Full Case J Leonen 5

G.R. No. 202430 - METRO BOTTLED WATER CORPORATION, PETITIONER, v.
ANDRADA CONSTRUCTION & DEVELOPMENT CORPORATION, INC.,

RESPONDENT.
THIRD DIVISION
G.R. No. 202430, March 06, 2019
METRO BOTTLED WATER CORPORATION, PETITIONER, v. ANDRADA

CONSTRUCTION & DEVELOPMENT CORPORATION, INC., RESPONDENT.
DECISION
LEONEN, J.:
Generally, judicial review of arbitral awards is permitted only on very narrow grounds.
Republic Act No. 876, or the Arbitration Law, does not allow an arbitral award to be
revisited without a showing of specified conditions,1 which must be proven affirmatively
by the party seeking its review. The Special Rules of Court on Alternative Dispute
Resolution,2 implementing the Alternative Dispute Resolution Act of 2004,3 mandate
that arbitral awards will not be vacated "merely on the ground that the arbitral tribunal
committed errors of fact, or of law, or of fact and law, as the court cannot substitute its
judgment for that of the arbitral tribunal."4 Parties are even "precluded from filing an
appeal or a petition for certiorari questioning the merits of an arbitral award." 5
On the other hand, arbitral awards by the Construction Industry Arbitration Commission
may only be appealed on pure questions of law,6 though not all will justify an appeal.
Consistent with the strict standards for judicial review of arbitral awards, only those
appeals which involve egregious errors of law may be entertained.
Given its technical expertise, the Construction Industry Arbitration Commission is given
a wide latitude of discretion so that it may resolve all issues before it in a fair and
expeditious manner. Included within the bounds of its discretion are situations where it
resolves, on the basis of equity, to order a party to compensate a contractor for any
unpaid work done.
For this Court's resolution is a Petition for Review on Certiorari7 assailing the March 21,
2012 Decision8and June 25, 2012 Resolution9 of the Court of Appeals, which upheld the
April 11, 2002 Arbitral Award10of the Construction Industry Arbitration Commission. The
arbitral tribunal had ordered Metro Bottled Water Corporation (Metro Bottled Water) to
pay Andrada Construction & Development Corporation, Inc. (Andrada Construction) the
amount of P4,607,523.40 with legal interest from November 24, 2000 as unpaid work
accomplishment in the construction of its manufacturing plant.
On April 28, 1995, Metro Bottled Water and Andrada Construction entered into a
Construction Agreement11 for the construction of a reinforced concrete manufacturing
plant in Gateway Business Park, General Trias, Cavite for the contract price of
P45,570,237.90. The Construction Agreement covered all materials, labor, equipment,
and tools, including any other works required.12 It provided:
8. Change Order
a. Without invalidating this Agreement, the OWNER may, at any time, order
additions, deletions or revisions in the Work by means of a Change Order.
The CONTRACTOR shall determine whether the Change Order causes a
decrease or increase in the Purchase Price or shortening or extension of
the Contract Period. Within three (3) days from receipt of the Change
Order, CONTRACTOR shall give written notice to the OWNER of the
value of the works required under the Change Order which will increase
the Contract Price and of the extension in the Contract Period necessary
to complete such works. On the other hand, if the Change Order involves
deletions of some works required in the original Contract Documents, the
value of the works deleted shall be deducted from the Contract Price and
the Contract Period shortened accordingly.
In either case, any addition or reduction in the Contract Price or extension

or shortening of the Contract Period shall be mutually agreed in writing by
the OWNER and the CONTRACTOR prior to the execution of the works
covered by the Change Order.13
The project was to be completed within 150 calendar days or by October 10, 1995, to
be reckoned from Andrada Construction's posting of a Performance Bond to answer for
liquidated damages, costs to complete the project, and third party claims. The
Performance Bond was issued by Intra Strata Assurance Corporation (Intra Strata). 14
On May 10, 1995, Metro Bottled Water extended the period of completion to November
30, 1995 upon Andrada Construction's request, due to the movement of one (1) bay of
the plant building, weather conditions, and change orders.15
On November 14, 1995, E.S. De Castro and Associates, Metro Bottled Water's
consultant for the project, recommended the forfeiture of the Performance Bond to
answer for the completion and correction of the project, as well as liquidated damages
for delay.16
On May 2, 1996, Metro Bottled Water filed a claim against the Performance Bond
issued by Intra Strata.17 Andrada Construction opposed the claim for lack of legal and
factual basis.18
On September 6, 1996, Andrada Construction wrote to Metro Bottled Water contesting

E.S. De Castro and Associates' Special Report.19 The works performed by Andrada
Construction were inspected by Metro Bottled Water and E.S. De Castro and
Associates. Punch lists were prepared to monitor Andrada Construction's
rectifications.20
Andrada Construction sent letters to Metro Bottled Water requesting for payment of
unpaid work accomplishments amounting to P7,292,721.27.21 Metro Bottled Water
refused to pay.22
On August 6, 2001, Andrada Construction filed a Request for Arbitration 23 before the
Construction Industry Arbitration Commission, alleging that Metro Bottled Water refused
to pay its unpaid work accomplishment amounting to P7,954,961.10, with interest of
P494,297.31.24
In its Answer,25 Metro Bottled Water denied the allegations and counterclaimed for cost
to complete and correct the project in the amount of P5,231,452.03 and liquidated
damages in the amount of P1,663,884.36, among others.
A preliminary conference was held. On February 16, 2002, the arbitral tribunal
conducted an ocular inspection of the construction site. The parties subsequently filed
their respective Memoranda.26
In its April 24, 2002 Decision,27 the Construction Industry Arbitration Commission found
that Andrada Construction was entitled to unpaid work accomplishment in the amount of
P4,607,523.40, with legal interest from November 24, 2000. It, however, denied Metro
Bottled Water's counterclaims.28
According to the Construction Industry Arbitration Commission, Andrada Construction

was entitled to the claims from the change orders since Metro Bottled Water did not
strictly enforce its procedures in approving Change Orders 1 to 38 and impliedly
approved Change Orders 39 to 109 by funding the payrolls and materials. However, it
deducted: (1) P648,773.63, as this was already included in the claim for change orders;
(2) P2,474,647.28, as costs for completion; and (3) P2,756,804.75, as corrective costs
for the cracks on the concrete slabs in the production plant building.29
The Construction Industry Arbitration Commission also found that there was no delay in
the completion since Metro Bottled Water validly granted an extension until November
30, 1995. It denied Metro Bottled Water's claim for corrective costs since any advance
made by Metro Bottled Water for labor and materials was charged against Andrada
Construction's 10% retention30 money.31
The Construction Industry Arbitration Commission also clarified that there were no valid
factual and legal grounds for Metro Bottled Water's termination of agreement. This was
because Andrada Construction completed the project within the extended period, and
Metro Bottled Water failed to substantiate its allegation of payroll padding. The arbitral
tribunal concluded that Metro Bottled Water could not have taken over the project from
November 15, 1995, since there was no notice of termination and Andrada Construction
remained in full control of the original contract and change orders during the extended
period.32 The Arbitral Award read:
WHEREFORE, premises considered we hold that:
A. Claimant's claims
Unpaid work
- P4,607,523.40
accomplishment
6% per annum on P4,607,523.40 reckoned

from November 24, 2000 date of receipt of the
Interest on the
letter dated October 24, 2000 by Respondent
unpaid work -
and 12% per annum from the time the judgment
Accomplishment
becomes final and executory until the entire
sum including interest is fully paid.
Respondent's
B.
Counterclaims
Cost to complete
and correct the - none
projects
Liquidated
- none
damages
All other claims and counterclaims are dismissed for lack of merit.
The costs of arbitration shall be shared equally by the parties.
Accordingly, judgment is hereby rendered ordering Metro Bottled Water Corporation to

pay Andrada Construction and Development Inc. the amount of P4,607,523.40 with
interest at 6% per annum reckoned from November 24, 2000 date of receipt of the letter
dated October 24, 2000 by Respondent and 12% per annum from the time this
judgment becomes final and executory until the entire sum including interest is fully
paid.
SO ORDERED, April 11, 2002.33

Metro Bottled Water filed before the Court of Appeals a Petition for Review34 assailing
the Arbitral Award.
In its March 21, 2012 Decision,35 the Court of Appeals dismissed the Petition for lack of
merit36 and upheld the factual findings of the Construction Industry Arbitration
Commission.37 It agreed with the arbitral tribunal's evaluation that Metro Bottled Water
confirmed the completed works, and thus, Andrada Construction was entitled to
compensation. To deny the payment would be to permit unjust enrichment at Andrada
Construction's expense.38
The Court of Appeals found no error in the entitlement of legal interest since demand
could be reasonably established from Andrada Construction's October 24, 2000 Letter,
which stated that payment was being requested as a formal claim.39 It held that it could
not pass upon Metro Bottled Water's allegation that the claims were barred by laches
since it was not among the issues for resolution in the parties' Terms of Reference. 40
Metro Bottled Water filed a Motion for Reconsideration, but it was denied by the Court of
Appeals in its June 25, 2012 Resolution.41 Hence, this Petition42 was filed.
Petitioner argues that the Court of Appeals erred in applying the principle of unjust
enrichment, considering that Article 1724 of the Civil Code43 provides the requisites for
the recovery of the costs of additional work. It contends that Article 1724 requires both
the written authority of the owner allowing the changes and a written agreement by the
parties as to the increase in costs, neither of which were present in this case.44 Even the
Construction Agreement, it asserts, requires a written order to the contractor signed by
the owner, authorizing work changes or adjustments on the contract price or contract
period—to which respondent did not comply.45
Petitioner explains that there was no evidence to conclude that it did not observe the
contractual provisions on Change Order Nos. 1 to 38 since respondent admitted that
Change Order Nos. 1 to 38 were submitted to petitioner for approval. At any rate, it
argues, the Construction Agreement provides that any non-enforcement under the
contract cannot be construed as a waiver of its rights. Hence, its non-enforcement of the
contractual provisions on Change Order Nos. 1 to 38 should not be construed as a
waiver of its rights to enforce the contractual provisions on Change Order Nos. 39 to
109.46
Petitioner asserts that it was entitled to the payment of liquidated damages since
respondent was unable to complete the project within the contract period. Respondent
had no valid reasons to extend the contract period or execute change orders. It points
out that its October 11, 1995 Letter did not grant a time extension, but merely provided
a new schedule of completion; hence, respondent's completion of the project nine (9)
days after the contract period constituted delay.47
Petitioner submits that the Court of Appeals and the Construction Industry Arbitration
Commission erred in not finding that there were no factual and legal grounds for
terminating the Construction Agreement and petitioner taking over the project. It argues
that respondent not only failed to complete the project on time, but also engaged in
payroll padding, as proven by documentary evidence. It points out that it needed no
notice to take over the project if, upon notice of default, respondent could not complete
it within 10 days, per the Construction Agreement.48 Thus, petitioner, on November 15,
1995, assumed the payment of labor and supervision of manpower, as proven by its
consultant's testimony and the Progress Reports submitted during the period. 49
Respondent counters that petitioner assails the competence of the Construction

Industry Arbitration Commission on its findings of fact. This, it points outs, is not among
the grounds for which petitioner may appeal the arbitral award. It argues that petitioner
agreed to be bound by arbitration proceedings in an administrative agency "vested with
special powers to determine issues in construction contracts, agreements[,] and
projects."50 It maintains that this Court may only entertain questions of law and that the
arbitral tribunal's factual findings are "regarded with full respect, if not finality." 51
Respondent contends that E.S. De Castro and Associates' engineers and architects
gave instructions on change orders that would later be endorsed to petitioner for
approval.52 For Change Order Nos. 1 to 109, the practice was that respondent would
receive "[a]dvise, directive or instruction and orders"53 from E.S. De Castro and
Associates, after which respondent would draft a written quotation or proposal to be
reviewed and evaluated by E.S. De Castro and Associates and endorsed to petitioner
for approval. Thus, respondent proceeded with the changes advised and directed by
E.S. De Castro and Associates, without need of petitioner's written authority.54
Respondent further argues that petitioner was not entitled to liquidated damages
considering its requested extension was thoroughly reviewed by E.S. De Castro and
Associates, which later approved it.55 Since there was no delay, it asserts, petitioner
would have no valid reason to terminate the Construction Agreement. 56 It argues that
the Construction Industry Arbitration Commission and the Court of Appeals correctly
found that petitioner did not take over the project from November 15, 1995 since no
evidence presented proved this allegation.57 Further, it raises the presence of a "domino
effect"58 in that the contract period was validly extended; hence, there could be no
delay. Without delay, there could be no reason for the award of damages, termination of
contract, or take-over of the project.59
Respondent submits that there was no error in the application of unjust enrichment
considering that petitioner "has already reaped enormous benefits out of the use of the
construction project" and has "continued to profit [from the] unhampered commercial
operations of the plant[.]"60 It asserts that equity and law are "applied distinctly based on
the antecedents of each case" and that the factual circumstances of this case
necessarily require the application of equity rather than "strict legalism or form." 61
In rebuttal, petitioner argues that it indeed raised questions of law when it questioned
respondent's entitlement to recover its claims despite its admission that there was no
written approval by petitioner, as required by the Construction Agreement and the Civil
Code.62 It also points out that while the arbitral tribunal's factual findings are entitled to
great respect, they may still be reviewed by the Court of Appeals and this Court when
there is a conflict in the application of law, jurisprudence, or the contract between the
parties.63 It reiterates its arguments in the Petition64 and asserts that respondent
"erroneously raised arguments on equity"65 when the provisions of law are clear.66
The main issue raised before this Court is whether or not the Construction Industry
Arbitration Commission and the Court of Appeals erred in finding that petitioner Metro
Bottled Water Corporation was liable to respondent Andrada Consumption &
Development Corporation, Inc. for unpaid work accomplishment.
To resolve this issue, this Court must pass upon the issue of whether the Court of
Appeals erred in affirming the arbitral tribunal's findings that: (1) petitioner agreed to the
Change Orders; (2) respondent did not commit delay in the project completion; and (3)
petitioner did not terminate the contract or take over the project. However, considering
the limited scope of review of arbitral awards by the Construction Industry Arbitration
Commission, this Court must first determine whether petitioner raises questions of law.
The Construction Industry Arbitration Commission was created by Executive Order No.
1008,67 or the Construction Industry Arbitration Law, to have "original and exclusive
jurisdiction over disputes arising from, or connected with, contracts entered into by
parties involved in construction in the Philippines, whether the dispute arises before or
after the completion of the contract, or after the abandonment or breach thereof."68 The
extent of its jurisdiction is clearly provided for in the law:
The jurisdiction of the CIAC may include but is not limited to violation of specifications
for materials and workmanship; violation of the terms of agreement; interpretation
and/or application of contractual time and delays; maintenance and defects; payment,
default of employer or contractor and changes in contract cost.
Excluded from the coverage of this law are disputes arising from employer-employee
relationships which shall continue to be covered by the Labor Code of the Philippines. 69
Considering that the law covers a specific field of industry and the arbitral tribunal's
jurisdiction is well defined, several provisions of the law emphasize the technical nature
of the proceedings before it, and provide for the particular expertise required of the
arbitrators:
SECTION 14. Arbitrators. — A sole arbitrator or three arbitrators may settle a dispute.
....
Arbitrators shall be men of distinction in whom the business sector and the government
can have confidence. They shall not be permanently employed with the CIAC. Instead,
they shall render services only when called to arbitrate. For each dispute they settle,
they shall be given fees.70
The Revised Rules of Procedure Governing Construction Arbitration provides more
stringent qualifications for arbitrators and enumerate specific professions that they may
hold, such as "engineers, architects, construction managers, engineering consultants,
and businessmen familiar with the construction industry":71
SECTION 8.1 General qualification of Arbitrators. — The Arbitrators shall be men of
distinction in whom the business sector and the government can have confidence. They
shall be technically qualified to resolve any construction dispute expeditiously and
equitably. The Arbitrators shall come from different professions. They may include
engineers, architects, construction managers, engineering consultants, and
businessmen familiar with the construction industry and lawyers who are experienced in
construction disputes.
The Construction Industry Arbitration Law even allows the appointment of experts if
requested by the parties or by the arbitral tribunal:
SECTION 15. Appointment of Experts. — The services of technical or legal experts may
be utilized in the settlement of disputes if requested by any of the parties or by the
Arbitral Tribunal. If the request for an expert is done by either or by both of the parties, it
is necessary that the appointment of the expert be confirmed by the Arbitral Tribunal.
Whenever the parties request for the services of an expert, they shall equally shoulder
the expert's fees and expenses, half of which shall be deposited with the Secretariat
before the expert renders service. When only one party makes the request, it shall
deposit the whole amount required.72
Likewise, the law mandates that any resort to arbitration must be voluntary. 73
Under the Revised Rules, a party's refusal to submit to arbitration may result in the
dismissal of the complaint without prejudice to its refiling:
Respondent's refusal to Answer the Complaint or the filing of a Motion to Dismiss for
lack of jurisdiction shall be deemed a refusal to submit to arbitration. In either case, the
Commission (CIAC) shall dismiss the Complaint without prejudice to its refiling upon a
subsequent submission.74 (Citation omitted)
Due to the highly technical nature of proceedings before the Construction Industry
Arbitration Commission, as well as its emphasis on the parties' willingness to submit to
the proceedings, the Construction Industry Arbitration Law provides for a narrow ground
by which the arbitral award can be questioned in a higher tribunal. Section 19 states:
SECTION 19. Finality of Awards. — The arbitral award shall be binding upon the
parties. It shall be final and inappealable except on questions of law which shall be
appealable to the Supreme Court.
The Construction Industry Arbitration Commission has since been categorized as a
quasi-judicial agency in Metro Construction, Inc. v. Chatham Properties, Inc.:75
[The Construction Industry Arbitration Commission] is a quasi-judicial agency. A quasi-
judicial agency or body has been defined as an organ of government other than a court
and other than a legislature, which affects the rights of private parties through either
adjudication or rule-making. The very definition of an administrative agency includes its
being vested with quasi-judicial powers. The ever increasing variety of powers and
functions given to administrative agencies recognizes the need for the active
intervention of administrative agencies in matters calling for technical knowledge and
speed in countless controversies which cannot possibly be handled by regular courts.
The CIAC's primary function is that of a quasi-judicial agency, which is to adjudicate
claims and/or determine rights in accordance with procedures set forth in E.O. No.
1008.76
To standardize appeals from quasi-judicial agencies, Rule 43 of the 1997 Rules of Civil
Procedure provides that appeals "may be taken to the Court of Appeals within the
period and in the manner herein provided, whether the appeal involves questions of
fact, of law, or mixed questions of fact and law."77 The Construction Industry Arbitration
Commission is among the quasi-judicial agencies explicitly listed in the rule.
While there is uniformity between appeals of the different quasi-judicial agencies, Rule
43 does not automatically apply to all appeals of arbitral awards. Fruehauf Electronics
Philippines Corporation v. Technology Electronics Assembly and Management Pacific
Corporation78 has since distinguished between commercial arbitration, construction
arbitration, and voluntary arbitration under Article 219(n) of the Labor Code. 79Fruehauf
Electronics Philippines Corporation declared that commercial arbitration tribunals are
not quasi-judicial agencies, but "purely ad hoc bodies operating through contractual
consent and as they intend to serve private, proprietary interests." 80 A commercial
arbitration tribunal is a "creature of contract"81 that becomes functus officio once the
arbitral award attains finality.82
However, the jurisdiction of construction arbitration tribunals and voluntary arbitrators is

vested by statute. This jurisdiction exists independently of the will of the contracting
parties due to the public interest inherent in their respective spheres,83 thus:
Voluntary Arbitrators resolve labor disputes and grievances arising from the
interpretation of Collective Bargaining Agreements. These disputes were specifically
excluded from the coverage of both the Arbitration Law and the ADR Law.
Unlike purely commercial relationships, the relationship between capital and labor [is]
heavily impressed with public interest. Because of this, Voluntary Arbitrators authorized
to resolve labor disputes have been clothed with quasi-judicial authority.
On the other hand, commercial relationships covered by our commercial arbitration laws
are purely private and contractual in nature. Unlike labor relationships, they do not
possess the same competing state interest that would justify state interference into the
autonomy of contracts. Hence, commercial arbitration is a purely private system of
adjudication facilitated by private citizens instead of government instrumentalities
wielding quasi-judicial powers.
Moreover, judicial or quasi-judicial jurisdiction cannot be conferred upon a tribunal by

the parties alone. The Labor Code itself confers subject-matter jurisdiction to Voluntary
Arbitrators.
Notably, the other arbitration body listed in Rule 43 — the Construction Industry
Arbitration Commission (CIAC) — is also a government agency attached to the
Department of Trade and Industry. Its jurisdiction is likewise conferred by statute. By
contrast, the subject-matter jurisdiction of commercial arbitrators is stipulated by the
parties.84(Citation omitted)
In CE Construction v. Araneta Center,85 however, this Court emphasized that Rule 43
must be read together with the Construction Industry Arbitration Law, which provides
that appeals of arbitral awards must only raise questions of law. Thus, even if Rule 43
now provides that appeals may be brought before the Court of Appeals, these appeals
must still be confined to questions of law:
This is not to say that factual findings of CIAC arbitral tribunals may now be assailed
before the Court of Appeals. Section 3's statement "whether the appeal involves
questions of fact, of law, or mixed questions of fact and law" merely recognizes
variances in the disparate modes of appeal that Rule 43 standardizes: there were those
that enabled questions of fact; there were those that enabled questions of law, and
there were those that enabled mixed questions [of] fact and law. Rule 43 emphasizes
that though there may have been variances, all appeals under its scope are to be
brought before the Court of Appeals. However, in keeping with the Construction Industry
Arbitration Law, any appeal from CIAC arbitral tribunals must remain limited to
questions of law.86 (Emphasis supplied)
The rationale for this limitation has already been thoroughly explained in Hi-Precision
Steel Center, Inc. v. Lim Kim Steel Builders, Inc.:87
Section 19 [of Executive Order No. 1008] makes it crystal clear that questions of fact
cannot be raised in proceedings before the Supreme Court — which is not a trier of
facts — in respect of an arbitral award rendered under the aegis of the CIAC.
Consideration of the animating purpose of voluntary arbitration in general, and
arbitration under the aegis of the CIAC in particular, requires us to apply rigorously the
above principle embodied in Section 19 that the Arbitral Tribunal's findings of fact shall
be final and unappealable.
Voluntary arbitration involves the reference of a dispute to an impartial body, the

members of which are chosen by the parties themselves, which parties freely consent in
advance to abide by the arbitral award issued after proceedings where both parties had
the opportunity to be heard. The basic objective is to provide a speedy and inexpensive
method of settling disputes by allowing the parties to avoid the formalities, delay,
expense and aggravation which commonly accompany ordinary litigation, especially
litigation which goes through the entire hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the construction industry in the Philippines can
have recourse. The Executive Order was enacted to encourage the early and
expeditious settlement of disputes in the construction industry, a public policy the
implementation of which is necessary and important for the realization of national
development goals.88
CE Construction further provides that even exceptions that may be allowed in the
review of Rule 45 petitions,89 such as the lower court's misapprehension of facts or a
conflict in the factual findings, will not apply to reviews of the arbitral tribunal's
decisions. Hi-Precision Steel Center, Inc. sufficiently explains the rationale of why courts
are duty bound to uphold the factual findings of the tribunal:
Aware of the objective of voluntary arbitration in the labor field, in the construction
industry, and in any other area for that matter, the Court will not assist one or the other
or even both parties in any effort to subvert or defeat that objective for their private
purposes. The Court will not review the factual findings of an arbitral tribunal upon the
artful allegation that such body had "misapprehended the facts" and will not pass upon
issues which are, at bottom, issues of fact, no matter how cleverly disguised they might
be as "legal questions." The parties here had recourse to arbitration and chose the
arbitrators themselves; they must have had confidence in such arbitrators. The Court
will not, therefore, permit the parties to relitigate before it the issues of facts previously
presented and argued before the Arbitral Tribunal, save only where a very clear
showing is made that, in reaching its factual conclusions, the Arbitral Tribunal
committed an error so egregious and hurtful to one party as to constitute a grave abuse
of discretion resulting in lack or loss of jurisdiction. Prototypical examples would be
factual conclusions of the Tribunal which resulted in deprivation of one or the other party
of a fair opportunity to present its position before the Arbitral Tribunal, and an award
obtained through fraud or the corruption of arbitrators. Any other, more relaxed, rule
would result in setting at naught the basic objective of a voluntary arbitration and would
reduce arbitration to a largely inutile institution.90
Thus, the general rule is that appeals of arbitral awards by the Construction Industry
Arbitration Commission may only be allowed on pure questions of law. Even the
Construction Industry Arbitration Law does not provide for any instance when an arbitral
award may be vacated. Spouses David v. Construction Industry and Arbitration
Commission91 recognized this gap, and thus, applied the provisions of Republic Act No.
876, or the Arbitration Law:92
[F]actual findings of construction arbitrators are final and conclusive and not reviewable
by this Court on appeal, except when the petitioner proves affirmatively that: (1) the
award was procured by corruption, fraud or other undue means; (2) there was evident
partiality or corruption of the arbitrators or of any of them; (3) the arbitrators were guilty
of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in
refusing to hear evidence pertinent and material to the controversy; (4) one or more of
the arbitrators were disqualified to act as such under section nine of Republic Act No.
876 and willfully refrained from disclosing such disqualifications or of any other
misbehavior by which the rights of any party have been materially prejudiced; or (5) the
arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final
and definite award upon the subject matter submitted to them was not made. 93
Notably, these exceptions refer to the conduct of the arbitral tribunal and
the qualifications of the arbitrator.94 They do not refer to the arbitral tribunal's errors of
fact and law, misappreciation of evidence, or conflicting findings of fact. Hence, CE
Construction, in recognizing the nature of these exceptions, held that questions of law
may be allowed "only in instances when the integrity of the arbitral tribunal itself has
been put in jeopardy."95 This Court further mandated that "factual findings may be
reviewed only in cases where the CIAC arbitral tribunals conducted their affairs in a
haphazard, immodest manner that the most basic integrity of the arbitral process was
imperiled."96
Thus, parties seeking to appeal an arbitral award of a construction tribunal must raise
an egregious error of law to warrant the exercise of this Court's appellate jurisdiction.
Absent any allegation and proof of these exceptions, the factual findings of the
Construction Industry Arbitration Commission will be treated by the courts with great
respect and even finality.
II
Petitioner raised issues that are questions of fact in the guise of questions of law. As
such, they are not proper for this Court's review.
The difference between a question of law and a question of fact is settled. In Spouses
David:
There is a question of law when the doubt or difference in a given case arises as to
what the law is on a certain set of facts, and there is a question of fact when the doubt
arises as to the truth or falsity of the alleged facts. Thus, for a question to be one of law,
it must not involve an examination of the probative value of the evidence presented by
the parties and there must be no doubt as to the veracity or falsehood of the facts
alleged.97
Petitioner alleges that it is not liable to respondent for the costs incurred in Change
Order Nos. 39 to 109 since the Construction Agreement clearly required a written
agreement by both parties of the change orders, which petitioner alleges it did not
provide. At first glance, petitioner appears to be raising a question of law, i.e., whether
respondent complied with the provisions of the Construction Agreement as to be entitled
to compensation, which, in turn, would require the proper interpretation of the contract
between the parties. This would be a question of law since it requires the courts to
determine the parties' rights under the contract. The Construction Agreement provided:
8. Change Order
In either case, any addition or reduction in the Contract Price or extension

or shortening of the Contract Period shall be mutually agreed in writing by
the OWNER and the CONTRACTOR prior to the execution of the works
covered by the Change Order.98
To resolve this issue, however, this Court would have to accept the factual premise
alleged by petitioner: that Change Order Nos. 39 to 109 were not authorized by
petitioner. This runs counter to the factual finding established by the Construction
Industry Arbitration Commission that petitioner did indeed agreeto the change orders,
thus:
We are not convinced by Respondent's argument that Claimant is not entitled to its
claim for change orders for not following the procedure prescribed by the contract for
change orders because it did not strictly enforce the same procedure in approving
Change Order 1-38 and impliedly allowed Change Orders 39-109 by funding the
payrolls and some materials. . . . Claimant was able to present sketches plans and cost
estimates and receipts supporting them (sic). . . . Upon the other hand respondent was
not able to produce contrary evidence that they were not additional and extra works to
the original plans and specifications or that they spent for them.99
Petitioner further argues that even if it waived its right to strictly enforce the provisions of
the Construction Agreement on Change Order Nos. 1 to 38, it should not have been
considered to have waived the same right with regard to Change Order Nos. 38 to 109,
citing Item No. 14 of the Construction Agreement:
14. Waiver
Any forebearance or extension that the OWNER may grant to the CONTRACTOR or
any non-exercise or non-enforcement by the OWNER of its rights or remedies under
this Agreement shall not in any manner be construed as a waiver of such right or
remedies of the OWNER.100
Again, at first glance, this appears to be a legal issue, since it requires a recognition of
whether the waiver of petitioner's rights in Change Order Nos. 1 to 38 carried with it a
waiver of its rights in Change Order Nos. 39 to 109. However, to fully discuss the extent
of the waiver under the contract, this Court would be required to accept the factual
premise that petitioner did not waive its rights with regard to Change Order Nos. 39 to
109. This clearly runs counter to the factual finding of the Construction Industry
Arbitration Commission that petitioner did waive its right to strictly enforce the provisions
of the contract with regard to Change Order Nos. 39 to 109. Even the Court of Appeals
was inclined to affirm the arbitral tribunal's finding on this matter, summarizing the
latter's findings as follows:
1. Change Order Nos. 39 to 64 — Within the period from October 30 to November 30,
1995, respondent was still working on the project. During this period petitioner provided
respondent financial assistance by paying the payroll. This financial assistance was
deducted from the billing of respondent;
2. Change Order Nos. 65 to 86 — petitioner confirms that the work is "completed and
can be seen at site", and it was not able to disprove the claim. The respondent is
therefore entitled to its claim.
3. Change Order Nos. 87 to 89 — it was verified during the ocular inspection that they
had been completed. Petitioner was not able to disprove the claim. Respondent is
4. Change Order No. 90 — petitioner confirms that the work is "completed and can be
seen at site", and it was not able to disprove the claim. The respondent is therefore
entitled to its claim.
5. Change Order No. 91 — it was verified during the ocular inspection that they had
been completed. Petitioner was not able to disprove the claims. Respondent is therefore
6. Change Order No. 92 — was inspected during the ocular inspection and found to
have been completed. Petitioner was not able to disprove the claim. Respondent is
7. Change Order Nos. 93 to 99 — it was verified during the ocular inspection that they
had been completed. Petitioner was not able to disprove the claim. Respondent is
8. Change Order Nos. 100 to 101 — petitioner confirms that the work is "completed and
can be seen at site", and it was not able to disprove the claim. The respondent is
9. Change Order Nos. 102 to 104 — it was verified during the ocular inspection that
they had been completed. Petitioner was not able to disprove the claim. Respondent is
therefore entitled to it[s] claim.
10. Change Order Nos. 105 to 106 — petitioner confirms that the work is "completed
and can be seen at site", and it was not able to disprove the claim. The respondent is
11. Change Order No. 107 — it was verified during the ocular inspection that they had
been completed. Petitioner was not able to disprove the claim. Respondent is therefore
12. Change Order Nos. 108 to 109 — petitioner confirms that the work is "completed
and can be seen at site", and it was not able to disprove the claim. The respondent is
therefore entitled to its claim.101
Petitioner further argues that the Court of Appeals erred in not finding that it was entitled
to liquidated damages since respondent allegedly committed delay in completing the
project.
Liquidated damages102 may be awarded if the contract provides for a monetary

compensation in case of breach. The contractor must agree to pay the owner in case
there is delay.103 Thus, this provision must be embodied in the contract. A perusal of the
Construction Agreement, however, shows that no such stipulation was provided. In case
of default, the contract provided:
10. / Termination
The OWNER shall have the right to terminate this Agreement, without prejudice to any
other remedies it may have, in case the CONTRACTOR defaults in the performance of
any of its obligations herein and fails to remedy such default within ten (10) days from
receipt of written notice of default given by the OWNER.
Upon such termination, the OWNER shall have the right to exclude the CONTRACTOR
from the Work Site, take possession of what has so far been completed and all
materials, equipment and tools at the Work Site, and finish the Work in whatever
manner the OWNER deems expedient including the engagement of another contractor.
The CONTRACTOR shall lose its right to be paid the unpaid balance of the Contract
Price and if the costs and expenses for completing the works and enforcing OWNER'S
aforementioned right exceed the unpaid balance of the Purchase Price, the
CONTRACTOR shall pay the OWNER the difference upon the written demand of the
OWNER.104
Under the contract, respondent must first be found ki default, after which it was only
required to pay if the enforcement of petitioner's rights exceeded the unpaid balance of
the purchase price. No specific provision holds respondent liable for liquidated damages
in case of delay.
Even assuming that liquidated damages could be awarded in case of delay, petitioner's
right to receive liquidated damages must first be anchored on a factual finding that
respondent incurred delay. This, again, is a question of fact since it requires a review of
the findings of the Construction Industry Arbitration Commission. The arbitral tribunal,
however, found that there was no delay in the completion of the project:
There was no failure on the part of Claimant to complete the project within the
contractual period because Respondent extended the period up to November 30, 1995
on valid grounds which are the (1) change orders (Change Order Nos. 1-109) (2) error
in the building set back (Exh. II, Annex A) and rainy weather condition (Exh. M39C-1).
The value of Change Order Nos. 39-109 (Evaluation of Change Orders by Tribunal) of
P4,607,523.40 would justify the extension of the contract to even beyond November 30,
1995 while the error in the building set back and rainy weather would require an
extension of more than twenty five days. And Claimant completed the original contract
and the change orders within the extension period.105
Even the arbitral tribunal could not be swayed by petitioner's argument that it did not
grant an "extension" but merely provided for a "new schedule of completion":
The attempt by Respondent [petitioner here] to distinguish between a "time extension"
and "new schedule of completion" in order to consider the letter of ESCA dated October
10, 1995 as not a notice of extension does not convince the tribunal because the two
phrases have the same meaning and effect of extending the period of work from the
original or prior period of work in order to complete the construction.106
This Court cannot pass upon petitioner's arguments that it terminated the Construction
Agreement and took over the project on November 15, 1995. These are questions of
fact already resolved by the arbitral tribunal. It found that since no notice of termination
was served on respondent, there was no contract termination. 107 Consequently, there
was no takeover. Any costs for labor and materials advanced to respondent during the
extension period were actually deducted by petitioner from respondent's 10% retention.
Thus, no new costs for the alleged project takeover were actually incurred. 108
The arbitral tribunal arrived at these findings after an ocular inspection of the
construction site conducted by proven experts in the field. Any review by this Court of
their findings would require conducting its own ocular inspection, hiring its own experts
in the construction industry to provide amicus briefs, and attempting to provide its own
interpretations of the findings of a highly technical agency. Review of these factual
findings, therefore, requires no less than proof that the integrity of the arbitral tribunal
has been compromised.
Petitioner has neither alleged that the arbitral tribunal arrived at its findings "in a
haphazard, immodest manner"109 nor questioned the integrity of the arbitrators. Absent
any proof to the contrary, this Court will not disturb its factual findings.
III
The Construction Industry Arbitration Commission may employ aids in interpretation

when there is ambiguity in the contractual provisions, or when there is no written
instrument that can define what was agreed upon by the parties.110 Otherwise, it need
not do so when the provisions of the contract on the matter in dispute are already
provided.
Petitioner submits that the Construction Industry Arbitration Commission and the Court
of Appeals erred in applying the equitable principle of unjust enrichment, since applying
Article 1724 of the Civil Code was more appropriate under the circumstances. Article
1724 provides:
Article 1724. The contractor who undertakes to build a structure or any other work for a
stipulated price, in conformity with plans and specifications agreed upon with the land-
owner, can neither withdraw from the contract nor demand an increase in the price on
account of the higher cost of labor or materials, save when there has been a change in
the plans and specifications, provided:
(1) Such change has been authorized by the proprietor in writing; and
(2) The additional price to be paid to the contractor has been determined in writing by
both parties.
Petitioner contends that the arbitral tribunal should first apply Article 1724 when
resolving the issue of whether respondent should be compensated for costs incurred in
Change Order Nos. 39 to 109.
Petitioner, however, fails to recognize that there was no need to apply Article 1724,
since salient points of the provision had already been embodied in the Construction
Agreement, which provided:
8. Change Order
In either case, any addition or reduction in the Contract Price or extension or shortening
of the Contract Period shall be mutually agreed in writing by the OWNER and the
CONTRACTOR prior to the execution of the works covered by the Change Order. 111
It is settled that the contract is the law between the parties.112 Without any ambiguity in
Item No. 8 of the Construction Agreement, there was no need to resort to other aids in
interpretation, such as Article 1724 of the Civil Code, to resolve the issue.
As previously discussed, petitioner was found to have waived its right to strictly enforce
the provisions of Item No. 8 of the Construction Agreement, when respondent undertook
Change Order Nos. 39 to 109. Petitioner should now reckon with the consequences of
that waiver.
The Construction Industry Arbitration Commission, however, cannot be faulted for

applying the equitable principle of unjust enrichment in determining petitioner's liability
to respondent.
CE Construction113 discusses two (2) main principles that guide the Construction
Industry Arbitration Commission in accomplishing its tasks. First is the basic principle of
fairness. The second is that of "effective dispute resolution or the overarching principle
of arbitration as a mechanism relieved of the encumbrances of litigation." 114 Section 1.1
of the Revised Rules of Procedure Governing Construction Arbitration provides
foremost:
SECTION 1.1 Statement of Policy and Objectives. — It is the policy and objective of
these Rules to provide a fair and expeditious resolution of construction disputes as an
alternative to judicial proceedings, which may restore the disrupted harmonious and
friendly relationships between or among the parties.
Here, services were rendered for which compensation was demanded. The contract
between the parties, however, inadequately provides for the mechanism by which
compensation may be due. The fair and expeditious resolution of the issue requires the
arbitral tribunal to instead apply equitable principles to arrive at a just conclusion. In CE
Construction:115
Jurisprudence has settled that even in cases where parties enter into contracts which
do not strictly conform to standard formalities or to the typifying provisions of nominate
contracts, when one renders services to another, the latter must compensate the former
for the reasonable value of the services rendered. This amount shall be fixed by a court.
This is a matter so basic, this Court has once characterized it as one that "springs from
the fountain of good conscience":
As early as 1903, in Perez v. Pomar, this Court ruled that where one has rendered
services to another, and these services are accepted by the latter, in the absence of
proof that the service was rendered gratuitously, it is but just that he should pay a
reasonable remuneration therefore because "it is a well-known principle of law, that no
one should be permitted to enrich himself to the damage of another." Similarly in 1914,
this Court declared that in this jurisdiction, even in the absence of statute, ". . . under the
general principle that one person may not enrich himself at the expense of another, a
judgment creditor would not be permitted to retain the purchase price of land sold as the
property of the judgment debtor after it has been made to appear that the judgment
debtor had no title to the land and that the purchaser had failed to secure title thereto . .
." The foregoing equitable principle which springs from the fountain of good conscience
are applicable to the case at bar.116
Here, the arbitral tribunal computed the entire cost of Change Order Nos. 1 to 109 at
P5,242,697.76.117This includes that of Change Order Nos. 1 to 38, which petitioner
categorically admitted were authorized changes. Upon subtracting the contract price
and other costs chargeable to respondent, the arbitral tribunal found that there was still
an unpaid amount of P4,607,523.40,118 resulting from the costs of the change orders,
which petitioner refuses to pay. There was, therefore, no error in the arbitral tribunal's
finding and the Court of Appeals' affirmation that petitioner is still liable to respondent for
that amount.
WHEREFORE, the Petition is DENIED. The March 21, 2012 Decision and June 25,
2012 Resolution of the Court of Appeals in CA-G.R. SP No. 70562, as well as the April
24, 2002 Arbitral Award of the Construction Industry Arbitration Commission in CIAC
Case No. 30-2001, are AFFIRMED. Petitioner Metro Bottled Water Corporation is
ordered to pay respondent Andrada Construction & Development Corporation, Inc. the
amount of P4,607,523.40, with legal interest of twelve percent (12%) to be computed
from November 24, 2000 to June 30, 2013, and six percent (6%) from July 1, 2013 until
its full satisfaction. The total amount payable shall also be subject to interest at the rate
of six percent (6%) per annum from the finality of this Decision until its full
satisfaction.119
SO ORDERED.
Peralta, (Chairperson), Jardeleza,*Hernando, and Carandang,**JJ., concur.
June 17, 2019
NOTICE OF JUDGMENT
Sirs / Mesdames:
Please take notice that on March 6, 2019 a Decision, copy attached hereto, was
rendered by the Supreme Court in the above-entitled case, the original of which was
received by this Office on June 17, 2019 at 11:05 a.m.
Very truly yours,
(SGD) WILFREDO V. LAPITAN
Division Clerk of Court
Endnotes:
* Designated additional Member per Raffle dated February 27, 2019.

** Designated additional Member per Special Order No. 2624 dated November 28, 2018.
1 Rep. Act No. 876 (1953), sec. 24 provides:
SECTION 24. Grounds for vacating award. — In any one of the following cases, the
court must make an order vacating the award upon the petition of any party to the
controversy when such party proves affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them;
or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the
hearing upon, sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; that one or more of the arbitrators
was disqualified to act as such under section nine hereof, and wilfully
refrained from disclosing such disqualifications or of any other misbehavior by
which the rights of any party have been materially prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them,
that a mutual, final and definite award upon the subject matter submitted to
them was not made.
2 A.M. No. 07-11 -08-SC (2009).

