any Foreign employer who does not honor the results of valid health examinations conducted by
a DOH-accredited or DOH-operated clinic shall be temporarily disqualified from participating in
the overseas employment program, pursuant to POEA rules and regulations.
In case an overseas Filipino worker is found to be not medically fit upon his/her immediate arrival
in the country of destination, the medical clinic that conducted the health examinations of such
overseas Filipino worker shall pay for his or her repatriation back to the Philippines and the cost
of deployment of such worker.
Any government official or employee who violates any provision of this subsection shall be
removed or dismissed from service with disqualification to hold any appointive public office for
five (5) years. Such penalty is without prejudice to any other liability which he or she may have
incurred under existing laws, rules or regulations. [emphases and underscoring supplied]
On August 13, 2010, the Implementing Rules and Regulations13 (IRR) of RA No. 8042, as
amended by RA No. 10022, took effect.
Pursuant to Section 16 of RA No. 10022, the DOH, through its August 23, 2010 letter-order,14
directed GAMCA to cease and desist from implementing the referral decking system and to wrap
up their operations within three (3) days from receipt thereof. GAMCA received its copy of the
August 23, 2010 letter-order on August 25, 2010.
On August 26, 2010, GAMCA filed with the RTC of Pasig City a petition for certiorari and
prohibition with prayer for a
pg. 1659
_______________
13 Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipino Act
of 1995, as amended by Republic Act No. 10022.
14 Signed by Alexander A. Padilla, Undersecretary of Health, Head of Health Regulation Cluster,

Rollo, pp. 139-140 (G.R. No. 207132) and pp. 63-64 (G.R. No. 207205).
471
VOL. 812, DECEMBER 6, 2016 471

writ of preliminary injunction and/or temporary restraining order (GAMCA’s petition).15 It

assailed: (1) the DOH’s August 23, 2010 letter-order on the ground of grave abuse of discretion;
and (2) paragraphs c.3 and c.4, Section 16 of RA No. 10022, as well as Section 1(c) and (d), Rule
XI of the IRR, as unconstitutional.
The case was originally raffled to RTC, Branch 110 (RTC Br. 110) whose presiding judge was
Judge Petronilo A. Sulla, Jr. on GAMCA’s motion for inhibition, the case was subsequently re-
raffled to RTC, Branch 108 under Judge Maria Rosario B. Ragasa.
Meanwhile, the DOH reiterated — through its November 2, 2010 order — its directive that
GAMCA cease and desist from implementing the referral decking system.16
On November 23, 2010, AMCOW filed an urgent motion for leave to intervene and to file an
opposition-in-intervention, attaching its opposition-in-intervention to its motion.17 In the hearing
conducted the following day, November 24, 2010, the RTC granted AMCOW’s intervention; DOH
and GAMCA did not oppose AMCOW’s motion.18 AMCOW subsequently paid the docket fees
and submitted its memorandum.19
_______________
15 Id., at pp. 141-173 (G.R. No. 207132).
16 Signed by Alexander A. Padilla, Undersecretary of Health, Head of Health Regulation Cluster,

id., at p. 192 (G.R. No. 207132) and p. 65 (G.R. No. 207205).
17 Id., at pp. 193-204.
18 Id., at p. 214.
pg. 1660
The November 24, 2010 order reads in full:
There being no opposition from the opposing Counsels to the ‘Urgent Motion For Leave to
Intervene and File Opposition-in-Intervention,’ movant’s Counsel or Intervenor is hereby
allowed to file said Opposition or Comment to the Application for Temporary Restraining
Order and as a matter of fact, the Court takes notice that said Comment/Opposition is already
attached to the said Urgent Motion, and since the petitioner and the respondent’s [sic]
Counsels, respectively, are no longer adducing further arguments in support of their
respective positions relative to the Application for TRO, Jet the said applica-
472

In an order20 dated August 1, 2011, the RTC issued a writ of preliminary injunction21 directing
the DOH to cease and desist from implementing its August 23, 2010 and November 2, 2010 orders.
The RTC likewise issued an order denying the motion for inhibition/disqualification filed by
AMCOW.
On August 18, 2011, the DOH sought reconsideration of the RTC’s August 1, 2011 order.
The Assailed RTC Rulings
In its August 10, 2012 decision,22 the RTC granted GAMCA’s certiorari petition and declared
null and void ab initio the DOH CDO letters. It also issued a writ of prohibition directing “the
DOH Secretary and all persons acting on his behalf to cease and desist from implementing the
assailed Orders against the [GAMCA].”
The RTC upheld the constitutionality of Section 16 of RA No. 10022, amending Section 23 of
RA No. 8042, but ruled that Section 16 of RA No. 10022 does not apply to GAMCA.
_______________
tion together with the respective opposition thereto of the respondents and intervenor be
submitted for resolution. Let the hearing on the Application for Preliminary Injunction be
tentatively scheduled on February 16, 2011 at 8:30 a.m.
pg. 1661
19 In an order dated March 14, 2011 (Rollo, p. 215 [G.R. No. 207132]), the RTC, Branch 110
ordered AMCOW to pay the docket fees within ten days from receipt of the order, and to file a
memorandum until March 17, 2011. AMCOW complied with the order to submit memorandum
and the directive to pay the docket fees (id., at pp. 216-218).
21 Dated August 2, 2011, id., at pp. 233-234 (G.R. No. 207132) and pp. 70-71 (G.R. No. 207205).
473
VOL. 812, DECEMBER 6, 2016 473

The RTC reasoned out that the prohibition against the referral decking system under Section 16 of
RA No. 10022 must be interpreted as applying only to clinics that conduct health examination on
migrant workers bound for countries that do not require the referral decking system for the issuance
of visas to job applicants.
It noted that the referral decking system is part of the application procedure in obtaining visas to
enter the GCC States, a procedure made in the exercise of the sovereign power of the GCC States
to protect their nationals from health hazards, and of their diplomatic power to regulate and screen
entrants to their territories. Under the principle of sovereign equality and independence of States,
the Philippines cannot interfere with this system and, in fact, must respect the visa-granting
procedures of foreign states in the same way that they respect our immigration procedures.
Moreover, to restrain GAMCA which is a mere adjunct of HMC, the agent of GCC States, is to
restrain the GCC States themselves. To the RTC, the Congress was aware of this limitation,
pursuant to the generally accepted principles of international law under Article II, Section 2 of the
1987 Constitution, when it enacted Section 16 of RA No. 10022.
The DOH and AMCOW separately sought reconsideration of the RTC’s August 10, 2012 decision,
which motions the RTC denied.23 The DOH and AMCOW separately filed the present Rule 45
petitions.
On August 24, 2013, AMCOW filed a motion for consolidation24 of the two petitions; the Court
granted this motion and ordered the consolidation of the two petitions in a resolution dated
September 17, 2013.25
pg. 1662
_______________
23 Id., at p. 68 (G.R. No. 207132) and p. 49 (G.R. No. 207205).
25 Id., at pp. 95-96 (G.R. No. 207205).
474

In the resolution26 of April 14, 2015, the Court denied: (1) GAMCA’s most urgent motion for
issuance of temporary restraining order/writ of preliminary injunction/status quo ante order (with
request for immediate inclusion in the Honorable Court’s agenda of March 3, 2015, its motion
dated March 2, 2015);27 and (2) the most urgent reiterating motion for issuance of temporary
restraining order/writ of preliminary injunction/status quo ante order dated March 11, 2015.28
The Court also suspended the implementation of the permanent injunction issued by the RTC of
Pasay City, Branch 108 in its August 10, 2012 decision.
II. The Issues
The consolidated cases before us present the following issues:
First, whether the Regional Trial Court legally erred in giving due course to the petition for
certiorari and prohibition against the DOH CDO letters;
Second, whether the DOH CDO letters prohibiting GAMCA from implementing the referral
decking system embodied under Section 16 of Republic Act No. 10022 violates Section 3, Article
II of the 1987 Constitution for being an undue taking of property;
Third, whether the application of Section 16 of Republic Act No. 10022 to the GAMCA violates
the international customary principles of sovereign independence and equality.
_______________
pg. 1663
26 Id., at pp. 472-479 (G.R. No. 207132).
27 Id., at pp. 442-446.
28 Id., at pp. 451-453.
475
VOL. 812, DECEMBER 6, 2016 475

III. Our Ruling
A. The RTC legally erred when it gave

due course to GAMCA’s petition
for certiorari and prohibition.
The present case reached us through an appeal by certiorari (pursuant to Rule 45) of an RTC
ruling, assailing the decision based solely on questions of law. The RTC decision, on the other
hand, involves the grant of the petitions for certiorari and prohibition (pursuant to Rule 65)
assailing the DOH CDO letters for grave abuse of discretion.
The question before us asks whether the RTC made a reversible error of law when it issued
writs of certiorari and prohibition against the DOH CDO letters.
AMCOW questions the means by which GAMCA raised the issue of the legality of RA No. 10022
before the RTC. AMCOW posits that GAMCA availed of an improper remedy, as certiorari and
prohibition lie only against quasi-judicial acts, and quasi-judicial and ministerial acts, respectively.
Since the disputed cease and desist order is neither, the RTC should have dismissed the petition
outright for being an improper remedy.
We agree with the petitioners’ assertion that the RTC erred when it gave due course to GAMCA’s
petition for certiorari and prohibition, but we do so for different reasons.
pg. 1664
1. Certiorari under Rules of Court
and under the courts’ expanded
jurisdiction under Art. VIII,
Section 1 of the Constitution, as
recognized by jurisprudence
A.1.a. The Current Certiorari Situation
The use of petitions for certiorari and prohibition under Rule 65 is a remedy that judiciaries have
used long before our
476

Rules of Court existed.29 As footnoted below, these writs — now recognized and regulated as
remedies under Rule 65 of our Rules of Court — have been characterized a “supervisory writs”
used by superior courts to keep lower courts within the confines of their granted jurisdictions,
thereby ensuring orderliness in lower courts’ rulings.
We confirmed this characterization in Madrigal Transport v. Lapanday Holdings Corporation,30

when we held that a writ is founded on the supervisory jurisdiction of appellate courts over inferior
courts, and is issued to keep the latter within the bounds of their jurisdiction. Thus, the writ corrects
only errors of jurisdiction of judicial and quasi-judicial bodies, and cannot be used to correct errors
of law or fact. For these mistakes of judgment, the appropriate remedy is an appeal.31
This situation changed after 1987 when the new Constitution “expanded” the scope of judicial
power by providing that —
been a grave abuse of dis-
_______________
pg. 1665
29 See Land Bank of the Philippines v. Court of Appeals, G.R. No. 129368, August 25, 2003, 409
SCRA 455, where the Court held:
A writ of certiorari has been called a “supervisory or superintending” writ. It was a common
law writ of ancient origin. Its earliest use was in the crown or criminal side of the Court of
King’s Bench. Its use on the civil side later came into general use. Certiorari is a remedy
narrow in scope and inflexible in character. It is not a general utility tool in the legal
workshop.
See also Barangay Blue Ridge “A” of Quezon City v. Court of Appeals, 377 Phil. 49, 53; 319
SCRA 48, 51 (1999); Lalican v. Vergara, 342 Phil. 485; 276 SCRA 518 (1997); Silverio v. Court
of Appeals, No. L-39861, March 17, 1986, 141 SCRA 527.
30 479 Phil. 768; 436 SCRA 123 (2004).
31 Id., at pp. 779-780; p. 133.
474

cretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government. (Italics supplied)32
In Francisco v. The House of Representatives,33 we recognized that this expanded jurisdiction

was meant “to ensure the potency of the power of judicial review to curb grave abuse of discretion
by ‘any branch or instrumentalities of government.’” Thus, the second paragraph of Article VIII,
Section 1 engraves, for the first time in its history, into black letter law the “expanded certiorari
jurisdiction” of this Court, whose nature and purpose had been provided in the sponsorship speech
of its proponent, former Chief Justice Constitutional Commissioner Roberto Concepcion:
xxxx
The first section starts with a sentence copied from former Constitutions. It says:
pg. 1666
The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.
I suppose nobody can question it.
The next provision is new in our constitutional law. I will read it first and explain.
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the government.
Fellow Members of this Commission, this is actually a product of our experience during martial
law. As a
_______________
32 Constitution, Art. VIII, Sec. 1.
33 460 Phil. 830; 415 SCRA 44 (2003).
478

matter of fact, it has some antecedents in the past, but the role of the judiciary during the deposed
regime was marred considerably by the circumstance that in a number of cases against the
government, which then had no legal defense at all, the solicitor general set up the defense of
political question and got away with it. As a consequence, certain principles concerning
particularly the writ of habeas corpus, that is, the authority of courts to order the release of political
detainees, and other matters related to the operation and effect of martial law failed because the
government set up the defense of political question. And the Supreme Court said: “Well, since it
is political, we have no authority to pass upon it.” The Committee on the Judiciary feels that this
was not a proper solution of the questions involved. It did not merely request an encroachment
upon the rights of the people, but it, in effect, encouraged further violations thereof during the
martial law regime. x x x
xxxx
pg. 1667
Briefly stated, courts of justice determine the limits of power of the agencies and offices of the
government as well as those of its officers. In other words, the judiciary is the final arbiter on the
question whether or not a branch of government or any of its officials has acted without jurisdiction
or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to
excess of jurisdiction or lack of jurisdiction. This is not only a judicial power but a duty to pass
judgment on matters of this nature.
This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter
evade the duty to settle matters of this nature, by claiming that such matters constitute a political
question.34 (Italics in the original; emphasis and underscoring supplied)
_______________
34 Id., at pp. 883, 909-910, citing I Records of the Constitutional Commission, pp. 434-436
(1986).
479
VOL. 812, DECEMBER 6, 2016 479

Meanwhile that no specific procedural rule has been promulgated to enforce this “expanded”
constitutional definition of judicial power and because of the commonality of “grave abuse of
discretion” as a ground for review under Rule 65 and the courts expanded jurisdiction, the Supreme
Court — based on its power to relax its rules35 — allowed Rule 65 to be used as the medium for
petitions invoking the courts’ expanded jurisdiction based on its power to relax its Rules.36 This
is however an ad hoc approach that does not fully consider the accompanying implications, among
them, that Rule 65 is an essentially distinct remedy that cannot simply be bodily lifted for
application under the judicial power’s expanded mode. The terms of Rule 65, too, are not fully
aligned with what the Court’s expanded jurisdiction signifies and requires.37
_______________
35 Tiangco v. Land Bank of the Philippines, G.R. No. 153998, October 6, 2010, 632 SCRA 256,
271; Villanueva v. People, G.R. No. 188630, February 23, 2011, 644 SCRA 358, 368.
36 See, for instance, the following cases where the Court gave due course to certiorari petitions
that question, at the first instance, the constitutionality of governmental acts that are not quasi-
judicial or judicial in nature: Belgica v. Executive Secretary, 721 Phil. 416; 710 SCRA 1 (2013),
pg. 1668
questioning the constitutionality of the Disbursement Acceleration Program; Disini, Jr. v.
Secretary of Justice, 716 SCRA 237 (2014), questioning the constitutionality of the Cybercrime
Prevention Act; Imbong v. Ochoa, Jr., 732 Phil. 1; 721 SCRA 146 (2014) questioning the
constitutionality of the Reproductive Health Law; Araullo v. Aquino III, 737 Phil. 457; 728 SCRA
1 (2014), questioning the constitutionality of the Priority Development Assistance Fund; Diocese
of Bacolod v. Comelec, 747 SCRA 1 (2015), questioning the Commission on Election’s
administrative actions against the Diocese of Bacolod; and Saguisag v. Ochoa, Jr., 779 SCRA 241
(2016), questioning the constitutionality of the Philippine government’s Enhanced Defense
Cooperation Agreement with the United States.
37 Cf Section 1 of Rule 65 of the Rules of Court, which provides a remedy “When any tribunal,
board or officer exercising
480

On the basis of almost thirty years’ experience with the courts’ expanded jurisdiction, the Court
should now fully recognize the attendant distinctions and should be aware that the continued use
of Rule 65 on an ad hoc basis as the operational remedy in implementing its expanded jurisdiction
may, in the longer term, result in problems of uneven, misguided, or even incorrect application of
the courts’ expanded mandate.
The present case is a prime example of the misguided reading that may take place in constitutional
litigation: the procedural issues raised apparently spring from the lack of proper understanding of
what a petition for certiorari assails under the traditional and expanded modes, and the impact of
these distinctions in complying with the procedural requirements for a valid petition.
2. The Basic Distinctions
A.2.a. Actual Case or Controversy
pg. 1669
Basic in the exercise of judicial power whether under the traditional or in the expanded setting —
is the presence of an actual case or controversy. For a dispute to be justiciable, a legally
demandable and enforceable right must exist as basis, and must be shown to have been violated.38
_______________
judicial or quasi-judicial functions has acted without or in excess its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction” with the more general grant
of jurisdiction “to determine whether or not there has been a grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government”
in Article VIII, Section 1 of the 1987 Constitution.
38 This requirement is reflected from the text of the 1987 Constitution, from its definition of
judicial power in Article VIII, Section 1, which requires “actual controversies” and its enumeration
of the Supreme Court’s jurisdiction in Article VIII, Section 5, which pertains to “cases.”
481
VOL. 812, DECEMBER 6, 2016 481

Whether a case actually exists depends on the pleaded allegations, as affected by the elements of
standing (translated in civil actions as the status of being a “real party-in-interest,” in criminal
actions as “offended party” and in special proceedings as “interested party”),39 ripeness,40
_______________
See also Justice Arturo Brion’s Separate Concurring Opinion in Villanueva v. Judicial and Bar
Council, G.R. No. 211833, April 7, 2015, 755 SCRA 182.
39 Note the pattern in our Rules of Civil Procedure requiring a party to be a “real party-in-interest”
to lodge an action, and for parties to have “a legal interest” in order to intervene.
Thus, Rule 3, Section 2 provides:
Section 2. Parties-in-interest.—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.
Unless otherwise authorized by law or these Rules, every action must be prosecuted or
defended in the name of the real party-in-interest. (2a)
Rule 19, Section 1, provides:
pg. 1670
Section 1. Who may intervene.—A person who has a legal interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, or is so situated
as to be adversely affected by a distribution or other disposition of property in the custody
of the court or of an officer thereof may, with leave of court, be allowed to intervene in the
action. The court shall consider whether or not the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties, and whether or not the
intervenor’s rights may be fully protected in a separate proceeding. (2[a], [b]a, R12)
Note, too, that criminal actions initiated against the accused, the People of the Philippines has been
recognized as “the offended party.” People v. Santiago, 255 Phil. 851; 174 SCRA 143 (1989).
Lastly, the Rules of Court on Special Proceedings require that parties have an interest in the
proceeding they initiate to establish a status, a right, or a particular fact.
40 While “ripeness” is a concept found in constitutional litigation, it is not without counterparts

in other proceedings. In civil
482

prematurity, and the moot and academic principle that likewise interact with one another. These
elements and their interactions are discussed in greater detail below.
The Court’s expanded jurisdiction — itself an exercise of judicial power — does not do away
with the actual case or controversy requirement in presenting a constitutional issue, but effectively
simplifies this requirement by merely requiring a prima facie showing of grave abuse of discretion
in the assailed governmental act.
A.2.b. Actions Correctable

by Certiorari
A basic feature of the expanded jurisdiction under the constitutional definition of judicial power,
is the authority and command for the courts to act on petitions involving the commission by any
branch or instrumentality of government of grave abuse of discretion amounting to lack or excess
of jurisdiction.
pg. 1671
This command distinctly contrasts with the terms of Rule 65 which confines court certiorari action
solely to the review of judicial and quasi-judicial acts.41 These differing features create very basic
distinctions that must necessarily result in differences in the application of remedies.
While actions by lower courts do not pose a significant problem because they are necessarily acting
judicially when
_______________
proceedings, for instance, the failure to exhaust administrative remedies before availing of judicial
relief renders a civil action immediately dismissible for being premature. Laguna CATV Network,
Inc. v. Maraan (DOLE), 440 Phil. 734; 392 SCRA 221 (2002). Too, the failure to comply with the
requisite barangay mediation prior to initiating certain cases also renders the action premature and
dismissible. Local Government Code, Chapter VII.
41 The writ of prohibition can be sought when the tribunal, board or body exercises judicial, quasi-
judicial or ministerial functions. Rules of Court, Rule 65, Sec. 1.
483
VOL. 812, DECEMBER 6, 2016 483

they adjudicate, a critical question comes up for the court acting on certiorari petitions when
governmental agencies are involved — under what capacity does the agency act?
This is a critical question as the circumstances of the present case show. When the government
entity acts quasi-judicially, the petition for certiorari challenging the action falls under Rule 65;
in other instances, the petition must be filed based on the courts’ expanded jurisdiction.
A.2.c. Grave Abuse of Discretion
Another distinction, a seeming one as explained below, relates to the cited ground of a certiorari
petition under Rule 65 which speaks of lack or excess of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction, as against the remedy under the courts’ expanded
jurisdiction which expressly only mentions grave abuse of discretion amounting to lack or excess
of jurisdiction.
pg. 1672
This distinction is apparently not legally significant when it is considered that action outside of or
in excess of the granted authority necessarily involves action with grave abuse of discretion: no
discretion is allowed in areas outside of an agency’s granted authority so that any such action
would be a gravely abusive exercise of power. The constitutional grant of power, too, pointedly
addresses grave abuse of discretion when it amounts to lack or excess of jurisdiction,42 thus
establishing that the presence of jurisdiction is the critical element; failure to comply with this
requirement necessarily leads to the certiorari petition’s immediate dismissal.43
As an added observation on a point that our jurisprudence has not fully explored, the result of the
action by a governmental entity (e.g., a law or an executive order) can be distin-
_______________
42 Ysidro v. Leonardo-De Castro, 681 Phil. 1, 14-17; 665 SCRA 1, 17 (2012).
484

guished from the perspective of its legality as tested against the terms of the Constitution or of
another law (where subordinate action like an executive order is involved), vis-à-vis the legality
of the resulting action where grave abuse of discretion attended the governmental action or the
exercise of the governmental function.
In the former, the conclusion may be plain illegality or legal error that characterized the law or
exec order (as tested, for example, under the established rules of interpretation); no consideration
is made of how the governmental entity exercised its function. In the latter case, on the other hand,
it is the governmental entity’s exercise of its function that is examined and adjudged independently
of the result, with impact on the legality of the result of the gravely abusive action.
Where the dispute in a case relates to plain legal error, ordinary court action and traditional mode
are called for and this must be filed in the lower courts based on rules of jurisdiction while
observing the hierarchy of courts.
Where grave abuse of discretion is alleged to be involved, the expanded jurisdiction is brought
into play based on the express wording of the Constitution and constitutional implications may be
involved (such as grave abuse of discretion because of plain oppression or discrimination), but this
must likewise be filed with the lowest court of concurrent jurisdiction, unless the court highest in
pg. 1673
the hierarchy grants exemption. Note that in the absence of express rules, it is only the highest
court, the Supreme Court, that can only grant exemptions.
From these perspectives, the use of grave abuse of discretion can spell the difference in deciding
whether a case filed directly with the Supreme Court has been properly filed.
485
VOL. 812, DECEMBER 6, 2016 485

A.2.d. Exhaustion of Available Remedies
A basic requirement under Rule 65 is that there be “no other plain, speedy and adequate remedy
found in law,”44 which requirement the expanded jurisdiction provision does not expressly carry.
Nevertheless, this requirement is not a significant distinction in using the remedy of certiorari
under the traditional and the expanded modes. The doctrine of exhaustion of administrative
remedies applies to a petition for certiorari, regardless of the act of the administrative agency
concerned, i.e., whether the act concerns a quasi-judicial, or quasi-legislative function, or is purely
regulatory.45
Consider in this regard that once an administrative agency has been empowered by Congress to
undertake a sovereign function, the agency should be allowed to perform its function to the full
extent that the law grants. This full extent covers the authority of superior officers in the
administrative agencies to correct the actions of subordinates, or for collegial bodies to reconsider
their own decisions on a motion for reconsideration. Premature judicial intervention would
interfere with this administrative mandate, leaving administrative action incomplete; if allowed,
such premature judicial action through a writ of certiorari, would be a usurpation that vio-
_______________
45 The doctrine of exhaustion of administrative remedies applies regardless of the kind of suit
initiated before the courts. Courts, for reasons of law, comity and convenience, should not
entertain suits unless the available administrative remedies have first been resorted to and the
proper authorities have been given an appropriate opportunity to act and correct their alleged
errors, if any, committed in the administrative forum. Factoran, Jr. v. Court of Appeals, G.R. No.
93540, December 13, 1999, 320 SCRA 530, 539, citing University of the Philippines v. Catungal,
pg. 1674
Jr., G.R. No. 121863, May 5, 1997, 272 SCRA 221, 240; Carale v. Abarintos, 336 Phil. 126, 137;
269 SCRA 132, 240-241 (1997).
486

lates the separation of powers principle that underlies our Constitution.46
In every case, remedies within the agency’s administrative process must be exhausted before
external remedies can be applied. Thus, even if a governmental entity may have committed a grave
abuse of discretion, litigants should, as a rule, first ask reconsideration from the body itself, or a
review thereof before the agency concerned. This step ensures that by the time the grave abuse of
discretion issue reaches the court, the administrative agency concerned would have fully exercised
its jurisdiction and the court can focus its attention on the questions of law presented before it.
Additionally, the failure to exhaust administrative remedies affects the ripeness to adjudicate
the constitutionality of a governmental act, which in turn affects the existence of the need for
an actual case or controversy for the courts to exercise their power of judicial review.47 The
need for ripeness — an aspect of the timing of a case or controversy does not change regardless of
whether the issue of constitutionality reaches the Court through the tradi-
_______________
46 Merida Water District v. Bacarro, G.R. No. 165993, September 30, 2008, 567 SCRA 203,
citing Sunville Timber Products, Inc. v. Abad, G.R. No. 85502, February 24, 1992, 206 SCRA 482,
486-487.
47 See the Court’s discussion in Abakada Guro Partylist v. Purisima, G.R. No. 166715, August
14, 2008, 562 SCRA 251, viz.:
An actual case or controversy involves a conflict of legal rights, an assertion of opposite

legal claims susceptible of judicial adjudication. A closely related requirement is ripeness,
that is, the question must be ripe for adjudication. A constitutional question is ripe for
adjudication when the challenged governmental act has a direct and existing adverse
effect on the individual challenging it. Thus, to be ripe for judicial adjudication, the
petitioner must show an existing personal stake in the outcome of the case or an existing or
imminent injury to himself that can be redressed by a favorable decision of the Court.
pg. 1675
487
VOL. 812, DECEMBER 6, 2016 487

tional means, or through the Court’s expanded jurisdiction. In fact, separately from ripeness, one
other concept pertaining to judicial review is intrinsically connected to it; the concept of a case
being moot and academic.48
Both these concepts relate to the timing of the presentation of a controversy before the Court —
ripeness relates to its prematurity, while mootness relates to a belated or unnecessary judgment on
the issues. The Court cannot preempt the actions of the parties, and neither should it (as a rule)
render judgment after the issue has already been resolved by or through external developments.
The importance of timing in the exercise of judicial review highlights and reinforces the need for
an actual case or controversy an act that may violate a party’s right. Without any completed action
or a concrete threat of injury to the petitioning party, the act is not yet ripe for adjudication. It is
merely a hypothetical problem. The challenged act must have been accomplished or performed by
either branch or instrumentality of government before a court may come into the picture, and the
petitioner must allege the existence of an immediate or threatened injury to itself as a result of the
challenged action.
In these lights, a constitutional challenge, whether presented through the traditional route or
through the Court’s
_______________
48 A case or issue is considered moot and academic when it ceases to present a justiciable
controversy by virtue of supervening events, so that an adjudication of the case or a declaration on
the issue would be of no practical value or use. In such instance, there is no actual substantial relief
which a petitioner would be entitled to, and which would be negated by the dismissal of the
petition. Courts generally decline jurisdiction over such case or dismiss it on the ground of
mootness. Carpio v. Court of Appeals, G.R. No. 183102, February 27, 2013, 692 SCRA 162, 174,
citing Osmeña III v. Social Security System of the Philippines, 559 Phil. 723, 735; 533 SCRA 313,
327 (2007).
488
pg. 1676
expanded jurisdiction, requires compliance with the ripeness requirement. In the case of
administrative acts, ripeness manifests itself through compliance with the doctrine of exhaustion
of administrative remedies.
In like manner, an issue that was once ripe for resolution but whose resolution, since then, has
been rendered unnecessary, needs no resolution from the Court, as it presents no actual case or
controversy and likewise merely presents a hypothetical problem. In simpler terms, a case is moot
and academic when an event supervenes to render a judgment over the issues unnecessary and
superfluous.
Without the element of ripeness or a showing that the presented issue is moot and academic,
petitions challenging the constitutionality of a law or governmental act are vulnerable to dismissal.
Not to be forgotten is that jurisprudence also prohibits litigants from immediately seeking judicial
relief without first exhausting the available administrative remedies for practical reasons.49
From the perspective of practicality, immediate resort to the courts on issues that are within the
competence of administrative agencies to resolve, would unnecessarily clog the courts’ dockets.
These issues, too, usually involve technical considerations that are within the agency’s specific
competence and which, for the courts, would require additional time and resources to study and
consider.50 Of course, the Supreme Court cannot really avoid the issues that a petition for
certiorari, filed with the lower courts may present; the case may be
_______________
49 Associated Communications and Wireless Services, Ltd. v. Dumlao, 440 Phil. 787, 801-802;
392 SCRA 269, 281 (2002); Zabat v. Court of Appeals, 393 Phil. 195, 206; 338 SCRA 551, 560
(2000).
50 See Antipolo Realty Corp. v. National Housing Authority, No. L-50444, August 31, 1987, 153
SCRA 399, 405; University of the Philippines v. Catungal, Jr., supra note 45.
489
VOL. 812, DECEMBER 6, 2016 489

pg. 1677
bound ultimately to reach the Court, albeit as an appeal from the rulings of the lower courts.
3. Situations Where a Petition

for Certiorari May Be Used
There are two distinct situations where a writ of certiorari or prohibition may be sought. Each
situation carries requirements, peculiar to the nature of each situation, that lead to distinctions that
should be recognized in the use of certiorari under Rule 65 and under the courts’ expanded
jurisdiction.
The two situations differ in the type of questions raised. The first is the constitutional situation
where the constitutionality of acts are questioned. The second is the non-constitutional situation
where acts amounting to grave abuse of discretion are challenged without raising constitutional
questions or violations.
The process of questioning the constitutionality of a governmental action provides a notable area
of comparison between the use of certiorari in the traditional and the expanded modes.
Under the traditional mode, plaintiffs question the constitutionality of a governmental action
through the cases they file before the lower courts; the defendants may likewise do so when they
interpose the defense of unconstitutionality of the law under which they are being sued. A petition
for declaratory relief may also be used to question the constitutionality or application of a
legislative (or quasi-legislative) act before the court.51
For quasi-judicial actions, on the other hand, certiorari is an available remedy, as acts or exercise
of functions that violate the Constitution are necessarily committed with grave abuse of discretion
for being acts undertaken outside the
_______________
51 See Rules of Court, Rule 63.
490

pg. 1678
contemplation of the Constitution. Under both remedies, the petitioners should comply with the
traditional requirements of judicial review, discussed below.52 In both cases, the decisions of these
courts reach the Court through an appeal by certiorari under Rule 45.
In contrast, existing Court rulings in the exercise of its expanded jurisdiction have allowed the
direct filing of petitions for certiorari and prohibition with the Court to question, for grave abuse
of discretion, actions or the exercise of a function that violate the Constitution.53 The
governmental action may be questioned regardless of whether it is quasi-judicial, quasi-legislative,
or administrative in nature. The Court’s expanded jurisdiction does not do away with the actual
case or controversy requirement for presenting a constitutional issue, but effectively simplifies this
requirement by merely requiring a prima facie showing of grave abuse of discretion in the exercise
of the governmental act.54
To return to judicial review heretofore mentioned, in constitutional cases where the question of
constitutionality of a
_______________
52 Id., Rule 65.
53 Supra note 36.
54 See Justice Arturo Brion’s discussion on the expanded jurisdiction of the Court in Imbong v.
Ochoa, Jr., supra note 36 at pp. 279, 281-294; pp. 489-491; Araullo v. Aquino III, supra note 36
at pp. 641, 681-696; p. 29; and Saguisag v. Executive Secretary, supra note 36 at pp. 5-12; pp.
541-546.
In Imbong, Justice Brion pointed out:
Under the expanded judicial power, justiciability expressly depends only on the presence or
absence of grave abuse of discretion, as distinguished from a situation where the issue of
constitutional validity is raised within a traditionally justiciable case where the elements of
actual controversy based on specific legal rights must exist. In fact, even if the requirements
for strict justiciability are applied, these requisites can already be taken to be present once
grave abuse of discretion is prima facie shown to be present. Supra note 36 at p. 286; p. 490.
491
VOL. 812, DECEMBER 6, 2016 491

pg. 1679
governmental action is raised, the judicial power the courts exercise is likewise identified as the
power of judicial review — the power to review the constitutionality of the actions of other
branches of government.55 As a rule, as required
_______________
55 Garcia v. Executive Secretary, 602 Phil. 64; 583 SCRA 119 (2009).
Judicial review was introduced as part of the colonial control of legislation in the Philippines. The
Organic Acts (Philippine Bill of 1902 and Jones Law of 1916) defined the authority and limit of
the powers of the government in the Philippines. In this sense they were like constitutions, albeit
they did not proceed from the sovereign will of the Filipino people, but were statutes enacted by
the US Congress.
These organic acts provided for the review by the US Supreme Court of decisions of the Philippine
Supreme Court “in all actions, cases, causes and proceedings . . . in which the Constitution or any
statute, treaty, title, right or privilege of the United States is involved.”
On this basis, in Casanovas v. Hord (8 Phil. 125 [1907]), the Court declared Section 134 of Internal
Revenue Act No. 1189 void for violating Section 5 of the Philippine Bill of 1902, which in turn
provided that “no law impairing the obligation of contracts shall be enacted.”
The Commonwealth of the Philippines, in adopting the 1935 Constitution, impliedly recognized
judicial review as part of judicial power, Article VIII, Section 2, viz.:
SEC. 2. x x x the Supreme Court of its original jurisdiction over cases affecting ambassadors,
other public ministers, and consuls, nor of its jurisdiction to review, revise, reverse, modify, or
affirm on appeal, certiorari, or writ of error, as the law or the rules of court may provide, final
judgments and decrees of inferior courts in —
(1) All cases in which the constitutionality or validity of any treaty, law, ordinance, or executive
order or regulation is in question.
x x x x (emphasis supplied)
Similar language has been used in Section 5, Article X of the 1973 Constitution on the jurisdiction
of the Supreme Court, and in Section 4, Article VIII of the 1987 Constitution.
492
pg. 1680
by the hierarchy of courts principle, these cases are filed with the lowest court with jurisdiction
over the matter. The judicial review that the courts undertake requires:
(1) there be an actual case or controversy calling for the exercise of judicial power;
(2) the person challenging the act must have “standing” to challenge; he must have a personal and
substantial interest in the case such that he has sustained, or will sustain, direct injury as a result
of its enforcement;
(3) the question of constitutionality must be raised at the earliest possible opportunity; and
(4) the issue of constitutionality must be the very lis mota of the case.56
_______________
To this day, judicial review has been part of the Philippine legal system, and Angara v. Electoral
Commission (63 Phil. 139 [1936]) exposition on the power of judicial review still holds doctrinal
value, viz.:
The Constitution is a definition of the powers of government. Who is to determine the nature,
scope and extent of such powers? The Constitution itself has provided for the instrumentality of
the judiciary as the rational way. And when the judiciary mediates to allocate constitutional
boundaries, it does not assert any superiority over the other departments; it does not in reality
nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation
assigned to it by the Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy the rights which that
instrument secures and guarantees to them. This is in truth all that is involved in what is termed
“judicial supremacy” which properly is the power of judicial review under the Constitution.
56 Id., at p. 73; p. 129, citing Francisco, Jr. v. Nagmamalasakit na mga Manananggol ng mga
Manggagawang Pilipino, Inc., supra note 33 at pp. 892-893; pp. 161-162, citing Angara v.
Electoral Commission, id.
493
VOL. 812, DECEMBER 6, 2016 493

pg. 1681
The lower court’s decision under the constitutional situation reaches the Supreme Court through
the appeal process, interestingly, through a petition for review on certiorari under Rule 45 of the
Rules of Court.
In the non-constitutional situation, the same requirements essentially apply, less the
requirements specific to the constitutional issues. In particular, there must be an actual case or
controversy and the compliance with requirements of standing, as affected by the hierarchy of
courts, exhaustion of remedies, ripeness, prematurity, and the moot and academic principles.
A.3.a. The “Standing” Requirement
Under both situations, the party bringing suit must have the necessary “standing.” This means that
this party has, in its favor, the demandable and enforceable right or interest giving rise to a
justiciable controversy after the right is violated by the offending party.
The necessity of a person’s standing to sue derives from the very definition of judicial power.
Judicial power includes the duty of the courts to settle actual controversies involving rights which
are legally demandable and enforceable. Necessarily, the person availing of a judicial remedy must
show that he possesses a legal interest or right to it, otherwise, the issue presented would be purely
hypothetical and academic. This concept has been translated into the requirement to have
“standing” in judicial review,57 or to be considered as a “real
_______________
57 As established by jurisprudence, standing involves a personal and substantial interest in the

case such that the petitioner has sustained, or will sustain, direct injury as a result of the violation
of its rights. Kilosbayan, Incorporated v. Morato, G.R. No. 118910, July 17, 1995, 246 SCRA
540, 562-563, citing Baker v. Carr, 369 U.S. 186, 7 L. Ed. 633 (1962); Bayan (Bagong Alyansang
Makabayan) v. Zamora, G.R. No. 138570, October 10, 2000, 342 SCRA 449, 478; Galicto v.
Aquino III, 683 Phil. 141, 170-174; 667 SCRA 150, 170-174 (2012).
494

pg. 1682
party-in-interest” in civil actions,58 as the “offended party” in criminal actions59 and the
“interested party” in special proceedings.60
While the Court follows these terms closely in both non-constitutional cases and constitutional
cases under the traditional mode, it has relaxed the rule in constitutional cases handled under the
expanded jurisdiction mode in the latter case, a prima facie showing that the questioned
governmental act violated the Constitution, effectively disputably shows an injury to the sovereign
Filipino nation who approved the Constitution and endowed it with authority, such that the
challenged act may be questioned by any Philippine citizen before the Supreme Court.61 In this
manner, the “standing” requirement is relaxed compared with the standard of personal stake or
injury that the traditional petition requires.
The relaxation of the standing requirement has likewise been achieved through the application of
the “transcendental importance doctrine” under the traditional mode for constitutional cases.62
(Under the traditional mode, “transcendental importance” not only relaxes the standing
requirement, but also allows immediate access to this Court, thus exempting the petitioner from
complying with the hierarchy of courts requirement.)63
_______________
59 People v. Santiago, supra note 39.
60 See the following provisions of the Rules of Court on Special Proceedings: Rule 74, Sec. 2;
Rule 76, Sec. 1; Rule 79, Sec. 1; Rule 89, Sec. 1; Rule 90, Sec. 1; Rule 93, Sec. 4; Rule 107, Sec.
1; Rule 108, Sec. 1; and Rule 109, Sec. 1.
61 Supra note 54.
62 David v. Gloria Macapagal-Arroyo, G.R. No. 171396, May 3, 2006, 489 SCRA 160, 224.
63 Notably, Justice Arturo Brion’s Separate Opinion in Araullo v. Aquino III, supra note 36 at pp.
661, 684; p. 250, pointed out that “The traditional rules on hierarchy of courts and transcendental
importance, far from being grounds for the dismissal of the petition
495
VOL. 812, DECEMBER 6, 2016 495

pg. 1683
More importantly perhaps, the prima facie showing of grave abuse of discretion in constitutional
cases also implies that the injury alleged is actual or imminent, and not merely hypothetical.
Through this approach, the Court’s attention is directed towards the existence of an actual case or
controversy — that is, whether the government indeed violated the Constitution to the detriment
of the Filipino people — without the distractions of determining the existence of transcendental
importance indicators unrelated to the dispute and which do not at all determine whether the Court
properly exercises its power of judicial review.
Parenthetically, in the traditional mode, the determination of the transcendental importance of the
issue presented,64
_______________
raising the question of unconstitutionality, are necessarily reduced to rules relating to the level of
court that should handle the controversy, as directed by the Supreme Court.”
64 The Court has yet to determine what falls within the general description of “transcendental
importance.” Note that despite the vagueness of this concept, its application has resulted in the
relaxation of recognized rules in constitutional litigation and has led to a nonuniform approach in
exercising judicial review.
In other words, no element of predictability definitively exists in applying the transcendental

importance doctrine. The Court has merely been using “determinants” of transcendental
importance in place of a clear definition of the term. These “determinants” include: (1) the
character of the funds or other assets involved in the case; (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public respondent agency or
instrumentality of the government; and (3) the lack of any other party with a more direct and
specific interest in raising the questions being raised. Senate of the Philippines v. Ermita, G.R. No.
169777, April 20, 2006, 488 SCRA 1, 39-40; and Francisco, Jr. v. Nagmamalasakit na mga
Manananggol ng mga Manggagawang Pilipino, Inc., supra note 33 at p. 139, citing Kilosbayan,
Incorporated v. Guingona, G.R. No. 113375, May 5, 1994, 232 SCRA 110, 155-157.
496

aside from simply relaxing the standing requirement, may result in the dilution of the actual case
or controversy element because of the inextricable link between standing and the existence of an
actual case or controversy.
pg. 1684
Consider, in this regard, that an actual case or controversy that calls for the exercise of judicial
power necessarily requires that the party presenting it possesses the standing to mount a challenge
to a governmental act. A case or controversy exists when there is an actual dispute between parties
_______________
These determinants, however, are largely irrelevant to the existence of an actual case or
controversy and as such should not be made the basis of relaxing the standing requirement.
That the funds or assets involved in the case has a “character” — presumably public or that which
the public has an interest in — does not have any connection to whether the petition presents an
actual controversy. That there is no other party with a more direct and specific interest in raising
the questions raised is an even more bothersome determinant: the fact that there is no party with a
direct and specific interest necessarily implies that there is no dispute to begin with.
Concededly, there may be incidents where a governmental agency’s disregard of clear

