Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 198501 January 30, 2013
KESTREL SHIPPING CO., INC./ CAPT. AMADOR P. SERVILLON and ATLANTIC
MANNING LTD., Petitioners,
vs.
FRANCISCO D. MUNAR, Respondent.
D E C I S I O N
REYES, J.:
This is a petition for review on certiorari assailing the Decision
1
dated January 28, 2011
and Resolution
2
dated September 6, 2011 of the Court of Appeals (CA) in CA-G.R. SP
No. 110878.
The facts leading to the filing of this petition are undisputed.
On March 23, 2006, petitioner Kestrel Shipping, Inc. (Kestrel), on behalf of its principal,
petitioner Atlantic Manning, Ltd., and respondent Francisco Munar (Munar) forged a six
(6)-month employment contract designating Munar as pump man for M/V Southern
Unity. As pump man, his duties include: (a) operating, maintaining and repairing power-
driven pumps, valves and related machinery; (b) transferring materials to and from
vessels and terminal storages; (c) transferring liquids by siphoning; (d) installing hoses
and pipes between pumps and containers that require filling or emptying; (e)
maintenance of pump rooms and similar spaces; (f) assisting in the cleaning of tanks,
crude oil washing, gas inerting, purging of tanks and wage sampling of cargo; (g)
checking and recording cargo temperature; and (h) operating tank heating equipment.
3

On October 12, 2006, after Munar assisted in manually lifting the ships anchor windlass
motor that weighs about 350 kilograms, he started to limp and experience severe pain
in his lumbar region. On October 18, 2006, Munar was admitted at the Entabeni
Hospital in Durban, South Africa. According to his attending physician, Dr. Soma T.
Govender (Dr. Govender), the x-ray and magnetic resonant image (MRI) of Munars
lumbar spine showed degenerative changes, which required him to take pain
medication, use pelvic traction, and undergo physiotherapy. In his medical report
4

dated October 19, 2006, Dr. Govender stated that:
I arranged for him to have lumbar spine x-rays and this showed that he had
degenerative changes especially of the lower lumbar spine in the L3/4 and L5/S1 region
with degenerative changes noted bilaterally. I proceeded to do a MRI of the lumbar
spine to exclude an acute prolapsed disc and this confirmed degenerative changes of
the lumbar spine extending from the L2/3 region and L3/4 and the worst affected levels
appeared to be L4/5 and L5/S1.
x x x x
I have admitted him for a course on intensive conservative management in hospital. He
has been commenced on pelvic traction and been given pain medication, which includes
Narcotic analgesia, muscle relaxants, and anti-inflammatories. I have also commenced
him on a course of physiotherapy and hopefully with this conservative mode of
treatment he should show sufficient improvement to obviate any spinal surgery.
5

On October 24, 2006, Dr. Govender issued another medical report
6
where he stated
that while Munars improved condition allowed him to travel, he would require
assistance in carrying his things and should be lying down for the entire duration of the
trip. Munar should undergo further treatment and management in a spine rehabilitation
facility but if he would not register a positive response thereto, he must undergo
surgery. Specifically:
Mr. Munar is currently recovered from the acute pain syndrome that he first presented
with. Although he has not recuperated completely he has progressed to the state were
he will be able to travel back to the Phillipines (sic) with assistance. He will require
assistance with regard to his baggage transfers and he should also be accommodated
on the aircraft so that he can lie down, as this would minimize the amount of pressure
on his lumbar inter-vertebral disc and minimize the nerve root compression. It is
reasonable to assume that the heavy lifting that forms part of his daily work duties has
contributed significantly to the abnormalities demonstrated on his lumbar spine MRI
scans. x x x.
Mr. Munar will require further treatment and management in the Philippines. I would
recommend a further course of conservative treatment for a few more weeks. If this
does not settle he may then require surgical intervention with decompression of the
areas of stenosis (narrowing) and removal of the disc fragments that are compressing
the nerve roots and a possible fusion of his lower back. However, this will depend on
the response to the conservative treatment and his recovery after such surgery may
take up to 3 months.
7

Dr. Govender also declared Munar unfit to perform his usual sea duties:
Whether he has further surgery or not, it will not be possible for Mr. Munar to continue
performing the "heavy manual duties" that hisjob requires any longer, as this could
exacerbate his lumbar spine problem. From this perspective he is medically unfit to
continue such duties. x x x
8

On October 28, 2006, Munar was repatriated.
On October 30, 2006, Munar was admitted at the Chinese General Hospital. For two (2)
weeks, he underwent intensive physiotherapy and was attended to by the following
doctors: Dr. Tiong Sam Lim (Dr. Lim), a spine surgeon; Dr. Antonio Periquet (Dr.
Periquet), a specialist on physical rehabilitation medicine; and Dr. Fidel Chua (Dr. Chua)
of Trans Global Health Systems, Inc. to whom Kestrel referred his case for evaluation.
9

On November 17, 2006, Dr. Chua issued a medical report,
10
stating that Munar did not
respond positively to the treatment and recommending that he undergo laminectomy
and dissectomy, procedures which would entail a recovery period from four (4) to six
(6) months:
The above patient had 2 weeks intensitive (sic) physiotherapy but no improvement. I
had conference with Dr. Tiong Sam Lim (spinal surgeon) and Dr. Antonio Periquet
(rehabilitation medicine) and strongly suggest patient to undergo Laminectomy &
dissectomy which will approximately cost PHP 120,000.00 to PHP 150,000.00 barring
complication.
Recuperation will take 4-6 months from date of operation.
11

On December 2, 2006, Munar had surgical intervention.
On December 20, 2006, he was discharged from the hospital. In his medical report
12
of
even date, Dr. Chua diagnosed Munar as suffering from herniated disc and that while
the surgery was successful, Munar should continue physiotherapy:
The above patient discharged today from Chinese General Hospital. He underwent
Laminectomy and Dissectomy last December 2, 2006. Since he is from La Union, he
may continue his physiotherapy in his hometown.
At present, the prognosis is good and recuperation will take 4-6 months from date of
operation.
13

Munar continued his physiotherapy sessions at Lorma Medical Center at Carlatan, San
Fernando City, La Union.
14

On February 27, 2007, Munar was physically examined by Dr. Lim and Dr. Periquet. The
following observations were noted in the medical report Dr. Chua issued:
Patient was re-evaluated by Dr. Tiong Sam Lim with finding of right lower extremities
has improved but there is still pain on straight leg raise of left and weak extensor hallis
longes.
He was also evaluated by Dr. Antonio Periquet with following finding
1. there is a decrease in pain
2. tenderness lumbar paravertebral
3. weakness left lower extremity
4. decrease in sensation from T 10 down
5. SLR 30o left; full right
6. decrease ankle jerk left
7. pain on all trunk motion
15

On April 11 and 12, 2007, Munar was once again examined by Dr. Periquet and Dr. Lim,
respectively. On May 3, 2007, Dr. Chua issued a medical report
16
where he enumerated
the findings of Dr. Periquet and Dr. Lim and rated Munars impediment as Grade 8.
The above patient was re-evaluated by Dr. Antonio Periquet on April 11, 2007 with
report of pain level is 5/10
- SLR-45o bilateral, weakness left foot muscle, decrease sensation below mid-
thigh
- Tenderness-lumbo sacral process and left lumbar area
- Pain on side bending and forward flexion
He is advised to continue physiotherapy.
He was also seen by Dr. Tiong Sam Lim on April 12, 2007 and advised to continue
physiotherapy and recommended disability assessment.
After thorough evaluation, the report of Dr. Antonio Periquet; Dr. Tiong Sam Lim and
Dr. Edward Lingayo, patient will take a long time to fully recovered.
Therefore, he may be given disability.
Based on Amended POEA Contract Section 32-CHEST-TRUNK-SPINE # 5-disability
grade 8.
17

Meantime, on April 17, 2007, Munar filed a complaint for total and permanent disability
benefits. His complaint was docketed as NLRC-NCR Case No. OFW-07-04-00970-00 and
raffled to Labor Arbiter Veneranda Guerrero (LA Guerrero). Munar claimed that the
mere fact that his medical condition, which incapacitated him to engage in any gainful
employment, persisted for more than 120 days automatically entitles him to total and
permanent disability benefits.
During the mandatory mediation and conciliation conferences, petitioners invoked Dr.
Chuas assessment per his medical report dated May 3, 2007 and offered to pay Munar
the benefit corresponding to Grade 8 disabilities or $16,795.00. Munar rejected
petitioners offer and maintained that his disability should be rated as Grade 1. Munar
relied on the following assessment made by Dr. Edward L. Chiu (Dr. Chiu), an
orthopedic surgeon at Lorma Medical Center, in a medical certificate
18
the latter issued
on May 21, 2007:
At present, he could tolerate walking for short distances due to his low back pain. There
is weakness of his left foot.
Due to his back injury and pain, he could not go back to work. He could not tolerate
stren[u]ous physical activities.
19

In a Decision
20
dated May 30, 2008, LA Guerrero awarded Munar with total and
permanent disability benefits in the amount of US$60,000.00 and attorneys fees
equivalent to ten percent (10%) of the former. As between the assessment of Dr. Chua
and that of Dr. Chiu, LA Guerrero gave more weight to the latter:
Assessing the parties respective averments and documents adduced in support thereof,
this Office finds that the complainant is entitled to the maximum compensation benefit
as provided under the POEA Standard Employment Contract in the amount of
US$60,000.00.
The medical certificate issued by Dr. Edward L. Chiu dated May 21, 2007 categorically
states that complainant cannot go back to work due to his back injury and that he
cannot tolerate strenuous physical activities. Given the nature of his shipboard
employment, it is logical to conclude that the complainant cannot resume shipboard
employment. This conclusion is borne out by the respondents own medical certificate
showing that after the complainant underwent surgery in December, 2006 he was
expected to recuperate for a period of 4-6 months, and on May 3, 2007 the
respondents designated physician determined that the complainant "will take a long
time to fully recovered (sic)". And, while he was assessed with Impediment Grade 8,
the assessment is not accompanied by any justification, other than the vague
qualification on the length of time of recovery.
Evidently, such ambiguous assessment, vis--vis that made by the complainants
independent physician who had taken over the complainants therapy, cannot be a basis
for the grant of the assessed disability grading. The determination of the company
designated physician cannot prevail over the specific assessment made by the
independent physician.
Verily the illness sustained by the complainant has rendered him unfit to continue his
employment as seafarer. Accordingly, he is entitled to the maximum compensation
benefit of US$60,000.00.
It is well-settled that:
"disability should not be understood more on its medical significance but on the loss of
earning capacity. Permanent total disability means disablement of an employee to earn
wages in the same kind of work, or work of similar nature that (he) was trained for or
accustomed to perform, or any kind of work which a person of (his) mentality and
attainment could do. It does not mean absolute helplessness. In disability
compensation, We likewise held, it is not the injury which is compensated, but rather it
is the incapacity to work resulting in the impairment of ones earning capacity."
(Philippine Transmarine, Inc., vs. NLRC 353 SCRA 47)
21

On appeal by petitioners, the National Labor Relations Commission (NLRC) affirmed LA
Guerreros Decision dated May 30, 2008. In a Decision
22
dated June 30, 2009, the NLRC
ruled that Dr. Chius categorical and definite assessment should prevail over that of Dr.
Chua, which failed to approximate the period needed by Munar to fully recover and
lacked clear basis.
Given the report of the company-designated physician who is unsure how much time
complainant needs in order to fully recover, and the report of complainants physician
who is certain in his own findings that complainant cannot go back to work given his
present condition, this Commission has no other obvious choice than to place its
confidence and accordingly uphold the findings of complainants physician.
23

The NLRC denied petitioners motion for reconsideration in a Resolution
24
dated August
28, 2009.
Petitioners filed a petition for certiorari
25
with the CA, alleging that the NLRC acted with
grave abuse of discretion in characterizing Munars disability as total and permanent.
The NLRC should have upheld Dr. Chuas findings over those of Dr. Chiu whose
knowledge of Munars case is questionable. Apart from the fact that it is Dr. Chua,
being the company designated physician, who is tasked under the Philippine Overseas
Employment Administration-Standard Employment Contract (POEA-SEC) to determine
the nature and degree of a seafarers disability or his fitness to perform sea duties, the
reliability of his assessment springs from his undisputed familiarity with Munars medical
condition. As one of Munars attending physicians from the time he was repatriated, Dr.
Chua is in a position to give a more accurate appraisal of Munars disability. Moreover,
Dr. Chuas assessment is based on the findings of Dr. Lim and Dr. Periquet who are
both specialists in the treatment and management of spine injuries. Furthermore, under
the POEA-SEC, herniated disc is not one of the disabilities that are classified as Grade 1.
Munars herniated or slipped disc only resulted to partial loss of motion of his lower
extremities, which is classified as Grade 8 impediment under Section 32 of the POEA-
SEC. Petitioners claim that for a spine injury to be considered as Grade 1 disability, it
should have brought forth incontinence or rendered walking impossible even with the
aid of crutches.
By way of the assailed decision, the CA found no grave abuse of discretion on the part
of the NLRC and ruled that Munars continued inability to perform his usual sea duties,
which is attributable to his medical condition that is work-related, despite surgery and
seven (7) months of physical therapy, conclusively indicate that he is totally and
permanently disabled. The CA noted that while the company-designated doctors did not
categorically state that Munar is unfit for sea duties, this is easily inferable from their
statement that he continues to experience pain, weakness and tenderness and would
take a long time to recover.
In the case at bar, despite his having undergone surgeries, treatment and physical
therapy of more than seven months from the injury, Munar is still found by all
physicians involved to continue to suffer from weakness, tenderness and pain that
prevent him from doing strenuous activities. In fact, Kestrels own designated
physicians have stated this in their last report and found that Munar was entitled to
disability benefits as he "(would) take a long time to fully recover." Though they did not
state it, it is clear from these findings that Munar is still unable to return to his
customary work as a seafarer in an ocean-going vessel, due to the strenuous nature of
the work demanded by it. No profit-motivated ship owner will employ Munar because of
his condition. Munars private physicians statement of this fact in his own report merely
confirms what is already obvious. Should he even try, Munar is certain to get
disqualified as seafarer since such an employment will require him to undergo rigorous
physical examinations which he is sure to fail because of the sorry state of his physical
health.
Thus, it is not even necessary to address Kestrel et al.s arguments as to the persuasive
or binding nature of the findings of the company-designated physicians since, as earlier
stated, they have been ruled to be not binding nor conclusive on the courts. In fact, the
findings of Kestrels company-designated doctors themselves do not categorically state
that Munar is fit to return to work; on the contrary, they state that Munar still suffers
from weakness, tenderness and pain and is entitled to disability benefits. Thus, the only
issue left for resolution is the amount of disability payments due to Munar.
26
(Citations
omitted)
Nonetheless, while the CA agreed with the NLRC that Munars spine injury is a Grade 1
disability, it deemed proper to reduce the amount of attorneys fees to two percent
(2%) of his disability benefits.
We find, however, that the grant by public respondent of 10% of $60,000 as attorneys
fees is exorbitant and without any stated basis, since it was not proven that Kestrel[,]
et al. acted in gross and evident bad faith in denying Munars claim of Impediment
Grade 1 compensation. The records bear that Kestrel in fact offered to pay Impediment
Grade 8 compensation, or $16,795.00, to Munar in good faith, which the latter refused.
But since the instant case is an action for recovery of compensation by a laborer,
attorneys fees are still due based on Article 2208(8) of the Civil Code, albeit on a
reduced amount of two percent (2%) of the main award, which We deem to be the
reasonable fee under the circumstances.
27

In a Resolution
28
dated September 6, 2011, the CA denied petitioners motion for
reconsideration.
Issue
There is no dispute that Munars spine injury is work-related and that he is entitled to
disability benefits. The bone of contention is how to classify such injury in order to
determine the amount of benefits due to him. There is a conflict between the disability
ratings made by the company-designated physician and Munars doctor-of-choice and
petitioners claim that holding the latters determination to be more credible is contrary
to the provisions of the POEA-SEC and prevailing jurisprudence. Absent any substantial
challenge to the competence and skill of the company-designated doctors, there is no
reason why their assessment should not be given due credence.
Petitioners insist on the correctness of the grade assigned by their doctors on Munars
disability. According to petitioners, Munars herniated disc is not a Grade 1 impediment
as it did not disable him from walking or rendered him incontinent. Munar suffers from
"moderate rigidity or two thirds (2/3) loss of motion or lifting power of the trunk" and
under Section 32 of the POEA-SEC, this is a Grade 8 and not a Grade 1 impediment.
Munar cannot claim, petitioners further posit, that he is totally and permanently
disabled and claim the benefits corresponding to Grade 1 disabilities simply because he
has not yet fully recovered after the lapse of 120 days from the time he signed-off from
M/V Southern Unity. The nature of disability and the benefits attached thereto are
determined by the manner they are graded or classified under the POEA and not by the
number of days that a seafarer is under treatment. If a seafarer has an injury or
medical condition that is not considered a Grade 1 impediment under the POEA-SEC,
then he cannot claim that he is totally or permanently disabled. To allow the contrary
would render naught the schedule of disabilities under the POEA-SEC.
Our Ruling
This Court resolves to DENY the petition.
Indeed, under Section 32
29
of the POEA-SEC, only those injuries or disabilities that are
classified as Grade 1 may be considered as total and permanent. However, if those
injuries or disabilities with a disability grading from 2 to 14, hence, partial and
permanent, would incapacitate a seafarer from performing his usual sea duties for a
period of more than 120 or 240 days, depending on the need for further medical
treatment, then he is, under legal contemplation, totally and permanently disabled. In
other words, an impediment should be characterized as partial and permanent not only
under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so
under the relevant provisions of the Labor Code and the Amended Rules on Employee
Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the
seafarer is partially injured or disabled, he is not precluded from earning doing the
same work he had before his injury or disability or that he is accustomed or trained to
do. Otherwise, if his illness or injury prevents him from engaging in gainful employment
for more than 120 or 240 days, as the case may be, he shall be deemed totally and
permanently disabled.
Moreover, the company-designated physician is expected to arrive at a definite
assessment of the seafarers fitness to work or permanent disability within the period of
120 or 240 days. That should he fail to do so and the seafarers medical condition
remains unresolved, the seafarer shall be deemed totally and permanently disabled.
It is settled that the provisions of the Labor Code and AREC on disabilities are
applicable to the case of seafarers such that the POEA-SEC is not the sole issuance that
governs their rights in the event of work-related death, injury or illness. As ruled in
Remigio v. NLRC:
30

Second. Is the Labor Codes concept of permanent total disability applicable to the case
at bar? Petitioner claims to have suffered from permanent total disability as defined
under Article 192(c)(1) of the Labor Code, viz:
Art. 192 (c). The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one hundred twenty
days, except as otherwise provided in the Rules; x x x
Petitioner likewise cites Vicente v. ECC and Abaya, Jr. v. ECC, both of which were
decided applying the Labor Code provisions on disability benefits. Private respondents,
on the other hand, contend that petitioner erred in applying the definition of
"permanent total disability" under the Labor Code and cases decided under the ECC as
the instant case involves a contractual claim under the 1996 POEA SEC.
Again, we rule for petitioner.
The standard employment contract for seafarers was formulated by the POEA pursuant
to its mandate under E.O. No. 247 to "secure the best terms and conditions of
employment of Filipino contract workers and ensure compliance therewith" and to
"promote and protect the well-being of Filipino workers overseas." Section 29 of the
1996 POEA SEC itself provides that "all rights and obligations of the parties to the
Contract, including the annexes thereof, shall be governed by the laws of the Republic
of the Philippines, international conventions, treaties and covenants where the
Philippines is a signatory." Even without this provision, a contract of labor is so
impressed with public interest that the New Civil Code expressly subjects it to "the
special laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects."
Thus, the Court has applied the Labor Code concept of permanent total disability to the
case of seafarers. In Philippine Transmarine Carriers v. NLRC, seaman Carlos Nietes
was found to be suffering from congestive heart failure and cardiomyopathy and was
declared as unfit to work by the company-accredited physician. The Court affirmed the
award of disability benefits to the seaman, citing ECC v. Sanico, GSIS v. CA, and
Bejerano v. ECC that "disability should not be understood more on its medical
significance but on the loss of earning capacity. Permanent total disability means
disablement of an employee to earn wages in the same kind of work, or work of similar
nature that he was trained for or accustomed to perform, or any kind of work which a
person of hismentality and attainment could do. It does not mean absolute
helplessness." It likewise cited Bejerano v. ECC, that in a disability compensation, it is
not the injury which is compensated, but rather it is the incapacity to work resulting in
the impairment of ones earning capacity.
31
(Citations omitted)
In Vergara v. Hammonia Maritime Services, Inc.,
32
this Court read the POEA-SEC in
harmony with the Labor Code and the AREC in interpreting in holding that: (a) the 120
days provided under Section 20-B(3) of the POEA-SEC is the period given to the
employer to determine fitness to work and when the seafarer is deemed to be in a state
of total and temporary disability; (b) the 120 days of total and temporary disability may
be extended up to a maximum of 240 days should the seafarer require further medical
treatment; and (c) a total and temporary disability becomes permanent when so
declared by the company-designated physician within 120 or 240 days, as the case may
be, or upon the expiration of the said periods without a declaration of either fitness to
work or permanent disability and the seafarer is still unable to resume his regular
seafaring duties. Quoted below are the relevant portions of this Courts Decision dated
October 6, 2008:
In real terms, this means that the shipowneran employer operating outside Philippine
jurisdictiondoes not subject itself to Philippine laws, except to the extent that it
concedes the coverage and application of these laws under the POEA Standard
Employment Contract. On the matter of disability, the employer is not subject to
Philippine jurisdiction in terms of being compelled to contribute to the State Insurance
Fund that, under the Labor Code, Philippine employers are obliged to support. (This
Fund, administered by the Employees Compensation Commission, is the source of
work-related compensation payments for work-related deaths, injuries, and illnesses.)
Instead, the POEA Standard Employment Contract provides its own system of disability
compensation that approximates (and even exceeds) the benefits provided under
Philippine law. The standard terms agreed upon, as above pointed out, are intended to
be read and understood in accordance with Philippine laws, particularly, Articles 191 to
193 of the Labor Code and the applicable implementing rules and regulations in case of
any dispute, claim or grievance.
In this respect and in the context of the present case, Article 192(c)(1) of the Labor
Code provides that:
x x x x
The rule referred to Rule X, Section 2 of the Rules and Regulations implementing
Book IV of the Labor Code states:
x x x x
These provisions are to be read hand in hand with the POEA Standard Employment
Contract whose Section 20 (3) states:
x x x x
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to
the company-designated physician within three (3) days from arrival for diagnosis and
treatment. For the duration of the treatment but in no case to exceed 120 days, the
seaman is on temporary total disability as he is totally unable to work. He receives his
basic wage during this period until he is declared fit to work or his temporary disability
is acknowledged by the company to be permanent, either partially or totally, as his
condition is defined under the POEA Standard Employment Contract and by applicable
Philippine laws. If the 120 days initial period is exceeded and no such declaration is
made because the seafarer requires further medical attention, then the temporary total
disability period may be extended up to a maximum of 240 days, subject to the right of
the employer to declare within this period that a permanent partial or total disability
already exists. The seaman may of course also be declared fit to work at any time such
declaration is justified by his medical condition.
x x x x
As we outlined above, a temporary total disability only becomes permanent when so
declared by the company physician within the periods he is allowed to do so, or upon
the expiration of the maximum 240-day medical treatment period without a declaration
of either fitness to work or the existence of a permanent disability. In the present case,
while the initial 120-day treatment or temporary total disability period was exceeded,
the company-designated doctor duly made a declaration well within the extended 240-
day period that the petitioner was fit to work. Viewed from this perspective, both the
NLRC and CA were legally correct when they refused to recognize any disability because
the petitioner had already been declared fit to resume his duties. In the absence of any
disability after his temporary total disability was addressed, any further discussion of
permanent partial and total disability, their existence, distinctions and consequences,
becomes a surplusage that serves no useful purpose.
33
(Citations omitted)
Consequently, if after the lapse of the stated periods, the seafarer is still incapacitated
to perform his usual sea duties and the company-designated physician had not yet
declared him fit to work or permanently disabled, whether total or permanent, the
conclusive presumption that the latter is totally and permanently disabled arises. On the
other hand, if the company-designated physician declares the seaman fit to work within
the said periods, such declaration should be respected unless the physician chosen by
the seaman and the doctor selected by both the seaman and his employer declare
otherwise. As provided under Section 20-B(3) of the POEA-SEC, a seafarer may consult
another doctor and in case the latters findings differ from those of the company-
designated physician, the opinion of a third doctor chosen by both parties may be
secured and such shall be final and binding. The same procedure should be observed in
case a seafarer, believing that he is totally and permanently disabled, disagrees with
the declaration of the company-designated physician that he is partially and
permanently disabled.
In Vergara, as between the determinations made by the company-designated physician
and the doctor appointed by the seaman, the former should prevail absent any
indication that the above procedure was complied with:
The POEA Standard Employment Contract and the CBA clearly provide that when a
seafarer sustains a work-related illness or injury while on board the vessel, his fitness or
unfitness for work shall be determined by the company-designated physician. If the
physician appointed by the seafarer disagrees with the company-designated physicians
assessment, the opinion of a third doctor may be agreed jointly between the employer
and the seafarer to be the decision final and binding on them.
Thus, while petitioner had the right to seek a second and even a third opinion, the final
determination of whose decision must prevail must be done in accordance with an
agreed procedure. Unfortunately, the petitioner did not avail of this procedure; hence,
we have no option but to declare that the company-designated doctors certification is
the final determination that must prevail. x x x.
34
(Citation omitted)
In this case, the following are undisputed: (a) when Munar filed a complaint for total
and permanent disability benefits on April 17, 2007, 181 days had lapsed from the time
he signed-off from M/V Southern Unity on October 18, 2006; (b) Dr. Chua issued a
disability grading on May 3, 2007 or after the lapse of 197 days; and (c) Munar secured
the opinion of Dr. Chiu on May 21, 2007; (d) no third doctor was consulted by the
parties; and (e) Munar did not question the competence and skill of the company-
designated physicians and their familiarity with his medical condition.
It may be argued that these provide sufficient grounds for the dismissal of Munars
complaint. Considering that the 240-day period had not yet lapsed when the NLRC was
asked to intervene, Munars complaint is premature and no cause of action for total and
permanent disability benefits had set in. While beyond the 120-day period, Dr. Chuas
medical report dated May 3, 2007 was issued within the 240-day period. Moreover,
Munar did not contest Dr. Chuas findings using the procedure outlined under Section
20-B(3) of the POEA-SEC. For being Munars attending physicians from the time he was
repatriated and given their specialization in spine injuries, the findings of Dr. Periquet
and Dr. Lim constitute sufficient bases for Dr. Chuas disability grading. As Munar did
not allege, much less, prove the contrary, there exists no reason why Dr. Chius
assessment should be preferred over that of Dr. Chua.
It must be noted, however, that when Munar filed his complaint, Dr. Chua had not yet
determined the nature and extent of Munars disability. Also, Munar was still undergoing
physical therapy and his spine injury had yet been fully addressed. Furthermore, when
Munar filed a claim for total and permanent disability benefits, more than 120 days had
gone by and the prevailing rule then was that enunciated by this Court in Crystal
Shipping, Inc. v. Natividad
35
that total and permanent disability refers to the seafarers
incapacity to perform his customary sea duties for more than 120 days. Particularly:
Permanent disability is the inability of a worker to perform his job for more than 120
days, regardless of whether or not he loses the use of any part of his body. As gleaned
from the records, respondent was unable to work from August 18, 1998 to February 22,
1999, at the least, or more than 120 days, due to his medical treatment. This clearly
shows that his disability was permanent.
Total disability, on the other hand, means the disablement of an employee to earn
wages in the same kind of work of similar nature that he was trained for, or
accustomed to perform, or any kind of work which a person of his mentality and
attainments could do. It does not mean absolute helplessness. In disability
compensation, it is not the injury which is compensated, but rather it is the incapacity
to work resulting in the impairment of ones earning capacity.
x x x x
Petitioners tried to contest the above findings by showing that respondent was able to
work again as a chief mate in March 2001. Nonetheless, this information does not alter
the fact that as a result of his illness, respondent was unable to work as a chief mate
for almost three years. It is of no consequence that respondent was cured after a
couple of years. The law does not require that the illness should be incurable. What is
important is that he was unable to perform his customary work for more than 120 days
which constitutes permanent total disability. An award of a total and permanent
disability benefit would be germane to the purpose of the benefit, which is to help the
employee in making ends meet at the time when he is unable to work.
36
(Citations
omitted and emphasis supplied)
Consequently, that after the expiration of the 120-day period, Dr. Chua had not yet
made any declaration as to Munars fitness to work and Munar had not yet fully
recovered and was still incapacitated to work sufficed to entitle the latter to total and
permanent disability benefits.
In addition, that it was by operation of law that brought forth the conclusive
presumption that Munar is totally and permanently disabled, there is no legal
compulsion for him to observe the procedure prescribed under Section 20-B(3) of the
POEA-SEC. A seafarers compliance with such procedure presupposes that the
company-designated physician came up with an assessment as to his fitness or
unfitness to work before the expiration of the 120-day or 240-day periods. Alternatively
put, absent a certification from the company-designated physician, the seafarer had
nothing to contest and the law steps in to conclusively characterize his disability as total
and permanent.
This Courts pronouncements in Vergara presented a restraint against the indiscriminate
reliance on Crystal Shipping such that a seafarer is immediately catapulted into filing a
complaint for total and permanent disability benefits after the expiration of 120 days
from the time he signed-off from the vessel to which he was assigned. Particularly, a
seafarers inability to work and the failure of the company-designated physician to
determine fitness or unfitness to work despite the lapse of 120 days will not
automatically bring about a shift in the seafarers state from total and temporary to
total and permanent, considering that the condition of total and temporary disability
may be extended up to a maximum of 240 days.
Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years
from the time Munar filed his complaint and observance of the principle of prospectivity
dictates that Vergara should not operate to strip Munar of his cause of action for total
and permanent disability that had already accrued as a result of his continued inability
to perform his customary work and the failure of the company-designated physician to
issue a final assessment.
WHEREFORE, premises considered, the petition is DENIED. The Decision dated January
28, 2011 and Resolution dated September 6, 2011 of the Court of Appeals in CA-G.R.
SP No. 110878 are AFFIRMED.
SO ORDERED.

************************ooooooooo**************************************















SECOND DIVISION
G.R. No. 167158 January 30, 2013
VIRGINIA JUDY DY and GABRIEL DY, Petitioners,
vs.
PHILIPPINE BANKING CORPORATION,
1
Respondent.
D E C I S I O N
CARPIO, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the 22 July 2004 Decision
2
and the 17 February 2005 Resolution
3
of the
Court of Appeals (CA) in CA-G.R. CV No. 57331. The CA affirmed with modification the
14 July 1997 Decision
4
of the Regional Trial Court (RTC) of Pasig City, Branch 154, in
Civil Case No. 58672, an action for sum of money filed by respondent Philippine
Banking Corporation (Philbank) against petitioners Virginia Judy Dy (Dy), Gabriel Dy,
5

Marina International Marketing Corporation (Marina), Caezar Tanjutco (Tanjutco), .Joel
Alindogan (Alindogan), Efren Mercado (Mercado), and Intercontinental Cargo
Specialists, Inc.
The Facts
Sometime in 1989, Philbanks Internal Auditing Department conducted a verification and
audit of Marinas accounts with the formers Balintawak, Quezon City branch.
6
The audit
team discovered that there were "fraudulent manipulations and falsification of
commercial documents involving, among others, bank drafts, invoices, bills of lading,
packing list, certificates of origin, medical and quarantine clearances and other related
documents resulting in loss to the bank of the amount of US$1,538,094.49" in Marinas
export accounts with the bank.
7

On 22 September 1989, Philbank filed a complaint for a sum of money with preliminary
attachment against Marina, Tanjutco, and Alindogan. The complaint was later amended
to include the Dy spouses and Mercado as defendants.
8

The investigation had revealed that in June 1989, Tanjutco and Alindogan negotiated
with Philbank the following export shipping documents:
Date of Negotiation Reference No. Amount
June 7, 1989 EBBAL 140.89 US$ 116,688.14
June 7, 1989 EBBAL 141.89 US$ 118,012.26
June 9, 1989 EBBAL 144.89 US$ 116,656.37
June 15, 1989 EBBAL 145.89 US$ 91,833.90
June 15, 1989 EBBAL 146.89 US$ 92,202.42
June 15, 1989 EBBAL 147.89 US$ 93,104.72
June 15, 1989 EBBAL 148.89 US$ 91,117.16
June 15, 1989 EBBAL 149.89 US$ 110,997.54
June 22, 1989 EBBAL 160.89 US$ 105,167.14
June 23, 1989 EBBAL 161.89 US$ 104,339.47
June 23, 1989 EBBAL 162.89 US$ 105,969.07
June 23, 1989 EBBAL 163.89 US$ 101,790.06
June 24, 1989 EBBAL 165.89 US$ 99,717.80
June 24, 1989 EBBAL 166.89 US$ 95,416.68
June 24, 1989 EBBAL 167.89 US$ 95,081.76
TOTAL

US$1,538,094.49
Philbank found that its bank officers, Dy and Mercado, authorized the negotiation of the
abovementioned shipping documents despite these being marked as "non-negotiable."
9

It further alleged that Dy and Mercado colluded with Tanjutco and Alindogan in the
scheme to defraud the bank.
When Philbank demanded the surrender of the negotiable bills of lading, with the
corresponding stamp "merchandise loaded on board," in order to obtain reimbursement
for the face value of the documents, Tanjutco and Alindogan could not produce them.
10

It was later found that there was, in fact, no merchandise to be shipped and the
documents presented to the bank were fictitious and fraudulent.
Philbank also alleged that Dy and Mercado allowed the outright purchase of said
documents knowing them to be fictitious and fraudulent. It also argued that even
assuming the documents were genuine, Dy and Mercado could still be held liable for the
banks loss because they acted in excess of their authority since they approved the
transaction without the approval by the Board of Directors and contrary to bank
practice and procedure.
11

Marina, Tanjutco, and Alindogan denied any liability. They alleged that, assuming they
received said amount from the bank, it was by way of a loan, which was not yet due at
the time of the filing of the case before the RTC, and secured by the corporate earnings
of Marina. If at all, any liability should be borne by Marina alone, they averred.
12

They further alleged that the bank was bound by its officers actions and could not
belatedly repudiate such actions by claiming that these transactions were irregular,
fraudulent, and prejudicial to it. They claimed to have transacted with Philbanks
officers in good faith, honestly believing that the latter were acting under the authority
given to them by the bank.
13

On the other hand, Dy denied that she conspired with Tanjutco and Alindogan to
defraud Philbank.
14
She alleged that, while she had general supervision of Area II
which includes the Balintawak branch her participation in every transaction was not
indispensable.
15
She stated that she was never aware of any false pretenses committed
by Tanjutco and Alindogan and that she never authorized the purchase of the alleged
fraudulent documents.
16

Mercado, for his part, also denied any liability, alleging that all the transactions were
"handled in accordance with standard operating procedures and were referred to and
duly approved by his immediate superior, defendant Virginia Judy Dy."
17
He averred
that the subject transactions were "considered at the instance of and approved by
defendant Virginia Judy Dy who is the Assistant Vice-President and Area Head of
plaintiff bank, and under whose jurisdiction, direction and supervision defendant works
as branch manager."
18
Mercado also narrated that it was Dy who brought Marina in as
Philbanks client when she joined the bank on 15 January 1989 since it was one of her
clients in the bank where she was previously employed.
19

The Ruling of the RTC
In a Decision dated 14 July 1997, the RTC rendered judgment, the dispositive portion of
which states:
WHEREFORE, the foregoing premises considered, defendant Marina is held solely liable
to the plaintiff and is hereby ordered to pay the plaintiff the following:
a) to pay the plaintiff the sum of US$1,538,049.49 or equivalent to P21.923 to
US$ 1.00;
b) to pay 10% of the total amount due, as and for attorneys fees; and
c) cost of suit.
The complaint against Tanjutco, Alindogan, Spouses Judy Dy and Gabriel Dy, Mercado
and ICSI, together with their respective counterclaims and the crossclaim against
Marina, Tanjutco, Alindogan, Spouses Judy Dy and Gabriel Dy, [and] Mercado, are
hereby DISMISSED.
20

The RTC held that since the bank could not obtain reimbursements due to Marinas
failure to surrender the negotiable shipping documents, "an obligation on the part of
Marina then clearly arose and Philbanks right to sue to recover the said amount was
undeniable."
21
It further stated that the evident negligence of the banks officers "does
not exculpate defendant Marina from the fact that it owes plaintiff bank the amount
covered by the subject export documents."
22
Thus, the RTC ruled that the obligation to
pay Philbank was Marinas corporate liability, and consequently, dismissed the complaint
against Tanjutco, Alindogan, the Dy spouses, and Mercado.
The Ruling of the CA
Philbank appealed the RTC decision to the CA.
In the assailed 22 July 2004 decision, the CA affirmed with modification the RTC
decision, to wit:
WHEREFORE, premises considered, we hereby AFFIRM the lower courts decision with
the MODIFICATION that the defendants-appellees Caezar Tanjutco, Joel Alindogan, and
Virginia Judy Dy are held jointly and solidarily liable with MARINA for the reliefs
awarded by the lower court, with interest on the principal sum at 12% per annum from
the time of the judicial demand.
23
(Emphasis in the original)
The CA held Marina, Tanjutco, and Alindogan liable for the amounts that Philbank
paid.
24
The CA ruled that "[w]hen the officers of MARINA failed or refused to submit the
original bills of lading, MARINA violated the condition under which payment by Philbank
was made, and hence, is liable for the return of the amounts paid."
25

The CA pointed out that Tanjutco and Alindogan represented Marina in all its banking
transactions with Philbank. The documents Marinas officers negotiated with the bank
were marked "non-negotiable" but the same were accepted by the bank upon Tanjutco
and Alindogans promise that the original copies of the bills of lading would be
presented later on.
The CA also noted that Philbank sent various demand letters to the forwarders that
issued the non-negotiable bills of lading because the bills contained a remark that the
goods were already on board. That statement turned out to be an act of
misrepresentation by Tanjutco and Alindogan.
26

As to the liability of the banks officers, the CA upheld the RTCs judgment absolving
Mercado of liability but reversed the finding on Dys guilt. The CA ruled that Dy was
jointly and solidarily liable with Marina, Tanjutco, and Alindogan. The CA stated that
"the transactions under question transpired because of Judy Dys approval."
27

The CA also held that Dys testimony on her functions as bank manager was not
believable because it "defied logic, reason and common experience."
28
The CA noted
that Dy claimed to have no authority to approve Marinas transactions since loan
transactions were approved by the head office based on the recommendation of the
branch manager (Mercado).
She claimed that because of the volume of her work, there were some loans she did not
know of but still recommended because Mercado recommended them. She further
claimed that she did not read all the papers brought to her to sign because she did not
have enough time.
29

If Dy were truthful, the Court stated, it would appear that, as Philbanks Assistant Vice
President, she had no substantial duties or authority; she could not approve anything;
she had no control of bank operations (she claimed it was Mercado who oversaw daily
operations); and she would sign important documents without reading them.
30
The CA
concluded that, contrary to her claims, Dy approved the transactions subject of this
case.
31

Further, the CA noted that although there is no direct evidence of conspiracy between
Marina and Dy, "circumstances, if read together, point to a concert of action directed
towards the same end."
32
The CA stated that Tanjutco and Alindogan made it appear
that goods were on board the carrier, with all the necessary government clearances.
Thereafter, the only missing component to secure Philbanks payment was the
acceptance of the non-negotiable bills of lading, which only Dy could provide. The CA
held that Marinas non-submission of the original bills of lading evinced not only a
failure to comply with the banks requirements but a mode to divest Philbank of its
funds.
33
Thus, the CA concluded that there was collusion among Tanjutco, Alindogan,
and Dy.
34

The Issue
Petitioners raise this sole issue:
WHETHER OR NOT THE RESPONDENT PHILBANKS EVIDENCE HAVE SUFFICIENTLY
PROVED THAT PETITIONER JUDY DY WAS IN CONSPIRACY/COLLUSION WITH
DEFENDANTS MARINA, TANJUTCO AND ALINDOGAN TO DEFRAUD RESPONDENT OF
THE VALUE OF THE SUBJECT EXPORTS SHIPPING DOCUMENTS.
35

The Courts Ruling
The Court denies the petition and affirms the decision of the CA.
The evidence on record clearly bears out Dys liability. Based on the testimonies of the
witnesses, Dy brought in Marinas account to Philbank
36
and she directly transacted with
Marinas officers. Mercado testified:
Q: Why do you know that there are non-negotiable Bills of Lading?
A: The form itself states "non-negotiable copy".
Q: And why were these accepted by your bank?
A: This was approved on the promise that they will produce or present to us the original
Bills of Lading, the negotiable Bills of Lading.
Q: And to whom was this promise or statement to produce thenegotiable or original
Bills of Lading made?
A: This was promised to Mrs. Dy.
Q: And who made this promise?
A: Joel Alindogan and Cezar Tanjutco.
Q: And why do you know that there was such a promise made to Mrs.Dy?
A: Because when we made follow up on these lacking documents, they would tell us[,
"I]t is being arranged with Mrs. Dy and we promised her that we will produce the
original Bills of Lading".
37

More importantly, there would have been no completed transaction without Dys
approval. Her act of approving the transaction was the single most important factor that
allowed Tanjutco and Alindogans scheme to succeed.
As the CA noted, only Dy could have supplied the key element that Tanjutco and
Alindogan needed: the banks approval. Mercado, by himself, could not approve the
subject transactions. He had no such authority. He only signed the export documents
because Dy approved the same. As Mercado himself testified:
Q: So in your experience, is that possible, where a non-negotiabledocument can be
negotiated?
A: Well, in that case, it was negotiated based on the approval of Mrs. Dy.
Q: In your experience, other than this alleged subject matter?
A: During the time by the other Heads, it was not approved by them.
Q: Did you consider that as irregular because the Bills of Lading arenon-negotiable and
yet the same were being negotiated?
A: I would consider it regular if it was approved by my superior, sir.
x x x x
Q: Were you the one who sought the approval of those documents, thru Mrs. Dy?
A: No, by (sic) the Export Department, sir.
38

x x x x
Q: Now, you said that she is an Area head, do you know what herduties are, as Area
Head?
A: As an Area Head, she is in charge of the lending operations of several branches
under her supervision as well as the operation of other branches. In short, she is our
over all boss.
Q: When you said that she is in charge of the lending operations of the several
branches of the bank, in this lending operation, what particular function or duties does
she perform?
A: As an Area head, she approves the negotiations of our export bills.
x x x x
39

Q: Now, who approved the payment to Marina International for theseshipments?
A: Since these documents are incomplete, particularly the lack of original bill of Lading,
our Export Section (sic) so the Assistant sought the approval of Mrs. Dy, since this is an
account solicited by her and since she has the authority to approve the discrepancies.
40

x x x x
Q: You said a while ago that Mrs. Dy approved the payment on these export bills, do
you have any proof to show that she approved the payment for these export bills?
A: Yes, sir.
Q: Please present the same to the Honorable Court.
A: These are the proofs, sir.
41

x x x x
Atty. Altuna:
How do you categorize these documents counsel?
Atty. Lozano:
These are approval slips.
Q: You said that in these documents or in these approval slips, the export bills, the
approval on these export bills are shown in these approval slips of Mrs. Dy, will you
show to us where the approval of Mrs. Dy appears in these documents?
A: This is her initial and some are her actual signatures.
42

x x x x
Q: When payment on export bills are made, aside from Mrs. Dy, is there any other
officer authorized to approve these payments?
A: She is the only one, since she is our Area Head and the Head of the Lending Area
Center.
43

Dys liability was further explained by Philbanks internal auditor, Laurito Abalos
(Abalos). Abalos testified that Dy acted beyond her authority, considering that the
transaction was not considered a "regular" bank transaction.
A: Well, immediately when we discovered these things, that there were numerous
unpaid export bills, what we did is we asked them to submit all these supposedly export
bills, that the (sic) supposedly purchased and paid. Now, when we got these copies,
immediately we caused an investigation because this is not a regular transaction, it is
an irregular transaction. So, normally, once the bank or any bank purchased an export
bills. (sic) these are being sent to the corresponding bank for reimbursement. In this
case, the branch was holding all these supposedly export bills because there was no
original Bills of Lading. If there is (sic) not original Bills of Lading and the terms and
conditions of the Letters of Credit expressly stated that it has to be supported by a
negotiable Bills of Lading, then it cannot be sent for reimbursement abroad, so in this
particular case, it was never been sent by the branch because there was an irregular
practice in this particular transaction.
44
(Emphasis supplied)
x x x x
Q: Now, you said that per your audit, these export bills, while accompanied only by a
non-negotiable Bills of Lading were negotiated and defendant Marina International
Marketing Corporation was able to get payment of these export bills. Do you know,
from your audit, who approved the payment of these export bills?
A: This one I would say that if ever it was passed or approved, it is an unauthorized
approval because as I said, the transaction is not regular. Now, in the course of our
review of the documents it appears that...and also from the testimony gathered from
the officers of the bank, it appears that Judy Dy approved all the transactions but I
repeat, she has no authority regarding this transaction.
Q: You said a while ago that Mrs. Judy Dy was an Assistant Vice President of the bank
and in charge of Area II or Balintawak Branch, why do you say now that she is not
authorized to approve the negotiation of these export bills?
A: Because in a negotiation of export bills supposed to be, only regular transactions.
(sic) When we say regular transaction, that means all the documents are complete, that
means if there is no discrepancy in the export bills that the bank is purchasing that
means that all the documents are clean and in accordance with the terms and
conditions, then this can be processed but in this case, there is a very important vital
document that is missing here and this is the negotiable Bills of Lading because the
Letters of Credit states (sic) the terms and conditions that it has to be supported by a
negotiable Bills of Lading, therefore, it is a violation of the terms and conditions and
Mrs. Judy Dy has no authority over it.
Q: And why do you say that Mrs. Dy has no authority to approve such kind of
negotiation?
A: Because this is not normal. It was already what we call an irregular transaction
because if you parted [with] something, you should get something in return. That
means, when you purchased an export bill, the bank will be able to get reimbursement.
In this case, the bank cannot get reimbursement because there was no shipment on
the goods that was (sic) being purchased, there is nothing..no export bills to talk about
here.
45
(Emphasis supplied)
Abalos also testified that, based on his units investigation, Dy alone was responsible for
allowing Marina to obtain funds from the bank.
A: x x x x
Our position in the later part, when we go over all the documents and the testimonies
of all the other rank and file as well as the other officers, Mr. Mercado clearly showed
that he followed the orders of Mrs. Dy. All the negotiations were done with Mrs. Dy
together with the defendant Marina International in this case.
This has been supported later on when they found out that sometimes in June, they
seek already an approval from Mrs. Dy, not only verbal but written approval, that Mrs.
Dy has authority, so therefore, they provised (sic), this Efren Mercado and the rest of
the officers, a short note wherein they indicated that it is an incomplete document and
despite this, Mrs. Dy said "go ahead, purchase it and credit the account of the client."
x x x x
46
(Emphasis supplied)
Finally, the Court agrees with the CAs finding that Dy colluded with Tanjutco and
Alindogan in the latters scheme to divest the bank of its funds. Dy knew that Marina
could not present the negotiable Bills of Lading; yet, she still approved the purchase of
Marinas export bills.
Tanjutco and Alindogan were holding non-negotiable export documents, which they
knew they could not negotiate with any other bank in the regular course of business.
Thus, the assurance of Dys approval was indispensable to their plans. They had to
secure it beforehand, or they would not have implemented the scheme knowing that
the outcome was uncertain and could have possibly exposed them to liability. They
would not have engaged in the elaborate scheme concocting fictitious export bills and
making them appear to have gone through all the necessary government procedures
if they were not assured of success in the end.1wphi1
Dy tried to convince the trial court that she should not be held liable for the subject
transactions. In her desperation, she even made herself appear as an inconsequential
bank officer without power or authority normally given to officers in her position,
downplayed her knowledge of banking procedures, and allowed herself to be painted as
a negligent officer who would simply sign anything her staff hands to her without
reading them.
It is difficult for the Court to believe that someone in Dys position, and with her years
of experience in the banking sector, could not have known the grave implication and
consequent effect of her action. Nor is this Court inclined to accept Dys claim of
incompetence and negligence. The more logical conclusion is that Dy was fully aware
that Tanjutco and Alindogan were out to defraud Philbank and allowed herself to be
part of the scheme. For that, she must be held accountable.
WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals
dated 22 July 2004 and Resolution dated 17 February 2005 in CA-G.R. CV No. 57331.
SO ORDERED.

SECOND DIVISION
G.R. No. 173520 January 30, 2013
NATIONAL POWER CORPORATION, Petitioner,
vs.
SPOUSES RODOLFO ZABALA and LILIA BAYLON, Respondents.
D E C I S I O N
DEL CASTILLO, J.:
Legislative enactments, as well as executive issuances, fixing or providing fix the
method of computing just compensation are tantamount to impermissible
encroachment on judicial prerogatives.
1
Thus they are not binding on courts and, at
best, are treated as mere guidelines in ascertaining the amount of just compensation.
2

This Petition for Review on Certiorari
3
assails the July 10, 2006 Decision
4
of the Court of
Appeals (CA) in CA-G.R. CV No. 85396 which affirmed the June 28, 2004 Partial
Decision
5
of the Regional Trial Court (RTC), Branch 2, Balanga City in an eminent
domain case,
6
ordering petitioner National Power Corporation ( Napocor) to pay
respondents spouses Rodolfo Zabala and Lilia Baylon (spouses Zabala) just
compensation ofP-150.00 per square meter for the 6,820-square meter portion of the
spouses' property which was traversed by transmission lines of Napocor under its 230
KV Limay-Hermosa Permanent Transmission Lines Project.
Factual Antecedents
The facts of this case as found by the CA and adopted by Napocor are as follows:
On October 27, 1994, plaintiff-appellant National Power Corporation ("Napocor" x x x)
filed a complaint for Eminent Domain against defendants-appellees Sps. R. Zabala & L.
Baylon, Tomas Aguirre, Generosa de Leon and Leonor Calub ("Spouses Zabala",
"Aguirre" "de Leon", and "Calub," respectively x x x) before the Regional Trial Court,
Balanga City, Bataan alleging that: defendants-appellees Spouses Zabala and Baylon,
Aguirre, de Leon, and Calub own parcels of land located in Balanga City, Bataan; it
urgently needed an easement of right of way over the affected areas for its 230 KV
Limay-Hermosa Transmission Line[s]; the said parcels of land have neither been applied
nor expropriated for any public use, and were selected in a manner compatible with the
greatest public good and the least private injury; it repeatedly negotiated with the
defendants-appellees for the acquisition of right of way easement over the said parcels
of land but failed to reach an agreement with the latter; it has the right to take or enter
upon the possession of the subject properties pursuant to Presidential Decree No. 42,
which repealed Section 2, Rule 67 of the Rules of Court upon the filing of the
expropriation complaint before the proper court or at anytime thereafter, after due
notice to defendants-appellees, and upon deposit with the Philippine National Bank of
the amount equal to the assessed value of the subject properties for taxation purposes
which is to be held by said bank subject to the orders and final disposition of the court;
and it is willing to deposit the provisional value representing the said assessed value of
the affected portions of the subject property x x x. It prayed for the issuance of a writ
of possession authorizing it to enter and take possession of the subject property, to
demolish all the improvements x x x thereon, and to commence with the construction of
the transmission lines project on the subject properties, and to appoint not more than
three (3) commissioners to ascertain and report the just compensation for the said
easement of right of way.
x x x x
On January 11, 1995, defendant-appellee Spouses Zabala moved to dismiss the
complaint averring that: the Balanga City proper is already crowded and x x x needs
additional space to meet the housing requirements of the growing population; the only
direction the city proper could expand is the side where their subject property is
located; they incurred a considerable expense in the preparatory development of the
subject property into a subdivision to serve the interest and well being of the growing
population of Balanga; the said growing need for housing and said preparatory
development would necessarily increase the value of the said property; the just
compensation would be higher if the proposed transmission lins of plaintiff-appellant
Napocor is installed or made to pass or traverse through their property rather than
through the parcels of land farther from the existing city proper and away from their
property which was tapped to meet the expansion requirements of the Balanga City
proper; the transfer of the proposed transmission lines from their property to a farther
location is more economical and less expensive to plaintiff-appellant Napocor and it
would better serve the interest of the people of Balanga because said location is less
developed, not needed for the expansion requirements of Balanga City proper, the lots
that would be traversed command a lower price and less compensation would be paid
by plaintiff-appellant Napocor; the traversing of the transmission lines through their
property would impact negatively on the housing expansion in Balanga, the high
tension wires would endanger the life and limb of the inhabitants within the area, and
decrease the value of their subject property; the complaint does not show that the
installation of the proposed transmission wires on their property is the most direct,
practical and least burdensome means to achieve public good; the assessed value of
P1,636.89 stated in Tax Declaration No. 1646 is insufficient because it has been revised
and cancelled by Tax Declaration No. 11052 which shows a higher assessment value for
the said property; and plaintiff-appellant Napocor did not exert earnest efforts toward
the direct purchase of the needed portion of their property before filing a complaint
before the lower court.
On March 4, 1996 and March 7, 1996 plaintiff-appellant Napocor and defendants-
appellees Spouses Zabala filed their respective Pre-Trial Briefs.
On December 4, 1997, the Commissioners submitted their Report/Recommendation
fixing the just compensation for the use of defendants-appellees Spouses Zabalas
property as easement of right of way at P150.00 per square meter without considering
the consequential damages.
Plaintiff-appellant Napocor prayed in its Comment to the commissioners report, that the
report be recommitted to the commissioners for the modification of the report and the
substantiation of the same with reliable and competent documentary evidence based on
the value of the property at the time of its taking. On their part, defendants-appellees
Spouses Zabala prayed, in the Comments, for the fixing of the just compensation at
P250.00 per square meter.
On February 25, 1998, the lower court recommitted the report to the Commissioners for
further report on the points raised by the parties.
On August 20, 2003, the Commissioners submitted their Final Report fixing the just
compensation at P500.00 per square meter.
7

Since the Commissioners had already submitted their Final Report
8
on the valuation of
the subject property, spouses Zabala moved for the resolution of the case insofar as
their property was concerned. Thus, on June 28, 2004, the RTC rendered its Partial
Decision,
9
ruling that Napocor has the lawful authority to take for public purpose and
upon payment of just compensation a portion of spouses Zabalas property. The RTC
likewise ruled that since the spouses Zabala were deprived of the beneficial use of their
property, they are entitled to the actual or basic value of their property. Thus, it fixed
the just compensation at P150.00 per square meter. The dispositive portion of the
RTCs Partial Decision reads:
WHEREFORE, premises considered, the Court having determined that Napocor has a
lawful right to take the subject properties in the exercise of the power of eminent
domain upon payment of just compensation, the petition is hereby granted.
Accordingly, Napocor is hereby ordered to pay defendant Spouses Rodolfo Zabala and
Lilia Baylon the amount of Php 150.00 per square meter for the 6,820 square meters
taken from the latters property, as the just compensation fixed and recommended by
the commissioners determined as of the date of the taking of the property.
As regards x x x the properties of the other defendants, the determination of x x x just
compensation is hereby held in abeyance until the submission of the commissioners
report.
SO ORDERED.
10

Napocor appealed to the CA. It argued that the Commissioners reports upon which the
RTC based the just compensation are not supported by documentary evidence.
Necessarily, therefore, the just compensation pegged by the RTC at P150.00 per square
meter also lacked basis. Napocor likewise imputed error on the part of the RTC in not
applying Section 3A of Republic Act (RA) No. 6395
11
which limits its liability to easement
fee of not more than 10% of the market value of the property traversed by its
transmission lines.
On July 10, 2006, the CA rendered the assailed Decision affirming the RTCs Partial
Decision.
Issue
Hence, this Petition anchored on the ground that:
THE COURT OF APPEALS ERRED IN AFFIRMING THE PARTIAL DECISION DATED JUNE
28, 2004 AND THE ORDER DATED FEBRUARY 7, 2005 OF THE TRIAL COURT FIXING
THE AMOUNT OF P150.00 PER SQUARE METER AS THE FAIR MARKET VALUE OF THE
SUBJECT PROPERTY SINCE THE SAME IS NOT SUPPORTED BY DOCUMENTARY
EVIDENCE.
12

Napocor contends that under Section 3A of RA No. 6395, it is not required to pay the
full market value of the property when the principal purpose for which it is actually
devoted will not be impaired by its transmission lines. It is enough for Napocor to pay
easement fee which, under the aforementioned law, should not exceed 10% of the
market value of the affected property. Napocor argues that when it installed its
transmission lines, the property of spouses Zabala was classified as riceland and was in
fact devoted to the cultivation of palay. Its transmission lines will not, therefore, affect
the primary purpose for which the subject land is devoted as the same only pass
through it. The towers to which such lines are connected are not even built on the
property of spouses Zabala, who will remain the owner of and continue to enjoy their
property. Hence, the RTC and the CA, according to Napocor, both erred in not applying
Section 3A of RA No. 6395.
Napocor further argues that even assuming that spouses Zabala are entitled to the full
market value of their property, the award of P150.00 per square meter as just
compensation lacks basis because the recommendation of the Commissioners is not
supported by documentary evidence.
Our Ruling
The petition is partially meritorious.
Section 3A of RA No. 6395 cannot
restrict the constitutional power of the
courts to determine just compensation.
In insisting that the just compensation cannot exceed 10% of the market value of the
affected property, Napocor relies heavily on Section 3A of RA No. 6395, the pertinent
portions of which read:
Sec. 3A. In acquiring private property or private property rights through expropriation
proceedings where the land or portion thereof will be traversed by the transmission
lines, only a right-of-way easement thereon shall be acquired when the principal
purpose for which such land is actually devoted will not be impaired, and where the
land itself or portion thereof will be needed for the projects or works, such land or
portion thereof as necessary shall be acquired.
In determining the just compensation of the property or property sought to be acquired
through expropriation proceedings, the same shall:
(a) With respect to the acquired land or portion thereof, not to exceed the
market value declared by the owner or administrator or anyone having legal
interest in the property, or such market value as determined by the assessor,
whichever is lower.
(b) With respect to the acquired right-of-way easement over the land or portion
thereof, not to exceed ten percent (10%) of the market value declared by the
owner or administrator or anyone having legal interest in the property, or such
market value as determined by the assessor whichever is lower.
x x x x
Just compensation has been defined as "the full and fair equivalent of the property
taken from its owner by the expropriator. The measure is not the taker's gain, but the
owners loss. The word just is used to qualify the meaning of the word compensation
and to convey thereby the idea that the amount to be tendered for the property to be
taken shall be real, substantial, full and ample."
13
The payment of just compensation for
private property taken for public use is guaranteed no less by our Constitution and is
included in the Bill of Rights.
14
As such, no legislative enactments or executive issuances
can prevent the courts from determining whether the right of the property owners to
just compensation has been violated. It is a judicial function that cannot "be usurped by
any other branch or official of the government."
15
Thus, we have consistently ruled that
statutes and executive issuances fixing or providing for the method of computing just
compensation are not binding on courts and, at best, are treated as mere guidelines in
ascertaining the amount thereof.
16
In National Power Corporation v. Bagui,
17
where the
same petitioner also invoked the provisions of Section 3A of RA No. 6395, we held that:
Moreover, Section 3A-(b) of R.A. No. 6395, as amended, is not binding on the Court. It
has been repeatedly emphasized that the determination of just compensation in
eminent domain cases is a judicial function and that any valuation for just
compensation laid down in the statutes may serve only as a guiding principle or one of
the factors in determining just compensation but it may not substitute the courts own
judgment as to what amount should be awarded and how to arrive at such amount.
18

This ruling was reiterated in Republic v. Lubinao,
19
National Power Corporation v.
Tuazon
20
and National Power Corporation v. Saludares
21
and continues to be the
controlling doctrine. Notably, in all these cases, Napocor likewise argued that it is liable
to pay the property owners for the easement of right-of-way only and not the full
market value of the land traversed by its transmission lines. But we uniformly held in
those cases that since the high-tension electric current passing through the
transmission lines will perpetually deprive the property owners of the normal use of
their land, it is only just and proper to require Napocor to recompense them for the full
market value of their property.
The just compensation of P150.00 per
square meter as fixed by the RTC is not
supported by evidence.
It has likewise been our consistent ruling that just compensation cannot be arrived at
arbitrarily. Several factors must be considered, such as, but not limited to, acquisition
cost, current market value of like properties, tax value of the condemned property, its
size, shape, and location. But before these factors can be considered and given weight,
the same must be supported by documentary evidence.
In the case before us, it appears that the Commissioners November 28, 1997
Report/Recommendation
22
is not supported by any documentary evidence. There is
nothing therein which would show that before arriving at the recommended just
compensation of P150.00, the Commissioners considered documents relevant and
pertinent thereto. Their Report/Recommendation simply states that on November 17,
1997, the Commissioners conducted an ocular inspection; that they interviewed persons
in the locality; that the adjacent properties have market value of P150.00 per square
meter; and, that the property of Nobel Philippine which is farther from the Roman
Expressway is being sold for P200.00 per square meter. No documentary evidence
whatsoever was presented to support their report that indeed the market value of the
adjacent properties are P150.00 and that of Nobel Philippine is P200.00.
Napocor objected to the Report/Recommendation of the Commissioners and pointed
out that the same is not supported by documentary evidence.
23
spouses Zabala likewise
commented thereon and argued that their property should be valued at P250.00 per
square meter.
24
Accordingly, the RTC recommitted the Report/Recommendation to the
Commissioners for further evaluation of the points raised by the parties.
25

In April 1998, the Commissioners submitted a Supplemental Report.
26
Then on August
20, 2003, the Commissioners submitted their Final Report
27
recommending a
compensation of P500.00 per square meter. But like their earlier reports, the
Commissioners Final Report lacks documentary support. It reads:
1. Further ocular inspection was conducted on the property under consideration
of the Honorable Court.
2. To date the land is properly secured, contained and fenced with concrete
hollow blocks.
3. The property is not tenanted and the area covered and affected by the
transmission lines has not been tilled and planted x x x.
4. Upon inquiry from the landowners, the Sps. Rodolfo and Lilia Zabala, they
intimated that they are proposing to develop the property into a subdivision, as
they already fenced and contained the area.
5. At present, another property which is very far from the Roman Expressway
was subdivided, known as the St. Elizabeth Country Homes. Lots are being sold
there at P1,700.00 per square meter.
6. The property of the Sps. Zabala is only some meters away from the Roman
Expressway compared to the St. Elizabeth Country Homes which is very far from
the highway.
7. Moreover, the other subdivisions, Maria Lourdes and Vicarville which are
within the vicinity sell their lots now ranging from P1,800.00 per square meter to
P2,500.00.
8. As already stated, the property of the Sps. Zabala is within the built-up area
classified as residential, commercial and industrial.
9. In its earlier reports in 1998, the commission recommended a just
compensation of P150.00 per square meter.
10. But considering the considerable lapse of time and increase in the valuation
of the properties within the area, the commissioners are impelled to increase the
recommended valuation to P500.00 per square meter.
WHEREFORE, it is recommended to the Honorable Court that the owners of the
property affected and traversed by the transmission lines of the NPC be compensated at
P500.00 per square meter.
28

In Republic v. Santos,
29
we ruled that a commissioners land valuation which is not
based on any documentary evidence is manifestly hearsay and should be disregarded
by the court, viz:
The statement in the 1970 report of the commissioners that according to the owners of
adjoining lots the prices per square meter ranged from P150 to P200 and that
subdivision lots in the vicinity were being sold at P85 to P120 a square meter was not
based on any documentary evidence. It is manifestly hearsay. Moreover, those prices
refer to 1970 or more than a year after the expropriation was effected.
30

The same ruling was arrived at in National Power Corporation v. Diato-Bernal,
31
where
we overturned the ruling of the trial court and the CA adopting the findings of the
commissioners sans supporting documentary evidence therefor. Thus:
It is evident that the above conclusions are highly speculative and devoid of any actual
and reliable basis. First, the market values of the subject propertys neighboring lots
were mere estimates and unsupported by any corroborative documents, such as sworn
declarations of realtors in the area concerned, tax declarations or zonal valuation from
the Bureau of Internal Revenue for the contiguous residential dwellings and commercial
establishments. The report also failed to elaborate on how and by how much the
community centers and convenience facilities enhanced the value of respondents
property. Finally, the market sales data and price listings alluded to in the report were
not even appended thereto.
32

Under Section 8,
33
Rule 67 of the Rules of Court, the trial court may accept or reject,
whether in whole or in part, the commissioners report which is merely advisory and
recommendatory in character. It may also recommit the report or set aside the same
and appoint new commissioners. In the case before us, however, in spite of the
insufficient and flawed reports of the Commissioners and Napocors objections thereto,
the RTC eventually adopted the same. It shrugged off Napocors protestations and
limited itself to the reports submitted by the Commissioners. It neither considered nor
required the submission of additional evidence to support the recommended P150.00
per square meter just compensation. Ergo, insofar as just compensation is concerned,
we cannot sustain the RTCs Partial Decision for want of documentary support.1wphi1
Lastly, it should be borne in mind that just compensation should be computed based on
the fair value of the subject property at the time of its taking or the filing of the
complaint, whichever came first.
34
Since in this case the filing of the eminent domain
case came ahead of the taking, just compensation should be based on the fair market
value of spouses Zabalas property at the time of the filing of Napocors Complaint on
October 27, 1994 or thereabouts.
WHEREFORE, the instant Petition is PARTIALLY GRANTED. This case is REMANDED to
the Regional Trial Court, Branch 2, Balanga City for the proper determination of just
compensation.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice


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FIRST DIVISION
G.R. No. 178312 January 30, 2013
LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
HEIRS OF SPOUSES JORJA RIGOR-SORIANO AND MAGIN SORIANO,
NAMELY: MARIVEL S. CARANDANG AND JOSEPH SORIANO, Respondents.
D E C I S I O N
BERSAMIN, J.:
In this appeal via petition for review -on certiorari, Land Bank of the Philippines (Land
Bank) seeks the review and reversal of the decision
1
of the Court of Appeals (CA)
promulgated on January 18, 2007 in CA-G.R. SP No. 91192, affirming the judgment
rendered on January 31, 2005 by the Regional Trial Court (RTC), Branch 23, in
Cabanatuan City, Nueva Ecija, sitting as a Special Agrarian Court (SAC), ordering Land
Bank to pay to the respondents as the landowners just compensation amounting to
P1,227,571.10 for the properties covered by TCT No. NT-146092(2839) situated in
Poblacion/Talabutab, Gen. Natividad, Nueva Ecija with an area of 10.9635 hectares, and
by TCT No. NT-61608 situated in Macabucod, Aliaga, Nueva Ecija with an area of
4.1224 hectares, plus 6% per annum legal interest from date of taking (which the RTC
determined to be October 25, 1999) until fully paid.
Antecedents
The respondents are the children of the late Spouses Jorja Rigor-Soriano and Magin
Soriano, the owners of the two parcels of land covered by TCT No. NT 146092 (2839)
and TCT NO. NT-61608, both of the Registry of Deeds of Nueva Ecija, containing an
area of 10.9635 hectares located in Poblacion/Talabutab, Gen. Natividad, Nueva Ecija
and 4.1224 hectares located in Macabucod, Aliaga, Nueva Ecija, respectively.
The properties became subject to Operation Land Transfer (OLT) and were valued by
the Land Bank and the Department of Agrarian Reform (DAR) at P10,000.00/hectare.
Contending, however, that such valuation was too low compared to existing valuations
of agricultural lands, the respondents commenced this action for just compensation,
claiming that the properties were irrigated lands that usually yielded 150 cavans per
hectare per season at a minimum of two seasons per year. They asked that a final
valuation of the properties be pegged at P1,800,000.00, based on Administrative Order
No. 61, Series of 1992 and Republic Act No. 6657.
2

Land Bank disagreed, insisting that Presidential Decree No. 27 and Executive Order No.
228 governed the fixing of just compensation for the properties; that the Government,
through the DAR as the lead agency in the implementation of all agrarian laws, had
taken the properties in 1972 pursuant to Presidential Decree No. 27, and had since then
redistributed the properties to farmer-beneficiaries; and that in all cases under
Presidential Decree No. 27 and Executive Order No. 228, its participation was only to
pay the landowners accepting the valuations fixed by the DAR, upon the latters
direction and in the amounts the DAR determined. It prayed that the
valuation by the DAR be retained or that a valuation be made judicially.
3

Ruling of the RTC as SAC
After trial, on January 31, 2005, the RTC rendered its decision, decreeing:
WHEREFORE, all premises considered, judgment is hereby rendered ordering the
defendant Land Bank of the Philippines to pay petitioner Manolo Goduco the total
amount of One Million Two Hundred Twenty Seven Thousand Five Hundred Seventy
One & 10/100 (P1,227,571.10), Philippine Currency, representing the just compensation
of the properties covered by TCT No. NT-146092 (2839), situated at
Poblacion/Talabutab, Gen. Natividad, Nueva Ecija x x x with an area of 10.9635
hectares, and TCT No. NT-61608, situated at Macabucod, Aliaga, Nueva Ecija, with an
area of 4.1224 hectares, with 6% legal interest per annum from date of taking (which
the Court determines to be October 25, 1999) until fully paid.
SO ORDERED.
4

Land Bank and the respondents filed separate motions for reconsideration, but the RTC
denied their motions on August 4, 2005. It should be mentioned that the clerical error
appearing in the dispositive portion of the decision as to the name of the landowner
was corrected from "Manolo Goduco" to "Marivel S. Carandang" and "Joseph Soriano."
5

Ruling of the CA
Land Bank appealed the decision dated January 31, 2005 to the CA, which sustained
the RTC through the decision promulgated on January 18, 2007,
6
pertinently holding
and disposing as follows:
The petition is unimpressed with merit.
x x x x
Under the factual circumstances of this case, the agrarian reform process is still
incomplete as the just compensation to be paid has yet to be settled. As mentioned
earlier, the court a quo set the date of taking on 25 October 1999. During this time,
Republic Act No. 6657 which took effect on 15 June 1988 was already operational.
Thus, the ruling of the Supreme Court in Land Bank of the Philippines v. Natividad,
supra, is highly relevant thus:
Considering the passage of Republic Act No. 6657 (RA 6657) before the completion of
this process, the just compensation should be determined and the process concluded
under the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228
having only
suppletory effect, conformably without our ruling in Paris v. Alfeche.
x x x x
A perusal of the records, however, disclosed that in the valuation of the subject
properties, the court a quo utilized the formula:
LV = Average Gross Production (AGP) x 2.5 x the
Government Support Price (GSP)
x x x x
Under Section 17 of RA No. 6657, infra, the Congress enumerated certain factors to be
considered in ascertaining just compensation of properties covered under the CARP. x x
x.
Significantly, the court a quos valuation of the properties in question finds support
under Section 17 of RA 6657, thus:
SECTION 17. Determination of Just Compensation. In determining just compensation,
the cost of acquisition of the land, the current value of like properties, its nature, actual
use and income, the sworn valuation by the owner, tax declarations, and the
assessment made by government assessors shall be considered. The social and
economic benefits contributed by the farmers and the farmworkers and by the
government to the property as well as the non-payment of taxes or loans secured from
any government financing institution shall be considered additional factors to determine
its valuation.
In the case at bar, as can be gleaned from the recorded evidence, hearings were had
and there were presentation of the parties evidence. Hence, it can be safely assumed
that the court a quo has aptly considered the factors provided under Section 17, supra,
in its determination of just compensation.
x x x x
In sum, We find that the just compensation which the court a quo fixed is within the
bounds of what the law considers as full and fair equivalent of the properties taken.
x x x x
WHEREFORE, premises considered, instant Petition is DENIED. The assailed Decision of
the court a quo dated 31 January 2005 is AFFIRMED.
7

On June 8, 2007, the CA denied Land Banks motion for reconsideration.
8

Issues
Hence, Land Bank appeals via petition for review on certiorari, assailing the decision of
the CA upon the following issues:
I.
WHETHER OR NOT THE CA COMMITTED SERIOUS ERRORS OF LAW IN THE
FOLLOWING INSTANCES: (A) THE QUESTIONED DECISION DISREGARDS [SIC]
THE SUPREME COURT RULING ON THE DATE OF TAKING OF LANDS UNDER
P.D. NO. 27/ E.O. NO. 228 WHICH WAS ENUNCIATED IN G.R. NO. 148223
TITLED "FERNANDO GABATIN, ET AL., VS. LAND BANK OF THE PHILIPPINES"
(25 NOVEMBER 2005); (B) THE QUESTIONED DECISION DISREGARDED THE
GOVERNMENT SUPPORT PRICE (GSP) FOR PALAY PRESCRIBED IN P.D. NO.
27/E.O. NO. 228 AMOUNTING TO THIRTY FIVE PESOS (PHP35.00), WHICH
AMOUNT IS SUBJECT TO MANDATORY JUDICIAL NOTICE;
II.
WHETHER OR NOT UNDER PD NO. 27, THE LANDS WERE DEEMED TAKEN BY
OPERATION OF LAW ON 21 OCTOBER 1972, THE DATE OF EFFECTIVITY OF
SAID PRESIDENTIAL DIRECTIVE;
III.
WHETHER OR NOT THE GOVERNMENT SUPPORT PRICE (GSP) FOR PALAY
PRESCRIBED IN P.D. NO. 27/E.O. NO. 228 AMOUNTING TO PHP35 IS SUBJECT
TO MANDATORY JUDICIAL NOTICE.
9

Ruling
On February 29, 2012, Land Bank submitted to the Court a so-called Joint Manifestation
and Motion (Re: Unconditional Acceptance of Revaluation) dated February 9, 2012,
stating that the approval by Land Banks responsible officers of the revaluation of the
properties pursuant to DAR Administrative Order No. 1 dated February 18, 2010, Series
of 2010, as follows:
(a) P229,799.42, for the acquired area consisting of 2.3539 hectares located in
Macabucod, Aliaga, Nueva Ecija and covered by TCT No. NT 61608; and
(b) P2,260,725.87 for the acquired area consisting of 10.4795 hectares located in
Talubatab, Gen. Natividad, Nueva Ecija and covered by TCT No. NT-146092,
was communicated to the respondents for their unconditional acceptance. It prayed
that the appeal be now resolved on the basis of the acceptance of payment by the
respondents.
10

Under the resolution dated March 12, 2012, the Court required the respondents to
comment on Land Banks submission of the Joint Manifestation and Motion (Re:
Unconditional Acceptance of Revaluation) dated February 29, 2012; directed the parties
to submit their formal written agreement within 15 days from notice; and deferred
action on the Joint Manifestation and Motion (Re: Unconditional Acceptance of
Revaluation) dated February 29, 2012 pending compliance by the parties.
11

On December 4, 2012, Land Bank submitted a Manifestation,
12
informing the Court that
the parties had filed by registered mail their Joint Motion to Approve the Attached
Agreement, submitting therewith their Agreement dated November 29, 2012.
On December 7, 2012, the Court received the Joint Motion to Approve the Attached
Agreement
13
and the Agreement dated November 29, 2012.
14
Thereby, the parties
prayed that the Court consider and approve the Agreement as its disposition of the
petition for review on certiorari, and render its judgment in accordance with the terms
of the Agreement.
The Agreement is reproduced in full below:
REPUBLIC OF THE PHILIPPINES)
CITY OF MANILA ) S.S.
AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This agreement made and executed by and between:
LAND BANK OF THE PHILIPPINES, with principal place of business at 1598 M.H. del
Pilar cor. Quintos Sts., Malate, Manila, hereinafter called the "First Party," and
HEIRS OF SPOUSES JORJA RIGOR-SORIANO and MAGIN SORIANO, NAMELY: MARIVEL
S. CARANDANG and JOSEPH SORIANO, hereinafter called the "Second Party,"
WITNESSETH:
1. That the First Party, in a Memorandum from Lily M. San Luis, Officer-in
Charge, AOC III-A, Land Bank of the Philippines, City of San Fernando,
Pampanga, revalued the acquired area belonging to the Second Party,
consisting of 2.3539 hectares located at Macabucad, Aliaga, Nueva Ecija,
covered by TCT No. NT - 61608 pursuant to DAR Administrative Order No.
1, Series of 2010, in the amount of Two Hundred Twenty Nine Thousand
Seven Hundred Ninety Nine Pesos & 42/100 (Php 229,799.42).
2. That on 04 August 2011, the above-stated revaluation for subject
property was duly approved by the First Partys approving authorities, as
indicated in the Memorandum and thereafter communicated to the Second
Party for unconditional acceptance.
3. That the First Party, in a subsequent Memorandum from Lily M. San
Luis, Officer-in-Charge, AOC III-A, Land Bank of the Philippines, City of
San Fernando, Pampanga, revalued another acquired area belonging to
the Second Party, consisting of 10.4795 hectares located at Talubatab,
Gen. Natividad, Nueva Ecija, covered by TCT No. NT - 146092 pursuant to
the above-stated DAR Administrative Order in the amount of Two Million
Two Hundred Sixty Thousand Seven Hundred Twenty Five Pesos & 87
(Php 2,260,725.87).
4. That on 18 January 2011, the above-stated revaluation for the subject
property was duly approved by the First Partys approving authorities as
indicated in the Memorandum and thereafter communicated to the Second
party for unconditional acceptance.1wphi1
5. That for the above-stated claims, the amounts of Php 210,884.03 for
TCT No. NT 61608 and Php 2,073,339.00 for TCT No. NT-146092,
representing the increase in valuation are due to the Second Party, receipt
of which is hereby acknowledged.
6. That the above-stated revalued amounts, which the Second Party have
received, are completely satisfactory to the Second Party who manifest
unconditional acceptance thereof, representing as they do, the fair, full
and just compensation for subject properties.
7. That in view of the Second Partys unconditional or absolute acceptance
and full receipt of the foregoing amounts as just compensation for subject
properties the First Party and the Second Party hereby consider the case
titled "Land Bank of the Philippines v. Heirs of Spouses Jorja Rigor-Soriano
and Magin Soriano, namely: Marivel S. Carandang and Joseph Soriano
(G.R. No. 178312) pending before the Supreme Court, closed and
terminated.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands this NOV 29
2012 day of November, 2012, in CITY OF MANILA, Philippines.
FIRST PARTY: SECOND PARTY:
LAND BANK OF THE PHILIPPINES
(Sgd.)
MARIVEL S. CARANDANG

(Sgd.)
JOSEPH SORIANO
REPRESENTED/ASSISTED BY: ASSISTED BY:
NOEL B. MARQUEZ
VP - Head, CLSD/Counsel
(Sgd.)
FELIPE R. DE BELEN
Counsel
(Sgd.)
MYLENE R. PACASUM/
Counsel
(Sgd.)
JOSE M. A. QUIMBOY
Counsel
Signed in the presence of:
(Sgd.)
SYLVIA M. EUSEBIO
(Sgd.)
RENAN B. UMALI
There is no question that the foregoing Agreement was a compromise that the parties
freely and voluntarily entered into for the purpose of finally settling their dispute in this
case. Under Article 2028 of the Civil Code, a compromise is a contract whereby the
parties, by making reciprocal concessions, avoid a litigation or put an end to one
already commenced. Accordingly, a compromise is either judicial, if the objective is to
put an end to a pending litigation, or extrajudicial, if the objective is to avoid a
litigation. As a contract, a compromise is perfected by mutual consent. However, a
judicial compromise, while immediately binding between the parties upon its execution,
is not executory until it is approved by the court and reduced to a judgment.
15
The
validity of a compromise is dependent upon its compliance with the requisites and
principles of contracts dictated by law. Also, the terms and conditions of a compromise
must not be contrary to law, morals, good customs, public policy and public order.
16

A review of the terms of the Agreement, particularly paragraph 6 and paragraph 7,
indicates that it is a judicial compromise because the parties intended it to terminate
their pending litigation by fully settling their dispute. Indeed, with the respondents
thereby expressly signifying their "unconditional or absolute acceptance and full receipt
of the foregoing amounts as just compensation for subject properties the First Party
and the Second Party hereby consider the case titled "Land Bank of the Philippines v.
Heirs of Spouses Jorja Rigor-Soriano and Magin Soriano, namely: Marivel S. Carandang
and Joseph Soriano (G.R. No. 178312) pending before the Supreme Court, closed and
terminated," the ultimate objective of the action to determine just compensation for the
landowners was achieved.
WHEREFORE, finding the Agreement to have been validly and voluntarily executed by
the parties in compliance with the requirements of law, the Court hereby APPROVES it.
Considering that the Agreement shows that the payment of just compensation was
already fully executed, and that the affected properties were already delivered to Land
Bank of the Philippines, thereby leaving nothing further to be complied with by the
parties, the Court declares this appeal CLOSED and TERMINATED, without
pronouncements as to costs of suit.
SO ORDERED

FIRST DIVISION
G.R. No. 192532 January 30, 2013
SPOUSES RICARDO AND ELENA GOLEZ, Petitioners,
vs.
SPOUSES CARLOS AND AMELITA NAVARRO, Respondents.
D E C I S I O N
REYES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to
set aside the Orders dated December 21, 2009
1
and May 17, 2010
2
of the Regional Trial
Court (RTC) of Molave, Zamboanga del Sur, Branch 23.
The facts are as follows:
On October 5, 1993, Spouses Ricardo and Elena Golez (herein petitioners), entered into
a written agreement
3
with respondent Amelita Navarro (Amelita), a real estate dealer,
appointing her as their exclusive agent in the sale of their property in Molave,
Zamboanga del Sur, which has an area of 1,100 square meters, more or less, and worth
six hundred thousand pesos (P600,000.00). They likewise agreed that if the price of the
sale exceeds P600,000.00, Amelita will be given a commission equivalent to 90% of the
amount in excess thereof.
Amelita found an interested buyer, the Church of Jesus Christ of Latter Day Saints
(Mormons). No sale between them, however, transpired because they couldnt agree on
the selling price of P1,200,000.00.
4
Upon knowing this fact, the petitioners took over
and continued negotiations with the Mormons representatives in Manila.
On November 9, 1994, the petitioners successfully sold their property to the Mormons
for the amount of P800,000.00. The sale included other lots owned by the petitioners
and the total purchase price amounted to P1,300,000.00. Amelita was neither notified
of the sale nor was she given any commission.
5
Hence, upon discovery of the
transaction, she asserted her right to be paid her commission but the petitioners sternly
refused. Because of this, Amelita brought the matter to the Office of the Barangay
Captain of Molave. However, no amicable settlement took place between her and the
petitioners.
On March 7, 1995, Amelita, together with her husband Carlos, (herein respondents)
instituted a complaint
6
for collection of sum of money, breach of contract and damages
against the petitioners with the RTC of Molave, Zamboanga del Sur, Branch 23. The
petitioners filed their Answer,
7
denying any liability. Thereafter, trial on the merits
ensued.
In its Decision
8
dated October 28, 1998, the RTC ruled in favor of the respondents. The
dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is hereby entered in favor of the plaintiffs and against the
defendants
1. Declaring the plaintiff to be entitled to commission on all of the sale of the
lands of the defendants to the Mormons Church brought about by reasons (sic)
of the efforts and labors of the plaintiffs, being the efficient procuring cause
thereof;
2. Ordering the defendants to pay, jointly and severally, the following sum to the
plaintiffs;
a. As agents commission earned P280,000.00, the unpaid sum of which
to earn interest at the rate of 12% per annum from the sale of
defendants property to the Mormons Church on November 9, 1994 until
the same is fully paid to the plaintiffs;
b. As moral damages - P50,000.00;
c. As Attorneys fees - P90,000.00;
3. To pay the costs of this action.
4. Ordering a writ of attachment to issue against the estate of the defendants,
real and personal, to secure the payment of the judgment sum, without need of
any bond to be filed by the plaintiffs.
SO ORDERED.
9

On appeal, the Court of Appeals (CA), in its Decision
10
dated September 29, 2006,
affirmed with modifications the RTC Decision. The dispositive portion of the CA Decision
provides:
WHEREFORE, premises considered, the assailed decision is hereby MODIFIED as
follows:
(1) Declaring Amelita Navarro to be entitled to the commission on the sale of
appellants properties subject of the contract of agency;
(2) Ordering appellants to pay, jointly and severally, to appellees the amount of
one hundred eighty thousand pesos (Php180,000.00) representing the
commission for the sale of appellants properties subject of the contract of
agency; and
(3) Deleting the award of moral damages and attorneys fees.
In its other aspects, the appealed decision shall remain undisturbed.
SO ORDERED.
11
(Emphasis ours)
The petitioners elevated the matter to the Court via petition for review on certiorari,
docketed as G.R. No. 178648.
12
The Court in its Resolution
13
dated September 22,
2008, denied the petition for "failure of petitioners to sufficiently show that the CA
committed any reversible error in the challenged decision and resolution as to warrant
the exercise of the Courts discretionary appellate jurisdiction. Besides, the issues raised
in the said petition are merely factual in nature."
14
The motion for reconsideration
thereof was likewise denied with finality on February 23, 2009;
15
thus the resolution of
the Court became final and executory.
Consequently, the respondents filed a Motion for the Issuance of the Writ of Execution
16

with the RTC, which was granted in an Order
17
dated May 22, 2009. Accordingly, the
Clerk of Court and Ex-Officio Sheriff issued a Writ of Execution
18
dated June 17, 2009,
viz:
NOW, THEREFORE, you are hereby commanded to cause the execution of the
DECISION of the Honorable Court of Appeals, Twenty Second Division, Cagayan de Oro
City promulgated on September 29, 2006 which modify the DECISION of this Honorable
Court dated October 28, 1998 and to demand from obligors SPOUSES RICARDO and
ELENA GOLEZ the immediate payment in full of the sum of ONE HUNDRED EIGHTY
THOUSAND PESOS (PhP180,000.00), Philippine Currency, together with your lawful fees
for the service of this writ of execution, which SPOUSES CARLOS and AMELITA
NAVARRO, as judgment obligees, recovered in this case against judgment obligors
SPOUSES RICARDO and ELENA GOLEZ, and to tender the same to said judgment
obligees SPOUSES CARLOS and AMELITA NAVARRO and return this writ, with the lawful
fees, to this Court within thirty (30) days from the date of receipt hereof with your
proceedings endorsed thereon.
19
(Emphasis ours)
Thereafter, the respondents filed a Motion for the Judicial Determination of the
Mon[e]tary Awards subject for Execution and for the Issuance of an Alias Writ of
Execution
20
alleging that:
1. The Plaintiffs counsel received the copy of the "Sheriffs Return on Writ of
Execution" dated 22 July 2009 when he went to the Sheriffs Office upon the
latters request relative to the defendants offer to pay under a "proposed
scheme" and thereat was handed by the Sheriff with the copy of the aforesaid
return incorporating the aforesaid "proposed scheme" in the afternoon of 22 July
2009;
2. That upon receipt of the aforesaid matter, for the first time, the undersigned
learned of the fact that the amount incorporated in the writ subject for
execution, i.e., in the sum of only P180,000.00, is not only substantially deficient,
but likewise contrary to Decision of this Honorable Court, duly affirmed by the
Court of Appeals and finally confirmed by the court of last resort, i.e., the
Honorable Supreme Court;
3. That the aforesaid deficiency and inconsistency consists of the inadvertence
committed by the Honorable Clerk of Court, with all due respect, to incorporate
in the issued "Writ of Execution", the amount representing the "interest at the
rate of 12% percent per annum", computed "from the sale of defendants
property to the Mormons Church on November 9, 1994, until the agents
commission in the modified (as modified by the Court of Appeals) sum of
P180,000.00 shall be fully paid to the plaintiffs";
4. That it is indubitable to behold, that Plaintiffs determined and persistent
endeavors in coming to equity and fighting thru the intricacies in the trial of the
case, has lasted for almost fifteen (15) long years, touching the conscience of
the Honorable Court of Appeals and ultimately terminated with the final
confirmation of the court of last resort. Such religious endeavors is a clear
indicia of plaintiffs high respect to the law and high esteem and confidence to
our system of justice. Certainly, such extraordinary disposition is not only
commendable, but likewise worthy to be extolled; and such matter definitely
justifies, among others, the legitimate and just basis of an award equivalent to
"twelve percent (12%) per annum" as incorporated in the "Decision" of this
Honorable Court; and which, if computed, would result to the total sum of
P324,000.00, adjudged upon the defendants, among others, to pay unto the
plaintiffs;
5. That certainly, the said award (12% per annum) has never been touched by
the Honorable Court of Appeals in the body, as well as in the dispositive portion
of its "Modified Decision" because such matter was not raised by the defendants
as among the issues in their appeal, as such, the same should never be
interpreted to be covered or included in the modification of the decision, or
accorded with an implication as having been abrogated, by the Court of Appeals,
least, such interpretation would revolutionize the standard and basic rules in
"Statutory Construction";
6. That this motion is never endowed with a minute intention whatsoever, to
alter, modify or amend the final and executory judgment of this Honorable Court,
but is exclusively designed to assist and in anyway guide the Honorable Court in
the correct and complete implementation of its decision which has withstood the
crucible test in determining its rectitude.
21

The petitioners opposed the motion stating that the same was a mere scrap of paper
for violating the 3-day notice rule. Nonetheless, the petitioners asserted that the writ of
execution was in consonance with the CA decision which expressly and categorically
modified the Decision dated October 28, 1998 of the RTC. Therein, the CA directed the
petitioners to pay to the respondents the sum of P180,000.00 representing their
commission from the sale of the petitioners properties. The respondents never
questioned this modified amount which did not mention anything about the payment of
12% interest from the date of sale; thus, they are bound by the tenor of the CA
decision.
22

Acting on the motion, the RTC issued the assailed Order
23
dated December 21, 2009,
explicitly providing for the amount of P504,000.00 as the total monetary award,
computed as follows:
P180,000.00----------representing the plaintiffs commission as modified by the Court of
Appeals
P324,000.00----------representing the interest of the unpaid commission at the rate of
12 percent per annum computed from the sale of defendants property to the Mormons
Church on November 9, 1994 until fully paid (P180,000.00 x 12% = P21,600.00 x 15
years = P324,000.00)
24

The fallo thus reads:
WHEREFORE, finding the MOTION FOR ISSUANCE OF ALIAS WRIT OF EXECUTION
being ministerial on the part of this Court, the Decision having become final and
executory and in accordance with the Decision of the Court of Appeals in relation to the
other aspects of the Decision of this Court, the same is GRANTED. Let an ALIAS WRIT
OF EXECUTION be issued ordering the defendants to pay the plaintiffs the total amount
of Five Hundred Four Thousand Pesos (P504,000.00).
Let also a WRIT OF ATTACHMENT be issued against the estate of the defendants, real
or personal, to secure the payment of the judgment sum.
SO ORDERED.
25

Accordingly, the Clerk of Court and Ex-Officio Sheriff issued the subject Alias Writ of
Execution,
26
which states:
NOW, THEREFORE, you are hereby commanded to cause the execution of the
DECISION of the Honorable Court of Appeals, Twenty Second Division, Cagayan de Oro
City promulgated on September 29, 2006 in relation to the other aspects of the
DECISION of this Honorable Court dated October 28, 1998 and to demand from
obligors SPOUSES RICARDO and ELENA GOLEZ the immediate payment in full of the
sum of FIVE HUNDRED FOUR THOUSANDPESOS (P504,000.00), Philippine Currency,
together with your lawful fees for the service of this writ of execution, which SPOUSES
CARLOS and AMELITA NAVARRO, as judgment obligees, recovered in this case against
judgment obligors SPOUSES RICARDO and ELENA GOLEZ, and to tender the same to
said judgment obligees SPOUSES CARLOS and AMELITA NAVARRO and return this writ,
with the lawful fees, to this Court within thirty (30) days from the date of receipt hereof
with your proceedings endorsed thereon.
27
(Emphasis ours)
The petitioners moved for reconsideration,
28
mainly contending that the terms of the
order and the alias writ of execution "varied the law of the case" and awarded more
than what the CAs judgment decreed.
In the assailed Order
29
dated May 17, 2010, the RTC denied the petitioners motion, viz:
It appears that the intent of the Court of Appeals is not to disturb the second portion,
which reads: "The unpaid sum of which interest of 12% per annum form (sic) the sale
of the defendants property to the Mormons Church on November 9, 1994 until the
same is fully paid to the plaintiffs". Otherwise, the Court of Appeals would have clearly
stated without interest or deleting the interest of 12% per annum from the earned
commission.
30

Hence, this petition based on the lone ground that:
THE TRIAL COURT COMMITTED GRAVE AND SERIOUS ERROR WHEN IT ORDERED THE
PAYMENT OF INTEREST FROM DATE OF SALE WHEN NONE IS SO DECREED IN THE
MODIFIED DECISION OF THE HONORABLE COURT OF APPEALS, THEREBY
WARRANTING THE EXERCISE OF THIS HONORABLE COURTS POWER OF
SUPERVISION OVER LOWER COURTS.
31

The petitioners contend that the order of execution issued by the RTC does not conform
to the terms of the dispositive portion of the CA decision, hence, invalid. The imposition
of a 12% interest on the award from the sale of defendants property to the Mormons
Church on November 9, 1994 until the same is fully paid to the plaintiffs is not ordered
in the CA judgment and the RTC committed an error in including it in its order.
The respondents, on the other hand, call for the dismissal of the petition on the
grounds that the petition is "an erroneous remedy, the filing of which is out-of-
context" and that its filing is "indubitably a subterfuge, contrary to public policy and
sound practice, and contemptuous in character."
32

The main issue in this case is whether the assailed order of execution dated December
21, 2009 and alias writ of execution dated May 17, 2010 varied the terms of the final
and executory CA Decision dated September 29, 2006. Prior to resolving this issue,
however, the Court shall first address the respondents procedural objection.
The petition filed in this case is one for review on certiorari under Rule 45 of the Rules
of Court. Petitions filed under this rule bring up for review errors of judgment. It is an
ordinary appeal and the petition must only raise questions of law which must be
distinctly set forth and discussed.
33
The present petition, however, assails the RTC order
of execution dated December 21, 2009 and alias writ of execution dated May 17, 2010.
It is a settled rule that orders granting execution are interlocutory orders;
34
hence, the
petitioners should have filed a petition for certiorari under Rule 65. This is categorically
provided in Rule 41, viz:
Section 1. Subject of appeal. An appeal may be taken from a judgment or final order
that completely disposes of the case, or of a particular matter therein when declared by
these Rules to be appealable.
No appeal may be taken from:
x x x x
(f) An order of execution;
x x x x
In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate special civil action under Rule 65. (Emphasis
ours)
Nevertheless, there are exceptions to this rule, one of which is when the writ of
execution varies the judgment.
35
Thus, in Shugo Noda & Co., Ltd. v. Court of Appeals,
36

the Court acknowledged that, in the past, it considered an appeal to be a proper
remedy when it is perceived that the order varies, or may not be in consonance with,
the essence of the judgment. In such case, considerations of justice and equity dictate
that there be some remedy available to the aggrieved party.
37
Likewise, the Court, in
the interest of equity or when justice demands, may interchangeably treat an appeal as
a petition for certiorari under Rule 65 of the Revised Rules of Court, and vice versa.
38

In the present case, the Court finds meritorious grounds to admit the petition and
absolve the petitioners from their procedural lapse.
It is undisputed that the CA Decision dated September 29, 2006 is already final and
executory. As a rule, once a judgment becomes final and executory, all that remains is
the execution of the decision which is a matter of right. The prevailing party is entitled
to a writ of execution, the issuance of which is the trial courts ministerial duty.
39
The
writ of execution, however, must conform substantially to every essential particular of
the judgment promulgated. It must conform, more particularly, to that ordained or
decreed in the dispositive portion of the decision.
40

The dispute in this case revolves around the order of execution issued by the RTC,
which commanded the Clerk of Court and Ex-Officio Sheriff to issue an alias writ of
execution ordering the defendants to pay the plaintiffs the total amount of
P504,000.00. In so ordering, it was the belief of the RTC that the monetary award
included the 12% per annum interest originally provided in its decision. This is,
however, in direct variance with the dispositive portion of the CA Decision, which
merely provided for the award of a commission in the amount of P180,000.00 without
any provision on the imposition of an interest, thus:
(2) Ordering appellants to pay, jointly and severally, to appellees the amount of one
hundred eighty thousand pesos (Php180,000.00) representing the commission for the
sale of appellants properties subject of the contract of agency; x x x
41

The dispositive portion is clear. What was merely ordered by the CA was the payment
of P180,000.00, nothing more. The portion "in its other aspects, the appealed decision
shall remain undisturbed"
42
pertains to those sections that were not disturbed or
modified by the CA, that is, payment of the costs of action and the issuance of a writ of
attachment against the estate of the petitioners. It cannot be construed to extend to
the award of P180,000.00. If the CA intended that there should be a 12% per annum
interest to be imposed on the principal sum of P180,000.00, "from the date of sale until
fully paid," it could have done so in plain and specific terms. But it did not. In Solidbank
Corp. v. Court of Appeals,
43
the Court ruled:
Petitioner was not ordered to pay interest on the amount it was to hold and deliver to
Valencia or to pay attorneys fees. The trial court cannot, therefore, without committing
grave abuse of discretion, direct the petitioner to pay interest and attorneys fees. To
do so would be to vary the tenor of the judgment against the latter and increase its
liability, thereby rendering nugatory the above proviso. Such imposition would mean, as
in this case, the delivery of money to Valencia in excess of that belonging to QRSI
which the petitioner has been retaining. It is a settled general principle that a writ of
execution must conform substantially to every essential particular of the judgment
promulgated. Execution not in harmony with the judgment is bereft of validity. It must
conform, more particularly, to that ordained or decreed in the dispositive portion of the
decision.
44

Clearly, the RTC exceeded its authority when it insisted on applying its own construal of
the dispositive portion of the CA Decision when its terms are explicit and need no
further interpretation. It would also be inequitable for the petitioners to pay and for the
respondents, who did not appeal the CA decision or questioned the deletion of the 12%
per annum interest, to receive more than what was awarded by the CA. The assailed
RTC order of execution dated December 21, 2009 and the alias writ of execution dated
May 17, 2010 are, therefore, void. Time and again, it has been ruled that an order of
execution which varies the tenor of the judgment, or for that matter, exceeds the terms
thereof is a nullity.
45

Having said that, it must however be clarified that the imposition of 12% interest is still
warranted in the case at bar, not from the date of sale on November 9, 1994, as the
respondents insist; but from the finality of the decision up to the satisfaction of
judgment in line with the doctrine laid down in Eastern Shipping Lines, Inc. v. Court of
Appeals.
46
The records disclose that the September 29, 2006 Decision of the CA
modifying that of the RTC became final and executory when this Court affirmed the
same in G.R. No. 178648 and denied with finality the motion for reconsideration thereof
in the Resolution dated February 28, 2009. The Court notes that the petitioners also
concede that the payment of 12% interest from the finality of judgment is in order
pursuant to Eastern Shippings Lines, Inc. where the Court held that:
"When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall begin to run
only from the date the judgment of the court is made (at which time the quantification
of damages may be deemed to have been reasonably ascertained).1wphi1 The actual
base for the computation of legal interest shall, in any case, be on the amount finally
adjudged.
When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit."
47
(Emphasis supplied)
WHEREFORE, the petition is GRANTED. The order of execution dated December 21,
2009 and the alias writ of execution dated May 17, 2010 issued by the Clerk of Court
and Ex-Officio Sheriff of the Regional Trial Court of Molave, Zamboanga del Sur, Branch
23, are NULLIFIED and SET ASIDE.
The Clerk of Court and Ex-Officio Sheriff of the Regional Trial Court of Molave,
Zamboanga del Sur, Branch 23, is hereby ORDERED to issue an alias writ of execution
ordering Spouses Ricardo and Elena Golez to pay, jointly and severally, to Spouses
Carlos and Amelita Navarro the amount of one hundred eighty thousand pesos
(P180,000.00) representing the commission for the sale of appellants' properties
subject of the contract of agency with 12% interest from finality of judgment on
February 28, 2009 until fully paid.
SO ORDERED.