3 Rep. Act No. 9285 (2004), ch. 7, sec. 41 provides:
SECTION 41. Vacation Award. — A party to a domestic arbitration may question the
arbitral award with the appropriate Regional Trial Court in accordance with rules of
procedure to be promulgated by the Supreme Court only on those grounds enumerated
in Section 25 of Republic Act No. 876. Any other ground raised against a domestic
arbitral award shall be disregarded by the regional trial court.
4 SPECIAL ADR RULES, Rule 19.10.
5 SPECIAL ADR RULES, Rule 19.7.
6 Exec. Order No. 1008 (1985), sec. 19.
7Rollo, pp. 13-70.
8 Id. at 73-88. The Decision, in CA-G.R. SP No. 70562, was penned by Associate
Justice Sesinando E. Villon, and concurred in by Presiding Justice Andres B. Reyes, Jr.
(now a member of this Court) and Associate Justice Amy C. Lazaro-Javier (now a
member of this Court) of the First Division, Court of Appeals, Manila.
9 Id. at 91. The Resolution, in CA-G.R. SP No. 70562, was penned by Associate Justice
Sesinando E. Villon, and concurred in by Presiding Justice Andres B. Reyes, Jr. (now a
member of this Court) and Associate Justice Amy C. Lazaro-Javier (now a member of
this Court) of the First Division, Court of Appeals, Manila.
10Id. at 94-115. The Arbitral Award, in CIAC Case No. 30-2001, was signed by
Arbitrators Beda G. Fajardo, Wenfredo A. Firme, and Rosauro S. Paderon of the
Construction Industry Arbitration Commission.
11 Id. at 124-136.
12 Id. at 94.
13 Id. at 132.
14 Id. at 74.
15 Id. at 94-95.
16 Id. at 137-138.
17 Id. at 150.
18 Id. at 95.
19 Id. at 163.
20 Id. at 95.
21 Id. at 228-240.
22 Id. at 95.
23 Id. at 118-123.
24 Id. at 95.
25 Id. at 242-272.
26 Id. at 96.
27 Id. at 94-115.
28 Id. at 104-105.
29 Id. at 98-100.
30 "In the construction industry, the 10 percent retention money is portion of the contract
price automatically deducted from the contractor's billings, as security for the execution
of corrective work—if any—becomes necessary. This amount is to be released one year
after the completion of the project, minus the cost of corrective work." H.L. Carlos
Construction v. Marina Properties Corporation, 466 Phil. 182, 199-200 (2004) [Per J.
Panganiban, First Division].
31Rollo, pp. 100-102.
32 Id. at 103-104.
33 Id. at 104-105.
34 Id. at 1773-1828.
35 Id. at 73-88.
36 Id. at 87.
37 Id. at 86.
38 Id. at 77-80.
39 Id. at 80-83.
40 Id. at 86-87.
41 Id. at 91.
42Id. at 13-70. Comment (rollo, pp. 2136-2258) was filed on November 20, 2012 while
Reply (rollo, pp. 2265-2284) was filed on February 28, 2013. A Rejoinder (rollo, pp.
2286-2371) was submitted but was expunged in a June 3, 2013 Resolution (rollo, p.
2373) for being a prohibited pleading.
43 CIVIL CODE, art. 1724 provides:
ARTICLE 1724. The contractor who undertakes to build a structure or any other work
for a stipulated price, in conformity with plans and specifications agreed upon with the
land-owner, can neither withdraw from the contract nor demand an increase in the price
on account of the higher cost of labor or materials, save when there has been a change
in the plans and specifications, provided:
(1) Such change has been authorized by the proprietor in writing; and
(2) The additional price to be paid to the contractor has been determined in writing by
both parties.
44Rollo, pp. 32-35.
45 Id. at 35-36.
46 Id. at 36-37.
47 Id. at 42-52.
48 Id. at 52-57.
49 Id. at 57-62.
50 Id. at 2177.
51 Id. at 2170-2177. Exact quote at 2173.
52 Id. at 2189.
53 Id. at 2201.
54 Id. at 2201-2202.
55 Id. at 2209-2215.
56 Id. at 2223-2224.
57 Id. at 2250-2251.
58 Id. at 2251.
59 Id. at 2251-2252.
60 Id. at 2255.
61 Id. at 2255-2256.
62 Id. at 2266-2267.
63 Id. at 2267-2268.
64 Id. at 2269-2279.
65 Id. at 2279.
66 Id.
67 Enacted February 4, 1985.
68 Exec. Order No. 1008 (1985), sec. 4.
69 Exec. Order No. 1008 (1985), sec. 4.
70 Exec. Order No. 1008 (1985), sec. 14.
71 CIAC Revised Rules of Procedure Governing Construction Arbitration (2011), Rule 8,
sec. 8.1.
72 Exec. Order No. 1008 (1985), sec. 15.
73 Exec. Order No. 1008 (1985), sec. 4 provides:
SECTION 4. Jurisdiction. — The CIAC shall have original and exclusive jurisdiction over
disputes arising from, or connected with, contracts entered into by parties involved in
construction in the Philippines, whether the dispute arises before or after the completion
of the contract, or after the abandonment or breach thereof. These disputes may involve
government or private contracts. For the Board to acquire jurisdiction, the parties to a
dispute must agree to submit the same to voluntary arbitration. (Emphasis supplied)
74Revised Rules of Procedure Governing Construction Arbitration (2011), Rule 2, sec.
2.3(2.3.3).
75 418 Phil. 176 (2001) [Per C.J. Davide Jr., First Division].
76Id. at 202-203 citing The Presidential Anti-Dollar Salting Task Force v. Court of
Appeals, 253 Phil. 344 (1989) [Per J. Sarmiento, En Banc]; Tropical Homes v. National
Housing Authority, 236 Phil. 580 (1987) [Per J. Gutierrez, Jr., En Banc]; Antipolo Realty
Corp. v. NHA, 237 Phil. 389 (1987) [Per J. Feliciano, En Banc]; and Solid Homes, Inc. v.
Payawal, 257 Phil. 914 (1989) [Per J. Cruz, First Division].
77 RULES OF COURT, Rule 43, sec. 3.
78 800 Phil. 721 (2016) [Per J. Brion, Second Division].
79 LABOR CODE, art. 219.
ARTICLE 219. [212] Definitions. — . . . . . . .
(n) "Voluntary Arbitrator" means any person accredited by the Board as such, or any
person named or designated in the Collective Bargaining Agreement by the parties to
act as their Voluntary Arbitrator, or one chosen with or without the assistance of the
National Conciliation and Mediation Board, pursuant to a selection procedure agreed
upon in the Collective Bargaining Agreement, or any official that may be authorized by
the Secretary of Labor and Employment to act as Voluntary Arbitrator upon the written
request and agreement of the parties to a labor dispute.
80CE Construction v. Araneta Center, G.R. No. 192725, August 9, 2017, 836 SCRA 181,
214 [Per J. Leonen, Second Division] citing Fruehauf Electronics v. Technology
Electronics Assembly and Management Pacific, 800 Phil. 721 (2016) [Per J. Brion,
Second Division].
81Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly and
Management Pacific Corporation, 800 Phil. 721, 744 (2016) [Per J. Brion, Second
Division].
82See Fruehauf Electronics Philippines Corporation v. Technology Electronics Assembly
and Management Pacific Corporation, 800 Phil. 721 (2016) [Per J. Brion, Second
Division].
83See CE Construction v. Araneta Center, G.R. No. 192725, August 9, 2017, 836 SCRA
181, 215 [Per J. Leonen, Second Division].
84 Id. at 215-216.
85 G.R. No. 192725, August 9, 2017, 836 SCRA 181 [Per J. Leonen, Second Division].
86 Id. at 219.
87 298-A Phil. 361 (1993) [Per J. Feliciano, Third Division].
88Id. at 372 citing the first three (3) Whereas clauses and sec. 2 of Exec. Order No.
1008 (1985), as amended.
89See Medina v. Mayor Asistio, Jr., 269 Phil. 225, 232 (1990) [Per J. Bidin, Third
Division] for the complete list of exceptions to the prohibition of questions of fact in Rule
45 petitions.
90Hi-Precision Steel Center v. Lim Kim Steel Builders, 298-A Phil. 361, 373-374 (1993)
[Per J. Feliciano, Third Division] citing Asian Construction and Development Corporation
v. Construction Industry Arbitration Commission, 291-A Phil. 576 (1993) [Per J. Padilla,
First Division]; Chung Fu Industries (Phil.) Inc. v. Court of Appeals, 283 Phil. 474 (1992)
[Per J. Romero, Third Division]; Primary Structures Corporation v. Victor P. Lazatin,
etc., G.R. No. 101258, July 13, 1992 (Unsigned Resolution); A.C. Enterprises, Inc. v.
Construction Industry Arbitration Commission, et al., 313 Phil. 745 (1995) [Per J.
Quiason, En Banc]; and Sime Darby Pilipinas, Inc. v. Magsalin, 259 Phil. 658 (1989)
[Per J. Feliciano, Third Division].
91 479 Phil. 578 (2004) [Per J. Puno, Second Division].
92 Approved June 19, 1953.
93Spouses David v. Construction Industry Arbitration Commission, 479 Phil. 578, 590-
591 (2004) [Per J. Puno, Second Division] citing Rep. Act No. 876, sec. 24.
94See also Fruehauf Electronics v. Technology Electronics Assembly and Management
Pacific, 800 Phil. 721 (2016) [Per J. Brion, Second Division].
95CE Construction v. Araneta Center, G.R. No. 192725, August 9, 2017, 836 SCRA 181,
186 [Per J. Leonen, Second Division].
96 Id. at 222.
97479 Phil. 578, 584 (2004) [Per J. Puno, Second Division] citing Serna v. Court of
Appeals, 368 Phil. 1 (1999) [J. Pardo, First Division] and Palon v. Nino, 405 Phil. 670
(2001) [Per J. Pardo, First Division].
98Rollo, p. 132.
99 Id. at 99.
100 Id. at 134.
101 Id. at 78-80.
102CIVIL CODE, art. 2226. Liquidated damages are those agreed upon by the parties to
a contract, to be paid in case of breach thereof.
103See H.L. Carlos Construction v. Marina Properties Corporation, 466 Phil. 182 (2004)
[Per J. Panganiban, First Division].
104Rollo, p. 133.
105 Id. at 102.
106 Id. at 103.
107 Id.
108 Id. at 103-104.
109CE Construction v. Araneta Center, G.R. No. 192725, August 9, 2017, 836 SCRA
181, 222 [Per J. Leonen, Second Division].
110See
CE Construction v. Araneta Center, G.R. No. 192725, August 9, 2017, 836
SCRA 181 [Per J. Leonen, Second Division].
111Rollo, p. 132.
112Alcantara v. Alinea, 8 Phil. 111 (1907) [Per J. Torres, En Banc].
114 Id. at 234.
116Id. at 235 citing Pacific Merchandising Corp. v. Consolation Insurance & Surety Co.,
Inc., 165 Phil. 543, 553-554 (1976) [Per J. Antonio, Second Division]; Perez v. Pomar, 2
Phil. 682 (1903) [Per J. Torres, En Banc]; and Bonzon v. Standard Oil Co. and Osorio,
27 Phil. 141 (1914) [Per J. Carson, First Division].
117Rollo,
pp. 99-100. In the cited pages, the Decision erroneously indicated Change
Order Nos. 1 to 108.
118 Id.
119Nacar v. Gallery Frames, 716 Phil. 267 (2013) [Per J. Peralta, En Banc].
G.R. No. 182307, June 06, 2018 - BELINA CANCIO AND JEREMY PAMPOLINA,
Petitioners, v. PERFORMANCE FOREIGN EXCHANGE CORPORATION, Respondent.
THIRD DIVISION
G.R. No. 182307, June 06, 2018
BELINA CANCIO AND JEREMY PAMPOLINA, Petitioners, v. PERFORMANCE

FOREIGN EXCHANGE CORPORATION, Respondent.
DECISION
LEONEN, J.:
When a party assails a lower court's appreciation of the evidence, that party raises a
question of fact that cannot be entertained in a petition for review filed under Rule 45 of
the Rules of Court.
This is a Petition for Review on Certiorari1 assailing January 31, 2008 Decision2 and
March 31, 2008 Resolution3 of the Court of Appeals, which overturned the Regional
Trial Court July 15, 2006 Decision. The Regional Trial Court found Performance Foreign
Exchange Corporation (Performance Forex) solidarity liable with broker Rolando Hipol
(Hipol) for unauthorized trade transactions he made on Belina Cancio (Cancio) and
Jeremy Pampolina's (Pampolina) joint trading account. The Court of Appeals, however,
absolved Performance Forex from any liability.
Performance Forex is a corporation operating as a financial broker/agent between

market participants in foreign exchange transactions.4
Foreign currency exchange trading or forex trading is the speculative trade of foreign
currency for the sole purpose of gaining profit from the change in prices. 5 The forex
market is a "global, decentralized," and essentially "an over-the-counter (OTC) market
where the different currency trading locations around the globe electronically form a
unified, interconnected market entity."6
Unlike a stock exchange market where the opening and closing of trades rely on only
one (1) or two (2) time zones, a forex market may have overlapping time zones. Foreign
currency, due to its decentralized nature, may be traded in different financial
markets.7 For instance, trading currency using US dollars would not depend on the
business or banking hours only of financial institutions in the United States.8
Traders are drawn to the forex market since the price of currency constantly fluctuates.
The value of a foreign currency is determined by international capital flow or the
"movement of money from one currency to another."9 International capital flow is
caused by a number of factors, among which are "a country's interest rates, inflation
situation, [Gross Domestic Product] growth, employment, trade balance, and other
barometers of economic health."10
Currencies are traded in pairs by speculating the value of one currency against
another.11 One currency, usually the US dollar,12 is considered the "base currency"
while the other currency is a "quote or counter currency." 13 If a trader speculates that
the base currency will be stronger than the counter currency, the trader will sell the base
currency to buy more counter currency. If the trader speculates that the base currency
will be weaker than the counter currency, then the trader will sell the counter currency to
buy more of the base currency.14 For example, if a trader speculates that the US dollar
will rise in value as against the Philippine peso, the trader will sell dollars to acquire
more pesos. If the trader speculates that the dollar will weaken against the peso, the
trader will sell pesos to acquire more dollars.
In a standard forex trade, a trader would "open a position" by buying or selling a certain
amount of a particular currency based on its value against the US dollar. The trader
would then hold on to this particular currency until its value appreciates or depreciates.
Once the value changes, the trader then "closes position" by selling this currency at a
higher price or buying it at a lower price; hence, earning a profit. 15 If the trader sells
when the value depreciates or buys when the value appreciates, the trader suffers a
loss. Losses, however, are only realized when the traders close their positions. 16
The participants in a forex market are banks, hedge funds, investment firms, and
individual retail traders.17 Unlike banks, hedge funds, and investment firms that have
significant amounts of capital to engage in trade, individual retail traders often make use
of brokers, who "serve as an agent of the customer in the broader [foreign currency
exchange] market, by seeking the best price in the market for a retail order and dealing
on behalf of the retail customer."18 Individual retail traders also rely on "leverage
trading," where traders can open margin accounts with a financial broker or agent to
make use of that broker or agent's credit line to engage in trade.19
A margin account is an account where the broker-dealer lends money to the trader to
purchase currency, using the same purchased currency as collateral.20 Returns will be
proportional to the amount deposited.21 Leverage is determined by the amount that the
trader is required to deposit. If a trader has to deposit US$1,000.00 into a margin
account to trade US$100,000.00 in currency, the margin account has a leverage of 100
to 1.22 This system allows the trader to control more money in the market than what was
originally deposited.23
Individual retail traders make use of leverage trading and margin accounts since price
movements are usually miniscule. A "pip" is "the smallest unit of price movement in the
exchange rate of a currency pair."24 The goal of every trader in foreign currency
exchange is to earn pips. To underscore how miniscule expected profits are, pips
commonly refer to the price movement of the fourth decimal place of major
currencies.25 Miniscule price movements, thus, require large amounts of capital for them
to have significant impact on the profits to be earned.
For example, the current Philippine peso equivalent of one (1) Japanese yen is
P0.4830.26 A pip would be a change from P0.4830 to 0.4831. A P0.0001 price
movement in the purchase of one (1) Japanese yen may not exactly have a significant
effect but when multiplied by a hundred, it will actually mean a P48.31 increase for
every trader betting on the rise of the yen and a P48.31 decrease for those expecting a
rise in peso prices. Leverage trading can substantially magnify profits. Considering,
however, that leverage trading is essentially trade using borrowed money, leverage
trading can magnify losses just as much. Forex trade is, thus, considered a lucrative but
risky endeavor since every trade multiplies profit and loss by a much higher rate than
what was originally invested.
Sometime in 2000, Cancio and Pampolina accepted Hipol's invitation to open a joint
account with Performance Forex. Cancio and Pampolina deposited the required margin
account deposit of US$10,000.00 for trading. The parties executed an application for
the opening of a joint account,27 with a trust/trading facilities agreement28 between
Performance Forex, and Cancio and Pampolina. They likewise entered into an
agreement for appointment of an agent29 between Hipol, and Cancio and
Pampolina.30 They agreed that Cancio and Pampolina would make use of Performance
Forex's credit line to trade in the forex market while Hipol would act as their commission
agent and would deal on their behalf in the forex market.
The trust/trading facilities agreement between Performance Forex, and Cancio and
Pampolina provided:
6. Orders
You hereby irrevocably authorize us to act upon any instructions, whether in writing, by
cable, telex, facsimile or telephone given or purported to be given by you or your agent
or representative which appear whether on their respective faces (in the case of writing,
cable, telex or facsimile) or otherwise to be bonafide. We shall not be responsible and
you shall indemnify us for any losses incurred as a result of acting upon such
instructions should there in fact be any error commission ambiguities or other
irregularities therein or therewith.
....
Commission Agent
You acknowledge and agree that the commission agent (one Mr/Ms Ronald (sic) M.
Hipol) who introduced you to us in connection with this Facility is your agent and we are
in no way responsible for his actions or any warranties or representations he may have
made (whether expressly on our behalf or not) and that pursuant to his having
introduced you to us, we will (if you accept this Facility) pay him a commission based on
your trading with us (details of which will be applied to you on request). Should you
choose to also vest in him trading authority on your behalf please do so only after
considering the matter carefully, for we shall not be responsible nor liable for any abuse
of the authority you may confer on him. This will be regarded strictly as a private matter
between you and him. You further acknowledge that for our own protection and
commercial purpose you are aware of the terms of the trading agreement between the
commission agent and ourselves where the commission agent is to trade for you.31
All parties agreed that the trading would only be executed by Cancio and Pampolina, or,
upon instructions to their agent, Hipol. The trading orders to Hipol would be coursed
through phone calls from Cancio and Pampolina.32
From March 9, 2000 to April 4, 2000, Cancio and Pampolina earned US$7,223.98. They
stopped trading for more or less two (2) weeks, after which, however, Cancio again
instructed Hipol to execute trading currency orders. When she called to close her
position, Hipol told her that he would talk to her personally.33
Cancio later found out that Hipol never executed her orders. Hipol confessed to her that
he made unauthorized transactions using their joint account from April 5, 2000 to April
12, 2000. The unauthorized transactions resulted in the loss of all their money, leaving a
negative balance of US$35.72 in their Statement of Account. Cancio later informed
Pampolina about the problem.34
Pampolina met with two (2) Performance Forex officers, Dave Almarinez and Al Reyes,
to complain about Hipol's unauthorized trading on their account and to confront them
about his past unauthorized trades with Performance Forex's other client, 35 Justine Dela
Rosa.36 The officers apologized for Hipol's actions and promised to settle their account.
However, they stayed quiet about Hipol's past unauthorized trading.37
Performance Forex offered US$5,000.00 to settle the matter but Cancio and Pampolina
rejected this offer. Their demand letters to Hipol were also unheeded.38 Thus, they filed
a Complaint39 for damages against Performance Forex and Hipol before the Regional
Trial Court of Mandaluyong City.
Hipol was declared in default. Since the parties were unable to come to a settlement,
trial commenced.40
During trial, Performance Forex's General Manager for Sales and Marketing Jonathan
Reyes Ocampo (Ocampo) testified that clients could trade through two (2) types of
brokers. The first type is the independent broker, or one who is already experienced in
trading and merely attends Performance Forex's orientation trainings to know its policies
and regulations. The second type is an in-house broker or business relations officer,
who is new to the business and has to be supervised by the sales and marketing
managers. He stated that Hipol was an Investment Portfolio Manager, or an
independent broker who not only provided information from financial experts but also
executed orders on behalf of the clients.41
Performance Forex Senior Manager Gabriel Erazo (Erazo) added that in-house brokers
usually cater to walk-in clients and are stationed in the company premises while
independent brokers, like Hipol, seek clients and introduce them to the company. 42
Ocampo likewise testified that clients must first sign a Purchase Order Form before
Performance Forex could authorize an order transaction. Every transaction must have
its own Purchase Order Form.43 Erazo confirmed that dealings were still done manually
at the time of the questioned transactions, and that clients or agents must submit an
actual signed Purchase Order Form.44
Ocampo confirmed that they paid a "goodwill offer," i.e. the return of the broker's
commission, to their client Justine Dela Rosa for Hipol's alleged unauthorized
transactions. He also testified that Hipol's accreditation had to be cancelled after
Pampolina complained against him to protect the reputation of the company. 45
On July 15, 2006, the Regional Trial Court rendered its Decision46 finding Performance
Forex and Hipol solidarity liable to Cancio and Pampolina for damages.
According to the Regional Trial Court, Performance Forex should have disclosed to
Cancio and Pampolina that Hipol made similar unauthorized trading activities in the
past, which could have affected their consent to Hipol's appointment as their agent. It
also noted that innocent third persons should not be prejudiced due to Performance
Forex's failure to adopt the necessary measures to prevent unauthorized trading by its
agents.47 The dispositive portion of the Regional Trial Court July 15, 2006 Decision
read:
ACCORDINGLY, judgment is hereby rendered in favor of the plaintiffs and against the
defendants PERFORMANCE FOREIGN EXCHANGE CORPORATION and ROLANDO
HIPOL. Both defendants are jointly and severally liable to pay the plaintiffs the following:
a. the amount of US$17,223.98 or its peso equivalent plus legal interest from the filing
of the complaint until the whole obligation is fully paid.
b. the amount of Php50,000.00 as attorney's fees; Php100,000.00 moral damages and

Php100,000.00 exemplary damages.
c. cost of suit
SO ORDERED.48
Performance Forex appealed this Decision to the Court of Appeals, arguing that it had
adequate safeguards concerning dealings with commission agents, and that it was
Cancio and Pampolina who vested Hipol with "broad powers to conduct trading on their
behalf."49
On January 31, 2008, the Court of Appeals rendered its Decision 50 granting the appeal.
According to the Court of Appeals, Performance Forex was a trading facility that acted
only on whatever their clients or their representatives would order. It was not privy to
anything that happened between its clients and their representatives. 51 It found that
Cancio admitted to giving Hipol pre-signed authorizations to trade; hence, Performance
Forex relied on these orders and on Hipol's designation as their agent to facilitate the
trades from April 5, 2000 to April 9, 2000.52
The Court of Appeals likewise found that Performance Forex's non disclosure of Hi pol's
prior unauthorized transactions with another client was irrelevant since he was an
independent broker who was not employed with Performance Forex. Thus,
Performance Forex had no legal duty to disclose any prior misconduct to its clients. It
also noted that the trust/trading facilities agreement between Cancio and Pampolina,
and Performance Forex contained a provision freeing itself from any liability from losses
incurred by acting on the instructions of its clients or their authorized representatives.
Thus, the Court of Appeals concluded that Cancio and Pampolina's action should only
be against Hipol.53 The dispositive portion of the Court of Appeals January 31, 2008
Decision read:
WHEREFORE, the appeal is hereby GRANTED. Appellant Performance Foreign
Exchange Corporation is hereby released from liability.
SO ORDERED.54
Cancio and Pampolina moved for reconsideration but were denied by the Court of
Appeals in its March 31, 2008 Resolution.55 Hence, this Petition56 was filed before this
Court.
Petitioners Cancio and Pampolina argue that bonafide transactions in respondent

Performance Forex's facility depends on signed purchase order forms from clients. They
allege that there were only 10 purchase order forms signed by petitioner Cancio and yet
respondent executed 29 transactions on their account, in clear breach of its assurance
that only bonafide transactions would be honored.57 They likewise point out that
respondent was aware of similar unauthorized transactions by Hipol in the past and
even settled the complaint against him, but respondent neglected to inform petitioners
about them, thus, failing to observe the degree of care, precaution, and vigilance for the
protection of petitioners' interests.58 They claim that in view of respondent's bad faith
and breach of its contractual obligations, it is liable for actual damages, exemplary
damages, and moral damages with attorney's fees.59
Respondent counters that it was unnecessary to examine other purchase order forms
since "petitioners' cause of action against respondent is grounded on defendant Hipol's
purported unauthorized trading transactions which occurred during the period 4 to 12
April 2000 and no other."60 It likewise insists that it cannot be held liable for damages
caused by Hipol considering that it is not Hipol's employer and that any losses suffered
were due to "the very broad and vast powers"61 that petitioners gave him to transact on
their behalf. It also points out that according to the trust/trading facilities agreement,
petitioners agreed that respondent would not be responsible for any act, warranty, or
representation made by their agent on their behalf; thus, it cannot be held liable for any
damages claimed.62
Respondent asserts that the Petition should be dismissed outright since petitioners
failed to attach the necessary documents to support their Petition. It also submits that
the Petition raises questions of fact by asking this Court to examine the probative value
of the evidence introduced before the Regional Trial Court and the Court of Appeals. 63
Petitioners, on the other hand, counter that there was substantial compliance by their
subsequent submission of the required documents.64 They claim that they only raise
questions of law since the facts have been settled. What they argue is merely the Court
of Appeals' application of the law given the facts of the case.65
From the arguments of the parties, this Court is asked to resolve the issue of whether or
not respondent Performance Forex Exchange Corporation should be held solidarity
liable with petitioners Belina Cancio and Jeremy Pampolina's broker, Hipol, for damages
due to the latter's unauthorized transactions in the foreign currency exchange trading
market. Before this issue can be resolved, this Court must first pass upon the
procedural issues of whether or not the Petition should be dismissed for petitioners'
failure to attach necessary pleadings, and whether or not the Petition raises questions
of fact.
I
The failure to attach material portions of the record will not necessarily cause the
outright dismissal of the petition. While Rule 45, Section 4 of the Rules of Court requires
that the petition "be accompanied by ... such material portions of the record as would
support the petition,"66 this Court may still give due course if there is substantial
compliance with the Rules.67 Rule 45, Section 7 states:
Section 7. Pleadings and documents that may be required; sanctions. - For purposes of
determining whether the petition should be dismissed or denied pursuant to section 5 of
this Rule, or where the petition is given due course under section 8 hereof, the Supreme
Court may require or allow the filing of such pleadings, briefs, memoranda or
documents as it may deem necessary within such periods and under such conditions as
it may consider appropriate, and impose the corresponding sanctions in case of non-
filing or unauthorized filing of such pleadings and documents or non-compliance with
the conditions therefor.68
In E.I. Dupont Nemours v. Francisco,69 this Court stated that a petition for review under
Rule 45 may still be given due course if the petitioner later submits the required
documents, thus:
[A] petition lacking an essential pleading or part of the case record may still be given
due course or reinstated (if earlier dismissed) upon showing that petitioner later
submitted the documents required, or that it will serve the higher interest of justice that
the case be decided on the merits.70
In this instance, petitioners submitted the assailed Court of Appeals January 31, 2008
Decision in their Petition,71 which quoted substantial portions of the Regional Trial Court
June 15, 2006 Decision; the Regional Trial Court's records; and the Court of
Appeals' rollo. They likewise attached in their Reply a copy of the Complaint, 72 the
Balance Ledger for Dealings,73 and the Purchase Order Forms74 presented before the
Regional Trial Court. These documents more than suffice to substantiate petitioners'
claims.
II
This Court is not a trier of facts. Factual findings of the lower courts will not be disturbed
by this Court if supported by substantial evidence.75 Thus, Rule 45 of the Rules of Court
requires that a petition for review on certiorari only raise questions of law. 76
The distinction between a question of fact and a question of law is settled. In Century
Iron Works v. Bañas:77
A question of law arises when there is doubt as to what the law is on a certain state of
facts, while there is a question of fact when the doubt arises as to the truth or falsity of
the alleged facts. For a question to be one of law, the question must not involve an
examination of the probative value of the evidence presented by the litigants or any of
them. The resolution of the issue must rest solely on what the law provides on the given
set of circumstances. Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact.
Thus, the test of whether a question is one of law or of fact is not the appellation given
to such question by the party raising the same; rather, it is whether the appellate court
can determine the issue raised without reviewing or evaluating the evidence, in which
case, it is a question of law; otherwise it is a question of fact.78
Appeal is not a matter of right but of sound judicial discretion.79
While questions of fact are generally not entertained by this Court, there are, of course,
ce1iain permissible exceptions, summarized in Medina v. Mayor Asistio, Jr.:80
(1) When the conclusion is a finding grounded entirely on speculation, surmises or
conjectures ...; (2) When the inference made is manifestly mistaken, absurd or
impossible ...; (3) Where there is a grave abuse of discretion ...; (4) When the judgment
is based on a misapprehension of facts ...; (5) When the findings of fact are conflicting
...; (6) When the Court of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and appellee ...; (7)
The findings of the Court of Appeals are contrary to those of the trial court ...; (8) When
the findings of fact are conclusions without citation of specific evidence on which they
are based ...; (9) When the facts set forth in the petition as well as in the petitioners'
main and reply briefs are not disputed by the respondents ...; and (10) The finding of
fact of the Court of Appeals is premised on the supposed absence of evidence and is
contradicted by the evidence on record ...81 (Citations omitted)
A case falling under any of these exceptions, however, does not automatically require
this Court's review. In Pascual v. Burgos,82 this Court explained that a party cannot
merely claim that his or her case falls under any of the exceptions; he or she "must
demonstrate and prove"83 that a review of the factual findings is necessary.
In this instance, petitioners do not plead that their case falls under any of the exceptions
since their contention is that their Petition only raises questions of law. They claim that
this Court "need not probe into the entirety of evidence on record, as the falsity or
veracity of the facts, as stated in the assailed decision, [is] not in issue."84
Petitioners, however, contradict this when they submit that while "[t]here is no doubt as
to the existence of the ... facts," the Court of Appeals' legal conclusions were
"contradictory to its very findings" and that the case was "differently ruled, and correctly
so, by the [Regional Trial Court]."85 This argument, otherwise stated, assails the Court
of Appeals' appreciation of the evidence and not merely its application of the law. This is
clear when petitioners argue that:
29. Despite finding only two (2) purchase order forms for the twelve (12) enumerated
transactions, the [Court of Appeals] still found no badge of negligence or breach of
contractual obligation on the part of respondent. This is very much contradictory to its
very findings that all trading transactions must be accompanied by purchase order
forms, being the obligation of respondent to secure the orders of petitioners. 86
In Pascual, this Court stated that there is a question of fact "when the issue presented
before this court is the correctness of the lower courts' appreciation of the evidence
presented by the parties."87 To determine whether a lower court erred in the
appreciation of evidence, this Court must also examine the records to see if there was
evidence that was overlooked or if certain pieces of evidence were given undue weight.
Thus, petitioners cannot evade having raised questions of fact before this Court by
simply arguing that the facts are not disputed.
This Court has previously stated that "[n]egligence, that is, a failure to comply with some
duty of care owed by one to another, is a mixed question of law and fact." 88 There is a
question of law as to the duty of care owed by a defendant to a plaintiff. The existence
of negligence, however, is determined by facts and evidence, which makes it a question
of fact.89
The review of a finding of negligence involves a question of fact.90 It is evidentiary in

nature. It requires an examination of the evidence presented by the parties to determine
the basis of this negligence.91 This Court has likewise held that determination of the
existence of a breach of contract is a question of fact.92
A petition for review filed under Rule 45 of the Rules of Court that assails the Court of
Appeals' failure to find negligence or breach of contract based on the evidence
presented is essentially raising questions of fact. This Court will uphold the findings of
the Court of Appeals unless the case falls under certain exceptions, which must first be
properly pleaded and substantiated. Otherwise, this Court must apply the general rule
and deny the petition.
III
Even if this Court were to liberally review the factual findings of the Court of Appeals,
the Petition would still be denied. A principal who gives broad and unbridled
authorization to his or her agent cannot later hold third persons who relied on that
authorization liable for damages that may arise from the agent's fraudulent acts.
Petitioners opened a joint account with respondent, through their broker, Hipol, to
engage in foreign currency exchange trading. Respondent had a leverage system of
trading,93 wherein clients may use its credit line to facilitate transactions. This means
that clients may actually trade more than what was actually in their accounts, signifying
a higher degree of risk. The contract between petitioners and respondent provided that
respondent was irrevocably authorized to follow bonafide instructions from petitioners or
their broker:
6. Orders
You hereby irrevocably authorize us to act upon any instructions, whether in writing, by
cable, telex, facsimile or telephone given or purported to be given by you or your agent
or representative which appear whether on their respective faces (in the case of writing,
cable, telex or facsimile) or otherwise to be bonafide. We shall not be responsible and
you shall indemnify us for any losses incurred as a result of acting upon such
instructions should there in fact be any error commission ambiguities or other
irregularities therein or therewith.94
According to respondent, for instructions to be considered "bonafide," there must be a
signed purchase order form from the client:
[Direct Examination]
Q
[B]ased on your testimony you said that every transaction is to be accompanied by a
purchase order form which purchase order form is signed by the client?
[Gabriel Erazo]
A
Yes, sir.
Q
By transaction[,] am I correct to say that this [is] either a buy or sell transaction?
A
Yes, sir.
Q
And whether it be for one (1) lot, two (2) lots, or three (3) lots, there should be a
purchase order form?
A
Yes, sir.
Q
So without this purchase order form[,] no transaction can be entered into?
A
Yes, sir, because the [dealer] will not accept [an] order without [a] purchase order form.
Q
Just supposing[,] Mr. Witness[,] that a transaction was entered without a purchase order
form, what happens to the transaction?
A
Basically[,] there will be no transaction if there is no purchase order form because the
dealer will ask for the purchase order form before they will execute the order, sir.
Q
So no incident will there be a transaction entered without a purchase order form signed
by the client?
A
Yes, sir.95
Petitioner Cancio admitted to giving "[b]etween five (5) to ten (10)" pre-signed
documentation"96 to facilitate their transactions.97 Indeed, 10 signed purchase order
forms were presented as evidence dated March 15, 2000,98 March 17, 2000,99 March
20, 2000,100 March 21, 2000,101 March 24, 2000,102 March 29, 2000,103 March 31,
2000,104 April 4, 2000,105 April 5, 2000,106 and April 9, 2000.107
Petitioners argue that there were 29 total transactions, as evidenced by the Balance
Ledger for Dealings,108 which means that 19 of the transactions were unauthorized. The
Balance Ledger reads:
BOUGHT SOLD
UNIT
DATE
NO.
PRICE
DATE
NO.
PRICE
COMMISSION
PROFIT/LOSS
NEW BALANCE
BALANCE BROUGHT FORWARD ->
0.00
***MARGIN IN***
10,000.00
2
16/03/00
39)
1.6607
0)
1.6590
10,009.72
2
16/03/00
39)
1.6607
17/03/00
8)
1.6630(L)
-140.00
276.61
9,990.08
3
0)
106.75
17/03/00
33)
106.65
9,990.08
3
20/03/00
25)
106.50(L)
17/03/00
33)
106.65
-210.00
422.54
10,202.62
1
0)
107.08
21/03/00
22)
107.00
10,185.26
1
0)
106.98
21/03/00
22)
107.00
10,167.90
1
0)
107.43
21/03/00
22)
107.00
10,115.82
2
0)
107.43
23/03/00
3)
107.55
10,115.82
1
24/03/00
40)
107.10(L)
21/03/00
22)
107.00
-70.00
-93.37
11,028.54
2
24/03/00
16)
106.90(L)
23/03/00
3)
107.55
-140.00
1,216.09
11,028.54
1
29/03/00
25)
105.77
0)
105.45
11,020.90
1
29/03/00
25)
105.77
0)
105.40
11,013.26
1
29/03/00
25)
105.77
31/03/00
5)
106.00(L)
-70.00
216.98
13,444.70
2
31/03/00
33)
104.80(L)
31/03/00
4)
105.60
-140.00
1,526.72
13,444.70
1
31/03/00
34)
104.80(L)
31/03/00
8)
106.05
-70.00
1,192.75
13,444.70
1
31/03/00
53)
102.50
0)
102.35
13,444.70
1
31/03/00
70)
103.03
0)
102.35
13,444.70
3
0)
102.45
31/03/00
54)
102.10
13,444.70
1
31/03/00
43)
103.00
0)
102.35
13,444.70
12
-840.00
4,758.32
BALANCE BROUGHT FORWARD ->
13,444.70
1
31/03/00
43)
103.00
03/04/00
1)
104.00(L)
-70.00
961.54
17,298.98
1
31/03/00
70)
103.03
03/04/00
13)
104.70(L)
-70.00
1,595.03
17,298.98
1
31/03/00
53)
102.50
03/04/00
14)
104.70(L)
-70.00
2,101.24
17,298.98
2
03/04/00
12)
104.83
03/04/00
21)
104.62(L)
-140.00
-401.45
17,298.98
3
0)
104.90
31/03/00
54)
102.10
17,298.98
3
0)
105.00
31/03/00
54)
102.10
17,223.98
3
04/04/00
26)
105.75
0)
104.90
17,223.98
1
04/04/00
26)
105.75
05/04/00
31)
105.27(L)
-70.00
-455.97
16,630.65
3
0)
104.95
31/03/00
54)
102.10
16,630.65
2
04/04/00
26)
105.75
0)
104.85
16,630.65
2
04/04/00
26)
105.75
06/04/00
4)
104.77(L)
-140.00
-1,870.76
14,567.81
3
0)
104.80
31/03/00
54)
102.10
14,567.81
3
0)
105.50
31/03/00
54)
102.10
14,411.56
3
10/04/00
36)
106.90
0)
106.40
14,336.56
3
0)
106.50
31/03/00
54)
102.10
14,336.56
3
0)
107.07
31/03/00
54)
102.10
14,261.56
3
10/04/00
36)
106.90
0)
106.97
14,261.56
3
10/04/00
36)
106.90
12/04/00
22)
105.85(L)
-210.00
-2,975.91
-35.72
3
12/04/00
21)
105.95(L)
31/03/00
54)
102.10
-210.00
-10,901.37
-35.72
14
-980.00
-11,947.65
Petitioners' argument would have been correct if each transaction was counted for
every buy and sell. During petitioner Cancio's crossexamination, respondent's counsel
counted by date of transaction, thus, counting 27 transactions. Petitioner Cancio,
however, clarified that they had a "buy and out" type of transaction. Each "open
position" and "close position" would be considered as only one (1) transaction: 109
Q
Allow me to count the number of transactions here and see how far we could go in this
kind of questioning. From March 9 to April 4, I counted twenty[-]seven (27) transactions.
And out of these twenty-seven (27) transactions you said that you are responsible for
five (5) of them?
A
Those are not twenty[-seven] (27) transactions[,] Sir.
Q
What are those?
A
Because there is what we call "buy" and "out," Sir. So, the "buy and out" is considered
as one (1) transaction only, Sir.
Q
So, how many transactions are there on [these] orders?
A
We made about ten (10)[,] Sir.110
According to respondent, each "buy and out" should be covered by one (1) purchase
order form. The actual count then of the transactions, according to petitioners' own
enumeration of the dealings,111should be:
TRANSACTION
DATE
[OPEN NEW POSITION]

LOTS
PRICE
DATE
[CLOSE POSITION]
LOTS
PRICE
1
March 16, 2000 [Buy]
2
1.6607
March 17, 2000 [Sell]
2
1.6630
2
3
106.65
3
106.50
3
1
107.00
1
107.10
4
2
107.55
2
106.90
5
1
105.77
1
106.00
6
2
105.60
2
104.80
7
2
106.05
2
104.80
8
1
102.50
April 3, 2000 [Sell]
1
104.70
9
1
103.03
1
104.70
10
3
102.10
April 12, 2000 [Buy]
3
105.95
11
1
103.00
1
104.00
12
2
104.62
April 3, 2000 [Buy]
2
104.83
13
April 4, 2000 [Buy]
3
105.75
1
105.27
14
2
104.77
15
April 10, 2000 [Buy]
3
106.90
3
105.85
Thus, by petitioners' own count, there were 15 transactions, not 29
transactions.112 According to the Balance Ledger, commission was deducted from
petitioners' account 15 times. Thus, commission was deducted for every
successful transaction, not for every time a "buy" or "sell" was made.
Interestingly, the eleventh and twelfth transactions occurred when petitioners were still
actively trading. This means that they executed more instructions to Hipol than what
was covered by the signed purchase order forms that he held, without complaint.
Petitioner Pampolina even testified that they were constantly aware of the status of their
account when they were trading:
Q
How did you get to know that you accumulated around $7,000.00 for your account?
A
Because every time that we execute orders[,] we take a position[,] and at the same
time[,] we monitor also the rate of the position that we are taking and we also relieve
orders to take profit. So, as long as we relieve orders to take profit[,] we know that we
are making money.113
Petitioners would have been aware that respondent could execute instructions relayed
by Hipol even without the required purchase order form. Otherwise, they would have
stopped executing orders upon their tenth transaction. Even if this Court were to apply
petitioners' argument that a "buy" and a "sell" is counted as one (1) transaction each,
that would still mean that there were 23 transactions made when petitioners were
actively trading. There would still be 13 orders that petitioners relayed to Hipol over and
above the 10 pre-signed purchase order forms that he held.
Moreover, petitioners assail the alleged unauthorized transactions executed after April
4, 2000, when they allegedly stopped relaying instructions to Hipol. These alleged
unauthorized transactions, they argue, breached respondent's contractual obligation to
execute only bonafide instructions from petitioners. From the table above, these
transactions would refer to the thirteenth, fourteenth, and fifteenth transactions.
Respondents, however, presented signed purchase order forms for the contested
transactions occurring after April 4, 2000, namely, the purchase order forms dated April
4, 2000,114 April 5, 2000,115 and April 9, 2000.116 If there was any breach committed by
respondent, it occurred when petitioners actively traded and they would have been
aware of this breach, not when they stopped trading.
Respondent likewise did not have the duty to disclose to petitioners any previous
infractions committed by their agent.
Hipol, petitioners' agent, was not employed with respondent. He was categorized as an
independent broker for commission. In Behn, Meyer, and Co. v. Nolting:117
A broker is generally defined as one who is engaged, for others, on a commission,
negotiating contracts relative to property with the custody of which he has no concern;
the negotiator between other parties. never acting in his own name, but in the name of
those who employed him; he is strictly a middleman and for some purposes the agent of
both parties.118
When Hipol became petitioners' agent, he had committed only one (1) known prior
infraction against a client of respondent. Respondent might have been construed this as
an isolated incident that did not warrant heightened scrutiny. Hipol's infraction
committed against petitioners was his second known infraction. Respondent cancelled
his accreditation when petitioners informed them of his unauthorized transactions.
It would be different if Hipol committed a series of infractions and respondent continued

to accredit him. In that instance, respondent would have been complicit to Hipol's
wrongdoings. Respondent, not being Hipol's employer, had no power of discipline over
him. It could only cancel his accreditation, which it did after a second incident was
reported. This was the extent by which respondent was obligated to act on Hipol's
infractions.
Moreover, petitioners and respondent signed and agreed to absolve respondent from
actions, representations, and warranties of their agent made on their behalf, thus:
Commission Agent
You acknowledge and agree that the commtssiOn agent (one Mr/Ms Ronald (sic) M.
Hipol) who introduced you to us in connection with this Facility is your agent and we are
in no way responsible for his actions or any warranties or representations he may have
made (whether expressly on our behalf or not) and that pursuant to his having
introduced you to us, we will (if you accept this Facility) pay him a commission based on
your trading with us (details of which will be applied to you on request). Should you
choose to also vest in him trading authority on your behalf please do so only after
considering the matter carefully, for we shall not be responsible nor liable for any abuse
of the authority you may confer on him. This will be regarded strictly as a private matter
between you and him. You further acknowledge that for our own protection and
commercial purpose you are aware of the terms of the trading agreement between the
commission agent and ourselves where the commission agent is to trade for you. 119
Petitioners conferred trading authority to Hipol. Respondent was not obligated to
question whether Hipol exceeded that authority whenever he made purchase orders.
Respondent was likewise not privy on how petitioners instructed Hipol to carry out their
orders. It did not assign Hipol to be petitioners' agent. Hipol was the one who
approached petitioners and offered to be their agent. Petitioners were highly
educated120 and were "[a]lready knowledgeable in playing in this foreign exchange
trading."121 They would have been aware of the extent of authority they granted to Hipol
when they handed to him 10 pre-signed blank purchase order forms. Under Article 1900
of the Civil Code:
Article 1900. So far as third persons are concerned, an act is deemed to have been
performed within the scope of the agent's authority, if such act is within the terms of the
power of attorney, as written, even if the agent has in fact exceeded the limits of his
authority according to an understanding between the principal and the agent.
Before a claimant can be entitled to damages, "the claimant should satisfactorily show
the existence of the factual basis of damages and its causal connection to defendant's
acts."122 The acts of petitioners' agent, Hipol, were the direct cause of their injury. There
is no reason to hold respondent liable for actual and moral damages. Since the basis for
moral damages has not been established, there would likewise be no basis to recover
exemplary damages123 and attorney's fees124 from respondent. If there was any fault,
the fault remains with petitioners' agent and him alone.
The State has already taken notice of the high risks involved in foreign exchange
leverage trading. In the prior case of Securities and Exchange Commission v.
Performance Foreign Exchange Corporation,125 the Securities and Exchange
Commission tried to issue a cease-and-desist order against respondent for trading
foreign currency futures contracts without the proper license.
This Court invalidated the cease-and-desist order upon finding that it was improperly
issued. It also took note that even the Securities and Exchange Commission was
unsure of whether foreign currency exchange trading constituted futures commodity
trading, and that it had to request the Bangko Sentral ng Pilipinas for its advice. The
Bangko Sentral ng Pilipinas' reply read:
Dear Ms. Bautista,
This refers to your letter dated February 8, 2001 requesting for a definitive statement
that the foreign currency leverage trading engage[d] in by private corporations,
particularly, Performance Foreign Exchange Corporation (PFEC), is a financial
derivatives transaction and that it can only be undertaken by banks or non-bank
financial intermediaries performing quasi-banking functions and/or its
subsidiaries/affiliates.
As indicated in your description of the transactions and the documents submitted, the
foreign currency leverage trading, subject of your query, is essentially similar in
mechanics to currency future trading, particularly with respect to the margin
requirements, standard contract size, and daily market-to-market of open position.
However, it does not fall under the category of futures trading because it is not
exchangetraded. Further, we can not classify it as being financial derivatives
transactions as we consider the transaction as plain currency margin trading, which by
its mechanics, involve the set-up of margin and nondelivery of the currencies involved.
In view of the foregoing facts, the activities of the aforesaid corporation are not covered
by [the Bangko Sentral ng Pilipinas'] guidelines on derivative licensing.
We hope we have satisfactorily clarified your concerns.
Very truly yours,

(Sgd.)
AMANDO M. TETANGCO, JR.126 (Emphasis supplied)
Nonetheless, the Securities and Exchange Commission persisted in regulating entities
involved in foreign exchange leverage trading, issuing the following Advisory:
SEC ADVISORY
20 October 2016
FOREIGN EXCHANGE TRADING
The advisory is prompted by the complaints of retail investors who lost their moneys to
forex trading.
The public is advised that TRADING OF COMMODITIES FUTURES CONTRACTS IN

THE PHILIPPINES (including Foreign Exchange Trading as consistently held by the
Commission) and the pertinent RULES ARE STILL SUSPENDED pursuant to
Paragraph 4 of Rule II of the Amended Rules and Regulations implementing the
Securities Regulation Code.
Based on the reports, huge amount of money has been invested (usually in US dollars)
in forex trading corporations where investors opened margin accounts to enable them to
trade in foreign currency. The so-called "experts" of the forex trading corporations
execute foreign trade positions in behalf of the investors on the representation that
investors shall gain profit as in the stock market.
It has to be reiterated that under Section 11 of the Securities Regulation Code "no
person shall offer, sell or enter into commodity futures contract except in accordance
with rules and regulations and orders of the Commission may prescribe in the public
interest".
The investors should also take the cue from the ruling laid down in Onapal v. Court of
Appeals (G.R. No. 90707, February 3, 1993) where the Supreme Court stated in this
wise: "xxx The payments made under said contract were payments of difference in
prices arising out of the rise or fall in the market price above or below the contract price
thus making it purely gambling and declared null and void by law."
The public is encouraged to report to the Commission entities operating Foreign

Exchange Trading and those acting as agents of these operators.127
Considering, however, that the legality of foreign exchange leverage trading is not in
issue in this case, this Court will not delve further into the current regulations affecting it.
It has been concluded that foreign exchange leverage trading is known to be risky and
may lead to substantial losses for investors. Petitioners, who were experienced in this
kind of trading, should have been more careful in the conduct of their affairs.
Currency trading adds no new good or service into the market that would be of use to
real persons. Instead, it has the tendency to alter the price of real goods and services to
the detriment of those who manufacture, labor, and consume products. It may alter the
real value of goods and services on the basis of a rumor or anything else that will cause
a herd of speculative traders to move one way or the other. Put in another way, those
who participate in it must be charged with knowledge that getting rich in this way is
accompanied with great risk. Given its real effects on the real economy and on real
people, it will be unfair for this Court to provide greater warranties to the parties in
currency trading. They should bear their own risks perhaps to learn that their capital is
better invested more responsibly and for the greater good of society.
Be that as it may, to arrive at these conclusions, this Court has to extensively review the
evidence submitted by the parties. If, as petitioners claim, the Petition only raised pure
questions of law, there would have been no need to re-examine the evidence. As it
stands, the Petition must be denied.
WHEREFORE, the Petition is DENIED. The January 31, 2008 Decision and March 31,
2008 Resolution of the Court of Appeals in CA-G.R. CV No. 88439 are AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo, JJ., concur.
October 1, 2018
NOTICE OF JUDGMENT
Sirs / Mesdames:
Please take notice that on June 6, 2018 a Decision, copy attached hereto, was
received by this Office on October 1, 2018 at 2:25 p.m.
Very truly yours,
(SGD)
WILFREDO V. LAPITAN
Endnotes:
1Rollo, pp. 23-52.