constitutional and statutory prohibitions imply the existence of a dispute. The determinant,
however, is too vague and does not require that the disregard relate to the issues raised in the
petition.
The standing requirement may seem innocuous at first glance, but it is inextricably linked to the
presence of an actual case or controversy so that it should not be relaxed on grounds that are outside
of the issues presented before the Court. By relaxing the standing requirement, we also relax the
case or controversy requirement. Without a showing of direct injury on the part of the petitioner,
his legal right in the dispute is also questionable. How could there be a legal right subject of a
dispute, when the party putting it forward failed to show that he has been injured, or is about to be
injured by the governmental act? When we use determinants outside of and irrelevant to the
existence of an actual case or controversy, we run the risk of deciding cases that may not have a
justiciable issue to begin with, and thus go outside the bounds of judicial review.
497
VOL. 812, DECEMBER 6, 2016 497

over their legal rights, which remains in conflict at the time the dispute is presented before the
court.65 Standing, on the other hand, involves a personal and substantial interest in the case
because the petitioner has sustained, or will sustain, direct injury as a result of the violation of its
right.66
pg. 1685
With the element of “standing” (or the petitioner’s personal or substantial stake or interest in the
case) relaxed, the practical effect is to dilute the need to show that an immediate
_______________
65 Supra note 55 at p. 129.
66 Kilosbayan, Incorporated v. Morato, supra note 57; Bayan (Bagong Alyansang Makabayan)
v. Zamora, supra note 57; Galicto v. Aquino III, supra note 57.
See also Justice Arturo D. Brion’s Dissenting Opinion in Diocese of Bacolod v. Comelec, supra
note 36, pointing out that:
Failure to meet any of these requirements [for judicial review] justifies the Court’s refusal to
exercise its power of judicial review under the Court’s traditional power. The Court, however, has,
in several instances, opted to relax one or more of these requirements to give due course to a
petition presenting issues of transcendental importance to the nation.
In these cases, the doctrine of transcendental importance relaxes the standing requirement, and
thereby indirectly relaxes the injury embodied in the actual case or controversy requirement. Note
at this point that an actual case or controversy is present when the issues the case poses are ripe
for adjudication, that is, when the act being challenged has had a direct adverse effect on the
individual challenging it. Standing, on the other hand, requires a personal and substantial interest
manifested through a direct injury that the petitioner has or will sustain as a result of the questioned
act.
Thus, when the standing is relaxed because of the transcendental importance doctrine, the character
of the injury presented to fulfill the actual case or controversy requirements likewise tempered.
When we, for instance, say that the petitioners have no standing as citizens or as taxpayers but we
nevertheless give the petition due course, we indirectly acknowledge that the injury that they had
or will sustain is not personally directed towards them, but to the more general and abstract Filipino
public.
498

pg. 1686
actual dispute over legal rights did indeed take place and is now the subject of the action before
the court.
In both the traditional and the expanded modes, this relaxation carries a ripple effect under
established jurisprudential rulings,67 affecting not only the actual case or controversy
_______________
67 See, for example, Justice Arturo D. Brion’s Opinion in Cawad v. Abad, G.R. No. 207145, July
28, 2015, 764 SCRA 1, 32, noting problems when the Court relaxes the rules on certiorari to
accommodate quasi-legislative acts, because of the “paramount importance” of the case, viz.:
In several cases, however, we reversed the decision of the Court of Appeals denying a petition for
certiorari against a quasi-legislative act based on the terms of the Rules of Court. In these reversals,
we significantly noted the paramount importance of resolving the case on appeal and, on this basis,
relaxed the requirements of the petition for certiorari filed in the lower court.
This kind of approach, to my mind, leads to an absurd situation where we effectively hold that the
CA committed an error of law when it applied the rules as provided in the Rules of Court.
To be sure, when we so act, we send mixed and confusing signals to the lower courts, which cannot
be expected to know when a certiorari petition may or should be allowed despite being the
improper remedy.
Additionally, this kind of approach reflects badly on the Court as an institution, as it applies the
highly arbitrary standard of ‘paramount importance’ in place of what is written in the Rules. A
suspicious mind may even attribute malicious motives when the Court invokes a highly subjective
standard such as “paramount importance.”
The public, no less, is left confused by the Court’s uneven approach. Thus, it may not hesitate to
file a petition that violates or skirts the margins of the Rules or its jurisprudence, in the hope that
the Court would consider its presented issue to be of paramount importance and on this basis take
cognizance of the petition.
499
VOL. 812, DECEMBER 6, 2016 499

requirement, but compliance with the doctrine of hierarchy of courts, discussed in greater detail
below.
pg. 1687
A.3.b. The Hierarchy of
Courts Principle
Another requirement that a certiorari petition carries, springs from the principle of “hierarchy of
courts” which recognizes the various levels of courts in the country as they are established under
the Constitution and by law, their ranking and effect of their rulings in relation with one another,
and how these different levels of court interact with one another.68 Since courts are established
and given their defined jurisdictions by law, the hierarchy of the different levels of courts should
leave very little opening for flexibility (and potential legal questions), but for the fact that the law
creates courts at different and defined levels but with concurrent jurisdictions.
The Constitution itself has partially determined the judicial hierarchy in the Philippine legal system
by designating the Supreme Court as the highest court with irreducible powers; its rulings serve as
precedents that other courts must follow69 because they form part of the law of the land.70 As a
rule, the Supreme Court is not a trial court and rules only on questions of law, in contrast with the
Court of Appeals and
_______________
68 See Rayos v. City of Manila, 678 Phil. 952; 662 SCRA 684 (2011).
69 See Section 1, Article VIII of the 1987 Constitution, vesting judicial power in one Supreme
Court and other courts as may be created by law. Presently, Batas Pambansa Blg. No. 129
established the courts of general jurisdiction in the Philippines, and provides for their hierarchy.
70 See Section 4, paragraph 3 of the 1987 Constitution impliedly recognizing the binding effect
of the doctrines created by the cases promulgated by the Court; note, too, Article 8 of the Civil
Code providing that “Art. 8. Judicial decisions applying or interpreting the laws or the Constitution
shall form a part of the legal system of the Philippines.”
500

pg. 1688
other intermediate courts71 which rule on both questions of law and of fact. At the lowest level of
courts are the municipal and the regional trial courts which handle questions of fact and law at the
first instance according to the jurisdiction granted to them by law.
Petitions for certiorari and prohibition fall under the concurrent jurisdiction of the regional trial
courts and the higher courts, all the way up to the Supreme Court. As a general rule, under the
hierarchy of courts principle, the petition must be brought to the lowest court with jurisdiction;72
the
_______________
71 Far Eastern Surety and Insurance Co., Inc. v. People, G.R. No. 170618, November 20, 2013,
710 SCRA 358.
72 Thus, in Rayos v. City of Manila, supra note 68 at p. 957; p. 689, the Court held:
Indeed, this Court, the Court of Appeals and the Regional Trial Courts exercise concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction. However, such concurrence in jurisdiction does not give petitioners unbridled freedom
of choice of court forum. In Heirs of Bertuldo Hinog v. Melicor, citing People v. Cuaresma, the
Court held:
This Court’s 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 Court’s original
jurisdiction to issue these writs should be allowed
501
VOL. 812, DECEMBER 6, 2016 501

petition brought to the higher courts may be dismissed based on the hierarchy principle. Cases, of
course, may ultimately reach the Supreme Court through the medium of an appeal.
pg. 1689
The recognition of exceptions to the general rule is provided by the Supreme Court through
jurisprudence, i.e., through the cases that recognized the propriety of filing cases directly with the
Supreme Court. This is possible as the Supreme Court has the authority to relax the application of
its own rules.73
As observed above, this relaxation waters down other principles affecting the remedy of certiorari.
While the relaxation may result in greater and closer supervision by the Court over the lower courts
and quasi-judicial bodies under Rule 65, the effect may not always be salutary in the long term
when it is
_______________
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 Court’s time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further overcrowding of the Court’s
docket. (Emphasis supplied, citations omitted)
73 Under the principle of hierarchy of courts, direct recourse to this Court is improper because
the Supreme Court is a court of last resort and must remain to be so for it to satisfactorily perform
its constitutional functions, thereby allowing it to devote its time and attention to matters within
its exclusive jurisdiction and preventing the overcrowding of its docket. Nonetheless, the
invocation of this Court’s original jurisdiction to issue writs of certiorari has been allowed in
certain instances on the ground of special and important reasons clearly stated in the petition, such
as, (1) when dictated by the public welfare and the advancement of public policy; (2) when
demanded by the broader interest of justice; (3) when the challenged orders were patent
nullities; or (4) when analogous exceptional and compelling circumstances called for and
justified the immediate and direct handling of the case. (emphasis supplied) Dy v. Bibat-Palamos,
717 Phil. 776, 782-783; 705 SCRA 613, 621-622 (2013).
502

considered that this may affect the constitutional standards for the exercise of judicial power,
particularly the existence of an actual case or controversy.
The “transcendental importance” standard, in particular, is vague, open-ended and value-laden,

and should be limited in its use to exemptions from the application of the hierarchy of courts
pg. 1690
principle. It should not carry any ripple effect on the constitutional requirement for the presence
of an actual case or controversy.
4. The petition for certiorari

and prohibition against the
DOH Letter was filed before
the wrong court
In the present case, the act alleged to be unconstitutional refers to the cease and desist order that
the DOH issued against GAMCA’s referral decking system. Its constitutionality was questioned
through a petition for certiorari and prohibition before the RTC. The case reached this Court
through a Rule 45 appeal by certiorari under the traditional route.
In using a petition for certiorari and prohibition to assail the DOHCDO letters, GAMCA
committed several procedural lapses that rendered its petition readily dismissible by the RTC. Not
only did the petitioner present a premature challenge against an administrative act; it also
committed the grave jurisdictional error of filing the petition before the wrong court.
503
VOL. 812, DECEMBER 6, 2016 503

A.4.a. The DOH CDO letters were

issued in the exercise of the
DOH’s quasi-judicial func-
tions, and could be as-
sailed through Rule 65 on
certiorari and prohibition
A cease and desist order is quasi-judicial in nature, as it applies a legislative policy to an individual
or group within the coverage of the law containing the policy.
The Court, in Municipal Council of Lemery, Batangas v. Provincial Board of Batangas,74

recognized the difficulty of defining the precise demarcation line between what are judicial and
pg. 1691
what are administrative or ministerial functions, as the exercise of judicial functions may involve
the performance of legislative or administrative duties, and the performance of administrative or
ministerial duties may, to some extent, involve the exercise of functions judicial in character. Thus,
the Court held that the nature of the act to be performed, rather than of the office, board, or body
which performs it, should determine whether or not an action is in the discharge of a judicial or a
quasi-judicial function.75
_______________
74 56 Phil. 260 (1931).
75 Id., at p. 268. This statement finds full support from the current wording of the Rule on
Certiorari, Rule 65 whose Section 1 provides:
Section 1. Petition for certiorari.—When any tribunal, board or officer exercising judicial
or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a
verified petition in the proper court, alleging the facts with certainty and praying that judgment be
rendered annulling or modifying the proceedings of such
504

Generally, the exercise of judicial functions involves the determination of what the law is, and
what the legal rights of parties are under this law with respect to a matter in controversy. Whenever
an officer is clothed with this authority and undertakes to determine those questions, he acts
judicially.76
In the administrative realm, a government officer or body exercises a quasi-judicial function when
it hears and determines questions of fact to which the legislative policy is to apply, and decide,
based on the law’s standards, matters relating to the enforcement and administration of the law.77
The DOH CDO letter directed GAMCA to cease and desist from engaging in the referral decking
system practice within three days from receipt of the letter. By issuing this CDO letter
implementing Section 16 of RA No. 10022, the DOH (1) made the finding of fact that GAMCA
implements the referral decking system, and (2) applied Section 16 of RA No. 10022, to conclude
that GAMCA’s practice is prohibited by law and should be stopped.
pg. 1692
From this perspective, the DOH acted in a quasi-judicial capacity: its CDO letter determined a
question of fact, and applied the legislative policy prohibiting the referral decking system practice.
Notably, cease and desist orders have been described and treated as quasi-judicial acts in past
cases, and had even been described as similar to the remedy of injunction granted by the courts.78
_______________
tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
76 Santiago, Jr. v. Bautista, No. L-25024, March 30, 1970, 32 SCRA 188, 198, citing In State ex
rel. Board of Commrs. v. Dunn (86 Minn. 301, 304).
77 Bedol v. Commission on Elections, G.R. No. 179830, December 3, 2009, 606 SCRA 554, 569.
78 The Court has consistently recognized the grant of the power to issue a cease and desist order
as an exercise of a government
505
VOL. 812, DECEMBER 6, 2016 505

A.4.b. The petitions for certiorari

and prohibition against
the DOH CDO letters fall
within the jurisdiction of
the Court of Appeals.
Since the CDO Letter was a quasi-judicial act, the manner by which GAMCA assailed it before
the courts of law had been erroneous; the RTC should not have entertained GAMCA’s petition.
First, acts or omissions by quasi-judicial agencies, regardless of whether the remedy involves a
Rule 43 appeal or a Rule 65 petition for certiorari, is cognizable by the Court of Appeals. In
particular, Section 4, Rule 65 of the Rules of Court provides:
pg. 1693
Section 4. When and where petition filed.—The petition shall be filed not later than sixty (60)
days from notice of the judgment, order or resolution. In case a motion for reconsideration or new
trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be
counted from notice of the denial of said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower
court or of a corporation, board, officer or person, in the Regional
_______________
agency’s quasi-judicial function. See Monetary Board v. Philippine Veterans Bank, G.R. No.
189571, January 21, 2015, 746 SCRA 508, 518; Vivas v. Monetary Board of the Bangko Sentral
ng Pilipinas, G.R. No. 191424, August 7, 2013, 703 SCRA 290, 304; Bank of Commerce v.
Planters Development Bank, G.R. Nos. 154470-71, September 24, 2012, 681 SCRA 521, 555,
citing United Coconut Planters Bank v. E. Ganzon, Inc., G.R. No. 168859, June 30, 2009, 591
SCRA 321, 338-341; Freedom from Debt Coalition v. Energy Regulatory Commission, G.R. No.
161113, June 15, 2004, 432 SCRA 157; and Laguna Lake Development Authority v. Court of
Appeals, G.R. No. 110120, March 16, 1994, 231 SCRA 292.
506

Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may
also be filed in the Court of Appeals whether or not the same is in aid of its appellate jurisdiction,
or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or
omissions of a quasi-judicial agency, unless otherwise provided by law or these Rules, the
petition shall be filed in and cognizable only by the Court of Appeals. (emphasis, italics, and
underscoring supplied)
Since the DOH is part of the Executive Department and has acted in its quasi-judicial capacity, the
petition challenging its CDO letter should have been filed before the Court of Appeals. The RTC
thus did not have jurisdiction over the subject matter of the petitions and erred in giving due course
to the petition for certiorari and prohibition against the DOH CDO letters. In procedural terms,
petitions for certiorari and prohibition against a government agency are remedies available to
assail its quasi-judicial acts, and should thus have been filed before the CA.
pg. 1694
The provision in Section 4, Rule 65 requiring that certiorari petitions challenging quasi-judicial
acts to be filed with the CA is in full accord with Section 9 of Batas Pambansa Blg. 12979 on the
same point. Section 9 provides:
Section 9. Jurisdiction.—The Court of Appeals shall exercise:
1. Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and
quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;
xxxx
_______________
507
VOL. 812, DECEMBER 6, 2016 507

3. Exclusive appellate jurisdiction over all final judgments, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commission,
including the Securities and Exchange Commission, the Social Security Commission, the
Employees Compensation Commission and the Civil Service Commission, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of
this Act, and of subparagraph (1) of the third paragraph and subparagraph 4 of the fourth paragraph
of Section 17 of the Judiciary Act of 1948.
xxxx
(emphases, italics, and underscoring supplied)
Thus, by law and by Supreme Court Rules, the CA is the court with the exclusive original
jurisdiction to entertain petitions for certiorari and prohibition against quasi-judicial agencies. In
short, GAMCA filed its remedy with the wrong court.
pg. 1695
A.4.c The petitions for certiorari
DOH CDO letters were pre-
mature challenges — they
failed to comply with the re-
quirement that there be “no
other plain, speedy and ade-
quate remedy” and with the
doctrine of exhaustion of ad-
ministrative remedies
Second, the Regional Trial Court of Pasay City unduly disregarded the requirements that there be
“no other plain, speedy and adequate remedy at law” and the doctrine of ex-
508

haustion of administrative remedies, when it gave due course to the certiorari and prohibition
petition against the DOH’s CDO.
Under Chapter 8, Book IV of Executive Order (EO) No. 292,80 Series of 1987, the DOH Secretary
“shall have supervision and control over the bureaus, offices, and agencies under him”81 and
“shall have authority over and responsibility for x x x operation” of the Department.
Section 1, Chapter 1, Title I, Book III of EO No. 292 in relation with Article VII, Sections 1 and
17 of the Constitution,82 on the other hand, provides that the “President shall have control of all
the executive departments, bureaus, and offices.”
These provisions both signify that remedies internal to the Executive Branch exist before resorting
to judicial remedies:
_______________
80 Administrative Code of 1987, enacted on July 25, 1987.
81 Section 38, Chapter 7, Book IV of Executive Order No. 292 defines supervision and control in
this wise:
pg. 1696
Supervision and Control.—Supervision and control shall include authority to act directly
whenever a specific function is entrusted by law or regulation to a subordinate; direct the
performance of duty; restrain the commission of acts; review, approve, reverse or modify acts and
decisions of subordinate officials or units; determine priorities in the execution of plans and
programs; and prescribe standards, guidelines, plans and programs. Unless a different meaning is
explicitly provided in the specific law governing the relationship of particular agencies, the word
“control” shall encompass supervision and control as defined in this paragraph.
82 Article VII, Section 1 of the Constitution states that:
Section 1. The executive power shall be vested in the President of the Philippines.
Article VII, Section 17, on the other hand, provides:
Section 17. The President shall have control of all the executive departments, bureaus,
and offices. He shall ensure that the laws be faithfully executed.
509
VOL. 812, DECEMBER 6, 2016 509

GAMCA could ask the DOH Secretary to reconsider or clarify its letter-order, after which it could
appeal, should the ruling be unfavorable, to the Office of the President.
Significantly, this was what GAMCA did in the past when the DOH issued Memorandum Order
No. 2008-0210 that prohibited the referral decking system. GAMCA then asked for the DOH
Secretary’s reconsideration, and subsequently appealed the DOH’s unfavorable decision with the
Office of the President. The OP then reversed Memorandum Order No. 2008-0210 and allowed
the referral decking system to continue.
That GAMCA had earlier taken this course indicates that it was not unaware of the administrative
remedies available to it; it simply opted to disregard the doctrine of exhaustion of administrative
remedies and the requirement that there be no other plain, speedy, and adequate remedy in law
when it immediately filed its petition for certiorari with the RTC.
This blatant disregard of the Rule 65 requirements clearly places GAMCA’s petition outside the
exceptions that we recognized in the past in relaxing strict compliance with the exhaustion of
administrative remedies requirement.
pg. 1697
Jurisprudence83 shows that this Court never hesitated in the past in relaxing the application of the
rules of procedure to accommodate exceptional circumstances when their strict application would
result in injustice. These instances, founded as they are on equitable considerations, do not include
the undue disregard of administrative remedies, particularly when they are readily available.84
_______________
83 See, among others, Cipriano v. Marcelino, 150 Phil. 336; 43 SCRA 291 (1972); Republic v.
Lacap, G.R. No. 158253, March 2, 2007, 517 SCRA 255; Buston-Arendain v. Gil, G.R. No.
172585, June 26, 2008, 555 SCRA 561; Vigilar v. Aquino, G.R. No. 180388, January 18, 2011,
639 SCRA 72.
84 See Abe-abe v. Manta, No. L-4827, May 31, 1979, 90 SCRA 524; Sandoval v. Cañeba, G.R.
No. 90503, September 27, 1990, 190
510

A.4.d. The petitions for certiorari

DOH CDO letters should have
been dismissed outright, as
Rule 65 Petitions for Certio-
rari and Prohibition are ex-
traordinary remedies given
due course only upon compli-
ance with the formal and
substantive requirements
Note, at this point, that Rule 65 petitions for certiorari and prohibition are discretionary writs, and
that the handling court possesses the authority to dismiss them outright for failure to comply with
the form and substance requirements. Section 6, Rule 65 of the Rules of Court in this regard
provides:
Section 6. Order to comment.—If the petition is sufficient in form and substance to justify
such process, the court shall issue an order requiring the respondent or respondents to comment
on the petition within ten (10) days from receipt of a copy thereof. Such order shall be served on
pg. 1698
the respondents in such manner as the court may direct together with a copy of the petition and
any annexes thereto. (emphasis, italics, and underscoring supplied)
Thus, even before requiring the DOH to comment, the RTC could have assessed the petition for
certiorari and prohibition
_______________
SCRA 77; Merida Water District v. Bacarro, supra note 46; Cabungcal v. Lorenzo, 623 Phil. 329;
608 SCRA 419 (2009); Addition Hills Mandaluyong Civic & Social Organization, Inc. v.
Megaworld Properties & Holdings, Inc., 686 Phil. 76; 670 SCRA 83 (2012); Samar II Electric
Cooperative, Inc. (SAMELCO II) v. Seludo, Jr., 686 Phil. 786; 671 SCRA 78 (2012).
511
VOL. 812, DECEMBER 6, 2016 511

for its compliance with the Rule 65 requirements. At that point, the petition for certiorari and
prohibition should have been dismissed outright, for failing to comply with Section 1 and Section
4 of Rule 65. When the court instead took cognizance of the petition, it acted on a matter outside
its jurisdiction.
Consequently, the RTC’s resulting judgment is void and carries no legal effect. The decision
exempting GAMCA from the application of the referral decking system should equally have no
legal effect.
Noncompliance with the Section 1, Rule 65 requirement that there be no other plain, speedy, and
adequate remedy in law, on the other hand, is more than just a pro-forma requirement in the present
case. Since the petitions for certiorari and prohibition challenge a governmental act — i.e., action
under the DOH CDO letters, as well as the validity of the instruments under which these letters
were issued — compliance with Section 1, Rule 65 and the doctrine of exhaustion of administrative
remedies that judicial review requires is also mandatory. To recall a previous discussion, the
exhaustion of administrative remedies is also an aspect of ripeness in deciding a constitutional
issue.
Thus, GAMCA’s disregard of the Rules of Court not only renders the petition dismissible for
failure to first exhaust administrative remedies; the constitutional issues GAMCA posed before
the RTC were not also ripe for adjudication.
pg. 1699
5. The Regional Trial Court
erred in finding grave abuse
of discretion on the part of
the DOH’s issuance of the
DOH CDO letters
On the merits, we find that the RTC of Pasay reversibly erred in law when it held that the DOH
acted with grave
512

abuse of discretion in prohibiting GAMCA from implementing the referral decking system.
In exempting GAMCA from the referral decking system that RA No. 10022 prohibits, the RTC of
Pasay City noted that the regulation per se was not unconstitutional, but its application to GAMCA
would violate the principle of sovereign equality and independence.
While we agree with the RTC’s ultimate conclusion upholding the constitutionality of the
prohibition against the referral decking system under RA No. 10022, our agreement proceeds from
another reason; we disagree that the prohibition does not apply to GAMCA and with the
consequent ruling nullifying the DOH’s CDO Letter.
A.5.a. The prohibition against

the referral decking system
under Section 16, RA No.
10022, is a valid exercise of
police power
pg. 1700
In its comment, GAMCA asserts that implementing the prohibition against the referral decking
system would amount to an undue taking of property that violates Article II, Section 2 of the 1987
Constitution.
It submits that the Securities and Exchange Commission had in fact approved its Articles of
Incorporation and Bylaws that embody the referral decking system; thus, the DOH cannot validly
prohibit the implementation of this system.
GAMCA further claims that its members made substantial investments to upgrade their facilities
and equipment. From this perspective, the August 23, 2010 order constitutes taking of property
without due process of law as its implementation would deprive GAMCA members of their
property.
AMCOW responded to these claims with the argument that the DOH CDO letters implementing
RA No. 10022 are consis-
513
VOL. 812, DECEMBER 6, 2016 513

tent with the State’s exercise of the police power to prescribe regulations to promote the health,
safety, and general welfare of the people. Public interest justifies the State’s interference in health
matters, since the welfare of migrant workers is a legitimate public concern. The DOH thus merely
performed its duty of upholding the migrant workers’ freedom to consult their chosen clinics for
the conduct of health examinations.
We agree with AMCOW.
The State’s police power85 is vast and plenary86 and the operation of a business,87 especially one
that is imbued with
_______________
85 Police power is the inherent power of the State to regulate or to restrain the use of liberty and
property for public welfare. Gerochi v. Department of Energy, 554 Phil. 563, 579; 527 SCRA 696,
714 (2007); Didipio Earth-Savers’ Multi-Purpose Association, Incorporated (DESAMA) v. Gozun,
G.R. No. 157882, March 30, 2006, 485 SCRA 586, 604, citing U.S. v. Torribio, 15 Phil. 85, 93
(1910) and Rubi v. The Provincial Board of Mindoro, 39 Phil. 660, 708 (1919) Under the police
power of the State, property rights of individuals may be subjected to restraints and burdens in
order to fulfill the objectives of the government. Social Justice Society (SJS) v. Atienza, Jr., G.R.
pg. 1701
No. 156052, February 13, 2008, 545 SCRA 92, 139. The only limitation is that the restriction
imposed should be reasonable, not oppressive. Mirasol v. Department of Public Works and
Highways, 523 Phil. 713, 747; 490 SCRA 318, 349 (2006)
86 It is the most pervasive, the least limitable, and the most demanding of the three fundamental
powers of the State. The justification is found in the Latin maxims salus populi est suprema lex
(the welfare of the people is the supreme law) and sic utere tuo ut alienum non laedas (so use your
property as not to injure the property of others). As an inherent attribute of sovereignty which
virtually extends to all public needs, police power grants a wide panoply of instruments through
which the State, as parens patriae, gives effect to a host of its regulatory powers. JMM Promotion
and Management, Inc. v. Court of Appeals, G.R. No. 120095, August 5, 1996, 260 SCRA 319,
324.
87 The State may interfere with personal liberty, property, lawful businesses and occupations to
promote the general welfare [as
514

public interest (such as healthcare services),88 falls within the scope of governmental exercise of
police power through regulation.
As defined, police power includes (1) the imposition of restraint on liberty or property, (2) in order
to foster the common good.89 The exercise of police power involves the “state authority to enact
legislation that may interfere with personal liberty or property in order to promote the general
welfare.”90
By its very nature, the exercise of the State’s police power limits individual rights and liberties,
and subjects them to the “far more overriding demands and requirements of the greater number.”91
Though vast and plenary, this State power also carries limitations, specifically, it may not be
exercised arbitrarily or unreasonably. Otherwise, it defeats the purpose
_______________
long as] the interference [is] reasonable and not arbitrary. Social Justice Society (SJS) v. Atienza,
Jr., supra note 85 at pp. 139-140; Patalinghug v. Court of Appeals, G.R. No. 104786, January 27,
1994, 229 SCRA 554, 559, citing Sangalang v. Intermediate Appellate Court, G.R. Nos. 71169,
76394, 74376 and 82281, December 22, 1988, 168 SCRA 634; Ortigas & Co. Limited Partnership
v. Feati Bank and Trust Co., No. L-24670, December 14, 1989, 94 SCRA 533.
pg. 1702
88 See Pharmaceutical and Health Care Association of the Philippines v. Duque III, G.R. No.
173034, October 9, 2007, 535 SCRA 265; St. Luke’s Medical Center Employee’s Association-
AFW v. National Labor Relations Commission, G.R. No. 162053, March 7, 2007, 517 SCRA 677;
Beltran v. Secretary of Health, G.R. No. 133640, November 25, 2005, 476 SCRA 168, 196;
Pollution Adjudication Board v. Court of Appeals, G.R. No. 93891, March 11, 1991, 195 SCRA
112, 123-124; Tablarin v. Gutierrez, No. L-78164, July 31, 1987, 152 SCRA 730, 741; Lorenzo
v. Director of Health, 50 Phil. 595, 597 (1927); and Rivera v. Campbell, 34 Phil. 348, 353-354
(1916).
89 Basco v. Phil. Amusement and Gaming Corporation, 274 Phil. 323; 197 SCRA 52, 61 (1991).
90 Id.
91 Philippine Association of Service Exporters v. Drilon, 246 Phil. 393, 399; 163 SCRA 386, 391
(1988).
515
VOL. 812, DECEMBER 6, 2016 515

for which it is exercised, that is, the advancement of the public good.92
To be considered reasonable, the government’s exercise of police power must satisfy the “valid
object and valid means” method of analysis: first, the interest of the public generally, as
distinguished from those of a particular class, requires interference; and second, the means
employed are reasonably necessary to attain the objective sought and not unduly oppressive upon
individuals.93
These two elements of reasonableness are undeniably present in Section 16 of RA No. 10022. The
prohibition against the referral decking system is consistent with the State’s exercise of the police
power to prescribe regulations to promote the health, safety, and general welfare of the people.
Public interest demands State interference on health matters, since the welfare of migrant workers
is a legitimate public concern.
We note that RA No. 10022 expressly reflects the declared State policies to “uphold the dignity of
its citizens whether in the country or overseas, in general, and Filipino migrant workers,” and to
“afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all. Towards this end, the State shall
provide adequate and timely social, economic and legal services to Filipino migrant workers.”
pg. 1703
The prohibition against the referral decking system in Section 16 of RA No. 10022 is an expression
and implementation of these state policies.
_______________
92 Id.
93 U.S. v. Toribio, 15 Phil. 85 (1910); Fabie v. City of Manila, 21 Phil. 486 (1912); Case v. Board
of Health, 24 Phil. 256; Bautista v. Juinio, No. L-50908, January 31, 1984, 127 SCRA 329; Ynot
v. Intermediate Appellate Court, No. L-74457, March 20, 1987, 148 SCRA 659 (1987).
516

The guarantee under Section 16 for OFWs to be given the option to choose a quality healthcare
service provider — as expressed in Section 16(c)94 of RA No. 10022 — is guaranteed by the
prohibition against the decking practice and against monopoly practices in OFW health
examinations.95
_______________
94 Section 16. Under Section 23 of Republic Act No. 8042, as amended, add new paragraphs
(c) and (d) with their corresponding subparagraphs to read as follows:
(c) Department of Health.—The Department of Health (DOH) shall regulate the activities and
operations of all clinics which conduct medical, physical, optical, dental, psychological and other
similar examinations, hereinafter referred to as health examinations, on Filipino migrant workers
as requirement for their overseas employment. Pursuant to this, the DOH shall ensure that:
(c.1) The fees for the health examinations are regulated, regularly monitored and duly published
to ensure that the said fees are reasonable and not exorbitant;
(c.2) The Filipino migrant worker shall only be required to undergo health examinations when
there is reasonable certainty that he or she will be hired and deployed to the jobsite and only those
health examinations which are absolutely necessary for the type of job applied for or those
specifically required by the foreign employer shall be conducted;
pg. 1704
(c.4) Every Filipino migrant worker shall have the freedom to choose any of the DOH-
accredited or DOH-operated clinics that will conduct his/her health examinations and that his
or her right as a patient are respected. The decking practice, which requires an overseas Filipino
worker to go first to an office for registration and then farmed out to a medical clinic located
elsewhere, shall not be allowed. x x x (Emphasis supplied)
95 Id.
517
VOL. 812, DECEMBER 6, 2016 517

Section 16 likewise requires employers to accept health examinations from any DOH-accredited
health facility; a refusal could lead to their temporary disqualification under pertinent rules to be
formulated by the Philippine Overseas Employment Authority (POEA).96
These rules are part of the larger legal framework to ensure the Overseas Filipino Workers’
(OFWs’) access to quality healthcare services, and to curb existing practices that limit their choices
to specific clinics and facilities.
Separately from the Section 16 prohibition against the referral decking system, RA No. 10022 also
prohibits and penalizes the imposition of a compulsory exclusive arrangement requiring OFWs to
undergo health examinations only from specifically designated medical clinics, institutions,
entities or persons. Section 5, in relation to Section 6 of RA No. 10022, penalizes compulsory,
exclusive arrangements97 by imprisonment and fine and by the automatic revocation of the
participating medical clinic’s license.
_______________
96 The pertinent part of the provision reads: Any Foreign employer who does not honor the results
of valid health examinations conducted by a DOH-accredited or DOH-operated clinic shall be
temporarily disqualified from the participating in the overseas employment program, pursuant to
POEA rules and regulations.
97 Section 5 of Republic Act No. 8042, as amended by Republic Act 1022 now includes:
In addition to the acts enumerated above, it shall also be unlawful for any person or entity
to commit the following prohibited acts:
xxxx
pg. 1705
(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker
is required to undergo health examinations only from specifically designated medical
clinics, institutions, entities or persons, except in the case of a seafarer whose medical
examination cost is shouldered by the principal/shipowner.
xxxx
518

The DOH’s role under this framework is to regulate the activities and operations of all clinics
conducting health examinations on Filipino migrant workers as a requirement for their overseas
employment. The DOH is tasked to ensure that:
(c.4) Every Filipino migrant worker shall have the freedom to choose any of the DOH-accredited
or DOH-operated clinics that will conduct his/her health examinations and that his or her rights as
a patient are respected. The decking practice, which requires an overseas Filipino worker to go
first to an office for registration and then farmed out to a medical clinic located elsewhere, shall
not be allowed.98
While Section 16 of RA No. 10022 does not specifically define the consequences of violating the
prohibition against the referral decking system, Republic Act No. 4226 (Hospital Licensure Act),
which governs the licensure and regulation of hospitals and health facilities, authorizes the DOH
to suspend, revoke, or refuse to renew the license of hospitals and clinics violating the law.99
_______________
98 Supra note 94.
99 Section 11 of Republic Act No. 4226 provides:
Section 11. Revocation of License.—The licensing agency may suspend or revoke a

license already issued for any of the following grounds: (a) repeated violation by the licensee
of any provision of this Act or of any other existing law; (b) repeated violation of rules and
pg. 1706
regulations prescribed in the implementation of this Act; or (c) repeated failure to make
necessary corrections or adjustments required by the licensing agency in the improvement
of facilities and services.
519
VOL. 812, DECEMBER 6, 2016 519

These consequences cannot but apply to the violation of the prohibition against the referral decking
system under RA No. 10022. If, under the law, the DOH can suspend, revoke, or refuse to renew
the license of these hospitals upon the finding that they violated any provision of law (whether
those found in RA No. 4226 or in RA No. 10022), it follows — as a necessarily included lesser
power — that the DOH can likewise order these clinics and their association to cease and desist
from practices that the law deems to be undesirable.
A.5.b. The DOH did not gravely

abuse its discretion in is-
suing the assailed DOH
CDO letters
As discussed above, the letter-order implementing the prohibition against the referral decking
system is quasi-judicial in nature. This characteristic requires that procedural due process be
observed — that is, that the clinics concerned be given the opportunity to be heard before the
standard found in the law can be applied to them.
Thus, prior to the issuance of the disputed CDO letter, the DOH should have given GAMCA the
opportunity to be heard on whether the prohibition applies to it. Lest this opportunity to be heard
be misunderstood, this DOH obligation raises an issue different from the question of whether
Congress can, under the exercise of police power, prohibit the referral decking system; this latter
issue lies outside the scope of the DOH to pass upon. The required hearing before the DOH relates
solely to whether it properly implemented, based on the given standards under the law, the
prohibition that Congress decreed under RA No. 10022.
Under normal circumstances, the issuance of a CDO without a prior hearing would violate
GAMCA’s procedural due process rights, and would amount to more than a legal error, i.e., an
error equivalent to action without jurisdiction. Render-
pg. 1707
520

ing a decision quasi-judicial in nature without providing the opportunity to be heard amounts to a
grave abuse of discretion that divests a quasi-judicial agency of its jurisdiction.
Factual circumstances unique to the present case, however, lead us to conclude that while it was
an error of law for the DOH to issue a CDO without complying with the requirements of procedural
due process, its action did not amount to a grave abuse of discretion.
Grave abuse of discretion amounts to more than an error of law; it refers to an act that is so
capricious, arbitrary, and whimsical that it amounts to a clear evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, as where the power is exercised in an arbitrary and
despotic manner because of passion or hostility.100
Prior to the issuance of its CDO Letter, the DOH had more than sufficient basis to determine that
GAMCA practices the prohibited referral decking system under RA No. 10022. Notably, the DOH
had earlier allowed and recognized the referral decking system that GAMCA practiced through
AO 5-01. This recognition was made with GAMCA’s practice in mind. The subsequent
administrative orders and department memorandum suspending and terminating the referral
decking system, respectively, all pertain to the practice that the
_______________
100 Office of the Ombudsman v. Magno, G.R. No. 178923, November 27, 2008, 572 SCRA 272,
286-287, citing Microsoft Corporation v. Best Deal Computer Center Corporation, 438 Phil. 408,
414; 389 SCRA 615, 620 (2002); Suliguin v. Commission on Elections, G.R. No. 166046, March
23, 2006, 485 SCRA 219, 233; Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1, 19-20; 391
SCRA 370, 384 (2002); Philippine Rabbit Bus Lines, Inc. v. Goimco, Sr., 512 Phil. 729, 733-734;
476 SCRA 361, 366 (2005), citing Land Bank of the Philippines v. Court of Appeals, 456 Phil.
755, 786; 409 SCRA 455, 481 (2003); Duero v. Court of Appeals, 424 Phil. 12, 20; 373 SCRA 11,
17 (2002), citing Cuison v. Court of Appeals, G.R. No. 128540, April 15, 1998, 289 SCRA 159,
171.
521
pg. 1708
VOL. 812, DECEMBER 6, 2016 521
DOH had authorized under AO 5-01. Even the subject matter of these issuances do not just pertain
to any other referral decking system, but to the “GAMCA referral decking system.”
GAMCA likewise had more than several opportunities to contest the suspension and eventual
revocation of the referral decking system initially permitted under AO 5-01. Its appeal even
reached the Office of the President, which overturned the DOH Memorandum Order terminating
the referral decking system.
That the referral decking system had been subsequently prohibited by law shows the intent of
Congress to prevent and prohibit the practice that GAMCA initiated and which the President had
allowed. The President’s duty under our political system is to implement the law; hence, when
Congress subsequently prohibited the practice that GAMCA initiated, the Executive — including
the President — has no choice but to implement it.
Based on these circumstances, while the DOH erred when it issued its CDO letters without first
giving GAMCA the opportunity to prove whether the practice conducted by GAMCA is the same
practice prohibited under RA No. 10022, the DOH conclusion to so act, in our view, did not
constitute grave abuse of discretion that would have divested it of jurisdiction.
We note that the DOH had sufficient basis when it determined that the referral decking system
prohibited under RA No. 10022 was the same decking system practiced by GAMCA. To reiterate,
the referral decking system was not something new; it was an old system that GAMCA practiced
and was known to all in its scope and operating details. That GAMCA had previously questioned
the DOH prohibition and had been given ample opportunity to be heard when it filed an appeal
before the OP, negate the conclusion that GAMCA had been aggrieved by precipitate and unfair
DOH action.
522

To be sure, these factual circumstances do not make the CDO letter compliant with procedural due
process. They mitigate, however, the error committed and render it less than the capricious,
arbitrary, and patent refusal to comply with a positive legal duty that characterizes an act
committed with grave abuse of discretion.
pg. 1709
The Court furthermore, in several instances,101 has recognized that an administrative agency may
issue an ex parte cease and desist order, where vital public interests outweigh the need for
procedural due process. In these instances, the Court noted that the affected establishment may
contest the ex parte order, upon which the administrative agency concerned must conduct a hearing
and allow the establishment to be heard. While jurisprudence has so far used the “vital public
interests” standard to pollution cases, it had not been a grave abuse of discretion on the part of the
DOH to consider that GAMCA’s referral decking practice falls within this category. The DOH has
long made the factual finding that the referral decking system hinders our Filipino seafarers’ access
to quality and affordable healthcare in its A.O. No. 106, Series of 2002.
These circumstances further mitigate whatever legal error the DOH has committed and render the
conclusion that grave abuse of discretion had taken place misplaced.
Since the writs of certiorari and prohibition do not issue against legal errors, but to acts of grave
abuse of discretion, the RTC erred in issuing these writs against the DOH CDO letters.
_______________
101 Laguna Lake Development Authority v. Court of Appeals, supra note 78, Pollution
Adjudication Board v. Court of Appeals, 272-A Phil. 66; 195 SCRA 112 (1991).
523
VOL. 812, DECEMBER 6, 2016 523