*******************oooooooooooooooooooooooo***************












SECOND DIVISION
G.R. No. 193507 January 30, 2013
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
vs.
REY MONTICALVO y MAGNO, Accused-Appellant.
D E C I S I O N
PEREZ, J.:
This is an appeal from the Decision
1
of the Court of Appeals in CA-G.R. CR-HC No.
00457 dated 3 December 2009 affirming in toto the Decision
2
of Branch 19 of the
Regional Trial Court (RTC) of Catarman, Northern Samar, in Criminal Case No. C-3460
dated 18 October 2005 finding herein appellant Rey Monticalvo y Magno guilty beyond
reasonable doubt of the crime of rape of a demented person committed against AAA,
3

thereby imposing upon him the penalty of reclusion perpetua and ordering him to pay
P50,000.00 as civil indemnity, P50,000.00 as moral damages and P25,000.00 as
exemplary damages.
Appellant Rey Monticalvo y Magno was charged with raping AAA in an Information
4

dated 30 April 2003, the accusatory portion of which reads:
That on or about the 9th day of December 2002 at about 7:00 oclock in the evening in
Bgy. XXX, Municipality of XXX, Province of XXX, Philippines and within the jurisdiction of
this Honorable Court, the above-named appellant, actuated by lust and with lewd
design, with force and intimidation, did, then and there, willfully, unlawfully and
feloniously have carnal knowledge with AAA, 12 years old and is suffering from mental
disorder or is demented or has mental disability, without the consent and against the
will of said victim.
5
[Emphasis supplied].
On arraignment, appellant, with the assistance of counsel de oficio, pleaded NOT
GUILTY
6
to the crime charged.
At the pre-trial conference, the prosecution and the defense failed to make any
stipulation of facts.
7
The pre-trial conference was then terminated and trial on the
merits thereafter ensued.
The prosecution presented the following witnesses: (1) AAA, the private offended party;
(2) BBB, mother of AAA; (3) Analiza Pait (Analiza), neighbor and friend of AAA; (4) Dr.
Jesus Emmanuel Nochete (Dr. Nochete), Medical Officer IV, Northern Samar Provincial
Hospital; and (5) Dr. Vincent Anthony M. Belicena (Dr. Belicena), Medical Specialist II,
Northern SamarProvincial Hospital. Their testimonies established the following facts:
AAA is a mental retardate and was 12 years and 11 months old at the time of the rape
incident.
8
She and appellant, who was then 17 years old,
9
are neighbors their
respective houses are adjoining each other.
10

In the afternoon of 9 December 2002, AAA and her friend, Analiza, were in front of the
sari-sari store of AAAs mother, BBB, while appellant was inside the fence of their house
adjacent to the said sari-sari store. Shortly, thereafter, appellant invited AAA to go with
him to the kiln at the back of their house. AAA acceded and went ahead.
11

Upon seeing appellant and AAA going to the kiln, Analiza, pretending to look for her one
peso coin, followed them until she reached a papaya tree located three and a half
meters away from the place. Analiza hid under the papaya tree and from there she saw
appellant undress AAA by removing the latters shorts and panty. Appellant, however,
glanced and saw Analiza. Frightened, Analiza ran away and went back to the sari-sari
store of BBB without telling BBB what she saw.
12

Appellant proceeded to satisfy his bestial desire. After undressing AAA, appellant made
her lie down. He then placed himself on top of AAA and made push and pull
movements. Afterwards, appellant stopped, allowed AAA to sit down for a while and
then sent her home.
13

When AAA arrived at their house around 7:30 p.m., she was asked by her mother, BBB,
where she came from and why she came home late. AAA replied that she was at the
back of their house as appellant brought her there and had sexual intercourse with
her.
14

The following day, BBB brought AAA to the police station and then to the Northern
Samar Provincial Hospital where AAA was examined by Dr. Nochete.
15
The medical
examination yielded the following:
The findings are:
= Confluent abrasion 1 x 1 inches, 2 inches below the umbilicus.
Genitalia Exam:
= Admits 1 finger with ease.
= (-) vulvar swelling, (-) erythema.
= (+) complete healed hymenal laceration at 5 oclock, 7 oclock & 10
oclock position.
Gram Stain Result: Negative for spermatozoa.
16

Dr. Nochete explained that AAA could have possibly sustained those complete healed
hymenal lacerations more than a month prior to the date of the examination. He also
clarified that even though AAA has no fresh hymenal laceration it does not necessarily
mean that no sexual intercourse was committed on her on 9 December 2002. It is
possible that AAA did not sustain any fresh hymenal laceration because the vaginal
canal has become loose. He did not also find any trace of spermatozoa on AAAs vagina,
its presence being dependent on whether the appellant did ejaculate or not.
17

AAA was also examined by Dr. Belicena, a Psychiatrist at the Northern Samar Provincial
Hospital, who found that AAA is suffering from moderate to severe mental retardation,
meaning, AAA is suffering from the specific form of below average intelligence that has
a low reproduction functioning resulting in impaired functioning. This finding was
obtained through mental examination and actual interview of AAA. Dr. Belicena,
however, recommended a full battery of psychological testing to determine AAAs exact
mental age.
18
Dr. Belicenas finding was reduced into writing as evidenced by a Medical
Certificate
19
dated 18 May 2004.
For its part, the defense offered the testimonies of (1) Pio Campos (Pio), neighbor and
friend of appellant; (2) Cesar Monticalvo (Cesar), appellants father; (3) Alexander
Sanico (Alexander), Local Civil Registrar of Bobon, Northern Samar; and (4) appellant,
who invoked the defense of denial and alibi to exonerate himself from the crime
charged.
Appellant denied having raped AAA. He claimed that on 9 December 2002, at around
1:00 p.m., he, together with Pio and a certain Dinnes Samson, was having a drinking
spree in the house of one Adolfo Congayao (Adolfo). They finished drinking at around
6:00 p.m. As he was too drunk, Pio assisted him in going home. He went to sleep and
woke up only at 12:00 midnight as he needed to urinate. He went back to sleep and
woke up at 6:00 a.m. of the following day, i.e., 10 December 2002. He was surprised
that AAA charged him with rape. He was then arrested at around 3:00 p.m. of 10
December 2002.
20

Appellant disclosed, however, that the house of Adolfo, where they had their drinking
spree, is more or less six (6) meters away from the house of AAA. In fact, he could still
see the house of AAA even when he was in the house of Adolfo. He similarly admitted
that he knew very well that AAA is suffering from mental abnormalities. He also
divulged that he asked Pio to testify on his behalf.
21

Appellants testimony was corroborated on all material points by Pio and his father,
Cesar, who also admitted that he personally knew AAA as she is their neighbor. Cesar
also knew that AAA is suffering from mental disorder.
22
Both Pio and Cesar confirmed
that on 9 December 2002, they brought appellant to his bedroom and let him sleep
there because he was too drunk. Thereafter, Pio and Cesar engaged in a drinking spree
inside the latters house, particularly at the kitchen that is more than two (2) meters
away from appellants bedroom, which lasted until 11:00 p.m. Pio and Cesar likewise
stated that there was no moment that appellant went out of his bedroom since the time
they brought him there.
23

Alexander, another defense witness, presented appellants Certificate of Live Birth
24
to
prove that the latter was only 17 years old during the commission of the crime, i.e., 9
December 2002.
25

The trial court, convinced about the merits of the prosecutions case rendered a
Decision on 18 October 2005, finding the appellant guilty beyond reasonable doubt of
the crime of rape of a demented person and sentenced him to an imprisonment term of
reclusion perpetua and ordered him to indemnify AAA in the amount of P50,000.00 as
civil indemnity, P50,000.00 as moral damages and P25,000.00 as exemplary damages.
On appeal, the following errors were assigned:
I.
THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE APPELLANT FOR THE CRIME
OF RAPE OF A DEMENTED PERSON DESPITE THE FAILURE OF THE PROSECUTION TO
PROVE HIS GUILT BEYOND REASONABLE DOUBT.
II.
THE TRIAL COURT FAILED TO APPRECIATE APPELLANTS AGE, BEING A MINOR,
ATTHE TIME OF THE COMMISSION OF THE CRIME.
III.
THE TRIAL COURT FAILED TO IMPOSE THE PROPER PENALTY.
26

The Court of Appeals rendered the assailed Decision on 3 December 2009 affirming in
toto the trial courts Decision dated 18 October 2005.
Hence, this appeal.
Appellant contends that the prosecution failed to prove his guilt beyond reasonable
doubt as the testimonies of AAA, BBB, Analiza and Dr. Nochete were replete with
inconsistencies and improbabilities. Firstly, while the Information stated that appellant
raped AAA on or about the 9th day of December 2002 at around 7:00 p.m., Analiza
testified that it was in the afternoon of the same day when she saw and heard
appellant calling AAA to go to the kiln at the back of their house, and while she saw
appellant undress AAA, she did not actually see the sexual intercourse because the
appellant saw her watching them, so she ran away. Secondly, BBBs testimony that on 9
December 2002, AAA confided to her that she was raped by appellant early that night
was inconsistent with the testimony of Analiza that it was in the afternoon of the same
day when she saw appellant and AAA going to the kiln, where the former undressed the
latter. Thirdly, Dr. Nochetes testimony clearly stated that the hymenal lacerations on
AAAs vagina could have possibly been sustained by her a month ago, which does not
support AAAs claim of rape on 9 December 2002. Even granting that appellant, indeed,
raped AAA on 9 December 2002, it is highly implausible that the hymenal lacerations on
her vagina were already completely healed when she was examined by Dr. Nochete on
10 December 2002, which was only after less than 24-hours from the date the alleged
rape was committed.
Appellant also questions the credibility of AAA as a witness given her condition as a
mental retardate. Appellant opines that AAA, could not perceive and is not capable of
making known her perception to others. As such, she can be easily coached on what to
say or do.
Appellant finally avers that granting arguendo that he is guilty of the crime charged, he
was only 17 years old at the time of its commission as evidenced by his Certificate of
Live Birth. This fact was even attested to by the Local Civil Registrar of Bobon, Northern
Samar. Given his minority at the time of the commission of the crime charged, the court
should have considered the same as privileged mitigating circumstance in imposing the
penalty against him.
This Court affirms appellants conviction.
At the outset, paragraph 1, Article 266-A of the Revised Penal Code, as amended by
Republic Act No. 8353,
27
provides for two (2) circumstances when carnal knowledge of
a woman with mental disability is considered rape. Subparagraph (b) thereof refers to
rape of a person "deprived of reason" while subparagraph (d) refers to rape of a
"demented person."
28
The term "deprived of reason" has been construed to encompass
those suffering from mental abnormality, deficiency or retardation.
29
The term
"demented," on the other hand, means having dementia, which Webster defines as
mental deterioration; also madness, insanity.
30
Dementia has also been defined in
Blacks Law Dictionary as a "form of mental disorder in which cognitive and intellectual
functions of the mind are prominently affected; x x x total recovery not possible since
cerebral disease is involved."
31
Thus, a mental retardate can be classified as a person
"deprived of reason," not one who is "demented" and carnal knowledge of a mental
retardate is considered rape under subparagraph (b), not subparagraph (d) of Article
266-A(1) of the Revised Penal Code, as amended.
32

In this case, both the trial court and the appellate court incorrectly used the word
demented to characterize AAAs mental condition and mistakenly categorized the rape
committed by appellant under subparagraph (d), Article 266-A(1) of the Revised Penal
Code, as amended, instead of under subparagraph (b) thereof. Nonetheless, the
mistake would not exonerate appellant. Otherwise stated, his conviction or criminal
liability for rape stands though not under subparagraph (d) of Article 266-A(1) of the
Revised Penal Code, as amended, but under subparagraph (b) thereof.
Neither can it be said that appellants right to be properly informed of the nature and
cause of the accusation against him was violated. This Court is not unaware that the
Information was worded, as follows: "AAA is suffering from mental disorder or is
demented or has mental disability." This fact, however, will not render the Information
defective and will not bar this Court from convicting appellant under subparagraph (b)
of Article 266-A(1) of the Revised Penal Code, as amended.
In Olivarez v. Court of Appeals,
33
this Court pronounced that:
x x x In People v. Rosare,
34
the information did not allege that the victim was a mental
retardate which is an essential element of the crime of statutory rape. This Court
however sustained the trial courts judgment of conviction holding that the resolution of
the investigating prosecutor which formed the basis of the information, a copy of which
is attached thereto, stated that the offended party is suffering from mental retardation.
It ruled that there was substantial compliance with the mandate that an accused be
informed of the nature of the charge against him. Thus:
Appellant contends that he cannot be convicted of statutory rape because the fact that
the victim was a mental retardate was never alleged in the information and, absent this
element, the acts charged negate the commission of the offense for which he was
convicted by the lower court.
Pursuant to Section 8, Rule 112 of the Rules of Court, we have decided to motu proprio
take cognizance of the resolution issued by the investigating prosecutor in I.S. No. 92-
0197 dated June 2, 1992, which formed the basis of and a copy of which was attached
to the information for rape filed against herein appellant. Therein, it is clearly stated
that the offended party is suffering from mental retardation. We hold, therefore, that
this should be deemed a substantial compliance with the constitutional mandate that an
accused be informed of the nature of the charge against him x x x (citation omitted).
35

[Emphasis supplied].
In this case, both the Complaint36 and the Resolution
37
of the Municipal Trial Court of
Northern Samar, which formed the basis of the Information and copies of which were
attached in the records, stated that AAA is suffering from mental abnormalities she
looked like a retardate and her focus is not normal. Even, the Resolution
38
of the Acting
Provincial Prosecutor concurred with the aforesaid findings. From the aforesaid, it can
be gleaned that AAAs mental disorder or mental disability is that of being a mentally
retarded and not demented. Thus, there was substantial compliance with the mandate
to inform the accused of the nature of the accusation.
39
More so, as discussed
hereunder, the prosecution was able to prove that AAA is, indeed, a mental retardate.
Even the appellant affirmed the said mental condition of the victim.
To repeat, the term "deprived of reason" has been construed to encompass those
suffering from mental abnormality, deficiency or retardation.
40
Hence, carnal knowledge
of a mental retardate is rape under subparagraph (b) not subparagraph (d) of Article
266-A(1) of the Revised Penal Code, as amended.
41

The gravamen of the crime of rape under Art. 266-A(1) is sexual intercourse with a
woman against her will or without her consent.
42
Article 266-A(1) of the Revised Penal
Code, as amended, specifically states that:
ART. 266-A. Rape; When and How Committed. Rape is committed.
1) By a man who 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.[Emphasis
supplied].
From the foregoing, for the charge of rape to prosper, the prosecution must prove that
the offender had carnal knowledge of a woman through any of the four enumerated
circumstances. Without doubt, carnal knowledge of a woman who is a mental retardate
is rape under the aforesaid provisions of law. Proof of force or intimidation is not
necessary, as a mental retardate is not capable of giving consent to a sexual act. What
needs to be proven are the facts of sexual congress between the accused and the
victim, and the mental retardation of the latter.
43

In People v. Dalandas,
44
citing People v. Dumanon,
45
this Court held that mental
retardation can be proven by evidence other than medical/clinical evidence, such as the
testimony of witnesses and even the observation by the trial court.
46

In the present case, the prosecution was able to establish that AAA is, indeed, a mental
retardate through, (1) the testimony of her mother; (2) the trial courts observation;
and (3) the mental examination and actual interview of AAA conducted by Dr. Belicena,
a Psychiatrist at the Northern Samar Provincial Hospital, who found AAA to be suffering
from moderate to severe mental retardation, meaning, AAA is suffering from the
"specific form of below average intelligence which has a low reproduction functioning
which result to impairment functioning."
47
It is also worthy to note that the defense did
not dispute, even admitted the fact that AAA is suffering from mental retardation. The
findings of the lower courts about AAAs mental condition must be upheld.
The prosecution was also able to establish the fact of sexual congress between
appellant and AAA. Despite the latters mental condition, she narrated before the court
in the best way she could her ordeal in the hands of appellant. As stated by the
appellate court, AAA conveyed her ideas by words and demonstrations.
48
AAA
recounted how the appellant sexually abused her on 9 December 2002 by inviting her
to go to the kiln at the back of their house. Thereupon, appellant suddenly undressed
her by removing her shorts and panty. This fact was attested to by Analiza, one of the
prosecution witnesses, who actually witnessed appellant undressing AAA by removing
the latters shorts and panty. AAA further testified that after undressing her, appellant
made her lie down, placed himself on top of her and made push and pull movements.
Thereafter, appellant stopped, made her sit down and sent her home.
49
This testimony
of AAA was correctly found by the trial court and the appellate court as coherent and
given in a detailed manner.
50

Emphasis must be given to the fact that the competence and credibility of mentally
deficient rape victims as witnesses have been upheld by this Court where it is shown
that they can communicate their ordeal capably and consistently. Rather than
undermine the gravity of the complainants accusations, it even lends greater credence
to her testimony, that, someone as feeble-minded and guileless could speak so
tenaciously and explicitly on the details of the rape if she has not in fact suffered such
crime at the hands of the accused. Moreover, it has been jurisprudentially settled that
when a woman says she has been raped, she says in effect all that is necessary to
show that she has been raped and her testimony alone is sufficient if it satisfies the
exacting standard of credibility needed to convict the accused.
51

Worth stressing also is the fact that during AAAs testimony, she positively identified the
appellant as the person who raped her.
52
Thus, the straightforward narration of AAA of
what transpired, accompanied by her categorical identification of appellant as the
malefactor, sealed the case for the prosecution.
53

The allegation of inconsistencies in the testimonies of AAA, BBB, Analiza and Dr.
Nochete as regards the exact date and time the alleged rape incident happened, as well
as the absence of fresh hymenal lacerations on AAAs vagina, pointed to by appellant
cannot work in his favor.
Evidently, these inconsistencies refer only to trivial and inconsequential matters that do
not alter the essential fact of the commission of rape.
54
A witness is not expected to
remember with perfect recollection every minute detail of her harrowing experience. A
minor mistake as to the exact time of the commission of the rape is immaterial and
cannot discredit the testimony of a witness. This Court has repeatedly held that the
exact date of the commission of the rape is not an essential element of the crime.
55

Indeed, the precise time of the crime has no substantial bearing on its commission.
56

What is decisive in a rape charge is that the commission of the rape by the accused
against the complainant has been sufficiently proven. Inconsistencies and discrepancies
as to minor matters which are irrelevant to the elements of the crime cannot be
considered grounds for acquittal.
57

In the same way, the absence of fresh hymenal lacerations and spermatozoa on AAAs
vagina do not negate the fact of rape. A freshly broken hymen, as well as the presence
or absence of spermatozoa, is not also an essential element of rape.
58
As clarified by
Dr. Nochete, the absence of fresh hymenal laceration on AAAs vagina does not
necessarily mean that she did not engage in sexual intercourse on 9 December 2002.
Possibly, AAA did not sustain any fresh hymenal laceration as her vaginal canal had
become loose. And, he did not find any trace of spermatozoa because its presence
depends on whether or not the appellant ejaculated.
Indeed, a mental retardate is not, by reason of such handicap alone, be disqualified
from testifying in court.
59
Mental retardation per se does not affect credibility. A
mentally retarded may be a credible witness. The acceptance of her testimony depends
on the quality of her perceptions and the manner she can make them known to the
court.
60
If the testimony of a mental retardate is coherent, the same is admissible in
court.
61

Neither can it be said that AAA was merely coached as a witness by her mother. It is
highly unthinkable that a mother would draw her daughter, a mental retardate at that,
into a rape story with all its attendant scandal and humiliation if the rape did not really
happen. No mother in her right mind would possibly wish to stamp her child with the
stigma that follows the despicable crime of rape.
62
Moreover, appellant failed to show
any ill-motive on the part of AAA and her mother to falsely testify against him.
In light of the straightforward and credible testimony of AAA, her positive identification
of appellant as her assailant and the lack of ill-motive on her part to falsely testify
against appellant, the latters defense of denial and alibi must necessarily fail.
Denial is an inherently weak defense and has always been viewed upon with disfavor by
the courts due to the ease with which it can be concocted. Denial as a defense
crumbles in the light of positive identification of the accused, as in this case. The
defense of denial assumes significance only when the prosecutions evidence is such
that it does not prove guilt beyond reasonable doubt. Verily, mere denial,
unsubstantiated by clear and convincing evidence, is negative self-serving evidence
which cannot be given greater evidentiary weight than the testimony of the complaining
witness who testified on affirmative matters.
63

Like denial, alibi is not looked upon with favor by the trial court. It also cannot prevail
over witnesses positive identification of appellant as the perpetrator of the crime. In
any event, for the defense of alibi to prosper, it is not enough that the accused can
prove his presence at another place at the time of its commission, it is likewise essential
that he show physical impossibility for him to be at the locus delicti,
64
which the
appellant in this case failed to do.
As aptly observed by the trial court:
The houses of the offended party and the appellant are only divided by a fence and the
place of the incident is only at the back of the house of the appellant. The defense of
alibi must fail. In addition to the positive identification made by AAA and the place of
the incident is adjacent to the houses of the victim and the appellant, being neighbors,
the fact that the appellant alleged that he was having drinking spree at that time and
that he was dead drunk at around 6:00 p.m. of that date, there is no impossibility for
the appellant to be physically present at the scene of the incident, because of its
proximity.
Corroborative testimony is not credible if tainted with bias particularly in cases where
the witnesses are closely associated to the appellant as to be interested in the
appellants acquittal. In this case, the appellants witnesses are his alleged drinking
buddy and his father. Considering that they are bound by friendship and affiliation, it is
conceivable that they would be inclined to make excuses for him appellant from
culpability.
65

All told, appellants guilt has been proven by the prosecution beyond reasonable doubt,
thus, his conviction stands.
As to penalty. Under Article 266-B
66
in relation to Article 266-A(1) of the Revised Penal
Code, as amended, simple rape is punishable by reclusion perpetua. However, when
rape is committed by an assailant who has knowledge of the victims mental
retardation, the penalty is increased to death. But this circumstance must be alleged in
the information being a qualifying circumstance which increases the penalty to death
and changes the nature of the offense from simple to qualified rape.
67
In the case at
bench, while appellant categorically admitted that he knew AAA to be suffering from
mental abnormalities, the prosecution failed to allege this fact in the information. As
such, even if it was proved, it cannot be appreciated as a qualifying circumstance. Thus,
appellants conviction is only for simple rape for which he should be meted the penalty
of reclusion perpetua.
Nonetheless, a reasonable ground exists in this case that calls for the modification of
the penaltyof reclusion perpetua imposed by both lower courts upon the appellant.
This Court finds merit in appellants assertion that he was a minor during the
commission of the crime charged. During trial, upon order of the trial court, the Local
Civil Registrar of Bobon, Northern Samar, brought before it their office records,
particularly appellants Certificate of Live
Birth containing the fact of birth of the latter. Appellants Certificate of Live Birth shows
that he was born on 23 February 1985. Indeed, at the time of the commission of the
crime charged on 9 December 2002, appellant was only 17 years old, a minor. Thus, he
is entitled to the privileged mitigating circumstance of minority pursuant to Article 68(2)
of the Revised Penal Code, as amended,
68
which specifically states that:
ART. 68. Penalty to be imposed upon a person under eighteen years of age. When
the offender is a minor under eighteen years and his case is one coming under the
provisions of the paragraph next to the last of article 80 of this Code, the following rules
shall be observed:
x x x x
2. Upon a person over fifteen and under eighteen years of age the penalty next lower
than that prescribed by the law shall be imposed, but always in the proper period.
69

[Emphasis supplied].
Applying the privileged mitigating circumstance, the proper imposable penalty upon
appellant is reclusion temporal, being the penalty next lower to reclusion perpetua - the
penalty prescribed by law for simple rape. Being a divisible penalty, the Indeterminate
Sentence Law is applicable.
70

Applying the Indeterminate Sentence Law, appellant can be sentenced to an
indeterminate penalty the minimum of which shall be within the range of prision mayor
(the penalty next lower in degree to reclusion temporal), that is 6 years and 1 day to 12
years, and maximum of which shall be within the range of reclusion temporal in its
medium period (there being no other modifying circumstances attendant to the crime),
that is 14 years, 8 months and 1 day to 17 years and 4 months.
71
With that, the
indeterminate penalty of 10 years of prision mayor, as minimum, to 17 years and 4
months of reclusion temporal, as maximum, should be imposed upon the appellant.
However, the case of appellant does not, as it normally should, end at this point. On 20
May 2006, Republic Act No. 9344, otherwise known as the "Juvenile Justice and Welfare
Act of 2006," took effect. Section 68 thereof specifically provides for its retroactive
application, thus:
72

SEC. 68. Children Who Have Been Convicted and are Serving Sentence. Persons who
have been convicted and are serving sentence at the time of the effectivity of this Act,
and who were below the age of eighteen (18) years at the time of the commission of
the offense for which they were convicted and are serving sentence, shall likewise
benefit from the retroactive application of this Act. They shall be entitled to appropriate
dispositions provided under this Act and their sentences shall be adjusted accordingly.
They shall be immediately released if they are so qualified under this Act or other
applicable law. [Emphasis supplied].
Clearly, Republic Act No. 9344 is applicable in this case even though the crime was
committed four (4) years prior to its enactment and effectivity. Parenthetically, with
more reason should Republic Act No. 9344 apply to this case as the 2005 conviction by
the lower courts was still under review when the law took effect in 2006.
73

Section 38 of Republic Act No. 9344 warrants the suspension of sentence of a child in
conflict with the law notwithstanding that he/she has reached the age of majority at the
time the judgment of conviction is pronounced.
74
It reads, thus:
SEC. 38. Automatic Suspension of Sentence. Once the child who is under eighteen
(18) years of age at the time of the commission of the offense is found guilty of the
offense charged, the court shall determine and ascertain any civil liability which may
have resulted from the offense committed. However, instead of pronouncing the
judgment of conviction, the court shall place the child in conflict with the law under
suspended sentence, without need of application: Provided, however, That suspension
of sentence shall still be applied even if the juvenile is already eighteen (18) of age or
more at the time of the pronouncement of his/her guilt.
Upon suspension of sentence and after considering the various circumstances of the
child, the court shall impose the appropriate disposition measures as provided in the
Supreme Court Rule on Juveniles in Conflict with the Law. [Emphasis supplied].
However, while Section 38 of Republic Act No. 9344 provides that suspension of
sentence can still be applied even if the child in conflict with the law is already eighteen
(18) years of age or more at the time of the pronouncement of his/her guilt, Section 40
of the same law limits the said suspension of sentence until the said child reaches the
maximum age of 21, thus:
75

SEC. 40. Return of the Child in Conflict with the Law to Court. If the court finds that
the objective of the disposition measures imposed upon the child in conflict with the law
have not been fulfilled, or if the child in conflict with the law has willfully failed to
comply with the conditions of his/her disposition or rehabilitation program, the child in
conflict with the law shall be brought before the court for execution of judgment.
If said child in conflict with the law has reached eighteen (18) years of age while under
suspended sentence, the court shall determine whether to discharge the child in
accordance with this Act, to order execution of sentence, or to extend the suspended
sentence for a certain specified period or until the child reaches the maximum age of
twenty-one (21) years. [Emphasis supplied].
At present, appellant is already 27 years of age, and the judgment of the trial court was
promulgated prior to the effectivity of Republic Act No. 9344. Therefore, the application
of Sections 38 and 40 of the said law is already moot and academic.
Be that as it may, to give meaning to the legislative intent of Republic Act No. 9344, the
promotion of the welfare of a child in conflict with the law should extend even to one
who has exceeded the age limit of 21 years, so long as he/she committed the crime
when he/she was still a child. The offender shall be entitled to the right to restoration,
rehabilitation and reintegration in accordance with Republic Act No. 9344 in order that
he/she is given the chance to live a normal life and become a productive member of the
community. The age of the child in conflict with the law at the time of the promulgation
of the judgment of conviction is not material. What matters is that the offender
committed the offense when he/she was still of tender age.
76
The appellant, therefore,
shall be entitled to appropriate disposition under Section 51 of Republic Act No. 9344,
which provides for the confinement of convicted children as follows:
77

SEC. 51. Confinement of Convicted Children in Agricultural Camps and Other Training
Facilities. A child in conflict with the law may, after conviction and upon order of the
court, be made to serve his/her sentence, in lieu of confinement in a regular penal
institution, in an agricultural camp and other training facilities that may be established,
maintained, supervised and controlled by the BUCOR, in coordination with the DSWD.
To conform to this Courts ruling in People v.Sarcia,
78
the case shall be remanded to the
court of origin to effect appellants confinement in an agricultrual camp or other training
facility.
79

As to damages. The civil liability resulting from the commission of the offense is not
affected by the appropriate disposition measures and shall be enforced in accordance
with law.
80
This Court affirms both the civil indemnity of P50,000.00 and moral
damages of P50,000.00 awarded by the lower courts in favor of AAA. Civil indemnity,
which is actually in the nature of actual or compensatory damages, is mandatory upon
the finding of the fact of rape. Case law also requires automatic award of moral
damages to a rape victim without need of proof because from the nature of the crime,
it can be assumed that she has suffered moral injuries entitling her to such award. Such
award is separate and distinct from civil indemnity.
81

In consonance with prevailing jurisprudence on simple rape wherein exemplary
damages are awarded to set a public example and to protect hapless individuals from
sexual molestation, this Court likewise affirms the lower courts award of exemplary
damages but increased the same from P25,000.00 to P30,000.00 to conform to recent
jurisprudence.
82

WHEREFORE, premises considered, the Decision of the Court of Appeals in CA-G.R. CR-
HC No. 00457 dated 3 December 2009 is hereby MODIFIED as follows: (I) appellant is
found guilty of rape under subparagraph (b) of Article 266-A( I) of the Revised Penal
Code, as amended, and not under subparagraph (d) thereof; (2) in view of the
privileged mitigating circumstance appreciated in favor of appellant the penalty of
reclusion perpetua is reduced to reclusion temporal and being a divisible penalty, the
Indeterminate Sentence Law applies and the indeterminate penalty of I 0 years of
prision mayor, as minimum, to 17 years and 4 months of reclusion temporal, as
maximum, is imposed upon the appellant; and (3) the amount of exemplary damages
awarded by the lower courts is increased from P25,000.00 to P30,000.00. The award of
civil indemnity and moral damages both in the amount of P50,000.00 are maintained.
This case, however, shall be REMANDED to the court a quo for appropriate disposition
in accordance with Section 51 of Republic Act No. 9344.
SO ORDERED.



***************************oooooooooooooooooooo************************

FIRST DIVISION
G.R. No. 169533 March 20, 2013
GEORGE BONGALON, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
D E C I S I O N
BERSAMIN, J.:
Not every instance of the laying of hands on a child constitutes the crime of child abuse
under Section 10 (a) of Republic Act No. 7610.
1
Only when the laying of hands is shown
beyond reasonable doubt to be intended by the accused to debase, degrade or demean
the intrinsic worth and dignity of the child as a human being should it be punished as
child abuse. Otherwise, it is punished under the Revised Penal Code.
The Case
On June 22, 2005,
2
the Court of Appeals (CA) affirmed the conviction of the petitioner
for the crime of child abuse under Section 10 (a) of Republic Act No. 7610.
Antecedents
On June 26, 2000, the Prosecutors Office of Legazpi City charged the petitioner in the
Regional Trial Court (RTC) in Legazpi City with child abuse, an act in violation of Section
10(a) of Republic Act No. 7610, alleging as follows:
That on or about the 11th day of May 2000, in the City of Legazpi Philippines, and
within the jurisdiction of this Honorable Court, the above-named accused, did then and
there wilfully, unlawfully and feloniously commit on the person of JAYSON DELA CRUZ,
a twelve year-old,
Grade VI pupil of MABA Institute, Legazpi City, acts of physical abuse and/or
maltreatment by striking said JAYSON DELA CRUZ with his palm hitting the latter at his
back and by slapping said minor hitting his left cheek and uttering derogatory remarks
to the latters family to wit: "Mga hayop kamo, para dayo kamo digdi, Iharap mo dito
ama mo" (You all animals, you are all strangers here. Bring your father here), which
acts of the accused are prejudicial to the childs development and which demean the
intrinsic worth and dignity of the said child as a human being.
CONTRARY TO LAW.
3

The Prosecution showed that on May 11, 2002, Jayson Dela Cruz (Jayson) and Roldan,
his older brother, both minors, joined the evening procession for the Santo Nio at Oro
Site in Legazpi City; that when the procession passed in front of the petitioners house,
the latters daughter Mary Ann Rose, also a minor, threw stones at Jayson and called
him "sissy"; that the petitioner confronted Jayson and Roldan and called them names
like "strangers" and "animals"; that the petitioner struck Jayson at the back with his
hand, and slapped Jayson on the face;
4
that the petitioner then went to the brothers
house and challenged Rolando dela Cruz, their father, to a fight, but Rolando did not
come out of the house to take on the petitioner; that Rolando later brought Jayson to
the Legazpi City Police Station and reported the incident; that Jayson also underwent
medical treatment at the Bicol Regional Training and Teaching Hospital;
5
that the
doctors who examined Jayson issued two medical certificates attesting that Jayson
suffered the following contusions, to wit: (1) contusion .5 x 2.5 scapular area, left; and
(2) +1x1 cm. contusion left zygomatic area and contusion .5 x 2.33 cm. scapular area,
left.
6

On his part, the petitioner denied having physically abused or maltreated Jayson. He
explained that he only talked with Jayson and Roldan after Mary Ann Rose and
Cherrylyn, his minor daughters, had told him about Jayson and Roldans throwing
stones at them and about Jaysons burning Cherrylyns hair. He denied shouting
invectives at and challenging Rolando to a fight, insisting that he only told Rolando to
restrain his sons from harming his daughters.
7

To corroborate the petitioners testimony, Mary Ann Rose testified that her father did
not hit or slap but only confronted Jayson, asking why Jayson had called her daughters
"Kimi" and why he had burned Cherrlyns hair. Mary Ann Rose denied throwing stones
at Jayson and calling him a "sissy." She insisted that it was instead Jayson who had
pelted her with stones during the procession. She described the petitioner as a loving
and protective father.
8

Ruling of the RTC
After trial, the RTC found and declared the petitioner guilty of child abuse as charged,
to wit:
9

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered
finding the accused GEORGE BONGALON @ "GI" GUILTY beyond reasonable doubt of
Violation of Republic Act No. 7610, and is hereby ordered to undergo imprisonment of
six (6) years and one (1) day to eight (8) years of prision mayor in its minimum period.
SO ORDERED.
Ruling of the CA
On appeal, the petitioner assailed the credibility of the Prosecution witnesses by citing
their inconsistencies. He contended that the RTC overlooked or disregarded material
facts and circumstances in the records that would have led to a favorable judgment for
him. He attacked the lack of credibility of the witnesses presented against him, citing
the failure of the complaining brothers to react to the incident, which was unnatural
and contrary to human experience.
The CA affirmed the conviction, but modified the penalty,
10
viz:
WHEREFORE, premises considered, the decision dated October 20, 2003 of the
Regional Trial Court, Branch 9 of Legazpi City is hereby AFFIRMED with MODIFICATION
in that accused-appellant George Bongalon is sentenced to suffer the indeterminate
penalty of (4) years, two (2) months and one (1) day of prision correccional, as
minimum term, to six (6) years, eight (8) months and 1 day of prision mayor as the
maximum term.
Further, accused-appellant is ordered to pay the victim, Jayson de la Cruz the additional
amount of P5,000 as moral damages.
SO ORDERED.
Issues
The petitioner has come to the Court via a petition for certiorari under Rule 65 of the
Rules of Court.
11

The petitioner asserts that he was not guilty of the crime charged; and that even
assuming that he was guilty, his liability should be mitigated because he had merely
acted to protect her two minor daughters.
Ruling of the Court
At the outset, we should observe that the petitioner has adopted the wrong remedy in
assailing the CAs affirmance of his conviction. His proper recourse from the affirmance
of his conviction was an appeal taken in due course. Hence, he should have filed a
petition for review on certiorari. Instead, he wrongly brought a petition for certiorari.
We explained why in People v. Court of Appeals:
12

The special civil action for certiorari is intended for the correction of errors of
jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction.
Its principal office is only to keep the inferior court within the parameters of its
jurisdiction or to prevent it from committing such a grave abuse of discretion amounting
to lack or excess of jurisdiction. As observed in Land Bank of the Philippines v. Court of
Appeals, et al. "the special civil action for certiorari is a remedy designed for the
correction of errors of jurisdiction and not errors of judgment. The raison detre for the
rule is when a court exercises its jurisdiction, an error committed while so engaged
does not deprived it of the jurisdiction being exercised when the error is committed. If it
did, every error committed by a court would deprive it of its jurisdiction and every
erroneous judgment would be a void judgment. In such a scenario, the administration
of justice would not survive. Hence, where the issue or question involved affects the
wisdom or legal soundness of the decisionnot the jurisdiction of the court to render
said decisionthe same is beyond the province of a special civil action for certiorari. The
proper recourse of the aggrieved party from a decision of the Court of Appeals is a
petition for review on certiorari under Rule 45 of the Revised Rules of Court.
It is of no consequence that the petitioner alleges grave abuse of discretion on the part
of the CA in his petition. The allegation of grave abuse of discretion no more warrants
the granting of due course to the petition as one for certiorari if appeal was available as
a proper and adequate remedy. At any rate, a reading of his presentation of the issues
in his petition indicates that he thereby imputes to the CA errors of judgment, not
errors of jurisdiction. He mentions instances attendant during the commission of the
crime that he claims were really constitutive of justifying and mitigating circumstances;
and specifies reasons why he believes Republic Act No. 7610 favors his innocence
rather than his guilt for the crime charged.
13
The errors he thereby underscores in the
petition concerned only the CAs appreciation and assessment of the evidence on
record, which really are errors of judgment, not of jurisdiction.
Even if we were to treat the petition as one brought under Rule 45 of the Rules of
Court, it would still be defective due to its being filed beyond the period provided by
law. Section 2 of Rule 45 requires the filing of the petition within 15 days from the
notice of judgment to be appealed. However, the petitioner received a copy of the CAs
decision on July 15, 2005,
14
but filed the petition only on September 12, 2005,
15
or well
beyond the period prescribed by the Rules of Court.
The procedural transgressions of the petitioner notwithstanding, we opt to forego
quickly dismissing the petition, and instead set ourselves upon the task of resolving the
issues posed by the petition on their merits. We cannot fairly and justly ignore his plea
about the sentence imposed on him not being commensurate to the wrong he
committed. His plea is worthy of another long and hard look. If, on the other hand, we
were to outrightly dismiss his plea because of the procedural lapses he has committed,
the Court may be seen as an unfeeling tribunal of last resort willing to sacrifice justice
in order to give premium to the rigidity of its rules of procedure. But the Rules of Court
has not been intended to be rigidly enforced at all times. Rather, it has been instituted
first and foremost to ensure justice to every litigant. Indeed, its announced objective
has been to secure a "just, speedy and inexpensive disposition of every action and
proceeding."
16
This objective will be beyond realization here unless the Rules of Court
be given liberal construction and application as the noble ends of justice demand.
Thereby, we give primacy to substance over form, which, to a temple of justice and
equity like the Court, now becomes the ideal ingredient in the dispensation of justice in
the case now awaiting our consideration.
The petitioners right to liberty is in jeopardy. He may be entirely deprived of such
birthright without due process of law unless we shunt aside the rigidity of the rules of
procedure and review his case. Hence, we treat this recourse as an appeal timely
brought to the Court. Consonant with the basic rule in criminal procedure that an
appeal opens the whole case for review, we should deem it our duty to correct errors in
the appealed judgment, whether assigned or not.
17

The law under which the petitioner was charged, tried and found guilty of violating is
Section 10 (a), Article VI of Republic Act No. 7610, which relevantly states:
Section 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation and other Conditions
Prejudicial to the Childs Development.
(a) Any person who shall commit any other acts of child abuse, cruelty or exploitation
or be responsible for other conditions prejudicial to the childs 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.
x x x x
Child abuse, the crime charged, is defined by Section 3 (b) of Republic Act No. 7610, as
follows:
Section 3. Definition of terms.
x x x x
(b) "Child Abuse" refers to the maltreatment, whether habitual or not, of the child
which includes any of the following:
(1) Psychological and physical abuse, neglect, cruelty, sexual abuse and
emotional maltreatment;
(2) Any act by deeds or words which debases, degrades or demeans the intrinsic
worth and dignity of a child as a human being;
(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.
x x x x
Although we affirm the factual findings of fact by the RTC and the CA to the effect that
the petitioner struck Jayson at the back with his hand and slapped Jayson on the face,
we disagree with their holding that his acts constituted child abuse within the purview
of the above-quoted provisions. The records did not establish beyond reasonable doubt
that his laying of hands on Jayson had been intended to debase the "intrinsic worth and
dignity" of Jayson as a human being, or that he had thereby intended to humiliate or
embarrass Jayson. The records showed the laying of hands on Jayson to have been
done at the spur of the moment and in anger, indicative of his being then overwhelmed
by his fatherly concern for the personal safety of his own minor daughters who had just
suffered harm at the hands of Jayson and Roldan. With the loss of his self-control, he
lacked that specific intent to debase, degrade or demean the intrinsic worth and dignity
of a child as a human being that was so essential in the crime of child abuse.
It is not trite to remind that under the well-recognized doctrine of pro reo every doubt
is resolved in favor of the petitioner as the accused. Thus, the Court should consider all
possible circumstances in his favor.
18

What crime, then, did the petitioner commit?
Considering that Jaysons physical injury required five to seven days of medical
attention,
19
the petitioner was liable for slight physical injuries under Article 266 (1) of
the Revised Penal Code, to wit:
Article 266. Slight physical injuries and maltreatment. The crime of slight physical
injuries shall be punished:
1. By arresto menor when the offender has inflicted physical injuries which shall
incapacitate the offended party for labor from one to nine days, or shall require medical
attendance during the same period.
x x x x
The penalty for slight physical injuries is arresto menor, which ranges from one day to
30 days of imprisonment.
20
In imposing the correct penalty, however, we have to
consider the mitigating circumstance of passion or obfuscation under Article 13 (6) of
the Revised Penal Code,
21
because the petitioner lost his reason and self-control,
thereby diminishing the exercise of his will power.
22
Passion or obfuscation may lawfully
arise from causes existing only in the honest belief of the accused.
23
It is relevant to
mention, too, that in passion or obfuscation, the offender suffers a diminution of
intelligence and intent. With his having acted under the belief that Jayson and Roldan
had thrown stones at his two minor daughters, and that Jayson had burned Cherrlyns
hair, the petitioner was entitled to the mitigating circumstance of passion. Arresto
menor is prescribed in its minimum period (i.e., one day to 10 days) in the absence of
any aggravating circumstance that offset the mitigating circumstance of passion.
Accordingly, with the Indeterminate Sentence Law being inapplicable due to the penalty
imposed not exceeding one year,
24
the petitioner shall suffer a straight penalty of 10
days of arresto menor.
The award of moral damages to Jayson is appropriate. Such damages are granted in
criminal cases resulting in physical injuries.
25
The amount of P5,000.00 fixed by the
lower courts as moral damages is consistent with the current jurisprudence.
26

WHEREFORE, we SET ASIDE the decision of the Court of Appeals; and ENTER a new
judgment: (a) finding petitioner George Bongalon GUlLTY beyond reasonable doubt of
the crime of SLIGHT PHYSICAL INJURIES under paragraph 1, Article 266, of the
Revised Penal Code; (b) sentencing him to suffer the penalty of 10 days of arresto
menor; and (c) ordering him to pay Jayson Dela Cruz the amount of P5,000.00 as moral
damages, plus the costs of suit.
SO ORDERED.


****************************ooooooooooooooooo**************************


THIRD DIVISION
G.R. No. 201701 June 3, 2013
UNILEVER PHILIPPINES, INC., Petitioner,
vs.
MARIA RUBY M. RIVERA, Respondent.
D E C I S I O N
MENDOZA, J.:
Subject of this disposition is the petition for review on certiorari
1
under Rule 45 of the
Rules of Court filed by petitioner Unilever Philippines, Inc. (Unilever) questioning the
June 22, 2011 Decision
2
and the April 25, 2012 Resolution
3
of the Court of Appeals
(CA)-Cagayan de Oro City, in CA G.R. SP No. 02963-MIN, an Illegal Dismissal case filed
by respondent Maria Ruby M. Rivera (Rivera). The CA affirmed with modification the
March 31, 2009 Resolution of the National Labor Relations Commission (NLRC) finding
Rivera's dismissal from work to be valid as it was for a just cause and declaring that she
was not entitled to any retirement benefit. The CA, however, awarded separation pay in
her favor as a measure of social justice.
The Facts
Unilever is a company engaged in the production, manufacture, sale, and distribution of
various food, home and personal care products, while Rivera was employed as its Area
Activation Executive for Area 9 South in the cities of Cotabato and Davao. She was
primarily tasked with managing the sales, distribution and promotional activities in her
area and supervising Ventureslink International, Inc. (Ventureslink), a third party
service provider for the companys activation projects. Unilever enforces a strict policy
that every trade activity must be accompanied by a Trade Development Program (TDP)
and that the allocated budget for a specific activity must be used for such activity only.
4

Sometime in 2007, Unilevers internal auditor conducted a random audit and found out
that there were fictitious billings and fabricated receipts supposedly from Ventureslink
amounting to P11,200,000.00. It was also discovered that some funds were diverted
from the original intended projects. Upon further verification, Ventureslink reported that
the fund deviations were upon the instruction of Rivera.
On July 16, 2007, Unilever issued a show-cause notice to Rivera asking her to explain
the following charges, to wit: a) Conversion and Misappropriation of Resources; b)
Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity Issues.
Responding through an email, dated July 16, 2007, Rivera admitted the fund diversions,
but explained that such actions were mere resourceful utilization of budget because of
the difficulty of procuring funds from the head office.
5
She insisted that the diverted
funds were all utilized in the companys promotional ventures in her area of coverage.
Through a letter, dated August 23, 2007, Unilever found Rivera guilty of serious breach
of the companys Code of Business Principles compelling it to sever their professional
relations. In a letter, dated September 20, 2007, Rivera asked for reconsideration and
requested Unilever to allow her to receive retirement benefits having served the
company for fourteen (14) years already. Unilever denied her request, reasoning that
the forfeiture of retirement benefits was a legal consequence of her dismissal from
work.
On October 19, 2007, Rivera filed a complaint for Illegal Dismissal and other monetary
claims against Unilever.
On April 28, 2008, the Labor Arbiter (LA) dismissed her complaint for lack of merit and
denied her claim for retirement benefits, but ordered Unilever to pay a proportionate
13th month pay and the corresponding cash equivalent of her unused leave credits. The
decretal portion of the LA decision reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing for lack of
merit the illegal dismissal complaint. However, UNILEVER PHILIPPINES, INC. is hereby
ordered to pay complainant the total amount of PESOS: FIFTY SEVEN THOUSAND
EIGHTY TWO & 90/100 ONLY (P57,082.90) representing proportionate 13th month pay
and unused leave credits.
The complaint against individual respondents Recto Sampang and Alejandro Concha are
likewise dismissed for it was not shown that they acted in bad faith in the dismissal of
complainant. Moreover, their legal personality is separate and distinct from that of the
corporation.
All other money claims are dismissed for lack of basis.
6

On appeal, the NLRC partially granted Riveras prayer. In its Resolution, dated
November 28, 2008, the NLRC held that although she was legally dismissed from the
service for a just cause, Unilever was guilty of violating the twin notice requirement in
labor cases. Thus, Unilever was ordered to pay her P30,000.00 as nominal damages,
retirement benefits and separation pay. The dispositive portion reads:
WHEREFORE, foregoing premises considered, the appeal is PARTIALLY GRANTED. The
assailed Decision dated 28 April 2008 is hereby MODIFIED in the sense that respondent
UNILEVER PHILIPPINES, INC. is hereby ordered to pay the following sums:
1. The amount of P30,000.00 representing nominal damages for violation of
complainants right to procedural due process;
2. Retirement benefits under the companys applicable retirement policy or
written agreement, and in the absence of which, to pay complainant her
retirement pay equivalent to at least one-half (1/2) month salary for every year
of service, a fraction of at least six (6) months being considered as one whole
year;
3. Separation pay under the companys applicable policy or written agreement,
and in the absence of which, to pay separation pay equivalent to at least one-
half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
The rest of the Decision is hereby AFFIRMED.
SO ORDERED.
7

Unilever asked for a reconsideration of the NLRC decision. In its Resolution, dated
March 31, 2009, the NLRC modified its earlier ruling by deleting the award of separation
pay and reducing the nominal damages from P30,000.00 to P20,000.00, but affirmed
the award of retirement benefits to Rivera. The fallo reads:
WHEREFORE, foregoing premises considered, the instant Motion for Partial
Reconsideration is PARTLY GRANTED. The Resolution dated 28 November 2008 of the
Commission is hereby
RECONSIDERED as follows:
(1)The award of separation pay is hereby deleted for lack of factual and legal
basis; and
(2)The award of nominal damages is hereby tempered and reduced to the
amount of P20,000.00.
The rest of the award for retirement benefits is affirmed in toto.
SO ORDERED.
8

Unsatisfied with the ruling, Unilever elevated the case to CA-Cagayan de Oro City via a
petition for certiorari under Rule 65 of the Rules of Court.
On June 22, 2011, the CA affirmed with modification the NLRC resolution. Justifying the
deletion of the award of retirement benefits, the CA explained that, indeed, under
Unilevers Retirement Plan, a validly dismissed employee cannot claim any retirement
benefit regardless of the length of service. Thus, Rivera is not entitled to any retirement
benefit. It stated, however, that there was no proof that she personally gained any
pecuniary benefit from her infractions, as her instructions were aimed at increasing the
sales efficiency of the company and competing in the local market. For said reason, the
CA awarded separation pay in her favor as a measure of social justice.
9
The decretal
portion of the CA decision reads:
WHEREFORE, the assailed Resolution dated March 31, 2009 of the NLRC (Branch 5),
Cagayan De Oro City is hereby AFFIRMED with MODIFICATION. Consequently,
UNILEVER is directed to pay MARIA RUBY M. RIVERA the following:
a) Separation pay, to be computed based on the companys applicable policy or
written agreement, or in the absence thereof, the equivalent of at least one-half
(1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year;
b) P20,000.00 as nominal damages; and
c) Proportionate 13th month pay and unused leave credits, to be computed
based on her salary during the period relevant to the case.
The award of retirement benefits is hereby DELETED.
SO ORDERED.
10

Unilever filed a motion for partial reconsideration,
11
but it was denied in a Resolution,
dated April 25, 2012.
Hence, this petition.
12

In support of its position, Unilever submits for consideration the following
G R O U N D S
I.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION
IN GRANTING AFFIRMATIVE RELIEFS IN FAVOR OF RIVERA EVEN IF SHE DID NOT
FILE ANY PETITION FOR CERTIORARI TO CHALLENGE THE NLRC RESOLUTIONS.
II.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION
IN AWARDING SEPARATION PAY IN FAVOR OF RIVERA CONSIDERING THAT THE
LATTER WAS VALIDLY DISMISSED FROM EMPLOYMENT BASED ON JUST CAUSES
UNDER THE LAW.
III.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION
IN RULING THAT THE COMPANY VIOLATED RIVERAS RIGHT TO PROCEDURAL DUE
PROCESS BEFORE TERMINATING HER EMPLOYMENT, AND CONSEQUENTLY, IN
AWARDING NOMINAL DAMAGES.
13

Unilever argues that Rivera did not file any separate petition for certiorari before the
CA. Neither did she file any comment on its petition. Hence, it was erroneous for the CA
to grant an affirmative relief because it was inconsistent with the doctrine that a party
who has not appealed cannot obtain from the appellate court any affirmative relief
other than the ones granted in the appealed decision. The petitioner stresses that
Rivera misappropriated company funds amounting to millions of pesos and that
granting her separation pay undermines the serious misdeeds she committed against
the company. Moreover, the length of her service with Unilever does not mitigate her
offense, but even aggravates the depravity of her acts.
14

The petition is partly meritorious.
The pivotal issue in the case at bench is whether or not a validly dismissed employee,
like Rivera, is entitled to an award of separation pay.
As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282
15
of the Labor Code is not entitled to a separation pay.
16

Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code
provides:
Sec. 7. Termination of employment by employer. The just causes for terminating the
services of an employee shall be those provided in Article 282 of the Code. The
separation from work of an employee for a just cause does not entitle him to the
termination pay provided in the Code, without prejudice, however, to whatever rights,
benefits and privileges he may have under the applicable individual or collective
agreement with the employer or voluntary employer policy or practice.
In exceptional cases, however, the Court has granted separation pay to a legally
dismissed employee as an act of "social justice" or on "equitable grounds." In both
instances, it is required that the dismissal (1) was not for serious misconduct; and (2)
did not reflect on the moral character of the employee.
17
The leading case of Philippine
Long Distance Telephone Co. vs. NLRC
18
is instructive on this point:
We hold that henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Where the reason for the
valid dismissal is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not
be required to give the dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the
punishment is his dismissal only and the separation pay has nothing to do with the
wrong he has committed. Of course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely that
he will commit a similar offense in his next employment because he thinks he can
expect a like leniency if he is again found out.1wphi1 This kind of misplaced
compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the
Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it
is committed by the underprivileged. At best, it may mitigate the penalty but it certainly
will not condone the offense. Compassion for the poor is an imperative of every
humane society but only when the recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be refuge of scoundrels any more than
can equity be an impediment to the punishment of the guilty. Those who invoke social
justice may do so only if their hands are clean and their motives blameless and not
simply because they happen to be poor. This great policy of our Constitution is not
meant for the protection of those who have proved they are not worthy of it, like the
workers who have tainted the cause of labor with the blemishes of their own
character.
19

In the subsequent case of Toyota Motor Philippines Corporation Workers Association
(TMPCWA) v. National Labor Relations Commission,
20
it was further elucidated that "in
addition to serious misconduct, in dismissals based on other grounds under Art. 282 like
willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust,
and commission of a crime against the employer or his family, separation pay should
not be conceded to the dismissed employee."
21
In Reno Foods, Inc, v. Nagkakaisang
Lakas ng Manggagawa (NLM)-Katipunan,
22
the Court wrote that "separation pay is only
warranted when the cause for termination is not attributable to the employees fault,
such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of
illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an
employee is dismissed for just cause."
23

In this case, Rivera was dismissed from work because she intentionally circumvented a
strict company policy, manipulated another entity to carry out her instructions without
the companys knowledge and approval, and directed the diversion of funds, which she
even admitted doing under the guise of shortening the laborious process of securing
funds for promotional activities from the head office. These transgressions were serious
offenses that warranted her dismissal from employment and proved that her
termination from work was for a just cause. Hence, she is not entitled to a separation
pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC
disallowing the award of separation pay to her. It was Unilever who elevated the case
to the CA. It is axiomatic that a party who does not appeal, or file a petition for
certiorari, is not entitled to any affirmative relief.
24
Due process prevents the grant of
additional awards to parties who did not appeal.
25
An appellee who is not an appellant
may assign errors in his brief where his purpose is to maintain the judgment, but he
cannot seek modification or reversal of the judgment or claim affirmative relief unless
he has also appealed.
26
It was, therefore, erroneous for the CA to grant an affirmative
relief to Rivera who did not ask for it.
Lastly, Unilever questions the grant of nominal damages in favor of Rivera for its
alleged non-observance of the requirements of procedural due process. It insists that
she was given ample opportunity "to explain her side, interpose an intelligent defense
and adduce evidence on her behalf."
27

The Court is not persuaded. Section 2, Rule XXIII, Book V of the Rules Implementing
the Labor Code expressly states:
Section 2. Standard of due process: requirements of notice.
In all cases of termination of employment, the following standards of due process
shall be substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the
Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond
to the charge, present his evidence or rebut the evidence presented against him;
and
(c) A written notice of termination served on the employee indicating that upon
due consideration of all the circumstance, grounds have been established to
justify his termination.
In case of termination, the foregoing notices shall be served on the employees last
known address.
King of Kings Transport, Inc. v. Mamac
28
detailed the steps on how procedural due
process can be satisfactorily complied with. Thus:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the Omnibus Rules means
every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed
as a period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them, consult a
union official or lawyer, gather data and evidence, and decide on the defenses
they will raise against the complaint. Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the notice should contain
a detailed narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which company rules, if
any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity to:
(1) explain and clarify their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut the evidence presented
against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity to come to
an amicable settlement.
(3) After determining that termination of employment is justified, the employers
shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered;
and (2) grounds have been established to justify the severance of their
employment.
29

In this case, Unilever was not direct and specific in its first notice to Rivera. The words
it used were couched in general terms and were in no way informative of the charges
against her that may result in her dismissal from employment. Evidently, there was a
violation of her right to statutory due process warranting the payment of indemnity in
the form of nominal damages. Hence, the Court finds no compelling reason to reverse
the award of nominal damages in her favor. The Court, however, deems it proper to
increase the award of nominal damages from P20,000.00 to P30,000.00, as initially
awarded by the NLRC, in accordance with existing jurisprudence.
30

WHEREFORE, the petition is hereby PARTIALLY GRANTED.1wphi1 The June 22, 2011
Decision and the April 25, 2012 Resolution of the Court of Appeals (CA)-Cagayan de
Oro City in CA-G.R. SP No. 02963-MIN are AFFIRMED with MODIFICATION. The
dispositive portion should read as follows:
WHEREFORE, the March 31, 2009 Resolution of the NLRC (Branch 5), Cagayan de Oro
City, is hereby AFFIRMED with MODIFICATION. UNILEVER PHILIPPINES, INC., is
hereby directed to pay MARIA RUBY M. RIVERA the following:
a) P30,000.00 as nominal damages; and
b) Proportionate 13th month pay and unused leave credits, to be computed
based on her salary during the period relevant to the case.
The award of retirement benefit is DELETED.
SO ORDERED.

**********************oooooooooooooooooooo**************************




FIRST DIVISION
G.R. No. 188024 June 5, 2013
RODRIGO RONTOS y DELA TORRE, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
D E C I S I O N
SERENO, CJ.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing
the Decision
1
dated 28 October 2008 and Resolution
2
dated 29 May 2009 of the Court
of Appeals (CA) in CA-G.R. CR No. 30412. The CA Decision affirmed the Decision
3
in
Criminal Case No. C-69394 of the Regional Trial Court of Caloocan City, Branch 123
(RTC) finding petitioner guilty beyond reasonable doubt of the crime of violation of
Section 11, Article II of Republic Act No. (R.A.) 9165 (Comprehensive Dangerous Drugs
Act).
At 4:00 p.m. on 19 October 2003, PO2 Emil Masi (PO2 Masi) of the Caloocan North City
Police Station dispatched PO1 Joven Pacis (PO1 Pacis) and PO1 Greg Labaclado (PO1
Labaclado) of the Station Anti-Illegal Drugs Task Force to conduct surveillance in
Sampaloc St., Camarin, Caloocan City because of reports of illegal drug activity in the
said area.
4
When they got there around 5:00 p.m., PO1 Pacis and PO1 Labaclado
noticed petitioner standing about five meters away from them, apparently preoccupied
with scrutinizing two plastic sachets in his hand.
Upon coming closer, they saw that the plastic sachets appeared to contain a white
crystalline substance similar to shabu.
5
PO1 Pacis approached petitioner and confiscated
the plastic sachets. Thereafter, he introduced himself as a police officer and informed
petitioner of the offense the latter had committed.
6
The two police officers informed
petitioner of his constitutional rights, while he just remained silent.
7
PO1 Pacis marked
the plastic sachets with his initials "JCP-1" and JCP-2" and placed them in a makeshift
envelope.
8

They then brought petitioner to the station and turned him over to PO2 Masi together
with the plastic sachets.
9
PO2 Masi conducted an investigation and prepared a request
for a laboratory examination
10
of the contents of the plastic sachets.
11
PO1 Pacis
brought the request and the plastic sachets to the crime laboratory, and forensic
chemist Police Inspector Jessie dela Rosa (P/Insp. dela Rosa) conducted the
examination.
12
The tests on the contents of the plastic sachets yielded a positive result
for methylamphetamine hydrochloride, a dangerous drug more commonly known as
shabu.
13

A Complaint
14
for violation of Section 11 (possession of dangerous drugs), Article II of
R.A. 9165, was drawn up and referred
15
to the city prosecutor for the filing of charges
before the court.
On the other hand, petitioner narrated a different version of the incident. According to
him, on the date and time mentioned, he was at home with his parents, sister, nephews
and a visitor named Cassandra Francisco (Cassandra) when PO1 Pacis and PO1
Labaclado suddenly barged in.
16
The police officers searched the house, claiming that
they were looking for something.
17
When the search proved fruitless, they arrested
petitioner and Cassandra and detained them at the Drug Enforcement Unit in Camarin,
Caloocan City.
18
Cassandra was later released when her uncle allegedly gave money to
the police officers.
19

After trial on the merits, the RTC rendered a Decision
20
dated 23 August 2006, the
dispositive portion of which states:
Wherefore, premises considered, judgment is hereby rendered finding accused
RODRIGO RONTOS Y DELA TORRE guilty beyond reasonable doubt of the crime of
Violation of Section 11, Article II, RA 9165 and hereby sentencing him to suffer
imprisonment of TWELVE YEARS AND ONE DAY TO THIRTEEN YEARS, NINE MONTHS
AND TEN DAYS and to pay a fine of P500,000.00 without subsidiary imprisonment in
case of insolvency.
21

Through the testimonies of PO1 Pacis, PO1 Labaclado and P/Insp. dela Rosa, the RTC
ruled that the prosecution was able to establish the concurrence of all the elements of
possession of dangerous drugs: (a) an item or object identified to be a dangerous drug
was in a persons possession; (b) the possession was not authorized by law; and (c) the
person freely and consciously possessed the dangerous drug. The RTC also found no
evil motive on the part of the police officers to testify falsely against petitioner. Despite
the defenses of denial, frame-up and evidence-planting interposed by petitioner, the
RTC held that his guilt was proven beyond reasonable doubt.
On appeal to the CA, petitioner contended that, since his warrantless arrest was illegal,
the allegedly confiscated items were inadmissible in evidence. He further claimed that
the police officers failed to faithfully comply with the procedure for ensuring the identity
and integrity of the plastic sachets containing shabu.
The CA ruled
22
that the question over the legality of the arrest was deemed waived by
petitioner when he voluntarily submitted himself to the jurisdiction of the court by
entering a plea of "Not Guilty" and participating in the trial of the case.
23
In any case,
the CA explained that while the arrest was without a warrant, it was with probable
cause since petitioner was arrested in flagrante delicto. He committed a crime in plain
view of the police officers, as he was spotted in the act of holding and examining plastic
sachets containing shabu.
While the CA admitted that no photograph or inventory of the confiscated items was
taken or made, it entertained no doubt that the dangerous drugs presented in court
were the same ones confiscated from petitioner. Furthermore, the failure of the police
officers to observe the proper procedure for handling confiscated dangerous drugs may
only result in administrative liability on their part. That failure does not cast doubt on
the identity and integrity of the illegal drugs.
24

Thus, the CA affirmed the Decision of the RTC with the modification that the fine
imposed was reduced from P500,000 to P300,000.
25
As the motion for reconsideration
26

of petitioner was denied,
27
he now comes before us raising the same issues presented
before the CA.
OUR RULING
We acquit petitioner on the ground of reasonable doubt. We cannot uphold the
contention of petitioner that his warrantless arrest was illegal. The CA correctly ruled
that his failure to question the legality of his arrest before entering his plea during
arraignment operated as a waiver of that defense. "It has been ruled time and again
that an accused is estopped from assailing any irregularity with regard to his arrest if he
fails to raise this issue or to move for the quashal of the information against him on this
ground before his arraignment."
28

In his arraignment before the trial court, petitioner never raised any issue and instead
"freely and voluntarily pleaded Not Guilty to the offense charged."
29
Thus, he was
estopped from raising the issue of the legality of his arrest before the trial court, more
so on appeal before the CA or this Court.
However, on the basis of the nonobservance of the rules of procedure for handling
illegal drug items, we resolve to acquit petitioner on the ground of reasonable doubt.
In illegal drugs cases, the identity and integrity of the drugs seized must be established
with the same unwavering exactitude as that required to arrive at a finding of guilt.
30

The case against the accused hinges on the ability of the prosecution to prove that the
illegal drug presented in court is the same one that was recovered from the accused
upon his arrest.
The procedure set forth in Section 21 of R.A. 9165 is intended precisely to ensure the
identity and integrity of dangerous drugs seized.
31
This provision requires that upon
seizure of illegal drug items, the apprehending team having initial custody of the drugs
shall (a) conduct a physical inventory of the drugs and (b) take photographs thereof (c)
in the presence of the person from whom these items were seized or confiscated and
(d) a representative from the media and the Department of Justice and any elected
public official (e) who shall all be required to sign the inventory and be given copies
thereof.
This Court has emphasized the import of Section 21 as a matter of substantive law that
mandates strict compliance.
32
It was laid down by Congress as a safety precaution
against potential abuses by law enforcement agents who might fail to appreciate the
gravity of the penalties faced by those suspected to be involved in the sale, use or
possession of illegal drugs.
33
Under the principle that penal laws are strictly construed
against the government, stringent compliance therewith is fully justified.
34

Here, the procedure was not observed at all. Where it is clear that Section 21 was not
observed, as in this case, such noncompliance brings to the fore the question of
whether the illegal drug items were the same ones that were allegedly seized from
petitioner.
The direct testimony of PO1 Pacis in connection with his identification of the envelope
where he placed the two plastic sachets allegedly confiscated from petitioner does not
really inspire confidence, to wit:
Q: What did you do with the plastic sachet that you have confiscated from the accused?
A: After confiscating them, I marked them and placed them in an envelope in order to
preserve the evidence, maam.
Q: I am showing toy [sic] you this white envelope, will you please have a look at it and
tell the Honorable Court if this is the same envelope which contained the two plastic
sachets?
A: I am not sure, maam, it is not actually an envelope but an improvised envelope.
35

We cannot, in good conscience, affirm the conviction of petitioner for possession of
illegal drugs if the police officer charged with the preservation of the evidence cannot
even be certain in the identification of the envelope that was presented in court. As
held in Dolera v. People,
36
there also exists in the present case a reasonable likelihood
of substitution, in that the two plastic sachets that tested positive for shabu and were
presented in court were not the items allegedly seized from petitioner.1wphi1 This
possibility of substitution is fatal for the prosecution,
37
for there is then a failure to
prove the identity of the corpus delicti beyond reasonable doubt.
38

We are not unaware of the rule that justifiable grounds may excuse noncompliance with
the requirements of Section 21 as long as the integrity and evidentiary value of the
seized items are properly preserved.
39
The problem in this case is that the police
officers presented no justifiable reason why they neglected to observe the proper
procedure. Considering that PO1 Pacis himself expressed misgivings on the identity of
the envelope shown to him in court, with the envelope that he had placed the
confiscated illegal drug items in, neither can we confirm that the chain of custody had
been sufficiently established.
Corpus delicti is the "actual commission by someone of the particular crime charged."
40

In illegal drug cases, it refers to the illegal drug item itself.
41
When courts are given
reason to entertain reservations about the identity of the illegal drug item allegedly
seized from the accused, the actual commission of the crime charged is put into serious
question. In those cases, courts have no alternative but to acquit on the ground of
reasonable doubt.
WHEREFORE, the Decision dated 28 October 2008 in CA-G.R. CR No. 30412 of the
Court of Appeals is REVERSED and SET ASIDE. RODRIGO RONTOS y DELA TORRE is
hereby ACQUITTED of the crime of Violation of Section 11, Article II of Republic Act No.
9165 (Comprehensive Dangerous Drugs Act) on the ground of reasonable doubt.
The Director of the Bureau of Corrections is hereby ORDERED to immediately RELEASE
petitioner from custody, unless he is detained for some other lawful cause.
SO ORDERED.

*************************oooooooooooooooooo************************



SECOND DIVISION
G.R. No. 184116 June 19, 2013
CENTURY IRON WORKS, INC. and BENITO CHUA, Petitioners,
vs.
ELETO B. BANAS, Respondent.
D E C I S I O N
BRION, J.:
We resolve the petition for review on certiorari
1
filed by petitioners Century Iron Works,
Inc. (Century Iron) and Benito Chua to challenge the January 31, 2008 decision
2
and
the August 8, 2008 resolution
3
of the Court of Appeals (CA) in CA-G.R. SP No. 98632.
The Factual Antecedents
Respondent Eleto B. Banas worked at petitioner Century Iron beginning July 5, 2000
4

until his dismissal on June 18, 2002.
5
Baas responded to his dismissal by filing a
complaint for illegal dismissal with prayer for reinstatement and money claims.
6

According to Century Iron, Baas worked as an inventory comptroller whose duties are
to: (1) train newly hired warehouseman; (2) initiate analysis on the discrepancies
concerning records and inventories; (3) check and confirm warehousemans report; (4)
check the accuracy of materials requisition before issuance to the respective
warehouseman at the jobsite; (5) monitor and maintain records; and (6) recommend
and initiate corrective or preventive action as may be warranted.
7

Sometime in 2002, Century Iron received letters of complaint from its gas suppliers
regarding alleged massive shortage of empty gas cylinders.
8
In the investigation that
Century Iron conducted in response to the letters, it found that Baas failed to make a
report of the missing cylinders. On May 14, 2002, Century Iron required Baas to
explain within forty-eight (48) hours from receipt of its letter why no disciplinary action
should be taken against him for loss of trust and confidence and for gross and habitual
neglect of duty.
9
On May 31, 2002, Century Iron issued a Memorandum requiring Baas
to attend a hearing regarding the missing cylinders.
10
Baas subsequently appeared at
the hearing to air his side.
On June 17, 2002, Century Iron, through Personnel Officer Mr. Virgilio T. Baaga,
terminated Baas services on grounds of loss of trust and confidence, and habitual and
gross neglect of duty.
11
The termination was effective June 18, 2002.
In his defense, Baas alleged that he merely worked as an inventory clerk who is not
responsible for the lost cylinders. He pointed out that his tasks were limited to
conducting periodic and yearly inventories, and submitting his findings to the personnel
officer. He maintained that unlike a supervisory employee, he was not required to post
a bond and he did not have the authority to receive and/or release cylinders in the way
that a warehouseman does. Therefore, he cannot be terminated on the ground of loss
of confidence.
12

On the other hand, the petitioners asserted that Baas was a supervisory employee
who was responsible for the lost cylinders. They maintained that Baas committed
numerous infractions during his tenure amounting to gross and habitual neglect of duty.
These included absences without leave, unauthorized under time, failure to implement
proper standard warehousing and housekeeping procedure, negligence in making
inventories of materials, and failure to ensure sufficient supplies of oxygen-acetylene
gases.
13

The Labor Arbitration Rulings
In a decision
14
dated January 31, 2005, Labor Arbiter (LA) Joel S. Lustria ruled that
Baas was illegally dismissed. The LA did not believe Century Irons assertions that
Baas worked as an inventory comptroller and that he was grossly and habitually
neglectful of his duties. The evidence on record shows that Baas was an inventory
clerk whose duties were merely to conduct inventory and to submit his report to the
personnel officer. As an inventory clerk, it was not his duty to receive the missing items.
The LA also ruled that Century Iron deprived Baas of due process because the purpose
of the hearing was to investigate the lost cylinders and not to give Baas an opportunity
to explain his side.
On appeal by Century Iron, the National Labor Relations Commission (NLRC) affirmed
the LAs ruling in toto.
15
It ruled that the various memoranda issued by Century Iron
explicitly show that Baas was an inventory clerk. It noted that Century Iron
unequivocally stated in its termination report dated July 29, 2002 that Baas was an
inventory clerk. It also pointed out that Century Iron failed to present the Contract of
Employment or the Appointment Letter which was the best evidence that Baas was an
inventory comptroller.
The NLRC denied
16
the motion for reconsideration
17
that Century Iron subsequently
filed, prompting the employer company to seek relief from the CA through a petition for
certiorari under Rule 65 of the Rules of Court.
18

The CA Ruling
On January 31, 2008, the CA affirmed with modification the NLRC decision. It agreed
with the lower tribunals finding that Baas was merely an inventory clerk. It, however,
ruled that Baas was afforded due process. It held that Baas had been given ample
opportunity to air his side during the hearing, pointing out that the essence of due
process is simply an opportunity to be heard.
19

Century Iron filed the present petition
20
after the CA denied
21
its motion for
reconsideration.
22

The Petition
The petitioners impute the following errors committed by the appellate court:
1) The CA erred in holding that the factual findings of the NLRC may not be
inquired into considering that only questions of law may be brought in an original
action for certiorari;
2) The CA erred in finding that Baas was not a supervisory employee; and
3) The CA erred in not holding that Baas termination from his employment was
for valid and just causes.
23

The petitioners argue that the CA erred when it did not disturb the NLRCs finding that
Baas was merely a rank-and-file employee. Citing Capitol Medical Center, Inc. v. Dr.
Meris,
24
they contend that for factual findings of the NLRC to be accorded respect,
these must be sufficiently supported by the evidence on record. The petitioners assert
that Baas was a supervisory employee who, in the interest of the employer, effectively
recommended managerial actions using his independent judgment. They point out that
one of Baas duties as an inventory comptroller was to recommend and initiate
corrective or preventive action as may be warranted.
The petitioners also maintain that Baas was dismissed for just and valid causes. They
reiterate that since Baas was a supervisory employee, he could be dismissed on the
ground of loss of confidence. Finally, the petitioners claim that Baas was grossly and
habitually negligent in his duty which further justified his termination.
The Respondents Position
In his Comment,
25
Baas posits that the petition raises purely questions of fact which a
petition for review on certiorari under Rule 45 of the Rules of Courts does not allow. He
additionally submits that the petitioners arguments have been fully passed upon and
found unmeritorious by the lower tribunals and the CA.
The Issues
This case presents to us the following issues:
1) Whether or not questions of fact may be inquired into in a petition for certiorari
under Rule 65 of the Rules of Court;
2) Whether or not Baas occupied a position of trust and confidence, or was routinely
charged with the care and custody of Century Irons money or property; and
3) Whether or not Century Iron terminated Baas for just and valid causes.
As part of the third issue, the following questions are raised:
a) Whether or not loss of confidence is a ground for terminating a rank-and-file
employee who is not routinely charged with the care and custody of the employers
money or property; and
b) Whether or not Baas was grossly and habitually neglectful of his duties.
The Courts Ruling
We reverse the CAs decision.
In a petition for review on certiorari
under Rule 45, only questions of law
may be put into issue while in a
petition for certiorari under Rule 65,
only questions of jurisdiction may be
inquired into
On the first issue, the CA relied on Cebu Shipyard & Engg Works, Inc. v. William Lines,
Inc.
26
in affirming the lower tribunals finding that Baas worked as an inventory clerk.
According to the CA, this Court has ruled in Cebu Shipyard that in petitions for
certiorari, only questions of law may be put into issue and questions of fact cannot be
entertained. Not noticing such glaring error, the petitioners agree to such
disquisition.They, however, assert that there is an exception to the rule that only
questions of law may be brought in an original action for certiorari, such as when the
lower courts findings of facts are not supported by sufficient evidence or that the same
was based on misapprehension or erroneous appreciation of facts.
27

A revisit of Cebu Shipyard shows that the CA has inadvertently misquoted this Court. In
the said case, we held:
28

In petitions for review on certiorari, only questions of law may be put into issue.
Questions of fact cannot be entertained. The finding of negligence by the Court of
Appeals is a question which this Court cannot look into as it would entail going into
factual matters on which the finding of negligence was based. [emphasis ours; italics
supplied]
We clarify that the petitioners filed a petition for certiorari under Rule 65 of the Rules of
Court before the CA. Both the petitioners and the CA have confused Rule 45 and Rule
65. In several Supreme Court cases,
29
we have clearly differentiated between a petition
for review on certiorari under Rule 45 and a petition for certiorari under Rule 65. A
petition for review on certiorari under Rule 45 is an appeal from a ruling of a lower
tribunal on pure questions of law.
30
It is only in exceptional circumstances
31
that we
admit and review questions of fact.
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.
32

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.
33

On the other hand, a petition for certiorari under Rule 65 is a special civil action, an
original petition confined solely to questions of jurisdiction because a tribunal, board or
officer exercising judicial or quasi-judicial functions has acted without jurisdiction or in
excess of jurisdiction or with grave abuse of discretion amounting to lack of
jurisdiction.
34

The petition before us involves mixed questions of fact and law. The issues of whether
Baas occupied a position of trust and confidence, or was routinely charged with the
care and custody of the employers money or property, and whether Baas was grossly
and habitually neglectful of his duties involve questions of fact which are necessary in
determining the legal question of whether Baas termination was in accordance with
Article 282 of the Labor Code.
We will only touch these factual issues in the course of determining whether the CA
correctly ruled whether or not the NLRC committed grave abuse of discretion in the
process of deducing its conclusions from the evidence proffered by the parties. In
reviewing in this Rule 45 petition the CAs decision on a Rule 65 petition, we will answer
the question: Did the CA correctly determine whether the NLRC committed grave abuse
of discretion in ruling on this case?
35

Baas did not occupy a position of
trust and confidence nor was he in
charge of the care and custody of
Century Irons money or property
The CA properly affirmed the NLRCs ruling that Baas was a rank-and-file employee
who was not charged with the care and custody of Century Irons money or property.
The ruling of the CA, finding no grave abuse of discretion in the LA and the NLRC
rulings and are supported by substantial evidence, is, to our mind, correct. The
evidence on record supports the holding that Baas was an ordinary employee. There is
no indication that the NLRCs decision was unfair or arbitrary. It properly relied on
Century Irons numerous memoranda
36
where Baas was identified as an inventory
clerk. It correctly observed that Century Iron unequivocably declared that Baas was an
inventory clerk in its July 29, 2002 termination report with the Department of Labor and
Employment.
37
Moreover, as the NLRC judiciously pointed out, Century Iron failed to
present the Contract of Employment or the Appointment Letter, the best evidence that
would show that Baas was an inventory comptroller.
Since Baas was an ordinary rank-
and-file employee, his termination
on the ground of loss of confidence
was illegal
Since Baas did not occupy a position of trust and confidence nor was he routinely in
charge with the care and custody of Century Irons money or property, his termination
on the ground of loss of confidence was misplaced.
We point out in this respect that loss of confidence applies to: (1) employees occupying
positions of trust and confidence, the managerial employees; and (2) employees who
are routinely charged with the care and custody of the employers money or property
which may include rank-and-file employees. Examples of rank-and-file employees who
may be dismissed for loss of confidence are cashiers, auditors, property custodians, or
those who, in the normal routine exercise of their functions, regularly handle significant
amounts of money or property.
38
Thus, the phrasing of the petitioners second
assignment of error is inaccurate because a rank-and-file employee who is routinely
charged with the care and custody of the employers money or property may be
dismissed on the ground of loss of confidence.
Baas was grossly and habitually
neglectful of his duties
With respect to Century Irons assertion that Baas was grossly and habitually
neglectful of his duties, the CA erred in ruling that the NLRC did not commit grave
abuse of discretion in concluding that the dismissal was illegal. The NLRCs finding that
there was illegal dismissal on the ground of gross and habitual neglect of duties is not
supported by the evidence on record. It believed in Baas bare and unsubstantiated
denial that he was not grossly and habitually neglectful of his duties when the record is
replete with pieces of evidence showing the contrary. Consequently, the NLRC
capriciously and whimsically exercised its judgment by failing to consider all material
evidence presented to it by the petitioners and in giving credence to Baas claim which
is unsupported by the evidence on record.
39

Baas self-serving and unsubstantiated denials cannot defeat the concrete and
overwhelming evidence submitted by the petitioners. The evidence on record shows
that Baas committed numerous infractions in his one year and eleven-month stay in
Century Iron. On October 27, 2000, Century Iron gave Baas a warning for failing to
check the right quantity of materials subject of his inventory.
40
On December 29, 2000,
Baas went undertime.
41
On January 2, 2001, Baas incurred an absence without
asking for prior leave.
42
On August 11, 2001, he was warned for failure to implement
proper warehousing and housekeeping procedures.
43
On August 21, 2001, he failed to
ensure sufficient supplies of oxygen-acetylene gases during business hours.
44
On
November 15, 2001, Baas was again warned for failing to secure prior permission
before going on leave.
45
In May 2002, Century Irons accounting department found out
that Baas made double and wrong entries in his inventory.
46

Article 282 of the Labor Code provides that one of the just causes for terminating an
employment is the employees gross and habitual neglect of his duties. This cause
includes gross inefficiency, negligence and carelessness.
47
"Gross negligence connotes
want or absence of or failure to exercise slight care or diligence, or the entire absence
of care. It evinces a thoughtless disregard of consequences without exerting any effort
to avoid them. Fraud and willful neglect of duties imply bad faith of the employee in
failing to perform his job, to the detriment of the employer and the latters business.
Habitual neglect, on the other hand, implies repeated failure to perform one's duties for
a period of time, depending upon the circumstances."
48

To our mind, such numerous infractions are sufficient to hold him grossly and habitually
negligent.1wphi1 His repeated negligence is not tolerable. The totality of infractions or
the number of violations he committed during his employment merits his dismissal.
Moreover, gross and habitual negligence includes unauthorized absences and
tardiness,
49
as well as gross inefficiency, negligence and carelessness.
50
As pronounced
in Valiao v. Court of Appeals,
51
"fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character, conduct, and ability
separate and independent of each other."
Besides, the determination of who to keep in employment and who to dismiss for cause
is one of Century Iron's prerogatives. Time and again, we have recognized that the
employer has the right to regulate, according to its discretion and best judgment, ell
aspects of employment, including work assignment, working methods, processes to be
followed, working regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of workers.
52
It would be the height of
injustice if we force an employer to retain the services of an employee who does not
value his work.
In view of all the foregoing, we find the petition meritorious.
WHEREFORE, premises considered, we hereby GRANT the petition. The assailed
decision and resolution of the Court of Appeals are REVERSED and SET ASIDE. The
complaint for illegal dismissal is DISMISSED for lack of merit. Costs against respondent
Eleto B. Baas.
SO ORDERED.



******************************ooooooooooooooooo***********************

THIRD DIVISION
G.R. Nos. 164155 & 175543 February 25, 2013
FORT BONIFACIO DEVELOPMENT CORPORATION, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondents.
D E C I S I O N
ABAD, J.:
These cases are concerned with the imposition of an assessment for unpaid
documentary stamp tax (DST) allegedly due on the Government's sale of the military
land in Fort Bonifacio to Fort Bonifacio Development Corporation (FBDC), then a wholly-
owned government corporation.
The Facts and the Case
In 1992 Congress enacted Republic Act (R.A.) 7227 creating the Bases Conversion
Development Authority (BCDA) for the purpose of raising funds through the sale to
private investors of military camps located in bustling Metro Manila. To do this, on
Febmary 3, 1995 the BCDA established the FBDC for the purpose of enabling it to
develop a 440-hectare area in Fort Bonifacio, Taguig City, for mixed residential,
commercial, business, institutional, recreational, tourism, and other purposes. At the
time of its incorporation, FBDC was a wholly-owned subsidiary of BCDA.
As part of the scheme that would enable BCDA to raise funds through FBDC,
1
on
February 7, 1995 the Republic of the Philippines transferred by land grant to FBDC,
through Special Patent 3596, a 214-hectare land in Fort Bonifacio. FBDC in turn
executed a Promissory Note for P71.2 billion plus in favor of the Republic. The Republic
for its part assigned the promissory note to BCDA which assigned it back to FBDC as full
and complete payment of BCDAs subscription to FBDCs authorized capital stock.
Further, on February 8, 1995 the Republic executed a Deed of Absolute Sale with
Quitclaim in favor of FBDC covering the same 214-hectare land also for P71.2 billion.
Based on this deed, on February 19, 1995 the Register of Deeds issued Original
Certificate of Title SP-001 in favor of FBDC, replacing Special Patent 3596. On February
24, 1995, within the same month of the issuance of the Special Patent and the
execution of the deed of absolute sale, Congress enacted R.A. 7917, declaring exempt
from all forms of taxes the proceeds of the Government sale of the Fort Bonifacio land.
Subsequently, fulfilling its task of raising funds for specified government projects, BCDA
sold at public bidding 55% of its shares in FBDC to private investors, retaining
ownership of the remaining 45%.
More than three years later or on September 15, 1998 respondent Commissioner of
Internal Revenue issued a Letter of Authority, providing for the examination of FBDCs
books and other accounting records covering all its internal revenue liabilities for the
1995 taxable year, the year it came into being. On December 10, 1999 the
Commissioner issued a Final Assessment Notice to FBDC for deficiency documentary
stamp tax of P1,068,412,560.00 based on the Republics 1995 sale to it of the Fort
Bonifacio land.
FBDC protested the assessment. On January 6, 2000 it wrote respondent Commissioner
a letter, invoking R.A. 7917, which exempted the proceeds of the sale of the Fort
Bonifacio land from all forms of taxes. When respondent Commissioner failed to act on
FBDCs request for tax exemption despite the lapse of the 180-day period,
2
FBDC filed a
petition for review
3
before the Court of Tax Appeals (CTA) contesting the deficiency
assessment.
On March 5, 2003 the CTA rendered a decision denying FBDCs petition and affirming
the Commissioners DST assessment. The CTA treated the Republics issuance of the
Special Patent separate and distinct from the Deed of Absolute Sale that it executed.
The former, said the CTA, was tax exempt but the latter was not. Still, the
Commissioner filed a motion for partial reconsideration of the decision on the ground
that the CTA failed to impose a 25% surcharge and a 20% delinquency interest on top
of the unpaid DST.
For its part, FBDC filed a petition for review
4
of the CTA decision before the Court of
Appeals (CA) alleging that the CTA erred in affirming the imposition of the assessment.
On August 14, 2003, while that petition for review was pending, the CTA issued a
resolution modifying its March 5, 2003 decision and imposed on FBDC a 20%
delinquency interest on the P1,068,412,560.00 DST, computed from January 26, 2000
until full payment. From this resolution, FBDC filed a separate petition for review
5

before the CA questioning the imposition of the 20% delinquency interest.
The CA first affirmed the March 5, 2003 CTA decision. Subsequently, it also affirmed the
August 14, 2003 CTA resolution. The CA held that FBDC was not exempt from the
payment of DST in connection with the execution of the deed of sale covering the Fort
Bonifacio land. The CA, in the subsequent decision also held that the CTA properly
imposed the 20% delinquency interest. The CA decisions prompted FBDC to file these
consolidated petitions.
During the pendency of these petitions or on December 17, 2004 the FBDC filed a
manifestation and motion informing the Court that the disputed assessment had already
been paid through a Special Allotment Release Order issued by the Department of
Budget and Management (DBM) to BCDA for P1,189,121,947.00. The amount "covers
the payment of documentary stamp taxes, transfer fees, 5% withholding tax and
registration fees relative to the sale of a portion of Fort Bonifacio," chargeable against
the Military Camps Sale Proceeds Fund.1wphi1
Commenting on the manifestation, the Commissioner claimed that the payment was
illegal since it breached the scope of the tax exemption provided in Section 8 of R.A.
7917 and since BCDA paid the tax for the benefit of FBDC, a private corporation.
The Issues Presented
These consolidated cases essentially present two issues:
1. Whether or not the CA erred in ruling that FBDC was liable for the payment of
the DST and a 20% delinquency interest on the Deed of Absolute Sale of the
214-hectare Fort Bonifacio land that the Republic executed in FBDCs favor; and
2. Whether or not the case is already moot and academic by the fact of payment
of the DST assessment by BCDA.
The Rulings of the Court
The CTA ruled that, while the Special Patent that the Republic issued to FBDC in
consideration of P71.2 billion plus was exempt from the payment of DST, the Deed of
Absolute Sale that the Republic subsequently executed in FBDCs favor covering the
same land is not.
Section 196 of the NIRC, as amended by Republic Act 7660, provides:
Sec. 196. Stamp tax on deeds of sale and conveyance of real property. On all
conveyances, deeds, instruments, or writings, other than grants, patents, or
original certificates of adjudication issued by the Government, whereby any
lands, tenements or other realty sold shall be granted, assigned, transferred, or
otherwise conveyed to the purchaser or purchasers, or to any other person or persons
designated by such purchaser or purchasers, there shall be collected a documentary
stamp tax at the following rates: x x x. (Emphasis supplied)
But the two documentsthe Special Patent and the Deed of Absolute Salecovered the
Republics conveyance to FBDC of the same Fort Bonifacio land for the same price that
the FBDC paid but once. It is one transaction, twice documented.
On February 7, 1995 the Republic through the President, issued Special Patent 3596 to
FBDC pursuant to an Act of Congress or R.A. 7227. That legislative act removed the
public character of the Fort Bonifacio land and allowed the President to cede ownership
of the same to FBDC, then a wholly-owned government corporation under the BCDA,
for the price of P71.2 billion plus, covered by a negotiable promissory note. The
Republic could not just spend or use the money it received from the sale without
authority from Congress. In this case, the basis for appropriation is found also in R.A.
7227 which earmarked the proceeds of the sale of the Fort Bonifacio land for use in
capitalizing the BCDA. Section 6 of R.A. 7227 thus provides:
Section 6. Capitalization. The Conversion Authority [BCDA] shall have an authorized
capital of One hundred billion pesos (P100,000,000,000) which may be fully
subscribed by the Republic of the Philippines and shall either be paid up from
the proceeds of the sales of its land assets as provided for in Section 8 of this
Act or by transferring to he Conversion Authority properties valued in such amount.
(Emphasis supplied)
At the time the sale subject of this case was entered into, FBDC was a wholly-owned
subsidiary of the BCDA pursuant to Section 16
6
of R.A. 7227. Notably, the Republic sold
the Fort Bonifacio land to FBDC and the latter paid for it with a promissory note. When
the Republic in turn assigned that promissory note to BCDA, not only did it comply with
its obligation under the above provision to capitalize BCDA from the proceeds of the
sales of its land assets but it also enabled the latter to fully and completely pay for its
subscription to FBDCs authorized capital stock. Consequently, to tax the proceeds of
that sale would be to tax an appropriation made by law, a power that the Commissioner
of Internal Revenue does not have.
The Republics subsequent execution of a Deed of Absolute Sale cannot be regarded as
a separate transaction subject to the payment of DST. The Republics sale of the land to
FBDC under the Special Patent was a complete and valid sale that conveyed ownership
of the land to the buyer.
7
Notably, FBDC paid for the land with a negotiable promissory
note. Indeed, paragraph 4 of the Deed of Absolute Sale acknowledges the absolute and
irrevocable nature of the sale made under the special patent. Thus, the pertinent
portion of paragraph 4 states:
4. To implement the transfer and registration of the Subject Property in the name of the
Buyer [FBDC], the Seller [Republic] has issued or shall hereafter cause to be issued, a
Special Patent which will absolutely and irrevocably grant and convey the
legal and beneficial title to the Subject Property to and in favor of the Buyer.
x x x. (Emphasis supplied)
Clearly, in acknowledging that the Republic "has issued x x x a Special Patent which will
absolutely and irrevocably grant and convey" the legal title over the land to FBDC, the
Republic in effect admitted that the Deed of Absolute Sale was only a formality, not a
vehicle for conveying ownership, that it thought essential for the issuance of an Original
Certificate of Title (OCT) covering the land. The issuance of the OCT lent itself to
unrestricted commercial use that helped attain the laws objective of raising through the
BCDA and its subsidiaries the funds needed for specified government projects.
DST is by nature, an excise tax since it is levied on the exercise by persons of privileges
conferred by law. These privileges may cover the creation, modification or termination
of contractual relationships by executing specific documents like deeds of sale,
mortgages, pledges, trust and issuance of shares of stock.
8
The sale of Fort Bonifacio
land was not a privilege but an obligation imposed by law which was to sell lands in
order to fulfill a public purpose. To charge DST on a transaction which was basically a
compliance with a legislative mandate would go against its very nature as an excise
tax.1wphi1
Besides, it is clear from Section 8 of R.A. 7227 that the capital of BCDA, which shall
come from the sales proceeds and/or transfers of certain Metro Manila military camps,
was not intended to be diminished by the payment of DST. Section 8 states:
SEC. 8. Funding Scheme. The capital of the Conversion Authority shall come
from the sales proceeds and/or transfers of certain Metro Manila military
camps, including all lands covered by Proclamation No. 423, series of 1957,
commonly known as Fort Bonifacio and Villamor (Nichols) Air Base, namely: x
x x
x x x x
The President is hereby authorized to sell the above lands, in whole or in part, which
are hereby declared alienable and disposable pursuant to the provisions of existing laws
and regulations governing sales of government properties: Provided, That no sale or
disposition of such lands will be undertaken until a development plan embodying
projects for conversion shall be approved by the President in accordance with
paragraph (b), Section 4, of this Act. However, six (6) months after approval of
this Act, the President shall authorize the Conversion Authority to dispose of
certain areas in Fort Bonifacio and Villamor as the latter so determines. The
Conversion Authority shall provide the President a report on any such disposition or
plan for disposition within one (1) month from such disposition or preparation of such
plan. The proceeds from any sale, after deducting all expenses related to the
sale, of portions of Metro Manila military camps as authorized under this Act,
shall be used for the following purposes with their corresponding percent
shares of proceeds: x x x (Emphasis supplied)
Had FBDC paid the amount on February 8, 1995 when it was supposed to be due, such
payment would have resulted in diminishing the proceeds of the sale that the Republic
received and turned over to BCDA to capitalize it. The above-quoted provision of
Section 8 clearly exempted the proceeds of the sale of the Fort Bonifacio land from all
forms of taxes, including DST.
As it developed, while this case was pending before this Court, the BCDA paid the DST
assessment for the benefit of FBDC through a government release of funds from the
national treasury, chargeable against the Military Camps Sale Proceeds Fund. Clearly,
by allowing such payment, the government acknowledges that it made the private
investors who submitted bids to acquire 55% of the capital stock of FBDC believe that
the proceeds of the government's sale of the land that capitalized FBDC was exempt
from all forms of taxes as the law provides. Indeed, the government warranted under
the Deed of Absolute Sale it executed in FBDC's favor that "There are no x x x taxes
due and owing on or in respect of the subject property or the transfer thereof in favor
of the buyer."
With the Court's above ruling, it would be useless to resolve the further issue of
whether or not the case has been rendered moot and academic by BCDA's payment of
the DST assessment.
WHEREFORE, the Court GRANTS the consolidated petitions and REVERSES and
SETS ASIDE the Decisions of the Court of Appeals in CA-G.R. SP 76017 and CA-G.R.
SP 79010 dated June 11, 2004 and November 27, 2006, respectively, and DECLARES
VOID Assessment STDST -95-0131-99 of respondent Commissioner of Internal
Revenue.
SO ORDERED.

SECOND DIVISION
G.R. No. 182358 February 20, 2013
DEPARTMENT OF HEALTH, THE SECRETARY OF HEALTH, and MA. MARGARITA
M. GALON, Petitioners,
vs.
PHIL PHARMA WEALTH, INC., Respondent.
D E C I S I O N
DEL CASTILLO, J.:
The state may not be sued without its consent. Likewise, public officials may not be
sued for acts done in the perfom1ance of their official functions or within the scope of
their authority.
This Petition for Review on Certiorari
1
assails the October 25, 2007 Decision
2
of the
Court of Appeals (CA) in CA-G.R. CV No. 85670, and its March 31, 2008 Reso1ution
3

denying petitioners' Motion for Reconsideration.
4

Factual Antecedents
On December 22, 1998, Administrative Order (AO) No. 27 series of 1998
5
was issued by
then Department of Health (DOH) Secretary Alfredo G. Romualdez (Romualdez). AO 27
set the guidelines and procedure for accreditation of government suppliers of
pharmaceutical products for sale or distribution to the public, such accreditation to be
valid for three years but subject to annual review.
On January 25, 2000, Secretary Romualdez issued AO 10 series of 2000
6
which
amended AO 27. Under Section VII
7
of AO 10, the accreditation period for government
suppliers of pharmaceutical products was reduced to two years. Moreover, such
accreditation may be recalled, suspended or revoked after due deliberation and proper
notice by the DOH Accreditation Committee, through its Chairman.
Section VII of AO 10 was later amended by AO 66 series of 2000,
8
which provided that
the two-year accreditation period may be recalled, suspended or revoked only after due
deliberation, hearing and notice by the DOH Accreditation Committee, through its
Chairman.
On August 28, 2000, the DOH issued Memorandum No. 171-C
9
which provided for a list
and category of sanctions to be imposed on accredited government suppliers of
pharmaceutical products in case of adverse findings regarding their products (e.g.
substandard, fake, or misbranded) or violations committed by them during their
accreditation.
In line with Memorandum No. 171-C, the DOH, through former Undersecretary Ma.
Margarita M. Galon (Galon), issued Memorandum No. 209 series of 2000,
10
inviting
representatives of 24 accredited drug companies, including herein respondent Phil
Pharmawealth, Inc. (PPI) to a meeting on October 27, 2000. During the meeting,
Undersecretary Galon handed them copies of a document entitled "Report on Violative
Products"
11
issued by the Bureau of Food and Drugs
12
(BFAD), which detailed violations
or adverse findings relative to these accredited drug companies products. Specifically,
the BFAD found that PPIs products which were being sold to the public were unfit for
human consumption.
During the October 27, 2000 meeting, the 24 drug companies were directed to submit
within 10 days, or until November 6, 2000, their respective explanations on the adverse
findings covering their respective products contained in the Report on Violative
Products.
Instead of submitting its written explanation within the 10-day period as required, PPI
belatedly sent a letter
13
dated November 13, 2000 addressed to Undersecretary Galon,
informing her that PPI has referred the Report on Violative Products to its lawyers with
instructions to prepare the corresponding reply. However, PPI did not indicate when its
reply would be submitted; nor did it seek an extension of the 10-day period, which had
previously expired on November 6, 2000, much less offer any explanation for its failure
to timely submit its reply. PPIs November 13, 2000 letter states:
Madam,
This refers to your directive on 27 October 2000, on the occasion of the meeting with
selected accredited suppliers, during which you made known to the attendees of your
requirement for them to submit their individual comments on the Report on Violative
Products (the "Report") compiled by your office and disseminated on that date.
In this connection, we inform you that we have already instructed our lawyers to
prepare on our behalf the appropriate reply to the Report furnished to us. Our lawyers
in time shall revert to you and furnish you the said reply.
Please be guided accordingly.
Very truly yours,
(signed)
ATTY. ALAN A.B. ALAMBRA
Vice-President for Legal and Administrative Affairs
14

In a letter-reply
15
dated November 23, 2000 Undersecretary Galon found "untenable"
PPIs November 13, 2000 letter and therein informed PPI that, effective immediately, its
accreditation has been suspended for two years pursuant to AO 10 and Memorandum
No. 171-C.
In another December 14, 2000 letter
16
addressed to Undersecretary Galon, PPI through
counsel questioned the suspension of its accreditation, saying that the same was made
pursuant to Section VII of AO 10 which it claimed was patently illegal and null and void
because it arrogated unto the DOH Accreditation Committee powers and functions
which were granted to the BFAD under Republic Act (RA) No. 3720
17
and Executive
Order (EO) No. 175.
18
PPI added that its accreditation was suspended without the
benefit of notice and hearing, in violation of its right to substantive and administrative
due process. It thus demanded that the DOH desist from implementing the suspension
of its accreditation, under pain of legal redress.
On December 28, 2000, PPI filed before the Regional Trial Court of Pasig City a
Complaint
19
seeking to declare null and void certain DOH administrative issuances, with
prayer for damages and injunction against the DOH, former Secretary Romualdez and
DOH Undersecretary Galon. Docketed as Civil Case No. 68200, the case was raffled to
Branch 160. On February 8, 2002, PPI filed an Amended and Supplemental Complaint,
20

this time impleading DOH Secretary Manuel Dayrit (Dayrit). PPI claimed that AO 10,
Memorandum No. 171-C, Undersecretary Galons suspension order contained in her
November 23, 2000 letter, and AO 14 series of 2001
21
are null and void for being in
contravention of Section 26(d) of RA 3720 as amended by EO 175, which states as
follows:
SEC. 26. x x x
(d) When it appears to the Director [of the BFAD] that the report of the Bureau that
any article of food or any drug, device, or cosmetic secured pursuant to Section twenty-
eight of this Act is adulterated, misbranded, or not registered, he shall cause notice
thereof to be given to the person or persons concerned and such person or persons
shall be given an opportunity to be heard before the Bureau and to submit evidence
impeaching the correctness of the finding or charge in question.
For what it claims was an undue suspension of its accreditation, PPI prayed that AO 10,
Memorandum No. 171-C, Undersecretary Galons suspension order contained in her
November 23, 2000 letter, and AO 14 be declared null and void, and that it be awarded
moral damages of P5 million, exemplary damages of P1 million, attorneys fees of P1
million, and costs of suit. PPI likewise prayed for the issuance of temporary and
permanent injunctive relief.
In their Amended Answer,
22
the DOH, former Secretary Romualdez, then Secretary
Dayrit, and Undersecretary Galon sought the dismissal of the Complaint, stressing that
PPIs accreditation was suspended because most of the drugs it was importing and
distributing/selling to the public were found by the BFAD to be substandard for human
consumption. They added that the DOH is primarily responsible for the formulation,
planning, implementation, and coordination of policies and programs in the field of
health; it is vested with the comprehensive power to make essential health services and
goods available to the people, including accreditation of drug suppliers and regulation
of importation and distribution of basic medicines for the public.
Petitioners added that, contrary to PPIs claim, it was given the opportunity to present
its side within the 10-day period or until November 6, 2000, but it failed to submit the
required comment/reply. Instead, it belatedly submitted a November 13, 2000 letter
which did not even constitute a reply, as it merely informed petitioners that the matter
had been referred by PPI to its lawyer. Petitioners argued that due process was
afforded PPI, but because it did not timely avail of the opportunity to explain its side,
the DOH had to act immediately by suspending PPIs accreditation to stop the
distribution and sale of substandard drug products which posed a serious health risk to
the public. By exercising DOHs mandate to promote health, it cannot be said that
petitioners committed grave abuse of discretion.
In a January 8, 2001 Order,
23
the trial court partially granted PPIs prayer for a
temporary restraining order, but only covering PPIs products which were not included
in the list of violative products or drugs as found by the BFAD.
In a Manifestation and Motion
24
dated July 8, 2003, petitioners moved for the dismissal
of Civil Case No. 68200, claiming that the case was one against the State; that the
Complaint was improperly verified; and lack of authority of the corporate officer to
commence the suit, as the requisite resolution of PPIs board of directors granting to
the commencing officer PPIs Vice President for Legal and Administrative Affairs, Alan
Alambra, the authority to file Civil Case No. 68200 was lacking. To this, PPI filed its
Comment/Opposition.
25

Ruling of the Regional Trial Court
In a June 14, 2004 Order,
26
the trial court dismissed Civil Case No. 68200, declaring the
case to be one instituted against the State, in which case the principle of state
immunity from suit is applicable.
PPI moved for reconsideration,
27
but the trial court remained steadfast.
28

PPI appealed to the CA.
Ruling of the Court of Appeals
Docketed as CA-G.R. CV No. 85670, PPIs appeal centered on the issue of whether it
was proper for the trial court to dismiss Civil Case No. 68200.
The CA, in the herein assailed Decision,
29
reversed the trial court ruling and ordered the
remand of the case for the conduct of further proceedings. The CA concluded that it
was premature for the trial court to have dismissed the Complaint. Examining the
Complaint, the CA found that a cause of action was sufficiently alleged that due to
defendants (petitioners) acts which were beyond the scope of their authority, PPIs
accreditation as a government supplier of pharmaceutical products was suspended
without the required notice and hearing as required by Section 26(d) of RA 3720 as
amended by EO 175. Moreover, the CA held that by filing a motion to dismiss,
petitioners were deemed to have hypothetically admitted the allegations in the
Complaint which state that petitioners were being sued in their individual and
personal capacities thus negating their claim that Civil Case No. 68200 is an
unauthorized suit against the State.
The CA further held that instead of dismissing the case, the trial court should have
deferred the hearing and resolution of the motion to dismiss and proceeded to trial. It
added that it was apparent from the Complaint that petitioners were being sued in their
private and personal capacities for acts done beyond the scope of their official
functions. Thus, the issue of whether the suit is against the State could best be
threshed out during trial on the merits, rather than in proceedings covering a motion to
dismiss.
The dispositive portion of the CA Decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order dated June 14, 2004 of the
Regional Trial Court of Pasig City, Branch 160, is hereby REVERSED and SET-ASIDE.
ACCORDINGLY, this case is REMANDED to the trial court for further proceedings.
SO ORDERED.
30

Petitioners sought, but failed, to obtain a reconsideration of the Decision. Hence, they
filed the present Petition.
Issue
Petitioners now raise the following lone issue for the Courts resolution:
Should Civil Case No. 68200 be dismissed for being a suit against the State?
31

Petitioners Arguments
Petitioners submit that because PPIs Complaint prays for the award of damages against
the DOH, Civil Case No. 68200 should be considered a suit against the State, for it
would require the appropriation of the needed amount to satisfy PPIs claim, should it
win the case. Since the State did not give its consent to be sued, Civil Case No. 68200
must be dismissed. They add that in issuing and implementing the questioned
issuances, individual petitioners acted officially and within their authority, for which
reason they should not be held to account individually.
Respondents Arguments
Apart from echoing the pronouncement of the CA, respondent insists that Civil Case No.
68200 is a suit against the petitioners in their personal capacity for acts committed
outside the scope of their authority.
Our Ruling
The Petition is granted.
The doctrine of non-suability.
The discussion of this Court in Department of Agriculture v. National Labor Relations
Commission
32
on the doctrine of non-suability is enlightening.
The basic postulate enshrined in the constitution that (t)he State may not be sued
without its consent, reflects nothing less than a recognition of the sovereign character
of the State and an express affirmation of the unwritten rule effectively insulating it
from the jurisdiction of courts. It is based on the very essence of sovereignty. x x x [A]
sovereign is exempt from suit, not because of any formal conception or obsolete theory,
but on the logical and practical ground that there can be no legal right as against the
authority that makes the law on which the right depends. True, the doctrine, not too
infrequently, is derisively called the royal prerogative of dishonesty because it grants
the state the prerogative to defeat any legitimate claim against it by simply invoking its
nonsuability. We have had occasion to explain in its defense, however, that a continued
adherence to the doctrine of non-suability cannot be deplored, for the loss of
governmental efficiency and the obstacle to the performance of its multifarious
functions would be far greater in severity than the inconvenience that may be caused
private parties, if such fundamental principle is to be abandoned and the availability of
judicial remedy is not to be accordingly restricted.
The rule, in any case, is not really absolute for it does not say that the state may not be
sued under any circumstance. On the contrary, as correctly phrased, the doctrine only
conveys, the state may not be sued without its consent; its clear import then is that
the State may at times be sued. The States consent may be given either expressly or
impliedly. Express consent may be made through a general law or a special law. x x x
Implied consent, on the other hand, is conceded when the State itself commences
litigation, thus opening itself to a counterclaim or when it enters into a contract. In this
situation, the government is deemed to have descended to the level of the other
contracting party and to have divested itself of its sovereign immunity. This rule, x x x
is not, however, without qualification. Not all contracts entered into by the government
operate as a waiver of its non-suability; distinction must still be made between one
which is executed in the exercise of its sovereign function and another which is done in
its proprietary capacity.
33

As a general rule, a state may not be sued. However, if it consents, either expressly or
impliedly, then it may be the subject of a suit.
34
There is express consent when a law,
either special or general, so provides. On the other hand, there is implied consent when
the state "enters into a contract or it itself commences litigation."
35
However, it must be
clarified that when a state enters into a contract, it does not automatically mean that it
has waived its non-suability.
36
The State "will be deemed to have impliedly waived its
non-suability [only] if it has entered into a contract in its proprietary or private capacity.
[However,] when the contract involves its sovereign or governmental capacity[,] x x x
no such waiver may be implied."
37
"Statutory provisions waiving [s]tate immunity are
construed in strictissimi juris. For, waiver of immunity is in derogation of sovereignty."
38

The DOH can validly invoke state immunity.
a) DOH is an unincorporated agency which performs sovereign or
governmental functions.
In this case, the DOH, being an "unincorporated agency of the government"
39
can
validly invoke the defense of immunity from suit because it has not consented, either
expressly or impliedly, to be sued. Significantly, the DOH is an unincorporated agency
which performs functions of governmental character.
The ruling in Air Transportation Office v. Ramos
40
is relevant, viz:
An unincorporated government agency without any separate juridical personality of its
own enjoys immunity from suit because it is invested with an inherent power of
sovereignty. Accordingly, a claim for damages against the agency cannot prosper;
otherwise, the doctrine of sovereign immunity is violated. However, the need to
distinguish between an unincorporated government agency performing governmental
function and one performing proprietary functions has arisen. The immunity has been
upheld in favor of the former because its function is governmental or incidental to such
function; it has not been upheld in favor of the latter whose function was not in pursuit
of a necessary function of government but was essentially a business.
41

b) The Complaint seeks to hold the DOH solidarily and jointly liable with the
other defendants for damages which constitutes a charge or financial liability
against the state.
Moreover, it is settled that if a Complaint seeks to "impose a charge or financial liability
against the state,"
42
the defense of non-suability may be properly invoked. In this case,
PPI specifically prayed, in its Complaint and Amended and Supplemental Complaint, for
the DOH, together with Secretaries Romualdez and Dayrit as well as Undersecretary
Galon, to be held jointly and severally liable for moral damages, exemplary damages,
attorneys fees and costs of suit.
43
Undoubtedly, in the event that PPI succeeds in its
suit, the government or the state through the DOH would become vulnerable to an
imposition or financial charge in the form of damages. This would require an
appropriation from the national treasury which is precisely the situation which the
doctrine of state immunity aims to protect the state from.
The mantle of non-suability extends to complaints filed against public
officials for acts done in the performance of their official functions.
As regards the other petitioners, to wit, Secretaries Romualdez and Dayrit, and
Undersecretary Galon, it must be stressed that the doctrine of state immunity extends
its protective mantle also to complaints filed against state officials for acts done in the
discharge and performance of their duties.
44
"The suability of a government official
depends on whether the official concerned was acting within his official or jurisdictional
capacity, and whether the acts done in the performance of official functions will result
in a charge or financial liability against the government."
45
Otherwise stated, "public
officials can be held personally accountable for acts claimed to have been performed in
connection with official duties where they have acted ultra vires or where there is
showing of bad faith."
46
Moreover, "[t]he rule is that if the judgment against such
officials will require the state itself to perform an affirmative act to satisfy the same,
such as the appropriation of the amount needed to pay the damages awarded against
them, the suit must be regarded as against the state x x x. In such a situation, the
state may move to dismiss the [C]omplaint on the ground that it has been filed without
its consent."
47

It is beyond doubt that the acts imputed against Secretaries Romualdez and Dayrit, as
well as Undersecretary Galon, were done while in the performance and discharge of
their official functions or in their official capacities, and not in their personal or
individual capacities. Secretaries Romualdez and Dayrit were being charged with the
issuance of the assailed orders. On the other hand, Undersecretary Galon was being
charged with implementing the assailed issuances. By no stretch of imagination could
the same be categorized as ultra vires simply because the said acts are well within the
scope of their authority. Section 4 of RA 3720 specifically provides that the BFAD is an
office under the Office of the Health Secretary. Also, the Health Secretary is authorized
to issue rules and regulations as may be necessary to effectively enforce the provisions
of RA 3720.
48
As regards Undersecretary Galon, she is authorized by law to supervise
the offices under the DOHs authority,
49
such as the BFAD. Moreover, there was also no
showing of bad faith on their part. The assailed issuances were not directed only
against PPI. The suspension of PPIs accreditation only came about after it failed to
submit its comment as directed by Undersecretary Galon. It is also beyond dispute that
if found wanting, a financial charge will be imposed upon them which will require an
appropriation from the state of the needed amount. Thus, based on the foregoing
considerations, the Complaint against them should likewise be dismissed for being a
suit against the state which absolutely did not give its consent to be sued. Based on the
foregoing considerations, and regardless of the merits of PPIs case, this case deserves
a dismissal. Evidently, the very foundation of Civil Case No. 68200 has crumbled at this
initial juncture.
PPI was not denied due process.
However, we cannot end without a discussion of PPIs contention that it was denied due
process when its accreditation was suspended "without due notice and hearing." It is
undisputed that during the October 27, 2000 meeting, Undersecretary Galon directed
representatives of pharmaceutical companies, PPI included, to submit their comment
and/or reactions to the Report on Violative Products furnished them within a period of
10 days. PPI, instead of submitting its comment or explanation, wrote a letter
addressed to Undersecretary Galon informing her that the matter had already been
referred to its lawyer for the drafting of an appropriate reply. Aside from the fact that
the said letter was belatedly submitted, it also failed to specifically mention when such
reply would be forthcoming. Finding the foregoing explanation to be unmeritorious,
Undersecretary Galon ordered the suspension of PPIs accreditation for two years.
Clearly these facts show that PPI was not denied due process. It was given the
opportunity to explain its side. Prior to the suspension of its accreditation, PPI had the
chance to rebut, explain, or comment on the findings contained in the Report on
Violative Products that several of PPIs products are not fit for human consumption.
However, PPI squandered its opportunity to explain. Instead of complying with the
directive of the DOH Undersecretary within the time allotted, it instead haughtily
informed Undersecretary Galon that the matter had been referred to its lawyers. Worse,
it impliedly told Undersecretary Galon to just wait until its lawyers shall have prepared
the appropriate reply. PPI however failed to mention when it will submit its "appropriate
reply" or how long Undersecretary Galon should wait. In the meantime, PPIs drugs
which are included in the Report on Violative Products are out and being sold in the
market. Based on the foregoing, we find PPIs contention of denial of due process
totally unfair and absolutely lacking in basis. At this juncture, it would be trite to
mention that "[t]he essence of due process in administrative proceedings is the
opportunity to explain ones side or seek a reconsideration of the action or ruling
complained of. As long as the parties are given the opportunity to be heard before
judgment is rendered, the demands of due process are sufficiently met. What is
offensive to due process is the denial of the opportunity to be heard. The Court has
repeatedly stressed that parties who chose not to avail themselves of the opportunity to
answer charges against them cannot complain of a denial of due process."
50

Incidentally, we find it inieresting that in the earlier case of Department q( Health v.
Phil Pharmawealth, Inc.
51
respondent filed a Complaint against DOH anchored on the
same issuances which it assails in the present case. In the earlier case of Department of
Health v. Phil Pharmawealth, Jnc.,
52
PPI submitted to the DOH a request for the
inclusion of its products in the list of accredited drugs as required by AO 27 series of
1998 which was later amended by AO 10 series of 2000. In the instant case, however,
PPI interestingly claims that these issuances are null and void.
WHEREFORE, premises considered, the Petition is GRANTED. Civil Case No. 68200 is
ordered DISMISSED.
SO ORDERED.

***************************oooooooooooooooooooo**********************


EN BANC
G.R. No. 204528 February 19, 2013
SECRETARY LEILA M. DE LIMA, DIRECTOR NONNATUS R. ROJAS and DEPUTY
DIRECTOR REYNALDO 0. ESMERALDA, Petitioners,
vs.
MAGTANGGOL B. GATDULA, Respondent.
R E S O L U T I O N
LEONEN, J.:
Submitted for our resolution is a prayer for the issuance of a temporary restraining
order and/or writ of preliminary injunction to enjoin "the Regional Trial Court, Branch
26, in Manila from implementing its Decision x x x in Civil Case No. 12-127405 granting
respondent's application for the issuance of inspection and production orders x x x."
1

This is raised through a Petition for Review on Certiorari under Rule 45 from the
"Decision" rendered by the Regional Trial Court dated 20 March 2012.
From the records, it appears that on 27 February 2012, respondent Magtanggol B.
Gatdula filed a Petition for the Issuance of a Writ of Amparo in the Regional Trial Court
of Manila.
2
This case was docketed as In the Matter of the Petition for Issuance of Writ
of Amparo of Atty. Magtanggol B. Gatdula, SP No. 12-127405. It was raffled to the sala
of Judge Silvino T. Pampilo, Jr. on the same day.
The Amparo was directed against petitioners Justice Secretary Leila M. De Lima,
Director Nonnatus R. Rojas and Deputy Director Reynaldo O. Esmeralda of the National
Bureau of Investigation (DE LIMA, ET AL. for brevity). Gatdula wanted De Lima, et al.
"to cease and desist from framing up Petitioner [Gatdula] for the fake ambush incident
by filing bogus charges of Frustrated Murder against Petitioner [Gatdula] in relation to
the alleged ambush incident."
3

Instead of deciding on whether to issue a Writ of Amparo, the judge issued summons
and ordered De Lima, et al. to file an Answer.
4
He also set the case for hearing on 1
March 2012. The hearing was held allegedly for determining whether a temporary
protection order may be issued. During that hearing, counsel for De Lima, et al.
manifested that a Return, not an Answer, is appropriate for Amparo cases.
5

In an Order dated 2 March 2012,
6
Judge Pampilo insisted that "[s]ince no writ has been
issued, return is not the required pleading but answer".
7
The judge noted that the Rules
of Court apply suppletorily in Amparo cases.
8
He opined that the Revised Rules of
Summary Procedure applied and thus required an Answer.
9

Judge Pampilo proceeded to conduct a hearing on the main case on 7 March 2012.
10

Even without a Return nor an Answer, he ordered the parties to file their respective
memoranda within five (5) working days after that hearing. Since the period to file an
Answer had not yet lapsed by then, the judge also decided that the memorandum of De
Lima, et al. would be filed in lieu of their Answer.
11

On 20 March 2012, the RTC rendered a "Decision" granting the issuance of the Writ of
Amparo. The RTC also granted the interim reliefs prayed for, namely: temporary
protection, production and inspection orders. The production and inspection orders
were in relation to the evidence and reports involving an on-going investigation of the
attempted assassination of Deputy Director Esmeralda. It is not clear from the records
how these pieces of evidence may be related to the alleged threat to the life, liberty or
security of the respondent Gatdula.
In an Order dated 8 October 2012, the RTC denied the Motion for Reconsideration
dated 23 March 2012 filed by De Lima, et al.
Petitioners Sec. De Lima, et al. thus came to this Court assailing the RTC "Decision"
dated 20 March 2012 through a Petition for Review on Certiorari (With Very Urgent
Application for the Issuance of a Temporary Restraining Order/Writ of Preliminary
Injunction) via Rule 45, as enunciated in Section 19 of the Rule on the Writ of Amparo
(A.M. No. 07-9- 12-SC, 25 September 2007), viz:
SEC. 19. Appeal. Any party may appeal from the final judgment or order to the
Supreme Court under Rule 45. The appeal may raise questions of fact or law or both. x
x x (Emphasis supplied).
It is the Courts view that the "Decision" dated 20 March 2012 granting the writ of
Amparo is not the judgment or final order contemplated under this rule. Hence, a
Petition for Review under Rule 45 may not yet be the proper remedy at this time.
The RTC and the Parties must understand the nature of the remedy of Amparo to put
its procedures in the proper context.
The remedy of the Writ of Amparo is an equitable and extraordinary remedy to
safeguard the right of the people to life, liberty
12
and security
13
as enshrined in the
1987 Constitution.
14
The Rule on the Writ of Amparo was issued as an exercise of the
Supreme Court's power to promulgate rules concerning the protection and enforcement
of constitutional rights.
15
It aims to address concerns such as, among others,
extrajudicial killings and enforced disappearances.
16

Due to the delicate and urgent nature of these controversies, the procedure was
devised to afford swift but decisive relief.
17
It is initiated through a petition
18
to be
filed in a Regional Trial Court, Sandiganbayan, the Court of Appeals, or the Supreme
Court.
19
The judge or justice then makes an "immediate" evaluation
20
of the facts as
alleged in the petition and the affidavits submitted "with the attendant circumstances
detailed".
21
After evaluation, the judge has the option to issue the Writ of Amparo
22
or
immediately dismiss the case. Dismissal is proper if the petition and the supporting
affidavits do not show that the petitioner's right to life, liberty or security is under threat
or the acts complained of are not unlawful. On the other hand, the issuance of the writ
itself sets in motion presumptive judicial protection for the petitioner. The court
compels the respondents to appear before a court of law to show whether the grounds
for more permanent protection and interim reliefs are necessary.
The respondents are required to file a Return
23
after the issuance of the writ through
the clerk of court. The Return serves as the responsive pleading to the petition.
24
Unlike
an Answer, the Return has other purposes aside from identifying the issues in the case.
Respondents are also required to detail the actions they had taken to determine the
fate or whereabouts of the aggrieved party.
If the respondents are public officials or employees, they are also required to state the
actions they had taken to: (i) verify the identity of the aggrieved party; (ii) recover and
preserve evidence related to the death or disappearance of the person identified in the
petition; (iii) identify witnesses and obtain statements concerning the death or
disappearance; (iv) determine the cause, manner, location, and time of death or
disappearance as well as any pattern or practice that may have brought about the
death or disappearance; and (vi) bring the suspected offenders before a competent
court.
25
Clearly these matters are important to the judge so that s/he can calibrate the
means and methods that will be required to further the protections, if any, that will be
due to the petitioner.
There will be a summary hearing
26
only after the Return is filed to determine the
merits of the petition and whether interim reliefs are warranted. If the Return is not
filed, the hearing will be done ex parte.
27
After the hearing, the court will render the
judgment within ten (10) days from the time the petition is submitted for decision.
28

If the allegations are proven with substantial evidence, the court shall grant the
privilege of the writ and such reliefs as may be proper and appropriate.
29
The judgment
should contain measures which the judge views as essential for the continued
protection of the petitioner in the Amparo case. These measures must be detailed
enough so that the judge may be able to verify and monitor the actions taken by the
respondents. It is this judgment that could be subject to appeal to the Supreme Court
via Rule 45.
30
After the measures have served their purpose, the judgment will be
satisfied. In Amparo cases, this is when the threats to the petitioners life, liberty and
security cease to exist as evaluated by the court that renders the judgment.
Parenthetically, the case may also be terminated through consolidation should a
subsequent case be filed either criminal or civil.
31
Until the full satisfaction of the
judgment, the extraordinary remedy of Amparo allows vigilant judicial monitoring to
ensure the protection of constitutional rights.
The "Decision" dated 20 March 2012 assailed by the petitioners could not be the
judgment or final order that is appealable under Section 19 of the Rule on the Writ of
Amparo. This is clear from the tenor of the dispositive portion of the "Decision", to wit:
The Branch Clerk of Court of Court [sic] is hereby DIRECTED to issue the Writ of
Amparo.
Likewise, the Branch Clerk of Court is hereby DIRECTED to effect the service of the Writ
of Amparo in an expeditious manner upon all concerned, and for this purpose may call
upon the assistance of any military or civilian agency of the government.
This "Decision" pertained to the issuance of the writ under Section 6 of the Rule on
the Writ of Amparo, not the judgment under Section 18. The "Decision" is thus an
interlocutory order, as suggested by the fact that temporary protection, production and
inspection orders were given together with the decision. The temporary protection,
production and inspection orders are interim reliefs that may be granted by the court
upon filing of the petition but before final judgment is rendered.
32

The confusion of the parties arose due to the procedural irregularities in the RTC.
First, the insistence on filing of an Answer was inappropriate. It is the Return that
serves as the responsive pleading for petitions for the issuance of Writs of Amparo. The
requirement to file an Answer is contrary to the intention of the Court to provide a
speedy remedy to those whose right to life, liberty and security are violated or are
threatened to be violated. In utter disregard of the Rule on the Writ of Amparo, Judge
Pampilo insisted on issuing summons and requiring an Answer.
Judge Pampilos basis for requiring an Answer was mentioned in his Order dated 2
March 2012:
Under Section 25 of the same rule [on the Writ of Amparo], the Rules of Court shall
apply suppletorily insofar as it is not inconsistent with the said rule.
Considering the summary nature of the petition, Section 5 of the Revised Rules of
Summary Procedure shall apply.
Section 5. Answer Within ten (10) days from service of summons, the defendant shall
file his Answer to the complaint and serve a copy thereof on the plaintiff. x x x
WHEREFORE, based on the foregoing, the respondents are required to file their Answer
ten (days) from receipt of this Order.
33

The 1991 Revised Rules of Summary Procedure is a special rule that the Court has
devised for the following circumstances:
SECTION 1. Scope. This rule shall govern the summary procedure in the
Metropolitan Trial Courts, the Municipal Trial Courts in Cities, the Municipal Trial Courts,
and the Municipal Circuit Trial Courts in the following cases falling within their
jurisdiction:
A. Civil Cases:
(1) All cases of forcible entry and unlawful detainer, x x x.
(2) All other cases, except probate proceedings, where the total amount
of the plaintiffs claim does not exceed x x x.
B. Criminal Cases:
(1) Violations of traffic laws, rules and regulations;
(2) Violations of the rental law;
(3) Violations of municipal or city ordinances;
(4) All other criminal cases where the penalty prescribed by law for the
offense charged is imprisonment not exceeding six months, or a fine not
exceeding one thousand pesos (P1,000.00), or both, x x x.
x x x x
It is clear from this rule that this type of summary procedure only applies to
MTC/MTCC/MCTCs. It is mind-boggling how this rule could possibly apply to
proceedings in an RTC. Aside from that, this Court limited the application of summary
procedure to certain civil and criminal cases. A writ of Amparo is a special
proceeding. It is a remedy by which a party seeks to establish a status, a right or
particular fact.
34
It is not a civil nor a criminal action, hence, the application of the
Revised Rule on Summary Procedure is seriously misplaced.
The second irregularity was the holding of a hearing on the main case prior to the
issuance of the writ and the filing of a Return. Without a Return, the issues could not
have been properly joined.
Worse, is the trial courts third irregularity: it required a memorandum in lieu of a
responsive pleading (Answer) of De Lima, et al.
The Return in Amparo cases allows the respondents to frame the issues subject to a
hearing. Hence, it should be done prior to the hearing, not after. A memorandum, on
the other hand, is a synthesis of the claims of the party litigants and is a final pleading
usually required before the case is submitted for decision. One cannot substitute for the
other since these submissions have different functions in facilitating the suit.
More importantly, a memorandum is a prohibited pleading under the Rule on the Writ
of Amparo.
35

The fourth irregularity was in the "Decision" dated 20 March 2012 itself. In the body of
its decision, the RTC stated:
"Accordingly this court GRANTS the privilege of the writ and the interim reliefs
prayed for by the petitioner." (Emphasis supplied).
This gives the impression that the decision was the judgment since the phraseology is
similar to Section 18 of the Rule on the Writ of Amparo:
"SEC. 18. Judgment. The court shall render judgment within ten (10) days from the
time the petition is submitted for decision. If the allegations in the petition are proven
by substantial evidence, the court shall grant the privilege of the writ and such
reliefs as may be proper and appropriate; otherwise, the privilege shall be denied."
(Emphasis supplied).
The privilege of the Writ of Amparo should be distinguished from the actual order
called the Writ of Amparo. The privilege includes availment of the entire procedure
outlined in A.M. No. 07-9-12-SC, the Rule on the Writ of Amparo. After examining the
petition and its attached affidavits, the Return and the evidence presented in the
summary hearing, the judgment should detail the required acts from the respondents
that will mitigate, if not totally eradicate, the violation of or the threat to the petitioner's
life, liberty or security.
A judgment which simply grants "the privilege of the writ" cannot be executed.1wphi1
It is tantamount to a failure of the judge to intervene and grant judicial succor to the
petitioner. Petitions filed to avail of the privilege of the Writ of Amparo arise out of very
real and concrete circumstances. Judicial responses cannot be as tragically symbolic or
ritualistic as "granting the privilege of the Writ of Amparo."
The procedural irregularities in the RTC affected the mode of appeal that petitioners
used in elevating the matter to this Court.
It is the responsibility of counsels for the parties to raise issues using the proper
procedure at the right time. Procedural rules are meant to assist the parties and courts
efficiently deal with the substantive issues pertaining to a case. When it is the judge
himself who disregards the rules of procedure, delay and confusion result.
The Petition for Review is not the proper remedy to assail the interlocutory order
denominated as "Decision" dated 20 March 2012. A Petition for Certiorari, on the other
hand, is prohibited.
36
Simply dismissing the present petition, however, will cause grave
injustice to the parties involved. It undermines the salutary purposes for which the Rule
on the Writ of Amparo were promulgated.
In many instances, the Court adopted a policy of liberally construing its rules in order to
promote a just, speedy and inexpensive disposition of every action and proceeding.
37

The rules can be suspended on the following grounds: (1) matters of life, liberty, honor
or property, (2) the existence of special or compelling circumstances, (3) the merits of
the case, (4) a cause not entirely attributable to the fault or negligence of the party
favored by the suspension of the rules, (5) a lack of any showing that the review
sought is merely frivolous and dilatory, and (6) the other party will not be unjustly
prejudiced thereby.
38

WHEREFORE, in the interest of justice, as a prophylactic to the irregularities
committed by the trial court judge, and by virtue of its powers under Article VIII,
Section 5 (5) of the Constitution, the Court RESOLVES to:
(1) NULLIFY all orders that are subject of this Resolution issued by Judge
Silvino T. Pampilo, Jr. after respondent Gatdula filed the Petition for the Issuance
of a Writ of Amparo;
(2) DIRECT Judge Pampilo to determine within forty-eight (48) hours from his
receipt of this Resolution whether the issuance of the Writ of Amparo is proper
on the basis of the petition and its attached affidavits.
The Clerk of Court is DIRECTED to cause the personal service of this Resolution on
Judge Silvino T. Pampilo, Jr. of Branch 26 of the Regional Trial Court of Manila for his
proper guidance together with a WARNING that further deviation or improvisation from
the procedure set in A.M. No. 07-9-12-SC shall be meted with severe consequences.
SO ORDERED.