2 Id. at 54-75. The Decision, docketed as CA-G.R. CV No. 88439, was penned by
Associate Justice Mariano C. Del Castillo (now Supreme Court Associate Justice) and
concurred in by Associate Justices Arcangelita Romilla-Lontok and Romeo F. Barza of
the Fourteenth Division, Court of Appeals, Manila.
3 Id. at 77. The Resolution, docketed as CA-G.R. CV No. 88439, was penned by
Associate Justice Mariano C. Del Castillo (now Supreme Court Associate Justice) and
concurred in by Associate Justices Arcangelita Romilla-Lontok and Romeo F. Barza of
the Former Fourteenth Division, Court of Appeals, Manila.
4 Id. at 55.
5 JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING, 2 (2009).
6 Id. at 7.
7 Id.
8 Id. at 9.
9 Id. at 15.
10 Id. at 15-16.
11 Id. at 22.
12 Id. at 10.
13 Id. at 22.
14 Id. at 22-23.
15See rollo, pp. 185 and 334.
16See THOMAS OBERLECHNER, THE PSYCHOLOGY OF THE FOREIGN
EXCHANGE MARKET, 85 (2004).
17 JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING, 13-14 (2009).
18 A. MORALY, INTERNATIONAL ROBBERY OF U.S. WEALTH, 132 (2011).
19Rollo, pp. 61-62.
20See
UNITED STATES SECURITIES AND EXCHANGE COMMISSION INVESTOR
BULLETIN, Understanding Margin Accounts, (Last accessed June 1, 2018).
21See
UNITED STATES SECURITIES AND EXCHANGE COMMISSION INVESTOR
BULLETIN, Understanding Margin Accounts, (Last accessed June 1, 2018).
22See JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING, 35-36
(2009).
23See JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING, 35-36
(2009).
24See JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING, 37 (2009).
25See JAMES CHEN, ESSENTIALS OF FOREIGN EXCHANGE TRADING, 37 (2009).
26See BANGKO SENTRAL NG PILIPINAS FINANCIAL MARKET OPERATIONS SUB-
SECTOR, Reference Exchange Bulletin, June 1, 2018,
http://www.bsp.gov.ph/statistics/sdds/ExchRate.htm (Accessed June 6, 2018).
27Rollo,
pp. 153-155, Denominated as "Application (Individual/Non-Incorporated
Business)".
28 Id. at 156-161.
29 Id. at 162-164.
30 Id. at 55-56.
31 Id. at 156 and 161.
32 Id. at 56.
33 Id.
34 Id. at 57.
35 Id.
36 Id. at 60-61.
37 Id. at 57.
38 Id. at 58. See also rollo, pp. 299-301.
39 Id. at 302-306.
40 Id. at 59.
41 Id. at 61-62.
42 Id. at 64-65.
43 Id. at 63.
44 Id. at 64-65.
45 Id. at 64.
46 The Decision is not attached to the Rollo.
47Rollo, pp. 65-66, as quoted in the CA Decision.
48 Id. at 24.
49 Id. at 67.
50 Id. at 54-75.
51 Id. at 68-69.
52 Id. at 70.
53 Id. at 72-74.
54 Id. at 74-75.
55 Id. at 77.
56 Id. at 23-52. Comment was filed on August 29, 2008 (rollo, pp. 84-104) while Reply
was filed on November 10, 2008 (rollo, pp. 434-450). Parties were ordered to submit
their respective memoranda (rollo, pp. 481-500 and 503-531) on January 28, 2009
(rollo, pp. 474-475).
57 Id. at 507-518.
58 Id. at 513-516.
59 Id. at 528-529.
60 Id. at 493.
61 Id. at 494.
62 Id. at 496-497.
63 Id. at 487-491.
64 Id. at 442-443.
65 Id. at 440-441.
66 RULES OF COURT, Rule 45, sec. 4 provides:
Section 4. Contents of petition. - The petition shall be filed in eighteen (18) copies, with
the original copy intended for the court being indicated as such by the petitioner, and
shall (a) state the full name of the appealing party as the petitioner and the adverse
party as respondent, without impleading the lower courts or judges thereof either as
petitioners or respondents; (b) 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; (c) set forth concisely a statement of the matters involved, and the reasons or
arguments relied on for the allowance of the petition; (d) be accompanied by a clearly
legible duplicate original, or a certified true copy of the judgment or final order or
resolution certified by the clerk of court of the court a quo and the requisite number of
plain copies thereof, and such material portions of the record as would support the
petition; and (e) contain a sworn certification against forum shopping as provided in the
last paragraph of section 2, Rule 42.
67See F.A.T Kee Computer Systems v. Online Networks International, 656 Phil. 403
(2011) [Per J. Leonardo-De Castro, First Division].
68 RULES OF COURT, Rule 45, sec. 7.
69 G.R. No. 174379. August 31, 2016 [Per J. Leonen, Second Division].
70Id. at 11 citing Magsino v. De Ocampo, 741 Phil. 394 (2014) [Per J. Bersamin, First
Division].
71Rollo, pp. 54-75.
72 Id. at 446-450.
73 Id. at 452 and 454.
74 Id. at 456-473.
75See Pascual v. Burgos, G.R. No. 171722, January 11, 2016 10-11 [Per J. Leonen,
Second Division] citing Commissioner of Internal Revenue v. Embroidery and Garments
Industries (Phil.), Inc., 364 Phil. 541, 546 (1999) [Per J. Pardo, First Division]; Siasat v.
Court of Appeals, 425 Phil. 139, 145 (2002) [Per J. Pardo, First Division]; Tabaco v.
Court of Appeals, 239 Phil. 485, 490 (1994) [Per J. Bellosillo, First Division]; Padilla v.
Court of Appeals, 241 Phil. 776, 781 (1988) [Per J. Paras, Second Division]; and Bank
of the Philippine Islands v. Leobrera, 461 Phil. 461, 469 (2003) [Per J. Ynares-Santiago,
Special First Division].
76See RULES OF COURT, Rule 45, sec. 1 provides:
Section 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari
from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan,
the Regional Trial Court or other courts whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition shall raise only
questions of law which must be distinctly set forth.
77 711 Phil. 576 (2013) [Per J. Brion, Second Division].
78Id. at 585-586 citing Leoncio v. De Vera, 569 Phil. 512 (2008) [Per J. Nachura, Third
Division] and Elenita S. Binay. in her capacity as Mayor of the City of Makati, Mario
Rodriguez and Priscilla Ferrolino v. Emerita Odeña, 551 Phil. 681 (2007) [Per J.
Nachura, En Banc].
79 RULES Of COURT, Rule 45, sec. 6.
80 269 Phil. 225 (1990) [Per J. Bidin, Third Division].
81 Id. at 232.
82 G.R. No. 171722, January 11, 2016 [Per J. Leonen, Second Division].
83 Id. at 12.
84Rollo, p. 441.
85 Id.
86 Id.
87Pascual v. Burgos, G.R. No. 171722, January 11, 2016 11-12 [Per J. Leonen, Second
Division].
88Santos v. Rustia, 90 Phil. 358, 360 (1951) [Per J. Feria, En Banc] citing Corpus Juris,
Vol. 45, sec. 852.
89 Id.
90Far Eastern Shipping Co. v. Court of Appeals, 357 Phil. 703, 747 (1998) [Per J.
Regalado, En Banc] citing Davidson Steamship Company vs. United States, 205 U.S.
186, 51 Law, Ed. 764 ( 1907).
91See Cebu Shipyard and Engineering Works v. William Lines, 366 Phil. 439 (1999) [Per
J. Purisima, Third Division].
92See Dueñas v. Guce-Africa, 618 Phil. 10, 19 (2009) [Per J. Del Castillo, Second
Division] citing Omengan v. Philippine National Bank, 541 Phil. 293 (2007) [Per J.
Corona, First Division].
93Rollo, p. 61.
94 Id. at 156.
95 Id. at 414-417.
96 Id. at 246.
97 Id. at 247.
98 Id. at 189.
99 Id.
100 Id. at 192.
101 Id. at 384.
102 Id. at 389.
103 Id.
104 Id. at 391.
105 Id. at 308.
106 Id. at 307.
107 Id. at 309.
108 Id. at 452 and 454.
109 Id. at 229-230.
110 Id.
111 Id. at 512-513.
112Id. at 69. The Court of Appeals likewise noted that petitioners' counsel "mistakenly
counted" 29 transactions to include even those transactions that were authorized and
not in issue.
113 Id. at 262.
114 Id. at 308.
115 Id. at 307.
116 Id. at 309.
117 35 Phil. 274 (1916) [Per J. Johnson, En Banc].
118
Id. at 279 citing 19 Cyc., 186; Henderson vs. The State, 50 Ind., 234; and Black's
Law Dictionary.
119Rollo, p. 161.
120
Id. at 199, Petitioner Cancio was a clinical psychologist. Rollo, p. 253, petitioner
Pampolina was a bank employee.
121 Id. at 55.
122Kierulf v. Court of Appeals, 336 Phil. 414, 431-432 ( 1997) [Per J. Panganiban, Third
Division].
Article 2234. While the amount of the exemplary damages need not be proved, the
plaintiff must show that he is entitled to moral, temperate or compensatory damages
before the court may consider the question of whether or not exemplary damages
should be awarded ....
Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded[.]

125 528 Phil. 169 (2006) [Per J. Sandoval-Gutierrez, Second Division].
126 Id. at 176-177.
127SECURITIES AND EXCHANGE COMMISSION, Advisory on Foreign Exchange
Trading, October 20, 2016 <http://www.sec.gov.ph/sec-advisory-foreign-exchange-
trading/> (last accessed June 1, 2018).
G.R. No. 202836, June 19, 2018 - FIRST SARMIENTO PROPERTY HOLDINGS, INC.,
Petitioner, v. PHILIPPINE BANK OF COMMUNICATIONS, Respondent.
EN BANC
G.R. No. 202836, June 19, 2018
FIRST SARMIENTO PROPERTY HOLDINGS, INC., Petitioner, v. PHILIPPINE BANK

OF COMMUNICATIONS, Respondent.
DECISION
LEONEN, J.:
To determine the nature of an action, whether or not its subject matter is capable or
incapable of pecuniary estimation, the nature of the principal action or relief sought must
be ascertained. If the principal relief is for the recovery of a sum of money or real
property, then the action is capable of pecuniary estimation. However, if the principal
relief sought is not for the recovery of sum of money or real property, even if a claim
over a sum of money or real property results as a consequence of the principal relief,
the action is incapable of pecuniary estimation.
This resolves the Petition for Review1 filed by First Sarmiento Property Holdings, Inc.
(First Sarmiento) assailing the April 3, 2012 Decision2 and July 25, 2012 Order3 of
Branch 11, Regional Trial Court, Malolos City, Bulacan in Civil Case No. 04-M-2012.
The facts as established by the parties are as follows:
On June 19, 2002,4 First Sarmiento obtained from Philippine Bank of Communications
(PBCOM) a P40,000,000.00 loan, which was secured by a real estate mortgage 5 over
1,076 parcels of land.6
On March 15, 2003,7 the loan agreement was amended8 with the increase of the loan
amount to P51,200,000.00. On September 15, 2003, the loan agreement was further
amended9 when the loan amount was increased to P100,000,000.00.
On January 2, 2006,10 PBCOM filed a Petition for Extrajudicial Foreclosure of Real

Estate Mortgage.11 It claimed in its Petition that it sent First Sarmiento several demand
letters, yet First Sarmiento still failed to pay the principal amount and accrued interest
on the loan. This prompted PBCOM to resort to extrajudicial foreclosure of the
mortgaged properties, a recourse granted to it under the loan agreement.12
On December 27, 2011, First Sarmiento attempted to file a Complaint for annulment of
real estate mortgage with the Regional Trial Court. However, the Clerk of Court refused
to accept the Complaint in the absence of the mortgaged properties' tax declarations,
which would be used to assess the docket fees.13
On December 29, 2011, Executive Judge Renato C. Francisco (Judge Francisco), First
Vice-Executive Judge Ma. Theresa A. Mendoza Arcega, Second Vice-Executive Judge
Ma. Belen R. Liban, and Third Vice-Executive Judge Basilio R. Gabo, Jr. of the
Regional Trial Court of City of Malolos, Bulacan, granted First Sarmiento's Urgent
Motion to Consider the Value of Subject Matter of the Complaint as Not Capable of
Pecuniary Estimation, and ruled that First Sarmiento's action for annulment of real
estate mortgage was incapable of pecuniary estimation.14
Also on December 29, 2011, the mortgaged properties were auctioned and sold to
PBCOM as the highest bidder.15
On January 2, 2012, First Sarmiento filed a Complaint for annulment of real estate
mortgage and its amendments, with prayer for the issuance of temporary restraining
order and preliminary injunction.16 It paid a filing fee of P5,545.00.17
First Sarmiento claimed in its Complaint that it never received the loan proceeds of
P100,000,000.00 from PBCOM, yet the latter still sought the extrajudicial foreclosure of
real estate mortgage. It prayed for the issuance of a temporary restraining order and
preliminary injunction to enjoin the Ex-Officio Sheriff from proceeding with the
foreclosure of the real estate mortgage or registering the certificate of sale in PBCOM's
favor with the Registry of Deeds of Bulacan.18
That same day, Judge Francisco issued an ex-parte temporary restraining order for 72
hours, enjoining the registration of the certificate of sale with the Registry of Deeds of
Bulacan.19
On January 4, 2012, the Regional Trial Court directed the parties to observe the status
quo ante.20
On January 24, 2012, the Clerk of Court and Ex-Officio Sheriff of Malolos City, Bulacan
issued a certificate of sale to PBCOM.21
In its Opposition (Re: Application for Issuance of Temporary Restraining

Order),22 PBCOM asserted that the Regional Trial Court failed to acquire jurisdiction
over First Sarmiento's Complaint because the action for annulment of mortgage was a
real action; thus, the filing fees filed should have been based on the fair market value of
the mortgaged properties.23
PBCOM also pointed out that the Regional Trial Court's directive to maintain the status
quo order beyond 72 hours constituted an indefinite extension of the temporary
restraining order, a clear contravention of the rules.24
On April 3, 2012, Branch 11, Regional Trial Court,25 Malolos City, Bulacan dismissed
the Complaint for lack of jurisdiction:
Following the High Court's ruling in the case of Home Guaranty Corporation v. R. II
Builders, Inc. and National Housing Authority, G.R. No. 192549, March 9, 2011, cited by
the bank in its Rejoinder, which appears to be the latest jurisprudence on the matter to
the effect that an action for annulment or rescission of contract does not operate to
efface the true objective and nature of the action which is to recover real property, this
Court hereby RESOLVES TO DISMISS the instant case for lack of jurisdiction, plaintiff
having failed to pay the appropriate filing fees.
Accordingly, the instant case is hereby DISMISSED.
SO ORDERED.26
On July 25, 2012, the Regional Trial Court27 denied First Sarmiento's motion for
reconsideration.28
On August 17, 2012, First Sarmiento sought direct recourse to this Court with its
Petition for Review29under Rule 45. It insists that its Complaint for the annulment of real
estate mortgage was incapable of pecuniary estimation.30 It points out that the
Executive Judge and Vice-Executive Judges of the Regional Trial Court likewise
acknowledged that its action was incapable of pecuniary estimation.31
Petitioner highlights that the Supreme Court En Banc in Lu v. Lu Ym held "that an action
for declaration of nullity of issuance of shares or an action questioning the legality of a
conveyance is one not capable of pecuniary estimation."32 Furthermore, petitioner
maintains that the Supreme Court En Banc in Bunayog v. Tunas also established that a
complaint questioning the validity of a mortgage is an action incapable of pecuniary
estimation.33
It emphasizes that Home Guaranty Corporation v. R-II Builders, which the Regional
Trial Court relied on to dismiss its complaint for lack of jurisdiction, was rendered by a
division of the Supreme Court; hence, it cannot modify or reverse a doctrine or principle
of law laid down by the Supreme Court En Banc.34
On September 19, 2012,35 this Court directed respondent PBCOM to comment on the
petition.
In its Comment,36 respondent contends that petitioner's action to annul the real estate
mortgage and enjoin the foreclosure proceedings did not hide the true objective of the
action, which is to restore petitioner's ownership of the foreclosed properties. 37
Respondent maintains that this Court has already settled that "a complaint for
cancellation of sale which prayed for both permanent and preliminary injunction aimed
at the restoration of possession of the land in litigation is a real action." 38
It likewise stresses that since petitioner's primary objective in filing its Complaint was to
prevent the scheduled foreclosure proceedings over the mortgaged properties and the
conveyance of their ownership to the highest bidder, the case was a real action. 39
Finally, it denies that Home Guaranty Corporation modified and reversed Lu v. Lu

Ym because the factual and legal milieus of these two (2) cases were different. 40
On November 26, 2012,41 this Court required petitioner to file a reply to the comment.
On February 1, 2013, petitioner filed its Reply42 where it denies that its Complaint was
for the annulment of the foreclosure sale, because when it filed its Complaint, the
foreclosure sale had not yet happened.43
It proclaims that its Complaint sought the removal of the lien on the mortgaged
properties and was not intended to recover ownership or possession since it was still
the registered owner with possession of the mortgaged properties when it filed its
Complaint.44
On February 27, 2013,45 this Court noted petitioner's reply and directed the parties to
submit their respective memoranda.
On May 30, 2013, the parties filed their respective memoranda. 46
In its Memorandum,47 petitioner continues to insist that it did not receive the loan
proceeds from PBCOM which is why it filed its Complaint for annulment of real estate
mortgage in response to the latter's Petition for Extrajudicial Foreclosure of Real Estate
Mortgage.48
Petitioner reiterates that its Complaint for annulment of real estate mortgage was an
action incapable of pecuniary estimation because it merely sought to remove the lien on
its properties, not the recovery or reconveyance of the mortgaged properties. 49
It states that it never expressly or impliedly sought the conveyance of the mortgaged
properties because it was still the registered owner of the mortgaged properties when its
Complaint was first presented for filing with the Clerk of Court.50
On the other hand, respondent in its Memorandum 51 restates its stand that petitioner's
Complaint involved a real action; hence, the estimated value of the mortgaged
properties should have been alleged and used as the basis for the computation of the
docket fees.52
Respondent claims that the allegations in petitioner's Complaint reveal the latter's real
intention to assert its title and recover the real properties sold at the public auction. 53
The only issue for this Court's resolution is whether or not the Regional Trial Court
obtained jurisdiction over First Sarmiento Corporation, Inc.'s Complaint for annulment of
real estate mortgage.
Rule 45 of the Rules of Court allows for a direct recourse to this Court by appeal from a
judgment, final order, or resolution of the Regional Trial Court. Rule 45, Section 1
provides:
Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by
certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The petition
shall raise only questions of law which must be distinctly set forth.
Rule 41, Section 2(c) likewise provides:
Section 2. Modes of appeal. —
....
(c) Appeal by certiorari. — In all cases where only questions of law are raised or
involved, the appeal shall be to the Supreme Court by petition for review on certiorari in
accordance with Rule 45.
Thus, there is no question that a petitioner may file a verified petition for review directly
with this Court if only questions of law are at issue; however, if both questions of law
and of facts are present, the correct remedy is to file a petition for review with the Court
of Appeals.54
Doña Adela Export International v. Trade and Investment Development

Corp.55 differentiated between a question of law and a question of fact as follows:
We stress that a direct recourse to this Court from the decisions, final resolutions and
orders of the RTC may be taken where only questions of law are raised or involved.
There is a question of law when the doubt or difference arises as to what the law is on a
certain state of facts, which does not call for an examination of the probative value of
the evidence presented by the parties-litigants. On the other hand, there is a question of
fact when the doubt or controversy arises as to the truth or falsity of the alleged facts.
Simply put, when there is no dispute as to fact, the question of whether the conclusion
drawn therefrom is correct or not, is a question of law.56 (Citation omitted)
In the case at bar, the underlying question for this Court's resolution pertains to
jurisdiction, or to be more precise, whether the Regional Trial Court attained jurisdiction
over petitioner's Complaint with the amount of docket fees paid.
Considering that the issue of jurisdiction is a pure question of law,57 petitioner did not err
in filing its appeal directly with this Court pursuant to law and prevailing jurisprudence.
II
Petitioner contends that its Complaint for annulment of real estate mortgage has a
subject incapable of pecuniary estimation because it was not intended to recover
ownership or possession of the mortgaged properties sold to respondent during the
auction sale.58 It insists that it had ownership and possession of the mortgaged
properties when it filed its Complaint; hence, it never expressly or impliedly sought
recovery of their ownership or possession.59
The petition is meritorious.
Jurisdiction is "the power and authority of a court to hear, try and decide a
case"60 brought before it for resolution.
Courts exercise the powers conferred on them with binding effect if they acquire
jurisdiction over: "(a) the cause of action or the subject matter of the case; (b) the thing
or the res; (c) the parties; and (d) the remedy."61
Jurisdiction over the thing or the res is a court's authority over the object subject of
litigation.62 The court obtains jurisdiction or actual custody over the object through the
seizure of the object under legal process or the institution of legal proceedings which
recognize the power and authority of the court.63
Jurisdiction over the parties is the court's power to render judgment that are binding on
the parties. The courts acquire jurisdiction over the plaintiffs when they file their initiatory
pleading, while the defendants come under the court's jurisdiction upon the valid service
of summons or their voluntary appearance in court.64
Jurisdiction over the cause of action or subject matter of the case is the court's authority
to hear and determine cases within a general class where the proceedings in question
belong. This power is conferred by law and cannot be acquired through stipulation,
agreement between the parties,65 or implied waiver due to the silence of a party.66
Jurisdiction is conferred by the Constitution, with Congress given the plenary power, for
cases not enumerated in Article VIII, Section 567 of the Constitution, to define, prescribe,
and apportion the jurisdiction of various courts.68
Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of 1980 as amended by
Republic Act No. 7691, provided for the jurisdictional division between the first and
second level courts by considering the complexity of the cases and the experience
needed of the judges assigned to hear the cases.
In criminal cases, first level courts are granted exclusive original jurisdiction to hear
complaints on violations of city or municipal ordinances69 and offenses punishable with
imprisonment not exceeding six (6) years.70 In contrast, second level courts, with more
experienced judges sitting at the helm, are granted exclusive original jurisdiction to
preside over all other criminal cases not within the exclusive jurisdiction of any other
court, tribunal, or body.71
The same holds true for civil actions and probate proceedings, where first level courts
have the power to hear cases where the value of personal property, estate, or amount
of the demand does not exceed P100,000.00 or P200,000.00 if in Metro Manila. 72 First
level courts also possess the authority to hear civil actions involving title to, possession
of, or any interest in real property where the value does not exceed P20,000.00 or
P50,000.00 if the real property is situated in Metro Manila.73 Second level courts then
assume jurisdiction when the values involved exceed the threshold amounts reserved
for first level courts74 or when the subject of litigation is incapable of pecuniary
estimation.75
First level courts were also conferred with the power to hear the relatively
uncomplicated cases of forcible entry and unlawful detainer,76 while second level courts
are authorized to hear all actions in admiralty and maritime jurisdiction 77 with claims
above a certain threshold amount. Second level courts are likewise authorized to hear
all cases involving the contract of marriage and marital relations,78 in recognition of the
expertise and probity required in deciding issues which traverse the marital sphere.
Section 19(1) of Batas Pambansa Blg. 129, as amended, provides Regional Trial Courts
with exclusive, original jurisdiction over "all civil actions in which the subject of the
litigation is incapable of pecuniary estimation."
Lapitan v. Scandia79 instructed that to determine whether the subject matter of an action
is incapable of pecuniary estimation, the nature of the principal action or remedy sought
must first be established. This finds support in this Court's repeated pronouncement that
jurisdiction over the subject matter is determined by examining the material allegations
of the complaint and the relief sought.80Heirs of Dela Cruz v. Heirs of Cruz81 stated,
thus:
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or
government agency, over the nature and subject matter of a petition or complaint is
determined by the material allegations therein and the character of the relief prayed for,
irrespective of whether the petitioner or complainant is entitled to any or all such
reliefs.82
However, Lapitan stressed that where the money claim is only a consequence of the
remedy sought, the action is said to be one incapable of pecuniary estimation:
A review of the jurisprudence of this Court indicates that in determining whether an
action is one the subject matter of which is not capable of pecuniary estimation, this
Court has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money, the claim is
considered capable of pecuniary estimation, and whether jurisdiction is in the municipal
courts or in the courts of first instance would depend on the amount of the claim.
However, where the basic issue is something other than the right to recover a sum of
money, or where the money claim is purely incidental to, or a consequence of, the
principal relief sought like in suits to have the defendant perform his part of the contract
(specific performance) and in actions for support, or for annulment of a judgment or to
foreclose a mortgage, this Court has considered such actions as cases where the
subject of the litigation may not be estimated in terms of money, and are cognizable
exclusively by courts of first instance. The rationale of the rule is plainly that the second
class cases, besides the determination of damages, demand an inquiry into other
factors which the law has deemed to be more within the competence of courts of first
instance, which were the lowest courts of record at the time that the first organic laws of
the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission
of June 11, 1901).83 (Citation omitted)
Heirs of Sebe v. Heirs of Sevilla84 likewise stressed that if the primary cause of action is
based on a claim of ownership or a claim of legal right to control, possess, dispose, or
enjoy such property, the action is a real action involving title to real property.85
A careful reading of petitioner's Complaint convinces this Court that petitioner never
prayed for the reconveyance of the properties foreclosed during the auction sale, or that
it ever asserted its ownership or possession over them. Rather, it assailed the validity of
the loan contract with real estate mortgage that it entered into with respondent because
it supposedly never received the proceeds of the P100,000,000.00 loan
agreement.86 This is evident in its Complaint, which read:
GROUNDS FOR THE APPLICATION OF PRELIMINARY INJUNCTION AND
TEMPORARY RESTRAINING ORDER
7. Defendant PBCOM knows fully well that plaintiff did not receive from it the loan it
(PBCOM) alleged to have granted in its favor.
8. Despite this, defendant PBCOM has filed with the Ex-Officio Sheriff of Bulacan, a
petition for extra judicial foreclosure of real estate mortgage, bent on foreclosing the real
estate properties of plaintiff, photocopy of the petition is hereto attached as Annex "F".
9. The auction sale of the properties is set on December 29, 2011.
10. Defendant PBCOM, well knowing the facts narrated above and willfully disregarding
the property rights of plaintiff, wrongfully filed an extra judicial foreclosure of real estate
mortgage and pursuant to said petition, the Ex-Officio Sheriff now does offer for sale,
the real estate properties of the plaintiff as set forth in its (PBCOM) said petition.
11. Unless defendants PBCOM and Ex-Officio Sheriff are restrained by this Honorable
Court, they will infringe the property rights of the plaintiff in the manner herein before
related.87
Far East Bank and Trust Company v. Shemberg Marketing Corporation 88 stated that an
action for cancellation of mortgage has a subject that is incapable of pecuniary
estimation:
Here, the primary reliefs prayed for by respondents in Civil Case No. MAN-4045 is the
cancellation of the real estate and chattel mortgages for want of consideration.
In Bumayog v. Tumas, this Court ruled that where the issue involves the validity of a
mortgage, the action is one incapable of pecuniary estimation. In the more recent case
of Russell v. Vestil, this Court, citing Bumayog, held that an action questioning the
validity of a mortgage is one incapable of pecuniary estimation. Petitioner has not
shown adequate reasons for this Court to revisit Bumayog and Russell. Hence,
petitioner's contention [cannot] be sustained. Since respondents paid the docket fees,
as computed by the clerk of court, consequently, the trial court acquired jurisdiction over
Civil Case No. MAN-4045.89
It is not disputed that even if the Complaint were filed a few days after the mortgaged
properties were foreclosed and sold at auction to respondent as the highest bidder, the
certificate of sale was only issued to respondent after the Complaint was filed.
Section 6 of Act No. 3135,90 as amended, provides that a property sold through an
extrajudicial sale may be redeemed "at any time within the term of one year from and
after the date of the sale":
Section 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date of the
sale; and such redemption shall be governed by the provisions of sections four hundred
and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in
so far as these are not inconsistent with the provisions of this Act.
Mahinay v. Dura Tire & Rubber Industries Inc.91 clarified that "[t]he date of the sale'
referred to in Section 6 is the date the certificate of sale is registered with the Register
of Deeds. This is because the sale of registered land does not 'take effect as a
conveyance, or bind the land' until it is registered."92
The registration of the certificate of sale issued by the sheriff after an extrajudicial sale
is a mandatory requirement; thus, if the certificate of sale is not registered with the
Registry of Deeds, the property sold at auction is not conveyed to the new owner and
the period of redemption does not begin to run.93
In the case at bar, the Ex-Officio Sheriff of the City of Malolos, Bulacan was restrained
from registering the certificate of sale with the Registry of Deeds of Bulacan and the
certificate of sale was only issued to respondent after the Complaint for annulment of
real estate mortgage was filed. Therefore, even if the properties had already been
foreclosed when the Complaint was filed, their ownership and possession remained with
petitioner since the certificate of sale was not registered with the Registry of Deeds.
This supports petitioner's claim that it never asked for the reconveyance of or asserted
its ownership over the mortgaged properties when it filed its Complaint since it still
enjoyed ownership and possession over them.
Considering that petitioner paid the docket fees as computed by the clerk of court, upon
the direction of the Executive Judge, this Court is convinced that the Regional Trial
Court acquired jurisdiction over the Complaint for annulment of real estate mortgage.
Furthermore, even if it is assumed that the instant case were a real action and the
correct docket fees were not paid by petitioner, the case should not have been
dismissed; instead, the payment of additional docket fees should have been made a lien
on the judgment award. The records attest that in filing its complaint, petitioner readily
paid the docket fees assessed by the clerk of court; hence, there was no evidence of
bad faith or intention to defraud the government that would have rightfully merited the
dismissal of the Complaint.94
III
Although not raised in the Petition, this Court nonetheless deems it proper to pass upon
the legality of the Regional Trial Court January 4, 2012 Order, which directed the parties
to observe the status quo ante,95 effectively extending indefinitely its 72-hour ex-parte
temporary restraining order issued on January 2, 2012.96
Rule 58, Section 5 of the Rules of Court provides the instances when a temporary
restraining order may be issued:
Section 5. Preliminary injunction not granted without notice; exception. — No
preliminary injunction shall be granted without hearing and prior notice to the party or
person sought to be enjoined. If it shall appear from facts shown by affidavits or by the
verified application that great or irreparable injury would result to the applicant before
the matter can be heard on notice, the court to which the application for preliminary
injunction was made, may issue a temporary restraining order to be effective only for a
period of twenty (20) days from service on the party or person sought to be enjoined,
except as herein provided. Within the said twenty-day period, the court must order said
party or person to show cause, at a specified time and place, why the injunction should
not be granted, determine within the same period whether or not the preliminary
injunction shall be granted, and accordingly issue the corresponding order.
However, and subject to the provisions of the preceding sections, if the matter is of
extreme urgency and the applicant will suffer grave injustice and irreparable injury, the
executive judge of a multiple-sala court or the presiding judge of a single-sala court may
issue ex-parte a temporary restraining order effective for only seventy-two (72) hours
from issuance but he shall immediately comply with the provisions of the next preceding
section as to service of summons and the documents to be served therewith.
Thereafter, within the aforesaid seventy-two (72) hours, the judge before whom the
case is pending shall conduct a summary hearing to determine whether the temporary
restraining order shall be extended until the application for preliminary injunction can be
heard. In no case shall the total period of effectivity of the temporary restraining order
exceed twenty (20) days, including the original seventy-two hours provided herein.
In the event that the application for preliminary injunction is denied or not resolved
within the said period, the temporary restraining order is deemed automatically vacated.
The effectivity of a temporary restraining order is not extendible without need of any
judicial declaration to that effect and no court shall have authority to extend or renew the
same on the same ground for which it was issued.
However, if issued by the Court of Appeals or a member thereof, the temporary

restraining order shall be effective for sixty (60) days from service on the party or person
sought to be enjoined. A restraining order issued by the Supreme Court or a member
thereof shall be effective until further orders.
It is clear that a temporary restraining order may be issued by a trial court in only two (2)
instances: first, when great or irreparable injury would result to the applicant even
before the application for writ of preliminary injunction can be heard; and second, if the
matter is of extreme urgency and the applicant will suffer grave injustice and irreparable
injury. The executive judge of a multi-sala court or the presiding judge of a single-sala
court may issue a 72-hour temporary restraining order.
In both instances, the temporary restraining order may be issued ex parte. However, in
the first instance, the temporary restraining order has an effectivity of only 20 days to be
counted from service to the party sought to be enjoined. Likewise, within those 20 days,
the court shall order the enjoined party to show why the injunction should not be granted
and shall then determine whether or not the injunction should be granted.
In the second instance, when there is extreme urgency and the applicant will suffer
grave injustice and irreparable injury, the court shall issue a temporary restraining order
effective for only 72 hours upon issuance. Within those 72 hours, the court shall conduct
a summary hearing to determine if the temporary restraining order shall be extended
until the application for writ of preliminary injunction can be heard. However, in no case
shall the extension exceed 20 days.
If the application for preliminary injunction is denied or not resolved within the given
periods, the temporary restraining order is automatically vacated and the court has no
authority to extend or renew it on the same ground of its original issuance.
Despite the clear wording of the rules, the Regional Trial Court issued a status quo ante
order dated January 4, 2012, indefinitely extending the temporary restraining order on
the registration of the certificate of sale with the Registry of Deeds.
Petitioner applied for a writ of preliminary injunction, yet the Regional Trial Court did not
conduct any hearing for that purpose and merely directed the parties to observe the
status quo ante.
Miriam College Foundation, Inc v. Court of Appeals97 explained the difference between
preliminary injunction and a restraining order as follows:
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
perform to refrain from performing a particular act or acts. As an extraordinary remedy,
injunction is calculated to preserve or maintain the status quo of things and is generally
availed of to prevent actual or threatened acts, until the merits of the case can be heard.
A preliminary injunction persists until it is dissolved or until the termination of the action
without the court issuing a final injunction.
The basic purpose of restraining order, on the other hand, is to preserve the status quo
until the hearing of the application for preliminary injunction. Under the former A§5, Rule
58 of the Rules of Court, as amended by A§5, Batas Pambansa Blg. 224, a judge (or
justice) may issue a temporary restraining order with a limited life of twenty days from
date of issue. If before the expiration of the 20-day period the application for preliminary
injunction is denied, the temporary order would thereby be deemed automatically
vacated. If no action is taken by the judge on the application for preliminary injunction
within the said 20 days, the temporary restraining order would automatically expire on
the 20th day by the sheer force of law, no judicial declaration to that effect being
necessary. In the instant case, no such preliminary injunction was issued; hence, the
TRO earlier issued automatically expired under the aforesaid provision of the Rules of
Court.98 (Citations omitted)
A temporary restraining order cannot be extended indefinitely to take the place of a writ
of preliminary injunction, since a temporary restraining order is intended only to have a
limited lifespan and is deemed automatically vacated upon the expiration of 72 hours or
20 days, as the case may be. As such, the temporary restraining order has long expired
and, in the absence of a preliminary injunction, there was nothing to stop the sheriff
from registering the certificate of sale with the Registry of Deeds.
This Court has repeatedly expounded on the nature of a temporary restraining

order99 and a preliminary injunction.100 Yet lower courts consistently interchange these
ancillary remedies and disregard the sunset clause101 inherent in a temporary
restraining order by erroneously extending it indefinitely. Such ignorance or defiance of
basic remedial measures is a gross disservice to the public, who look towards the court
for legal guidance and legal remedy. More importantly, this cavalier attitude towards
these injunctive reliefs might even be construed as a deliberate effort to look the other
way to favor a party, which will then sully the image of the entire judiciary. Henceforth,
this Court will demand stricter compliance with the rules from the members of the bench
as regards their issuances of these injunctive reliefs.
IV
Finally, there is a need to reassess the place of Home Guaranty v. R-II Builders102 in our
jurisprudence.
In Home Guaranty, R-II Builders, Inc. (R-II Builders) filed a Complaint for the rescission
of the Deed of Assignment and Conveyance it entered into with Home Guaranty
Corporation and National Housing Authority. The Complaint was initially determined to
have a subject that is incapable of pecuniary estimation and the docket fees were
assessed and paid accordingly.103
R-II Builders later filed a motion to admit its Amended and Supplemental Complaint,
which deleted its earlier prayer for the resolution of its Deed of Assignment and
Conveyance, and prayed for the conveyance of title to and/or possession of the entire
Asset Pool. The Regional Trial Court ruled that the Amended and Supplemental
Complaint involved a real action and directed R-II Builders to pay the correct docket
fees.104
Instead of paying the additional docket fees, R-II Builders withdrew its Amended and
Supplemental Complaint and instead filed a motion to admit its Second Amended
Complaint, which revived the prayer in its original Complaint to resolve the Deed of
Assignment and Conveyance and deleted the causes of action for conveyance of title to
and/or possession of the entire Asset Pool in its Amended and Supplemental
Complaint.105 The Regional Trial Court granted the motion to admit the Second
Amended Complaint, ratiocinating that the docket fees to the original Complaint had
been paid; that the Second Amended Complaint was not intended to delay the
proceedings; and that the Second Amended Complaint was consistent with R-II
Builders' previous pleadings.106
The Court of Appeals upheld the ruling of the Regional Trial Court and reiterated that
the case involved a subject that was incapable of pecuniary
estimation.107 However, Home Guaranty reversed the Court of Appeals Decision, ruling
that the Complaint and the Amended and Supplemental Complaint both involved
prayers for the conveyance and/or transfer of possession of the Asset Pool, causes of
action which were undoubtedly real actions. Thus, the correct docket fees had not yet
been paid:108
Although an action for resolution and/or the nullification of a contract, like an action for
specific performance, fall squarely into the category of actions where the subject matter
is considered incapable of pecuniary estimation, we find that the causes of action for
resolution and/or nullification of the [Deed of Assignment and Conveyance] was
erroneously isolated by the [Court of Appeals] from the other causes of action alleged in
R-II Builders' original complaint and Amended and Supplemental Complaint which
prayed for the conveyance and/or transfer of possession of the Asset Pool. In Gochan
v. Gochan, this Court held that an action for specific performance would still be
considered a real action where it seeks the conveyance or transfer of real property, or
ultimately, the execution of deeds of conveyance of real property.
....
Granted that R-II Builders is not claiming ownership of the Asset Pool because its
continuing stake is, in the first place, limited only to the residual value thereof, the
conveyance and/or transfer of possession of the same properties sought in the original
complaint and Amended and Supplemental Complaint both presuppose a real action for
which appropriate docket fees computed on the basis of the assessed or estimated
value of said properties should have been assessed and paid. . . . 109 (Citations omitted)
Home Guaranty stated that to determine whether an action is capable or incapable of
pecuniary estimation, the nature of the principal action or remedy prayed for must first
be determined.110Nonetheless, in citing Ruby Shelter Builders v. Formaran, Home
Guaranty looked beyond R-II Builder's principal action for annulment or rescission of
contract to purportedly unmask its true objective and nature of its action, which was to
recover real property.111
In a dissenting opinion in the Home Guaranty112 June 22, 2011 Resolution that
dismissed R-II Builders' motion for reconsideration, Associate Justice Presbitero
Velasco, Jr. stressed that one must first look at the principal action of the case to
determine if it is capable or incapable of pecuniary estimation:
Whether or not the case is a real action, and whether or not the proper docket fees were
paid, one must look to the main cause of action of the case. In all instances, in the
original Complaint, the Amended and Supplemental Complaint and the Amended
Complaint, it was all for the resolution or rescission of the [Deed of Assignment and
Conveyance], with the prayer for the provisional remedy of injunction and the
appointment of a trustee and subsequently a receiver. In the Second Amended
Complaint, the return of the remaining assets of the asset pool, if any, to respondent R-
II Builders would only be the result of the resolution or rescission of the [Deed of
Assignment and Conveyance].
Even if real property in the Asset Pool may change hands as a result of the case in the
trial court, the fact alone that real property is involved does not make that property the
basis of computing the docket fees. De Leon v. Court of Appeals has already settled the
matter. That case, citing Bautista v, Lim, held that a case for rescission or annulment of
contract is not susceptible of pecuniary estimation. On the other hand, in the Decision
We rendered on July 25, 2005 in Serrano v. Delica, We ruled that the action for
cancellation of contracts of sale and the titles is a real action. Similarly, on February 10,
2009, We ruled in Ruby Shelter Builders and Realty Development Corporation v.
Formaran III (Ruby Shelter) that an action for nullification of a Memorandum of
Agreement which required the lot owner to issue deeds of sale and cancellation of the.
Deeds of Sale is a real action.113 (Citations omitted)
Whatever confusion there might have been regarding the nature of actions for nullity of
contracts or legality of conveyances, which would also involve recovery of sum of
money or real property, was directly addressed by Lu v. Lu Ym.114Lu underscored that
"where the basic issue is something other than the right to recover a sum of money, the
money claim being only incidental to or merely a consequence of, the principal relief
sought, the action is incapable of pecuniary estimation."115
This finds support in numerous decisions where this Court proclaimed that the test to
determine whether an action is capable or incapable of pecuniary estimation is to
ascertain the nature of the principal action or relief sought. Thus, if the principal relief
sought is the recovery of a sum of money or real property, then the action is capable of
pecuniary estimation. However, if the principal relief sought is not for the recovery of
money or real property and the money claim is only a consequence of the principal
relief, then the action is incapable of pecuniary estimation.116
Considering that the principal remedy sought by R-II Builders was the resolution of the
Deed of Assignment and Conveyance, the action was incapable of pecuniary estimation
and Home Guaranty erred in treating it as a real action simply because the principal
action was accompanied by a prayer for conveyance of real property.
It is clear that subject matter jurisdiction cannot be dependent on the supposed ultimate
motive or true objective of the complaint because this will require the judge to speculate
on the defenses of the plaintiff beyond the material allegations contained in the
complaint. Likewise, in attempting to pinpoint the true objective of the complaint at the
initial stages of trial, the judge might end up dictating the result outside of the evidence
still to be presented during the trial, opening up the judge to charges of partiality and
even impropriety. Furthermore, the judge is not aware of the evidence to be presented
by either party when the complaint is filed; thus, there is no reliable basis that can be
used to infer the true objective of the complaint. It is imperative then that the competing
claims as basis of subject matter jurisdiction be textually based, finding its basis in the
body of the complaint and the relief sought without reference to extraneous facts not
alleged or evidence still to be presented.
Nonetheless, if subject matter jurisdiction is assailed during the course of the trial and
evidence is presented to prove the defense's allegation of lack of jurisdiction, this will
lead to an anomaly where the defense's evidence, instead of the complaint, will
effectively determine the remedy and cause of action.
In the case at bar, petitioner contends that its complaint prayed for the annulment of the
real estate mortgage it entered into with respondent and not for the recovery or
reconveyance of the mortgaged properties because it was still the registered owner
when it filed its complaint. The evidence on record supports petitioner's claim; hence,
there was no reason for the dismissal of its Complaint for lack of jurisdiction.
Home Guaranty likewise erred in dismissing the action because of non-payment of the
correct filing fees. Fedman Development Corporation v. Agcaoili117 reiterated that where
the assessed docket fees have been paid and the assessment turns out to be
insufficient, the court still acquires jurisdiction over the case, subject to payment of the
deficiency assessment.118 The only exception is when the deficiency in docket fees is
accompanied with bad faith and an intention to defraud the government. 119 It is not
disputed that R-II Builders paid the assessed docket fees when it filed its Complaint,
negating bad faith or intent on its part to defraud the government.
In light of the foregoing, this Court reaffirms that the nature of an action is determined by
the principal relief sought in the complaint, irrespective of the other causes of actions
that may also crop up as a consequence of the principal relief prayed for. The contrary
rule espoused in Home Guaranty is thereby set aside.
WHEREFORE, this Court resolves to GRANT the Petition. The assailed April 3, 2012
Decision and July 25, 2012 Order of Branch 11, Regional Trial Court, City of Malolos,
Bulacan in Civil Case No. 04-M-2012 are REVERSED and SET ASIDE.
The case is ordered REMANDED to Branch 11, Regional Trial Court, City of Malolos,
Bulacan for continued trial on First Sarmiento Property Holdings, Inc.'s Complaint for
annulment of real estate mortgage and its amendments.
SO ORDERED.
Carpio, Acting C. J., Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo,
Perlas-Bernabe, Jardeleza, Caguioa, Martires, Tijam, Reyes, Jr., and Gesmundo, JJ.,
concur.
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on June 19, 2018 a Decision, copy attached herewith, was
received by this Office on August 28,2018 at 2:30 p.m.
Very truly yours,
(SGD)
EDGAR O. ARICHETA
Clerk of Court
Endnotes:
1Rollo, pp. 3-20.