6. The prohibition against

the referral decking sys-
tem against GAMCA does
not violate the principle
of sovereign equality and
independence
The RTC based its decision to grant the writs of certiorari and prohibition against the DOH letter-
order on the principle of sovereign equality and independence; applying the referral decking
system prohibition against GAMCA violates this principle.
The RTC reasoned out that the prohibition against the referral decking system under Section 16 of
RA No. 10022 must be interpreted to apply only to clinics conducting health examinations on
pg. 1710
migrant workers bound for countries that do not require the referral decking system for the issuance
of visas to job applicants.
The RTC observed, too, that the referral decking system is part of the application procedure in
obtaining visas to enter the GCC States, a procedure made in the exercise of the sovereign power
of the GCC States to protect their nationals from health hazards, and of their diplomatic power to
regulate and screen entrants to their territories.
It also reasoned out that under the principle of sovereign equality and independence of States, the
Philippines cannot interfere with this system and in fact must respect the visa-granting procedures
of foreign states in the same way that they respect our immigration procedures. Moreover, to
restrain GAMCA which is a mere adjunct of HMC (an agent of GCC States) is to restrain the GCC
States themselves.
AMCOW contests the RTC’s conclusion, arguing that the principles of sovereign equality and
independence of States do not apply to the present case. According to AMCOW, the subject matter
of this case pertains to a domestic concern as the
524

law and the regulations that GAMCA assails relate to the operation of medical clinics in the
Philippines.
It points out that the Philippines gave GAMCA and its members the privilege of conducting their
businesses domestically; hence, their operations are governed by Philippine laws, specifically by
RA No. 10022 which serves as one of the limitations on the privilege granted to them. GAMCA’s
right to engage in business should yield to the State’s exercise of police power. In legal
contemplation, therefore, the DOH CDO letters did not prejudice GAMCA’s right to engage in
business; nor did they hamper the GAMCA members’ business operations.
AMCOW further insists that the August 23, 2010 and November 2, 2010 orders are consistent with
the State’s exercise of the police power to prescribe regulations to promote the health, safety, and
general welfare of the people. Public interest demands State interference on health matters, since
the welfare of migrant workers is a legitimate public concern. The DOH thus merely performed
its duty of upholding the migrant workers’ freedom to choose any of its accredited or operated
clinics that will conduct health examinations.
pg. 1711
The DOH, for its part, adds that the implementation of RA No. 10022 cannot be defeated by
agreements entered into by GAMCA with the GCC States. The GCC States, the DOH points out,
are not empowered to determine the Philippines’ courses of action with respect to the operation,
within Philippine territory, of medical clinics; the conduct of health examinations; and the freedom
of choice of Filipino migrant workers.
GAMCA responds to these arguments by asserting that the referral decking system is a part of the
application procedure for obtaining visas to enter the GCC States. Hence, it is an exercise of the
sovereign power of the GCC States to protect their nationals from health hazards, and their
diplomatic power to regulate and screen entrants to their territories. To restrain an agent of the
GCC States under the control and
525
VOL. 812, DECEMBER 6, 2016 525

acting in accordance with the direction of these GCC States, restrains the GCC States.
GAMCA also points out that the OFWs would suffer grave and irreparable damage and injury if
the DOH CDO letters would be implemented as the GCC States would not issue working visas
without the GAMCA seal attesting that the OFWs had been medically examined by GAMCA
member clinics.
After considering all these arguments, we find that the RTC’s decision misapplied the principle of
sovereign independence and equality to the present case. While the principles of sovereign
independence and equality have been recognized in Philippine jurisprudence, our recognition of
this principle does not extend to the exemption of States and their affiliates from compliance with
Philippine regulatory laws.
A.6. The principle of sovereign

equality and independence
of states does not exempt
GAMCA from the referral
decking system prohibition
under RA No. 10022
pg. 1712
In Republic of Indonesia v. Vinzon,102 we recognized the principle of sovereign independence and
equality as part of the law of the land. We used this principle to justify the recognition of the
principle of sovereign immunity which exempts the State — both our Government and foreign
governments — from suit. We held:
International law is founded largely upon the principles of reciprocity, comity, independence, and
equality of States which were adopted as part of the law of our land under Article II, Section 2 of
the 1987 Constitution. The rule that a State may not be sued without its consent
_______________
102 G.R. No. 154705, June 26, 2003, 405 SCRA 126.
526

is a necessary consequence of the principles of independence and equality of States. As enunciated

in Sanders v. Veridiano II, the practical justification for the doctrine of sovereign immunity is that
there can be no legal right against the authority that makes the law on which the right depends. In
the case of foreign States, the rule is derived from the principle of the sovereign equality of States,
as expressed in the maxim par in parem non habet imperium. All states are sovereign equals and
cannot assert jurisdiction over one another. A contrary attitude would “unduly vex the peace of
nations.”
Our recognition of sovereign immunity, however, has never been unqualified. While we
recognized the principles of independence and equality of States to justify a State’s sovereign
immunity from suit, we also restricted state immunity to acts jus imperii, or public acts. We said
that once a State enters into commercial transactions (jus gestionis), then it descends to the level
of a private individual, and is thus not immune from the resulting liability and consequences of its
actions.103
By this recognition, we acknowledge that a foreign government acting in its jus imperii function
cannot be held liable in a Philippine court. Philippine courts, as part of the Philippine government,
cannot and should not take jurisdiction over cases involving the public acts of a foreign
government. Taking jurisdiction would amount to authority over a foreign government, and would
thus violate the principle of sovereign independence and equality.104
pg. 1713
_______________
103 China National Machinery & Equipment Corp. (Group) v. Santamaria, G.R. No. 185572,
February 7, 2012, 665 SCRA 189, 196; Holy See v. Rosario, Jr., G.R. No. 101949, December 1,
1994, 238 SCRA 524, 535; JUSMAG Philippines v. NLRC, G.R. No. 108813, December 15, 1994,
239 SCRA 224, 231-232.
104 Arigo v. Swift, G.R. No. 206510, September 16, 2014, 735 SCRA 102, citing Minucher v.
Court of Appeals, 445 Phil. 250; 397 SCRA 244 (2003).
527
VOL. 812, DECEMBER 6, 2016 527

This recognition is altogether different from exempting governments whose agents are in the
Philippines from complying with our domestic laws.105 We have yet to declare in a case that the
principle of sovereign independence and equality exempts agents of foreign governments from
compliance with the application of Philippine domestic law.
In the present case, GAMCA has not adduced any evidence in the court below, nor has it presented
any argument before us showing that the principle of sovereign equality and independence has
developed into an international custom shielding state agents from compliance with another state’s
domestic laws. Under this situation, the Court is in no position to determine whether the practice
that GAMCA alleges has indeed crystallized into an international custom.
GAMCA has never proven in this case, too, that the GCC has extended its sovereign immunity to
GAMCA. Sovereign immunity belongs to the State, and it must first be extended to its agents
before the latter may be considered to possess sovereign immunity.
Significantly, the Court has even adopted a restrictive approach in recognizing state immunity, by
distinguishing between a State’s jus imperii and jus gestionis. It is only when a State acts in its jus
imperii function that we recognize state immunity.106
We point out furthermore that the prohibition against the referral decking system applies to
hospitals and clinics, as well as to OFW employers, and does not seek to interfere with the GCC’s
visa requirement processes. RA No. 10022 prohibits hospitals and clinics in the Philippines from
practicing the
_______________
pg. 1714
105 x x x the privilege is not an immunity from the observance of the law of the territorial
sovereign or from ensuing legal liability; it is, rather, an immunity from the exercise of territorial
jurisdiction. Id., at p. 132.
106 United States of America v. Ruiz, 221 Phil. 179, 182-183 & 184; 136 SCRA 487, 491 (1985).
528

referral decking system, and employers from requiring OFWs to procure their medical
examinations from hospitals and clinics practicing the referral decking system.
The regulation applies to Philippine hospitals and clinics, as well as to employers of OFWs. It does
not apply to the GCCs and their visa processes. That the regulation could affect the OFWs’
compliance with the visa requirements imposed by GCCs does not place it outside the regulatory
powers of the Philippine government.
In the same manner, GCC states continue to possess the prerogative to apply their visa
requirements to any foreign national, including our OFWs, who seeks to enter their territory; they
may refuse to grant them entry for failure to comply with the referral decking system, or they may
adjust to the prohibition against the referral decking system that we have imposed. These
prerogatives lie with the GCC member-states and do not affect at all the legality of the prohibition
against the referral decking system.
Lastly, the effect of the prohibition against the referral decking system is beyond the authority of
this Court to consider. The wisdom of this prohibition has been decided by Congress, through the
enactment of RA No. 10022. Our role in this case is merely to determine whether our government
has the authority to enact the law’s prohibition against the referral decking system, and whether
this prohibition is being implemented legally. Beyond these lies the realm of policy that, under our
Constitution’s separation of powers, this Court cannot cross.
WHEREFORE, in the light of these considerations, we hereby GRANT the petitions.

Accordingly, we REVERSE and SET ASIDE the orders dated August 10, 2012 and April 12,
2013 of the Regional Trial Court of Pasay City, Branch 108, in Sp. Civil Action No. R-PSY-10-
04391-CV.
Costs against respondent GAMCA.
SO ORDERED.
pg. 1715
529
VOL. 812, DECEMBER 6, 2016 529

Sereno (CJ.), Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Perez,
Mendoza, Reyes and Perlas-Bernabe, JJ., concur.
Leonen, J., In the result. See Separate Opinion.
Jardeleza, J., No part prior OSG action.
Caguioa, J., On Leave.
CONCURRING AND DISSENTING OPINION
LEONEN, J.:
I concur in the result.
I.
The special civil actions filed with the Regional Trial Court were both for the issuance of a writ of
certiorari and a writ of prohibition. Thus, in the very opening paragraph of the discussion of the
Regional Trial Court in question:
The present Petition for Certiorari and Prohibition seeks: a) the issuance of a writ of prohibition
to enjoin and prohibit respondent Secretary from enforcing and implementing Department of
Health (DOH) Order dated August 23, 2010 on the ground that it was issued with grave abuse of
discretion amounting to lack or excess of jurisdiction; and b) the declaration of Paragraphs c.3 and
c.4, Section 16, of Republic Act (R.A.) No. 10022 and Section 1(c) and 1(d), Rule XI of the
Implementing Rules and Regulations (IRR) as unconstitutional for being contrary to the generally
pg. 1716
accepted principles of international law, i.e., the principle of sovereign equality and independence
of states.1
_______________
1 Rollo, p. 56.
530

The dispositive portion of the Regional Trial Court’s questioned Decision2 reads:
WHEREFORE, the petition is hereby granted. Accordingly, the writ of CERTIORARI is hereby
issued declaring null and void ab initio the August 23, 2010 Order and November 2, 2010
reiterating Order of the respondent DOH secretary. A writ of Prohibition is likewise issued
directing the respondent DOH Secretary and all persons acting on his behalf to cease and desist
from implementing the assailed Orders against the petitioners. The August 1, 2011 writ of
preliminary injunction is hereby made permanent. Civil Case No. 04-0670 is hereby dismissed for
being moot and academic.3 (Emphasis supplied)
Section 21 of Batas Pambansa Blg. 129 provides:
Section 21. Original jurisdiction in other cases.—Regional Trial Courts shall exercise original
jurisdiction:
(1) In the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus
and injunction which may be enforced in any part of their respective regions[.] (Emphasis
supplied)
The Regional Trial Court of Pasay had jurisdiction over the remedies invoked, which were
petitions for a writ of certiorari and a writ of prohibition. However, it did not have jurisdiction to
enjoin to issue the writs for its intended scope.
The Order of the Department of Health dated August 23, 20104 and its reiterative Order dated
November 2, 20105 was
pg. 1717
_______________
2 Id., at pp. 56-66. The Regional Trial Court Decision was promulgated on August 10, 2012 and
penned by Judge Maria Rosario B. Ragasa of Branch 108 of the Regional Trial Court of Pasay
City.
3 Id., at p. 66.
4 Id., at pp. 19-20.
5 Id., at p. 20.
531
VOL. 812, DECEMBER 6, 2016 531

nationwide in its scope. After all, the Department of Health is a nationwide agency. The respondent
GCC Approved Medical Centers Association, Inc. did not clearly and convincingly show that all
its members were located only within the territorial jurisdiction of the Regional Trial Court of
Pasay City.
For these reasons alone, the decision of the court a quo is null and void for having been issued
without jurisdiction. Thus, the Petitions should be granted.
II.
In my view, it is not necessary to bifurcate the Special Civil Action for certiorari into a
“traditional” track and an “expanded” mode. The present rules are already sufficient for this Court
to exercise its fundamental power of judicial review described in part in Article VIII, Section 1.6
Neither would it be correct to limit any of our certiorari powers, even on an “expanded” basis, to
questions, which only raise constitutional issues. An act of any government branch, agency, or
instrumentality that violates a statute or a treaty is grave abuse of discretion. The Constitution does
not distinguish the cause for grave abuse.7 Neither should this Court, unless, in the guise of
promulgating rules of procedure, we wish to effect an amendment of the Constitution.
pg. 1718
Finally, I express my reservations relating to the absolute necessity for a decision of this Court
before any other organ of
_______________
6 Const., Art. VIII, Sec. 1 states:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether
or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government.
7 Id.
532

government can act on its rational belief in the bending nature of any customary international
norms or a general principle of international law. Our constitutional adherence to international law
is by virtue of incorporation through Article II, Section 28 or Article VII, Section 21 of the
Constitution.9 Judicial action is not required for these norms to be binding. Neither of these modes
of incorporation require it.
III.
Fundamental to constitutional litigation is the assurance that judicial review should only happen
when there is an actual case or controversy. That is, the judiciary is not an advisory body to the
President, Congress, or any other branch, instrumentality, or agency of the government. Thus,
absent any actual or sufficiently imminent breach, which will cause an injury to a fundamental
right, a provision of law or an administrative regulation cannot be challenged. This Court is
coequal with the other branches of government.10 The Constitution is a legible, written document
pg. 1719
capable of being read by all. Its ambiguity may only be clarified through judicial review when it
becomes apparent through the existence of
_______________
8 Const., Art. VIII, Sec. 1 states:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether
or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government.
9 Const., Art. VII, Sec. 21 states:
Section 21. No treaty or international agreement shall be valid and effective unless
concurred in by at least two-thirds of all the Members of the Senate.
10 Alejandrino v. Quezon, 46 Phil. 83 (1924) [Per J. Malcolm, En Banc].
533
VOL. 812, DECEMBER 6, 2016 533

an actual situation. The mere existence of subordinate norms — in the form of a statue, treaty or
administrative rule — is not enough. There has to be parties who tend to be directly and
substantially injured under a specific concrete set of facts.11
The confusion with certiorari in my view, is brought about by instances in the recent past where
actions, which should have been considered as ones for declaratory relief, were acted upon by this
Court as if they were certiorari actions. For example, in James M. Imbong, et al. v. Hon. Paquito
N. Ochoa, Jr., et al.12 or the Reproductive Health (RH) cases, this Court took cognizance of the
Petitions even if there were still no Implementing Rules, no doctor or health practitioner threatened
with sanctions, no couple or spouse whose prerogatives were to be curtailed. In my dissent, I
pointed to the dangers of speculative arguments, mainly, that our imagination substituted for actual
facts. Imagination took precedence over actual controversy.
pg. 1720
The same with the case of Jose Jesus M. Disini, et al. v. The Secretary of Justice, et al.13 In that
case, there was no cybercrime committed. There was no cybercrime threatened to be committed,
no social media part removed, no advertising in cyberspace prohibited. Again, although
denominated as certiorari actions, the petitions were in actuality actions for declaratory relief.
Petitions for certiorari as provided in Rule 65 are available only to correct acts done in a judicial
or quasi-judicial procedure.14 This ensures that the power of judicial review can only
_______________
11 Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on
Ancestral Domain (GRP), 589 Phil. 387; 568 SCRA 402 (2008) [Per J. Carpio-Morales, En Banc].
12 732 Phil. 1; 721 SCRA 146 (2014) [Per J. Mendoza, En Banc].
13 727 Phil. 28; 716 SCRA 237 (2014) [Per J. Abad, En Banc].
14 Rules of Court, Rule 65, Sec. 1 states that:
534

be exercised when there is an actual controversy. No judicial action can happen without interested
parties, who suffer injury and therefore ready to plead the facts that give actual rise to their real
injury. This is the same with quasi-judicial actions.
Ministerial or administrative actions, which will cause or threaten to cause injury can be corrected
through a Writ of Prohibition, not a Writ of Certiorari. In both cases, the requirement of the
absence of a plain, speedy, and adequate remedy in the ordinary course of the law conforms with
the deferential nature of judicial review in constitutional cases. The requirement in both cases that
there be a clear finding of grave abuse of discretion amounting to lack of jurisdiction is sufficient
to meet the scope of all our powers of judicial review.
The suggestion to expand the present rules on Petitions for Certiorari opens a very dangerous road
towards changing our place in the Constitutional order. It will transform this Court to a virtual
overload that will review legislative and executive acts, even without the presence of an actual
controversy, simply because in our collective and subjective view, there may be some amorphous
and undefined but gut feeling transcendental interest involved.
pg. 1721
It is in this respect that I wage this Court to tread with an abundance of all caution even as I respect
the erudite obser-
_______________
Section 1. Petition for certiorari.—When any tribunal, board or officer exercising judicial
or quasi-judicial functions has acted without or in excess its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or
any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the proceedings of such tribunal,
board or officer, and granting such incidental reliefs as law and justice may require.
535
VOL. 812, DECEMBER 6, 2016 535

vations of Justice Arturo Brion. This Court must clothe itself with humility as it reviews its past
cases in the light of a full understanding of our constitutional role if and when we do exercise our
power to amend the rules.
In my view, discussions are thus premature.
IV.
In Restituto Ynot v. Intermediate Appellate Court, et al.,15 this Court called a trial court to task
when it hesitated to decide on the constitutionality of an Executive Order in the presence of a
clearly pleaded actual case. After all, the plain text of Article VIII, Section 5(2)(a) states:
Section 5. The Supreme Court shall have the following powers:
....
pg. 1722
(2) Review, revise, reverse, modify or affirm an appeal or certiorari, as the law or the Rules of
Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or the validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order instruction, ordinance,
or regulation is in question. (Emphasis provided)
To limit constitutional questions only for the determination of this Court at first instance and even
in its “expanded” mode is not consistent with this provision. It may also be inconsistent with
Article VIII, Section 2 of the Constitution:
Section 2. The Congress shall have the power to define, prescribe, and apportion the jurisdiction
of various courts but may not deprive the Supreme Court of its jurisdiction over cases enumerated
in Section 5 hereof.
_______________
15 232 Phil. 615; 148 SCRA 659 (1987) [Per J. Cruz, En Banc].
536

As earlier pointed out, Section 21 of Batas Pambansa Bilang 129 grants jurisdiction to the
Regional Trial Court in Petitions for Certiorari and Prohibition. The only qualification is that the
writs “. . . may be enforced in any part of their respective jurisdictions.”16
For this Court to reduce this jurisdiction further is to amend Batas Pambansa Bilang 129, therefore
breaching our solemn commitment to a Constitution that removes from us the power to prescribe
jurisdiction.
V.
pg. 1723
I join Justice Lucas Bersamin’s observations that the issuance of a Cease and Desist Order does
not per se mean that the actions taken by the Department of Health is quasi-judicial in nature. In
my view, the executive department in applying and implementing the law does not only do so by
mere advice or persuasion to those who do not follow its provisions. The executive is not without
its own set of legally mandated coercive powers short of any kind of adjudication. The issuance of
an order to cease and desist in the Petitioners’ continuing violation of the law is one of them. The
type of cease and order in the case was therefore an administrative act. If at all, the proper action
to question its constitutionality is a Petition for a Writ of Prohibition not a Writ of Certiorari.
However, due to the scope of the writ requested, it should have been filed with the Court of
Appeals, not the Regional Trial Court.
ACCORDINGLY, I vote to DISMISS the Petitions.
Petitions granted, orders dated August 10, 2012 and April 12, 2013 reversed and set aside.
_______________
16 Batas Pambansa Blg. 129, Sec. 21.
537
VOL. 812, DECEMBER 6, 2016 537

Notes.—The thrust of the doctrine of exhaustion of administrative remedies is that courts must
allow administrative agencies to carry out their functions and discharge their responsibilities
within the specialized areas of their respective competence. (Go vs. Distinction Properties
Development and Construction, Inc., 671 SCRA 461 [2012])
As the Court held in People v. Ventura, 4 SCRA 208 (1962), the State under its police power “may
prescribe such regulations as in its judgment will secure or tend to secure the general welfare of
the people, to protect them against the consequence of ignorance and incapacity as well as of
deception and fraud.” (Sto. Tomas vs. Salac, 685 SCRA 245 [2012])
——o0o——
pg. 1724
G.R. No. 197146. December 6, 2016.*
HON. MICHAEL L. RAMA, in his capacity as Mayor of Cebu City, METROPOLITAN CEBU
WATER DISTRICT (MCWD), represented by its General Manager, ARMANDO PAREDES; the
Board of Directors of MCWD, represented by its Chair, ELIGIO A. PACANA; JOEL MARI S.
YU, in his capacity as member of the MCWD Board; and the HONORABLE TOMAS R.
OSMEÑA, in his capacity as Congressional Representative of the South District, Cebu City,
petitioners, vs. HON. GILBERT P. MOISES, in his capacity as Presiding Judge of Regional Trial
Court, Branch 18, Cebu City; and HON. GWENDOLYN F. GARCIA, in her capacity as Governor
of the province of Cebu, respondents.
Political Law; Political Questions; Words and Phrases; Political questions refer to “those
questions which, under the Constitution, are to be decided by the people in their sovereign
capacity; or in regard to which full discretionary authority has been delegated to the legislature
or executive branch of the government.”—Political questions refer to “those questions which,
under the Constitution, are to be decided by the people in their sovereign capacity; or in regard to
which full discretionary authority has been delegated to the legislature or executive branch of the
government.” They are “neatly associated with the wisdom” of a particular act.
Same; Same; “Political Questions” and “Justiciable Questions,” Distinguished.—The difference

between the political and the justiciable questions has been noted in Sanidad v. Commission on
Elections, 73 SCRA 333 (1976), as follows: x x x The implementing Presidential Decree Nos. 991,
1031, and 1033, which commonly purport to have the force and effect of legislation are assailed
as invalid, thus the issue of the validity of said Decrees is plainly a justiciable one, within the
competence of this Court to pass upon. Section 2(2), Article X of the new Constitution provides:
“All cases involving the constitutionality of a treaty, executive agreement, or law, which shall be
heard and decided by the Supreme Court En Banc and no treaty, executive agreement, or
_______________
* EN BANC.
348

Rama vs. Moises
law may be declared unconstitutional without the concurrence of at least ten Members. . . .” The
Supreme Court has the last word in the construction not only of treaties and statutes, but also of
the Constitution itself. The amending, like all other powers organized in the Constitution, is in
pg. 1725
form a delegated and hence a limited power, so that the Supreme Court is vested with that authority
to determine whether that power has been discharged within its limits.
Constitutional Law; Local Government Units; Right of Suffrage; Highly Urbanized Cities; In
accordance with Section 12 of Article X of the 1987 Constitution, cities that are highly urbanized,
as determined by law, and component cities whose charters prohibit their voters from voting for
provincial elective officials, shall be independent of the province, but the voters of component
cities within a province, whose charters contain no such prohibition, shall not be deprived of their
right to vote for elective provincial officials.—The enactment of P.D. No. 198 on May 25, 1973
was prior to the enactment on December 22, 1979 of Batas Pambansa Blg. 51 (An Act Providing
for the Elective or Appointive Positions in Various Local Governments and for Other Purposes)
and antedated as well the effectivity of the 1991 Local Government Code on January 1, 1992. At
the time of the enactment of P.D. No. 198, Cebu City was still a component city of Cebu Province.
Section 3 of B.P. Blg. 51 reclassified the cities of the Philippines based on well-defined criteria.
Cebu City thus became an HUC, which immediately meant that its inhabitants were ineligible to
vote for the officials of Cebu Province. In accordance with Section 12 of Article X of the 1987
Constitution, cities that are highly urbanized, as determined by law, and component cities whose
charters prohibit their voters from voting for provincial elective officials, shall be independent of
the province, but the voters of component cities within a province, whose charters contain no such
prohibition, shall not be deprived of their right to vote for elective provincial officials. Later on,
Cebu City, already an HUC, was further effectively rendered independent from Cebu Province
pursuant to Section 29 of the 1991 Local Government Code, viz.: Section 29. Provincial Relations
with Component Cities and Municipalities.—The province, through the governor, shall ensure that
every component city and municipality within its territorial jurisdiction acts within the scope of its
prescribed powers and functions.
349
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Rama vs. Moises
Highly urbanized cities and independent component cities shall be independent of the
province.
Same; Local Autonomy; To conform with the guarantees of the Constitution in favor of the
autonomy of the Local Government Units (LGUs), therefore, it becomes the duty of the Supreme
Court (SC) to declare and pronounce Section 3(b) of Presidential Decree (PD) No. 198 as already
partially unconstitutional.—Article X of the 1987 Constitution guarantees and promotes the
administrative and fiscal autonomy of the LGUs. The foregoing statutory enactments enunciate
and implement the local autonomy provisions explicitly recognized under the 1987 Constitution.
To conform with the guarantees of the Constitution in favor of the autonomy of the LGUs,
therefore, it becomes the duty of the Court to declare and pronounce Section 3(b) of P.D. No. 198
pg. 1726
as already partially unconstitutional. We note that this pronouncement is also advocated by the
National Government, as shown in the comment of the Solicitor General.
Local Government Units; Water Supply; Water and its efficient supply are among the primary
concerns of every Local Government Unit (LGU).—Water and its efficient supply are among the
primary concerns of every LGU. Issues that tend to reduce or diminish the authority of the boards
of directors to manage the water districts are imbued with public interest. Bearing this in mind,
and recalling that the MCWD had been established from the erstwhile Osmeña Waterworks
Systems (OWS) without any investment or contribution of funds and material from the Province
of Cebu towards the creation and maintenance of OWS and the MCWD, and considering that it
had always been the City Mayor of the City of Cebu who appointed the members of the MCWD
Board of Directors regardless of the percentage of the water subscribers, our pronouncement herein
rests on firm ground.
Due Process; Substantive due process “requires that the law itself, not merely the procedures by
which the law would be enforced, is fair, reasonable, and just.”—Substantive due process
“requires that the law itself, not merely the procedures by which the law would be enforced, is fair,
reasonable, and just.” It demands the intrinsic validity of the law in interfering with the rights of
the person to life, liberty or property. In short, to be determined is whether the law has
350

Rama vs. Moises
a valid governmental objective, like the interest of the public as against that of a particular class.
Constitutional Law; Equal Protection of the Laws; According to Tiu v. Court of Appeals, 301
SCRA 278 (1999), the fundamental right of equal protection of the law is not absolute, but subject
to reasonable classification. Classification, to be valid, must: (1) rest on substantial distinctions;
(2) be germane to the purpose of the law; (3) not be limited to existing conditions only; and (4)
apply equally to all members of the same class.—The principle of equal protection enshrined in
the Constitution does not require the territorial uniformity of laws. According to Tiu v. Court of
Appeals, 301 SCRA 278 (1999), the fundamental right of equal protection of the law is not
absolute, but subject to reasonable classification. Classification, to be valid, must: (1) rest on
substantial distinctions; (2) be germane to the purpose of the law; (3) not be limited to existing
conditions only; and (4) apply equally to all members of the same class. We opine that although
Section 3(b) of P.D. No. 198 provided for substantial distinction and was germane to the purpose
of P.D. No. 198 when it was enacted in 1973, the intervening reclassification of the City of Cebu
into an HUC and the subsequent enactment of the 1991 Local Government Code rendered the
continued application of Section 3(b) in disregard of the reclassification unreasonable and unfair.
Clearly, the assailed provision no longer provided for substantial distinction because, firstly, it
pg. 1727
ignored that the MCWD was built without the participation of the provincial government;
secondly, it failed to consider that the MCWD existed to serve the community that represents the
needs of the majority of the active water service connections; and thirdly, the main objective of
the decree was to improve the water service while keeping up with the needs of the growing
population.
Grave Abuse of Discretion; Words and Phrases; Grave abuse of discretion means either that the
judicial or quasi-judicial power was exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, or that the respondent judge, tribunal or board evaded a positive
duty, or virtually refused to perform the duty enjoined or to act in contemplation of law, such as
when such judge, tribunal or board exercising judicial or quasi-judicial powers acted in a
capricious or whimsical manner as to be equivalent to lack of jurisdiction.—Grave abuse of
discretion means either that the judicial or quasi-judicial power was exercised in an arbitrary or
despotic man-
351
VOL. 812, DECEMBER 6, 2016 351

Rama vs. Moises
ner by reason of passion or personal hostility, or that the respondent judge, tribunal or board evaded
a positive duty, or virtually refused to perform the duty enjoined or to act in contemplation of law,
such as when such judge, tribunal or board exercising judicial or quasi-judicial powers acted in a
capricious or whimsical manner as to be equivalent to lack of jurisdiction. Mere abuse of discretion
is not enough to warrant the issuance of the writ. The abuse of discretion must be grave. Under the
foregoing circumstances, therefore, the RTC gravely abused its discretion in upholding Section
3(b) of P.D. No. 198. It thereby utterly disregarded the clear policies favoring local autonomy
enshrined in the 1987 Constitution and effected by the 1991 Local Government Code and related
subsequent statutory enactments, and for being violative of the Due Process Clause and the Equal
Protection Clause of the 1987 Constitution.
Leonardo-De Castro, J., Dissenting Opinion:
Local Government Units; Local Water Districts; View that the decision to form a local water
district (LWD) is lodged upon the legislative body of any city, municipality or province itself, which
can do so by enacting a resolution to form or join a district.—The decision to form a local water
district is lodged upon the legislative body of any city, municipality or province itself, which can
do so by enacting a resolution to form or join a district. An LGU is free to decide to join or not a
local water district based on its own assessment of whether or not it will redound to its benefit to
be covered by Presidential Decree No. 198, which provides, among others, for a package of
powers, rights and obligations. Specifically, the local water district is assured of support on the
national level in the area of technical advisory services and financing (Fifth Preambulatory Clause
pg. 1728
of Presidential Decree No. 198), guarantee of exclusive franchise for domestic water service within
the district (Section 46), and exemption from income taxes under Section 45 which provides: SEC.
45. Exemption from Taxes.—A district shall (1) be exempt from paying income taxes, and (2) shall
be exempt from the payment of (a) all National Government, local government and municipal
taxes and fees, including any franchise, filing, recordation, license or permit fees or taxes and fees,
charges or costs involved in any court of administrative proceeding in which it may be a party and
(b) all duties or imposts on imported machinery, equipment and materials required for its
operations.
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Same; Same; View that the local water district (LWD) has a separate juridical personality which
is independent of the Local Government Units (LGUs). It is governed by its Board of Directors
pursuant to Section 17.—The LGU joining a local water district does not surrender any of its
powers under the Constitution or the Local Government Code to another LGU vested with the
power to appoint the members of the Board of the local water district since Presidential Decree
No. 198 expressly provides that a district once formed shall not be under the jurisdiction of any
political subdivision. The local water district has a separate juridical personality which is
independent of the LGUs. It is governed by its Board of Directors pursuant to Section 17 which
reads: Sec. 17. Performance of District Powers.—All powers, privileges, and duties of the district
shall be exercised and performed by and through the board: Provided, however, That any
executive, administrative or ministerial power shall be delegated and redelegated by the board to
officers or agents designated for such purpose by the board.
Same; Same; View that the power to appoint the members of the Board of Directors of the local
water districts (LWDs), which is vested upon the Local Government Unit (LGU) determined in
accordance with the formula or rule prescribed by Presidential Decree (PD) No. 198, does not
impair the autonomy of the other LGUs included in the District.—The power to appoint the
members of the Board of Directors of the local water districts, which is vested upon the LGU
determined in accordance with the formula or rule prescribed by Presidential Decree No. 198, does
not impair the autonomy of the other LGUs included in the District. If a province can join a local
water district and be subjected to the provisions of Presidential Decree No. 198, there is no cogent
reason why the change of status of a component city of a province, which would later on become
a highly urbanized city, should affect its powers, rights and obligations under Presidential Decree
No. 198. A province which enjoys local autonomy may join a local water district and be subject to
the provisions of Presidential Decree No. 198 pursuant to Section 6 of said Decree.
Same; Same; View that assuming that Section 3(b) of Presidential Decree (PD) No. 198, as argued
in the majority opinion, is no longer in keeping with the recent developments in the status, socio-
pg. 1729
economic and political conditions of the Local Government Units (LGUs) comprising a local water
district, the remedy is legislative amendment.—Assuming that Section 3(b) of Presidential Decree
No.
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198, as argued in the majority opinion, is no longer in keeping with the recent developments in the
status, socio-economic and political conditions of the LGUs comprising a local water district, the
remedy is legislative amendment. It is not for this Court to prescribe another rule or formula to
determine who shall have the authority to appoint the Board of Directors of a local water district.
I join Justice Brion who, with clarity, extensively expounded on this issue to support the view
which was early on tritely expressed in the appealed decision of the Regional Trial Court,
particularly, that the question or issue on the situs of the appointing authority is for our lawmakers
to address.
Brion, J., Dissenting Opinion:
Remedial Law; Special Civil Actions; Certiorari; View that the Supreme Court’s (SC’s) original
jurisdiction to issue writs of certiorari (as well as prohibition, mandamus, quo warranto, habeas
corpus, and injunction) is not exclusive. Its jurisdiction is concurrent with that of the Court of
Appeals (CA) and, in proper cases, with the Regional Trial Courts (RTCs).—Unquestionably, this
Court has the original jurisdiction to issue writs of certiorari against final judgments resolving the
constitutionality or validity of laws, including presidential decrees. However, this Court’s
certiorari jurisdiction is not exclusive. No less than the Constitution states that this Court’s power
to revise, reverse, or modify final judgments on certiorari is subject to what “the law or the Rules
of Court may provide.” Section 9 of Batas Pambansa Blg. 129, otherwise known as the Judiciary
Reorganization Act of 1980, as amended by Republic Act No. 7902, also grants the Court of
Appeals (CA) original jurisdiction to issue writs of certiorari whether or not in aid of its appellate
jurisdiction: Section 9. Jurisdiction.—The Court of Appeals shall exercise: 1. Original jurisdiction
to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and
auxiliary writs or processes, whether or not in aid of its appellate jurisdiction. x x x x Thus, this
Court’s original jurisdiction to issue writs of certiorari (as well as prohibition, mandamus, quo
warranto, habeas corpus, and injunction) is not exclusive. Its jurisdiction is concurrent with that
of the CA and, in proper cases, with the RTCs.
Same; Jurisdiction; Concurrence of Jurisdiction; Hierarchy of Courts; View that such

concurrence of jurisdiction does not give a party the absolute freedom to file his petition with the
court of his
pg. 1730
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choice. Parties must observe the principle of judicial hierarchy of courts before they can seek relief
directly from this Court.—Such concurrence of jurisdiction does not give a party the absolute
freedom to file his petition with the court of his choice. Parties must observe the principle of
judicial hierarchy of courts before they can seek relief directly from this Court. The principle of
judicial hierarchy ensures that this Court remains a court of last resort. Unwarranted demands upon
this Court’s attention must be prevented so that the Court may devote its time to more pressing
matters within its exclusive jurisdiction. Thus, petitions for the issuance of extraordinary writs
against first level (inferior) courts should be filed with the RTC, and those against the RTC with
the CA.
Same; Courts; Judicial Review; View that a refusal on the lower court’s part to engage in judicial
review, whenever warranted, is a virtual refusal to perform a duty correctible by a petition for
certiorari.—Courts have the power to determine the constitutionality of statutes. This power, aptly
named as the power of judicial review, is incidentally also a duty and a limitation. It is a duty
because it proceeds from the Court’s expanded power to determine whether or not there has been
a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch
or instrumentality of the Government. It is also a limitation because Courts can only exercise the
power of judicial review if: (1) the case presents an actual case or justiciable controversy; (2) the
constitutional question is ripe for adjudication; (3) the person challenging the act is a proper party;
and (4) the issue of constitutionality was raised at the earliest opportunity and is the very litis mota
of the case. Lower courts share this duty and limitation. Consequently, a refusal on the lower
court’s part to engage in judicial review, whenever warranted, is a virtual refusal to perform a duty
correctible by a petition for certiorari.
Same; Appeals; View that as a rule, erroneous conclusions are correctible by way appeal and not
by certiorari. Thus, certiorari cannot be used to review a decision’s wisdom or legal soundness.—
As a rule, erroneous conclusions are correctible by way appeal and not by certiorari. Thus,
certiorari cannot be used to review a decision’s wisdom or legal soundness. However, mere abuse
of discretion still does not merit the issuance of a writ of certiorari. The petitioner must amply
demonstrate grave abuse of discretion since the jurisdiction of the court, no less, will be affected.
Jurisprudence has
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pg. 1731
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defined grave abuse of discretion in this wise: Grave abuse of discretion is defined as capricious
or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion
must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform
a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in
an arbitrary and despotic manner by reason of passion and hostility.
Grave Abuse of Discretion; View that the presiding judge’s writing style which did not address
the constitutional issues point-by-point may have resulted in a poorly written draft. Still, the draft’s
poor quality does not amount to grave abuse of discretion in the absence of arbitrariness or
personal hostility on the part of the trial judge.—I disagree with the ponencia’s conclusion that
the RTC gravely abused its discretion because it improperly relied on the political question
doctrine to skirt the duty of judicial review. To my mind, albeit not exhaustively, the RTC
exercised its power of judicial review and, therefore, did not commit grave abuse of discretion.
The November 16, 2010 decision does not patently show that the RTC arbitrarily, capriciously,
or whimsically withheld the power of judicial review. On the contrary, as the ponencia itself noted,
“the RTC, which indisputably had the power and the duty to determine and decide the issue of
constitutionality of Section 3(b) of P.D. 198, discharged its duty.” Admittedly, the presiding
judge’s writing style which did not address the constitutional issues point-by-point may have
resulted in a poorly written draft. Still, the draft’s poor quality does not amount to grave abuse of
discretion in the absence of arbitrariness or personal hostility on the part of the trial judge. This
Court must not allow litigants to directly resort to certiorari petitions simply because they think
the presiding judge lacked the skill to close out all arguments presented before the trial court.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; View that appeals
from the Regional Trial Court (RTC), in the exercise of its original jurisdiction, where only
questions of law are raised or are involved, are filed directly with the Supreme Court (SC) via a
Petition for Review on Certiorari under Rule 45 of the Rules of Court.—In any case, I find that
the petitioners not only made the mistake of filing their petition for certiorari with the wrong
court, they also made the mistake of filing with this Court a wrong petition. Notably, appeals
from the RTC, in the
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exercise of its original jurisdiction, where only questions of law are raised or are involved, are filed
directly with this Court via a Petition for Review on Certiorari under Rule 45 of the Rules of
pg. 1732
Court. Thus, had petitioners simply stuck with the constitutional issues instead of filing a baseless
petition for certiorari, they could have appealed directly to the Court on pure questions of law.
This, in my view, is the petitioners’ more plain, speedy, and adequate remedy.
Judicial Review; Locus Standi; View that one of the requisites of judicial review is that the person
who challenges a statute’s constitutionality must have locus standi.—Incidentally, one of the
requisites of judicial review is that the person who challenges a statute’s constitutionality must
have locus standi. The rationale for the requirement of locus standi is by no means trifle. Not only
does it assure the vigorous adversarial presentation of the case; more importantly, it must suffice
to warrant the Judiciary’s overruling the determination of a coordinate, democratically elected
organ of government. To have locus standi, one must show that he has been or is about to be denied
some right or privilege to which he is lawfully entitled or that he is about to be subjected to some
burdens or penalties by reason of the statute or the act complained of. In other words, locus standi
or legal standing has been defined as a personal and substantial interest in a case such that the party
has sustained or will sustain direct injury as a result of the governmental act that is being
challenged.
Local Water Districts; Government-Owned and -Controlled Corporations; View that once formed,
the districts shall become government-owned and -controlled corporations (GOCCs) and will no
longer be under the jurisdiction of any political subdivision.—To create LWDs, PD 198 authorized
LGUs to form water districts by enacting Resolutions for the purpose, and by filing copy/ies of the
resolution/s to the Local Water Utilities Administration (LWUA) — an office attached to the office
of the president. Once formed, the districts shall become government-owned and -controlled
corporations (GOCC) and will NO longer be under the jurisdiction of any political subdivision.
Same; View that nothing in Presidential Decree (PD) No. 198 implies that the power to appoint
the members of the Local Water District’s (LWD’s) Board of Directors is a right that can be
acquired
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or vested thru time. On the contrary, PD No. 198 designed the appointing power to shift depending
on the circumstances.—Without any property right over MCWD’s waterworks, the City of Cebu
cannot claim that Section 3(b) operates to deprive it of any property right without due process of
law. Accordingly, the City of Cebu lacks the requisite standing to question Section 3(b)’s
constitutionality under the due process clause. In these lights, I cannot but disagree with the
ponencia’s conclusion that since “it had always been the City Mayor of the City of Cebu who had
appointed the members of the MCWD Board of Directors regardless of the percentage of the water
subscribers, [the ponencia’s] pronouncement herein rests on firm ground.” Nothing in PD 198
pg. 1733
implies that the power to appoint the members of the LWD’s Board of Directors is a right that can
be acquired or vested thru time. On the contrary, and as I will discuss further, PD 198 designed
the appointing power to shift depending on the circumstances.
Constitutional Law; Equal Protection of the Laws; View that the equal protection clause
guarantees the legal equality of all persons before the law. The equality guaranteed, however, is
not a disembodied equality, and does not deny the State the power to recognize and act upon
factual differences between individuals and classes.—The equal protection clause guarantees the
legal equality of all persons before the law. The equality guaranteed, however, is not a disembodied
equality, and does not deny the State the power to recognize and act upon factual differences
between individuals and classes. Accordingly, the equal protection of the law is not violated by a
legislation based on reasonable classification. To be reasonable, the classification: (1) must rest on
substantial distinctions; (2) must be germane to the law’s purpose; (3) must not be limited to
existing conditions only; and (4) must equally apply to all members of the same class.
Local Water Districts; View that neither the Local Government Units (LGUs), which created the
Local Water District (LWD), nor the LGU official, to whom the appointing power resides, can
countermand the LWD should it decide to expand its services, regardless if the expansion dilutes
or increases the city’s or municipality’s waterworks connection below or above the seventy-five
percent (75%) threshold.—One of PD 198’s purposes is to extend reliable and economically viable
and sound water supply and wastewater disposal systems to meet the need of communities,
including those who re-
358