*****************************oooooooooooooo****************************



FIRST DIVISION
G.R. No. 157086 February 18, 2013
LEPANTO CONSOLIDATED MINING COMPANY, Petitioner,
vs.
THE LEPANTO CAPATAZ UNION, Respondent.
D E C I S I O N
BERSAMIN, J.:
Capatazes are not rank-and-file employees because they perform supervisory functions
for the management; hence, they may form their own union that is separate and
distinct from the labor organization of rank-and-file employees.
The Case-
Lepanto Consolidated Mining Company (Lepanto) assails the Resolution promulgated on
December 18, 2002,
1
whereby the Court of Appeals (CA) dismissed its petition for
certiorari on the ground of its failure to first file a motion for reconsideration against the
decision rendered by the Secretary of the Department of Labor and Employment
(DOLE); and the resolution promulgated on January 31, 2003,
2
whereby the CA denied
Lepanto's motion for reconsideration.
Antecedents
As a domestic corporation authorized to engage in large-scale mining, Lepanto operated
several mining claims in Mankayan, Benguet. On May 27, 1998, respondent Lepanto
Capataz Union (Union), a labor organization duly registered with DOLE, filed a petition
for consent election with the Industrial Relations Division of the Cordillera Regional
Office (CAR) of DOLE, thereby proposing to represent 139 capatazes of Lepanto.
3

In due course, Lepanto opposed the petition,
4
contending that the Union was in reality
seeking a certification election, not a consent election, and would be thereby competing
with the Lepanto Employees Union (LEU), the current collective bargaining agent.
Lepanto pointed out that the capatazes were already members of LEU, the exclusive
representative of all rank-and-file employees of its Mine Division.
On May 2, 2000, Med-Arbiter Michaela A. Lontoc of DOLE-CAR issued a ruling to the
effect that the capatazes could form a separate bargaining unit due to their not being
rank-and-file employees,
5
viz:
x x x x
We agree with petitioner that its members perform a function totally different from the
rank-and-file employees. The word capataz is defined in Websters Third International
Dictionary, 1986 as "a boss", "foreman" and "an overseer". The employer did not
dispute during the hearing that the capatazes indeed take charge of the
implementation of the job orders by supervising and instructing the miners,
mackers and other rank-and-file workers under them, assess and evaluate
their performance, make regular reports and recommends (sic) new systems
and procedure of work, as well as guidelines for the discipline of employees.
As testified to by petitioners president, the capatazes are neither rank-and-
file nor supervisory and, more or less, fall in the middle of their rank. In this
respect, we can see that indeed the capatazes differ from the rank-and-file
and can by themselves constitute a separate bargaining unit.
While it is claimed by the employer that historically, the capatazes have been
considered among the rank-and-file and that it is only now that they seek a separate
bargaining unit such history of affiliation with the rank-and-file association of LEU
cannot totally prevent the capatazes from disaffiliating and organizing themselves
separately. The constitutional right of every worker to self-organization essentially gives
him the freedom to join or not to join an organization of his own choosing.
The fact that petitioner seeks to represent a separate bargaining unit from the rank-
and-file employees represented by the LEU renders the contract bar rule inapplicable.
While the collective bargaining agreement existing between the LEU and the employer
covering the latters rank-andfile employee covers likewise the capatazes, it was
testified to and undisputed by the employer that the capatazes did not anymore
participate in the renegotiation and ratification of the new CBA upon expiration of their
old one on 16 November 1998. Their nonparticipation was apparently due to their
formation of the new bargaining unit. Thus, while the instant petition was filed on 27
May 1998, prior to the freedom period, in the interest of justice and in consonance with
the constitutional right of workers to self-organization, the petition can be deemed to
have been filed at the time the 60-day freedom period set in. After all, the petition was
still pending and unresolved during this period.
WHEREFORE, the petition is hereby granted and a certification election among the
capataz employees of the Lepanto Consolidated Mining Company is hereby ordered
conducted, subject to the usual preelection and inclusion/exclusion proceedings, with
the following choices:
1.Lepanto Capataz Union; and
2.No Union.
The employer is directed to submit to this office within ten (10) days from receipt
hereof a copy of the certified list of its capataz employees and the payroll covering the
said bargaining unit for the last three (3) months prior to the issuance hereof.
SO DECIDED.
6

Lepanto appealed to the DOLE Secretary.
7

On July 12, 2000, then DOLE Undersecretary Rosalinda Dimapilis- Baldoz (Baldoz),
acting by authority of the DOLE Secretary, affirmed the ruling of Med-Arbiter Lontoc,
8

pertinently stating as follows:
x x x x
The bargaining unit sought to be represented by the appellee are the capataz
employees of the appellant. There is no other labor organization of capatazes within the
employer unit except herein appellant. Thus, appellant is an unorganized establishment
in so far as the bargaining unit of capatazes is concerned. In accordance with the last
paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in a
petition filed by a legitimate labor organization involving an unorganized establishment,
the Med-Arbiter shall, pursuant to Article 257 of the Code, automatically order the
conduct of certification election after determining that the petition has complied with all
requirements under Section 1, 2 and 4 of the same rules and that none of the grounds
for dismissal thereof exists", the order for the conduct of a certification election is
proper.
Finally, as to the issue of whether the Med-Arbiter exhibited ignorance of the law when
she directed the conduct of a certification election when appellee prays for the conduct
of a consent election, let it be stressed that appellee seeks to be recognized as the sole
and exclusive bargaining representative of all capataz employees of appellant. There
are two modes by which this can be achieved, one is by voluntary recognition and two,
by consent or certification election. Voluntary recognition under Rule X, Department
Order No. 9 is a mode whereby the employer voluntarily recognizes the union as the
bargaining representative of all the members in the bargaining unit sought to be
represented. Consent and certification election under Rules XI and XII of Department
Order No. 9 is a mode whereby the members of the bargaining unit decide whether
they want a bargaining representative and if so, who they want it to be. The difference
between a consent election and a certification election is that the conduct of a consent
election is agreed upon by the parties to the petition while the conduct of a certification
election is ordered by the Med-Arbiter. In this case, the appellant withdrew its consent
and opposed the conduct of the election. Therefore, the petition necessarily becomes
one of a petition for certification election and the Med-Arbiter was correct in granting
the same.
9

x x x x
In the ensuing certification election held on November 28, 2000, the Union garnered
109 of the 111 total valid votes cast.
10

On the day of the certification election, however, Lepanto presented an
opposition/protest.
11
Hence, on February 8, 2001, a hearing was held on Lepantos
opposition/protest. Although the parties were required in that hearing to submit their
respective position papers, Lepanto later opted not to submit its position paper,
12
and
contended that the issues identified during the hearing did not pose any legal issue to
be addressed in a position paper.
13

On April 26, 2001, Med-Arbiter Florence Marie A. Gacad-Ulep of DOLE-CAR rendered a
decision certifying the Union as the sole and exclusive bargaining agent of all capatazes
of Lepanto.
14

On May 18, 2001, Lepanto appealed the decision of Med-Arbiter Gacad-Ulep to the
DOLE Secretary.
By her Resolution dated September 17, 2002,
15
DOLE Secretary Patricia A. Sto. Tomas
affirmed the decision dated April 26, 2001, holding and disposing thus:
Appellant accused Med-Arbiter Ulep of grave abuse of discretion amounting to lack of
jurisdiction based on her failure to resolve appellants motion to modify order to submit
position papers and on rendering judgment on the basis only of appellees position
paper.
We deny.
Section 5, Rule XXV of Department Order No. 9, otherwise known as the New Rules
Implementing Book V of the Labor Code, states that "in all proceedings at all levels,
incidental motions shall not be given due course, but shall remain as part of the records
for whatever they may be worth when the case is decided on the merits".
Further, the motion to modify order to submit position papers filed by appellant is
without merit. Appellant claimed that the issues over which Med-Arbiter Ulep directed
the submission of position papers were: (1) failure to challenge properly; (2) failure
(especially of LEU) to participate actively in the proceedings before the decision calling
for the conduct of certification election; and (3) validity of earlier arguments. According
to appellant, the first issue was for appellee LCU to reply to in its position paper, the
second issue was for the LEU and the third issue for appellant company to explain in
their respective position paper. It was the position of appellant company that unless the
parties filed their position paper on each of their respective issues, the other parties
cannot discuss the issues they did not raise in the same position papers and have to
await receipt of the others position paper for their appropriate reply.
Section 9, Rule XI of Department Order No. 9, which is applied with equal force in the
disposition of protests on the conduct of election, states that "the Med-Arbiter shall in
the same hearing direct all concerned parties, including the employer, to simultaneously
submit their respective position papers within a non-extendible period of ten days". The
issues as recorded in the minutes of 28 February 2001 hearing before the Med- Arbiter
are clear. The parties, including appellant company were required to submit their
respective positions on whether there was proper challenge of the voters, whether LEU
failed to participate in the proceedings, if so, whether it should be allowed to participate
at this belated stage and whether the arguments raised during the pre-election
conferences and in the protests are valid. The parties, including appellant company
were apprised of these issues and they agreed thereto. The minutes of the hearing
even contained the statement that "no order will issue" and that "the parties are
informed accordingly". If there is any matter that had to be clarified, appellant should
have clarified the same during the said hearing and refused to file its position paper
simultaneously with LCU and LEU. It appears that appellant did not do so and
acquiesced to the filing of its position paper within fifteen days from the date of said
hearing.
Neither is there merit in appellants contention that the Med- Arbiter resolved the
protest based solely on appellee LCUs position paper. Not only did the Med-Arbiter
discuss the demerits of appellants motion to modify order to submit position papers but
likewise the demerits of its protest. We do not, however, agree with the Med-Arbiter
that the protest should be dismissed due to appellants failure to challenge the
individual voters during the election. We take note of the minutes of the pre-election
conference on 10 November 2000, thus:
"It was also agreed upon (by union and managements legal officer) that all those listed
will be allowed to vote during the certification election subject to challenge by
management on ground that none of them belongs to the bargaining unit".
(Underscoring supplied)
It is therefore, not correct to say that there was no proper challenge made by appellant
company. The challenge was already manifested during the pre-election conference,
specifying that all listed voters were being challenged because they do not belong to
the bargaining unit of capatazes. Likewise, the formal protest filed by appellant
company on the day of the election showed its protest to the conduct of the election on
the grounds that (1) none of the names submitted and included (with pay bracket 8
and 9) to vote qualifies as capataz under the five-point characterization made in 02 May
2000 decision calling for the conduct of certification election; (2) the characterization
made in the 02 May 2000 decision pertains to shift bosses who constitutes another
union, the Lepanto Local Staff Union; and (3) the names listed in the voters list are
members of another union, the Lepanto Employees Union. This constitutes proper
challenge to the eligibility of all the voters named in the list which includes all those
who cast their votes. The election officer should have not canvassed the ballots and
allowed the Med-Arbiter to first determine their eligibility.
Notwithstanding the premature canvass of the votes, we note that appellant company
failed to support its grounds for challenge with sufficient evidence for us to determine
the validity of its claim. No job description of the challenged voters was submitted by
appellant from which we can verify whether the said voters are indeed disqualified from
the alleged five-point characterization made in the 02 May 2000 decision, either before
the Med-Arbiter or on appeal. Neither was the job description of the shift bosses whom
appellant company claims pertain to the alleged five-point characterization submitted
for our perusal. The challenge must perforce fail for lack of evidence.
As to the alleged membership of appellee LCUs member with another union LEU, the
issue has been resolved in the 02 May 200[0] decision of Med-Arbiter Lontoc which we
affirmed on 12 July 2000.
WHEREFORE, the appeal is hereby DENIED for lack of merit and the decision of the
Med-Arbiter dated 26 April 2001, certifying Lepanto Capataz Union as the sole and
exclusive bargaining agent of all capataz workers of Lepanto Consolidated Mining
Company, is AFFIRMED.
SO RESOLVED.
16

Ruling of the CA
Still dissatisfied with the result, but without first filing a motion for reconsideration,
Lepanto challenged in the CA the foregoing decision of the DOLE Secretary through a
petition for certiorari.
On December 18, 2002, the CA dismissed Lepantos petition for certiorari, stating in its
first assailed resolution:
Considering that the petitioner failed to file a prior motion for reconsideration of the
Decision of the public respondent before instituting the present petition as mandated by
Section 1 of Rule 65 of the 1997 Rules of Civil Procedure, as amended, the instant
"Petition for Certiorari Under Rule 65 with Prayer for Temporary Restraining Order and
Injunction" is hereby DISMISSED.
Well-settled is the rule that the "filing of a petition for certiorari under Rule 65 without
first moving for reconsideration of the assailed resolution generally warrants the
petitions outright dismissal. As we consistently held in numerous cases, a motion for
reconsideration by a concerned party is indispensable for it affords the NLRC an
opportunity to rectify errors or mistakes it might have committed before resort to the
courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy
and adequate remedy in the ordinary course of law against acts of public respondents.
Here, the plain and adequate remedy expressly provided by law was a motion for
reconsideration of the impugned resolution, based on palpable or patent errors, to be
made under oath and filed within ten (10) days from receipt of the questioned
resolution of the NLRC, a procedure which is jurisdictional. Further, it should be
stressed that without a motion for reconsideration seasonably filed within the ten-day
reglementary period, the questioned order, resolution or decision of NLRC, becomes
final and executory after ten (10) calendar days from receipt thereof." (Association of
Trade Unions (ATU), Rodolfo Monteclaro and Edgar Juesan vs. Hon.
Commissioners Oscar N. Abella, Musib N. Buat, Leon Gonzaga, Jr., Algon
Engineering Construction Corp., Alex Gonzales and Editha Yap. 323 SCRA
50).
SO ORDERED.
17

Lepanto moved to reconsider the dismissal, but the CA denied its motion for
reconsideration through the second assailed resolution.
18

Issues
Hence, this appeal by Lepanto based on the following errors, namely:
I
THE COURT OF APPEALS ERRED IN SUMMARILY DISMISSING THE PETITION
FOR CERTIORARI ON THE GROUND THAT NO PRIOR MOTION FOR
RECONSIDERATION WAS FILED. THE DECISION OF THE SECRETARY BEING
FINAL AND EXECUTORY, A MOTION FOR RECONSIDERATION WAS NOT AN
AVAILABLE REMEDY FOR PETITIONER.
II
ON THE MERITS, THE SECRETARY OF LABOR ACTED WITHOUT OR IN EXCESS
OF JURISDICTION, [O]R WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION IN ISSUNG THE DECISION DATED
SEPTEMBER 17, 2002, WHEN SHE DELIBERATELY IGNORED THE FACTS AND
RULED IN FAVOR OF THE RESPONDENT UNION, DESPITE HER OWN FINDING
THAT THERE HAD BEEN A PREMATURE CANVASS OF VOTES.
19

Lepanto argues that a motion for reconsideration was not an available remedy due to
the decision of the DOLE Secretary being already classified as final and executory under
Section 15, Rule XI, Book V of Omnibus Rules Implementing the Labor Code, as
amended by Department Order No. 9, series of 1997;
20
that the Unions petition for
consent election was really a certification election; that the Union failed to give a
definite description of the bargaining unit sought to be represented; and that the
capatazes should be considered as rank-and-file employees.
The issues to be resolved are, firstly, whether a motion for reconsideration was a pre-
requisite in the filing of its petition for certiorari; and, secondly, whether the capatazes
could form their own union independently of the rank-and-file employees.
Ruling
The petition for review has no merit.
I.
The filing of the motion for reconsideration is a pre-requisite to the filing of a
petition for certiorari to assail the decision of the DOLE Secretary
We hold to be untenable and not well taken Lepantos submissions that: (1) a motion
for reconsideration was not an available remedy from the decision of the DOLE
Secretary because of Section 15, Rule XI, Book V of the Omnibus Rules Implementing
the Labor Code, as amended; and (2) the ruling in National Federation of Labor v.
Laguesma
21
(recognizing the remedy of certiorari against the decision of the DOLE
Secretary to be filed initially in the CA) actually affirms its position that an immediate
recourse to the CA on certiorari is proper even without the prior filing of a motion for
reconsideration.
To start with, the requirement of the timely filing of a motion for reconsideration as a
precondition to the filing of a petition for certiorari accords with the principle of
exhausting administrative remedies as a means to afford every opportunity to the
respondent agency to resolve the matter and correct itself if need be.
22

And, secondly, the ruling in National Federation of Labor v. Laguesma reiterates St.
Martins Funeral Home v. National Labor Relations Commission,
23
where the Court has
pronounced that the special civil action of certiorari is the appropriate remedy from the
decision of the National Labor Relations Commission (NLRC) in view of the lack of any
appellate remedy provided by the Labor Code to a party aggrieved by the decision of
the NLRC. Accordingly, any decision, resolution or ruling of the DOLE Secretary from
which the Labor Code affords no remedy to the aggrieved party may be reviewed
through a petition for certiorari initiated only in the CA in deference to the principle of
the hierarchy of courts.
Yet, it is also significant to note that National Federation of Labor v. Laguesma also
reaffirmed the dictum issued in St. Martins Funeral Homes v. National Labor Relations
Commission to the effect that "the remedy of the aggrieved party is to timely file a
motion for reconsideration as a precondition for any further or subsequent remedy, and
then seasonably avail of the special civil action of certiorari under Rule 65 x x x."
24

Indeed, the Court has consistently stressed the importance of the seasonable filing of a
motion for reconsideration prior to filing the certiorari petition. In SMC Quarry 2
Workers Union-February Six Movement (FSM) Local Chapter No. 1564 v. Titan
Megabags Industrial Corporation
25
and Manila Pearl Corporation v. Manila Pearl
Independent Workers Union,
26
the Court has even warned that a failure to file the
motion for reconsideration would be fatal to the cause of the petitioner.
27
Due to its
extraordinary nature as a remedy, certiorari is to be availed of only when there is no
appeal, or any plain, speedy or adequate remedy in the ordinary course of law.
28
There
is no question that a motion for reconsideration timely filed by Lepanto was an
adequate remedy in the ordinary course of law in view of the possibility of the Secretary
of Justice reconsidering her disposition of the matter, thereby according the relief
Lepanto was seeking.1wphi1
Under the circumstances, Lepantos failure to timely file a motion for reconsideration
prior to filing its petition for certiorari in the CA rendered the September 17, 2002
resolution of the DOLE Secretary beyond challenge.
II.
Capatazes are not rank-and-file employees; hence, they could form their own
union
Anent the second issue, we note that Med-Arbiter Lontoc found in her Decision issued
on May 2, 2000 that the capatazes were performing functions totally different from
those performed by the rank-and-file employees, and that the capatazes were
"supervising and instructing the miners, mackers and other rank-and-file workers under
them, assess[ing] and evaluat[ing] their performance, mak[ing] regular reports and
recommend[ing] new systems and procedure of work, as well as guidelines for the
discipline of employees."
29
Hence, Med-Arbiter Lontoc concluded, the capatazes
"differ[ed] from the rank-and-file and [could] by themselves constitute a separate
bargaining unit."
30

Agreeing with Med-Arbiter Lontocs findings, then DOLE Undersecretary Baldoz, acting
by authority of the DOLE Secretary, observed in the resolution dated July 12, 2000,
thus:
31

The bargaining unit sought to be represented by the appellee are the capataz
employees of the appellant. There is no other labor organization of capatazes within the
employer unit except herein appellant. Thus, appellant is an unorganized establishment
in so far as the bargaining unit of capatazes is concerned. In accordance with the last
paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in a
petition filed by a legitimate labor organization involving an unorganized establishment,
the Med-Arbiter shall, pursuant to Article 257 of the Code, automatically order the
conduct of certification election after determining that the petition has complied with all
requirements under Section 1, 2 and 4 of the same rules and that none of the grounds
for dismissal thereof exists", the order for the conduct of a certification election is
proper.
32

We cannot undo the affirmance by the DOLE Secretary of the correct findings of her
subordinates in the DOLE, an office that was undeniably possessed of the requisite
expertise on the matter in issue. In dealing with the matter, her subordinates in the
DOLE fairly and objectively resolved whether the Union could lawfully seek to be the
exclusive representative of the bargaining unit of capatazes in the company. Their
factual findings, being supported by substantial evidence, are hereby accorded great
respect and finality. Such findings cannot be made the subject of our judicial review by
petition under Rule 45 of the Rules of Court, because:
x x x [T]he office of a petition for review on certiorari under Rule 45 of the Rules of
Court requires that it shall raise only questions of law. The factual findings by quasi-
judicial agencies, such as the Department of Labor and Employment, when supported
by substantial evidence, are entitled to great respect in view of their expertise in their
respective field. Judicial review of labor cases does not go far as to evaluate the
sufficiency of evidence on which the labor officials findings rest. It is not our function to
assess and evaluate all over again the evidence, testimonial and documentary, adduced
by the parties to an appeal, particularly where the findings of both the trial court (here,
the DOLE Secretary) and the appellate court on the matter coincide, as in this case at
bar. The Rule limits that function of the Court to review or revision of errors of law and
not to a second analysis of the evidence. Here, petitioners would have us re-calibrate all
over again the factual basis and the probative value of the pieces of evidence submitted
by the Company to the DOLE, contrary to the provisions of Rule 45. Thus, absent any
showing of whimsical or capricious exercise of judgment, and unless lack of any basis
for the conclusions made by the appellate court may be amply demonstrated, we may
not disturb such factual findings.
33

In any event, we affirm that capatazes or foremen are not rank-andfile employees
because they are an extension of the management, and as such they may influence the
rank-and-file workers under them to engage in slowdowns or similar activities
detrimental to the policies, interests or business objectives of the employers.
34

WHEREFORE, the Court DENIES the petition for review for lack of merit, and
AFFIRMS the resolutions the Court of Appeals promulgated on December 18, 2002 and
January 31, 2003.
Petitioner to pay the costs of suit.
SO ORDERED.

******************************ooooooooooooooo**************************

THIRD DIVISION
G.R. No. 195032 February 20, 2013
ISABELO A. BRAZA, Petitioner,
vs.
THE HONORABLE SANDIGANBA Y AN (1st Division), Respondents.
D E C I S I O N
MENDOZA, J.:
This is a petition for certiorari filed by petitioner Isabelo Braza (Braza) seeking to
reverse and set aside the October 12, 2009 Resolution
1
of the Sandiganbayan in
Criminal Case No. SB-08-CRM-0275, entitled People v. Robert G. Lala, et al., as well as
its October 22, 2010 Resolution,
2
denying his motion for reconsideration.
The Philippines was assigned the hosting rights for the 12th Association of Southeast
Asian Nations (ASEAN) Leaders Summit scheduled in December 2006. In preparation
for this international diplomatic event with the province of Cebu as the designated
venue, the Department of Public Works and Highways (DPWH) identified projects
relative to the improvement and rehabilitation of roads and installation of traffic safety
devices and lighting facilities. The then Acting Secretary of the DPWH, Hermogenes E.
Ebdane, approved the resort to alternative modes of procurement for the
implementation of these projects due to the proximity of the ASEAN Summit.
One of the ASEAN Summit-related projects to be undertaken was the installation of
street lighting systems along the perimeters of the Cebu International Convention
Center in Mandaue City and the ceremonial routes of the Summit to upgrade the
appearance of the convention areas and to improve night-time visibility for security
purposes. Four (4) out of eleven (11) street lighting projects were awarded to FABMIK
Construction and Equipment Supply Company, Inc. (FABMIK) and these were covered
by Contract I.D. Nos. 06H0021, 06H00049, 06H00050, and 06H00052. Contract I.D. No.
06H00050, the subject transaction of this case, involved the supply and installation of
street lighting facilities along the stretch of Mandaue-Mactan Bridge 1 to Punta Engao
Section in Lapu-Lapu City, with an estimated project cost of P83,950,000.00.
With the exception of the street lighting project covered by Contract I.D. No. 06H0021,
the three other projects were bidded out only on November 28, 2006 or less than two
(2) weeks before the scheduled start of the Summit. Thereafter, the DPWH and FABMIK
executed a Memorandum of Agreement (MOA) whereby FABMIK obliged itself to
implement the projects at its own expense and the DPWH to guarantee the payment of
the work accomplished. FABMIK was able to complete the projects within the deadline
of ten (10) days utilizing its own resources and credit facilities. The schedule of the
international event, however, was moved by the national organizers to January 9-15,
2007 due to typhoon Seniang which struck Cebu for several days.
After the summit, a letter-complaint was filed before the Public Assistance and
Corruption Prevention Office (PACPO), Ombudsman Visayas, alleging that the ASEAN
Summit street lighting projects were overpriced. A panel composing of three
investigators conducted a fact-finding investigation to determine the veracity of the
accusation. Braza, being the president of FABMIK, was impleaded as one of the
respondents. On March 16, 2007, the Ombudsman directed the Department of Budget
and Management (DBM) and the DPWH to cease and desist from releasing or
disbursing funds for the projects in question.
3

On March 23, 2007, the fact-finding body issued its Evaluation Report
4
recommending
the filing of charges for violation of Section 3(e) of Republic Act (R.A.) No. 3019,
otherwise known as the Anti-Graft and Corrupt Practice Act, against the DPWH officials
and employees in Region VII and the cities of Mandaue and Lapu-lapu, and private
contractors FABMIK and GAMPIK Construction and Development, Inc. (GAMPIK). This
report was filed before the Office of the Ombudsman-Visayas (OMBVisayas) for the
conduct of a preliminary investigation and was docketed therein as OMB-V-C-07-124-C,
entitled PACPO-OMB-Visayas v. Lala, et. al.
After the preliminary investigation, the OMB-Visayas issued its Resolution,
5
dated
January 24, 2008, finding probable cause to indict the concerned respondents for
violation of Section 3(g) of R.A. No. 3019. It was found that the lampposts and other
lighting facilities installed were indeed highly overpriced after a comparison of the costs
of the materials indicated in the Program of Works and Estimates (POWE) with those in
the Bureau of Customs (BOC) documents; and that the contracts entered into between
the government officials and the private contractors were manifestly and grossly
disadvantageous to the government.
Subsequently, the OMB-Visayas filed several informations before the Sandiganbayan for
violation of Sec. 3(g) of R.A. 3019 against the officials of DPWH Region VII, the officials
of the cities of Mandaue and Lapu-lapu and private contractors, FABMIK President Braza
and GAMPIK Board Chairman Gerardo S. Surla (Surla). The Information docketed as SB-
08- CRM-0275
6
(first information) which involved the street lighting project covered by
Contract I.D. No. 06H00050 with FABMIK, was raffled to the First Division of the
Sandiganbayan. It was alleged therein that Braza acted in conspiracy with the public
officials and employees in the commission of the crime charged.
On June 6, 2008, Braza was arraigned as a precondition to his authorization to travel
abroad. He entered a plea of "not guilty."
On August 14, 2008, the motions for reinvestigation filed by Arturo Radaza (Radaza),
the Mayor of Lapu-lapu City, and the DPWH officials were denied by the Sandiganbayan
for lack of merit. Consequently, they moved for the reconsideration of said resolution.
7

On August 27, 2008, Braza filed a motion for reinvestigation
8
anchored on the following
grounds: (1) the import documents relied upon by the OMB-Visayas were spurious and
falsified; (2) constituted new evidence, if considered, would overturn the finding of
probable cause; and (3) the finding of overpricing was bereft of factual and legal basis
as the same was not substantiated by any independent canvass of prevailing market
prices of the subject lampposts. He prayed for the suspension of the proceedings of the
case pending such reinvestigation. The Sandiganbayan treated Braza's motion as his
motion for reconsideration of its August 14, 2008 Resolution.
On November 13, 2008, Braza filed a manifestation
9
to make of record that he was
maintaining his previous plea of "not guilty" without any condition.
During the proceedings held on November 3, 2008, the Sandiganbayan reconsidered its
August 14, 2008 resolution and directed a reinvestigation of the case.
10
According to
the anti-graft court, the allegations to the effect that no independent canvass was
conducted and that the charge of overpricing was based on falsified documents were
serious reasons enough to merit a reinvestigation of the case. The Sandiganbayan said
that it could be reasonably inferred from the July 30, 2008 Order of the Ombudsman in
OMB-V-C-07-0124-C that the latter would not object to the conduct of a reinvestigation
of all the cases against the accused.
Braza filed his Manifestation,
11
dated February 2, 2009, informing the Sandiganbayan of
his intention to abandon his previous motion for reinvestigation. He opined that the
prosecution would merely use the reinvestigation proceedings as a means to engage in
a second unbridled fishing expedition to cure the lack of probable cause.
On March 23, 2009, Braza filed a motion
12
in support of the abandonment of
reinvestigation with a plea to vacate Information, insisting that the further
reinvestigation of the case would only afford the prosecution a second round of
preliminary investigation which would be vexatious, oppressive and violative of his
constitutional right to a speedy disposition of his case, warranting its dismissal with
prejudice.
After concluding its reinvestigation of the case, the OMB-Visayas issued its Resolution,
13

dated May 4, 2009, (Supplemental Resolution) which upheld the finding of probable
cause but modified the charge from violation of Sec. 3(g) of R.A. No. 3019
14
to violation
of Sec. 3(e)
15
of the same law. Accordingly, the prosecution filed its Manifestation and
Motion to Admit Amended Information
16
on May 8, 2009.
On July 1, 2009, Braza filed his Comment (to the motion to admit amended
information) with Plea for Discharge and/or Dismissal of the Case.
17
He claimed that the
first information had been rendered ineffective or had been deemed vacated by the
issuance of the Supplemental Resolution and, hence, his discharge from the first
information was in order. By way of an alternative prayer, Braza sought the dismissal of
the case with prejudice claiming that his right to a speedy disposition of the case had
been violated and that the Supplemental Resolution failed to cure the fatal infirmities of
the January 24, 2008 Resolution since proof to support the allegation of overpricing
remained wanting. Braza averred that he could not be arraigned under the second
information without violating the constitutional proscription against double jeopardy.
On October 12, 2009, the Sandiganbayan issued the first assailed resolution admitting
the Amended Information,
18
dated May 4, 2009, (second Information) and denying
Braza's plea for dismissal of the criminal case. The Sandiganbayan ruled that Braza
would not be placed in double jeopardy should he be arraigned anew under the second
information because his previous arraignment was conditional. It continued that even if
he was regularly arraigned, double jeopardy would still not set in because the second
information charged an offense different from, and which did not include or was
necessarily included in, the original offense charged. Lastly, it found that the delay in
the reinvestigation proceedings could not be characterized as vexatious, capricious or
oppressive and that it could not be attributed to the prosecution. The dispositive portion
of the said resolution reads:
WHEREFORE, premises considered, the Motion to Admit Attached Amended
Information filed by the prosecution is hereby GRANTED. The Amended Information
charging all the accused therein with violation of Sec. 3 (e) of R.A. 3019, being the
proper offense, is hereby ADMITTED.
Consequently, accused Braza's Alternative Relief for Dismissal of the Case is hereby
DENIED.
Let the arraignment of all the accused in the Amended Information be set on November
18, 2009, at 8:30 in the morning.
SO ORDERED.
19

On November 6, 2009, Braza moved for reconsideration with alternative motion to
quash the information
20
reiterating his arguments that his right against double jeopardy
and his right to a speedy disposition of the case were violated warranting the dismissal
of the criminal case with prejudice. In the alternative, Braza moved for the quashal of
the second information vigorously asserting that the same was fatally defective for
failure to allege any actual, specified and quantifiable injury sustained by the
government as required by law for indictment under Sec. 3(e) of R.A. 3019, and that
the charge of overpricing was unfounded.
On October 22, 2010, the Sandiganbayan issued the second assailed resolution stating,
among others, the denial of Braza's Motion to Quash the information. The anti-graft
court ruled that the Amended Information was sufficient in substance as to inform the
accused of the nature and causes of accusations against them. Further, it held that the
specifics sought to be alleged in the Amended Information were evidentiary in nature
which could be properly presented during the trial on the merits. The Sandiganbayan
also stated that it was possible to establish the fact of overpricing if it would be proven
that the contract price was excessive compared to the price for which FABMIK
purchased the street lighting facilities from its supplier. Braza was effectively discharged
from the first Information upon the filing of the second Information but said discharge
was without prejudice to, and would not preclude, his prosecution for violation of Sec.
3(e) of R.A. No. 3019. It added that his right to speedy disposition of the case was not
violated inasmuch as the length of time spent for the proceedings was in compliance
with the procedural requirements of due process. The Sandiganbayan, however,
deemed it proper that a new preliminary investigation be conducted under the new
charge. Accordingly, the Sandiganbayan disposed:
WHEREFORE, in the light of all the foregoing, the separate omnibus motions of
accused-movant Radaza and accused-movants Bernido, Manggis and Ojeda, insofar as
the sought preliminary investigation is concerned is GRANTED.
Accordingly, this case is hereby remanded to the Office of the Ombudsman/Special
Prosecutor for preliminary investigation of violation of Section 3(e) of RA 3019. The said
office/s are hereby ordered to complete the said preliminary investigation and to submit
to the Court the result of the said investigation within sixty (60) days from notice.
However, the Motion for Bill of Particulars of accusedmovants Lala, Dindin Alvizo,
Fernandez, Bagolor, Galang and Diano, the Motion for Quashal of Information of
accused-movants Bernido, Manggis and Ojeda, and accused-movant Braza's Motion to
Quash, are hereby DENIED for lack of merit.
SO ORDERED.
21

ISSUES
Undaunted, Braza filed this petition for certiorari ascribing grave abuse of discretion on
the Sandiganbayan for issuing the Resolutions, dated October 12, 2009 and October 22,
2010, respectively. Braza raised the following issues:
A) The Sandiganbayan committed grave abuse of discretion in
sustaining the withdrawal of the Information in violation of the
constitutional guarantee against double jeopardy, the petitioner having
entered a valid plea and vigorously objected to any further conduct of
reinvestigation and amendment of Information.
B) The Sandiganbayan acted with grave abuse of discretion in allowing
the withdrawal and amendment of the Information without prejudice,
the proceedings being fraught with flip-flopping, prolonged and
vexatious determination of probable cause, thereby violating
petitioner's constitutional right to speedy disposition of his case,
warranting his discharge with prejudice regardless of the nature of his
previous arraignment.
C) The Sandiganbayan acted with grave abuse of discretion in denying
the motion to quash Amended Information, there being no allegation
of actual, specified, or quantifiable injury sustained by the government
as required by law (in cases involving Sec. 3 (e) of RA 3019) with the
Reinvestigation Report itself admitting on record that the government
has not paid a single centavo for the fully-implemented project.
D) The Sandiganbayan acted with grave abuse of discretion in
sustaining the new indictment under Sec. 3(e) of R.A. 3019 without
threshing out the fatal infirmities that hounded the previous finding of
overpricing the erroneous reliance on spurious import documents and
lack of price canvass to establish prevailing market price thereby
rendering the new Resolution fatally defective.
22

Essentially, Braza posits that double jeopardy has already set in on the basis of his "not
guilty" plea in the first Information and, thus, he can no longer be prosecuted under the
second Information. He claims that his arraignment was unconditional because the
conditions in the plea were ineffective for not being unmistakable and categorical. He
theorizes that the waiver of his constitutional guarantee against double jeopardy was
not absolute as the same was qualified by the phrase "as a result of the pending
incidents." He argues that even granting that his arraignment was indeed conditional,
the same had become simple and regular when he validated and confirmed his plea of
"not guilty" by means of a written manifestation which removed any further condition
attached to his previous plea.
Braza submits that the prolonged, vexatious and flip-flopping determination of probable
cause violated his right to a speedy disposition of the case which would justify the
dismissal of the case with prejudice. Further, he assails the sufficiency of the allegation
of facts in the second Information for failure to assert any actual and quantifiable injury
suffered by the government in relation to the subject transaction. He points out that the
admission in the Reinvestigation Report to the effect that the government had not paid
a single centavo to FABMIK for the fully implemented project, had rendered as invalid,
baseless and frivolous any indictment or prosecution for violation of Sec. 3(e) of R.A.
3019. Braza insists that the Supplemental Resolution of the OMB-Visayas was fatally
defective considering that the Ombudsman did not conduct an independent price
canvass of the prevailing market price of the subject lampposts and merely relied on
the spurious and false BOC documents to support its conclusion of overpricing.
By way of comment,
23
the Office of the Special Prosecutor (OSP) retorts that the
withdrawal of the first information and the subsequent filing of the second information
did not place Braza in double jeopardy or violate his right to speedy disposition of the
case. The OSP reasons that Braza waived his right to invoke double jeopardy when he
agreed to be conditionally arraigned. It further argues that even granting that the
arraignment was unconditional, still double jeopardy would not lie because the charge
of violation of Section 3(e) of R.A. 3019 in the second information is a different offense
with different elements from that of the charge of violation of Sec. 3(g) in the first
Information. The OSP posits that his right to a speedy disposition of the case was not
violated as the delay in the proceedings cannot be considered as oppressive, vexatious
or capricious. According to the OSP, such delay was precipitated by the many pleadings
filed by the accused, including Braza, and was in fact incurred to give all the accused
the opportunities to dispute the accusation against them in the interest of fairness and
due process.
The OSP also submits that proof of the actual injury suffered by the government and
that of overpricing, are superfluous and immaterial for the determination of probable
cause because the alleged mode for committing the offense charged in the second
Information was by giving any private party unwarranted benefit, advantage or
preference. The second Information sufficiently alleges all the elements of the offense
for which the accused were indicted.
The Courts Ruling
Simply put, the pivotal issue in this case is whether the Sandiganbayan acted with
grave abuse of discretion in denying Braza's plea for the dismissal of Case No. SB-08-
CRM-0275 and his subsequent motion to quash the second Information, particularly on
the grounds of double jeopardy, violation of his right to a speedy disposition of the
case, and failure of the Information to state every single fact to constitute all the
elements of the offense charged.
The petition is devoid of merit.
It is Brazas stance that his constitutional right under the double jeopardy clause bars
further proceedings in Case No. SB-08-CRM-0275. He asserts that his arraignment
under the first information was simple and unconditional and, thus, an arraignment
under the second information would put him in double jeopardy.
The Court is not persuaded. His argument cannot stand scrutiny.
The June 6, 2008 Order
24
of the Sandiganbayan reads:
This morning, accused Isabelo A. Braza was summoned to arraignment as a
precondition in authorizing his travel. The arraignment of the accused was
conditional in the sense that if the present Information will be amended as a
result of the pending incidents herein, he cannot invoke his right against
double jeopardy and he shall submit himself to arraignment anew under such
Amended Information. On the other hand, his conditional arraignment shall not
prejudice his right to question such Amended Information, if one shall be filed. These
conditions were thoroughly explained to the accused and his counsel. After consultation
with his counsel, the accused willingly submitted himself to such conditional
arraignment.
Thereafter, the accused, with the assistance of counsel, was arraigned by reading
the Information to him in English, a language understood by him. Thereafter, he
pleaded Not Guilty to the charge against him. [Emphases supplied]
While it is true that the practice of the Sandiganbayan of conducting "provisional" or
"conditional" arraignment of the accused is not specifically sanctioned by the Revised
Internal Rules of the Procedure of the Sandiganbayan or by the regular Rules of
Procedure, this Court had tangentially recognized such practice in People v. Espinosa,
25

provided that the alleged conditions attached to the arraignment should be
"unmistakable, express, informed and enlightened." The Court further required that the
conditions must be expressly stated in the order disposing of arraignment, otherwise, it
should be deemed simple and unconditional.
26

A careful perusal of the record in the case at bench would reveal that the arraignment
of Braza under the first information was conditional in nature as it was a mere
accommodation in his favor to enable him to travel abroad without the Sandiganbayan
losing its ability to conduct trial in absentia in case he would abscond. The
Sandiganbayan's June 6, 2008 Order clearly and unequivocally states that the
conditions for Braza's arraignment as well as his travel abroad, that is, that if the
Information would be amended, he shall waive his constitutional right to be protected
against double jeopardy and shall allow himself to be arraigned on the amended
information without losing his right to question the same. It appeared that these
conditions were duly explained to Braza and his lawyer by the anti-graft court. He was
afforded time to confer and consult his lawyer. Thereafter, he voluntarily submitted
himself to such conditional arraignment and entered a plea of "not guilty" to the offense
of violation of Sec. 3(g) of R.A. No. 3019.
Verily, the relinquishment of his right to invoke double jeopardy had been convincingly
laid out. Such waiver was clear, categorical and intelligent. It may not be amiss to state
that on the day of said arraignment, one of the incidents pending for the consideration
of the Sandiganbayan was an omnibus motion for determination of probable cause and
for quashal of information or for reinvestigation filed by accused Radaza. Accordingly,
there was a real possibility that the first information would be amended if said motion
was granted. Although the omnibus motion was initially denied, it was subsequently
granted upon motion for reconsideration, and a reinvestigation was ordered to be
conducted in the criminal case.
Having given his conformity and accepted the conditional arraignment and its legal
consequences, Braza is now estopped from assailing its conditional nature just to
conveniently avoid being arraigned and prosecuted of the new charge under the second
information. Besides, in consonance with the ruling in Cabo v. Sandiganbayan,
27
this
Court cannot now allow Braza to renege and turn his back on the above conditions on
the mere pretext that he affirmed his conditional arraignment through a pleading
denominated as Manifestation filed before the Sandiganbayan on November 13, 2008.
After all, there is no showing that the anti-graft court had acted on, much less noted,
his written manifestation.
Assuming, in gratia argumenti, that there was a valid and unconditional plea, Braza
cannot plausibly rely on the principle of double jeopardy to avoid arraignment under the
second information because the offense charged therein is different and not included in
the offense charged under the first information. The right against double jeopardy is
enshrined in Section 21 of Article III of the Constitution, which reads:
No person shall be twice put in jeopardy of punishment for the same offense. If an act
is punished by a law and an ordinance conviction or acquittal under either shall
constitute a bar to another prosecution for the same act.
This constitutionally mandated right is procedurally buttressed by Section 17 of Rule
117
28
of the Revised Rules of Criminal Procedure. To substantiate a claim for double
jeopardy, the accused has the burden of demonstrating the following requisites: (1) a
first jeopardy must have attached prior to the second; (2) the first jeopardy must have
been validly terminated; and (3) the second jeopardy must be for the same offense as
in the first.
29
As to the first requisite, the first jeopardy attaches only (a) after a valid
indictment; (b) before a competent court; (c) after arraignment, (d) when a valid plea
has been entered; and (e) when the accused was acquitted or convicted, or the case
was dismissed or otherwise terminated without his express consent.
30
The test for the
third element is whether one offense is identical with the other or is an attempt to
commit it or a frustration thereof; or whether the second offense includes or is
necessarily included in the offense charged in the first information.
Braza, however, contends that double jeopardy would still attach even if the first
information charged an offense different from that charged in the second information
since both charges arose from the same transaction or set of facts. Relying on the
antiquated ruling of People v. Del Carmen,
31
Braza claims that an accused should be
shielded against being prosecuted for several offenses made out from a single act.
It appears that Braza has obviously lost sight, if he is not altogether aware, of the ruling
in Suero v. People
32
where it was held that the same criminal act may give rise to two
or more separate and distinct offenses; and that no double jeopardy attaches as long as
there is variance between the elements of the two offenses charged. The doctrine of
double jeopardy is a revered constitutional safeguard against exposing the accused
from the risk of being prosecuted twice for the same offense, and not a different one.
There is simply no double jeopardy when the subsequent information charges another
and different offense, although arising from the same act or set of acts.
33
Prosecution
for the same act is not prohibited. What is forbidden is the prosecution for the same
offense.
In the case at bench, there is no dispute that the two charges stemmed from the same
transaction. A comparison of the elements of violation of Sec. 3(g) of R.A. No. 3019 and
those of violation of Sec. 3(e) of the same law, however, will disclose that there is
neither identity nor exclusive inclusion between the two offenses. For conviction of
violation of Sec. 3(g), the prosecution must establish the following elements:
1. The offender is a public officer;
2. He entered into a contract or transaction in behalf of the government; and
3. The contract or transaction is manifestly and grossly disadvantageous to the
government.
34

On the other hand, an accused may be held criminally liable of violation of Section 3(e)
of R.A. No. 3019, provided that the following elements are present:
1. The accused must be a public officer discharging administrative, judicial or
official functions;
2. The accused must have acted with manifest partiality, evident bad faith or
gross inexcusable negligence; and
3. His action caused undue injury to any party, including the government or gave
any private party unwarranted benefits, advantage or preference in the
discharge of his functions.
35

Although violation of Sec. 3(g) of R.A. No. 3019 and violation of Sec. 3(e) of the same
law share a common element, the accused being a public officer, the latter is not
inclusive of the former. The essential elements of each are not included among or do
not form part of those enumerated in the other. For double jeopardy to exist, the
elements of one offense should ideally encompass or include those of the other. What
the rule on double jeopardy prohibits refers to identity of elements in the two
offenses.
36

Next, Braza contends that the long delay that characterized the proceedings for the
determination of probable cause has resulted in the transgression of his constitutional
right to a speedy disposition of the case. According to him, the proceedings have
unquestionably been marred with vexatious, capricious and oppressive delay meriting
the dismissal of Case No. SB-08-CRM-0275. Braza claims that it took the OMB more
than two (2) years to charge him and his co-accused with violation of Section 3(e) in
the second information.
The petitioner's contention is untenable.
Section 16, Article III of the Constitution declares in no uncertain terms that "[A]ll
persons shall have the right to a speedy disposition of their cases before all judicial,
quasi-judicial, or administrative bodies." The right to a speedy disposition of a case is
deemed violated only when the proceedings are attended by vexatious, capricious, and
oppressive delays, or when unjustified postponements of the trial are asked for and
secured, or when without cause or justifiable motive, a long period of time is allowed to
elapse without the party having his case tried.
37
The constitutional guarantee to a
speedy disposition of cases is a relative or flexible concept.
38
It is consistent with delays
and depends upon the circumstances. What the Constitution prohibits are
unreasonable, arbitrary and oppressive delays which render rights nugatory.
39

In Dela Pea v. Sandiganbayan,
40
the Court laid down certain guidelines to determine
whether the right to a speedy disposition has been violated, as follows:
The concept of speedy disposition is relative or flexible. A mere mathematical reckoning
of the time involved is not sufficient. Particular regard must be taken of the facts and
circumstances peculiar to each case. Hence, the doctrinal rule is that in the
determination of whether that right has been violated, the factors that may be
considered and balanced are as follows: (1) the length of the delay; (2) the reasons for
the delay; (3) the assertion or failure to assert such right by the accused; and (4) the
prejudice caused by the delay.
Using the foregoing yardstick, the Court finds that Brazas right to speedy disposition of
the case has not been infringed.
Record shows that the complaint against Braza and twenty-three (23) other
respondents was filed in January 2007 before the PACPO-Visayas. After the extensive
inquiries and data-gathering, the PACPO-Visayas came out with an evaluation report on
March 23, 2007 concluding that the installed lampposts and lighting facilities were
highly overpriced.
41
PACPO-Visayas recommended that the respondents be charged
with violation of Section 3(e) of R.A. No. 3019. Thereafter, the investigatory process
was set in motion before the OMB-Visayas where the respondents filed their respective
counter-affidavits and submitted voluminous documentary evidence to refute the
allegations against them. Owing to the fact that the controversy involved several
transactions and varying modes of participation by the 24 respondents and that their
respective responsibilities had to be established, the OMB-Visayas resolved the
complaint only on January 24, 2008 with the recommendation that the respondents be
indicted for violation of Section 3(g) of R.A. 3019. The Court notes that Braza never
decried the time spent for the preliminary investigation. There was no showing either
that there were unreasonable delays in the proceedings or that the case was kept in
idle slumber.
After the filing of the information, the succeeding events appeared to be part of a valid
and regular course of the judicial proceedings not attended by capricious, oppressive
and vexatious delays. On November 3, 2008, Sandiganbayan ordered the
reinvestigation of the case upon motion of accused Radaza, petitioner Braza and other
accused DPWH officials. In the course of the reinvestigation, the OMB-Visayas furnished
the respondents with the additional documents/papers it secured, especially the
Commission on Audit Report, for their verification, comment and submission of
countervailing evidence.
42
Thereafter, the OMB-Visayas issued its Supplemental
Resolution, dated May 4, 2009, finding probable cause against the accused for violation
of Section 3(e) of R.A. 3019.
Indeed, the delay can hardly be considered as "vexatious, capricious and oppressive."
The complexity of the factual and legal issues, the number of persons charged, the
various pleadings filed, and the volume of documents submitted, prevent this Court
from yielding to the petitioners claim of violation of his right to a speedy disposition of
his case. Rather, it appears that Braza and the other accused were merely afforded
sufficient opportunities to ventilate their respective defenses in the interest of justice,
due process and fair investigation. The re-investigation may have inadvertently
contributed to the further delay of the proceedings but this process cannot be
dispensed with because it was done for the protection of the rights of the accused.
Albeit the conduct of investigation may hold back the progress of the case, the same
was essential so that the rights of the accused will not be compromised or sacrificed at
the altar of expediency.
43
The bare allegation that it took the OMB more than two (2)
years to terminate the investigation and file the necessary information would not
suffice.
44
As earlier stated, mere mathematical reckoning of the time spent for the
investigation is not a sufficient basis to conclude that there was arbitrary and inordinate
delay.
The delay in the determination of probable cause in this case should not be cause for
an unfettered abdication by the anti-graft court of its duty to try and determine the
controversy in Case No. SB-08-CRM-0275. The protection under the right to a speedy
disposition of cases should not operate to deprive the government of its inherent
prerogative in prosecuting criminal cases.
Finally, Braza challenges the sufficiency of the allegations in the second information
because there is no indication of any actual and quantifiable injury suffered by the
government. He then argues that the facts under the second information are
inadequate to support a valid indictment for violation of Section 3(e) of R.A. No. 3019.
The petitioner's simple syllogism must fail.
Section 3 (e) of R.A. No. 3019 states:
Sec. 3. Corrupt practices of public officers In addition to acts or omission of public
officers already penalized by existing law, the following shall constitute corrupt practices
of any public officer and are hereby declared to be unlawful:
(e) Causing any undue injury to any party, including the Government, or giving any
private party any unwarranted benefits, advantage or preference in the discharge of his
official administrative or judicial functions through manifest partiality, evident bad faith
or gross inexcusable negligence. This provision shall apply to officers and employees of
offices or government corporations charged with the grant of licenses or permits or
other concessions.
In a catena of cases, this Court has held that there are two (2) ways by which a public
official violates Section 3(e) of R.A. No. 3019 in the performance of his functions,
namely: (1) by causing undue injury to any party, including the Government; or (2) by
giving any private party any unwarranted benefit, advantage or preference.
45
The
accused may be charged under either mode or under both.1wphi1 The disjunctive
term "or" connotes that either act qualifies as a violation of Section 3(e) of R.A. No.
3019.
46
In other words, the presence of one would suffice for conviction.
It must be emphasized that Braza was indicted for violation of Section 3(e) of R.A. No.
3019 under the second mode. "To be found guilty under the second mode, it suffices
that the accused has given unjustified favor or benefit to another, in the exercise of his
official, administrative and judicial functions."
47
The element of damage is not required
for violation of Section 3(e) under the second mode.
48

In the case at bench, the second information alleged, in substance, that accused public
officers and employees, discharging official or administrative function, together with
Braza, confederated and conspired to give F ABMIK unwarranted benefit or preference
by awarding to it Contract I.D. No. 06H00050 through manifest partiality or evident bad
faith, without the conduct of a public bidding and compliance with the requirement for
qualification contrary to the provisions of R.A. No. 9184 or the Government
Procurement Reform Act. Settled is the rule that private persons, when acting in
conspiracy with public officers, may be indicted and, if found guilty, held liable for the
pertinent offenses under Section 3 of R.A. No. 3 019.
49
Considering that all the
elements of the offense of violation of Sec. 3(e) were alleged in the second information,
the Court finds the same to be sufficient in form and substance to sustain a conviction.
At any rate, the presence or absence of the elements of the crime is evidentiary in
nature and is a matter of defense that may be passed upon after a full-blown trial on
the merits.
50
It is not proper, therefore, to resolve the issue right at the outset without
the benefit of a full-blown trial. This issue requires a fuller ventilation and examination.
All told, this Court finds that the Sandiganbayan did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction, much less did it gravely err, in
denying Braza's motion to quash the information/dismiss Case No. SB-08-CRM-0275.
This ruling, however, is without prejudice to the actual merits of this criminal case as
may be shown during the trial before the court a quo.
WHEREFORE, the petition for certiorari is DENIED. The Sandiganbayan is hereby
DIRECTED to dispose of Case No. SB-08-CRM- 0275 with reasonable dispatch.
SO ORDERED.

********************************ooooooooooooooooo**********************


FIRST DIVISION
G.R. No. 188956 March 20, 2013
ARMED FORCES OF THE PHILIPPINES RETIREMENT AND SEPARATION
BENEFITS SYSTEM, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
D E C I S I O N
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 assailing the Orders dated
February 17, 2009
1
and July 9, 2009
2
of the Regional Trial Court (RTC) of Pasig City,
Branch 68, in Land Registration Case No. N-11517.
The first Order reconsidered and recalled the Decision
3
of the RTC dated April 21, 2008,
which granted the- application for land registration of petitioner Armed Forces of the
Philippines Retirement and Separation Benefits System. The second Order denied the
Motion for Reconsideration filed by the petitioner.
Petitioner was "created under Presidential Decree (P.D.) No. 361,
4
as amended, and
was designed to establish a separate fund to guarantee continuous financial support to
the Armed Forces of the Philippines military retirement system as provided for in
Republic Act No. 340."
5

Petitioner filed an Application for Registration of Title
6
over three parcels of land located
in West Bicutan, Taguig City, before the RTC of Pasig City. The said application was
later docketed as LRC Case No. N-11517 and raffled to Branch 68 of the court a quo.
These three parcels of land constitute a land grant by virtue of Presidential
Proclamation No. 1218, issued by former President Fidel V. Ramos on May 8, 1998.
7

The application was filed by Mr. Honorio S. Azcueta (Mr. Azcueta), the then Executive
Vice President and Chief Operating Officer of the petitioner, who was duly authorized to
do so by the Board of Trustees of the petitioner, as evidenced by a notarized
Secretarys Certificate
8
dated August 18, 2003.
After due posting and publication of the requisite notices, and since no oppositor
registered any oppositions after the petitioner met the jurisdictional requirements, the
court a quo issued an order of general default against the whole world, and the
petitioner was allowed to present evidence ex-parte.
9

The petitioner then presented as its witness, Ms. Alma P. Aban (Ms. Aban), its Vice
President and Head of its Asset Enhancement Office. She testified, inter alia, that:
among her main duties is to ensure that the properties and assets of petitioner,
especially real property, are legally titled and freed of liens and encumbrances; the
subject properties were acquired by the petitioner through a land grant under
Presidential Proclamation No. 1218; prior to Presidential Proclamation No. 1218, the
Republic of the Philippines was in open, continuous, exclusive, notorious, and peaceful
possession and occupation of the subject properties in the concept of an owner to the
exclusion of the world since time immemorial; petitioner, after the Republic of the
Philippines transferred ownership of the subject properties to it, assumed open,
continuous, exclusive, notorious, and peaceful possession and occupation, and
exercised control over them in the concept of owner, and likewise assumed the
obligations of an owner; petitioner has been paying the real estate taxes on the subject
properties; and the subject properties are not mortgaged, encumbered, or tenanted.
10

Subsequently, petitioner submitted its Formal Offer of Evidence,
11
following which, the
court a quo granted the application in a Decision dated April 21, 2008. The dispositive
portion of the said decision reads:
WHEREFORE, finding the Petition meritorious, the Court DECLARES, CONFIRMS AND
ORDERS the registration of AFPRSBS title thereto.
As soon as this Decision shall have become final and after payment of the required
fees, let the corresponding Decree be issued in the name of Armed Forces of the
Philippines Retirement and Separation Benefits System.
Let copies of this Decision be furnished the Office of the Solicitor General, Land
Registration Authority, Land Management Bureau and the Registry of Deeds, Taguig
City, Metro Manila.
SO ORDERED.
12

In response, the Office of the Solicitor General (OSG) filed a Motion for
Reconsideration
13
dated May 12, 2008, wherein it argued that the petitioner failed to
prove that it has personality to own property in its name and the petitioner failed to
show that the witness it presented was duly authorized to appear for and in its behalf.
On June 2, 2008, petitioner filed its Comment/Opposition.
14

On February 17, 2009, the court a quo issued the assailed Order granting the Motion
for Reconsideration of the OSG on the ground that the petitioner failed to prosecute its
case. The dispositive portion of the assailed Order reads:
WHEREFORE, premises considered, the OSGs motion for reconsideration is GRANTED.
The Courts Decision of April 21, 2008 is hereby RECONSIDERED and RECALLED, and a
new one issued DISMISSING this Application for Registration of Title for failure to
prosecute.
SO ORDERED.
15

The Motion for Reconsideration
16
of petitioner was denied by the court a quo in the
other assailed Order
17
dated July 9, 2009. Hence, this petition.
The issue to be resolved in the present case is whether the court a quo acted contrary
to law and jurisprudence when it dismissed petitioners application for land registration
on the ground that petitioner failed to prosecute the subject case.
We answer in the affirmative.
The reason of the court a quo in dismissing petitioners application for land registration
on the ground of failure to prosecute was the lack of authority on the part of Ms. Aban
to testify on behalf of the petitioner.
However, Section 3, Rule 17 of the 1997 Rules of Civil Procedure, as amended, provides
only three instances wherein the Court may dismiss a case for failure to prosecute:
Sec. 3. Dismissal due to fault of plaintiff.If, for no justifiable cause, the plaintiff fails to
appear on the date of the presentation of his evidence in chief on the complaint, or to
prosecute his action for an unreasonable length of time, or to comply with these Rules
or any order of the court, the complaint may be dismissed upon motion of the
defendant or upon the courts own motion, without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court.
Jurisprudence has elucidated on this matter in De Knecht v. CA:
18

An action may be dismissed for failure to prosecute in any of the following instances:
(1) if the plaintiff fails to appear at the time of trial; or (2) if he fails to prosecute the
action for an unreasonable length of time; or (3) if he fails to comply with the Rules of
Court or any order of the court. Once a case is dismissed for failure to prosecute, this
has the effect of an adjudication on the merits and is understood to be with prejudice
to the filing of another action unless otherwise provided in the order of dismissal. In
other words, unless there be a qualification in the order of dismissal that it is without
prejudice, the dismissal should be regarded as an adjudication on the merits and is with
prejudice. (Emphasis supplied.)
Clearly, the court a quos basis for pronouncing that the petitioner failed to prosecute its
case is not among those grounds provided by the Rules. It had no reason to conclude
that the petitioner failed to prosecute its case. First, the petitioner did not fail to appear
at the time of the trial. In fact, the Decision of the RTC dated April 21, 2008 ordering
the registration of petitioners title to the subject lots shows that the petitioner
appeared before the Court and was represented by counsel. Records would also reveal
that the petitioner was able to present its evidence, and as a result, the RTC rendered
judgment in its favor.
Second, the petitioner did not fail to prosecute the subject case considering that it
appeared during trial, presented Ms. Aban, who gave competent testimony as regards
the titling of the subject lots, and the court a quo never held petitioner liable for any
delay in prosecuting the subject case.
Third, a perusal of the records would demonstrate that the petitioner did not fail to
comply with the Rules or any order of the court a quo, as there is no ruling on the part
of the latter to this effect.
Indeed, there was no basis for the court a quos ruling that the petitioner failed to
prosecute the subject case, because none of the grounds provided in the Rules for
dismissing a case due to failure to prosecute is present. That the RTC dismissed the
application for land registration of the petitioner for failure to prosecute after the
petitioner presented all its evidence and after said court has rendered a decision in its
favor, is highly irregular.
At this juncture, it would be appropriate to discuss the basis of the court a quo in
dismissing the petitioners application for land registration for failure to prosecute the
alleged lack of authority of the witness, Ms. Aban, to testify on behalf of the petitioner.
The assailed Order held as follows:
With things now stand, the Court believes that OSG was correct in observing that
indeed the AFPRSBS did not present its duly authorized representative to prosecute this
case. And the records support the observation since AFPRSBS presented only one
witness Mrs. Aban. In view of the foregoing the Court is left without choice than to
grant OSGs motion for reconsideration.
19

However, there is no substantive or procedural rule which requires a witness for a party
to present some form of authorization to testify as a witness for the party presenting
him or her. No law or jurisprudence would support the conclusion that such omission
can be considered as a failure to prosecute on the part of the party presenting such
witness. All that the Rules require of a witness is that the witness possesses all the
qualifications and none of the disqualifications provided therein. Rule 130 of the Rules
on Evidence provides:
SEC. 20. Witnesses; their qualifications.Except as provided in the next succeeding
section, all persons who can perceive, and perceiving, can make known their perception
to others, may be witnesses.
x x x x
Cavili v. Judge Florendo
20
speaks of the disqualifications:
Sections 19 and 20 of Rule 130 provide for specific disqualifications.1wphi1 Section 19
disqualifies those who are mentally incapacitated and children whose tender age or
immaturity renders them incapable of being witnesses. Section 20 provides for
disqualification based on conflicts of interest or on relationship. Section 21 provides for
disqualifications based on privileged communications. Section 15 of Rule 132 may not
be a rule on disqualification of witnesses but it states the grounds when a witness may
be impeached by the party against whom he was called.
x x x The specific enumeration of disqualified witnesses excludes the operation of
causes of disability other than those mentioned in the Rules. It is a maxim of
recognized utility and merit in the construction of statutes that an express exception,
exemption, or saving clause excludes other exceptions. (In Re Estate of Enriquez, 29
Phil. 167) As a general rule, where there are express exceptions these comprise the
only limitations on the operation of a statute and no other exception will be implied.
(Sutherland on Statutory Construction, Fourth Edition, Vol. 2A, p. 90) The Rules should
not be interpreted to include an exception not embodied therein. (Emphasis supplied.)
A reading of the pertinent law and jurisprudence would show that Ms. Aban is qualified
to testify as a witness for the petitioner since she possesses the qualifications of being
able to perceive and being able to make her perceptions known to others. Furthermore,
she possesses none of the disqualifications described above.
The RTC clearly erred in ordering the dismissal of the subject application for land
registration for failure to prosecute because petitioners witness did not possess an
authorization to testify on behalf of petitioner. The court a quo also erred when it
concluded that the subject case was not prosecuted by a duly authorized representative
of the petitioner. The OSG and the court a quo did not question the
Verification/Certification
21
of the application, and neither did they question the authority
of Mr. Azcueta to file the subject application on behalf of the petitioner. Case records
would reveal that the application was signed and filed by Mr. Azcueta in his capacity as
the Executive Vice President and Chief Operating Officer of the petitioner, as authorized
by petitioners Board of Trustees.
22
The authority of Mr. Azcueta to file the subject
application was established by a Secretarys Certificate
23
attached to the said
application. The asseveration that the subject case was not prosecuted by a duly
authorized representative of the petitioner is thus unfounded.
Interestingly enough, the respondent itself agrees with the petitioner that the dismissal
of the subject application by the court a quo on the ground of failure to prosecute due
to lack of authority of the sole witness of the petitioner is unfounded and without legal
basis.
24

WHEREFORE, the petition for review on certiorari is GRANTED. The Orders of the
Regional Trial Court dated February 17, 2009 and July 9, 2009 are REVERSED AND SET
ASIDE. The Decision of the Regional Trial Court dated April 21, 2008, granting the
Application for Registration of Title of the petitioner is hereby REINSTATED and
UPHELD.
No pronouncement as to costs.
SO ORDERED.






FIRST DIVISION
A.C. No. 9514 : April 10, 2013
BERNARD N. JANDOQUILE, Complainant, v.ATTY. QUIRINO P. REVILLA, JR.,
Respondent.
R E S O L U T I O N
VILLARAMA, JR., J.:
Before us is a complaint
1
for disbarment filed by complainant Bernard N. Jandoquile
against respondent Atty. Quirino P. Revilla, Jr.
The Facts of the case are not disputed.
Atty. Revilla, Jr. notarized a complaint-affidavit
2
signed by Heneraline L. Brosas,
Herizalyn Brosas Pedrosa and Elmer L. Alvarado. Heneraline Brosas is a sister of Heizel
Wynda Brosas Revilla, Atty. Revilla, Jr.'s wife. Jandoquile complains that Atty. Revilla,
Jr. is disqualified to perform the notarial act
3
per Section 3( c), Rule IV of the 2004
Rules on Notarial Practice which reads as follows:chanroblesvirtualawlibrary
SEC. 3. Disqualifications. A notary public is disqualified from performing a notarial act if
he:chanroblesvirtualawlibrary
x x x
(c) is a spouse, common-law partner, ancestor, descendant, or relative by affinity or
consanguinity of the principal
4
within the fourth civil degree.
Jandoquile also complains that Atty. Revilla, Jr. did not require the three affiants in the
complaint-affidavit to show their valid identification cards.
In his comment
5
to the disbarment complaint, Atty. Revilla, Jr. did not deny but
admitted Jandoquile's material allegations. The issue, according to Atty. Revilla, Jr., is
whether the single act of notarizing the complaint-affidavit of relatives within the fourth
civil degree of affinity and, at the same time, not requiring them to present valid
identification cards is a ground for disbarment. Atty. Revilla, Jr. submits that his act is
not a ground for disbarment. He also says that he acts as counsel of the three affiants;
thus, he should be considered more as counsel than as a notary public when he
notarized their complaint-affidavit. He did not require the affiants to present valid
identification cards since he knows them personally. Heneraline Brosas and Herizalyn
Brosas Pedrosa are sisters-in-law while Elmer Alvarado is the live-in houseboy of the
Brosas family.
Since the facts are not contested, the Court deems it more prudent to resolve the case
instead of referring it to the Integrated Bar of the Philippines for investigation.
Indeed, Atty. Revilla, Jr. violated the disqualification rule under Section 3(c), Rule IV of
the 2004 Rules on Notarial Practice. We agree with him, however, that his violation is
not a sufficient ground for disbarment.
Atty. Revilla, Jr.'s violation of the aforesaid disqualification rule is beyond dispute. Atty.
Revilla, Jr. readily admitted that he notarized the complaint-affidavit signed by his
relatives within the fourth civil degree of affinity. Section 3(c), Rule IV of the 2004 Rules
on Notarial Practice clearly disqualifies him from notarizing the complaint-affidavit, from
performing the notarial act, since two of the affiants or principals are his relatives within
the fourth civil degree of affinity. Given the clear provision of the disqualification rule, it
behooved upon Atty. Revilla, Jr. to act with prudence and refuse notarizing the
document. We cannot agree with his proposition that we consider him to have acted
more as counsel of the affiants, not as notary public, when he notarized the complaint-
affidavit. The notarial certificate
6
at the bottom of the complaint-affidavit shows his
signature as a notary public, with a notarial commission valid until December 31, 2012.
He cannot therefore claim that he signed it as counsel of the three affiants.
On the second charge, we agree with Atty. Revilla, Jr. that he cannot be held liable. If
the notary public knows the affiants personally, he need not require them to show their
valid identification cards. This rule is supported by the definition of a "jurat" under
Section 6, Rule II of the 2004 Rules on Notarial Practice. A "jurat" refers to an act in
which an individual on a single occasion: (a) appears in person before the notary public
and presents an instrument or document; (b) is personally known to the notary public
or identified by the notary public through competent evidence of identity; (c) signs the
instrument or document in the presence of the notary; and (d) takes an oath or
affirmation before the notary public as to such instrument or document. In this case,
Heneraline Brosas is a sister of Atty. Revilla, Jr.'s wife; Herizalyn Brosas Pedrosa is his
wife's sister-in-law; and Elmer Alvarado is the live-in houseboy of the Brosas family.
Atty. Revilla, Jr. knows the three affiants personally. Thus, he was justified in no longer
requiring them to show valid identification cards. But Atty. Revilla, Jr. is not without
fault for failing to indicate such fact in the "jurat" of the complaint-affidavit. No
statement was included therein that he knows the three affiants personally.
7
Let it be
impressed that Atty. Revilla, Jr. was clearly disqualified to notarize the complaint-
affidavit of his relatives within the fourth civil degree of affinity. While he has a valid
defense as to the second charge, it does not exempt him from liability for violating the
disqualification rule.
As we said, Atty. Revilla, Jr.'s violation of the disqualification rule under Section 3(c),
Rule IV of the 2004 Rules on Notarial Practice is not a sufficient ground to disbar him.
To our mind, Atty. Revilla, Jr. did not commit any deceit, malpractice, gross misconduct
or gross immoral conduct, or any other serious ground for disbarment under Section
27,
8
Rule 138 of the Rules of Court. We recall the case of Maria v. Cortez
9
where we
reprimanded Cortez and disqualified him from being commissioned as notary public for
six months. We were convinced that said punishment, which is less severe than
disbarment, would already suffice as sanction for Cortez's violation. In Cortez, we noted
the prohibition in Section 2(b), Rule IV of the 2004 Rules on Notarial Practice that a
person shall not perform a notarial act if the person involved as signatory to the
instrument or document (1) is not in the notary's presence personally at the time of the
notarization and (2) is not personally known to the notary public or otherwise identified
by the notary public through a competent evidence of identity. Cortez had notarized a
special power of attorney without having the alleged signatories appear before him. In
imposing the less severe punishment, we were mindful that removal from the Bar
should not really be decreed when any punishment less severe such as reprimand,
temporary suspension or fine would accomplish the end desired.
Considering the attendant circumstances and the single violation committed by Atty.
Revilla, Jr., we are in agreement that a punishment less severe than disbarment would
suffice.
WHEREFORE, respondent Atty. Quirino P. Revilla, Jr., is REPRIMANDED and
DISQUALIFIED from being commissioned as a notary public, or from performing any
notarial act if he is presently commissioned as a notary public, for a period of three (3)
months. Atty. Revilla, Jr. is further DIRECTED to INFORM the Court, through an
affidavit, once the period of his disqualification has lapsed.
SO ORDERED.

********************************ooooooooooooooo************************

FIRST DIVISION
G.R. NO. 158361 : April 10, 2013
INTERNATIONAL HOTEL CORPORATION, Petitioner, v.FRANCISCO B. JOAQUIN,
JR. and RAFAEL SUAREZ, Respondents.
D E C I S I O N
BERSAMIN, J.:
To avoid unjust enrichment to a party from resulting out of a substantially performed
contract, the principle of quantum meruit may be used to determine his compensation
in the absence of a written agreement for that purpose. The principle of quantum
meruit justifies the payment of the reasonable value of the services rendered by him.
The Case
Under review is the decision the Court of Appeals (CA) promulgated on November 8,
2002,
1
disposing:chanroblesvirtualawlibrary
WHEREFORE, premises considered, the decision dated August 26, 1993 of the Regional
Trial Court, Branch 13, Manila in Civil Case No. R-82-2434 is AFFIRMED with
Modification as to the amounts awarded as follows: defendant-appellant IHC is ordered
to pay plaintiff-appellant Joaquin P700,000.00 and plaintiff-appellant Suarez
P200,000.00, both to be paid in cash.
SO ORDERED.
Antecedents
On February 1, 1969, respondent Francisco B. Joaquin, Jr. submitted a proposal to the
Board of Directors of the International Hotel Corporation (IHC) for him to render
technical assistance in securing a foreign loan for the construction of a hotel, to be
guaranteed by the Development Bank of the Philippines (DBP).
2
The proposal
encompassed nine phases, namely: (1) the preparation of a new project study; (2) the
settlement of the unregistered mortgage prior to the submission of the application for
guaranty for processing by DBP; (3) the preparation of papers necessary to the
application for guaranty; (4) the securing of a foreign financier for the project; (5) the
securing of the approval of the DBP Board of Governors; (6) the actual follow up of the
application with DBP
3
; (7) the overall coordination in implementing the projections of
the project study; (8) the preparation of the staff for actual hotel operations; and (9)
the actual hotel operations.
4
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The IHC Board of Directors approved phase one to phase six of the proposal during the
special board meeting on February 11, 1969, and earmarked P2,000,000.00 for the
project.
5
Anent the financing, IHC applied with DBP for a foreign loan guaranty. DBP
processed the application,
6
and approved it on October 24, 1969 subject to several
conditions.
7
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On July 11, 1969, shortly after submitting the application to DBP, Joaquin wrote to IHC
to request the payment of his fees in the amount of P500,000.00 for the services that
he had provided and would be providing to IHC in relation to the hotel project that
were outside the scope of the technical proposal. Joaquin intimated his amenability to
receive shares of stock instead of cash in view of IHC's financial
situation.
8
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On July 11, 1969, the stockholders of IHC met and granted Joaquin's request, allowing
the payment for both Joaquin and Rafael Suarez for their services in implementing the
proposal.
9
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On June 20, 1970, Joaquin presented to the IHC Board of Directors the results of his
negotiations with potential foreign financiers. He narrowed the financiers to Roger Dunn
& Company and Materials Handling Corporation. He recommended that the Board of
Directors consider Materials Handling Corporation based on the more beneficial terms it
had offered. His recommendation was accepted.
10
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Negotiations with Materials Handling Corporation and, later on, with its principal, Barnes
International (Barnes), ensued. While the negotiations with Barnes were ongoing,
Joaquin and Jose Valero, the Executive Director of IHC, met with another financier, the
Weston International Corporation (Weston), to explore possible financing.
11
When
Barnes failed to deliver the needed loan, IHC informed DBP that it would submit Weston
for DBP's consideration.
12
As a result, DBP cancelled its previous guaranty through a
letter dated December 6, 1971.
13
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On December 13, 1971, IHC entered into an agreement with Weston, and
communicated this development to DBP on June 26, 1972. However, DBP denied the
application for guaranty for failure to comply with the conditions contained in its
November 12, 1971 letter.
14
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Due to Joaquin's failure to secure the needed loan, IHC, through its President Bautista,
canceled the 17,000 shares of stock previously issued to Joaquin and Suarez as
payment for their services. The latter requested a reconsideration of the cancellation,
but their request was rejected.
Consequently, Joaquin and Suarez commenced this action for specific performance,
annulment, damages and injunction by a complaint dated December 6, 1973 in the
Regional Trial Court in Manila (RTC), impleading IHC and the members of its Board of
Directors, namely, Felix Angelo Bautista, Sergio O. Rustia, Ephraim G. Gochangco, Mario
B. Julian, Benjamin J. Bautista, Basilio L. Lirag, Danilo R. Lacerna and Hermenegildo R.
Reyes.
15
The complaint alleged that the cancellation of the shares had been illegal, and
had deprived them of their right to participate in the meetings and elections held by
IHC; that Barnes had been recommended by IHC President Bautista, not by Joaquin;
that they had failed to meet their obligation because President Bautista and his son had
intervened and negotiated with Barnes instead of Weston; that DBP had canceled the
guaranty because Barnes had failed to release the loan; and that IHC had agreed to
compensate their services with 17,000 shares of the common stock plus cash of
P1,000,000.00.
16
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IHC, together with Felix Angelo Bautista, Sergio O. Rustia, Mario B. Julian and Benjamin
J. Bautista, filed an answer claiming that the shares issued to Joaquin and Suarez as
compensation for their "past and future services" had been issued in violation of Section
16 of the Corporation Code; that Joaquin and Suarez had not provided a foreign
financier acceptable to DBP; and that they had already received P96,350.00 as payment
for their services.
17
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On their part, Lirag and Lacerna denied any knowledge of or participation in the
cancellation of the shares.
18
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Similarly, Gochangco and Reyes denied any knowledge of or participation in the
cancellation of the shares, and clarified that they were not directors of IHC.
19
In the
course of the proceedings, Reyes died and was substituted by Consorcia P. Reyes, the
administratrix of his estate.
20
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Ruling of the RTC
Under its decision rendered on August 26, 1993, the RTC held IHC liable pursuant to
the second paragraph of Article 1284 of the Civil Code, disposing
thusly:chanroblesvirtualawlibrary
WHEREFORE, in the light of the above facts, law and jurisprudence, the Court hereby
orders the defendant International Hotel Corporation to pay plaintiff Francisco B.
Joaquin, the amount of Two Hundred Thousand Pesos (P200,000.00) and to pay
plaintiff Rafael Suarez the amount of Fifty Thousand Pesos (P50,000.00); that the said
defendant IHC likewise pay the co-plaintiffs, attorney's fees of P20,000.00, and costs of
suit.
IT IS SO ORDERED.
21
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The RTC found that Joaquin and Suarez had failed to meet their obligations when IHC
had chosen to negotiate with Barnes rather than with Weston, the financier that
Joaquin had recommended; and that the cancellation of the shares of stock had been
proper under Section 68 of the Corporation Code, which allowed such transfer of shares
to compensate only past services, not future ones.
Ruling of the CA
Both parties appealed.
22
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Joaquin and Suarez assigned the following errors, to wit:chanroblesvirtualawlibrary
DESPITE HAVING CORRECTLY ACKNOWLEDGED THAT PLAINTIFFS-APPELLANTS FULLY
PERFORMED ALL THAT WAS INCUMBENT UPON THEM, THE HONORABLE JUDGE
ERRED IN NOT ORDERING THAT:chanroblesvirtualawlibrary
A. DEFENDANTS WERE UNJUSTIFIED IN CANCELLING THE SHARES OF STOCK
PREVIOUSLY ISSUED TO PLAINTIFFS-APPELLANTS; AND
B. DEFENDANTS PAY PLAINTIFFS-APPELLANTS TWO MILLION SEVEN HUNDRED PESOS
(sic) (P2,700,000.00), INCLUDING INTEREST THEREON FROM 1973, REPRESENTING
THE TOTAL OBLIGATION DUE PLAINTIFFS-APPELLANTS.
23
chanroblesvirtualawlibrary
On the other hand, IHC attributed errors to the RTC, as
follows:chanroblesvirtualawlibrary
I.
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLANTS HAVE
NOTBEEN COMPLETELY PAID FOR THEIR SERVICES, AND IN ORDERING THE
DEFENDANT-APPELLANT TO PAY TWO HUNDRED THOUSAND PESOS (P200,000.00)
AND FIFTY THOUSAND PESOS (P50,000.00) TO PLAINTIFFS-APPELLANTS FRANCISCO
B. JOAQUIN AND RAFAEL SUAREZ, RESPECTIVELY.
II.
THE LOWER COURT ERRED IN AWARDING PLAINTIFFS-APPELLANTS ATTORNEY'S
FEES AND COSTS OF SUIT.
24
chanroblesvirtualawlibrary
In its questioned decision promulgated on November 8, 2002, the CA concurred with
the RTC, upholding IHC's liability under Article 1186 of the Civil Code. It ruled that in
the context of Article 1234 of the Civil Code, Joaquin had substantially performed his
obligations and had become entitled to be paid for his services; and that the issuance of
the shares of stock was ultra vires for having been issued as consideration for future
services.
Anent how much was due to Joaquin and Suarez, the CA explained
thusly:chanroblesvirtualawlibrary
This Court does not subscribe to plaintiffs-appellants' view that defendant-appellant IHC
agreed to pay them P2,000,000.00. Plaintiff-appellant Joaquin's letter to defendant-
appellee F.A. Bautista, quoting defendant-appellant IHC's board resolutions which
supposedly authorized the payment of such amount cannot be sustained. The
resolutions are quite clear and when taken together show that said amount was only
the "estimated maximum expenses" which defendant-appellant IHC expected to incur in
accomplishing phases 1 to 6, not exclusively to plaintiffs-appellants' compensation.This
conclusion finds support in an unnumbered board resolution of defendant-appellant IHC
dated July 11, 1969:chanroblesvirtualawlibrary
"Incidentally, it was also taken up the necessity of giving the Technical Group a portion
of the compensation that was authorized by this corporation in its Resolution of
February 11, 1969 considering that the assistance so far given the corporation by said
Technical Group in continuing our project with the DBP and its request for guaranty for
a foreign loan is 70% completed leaving only some details which are now being
processed. It is estimated that P400,000.00 worth of Common Stock would be
reasonable for the present accomplishments and to this effect, the President is
authorized to issue the same in the name of the Technical Group, as
follows:chanroblesvirtualawlibrary
P200,000.00 in common stock to Rafael Suarez, as associate in the Technical Group,
and P200,000.00 in common stock to Francisco G. Joaquin, Jr., also a member of the
Technical Group.
It is apparent that not all of the P2,000,000.00 was allocated exclusively to compensate
plaintiffs-appellants. Rather, it was intended to fund the whole undertaking including
their compensation. On the same date, defendant-appellant IHC also authorized its
president to pay-appellant Joaquin P500,000.00 either in cash or in stock or both.
The amount awarded by the lower court was therefore less than what defendant-
appellant IHC agreed to pay plaintiffs-appellants. While this Court cannot decree that
the cancelled shares be restored, for they are without a doubt null and void, still and
all, defendant-appellant IHC cannot now put up its own ultra vires act as an excuse to
escape obligation to plaintiffs-appellants. Instead of shares of stock, defendant-
appellant IHC is ordered to pay plaintiff-appellant Joaquin a total of P700,000.00 and
plaintiff-appellant Suarez P200,000.00, both to be paid in cash.
Although the lower court failed to explain why it was granting the attorney's fees, this
Court nonetheless finds its award proper given defendant-appellant IHC's
actions.
25
chanroblesvirtualawlibrary
Issues
In this appeal, the IHC raises as issues for our consideration and resolution the
following:chanroblesvirtualawlibrary
I
WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN AWARDING
COMPENSATION AND EVEN MODIFYING THE PAYMENT TO HEREIN RESPONDENTS
DESPITE NON-FULFILLMENT OF THEIR OBLIGATION TO HEREIN PETITIONER
II
WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN AWARDING ATTORNEY'S
FEES TO RESPONDENTS
26
chanroblesvirtualawlibrary
IHC maintains that Article 1186 of the Civil Code was erroneously applied; that it had no
intention of preventing Joaquin from complying with his obligations when it adopted his
recommendation to negotiate with Barnes; that Article 1234 of the Civil Code applied
only if there was a merely slight deviation from the obligation, and the omission or
defect was technical and unimportant; that substantial compliance was unacceptable
because the foreign loan was material and was, in fact, the ultimate goal of its contract
with Joaquin and Suarez; that because the obligation was indivisible and subject to a
suspensive condition, Article 1181 of the Civil Code
27
applied, under which a partial
performance was equivalent to non-performance; and that the award of attorney's fees
should be deleted for lack of legal and factual bases.
On the part of respondents, only Joaquin filed a comment,
28
arguing that the petition
was fatally defective for raising questions of fact; that the obligation was divisible and
capable of partial performance; and that the suspensive condition was deemed fulfilled
through IHC's own actions.
29
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Ruling
We deny the petition for review on certiorari subject to the ensuing disquisitions.
1. IHC raises questions of law
We first consider and resolve whether IHC's petition improperly raised questions of fact.
A question of law exists when there is doubt as to what the law is on a certain state of
facts, but, in contrast, a question of fact exists when the doubt arises as to the truth or
falsity of the facts alleged. A question of law does not involve an examination of the
probative value of the evidence presented by the litigants or by any of them; the
resolution of the issue must rest solely on what the law provides on the given set of
circumstances.
30
When there is no dispute as to the facts, the question of whether or
not the conclusion drawn from the facts is correct is a question of
law.
31
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Considering that what IHC seeks to review is the CA's application of the law on the facts
presented therein, there is no doubt that IHC raises questions of law. The basic issue
posed here is whether the conclusions drawn by the CA were correct under the
pertinent laws.
2. Article 1186 and Article 1234 of the Civil Code cannot be the source of IHC's
obligation to pay respondents IHC argues that it should not be held liable because: (a)
it was Joaquin who had recommended Barnes; and (b) IHC's negotiation with Barnes
had been neither intentional nor willfully intended to prevent Joaquin from complying
with his obligations.
IHC's argument is meritorious.
Article 1186 of the Civil Code reads:chanroblesvirtualawlibrary
Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily
prevents its fulfillment.
This provision refers to the constructive fulfillment of a suspensive condition,
32
whose
application calls for two requisites, namely: (a) the intent of the obligor to prevent the
fulfillment of the condition, and (b) the actual prevention of the fulfillment. Mere
intention of the debtor to prevent the happening of the condition, or to place ineffective
obstacles to its compliance, without actually preventing the fulfillment, is
insufficient.
33
chanroblesvirtualawlibrary
The error lies in the CA's failure to determine IHC's intent to pre-empt Joaquin from
meeting his obligations. The June 20, 1970 minutes of IHC's special board meeting
discloses that Joaquin impressed upon the members of the Board that Materials
Handling was offering more favorable terms for IHC, to wit:chanroblesvirtualawlibrary
x x x
At the meeting all the members of the Board of Directors of the International Hotel
Corporation were present with the exception of Directors Benjamin J. Bautista and
Sergio O. Rustia who asked to be excused because of previous engagements. In that
meeting, the President called on Mr. Francisco G. Joaquin, Jr. to explain the different
negotiations he had conducted relative to obtaining the needed financing for the hotel
project in keeping with the authority given to him in a resolution approved by the Board
of Directors.
Mr. Joaquin presently explained that he contacted several local and foreign financiers
through different brokers and after examining the different offers he narrowed down his
choice to two (2), to wit: the foreign financier recommended by George Wright of the
Roger Dunn & Company and the offer made by the Materials Handling Corporation.
After explaining the advantages and disadvantages to our corporation of the two (2)
offers specifically with regard to the terms and repayment of the loan and the rate of
interest requested by them, he concluded that the offer made by the Materials Handling
Corporation is much more advantageous because the terms and conditions of payment
as well as the rate of interest are much more reasonable and would be much less
onerous to our corporation. However, he explained that the corporation accepted, in
principle, the offer of Roger Dunn, per the corporation's telegrams to Mr. Rudolph Meir
of the Private Bank of Zurich, Switzerland, and until such time as the corporation's
negotiations with Roger Dunn is terminated, we are committed, on one way or the
other, to their financing.
It was decided by the Directors that, should the negotiations with Roger Dunn
materialize, at the same time as the offer of Materials Handling Corporation, that the
funds committed by Roger Dunn may be diverted to other borrowers of the
Development Bank of the Philippines. With this condition, Director Joaquin showed the
advantages of the offer of Materials Handling Corporation. Mr. Joaquin also informed
the corporation that, as of this date, the bank confirmation of Roger Dunn & Company
has not been received. In view of the fact that the corporation is racing against time in
securing its financing, he recommended that the corporation entertain other offers.
After a brief exchange of views on the part of the Directors present and after hearing
the clarification and explanation made by Mr. C. M. Javier who was present and who
represented the Materials Handling Corporation, the Directors present approved
unanimously the recommendation of Mr. Joaquin to entertain the offer of Materials
Handling Corporation.
34
chanroblesvirtualawlibrary
Evidently, IHC only relied on the opinion of its consultant in deciding to transact with
Materials Handling and, later on, with Barnes. In negotiating with Barnes, IHC had no
intention, willful or otherwise, to prevent Joaquin and Suarez from meeting their
undertaking. Such absence of any intention negated the basis for the CA's reliance on
Article 1186 of the Civil Code.
Nor do we agree with the CA's upholding of IHC's liability by virtue of Joaquin and
Suarez's substantial performance. In so ruling, the CA applied Article 1234 of the Civil
Code, which states:chanroblesvirtualawlibrary
Article 1234. If the obligation has been substantially performed in good faith, the
obligor may recover as though there had been a strict and complete fulfillment, less
damages suffered by the obligee.
It is well to note that Article 1234 applies only when an obligor admits breaching the
contract
35
after honestly and faithfully performing all the material elements thereof
except for some technical aspects that cause no serious harm to the obligee.
36
IHC
correctly submits that the provision refers to an omission or deviation that is slight, or
technical and unimportant, and does not affect the real purpose of the contract.
Tolentino explains the character of the obligor's breach under Article 1234 in the
following manner, to wit:chanroblesvirtualawlibrary
In order that there may be substantial performance of an obligation, there must have
been an attempt in good faith to perform, without any willful or intentional departure
therefrom. The deviation from the obligation must be slight, and the omission or defect
must be technical and unimportant, and must not pervade the whole or be so material
that the object which the parties intended to accomplish in a particular manner is not
attained. The non-performance of a material part of a contract will prevent the
performance from amounting to a substantial compliance.
The party claiming substantial performance must show that he has attempted in good
faith to perform his contract, but has through oversight, misunderstanding or any
excusable neglect failed to completely perform in certain negligible respects, for which
the other party may be adequately indemnified by an allowance and deduction from the
contract price or by an award of damages. But a party who knowingly and wilfully fails
to perform his contract in any respect, or omits to perform a material part of it, cannot
be permitted, under the protection of this rule, to compel the other party, and the trend
of the more recent decisions is to hold that the percentage of omitted or irregular
performance may in and of itself be sufficient to show that there had not been a
substantial performance.
37
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By reason of the inconsequential nature of the breach or omission, the law deems the
performance as substantial, making it the obligee's duty to pay.
38
The compulsion of
payment is predicated on the substantial benefit derived by the obligee from the partial
performance. Although compelled to pay, the obligee is nonetheless entitled to an
allowance for the sum required to remedy omissions or defects and to complete the
work agreed upon.
39
chanroblesvirtualawlibrary
Conversely, the principle of substantial performance is inappropriate when the
incomplete performance constitutes a material breach of the contract. A contractual
breach is material if it will adversely affect the nature of the obligation that the obligor
promised to deliver, the benefits that the obligee expects to receive after full
compliance, and the extent that the non-performance defeated the purposes of the
contract.
40
Accordingly, for the principle embodied in Article 1234 to apply, the failure of
Joaquin and Suarez to comply with their commitment should not defeat the ultimate
purpose of the contract.
The primary objective of the parties in entering into the services agreement was to
obtain a foreign loan to finance the construction of IHC's hotel project. This objective
could be inferred from IHC's approval of phase 1 to phase 6 of the proposal. Phase 1
and phase 2, respectively the preparation of a new project study and the settlement of
the unregistered mortgage, would pave the way for Joaquin and Suarez to render
assistance to IHC in applying for the DBP guaranty and thereafter to look for an able
and willing foreign financial institution acceptable to DBP. All the steps that Joaquin and
Suarez undertook to accomplish had a single objective to secure a loan to fund the
construction and eventual operations of the hotel of IHC. In that regard, Joaquin
himself admitted that his assistance was specifically sought to seek financing for IHC's
hotel project.
41
chanroblesvirtualawlibrary
Needless to say, finding the foreign financier that DBP would guarantee was the
essence of the parties' contract, so that the failure to completely satisfy such obligation
could not be characterized as slight and unimportant as to have resulted in Joaquin and
Suarez's substantial performance that consequentially benefitted IHC. Whatever
benefits IHC gained from their services could only be minimal, and were even probably
outweighed by whatever losses IHC suffered from the delayed construction of its hotel.
Consequently, Article 1234 did not apply.
3. IHC is nonetheless liable to pay under the rule on constructive fulfillment
of a mixed conditional obligation
Notwithstanding the inapplicability of Article 1186 and Article 1234 of the Civil Code,
IHC was liable based on the nature of the obligation.
Considering that the agreement between the parties was not circumscribed by a
definite period, its termination was subject to a condition the happening of a future and
uncertain event.
42
The prevailing rule in conditional obligations is that the acquisition of
rights, as well as the extinguishment or loss of those already acquired, shall depend
upon the happening of the event that constitutes the
condition.
43
chanroblesvirtualawlibrary
To recall, both the RTC and the CA held that Joaquin and Suarez's obligation was
subject to the suspensive condition of successfully securing a foreign loan guaranteed
by DBP. IHC agrees with both lower courts, and even argues that the obligation with a
suspensive condition did not arise when the event or occurrence did not happen. In
that instance, partial performance of the contract subject to the suspensive condition
was tantamount to no performance at all. As such, the respondents were not entitled to
any compensation.
We have to disagree with IHC's argument.
To secure a DBP-guaranteed foreign loan did not solely depend on the diligence or the
sole will of the respondents because it required the action and discretion of third
persons an able and willing foreign financial institution to provide the needed funds,
and the DBP Board of Governors to guarantee the loan. Such third persons could not be
legally compelled to act in a manner favorable to IHC. There is no question that when
the fulfillment of a condition is dependent partly on the will of one of the contracting
parties,
44
or of the obligor, and partly on chance, hazard or the will of a third person,
the obligation is mixed.
45
The existing rule in a mixed conditional obligation is that when
the condition was not fulfilled but the obligor did all in his power to comply with the
obligation, the condition should be deemed satisfied.
46
chanroblesvirtualawlibrary
Considering that the respondents were able to secure an agreement with Weston, and
subsequently tried to reverse the prior cancellation of the guaranty by DBP, we rule that
they thereby constructively fulfilled their obligation.
4. Quantum meruit should apply in the absence of an express agreement on the fees
The next issue to resolve is the amount of the fees that IHC should pay to Joaquin and
Suarez.
Joaquin claimed that aside from the approved P2,000,000.00 fee to implement phase 1
to phase 6, the IHC Board of Directors had approved an additional P500,000.00 as
payment for his services. The RTC declared that he and Suarez were entitled to
P200,000.00 each, but the CA revised the amounts to P700,000.00 for Joaquin and
P200,000.00 for Suarez.
Anent the P2,000,000.00, the CA rightly concluded that the full amount of
P2,000,000.00 could not be awarded to respondents because such amount was not
allocated exclusively to compensate respondents, but was intended to be the estimated
maximum to fund the expenses in undertaking phase 6 of the scope of services. Its
conclusion was unquestionably borne out by the minutes of the February 11, 1969
meeting, viz:chanroblesvirtualawlibrary
x x x
II
The preparation of the necessary papers for the DBP including the preparation of the
application, the presentation of the mechanics of financing, the actual follow up with
the different departments of the DBP which includes the explanation of the feasibility
studies up to the approval of the loan, conditioned on the DBP's acceptance of the
project as feasible. The estimated expenses for this particular phase would be
contingent, i.e. upon DBP's approval of the plan now being studied and prepared, is
somewhere around P2,000,000.00.
After a brief discussion on the matter, the Board on motion duly made and seconded,
unanimously adopted a resolution of the following tenor:chanroblesvirtualawlibrary
RESOLUTION NO. ______
(Series of 1969)
"RESOLVED, as it is hereby RESOLVED, that if the Reparations allocation and the plan
being negotiated with the DBP is realized the estimated maximum expenses of
P2,000,000.00 for this phase is hereby authorized subject to the sound discretion of the
committee composed of Justice Felix Angelo Bautista, Jose N. Valero and Ephraim G.
Gochangco."
47
(Emphasis supplied)
Joaquin's claim for the additional sum of P500,000.00 was similarly without factual and
legal bases. He had requested the payment of that amount to cover services rendered
and still to be rendered to IHC separately from those covered by the first six phases of
the scope of work. However, there is no reason to hold IHC liable for that amount due
to his failure to present sufficient proof of the services rendered towards that end.
Furthermore, his July 11, 1969 letter revealed that the additional services that he had
supposedly rendered were identical to those enumerated in the technical proposal,
thus:chanroblesvirtualawlibrary
The Board of Directors
International Hotel Corporation
Thru: Justice Felix Angelo Bautista
President & Chairman of the Board
Gentlemen:chanroblesvirtualawlibrary
I have the honor to request this Body for its deliberation and action on the fees for my
services rendered and to be rendered to the hotel project and to the corporation. These
fees are separate from the fees you have approved in your previous Board Resolution,
since my fees are separate. I realize the position of the corporation at present, in that it
is not in a financial position to pay my services in cash, therefore, I am requesting this
Body to consider payment of my fees even in the form of shares of stock, as you have
done to the other technical men and for other services rendered to the corporation by
other people.
Inasmuch as my fees are contingent on the successful implementation of this project, I
request that my fees be based on a percentage of the total project cost. The fees which
I consider reasonable for the services that I have rendered to the project up to the
completion of its construction is P500,000.00. I believe said amount is reasonable since
this is approximately only of 1% of the total project cost.
So far, I have accomplished Phases 1-5 of my report dated February 1, 1969 and which
you authorized us to do under Board Resolution of February 11, 1969. It is only Phase 6
which now remains to be implemented. For my appointment as Consultant dated May
12, 1969 and the Board Resolution dated June 23, 1969 wherein I was appointed to the
Technical Committee, it now follows that I have been also authorized to implement part
of Phases 7 & 8.
A brief summary of my accomplished work has been as
follows:chanroblesvirtualawlibrary
1. I have revised and made the new Project Study of your hotel project, making it
bankable and feasible.
2. I have reduced the total cost of your project by approximately P24,735,000.00.
3. I have seen to it that a registered mortgage with the Reparations Commission did not
affect the application with the IBP for approval to processing.
4. I have prepared the application papers acceptable to the DBP by means of an
advance analysis and the presentation of the financial mechanics, which was accepted
by the DBP.
5. I have presented the financial mechanics of the loan wherein the requirement of the
DBP for an additional P19,000,000.00 in equity from the corporation became
unnecessary.
6. The explanation of the financial mechanics and the justification of this project was
instrumental in changing the original recommendation of the Investment Banking
Department of the DBP, which recommended disapproval of this application, to the
present recommendation of the Real Estate Department which is for the approval of this
project for proceeding.
7. I have submitted to you several offers already of foreign financiers which are in your
files. We are presently arranging the said financiers to confirm their funds to the DBP
for our project,
8. We have secured the approval of the DBP to process the loan application of this
corporation as per its letter July 2, 1969.
9. We have performed other services for the corporation which led to the cooperation
and understanding of the different factions of this corporation.
I have rendered services to your corporation for the past 6 months with no clear
understanding as to the compensation of my services. All I have drawn from the
corporation is the amount of P500.00 dated May 12, 1969 and personal payment
advanced by Justice Felix Angelo Bautista in the amount of P1,000.00.
I am, therefore, requesting this Body for their approval of my fees. I have shown my
good faith and willingness to render services to your corporation which is evidenced by
my continued services in the past 6 months as well as the accomplishments above
mentioned. I believe that the final completion of this hotel, at least for the processing of
the DBP up to the completion of the construction, will take approximately another 2
years. In view of the above, I again reiterate my request for your approval of my fees.
When the corporation is in a better financial position, I will request for a withdrawal of a
monthly allowance, said amount to be determined by this Body.
Very truly yours,
(Sgd.)
Francisco G., Joaquin, Jr.
48

(Emphasis supplied)
Joaquin could not even rest his claim on the approval by IHC's Board of Directors. The
approval apparently arose from the confusion between the supposedly separate
services that Joaquin had rendered and those to be done under the technical proposal.
The minutes of the July 11, 1969 board meeting (when the Board of Directors allowed
the payment for Joaquin's past services and for the 70% project completion by the
technical group) showed as follows:chanroblesvirtualawlibrary
III
The Third order of business is the compensation of Mr. Francisco G. Joaquin, Jr. for his
services in the corporation.
After a brief discussion that ensued, upon motion duly made and seconded, the
stockholders unanimously approved a resolution of the following
tenor:chanroblesvirtualawlibrary
RESOLUTION NO. ___
(Series of 1969)
"RESOLVED that Mr. Francisco G. Joaquin, Jr. be granted a compensation in the amount
of Five Hundred Thousand (P500,000.00) Pesos for his past services and services still to
be rendered in the future to the corporation up to the completion of the Project. The
President is given full discretion to discuss with Mr. Joaquin the manner of payment of
said compensation, authorizing him to pay part in stock and part in cash."
Incidentally, it was also taken up the necessity of giving the Technical Group a portion
of the compensation that was authorized by this corporation in its Resolution of
February 11, 1969 considering that the assistance so far given the corporation by said
Technical Group in continuing our project with the DBP and its request for guaranty for
a foreign loan is 70% completed leaving only some details which are now being
processed. It is estimated that P400,000.00 worth of Common Stock would be
reasonable for the present accomplishments and to this effect, the President is
authorized to issue the same in the name of the Technical Group, as
follows:chanroblesvirtualawlibrary
P200,000.00 in Common Stock to Rafael Suarez, an associate in the Technical Group,
and P200,000.00 in Common stock to Francisco G. Joaquin, Jr., also a member of the
Technical Group.
49
chanroblesvirtualawlibrary
Lastly, the amount purportedly included services still to be rendered that supposedly
extended until the completion of the construction of the hotel. It is basic, however, that
in obligations to do, there can be no payment unless the obligation has been completely
rendered.
50
chanroblesvirtualawlibrary
It is notable that the confusion on the amounts of compensation arose from the parties'
inability to agree on the fees that respondents should receive. Considering the absence
of an agreement, and in view of respondents' constructive fulfillment of their obligation,
the Court has to apply the principle of quantum meruit in determining how much was
still due and owing to respondents. Under the principle of quantum meruit, a contractor
is allowed to recover the reasonable value of the services rendered despite the lack of a
written contract.
51
The measure of recovery under the principle should relate to the
reasonable value of the services performed.
52
The principle prevents undue enrichment
based on the equitable postulate that it is unjust for a person to retain any benefit
without paying for it. Being predicated on equity, the principle should only be applied if
no express contract was entered into, and no specific statutory provision was
applicable.
53
chanroblesvirtualawlibrary
Under the established circumstances, we deem the total amount of P200,000.00 to be
reasonable compensation for respondents' services under the principle of quantum
meruit.
Finally, we sustain IHC's position that the grant of attorney's fees lacked factual or legal
basis. Attorney's fees are not awarded every time a party prevails in a suit because of
the policy that no premium should be placed on the right to litigate. There should be
factual or legal support in the records before the award of such fees is sustained. It is
not enough justification for the award simply because respondents were compelled to
protect their rights.
54
chanroblesvirtualawlibrary
ACCORDINGLY, the Court DENIES the petition for review on certiorari; and AFFIRMS
the decision of the Court of Appeals promulgated on November 8, 2002 in C.A.-G.R.
NO. 47094 subject to the MODIFICATIONS that: (a) International Hotel Corporation is
ordered to. pay Francisco G. Joaquin, Jr. and Rafael Suarez P100,000.00 each as
compensation for their services, and (b) the award of P20,000.00 as attorney's fees is
deleted.
No costs of suit.
SO ORDERED.