2 Id. at 21-22. The Decision was penned by Judge Basilio R. Gabo, Jr.
3 Id. at 23. The Resolution was penned by Judge Basilio R. Gabo, Jr.
4 Id. at 53.
5 Id. at 33-34.
6 Id. at 21 and 35-52.
7 Id. at 21.
8 Id. at 53-54.
9 Id. at 55-56.
10 Id. at 179.
11 Id. at 57-64.
12 Id. at 62-64.
13 Id. at 155.
14 Id. at 65-66.
15 Id. at 179.
16 Id. at 24-30.
17 Id. at 67-68.
18 Id. at 26-27.
19 Id. at 69-70.
20 Id. at 21.
21 Id. at 179.
22 Id. at 71-81.
23 Id. at 76-77.
24 Id. at 77-79.
25 Id. at 21-22.
26 Id. at 22.
27 Id. at 23.
28 Id. at 90-94.
29 Id. at 3-20.
30 Id. at 11-13.
31 Id. at 10.
32 Id. at 14.
33 Id. at 14.
34 Id. at 13-15.
35 Id. at 113.
36 Id. at 118-133.
37 Id. at 122.
38 Id.
39 Id. at 125.
40 Id. at 128-129.
41 Id. at 137.
42 Id. at 138-144.
43 Id. at 138-139.
44 Id. at 139-140.
45 Id. at 145.
46
Id. at 154-174, First Sarmiento's Memorandum; and rollo, pp. 175-196, PBCOM's
Memorandum.
47 Id. at 154-174.
48 Id. at 155.
49 Id. at 158-159.
50 Id, at 166.
51 Id. at 175-196.
52 Id. at 181.
53 Id. at 182-183.
54MarilaoWater v. Intermediate Appellate Court, 278 Phil. 444, 452 (1991) [Per J.
Narvasa, First Division]; Mendoza v. Villas, 659 Phil. 409, 415-416 (2011) [Per J.
Velasco, Jr., First Division]; Doña Adela Export International v. Trade & Investment
Development Corp., 753 Phil. 596, 610 (2015) [Per J. Villarama, Jr., Third Division].
55 753 Phil. 596 (2015) [Per J. Villarama, Jr., Third Division].
56 Id. at 610.
57VictoriasMilling Co. Inc. v. Intermediate Appellate Court, 277 Phil. 1, 8 (1991) [Per J.
Davide, Jr., Third Division].
58Rollo, pp. 11-13.
59 Id. at 166.
60Zamora v. Court of Appeals, 262 Phil. 298, 304 (1990) [Per J. Cruz, First Division].
61DePedro v. Romasan Development Corp., 748 Phil. 706, 723 (2014) [Per J. Leonen,
Second Division].
62 Id. at 723-724.
63Macahilig v. Heirs of Magalit, 398 Phil. 802, 817 (2000) [Per J. Panganiban, Third
Division].
64See Villagracia v. Fifth Shari'a District Court, 734 Phil. 239 (2014) [Per J. Leonen,
Third Division].
65Heirsof Concha, Sr. v. Spouses Lumocso, 564 Phil. 580, 592-593 (2007) [Per C. J.
Puno, First Division].
66Peralta-Labrador v. Bugarin, 505 Phil. 409, 415 (2005) [Per J. Ynares-Santiago, First
Division]
67 CONST., art. VIII, sec. 5 provides:
Section 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other public
ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo
warranto, and habeas corpus.
(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.
(b) All cases involving the legality of any tax, impost, assessment, or toll, or any penalty
imposed in relation thereto.
(c) All cases in which the jurisdiction of any lower court is in issue.
(d) All criminal cases in which the penalty imposed is reclusion perpetua or higher.
(e) All cases in which only an error or question of law is involved.
(3) Assign temporarily judges of lower courts to other stations as public interest may
require. Such temporary assignment shall not exceed six months without the consent of
the judge concerned.
(4) Order a change of venue or place of trial to avoid a miscarriage of justice.
(5) Promulgate rules concerning the protection and enforcement of constitutional rights,
pleading, practice, and procedure in all courts, the admission to the practice of law, the
Integrated Bar, and legal assistance to the underprivileged. Such rules shall provide a
simplified and inexpensive procedure for the speedy disposition of cases, shall be
uniform for all courts of the same grade, and shall not diminish, increase, or modify
substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall
remain effective unless disapproved by the Supreme Court.
(6) Appoint all officials and employees of the Judiciary in accordance with the Civil
Service Law.
68 CONST., art. VIII, sec. 2.
69 Batas Blg. 129, sec. 32(1).
70 Batas Blg. 129, sec. 32(2).
71 Batas Blg. 129, sec. 20.
72 Batas Blg. 129, sec. 33(1).
73 Batas Blg. 129, sec. 33(3).
74 Batas Blg. 129, sec. 19(2) and (4).
75 Batas Blg. 129, sec. 19(1).
76 Batas Blg. 129, sec. 33(2).
77 Batas Blg. 129, sec. 19(3).
78 Batas Blg. 129, sec. 19(5).
79 133 Phil 526 (1968) [Per J. Reyes, J.B.L, En Banc].
80Figueroa v. People, 580 Phil. 58, 78 (2008) [Per J. Nachura, Third Division] citing
Villagracia v. Fifth Shari'a District Court, 734 Phil. 239 (2014) [Per J. Leonen, Third
Division]; Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, 512
Phil. 389 (2005) [Per J. Callejo, Second Division]; Spouses Atuel v. Spouses Valdez,
451 Phil. 631 (2003) [Per J. Carpio, First Division].
81 512 Phil. 389 (2005) [Per J. Callejo, Second Division]
82 Id. at 400.
83Lapitan v. Scandia, 133 Phil. 526, 528 (1968) [Per J. Reyes, J.B.L, En Banc]
84 618 Phil. 395 (2009) [Per J. Abad, Second Division].
85 Id. at 407.
86Rollo, pp. 25-26.
87 Id. at 26-27.
88 540 Phil. 7 (2006) [Per J. Sandoval-Gutierrez, Second Division].
89Id. at 21 citing Bunayog v. Tunas, 106 Phil. 715 (1959) [Per J. Bautista Angelo, En
Banc] and Russell v. Vestil, 364 Phil. 392 (1999) [Per J. Kapunan, First Division].
90An Act to Regulate the Sale of Property Under Special Powers Inserted In or
Annexed to Real-Estate Mortgages.
91G.R. No. 194152, June 5, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/june2017/1941
52.pdf> [Per J. Leonen, Second Division].
92 Id. at 5 citing Reyes v. Noblejas, 129 Phil. 256, 262 (1967) [Per J. Angeles, En Banc].
93Reyes v. Noblejas, 129 Phil. 256, 261-262 (1967) [Per J. Angeles, En Banc].
94Fedman Development Corp. v. Agcaoili, 672 Phil. 20 (2011) [Per J. Bersamin, First
Division].
95Rollo, p. 21.
96 Id. at 69-70.
97 401 Phil. 431 (2000) [Per J. Kapunan, First Division].
98 Id. at 447-448.
99Carpio-Morales v. Court of Appeals, 772 Phil. 627, 736-738 (2015) [Per J. Perlas-
Bernabe, En Banc]; Miriam College Foundation, Inc. v. Court of Appeals, 401 Phil. 431,
447-448 (2000) [Per J. Kapunan, First Division].
100Carpio-Morales v. Court of Appeals, 772 Phil. 627, 736-738 (2015) [Per J. Perlas-
Bernabe, En Banc]; The Incorporators of Mindanao Institute, Inc. v. The United Church
of Christ in the Philippines, 685 Phil. 21, 32-34 (2012) [Per J. Mendoza, Third
Division]; Dungog v. Court of Appeals, 455 Phil. 675, 684-685 (2003) [Per J. Carpio,
First Division].
101Bankers Association of the Philippines v. Comelec, 722 Phil. 92, 100 (2013) [Per J.
Brion, En Banc].
102 660 Phil. 517 (2011) [Per J. Perez, First Division].
103 Id. at 523.
104 Id. at 524-525.
105 Id. at 525.
106 Id. at 526.
107 Id. at 527.
108 Id. at 532.
109 Id. at 536 and 538.
110 Id. at 535.
111 Id. at 537-538.
112 667 Phil. 781 (2011) [Per J. Perez, Special First Division].
113 Id. at 802.
114 585 Phil. 251 (2008) [Per J. Nachura, En Banc].
115 Id. at 273.
116See Lapitan v. Scandia, Inc., et al., 133 Phil. 526, 528 (1968) [Per J. Reyes, J.B.L, En
Banc]; Singson v. Isabela Sawmill, 177 Phil. 575, 588 (1979) [Per J. Fernandez, First
Division]; Spouses Huguete v. Spouses Embudo, 453 Phil. 170, 176-177 (2003) Far
East Bank and Trust Company v. Shemberg Marketing Corporation, 540 Phil. 7, 21
(2006) [Per J. Sandoval-Gutierrez, Second Division].
117 672 Phil 20 (2011) [Per J. Bersamin, First Division].
118 Id. at 29-30.
119 Id. at 29.
THIRD DIVISION
November 29, 2017
G.R. No. 206965
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee

vs.
EMMA BOFILL PANGAN, Accused-appellant
DECISION
LEONEN, J.:
Section 21 of Republic Act No. 9165, otherwise known as the Comprehensive

Dangerous Drugs Act of 2002, cannot be utilized to frustrate legitimate efforts of law
enforcers.1 Minor deviations from the mandated procedure in handling the corpus
delicti must not absolve a guilty defendant.2
This Court resolves this appeal3 filed by Emma Bofill Pangan (Pangan) from the
September 21, 2012 Decision4 of the Court of Appeals in CA-G.R. CR-H.C. No. 00747,
which affirmed the Regional Trial Court ruling5 that she was guilty beyond reasonable
doubt of illegal possession of dangerous drugs in violation of Section 11 of Republic Act
No. 9165.6
On April 11, 2003, the Office of the City Prosecutor of Roxas City filed an
Information7 against Pangan for violation of Section 11 of Republic Act No. 9165. 8 The
accusatory portion of this Information read:
That on or about the 10th day of April, 2003, in the City of Roxas, Philippines, and within
the jurisdiction of this Honorable Court, said accused, did then and there willfully,
unlawfully and feloniously have in her possession and control 14.16 grams of
Methamphetamine Hydrochloride (shabu), a dangerous drug, without being authorized
by law to possess the same.
CONTRARY TO LAW.9
On May 15, 2003, Pangan pleaded not guilty to the charge.10
Trial on the merits commenced.11
The prosecution presented the following witnesses12: PO1 Eleno Carillo (PO1 Carillo),
SPO4 Dionisio Revisa, Jr. (SPO4 Revisa),13 Forensic Chemist P/Chief Insp. Angela
Baldevieso (P/Chief Insp. Baldevieso), Fastpak Global Express Corporation (Fastpak)
employee Louie Culili (Culili), Barangay Kagawad Virginia Beluso (Barangay Kagawad
Beluso), and P/S Insp14 Leo Batiles (P/S Insp Batiles).15
PO1 Carillo was an Intelligence Operative16 of the Capiz Police Provincial Office in
Camp Teodoro Apil, Roxas City.17 At around 8:00 a.m. of April 10, 2003, he conducted
a test-buy operation on Pangan at B&T Merchandising on Asis Street, Roxas City. 18 A
police asset had reported that the shop was owned by Pangan and her live-in partner,
Mario Tupaz (Tupaz).19
After PO1 Carillo bought a sachet of shabu worth P1,000.00 from Pangan, he
expressed his interest to buy more drugs.20 Pangan instructed him to return in the
afternoon of that day as more shabu would allegedly be delivered to her via Fastpak.21
PO1 Carillo went back to the Police Provincial Office to report the information to P/S
Insp. Batiles. P/S Insp. Batiles and PO1 Carillo applied for a search warrant before
Judge Charlito Fantilanan (Judge Fantilanan), who later issued Search Warrant No.
2003-26.22
P/S Insp. Batiles conducted a briefing with the buy-bust team23 comprised of PO1
Carillo, SPO4 Revisa, PO2 Escultero, PO1 Etalla,24 PO1 Cordovero, PO1
Bernardez25 and SPO3 Inocentes Liberia, together with the assigned investigator and
recorder.26 PO1 Carillo and PO1 Bernardez were tasked to ensure that Pangan was in
her store and to give the needed prearranged signal when already warranted.27
At around 4:20 p.m., PO1 Carillo and PO1 Bernardez28 bought soft drinks at Pangan's
store.29 Thereafter, Pangan went out to get a delivery package from Culili. 30 Pangan
acknowledged the receipt of the delivery by signing Waybill No. 200-0000002352-
2.31 She then returned to the store and placed the delivered Fastpak pouch on top of a
table.32
PO1 Carillo made the pre-arranged signal, prompting P/S Insp. Batiles to advance to
the area where other members of the buy-bust team followed.33 P/S Insp. Batiles read
the contents of the search warrant to Pangan.34 Barangay Captain Andrada,35 Barangay
Kagawad Beluso, Barangay Kagawad Cesar Lara (Lara),36 Rey Casumpang of Radio
Mindanao Network (RMN), Nimbe dela Cruz and Ricardo Bulana (Bulana) of RMN-
DYVR also arrived.37
While inside the store, PO1 Carillo and SPO4 Revisa inspected the Fastpak package on
top of the table.38 Pangan suddenly became unruly, trying to grab the package from
PO1 Carillo.39 The police officers brought Pangan out of the store to continue the search
and to prevent Pangan from harming herself.40
SPO4 Revisa opened the sealed package with a knife.41 He found a Noli Me
Tangere book, the pages of which were intentionally cut42 to serve as "compartments"
for the three (3) big sachets of suspected shabu.43 PO1 Carillo searched the table's
drawer where he found another small pack of suspected illicit drugs, magazines of a
0.45 caliber pistol, ammunition, a magazine pouch, and a holster. 44 Members of the
media and barangay officials were present during the entire course of the search and
seizure.45
The confiscated items were turned over to SPO1 Lebria46 for marking.47 He wrote "EBP-
1," "EBP-2," "EBP-3," and "EBP-4" on the four (4) plastic sachets, which stood for
Emma Bofill Pangan.48 He also prepared the inventory, which was signed by the third-
party witnesses, who were present during the search.49 PO1 Carillo took pictures of the
premises and the seized items.50
The arresting team brought Pangan to the police station.51 The confiscated articles were
recorded in the police blotter.52 P/S Insp. Batiles prepared and signed the return of
service to be presented to the trial court which issued the search warrant. 53 The
arresting team then brought the return of service of the search warrant and the seized
items to the court.54
Later, P/S Insp. Batiles wrote a letter to Judge Fantilanan, requesting to withdraw the
four (4) sachets of suspected shabu for laboratory examination.55 The trial court granted
the request causing the items to be forwarded to the Philippine National Police Crime
Laboratory, Camp Delgado, Iloilo City.56 P/C Insp. Baldevieso issued Chemistry Report
No. D-145, which verified that the seized items tested positive for methamphetamine
hydrochloride or shabu.57
On the other hand, the defense's witnesses were Pangan; her live-in partner, Tupaz;
her 17-year-old nephew, Ronel Compa (Compa); a tricycle driver,58 Wilson Villareal
(Villareal); and Radio Mindanao Network reporter, Bulana.59
The defense's narrative was as follows:

Pangan and Compa were operating the store when a tricycle driver named Nong
Nelson came and bought a bottle of soft drink. Thereafter, two (2) men followed and
similarly bought some drinks.60
A delivery man from Fastpak suddenly came with a package for Pangan. After handing
the package to Pangan, the delivery man directed her to sign the receipt. 61 Upon
checking the package, Pangan noticed that it was addressed to a certain "Gemma." 62 It
is at this point when the two (2) men allegedly approached Pangan and introduced
themselves as police officers. One (1) of them struggled to possess the package while
the other poked a gun at Compa, instructing him to stay still.63
Pangan continuously struggled to free herself. In the process, she hit a bottle, which
broke into pieces. As the commotion continued, one (1) of the men instructed Compa to
get the handcuffs inside the store. Pangan was eventually handcuffed and pulled
towards the Radio Mindanao Network vehicle parked about 10 arms' length from the
store. The two (2) men who struggled to detain her then returned to the store to
continue the search.64
After 15 minutes, more police arrived at the store to aid in the search. One (1) of the
police officers approached Pangan and told her that her store was being searched. She
was told that her handcuffs would be removed so that she could sign some papers,
which Pangan refused to sign.65
Pangan narrated that she and Compa were brought to the police station. In the evening
of the same day, Tupaz came. Pangan instructed him to go to her store to check the
money she had left in a bag on their bed. When Tupaz returned, he informed Pangan
that her bag was "in disarray" without the money inside.66 The next day, Pangan caused
the incident to be entered in the police blotter.67
Pangan claimed that the package was sealed when it was delivered. She asserted that
she was already inside the vehicle when the search warrant was shown to
her.68 According to her, the search warrant had an inaccurate account of its subject as
her true and right name was Emma Bofill, not69 Emma Bofill Pangan,70 and that the
name of her store, Imar Marketing, was not there.71 Pangan insisted that she did not
know Jaime Castro, the indicated sender of the package.72 She asserted that she was
not expecting any delivery that day.73
The Regional Trial Court74 convicted Pangan.75 It found that Pangan had animus
possidendi as she appeared to know the contents of the Fastpak package she had
received.76
It also ruled that Pangan failed to rebut the claim that PO1 Carillo initially conducted a
successful test-buy that led to the application for a search warrant.77 Considering that
Pangan directed PO1 Carillo to return in the afternoon as more supply would allegedly
be delivered to her through Fastpak, PO1 Carillo knew precisely what to find during the
conduct of the search.78
Furthermore, when Pangan realized that she was dealing with police officers, she tried
to grab the package. The trial court inferred that if she really knew nothing about its
contents, she would not have been concerned with its possession.79
Contrary to Pangan's assertion that the presumption of regularity could not work in favor
of the arresting team,80 the trial court ruled that the police officers properly carried out
their duties during the search, there being no proof of any misdeed or irregularity. 81 It
also ruled that although none of the prosecution witnesses testified where the seized
articles were marked, this does not automatically mean that the articles were marked
elsewhere and not at the place where the items were confiscated.82 PO1 Carillo, SPO4
Revisa, and Barangay Kagawad Beluso identified the seized illicit drugs in court as the
same ones recovered from Pangan during the implementation of the warrant.
Considering that no evidence was presented to establish any improper motive on their
part, their testimonies deserve full credit.83
The dispositive portion of its Decision read:
WHEREFORE, accused EMMA BOFILL PANGAN is found guilty beyond reasonable

doubt of possession of 14.16 grams84 of methamphetamine hydrochloride, a dangerous
drug, in the afternoon of April 10, 2003 at Roxas City, Philippines without being
authorized by law to possess the same, defined and penalized by Section 11 sub
paragraph (1), Article II of Republic Act No. 9165 and is sentenced to life imprisonment
and to pay a fine of Four Hundred Thousand (₱400,000.00) Pesos, Philippine Currency,
and the costs of this suit.
She will be credited with the full term of her detention period.
The illegal drugs are ordered confiscated to be turned over to the Philippine Drug
Enforcement Agency (PDEA) for proper disposal.
SO ORDERED.85 (Emphasis in the original)
Pangan appealed the conviction, attesting that the prosecution failed to prove the
identity of the confiscated drugs. Allegedly, the police officers failed to observe the
guidelines provided for under Section 21 of Republic Act No. 9165. Neither the marking
of the confiscated drugs or the signing of the inventory receipt was made in her
presence.86
The Court of Appeals ruled against the accused.87
It found that failure to strictly conform to the requirements of Section 21 of Republic Act
No. 9165 does not immediately make the seized drugs inadmissible as
evidence,88 provided that the integrity and evidentiary worth of the seized articles were
maintained.89
Furthermore, the Court of Appeals ruled that Pangan's absence during the marking and
inventory was justified as she became "hysterical" after the search warrant was read to
her.90 Hence, the arresting officers needed to pacify Pangan to prevent her from
harming herself and other people.91
>>
The dispositive portion of its Decision provided:
WHEREFORE, in view of the foregoing premises, the appeal filed in this case is
hereby DENIED. The assailed Decision dated April 18, 2007 of the Regional Trial Court,
Branch 16, of Roxas City in Criminal Case No. C-093-03 is AFFIRMED.
Hence, this appeal was filed before this Court.
On May 20, 2013,93 the Court of Appeals elevated to this Court the records of this case
pursuant to its January 23, 2013 Resolution,94 which gave due course to Pangan's
Notice of Appeal.95
In its July 22, 2013 Resolution,96 this Court noted the records of this case forwarded by
the Court of Appeals. The parties were ordered to file their respective supplemental
briefs, should they have desired, within 30 days from notice. Both parties manifested
that they would no longer file supplemental briefs.97
For resolution before this Court is whether or not Emma Bofill Pangan's98 guilt was
proven beyond reasonable doubt. Specifically, the main issue presented is whether or
not the prosecution established an unbroken chain of custody on the handling of the
confiscated illicit drugs.
Pangan wonders how three (3) armed middle-aged police officers allegedly failed to
pacify a 42-year-old woman like her, causing them to lock her up inside a vehicle during
the entire course of the search.99 She questions whether or not her enforced inability to
witness the marking and inventory of the confiscated items has sufficient justification to
allow a deviation from Section 21 of Republic Act No. 9165.100
Furthermore, Pangan claims that the testimony of Culili cannot prove her guilt
considering that the delivery man has no personal knowledge of the package's
contents.101 She also insists that the trial court erred when it discredited her nephew's
testimony on the ground that he was her relative.102 Relationship, in itself, does not give
rise to assumption of bias or impair the credibility of witnesses or their statements.103
Pangan underscores the arresting officers' failure to provide any acceptable reason to
deviate from the requirements of Republic Act No. 9165 and its implementing
rules.104 She asserts that the presumption of regularity cannot work in their favor. 105
On the other hand, the Office of the Solicitor General106 presents that all the elements of
illegal possession of dangerous drugs were present.107 The prosecution's testimonial,
documentary and object evidence amply established that Pangan was guilty of the
charge.108
The Office of the Solicitor General reiterates that non-compliance with Section 21 of
Republic Act No. 9165 is not fatal provided that there are justifiable grounds to deviate
and the integrity of the chain of custody of the confiscated articles is
maintained.109Pangan's absence in the marking and inventory was justifiable since the
arresting officers needed to pacify her as she became frantic and disorderly after the
search warrant was read to her.110
The Office of the Solicitor General further avers that Pangan's mere denial of the charge
and claim of violation of the chain of custody rule cannot be the bases of her
acquittal.111 Pangan's defense of denial is innately weak and unless corroborated by
clear and persuasive evidence, it remains self-serving and does not merit any credence
in law.112
This Court dismisses the appeal and sustains the conviction.
The prosecution presented evidence beyond reasonable doubt to establish that all the
elements of the offense were present and that the accused committed the offense.
Section 11 of Republic Act No. 9165 punishes illegal possession of dangerous drugs as
follows:
Section 11. Possession of Dangerous Drugs. — The penalty of life imprisonment to

death and a fine ranging from Five hundred thousand pesos (₱500,000.00) to Ten
million pesos (₱10,000,000.00) shall be imposed upon any person, who, unless
authorized by law, shall possess any dangerous drug in the following quantities,
regardless of the degree of purity thereof:
....
(5) 50 grams or more of methamphetamine hydrochloride or "shabu";

....
Otherwise, if the quantity involved is less than the foregoing quantities, the penalties
shall be graduated as follows:
(1) Life imprisonment and a fine ranging from Four hundred thousand pesos
(₱400,000.00) to Five hundred thousand pesos (₱500,000.00), if the quantity of
methamphetamine hydrochloride or "shabu" is ten (10) grams or more but less
than fifty (50) grams[.] (Emphasis supplied)
Based on this provision, sufficient evidence to prove the following elements should be
presented:
(1) the actual possession of an item or object which is identified to be a prohibited drug;
(2) such possession is not authorized by law; and
(3) the accused freely or consciously possessed the said drug.113 (Citation omitted)
The prosecution presented evidence that in the morning of April 10, 2003, PO1 Carillo
initially conducted a successful test-buy which served as basis for the application of a
search warrant.114 In the test-buy, Pangan disclosed to PO1 Carillo that more drugs
would be delivered to her via Fastpak in the afternoon that day.115 Her words
were confirmed when indeed, Culili delivered a Fastpak package to Pangan, which
prompted PO1 Carillo and other members of the buy-bust team to effect the search
leading to the seizure of the illegal drugs.116
Pangan admitted the delivery of the Fastpak package where she signed a delivery
receipt.117 Culili, in response to a subpoena issued against him, testified for the
prosecution and confirmed that he delivered a package to Pangan. 118
Culili added that the package was addressed to "Gemma Bofill." 119 He identified Pangan
as a regular customer.120 This claim was expressly acknowledged121 by the accused
herself, when she admitted that prior to April 10, 2003, she had received other
packages from Fastpak addressed to either her or Tupaz. Culili asserted that he already
made prior deliveries to Pangan and Tupaz in their past residence at SANECRA
Subdivision in Gabuan, Roxas City.122 Culili was definite that it was Pangan who
received the package.123 He personally handed it to her and saw her sign the
corresponding waybill.124 Moreover, Pangan admitted125 that she was the owner of the
store that was made subject of the search warrant.
PO1 Carillo testified that when the barangay officials and media representatives came,
he and SPO4 Revisa had started the search.126 When SPO4 Revisa opened the sealed
package, they found a book containing three (3) sachets of suspected illicit
drugs.127 From the table's drawer, an additional sachet was also discovered along with
other articles listed in the inventory duly signed by P/S Insp. Batiles and the third-party
witnesses.128 PO1 Carillo's testimony was corroborated by the statements of SPO4
Revisa in court.129
Barangay Kagawad Beluso testified for the prosecution to confirm that she saw the
search warrant, witnessed its implementation, and signed the inventory prepared after
the search.130 Finally, to prove that the contents of the four (4) sachets tested positive
for methamphetamine hydrochloride or shabu, P/C Insp. Baldevieso testified to have
conducted the qualitative and quantitative131examination.132 The test result was
embodied in Chemistry Report No. D-145-03, which she and the Regional Chief of the
Crime Laboratory, Police Chief Inspector Rea Abastillas-Villavicencio, duly signed.133
To evade liability, Pangan offered uncorroborated and self-serving assertions. She

alleged that Culili's delivery of the package cannot prove her guilt considering that he
had no personal knowledge of the package's contents. 134 She also assumes that the
trial court discredited Compa's testimony as he was her relative.135
This Court is not persuaded with Pangan's defense. She was found to have been in
possession of the illicit drugs without authority to do so. Her mere possession
establishes a prima facie proof of knowledge or animus possidendi enough to convict
her as an accused in the absence of any acceptable reason for its custody. 136
The trial judge had the distinct opportunity to examine the witnesses and to gauge their
credibility.137 The trial court was persuaded with the evidence presented by the
prosecution.138 Pangan's culpability of the charge was sufficiently established.139This
Court does not find either palpable error or grave abuse of discretion in the trial court's
or Court of Appeals' evaluation of evidence.140 Therefore, their findings will not be
overturned on appeal.141
II
In crimes involving dangerous drugs, the State has the burden of proving not only the
elements of the offense but also the corpus delicti of the charge.142
Prosecutions involving illegal possession of dangerous drugs demand that the

elemental act of possession be proven with moral certainty and not allowed by
law.143 The illicit drugs, itself, comprise the corpus delicti of the charge and its existence
is necessary to obtain a judgment of conviction.144 Therefore, it is important in these
cases that the identity of the illegal drugs be proven beyond reasonable doubt.145
The prosecution must establish the existence of the illicit drugs.146 It must also prove
that the integrity of the corpus delicti has been maintained because the confiscated
drug, being the proof involved, is not promptly recognizable through sight and can be
tampered or replaced.147
To establish that the illicit drugs scrutinized and presented in court were the very same
ones confiscated from the accused, the prosecution should offer testimonies relating to
its chain of custody.148 Chain of custody is defined as:
[T]he duly recorded authorized movements and custody of seized drugs or controlled
chemicals or plant sources of dangerous drugs or laboratory equipment of each stage,
from the time of seizure/confiscation to receipt in the forensic laboratory to safekeeping
to presentation in court for destruction. Such record of movements and custody of
seized item shall include the identity and signature of the person who held temporary
custody of the seized item, the date and time when such transfer of custody were made
in the course of safekeeping and use in court as evidence, and the final
disposition.149 (Citation omitted)
This is governed by Section 21 of Republic Act No. 9165:150
Section 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered

Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and
Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. — The
PDEA shall take charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so confiscated, seized and/or
surrendered, for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of the drugs shall,
immediately after seizure and confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any elected public official who
shall be required to sign the copies of the inventory and be given a copy thereof;
(2) Within twenty-four (24) hours upon confiscation/seizure of dangerous drugs, plant
sources of dangerous drugs, controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment, the same shall be submitted to
the PDEA Forensic Laboratory for a qualitative and quantitative examination;
(3) A certification of the forensic laboratory examination results, which shall be done
under oath by the forensic laboratory examiner, shall be issued within twenty-four (24)
hours after the receipt of the subject item/s: Provided, That when the volume of the
dangerous drugs, plant sources of dangerous drugs, and controlled precursors and
essential chemicals does not allow the completion of testing within the time frame, a
partial laboratory examination report shall be provisionally issued stating therein the
quantities of dangerous drugs still to be examined by the forensic laboratory: Provided,
however, That a final certification shall be issued on the completed forensic laboratory
examination on the same within the next twenty-four (24) hours;
(4) After the filing of the criminal case, the Court shall, within seventy-two (72) hours,
conduct an ocular inspection of the confiscated, seized and/or surrendered dangerous
drugs, plant sources of dangerous drugs, and controlled precursors and essential
chemicals, including the instruments/paraphernalia and/or laboratory equipment, and
through the PDEA shall within twenty-four (24)hours thereafter proceed with the
destruction or burning of the same, in the presence of the accused or the person/s from
whom such items were confiscated and/or seized, or his/her representative or counsel,
a representative from the media and the DOJ, civil society groups and any elected
public official. The Board shall draw up the guidelines on the manner of proper
disposition and destruction of such item/s which shall be borne by the
offender: Provided, That those item/s of lawful commerce, as determined by the Board,
shall be donated, used or recycled for legitimate purposes: Provider,further, That a
representative sample, duly weighed and recorded is retained;
(5) The Board shall then issue a sworn certification as to the fact of destruction or
burning of the subject item/s which, together with the representative sample/s in the
custody of the PDEA, shall be submitted to the court having jurisdiction over the case.
In all instances, the representative sample/s shall be kept to a minimum quantity as
determined by the Board;
(6) The alleged offender or his/her representative or counsel shall be allowed to

personally observe all of the above proceedings and his/her presence shall not
constitute an admission of guilt. In case the said offender or accused refuses or fails to
appoint a representative after due notice in writing to the accused or his/her counsel
within seventy-two (72) hours before the actual burning or destruction of the evidence in
question, the Secretary of Justice shall appoint a member of the public attorney's office
to represent the former;
(7) After the promulgation and judgment in the criminal case wherein the representative
sample/s was presented as evidence in court, the trial prosecutor shall inform the Board
of the final termination of the case and, in turn, shall request the court for leave to turn
over the said representative sample/s to the PDEA for proper disposition and
destruction within twenty-four (24) hours from receipt of the same[.] (Emphasis
supplied)
Compliance with the preconditions provided for under Section 21 cannot be

overstated.151 It excludes the chances that the evidence may be planted, contaminated,
or tampered in any way.152 Thus, as signified by its mandatory terms, strict conformity
to the procedures in handling the seized articles and drugs is important and the
prosecution must prove their acquiescence in any case.153
Non-conformity equates to failure in proving the identity of the corpus delicti, which is an
important element of the charge involving illegal possession of illicit drugs. 154 Hence,
even doing acts which apparently nears compliance but do not really conform to the
requirements do not suffice.155 By failing to prove an element of the charge, non-
conformity with the law will, therefore, cause the acquittal of the accused.156
This Court had the occasion to discuss the consequences of the arresting team's failure
to comply with Section 21(1) of Republic Act No. 9165 in this Court's recent cases.
In People v. Jaafar,157 the accused was acquitted of the charge for the illegal sale of
0.0604 grams of shabu, which was seized from him through a buy-bust operation. While
the police officers marked the confiscated items, the physical inventory was not done in
the presence of the accused or any of the mandated third-party witnesses. Also, no
photograph was taken. In closing, this Court held that non-compliance with the
mandatory preconditions of Section 21 creates doubt on the integrity of the
seized shabu.158
In People v. Saunar,159 accused Delia Saunar was acquitted of the charge for illegal
sale of 0.0526 grams and 0.0509 grams of dangerous drugs. This Court held that the
prosecution failed to strictly conform to the rigorous standards provided for under
Republic Act No. 9165, as amended, causing serious doubt on the origin and identity of
the seized drugs.
In Saunar, the marking and inventory were done only when the team already reached
Camp Simeon Ola and not immediately after confiscation.1âwphi1 This Court inferred
that any of the arresting officers could have taken custody of the seized drugs during
transit, thereby concluding that there was a high probability that the evidence was
tampered with or altered. While the belated marking and inventory were done in the
presence of third-party witnesses, there was no evidence showing that the acts were
done in the presence of the accused or any of her representatives. More telling was the
fact that none of the third-party witnesses was presented to testify in court. Furthermore,
no photograph was taken.160
In People v. Sagana,161 photos of the seized items were taken only when the accused
was already in the police station. The belated photograph taking was not simultaneously
done with the marking and inventory, which was conducted immediately after the items
were seized.162 Also, there was no third-party witness present when the items were
seized and inventoried.163
Accused Sagana was acquitted of the charge for illegal sale of shabu due to the evident
lapses in the chain of custody that cast doubt on the integrity and identity of the corpus
delicti and the arresting team's lack of justifiable reason to deviate from the mandated
procedures.164
While the chain of custody has been a crucial issue which led to acquittals in drugs
cases, this Court has still ruled that non-conformity with the mandated procedure in
handling the seized drugs does not automatically mean that the seized items' identity
was compromised, which necessarily leads to an acquittal.165 The Implementing Rules
and Regulations of Republic Act No. 9165 provide some flexibility166 with the addition of
a proviso which reads:
Section 21: Custody and Disposition of Confiscated, Seized and/or Surrendered

Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment...
(a) The apprehending officer/team having initial custody and control of the drugs shall,
shall be required to sign the copies of the inventory and be given a copy
thereof: Provided, that the physical inventory and photograph shall be conducted at the
place where the search warrant is served; or at the nearest police station or at the
nearest office of the apprehending officer/team, whichever is practicable, in case of
warrantless seizures; Provided, further, that non-compliance with these requirements
under justifiable grounds, as long as the integrity and the evidentiary value of the seized
items are properly preserved by the apprehending officer/team, shall not render void
and invalid such seizures of and custody over said items[.](Emphasis supplied)
The saving mechanism included in the implementing rules guarantees that not every
case of non-observance will irreversibly prejudice the prosecution's cause. However, to
merit the application of the saving clause, the prosecution should acknowledge and
explain the deviations they committed. Moreover, the prosecution should also prove that
the integrity and evidentiary worth of the confiscated evidence was maintained. 167
In other words, the arresting officers' non-compliance with Section 21 is not fatal,
provided that that there is a justifiable reason for their deviation and that
the evidentiary worth of the seized drugs or articles was preserved. Non-conformity
with the mandated procedures will not make the arrest of the accused illegal or the
items seized inadmissible as evidence. What matters most is that the integrity and
evidentiary worth of the seized articles were maintained since these will be used in
resolving the guilt or innocence of the accused.168
Pangan's main point of contention rests on her absence during the inventory and
marking of the confiscated articles.169
This Court underscores that from the start, Pangan already insisted that she
did not know the contents of the delivery.170 Surprisingly, when she testified in her
defense, she disclosed that when the two (2) men allegedly "grabbed the package from
her,"171 they grappled for its possession for about two (2) to three (3) minutes. 172 Hence,
the way she violently reacted belied her claim of innocence. As emphasized by the trial
court, "She fought tooth and nail for [the] possession of the Fastpak pouch . . . with the
police officer because a revelation of its contents would surely incriminate her."173
The police officers acknowledged their breach, offering a justifiable reason why they
had to dispense with Pangan's presence during the search, inventory, and
photographing. The police narrated how Pangan became "uncontrollable." 174 This is a
fact corroborated by the accused herself when she testified that she "struggled to free
herself [and] she accidentally swiped a bottle in front of her store that fell and broke into
pieces."175 Therefore, Pangan's aggressive actuations urged the police officers to lock
her up in the vehicle for the search to smoothly proceed.
The attendance of third-party witnesses during buy-bust operations and during time of
seizures is to prevent the planting of evidence or frame-up.176 Even though neither
Pangan nor any of her representatives was present during the marking, inventory, and
photographing, the police officers substantially complied with the rules as media
representatives and barangay officials were present during the search.177
Barangay Kagawad Beluso, who appeared as one (1) of the witnesses for the
prosecution, confirmed that she was with Barangay Kagawad Lara and Barangay
Captain Andrada during the search. She testified that the police officers found the
sealed Fastpak package on top of Pangan's table, which was inside the store. She
corroborated the testimonies of other prosecution witnesses narrating that when the Noli
Me Tangere book was opened, three (3) sachets of suspected shabu were concealed
between its pages. She added that the police officers found another sachet of illicit
drugs in Pangan's drawer.178
Barangay Kagawad Beluso also identified in court the Fastpak package, the Noli Me
Tangere book, and the additional small sachet as the articles she was referring to in her
statements. She verified that an inventory of the items was prepared by the police which
she and the other witnesses signed.179
Even radio reporter Bulana, who testified for the defense, mentioned that he
was one (1) of the witnesses.180 He disclosed that at around 4:00 p.m. of April 10, 2003,
they gathered with the arresting team at Dinggoy Roxas Civic Center.181 He attested
that after seeing the pre-arranged signal from one (1) of the police officers, they went to
Asis Street where he saw PO1 Carillo and PO1 Bernardez enter Pangan's store, trying
to grab a "bundle" from the accused.182 Thereafter, Pangan was "forcefully" brought
outside the store and was eventually handcuffed inside a Radio Mindanao Network
vehicle.183
Furthermore, even assuming that the police officers failed to strictly conform to the
procedures provided for under Section 21, the accused may still be adjudged guilty of
the charge provided that the chain of custody remains uninterrupted. 184
In this case, the prosecution was able to establish the necessary links in the chain of
custody from the time the sachets of illicit drugs were confiscated until they were
forwarded to the laboratory for examination and presented as evidence in court.
After its seizure, the four (4) plastic sachets were immediately given to SPO1 Liberia for
marking. SPO1 Liberia also prepared the inventory, which was duly signed by the third-
party witnesses present during the search.185
PO1 Carillo took photographs of the search and the confiscated articles. Thereafter, the
seized items were forwarded to the trial court which issued the warrant.1âwphi1 Upon
P/S Insp. Batiles' request, the trial court released the seized items for laboratory testing.
The articles were received by SPO1 Alberto Espura of the Philippine National Police
Crime Laboratory in Camp Claudio, Iloilo City. P/C Insp. Baldevieso confirmed through
a chemical analysis that the contents of the sachets yielded positive for
methamphetamine hydrochloride or shabu as evinced by Chemistry Report No. D-
145.186
The confiscated drugs which were examined in the laboratory were offered as evidence
in the trial court and were identified by PO1 Carillo, Barangay Kagawad Beluso, and
SPO4 Revisa as the same ones seized from Pangan during the lawful search. 187
Apart from Pangan's unsupported claims, no cogent proof was shown to attest that the
seized items were tampered in any way. Based on the totality of the prosecution's
evidence, the integrity and evidentiary value of the seized items were never
compromised.
The rationale behind Section 21 is to shield the accused from malicious assertions of
guilt from abusive police officers. However, this provision cannot be utilized to frustrate
legitimate efforts of law enforcers. Minor deviations from the mandated procedure in
handling the corpus delicti must not absolve a guilty defendant.188
III
In a further attempt to evade liability, accused Pangan denies the presence of the
additional sachet of shabu found hidden in her drawer, asserting that "PO1
Carillo could have planted it there because he has a bad record."189
It is settled that in proceedings involving violations of the Dangerous Drugs Act, the
testimonies of police officers as prosecution witnesses are given weight for it is
assumed that they have perforaied their functions in a regular manner. Thus, this
presumption stands except in cases when there is evidence to the contrary or proof
imputing ill-motive on their part, which is wanting in this case. Pangan failed to adduce
any evidence which could overturn the well-entrenched presumption in favor of the
police officers.190
Pangan's denial was essentially weak and cannot overcome the prosecution witnesses'
positive identification of her as the perpetrator of the charge. Considering that a denial is
self-serving, it merits no credence in law when uncorroborated by any clear and
persuasive proof.191
Therefore, this Court upholds Pangan's guilt for possession of a considerable amount of
14.16 grams of methamphetamine hydrochloride or shabu. As correctly imposed by the
Regional Trial Court and affirmed by the Court of Appeals, the penalty of life
imprisonment and a fine of ₱400,000.00 are warranted and are in accordance with
law.192
WHEREFORE, the appeal is DISMISSED. The Court of Appeals September 21, 2012
Decision in CA-G.R. CR-H.C. No. 00747 affirming the Regional Trial Court's conviction
of accused-appellant Emma Bofill Pangan of illegal possession of dangerous drugs in
violation of Section 11 of Republic Act No. 9165 is AFFIRMED.
SO ORDERED.
MARVIC M.V.F. LEONEN
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson
LUCAS P. BERSAMIN SAMUEL R. MARTIRES