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ceive no piped water service whatsoever. To enable LWDs to expand its services, PD 198 allows
LWDs to Annex and De-Annex (and whenever necessary exclude) territories. To this end, LWDs
can enter into contracts, acquire and construct waterworks, and exercise the power of eminent
domain. To reiterate, LWDs are GOCCs that are independent from any political subdivision. All
powers, privileges, and duties of the LWD are exercised and performed by and through the
LWD’s board of directors, and not by any LGU official. Accordingly, neither the LGUs, which
created the LWD, nor the LGU official, to whom the appointing power resides, can countermand
the LWD should it decide to expand its services, regardless if the expansion dilutes or increases
the city’s or municipality’s waterworks connection below or above the 75% threshold. In fact, PD
198 expressly prohibits LGUs from “dissolving, altering or affecting” the LWDs they created.
Same; View that Section 3(b) also realizes that confining the appointing power to the Governor
loses its relevance where the Local Water District (LWD) operates almost entirely within a single
city or municipality. Thus, as an alternative, Section 3(b) lodges the appointing power with the
pg. 1734
Mayor of the City or Municipality where seventy-five percent (75%) or three-fourths (3/4) of the
LWDs water connections are located.—One substantial distinction between provinces, on one
hand, and cities (whether component, highly urbanized, or independent) and municipalities, on the
other, is the land areas they cover. Under the Local Government Code, a province must have a
contiguous territory of at least two thousand (2,000) square kilometers. On the other hand, a city
or a municipality must have a contiguous territory of at least one hundred (100), and fifty (50)
square kilometers, respectively. By giving the Governor the power to appoint, Section 3(b) entrusts
the appointing power to the highest local official who oversees the largest geography where the
LWD may expand its operations. However, Section 3(b) also realizes that confining the appointing
power to the Governor loses its relevance where the LWD operates almost entirely within a single
city or municipality. Thus, as an alternative, Section 3(b) lodges the appointing power with the
Mayor of the City or Municipality where 75% or 3/4 of the LWDs water connections are located.
Statutes; View that the Supreme Court (SC) must exercise every effort to har-
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monize seemingly conflicting laws. It is only when harmonization is impossible that the Court must
choose which law to uphold.—The main flaw in the petitioners’ argument and corollary, in the
ponencia’s conclusions, is the misconception that PD 198 grants the appointing power control
over LWDs and, therefore, violates the constitutional and statutory provisions on local autonomy.
This is simply not the case. All laws including Presidential Decrees issued by President Marcos
enjoy the presumption of constitutionality. Both the 1986 Freedom and the 1987 Constitutions
recognize the validity of PDs unless and until they are amended, repealed, and revoked. Hand in
hand with the presumption of validity, this Court must first attempt to harmonize Section 3(b) with
other laws on the same subject matter so as to form a complete, coherent, and intelligible system.
In other words, the Court must exercise every effort to harmonize seemingly conflicting laws. It is
only when harmonization is impossible that the Court must choose which law to uphold.
Appointments; Local Autonomy; View that the shift of the appointing power to the Governor does
not infringe on the autonomy that Cebu City enjoys as a highly urbanized city.—The shift of the
appointing power to the Governor does not infringe on the autonomy that Cebu City enjoys as a
highly urbanized city. Neither do I subscribe to the view that the power to appoint is a form of
indirect control over the appointee. In this jurisdiction, it is not a novel setup to grant the appointing
authority to a person who, after making the appointment, renounces complete control over the
appointee.
Local Water Districts; Local Government Units; View that while the Local Government Code
(LGC) mandates and empowers the Sangguniang Panlalawigan, Panlunsod and Bayan “to enact
pg. 1735
ordinances, approve resolutions, and appropriate funds” for “the establishment, operation,
maintenance, and repair of an efficient waterworks system,” the LGC explicitly states the Local
Government Units (LGUs) can only exercise such power “subject to existing laws.”—At any rate,
I find nothing irreconcilable between Section 3(b) and the Local Government Code. On the
contrary, a reading of the law shows that Congress created the Local Government Code with PD
198 in mind. While the Local Government Code mandates and empowers the Sangguniang
Panlalawigan, Panlunsod and Bayan “to enact ordinances, approve resolutions, and appropriate
funds” for “the establishment, operation, maintenance, and repair of an efficient
360

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waterworks system,” the Local Government Code explicitly states the LGUs can only exercise
such power “subject to existing laws.” Indisputably, one of these existing laws is PD 198.
Following the principle of harmonization of laws, the LWDs created under PD 198 — such as the
MCWD — are still governed by PD 198 as a special law. Accordingly, these LWDs remain
independent from the political subdivisions they serve, and their subsisting relations with the
proper appointing official, as provided for in PD 198, must be respected.
Same; Appointments; View that Section 10 of Presidential Decree (PD) No. 198 empowers the
majority of the incumbent directors to fill vacancies in the board should the appointing power fail
to make an appointment.—Citing Judge Learned Hand, the petitioners argue that while Courts
cannot engage in judicial legislation, they must fill the gaps in the law. The petitioners argue that
by making such declaration, the Court will not be creating a policy but will merely enforce the
“constitutional doctrine of majority rule.” I have serious difficulty in accepting this argument. First
and foremost, this Court cannot resort to judicial legislation even if it declares a law
unconstitutional. Second, the petitioners are mistaken in implying that legislative fiat will result if
this Court declares Section 3(b) void. Section 10 of PD 198 empowers the majority of the
incumbent directors to fill vacancies in the board should the appointing power fail to make an
appointment. Lastly, there is simply no constitutional provision or principle that provides for the
so-called doctrine of majority rule. In fact, modern legal principles (such as the social justice
principle) focus less on numerical superiority and, instead, ensures that the less privileged have
more in law.
Leonen, J., Concurring Opinion:
Local Water Districts; Appointments; View that the provincial governor has no power to appoint
members of Metropolitan Cebu Water District’s (MCWD’s) board.—The provincial governor has
no power to appoint members of Metropolitan Cebu Water District’s (MCWD’s) board. This case
involves the validity and proper interpretation of Section 3(b) of Presidential Decree No. 198 or
pg. 1736
the Provincial Water Utilities Act of 1973. Metropolitan Cebu Water District, having been created
in 1974 by virtue of this Decree, was subject to its provisions including that in dispute.
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Local Autonomy; View that Section 3(b) of Presidential Decree (PD) No. 198 is unconstitutional
because it violates the local autonomy of cities and municipalities covered by Metropolitan Cebu
Water District (MCWD). It interferes with the cities’ and municipalities’ power and duty to
conduct their own affairs, particularly with regard to the delivery of basic services.—Section 3(b)
of Presidential Decree No. 198 is unconstitutional because it violates the local autonomy of cities
and municipalities covered by MCWD. It interferes with the cities’ and municipalities’ power and
duty to conduct their own affairs, particularly with regard to the delivery of basic services. Local
governments were instituted as a means to allocate powers and responsibilities to units that are
most aware of and can best meet the needs of its constituents. Through this, the State fosters self-
reliant communities and furthers a government structure that is both responsive and accountable
to its citizens.
Same; View that local government autonomy had been impliedly adopted as State policy as early
as 1935 when our Constitution defined the kind of power that the President may exercise over
executive departments and local governments.—Local government autonomy had been impliedly
adopted as State policy as early as 1935 when our Constitution defined the kind of power that the
President may exercise over executive departments and local governments. Article VII, Section
11(1) of the 1935 Constitution provided that the President exercised control over executive
departments. However, the President’s power over local governments was limited to general
supervision: SEC. 11. (1) The President shall have control of all the executive departments,
bureaus, or offices, exercise general supervision over all local governments as may be provided by
law, and take care that the laws be faithfully executed.
Presidency; View that the Supreme Court (SC) explained the difference between “control” and
“supervision” in Drilon v. Lim, 235 SCRA 135 (1994).—“Control” has been consistently defined
in our jurisprudence as the power to “alter or modify or nullify or set aside what a subordinate
officer had done in the performance of his duties and to substitute the judgment of the former for
that of the latter.” On the other hand, “supervision” has been defined as “overseeing, or the power
or authority of an officer to see that subordinate officers perform their duties, and to take such
action as prescribed by law to compel his subordinates to perform their duties.” This court further
pg. 1737
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explained the difference between “control” and “supervision” in Drilon v. Lim, 235 SCRA 135
(1994): An officer in control lays down the rules in the doing of an act. If they are not followed,
he may, in his discretion, order the act undone or redone by his subordinate or he may even decide
to do it himself. Supervision does not cover such authority. The supervisor or superintendent
merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does
he have the discretion to modify or replace them. If the rules are not observed, he may order the
work done or redone but only to conform to the prescribed rules. He may not prescribe his own
manner for the doing of the act. He has no judgment on this matter except to see to it that the rules
are followed.
Local Autonomy; View that as a reflection of the increasing importance our State gives to local
autonomy, the present Constitution expanded the 1973 Constitution’s Article XI to reiterate the
guarantee that local governments shall enjoy local autonomy.—As a reflection of the increasing
importance our State gives to local autonomy, the present Constitution expanded the 1973
Constitution’s Article XI to reiterate the guarantee that local governments shall enjoy local
autonomy. Section 2 of Article X provides: SECTION 2. The territorial and political subdivisions
shall enjoy local autonomy. Aside from the power to create their own revenues, the present
Constitution gave local governments entitlement to shares in the national taxes and in proceeds of
the utilization of their wealth and resources. Local government units were also guaranteed sectoral
representation. Further, the present Constitution created autonomous regions for areas “sharing
common and distinctive historical and cultural heritage, economic and social structures[.]”
Same; View that the present Constitution, like the 1935 Constitution provides that the President’s
power over local government units (LGUs) is limited to general supervision.—The present
Constitution, like the 1935 Constitution provides that the President’s power over local government
units is limited to general supervision. Thus: SECTION 4. The President of the Philippines shall
exercise general supervision over local governments. Provinces with respect to component cities
and municipalities, and cities and municipalities with respect to component barangays shall ensure
that the acts of their component units are within the scope of their prescribed powers and functions.
In other words, the present Constitution reiterated that
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pg. 1738
not even the President may determine and dictate how local government units’ duties shall be
performed.
Same; View that the autonomy guaranteed by the Constitution to local government units (LGUs)
should apply not only against the national government but also against other LGUs.—The
autonomy guaranteed by the Constitution to local government units should apply not only against
the national government but also against other local government units. After all, Section 4 of
Article X of the Constitution does not limit only the President’s powers over local government
units but also the local government units’ powers over other local government units. It provides
that provinces and cities or municipalities shall only “ensure that the acts of their component units
are within the scope of their prescribed powers and functions.” This, essentially, refers only to the
power of supervision.
Same; View that the national government may only exercise supervisory powers over local
government units (LGUs). Similarly, LGUs may only exercise supervisory powers over their
component units.—The national government may only exercise supervisory powers over local
government units. Similarly, local government units may only exercise supervisory powers over
their component units. Provinces do not exercise control over their component cities and/or
municipalities and over highly urbanized cities. Cities or municipalities do not control their
barangays.
Same; Local Government Units; View that to attain the goals of giving local autonomy to local
governments, the smallest possible unit of local government should be allowed to determine and
provide the basic services needed by its constituents in accordance with the Local Government
Code (LGC).—Indeed, provinces are also given the power and the duty to provide its constituents
with inter-municipal waterworks and other similar facilities. However, this is not equivalent to a
grant of power to take control of duties necessarily imposed on cities or municipalities. Provisions
granting powers to the provincial government should not only be interpreted in a manner that
favors its own local autonomy, but also the local autonomy of local government units outside its
control. The spirit of the principle of local autonomy is upheld if local government units are
allowed to exercise the most degree of control possible over its policies and operations to the
exclusion of other local government units. Thus, to
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attain the goals of giving local autonomy to local governments, the smallest possible unit of local
government should be allowed to determine and provide the basic services needed by its
constituents in accordance with the Local Government Code. More than the provincial
pg. 1739
government, municipalities and cities are more familiar with the needs and are more capable of
determining the best policies that would serve their constituents.
Constitutional Law; View that the presumption of constitutionality accorded to laws passed by
Congress should not apply in the same degree to presidential decrees (PDs). PDs and laws passed
by the Congress do not belong in the same category.—The presumption of constitutionality
accorded to laws passed by Congress should not apply in the same degree to presidential decrees.
Presidential decrees and laws passed by the Congress do not belong in the same category. The
presumption of constitutionality enjoyed by laws is based on the principle of separation of powers
implied under our Constitution. The executive, legislative, and judicial branches each has distinct
powers and duties, which may not be encroached upon by the other. “The executive power [is]
vested in the President of the Philippines,” who must ensure the faithful execution of laws. Judicial
power is vested upon courts, whose duties, essentially, is to settle actual controversies and declare
acts, in proper cases, as void for being an exercise of grave abuse of discretion or for being
unconstitutional. Legislative powers are vested solely upon the Congress. It is the Congress,
composed of senators and representatives elected periodically by the people, that enact laws.
Same; Separation of Powers; View that the principle of separation of powers under our present
Constitution ensures that none of the branches are superior to another. The three (3) branches of
the government are considered coequal branches.—The principle [of separation of powers]
presupposes mutual respect by and between the executive, legislative and judicial departments of
the government and calls for them to be left alone to discharge their duties as they see fit. The
principle of separation of powers prevents government powers from being concentrated in one
branch of the government. It has been theorized that a combination of any of the government
powers into one person “would create a system with an inherent tendency towards tyrannical
actions[.]” Thus, the principle of separation of powers under our present Constitution ensures that
none of
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the branches are superior to another. The three branches of the government are considered coequal
branches. Our Constitution, however, also recognizes the need for coordination among the three
branches of the government. Hence, the three branches operate under a system of checks and
balances. Each government branch has a means of checking the workings of another branch.
Statutes; View that presidential decrees (PDs) and statutes promulgated by the Congress should
not be examined under the same lens; PDs should undergo a stricter review than statutes
promulgated by the Congress.—The premises for according in favor of statues a presumption of
constitutionality are absent in presidential decrees. Separation of powers, as well as the principle
pg. 1740
of checks and balances, were limited during the martial law. Indeed, presidential decrees are laws,
but they are laws that did not undergo the careful process of discussion, debates, approval and
disapproval by representatives of the people. They are not in reality the product of two government
branches in coordination and in accordance with the system of checks of balances. They are
essentially laws issued by one person. Hence, presidential decrees and statutes promulgated by the
Congress should not be examined under the same lens. The presumption of constitutionality
accorded to legislative acts by the Congress should not equally apply to presidential decrees. The
courts should consider the different circumstances under which presidential decrees were issued
whenever they examine their validity. Presidential decrees should undergo a stricter review than
statutes promulgated by the Congress.
Office of the City Attorney for petitioner Cebu City Mayor.
MCWD-Legal Department for petitioner MCWD and Board of Directors.
Benjamin R. Militar for petitioners Congressman Tomas R. Osmeña and Joel Mari S. Yu.
Provincial Legal Office for respondent Governor of the Province of Cebu.
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BERSAMIN, J.:
A law enacted prior to the 1987 Constitution, like a presidential decree, is presumed to be valid
and constitutional on the theory that it was carefully studied by the Legislative and Executive
Departments prior to its enactment, and determined to be in accord with the Fundamental Law.
However, the presumption of validity and constitutionality is overturned and the law should be
struck down once it becomes inconsistent with the present Constitution and the later laws.
Antecedents
pg. 1741
On May 25, 1973, President Ferdinand E. Marcos issued Presidential Decree No. 198 (Provincial
Water Utilities Act of 1973). By virtue of P.D. No. 198, Cebu City formed the Metro Cebu Water
District (MCWD) in 1974. Thereafter, the Cities of Mandaue, Lapu-Lapu and Talisay, and the
Municipalities of Liloan, Compostela, Consolacion, and Cordova turned over their waterworks
systems and services to the MCWD. Since then, the MCWD has distributed water and sold water
services to said cities and municipalities. From 1974 to 2002, the Cebu City Mayor appointed all
the members of the MCWD Board of Directors in accordance with Section 3(b) of P.D. No. 198,
to wit:
Section 3. Definitions.—As used in this Decree, the following words and terms shall have the
meanings herein set forth, unless a different meaning clearly appears from the context. The
definition of a word or term applies to any of its variants.
(a) Act.—This is the Provincial Water Utilities Act of 1973.
(b) Appointing authority.—The person empowered to appoint the members of the board of
Directors of a local water district, depending upon the geographic coverage and population make-
up of the particular district. In
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the event that more than seventy-five percent of the total active water service connections of
a local water district are within the boundary of any city or municipality, the appointing
authority shall be the mayor of that city or municipality, as the case may be; otherwise, the
appointing authority shall be the governor of the province within which the district is located.
If portions of more than one province are included within the boundary of the district, and the
appointing authority is to be the governors then the power to appoint shall rotate between the
governors involved with the initial appointments made by the governor in whose province the
greatest number of service connections exists. (Bold underscoring supplied for emphasis)
In July 2002, Cebu Provincial Governor Pablo L. Garcia wrote to the MCWD to assert his authority
and intention to appoint the members of the MCWD Board of Directors.1 He stated in his letter
that since 1996, the active water service connections in Cebu City had been below 75% of the total
active water service connection of the MCWD; that no other city or municipality under the MCWD
had reached the required percentage of 75%; and that, accordingly, he, as the Provincial Governor
pg. 1742
of Cebu, was the appointing authority for the members of the MCWD Board of Directors pursuant
to Section 3(b) of P.D. No. 198.
Later on, the MCWD commenced in the Regional Trial Court in Cebu City (RTC) its action for
declaratory relief seeking to declare Section 3(b) of P.D. No. 198 unconstitutional; or, should the
provision be declared valid, it should be interpreted to mean that the authority to appoint the
members of the MCWD Board of Directors belonged solely to the Cebu City Mayor.2
_______________
1 Rollo, p. 151.
2 Id.
368

Rama vs. Moises
The RTC (Branch 7) dismissed the action for declaratory relief without any finding and declaration
as to the proper appointing authority for the members of the MCWD Board of Directors should
none of the cities and municipalities reach 75% of the total water service connections in the areas
under the MCWD.3
In the meanwhile, the terms of two members of the MCWD Board of Directors ended, resulting in
two vacancies. To avoid a vacuum and in the exigency of the service, Provincial Governor
Gwendolyn F. Garcia and Cebu City Mayor Tomas R. Osmeña jointly appointed Atty. Adelino
Sitoy and Leo Pacaña to fill the vacancies.4 However, the position of Atty. Sitoy was deemed
vacated upon his election as the Municipal Mayor of Cordova, Cebu in the 2007 elections.
Consequently, Governor Garcia commenced an action for declaratory relief to seek the
interpretation of Section 3(b) of P.D. No. 198 on the proper appointing authority for the members
of the MCWD Board of Directors.5
It appears that on February 7, 2008, the Cebu Provincial Legal Office, upon being informed that
Mayor Osmeña would be appointing Joel Mari S. Yu to replace Atty. Sitoy as a member of the
MCWD Board of Directors, formally advised in writing Cynthia A. Barrit, the MCWD Board
Secretary, to defer the submission of the list of nominees to any appointing authority until the RTC
rendered its final ruling on the issue of the proper appointing authority.6 On February 22, 2008,
however, Mayor Osmeña appointed Yu as a member of the MCWD Board of Directors.7
Accordingly, on May 20, 2008, the RTC dismissed the action for declaratory relief on the ground
pg. 1743
_______________
3 Id.
4 Id.
5 Id., at p. 152.
6 Id., at pp. 99-100.
7 Id., at p. 96.
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that declaratory relief became improper once there was a breach or violation of the provision.8
On June 13, 2008, Governor Garcia filed a complaint to declare the nullity of the appointment of
Yu as a member of the MCWD Board of Directors (docketed as Civil Case No. CEB-34459),
alleging that the appointment by Mayor Osmeña was illegal; that under Section 3(b) of P.D. No.
198, it was she as the Provincial Governor of Cebu who was vested with the authority to appoint
members of the MCWD Board of Directors because the total active water service connections of
Cebu City and of the other cities and municipalities were below 75% of the total water service
connections in the area of the MCWD.9 She impleaded Mayor Osmeña, the MCWD, and Yu as
defendants.
In his answer, Mayor Osmeña contended that the authority to appoint the members of the MCWD
Board of Directors solely belonged to him; that since the creation of the MCWD in 1974, it was
the Cebu City Mayor who had been appointing the members of the MCWD Board of Directors;
that the Province of Cebu had not invested or participated in the creation of the MCWD; and that
Cebu City, being a highly urbanized city (HUC), was independent from the Province of Cebu
under the provisions on local autonomy of the 1987 Constitution.10
The RTC (Branch 18), to which the case was raffled, required the parties to submit their
memorandum.
In their joint memorandum, Osmeña and Yu posited that the Province of Cebu did not participate
in the organization of the MCWD; that the words and sentences of Section 3(b) of P.D. No. 198
should not be read and understood or interpreted literally; and that the case should be dismissed
pg. 1744
because: (1) Section 3(b) of P.D. No. 198 was unconstitutional for being arbitrary and
unreasonable; (2) Governor Garcia
_______________
8 Id., at p. 152.
9 Id., at pp. 85-95.
10 Id., at pp. 102-128.
370

Rama vs. Moises
had no authority to appoint any members of the MCWD Board of Directors; and (3) that the Mayor
of the city or municipality having the majority of water connections within the area under the
MCWD had the power to appoint the members of the MCWD Board of Directors.11
On November 16, 2010, the RTC rendered the assailed judgment declaring the appointment of Yu
as illegal and void,12 holding as follows:
The questioned provision, paragraph (b) of Section 3 of P.D. 198 is clear enough that it needs no
interpretation. It expressly states in unequivocal terms the appointing authority in the water
district’s board of directors — if more than seventy-five percent of the total active water service
connections of a local water district are within the boundary of any city or municipality, the
appointing authority shall be the mayor of the city or municipality, as the case may be; otherwise,
the appointing authority shall be the governor of the province within which the district is located.
It has not been belied by defendants that the active water service connections of Cebu City in the
Metropolitan Cebu Water District (MCWD), at 61.28%, have gone below the required 75%
required by law for the city mayor to have the authority to appoint members of the board of
directors of the water district. Lacking such percentage requisite, the appointing power is now
vested with the governor of the Province of Cebu. While it may be true that the governor had not
participated in organizing MCWD and neither did the Province of Cebu invest in establishing
waterworks in the component local governments, the law, however, does not impose any condition
or restriction in transferring the power to the governor to appoint members of the board of directors
when the percentage falls below 75%. Thus, there is no doubt that when any of the water district’s
participating city or
_______________
pg. 1745
11 Id., at pp. 164-188.
12 Id., at pp. 73-80.
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municipality could not obtain 75% of the active water service connections, the governor shall
appoint the members of the board of directors of the water district, whether it is a participant or
not, in its organization.
As to the constitutionality of the questioned provision, the Court finds that Sec. 3 of P.D. 198 does
not violate the Constitution or the Local Government Code. Vesting the authority in the governor
to appoint a member of the board of directors of a water district is not intruding into the affairs of
the highly urbanized cities and component cities which comprise the district, and neither is it a
threat to their autonomy. It does not interfere with their powers and functions and neither can it be
considered an exercise of the provincial government’s supervisory powers. At most, it is simply
giving the authority to appoint the head of the government unit (the governor) where all the
members of the water district are geographically located, and only when none of these cities and
municipalities has the required 75% of the active water service connections. Nevertheless, the
issue is not whether the governor took any part in organizing the water district or has contributed
to its formation, but that by law, she has been made the appointing authority even if she has no
participation or involvement in the cooperative effort of the members of the water district. This
may not be the most expedient and appropriate solution, but still, it is not illegal. As to why this is
so is a question only our lawmakers could answer.
All presumptions are indulged in favor of constitutionality, one who attacks a statute, alleging
constitutionality must prove its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional, that if any reasonable basis may be conceived which
supports the statute, it will be upheld and the challenger must negate all possible bases; that the
courts are not concerned with the wisdom, justice, policy or expediency of a statute, and that a
liberal interpretation of the constitution in favour of the constitutionality of legislation should be
adopted.
372
pg. 1746
Rama vs. Moises
Notably, among the admissions found in the Answer for defendants Yu and MCWD states: “x x x
with respect to the two (2) vacancies in the Board of MCWD and that joint appointment was made
by the plaintiff and defendant Mayor Osmeña to Atty. Adelino Sitoy and Mr. Eligio Pacaña.” The
Court surmises from this statement that as early as the previous appointments (of Mr. Pacaña and
Atty. Sitoy) defendants have already recognized the appointing authority of the governor for
members of the MCWD board of directors, considering Cebu City’s failure to reach the 75%
benchmark on active water service connections.
In sum, the Court has not been able to find any constitutional infirmity in the questioned provision
(Sec. 3) of Presidential Decree No. 198. The fundamental criterion is that all reasonable doubts
should be resolved in favor of the constitutionality of a statute. Every law has in its favor the
presumption of constitutionality. For a law to be nullified, there must be shown that there is a
clear and unequivocal breach of the Constitution. The ground for nullity must be clear and beyond
reasonable doubt. Those who seek to declare the law, or parts thereof unconstitutional, must
clearly establish the basis therefore. Otherwise, the arguments fall short.
Based on the grounds raised by defendants to challenge the constitutionality of Section 3 of P.D.
198, the Court finds that defendants have failed to overcome the presumption of constitutionality
of the law. As to whether the questioned section constitutes a wise legislation, considering the
issues being raised by petitioners, is for Congress to determine.
WHEREFORE, Judgment is hereby rendered in favour of plaintiff and against defendants, finding
the appointment of defendant Joel Mari S. Yu as member of the Metropolitan Cebu Water District
(MCWD) as illegal, null and void.13
_______________
13 Id., at pp. 78-80.
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Mayor Osmeña and Yu jointly moved for reconsideration,14 but the RTC denied their motion.15
pg. 1747
Issues
Hence, the petitioners have instituted this special civil action for certiorari,16 contending that:
I.
THE RESPONDENT COURT ABDICATED ITS CONSTITUTIONAL DUTY IN

REFUSING TO DELVE ON THE ISSUE OF CONSTITUTIONALITY.
II.
THE JUDGMENT IS VOID ON ITS FACE BECAUSE OF CLEAR CONSTITUTIONAL

VIOLATIONS APPARENT BY A MERE READING OF THE DECREE.
III.
THE JUDGMENT VIOLATES DUE PROCESS AND THE EQUAL PROTECTION

CLAUSE OF THE CONSTITUTION.17
Ruling of the Court
The petition for certiorari is granted.
1.
Preliminary Matter:
Yu’s expiration of term did
not render case moot and academic
We note that respondent Yu’s term as a member of the MCWD Board of Directors expired on
December 31, 2012.18
_______________
pg. 1748
14 Id., at pp. 189-221.
15 Id., at pp. 81-84.
16 Id., at pp. 3-72.
17 Id., at p. 22.
18 Id., at p. 96.
374

Rama vs. Moises
However, this fact does not justify the dismissal of the petition on the ground of its being rendered
moot and academic. The case should still be decided, despite the intervening developments that
could have rendered the case moot and academic, because public interest is involved, and because
the issue is capable of repetition yet evading review.19
For sure, the appointment by the proper official of the individuals to manage the system of water
distribution and service for the consumers residing in the concerned cities and municipalities
involves the interest of their populations and the general public affected by the services of the
MCWD as a public utility. Moreover, the question on the proper appointing authority for the
members of the MCWD Board of Directors should none of the cities and municipalities have at
least 75% of the water consumers will not be definitively resolved with finality if we dismiss the
petition on the ground of mootness. It is notable that the two cases for declaratory relief filed for
the purpose of determining the proper appointing authority were dismissed without any definitive
declaration or ultimate determination of the merits of the issue. The issue festers. Hence, the Court
needs to decide it now, not later.
2.
First Issue:
RTC explained its holding of the
assailed provision as valid and constitutional
but it thereby erred nonetheless
pg. 1749
The petitioners take the RTC to task for not explaining why it held Section 3(b) of P.D. No. 198
to be not violative of the constitutional provision on local autonomy and HUCs, and why it only
opined that the question of constitutionality of the provision should be left to Congress; that it did
not
_______________
19 David v. Macapagal-Arroyo, G.R. No. 171396, May 3, 2006, 489 SCRA 160, 214-215.
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determine whether the requisites for raising the constitutional issue had been met; that it did not
discuss the reasons for holding that the issue about Section 3(b) of P.D. No. 198 was a political
question; that no political question was involved because what was being inquired into was not the
wisdom of the provision but its validity; and that because it did not perform its constitutional duty
of reviewing the provision, its judgment was void.20
The petitioners are mistaken on the first issue. The records show that the RTC, which indisputably
had the power and the duty to determine and decide the issue of the constitutionality of Section
3(b) of P.D. No. 198,21 fully discharged its duty. In its assailed decision of November 16, 2010,
the RTC ruled as follows:
As to the constitutionality of the questioned provision, the Court finds that Sec. 3 of P.D. 198 does
not violate the Constitution or the Local Government Code. Vesting the authority in the governor
to appoint a member of the board of directors of a water district is not intruding into the affairs of
the highly urbanized cities and component cities which comprise the district, and neither is it a
threat to their autonomy. It does not interfere with their powers and functions and neither can it be
considered an exercise of the provincial government’s supervisory powers. At most, it is simply
giving the authority to appoint the head of the government unit (the governor) where all the
members of the water district are geographically located, and only when none of these cities and
municipalities has the required 75% of the active water service connections. Nevertheless, the
issue is not whether the governor took any part in organizing the water district or has contributed
to its formation, but that by law, she has been made the appointing authority even
_______________
20 Rollo, pp. 22-41.
pg. 1750
21 Mirasol v. Court of Appeals, G.R. No. 128448, February 1, 2001, 351 SCRA 44, 51-52; Ynot
v. Intermediate Appellate Court, No. L-74457, March 20, 1987, 148 SCRA 659, 665-666.
376

Rama vs. Moises
if she has no participation or involvement in the cooperative effort of the members of the water
district. This may not be the most expedient and appropriate solution, but still, it is not illegal. As
to why this is so is a question only our lawmakers could answer.
All presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging
constitutionality must prove its invalidity beyond a reasonable doubt; that a law may work
hardship does not render it unconstitutional; that if any reasonable basis may be conceived which
supports the statute, it will be upheld and the challenger must negate all possible bases, that the
courts are not concerned with the wisdom, justice, policy or expediency of a statute; and that a
liberal interpretation of the constitution in favor of the constitutionality of legislation should be
adopted.
xxxx
In sum, the Court has not been able to find any constitutional infirmity in the questioned provision
(Sec. 3) of Presidential Decree No. 198. The fundamental criterion is that all reasonable doubts
should be resolved in favor of the constitutionality of a statute. Every law has in its favor the
presumption of constitutionality. For a law to be nullified, there must be shown that there is a
clear and unequivocal breach of the Constitution. The ground for nullity must be clear and beyond
reasonable doubt. Those who seek to declare the law, or parts thereof, unconstitutional, must
clearly establish the basis therefore. Otherwise, the arguments fall short.22
Nonetheless, the petitioners rightly contend that the RTC improperly regarded the matter about
Section 3(b) of P.D. No. 198 as a political question; hence, not justiciable. It was not.
Political questions refer to “those questions which, under the Constitution, are to be decided by
the people in their sovereign capacity; or in regard to which full discretionary au-
pg. 1751
_______________
22 Rollo, pp. 79-80.
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thority has been delegated to the legislature or executive branch of the government.”23 They are
“neatly associated with the wisdom” of a particular act.24
The difference between the political and the justiciable questions has been noted in Sanidad v.
Commission on Elections,25 as follows:
x x x The implementing Presidential Decree Nos. 991, 1031, and 1033, which commonly purport
to have the force and effect of legislation are assailed as invalid, thus the issue of the validity of
said Decrees is plainly a justiciable one, within the competence of this Court to pass upon.
Section 2(2), Article X of the new Constitution provides: “All cases involving the constitutionality
of a treaty, executive agreement, or law, which shall be heard and decided by the Supreme Court
En Banc and no treaty, executive agreement, or law may be declared unconstitutional without the
concurrence of at least ten Members. . . .” The Supreme Court has the last word in the construction
not only of treaties and statutes, but also of the Constitution itself. The amending, like all other
powers organized in the Constitution, is in form a delegated and hence a limited power, so that the
Supreme Court is vested with that authority to determine whether that power has been discharged
within its limits. (Emphasis supplied)
The petitioners have averred the unconstitutionality or invalidity of Section 3(b) of P.D. No 198
based on the provision’s arbitrariness in denying substantive due process and equal protection to
the affected local government units (LGUs). Such issue, being justiciable, comes within the power
of judicial review. As such, the RTC skirted its duty of judicial re-
_______________
23 Estrada v. Desierto, G.R. Nos. 146710-15, March 2, 2001, 353 SCRA 452, 491.
24 Sanidad v. Commission on Elections, No. L-44640, October 12, 1976, 73 SCRA 333, 360.
25 Id.
pg. 1752
378

Rama vs. Moises
view by improperly relying on the political question doctrine. It should have instead adhered to
the pronouncement in Estrada v. Desierto,26 to wit:
To a great degree, the 1987 Constitution has narrowed the reach of the political question doctrine
when it expanded the power of judicial review of this court not only to settle actual controversies
involving rights which are legally demandable and enforceable but also to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of government. Heretofore, the judiciary has focused on the
“thou shalt not’s” of the Constitution directed against the exercise of its jurisdiction. With the new
provision, however, courts are given a greater prerogative to determine what it can do to prevent
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of government. Clearly, the new provision did not just grant the Court power of
doing nothing. x x x (Italics omitted)
3.
Second Issue:
Section 3(b) of P.D. 198 is already superseded
The petitioners argue that the MCWD became a water district by the pooling of the water utilities
belonging to several HUCs and municipalities; that the active water connections in the MCWD
have been distributed as follows: Cebu City: 61.28%; Mandaue City: 16%; Lapu-Lapu City: 6.8%;
Talisay City and the Municipalities of Liloan, Consolacion, Compostela, and Cordova: 16.92%;
that Section 3(b) of P.D. No. 198 was unconstitutional on its face for being unreasonable and
arbitrary because the determination of who would exercise the power to appoint the members of
the MCWD Board of
_______________
26 Supra note 23.
pg. 1753
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Directors was thereby made to depend on the shifting number of water users in the water district’s
component LGUs; that the provision on the authority of the Provincial Governor to appoint in
cases where the water connections of any of the water district’s cities or municipalities were below
75% was arbitrary for not distinguishing whether or not the province had contributed any
waterworks to the water district; that the provision did not consider whether a city or municipality
comprised the majority or more of the water consumers; that the provision was irrational as it gave
the Provincial Governor the power to appoint regardless of whether the province had participated
in the organization of the water district or not; that in a democracy, the principle that if power or
authority was conferred through determination of numerical figures then the numerical superiority
or the rule of the majority should apply; that the rule of the majority was being applied in electing
government leaders as well as in choosing the leaders in the private sector; that the provision
violated the rule of the majority; that at the time of the filing of this case, the majority of MCWD
water service connections were in Cebu City (61.28%); and that the appointing power should
necessarily remain in the City Mayor of Cebu City because the appointing power was based on the
number of water service connections.
The petitioners asseverate that the provision or any part of P.D. No. 198 did not state any reason
for departing from the rule of the majority; that the provision failed reasonableness as a standard
of substantive due process; that the appointing authority should be the mayor of the city or
municipality having the majority of the water connections; that if such majority could not be
attained, there must be a power sharing scheme among those having the largest number of water
connections conformably with the rule of the majority; that the temporary alternative was the
Board of Directors themselves, who, under Section 10 of P.D. No. 198, could appoint upon failure
of the appointing authority to do so; that the assailed provision was void on its face for violating
the consti-
380

Rama vs. Moises
tutional provision on local autonomy and independence of HUCs under Article X of the 1987
Constitution; that the provision unduly interfered with the internal affairs of Cebu City, and
diminished the autonomy of the LGUs; that the provision undermined the independence of HUCs;
that both the Office of the Government Corporate Counsel and the Office of the Solicitor General
have opined that because Cebu City was an HUC, the City Mayor of Cebu City should retain the
pg. 1754
right to appoint the members of the MCWD Board of Directors; that the chief executive of the
LGU having the majority of water consumers was in the best position to exercise the discretion of
choosing the most competent persons who could best serve the constituents; that because the
largest number of water consumers were in Cebu City, any intrusion on the City Mayor’s power
to appoint would violate its independence and autonomy; that the Province of Cebu could not
exercise powers that affected the constituents of HUCs; that providing water to constituents was
the sole responsibility of the concerned LGU; that the water utility of the LGU was a patrimonial
property that was not for public use; that as such, the operation, ownership and management of the
public utility should belong to the LGU; and that the operation of the water utilities involved the
private rights of the LGUs that could not be amended or altered by a statute.27
The Court opines that Section 3(b) of P.D. No. 198 should be partially struck down for being
repugnant to the local autonomy granted by the 1987 Constitution to LGUs, and for being
inconsistent with R.A. No. 7160 (1991 Local Government Code) and related laws on local
governments.
P.D. No. 198 — issued by President Marcos in the exercise of his legislative power during the
period of Martial Law proclaimed under the 1973 Constitution — relevantly provided:
_______________
27 Rollo, pp. 41-59.
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MALACAÑANG
Manila
PRESIDENTIAL DECREE No. 198 May 25, 1973
DECLARING A NATIONAL POLICY FAVORING LOCAL OPERATION AND CONTROL

OF WATER SYSTEMS; AUTHORIZING THE FORMATION OF LOCAL WATER
DISTRICTS AND PROVIDING FOR THE GOVERNMENT AND ADMINISTRATION OF
pg. 1755
SUCH DISTRICTS; CHARTERING A NATIONAL ADMINISTRATION TO FACILITATE
IMPROVEMENT OF LOCAL WATER UTILITIES; GRANTING SAID ADMINISTRATION
SUCH POWERS AS ARE NECESSARY TO OPTIMIZE PUBLIC SERVICE FROM WATER
UTILITY OPERATIONS, AND FOR OTHER PURPOSES.
WHEREAS, one of the prerequisites to the orderly and well-balanced growth of urban areas is an
effective system of local utilities, the absence of which is recognized as a deterrent to economic
growth, a hazard to public health and an irritant to the spirit and well-being of the citizenry;
WHEREAS, domestic water systems and sanitary sewers are two of the most basic and essential
elements of local utility system, which, with a few exceptions, do not exist in provincial areas in
the Philippines;
WHEREAS, existing domestic water utilities are not meeting the needs of the communities they
serve; water quality is unsatisfactory; pressure is inadequate; and reliability of service is poor; in
fact, many persons receive no piped water service whatsoever;
WHEREAS, conditions of service continue to worsen for two apparent reasons, namely: (1) that
key element of existing systems are deteriorating faster than they are being maintained or replaced,
and (2) that they are not being expanded at a rate sufficient to match population growth; and
WHEREAS, local water utilities should be locally-controlled and managed, as well as have support
on the
382

Rama vs. Moises
national level in the area of technical advisory services and financing;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of

the powers vested in me by the Constitution, as Commander-in-Chief of all the Armed Forces of
the Philippines, and pursuant to Proclamation No. 1081 dated September 21, 1972 and General
Order No. 1 dated September 22, 1972, as amended, do hereby decree, order and make as part of
the law of the land the following measure:
TITLE I
pg. 1756
PRELIMINARY PROVISIONS
Section 1. Title.—This Decree shall be known and referred to as the “Provincial Water Utilities
Act of 1973.”
Section 2. Declaration of Policy.—The creation, operation, maintenance and expansion of

reliable and economically viable and sound water supply and wastewater disposal system for
population centers of the Philippines is hereby declared to be an objective of national policy of
high priority. For purpose of achieving said objective, the formulation and operation of
independent, locally controlled public water districts is found and declared to be the most feasible
and favored institutional structure. To this end, it is hereby declared to be in the national interest
that said districts be formed and that local water supply and wastewater disposal systems be
operated by and through such districts to the greatest extent practicable. To encourage the
formulation of such local water districts and the transfer thereto to existing water supply and
wastewater disposal facilities, this Decree provides the general act the authority for the formation
thereof, on a local option basis. It is likewise declared appropriate, necessary and advisable that all
funding requirements for such local water systems, other than those provided by local revenues,
should be channeled through and administered by an institution on the
383
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Rama vs. Moises
national level, which institution shall be responsible for and have authority to promulgate and
enforce certain rules and regulations to achieve national goals and the objective of providing public
waterworks services to the greatest number at least cost, to effect system integration or joint
investments and operations whenever economically warranted and to assure the maintenance of
uniform standards, training of personnel and the adoption of sound operating and accounting
procedures.
(b) Appointing authority.—The person empowered to appoint the members of the Board of
up of the particular district. In the event that more than seventy-five percent of the total active
pg. 1757
water service connections of a local water district are within the boundary of any city or
municipality, the appointing authority shall be the mayor of that city or municipality, as the
case may be; otherwise, the appointing authority shall be the governor of the province within
which the district is located. If portions of more than one province are included within the
boundary of the district, and the appointing authority is to be the governors then the power to
appoint shall rotate between the governors involved with the initial appointments made by the
governor in whose province the greatest number of service connections exists. (Emphasis supplied)
xxxx
The enactment of P.D. No. 198 on May 25, 1973 was prior to the enactment on December 22,
1979 of Batas Pambansa Blg. 51 (An Act Providing for the Elective or Appointive Posi-
384