*********************************oooooooooooooooo**********************

EN BANC
G.R. NO. 174788 : April 11, 2013
THE SPECIAL AUDIT TEAM, COMMISSION ON AUDIT, Petitioners, v.COURT OF
APPEALS and GOVERNMENT SERVICE INSURANCE SYSTEM, Respondents.
D E C I S I O N
SERENO, C.J.:
This is a Petition for Certiorari and Prohibition
1
filed on 10 November 2006, seeking to
set aside two Resolutions of the Court of Appeals (CA) of CA-G .R. SP No. 90484, dated
9 August 2006
2
and 23 September 2005,
3
respectively, and to prohibit the CA from
proceeding with CA-G.R. SP No. 90484.
Respondent Government Service Insurance System (GSIS) filed a Petition for Prohibition
with the CA dated 18 July 2005 against petitioner Special Audit Team (SAT) of the
Commission on Audit (COA) with a prayer for the issuance of a temporary restraining
order (TRO), a writ of preliminary prohibitory injunction, and a writ of prohibition.
4

Subsequently, GSIS also submitted a Manifestation and Motion dated 21 July 2005
detailing the urgency of restraining the SAT.
5
The CA issued a Resolution on 22 July
2005, directing petitioner SAT to submit the latter's comment, to be treated as an
answer.
6
Additionally, the CA granted the prayer of GSIS for the issuance of a TRO
effective sixty (60) days from notice.
After requiring the submission of memoranda, CA issued the assailed Resolution dated
23 September 2005 in CA-G.R. SP No. 90484, granting the prayer for the issuance of a
writ of preliminary injunction upon the posting of an injunction bond.
7
The Office of the
Solicitor General (OSG) filed a Motion for Reconsideration (MR) and a Comment on the
petition dated 10 October 2005, after it was notified of the case, as the SAT had been
represented in the interim by one of the team members instead of the OSG.
8
The MR
was denied through a Resolution of the CA on 9 August
2006.
9
chanroblesvirtualawlibrary
The present Petition seeks to nullify both the 23 September 2005 and the 9 August
2006 CA Resolutions and to prohibit the CA from proceeding to decide the case.
ANTECEDENT FACTS
COA created the SAT under Legal and Adjudication Office (LAO) Order No. 2004-093,
which was issued by COA Assistant Commissioner and General Counsel Raquel R.
Ramirez-Habitan. Tasked to conduct a special audit of specific GSIS transactions, the
SAT had the avowed purpose of conducting a special audit of those transactions for the
years 2000 to 2004.
10
Accordingly, the SAT immediately initiated a conference with
GSIS management and requested copies of pertinent auditable documents, which the
latter initially agreed to furnish.
11
However, due to the objection of GSIS to the actions
of SAT during the conference,
12
the request went unheeded. This prompted the latter to
issue a subpoena duces tecum.
13
chanroblesvirtualawlibrary
In response to the subpoena, the GSIS, through its President and General Manager
Winston F. Garcia, replied that while it did recognize the authority of COA to constitute
a team to conduct a special audit, that team should not be the SAT, whose members
were biased, partial, and hostile.
14
The then-COA Chairperson Guillermo N. Carague
denied the request of GSIS on account of the restructuring of the commission under
COA Resolution 2002-005, which formed the basis for the SAT's creation.
15
However,
through a subsequent letter of Atty. Claro B. Flores and Atty. Nelo B. Gellaco, the GSIS
alleged that the SAT's creation was not supported by COA Resolution 2002-005, which
was without force and effect.
16
chanroblesvirtualawlibrary
The reasoning of both lawyers was based on the theory that the 1987 Constitution did
not give COA the power to reorganize itself.
17
Allegedly, the commission only had the
power to define the scope of its audit and examination, as well as to promulgate rules
concerning pleading and practice.
18
Even if the COA were allowed to reorganize itself,
the GSIS claimed that the subpoena required a case to have been brought to the
commission for resolution.
19
chanroblesvirtualawlibrary
Thereafter, several GSIS officials sent COA Chairperson Carague a letter emphasizing
that the special audit should be conducted by another team and detailing how the SAT,
as then constituted, prejudged the legality of several key projects of the GSIS
20
while
merely relying on hearsay and inapplicable legal standards.
21
chanroblesvirtualawlibrary
In its Petition, the SAT claimed that due to the continued refusal of GSIS to cooperate,
the team was constrained to employ "alternative audit procedures" by gathering
documents from the Office of the Auditor of GSIS, the House of Representatives, and
others.
22
Meanwhile, some of the audit observations made by the SAT appeared in the
newspaper Manila Times,
23
resulting in the refusal of GSIS management to attend the
SAT's exit conference.
24
chanroblesvirtualawlibrary
COURT INTERVENTION
On 15 April 2005, GSIS filed with the COA itself a "Petition/Request to nullify Special
Audit Report dated 29 March 2005 on selected transactions of the GSIS for CY 2000 to
2004."
25
The GSIS also filed a Petition for Prohibition dated 18 July 2005
26
before the
CA, whose Resolutions therein led to this present Petition.
PARTIES' CLAIMS
Petitioner SAT anchors its claims on the following grounds:chanroblesvirtualawlibrary
First, the grant of the preliminary injunction was in grave abuse of discretion because of
procedural infirmities in the Petition.
27
chanroblesvirtualawlibrary
Second, the CA had no jurisdiction to rule on the validity or correctness of the findings
and recommendations of the SAT because of the doctrines of primary jurisdiction and
exhaustion of administrative remedies. Additionally, judicial review over the COA is
vested exclusively in the Supreme Court.
28
chanroblesvirtualawlibrary
Third, the SAT's special audit has basis in law.
29
chanroblesvirtualawlibrary
Respondent GSIS, on the other hand, claims that the need for an injunction was urgent,
since the SAT's supervisor had said that notices for disallowance were available at the
COA's Records Division.
30
As to the procedural and substantial aspect, GSIS claims the
following:chanroblesvirtualawlibrary
First, the Petition for Prohibition satisfies the legal and procedural
requirements.
31
chanroblesvirtualawlibrary
Second, the CA has the power to prohibit the conduct of special audit and the issuance
of notices of disallowance.
32
chanroblesvirtualawlibrary
Third, the special audit does not have statutory basis.
33
chanroblesvirtualawlibrary
In support of the prohibitory writ, GSIS claims that it is only the regular auditor who
can conduct such audits and issue disallowances; that it is only the commissioner of
COA who can delegate this power; and that GSIS would suffer grave and irreparable
injury, should the SAT implement the latter's report.
ISSUES
We categorize the arguments in the following manner:chanroblesvirtualawlibrary
1. Whether or not prohibition is the correct remedy
2. Whether or not the writ of preliminary injunction was properly issued
3. Whether or not the SAT was validly constituted
RULING
PROHIBITION IS NOT THE CORRECT REMEDY.
There is an appeal or a plain, speedy, and adequate remedy available.
A rule of thumb for every petition brought under Rule 65 is the unavailability of an
appeal or any "plain, speedy, and adequate remedy."
34
Certiorari, prohibition, and
mandamus are extraordinary remedies that historically require extraordinary facts to be
shown
35
in order to correct errors of jurisdiction.
36
The law also dictates the necessary
steps before an extraordinary remedy may be issued.
37
To be sure, the availability of
other remedies does not always lend itself to the impropriety of a Rule 65 petition.
38
If,
for instance, the remedy is insufficient or would be proven useless,
39
then the petition
will be given due course.
40
chanroblesvirtualawlibrary
COA itself has a mechanism for parties who are aggrieved by its actions and are
seeking redress directly from the commission itself.
Section 48 of Presidential Decree No. 1445 reads:chanroblesvirtualawlibrary
Appeal from decision of auditors. Any person aggrieved by the decision of an auditor of
any government agency in the settlement of an account or claim may within six months
from receipt of a copy of the decision appeal in writing to the Commission.
Additionally, Rule V, Section 1 of the 1997 COA Rules
provides:chanroblesvirtualawlibrary
An aggrieved party may appeal from an order or decision or ruling rendered by the
Auditor embodied in a report, memorandum, letter, notice of disallowances and
charges, Certificate of Settlement and Balances, to the Director who has jurisdiction
over the agency under audit.
41
chanroblesvirtualawlibrary
Rule VI, Section 1, continues the linear procedure, to wit: The party aggrieved by a final
order or decision of the Director may appeal to the Commission
Proper.
42
chanroblesvirtualawlibrary
This discussion of the different procedures in place clearly shows that an administrative
remedy was indeed available. To allow a premature invocation of Rule 65 would subvert
these administrative provisions, unless they fall under the established exceptions to the
general rule, some of which are as follows:chanroblesvirtualawlibrary
1) when the question raised is purely legal;cralawlibrary
2) when the administrative body is in estoppel;cralawlibrary
3) when the act complained of is patently illegal;cralawlibrary
4) when there is urgent need for judicial intervention;cralawlibrary
5) when the claim involved is small;cralawlibrary
6) when irreparable damage will be suffered;cralawlibrary
7) when there is no other plain, speedy and adequate remedy;cralawlibrary
8) when strong public interest is involved;cralawlibrary
9) when the subject of the controversy is private land;cralawlibrary
10) in quo warranto proceedings.
43
chanroblesvirtualawlibrary
GSIS claims that its case falls within the exceptions, because (a) the SAT supervisor has
threatened to issue notices of disallowance;
44
(b) GSIS did nothing to stop the
threatened issuances or the public appearances of the SAT supervisor;
45
(c) the
petition/request filed with the COA has not been acted upon as of date;
46
(d) GSIS was
denied due process because SAT had acted with partiality and bias;
47
and (e) the
special audit was illegal, arbitrary, or oppressive, having been done without or in excess
or in grave abuse of discretion.
48
chanroblesvirtualawlibrary
All of these claims are baseless. First, a threat to issue a notice of disallowance is
speculative, absent actual proof. Moreover, even if the threat were real, it would not fall
under any of the exceptions, because the COA rules provide an adequate remedy to
dispute a notice of disallowance:chanroblesvirtualawlibrary
Who May Appeal. - An aggrieved party may appeal from an order or decision or ruling
rendered by the Auditor embodied in a report, memorandum, letter, notice of
disallowances and charges, Certificate of Settlement and Balances, to the Director who
has jurisdiction over the agency under audit factual issues that require some form of
proof in order that they may be considered. (Emphasis
supplied)
49
chanroblesvirtualawlibrary
Second, GSIS also mentions the fact that the COA has not acted on the former's
petition/request both in the original Petition before the CA
50
and the pleadings before
this Court.
51
This inaction is, of course, explainable by the fact that the CA issued a TRO
and a writ of preliminary injunction. Moreover, the cited two (2) month delay is not so
unreasonable as to require the trampling of procedural rules.
Third, the claim that there was a denial of due process runs counter to the claim that
there is a pending petition/request before the COA. The fact that the petition/request
was not denied or delayed for reasons within the control of the COA contradicts any
claim that there was a due process violation involved.
Fourth, allegations of partiality and bias are questions of fact already before the COA.
As the Court has clarified, "[t]here is a question of law when the doubt or difference
arises as to what the law is on a certain state of facts, and not as to the truth or the
falsehood of alleged facts."
52
chanroblesvirtualawlibrary
A question of fact exists when the doubt or difference arises as to the truth or
falsehood of facts or when the query invites calibration of the whole evidence
considering mainly the credibility of witnesses, the existence and relevancy of specific
surrounding circumstances as well as their relation to each other and to the whole, and
the probability of the situation.
53
chanroblesvirtualawlibrary
True enough, questions of fact require evidentiary processes, the "calibration of the
evidence, the credibility of the witnesses, the existence and the relevance of
surrounding circumstances, and the probability of specific situations,"
54
especially "if the
query requires x x x the existence or relevance of surrounding circumstances and their
relation to each other, the issue in that query is factual."
55
Generally, these questions of
fact cannot be decided by a petition for prohibition under Rule 65,
56
because the rule
applies to jurisdictional flaws brought about by lack, excess, or grave abuse of
discretion.
57
chanroblesvirtualawlibrary
The Petition before the CA did not present anything to show that the remedies available
to the GSIS were insufficient. If the Petition itself admitted to the existence of other
remedies,
58
then the burden of proving that there was an exception was on the party
seeking that exception; in the absence of proof the Petition must be denied.
59
This
burden of proof is "the duty of a party to present such amount of evidence on the facts
in issue as the law deems necessary for the establishment of his
claim."
60
chanroblesvirtualawlibrary
The failure to fulfill the requirements of Rule 65 disallows the CA from taking due
course of the Petition;
61
otherwise appeals and motions for reconsideration would be
rendered meaningless,
62
as stated time and again by this
Court:chanroblesvirtualawlibrary
If resort to a remedy within the administrative machinery can still be made by giving
the administrative officer concerned every opportunity to decide on a matter that comes
within his or her jurisdiction, then such remedy should be exhausted first before the
court's judicial power can be sought. The premature invocation of the intervention of
the court is fatal to one's cause of action. The doctrine of exhaustion of administrative
remedies is based on practical and legal reasons. The availment of administrative
remedy entails lesser expenses and provides for a speedier disposition of controversies.
Furthermore, the courts of justice, for reasons of comity and convenience, will shy away
from a dispute until the system of administrative redress has been completed and
complied with, so as to give the administrative agency concerned every opportunity to
correct its error and dispose of the case.
63
x x x.
Moreover, courts have accorded respect for the specialized ability of other agencies of
government to deal with the issues within their respective specializations prior to any
court intervention.
64
The Court has reasoned thus:chanroblesvirtualawlibrary
We have consistently declared that the doctrine of exhaustion of administrative
remedies is a cornerstone of our judicial system. The thrust of the rule is that courts
must allow administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence. The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the
speedier resolution of controversies. Comity and convenience also impel courts of
justice to shy away from a dispute until the system of administrative redress has been
completed.
65
chanroblesvirtualawlibrary
The 1987 Constitution created the constitutional commissions as independent
constitutional bodies, tasked with specific roles in the system of governance that require
expertise in certain fields.
66
For COA, this role involves
The power, authority, and duty to examine, audit, and settle all accounts pertaining to
the revenue and receipts of, and expenditures or uses of funds and property, owned or
held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies,
instrumentalities, including government-owned and controlled corporations with original
charter. x x x.
67
chanroblesvirtualawlibrary
As one of the three (3) independent constitutional commissions, COA has been
empowered to define the scope of its audit and examination and to establish the
techniques and methods required therefor; and to promulgate accounting and auditing
rules and regulations, including those for the prevention and disallowance of irregular,
unnecessary, excessive, extravagant or unconscionable expenditures or uses of
government funds and properties.
68
chanroblesvirtualawlibrary
Thus, in the light of this constitutionally delegated task, the courts must exercise
caution when intervening with disputes involving these independent bodies, for The
general rule is that before a party may seek the intervention of the court, he should
first avail of all the means afforded him by administrative processes. The issues which
administrative agencies are authorized to decide should not be summarily taken from
them and submitted to a court without first giving such administrative agency the
opportunity to dispose of the same after due deliberation.
69
chanroblesvirtualawlibrary
COA was not exercising judicial, quasi-judicial, or ministerial functions when
it issued LAO Order No. 2004-093.
LAO Order No. 2004-093 reads as follows:chanroblesvirtualawlibrary
SUBJECT: SPECIAL AUDIT/INVESTIGATION ON SELECTED TRANSACTION OF
THE GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) FROM CY 2000 TO
2004.
Pursuant to COA Memorandum No. 2002-053 dated August 26, 2002, a team is hereby
constituted composed of the following personnel, namely:chanroblesvirtualawlibrary
x x x
who shall conduct a special audit on selected transactions for the period 2000-2004
with particular attention on the creation of subsidiaries such as GSIS Properties, Inc.,
missing paintings, cash advances and allowances/benefits of the Officers and Members
of the Board of Trustees of the GSIS within a period of ten (10) working days and shall
submit the appropriate report thereon within five (5) days after completion of the audit
to the Director, Legal and Adjudication Office Office of Legal Affairs who shall supervise
the proper implementation of this order.
Travel and other incidental expenses that may be incurred with this assignment shall be
charged against the appropriate funds of this Commission and the Team Leaders are
hereby authorized to draw a cash advance of P1,900 to defray out of pocket expenses
subject to the usual accounting and auditing rules and regulations.
By virtue of Section 40 of Presidential Decree No. 1445 in relation to Item III.A.6 of
COA Memorandum 2002-053, the team shall have the authority to administer oaths,
take testimony, summon witnesses and compel the production of documents by
compulsory processes in all matters relevant to this audit/investigation. x x
x.
70
chanroblesvirtualawlibrary
This was obviously not an exercise of judicial power, which is constitutionally vested in
the Supreme Court and such other courts as may be established by law.
71
Neither was it
an exercise of quasi-judicial power, as administrative agencies exercise it "to hear and
determine questions of fact to which the legislative policy is to apply and to decide in
accordance with the standards laid down by the law itself in enforcing and
administering the same law."
72
The Court has made this point
clear:chanroblesvirtualawlibrary
In carrying out their quasi-judicial functions, the administrative officers or bodies are
required to investigate facts or ascertain the existence of facts, hold hearings, weigh
evidence, and draw conclusions from them as basis for their official action and exercise
of discretion in a judicial nature.
73
chanroblesvirtualawlibrary
Yet issuing the Order was not ministerial, because it required the exercise of discretion.
Ministerial acts do not require discretion or the exercise of judgment, but only the
performance of a duty pursuant to a given state of facts in the manner prescribed.
74

The Order obviously involved discretion, in both the choice of the personnel and the
powers/functions to be given them.
A Rule 65 petition for prohibition can only be aimed at judicial, quasi-judicial, and
ministerial functions.
75
Since the issuance of the LAO Order assailed was not
characterized by any of the three functions, as shown supra, then it follows that the
GSIS chose the wrong remedy. Moreover, "where it is the Government which is being
enjoined from implementing an issuance which enjoys the presumption of validity, such
discretion [to enjoin] must be exercised with utmost
caution.
76
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THE WRIT SHOULD NOT HAVE BEEN ISSUED.
Writs of injunction do not perfunctorily issue from the courts.
For the issuance of a writ of preliminary injunction to be proper, it must be shown that
the invasion of the right sought to be protected is material and substantial, that the
right of complainant is clear and unmistakable and that there is an urgent and
paramount necessity for the writ to prevent serious damage. In the absence of a clear
legal right, the issuance of the injunctive writ constitutes grave abuse of discretion. In
this case, respondents failed to show that they have a right to be protected and that
the acts against which the writ is to be directed are violative of the said right.
(Emphasis supplied)
77
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The CA Resolution stated the following as its reason for issuing the writ of preliminary
injunction:chanroblesvirtualawlibrary
It should be noted that the instant petition precisely questions the creation of the
respondent SAT, and consequently, the validity of its actions. In order to completely
review and adjudicate the matters raised herein, the issuance of a preliminary
injunction is warranted in the meantime in order to preserve the status quo and to
avoid grave and irreparable injury should the recommendations in the AOM and special
audit report regarding the notices of disallowance of certain GSIS transactions be
enforced. Furthermore, such recourse is necessary in order not to render moot any
pronouncement that this Court may render in this petition.
78
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From its ruling, it is clear that the CA erred in granting a TRO and writ of preliminary
injunction. A preliminary injunction is proper only when the plaintiff appears to be
clearly entitled to the relief sought and has substantial interest in the right sought to be
defended.
79
Factually, there must exist "a right to be protected and that the acts
against which the writ is to be directed are violative of the said right."
80
As this Court
has previously ruled, "while the existence of the right need not be conclusively
established, it must be clear."
81
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Lacking a clear legal right,
82
the provisional remedy should not have been issued, all the
more because the factual support for issuing the writ had not been established. In
giving injunctive relief, courts cannot reverse the burden of proof, for to do so "would
assume the proposition which the petitioner is inceptively duty bound to prove."
83
This
concern is not a mere technicality, but lies at the heart of procedural law, for every case
before a court of law requires a cause of action.
84
chanroblesvirtualawlibrary
Moreover, there was no urgency in the request of the GSIS for injunctive relief, because
no notice of disallowance had been issued. The CA held that since there was a question
on the validity of the SAT and a corresponding threat of a notice of disallowance, then
the status quo must be preserved.
85
Its criteria falls short of the "clear legal right"
standard. Even if there was a notice of disallowance,, the COA's rules for contesting the
issuance would have been the proper remedy; otherwise, any administrative dispute
settlement procedure would be rendered useless by the simple filing of an injunctive
suit in court.
THE SAT WAS VALIDLY CONSTITUTED.
We come now to the crux of the dispute: the validity of the creation of the SAT. Much
as the procedural discussion already leads this Court to a conclusion, in the interest of
justice and in consideration of the manifest desire of both parties to have the matter
dealt with in this forum, it shall rule on the validity of the SAT, notwithstanding the
procedural infirmities of the original Petition in the CA. This power is vested in this
Court when so required by the exigencies of the case.
86
The exercise of this power is
especially important in this case, because the justification of GSIS for directly seeking
court intervention is based on the alleged invalidity of the SAT's creation. Considering
that court intervention must be put to an end, and that the question has its roots in the
powers of a constitutional commission, we rule on the merits of the case.
As previously discussed, the COA has "the power, authority, and duty to examine, audit,
and settle all accounts pertaining to the revenue and receipts of, and expenditures or
uses of funds and property, owned or held in trust by, or pertaining to, the
Government, or any of its subdivisions, agencies, instrumentalities, including
government-owned and controlled corporations with original charter. x x
x."
87
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The Constitution further provides as follows:chanroblesvirtualawlibrary
The Commission shall have exclusive authority, subject to the limitations in this Article,
to define the scope of its audit and examination, establish the techniques and methods
required therefor, and promulgate accounting and auditing rules and regulations,
including those for the prevention and disallowance of irregular, unnecessary,
excessive, extravagant, or unconscionable expenditures or uses of government funds
and properties.
88
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The Constitution grants the COA the exclusive authority to define the scope of its audit
and examination, and establish the techniques and methods therefor. Pursuant to this
authority, COA Memorandum No. 2002-053 was promulgated, giving the General
Counsel the authority to deputize a special audit team, viz:chanroblesvirtualawlibrary
In case the Director, Legal and Adjudication Office for the sector in the Central Office
finds that the transaction/event is a proper subject of special or fraud audit, he shall
recommend the creation of a special audit team for approval of the General Counsel
who shall sign the office order for the purpose. This memorandum shall constitute
authority for the General Counsel to deputize the team pursuant to the provisions of
Section 40 of P.D. 1445.
89
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This Memorandum, in turn, draws its force from COA Resolution No. 2002-005,
90
the
preamble of which states:chanroblesvirtualawlibrary
WHEREAS, the Constitution (Article IX, D (2) ) invests the Commission on Audit with the
exclusive authority to define the scope of its audit and examination as well as establish
the techniques and methods required therefor;cralawlibrary
WHEREAS, inherent in this authority is the prerogative of COA to organize its manpower
in such a manner that would be appropriate to cope with its defined scope of audit as
well as the methods and techniques it prescribes or adopts;cralawlibrary
WHEREAS, since such scope of audit, methods and techniques vary from time to time
as the exigencies of the situation may demand, COA is impelled to continually
restructure its organization to keep abreast of the necessary changes;cralawlibrary
WHEREAS, invoking the independence and fiscal autonomy which the Constitution
guarantees, COA has in the past successfully effected various changes in its
organizational structure within the limits of its appropriations; x x x.
The validity of the SAT, therefore, cannot be contested on the grounds claimed by
GSIS. If ever it has a cause for complaint, it should refer to the conduct of the audit,
and not to the validity of the auditing body. And since the COA itself provides for the
procedure to contest such audit, the Court must not interfere. Simplifying it once and
for all,
The increasing pattern of law and legal development has been to entrust "special cases"
to "special bodies" rather than the courts. As we have also held, the shift of emphasis is
attributed to the need to slacken the encumbered dockets of the judiciary and so also,
to leave "special cases" to specialists and persons trained therefor. (Emphasis
supplied)
91
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CONCLUSION
Once again, the Court must remind the parties to judicial disputes to adhere to the
standards for litigation as set by procedural rules. These rules exist primarily for the
benefit of litigants, in order to afford them both speedy and appropriate relief from a
body duly authorized by law to dispense the remedy. If a litigant prematurely invokes
the jurisdiction of a court, then the potential result might be a deafening silence.
Although we recognize that justice delayed is justice denied,
92
we must also bear in
mind that justice in haste is justice defiled.
WHEREFORE, the Petition for Certiorari and Prohibition is GRANTED, the Resolutions
dated 9 August 2006 and 23 September 2005 in CA-G.R. SP No. 90484 are hereby
ANNULLED and SET ASIDE. The CA is directed to dismiss the Petition in CA G.R. SP No.
90484.
SO ORDERED.




EN BANC
G.R. NO. 175368 : April 11, 2013
LEAGUE OF PROVINCES OF THE PHILIPPINES, Petitioner, v.DEPARTMENT OF
ENVIRONMENT and NATURAL RESOURCES and HON. ANGELO T. REYES, in his
capacity as Secretary of DENR, Respondents.
D E C I S I O N
PERALTA, J.:
This is a petition for certiorari, prohibition and mandamus,
1
praying that this Court
order the following: ( 1) declare as unconstitutional Section 17(b)(3)(iii) of Republic Act
(R.A.) No. 7160, otherwise known as The Local Government Code of 1991 and Section
24 of Republic Act (R.A.) No. 7076, otherwise known as the People's Small-Scale Mining
Act of 1991; (2) prohibit and bar respondents from exercising control over provinces;
and (3) declare as illegal the respondent Secretary of the Department of Energy and
Natural Resources' (DENR) nullification, voiding and cancellation of the Small-Scale
Mining permits issued by the Provincial Governor of Bulacan.
The Facts are as follows:chanroblesvirtualawlibrary
On March 28, 1996, Golden Falcon Mineral Exploration Corporation (Golden Falcon) filed
with the DENR Mines and Geosciences Bureau Regional Office No. III (MGB R-III) an
Application for Financial and Technical Assistance Agreement (FTAA) covering an area
of 61,136 hectares situated in the Municipalities of San Miguel, San Ildefonso,
Norzagaray and San Jose del Monte, Bulacan.
2
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On April 29, 1998, the MGB R-III issued an Order denying Golden Falcon's Application
for Financial and Technical Assistance Agreement for failure to secure area clearances
from the Forest Management Sector and Lands Management Sector of the DENR
Regional Office No. III.
3
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On November 11, 1998, Golden Falcon filed an appeal with the DENR Mines and
Geosciences Bureau Central Office (MGB-Central Office), and sought reconsideration of
the Order dated April 29, 1998.
4
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On February 10, 2004, while Golden Falcon's appeal was pending, Eduardo D. Mercado,
Benedicto S. Cruz, Gerardo R. Cruz and Liberato Sembrano filed with the Provincial
Environment and Natural Resources Office (PENRO) of Bulacan their respective
Applications for Quarry Permit (AQP), which covered the same area subject of Golden
Falcon's Application for Financial and Technical Assistance
Agreement.
5
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On July 16, 2004, the MGB-Central Office issued an Order denying Golden Falcon's
appeal and affirming the MGB R-III's Order dated April 29, 1998.
On September 13, 2004, Atlantic Mines and Trading Corporation (AMTC) filed with the
PENRO of Bulacan an Application for Exploration Permit (AEP) covering 5,281 hectares
of the area covered by Golden Falcon's Application for Financial and Technical
Assistance Agreement.
6
chanroblesvirtualawlibrary
On October 19, 2004, DENR-MGB Director Horacio C. Ramos, in response to MGB R-III
Director Arnulfo V. Cabantog's memorandum query dated September 8, 2004,
categorically stated that the MGB-Central Office's Order dated July 16, 2004 became
final on August 11, 2004, fifteen (15) days after Golden Falcon received the said Order,
per the Certification dated October 8, 2004 issued by the Postmaster II of the Philippine
Postal Corporation of Cainta, Rizal.
7
chanroblesvirtualawlibrary
Through letters dated May 5 and May 10, 2005, AMTC notified the PENRO of Bulacan
and the MGB R-III Director, respectively, that the subject Applications for Quarry Permit
fell within its (AMTC's) existing valid and prior Application for Exploration Permit, and
the the former area of Golden Falcon was open to mining location only on August 11,
2004 per the Memorandum dated October 19, 2004 of the MGB Director, Central
Office.
8
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On June 24, 2005, Ricardo Medina, Jr., PENRO of Bulacan, indorsed AMTC's letter to
the Provincial Legal Officer, Atty. Eugenio F. Resurreccion, for his legal opinion on which
date of denial of Golden Falcon's application/appeal April 29, 1998 or July 16, 2004 is
to be considered in the deliberation of the Provincial Mining Regulatory Board (PMRB)
for the purpose of determining when the land subject of the Applications for Quarry
Permit could be considered open for application.
On June 28, 2005, Provincial Legal Officer Eugenio Resurreccion issued a legal opinion
stating that the Order dated July 16, 2004 of the MGB-Central Office was a mere
reaffirmation of the Order dated April 29, 1998 of the MGB R-III; hence, the Order
dated April 29, 1998 should be the reckoning period of the denial of the application of
Golden Falcon.
On July 22, 2005, AMTC filed with the PMRB of Bulacan a formal protest against the
aforesaid Applications for Quarry Permit on the ground that the subject area was
already covered by its Application for Exploration Permit.
9
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On August 8, 2005, MGB R-III Director Cabantog, who was the concurrent Chairman of
the PMRB, endorsed to the Provincial Governor of Bulacan, Governor Josefina M. dela
Cruz, the aforesaid Applications for Quarry Permit that had apparently been converted
to Applications for Small-Scale Mining Permit of Eduardo D. Mercado, Benedicto S. Cruz,
Gerardo R. Cruz and Lucila S. Valdez (formerly Liberato
Sembrano).
10
chanroblesvirtualawlibrary
On August 9, 2005, the PENRO of Bulacan issued four memoranda recommending to
Governor Dela Cruz the approval of the aforesaid Applications for Small-Scale Mining
Permit.
11
chanroblesvirtualawlibrary
On August 10, 2005, Governor Dela Cruz issued the corresponding Small-Scale Mining
Permits in favor of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Lucila
S. Valdez.
12
chanroblesvirtualawlibrary
Subsequently, AMTC appealed to respondent DENR Secretary the grant of the aforesaid
Small-Scale Mining Permits, arguing that: (1) The PMRB of Bulacan erred in giving due
course to the Applications for Small-Scale Mining Permit without first resolving its formal
protest; (2) The areas covered by the Small-Scale Mining Permits fall within the area
covered by AMTC's valid prior Application for Exploration Permit; (3) The Applications
for Quarry Permit were illegally converted to Applications for Small-Scale Mining Permit;
(4) DENR-MGB Director Horacio C. Ramos' ruling that the subject areas became open
for mining location only on August 11, 2004 was controlling; (5) The Small-Scale Mining
Permits were null and void because they covered areas that were never declared
People's Small-Scale Mining Program sites as mandated by Section 4 of the People's
Small-Scale Mining Act of 1991; and (6) Iron ore is not considered as one of the quarry
resources, as defined by Section 43 of the Philippine Mining Act of 1995, which could be
subjects of an Application for Quarry Permit.
13
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On August 8, 2006, respondent DENR Secretary rendered a Decision
14
in favor of AMTC.
The DENR Secretary agreed with MGB Director Horacio C. Ramos that the area was
open to mining location only on August 11, 2004, fifteen (15) days after the receipt by
Golden Falcon on July 27, 2004 of a copy of the MGB-Central Office's Order dated July
16, 2004, which Order denied Golden Falcon's appeal. According to the DENR
Secretary, the filing by Golden Falcon of the letter-appeal suspended the finality of the
Order of denial issued on April 29, 1998 by the Regional Director until the resolution of
the appeal on July 16, 2004 by the MGB-Central Office. He stated that the Applications
for Quarry Permit were filed on February 10, 2004 when the area was still closed to
mining location; hence, the Small-Scale Mining Permits granted by the PMRB and the
Governor were null and void. On the other hand, the DENR Secretary declared that
AMTC filed its Application for Exploration Permit when the area was already open to
other mining applicants; thus, AMTC's Application for Exploration Permit was valid.
Moreover, the DENR Secretary held that the questioned Small-Scale Mining Permits
were issued in violation of Section 4 of R.A. No. 7076 and beyond the authority of the
Provincial Governor pursuant to Section 43 of R.A. No. 7942, because the area was
never proclaimed to be under the People's Small-Scale Mining Program. Further, the
DENR Secretary stated that iron ore mineral is not considered among the quarry
resources.
The dispositive portion of the DENR Secretary's Decision
reads:chanroblesvirtualawlibrary
WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines
and Trading Corp. is declared valid and may now be given due course. The Small-Scale
Mining Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo D.
Mercado, SSMP-B-004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S. Valdez
are declared NULL AND VOID. Consequently, the said permits are hereby
CANCELLED.
15
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Hence, petitioner League of Provinces filed this petition.
Petitioner is a duly organized league of local governments incorporated under R.A. No.
7160. Petitioner declares that it is composed of 81 provincial governments, including
the Province of Bulacan. It states that this is not an action of one province alone, but
the collective action of all provinces through the League, as a favorable ruling will not
only benefit one province, but all provinces and all local governments.
Petitioner raises these issues:chanroblesvirtualawlibrary
I
WHETHER OR NOT SECTION 17(B)(3)(III) OF THE, 1991 LOCAL GOVERNMENT CODE
AND SECTION 24 OF THE PEOPLE'S SMALL-SCALE MINING ACT OF 1991 ARE
UNCONSTITUTIONAL FOR PROVIDING FOR EXECUTIVE CONTROL AND INFRINGING
UPON THE LOCAL AUTONOMY OF PROVINCES.
II
WHETHER OR NOT THE ACT OF RESPONDENT [DENR] IN NULLIFYING, VOIDING AND
CANCELLING THE SMALL-SCALE MINING PERMITS AMOUNTS TO EXECUTIVE
CONTROL, NOT MERELY SUPERVISION AND USURPS THE DEVOLVED POWERS OF ALL
PROVINCES.
16
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To start, the Court finds that petitioner has legal standing to file this petition because it
is tasked under Section 504 of the Local Government Code of 1991 to promote local
autonomy at the provincial level;
17
adopt measures for the promotion of the welfare of
all provinces and its officials and employees;
18
and exercise such other powers and
perform such other duties and functions as the league may prescribe for the welfare of
the provinces.
19
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Before this Court determines the validity of an act of a co-equal and coordinate branch
of the Government, it bears emphasis that ingrained in our jurisprudence is the time-
honored principle that a statute is presumed to be valid.
20
This presumption is rooted in
the doctrine of separation of powers which enjoins upon the three coordinate
departments of the Government a becoming courtesy for each other's acts.
21
This
Court, however, may declare a law, or portions thereof, unconstitutional where a
petitioner has shown a clear and unequivocal breach of the Constitution,
22
leaving no
doubt or hesitation in the mind of the Court.
23
chanroblesvirtualawlibrary
In this case, petitioner admits that respondent DENR Secretary had the authority to
nullify the Small-Scale Mining Permits issued by the Provincial Governor of Bulacan, as
the DENR Secretary has control over the PMRB, and the implementation of the Small-
Scale Mining Program is subject to control by respondent DENR.
Control of the DENR/DENR Secretary over small-scale mining in the provinces is granted
by three statutes: (1) R.A. No. 7061 or The Local Government Code of 1991; (2) R.A.
No. 7076 or the People's Small Scale Mining Act of 1991; and (3) R.A. No. 7942,
otherwise known as the Philippine Mining Act of 1995.
24
The pertinent provisions of law
sought to be declared as unconstitutional by petitioner are as
follows:chanroblesvirtualawlibrary
R.A. No. 7061 (The Local Government Code of 1991)
SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to be
self-reliant and shall continue exercising the powers and discharging the duties and
functions currently vested upon them. They shall also discharge the functions and
responsibilities of national agencies and offices devolved to them pursuant to this Code.
Local government units shall likewise exercise such other powers and discharge such
other functions and responsibilities as are necessary, appropriate, or incidental to
efficient and effective provision of the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the
following:chanroblesvirtualawlibrary
x x x
(3) For a Province:c
x x x
(iii) Pursuant to national policies and subject to supervision, control and review of the
DENR, enforcement of forestry laws limited to community-based forestry projects,
pollution control law, small-scale mining law, and other laws on the protection of the
environment; and mini-hydro electric projects for local purposes; x x
x
25
chanroblesvirtualawlibrary
R.A. No. 7076 (People's Small-Scale Mining Act of 1991)
Sec. 24. Provincial/City Mining Regulatory Board. - There is hereby created under the
direct supervision and control of the Secretary a provincial/city mining regulatory board,
herein called the Board, which shall be the implementing agency of the Department,
and shall exercise the following powers and functions, subject to review by the
Secretary:chanroblesvirtualawlibrary
(a) Declare and segregate existing gold-rush areas for small-scale mining;cralawlibrary
(b) Reserve future gold and other mining areas for small-scale mining;cralawlibrary
(c) Award contracts to small-scale miners;cralawlibrary
(d) Formulate and implement rules and regulations related to small-scale
mining;cralawlibrary
(e) Settle disputes, conflicts or litigations over conflicting claims within a people's small-
scale mining area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to achieve the goals and
objectives of this Act.
26
chanroblesvirtualawlibrary
Petitioner contends that the aforecited laws and DENR Administrative Order No. 9640
(the Implementing Rules and Regulations of the Philippine Mining Act of 1995) did not
explicitly confer upon respondents DENR and the DENR Secretary the power to reverse,
abrogate, nullify, void, or cancel the permits issued by the Provincial Governor or small-
scale mining contracts entered into by the PMRB. The statutes are also silent as to the
power of respondent DENR Secretary to substitute his own judgment over that of the
Provincial Governor and the PMRB.
Moreover, petitioner contends that Section 17 (b)(3)(iii) of the Local Government Code
of 1991 and Section 24 of R.A. No. 7076, which confer upon respondents DENR and the
DENR Secretary the power of control are unconstitutional, as the Constitution states
that the President (and Executive Departments and her alter-egos) has the power of
supervision only, not control, over acts of the local government units, and grants the
local government units autonomy, thus:chanroblesvirtualawlibrary
The 1987 Constitution:chanroblesvirtualawlibrary
Article X, Section 4. The President of the Philippines shall exercise general supervision
over local governments. Provinces with respect to component cities and municipalities,
and cities and municipalities with respect to component barangays, shall ensure that
the acts of their component units are within the scope of their prescribed powers and
functions.
27
chanroblesvirtualawlibrary
Petitioner contends that the policy in the above-cited constitutional provision is mirrored
in the Local Government Code, which states:chanroblesvirtualawlibrary
SEC. 25. National Supervision over Local Government Units. - (a) Consistent with the
basic policy on local autonomy, the President shall exercise general supervision over
local government units to ensure that their acts are within the scope of their prescribed
powers and functions.
The President shall exercise supervisory authority directly over provinces, highly
urbanized cities, and independent component cities; through the province with respect
to component cities and municipalities; and through the city and municipality with
respect to barangays.
28
chanroblesvirtualawlibrary
Petitioner contends that the foregoing provisions of the Constitution and the Local
Government Code of 1991 show that the relationship between the President and the
Provinces or respondent DENR, as the alter ego of the President, and the Province of
Bulacan is one of executive supervision, not one of executive control. The term
"control" has been defined as the power of an officer to alter or modify or set aside
what a subordinate officer had done in the performance of his/her duties and to
substitute the judgment of the former for the latter, while the term "supervision" is the
power of a superior officer to see to it that lower officers perform their function in
accordance with law.
29
chanroblesvirtualawlibrary
Petitioner argues that respondent DENR Secretary went beyond mere executive
supervision and exercised control when he nullified the small-scale mining permits
granted by the Provincial Governor of Bulacan, as the former substituted the judgment
of the latter.
Petitioner asserts that what is involved here is a devolved power.
Under the Local Government Code of 1991, the power to regulate small-scale mining
has been devolved to all provinces. In the exercise of devolved powers, departmental
approval is not necessary.
30
chanroblesvirtualawlibrary
Petitioner contends that if the provisions in Section 24 of R.A. No. 7076 and Section 17
(b)(3)(iii) of the Local Government Code of 1991 granting the power of control to the
DENR/DENR Secretary are not nullified, nothing would stop the DENR Secretary from
nullifying, voiding and canceling the small-scale mining permits that have been issued
by a Provincial Governor.
Petitioner submits that the statutory grant of power of control to respondents is
unconstitutional, as the Constitution only allows supervision over local governments and
proscribes control by the executive departments.
In its Comment, respondents, represented by the Office of the Solicitor General, stated
that contrary to the assertion of petitioner, the power to implement the small-scale
mining law is expressly limited in Section 17 (b)(3)(iii) of the Local Government Code,
which provides that it must be carried out "pursuant to national policies and subject to
supervision, control and review of the DENR." Moreover, the fact that the power to
implement the small-scale mining law has not been fully devolved to provinces is
further amplified by Section 4 of the People's Small-Scale Mining Act of 1991, which
provides, among others, that the People's Small-Scale Mining Program shall be
implemented by the DENR Secretary.
The petition lacks merit.
Paragraph 1 of Section 2, Article XII (National Economy and Patrimony) of the
Constitution
31
provides that "the exploration, development and utilization of natural
resources shall be under the full control and supervision of the State."
Moreover, paragraph 3 of Section 2, Article XII of the Constitution provides that "the
Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens x x x."
Pursuant to Section 2, Article XII of the Constitution, R.A. No. 7076 or the People's
Small-Scale Mining Act of 1991, was enacted, establishing under Section 4 thereof a
People's Small-Scale Mining Program to be implemented by the DENR Secretary in
coordination with other concerned government agencies.
The People's Small-Scale Mining Act of 1991 defines "small-scale mining" as "refer[ring]
to mining activities, which rely heavily on manual labor using simple implement and
methods and do not use explosives or heavy mining
equipment."
32
chanroblesvirtualawlibrary
It should be pointed out that the Administrative Code of 198733 provides that the DENR
is, subject to law and higher authority, in charge of carrying out the State's
constitutional mandate, under Section 2, Article XII of the Constitution, to control and
supervise the exploration, development, utilization and conservation of the country's
natural resources. Hence, the enforcement of small-scale mining law in the provinces is
made subject to the supervision, control and review of the DENR under the Local
Government Code of 1991, while the People's Small-Scale Mining Act of 1991 provides
that the People's Small-Scale Mining Program is to be implemented by the DENR
Secretary in coordination with other concerned local government agencies.
Indeed, Section 4, Article X (Local Government) of the Constitution states that "[t]he
President of the Philippines shall exercise general supervision over local governments,"
and Section 25 of the Local Government Code reiterates the same. General supervision
by the President means no more than seeing to it that laws are faithfully executed or
that subordinate officers act within the law.
34
chanroblesvirtualawlibrary
The Court has clarified that the constitutional guarantee of local autonomy in the
Constitution Art. X, Sec. 2 refers to the administrative autonomy of local government
units or, cast in more technical language, the decentralization of government
authority.
35
It does not make local governments sovereign within the State.
36

Administrative autonomy may involve devolution of powers, but subject to limitations
like following national policies or standards,
37
and those provided by the Local
Government Code, as the structuring of local governments and the allocation of powers,
responsibilities, and resources among the different local government units and local
officials have been placed by the Constitution in the hands of Congress
38
under Section
3, Article X of the Constitution.
Section 3, Article X of the Constitution mandated Congress to "enact a local government
code which shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization with effective mechanisms of
recall, initiative, and referendum, allocate among the different local government units
their powers, responsibilities, and resources, and provide for the qualifications, election,
appointment and removal, term, salaries, powers and functions and duties of local
officials, and all other matters relating to the organization and operation of the local
units."
In connection with the enforcement of the small-scale mining law in the province,
Section 17 of the Local Government Code provides:chanroblesvirtualawlibrary
SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to be
self-reliant and shall continue exercising the powers and discharging the duties and
functions currently vested upon them. They shall also discharge the functions and
responsibilities of national agencies and offices devolved to them pursuant to this Code.
Local government units shall likewise exercise such other powers and discharge such
other functions and responsibilities as are necessary, appropriate, or incidental to
efficient and effective provision of the basic services and facilities enumerated herein.
(b) Such basic services and facilities include, but are not limited to, the
following:chanroblesvirtualawlibrary
x x x
(3) For a Province:c
x x x
(iii) Pursuant to national policies and subject to supervision, control and review of the
DENR, enforcement of forestry laws limited to community-based forestry projects,
pollution control law, small-scale mining law, and other laws on the protection of the
environment; and mini-hydro electric projects for local
purposes;
39
chanroblesvirtualawlibrary
Clearly, the Local Government Code did not fully devolve the enforcement of the small-
scale mining law to the provincial government, as its enforcement is subject to the
supervision, control and review of the DENR, which is in charge, subject to law and
higher authority, of carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization of the country's natural
resources.
40
chanroblesvirtualawlibrary
Section 17 (b)(3)(iii) of the Local Government Code of 1991 is in harmony with R.A. No.
7076 or the People's Small-Scale Mining Act of 1991,
41
which established a People's
Small-Scale Mining Program to be implemented by the Secretary of the DENR,
thus:chanroblesvirtualawlibrary
Sec. 2. Declaration of Policy. It is hereby declared of the State to promote, develop,
protect and rationalize viable small-scale mining activities in order to generate more
employment opportunities and provide an equitable sharing of the nation's wealth and
natural resources, giving due regard to existing rights as herein provided.
x x x
Sec. 4. People's Small-Scale Mining Program. - For the purpose of carrying out the
declared policy provided in Section 2 hereof, there is hereby established a People's
Small-Scale Mining Program to be implemented by the Secretary of the Department of
Environment and Natural Resources, hereinafter called the Department, in coordination
with other concerned government agencies, designed to achieve an orderly, systematic
and rational scheme for the small-scale development and utilization of mineral
resources in certain mineral areas in order to address the social, economic, technical,
and environmental problems connected with small-scale mining activities.
x x x
Sec. 24. Provincial/City Mining Regulatory Board. There is hereby created under the
direct supervision and control of the Secretary a provincial/city mining regulatory board,
herein called the Board, which shall be the implementing agency of the Department,
and shall exercise the following powers and functions, subject to review by the
Secretary:chanroblesvirtualawlibrary
(a) Declare and segregate existing gold-rush areas for small-scale mining;cralawlibrary
(b) Reserve future gold and other mining areas for small-scale mining;cralawlibrary
(c) Award contracts to small-scale miners;cralawlibrary
(d) Formulate and implement rules and regulations related to small-scale
mining;cralawlibrary
(e) Settle disputes, conflicts or litigations over conflicting claims within a people's small-
scale mining area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to achieve the goals and
objectives of this Act.
42
chanroblesvirtualawlibrary
DENR Administrative Order No. 34, series of 1992, containing the Rules and Regulations
to implement R.A. No. 7076, provides:chanroblesvirtualawlibrary
SEC. 21. Administrative Supervision over the People's Small-Scale Mining Program.
The following DENR officials shall exercise the following supervisory functions in the
implementation of the Program:chanroblesvirtualawlibrary
21.1 DENR Secretrary direct supervision and control over the program and activities of
the small-scale miners within the people's small-scale mining area;cralawlibrary
21.2 Director the Director shall:chanroblesvirtualawlibrary
a. Recommend the depth or length of the tunnel or adit taking into account the: (1)
size of membership and capitalization of the cooperative; (2) size of mineralized areas;
(3) quantity of mineral deposits; (4) safety of miners; and (5) environmental impact
and other considerations;cralawlibrary
b. Determine the right of small-scale miners to existing facilities in consultation with the
operator, claimowner, landowner or lessor of an affected area upon declaration of a
small-scale mining area;cralawlibrary
c. Recommend to the Secretary the withdrawal of the status of the people's small-scale
mining area when it can no longer be feasibly operated on a small-scale basis; and
d. See to it that the small-scale mining contractors abide by small-scale mines safety
rules and regulations.
x x x
SEC. 22. Provincial/City Mining Regulatory Board. The Provincial/City Mining
Regulatory Board created under R.A. 7076 shall exercise the following powers and
functions, subject to review by the Secretary:chanroblesvirtualawlibrary
22.1 Declares and segregates existing gold rush area for small-scale
mining;cralawlibrary
22.2 Reserves for the future, mineralized areas/mineral lands for people's small-scale
mining;cralawlibrary
22.3 Awards contracts to small-scale miners' cooperative;cralawlibrary
22.4 Formulates and implements rules and regulations related to R.A.
7076;cralawlibrary
22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90)
days upon filing of protests or complaints; Provided, That any aggrieved party may
appeal within five (5) days from the Board's decision to the Secretary for final resolution
otherwise the same is considered final and executory; and
22.6 Performs such other functions as may be necessary to achieve the goals and
objectives of R.A. 7076.
SEC. 6. Declaration of People's Small-Scale Mining Areas. The Board created under R.A.
7076 shall have the authority to declare and set aside People's Small-Scale Mining Areas
in sites onshore suitable for small-scale mining operations subject to review by the
DENR Secretary thru the Director.
43
chanroblesvirtualawlibrary
DENR Administrative Order No. 23, otherwise known as the Implementing Rules and
Regulations of R.A. No. 7942, otherwise known as the Philippine Mining Act of 1995,
adopted on August 15, 1995, provides under Section 123
44
thereof that small-scale
mining applications should be filed with the PMRB
45
and the corresponding permits shall
be issued by the Provincial Governor, except small-scale mining applications within the
mineral reservations.
Thereafter, DENR Administrative Order No. 96-40, otherwise known as the Revised
Implementing Rules and Regulations of R.A. No. 7942, otherwise known as the
Philippine Mining Act of 1995, adopted on December 19, 1996, provides that
applications for Small-Scale Mining Permits shall be filed with the Provincial
Governor/City Mayor through the concerned Provincial/City Mining Regulatory Board for
areas outside the Mineral Reservations and with the Director though the Bureau for
areas within the Mineral Reservations.
46
Moreover, it provides that Local Government
Units shall, in coordination with the Bureau/ Regional Offices and subject to valid and
existing mining rights, "approve applications for small-scale mining, sand and gravel,
quarry x x x and gravel permits not exceeding five (5)
hectares."
47
chanroblesvirtualawlibrary
Petitioner contends that the Local Government Code of 1991, R.A. No. 7076, DENR
Administrative Orders Nos. 95-23 and 96-40 granted the DENR Secretary the broad
statutory power of control, but did not confer upon the respondents DENR and DENR
Secretary the power to reverse, abrogate, nullify, void, cancel the permits issued by the
Provincial Governor or small-scale mining contracts entered into by the Board.
The contention does not persuade.
The settlement of disputes over conflicting claims in small-scale mining is provided for
in Section 24 of R.A. No. 7076, thus:chanroblesvirtualawlibrary
Sec. 24. Provincial/City Mining Regulatory Board. There is hereby created under the
direct supervision and control of the Secretary a provincial/city mining regulatory board,
herein called the Board, which shall be the implementing agency of the Department,
and shall exercise the following powers and functions, subject to review by the
Secretary:chanroblesvirtualawlibrary
x x x
(e) Settle disputes, conflicts or litigations over conflicting claims within a people's small-
scale mining area, an area that is declared a small mining area; x x x
Section 24, paragraph (e) of R.A. No. 7076 cited above is reflected in Section 22,
paragraph 22.5 of the Implementing Rules and Regulations of R.A. No. 7076, to
wit:chanroblesvirtualawlibrary
SEC. 22. Provincial/City Mining Regulatory Board. The Provincial/City Mining Regulatory
Board created under R.A. No. 7076 shall exercise the following powers and functions,
subject to review by the Secretary:chanroblesvirtualawlibrary
x x x
22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90)
days upon filing of protests or complaints; Provided, That any aggrieved party may
appeal within five (5) days from the Board's decision to the Secretary for final resolution
otherwise the same is considered final and executory; x x x
In this case, in accordance with Section 22, paragraph 22.5 of the Implementing Rules
and Regulations of R.A. No. 7076, the AMTC filed on July 22, 2005 with the PMRB of
Bulacan a formal protest against the Applications for Quarry Permits of Eduardo
Mercado, Benedicto Cruz, Liberato Sembrano (replaced by Lucila Valdez) and Gerardo
Cruz on the ground that the subject area was already covered by its Application for
Exploration Permit.
48
However, on August 8, 2005, the PMRB issued Resolution Nos. 05-
8, 05-9, 05-10 and 05-11, resolving to submit to the Provincial Governor of Bulacan the
Applications for Small-Scale Mining Permits of Eduardo Mercado, Benedicto Cruz, Lucila
Valdez and Gerardo Cruz for the granting/issuance of the said permits.
49
On August 10,
2005, the Provincial Governor of Bulacan issued the Small-Scale Mining Permits to
Eduardo Mercado, Benedicto Cruz, Lucila Valdez and Gerardo Cruz based on the legal
opinion of the Provincial Legal Officer and the Resolutions of the PMRB of Bulacan.
Hence, AMTC filed an appeal with respondent DENR Secretary, appealing from Letter-
Resolution No. 05-1317 and Resolution Nos. 05-08, 05-09, 05-10 and 05-11, all dated
August 8, 2005, of the PMRB of Bulacan, which resolutions gave due course and
granted, on August 10, 2005, Small-Scale Mining Permits to Eduardo D. Mercado,
Benedicto S. Cruz, Lucila Valdez and Gerardo Cruz involving parcels of mineral land
situated at Camachin, Doa Remedios Trinidad, Bulacan.
The PMRB of Bulacan filed its Answer, stating that it is an administrative body, created
under R.A. No. 7076, which cannot be equated with the court wherein a full-blown
hearing could be conducted, but it is enough that the parties were given the
opportunity to present evidence. It asserted that the questioned resolutions it issued
were in accordance with the mining laws and that the Small-Scale Mining Permits
granted were registered ahead of AMTC's Application for Exploration Permit. Further,
the Board stated that the Governor of Bulacan had the power to approve the Small-
Scale Mining Permits under R.A. No. 7160.
The DENR Secretary found the appeal meritorious, and resolved these pivotal issues:
(1) when is the subject mining area open for mining location by other applicants; and
(2) who among the applicants have valid applications. The pertinent portion of the
decision of the DENR Secretary reads:chanroblesvirtualawlibrary
We agree with the ruling of the MGB Director that the area is open only to mining
location on August 11, 2004, fifteen (15) days after the receipt by Golden Falcon on
July 27, 2004 of a copy of the subject Order of July 16, 2004. The filing by Golden
Falcon of the letter-appeal suspended the finality of the Order of Denial issued on April
29, 1998 by the Regional Director until the Resolution thereof on July 16, 2004.
Although the subject AQPs/SSMPs were processed in accordance with the procedures of
the PMRB, however, the AQPs were filed on February 10, 2004 when the area is still
closed to mining location. Consequently, the SSMPs granted by the PMRB and the
Governor are null and void making thereby AEP No. III-02-04 of the AMTC valid, it
having been filed when the area is already open to other mining applicants.
Records also show that the AQPs were converted into SSMPs. These are two (2)
different applications. The questioned SSMPs were issued in violation of Section 4 of RA
7076 and beyond the authority of the Provincial Governor pursuant to Section 43 of RA
7942 because the area was never proclaimed as "People's Small-Scale Mining Program."
Moreover, iron ore mineral is not considered among the quarry resources.
x x x
WHEREFORE, the Application for Exploration Permit, AEP-III-02-04 of Atlantic Mines
and Trading Corp. is declared valid and may now be given due course. The Small-Scale
Mining Permits, SSMP-B-002-05 of Gerardo Cruz, SSMP-B-003-05 of Eduardo D.
Mercado, SSMP-B-004-05 of Benedicto S. Cruz and SSMP-B-005-05 of Lucila S. Valdez
are declared NULL AND VOID. Consequently, the said permits are hereby
CANCELLED.
50
chanroblesvirtualawlibrary
The Court finds that the decision of the DENR Secretary was rendered in accordance
with the power of review granted to the DENR Secretary in the resolution of disputes,
which is provided for in Section 24 of R.A. No. 707651 and Section 22 of its
Implementing Rules and Regulations.
52
It is noted that although AMTC filed a protest
with the PMRB regarding its superior and prior Application for Exploration Permit over
the Applications for Quarry Permit, which were converted to Small-Scale Mining Permits,
the PMRB did not resolve the same, but issued Resolution Nos. 05-08 to 05-11 on
August 8, 2005, resolving to submit to the Provincial Governor of Bulacan the
Applications for Small-Scale Mining Permits of Eduardo Mercado, Benedicto Cruz, Lucila
Valdez and Gerardo Cruz for the granting of the said permits. After the Provincial
Governor of Bulacan issued the Small-Scale Mining Permits on August 10, 2005, AMTC
appealed the Resolutions of the PMRB giving due course to the granting of the Small-
Scale Mining Permits by the Provincial Governor.
Hence, the decision of the DENR Secretary, declaring that the Application for
Exploration Permit of AMTC was valid and may be given due course, and canceling the
Small-Scale Mining Permits issued by the Provincial Governor, emanated from the
power of review granted to the DENR Secretary under R.A. No. 7076 and its
Implementing Rules and Regulations. The DENR Secretary's power to review and,
therefore, decide, in this case, the issue on the validity of the issuance of the Small-
Scale Mining Permits by the Provincial Governor as recommended by the PMRB, is a
quasi-judicial function, which involves the determination of what the law is, and what
the legal rights of the contending parties are, with respect to the matter in controversy
and, on the basis thereof and the facts obtaining, the adjudication of their respective
rights.
53
The DENR Secretary exercises quasi-judicial function under R.A. No. 7076 and
its Implementing Rules and Regulations to the extent necessary in settling disputes,
conflicts or litigations over conflicting claims. This quasi-judicial function of the DENR
Secretary can neither be equated with "substitution of judgment" of the Provincial
Governor in issuing Small-Scale Mining Permits nor "control" over the said act of the
Provincial Governor as it is a determination of the rights of AMTC over conflicting claims
based on the law.
In determining whether Section 17 (b)(3)(iii) of the Local Government Code of 1991
and Section 24 of R.A. No. 7076 are unconstitutional, the Court has been guided by
Beltran v. The Secretary of Health,
54
which held:chanroblesvirtualawlibrary
The fundamental criterion is that all reasonable doubts should be resolved in favor of
the constitutionality of a statute. Every law has in its favor the presumption of
constitutionality. For a law to be nullified, it must be shown that there is a clear and
unequivocal breach of the Constitution. The ground for nullity must be clear and
beyond reasonable doubt. Those who petition this Court to declare a law, or parts
thereof, unconstitutional must clearly establish the basis therefor. Otherwise, the
petition must fail.
55
chanroblesvirtualawlibrary
In this case, the Court finds that the grounds raised by petitioner to challenge the
constitutionality of Section 17 (b )(3)(iii) of the Local Government Code of 1991 and
Section 24 'of R.A. No.7076 failed to overcome the constitutionality of the said
provisions of law.
WHEREFORE, the petition is DISMISSED for lack of merit.
No costs.
SO ORDERED.



******************************oooooooooooooooooooooo*******************

SECOND DIVISION
G.R. NO. 180843 : April 17, 2013
APOLONIO GARCIA, in substitution of his deceased mother, Modesta Garcia,
and CRISTINA SALAMAT, Petitioners, v.DOMINGA ROBLES VDA. DE CAPARAS,
Respondent.
D E C I S I O N
DEL CASTILLO, J.:
Under the Dead Man's Statute Rule, "if one party to the alleged transaction is precluded
from testifying by death, insanity, or other mental disabilities, the other party is not
entitled to the undue advantage of giving his own uncontradicted and unexplained
account of the transaction."
1
Thus, the alleged admission of the deceased Pedro
Caparas (Pedro) that he entered into a sharing of leasehold rights with the petitioners
cannot be used as evidence against the herein respondent as the latter would be
unable to contradict or disprove the same.
This Petition for Review on Certiorari
2
seeks to reverse and set aside the August 31,
2007 Decision
3
of the Court of Appeals (CA) in CA-G.R. SP No. 90403;
4
as well as its
December 13, 2007 Resolution
5
denying petitioners' Motion for Reconsideration.
Factual Antecedents
Flora Makapugay (Makapugay) is the owner of a 2.5-hectare farm in Barangay Lugam,
Malolos, Bulacan (the land) covered by Transfer Certificate of Title No. (TCT) RT-65932
(T-25198)
6
and being tilled by Eugenio Caparas (Eugenio) as agricultural lessee under a
leasehold agreement. Makapugay passed away and was succeeded by her nephews and
niece, namely Amanda dela Paz-Perlas (Amanda), Justo dela Paz (Justo) and Augusto
dela Paz (Augusto). On the other hand, Eugenio's children Modesta Garcia (Garcia),
Cristina Salamat (Salamat) and Pedro succeeded him.
Before she passed away, Makapugay appointed Amanda as her attorney-in-fact. After
Eugenio died, or in 1974, Amanda and Pedro entered into an agreement entitled
"Kasunduan sa Buwisan",
7
followed by an April 19, 1979 Agricultural Leasehold
Contract,
8
covering the land. In said agreements, Pedro was installed and recognized as
the lone agricultural lessee and cultivator of the land.
Pedro passed away in 1984, and his wife, herein respondent Dominga Robles Vda. de
Caparas (Dominga), took over as agricultural lessee.
On July 10, 1996, the landowners Amanda, Justo and Augusto, on the one hand, and
Pedro's sisters Garcia and Salamat on the other, entered into a "Kasunduan sa Buwisan
ng Lupa"
9
whereby Garcia and Salamat were acknowledged as Pedro's co-lessees.
On October 24, 1996, herein petitioners Garcia and Salamat filed a Complaint
10
for
nullification of leasehold and restoration of rights as agricultural lessees against Pedro's
heirs, represented by his surviving spouse and herein respondent Dominga. Before the
office of the Provincial Agrarian Reform Adjudicator (PARAD) of Bulacan, the case was
docketed as Department of Agrarian Reform Adjudication Board (DARAB) Case No. R-
03-02-3520-96.
In their Complaint, Garcia and Salamat claimed that when their father Eugenio died,
they entered into an agreement with their brother Pedro that they would alternately
farm the land on a "per-season basis"; that the landowner Makapugay knew of this
agreement; that when Makapugay passed away, Pedro reneged on their agreement and
cultivated the land all by himself, deliberately excluding them and misrepresenting to
Amanda that he is Eugenio's sole heir; that as a result, Amanda was deceived into
installing him as sole agricultural lessee in their 1979 Agricultural Leasehold Contract;
that when Amanda learned of Pedro's misrepresentations, she executed on July 10,
1996 an Affidavit
11
stating among others that Pedro assured her that he would not
deprive Garcia and Salamat of their "cultivatory rights"; that in order to correct matters,
Amanda, Justo and Augusto executed in their favor the 1996 "Kasunduan sa Buwisan
ng Lupa", recognizing them as Pedro's co-lessees; that when Pedro passed away,
Dominga took over the land and, despite demands, continued to deprive them of their
rights as co-lessees; that efforts to settle their controversy proved futile, prompting the
Barangay Agrarian Reform Committee to issue the proper certification authorizing the
filing of a case; and that they suffered damages as a consequence. Petitioners prayed
that the 1979 Agricultural Leasehold Contract between Pedro and Amanda be nullified;
that they be recognized as co-lessees and allowed to cultivate the land on an alternate
basis as originally agreed; and that they be awarded P50,000.00 attorney's fees and
costs of litigation.
In her Answer,
12
herein respondent Dominga claimed that when her father-in-law
Eugenio died, only her husband Pedro succeeded and cultivated the land, and that
petitioners never assisted him in farming the land; that Pedro is the sole agricultural
lessee of the land; that Amanda's July 10, 1996 Affidavit and "Kasunduan sa Buwisan
ng Lupa" of even date between her and the petitioners are self-serving and violate the
existing 1979 Agricultural Leasehold Contract; that under Section 38
13
of Republic Act
No. 3844
14
(RA 3844), petitioners' cause of action has prescribed. Dominga further
claimed that Pedro has been in possession of the land even while Eugenio lived; that
petitioners have never cultivated nor possessed the land even for a single cropping;
that Pedro has been the one paying the lease rentals as evidenced by receipts; that
when Pedro died in 1984, she succeeded in his rights as lessee by operation of law, and
that she had been remitting lease rentals to the landowners since 1985; and that
petitioners had no right to institute themselves as her co-lessees. She prayed that the
Complaint be dismissed; that the July 10, 1996 "Kasunduan sa Buwisan ng Lupa" be
nullified; that the execution of a new leasehold agreement between her and the
landowners be ordered; and by way of counterclaim, that moral damages
15
and
litigation costs be awarded her.
Ruling of the PARAD
After hearing and consideration of the parties' respective position papers and other
submissions, the PARAD issued on May 4, 1998 a Decision,
16
which decreed as
follows:chanroblesvirtualawlibrary
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
defendant and against the plaintiffs and Order is hereby
issued:chanroblesvirtualawlibrary
1. ORDERING the dismissal of the case;cralawlibrary
2. DECLARING defendant Dominga Robles Vda. de Caparas as lawful successor-
tenant;cralawlibrary
3. ORDERING plaintiffs to maintain defendant in her peaceful possession and cultivation
of the subject landholding;cralawlibrary
4. ORDERING the MARO of Malolos, Bulacan to execute a new leasehold contract
between the landowner and defendant Dominga Robles Vda. de Caparas;cralawlibrary
5. No pronouncement as to costs.
SO ORDERED.
17
chanroblesvirtualawlibrary
The PARAD held that Amanda's act of executing the July 10, 1996 Affidavit and
"Kasunduan sa Buwisan ng Lupa" amounted to dispossession of Pedro's landholding
and rights without cause; that Amanda's 1996 disclaimer, after having installed Pedro
as tenant in 1979, was belated and unjustified; that petitioners have not shown by
evidence that they actually cultivated the land, or that they paid rentals to the
landowners; that petitioners' cause of action has prescribed in accordance with Section
38 of RA 3844; that for failure to timely question Pedro's leasehold, his rights were
transferred, by operation of law, to Dominga upon his death. Finally, the PARAD held
that petitioners' July 10, 1996 "Kasunduan sa Buwisan ng Lupa" is null and void for
being issued against Pedro's existing 1979 Agricultural Leasehold Contract, which has
not been cancelled by competent authority.
DARAB Case No. 03-03-10307-99
It appears that sometime after the execution of the July 10, 1996 "Kasunduan sa
Buwisan ng Lupa" and during the pendency of DARAB Case No. R-03-02-3520-96,
petitioners entered the land and began tilling the same. For this reason, Dominga filed
DARAB Case No. 03-03-10307-99, for maintenance of peaceful possession with
injunctive relief, against the landowners and petitioners. On petitioners' motion, the
case was dismissed.
18
chanroblesvirtualawlibrary
Ruling of the DARAB
Petitioners appealed the May 4, 1998 PARAD Decision in DARAB Case No. R-03-02-
3520-96 to the DARAB, where the case was docketed as DARAB Case No. 9722
19
(DCN
9722). Dominga likewise appealed the dismissal of DARAB Case No. 03-03-10307-99,
which appeal was docketed as DARAB Case No. 11155 (DCN 11155). On motion, both
appeals were consolidated.
On June 15, 2005, the DARAB issued its Decision,
20
the dispositive portion of which
reads, as follows:chanroblesvirtualawlibrary
WHEREFORE, premises considered, a new judgment is hereby
rendered:chanroblesvirtualawlibrary
1. DECLARING Dominga Robles Vda. de Caparas as the lawful successor-tenant of
Pedro Caparas over the subject landholding;cralawlibrary
2. ORDERING the plaintiffs in DCN 9722 and the respondents in DCN 11155 or any
person acting in their behalves [sic], to maintain Dominga Robles Vda. de Caparas in
peaceful possession and cultivation of the subject landholding;cralawlibrary
3. ORDERING the MARO of Malolos, Bulacan, to execute a new leasehold contract
between the landowner and Dominga Robles Vda. de Caparas; and
4. ORDERING for the dismissal of DCN 11155 for being moot and academic.
SO ORDERED.
21
chanroblesvirtualawlibrary
In upholding the PARAD Decision, the DARAB held that contrary to petitioners' claim,
there was no alternate farming agreement between the parties, and thus petitioners
may not claim that they were co-lessees; that Pedro merely shared his harvest with
petitioners as an act of generosity, and Dominga's act of stopping this practice after
succeeding Pedro prompted petitioners to file DARAB Case No. R-03-02-3520-96 and
claim the status of co-lessees; that Amanda's Affidavit and the 1996 "Kasunduan sa
Buwisan ng Lupa" between the landowners and petitioners cannot defeat Pedro's 1979
Agricultural Leasehold Contract and his rights as the sole tenant over the land; that for
sleeping on their rights, petitioners are now barred by laches from claiming that they
are co-lessees; and that petitioners' 1996 "Kasunduan sa Buwisan ng Lupa" is null and
void for being contrary to law, morals, public policy, and Pedro's 1979 Agricultural
Leasehold Contract, which was subsisting and which has not been cancelled by
competent authority.
Ruling of the Court of Appeals
Petitioners filed before the CA a Petition for Certiorari, which was docketed as CA-G.R.
SP No. 90403, seeking to set aside the DARAB Decision. The sole basis of their Petition
rests on the argument that as a result of a May 9, 2005 Order issued by the Regional
Technical Director (Region III) of the Department of Environment and Natural
Resources, the survey returns and plans covering TCT RT-65932 have been cancelled,
which thus rendered the June 15, 2005 DARAB Decision null and void and a proper
subject of certiorari.
On August 31, 2007, the CA issued the assailed Decision which decreed as
follows:chanroblesvirtualawlibrary
IN LIGHT OF ALL THE FOREGOING, the instant petition is DENIED. The assailed
decision is AFFIRMED in toto.
SO ORDERED.
22
chanroblesvirtualawlibrary
The CA held that the issue raised by petitioners the cancellation of the survey returns
and plans covering TCT RT-65932 was not part of their causes of action in the PARAD
or DARAB, and this new issue changed the theory of their case against Dominga, which
is not allowed. The CA added that it could not decide the case on the basis of a
question which was not placed in issue during the proceedings below.
The CA held further that even granting that the issues are resolved on the merits, the
petition would fail; the cancellation of the survey returns and plans covering TCT RT-
65932 reverts the property to its original classification as agricultural land which thus
vindicates the leasehold agreements of the parties. And speaking of leasehold
agreements, the CA held that petitioners may not be considered as Pedro's co-lessees,
for lack of proof that they actually tilled the land and with petitioners' own admission in
their pleadings that they merely received a share from Pedro's harvests; that the
original 1974 and 1979 leasehold agreements between Makapugay, Amanda and Pedro
categorically show that Pedro is the sole designated agricultural lessee; and that
without proper legal termination of Pedro's lease in accordance with RA 3844, the
landowners cannot designate other tenants to the same land in violation of the existing
lessee's rights.
Petitioners moved for reconsideration, arguing that the land has been re- classified as
residential land, and has been actually used as such. Petitioners cited a 1997 ordinance,
Malolos Municipal Resolution No. 41-97,
23
which adopted and approved the zoning
ordinance and the Malolos Development Plan prepared jointly by the Housing and Land
Use Regulatory Board and the Malolos Sangguniang Bayan. In the assailed December
13, 2007 Resolution,
24
the CA denied the Motion for Reconsideration.
Issues
In this petition, the following errors are assigned:chanroblesvirtualawlibrary
1. x x x RESPONDENT'S ACT OF HAVING BUILT THREE (3) HOUSES (FOR HERSELF
AND TWO OF HER CHILDREN), WAS "CONVERSION OF THE FARMHOLD INTO A
HOUSING-RESIDENTIAL SUBDIVISION" AND THEREFORE, SHE IS NOT BEING PUT IN
SURPRISE NOR IN UNFAIR SITUATION. CONSEQUENTLY, SHE IS THE PARTY IN
ESTOPPEL. AND FROM THE TIME BY HER ACTS OF SELF-CONVERSION OF THE LAND,
IN THE EARLY 90S OR EARLIER, SHE "LOST HER SECURITY OF TENURE" AS
AGRICULTURAL LESSEE.
2. THE DECISIONS OF THE DARAB PROVINCIAL ADJUDICATOR, DARAB CENTRAL
OFFICE, AND THE HONORABLE COURT OF APPEALS, SPEAK OF NO HOMELOT HAVING
BEEN AWARDED BY THE DEPARTMENT OF AGRARIAN REFORM TO PRIVATE
RESPONDENT.
3. ACTUAL PHYSICAL CHANGE IN THE USE OF THE LAND FROM AGRICULTURAL TO
"RESIDENTIAL" MAY OCCUR AFTER TRIAL, BUT DURING THE APPEAL, WHICH THE
HON. COURT OF APPEALS MAY CONSIDER.
4. "CONVERSION" (WHICH REQUIRES PRIOR APPROVAL BY THE DAR) HAVING
BECOME A "FAIT ACCOMPLI", SECTION 220 OF THE REAL ESTATE TAX CODE AND
ARTICLE 217 OF THE LOCAL GOVERNMENT CODE OF 1991 AFFIRM THE
TRUSTWORTHINESS OF THE TAX DECLARATION THAT IS, THE PREVIOUS FARMHOLD
HAS BEEN CONVERTED INTO "RESIDENTIAL" LAND, AND CONFIRMED BY THE CITY
ZONING DIRECTOR.
5. IN NOT HAVING CONSIDERED THE TAX DECLARATION AND THE ZONING
CERTIFICATION x x x, THE HON. COURT OF APPEALS COMMITTED A VERY
FUNDAMENTAL ERROR.
25
chanroblesvirtualawlibrary
Petitioners' Arguments
In their Petition and Reply,
26
petitioners this time argue that in building houses upon
the land for herself and her children without a homelot award from the Department of
Agrarian Reform, Dominga converted the same to residential use; and by this act of
conversion, Dominga violated her own security of tenure and the land was removed
from coverage of the land reform laws. They add that the Malolos zoning ordinance and
the tax declaration covering the land effectively converted the property into residential
land.
Petitioners justify their change of theory, the addition of new issues, and the raising of
factual issues, stating that the resolution of these issues are necessary in order to arrive
at a just decision and resolution of the case in its totality. They add that the new issues
were raised as a necessary consequence of supervening events which took place after
the Decisions of the PARAD and DARAB were issued.
Respondent's Arguments
In her Comment,
27
Dominga argues that the Petition raises questions of fact which are
not the proper subject of a Petition under Rule 45 of the Rules. She adds that
petitioners raised anew issues which further changed the theory of their case, and
which issues may not be raised for the first time at this stage of the proceedings.
Our Ruling
The Petition is denied.
DARAB Case No. R-03-02-3520-96, which was filed in 1996 or long after Pedro's death
in 1984, has no leg to stand on other than Amanda's declaration in her July 10, 1996
Affidavit that Pedro falsely represented to Makapugay and to her that he is the actual
cultivator of the land, and that when she confronted him about this and the alleged
alternate farming scheme between him and petitioners, Pedro allegedly told her that
"he and his two sisters had an understanding about it and he did not have the intention
of depriving them of their cultivatory rights."
28
Petitioners have no other evidence, other
than such verbal declaration, which proves the existence of such arrangement. No
written memorandum of such agreement exists, nor have they shown that they actually
cultivated the land even if only for one cropping. No receipt evidencing payment to the
landowners of the latter's share, or any other documentary evidence, has been put
forward.
What the PARAD, DARAB and CA failed to consider and realize is that Amanda's
declaration in her Affidavit covering Pedro's alleged admission and recognition of the
alternate farming scheme is inadmissible for being a violation of the Dead Man's
Statute,
29
which provides that "[i]f one party to the alleged transaction is precluded
from testifying by death, insanity, or other mental disabilities, the other party is not
entitled to the undue advantage of giving his own uncontradicted and unexplained
account of the transaction."
30
Thus, since Pedro is deceased, and Amanda's declaration
which pertains to the leasehold agreement affects the 1996 "Kasunduan sa Buwisan ng
Lupa" which she as assignor entered into with petitioners, and which is now the subject
matter of the present case and claim against Pedro's surviving spouse and lawful
successor-in-interest Dominga, such declaration cannot be admitted and used against
the latter, who is placed in an unfair situation by reason of her being unable to
contradict or disprove such declaration as a result of her husband-declarant Pedro's
prior death.
If petitioners earnestly believed that they had a right, under their supposed mutual
agreement with Pedro, to cultivate the land under an alternate farming scheme, then
they should have confronted Pedro or sought an audience with Amanda to discuss the
possibility of their institution as co-lessees of the land; and they should have done so
soon after the passing away of their father Eugenio. However, it was only in 1996, or
17 years after Pedro was installed as tenant in 1979 and long after his death in 1984,
that they came forward to question Pedro's succession to the leasehold. As correctly
held by the PARAD, petitioners slept on their rights, and are thus precluded from
questioning Pedro's 1979 agricultural leasehold contract.
Amanda, on the other hand, cannot claim that Pedro deceived her into believing that he
is the sole successor to the leasehold. Part of her duties as the landowner's
representative or administrator was to know the personal circumstances of the lessee
Eugenio; more especially so, when Eugenio died. She was duty-bound to make an
inquiry as to who survived Eugenio, in order that the landowner or she as
representative could choose from among them who would succeed to the leasehold.
Under Section 9 of RA 3844, Makapugay, or Amanda as Makapugay's duly appointed
representative or administrator was required to make a choice, within one month from
Eugenio's death, who would succeed as agricultural lessee.
Thus:chanroblesvirtualawlibrary
Section 9. Agricultural Leasehold Relation Not Extinguished by Death or Incapacity of
the Parties - In case of death or permanent incapacity of the agricultural lessee to work
his landholding, the leasehold shall continue between the agricultural lessor and the
person who can cultivate the landholding personally, chosen by the agricultural lessor
within one month from such death or permanent incapacity, from among the following:
(a) the surviving spouse; (b) the eldest direct descendant by consanguinity; or (c) the
next eldest descendant or descendants in the order of their age: Provided, That in case
the death or permanent incapacity of the agricultural lessee occurs during the
agricultural year, such choice shall be exercised at the end of that agricultural year:
Provided, further, That in the event the agricultural lessor fails to exercise his choice
within the periods herein provided, the priority shall be in accordance with the order
herein established.
In case of death or permanent incapacity of the agricultural lessor, the leasehold shall
bind his legal heirs. (Emphasis supplied)
Amanda may not claim ignorance of the above provision, as ignorance of the law
excuses no one from compliance therewith.
31
Thus, when she executed the 1979
Agricultural Leasehold Contract with Pedro, she is deemed to have chosen the latter as
Eugenio's successor, and is presumed to have diligently performed her duties, as
Makapugay's representative, in conducting an inquiry prior to making the choice.
The same holds true for petitioners. They should be held to a faithful compliance with
Section 9. If it is true that they entered into a unique arrangement with Pedro to
alternately till the land, they were thus obliged to inform Makapugay or Amanda of their
arrangement, so that in the process of choosing Eugenio's successor, they would not be
left out. But evidently, they did not; they slept on their rights, and true enough, they
were excluded, if there was any such alternate farming agreement between them. And
after Pedro was chosen and installed as Eugenio's successor, they allowed 17 years to
pass before coming out to reveal this claimed alternate farming agreement and insist on
the same.
With the above pronouncements, there is no other logical conclusion than that the 1996
"Kasunduan sa Buwisan ng Lupa" between Amanda and petitioners, which is grounded
on Pedro's inadmissible verbal admission, and which agreement was entered into
without obtaining Dominga's consent, constitutes an undue infringement of Dominga's
rights as Pedro's successor-in-interest under Section 9, and operates to deprive her of
such rights and dispossess her of the leasehold against her will. Under Section 7
32
of RA
3844, Dominga is entitled to sennity of tenure; and under Section 16,
33
any
modification of the lease agreement must be done with the consent of both parties and
without prejudicing Dominga's security of tenure.
This Court shall not delve into the issue of re-classification or conversion of the land.
Re-classification/conversion changes nothing as between the landowners and Dominga
in regard to their agreement, rights and obligations. On the contrary, re-
classification/conversion can only have deleterious effects upon petitioners' cause. Not
being agricultural lessees of the land, petitioners may not benefit at all, for under the
law, only the duly designated lessee -herein respondent - is entitled to disturbance
compensation in case of re-classification/conversion of the landholding into residential,
commercial, industrial or some other urban purposes.
34
Besides, a valid re-classification
of the land not only erases petitioners' supposed leasehold rights; it renders them illegal
occupants and sowers in bad faith thereof, since from the position they have taken as
alleged lessees, they are not the owners of the land.
WHEREFORE, the Petition is DENIED. The assailed August 31, 2007 Decision and
December 13, 2007 Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.







EN BANC
G.R. NO. 192249 : April 2, 2013
SALIC DUMARPA, Petitioner, v.COMMISSION ON ELECTIONS, Respondent.
D E C I S I O N
PEREZ, J.:
Challenged in this petition for prohibition and mandamus with prayer for issuance of
temporary restraining order and/or writ of preliminary injunction under Rule 64, in
relation to Rule 65, of the Rules of Court is Resolution No. 8965
1
issued by respondent
Commission on Elections (COMELEC) en bane and entitled Guidelines and Procedures in
the Conduct of Special Elections in Some Areas Where There are Failure of Elections
during the Conduct of the 10 May 2010 National Elections. Petitioner Salic Dumarpa
(Dumarpa) seeks to annul or declare illegal Sections 4
2
and 12
3
of COMELEC Resolution
No. 8965 for having been issued with grave abuse of discretion.
Dumarpa was a congressional candidate for the 1st District of Lanao del Sur at the 10
May 2010 elections. The COMELEC declared a total failure of elections in seven (7)
municipalities, including the three (3) Municipalities of Masiu, Lumba Bayabao and
Kapai, which are situated in the 1st Congressional District of Province of Lanao del Sur.
The conduct of special elections in the seven (7) Lanao del Sur municipalities was
originally scheduled for 29 May 2010.
On 25 May 2010, COMELEC issued Resolution No. 8946,
4
resetting the special elections
to 3 June 2010 for the following reasons:chanroblesvirtualawlibrary
x x x
1. Aside from the reported seven (7) municipalities where there are total failure of
elections, there are precincts in eight (8) other municipalities where there were failure
of elections, namely:chanroblesvirtualawlibrary
x x x
2. The results of elections in the said municipalities will affect the elections not only in
the provincial level (Congressman, Vice-Governor and Sangguniang Panlalawigan) but
also in the municipal level.
3. There are missing ballots in the following precincts more particularly
in:chanroblesvirtualawlibrary
a. Brgy. Picotaan, Lumbatan with 682 registered voters.
b. Brgy. Pagalamatan, Tugaya with 397 registered voters.
4. Based on reports some of the BEIs are not willing to serve or are disqualified due to
relationship;cralawlibrary
5. The Precinct Count Optical Scan (PCOS) assigned in the said municipalities were
already pulled out by Smartmatic;cralawlibrary
6. There is a need for the newly constituted BEIs to undergo training and certification
as required under R.A. 9369.
7. There is a need to review the manning of Comelec personnel in the municipal level
and assess their capabilities to discharge their duties and functions not only as an
Election Officer but also as Chairman of the Board of Canvassers.
x x x
Considering the foregoing, the Commission RESOLVED, as it hereby RESOLVES as
follows:chanroblesvirtualawlibrary
1. to reset the special elections scheduled on 29 May 2010 pursuant to the Commission
En Banc Resolution promulgated May 21, 2010 in the following
areas:chanroblesvirtualawlibrary
x x x
and to reschedule the same on June 3, 2010;cralawlibrary
2. to prepare the logistical, manpower and security requirements in connection with the
conduct of said special elections;cralawlibrary
3. to direct the Regional Election Director and the Provincial Election Supervisor to
notify the candidates/interested parties thereat; and
4. to hear the petitions/report/s on the failure of elections on the eight (8) other
municipalities in Lanao del Sur, to wit:chanroblesvirtualawlibrary
x x x
Let the Executive Director implement this resolution and the Education and Information
Department publish this resolution in two (2) newspapers of general
circulation.
5
chanroblesvirtualawlibrary
Subsequently, COMELEC issued the herein assailed resolution which provided, among
others, the constitution of Special Board of Election Inspectors (SBEI) in Section 4 and
Clustering of Precincts in Section 12.
On the same date COMELEC Resolution No. 8965 was issued, on 28 May 2010,
Dumarpa filed a Motion for Reconsideration concerning only Sections 4 and 12 thereof
as it may apply to the Municipality of Masiu, Lanao del Sur. The COMELEC did not act
on Dumarpa's motion.
A day before the scheduled special elections, on 2 June 2010, Dumarpa filed the instant
petition alleging that "both provisions on Re-clustering of Precincts (Section 12) and
constitution of SBEIs [Special Board of Election Inspectors] (Section 4) affect the
Muncipality of Masiu, Lanao del Sur, and will definitely doom petitioner to certain
defeat, if its implementation is not restrained or prohibited by the Honorable Supreme
Court."
Parenthetically, at the time of the filing of this petition, Dumarpa was leading by a slim
margin over his opponent Hussin Pangandaman in the canvassed votes for the areas
which are part of the 1st Congressional District of Lanao del Sur where there was no
failure of elections.
6
chanroblesvirtualawlibrary
We did not issue a temporary restraining order or a writ of preliminary injunction. Thus,
the special elections on 3 June 2010 proceeded as scheduled.
Petitioner is adamant that:chanroblesvirtualawlibrary
1. x x x SECTION 12 OF COMELEC RESOLUTION NO. 8965 x x x IS ILLEGAL OR VOID,
BEING CONTRARY TO LAW, AND ARE ISSUED OR EMBODIED IN SAID RESOLUTION
WITHOUT NOTICE TO CANDIDATES AND STAKEHOLDERS AND WITHOUT
HEARING;cralawlibrary
2. x x x SECTION 4 OF COMELEC RESOLUTION NO. 8965 x x x IS ILLEGAL OR VOID,
BEING CONTRARY TO LAW, AND ARE ISSUED OR EMBODIED IN SAID RESOLUTION
WITHOUT NOTICE TO CANDIDATES AND STAKEHOLDERS AND WITHOUT
HEARING;cralawlibrary
3. PUBLIC RESPONDENT, THE HONORABLE COMMISSION ON ELECTIONS, ACTED
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION, IN INCORPORATING, PROVIDING, OR ISSUING SECTION 12 AND
SECTION 4 IN SAID RESOLUTION NO. 8965.
7
chanroblesvirtualawlibrary
The Office of the Solicitor General (OSG), however, in its sparse Comment counters that
the issues have been mooted by the holding of the special elections as scheduled on 3
June 2010. As a catch-all refutation, the OSG maintains that COMELEC Resolution No.
8965 is not tainted with grave abuse of discretion.
We dismiss the petition.
Indeed, the special elections held on 3 June 2010 mooted the issues posed by
Dumarpa. The opponent of Dumarpa, Hussin Pangandaman, was proclaimed winner in
the 1st Congressional District of Lanao del Sur. We see this as a supervening event
which, additionally, mooted the present petition as the issues raised herein are
resolvable in the election protest.
8
chanroblesvirtualawlibrary
A moot and academic case is one that ceases to present a justiciable controversy by
virtue of supervening events, so that a declaration thereon would be of no practical
value. As a rule, courts decline jurisdiction over such case, or dismiss it on ground of
mootness.
9
chanroblesvirtualawlibrary
In any event, the petition is unmeritorious.
COMELEC issued Resolution No. 8965, in the exercise of its plenary powers in the
conduct of elections enshrined in the Constitution
10
and
statute.
11
chanroblesvirtualawlibrary
Thus, it brooks no argument that the COMELEC's broad power to "enforce and
administer all laws and regulations relative to the conduct of an election, plebiscite,
initiative, referendum and recall,"
12
carries with it all necessary and incidental powers
for it to achieve the objective of holding free, orderly, honest, peaceful and credible
elections.
13
chanroblesvirtualawlibrary
As stated in Sumulong v. COMELEC:chanroblesvirtualawlibrary
Politics is a practical matter, and political questions must be dealt with realistically - not
from the standpoint of pure theory. The Commission on Elections, because of its fact-
finding facilities, its contacts with political strategists, and its knowledge derived from
actual experience in dealing with political controversies, is in a peculiarly advantageous
position to decide complex political questions.
x x x
There are no ready-made formulas for solving public problems. Time and experience
are necessary to evolve patterns that will serve the ends of good government. In the
matter of the administration of the laws relative to the conduct of elections x x x, we
must not by any excessive zeal take away from the Commission on Elections that
initiative which by constitutional and legal mandates properly belongs to
it.
14
chanroblesvirtualawlibrary
Cauton v. COMELEC
15
emphasized the COMELEC's latitude of
authority:chanroblesvirtualawlibrary
The purpose of the governing statutes on the conduct of elections is to protect the
integrity of elections to suppress all evils that may violate its purity and defeat the will
of the voters citation omitted. The purity of the elections is one of the most
fundamental requisites of popular government citation omitted. The Commission on
Elections, by constitutional mandate, must do everything in its power to secure a fair
and honest canvass of the votes cast in the elections. In the performance of its duties,
the Commission must be given a considerable latitude in adopting means and methods
that will insure the accomplishment of the great objective for which it was created - to
promote free, orderly, and honest elections. The choice of means taken by the
Commission on Elections, unless they are clearly illegal or constitute grave abuse of
discretion, should not be interfered with
16
citation omitted. (Emphasis supplied).
Viewed against the foregoing spectrum of the COMELEC's plenary powers and the
raison d etre for the statutes on the conduct of elections, we dismiss Dumarpa's
objections about Sections 4 and 12 of COMELEC Resolution No. 8965.
Dumarpa objects to the re-clustering of precincts, only for the Municipality of Masiu,
because it was undertaken: (1) without notice and hearing to the candidates affected;
(2) in less than thirty days before the conduct of the special elections; and (3) the
polling place was reduced from 21 to only 3 voting centers which Dumarpa's opponent,
Representative Hussin Pangandaman, controls. As regards the designation of SBEIs,
Dumarpa points out that "public school teachers who are members of the board of
election inspectors shall not be relieved nor disqualified from acting as such members,
except for cause and after due hearing."
17
chanroblesvirtualawlibrary
Dumarpa's objections conveniently fail to take into account that COMELEC Resolution
No. 8965, containing the assailed provisions on re-clustering of the precincts and the
designation of special board of election inspectors, was issued precisely because of the
total failure of elections in seven (7) Municipalities
18
in the Province of Lanao del Sur, a
total of fifteen (15) Municipalities where there was a failure of elections. Notably, the
COMELEC's declaration of a failure of elections is not being questioned by Dumarpa. In
fact, he confines his objections on the re-clustering of precincts, and only as regards
the Municipality of Masiu.
Plainly, it is precisely to prevent another occurrence of a failure of elections in the
fifteen (15) municipalities in the province of Lanao del Sur that the COMELEC issued the
assailed Resolution No. 8965. The COMELEC, through its deputized officials in the field,
is in the best position to assess the actual condition prevailing in that area and to make
judgment calls based thereon. Too often, COMELEC has to make snap judgments to
meet unforeseen circumstances that threaten to subvert the will of our voters. In the
process, the actions of COMELEC may not be impeccable, indeed, may even be
debatable. We cannot, however, engage in an academic criticism of these actions often
taken under very difficult circumstances.
19
chanroblesvirtualawlibrary
The COMELEC actually closely followed Section 6 of the Omnibus Election Code by
scheduling the special election not later than thirty (30) days after the cessation of the
cause of the failure to elect. Moreover, the COMELEC sought to foreclose the possibility
that the Board of Election
Inspectors may not report to the polling place, as what occurred in the Municipality of
Masiu, resulting in another failure of election.
Of course the case cannot preempt the decision in the election protest filed by Dumarpa
before the House of Representative Electoral Tribunal, or our action should the matter
reach us on petition for certiorari.
20
Our ruling herein is confined to the issues raised by
Dumarpa relative to COMELEC Resolution No. 8965.
WHEREFORE, the petition 1s DISMISSED. Cost against petitioner Salic Dumarpa.
SO ORDERED.


*****************************ooooooooooooooooo*****************

FIRST DIVISION
[A.M. No. RTJ-10-2217, April 08, 2013]
SONIA C. DECENA AND REY C. DECENA, Petitioners, v. JUDGE NILO A.
MALANYAON, REGIONAL TRIAL COURT, BRANCH 32, IN PILI, CAMARINES
SUR, Respondent.
D E C I S I O N
BERSAMIN, J.:
A judge may not involve himself in any activity that is an aspect of the private practice
of law. His acceptance of an appointment to the Bench inhibits him from engaging in
the private practice of law, regardless of the beneficiary of the activity being a member
of his immediate family. He is guilty of conduct unbecoming of a judge otherwise.
Antecedents

The complainants have lodged an administrative complaint for conduct unbecoming a
judge against Hon. Nilo A. Malanyaon, the Presiding Judge of the Regional Trial Court,
Branch 32, in Pili, Camarines Sur.
1
crared

In their joint complaint-affidavit dated April 10, 2007,
2
the complainants averred that
complainant Rey C. Decena had brought an administrative case in Regional Office No. V
of the Civil Service Commission in Legaspi City, Albay against Judge Malanyaons wife,
Dr. Amelita C. Malanyaon (Dr. Amelita), then the Assistant Provincial Health Officer of
the Province of Camarines Sur; that during the hearing of the administrative case on
May 4, 2006, Judge Malanyaon sat beside his daughter, Atty. Ma. Kristina C.
Malanyaon, the counsel of Dr. Amelita in the case; and that the events that then
transpired were as recounted in the joint complaint-affidavit, to
wit:chanroblesvirtuallawlibrary
3. During the early stage of the hearing when the hearing officer, Atty. Dennis Masinas
Nieves, brought up the matter regarding Dr. Malanyaons manifestation or motion (to
dismiss the case for lack of jurisdiction), Judge Malanyaon coached her daughter in
making manifestations/motions before the hearing officer, by scribbling on some piece
of paper and giving the same to the former, thus prompting her daughter to rise from
her seat and/or ask permission from the officer to speak, and then make some
manifestations while reading or glancing on the paper given by Judge Malanyaon. At
one point, Judge Malanyaon even prompted her daughter to demand that Atty. Eduardo
Loria, the collaborating counsel of our principal counsel, Atty. Mary Ailyne Zamora, be
required to produce his PTR number.

4. When our principal counsel, Atty. Zamora, arrived and took over from Atty. Loria, she
inquired regarding the personality of Judge Malanyaon, being seated at the lawyers
bench beside Atty. Malanyaon, Judge Malanyaon then proudly introduced himself and
manifested that he was the counsel of the respondents counsel. Atty. Zamora
proceeded to raise the propriety of Judge Malanyaons sitting with and assisting his
daughter in that hearing, being a member of the judiciary, to which Judge Malanyaon
loudly retorted that he be shown any particular rule that prohibits him from sitting with
his daughter at the lawyers bench. He insisted that he was merely assisting her
daughter, who just passed the bar, defend the respondent, and was likewise helping
the latter defend herself. Pertinent portion of the records of the proceedings are as
follows:
x x x x
Atty. Nieves : First, she has to enter her appearance. Okay?
Atty.
Zamora
: Anyway, I dont think, I do not memorize my PTR number, I dont
remember my PTR number, but aside from that Your Honor, I think this
Honorable Hearing Officer could take judicial notice that Atty. Ed Loria is
indeed a lawyer in good standing in IBP. And moreover, Your Honor, I
would like to inquire as to the personality of the gentleman next to the
lawyer of the defendant or respondent, Your Honor?
Judge
Malanyaon
: I am the counsel of the complainant, ah, of the respondents
counsel, I am Judge Malanyaon. I am assisting her. And so
what?!!
Atty.
Zamora
: Ah, you are the counsel of the (interrupted)
Atty. Nieves : Theres no need to be belligerent lets calm down
Atty.
Zamora
: Your Honor, Your Honor, we all do not know each other, and with due
respect to the judge, there is also a hearing officer here Your Honor, and
I think Your Honor the Hearing Officer here deserves due respect. I mean,
the word So what?!, I dont think that would be proper Your Honor in
this Court.
Judge
Malanyaon
: I am sorry your Honor, because the is out of turn, out of turn.
Atty. Nieves : This is not necessary, actually, this is not necessary. So we might as well
proceed with our hearing today. Ive already made a ruling regarding the,
the query regarding PTR. Okay, at this stage it is not proper considering
that Atty. Loria only entered his appearance during the start of the
hearing. Okay. So, we have to proceed now.
Atty.
Zamora
: I am accepting Your Honor the delegation again of Atty. Loria. I am
entering my appearance as the lead counsel for this case, Your Honor, as
counsel for the complainant.
Atty. Nieves : Okay.
Atty.
Zamora
: And may I be clear that the judge will be the collaborating counsel for the
respondent or the counsel of record of the respondent?
Atty. Nieves : of the judge is Im sorry?
Atty.
Zamora
: He manifested Your Honor that he is the counsel of the respondent.
Atty.
Malanyaon
: No, the counsel of the counsel of the respondent.
Atty. Nieves : He has not, he has not entered his appearance in this case.
Atty.
Zamora
: Would that be proper for him Your Honor, considering that he is a judge
Your Honor? Would that, ah, there will be undue influence, or whatever,
Your Honor? We are just trying to avoid any bias or undue influence in
this court, Your Honor.
Atty. Nieves : Okay, it will not, considering the fact that he has not entered his
appearance for the respondent.
Judge
Malanyaon
: If Your Honor, please, the respondent is my wife. Counsel for the
respondent is my daughter. She just passed the bar! Im
assisting her. Is it not my right, my duty to assist my daughter?
And to assist my wife defend herself? I am only sitting with my
daughter! Im not acting for the respondent!
Atty.
Zamora
: I dont think Your Honor under the rule, the counsel needs a counsel.
Only the one charged or the one being charged needs a counsel.
Atty. Nieves : Okay, lets settle this now. Judge Malanyaon has not entered his
appearance. It will not in any way
x x x x

The complainants averred that the actuations of Judge Malanyaon during the hearing of
his wifes administrative case in the Civil Service Commission constituted violations of
the New Code of Judicial Conduct for the Philippines Judiciary.

On June 21, 2007, then Court Administrator Christopher O. Lock required Judge
Malanyaon to comment on the complaint.
3
cralawvllred

On July 15, 2007, Judge Malanyaon filed his comment, refuting the allegations of the
complaint thusly:chanroblesvirtuallawlibrary
1. Complainants are the sister and nephew of my wife, Amelita C. Malanyaon, there
is bad blood between them arising from divergent political loyalties and family
differences;cralawlibrary
2. There is no reason for complainants to take offense at my sitting beside my
daughter Ma. Kristina, when she appeared for my wife in the first hearing of the
administrative case Rey C. Decena filed against my wife; the hearing officer
himself could cite no rule disallowing me from sitting beside my daughter, in the
counsels table, and he did not ask me to vacate where I sat beside my
daughter; the transcript does not support complainants claim;cralawlibrary
3. It is true I snapped at Atty. Zamora, when she asked about my personality but
she was speaking out of turn as all I was doing was sitting beside my daughter
when she came as the transcript will show, I apologized to the hearing officer,
who graciously let the matter pass;cralawlibrary
4. My daughter is a new practitioner; her law partner and lead counsel could not
make it on time, and as her consultant, I did not speak, nor enter my
appearance for my wife to lend a helping hand to a neophyte lawyer,
defending her mother in an administrative case, is not unethical, nor does it
constitute the proscribed practice of law;cralawlibrary
5. It is petty for my sister-in-law and for my nephew to complain of my presence
during the hearing; it is my filial duty to lend my wife and daughter, moral and
legal support in their time of need; indeed, it is strange for complainants to take
offense at my presence and accuse me of practicing law during my stint as a
judge when before the bad blood between my wife and her sibling and nephew
erupted, I helped them out with their legal problems gratis et amore and they
did not complain of my practicing law on their behalf, indeed, one of the crosses
a judge must carry is the cross of base ingratitude.
4


On March 27, 2008, then Court Administrator Zenaida N. Elepao recommended to the
Court that: (a) the complaint be re-docketed as a regular administrative matter; (b)
Judge Malanyaon be found guilty of gross misconduct; and (c) Judge Malanyaon be
fined P50,000.00.
5
cralawvllred

On September 16, 2009, the Court required the parties to manifest within 10 days from
notice if they were willing to submit the case for resolution on the basis of the records
or pleadings filed.
6
cralawvllred

The complainants complied on November 13, 2009, stating their willingness to submit
the case for resolution after a formal investigation or hearing was conducted, and after
they were given time to file their respective position papers or memoranda.
7
cralawvllred

On January 11, 2010, the Court resolved: (a) to re-docket the administrative case as a
regular administrative matter; (b) to await Judge Malanyaons compliance with the
September 16, 2009 resolution; and (c) to refer the administrative matter to the OCA
for evaluation, report and recommendation.
8
cralawvllred

After Judge Malanyaon did not submit any compliance with the September 16, 2009
resolution, the Court ordered him on February 10, 2010 to show cause why he should
not be disciplinarily dealt with or held in contempt for such failure, and further directed
him to still comply with the resolution.
9
cralawvllred

On February 15, 2010, Judge Malanyaons counsel informed the Court that Judge
Malanyaon had meanwhile suffered a massive stroke on September 2, 2009 that had
affected his mental faculties and made him unfit to defend himself here; and prayed for
the suspension of the proceedings until Judge Malanyaon would have been found
competent to comprehend and stand the rigors of the investigation.
10
cralawvllred

On April 12, 2010, the Court deferred action on the case, and required Judge
Malanyaon to submit a medical certificate.
11
cralawvllred

Judge Malanyaon submitted a medical certificate dated May 27, 2010, issued by the
Philippine General Hospital, certifying that he had been confined thereaft from
September 2, 2009 to October 19, 2009 for the following reason, to
wit:chanroblesvirtuallawlibrary
Cerebro Vascular disease, Hypertension Intra Cerebral Hematoma
Left Thalamus with obstructive Hydrocephalus; DM type II, Chronic
Obstructive Pulmonary disease; Pneumonia; lleus (resolved); Neurogenic bladder,
Benign Prostatic Hypertrophy; Graves disease;
Arthritis.

OPERATION PERFORMED:
Bilateral tube ventriculostomy
12


Judge Malanyaon submitted two more medical certificates, the first dated October 5,
2010,
13
certifying that, among others, he was undergoing regular check-up, and the
other, dated January 24, 2011,
14
certifying that his functional and mental status had
been assessed as follows:chanroblesvirtuallawlibrary
The severity and location of the hemorrage in the brain resulted in residual
epoliptogenic focus (Post-gliotic seizures) and significant impairment of cognition,
memory judgment behavior (Vascular Dementia). He has problems with memory recall,
analysis of information, events and situations which may make defending himself
difficult, if necessary. Although he is independent on ambulation, he requires assistance
even in basic activities of daily living.
15


The Court required the complainants to comment on Judge Malanyaons medical
certification dated October 5, 2010.

On July 18, 2011, however, Dr. Amelita submitted a manifestation and urgent motion to
dismiss, seeking the dismissal of the administrative case against Judge Malanyaon upon
the following grounds, to wit:chanroblesvirtuallawlibrary
x x x x

2. Unfortunately, in a Medical Certification dated June 15, 2011 the original of which
is attached hereto as Annex 1, the attending neurologist of my husband has
pronounced him permanently mentally impaired. x x x.

x x x x

3. As a consequence, my husband has permanently lost the capacity to understand the
nature and object of the administrative proceedings against him. He cannot intelligently
appoint his counsel or communicate coherently with him. He cannot testify in his own
behalf, and confront and cross-examine opposing witnesses. Indeed, he cannot
properly avail himself of his rights in an adversarial administrative
investigation;cralawlibrary

4. Given the progressive mental impairment afflicting my husband, he has permanently
lost the capacity to defend himself. Thus, to continue the administrative investigation
against my husband who is no longer in any position to defend himself would constitute
a denial of his right to be heard (Baikong Akang Camsa vs. Judge Aurelio Rendon, A.M.
No. MTJ-02-1395 dated 19 February 2002).
16


Even so, on September 26, 2011, we required the complainants to comment on the
manifestation and motion of Dr. Amelita.
17
cralawvllred

Subsequently, Dr. Amelita submitted another motion dated January 23, 2012,
18
praying
for the dismissal of the case against Judge Malanyaon.

On February 6, 2012, Court Administrator Jose Midas P. Marquez reiterated the
recommendation made on March 27, 2008 by then Court Administrator Elepao by
recommending that: (a) the administrative case be re-docketed as a regular
administrative matter; and (b) Judge Malanyaon be found guilty of gross misconduct
and fined P50,000.00.
19
cralawvllred

On May 3, 2012, the Court received the complainants compliance dated February 1,
2012,
20
as their response to the show cause order issued in relation to their failure to
submit the comment the Court had required on September 26, 2011.
21
cralawvllred

On September 4, 2012, the Court received from Dr. Amelita an urgent ex parte motion
for immediate resolution, praying that the motion to dismiss dated July 18, 2011 be
already resolved.
22
cralawvllred
Issues

For consideration and resolution are the following issues, namely: (a) whether or not
Judge Malanyaon would be denied due process if the administrative case was not
dismissed; (b) whether the actuations of Judge Malanyaon complained of constituted
conduct unbecoming of a judge; and (c) if Judge Malanyaon was guilty of conduct
unbecoming of a judge, what should be the correct sanction.
Ruling

We now discuss and resolve the issues accordingly.
1.
Respondents right to due process
is not violated by resolution of the case

In her manifestation with urgent motion to dismiss,
23
Dr. Amelita stressed that
proceeding against Judge Malanyaon despite his present medical state would violate his
right to due process. She stated:chanroblesvirtuallawlibrary
3. As a consequence, my husband has permanently lost the capacity to understand the
nature and object of the administrative proceedings against him. He cannot intelligently
appoint his counsel or communicate coherently with him. He cannot testify in his own
behalf, and confront and cross-examine opposing witnesses. Indeed, he cannot
properly avail himself of his rights in an adversarial administrative investigation.
24


Opposing, the complainants argued that Dr. Amelitas concern was unfounded
considering that Judge Malanyaon had not only been given the opportunity to be heard,
but had been actually heard on their complaint.

The complainants argument is well taken.

On August 3, 2007, or prior to his suffering the massive stroke that impaired his mental
faculty, Judge Malanyaon already submitted his comment containing his explanations
and refutations of the charge against him. His comment asserted that during the
hearing of the administrative case of his wife in the Regional Office of the Civil Service
Commission, the hearing officer did not even cite any rule that prohibited him from
sitting beside his daughter who was then acting as the counsel of Dr. Amelita therein,
or that inhibited him from assisting his daughter in the defense of his wife. He pointed
out that although he had then lost his temper after the opposing counsel had inquired
about his personality in that hearing, he had ultimately apologized to the hearing
officer, who had in turn graciously let the matter pass.

Under the circumstances, Judge Malanyaon was accorded due process. In
administrative cases, the requirement of due process is satisfied whenever the parties
are afforded the fair and reasonable opportunity to explain their side of the
controversy,
25
either through oral arguments or through pleadings.
26
That is what
happened herein. Accordingly, Dr. Amelitas motion was bereft of basis, and should be
denied.
2.
Actuations of Judge Malanyaon
rendered him guilty of
conduct unbecoming of a judge

The following actuations of Judge Malanyaon constituted conduct unbecoming of a
judge upon the reasons set forth below.

First was Judge Malanyaons occupying a seat beside his daughter that was reserved for
the lawyers during the hearing. Such act displayed his presumptuousness, and probably
even his clear intention to thereby exert his influence as a judge of the Regional Trial
Court on the hearing officer in order for the latter to favor his wifes cause. That
impression was definitely adverse against the Judiciary, whose every judicial officer was
presumed to be a subject of strict scrutiny by the public. Being an incumbent RTC
Judge, he always represented the Judiciary, and should have acted with greater
circumspection and self-restraint, simply because the administrative hearing was
unavoidably one in which he could not but be partisan. Simple prudence should have
counselled him to avoid any form of suspicion of his motives, or to suppress any
impression of impropriety on his part as an RTC judge by not going to the hearing
himself.

Second was Judge Malanyaons admission that his presence in that hearing was to
advise his daughter on what to do and say during the hearing, to the point of coaching
his daughter. In the process, he unabashedly introduced himself as the counsel of the
respondents counsel upon his presence being challenged by the adverse counsel,
stating that his daughter was still inexperienced for having just passed her Bar
Examinations. Such excuse, seemingly grounded on a filial duty towards his wife and
his daughter, did not furnish enough reason for him to forsake the ethical conduct
expected of him as a sitting judge. He ought to have restrained himself from sitting at
that hearing, being all too aware that his sitting would have him cross the line beyond
which was the private practice of law.

Section 35
27
of Rule 138 of the Rules of Court expressly prohibits sitting judges like
Judge Malanyaon from engaging in the private practice of law or giving professional
advice to clients. Section 11,
28
Canon 4 (Propriety),
29
of the New Code of Judicial
Conduct and Rule 5.07
30
of the Code of Judicial Conduct reiterate the prohibition from
engaging in the private practice of law or giving professional advice to clients. The
prohibition is based on sound reasons of public policy, considering that the rights,
duties, privileges and functions of the office of an attorney are inherently incompatible
with the high official functions, duties, powers, discretion and privileges of a sitting
judge. It also aims to ensure that judges give their full time and attention to their
judicial duties, prevent them from extending favors to their own private interests, and
assure the public of their impartiality in the performance of their functions. These
objectives are dictated by a sense of moral decency and desire to promote the public
interest.
31
cralawvllred

Thus, an attorney who accepts an appointment to the Bench must accept that his right
to practice law as a member of the Philippine Bar is thereby suspended, and it shall
continue to be so suspended for the entire period of his incumbency as a judge. The
term practice of law is not limited to the conduct of cases in court or to participation in
court proceedings, but extends to the preparation of pleadings or papers in anticipation
of a litigation, the giving of legal advice to clients or persons needing the same, the
preparation of legal instruments and contracts by which legal rights are secured, and
the preparation of papers incident to actions and special proceedings.
32
To the Court,
then, Judge Malanyaon engaged in the private practice of law by assisting his daughter
at his wifes administrative case, coaching his daughter in making manifestations or
posing motions to the hearing officer, and preparing the questions that he prompted to
his daughter in order to demand that Atty. Eduardo Loria, collaborating counsel of the
complainants principal counsel, should produce his privilege tax receipt. Judge
Malanyaon did so voluntarily and knowingly, in light of his unhesitating announcement
during the hearing that he was the counsel for Atty. Katrina Malanyaon, the counsel of
the respondent, as his response to the query by the opposing counsel why he was
seated next to Atty. Malanyaon thereat.

Third was Judge Malanyaons admission that he had already engaged in the private
practice of law even before the incident now the subject of this case by his statement in
his comment that it is strange for complainants to take offense at my presence and
accuse me of practicing law during my stint as a judge when before the bad blood
between my wife and her sibling and nephew erupted, I helped them out with their
legal problems gratis et amore and they did not complain of my practicing law on their
behalf.
33
He thereby manifested his tendencies to disregard the prohibition against the
private practice of law during his incumbency on the Bench.

Any propensity on the part of a magistrate to ignore the ethical injunction to conduct
himself in a manner that would give no ground for reproach is always worthy of
condemnation.
34
We should abhor any impropriety on the part of judges, whether
committed in or out of their courthouses, for they are not judges only occasionally. The
Court has fittingly emphasized in Castillo v. Calanog, Jr.:
35
cralawvllred
The Code of Judicial Ethics mandates that the conduct of a judge must be free of a
whiff of impropriety not only with respect to his performance of his judicial duties, but
also to his behavior outside his sala and as a private individual. There is no dichotomy
of morality; a public official is also judged by his private morals. The Code dictates that
a judge, in order to promote public confidence in the integrity and impartiality of the
judiciary, must behave with propriety at all times. As we have very recently explained, a
judges official life cannot simply be detached or separated from his personal existence.
Thus:cralaw

Being a subject of constant public scrutiny, a judge should freely and willingly accept
restrictions on conduct that might be viewed as burdensome by the ordinary citizen.

A judge should personify judicial integrity and exemplify honest public service. The
personal behavior of a judge, both in the performance of official duties and in private
life should be above suspicion.

Fourth was Judge Malanyaons display of arrogance during the hearing, as reflected by
his reaction to the opposing counsels query on his personality to sit at the counsel table
at the hearing, to wit:chanroblesvirtuallawlibrary
I am the counsel of the complainant, ah, of the respondents counsel, I am Judge
Malanyaon. I am assisting her. And so what?!!

Judge Malanyaons uttering And so what? towards the opposing counsel evinced his
instant resentment towards the adverse parties counsel for rightly challenging his right
to be sitting on a place reserved for counsel of the parties. The utterance, for being
made in an arrogant tone just after he had introduced himself as a judge, was
unbecoming of the judge that he was, and tainted the good image of the Judiciary that
he should uphold at all times.
36
It is true that the challenge of the opposing counsel
might have slighted him, but that was not enough to cause him to forget that he was
still a judge expected to act with utmost sobriety and to speak with self-restraint. He
thereby ignored the presence of the hearing officer, appearing to project that he could
forsake the decorum that the time and the occasion rightly called for from him and the
others just because he was a judge and the other side was not. He should not forget
that a judge like himself should be the last person to be perceived by others as a petty
and sharp-tongued tyrant.

Judge Malanyaon has insisted that his actuations were excused by his filial obligation to
assist his daughter, then only a neophyte in the Legal Profession. We would easily
understand his insistence in the light of our culture to be always solicitous of the
wellbeing of our family members and other close kin, even risking our own safety and
lives in their defense. But the situation of Judge Malanyaon was different, for he was a
judicial officer who came under the stricture that uniformly applied to all judges of all
levels of the judicial hierarchy, forbidding him from engaging in the private practice of
law during his incumbency, regardless of whether the beneficiary was his wife or
daughter or other members of his own family.
3.
What is the proper penalty?

Judge Malanyaon had been previously sanctioned by the Court on the following three
occasions, namely: (a) A.M. No. RTJ-93-1090, with admonition for gross ignorance of
the law and unreasonable delay in resolving motions;
37
(b) A.M. No. RTJ-99-1444, with
reprimand for failure to resolve motions;
38
and (c) A.M. No. RTJ-02-1669, with a fine of
P20,000.00 (coupled with a stern warning that a repetition of the same or similar act
would be dealt with more severely) for conduct unbecoming of a judge.
39
He had other
administrative cases that were dismissed.
40
Of the three administrative cases that
merited sanctions, however, only the third should be considered as aggravating herein
because it involved the similar offense of conduct unbecoming of a judge for which he
had been given the stern warning of a more severe penalty upon a repetition.

However, our uniform treatment of administrative sanctions as having the nature of
liabilities akin to those in criminal cases now brings us to offset such aggravating
circumstance with the apparent fact that the actuations of Judge Malanyaon complained
of had not been motivated by bad faith, or by any malice towards another. Indeed, he
did not intend to thereby cause any prejudice to another, having so acted from a
sincere, albeit misplaced, desire to go to the help of his wife and daughter.

Accordingly, the Court deems it condign and proper to mitigate the fine of P50,000.00
recommended by the Court Administrator by imposing on Judge Malanyaon a fine of
P40,000.00. With his disability retirement from the Judiciary having been earlier granted
by the Court, the fine shall be deducted from his remaining retirement benefits.

WHEREFORE, the Court finds and pronounces JUDGE NILO A. MALANYAON,
Presiding Judge of Branch 32 of the Regional Trial Court in Pili, Camarines Sur,
administratively liable for conduct unbecoming of a Judge, and penalizes him with a fine
of P40,000.00.rbl rl l lbrr

SO ORDERED.



*********************************ooooooooooo***************************



EN BANC
[G.R. No. 204637, April 16, 2013]
LIWAYWAY VINZONS-CHATO, Petitioner, v. HOUSE OF REPRESENTATIVES
ELECTORAL TRIBUNAL AND ELMER E. PANOTES, Respondents.
R E S O L U T I O N
REYES, J.:
Before us is a Petition for Certiorari and Prohibition with Prayer for the Issuance of a
Temporary Restraining Order and/or Writ of Prohibitory Injunction
1
assailing the
Decision
2
rendered on October 15, 2012 and Resolution
3
issued on December 3, 2012
by the House of Representatives Electoral Tribunal (HRET) in HRET Case No. 10-040
(EP). The Decision dated October 15, 2012 and Resolution dated December 3, 2012
denied herein petitioner Liwayway Vinzons-Chatos (Chato) electoral protest filed before
the HRET to challenge the proclamation of herein respondent, Elmer Panotes (Panotes),
as the duly elected Representative of the Second District of Camarines Norte.

In the May 10, 2010 elections, Chato and Panotes both ran for the congressional seat to
represent the Second District of Camarines Norte. On May 12, 2010, Panotes was
proclaimed as the winner for having garnered 51,704 votes. The votes cast for Chato
totalled 47,822.

On May 24, 2010, Chato filed an electoral protest claiming that in four of the seven
municipalities
4
comprising the Second District of Camarines Norte, the following
irregularities occurred: (a) the Precinct Count Optical Scan (PCOS) machines rejected
and failed to count the votes, which if manually counted and visually appreciated, were
in fact validly cast for her; (b) the PCOS machines broke down in some clustered
precincts (CPs) and the ballots were inserted in contingency machines at later times
rendering uncertain the actual inclusion of the votes in the final tally; (c) the protocols
prescribed by the Commission on Elections (COMELEC) relative to the installation of the
PCOS machines and Canvassing and Consolidation System (CCS), counting of ballots,
canvassing and transmission of results, and closing of the voting were either not
followed or modified making it possible for the tampering and manipulation of the
election results; (d) several compact flash (CF) cards in the PCOS machines were
reconfigured on the eve of the May 10, 2010 elections; (e) there were errors or lapses
in transmitting results from several PCOS machines to the CCS of the Municipal Boards
of Canvassers (MBOCs) resulting to the need to manually insert CF cards into the CCS,
but in some instances, the insertions were made after significant and unaccounted
lapse of time in cases where before transporting the CF cards to the MBOCs, the
members of the Boards of Election Inspectors (BEIs) went home first or did private
business; and (f) after the closing of the polls, some CF cards failed to show recorded
results.
5
cralawvllred

On March 21, 2011, the HRET started the initial revision of ballots in 25% of the pilot
protested CPs. The revision ended on March 24, 2011. Per physical count, Chatos
votes increased by 518, while those cast for Panotes decreased by 2,875 votes. The
detailed results follow:
6
cralawvllred
VOTES FOR CHATO VOTES FOR PANOTES
Municipalities Per Election
Returns
(ERs)
Per Physical
Count
Gain or
(Loss)
Per Election
Returns
Per
Physical
Count
Gain or
(Loss)
Basud 1,735 1,891 156 3,067 2,242 (825)
Daet 3,337 3,704 367 5,229 3,186 (2,043)
Mercedes 779 779 0 1,573 1,573 0
Vinzons 1,628 1,623 (5) 3,224 3,217 (7)
Total 7,479 7,997 518 13,093 10,218 (2,875)

Panotes filed an Urgent Motion to Suspend Proceedings with Motion for Preliminary
Hearing to Determine the Integrity of the Ballots and Ballot Boxes Used in the May 10,
2010 Elections in the Contested Precincts of the Second District of Camarines Norte and
to Direct the Printing of the Picture Images of the Ballots of the Subject Precincts.
7

Panotes claimed that in Daet and Basud: (a) the top cover of some of the ballot boxes
were loose, and ballots, Minutes of Voting (MOV) and ERs can be taken out; (b) when
keys were inserted into the padlocks of the ballot boxes, the upper portion of the locks
disconnected from the bodies indicating tampering; (c) the packing tape seals, which he
was able to put in some of the ballot boxes, were broken or cut, leading to the
conclusion that the boxes had been opened prior to the initial revision; (d) some self-
locking security seals were not properly attached; and (e) the contents of some of the
ballot boxes, such as the MOV and ERs were either missing or in disarray, with the
ballots unnecessarily folded or crumpled in the CPs, where the votes cast for him
substantially decreased as per physical count when compared to the figures found in
the ERs.

On March 22, 2012, the HRET issued Resolution No. 12-079 directing the continuance
of the revision of ballots in 75% of the contested CPs. The proceeding commenced on
May 2, 2012 and ended on May 9, 2012. The results were:
8
cralawvllred
VOTES FOR CHATO VOTES FOR PANOTES
Municipalities Per Election
Returns
(ERs)
Per Physical
Count
Gain or
(Loss)
Per Election
Returns
Per
Physical
Count
Gain or
(Loss)
Basud 4,792 5,259 467 4,812 3,163 (1,649)
Daet 12,569 13,312 743 12,856 9,029 (3,827)
Mercedes 8,553 8,554 1 6,166 6,166 0
Vinzons 5,085 5,087 2 4,883 4,883 0
Total 30,999 32,212 1,213 28,717 23,241 (5,476)

As shown above, there was a substantial discrepancy between the figures indicated in
the ERs/Statements of Votes by Precinct (SOVPs) on one hand, and the results of the
physical count during the revision, on the other. Thereafter, the HRET issued
Resolution No. 11-208 directing the decryption and copying of the picture image files of
ballots (PIBs). The proceeding was conducted within the COMELEC premises.
However, Chato alleged that the back-up CF card for CP No. 44 of the Municipality of
Daet and the CF card for CP No. 29 of the Municipality of Mercedes did not contain the
PIBs. Chato filed before the HRET an Urgent Motion to Prohibit the Use by Protestee of
the Decrypted and Copied Ballot Images. The HRET denied Chatos motion through
Resolution No. 11-321 issued on June 8, 2011.