Associate Justice Associate Justice
On leave
ALEXANDER G. GESMUNDO*
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decisionhad been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.
PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to the Section 13, Article VIII of the Constitution and the Division
Chairperson’s Attestation, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
MARIA LOURDES P.A. SERENO

Chief Justice
Footnotes
* On leave.
1 People v. Dimaano, G.R. No. 174481, February 10, 2016,
<http://sc.judiciary.gov.ph/pdf/web/viewer.htm!?file=/jurisprudence/2016/february
2016/174481.pdf> 12 [Per J. Leonen, Second Division].
2 Id.
3 CA rollo, p. 117.
4Rollo, pp. 3-17. The Decision was penned by Associate Justice Ramon Paul L.
Hernando and concurred in by Associate Justices Carmelita Salandanan-
Manahan and Zenaida T. Galapate-Laguilles of the Twentieth Division, Court of
Appeals, Cebu City.
5CA rollo, pp. 47-63. The Decision, dated April 18, 2007 and docketed as Crim.
Case No. C-093-03, was penned by Judge Delano F. Villaruz of Branch 16,
Regional Trial Court, Roxas City.
6 Rep. Act No. 9165, sec. 11 provide:
Section 11. Possession of Dangerous Drugs. — The penalty of life imprisonment

to death and a fine ranging from Five hundred thousand pesos (₱500,000.00) to
Ten million pesos (₱10,000,000.00) shall be imposed upon any person, who,
unless authorized by law, shall possess any dangerous drug in the following
quantities, regardless of the degree of purity thereof:
Otherwise, if the quantity involved is less than the foregoing quantities, the
penalties shall be graduated as follows:
(1) Life imprisonment and a fine ranging from Four hundred thousand pesos
than fifty (50) grams[.]
7See CA rollo, p. 47. The Information was filed by Assistant City Prosecutor
Eduardo D. Delfin.
8 Rollo, p. 4.
9 Id.
10 Id.
11 Id.
12 Id. at 5.
13 Id. at 6.
14See CA rollo, p. 48. The RTC Decision referred to him as Captain Batiles
instead of P/SInsp Batiles.
15 Rollo, p. 5. He was a rebuttal-witness for the prosecution.
16
See CA rollo, p. 48. One of PO1 Carillo's functions includes the "surveillance,
monitoring and gathering information about illegal drug operations in Roxas City."
17 Rollo, p. 5.
18 Id.
19 Id.
20 Id.
21 Id.
22 Id.
23 Id. at 5-6. "[C]omposed of members of Capiz PPO Intelligence Section, the
First Mobile Group and the Military Intelligence, Group 6."
24 See CA rollo, p. 49, RTC Decision. Name spelled as PO1 Italia.
25The complete names of PO2 Escultero, PO1 Etalla, PO1 Cordovero, and PO1
Bernardez are not mentioned.
26 Rollo, p. 6.
27 Id.
28
See CA rollo, p. 82, Brief for the Plaintiff-Appellee. He was also pertained as
PO1 Bernaldez.
29 Rollo, p. 4.
30 Id.
31 Id.
32 Id.
33 Id.
34 Id.
35 Barangay Captain Andrada's complete name is not mentioned.
36 CA rollo, p. 51.
37 Rollo, p. 6.
38 Id.
39 Id.
40 Id. at 6-7.
41 Id at 7.
42See CA rollo, p. 62. "Cutting the tape, the police discovered inside the book
between the cut portions of pages 45 to 119[,] three sachets of suspected
methamphetamine hydrochloride..."
43 Rollo, p. 7.
44 Id.
45 Id.
46See CA rollo, p. 50, RTC Decision. Pertained to as "SPO3 Libria" and the
complete name is not mentioned.
47 Rollo, p. 7, CA Decision.
48 Id.
49 Id.
50 Id.
51 Id.
52 Id.
53 Id.
54 Id. at 7-8.
55 Id.
56 Id.
57Id. See RTC Decision on p. 53 of CA rollo which refers to the same as
Chemistry Report No. D-143-05. However on p. 52 of the same decision, it was
referred as Chemistry Report No. D-145-03.
58 CA rollo, p. 54.
59 Rollo, p. 8.
60 Id.
61 Id.
62 Id. at 8-9.
63 Id.
64 Id. at 8-9.
65 Id.
66 CA rollo, p. 55.
67 Rollo, p. 8.
68 Id. at 9.
69 See CA rollo, p. 56.
Based on the testimony of Pangan, she disclosed that prior to her relationship
with Tupaz, she had been living with one Noel Pangan (Noel) who was allegedly
charged of illegal possession of drugs. In that case, Pangan executed an affidavit
stating that she was the wife of Noel and her name appearing therein was
"Emma Bofill Pangan."
70 Rollo, p. 8.
71 Id.
73 Rollo, p. 9.
74 CA rollo, pp. 47-63.
75 Id. at 62.
76 Id. at 59.
77 Id. at 58.
78 Id. at 58-59.
79 Id. at 59.
80 Id. at 60.
81 Id. at 61.
82 Id. at 60.
83 Id.
84Id. at 62. "EBP-1," "EBP-2," "EBP-3," and "EBP-4" correspondingly weighed
5.03 grams, 4.09 grams, 5.02 grams, and 0.02 grams.
85 Id. at 62.
86 Rollo, p. 12.
87 Id. at 3-17.
88 Id. at 10.
89 Id. at 14.
90 Id. at 13-14.
91 Id. at 14.
92 Id. at 16.
93 Id. at 1.
94 Id. at 19-20.
95 Id. at 18.
96 Id. at 22.
97Id. at 24-28, Manifestation of the Office of the Solicitor General and rollo, pp.
30-32, Manifestation of A the accused. See also rollo, p. 34 where this Court
noted the Manifestations of the parties through a Resolution dated November 11,
2013.
98 Id. at 37-48. Three indorsements with attachments were included as part of
the Rollo, all pertaining to a request for regular hospital referral of Accused-
Appellant Pangan to Rizal Medical Center for further examination and treatment
of her T/C Myoma Uteri with Afbnormal] U[terine] Breeding]. Through a
Resolution dated March 9, 2016 (Rollo, pp. 49-51), this Court noted the
indorsements. Similarly, this Court also approved (Rollo, pp. 52-57) the request
for Pangan's outside medical referral subject to certain conditions.
99 CA rollo, p. 42.
100 Id. at 41-42.
101 Id. at 43.
102 Id.
103 Id.
104 Id. at 43-44.
105 Id.
106 Id. at 76-97.
107 Id. at 87.
108 Id. at 89.
109 Id. at 90.
110 Id.
111 Id. at 93.
112 Id.
113
People v. Lagman, 593 Phil. 617, 625 (2008) [Per J. Carpio-Morales, En
Banc].
114 CA rollo, p. 58.
115 Id.
116 Id. at 58-59.
117 Id. at 55.
118 Id. at 51.
119 Id.
120 Id.
121 Id. at 56.
122 Id. at 51.
123 Id.
124 Id.
125 Id. at 56.
126 Id. at 49.
127 Id.
128 Id.
129 Id. at 50.
130 Id. at 51.
131Id. She individually weighed the four (4) sachets which yield to the following:
EBP-1 - 5.03 grams; EBP-2 - 4.09 grams, EBP-3 - 5.02 grams and EBP-4 - 0.02
grams. The total weight of the confiscated illicit drugs is 14.16 grams.
132 Id. at 52.
133 Id. at 53.
134 Id. at 43.
135 Id.
136 People v. Bontuyan, 742 Phil. 788, 799 (2014) [Per J. Perez, First Division].
137People v. Del Mundo, 418 Phil. 740, 755 (2001) [Per J. Ynares-Santiago, First
Division].
139 Id.
140See People v. Minanga, 751 Phil. 240, 249 (2015) [Per J. Villarama, Jr., Third
Division].
141 Id.
142 People v. Bautista, 682 Phil. 487, 499 (2012) [Per J. Bersamin, First Division].
143 Mallillin v. People, 576 Phil. 576, 586 (2008) [Per J. Tinga, Second Division].
144 Id.
145 Id.
146People v. Dimaano, G.R. No. 174481, February 10, 2016,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2016/february
2016/174481.pdf> [Per J. Leonen, Second Division].
147 Id. at 10.
148 Id.
149 Id.
150Id. This is the prevailing law then. Now amended by Republic Act No. 10640
(2014) or An Act to Further Strengthen the Anti-Drug Campaign of the
Government, amending for the purpose Section 21 of Republic Act No. 9165,
otherwise known as the "Comprehensive Dangerous Drugs Act of 2002."
151People v. Dela Cruz, 744 Phil. 816, 827 (2014) [Per J. Leonen, Second
Division].
152 People v. Holgado, 741 Phil. 78, 93 (2014) [Per J. Leonen, Third Division].
153People v. Denoman, 612 Phil. 1165, 1175 (2009) [Per J. Brion, Second
Division].
Division].
155 People v. Holgado, 741 Phil. 78, 94 (2014) [Per J. Leonen, Third Division].
Division].
157G.R. No. 219829, January 18, 2017,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/january2
158 Id. at 7-9.
159G.R. No. 207396, August 9, 2017,

<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/august2
160 Id. at 9-11.
161G.R. No. 208471, August 2, 2017,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/august2
162 Id.
163 Id. at 14-16.
164 Id.
Division].
166 People v. Capuno, 655 Phil. 226, 240 (2011) [Per J. Brion, Third Division].
Division].
168People v. Pringas, 558 Phil. 579, 593 (2007) [Per J. Chico-Nazario, Third
Division].
170 Id. at 58.
171 Id. at 55.
172 Id. at 56.
173 Id. at 59.
174 Id. at 90.
175 Id. at 55.
176See People v. Reyes, G.R. No. 199271, October 19, 2016,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2016/october2
016/199271.pdf> [Per Justice Bersamin, First Division].
177 Rollo, p. 14.
178 CA rollo, pp. 51-52.
179 Id. at 52.
180 Id. at 56.
181 Id.
182 Id. at 56-57.
183 Id. at 57.
184 People v. Amarillo, 692 Phil. 698, 711 (2012) [Per J. Perez, Second Division].
185 Rollo, p. 14.
186 Id.
187 Id.
188People v. Dimaano, G.R. No. 174481, February 10, 2016,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2016/february
2016/174481.pdf> 12 [Per J. Leonen, Second Division],
190 People v. Dulay, 468 Phil. 56, 65 (2004) [Per J. Azcuna, First Division].
191 Id.
192See Rep. Act No. 9165, art. II, sec. 11 which provides that the penalty of "Life
imprisonment and a fine ranging from Four hundred thousand pesos
than fifty (50) grams."
THIRD DIVISION
OCTOBER 4, 2017
G.R. No. 201622
ANGELITO L. CRISTOBAL, Petitioner

vs.
PHILIPPINE AIRLINES, INC., AND LUCIO TAN,, Respondents
DECISION
LEONEN, J.:
Where a tribunal renders a decision substantially reversing itself on a matter, a motion

for reconsideration seeking reconsideration of this reversal, for the first time, is not a
prohibited second motion for reconsideration.
This is a Petition for Review on Certiorari,1 assailing the Court of Appeals Resolutions
dated January 10, 20122 and April 18, 20123 in CA-GR. SP No. 12.2034 dismissing
petitioner Angelito L. Cristobal's (Cristobal)
Petition for Certiorari for having been filed out of time.
Cristobal became a pilot for respondent Philippine Airlines, Inc. (PAL) on October 16,
1971.4 In May 1998, in line with a downsizing program of PAL,5 Cristobal applied for
leave without pay from PAL to enter into a four (4)-year contract with EVA Air.6 PAL
approved the application and advised him that he would continue to accrue seniority
during his leave and that he could opt to retire from PAL during this period. 7 In a letter
dated March 10, 1999, Cristobal advised PAL of his intent to retire. 8 In response, PAL
advised him that he was deemed to have lost his employment status on June 9,
1998.9 Thus, on May 12, 1999, Cristobal filed a complaint with the National Labor
Relations Commission.10
In a Decision11 dated December 1, 1999, the Labor Arbiter found Cristobal's dismissal
illegal. On the matter of retirement benefits, the Labor Arbiter noted PAL's claim that
Cristobal could only be entitled to a retirement pay of ₱5,000,00 per year, pursuant to
the Philippine Airlines, Inc.-Airline Pilots Association of the Philippines (PAL-ALPAP)
Retirement Plan of 1967. However, he found that Cristobal's retirement benefits should
not be less than the amount provided under the law. Thus, the Labor Arbiter found him
entitled to an amount computed pursuant to Article 287 of the Labor Code. 12 The
dispositive portion of the Labor Arbiter Decision read:
WHEREFORE, judgment is hereby rendered finding the dismissal of the complainant

illegal.
The respondent is further ordered to pay the complainant:
1. Retirement pay in the amount of ₱1,575,964.30;
2. Moral damages in the amount of ₱500,000.00;
3. Exemplary damages in the amount of ₱500,000.00;
4. Attorney's fees in an amount equivalent to ten percent (10%) of the total award in
favor of the complainant.
Respondent is likewise ordered to give and grant to complainant all other benefits he is
entitled to under the law and existing Collective Bargaining Agreement.
SO ORDERED.13
In a Decision14 dated September 30, 2010, the National Labor Relations Commission
affim1ed the Labor Arbiter Decision but reduced the award of moral and exemplary
damages to ₱l00,000.00 each.15 On Cristobal's retirement pay, it noted PAL's argument
that any retirement benefits should be pursuant to the terms of the Collective Bargaining
Agreement and affirmed the Labor Arbiter's computation. The dispositive portion of the
National Labor Relations Commission Decision read:
WHEREFORE, the assailed Decision is, hereby, AFFIRMED with MODIFICATION to

the effect that the award for moral and exemplary damages is hereby reduced to
₱l00,000.00 each.
SO ORDERED.16
Cristobal filed a Motion for Partial Reconsideration17 on November 12, 2010, raising the
following assignment of errors:
1. Since the Honorable Commission found that Respondents· Appellants acted in bad
faith, the award of Php 500,000.00 each for Moral and Exemplary Damages should be
reinstated, instead of the reduced amount of Php 100,000.00
2. The monetary award should include a legal interest considering the long delay.
3. Respondents-Appellants should be jointly and severally be (sic) liable in view of the

bad faith, as per findings of this Honorable Commission.18
PAL also filed a motion for reconsideration, claiming that it was error to find that
Cristobal was illegally dismissed and to base his retirement benefits on Article 287 of
the Labor Code.19
The National Labor Relations Commission resolved both motions in its Decision 20 dated
May 31, 2011, deleting the award of moral and exemplary damages and reducing the
amount of Cristobal's retirement benefits. It agreed that Cristobal's retirement benefits
should not be computed in accordance with Article 287 of the Labor Code as Cristobal
was not yet 60 years old when he retired on March 10, 1999. 21 The National Labor
Relations Commission cited Philippine Airlines, Inc. vs. Airline PilotsAssociation of the
Philippines22 to support this position and held that Cristobal was entitled to receive only
₱5,000.00 per year of service, under the 1967 PAL-ALPAP Retirement Plan:
Nevertheless, the contention of respondents that complainant's retirement benefits

should not be computed in accordance with Article 287 of the Labor Code, as amended
by Republic Act No. 7641, the New Retirement Law, is meritorious. In their motion, the
respondents cite the Supreme Court's decision in Philippine Airlines, Inc. vs. Airline
Pilots Association of the Philippines (G.R. No. 143686, 15 January 2002). In said case,
the Supreme Court categorically sustained respondent PAL's position and ruled that
Article 287 of the Labor Code does not apply to PAL pilots who, without reaching the
age of sixty (60), retire pursuant to the provisions of the 1967 PAL-ALP AP Retirement
Plan. We have noted that complainant never refuted respondents' allegation that he has
not reached the age of sixty (60) years when he opted to retire on 10 March 1999.
...
Hence, PAL pilots who retire without reaching the age of 60 are entitled to claim
retirement benefits from two (2) retirement plans: a) 1967 PAL-ALPAP Retirement Plan
of 1967, and b) PAL Pilot[s'] Retirement Benefit Plan. The amount of ₱5,000.00 for
every year of service provided under the 1967 PAL-.ALPAP Retirement Plan would be
in addition to the retirement benefits provided by the PAL Pilot[s '] Retirement Benefit
Plan.
In their supplement to motion for reconsideration, respondents submit copies of the
acknowledgment receipt for ₱5,530,214.67 signed by Ma. Pilar M. Cristobal on 29 June
1999 as well as Cashier's Checks issued by Metro bank all dated 28 June 1999 to
complainant Angelito L. Cristobal in the amount of PS,346,085.23, P93,579.68 and
P90,549.76. These amounts were acknowledged to have been paid by and received
from the PAL PILOT[S'] RETIREMENT BOARD.
Accordingly, complainant is only entitled to receive retirement benefits from the 1967
PAL-ALPAP Retirement Plan in an amount equal to ₱5,000.00 for every year of service.
In this connection, the moral and exemplary damages awarded to complainant has (sic)
no legal and factual basis and must be deleted.23
The dispositive portion of this May 31, 2011 Decision read:
CONSIDERING THE FOREGOING1 the motion for partial reconsideration filed by

complainant is DENIED. The motion for reconsideration filed by respondents is partially
GRANTED.
The award of moral and exemplary damages is DELETED.
The respondents are directed to pay complainant the retirement benefits pursuant only
to the 1967 PAL-ALPAP Retirement Plan in the amount of one hundred forty thousand
pesos (₱140,000.00).
The other findings are reiterated.
SO ORDERED.24
On June 24, 2011, Cristobal filed his Motion for Reconsideration,25 seeking
reconsideration of the reduction of retirement benefits. He pointed out that the PAL
Pilots Retirement Benefit Plan is different from the PAL ALPAP Retirement Plan, and
that it is an investment plan:
It would appear that in reaching its Decision, the Honorable Commission took into
consideration the fact that the complainant already received ₱5,530,214,67 paid for and
received from the PAL PILOTS RETIREMENT BENEFIT PLAN. Complainant begs [to]
submit that this Honorable Commission committed serious error in taking into
consideration in reducing the retirement benefits from the PAL-ALPAP Retirement Plan.
The PAL PILOTS RETIREMENT BENEFIT PLAN is totally different from the PAL-ALP
AP Retirement Plan.
Moreover, the PAL PILOTS RETIREMENT BENEFIT PLAN is a misnomer. It is not

really a retirement plan but rather it[']s an investment plan where the funds come from
the contributions of each pilot deducted from their monthly gross pay and upon
retirement the pilot receives the full amount of his contribution. Thus, it is a mistake [to]
reduce the retirement benefits of the complainant from the PAL-ALP AP Retirement
Plan because the complainant already received his supposed retirement benefits (which
should be investment) from the PAL PILOTS RETIREMENT BENEFIT PLAN. 26
In its Resolution27 dated August 24, 2011, the National Labor Relations Commission
denied Cristobal's Motion for Reconsideration, deeming it a second motion for
reconsideration of its May 31, 2011 Decision.28 The dispositive portion of this Resolution
read:
PREMISES CONSIDERED, complainant's motion for reconsideration which we treat as

a second motion for reconsideration is hereby DISMISSED. Let this case be dropped
from the calendar of the Commission.
SO ORDERED.29
On November 14, 2011, Cristobal filed his Petition for Certiorari before the Court of
Appeals, which was dismissed in the Court of Appeals January 10, 2012
Resolution.30 The Court of Appeals accepted the National Labor Relations
Commission's premise that petitioner's June 24, 2011 Motion for Reconsideration was a
second motion for reconsideration. Thus, it did not toll petitioners period to file a petition
for certiorari assailing the May 31, 2011 Decision. Consequently, the petition
for certiorari was filed out of time. The Court of Appeals also held that the petition did
not contain copies of the pertinent supporting documents. The dispositive portion of this
Resolution read:
IN VIEW of all the foregoing patent infirmities, the petition is DISMISSED.
SO ORDERED.31
Thus, on June 13, 2012, petitioner filed his Petition for Review on Certiorari32 before this
Court. Thereafter, there was an exchange of pleadings.33
Petitioner points out that his November 12, 2010 Partial Motion for Reconsideration only
assailed the National Labor Relations Commission May 31, 2011 Decision, which
reduced the award of moral and exemplary damages. On the other hand, his June 24,
2011 11otion for Reconsideration assailed the reduction of his retirement
benefits.34Moreover, the filing of a motion for reconsideration to afford the National
Labor Relations Commission an opportunity to correct itself on the matter of retirement
benefits was a condition sine qua non in instituting a petition for certiorari before the
Court of Appeals.35 As for the attachment of relevant records, petitioner argues ti11at
the main issue in his petition was whether or not the National Labor Relations
Commission committed grave abuse of discretion in treating his motion for
reconsideration as a prohibited second motion for reconsideration. Likewise, he adds
that the Court of Appeals should have been more liberal and should have ordered him
to submit documents, instead of dismissing his motion out right. Petitioner further
discussed how the National Labor Relations Commission committed grave abuse of
discretion in reducing his retirement benefits.36
Respondents insist that petitioner's June 24, 2011 Motion for Reconsideration is a
prohibited second motion for reconsideration, which did not toll his period to question
the May 31, 2011 Decision. Thus, petitioner's petition for certiorari with the Court of
Appeals was filed out of time. Respondents call attention to the fact that the National
Labor Relations Commission already rejected petitioner's arguments against the
reduction of retirement benefits and claim that petitioner's June 24, 2011 Motion for
Reconsideration repeated his arguments in his Opposition.37
The sole issue for this Court's resolution is whether or not the June 24, 2011 Motion for
Reconsideration filed by petitioner Angelito L. Cristobal assailing the National Labor
Relations Commission May 31, 2011 Decision was a prohibited second motion for
reconsideration.
This Court grants the petition.
Rule VII, Section 15 of the National Labor Relations Commission Rules of Procedure
provides:
Section 15. Motions for Reconsideration. - Motion for reconsideration of any decision,
resolution or order of the Commission shall not be entertained except when based on
palpable or patent errors; provided that the motion is under oath and filed within ten (10)
calendar days from receipt of decision, resolution or order, with proof of service that a
copy of the same has been furnished, within the reglementary period, the adverse party;
and provided further, that only one such motion from the same party shall be
entertained.
The National Labor Relations Commission Rules of Procedure prohibits a party from
questioning a decision, resolution, or order, twice. In other words, this rule prohibits the
same party from assailing the same judgment. However, a decision substantially
reversing a determination in a prior decision is a discrete decision from the earlier one.
Thus, in Poliand Industrial Ltd. v. National Development Co., 38 this Court held:
Ordinarily, no second motion for reconsideration of a judgment or final resolution by the

same party shall be entertained.1âwphi1 Essentially, however, the instant motion is not
a second motion for reconsideration since the viable relief it seeks calls for the review,
not of the Decision dated August 22, 2005, but the November 23, 2005 Resolution
which delved for the first time on the issue of the reckoning date of the computation of
interest ... (Citation omitted)
This Court ruled similarly in Solidbank Corp. v. Court of Appeals,39 where the Labor
Arbiter dismissed a labor complaint but awarded the employee separation pay,
compensatory benefit, Christmas bonus, and moral and exemplary damages. This was
appealed to the National Labor Relations Commission by both parties. The National
Labor Relations Commission rendered a Decision affirming the Labor Arbiter Decision
but modifying it by deleting the award of moral and exemplary damages. On appeal, the
Court of Appeals ruled that the employee had been illegally dismissed and, considering
the cessation of the employer’s operations, awarded the employee separation pay,
backwages, compensatory benefit, Christmas bonus, unpaid salary, moral and
exemplary damages, and attorneys fees. Then, the employer bank filed a Motion for
Reconsideration and a Supplemental Motion for Reconsideration, while the employee
filed a Motion for Clarification and/or Partial Motion for Reconsideration. The Court of
Appeals then issued an Amended Decision, modifying the amount awarded as
separation pay, backwages, and unpaid salary. Afterwards, the employee filed another
Motion for Reconsideration/Clarification, and the Court of Appeals again corrected the
amounts awarded as separation pay, backwages, and unpaid salary. In its petition
assailing the Court of Appeals Resolution, the employer bank claimed that the Court of
Appeals erred in granting the employee's second motion for reconsideration, a
prohibited pleading. This Court held:
The Amended Decision is an entirely new decision which supersedes the original
decision, for which a new motion for reconsideration may he filed again.
Anent the issue of Lazaro’s "second" motion for reconsideration, we disagree with the
bank''3 contention that it is disallowed by the Rules of Court.1âwphi1 Upon thorough
examination of the procedural history of this case, the "second" motion does not partake
the nature of a prohibited pleading because the Amended Decision is an entirely new
decision which supersedes the original, for which a new motion for reconsideration may
be filed again.40
In Barba v. Licea De Cagayan University,41 where the Court of Appeals denied a motion
for reconsideration from an amended decision on the ground that it was a prohibited
second motion for reconsideration, this Court held that the prohibition againgt a second
motion for reconsideration contemplates the same party assailing the same judgment:
Prefatorily, we first discuss the procedural matter raised by respondent that the present
petition is filed out of time. Respondent clai.ms that petitioner's motion for
reconsideration from the Amended Decision is a second motion for reconsideration
which is a prohibited pleading. Respondent's assertion, h0wever, is misplaced for it
should be noted that the CA's Amended Decision totally reversed and set aside its
previous ruling. Section 2, Rule 52 of the 1997 Rules of Civil Procedure, as amended,
provides that no second motion for reconsideration of a judgment or final resolution by
the same party shall be entertained. This contemplates a situation where a second
motion for reconsideration is filed by the same party assailing the same judgment or
final resolution. Here, the motion for reconsideration of petitioner was filed after the
appellate court rendered an Amended Decision totally reversing and setting aside its
previous ruling. Hence, petitioner is not precluded from filing another motion for
reconsideration from the Amended Decision which held that the labor tribunals lacked
jurisdiction over petitioner's complaint for constructive dismissal. The period to file an
appeal should be reckoned not from the denial of her motion for reconsideration of the
original decision, but from the date of petitioner's receipt of the notice of denial of her
motion for reconsideration from the Amended Decision. And as petitioner received
notice of the denial of her motion for reconsideration from the Amended Decision on
September 23, 2010 and filed her petition on November 8, 2010, or within the extension
period granted by the Court to file the petition,her petition was filed on time. 42
Here, the National Labor Relations Commission May 31, 2011 Decision substantially
modified its September 30, 2010 Decision. Thus, petitioner was not precluded from
seeking reconsideration of the new decision of the National Labor Relations
Commission, and it was clearly an error for the Court of Appeals to find that petitioner's
petition for certiorari was filed out of time on that ground.
As for the purported failure to attach the records necessary to resolve the petition,
in Wack Wack Golf & Country Club v. National Labor Relations Commission, 43 this
Court held:
In Novelty Philippines, Inc. v. Court of Appeals, the Court recognized the authority of the
general manager to sue on behalf of the corporation and to sign the requisite verification
and certification of non-forum shopping. The general manager is also one person who is
in the best position to know ti1e state of affairs of the corporation. It was also error for
the CA not to admit the requisite proof of authority when in the Novelty case, the Court
ruled that the subsequent submission of the requisite documents constituted substantial
compliance with procedural rules. There is ample jurisprudence holding that the
subsequent and substantial compliance of an appellant may call for the relaxation of the
rules of procedure in the interest of justice. While it is true that rules of procedure are
intended to promote rather than frustrate the ends of justice, and while the swift
unclogging of court dockets is a laudable objective, it nevertheless must not be met at
the expense of substantial justice. It was, therefore, reversible error for the CA to have
dismissed the petition for certiorari before it. The ordinary recourse for us to take is to
remand the case to the CA for proper disposition on the merits; however, considering
that the records are now before us, we deem it necessary to resolve the instant case in
order to ensure harmony in the rulings and expediency.44
Thus, this Court finds that the Court of Appeals committed reversible error in dismissing
the petition outright, considering the circumstances of this case.1âwphi1
Petitioner raises in issue whether or not the PAL Pilots Retirement Benefit Plan is part
of the retirement benefits that should be computed in comparing the retirement benefits
accorded to him under the Labor Code as against what he is entitled to under PAL
policy. However, the matter of retirement benefits is not addressed in respondent's
memorandum. It would better serve th1e interest of substantial justice to remand this
case to the Court of Appeals to allow the parties to folly discuss this issue.
WHEREFORE, the assailed January 10, 2012 and April 18, 2012 Resolutions of the
Court of Appeals are REVERSED and SET ASIDE. The Court of Appeals is directed
to REINSTATE the petition for certiorari, docketed as CA-G.R. SP. No. 122034, for
further proceedings.
No costs.
SO ORDERED.

Associate Justice
WE CONCUR:
LUCAS P. BERSAMIN
Associate Justice
Acting Chairperson
FRANCIS H. JARDELEZA SAMUEL R. MARTIRES

ALEXANDER G. GESMUNDO
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
LUCAS P. BERSAMIN
Associate Justice
Acting Chairperson, Third Division
CERTIFICATION
Court’s Division.

Chief Justice
Footnotes
* Designated additional member per Raffle dated October 2, 2017.
1 Rollo, pp, 8-42.
2Id. at 43-45. The Resolutions were penned by Associate Justice Edwin D.
Sorongon and concurred in by Associate Justices Noel D. Tijam and Romeo F.
Barza of the Ninth Division, Court of Appeals, Manila.
3Id. at 46-47. The Resolutions were penned by Associate Justice Edwin D.
Sorongon and concurred in by Associate Justices Noel G, TiJam and Romeo F.
Barza of the Former Ninth Division, Court of Appeals, Manila.
4 Id. at 154, NLRC Decision.
5 Rollo, p. 10.
6 Id. at 70.
7 Id. at 71.
8 Id. at 73.
9 Id. at 74.
10 Id. at 11.
11 Id. at 154-166. The Decision was pr:;nner.l by Labor Arbiter Felipe P. Pati.
12 Id. at 162.
13 Id. at 166.
14Id. at 320-335. The Decision was penned by Presiding Commissioner Alex A.
Lopez and was concurred in by Commissioners Gregorio O. Bilog, III and Pablo
C. Espiritu, Jr. of the Third Division, National Labor Relations Commission.
15 Id. at 334.
16 Id.
17 Id. at 353-359.
18 Id. at 354.
19 Id. at 339.
20 Id. at 337-348.
21 Id. at 344.
22 424 Phil. 356 (2002) [Per J. Ynares-Santiago, First Division].
23 Id. at 344-347.
24 Id. at 347.
25 Id. at 291-298.
26 Id. at 294"--295.
27 Id. at 350-352.
28 Id. at 350.
29 Id. at 351.
30 Id. at 43-45.
31 Id. at 44.
32 Id. at 8-42.
33Id. at 378-403, respondents' Comment and rollo, pp. 435-447, petitioner's
Reply.
34 Id. at 436-437.
35 Id. at 438.
36 Id. at 439.
37 Id. at 382-384.
38 523 Phil. 368 (2006) [Per J. Tinga, Special Second Division].

39G.R. No. 166581 & 167187, December 7, 2015,
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/20l5/decembe
r2015/166581.pdf> [Per C.J. Sereno, First Division].
40 Id. at 11.
41 699 Phil. 622 (2012) [Per J. Villarama, First Division].
42 Id at 639.
43 496 Phil. 180 (2005) [Per J. Callejo, Second Division].
44 Id. at 192.
G.R. No. 207229, September 20, 2017 - PEOPLE OF THE PHILIPPINES, Plaintiff-
Appellee, v. SIEGFRED CABELLON CABAÑERO, Accused-Appellant.
THIRD DIVISION
G.R. No. 207229, September 20, 2017
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. SIEGFRED CABELLON

CABAÑERO, Accused-Appellant.
DECISION
LEONEN, J.:
The marking and identification of the seized dangerous drug is an essential part of the
chain of custody. Absent this step, a gap is created which casts a shadow of doubt on
the identity and integrity of the dangerous drug presented as evidence, creating
reasonable doubt, which must be resolved in favor of the accused.
This reviews the August 30, 2012 Decision1 of the Court of Appeals in CA-G.R. No.
CEB-CR HC No. 01081, affirming the conviction of accused-appellant Siegfred Cabellon
y Cabañero (Cabellon) for violation of Section 5 of Republic Act No. 9165, otherwise
known as the Comprehensive Dangerous Drugs Act of 2002.
This Court restates the facts as found by the lower courts.
In an Information2 dated April 28, 2006, Cabellon was charged with violation of Section
5 of Republic Act No. 9165:
That on or about the 13th day of April2006 at about 7:30 P.M. more or less, in Bulacao,
City of Talisay, Cebu, Philippines, and within the jurisdiction of this Honorable Court, the
said accused, with deliberate intent, did then and there sell and dispose One (1) heat
sealed plastic packet of white crystalline substance containing Methylamphetamine (sic)
hydrochloride locally known as "SHABU", weighing 0.03 gram, a dangerous drugs.
CONTRARY TO LAW.3
Upon arraignment Cabellon pleaded not guilty.4 Trial on the merits ensued.
Evidence for the prosecution showed that on April 13, 2006, a buy bust operation was
planned to capture Cabellon in the act of selling drugs. At 7:30 p.m., PO2 Junar Rey
Barangan (PO2 Barangan), PO3 Rey Bucao (PO3 Bucao), and PO3 Reynato Abellar
(PO3 Abellar) went to Sitio Jawod, Barangay Bulacao, Talisay City to commence the
buy-bust operation. The police officers had a poseur-buyer with them.5
The asset poseur-buyer transacted with Cabellon in an alley, while the police officers
observed them from a distance. Once they saw the poseur-buyer scratch his head, their
pre-approved signal, the police officers descended upon Cabellon, who then ran away
upon noticing the approaching officers.6
Cabellon ran and hid inside a nearby house and the police officers followed him. The
police officers stumbled upon three (3) men sniffing shabu inside the house, one (1) of
whom they apprehended while the other two (2) managed to escape. The police officers
caught up with Cabellon inside the house, whom they thereafter frisked. They recovered
the marked P100.00 and P50.00 bills from him.7
After Cabellon's arrest, the poseur-buyer handed over the sachet of shabu he
purchased from Cabellon to PO3 Bucao.8
That same date, a sachet marked with "SCC 04/13/06" was turned over to the
Philippine National Police Crime Laboratory for examination. The Request for
Laboratory Examination was received by a certain PO1 Domael.9
P/S Insp. Mutchit G. Salinas (P/S Insp. Salinas), a forensic chemist, confirmed
executing Chemistry Report No. D-698-2006. She testified that she had examined a
heat-sealed plastic sachet of white crystalline substance labelled with "SCC 04/13/06."
The chemistry report bore the signatures of P/S Insp. Salinas and P/Supt. Myrna P.
Areola. The specimen weighed 0.03 grams and tested positive for methamphetamine
hydrochloride (shabu).10
Cabellon was the only defense witness and he denied selling shabu to the poseur-
buyer.11
He claimed that on April 13, 2006, at about 3:30p.m., he was buying barbecue when he
saw his aunt, Jane Cabellon, crying. He asked her why she was crying and he told her
that she had a fight with someone. He approached and slapped the lady his aunt had a
fight with. The lady then warned him that he would be arrested for what he had done to
her.12
Later that evening, at the barbecue station,13 he was arrested and bodily searched by
some police officers; however, nothing was recovered from him. He claimed that he was
not informed by the arresting officers of the offense he supposedly violated. 14
Cabellon was then brought to the police station and was asked to call somebody. He
was also asked to pay for his release and for the settlement of the case filed against
him. He was unable to pay or give a gift and declined to make the phone call; hence, he
was charged and a case was filed against him.15
On October 27, 2008, the Regional Trial Court16 found that the prosecution was able to
prove all the elements for the illegal sale of shabu.17 Furthermore, PO3 Bucao and PO2
Barangan identified the sachet sold by Cabellon to the poseur-buyer. The seized
sachet's chain of custody from the time Cabellon was arrested until it was presented as
evidence to the court was accounted for.18 The fallo of the trial court Decision read:
ACCORDINGLY, this court finds the accused GUILTY as charged and sentences him to
suffer the penalty of LIFE IMPRISONMENT and to pay a fine of [P]500,000.00.
Exhibit "B" is forfeited in favor of the State for proper disposition.
SO ORDERED.19
Cabellon filed an appeal before the Court of Appeals and raised several errors. He
claimed that the trial court erred in upholding the validity of his arrest despite the blatant
violation of his right against unreasonable searches and when it relied on the weakness
of the defense evidence rather than on the strength of the prosecution evidence.
Additionally, he averred that the prosecution failed to prove his guilt beyond reasonable
doubt.20
On August 30, 2012, the Court of Appeals21 dismissed the appeal and upheld the trial
court decision.
The Court of Appeals held that the elements for the illegal sale of shabu were duly
proven by the prosecution.22
The Court of Appeals also downplayed the supposed necessity of presenting the
poseur-buyer as a witness in court since the testimonies of the members of the
apprehending team had already sufficiently established the illegal sale between
Cabellon and the poseur-buyer.23
The Court of Appeals likewise waived the stringent application of Section 21 of Republic
Act No. 9165, considering the circumstances obtaining in the case. The Court of
Appeals emphasized that the defense never questioned the integrity of the evidence
during trial and only did so upon appeal.24 The fallo of the Court of Appeals Decision
read:
IN LIGHT OF THE FOREGOING, the appeal is DENIED. The decision dated October
27, 2008 of the Regional Trial Court (RTC), Brunch 58, Cebu City in Criminal Case No.
CBU-76737 convicting Siegfred Cabellon y Cabañero for the crime of Sale of
Dangerous Drugs penalized under Section 5 of Republic Act No. 9165 is AFFIRMED
in toto.
SO ORDERED.25
Cabellon filed a Notice of Appeal26 on October 4, 2012, which was noted and given due
course by the Court of Appeals in its April 29, 2013 Resolution.27
In its August 7, 2013 Resolution,28 this Court notified the parties that they may file their
respective supplemental briefs. Both parties manifested29 that they were dispensing with
the filing of a supplemental brief.
Cabellon alleges that the supposed illegal sale was never proven because the poseur-
buyer was not presented to attest to the alleged sale. Furthermore, the police officers
were positioned at a distance where they could not have seen the sale and could
merely rely on the poseur-buyer's signal. Cabellon insisted that the fact of the sale was
not proven beyond reasonable doubt.30
Cabellon also emphasizes that the police officers did not comply with the mandatory
requirements under Section 21, paragraph 1 of Republic Act No. 9165, requiring the
apprehending team to immediately physically inventory and photograph the seized
drugs in the presence of the accused, a representative from media or the Department of
Justice, and any elected official.31
Cabellon then points out that the prosecution was unable to show an unbroken chain of
custody, PO3 Bucao testified that the poseur-buyer handed him the sachet after
Cabellon was arrested, but he never testified as to whom he gave it next or who marked
it.32 Lastly, Cabellon asserts that he was not informed either of his constitutional rights
upon his arrest or the reason for his arrest or detention.33
On the other hand, the prosecution claims that the poseur-buyer's failure to testify was
not fatal to the case since PO3 Bucao testified that he saw the sale.34
The prosecution argues that there was substantial compliance with Section 21 of
Republic Act No. 9165 because the integrity and evidentiary value of the seized item
was properly preserved. The prosecution maintains that the circumstances surrounding
the arrest, where he was arrested in a house with three (3) persons high on drugs,
made it impossible to mark and inventory the sachet on the spot. 35 The prosecution also
avers that the supposed violations of Section 21 of Republic Act No. 9165 were only
raised for the first time on appeal.36
Finally, the prosecution denies that Cabellon was found guilty based on his weak
defense and holds that it has proven the evidentiary integrity of the seized sachet
proving Cabellon's guilt beyond reasonable doubt. It asserts that the prosecution
witnesses have established Cabellon's guilt with their straightforward and candid
testimonies.37
The only issue for this Court's resolution is whether or not accused-appellant Siegfred
Cabellon's guilt was proven beyond reasonable doubt despite the non-observance of
the required procedure under Section 21 of Republic Act No. 9165.
This Court grants the appeal and acquits Siegfred Cabellon y Cabañero.
In order to sustain a conviction for the illegal sale of dangerous drugs, these two (2)
elements must be established by the prosecution: "(1) proof that the transaction or sale
took place and (2) the presentation in court of the corpus delicti or the illicit drug as
evidence."38
To prove that the illegal sale of shabu took place, the prosecution presented PO3 Bucao
and PO2 Barangan, two (2) of the police officers who were part of the buy-bust
operation team which apprehended the accused.
Both PO3 Bucao39 and PO2 Barangan40 testified that they had seen the accused talk
with the poseur-buyer before the latter scratched his head, signalling that the
transaction had taken place. The marked money was recovered from the
accused,41 while the poseur-buyer turned over the sachet with shabu he had bought
from the accused to PO3 Bucao.42
While the prosecution may have proven that a transaction took place, it was not as
convincing in its presentation of the alleged corpus delicti as evidence.
People v. Jaafar43 underscored the importance of presenting the actual illicit drug
or corpus delictirecovered as evidence since its existence is essential to convict the
accused. Thus:
In all prosecutions for violations of Republic Act No. 9165, the corpus delicti is the
dangerous drug itself. Its existence is essential to a judgment of conviction. Hence, the
identity of the dangerous drug must be clearly established.
Narcotic substances are not readily identifiable. To determine their composition and
nature, they must undergo scientific testing and analysis. Narcotic substances are also
highly susceptible to alteration, tampering, or contamination. It is imperative, therefore,
that the drugs allegedly seized from the accused are the very same objects tested in the
laboratory and offered in court as evidence. The chain of custody, as a method of
authentication, ensures that unnecessary doubts involving the identity of seized drugs
are removed.44(Emphasis supplied)
Section 21 of Republic Act No. 9165 provides the manner by which law enforcement
officers should handle seized dangerous drugs:
Section 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered
Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. - The
shall be required to sign the copies of the inventory and be given a copy thereof[.]
(Emphasis supplied)
Section 21 of the Implementing Rules and Regulations of Republic Act No. 9165 further
provides:
Section 21. Custody and Disposition of Confiscated, Seized and/or Surrendered
Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. - The
(a) The apprehending officer/team having initial custody and control of the drugs shall,
same in the presence of the accused or the person's from whom such items were
shall be required to sign the copies of the inventory and be given a copy thereof:
Provided, that the physical inventory and photograph shall be conducted at the place
where the search warrant is served; or at the nearest police station or at the nearest
office of the apprehending officer/team, whichever is practicable, in case of warrantless
seizures; Provided, further, that non-compliance with these requirements under
justifiable grounds, as long as the integrity and the evidentiary value of the seized items
are properly preserved by the apprehending officer/team, shall not render void and
invalid such seizures of and custody over said items[.] (Emphasis supplied)
While it may be true that strict compliance with Section 21 of Republic Act No. 9165
may be excused under justifiable grounds, the integrity and evidentiary value of the
seized items must still be preserved by the apprehending officer.
This Court is not convinced that the prosecution was able to prove the identity of the
shabu supposedly seized from the accused.
PO3 Bucao claimed that the poseur-buyer turned over to him the sachet purchased
from the accused and that he had custody of the sachet until he reached the police
station. He then handed the sachet to PO3 Abellar, who supposedly prepared the
request for the chemical analysis of the seized item. However, PO3 Bucao failed to
identify who placed the markings on the sachet:
(Pros. Canta) Q: How many packs of shabu did your poseur[-]buyer handed it (sic) to
you?
(PO3 Bucao) A: Only one.
Q: Who kept this pack of shabu from the place of the arrest to the police station?
A: Myself.
Q: What did you do with this pack of shabu that you get (sic) from the accused?
A: After we reach in (sic) our station I gave it to PO3 Abellar the one pack of shabu.
Q: What did PO3 Abellar do with this one pack of shabu?
A: He made a request to the PNP Crime Lab for chemical analysis.
....
Q: I am showing to you this one pack of white crystalline substance with labeling "SCC"
the date thereon, is that the evidence you are referring to?
A: Yes[,] sir.
Q: Who then made the marking "SCC" and the date?
A: I am not sure who made the marking.45