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tions in Various Local Governments and for Other Purposes) and antedated as well the effectivity
of the 1991 Local Government Code on January 1, 1992. At the time of the enactment of P.D. No.
198, Cebu City was still a component city of Cebu Province. Section 328 of B.P. Blg. 51
reclassified the cities of the Philippines based on well-defined criteria. Cebu City thus became an
HUC, which immediately meant that its inhabitants were ineligible to vote for the officials of Cebu
Province. In accordance with Section 12 of Article X of the 1987 Constitution, cities that are highly
urbanized, as determined by law, and component cities whose charters prohibit their voters from
voting for provincial elective officials, shall be independent of the province, but the voters of
component cities within a province, whose charters contain no such prohibition, shall not be
deprived of their right to vote for elective provincial officials. Later on, Cebu City, already an
HUC, was further effectively rendered independent from Cebu Province pursuant to Section 29 of
the 1991 Local Government Code, viz.:
Section 29. Provincial Relations with Component Cities and Municipalities.—The province,
through the governor, shall ensure that every component city and municipality within its territorial
jurisdiction acts within the scope of its prescribed powers and functions. Highly urbanized cities
and independent component cities
_______________
28 Sec. 3. Cities.—x x x x
pg. 1758
Until cities are reclassified into highly urbanized and component Cities in accordance with the
standards established in the Local Government Code as provided for in Article XI, Sec. 4(1) of the
Constitution, any city now existing with an annual regular income derived from
infrastructure and general funds of not less than forty million pesos (P40,000,000.00) at the
time of the approval of this Act shall be classified as a highly urbanized city. All other cities
shall be considered components of the provinces where they are geographically located.
xxxx
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shall be independent of the province. (Emphasis supplied)
Hence, all matters relating to its administration, powers and functions were exercised through its
local executives led by the City Mayor, subject to the President’s retained power of general
supervision over provinces, HUCs, and independent component cities pursuant to and in
accordance with Section 2529 of the 1991 Local Government Code, a law enacted for the purpose
of strengthening the autonomy of the LGUs in accordance with the 1987 Constitution.
Article X of the 1987 Constitution guarantees and promotes the administrative and fiscal autonomy
of the LGUs.30 The
_______________
29 Sec. 25. National Supervision over Local Government Units.—
(a) Consistent with the basic policy on local autonomy, the President shall exercise general
supervision over local government units to ensure that their acts are within the scope of their
prescribed powers and functions.
The President shall exercise supervisory authority directly over provinces, highly urbanized
cities, and independent component cities; through the province with respect to component cities
and municipalities; and through the city and municipality with respect to barangays.
xxxx
30 The pertinent provisions of Article X on this are:
pg. 1759
Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.
Sec. 3. The Congress shall enact a local government code which shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization with effective mechanisms of recall, initiative, and referendum, allocate
among the different local government units their powers, responsibilities, and resources, and
provide for the qualifications, election, appointment and removal, term, salaries, powers and
functions and duties of local officials, and all other matters relating to the organization and
operation of the local units.
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foregoing statutory enactments enunciate and implement the local autonomy provisions explicitly
recognized under the 1987 Constitution. To conform with the guarantees of the Constitution in
favor of the autonomy of the LGUs, therefore, it becomes the duty of the Court to declare and
pronounce Section 3(b) of P.D. No. 198 as already partially unconstitutional. We note that this
pronouncement is also advocated by the National Government, as shown in the comment of the
Solicitor General.31
In Navarro v. Ermita,32 the Court has pointed out that the central policy considerations in the
creation of local government units are economic viability, efficient administration, and capability
to deliver basic services to their constituents. These considerations must be given importance as
they ensure the success of local autonomy. It is accepted that the LGUs, more than the National
Government itself, know the needs of their constituents, and cater to such needs based on the
particular circumstances of their localities. Where a particular law or statute affecting the LGUs
infringes on their autonomy, and on their rights and powers to efficiently and
_______________
Sec. 5. Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees,
and charges shall accrue exclusively to the local governments.
Sec. 6. Local government units shall have a just share, as determined by law, in the
national taxes which shall be automatically released to them.
Sec. 7. Local governments shall be entitled to an equitable share in the proceeds of the
utilization and development of the national wealth within their respective areas, in the
pg. 1760
manner provided by law, including sharing the same with the inhabitants by way of direct
benefits.
31 Rollo, pp. 272-304.
32 G.R. No. 180050, April 12, 2011, 648 SCRA 400, 436.
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effectively address the needs of their constituents, we should lean in favor of their autonomy, their
rights and their powers.
Water and its efficient supply are among the primary concerns of every LGU. Issues that tend to
reduce or diminish the authority of the boards of directors to manage the water districts are imbued
with public interest. Bearing this in mind, and recalling that the MCWD had been established from
the erstwhile Osmeña Waterworks Systems (OWS) without any investment or contribution of
funds and material from the Province of Cebu towards the creation and maintenance of OWS and
the MCWD,33 and considering that it had always been the City Mayor of the City of Cebu who
appointed the members of the MCWD Board of Directors regardless of the percentage of the water
subscribers, our pronouncement herein rests on firm ground.
4.
Third Issue:
Section 3(b) of P.D. 198 is unconstitutional
for violating the Due Process Clause and the
Equal Protection Clause
The petitioners assert that Section 3(b) of P.D. No. 198, being unfair, violated substantive due
process; that Governor Garcia could not determine the water needs of each of the LGUs within the
MCWD; that the provision allowed inequality of treatment of the cities and municipalities in
relation to the province, and thus violated the Equal Protection Clause of the Constitution; that the
provision unduly deprived Cebu City of the power to determine the membership in the MCWD
Board of Directors despite Cebu City having the majority of the water service connections; that
the Province of Cebu was given unreasonable and unwarranted benefit despite Cebu City being
independent from the Province of Cebu; that Sec-
pg. 1761
_______________
33 Rollo, pp. 109-110.
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tion 3(b) of P.D. No. 198 did not distinguish whether the province contributed any resource to the
water district or not; that under the provision, if two or more provinces contributed to the water
district, they were not subject to the 75% requirement to avail of the power of appointment,
indicating that the power to appoint devolved only in the provinces; that this violated the guarantee
of equality of treatment in favor of the participating LGUs; that the provision created a privileged
class (the provinces) without any justification in reason; and that “the classification is not germane
to the purpose of the law and is not based on substantial distinctions that make real differences.”34
Substantive due process “requires that the law itself, not merely the procedures by which the law
would be enforced, is fair, reasonable, and just.”35 It demands the intrinsic validity of the law in
interfering with the rights of the person to life, liberty or property. In short, to be determined is
whether the law has a valid governmental objective, like the interest of the public as against that
of a particular class.36
On the other hand, the principle of equal protection enshrined in the Constitution does not require
the territorial uniformity of laws. According to Tiu v. Court of Appeals,37 the fundamental right
of equal protection of the law is not absolute, but subject to reasonable classification.
Classification, to be valid, must: (1) rest on substantial distinctions; (2) be germane to the purpose
of the law; (3) not be limited to existing conditions only; and (4) apply equally to all members of
the same class.
_______________
34 Id., at pp. 59-64.
35 Corona v. United Harbor Pilots Association, G.R. No. 111953, December 12, 1997, 283 SCRA
31, 39-40.
36 See Abakada Guro Partylist v. Ermita, G.R. No. 168056, September 1, 2005, 469 SCRA 1.
37 G.R. No. 127410, January 20, 1999, 301 SCRA 278, 289.
pg. 1762
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We opine that although Section 3(b) of P.D. No. 198 provided for substantial distinction and was
germane to the purpose of P.D. No. 198 when it was enacted in 1973, the intervening
reclassification of the City of Cebu into an HUC and the subsequent enactment of the 1991 Local
Government Code rendered the continued application of Section 3(b) in disregard of the
reclassification unreasonable and unfair. Clearly, the assailed provision no longer provided for
substantial distinction because, firstly, it ignored that the MCWD was built without the
participation of the provincial government; secondly, it failed to consider that the MCWD existed
to serve the community that represents the needs of the majority of the active water service
connections; and thirdly, the main objective of the decree was to improve the water service while
keeping up with the needs of the growing population.
The Whereas Clauses of P.D. No. 198 essentially state the raison d’être of its enactment, to wit:
WHEREAS, existing domestic water utilities are not meeting the needs of the communities
they serve; water quality is unsatisfactory; pressure is inadequate; and reliability of service is poor;
in fact, many persons receive no piped water service whatsoever;
WHEREAS, conditions of service continue to worsen for two apparent reasons, namely: (1) that
key element of existing systems are deteriorating faster than they are being maintained or replaced,
and (2) that they are not being expanded at a rate sufficient to match population growth; and
WHEREAS, local water utilities should be locally-controlled and managed, as well as have
support on the national level in the area of technical advisory services and financing. (Bold
emphasis supplied)
Verily, the decree was enacted to provide adequate, quality and reliable water and wastewater
services to meet the needs of the local communities and their growing populations. The
390
pg. 1763
Rama vs. Moises
needs of the communities served were paramount. Hence, we deem it to be inconsistent with the
true objectives of the decree to still leave to the provincial governor the appointing authority if the
provincial governor had administrative supervision only over municipalities and component cities
accounting for 16.92% of the active water service connection in the MCWD. In comparison, the
City of Cebu had 61.28%38 of the active service water connections; Mandaue, another HUC, 16%;
and Lapu-Lapu City, another HUC, 6.8%. There is no denying that the MCWD has been primarily
serving the needs of Cebu City. Although it is impermissible to inquire into why the decree set
75% as the marker for determining the proper appointing authority, the provision has meanwhile
become unfair for ignoring the needs and circumstances of Cebu City as the LGU accounting for
the majority of the active water service connections, and whose constituency stood to be the most
affected by the decisions made by the MCWD’s Board of Directors. Indeed, the classification has
truly ceased to be germane or related to the main objective for the enactment of P.D. No. 198 in
1973.
Grave abuse of discretion means either that the judicial or quasi-judicial power was exercised in
an arbitrary or despotic manner by reason of passion or personal hostility, or that the respondent
judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty enjoined
or to act in contemplation of law, such as when such judge, tribunal or board exercising judicial or
quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to lack of
jurisdiction. Mere abuse of discretion is not enough to warrant the issuance of the writ. The abuse
of discretion must be grave.39
_______________
38 Rollo, pp. 97-101.
39 See Delos Santos v. Metropolitan Bank and Trust Company, G.R. No. 153852, October 24,
2012, 684 SCRA 410, 422-423.
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Under the foregoing circumstances, therefore, the RTC gravely abused its discretion in upholding
Section 3(b) of P.D. No. 198. It thereby utterly disregarded the clear policies favoring local
autonomy enshrined in the 1987 Constitution and effected by the 1991 Local Government Code
pg. 1764
and related subsequent statutory enactments, and for being violative of the Due Process Clause
and the Equal Protection Clause of the 1987 Constitution.
WHEREFORE, we GRANT the petition for certiorari; ANNUL and SET ASIDE the decision
rendered in Civil Case No. CEB-34459 on November 16, 2010 by the Regional Trial Court, Branch
18, in Cebu City; and DECLARE as UNCONSTITUTIONAL Section 3(b) of Presidential
Decree No. 198 to the extent that it applies to highly urbanized cities like the City of Cebu and to
component cities with charters expressly providing for their voters not to be eligible to vote for the
officials of the provinces to which they belong for being in violation of the express policy of the
1987 Constitution on local autonomy, the 1991 Local Government Code and subsequent statutory
enactments, and for being also in violation of the Due Process Clause and the Equal Protection
Clause.
ACCORDINGLY, the Mayor of the City of Cebu is declared to be the appointing authority of the
Members of the Board of Directors of the Metro Cebu Water District.
SO ORDERED.
Sereno (CJ.), Velasco, Jr., Peralta, Perez, Mendoza, Reyes and Perlas-Bernabe, JJ., concur.
Carpio, J., I join the dissent of J. Brion.
Leonardo-De Castro, J., I join the dissent of Justice Brion in my Separate Dissenting Opinion.
Brion, J., See Dissenting Opinion.
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Del Castillo, J., I join the dissent of J. Brion.
Leonen, J., See Separate Concurring Opinion.
Jardeleza, J., I join the dissent of J. Brion.
Caguioa, J., On Leave.
DISSENTING OPINION
pg. 1765
LEONARDO-DE CASTRO, J.:
I concur fully with the Dissenting Opinion of Justice Arturo D. Brion. For brevity, I submit with
due respect, the serious flaws in the conclusions reached by the majority opinion.
Firstly, I disagree with the majority opinion that Section 3(b) of Presidential Decree No. 198
should be partially struck down for being repugnant to the local autonomy granted by the 1987
Constitution to local government units (LGUs), and for being inconsistent with Republic Act No.
7160 (1991 Local Government Code) and related laws on local government.
There is no impairment of the local autonomy provided by the 1987 Constitution and its
implementing legislations for the following reasons:
The decision to form a local water district is lodged upon the legislative body of any city,
municipality or province itself, which can do so by enacting a resolution to form or join a district.
An LGU is free to decide to join or not a local water district based on its own assessment of whether
or not it will redound to its benefit to be covered by Presidential Decree No. 198, which provides,
among others, for a package of powers, rights and obligations. Specifically, the local water
district is assured of support on the national level in the area of technical advisory services and
financing (Fifth Preambulatory Clause of Presidential Decree No. 198), guarantee of exclusive
franchise for domestic water service within the district (Sec-
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tion 46), and exemption from income taxes under Section 45 which provides:
SEC. 45. Exemption from Taxes.—A district shall (1) be exempt from paying income taxes, and
(2) shall be exempt from the payment of (a) all National Government, local government and
municipal taxes and fees, including any franchise, filing, recordation, license or permit fees or
taxes and fees, charges or costs involved in any court of administrative proceeding in which it may
be a party and (b) all duties or imposts on imported machinery, equipment and materials required
for its operations.
pg. 1766
Moreover, the LGU joining a local water district does not surrender any of its powers under the
Constitution or the Local Government Code to another LGU vested with the power to appoint the
members of the Board of the local water district since Presidential Decree No. 198 expressly
provides that a district once formed shall not be under the jurisdiction of any political
subdivision.
The local water district has a separate juridical personality which is independent of the LGUs. It
is governed by its Board of Directors pursuant to Section 17 which reads:
Sec. 17. Performance of District Powers.—All powers, privileges, and duties of the district shall
be exercised and performed by and through the board: Provided, however, That any executive,
administrative or ministerial power shall be delegated and redelegated by the board to officers or
agents designated for such purpose by the board.
Hence, the power to appoint the members of the Board of Directors of the local water districts,
which is vested upon the LGU determined in accordance with the formula or rule prescribed by
Presidential Decree No. 198, does not impair the autonomy of the other LGUs included in the
District.
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If a province can join a local water district and be subjected to the provisions of Presidential Decree
No. 198, there is no cogent reason why the change of status of a component city of a province,
which would later on become a highly urbanized city, should affect its powers, rights and
obligations under Presidential Decree No. 198.
A province which enjoys local autonomy may join a local water district and be subject to the
provisions of Presidential Decree No. 198 pursuant to Section 6 of said Decree, which is quoted
as follows:
SEC. 6. Formation of District.—This Act is the source of authorization and power to form and
maintain a district. Once formed, a district is subject to the provisions of this Act and not under
the jurisdiction of any political subdivision. To form a district, the legislative body of any city,
municipality or province shall enact a resolution containing the following:
(a) The name of the local water district, which shall include the name of the city, municipality,
or province, or region thereof, served by said system, followed by the words “Water District.”
pg. 1767
(b) A description of the boundary of the district. In the case of a city or municipality, such
boundary may include all lands within the city or municipality. A district may include one or more
municipalities, cities or provinces, or portions thereof.
(c) A statement of intent to transfer any and all waterworks and/or sewerage facilities owned by
such city, municipality or province to such district pursuant to a contract authorized by Section
31(b) of this Title.
(d) A statement identifying the purpose for which the district is formed, which shall include those
purposes outlined in Section 5 above.
(e) The names of the initial directors of the district with the date of expiration of term of office
for each.
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(f) A statement that the district may only be dissolved on the grounds and under the conditions
set forth in Section 44 of this Title.
(g) A statement acknowledging the powers, rights and obligations as set forth in Section 36 of
this Title.
Nothing in the resolution of formation shall state or infer that the local legislative body has the
power to dissolve, alter or affect the district beyond that specifically provided for in this Act.
If two or more cities, municipalities or provinces, or any combination thereof, desire to form a
single district, a similar resolution shall be adopted in each city, municipality and province.
Secondly, the majority opinion indulged itself in constitutionally objectionable judicial legislation
by effectively amending Section 3(b) of Presidential Decree No. 198, which provides:
SEC. 3. Definitions.—x x x.
xxxx
pg. 1768
up of the particular district. In the event that more than seventy-five percent of the total acting
municipality, the appointing authority shall be the mayor of that city or municipality, as the case
may be; otherwise, the appointing authority shall be the governor of the province within which the
district is located. If portions of more than one province are included within the boundary of the
district, and the appointing authority is to be the governors then the power to appoint shall rotate
between the governors involved with the initial appointments made by the governor in whose
province the greatest number of service connections exists.
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The majority opinion criticized the 75% threshold prescribed by Section 3(b) of Presidential
Decree No. 198 to vest an LGU with the power to appoint the members of the Board of Directors
of the local water district, and in doing so, framed it within the supposed violation of the due
process clause and equal protection of the laws.
We only need to underscore the legislative process that each LGU should go through to become a
part of a local water district and to be subject to the provisions of Presidential Decree No. 198. It
is a conscious and deliberate decision reached by an LGU through its legislative body or
Sanggunian which should follow the procedure prescribed by law for the enactment of a resolution.
It is for the said legislative body to evaluate the advantages and disadvantages, if any, of joining a
local water district. Furthermore, for this Court to say that there was a denial of substantive due
process of law and equal protection of the law, it must first closely scrutinize not only one provision
of Presidential Decree No. 198 but all of its other provisions, particularly those pertaining to the
power, rights and obligations of the component LGUs of the local water district. This the majority
opinion failed to do. Moreover, it partially struck down Section 3(b) of Presidential Decree No.
198 taking into account only the particular situation of the City of Cebu.
The majority opinion substituted its own rule or formula with that provided by Presidential Decree
No. 198 to identify the appointing authority of the Board of Directors of the local water district by
reducing the threshold of 75% of total active water service connections within the boundary of any
city or municipality to a majority of said water connections, meaning, at least 51%, based on a
supposed majority rule which has no basis in law.
pg. 1769
While the majority opinion claimed to have partially struck down Section 3(b) of Presidential
Decree No. 198, it had practically nullified too the last sentence of said Section 3(b), which did
not apply the threshold of 51% or majority rule in
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case more than one province are included in the local water district. In this case, Section 3(b) of
Presidential Decree No. 198 provides that the appointing authority among the provinces is
determined by rotation.
Assuming that Section 3(b) of Presidential Decree No. 198, as argued in the majority opinion, is
no longer in keeping with the recent developments in the status, socio-economic and political
conditions of the LGUs comprising a local water district, the remedy is legislative amendment. It
is not for this Court to prescribe another rule or formula to determine who shall have the authority
to appoint the Board of Directors of a local water district. I join Justice Brion who, with clarity,
extensively expounded on this issue to support the view which was early on tritely expressed in
the appealed decision of the Regional Trial Court, particularly, that the question or issue on the
situs of the appointing authority is for our lawmakers to address.
In view of the foregoing, I join Justice Brion in voting to DENY the petition.
DISSENTING OPINION
BRION, J.:
Background
The constitutional challenge before us springs from a single issue: who — between the Governor
of the Province of Cebu and the Mayor of Cebu City — has the power to appoint the Board of
Directors of the Metro Cebu Water District (MCWD).
pg. 1770
The MCWD is a Local Water District (LWD) created under Presidential Decree No. 198, otherwise
known as the Provincial Water Utilities Act of 1973. The MCWD services the cities of Cebu,
Mandaue, Lapu-Lapu, and Talisay, and the municipalities of Liloan, Compostela, Consolacion,
and Cordova — all geographically located within the Province of Cebu.
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Since MCWD began its operations in 1975,1 the Mayor of Cebu City has always appointed the
members of the MCWD Board of Directors.
On July 11, 2002, Cebu Provincial Governor Pablo L. Garcia (Gov. Pablo) wrote MCWD a letter
asserting his authority under Section 3(b) of P.D. 198 (hereafter referred to as “Section 3[b]”) to
appoint the members of the MCWD Board:2
xxxx
up of the particular district. In the event that more than seventy-five percent of the total active
municipality, the appointing authority shall be the mayor of that city or municipality, as the case
may be; otherwise, the appointing authority shall be the governor of the province within which
the district is located. x x x (emphasis and omissions supplied)
In his letter, Gov. Pablo pointed out that since 1996, MCWD’s active waterworks connections in
Cebu City had gone below Sec. 3(b)’s 75% threshold, and that no other city or municipality under
MCWD had reached the same threshold.3 Hence, he (Gov. Pablo) and not the Mayor of Cebu City
has the power to appoint members to the MCWD board.
_______________
1 Executive Summary of COA 2014 Report on MCWD.

<http://www.coa.gov.ph/phocadownloadpap/userupload/annual_audit_report/GOCCs/2014/COA
pg. 1771
-Regional-Office/Region-VII/MetropolitanCebuWD-R7_ES2014.pdf>, last accessed December
6, 2016.
2 Rollo, p. 151.
3 Page 368 of the Ponencia.
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Meanwhile, the terms of office of two MCWD Directors expired.
To avoid a vacuum in the MCWD Board, Gov. Pablo and Cebu Mayor Tomas Osmeña jointly
appointed the new Directors, one of whom was Atty. Adelino Sitoy (Atty. Sitoy).4
In May 2007, Atty. Sitoy was elected as Mayor of Cordova, Cebu, and, thus, had to vacate his post
in the MCWD Board.
Prompted by the vacancy left by Atty. Sitoy, then Cebu Provincial Governor, Gwendolyn F. Garcia
(Gov. Gwendolyn), filed before the Regional Trial Court (RTC) an Action for Declaratory Relief5
against Mayor Osmeña and the MCWD to seek an interpretation of Section 3(b).6
Notwithstanding the pendency of the Action for Declaratory Relief, Mayor Osmeña appointed
respondent Joel Mari S. Yu (Yu) as Atty. Sitoy’s replacement.7 Viewing Yu’s appointment as a
breach on Mayor Osmeña’s part, the RTC dismissed the Action for Declaratory Relief on May 20,
2008.8
On June 13, 2009, Gov. Gwendolyn filed before the RTC a complaint to annul Yu’s appointment
and impleaded Yu, the MCWD, the MCWD Board of Directors, and the City Mayor (petitioners)
as defendants.
In their defense, the petitioners claimed that Section 3(b) violates the due process clause and the
equal protection clause, and that Section 3(b) had been superseded by Constitutional provisions on
local autonomy and the Local Government Code of 1991 (LGC). They also argue that the Governor
has no right to appoint the MCWD’s board of directors be-
_______________
4 Id.
pg. 1772
5 Id. This was the Second Action for Declaratory Relief filed. The first was filed by MCWD after
it received Governor Pablo Garcia’s letter. The case was dismissed without pronouncement on
Section 3(b)’s constitutionality.
6 Rollo, p. 152.
7 On February 22, 2008; id., at p. 96.
8 Id., at p. 153.
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cause: (i) the Province neither invested nor participated in creating the MCWD; (ii) Cebu City is
a Highly Urbanized City and, therefore, independent from the Province of Cebu; and (iii) the
majority of MCWD’s active water connections are located in Cebu City.
In its November 16, 2000 decision, the RTC annulled Yu’s appointment, and observed that Section
3(b) lodges the appointing power to the Provincial Governor in the event that 75% of the LWD’s
waterworks do not fall within any city or municipality.9 Since Cebu City accounts for only 61.28%
of MCWD’s total waterworks, the Governor of Cebu must appoint the members of the MCWD
Board.
The RTC likewise ruled that Section 3(b) does not violate the Constitution and the LGC because
the Governor’s appointing power does not amount to an intrusion into the affairs, nor threaten the
autonomy, of Cebu City.10 The RTC also ruled that whether the Governor contributed to
MCWD’s creation is immaterial because Section 3(b) does not impose such condition.11
Dissatisfied, the petitioners moved for reconsideration,12 but the RTC denied their motion on
March 30, 2011.13
Thus, on June 23, 2011, the petitioners filed directly to this Court a petition for certiorari
claiming that the RTC resorted to impermissible shortcuts in dealing with the constitutional issues
raised.14 They insist that Section 3(b) is unconstitutional and antiquated, and pray for the Court to
issue an Order “declaring” that the appointing power should be lodged with the Mayor of the city
or municipality: (i) which
_______________
9 Id., at p. 74.
pg. 1773
10 Id., at p. 79.
11 Id.
12 Id., at p. 189.
13 Id., at p. 6.
14 Id., at p. 26.
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participated in the formation of the water district15 and (ii) where a majority of the LWD’s water
service connections lie.16
The Ponencia and my Dissent
The ponencia granted the petition, and ruled that the RTC committed grave abuse of discretion.
According to the ponencia, while the RTC “discharged” its “duty to determine and [to] decide
the issue of constitutionality,”17 the RTC nevertheless “skirt[ed] the duty of judicial review”18
by improperly treating Section 3(b) as a “political question.”19
As for the petitioners’ constitutional challenge, the ponencia ruled that Section 3(b) had been
superseded by the LGC and the constitutional provisions on local autonomy which granted highly
urbanized cities, such as Cebu City, independence from the province.20
The ponencia likewise ruled that Section 3(b) violates the due process and the equal protection
clause.
According to the ponencia, while Section 3(b) was initially valid when enacted in 1973, the
intervening reclassification of Cebu City into a highly urbanized city, and the subsequent
enactment of the 1991 Local Government Code rendered Section 3(b)’s continued application
unreasonable and unfair.21
pg. 1774
The ponencia noted that 61.28% of MCWD’s water connections are located in Cebu City, whereas
the province’s component cities and municipalities only account for 16.92% of
_______________
15 Id., at p. 65.
16 Id.
18 Id., at pp. 377-378.
19 Id., at p. 378.
20 Id., at p. 380.
21 Id., at p. 389.
402

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MCWD’s water connections.22 Thus, to continuously uphold the validity of Section 3(b) — which
grants the Governor the appointing power — is no longer germane to PD 198’s objective, which
is to provide adequate, quality, and reliable water services to local communities and their growing
populations.23
I disagree with these positions; hence, this dissent.
In my opinion, the present petition must be dismissed because: first, the petitioners disregarded
the hierarchy of courts; second, the RTC did not commit grave abuse of discretion; and third,
Section 3(b) does not violate the Constitution, nor was it superseded by the Local Government
Code, or by Cebu City’s reclassification as a highly urbanized city.
I. The Petitioners disregarded

the Hierarchy of Courts.
pg. 1775
Section 5(2)(a), Article VIII of the 1987 Constitution states:
SECTION 5. The Supreme Court shall have the following powers:
xxxx
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules
of Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is
in question. (omissions and emphases supplied)
xxxx
_______________
22 Id.
23 Id.
403
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Unquestionably, this Court has the original jurisdiction to issue writs of certiorari against final
judgments resolving the constitutionality or validity of laws, including presidential decrees.
However, this Court’s certiorari jurisdiction is not exclusive.
No less than the Constitution states that this Court’s power to revise, reverse, or modify final
judgments on certiorari is subject to what “the law or the Rules of Court may provide.”
pg. 1776
Section 9 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of
1980, as amended by Republic Act No. 7902,24 also grants the Court of Appeals (CA) original
jurisdiction to issue writs of certiorari whether or not in aid of its appellate jurisdiction:
Section 9. Jurisdiction.—The Court of Appeals shall exercise:
1. Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and
quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction.
xxxx
Thus, this Court’s original jurisdiction to issue writs of certiorari (as well as prohibition,
mandamus, quo warranto, habeas corpus, and injunction) is not exclusive. Its jurisdiction is
concurrent with that of the CA and, in proper cases, with the RTCs.25
_______________
24 An Act Expanding the Jurisdiction of the Court of Appeals, Amending for the Purpose Section
Nine of Batas Pambansa Blg. 129, as amended, Known as the Judiciary Reorganization Act of
1980.
25 Cruz v. Gingoyon, G.R. No. 170404, September 28, 2011, 658 SCRA 254, citing Ouano v.
PGTT International Investment Corp., 434 Phil. 28, 34; 384 SCRA 589, 593 (2002).
404

Rama vs. Moises
However, such concurrence of jurisdiction does not give a party the absolute freedom to file his
petition with the court of his choice.26 Parties must observe the principle of judicial hierarchy of
courts before they can seek relief directly from this Court.
The principle of judicial hierarchy ensures that this Court remains a court of last resort.
Unwarranted demands upon this Court’s attention must be prevented so that the Court may devote
pg. 1777
its time to more pressing matters within its exclusive jurisdiction.27 Thus, petitions for the
issuance of extraordinary writs against first level (inferior) courts should be filed with the RTC,
and those against the RTC with the CA.28
In this case, since the petitioners insist on filing a Petition for Certiorari, they should have done
so before the CA. Hence, I vote to dismiss the petition.
Neither do I find anything special or important in this case to invoke the Court’s original certiorari
jurisdiction. Neither the petitioner nor the respondent allege that MCWD’s operations has been, or
will be paralyzed, simply because the appointing power has shifted from one government official
to another.
At any rate, what is clear to me is that MCWD’s operations are not hampered by the existence of
the constitutional issues presented before us, and that the CA is more than capable of resolving the
present petition.
II. The RTC did not commit grave

abuse of discretion.
In any case, I am of the view that the RTC did not commit grave abuse in the exercise of its
discretion.
_______________
26 Id.
27 Id.
28 Id.
405
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Courts have the power to determine the constitutionality of statutes. This power, aptly named as
the power of judicial review, is incidentally also a duty and a limitation.
pg. 1778
It is a duty because it proceeds from the Court’s expanded power to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.29
It is also a limitation because Courts can only exercise the power of judicial review if: (1) the case
presents an actual case or justiciable controversy; (2) the constitutional question is ripe for
adjudication; (3) the person challenging the act is a proper party; and (4) the issue of
constitutionality was raised at the earliest opportunity and is the very litis mota of the case.30
Lower courts share this duty and limitation.31 Consequently, a refusal on the lower court’s part to
engage in judi-
_______________
29 SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower
xxxx
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
30 Funa v. Villar, G.R. No. 192791, April 24, 2012, 670 SCRA 579, 593. According to Black’s
Law Dictionary (Ninth edition), lis motais “means [a] dispute that has begun and later forms the
basis of a lawsuit.”
31 This Court’s power to “review, revise, reverse, modify or affirm on appeal or certiorari” final
judgments and orders of lower courts in cases involving the constitutionality of statutes means that
the resolution of such cases may be made in the first instance by the lower courts. See Ynot v.
Intermediate Appellate Court, G.R. No. 74457, March 20, 1987, 148 SCRA 659, 665.
406

Rama vs. Moises
cial review, whenever warranted, is a virtual refusal to perform a duty32 correctible by a petition
for certiorari.
Certiorari, however, is not synonymous with appeal.
pg. 1779
Appeal is the proper remedy where the error is one of fact and/or of law.33 Certiorari, on the other
hand, is a remedy designed to correct of errors of jurisdiction and not errors of judgment.34
As a rule, erroneous conclusions are correctible by way appeal and not by certiorari. Thus,
certiorari cannot be used to review a decision’s wisdom or legal soundness.35
However, mere abuse of discretion still does not merit the issuance of a writ of certiorari. The
petitioner must amply demonstrate grave abuse of discretion since the jurisdiction of the court,
no less, will be affected.36 Jurisprudence37 has defined grave abuse of discretion in this wise:
Grave abuse of discretion is defined as capricious or whimsical exercise of judgment as is

equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount
to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to
_______________
32 Grave abuse of discretion is defined as capricious or whimsical exercise of judgment as is

equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount
to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at
all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner
by reason of passion and hostility. Ganaden v. Court of Appeals, G.R. Nos. 170500 and 170510-
11, June 1, 2011, 650 SCRA 117, 123.
33 Vios v. Pantangco, Jr., G.R. No. 163103, February 6, 2009, 578 SCRA 129.
34 Id.
35 Id.
36 People v. Nazareno, G.R. No. 168982, August 5, 2009, 595 SCRA 438, 452-453.
37 Supra note 31.
407
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Rama vs. Moises
act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reason of passion and hostility.
pg. 1780
Thus, to determine whether the RTC committed grave abuse of discretion, the Court must go
beyond the present petition, and determine whether the RTC resolved the constitutional issues
framed by the parties before it.
In other words, we should determine how the petitioners attacked Section 3(b)’s constitutionality
before the RTC, and from this prism, determine if the RTC’s resolution of the constitutional
questions, or the lack thereof, consists of grave abuse of discretion.
The petitioners’ arguments

before the RTC
The petitioners argued before the RTC that Section 3(b) is unconstitutional for violating
substantive due process and the equal protection clause.
The petitioners’ substantive due process argument is based on two points:
First, the power to appoint the MCWD Board is Cebu City’s proprietary function because most
of MCWD’s waterworks originated from the Osmeña Waterworks System (OWS) — a water
district organized and owned by the City of Cebu.38
_______________
38 The petitioners argued in the court below that [MCWD] is a government corporation, whose
existence emanates from the patrimony of local governments, particularly Cebu City’s Osmeña
Waterworks, which maintains and services the majority of water consumers within the district.
They are paid only through an annual in lieu shares with restrictions; thus the exercise of the
authority of appointment to the governing body of MCWD is not a political power but a proprietary
right. Rollo, p. 122.
408

Rama vs. Moises
Thus, they argue that Section 3(b) violates substantive due process because it allows the Province
of Cebu — an LGU which did not participate in MCWD’s creation, and whose component cities
and municipalities have a minority of MCWD’s water connections — to deprive Cebu City of its
proprietary right; and
pg. 1781
Second, Section 3(b)’s 75% threshold is arbitrary.39
To stress their point, the petitioners asked the RTC why PD 198 set the threshold at 75%, and not
“80%, 85%, 90%,” “30% or 40%.”40 They blame the Section 3(b)’s numerical sloppiness on the
martial law days, when anything signed by the President became law.41
As for their equal protection argument, the petitioners claim that Cebu City is a highly urbanized
city and is therefore, a coequal of the Province of Cebu. Thus, the Province of Cebu has no right
to interfere with, or exercise its power of supervision over Cebu City insofar as the MCWD is
concerned.42
The RTC’s ruling on the

Constitutional Issues.
A reading of the RTC’s eight-page decision43 shows that the presiding judge had considered all
of the parties’ arguments, and limited the issues into three:
a) Who has the authority to appoint the members of the Board of Directors of the [MCWD] under
[PD 198];
b) The constitutionality of Section 3(b) of PD 198; and
_______________
39 Id., at p. 184.
40 Id.
41 Id.
42 Id., at p. 121.
43 Id., at pp. 73-80.
409
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Rama vs. Moises
pg. 1782
c) Whether or not the Province of Cebu is a participant in the operation, management and
organization of MCWD.44
As I discussed at the beginning of this dissent, the RTC resolved the first issue.
As for the second and third issues, the presiding judge wrote:
As to the constitutionality of the questioned provision, the Court finds that Section 3, of PD 198
does not violate the Constitution or the Local Government Code. Vesting the authority in the
governor to appoint a member of the board of directors of a water district is not intruding
into the affairs of the Highly Urbanized Cities and component cities which comprise the district
and neither is it a threat to their autonomy. It does not interfere with their powers and functions
and neither can it be considered an exercise of the provincial government’s supervisory
powers. At most it is simply giving the authority to appoint to the head of the government unit
(the governor) where all the members of the water district are geographically located, and only
when none of these cities and municipalities has the required 75% of the active water connections.
Nevertheless, the issue is not whether the governor took part in organizing the water district
or has contributed to its formation, but that by law, she has been made the appointing authority
even if she has no participation or involvement in the cooperative effort of the members of the
water district. This may not be the most expedient and appropriate solution, but still, it is not
illegal. As to why this is so is a question only our lawmakers could answer. (emphasis supplied)
_______________
44 Id., at p. 74.
410

Rama vs. Moises
While the presiding judge had devoted only one paragraph to address the second and third issues,
he emphasized three observations: first, Section 3(b) is not an intrusion into Cebu City’s
autonomy; second, the issue is not whether the governor participated in organizing the water
district, but whether the law granted him the power to appoint the LWD’s board of directors; and
third, granting the power appoint to the governor may not be the most appropriate solution but it
is not illegal.
I find that the above observations satisfactorily addressed the petitioners’ constitutional challenge.
In fact, no less than the petitioners themselves admitted in their December 30, 2010 motion for
pg. 1783
reconsideration before the RTC that they (petitioners) “fully [appreciate] the extensive effort made
by the Court in arriving at its conclusions for its decision.”45
If there is any flaw in the RTC’s decision at all, it would be the lack of a more detailed discussion.
Despite this flaw, however, I disagree with the ponencia’s conclusion that the RTC gravely abused
its discretion because it improperly relied on the political question doctrine to skirt the duty of
judicial review.46
To my mind, albeit not exhaustively, the RTC exercised its power of judicial review and,
therefore, did not commit grave abuse of discretion.
The November 16, 2010 decision does not patently show that the RTC arbitrarily, capriciously,
or whimsically withheld the power of judicial review. On the contrary, as the ponencia itself noted,
“the RTC, which indisputably had the power and the duty to determine and decide the issue of
con-
_______________
45 Id., at p. 189.
46 As such, the political question doctrine was improperly relied upon by the RTC to skirt the
duty of judicial review. Pages 377-378 of the Ponencia.
411
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Rama vs. Moises
stitutionality of Section 3(b) of P.D. 198, discharged its duty.”47
Admittedly, the presiding judge’s writing style which did not address the constitutional issues
point-by-point may have resulted in a poorly written draft. Still, the draft’s poor quality does not
amount to grave abuse of discretion in the absence of arbitrariness or personal hostility on the part
of the trial judge. This Court must not allow litigants to directly resort to certiorari petitions simply
because they think the presiding judge lacked the skill to close out all arguments presented before
the trial court.
In any case, I find that the petitioners not only made the mistake of filing their petition for
certiorari with the wrong court, they also made the mistake of filing with this Court a wrong
petition.
pg. 1784
Notably, appeals from the RTC, in the exercise of its original jurisdiction, where only questions
of law are raised or are involved, are filed directly with this Court via a Petition for Review on
Certiorari under Rule 45 of the Rules of Court.48
Thus, had petitioners simply stuck with the constitutional issues instead of filing a baseless petition
for certiorari, they could have appealed directly to the Court on pure questions of law. This, in my
view, is the petitioners’ more plain, speedy, and adequate remedy.
III. Section 3(b) is Neither

Unconstitutional Nor Antiquated.
Procedural niceties aside, I still vote to dismiss the petition on the merits.
A close analysis of the petitioners’ due process position shows that they do not have the requisite
standing to ques-
_______________
47 Id., at p. 375.
48 Section 2(c), Rule 41 of the Rules of Court.
412

Rama vs. Moises
tion Section 3(b)’s validity based on the due process clause. Neither do I agree with the ponencia
that Section 3(b) is unconstitutional for violating the equal protection clause, or that it has become
antiquated with the advent of the Local Government Code.
Petitioners have no
Locus Standi.
pg. 1785
Section 1, Article III of the 1987 Constitution states that “no person shall be deprived of life,
liberty or property without due process of law.”
Due process consists of two broad aspects: the procedural and the substantive.49
Procedural due process refers to the procedures that the government must follow before it deprives
a person of life, liberty, or property.50 Procedural due process concerns itself with the established
process the government must adhere to before it intrudes into the private sphere.51 Succinctly,
procedural due process is the person’s “right to be heard.”
If due process were confined solely to its procedural aspects, the government can resort to arbitrary
action provided it follows the proper formalities.52 Substantive due process completes the
protection by inquiring whether the government has sufficient justification to deprive a person of
life, liberty, or property.53
_______________
49 Santiago, Miriam, Constitutional Law, Volume 2, Bill of Rights, p. 227, 2002 ed.
50 Lopez v. Director of Lands, 47 Phil. 23, 32 (1924).
51 White Light Corporation v. The City of Manila, G.R. No. 122846, January 20, 2009, 576 SCRA
416.
52 Id., at p. 435.
53 Id.; see City of Manila v. Laguio, Jr., G.R. No. 118127, April 12, 2005, 455 SCRA 308, citing
Chemerinsky, Erwin, Constitutional Law Principles and Policies, p. 523, 2nd ed. (2002).
413
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Whether in its procedural or substantive aspect, the due process clause is mainly concerned with
governmental policies that deprive a person’s life, liberty, and property.54
Incidentally, one of the requisites of judicial review is that the person who challenges a statute’s
constitutionality must have locus standi.
The rationale for the requirement of locus standi is by no means trifle. Not only does it assure the
vigorous adversarial presentation of the case; more importantly, it must suffice to warrant the
pg. 1786
Judiciary’s overruling the determination of a coordinate, democratically elected organ of
government.55
To have locus standi, one must show that he has been or is about to be denied some right or
privilege to which he is lawfully entitled or that he is about to be subjected to some burdens or
penalties by reason of the statute or the act complained of.56
In other words, locus standi or legal standing has been defined as a personal and substantial interest
in a case such that the party has sustained or will sustain direct injury as a result of the
governmental act that is being challenged.57
The acceptable degree of standing, however, varies between private suits, on one hand, and public
suits, on the other.
In public suits, the plaintiff who asserts a “public right” in assailing an allegedly illegal official
action, does so as a representative of the general public. He may be a person who is affected no
differently from any other person. He could be
_______________
54 Supra note 49.
55 Galicto v. Aquino III, G.R. No. 193978, February 28, 2012, 667 SCRA 150, 172.
56 Anak Mindanao Party-List Group v. The Executive Secretary, G.R. No. 166052, August 29,
2007, 531 SCRA 583, citing Agan, Jr. v. Philippine International Air Terminals Co., Inc., 450
Phil. 744; 420 SCRA 575 (2004).