Panotes filed before us a petition
9
assailing HRET Resolution No. 12-079. On her
part, Chato instituted a petition
10
challenging HRET Resolution No. 11-321. We ordered
the consolidation of the two petitions, and both were dismissed in a decision which we
rendered on January 22, 2013. Panotes petition was moot and academic since revision
was in fact completed. Chato, on the other hand, was not able to present sufficient
evidence to prove that the integrity of the CF cards was not preserved.

Going back to HRET Case No. 10-040 (EP), in the 160 protested CPs, there were
substantial variances in the figures per machine count as indicated in the ERs, on one
hand, and per physical count, on the other, in a total of 69 CPs, 23 of which were in
Basud and 46 in Daet. The HRET then tediously compared the paper ballots that were
fed to the PCOS machine in these 69 CPs with the corresponding PIBs in the CF cards
to resolve the discrepancies. The bar codes at the bottom right of the PIBs were
compared with those indicated in the paper ballots. However, the HRET found that
while the name of Chato was shaded in some of the paper ballots objected to by
Panotes, there were no votes (NV) for congressional representative reflected in the
PIBs.
11
Notably, the number of ballots gained by Chato during the physical count of
votes is directly proportional with the number of paper ballots for her objected to by
Panotes with NV on the congressional representative line per PIBs.
12
The HRET likewise
observed that per physical count, there was a substantial increase in the number of
stray votes by reason of over voting (OV) for congressional representative. The
decryption and copying of the PIBs revealed that there were only a few PIBs with OV
for the said position.
13
Panotes loss per physical count is more or less proportionate
with the number of ballots, which Chato claimed as having exhibited stray over voting
for the congressional representative line.
14
cralawvllred

Chato and Panotes presented their respective evidence before the HRET.

Among the evidence offered by Chato were: (a) certified true copies of the Transcript of
Stenographic Notes (TSN) of the testimony of Atty. Anne A. Romero-Cortez
15
(Atty.
Cortez) on June 2, 2010 when she explicitly said before the Congress, acting as the
Presidential and Vice-Presidential Board of Canvassers, that for the municipalities of
Labo, Vinzons and Basud, there were CF cards that had to be replaced because they
were defective; (b) the testimony of Angel Averia (Averia),
16
who, during the
decryption and copying of the PIBs in the COMELEC premises on April 26, 2011, had
allegedly heard COMELEC Director Esther Roxas (Director Roxas) admit that there was
no inventory of the CF cards; (c) Panotes own admission in his Opposition to the
Motion to Reiterate the Continuation of Revision, dated March 22, 2011, to the effect
that the main CF card for CP 44 of the Municipality of Daet is missing and it would
appear that the Election Officer submitted the back-up CF card in lieu thereof but the
back-up CF card did not contain the picture image of the ballots; and (d) Panotes
admission in the aforesaid Opposition that in the Municipality of Mercedes, the BEI re-
zeroed the results of the elections in CP No. 29, and consequently, the PIBs for these
precincts were erased from the CF cards memory.
17
cralawvllred

Following are among Panotes claims to establish that in order to tilt the results of the
electoral protest in Chatos favor, the paper ballots were tampered after the canvassing,
counting and transmission of the voting results in the May 10, 2010 elections were
completed: (a) the testimonies of Philip Fabia and Danilo Sibbaluca that the ballot
boxes used in the May 10, 2010 elections could be turned upside down and the bottom
portion of the ballot box could be lifted so that the contents could be taken out;
18
(b)
the reports of the HRET Revision Committees stating that in Daet and Basud, some of
the padlocks and self-locking security seals in the ballot boxes were either missing or
not properly attached, and the MOVs and ERs were likewise nowhere to be found;
19
(c)
the testimony of Benjamina Camino that during the revision, in the matched paper
ballots and PIBs, the votes were identical except those for the position of congressional
representative;
20
(d) testimony of Florivida Mago
21
indicating that in the Random
Manual Audit (RMA) conducted on the same day right after the closing of the polls, the
team found that out of 420 valid votes counted by the PCOS machine, there was none
with an over-vote for the congressional seat line, and there was only a single difference
between the automated result and the manual count;
22
(e) in direct contrast with the
RMA teams findings, in the revision report for CP No. 23 of Basud, 99 ballots reflected
over-votes for the congressional seat line;
23
(f) the main CF card for CP No. 44 of Daet
had already been retrieved from the ballot box of the municipalitys MBOC and its
contents decrypted;
24
(g) even granting for arguments sake that in Mercedes, the BEI
re-zeroed the results of the elections in CP No. 29, this has no bearing since the
physical count of the ballots jived with the results indicated in the ER;
25
(h) Chato took
out of context Atty. Cortezs testimony before the Congress because what the latter
stated was that the defective CF cards were replaced with working ones on May 10,
2010 and not after;
26
and (i) Atty. Cortez and Director Roxas were not presented as
witnesses before the HRET, hence, the statements ascribed to them by Chato do not
bear weight.
27
cralawvllred

The HRET found that out of the 160 contested CPs, there were 91 without substantial
variances between the results of the automatic and the manual count. However, in 69
CPs in Basud and Daet, the variances were glaring.

On October 15, 2012, the HRET rendered the herein assailed decision dismissing
Chatos electoral protest based on the following grounds:chanroblesvirtuallawlibrary
[T]he settled rule in election contests is that the ballots themselves constitute the best
evidence of the will of the voters, but the ballots lose this character and give way to the
acceptance of the election returns when it has been shown that they have been [the]
subject of tampering, either by substituting them with other official or fake ballots, or
by substantially altering or changing their contents.

Consequently, the votes determined after the revision in the foregoing 69 CPs in
Basud and Daet, which yielded a reversal of votes, cannot be relied upon, as
they do not reflect the true will of the electorate. Hence, the Tribunal has to rely on
what is reflected in the election returns and/or statement of votes by precinct[,] the
same being the best evidence of the results of the election in said precincts in lieu of
the altered ballots.

x x x x

The votes of the parties per physical count in all the 120 [sic] protested CPs in the
concerned district are 40,209 for protestant [Chato] and 33,459 for protestee
[Panotes].

Considering that 69 CPs have substantial variances, the Tribunal decided to
disregard the ballots therein, i.e., 18,535 for protestant and 10,858 for protestee, and
to consider, instead, the results in the election returns, i.e., 16,802 for
protestant and 19,202 for protestee.

Hence, only the ballots in the 91 CPs without substantial variances, i.e., 21,674
for protestant and 22,601 for protestee, had undergone appreciation of ballots. Of
the ballots appreciated, the Tribunal rejected two (2) ballots for protestant and two
(2) ballots for protestee, while it admitted 176 ballots claimed by the protestant
and 183 claimed by the protestee.

The votes of the parties in the uncontested municipalities are 9,338 for protestant
and 9,894 for protestee.

Accordingly, the parties votes, after recount and appreciation and examination of the
evidence presented in the 160 protested CPs as well as in the uncontested
municipalities, are summarized below:cralaw
[Chato] [Panotes]
Votes in the 91 revised protested CPs without SV
[substantial variance] per recount and appreciation
21,674 22,601
Add: Votes per ER/SOVP in 69 revised protested CPs with
SV
16,802 19,202
Less: Rejected Ballots Objected to in the 91 revised
protested CPs without SV
(2) (2)
Add: Admitted PCOS Rejected Ballots Claimed in the 91
revised protested CPs without SV
176 183
Add: Votes in the uncontested municipalities 9,338 9,894
Equals: Total votes of the parties in the congressional
district
47,988 51,878
Winning Margin of Protestee 3,890


The foregoing results of revision and appreciation of ballots in the protested CPs, and
the evidence of the parties indicate that protestees proclamation margin of 3,882
[votes] increased by eight (8).
28
(Citations omitted)

On December 3, 2012, the HRET denied Chatos motion for reconsideration to the
Decision dated October 15, 2012.

Central to the resolution of the instant petition are the issues of whether or not the
HRET committed grave abuse of discretion when it:cralaw

(a) disregarded the results of the physical count in the 69 CPs when the HRET had
previously held that the integrity of the ballot boxes was preserved and that the results
of the revision proceedings can be the bases to overturn those reflected in the election
returns;cralawlibrary

(b) resorted to the PIBs, regarded them as the equivalent of the paper ballots, and
thereafter ruled that the integrity of the latter was doubtful;cralawlibrary

(c) held that Chato had failed to prove by substantial evidence that the CF cards used in
the May 10, 2010 elections were not preserved.

In support of the instant petition, Chato reiterates her allegations in the proceedings
before the HRET. She stresses that in the Order
29
issued on April 10, 2012, the HRET
ruled that as regards the conditions of the ballot boxes in Basud and Daet, the self-
locking security seals and padlocks were attached and locked, hence, there was
substantial compliance with statutory safety measures to prevent reasonable
opportunity for tampering with their contents x x x.
30
Chato likewise argues that under
Republic Act (R.A.) No. 9369,
31
the May 10, 2010 Automated Election System was
paper-based
32
and the PIBs are not the official ballots. Further, under Section 15 of
R.A. No. 8436, what should be regarded as the official ballots are those printed by the
National Printing Office (NPO) and/or the Bangko Sentral ng Pilipinas (BSP), or by
private printers contracted by the COMELEC in the event that the NPO and the BSP both
certify that they cannot meet the printing requirements. Chato once again referred to
the statements allegedly made by Atty. Cortez, Averia and Panotes himself to prove
that serious doubt exists relative to the integrity of the CF cards used in the May 10,
2010 elections.

Panotes refutes the foregoing in his Comment
33
to the instant petition. He points out
that in Liwayway Vinzons-Chato v. HRET and Elmer Panotes,
34
we sustained the PIBs as
the functional equivalent of paper ballots, thus, they may be used for revision
purposes. Further, the HRET had categorically ruled in the herein assailed decision that
the physical ballots were altered or tampered, hence, not reflective of the true will of
the electorate. Besides, Chatos electoral protest was flimsily anchored on the alleged
missing CF card in CP No. 44 of Daet. Panotes emphasizes that the CF card had
already been retrieved. Even if it were not found, there are 14 CPs in Daet and one
incident of a missing CF card cannot create a strong presumption that all such cards in
the entire Second District of Camarines Norte had been tampered.

There is no merit in the instant petition.

Chato posits that since the HRET, in its Order dated April 10, 2012, had already
considered the conditions of the ballot boxes as indicative of having substantially
complied with statutory safety measures to prevent reasonable opportunity for
tampering with their contents,
35
its subsequent disregard of the results of the physical
count in the 69 CPs in Daet and Basud was tainted with grave abuse of discretion.

We do not agree.

It bears stressing that the HRETs Order dated April 10, 2012 was issued to resolve
Panotes motion to suspend the continuance of the revision proceedings in 75% of the
contested CPs. The HRETs findings then anent the integrity of the ballot boxes were at
the most, preliminary in nature. The HRET was in no way estopped from subsequently
holding otherwise after it had the opportunity to exhaustively observe and examine in
the course of the entire revision proceedings the conditions of all the ballot boxes and
their contents, including the ballots themselves, the MOV, SOVs and ERs.

We need not belabor the second and third issues raised herein as the same had been
resolved in the following wise in Liwayway Vinzons-Chato v. HRET and Elmer Panotes
36

and Elmer E. Panotes v. HRET and Liwayway Vinzons-Chato:
37
cralawvllred
Section 2(3) of R.A. No. 9369 defines official ballot where AES [Automated Election
System] is utilized as the paper ballot, whether printed or generated by the
technology applied, that faithfully captures or represents the votes cast by a voter
recorded or to be recorded in electronic form.

x x x x

[T]he May 10, 2010 elections used a paper-based technology that allowed voters to fill
out an official paper ballot by shading the oval opposite the names of their chosen
candidates. Each voter was then required to personally feed his ballot into the Precinct
Count Optical Scan (PCOS) machine which scanned both sides of the ballots
simultaneously, meaning, in just one pass. As established during the required demo
tests, the system captured the images of the ballots in encrypted format which, when
decrypted for verification, were found to be digitized representations of the ballots cast.

As such, the printouts thereof [PIBs] are the functional equivalent of the paper ballots
filled out by the voters and, thus, may be used for purposes of revision of votes in an
electoral protest.

x x x x

x x x [T]he HRET found Chatos evidence insufficient. The testimonies of the witnesses
she presented were declared irrelevant and immaterial as they did not refer to the CF
cards used in the 20 precincts in the Municipalities of Basud and Daet with substantial
variances x x x.

To substitute our own judgment to the findings of the HRET will doubtless constitute an
intrusion into its domain and a curtailment of its power to act of its own accord on its
evaluation of the evidentiary weight of testimonies presented before it. Thus, for failure
of Chato to discharge her burden of proving that the integrity of the questioned cards
had not been preserved, no further protestations to the use of the picture images of the
ballots as stored in the CF cards should be entertained. (Citations omitted)

Chato attempts to convince us that the integrity of the physical ballots was preserved,
while that of the CF cards was not. As mentioned above, the integrity of the CF cards is
already a settled matter. Anent that of the physical ballots, this is a factual issue which
calls for a re-calibration of evidence. Generally, we do not resolve factual questions
unless the decision, resolution or order brought to us for review can be shown to have
been rendered or issued with grave abuse of discretion.

In Dueas, Jr. v. HRET,
38
we defined grave abuse of discretion,
viz:chanroblesvirtuallawlibrary
It is such capricious and whimsical exercise of judgment which is tantamount to lack of
jurisdiction. Ordinary abuse of discretion is insufficient. The abuse of discretion must
be grave, that is, the power is exercised in an arbitrary or despotic manner by reason of
passion or personal hostility. It must be so patent and gross as to amount to evasion of
positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in
contemplation of the law. In other words, for a petition for certiorari to prosper, there
must be a clear showing of caprice and arbitrariness in the exercise of discretion. There
is also grave abuse of discretion when there is a contravention of the Constitution, the
law or existing jurisprudence. x x x.
39
(Citation omitted)

In the case at bar, the HRET disposed of Chatos electoral protest without grave abuse
of discretion. The herein assailed decision and resolution were rendered on the bases
of existing evidence and records presented before the HRET.

WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is DISMISSED
for lack of merit. The Decision dated October 15, 2012 and Resolution dated December
3, 2012 of the House of Representatives Electoral Tribunal in HRET Case No. 10-040
(EP) are AFFIRMED.

SO ORDERED.





**************************ooooooooooooooo******************************


THIRD DIVISION
[G.R. No. 198783, April 15, 2013]
ROYAL PLANT WORKERS UNION, Petitioner, v. COCA-COLA BOTTLERS
PHILIPPINES, INC.-CEBU PLANT, Respondent.
D E C I S I O N
MENDOZA, J.:
Assailed in this petition is the May 24, 2011 Decision
1
and the September 2, 2011
Resolution
2
of the Court of Appeals (CA) in CA-G.R. SP No. 05200, entitled Coca-Cola
Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant Workers Union, which nullified and
set aside the June 11, 2010 Decision
3
of the Voluntary Arbitration Panel (Arbitration
Committee) in a case involving the removal of chairs in the bottling plant of Coca-Cola
Bottlers Philippines, Inc. (CCBPI).

The Factual and Procedural
Antecedents

The factual and procedural antecedents have been accurately recited in the May 24,
2011 CA decision as follows:chanroblesvirtuallawlibrary
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation
engaged in the manufacture, sale and distribution of softdrink products. It has several
bottling plants all over the country, one of which is located in Cebu City. Under the
employ of each bottling plant are bottling operators. In the case of the plant in Cebu
City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12-
14 bottling operators who man its Bottling Line 2. All of them are male and they are
members of herein respondent Royal Plant Workers Union (ROPWU).

The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the
second shift is from 5 p.m. up to the time production operations is finished. Thus, the
second shift varies and may end beyond eight (8) hours. However, the bottling
operators are compensated with overtime pay if the shift extends beyond eight (8)
hours. For Bottling Line 1, 10 bottling operators work for each shift while 6 to 7 bottling
operators work for each shift for Bottling Line 2.

Each shift has rotations of work time and break time. Prior to September 2008, the
rotation is this: after two and a half (2 ) hours of work, the bottling operators are
given a 30-minute break and this goes on until the shift ends. In September 2008 and
up to the present, the rotation has changed and bottling operators are now given a 30-
minute break after one and one half (1 ) hours of work.

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon
their request. In 1988, the bottling operators of then Bottling Line 1 followed suit and
asked to be provided also with chairs. Their request was likewise granted. Sometime in
September 2008, the chairs provided for the operators were removed pursuant to a
national directive of petitioner. This directive is in line with the I Operate, I Maintain, I
Clean program of petitioner for bottling operators, wherein every bottling operator is
given the responsibility to keep the machinery and equipment assigned to him clean
and safe. The program reinforces the task of bottling operators to constantly move
about in the performance of their duties and responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned
to him, a bottling operator does not need a chair anymore, hence, petitioners directive
to remove them. Furthermore, CCBPI rationalized that the removal of the chairs is
implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to
their persons. As bottling operators are working with machines which consist of moving
parts, it is imperative that they should not fall asleep as to do so would expose them to
hazards and injuries. In addition, sleeping will hamper the efficient flow of operations as
the bottling operators would be unable to perform their duties competently.

The bottling operators took issue with the removal of the chairs. Through the
representation of herein respondent, they initiated the grievance machinery of the
Collective Bargaining Agreement (CBA) in November 2008. Even after exhausting the
remedies contained in the grievance machinery, the parties were still at a deadlock with
petitioner still insisting on the removal of the chairs and respondent still against such
measure. As such, respondent sent a Notice to Arbitrate, dated 16 July 2009, to
petitioner stating its position to submit the issue on the removal of the chairs for
arbitration. Nevertheless, before submitting to arbitration the issue, both parties availed
of the conciliation/mediation proceedings before the National Conciliation and Mediation
Board (NCMB) Regional Branch No. VII. They failed to arrive at an amicable settlement.

Thus, the process of arbitration continued and the parties appointed the chairperson
and members of the Arbitration Committee as outlined in the CBA. Petitioner and
respondent respectively appointed as members to the Arbitration Committee Mr. Raul A.
Kapuno, Jr. and Mr. Luis Ruiz while they both chose Atty. Alice Morada as chairperson
thereof. They then executed a Submission Agreement which was accepted by the
Arbitration Committee on 01 October 2009. As contained in the Submission Agreement,
the sole issue for arbitration is whether the removal of chairs of the operators assigned
at the production/manufacturing line while performing their duties and responsibilities is
valid or not.

Both parties submitted their position papers and other subsequent pleadings in
amplification of their respective stands. Petitioner argued that the removal of the chairs
is valid as it is a legitimate exercise of management prerogative, it does not violate the
Labor Code and it does not violate the CBA it contracted with respondent. On the other
hand, respondent espoused the contrary view. It contended that the bottling operators
have been performing their assigned duties satisfactorily with the presence of the
chairs; the removal of the chairs constitutes a violation of the Occupational Health and
Safety Standards, the policy of the State to assure the right of workers to just and
humane conditions of work as stated in Article 3 of the Labor Code and the Global
Workplace Rights Policy.

Ruling of the Arbtration Committee

On June 11, 2010, the Arbitration Committee rendered a decision in favor of the Royal
Plant Workers Union (the Union) and against CCBPI, the dispositive portion of which
reads, as follows:chanroblesvirtuallawlibrary
Wherefore, the undersigned rules in favor of ROPWU declaring that the removal of the
operators chairs is not valid. CCBPI is hereby ordered to restore the same for the use of
the operators as before their removal in 2008.
4


The Arbitration Committee ruled, among others, that the use of chairs by the operators
had been a company practice for 34 years in Bottling Line 2, from 1974 to 2008, and 20
years in Bottling Line 1, from 1988 to 2008; that the use of the chairs by the operators
constituted a company practice favorable to the Union; that it ripened into a benefit
after it had been enjoyed by it; that any benefit being enjoyed by the employees could
not be reduced, diminished, discontinued, or eliminated by the employer in accordance
with Article 100 of the Labor Code, which prohibited the diminution or elimination by
the employer of the employees benefit; and that jurisprudence had not laid down any
rule requiring a specific minimum number of years before a benefit would constitute a
voluntary company practice which could not be unilaterally withdrawn by the employer.

The Arbitration Committee further stated that, although the removal of the chairs was
done in good faith, CCBPI failed to present evidence regarding instances of sleeping
while on duty. There were no specific details as to the number of incidents of sleeping
on duty, who were involved, when these incidents happened, and what actions were
taken. There was no evidence either of any accident or injury in the many years that
the bottling operators used chairs. To the Arbitration Committee, it was puzzling why it
took 34 and 20 years for CCBPI to be so solicitous of the bottling operators safety that
it removed their chairs so that they would not fall asleep and injure themselves.

Finally, the Arbitration Committee was of the view that, contrary to CCBPIs position,
line efficiency was the result of many factors and it could not be attributed solely to one
such as the removal of the chairs.

Not contented with the Arbitration Committees decision, CCBPI filed a petition for
review under Rule 43 before the CA.

Ruling of the CA

On May 24, 2011, the CA rendered a contrasting decision which nullified and set aside
the decision of the Arbitration Committee. The dispositive portion of the CA decision
reads:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the petition is hereby GRANTED and the Decision,
dated 11 June 2010, of the Arbitration Committee in AC389-VII-09-10-2009D is
NULLIFIED and SET ASIDE. A new one is entered in its stead SUSTAINING the removal
of the chairs of the bottling operators from the manufacturing/production line.
5


The CA held, among others, that the removal of the chairs from the
manufacturing/production lines by CCBPI is within the province of management
prerogatives; that it was part of its inherent right to control and manage its enterprise
effectively; and that since it was the employers discretion to constantly develop
measures or means to optimize the efficiency of its employees and to keep its
machineries and equipment in the best of conditions, it was only appropriate that it
should be given wide latitude in exercising it.

The CA stated that CCBPI complied with the conditions of a valid exercise of a
management prerogative when it decided to remove the chairs used by the bottling
operators in the manufacturing/production lines. The removal of the chairs was solely
motivated by the best intentions for both the Union and CCBPI, in line with the I
Operate, I Maintain, I Clean program for bottling operators, wherein every bottling
operator was given the responsibility to keep the machinery and equipment assigned to
him clean and safe. The program would reinforce the task of bottling operators to
constantly move about in the performance of their duties and responsibilities. Without
the chairs, the bottling operators could efficiently supervise these machineries
operations and maintenance. It would also be beneficial for them because the working
time before the break in each rotation for each shift was substantially reduced from two
and a half hours (2 ) to one and a half hours (1 ) before the 30-minute break.
This scheme was clearly advantageous to the bottling operators as the number of
resting periods was increased. CCBPI had the best intentions in removing the chairs
because some bottling operators had the propensity to fall asleep while on the job and
sleeping on the job ran the risk of injury exposure and removing them reduced the risk.

The CA added that the decision of CCBPI to remove the chairs was not done for the
purpose of defeating or circumventing the rights of its employees under the special
laws, the Collective Bargaining Agreement (CBA) or the general principles of justice and
fair play. It opined that the principles of justice and fair play were not violated because,
when the chairs were removed, there was a commensurate reduction of the working
time for each rotation in each shift. The provision of chairs for the bottling operators
was never part of the CBAs contracted between the Union and CCBPI. The chairs were
not provided as a benefit because such matter was dependent upon the exigencies of
the work of the bottling operators. As such, CCBPI could withdraw this provision if it
was not necessary in the exigencies of the work, if it was not contributing to the
efficiency of the bottling operators or if it would expose them to some hazards. Lastly,
the CA explained that the provision of chairs to the bottling operators cannot be
covered by Article 100 of the Labor Code on elimination or diminution of benefits
because the employees benefits referred to therein mainly involved monetary
considerations or privileges converted to their monetary equivalent.

Disgruntled with the adverse CA decision, the Union has come to this Court praying for
its reversal on the following
GROUNDS

I

THAT WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR
IN HOLDING THAT A PETITION FOR REVIEW UNDER RULE 43 OF THE RULES OF
COURT IS THE PROPER REMEDY OF CHALLENGING BEFORE SAID COURT THE
DECISION OF THE VOLUNTARY ARBITRATOR OR PANEL OF VOLUNTARY
ARBITRATORS UNDER THE LABOR CODE.
II

THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN NULLIFYING AND SETTING ASIDE THE DECISION OF THE PANEL OF
VOLUNTARY ARBITRATORS WHICH DECLARED AS NOT VALID THE REMOVAL OF THE
CHAIRS OF THE OPERATORS IN THE MANUFACTURING AND/OR PRODUCTION LINE.

In advocacy of its positions, the Union argues that the proper remedy in challenging the
decision of the Arbitration Committee before the CA is a petition for certiorari under
Rule 65. The petition for review under Rule 43 resorted to by CCBPI should have been
dismissed for being an improper remedy. The Union points out that the parties agreed
to submit the unresolved grievance involving the removal of chairs to voluntary
arbitration pursuant to the provisions of Article V of the existing CBA. Hence, the
assailed decision of the Arbitration Committee is a judgment or final order issued under
the Labor Code of the Philippines. Section 2, Rule 43 of the 1997 Rules of Civil
Procedure, expressly states that the said rule does not cover cases under the Labor
Code of the Philippines. The judgments or final orders of the Voluntary Arbitrator or
Panel of Voluntary Arbitrators are governed by the provisions of Articles 260, 261, 262,
262-A, and 262-B of the Labor Code of the Philippines.

On the substantive aspect, the Union argues that there is no connection between
CCBPIs I Operate, I Maintain, I Clean program and the removal of the chairs because
the implementation of the program was in 2006 and the removal of the chairs was done
in 2008. The 30-minute break is part of an operators working hours and does not make
any difference. The frequency of the break period is not advantageous to the operators
because it cannot compensate for the time they are made to stand throughout their
working time. The bottling operators get tired and exhausted after their tour of duty
even with chairs around. How much more if the chairs are removed?

The Union further claims that management prerogatives are not absolute but subject to
certain limitations found in law, a collective bargaining agreement, or general principles
of fair play and justice. The operators have been performing their assigned duties and
responsibilities satisfactorily for thirty (30) years using chairs. There is no record of poor
performance because the operators are sitting all the time. There is no single incident
when the attention of an operator was called for failure to carry out his assigned tasks.
CCBPI has not submitted any evidence to prove that the performance of the operators
was poor before the removal of the chairs and that it has improved after the chairs
were removed. The presence of chairs for more than 30 years made the operators
awake and alert as they could relax from time to time. There are sanctions for those
caught sleeping while on duty. Before the removal of the chairs, the efficiency of the
operators was much better and there was no recorded accident. After the removal of
the chairs, the efficiency of the operators diminished considerably, resulting in the
drastic decline of line efficiency.

Finally, the Union asserts that the removal of the chairs constitutes violation of the
Occupational Health and Safety Standards, which provide that every company shall
keep and maintain its workplace free from hazards that are likely to cause physical
harm to the workers or damage to property. The removal of the chairs constitutes a
violation of the State policy to assure the right of workers to a just and humane
condition of work pursuant to Article 3 of the Labor Code and of CCBPIs Global
Workplace Rights Policy. Hence, the unilateral withdrawal, elimination or removal of the
chairs, which have been in existence for more than 30 years, constitutes a violation of
existing practice.

The respondents position

CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of the
Rules of Court was the proper remedy to question the decision of the Arbitration
Committee. It likewise echoes the ruling of the CA that the removal of the chairs was a
legitimate exercise of management prerogative; that it was done not to harm the
bottling operators but for the purpose of optimizing their efficiency and CCBPIs
machineries and equipment; and that the exercise of its management prerogative was
done in good faith and not for the purpose of circumventing the rights of the employees
under the special laws, the CBA or the general principles of justice and fair play.
The Courts Ruling

The decision in this case rests on the resolution of two basic questions. First, is an
appeal to the CA via a petition for review under Rule 43 of the 1997 Rules of Civil
Procedure a proper remedy to question the decision of the Arbitration Committee?
Second, was the removal of the bottling operators chairs from CCBPIs
production/manufacturing lines a valid exercise of a management prerogative?

The Court sustains the ruling of the CA on both issues.

Regarding the first issue, the Union insists that the CA erred in ruling that the recourse
taken by CCBPI in appealing the decision of the Arbitration Committee was proper. It
argues that the proper remedy in challenging the decision of the Voluntary Arbitrator
before the CA is by filing a petition for certiorari under Rule 65 of the Rules of Court,
not a petition for review under Rule 43.

CCBPI counters that the CA was correct in ruling that the recourse it took in appealing
the decision of the Arbitration Committee to the CA via a petition for review under Rule
43 of the Rules of Court was proper and in conformity with the rules and prevailing
jurisprudence.

A Petition for Review
under Rule 43 is the
proper remedy

CCBPI is correct. This procedural issue being debated upon is not novel. The Court has
already ruled in a number of cases that a decision or award of a voluntary arbitrator is
appealable to the CA via a petition for review under Rule 43. The recent case of
Samahan Ng Mga Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon. Voluntary
Arbitrator Buenaventura C. Magsalin and Hotel Enterprises of the Philippines
6
reiterated
the well-settled doctrine on this issue, to wit:chanroblesvirtuallawlibrary
In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,
7

we repeated the well-settled rule that a decision or award of a voluntary arbitrator is
appealable to the CA via petition for review under Rule 43. We held
that:chanroblesvirtuallawlibrary
The question on the proper recourse to assail a decision of a voluntary arbitrator has
already been settled in Luzon Development Bank v. Association of Luzon Development
Bank Employees, where the Court held that the decision or award of the voluntary
arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals,
in line with the procedure outlined in Revised Administrative Circular No. 1-95 (now
embodied in Rule 43 of the 1997 Rules of Civil Procedure), just like those of the quasi-
judicial agencies, boards and commissions enumerated therein, and consistent with the
original purpose to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-
Olalia v. Court of Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the
Court held that notwithstanding Section 2 of Rule 43, the ruling in Luzon Development
Bank still stands. The Court explained, thus:
The provisions may be new to the Rules of Court but it is far from being a new law.
Section 2, Rules 42 of the 1997 Rules of Civil Procedure, as presently worded, is
nothing more but a reiteration of the exception to the exclusive appellate jurisdiction of
the Court of Appeals, as provided for in Section 9, Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902:cralaw

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities,
boards or commissions, including the Securities and Exchange Commission, the
Employees Compensation Commission and the Civil Service Commission, except those
falling within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank but,
nevertheless, held that the decisions of voluntary arbitrators issued pursuant to the
Labor Code do not come within its ambit x x x.
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as
amended, provide:chanroblesvirtuallawlibrary
SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of
the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
Among these agencies are the x x x, and voluntary arbitrators authorized by law.

x x x x

SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of
Appeals within the period and in the manner therein provided, whether the appeal
involves questions of fact, of law, or mixed questions of fact and law.

SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from
notice of the award, judgment, final order or resolution, or from the date of its last
publication, if publication is required by law for its effectivity, or of the denial of
petitioners motion for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. x x x. (Emphasis supplied.)

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution denying
petitioners motion for reconsideration, petitioner should have filed with the CA, within
the fifteen (15)-day reglementary period, a petition for review, not a petition for
certiorari.

On the second issue, the Union basically claims that the CCBPIs decision to unilaterally
remove the operators chairs from the production/manufacturing lines of its bottling
plants is not valid because it violates some fundamental labor policies. According to the
Union, such removal constitutes a violation of the 1) Occupational Health and Safety
Standards which provide that every worker is entitled to be provided by the employer
with appropriate seats, among others; 2) policy of the State to assure the right of
workers to a just and humane condition of work as provided for in Article 3 of the Labor
Code;
8
3) Global Workplace Rights Policy of CCBPI which provides for a safe and
healthy workplace by maintaining a productive workplace and by minimizing the risk of
accident, injury and exposure to health risks; and 4) diminution of benefits provided in
Article 100 of the Labor Code.
9
cralawvllred

Opposing the Unions argument, CCBPI mainly contends that the removal of the subject
chairs is a valid exercise of management prerogative. The management decision to
remove the subject chairs was made in good faith and did not intend to defeat or
circumvent the rights of the Union under the special laws, the CBA and the general
principles of justice and fair play.

Again, the Court agrees with CCBPI on the matter.

A Valid Exercise of
Management Prerogative

The Court has held that management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work assignments, working
methods, time, place, and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-off of
workers, and discipline, dismissal and recall of workers. The exercise of management
prerogative, however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor.
10
cralawvllred

In the present controversy, it cannot be denied that CCBPI removed the operators
chairs pursuant to a national directive and in line with its I Operate, I Maintain, I
Clean program, launched to enable the Union to perform their duties and
responsibilities more efficiently. The chairs were not removed indiscriminately. They
were carefully studied with due regard to the welfare of the members of the Union.
The removal of the chairs was compensated by: a) a reduction of the operating
hours of the bottling operators from a two-and-one-half (2 )-hour rotation period to
a one-and-a-half (1 ) hour rotation period; and b) an increase of the break period
from 15 to 30 minutes between rotations.

Apparently, the decision to remove the chairs was done with good intentions as CCBPI
wanted to avoid instances of operators sleeping on the job while in the performance of
their duties and responsibilities and because of the fact that the chairs were not
necessary considering that the operators constantly move about while working. In
short, the removal of the chairs was designed to increase work efficiency. Hence,
CCBPIs exercise of its management prerogative was made in good faith without doing
any harm to the workers rights.

The fact that there is no proof of any operator sleeping on the job is of no moment.
There is no guarantee that such incident would never happen as sitting on a chair is
relaxing. Besides, the operators constantly move about while doing their job. The
ultimate purpose is to promote work efficiency.

No Violation of Labor Laws

The rights of the Union under any labor law were not violated. There is no law that
requires employers to provide chairs for bottling operators. The CA correctly ruled that
the Labor Code, specifically Article 132
11
thereof, only requires employers to provide
seats for women. No similar requirement is mandated for men or male workers. It must
be stressed that all concerned bottling operators in this case are men.

There was no violation either of the Health, Safety and Social Welfare Benefit provisions
under Book IV of the Labor Code of the Philippines. As shown in the foregoing, the
removal of the chairs was compensated by the reduction of the working hours and
increase in the rest period. The directive did not expose the bottling operators to safety
and health hazards.

The Union should not complain too much about standing and moving about for one and
one-half (1 ) hours because studies show that sitting in workplaces for a long time is
hazardous to ones health. The report of VicHealth, Australia,
12
disclosed that
prolonged workplace sitting is an emerging public health and occupational health issue
with serious implications for the health of our working population. Importantly,
prolonged sitting is a risk factor for poor health and early death, even among those who
meet, or exceed, national
13
activity guidelines. In another report,
14
it was
written:chanroblesvirtuallawlibrary
Workers needing to spend long periods in a seated position on the job such as taxi
drivers, call centre and office workers, are at risk for injury and a variety of adverse
health effects.

The most common injuries occur in the muscles, bones, tendons and ligaments,
affecting the neck and lower back regions. Prolonged sitting:
reduces body movement making muscles more likely to pull, cramp or strain
when stretched suddenly,
causes fatigue in the back and neck muscles by slowing the blood supply and
puts high tension on the spine, especially in the low back or neck, and
causes a steady compression on the spinal discs that hinders their nutrition and
can contribute to their premature degeneration.
Sedentary employees may also face a gradual deterioration in health if they do not
exercise or do not lead an otherwise physically active life. The most common health
problems that these employees experience are disorders in blood circulation and
injuries affecting their ability to move. Deep Vein Thrombosis (DVT), where a clot forms
in a large vein after prolonged sitting (eg after a long flight) has also been shown to be
a risk.

Workers who spend most of their working time seated may also experience other, less
specific adverse health effects. Common effects include decreased fitness, reduced
heart and lung efficiency, and digestive problems. Recent research has identified too
much sitting as an important part of the physical activity and health equation, and
suggests we should focus on the harm caused by daily inactivity such as prolonged
sitting.

Associate professor David Dunstan leads a team at the Baker IDI in Melbourne which is
specifically researching sitting and physical activity. He has found that people who
spend long periods of time seated (more than four hours per day) were at risk of:
higher blood levels of sugar and fats,
larger waistlines, and
higher risk of metabolic syndrome
regardless of how much moderate to vigorous exercise they had.

In addition, people who interrupted their sitting time more often just by standing or
with light activities such as housework, shopping, and moving about the office had
healthier blood sugar and fat levels, and smaller waistlines than those whose sitting
time was not broken up.

Of course, in this case, if the chairs would be returned, no risks would be involved
because of the shorter period of working time. The study was cited just to show that
there is a health risk in prolonged sitting.

No Violation of the CBA

The CBA
15
between the Union and CCBPI contains no provision whatsoever requiring
the management to provide chairs for the operators in the production/manufacturing
line while performing their duties and responsibilities. On the contrary, Section 2 of
Article 1 of the CBA expressly provides as follows:chanroblesvirtuallawlibrary
Article I

SCOPE

SECTION 2. Scope of the Agreement. All the terms and conditions of employment of
employees and workers within the appropriate bargaining unit (as defined in Section 1
hereof) are embodied in this Agreement and the same shall govern the relationship
between the COMPANY and such employees and/or workers. On the other hand, all
such benefits and/or privileges as are not expressly provided for in this
Agreement but which are now being accorded, may in the future be
accorded, or might have previously been accorded, to the employees and/or
workers, shall be deemed as purely voluntary acts on the part of the
COMPANY in each case, and the continuance and repetition thereof now or in
the future, no matter how long or how often, shall not be construed as
establishing an obligation on the part of the COMPANY. It is however
understood that any benefits that are agreed upon by and between the COMPANY and
the UNION in the Labor-Management Committee Meetings regarding the terms and
conditions of employment outside the CBA that have general application to employees
who are similarly situated in a Department or in the Plant shall be implemented.
[emphasis and underscoring supplied]

As can be gleaned from the aforecited provision, the CBA expressly provides that
benefits and/or privileges, not expressly given therein but which are presently being
granted by the company and enjoyed by the employees, shall be considered as purely
voluntary acts by the management and that the continuance of such benefits and/or
privileges, no matter how long or how often, shall not be understood as establishing an
obligation on the companys part. Since the matter of the chairs is not expressly stated
in the CBA, it is understood that it was a purely voluntary act on the part of CCBPI and
the long practice did not convert it into an obligation or a vested right in favor of the
Union.

No Violation of the general principles
of justice and fair play

The Court completely agrees with the CA ruling that the removal of the chairs did not
violate the general principles of justice and fair play because the bottling operators
working time was considerably reduced from two and a half (2 ) hours to just
one and a half (1 ) hours and the break period, when they could sit down, was
increased to 30 minutes between rotations. The bottling operators new work schedule
is certainly advantageous to them because it greatly increases their rest period and
significantly decreases their working time. A break time of thirty (30) minutes after
working for only one and a half (1 ) hours is a just and fair work schedule.

No Violation of Article 100
of the Labor Code

The operators chairs cannot be considered as one of the employee benefits covered in
Article 100
16
of the Labor Code. In the Courts view, the term benefits mentioned in
the non-diminution rule refers to monetary benefits or privileges given to the employee
with monetary equivalents. Such benefits or privileges form part of the employees
wage, salary or compensation making them enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule where
the benefits or privileges involved in those cases mainly concern monetary
considerations or privileges with monetary equivalents. Some of these cases are:
Eastern Telecommunication Phils. Inc. v. Eastern Telecoms Employees Union,
17
where
the case involves the payment of 14
th
, 15
th
and 16
th
month bonuses; Central Azucarera
De Tarlac v. Central Azucarera De Tarlac Labor Union-NLU,
18
regarding the 13th month
pay, legal/special holiday pay, night premium pay and vacation and sick leaves; TSPIC
Corp. v. TSPIC Employees Union,
19
regarding salary wage increases; and American
Wire and Cable Daily Employees Union vs. American Wire and Cable Company, Inc.,
20

involving service awards with cash incentives, premium pay, Christmas party with
incidental benefits and promotional increase.

In this regard, the Court agrees with the CA when it resolved the matter and
wrote:chanroblesvirtuallawlibrary
Let it be stressed that the aforequoted article speaks of non-diminution of supplements
and other employee benefits. Supplements are privileges given to an employee which
constitute as extra remuneration besides his or her basic ordinary earnings and wages.
From this definition, We can only deduce that the other employee benefits spoken of by
Article 100 pertain only to those which are susceptible of monetary considerations.
Indeed, this could only be the most plausible conclusion because the cases tackling
Article 100 involve mainly with monetary considerations or privileges converted to their
monetary equivalents.
x x x x

Without a doubt, equating the provision of chairs to the bottling operators as something
within the ambit of benefits in the context of Article 100 of the Labor Code is unduly
stretching the coverage of the law. The interpretations of Article 100 of the Labor Code
do not show even with the slightest hint that such provision of chairs for the bottling
operators may be sheltered under its mantle.
21


Jurisprudence recognizes the exercise of management prerogatives. Labor laws also
discourage interference with an employers judgment in the conduct of its business. For
this reason, the Court often declines to interfere in legitimate business decisions of
employers. The law must protect not only the welfare of the employees, but also the
right of the employers.
22
cralawvllred

WHEREFORE, the petition is DENIED.

SO ORDERED.

FIRST DIVISION
[G.R. No. 197291, April 03, 2013]
DATU ANDAL AMPATUAN JR., Petitioner, v. SEC. LEILA DE LIMA, AS
SECRETARY OF THE DEPARTMENT OF JUSTICE, CSP CLARO ARELLANO, AS
CHIEF STATE PROSECUTOR, NATIONAL PROSECUTION SERVICE, AND PANEL
OF PROSECUTORS OF THE MAGUINDANAO MASSACRE, HEADED BY RSP
PETER MEDALLE, Respondents.
D E C I S I O N
BERSAMIN, J.:
In matters involving the exercise of judgment and discretion, mandamus cannot be
used to direct the manner or the particular way the judgment and discretion are to be
exercised. Consequently, the Secretary of Justice may be compelled by writ of
mandamus to act on a letter-request or a motion to include a person in the information,
but may not be compelled by writ of mandamus to act in a certain way, i.e., to grant or
deny such letter-request or motion.
The Case

This direct appeal by petition for review on certiorari has been taken from the final
order issued on June 27, 2011 in Civil Case No. 10-124777
1
by the Regional Trial Court
(RTC), Branch 26, in Manila, dismissing petitioners petition for mandamus.
2
cralawvllred
Antecedents

History will never forget the atrocities perpetrated on November 23, 2009, when 57
innocent civilians were massacred in Sitio Masalay, Municipality of Ampatuan,
Maguindanao Province. Among the principal suspects was petitioner, then the Mayor of
the Municipality of Datu Unsay, Maguindanao Province. Inquest proceedings were
conducted against petitioner on November 26, 2009 at the General Santos (Tambler)
Airport Lounge, before he was flown to Manila and detained at the main office of the
National Bureau of Investigation (NBI). The NBI and the Philippine National Police (PNP)
charged other suspects, numbering more than a hundred, for what became aptly
known as the Maguindanao massacre.
3
cralawvllred

Through Department Order No. 948, then Secretary of Justice Agnes Devanadera
constituted a Special Panel of Prosecutors to conduct the preliminary investigation.

On November 27, 2009, the Department of Justice (DOJ) resolved to file the
corresponding informations for murder against petitioner, and to issue subpoenae to
several persons.
4
On December 1, 2009, 25 informations for murder were also filed
against petitioner in the Regional Trial Court, 12th Judicial Region, in Cotabato
City.
5
cralawvllred

On December 3, 2009, Secretary of Justice Devanadera transmitted her letter to Chief
Justice Puno requesting the transfer of the venue of the trial of the Maguindanao
massacre from Cotabato City to Metro Manila, either in Quezon City or in Manila, to
prevent a miscarriage of justice.
6
On December 8, 2009, the Court granted the request
for the transfer of venue.
7
However, on December 9, 2009, but prior to the transfer of
the venue of the trial to Metro Manila, the Prosecution filed a manifestation regarding
the filing of 15 additional informations for murder against petitioner in Branch 15 of the
Cotabato City RTC.
8
Later on, additional informations for murder were filed against
petitioner in the RTC in Quezon City, Branch 211, the new venue of the trial pursuant to
the resolution of the Court.
9
cralawvllred

The records show that petitioner pleaded not guilty to each of the 41 informations for
murder when he was arraigned on January 5, 2010,
10
February 3, 2010,
11
and July 28,
2010.
12
cralawvllred

In the joint resolution issued on February 5, 2010, the Panel of Prosecutors charged
196 individuals with multiple murder in relation to the Maguindanao massacre.
13
It
appears that in issuing the joint resolution of February 5, 2010 the Panel of Prosecutors
partly relied on the twin affidavits of one Kenny Dalandag, both dated December 7,
2009.
14
cralawvllred

On August 13, 2010, Dalandag was admitted into the Witness Protection Program of the
DOJ.
15
On September 7, 2010, the QC RTC issued its amended pre-trial order,
16

wherein Dalandag was listed as one of the Prosecution witnesses.
17
cralawvllred

On October 14, 2010, petitioner, through counsel, wrote to respondent Secretary of
Justice Leila De Lima and Assistant Chief State Prosecutor Richard Fadullon to request
the inclusion of Dalandag in the informations for murder considering that Dalandag had
already confessed his participation in the massacre through his two sworn
declarations.
18
Petitioner reiterated the request twice more on October 22, 2010
19
and
November 2, 2010.
20
cralawvllred

By her letter dated November 2, 2010,
21
however, Secretary De Lima denied petitioners
request.

Accordingly, on December 7, 2010, petitioner brought a petition for mandamus in the
RTC in Manila (Civil Case No. 10-124777),
22
seeking to compel respondents to charge
Dalandag as another accused in the various murder cases undergoing trial in the QC
RTC.

On January 19, 2011,
23
the RTC in Manila set a pre-trial conference on January 24,
2011 in Civil Case No. 10-124777. At the close of the pre-trial, the RTC in Manila issued
a pre-trial order.

In their manifestation and motion dated February 15, 2011
24
and February 18, 2011,
25

respondents questioned the propriety of the conduct of a trial in a proceeding for
mandamus. Petitioner opposed.

On February 15, 2011, petitioner filed a motion for the production of documents,
26

which the RTC in Manila granted on March 21, 2011 after respondents did not file either
a comment or an opposition.

Respondents then sought the reconsideration of the order of March 21, 2011.

On March 21, 2011,
27
the RTC in Manila issued a subpoena to Dalandag, care of the
Witness Protection Program of the DOJ, requiring him to appear and testify on April 4,
2011 in Civil Case No. 10-124777.

On April 4, 2011, respondents moved to quash the subpoena.
28
Petitioner opposed the
motion to quash the subpoena on April 15, 2011.
29
The parties filed other papers,
specifically, respondents their reply dated April 26, 2011;
30
petitioner an opposition on
May 12, 2011;
31
and respondents another reply dated May 20, 2011.
32
cralawvllred

On June 27, 2011,
33
the RTC of Manila issued the assailed order in Civil Case No. 10-
124777 dismissing the petition for mandamus.
34
cralawvllred

Hence, this appeal by petition for review on certiorari.
Issues

Petitioner raises the following issues, to wit:chanroblesvirtuallawlibrary
1. WHETHER THE PUBLIC RESPONDENTS MAY BE COMPELLED BY MANDAMUS
TO INVESTIGATE AND PROSECUTE KENNY DALANDAG AS AN ACCUSED IN THE
INFORMATIONS FOR MULTIPLE MURDER IN THE MAGUINADANAO MASSACRE
CASES IN LIGHT OF HIS ADMITTED PARTICIPATION THEREAT IN AFFIDAVITS
AND OFFICIAL RECORDS FILED WITH THE PROSECUTOR AND THE QC RTC;
and,
2. WHETHER THE SUBSEQUENT INCLUSION OF KENNY DALANDAG IN THE
WITNESS PROTECTION PROGRAM JUSTIFIES EXCLUSION AS AN ACCUSED AND
HIS NON-INDICTMENT FOR HIS COMPLICITY IN THE MAGUINDANAO
MASSACRE NOTWITHSTANDING ADMISSIONS MADE THAT HE TOOK PART IN
ITS PLANNING AND EXECUTION.
35


The crucial issue is whether respondents may be compelled by writ of mandamus to
charge Dalandag as an accused for multiple murder in relation to the Maguindanao
massacre despite his admission to the Witness Protection Program of the DOJ.
Ruling

The appeal lacks merit.

The prosecution of crimes pertains to the Executive Department of the Government
whose principal power and responsibility are to see to it that our laws are faithfully
executed. A necessary component of the power to execute our laws is the right to
prosecute their violators. The right to prosecute vests the public prosecutors with a
wide range of discretion the discretion of what and whom to charge, the exercise of
which depends on a smorgasbord of factors that are best appreciated by the public
prosecutors.
36
The public prosecutors are solely responsible for the determination of
the amount of evidence sufficient to establish probable cause to justify the filing of
appropriate criminal charges against a respondent. Theirs is also the quasi-judicial
discretion to determine whether or not criminal cases should be filed in
court.
37
cralawvllred

Consistent with the principle of separation of powers enshrined in the Constitution, the
Court deems it a sound judicial policy not to interfere in the conduct of preliminary
investigations, and to allow the Executive Department, through the Department of
Justice, exclusively to determine what constitutes sufficient evidence to establish
probable cause for the prosecution of supposed offenders. By way of exception,
however, judicial review may be allowed where it is clearly established that the public
prosecutor committed grave abuse of discretion, that is, when he has exercised his
discretion in an arbitrary, capricious, whimsical or despotic manner by reason of
passion or personal hostility, patent and gross enough as to amount to an evasion of a
positive duty or virtual refusal to perform a duty enjoined by law.
38
cralawvllred

The records herein are bereft of any showing that the Panel of Prosecutors committed
grave abuse of discretion in identifying the 196 individuals to be indicted for the
Maguindanao massacre. It is notable in this regard that petitioner does not assail the
joint resolution recommending such number of individuals to be charged with multiple
murder, but only seeks to have Dalandag be also investigated and charged as one of
the accused based because of his own admissions in his sworn declarations. However,
his exclusion as an accused from the informations did not at all amount to grave abuse
of discretion on the part of the Panel of Prosecutors whose procedure in excluding
Dalandag as an accused was far from arbitrary, capricious, whimsical or despotic.
Section 2, Rule 110 of the Rules of Court, which requires that the complaint or
information shall be xxx against all persons who appear to be responsible for the
offense involved, albeit a mandatory provision, may be subject of some exceptions,
one of which is when a participant in the commission of a crime becomes a state
witness.

The two modes by which a participant in the commission of a crime may become a
state witness are, namely: (a) by discharge from the criminal case pursuant to Section
17 of Rule 119 of the Rules of Court; and (b) by the approval of his application for
admission into the Witness Protection Program of the DOJ in accordance with Republic
Act No. 6981 (The Witness Protection, Security and Benefit Act).
39
These modes are
intended to encourage a person who has witnessed a crime or who has knowledge of
its commission to come forward and testify in court or quasi-judicial body, or before an
investigating authority, by protecting him from reprisals, and shielding him from
economic dislocation.

These modes, while seemingly alike, are distinct and separate from each other.

Under Section 17, Rule 119 of the Rules of Court, the discharge by the trial court of one
or more of several accused with their consent so that they can be witnesses for the
State is made upon motion by the Prosecution before resting its case. The trial court
shall require the Prosecution to present evidence and the sworn statements of the
proposed witnesses at a hearing in support of the discharge. The trial court must
ascertain if the following conditions fixed by Section 17 of Rule 119 are complied with,
namely: (a) there is absolute necessity for the testimony of the accused whose
discharge is requested; (b) there is no other direct evidence available for the proper
prosecution of the offense committed, except the testimony of said accused; (c) the
testimony of said accused can be substantially corroborated in its material points; (d)
said accused does not appear to be most guilty; and (e) said accused has not at any
time been convicted of any offense involving moral turpitude.

On the other hand, Section 10 of Republic Act No. 6981
provides:chanroblesvirtuallawlibrary
Section 10. State Witness. Any person who has participated in the commission of a
crime and desires to be a witness for the State, can apply and, if qualified as
determined in this Act and by the Department, shall be admitted into the Program
whenever the following circumstances are present:cralaw

a. the offense in which his testimony will be used is a grave felony as defined under the
Revised Penal Code or its equivalent under special laws;cralawlibrary

b. there is absolute necessity for his testimony;cralawlibrary

c. there is no other direct evidence available for the proper prosecution of the offense
committed;cralawlibrary

d. his testimony can be substantially corroborated on its material points;cralawlibrary

e. he does not appear to be most guilty; and

f. he has not at any time been convicted of any crime involving moral turpitude.

An accused discharged from an information or criminal complaint by the court in order
that he may be a State Witness pursuant to Section 9 and 10 of Rule 119 of the
Revised Rules of Court may upon his petition be admitted to the Program if he complies
with the other requirements of this Act. Nothing in this Act shall prevent the discharge
of an accused, so that he can be used as a State Witness under Rule 119 of the Revised
Rules of Court.

Save for the circumstance covered by paragraph (a) of Section 10, supra, the requisites
under both rules are essentially the same. Also worth noting is that an accused
discharged from an information by the trial court pursuant to Section 17 of Rule 119
may also be admitted to the Witness Protection Program of the DOJ provided he
complies with the requirements of Republic Act No. 6981.

A participant in the commission of the crime, to be discharged to become a state
witness pursuant to Rule 119, must be one charged as an accused in the criminal case.
The discharge operates as an acquittal of the discharged accused and shall be a bar to
his future prosecution for the same offense, unless he fails or refuses to testify against
his co-accused in accordance with his sworn statement constituting the basis for his
discharge.
40
The discharge is expressly left to the sound discretion of the trial court,
which has the exclusive responsibility to see to it that the conditions prescribed by the
rules for that purpose exist.
41
cralawvllred

While it is true that, as a general rule, the discharge or exclusion of a co-accused from
the information in order that he may be utilized as a Prosecution witness rests upon the
sound discretion of the trial court,
42
such discretion is not absolute and may not be
exercised arbitrarily, but with due regard to the proper administration of justice.
43
Anent
the requisite that there must be an absolute necessity for the testimony of the accused
whose discharge is sought, the trial court has to rely on the suggestions of and the
information provided by the public prosecutor. The reason is obvious the public
prosecutor should know better than the trial court, and the Defense for that matter,
which of the several accused would best qualify to be discharged in order to become a
state witness. The public prosecutor is also supposed to know the evidence in his
possession and whomever he needs to establish his case,
44
as well as the availability or
non-availability of other direct or corroborative evidence, which of the accused is the
most guilty one, and the like.
45
cralawvllred

On the other hand, there is no requirement under Republic Act No. 6981 for the
Prosecution to first charge a person in court as one of the accused in order for him to
qualify for admission into the Witness Protection Program. The admission as a state
witness under Republic Act No. 6981 also operates as an acquittal, and said witness
cannot subsequently be included in the criminal information except when he fails or
refuses to testify. The immunity for the state witness is granted by the DOJ, not by the
trial court. Should such witness be meanwhile charged in court as an accused, the
public prosecutor, upon presentation to him of the certification of admission into the
Witness Protection Program, shall petition the trial court for the discharge of the
witness.
46
The Court shall then order the discharge and exclusion of said accused from
the information.
47
cralawvllred

The admission of Dalandag into the Witness Protection Program of the Government as a
state witness since August 13, 2010 was warranted by the absolute necessity of his
testimony to the successful prosecution of the criminal charges. Apparently, all the
conditions prescribed by Republic Act No. 6981 were met in his case. That he admitted
his participation in the commission of the Maguindanao massacre was no hindrance to
his admission into the Witness Protection Program as a state witness, for all that was
necessary was for him to appear not the most guilty. Accordingly, he could not anymore
be charged for his participation in the Maguindanao massacre, as to which his
admission operated as an acquittal, unless he later on refuses or fails to testify in
accordance with the sworn statement that became the basis for his discharge against
those now charged for the crimes.

Mandamus shall issue when any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act that the law specifically enjoins as a duty
resulting from an office, trust, or station. It is proper when the act against which it is
directed is one addressed to the discretion of the tribunal or officer. In matters
involving the exercise of judgment and discretion, mandamus may only be resorted to
in order to compel respondent tribunal, corporation, board, officer or person to take
action, but it cannot be used to direct the manner or the particular way discretion is to
be exercised,
48
or to compel the retraction or reversal of an action already taken in the
exercise of judgment or discretion.
49
cralawvllred

As such, respondent Secretary of Justice may be compelled to act on the letter-request
of petitioner, but may not be compelled to act in a certain way, i.e., to grant or deny
such letter-request. Considering that respondent Secretary of Justice already denied
the letter-request, mandamus was no longer available as petitioners recourse.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the
final order issued on June 27, 2011 in Civil Case No. 10-124777 by the Regional Trial
Court in Manila; and ORDERS petitioner to pay the costs of
suit.rbl rl l lbrr

SO ORDERED.



**************************ooooooooooooooooo****************************


EN BANC
[G.R. No. 191805, April 16, 2013]
IN THE MATTER OF THE PETITION FOR THE WRIT OF AMPARO AND HABEAS
DATA IN FAVOR OF NORIEL RODRIGUEZ, NORIEL RODRIGUEZ, Petitioner, v.
GLORIA MACAPAGAL-ARROYO, GEN. VICTOR S. IBRADO, PDG JESUS AME
VERSOZA, LT. GEN. DELFIN BANGIT, MAJ. GEN. NESTOR Z. OCHOA, P/CSUPT.
AMETO G. TOLENTINO, P/SSUPT. JUDE W. SANTOS, COL. REMIGIO M. DE
VERA, AN OFFICER NAMED MATUTINA, LT. COL. MINA, CALOG, GEORGE
PALACPAC UNDER THE NAME HARRY, ANTONIO CRUZ, ALDWIN BONG
PASICOLAN AND VINCENT CALLAGAN, Respondents.

[G.R. No. 193160]

IN THE MATTER OF THE PETITION FOR THE WRIT OF AMPARO AND HABEAS
DATA IN FAVOR OF NORIEL RODRIGUEZ, POLICE DIR. GEN. JESUS A.
VERSOZA, P/SSUPT. JUDE W. SANTOS, BGEN. REMEGIO M. DE VERA, 1ST LT.
RYAN S. MATUTINA, LT. COL. LAURENCE E. MINA, ANTONIO C. CRUZ,
ALDWIN C. PASICOLAN AND VICENTE A. CALLAGAN, Petitioners, v. NORIEL H.
RODRIGUEZ, Respondent.

R E S O L U T I O N
ERENO, C.J.:
On 15 November 2011, the Court promulgated its Decision in the present case, the
dispositive portion of which reads:chanroblesvirtuallawlibrary
WHEREFORE, we resolve to GRANT the Petition for Partial Review in G.R. No. 191805
and DENY the Petition for Review in G.R. No. 193160. The Decision of the Court of
Appeals is hereby AFFIRMED WITH MODIFICATION.

The case is dismissed with respect to respondents former President Gloria Macapagal-
Arroyo, P/CSupt. Ameto G. Tolentino, and P/SSupt. Jude W. Santos, Calog, George
Palacpac, Antonio Cruz, Aldwin Pasicolan and Vincent Callagan for lack of merit.

This Court directs the Office of the Ombudsman (Ombudsman) and the Department of
Justice (DOJ) to take the appropriate action with respect to any possible liability or
liabilities, within their respective legal competence, that may have been incurred by
respondents Gen. Victor Ibrado, PDG. Jesus Verzosa, Lt. Gen. Delfin Bangit, Maj. Gen.
Nestor Ochoa, Brig. Gen. Remegio De Vera, 1st Lt. Ryan Matutina, and Lt. Col.
Laurence Mina. The Ombudsman and the DOJ are ordered to submit to this Court the
results of their action within a period of six months from receipt of this Decision.

In the event that herein respondents no longer occupy their respective posts, the
directives mandated in this Decision and in the Court of Appeals are enforceable against
the incumbent officials holding the relevant positions. Failure to comply with the
foregoing shall constitute contempt of court.

SO ORDERED.

After a careful examination of the records, the Court was convinced that the Court of
Appeals correctly found sufficient evidence proving that the soldiers of the 17
th
Infantry
Battalion, 5
th
Infantry Division of the military abducted petitioner Rodriguez on 6
September 2009, and detained and tortured him until 17 September 2009.

Pursuant to the Decision ordering the Office of the Ombudsman to take further action,
Ombudsman Conchita Carpio Morales sent this Court a letter dated 23 May 2012,
requesting an additional two-month period, or until 24 July 2012, within which to
submit a report. The Ombudsman stated that Noriel Rodriguez (Rodriguez) and his
family refused to cooperate with the investigation for security reasons.

On 6 January 2012, respondents filed their Motion for Reconsideration,
1
arguing that
the soldiers belonging to the 17
th
Infantry Battalion, 5
th
Infantry Division of the military
cannot be held accountable for authoring the abduction and torture of petitioner. Their
arguments revolve solely on the claim that respondents were never specifically
mentioned by name as having performed, permitted, condoned, authorized, or allowed
the commission of any act or incurrence omission which would violate or threaten with
violation the rights to life, liberty, and security of petitioner-respondent and his
family.
2
cralawvllred

On 18 January 2013, the Ombudsman submitted the Investigation Report, as
compliance with the Courts directive to take appropriate action with respect to possible
liabilities respondents may have incurred. The exhaustive report detailed the steps
taken by the Field Investigation Office (FIO) of the Office of the Ombudsman,
concluding that no criminal, civil, or administrative liabilities may be imputed to the
respondents. It was reflected therein that the lawyers for the Rodriguezes had
manifested to the FIO that the latter are hesitant to appear before them for security
reasons, viz:chanroblesvirtuallawlibrary
Karapatan (a non-governmental organization that provides legal assistance to victims of
human rights violations and their families) could not locate Noriel and Rodel. As of this
writing, the Rodriguezes refused to participate in the present fact-finding investigation
for security reasons. Atty. Yambot disclosed (through a Manifestation dated March 30,
2012 that despite efforts to convince Noriel to participate in the present proceedings,
the latter remains unconvinced and unwilling to this date.

Recent information, however, revealed that Noriel and his family are no longer
interested in participating in the present case.

Instead of appearing before this Office for a conference under oath, SPO1 Robert B.
Molina submitted an Affidavit dated June 13, 2012 stating that on September 15, 2009,
at around 11:00 oclock in the morning, Wilma H. Rodriguez appeared before the
Gonzaga Police Station and requested to enter into the blotter that her son, Noriel, was
allegedly missing in Sitio Comunal, Gonzaga, Cagayan. Thereupon, he gathered
information relative to Wilmas report but the community residence failed to reveal
anything.
3


The other accounts specifically that of respondent Antonino C. Cruz, Special
Investigator II of the Commission on Human Rights (CHR), as well as the claims of
respondents Mina and De Vera that they had disclosed to the CHR that Noriel had
become an agent (asset) of the 17
th
Infantry Battalion have been thoroughly
evaluated and ruled upon in our Decision. The OMB further laments, If only he (Noriel)
could be asked to verify the circumstances under which he executed these subsequent
affidavits, his inconsistent claims will finally be settled, and that (I)f there is one
person who can attest on whether detention and torture were indeed committed by
any of the Subjects herein, it is Noriel Rodriguez himself, the supposed
victim.
4
cralawvllred

The purported unwillingness of the petitioner to appear or participate at this stage of
the proceedings due to security reasons does not affect the rationale of the writ
granted by the CA, as affirmed by this Court. In any case, the issue of the existence of
criminal, civil, or administrative liability which may be imputed to the respondents is not
the province of amparo proceedings -- rather, the writ serves both preventive and
curative roles in addressing the problem of extrajudicial killings and enforced
disappearances. It is preventive in that it breaks the expectation of impunity in the
commission of these offenses, and it is curative in that it facilitates the subsequent
punishment of perpetrators by inevitably leading to subsequent investigation and
action.
5
In this case then, the thrust of ensuring that investigations are conducted and
the rights to life, liberty, and security of the petitioner, remains.

We deny the motion for reconsideration.

The writ of amparo partakes of a summary proceeding that requires only substantial
evidence to make the appropriate interim and permanent reliefs available to the
petitioner. As explained in the Decision, it is not an action to determine criminal guilt
requiring proof beyond reasonable doubt, or liability for damages requiring
preponderance of evidence, or even administrative responsibility requiring substantial
evidence. The totality of evidence as a standard for the grant of the writ was correctly
applied by this Court, as first laid down in Razon v. Tagitis:chanroblesvirtuallawlibrary
The fair and proper rule, to our mind, is to consider all the pieces of evidence
adduced in their totality, and to consider any evidence otherwise inadmissible under
our usual rules to be admissible if it is consistent with the admissible evidence adduced.
In other words, we reduce our rules to the most basic test of reason i.e., to the
relevance of the evidence to the issue at hand and its consistency with all
other pieces of adduced evidence. Thus, even hearsay evidence can be admitted if
it satisfies this basic minimum test.
6
(Emphasis supplied.)

No reversible error may be attributed to the grant of the privilege of the writ by the CA,
and the present motion for reconsideration raises no new issues that would convince us
otherwise.

Respondents claim that they were not competently identified as the soldiers who
abducted and detained the petitioner, or that there was no mention of their names in
the documentary evidence, is baseless. The CA rightly considered Rodriguezs
Sinumpaang Salaysay
7
as a meticulous and straightforward account of his horrific ordeal
with the military, detailing the manner in which he was captured and maltreated on
account of his suspected membership in the NPA.
8
cralawvllred

Petitioner narrated that at dawn on 9 September 2009, he noticed a soldier with the
name tag Matutina, who appeared to be an official because the other soldiers
addressed him as sir.
9
He saw Matutina again at 11:00 p.m. on 15 September 2009,
when his abductors took him to a military operation in the mountains. His narration of
his suffering included an exhaustive description of his physical surroundings, personal
circumstances, and perceived observations. He likewise positively identified respondents
1st Lt. Matutina and Lt. Col. Mina to be present during his abduction, detention and
torture.
10
These facts were further corroborated by Hermie Antonio Carlos in his
Sinumpaang Salaysay dated 16 September 2009,
11
wherein he recounted in detail the
circumstances surrounding the victims capture.

Respondents main contention in their Return of the Writ was correctly deemed illogical
and contradictory by the CA. They claim that Rodriguez had complained of physical
ailments due to activities in the CPP-NPA, yet nevertheless signified his desire to
become a double-agent for the military. The CA stated:chanroblesvirtuallawlibrary
In the Return of the Writ, respondent AFP members alleged that petitioner confided to
his military handler, Cpl. Navarro, that petitioner could no longer stand the hardships he
experienced in the wilderness, and that he wanted to become an ordinary citizen again
because of the empty promises of the CPP-NPA. However, in the same Return,
respondents state that petitioner agreed to become a double agent for the military and
wanted to re-enter the CPP-NPA, so that he could get information regarding the
movement directly from the source. If petitioner was tired of life in the
wilderness and desired to become an ordinary citizen again, it defies logic
that he would agree to become an undercover agent and work alongside
soldiers in the mountains or the wilderness he dreads to locate the
hideout of his alleged NPA comrades.
12
(Emphasis supplied.)

Respondents conveniently neglect to address the findings of both the CA and this Court
that aside from the abduction of Rodriguez, respondents, specifically 1
st
Lt. Matutina,
had violated and threatened the formers right to security when they made a visual
recording of his house, as well as the photos of his relatives. The CA found that the
soldiers even went as far as taking videos of the photos of petitioners relatives hung on
the wall of the house, and the innermost portions of the house.
13
There is no
reasonable justification for this violation of the right to privacy and security of
petitioners abode, which strikes at the very heart and rationale of the Rule on the Writ
of Amparo.

More importantly, respondents also neglect to address our ruling that the failure to
conduct a fair and effective investigation similarly amounted to a violation of, or threat
to Rodriguezs rights to life, liberty, and security.
14
The writs curative role is an
acknowledgment that the violation of the right to life, liberty, and security may be
caused not only by a public officials act, but also by his omission. Accountability may
attach to respondents who are imputed with knowledge relating to the enforced
disappearance and who carry the burden of disclosure; or those who carry, but have
failed to discharge, the burden of extraordinary diligence in the investigation of the
enforced disappearance.
15
The duty to investigate must be undertaken in a serious
manner and not as a mere formality preordained to be ineffective.
16
cralawvllred

The CA found that respondents Gen. Ibrado, PDG Verzosa, LT. Gen. Bangit, Maj. Gen.
Ochoa, Col. De Vera, and Lt. Col. Mina conducted a perfunctory investigation which
relied solely on the accounts of the military. Thus, the CA correctly held that the
investigation was superficial, one-sided, and depended entirely on the report prepared
by 1st Lt. Johnny Calub. No efforts were undertaken to solicit petitioners version of the
incident, and no witnesses were questioned regarding it.
17
The CA also took into
account the palpable lack of effort from respondent Versoza, as the chief of the
Philippine National Police.

WHEREFORE, in view of the foregoing, the Motion for Reconsideration is hereby
DENIED with FINALITY. Let a copy of this Resolution be furnished the Ombudsman
for whatever appropriate action she may still take under
circumstances.rbl rl l lbrr

SO ORDERED.












THIRD DIVISION
A.C. No. 9537 [Formerly CBD Case No. 09-2489], June 10, 2013
DR. TERESITA LEE, Complainant, v. ATTY. AMADOR L. SIMANDO, Respondent.
D E C I S I O N
PERALTA, J.:

Before us is a Petition for Disbarment
1
dated July 21, 2009 filed by Dr. Teresita Lee (Dr.
Lee) against respondent Atty. Amador L. Simando (Atty. Simando) before the
Integrated Bar of the Philippines-Commission on Bar Discipline (IBP-CBD), docketed as
CBD Case No. 09-2489, now A.C. No. 9537, for violation of the Code of Judicial Ethics of
Lawyers.

The facts of the case, as culled from the records, are as
follows:chanroblesvirtualawlibrary

Atty. Simando was the retained counsel of complainant Dr. Lee from November 2004
until January 8, 2008, with a monthly retainer fee of Three Thousand Pesos
(Php3,000.00).
2
chanroblesvirtuallawlibrary

Sometime during the above-mentioned period, Atty. Simando went to see Dr. Lee and
asked if the latter could help a certain Felicito M. Mejorado (Mejorado) for his needed
funds. He claimed that Mejorado was then awaiting the release of his claim for
informer's reward from the Bureau of Customs. Because Dr. Lee did not know Mejorado
personally and she claimed to be not in the business of lending money, the former
initially refused to lend money. But Atty. Simando allegedly persisted and assured her
that Mejorado will pay his obligation and will issue postdated checks and sign
promissory notes. He allegedly even offered to be the co-maker of Mejorado and
assured her that Mejorado's obligation will be paid when due. Atty. Simando was
quoted saying: "Ipapahamak ba kita, kliyente kita"; "Sigurado ito, kung gusto mo,
gagarantiyahan ko pa ito, at pipirma din ako"; "Isang buwan lang, at hindi hihigit sa
dalawang buwan ito, bayad ka na."
3
chanroblesvirtuallawlibrary

Due to Atty. Simando's persistence, his daily calls and frequent visits to convince Dr.
Lee, the latter gave in to her lawyer's demands, and finally agreed to give Mejorado
sizeable amounts of money. Respondent acted as co-maker with Mejorado in various
cash loans, to wit:
4
chanroblesvirtuallawlibrary
Date: Amount
November 11, 2006 Php 400,000.00
November 24, 2006 200,000.00
November 27, 2006 400,000.00
December 7, 2006 200,000.00
December 13, 2006 _____200,000.00
Total: Php1,400,000.00
When the said obligation became due, despite Dr. Lee's repeated demands, Mejorado
failed and refused to comply with his obligation. Since Atty. Simando was still her
lawyer then, Dr. Lee instructed him to initiate legal action against Mejorado. Atty.
Simando said he would get in touch with Mejorado and ask him to pay his obligation
without having to resort to legal action. However, even after several months, Mejorado
still failed to pay Dr. Lee, so she again asked Atty. Simando why no payment has been
made yet. Dr. Lee then reminded Atty. Simando that he was supposed to be the co-
maker of the obligation of Mejorado, to which he replied: "Di kasuhan din ninyo
ako!"
5
chanroblesvirtuallawlibrary

Despite complainant's repeated requests, respondent ignored her and failed to bring
legal actions against Mejorado. Thus, in January 2008, complainant was forced to
terminate her contract with Atty. Simando.

Subsequently, complainant's new lawyer, Atty. Gilbert Morandarte, sent a demand letter
dated June 13, 2008 to Atty. Simando in his capacity as the co-maker of some of the
loans of Mejorado.

In his Letter dated June 30, 2008, respondent denied his liability as a co-maker and
claimed that novation had occurred because complainant had allegedly given additional
loans to Mejorado without his knowledge.
6
chanroblesvirtuallawlibrary

Dr. Lee then accused Atty. Simando of violating the trust and confidence which she
gave upon him as her lawyer, and even took advantage of their professional
relationship in order to get a loan for his client. Worse, when the said obligation
became due, respondent was unwilling to help her to favor Mejorado. Thus, the instant
petition for disbarment against Atty. Simando.

On August 12, 2009, the IBP-CBD ordered respondent to submit his Answer on the
complaint against him.
7
chanroblesvirtuallawlibrary

In his Answer
8
dated September 17, 2009, Atty. Simando claimed that complainant,
who is engaged in lending money at a high interest rate, was the one who initiated the
financial transaction between her and Mejorado. He narrated that complainant asked
him if it is true that Mejorado is his client as she found out that Mejorado has a pending
claim for informer's reward with the Bureau of Customs. When he affimed that
Mejorado is his client, complainant signified that she is willing to give money for
Mejorado's financial needs while awaiting for the release of the informer's reward.
Eventually, parties agreed that Mejorado will pay double the amount and that payment
shall be made upon receipt by Mejorado of the payment of his claim for informer's
reward.
9
chanroblesvirtuallawlibrary

Meanwhile, Atty. Simando stressed that Dr. Lee gave Mejorado a total of
Php700,000.00 as an investment but he signed as co-maker in all the receipts showing
double the amount or Php1,400,000.00.
10
chanroblesvirtuallawlibrary

Respondent claimed that complainant is a money-lender exacting high interest rates
from borrowers.
11
He narrated several instances and civil cases where complainant was
engaged in money-lending where he divulged that even after defendants had already
paid their loan, complainant still persists in collecting from them.
12
Respondent asserted
that he knew of these transactions, because he was among the four lawyers who
handled complainant's case.
13
chanroblesvirtuallawlibrary

Respondent averred that from the time that Mejorado and Dr. Lee had become close to
each other, the latter had given Mejorado additional investments and one (1) Silverado
Pick-up at the price of P500,000.00 and fifty (50) sacks of old clothings. He claimed that
the additional investments made by Dr. Lee to Mejorado were given without his
knowledge.

Atty. Simando further alleged that with Dr. Lee's investment of around P2 Million which
included the Silverado Pick-up and the fifty (50) sacks of old clothings, the latter
required Mejorado to issue five (5) checks with a total value of P7,033,500.00, an
amount more than the actual value which Mejorado
received.
14
chanroblesvirtuallawlibrary

Atty. Simando added that while Dr. Lee and Mejorado agreed that the issued checks
shall be presented to the bank only upon payment of his informer's reward, Dr. Lee
presented the checks to the bank despite being aware that Mejorado's account had no
funds for said checks. Atty. Simando further denied that he refused to take legal action
against Mejorado. He claimed that complainant never instructed him to file legal action,
since the latter knew that Mejorado is obligated to pay only upon receipt of his
informer's reward.

Finally, Atty. Simando insisted that he did not violate their lawyer- client relationship,
since Dr. Lee voluntarily made the financial investment with Mejorado and that he
merely introduced complainant to Mejorado. He further claimed that there is no conflict
of interest because he is Mejorado's lawyer relative to the latter's claim for informer's
reward, and not Mejorado's lawyer against Dr. Lee. He reiterated that there is no
conflicting interest as there was no case between Mejorado and Dr. Lee that he is
handling for both of them.
15
chanroblesvirtuallawlibrary

In her Reply dated October 30, 2009, Dr. Lee denied that what she entered into was a
mere investment. She insisted that she lent the money to Mejorado and respondent, in
his capacity as co-maker and the transaction was actually a loan.
16
To prove her claim,
Dr. Lee submitted the written loan agreements/receipts which categorically stated that
the money received was a loan with due dates, signed by Mejorado and respondent as
co-maker.
17
She further claimed that she did not know Mejorado and it was respondent
who brought him to her and requested her to assist Mejorado by lending him money as,
in fact, respondent even vouched for Mejorado and agreed to sign as co-maker.

Complainant further emphasized that what she was collecting is the payment only of
the loan amounting to One Million Four Hundred Thousand Pesos (Php1,400,000.00)
which respondent had signed as co-maker. Thus, respondent's claim that his obligation
was already extinguished by novation holds no water, since what was being collected is
merely his obligation pertaining to the loan amounting to Php1,400,000.00 only, and
nothing more.

Finally, complainant lamented that respondent, in his comments, even divulged
confidential informations he had acquired while he was still her lawyer and even used it
against her in the present case, thus, committing another unethical conduct. She,
therefore, maintained that respondent is guilty of violating the lawyer-client
confidentiality rule.

Both parties failed to appear during the mandatory conference on January 15, 2010.
Both parties requested for resetting of the mandatory conference, however, both failed
to agree on a certain date. Hence, the IBP, so as not to delay the disposition of the
complaint, terminated the mandatory conference and instead required the parties to
submit their respective position papers.
18
chanroblesvirtuallawlibrary

On March 18, 2010, the IBP-CBD found Atty. Simando guilty of violating the Code of
Professional Responsibility. It recommended that respondent be suspended from the
practice of law for six (6) months.

On December 29, 2010, the IBP Board of Governors adopted and approved the Report
and Recommendation of the IBP-CBD to suspend Atty. Simando from the practice of
law for a period of six (6) months.

Respondent moved for reconsideration.

On March 10, 2012, the IBP Board of Governors granted respondent's motion for
reconsideration for lack of sufficient evidence to warrant the penalty of suspension. The
Resolution dated December 29, 2010 was reversed and the case against respondent
was dismissed.
RULING

We reverse the ruling of the IBP Board of Governors.

Jurisprudence has provided three tests in determining whether a lawyer is guilty of
representing conflicting interest:chanroblesvirtualawlibrary
One test is whether a lawyer is duty-bound to fight for an issue or claim in behalf of
one client and, at the same time, to oppose that claim for the other client. Thus, if a
lawyer's argument for one client has to be opposed by that same lawyer in arguing for
the other client, there is a violation of the rule.

Another test of inconsistency of interests is whether the acceptance of a new
relation would prevent the full discharge of the lawyer's duty of undivided
fidelity and loyalty to the client or invite suspicion of unfaithfulness or
double-dealing in the performance of that duty. Still another test is whether the
lawyer would be called upon in the new relation to use against a former client any
confidential information acquired through their connection or previous employment.
19


In the instant case, we find substantial evidence to support respondent's violation of
the above parameters, as established by the following circumstances on
record:chanroblesvirtualawlibrary

First, it is undisputed that there was a lawyer-client relationship between complainant
and Atty. Simando as evidenced by the retainer fees received by respondent and the
latter's representation in certain legal matters pertaining to complainant's
business;nadcralavvonlinelawlibrary

Second, Atty. Simando admitted that Mejorado is another client of him albeit in a case
claiming rewards against the Bureau of Customs;nadcralavvonlinelawlibrary

Third, Atty. Simando admitted that he was the one who introduced complainant and
Mejorado to each other for the purpose of entering into a financial transaction while
having knowledge that complainant's interests could possibly run in conflict with
Mejorado's interests which ironically such client's interests, he is duty-bound to
protect;nadcralavvonlinelawlibrary

Fourth, despite the knowledge of the conflicting interests between his two clients,
respondent consented in the parties' agreement and even signed as co-maker to the
loan agreement;nadcralavvonlinelawlibrary

Fifth, respondent's knowledge of the conflicting interests between his two clients was
demonstrated further by his own actions, when he:chanroblesvirtualawlibrary
(a) failed to act on Mejorado's failure to pay his obligation to complainant despite the
latter's instruction to do so;nadcralavvonlinelawlibrary

(b) denied liability despite signing as co-maker in the receipts/promissory notes arising
from the loan agreement between his two clients;nadcralavvonlinelawlibrary

(c) rebutted complainant's allegations against Mejorado and him, and even divulged
informations he acquired while he was still complainant's lawyer.

Clearly, it is improper for respondent to appear as counsel for one party (complainant
as creditor) against the adverse party (Mejorado as debtor) who is also his client, since
a lawyer is prohibited from representing conflicting interests. He may not, without being
guilty of professional misconduct, act as counsel for a person whose interest conflict
with that of his present or former client.

Respondent's assertion that there is no conflict of interest because complainant and
respondent are his clients in unrelated cases fails to convince. His representation of
opposing clients in both cases, though unrelated, obviously constitutes conflict of
interest or, at the least, invites suspicion of double-dealing.
20
Moreover, with the
subject loan agreement entered into by the complainant and Mejorado, who are both
his clients, readily shows an apparent conflict of interest, moreso when he signed as co-
maker.

Likewise, respondent's argument that the money received was an investment and not a
loan is difficult to accept, considering that he signed as co-maker. Respondent is a
lawyer and it is objectionable that he would sign as co-maker if he knew all along that
the intention of the parties was to engage in a mere investment. Also, as a lawyer,
signing as a co-maker, it can be presupposed that he is aware of the nature of
suretyship and the consequences of signing as co-maker. Therefore, he cannot escape
liability without exposing himself from administrative liability, if not civil liability.
Moreover, we noted that while complainant was able to show proof of receipts of
various amounts of money loaned and received by Mejorado, and signed by the
respondent as co-maker, the latter, however, other than his bare denials, failed to show
proof that the money given was an investment and not a loan.

It must be stressed that the proscription against representation of conflicting interests
finds application where the conflicting interests arise with respect to the same general
matter however slight the adverse interest may be. It applies even if the conflict
pertains to the lawyer's private activity or in the performance of a function in a non-
professional capacity. In the process of determining whether there is a conflict of
interest, an important criterion is probability, not certainty, of
conflict.
21
chanroblesvirtuallawlibrary

We likewise note that respondent offered several excuses in order to avoid payment of
his liability. First, in his Answer to complainant's demand letter, he claimed there was
novation which extinguished his liability; Secondly, he claimed that the amount received
by Mejorado for which he signed as co-maker was merely an investment and not a
loan. Finally, he alleged that it was agreed that the investment with profits will be paid
only after Mejorado receives the payment for his claim for reward which complainant
violated when she presented the checks for payment prematurely. These actuations of
Atty. Simando do not speak well of his reputation as a
lawyer.
22
chanroblesvirtuallawlibrary

Finally, we likewise find respondent guilty of violating Rule 21.01 of the Code of
Professional Responsibility.
23
In his last-ditch effort to impeach the credibility of
complainant, he divulged informations
24
which he acquired in confidence during the
existence of their lawyer-client relationship.

We held in Nombrado v. Hernandez
25
that the termination of the relation of attorney
and client provides no justification for a lawyer to represent an interest adverse to or in
conflict with that of the former client. The reason for the rule is that the client's
confidence once reposed cannot be divested by the expiration of the professional
employment. Consequently, a lawyer should not, even after the severance of the
relation with his client, do anything which will injuriously affect his former client in any
matter in which he previously represented him nor should he disclose or use any of the
client's confidences acquired in the previous relation.

Accordingly, we reiterate that lawyers are enjoined to look at any representation
situation from "the point of view that there are possible conflicts," and further, "to think
in terms of impaired loyalty" that is to evaluate if his representation in any way will
impair loyalty to a client.
26
chanroblesvirtuallawlibrary

WHEREFORE, premises considered, this Court resolves to ADOPT the findings and
recommendation of the IBP in Resolution No. XIX-2010-733 suspending respondent
Atty. Amador L. Simando for six (6) months from the practice of law, with a WARNING
that a repetition of the same or similar offense will warrant a more severe penalty.

Let copies of this Decision be furnished all courts, the Office of the Bar Confidant and
the Integrated Bar of the Philippines for their information and guidance. The Office of
the Bar Confidant is DIRECTED to append a copy of this Decision to respondent's
record as member of the Bar.

Atty. Simando is DIRECTED to inform the Court of the date of his receipt of this
Decision so that we can determine the reckoning point when his suspension shall take
effect.

This Decision shall be immediately executory.

SO ORDERED.


















THIRD DIVISION
A.C. No. 9537 [Formerly CBD Case No. 09-2489], June 10, 2013
DR. TERESITA LEE, Complainant, v. ATTY. AMADOR L. SIMANDO, Respondent.
D E C I S I O N
PERALTA, J.:

Before us is a Petition for Disbarment
1
dated July 21, 2009 filed by Dr. Teresita Lee (Dr.
Lee) against respondent Atty. Amador L. Simando (Atty. Simando) before the
Integrated Bar of the Philippines-Commission on Bar Discipline (IBP-CBD), docketed as
CBD Case No. 09-2489, now A.C. No. 9537, for violation of the Code of Judicial Ethics of
Lawyers.

The facts of the case, as culled from the records, are as
follows:chanroblesvirtualawlibrary

Atty. Simando was the retained counsel of complainant Dr. Lee from November 2004
until January 8, 2008, with a monthly retainer fee of Three Thousand Pesos
(Php3,000.00).
2
chanroblesvirtuallawlibrary

Sometime during the above-mentioned period, Atty. Simando went to see Dr. Lee and
asked if the latter could help a certain Felicito M. Mejorado (Mejorado) for his needed
funds. He claimed that Mejorado was then awaiting the release of his claim for
informer's reward from the Bureau of Customs. Because Dr. Lee did not know Mejorado
personally and she claimed to be not in the business of lending money, the former
initially refused to lend money. But Atty. Simando allegedly persisted and assured her
that Mejorado will pay his obligation and will issue postdated checks and sign
promissory notes. He allegedly even offered to be the co-maker of Mejorado and
assured her that Mejorado's obligation will be paid when due. Atty. Simando was
quoted saying: "Ipapahamak ba kita, kliyente kita"; "Sigurado ito, kung gusto mo,
gagarantiyahan ko pa ito, at pipirma din ako"; "Isang buwan lang, at hindi hihigit sa
dalawang buwan ito, bayad ka na."
3
chanroblesvirtuallawlibrary

Due to Atty. Simando's persistence, his daily calls and frequent visits to convince Dr.
Lee, the latter gave in to her lawyer's demands, and finally agreed to give Mejorado
sizeable amounts of money. Respondent acted as co-maker with Mejorado in various
cash loans, to wit:
4
chanroblesvirtuallawlibrary
Date: Amount
November 11, 2006 Php 400,000.00
November 24, 2006 200,000.00
November 27, 2006 400,000.00
December 7, 2006 200,000.00
December 13, 2006 _____200,000.00
Total: Php1,400,000.00
When the said obligation became due, despite Dr. Lee's repeated demands, Mejorado
failed and refused to comply with his obligation. Since Atty. Simando was still her
lawyer then, Dr. Lee instructed him to initiate legal action against Mejorado. Atty.
Simando said he would get in touch with Mejorado and ask him to pay his obligation
without having to resort to legal action. However, even after several months, Mejorado
still failed to pay Dr. Lee, so she again asked Atty. Simando why no payment has been
made yet. Dr. Lee then reminded Atty. Simando that he was supposed to be the co-
maker of the obligation of Mejorado, to which he replied: "Di kasuhan din ninyo
ako!"
5
chanroblesvirtuallawlibrary

Despite complainant's repeated requests, respondent ignored her and failed to bring
legal actions against Mejorado. Thus, in January 2008, complainant was forced to
terminate her contract with Atty. Simando.

Subsequently, complainant's new lawyer, Atty. Gilbert Morandarte, sent a demand letter
dated June 13, 2008 to Atty. Simando in his capacity as the co-maker of some of the
loans of Mejorado.

In his Letter dated June 30, 2008, respondent denied his liability as a co-maker and
claimed that novation had occurred because complainant had allegedly given additional
loans to Mejorado without his knowledge.
6
chanroblesvirtuallawlibrary

Dr. Lee then accused Atty. Simando of violating the trust and confidence which she
gave upon him as her lawyer, and even took advantage of their professional
relationship in order to get a loan for his client. Worse, when the said obligation
became due, respondent was unwilling to help her to favor Mejorado. Thus, the instant
petition for disbarment against Atty. Simando.

On August 12, 2009, the IBP-CBD ordered respondent to submit his Answer on the
complaint against him.
7
chanroblesvirtuallawlibrary

In his Answer
8
dated September 17, 2009, Atty. Simando claimed that complainant,
who is engaged in lending money at a high interest rate, was the one who initiated the
financial transaction between her and Mejorado. He narrated that complainant asked
him if it is true that Mejorado is his client as she found out that Mejorado has a pending
claim for informer's reward with the Bureau of Customs. When he affimed that
Mejorado is his client, complainant signified that she is willing to give money for
Mejorado's financial needs while awaiting for the release of the informer's reward.
Eventually, parties agreed that Mejorado will pay double the amount and that payment
shall be made upon receipt by Mejorado of the payment of his claim for informer's
reward.
9
chanroblesvirtuallawlibrary

Meanwhile, Atty. Simando stressed that Dr. Lee gave Mejorado a total of
Php700,000.00 as an investment but he signed as co-maker in all the receipts showing
double the amount or Php1,400,000.00.
10
chanroblesvirtuallawlibrary

Respondent claimed that complainant is a money-lender exacting high interest rates
from borrowers.
11
He narrated several instances and civil cases where complainant was
engaged in money-lending where he divulged that even after defendants had already
paid their loan, complainant still persists in collecting from them.
12
Respondent asserted
that he knew of these transactions, because he was among the four lawyers who
handled complainant's case.
13
chanroblesvirtuallawlibrary

Respondent averred that from the time that Mejorado and Dr. Lee had become close to
each other, the latter had given Mejorado additional investments and one (1) Silverado
Pick-up at the price of P500,000.00 and fifty (50) sacks of old clothings. He claimed that
the additional investments made by Dr. Lee to Mejorado were given without his
knowledge.

Atty. Simando further alleged that with Dr. Lee's investment of around P2 Million which
included the Silverado Pick-up and the fifty (50) sacks of old clothings, the latter
required Mejorado to issue five (5) checks with a total value of P7,033,500.00, an
amount more than the actual value which Mejorado
received.
14
chanroblesvirtuallawlibrary

Atty. Simando added that while Dr. Lee and Mejorado agreed that the issued checks
shall be presented to the bank only upon payment of his informer's reward, Dr. Lee
presented the checks to the bank despite being aware that Mejorado's account had no
funds for said checks. Atty. Simando further denied that he refused to take legal action
against Mejorado. He claimed that complainant never instructed him to file legal action,
since the latter knew that Mejorado is obligated to pay only upon receipt of his
informer's reward.

Finally, Atty. Simando insisted that he did not violate their lawyer- client relationship,
since Dr. Lee voluntarily made the financial investment with Mejorado and that he
merely introduced complainant to Mejorado. He further claimed that there is no conflict
of interest because he is Mejorado's lawyer relative to the latter's claim for informer's
reward, and not Mejorado's lawyer against Dr. Lee. He reiterated that there is no
conflicting interest as there was no case between Mejorado and Dr. Lee that he is
handling for both of them.
15
chanroblesvirtuallawlibrary

In her Reply dated October 30, 2009, Dr. Lee denied that what she entered into was a
mere investment. She insisted that she lent the money to Mejorado and respondent, in
his capacity as co-maker and the transaction was actually a loan.
16
To prove her claim,
Dr. Lee submitted the written loan agreements/receipts which categorically stated that
the money received was a loan with due dates, signed by Mejorado and respondent as
co-maker.
17
She further claimed that she did not know Mejorado and it was respondent
who brought him to her and requested her to assist Mejorado by lending him money as,
in fact, respondent even vouched for Mejorado and agreed to sign as co-maker.

Complainant further emphasized that what she was collecting is the payment only of
the loan amounting to One Million Four Hundred Thousand Pesos (Php1,400,000.00)
which respondent had signed as co-maker. Thus, respondent's claim that his obligation
was already extinguished by novation holds no water, since what was being collected is
merely his obligation pertaining to the loan amounting to Php1,400,000.00 only, and
nothing more.

Finally, complainant lamented that respondent, in his comments, even divulged
confidential informations he had acquired while he was still her lawyer and even used it
against her in the present case, thus, committing another unethical conduct. She,
therefore, maintained that respondent is guilty of violating the lawyer-client
confidentiality rule.

Both parties failed to appear during the mandatory conference on January 15, 2010.
Both parties requested for resetting of the mandatory conference, however, both failed
to agree on a certain date. Hence, the IBP, so as not to delay the disposition of the
complaint, terminated the mandatory conference and instead required the parties to
submit their respective position papers.
18
chanroblesvirtuallawlibrary

On March 18, 2010, the IBP-CBD found Atty. Simando guilty of violating the Code of
Professional Responsibility. It recommended that respondent be suspended from the
practice of law for six (6) months.

On December 29, 2010, the IBP Board of Governors adopted and approved the Report
and Recommendation of the IBP-CBD to suspend Atty. Simando from the practice of
law for a period of six (6) months.

Respondent moved for reconsideration.

On March 10, 2012, the IBP Board of Governors granted respondent's motion for
reconsideration for lack of sufficient evidence to warrant the penalty of suspension. The
Resolution dated December 29, 2010 was reversed and the case against respondent
was dismissed.
RULING

We reverse the ruling of the IBP Board of Governors.

Jurisprudence has provided three tests in determining whether a lawyer is guilty of
representing conflicting interest:chanroblesvirtualawlibrary
One test is whether a lawyer is duty-bound to fight for an issue or claim in behalf of
one client and, at the same time, to oppose that claim for the other client. Thus, if a
lawyer's argument for one client has to be opposed by that same lawyer in arguing for
the other client, there is a violation of the rule.

Another test of inconsistency of interests is whether the acceptance of a new
relation would prevent the full discharge of the lawyer's duty of undivided
fidelity and loyalty to the client or invite suspicion of unfaithfulness or
double-dealing in the performance of that duty. Still another test is whether the
lawyer would be called upon in the new relation to use against a former client any
confidential information acquired through their connection or previous employment.
19


In the instant case, we find substantial evidence to support respondent's violation of
the above parameters, as established by the following circumstances on
record:chanroblesvirtualawlibrary

First, it is undisputed that there was a lawyer-client relationship between complainant
and Atty. Simando as evidenced by the retainer fees received by respondent and the
latter's representation in certain legal matters pertaining to complainant's
business;nadcralavvonlinelawlibrary

Second, Atty. Simando admitted that Mejorado is another client of him albeit in a case
claiming rewards against the Bureau of Customs;nadcralavvonlinelawlibrary

Third, Atty. Simando admitted that he was the one who introduced complainant and
Mejorado to each other for the purpose of entering into a financial transaction while
having knowledge that complainant's interests could possibly run in conflict with
Mejorado's interests which ironically such client's interests, he is duty-bound to
protect;nadcralavvonlinelawlibrary

Fourth, despite the knowledge of the conflicting interests between his two clients,
respondent consented in the parties' agreement and even signed as co-maker to the
loan agreement;nadcralavvonlinelawlibrary

Fifth, respondent's knowledge of the conflicting interests between his two clients was
demonstrated further by his own actions, when he:chanroblesvirtualawlibrary
(a) failed to act on Mejorado's failure to pay his obligation to complainant despite the
latter's instruction to do so;nadcralavvonlinelawlibrary

(b) denied liability despite signing as co-maker in the receipts/promissory notes arising
from the loan agreement between his two clients;nadcralavvonlinelawlibrary

(c) rebutted complainant's allegations against Mejorado and him, and even divulged
informations he acquired while he was still complainant's lawyer.

Clearly, it is improper for respondent to appear as counsel for one party (complainant
as creditor) against the adverse party (Mejorado as debtor) who is also his client, since
a lawyer is prohibited from representing conflicting interests. He may not, without being
guilty of professional misconduct, act as counsel for a person whose interest conflict
with that of his present or former client.

Respondent's assertion that there is no conflict of interest because complainant and
respondent are his clients in unrelated cases fails to convince. His representation of
opposing clients in both cases, though unrelated, obviously constitutes conflict of
interest or, at the least, invites suspicion of double-dealing.
20
Moreover, with the
subject loan agreement entered into by the complainant and Mejorado, who are both
his clients, readily shows an apparent conflict of interest, moreso when he signed as co-
maker.

Likewise, respondent's argument that the money received was an investment and not a
loan is difficult to accept, considering that he signed as co-maker. Respondent is a
lawyer and it is objectionable that he would sign as co-maker if he knew all along that
the intention of the parties was to engage in a mere investment. Also, as a lawyer,
signing as a co-maker, it can be presupposed that he is aware of the nature of
suretyship and the consequences of signing as co-maker. Therefore, he cannot escape
liability without exposing himself from administrative liability, if not civil liability.
Moreover, we noted that while complainant was able to show proof of receipts of
various amounts of money loaned and received by Mejorado, and signed by the
respondent as co-maker, the latter, however, other than his bare denials, failed to show
proof that the money given was an investment and not a loan.

It must be stressed that the proscription against representation of conflicting interests
finds application where the conflicting interests arise with respect to the same general
matter however slight the adverse interest may be. It applies even if the conflict
pertains to the lawyer's private activity or in the performance of a function in a non-
professional capacity. In the process of determining whether there is a conflict of
interest, an important criterion is probability, not certainty, of
conflict.
21
chanroblesvirtuallawlibrary

We likewise note that respondent offered several excuses in order to avoid payment of
his liability. First, in his Answer to complainant's demand letter, he claimed there was
novation which extinguished his liability; Secondly, he claimed that the amount received
by Mejorado for which he signed as co-maker was merely an investment and not a
loan. Finally, he alleged that it was agreed that the investment with profits will be paid
only after Mejorado receives the payment for his claim for reward which complainant
violated when she presented the checks for payment prematurely. These actuations of
Atty. Simando do not speak well of his reputation as a
lawyer.
22
chanroblesvirtuallawlibrary

Finally, we likewise find respondent guilty of violating Rule 21.01 of the Code of
Professional Responsibility.
23
In his last-ditch effort to impeach the credibility of
complainant, he divulged informations
24
which he acquired in confidence during the
existence of their lawyer-client relationship.

We held in Nombrado v. Hernandez
25
that the termination of the relation of attorney
and client provides no justification for a lawyer to represent an interest adverse to or in
conflict with that of the former client. The reason for the rule is that the client's
confidence once reposed cannot be divested by the expiration of the professional
employment. Consequently, a lawyer should not, even after the severance of the
relation with his client, do anything which will injuriously affect his former client in any
matter in which he previously represented him nor should he disclose or use any of the
client's confidences acquired in the previous relation.

Accordingly, we reiterate that lawyers are enjoined to look at any representation
situation from "the point of view that there are possible conflicts," and further, "to think
in terms of impaired loyalty" that is to evaluate if his representation in any way will
impair loyalty to a client.
26
chanroblesvirtuallawlibrary

WHEREFORE, premises considered, this Court resolves to ADOPT the findings and
recommendation of the IBP in Resolution No. XIX-2010-733 suspending respondent
Atty. Amador L. Simando for six (6) months from the practice of law, with a WARNING
that a repetition of the same or similar offense will warrant a more severe penalty.

Let copies of this Decision be furnished all courts, the Office of the Bar Confidant and
the Integrated Bar of the Philippines for their information and guidance. The Office of
the Bar Confidant is DIRECTED to append a copy of this Decision to respondent's
record as member of the Bar.

Atty. Simando is DIRECTED to inform the Court of the date of his receipt of this
Decision so that we can determine the reckoning point when his suspension shall take
effect.

This Decision shall be immediately executory.

SO ORDERED.


















THIRD DIVISION
G.R. NO. 192893, June 05, 2013
MANILA ELECTRIC COMPANY, Petitioner, v. HEIRS OF SPOUSES DIONISIO
DELOY AND PRAXEDES MARTONITO, REPRESENTED BY POLICARPIO DELOY,
Respondents.
D E C I S I O N
MENDOZA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking the reversal of the November 9, 2009 Decision
1
and the July 5, 2010
Resolution
2
of the Court of Appeals (CA), in CA-G.R. SP No. 96998. The challenged
decision set aside the May 4, 2006 Resolution
3
and the September 27, 2006 Order
4
of
the Regional Trial Court, Trece Martires City, Branch 23 (RTC), which affirmed the
dismissal of an unlawful detainer case by the Municipal Trial Court in Cities of Trece
Martires City (MTCC).
The Facts

On July 8, 2003, Domingo Delay, Maria Deloy-Masicap, Zosimo Delay, Mario Delay,
Silveria Deloy-Mabiling, Norma Delay, Milagros Panganiban, Lino Deloy, Cornelio Deloy,
Maricel Deloy, Adelina Banta, Rogelio Deloy, Evelyn Deloy, Edgardo Deloy, Cynthia
Deloy, Donnabel Deloy, Glenda Deloy, Arnel Deloy, Ronnio Deloy, Isagani L. Reyes, and
Policarpio Deloy (respondents), all heirs of Spouses Dionisio Deloy (Dionisio) and
Praxedes Martonito-Deloy, represented by Policarpio Deloy, instituted the Complaint for
Unlawful Detainer
5
against Manila Electric Company (MERALCO) before the MTCC.

Respondents are the owners, by way of succession, of a parcel of land consisting of
8,550 square meters located in Trece Martires City (Trece Martires property). On
November 12, 1965, Dionisio, respondents' predecessor-in-interest, donated a 680-
square meter portion (subject land) of the 8,550 square meter property to the
Communications and Electricity Development Authority (CEDA) for the latter to provide
cheap and affordable electric supply to the province of Cavite. A deed of donation
6
was
executed to reflect and formalize the transfer.

Sometime in 1985, CEDA offered for sale to MERALCO, its electric distribution system,
consisting of transformers and accessories, poles and hardware, wires, service drops,
and customer meters and all rights and privileges necessary for providing electrical
service in Cavite. This was embodied in a memorandum of agreement (MOA),
7
dated
June 28, 1985, signed by the parties.

On the same date, June 28, 1985, after the approval of the MOA, CEDA and MERALCO
executed the Deed of Absolute Sale. Thereafter, MERALCO occupied the subject land.

On October 11, 1985, MERALCO, through its Assistant Vice President and Head of the
Legal Department, Atty. L.D. Torres (Atty. Torres), wrote a letter
8
to Dionisio requesting
the latter's permission for the continued use of the subject land as a substation site.

The parties were not able to reach any agreement. In an internal memorandum,
9
dated
December 16, 1985, from L.G. De La Paz of the Trece Martires Substation of MERALCO
to Atty. G.R. Gonzales and Atty. Torres of the Realty Division of MERALCO, it was stated
that the death of Dionisio, the lack of agreement yet among the heirs, and a request
that a member of the Deloy family be employed by MERALCO were some of the
reasons.

Meanwhile, respondents claimed that they had no immediate use for the subject land
and that they were preoccupied with the judicial proceedings to rectify errors involving
the reconstituted title of the Trece Martires property, which included the subject land.
On November 22, 2001, the proceedings were terminated and the decision became
final.
10
Not long after, respondents offered to sell the subject land to MERALCO, but
their offer was rejected.

For said reason, in their letter,
11
dated May 19, 2003, respondents demanded that
MERALCO vacate the subject land on or before June 15, 2003. Despite the written
demand, MERALCO did not move out of the subject land. Thus, on July 8, 2003,
respondents were constrained to file the complaint for unlawful detainer.

Traversing respondents' complaint, MERALCO countered that CEDA, as the owner of the
subject land by virtue of the deed of donation executed by Dionisio, lawfully sold to it
all rights necessary for the operation of the electric service in Cavite by way of a deed
of sale on June 28, 1985. MERALCO stressed that the condition of providing affordable
electricity to the people of Cavite,
12
imposed in the deed of donation between Dionisio
and CEDA, was still being observed and complied with. Thus, MERALCO claimed that,
being CEDA's successor-in-interest, it had legal justification to occupy the subject land.

On September 15, 2005, the MTCC rendered the decision
13
dismissing respondents'
complaint for unlawful detainer against MERALCO.

The MTCC ruled that it had no jurisdiction over the case because it would require an
interpretation of the deed of donation making it one not capable of pecuniary
estimation. Nevertheless, it opined that MERALCO was entitled to the possession of the
subject land. It was of the view that it would only be when the deed of donation would
be revoked or the deed of sale nullified that MERALCO's possession of the subject land
would become unlawful.

Aggrieved, respondents appealed the MTCC ruling to the RTC. In its May 4, 2006
Resolution, the RTC sustained the MTCC decision.

The RTC pointed out that the only issue in an unlawful detainer case was possession. It
affirmed the MTCC ruling that the latter had no jurisdiction to interpret contracts
involving the sale of the subject land to MERALCO, after the latter raised the issue of
ownership of the subject land. According to the RTC, the interpretation of the deed of
sale and the deed of donation was the main, not merely incidental, issue.

Respondents moved for reconsideration but their motion was denied by the RTC in its
September 27, 2006 Order.

Not satisfied with the adverse ruling, respondents elevated the case before the CA via a
petition for review under Rule 42 of the Rules of Court.

In its November 9, 2001 Decision, the CA set aside the RTC ruling. The fallo of the
decision reads:chanroblesvirtualawlibrary
WHEREFORE, the instant Petition is GRANTED. The assailed Resolution, dated May 4,
2006, and Order, dated September 27, 2006, both of the Regional Trial Court of Trece
Martires City, Branch 23, in Civil Case No. TMCV-0055005, are hereby SET ASIDE and
a new one rendered partially granting Petitioners' Complaint for Unlawful Detainer
against Respondent. Accordingly, Respondent is ordered to vacate the subject property
and to pay Petitioners the amount of ?50,0000.00 monthly rental counting from June
16, 2003, up to the time Respondent shall have fully vacated the subject property, and
?25,000.00 as attorney's fees. Costs against Respondent.

SO ORDERED.
14


In partially granting the appeal, the CA explained that an ejectment case, based on the
allegation of possession by tolerance, would fall under the category of unlawful
detainer. Unlawful detainer involved the person's withholding from another of the
possession of real property to which the latter was entitled, after the expiration or
termination of the former's right to hold possession under a contract, either express or
implied. Where the plaintiff allowed the defendant to use his/her property by tolerance
without any contract, the defendant was necessarily bound by an implied promise that
he/she would vacate on demand, failing which, an action for unlawful detainer would
lie.

As to the issue of possession, the CA stated that by seeking Dionisio's permission to
continuously occupy the subject land, MERALCO expressly acknowledged his paramount
right of possession. MERALCO, thru its representative, Atty. Torres, would not have
asked permission from Dionisio if it had an unconditional or superior right to possess
the subject land. The CA considered the fact that this recognition of Dionisio's right over
the subject land was amplified by another letter, dated December 16, 1985,
15
by one
L.G. De la Paz to Atty. Torres, expressly declaring Dionisio as the owner of the subject
land. MERALCO never disputed the declarations contained in these letters. Neither did it
claim that the same was made through palpable mistake. Indeed, Meralco even marked
these letters as documentary exhibits. Pursuant to Section 26, Rule 130 of the Rules of
Evidence, these admissions and/or declarations may be admitted against Meralco.

MERALCO moved for reconsideration but its motion was denied by the CA in its July 5,
2010 Resolution.

Hence, this petition for review.

ISSUES

I

WHETHER OR NOT THE COMPLAINT STATES A CAUSE OF ACTION FOR
UNLAWFUL DETAINER.
II

WHETHER OR NOT EVIDENCE ALIUNDE, SUCH AS THE LETTERS DATED 11
OCTOBER 1985 OF PETITIONER'S ASSISTANT VICE PRESIDENT AND HEAD
OF LEGAL DEPARTMENT, L.D. TORRES AND INTERNAL MEMORANDUM DATED
6 DECEMBER 1985 OF PETITIONER'S L.G. DELA PAZ WHICH PURPORTEDLY
RECOGNIZED RESPONDENTS' OWNERSHIP OF THE PROPERTY CAN PREVAIL
OVER THE DEED OF ABSOLUTE SALE.
III

WHETHER OR NOT TITLE TO THE PROPERTY DONATED TO CEDA WAS
VALIDLY TRANSFERRED TO THE PETITIONER.
IV

WHETHER OR NOT THE SALE OF THE PROPERTY TO THE PETITIONER
VIOLATED OR REVOKED THE DONATION TO CEDA.
V

WHETHER OR NOT THE COMPLAINT WAS BARRED BY PRESCRIPTION AND
LACHES.
16


Simply put, the vital issues for the Court's consideration are: (1) whether an action for
unlawful detainer is the proper remedy in this case; and (2) if it is, who has a better
right of physical possession of the disputed property.

In presenting its case before the Court, MERALCO argues that respondents' complaint
before the MTCC failed to state a cause of action for unlawful detainer, but for one
incapable of pecuniary estimation, because the issue of physical possession is
inextricably linked with the proper interpretation of the deed of donation executed
between Dionisio and CEDA. Thus, the MTCC was without jurisdiction to hear and
decide the case. Further, MERALCO avers that it validly acquired title to the subject land
by virtue of the deed of sale executed by CEDA in its favor on June 28, 1985. As a
consequence, MERALCO contends that extrinsic or extraneous evidence, such as the
letters, dated October 11, 1985 and December 6, 1985, cannot contradict the terms of
the deed of sale between CEDA and MERALCO pursuant to Section 9, Rule 130
17
of the
Rules of Court.cralaw lawlibrary
The Court's Ruling

The petition lacks merit.

Unlawful detainer is an action to recover possession of real property from one who
illegally withholds possession after the expiration or termination of his right to hold
possession under any contract, express or implied. The possession of the defendant in
unlawful detainer is originally legal but became illegal due to the expiration or
termination of the right to possess.
18
The only issue to be resolved in an unlawful
detainer case is physical or material possession of the property involved, independent of
any claim of ownership by any of the parties involved.
19
chanroblesvirtuallawlibrary

An ejectment case, based on the allegation of possession by tolerance, falls under the
category of unlawful detainer. Where the plaintiff allows the defendant to use his/her
property by tolerance without any contract, the defendant is necessarily bound by an
implied promise that he/she will vacate on demand, failing which, an action for unlawful
detainer will lie.
20
chanroblesvirtuallawlibrary

Jurisdiction of the MTCC

MERALCO contends that respondents' complaint failed to make out a case for unlawful
detainer but, rather, one incapable of pecuniary estimation, properly cognizable by the
RTC and not the MTCC. It stresses the allegations in the complaint involve a prior
determination on the issue of ownership before the issue of possession can be validly
resolved.

This contention fails to persuade.

When the issue of ownership is raised in an ejectment case, the first level courts are
not ipso facto divested of its jurisdiction. Section 33 (2) of Batas Pambansa (B.P.) Blg.
129, as amended by Republic Act (R.A.) No. 7691,
21
provides:chanroblesvirtualawlibrary
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts shall exercise:chanroblesvirtualawlibrary

x x x x

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer:
Provided, That when, in such cases, the defendant raises the question of ownership in
his pleadings and the question of possession cannot be resolved without deciding the
issue of ownership, the issue of ownership shall be resolved only to determine the issue
of possession. [Underscoring supplied.]

x x x x

In this regard, Section 16, Rule 70 of the Rules of Court allows the first level courts, in
ejectment cases, to provisionally determine the issue of ownership for the sole purpose
of resolving the issue of physical possession.
Sec. 16. Resolving defense of ownership.When the defendant raises the defense of
ownership in his pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession.

Accordingly, it is unquestionably clear that the first level courts are clothed with the
power to preliminarily resolve questions on the ownership of real property, if necessary,
to arrive at the proper and complete determination of the question on physical
possession or possession de facto. Thus, as correctly ruled by the CA, the MTCC should
have taken cognizance of the complaint as it was well within its jurisdiction to do so.
Moreover, considering that B.P. Blg. 129, as amended, has distinctly defined and
granted the MTCC with jurisdiction, it is the trial court's duty and obligation to exercise
the same when properly invoked.

Right of Possession

As earlier stated, on the issue of possession, the CA opined that by seeking Dionisio's
permission to occupy the subject land, MERALCO expressly acknowledged his
paramount right of possession.

MERALCO posits that extrinsic evidence, such as the letter request, dated October 11,
1985, and the Internal Memorandum, dated December 6, 1985, cannot contradict the
terms of the deed of sale between CEDA and MERALCO pursuant to Section 9, Rule
130
22
of the Rules of Court.

The Court has combed the records and is not convinced.