Even PO2 Barangan could not confirm who placed the markings on the sachet:
(PROS. CANTA) Q: I am showing to you this one pack of white crystalline substance
marked as Exhibit B, with markings SCC with a date, can you tell us if this is the same
evidence that your (sic) recovered from the accused?
A: Yes, sir.
Q: Why are you sure?
A: Because this is the one PO3 Bucao showed to me.
Q: And there are markings in this plastic pack containing this small plastic pack of
shabu SCC and the date 04/13/06, who made that marking if you know?
A: I do not know[,] sir.46

People v. Nandi47 expounded on the four (4) links that should be established by the
prosecution to constitute an unbroken chain of custody:
[F]irst, the seizure and marking, if practicable, of the illegal drug recovered from the
accused by the apprehending officer; second, the turnover of the illegal drug seized by
the apprehending officer to the investigating officer; third, the turnover by the
investigating officer of the illegal drug to the forensic chemist for laboratory examination;
and fourth, the turnover and submission of the marked illegal drug seized from the
forensic chemist to the court.48
Undeniably, a noticeable gap exists in the chain of custody with the prosecution's failure
to present evidence that the seized sachet was actually marked by any of the three (3)
apprehending officers.
The prosecution likewise did not present evidence that the seized sachet was
inventoried and photographed in the presence of the accused or his representative, a
representative from the media or the Department of Justice, and an elected public
official. Neither did it provide an explanation as to why the police officers did not follow
the requirements provided under the law.
PO3 Bucao also testified that he turned over the unmarked seized sachet to PO3
Abellar, who then prepared the request to the Philippine National Police for chemical
analysis.49 However, a careful review of the Request for Laboratory
Examination50 dated April 13, 2006 shows that not only did it refer to a marked sachet, it
was also signed by P/Superintendent Romeo Pagal Perigo, not PO3 Abellar, who
supposedly prepared it.
The prosecution utterly failed to proffer evidence on who placed the markings on the
sachet Furthermore, it also failed to account for the seized sachet's transfer from PO3
Bucao to the Philippine National Police Crime Laboratory for laboratory examination,
creating another gap in the chain of custody.
This blatant lack of compliance with the safeguards established in Republic Act No.
9165 is made even more egregious by the fact that the seized sachet only contained
0.03 grams51 of shabu, no more than a grain of rice. The danger of tampering and
planting of evidence was, thus, heightened, which should have put the lower courts on
guard and not have so easily relied on the presumption of regularity accorded to police
officers in the performance of their official acts. As this Court stated in People v.
Holgado:52
While the miniscule amount of narcotics seized is by itself not a ground for acquittal, this
circumstance underscores the need for more exacting compliance with Section 21.
In Mallillin v. People, this court said that "the likelihood of tampering, loss or mistake
with respect to an exhibit is greatest when the exhibit is small and is one that has
physical characteristics fungible in nature and similar in form to substances familiar to
people in their daily lives."53
WHEREFORE, premises considered, the Decision dated August 30, 2012 of the Court
of Appeals in CA-G.R. No. CEB-CR HC No. 01081 is REVERSED and SET ASIDE.
Accused-appellant Siegfred Cabellon y Cabañero 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 decision be furnished the Director of the Bureau of Corrections,
Muntinlupa City 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
decision the action he has taken.
The Regional Trial Court is directed to turn over the seized sachet of methamphetamine
hydrochloride to the Dangerous Drugs Board for destruction in accordance with law.
Let entry of judgment be issued immediately.
SO ORDERED.
ORDER OF RELEASE
TO: The Director

Bureau of Corrections
1770 Muntinlupa City
GREETINGS:
WHEREAS, the Supreme Court on September 20, 2017 promulgated a Decision in the
above-entitled case, the dispositive portion of which reads:
"WHEREFORE, premises considered, the Decision dated August 30, 2012 of the Court
of Appeals in CA-G.R. No. CEB-CR HC No. 01081 is hereby REVERSED and SET
ASIDE. Accused-appellant Siegfred Cabellon y Cabanero is hereby ACQUITTED for
failure of the prosecution to prove his guilt beyond reasonable doubt. He is ordered
immediatelyRELEASED from detention, unless he is confined for any other lawful
cause.
Muntinlupa City 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
decision, the action he has taken.
The Regional Trial Court is directed to turn over the seized sachet of methamphetamine
hydrochloride to the Dangerous Drugs Board for destruction in accordance with law.
SO ORDERED."
NOW, THEREFORE, You are hereby ordered to immediately release SIEGFRED
CABELLON y CABAÑERO unless there are other lawful causes for which he should
be further detained, and to return this Order with the certificate of your proceedings
within five (5) days from notice hereof.
GIVEN by the Honorable PRESBITERO J. VELASCO, JR., Chairperson of the Third

Division of the Supreme Court of the Philippines, this 20th day of September 2017.
Very truly yours,

(SGD)
WILFREDO V. LAPITAN
Endnotes:
1CArollo, pp. 92-105. The Decision was penned by Associate Justice Pamela Ann
Abella Maxino and concurred in by Associate Justices Edgardo L. Didos Reyes and
Zenaida T. Galapate-Laguilles of the Nineteenth Division, Court of Appeals, Cebu City.
2 Id. at 10-11.
3 Id. at 10.
4 Id. at 51, RTC Decision.
6 Id.
7 Id.
9 Id. at 51-52.
10Id. at 51 and 53. RTC referred to the substance as "methylamphetamine
hydrochloride."
11 Id. at 53-54, RTC Decision.
12 Id.
13TSN dated September 23, 2008, p. 4. TSN also refers to the date as "September 23,
2007."
14 Id. at 54.
15 Id.
16Id. at 51-58. The Decision, docketed as Criminal Case No. CBU 76737, was penned
by Presiding Judge Gabriel T. Ingles of Branch 58, Regional Trial Court, Cebu City.
17 Id. at 55-57.
18 Id. at 57.
19 Id. at 58.
20 Id. at 31.
21 Id. at 92-105.
22 Id. at 95-99.
23 Id. at 100-101.
24 Id. at 101-104.
25 Id. at 105.
26 Id. at 106-107.
27 Id. at 111.
28Rollo, p. 22.
29 Id. at 23-26 and 27-28.
30 CA rollo, pp. 37-38.
31 Id. at 38-39.
32 Id. at 39-42.
33 Id. at 48-49.
34 Id. at 74.
35 Id. at 76-77.
36 Id. at 78-79.
37 Id. at 79-81.
38People v. Morales, 630 Phil. 215, 228 (2010) [Per J. Del Castillo, Second
Division] citing People v. Darisan, 597 Phil. 479 (2009) [Per J. Corona, First Division].
39 TSN dated April 24, 2007, p. 4.
40 TSN dated February 13, 2007, pp. 5-6.
41 Id. at 7.
42 TSN dated April 24, 2007, pp. 5-6.
43G.R. No. 219829, January 18, 2017
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/january2017/21
44Id. at 7, citing People v. Simbahon, 449 Phil. 74 (2003) [Per J. Ynares-Santiago, First
Division] and Mallillin v. People, 516 Phil. 576 (2008) [Per J. Tinga, Second Division].
46 TSN dated February 13, 2007, p. 9.
47 639 Phil. 134 (2010) [Per J. Mendoza, Second Division].
48Id. at 144-145, citing People v, Kamad, 624 Phil. 289 (2010) [Per J. Brion, Second
Division].
50 RTC records, p. 8.
51 Id. at 9.
52 741 Phil. 78 (2014) [Per J. Leonen].
53Id. at 99, citing Mallillin v. People, 576 Phil. 576 (2008) [Per J. Tinga, Second
Division].
THIRD DIVISION
[ G.R. No. 210677, August 23, 2017 ]
PEOPLE OF THE PHILIPPINES PLAINTIFF-APPELLEE. VS. ABUNDIO M.
SARAGENA, ACCUSED-APPELLANT.
DECISION
LEONEN, J.:
When the quantity of the confiscated substance is miniscule, the requirements of
Section 21 of Republic Act No. 9165, otherwise known as the Comprehensive
Dangerous Drugs Act of 2002, must be strictly complied with.[1]
The prosecution's failure to present the police officer who acted as the poseur-buyer in
the buy-bust operation, which allegedly involved 0.03 grams of shabu, coupled with the
improbability that the two (2) apprehending police officers witnessed the transaction at
night time, engenders reasonable doubt on the guilt of the accused. The prosecution's
failure to sufficiently establish the chain of custody in accordance with the law further
amplifies the doubt on accused's guilt.
In its April 2, 2013 Decision,[2] the Court of Appeals upheld Abundio Mamolo
Saragena's[3] (Saragena) conviction in the Regional Trial Court Judgment dated August
21, 2008.[4]
This Court reverses his conviction and acquits him of the sale of dangerous drugs under
Section 5 of Republic Act No. 9165.
On September 23, 2005,[5] SPO1 Roldan Paller (SPO1 Paller) received information that
a certain "Tatay"[6] was selling illegal drugs at Sitio Sindulan, Brgy. Mabolo, Cebu
City.[7] "Tatay's" exact address was unknown.[8]
A buy-bust team was formed, composed of SPO3 Raul Magdadaro (SPO3 Magdadaro)
as team leader, PO1 Roy Misa (PO1 Misa)[9] as poseur-buyer, and SPO1 Paller as
back-up.[10] SPO1 Paller called the Philippine Drug Enforcement Agency for
coordination on the buy-bust operation.[11] SPO1 Paller, SPO3 Magdadaro, and PO1
Misa held a briefing before jump-off. A buy-bust money of P100.00, bearing the serial
no. VT129780, was handed to PO1 Misa.[12]
On June 23, 2005, at about 7:00 p.m., the buy-bust team headed to Sitio Sindulan in
their service vehicle.[13] An informant helped them locate the house of accused-
appellant,[14] Saragena, alias "Tatay."[15] The police officers parked three (3) comers
away from accused-appellant's house.[16]
As the designated poseur-buyer, PO1 Misa walked towards accused-appellant's
house.[17] SPO1 Paller and SPO3 Magdadaro trailed behind him.[18] Accused-appellant's
house was located at the back of a stage.[19] As PO1 Misa drew closer to the target site,
SPO1 Paller and SPO3 Magdadaro hid themselves at the side of the stages[20] beside
the basketball court.[21] The distance between the designated poseur-buyer and the two
(2) back-up officers were about five (5) to eight (8) meters.[22]
Outside accused-appellant's house,[23] PO1 Misa convinced the suspect to sell him
shabu.[24] PO1 Misa handed the P100.00 bill as payment, for which he received a "pack
of white crystalline substance."[25] SPO1 Paller and SPO3 Magdadaro then rushed to
the scene[26] and introduced themselves as police officers.[27] SPO1 Paller conducted a
body search on accused-appellant and recovered the buy-bust money. Accused-
appellant was brought to the police station.[28]
PO1 Misa retained custody of the plastic pack, while SPO1 Paller took the buy-bust
money from accused-appellant.[29] At the police station,[30] PO1 Misa turned over the
plastic pack to their team leader, SPO3 Magdadaro,[31] who then marked it with the
letters "AS."[32] The incident was logged in the police blotter.[33]
SPO3 Magdadaro wrote a letter-request for laboratory examination of the seized and
marked plastic pack, signed by Chief Police Superintendent Armando Macolbacol
Radoc.[34] PO1 Misa, accompanied by SPO1 Paller,[35] delivered SPO3 Magdadaro's
letter-request and the seized plastic pack to the Philippine National Police Crime
Laboratory in Cebu City.[36] A certain PO2 Roma received the letter-request and the
specimen from PO1 Misa and then delivered these items to P/S Insp. Pinky Sayson-
Acog (P/S Insp. Acog),[37] a forensic chemist.[38]
On June 23, 2005,[39] P/S Insp. Acog found the plastic pack marked as "AS" to be
positive for methamphetamine hydrochloride.[40] She entered her findings in her
Chemistry Report No. D-89G-2005,[41] marked the specimen as "D-890-05," and put her
initials, "PSA."[42]
On the other hand, according to the defense, accused-appellant was at home when
three (3) armed police officers kicked the door of his house.[43] He recognized PO1
Misa, SPO1 Palter, and SPO3 Magdadaro as they frequented illegal cockfights [44] and
would take turns asking for the defeated fighting cock.[45] The police officers held
accused-appellant.[46] One (1) of them searched his pockets but found nothing. They
also searched his house.[47]
Despite the lack of contraband found, accused-appellant was sent to the Mabolo Police
Station. He inquired why he was being arrested. The buy-bust team told him that they
were able to buy shabu from him.[48] Denying this accusation, accused-appellant
asserted that they planted the evidence.[49]
An Information was filed against accused-appellant for the illegal sale of a dangerous
drug under Section 5 of Republic Act No. 9165, as follows:
That on or about the 23rd day of June, 2005, at about 7:00 P.M. in the City of Cebu,
Philippines, and within the jurisdiction of this Honorabie Court, the said accused, with
deliberate intent, and without authority of law, did then and there sell, deliver or give
away to a poseur buyer:
one (1) heat[-]sealed transparent plastic pocket containing 0.03 gram[s] of white
crystalline substance locally known as "SHABU" containing methylamphetamine (sic)
hydrochloride, a dangerous drug.
CONTRARY TO LAW.[50]
On August 21, 2008, the Regional Trial Court convicted[51] accused-appellant of the
crime charged. The dispositive portion of the Decision read:
In fine, the prosecution has successfully discharged its task to adduce evidence to
obtain a conviction.
For all the foregoing, accused is hereby sentenced to suffer the penalty of life
imprisonment and to pay a fine of one million pesos.
The plastic pack of shabu is order[ed] forfeited in favor of the government.
SO ORDERED.[52]
Accused-appellant appealed[53] before the Court of Appeals.
The Court of Appeals found that the police officers failed to comply with the compulsory
procedure on the seizure and custody of dangerous drugs under Section 21 of Republic
Act No. 9165 or the chain of custody rule. Nevertheless, it justified the noncompliance
by applying the exception in the same provision.[54]
On April 2, 2013, the Court of Appeals convicted[55] accused-appellant. The dispositive

portion of the Decision read:
After due consideration, We resolve that accused-appellant has not overcome the
evidence presented by the prosecution against him. This Court finds accused-
appellant GUILTY beyond reasonable doubt of violation of Section 5, Article II, Republic
Act No. 9165.
WHEREFORE, the instant appeal is DENIED. The RTC's judgment dated August 21,
2008 is AFFIRMED.
SO ORDERED.[56] (Emphasis in the original)

For resolution of this Court is the sole issue of whether or not accused-appellant
Abundio Mamolo Saragena is guilty beyond reasonable doubt of violation of Section 5
of Republic Act No. 9165. Subsumed in this issue is the matter of whether or not the law
enforcement officers substantially complied with the chain of custody rule.
This Court rules in favor of accused-appellant.
I
Absent proof beyond reasonable doubt, accused-appellant is presumed innocent of the
crime charged.
Section 14(2) of Article III of the Constitution provides that "[i]n all criminal prosecutions,
the accused shall be presumed innocent until the contrary is proved[.]" To overcome
this constitutional presumption, prosecution must establish accused's guilt beyond
reasonable doubt.[57]
Proof beyond reasonable doubt does not require absolute certainty; it only requires
moral certainty or the "degree of proof which produces conviction in an unprejudiced
mind,"[58] Thus:
Reasonable doubt is that doubt engendered by an investigation of the whole proof and
an inability after such investigation to let the mind rest ea[sy] upon the certainty of guilt.
Absolute certainty of guilt is not demanded by the law to convict a criminal charge, but
moral certainty is required as to every proposition of proof requisite to constitute the
offense.[59]
The legal presumption of innocence prevails if the judge's mind cannot rest easy on the
certainty that the accused committed the crime. In People v. Santos:[60]
The prosecution has the burden to overcome such presumption of innocence by
presenting the quantum of evidence required. Corollarily, the prosecution must rest on
its own merits and must not rely on the weakness of the defense. If the prosecution fails
to meet the required quantum of evidence [of proof beyond reasonable doubt], the
defense may logically not even present evidence on its own behalf. In which case, the
presumption of innocence shall prevail and hence, the accused shall be acquitted.[61]
This rule is borne by the need to evenly balance the State's encompassing powers to
prosecute and the defense's arduous struggle for liberty.[62] It addresses the inherent
inequality in resources, command, capacity, and authority between the State and an
accused.[63] In People v. Berroya:[64]
[P]roof beyond reasonable doubt lies in the fact that "(i)n a criminal prosecution, the
State is arrayed against the subject; it enters the contest with a prior inculpatory finding
in its hands; with unlimited means of command; with counsel usually of authority and
capacity, who are regarded as public officers, and therefore as speaking semi-judicially,
and with an attitude of tranquil majesty often in striking contrast to that of defendant
engaged in a perturbed and distracting struggle for liberty[,] if not for life. These
inequalities of position, the law strives to meet by the rule that there is to be no
conviction when there is a reasonable doubt of guilt."[65] (Emphasis supplied, citation
omitted)
II
There is great possibility of abuse in drug cases, especially those involving miniscule
amounts. This Court has recognized that buy-bust operations could be initiated based
on dubious claims of shady persons, or that small amounts of illicit drugs could be
planted as evidence on innocent individuals, in view of the secrecy surrounding drug
deals in general. Thus:
"[B]y the very nature of anti-narcotics operations, the need for entrapment procedures,
the use of shady characters as informants, the ease with which sticks of marijuana or
grams of heroin can be planted in pockets or hands of unsuspecting provincial hicks,
and the secrecy that inevitably shrouds all drug deals, the possibility of abuse is great."
Thus, the courts have been exhorted to be extra vigilant in trying drug cases lest an
innocent person is made to suffer the unusually severe penalties for drug
offenses[.][66] (Emphasis supplied)
Therefore, courts must subject "the prosecution evidence through the crucible of
a severe testing . . . [T]he presumption of innocence requires them to take a more than
casual consideration of every circumstance or doubt favoring the innocence of the
accused."[67] In deliberating the accused's guilt, courts must exercise "utmost diligence
and prudence."[68] More importantly, they must be on their guard in trying drug cases;
otherwise, they risk meting severe penalties to innocent persons.[69]
Here, there is reasonable doubt that the sale of shabu took place.
Section 5 of Republic Act No. 9165 penalizes any person who sells a dangerous drug,
regardless of quantity. To successfully convict an accused under this provision, the
prosecution must establish the identities of the buyer and the seller, the item sold, and
the consideration given for it. There must be an actual sale, consummated through
delivery and payment. Finally, the corpus delicti must be presented in court as
evidence.[70]
According to accused-appellant, SPO3 Magdadaro's allegation of having "clearly" seen

the exchange of money and the pack of shabu between accused-appellant and PO1
Misa is "quite disturbing."
It is unclear how SPO1 Paller and SPO3 Magdadaro allegedly witnessed the purported
sale. The alleged illegal drug was of very small quantity, It weighed only 0.03
grams,[71] approximately as light as a grain of rice[72] or an ant.[73]The alleged transaction
between PO1 Misa and accused-appellant happened five (5) to eight (8) meters away
from SPO3 Magdadaro.[74] While PO1 Misa was allegedly buying shabu from accused-
appellant, SPO1 Paller and SPO3 Magdadaro were hiding at the side of the stage.
Accused-appellant's house was at the back of this stage where they hid.[75] Likewise, it
was already 7:00 p.m. and the night time would have impaired their vision.
PO1 Misa, the only person who could attest to the commission of the crime, was not
presented in court.[76] The poseur-buyer "had personal knowledge of the transaction
since he conducted the actual transaction."[77] His testimony is crucial in establishing the
alleged facts and circumstances surrounding the purported sale.[78]
The failure to present the poseur-buyer casts doubt on the charge that an illegal sale of
drugs took place. SPO1 Paller and SPO3 Magdadaro's location, the nightfall, and the
miniseule amount of the alleged illegal drug further call into question prosecution's claim
that SPO1 Paller and SPO3 Magdadaro witnessed the scene.
Even if there was a sale, the corpus delicti was not proven as the chain of custody was
defective.
The corpus delicti is the body of the crime that would establish that a crime was
committed.[79] In cases involving the sale of drugs, the corpus delicti is the confiscated
illicit drug itself,[80] the integrity of which must be preserved.[81]
Accused-appellant argues that the conduct of the post-seizure custody of the shabu
allegedly recovered from him violated the chain of custody rule. [82] His contention is
meritorious. The police officers' lapses are numerous and unjustified that there are
serious grounds to doubt the preservation of the integrity of the corpus delicti.
To begin with, no evidence was adduced to show specifically how the police officers
handled, stored, and safeguarded the seized shabu pending its offer as evidence. The
records merely state:
a. PO1 Misa, as the poseur-buyer, transacted with accused-appellant with the buy-bust
money. Upon receipt of the buy-bust money, accused-appellant gave PO1 Misa a
plastic pack of white crystalline substance.
b. PO1 Misa turned over the specimen drug to SPO3 Magdadaro at the police station.
c. SPO3 Magdadaro marked the plastic pack of white crystalline substance as "AS."
d. SPO3 Magdadaro then drafted a letter-request for laboratory examination of the
specimen drug signed by Chief Police Superintendent Armando Macolbacol Radoc.
e. PO1 Misa then delivered the letter-request for laboratory examination of the
specimen drug, and the actual specimen drug marked as "AS" to the crime
laboratory.
f. SPO2 Roma received the letter-request and the specimen drug.
g. SPO2 Roma immediately delivered the letter-request and the specimen drug to
[PS]Insp. Acog, the forensic chemist of the PNP Crime Laboratory.
h. [PS]Insp. Acog made the chemical analysis and concluded that the specimen white
crystalline substance tested positive for methylamphetamine hydrochloride.
i. [PS]Insp. Acog was presented before the court a quo for identification of the subject
specimen marked as "AS."[83]
There was no showing that accused-appellant signed a receipt of the inventory of the
pack of shabu, that it was marked in his presence, that photographs were taken, or that
he was made to sign a confiscation receipt relating to the seized pack of shabu. [84]
This Court emphasizes that "ostensibly approximate compliance" does not suffice;
rather, there must be actual compliance with Section 21 of Republic Act No.
9165.[85] Not doing so is tantamount to a failure to establish the corpus delicti, a crucial
element of the crime charged.[86]
This case arose from a buy-bust operation. While a buy-bust operation can indeed
enable authorities to uncover illicit transactions otherwise kept under wraps, this Court
has recognized that such an operation poses a significant drawback—that is, "[i]t is
susceptible to police abuse, the most notorious of which is its use as a tool for
extortion."[87]
To avert such possibility, the prosecution must establish beyond reasonable doubt that
the dangerous drug offered during trial was the same that was bought during the buy-
bust operation.[88] The chain of custody rule under Republic Act No. 9165 fulfills this
rigorous requirement.[89]
Section 1(b) of the Dangerous Drugs Board Regulation No. 01-02, which implements
Republic Act No. 9165, explains chain of custody rule as follows:
"Chain of Custody" means the duly recorded authorized movements and custody of
seized drugs or controlled chemicals or plant sources of dangerous drugs or laboratory
equipment of each stage, from the time of seizure/confiscation to receipt in the forensic
laboratory to safekeeping to presentation in court for destruction. Such record of
movements and custody of seized item shall include the identity and signature of the
person who held temporary custody of the seized item, the date and time when such
transfer of custody were made in the course of safekeeping and use in court as
evidence, and the final disposition.
This Court agrees with the Court of Appeals that the prosecution failed to follow the
chain of custody rule under Section 21 of Republic Act No. 9165.
Paragraph 1 of Section 21 of the original Republic Act No. 9165 (2002) provides the
requirements for ensuring the integrity and evidentiary value of the seized item:
same in the presence of [a] the accused or the person/s from whom such items
were confiscated and/or seized, or his/her representative or counsel, [b] a
representative from the media and the Department of Justice (DOJ), and [c] any
elected public official who shall be required to sign the copies of the inventory and
be given a copy thereof[.] (Emphasis supplied)
This is reiterated in paragraph 1 of Section 21 of the amended[90] Republic Act No. 9165
(2013):
(1) The apprehending team having initial custody and control of the dangerous drugs,
controlled precursors and essential chemicals, instruments/paraphernalia and/or
laboratory equipment shall, immediately after seizure and confiscation, conduct a
physical inventory of the seized items and photograph the same in the presence of [a]
the accused or the persons from whom such items were confiscated and/or seized, or
his/her representative or counsel, [b] with an elected public official and [c] a
representative of the National Prosecution Service or the media[,] who shall be required
to sign the copies of the inventory and be given a copy thereof: Provided, That the
physical inventory and photograph shall be conducted at the place where the search
warrant is served; or at the nearest police station or at the nearest office of the
apprehending officer/team, whichever is practicable, in case of warrantless
seizures: Provided, finally, That noncompliance of these requirements under justifiable
grounds, as long as the integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not render void and invalid
such seizures and custody over said items. (Emphasis supplied)
The chain of custody rule is further clarified by Section 1(A) of the Guidelines on the
Implementing Rules and Regulations of Section 21 of Republic Act No. 9165, as
amended (Chain of Custody Implementing Rules and Regulations).[91]
The Chain of Custody Implementing Rules and Regulations require the apprehending
team to mark, inventory, and photograph the evidence in the following manner:
First, the apprehending officer or the poseur-buyer must place his or her initials and
signature on the seized item.[92]Here, PO1 Misa did not place his initials "RM" on the
confiscated pack; rather, it was SPO3 Magdadaro who wrote "AS" on it,[93] presumably
standing for accused-appellant's initials for Abundio Saragena, instead of the police
officer's initials. It was also not shown whether PO1 Misa or SPO3 Magdadaro signed
the plastic pack.
Second, in a warrantless search as in this case, the marking of the drug must be done
in the presence of the accused-appellant[94] and at the earliest possible
opportunity.[95] The earliest possible opportunity to mark the evidence is immediately at
the place where it was seized, if practicable,[96] to avoid the risk that the seized item
might be altered while in transit.[97] In People v. Sabdula:[98]
[C]rucial in proving chain of custody is the marking of the seized drugs or other related
items immediately after they are seized from the accused. "Marking" means the placing
by the apprehending officer or the poseur-buyer of his/her initials and signature on the
items seized. Long before Congress passed R.A. No. 9165, this Court has consistently
held that failure of the authorities to immediately mark the seized drugs casts
reasonable doubt on the authenticity of the corpus delicti.
Marking after seizure is the starting point in the custodial link; hence, it is vital that the
seized contraband be immediately marked because succeeding handlers of the
specimens will use the markings as reference. The marking of the evidence serves to
separate the marked evidence from the corpus of all other similar or related evidence
from the time they are seized from the accused until they are disposed of at the end of
the criminal proceedings, thus preventing switching, "planting," or contamination of
evidence.[99] (Emphasis supplied, citation omitted)
Here, the records do not show why the officers had to wait to arrive at the police
station[100] before marking the seized plastic pack. The earliest available opportunity to
mark it was in accused-appellant's house. Likewise, there is no showing that the seized
item was marked in the presence of accused-appellant. All that the prosecution
established was that, while at the police station, PO1 Misa turned over the plastic pack
to SPO3 Magdadaro, who marked it with the letters "AS."[101] Other details are left out
for this Court to guess.
As in People v. Dahil,[102] this Court cannot determine "how the unmarked drugs were
handled," making it possible for the seized item to have been altered, thus:
The Court must conduct guesswork on how the seized drugs were transported and who
took custody of them while in transit. Evidently, the alteration of the seized items was a
possibility absent their immediate marking thereof.[103](Emphasis supplied)
Third, the physical inventory and photograph of the seized item must be done in the
presence of (a) the accused, the accused's representative, or the accused's counsel; (b)
any elected public official; and (c) a representative of the Department of Justice's
National Prosecution Service or a media practitioner. These three (3) persons required
by law should sign the copies of the inventory of the seized item and be given a copy of
the certificate of inventory.[104]This insulates the buy-bust operation "from any taint of
illegitimacy or irregularity."[105]
Here, it was not shown that the buy-bust team conducted a physical inventory or took
photographs of the contraband after its confiscation. Moreover, none of the witnesses
testified that (a) accused-appellant, his representative or counsel, (b) any elected
official, and (c) a representative from the media or from the National Prosecution
Service signed a confiscation receipt.
Section 1(A.1.6) of the Chain of Custody Implementing Rules and Regulations states
that "[a] representative of the Nfational] Pjrosecution] S[ervice] is anyone from its
employees, while the media representative is any media practitioner. The elected public
official is any incumbent public official regardless of the place where he/she is elected."
The presence of these three (3) persons required by law can be ensured in a planned
operation such as a buy-bust operation. Here, the buy-bust operation was arranged and
scheduled in advance: the police officers formed an apprehending, team, coordinated
with the Philippine Drug Enforcement Agency,[106] prepared the buy-bust money, and
held a briefing,[107] Yet, they failed to ensure that a National Prosecution Office
representative, or if unavailable, any media practitioner, would be present during the
seizure of shabu. They also failed to ensure that any incumbent public official such as a
barangay captain or kagawad would be there at the same time.
Securing the presence of these persons is not impossible. Lescano v.

People[108] affirmed that it is not enough for the apprehending officers to merely mark
the seized pack of shabu; the buy-bust team must also conduct a physical inventory and
take photographs of the confiscated item in the presence of these persons required by
law.[109]
Finally, the apprehending team shall "document the chain of custody each time a
specimen is handled, transferred or presented in court until its disposal, and every
individual in the chain of custody shall be identified following the laboratory control and
chain of custody form."[110]
People v. Kamad[111] stated that the prosecution must prove four (4) links in the chain of
custody of evidence. Read with the Chain of Custody Implementing Rules and
Regulations, Kamad provided for the following steps to establish the links necessary for
a chain of custody of the specimen seized from the accused:
First, the apprehending officer seizes and then marks the dangerous drug taken from
the accused.[112] The chain of custody of evidence must show the time and place that
the seized item is marked and the names of the officers who marked it.[113]
Second, the apprehending officer turns over the seized dangerous drug to the
investigating officer.[114] The chain of custody of evidence must establish the names of
officers who inventoried, photographed, and/or sealed the seized item.[115]
Third, the investigating officer turns over the seized dangerous drug to the forensic
chemist for laboratory examination.[116] The chain of custody of evidence must show the
names of officers who had custody and received the evidence from one officer to
another within the chain.[117]
Fourth, the forensic chemist turns over and submits the marked confiscated dangerous
drug to the court.[118]Similarly, the chain of custody of evidence must show the names of
officers who had custody and received the evidence from one officer to another within
the chain.[119]
"[E]ach and every link in the custody must be accounted for" until the seized item is
presented before the court.[120]In this case, there are gaps in the linkages in the chain of
custody. Some key witnesses were absent during trial.
PO1 Misa, the poseur-buyer, was not presented in court.[121] As a result, prosecution
has not established how the purported transaction with accused-appellant occurred.
PO1 Misa also delivered the drug specimen to the Philippine National Police Crime
Laboratory for examination.[122]During the post-seizure custody and handling of the
dangerous drug, a certain PO2 Roma received the specimen from PO1 Misa before
delivering it to P/S Insp. Acog.[123] However, the prosecution failed to present the
testimony of P02 Roma, who was also part of the chain of custody. In People v.
Salcena:[124]
[A]n unbroken chain becomes indispensable and essential in the prosecution of drug
cases owing to its susceptibility to alteration, tampering, contamination and even
substitution and exchange. Accordingly, each and every link in the custody must be
accounted for, from the time the shabu was retrieved from [accused-appellant] during
the buy-bust operation to its submission to the forensic chemist until its presentation
before the R[egional] T[rial] C[ourt]. In the case at bench, the prosecution failed to do
so.[125] (Emphasis supplied, citation omitted)
III
The chain of custody rule must be strictly complied with. Mallillin v. People[126] explained
that strict compliance goes into the nature of the dangerous drug itself, this being the
subject of prosecution under Republic Act No. 9165. Thus:
A unique characteristic of narcotic substances is that they are not readily identifiable as
in fact they are subject to scientific analysis to determine their composition and nature.
The Court cannot reluctantly close its eyes to the likelihood, or at least the possibility,
that[,] at any of the links in the chain of custody over the [narcotic substances,] there
could have been tampering, alteration, or substitution of substances from other cases —
by accident or otherwise — in which similar evidence was seized or in which similar
evidence was submitted for laboratory testing. Hence, in authenticating the same,
a standard more stringent than that applied to cases involving objects which are readily
identifiable must be applied, a more exacting standard that entails a chain of custody of
the item with sufficient completeness if only to render it improbable that the original item
has either been exchanged with another or been contaminated or tampered
with.[127] (Emphasis supplied)
People v. Casacop[128] held that the buy-bust team "should have been more meticulous
in complying with Section 21 of Republic Act No. 9165 to preserve the integrity of the
seized shabu."[129] This is especially true where the weight of the seized item is a
miniscule amount that can be easily planted and tampered with.[130]
The Court of Appeals correctly found that the police officers failed to comply with the
chain of custody rule under Section 21 of Republic Act No. 9165.[131] However, this
Court reverses the Court of Appeals judgment for erroneously applying the exception
here.[132]
A proviso in the old Section 21 (a) of Republic Act No. 9165 Implementing Rules and
Regulations states that the failure to comply with the chain of custody rule may be
excused in exceptional circumstances, provided that (a) there are justifiable grounds for
it, and (b) the integrity and evidentiary value of the seized items were properly
preserved:
[N]on-compliance with these requirements [a] under justifiable grounds, [b] as long as
the integrity and the evidentiary value of the seized items are properly preserved by the
apprehending officer/team, shall not render void and invalid such seizures of and
custody over said items.[133]
The Court of Appeals disregarded the operative phrase—that the prosecution must
provide "justifiable grounds" for noncompliance, in addition to showing that the
prosecution maintained the integrity of the seized item.
In People v. Jafaar,[134] this Court held that the exception under then Section 21 (a) of
Republic Act No. 9165 Implementing Rules and Regulations "will only be triggered by
the existence of a ground that justifies departure from the general rule."[135]
The Court of Appeals' ruling falls further in the face of Sections 1(A.1.9) and 1 (A.1.10)
of the Chain of Custody Implementing Rules and Regulations, which provide:
A.1.9. Noncompliance, [a] under justifiable grounds, with the requirements of Section
21 (1) of RA No. 9165, as amended, shall not render void and invalid such
seizures and custody over the items [b] provided the integrity and the evidentiary
value of the seized items are properly preserved by the apprehending
officer/team.
A.1.10.Any justification or explanation in cases of noncompliance with the requirements

of Section 21 (1) of RA No. 9165, as amended, shall be clearly stated in the
sworn statements/affidavits of the apprehending/seizing officers, as well as the
steps taken to preserve the integrity and evidentiary value of the
seized'confiscated items. Certification or record of coordination for operating
units other than the PDEA pursuant to Section 86 (a) and (b), Article IX of the
IRR of RA No. 9165 shall be presented. (Emphasis supplied)
The Chain of Custody Implementing Rules and Regulations require that the
apprehending officers do not simply mention a justifiable ground, but also clearly state
this ground in their sworn affidavit, coupled with a statement on the steps they took to
preserve the integrity of the seized item.[136]
Here, the prosecution has not given a justifiable ground for applying the exception. All it
has done is to assert a self-serving claim that the integrity of the seized pack has been
preserved[137] despite the numerous procedural lapses it has committed. The fatal errors
of the apprehending team can only lead this Court to seriously doubt the integrity of
the corpus delicti.
Law enforcers "cannot feign ignorance of the exacting standards under Section 21 of
Republic Act No. 9165. [They] are presumed and are required to know the laws they are
charged with executing."[138]
The prosecution's procedural shoxtcut finds no basis in fact or law. Its failure to comply
with the chain of custody rule is equivalent to its failure to establish the corpus delicti,
and therefore, its failure to prove that the crime was indeed committed. [139] In People v.
Dela Cruz:[140]
Non-compliance [with the chain of custody rule] is tantamount to failure in establishing
identity of corpus delicti, an essential element of the offenses of illegal sale and illegal
possession of dangerous drugs. By failing to establish an element of these offenses,
non-compliance will, thus, engender the acquittal of an accused.[141]
Accused-appellant is presumed innocent until the contrary is proved beyond reasonable
doubt. The prosecution had the burden of overcoming such presumption, which it
miserably failed to do so.
In closing, this Court reiterates its ruling in People v. Holgado:[142]

It is lamentable that while our dockets are clogged with prosecutions under Republic Act
No. 9165 involving small-time drug users and retailers, we are seriously short of
prosecutions involving the proverbial "big fish." We are swamped with cases involving
small fry who have been arrested for miniscule amounts. While they are certainly a
bane to our society, small retailers are but low-lying fruits in an exceedingly vast
network of drug cartels. Both law enforcers and prosecutors should realize that the
more effective and efficient strategy is to focus resources more' on the source and true
leadership of these nefarious organizations. Otherwise, all these executive and judicial
resources expended to attempt to convict an accused for 0.05 gram of shabu under
doubtful custodial arrangements will hardly make a dent in the overall picture. It might in
fact be distracting our law enforcers from their more challenging task: to uproot the
causes of this drug menace. We stand ready to assess cases involving greater amounts
of drugs and the leadership of these cartels.[143]
WHEREFORE, premises considered, the Court of Appeals April 2, 2013 Decision in
CA-G.R. CEB-CR-HC No. 00939 is REVERSED and SET ASIDE. Accused-appellant
Abundio Mamolo Saragena 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.
Muntinlupa City, 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
decision the action he has taken. Copies shall also be furnished the Director General of
the Philippine National Police and the Director General of the Philippine Drugs
Enforcement Agency for their information.
The Regional Trial Court is directed to turn over the seized sachet of shabu to the
Dangerous Drugs Board for destruction in accordance with law.
SO ORDERED.
November 27, 2017
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on August 23, 2017 a Decision, copy attached hereto, was
received by this Office on November 2017 at 1:30 p.m.
Very truly yours,
(SGD)
WILFREDO V.
LAPITAN
Division Clerk of
Court
ORDER OF RELEASE
TO: The Director

Bureau of Corrections
1770 Muntinlupa City
GREETINGS:
WHEREAS, the Supreme Court on August 23, 2017 promulgated a Decision in the
above-entitled case, the dispositive portion of which reads:
"WHEREFORE, premises considered, the Court of Appeals April 2, 2013 Decision in
CA-G.R. CEB-CR-HC No. 00939 is REVERSED and SET ASIDE. Accused-appellant
Abundio Mamolo Saragena 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.
Muntinlupa City, 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
decision the action he has taken. Copies shall also be furnished the Director General of
the Philippine National Police and the Director General of the Philippine Drugs
Enforcement Agency for their information.
The Regional Trial Court is directed to turn over the seized sachet of shabu to the
Dangerous Drugs Board for destruction in accordance with law.
SO ORDERED."
NOW, THEREFORE, You are hereby ordered to immediately release ABUNDIO M.
SARAGENA unless there are other lawful causes for which he should be further
detained, and to return this Order with the certificate of your proceedings within five (5)
days from notice hereof.
GIVEN by the Honorable PRESBITERO J. VELASCO, JR., Chairperson of the Third