Inc., 460 Phil. 830, 893; 415 SCRA 44, 134 (2003).
414

Rama vs. Moises
suing as a “stranger,” or in the category of a “citizen,” or “taxpayer.”58
I wish to emphasize, however, that insofar as the due process challenge is concerned, the
petitioners are not suing on behalf of their constituents. Instead, the City of Cebu questions Section
3(b)’s arbitrariness from a private standpoint.
pg. 1787
To repeat, the petitioner Cebu City claims that the operation of LWDs, such as the MCWD, is a
patrimonial property of the local government unit it serves.59
In support of this view, the City points out that MCWD’s assets originated from the Osmeña
Waterworks System (OWS) — a waterworks system previously operated and maintained by the
City of Cebu. They argue that since the Province of Cebu never invested in the OWS,60 or in the
MCWD, the Governor has no right to appoint the members of the MCWD Board.
I disagree with this view as the City of Cebu has no proprietary right over MCWD’s waterworks.
The History of the City of Cebu,

PD 198 and the MCWD
To determine whether the petitioners’ argument has merit, we must briefly trace the history of the
City of Cebu, PD 198, and the MCWD.
In the early part of the 20th century, the Municipality of Cebu’s water supply was provided and
maintained by the Osmeña Waterworks System (OWS).61
_______________
58 Lawyers Against Monopoly and Poverty (LAMP) v. Secretary of Budget and Management,
G.R. No. 164987, April 24, 2012, 670 SCRA 373, 384, citing David v. Macapagal-Arroyo, G.R.
Nos. 171396, 171409, 171485, 171483, 171400, 171489, and 171424, May 3, 2006, 489 SCRA
160.
59 Rollo, p. 54.
60 Id., at p. 11.
61 Id., at p. 73.
415
VOL. 812, DECEMBER 6, 2016 415

Rama vs. Moises
pg. 1788
In 1934,62 Commonwealth Act No. 58 transformed the municipality of Cebu into a city. In 1964,
the City’s Revised Charter63 placed the exclusive ownership, control, direction and supervision
of the OWS to the City of Cebu.64
Acknowledging the lack of water utilities and the poor water quality in provincial areas,65
President Ferdinand Marcos issued PD 198 on May 25, 1973.
PD 198 seeks to provide quality, adequately pressured and reliable water service by encouraging
LGUs to form local water districts, and to transfer thereto existing water supply and wastewater
disposal facilities on a local option basis.66
_______________
62 <https://www.cebucity.gov.ph/index.php/home-new/cebu-city-charter>, last accessed

December 6, 2016.
63 Republic Act No. 3857.
64 Id., Section 31(30). To provide for the establishment and maintenance and regulate the use
of public drains, sewers, latrines, and cesspools; to regulate the construction and use of private
sewers, drains, cesspools, water closets and privies; to provide for the establishment and
maintenance of waterworks, for the purpose of supplying water to the inhabitants of the city, and
for the purification of the source of water supply and places through which the same passes, and
to regulate the consumption and use of the water; to fix and provide for the collection of rents
therefore, and to regulate the construction, repair, and use of hydrants, pumps, cisterns and
reservoirs. Any and all waterworks systems, including the Osmeña Waterworks System, provided
for or undertaken by the city government shall exclusively belong to it, such that the city shall
have the exclusive control, direction and supervision over the same, and all laws and executive
orders and circulars issued by the Office of the President making reference to the ownership,
possession, control and operation of waterworks and sewers shall not be applicable to the City of
Cebu.
65 PD No. 198 “whereas” clauses of the law explain the need to establish local water districts.
66 Section 2, Title I, Presidential Decree No. 198.
416

Rama vs. Moises
pg. 1789
In turn, the National Government promises LGUs support in the areas of technical advisory,
service, and financing.67
To create LWDs, PD 198 authorized LGUs to form water districts by enacting Resolutions for the
purpose, and by filing copy/ies of the resolution/s to the Local Water Utilities Administration
(LWUA) — an office attached to the office of the president.68
Once formed, the districts shall become government-owned and -controlled corporations
(GOCC)69 and will NO longer be under the jurisdiction of any political subdivision.70
Under these terms, the City of Cebu, through the then mayor Engr. Eulogio Borres, approved on
May 9, 1974 Resolution No. 873 creating the MCWD.71 Thereafter, the City of Cebu transferred
all of OWS’ assets and facilities (approximately worth P25.4 million Pesos)72 to MCWD.73
_______________
67 WHEREAS, local water utilities should be locally-controlled and managed, as well as have
support on the national level in the area of technical advisory services and financing; Presidential
Decree No. 198.
68 Section 49, PD No. 198, as amended by Section 21, PD No. 768.
69 The PD originally reads: “For purposes of this Act, a district shall be considered a quasi-public
corporation x x x.” However, in the 1991 case of Davao City Water District v. CSC, the Supreme
Court ruled that LWUs are government-owned and -controlled corporations.
70 Section 6, PD No. 198.
71 Executive Summary of COA 2014 Report on MCWD

<http://www.coa.gov.ph/phocadownloadpap/userupload/annual_audit_report/GOCCs/2014/COA
-RegionalOffice/Region-VII/MetropolitanCebuWD-R7_ES2014.pdf>, last accessed December 6,
2016. <https://www.cebucity.gov.ph/index.php/home-new/cebu-city-charter>, last accessed
December 6, 2016.
72 Id.
73 Rollo, p. 129.
417
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pg. 1790
Soon after, the City Councils of Mandaue and Lapu-Lapu, and the municipal governments of
Compostela, Consolacion, and Cordova, all located within the Province of Cebu, approved
concurring resolutions turning over their respective waterworks to MCWD.74
Section 3(b) does not

deprive the City of Cebu
of any proprietary right.
Based on the above facts, I see no merit in Cebu City’s claim that it retains proprietary rights over
MCWD’s waterworks. The MCWD is a separate and distinct entity from the LGUs it serves,
including the City of Cebu.
Neither can the City of Cebu claim that it retains ownership, or that it has a better right, over
MCWD’s waterworks than any other LGU. That the City of Cebu had transferred all of OWS’
waterworks to the MCWD, to my mind, is beyond question.
Without any property right over MCWD’s waterworks, the City of Cebu cannot claim that Section
3(b) operates to deprive it of any property right without due process of law. Accordingly, the City
of Cebu lacks the requisite standing to question Section 3(b)’s constitutionality under the due
process clause.75
_______________
74 Id., at pp. 11 and 134-141.
75 Locus standi or legal standing has been defined as a personal and substantial interest in a
case such that the party has sustained or will sustain direct injury as a result of the governmental
act that is being challenged. The gist of the question on 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. This requirement of standing relates to the constitutional mandate that
this Court settle only actual cases or controversies. Supra note 55.
418

Rama vs. Moises
pg. 1791
In these lights, I cannot but disagree with the ponencia’s conclusion that since “it had always been
the City Mayor of the City of Cebu who had appointed the members of the MCWD Board of
Directors regardless of the percentage of the water subscribers, [the ponencia’s] pronouncement
herein rests on firm ground.”76
Nothing in PD 198 implies that the power to appoint the members of the LWD’s Board of Directors
is a right that can be acquired or vested thru time. On the contrary, and as I will discuss further,
PD 198 designed the appointing power to shift depending on the circumstances.
Section 3(b) does not violate the

equal protection clause.
The equal protection clause guarantees the legal equality of all persons before the law.77 The
equality guaranteed, however, is not a disembodied equality, and does not deny the State the power
to recognize and act upon factual differences between individuals and classes.78
Accordingly, the equal protection of the law is not violated by a legislation based on reasonable
classification. To be reasonable, the classification: (1) must rest on substantial distinctions; (2)
must be germane to the law’s purpose; (3) must not be limited to existing conditions only; and (4)
must equally apply to all members of the same class.79
The City of Cebu claims that Section 3(b) violates the equal protection clause because it gives the
province the unreason-
_______________
76 See p. 387, Ponencia.
77 Bernas, Joaquin, The 1987 Constitution of the Republic of the Philippines, A Commentary, p.
139, 2009 ed., citing II Schwartz, The Right of the Person, pp. 487-478 (1968).
78 Id.
79 People v. Cayat, 68 Phil. 12, 83, 90 (1939).
419
VOL. 812, DECEMBER 6, 2016 419
pg. 1792
Rama vs. Moises
able and unwarranted benefit of appointing the MCWD’s Board of Directors.
The ponencia agreed with the petitioners, and ruled that while the substantial distinctions espoused
by Section 3(b) were germane to PD 198’s purpose at the time of its enactment, the City of Cebu’s
intervening reclassification into a Highly Urbanized City and the subsequent enactment of the
Local Government Code rendered Section 3(b)’s continued application unreasonable.80
Hence, the ponencia opines that Section 3(b) is invalid because it: (i) ignores the province’s lack
of participation in creating the MCWD; (ii) fails to consider the needs of the majority; (iii) runs
counter to PD 198’s objective to improve the water service connection while keeping up with the
needs of the growing population.81
I again disagree with this position. To my mind, the ponencia missed out on one of PD 198’s main
purposes.
PD 198’s purpose is to expand

the LWD’s services without
being hampered by any LGU.
One of PD 198’s purposes is to extend reliable and economically viable and sound water supply
and wastewater disposal systems82 to meet the need of communities, including those who receive
no piped water service whatsoever.83
_______________
81 Id.
82 See Section 2, Title I, PD No. 198.
83 WHEREAS, existing domestic water utilities are not meeting the needs of the communities
they serve; water quality is unsatisfactory; pressure is inadequate; and reliability of service is poor;
in fact, many persons receive no piped water service whatsoever.
420
pg. 1793
Rama vs. Moises
To enable LWDs to expand its services, PD 198 allows LWDs to Annex and De-Annex (and
whenever necessary exclude) territories.84 To this end, LWDs can enter into contracts,85 acquire
and construct waterworks,86 and exercise the power of eminent domain.87
To reiterate, LWDs are GOCCs that are independent from any political subdivision. All powers,
privileges, and duties of the LWD are exercised and performed by and through the LWD’s board
of directors,88 and not by any LGU official.
Accordingly, neither the LGUs, which created the LWD, nor the LGU official, to whom the
appointing power resides, can countermand the LWD should it decide to expand its services,
regardless if the expansion dilutes or increases the city’s or municipality’s waterworks connection
below or above the 75% threshold. In fact, PD 198 expressly prohibits LGUs from “dissolving,
altering or affecting” the LWDs they created.89
PD 198’s purpose in this aspect is not difficult to appreciate. By ensuring their independence,
LWDs are freed from the political strings of the LGUs that created them, thus enabling LWDs to
expand and serve the country’s increasing populace.
_______________
84 By filing the appropriate resolutions to, and after hearing conducted by, the LWUA; see
Sections 42 and 43 of the PD No. 198, as amended by PD No. 768.
85 Section 31 of PD No. 198.
86 Id., Section 26.
87 Id., Section 25, as amended by Section 4, PD No. 1479.
88 Id., Section 17.
89 Id., Section 6 states that “Nothing in the resolution of formation shall state or infer that the
local legislative body has the power to dissolve, alter or affect the district beyond that specifically
provided for in this Act.”
421
VOL. 812, DECEMBER 6, 2016 421
pg. 1794
Rama vs. Moises
Section 3(b) contains a

Reasonable classification.
With PD 198’s purpose in mind, I find that Section 3(b) contains a reasonable classification.
One substantial distinction between provinces, on one hand, and cities (whether component, highly
urbanized, or independent) and municipalities, on the other, is the land areas they cover.
Under the Local Government Code, a province must have a contiguous territory of at least two
thousand (2,000) square kilometers.90 On the other hand, a city or a municipality must have a
contiguous territory of at least one hundred (100), and fifty (50) square kilometers, respectively.91
By giving the Governor the power to appoint, Section 3(b) entrusts the appointing power to the
highest local official who oversees the largest geography where the LWD may expand its
operations.
However, Section 3(b) also realizes that confining the appointing power to the Governor loses its
relevance where the LWD operates almost entirely within a single city or municipality. Thus, as
an alternative, Section 3(b) lodges the appointing power with the Mayor of the City or Municipality
where 75% or 3/4 of the LWDs water connections are located.
Neither was the 75% threshold created to favor Governors, as specific class, over Mayors; nor is
it limited to conditions existing at the time PD 198 was enacted, or at the time an LWD is created.
The phrase “In the event that more than seventy-five percent of the total active water service
connections of a local water district are within the boundary of any city or munici-
_______________
90 Section 461 of the Local Government Code.
91 Id., Sections 450 and 442, respectively.
422

Rama vs. Moises
pg. 1795
pality” signifies that the appointing power may shift at any time depending on the circumstances.
To illustrate this dynamic, while the province of Cebu now enjoys the appointing power, a future
increase in MCWD’s water connections within Cebu City may re-shift the appointing power to the
Mayor.
Finally, do I not see anything wrong in applying the 75% threshold to all cities, regardless of their
respective status as a component, independent component or highly urbanized.
Ironically, what would consist of discrimination is to treat highly urbanized and independent
component cities differently from component cities on the supposed reason that the former enjoys
autonomy over its territory. The authority to appoint, as I will discuss below, does not equate to
control over the other LGUs serviced by an LWD.
Section 3(b) is not superseded

by the Local Government Code.
The main flaw in the petitioners’ argument and corollary, in the ponencia’s conclusions, is the
misconception that PD 198 grants the appointing power control over LWDs and, therefore, violates
the constitutional and statutory provisions on local autonomy.
This is simply not the case.
All laws including Presidential Decrees issued by President Marcos enjoy the presumption of
constitutionality. Both the 1986 Freedom92 and the 198793 Constitutions recognize the
_______________
92 Section 1, Article IV of the Freedom Constitution states that “All existing laws, decrees,
executive orders, proclamations, letters of instruction, implementing rules and regulations, and
other executive issuances not inconsistent with this Proclamation shall remain operative until
amended, modified, or repealed by the President or the regular legislative body to be established
under a New Constitution.”
423
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pg. 1796
validity of PDs unless and until they are amended, repealed, and revoked.
Hand in hand with the presumption of validity, this Court must first attempt to harmonize Section
3(b) with other laws on the same subject matter so as to form a complete, coherent, and intelligible
system.94 In other words, the Court must exercise every effort to harmonize seemingly conflicting
laws. It is only when harmonization is impossible that the Court must choose which law to uphold.
As I discussed above, the appointing power has NO control over the LWD. Since the appointing
power has no control over the LWD, Section 3(b) does not create a link between the LGU where
the appointing power sits, and the LGUs served by the LWD.
As applied to this case, reposing the appointing authority on the Governor of Cebu does not grant
the provincial government control or supervision over Cebu City or over the other LGUs where
the LWD operates. In the same way, the Mayor of Cebu — during the period he/she exercised the
appointing power never exercised control or supervision over the other LGUs served by MCWD,
i.e., Mandaue City, Lapu-Lapu City, Talisay City, and the municipalities of Liloan, Compostela,
Consolacion and Cordova.
In short, the shift of the appointing power to the Governor does not infringe on the autonomy that
Cebu City enjoys as a highly urbanized city.
_______________
93 Section 3, Article XVIII of the 1987 Constitution states that “All existing laws, decrees,
executive orders, proclamations, letters of instructions, and other executive issuances not
inconsistent with this Constitution shall remain operative until amended, repealed, or revoked.”
94 Dreamwork Construction, Inc. v. Janiola, G.R. No. 184861, June 30, 2009, 591 SCRA 466,
citing Agpalo, R.E., Statutory Construction, pp. 269-270 (4th ed., 1998).
424

Rama vs. Moises
Neither do I subscribe to the view that the power to appoint is a form of indirect control over the
appointee.
In this jurisdiction, it is not a novel setup to grant the appointing authority to a person who, after
making the appointment, renounces complete control over the appointee.
pg. 1797
For instance, while the President has the power to appoint the commissioners of the Constitutional
Commissions,95 judges,96 and even the members of this Court,97 the President does not exercise
any degree of control over the appointee. While the appointing power may enjoy his appointee’s
loyalty, such circumstance does not reduce the latter’s independence; loyalty and lack of
independence may amount to an ethically and legally objectionable situation.
In these lights, I cannot but disagree with the ponencia’s conclusion that Section 3(b) was
superseded by the constitutional provisions on local autonomy, as implemented by the Local
Government Code.98
At any rate, I find nothing irreconcilable between Section 3(b) and the Local Government Code.
On the contrary, a reading of the law shows that Congress created the Local Government Code
with PD 198 in mind.
While the Local Government Code mandates and empowers the Sangguniang Panlalawigan,99
Panlunsod100 and Ba-
_______________
95 Section B, 1(2); C, 1(2); D, 1(2), Article IX, Constitution.
96 Section 9, Article VIII, Constitution.
97 Id.
99 Section 468. Powers, Duties, Functions and Compensation.—(a) The sangguniang

panlalawigan, as the legislative body of the province, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the province and its inhabitants x x x and shall:
xxxx
(4) Approve ordinances which shall ensure the efficient and effective delivery of basic
services and facilities as
425
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Rama vs. Moises
pg. 1798
yan101 “to enact ordinances, approve resolutions, and appropriate funds” for “the establishment,
operation, maintenance,
_______________
provided for under Section 17 of this Code, and, in addition to said services and facilities,
shall:
xxxx
(ii) Subject to applicable laws, facilitate or provide for the establishment and
maintenance of waterworks system or district waterworks for supplying water to
inhabitants of component cities and municipalities. x x x (omission and emphasis
supplied)
panlungsod, as the legislative body of the city, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the city and its inhabitants x x x and shall:
xxxx
(5) Approve ordinances which shall ensure the efficient and effective delivery of the basic
services and facilities as provided for under Section 17 of this Code, and in addition to said
services and facilities, shall:
xxxx
(vii) Subject to existing laws, establish and provide for the maintenance, repair and
operation of an efficient waterworks system to supply water for the inhabitants and
to purify the source of the water supply. x x x.
bayan, as the legislative body of the municipality, shall enact ordinances, approve resolutions and
appropriate funds for the general welfare of the municipality and its inhabitants x x x and shall:
xxxx
(5) Approve ordinances which shall ensure the efficient and effective delivery of the basic
services and facilities as provided for under Section 17 of this Code, and in addition to said
services and facilities, shall:
xxxx
pg. 1799
426

Rama vs. Moises
and repair of an efficient waterworks system,” the Local Government Code explicitly states the
LGUs can only exercise such power “subject to existing laws.”
Indisputably, one of these existing laws is PD 198.
Following the principle of harmonization of laws, the LWDs created under PD 198 — such as the
MCWD — are still governed by PD 198 as a special law. Accordingly, these LWDs remain
independent from the political subdivisions they serve, and their subsisting relations with the
proper appointing official, as provided for in PD 198, must be respected.
The Court should not

resort to judicial legislation.
As a final note, I wish to address the petitioners’ prayer for this Court to “declare” that the
appointing power should be lodged with the Mayor of the city or municipality which participated
in the LWD’s formation and where a majority of the LWD’s water connections lie.102
Citing Judge Learned Hand, the petitioners argue that while Courts cannot engage in judicial
legislation, they must fill the gaps in the law.103 The petitioners argue that by making such
declaration, the Court will not be creating a policy but will merely enforce the “constitutional
doctrine of majority rule.”104
I have serious difficulty in accepting this argument.
_______________
(vii) Subject to existing laws, provide for the establishment, operation,

maintenance, and repair of an efficient waterworks system to supply water for
the inhabitants. x x x (omission and emphasis supplied)
102 Rollo, p. 65.
103 Id., at p. 47.
104 Id.
pg. 1800
427
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First and foremost, this Court cannot resort to judicial legislation even if it declares a law
unconstitutional.
Second, the petitioners are mistaken in implying that legislative fiat will result if this Court declares
Section 3(b) void. Section 10 of PD 198 empowers the majority of the incumbent directors to fill
vacancies in the board should the appointing power fail to make an appointment.105
Lastly, there is simply no constitutional provision or principle that provides for the so-called
doctrine of majority rule. In fact, modern legal principles (such as the social justice principle) focus
less on numerical superiority and, instead, ensures that the less privileged have more in law.
For all these reasons, I vote to deny the petition.
CONCURRING OPINION
LEONEN, J.:
I concur. The provincial governor has no power to appoint members of Metropolitan Cebu Water
District’s (MCWD) board.
_______________
105 Section 10. Nominations.—On or before October 1 of each even-numbered year, the
secretary of the district shall conduct each known organization, association, or institution being
represented by the director whose term will expire on December 31 and solicit nominations from
these organizations to fill the position for the ensuring term. One nomination may be submitted in
writing by each such organization to the secretary of the district on or before November 1 of such
year. This list of nominees shall be transmitted by the Secretary of the district to the office of the
appointing authority on or before November 15 of such year and he shall make his appointment
from the list submitted on or before December 15. In the event the appointing authority fails to
make his appointments on or before December 15, selection shall be made from said list of
nominees by majority vote of the seated directors of the district constituting a quorum. x x x.
(emphasis and omission supplied)
pg. 1801
428

Rama vs. Moises
This case involves the validity and proper interpretation of Section 3(b) of Presidential Decree No.
198 or the Provincial Water Utilities Act of 1973. Metropolitan Cebu Water District, having been
created in 1974 by virtue of this Decree, was subject to its provisions including that in dispute:
(b) Appointing authority.—The person empowered to appoint the members of the board
of Directors of a local water district, depending upon the geographic coverage and
population make-up of the particular district. In the event that more than seventy-five
percent of the total active water service connections of a local water district are within the
boundary of any city or municipality, the appointing authority shall be the mayor of that city
or municipality, as the case may be; otherwise, the appointing authority shall be the governor
of the province within which the district is located. If portions of more than one province
are included within the boundary of the district, and the appointing authority is to be the
governors then the power to appoint shall rotate between the governors involved with the
initial appointments made by the governor in whose province the greatest number of service
connections exists.
The controversy started when in 2002, after consistent exercise by the Cebu City Mayor of the
power to appoint MCWD directors from 1974 to 2002, the Governor of the Province of Cebu
decided to assert her power of appointment. The Governor claims that the provision gives her the
power to appoint directors of MCWD whenever none of the cities or municipali-
429
VOL. 812, DECEMBER 6, 2016 429
pg. 1802
Rama vs. Moises
ties covered by MCWD holds seventy-five percent (75%) of its total active water service
connections.
Despite the Provincial Governor’s claim, however, the Cebu City Mayor exercised the authority
when he appointed Joel Mari S. Yu in 2008 to fill a vacant seat in MCWD’s board of directors.
Both the Mayor of Cebu City and the Provincial Governor of Cebu claim authority to appoint
directors of MCWD in case none of the cities or municipalities covered by MCWD reaches
seventy-five percent (75%) of its total active water service connections.
Petitioners claim that Section 3(b) of Presidential Decree No. 198 is unconstitutional because it
violates Cebu City’s local autonomy, and the due process and equal protection clause. The
provincial government had not participated in the creation of MCWD. Cebu City also holds
majority, though not 75% of MCWD’s total active water service connections. Hence, Cebu City’s
Mayor and not Cebu’s Provincial Governor should be given the power to appoint directors of
MCWD.
On the other hand, respondents claim that Section 3(b) of Presidential Decree No. 198 is clear that
if the 75% requirement under Section 3(b) of Presidential Decree No. 198 is not met, it is the
Provincial Governor who has the authority to appoint MCWD directors.
We are asked to determine whether Section 3(b) of Presidential Decree No. 198 is unconstitutional.
Section 3(b) of Presidential Decree No. 198 is unconstitutional because it violates the local
autonomy of cities and municipalities covered by MCWD. It interferes with the cities’ and
municipalities’ power and duty to conduct their own affairs, particularly with regard to the delivery
of basic services.
430

Rama vs. Moises
pg. 1803
Local governments were instituted as a means to allocate powers and responsibilities to units that
are most aware of and can best meet the needs of its constituents.1 Through this, the State fosters
self-reliant communities and furthers a government structure that is both responsive and
accountable to its citizens.2
_______________
1 Local Govt. Code, Sec. 3 provides:
Section 3. Operative Principles of Decentralization.—The formulation and implementation of

policies and measures on local autonomy shall be guided by the following operative principles:
1. (a) There shall be an effective allocation among the different local government units
of their respective powers, functions, responsibilities, and resources;
2. (b) There shall be established in every local government unit an accountable,
efficient, and dynamic organizational structure and operating mechanism that will
meet the priority needs and service requirements of its communities[.]
2 Local Govt. Code, Sec. 2 provides:
Section 2. Declaration of Policy.—
1. (a) It is hereby declared the policy of the State that the territorial and political
subdivisions of the State shall enjoy genuine and meaningful local autonomy to
enable them to attain their fullest development as self-reliant communities and make
them more effective partners in the attainment of national goals. Toward this end,
the State shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization whereby local government
units shall be given more powers, authority, responsibilities and resources. The
process of decentralization shall proceed from the national government to the local
government units.
2. (b) It is also the policy of the State to ensure the accountability of local government
units through the institution of effective mechanisms of recall, initiative, and
referendum.
3. (c) It is likewise the policy of the State to require all national agencies and offices
to conduct periodic consulta-
431
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Rama vs. Moises
pg. 1804
The importance of self-reliant communities was expressed in the 1900 McKinley Instructions:
You will instruct the commission to proceed to the city of Manila, where they will make their
principal office, and to communicate with the military governor of the Philippine Islands, whom
you will at the same time direct to render to them every assistance within his power in the
performance of their duties. Without hampering them by too specific instructions, they should in
general be enjoined, after making themselves familiar with the conditions and needs of the country,
to devote their attention in the first instance to the establishment of municipal governments, in
which the natives of the islands, both in the cities and in the rural communities, shall be afforded
the opportunity to manage their own local affairs to the fullest extent of which they are capable,
and subject to the least degree of supervision and control which a careful study of their capacities
and observations of the workings of native control show to be consistent with the maintenance of
law, order, and loyalty.
The next subject in order of importance should be the organization of government in the larger
administrative divisions corresponding to counties, departments, or provinces, in which the
common interests of many or several municipalities falling within the same tribal lines, or the
same natural geographical limits, may best be subserved by a common administration. Whenever
the commission is of the opinion that the condition of affairs in the islands is such that the central
administration may safely be transferred from military to civil control, they will report that
conclusion to you, with their recommendations as to the form of central government to be
established for
_______________
1. tions with appropriate local government units, nongovernmental and people’s

organizations, and other concerned sectors of the community before any project or
program is implemented in their respective jurisdictions.
432

Rama vs. Moises
the purpose of taking over the control.3 (Emphasis supplied)
Local government autonomy had been impliedly adopted as State policy as early as 1935 when
our Constitution defined the kind of power that the President may exercise over executive
pg. 1805
departments and local governments. Article VII, Section 11(1) of the 1935 Constitution provided
that the President exercised control over executive departments. However, the President’s power
over local governments was limited to general supervision:
SEC. 11.(1) The President shall have control of all the executive departments, bureaus, or
offices, exercise general supervision over all local governments as may be provided by law, and
take care that the laws be faithfully executed.
“Control” has been consistently defined in our jurisprudence as the power to “alter or modify or
nullify or set aside what a subordinate officer had done in the performance of his duties and to
substitute the judgment of the former for that of the latter.”4 On the other hand, “supervision” has
been defined as “overseeing, or the power or authority of an officer to see that subordinate officers
perform their duties, and to take such action as prescribed by law to compel his subordinates to
perform their duties.”5
_______________
3 Full text of “Instructions of the President to the Philippine Commission, April 7, 1900.”
<https://archive.org/stream/instructionspre00mckigoog/instructionspre00mckigoog_djvu.txt>
(last visited November 15, 2016).
4 National Liga ng mga Barangay v. Paredes, 482 Phil. 331, 355; 439 SCRA 130, 150 (2004)
[Per J. Tinga, En Banc], citing Mondano v. Silvosa, 97 Phil. 143, 148 (1955) [Per J. Padilla, En
Banc]. See also Taule v. Santos, 277 Phil. 584, 598; 200 SCRA 512, 521-522 (1991) [Per J.
Gancayco, En Banc].
5 Id., citing Mondano v. Silvosa, id., at p. 147. See also Taule v. Santos, id., Pimentel, Jr. v.
Aguirre, 391 Phil. 84, 98-100; 336 SCRA
433
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This court further explained the difference between “control” and “supervision” in Drilon v. Lim:6
An officer in control lays down the rules in the doing of an act. If they are not followed, he may,
in his discretion, order the act undone or redone by his subordinate or he may even decide to do it
himself. Supervision does not cover such authority. The supervisor or superintendent merely sees
to it that the rules are followed, but he himself does not lay down such rules, nor does he have the
discretion to modify or replace them. If the rules are not observed, he may order the work done or
pg. 1806
redone but only to conform to the prescribed rules. He may not prescribe his own manner for the
doing of the act. He has no judgment on this matter except to see to it that the rules are followed.7
Thus, when the 1935 Constitution limited the President’s power over local government units to
supervision, he or she had been proscribed from interfering or taking an active part in the affairs
of local government units. The State, at that time, had already recognized local autonomy as a
means to more effectively determine and address local concerns.
The principle of local autonomy was expressly adopted as a State policy in Article II, Section 10
of 1973 Constitution:
SEC. 10. The State shall guarantee and promote the autonomy of local government units,
especially the [barangays], to ensure their fullest development as self-reliant communities.
_______________
201, 214 (2000) [Per J. Panganiban, En Banc], and Drilon v. Lim, G.R. No. 112497, August 4,
1994, 235 SCRA 135, 140-141 [Per J. Cruz, En Banc].
6 Drilon v. Lim, id.
7 Id., at p. 142.
434

Rama vs. Moises
A similar provision can be found among the State policies enumerated in Article II of the 1987
Constitution:
SECTION 25. The State shall ensure the autonomy of local governments.
Both the 1973 Constitution and the 1987 Constitution devoted a whole Article to local
governments as a means to institutionalize the principle of local autonomy.8
pg. 1807
The Article XI9 of the 1973 Constitution enjoined the enactment of a Local Government Code. It
defined the relationship between local government units with their component units.10 It explicitly
gave local government units a form of
_______________
8 Const. (1973), Art. XI and Const., Art. X.
ARTICLE XI. LOCAL GOVERNMENT
....
SEC. 2. The Batasang Pambansa shall enact a local government code which may not
thereafter be amended except by a majority vote of all its Members, defining a more
responsive and accountable local government structure with an effective system of recall,
allocating among the different local government units their powers, responsibilities, and
resources, and providing for the qualifications, election and removal, term, salaries, powers,
functions, and duties of local officials, and all other matters relating to the organization and
operation of the local units. However, any change in the existing form of local government
shall not take effect until ratified by a majority of the votes cast in a plebiscite called for the
purpose.
10 Id., Sec. 4(1) provides:
....
SEC. 4(1). Provinces with respect to component cities and municipalities, and cities and
municipalities with respect to component barrios, shall ensure that the acts of their
component units are within the scope of their assigned powers and functions. Highly
urbanized cities, as determined by standards
435
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Rama vs. Moises
fiscal independence by giving them power to create their own revenues.11
pg. 1808
As a reflection of the increasing importance our State gives to local autonomy, the present
Constitution expanded the 1973 Constitution’s Article XI to reiterate the guarantee that local
governments shall enjoy local autonomy. Section 2 of Article X provides:
SECTION 2. The territorial and political subdivisions shall enjoy local autonomy.
Aside from the power to create their own revenues, the present Constitution gave local
governments entitlement to shares in the national taxes and in proceeds of the utilization of their
wealth and resources.12 Local government units were also guaranteed sectoral representation.13
Further, the present Constitution created autonomous regions for areas “sharing common and
distinctive historical and cultural heritage, economic and social structures[.]”14
The present Constitution, like the 1935 Constitution provides that the President’s power over local
government units is limited to general supervision. Thus:
SECTION 4. The President of the Philippines shall exercise general supervision over local
governments. Prov-
_______________
established in the local government code, shall be independent of the province.
....
SEC. 5. Each local government unit shall have the power to create its own sources of
revenue and to levy taxes, subject to such limitations as may be provided by law.
12 Const., Art. X, Secs. 6 and 7.
13 Id., Sec. 9.
14 Id., Sec. 15.
436
pg. 1809
Rama vs. Moises
inces with respect to component cities and municipalities, and cities and municipalities with
respect to component barangays shall ensure that the acts of their component units are within the
scope of their prescribed powers and functions.15
In other words, the present Constitution reiterated that not even the President may determine and
dictate how local government units’ duties shall be performed.
The autonomy guaranteed by the Constitution to local government units should apply not only
against the national government but also against other local government units. After all, Section 4
of Article X of the Constitution does not limit only the President’s powers over local government
units but also the local government units’ powers over other local government units. It provides
that provinces and cities or municipalities shall only “ensure that the acts of their component units
are within the scope of their prescribed powers and functions.” This, essentially, refers only to the
power of supervision.
Thus, the national government may only exercise supervisory powers over local government units.
Similarly, local government units may only exercise supervisory powers over their component
units. Provinces do not exercise control over their component cities and/or municipalities and over
highly urbanized cities.16 Cities or municipalities do not control their barangays.
_______________
15 Id., Sec. 4.
ARTICLE X. Local Government
....
SECTION 12. Cities that are highly urbanized, as determined by law, and component
cities whose charters prohibit their voters from voting for provincial elective officials, shall
be independent of the province. The voters of component cities within a province, whose
charters contain no such prohibition,
437
pg. 1810
VOL. 812, DECEMBER 6, 2016 437
Rama vs. Moises
The Local Government Code has a general welfare clause that provides local government units
with as much power necessary to “[accelerate] economic development and [upgrade] the quality
of life for the people in the community[.]”17 Section 16 of the Local Government Code provides:
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.
Further, the Local Government Code provides that local government units “shall endeavor to be
self-reliant”18 and shall be responsible for providing the basic services needed by its constituents.
Thus:
_______________
shall not be deprived of their right to vote for elective provincial officials.
17 Local Govt. Code, Sec. 5(c) provides:
SECTION 5. Rules of interpretation.—In the interpretation of the provisions of this Code,

the following rules shall apply:
....
1. (c) The general welfare provision in this Code shall be liberally interpreted to give
more powers to local government units in accelerating economic development and
upgrading the quality of life for the people in the community.
18 Id., Sec. 17(a).
438
pg. 1811
Rama vs. Moises
SECTION 17. Basic Services and Facilities.—
(a) Local government units shall endeavor to be self-reliant and shall continue exercising the
powers and discharging the duties and functions currently vested upon them. They shall also
discharge the functions and responsibilities of national agencies and offices devolved to them
pursuant to this Code. Local government units shall likewise exercise such other powers and
discharge such other functions and responsibilities as are necessary, appropriate, or incidental to
efficient and effective provisions of the basic services and facilities enumerated herein[.]
Among the basic services that municipalities and cities must provide their constituents are
infrastructure facilities such as water supply systems. Thus:
....
(b) Such basic services and facilities include, but are not limited to, the following:
(2) For a municipality:
....
(viii) Infrastructure facilities intended primarily to service the needs of the residents
of the municipality and which are funded out of municipal funds including, but not
limited to, municipal roads and bridges; school buildings and other facilities for public
elementary and secondary schools; clinics, health centers and other health facilities
necessary to carry out health services; communal irrigation, small water impounding
projects and other
439
VOL. 812, DECEMBER 6, 2016 439

Rama vs. Moises
pg. 1812
similar projects; fish ports; artesian wells, spring development, rainwater collectors
and water supply systems; seawalls, dikes, drainage and sewerage, and flood control;
traffic signals and road signs; and similar facilities.
....
(4) For a City:
All the services and facilities of the municipality and province[.] (Emphasis supplied)
Presidential Decree No. 198 allows provinces to interfere with this duty of municipalities and cities
when it empowered the governor to appoint MWCD directors in case none of the cities and
municipalities covered by MCWD reached the 75% requirement.
Indeed, provinces are also given the power and the duty to provide its constituents with inter-
municipal waterworks and other similar facilities.19 However, this is not equivalent to a grant of
power to take control of duties necessarily imposed on cities or municipalities. Provisions granting
powers to the provincial government should not only be interpreted in a manner that favors its own
local autonomy, but also the local
_______________
19 Id., Sec. 17(3)(vii) provides:
....
1. (3) For a Province:
....
(vii) Infrastructure facilities intended to service the needs of the residents of the province
and which are funded out of provincial funds including, but not limited to, provincial roads
and bridges; inter-municipal waterworks, drainage and sewerage, flood control, and
irrigation systems; reclamation projects; and similar facilities[.]
440
pg. 1813
Rama vs. Moises
autonomy of local government units outside its control.20 The spirit of the principle of local
autonomy is upheld if local government units are allowed to exercise the most degree of control
possible over its policies and operations to the exclusion of other local government units.
Thus, to attain the goals of giving local autonomy to local governments, the smallest possible unit
of local government should be allowed to determine and provide the basic services needed by its
constituents in accordance with the Local Government Code. More than the provincial
government, municipalities and cities are more familiar with the needs and are more capable of
determining the best policies that would serve their constituents.
Since MCWD’s polices are created by MCWD’s Board of Directors,21 the appointment of
directors is the only means by
_______________
20 See also San Juan v. Civil Service Commission (273 Phil. 271, 279; 196 SCRA 69, 77 [1991]
[Per J. Gutierrez, Jr., En Banc]), where the Court upheld the primacy of interpretations favouring
local autonomy over interpretations favouring centralized power of the national government.
21 Pres. Decree No. 198 (1973), Secs. 17, 18, 23, and 24 provide:
SEC. 17. Performance of District Powers.—All powers, privileges, and duties of the district
shall be exercised and performed by and through the board: Provided, however, That any
executive, administrative or ministerial power shall be delegated and redelegated by the board to
officers or agents designated for such purpose by the board.
SEC. 18. Functions Limited to Policy Making.—The function of the board shall be to establish
policy. The Board shall not engage in the detailed management of the district.
....
SEC. 23. The General Manager.—At the first meeting of the Board, or as soon thereafter as
practicable, the Board shall appoint, by a majority vote, a general manager and shall define his
duties and fix his compensation. Said officer shall not be removed from office, except for cause
and after due process. (As amended by Pres. Decree No. 768 [1975], Sec. 9 and Rep. Act No. 9286
[2003], Sec. 2)
441
VOL. 812, DECEMBER 6, 2016 441
pg. 1814
Rama vs. Moises
which local government units may exercise control over the policies that will be implemented by
MCWD. Any exercise of this appointment power entails great consideration not only of the needs
of the most affected but also judgment as to whose decisions could best determine and serve the
needs of the local community. The person who could make such judgment is not the governor but
the mayor of the most number of barangays served by MCWD. It is that city or municipality that
will be most affected by the decisions and policies of the board of directors of MCWD.
Thus, the power to appoint MCWD’s directors may not be taken away by the provincial
government from the cities or municipalities covered by MCWD without violating their local
autonomy. This interpretation is in consonance with the spirit of the principle of local autonomy.
It is in accordance with our state policy to foster self-reliant communities and accountable systems
of government.
II
Further, the presumption of constitutionality accorded to laws passed by Congress should not apply
in the same degree to presidential decrees. Presidential decrees and laws passed by the Congress
do not belong in the same category.
The presumption of constitutionality enjoyed by laws is based on the principle of separation of

powers implied under our Constitution.
_______________
SEC. 24. Duties.—The duties of the General Manager and other officers shall be
determined and specified from time to time by the board. The general manager, who shall
not be a director, shall have full supervision and control of the maintenance and operation
of water district facilities, with power and authority to appoint all personnel of the district:
Provided, That the appointment of personnel in the supervisory level shall be subject to
approval by the board. (As amended by Pres. Decree No. 768 [1975], Sec. 9).
442

Rama vs. Moises
pg. 1815
The executive, legislative, and judicial branches each has distinct powers and duties, which may
not be encroached upon by the other.22
“The executive power [is] vested in the President of the Philippines,”23 who must ensure the
faithful execution of laws.24
Judicial power is vested upon courts, whose duties, essentially, is to settle actual controversies and
declare acts, in proper cases, as void for being an exercise of grave abuse of discretion or for being
unconstitutional.25
Legislative powers are vested solely upon the Congress.26 It is the Congress, composed of senators
and representatives elected periodically by the people, that enact laws.27
_______________
22 Angara v. Electoral Commission, 63 Phil. 139, 156 (1936) [Per J. Laurel, En Banc].
23 Const., Art. VII, Sec. 1.
24 Id., Sec. 17.
25 Id., Art. VIII, Sec. 1.
26 Id., Art. VI, Sec. 1.
27 Id., Secs. 1, 2, 4, 5(1), and 7 provide:
SECTION 1. The legislative power shall be vested in the Congress of the Philippines
which shall consist of a Senate and a House of Representatives, except to the extent reserved
to the people by the provision on initiative and referendum.
SECTION 2. The Senate shall be composed of twenty-four Senators who shall be elected
at large by the qualified voters of the Philippines, as may be provided by law.
....
SECTION 4. The term of office of the Senators shall be six years and shall commence,
unless otherwise provided by law, at noon on the thirtieth day of June next following their
election.
No Senator shall serve for more than two consecutive terms. Voluntary renunciation of the
office for any length of time shall not be considered as an interruption in the continuity of
his service for the full term for which he was elected.
pg. 1816
443
VOL. 812, DECEMBER 6, 2016 443

Rama vs. Moises
“The principle [of separation of powers] presupposes mutual respect by and between the executive,
legislative and judicial departments of the government and calls for them to be left alone to
discharge their duties as they see fit.”28
The principle of separation of powers prevents government powers from being concentrated in one
branch of the government.29 It has been theorized that a combination of any of the government
powers into one person “would create a system with an inherent tendency towards tyrannical
actions[.]”30
_______________
SECTION 5.(1) The House of Representatives shall be composed of not more than two
hundred and fifty members, unless otherwise fixed by law, who shall be elected from
legislative districts apportioned among the provinces, cities, and the Metropolitan Manila
area in accordance with the number of their respective inhabitants, and on the basis of a
uniform and progressive ratio, and those who, as provided by law, shall be elected through
a party-list system of registered national, regional, and sectoral parties or organizations.
....
SECTION 7. The Members of the House of Representatives shall be elected for a term of
three years which shall begin, unless otherwise provided by law, at noon on the thirtieth day
of June next following their election.
No member of the House of Representatives shall serve for more than three consecutive
terms. Voluntary renunciation of the office for any length of time shall not be considered as
an interruption in the continuity of his service for the full term for which he was elected.
28 Anak Mindanao Party-List Group v. The Executive Secretary, 558 Phil. 338, 353; 531 SCRA
583, 594 (2007) [Per J. Carpio-Morales, En Banc], citing Atitiw v. Zamora, 508 Phil. 321, 342;
471 SCRA 329, 345-346 (2005) [Per J. Tinga, En Banc].
29 J. Puno, Concurring and Dissenting Opinion in Macalintal v. Commission on Elections, 453