It is undisputed that on October 11, 1985 or four (4) months after the approval of the
MOA and the corresponding Deed of Absolute Sale, MERALCO, through its Assistant
Vice President and Head of the Legal Department, Atty. Torres , sent a letter to Dionisio
seeking his permission for the continued use of the subject land. The letter
reads:chanroblesvirtualawlibrary
Mr. Dionisio D(e)loy
Trece Martires City 2724
Province of Cavite

Dear Mr. D(e)loy:chanroblesvirtualawlibrary

This has reference to the Deed of Donation (Inter-vivos) executed on November 12,
1965 between Communications and Electricity Development Authority (CEDA) and
Dionisio D(e)loy for a 680-square meter of land used as a substation site adjacent to
A.B. Memorial Hospital x x x.

In compliance with the franchise Nationalization program of the National Government,
we wish to inform you that Meralco had taken over the electric operations in the
province of Cavite being served by CEDA.

In view of this recent development, may we respectfully request you to please allow
Manila Electric Company (Meralco) to continue the use of the above-mentioned portion
of land as a substation site, subject to the terms and conditions which we may mutually
agree upon.

In the interest of public service, we shall highly appreciate your kind cooperation on this
matter and awaiting your reply.

Very truly yours,
[Signed]
L. D. TORRES
Assistant Vice-President
& Head, Legal Department
23

[Underscoring supplied]

Relative thereto, L.G. De La Paz of the Trece Martires Substation of MERALCO sent the
December 16, 1985 Internal Memorandum, addressed to Atty. G.R. Gonzales and Atty.
Torres, informing them of some obstacles in reaching a lease agreement with the
Deloys. The Internal Memorandum reads:chanroblesvirtualawlibrary
ATTY. G.R. GONZALES
ATTY. L.D. TORRES TRECE MARTIRES SUBTATION

REALTY SERVICES DECEMBER 16, 1985

This refers to the proposed contract of lease with Mr. Dionisio D[e]loy, co-owner of the
lot wherein the Trece Martires Substation is located.

Mr. D[e]loy had donated the use of 680-sq. m. portion of his co-owned land for CEDA's
substation in Trece Martires in 1966. Copy of the Donation is enclosed. On October 11,
1985, the company informed him through its letter of its intention of continuing with
the use of the property as a result of its acquisition of CEDA's franchise. He agreed to
the request and proposed rental would be free provided one of his sons/grandsons
would be employed by Meralco. Governor Remulla had favorably recommended Lino
D(e)loy, one of his grandsons, for a position in the company. A son, Mr. Policarpio
D(e)loy, former CEDA employee, had passed Meralco's entrance examination. According
to PAD, his application papers were being processed by the Branch Services
Department.

It was unfortunate that when we went to see him on December 6, 1985, to finalize the
Contract of Lease, the man was already dead. His body laid at state in his residence. He
died on December 5, 1985. As it was not proper to discuss things with the family, we
asked the wife when the family would be available. She suggested that we should come
back on December 21, 1985. On that day, all the members of the family would be free
to confer with us.

There are some problems that may come up with the death of Mr. D(e)loy. These are:
1. the settlement of his estate among his heirs
2. the desire to have more members of the family to be employed in Meralco
3. the rent free use of the substation may not push through
4. the proper signatories in the contract of lease to be drawn
We do hope whatever the problem may be, we will be able to work it out.

For your information.
[Signed]
L.G. DE LA PAZ

x x x x.

Evidently, by these two documents, MERALCO acknowledged that the owners of the
subject land were the Deloys. It is clear as daylight. The first letter was written barely
four (4) months after the deed of sale was accomplished. As observed by the CA,
MERALCO never disputed the declarations contained in these letters which were even
marked as its own exhibits. Pursuant to Section 26, Rule 130 of the Rules of Evidence,
these admissions and/or declarations are admissible against MERALCO.
SEC. 26. Admissions of a party The act, declaration, or omission of a party as to a
relevant fact may be given in evidence against him.

In Heirs of Bernardo Ulep v. Ducat,
24
it was written, thus:chanroblesvirtualawlibrary
x x x Being an admission against interest, the documents are the best evidence which
affords the greatest certainty of the facts in dispute. The rationale for the rule is based
on the presumption that no man would declare anything against himself unless such
declaration was true. Thus, it is fair to presume that the declaration corresponds with
the truth, and it is his fault if it does not.

Guided by the foregoing rules and jurisprudence, the Court holds that the letter and the
internal memorandum presented, offered and properly admitted as part of the evidence
on record by MERALCO itself, constitute an admission against its own interest. Hence,
MERALCO should appropriately be bound by the contents of the documents.

Nevertheless, in this petition, MERALCO insists that extrinsic evidence, such as the two
documents, even if these were their own, cannot contradict the terms of the deed of
sale between CEDA and MERALCO pursuant to Section 9, Rule 130
25
of the Rules of
Court.

The Court has read the MOA and the Deed of Absolute Sale but found nothing that
clearly stated that the subject land was included therein. What were sold, transferred
and conveyed were "its electric distribution facilities, service drops, and customers'
electric meters except those owned by the VENDOR'S customers, x x x, and all the
rights and privileges necessary for the operation of the electric service x x x."
26
No
mention was made of any land. Rights and privileges could only refer to franchises,
permits and authorizations necessary tor the operation of the electric service. The land
on which the substation was erected was not included, otherwise, it would have been
so stated in the two documents. Otherwise, also, MERALCO would not have written
Dionisio to ask permission for the continued use of the subject land.

At any rate, it is fundamental that a certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person whose name
appears therein. It bears to emphasize that the titleholder is entitled to all the attributes
of ownership of the property, including possession. Thus, the Court must uphold the
age-old rule that the person who has a Torrens title over a land is entitled to its
possession.
27
In Pascual v. Coronel,
28
the Court reiterated the rule that a certificate of
title has a superior probative value as against that of an unregistered deed of sale in
ejectment cases.

On a final note, the Court must stress that the ruling in this case is limited only to the
determination as to who between the parties has a better right to possession. This
adjudication is not a final determination on the issue of ownership and, thus, will not
bar any party from filing an action raising the matter of ownership.

WHEREFORE, the petition is hereby DENIED.

SO ORDERED.




****************************ooooooooooooo**************************




FIRST DIVISION
G.R. No. 160739, July 17, 2013
ANITA MANGILA, Petitioner, v. JUDGE HERIBERTO M. PANGILINAN, ASST.CITY
PROSECUTOR II LUCIA JUDY SOLINAP, AND NATIONAL BUREAU OF
INVESTIGATION (DIRECTOR REYNALDO WYCOCO), Respondents.

D E C I S I O N
BERSAMIN, J.:

Restraint that is lawful and pursuant to a court process cannot be inquired into through
habeas corpus.
Antecedents

On June 16, 2003, seven criminal complaints charging petitioner Anita Mangila and four
others with syndicated estafa in violation of Article 315 of the Revised Penal Code, in
relation to Presidential Decree No. 1689, and with violations of Section 7(b) of Republic
Act No. 8042 (Migrant Workers and Overseas Filipino Act of 1995) were filed in the
Municipal Trial Court in Cities in Puerto Princesa City (MTCC), docketed as Criminal
Cases No. 16916 to No. 16922. The complaints arose from the recruiting and promising
of employment by Mangila and the others to the private complainants as overseas
contract workers in Toronto, Canada, and from the collection of visa processing fees,
membership fees and on-line application fees from the private complainants without
lawful authority from the Philippine Overseas Employment Administration (POEA).
1


On the following day, June 17, 2003, Judge Heriberto M. Pangilinan, Presiding Judge of
the MTCC, conducted a preliminary investigation on the complaints. After examining
Miguel Aaron Palayon, one of the complainants, Judge Pangilinan issued a warrant for
the arrest of Mangila and her cohorts without bail.
2
On the next day, the entire records
of the cases, including the warrant of arrest, were transmitted to the City Prosecutor of
Puerto Princesa City for further proceedings and appropriate action in accordance with
the prevailing rules.
3


As a consequence, Mangila was arrested on June 18, 2003 and detained at the
headquarters on Taft Avenue, Manila of the National Bureau of Investigation (NBI).
4


Claiming that Judge Pangilinan did not have the authority to conduct the preliminary
investigation; that the preliminary investigation he conducted was not yet completed
when he issued the warrant of arrest; and that the issuance of the warrant of arrest
was without sufficient justification or without a prior finding of probable cause, Mangila
filed in the Court of Appeals (CA)a petition for habeas corpus to obtain her release from
detention. Her petition averred that the remedy of habeas corpus was available to her
because she could no longer file a motion to quash or a motion to recall the warrant of
arrest considering that Judge Pangilinan had already forwarded the entire records of
the case to the City Prosecutor who had no authority to lift or recall the warrant.
5


In its resolution promulgated on October 14, 2003,
6
the CA denied the petition for
habeas corpus for its lack of merit, explaining:cralavvonlinelawlibrary
As a general rule, a writ of habeas corpus will not be granted where relief may be had
or could have been procured by resort to another general remedy. As pointed out in
Luna vs. Plaza, if petitioner is detained by virtue of a warrant of arrest, which is
allegedly invalid, the remedy available to her is not a petition for habeas corpus but a
petition to quash the warrant of arrest or a petition for a reinvestigation of the case by
the Municipal Judge or by the Provincial Fiscal.

Section 5, Rule 112 of the Revised Rules of Criminal Procedure provides that the
Municipal Judge who conducted the preliminary investigation shall transmit his
resolution, together with the record of the case, including the warrant of arrest, to the
Provincial Prosecutor, who shall review the same and order the release of an accused
who is detained if no probable cause is found against him. Thus, the proper remedy
available to petitioner is for her to file with the Provincial Prosecutor a motion to be
released from detention on the grounds alleged in the instant petition.

WHEREFORE, the petition for habeas corpus is DENIED for lack of merit.

SO ORDERED.
7


Mangila moved for the reconsideration of the denial of her petition for habeas corpus,
8

but the CA denied the motion on November 19, 2003.
9


Hence, this appeal via petition for review on certiorari.
Issue

Did the CA err in ruling that habeas corpus was not the proper remedy to obtain the
release of Mangila from detention?
Ruling of the Court

The petition for review lacks merit.

The high prerogative writ of habeas corpus has been devised as a speedy and effective
remedy to relieve persons from unlawful restraint. In Caballes v. Court of Appeals,
10

the Court discoursed on the nature of the special proceeding of habeas corpus in the
following manner:cralavvonlinelawlibrary
A petition for the issuance of a writ of habeas corpus is a special proceeding governed
by Rule 102 of the Rules of Court, as amended. In Ex Parte Billings, it was held that
habeas corpus is that of a civil proceeding in character. It seeks the enforcement of civil
rights. Resorting to the writ is not to inquire into the criminal act of which the complaint
is made, but into the right of liberty, notwithstanding the act and the immediate
purpose to be served is relief from illegal restraint. The rule applies even when
instituted to arrest a criminal prosecution and secure freedom. When a prisoner
petitions for a writ of habeas corpus, he thereby commences a suit and prosecutes a
case in that court.

Habeas corpus is not in the nature of a writ of error; nor intended as substitute for the
trial courts function. It cannot take the place of appeal, certiorari or writ of error. The
writ cannot be used to investigate and consider questions of error that might be raised
relating to procedure or on the merits. The inquiry in a habeas corpus proceeding
is addressed to the question of whether the proceedings and the assailed
order are, for any reason, null and void. The writ is not ordinarily granted
where the law provides for other remedies in the regular course, and in the
absence of exceptional circumstances. Moreover, habeas corpus should not
be granted in advance of trial. The orderly course of trial must be pursued
and the usual remedies exhausted before resorting to the writ where
exceptional circumstances are extant. In another case, it was held that
habeas corpus cannot be issued as a writ of error or as a means of reviewing
errors of law and irregularities not involving the questions of jurisdiction
occurring during the course of the trial, subject to the caveat that
constitutional safeguards of human life and liberty must be preserved, and
not destroyed. It has also been held that where restraint is under legal
process, mere errors and irregularities, which do not render the proceedings
void, are not grounds for relief by habeas corpus because in such cases, the
restraint is not illegal.

Habeas corpus is a summary remedy. It is analogous to a proceeding in rem when
instituted for the sole purpose of having the person of restraint presented before the
judge in order that the cause of his detention may be inquired into and his statements
final. The writ of habeas corpus does not act upon the prisoner who seeks relief, but
upon the person who holds him in what is alleged to be the unlawful authority. Hence,
the only parties before the court are the petitioner (prisoner) and the person holding
the petitioner in custody, and the only question to be resolved is whether the custodian
has authority to deprive the petitioner of his liberty. The writ may be denied if the
petitioner fails to show facts that he is entitled thereto ex merito justicias.

A writ of habeas corpus, which is regarded as a palladium of liberty, is a prerogative
writ which does not issue as a matter of right but in the sound discretion of the court or
judge. It is, however, a writ of right on proper formalities being made by proof. Resort
to the writ is not to inquire into the criminal act of which a complaint is made but unto
the right of liberty, notwithstanding the act, and the immediate purpose to be served is
relief from illegal restraint.The primary, if not the only object of the writ of habeas
corpus ad subjuciendum, is to determine the legality of the restraint under which a
person is held.
11
(Bold underscoring supplied for emphasis)

The object of the writ of habeas corpusis to inquire into the legality of the detention,
and, if the detention is found to be illegal, to require the release of the detainee.
Equally well-settled however, is that the writ will not issue where the person in whose
behalf the writ is sought is out on bail, or is in the custody of an officer under process
issued by a court or judge with jurisdiction or by virtue of a judgment or order of a
court of record.
12


There is no question that when the criminal complaints were lodged against Mangila
and her cohorts on June 16, 2003, Judge Pangilinan, as the Presiding Judge of the
MTCC, was empowered to conduct preliminary investigations involving all crimes
cognizable by the proper court in their respective territorial jurisdictions. His authority
was expressly provided in Section 2, Rule 112 of the Revised Rules of Criminal
Procedure, to wit:cralavvonlinelawlibrary
Section 2. Officers authorized to conduct preliminary investigations. The following
may conduct preliminary investigations:cralavvonlinelawlibrary

(a) Provincial or City Prosecutors and their assistants;chanroblesvirtualawlibrary
(b) Judges of the Municipal Trial Courts and Municipal Circuit Trial Courts;
(c) National and Regional State Prosecutors; and
(d) Other officers as may be authorized by law.

Their authority to conduct preliminary investigations shall include all crimes
cognizable by the proper court in their respective territorial jurisdictions. (2a)

Under Section 6(b) of Rule 112of the Revised Rules of Criminal Procedure, the
investigating judge could issue a warrant of arrest during the preliminary investigation
even without awaiting its conclusion should he find after an examination in writing and
under oath of the complainant and the witnesses in the form of searching questions
and answers that a probable cause existed, and that there was a necessity of placing
the respondent under immediate custody in order not to frustrate the ends of justice.In
the context of this rule, Judge Pangilinan issued the warrant of arrest against Mangila
and her cohorts. Consequently, the CA properly denied Mangilas petition for habeas
corpus because she had been arrested and detained by virtue of the warrant issued for
her arrest by Judge Pangilinan, a judicial officer undeniably possessing the legal
authority to do so.

It is relevant to point out at this juncture that the authority of the MTC and MTCC
judges to conduct preliminary investigations was removed only effective on October 3,
2005 pursuant to A.M. No. 05-8-26-SC.

With Mangilas arrestand ensuing detention being by virtue of the order lawfully issued
by Judge Pangilinan, the writ of habeas corpus was not an appropriate remedy to
relieve her from the restraint on her liberty. This is because the restraint, being lawful
and pursuant to a court process, could not be inquired into through habeas corpus. To
quote the dictum enunciated by Justice Malcolm in Quintos v. Director of Prisons:
13

The writ of habeas corpus secures to a prisoner the right to have the cause of his
detention examined and determined by a court of justice, and to have ascertained if he
is held under lawful authority. The function of habeas corpus, where the party
who has appealed to its aid is in custody under process, does not extend
beyond an inquiry into the jurisdiction of the court by which it was issued
and the validity of the process upon its face. It is not a writ of error. xxx (Bold
underscoring supplied for emphasis)

Accordingly, Section 4, Rule 102 of the Rules of Court explicitly
states:cralavvonlinelawlibrary
Section 4. When writ not allowed or discharge authorized. If it appears that the
person alleged to be restrained of his liberty is in the custody of an officer
under process issued by a court or judge or by virtue of a judgment or order
of a court of record, and that the court or judge had jurisdiction to issue the
process, render the judgment, or make the order, the writ shall not be
allowed; or if the jurisdiction appears after the writ is allowed, the person shall not
be discharged by reason of any informality or defect in the process,
judgment, or order. Nor shall anything in this rule be held to authorize the discharge
of a person charged with or convicted of an offense in the Philippines, or of a person
suffering imprisonment under lawful judgment. (Bold underscoring supplied for
emphasis)

Still, Mangila harps on the procedural flaws supposedly committed by Judge Pangilinan
in her attempt to convince the Court on her entitlement to the issuance of the writ of
habeas corpus. She insists that the illegality and invalidity of the warrant of arrest
because of its having been issued without an exhaustive examination of the
complainants and the witnesses in writing and under oath; without a prior finding of
probable cause; and without consideration of the necessity for its issuance in order not
to frustrate the ends of justice were enough reasons for granting the writ of habeas
corpus.
14


Mangila fails to persuade.

To begin with, Judge Pangilinan issued the order of arrest after examining Palayon, one
of the complainants against Mangila and her cohorts. If he, as the investigating judge,
considered Palayons evidence sufficient for finding probable cause against her and her
cohorts, which finding the Court justifiably presumes from his act of referring the case
and its records to the Office of the City Prosecutor on the day immediately following the
preliminary investigation he conducted, her petition for habeas corpus could not be the
proper remedy by which she could assail the adequacy of the adverse finding. Even
granting that there was a failure to adhere to the law or rule, such failure would not be
the equivalent of a violation of her constitutional rights.
15


Secondly, it was not procedurally correct for her to impugn the issuance of the warrant
of arrest by hinting that the investigating judge did not at all consider the necessity of
determining the existence of probable cause for its issuance due to time constraints and
in order not to frustrate the ends of justice, for that consideration was presumed.

And, lastly, it was clear that under Section 5,
16
Rule 112 of the Revised Rules of
Criminal Procedure, the resolution of the investigating judge was not final but was still
subject to the review by the public prosecutor who had the power to order the release
of the detainee if no probable cause should be ultimately found against her. In the
context of the rule, Mangila had no need to seek the issuance of the writ of habeas
corpus to secure her release from detention. Her proper recourse was to bring the
supposed irregularities attending the conduct of the preliminary investigation and the
issuance of the warrant for her arrest to the attention of the City Prosecutor, who had
been meanwhile given the most direct access to the entire records of the case,
including the warrant of arrest, following Judge Pangilinans transmittal of them to the
City Prosecutor for appropriate action.
17
We agree with the CA, therefore, that the writ
of habeas corpus could not be used as a substitute for another available remedy.
18


WHEREFORE, the Court AFFIRMS the resolutions promulgated on October 14, 2003
and November 19, 2003 in C.A.-G.R. SP No. 79745; and ORDERS the petitioner to pay
the costs of suit.

SO ORDERED.





************************ooooooooooo************************************




EN BANC
G.R. No. 189028, July 16, 2013
NATIONAL ARTIST FOR LITERATURE VIRGILIO ALMARIO, NATIONAL ARTIST
FOR LITERATURE BIENVENIDO LUMBERA, NATIONAL ARTIST FOR VISUAL
ARTS (PAINTING) BENEDICTO CABRERA, NATIONAL ARTIST FOR VISUAL
ARTS (SCULPTURE) NAPOLEON ABUEVA, NATIONAL ARTIST FOR VISUAL
ARTS (PAINTING AND SCULPTURE) ARTURO LUZ, NATIONAL ARTIST FOR
PRODUCTION DESIGN SALVADOR BERNAL, UNIVERSITY PROFESSOR
EMERITUS GEMINO ABAD, DEAN MARVIC M.V.F. LEONEN (UP COLLEGE OF
LAW), DEAN DANILO SILVESTRE (UP COLLEGE OF ARCHITECTURE), DEAN
ROLAND TOLENTINO (UP COLLEGE OF MASS COMMUNICATION), PROF. JOSE
DALISAY, DR. ANTON JUAN, DR. ALEXANDER CORTEZ, DR. JOSE NEIL
GARCIA, DR. PEDRO JUN CRUZ REYES, PROF. JOSE CLAUDIO GUERRERO,
PROF. MICHAEL M. COROZA, PROF. GERARD LICO, PROF. VERNE DE LA PENA,
PROF. MARIAN ABUAN, PROF. THEODORE O. TE, DR. CRISTINA PANTOJA-
HIDALGO, PROF. JOSE WENDELL CAPILI, PROF. SIR ANRIAL TIATCO, PROF.
NICOLO DEL CASTILLO, PROF. HORACIO DUMANLIG, PROF. DANTON
REMOTO, PROF. PRISCELINA PATAJO-LEGASTO, PROF. BELEN
CALINGACION, PROF. AMIEL Y. LEONARDIA, PROF. VIM NADERA, PROF.
MARILYN CANTA, PROF. CECILIA DELA PAZ, PROF. CHARLSON ONG, PROF.
CLOD MARLON YAMBAO, PROF. KENNETH JAMANDRE, PROF. JETHRO
JOAQUIN, ATTY. F.D. NICOLAS B. PICHAY, ATTY. ROSE BEATRIX ANGELES,
MR. FERNANDO JOSEF, MS. SUSAN S. LARA, MR. ALFRED YUSON, MS. JING
PANGANIBAN-MENDOZA, MR. ROMULO BAQUIRAN, JR., MR. CARLJOE
JAVIER, MS. REBECCA T. ANONUEVO, MR. JP ANTHONY D. CUNADA, MS.
LEAH NAVARRO, MR. MARK MEILLY, MR. VERGEL O. SANTOS, MR. GIL OLEA
MENDOZA, MR. EDGAR C. SAMAR, MS. CHRISTINE BELLEN, MR. ANGELO R.
LACUESTA, MS. ANNA MARIA KATIGBAK-LACUESTA, MR. LEX LEDESMA, MS.
KELLY PERIQUET, MS. CARLA PACIS, MR. J. ALBERT GAMBOA, MR. CESAR
EVANGELISTA BUENDIA, MR. PAOLO ALCAZAREN, MR. ALWYN C. JAVIER,
MR. RAYMOND MAGNO GARLITOS, MS. GANG BADOY, MR. LESLIE BOCOBO,
MS. FRANCES BRETANA, MS. JUDITH TORRES, MS. JANNETTE PINZON, MS.
JUNE POTICAR-DALISAY, MS. CAMILLE DE LA ROSA, MR. JAMES LADIORAY,
MR. RENATO CONSTANTINO, JR., AND CONCERNED ARTISTS OF THE
PHILIPPINES (CAP), Petitioners, v. THE EXECUTIVE SECRETARY, THE
SECRETARY OF THE DEPARTMENT OF BUDGET AND MANAGEMENT, THE
CULTURAL CENTER OF THE PHILIPPINES, THE NATIONAL COMMISSION ON
CULTURE AND THE ARTS, MS. CECILE GUIDOTE-ALVAREZ, MR. CARLO
MAGNO JOSE CAPARAS,
1
MR. JOSE MORENO, MR. FRANCISCO MAOSA, AND
ALL PERSONS, PUBLIC AND PRIVATE, ACTING UNDER THEIR
INSTRUCTIONS, DIRECTION, CONTROL AND SUPERVISION IN RELATION TO
THE CONFERMENT OF THE ORDER OF THE NATIONAL ARTIST AND THE
RELEASE OF FUNDS IN RELATION TO THE CONFERMENT OF THE HONORS
AND PRIVILEGES OF THE ORDER OF NATIONAL ARTISTS ON RESPONDENTS
GUIDOTE-ALVAREZ, CAPARAS, MORENO AND MAOSA, Respondents.

D E C I S I O N
LEONARDO-DE CASTRO, J.:

Art has traditionally been viewed as the expression of everything that is true, good and
beautiful. As such, it is perceived to evoke and produce a spirit of harmony. Art is also
considered as a civilizing force, a catalyst of nation-building. The notion of art and
artists as privileged expressions of national culture helped shape the grand narratives of
the nation and shared symbols of the people. The artist does not simply express
his/her own individual inspiration but articulates the deeper aspirations of history and
the soul of the people.
2
The law recognizes this role and views art as something that
reflects and shapes values, beliefs, aspirations, thereby defining a peoples national
identity.
3
If unduly politicized, however, art and artists could stir controversy and may
even cause discord, as what happened in this case.
The Antecedents

History of the Order of National Artists

On April 27, 1972, former President Ferdinand E. Marcos issued Proclamation No. 1001
4

and, upon recommendation of the Board of Trustees of the Cultural Center of the
Philippines (CCP), created the category of Award and Decoration of National Artist to be
awarded to Filipinos who have made distinct contributions to arts and letters. In the
same issuance, Fernando Amorsolo was declared as the first National Artist.

On May 15, 1973, Proclamation No. 1144
5
was issued. It amended Proclamation No.
1001 by creating a National Artists Awards Committee that would administer the
conferment of the category of National Artist upon deserving Filipino artists. The
Committee, composed of members of the Board of Trustees of the CCP, was tasked to
draft the rules to guide its deliberations in the choice of National Artists, to the end
that those who have created a body of work in the arts and letters capable of
withstanding the test of time will be so recognized.

The authority of the National Artists Awards Committee to administer the conferment of
the National Artist Award was again reiterated in Presidential Decree No. 208
6
issued on
June 7, 1973.

On April 3, 1992, Republic Act No. 7356, otherwise known as the Law Creating the
National Commission for Culture and the Arts, was signed into law. It established the
National Commission for Culture and the Arts (NCCA) and gave it an extensive mandate
over the development, promotion and preservation of the Filipino national culture and
arts and the Filipino cultural heritage. The NCCA was tasked with the
following:cralavvonlinelawlibrary
Sec. 8. The Commission. A National Commission for Culture and Arts is hereby
created to formulate policies for the development of culture and arts; implement these
policies in coordination with affiliated cultural agencies; coordinate the implementation
of programs of these affiliated agencies; administer the National Endowment Fund for
Culture and Arts (NEFCA); encourage artistic creation within a climate of artistic
freedom; develop and promote the Filipino national culture and arts; and preserve
Filipino cultural heritage. The Commission shall be an independent agency. It shall
render an annual report of its activities and achievements to the President and to
Congress.

Among the specific mandates of the NCCA under Republic Act No. 7356 is to extend
recognition of artistic achievement through awards, grants and services to artists and
cultural groups which contribute significantly to the Filipinos cultural legacy.
7
In
connection with this mandate, the NCCA is vested with the power to advise the
President on matters pertaining to culture and the arts, including the creation of a
special decoration or award, for persons who have significantly contributed to the
development and promotion of Philippine culture and arts.
8


As both the CCP Board of Trustees and the NCCA have been mandated by law to
promote, develop and protect the Philippine national culture and the arts, and
authorized to give awards to deserving Filipino artists, the two bodies decided to team
up and jointly administer the National Artists Award.
9
Thereafter, they reviewed the
guidelines for the nomination, selection and administration of the National Artists
Award. Pursuant to their respective powers to draft and promulgate rules, regulations
and measures to guide them in their deliberations in the choice of National Artists, the
CCP and NCCA adopted the following revised guidelines in September
2007
10
:cralavvonlinelawlibrary
4. ADMINISTRATION OF THE AWARD
4.1. The National Commission for Culture and the Arts (NCCA) shall plan,
organize and implement the Order of National Artists in coordination
with the Cultural Center of the Philippines (CCP).
4.2. It shall enlist the support and cooperation of private sector experts from the
various fields of art to ensure that the awards are implemented in a successful
and impartial manner.
4.3. The National Artist Award Secretariat shall commission art experts to form a
Special Research Group who shall verify information submitted on nominees and
provide essential data. They shall be selected for their specialization and
familiarity with the works and accomplishments of nominated artists.
4.4. The Special Research Group shall be composed of ten (10) to twenty (20)
members who have expertise in one or more fields or disciplines.
4.5. The National Artist Award Council of Experts shall be created before or during
the nomination period. It is tasked to screen nominees and recommend to the
NCCA and CCP Boards the candidates for the Order of National Artists. It shall
be composed of highly regarded peers, scholars, (including cultural philosophers
and historians), academicians, researchers, art critics, and other knowledgeable
individuals. A wider age-range of experts who would have first-hand knowledge
of achievements of nominees shall be considered.
4.6. The selection of the members of the National Artist Award Council of Experts
shall be based on the following criteria:
(a) should have achieved authority, credibility and track record in his field(s)
of expertise;
(b) should have extensive knowledge in his field(s) and his views on Philippine
art and culture must be national in perspective;
(c) should be a recognized authority in the study or research of Philippine art
and culture;
(d) must be willing to devote sufficient time and effort to the work of the
Council;
(e) must be willing to sign a non-disclosure statement in order to safeguard
the confidentiality of the deliberations;
(f) must not have been convicted with finality of any crime by a court of
justice or dismissed for cause by any organization, whether public or
private.
4.7. The National Artist Award Council of Experts shall be composed of a maximum
of seven (7) members each of the seven (7) areas/disciplines. The living
National Artists will automatically become members in addition to the
forty-nine (49) selected members. These members will constitute the first
deliberation panel and will be invited to evaluate the nominations and materials
submitted by the Special Research Group.
4.8. Any member of the Council of Experts who is nominated or related to a nominee
up to the fourth degree of consanguinity or affinity shall inhibit himself/herself
from the deliberation process. Likewise, any member may decline to participate
in the deliberation for any reason or may be removed for just cause upon
recommendation to the NCCA Board by at least two thirds (2/3) of the
members; in which case, the National Artist Award Secretariat shall again select
the replacements for those who decline or resigned until the first deliberation
panel is completed.
4.9. The list of nominated members of the National Artist Award Council of Experts
shall be reviewed by the National Artist Award Secretariat as needed, for
purposes of adding new members or replacements.
4.10. The members of the National Artist Award Council of Experts shall serve for a
fixed term of three (3) years.
5. CRITERIA FOR SELECTION
The Order of National Artists shall be given to:
5.1 Living artists who are Filipino citizens at the time of nomination, as well as those
who died after the establishment of the award in 1972 but were Filipino citizens
at the time of their death.
5.2 Artists who through the content and form of their works have contributed in
building a Filipino sense of nationhood.
5.3. Artists who have pioneered in a mode of creative expression or style, thus,
earning distinction and making an impact on succeeding generations of artists.
5.4. Artists who have created a substantial and significant body of works and/or
consistently displayed excellence in the practice of their art form thus enriching
artistic expression or style.
5.5 Artists who enjoy broad acceptance through:
5.5.1. prestigious national and/or international recognition, such as the Gawad
CCP Para sa Sining, CCP Thirteen Artists Award and NCCA Alab ng Haraya
5.5.2. critical acclaim and/or reviews of their works
5.5.3. respect and esteem from peers.
6. NOMINATION PROCEDURE
6.1. The National Artist Award Secretariat shall announce the opening of nominations
through media releases and letters to qualified organizations.
6.2. Candidates may be nominated under one or more of the following categories:
6.2.1. Dance choreography, direction and/or performance.
6.2.2. Music composition, direction, and/or performance.
6.2.3. Theater direction, performance and/or production design.
6.2.4. Visual Arts painting, sculpture, printmaking, photography, installation art,
mixed media works, illustration, comics/komiks, graphic arts, performance
art and/or imaging.
6.2.5. Literature poetry, fiction (short story, novel and play); non-fiction (essay,
journalism, literary criticism and historical literature).
6.2.6. Film and Broadcast Arts direction, writing, production design,
cinematography, editing, camera work, and/or performance.
6.2.7. Architecture, Design and Allied Arts architecture design, interior design,
industrial arts design, landscape architecture and fashion design.
6.3. Nominations for the Order of National Artists may be submitted by government
and non-government cultural organizations and educational institutions, as well
as private foundations and councils.
6.4. Members of the Special Research Group, as well as agencies attached to the
NCCA and CCP shall not submit nominations.
6.5. NCCA and CCP Board members and consultants and NCCA and CCP
officers and staff are automatically disqualified from being nominated.
6.6. Nominations shall be accepted only when these are submitted in writing and
with proper supporting documentation, as follows:
6.6.1. A cover letter signed by the head or designated representative of the
nominating organization.
The cover letter shall be accompanied by a Board Resolution approving the
nominee concerned with the said resolution signed by the organization
President and duly certified by the Board Secretary.
6.6.2. A duly accomplished nomination form;
6.6.3. A detailed curriculum vitae of the nominee;
6.6.4. A list of the nominees significant works categorized according to the
criteria;
6.6.5. The latest photograph (color or black and white) of the nominee, either
5[] x 7 or 8[] x 11;
6.6.6. Pertinent information materials on the nominees significant works (on
CDs, VCDs and DVDs);
6.6.7. Copies of published reviews;
6.6.8. Any other document that may be required.
6.7. Nominations received beyond the announced deadline for the submission of
nominations shall not be considered.
6.8. The National Artist Award Secretariat shall announce the opening of nominations
through media releases.
6.9. All inquiries and nominations shall be submitted to
The NATIONAL ARTIST AWARD SECRETARIAT
Office of the Artistic Director
Cultural Center of the Philippines
Roxas Boulevard, 1300 Pasay City
or
The NATIONAL ARTIST AWARD SECRETARIAT
Office of the Deputy Executive Director
National Commission for Culture and the Arts
633 General Luna Street, Intramuros, Manila
7. SCREENING AND SELECTION PROCESS
7.1. The National Artist Award Secretariat shall pre-screen the nominees based on
technical guideline items 5.1, 6.2, 6.3, 6.4, 6.5 and 6.6. The pre-screening shall
not be based on the accomplishments and merits of the nominee.
7.2. The Special Research Group shall accomplish its task within six (6) months. The
main objective is to verify the validity of the data, and evaluate the quality, true
value and significance of works according to the criteria. It shall come up with
the updated and comprehensive profiles of nominees reflecting their most
outstanding achievements.
7.3. The National Artist Award Secretariat will meet to review the list of nominees for
oversights. Consequently, deserving nominees shall be added to the list.
7.4. The first deliberation panel (Council of Experts) shall be intra-disciplinary. The
panelists shall be grouped according to their respective fields of expertise or
disciplines to shortlist the nominees in their disciplines or categories for
presentation to the second deliberation panel.
7.5. The second deliberation panel shall be composed of a different set of experts
from the first deliberation panel [three (3) experts each of the seven (7)
areas/discipline] and may include members from varying backgrounds such as
critics and academicians. The achievements of each shortlisted nominee shall be
presented by one designated member of Council of Experts. Then panel
deliberates and ranks the shortlisted nominees according to the order of
precedence following the set criteria of the Order of National Artists. In extreme
cases, the Second Deliberation may add new names to the lists.
7.6. The second deliberation panel may recommend not to give award in any
category if no nominee is found deserving. The number of awardees shall also
depend on the availability of funds. All decisions and recommendations shall be
in writing.
7.7. The recommendations from the Second Deliberation Panel of the National Artist
Award Council of Experts shall then be presented to the joint boards of NCCA
and CCP for final selection. The presentors shall prepare their presentation in
writing together with an audio-visual presentation or powerpoint presentation.
Written interpellations/opinions will be accepted from selected critics. The review
shall be based on the ranking done by the Second Deliberation. The voting shall
be across disciplines. The National Artists will be given the option
whether to vote on all categories or on his/her particular discipline.
7.8. Proxy votes will not be allowed in the Selection Process. Designation of
permanent representatives of agencies should be made at the outset to make
them regular Board members of NCCA and thus, may be allowed to cast votes.
7.9. The list of awardees shall be submitted to the President of the
Republic of the Philippines for confirmation, proclamation and
conferral.
8. PRESENTATION OF THE AWARDS
8.1. The Order of National Artists shall not be conferred more frequently than every
three (3) years.
8.2. The Order of National Artists shall be conferred by the President of the
Philippines on June 11 or any appropriate date in fitting ceremonies to be
organized by the National Artist Secretariat.
8.3. The medallion of the Order of National Artists and citation shall be given to the
honoree during the conferment ceremony. The cash award of P100,000.00 in
cheque shall be given immediately after the ceremony or at another time and
place as requested by the honoree.
8.4. A posthumous conferral consisting of the medallion and citation shall be given to
the family or legal heir/s of the honoree. The cash award of P75,000.00 in
cheque shall be given to the honorees legal heir/s or a representative
designated by the family immediately after the ceremony or at another time and
place as requested by the family. (Emphases supplied.)

In 1996, the NCCA and the CCP created a National Artist Award Secretariat composed
of the NCCA Executive Director as Chairperson, the CCP President as Vice-Chairperson,
and the NCCA Deputy Executive Director, the CCP Vice-President/Artistic Director, the
NCCA National Artist Award Officer and the CCP National Artist Award Officer as
members. They also centralized with the NCCA all financial resources and management
for the administration of the National Artists Award. They added another layer to the
selection process to involve and allow the participation of more members of the arts
and culture sector of the Philippines in the selection of who may be proclaimed a
National Artist.

On September 19, 2003, Executive Order No. 236, s. 2003, entitled Establishing the
Honors Code of the Philippines to Create an Order of Precedence of Honors Conferred
and for Other Purposes, was issued. The National Artists Award was renamed the
Order of National Artists and raised to the level of a Cultural Order, fourth in
precedence among the orders and decorations that comprise the Honors of the
Philippines.
11
Executive Order No. 236, s. 2003, recognizes the vital role of the NCCA
and the CCP in identifying Filipinos who have made distinct contributions to arts and
letters and states that the National Artist recognition is conferred upon the
recommendation of the Cultural Center of the Philippines and the National Commission
for Culture and the Arts.
12
Executive Order No. 236, s. 2003, further created a
Committee on Honors to assist the President in evaluating nominations for recipients of
Honors,
13
including the Order of National Artists, and presidential awards. The
Committee on Honors has been allowed to authorize relevant department or
government agencies to maintain Honors and/or Awards Committees to process
nominations for Honors and/or Presidential Awards.
14
In this connection, Section
2.4(A) of the Implementing Rules and Regulations
15
of Executive Order No. 236, s.
2003, states:cralavvonlinelawlibrary
2.4: Awards Committees

There shall be two types of awards committees: the Committee on Honors and the
various awards committees in the various units of the government service.

A. The Committee on Honors

The Committee on Honors serves as a National Awards Committee. It is composed of
the following:cralavvonlinelawlibrary
The Executive Secretary, Chairman
The Secretary of Foreign Affairs, Vice-Chairman
Head, Presidential Management Staff, member
Presidential Assistant for Historical Affairs, member
Chief of Presidential Protocol, member
Chief of Protocol, DFA, member
All nominations from the various awards committees must be submitted to the
Committee on Honors via the Chancellery of Philippine Orders and State Decorations.
The Chancellery shall process nominations for the consideration of the Committee on
Honors. The Committee on Honors shall screen and recommend these nominations to
the President.

The Committee on Honors shall, as a general rule, serve as a screening
committee to ensure that nominations received from the various awards
committees meet two tests: that there has not been an abuse of discretion in
making the nomination, and that the nominee is in good standing. Should a
nomination meet these criteria, a recommendation to the President for
conferment shall be made.

The President of the Philippines takes the recommendations of the Committee on
Honors in the highest consideration when making the final decision on the conferment
of awards. (Emphasis supplied.)

Executive Order No. 435, s. 2005, entitled Amending Section 5(IV) of Executive Order
No. 236 Entitled Establishing the Honors Code of the Philippines to Create an Order of
Precedence of Honors Conferred and for Other Purposes was subsequently issued on
June 8, 2005. It amended the wording of Executive Order No. 236, s. 2003, on the
Order of National Artists and clarified that the NCCA and the CCP shall advise the
President on the conferment of the Order of National Artists.

Controversy Surrounding the 2009
Order of National Artists

Petitioners alleged that on January 30, 2007, a joint meeting of the NCCA Board of
Commissioners and the CCP Board of Trustees was held to discuss, among others, the
evaluation of the 2009 Order of National Artists and the convening of the National Artist
Award Secretariat. The nomination period was set for September 2007 to December
31, 2007, which was later extended to February 28, 2008. The pre-screening of
nominations was held from January to March 2008.
16


On April 3, 2009, the First Deliberation Panel met.
17
A total of 87 nominees
18
were
considered during the deliberation and a preliminary shortlist
19
of 32 names was
compiled.

On April 23, 2009, the Second Deliberation Panel purportedly composed of an entirely
new set of Council of Experts met and shortlisted 13 out of the 32 names in the
preliminary shortlist.
20
On May 6, 2009, the final deliberation was conducted by the 30-
member Final Deliberation Panel comprised of the CCP Board of Trustees and the NCCA
Board of Commissioners and the living National Artists.
21
From the 13 names in the
second shortlist, a final list of four names was agreed upon.
22
The final list, according
to rank, follows:cralavvonlinelawlibrary
Name Art Field/Category Number of Votes
Manuel Conde (+) Film and Broadcast Arts (Film) 26
Ramon Santos Music 19
Lazaro Francisco (+) Literature 15
Federico Aguilar-Alcuaz Visual Arts 15

On May 6, 2009, a letter, signed jointly by the Chairperson of the NCCA, Undersecretary
Vilma Labrador, and the President and Artistic Director of the CCP, Mr. Nestor Jardin,
was sent to the President.
23
The letter stated, thus:cralavvonlinelawlibrary
May 6, 2009

Her Excellency GLORIA MACAPAGAL-ARROYO
President of the Philippines
Malacaan Palace, Manila
Subject: 2009 Order of National Artist Awardees

Dear President Arroyo:cralavvonlinelawlibrary

We are respectfully submitting a recommendation of the NCCA Board of Trustees and
CCP Board of Trustees for the Proclamation of the following as 2009 Order of National
Artists:cralavvonlinelawlibrary
1. Mr. MANUEL CONDE+ (Posthumous) Film and Broadcast Arts
2. Dr. RAMON SANTOS Music
3. Mr. LAZARO FRANCISCO+ (Posthumous) Literature
4. Mr. FEDERICO AGUILAR-ALCUAZ Visual Arts
The above persons were identified by experts in the various fields of arts and culture,
including living National Artists. An intensive selection process was observed following
established practice. In the past, awards were presented by the President at a
Ceremony held at the Malacaan Palace followed by a program called Parangal at the
Cultural Center of the Philippines. We also propose to continue with past practice of
celebrating the life and works of the four (4) Order of National Artists through an
exhibit that will open and a commemorative publication that will be released on the day
of the proclamation.

We respectfully suggest, subject to Her Excellencys availability, that the Proclamation
be on June 11, 2009, if possible at the Malacaan Palace.

Thank you for your kind attention.
Very respectfully yours,

(Sgd.)
VILMA L. LABRADOR
Chairman
National Commission for Culture and the Arts

(Sgd.)
NESTOR O. JARDIN
President and Artistic Director

Cultural Center of the Philippines
24


According to respondents, the aforementioned letter was referred by the Office of the
President to the Committee on Honors. Meanwhile, the Office of the President allegedly
received nominations from various sectors, cultural groups and individuals strongly
endorsing private respondents Cecile Guidote-Alvarez, Carlo Magno Jose Caparas,
Francisco Maosa and Jose Moreno. The Committee on Honors purportedly processed
these nominations and invited resource persons to validate the qualifications and
credentials of the nominees.
25


The Committee on Honors thereafter submitted a memorandum to then President
Gloria Macapagal-Arroyo recommending the conferment of the Order of National Artists
on the four recommendees of the NCCA and the CCP Boards, as well as on private
respondents Guidote-Alvarez, Caparas, Maosa and Moreno. Acting on this
recommendation, Proclamation No. 1823 declaring Manuel Conde a National Artist was
issued on June 30, 2009. Subsequently, on July 6, 2009, Proclamation Nos. 1824 to
1829 were issued declaring Lazaro Francisco, Federico Aguilar-Alcuaz and private
respondents Guidote-Alvarez, Caparas, Maosa and Moreno, respectively, as National
Artists. This was subsequently announced to the public by then Executive Secretary
Eduardo Ermita on July 29, 2009.
26


Convinced that, by law, it is the exclusive province of the NCCA Board of Commissioners
and the CCP Board of Trustees to select those who will be conferred the Order of
National Artists and to set the standard for entry into that select group, petitioners
instituted this petition for prohibition, certiorari and injunction (with prayer for
restraining order) praying that the Order of National Artists be conferred on Dr. Santos
and that the conferment of the Order of National Artists on respondents Guidote-
Alvarez, Caparas, Maosa and Moreno be enjoined and declared to have been rendered
in grave abuse of discretion.
27


In a Resolution
28
dated August 25, 2009, the Court issued a status quo order
29

enjoining public respondents from conferring the rank and title of the Order of
National Artists on private respondents; from releasing the cash awards that accompany
such conferment and recognition; and from holding the acknowledgment ceremonies
for recognition of the private respondents as National Artists.

What is the nature and scope of the power of the President to confer the Order of the
National Artists and how should it be exercised? This is the essential issue presented in
this case. It will determine whether the proclamation of respondents as National Artists
is valid. Preliminary procedural issues on the standing of the petitioners and the
propriety of the remedies taken,
30
however, call for resolution as a prerequisite to the
discussion of the main question.

Contention of the Parties

A perusal of the pleadings submitted by the petitioners reveals that they are an
aggrupation of at least three groups, the National Artists, cultural workers and
academics, and the Concerned Artists of the Philippines (CAP). The National Artists
assert an actual as well as legal interest in maintaining the reputation of the Order of
National Artists.
31
In particular, they invoke their right to due process not to have the
honor they have been conferred with diminished by the irregular and questionable
conferment of the award on respondents Guidote-Alvarez, Caparas, Maosa and
Moreno. For petitioners, this would adversely affect their right to live a meaningful life
as it detracts not only from their right to enjoy their honor as a fruit of their lifelong
labor but also from the respect of their peers.
32


The cultural workers, academics and CAP claim to be Filipinos who are deeply
concerned with the preservation of the countrys rich cultural and artistic heritage. As
taxpayers, they are concerned about the use of public monies for illegal appointments
or spurious acts of discretion.
33


All of the petitioners claim that former President Macapagal-Arroyo gravely abused her
discretion in disregarding the results of the rigorous screening and selection process for
the Order of National Artists and in substituting her own choice for those of the
Deliberation Panels. According to petitioners, the Presidents discretion to name
National Artists is not absolute but limited. In particular, her discretion on the matter
cannot be exercised in the absence of or against the recommendation of the NCCA and
the CCP. In adding the names of respondents Caparas, Guidote-Alvarez, Maosa and
Moreno while dropping Dr. Santos from the list of conferees, the Presidents own
choices constituted the majority of the awardees in utter disregard of the choices of the
NCCA and the CCP and the arts and culture community which were arrived at after a
long and rigorous process of screening and deliberation. Moreover, the name of Dr.
Santos as National Artist for Music was deleted from the final list submitted by the
NCCA and the CCP Boards without clearly indicating the basis thereof. For petitioners,
the Presidents discretion to name National Artists cannot be exercised to defeat the
recommendations made by the CCP and NCCA Boards after a long and rigorous
screening process and with the benefit of expertise and experience. The addition of
four names to the final list submitted by the Boards of the CCP and the NCCA and the
deletion of one name from the said list constituted a substitution of judgment by the
President and a unilateral reconsideration without clear justification of the decision of
the First, Second and Final Deliberation Panels composed of experts.
34


Petitioners further argue that the choice of respondent Guidote-Alvarez was illegal and
unethical because, as the then Executive Director of the NCCA and presidential adviser
on culture and arts, she was disqualified from even being nominated.
35
Moreover, such
action on the part of the former President constituted grave abuse of discretion as it
gave preferential treatment to respondent Guidote-Alvarez by naming the latter a
National Artist despite her not having been nominated and, thus, not subjected to the
screening process provided by the rules for selection to the Order of National Artists.
Her inclusion in the list by the President represented a clear and manifest favor given
by the President in that she was exempted from the process that all other artists have
to undergo. According to petitioners, it may be said that the President used a different
procedure to qualify respondent Guidote-Alvarez. This was clearly grave abuse of
discretion for being manifest and undue bias violative of the equal protection clause.
36


Respondent Caparas refutes the contention of the petitioning National Artists and insists
that there could be no prejudice to the latter. They remain to be National Artists and
continue to receive the emoluments, benefits and other privileges pertaining to them by
virtue of that honor. On the other hand, all the other petitioners failed to show any
material and personal injury or harm caused to them by the conferment of the Order of
National Artists on respondents Guidote-Alvarez, Caparas, Maosa and Moreno. The
rule on standing may not be relaxed in favor of the petitioners as no question of
constitutionality has been raised and no issue of transcendental importance is
involved.
37


Respondent Caparas further argues that the remedies of prohibition and injunction are
improper as the act sought to be enjoined the declaration of respondents Guidote-
Alvarez, Caparas, Maosa and Moreno as National Artists had already been
consummated. In particular, respondent Caparas was already proclaimed National
Artist through Proclamation No. 1827 issued on July 6, 2009.
38


On the merits, respondent Caparas contends that no grave abuse of discretion attended
his proclamation as National Artist. The former President considered the respective
recommendations of the NCCA and the CCP Boards and of the Committee on Honors in
eventually declaring him (Caparas) as National Artist. The function of the NCCA and the
CCP Boards is simply to advise the President. The award of the Order of National
Artists is the exclusive prerogative of the President who is not bound in any way by the
recommendation of the NCCA and the CCP Boards. The implementing rules and
regulations or guidelines of the NCCA cannot restrict or limit the exclusive power of the
President to select the recipients of the Order of National Artists.
39


For her part, in a letter
40
dated March 11, 2010, respondent Guidote-Alvarez manifested
that she was waiving her right to file her comment on the petition and submitted
herself to the Courts discretion and wisdom.

Respondent Maosa manifested that his creations speak for themselves as his
contribution to Filipino cultural heritage and his worthiness to receive the award.
Nonetheless, he expressed his conviction that the Order of National Artists is not a right
but a privilege that he would willingly relinquish should he be found not worthy of it.
41


Respondent Moreno did not file any pleading despite being given several opportunities
to do so. Hence, the Court dispensed with his pleadings.
42


In a Resolution dated July 12, 2011, this Court gave due course to the petition and
required the parties to file their respective memoranda.
43
Respondent Caparas filed his
memorandum on September 8, 2011,
44
the CCP filed its memorandum on September
19, 2011,
45
respondent Maosa on September 20, 2011,
46
and the Office of the Solicitor
General filed a manifestation stating that it is adopting its comment as its memorandum
on September 21, 2011.
47
Respondent Moreno failed to file a Memorandum, hence, the
Court resolved to dispense with the same.
48
Petitioners filed their Memorandum on May
14, 2012.
49


On the other hand, the original position of the Office of the Solicitor General (OSG) was
similar to that of respondent Caparas.
50
In a subsequent manifestation,
51
however, the
OSG stated that the current Board of Commissioners of the NCCA agree with the
petitioners that the President cannot honor as a National Artist one who was not
recommended by the joint Boards of the NCCA and the CCP. The implementing rules
and regulations of Executive Order No. 236, s. 2003, recognized the binding character
of the recommendation of the NCCA and the CCP Boards and limited the authority of
the Committee on Honors to the determination that (1) there has been no grave abuse
of discretion on the part of the NCCA and the CCP Boards in making the nomination,
and (2) the nominee is in good standing. Where a nomination meets the said two
criteria, a recommendation to the President to confer the award shall be made.
52


The OSG further argued that, while the President exercises control over the NCCA and
the CCP, the President has the duty to faithfully execute the laws, including the NCCA-
CCP guidelines for selection of National Artists and the implementing rules of Executive
Order No. 236, s. 2003. Moreover, the laws recognize the expertise of the NCCA and
the CCP in the arts and tasked them to screen and select the artists to be conferred the
Order of National Artists. Their mandate is clear and exclusive as no other agency
possesses such expertise.
53


The OSG also assailed the former Presidents choice of respondent Guidote-Alvarez for
being contrary to Republic Act No. 7356.
54
Section 11 of the said law
provides:cralavvonlinelawlibrary
Sec. 11. Membership Restrictions. During his/her term as member of the Commission,
a Commissioner shall not be eligible for any grant, or such other financial aid from the
Commission as an individual: Provided, however, That he/she may compete for grants
and awards on the same level as other artists one (1) year after his/her term shall have
expired.

The omission of the word award in the first portion of the above provision appears to
be unintentional as shown by the proviso which states that a member may compete for
grants and awards only one year after his or her term shall have expired. As such,
respondent Guidote-Alvarez is restricted and disqualified from being conferred the 2009
Order of National Artists.
55

The Courts Ruling


Standing of the Petitioners

Standing is the determination of whether a specific person is the proper party to bring a
matter to the court for adjudication.
56
The gist of the question of standing is whether a
party alleges such personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions.
57


The parties who assail the constitutionality or legality of a statute or an official act must
have a direct and personal interest. They must show not only that the law or any
governmental act is invalid, but also that they sustained or are in immediate danger of
sustaining some direct injury as a result of its enforcement, and not merely that they
suffer thereby in some indefinite way. They must show that they have been or are
about to be denied some right or privilege to which they are lawfully entitled or that
they are about to be subjected to some burdens or penalties by reason of the statute or
act complained of.
58


In this case, we find that the petitioning National Artists will be denied some right or
privilege to which they are entitled as members of the Order of National Artists as a
result of the conferment of the award on respondents Guidote-Alvarez, Caparas,
Maosa and Moreno. In particular, they will be denied the privilege of exclusive
membership in the Order of National Artists.

In accordance with Section 2(a)
59
of Executive Order No. 236, s. 2003, the Order of
National Artists is an exclusive association of honored individuals. To ensure the
exclusivity of the membership in the Order, a rigid nomination and screening process
has been established with different sets of renowned artists and respected art critics
invited to sit as the Council of Experts for the First and Second Deliberation Panels.
Moreover, all living National Artists are given a voice on who should be included in their
exclusive club as they automatically become members of the Final Deliberation Panel
that will vote on who should be included in the final list to be submitted to the President
for conferment of the Order of National Artists. To allow the untrammeled discretion
and authority of the President to confer the Order of National Artists without regard to
the stringent screening and rigorous selection process established by the NCCA and the
CCP will diminish, if not negate, the exclusive nature of the said Order. It will unduly
subject the selection and conferment of the Order of National Artists to politics rather
than to principles and procedures. It will subvert the transparent and rigorous process
and allow entry to the exclusive Order of National Artists through a secret backdoor of
lobbying, back channeling and political accommodation.

Among the other petitioners, Prof. Gemino Abad presents a unique valid personal and
substantial interest. Like respondents Caparas, Maosa and Moreno, he was among the
87 nominees for the 2009 Order of National Artists. Like respondent Moreno, he made
it to the preliminary shortlist. As he did not make it to the second shortlist, he was not
considered by the Final Deliberation Panel, more so by the former President.

It should be recalled too that respondent Guidote-Alvarez was disqualified to be
nominated for being the Executive Director of the NCCA at that time while respondents
Maosa and Caparas did not make it to the preliminary shortlist and respondent Moreno
was not included in the second shortlist. Yet, the four of them were treated differently
and considered favorably when they were exempted from the rigorous screening
process of the NCCA and the CCP and conferred the Order of National Artists. The
Committee on Honors and the former President effectively treated respondents
Guidote-Alvarez, Caparas, Maosa and Moreno as a preferred class. The special
treatment accorded to respondents Guidote-Alvarez, Caparas, Maosa and Moreno fails
to pass rational scrutiny.
60
No real and substantial distinction between respondents and
petitioner Abad has been shown that would justify deviating from the laws, guidelines
and established procedures, and placing respondents in an exceptional position. The
undue classification was not germane to the purpose of the law. Instead, it
contradicted the law and well-established guidelines, rules and regulations meant to
carry the law into effect. While petitioner Abad cannot claim entitlement to the Order
of National Artists,
61
he is entitled to be given an equal opportunity to vie for that
honor. In view of the foregoing, there was a violation of petitioner Abads right to
equal protection, an interest that is substantial enough to confer him standing in this
case.

As regards the other concerned artists and academics as well as the CAP, their claim of
deep concern for the preservation of the countrys rich cultural and artistic heritage,
while laudable, falls short of the injury in fact requirement of standing. Their assertion
constitutes a generalized grievance shared in a substantially equal measure by all or a
large class of citizens.
62
Nor can they take refuge in their status as taxpayers as the
case does not involve any illegal appropriation or taxation. A taxpayers suit is proper
only when there is an exercise of the spending or taxing power of the Congress.
63


Nonetheless, as a reading of the petition shows that it has advanced an issue which
deserves the attention of this Court in view of its seriousness, novelty and weight as
precedent, it behooves the Court to relax the rules on standing and to resolve the issue
presented before it.
64
Moreover, this issue is of paramount interest,
65
which further
justifies a liberal stance on standing.

Propriety of the Remedies

The present action is a petition for prohibition, certiorari, injunction, restraining order
and all other legal, just and equitable reliefs.

It has been held that the remedies of prohibition and injunction are preventive and, as
such, cannot be availed of to restrain an act that is already fait accompli.
66
Where the
act sought to be prohibited or enjoined has already been accomplished or
consummated, prohibition or injunction becomes moot.
67


Nevertheless, even if the principal issue is already moot, this Court may still resolve its
merits for the future guidance of both bench and bar. Courts will decide a question
otherwise moot and academic if it is capable of repetition, yet evading review.
68


It is an opportune time for the Court to assert its role as republican schoolmaster,
69
a
teacher in a vital national seminar.
70
There are times when the controversy is of such
character that, to prevent its recurrence and to assure respect for constitutional
limitations, this Court must pass on the merits of a case.
71
This is one such case. More
than being a teaching moment, this is not the first time that the Order of National
Artists was conferred in the manner that is being assailed in this case.
72
If not
addressed here and now, there is great probability that the central question involved in
this case will haunt us again in the future. Every President may invoke absolute
presidential prerogative and thrust upon us National Artists after his or her own heart,
in total disregard of the advise of the CCP and the NCCA and the voice of the
community of artists, resulting to repeated episodes of indignation and uproar from the
artists and the public.

Furthermore, if not corrected, such an act would give rise to mischief and dangerous
precedent whereby those in the corridors of power could avoid judicial intervention and
review by merely speedily and stealthily completing the commission of an illegality.
73


In any event, the present petition is also for certiorari and there is no procedural bar for
the Court to pass upon the question of whether the proclamations of respondents
Guidote-Alvarez, Caparas, Maosa and Moreno as National Artists were attended by
grave abuse of presidential discretion.

Limits of the Presidents Discretion

The respective powers of the CCP Board of Trustees and of the NCCA Board of
Commissioners with respect to the conferment of the Order of National Artists are
clear. They jointly administer the said award and, upon their recommendation or
advice, the President confers the Order of National Artists.

To recommend and to advise are synonymous. To recommend is to advise or
counsel.
74
To advise is to give an opinion or counsel, or recommend a plan or
course of action; also to give notice. To encourage, inform or acquaint.
75
Advise
imports that it is discretionary or optional with the person addressed whether he will act
on such advice or not.
76
This has been clearly explained in Cojuangco, Jr. v. Atty.
Palma
77
:cralavvonlinelawlibrary
The power to recommend includes the power to give advice, exhortation or
indorsement, which is essentially persuasive in character, not binding upon the
party to whom it is made. (Emphasis supplied.)

Thus, in the matter of the conferment of the Order of National Artists, the President
may or may not adopt the recommendation or advice of the NCCA and the CCP Boards.
In other words, the advice of the NCCA and the CCP is subject to the Presidents
discretion.

Nevertheless, the Presidents discretion on the matter is not totally unfettered, nor the
role of the NCCA and the CCP Boards meaningless.

Discretion is not a free-spirited stallion that runs and roams wherever it pleases but is
reined in to keep it from straying. In its classic formulation, discretion is not
unconfined and vagrant but canalized within banks that keep it from overflowing.
78


The Presidents power must be exercised in accordance with existing laws. Section 17,
Article VII of the Constitution prescribes faithful execution of the laws by the
President:cralavvonlinelawlibrary
Sec. 17. The President shall have control of all the executive departments, bureaus and
offices. He shall ensure that the laws be faithfully executed. (Emphasis
supplied.)

The Presidents discretion in the conferment of the Order of National Artists should be
exercised in accordance with the duty to faithfully execute the relevant laws. The
faithful execution clause is best construed as an obligation imposed on the President,
not a separate grant of power.
79
It simply underscores the rule of law and, corollarily,
the cardinal principle that the President is not above the laws but is obliged to obey and
execute them.
80
This is precisely why the law provides that [a]dministrative or
executive acts, orders and regulations shall be valid only when they are not contrary to
the laws or the Constitution.
81


In this connection, the powers granted to the NCCA and the CCP Boards in connection
with the conferment of the Order of National Artists by executive issuances were
institutionalized by two laws, namely, Presidential Decree No. 208 dated June 7, 1973
and Republic Act No. 7356. In particular, Proclamation No. 1144 dated May 15, 1973
constituted the CCP Board as the National Artists Awards Committee and tasked it to
administer the conferment of the category of National Artist upon deserving Filipino
artists with the mandate to draft the rules to guide its deliberations in the choice of
National Artists:cralavvonlinelawlibrary
Proclamation No. 1001 dated April 27, 1972, creating the Award and Decoration of
National Artist, is hereby amended by creating a National Artists Awards
Committee, hereinafter to administer the conferment of the category of
National Artist upon those deserving thereof. The Committee, which shall be
composed of members of the Board of Trustees of the Cultural Center of the
Philippines, shall organize itself immediately and shall draft the rules to guide its
deliberations in the choice of National Artists, to the end that those who have
created a body of work in the arts and in letters capable of withstanding the test of
time will be so recognized. (Emphases supplied.)

The authority of the CCP Board of Trustees as National Artists Awards Committee was
reiterated in Presidential Decree No. 208 dated June 7, 1973.

The function of the CCP Board of Trustees as National Artists Awards Committee has
been recognized under Republic Act No. 7356:cralavvonlinelawlibrary
Sec. 18. The National Cultural Agencies. The [NCCA] shall coordinate with the
national cultural agencies including but not limited to the Cultural Center of the
Philippines, the Institute of Philippine Languages, the National Historical Institute, the
National Library, the National Museum, the Records Management and Archives Office.
However, they shall continue operating under their respective charters or as
provided by law where provisions therein are not inconsistent with the
provisions of this Act. They shall serve as the national repository and/or showcase,
as the case may be, of the best of Philippine culture and arts. For this purpose, these
agencies shall submit periodic reports, including recommendations to the [NCCA].
(Emphasis supplied.)

On the other hand, the NCCA has been given the following mandate in connection with
the conferment of cultural or arts awards:cralavvonlinelawlibrary
Sec. 12. Mandate. The Commission is hereby mandated to formulate and
implement policies and plans in accordance with the principles stated in Title 1 of
this Act.
(a) To encourage the continuing and balanced development of a pluralistic culture by
the people themselves, it shall:cralavvonlinelawlibrary
x x x x

(4) extend recognition of artistic achievement through awards, grants and
services to artists and cultural groups which contribute significantly to the
Filipinos cultural legacy;chanroblesvirtualawlibrary

x x x x

Sec. 13. Powers and Functions. To carry out its mandate, the Commission shall
exercise the following powers and functions:cralavvonlinelawlibrary
x x x x

(j) advise the President on matters pertaining to culture and the arts,
including the creation of a special decoration or award, for persons who have
significantly contributed to the development and promotion of Philippine culture and
arts;chanroblesvirtualawlibrary

(k) promulgate rules, regulations and undertake any and all measures as
may be necessary to implement this Act[.] (Emphases supplied.)

By virtue of their respective statutory mandates in connection with the conferment of
the National Artist Award, the NCCA and the CCP decided to work together and jointly
administer the National Artist Award. They reviewed the guidelines for the nomination,
selection and administration of the National Artist Award, created a National Artist
Award Secretariat, centralized all financial resources and management for the
administration of the National Artist Award, and added another layer to the selection
process so that more members of the arts and culture sector of the Philippines may be
involved and participate in the selection of National Artists.

We have held that an administrative regulation adopted pursuant to law has the force
and effect of law.
82
Thus, the rules, guidelines and policies regarding the Order of
National Artists jointly issued by the CCP Board of Trustees and the NCCA pursuant to
their respective statutory mandates have the force and effect of law. Until set aside,
they are binding upon executive and administrative agencies,
83
including the President
himself/herself as chief executor of laws. In this connection, Section 2.5(A) of the
Implementing Rules and Regulations
84
of Executive Order No. 236, s. 2003
provides:cralavvonlinelawlibrary
2.5: General Guidelines for Awards Committees

A. National Orders of Cultural and Scientific Merit

The existing modalities of the NCCA for selecting recipients for the Order of
National Artists, and the Gawad sa Manlilikha ng Bayan, and of the NAST for
selecting recipients of the Order of National Scientists, shall remain in force.
(Emphases supplied.)

Section 2.4(A) of the same implementing rules further states:cralavvonlinelawlibrary

2.4: Awards Committees

There shall be two types of awards committees: the Committee on Honors and the
various awards committees in the various units of the government service.

A. The Committee on Honors

The Committee on Honors serves as a National Awards Committee. It is composed of
the following:cralavvonlinelawlibrary
The Executive Secretary, Chairman
The Secretary of Foreign Affairs, Vice-Chairman
Head, Presidential Management Staff, member
Presidential Assistant for Historical Affairs, member
Chief of Presidential Protocol, member
Chief of Protocol, DFA, member
All nominations from the various awards committees must be submitted to the
Committee on Honors via the Chancellery of Philippine Orders and State Decorations.
The Chancellery shall process nominations for the consideration of the Committee on
Honors. The Committee on Honors shall screen and recommend these nominations to
the President.

The Committee on Honors shall, as a general rule, serve as a screening
committee to ensure that nominations received from the various awards
committees meet two tests: that there has not been an abuse of discretion in
making the nomination, and that the nominee is in good standing. Should a
nomination meet these criteria, a recommendation to the President for
conferment shall be made.

The President of the Philippines takes the recommendations of the Committee on
Honors in the highest consideration when making the final decision on the conferment
of awards. (Emphasis supplied.)

Pursuant to the above provision of the implementing rules of Executive Order No. 236,
s. 2003, the authority of the Committee on Honors is limited to determining whether
the nominations submitted by a particular awards committee, in this case, the joint
NCCA and CCP Boards, have been tainted by abuse of discretion, and whether the
nominees are in good standing. Should the nominations meet these two criteria, the
Committee on Honors shall make a recommendation to the President for conferment of
the Order of National Artists.

In view of the various stages of deliberation in the selection process and as a
consequence of his/her duty to faithfully enforce the relevant laws, the discretion of the
President in the matter of the Order of National Artists is confined to the names
submitted to him/her by the NCCA and the CCP Boards. This means that the President
could not have considered conferment of the Order of National Artists on any person
not considered and recommended by the NCCA and the CCP Boards. That is the proper
import of the provision of Executive Order No. 435, s. 2005, that the NCCA and the CCP
shall advise the President on the conferment of the Order of National Artists.
Applying this to the instant case, the former President could not have properly
considered respondents Guidote-Alvarez, Caparas, Maosa and Moreno, as their names
were not recommended by the NCCA and the CCP Boards. Otherwise, not only will the
stringent selection and meticulous screening process be rendered futile, the respective
mandates of the NCCA and the CCP Board of Trustees under relevant laws to administer
the conferment of Order of National Artists, draft the rules and regulations to guide its
deliberations, formulate and implement policies and plans, and undertake any and all
necessary measures in that regard will also become meaningless.

Furthermore, with respect to respondent Guidote-Alvarez who was the Executive
Director of the NCCA at that time, the Guidelines expressly
provides:cralavvonlinelawlibrary
6.5 NCCA and CCP Board members and consultants and NCCA and CCP officers and
staff are automatically disqualified from being nominated.
85


Respondent Guidote-Alvarez could not have even been nominated, hence, she was not
qualified to be considered and conferred the Order of National Artists at that time. The
Presidents discretion on the matter does not extend to removing a legal impediment or
overriding a legal restriction.

From the foregoing, the advice or recommendation of the NCCA and the CCP Boards as
to the conferment of the Order of National Artists on Conde, Dr. Santos, Francisco and
Alcuaz was not binding on the former President but only discretionary or optional for
her whether or not to act on such advice or recommendation. Also, by virtue of the
power of control, the President had the authority to alter or modify or nullify or set
aside such recommendation or advice. It was well within the Presidents power and
discretion to proclaim all, or some or even none of the recommendees of the CCP and
the NCCA Boards, without having to justify his or her action. Thus, the exclusion of
Santos did not constitute grave abuse of discretion on the part of the former President.

The conferment of the Order of National Artists on respondents Guidote-Alvarez,
Caparas, Maosa and Moreno was an entirely different matter.

There is grave abuse of discretion when an act is (1) done contrary to the Constitution,
the law or jurisprudence or (2) executed whimsically, capriciously or arbitrarily, out of
malice, ill will or personal bias.
86


There was a violation of the equal protection clause of the Constitution
87
when the
former President gave preferential treatment to respondents Guidote-Alvarez, Caparas,
Maosa and Moreno. The former Presidents constitutional duty to faithfully execute
the laws and observe the rules, guidelines and policies of the NCCA and the CCP as to
the selection of the nominees for conferment of the Order of National Artists proscribed
her from having a free and uninhibited hand in the conferment of the said award. The
manifest disregard of the rules, guidelines and processes of the NCCA and the CCP was
an arbitrary act that unduly favored respondents Guidote-Alvarez, Caparas, Maosa and
Moreno. The conferment of the Order of National Artists on said respondents was
therefore made with grave abuse of discretion and should be set aside.

While the Court invalidates today the proclamation of respondents Guidote-Alvarez,
Caparas, Maosa and Moreno as National Artists, such action should not be taken as a
pronouncement on whether they are worthy to be conferred that honor. Only the
President, upon the advise of the NCCA and the CCP Boards, may determine that. The
Court simply declares that, as the former President committed grave abuse of discretion
in issuing Proclamation Nos. 1826 to 1829 dated July 6, 2009, the said proclamations
are invalid. However, nothing in this Decision should be read as a disqualification on
the part of respondents Guidote-Alvarez, Caparas, Maosa and Moreno to be
considered for the honor of National Artist in the future, subject to compliance with the
laws, rules and regulations governing said award.

WHEREFORE, the petition is hereby GRANTED in PART. Proclamation Nos. 1826 to
1829 dated July 6, 2009 proclaiming respondents Cecile Guidote-Alvarez, Carlo Magno
Jose Caparas, Francisco Maosa, and Jose Moreno, respectively, as National Artists are
declared INVALID and SET ASIDE for having been issued with grave abuse of
discretion.

SO ORDERED.


***********************************ooooooooooo*************************




FIRST DIVISION
G.R. No. 189316, July 01, 2013
PHILIPPINE NATIONAL BANK, Petitioner, v. SPOUSES BERNARD AND
CRESENCIA MARAON, Respondents.

D E C I S I O N
REYES, J.:

This is a petition for review on certiorari
1
under Rule 45 of the Rules of Court, assailing
the Decision
2
dated June 18, 2008 and Resolution
3
dated August 10, 2009 of the Court
of Appeals (CA) in CA-G.R. SP No. 02513, which affirmed in toto the Orders dated
September 8, 2006
4
and December 6, 2006
5
of the Regional Trial Court (RTC) of
Bacolod City, Branch 54, directing petitioner Philippine National Bank (PNB) to release in
favor of Spouses Bernard and Cresencia Maraon (Spouses Maraon) the rental fees it
received amounting to Thirty Thousand Pesos (P30,000.00).
The Facts

The controversy at bar involves a 152-square meter parcel of land located at Cuadra-
Smith Streets, Downtown, Bacolod (subject lot) erected with a building leased by
various tenants. The subject lot was among the properties mortgaged by Spouses
Rodolfo and Emilie Montealegre (Spouses Montealegre) to PNB as a security for a loan.
In their transactions with PNB, Spouses Montealegre used Transfer Certificate of Title
(TCT) No. T-156512 over the subject lot purportedly registered in the name of Emilie
Montealegre (Emilie).
6


When Spouses Montealegre failed to pay the loan, PNB initiated foreclosure proceedings
on the mortgaged properties, including the subject lot. In the auction sale held on
August 16, 1991, PNB emerged as the highest bidder. It was issued the corresponding
Certificate of Sale dated December 17, 1991
7
which was subsequently registered on
February 4, 1992.
8


Before the expiration of the redemption period or on July 29, 1992, Spouses Maraon
filed before the RTC a complaint for Annulment of Title, Reconveyance and Damages
9

against Spouses Montealegre, PNB, the Register of Deeds of Bacolod City and the Ex-
Officio Provincial Sheriff of Negros Occidental. The complaint, docketed as Civil Case
No. 7213, alleged that Spouses Maraon are the true registered owners of the subject
lot by virtue of TCT No. T-129577 which was illegally cancelled by TCT No. T-156512
under the name of Emilie who used a falsified Deed of Sale bearing the forged
signatures of Spouse Maraon
10
to effect the transfer of title to the property in her
name.

In its Answer,
11
PNB averred that it is a mortgagee in good faith and for value and that
its mortgage lien on the property was registered thus valid and binding against the
whole world.

As reflected in the Pre-trial Order
12
dated March 12, 1996, the parties stipulated, among
others, that the period for legal redemption of the subject lot has already expired.

While the trial proceedings were ongoing, Paterio Tolete (Tolete), one of the tenants of
the building erected on the subject lot deposited his rental payments with the Clerk of
Court of Bacolod City which, as of October 24, 2002, amounted to P144,000.00.

On June 2, 2006, the RTC rendered its Decision
13
in favor of the respondents after
finding, based on the expert testimony of Colonel Rodolfo Castillo, Head of the Forensic
Technology Section of Bacolod City Philippine National Police, that the signatures of
Spouses Maraon in the Deed of Sale presented by Spouses Montealegre before the
Register of Deeds to cause the cancellation of TCT No. T-129577 were forged. Hence,
the RTC concluded the sale to be null and void and as such it did not transfer any right
or title in law. PNB was adjudged to be a mortgagee in good faith whose lien on the
subject lot must be respected. Accordingly, the Decision disposed as
follows:cralavvonlinelawlibrary
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs [herein
respondents]:cralavvonlinelawlibrary

1. The cancellation of TCT No. 129577 over Lot 177-A-1 Bacolod Cadastre in the name
of Bernard Maraon and the issuance of new TCT No. 156512 in the name of defendant
Emilie Montealegre are hereby declared null and void;chanroblesvirtualawlibrary

2. The defendant Emilie Montealegre is ordered to reconvey the title over Lot No. 177-
A-1, Bacolod Cadastre back to the plaintiffs Maraon [herein
respondents];chanroblesvirtualawlibrary

3. The Real Estate Mortgage lien of the Philippine National Bank registered on the title
of Lot No. 177-A-1 Bacolod Cadastre shall stay and be respected; and

4. The defendants - Emilie Montealegre and spouse are ordered to pay attorneys fees
in the sum of Php50,000.00, and to pay the costs of the suit.

SO ORDERED.
14
nadcralavvonlinelawlibrary

Neither of the parties sought a reconsideration of the above decision or any portion
thereof nor did they elevate the same for appellate review.

What precipitated the controversy at hand were the subsequent motions filed by
Spouses Maraon for release of the rental payments deposited with the Clerk of Court
and paid to PNB by Tolete.

On June 13, 2006, Spouses Maraon filed an Urgent Motion for the Withdrawal of
Deposited Rentals
15
praying that the P144,000.00 rental fees deposited by Tolete with
the Clerk of Court be released in their favor for having been adjudged as the real owner
of the subject lot. The RTC granted the motion in its Order
16
dated June 28, 2006.

On September 5, 2006, Spouses Maraon again filed with the RTC an Urgent Ex-Parte
Motion for Withdrawal of Deposited Rentals
17
praying that the P30,000.00 rental fees
paid to PNB by Tolete on December 12, 1999 be released in their favor. The said lease
payments were for the five (5)-month period from August 1999 to December 1999 at
the monthly lease rate of P6,000.00.

The RTC granted the motion in its Order
18
dated September 8, 2006 reasoning that
pursuant to its Decision dated June 2, 2006 declaring Spouses Maraon to be the true
registered owners of the subject lot, they are entitled to its fruits.

The PNB differed with the RTCs ruling and moved for reconsideration averring that as
declared by the RTC in its Decision dated June 2, 2006, its mortgage lien should be
carried over to the new title reconveying the lot to Spouses Maraon. PNB further
argued that with the expiration of the redemption period on February 4, 1993, or one
(1) year from the registration of the certificate of sale, PNB is now the owner of the
subject lot hence, entitled to its fruits. PNB prayed that (1) the Order dated September
8, 2006 be set aside, and (2) an order be issued directing Spouses Maraon to turn
over to PNB the amount of P144,000.00 released in their favor by the Clerk of Court.
19


On November 20, 2006, the RTC issued an Order again directing PNB to release to
Spouses Maraon the P30,000.00 rental payments considering that they were adjudged
to have retained ownership over the property.
20


On December 6, 2006, the RTC issued another Order denying PNBs motion for
reconsideration and reiterating the directives in its Order dated September 8, 2006.
21


Aggrieved, PNB sought recourse with the CA via a petition for certiorari and
mandamus
22
claiming that as the lawful owner of the subject lot per the RTCs
judgment dated June 2, 2006, it is entitled to the fruits of the same such as rentals paid
by tenants hence, the ruling that the real estate mortgage lien of the [PNB] registered
on the title of Lot No. 177-A-1 Bacolod Cadastre shall stay and be respected. PNB also
contended that it is an innocent mortgagee.

In its Decision
23
dated June 18, 2008, the CA denied the petition and affirmed the RTCs
judgment ratiocinating that not being parties to the mortgage transaction between PNB
and Spouses Montealegre, Spouses Maraon cannot be deprived of the fruits of the
subject lot as the same will amount to deprivation of property without due process of
law. The RTC further held that PNB is not a mortgagee in good faith because as a
financial institution imbued with public interest, it should have looked beyond the
certificate of title presented by Spouses Montealegre and conducted an inspection on
the circumstances surrounding the transfer to Spouses Montealegre. The decretal
portion of the Decision thus read:cralavvonlinelawlibrary
WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED. The
Orders dated September 8, 2006 and December 6, 2006, rendered by the respondent
Presiding Judge of the Regional Trial Court, Branch 54, Bacolod City, in Civil Case NO.
7213 directing the release of the deposited rental in the amount of THIRTY THOUSAND
PESOS ([P]30,000.00) to private respondents are hereby AFFIRMED.

SO ORDERED.
24


PNB moved for reconsideration
25
but the motion was denied in the CA Resolution dated
August 10, 2009.
26
Hence, the present recourse whereby PNB argues that the RTC
Decision dated June 2, 2006 lapsed into finality when it was not appealed or submitted
for reconsideration. As such, all conclusions therein are immutable and can no longer
be modified by any court even by the RTC that rendered the same. The CA however
erroneously altered the RTC Decision by reversing the pronouncement that PNB is a
mortgagee-in-good-faith.

PNB further asseverates that its mortgage lien was carried over to the new title issued
to Spouses Maraon and thus it retained the right to foreclose the subject lot upon non-
payment of the secured debt. PNB asserts that it is entitled to the rent because it
became the subject lots new owner when the redemption period expired without the
property being redeemed.
Ruling of the Court

We deny the petition.

It is readily apparent from the facts at hand that the status of PNBs lien on the subject
lot has already been settled by the RTC in its Decision dated June 2, 2006 where it was
adjudged as a mortgagee in good faith whose lien shall subsist and be respected. The
decision lapsed into finality when neither of the parties moved for its reconsideration or
appealed.

Being a final judgment, the dispositions and conclusions therein have become
immutable and unalterable not only as against the parties but even the courts. This is
known as the doctrine of immutability of judgments which espouses that a judgment
that has acquired finality becomes immutable and unalterable, and may no longer be
modified in any respect even if the modification is meant to correct erroneous
conclusions of fact or law and whether it will be made by the court that rendered it or
by the highest court of the land.
27
The significance of this rule was emphasized in Apo
Fruits Corporation v. Court of Appeals,
28
to wit:cralavvonlinelawlibrary
The reason for the rule is that if, on the application of one party, the court could
change its judgment to the prejudice of the other, it could thereafter, on application of
the latter, again change the judgment and continue this practice indefinitely. The
equity of a particular case must yield to the overmastering need of certainty and
unalterability of judicial pronouncements.

The doctrine of immutability and inalterability of a final judgment has a two-fold
purpose: (1) to avoid delay in the administration of justice and thus, procedurally, to
make orderly the discharge of judicial business and (2) to put an end to judicial
controversies, at the risk of occasional errors, which is precisely why courts exist.
Controversies cannot drag on indefinitely. The rights and obligations of every litigant
must not hang in suspense for an indefinite period of time. The doctrine is not a mere
technicality to be easily brushed aside, but a matter of public policy as well as a time-
honored principle of procedural law.
29
(Citations omitted)

Hence, as correctly argued by PNB, the issue on its status as a mortgagee in good faith
have been adjudged with finality and it was error for the CA to still delve into and,
worse, overturn, the same. The CA had no other recourse but to uphold the status of
PNB as a mortgagee in good faith regardless of its defects for the sake of maintaining
stability of judicial pronouncements. The main role of the courts of justice is to assist
in the enforcement of the law and in the maintenance of peace and order by putting an
end to judiciable controversies with finality. Nothing better serves this role than the
long established doctrine of immutability of judgments.
30


Further, it must be remembered that what reached the CA on certiorari were RTC
resolutions issued long after the finality of the Decision dated June 2, 2006. The RTC
Orders dated September 8, 2006 and December 6, 2006 were implements of the
pronouncement that Spouses Maraon are still the rightful owners of the subject lot, a
matter that has been settled with finality as well. This notwithstanding, the Court
agrees with the ultimate outcome of the CAs assailed resolutions.

Rent is a civil fruit
31
that belongs to the owner of the property
32
producing it by right of
accession
33
.
34
The rightful recipient of the disputed rent in this case should thus be the
owner of the subject lot at the time the rent accrued. It is beyond question that
Spouses Maraon never lost ownership over the subject lot. This is the precise
consequence of the final and executory judgment in Civil Case No. 7213 rendered by
the RTC on June 3, 2006 whereby the title to the subject lot was reconveyed to them
and the cloud thereon consisting of Emilies fraudulently obtained title was removed.
Ideally, the present dispute can be simply resolved on the basis of such
pronouncement. However, the application of related legal principles ought to be
clarified in order to settle the intervening right of PNB as a mortgagee in good faith.

The protection afforded to PNB as a mortgagee in good faith refers to the right to have
its mortgage lien carried over and annotated on the new certificate of title issued to
Spouses Maraon
35
as so adjudged by the RTC. Thereafter, to enforce such lien thru
foreclosure proceedings in case of non-payment of the secured debt,
36
as PNB did so
pursue. The principle, however, is not the singular rule that governs real estate
mortgages and foreclosures attended by fraudulent transfers to the mortgagor.

Rent, as an accessory follow the principal.
37
In fact, when the principal property is
mortgaged, the mortgage shall include all natural or civil fruits and improvements found
thereon when the secured obligation becomes due as provided in Article 2127 of the
Civil Code, viz:cralavvonlinelawlibrary
Art. 2127. The mortgage extends to the natural accessions, to the improvements,
growing fruits, and the rents or income not yet received when the obligation becomes
due, and to the amount of the indemnity granted or owing to the proprietor from the
insurers of the property mortgaged, or in virtue of expropriation for public use, with the
declarations, amplifications and limitations established by law, whether the estate
remains in the possession of the mortgagor, or it passes into the hands of a third
person.

Consequently, in case of non-payment of the secured debt, foreclosure proceedings
shall cover not only the hypothecated property but all its accessions and accessories as
well. This was illustrated in the early case of Cu Unjieng e Hijos v. Mabalacat Sugar
Co.
38
where the Court held:cralavvonlinelawlibrary
That a mortgage constituted on a sugar central includes not only the land on which it is
built but also the buildings, machinery, and accessories installed at the time the
mortgage was constituted as well as the buildings, machinery and accessories
belonging to the mortgagor, installed after the constitution thereof x x x [.]
39


Applying such pronouncement in the subsequent case of Spouses Paderes v. Court of
Appeals,
40
the Court declared that the improvements constructed by the mortgagor on
the subject lot are covered by the real estate mortgage contract with the mortgagee
bank and thus included in the foreclosure proceedings instituted by the latter.
41


However, the rule is not without qualifications. In Castro, Jr. v. CA
42
the Court
explained that Article 2127 is predicated on the presumption that the ownership of
accessions and accessories also belongs to the mortgagor as the owner of the
principal. After all, it is an indispensable requisite of a valid real estate mortgage that
the mortgagor be the absolute owner of the encumbered property,
thus:cralavvonlinelawlibrary
[A]ll improvements subsequently introduced or owned by the mortgagor on the
encumbered property are deemed to form part of the mortgage. That the
improvements are to be considered so incorporated only if so owned by the mortgagor
is a rule that can hardly be debated since a contract of security, whether, real or
personal, needs as an indispensable element thereof the ownership by the pledgor or
mortgagor of the property pledged or mortgaged. x x x.
43
(Citation omitted)

Otherwise stated, absent an adverse claimant or any evidence to the contrary, all
accessories and accessions accruing or attached to the mortgaged property are included
in the mortgage contract and may thus also be foreclosed together with the principal
property in case of non-payment of the debt secured.

Corollary, any evidence sufficiently overthrowing the presumption that the mortgagor
owns the mortgaged property precludes the application of Article 2127. Otherwise
stated, the provision is irrelevant and inapplicable to mortgages and their resultant
foreclosures if the mortgagor is later on found or declared to be not the true owner of
the property, as in the instant case.

It is beyond question that PNBs mortgagors, Spouses Montealegre, are not the true
owners of the subject lot much less of the building which produced the disputed rent.
The foreclosure proceedings on August 16, 1991 caused by PNB could not have, thus,
included the building found on the subject lot and the rent it yields. PNBs lien as a
mortgagee in good faith pertains to the subject lot alone because the rule that
improvements shall follow the principal in a mortgage under Article 2127 of the Civil
Code does not apply under the premises. Accordingly, since the building was not
foreclosed, it remains a property of Spouses Maraon; it is not affected by non-
redemption and is excluded from any consolidation of title made by PNB over the
subject lot. Thus, PNBs claim for the rent paid by Tolete has no basis.

It must be remembered that there is technically no juridical tie created by a valid
mortgage contract that binds PNB to the subject lot because its mortgagor was not the
true owner. But by virtue of the mortgagee in good faith principle, the law allows PNB
to enforce its lien. We cannot, however, extend such principle so as to create a
juridical tie between PNB and the improvements attached to the subject lot despite
clear and undeniable evidence showing that no such juridical tie exists.

Lastly, it is worthy to note that the effects of the foreclosure of the subject lot is in fact
still contentious considering that as a purchaser in the public sale, PNB was only
substituted to and acquired the right, title, interest and claim of the mortgagor to the
property as of the time of the levy.
44
There being already a final judgment reconveying
the subject lot to Spouses Maraon and declaring as null and void Emilies purported
claim of ownership, the legal consequences of the foreclosure sale, expiration of the
redemption period and even the consolidation of the subject lots title in PNBs name
shall be subjected to such final judgment. This is the clear import of the ruling in
Unionbank of the Philippines v. Court of Appeals:
45

This is because as purchaser at a public auction, UNIONBANK is only substituted to and
acquires the right, title, interest and claim of the judgment debtors or mortgagors to
the property at the time of levy. Perforce, the judgment in the main action for
reconveyance will not be rendered ineffectual by the consolidation of ownership and the
issuance of title in the name of UNIONBANK.
46
(Citation omitted)

Nonetheless, since the present recourse stemmed from a mere motion claiming
ownership of rent and not from a main action for annulment of the foreclosure sale or
of its succeeding incidents, the Court cannot proceed to make a ruling on the bearing of
the CAs Decision dated June 18, 2008 to PNBs standing as a purchaser in the public
auction. Such matter will have to be threshed out in the proper forum.

All told, albeit the dispositive portions of the assailed CA decision and resolution are
differently premised, they ought to be upheld as they convey the similar conclusion that
Spouses Maraon are the rightful owners of the rent earned by the building on the
subject lot.

WHEREFORE, foregoing considered, the petition is hereby DENIED. The Decision
dated June 18, 2008 and Resolution dated August 10, 2009 of the Court of Appeals in
CA-G.R. SP No. 02513 are AFFIRMED.

SO ORDERED.




**************************ooooooooooo**********************************



SECOND DIVISION
G.R. No. 198759, July 01, 2013
PHILIPPINE AIRLINES, INC., Petitioner, v. COMMISSIONER OF INTERNAL
REVENUE, Respondent.

D E C I S I O N
PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari
1
assailing the May 9, 2011
Decision
2
and September 16, 2011 Resolution
3
of the Court of Tax Appeals (CTA) En
Banc in CTA EB Case No. 588 which denied petitioner Philippine Airlines, Inc.s (PAL)
claim for refund of the excise taxes imposed on its purchase of petroleum products
from Caltex Philippines, Inc. (Caltex).
The Facts

For the period July 24 to 28, 2004, Caltex sold 804,370 liters of imported Jet A-1 fuel to
PAL for the latters domestic operations.
4
Consequently, on July 26, 27, 28 and 29,
2004, Caltex electronically filed with the Bureau of Internal Revenue (BIR) its Excise
Tax Returns for Petroleum Products, declaring the amounts of P1,232,798.80,
P686,767.10, P623,422.90 and P433,904.10, respectively, or a total amount of
P2,975,892.90, as excise taxes due thereon.
5


On August 3, 2004, PAL received from Caltex an Aviation Billing Invoice for the
purchased aviation fuel in the amount of US$313,949.54, reflecting the amount of
US$52,669.33 as the related excise taxes on the transaction. This was confirmed by
Caltex in a Certification dated August 20, 2004 where it indicated that: (a) the excise
taxes it paid on the imported petroleum products amounted to P2,952,037.90, i.e., the
peso equivalent of the abovementioned dollar amount; (b) the foregoing excise tax
payment was passed on by it to PAL; and (c) it did not file any claim for the refund of
the said excise tax with the BIR.
6


On October 29, 2004, PAL, through a letter-request dated October 15, 2004 addressed
to respondent Commissioner of Internal Revenue (CIR), sought a refund of the excise
taxes passed on to it by Caltex. It hinged its tax refund claim on its operating franchise,
i.e., Presidential Decree No. 1590
7
issued on June 11, 1978 (PALs franchise), which
conferred upon it certain tax exemption privileges on its purchase and/or importation of
aviation gas, fuel and oil, including those which are passed on to it by the seller and/or
importer thereof. Further, PAL asserted that it had the legal personality to file the
aforesaid tax refund claim.
8


Due to the CIRs inaction, PAL filed a Petition for Review with the CTA on July 25,
2006.
9
In its Answer, the CIR averred that since the excise taxes were paid by Caltex,
PAL had no cause of action.
10

The CTA Division Ruling

Relying on Silkair (Singapore) Pte. Ltd. v. CIR
11
(Silkair), the CTA Second Division
denied PALs petition on the ground that only a statutory taxpayer (referring to Caltex in
this case) may seek a refund of the excise taxes it paid.
12
It added that even if the tax
burden was shifted to PAL, the latter cannot be deemed a statutory taxpayer.

It further ruled that PALs claim for refund should be denied altogether on account of
Letter of Instruction No. 1483 (LOI 1483) which already withdrew the tax exemption
privileges previously granted to PAL on its purchase of domestic petroleum products, of
which the transaction between PAL and Caltex was characterized.
13


PAL moved for reconsideration, but the same was denied in a Resolution
14
dated
January 14, 2010, prompting it to elevate the matter to the CTA En Banc.
The CTA En Banc Ruling

In a Decision dated May 9, 2011,
15
the CTA En Banc affirmed the ruling of the CTA
Second Division, reiterating that it was Caltex, the statutory taxpayer, which had the
personality to file the subject refund claim. It explained that the payment of the subject
excise taxes, being in the nature of indirect taxes, remained to be the direct liability of
Caltex. While the tax burden may have been shifted to PAL, the liability passed on to it
should not be treated as a tax but a part of the purchase price which PAL had to pay to
obtain the goods.
16
Further, it held that PALs exemption privileges on the said excise
taxes, which it claimed through its franchise, had already been withdrawn by LOI
1483.
17


Aggrieved, PAL filed a motion for reconsideration which was, however, denied in a
Resolution dated September 16, 2011.
18


Hence, the instant petition.
The Issues Before the Court

The following issues have been presented for the Courts resolution: (a) whether PAL
has the legal personality to file a claim for refund of the passed on excise taxes; (b)
whether the sale of imported aviation fuel by Caltex to PAL is covered by LOI 1483
which withdrew the tax exemption privileges of PAL on its purchases of domestic
petroleum products for use in its domestic operations; and (c) whether PAL has
sufficiently proved its entitlement to refund.
The Ruling of the Court

The petition is meritorious.

A. PALs legal personality to file a claim for refund of excise taxes.

The CIR argues that PAL has no personality to file the subject tax refund claim because
it is not the statutory taxpayer. As basis, it relies on the Silkair ruling which enunciates
that the proper party to question, or to seek a refund of an indirect tax, is the statutory
taxpayer, or the person on whom the tax is imposed by law and who paid the same,
even if the burden to pay such was shifted to another.
19


PAL counters that the doctrine laid down in Silkair is inapplicable, asserting that it has
the legal personality to file the subject tax refund claim on account of its tax exemption
privileges under its legislative franchise which covers both direct and indirect taxes. In
support thereof, it cites the case of Maceda v. Macaraig, Jr.
20
(Maceda).

The Court agrees with PAL.

Under Section 129 of the National Internal Revenue Code (NIRC),
21
as amended, excise
taxes are imposed on two (2) kinds of goods, namely: (a) goods manufactured or
produced in the Philippines for domestic sales or consumption or for any other
disposition; and (b) things imported.
22


With respect to the first kind of goods, Section 130 of the NIRC states that, unless
otherwise specifically allowed, the taxpayer obligated to file the return and pay the
excise taxes due thereon is the manufacturer/producer.
23


On the other hand, with respect to the second kind of goods, Section 131 of the NIRC
states that the taxpayer obligated to file the return and pay the excise taxes due
thereon is the owner or importer, unless the imported articles are exempt from excise
taxes and the person found to be in possession of the same is other than those legally
entitled to such tax exemption.
24


While the NIRC mandates the foregoing persons to pay the applicable excise taxes
directly to the government, they may, however, shift the economic burden of such
payments to someone else usually the purchaser of the goods since excise taxes
are considered as a kind of indirect tax.

Jurisprudence states that indirect taxes are those which are demanded in the first
instance from one person with the expectation and intention that he can shift the
economic burden to someone else.
25
In this regard, the statutory taxpayer can transfer
to its customers the value of the excise taxes it paid or would be liable to pay to the
government by treating it as part of the cost of the goods and tacking it on to the
selling price.
26
Notably, this shifting process, otherwise known as passing on, is
largely a contractual affair between the parties. Meaning, even if the purchaser
effectively pays the value of the tax, the manufacturer/producer (in case of goods
manufactured or produced in the Philippines for domestic sales or consumption or for
any other disposition) or the owner or importer (in case of imported goods) are still
regarded as the statutory taxpayers under the law. To this end, the purchaser does not
really pay the tax; rather, he only pays the seller more for the goods because of the
latters obligation to the government as the statutory taxpayer.
27


In this relation, Section 204(c)
28
of the NIRC states that it is the statutory taxpayer
which has the legal personality to file a claim for refund. Accordingly, in cases involving
excise tax exemptions on petroleum products under Section 135
29
of the NIRC, the
Court has consistently held that it is the statutory taxpayer who is entitled to claim a tax
refund based thereon and not the party who merely bears its economic burden.
30


For instance, in the Silkair case, Silkair (Singapore) Pte. Ltd. (Silkair Singapore) filed a
claim for tax refund based on Section 135(b) of the NIRC as well as Article 4(2)
31
of the
Air Transport Agreement between the Government of the Republic of the Philippines
and the Government of the Republic of Singapore. The Court denied Silkair Singapores
refund claim since the tax exemptions under both provisions were conferred on the
statutory taxpayer, and not the party who merely bears its economic burden. As such,
it was the Petron Corporation (the statutory taxpayer in that case) which was entitled to
invoke the applicable tax exemptions and not Silkair Singapore which merely shouldered
the economic burden of the tax. As explained in Silkair:cralavvonlinelawlibrary
The proper party to question, or seek a refund of, an indirect tax is the
statutory taxpayer, the person on whom the tax is imposed by law and who
paid the same even if he shifts the burden thereof to another. Section
130(A)(2) of the NIRC provides that [u]nless otherwise specifically allowed, the return
shall be filed and the excise tax paid by the manufacturer or producer before removal of
domestic products from place of production. Thus, Petron Corporation, not Silkair, is
the statutory taxpayer which is entitled to claim a refund based on Section 135 of the
NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP and
Singapore.

Even if Petron Corporation passed on to Silkair the burden of the tax, the additional
amount billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to
pay as a purchaser.
32
(Emphasis supplied)

However, the abovementioned rule should not apply to instances where the law clearly
grants the party to which the economic burden of the tax is shifted an exemption from
both direct and indirect taxes. In which case, the latter must be allowed to claim a tax
refund even if it is not considered as the statutory taxpayer under the law. Precisely,
this is the peculiar circumstance which differentiates the Maceda case from Silkair.

To elucidate, in Maceda, the Court upheld the National Power Corporations (NPC) claim
for a tax refund since its own charter specifically granted it an exemption from both
direct and indirect taxes, viz:cralavvonlinelawlibrary
x x x [T]he Court rules and declares that the oil companies which supply bunker fuel oil
to NPC have to pay the taxes imposed upon said bunker fuel oil sold to NPC. By the
very nature of indirect taxation, the economic burden of such taxation is expected to be
passed on through the channels of commerce to the user or consumer of the goods
sold. Because, however, the NPC has been exempted from both direct and
indirect taxation, the NPC must be held exempted from absorbing the
economic burden of indirect taxation. This means, on the one hand, that the oil
companies which wish to sell to NPC absorb all or part of the economic burden of the
taxes previously paid to BIR, which they could shift to NPC if NPC did not enjoy
exemption from indirect taxes. This means also, on the other hand, that the NPC may
refuse to pay the part of the "normal" purchase price of bunker fuel oil which
represents all or part of the taxes previously paid by the oil companies to BIR. If NPC
nonetheless purchases such oil from the oil companies because to do so
may be more convenient and ultimately less costly for NPC than NPC itself
importing and hauling and storing the oil from overseas NPC is entitled to
be reimbursed by the BIR for that part of the buying price of NPC which
verifiably represents the tax already paid by the oil company-vendor to the
BIR.
33
(Emphasis and underscoring supplied)

Notably, the Court even discussed the Maceda ruling in Silkair, highlighting the
relevance of the exemptions in NPCs charter to its claim for tax
refund:cralavvonlinelawlibrary
Silkair nevertheless argues that it is exempt from indirect taxes because the Air
Transport Agreement between RP and Singapore grants exemption "from the same
customs duties, inspection fees and other duties or taxes imposed in the territory of the
first Contracting Party." It invokes Maceda v. Macaraig, Jr. which upheld the
claim for tax credit or refund by the National Power Corporation (NPC) on the
ground that the NPC is exempt even from the payment of indirect taxes.

Silkairs argument does not persuade. In Commissioner of Internal Revenue v.
Philippine Long Distance Telephone Company, this Court clarified the ruling in Maceda
v. Macaraig, Jr., viz:cralavvonlinelawlibrary
It may be so that in Maceda vs. Macaraig, Jr., the Court held that an exemption from
"all taxes" granted to the National Power Corporation (NPC) under its charter includes
both direct and indirect taxes. But far from providing PLDT comfort, Maceda in fact
supports the case of herein petitioner, the correct lesson of Maceda being that an
exemption from "all taxes" excludes indirect taxes, unless the exempting statute,
like NPCs charter, is so couched as to include indirect tax from the
exemption. Wrote the Court:cralavvonlinelawlibrary
x x x However, the amendment under Republic Act No. 6395 enumerated the details
covered by the exemption. Subsequently, P.D. 380, made even more specific the details
of the exemption of NPC to cover, among others, both direct and indirect taxes on
all petroleum products used in its operation. Presidential Decree No. 938 [NPCs
amended charter] amended the tax exemption by simplifying the same law in general
terms. It succinctly exempts NPC from "all forms of taxes, duties[,] fees"

The use of the phrase "all forms" of taxes demonstrates the intention of the law to give
NPC all the tax exemptions it has been enjoying before. . .

x x x x

It is evident from the provisions of P.D. No. 938 that its purpose is to maintain the tax
exemption of NPC from all forms of taxes including indirect taxes as provided under
R.A. No. 6395 and P.D. 380 if it is to attain its goals.
The exemption granted under Section 135(b) of the NIRC of 1997 and Article 4(2) of
the Air Transport Agreement between RP and Singapore cannot, without a clear
showing of legislative intent, be construed as including indirect taxes. Statutes granting
tax exemptions must be construed in strictissimi juris against the taxpayer and liberally
in favor of the taxing authority, and if an exemption is found to exist, it must not be
enlarged by construction.
34
(Emphasis and underscoring supplied)

Based on these rulings, it may be observed that the propriety of a tax refund claim is
hinged on the kind of exemption which forms its basis. If the law confers an exemption
from both direct or indirect taxes, a claimant is entitled to a tax refund even if it only
bears the economic burden of the applicable tax. On the other hand, if the exemption
conferred only applies to direct taxes, then the statutory taxpayer is regarded as the
proper party to file the refund claim.

In this case, PALs franchise grants it an exemption from both direct and indirect taxes
on its purchase of petroleum products. Section 13 thereof reads:cralavvonlinelawlibrary
SEC. 13. In consideration of the franchise and rights hereby granted, the grantee [PAL]
shall pay to the Philippine Government during the life of this franchise whichever of
subsections (a) and (b) hereunder will result in a lower tax:cralavvonlinelawlibrary
(a) The basic corporate income tax based on the grantee's annual net taxable income
computed in accordance with the provisions of the National Internal Revenue Code; or

(b) A franchise tax of two per cent (2%) of the gross revenues derived by the grantee
from all sources, without distinction as to transport or nontransport operations;
provided, that with respect to international air-transport service, only the gross
passenger, mail, and freight revenues from its outgoing flights shall be subject to this
tax.
The tax paid by the grantee under either of the above alternatives shall be in lieu of
all other taxes, duties, royalties, registration, license, and other fees and charges of
any kind, nature, or description, imposed, levied, established, assessed, or collected by
any municipal, city, provincial, or national authority or government agency, now or in
the future, including but not limited to the following:cralavvonlinelawlibrary

1. All taxes, duties, charges, royalties, or fees due on local purchases by the grantee of
aviation gas, fuel, and oil, whether refined or in crude form, and whether such taxes,
duties, charges, royalties, or fees are directly due from or imposable upon the
purchaser or the seller, producer, manufacturer, or importer of said
petroleum products but are billed or passed on the grantee either as part of
the price or cost thereof or by mutual agreement or other arrangement;
provided, that all such purchases by, sales or deliveries of aviation gas, fuel, and oil to
the grantee shall be for exclusive use in its transport and nontransport operations and
other activities incidental thereto;chanroblesvirtualawlibrary

2. All taxes, including compensating taxes, duties, charges, royalties, or fees due on all
importations by the grantee of aircraft, engines, equipment, machinery, spare parts,
accessories, commissary and catering supplies, aviation gas, fuel, and oil, whether
refined or in crude form and other articles, supplies, or materials; provided, that such
articles or supplies or materials are imported for the use of the grantee in its transport
and transport operations and other activities incidental thereto and are not locally
available in reasonable quantity, quality, or price; (Emphasis and underscoring supplied)

x x x x

Based on the above-cited provision, PALs payment of either the basic corporate income
tax or franchise tax, whichever is lower, shall be in lieu of all other taxes, duties,
royalties, registration, license, and other fees and charges, except only real property
tax.
35
The phrase in lieu of all other taxes includes but is not limited to taxes that are
directly due from or imposable upon the purchaser or the seller, producer,
manufacturer, or importer of said petroleum products but are billed or passed on the
grantee either as part of the price or cost thereof or by mutual agreement or other
arrangement.
36
In other words, in view of PALs payment of either the basic corporate
income tax or franchise tax, whichever is lower, PAL is exempt from paying: (a) taxes
directly due from or imposable upon it as the purchaser of the subject petroleum
products; and (b) the cost of the taxes billed or passed on to it by the seller, producer,
manufacturer, or importer of the said products either as part of the purchase price or
by mutual agreement or other arrangement. Therefore, given the foregoing direct and
indirect tax exemptions under its franchise, and applying the principles as above-
discussed, PAL is endowed with the legal standing to file the subject tax refund claim,
notwithstanding the fact that it is not the statutory taxpayer as contemplated by law.

B. Coverage of LOI 1483.

LOI 1483 amended PALs franchise by withdrawing the tax exemption privilege granted
to PAL on its purchase of domestic petroleum products for use in its domestic
operations. It pertinently provides:cralavvonlinelawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of
the powers vested in me by the Constitution, do hereby order and direct that the tax-
exemption privilege granted to PAL on its purchase of domestic petroleum
products for use in its domestic operations is hereby withdrawn. (Emphasis
and underscoring supplied)

On this score, the CIR contends that the purchase of the aviation fuel imported by
Caltex is a purchase of domestic petroleum products because the same was not
purchased abroad by PAL.

The Court disagrees.

Based on Section 13 of PALs franchise, PALs tax exemption privileges on all taxes on
aviation gas, fuel and oil may be classified into three (3) kinds, namely: (a) all taxes
due on PALs local purchase of aviation gas, fuel and oil;
37
(b) all taxes directly due
from or imposable upon the purchaser or the seller, producer, manufacturer, or
importer of aviation gas, fuel and oil but are billed or passed on to PAL;
38
and (c), all
taxes due on all importations by PAL of aviation gas, fuel, and oil.
39


Viewed within the context of excise taxes, it may be observed that the first kind of
tax privilege would be irrelevant to PAL since it is not liable for excise taxes on locally
manufactured/produced goods for domestic sale or other disposition; based on Section
130 of the NIRC, it is the manufacturer or producer, i.e., the local refinery, which is
regarded as the statutory taxpayer of the excise taxes due on the same. On the
contrary, when the economic burden of the applicable excise taxes is passed on to PAL,
it may assert two (2) tax exemptions under the second kind of tax privilege namely,
PALs exemptions on (a) passed on excise tax costs due from the seller,
manufacturer/producer in case of locally manufactured/ produced goods for domestic
sale (first tax exemption under the second kind of tax privilege); and (b) passed on
excise tax costs due from the importer in case of imported aviation gas, fuel and oil
(second tax exemption under the second kind of tax privilege). The second kind of tax
privilege should, in turn, be distinguished from the third kind of tax privilege which
applies when PAL itself acts as the importer of the foregoing petroleum products. In the
latter instance, PAL is not merely regarded as the party to whom the economic burden
of the excise taxes is shifted to but rather, it stands as the statutory taxpayer directly
liable to the government for the same.
40


In view of the foregoing, the Court observes that the phrase purchase of domestic
petroleum products for use in its domestic operations which characterizes the tax
privilege LOI 1483 withdrew refers only to PALs tax exemptions on passed
on excise tax costs due from the seller, manufacturer/producer of locally
manufactured/ produced goods for domestic sale
41
and does not, in any way,
pertain to any of PALs tax privileges concerning imported goods,
42
may it be
(a) PALs tax exemption on excise tax costs which are merely passed on to it by the
importer when it buys imported goods from the latter (the second tax exemption under
the second kind of tax privilege); or (b) PALs tax exemption on its direct excise tax
liability when it imports the goods itself (the third kind of tax privilege). Both textual
and contextual analyses lead to this conclusion:cralavvonlinelawlibrary

First, examining its phraseology, the word domestic, which means of or relating to
ones own country
43
or an article of domestic manufacture,
44
clearly pertains to
goods manufactured or produced in the Philippines for domestic sales or consumption
or for any other disposition
45
as opposed to things imported.
46
In other words, by sheer
divergence of meaning, the term domestic petroleum products could not refer to
goods which are imported.

Second, examining its context, certain whereas clauses
47
in LOI 1483 disclose that
the said law was intended to lift the tax privilege discussed in Department of Finance
(DOF) Ruling dated November 17, 1969 (Subject DOF Ruling) which, based on a
reading of the same, clarified that PALs franchise included tax exemptions on aviation
gas, fuel and oil which are manufactured or produced in the Philippines for domestic
sales (and not only to those imported).
48
In other words, LOI 1483 was meant to divest
PAL from the tax privilege which was tackled in the Subject DOF Ruling, namely, its tax
exemption on aviation gas, fuel and oil which are manufactured or produced in the
Philippines for domestic sales. Consequently, if LOI 1483 was intended to withdraw
the foregoing tax exemption, then the term purchase of domestic petroleum
products for use in its domestic operations as used in LOI 1483 could only refer to
goods manufactured or produced in the Philippines for domestic sales or
consumption or for any other disposition, and not to things imported. In this respect,
it cannot be gainsaid that PALs tax exemption privileges concerning imported goods
remain beyond the scope of LOI 1483 and thus, continue to subsist.

In this case, records disclose that Caltex imported aviation fuel from abroad and merely
re-sold the same to PAL, tacking the amount of excise taxes it paid or would be liable to
pay to the government on to the purchase price. Evidently, the said petroleum products
are in the nature of things imported and thus, beyond the coverage of LOI 1483 as
previously discussed. As such, considering the subsistence of PALs tax exemption
privileges over the imported goods subject of this case, PAL is allowed to claim a tax
refund on the excise taxes imposed and due thereon.

C. PALs entitlement to refund.

It is hornbook principle that the Court is not a trier of facts and often, remands cases to
the lower courts for the determination of questions of such character. However, when
the trial court had already received all the evidence of the parties, the Court may
resolve the case on the merits instead of remanding them in the interest of expediency
and to better serve the ends of justice.
49


Applying these principles, the Court finds that the evidence on record shows that PAL
was able to sufficiently prove its entitlement to the subject tax refund. The following
incidents attest to the same:cralavvonlinelawlibrary

First, PAL timely filed its claim for refund.

Section 229
50
of the NIRC provides that the claim for refund should be filed within two
(2) years from the date of payment of the tax.

Shortly after imported aviation fuel was delivered to PAL, Caltex electronically filed the
requisite excise tax returns and paid the corresponding amount of excise taxes, as
follows:cralavvonlinelawlibrary
DATE OF FILING AND PAYMENT FILING REFERENCE NO.
July 26, 2004 074400000178825
July 27, 2004 070400000179115
July 28, 2004 070400000179294
July 29, 2004 070400000179586

PAL filed its administrative claim for refund on October 29, 2004
51
and its judicial claim
with the CTA on July 25, 2006.
52
In this regard, PALs claims for refund were filed on
time in accordance with the 2-year prescriptive period.

Second, PAL paid the lower of the basic corporate income tax or the franchise tax as
provided for in the afore-quoted Section 13 of its franchise.

In its income tax return for FY 2004-2005,
53
PAL reported no net taxable income for the
period resulting in zero basic corporate income tax, which would necessarily be lower
than any franchise tax due from PAL for the same period.

Third, the subject excise taxes were duly declared and remitted to the BIR.

Contrary to the findings of the CTA that the excise taxes sought to be refunded were
not the very same taxes that were declared in the Excise Tax Returns filed by Caltex
54

(underscoring the discrepancy of P23,855.00 between the amount of P2,975,892.90
declared in the said returns and the amount of P2,952.037.90
55
sought to be
refunded), an examination of the records shows a sufficient explanation for the
difference.

In the Certification
56
of Caltex on the volume of aviation fuel sold to PAL and its
Summary of Local Sales
57
(see table below), Caltex sold 810,870 liters during the
subject period out of which 804,370 liters were sold to PAL, while the difference of
6,500 liters
58
were sold to its other client, LBOrendain.
DATE OF SALE
DOCUMENT July 24,
2004
July 25,
2004
July 26,
2004
July 27,
2004
July 28,
2004
TOTAL
Certification 174,070 158,570 187,130 166,370 118,230 804,370
Summary of
Local Sales
177,070 158,570 187,130 166,370 121,730 810,870
DIFFERENCE 3,000 0 0 0 3,500 6,500


Per Summary of Removals and Excise Tax Due on Mineral Products Chargeable Against
Payments attached to the Excise Tax Returns,
59
the excise tax rate is P3.67 per liter,
which, if multiplied with 6,500 liters sold by Caltex to LBOrendain, would equal the
discrepancy amount of P23,855.00.

Further examination of the records also reveals that the amount reflected in Caltexs
Certification is consistent with the amount indicated in Caltexs Aviation Receipts and
Invoices
60
and Aviation Billing Invoice.
61


Thus, finding that PAL has sufficiently proved its entitlement to a tax refund of the
excise taxes subject of this case, the Court hereby grants its petition and consequently,
annuls the assailed CTA resolutions.

WHEREFORE, the petition is hereby GRANTED. The May 9, 2011 Decision and
September 16, 2011 Resolution of the Court of Tax Appeals En Banc in CTA EB Case
No. 588 are ANNULLED and SET ASIDE. Respondent Commissioner of Internal
Revenue is hereby ORDERED to refund or issue a tax credit certificate in favor of the
petitioner Philippine Airlines, Inc. in the amount of P2,952,037.90.