Division of the Supreme Court of the Philippines, this 23rd day of August 2017.
Very truly yours,
(SGD)
WILFREDO V.
LAPITAN
Division Clerk of
Court
[1] People v. Holgado, 741 Phil. 78, 81 (2014) [Per J. Leonen, Third Division].
[2]
Rollo, pp. 3-11. The Decision, docketed as CA-G.R. CEB-CR-HC No. 00939, was
penned by-Associate Justice Maria Elisa Sempio Diy and concurred in by Associate
Justices Edgardo L. Delos Santos and Pamela Ann Abelia Maxino of the Nineteenth
Division, Court of Appeals, Cebu City.
[3] Id. at 20.
[4]
CA rollo, pp. 40-43. The Judgment, docketed as Crim. Case No. CBU-73766, was
penned by Presiding Judge Enriqueta Loquillano-Belarmino of Branch 57, Regional
Trial Court, Cebu City.
[5]The records state that it was only on September 23, 2005 when SPO1 Paller received
a tip about "Tatay's" alleged sale of dangerous drugs (Rollo, p. 4), Curiously, the buy-
bust operation that supposedly resulted from this tip happened three months earlier, on
June 23, 2005 (CA rollo, p. 40).
[6] CA rollo, pp. 29-30.
[7] Rollo,p. 4,
[8] CA rollo, p. 30.
[9]
The Regional Trial Court spells his first name as "Roy" (CA rollo, p. 40), while the
Court of Appeals spells it as "Rey." (rollo, p. 4).
[10] Rollo, pp. 4-5.
[11] Id. at 5.
[12] CA rollo, p. 40.
[13] Id.
[14] Id. at 5.
[15] Id. at 40.
[16] Id. at 40-41.
[17] Id. at 41.
[18] Id.
[19] Id.
[20] Rollo, p. 5.
[21] CA rollo, p. 30.
[22] Id.
[23] Id. at 61.
[24] Id. at 41.
[25] Id. at 61.
[26] Id. at 41.
[27] Rollo, p. 5.
[28] Id.
[29] CA rollo, p. 41.
[30] Id. at 67.
[31] Rollo, p. 5.
[32] CA rollo, p. 41.
[33] Id.
[34] Rollo, p. 5.
[35] CA rollo, pp. 68-69.
[36] Rollo, p. 5.
[37] CA rollo, p. 41.
[38] Rollo, p. 5.
[39] CA rollo, p. 69.
[40]
Rollo, pp. 5-6. The CA Decision referred to the substance as "methylamphetamine
hydrochloride."
[41] CA rollo, p. 41.
[42] Id. at 70.
[43] Id. at 41.
[44] Rollo, p. 6.
[45] CA rollo, p. 28.
[46] Id. at 41.
[47] Id.
[48] Id.
[49] Id. at 42.
[50] Id. at 40.
[51]
Id. at 40-43. The Decision was penned by Presiding Judge Enriqueta Loquillano-
Belarmino of Branch 57 of the Regional Trial Court of Cebu City.
[52] Id. at 43.
[53] Id. at 24-39.
[54] Rollo, p. 8.
[55] Id. at 3-11.
[56] Id. at 10-11.
[57] People v. Santos Jr., 562 Phil. 45S, 467 (2007) [Per J. Tinga, Second Division].
[58] People v. Berroya, 347 Phil 410, 423 (1997) [Per J. Romero, Third Division].
[59] People v. Santos, Jr., 562 Phil, 458, 467 (2007) [Per J. Tinga, Second Division].
[60] 562 Phil. 458 (2007) [Per J. Tinga, Second Division].
[61] Id. at 467-468.
[62] People v. Berroya, 347 Phil. 410, 423 (1997) [Per J. Romero, Third Division].
[63] Id.
[64] 347 Phil. 410 (1997) [Per J. Romero, Third Division].
[65] Id. at 423.
[66] People v. Tan, 401 Phil. 259,273 (2000) [Per J. Melo, Third Division].
[67] People v. Santos, Jr., 562 Phil. 458, 472 (2007) [Per J, Tinga, Second Division].
[68] People v. Tan, 401 Phil. 259,273 [Per J. Melo, Third Division].
[69] Id.
[70] People v. Pagaduan, 641 Phil. 432, 448 (2010) [Per J. Brion, Third Division].
[71] Id. at 40.
[72]A grain of rice has a mass of roughly 0.2 to 0.3 grams. See Tho Lai Hoong, Tho Mun
Yi, and Josephine Fong, Interactive Science for Inquiring Minds, Vol. A (2009), at 36. A
weight of 0.03 grams is equivalent to 0.003058219 ounces. 0.001058219 ounces is
"about as heavy as a [g]rain of [r]ice." See The Measure of Things, available
at http://www.bluebulbprojects.com/MeasureOfThings/results.php?comp=weight&unit=o
z&amt=0.001058219.
[73]
Vosniadou, Stella, ed., International Handbook of Research on Conceptual Change,
2nd edition (2013), at 160.
[74] CA rollo, p. 30.
[75] CA rollo, p. 41.
[76] Rollo, p. 4.
[77] People v. Casacop, 755 Phil. 265, 274 (2015) [Per J. Leonen, Second Division].
[78] Id.
[79] People v. Pagaduan, 641 Phil. 432, 447 (2010) [Per J. Brion, Third Division].
[80] Id.
[81] People v. Caiz, G.R. No. 215340, July 13, 2016 1 [Per J. Leonen, Second Division].
[82] Rollo, p. 7.
[83] Id. at 9-10.
[84] CA rollo, pp. 31-32.
[86]
Lescano v. People, G.R. No. 214490, January 13,
2016 <http://scjudiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2016/january20
16/214490.pdf> 7 [Per J. Leonen, Second Division].
[87] People v. Dahil, 750 Phil. 212, 226 (2015) [Per J. Mendoza, Second Division].
[88] People v. De Leon, 624 Phil. 786. 800 (2010) [Per J. Velasco Jr., Third Division].
[89] Id.
[90] Amended by Rep. Act No. 10640.
[91]
Guidelines on the Implementing Rules and Regulations (IRR) of Section 21 of
Republic Act No. 9165 as Amended by Republic Act No. 10640, sec. 1 provides:
Section 1. Implementing Guidelines. — The PDEA shall take charge and have custody
of all dangerous drugs, plant sources of dangerous drugs, controlled precursors and
essential chemicals, as well as instruments/paraphernalia and/or laboratory equipment
so confiscated, seized and/or surrendered, for proper disposition in the following
manner:
A. Marking, Inventory and Photograph; Chain of Custody implementing Paragraph "a "
of the IRR
A.1. The apprehending or seizing officer having initial custody and control of the seized
or confiscated dangerous drugs, plant sources of dangerous drugs, controlled
precursors and essential chemicals, instruments/paraphernaiia and/or laboratory
equipment shall, immediately after seizure and confiscation, mark, inventory and
photograph the same in the following manner:
A.1.1. The marking, physical inventory and photograph of the seized/confiscated items
shall be conducted where the search warrant is served.
A.1.2, The marking is the placing by the apprehending officer or the poseur-buyer of
his/her initial and signature on the item/s seized.
A.1.3. In warrantless seizures, the marking of the seized items in the presence of the
violator shall be done immediately at the place where the drugs were seized or at the
nearest police station or nearest office of the apprehending officer/team, whichever is
practicable. The physical inventory and photograph shall be conducted in the same
nearest police station or nearest office of the apprehending officer/team, whichever is
practicable.
A.1.4. In cases when the execution of search warrant is preceded by warrantless

seizures, the marking, inventory and photograph of the items recovered from the search
warrant shall be performed separately from the marking, inventory and photograph of
the items seized from warrantless seizures.
A.1.5. The physical inventory and photograph of the seized/confiscated items shall be
done in the presence of the suspect or his representative or counsel, with elected public
official and a representative of the National Prosecution Service (NPS) or the media,
who shall be required to sign the copies of the inventory of the seized or confiscated
items and be given copy thereof. In case of their refusal to sign, it shall be stated
"refused to sign" above their names in the certificate of inventory of the apprehending or
seizing officer.
A.1.6. A representative of the NPS is anyone from its employees, while the media
representative is any media practitioner. The elected public official is any incumbent
public official regardless of the place where he/she is elected.
A.1.7. To prevent switching or contamination, the seized items, which are fungible and
indistinct in character, and which have been marked after the seizure, shall be sealed in
a container or evidence bag and signed by the apprehending/seizing officer for
submission to the forensic laboratory for examination.
A.1.8. In case of seizure of plant sources at the plantation site, where it is not physically
possible to count or weigh the seizure as a complete entity, the seizing officer shall
estimate its count or gross weight or net weight, as the case may be. If it is safe and
practicable, marking, inventory and photograph of the seized plant sources may be
performed at the plantation site. Representative samples of prescribed quantity
pursuant to Board Regulation No. 1, Series of 2002, as amended, and/or Board
Regulation No. 1, Series of 2007, as amended, shall be taken from the site after the
seizure for laboratory examination, and retained for presentation as the corpus delicti of
the seized/confiscated plant sources fallowing the chain of custody of evidence.
[92]
See Guidelines on the Implementing Rules and Regulations (IRR) of Section 21 of
Republic Act No. 9165 as Amended by Republic Act No. 10640, sec. 1.A.1.2.
[93] CA rollo, p.41.
[94]
[95] People v. Dahil, 750 Phil. 212, 233-234 (2015) [Per J. Mendoza, Second Division].
[96]
[97] People v. Dahil, 750 Phil. 212, 233 (2015) [Per J. Mendoza, Second Division].
[98] 733 Phil. 85 (2014) [Per J. Brion, First Division].
[99] Id. at 95.
[100] Rollo,p.5.
[101] Id.
[102] 750 Phil. 212 (2015) [Per J. Mendoza, Second Division].
[103] Id. at 233.
[104]
[105] People v. Mendoza, 736 Phil, 749, 762 (2014) [Per J. Bersamin, First Division].
[106] Rollo, pp. 4-5.
[107] CA rollo, p. 40.
[108]
Lescano v. People, G.R. No, 214490, January 13, 2016,
[109] Id. at 11.
[110]
Republic Act No. 9165 as Amended by Republic Act No. 10640, sec. 1.B.5.
[111] People v. Kamad, 624 Phil. 289 (2010) [Per J. Brion, Second Division].
[112] People v. Kamad, 624 Phil. 289, 304 (2010) [Per J. Brion, Second Division].
[113]
Republic Act No. 9165 as Amended by Republic Act No. 10640, sec. 1.A.1.11 provides:
A.1.11. The chain of custody of evidence shall indicate the time and place of marking,
the names of officers who marked, inventoried, photographed and sealed the seized
items, who took custody and received the evidence from one officer to another within
the chain, and further indicating the time and date every time the transfer of custody of
the same evidence were made in the course of safekeeping until submitted to laboratory
personnel for forensic laboratory examination. The latter shall continue the chain as
required in paragraph B.5 below.
[115]
[117]
[119]
[120] People v. Salcena, 676 Phil. 357, 381 (2011) [Per J. Mendoza, Third Division].
[121]
PO1 Misa allegedly "died months after the incident," but no proof of his death is
attached to the petition. Prosecution also did not the mention the date of his alleged
death. See CA rollo, p. 41.
[122] Rollo, p. 5.
[123] Id.
[124] People v. Salcena, 676 Phil. 357 (2011) [Per J. Mendoza, Third Division].
[125] Id. at 381.
[126] Mallillin v. People, 576 Phil. 576 (2008) [Per J. Tinga, Second Division].
[127] Id. at 588-589.
[128] People v. Casacop, 755 Phil. 265 (2015) [Per J. Leonen, Second Division].
[129] Id. at 283.
[131] Rollo, p. 7.
[132] Id. at 8.
[133] Then Implementing Rules and Regulations of R.A. No. 9165, art. II, sec. 21 (a).
[134]
People v. Jaafar, G,R. No. 219829, January 18, 2017
<http://scjudiciary,gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/january2017/21
[135] Id. at 8.
[136]
[137] CA rollo, pp. 64-71.
[138]
People v. Jaafar, G.R. No. 219829, January 18, 2017
9829.pdf> 10 [Per J. Leonen, Second Division].
[139] People v. Pagaduan, 641 Phil. 432, 449-450 (2010) [Per J. Brion, Third Division].
[140] 744 Phil. 816 (2014) [Per J. Leonen, Second Division].
[141] Id. at 827.
[142] 741 Phil. 78 (2014) [Per J. Leonen, Third Division].
[143] Id. at 100.
SECOND DIVISION
July 26, 2017
G.R. No. 207765

vs.
JULITO DIVINAGRACIA, SR., Accused-Appellant
DECISION
LEONEN, J.:
"Pa, don't do that[,] Pa."1
Child victims of rape by their very own fathers usually continue to live in an environment
where the perpetrators consistently underscore the weakness and worthlessness of
their victims. In addition to the continued economic dependence of the child victims, this
ensures enormous difficulty to find a safe space for them to reveal their ordeal and
ensure protection. The animosity and intolerable indignity that child victims experience
often lead them to find the courage to seek succor from someone who appears to have
moral ascendancy over their perpetrator. This is often their mother, although at times, it
may also be a relative.
This case is the story of the courage of AAA and BBB, sisters who were sexually
molested by their father.
This resolves the appeal, through Rule 124, Section 13, paragraph (c)2 of the Rules of
Court, as amended by Administrative Matter No. 00-5-03-SC dated September 28,
2004, of the October 7, 2009 Joint Judgment3 of Branch 28, Regional Trial Court,
Mandaue City in Criminal Case Nos. DU-8072 and DU-8074. The trial court found
accused Julito Divinagracia, Sr. (Divinagracia) guilty beyond reasonable doubt of one
(1) count of rape in relation to Republic Act No. 7 610 and one (1) count of acts of
lasciviousness in relation to Republic Act No. 7610. The Court of Appeals, 4 upon
intermediate review, affirmed the trial court's Decision.
This Court restates the facts as found by the lower courts.
Divinagracia and CCC were husband and wife with seven (7) children.5 The family lived
in a one (1)-room house at Jagobiao, Mandaue City near the boundary of Riverside,
Consolacion.6
Sometime in November 1996,7 Divinagracia and CCC quarrelled, prompting CCC to

leave and spend the night at her sibling's house. Their daughters AAA and BBB were
then left by themselves8 since their other siblings were either at their grandmother's
house or with their friends.9
Later that evening, while AAA and BBB were sleeping side by side inside their house,
BBB suddenly woke up to her father's tight embrace from behind and felt him roughly
running his hand over her leg and breasts. BBB then felt her father poking his hard
penis against her buttocks. BBB begged her father to stop, saying that she still had to
go to school the following day. Divinagracia moved away from BBB and went out of the
house.10
BBB was nine (9) years old at that time.11
A few minutes later, Divinagracia went back inside the house and lay down beside
AAA.12 AAA woke up and asked her father where her mother was. Divinagracia pinched
her ear and ordered her to keep quiet.13
AAA noticed that BBB, who was then lying beside her, slowly moved away. AAA tried to
follow BBB, but Divinagracia pulled AAA towards him and made her face him.
Divinagracia pulled down AAA's shorts and put his finger inside her vagina. Afterwards,
Divinagracia got on top of AAA and inserted his penis inside her vagina. AA.A:s father
then continued to molest her.14
AAA cried to her sister for help but BBB could do nothing but weep and cover her
ears.15 AAA was eight (8) years old at that time.16
The following day, AAA was shocked and scared to find blood stains on her shorts.
Divinagracia merely laughed when he saw AAA's distress.17
When CCC arrived later that day, AAA told her that she was molested by Divinagracia.
AAA did not say that she was raped because she was afraid that her parents would only
quarrel again. However, CCC did not believe her daughter. AAA claimed that CCC told
Elvira Aburido (Aburido ), Divinagracia's sister, about the molestation.18
On January 19, 1999, or a little over two (2) years after the incident, Sister Mary Ann
Abuna (Sister Mary Ann), CCC's sister and a nun,19 visited her family in Cebu.20
That same day, AAA told Sister Mary Ann that she wanted to stop her schooling and
begged to go with her back to Manila because she did not want to see her father
anymore. Sister Mary Ann asked AAA's sisters if their father had changed his ways.
BBB and their other sister responded that he had not reformed and even almost raped
them.21
Sister Mary Ann asked the sisters to leave Cebu and go back with her to Manila to
prevent their father from further molesting them. She brought AAA, BBB, their other
sister, and CCC back with her to Manila. A few days later they all went to Pampanga
where Sister Mary Ann was a missionary.22
While in Pampanga, AAA saw CCC crying because she wanted to go back to Cebu.
AAA then went to Sister Mary Ann and declared that if CCC would return to Cebu, she
would not go back with her. It was at this point that AAA opened up to Sister Mary Ann
about the sexual abuse she suffered from her father.23
Sister Mary Ann brought AAA to the Hospital Ning in Angeles City to be examined by a
doctor.24 After examining AAA, Dr. Lauro C. Biag (Dr. Biag) issued a medical
certificate,25 a portion of which read:
Genitalia: labia majora/minora - well coaptated.
Hymen: orifice 0. 7 cm old healed complete laceration on
11, 8, 2 o'clock.
old healed incomplete laceration 5 & 10 o'clock.
(-) abrasion, (-) hematoma, (-) discharge26
Sister Mary Ann helped the girls file their respective complaints27 against their father. At
first, BBB was hesitant to file a complaint but she finally agreed because AAA would not
stop crying and was always afraid.28
On November 13, 2000, Divinagracia was charged with rape and acts of lasciviousness
in relation to Republic Act No. 7610.29 Pertinent portions of the Information for rape
read:
That on or about the month of November 1996 in the Municipality of Consolacion,

Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused with deliberate intent, by means of force and intimidation, did
then and there wilfully, unlawfully and feloniously have carnal knowledge with [AAA], his
own daughter an [8-year-old] girl at that time, against her will and consent.
CONTRARY TO LAW.30
The Information for acts of lasciviousness read:
That on or about the month of November 1996 in the Municipality of Consolacion,

Province of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused with force and intimidation and with lewd designs, did then and
there wilfully, unlawfully and feloniously commit an act of lasciviousness against [BBB],
his own daughter, a [12-year-old] girl by embracing her, pressing his penis against her
buttocks and touching her breasts, against her will and consent.
CONTRARY TO LAW.31
Divinagracia, assisted by counsel, pleaded not guilty to the charge of rape against
him.32 During pre-trial, defense admitted the following facts and stipulations:
1. The existence of a birth certificate of the private offended party. Her birth certificate
shows that she was born in Consolacion, Cebu on October 29, 1988;
2. The accused is the father of the private offended party;
3. On November 1996 and prior thereto, the accused had been living together with his
wife and children at Riverside, Consolacion, Cebu;
4. The existence of a medical certificate of the private offended party signed by a certain
Dr. Lauro Biag, Medical Officer III of Hospital Ning Angeles City[.]33
The prosecution, in turn, admitted the following facts and stipulations:
1. The house where the family of the accused stays at Riverside, Consolacion, Cebu is
a one room affair, is about 6 x 8 meters which is more or less half of the area of this
courtroom;
2. The whole family which includes seven (7) children, the accused and his wife slept in
the same house;
3. The next door neighbor is about four (4) feet away from the house of the accused;
4. Elvira Divinagracia Aburido, sister of the accused, also lives at Riverside,

Consolacion, Cebu;
5. The complaint against the accused was filed at the Provincial Prosecutor's Office on
July 31, 2000.34
The complaints for rape and acts of lasciviousness against Divinagracia were eventually
consolidated for trial.35
Divinagracia, assisted by counsel, also pleaded not guilty to the charge of acts of
lasciviousness against him.36Defense then admitted the following facts and stipulations
during pre-trial:
1. The accused is the father of the complaining witness;
2. The accused and the private complainant (his daughter) were residing at Riverside,
Consolacion, Cebu at the time this incident occurred in November 1996 and prior
thereto. As a matter of fact, according to Atty. Rodriguez, all the members of the family
of the accused lived together at this place at this given time;
3. The existence of a Certificate of Live Birth and Baptismal Certificate of the

complaining witness.37
On the other hand, the prosecution admitted the following stipulations:
1. All the seven (7) children including the father and the mother lived together in a one-
room house at Riverside, Consolacion, Cebu;
2. The mother of the complaining witness is a housewife;
3. The uncles and aunties of the complaining witness also live in Consolacion, Cebu;
4. The next door neighbor of the family of the complaining witness at Riverside,
Consolacion, Cebu is about 4 feet away from their house;
5. The records show a [Si]numpaang Salaysay executed by the complaining witness

and subscribed before the City Prosecutor of Angeles City on November 1999. 38
The prosecution presented the following as witnesses: AAA, BBB,Sister Mary Ann, and
Dr. Naomi Poca (Dr. Poca).
Dr. Poca, a pediatrician who was also a child protection specialist,39 interpreted the
medical findings of Dr. Biag, who failed to attend the hearings due to the distance of
Angeles City, Pampanga from Mandaue City, Cebu.40
Dr. Poca testified that the healed lacerations at 11 :00, 2:00, and 10:00 positions are
"more likely congenital rather than acquired".41 However, the lacerations at 8:00 and
5:00 positions could have only been caused by penetration into the vagina. 42 Moreover,
given AAA' s disclosure, Dr. Poca opined that the healed laceration at 8 :00 position
suggested sexual abuse.43
The defense presented the following as its witnesses: Divinagracia, his neighbors
Pamela Sison (Sison), Alvin Ho (Ho), Darwin Isok (Isok), and his sister Aburido.
Divinagracia denied abusing his daughters44 and claimed that they had a happy45 family
life. He further claimed that he only found out about the complaints for molestation
against him when he was arrested in 2001.46 Divinagracia then accused his wife's family
of plotting against him.47
Sison testified that Divinagracia and his family had been her neighbors as far back as
the 1980s. Sison claimed that CCC used to go to her house all the time to complain
about her financial problems and quarrels with Divinagracia.48Sison further averred that
despite beating his wife, Divinagracia appeared to be a loving father because he was
very affectionate and sent his children to school, even if he was financially hard-up most
of the time.49
Ho, who had been Divinagracia's neighbor since 1992, attested that Divinagracia would
often quarrel with and hit CCC.50 He claimed that it was impossible for Divinagracia to
abuse his children because they were always playful.51He added that he had never
seen the children look weak and tired or heard them complain. 52
Isok claimed that he was friends with some of Divinagracia' s children as they all lived in
the same neighborhood.53Isok testified that he was close with and fond of Divinagracia'
s family, yet he never heard of any problems between Divinagracia and his children. 54
Aburido testified to being Divinagracia's sister and aunt to AAA and BBB. 55 She claimed
that she was not close to Divinagracia and his family but that her nieces and nephews
would sometimes ask her for rice. Her brother would also go to her whenever he had
any financial problem. Aburido claimed that she first found out about her brother's
supposed abuse of AAA and BBB when he was arrested.56
In its Joint Judgment57 dated October 7, 2009, Branch 28, Regional Trial Court,
Mandaue City found Divinagracia guilty beyond reasonable doubt of the charges of rape
and acts of lasciviousness against him.
In DU-8072, the Regional Trial Court ruled that AAA's testimony was direct, candid, and
convincing, clearly proving that Divinagracia had carnal knowledge of AAA when she
was only eight (8) years old. The Regional Trial Court also held that Dr. Poca's
testimony corroborated AAA's version of the abuse she experienced.58
In DU-8074, the Regional Trial Court found BBB's testimony to be clear and convincing
on the acts of lasciviousness committed by her father. The Regional Trial Court held
that BBB was direct and remained consistent and steadfast during her testimony. 59
The Regional Trial Court further held that Sister Mary Ann's testimony corroborated both
the testimonies of AAA and BBB.60
The dispositive portion of the Regional Trial Court's Joint Judgment read:
WHEREFORE, in DU-8072, Joint Judgment is hereby rendered finding the accused

Julito Divinagracia, Sr., guilty beyond reasonable doubt of rape. The Court hereby
imposes upon him the indeterminate sentence of reclusion perpetua together with the
accessory penalties of the law.
In DU-8074, judgment is hereby rendered finding the accused Julito Divinagracia, Sr.,
guilty beyond reasonable doubt of acts of lasciviousness. The Court hereby imposes
upon him the penalty of 14 years and 4 months of reclusion temporal as the minimum
term to 1 7 years and 4 months of reclusion temporal as the maximum term together
with the accessory penalties of the law.
The accused shall be given credit of his preventive detention but he shall not be eligible
for parole.
With costs against the accused.
IT IS SO ORDERED.61
On March 8, 2010, after Divinagracia filed an appeal from the Joint Judgment, the
Regional Trial Court transmitted the records of the case to the Court of Appeals. 62
On July 30, 2012, the Court of Appeals63 denied Divinagracia's appeal.

The Court of Appeals agreed with the Regional Trial Court that AAA's testimony on her
father's rape was clear, candid, and deserving of belief. Additionally, her testimony was
corroborated by BBB.64 The dispositive portion of the Court of Appeals Decision read:
WHEREFORE, premises considered, this appeal is DENIED. The Joint Judgment dated
October 7, 2009 rendered by the Regional Trial Court (RTC), Branch 28, Mandaue City,
in Criminal Case Nos. DU-8072 and DU-8074 finding him guilty for Rape and Acts of
Lasciviousness, respectively, is hereby AFFIRMED in toto. Costs against the appellant.
SO ORDERED.65
Divinagracia filed a Notice of Appeal66 with the Court of Appeals. On August 28, 2013,
this Court noted the records forwarded by the Court of Appeals and informed the parties
that they may file their respective supplemental briefs. This Court also required the
Chief Superintendent of the New Bilibid Prison to confirm Divinagracia's confinement
therein.67
On November 12, 2013, Divinagracia manifested68 that he would be adopting in toto the
contents of his briet69 filed before the Court of Appeals.
On November 15, 2013, the Office of the Solicitor General also manifested 70 that it
would be adopting its brief71 filed before the Court of Appeals.
In his Appellant's Brief, Divinagracia points to several inconsistencies in the testimonies

of AAA and BBB that purportedly lessen their credibility as witnesses.
First, he claims that it was not clear when AAA told Sister Mary Ann about her rape.
AAA claimed that she confided to her aunt Sister Mary Ann when she visited them in
Cebu in 1996. However, Sister Mary Ann testified that AAA only told her about the rape
when they were in Pampanga in 1999.72
Second, AAA testified that she told her mother about the rape the following day after it
happened. This contradicts Sister Mary Ann's testimony that AAA's mother only learned
of the rape after AAA was physically examined in Pampanga. Furthermore, AAA said
that after she told her mother, CCC disclosed what happened to Aburido. During her
testimony, Aburido denied that she knew about the rape and claimed that she only
found out about it when her brother was arrested.73
Third, Divinagracia emphasizes that BBB never actually saw him having sexual
intercourse with AAA since BBB only testified to seeing him on top of AAA. Divinagracia
also insists that BBB's accusation of acts of lasciviousness against him was
uncorroborated, even by AAA who was in the same room when it supposedly
happened.74
Finally, Divinagracia asserts that the charges of rape and acts of lasciviousness against
him were unfounded and that his guilt was never established beyond reasonable
doubt.75
The prosecution, in turn, avers that it was able to prove Divinagracia's guilt on both
charges beyond reasonable doubt.76
The prosecution posits that the straightforward and candid testimonies of AAA and BBB,
with the medical certificate issued by Dr. Biag corroborating AAA's testimony,
sufficiently proved the elements of the charges against their father.77
The prosecution contends that the supposed inconsistencies on when AAA told Sister
Mary Ann of the abuse or when CCC and Aburido learned of the ordeal she underwent
are trivial matters, which have no bearing on the crimes committed.78
The issue for resolution before this Court is whether the prosecution proved beyond
reasonable doubt Divinagracia's guilt for the crimes of rape and acts of lasciviousness
against his minor daughters.
This Court affirms Divinagracia's conviction with some modifications.
The alleged inconsistencies in the testimonies of AAA, BBB, and Sister Mary Ann are
immaterial as these are not elements of the crime and do not detract from the credibility
of the witnesses. In fact, minor inconsistencies may even be expected from AAA and
BBB who are not accustomed to public trial and were only eight (8) and nine (9) years
old, respectively, at the time of their father's sexual abuse.79
The rule cited in People v. Pacala80that inconsistencies on minor details and collateral
matters do not affect the veracity, substance, or weight of the witness' testimony finds
application in the case at bar.81
Divinagracia insists on inconsistencies on when AAA and BBB told Sister Mary Ann
about their father's attack. AAA claims that she told her aunt sometime in
1996,82 contradicting Sister Mary Ann's testimony that AAA told her about the rape in
1999.83
The records show that AAA admitted that she could no longer recall when she told her
aunt of the rape, but AAA was consistent in her testimony that she eventually told her
aunt about the rape when they left Cebu.84 This corroborates Sister Mary Ann's
testimony that she only learned of AAA's rape in 1999, when they were no longer in
Cebu. As found by the Court of Appeals:
Stress is made that per the victim's testimony, when Sister [Mary] Ann visited their
family here in Cebu in 1996, she (AAA) did not say that she was raped but was
molested. She only divulged the real incident when they were already in Manila and
even then, her relatives required that she undergo a medical examination, which could
have been an avenue for them to verify and ascertain that what she was telling, that is,
about being raped by her father, was the truth.
Moreover, it was BBB who was adamant that they told Sister Mary Anne [sic] about the
incident in 1999 while they were already in Manila. Sister Mary Anne [sic] herself even
testified that she was told that the children were abused while still in Cebu and was told
about the rape only in Manila. She even asked her niece AAA to undergo a medical
examination in order to confirm if AAA was really raped.85(Citations omitted)
These supposed discrepancies, not being elements of the crime, do not diminish the
credibility of AAA's declarations. Jurisprudence has held "youth and immaturity [to be]
badges of truth and sincerity"86 and has generally given leeway to minor witnesses
when relating traumatic incidents of the past.87
II
Article 266-A, paragraph 1 of the Revised Penal Code, as amended by Republic Act No.
8353 or the Anti-Rape Law of 1997, provides the elements for the crime of rape:
Article 266-A. Rape: When And How Committed. - Rape is committed
1) By a man who shall have carnal knowledge of a woman under any of the following
circumstances:
a) Through force, threat, or intimidation;
b) When the offended party is deprived of reason or otherwise unconscious;
c) By means of fraudulent machination or grave abuse of authority; and
d) When the offended party is under twelve (12) years of age or is demented, even
though none of the circumstances mentioned above be present.
Rape becomes qualified when committed by a parent against his child less than 18
years of age. This is provided for under paragraph 1, Article 266-B:
Article 266-B. Penalties. - Rape under paragraph 1 of the next preceding article shall be
punished by reclusion perpetua.
....
The death penalty shall also be imposed if the crime of rape is committed with any of
the following aggravating/qualifying circumstances:
1. When the victim is under eighteen (18) years of age and the offender is a parent,
ascendant, step-parent, guardian, relative by consanguinity or affinity within the third
civil degree, or the common-law spouse of the parent of the victim[.]
The elements of qualified rape are: "(1) sexual congress; (2) with a woman; (3) [done]
by force and without consent; ... (4) the victim is under eighteen years of age at the time
of the rape; and (5) the offender is a parent (whether legitimate, illegitimate or adopted)
of the victim."88
It was not disputed that AAA was eight (8) years old in November 1996. The medical
findings of Dr. Biag, as interpreted and testified to by Dr. Poca, also corroborate AAA's
allegations of her father's abuse. Dr. Poca testified that while some of the healed
lacerations could still be considered as normal variant finding rather than acquired, the
lacerations at 8:00 and 5:00 positions could have only been caused by the insertion of a
penis, object, or finger into the vagina:
At 11, 8 and 2 - the findings at 11 and 2 o'clock are still considered, based on studies,
more likely congenital rather than acquired, whereas the 8 o'clock finding is more likely
an acquired condition and that could have been caused by penetration of the vagina.
Then the old healed incomplete laceration . . . at 5 and 10 o'clock, again the 10 o'clock
might still be a normal finding or a normal variant finding, but the 5 o'clock is more
probably the result of an acquired condition like trauma.89
Dr. Poca likewise testified that given AAA's revelation of her ordeal caused by her
father, "the complete healed laceration at 8 :00 o'clock" is indicative of sexual abuse. 90
People v. Noveras91emphasized that when a rape victim's allegation is corroborated by

a physician's finding of penetration, "there is sufficient foundation to conclude the
existence of the essential requisite of carnal know ledge."92
It is well-established that "[p]hysical evidence is evidence of the highest order. It speaks

more eloquently than a hundred witnesses."93 The physical evidence of the healed
lacerations in AAA's vagina strongly corroborates AAA and BBB's testimonies that AAA
was raped by their father.
Nonetheless, this Court notes that even if AAA was only physically examined almost
three (3) years after she was sexually abused by her father, the defense never
questioned the credibility of the expert witness, nor was Dr. Poca's testimony
impeached.
The trial court, as upheld by the Court of Appeals, also ruled that AAA's testimony was
credible and competent, sufficiently proving the charge of rape against her father, thus:
The private complainant categorically stated that the accused (her father) had sexual
intercourse with her. The private complainant clearly described the rape incident. "After
he pulled my waist, he had me face him and he pulled down my shorts and at that time I
was not wearing any panty then he inserted his penis into my vagina but first he
inserted his finger. " This candid description of the molestations is a direct statement
that undoubtedly shows carnal knowledge by the accused with his
daughter.94(Emphasis in the original)
It is likewise immaterial that it took AAA more than two (2) years before divulging the
sexual abuse she experienced at her father's hands.
The records show that the day following her abuse, AAA immediately told her mother
but CCC did not believe her. This lack of support from the very person she was
expecting it from naturally made AAA wary of whom she could trust. It was only when
she became close to and felt safe with Sister Mary Ann and after she was no longer in
Cebu under her father's control that she found the courage to reveal her traumatic
experience. This is consistent with the normal reaction of a child raped by her father.
Dr. Poca, a child protection specialist, also confirmed that AAA'sfailure to immediately
disclose her abuse is a normal reaction of children:
Given her disclosure or her revelation that her father inserted his finger and later his
penis into her vagina but not having disclosed immediately because of fear which is a
normal reaction of children, and then having disclosed only to an aunt about 3 years
later, which again is a normal reaction of children especially if they do find a person
whom they can trust and whom they can feel safe with, between 1996 and 1999 if there
were any injuries at that point in 1996, that could have healed and giving us these
results in 1999.95 (Emphasis supplied)
This Court also notes that AAA asked, "Pa, where is Nanay?"96when she woke up to
find her father lying beside her. Her question was telling. At that moment, she perhaps
already entertained a fear that something so wrong was about to happen to her. At the
same time, she was trying to tell him that her mother would not approve of what he was
about to do.
Furthermore, BBB testified that her father groped her and poked his penis against her
buttocks but that he stopped and left the house after she pleaded with him. However,
she saw him go back a few minutes later and she tried to warn AAA by pinching her, but
AAA did not wake up. When AAA did wake up, Divinagracia was already beside her. 97
BBB testified that she saw her father get on top of AAA, who could not repel his
advances.1âwphi1 BBB admitted that AAA was crying and calling out for help the whole
time their father was on top of her, but BBB lamented that she was unable to go to her
sister because she could not move due to fear.98
BBB's reaction is consistent with the normal, expected actuations of a child seeing her
father doing despicable acts on her younger sister, especially after she herself had
fallen victim to his acts of lasciviousness. Her action is a mixture of denial and fear-
denial that the father whom she trusted could do these acts and fear, not so much for
her physical safety, but more for her economic and financial support.
The rule is settled that the factual findings and the evaluation of witnesses' credibility
and testimony mad~ by the trial court should be entitled to great respect, unless it is
shown that the trial court may have "overlooked, misapprehended, or misapplied any
fact or circumstance of weight and substance."99
Aside from the supposed inconsistencies in AAA's and Sister Mary Ann's testimonies,
Divinagracia only managed to present a defense of denial, which must fail in light of
AAA's categorical and competent testimony as well as the undisputed findings of healed
lacerations in her vagina. This Court is not swayed by Divinagracia's argument that his
daughters were manipulated by his in-laws into filing these charges against him. People
v. Venturina100aptly stated that "[n]ot even the most ungrateful and resentful daughter
would push her own father to the wall as the fall guy in any crime unless the accusation
against him is true."101
Even the well-meaning testimonies of the other defense witnesses102 did not disprove
AAA's account of the rape since they only managed to prove that Divinagracia and his
wife constantly quarrelled. What their testimonies inadvertently revealed, though, was
Divinagracia's proclivity towards violence, particularly when dealing with his wife. His
sister and neighbors testified that they would regularly hear and see Divinagracia
quarrelling with CCC, with Divinagracia usually hitting CCC in the course of their
arguments. Divinagracia's violent nature frames an inference of a lack of appreciation of
the humanity of every member of the family and highlights his attitude of impunity.
This Court sees no reason to reverse the findings of the Regional Trial Court and the
Court of Appeals that Divinagracia was guilty beyond reasonable doubt of rape in
relation to Republic Act No. 7610.
IV
On the charge of acts of lasciviousness in relation to Republic Act No. 7610, Article 2(h)
of the Implementing Rules and Regulations of Republic Act No. 7610 defines lascivious
conduct as:
[T]he intentional touching, either directly or through clothing, of the genitalia, anus,
groin, breast, inner thigh, or buttocks, or the introduction of any object into the genitalia,
anus or mouth, of any person, whether of the same or opposite sex, with an intent to
abuse, humiliate, harass, degrade, or arouse or gratify the sexual desire of any person,
bestiality, masturbation, lascivious exhibition of the genitals or pubic area of a person[.]
As with the rape case, the parties in the case for acts of lasciviousness also affirmed
BBB's minority at the time of the assault and her relationship with Divinagracia.
The Regional Trial Court and Court of Appeals likewise found that there was clear and
convincing evidence to hold Divinagracia guilty of committing sexual violence against
his daughter BBB. The lower courts also found BBB's testimony to be candid, credible,
and competent; thus:
Such finding of lasciviousness is solely attributable to the testimony of the private

complainant BBB whom the court considers credible and competent. BBB categorically
stated that the accused (her father) lay down beside her, embraced her and poked his
penis to her buttocks. BBB clearly recalled the manner the lascivious acts by
demonstrating these in the court. "He embraced me tightly this way (witness
demonstrating by closing her arms in front of her fist), the (sic) after that he slipped his
hand from here up to here, touching my body (witness demonstrating by tracing her
palm from the left thigh upward towards the left side of her body under her armpit. " This
candid description of the molestation is a direct statement that undoubtedly proves the
crime committed by the accused with his daughter.103(Emphasis in the original, citation
omitted)
Compared to his daughter's candid and categorical testimony, Divinagracia's defense of

denial must fail.1âwphi1 Jmbo v. People104emphasized that the self-serving defense of
denial falters against the "positive identification by, and straightforward narration of the
victim."105
This Court has repeatedly held that the lone yet credible testimony of the offended party
is sufficient to establish the guilt of the accused.106
Despite upholding the findings of fact and appreciation of the evidence by the lower
courts, there is a need to modify the penalties awarded. Section 5(b) of Republic Act
No. 7610 provides for the penalty of reclusion perpetua if the rape victim is below 12
years old while the penalty of reclusion temporal in its medium period is imposed if the
victim of lascivious conduct is also below 12 years old:
Section 5. Child Prostitution and Other Sexual Abuse. –
....
(b) Those who commit the act of sexual intercourse or lascivious conduct with a child
exploited in prostitution or subjected to other sexual abuse; Provided, That when the
victims is under twelve (12) years of age, the perpetrators shall be prosecuted
under Article 335, paragraph 3, for rape and Article 336 of Act No. 3815, as amended,
the Revised Penal Code, for rape or lascivious conduct, as the case may be:
Provided, That the penalty for lascivious conduct when the victim is under twelve (12)
years of age shall be reclusion temporal in its medium period[.] (Emphasis supplied)
The Regional Trial Court correctly set the penalty of reclusion perpetua for rape.
However, since the victim was under twelve (12) years of age at the time of the crime,
the imposable penalty for lascivious conduct should have been within the range of 14
years, 8 months, and 1 day to 17 years and 4 months, or reclusion temporal in its
medium period, as mandated by Republic Act No. 7610. Instead, the Regional Trial
Court imposed the range of 14 years and 4 months to 17 years and 4 months. Applying
the Indeterminate Sentence Law107 and with the presence of the alternative aggravating
circumstance108 of relationship, the maximum term of the sentence to be imposed
should be taken from the maximum period of the imposable penalty, that is reclusion
temporal maximum, which ranges from 17 years, 4 months, and 1 day to 20
years.109 The minimum term under the Indeterminate Sentence Law shall be within the
range of one (1) degree lower than reclusion temporal, which is prision mayor with a
total range of six (6) years and one (1) day to 12 years.110
There is also a need to review the lack of civil indemnity and other damages in the
decisions of the lower courts. The Regional Trial Court, as affirmed by the Court of
Appeals, held that since Divinagracia, as the father of AAA and BBB, stood to benefit
from the monetary award, it would not be proper to award civil indemnity:
The Court shall not award civil indemnity to the private complainant. The accused as the
father of the private complainants stands to benefit from the monetary award if
adjudicated to his daughters since he is a compulsory heir. The concept of
indemnification is not served if the very person made to pay for his crime shall benefit
from it.111
The lower courts are mistaken.
Civil indemnity ex delicto, as a form of monetary restitution or compensation to the

victim, attaches upon a finding of criminal liability because "[e]very person criminally
liable for a felony is also civilly liable."112
On the other hand, moral damages are treated as "compensatory damages awarded for
mental pain and suffering or mental anguish resulting from a wrong."113 The award of
moral damages is meant to restore the status quo ante; thus, it must be commensurate
to the suffering and anguish experienced by the victim.114
Finally, exemplary or corrective damages are imposed as an example to the

public,115 serving as a deterrent to the commission of similar acts. Exemplary damages
are also awarded "as a part of the civil liability may be imposed when the crime was
committed with one or more aggravating circumstances."116
In view of the depravity of the acts committed by Divinagracia against his minor
daughters, this Court imposes the following monetary awards, in accordance with
jurisprudence:
For rape against AAA, Divinagracia is directed to pay AAA ₱l00,000.00 as civil
indemnity, ₱l00,000.00 as moral damages, and ₱100,000.00 as exemplary damages 117
For acts of lasciviousness against BBB, this Court adopts the ruling in People v.
Santos118and directs Divinagracia to pay BBB ₱20,000.00 as civil indemnity and
₱30,000.00 as moral damages. However, in light of the heinous nature of the crime
committed, exemplary damages are increased from ₱2,000.00 to ₱20,000.00.
In addition, interest at the legal rate of six percent (6%) per annum shall be imposed on
all damages awarded from the date of finality of this judgment until fully paid. 119
WHEREFORE, the Court of Appeals Decision in CA-G.R. CEB CRH. C. No. 01134
dated July 30, 2012 is AFFIRMED with MODIFICATION. Accused-appellant Julito
Divinagracia, Sr. is sentenced to suffer the penalty of a) reclusion perpetua for the crime
of rape in relation to Republic Act No. 7610; and b) the indeterminate penalty of 12
years of prision mayor, as minimum, to 20 years of reclusion temporal, as maximum, for
the crime of acts of lasciviousness in relation to Republic Act No. 7610. Furthermore, he
is ordered to pay AAA ₱l00,000.00 as civil indemnity, ₱l00,000.00 as moral damages,
and ₱l00,000.00 as exemplary damages. He is also ordered to pay BBB ₱20,000.00 as
civil indemnity, ₱30,000.00 as moral damages, and ₱20,000.00 as exemplary damages.
All the awarded damages shall earn the legal interest rate of six percent (6%) per
annum from the date of finality of this judgment until fully paid.
SO ORDERED.

Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
DIOSDADO M. PERALTA JOSE CATRAL MENDOZA

SAMUEL R. MARTIRES
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Court’s Division.

Chief Justice
Footnotes
2 RULES OF COURT, Rule 124, sec. 13(c) provides:
Section 13. Certification or appeal of case to the Supreme Court. -
....
(c) In cases where the Court of Appeals imposes reclusion perpetua, life
imprisonment or a lesser penalty, it shall render and enter judgment imposing
such penalty. The judgment may be appealed to the Supreme Court by notice of
appeal filed with the Court of Appeals.
3CA rollo, pp. 31-49. The Joint Judgment was penned by Judge Marilyn Lagura-
Yap.
4Rollo, pp. 3-19. The Decision, promulgated on July 30, 2012 and docketed as
CA-G.R. CEB-CR-H.C. No. 01134, was penned by Associate Justice Ramon
Paul L. Hernando and concurred in by Associate Justices Carmelita Salandanan-
Manahan and Zenaida T. Galapate-Laguilles of the Twentieth Division, Court of
Appeals, Cebu City.
5 TSN dated November 13, 2003, pp. 4-5.
6 Id. at 5, 10-11.
7Rollo, p. 8. The narration reported "November 1986" but meant "November
1996." BBB was nine (9) years old at that time while AAA was eight (8) years old.
9 Id. at 6.
10 Id. at 30-32.
11Rollo, p. 8, Court of Appeals Decision. The narration reported "November
1986" but meant "November 1996."
14 Id. at 5.
15 Id. at 5-6.
16 Rollo, p. 8, Court of Appeals Decision.
17 Id. at 6.

19Sister Mary Ann Ahuna was a member of the religious order of the
Missionaries of Eucharistic Love, Children's Home of the Immaculate Heart of
Mary in Pampanga. See TSN dated September 4, 2002, p. 2.
20 TSN dated September 4, 2002, pp. 3-4.
21 Id. at 4-5.
22 Id. at 5-6.
23 Id. at 6-7.
24 Id. at 7-8.
25 RTC records (DU-8072), p. 76.
26 Id.
27 RTC records (DU-8072), pp. 3-5 and (DU-8074), pp. 5-6.
29Special Protection of Children Against Child Abuse, Exploitation and
Discrimination Act
30 RTC Records (DU-8072), p. 1.
31 RTC Records (DU-8074), p. 1.
32RTC Records (DU-8072), p. 17. The Information stated that BBB was 12 years
old in November 1996 but it was established that she was only 9 years old
considering the date of birth shown on her birth certificate.
34 Id. at 6-7.
35 CA Rollo, p. 32.
36 RTC records (DU-8074), p. 20.

37 Rollo, p. 7.
38 Id. at 7-8.
39 TSN dated February 12, 2003, pp. 3 and 5.

40 RTC Records (DU-8072), pp. 31-32, 64.
42 Id.
43 Id. at 8-9.
44 TSN dated November 13, 2003, pp. 13-14.

45 Id. At 7.
46 Id.
47 Id. at 14.
50TSN dated February 7, 2005, pp. 3-5.
53 TSN dated May 9, 2005, pp. 3-4.
54 Id. at 6-7.
55TSN dated August 9, 2005, p. 3.

56 Id. at 5-6.
57 CA Rollo, pp. 31-50.
58 Id. at 43-44.
59 Id. at 46.
60 Id. at 47.
61 Id. at 49.
62 Id. at 3.
63 Rollo, pp. 3-19.
64 Id. at 15-16.
65Id. at 18.
66 CA Rollo, pp. 109-111.
67 Rollo, p. 25.
68 Id. at 26-29.
69 CA Rollo, pp. 14-30, Brief for the Accused-Appellant.
70 Rollo, pp. 31-32.
71 CA Rollo, pp. 65-88, Brief for the Appellee.
72 Id. at 23-25.
73 Id. at 25-26.
74 Id. at 26-27.
75 Id. at 28.
76 Id. at 74.
77 Id. at 75-78.
78 Id. at 84.
79People v. Avanzado, Sr., 242 Phil. 163, 169 (1988) [Per J. Melencio-Herrera,
Second Division].
80 157 Phil. 365 (1974) [Per J. Antonio, En Banc].
81 Id. at 375.