Phil. 586, 732; 405 SCRA 614, 695 (2003) [Per J. Austria-Martinez, En Banc].
30 Id., at p. 734; p. 697.
pg. 1817
444

Rama vs. Moises
Thus, the principle of separation of powers under our present Constitution ensures that none of the
branches are superior to another. The three branches of the government are considered coequal
branches.
Our Constitution, however, also recognizes the need for coordination among the three branches of
the government. Hence, the three branches operate under a system of checks and balances.31 Each
government branch has a means of checking the workings of another branch.
In Angara v. Electoral Commission:32
But it does not follow from the fact that the three powers are to be kept separate and distinct that
the Constitution intended them to be absolutely unrestrained and independent of each other. The
Constitution has provided for an elaborate system of checks and balances to secure coordination
in the workings of the various departments of the government. For example, the Chief Executive
under our Constitution is so far made a check on the legislative power that this assent is required
in the enactment of laws. This, however, is subject to the further check that a bill may become a
law notwithstanding the refusal of the President to approve it, by a vote of two-thirds or three-
fourths, as the case may be, of the National Assembly. The President has also the right to convene
the Assembly in special session whenever he chooses. On the other hand, the National Assembly
operates as a check on the Executive in the sense that its consent through its Commission on
Appointments is necessary in the appointment of certain officers; and the concurrence of a majority
of all its members is essential to the conclusion of treaties. Furthermore, in its power to determine
what courts other than the Supreme Court shall be established, to define their jurisdiction and to
appropriate funds for their support, the National Assembly controls the judicial department to a
certain extent. The Assem-
_______________
31 Supra note 22.
32 Id.
445
pg. 1818
VOL. 812, DECEMBER 6, 2016 445
Rama vs. Moises
bly also exercises the judicial power of trying impeachments. And the judiciary in turn, with the
Supreme Court as the final arbiter, effectively checks the other departments in the exercise of its
power to determine the law, and hence to declare executive and legislative acts void if violative of
the Constitution.33
The presumption of constitutionality accorded to laws passed by the Congress also recognizes the
meticulousness imposed by our Constitution on the process by which the legislative department
should promulgate laws. Each law passed by the legislative department undergoes three
readings.34 In between those readings, public hearings may be conducted wherein the
representatives from the public and private sectors, members of the academe, and experts in the
field related to the proposed law may participate. The law may also undergo discussions and
debates. Opinions by the representatives from the public, private, and academic communities and
the differences that emerge from the discussions and debates will result to several amendments of
the pro-
_______________
33 Id., at pp. 156-157.
....
SECTION 26. (1) Every bill passed by the Congress shall embrace only one subject
which shall be expressed in the title thereof.
(2) No bill passed by either House shall become a law unless it has passed three readings
on separate days, and printed copies thereof in its final form have been distributed to its
Members three days before its passage, except when the President certifies to the necessity.
If its immediate enactment to meet a public calamity or emergency. Upon the last reading
of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken
immediately thereafter, and the yeas and nays entered in the Journal.
446
pg. 1819
Rama vs. Moises
posed law before its actual passage.35 After its passage by the Congress, the law shall be submitted
to the President for approval.36
In sum, the principles of separation of powers, the special process of legislation that allows
participation of representatives of the people and the operation of the system of checks and
balances provide bases for the presumption of constitutionality we accord to legislative
enactments. In Angara v. Electoral Commission:
_______________
35 Legislative Process: How a bill becomes a law, House of Representatives

<http://congress.gov.ph/legisinfo/?l=process> (last visited November 15, 2016).
....
SECTION 27. (1) Every bill passed by the Congress shall, before it becomes a law, be
presented to the President. If he approves the same, he shall sign it; otherwise, he shall veto
it and return the same with his objections to the House where it originated, which shall enter
the objections at large in its Journal and proceed to reconsider it. If, after such
reconsideration, two-thirds of all the Members of such House shall agree to pass the bill, it
shall be sent, together with the objections, to the other House by which it shall likewise be
reconsidered, and if approved by two-thirds of all the Members of that House, it shall
become a law. In all such cases, the votes of each House shall be determined by yeas or
nays, and the names of the Members voting for or against shall be entered in its Journal. The
President shall communicate his veto of any bill to the House where it originated within
thirty days after the date of receipt thereof; otherwise, it shall become a law as if he had
signed it.
(2) The President shall have the power to veto any particular item or items in an
appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to which
he does not object.
447
pg. 1820
VOL. 812, DECEMBER 6, 2016 447
Rama vs. Moises
More than that, courts accord the presumption of constitutionality to legislative enactments, not
only because the legislature is presumed to abide by the Constitution but also because the judiciary
in the determination of actual cases and controversies must reflect the wisdom and justice of the
people as expressed through their representatives in the executive and legislative departments of
the government.37 (Emphasis supplied)
In Romualdez v. Hon. Sandiganbayan:38
In Garcia v. Executive Secretary, the rationale for the presumption of constitutionality was
explained by this Court thus:
“The policy of the courts is to avoid ruling on constitutional questions and to presume that
the acts of the political departments are valid in the absence of a clear and unmistakable
showing to the contrary. To doubt is to sustain. This presumption is based on the doctrine
of separation of powers which enjoins upon each department a becoming respect for the acts
of the other departments. The theory is that as the joint act of Congress and the President of
the Philippines, a law has been carefully studied and determined to be in accordance with
the fundamental law before it was finally enacted.”39 (Emphasis supplied)
_______________
38 479 Phil. 265; 435 SCRA 371 (2004) [Per J. Panganiban, En Banc].
39 Id., at pp. 284-285; p. 385, citing Garcia v. Executive Secretary, 281 Phil. 572, 579-580; 204
SCRA 516, 523 (1991) [Per J. Cruz, En Banc].
448

Rama vs. Moises
In Lawyers Against Monopoly and Poverty (LAMP), et al. v. The Secretary of Budget and
Management, et al.:40
pg. 1821
In determining whether or not a statute is unconstitutional, the Court does not lose sight of the
presumption of validity accorded to statutory acts of Congress. In Fariñas v. The Executive
Secretary, the Court held that:
Every statute is presumed valid. The presumption is that the legislature intended to enact a
valid, sensible and just law and one which operates no further than may be necessary to
effectuate the specific purpose of the law. Every presumption should be indulged in favor
of the constitutionality and the burden of proof is on the party alleging that there is a clear
and unequivocal breach of the Constitution.
To justify the nullification of the law or its implementation, there must be a clear and unequivocal,
not a doubtful, breach of the Constitution. In case of doubt in the sufficiency of proof establishing
unconstitutionality, the Court must sustain legislation because “to invalidate [a law] based on x x
x baseless supposition is an affront to the wisdom not only of the legislature that passed it but also
of the executive which approved it.”41 (Emphasis supplied)
These principles were inoperative when President Ferdinand Marcos issued presidential decrees.
Presidential decrees were laws promulgated by President Ferdinand Marcos in
_______________
40 686 Phil. 357; 670 SCRA 373 (2012) [Per J. Mendoza, En Banc].
41 Id., at pp. 372-373; pp. 386-387, citing Fariñas v. The Executive Secretary, 463 Phil. 179, 197;
417 SCRA 503, 517-518 (2003) [Per J. Callejo, Sr., En Banc] and Abakada Guro Party List v.
Purisima, 584 Phil. 246, 267-268; 562 SCRA 251, 272 (2008) [Per J. Corona, En Banc].
449
VOL. 812, DECEMBER 6, 2016 449

Rama vs. Moises
arrogation of the Congress’ legislative powers, under his martial law powers.42 The issuance of
presidential decrees at that time was an exercise by the executive of his legislative powers.43 This
was made possible in the 1973 Constitution, which had provisions allowing for such combined
powers. Under the 1973 Constitution, the President may exercise legislative powers as long as
martial law was in effect.44
_______________
pg. 1822
42 See also Presidential Decrees, Official Gazette <http://www.gov.ph/section/executive-
issuances/presidential-decrees-executive-issuances/> (last visited November 15, 2016).
43 See David v. Macapagal-Arroyo, 522 Phil. 705; 489 SCRA 160 (2006) [Per J. Sandoval-
Gutierrez, En Banc].
44 1976 Amendments <http://www.gov.ph/constitutions/1973-constitution-of-the-republic-of-

the-philippines-2/> (last visited November 15, 2016).
1. There shall be, in lieu of the interim National Assembly, an interim Batasang
Pambansa. Members of the interim Batasang Pambansa which shall not be more than 120,
unless otherwise provided by law, shall include the incumbent President of the Philippines,
representatives elected from the different regions of the nation, those who shall not be less
than eighteen years of age elected by their respective sectors, and those chosen by the
incumbent President from the Members of the Cabinet. Regional representatives shall be
apportioned among the regions in accordance with the number of their respective inhabitants
and on the basis of a uniform and progressive ratio, while the sector shall be determined by
law. The number of representatives from each region or sector and the manner of their
election shall be prescribed and regulated by law.
2. The interim Batasang Pambansa shall have the same powers and its Members shall
have the same functions, responsibilities, rights, privileges, and disqualifications as the
interim National Assembly and the regular National Assembly and the Members thereof.
3. The incumbent President of the Philippines shall, within 30 days from the election and
selection of the Members, convene the interim Batasang Pambansa and preside over its
sessions until the Speaker shall have been elected. The incumbent
450

Rama vs. Moises
Thus, the premises for according in favor of statues a presumption of constitutionality are absent
in presidential decrees. Separation of powers, as well as the principle of checks and balances, were
limited during the martial law. Indeed, presidential decrees are laws, but they are laws that did not
undergo the careful process of discussion, debates, approval and disapproval by representatives of
the people. They are not in reality the product of two government branches in coordination and in
accordance with the system of checks of balances. They are essentially laws issued by one person.
Hence, presidential decrees and statutes promulgated by the Congress should not be examined
under the same lens.
pg. 1823
_______________
President of the Philippines shall be the Prime Minister and he shall continue to exercise all
his powers even after the interim Batasang Pambansa is organized and ready to discharge
its functions, and likewise he shall continue to exercise his powers and prerogatives under
the 1935 Constitution and the powers vested in the President and the Prime Minister under
this Constitutions.
4. The President (Prime Minister) and his Cabinet shall exercise all the powers and
functions, and discharge the responsibilities of the regular President (Prime Minister) and
his Cabinet, and shall be subject only to such disqualifications as the President (Prime
Minister) may prescribe. The President (Prime Minister), if he so desires, may appoint a
Deputy Prime Minister or as many Deputy Prime Ministers as he may deem necessary.
5. The incumbent President shall continue to exercise legislative powers until martial law
shall have been lifted.
6. Whenever in the judgment of the President (Prime Minister), there exists a grave
emergency or a threat or imminence thereof, or whenever the interim Batasang Pambansa
or the regular National Assembly fails or is unable to act adequately on any matter for any
reason that in his judgment requires immediate action, he may, in order to meet the exigency,
issue the necessary decrees, orders, or letters of instructions, which shall form part of the
law of the land. (Emphasis supplied)
451
VOL. 812, DECEMBER 6, 2016 451

Rama vs. Moises
The presumption of constitutionality accorded to legislative acts by the Congress should not
equally apply to presidential decrees. The courts should consider the different circumstances under
which presidential decrees were issued whenever they examine their validity. Presidential decrees
should undergo a stricter review than statutes promulgated by the Congress.
Accordingly, I vote to GRANT the Petition.
Petition granted, judgment of Regional Trial Court of Cebu City, Br. 18 annulled and set aside,
Section 3(b) of PD No. 198 to the extent that it applies to highly urbanized cities and to component
cities with charters expressly providing for their voters not to be eligible to vote for the officials of
the provinces to which they belong for being in violation of the express policy of the 1987
Constitution on local autonomy, the 1991 Local Government Code and subsequent statutory
pg. 1824
enactments, and for being also in violation of the Due Process Clause and the Equal Protection
Clause.
Notes.—The Constitution declares it a policy of the State to ensure the autonomy of local
governments. (Pimentel, Jr. vs. Ochoa, 676 SCRA 551 [2012])
While it is through a system of decentralization that the State shall promote a more responsive and
accountable local government structure, the concept of local autonomy does not imply the
conversion of local government units into “mini-states.” (Id.)
——o0o——
pg. 1825
G.R. No. 210810. December 7, 2016.*
RICARDO DEL POSO y DELA CERNA, petitioner vs. PEOPLE OF THE PHILIPPINES,
respondent.
Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; Under Rule 45,
Section 1 of the Rules of Court, only questions of law may be raised in a Petition for Review on
Certiorari; Exceptions.—Under Rule 45, Section 1 of the Rules of Court, only questions of law
may be raised in a Petition for Review on Certiorari: Section 1. Filing of petition with Supreme
Court.—A party desiring to appeal by certiorari from a judgment, final order or resolution of the
Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other
courts, whenever authorized by law, may file with the Supreme Court a verified petition for review
on certiorari. The petition may include an application for a writ of preliminary injunction or other
provisional remedies and shall raise only questions of law, which must be distinctly set forth. The
petitioner may seek the same provisional remedies by verified motion filed in the same action or
proceeding at any time during its pendency. As an exception to the rule, questions of fact may be
raised in a Rule 45 Petition if any of the following is present: (1) when there is grave abuse of
discretion; (2) when the findings are grounded on speculations; (3) when the inference made is
manifestly mistaken; (4) when the judgment of the Court of Appeals is based on a misapprehension
of facts; (5) when the factual findings are conflicting; (6) when the Court of Appeals went beyond
the issues of the case and its findings are contrary to the admissions of the parties; (7) when the
Court of Appeals overlooked undisputed facts which, if properly considered, would justify a
different conclusion; (8) when the findings of the Court of Appeals are contrary to those of the
trial court; (9) when the facts set forth by the petitioner are not disputed by the respondent; and
(10) when the findings of the Court of Appeals are premised on the absence of evidence and are
contradicted by the evidence on record.
_______________
* THIRD DIVISION.
437
VOL. 813, DECEMBER 7, 2016 437

Del Poso vs. People
Same; Same; Same; Same; A question of fact exists “when the doubt or difference arises as to the
truth or the falsehood of alleged facts.” On the other hand, a question of law exists “when the
doubt or difference arises as to what the law is on a certain state of facts.”—A question of fact
exists “when the doubt or difference arises as to the truth or the falsehood of alleged facts.” On the
pg. 1826
other hand, a question of law exists “when the doubt or difference arises as to what the law is on a
certain state of facts.” A close reading of the issues presented by petitioner shows that they are all
factual in nature, and thus, does not fall within the scope of a petition for review under Rule 45 of
the Rules of Court nor do they fall within the exceptions to the general rule.
Criminal Law; Child Abuse Law; The prosecution was able to prove the elements of the violation
of the child abuse law, namely: (1) the minority of VVV; (2) the acts constituting physical abuse,
committed by petitioner against VVV; and (3) the said acts are clearly punishable under Republic
Act (RA) No. 7610.—Section 10 of R.A. No. 7610 otherwise known as “An Act Providing for
Stronger Deterrence and Special Protection Against Child Abuse, Exploitation and Discrimination,
and for Other Purposes,” provides the following: ARTICLE VI Other Acts of Abuse SECTION
10. Other Acts of Neglect, Abuse, Cruelty or Exploitation and Other Conditions Prejudicial to the
Child’s Development.—a) Any person who shall commit any other acts of child abuse, cruelty or
exploitation or be responsible for other conditions prejudicial to the child’s development including
those covered by Article 59 of Presidential Decree No. 603, as amended, but not covered by the
Revised Penal Code, as amended, shall suffer the penalty of prisión mayor in its minimum period.
Section 3 of the same law defines child abuse as — 3(b) “Child abuse” refers to the maltreatment,
whether habitual or not, of the child which includes any of the following: (1) Psychological and
physical abuse, neglect, cruelty, sexual abuse and emotional maltreatment; (2) Any act by deeds
or words which debases, degrades or demeans the intrinsic worth and dignity of a child as a
human being. The prosecution was able to prove the elements of the violation of the said law,
namely: (1) the minority of VVV; (2) the acts constituting physical abuse, committed by petitioner
against VVV; and (3) the said acts are clearly punishable under R.A. No. 7610.
438

Del Poso vs. People
Same; Same; In Araneta v. People, 556 SCRA 323 (2008), the Supreme Court (SC) discussed the
nature of the crime of child abuse as defined in Republic Act (RA) No. 7610.—In Araneta v.
People, 556 SCRA 323 (2008), this Court discussed the nature of the crime of child abuse as
defined in R.A. No. 7610, thus: Republic Act No. 7610 is a measure geared towards the
implementation of a national comprehensive program for the survival of the most vulnerable
members of the population, the Filipino children, in keeping with the Constitutional mandate under
Article XV, Section 3, paragraph 2, that The State shall defend the right of the children to
assistance, including proper care and nutrition, and special protection from all forms of
neglect, abuse, cruelty, exploitation, and other conditions prejudicial to their development.
This piece of legislation supplies the inadequacies of existing laws treating crimes committed
against children, namely, the Revised Penal Code and Presidential Decree No. 603 or the Child
and Youth Welfare Code. As a statute that provides for a mechanism for strong deterrence against
the commission of child abuse and exploitation, the law has stiffer penalties for their commission,
pg. 1827
and a means by which child traffickers could easily be prosecuted and penalized. Also, the
definition of child abuse is expanded to encompass not only those specific acts of child abuse under
existing laws but includes also other acts of neglect, abuse, cruelty or exploitation and other
conditions prejudicial to the child’s development.
Same; Mitigating Circumstances; Lack of Intention to Commit So Grave a Wrong; It is a hornbook

doctrine that the mitigating circumstance of lack of intention to commit so grave a wrong can be
taken into account only when the facts proven show that there is a notable and evident
disproportion between the means employed to execute the criminal act and its consequences.—As
to the contention of petitioner that the mitigating circumstance of lack of intention to commit so
grave a wrong should have been appreciated, this Court finds it unmeritorious. It is a hornbook
doctrine that this mitigating circumstance can be taken into account only when the facts proven
show that there is a notable and evident disproportion between the means employed to execute the
criminal act and its consequences. The facts found by the trial court and the CA show that petitioner
intended the natural consequence of his act. The observation of the OSG that petitioner’s intention
of inflicting such harm should be judged in accordance with his previous acts of abusing the victim,
of
439
VOL. 813, DECEMBER 7, 2016 439

Del Poso vs. People
regarding VVV as a mere adoptive child who is not his blood relative and petitioner’s evident
superiority of physique as a fully grown man inflicting harm upon a 9-year-old victim, and thus,
when petitioner pressed the hot iron upon the body of the victim, it must be presumed that his
intention was to physically abuse her since such act was sufficient to produce the evil which
resulted from such act is also worth noting.
Same; Same; Passion and Obfuscation; The mitigating circumstance of passion or obfuscation
only applies if the act of the victim is both unlawful and sufficient to produce such condition of
mind.—Applying the same set of facts, petitioner is also not entitled to the application of the
mitigating circumstance of passion and/or obfuscation. The mitigating circumstance of passion or
obfuscation only applies if the act of the victim is both unlawful and sufficient to produce such
condition of mind. A child who fell asleep while attending to a business establishment is not an
offense at all and could not give rise to an impulse sufficiently powerful to naturally produce a
justified diminution of an adult’s self-control.
pg. 1828
Valmonte Law Office for petitioner.
Office of the Solicitor General for respondent.
PERALTA, J.:
This is to resolve the Petition for Review on Certiorari under Rule 45 of the Rules of Court dated
January 28, 2014 of petitioner Ricardo Del Poso y Dela Cerna seeking the reversal of the Decision1
dated July 22, 2013 of the Court of Appeals
_______________
1 Penned by Associate Justice Marlene Gonzales-Sison, with the concurrence of Associate

Justices Hakim S. Abdulwahid and Edwin D. Sorongon.
440

Del Poso vs. People
(CA), which affirmed the Decision2 dated July 1, 2011 of the Regional Trial Court (RTC), Branch
38, Manila in Criminal Case No. 05-239429 convicting petitioner of violation of Section 10(a) of
Republic Act (R.A.) No. 7610.
The facts follow.
The victim, VVV3 was given by her biological mother to the petitioner when she was 7 years old
and the latter then acted as her guardian. On September 10, 2005, when VVV was 9 years old,
petitioner ordered her to attend to petitioner’s photocopying business. While attending the
business, VVV fell asleep. When petitioner saw VVV asleep, the former became furious and laid
VVV on top of an ironing board and placed a heated flat iron on her. When VVV tried to evade
the heat emanating from the flat iron, her forehead, right elbow, left cheek, left buttock and back
got burned. Thereafter, peti-
_______________
2 Penned by Presiding Judge Ma. Celestina C. Mangrobang.
3 This is pursuant to the ruling of this Court in People v. Cabalquinto (533 Phil. 703, 709; 502
SCRA 419, 425-426 [2006]), wherein this Court resolved to withhold the real name of the victims-
pg. 1829
survivors and to use fictitious initials instead to represent them in its decisions. Likewise, the
personal circumstances of the victims-survivors or any other information tending to establish or
compromise their identities, as well as those of their immediate family or household members,
shall not be disclosed. The names of such victims, and of their immediate family members other
than the accused, shall appear as “AAA,” “BBB,” “CCC,” and so on. Addresses shall appear as
“XXX” as in “No. XXX Street, XXX District, City of XXX.”
The Supreme Court took note of the legal mandate on the utmost confidentiality of proceedings
involving violence against women and children set forth in Sec. 29 of Republic Act No. 7610,
otherwise known as Special Protection of Children Against Child Abuse, Exploitation and
Discrimination Act; Sec. 44 of Republic Act No. 9262, otherwise known as Anti-Violence Against
Women and Their Children Act of 2004; and Sec. 40 of A.M. No. 04-10-11-SC, known as Rule
on Violence Against Women and Their Children effective November 15, 2004.
441
VOL. 813, DECEMBER 7, 2016 441

Del Poso vs. People
tioner got her down from the ironing board and ordered her to sleep. The following morning,
petitioner’s wife saw the burns on VVV and told petitioner not to do it again. Later on, VVV went
to her Lola Ma. Luisa to watch TV and the latter, and several other people, saw the burns prompting
Lola Ma. Luisa to bring VVV to the Barangay Hall where the incident was put on blotter.
Thereafter, VVV was brought to the hospital and then to the police station. Hence, an Information
was filed against petitioner, which reads as follows:
That on or about September 10, 2005, in the City of Manila, Philippines, the said accused, did then
and there willfully, unlawfully, and knowingly commit cruelty and abusive acts upon VVV, a
minor, 9 years old, by then and there injuring the said minor on the forehead, right cheek, abdomen
and at her right forearm with a hot flat iron, inflicting upon her multiple 1st degree burns, which
debases and demeans the intrinsic worth and dignity of said VVV as a human being, an act
prejudicial to her normal growth and development, to her damage and prejudice.
Contrary to law.
The prosecution presented seven (7) witnesses, namely: Anielyn Barnes, the Social Worker-on-
case; SPO2 Susan Mendez of Station VI, the investigator; Redentor Torres, a Barangay Kagawad;
VVV, herself; Laura Delos Santos, Records Custodian of the Ospital ng Maynila; Nanette Repalpa,
a social worker who took custody of the victim; and Dr. Martin Joseph Cabahog. VVV, during her
pg. 1830
testimony, also narrated the other acts of physical abuse that petitioner had inflicted on her prior
to the incident which became the basis of the present case.
Petitioner, on the other hand, claimed that the incident happened accidentally. According to him,
on that particular day, he just came from work when he saw VVV playing under a table and to
teach her a lesson, he tried to scare her with a hot flat iron. Petitioner was then not aware that VVV
was
442

Del Poso vs. People
hurt as there were no marks on her. The marks only became evident the following morning.
Petitioner claimed that he applied medication on VVV’s burns.
The RTC found petitioner guilty beyond reasonable doubt of violation of Section 10(a) of R.A.
No. 7610 in its Decision dated July 1, 2011, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the Court finds that the prosecution has proven the guilt of
the accused beyond reasonable doubt from the crime of violation of Section 10(a) of RA 7610,
“The Special Protection of Children Against Child Abuse, Exploitation and Discrimination Act”
and hereby sentences Ricardo Del Poso y Cerna to suffer the penalty of four (4) years, nine (9)
months and eleven (11) days of prisión correccional, as minimum, to six (6) years, eight (8)
months and one (1) day of prisión mayor, as maximum.
SO ORDERED.
Petitioner filed his appeal with the CA and the latter court, in its Decision dated July 22, 2013,
dismissed the same appeal and affirmed the Decision of the RTC, the dispositive portion of which
reads:
WHEREFORE, premises considered, the appeal filed by appellant is hereby DENIED. The
Decision dated 1 July 2011 and Order dated 27 October 2011 RTC, (NCJR) Branch 38, Manila in
Crim. Case No. 05-239429 are AFFIRMED.
SO ORDERED.4
pg. 1831
Hence, the present petition.
The grounds relied upon by petitioner are the following:
_______________
4 Rollo, p. 41.
443
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Del Poso vs. People
I. THE HONORABLE COURT OF APPEALS ERRED IN CONVICTING THE PETITIONER

WHEN THE MINOR CHILD-COMPLAINANT ADMITTED THAT SHE SUSTAINED THE
BURNS WHEN SHE TRIED TO EVADE THE HEATED IRON THAT (PETITIONER) WAS
HOLDING OVER HER WHILE LYING ON THE IRONING BOARD JUST TO SCARE HER
AS A WAY OF CHASTENING HER, WHICH THE COURT FOUND IN ITS ASSAILED
DECISION. [EQUALLY] OF WEIGHT, WHICH IT LIKEWISE FOUND AND WHICH IT
UNCEREMONIOUSLY DISREGARDED IS THE RELATION OF THE PARTIES
ESTABLISHED BY FATE.
II. ASSUMING THE HONORABLE COURT OF APPEALS IS CORRECT, IT ERRED WHEN

IT REFUSED TO APPRECIATE IN FAVOR OF THE PETITIONER THE MITIGATING
CIRCUMSTANCES OF NO INTENTION TO COMMIT SO GRAVE A WRONG AS THAT
COMMITTED DESPITE THE PARALLEL CASE OF PEOPLE V. ENRIQUEZ, 58 PHIL. 536,
IN WHICH IT WAS HELD THAT TO BE PRESENT, PASSION AND OBFUSCATION AND
SUCH OTHER CIRCUMSTANCES ANALOGOUS THERETO.
III. HENCE, THE HONORABLE COURT OF APPEALS ERRED IN NOT MODIFYING THE
SENTENCE OF THE PETITIONER TO ONE DEGREE LOWER.5
Petitioner insists that the CA erred in convicting him when the minor admitted that she sustained
the burns when she tried to evade the heated iron that he was holding over her while lying on the
ironing board just to scare her as a way of chastening her. He also claims that assuming the CA is
correct, it still erred in refusing to appreciate the mitigating circumstances of no intention to
commit so grave a wrong as
_______________
pg. 1832
5 Id., at p. 13.
444

Del Poso vs. People
that committed and passion and/or obfuscation, thus, also erring in not modifying his sentence to
another degree lower.
The Office of the Solicitor General (OSG), in its Comment6 dated June 19, 2014, argues that the
trial court and the CA correctly convicted the petitioner for violation of R.A. No. 7610. It also
avers that the trial court correctly denied appreciation of the mitigating circumstances of passion
and/or obfuscation and lack of intention to commit so grave a wrong, and as such properly applied
the corresponding penalty without any mitigating circumstance.
In its Reply7 dated October 8, 2014, petitioner reiterates the arguments and issues he presented in
his petition.
The petition is unmeritorious.
Under Rule 45, Section 1 of the Rules of Court, only questions of law may be raised in a Petition
for Review on Certiorari:
Section 1. Filing of petition with Supreme Court.—A party desiring to appeal by certiorari from
a judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an application
for a writ of preliminary injunction or other provisional remedies and shall raise only questions of
law, which must be distinctly set forth. The petitioner may seek the same provisional remedies by
verified motion filed in the same action or proceeding at any time during its pendency.
As an exception to the rule, questions of fact may be raised in a Rule 45 Petition if any of the
following is present:
_______________
6 Id., at pp. 60-92.
7 Id., at pp. 99-106.
pg. 1833
445
VOL. 813, DECEMBER 7, 2016 445

Del Poso vs. People
(1) when there is grave abuse of discretion; (2) when the findings are grounded on speculations;
(3) when the inference made is manifestly mistaken; (4) when the judgment of the Court of Appeals
is based on a misapprehension of facts; (5) when the factual findings are conflicting; (6) when the
Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions
of the parties; (7) when the Court of Appeals overlooked undisputed facts which, if properly
considered, would justify a different conclusion; (8) when the findings of the Court of Appeals are
contrary to those of the trial court; (9) when the facts set forth by the petitioner are not disputed by
the respondent; and (10) when the findings of the Court of Appeals are premised on the absence
of evidence and are contradicted by the evidence on record.8
A question of fact exists “when the doubt or difference arises as to the truth or the falsehood of
alleged facts.”9 On the other hand, a question of law exists “when the doubt or difference arises
as to what the law is on a certain state of facts.”10 A close reading of the issues presented by
petitioner shows that they are all factual in nature, and thus, does not fall within the scope of a
petition for review under Rule 45 of the Rules of Court nor do they fall within the exceptions to
the general rule.
_______________
8 Pagsibigan v. People, 606 Phil. 233, 241-242; 588 SCRA 249, 257 (2009) [Per J. Carpio, First
Division]. See Medina v. Asistio, Jr., G.R. No. 75450, November 8, 1990, 191 SCRA 218, 224
[Per J. Bidin, Third Division], where this court enumerated for the first time the instances when
the findings of fact by the trial courts and the Court of Appeals were passed upon and reviewed in
a Rule 45 Petition.
9 Benito v. People, G.R. No. 204644, February 11, 2015, 750 SCRA 450, 460, citing Sesbreño v.
Court of Appeals, 310 Phil. 671, 679; 240 SCRA 606, 612 (1995) [Per J. Quiason, First Division],
Bernardo v. Court of Appeals, G.R. No. 101680, December 7, 1992, 216 SCRA 224, 232 (1992)
[Per J. Campos, Jr., Second Division].
10 Id.
pg. 1834
446

Del Poso vs. People
Nevertheless, even if this Court should disregard such infirmity, the petition still fails to impress.
Section 10 of R.A. No. 7610 otherwise known as “An Act Providing for Stronger Deterrence and
Special Protection Against Child Abuse, Exploitation and Discrimination, and for Other
Purposes,” provides the following:
ARTICLE VI
Other Acts of Abuse
SECTION 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation and Other Conditions
Prejudicial to the Child’s Development.—
a) Any person who shall commit any other acts of child abuse, cruelty or exploitation or be
responsible for other conditions prejudicial to the child’s development including those
covered by Article 59 of Presidential Decree No. 603, as amended, but not covered by the
Revised Penal Code, as amended, shall suffer the penalty of prisión mayor in its minimum
period.
Section 3 of the same law defines child abuse as —
3(b) “Child abuse” refers to the maltreatment, whether habitual or not, of the child which includes
any of the following:
(1) Psychological and physical abuse, neglect, cruelty, sexual abuse and emotional
maltreatment;
(2) Any act by deeds or words which debases, degrades or demeans the intrinsic
worth and dignity of a child as a human being.
The prosecution was able to prove the elements of the violation of the said law, namely: (1) the
minority of VVV; (2) the
447
pg. 1835
VOL. 813, DECEMBER 7, 2016 447
Del Poso vs. People
acts constituting physical abuse, committed by petitioner against VVV; and (3) the said acts are
clearly punishable under R.A. No. 7610. As aptly ruled by the CA citing the factual findings of
the RTC, all the elements of the crime charged are present, thus:
We agree with the trial court when it ruled that the prosecution have established the elements of
child abuse in this case, to wit: (a) the victim’s minority; (b) the acts constituting physical and
psychological abuse when accused employed the use of a heated flat iron; and (c) said excessive
acts of rebuke and chastening are clearly punishable under RA No. 7610. This is clearly shown in
the evidence it presented during trial particularly the testimonies of its witnesses and that of the
minor victim, VVV, who gave a clear, consistent, and credible account of the events on September
10, 2010, in a straightforward and candid manner. Settled is the rule that when the victim’s
testimony is straightforward, convincing, and consistent with human nature and the normal course
of things, unflawed by any material or significant inconsistency, it passes the test of credibility,
and the accused may be convicted solely on the basis thereof. Hence, We see no reason not to
affirm the factual findings of the trial court. Equally, settled is the rule that factual findings of the
trial court are entitled to respect and are not to be disturbed on appeal, unless some facts or
circumstances of weight and substance, having been overlooked or misinterpreted, might
materially affect the disposition of the case. Not one of the exceptions is present in this case.11
In Araneta v. People,12 this Court discussed the nature of the crime of child abuse as defined in
R.A. No. 7610, thus:
Republic Act No. 7610 is a measure geared towards the implementation of a national
comprehensive program
_______________
11 Rollo, p. 37.
12 578 Phil. 876; 556 SCRA 323 (2008).
448

Del Poso vs. People
pg. 1836
for the survival of the most vulnerable members of the population, the Filipino children, in keeping
with the Constitutional mandate under Article XV, Section 3, paragraph 2, that The State shall
defend the right of the children to assistance, including proper care and nutrition, and special
protection from all forms of neglect, abuse, cruelty, exploitation, and other conditions
prejudicial to their development. This piece of legislation supplies the inadequacies of existing
laws treating crimes committed against children, namely, the Revised Penal Code and Presidential
Decree No. 603 or the Child and Youth Welfare Code. As a statute that provides for a mechanism
for strong deterrence against the commission of child abuse and exploitation, the law has stiffer
penalties for their commission, and a means by which child traffickers could easily be prosecuted
and penalized. Also, the definition of child abuse is expanded to encompass not only those specific
acts of child abuse under existing laws but includes also other acts of neglect, abuse, cruelty or
exploitation and other conditions prejudicial to the child’s development.
Article VI of the statute enumerates the other acts of abuse. Paragraph (a) of Section 10 thereof
states:
Article VI
OTHER ACTS OF ABUSE
SEC. 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation and Other Conditions
Prejudicial to the Childs Development.—
(a) Any person who shall commit any other acts of abuse, cruelty or exploitation or be
responsible for other conditions prejudicial to the child’s development including those
covered by Article 59 of Presidential Decree No. 603, as amended, but not covered by the
Revised Penal Code, as amended, shall suffer the penalty of prisión mayor in its minimum
period.
449
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Del Poso vs. People
As gleaned from the foregoing, the provision punishes not only those enumerated under Article 59
of Presidential Decree No. 603, but also four distinct acts, i.e., (a) child abuse, (b) child cruelty,
(c) child exploitation and (d) being responsible for conditions prejudicial to the child’s
development. The Rules and Regulations of the questioned statute distinctly and separately defined
child abuse, cruelty and exploitation just to show that these three acts are different from one
another and from the act prejudicial to the child’s development. Contrary to petitioner’s assertion,
an accused can be prosecuted and be convicted under Section 10(a), Article VI of Republic Act
No. 7610 if he commits any of the four acts therein. The prosecution need not prove that the acts
pg. 1837
of child abuse, child cruelty and child exploitation have resulted in the prejudice of the child
because an act prejudicial to the development of the child is different from the former acts.
Moreover, it is a rule in statutory construction that the word or is a disjunctive term signifying
dissociation and independence of one thing from other things enumerated. It should, as a rule, be
construed in the sense which it ordinarily implies. Hence, the use of or in Section 10(a) of Republic
Act No. 7610 before the phrase be responsible for other conditions prejudicial to the child’s
development supposes that there are four punishable acts therein. First, the act of child abuse;
second, child cruelty; third, child exploitation; and fourth, being responsible for conditions
prejudicial to the child’s development. The fourth penalized act cannot be interpreted, as petitioner
suggests, as a qualifying condition for the three other acts, because an analysis of the entire context
of the questioned provision does not warrant such construal.
The subject statute defines children as persons below eighteen (18) years of age; or those over that
age but are unable to fully take care of themselves or protect themselves from abuse, neglect,
cruelty, exploitation or discrimination because of a physical or mental disability or condition.13
_______________
13 Id., at pp. 883-886; p. 335. (Emphases ours)
450

Del Poso vs. People
As to the contention of petitioner that the mitigating circumstance of lack of intention to commit
so grave a wrong should have been appreciated, this Court finds it unmeritorious. It is a hornbook
doctrine that this mitigating circumstance can be taken into account only when the facts proven
show that there is a notable and evident disproportion between the means employed to execute the
criminal act and its consequences.14 The facts found by the trial court and the CA show that
petitioner intended the natural consequence of his act. The observation of the OSG that petitioner’s
intention of inflicting such harm should be judged in accordance with his previous acts of abusing
the victim, of regarding VVV as a mere adoptive child who is not his blood relative and petitioner’s
evident superiority of physique as a fully grown man inflicting harm upon a 9-year-old victim, and
thus, when petitioner pressed the hot iron upon the body of the victim, it must be presumed that
his intention was to physically abuse her since such act was sufficient to produce the evil which
resulted from such act is also worth noting.15
Applying the same set of facts, petitioner is also not entitled to the application of the mitigating
circumstance of passion and/or obfuscation. The mitigating circumstance of passion or obfuscation
only applies if the act of the victim is both unlawful and sufficient to produce such condition of
pg. 1838
mind.16 A child who fell asleep while attending to a business establishment is not an offense at
all and could not give rise to an impulse sufficiently powerful to naturally produce a justified
diminution of an adult’s self-control. As correctly ruled by the CA:
_______________
14 People v. Amit, 143 Phil. 48, 50; 32 SCRA 95, 97 (1970).
15 Rollo, pp. 86-87.
16 See People v. Takbobo, G.R. No. 102984, June 30, 1993, 224 SCRA 134, 142.
451
VOL. 813, DECEMBER 7, 2016 451

Del Poso vs. People
Going now to the theory of appellant that the trial court committed error when it did not appreciate
the mitigating circumstances of passion and/or obfuscation and lack of intent to commit so grave
a wrong, the same deserves scant consideration.
To be entitled to the mitigating circumstance [of] passion and/or obfuscation the following
elements must be present: (1) there should be an act both unlawful and sufficient to produce such
condition of mind; (2) the act that produced the obfuscation was not far removed from the
commission of the crime by a considerable length of time, during which the perpetrator might
recover his normal equanimity. These elements are not present here. There was no unlawful and
sufficient act on VVV’s part which sufficiently provoked passion and/or obfuscation on
appellant’s side. As correctly observed by the trial court, the dozing off of VVV when she was
ordered to watch over the Xerox machine for possible clients is not an unlawful act sufficient to
produce passion and raging anger, even to a disciplinarian foster parent. Hence, appellant cannot
successfully claim that he was blinded by passion and obfuscation.17
Hence, the trial court and the CA correctly imposed the penalty by not considering the mitigating
circumstances claimed by petitioner. Section 10(a) of R.A. No. 7610 imposes the penalty of prisión
mayor in its minimum period. Applying the Indeterminate Sentence Law, the trial court did not err
when it imposed the penalty of 4 years, 9 months and 11 days of prisión correccional, as minimum,
to 6 years, 8 months and 1 day of prisión mayor, as maximum.
WHEREFORE, the Petition for Review on Certiorari under Rule 45 dated January 28, 2014 of
Ricardo Del Poso y Dela Cerna is DENIED for lack merit and the Decision dated July 22, 2013,
pg. 1839
dismissing petitioner’s appeal and affirming the Decision dated July 1, 2011 of the Regional Trial
Court,
_______________
17 Rollo, p. 40. (Emphases omitted)
452

Del Poso vs. People
Branch 38, Manila in Criminal Case No. 05-239429, convicting petitioner of violation of Section
10(a) of R.A. No. 7610 and imposing upon petitioner the indeterminate penalty of imprisonment
of four (4) years, nine (9) months and eleven (11) days of prisión correccional, as minimum, to
six (6) years, eight (8) months and one (1) day of prisión mayor, as maximum, is AFFIRMED.
SO ORDERED.
Velasco, Jr. (Chairperson), Brion,** Perez and Reyes, JJ., concur.
Notes.—Having sex with a ten (10)-year-old is child abuse and is punished by a special law
(Republic Act [RA] No. 7610). (Ricalde vs. People, 747 SCRA 542 [2015])
Under Section 3(a) of Republic Act (RA) No. 7610, “children” refers to “persons below eighteen
(18) years of age or those over but unable to fully take care of themselves or protect themselves
from abuse, neglect, cruelty, exploitation or discrimination because of a physical or mental
disability or condition.” (Dimakuta vs. People, 773 SCRA 228 [2015])
——o0o——
_______________
** Designated additional member, in lieu of Associate Justice Francis H. Jardeleza, per Raffle
dated October 1, 2014.
pg. 1840
G.R. No. 220546. December 7, 2016.*
LUZON IRON DEVELOPMENT GROUP CORPORATION and CONSOLIDATED IRON

SANDS, LTD., petitioners, vs. BRIDESTONE MINING AND DEVELOPMENT
CORPORATION and ANACONDA MINING AND DEVELOPMENT CORPORATION,
respondents.
Remedial Law; Civil Procedure; Forum Shopping; Forum shopping is committed when multiple
suits involving the same parties and the same causes of action are filed, either simultaneously or
successively, for the purpose of obtaining a favorable judgment through means other than appeal
or certiorari.—Forum shopping is committed when multiple suits involving the same parties and
the same causes of action are filed, either simultaneously or successively, for the purpose of
obtaining a favorable judgment through means other than appeal or certiorari. The prohibition on
forum shopping seeks to prevent the possibility that conflicting decisions will be rendered by two
tribunals.
_______________
* SECOND DIVISION.
584