SO ORDERED.





****************************oooooooooooooooo**************************


SECOND DIVISION
G.R. No. 189686, July 15, 2013
UNIVERSAL ROBINA CORPORATION AND LANCE Y. GOKONGWEI, Petitioners,
v. WILFREDO Z. CASTILLO, Respondent.

D E C I S I O N
PEREZ, J.:
Whether a validly dismissed employee is entitled to separation pay is the meat of this
controversy.

The instant petition for review assails the Decision
1
and Resolution
2
of the Court of
Appeals dated 20 July 2009 and 17 September 2009, respectively, in CA-G.R. SP. No.
105604.

The facts, as culled from the records, follow.

Respondent Wilfredo Z. Castillo (Castillo) was hired by petitioner Universal Robina
Corporation (URC) as a truck salesman on 23 March 1983 with a monthly salary of
P4,000.00. He rose from the ranks and became a Regional Sales Manager, until his
dismissal on 12 January 2006.

As Regional Sales Manager, respondent was responsible for planning, monitoring,
leading and controlling all activities affecting smooth sales operation. He is particularly
in charge of the operational and administrative functions encompassing the formulation
of sales forecast, selling expense, budget preparation and control, sales analysis,
formulation and review of policies and procedures affecting the sales force and service
provided to customers, including representation in keeping and maintaining key
accounts of the company. He is likewise tasked to transact, sign and represent the
company in all its dealings with key accounts or customers subject however to his
selling expense budget duly approved by URC Management. Consequently, he is
obliged to give an account of all his dealings or transactions with all his customers to
URC.
3
His area of responsibility covered some parts of Laguna, including Lianas
Supermart (Liana) in San Pablo City, Laguna.

On 19 August 2005, URCs Credit and Collection Department (CCD) Analyst in Silangan,
Laguna Branch noted an outright deduction in the amount of P72,000.00 tagged as Gift
Certificate (GC) per Original Receipt No. 625462 dated 18 August 2005. The CCD
Analyst found the issuance of GCs as unusual. This finding prompted URCs Corporate
Internal Audit (CIA) to conduct a routine audit of the unresolved accounts of Lianas
account receivables.

Based on its investigation, CIA came up with the following
findings:cralavvonlinelawlibrary
1. Per Ms. Prezy Manansala, Lianas San Pablo Branch Manager, URC agreed to
sponsor their Back to School Promo.
2. She showed us their copy of the Account Development Agreement x x x signed
by URC Salesman and Ms. Manansala as proof that there was indeed an agreed
promotional activity.
3. Lianas issued GCs worth P72,000.00 to RSM Castillo. Issuance of Lianas GCs
was covered by Charge Sales Invoice Nos. 2189 and 2190 dated June 25, 2005.
As claimed by Ms. Manansala, this issuance of GC is part of the promo activity.
x x x x

[4.] Ms. Manansala informed us that the Back to School Raffle Promo was cancelled.
x x x.

[5.] We showed her photocopies of Charged Invoices [N]os. 2189 and 2190 x x x. Ms.
Manansala confirmed that RSM Castillo is the one who signed on the received x x x
portion of the documents we showed.

[6.] Copies of the Charged Invoice [N]os. 2189 and 2190 were marked/stamped paid as
these charges were already deducted from their payment to URC.

x x x x

[7.] Based on the report of Mr. Patrick Ong, Trade Marketing personnel, dated August
29, 2005, he mentioned the following exceptions with regard to the subject promo
activity:cralavvonlinelawlibrary
a. The cut case display was only implemented in June 2005.
b. No shelf space added.
c. According to Lianas San Pablo Branch Manager, URC through RSM Wilfredo
Castillo received Gift Certificates worth P72,000.00 from Lianas.
x x x x

[8.] On September 29, 2005, Lianas HO officer confirmed that P72,000.00 worth of Gift
Certificates were issued per Charged Invoice Nos. 2189 and 2190 dated June 25, 2005.

[9.] As of audit date, the P72,000.00 worth of promo deductions represented by the
Gift Certificates allegedly received by RSM Castillo still floats or remains unresolved in
the URC Account Receivable records. x x x.
4


The CIA suspected that respondent might have committed an act of fraud against the
company and Lianas for his personal gain.

Lianas Vice President for Marketing Mr. Peter Sy confirmed the receipt of the GCs by
respondent.
5


On 14 November 2005, respondent was asked to explain in writing why the company
should not institute the appropriate disciplinary action against him for possible violation
of Offenses Subject to Disciplinary Action 2.04, to wit:cralavvonlinelawlibrary
Directly or indirectly obtraining or accepting money or anything of value by entering
into unauthorized arrangement/s with supplier/s, client or other outsider/s.
6


On 17 November 2005, respondent submitted his explanation. He recounted that
Lianas launched a Back to School Raffle Promo sponsored by URC and covered by
Account Development Agreement (ADA) No. WZC-05-046. The promotion cost URC
sponsorship expenses amounting to P92,431.00. The trade-offs included in said promo
are:cralavvonlinelawlibrary
1. Raffle Draw
2. Additional shelf Space for New products
3. Cut case display
4. Increment of 15% (Value)
7


The raffle draw portion of the promotion, however, was cancelled by Lianas due to cost
implications and difficulty in obtaining permits. In lieu of the raffle draw, additional cut
case display for 3 categories (snacks, beverages and foods), together with 15% sales
increment, was offered by Lianas. By virtue of said revisions, Lianas charged and
deducted P72,000.00 from URCs collectibles which correspond to the monthly rentals of
the cut case display.
8
Respondent denied accepting any gift certificate.

Another memo was sent to respondent on 8 December 2005 directing him to explain
why no administrative sanctions should be meted against him for the following acts
which are deemed inimical to the interest of the company:cralavvonlinelawlibrary
1. You entered into an agreement with Lianas Supermarket for the use of cut-case
displays for the period from June 1, 2005 to August 31, 2005, inclusive,
coinciding with the inclusive period of the implementation of the Account
Development Agreement (ADA No. WZC-05-046), and admitted that you did not
have any authority to enter into such contract.
2. You signed two (2) blank Charge Invoices of Lianas Supermarket to warrant the
payment of the rentals for three (3) cut-case displays during the said period with
the use thereof as basis for deducting the amount of PHP 72,000.00 from the
account of the Company, without the authority to do so.
3. Your act of signing the blank Charge Invoices included the payment of rental for
the cut-case display that should have been part of the concessions without rental
fees as per the supposed revised ADA prepared by Salesman Jose Moises C.
Villareal, thereby resulting in undue payment to Lianas Supermarket amounting
to PHP 24,000.00.
9


Respondent repeatedly denied that he signed two (2) blank Charge invoices intended
for GCs. He also admitted that only two (2) cut-cases should have been charged and
he assumed liability for the undue payment of one (1) cut-case display.

Clarification inquiries were likewise held on 8 December 2005.

On 9 January 2006, respondent was served a written notice of termination in the
following tenor:cralavvonlinelawlibrary
W[ith] deep regret, we hereby inform you that, after DUE PROCESS, you were found
guilty of acts inimical to the interest of the Company and for breach of trust &
confidence.

In the series of administrative investigations, the following has been clearly
established;chanroblesvirtualawlibrary
1. You signed two (2) blank Charge Invoices of Lianas Supermarket. You failed to
satisfactorily explain your failure to exercise the slightest degree of prudence
required of your position as SENIOR MANAGER, when you signed the blank
Charge Invoices despite full knowledge that the same will be used to cause the
deduction of the subject amount from the account of URC.
2. You authorized the changes in ADA despite of the fact that you have no authority
to enter into any short term or long term contract for the rental of cut-case
displays and shelf spaces.
In view of the above, your services shall be terminated for cause effective immediately.
In addition, you are required to restitute the amount of P72,000.00 that Lianas
Supermarket charged against the account of URC for the gift certificate you unduly
received.
10


On 30 May 2006, respondent filed a complaint for illegal dismissal against petitioners
URC and its President and Chief Operating Officer (COO) Lance Gokongwei. He alleged
that the grounds for which he was dismissed were totally different from the charges
leveled against him during the investigation.
11


On the other hand, URC countered that respondent was dismissed for a just and valid
cause.

On 12 June 2007, the labor arbiter rendered a decision declaring respondent to have
been illegally dismissed and ordered the payment of backwages and separation pay.
The dispositive portion of the Decision reads:cralavvonlinelawlibrary
WHEREFORE, judgment is hereby rendered declaring complainants dismissal as
ILLEGAL. Respondents are hereby ordered jointly and severally
liable:cralavvonlinelawlibrary

1) To pay complainant the amount of P1,343,000.00, representing his backwages
computed only up to the promulgation of this decision;chanroblesvirtualawlibrary

2) To pay complainant the amount of P1,728,000.00, representing his separation
pay;chanroblesvirtualawlibrary

3) To pay complainant an amount equivalent to ten (10%) percent of the total
judgment award, as and for attorneys fees.

Other claims are dismissed for lack of merit.
12


The Labor Arbiter ruled that respondent was asked to explain on charges which are
different from the charges for which he was dismissed. The Labor Arbiter also held that
URC failed to substantiate the charges against respondent.

On appeal, the National Labor Relations Commission (NLRC) found the appeal
meritorious and reversed the decision of the labor arbiter. According to the NLRC, URC
had more than sufficient proof that respondent violated its trust. Respondent sought
reconsideration of the reversal, but his motion for reconsideration was denied.

This prompted respondent to file a petition for certiorari before the Court of Appeals,
which upheld his dismissal but awarded him separation pay as a form of equitable
relief. In the final paragraphs, as well as in the dispositive, the Court of Appeals
stated:cralavvonlinelawlibrary
In fine, this Court finds just cause for petitioner Castillos dismissal.

Petitioner nonetheless pleads for compassion, citing the fact that he honorably served
the company for about twenty-three (23) years and this is his only and first offense.

Mindful of the Courts duty to accord compassion to the working man in light of the
social justice mandate in our Constitution, this Court deems proper an award of
separation pay to petitioner Castillo as a form of equitable relief.

WHEREFORE, premises considered, the instant petition for certiorari is PARTLY
GRANTED. Private respondent URC is hereby ordered to pay SEPARATION PAY to
petitioner Castillo for his twenty-three (23) years of service in the company, equivalent
to one-half (1/2) month salary for every year of service inclusive of allowances.
13


URC moved for partial reconsideration but the Court of Appeals denied the motion.

Before this Court, URC raises the lone argument that respondent is not entitled to
separation pay in accordance with prevailing law and jurisprudence.
14
Citing case law,
URC contends that if an employees act or violation of the companys code constitutes
serious misconduct or is reflective of lack of moral character, then the employer is not
required to give the dismissed employee financial assistance or separation. URC
maintains that respondents acts of signing blank Charge Invoices without any authority
and receiving P72,000.00 worth of GCs for his personal benefit clearly constitute serious
misconduct which preclude an award for separation pay.

In his Comment, respondent stresses that based on the tenor of the termination letter,
he was never dismissed on the ground of gross misconduct. Respondent concedes
that at most, he may have committed simple negligence. He reiterates that he did not
commit any act constituting serious misconduct nor does it reflect any deterioration in
his moral character.

We resolve to grant the petition.

Why and when separation pay may be awarded or denied, has been the subject of
many cases. We pick out the rulings pertinent to the case at hand.

The leading case of Philippine Long Distance Telephone Co. v. NLRC
15
enunciated the
ruling that separation pay as a measure of social justice is allowed in those instances
where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character.
16
The case of Toyota Motor Phils. Corp.
Workers Association (TMPCWA) v. NLRC
17
expanded the doctrine laid down in PLDT by
adding dismissals other than those under Art. 282 of the Labor Code, like willful
disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and
commission of a crime against the employer or his family which would preclude award
of separation pay.

As the rule now stands, the award of separation pay is authorized in the situations dealt
with in Article 283 and 284 of the Labor Code, but not in terminations of employment
based on instances enumerated in Article 282.
18
Article 282 states
that:cralavvonlinelawlibrary
ART. 282. Termination by employer. An employer may terminate an employment for
any of the following causes:cralavvonlinelawlibrary

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;chanroblesvirtualawlibrary

(b) Gross and habitual neglect by the employee of his
duties;chanroblesvirtualawlibrary

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;chanroblesvirtualawlibrary

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representatives;
and

(e) Other causes analogous to the foregoing.

Central Philippines Bandag Retreaders, Inc. cautioned labor tribunals in indiscriminately
awarding separation pay as a measure of social justice, in this
wise:cralavvonlinelawlibrary
x x x [L]abor adjudicatory officials and the CA must demur the award of separation pay
based on social justice when an employees dismissal is based on serious misconduct or
willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust;
or commission of a crime against the person of the employer or his immediate family
grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They
must be most judicious and circumspect in awarding separation pay or financial
assistance as the constitutional policy to provide full protection to labor is not meant to
be an instrument to oppress the employers. The commitment of the Court to the cause
of labor should not embarrass us from sustaining the employers when they are right, as
here. In fine, we should be more cautious in awarding financial assistance to the
undeserving and those who are unworthy of the liberality of the law.
19


Indeed, respondent has committed acts constituting willful breach of trust and
confidence reposed on him by URC based on the following facts established by the
Court of Appeals, thus:cralavvonlinelawlibrary
x x x The principal charge against petitioner Castillo was hinged upon unauthorized
arrangements which he allegedly entered into. Petitioner Castillos unauthorized
dealing with respect to the changes in the Account Development Agreement is exactly
the offending cause of the host of infractions he committed, i.e., his neglect in signing
the blank charge invoices and his improper receipt of gift certificates for his personal
gain. These acts taken together constitute a breach of the trust and confidence
reposed on petitioner Castillo by private respondent URC. x x x.

Indeed, petitioner Castillos acts of receiving the gift certificates and signing the blank
invoices are closely intertwined and inextricably connected with each other. In other
words, petitioner Castillos acquisition of the gift certificates could not have been
facilitated without him signing the blank invoices. Such signing was a ruse to cover up
his receipt of the gift certificates. Oddly enough, petitioner Castillo readily admitted to
signing receipt on Charge Invoices Nos. 2189 and 2190 covering the gift certificates in
the amounts of P60,000.00 and P12,000.00, respectively, but made the qualification
that the same were in blank when he signed on them. Such claim was obviously to
create the impression that he was really not aware of any gift certificates and that
whatever misstep he committed was merely brought about by his good faith.

Nonetheless, the evidence on record negates petitioner Castillos claim of good faith
and furnishes sufficient basis for the breach of trust and loss of confidence reposed on
him by private respondent URC. Petitioner Castillos receipt of the gift certificates is
categorically confirmed by Peter Sy, the Vice President of Marketing of Lianas
Supermarket. This piece of evidence, coming from a disinterested party, speaks
eloquently of petitioner Castillos perfidy. Such an affirmative statement coupled with
petitioner Castillos signatures on the charge invoices convincingly established the fact
that he indeed received the P72,000.00 worth of gift certificates.

Assuming that he did not receive the gift certificates, petitioner Castillos ready
admission that he signed the charge invoices even if these were blank clearly shows his
negligence and utter lack of care in the interests of private respondent URC. As a
Regional Sales Manager, petitioner Castillo occupied a position of responsibility and as
such, he should have known that he placed the interests of the company at a
disadvantage by signing the blank charge invoices. Because of such act, private
respondent URC was prejudiced by no less than P72,000.00. This alone is sufficient
cause for breach of trust and loss of confidence.
20


In this case before us, respondent did not appeal the decision of the Court of Appeals.
He is deemed to have accepted the findings and conclusion of the appellate court
pertaining to the validity of his dismissal.

In Bank of the Philippine Islands v. NLRC and Arambulo,
21
we ruled that an employee
who has been dismissed for a just cause under Article 282 of the Labor Code is not
entitled to separation pay. The complainant therein was likewise dismissed on the
ground of loss of trust and confidence. Applying that rule to the instant case, we here
hold that respondent is not entitled to separation pay.

WHEREFORE, the petition is GRANTED. The 20 July 2009 Decision and 17
September 2009 Resolution of the Court of Appeals in CA-G.R. SP. No. 105604 is
REVERSED and SET ASIDE. The Resolution dated 31 March 2008 of the National
Labor Relations Commission REINSTATED.

SO ORDERED.



************************oooooooooooooo*********************************





EN BANC
A.M. No. CA-13-51-J, July 02, 2013
RE: LETTER COMPLAINT OF MERLITA B. FABIANA AGAINST PRESIDING
JUSTICE ANDRES B. REYES, JR., ASSOCIATE JUSTICES ISAIAS P. DICDICAN
AND STEPHEN C. CRUZ; CARAG JAMORA SOMERA AND VILLAREAL LAW
OFFICES AND ITS LAWYERS ATTYS. ELPIDIO C. JAMORA, JR. AND BEATRIZ
O. GERONILLA-VILLEGAS, LAWYERS FOR MAGSAYSAY MARITIME
CORPORATION AND VISAYAN SURETY AND INSURANCE CORPORATION.

D E C I S I O N
BERSAMIN, J.:
This administrative matter stems from the claim for death benefits by the heirs of the
late Marlon Fabiana (heirs of Fabiana) against manning agent Magsaysay Maritime
Corporation and its principal Air Sea Holiday GMBH-Stable Organizations Italia.

Complainant Merlita B. Fabiana, Marlons surviving spouse, hereby accuses Court of
Appeals (CA) Presiding Justice Andres B. Reyes, Jr., Associate Justice Isaias P. Dicdican
and Associate Justice Stephen C. Cruz, as the former Members of the CAs First Division,
of having openly defied the resolution promulgated by the Court on January 13, 2010 in
G.R. No. 189726 entitled Heirs of the Late Marlon A. Fabiana, [herein represented by
Merlita B. Fabiana] v. Magsaysay Maritime Corp., et al., whereby the Court had
allegedly fixed with finality complainants claims for death benefits and other monetary
claims, including damages and attorneys fees, against the Maritime Company arising
from the death of her husband.
1


The relevant antecedents follow.

On December 19, 2007, the Labor Arbiter granted the following claims to the heirs of
Fabiana, to wit:cralavvonlinelawlibrary
WHEREFORE, considering all the foregoing premises, respondents are liable to pay the
following to the complainants:cralavvonlinelawlibrary
1. US $82,500.00 death benefits to complainant Merlita B.
Fabiana;chanroblesvirtualawlibrary
2. US $16,500.00 to complainant Jomari Paul B. Fabiana;chanroblesvirtualawlibrary
3. Salary differentials from July 17, 2006 to April 23, 2007 computed at US $1,038
deducting the US $424.00 monthly salaries already paid by the
respondents;chanroblesvirtualawlibrary
4. The difference of 1,500.00 Euro contributed by fellow Filipino seafarer and US
$1,000 remitted by respondents computed at the rate of exchange at the time of
payment;chanroblesvirtualawlibrary
5. Sick benefits from April 23, 2007 to May 11, 2007 computed at US $1,038.00
monthly salary rate;chanroblesvirtualawlibrary
6. US $331.00 guaranteed overtime pay;chanroblesvirtualawlibrary
7. P7,574.00 actual damages;chanroblesvirtualawlibrary
8. P100,000.00 for moral damages;chanroblesvirtualawlibrary
9. P1,000,000.00 exemplary damages;chanroblesvirtualawlibrary
10. Ten percent (10%) attorneys fees computed on the total awards.
2


On December 10, 2008, the National Labor Relations Commission (NLRC) rendered its
decision,
3
disposing:cralavvonlinelawlibrary
WHEREFORE, foregoing premises considered, the appeal is MODIFIED in the sense that
the award of moral and exemplary damages are reduced to P50,000.00 each while the
other awards are AFFIRMED.

SO ORDERED.

The parties then separately brought their respective petitions for certiorari to the CA,
specifically:cralavvonlinelawlibrary
(a) C.A.-G.R. SP No. 109382 entitled Heirs of the late Marlon A. Fabiana, herein
represented by Merlita B. Fabiana v. National Labor Relations Commission,
Magsaysay Maritime Corporation and Air Sea Holiday GMBH-Stab[i]le Organizations
Italia (Hotel), assailing the jurisdiction of the NLRC in entertaining the appeal of
Magsaysay Maritime Corporation and its principal, and seeking the reinstatement of
the moral and exemplary damages as awarded by the Labor Arbiter (first petition);
4

and
(b) C.A.-G.R. SP No. 109699 entitled Magsaysay Maritime Corporation, Eduardo
Manese, Prudential Guarantee (Surety), and Air Sea Holiday GMBH-Stable
Organizations, Italia v. Heirs of the late Marlon Fabiana, and National Labor
Relations Commission challenging the propriety of the monetary awards granted to
the heirs of Fabiana (second petition).
5


In the second petition, the petitioners averred that the late Marlon Fabiana had died
from a non-work related disease after his employment contract had terminated.

On August 20, 2009, when the heirs of Fabiana filed their comment vis--vis the second
petition, they sought the consolidation of the two petitions. Their request for
consolidation was not acted upon, however, but was soon mooted a month later by the
First Division of the CA promulgating its decision on the first petition (C.A.-G.R. No.
109382) on September 29, 2009,
6
to wit:cralavvonlinelawlibrary
WHEREFORE, premises considered, the petition is partly GRANTED. Accordingly, the
challenged Decision is AFFIRMED but MODIFIED insofar as interest at the rate of six
percent per annum (6% p.a.) is imposed on all the monetary awards, reckoned from
the Labor Arbiters judgment on 19 December 2007, except moral and exemplary
damages to which the same rate of interest is imposed, but reckoned from the time the
aforementioned decision was promulgated on 10 December 2008 by the NLRC Sixth
Division. An additional interest of twelve percent per annum (12% p.a.) is applied on
the total amount ultimately awarded upon finality of the decision until fully paid.

The petitioners motion for preliminary mandatory injunction is deemed resolved by this
decision.

IT IS SO ORDERED.

Magsaysay Maritime Corporation filed on October 25, 2009 a motion for clarification in
C.A.-G.R. No. 109382 instead of a motion for reconsideration.
7
In response, the CA
issued its clarification on November 26, 2009 by stating that the affirmance with
modification was but the consequence of the certiorari petition being merely partially
granted.
8


On their part, the heirs of Fabiana filed a motion for reconsideration in C.A.-G.R. No.
109382, which the CA denied. Hence, on November 23, 2009, they appealed to the
Court by petition for review on certiorari (G.R. No. 189726). However, the Court,
through the Third Division,
9
denied the petition for review on certiorari through the
resolution of January 13, 2010,
10
quoted as follows:cralavvonlinelawlibrary
Acting on the petition for review on certiorari assailing the Decision dated 29 September
2009 of the Court of Appeals in CA-G.R. SP No. 109382, the Court resolves to DENY the
petition for failure to sufficiently show that the appellate court committed any reversible
error in the challenged decision as to warrant the exercise by this Court of its
discretionary appellate jurisdiction.

A careful consideration of the petition indicates a failure of the petitioners to show any
cogent reason why the actions of the Labor Arbiter, the National Labor Relations
Commission and the Court of Appeals which have passed upon the same issue should
be reversed. Petitioners failed to show that their factual findings are not based on
substantial evidence or that their decisions are contrary to applicable law and
jurisprudence.

SO ORDERED.

In the meanwhile, on October 16, 2009, the heirs of Fabiana moved to dismiss the
second petition (C.A.-G.R. SP. No. 109699) on the ground that the intervening
promulgation on September 29, 2009 by the First Division of the decision on the first
petition (C.A.-G.R. No. 109382) had rendered the second petition moot and academic.
11


On June 4, 2010, however, the First Division of the CA, then comprised by Presiding
Justice Reyes, Jr., Associate Justice Dicdican (ponente) and Associate Justice Cruz,
denied the motion to dismiss filed in C.A.-G.R. SP. No. 109699,
12
holding
thusly:cralavvonlinelawlibrary
This has reference to the motion filed by the private respondents, through their
counsel, to dismiss the petition in the case at bench on the ground that it has been
rendered moot and academic by the decision promulgated on September 29, 2009 by
this Court in CA-G.R. SP No. 109382.

After a judicious scrutiny of the whole matter, we find the said motion to dismiss to be
wanting in merit. It is not true that the petition in this case has been rendered moot
and academic by the decision promulgated by this Court on September 29, 2009 in CA-
G.R. SP No. 109382. The said decision rendered by this Court passed upon two limited
issues only, namely, the NLRCs jurisdiction to allow the petitioners appeal thereto
despite flaws in their verification and non-forum shopping papers and the propriety of
the reduction by the NLRC of the amount of damages awarded to the private
respondents. A reading of the said decision will unmistakably bear this out. However, in
the case at bench, the petitioners have assailed omnibously the NLRCs awards in favor
of the private respondents for death benefits, sickness allowance, salary differentials
and other monetary claims. We have to pass upon the propriety of all these monetary
awards.

WHEREFORE, in view of the foregoing premises, we hereby DENY the aforementioned
motion to dismiss filed in this case.

We hereby give the parties a fresh period of fifteen (15) days from notice hereof within
which to file memoranda in support of their respective sides of the case.

SO ORDERED.

The second petition (C.A.-G.R. SP. No. 109699) was ultimately resolved on September
16, 2011 by the Sixth Division of the CA, composed of Associate Justice Amelita G.
Tolentino, Associate Justice Normandie B. Pizarro (ponente) and Associate Justice Rodil
V. Zalameda, dismissing the petition upon not finding the NLRC to have gravely abused
its discretion.

As earlier adverted to, the complainant accuses Presiding Justice Reyes, Jr., Associate
Justice Dicdican and Associate Justice Cruz with thereby willfully disobeying the
resolution of January 13, 2010 promulgated by the Court.

The complaint lacks merit.

In administrative proceedings, the burden of substantiating the charges falls on the
complainant who must prove her allegations in the complaint by substantial evidence.
13

Here, the allegation of willful disobedience against respondent CA Justices was
unsubstantiated and baseless. The issues raised in the first petition (C.A.-G.R. No.
109382) were limited to the NLRCs jurisdiction over the appeal by Magsaysay Maritime
Corporation and its principal, and to the reduction of the amounts awarded as moral
and exemplary damages. In contrast, the second petition (C.A.-G.R. SP. No. 109699)
concerned only the propriety of awarding monetary benefits. Under the circumstances,
the promulgation by the Court of the resolution of January 13, 2010 in G.R. No. 189726
did not divest the respondents as members of the First Division of the CA of the
jurisdiction to entertain and pass upon the second petition (C.A.-G.R. SP. No. 109699),
something that they sought to explain through their resolution promulgated on June 4,
2010. The explanation, whether correct or not, was issued in the exercise of judicial
discretion. It is not for us to say now in a resolution of this administrative complaint
whether the explanation was appropriate or not, nor for the complainant to herself hold
them in error. The recourse open to the heirs of Fabiana, including the complainant,
was to move for the correction of the resolution, if they disagreed with it, and, should
their motion be denied, to assail the denial in this Court through the remedy warranted
under the law.

The complainants initiation of her complaint would take respondent Justices to task for
their regular performance of their office. Yet, as the surviving spouse of the late-
lamented Marlon, she was understandably desirous of the most favorable and quickest
outcome for the claim for death benefits because his intervening demise had rendered
her and her family bereft of his support. Regardless of how commendable were her
motives for initiating this administrative complaint, however, she could not substitute a
proper judicial remedy not taken with an improper administrative denunciation of the
Justices she has hereby charged. That is impermissible. If she felt aggrieved at all, she
should have resorted to the available proper judicial remedy, and exhausted it, instead
of resorting to the unworthy disciplinary charge.

Truly, disciplinary proceedings and criminal actions brought against any Judge or Justice
in relation to the performance of official functions are neither complementary to nor
suppletory of appropriate judicial remedies,

nor a substitute for such remedies.
14
The Court has fittingly explained why in In Re:
Joaquin T. Borromeo,
15
to wit:cralavvonlinelawlibrary
Given the nature of the judicial function, the power vested by the Constitution in the
Supreme Court and the lower courts established by law, the question submits to only
one answer: the administrative or criminal remedies are neither alternative nor
cumulative to judicial review where such review is available, and must wait on the
result thereof.

Simple reflection will make this proposition amply clear, and demonstrate that any
contrary postulation can have only intolerable legal implications. Allowing a party who
feels aggrieved by a judicial order or decision not yet final and executory to mount an
administrative, civil or criminal prosecution for unjust judgment against the issuing
judge would, at a minimum and as an indispensable first step, confer the prosecutor
(Ombudsman) with an incongruous function pertaining, not to him, but to the courts:
the determination of whether the questioned disposition is erroneous in its findings of
fact or conclusions of law, or both. If he does proceed despite that impediment,
whatever determination he makes could well set off a proliferation of administrative or
criminal litigation, a possibility hereafter more fully explored.

Such actions are impermissible and cannot prosper. It is not, as already pointed out,
within the power of public prosecutors, or the Ombudsman or his deputies, directly or
vicariously, to review judgments or final orders or resolutions of the Courts of the land.
The power of reviewby appeal or special civil actionis not only lodged exclusively in
the Courts themselves but must be exercised in accordance with a well-defined and
long established hierarchy, and long standing processes and procedures. No other
review is allowed; otherwise litigation would be interminable, and vexatiously repetitive.

Moreover, in Re: Verified Complaint of Engr. Oscar L. Ongjoco, Chairman of the
Board/CEO of FH-Gymn Multi-Purpose and Transport Service Cooperative, against Hon.
Juan Q. Enriquez, Jr., Hon. Ramon M. Bato, Jr. and Hon. Florito S. Macalino, Associate
Justices, Court of Appeals,
16
the Court ruminates:cralavvonlinelawlibrary
In this regard, we reiterate that a judges failure to correctly interpret the law or to
properly appreciate the evidence presented does not necessarily incur administrative
liability, for to hold him administratively accountable for every erroneous ruling or
decision he renders, assuming he has erred, will be nothing short of harassment and
will make his position doubly unbearable. His judicial office will then be rendered
untenable, because no one called upon to try the facts or to interpret the law in the
process of administering justice can be infallible in his judgment. Administrative
sanction and criminal liability should be visited on him only when the error is so gross,
deliberate and malicious, or is committed with evident bad faith, or only in clear cases
of violations by him of the standards and norms of propriety and good behavior
prescribed by law and the rules of procedure, or fixed and defined by pertinent
jurisprudence.

To be clear, although we do not shirk from the responsibility of imposing discipline on
the erring Judges or Justices and employees of the Judiciary, we shall not hesitate to
shield them from baseless charges that only serve to disrupt rather than promote the
orderly administration of justice.
17


Even as we dismiss the administrative charge, we deem it necessary to observe further,
in the exercise of our administrative supervision over the CA, that the matter addressed
here was really simple and avoidable if only the CA had promptly implemented its
current procedure for the consolidation of petitions or proceedings relating to or arising
from the same controversies. Section 3(a), Rule III of the 2009 Internal Rules of the
Court of Appeals has forthrightly mandated the consolidation of related cases assigned
to different Justices, viz:cralavvonlinelawlibrary
Section 3. Consolidation of Cases. When related cases are assigned to different
justices, they shall be consolidated and assigned to one Justice.

(a) Upon motion of a party with notice to the other party/ies, or at the instance of the
Justice to whom any or the related cases is assigned, upon notice to the parties,
consolidation shall ensue when the cases involve the same parties and/or
related questions of fact and/or law. (Emphases supplied)

x x x x

A perusal of the two petitions showed that they involved the same parties and the same
facts. Even their issues of law, albeit not entirely identical, were closely related to one
another. It could not also be denied that they assailed the same decision of the NLRC.
For these reasons alone, the request for consolidation by the heirs of Fabiana should
have been granted, and the two petitions consolidated in the same Division of the CA.

The consolidation of two or more actions is authorized where the cases arise from the
same act, event or transaction, involve the same or like issues, and depend largely or
substantially on the same evidence, provided that the court has jurisdiction and that
consolidation will not give one party an undue advantage or that consolidation will not
prejudice the substantial rights of any of the parties.
18
As to parties, their substantial
identity will suffice. Substantial identity of parties exists when there is a community of
interest or privity of interest between a party in the first case and a party in the second,
even if the latter has not been impleaded in the first case.
19
As to issues, what is
required is mere identity of issues where the parties, although not identical, present
conflicting claims.
20
The justification for consolidation is to prevent a judge from
deciding identical issues presented in the case assigned to him in a manner that will
prejudice another judge from deciding a similar case before him.

We are perplexed why the CA did not act on and grant the request for consolidation
filed on August 20, 2009 by the heirs of Fabiana. In fact, the consolidation should have
been required as a matter of course even without any of the parties seeking the
consolidation of the petitions, considering that the two cases rested on the same set of
facts, and involved claims arising from the death of the late Marlon Fabiana.

It is true that under the Rules of Court,
21
the consolidation of cases for trial is
permissive and a matter of judicial discretion.
22
This is because trials held in the first
instance require the attendance of the parties, their respective counsel and their
witnesses, a task that surely entails an expense that can multiply if there are several
proceedings upon the same issues involving the same parties. At the trial stage, the
avoidance of unnecessary expenses and undue vexation to the parties is the primary
objective of consolidation of cases.
23
But the permissiveness of consolidation does not
carry over to the appellate stage where the primary objective is less the avoidance of
unnecessary expenses and undue vexation than it is the ideal realization of the dual
function of all appellate adjudications. The dual function is expounded
thuswise:cralavvonlinelawlibrary
An appellate court serves a dual function. The first is the review for correctness
function, whereby the case is reviewed on appeal to assure that substantial justice has
been done. The second is the institutional function, which refers to the progressive
development of the law for general application in the judicial system.

Differently stated, the review for correctness function is concerned with the justice of
the particular case while the institutional function is concerned with the articulation and
application of constitutional principles, the authoritative interpretation of statutes, and
the formulation of policy within the proper sphere of the judicial function.

The duality also relates to the dual function of all adjudication in the common law
system. The first pertains to the doctrine of res judicata, which decides the case and
settles the controversy; the second is the doctrine of stare decisis, which pertains to the
precedential value of the case which assists in deciding future similar cases by the
application of the rule or principle derived from the earlier case.

With each level of the appellate structure, the review for correctness function
diminishes and the institutional function, which concerns itself with uniformity of judicial
administration and the progressive development of the law, increases.
24


In the appellate stage, therefore, the rigid policy is to make the consolidation of all
cases and proceedings resting on the same set of facts, or involving identical claims or
interests or parties mandatory. Such consolidation should be made regardless of
whether or not the parties or any of them requests it. A mandatory policy eliminates
conflicting results concerning similar or like issues between the same parties or interests
even as it enhances the administration of justice.

In this connection, the Court reminds all attorneys appearing as counsel for the
initiating parties of their direct responsibility to give prompt notice of any related cases
pending in the courts, and to move for the consolidation of such related cases in the
proper courts. This responsibility proceeds from their express undertakings in the
certifications against forum-shopping that accompany their initiatory pleadings pursuant
to Section 5 of Rule 7 and related rules in the Rules of Court, to the effect that they
have not theretofore commenced any actions or filed any claims involving the same
issues in any court, tribunal or quasi-judicial agency and, to the best of their
knowledge, no such other actions or claims are pending therein; that if there were such
other pending actions or claims, to render complete statements of the present status
thereof; and if they should thereafter learn that the same or similar actions or claims
have been filed or are pending, they shall report that fact within five days therefrom to
the courts wherein the said complaints or initiatory pleadings have been filed.

WHEREFORE, the Court DISMISSES the administrative complaint against Presiding
Justice Andres B. Reyes, Jr., Associate Justice Isaias P. Dicdican and Associate Justice
Stephen C. Cruz of the Court of Appeals for its lack of merit.

The Court of Appeals is DIRECTED to forthwith adopt measures that will ensure the
strict observance of Section 3, Rule III of the 2009 Internal Rules of the Court of
Appeals, including the revision of the rule itself to make the consolidation of cases and
proceedings concerning similar or like issues or involving the same parties or interests
mandatory and not dependent on the initiative of the parties or of any of them.

All attorneys of the parties in cases brought to the third level courts either on appeal or
interlocutory review (like certiorari) are REQUIRED to promptly notify the reviewing
courts of the pendency of any other cases and proceedings involving the same parties
and issues pending in the same or other courts.

Let this decision be FURNISHED to the Court of Appeals, Sandiganbayan, Court of Tax
Appeals and the Office of the Court Administrator for their guidance; and to the
Integrated Bar of the Philippines for dissemination to all its chapters.

SO ORDERED.




******************************ooooooooooooooooo************************




EN BANC
A.C. No. 6664, July 16, 2013
FERDINAND A. SAMSON, Complainant, v. ATTY. EDGARDO O. ERA, Respondent.

D E C I S I O N
BERSAMIN, J.:

An attorney who wittingly represents and serves conflicting interests may be suspended
from the practice of law, or even disbarred when circumstances so warrant.
Antecedents

Ferdinand A. Samson has brought this complaint for disbarment charging respondent
Atty. Edgardo O. Era with violation of his trust and confidence of a client by
representing the interest of Emilia C. Sison, his present client, in a manner that
blatantly conflicted with his interest.

Samson and his relatives were among the investors who fell prey to the pyramiding
scam perpetrated by ICS Exports, Inc. Exporter, Importer, and Multi-Level Marketing
Business (ICS Corporation), a corporation whose corporate officers were led by Sison.
The other officers were Ireneo C. Sison, William C. Sison, Mimosa H. Zamudio, Mirasol
H. Aguilar and Jhun Sison.

Samson engaged Atty. Era to represent and assist him and his relatives in the criminal
prosecution of Sison and her group. Pursuant to the engagement, Atty. Era prepared
the demand letter dated July 19, 2002 demanding the return or refund of the money
subject of their complaints. He also prepared the complaint-affidavit that Samson
signed and swore to on July 26, 2002. Subsequently, the complaint-affidavit charging
Sison and the other corporate officials of ICS Corporation with several counts of estafa
1

was presented to the Office of the City Prosecutor of Quezon City (OCPQC). After the
preliminary investigation, the OCPQC formally charged Sison and the others with several
counts of estafa in the Regional Trial Court, Branch 96 (RTC), in Quezon City.
2


In April 2003, Atty. Era called a meeting with Samson and his relatives to discuss the
possibility of an amicable settlement with Sison and her cohorts. He told Samson and
the others that undergoing a trial of the cases would just be a waste of time, money
and effort for them, and that they could settle the cases with Sison and her group, with
him guaranteeing the turnover to them of a certain property located in Antipolo City
belonging to ICS Corporation in exchange for their desistance. They acceded and
executed the affidavit of desistance he prepared, and in turn they received a deed of
assignment covering land registered under Transfer Certificate of Title No. R-4475
executed by Sison in behalf of ICS Corporation.
3


Samson and his relatives later demanded from Atty. Era that they be given instead a
deed of absolute sale to enable them to liquidate the property among themselves. It
took some period of negotiations between them and Atty. Era before the latter
delivered to them on November 27, 2003 five copies of a deed of absolute sale
involving the property. However, Atty. Era told them that whether or not the title of the
property had been encumbered or free from lien or defect would no longer be his
responsibility. He further told them that as far as he was concerned he had already
accomplished his professional responsibility towards them upon the amicable settlement
of the cases between them and ICS Corporation.
4


When Samson and his co-complainants verified the title of the property at the Registry
of Deeds and the Assessors Office of Antipolo City, they were dismayed to learn that
they could not liquidate the property because it was no longer registered under the
name of ICS Corporation but was already under the name of Bank Wise Inc.
5
Upon their
urging, Atty. Era negotiated as their counsel with ICS Corporation.

Due to the silence of Atty. Era for sometime thereafter, Samson and his group wrote to
him on September 8, 2004 to remind him about his guarantee and the promise to settle
the issues with Sison and her cohorts. But they did not hear from Atty. Era at all.
6


During the hearings in the RTC, Atty. Era did not anymore appear for Samson and his
group. This forced them to engage another lawyer. They were shocked to find out later
on, however, that Atty. Era had already been entering his appearance as the counsel
for Sison in her other criminal cases in the other branches of the RTC in Quezon City
involving the same pyramiding scam that she and her ICS Corporation had
perpetrated.
7
In this regard, they established Atty. Eras legal representation of Sison by
submitting several certified copies of the minutes of the proceedings in the criminal
cases involving Sison and her group issued by Branch 102 and Branch 220 of the RTC in
Quezon City showing that Atty. Era had appeared as the counsel of Sison in the cases
for estafa pending and being tried in said courts.
8
They also submitted a certification
issued on November 3, 2004 indicating that Atty. Era had visited Sison, an inmate in the
Female Dormitory in Camp Karingal, Sikatuna Village, Quezon City as borne out by the
blotter logbook of that unit.
9


On January 20, 2005, Samson executed an affidavit alleging the foregoing antecedents,
and praying for Atty. Eras disbarment on the ground of his violation of the trust,
confidence and respect reposed in him as their counsel.
10


Upon being required by the Court to comment on the complaint against him within 10
days from notice, Atty. Era several times sought the extension of his period to file the
comment to supposedly enable him to collate documents relevant to his comment.
11

The Court granted his request and allowed him an extension totalling 40 days. But
despite the lapse of the extended period, he did not file his comment.

On September 27, 2005, Samson reiterated his complaint for disbarment against Atty.
Era.
12


By its resolution dated March 1, 2006,
13
the Court required Atty. Era to show cause why
he should not be disciplinarily dealt with or held in contempt for such failure to submit
his comment.

In the comment that he subsequently filed on April 11, 2006 in the Office of the Bar
Confidant,
14
Atty. Era alleged that the conclusion on April 23, 2002 of the compromise
settlement between Samson and his group, on one hand, and Sison and her ICS
Corporation, on the other, had terminated the lawyer-client relationship between him
and Samson and his group; and that on September 1, 2003, he had been appointed as
counsel de officio for Sison by Branch 102 of the RTC in Quezon City only for purposes
of her arraignment.

On July 17, 2006, the Court referred the case to the Integrated Bar of the Philippines
(IBP) for investigation, report and recommendation.
15


In his report and recommendation dated October 1, 2007,
16
the Investigating
Commissioner of the IBP Commission on Bar Discipline (IBP-CBD) found Atty. Era guilty
of misconduct for representing conflicting interests, for failing to serve his clients with
competence and diligence, and for failing to champion his clients cause with
wholehearted fidelity, care and devotion.

The Investigating Commissioner observed that the evidence did not sustain Atty. Eras
claim that his legal services as counsel for Samson and his group had terminated on
April 23, 2003 upon the execution of the compromise settlement of the criminal cases;
that he even admitted during the mandatory conference that there was no formal
termination of his legal services;
17
that his professional obligation towards Samson and
his group as his clients did not end upon execution of the settlement agreement,
because he remained duty-bound to see to it that the settlement was duly
implemented; that he also had the obligation to appear in the criminal cases until their
termination; and that his acceptance of the engagement to appear in behalf of Sison
invited suspicion of his double-dealing and unfaithfulness.

The Investigating Commissioner recommended that Atty. Era be suspended from the
practice of law for six months, viz:cralavvonlinelawlibrary
From the foregoing, it is clear that respondent is guilty of misconduct for representing
conflicting interests, failing to serve his client, complainant herein, with competence and
diligence and champion the latters cause with wholehearted fidelity, care and devotion.
It is respectfully recommended that respondent be SUSPENDED from the practice of
law for a period of six (6) months and WARNED that a repetition of the same or similar
act would merit a more severe penalty.
18


In Resolution No. XVIII-2007-195 passed on October 19, 2007,
19
the IBP Board of
Governors adopted and approved the report and recommendation of the Investigating
Commissioner of the IBP-CBD, with the modification that Atty. Era be suspended from
the practice of law for two years.

On June 9, 2012, the IBP Board of Governors passed Resolution No. XX-2012-180,
20

denying Atty. Eras motion for reconsideration and affirming Resolution No. XVIII-2007-
195.

The IBP Board of Governors then forwarded the case to the Court pursuant to Section
12(b), Rule 139-B of the Rules of Court.
21


On October 17, 2012, Atty. Era filed a Manifestation and Motion (With Leave of
Court).
22
However, on November 26, 2012, the Court merely noted the manifestation,
and denied the motion for its lack of merit.
23

Ruling

We affirm the findings of the IBP.

In his petition for disbarment, Samson charged Atty. Era with violating Canon 15 of the
Code of Professional Responsibility for representing conflicting interests by accepting
the responsibility of representing Sison in the cases similar to those in which he had
undertaken to represent Samson and his group, notwithstanding that Sison was the
very same person whom Samson and his group had accused with Atty. Eras legal
assistance. He had drafted the demand letters and the complaint-affidavit that became
the bases for the filing of the estafa charges against Sison and the others in the RTC in
Quezon City.

Atty. Eras contention that the lawyer-client relationship ended when Samson and his
group entered into the compromise settlement with Sison on April 23, 2002 was
unwarranted. The lawyer-client relationship did not terminate as of then, for the fact
remained that he still needed to oversee the implementation of the settlement as well
as to proceed with the criminal cases until they were dismissed or otherwise concluded
by the trial court. It is also relevant to indicate that the execution of a compromise
settlement in the criminal cases did not ipso facto cause the termination of the cases
not only because the approval of the compromise by the trial court was still required,
but also because the compromise would have applied only to the civil aspect, and
excluded the criminal aspect pursuant to Article 2034 of the Civil Code.
24


Rule 15.03, Canon 15 of the Code of Professional Responsibility provides that: A lawyer
shall not represent conflicting interests except by written consent of all concerned given
after a full disclosure of the facts. Atty. Era thus owed to Samson and his group entire
devotion to their genuine interest, and warm zeal in the maintenance and defense of
their rights.
25
He was expected to exert his best efforts and ability to preserve the
clients cause, for the unwavering loyalty displayed to his clients likewise served the
ends of justice.
26


In Hornilla v. Atty. Salunat,
27
the Court discussed the concept of conflict of interest in
this wise:cralavvonlinelawlibrary
There is conflict of interest when a lawyer represents inconsistent interests of two or
more opposing parties. The test is whether or not in behalf of one client, it is the
lawyers duty to fight for an issue or claim, but it is his duty to oppose it for the other
client. In brief, if he argues for one client, this argument will be opposed by him when
he argues for the other client. This rule covers not only cases in which confidential
communications have been confided, but also those in which no confidence has been
bestowed or will be used. Also, there is conflict of interests if the acceptance of the new
retainer will require the attorney to perform an act which will injuriously affect his first
client in any matter in which he represents him and also whether he will be called upon
in his new relation to use against his first client any knowledge acquired through their
connection. Another test of the inconsistency of interests is whether the acceptance of
a new relation will prevent an attorney from the full discharge of his duty of undivided
fidelity and loyalty to his client or invite suspicion of unfaithfulness or double dealing in
the performance thereof.
28


The prohibition against conflict of interest rests on five rationales, rendered as
follows:cralavvonlinelawlibrary
x x x. First, the law seeks to assure clients that their lawyers will represent them with
undivided loyalty. A client is entitled to be represented by a lawyer whom the client can
trust. Instilling such confidence is an objective important in itself. x x x.

Second, the prohibition against conflicts of interest seeks to enhance the effectiveness
of legal representation. To the extent that a conflict of interest undermines the
independence of the lawyers professional judgment or inhibits a lawyer from working
with appropriate vigor in the clients behalf, the clients expectation of effective
representation x x x could be compromised.

Third, a client has a legal right to have the lawyer safeguard the clients confidential
information xxx. Preventing use of confidential client information against the interests of
the client, either to benefit the lawyers personal interest, in aid of some other client, or
to foster an assumed public purpose is facilitated through conflicts rules that reduce the
opportunity for such abuse.

Fourth, conflicts rules help ensure that lawyers will not exploit clients, such as by
inducing a client to make a gift to the lawyer xxx.

Finally, some conflict-of-interest rules protect interests of the legal system in obtaining
adequate presentations to tribunals. In the absence of such rules, for example, a lawyer
might appear on both sides of the litigation, complicating the process of taking proof
and compromise adversary argumentation x x x.
29


The rule prohibiting conflict of interest was fashioned to prevent situations wherein a
lawyer would be representing a client whose interest is directly adverse to any of his
present or former clients. In the same way, a lawyer may only be allowed to represent
a client involving the same or a substantially related matter that is materially adverse to
the former client only if the former client consents to it after consultation.
30
The rule is
grounded in the fiduciary obligation of loyalty.
31
Throughout the course of a lawyer-
client relationship, the lawyer learns all the facts connected with the client's case,
including the weak and strong points of the case. Knowledge and information gathered
in the course of the relationship must be treated as sacred and guarded with care. It
behooves lawyers not only to keep inviolate the clients confidence, but also to avoid
the appearance of treachery and double-dealing, for only then can litigants be
encouraged to entrust their secrets to their lawyers, which is paramount in the
administration of justice.
32
The nature of that relationship is, therefore, one of trust and
confidence of the highest degree.
33


Contrary to Atty. Eras ill-conceived attempt to explain his disloyalty to Samson and his
group, the termination of the attorney-client relationship does not justify a lawyer to
represent an interest adverse to or in conflict with that of the former client. The spirit
behind this rule is that the clients confidence once given should not be stripped by the
mere expiration of the professional employment. Even after the severance of the
relation, a lawyer should not do anything that will injuriously affect his former client in
any matter in which the lawyer previously represented the client. Nor should the lawyer
disclose or use any of the clients confidences acquired in the previous relation.
34
In this
regard, Canon 17 of the Code of Professional Responsibility expressly declares that: A
lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and
confidence reposed in him.

The lawyers highest and most unquestioned duty is to protect the client at all hazards
and costs even to himself.
35
The protection given to the client is perpetual and does not
cease with the termination of the litigation, nor is it affected by the clients ceasing to
employ the attorney and retaining another, or by any other change of relation between
them. It even survives the death of the client.
36


In the absence of the express consent from Samson and his group after full disclosure
to them of the conflict of interest, therefore, the most ethical thing for Atty. Era to have
done was either to outrightly decline representing and entering his appearance as
counsel for Sison, or to advice Sison to engage another lawyer for herself.
Unfortunately, he did neither, and should now suffer the proper sanction.

WHEREFORE, the Court FINDS and PRONOUNCES Atty. EDGARDO O. ERA guilty of
violating Rule 15.03 of Canon 15, and Canon 17 of the Code of Professional
Responsibility; and SUSPENDS him from the practice of law for two years effective
upon his receipt of this decision, with a warning that his commission of a similar offense
will be dealt with more severely.

Let copies of this decision be included in the personal record of Atty. EDGARDO O.
ERA and entered in his file in the Office of the Bar Confidant.

Let copies of this decision be disseminated to all lower courts by the Office of the Court
Administrator, as well as to the Integrated Bar of the Philippines for its guidance.

SO ORDERED.
















EN BANC
G.R. No. 191661, August 13, 2013
CITY GOVERNMENT OF MAKATI, AS REPRESENTED BY HON. MAYOR
JEJOMAR C. BINAY, Petitioner, v. EMERITA B. ODEA, Respondent.
D E C I S I O N
SERENO, C.J.:

This is a Rule 45 Petition for Review on Certiorari assailing the Resolution dated 17
March 2010 of the Court Appeals (CA) docketed as CA-G.R. SP No. 108983.
1
The
assailed Resolution denied the Motion for Reconsideration filed by petitioner City of
Makati (petitioner) of the CAs earlier Resolution dated 23 October 2009
2
that in turn
dismissed petitioners Rule 43 Petition for Review.
3
cralaw virtualaw library

This case involves respondent Emerita B. Odea (respondent) who was a teacher
previously employed by petitioner. She was illegally dismissed and is now seeking full
payment of her backwages and other benefits as she interprets them to be.
Facts of the Case

Some of the incidents of this case have been previously resolved by this Court in Elenita
S. Binay, in her capacity as Mayor of the City of Makati, Mario Rodriguez and Priscilla
Ferrolino v. Emerita Odea, docketed as G.R. No. 163683, in a Decision dated 08 June
2007 (hereinafter, the 2007 Decision).
4
This Court ruled therein that respondent had
been illegally dismissed and was thus ordered to be reinstated and paid her backwages,
computed from date of dismissal up to date of reinstatement, but in no case to exceed
five (5) years.
5
cralaw virtualaw library

2007 Decision

The factual findings in the 2007 Decision of this Court are summarized as
follows:cralawlibrary

Respondent had been employed by petitioner as a teacher since 1980. She was a
contractual employee up to 30 July 1992 and a casual employee from July 1992 until
November 1996. Sometime in 1996, she held the position of Clerk I and was detailed at
the Library Department of the Makati High School.

It was the practice of respondent to sign an Attendance Sheet bearing her name and
signature to signify attendance, instead of using a Daily Time Record.

In 2000, she was asked to explain why she supposedly failed to report for work starting
in November 1999. She explained that she did not incur those alleged absences and
presented the employees log book as proof of her attendance. Her explanation was
disregarded by then education consultant Priscilla Ferrolino.

Thereafter, on 8 June 2000, Mayor Elenita S. Binay issued a Memorandum dropping
respondent from the roll of employees, effective at the close of office hours of 15 May
2000, in view of the latters absences without official leave (AWOL) starting on 10
November 1999. Respondent moved for reconsideration, but her motion was denied.
Aggrieved, she appealed to the Civil Service Commission (CSC).

The CSC ruled that the dropping of respondent from the roll of employees was not
supported by evidence.
6
It found that she had actually reported for work from
November 1999 to May 2000; and that, while she had incurred absences during that
period, those were not equivalent to a continuous absence of at least thirty (30)
working days.
7
The Attendance Sheet duly complied with regulations,
8
as it indicated
her name and signature, as well as times of arrival and departure, and was verified by
her immediate supervisor.
9
Furthermore, she could not have received her corresponding
salary for the said period if she were indeed absent.

The CSC, by virtue of respondents illegal dismissal, directed petitioner to: (1) reinstate
her; and (2) to pay her back salaries from the time of her separation up to her actual
reinstatement.
10
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Consequently, petitioner moved for reconsideration, but the motion was denied.
11

Aggrieved, it filed a Rule 43 Petition appealing the findings of the CSC to the
CA.
12
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The CA denied the Petition and affirmed that respondent was illegally dismissed.
13
The
CA affirmed the CSC Resolutions which ordered the reinstatement of respondent and
payment of back salaries, but subject to the modification that an illegally terminated
civil service employee, like respondent, is entitled to back salaries limited to a
maximum period of five (5) years, and not to full salaries from her illegal dismissal
up to her reinstatement.
14
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The dispositive portion of the CA Decision provides as follows:
WHEREFORE, the petition is DISMISSED for lack of merit. CSC Resolution No.
010962 dated May 29, 2001 and CSC Resolution No. 021491 dated November
18, 2002 are affirmed, without prejudice to the filing of whatever appropriate
disciplinary case against Emerita Odea, and subject to the modification that
payment of her back salaries shall be computed from date of dismissal up to
date of reinstatement, but in no case to exceed five (5) years.

SO ORDERED. (Emphasis supplied)
15
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Thereafter, petitioner filed a Petition with this Court
16
arguing that the CA committed
serious error in ruling that the respondent had been illegally dismissed.

In its 2007 Decision, this Court dismissed the Petition and affirmed the ruling of the CA
in its entirety; more specifically, that respondent had indeed been illegally dismissed
and was thus entitled to payment of backwages to be computed from the date of
dismissal up to the date of reinstatement, but not exceeding five (5) years.
17
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The dispositive portion of the 2007 Decision in no uncertain terms affirmed the CA
Decision without any modification as follows:
WHEREFORE, the instant petition is DISMISSED for lack of merit. The assailed CA
Decision dated May 14, 2004 is hereby AFFIRMED. Costs against petitioners.

SO ORDERED.
18
(Emphasis supplied)
The Present Case

The 2007 Decision became final. The following events significant to the present Petition
occurred after the promulgation of this Courts 2007 Decision:
19
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The CSC, upon motion of respondent,
20
directed the incumbent Mayor of Makati to
immediately reinstate respondent to her former position and cause the payment of all
her salaries and other benefits from the date of her removal from service up to her
reinstatement.
21
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The directive, however, was not complied with,
22
which then compelled the CSC to
subsequently reiterate its previous order to immediately reinstate respondent.
23
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The directive to reinstate respondent was never complied with. Respondent instead
opted to avail herself of early retirement effective 13 February 2008.

Petitioner thereafter paid her the amount of P558,944.19, representing her supposed
back salaries and other benefits.
24
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In acknowledging receipt of this amount, she signed in favor of petitioner a Release,
Quitclaim, and Waiver dated 05 May 2008 (Quitclaim).
25
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The Letter-Complaint

Respondent alleges that after realizing that she had been shortchanged by petitioner,
she complained to the CSC, asserting that the amount paid her did not correspond to
the entire amount she was legally entitled to.
26
She claimed in her Letter-Complaint that
the payment made to her, the amount of which corresponded to five years of service,
was insufficient to cover her almost eight years of suffering, viz.:
Ipinaglaban ko itong karapatang ito at ito ay aking nakamtan sa papel nga
lamang dahil hindi ito lubos na kapanalunan. Limang taong kabayaran
katumbas ng halos walong (8) taong pagdurusa ko at ng aking pamilya, ito
ba ang tamang katarungan na iginawad sa akin ng City Government of
Makati? Proseso po ba ng inyong pamahalaan ang pagpapapirma ng pilit ng Release
quit claim at waiver (See attached A&B) na pag hindi ka pumirma hindi mo makukuha
ang iyong kabayaran. Kinontra ko iyon sa pagdagdag ng gusto ko (See attached C&C-
1) ngunit walang nangyari. Nagalit sila, matigas daw ang ulo ko di ko raw makukuha
ang nais ko pag di ako sumunod. Pananakot para pumirma lang ako sa waiver (see
attached D &D-1) kasama ba iyon sa Decision ng Korte Suprema? Batas ba iyon ng
Civil Service Commission?

Takot na mamatay sa gutom ang pamilya ko kaya naghihimagsik man ang aking
kalooban sa matinding pagtutol ay napilitan akong pirmahan iyon-kapalit ng tsekeng
nagkakahalaga ng limang daan at limamput libong piso (P550,000.00) lamang para sa
limang (5) taong kabayaran. (See attached E) Ito ang nangyari noong Mayo 5,
2008 sa opisina ng legal ng City Hall ng Makati. Ito po ba ay angkop na HATOL na
inilapat sa akin ng City Government ng Makati? Alam ko hindi ulit
makatarungan ang ginawa nilang ito. Hindi makatarungang pagtanggal sa
trabaho ang ginawa nila sa akin noon naipanalo ko nga ang aking karapatan
ngunit ngayon hindi pa rin makatarungan ang kanilang kabayaran. Hindi
sapat ang limang taong (5) kabayaran sa halos magwawalong (8) taong
walang hanapbuhay, dapat po bang ako ang umatang ng kakulangan?
Nasaan po ba ang tunay na batas?

x x x x

Dahil hindi na ako nagreinstate nagfile ako ng retirement letter effective noong
February 13, 2008, petsa nang matanggap ko ang CSC, Resolution No. 08-0132. Di po
ba isa sa mga benepisyo ko na dapat matanggap ay ang GSIS, PAG-IBIG at yung mga
leave credits ko? May karapatan po ba ako na makuha ko ang kumpletong leave credits
ko simula nang maglingkod ako sa City Government of Makati, hanggang sa petsa ng
reinstatement ko, kahit ako ay nagfile na ng early retirement? Ayon sa legal ng City
Government ng Makati, wala daw po akong karapatan sa benepisyong iyon, lalo na
yong pitong taon (7) at labing isang (11) buwan na di ko pagpasok simula nang
tinanggal nila ako sa trabaho, kasi accumulation daw po iyon, di ko naman pinasukan
kaya di ako dapat bayaran, proseso din daw po iyon ng gobyerno, gaano po katotoo
iyon? Naaangkop po ba iyon sa aking katayuan, sila naman po ang dahilan kung bakit
di ako nagtrabaho, bakit ako ang magdudusa, ayon po ba iyon sa desisyon ng korte?
Bakit inilagay nila yun sa Release quit claim at waiver na pinapirmahan nila sa akin
bilang pagsang-ayon kung iyon ay proseso? Meron bang dapat pangilagan ang City
Government ng Makati kaya nila ako pinapirma ng Release quit claim at waiver nang
sapilitan?

x x x x

Kaya muli po akong maninikluhod upang humingi ng tamang hustisya at
mabigyang linaw ang lahat ng katanungan ko sa kung ano ang tunay na
batas ng Civil Service Commission. Sana po ay mabigyan ng makatarungang
paglapat ng hustisya ang hamak na kawani na katulad ko nang sa ganon ay hindi na
maulit muli, at sana ay mabigyan ng karampatang lunas ang hinaing kong ito at
maimplemento nang tama ang CSC Resolution 08-132 sa lalong madaling panahon.
27

(Emphasis supplied.)

The CSC took cognizance of respondents Letter-Complaint and directed petitioner to
file her comment.
28
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In her Comment,
29
petitioner denied the allegations of respondent for being false and
baseless. She argued that the 2007 Decision of this Court has become final and
executor, and that, under the same, payment of respondents back salaries shall be
limited to five years only. Moreover, respondent had not been forced to sign a Release,
Quitclaim and Waiver, as she executed the same voluntarily. While respondent claimed
that the amount of P550,000 representing five (5)-year back salaries is insufficient,
respondent has not submitted the supposed correct amount that she should receive.
Furthermore, as to her leave credits, respondent had failed to submit the necessary
documents so the city government could start processing the release. Finally, as
regards the GSIS and PAG-IBIG benefits, petitioner contended that respondent has to
personally apply for their release from the said government agencies.
The Ruling of the CSC

The CSC ruled in favor of respondent, and directed petitioner to pay her backwages and
other benefits from the period of her illegal dismissal until her early retirement, or
for a period of seven (7) years, eight (8) months and twenty-eight (28) days.
30
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The CSC, in its Resolution No. 082264,
31
stated that the 5-year limit was inequitable, to
wit:
Although it would appear that the Supreme Court in the aforementioned case
affirmed the ruling of the Court of Appeals, it is worth noting, however, that
there is nothing in the High Courts decision, either in the body or the
dispositive portion, that categorically states that Odena is entitled to back
salaries and other benefits only for a period not exceeding five (5) years. As
such, it is apposite to conclude that Odena is entitled to the payment of her
entire back salaries and other benefits from the date of her illegal dismissal
up to the date of her retirement, as will be explained later. This is precisely why
the Commission, in all its Resolutions promulgated in relation with this case, was
consistent in holding that Odena must be paid her back salaries and other benefits from
the days of her illegal dismissal up to her reinstatement.

x x x x

Admittedly, there are rulings of the Supreme Court where the claims of an illegally
dismissed employee were limited only to five (5) years without conditions and
qualifications. Such rulings, however, were expressly and explicitly abandoned in
subsequent decisions of the High Court.

x x x x

But even if the Supreme Court had implicitly intended, in the case of Binay vs. Odena,
524 SCRA 248 (2007), that Odena is entitled only to five (5) years of back salaries and
other benefits, such will not bar her from claiming payment of the same in full for the
entire period she was out from the service as a result of her illegal dismissal. To limit
the entitlement of Odena to only five (5) years of back salaries and other
benefits will indubitably cause serious injustice to her inasmuch as the
prevailing jurisprudence at the time of promulgation of the Binay case,
supra, is that an illegally dismissed employee who is ordered reinstated by
competent authority is entitled to the payment of his/her illegal dismissal up
to his/her reinstatement. Thus, even if the Supreme Court indeed intended to
limit to only five (5) years the back salaries and other benefits of Odea, and
that said decision had already become final and executory, the same had to
yield to the higher interest of justice. x x x.
32
(Emphases supplied)
The dispositive portion of CSC Resolution No. 082264
33
provides as follows:
WHEREFORE, the incumbent City Mayor of Makati is hereby directed to
recompute the full back salaries and other benefits of Emerita B. Odena
which she is entitled for seven (7) years, eight (8) months, and twenty-eight
(28) days, the entire period she was out of the service as a result of her
illegal dismissal. Said benefits shall include the allowances, 13
th
month pay, bonuses,
cash gifts, all other monetary benefits which other employees of the City Government of
Makati received within the same period, yearly fifteen (15) days sick and fifteen (15)
days vacation leave benefits for the same period including commutation of her entire
accrued leave credits that she earned prior to her illegal dismissal. Should there
appear, upon re-computation of Odeas back salaries and other benefit, an
excess of the amount of P558,944.19 which she already received, said excess
must be immediately paid her.

The City Mayor of Makati is directed to report to the Commission the action he will take
to implement the Resolution, within 15 days from receipt hereof. He is likewise
reminded that his failure to implement the decision of the Commission shall be reason
enough to cite him in indirect contempt of the Commission and shall be the basis for
the filing of administrative and criminal charges against him before the proper forum.
34

(Emphases supplied)
It is clear from the foregoing that the CSC ignored the 5-year limit imposed on
backwages and instead awarded respondent backwages and other benefits equivalent
to a period of more than 7 years, pegged from her illegal dismissal in 2000 until her
early retirement in 2008.

Petitioner moved for reconsideration,
35
but the CSC denied the motion and affirmed CSC
Resolution No. 082264.
36
In Resolution No. 090622,
37
CSC stated that res judicata
invoked by petitioner must give way to the higher interest of justice, to wit:
Notably, the issue on the computation of the back salaries and other benefits to which
Emerita B. Odea is entitled to raised by the City Government of Makati in its motion for
reconsideration were already discussed and passed upon extensively in the Resolution
now being sought to be reconsidered. By sheer necessity, however, be it reiterated and
emphasized that the apparent affirmation by the Supreme Court of the
Decision dated May 14, 2004 of the Court of Appeals must not be employed
as an instrument to thwart and ultimately defeat the lawful claim of Odea
for the payment in full of her back salaries and other benefits after her illegal
dismissal from the service.

Thus, the doctrine of res judicata being invoked by the City Government of Makati must
give way to the higher interest of justice. x x x (Emphasis supplied)
38
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The dispositive portion of CSC Resolution No. 090622,
39
which dismissed petitioners
Motion for Reconsideration, states as follows:
WHEREFORE, the motion for reconsideration of the City Government of Makati is
hereby DENIED for lack of merit. Accordingly, the directive of the Commission stated
in CSC Resolution No. 08-2264 dated December 8, 2008 is REITERATED whether the
incumbent City Mayor of Makati is directed to re-compute the full back salaries
and other benefits which Emerita B. Odea is entitled to for a period of seven
(7) years, eight (8) months and twenty-eight (28) days. x x x. (Emphasis
supplied)
Thereafter, petitioner filed a Rule 43 Petition with the CA
40
and argued that: (1) the
CSC Resolutions were violative of the doctrine of res judicata;
41
and (2) the CSC erred
in including respondents retirement as a ground for her entitlement to full back salaries
and other benefits, more than what was granted by this Court in its 2007 Decision.
42

Petitioner contended that the cause of action of the case is the entitlement of
respondent to back salaries, and therefore, the issues of her retirement and entitlement
to other benefits cannot be assailed.
43
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The Ruling of the CA

The CA dismissed the Rule 43 Petition. The CA regarded the CSC Resolutions, issued in
relation to respondents Letter-Complaint, as orders of execution of the final and
executory 2007 Decision of this Court.
44
Thus, petitioners recourse to a Rule 43 Petition
was unavailing, because orders of execution cannot be the subject of appeal, the
proper remedy being a Rule 65 petition.
45
The CA ruled that:
This notwithstanding, even if such procedural infirmity is to be disregarded, the instant
Petition for Review must still be dismissed for being a wrong mode of remedy.

Section 1(f), Rule 41 of the Revised Rules of Civil Procedure provides that:
Section 1. Subject of appeal. An appeal may be taken from a judgment or final
order that completely disposes of the case, or of a particular matter therein when
declared by these Rules to be appealable.

No appeal may be taken from:

x x x

(f) an order of execution;

x x x

In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate special civil action under Rule 65.
(Emphasis supplied)
It is thus explicit from the above provision that no appeal may be taken from an order
of execution. Instead, such order may be challenged by the aggrieved party by way of a
special civil action for certiorari under Rule 65 of the Rules of Court.

Here, the instant Petition for review assails the CSCs Resolution No. 082264 dated
December 8, 2008 and Resolution No. 090622 dated April 28, 2009 ordering herein
petitioner City of Government Makati to re-compute the full back salaries and benefits
of private respondent from the time of her illegal dismissal up to her retirement. A
cursory reading of the petition, however, reveals that the merits of the illegal dismissal
case has already been adjudged with finality by the Supreme Court in a Decision dated
June 8, 2007. The assailed Resolutions of the CSC arose merely as an incident
of the execution when the CSC modified the judgment award on account of
private respondents complaint wherein she sought to be paid more than
what has been awarded to her by the Supreme Court.

Such being the case, petitioners recourse to a Petition for Review is unavailing. The
filing of a special civil action for certiorari under Rule 65 of the Rules of Court was the
proper remedy questioning an order of execution on the ground of grave abuse of
discretion amounting to lack or excess of jurisdiction. x x x.
46
(Emphasis supplied)
Petitioner moved for reconsideration, but the CA denied the motion and affirmed its
previous ruling.
47
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The Present Petition

On 8 April 2010, petitioner filed before this Court a Motion for Extension of Time to File
Petition for Review on Certiorari (Motion for Extension), praying for an additional period
of thirty (30) days or until 9 May 2010 within which to file a petition for review on
certiorari .
48
On 27 April 2010, We denied the Motion for Extension for failing to state
material dates.
49
Petitioner received notice of the denial only on 9 June 2010, or one
and a half months after its promulgation.
50
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In the meantime, on 7 May 2010, petitioner filed the instant Petition.
51
Thereafter, this
Court required respondent to file a comment,
52
notwithstanding the previous denial of
petitioners Motion for Extension.

In her Comment,
53
respondent argued: (1) the CA did not err in considering the CSC
Resolutions as execution orders; (2) petitioner failed to properly serve its pleadings
upon respondent; (3) respondent is entitled to the moneys awarded her by the CSC;
and (4) the Petition was filed out of time, since petitioners Motion for Extension had
been denied by this Court.

In response, petitioner countered as follows:
54
(1) no motion for execution was ever
filed before the CSC, since petitioner had already complied with this Courts 2007
Decision by paying respondent; (2) petitioner had been serving its pleadings at
respondents last address on record; (3) the issue of respondents benefits had already
been settled with finality; and (4) petitioner was notified of this Courts denial of its
Motion for Extension only on 9 June 2010, many days after the present Petition had
been filed and after this Court had constructively admitted the present Petition by
requiring respondent to file her Comment.
Issues

Based on the submissions of both parties, the following main issues are presented for
resolution by this Court:
1. Whether petitioner undertook an improper remedy when it filed a Rule 43 Petition
with the CA to question the Resolutions issued by the CSC; and

2. Whether respondent, after receiving payment from petitioner, is still entitled to the
additional amount awarded by the CSC.
Respondent raises the following preliminary procedural matters:cralawlibrary

First, she argues that the present Petition was filed out of time, since petitioners Motion
for Extension had been denied, thereby causing the lapse of the original period for filing
the Petition.

We dispose of this argument forthwith. While it is true that the Petition was belatedly
filed, it may still be admitted and allowed by this Court in the exercise of its discretion,
55

as in fact it effectively did when it required respondent to file her Comment.

Second, respondent argued that petitioner improperly sent its Petition to the wrong
address. On the other hand, the latter insisted that it served its Petition at her last
address on record. We note that respondent was able to secure a copy of the Petition
and intelligently respond thereto. Thus, we adopt the principle that rules of procedure
are employed only to help secure and not override substantial justice.
56
If a stringent
application of the rules would hinder rather than serve the demands of substantial
justice, the former must yield to the latter.
57
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The Courts Ruling

We find the instant Petition impressed with merit.

I. Petitioner undertook the correct remedy in assailing the CSC Resolutions
by filing a Rule 43 Petition with the Court of Appeals.

Petitioner insists that its filing of a Rule 43 Petition to assail the CSC Resolutions was
proper, as these supposedly involved a new subject matter and were thus issued
pursuant to CSCs exercise of its quasi-judicial function. They were not merely incidental
to the execution of this Courts 2007 Decision.

We rule that filing a Rule 43 Petition with the CA is the proper remedy to assail the CSC
Resolutions, but not for the reasons advanced by petitioner.

First, the jurisdiction of the CA over petitions for review under Rule 43 is not limited to
judgments and final orders of the CSC, but can extend to appeals from awards,
judgments, final orders or resolutions issued by the latter.
58
Section 1, Rule 43 of the
Rules, provides in part:
Section 1. Scope. This Rule shall apply to appeals from judgments or final orders of
the Court of Tax Appeals and from awards, judgments, final orders or resolutions of
or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
Among these agencies are the Civil Service Commission x x x. (Emphasis supplied.)
In PAGCOR v. Aumentado, Jr.,
59
this Court ruled that it is clear from the above-quoted
provision that the CAs jurisdiction covers not merely final judgments and final orders of
the CSC, but also awards, judgments, final orders or resolutions of the CSC.
60
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Second, although the general rule is that an order of execution is not appealable, the
CA failed to consider that there are exceptions to this rule, as illustrated in this case.

A writ of execution is a direct command of the court to the sheriff to carry out the
mandate of the writ, which is normally the enforcement of a judgment.
61
By analogy,
the CSC Resolutions were orders of execution and were issued in connection with the
implementation of this Courts 2007 Decision.

It is obvious from both the body and the dispositive portions of the CSC Resolutions
that they carried instructions to enforce this Courts 2007 Decision, albeit erroneously
made.

The dispositive portion of CSC Resolution No. 082264,
62
directed petitioner to pay
respondents backwages:
WHEREFORE, the incumbent City Mayor of Makati is hereby directed to
recompute the full back salaries and other benefits of Emerita B. Odea
which she is entitled for seven (7) years, eight (8) months, and twenty-eight
(28) days, the entire period she was out of the service as a result of her
illegal dismissal. Said benefits shall include the allowances, 13
th
month pay, bonuses,
cash gifts, all other monetary benefits which other employees of the City Government of
Makati received within the same period, yearly fifteen (15) days sick and fifteen (15)
days vacation leave benefits for the same period including commutation of her entire
accrued leave credits that she earned prior to her illegal dismissal. Should there appear,
upon re-computation of Odeas back salaries and other benefit, an excess of the
amount of P558,944.19 which she already received, said excess must be immediately
paid her.

The City Mayor of Makati is directed to report to the Commission the action he will take
to implement the Resolution, within 15 days from receipt hereof. He is likewise
reminded that his failure to implement the decision of the Commission shall be reason
enough to cite him in indirect contempt of the Commission and shall be the basis for
the filing of administrative and criminal charges against him before the proper forum.
63

(Emphasis supplied)
The directive addressed to petitioner to recompute the amount of full back salaries and
other benefits is derived from the enforcement of this Courts 2007 Decision.

In a similar vein, the dispositive portion of CSC Resolution No. 090622,
64
which
dismissed petitioners Motion for Reconsideration of the above Resolution, states as
follows:
WHEREFORE, the motion for reconsideration of the City Government of Makati is
hereby DENIED for lack of merit. Accordingly, the directive of the Commission stated
in CSC Resolution No. 08-2264 dated December 8, 2008 is REITERATED where the
incumbent City Mayor of Makati is directed to re-compute the full back salaries and
other benefits of which Emerita B. Odena is entitled to for a period of seven (7) years,
eight (8) months, and twenty-eight (28) days. x x x.
Based on the foregoing, the CA was correct in treating the CSC Resolutions as orders of
execution that were issued in connection with the implementation of this Courts 2007
Decision. The CA, however erred in dismissing petitioners Rule 43 Petition for being
improper.

To recall, the CA ruled that an order of execution is not appealable under Section 1(f),
Rule 41of the Rules of Court.
65
It reasoned that the correct remedy should have been a
special civil action for certiorari under Rule 65.
66
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Section 1(f), Rule 41provides, in pertinent part:
SECTION 1. Subject of Appeal. An appeal may be taken from a judgment or final
order that completely disposes of the case, or of a particular matter therein when
declared by these Rules to be appealable.

No appeal may be taken from:

x x x x

f) An order of execution;chanr0blesvirtualawlibrary

x x x x

In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate special civil action under Rule 65.
(Emphasis supplied)
Indeed, the general rule is that an order of execution is not appealable; otherwise, a
case would never end.
67
The CA, however, failed to consider that there are exceptions
to this rule. This Court in Banaga v. Majaducon
68
enumerated the exceptions as follows:
Even prior to the promulgation of the 1997 Rules of Civil Procedure, the rule that no
appeal lies from an order or writ directing the execution of a final judgment,
for otherwise a case will not attain finality, is not absolute since a party
aggrieved by an improper or irregular execution of a judgment is not without
a remedy. Thus, in Limpin v. Intermediate Appellate Court, the Court enumerated the
exceptional circumstances where a party may elevate the matter of an improper
execution for appeal, to wit:
There may, to be sure, be instances when an error may be committed in the
course of execution proceedings prejudicial to the rights of a party. These
instances, rare though they may be, do call for correction by a superior court,
as where

1) the writ of execution varies the judgment;

2) there has been a change in the situation of the parties making execution
inequitable or unjust;

x x x x

6) it appears that the writ of execution has been improvidently issued, or that it is
defective in substance, or is issued against the wrong party, or that the judgment
debt has been paid or otherwise satisfied, or the writ was issued without
authority;
In these exceptional circumstances, considerations of justice and equity dictate that
there be some mode available to the party aggrieved of elevating the question to a
higher court. That mode of elevation may be either by appeal (writ of error or
certiorari ), or by a special civil action of certiorari , prohibition, or
mandamus.

The aforementioned pronouncement has been reiterated in cases subsequent to t he
adoption of the 1997 Rules of Civil Procedure. The Court finds no sound justification to
abandon the aforequoted pronouncement insofar as it recognizes the filing of an
ordinary appeal as a proper remedy to assail a writ or order issued in connection with
the execution of a final judgment, where a factual review in the manner of execution is
called for to determine whether the challenged writ or order has indeed varied the
tenor of the final judgment.
69
(Emphases supplied)
To rule that a special civil action for certiorari constitutes the sole and exclusive remedy
to assail a writ or order of execution would unduly restrict the remedy available to a
party prejudiced by an improper or illegal execution.
70
It must be borne in mind that the
issue in a special civil action for certiorari is whether the lower court acted without or in
excess of jurisdiction or with grave abuse of discretion.
71
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In the instant case, the appeal of the CSC Resolutions under Rule 43 is proper on two
(2) points: (1) they varied the 2007 Decision and (2) the judgment debt has been paid
or otherwise satisfied.

First, the CSC Resolutions have varied the 2007 Decision, considering that instead of
directing the payment of backwages for a period not exceeding five (5) years, the CSC
ordered petitioner to pay an amount equivalent to almost eight (8) years.

Second, the judgment debt arising from the 2007 Decision has been satisfied as
respondent has already received payment from petitioner the amount of P558,944.19,
representing her back salaries not exceeding five (5) years, as computed by petitioner.

All these circumstances require a factual review of the manner of the execution of the
2007 Decision, which should have prompted the CA to take cognizance of the appeal.
Clearly, these circumstances fall under the above-quoted enumeration of the exceptions
to the general rule that an order of execution is not subject to appeal. Thus, the CA
committed grave error when it denied petitioners appeal for being the wrong remedy.

At this juncture, however, a remand of the case to the CA would serve no useful
purpose, since the core issue hereinmore specifically, whether respondent is entitled
to the money awarded to her by the CSCmay already be resolved using the records of
the proceedings. A remand would unnecessarily burden the parties with the
concomitant difficulties and expenses of another proceeding, in which they would have
to present similar arguments and pieces of evidence.

Thus, we deem it proper to resolve the issue of whether respondent is entitled to the
amount awarded to her by the CSC. We rule in the negative.

II. Respondent is not entitled to the amount awarded to her by the CSC.

We reverse the ruling of the CSC granting respondent additional amounts pertaining to
her back wages equivalent to seven (7) years, eight (8) months and twenty-eight (28)
days, or for the entire period that she was not reinstated; more specifically, from the
time of her illegal dismissal on 15 May 2000 until her early retirement on 13 February
2008, contrary to our 2007 Decision, which limited the said award only to five (5) years.
We reverse based on the following reasons:
1. The Letter-Complaint is a belated attempt to seek the reversal of the 2007 Decision,
which should not have been considered by the CSC in the first place. Thus, the CSC
Resolutions awarding additional amounts arising therefrom are void and ineffectual.

2. The CSC Resolutions are void and ineffectual for varying the tenor of our 2007
Decision.

3. Petitioner had already complied with this Courts 2007 Decision, and its obligation
under the 2007 Decision was extinguished, when it paid respondent the amount of
P558,944.19 representing her backwages, from the time of illegal dismissal up to
reinstatement (in this case, early retirement) for a period not exceeding five (5) years.
The amounts awarded by the CSC exceeding this payment is not justified under this
Courts 2007 Decision.
To recall, the 2007 Decision, in relation to the CA Decision dated 14 May 2004, directed
petitioner to do two things: (1) to reinstate respondent to her former position;
72
and (2)
to pay her back wages to be computed from the time of her illegal dismissal until her
reinstatement to her former position, but not to exceed five (5) years.

The reinstatement portion was rendered moot by respondents early retirement
effective on 13 February 2008.

To comply with the second directive, the amount of P558,944.19 representing the
amount of back wages for a period not exceeding five (5) years, as computed by
petitioner, was paid to respondent.

We rule, however, that the Quitclaim executed by respondent is void and of no effect
and cannot validly foreclose her right to receive amounts pertaining to her early
retirement.

A. The Letter-Complaint is a belated attempt to seek the reversal of this
Courts 2007 Decision, which should not have been considered by the CSC.

The CSC grievously erred in taking cognizance of respondents Letter-Complaint which
was actually a prohibited appeal of the 2007 Decision that by then had long become
final and executory.

It is axiomatic that final and executory judgments can no longer be attacked by any of
the parties or be modified, directly or indirectly, even by the highest court of the
land.
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In the instant case, respondents Letter-Complaint, which is clearly geared towards the
reversal of this Courts 2007 Decision, states as follows:
Ipinaglaban ko itong karapatang ito at ito ay aking nakamtan sa papel nga
lamang dahil hindi ito lubos na kapanalunan. Limang taong kabayaran
katumbas ng halos walong (8) taong pagdurusa ko at ng aking pamilya, ito
ba ang tamang katarungan na iginawad sa akin ng City Government of
Makati? Proseso po ba ng inyong pamahalaan ang pagpapapirma ng pilit ng Release
quit claim at waiver (See attached A&B) na pag hindi ka pumirma hindi mo makukuha
ang iyong kabayaran. Kinontra ko iyon sa pagdagdag ng gusto ko (See attached C&C-
1) ngunit walang nangyari. Nagalit sila, matigas daw ang ulo ko di ko raw makukuha
ang nais ko pag di ako sumunod. Pananakot para pumirma lang ako sa waiver (see
attached D &D-1) kasama ba iyon sa Decision ng Korte Suprema? Batas ba iyon ng
Civil Service Commission?

Takot na mamatay sa gutom ang pamilya ko kaya naghihimagsik man ang aking
kalooban sa matinding pagtutol ay napilitan akong pirmahan iyon- kapalit ng tsekeng
nagkakahalaga ng limang daan at limamput libong piso (P550,000.00) lamang para sa
limang (5) taong kabayaran. (See attached E) Ito ang nangyari noong Mayo 5, 2008
sa opisina ng legal ng City Hall ng Makati. Ito po ba ay angkop na HATOL na
inilapat sa akin ng City Government ng Makati? Alam ko hindi ulit
makatarungan ang ginawa nilang ito. Hindi makatarungang pagtanggal sa
trabaho ang ginawa nila sa akin noon naipanalo ko nga ang aking karapatan
ngunit ngayon hindi pa rin makatarungan ang kanilang kabayaran. Hindi
sapat ang limang taong (5) kabayaran sa halos magwawalong (8) taong
walang hanapbuhay, dapat po bang ako ang umatang ng kakulangan?
Nasaan po ba ang tunay na batas?

x x x x

Kaya muli po akong maninikluhod upang humingi ng tamang hustisya at mabigyang
linaw ang lahat ng katanungan ko sa kung ano ang tunay na batas ng Civil Service
Commission. Sana po ay mabigyan ng makatarungang paglapat ng hustisya ang hamak
na kawani na katulad ko nang sa ganon ay hindi na maulit muli, at sana ay mabigyan
ng karampatang lunas ang hinaing kong ito at maimplemento nang tama ang CSC
Resolution 08-132 sa lalong madaling panahon.
74
(Emphasis supplied.)
It can be gleaned from the above-quoted portion of the Letter-Complaint that
respondent was assailing the award of back wages for a period not exceeding five (5)
years as decreed by this Court in the 2007 Decision. In the said Letter-Complaint,
respondent expresses her dismay at the seemingly insufficient award of back wages,
which were limited to five (5) years vis--vis the period of almost eight (8) years that
she was out of work. The CSC should have realized that it did not have any authority to
entertain any attempt to seek the reversal of the 2007 Decision.

Indeed, while being well-aware that the 2007 Decision had long become final and
executory, and that any such appeal by respondent would be futile and useless, it still
erringly took cognizance of the appeal and worse, modified the 2007 Decision, instead
of dismissing the Letter-Complaint outright.

As the final arbiter of all legal questions properly brought before it, our decision in any
given case constitutes the law of that particular case, from which there is no appeal.
75

The 2007 Decision bars a further repeated consideration of the very same issues that
have already been settled with finality; more particularly, the illegal dismissal of
respondent, as well as the amount of back wages that she was entitled to receive by
reason thereof.

To once again reopen that issue through a different avenue would defeat the existence
of our courts as final arbiters of legal controversies. Having attained finality, the
decision is beyond review or modification even by this Court.
76
Every litigation must
come to an end once a judgment becomes final, executory and unappealable.
77
Just as
a losing party has the right to file an appeal within the prescribed period, the winning
party also has the correlative right to enjoy the finality of the resolution of the latters
case by the execution and satisfaction of the judgment, which is the life of the
law.
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Thus, the CSC gravely erred in taking cognizance of respondents appeal of this Courts
2007 Decision in the guise of a Letter-Complaint. Any proceedings and resolutions
arising therefrom should be rendered nugatory.

B. The CSC Resolutions are void and ineffectual for varying the tenor of the
2007 Decision.

We likewise rule that the CSC Resolutions are void and ineffectual for varying the tenor
of our 2007 Decision. These Resolutions directed petitioner to pay respondents back
salaries for the entire period of seven (7) years, eight (8) months and twenty-eight (28)
days or for the entire period that she had not been reinstated; more specifically, from
the time of her illegal dismissal on 15 May 2000 until her early retirement on 13
February 2008, contrary to our 2007 Decision limiting the said award only to five (5)
years.

It is a fundamental rule that when a final judgment becomes executory, it thereby
becomes immutable and unalterable.
79
It may no longer be modified in any respect,
even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is attempted to be
made by the court rendering it or by this Court.
80
The only recognized exception is the
correction of clerical errors; or the making of so-called nunc pro tunc entries which
cause no prejudice to any party or when the judgment is void.
81
Any amendment or
alteration that substantially affects a final and executory judgment is null and void for
lack of jurisdiction, including the entire proceedings held for that purpose.
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In the instant case, when the CSC directed petitioner to pay respondent an amount
pertaining to her backwages for a period of almost eight (8) years, it erroneously
modified the 2007 Decision of this Court. The CSCs directive cannot be considered as
mere correction of a clerical error either, since it substantially altered the amount of
benefits respondent was entitled to as decreed by this Court.

To recall, an examination of the CA Decision dated 14 May 2004
83
would reveal that it
clearly imposed a five-year limit on the amount of back wages that respondent is
entitled to receive upon her illegal dismissal. The appellate court ruled in this wise:
However, as regards the CSCs order to pay Emerita Odeas salaries from the time of
her separation up to her actual reinstatement, the Court deems it appropriate to
modify the same. It is settled that an illegally terminated civil service employee
is entitled to back salaries limited only to a maximum period of five years,
not full back salaries from her illegal dismissal up to her reinstatement
(Marohombsar vs. Court of Appeals, 326 SCRA 62 [2000]). Hence, considering that
Emerita Odea was dropped from the rolls effective at the close of office hours of May
15, 2000, her back salaries shall be computed from May 16, 2000 up to date of
reinstatement, but not to exceed five (5) years.
84
(Emphases supplied)
The five-year limit was also reflected in the dispositive portion of the CA Decision as
follows:
WHEREFORE, the petition is DISMISSED for lack of merit. CSC Resolution No.
010962 dated May 29, 2001
85
and CSC Resolution No. 021491 dated
November 18, 2002
86
are affirmed, without prejudice to the filing of whatever
appropriate disciplinary case against Emerita Odea, and subject to the modification
that payment of her back salaries shall be computed from date of dismissal up to date
of reinstatement, but in no case to exceed five (5) years.

SO ORDERED. (Emphasis supplied)
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The discussion in the 2007 Decision did not mention any qualification pertaining to the
five-year limit set by the CA on the amount of back wages to be received by
respondent. Likewise, the dispositive portion of the 2007 Decision simply provides as
follows:
WHEREFORE, the instant petition is DISMISSED for lack of merit. The assailed CA
Decision dated May 14, 2004 is hereby AFFIRMED. Costs against petitioners.

SO ORDERED. (Emphasis supplied)
Thus, our 2007 Decision unequivocally affirmed the CA Decision dated 14 May 2004
88

without modification. Since there is no qualification stated in either the body or the
dispositive portion, the ordinary and literal meaning of the word affirm should prevail,
that is, that the CA Decision had been affirmed in its entirety; including the five-year
limit imposed by the appellate court.
89
This Court in Jose Clavano, Inc. v. HLURB
90

reiterated previous rulings wherein We nullified orders that veered away from the
dispositive portion of final judgments:
Clearly, there is nothing in the body much less in the dispositive portion of
the HLURB Decision nor in the pleadings of the parties from where we may
deduce that petitioner must pay for the amounts spent in transferring title to
private respondents. It is well-settled that under these circumstances no
process may be issued to enforce the asserted legal obligation. In De la Cruz
Vda. de Nabong v. Sadang we nullified an order requiring an indemnity bond since the
requirement was not contained in the dispositive part of the final judgment. Similarly in
Supercars, Inc. v. Minister of Labor we set aside the award of backwages for the period
that the writ of execution was unserved since the final and executory decision of the
Minister of Labor merely directed the reinstatement of the laborers to their former
positions. Finally, David v. Court of Appeals affirmed the ruling of the Court of Appeals
mandating the payment of simple legal interest only with nothing said about
compounded interest since the judgment sought to be executed therein ordered the
payment of simple legal interest only and held nothing about payment of compounded
interest. This Court can do no less than follow these precedents in the instant petition.

x x x x

Verily, since the Orders in question are a wide departure from and a material
amplification of the final and at least executory HLURB Decision, they are pro tanto void
and absolutely unenforceable for any purpose. It is well settled that after the decision
has become final and executory, it can no longer be amended or corrected by the court
except for clerical errors or mistakes. In Robles v. Timario we nullified and set aside the
imposition of interest in a subsequent order of the lower court on the ground that the
dispositive part of the judgment absolutely made no mention of any interest on the
amount of the judgment, hence there is no ambiguity to be clarified from the
statements made in the body of the decision x x x We shall do the same in the instant
case. (Emphasis supplied)
We have often ruled that when the dispositive portion of a judgment is clear and
unequivocal, it must be executed strictly according to its tenor.
91
A definitive judgment
is no longer subject to change, revision, amendment or reversal. Upon finality of the
judgment, the Court loses its jurisdiction to amend, modify or alter it.
92
The 2007
Decision had been clear and unambiguous to both parties; otherwise, the parties would
have filed a motion for its clarification, but neither party did in this case. Thus, the
CSCs act of increasing the amount of benefits awarded to respondent was improper. It
did not have any authority to modify, let alone increase the said award which has
already been adjudged with finality.

The CSC has no authority to vary or modify such final and executory judgment. It is
merely obliged with becoming modesty to enforce that judgment and has no jurisdiction
either to modify in any way or to reverse the same.
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C. Petitioner already complied with this Courts 2007 Decision, and its
obligation was extinguished, when it paid respondent the amount of
P558,944.19 representing her backwages for a period not exceeding five (5)
years, as computed by petitioner.

Petitioner insists that it has complied with this Courts 2007 Decision upon its payment
of the amount of P558,944.19 to respondent. We agree.

The rule is fundamental, that after a judgment has been fully satisfied, the case is
deemed terminated once and for all. It cannot be modified or altered.
94
The CSC
gravely erred in modifying a judgment which had in fact already been satisfied even
before respondent filed her Letter-Complaint.

As previously stated, the 2007 Decision, in relation to the CA Decision dated 14 May
2004, directed petitioner to do two things: (1) to reinstate respondent to her former
position;
95
and (2) to pay her back wages to be computed from the time of her illegal
dismissal until her reinstatement to her former position, but not to exceed five (5)
years. We rule that these directives have already been complied with prior to the filing
of the Letter-Complaint.

Moreover, respondents reinstatement was rendered moot by the fact of her early
retirement. Thus, petitioner could no longer carry out the same.

As earlier discussed, it is undisputed that the respondent received from the petitioner
the amount of P558,944.19 as backwages. Thus, upon satisfaction of the judgment, any
subsequent modification thereof ordered by the CSC was rendered useless and futile.

D. The quitclaim executed by respondent is void and of no effect in terms of
foreclosing her rights to receive additional amounts pertaining to her
retirement benefits.

We are aware that respondent has already retired. We emphasize that this Decision, as
well as our 2007 Decision, pertain mainly to her entitlement to back wages due to her
illegal dismissal. We were made aware, however, of a quitclaim that she executed in
favor of petitioner, signed after receiving payment of her back wages, and which
seemingly included a waiver of her rights to her retirement benefits. We deem it
necessary, therefore, to discuss the implications of that quitclaim, with regard not only
to the payment of back wages, but also as to her retirement benefits.

Petitioner argues that the waiver executed by respondent forecloses any right to receive
additional amounts pertaining to her benefits.

We cannot sustain petitioners argument. The waiver made by respondent cannot
repudiate her entitlement to her retirement benefits after having served petitioner for
almost twenty-eight years (28) or beginning 1980.

In our jurisprudence, quitclaims, waivers or releases are looked upon with disfavor.
96
In
Interorient Maritime Enterprises, Inc. v. Remo,
97
this Court elucidated on the following
requirements for a waiver of rights to be valid:
To be valid, a Deed of Release, Waiver and/or Quitclaim must meet the following
requirements: (1) that there was no fraud or deceit on the part of any of the parties;
(2) that the consideration for the quitclaim is credible and reasonable; and (3) that the
contract is not contrary to law, public order, public policy, morals or good customs, or
prejudicial to a third person with a right recognized by law. Courts have stepped in to
invalidate questionable transactions, especially where there is clear proof that a waiver,
for instance, was obtained from an unsuspecting or a gullible person, or where the
agreement or settlement was unconscionable on its face. A quitclaim is ineffective in
barring recovery of the full measure of a worker's rights, and the acceptance of benefits
therefrom does not amount to estoppel. Moreover, a quitclaim in which the
consideration is scandalously low and inequitable cannot be an obstacle to the pursuit
of a worker's legitimate claim.
A reading of the wording of the Release, Waiver and Quitclaim
98
executed by
respondent reveals that the waiver also included her retirement benefits as
follows:
1. In accordance with the Decision of the Supreme Court dated June 08, 2007 in SC
G.R. 163683, I hereby agree to accept payment in the amount of FIVE HUNDRED FIFTY
EIGHT THOUSAND NINE HUNDRED FORTY FOUR AND 19/100 (Php 558,944.19) which
is full and total payment pursuant to the said Decision;chanr0blesvirtualawlibrary

2. It is understood and agreed that with the payment to me of the specified amount,
receipt of which is hereby acknowledged, I hereby release and forever discharge the
City Government of Makati of all its obligations and liabilities pursuant to the said
Decision and in relation to my previous employment to the City Government of
Makati;chanr0blesvirtualawlibrary

3. It is also understood and agreed that the amount paid to me is in full
settlement of my benefits, except for the terminal leave earned during the
period that I rendered actual service to the City Government of Makati as
maybe allowed under the law, and I hereby waive any further action, causes
of actions, demands, damages, or any claim whatsoever against the City
Government of Makati and its officials;

4. Further, I hereby state that I have carefully read and understood the foregoing
release, waiver and quitclaim and have signed the same freely and voluntarily.
(Emphases supplied)
We find that respondents waiver is void and contrary to public policy, insofar as it
included therein her entitlement to retirement benefits.

The waiver states that petitioner was being discharged from its obligations pertaining
not only to the 2007 Decision, but also from those obligations in relation to
respondents previous employment with petitioner. Those obligations in relation to her
previous employment erroneously include within its scope her retirement benefits. This
waiver, therefore, cannot be countenanced, insofar as it included her retirement
benefits.

We rule that the said waiver is void in two respects, more particularly the following: (1)
there was fraud or deceit on the part of petitioner; and (2) the consideration for the
quitclaim was unreasonable.

Obviously, the waiver was merely inveigled from respondent, who had been anxiously
waiting to receive payment of her back wages as decreed by this Court. Petitioner
basically cornered respondent into signing the same by making its execution a pre-
condition before she could receive her back wages.

Similarly, the consideration for the quitclaim is unreasonably low, if we consider that
she was supposed to receive her retirement benefits as well, computed from the time
she started serving petitioner since way back in 1980. The quitclaim basically meant
that the P558,944.19 she received from petitioner as payment of back wages was
likewise in fulfillment of her retirement benefits as well. Needless to state, the quitclaim,
in effect, unduly limited the amount of retirement pay that she was supposed to receive
from petitioner. The waiver is, therefore, without effect insofar as it foreclosed her
entitlement to her retirement benefits. It should not prevent her from receiving her
retirement benefits for her employment.

WHEREFORE, the instant Petition for Review filed by City of Makati is hereby
GRANTED. The Resolutions dated 23 October 2009 and 17 March 2010 of the Court of
Appeals in CA-G.R. SP No. 108983 are REVERSED. The Release, Waiver and Quitclaim
signed by respondent, however, is without force and effect, and should not foreclose
her entitlement to retirement benefits. The City of Makati is hereby likewise directed to
immediately pay the same.

SO ORDERED.









SECOND DIVISION
G.R. No. 168137, August 07, 2013
SECRETARY OF THE DEPARTMENT OF FINANCE, Petitioner, v. COURT OF TAX
APPEALS (SECOND DIVISION) AND KUTANGBATO CONVENTIONAL TRADING
MULTI-PURPOSE COOPERATIVE,
1
Respondents.

R E S O L U T I O N
PERLAS-BERNABE, J.:

Assailed in this petition for certiorari
2
are the Resolutions dated December 21, 2004
3

and April 18, 2005
4
of the Court of Tax Appeals - Second Division (CTA) in C.T.A. Case
No. 7028, granting private respondent Kutangbato Conventional Trading Multi-Purpose
Cooperatives (KCTMPC) Motion to Release Goods Under Bond
5
(motion to release).
The Facts

On the strength of a Warrant of Seizure and Detention issued on January 31, 2003
(seizure warrant) by the Bureau of Customs, 4
th
Collection District, Batangas (BoC), 73
container vans loaded with 29,796 bags of imported rice (subject goods) were seized
and detained for alleged violation of Section 2530
6
of Republic Act No. (RA) 1937,
7

otherwise known as the Tariff and Customs Code of the Philippines (TCCP).
8
The
shipment, which came from Polloc, Cotabato, was destined for Manila on board the
inter-island vessel M/V Nossa Senhora de Fatima and was initially intercepted on
January 30, 2003 in the Batangas Bay area by the combined elements of the Philippine
Coast Guard, Presidential Security Guard, Batangas Customs Police-Enforcement and
Security Service, and Customs Intelligence & Investigation Service. Upon inspection, it
was discovered that the shipment did not have the required import permit and that the
shipment was declared in the Coasting Manifest and Bill of Lading of the vessel as corn
grits, instead of rice, in violation of the TCCP.
9
The seizure was thereafter, docketed as
Batangas Seizure Identification No. 02-03.
10
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On February 7, 2003, KCTMPC, claiming ownership over the foregoing shipment, moved
to intervene in the seizure proceedings and further sought the quashal of the seizure
warrant.
11
In an Order dated March 18, 2003, the BoC granted KCTMPCs motion to
intervene but denied its motion to quash seizure warrant.
12
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The Proceedings Before the BoC and the Department of Finance

After the formal hearing of the case, District Collector of Customs Edward P. Dela
Cuesta (Dela Cuesta), rendered a Decision
13
dated April 4, 2003 in favor of KCTMPC,
ordering the release of the 73 container vans loaded with the subject goods.

Dela Cuesta found that KCTMPC did not transgress Section 2503 of the TCCP since
there was no importation involved but only a transport of local commodities which is
beyond the ambit of the TCCP.
14
This is due to the fact that KCTMPCs importation of
assorted commodities, including the subject goods, from Labuan, Malaysia for the
period of November 10, 2002 to January 26, 2003, had already been cleared under
different Informal Import Declarations and Entry Numbers and that the corresponding
leviable duties and taxes due thereon had likewise been paid.
15
The subject goods had
also been released from the customhouse and hence, had already left the jurisdiction of
the BoC.
16
Dela Cuesta also pointed out that KCTMPC was issued a special
permit/authority by the Regional Secretary of the Department of Trade and Industry,
Cotabato City (DTI) and by the Department of Agriculture, inter alia, to engage in
conventional trading via the Labuan, Malaysia-Singapore-Polloc-Maguindanao trading
route for products like grains. The National Food Authority (NFA) equally granted a
Grains Business License to KCTMPC, allowing it to engage in the retailing, wholesaling,
warehousing, and importing of rice.
17
Considering the foregoing reasons, Dela Cuesta
found no sufficient ground to engender a well-founded belief that the 73 container vans
containing the subject goods are liable for forfeiture and, as such, ordered them to be
released.
18
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As Dela Cuestas ruling was adverse to the government, then BoC Commissioner,
Antonio M. Bernardo, forwarded the case for automatic review to petitioner Secretary of
the Department of Finance (petitioner).
19
In the 4
th
Indorsement
20
dated November 21,
2003 (4
th
Indorsement) of then Undersecretary of Finance, Maria Gracia M. Pulido-Tan
(Pulido-Tan), Dela Cuestas ruling was reversed and the BoC was ordered to determine
the possible violations or applicable customs rules and regulations, and institute such
actions, criminal or otherwise, against the person found to be responsible.
21
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Nonetheless, on January 23, 2004, KCTMPC filed a Motion for Execution,
22
contending
that the Decision of Dela Cuesta had already become final and executory in accordance
with Section 2313
23
of the TCCP, as amended by RA 7651. Pulido-Tan denied the said
motion through a 9
th
Indorsement
24
dated April 1, 2004 (9
th
Indorsement), instructing
the BoC to strictly abide by and comply with the 4
th
Indorsement. Aggrieved, KCTMPC
filed a Petition for Review with Prohibition
25
(petition for prohibition) before the CTA,
docketed as C.T.A. Case No. 7028.
The Proceedings Before the CTA

In its petition for prohibition, KCTMPC contended that the subject goods are not subject
to seizure and forfeiture because the legal requisites for the same are absent and that,
pursuant to Section 1202 of the TCCP, the importation of the rice shipment was already
terminated upon payment of the duties and taxes due thereon.

Meanwhile, pending resolution of its petition, KCTMPC filed a motion to release
26
which
petitioner opposed
27
on the ground that the importation in question demonstrates
badges of smuggling since: (a) KCTMPC had no clear license to undertake the
importation of the subject goods; (b) the subject goods were misdeclared as corn grits;
(c) there is a strong indication that KCTMPC was just being used as a dummy or conduit
for Agro Farm, Las Buenas Farm, and SCC Farm that had also laid claim to the rice
shipment; (d) the subject goods were not imported by KCTMPC itself but by persons
who do not possess any authority or license therefor; and (e) M/V Nossa Senhora de
Fatima curiously deviated from its intended route and attempted to dock at Batangas
Port.
28
Also, citing the case of Geotina v. CTA
29
(Geotina), petitioner argued that the
subject goods should be considered as prohibited under Section 102(k) of the TCCP
and, as such, should not be released pending final determination of KCTMPCs petition
for prohibition.
30
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On December 21, 2004, the CTA issued a Resolution
31
which granted KCTMPCs motion
to release. Petitioners moved for reconsideration which was, however, denied in a
Resolution
32
dated April 18, 2005.

The CTA ruled that petitioners reliance on Geotina was misplaced since the importation
of the articles therein, i.e., apples, were barred under Central Bank Circular (CB
Circular) No. 289 dated February 21, 1970. This is, however, untrue for rice and corn
products which are mere regulated and not prohibited commodities.
33
It further
found that the government agency tasked to supervise the importation of the subject
goods already confirmed its allowance. In addition, the CTA noted that KCTMPC may,
under Section 2301 of the TCCP, secure the release of the subject goods in detention
by the filing of a cash bond.
34
Dissatisfied with the CTAs ruling, petitioner filed the
instant petition for certiorari.

Subsequently, or on August 6, 2008, the CTA rendered a Decision (August 6, 2008
Decision) in C.T.A. Case No. 7028, annulling the 9
th
Indorsement for having been issued
beyond the reglementary period allowed by law. As a result, Dela Cuestas ruling lifting
the seizure warrant had become final and executory. Thereafter, or on August 27,
2008, the CTAs August 6, 2008 Decision had also become final and executory.
35
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The Issue Before the Court

The essential issue in this case is whether or not the CTA committed grave abuse of
discretion when it granted KCTMPCs motion to release.
The Courts Ruling

The petition is denied.

At the outset, it bears to stress that the issues raised in the instant petition have
already been rendered moot and academic by virtue of petitioners own manifestation
that the CTA had already rendered a decision on the main case,
36
of which the matter
on the propriety of the CTAs grant of KCTMPCs motion to release is but an incident.

Records disclose that based on the Entry of Judgment
37
attached to petitioners
Manifestation, the 9
th
Indorsement was annulled by the CTA for having been issued
beyond the reglementary period allowed by law. In effect, Dela Cuestas ruling lifting
the seizure of warrant was declared to be final and executory.
38
More pertinently, the
CTAs August 6, 2008 Decision had also become final and executory last August 27,
2008.
39
Therefore, C.T.A. Case No. 7028, including all of the incidents therein, has been
laid to rest, altogether barring petitioner to contest the same. Consequently, no
practical relief can be granted to petitioner by resolving the instant petition as it only
revolves around the CTAs grant of KCTMPCs motion to release, which, as earlier
mentioned, is but an incident of the main case. In fine, the petition is deemed as
moot.
40
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In any event, the Court finds that the CTA did not gravely abuse its discretion when it
granted KCTMPCs motion to release since there lies cogent legal bases to support its
conclusion that the subject goods were merely regulated and not prohibited
commodities.

Among others, the CTA correctly observed that the Geotina ruling was inapplicable due
to the classification of the goods involved therein. As cited by the CTA, CB Circular No.
1389 dated April 13, 1993 classified imports into three (3) categories, namely: (a)
freely importable commodities or those commodities which are neither regulated nor
prohibited and the importation of which may be effected without any prior approval of
or clearance from any government agency; (b) regulated commodities or those
commodities the importation of which require clearances/permits from appropriate
government agencies; and (c) prohibited commodities or those commodities the
importation of which are not allowed by law.
41
Under Annex 1 of the foregoing circular,
rice and corn are enumerated as regulated commodities, unlike the goods in the
Geotina case, which were, at that time, classified as prohibited commodities.
42

Therefore, owing to this divergence, the CTA properly pronounced that the Geotina
ruling is inapplicable.

It is a standing jurisprudential rule that not every error in the proceedings, or every
erroneous conclusion of law or fact, constitutes grave abuse of discretion.
43
An act of a
court or tribunal can only be considered to be tainted with grave abuse of discretion
when such act is done in a capricious or whimsical exercise of judgment as is equivalent
to lack of jurisdiction.
44
In order to be qualified as grave, the abuse of discretion must
be so patent or gross as to constitute an evasion of a positive duty or a virtual refusal
to perform the duty or to act at all in contemplation of law.
45
Finding that this
characterization does not fit the CTAs exercise of discretion in this case, the Court
holds that no grave abuse of discretion attended its grant of KCTMPCs motion to
release.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.












SECOND DIVISION
G.R. No. 174727, August 12, 2013
ANTIPOLO INING (DECEASED), SURVIVED BY MANUEL VILLANUEVA,
TEODORA VILLANUEVA-FRANCISCO, CAMILO FRANCISCO, ADOLFO
FRANCISCO, LUCIMO FRANCISCO, JR., MILAGROS FRANCISCO,
*
CELEDONIO
FRANCISCO, HERMINIGILDO FRANCISCO; RAMON TRESVALLES, ROBERTO
TAJONERA, NATIVIDAD INING-IBEA (DECEASED) SURVIVED BY EDILBERTO
IBEA, JOSEFA IBEA, MARTHA IBEA, CARMEN IBEA, AMPARO IBEA-
FERNANDEZ, HENRY RUIZ, EUGENIO RUIZ AND PASTOR RUIZ; DOLORES
INING-RIMON (DECEASED) SURVIVED BY JESUS RIMON, CESARIA RIMON
GONZALES AND REMEDIOS RIMON CORDERO; AND PEDRO INING
(DECEASED) SURVIVED BY ELISA TAN INING (WIFE) AND PEDRO INING, JR.,
Petitioners, v. LEONARDO R. VEGA, SUBSTITUTED BY LOURDES VEGA,
RESTONILO I. VEGA, CRISPULO M. VEGA, MILBUENA VEGA-RESTITUTO, AND
LENARD VEGA, Respondents.
D E C I S I O N
DEL CASTILLO, J.:

One who is merely related by affinity to the decedent does not inherit from the latter
and cannot become a co-owner of the decedents property. Consequently, he cannot
effect a repudiation of the co-ownership of the estate that was formed among the
decedents heirs.

Assailed in this Petition for Review on Certiorari
1
are the March 14, 2006 Decision
2
of
the Court of Appeals (CA) in CA-G.R. CV No. 74687 and its September 7, 2006
Resolution
3
denying petitioners Motion for Reconsideration.
4
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Factual Antecedents

Leon Roldan (Leon), married to Rafaela Menez (Rafaela), is the owner of a 3,120-
square meter parcel of land (subject property) in Kalibo, Aklan covered by Original
Certificate of Title No. (24071) RO-630
5
(OCT RO-630). Leon and Rafaela died without
issue. Leon was survived by his siblings Romana Roldan (Romana) and Gregoria Roldan
Ining (Gregoria), who are now both deceased.

Romana was survived by her daughter Anunciacion Vega and grandson, herein
respondent Leonardo R. Vega (Leonardo) (also both deceased). Leonardo in turn is
survived by his wife Lourdes and children Restonilo I. Vega, Crispulo M. Vega, Milbuena
Vega-Restituto and Lenard Vega, the substituted respondents.

Gregoria, on the other hand, was survived by her six children: petitioners Natividad
Ining-Ibea (Natividad), Dolores Ining-Rimon (Dolores), Antipolo, and Pedro; Jose; and
Amando. Natividad is survived by Edilberto Ibea, Josefa Ibea, Martha Ibea, Carmen
Ibea, Amparo Ibea-Fernandez, Henry Ruiz and Pastor Ruiz. Dolores is survived by Jesus
Rimon, Cesaria Rimon Gonzales and Remedios Rimon Cordero. Antipolo is survived by
Manuel Villanueva, daughter Teodora Villanueva-Francisco (Teodora), Camilo Francisco
(Camilo), Adolfo Francisco (Adolfo), Lucimo Francisco, Jr. (Lucimo Jr.), Milagros
Francisco, Celedonio Francisco, and Herminigildo Francisco (Herminigildo). Pedro is
survived by his wife, Elisa Tan Ining and Pedro Ining, Jr. Amando died without issue. As
for Jose, it is not clear from the records if he was made party to the proceedings, or if
he is alive at all.

In short, herein petitioners, except for Ramon Tresvalles (Tresvalles) and Roberto
Tajonera (Tajonera), are Gregorias grandchildren or spouses thereof (Gregorias heirs).

In 1997, acting on the claim that one-half of subject property belonged to him as
Romanas surviving heir, Leonardo filed with the Regional Trial Court (RTC) of Kalibo,
Aklan Civil Case No. 5275
6
for partition, recovery of ownership and possession, with
damages, against Gregorias heirs. In his Amended Complaint,
7
Leonardo alleged that
on several occasions, he demanded the partition of the property but Gregorias heirs
refused to heed his demands; that the matter reached the level of the Lupon
Tagapamayapa, which issued a certification to file a court action sometime in 1980;
that Gregorias heirs claimed sole ownership of the property; that portions of the
property were sold to Tresvalles and Tajonera, which portions must be collated and
included as part of the portion to be awarded to Gregorias heirs; that in 1979, Lucimo
Francisco, Sr. (Lucimo Sr.), husband of herein petitioner Teodora, illegally claimed
absolute ownership of the property and transferred in his name the tax declaration
covering the property; that from 1988, Lucimo Sr. and Teodora have deprived him
(Leonardo) of the fruits of the property estimated at P1,000.00 per year; that as a
result, he incurred expenses by way of attorneys fees and litigation costs. Leonardo
thus prayed that he be declared the owner of half of the subject property; that the
same be partitioned after collation and determination of the portion to which he is
entitled; that Gregorias heirs be ordered to execute the necessary documents or
agreements; and that he (Leonardo) be awarded actual damages in the amount of
P1,000.00 per year from 1988, attorneys fees of P50,000.00, and lawyers appearance
fees of P500.00 per hearing.