85 Rollo, pp. 17-18.
86People v. Dimanawa, 628 Phil. 678, 689 (2010) [Per J. Nachura, Third
Division].
87People v. Dominguez, 667 Phil. 105, 119 (2011) [Per J. Sereno (now Chief
Justice), Third Division].
88 People v. Buclao, 736 Phil. 325, 336 (2014) [Per J. Leonen, Third Division]
citing People v. Candellada, 713 Phil 623, 635 (2013) [Per J. Leonardo-De
Castro, First Division].
90 Id. at 8-9.
91 550 Phil. 871 (2007) [Per J. Callejo Sr., Third Division].
92 Id. at 887.
93Peoplev. Sacabin, 156 Phil 707, 713 (1974) [Per J. Fernandez, Second
Division].
94 CA Rollo, p. 44, Regional Trial Court Joint Judgment.
98 Id. at 33-35.
99 People v. De Jesus, 695 Phil. 114, 122 (2012) [Per J. Brion, Second Division].
100 694 Phil 646 (2012) [Per J. Del Castillo, Second Division].
101 Id. at 655.
102 CA Rollo, pp. 40-43.
103 CA Rollo, p. 46.
104 G.R. No. 197712, April 20, 2015 <!! HYPERLINK
"http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2015/april2015
/197712.pdf'<Jl http
://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2015/april2015/197
712.pdf1- > [Per J. Perez, First Division].
105 Id. at 7.
106 Ricalde v. People, 751 Phil 793, 807 (2015) [Per J. Leonen, Second
Division]; Garingarao v. People, 669 Phil. 512, 522 (2011) [Per J. Carpio, Second
Division]; People v. Tagaylo, 398 Phil. 1123, 1131-1132 (2000) [Per CJ Davide,
Jr, First Division].
107 Act No. 4103 (1933).
108 Revised REv. PEN. CODE Penal Code, art. 15 provides:
Article 15. Their concept. - Alternative circumstances are those which must be
taken into consideration as aggravating or mitigating according to the nature and
effects of the crime and the other conditions attending its commission. They are
the relationship, intoxication and the degree of instruction and education of the
offender.
The alternative circumstance of relationship shall be taken into consideration
when the offended party is the spouse, ascendant, descendant, legitimate,
natural, or adopted brother or sister, or relative by affinity in the same degrees of
the offender.
The intoxication of the offender shall be taken into consideration as a mitigating

circumstance when the offender has committed a felony in a state of intoxication,
if the same is not habitual or subsequent to the plan to commit said felony; but
when the intoxication is habitual or intentional it shall be considered as an
aggravating circumstance.
109 REV. PEN. CODE, art. 76.
111 CA Rollo, p. 48, Regional Trial Court Joint Judgment.
113Bagumbayan Corp. v. Intermediate Appellate Court, 217 Phil. 421, 425-426
(1984) [Per J. Aquino, Second Division].
114
Lambert v. Heirs of Castillon, 492 Phil. 384, 395, citing CESAR SANGCO,
TORTS & DAMAGES 986 (1994 ed.) [Per J. Ynares-Santiago, First Division].
Article 2229. Exemplary or corrective damages are imposed, by way of example

or correction for the public good, in addition to the moral, temperate, liquidated,
or compensatory damages.
Article 2230. In criminal offenses, exemplary damages as a part of the civil

liability may be imposed when the crime was committed with one or more
aggravating circumstances. Such damages are separate and distinct from fines
and shall be paid to the offended party.
117People v. Jugueta, G.R. No. 202124, April 5, 2016 <
http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/20l6/april2016/2
02124.pdf > [Per J. Peralta, En Banc].
118 753 Phil 637, 652 (2015) [Per J. Carpio, Second Division].
119 Ricalde v. People, 751 Phil 793, 816 (2015) [Per J. Leonen, Second Division].
G.R. No. 217764, August 07, 2017 - ANTONIETA LUCIDO @ TONYAY, Petitioner, v.
PEOPLE OF THE PHILIPPINES, Respondent.
SECOND DIVISION
G.R. No. 217764, August 07, 2017
ANTONIETA LUCIDO1 @ TONYAY, Petitioner, v. PEOPLE OF THE

PHILIPPINES, Respondent.
DECISION
LEONEN, J.:
This resolves a Petition for Review on Certiorari2 assailing the Court of Appeals'
Decision3 dated August 28, 2014 and Resolution4 dated March 13, 2015. The assailed
Court of Appeals Decision affirmed with modification the Regional Trial Court
Decision5 dated June 27, 2011, while the assailed Resolution denied the Motion for
Reconsideration.
The Regional Trial Court Decision found Antonieta Lucido (Lucido) guilty of child abuse
under Section 10(a)6 of Republic Act No. 7610 or the Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act.7
In the Information8 dated March 30, 2008, Lucido was charged with child abuse under
Section 10(a) of Republic Act No. 7610:
That on or about the month of December, 2007 in Brgy. Atabay, Hilongos, Leyte, within
the jurisdiction of the Honorable Court, the above-named accused, did then and there,
maliciously, willfully, unlawfully, and intentionally, beat with the use of a belt, pinched,
and strangulated the child victim [AAA], who was then eight (8) years old, thereby
inflicting physical injuries that affected the normal development of the said child victim.
CONTRARY TO LAW.9
Lucido pleaded not guilty upon arraignment.10
On August 10, 2008, the pre-trial was held. Lucido, through counsel, offered to plead
guilty to the crime of Less Serious Physical Injuries under Article 265 of the Revised
Penal Code or Violation of Article 59, paragraph 8 of Presidential Decree No. 60311 or
the Child and Youth Welfare Code. However, it was not accepted by the complaining
witnesses and the prosecution. Thereafter, trial on the merits ensued. 12
On July 1, 2009, Lucido was released on bail.13
The prosecution presented the following as witnesses: the victim AAA, Dr. Conrado
Abiera III (Dr. Abiera), the father of the victim FFF, and Maria Hinampas
(Hinampas).14 The prosecution established the following facts:
Sometime in August 2007, in Barangay Atabay, Hilongos, Leyte, AAA was placed by
her parents in the custody of their neighbor Lucido, alias Tony ay. 15 The arrangement
was made upon the request of Lucido that AAA stay with her since she was living
alone.16 AAA was eight (8) years old at that time.17
During AAA's stay with Lucido, the child suffered repeated physical abuse in the latter's
hands, which included strangulation,18 beating,19 pinching,20 and touching of her sex
organ by Lucido.21 AAA was also threatened by Lucido that she would be stabbed if she
tells anyone about what was being done to her.22
One of Lucido's neighbors, Hinampas, noticed the abrasions on AAA's neck and
observed that she was limping as she walked.23 The child then related that she was
choked and beaten on her leg by Lucido.24AAA's parents learned of her
plight,25 prompting FFF to go to Lucido's residence and take AAA back with the help of
a barangay tanod.26
A subsequent physical examination conducted by Dr. Abiera of Hilongos District

Hospital confirmed AAA's story. His findings were as
follows:chanRoblesvirtualLawlibrary
Multiple abrasions on different parts of the body secondary to pricking
nail marks/scratches
There is redness on the peripheral circumference of the hymen
No hymenal laceration noted.
There is weakness of (L) knee joint upon walking.27
After the prosecution rested its case, the defense presented Lucido, Lucia Mancio
Lusuegro (Lusuegro), and Estrella L. Sanchez (Sanchez) as witnesses. 28 The Court of
Appeals summarized their testimonies as follows:chanRoblesvirtualLawlibrary
[Lucido] denied that she pinched, beat and hit AAA and that she inserted her finger into
AAA's vagina. She claimed that she usually cleaned AAA's vagina and bathed her with
hot water. She, likewise, denied that she brought AAA to Bato for sexual intercourse.
[Lucido] impute[d] ill motive on Hinampas, whom she claimed to be her enemy, in
instituting the complaint against her.
Lucia Mancio Lusuegro ... a neighbor of [Lucido] and AAA's parents at Brgy. Atabay,
Hilongos, Leyte, testified that she heard AAA cry only once outside the house of
[Lucido]. She never heard any commotion that [Lucido] maltreated AAA.
Estrella Sanchez ... testified that the accusation of child abuse and prostitution was not
true. She claimed that the filing of the case against [Lucido] was instigated by
Hinampas, with whom [Lucido] had a quarrel.29
On June 27, 2011, the Regional Trial Court rendered a Decision, convicting Lucido of
child abuse, as follows:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, accused ANTON1ETA LUCIDO alyas "Tonyay"
is found GUILTY beyond reasonable doubt in violation of Section 10 (a) of Republic Act
No. 7610 and hereby sentenced to suffer the penalty of Prision Mayor in its minimum
period (SIX (6) YEARS and ONE (1) DAY to EIGHT (8) YEARS imprisonment), and to
pay the offended party [AAA] Fifty Thousand Pesos (P50,000.00) as moral damages.
SO ORDERED.30
The Court of Appeals affirmed Lucido's conviction, but modified the penalty imposed by
applying the Indeterminate Sentence Law. The dispositive portion of the Decision
read:chanRoblesvirtualLawlibrary
WHEREFORE, the Appeal is DENIED. The Decision, dated 27 June 2011, of the
Regional Trial Court of Hilongos[,] Leyte, 8th Judicial Region, Branch 18 in Criminal
Case No. H-1675 is hereby AFFIRMED with MODIFICATIONS, to wit:
(a) the appellant Antonieta Lucido @ "Tonyay" is hereby sentenced to four (4) years,
nine (9) months and eleven (11) days of prision correccional, as minimum, to six (6)
years, eight (8) months and one (1) day of prision mayor, as maximum;
(b) an interest at the rate of six percent (6%) per annum shall be applied to the award of
moral damages to be reckoned from this date until fully paid;
(c) the bondsman is ordered to surrender the appellant to the court a quo, within ten
(10) days from notice and to report to this Court the fact of surrender, within ten (10)
days from notice of such fact;
(d) in case of non-surrender, the Regional Trial Court of Hilongos[,] Leyte, 8th Judicial
Region, Branch 18 is DIRECTED to:
(i) cancel the bond posted for the provisional liberty of the appellant;
(ii) order the arrest of the appellant; and
(iii) immediately commit the appellant to the Bureau of Prisons.

SO ORDERED.31
Lucido's Motion for Reconsideration was likewise denied in the Court of Appeals March
13, 2015 Resolution.
Hence, this Petition32 was filed on May 20, 2015. This Court received respondent's
Comment33 on November 23, 2015.
Petitioner raises the following issues for this Court's resolution:
1. whether the Court of Appeals erred in sustaining her conviction despite the failure of
the prosecution to prove her guilt beyond reasonable doubt; and
2. whether the Court of Appeals erred in not finding that the crime committed was only
slight physical injuries and not a violation of Republic Act No. 7610.34
Petitioner contends that the prosecution failed to prove "that the physical injuries
inflicted on the child had prejudiced the child's development so as to debase, degrade
or demean the intrinsic worth and dignity of the child as a human being." She cites the
absence of an expert opinion validating scientifically that the acts complained of
proximately caused the "prejudice inflicted upon the child's development." 35
Furthermore, petitioner argues that the prosecution was not able to prove the infliction
of physical injuries on the child. She avers that Hinampas' testimony of having heard the
victim being maltreated several times by Lucido is incredible, exaggerated, and
unworthy of belief. First, the victim's own father, whose house was about five (5) meters
away from Lucido's house, never testified that he heard the maltreatment done by
Lucido upon his own daughter.36 Second, two (2) defense witnesses who were
neighbors of Lucido testified that they did not hear any noise that would indicate
Lucido's maltreatment of AAA.37
Petitioner claims that the charge against her was ill-motivated. She highlights the
ongoing enmity between her and Hinampas, one (1) of the witnesses for the
prosecution. Petitioner also imputes ill-motive on AAA in falsely testifying against her
after having been scolded for damaging petitioner's cellphone.38
Finally, petitioner asserts that the prosecution failed to prove that the acts alleged in the
information—beating using a belt, pinching, and strangulating AAA—were intended to
"debase, degrade or demean the intrinsic worth and dignity of the child as a human
being."39 Citing Bongalon v. People,40 petitioner contends that she could not be
convicted of child abuse but only of slight physical injuries defined and punished under
the Revised Penal Code.41
On the other hand, respondent argues that the petition must be denied because it raises
questions of fact, which could not be done in a petition for review under Rule 45. 42
This Court denies the petition.
The issues submitted by petitioner—the prosecution's failure to prove that the abuse
suffered by the victim had prejudiced her normal development and want of credibility of
the prosecution witnesses—are fundamentally factual. However, this Court is not a trier
of facts. As a rule, "only questions of law may be raised in a petition for review
on certiorari under Rule 45."43
It is not the function of this Court to review and weigh anew the evidence already
passed upon by the Regional Trial Court and the Court of Appeals absent any showing
of arbitrariness, capriciousness, or palpable error.44 Petitioner did not present any
substantive or compelling reason for this Court to apply the exception in this case.
Even if this Court disregards this infirmity, the petition still fails to impress. This Court
finds no reversible error in the Court of Appeals Decision affirming petitioner's conviction
for child abuse.
It is a fact that when the incident happened, the victim was a child entitled to the
protection extended by Republic Act No. 7610, as mandated by the
Constitution.45 Thus, petitioner was properly charged and found guilty of violating Article
VI, Section 10(a) of Republic Act No. 7610, which reads:chanRoblesvirtualLawlibrary
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
developmentincluding 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 prision mayor in its minimum period. (Emphasis
supplied)
Article I, Section 3(b) of Republic Act No. 7610 defines child abuse as the maltreatment
of a child, whether habitual or not, including any of the
following:chanRoblesvirtualLawlibrary
(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;
(3) Unreasonable deprivation of his basic needs for survival, such as food and
shelter; or
(4) Failure to immediately give medical treatment to an injured child resulting in

serious impairment of his growth and development or in his permanent
incapacity or death. (Emphasis supplied)
As defined in the law, child abuse includes physical abuse of the child, whether it is
habitual or not. Petitioner's acts fall squarely within this definition.
AAA testified on the physical abuse she suffered in the hands of petitioner. The
Regional Trial Court described her narration of the facts to be in "a straightforward,
credible and spontaneous manner which could not be defeated by the denial of the
accused."46 From the appearance of the victim, the trial court likewise observed physical
evidence of the abuses and ill-treatment inflicted by the petitioner on AAA aside from
the victim's psychological displacement.47 AAA's testimony was further corroborated by
Dr. Abierra, who noted several observations during his physical examination of the
victim. First, there were "multiple abrasions on different parts of [AAA's]
body."48 Additionally, he observed a "redness on the peripheral circumference of the
hymen," which could have been caused by a hard pinching. 49 Finally, there was an
evident "weakness on the left knee joint," which could have been caused by the victim
falling to the ground or being beaten by a hard object.50
Petitioner's bare imputations of ill motive on Hinampas and AAA deserve scant
consideration. This defense had been judiciously taken into account and rejected by the
trial court, in light of the clear, consistent, and positive testimonies of AAA, Dr. Abierra,
and FFF. As aptly observed by the trial court, Hinampas "ha[d] no control over the
intelligence and will of the victim and the parents in testifying against [petitioner]." 51 A
child witness like AAA, who spoke in a clear, positive, and convincing manner and
remained consistent on cross-examination, is a credible witness.52 Motive becomes
inconsequential when there is a categorical declaration from the victim, which
establishes the liability of the accused.53
Moreover, the inconsistencies relied upon by petitioner are trivial and do not minimize
the value of the prosecution witnesses' testimonies. The fact that the victim's father did
not mention in his testimony that he had heard any sound that would indicate Lucido's
maltreatment of his daughter does not render impossible the positive declaration of the
victim as to the abuses she suffered. On the other hand, defense witness Sanchez's
testimony is hardly credible because she was no longer residing in Brgy. Atabay in
2007, when AAA was living with Lucido.54 Further, contrary to petitioner's assertion, the
other defense witness, Lusuegro, testified that she heard AAA cry when the latter was
staying with Lucido.55
Indeed, the trial court's assessment on the trustworthiness of AAA and Hinampas will
not be disturbed, absent any facts or circumstances of real weight which might have
been overlooked, misappreciated, or misunderstood.56 Through its firsthand
observations during the entire proceedings, the trial court can be expected to determine,
with reasonable discretion, whose testimony to accept and which witness to believe. 57
II
Petitioner further insists that the prosecution failed to prove that the acts complained of
were prejudicial to the victim's development.
This Court disagrees.
Section 10(a) of Republic Act No. 7610 punishes four (4) distinct offenses, i.e. (a) child
abuse, (b) child cruelty, (c) child exploitation, and (d) being responsible for conditions
prejudicial to the child's development.58 As correctly ruled by the Court of Appeals, the
element that the acts must be prejudicial to the child's development pertains only to the
fourth offense. Thus:chanRoblesvirtualLawlibrary
Instructive is Araneta v. People which held, viz:chanRoblesvirtualLawlibrary
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 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.
Contrary to the proposition of the appellant, the prosecution need not prove that the acts
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. The element of resulting prejudice to the child's development cannot be
interpreted as a qualifying condition to the other acts of child abuse, child cruelty and
child exploitation.59 (Emphasis in the original, citations omitted)
Strangulating, severely pinching, and beating an eight (8)-year-old child to cause her to
limp are intrinsically cruel and excessive. These acts of abuse impair the child's dignity
and worth as a human being and infringe upon her right to grow up in a safe,
wholesome, and harmonious place. It is not difficult to perceive that this experience of
repeated physical abuse from petitioner would prejudice the child's social, moral, and
emotional development.
Petitioner's contention that she should only be convicted for slight physical injuries in
light of the ruling in Bongalon v. People,60 is likewise untenable.
The facts in Bongalon are markedly different from this case. In Bongalon, a father was
overwhelmed by his parental concern for the personal safety of his own minor
daughters who had just suffered harm at the hands of the minor complainant and hit the
minor complainant's back with his hand and slapped his left cheek.61
Here, AAA was maltreated by petitioner through repeated acts of strangulation,

pinching, and beating. These are clearly extreme measures of punishment not
commensurate with the discipline of an eight (8)-year-old child. Discipline is a loving
response that seeks the positive welfare of a child. Petitioner's actions are diametrically
opposite. They are abusive, causing not only physical injuries as evidenced by the
physical marks on different parts of AAA's body and the weakness of her left knee upon
walking, but also emotional trauma on her.
Republic Act No. 7610 is a measure geared to provide a strong deterrence against child
abuse and exploitation and to give a special protection to children from all forms of
neglect, abuse, cruelty, exploitation, and other conditions prejudicial to their
development.62 It must be stressed that the crime under Republic Act No. 7610
is malum prohibitum.63 Hence, the intent to debase, degrade, or demeanthe minor is not
the defining mark. Any act of punishment that debases, degrades, and demeans the
intrinsic worth and dignity of a child constitutes the offense.
WHEREFORE, the Petition is DENIED. The August 28, 2014 Decision and March 13,
2015 Resolution of the Court of Appeals in CA-G.R. CEB CR No. 01911 are
hereby AFFIRMED.
SO ORDERED.
Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ., concur.
Endnotes:
1 "Lucedo" in other parts of the Rollo, CA rollo, and RTC records.
2Rollo, pp. 10-32.
3Id. at 34-47. The Decision, docketed as CA-G.R. CEB CR No. 01911, was penned by
Associate Justice Renato C. Francisco and concurred in by Associate Justices Gabriel
T. Ingles and Pamela Ann A. Maxino of the Eighteenth Division, Court of Appeals, Cebu
City.
4 Id. at 49-52. The Resolution was penned by Associate Justice Renato C. Francisco
and concurred in by Associate Justices Gabriel T. Ingles and Pamela Ann A. Maxino of
the Former Eighteenth Division, Court of Appeals, Cebu City.
5Id. at 53-58. The Decision, docketed as Crim. Case No. H-1675, was penned by
Judge Ephrem S. Abando of Branch 18, Regional Trial Court, Hilongos, Leyte.
6 Rep. Act No. 7610, sec. 10(a) provides:
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 prision mayor in its
minimum period.
7Rollo, p. 58.
8 RTC records, p. 19.
9 Id.
10 CA rollo, p. 78.
11 Pres. Decree No. 603, art. 59 provides:
Article 59. Crimes. — Criminal liability shall attach to any parent who:
(1) Conceals or abandons the child with intent to make such child lose his civil status.
(2) Abandons the child under such circumstances as to deprive him of the love, care
and protection he needs.
(3) Sells or abandons the child to another person for valuable consideration.
(4) Neglects the child by not giving him the education which the family's station in life
and financial conditions permit.
(5) Fails or refuses, without justifiable grounds, to enroll the child as required by Article
72.
(6) Causes, abates, or permits the truancy of the child from the school where he is
enrolled. "Truancy" as here used means absence without cause for more than twenty
schooldays, not necessarily consecutive.
It shall be the duty of the teacher in charge to report to the parents the absences of the
child the moment these exceed five schooldays.
(7) Improperly exploits the child by using him, directly or indirectly, such as for purposes
of begging and other acts which are inimical to his interest and welfare.
(8) Inflicts cruel and unusual punishment upon the child or deliberately subjects him to
indignities and other excessive chastisement that embarrass or humiliate him.
(9) Causes or encourages the child to lead an immoral or dissolute life.
(10) Permits the child to possess, handle or carry a deadly weapon, regardless of its
ownership.
(11) Allows or requires the child to drive without a license or with a license which the
parent knows to have been illegally procured. If the motor vehicle driven by the child
belongs to the parent, it shall be presumed that he permitted or ordered the child to
drive.
"Parents" as here used shall include the guardian and the head of the institution or
foster home which has custody of the child. (Emphasis supplied)
12 CA rollo, p. 78.
13 Id.
14Rollo, p. 35.
15 TSN dated October 6, 2009, p. 6.
16 Id.
17TSN dated January 5, 2010, pp. 14-15; RTC records, p. 12, AAA's Birth Certificate
showed that she was born on August 6, 1999.
18 TSN dated November 27, 2008, p. 5; TSN dated May 26, 2009, p. 4.
19 Id. at 6.
20 Id.
21 Id. at 8.
22 TSN dated May 26, 2009, pp. 7-8.
23 TSN dated January 5, 2010, p. 5.
24 Id.
25 TSN dated, October 6, 2009, p. 14.
26 Id. at 9.
27 RTC records, p. 10, Medical Certificate dated January 2, 2008.
28Rollo, pp. 56-60.
29 Id. at 37.
30 Id. at 58.
31 Id. at 46.
32 Id. at 10-32.
33 Id. at 118-134.
34 Id. at 19.
35 Id. at 21.
36 Id. at 22.
37 Id. at 22-23.
38 Id. at 23.
39 Id. at 25.
40 707 Phil. 11 (2013) [Per J. Bersamin, First Division].
41Rollo, pp. 24-25.
42 Id. at 124.
43Torres v. People, G.R. No. 206627, January 18, 2017 5 [Per J. Leonen, Second
Division].
44Torres v. People, G.R. No. 206627, January 18, 2017 6 [Per J. Leonen, Second
Division],
45 CONST., art. XV, sec. 3, par. 2 provides:
Section 3. The State shall defend:
....
(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[.]
46Rollo, p. 58.
47 Id.
48 TSN dated July 28, 2009, p. 7.
49 Id. at 9.
50 Id. at 9-10.
51Rollo, p. 58.
52Peoplev. Reyes, 549 Phil. 655, 662 (2007) [Per J. Quisumbing, En Banc]; People v.
Rama, 403 Phil. 155, 171-172 (2001) [Per J. Puno, First Division].
53People v. Lawa, AAA Phil. 191, 204 (2003) [Per Curiam, En Banc]; People v. Optana,
404 Phil. 316, 348 (2001) [Per J. Kapunan, First Division].
54 TSN dated September 7, 2010, p. 8.
55 TSN dated January 11, 2011, pp. 5-6 and 9.
56Sanchez v. People, 606 Phil. 762, 779 (2009) [Per J. Nachura, Third Division].
57People v. Diu, 708 Phil. 218, 232 (2013) [First Division, per J. Leonardo-De
Castro]; People v. Nelmida, 694 Phil. 529, 556 (2012) [En Banc, per J. Perez]; Magno v.
People, 516 Phil. 72, 81 (2006) [Per J. Garcia, Second Division].
58Araneta v. People, 578 Phil. 876, 883 (2008) [Per J. Chico Nazario, Third Division].
59Rollo, pp. 39-40.
60 707 Phil. 11 (2013) [Per J. Bersamin, First Division].
61 Id. at 14-15.
62Araneta v. People, 578 Phil. 876, 883 (2008) [Per J. Chico Nazario, Third Division].
63See Malto v. People, 560 Phil. 119, 139 (2007) [Per J. Corona, First Division].
SECOND DIVISION
June 7, 2017
G.R. No. 210654

vs.
PABLO LUAD ARMODIA, Accused-Appellant
DECISION
LEONEN, J.:
The rape of a minor constitutes moral depravity of the highest order. This is an appeal
from a conviction for two (2) counts of rape of a child under Article 266-A (1) of the
Revised Penal Code by a father, who twice fulfilled his desires on his own daughter.
Accused-appellant Pablo Luad Armodia (accused-appellant) and his wife, BBB, had
three (3) children, the oldest of whom was AAA.1 They owned a piggery2 in Cambanay,
Danao City, Cebu, located close to their house. 3 Beside this piggery was a makeshift
room that served as the venue for the material incidents in this case. 4
The first incident happened in the last week of March 2003, at about 8:00 p.m. Accused-
appellant called for AAA and ordered her to sleep beside him in the makeshift room.
The child obeyed her father. While AAA was lying down, accused-appellant pinned her
to the ground with his arms and legs. To ensure his success, he placed a lagting-a bolo
used for cutting sugarcanes-a foot away from her head.5
AAA's agony then began to unfold. Accused-appellant slid his leg down from her hip
and removed her shorts and underwear. Then, he stripped off his briefs and shorts and
went on top of her. The child tried to push him away, but she was powerless against the
figure that lunged towards her.6
Holding his penis, accused-appellant inserted it into his child's vagina. AAA felt pain as
he penetrated her. He continued to thrust her until he ejaculated. Sexually satisfied at
her daughter's expense, accused-appellant cleaned out the sperm left in her vagina. He
threatened to kill anyone to whom she would report the incident. AAA kept quiet out of
fear. She was then only 16 years old. 7
The second incident happened in the same place. On April 4, 2003, around 3:00 a.m.,
accused-appellant shouted for her, who was asleep. His booming voice roused her up
from slumber. He ordered her to give water to the hogs and she complied. Then, he
commanded her to lie down in the makeshift room next to the piggery. Accused-
appellant threatened to wield his lagting and chop off the heads of those who would find
out what he was about to do. 8
He grabbed her hands and legs, pinned her down on the floor, stripped off her panty,
and removed his underwear. Going on top of her, he mashed her breasts and forced
himself on her body. 9 His penis abused her vagina until he reached his
climax. 10 Scooping his semen out of her vagina, 11 accused-appellant told AAA to rest
easy as she would not get pregnant. 12
The child could no longer remain quiet. The next day, on April 5, 2003, AAA finally
revealed everything to her mother, BBB.13 Crying and shaking, AAA informed BBB that
her father raped her. 14
On April 6, 2003, AAA and BBB reported the incident to their punong barangay, who
thereafter informed the police. 15 She was brought to Vicente Sotto Memorial Medical
Center, then Southern Island Hospital, for exammation. 16
Dr. Elvie Austria (Dr. Austria) examined AAA and issued a Medical Certificate. 17 The
Medical Certificate stated, "Tanner IV, redundant."18 It also stated that the "medical
evaluation is suggestive of abuse."19
Accused-appellant was arrested on the same day. 20 He was charged with two (2)
counts of rape of a minor under two (2) separate informations, the pertinent portions of
which read as follows:
Criminal Case No. DN0-2983
That on or about April 4, 2003 at 3:00 o'clock (sic) at dawn more or less, in Cambanay,
Danao City, Philippines and within the jurisdiction of this Honorable Court, the above-
named accused, did then and there, with threats, intimidation and influence of moral
ascendency, forcibly, willfully, unlawfully and feloniously have sexual intercourse with
[AAA], a virgin over 12 years old but under 18 years of age.
CONTRARY TO LAW.
Criminal Case No. DN0-2998
That sometime in the last week of March, 2003, in Cambanay, Danao City, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, did then
and there, with threats, intimidation and influence of moral ascendency, forcibly, willfully,
unlawfully and feloniously have sexual intercourse with [AAA], a virgin over 12 years old
but under 18 years of age.
CONTRARY TO LAW.21
Accused-appellant was arraigned and pleaded "not guilty" to the rape charges.22 On
October 21, 2003, the State moved for leave to amend the informations and add the
phrase, "being the father of the victim."23
On November 7, 2003, the Regional Trial Court denied the State's motion, ruling that
the requested amendment was substantial and prejudicial to accused-appellant's right
to be informed of the charges against him. The criminal cases were tried jointly. 24
The State presented three (3) witnesses: pediatrician Dr. Naomi Poca (Dr. Poca), BBB,
and AAA. Dr. Poca testified that another physician, Dr. Austria, examined AAA. She
explained that the phrase "Tanner IV, redundant" in the Medical Certificate issued by
Dr. Austria meant that AAA's hymen was "thickened, redundant, estrogenized (effect),
and elastic;" in simple terms, it could "accommodate a penis or any object." 25
For her part, BBB testified that accused-appellant was her husband and that AAA was
their eldest child. On April 5, 2003, at about 7:00 p.m., AAA trembled and cried as she
recounted to BBB accused-appellant's acts. The following day, BBB accompanied her
daughter to Barangay Captain Tomas Gomez, who then reported the incidents to the
police.26
Meanwhile, defense presented accused-appellant as its sole witness. He admitted that

AAA was his daughter but denied the rape charges against him. According to him, the
criminal cases were filed in retaliation for his strict upbringing of his children. Accused-
appellant added that he was physically incapable of having sexual intercourse as two
(2) years before the first alleged rape, he sustained a gunshot wound on the right
portion of his body. Thus, whenever he had sex, "his wastes would go out of his
intestines." 27
On July 25, 2011, the Regional Trial Court convicted 28 accusedappellant of two (2)
counts of simple rape.
Citing People v. Ilao,29 it held that the "accused [cannot] be convicted of qualified rape,
because of the prosecution's failure to include the relationship in the
information[.]"30 The trial court did not give credence to his defense of physical
incapacity, as "his wife BBB testified that they had sexual congress many times." 31 The
dispositive portion read:
WHEREFORE, FOR ALL THE FOREGOING the court finds the accused PABLO LUAD
ARMODIA:
a) In Criminal Case No. DN0-2983, GUILTY beyond reasonable doubt for the crime of
rape [under Article 266-A(l), which is] punished under the provision of Article 266-B of
the Revised Penal Code, and hereby sentences him to suffer the penalty of reclusion
perpetua; and
b) In Criminal Case No. DN0-2998, GUILTY beyond reasonable doubt of the crime of
rape [under Article. 266-A(l), which is] punished under the provision of Article 266-B of
the Revised Penal Code, and hereby sentences him to suffer the penalty of reclusion
perpetua.
Accused is likewise directed to indemnify private complainant, [AAA], the amounts of

₱50,000.00 as civil indemnity, ₱50,000.00 as moral damages and ₱30,000.00 as
exemplary damages for each count of rape pursuant to People v. Malana.
SO ORDERED.32 (Emphasis in the original, citation omitted)
Accused-appellant appealed before the Court of Appeals, arguing that "the prosecution
failed to prove his guilt beyond reasonable doubt."33
The Court of Appeals affirmed 34 with modification the Regional Trial Court's Decision,
adding the payment of six percent (6%) legal interest in the award for damages. The
dispositive portion of the Decision reads:
WHEREFORE, premises considered, this appeal is DENIED. The Decision of the
Regional Trial Court, Branch 25, Danao City in Crim. Cases Nos. DN0-2983 and DN0-
2998 dated July 25, 2011 is AFFIRMED with MODIFICATION. Armodia is further
ORDERED to pay to pay [sic] interest on all damages awarded at the legal rate of
6% per annum from the date of finality of this Decision. No pronouncement as to costs.
The case has reached this Court via a notice of appeal.36 For resolution is whether
accused-appellant is guilty of two (2) counts of simple rape.
We affirm the conviction.
The prosecution has proven beyond reasonable doubt that accusedappellant had carnal
knowledge of AAA against her will, through force, threat, or intimidation.
Article 266-A (l)(a) of the Revised Penal Code states:
Article 266-A. Rape; When And How Committed. - Rape is committed - 1) By a man
who shall have carnal knowledge of a woman under any of the following circumstances:
a. Through force, threat, or intimidation [.]
Accused-appellant had carnal knowledge of AAA twice, through force and intimidation.
His moral ascendancy also intimidated her into submission. This ascendancy or
influence is grounded on his parental authority over his child, which is recognized by our
Constitution38 and laws,39 as well as on the respect and reverence that Filipino children
generally accord to their parents. 40
AAA's story cannot be trivialized as a mere fabrication or a tale allegedly weaved to take
revenge for her father's strictness. Children are vulnerable.41 Generally, they do not
have the maturity to execute complex strategies impelled by evil motives. That they
would go through such lengths-exposing themselves and their families to dishonor by
publicly narrating how their father stripped them of their innocence42-only to get even
for a trivial reason is, therefore, incredulous.
Testimonies of child victims may not always be the absolute truth. Nevertheless, the
testimonies of child rape victims are generally entitled to full faith and
credence.1âwphi1 A girl who would willingly cause the examination of her private parts,
allow the invasion of her privacy via an open trial, and recall the harrowing experiences
she suffered. in the hands of her own father must have been impelled by the desire to
have the perpetrator caught and punished.43 More significantly, she must have been
motivated by the need to be physically and psychologically protected from her assailant.
After a child rape victim gives a credible testimony, the defense carries the burden of
evidence to rebut it. Certainly, the defense that a child would wish to cause the arrest,
imprisonment, and embarrassment of her own father only because he was strict strains
logic and common sense. It is a narrative that has no basis on any fact proven on
record.
A child would not concoct a story of incest especially if it would result in losing one's
father to prison.44 In People v. Baun,45 where the father was convicted for raping his 14-
year old daughter four (4) times:
No sane girl would concoct a story of defloration, allow an examination of her private
parts and subject herself to public trial or ridicule if she has not in truth, been a victim of
rape and impelled to seek justice for the wrong done to her. It is against human nature
for a girl to fabricate a story that would expose herself and her family to a lifetime of
dishonor, especially where her charges would mean the death or the longterm
imprisonment of her own father. 46 (Emphasis supplied, citations omitted)
The Medical Certificate issued by Dr. Austria stating, "medical evaluation is suggestive
of abuse," further supports the lower courts' finding that accused-appellant committed
the incestuous acts charged against him.
As against these details and testimonies, all that accused-appellant has offered in
defense are denials and alibis, defenses which jurisprudence has long considered as
weak and unreliable.47
II
Accused-appellant committed two (2) counts of simple rape, not qualified rape.
The crime of qualified rape under Article 266-B(1) 48 of the Revised Penal Code consists
of the twin circumstances of the victim's minority and her relationship to the perpetrator,
both of which must concur and must be alleged in the information.49 It is immaterial
whether the relationship was proven during trial if that was not specifically pleaded for in
the information.
The Court of Appeals 51 and the Regional Trial Court 52 found that accused-appellant's
relationship with AAA was not duly alleged in the informations. Thus, his relationship
with the victim cannot qualify the crimes of rape. Ruling otherwise would deprive him of
his constitutional right to be informed of the nature and cause of accusation against
him. 53
Simple rape is punishable by reclusion perpetua.54 Even if the aggravating

circumstances of minority and relationship were present, the appropriate penalty would
still be reclusion perpetua under the law. Article 63 of the Revised Penal Code provides
that "in all cases in which the law prescribes a single indivisible penalty, it shall be
applied by the courts regardless of any mitigating or aggravating circumstances that
may have attended the commission of the deed."
In view of the depravity of the acts committed by accused-appellant against his

daughter, we increase the amounts awarded to AAA, in accordance with
jurisprudence: 55
For each incident of rape through carnal knowledge, this Court modifies the award of
civil indemnity from ₱50,000 to ₱l00,000.00; moral damages from ₱50,000 to ₱l00,000;
and exemplary damages from ₱30,000 to ₱l00,000.
WHEREFORE, finding accused-appellant Pablo Luad Armodia GUILTY beyond

reasonable doubt, he is hereby SENTENCED as follows:
In Criminal Case No. DN0-2983 for simple rape - the penalty of reclusion
perpetua without eligibility for parole and .to pay AAA the amount of ₱l00,000.00 as civil
indemnity, ₱l00,000.00 as moral damages, and ₱l00,000.00 as exemplary damages;
and
In Criminal Case No. DN0-2998 for simple rape - the penalty of reclusion
perpetua without eligibility for parole and to pay AAA the amount of ₱l00,000.00 as civil
indemnity, ₱l00,000.00 as moral damages, and ₱l00,000.00 as exemplary damages.
All awards for damages are with interest at the legal rate of six percent (6%) per
annum from the date of finality of this judgment until fully paid.56
SO ORDERED.

Associate Justice
WE CONCUR:

Associate Justice
Chairperson
(On Official Leave)

DIOSDADO M. PERALTA
JOSE CATRAL MENDOZA
Associate Justice
Associate Justice
(On Official Leave)

SAMUEL R. MARTIRES
Associate Justice
ATTESTATION
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Court’s Division.

Chief Justice
Footnotes
* On official leave.
** On official leave.
2 Id.
3 Id.at7.
4 Id. at 5.
5 Id.
6 Id.
7 Id.
8 Id.
9 Id.
10 Id. at 5-6.
11 Id. at 6.
12 Id. at 8.
13 Id. at 8.
14 Id. at 6.
15 Id. at 8.
16 Id. at 6.
17 Id.
18 Id.
19 Id.
20 Id. at 8.
21 CA rollo, p. 26.
22 Id. at 27.
23 Id.
24 Id.
25 Rollo, p. 6.
26 Id.
27 Id.
28CA Rollo, pp. 26-40. The Decision was penned by Assisting Judge Sylva G.
Aguirre Paderanga of Branch 25, Regional Trial Court of Danao City.
29 357 Phil. 656 (1998) [Per J. Regalado, En Banc].
30 CA Rollo, p. 39.
31 Rollo, p. 6.
32 CA rollo, p. 40.
33 Rollo, p. 7.
34Id. at 3-10. The Decision was promulgated on August 15, 2013, docketed as
CA-G.R. CEB-C.R.-H.C. No. 01489, and was penned by Associate Justice
Ramon Paul L. Hernando and concurred in by Associate Justices Carmelita
Salandanan-Manahan and Ma. Luisa C. Quijano-Padilla of the Twentieth (20th)
Division, Court of Appeals, Cebu City.
35 Id. at 10.
36RULES OF COURT, Rule 122, sec. 3(c) states: The appeal to the Supreme
Court in cases where the penalty imposed by the Regional Trial Court is
death, reclusion perpetua, or life imprisonment, or where a lesser penalty is
imposed but for offenses committed on the same occasion or which arose out of
the same occurrence that gave rise to the moreserious offense for which the
penalty of death, reclusion perpetua, or life imprisonment is imposed,
shall be by filing a notice of appeal in accordance with paragraph (a) of this

section.
37 Rollo, pp. 5--6.
38 CONST., art. XIV, sec. 2(2) recognizes that parents have the "natural right ...
to rear their children."
39CIVIL CODE, art. 311 states that "[c]hildren are obliged to obey their parents
so long as they are under parental power, and to observe respect and reverence
toward them always."
40 People v. Panique, 375 Phil. 227, 238 (1999) [Per J. Mendoza, En Banc].
41 People v. Guillermo, 550 Phil. 176, 188 (2007) [Per J. Garcia, En Banc].
42 People v. Baun, 584 Phil. 560, 574 (2008) [Per J. Azcuna, En Banc].
43 Id.
44 Id.
45 584 Phil. 560 (2008) [Per J. Azcuna, En Banc].
46 Id. at 574.
47People v. Liwanag, 415 Phil. 271, 295 (2001) [Per J. Ynares-Santiago, First
Division].
48 Article 266-B. Penalties-
The death penalty shall also be imposed if the crime of rape is committed with
any of the following aggravating/qualifying circumstances:
1) When the victim is under eighteen (18) years of age andthe offender is a
parent. .. of the victim[.]
49 People v. Malana, 646 Phil. 290, 3 10 (2010) [Per J. Perez, First Division].
50 People v. Jlao, 357 Phil. 656, 671 (1998) [Per J. Regalado, En Banc].
51 Rollo, p. 9.
52 CA Rollo, pp. 38-40.
53Andaya v. People, 526 Phil. 480, 496 (2006) [Per J. Ynares-Santiago, First
Division].
54 See Article 266-B, Revised Penal Code.
55People v. Jugueta, G.R. No. 202124, April 5, 2016
<http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/20l6/april2016/
202124.pdf> [Per J. Peralta, En Banc].
56 Rica/de v. People, 751 Phil. 793, 816 (2015) [Per J. Leonen, Second Division].

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G.R. No. 202430 - METRO BOTTLED WATER CORPORATION, PETITIONER, v.

ANDRADA CONSTRUCTION & DEVELOPMENT CORPORATION, INC.,

G.R. No. 202430, March 06, 2019

METRO BOTTLED WATER CORPORATION, PETITIONER, v. ANDRADA

In either case, any addition or reduction in the Contract Price or extension

On September 6, 1996, Andrada Construction wrote to Metro Bottled Water contesting

According to the Construction Industry Arbitration Commission, Andrada Construction

6% per annum on P4,607,523.40 reckoned

Accordingly, judgment is hereby rendered ordering Metro Bottled Water Corporation to

SO ORDERED, April 11, 2002.33

Respondent counters that petitioner assails the competence of the Construction

However, the jurisdiction of construction arbitration tribunals and voluntary arbitrators is

Moreover, judicial or quasi-judicial jurisdiction cannot be conferred upon a tribunal by

Voluntary arbitration involves the reference of a dispute to an impartial body, the

In either case, any addition or reduction in the Contract Price or extension

Liquidated damages102 may be awarded if the contract provides for a monetary

The Construction Industry Arbitration Commission may employ aids in interpretation

The Construction Industry Arbitration Commission, however, cannot be faulted for

June 17, 2019

Very truly yours,

(SGD) WILFREDO V. LAPITAN

Division Clerk of Court

* Designated additional Member per Raffle dated February 27, 2019.

2 A.M. No. 07-11 -08-SC (2009).

ARTICLE 219. [212] Definitions. — . . . . . . .

G.R. No. 182307, June 06, 2018

BELINA CANCIO AND JEREMY PAMPOLINA, Petitioners, v. PERFORMANCE

Performance Forex is a corporation operating as a financial broker/agent between

b. the amount of Php50,000.00 as attorney's fees; Php100,000.00 moral damages and

Petitioners Cancio and Pampolina argue that bonafide transactions in respondent

The review of a finding of negligence involves a question of fact.90 It is evidentiary in

[OPEN NEW POSITION]

It would be different if Hipol committed a series of infractions and respondent continued

We hope we have satisfactorily clarified your concerns.

Very truly yours,

FOREIGN EXCHANGE TRADING

The public is advised that TRADING OF COMMODITIES FUTURES CONTRACTS IN

The public is encouraged to report to the Commission entities operating Foreign

Velasco, Jr., (Chairperson), Bersamin, Martires, and Gesmundo, JJ., concur.

Very truly yours,

Division Clerk of Court

1Rollo, pp. 23-52.

(1) When exemplary damages are awarded[.]

FIRST SARMIENTO PROPERTY HOLDINGS, INC., Petitioner, v. PHILIPPINE BANK

The facts as established by the parties are as follows:

On January 2, 2006,10 PBCOM filed a Petition for Extrajudicial Foreclosure of Real

In its Opposition (Re: Application for Issuance of Temporary Restraining

Accordingly, the instant case is hereby DISMISSED.

Finally, it denies that Home Guaranty Corporation modified and reversed Lu v. Lu

On May 30, 2013, the parties filed their respective memoranda. 46

Doña Adela Export International v. Trade and Investment Development

The petition is meritorious.

9. The auction sale of the properties is set on December 29, 2011.

However, if issued by the Court of Appeals or a member thereof, the temporary

This Court has repeatedly expounded on the nature of a temporary restraining

1Rollo, pp. 3-20.

Section 5. The Supreme Court shall have the following powers:

(e) All cases in which only an error or question of law is involved.

November 29, 2017

G.R. No. 206965

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee

Section 21 of Republic Act No. 9165, otherwise known as the Comprehensive

On May 15, 2003, Pangan pleaded not guilty to the charge.10