Luzon Iron Development Group Corporation vs.Bridestone Mining and Development
Corporation
Same; Same; Same; Elements of Forum Shopping.—There is forum shopping when the following
elements are present: (a) identity of parties, or at least such parties representing the same interests
in both actions; (b) identity of rights asserted and reliefs prayed for, the relief being founded on
the same facts; and (c) the identity of the two preceding particulars, such that any judgment
rendered in the other action will, regardless of which party is successful, amounts to res judicata
in the action under consideration. All the above stated elements are present in the case at bench.
Same; Same; Same; Identity of Parties; The requirement is only substantial, and not absolute,
identity of parties; and there is substantial identity of parties when there is community of interest
between a party in the first case and a party in the second case, even if the latter was not impleaded
in the other case.—In both the complaints before the RTC and the DENR, Luzon Iron was
impleaded as defendant while Consolidated Iron was only impleaded in the complaint before the
RTC. Even if Consolidated Iron was not impleaded in the DENR complaint, the element still exists.
The requirement is only substantial, and not absolute, identity of parties; and there is substantial
pg. 1841
identity of parties when there is community of interest between a party in the first case and a party
in the second case, even if the latter was not impleaded in the other case. Consolidated Iron and
Luzon Iron had a common interest under the TPAA as the latter was a wholly-owned subsidiary
of the former.
Same; Same; Same; Identity of Causes of Action; The test to determine whether the causes of
action are identical is to ascertain whether the same evidence will sustain both actions, or whether
there is an identity in the facts essential to the maintenance of the two (2) actions.—A reading of
the complaints filed before the RTC and the DENR reveals that they had almost identical causes
of action and they prayed for similar reliefs as they ultimately sought the return of their respective
Exploration Permit on the ground of the alleged violations of the TPAA committed by the
petitioners. In Yap v. Chua, 672 SCRA 419 (2012), the Court ruled that identity of causes of action
did not mean absolute identity. Hornbook is the rule that identity of causes of action does not mean
absolute identity; otherwise, a party could easily escape the operation of res judicata by changing
the form of the action or the relief sought. The test to determine whether the causes of action
are identical is to
585
VOL. 813, DECEMBER 7, 2016 585

Corporation
ascertain whether the same evidence will sustain both actions, or whether there is an identity
in the facts essential to the maintenance of the two actions. If the same facts or evidence
would sustain both, the two actions are considered the same, and a judgment in the first case
is a bar to the subsequent action. Hence, a party cannot, by varying the form of action or adopting
a different method of presenting his case, escape the operation of the principle that one and the
same cause of action shall not be twice litigated between the same parties or their privies. In the
case at bench, both complaints filed before different fora involved similar facts and issues, the
resolution of which depends on analogous evidence. Thus, the filing of two separate complaints
by the petitioners with the RTC and the DENR clearly constitutes forum shopping. It is worth
noting that the very evil which the prohibition against forum shopping sought to prevent had
happened — the RTC and the DENR had rendered conflicting decisions. The trial court ruled that
it had jurisdiction notwithstanding the arbitration clause in the TPAA. On the other hand, the
DENR found that it was devoid of jurisdiction because the matter was subject to arbitration.
Same; Same; Service of Summons; Section 12 of Rule 14 of the Revised Rules of Court provides
that “[w]hen the defendant is a foreign private juridical entity which has transacted business in
the Philippines, service may be made on its resident agent designated in accordance with law for
that purpose, or, if there be no such agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines.”—Section 12 of Rule 14 of the
pg. 1842
Revised Rules of Court provides that “[w]hen the defendant is a foreign private juridical entity
which has transacted business in the Philippines, service may be made on its resident agent
designated in accordance with law for that purpose, or, if there be no such agent, on the government
official designated by law to that effect, or on any of its officers or agents within the Philippines.”
Same; Same; Same; Under the present legal milieu, the rules on service of summons on foreign
private juridical entities had been expanded as it recognizes additional modes by which summons
may be served.—Under the present legal milieu, the rules on service of summons on foreign private
juridical entities had been expanded as it recognizes additional modes by which summons may be
served. A.M. No. 11-3-6-SC thus provides: Section 12, Rule 14 of the Rules
586

Corporation
of Court is hereby amended to read as follows: “SEC. 12. Service upon foreign private juridical
entity.—When the defendant is a foreign private juridical entity which has transacted business in
the Philippines, service may be made on its resident agent designated in accordance with law for
that purpose, or, if there be no such agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines. If the foreign private juridical
entity is not registered in the Philippines or has no resident agent, service may, with leave of court,
be effected out of the Philippines through any of the following means: a) By personal service
coursed through the appropriate court in the foreign country with the assistance of the Department
of Foreign Affairs; b) By publication once in a newspaper of general circulation in the country
where the defendant may be found and by serving a copy of the summons and the court order by
registered mail at the last known address of the defendant; c) By facsimile or any recognized
electronic means that could generate proof of service; or d) By such other means as the court may
in its discretion direct.”
Corporations; Subsidiary Corporations; A wholly-owned subsidiary is a distinct and separate

entity from its mother corporation and the fact that the latter exercises control over the former
does not justify disregarding their separate personality.—The respondents err in insisting that
Luzon Iron could be served summons as an agent of Consolidated Iron, it being a wholly-owned
subsidiary of the latter. The allegations in the complaint must clearly show a connection between
the principal foreign corporation and its alleged agent corporation with respect to the transaction
in question as a general allegation of agency will not suffice. In other words, the allegations of the
complaint taken as whole should be able to convey that the subsidiary is but a business conduit of
the principal or that by reason of fraud, their separate and distinct personality should be
disregarded. A wholly-owned subsidiary is a distinct and separate entity from its mother
corporation and the fact that the latter exercises control over the former does not justify
pg. 1843
disregarding their separate personality. It is true that under the TPAA, Consolidated Iron wielded
great control over the actions of Luzon Iron under the said agreement. This, nonetheless, does not
warrant the conclusion that Luzon Iron was a mere conduit of Consolidated Iron.
587
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Civil Law; Arbitration; Consistent with the state policy of favoring arbitration, the present
Tenement Partnership and Acquisition Agreement (TPAA) must be construed in such a manner
that would give life to the arbitration clause rather than defeat it, if such interpretation is
permissible.—Consistent with the state policy of favoring arbitration, the present TPAA must be
construed in such a manner that would give life to the arbitration clause rather than defeat it, if
such interpretation is permissible. With this in mind, the Court views the interpretation forwarded
by the petitioners as more in line with the state policy favoring arbitration. Paragraphs 14.8 and
15.1 of the TPAA should be harmonized in such a way that the arbitration clause is given life,
especially since such construction is possible in the case at bench. A synchronized reading of the
above mentioned TPAA provisions will show that a claim or action raising the sufficiency,
validity, legality or constitutionality of: (a) the assignments of the EP to Luzon Iron; (b) any other
assignments contemplated by the TPAA; or (c) any agreement to which the EPs may be converted,
may be instituted only when there is a direct and/or blatant violation of the TPAA. In turn, the said
action or claim is commenced by proceeding with arbitration, as espoused in the TPAA.
Same; Same; The petitioners’ failure to refer the case for arbitration does not render the
arbitration clause in the present Tenement Partnership and Acquisition Agreement (TPAA)
inoperative.—The petitioners’ failure to refer the case for arbitration, however, does not render
the arbitration clause in the TPAA inoperative. In Koppel, Inc. v. Makati Rotary Club Foundation,
Inc. (Koppel), 705 SCRA 142 (2013), the Court explained that an arbitration clause becomes
operative, notwithstanding the lack of a formal request, when a party has appraised the trial court
of the existence of an arbitration clause, viz.: x x x The operation of the arbitration clause in
this case is not at all defeated by the failure of the petitioner to file a formal “request” or
application therefor with the MeTC. We find that the filing of a “request” pursuant to Section
24 of R.A. No. 9285 is not the sole means by which an arbitration clause may be validly invoked
in a pending suit.
Same; Same; Generally, the action of the court is stayed if the matter raised before it is subject to
arbitration.—Generally, the action of the court is stayed if the matter raised before it is subject to
pg. 1844
588

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arbitration. In the case at bench, however, the complaints filed before the RTC should have been
dismissed considering that the petitioners were able to establish the ground for their dismissal, that
is, violating the prohibition on forum shopping. The parties, nevertheless, are directed to initiate
arbitration proceedings as provided under Paragraph 15.1 of the TPAA.
Quisumbing, Torres for petitioners.
Lazaro Law Firm for respondents.
MENDOZA, J.:
This petition for review on certiorari with prayer for the issuance of a writ of preliminary
injunction and/or temporary restraining order (TRO) seeks to reverse and set aside the September
8, 2015 Decision1 of the Court of Appeals (CA) in C.A.-G.R. S.P. No. 133296, which affirmed
the March 18, 20132 and September 18, 20133 Orders of the Regional Trial Court, Branch 59,
Makati City (RTC), in the consolidated case for rescission of contract and damages.
The Antecedents
On October 25, 2012, respondents Bridestone Mining and Development Corporation (Bridestone)
and Anaconda Mining and Development Corporation (Anaconda) filed separate com-
_______________
1 Penned by Associate Justice Socorro B. Inting, with Associate Justices Remedios A. Salazar-
Fernando and Priscilla J. Baltazar-Padilla, concurring; Rollo, pp. 6-14.
pg. 1845
2 Penned by Presiding Judge Winlove M. Dumayas; id., at
pp. 843-847.
3 Id., at p. 922.
589
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plaints before the RTC for rescission of contract and damages against petitioners Luzon Iron
Development Group Corporation (Luzon Iron) and Consolidated Iron Sands, Ltd. (Consolidated
Iron), docketed as Civil Case No. 12-1053 and Civil Case No. 12-1054, respectively. Both
complaints sought the rescission of the Tenement Partnership and Acquisition Agreement (TPAA)4
entered into by Luzon Iron and Consolidated Iron, on one hand, and Bridestone and Anaconda, on
the other, for the assignment of the Exploration Permit Application of the former in favor of the
latter. The complaints also sought the return of the Exploration Permits to Bridestone and
Anaconda.5
Thereafter, Luzon Iron and Consolidated Iron filed their Special Appearance with Motion to
Dismiss6 separately against Bridestone’s complaint and Anaconda’s complaint. Both motions to
dismiss presented similar grounds for dismissal. They contended that the RTC could not acquire
jurisdiction over Consolidated Iron because it was a foreign corporation that had never transacted
business in the Philippines. Likewise, they argued that the RTC had no jurisdiction over the subject
matter because of an arbitration clause in the TPAA.
On December 19, 2012, the RTC ordered the consolidation of the two cases.7 Subsequently, Luzon
Iron and Consolidated Iron filed their Special Appearance and Supplement to Motions to Dismiss,8
dated January 31, 2013, seeking the dismissal of the consolidated cases. The petitioners alleged
that Bridestone and Anaconda were guilty of forum shopping because they filed similar complaints
before the Department of Environment and Natural Resources (DENR), Mines and
4 Id., at pp. 121-134.
5 Id., at pp. 22-25.
6 Id., at pp. 195-215, 311-331.
7 Id., at p. 26.
8 Id., at pp. 375-379.
pg. 1846
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Geosciences Bureau, Regional Panel of Arbitrators against Luzon Iron.
The RTC’s Orders
In its March 18, 2013 Order, the RTC denied the motions to dismiss, as well as the supplemental
motion to dismiss, finding that Consolidated Iron was doing business in the Philippines, with
Luzon Iron as its resident agent. The RTC ruled that it had jurisdiction over the subject matter
because under clause 14.8 of the TPAA, the parties could go directly to courts when a direct and/or
blatant violation of the provisions of the TPAA had been committed. The RTC also opined that
the complaint filed before the DENR did not constitute forum shopping because there was neither
identity of parties nor identity of reliefs sought.
Luzon Iron and Consolidated Iron moved for reconsideration, but the RTC denied their motion in
its September 18, 2013 Order.
Undaunted, they filed their petition for review with prayer for the issuance of a writ of preliminary
injunction and/or TRO before the CA.
The CA’s Ruling
In its September 8, 2015 Decision, the CA affirmed the March 18, 2013 and September 18, 2013
RTC Orders in denying the motions to dismiss and the supplemental motions to dismiss. It agreed
that the court acquired jurisdiction over the person of Consolidated Iron because the summons may
be validly served through its agent Luzon Iron, considering that the latter was merely the business
conduit of the former. The CA also sustained the jurisdiction of the RTC over the subject matter
opining that the arbitration clause in the TPAA provided for an exception where parties could
directly go to court.
pg. 1847
591
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Further, the CA also disregarded the averment of forum shopping, explaining that in the complaint
before the RTC, both Consolidated Iron and Luzon Iron were impleaded but in the complaint
before the DENR only the latter was impleaded. It stated that there was no identity of relief and
no identity of cause of action.
Hence, this appeal raising the following:
Issues
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT THE TRIAL

COURT ACQUIRED JURISDICTION OVER THE PERSON OF CONSOLIDATED
IRON;
II
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT THE TRIAL

COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF THE
CONSOLIDATED CASES; AND
III
pg. 1848
WHETHER THE COURT OF APPEALS ERRED IN RULING THAT
BRIDESTONE/ANACONDA WERE NOT GUILTY OF FORUM SHOPPING.9
Petitioners Luzon Iron and Consolidated Iron insist that the RTC has no jurisdiction over the latter
because it is a foreign corporation which is neither doing business nor has transacted business in
the Philippines. They argue that there could be no means by which the trial court could acquire
jurisdiction over the person of Consolidated Iron under any
_______________
9 Id., at p. 34.
592

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mode of service of summons. The petitioners claim that the service of summons to Consolidated
Iron was defective because the mere fact that Luzon Iron was a wholly-owned subsidiary of
Consolidated Iron did not establish that Luzon Iron was the agent of Consolidated Iron. They
emphasize that Consolidated Iron and Luzon Iron are two distinct and separate entities.
The petitioners further assert that the trial court had no jurisdiction over the consolidated cases
because of the arbitration clause set forth in the TPAA. They reiterate that Luzon Iron and
Consolidated Iron were guilty of forum shopping because their DENR complaint contained similar
causes of action and reliefs sought. They stress that the very evil sought to be prevented by the
prohibition on forum shopping had occurred when the DENR and the RTC issued conflicting
orders in dismissing or upholding the complaints filed before them.
Position of Respondents
In their Comment/Opposition,10 dated January 7, 2016, respondents Bridestone and Anaconda

countered that the RTC validly acquired jurisdiction over the person of Consolidated Iron. They
posited that Consolidated Iron was doing business in the Philippines as Luzon Iron was merely its
conduit. Thus, they insisted that summons could be served to Luzon Iron as Consolidated Iron’s
pg. 1849
agent. Likewise, they denied that they were guilty of forum shopping as the issues and the reliefs
prayed for in the complaints before the RTC and the DENR differed.
Further, the respondents asserted that the trial court had jurisdiction over the complaints because
the TPAA itself allowed a direct resort before the courts in exceptional circumstances. They cited
Paragraph 14.8 thereof as basis explain-
_______________
10 Id., at pp. 1272-1310.
593
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ing that when a direct and/or blatant violation of the TPAA had been committed, a party could go
directly to the courts. They faulted the petitioners in not moving for the referral of the case for
arbitration instead of merely filing a motion to dismiss. They added that actions that are subject to
arbitration agreement were merely suspended, and not dismissed.
Reply of Petitioners
In their Reply,11 dated April 29, 2016, the petitioners stated that Consolidated Iron was not
necessarily doing business in the Philippines by merely establishing a wholly-owned subsidiary in
the form of Luzon Iron. Also, they asserted that Consolidated Iron had not been validly served the
summons because Luzon Iron is neither its resident agent nor its representative in the Philippines.
The petitioners explained that Luzon Iron, as a wholly-owned subsidiary, had a separate and
distinct personality from Consolidated Iron.
The petitioners explained that Paragraph 14.8 of the TPAA should not be construed as an authority
to directly resort to court action in case of a direct and/or blatant violation of the TPAA because
such interpretation would render the arbitration clause nugatory. They contended that, even for the
sake of argument, the judicial action under the said provisions was limited to issues or matters
which were inexistent in the present case. They added that a party was not required to file a formal
request for arbitration before an arbitration clause became operational. Lastly, they insisted that
pg. 1850
the respondents were guilty of forum shopping in simultaneously filing complaints before the trial
court and the DENR.
_______________
11 Id., at pp. 1319-1347.
594

Corporation
Filing of complaints
before the RTC and
the DENR is forum
shopping
Forum shopping is committed when multiple suits involving the same parties and the same causes
of action are filed, either simultaneously or successively, for the purpose of obtaining a favorable
judgment through means other than appeal or certiorari.12 The prohibition on forum shopping
seeks to prevent the possibility that conflicting decisions will be rendered by two tribunals.13
In Spouses Arevalo v. Planters Development Bank,14 the Court elaborated that forum shopping
vexed the court and warranted the dismissal of the complaints. Thus:
Forum shopping is the act of litigants who repetitively avail themselves of multiple judicial
remedies in different fora, simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances; and raising substantially similar issues
either pending in or already resolved adversely by some other court; or for the purpose of
pg. 1851
increasing their chances of obtaining a favorable decision, if not in one court, then in another. The
rationale against forum shopping is that a party should not be allowed to pursue
simultaneous remedies in two different courts, for to do so would constitute abuse of court
processes which tends to degrade the administration of justice, wreaks havoc upon orderly
judicial procedure, and adds to the congestion of the heavily burdened dockets of the courts.
_______________
12 Vda. de Karaan v. Aguinaldo, G.R. No. 182151, September 21, 2015, 771 SCRA 107, 113.
13 Philippine Postal Corporation v. Court of Appeals, 722 Phil. 860; 711 SCRA 632 (2013).
14 68 Phil. 236; 670 SCRA 252 (2012).
595
VOL. 813, DECEMBER 7, 2016 595

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xxxx
What is essential in determining the existence of forum shopping is the vexation caused the
courts and litigants by a party who asks different courts and/or administrative agencies to
rule on similar or related causes and/or grant the same or substantially similar reliefs, in the
process creating the possibility of conflicting decisions being rendered upon the same issues.
xxxx
We emphasize that the grave evil sought to be avoided by the rule against forum shopping is the
rendition by two competent tribunals of two separate and contradictory decisions. To avoid any
confusion, this Court adheres strictly to the rules against forum shopping, and any violation
of these rules results in the dismissal of a case. The acts committed and described herein can
possibly constitute direct contempt.15 [Emphases supplied]
pg. 1852
There is forum shopping when the following elements are present: (a) identity of parties, or at least
such parties representing the same interests in both actions; (b) identity of rights asserted and
reliefs prayed for, the relief being founded on the same facts; and (c) the identity of the two
preceding particulars, such that any judgment rendered in the other action will, regardless of which
party is successful, amounts to res judicata in the action under consideration.16 All the above
stated elements are present in the case at bench.
First, there is identity of parties. In both the complaints before the RTC and the DENR, Luzon
Iron was impleaded as
_______________
15 Id., at pp. 250-251; pp. 264-267.
16 Heirs of Marcelo Sotto v. Palicte, 726 Phil. 651; 716 SCRA 175 (2014).
596

Corporation
defendant while Consolidated Iron was only impleaded in the complaint before the RTC. Even if
Consolidated Iron was not impleaded in the DENR complaint, the element still exists. The
requirement is only substantial, and not absolute, identity of parties; and there is substantial
identity of parties when there is community of interest between a party in the first case and a party
in the second case, even if the latter was not impleaded in the other case.17 Consolidated Iron and
Luzon Iron had a common interest under the TPAA as the latter was a wholly-owned subsidiary
of the former.
Second, there is identity of causes of action. A reading of the complaints filed before the RTC and
the DENR reveals that they had almost identical causes of action and they prayed for similar reliefs
as they ultimately sought the return of their respective Exploration Permit on the ground of the
alleged violations of the TPAA committed by the petitioners.18 In Yap v. Chua,19 the Court ruled
that identity of causes of action did not mean absolute identity.
Hornbook is the rule that identity of causes of action does not mean absolute identity; otherwise,
a party could easily escape the operation of res judicata by changing the form of the action or the
relief sought. The test to determine whether the causes of action are identical is to ascertain
whether the same evidence will sustain both actions, or whether there is an identity in the
facts essential to the maintenance of the two actions. If the same facts or evidence would
sustain both, the two actions are considered the same, and a judgment in the first case is a
pg. 1853
bar to the subsequent action. Hence, a party cannot, by varying the form of action or adopting a
different method of presenting his case, escape the opera-
_______________
17 Santos v. Heirs of Dominga Lustre, 583 Phil. 118, 127; 561 SCRA 120, 129-130 (2008).
18 Rollo, pp. 528 and 612.
19 687 Phil. 392; 672 SCRA 419 (2012).
597
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tion of the principle that one and the same cause of action shall not be twice litigated between the
same parties or their privies. x x x20 [Emphases supplied]
In the case at bench, both complaints filed before different fora involved similar facts and issues,
the resolution of which depends on analogous evidence. Thus, the filing of two separate complaints
by the petitioners with the RTC and the DENR clearly constitutes forum shopping.
It is worth noting that the very evil which the prohibition against forum shopping sought to prevent
had happened — the RTC and the DENR had rendered conflicting decisions. The trial court ruled
that it had jurisdiction notwithstanding the arbitration clause in the TPAA. On the other hand, the
DENR found that it was devoid of jurisdiction because the matter was subject to arbitration.
Summons were not

validly served
Section 12 of Rule 14 of the Revised Rules of Court provides that “[w]hen the defendant is a
foreign private juridical entity which has transacted business in the Philippines, service may be
made on its resident agent designated in accordance with law for that purpose, or, if there be no
pg. 1854
such agent, on the government official designated by law to that effect, or on any of its officers or
agents within the Philippines.”
The Rule on Summons, as it now reads, thus, makes the question whether Consolidated Iron was
“doing business in the Philippines” irrelevant as Section 12, Rule 14 of the Rules of Court was
broad enough to cover corporations which have “transacted business in the Philippines.”
_______________
20 Id., at p. 401; p. 430.
598

Corporation
In fact, under the present legal milieu, the rules on service of summons on foreign private juridical
entities had been expanded as it recognizes additional modes by which summons may be served.
A.M. No. 11-3-6-SC21 thus provides:
Section 12, Rule 14 of the Rules of Court is hereby amended to read as follows:
“SEC. 12. Service upon foreign private juridical entity.—When the defendant is a foreign
private juridical entity which has transacted business in the Philippines, service may be made
on its resident agent designated in accordance with law for that purpose, or, if there be no
such agent, on the government official designated by law to that effect, or on any of its
officers or agents within the Philippines.
If the foreign private juridical entity is not registered in the Philippines or has no resident
agent, service may, with leave of court, be effected out of the Philippines through any of the
following means:
a) By personal service coursed through the appropriate court in the foreign country with the
assistance of the Department of Foreign Affairs;
b) By publication once in a newspaper of general circulation in the country where the defendant
may be found and by serving a copy of the summons and the court order by registered mail at the
last known address of the defendant;
_______________
pg. 1855
21 Amendment of Section 12, Rule 14 of the Rules of Court on Service Upon Foreign Private
Juridical Entity.
599
VOL. 813, DECEMBER 7, 2016 599

Corporation
c) By facsimile or any recognized electronic means that could generate proof of service; or
d) By such other means as the court may in its discretion direct.”
The petitioners are mistaken in arguing that it cannot be served summons because under Section
15, Rule 14 of the Rules of Court, extrajudicial service of summons may be resorted to only when
the action is in rem or quasi in rem and not when the action is in personam. The premise of the
petitioners is erroneous as the rule on extraterritorial service of summons provided in Section 15,
Rule 14 of the Rules of Court is a specific provision dealing precisely with the service of summons
on a defendant which does not reside and is not found in the Philippines.22 On the other hand,
Section 12, Rule 14 thereof, specifically applies to a defendant foreign private juridical entity
which had transacted business in the Philippines. Both rules may provide for similar modes of
service of summons, nevertheless, they should only be applied in particular cases, with one
applicable to defendants which do not reside and are not found in the Philippines and the other to
foreign private juridical entities which had transacted business in the Philippines.
In the case at bench, it is crystal clear that Consolidated Iron transacted business in the Philippines
as it was a signatory in the TPAA that was executed in Makati. Hence, as the respondents argued,
it may be served with the summons in accordance with the modes provided under Section 12, Rule
14 of the Rules of Court.
_______________
22 NM Rothschild & Sons (Australia) Limited v. Lepanto Consolidated Mining Company, 677
Phil. 351, 370; 661 SCRA 328, 343 (2011).
600
pg. 1856
Corporation
In Atiko Trans, Inc. v. Prudential Guarantee and Assurance, Inc.,23 the Court elucidated on the
means by which summons could be served on a foreign juridical entity, to wit:
On this score, we find for the petitioners. Before it was amended by A.M. No. 11-3-6-SC, Section
12 of Rule 14 of the Rules of Court reads:
SEC. 12. Service upon foreign private juridical entity.—When the defendant is a foreign
private juridical entity which has transacted business in the Philippines, service may be made
on its resident agent designated in accordance with law for that purpose, or, if there be no
such agent, on the government official designated by law to that effect, or on any of its
officers or agents within the Philippines.
Elucidating on the above provision of the Rules of Court, this Court declared in Pioneer
International, Ltd. v. Guadiz, Jr. that when the defendant is a foreign juridical entity, service of
summons maybe made upon:
1. Its resident agent designated in accordance with law for that purpose;
2. The government official designated by law to receive summons if the corporation

does not have a resident agent; or
3. Any of the corporation’s officers or agents within the Philippines.24 [Emphasis

supplied]
The Court, however, finds that Consolidated Iron was not properly served with summons through
any of the permissible
_______________
23 671 Phil. 388; 655 SCRA 625 (2011).
24 Id., at pp. 399-400; pp. 636-637.
601
pg. 1857
VOL. 813, DECEMBER 7, 2016 601
Corporation
modes under the Rules of Court. Indeed, Consolidated Iron was served with summons through
Luzon Iron. Such service of summons, however, was defective.
It is undisputed that Luzon Iron was never registered before the Securities and Exchange
Commission (SEC) as Consolidated Iron’s resident agent. Thus, the service of summons to
Consolidated Iron through Luzon Iron cannot be deemed a service to a resident agent25 under the
first mode of service.
Likewise, the respondents err in insisting that Luzon Iron could be served summons as an agent of
Consolidated Iron, it being a wholly-owned subsidiary of the latter. The allegations in the
complaint must clearly show a connection between the principal foreign corporation and its alleged
agent corporation with respect to the transaction in question as a general allegation of agency will
not suffice.26 In other words, the allegations of the complaint taken as whole should be able to
convey that the subsidiary is but a business conduit of the principal or that by reason of fraud, their
separate and distinct personality should be disregarded.27 A wholly-owned subsidiary is a distinct
and separate entity from its mother corporation and the fact that the latter exercises control over
the former does not justify disregarding their separate personality. It is true that under the TPAA,
Consolidated Iron wielded great control over the actions of Luzon Iron under the said agreement.
This, nonetheless, does not warrant the conclusion that Luzon Iron was a mere conduit of
Consolidated Iron. In Pacific Rehouse Corporation v. CA,28 the Court ruled:
_______________
25 Section 128 of the Corporation Code.
26 French Oil Mill Machinery Co., Inc. v. Court of Appeals, 356 Phil. 780, 785; 295 SCRA 462,
467 (1998).
27 Signetics Corporation v. Court of Appeals, 296-A Phil. 782, 792; 225 SCRA 737, 745 (1993).
28 730 Phil. 325; 719 SCRA 665 (2014).
602

Corporation
pg. 1858
Albeit the RTC bore emphasis on the alleged control exercised by Export Bank upon its subsidiary
E-Securities, “[c]ontrol, by itself, does not mean that the controlled corporation is a mere
instrumentality or a business conduit of the mother company. Even control over the financial
and operational concerns of a subsidiary company does not by itself call for disregarding its
corporate fiction. There must be a perpetuation of fraud behind the control or at least a fraudulent
or illegal purpose behind the control in order to justify piercing the veil of corporate fiction. Such
fraudulent intent is lacking in this case.”29 [Emphasis supplied]
In the case at bench, the complaint merely contained a general statement that Luzon Iron was the
resident agent of Consolidated Iron, and that it was a wholly-owned subsidiary of the latter. There
was no allegation showing that Luzon Iron was merely a business conduit of Consolidated Iron,
or that the latter exercised control over the former to the extent that their separate and distinct
personalities should be set aside. Thus, Luzon Iron cannot be deemed as an agent of Consolidated
Iron in connection with the third mode of service of summons.
To reiterate, the Court did not acquire jurisdiction over Consolidated Iron because the service of
summons, coursed through Luzon Iron, was defective. Luzon Iron was neither the resident agent
nor the conduit or agent of Consolidated Iron.
On the above mentioned procedural issues alone, the dismissal of the complaints before the RTC
was warranted. Even granting that the complaints were not procedurally defective, there still
existed enough reason for the trial court to refrain from proceeding with the case.
_______________
29 Id., at p. 351; p. 692.
603
VOL. 813, DECEMBER 7, 2016 603

Corporation
Controversy must be
referred for arbitration
pg. 1859
The petitioners insisted that the RTC had no jurisdiction over the subject matter because under
Paragraph 15.1 of the TPAA, any dispute out of or in connection with the TPAA must be resolved
by arbitration. The said provision provides:
If, for any reasonable reason, the Parties cannot resolve a material fact, material event or any
dispute arising out of or in connection with this TPAA, including any question regarding its
existence, validity or termination, within 90 days from its notice, shall be referred to and finally
resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore
International Arbitration Centre (“SIAC Rules”) for the time being in force, which rules are
deemed to be incorporated by reference in this clause 15.1.30
The RTC, as the CA agreed, countered that Paragraph 14.8 of the TPAA allowed the parties to
directly resort to courts in case of a direct and/or blatant violation of the provisions of the TPAA.
Paragraph 14.8 stated:
Each Party agrees not to commence or procure the commencement of any challenge or claim,
action, judicial or legislative enquiry, review or other investigation into the sufficiency, validity,
legality or constitutionality of (i) the assignments of the Exploration Permit Applications(s) (sic)
to LIDGC, (ii) any other assignments contemplated by this TPAA, and/or (iii) or (sic) any
agreement to which the Exploration Permit Application(s) may be converted, unless a direct and/or
blatant violation of the provisions of the TPAA has been committed.31
_______________
30 Rollo, pp. 131-132.
31 Id., at p. 128.
604

Corporation
In Bases Conversion Development Authority v. DMCI Project Developers, Inc.,32 the Court
emphasized that the State favored arbitration, to wit:
The state adopts a policy in favor of arbitration. Republic Act No. 9285 expresses this policy:
pg. 1860
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 parties 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. As such, the State shall provide means
for the use of ADR as an efficient tool and an alternative procedure for the resolution of
appropriate cases. Likewise, the State shall enlist active private sector participation in the
settlement of disputes through ADR. This Act shall be without prejudice to the adoption by the
Supreme Court of any ADR system, such as mediation, conciliation, arbitration, or any
combination thereof as a means of achieving speedy and efficient means of resolving cases pending
before all courts in the Philippines which shall be governed by such rules as the Supreme Court
may approve from time to time.
Our policy in favor of party autonomy in resolving disputes has been reflected in our laws as
early as 1949 when our Civil Code was approved. Republic Act No. 876 later explicitly
recognized the validity and enforceability of parties’ decision to submit disputes and related issues
to arbitration.
Arbitration agreements are liberally construed in favor of proceeding to arbitration. We

adopt the interpretation that would render effective an arbitration clause if the terms of the
_______________
605
VOL. 813, DECEMBER 7, 2016 605

Corporation
agreement allow for such interpretation.33 [Emphases supplied]
Thus, consistent with the state policy of favoring arbitration, the present TPAA must be construed
in such a manner that would give life to the arbitration clause rather than defeat it, if such
interpretation is permissible. With this in mind, the Court views the interpretation forwarded by
the petitioners as more in line with the state policy favoring arbitration.
Paragraphs 14.8 and 15.1 of the TPAA should be harmonized in such a way that the arbitration
clause is given life, especially since such construction is possible in the case at bench. A
pg. 1861
synchronized reading of the above mentioned TPAA provisions will show that a claim or action
raising the sufficiency, validity, legality or constitutionality of: (a) the assignments of the EP to
Luzon Iron; (b) any other assignments contemplated by the TPAA; or (c) any agreement to which
the EPs may be converted, may be instituted only when there is a direct and/or blatant violation of
the TPAA. In turn, the said action or claim is commenced by proceeding with arbitration, as
espoused in the TPAA.
The Court disagrees with the respondents that Paragraph 14.8 of the TPAA should be construed
as an exception to the arbitration clause where direct court action may be resorted to in case of
direct and/or blatant violation of the TPAA occurs. If such interpretation is to be espoused, the
arbitration clause would be rendered inutile as practically all matters may be directly brought
before the courts. Such construction is anathema to the policy favoring arbitration.
A closer perusal of the TPAA will also reveal that paragraph 14 and all its subparagraphs are
general provisions, whereas paragraphs 15 and all its sub-clauses specifically refer to arbitration.
When general and specific provisions are
_______________
33 Id.
606

Corporation
inconsistent, the specific provision shall be paramount and govern the general provision.34
The petitioners’ failure to refer the case for arbitration, however, does not render the arbitration
clause in the TPAA inoperative. In Koppel, Inc. v. Makati Rotary Club Foundation, Inc.
(Koppel),35 the Court explained that an arbitration clause becomes operative, notwithstanding the
lack of a formal request, when a party has appraised the trial court of the existence of an arbitration
clause, viz.:
x x x The operation of the arbitration clause in this case is not at all defeated by the failure
of the petitioner to file a formal “request” or application therefor with the MeTC. We find
that the filing of a “request” pursuant to Section 24 of R.A. No. 9285 is not the sole means by
which an arbitration clause may be validly invoked in a pending suit.
Section 24 of R.A. No. 9285 reads:
pg. 1862
SEC. 24. Referral to Arbitration.—A court before which an action is brought in a matter which
is the subject matter of an arbitration agreement shall, if at least one party so requests not later that
the pretrial conference, or upon the request of both parties thereafter, refer the parties to arbitration
unless it finds that the arbitration agreement is null and void, inoperative or incapable of being
performed.
The “request” referred to in the above provision is, in turn, implemented by Rules 4.1 to 4.3 of
A.M. No. 07-11-08-SC or the Special Rules of Court on Alternative Dispute Resolution (Special
ADR Rules):
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34 TSPIC Corporation v. TSPIC Employees Union (FFW), 568 Phil. 744, 785; 545 SCRA 215,
227 (2008).
35 717 Phil. 337; 705 SCRA 142 (2013).
607
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Corporation
RULE 4: REFERRAL TO ADR
Rule 4.1. Who makes the request.—A party to a pending action filed in violation of the
arbitration agreement, whether contained in an arbitration clause or in a submission agreement,
may request the court to refer the parties to arbitration in accordance with such agreement.
xxxx
Attention must be paid, however, to the salient wordings of Rule 4.1. It reads: “[a] party to a
pending action filed in violation of the arbitration agreement x x x may request the court to refer
the parties to arbitration in accordance with such agreement.”
In using the word “may” to qualify the act of filing a “request” under Section 24 of R.A. No.
9285, the Special ADR Rules clearly did not intend to limit the invocation of an arbitration
agreement in a pending suit solely via such “request.” After all, noncompliance with an
arbitration agreement is a valid defense to any offending suit and, as such, may even be raised in
an answer as provided in our ordinary rules of procedure.
pg. 1863
In this case, it is conceded that petitioner was not able to file a separate “request” of arbitration
before the MeTC. However, it is equally conceded that the petitioner, as early as in its Answer
with Counterclaim, had already apprised the MeTC of the existence of the arbitration clause
in the 2005 Lease Contract and, more significantly, of its desire to have the same enforced in this
case. This act of petitioner is enough valid invocation of his right to arbitrate. x x x36
[Emphases supplied; italics in the original]
It is undisputed that the petitioners Luzon Iron and Consolidated Iron never made any formal
request for arbitration.
_______________
36 Id., at pp. 359-360; pp. 163-165.
608

Corporation
As expounded in Koppel, however, a formal request is not the sole means of invoking an arbitration
clause in a pending suit. Similar to the said case, the petitioners here made the RTC aware of the
existence of the arbitration clause in the TPAA as they repeatedly raised this as an issue in all their
motions to dismiss. As such, it was enough to activate the arbitration clause and, thus, should have
alerted the RTC in proceeding with the case.
Moreover, judicial restraint should be exercised pursuant to the competence-competence principle

embodied in Rule 2.4 of the Special Rules of Court on Alternative Dispute Resolution.37 The said
provision reads:
RULE 2.4. Policy Implementing Competence-Competence Principle.—The arbitral tribunal

shall be accorded the first opportunity or competence to rule on the issue of whether or not it has
the competence or jurisdiction to decide a dispute submitted to it for decision, including any
objection with respect to the existence or validity of the arbitration agreement. When a court is
asked to rule upon issue/s affecting the competence or jurisdiction of an arbitral tribunal in
a dispute brought before it, either before or after the arbitral tribunal is constituted, the
court must exercise judicial restraint and defer to the competence or jurisdiction of the
arbitral tribunal by allowing the arbitral tribunal the first opportunity to rule upon such
issues.
pg. 1864
Where the court is asked to make a determination of whether the arbitration agreement is null and
void, inoperative or incapable of being performed, under this policy of judicial restraint, the court
must make no more than a prima facie determination of that issue.
Unless the court, pursuant to such prima facie determination, concludes that the arbitration
agreement is null and void, inoperative or incapable of being per-
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37 A.M. No. 07-11-08-SC.
609
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Corporation
formed, the court must suspend the action before it and refer the parties to arbitration pursuant to
the arbitration agreement. [Emphasis supplied]
Generally, the action of the court is stayed if the matter raised before it is subject to arbitration.38
In the case at bench, however, the complaints filed before the RTC should have been dismissed
considering that the petitioners were able to establish the ground for their dismissal, that is,
violating the prohibition on forum shopping. The parties, nevertheless, are directed to initiate
arbitration proceedings as provided under Paragraph 15.1 of the TPAA.
WHEREFORE, the petition is GRANTED. The September 8, 2015 Decision of the Court of
Appeals in C.A.-G.R. S.P. No. 133296, affirming the March 18, 2013 and September 18, 2013
Orders of the Regional Trial Court, Branch 59, Makati City, is hereby SET ASIDE. The
complaints in Civil Case Nos. 12-1053 and 12-1054 are DISMISSED. The parties, however, are
ORDERED to commence arbitration proceedings pursuant to Paragraph 15.1 of the Tenement
Partnership and Acquisition Agreement.
SO ORDERED.
Carpio (Chairperson), Del Castillo and Leonen, JJ., concur.
Petition granted, judgment set aside.
pg. 1865
Notes.—In Majority Stockholders of Ruby Industrial Corporation v. Lim, 650 SCRA 461 (2011),
the Supreme Court (SC) reiterated that no forum shopping exists when two (2) groups of oppositors
in a rehabilitation case act independently of each other, even when they have sought relief from
the
_______________
38 Rule 4.5, A.M. No. 07-11-08-SC.
610

Corporation
same appellate court. (Victorio-Aquino vs. Pacific Plans, Inc., 744 SCRA 480 [2014])
To determine whether a party violated the rule against forum shopping, the elements of litis
pendentia must be present, or the final judgment in one case amounts to res judicata in another.
(Suntay vs. Keyser Mercantile, Inc., 744 SCRA 645 [2014])
——o0o——
pg. 1866

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Short Name: Pamaran vs.

G.R. No. 205753. July 4, 2016.*

ROSA PAMARAN, substituted by her heirs, through their representative, ROSEMARY P.

The facts are stated in the opinion of the Court.

Leonardo W. Bernabe for petitioners.

DEL CASTILLO, J.:

Hence, petitioners filed this Petition raising the following issues:

VOL. 795, JULY 4, 2016 437

14 Id., at pp. 275-276; pp. 379-380.

15 Id., at p. 276; p. 380.

438 SUPREME COURT REPORTS ANNOTATED

Here, the pertinent portions of the Complaint read:

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440 SUPREME COURT REPORTS ANNOTATED

17 Records, pp. 3-5, 7.

VOL. 795, JULY 4, 2016 441

The position of the RTC Olongapo is unjustified.

442 SUPREME COURT REPORTS ANNOTATED

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444 SUPREME COURT REPORTS ANNOTATED

Carpio** (Acting CJ., Chairperson), Brion and Leonen, JJ., concur.

Mendoza, J., On Official Leave.

Petition granted, orders reversed and set aside.

G.R. No. 220978. July 5, 2016.*

CENTURY PROPERTIES, INC., petitioner, vs. EDWIN J. BABIANO and EMMA B.

VOL. 795, JULY 5, 2016 673

The facts are stated in the opinion of the Court.

Divina Law for petitioner.

The Law Firm of Culvera & Associates for respondents.

Assailed in this petition for review on certiorari1 are the

1 Rollo, pp. 10-32.

674 SUPREME COURT REPORTS ANNOTATED

3 Id., at pp. 53-56.

7 Dated September 1, 2007. Id., at pp. 76-79.

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9 Id.; pp. 38-39 and 277.

15 Id., at pp. 114 and 115.

676 SUPREME COURT REPORTS ANNOTATED

of interest, and breach of trust and confidence for his actuations.17

On August 8, 2011, respondents filed a complaint23 for

17 Id., at pp. 83 and 226-227.

19 Id., at pp. 39 and 130.

23 Not attached to the Rollo.

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The LA’s Ruling

27 Id., at pp. 125-130; p. 40.

28 Id., at pp. 137-139; p. 40.

29 Id., at pp. 220-237. Penned by LA Eduardo G. Magno.

31 Id., at pp. 230-233.

32 Id., at pp. 233-237.

678 SUPREME COURT REPORTS ANNOTATED

The NLRC’s Ruling

34 Id., at pp. 276-290.

38 Id., at pp. 282-284.

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The CA’s Ruling

39 Id., at pp. 284-287.

42 Id., at pp. 310-311.

44 Id., at pp. 37-51.

680 SUPREME COURT REPORTS ANNOTATED

46 Id., at pp. 44-47.

47 Id., at pp. 47-48.

VOL. 795, JULY 5, 2016 681