In their Answer
8
with counterclaim, Teodora, Camilo, Adolfo, Lucimo Jr. and
Herminigildo claimed that Leonardo had no cause of action against them; that they
have become the sole owners of the subject property through Lucimo Sr. who acquired
the same in good faith by sale from Juan Enriquez (Enriquez), who in turn acquired the
same from Leon, and Leonardo was aware of this fact; that they were in continuous,
actual, adverse, notorious and exclusive possession of the property with a just title; that
they have been paying the taxes on the property; that Leonardos claim is barred by
estoppel and laches; and that they have suffered damages and were forced to litigate
as a result of Leonardos malicious suit. They prayed that Civil Case No. 5275 be
dismissed; that Leonardo be declared to be without any right to the property; that
Leonardo be ordered to surrender the certificate of title to the property; and that they
be awarded P20,000.00 as moral damages, P10,000.00 as temperate and nominal
damages, P20,000.00 as attorneys fees, and double costs.

The other Gregoria heirs, as well as Tresvalles and Tajonera were declared in
default.
9
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As agreed during pre-trial, the trial court commissioned Geodetic Engineer Rafael M.
Escabarte to identify the metes and bounds of the property.
10
The resulting
Commissioners Report and Sketch,
11
as well as the Supplementary Commissioners
Report,
12
were duly approved by the parties. The parties then submitted the following
issues for resolution of the trial court:
1. Whether Leonardo is entitled to a share in Leons
estate;chanr0blesvirtualawlibrary
2. Whether Leon sold the subject property to Lucimo Sr.; and
3. Whether Leonardos claim has prescribed, or that he is barred by estoppel or
laches.
13
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In the meantime, Leonardo passed away and was duly substituted by his heirs, the
respondents herein.
14
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During the course of the proceedings, the following additional relevant facts came to
light:cralawlibrary

1. In 1995, Leonardo filed against petitioners Civil Case No. 4983 for partition with the
RTC Kalibo, but the case was dismissed and referred to the Kalibo Municipal Trial Court
(MTC), where the case was docketed as Civil Case No. 1366. However, on March 4,
1997, the MTC dismissed Civil Case No. 1366 for lack of jurisdiction and declared that
only the RTC can take cognizance of the partition case;
15
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2. The property was allegedly sold by Leon to Enriquez through an unnotarized
document dated April 4, 1943.
16
Enriquez in turn allegedly sold the property to Lucimo
Sr. on November 25, 1943 via another private sale document;
17
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3. Petitioners were in sole possession of the property for more than 30 years, while
Leonardo acquired custody of OCT RO-630;
18
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4. On February 9, 1979, Lucimo Sr. executed an Affidavit of Ownership of Land
19

claiming sole ownership of the property which he utilized to secure in his name Tax
Declaration No. 16414 (TD 16414) over the property and to cancel Tax Declaration No.
20102 in Leons name;
20
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5. Lucimo Sr. died in 1991; and

6. The property was partitioned among the petitioners, to the exclusion of
Leonardo.
21
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Ruling of the Regional Trial Court

On November 19, 2001, the trial court rendered a Decision,
22
which decreed as follows:
WHEREFORE, premises considered, judgment is hereby rendered:cralawlibrary

Dismissing the complaint on the ground that plaintiffs right of action has long
prescribed under Article 1141 of the New Civil Code;chanr0blesvirtualawlibrary

Declaring Lot 1786 covered by OCT No. RO-630 (24071) to be the common property of
the heirs of Gregoria Roldan Ining and by virtue whereof, OCT No. RO-630 (24071) is
ordered cancelled and the Register of Deeds of the Province of Aklan is directed to issue
a transfer certificate of title to the heirs of Natividad Ining, one-fourth (1/4) share;
Heirs of Dolores Ining, one-fourth (1/4) share; Heirs of Antipolo Ining, one-fourth (1/4)
share; and Heirs of Pedro Ining, one-fourth (1/4) share.

For lack of sufficient evidence, the counterclaim is ordered dismissed.

With cost against the plaintiffs.

SO ORDERED.
23
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The trial court found the April 4, 1943 and November 25, 1943 deeds of sale to be
spurious. It concluded that Leon never sold the property to Enriquez, and in turn,
Enriquez never sold the property to Lucimo Sr., hence, the subject property remained
part of Leons estate at the time of his death in 1962. Leons siblings, Romana and
Gregoria, thus inherited the subject property in equal shares. Leonardo and the
respondents are entitled to Romanas share as the latters successors.

However, the trial court held that Leonardo had only 30 years from Leons death in
1962 or up to 1992 within which to file the partition case. Since Leonardo instituted
the partition suit only in 1997, the same was already barred by prescription. It held that
under Article 1141 of the Civil Code,
24
an action for partition and recovery of ownership
and possession of a parcel of land is a real action over immovable property which
prescribes in 30 years. In addition, the trial court held that for his long inaction,
Leonardo was guilty of laches as well. Consequently, the property should go to
Gregorias heirs exclusively.

Respondents moved for reconsideration
25
but the same was denied by the RTC in its
February 7, 2002 Order.
26
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Ruling of the Court of Appeals

Only respondents interposed an appeal with the CA. Docketed as CA-G.R. CV No.
74687, the appeal questioned the propriety of the trial courts dismissal of Civil Case
No. 5275, its application of Article 1141, and the award of the property to Gregorias
heirs exclusively.

On March 14, 2006, the CA issued the questioned Decision,
27
which contained the
following decretal portion:
IN LIGHT OF ALL THE FOREGOING, this appeal is GRANTED. The decision of the
Regional Trial Court, Br. 8, Kalibo, Aklan in Civil Case No. 5275 is REVERSED and SET
ASIDE. In lieu thereof, judgment is rendered as follows:cralawlibrary

1. Declaring 1/2 portion of Lot 1786 as the share of the plaintiffs as successors-in-
interest of Romana Roldan;chanr0blesvirtualawlibrary

2. Declaring 1/2 portion of Lot 1786 as the share of the defendants as successors-in-
interest of Gregoria Roldan Ining;chanr0blesvirtualawlibrary

3. Ordering the defendants to deliver the possession of the portion described in
paragraphs 8 and 9 of the Commissioners Report (Supplementary) to the herein
plaintiffs;chanr0blesvirtualawlibrary

4. Ordering the cancellation of OCT No. RO-630 (24071) in the name of Leon Roldan
and the Register of Deeds of Aklan is directed to issue transfer certificates of title to the
plaintiffs in accordance with paragraphs 8 and 9 of the sketch plan as embodied in the
Commissioners Report (Supplementary) and the remaining portion thereof be adjudged
to the defendants.

Other claims and counterclaims are dismissed.

Costs against the defendants-appellees.

SO ORDERED.
28
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The CA held that the trial courts declaration of nullity of the April 4, 1943 and
November 25, 1943 deeds of sale in favor of Enriquez and Lucimo Sr., respectively,
became final and was settled by petitioners failure to appeal the same. Proceeding
from the premise that no valid prior disposition of the property was made by its owner
Leon and that the property which remained part of his estate at the time of his death
passed on by succession to his two siblings, Romana and Gregoria, which thus makes
the parties herein who are Romanas and Gregorias heirs co-owners of the property
in equal shares, the appellate court held that only the issues of prescription and laches
were needed to be resolved.

The CA did not agree with the trial courts pronouncement that Leonardos action for
partition was barred by prescription. The CA declared that prescription began to run not
from Leons death in 1962, but from Lucimo Sr.s execution of the Affidavit of
Ownership of Land in 1979, which amounted to a repudiation of his co-ownership of the
property with Leonardo. Applying the fifth paragraph of Article 494 of the Civil Code,
which provides that [n]o prescription shall run in favor of a co-owner or co-heir against
his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-
ownership, the CA held that it was only when Lucimo Sr. executed the Affidavit of
Ownership of Land in 1979 and obtained a new tax declaration over the property (TD
16414) solely in his name that a repudiation of his co-ownership with Leonardo was
made, which repudiation effectively commenced the running of the 30-year prescriptive
period under Article 1141.

The CA did not consider Lucimo Sr.s sole possession of the property for more than 30
years to the exclusion of Leonardo and the respondents as a valid repudiation of the co-
ownership either, stating that his exclusive possession of the property and appropriation
of its fruits even his continuous payment of the taxes thereon while adverse as
against strangers, may not be deemed so as against Leonardo in the absence of clear
and conclusive evidence to the effect that the latter was ousted or deprived of his rights
as co-owner with the intention of assuming exclusive ownership over the property, and
absent a showing that this was effectively made known to Leonardo. Citing Bargayo v.
Camumot
29
and Segura v. Segura,
30
the appellate court held that as a rule, possession
by a co-owner will not be presumed to be adverse to the other co-owners but will be
held to benefit all, and that a co-owner or co-heir is in possession of an inheritance pro-
indiviso for himself and in representation of his co-owners or co-heirs if he administers
or takes care of the rest thereof with the obligation to deliver the same to his co-
owners or co-heirs, as is the case of a depositary, lessee or trustee.

The CA added that the payment of taxes by Lucimo Sr. and the issuance of a new tax
declaration in his name do not prove ownership; they merely indicate a claim of
ownership. Moreover, petitioners act of partitioning the property among themselves to
the exclusion of Leonardo cannot affect the latter; nor may it be considered a
repudiation of the co-ownership as it has not been shown that the partition was made
known to Leonardo.

The CA held further that the principle of laches cannot apply as against Leonardo and
the respondents. It held that laches is controlled by equitable considerations and it
cannot be used to defeat justice or to perpetuate fraud; it cannot be utilized to deprive
the respondents of their rightful inheritance.

On the basis of the above pronouncements, the CA granted respondents prayer for
partition, directing that the manner of partitioning the property shall be governed by
the Commissioners Report and Sketch and the Supplementary Commissioners Report
which the parties did not contest.

Petitioners filed their Motion for Reconsideration
31
which the CA denied in its assailed
September 7, 2006 Resolution.
32
Hence, the present Petition.
Issues

Petitioners raise the following arguments:
I

THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING
THE DECISION OF THE TRIAL COURT ON THE GROUND THAT LUCIMO FRANCISCO
REPUDIATED THE CO-OWNERSHIP ONLY ON FEBRUARY 9, 1979.
II

THE APPELLATE COURT ERRED IN NOT UPHOLDING THE DECISION OF THE TRIAL
COURT DISMISSING THE COMPLAINT ON THE GROUND OF PRESCRIPTION AND
LACHES.
33

Petitioners Arguments

Petitioners insist in their Petition and Reply
34
that Lucimo Sr.s purchase of the property
in 1943 and his possession thereof amounted to a repudiation of the co-ownership, and
that Leonardos admission and acknowledgment of Lucimo Sr.s possession for such
length of time operated to bestow upon petitioners as Lucimo Sr.s successors-in-
interest the benefits of acquisitive prescription which proceeded from the repudiation.

Petitioners contend that Leonardos inaction from Lucimo Sr.s taking possession in
1943, up to 1995, when Leonardo filed Civil Case No. 4983 for partition with the RTC
Kalibo amounted to laches or neglect. They add that during the proceedings before
the Lupon Tagapamayapa in 1980, Leonardo was informed of Lucimo Sr.s purchase of
the property in 1943; this notwithstanding, Leonardo did not take action then against
Lucimo Sr. and did so only in 1995, when he filed Civil Case No. 4983 which was
eventually dismissed and referred to the MTC. They argue that, all this time, Leonardo
did nothing while Lucimo Sr. occupied the property and claimed all its fruits for himself.

Respondents Arguments

Respondents, on the other hand, argue in their Comment
35
that
For purposes of clarity, if [sic] is respectfully submitted that eighteen (18) legible copies
has [sic] not been filed in this case for consideration in banc [sic] and nine (9) copies in
cases heard before a division in that [sic] all copies of pleadings served to the offices
concern [sic] where said order [sic] was issued were not furnished two (2) copies each
in violation to [sic] the adverse parties [sic] to the clerk of court, Regional Trial Court,
Branch 8, Kalibo, Aklan, Philippines; to the Honorable Court of Appeals so that No [sic]
action shall be taken on such pleadings, briefs, memoranda, motions, and other papers
as fail [sic] to comply with the requisites set out in this paragraph.

The foregoing is confirmed by affidavit of MERIDON F. OLANDESCA, the law secretary
of the Petitioner [sic] who sent [sic] by Registered mail to Court of Appeals, Twentieth
Division, Cebu City; to Counsel for Respondent [sic] and to the Clerk of Court Supreme
Court Manila [sic].

These will show that Petitioner has [sic] violated all the requirements of furnishing two
(2) copies each concerned party [sic] under the Rule of Courts [sic].
36
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library
Our Ruling

The Court denies the Petition.

The finding that Leon did not sell the property to Lucimo Sr. had long been settled and
had become final for failure of petitioners to appeal. Thus, the property remained part
of Leons estate.

One issue submitted for resolution by the parties to the trial court is whether Leon sold
the property to Lucimo Sr. The trial court, examining the two deeds of sale executed in
favor of Enriquez and Lucimo Sr., found them to be spurious. It then concluded that no
such sale from Leon to Lucimo Sr. ever took place. Despite this finding, petitioners did
not appeal. Consequently, any doubts regarding this matter should be considered
settled. Thus, petitioners insistence on Lucimo Sr.s 1943 purchase of the property to
reinforce their claim over the property must be ignored. Since no transfer from Leon to
Lucimo Sr. took place, the subject property clearly remained part of Leons estate upon
his passing in 1962.

Leon died without issue; his heirs are his siblings Romana and Gregoria.

Since Leon died without issue, his heirs are his siblings, Romana and Gregoria, who
thus inherited the property in equal shares. In turn, Romanas and Gregorias heirs
the parties herein became entitled to the property upon the sisters passing. Under
Article 777 of the Civil Code, the rights to the succession are transmitted from the
moment of death.

Gregorias and Romanas heirs are co-owners of the subject property.

Thus, having succeeded to the property as heirs of Gregoria and Romana, petitioners
and respondents became co-owners thereof. As co-owners, they may use the property
owned in common, provided they do so in accordance with the purpose for which it is
intended and in such a way as not to injure the interest of the co-ownership or prevent
the other co-owners from using it according to their rights.
37
They have the full
ownership of their parts and of the fruits and benefits pertaining thereto, and may
alienate, assign or mortgage them, and even substitute another person in their
enjoyment, except when personal rights are involved.
38
Each co-owner may demand at
any time the partition of the thing owned in common, insofar as his share is
concerned.
39
Finally, no prescription shall run in favor of one of the co-heirs against the
others so long as he expressly or impliedly recognizes the co-ownership.
40
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virtualaw library

For prescription to set in, the repudiation must be done by a co-owner.

Time and again, it has been held that a co-owner cannot acquire by prescription the
share of the other co-owners, absent any clear repudiation of the co-ownership. In
order that the title may prescribe in favor of a co-owner, the following requisites must
concur: (1) the co-owner has performed unequivocal acts of repudiation amounting to
an ouster of the other co-owners; (2) such positive acts of repudiation have been made
known to the other co-owners; and (3) the evidence thereof is clear and
convincing.
41
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From the foregoing pronouncements, it is clear that the trial court erred in reckoning
the prescriptive period within which Leonardo may seek partition from the death of
Leon in 1962. Article 1141 and Article 494 (fifth paragraph) provide that prescription
shall begin to run in favor of a co-owner and against the other co-owners only from the
time he positively renounces the co-ownership and makes known his repudiation to the
other co-owners.

Lucimo Sr. challenged Leonardos co-ownership of the property only sometime in 1979
and 1980, when the former executed the Affidavit of Ownership of Land, obtained a
new tax declaration exclusively in his name, and informed the latter before the Lupon
Tagapamayapa of his 1943 purchase of the property. These apparent acts of
repudiation were followed later on by Lucimo Sr.s act of withholding Leonardos share
in the fruits of the property, beginning in 1988, as Leonardo himself claims in his
Amended Complaint. Considering these facts, the CA held that prescription began to
run against Leonardo only in 1979 or even in 1980 when it has been made
sufficiently clear to him that Lucimo Sr. has renounced the co-ownership and has
claimed sole ownership over the property. The CA thus concluded that the filing of Civil
Case No. 5275 in 1997, or just under 20 years counted from 1979, is clearly within the
period prescribed under Article 1141.

What escaped the trial and appellate courts notice, however, is that while it may be
argued that Lucimo Sr. performed acts that may be characterized as a repudiation of
the co-ownership, the fact is, he is not a co-owner of the property. Indeed, he is not an
heir of Gregoria; he is merely Antipolos son-in-law, being married to Antipolos
daughter Teodora.
42
Under the Family Code, family relations, which is the primary basis
for succession, exclude relations by affinity.
Art. 150. Family relations include those:cralawlibrary

(1) Between husband and wife;chanr0blesvirtualawlibrary

(2) Between parents and children;chanr0blesvirtualawlibrary

(3) Among other ascendants and descendants; and

(4) Among brothers and sisters, whether of the full or half blood.
In point of law, therefore, Lucimo Sr. is not a co-owner of the property; Teodora is.
Consequently, he cannot validly effect a repudiation of the co-ownership, which he was
never part of. For this reason, prescription did not run adversely against Leonardo, and
his right to seek a partition of the property has not been lost.

Likewise, petitioners argument that Leonardos admission and acknowledgment in his
pleadings that Lucimo Sr. was in possession of the property since 1943 should be
taken against him, is unavailing. In 1943, Leon remained the rightful owner of the land,
and Lucimo Sr. knew this very well, being married to Teodora, daughter of Antipolo, a
nephew of Leon. More significantly, the property, which is registered under the Torrens
system and covered by OCT RO-630, is in Leons name. Leons ownership ceased only
in 1962, upon his death when the property passed on to his heirs by operation of law.

In fine, since none of the co-owners made a valid repudiation of the existing co-
ownership, Leonardo could seek partition of the property at any time.

WHEREFORE, the Petition is DENIED. The assailed March 14, 2006 Decision and the
September 7, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 74687are
AFFIRMED.

SO ORDERED.






SECOND DIVISION
G.R. No. 207412, August 07, 2013
FLORD NICSON CALAWAG, Petitioner, v. UNIVERSITY OF THE PHILIPPINES
VISAYAS AND DEAN CARLOS C. BAYLON, Respondents.
G.R. No. 207542

MICAH P. ESPIA, JOSE MARIE F. NASALGA AND CHE CHE B. SALCEPUEDES,
Petitioners, v. DR. CARLOS C. BA YLON, DR. MINDA J. FORMACI ON AND DR.
EMERLINDA ROMAN (TO BE SUBSTITUTED BY ALFREDO E. PASCUAL, BEING
THE NEW UP PRESIDENT), UNIVERSITY OF THE PHILIPPINES BOARD OF
REGENTS, Respondents.
RESOLUTION
BRION, J.:

This case involves the consolidated petitions of petitioner Flord Nicson Calawag in G.R.
No. 207412 and petitioners Micah P. Espia, Jose Marie F. Nasalga and Che Che B.
Salcepuedes in G.R. No. 207542 (hereinafter collectively known as petitioners), both
assailing the decision
1
dated August 9, 2012 of the Court of Appeals (CA) in CA-G.R.
CEB-SP No. 05079. The CA annulled the Order
2
of the Regional Trial Court (RTC) of
Guimbal, Iloilo, Branch 67, granting a writ of preliminary mandatory injunction against
respondent Dean Carlos Baylon of the University of the Philippines Visayas (UP Visayas).

The petitioners enrolled in the Master of Science in Fisheries Biology at UP Visayas
under a scholarship from the Department of Science and Technology-Philippine Council
for Aquatic and Marine Research and Development. They finished their first year of
study with good grades, and thus were eligible to start their thesis in the first semester
of their second year. The petitioners then enrolled in the thesis program, drafted their
tentative thesis titles, and obtained the consent of Dr. Rex Balea to be their thesis
adviser, as well as the other faculty members consent to constitute their respective
thesis committees. These details were enclosed in the letters the petitioners sent to
Dean Baylon, asking him to approve the composition of their thesis committees. The
letter contained the thesis committee members and the thesis advisers approval of
their titles, as well as the approval of Professor Roman Sanares, the director of the
Institute of Marine Fisheries and Oceanology.

Upon receipt of the petitioners letters, Dean Baylon wrote a series of memos addressed
to Professor Sanares, questioning the propriety of the thesis topics with the colleges
graduate degree program. He subsequently disapproved the composition of the
petitioners thesis committees and their tentative thesis topics. According to Dean
Baylon, the petitioners thesis titles connote a historical and social dimension study
which is not appropriate for the petitioners chosen masters degrees. Dean Baylon
thereafter ordered the petitioners to submit a two-page proposal containing an outline
of their tentative thesis titles, and informed them that he is forming an ad hoc
committee that would take over the role of the adviser and of the thesis committees.

The petitioners thus filed a petition for certiorari and mandamus before the RTC, asking
it to order Dean Baylon to approve and constitute the petitioners thesis committees and
approve their thesis titles. They also asked that the RTC issue a writ of preliminary
mandatory injunction against Dean Baylon, and order him to perform such acts while
the suit was pending.

The RTC granted a writ of preliminary mandatory injunction, which Dean Baylon
allegedly refused to follow. UP Visayas eventually assailed this order before the CA
through a Rule 65 petition for certiorari, with prayer for a temporary restraining order
(TRO).
The CAs Ruling

The CA issued a TRO against the implementation of the RTCs order, holding that the
petitioners had no clear right to compel Dean Baylon to approve the composition of
their thesis committees as a matter of course. As the college dean, Dean Baylon
exercises supervisory authority in all academic matters affecting the college. According
to the CA, the petitioners reliance on Article 51 of the Graduate Program Manual of UP
Visayas is misplaced. Article 51 provides:
Art. 51. The composition of the thesis committee shall be approved by the dean of the
college/school upon the recommendation of the chairperson of the major
department/division/institute. The GPO shall be informed of the composition of the
thesis committee and/or any change thereof.
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Despite the mandatory language provided for composing the thesis committee under
Article 51 of the Graduate Program Manual of UP Visayas, the CA construed it to mean
that the Deans approval is necessary prior to the composition of a thesis committee.

Lastly, the CA held that the case presents issues that are purely academic in character,
which are outside the courts jurisdiction. It also noted that Dean Baylon has been
accommodating of the petitioners, and that the requirements he imposed were meant
to assist them to formulate a proper thesis title and graduate on time.
The Petitions for Review on Certiorari

In G.R. No. 207412, Calawag argues that the CAs decision should be set aside for the
following reasons:cralawlibrary

First, Calawag was entitled to the injunction prayed for, as he has clear rights under
the law which were violated by Dean Baylons actions. These are the right to education,
the right to due process, and the right to equal protection under the law. According to
Calawag, Dean Baylon violated his right to due process when he added to and changed
the requirements for the constitution of his thesis committee, without prior publication
of the change in rules. Calawags right to equal protection of the law, on the other
hand, was allegedly violated because only students like him, who chose Dr. Balea for
their thesis adviser, were subjected to the additional requirements imposed by the
dean, while the other students thesis committees were formed without these
impositions. Hence, Calawag and the three other petitioners in G.R. No. 207542 were
unduly discriminated against.

Second, a reading of Executive Order No. 628, s. 1980,
4
and Republic Act No. 9500
5

shows that the college deans functions are merely administrative, and, hence, the CA
erred in its construction of Article 51 of the Graduate Program Manual of UP Visayas, as
well as its proclamation that the college dean has supervisory authority over academic
matters in the college.

On the other hand, in G.R. No. 207542, petitioners Espia, Nasalga and Salcepuedes
argue that the CAs decision should be set aside for the following reasons:cralawlibrary

First, the Graduate Program Manual of UP Visayas and the Guidelines for the Master of
Science in Fisheries Program are clear in providing that Dean Baylon has a formal duty
to approve the composition of the petitioners thesis committees upon the latters
compliance with several requirements. Thus, when the petitioners complied with these
requirements and Dean Baylon still refused to approve the composition of their thesis
committees, the petitioners had a right to have him compelled to perform his duty.

Second, Dean Baylon cannot arbitrarily change and alter the manual and the
guidelines, and cannot use academic freedom as subterfuge for not performing his
duties.

Third, the thesis adviser and the thesis committees, in consultations with the students,
have the right to choose the thesis topics, and not the dean.

The Courts Ruling

Having reviewed the arguments presented by the petitioners and the records they have
attached to the petitions, we find that the CA did not commit an error in judgment in
setting aside the preliminary mandatory injunction that the RTC issued against Dean
Baylon. Thus, there could be no basis for the Courts exercise of its discretionary power
to review the CAs decision.

To be entitled to a writ of preliminary injunction, x x x the petitioners must establish
the following requisites: (a) the invasion of the right sought to be protected is material
and substantial; (b) the right of the complainant is clear and unmistakable; and (c)
there is an urgent and permanent necessity for the writ to prevent serious damage.
Since a preliminary mandatory injunction commands the performance of an act, it does
not preserve the status quo and is thus more cautiously regarded than a mere
prohibitive injunction. Accordingly, the issuance of a writ of preliminary mandatory
injunction [presents a fourth requirement: it] is justified only in a clear case, free from
doubt or dispute. When the complainants right is thus doubtful or disputed, he does
not have a clear legal right and, therefore, the issuance of injunctive relief is
improper.
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The CA did not err in ruling that the petitioners failed to show a clear and unmistakable
right that needs the protection of a preliminary mandatory injunction. We support the
CAs conclusion that the dean has the discretion to approve or disapprove the
composition of a thesis committee, and, hence, the petitioners had no right for an
automatic approval and composition of their thesis committees.

Calawags citation of Executive Order No. 628, s. 1980 and Republic Act No. 9500 to
show that the dean of a college exercises only administrative functions and, hence, has
no ascendancy over the colleges academic matters, has no legal ground to stand on.
Neither law provides or supports such conclusion, as neither specifies the role and
responsibilities of a college dean. The functions and duties of a college dean are
outlined in the universitys Faculty Manual, which details the rules and regulations
governing the universitys administration. Section 11.8.2, paragraph b of the Faculty
Manual enumerates the powers and responsibilities of a college dean, which include the
power to approve the composition of a thesis committee, to wit:
11.8.2 Administration

x x x x

b. Dean/Director of UP System or UP Diliman-based Programs * The Dean/Director shall
be responsible for the planning and

implementation of the graduate programs. In particular, the Dean/Director shall
exercise the following powers and responsibilities based on the recommendations
forwarded to him/her, through channels:cralawlibrary

x x x x
Approve the composition of the Thesis, Dissertation or Special
Project** Committees and Masters or doctoral examination/oral defense
panel for each student[.]
7
(emphases and italics ours)
By necessary implication,
8
the deans power to approve includes the power to
disapprove the composition of a thesis committee. Thus, under the UP Systems faculty
manual, the dean has complete discretion in approving or disapproving the composition
of a thesis committee. Harmonizing this provision with the Graduate Program Manual of
UP Visayas, and the Guidelines for the Master of Science in Fisheries Program, we agree
with the CAs interpretation that the thesis committees composition needs the approval
of the dean after the students have complied with the requisites provided in Article 51
of the Graduate Program Manual and Section IX of the Guidelines for the Master of
Science in Fisheries Program.
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Anent the petitioners argument that Dean Baylon acted arbitrarily in imposing
additional requirements for the composition of the thesis committee, which according to
Calawag violated their right to due process, we hold that the deans authority to
approve or disapprove the composition of a thesis committee includes this discretion.
We also note the CAs finding that these additional requirements were meant to assist
the petitioners in formulating a thesis title that is in line with the colleges master of
fisheries program. Absent any finding of grave abuse of discretion, we cannot interfere
with the exercise of the deans prerogative without encroaching on the colleges
academic freedom.

Verily, the academic freedom accorded to institutions of higher learning gives them the
right to decide for themselves their aims and objectives and how best to attain them.
10

They are given the exclusive discretion to determine who can and cannot study in
them, as well as to whom they can confer the honor and distinction of being their
graduates.
11
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This necessarily includes the prerogative to establish requirements for graduation, such
as the completion of a thesis, and the manner by which this shall be accomplished by
their students. The courts may not interfere with their exercise of discretion unless
there is a clear showing that they have arbitrarily and capriciously exercised their
judgment.
12
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Lastly, the right to education invoked by Calawag cannot be made the basis for issuing
a writ of preliminary mandatory injunction. In Department of Education, Culture and
Sports v. San Diego,
13
we held that the right to education is not absolute. Section 5(e),
Article XIV of the Constitution provides that "[e]very citizen has a right to select a
profession or course of study, subject to fair, reasonable, and equitable admission and
academic requirements. The thesis requirement and the compliance with the
procedures leading to it, are part of the reasonable academic requirements a person
desiring to complete a course of study would have to comply with.

WHEREFORE, the Court resolves to DENY giving due course to the petitions in G.R.
No. 207412 and G.R. No. 207542.

SO ORDERED.










IRST DIVISION
G.R. No. 199890, August 19, 2013
JEROME M. DAABAY, Petitioner, v. COCA-COLA BOTTLERS PHILS., INC.,
Respondent.
DECISION
REYES, J.:

This resolves petitioner Jerome M. Daabays (Daabay) Verified Petition for Review
1
,
which assails the Decision
2
dated June 24, 2011 and Resolution
3
dated December 9,
2011 of the Court of Appeals (CA) in CA-G.R. SP No. 03369-MIN.

The case stems from a complaint for illegal dismissal, illegal suspension, unfair labor
practice and monetary claims filed by Daabay against respondent Coca-Cola Bottlers
Phils., Inc. (Coca-Cola) and three officers of the company.
4
The records indicate that
the employment of Daabay with Coca-Cola as Sales Logistics Checker was terminated
by the company in June 2005,
5
following receipt of information from one Cesar Sorin
(Sorin) that Daabay was part of a conspiracy that allowed the pilferage of company
property.
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The allegations of Sorin were embodied in an affidavit which he executed on April 16,
2005.
7
The losses to the company were also confirmed by an inventory and audit
conducted by Coca-Colas Territory Finance Head, Silvia Ang. Such losses comprised of
cases of assorted softdrinks, empty bottles, missing shells and missing pallets valued at
P20,860,913.00.
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Coca-Cola then served upon Daabay a Notice to Explain with Preventive Suspension,
which required him to explain in writing his participation in the scheme that was
reported to involve logistics checkers and gate guards. In compliance therewith, Daabay
submitted an Explanation dated April 19, 2005 wherein he denied any participation in
the reported pilferage.
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A formal investigation on the matter ensued. Eventually, Coca-Cola served upon Daabay
a Notice of Termination that cited pilferage, serious misconduct and loss of trust and
confidence as grounds. At the time of his dismissal, Daabay had been a regular
employee of Coca-Cola for eight years, and was receiving a monthly pay of P20,861.00,
exclusive of other benefits.
10
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Daabay then filed the subject labor complaint against Coca-Cola and Roberto Huang
(Huang), Raymund Salvador (Salvador) and Alvin Garcia (Garcia), who were the
President and Plant Logistics Managers, respectively, of Coca-Cola at the time of the
dispute.
11
On April 18, 2008, Executive Labor Arbiter Noel Augusto S. Magbanua (ELA
Magbanua) rendered his Decision
12
in favor of Daabay. He ruled that Daabay was
illegally dismissed because his participation in the alleged conspiracy was not proved by
substantial evidence. In lieu of reinstatement and considering the already strained
relations between the parties, ELA Magbanua ordered the payment to Daabay of
backwages and separation pay or retirement benefits, as may be applicable. The
dispositive portion of ELA Magbanuas Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring the
dismissal of complainant Jerome Daabay as illegal, and ordering respondents to pay
complainant his backwages in the amount of [P]750,996.00.

Additionally, respondents are hereby ordered to pay complainant his separation pay at
one (1) month for every year of service, or his retirement benefits based on the latest
Collective Bargaining Agreement prior to his suspension/termination.

Other claims are hereby ordered dismissed for failure to substantiate.

SO ORDERED.
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Dissatisfied, Coca-Cola, Huang, Salvador and Garcia, appealed from ELA Magbanuas
Decision to the National Labor Relations Commission (NLRC). Daabay filed a separate
appeal to ask for his reinstatement without loss of seniority rights, the payment of
backwages instead of separation pay or retirement benefits, and an award of litigation
expenses, moral and exemplary damages and attorneys fees.

The NLRC reversed the finding of illegal dismissal. In a Resolution
14
dated August 27,
2009, the NLRC held that there was reasonable and well-founded basis to dismiss
[Daabay], not only for serious misconduct, but also for breach of trust or loss of
confidence arising from such company losses.
15
Daabays participation in the
conspiracy was sufficiently established. Several documents such as checkers receipts
and sales invoices that made the fraudulent scheme possible were signed by Daabay.
16

The NLRC also found fault in Daabay for his failure to detect the pilferage, considering
that the timely recording and monitoring as security control for the outgoing [sic] of
company products are necessarily connected with the functions, duties and
responsibilities reposed in him as Sales Logistics Checker.
17
Notwithstanding its ruling
on the legality of the dismissal, the NLRC awarded retirement benefits in favor of
Daabay. The dispositive portion of its Resolution reads:
WHEREFORE, premises considered, the appeal of complainant is DENIED for lack of
merit, while that of respondent Coca-Cola Bottlers Philippines, Inc. is GRANTED.

Accordingly, the assailed 18 April 2008 Decision of the Executive Labor Arbiter is hereby
REVERSED and SET ASIDE, and a new judgment is entered DISMISSING the
present complaint for want of evidence.

Let, however, this case be REMANDED to the Executive Labor Arbiter or the Regional
Arbitration Branch of origin for the computation of complainants retirement benefits in
accordance with the latest Collective Bargaining Agreement prior to his termination.

SO ORDERED.
18
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Coca-Colas partial motion for reconsideration to assail the award of retirement benefits
was denied by the NLRC in a Resolution
19
dated October 30, 2009. The NLRC explained
that there was a need to humanize the severe effects of dismissal
20
and tilt the
scales of justice in favor of labor as a measure of equity and compassionate social
justice.
21
Daabay also moved to reconsider, but his motion remained unresolved by the
NLRC.
22
Undaunted, Coca-Cola appealed to the CA.

The CA agreed with Coca-Cola that the award of retirement benefits lacked basis
considering that Daabay was dismissed for just cause. It explained:
We are not oblivious of the instances where the Court awarded financial assistance to
dismissed employees, even though they were terminated for just causes. Equity and
social justice was the vague justification. Quickly realizing the unjustness of these [s]o-
called equitable awards, the Supreme Court took the opportunity to curb and rationalize
the grant of financial assistance to legally dismissed employees. Thus, in Philippine
Long Distance Telephone Company v. National Labor Relations Commission, the
Supreme Court recognized the harsh realities faced by employees that forced them,
despite their good intentions, to violate company policies, for which the employer can
rightfully terminate their employment. For these instances, the award of financial
assistance was allowed. But, in clear and unmistakable language, the Supreme Court
also held that the award of financial assistance should not be given to validly
terminated employees, whose offenses are iniquitous or reflective of some depravity in
their moral character. x x x.
23
(Citation omitted)
Thus, the dispositive portion of its Decision dated June 24, 2011 reads:
FOR THESE REASONS, the writ of certiorari is GRANTED; the portion of the
Resolution promulgated on 27 August 2009 remanding of the case to the Executive
Labor Arbiter or the Regional Arbitration Branch of origin for computation of retirement
benefits is DELETED.

SO ORDERED.
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Daabays motion for reconsideration was denied in a Resolution
25
dated December 9,
2011; hence, this petition.

It bears stressing that although the assailed CA decision and resolution are confined to
the issue of Daabays entitlement to retirement benefits, Daabay attempts to revive
through the present petition the issue of whether or not his dismissal had factual and
legal bases. Thus, instead of confining itself to the issue of whether or not Daabay
should be entitled to the retirement benefits that were awarded by the NLRC, the
petition includes a plea upon the Court to affirm ELA Magbanuas Decision, with the
modification to include: (a) his allowances and other benefits or their monetary
equivalent in the computation of his backwages; (b) his actual reinstatement; and (c)
damages, attorneys fees and litigation expenses.

We deny the petition.

We emphasize that the appeal to the CA was brought not by Daabay but by Coca-Cola,
and was limited to the issue of whether or not the award of retirement benefits in favor
of Daabay was proper. Insofar as CA-G.R. SP No. 03369-MIN was concerned, the
correctness of the NLRCs pronouncement on the legality of Daabays dismissal was no
longer an issue, even beyond the appellate courts authority to modify. In Andaya v.
NLRC,
26
the Court emphasized that a party who has not appealed from a decision may
not obtain any affirmative relief from the appellate court other than what he had
obtained from the lower court, if any, whose decision is brought up on appeal.
27

Further, we explained in Yano v. Sanchez,
28
that the entrenched procedural rule in this
jurisdiction is that a party who did not appeal cannot assign such errors as are designed
to have the judgment modified. All that he can do is to make a counter-assignment of
errors or to argue on issues raised below only for the purpose of sustaining the
judgment in his favor.
29
Due process prevents the grant of additional awards to parties
who did not appeal.
30
Considering that Daabay had not yet appealed from the NLRCs
Resolution to the CA, his plea for the modification of the NLRCs findings was then
misplaced. For the Court to review all matters that are raised in the petition would be
tolerant of what Daabay was barred to do before the appellate court.

Before the CA and this Court, Daabay attempts to justify his plea for relief by stressing
that he had filed his own motion for reconsideration of the NLRCs Resolution dated
August 27, 2009 but the same remained unacted upon by the NLRC. Such bare
allegation, however, is insufficient to allow the issue to be disturbed through this
petition. We take note of Daabays failure to attach to his petition a copy of the motion
which he allegedly filed with the NLRC. It is also quite baffling why Daabay does not
appear to have undertaken steps to seek the NLRCs resolution on the motion, even
after it remained unresolved for more than two years from its supposed filing.

Granting that such motion to reconsider was filed with the NLRC, the labor tribunal shall
first be given the opportunity to review its findings and rulings on the issue of the
legality of Daabays dismissal, and then correct them should it find that it erred in its
disposition. The Court cannot, by this petition, pre-empt the action which the NLRC,
and the CA in case of an appeal, may take on the matter.

Even as we limit our present review to the lone issue that was involved in the assailed
CA decision and resolution, the Court finds no cogent reason to reverse the ruling of the
CA.

Daabay was declared by the NLRC to have been lawfully dismissed by Coca-Cola on the
grounds of serious misconduct, breach of trust and loss of confidence. Our
pronouncement in Philippine Airlines, Inc. v. NLRC
31
on the issue of whether an
employee who is dismissed for just cause may still claim retirement benefits equally
applies to this case. We held:
At the risk of stating the obvious, private respondent was not separated from
petitioners employ due to mandatory or optional retirement but, rather, by
termination of employment for a just cause. Thus, any retirement pay provided
by PALs Special Retirement & Separation Program dated February 15, 1988 or, in the
absence or legal inadequacy thereof, by Article 287 of the Labor Code does not operate
nor can be made to operate for the benefit of private respondent. Even private
respondents assertion that, at the time of her lawful dismissal, she was already
qualified for retirement does not aid her case because the fact remains that private
respondent was already terminated for cause thereby rendering nugatory
any entitlement to mandatory or optional retirement pay that she might have
previously possessed.
32
(Citation omitted and emphasis ours)
In ruling against the grant of the retirement benefits, we also take note of the NLRCs
lone justification for the award, to wit:
Where from the facts obtaining, as in this case, there is a need to humanize the
severe effects of dismissal and where complainants entitlement to retirement benefits
are even admitted in [Coca-Colas] motion to reduce bond, [w]e can do no less but
tilt the scales of justice in favor of labor as a measure of equity and
compassionate social justice, taking into consideration the circumstances
obtaining in this case.
33
(Emphasis ours)
Being intended as a mere measure of equity and social justice, the NLRCs award was
then akin to a financial assistance or separation pay that is granted to a dismissed
employee notwithstanding the legality of his dismissal. Jurisprudence on such financial
assistance and separation pay then equally apply to this case. The Court has ruled, time
and again, that financial assistance, or whatever name it is called, as a measure of
social justice is allowed only in instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on his moral character.
34
We
explained in Philippine Long Distance Telephone Company v. NLRC
35
:
[S]eparation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the employer may not be required to give
the dismissed employee separation pay, or financial assistance, or whatever
other name it is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the
punishment is his dismissal only and that the separation pay has nothing to do with the
wrong he has committed. Of course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely that
he will commit a similar offense in his next employment because he thinks he can
expect a like leniency if he is again found out. This kind of misplaced compassion is not
going to do labor in general any good as it will encourage the infiltration of its ranks by
those who do not deserve the protection and concern of the Constitution.
36
(Emphasis
ours)
Clearly, considering that Daabay was dismissed on the grounds of serious misconduct,
breach of trust and loss of confidence, the award based on equity was unwarranted.

Even the NLRCs reliance on the alleged admission by Coca-Cola in its motion to reduce
bond that Daabay is entitled to retirement benefits is misplaced. Apparently, the
supposed admission by Coca-Cola was based on the following:
In support of its motion to reduce bond, Coca-cola seeks leniency for its failure to
include in the posting of the bond the monetary award for [Daabays] retirement
benefits which, as directed by the Executive Labor Arbiter, should be computed in
accordance with the latest Collective Bargaining Agreement prior to his termination.
Coca-Cola explains that the amount of the retirement benefits has not been determined
and there is a need to compute the same on appeal. x x x.
37
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It is patent that the statements made by Coca-Cola were in light of ELA Magbanuas
ruling that Daabay was illegally dismissed. Furthermore, any admission was only for the
purpose of explaining the non-inclusion of the amount of retirement benefits in the
computation of the appeal bond posted with the NLRC. Coca-Colas statements should
be taken in such context, and could not be deemed to bind the company even after the
NLRC had reversed the finding of illegal dismissal. And although retirement benefits,
where not mandated by law, may still be granted by agreement of the employees and
their employer or as a voluntary act of the employer,
38
there is no proof that any of
these incidents attends the instant case.

WHEREFORE, the petition is DENIED. The Decision dated June 24, 2011 and
Resolution dated December 9, 2011 of the Court of Appeals in CA-G.R. SP No. 03369-
MIN are AFFIRMED.

SO ORDERED.

EN BANC
G.R. No. 186613, August 27, 2013
ROSENDO R. CORALES, IN HIS OFFICIAL CAPACITY AS MUNICIPAL MAYOR
OF NAGCARLAN, LAGUNA, AND DR. RODOLFO R. ANGELES, IN HIS OFFICIAL
CAPACITY AS MUNICIPAL ADMINISTRATOR OF NAGCARLAN, LAGUNA
Petitioners, v. REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
COMMISSION ON AUDIT, AS REPRESENTED BY PROVINCIAL STATE AUDITOR
OF LAGUNA MAXIMO L. ANDAL, Respondent.
D E C I S I O N
PEREZ, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to
nullify the Decision
1
and Resolution
2
dated 15 September 2008 and 20 February 2009,
respectively, of the Court of Appeals in CA-G.R. SP No. 101296 and, in effect, to
reinstate the Petition for Prohibition and Mandamus
3
filed by herein petitioners Rosendo
R. Corales (Corales) and Dr. Rodolfo R. Angeles (Dr. Angeles) with the Regional Trial
Court (RTC) of San Pablo City, Laguna. The assailed Decision annulled and set aside the
Order
4
dated 17 May 2007 of Branch 32, and the Order
5
dated 5 September 2007 of
Branch 29, both of the RTC of San Pablo City, Laguna in Civil Case No. SP-6370 (07),
which respectively denied herein respondent Republic of the Philippines (Republic)
Motion to Dismiss petitioners Petition for Prohibition and the subsequent Motion for
Reconsideration thereof. The Court of Appeals thereby ordered the dismissal of
petitioners Petition for Prohibition with the court a quo. The questioned Resolution, on
the other hand, denied for lack of merit petitioners Motion for Reconsideration of the
assailed Decision.

The antecedents, as culled from the records, are as follows:cralawlibrary

Petitioner Corales was the duly elected Municipal Mayor of Nagcarlan, Laguna for three
(3) consecutive terms, i.e., the 1998, 2001 and 2004 elections. In his first term as local
chief executive, petitioner Corales appointed petitioner Dr. Angeles to the position of
Municipal Administrator, whose appointment was unanimously approved by the
Sangguniang Bayan of Nagcarlan, Laguna (Sangguniang Bayan) per Resolution No. 98-
64
6
dated 22 July 1998. During his second and third terms as municipal mayor,
petitioner Corales renewed the appointment of petitioner Dr. Angeles. But, on these
times, the Sangguniang Bayan per Resolution No. 2001-078
7
dated 12 July 2001 and 26
subsequent Resolutions, disapproved petitioner Dr. Angeles appointment on the ground
of nepotism, as well as the latters purported unfitness and unsatisfactory performance.
Even so, petitioner Dr. Angeles continued to discharge the functions and duties of a
Municipal Administrator for which he received an annual salary of P210,012.00.
8
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Following an audit on various local disbursements, Maximo Andal (Andal), the Provincial
State Auditor of Laguna, issued an Audit Observation Memorandum (AOM) No. 2006-
007-100
9
dated 6 October 2006 addressed to petitioner Corales who was asked to
comment/reply. The aforesaid AOM, in sum, states that: 1) petitioner Dr. Angeles
appointment as Municipal Administrator (during the second and third terms of petitioner
Corales) was without legal basis for having been repeatedly denied confirmation by the
Sangguniang Bayan; 2) petitioner Dr. Angeles can be considered, however, as a de
facto officer entitled to the emoluments of the office for the actual services rendered; 3)
nonetheless, it is not the Municipality of Nagcarlan that should be made liable to pay for
petitioner Dr. Angeles salary; instead, it is petitioner Corales, being the appointing
authority, as explicitly provided for in Article 169(I) of the Rules and Regulations
Implementing the Local Government Code of 1991,
10
as well as Section 5, Rule IV of
the Omnibus Rules of Appointments and Other Personnel Actions;
11
4) a post audit of
payrolls pertaining to the payment of salaries, allowances and other incentives of
petitioner Dr. Angeles from 15 July 2001 up to 31 May 2006
12
partially amounted to
P1,282,829.99; and 5) in view thereof, it is recommended that an appropriate Notice of
Disallowance be issued for the payment of salary expenses incurred without legal basis
by the Municipality of Nagcarlan in the aforestated amount.
13
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Instead of submitting his comment/reply thereon, petitioner Corales, together with
petitioner Dr. Angeles, opted to file a Petition for Prohibition and Mandamus against
Andal and the then members of the Sangguniang Bayan before the RTC of San Pablo
City, Laguna, docketed as Civil Case No. SP-6370 (07) and originally raffled to Branch
32. Petitioners sought, by way of prohibition, to require the Office of the Provincial
Auditor, through Andal, to recall its AOM and to eventually desist from collecting
reimbursement from petitioner Corales for the salaries paid to and received by
petitioner Dr. Angeles for the latters services as Municipal Administrator. Petitioners
similarly sought, by way of mandamus, to compel the then members of the
Sangguniang Bayan, as a collegial body, to recall its Resolutions denying confirmation
to petitioner Dr. Angeles appointment as Municipal Administrator and in their stead to
confirm the validity and legitimacy of such appointment.
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In its turn, the Office of the Solicitor General (OSG), on Andals behalf, who was
impleaded in his official capacity, filed a Motion to Dismiss petitioners Petition for
Prohibition and Mandamus grounded on lack of cause of action, prematurity and non-
exhaustion of administrative remedies. It was specifically contended therein that: (1)
the issuance of the AOM was merely an initiatory step in the administrative
investigation of the Commission on Audit (COA) to allow petitioner Corales to controvert
the findings and conclusions of the Sangguniang Bayan in its Resolution No. 2001-078,
as well as those of then Secretary Jose D. Lina, Jr. in Department of Interior and Local
Government (DILG) Opinion No. 124 s. 2002; (2) it was only after the completion of the
said investigation that a resolution will be issued as regards the propriety of the
disbursements made by the Municipality of Nagcarlan in the form of salaries paid to
petitioner Dr. Angeles during his tenure as Municipal Administrator; and (3) instead of
resorting to judicial action, petitioner Corales should have first responded to the AOM
and, in the event of an adverse decision against him, elevate the matter for review to a
higher authorities in the COA.
15
With these, petitioners petition should be dismissed, as
petitioner Corales has no cause of action against Andal - his resort to judicial
intervention is premature and he even failed to avail himself of, much less exhaust, the
administrative remedies available to him.
16
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In its Order dated 17 May 2007, the trial court denied the said Motion to Dismiss on the
ground that Andal was merely a nominal party.
17
The subsequent motion for its
reconsideration was also denied in another Order dated 5 September 2007.
18
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Respondent Republic, as represented by COA, as represented by Andal, consequently
filed a Petition for Certiorari with the Court of Appeals ascribing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the trial court in
rendering the Orders dated 17 May 2007 and 5 September 2007, as it unjustly denied
respondents right to actively prosecute the case through a mere declaration that it was
a nominal party despite a clear showing that the Petition for Prohibition referred to the
respondent as a real party in interest.
19
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On 15 September 2008, the Court of Appeals rendered its now assailed Decision
granting respondents Petition for Certiorari, thereby annulling and setting aside the
RTC Orders dated 17 May 2007 and 5 September 2007 and, accordingly, dismissing
petitioners Petition for Prohibition with the court a quo.
20
The Court of Appeals justified
its decision in the following manner:
x x x We agree with the OSGs contention that the [herein respondent Republic],
herein represented by the COA and specifically by Andal in the latters capacity as
Provincial State Auditor of Laguna, is not merely a nominal party to the petition
for prohibition. x x x. That the [respondent] naturally has an interest in the
disposition/disbursement of said public funds as well as in the recovery
thereof should the ongoing investigative audit confirm the illegality thereof
cannot be gainsaid. Rather than a mere nominal party, therefore, the
[respondent] is an indispensable party to the petition for prohibition and may
thus seek its dismissal, given that under the attendant facts there is a yet no
actual case or controversy calling for [therein] respondent courts exercise of
its judicial power.

Judicial review cannot be exercised in vacuo. Thus, as a condition precedent
for the exercise of judicial inquiry, there must be an actual case or
controversy, which exists when there is a conflict of legal rights or an assertion of
opposite legal claims, which can be resolved on the basis of existing law and
jurisprudence. x x x. An actual case or controversy thus means an existing case or
controversy that is appropriate or ripe for judicial determination, not conjectural or
anticipatory, lest the decision of the court would amount to an advisory opinion.

[Herein petitioners] x x x have failed to show the existence of an actual case
or controversy that would necessitate judicial inquiry through a petition for
prohibition. As the OSG aptly observed, the issuance of the AOM is just an
initiatory step in the investigative audit being then conducted by Andal[,] as
Provincial State Auditor of Laguna to determine the propriety of the
disbursements made by the Municipal Government of Nagcarlan. While Andal
may have stated an opinion in the AOM that [herein petitioner] Corales
should reimburse the government treasury for the salaries paid to [herein
petitioner Dr. Angeles] in light of the repeated disapproval and/or rejection
of the latters appointment by the Sangguniang [Bayan] of Nagcarlan, there
is no showing whatsoever of any affirmative action taken by Andal to enforce
such audit observation. What Andal did, as the AOM unmistakably shows,
was to merely request [petitioner] Corales to submit a reply/comment to the
audit observation and in the process afford the latter an opportunity to controvert
not only Andals opinion on salary reimbursement but the other statements therein
expressed by the other members of the audit team.

In the absence moreover of a showing that [petitioners], particularly [petitioner]
Corales, sustained actual or imminent injury by reason of the issuance of the AOM,
there is no reason to allow the continuance of the petition for prohibition which was,
after all, manifestly conjectural or anticipatory, filed for a speculative purpose and upon
the hypothetical assumption that [petitioner] Corales would be eventually compelled to
reimburse the amounts paid as [petitioner Dr. Angeles] salaries should the audit
investigation confirm the irregularity of such disbursements. This Court will not engage
in such speculative guesswork and neither should respondent court x x x.
21
(Emphasis
and italics supplied).
Disgruntled, petitioners moved for its reconsideration but it was denied for lack of merit
in a Resolution dated 20 February 2009.

Hence, this petition.

In their Memorandum, petitioners raise the following issues:
I.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A PALPABLY
ERRONEOUS RESOLUTION OF A SUBSTANTIAL QUESTION OF LAW WHEN IT
ORDERED THE DISMISSAL OF PETITIONERS SUIT FOR PROHIBITION.
II.

WHETHER OR NOT THE COURT OF APPEALS ACTED UNJUSTLY AND
INJUDICIOUSLY WHEN IT HELD THAT THE FACTS AND CIRCUMSTANCES
SURROUNDING THE SUIT FOR PROHIBITION IS NOT YET RIPE FOR
JUDICIAL DETERMINATION.
III.

WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE AND
REVERSIBLE ERROR IN THE INTERPRETATION AND RESOLUTION OF A
PIVOTAL LEGAL ISSUE WHEN IT CONCLUDED THAT THERE IS NO ACTUAL
DISPUTE OR CONCRETE CONTROVERSY WHICH MAY BE THE PROPER
SUBJECT MATTER OF A SUIT FOR PROHIBITION.
IV.

WHETHER OR NOT THE COURT OF APPEALS UNJUSTIFIABLY TRANSGRESSED
AND TRAMPLED UPON A CATEGORICAL JURISPRUDENTIAL DOCTRINE WHEN
IT TOOK COGNIZANCE OF AND FAVORABLY RESOLVED THE [HEREIN
RESPONDENTS] PETITION FOR CERTIORARI, IN BLATANT VIOLATION OF
THE RULE LAID DOWN IN THE APROPOS CASE OF CHINA ROAD AND BRIDGE
CORPORATION [V.] COURT OF APPEALS (348 SCRA 401).
V.

WHETHER OR NOT THE COURT OF APPEALS OVERSTEPPED AND WENT
BEYOND THE BOUNDARIES OF ITS LEGITIMATE DISCRETION WHEN IT
DEVIATED AND VEERED AWAY FROM THE PRINCIPAL ISSUES OF THE CASE,
INSTEAD OF PRONOUNCING THAT PETITIONERS HAVE A VALID, PERFECT
AND LEGITIMATE CAUSE OF ACTION FOR PROHIBITION.
22
(Italics supplied).
The Petition is bereft of merit.

The issues will be discussed in seriatim.

The first three issues concern the ripeness or prematurity of the Petition for Prohibition
assailing the AOM issued by Andal to petitioner Corales. Petitioners argue that from the
tenor of the AOM it is clear that petitioner Corales is being adjudged liable and
personally accountable to pay or to reimburse, in his private capacity, the salaries paid
to and received by petitioner Dr. Angeles for the latters services as Municipal
Administrator, as his appointment thereto was considered invalid for lack of necessary
confirmation from the Sangguniang Bayan. It is further argued that contrary to the
claim of respondent Republic that such AOM is a mere initiatory step in the course of an
investigative auditing process, the wordings thereof unmistakably reveal that the same
is a categorical disposition and enforcement measure requiring petitioner Corales to
reimburse the money disbursed by the Municipality of Nagcarlan to pay petitioner Dr.
Angeles salaries as Municipal Administrator. Such AOM is a firm, clear and affirmative
official action on the part of the Provincial State Auditor to hold petitioner Corales liable
for reimbursement; thus, to require the latter to still comment or controvert the findings
thereon is a mere frivolous and useless formality. Since the requirement for petitioner
Corales to pay and reimburse the salaries of petitioner Dr. Angeles is actual, direct and
forthcoming, the same may be the proper subject of an action for prohibition.
Otherwise stated, such imposition of liability for reimbursement against petitioner
Corales presents a concrete justiciable controversy and an actual dispute of legal rights.

Petitioners contention is unavailing.

To begin with, this Court deems it proper to quote the significant portions of the
questioned AOM, to wit:
FOR: Hon. ROSENDO R. CORALES

Municipal Mayor

Nagcarlan, Laguna
FROM: Mr. MAXIMO L. ANDAL

State Auditor IV

Audit Team Leader

May we have your comment/reply on the following audit observation. Please
return the duplicate within fifteen (15) days upon receipt by filling up the space
provided for with your comments.
AUDIT OBSERVATION MANAGEMENT COMMENT
The appointment of [herein petitioner
Dr. Angeles] as Municipal Administrator
was repeatedly denied not confirmed/
concurred by Sangguniang Bayan
hence, the validity of the appointment
as per opinion/rulings by the then
Secretary Jose D. Lina, Jr. of the DILG
in opinion No. 124 s.2002 was without
legal basis.



DILG Opinion No. 124 s[.]2002 states
that the continued discharge of powers
by [petitioner Dr. Angeles] as Municipal
Administrator appears to have no legal
basis. A person may assume public
office once his appointment is already
effective. The Supreme Court in one
case (Atty. David B. Corpuz [v.] Court
of Appeals, et al[.], G.R. No. 123989,
26 January 1998) held that where the
assent or confirmation of some other
office or body is required, the
appointment may be complete only
when such assent or confirmation is
obtained. Until the process is
completed, the appointee can claim no

vested right in the office nor invoke
security of tenure. Since the
appointment of a Municipal
Administrator requires sanggunian
concurrence (Section 443 (d), RA
7160) and considering that the
appointment never became effective.
As such, his assumption and continued
holding of the office of the Municipal
Administrator find no legal basis.


However, [petitioner Dr. Angeles] may
claim salary for the services he has
actually rendered. As held in one case
(Civil Liberties Union [v.] Executive
Secretary, 194 SCRA 317), a de facto
officer is entitled to emoluments of the
office for the actual services rendered.
Here, [petitioner Dr. Angeles] can be
considered as a de facto officer. x x x,
as held in the Corpuz case cited above,
the Supreme Court ruled that a public
official who assumed office under an
incomplete appointment is merely a de
facto officer for the duration of his
occupancy of the office for the reason
that he assumed office under color of a
known appointment which is void by a
reason of some defect or irregularity in
its exercise.



It is worthy to emphasize along that
line that while [petitioner Dr. Angeles]
may be entitled to the salary as a de
facto officer, the municipality cannot be
made liable to pay his salaries.
Instructive on this point is Article 169
(I) of the Rules and Regulations
Implementing the Local Government
Code of 1991 which explicitly provides,
thus:



The appointing authority shall be
liable for the payment of salary of
the appointee for actual services
rendered if the appointment is
disapproved because the
appointing authority issued it in
willful violation of applicable laws,
rules and regulations thereby
making the appointment
unlawful.



Corollary, Section 5 of Rule IV of the

Omnibus Rules of Appointments and
Other Personnel Actions provides, thus:


The services rendered by any
person who was required to
assume the duties and
responsibilities of any position
without appointment having been
issued by the appointing authority
shall not be credited nor
recognized by the Commission and
shall be the personal
accountability of the person who
made him assume office.



Hence, [herein petitioner Corales] shall
pay the salaries of [petitioner Dr.
Angeles] for the services the latter has
actually rendered.



x x x x x x x x x x x x



Clearly, the appointment of [petitioner
Dr. Angeles] per se was bereft of
legal basis in view of the absence of
the concurrence of the legislative body
thus payment of his salaries from the
funds of the Municipality for actual
services rendered remained unlawful.



Further, in paragraph 4 of the letter of
Mr. Allan Poe M. Carmona, Director II
of the CSC dated [1 December 2004]
to Mr. Ruben C. Pagaspas, OIC,
Regional Cluster Director, COA, Cluster
III, Sub-Cluster VI stated that
[petitioner Dr. Angeles] cannot be
appointed to Municipal Administrator
without the concurrence of the
Sangguniang Bayan as provided under
RA 7160.



Post audit of payrolls pertaining to the
payment of salaries, allowances and
other incentives of [petitioner Dr.
Angeles] as Municipal Administrator for
the period from [15 July 2001] up to
[31 May 2006] excluding the period
from [1 November 2001] to [31
December 2001], [16 March 2002] to
[15 May 2002], [1-31 August 2002],
[16-30 June 2003], [1-31 December
2003], [1-31 September 2004] and [1
June 2006] to [30 September 2006]

were partially amounted to
P1,282,829.99. x x x.


Issuance of Notice of Disallowance was
suggested by Atty. Eden T. Rafanan,
Regional Cluster Director for [L]egal
and Adjudication Office in her 2nd
Indorsement dated [3 July 2006].



In view hereof, it is recommended
that appropriate Notice of
Disallowance be issued for the
payment of the salary expenses
incurred without legal basis by the
municipality in the amount mentioned
in the above paragraph.
23
(Emphasis,
italics and underscoring supplied).

As can be gleaned therefrom, petitioner Corales was simply required to submit his
comment/reply on the observations stated in the AOM. As so keenly observed by
the Court of Appeals, any mention in the AOM that petitioner Corales shall reimburse
the salaries paid to petitioner Dr. Angeles in light of the repeated disapproval or
rejection by the Sangguniang Bayan of his appointment as Municipal Administrator was
merely an initial opinion, not conclusive, as there was no showing that Andal had taken
any affirmative action thereafter to compel petitioner Corales to make the necessary
reimbursement. Otherwise stated, it has not been shown that Andal carried out or
enforced what was stated in the AOM. On the contrary, petitioner Corales was given an
opportunity to refute the findings and observations in the AOM by requesting him to
comment/reply thereto, but he never did. More so, even though the AOM already
contained a recommendation for the issuance of a Notice of Disallowance of the
payment of salary expenses, the records are bereft of any evidence to show that a
Notice of Disallowance has, in fact, been issued. Concomitantly, the AOM did not
contain any recommendation to the effect that petitioner Corales would be held
personally liable for the amount that would be disallowed. It is, therefore, incongruous
to conclude that the said AOM is tantamount to a directive requiring petitioner Corales
to reimburse the salaries paid to and received by petitioner Dr. Angeles during the
latters stint as Municipal Administrator after his appointment thereto was held invalid
for want of conformity from the Sangguniang Bayan.

In relation thereto, as aptly observed by the OSG, to which the Court of Appeals
conformed, the issuance of the AOM is just an initiatory step in the
investigative audit being conducted by Andal as Provincial State Auditor to determine
the propriety of the disbursements made by the Municipal Government of Laguna. That
the issuance of an AOM can be regarded as just an initiatory step in the investigative
audit is evident from COA Memorandum No. 2002-053 dated 26 August 2002.
24
A
perusal of COA Memorandum No. 2002-053, particularly Roman Numeral III, Letter A,
paragraphs 1 to 5 and 9, reveals that any finding or observation by the Auditor stated
in the AOM is not yet conclusive, as the comment/justification
25
of the head of office or
his duly authorized representative is still necessary before the Auditor can make any
conclusion. The Auditor may give due course or find the comment/justification to be
without merit but in either case, the Auditor shall clearly state the reason for the
conclusion reached and recommendation made. Subsequent thereto, the Auditor shall
transmit the AOM, together with the comment or justification of the Auditee and the
formers recommendation to the Director, Legal and Adjudication Office (DLAO), for the
sector concerned in Metro Manila and/or the Regional Legal and Adjudication Cluster
Director (RLACD) in the case of regions. The transmittal shall be coursed through the
Cluster Director concerned and the Regional Cluster Director, as the case may be, for
their own comment and recommendation. The DLAO for the sector concerned in the
Central Office and the RLACD shall make the necessary evaluation of the records
transmitted with the AOM. When, on the basis thereof, he finds that the transaction
should be suspended or disallowed, he will then issue the corresponding Notice of
Suspension (NS), Notice of Disallowance (ND) or Notice of Charge (NC), as the case
may be, furnishing a copy thereof to the Cluster Director. Otherwise, the Director may
dispatch a team to conduct further investigation work to justify the contemplated
action. If after in-depth investigation, the DLAO for each sector in Metro Manila and the
RLACD for the regions find that the issuance of the NS, ND, and NC is warranted, he
shall issue the same and transmit such NS, ND or NC, as the case may be, to the
agency head and other persons found liable therefor.

From the foregoing, it is beyond doubt that the issuance of an AOM is, indeed, an initial
step in the conduct of an investigative audit considering that after its issuance there are
still several steps to be conducted before a final conclusion can be made or before the
proper action can be had against the Auditee. There is, therefore, no basis for petitioner
Corales claim that his comment thereon would be a mere formality. Further, even
though the AOM issued to petitioner Corales already contained a recommendation for
the issuance of a Notice of Disallowance, still, it cannot be argued that his
comment/reply to the AOM would be a futile act since no Notice of Disallowance was
yet issued. Again, the records are bereft of any evidence showing that Andal has
already taken any affirmative action against petitioner Corales after the issuance of the
AOM.

Viewed in this light, this Court can hardly see any actual case or controversy to warrant
the exercise of its power of judicial review. Settled is the rule that for the courts to
exercise the power of judicial review, the following must be extant: (1) there must be
an actual case calling for the exercise of judicial power; (2) the question must be ripe
for adjudication; and (3) the person challenging must have the standing. An actual
case or controversy involves a conflict of legal rights, an assertion of opposite legal
claims, susceptible of judicial resolution as distinguished from a mere hypothetical or
abstract difference or dispute. There must be a contrariety of legal rights that can be
interpreted and enforced on the basis of existing law and jurisprudence. Closely related
thereto is that the question must be ripe for adjudication. A question is
considered ripe for adjudication when the act being challenged has had a
direct adverse effect on the individual challenging it. The third requisite is legal
standing or locus standi, which has been defined as a personal or substantial interest in
the case such that the party has sustained or will sustain direct injury as a result of the
governmental act that is being challenged, alleging more than a generalized grievance.
The gist of the question of standing is whether a party alleges such personal stake in
the outcome of the controversy as to assure that concrete adverseness which sharpens
the presentation of issues upon which the court depends for illumination of difficult
constitutional questions. Unless a person is injuriously affected in any of his
constitutional rights by the operation of statute or ordinance, he has no
standing.
26
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The requisites of actual case and ripeness are absent in the present case. To repeat,
the AOM issued by Andal merely requested petitioner Corales to comment/reply
thereto. Truly, the AOM already contained a recommendation to issue a Notice of
Disallowance; however, no Notice of Disallowance was yet issued. More so, there was
no evidence to show that Andal had already enforced against petitioner Corales the
contents of the AOM. Similarly, there was no clear showing that petitioners, particularly
petitioner Corales, would sustain actual or imminent injury by reason of the issuance of
the AOM. The action taken by the petitioners to assail the AOM was, indeed, premature
and based entirely on surmises, conjectures and speculations that petitioner Corales
would eventually be compelled to reimburse petitioner Dr. Angeles salaries, should the
audit investigation confirm the irregularity of such disbursements. Further, as correctly
pointed out by respondent Republic in its Memorandum, what petitioners actually assail
is Andals authority to request them to file the desired comment/reply to the AOM,
which is beyond the scope of the action for prohibition, as such request is neither an
actionable wrong nor constitutive of an act perceived to be illegal. Andal, being the
Provincial State Auditor, is clothed with the authority to audit petitioners
disbursements, conduct an investigation thereon and render a final finding and
recommendation thereafter. Hence, it is beyond question that in relation to his audit
investigation function, Andal can validly and legally require petitioners to submit
comment/reply to the AOM, which the latter cannot pre-empt by prematurely seeking
judicial intervention, like filing an action for prohibition.

Moreover, prohibition, being a preventive remedy to seek a judgment ordering the
defendant to desist from continuing with the commission of an act perceived to be
illegal, may only be resorted to when there is no appeal or any other plain,
speedy, and adequate remedy in the ordinary course of law.
27
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In this case, petitioners insist that it is no longer necessary to exhaust administrative
remedies considering that there is no appeal or any other plain, speedy and appropriate
remedial measure to assail the imposition under the AOM aside from an action for
prohibition.

This Court finds the said contention plain self-deception.

As previously stated, petitioners action for prohibition was premature. The audit
investigative process was still in its initial phase. There was yet no Notice of
Disallowance issued. And, even granting that the AOM issued to petitioner Corales is
already equivalent to an order, decision or resolution of the Auditor or that such AOM is
already tantamount to a directive for petitioner Corales to reimburse the salaries paid to
petitioner Dr. Angeles, still, the action for prohibition is premature since there are still
many administrative remedies available to petitioners to contest the said AOM. Section
1, Rule V of the 1997 Revised Rules of Procedure of the COA, provides: [a]n aggrieved
party may appeal from an order or decision or ruling rendered by the Auditor embodied
in a report, memorandum, letter, notice of disallowances and charges, Certificate of
Settlement and Balances, to the Director who has jurisdiction over the agency under
audit. From the final order or decision of the Director, an aggrieved party may appeal
to the Commission proper.
28
It is the decision or resolution of the Commission proper
which can be appealed to this Court.
29
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Clearly, petitioners have all the remedies available to them at the administrative level
but they failed to exhaust the same and instead, immediately sought judicial
intervention. Otherwise stated, the auditing process has just begun but the petitioners
already thwarted the same by immediately filing a Petition for Prohibition. In Fua, Jr. v.
COA,
30
citing Sison v. Tablang,
31
this Court declared that the general rule is that before
a party may seek the intervention of the court, he should first avail himself of all
the means afforded him by administrative processes. The issues which
administrative agencies are authorized to decide should not be summarily taken from
them and submitted to the court without first giving such administrative agency the
opportunity to dispose of the same after due deliberation. Also, in The Special Audit
Team, Commission on Audit v. Court of Appeals and Government Service Insurance
System,
32
this Court has extensively pronounced that:
If resort to a remedy within the administrative machinery can still be made by giving
the administrative officer concerned every opportunity to decide on a matter that comes
within his or her jurisdiction, then such remedy should be exhausted first before the
courts judicial power can be sought. The premature invocation of the
intervention of the court is fatal to ones cause of action. The doctrine of
exhaustion of administrative remedies is based on practical and legal reasons. The
availment of administrative remedy entails lesser expenses and provides for a speedier
disposition of controversies. Furthermore, the courts of justice, for reasons of
comity and convenience, will shy away from a dispute until the system of
administrative redress has been completed and complied with, so as to give
the administrative agency concerned every opportunity to correct its error
and dispose of the case. x x x.

Moreover, courts have accorded respect for the specialized ability of other
agencies of government to deal with the issues within their respective
specializations prior to any court intervention. The Court has reasoned thus:
We have consistently declared that the doctrine of exhaustion of administrative
remedies is a cornerstone of our judicial system. The thrust of the rule is that courts
must allow administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence. The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the
speedier resolution of controversies. Comity and convenience also impel courts of
justice to shy away from a dispute until the system of administrative redress has been
completed.
The 1987 Constitution created the constitutional commissions as independent
constitutional bodies, tasked with specific roles in the system of governance that require
expertise in certain fields. For COA, this role involves:
The power, authority, and duty to examine, audit, and settle all accounts pertaining to
the revenue and receipts of, and expenditures or uses of funds and property, owned or
held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies,
instrumentalities, including government-owned and controlled corporations with original
charter. x x x.
As one of the three (3) independent constitutional commissions, COA has been
empowered to define the scope of its audit and examination and to establish
the techniques and methods required therefor; and to promulgate accounting
and auditing rules and regulations, including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant or
unconscionable expenditures or uses of government funds and properties.

Thus, in the light of this constitutionally delegated task, the courts must exercise
caution when intervening with disputes involving these independent bodies, for the
general rule is that before a party may seek the intervention of the court, he
should first avail of all the means afforded him by administrative processes.
The issues which administrative agencies are authorized to decide should not
be summarily taken from them and submitted to a court without first giving such
administrative agency the opportunity to dispose of the same after due deliberation.
33

(Emphasis supplied).
In their futile attempt to convince this Court to rule in their favor, petitioners aver that
by filing a Motion to Dismiss on the ground of lack of cause of action, respondent
Republic, in essence, admitted all the material averments and narration of facts stated
in the Petition for Prohibition and Mandamus. As such, there is no longer any question
of fact to speak of and what remains is a pure question of law. The judgment,
therefore, of the trial court denying the Motion to Dismiss is no longer subject to any
appeal or review by the Court of Appeals. Instead, it is already appealable and
reviewable by this Court under Rule 45 of the Rules of Court, where only pure questions
of law may be raised and dealt with. This is in line with the pronouncement in China
Road and Bridge Corporation v. Court of Appeals
34
(China Road Case). The Court of
Appeals should have dismissed respondent Republics Petition for Certiorari under Rule
65 of the Rules of Court for being an improper and inappropriate mode of review.

Petitioners above argument is misplaced.

China Road Case is not at all applicable in the case at bench. Therein, the Motion to
Dismiss the Complaint was granted. As the order granting the motion to dismiss was a
final, as distinguished from an interlocutory order, the proper remedy was an appeal in
due course.
35
Thus, this Court in China Road Case held that:
x x x Applying the test to the instant case, it is clear that private respondent raises pure
questions of law which are not proper in an ordinary appeal under Rule 41, but should
be raised by way of a petition for review on certiorari under Rule 45.

We agree with private respondent that in a motion to dismiss due to failure to state a
cause of action, the trial court can consider all the pleadings filed, including annexes,
motions and the evidence on record. However in so doing, the trial court does not rule
on the truth or falsity of such documents. It merely includes such documents in the
hypothetical admission. Any review of a finding of lack of cause of action based on
these documents would not involve a calibration of the probative value of such pieces
of evidence but would only limit itself to the inquiry of whether the law was properly
applied given the facts and these supporting documents. Therefore, what would
inevitably arise from such a review are pure questions of law, and not
questions of fact.
36
(Emphasis supplied).
In the case at bench, however, the Motion to Dismiss was denied. It is well-entrenched
that an order denying a motion to dismiss is an interlocutory order which neither
terminates nor finally disposes of a case as it leaves something to be done by the court
before the case is finally decided on the merits.
37
Therefore, contrary to the claim of
petitioners, the denial of a Motion to Dismiss is not appealable, not even via Rule 45 of
the Rules of Court. The only remedy for the denial of the Motion to Dismiss is a special
civil action for certiorari showing that such denial was made with grave abuse of
discretion.
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Taking into consideration all the foregoing, this Court finds no reversible error on the
part of the Court of Appeals in reversing the Orders of the court a quo and
consequently dismissing petitioners Petition for Prohibition filed thereat.

WHEREFORE, premises considered, the Decision and Resolution dated 15 September
2008 and 20 February 2009, respectively, of the Court of Appeals in CA-G.R. SP No.
101296 are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.








FIRST DIVISION
G.R. No. 180418, August 28, 2013
REPUBLIC OF THE PHILIPPINES, Petitioner, v. LUZ REYES-BAKUNAWA,
MANUEL BAKUNAWA, JR., MANUEL BAKUNAWA III, FERDINAND E. MARCOS
AND IMELDA R. MARCOS, Respondents.
D E C I S I O N
BERSAMIN, J.:

Assets or properties, to be considered as ill-gotten wealth, must be shown to have
originated from the Government itself, and should have been taken by former President
Marcos, the members of his immediate family, relatives, close subordinates and close
associates by illegal means. That one served as a government official or employee
during the Marcos administration did not immediately make her a close subordinate or
close associate of former President Marcos.
1
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The Case

The Republic appeals the adverse decision rendered on April 10, 2002,
2
and the
resolution issued on November 8, 2007,
3
whereby the Sandiganbayan respectively
dismissed the complaint for reconveyance, reversion, accounting, restitution and
damages filed against respondents in Civil Case No. 0023, and denied the Republics
motion for reconsideration.
Antecedents

Civil Case No. 0023 is an action for reconveyance, reversion, accounting, restitution and
damages brought by the Republic against respondents Luz Reyes-Bakunawa, Manuel
Bakunawa, Jr., Manuel Bakunawa III, President Marcos and First Lady Imelda R. Marcos
for having allegedly acquired and accumulated ill-gotten wealth consisting of funds and
other property in unlawful concert with one another and in flagrant breach of trust
and of their fiduciary obligations as public officers, with grave abuse of right and power
and in brazen violation of the Constitution and laws of the Republic of the Philippines,
thus resulting in their unjust enrichment.
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The complaint alleged that respondent Luz Reyes-Bakunawa (Luz Bakunawa) had
served as Imelda Marcos Social Secretary during the Marcos administration; that it was
during that period of her incumbency in that position that Luz Bakunawa and her
husband Manuel Bakunawa had acquired assets, funds and other property grossly and
manifestly disproportionate to her salaries and their other lawful income;
5
and that Luz
Bakunawa, by herself and/or in unlawful concert with Defendants Ferdinand E. Marcos
and Imelda R. Marcos, taking undue advantage of her position, influence and
connection with the latter Defendant spouses, for their benefit and unjust enrichment
and in order to prevent disclosure and recovery of assets illegally obtained, engaged in
devices, schemes and stratagems,
6
particularly:
1) acted as dummies, nominees, and/or agents of the Marcos spouses and, with the
active collaboration, knowledge and willing participation of the other defendants,
established several corporations engaged in a wide range of economic activities, such
as construction and cattle ranching;chanr0blesvirtualawlibrary

2) secured favorable contracts with the Department of Public Works and
Communications for the construction of government projects through grossly
undercapitalized corporations and without complying with such usual requirements as
public bidding, notice and publication of contractors;chanr0blesvirtualawlibrary

3) unlawfully acquired heads of cattle from the government dispersal program and
raised them on ranch lands encroaching on forest zones;chanr0blesvirtualawlibrary

4) unlawfully encroached upon a mangrove-forested section in Masbate, Masbate and
converted it into a fishpond;chanr0blesvirtualawlibrary

5) unlawfully amassed funds by obtaining huge credit lines from government financial
institutions, and incorporating into their contracts a cost-escalation adjustment
provision to justify collection of grossly arbitrary and unconscionable amounts
unsupported by evidence of increase in prices;chanr0blesvirtualawlibrary

6) unlawfully imported hundreds of brand-new units of heavy equipment without paying
customs duties and other allied taxes amounting to millions of pesos, by falsely
representing said heavy equipment to be for official government use and selling them
at very low prices to avoid paying the required taxes.
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The Republic prayed for: (a) the reconveyance to itself of all funds and other property
impressed with constructive trust, as well as funds and other property acquired by
respondents abuse of right and power and through unjust enrichment, plus interests;
(b) accounting of all beneficial interests in funds, properties and assets in excess of
their unlawful earnings; and (c) payment of actual damages to be proved during the
trial, moral damages of P50,000,000,000.00, temperate, nominal and exemplary
damages, attorneys fees, litigation expenses and treble judicial costs.
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In their amended answer, the Bakunawas alleged that Luz Bakunawa was never the
Social Secretary of Imelda Marcos, but only an employee in the office of the Social
Secretary; that the properties acquired while Luz Bakunawa was employed in the
Government were purchased with honestly earned money and their acquisition was well
within their legitimate income; that their family owned and controlled five closed family
corporations, namely: (1) Hi-Tri Development Corporation; (2) 7-R Development
Corporation; (3) 7-R Heavy Equipment, Inc.; (4) 7-R Sales Company, Inc.; and (5) 7-R
Ranch, Inc.; that their public works contracts were awarded to them in accordance with
law; that their acquisition of the heads of cattle were legal;
9
and that they did not
commit any breach of trust while in public office, and did not possess illegally acquired
funds that rendered them liable under constructive trust in favor of the
Republic.
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During the pre-trial on August 26, 1999, the Bakunawas admitted that: (a) the
properties enumerated in Annex A of the complaint
11
belonged to or were connected to
them, except three corporations, namely:7-R International Trading, 7-R Enterprise, Inc.,
and 7-R Group of Companies; and (b) two parcels of land that belonged to one of their
children.
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Also during the pre-trial, the parties agreed on the following statement of the issues, to
wit:
[t]he fundamental issue in this case is whether or not defendant Luz Bakunawa,
considering her position in Malacaang during the incumbency of President Ferdinand
E. Marcos from 1970 up to 1986, occupied a confidential position in Malacaang, and
was able to obtain contracts, run businesses and acquire real properties as enumerated
in the Complaint, using her office and the influence of either or both of the [s]pouses
Ferdinand and Imelda Marcos. The parties agreed that it is the use of the influence of
the Spouses Marcos that constitutes the essence of the case, and not the failure to
report the Statement of Assets and Liabilities or any other impropriety in the acquisition
of the properties herein, this case having been filed under the authority given to the
Presidential Commission on Good Government under Executive Orders No. 1,2, 14 and
14-a.
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After the Republic rested its case, respondents filed their motion to dismiss,
14
insisting
that the Republic has failed to establish even prima facie, its case and/or charges
against them.
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Ruling of the Sandiganbayan

On April 10, 2002, the Sandiganbayan rendered its decision in favor of respondents, to
wit:
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x x x x

As the evidence stands, neither the presence of the link with the Marcoses, nor the
irrefutability of the evidence against the Bakunawas for their misuse of that connection
exists to justify the instant action by the PCGG.

In view of all the above, this Court is constrained to grant the Motion to Dismiss, as it
hereby dismisses, the Complaint of the plaintiff for its failure to prove the essential
allegations thereof.

The writs of sequestration issued and in force against the properties of the Bakunawas
as enumerated in Annex A of the Complaint (page 24 and p. 34, Vol. I, Record) are
lifted, set aside and declared of no further force and effect.

SO ORDERED.
The Sandiganbayan justified its decision in the following manner:
x x x x

Many of the plaintiffs allegations in its specific averments (Article V) in the complaint
are alluded to in the evidence in a general fashion: engaging in cattle ranching and
construction [para. 12 (a)], entering into public works contracts [para.12 (b)],
acquisition of mangrove areas [para. 12 (c)]. Nothing exists in the record, however,
with respect to undercapitalization of the corporation, non-compliance with bidding
requirements, encroachment of ranches into forest zones, huge credit lines, unjustified
claims of cost escalation adjustment, and importation of heavy equipment.

Properties have been shown in the name of the spouses Bakunawa or either of them;
testimonies have been rendered about eviction, official documents presented with
respect to public works contracts, and finally, a Statement of Assets and Liabilities for
the year 1985. Indeed, to hear some of the witnesses, acts of oppression appear to
have been committed if not by the wife then by the husband Manuel Bakunawa. There
is no indication however, that the acts of oppression involved the improper use of
influence on the part of the defendant Luz Bakunawa by reason of her having been
employed in the office of the Social Secretary of Imelda Marcos when the latter was the
First Lady.

x x x x

An examination of the testimonial evidence for the Plaintiff, as summarized in the first
part of this decision, shows its concentration in the alleged dispossession of some
landowners of their occupied land in the province of Masbate by the defendants
Bakunawa and the allegedly (sic) inaction by the Bureau of Forestry and the police
agencies thereon. Thus, the almost uniform allegation of witnesses is that they were
dispossessed of pasture lands which they believed they were entitled to possess. There
were documents presented to prove that, indeed, the witnesses had claims to these
pieces of property or had occupied them and had introduced improvements thereon.

The tenor of the testimony of the said witnesses is that while there was no force
directly applied in the dispossession of their properties, their lands, however, were
fenced in, and occupied by, other people, allegedly the Bakunawas and secured by
armed and uniformed men.

There is likewise the contention of the plaintiffs witnesses that they did not know who
these men were, although it has been said that one or two of the men who helped in
fencing off these properties were employees of the Bakunawas.

What is clear is that with the evidence thus far, the Bakunawas, or more specifically,
Manuel Bakunawa, ignored the Bureau of Forestry summons, and caused the
unceremonious exclusion of people who had apparently occupied rather large tracts of
land under permits for the Bureau or those with pending applications.

There also seems to be evidence that defendant Luz Bakunawa did quite a bit of work
in her capacity as a member of the staff of the Social Secretary of Imelda Marcos. While
the influence of Luz Bakunawa may be assumed or conjectured, there has been no
evidence which would categorically show that the position of defendant Luz Bakunawa
in Malacaang in concert with the spouses Marcos or either of them was the
explanation for the absence of the law enforcement officers or the inaction of the
administrative officers of the government.

x x x x

The influence may be assumed and in common parlance, it might be reasonably made.
But to conclude that there was abuse of office by Luz Bakunawa or her utilization of the
influence of her office or of the spouses Marcos cannot be assumed or stated in any
certainty.

And since, as aforesaid, the action herein is confiscatory in character, assumptions will
not do to obtain judgment against the defendants Bakunawa.
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The Sandiganbayan ruled that in civil suits initiated by the Presidential Commission on
Good Government (PCGG) for the recovery of illegally acquired property pursuant to
Republic Act No. 1379,
18
the Republic must show not only that defendant was a
subordinate of the Marcos spouses or of either of them, but also that the relationship
was similar to that of an immediate member of the Marcos family or a dummy of the
Marcoses.
19
It concluded that no proof established the link between the alleged acts of
the Bakunawas and those of the Marcoses, or even the proximity of Luz Bakunawa as a
Marcos relative or Marcos dummy.

The Republic sought the reconsideration of the decision, arguing that the
Sandiganbayan erred in holding that it did not show the Bakunawas link with the
Marcoses, and in ruling that it did not prove that the Bakunawas had abused their
connections or close association with the Marcoses.
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On November 8, 2007, the Sandiganbayan denied the Republics motion for
reconsideration,
21
reiterating its ruling that the Republic did not discharge its burden of
proving the close links between the Bakunawas and the Marcoses, and of proving how
the Bakunawas had abused said links, assuming that the links existed.

Hence, this appeal.
Issues

The Republic ascribes the following errors, to wit:
I.

THE QUANTUM OF PROOF REQUIRED TO PROVE PETITIONERS CASE AGAINST THE
BAKUNAWAS IS MERE PREPONDERANCE OF EVIDENCE.
II.

THE LINK BETWEEN AND/OR AMONG THE BAKUNAWAS AND THE MARCOSES WAS
SATISFACTORILY ESTABLISHED BY PETITIONER.
III.

PETITIONER WAS ABLE TO ESTABLISH THAT THE BAKUNAWAS AMASSED ASSETS,
FUNDS AND PROPERTIES GROSSLY AND MANIFESTLY DISPROPORTIONATE TO THEIR
SALARIES AND OTHER LAWFUL INCOME BECAUSE OF THEIR POSITION IN THE
GOVERNMENT AND/OR CLOSE ASSOCIATION AND CONNECTION WITH THE
MARCOSES TO THE PREJUDICE OF PETITIONER AND THE FILIPINO PEOPLE.
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In their comment,
23
respondents mainly submit that the Republic failed to present a
justiciable issue to warrant the reversal of the Sandiganbayans decision; and that the
April 10, 2002 decision already become final and could no longer be reviewed and
modified because of the belated filing of the petition for review.

On her part, First Lady Marcos opted not to file her comment.
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Ruling

The appeal lacks merit.
1.
Appeal of the Republic was timely

The Bakunawas contend that the April 10, 2002 decision already became final because
of the Republics failure to file the petition for review on time.

We cannot sustain the contention.

The Republic had until November 24, 2007 within which to file the petition for review. It
filed a motion seeking an extension of 30 days of its period to file, or until December
24, 2007. Although it did not file the petition within the requested extension period, the
Court directed it on June 30, 2008 to file the petition for review within 15 days from
notice. Considering that it received the resolution of June 30, 2008 on August 11,
2008,
25
its filing of the petition for review on August 26, 2008 was timely.

2.
Preponderance of evidence is required in actions brought to recover ill-
gotten wealth

In its decision of April 10, 2002, the Sandiganbayan stated as follows:
Considering the confiscatory character of proceedings described in E.O. No. 14 in
actions for recovery of alleged unlawfully acquired property such as the instant case,
evidence must be substantial, if not beyond reasonable doubt, akin to the actions for
forfeiture under Republic Act. No. 1379; this, notwithstanding the statements in Sec. 3
of the Executive Order which states the adequacy of mere preponderance of
evidence.
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The Republic argues that the Sandiganbayan thereby erred in seemingly requiring a
degree of proof greater than that required by Executive Order (E.O.) No. 14-A.
27
This
was also its submission in the motion for reconsideration vis--vis the decision of April
10, 2002.

In denying the Republics motion for reconsideration through the November 8, 2007
resolution, the Sandiganbayan agreed with the Republics submission to the effect that
preponderance of evidence was all that was required for this case. However, the
Sandiganbayan pointed out that even on that basis the Republic still did not satisfy its
quantum of proof because the facts it established were not sufficient to prove its case
against respondents.
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We uphold the Sandiganbayan.

We first clarify that the Republic correctly submits that only a preponderance of
evidence was needed to prove its demand for reconveyance or recovery of ill-gotten
wealth. That is quite clear from Section 1 of E.O. No. 14-A, which provides:
Section 1. Section 3 of Executive Order No. 14 dated May 7, 1986 is hereby amended to
read as follows:cralawlibrary

Sec. 3. The civil suits to recover unlawfully acquired property under Republic Act No.
1379 or for restitution, reparation of damages, or indemnification for consequential and
other damages or any other civil actions under the Civil Code or other existing laws filed
with the Sandiganbayan against Ferdinand E. Marcos, Imelda R. Marcos, members of
their immediate family, close relatives, subordinates, close and/or business associates,
dummies, agents and nominees, may proceed independently of any criminal
proceedings and may be proved by a preponderance of evidence.
By preponderance of evidence is meant that the evidence adduced by one side is, as a
whole, superior to that of the other side. Essentially, preponderance of evidence refers
to the comparative weight of the evidence presented by the opposing parties. As such,
it has been defined as the weight, credit, and value of the aggregate evidence on
either side, and is usually considered to be synonymous with the term greater weight
of the evidence or greater weight of the credible evidence. It is proof that is more
convincing to the court as worthy of belief than that which is offered in opposition
thereto.
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Here, the Bakunawas filed a motion to dismiss, by which they specifically demurred to
the evidence adduced against them. A demurrer to evidence is an objection by one of
the parties in an action to the effect that the evidence that his adversary produced,
whether true or not, is insufficient in point of law to make out a case or to sustain the
issue. The demurring party thereby challenges the sufficiency of the whole evidence to
sustain a judgment. The court, in passing upon the sufficiency of the evidence, is
required merely to ascertain whether there is competent or sufficient evidence to
sustain the indictment or claim, or to support a verdict of guilt or liability.
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Under the rule on preponderance of evidence, the court is instructed to find for and to
dismiss the case against the defendant should the scales hang in equipoise and there is
nothing in the evidence that tilts the scales to one or the other side. The plaintiff who
had the burden of proof has failed to establish its case, and the parties are no better off
than before they proceeded upon their litigation. In that situation, the court should
leave the parties as they are.
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Moreover, although the evidence of the plaintiff may be stronger than that of the
defendant, there is no preponderance of evidence on the plaintiffs side if its evidence
alone is insufficient to establish its cause of action.
32
Similarly, when only one side is
able to present its evidence, and the other side demurs to the evidence, a
preponderance of evidence can result only if the plaintiffs evidence is sufficient to
establish the cause of action. For this purpose, the sheer volume of the evidence
presented by one party cannot tip the scales in its favor. Quality, not quantity, is the
primordial consideration in evaluating evidence.
3.
The evidence of the Republic did not preponderantly establish the ill-gotten
nature of the Bakunawas wealth

The decisive query is whether the Republic preponderantly showed that the Bakunawas
had acquired ill-gotten wealth during Luz Bakunawas employment during the Marcos
administration.

In Republic v. Sandiganbayan (First Division), decided on April 12, 2011,
33
the Court
settled not only the meaning of ill-gotten wealth but also who were the persons liable to
illegally acquire or amass such wealth, viz:
x x x x
II
The Concept and Genesis of Ill-Gotten Wealth in the Philippine Setting

A brief review of the Philippine law and jurisprudence pertinent to ill-gotten wealth
should furnish an illuminating backdrop for further discussion.

In the immediate aftermath of the peaceful 1986 EDSA Revolution, the administration
of President Corazon C. Aquino saw to it, among others, that rules defining the
authority of the government and its instrumentalities were promptly put in place. It is
significant to point out, however, that the administration likewise defined the limitations
of the authority.

The first official issuance of President Aquino, which was made on February 28, 1986,
or just two days after the EDSA Revolution, was Executive Order (E.O.) No. 1, which
created the Presidential Commission on Good Government (PCGG). Ostensibly, E.O. No.
1 was the first issuance in light of the EDSA Revolution having come about mainly to
address the pillage of the nations wealth by President Marcos, his family, and cronies.

E.O. No. 1 contained only two WHEREAS Clauses, to wit:
WHEREAS, vast resources of the government have been amassed by former
President Ferdinand E. Marcos, his immediate family, relatives, and close associates
both here and abroad;chanr0blesvirtualawlibrary

WHEREAS, there is an urgent need to recover all ill-gotten wealth;
Paragraph (4) of E.O. No. 2
34
further required that the wealth, to be ill-gotten, must be
acquired by them through or as a result of improper or illegal use of or the conversion
of funds belonging to the Government of the Philippines or any of its branches,
instrumentalities, enterprises, banks or financial institutions, or by taking undue
advantage of their official position, authority, relationship, connection or influence to
unjustly enrich themselves at the expense and to the grave damage and prejudice of
the Filipino people and the Republic of the Philippines.

Although E.O. No. 1 and the other issuances dealing with ill-gotten wealth (i.e., E.O.
No. 2, E.O. No. 14, and E.O. No. 14-A) only identified the subject matter of ill-gotten
wealth and the persons who could amass ill-gotten wealth and did not include an
explicit definition of ill-gotten wealth, we can still discern the meaning and concept of
ill-gotten wealth from the WHEREAS Clauses themselves of E.O. No. 1, in that ill-gotten
wealth consisted of the vast resources of the government amassed by former
President Ferdinand E. Marcos, his immediate family, relatives and close associates both
here and abroad. It is clear, therefore, that ill-gotten wealth would not include all the
properties of President Marcos, his immediate family, relatives, and close associates but
only the part that originated from the vast resources of the government.

In time and unavoidably, the Supreme Court elaborated on the meaning and concept of
ill-gotten wealth. In Bataan Shipyard & Engineering Co., Inc. v. Presidential Commission
on Good Government, or BASECO, for the sake of brevity, the Court held that:
x x x until it can be determined, through appropriate judicial proceedings, whether the
property was in truth ill-gotten, i.e., acquired through or as a result of improper
or illegal use of or the conversion of funds belonging to the Government or any of
its branches, instrumentalities, enterprises, banks or financial institutions, or
by taking undue advantage of official position, authority, relationship, connection or
influence, resulting in unjust enrichment of the ostensible owner and grave damage and
prejudice to the State. And this, too, is the sense in which the term is commonly
understood in other jurisdictions.
The BASECO definition of ill-gotten wealth was reiterated in Presidential Commission on
Good Government v. Lucio C. Tan, where the Court said:
On this point, we find it relevant to define ill-gotten wealth. In Bataan Shipyard and
Engineering Co., Inc., this Court described ill-gotten wealth as follows:cralawlibrary

Ill-gotten wealth is that acquired through or as a result of improper or illegal use of or
the conversion of funds belonging to the Government or any of its branches,
instrumentalities, enterprises, banks or financial institutions, or by taking undue
advantage of official position, authority, relationship, connection or influence, resulting
in unjust enrichment of the ostensible owner and grave damage and prejudice to the
State. And this, too, is the sense in which the term is commonly understood in other
jurisdiction.

Concerning respondents shares of stock here, there is no evidence presented by
petitioner that they belong to the Government of the Philippines or any of its branches,
instrumentalities, enterprises, banks or financial institutions. Nor is there evidence that
respondents, taking undue advantage of their connections or relationship with former
President Marcos or his family, relatives and close associates, were able to acquire
those shares of stock.
Incidentally, in its 1998 ruling in Chavez v. Presidential Commission on Good
Government, the Court rendered an identical definition of ill-gotten wealth,
viz:cralawlibrary

x x x. We may also add that ill-gotten wealth, by its very nature, assumes a public
character. Based on the aforementioned Executive Orders, ill-gotten wealth refers to
assets and properties purportedly acquired, directly or indirectly, by former President
Marcos, his immediate family, relatives and close associates through or as a result of
their improper or illegal use of government funds or properties; or their
having taken undue advantage of their public office; or their use of powers,
influence or relationships, resulting in their unjust enrichment and causing grave
damage and prejudice to the Filipino people and the Republic of the Philippines.
Clearly, the assets and properties referred to supposedly originated from the
government itself. To all intents and purposes, therefore, they belong to the
people. As such, upon reconveyance they will be returned to the public
treasury, subject only to the satisfaction of positive claims of certain persons as may
be adjudged by competent courts. Another declared overriding consideration for the
expeditious recovery of ill-gotten wealth is that it may be used for national economic
recovery.

All these judicial pronouncements demand two concurring elements to be present
before assets or properties were considered as ill-gotten wealth, namely: (a) they must
have originated from the government itself, and (b) they must have been taken by
former President Marcos, his immediate family, relatives, and close associates by illegal
means.

But settling the sources and the kinds of assets and property covered by E.O. No. 1 and
related issuances did not complete the definition of ill-gotten wealth. The further
requirement was that the assets and property should have been amassed by former
President Marcos, his immediate family, relatives, and close associates both here and
abroad. In this regard, identifying former President Marcos, his immediate family, and
relatives was not difficult, but identifying other persons who might be the close
associates of former President Marcos presented an inherent difficulty, because it was
not fair and just to include within the term close associates everyone who had had any
association with President Marcos, his immediate family, and relatives.

Again, through several rulings, the Court became the arbiter to determine who were the
close associates within the coverage of E.O. No. 1.

In Republic v. Migrio, the Court held that respondents Migrio, et al. were not
necessarily among the persons covered by the term close subordinate or close associate
of former President Marcos by reason alone of their having served as government
officials or employees during the Marcos administration, viz:
It does not suffice, as in this case, that the respondent is or was a
government official or employee during the administration of former Pres.
Marcos. There must be a prima facie showing that the respondent unlawfully
accumulated wealth by virtue of his close association or relation with former
Pres. Marcos and/or his wife. This is so because otherwise the respondents case
will fall under existing general laws and procedures on the matter. x x x
In Cruz, Jr. v. Sandiganbayan, the Court declared that the petitioner was not a close
associate as the term was used in E.O. No. 1 just because he had served as the
President and General Manager of the GSIS during the Marcos administration.

In Republic v. Sandiganbayan, the Court stated that respondent Maj. Gen. Josephus Q.
Ramas having been a Commanding General of the Philippine Army during the Marcos
administration d[id] not automatically make him a subordinate of former President
Ferdinand Marcos as this term is used in Executive Order Nos. 1, 2, 14 and 14-A absent
a showing that he enjoyed close association with former President Marcos.

It is well to point out, consequently, that the distinction laid down by E.O. No. 1 and its
related issuances, and expounded by relevant judicial pronouncements unavoidably
required competent evidentiary substantiation made in appropriate judicial proceedings
to determine: (a) whether the assets or properties involved had come from the vast
resources of government, and (b) whether the individuals owning or holding such
assets or properties were close associates of President Marcos. The requirement of
competent evidentiary substantiation made in appropriate judicial proceedings was
imposed because the factual premises for the reconveyance of the assets or properties
in favor of the government due to their being ill-gotten wealth could not be simply
assumed. Indeed, in BASECO, the Court made this clear enough by emphatically
observing:
6. Governments Right and Duty to Recover All Ill-gotten Wealth

There can be no debate about the validity and eminent propriety of the Governments
plan to recover all ill-gotten wealth.

Neither can there be any debate about the proposition that assuming the above
described factual premises of the Executive Orders and Proclamation No. 3 to be true,
to be demonstrable by competent evidence, the recovery from Marcos, his family and
his minions of the assets and properties involved, is not only a right but a duty on the
part of Government.

But however plain and valid that right and duty may be, still a balance must
be sought with the equally compelling necessity that a proper respect be
accorded and adequate protection assured, the fundamental rights of private
property and free enterprise which are deemed pillars of a free society such as
ours, and to which all members of that society may without exception lay claim.

x x x Democracy, as a way of life enshrined in the Constitution, embraces as its
necessary components freedom of conscience, freedom of expression, and freedom in
the pursuit of happiness. Along with these freedoms are included economic freedom
and freedom of enterprise within reasonable bounds and under proper control. x x x
Evincing much concern for the protection of property, the Constitution distinctly
recognizes the preferred position which real estate has occupied in law for ages.
Property is bound up with every aspect of social life in a democracy as democracy is
conceived in the Constitution. The Constitution realizes the indispensable role which
property, owned in reasonable quantities and used legitimately, plays in the stimulation
to economic effort and the formation and growth of a solid social middle class that is
said to be the bulwark of democracy and the backbone of every progressive and happy
country.

a. Need of Evidentiary Substantiation in Proper Suit

Consequently, the factual premises of the Executive Orders cannot simply be
assumed. They will have to be duly established by adequate proof in each
case, in a proper judicial proceeding, so that the recovery of the ill-gotten
wealth may be validly and properly adjudged and consummated; although
there are some who maintain that the fact that an immense fortune, and vast
resources of the government have been amassed by former President Ferdinand E.
Marcos, his immediate family, relatives, and close associates both here and abroad,
and they have resorted to all sorts of clever schemes and manipulations to disguise and
hide their illicit acquisitions is within the realm of judicial notice, being of so
extensive notoriety as to dispense with proof thereof. Be this as it may, the
requirement of evidentiary substantiation has been expressly acknowledged,
and the procedure to be followed explicitly laid down, in Executive Order No.
14.
Accordingly, the Republic should furnish to the Sandiganbayan in proper judicial
proceedings the competent evidence proving who were the close associates of
President Marcos who had amassed assets and properties that would be rightly
considered as ill-gotten wealth.

x x x x
As can be gleaned from the foregoing pronouncement, evidentiary substantiation of the
allegations of how the wealth was illegally acquired and by whom was necessary. For
that purpose, the mere holding of a position in the Marcos administration did not
necessarily make the holder a close associate within the context of E.O. No.1. According
to Republic v. Migrio,
35
the term subordinate as used in E.O. No. 1
36
and E.O. No. 2
37

referred to a person who enjoyed a close association with President Marcos and/or his
wife similar to that of an immediate family member, relative, and close associate, or to
that of a close relative, business associate, dummy, agent, or nominee. Indeed, a prima
facie showing must be made to show that one unlawfully accumulated wealth by virtue
of a close association or relation with President Marcos and/or his wife.
38
It would not
suffice, then, that one served during the administration of President Marcos as a
government official or employee.

The Republic particularly insists that Luz Bakunawa served as the Social Secretary or
the Assistant Social Secretary of First Lady Marcos; and mentions several other
circumstances that indicated her close relationship with the Marcoses, such as her
assumption of office in the early part of the Marcos administration,
39
the
accommodations extended to her during her various travels,
40
the fact that her close
relationship with the Marcoses was of common knowledge among the Masbateos,
41

and the negotiated contracts the Bakunawas entered into during the Marcos
administration.
42
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However, Luz Bakunawa maintains that she was not First Lady Marcos Social Secretary
but a mere member of the staff of the Social Secretary; and that the assets of the
Bakunawas were honestly earned and acquired well within the legitimate income of
their businesses.

We hold that the Sandiganbayan correctly ruled that the evidence of the Republic was
able to establish, at best, that Luz Bakunawa had been an employee in Malacaang
Palace during the Marcos administration, and did not establish her having a close
relationship with the Marcoses, or her having abused her position or employment in
order to amass the assets subject of this case. Consequently, Luz Bakunawa could not
be considered a close associate or subordinate of the Marcoses within the context of
E.O. No. 1 and E.O. No. 2.

The determination by the Sandiganbayan of the equiponderance or insufficiency of
evidence involved its appreciation of the evidence. We cannot undo such determination
unless the Republic makes a strong demonstration to us that the determination was
whimsical or capricious.
43
Alas, the Republic did not make such demonstration. Its
evidence could not sustain the belief that the Bakunawas had used their influence, or
the Marcoses influence in acquiring their properties. Nor did it prove that the ties or
relationship between the Bakunawas and the Marcoses had been similar to that of an
immediate member of the family or a dummy.

On another important aspect, the evidence of the Republic was likewise wanting. The
Sandiganbayan enumerated in its decision five activities in which the Bakunawas had
acquired their ill-gotten wealth, namely: (a) land-grabbing and cattle-ranching; (b)
engaging in government construction projects; (c) operating fishponds; (d) obtaining
credit lines from government financial institutions; and (e) importing heavy
equipment.
44
However, the decision dwelt only on land-grabbing and the construction
projects for the reason that the Republic attempted to substantiate only those two
activities. The Court is thus limited to the review of the findings on the two activities.

Anent land-grabbing, the records show that although the Bakunawas had ignored the
summons from the Bureau of Forestry, and that the several persons occupying large
tracts of land under permits from the Bureau of Forestry or under still-pending
applications had been dispossessed thereof, the dispossessed persons whom the
Republic presented as witnesses could not tell in court that the Bakunawas had
employed the people who had fenced or occupied the lands in question. Such witnesses
admitted that they did not put up much resistance against their forcible dispossession
because of their belief that the Bakunawas had been very influential and had enjoyed
very close ties with the Marcoses. However, they did not show that they had at the time
any direct contact or communication with the Bakunawas, which could only mean that
they only surmised and suspected the participation of the Bakunawas in their
dispossession. As such, the Republics evidence in that regard could not be sufficient,
for surmises and suspicions could not support any conclusion either that the Bakunawas
had taken advantage of their close ties with the Marcoses in order to dispossess the
affected witnesses, or that Luz Bakunawa had abused her influence arising from her
close association with the Marcoses.

The Republic presented documents tending to prove that the dispossessed witnesses
had retained claims to the affected properties,
45
and that the Bakunawas themselves
had been issued pasture leases over the same areas.
46
Given that both the
dispossessed witnesses and the Bakunawas held legal rights of possession respecting
the same areas independently of each other, the Sandiganbayan did not err in ruling
that the plaintiffs evidence is not conclusive proof of the ill-gotten character of the
lands in the possession of the defendants Bakunawas.
47
This is really a good reason for
the Sandiganbayan to hold that the Republic had not preponderantly shown that the
acts of dispossession and oppression had involved the improper use of her influence by
Luz Bakunawa on account of her close association with the Marcoses.
48
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Concerning the negotiated construction contracts, the Republic posits that the contracts
had been entered into when Luz Bakunawa was a member of the Presidential Staff
during the Marcos administration, laying heavy emphasis on the notations and
handwritten instructions by President Marcos found on the written communications
from Manuel Bakunawa to then DPWH Secretary Baltazar Aquino.

Yet, the Republic offered the negotiated contracts solely to prove that the Bakunawas
had been incorporators or owners, or had held key positions in the corporations that
entered into the contracts.
49
The Sandiganbayan correctly ruled, therefore, that the
contracts could be considered and appreciated only for those stated purposes, not for
the purpose of proving the irregularity of the contracts, opining as follows:
x x x. The documents appear to be public documents and are, therefore, considered
prima facie evidence of the fact of their issuance and that they were signed by the
persons whose signatures appear therein. It is, indeed, apparent on the face of the
documents that government projects were awarded to the defendants Bakunawas
through negotiated contracts, and that at least one was approved by then President
Marcos himself. Outside of these, however, there can be no other facts that can be
inferred from the aforesaid documents.
50
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The Court upholds the Sandiganbayan. It was basic enough that the Sandiganbayan
could not consider any evidence that was not formally offered; and could consider
evidence only for the purposes it was specifically offered. Section 34, Rule 132 of the
Rules of Court explicitly states:
Section 34. Offer of evidence. The court shall consider no evidence which has not
been formally offered. The purpose for which the evidence is offered must be specified.
The need to formally offer evidence by specifying the purpose of the offer cannot be
overemphasized. This need is designed to meet the demand for due process by
apprising the adverse party as well as the trial court on what evidence the court would
soon be called upon to decide the litigation. The offer and purpose will also put the trial
court in the position to determine which rules of evidence it shall apply in admitting or
denying admission to the evidence being offered. According to Union Bank of the
Philippines v. Tiu:
51
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x x x a formal offer is necessary because judges are mandated to rest their findings of
facts and their judgment only and strictly upon the evidence offered by the parties at
the trial. It has several functions: (1) to enable the trial judge to know the purpose or
purposes for which the proponent is presenting the evidence; (2) to allow opposing
parties to examine the evidence and object to its admissibility; and (3) to facilitate
review by the appellate court, which will not be required to review documents not
previously scrutinized by the trial court. x x x.
Expounding on the office of the offer and statement of the purposes, the Court has
cogently said in Candido v. Court of Appeals:
52
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A document, or any article for that matter, is not evidence when it is simply marked for
identification; it must be formally offered, and the opposing counsel given an
opportunity to object to it or cross-examine the witness called upon to prove or identify
it. A formal offer is necessary since judges are required to base their findings of fact
and judgment only - and strictly - upon the evidence offered by the parties at the trial.
To allow a party to attach any document to his pleading and then expect the court to
consider it as evidence may draw unwarranted consequences. The opposing party will
be deprived of his chance to examine the document and object to its admissibility. The
appellate court will have difficulty reviewing documents not previously scrutinized by
the court below. The pertinent provisions of the Revised Rules of Court on the inclusion
on appeal of documentary evidence or exhibits in the records cannot be stretched as to
include such pleadings or documents not offered at the hearing of the case.
At any rate, the Court must point out that negotiated contracts are not per se illegal. A
negotiated contract is one that is awarded on the basis of a direct agreement between
the Government and the contractor, without going through the normal procurement
process, like obtaining the prior approval from another authority, or a competitive
bidding process. It is generally resorted to for convenience, or when time is of the
essence, or where there is a lack of qualified bidders or contractors, or where there is
conclusive evidence that greater economy and efficiency would be achieved.
53
The
Court has upheld the validity of a negotiated contract made pursuant to law, like a
negotiated contract entered into by a City Mayor pursuant to the then existing Local
Government Code,
54
or a negotiated contract that eventually redounded to the benefit
of the general public, even if there was no specific covering appropriation pursuant to
COA rules,
55
or a negotiated contract that was made due to an emergency in the health
sector,
56
or a negotiated contract for long overdue repair and renovation needed to
provide better health services.
57
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Absent evidence proving that the negotiated construction contracts had been irregularly
entered into by the Bakunawas, or that the public had been thereby prejudiced, it is
pointless for the Court to declare their invalidity. On the contrary, the Sandiganbayan
correctly observed that the presumption of the validity of the contracts
prevailed.
58
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It is true that the recovery of ill-gotten wealth should be relentlessly pursued. But the
pursuit should not be mindless as to be oppressive towards anyone. Due process
requires that there be sufficient competent evidence of the asset being ill-gotten
wealth, and of the person or persons charged with the illegal acquisition of ill-gotten
wealth being a close associate or subordinate of the Marcoses who took advantage of
such ties with the Marcoses to enrich themselves. In that effort, the Republic carries the
heavy burden of proof, and must discharge such burden fully; otherwise, the effort
would fail and fall.

WHEREFORE, we DENY the petition for review on certiorari for its lack of merit; and
AFFIRM the decision rendered on April 10, 2002, without pronouncements on costs of
suit.

SO ORDERED.






FIRST DIVISION
G.R. No. 202651, August 28, 2013
LUCENA B. RALLOS, Petitioner, v. CITY OF CEBU, HONORABLE MICHAEL RAMA,
HONORABLE JOY AUGUSTUS YOUNG, HONORABLE SISINIO ANDALES,
HONORABLE RODRIGO ABELLANOSA, HONORABLE ALVIN ARCILLA,
HONORABLE RAUL ALCOSEBA, HONORABLE MA. NIDA CABRERA,
HONORABLE ROBERTO CABARRUBIAS, HONORABLE ALVIN DIZON,
HONORABLE RONALD CUENCO, HONORABLE LEA JAPSON, HONORABLE JOSE
DALUZ III, HONORABLE EDGARDO LABELLA, HONORABLE MARGARITA
OSMEA, HONORABLE AUGUSTUS PE, HONORABLE RICHARD OSMEA,
HONORABLE NOEL WENCESLAO, HONORABLE EDUARDO RAMA, JR.,
HONORABLE MICHAEL RALOTA, HONORABLE JOHN PHILIP ECHAVEZ-PO,
ATTY. JOSEPH BERNALDEZ, ATTY. JUNE MARATAS, ATTY. JERONE CASTILLO,
ATTY. MARY ANN SUSON, ATTY. LESLIE ANN REYES, ATTY. CARLO VINCENT
GIMENA, ATTY. FERDINAND CAETE, ATTY. ISMAEL GARAYGAY III, ATTY.
LECEL LLAMEDO AND ATTY. MARIE VELLE ABELLA, Respondents.
R E S O L U T I O N
REYES, J.:

One of the Heirs of Reverend Father Vicente Rallos (Heirs of Fr. Rallos), Lucena B.
Rallos
1
(Lucena), is now before this Court with a petition
2
praying for the citation for
indirect contempt of the City of Cebu, Mayor Michael Rama (Mayor Rama), the
presiding officer and members of the Sangguniang Panlungsod, and lawyers from the
Office of the City Attorney (respondents). The instant petition is anchored on Lucenas
allegation that the respondents impede the execution of final and executory judgments
rendered by this Court in G.R. Nos. 179662
3
and 194111
4
. G.R. Nos. 179662 and
194111 were among a string of suits which originated from a Complaint for Forfeiture
of Improvements or Payment of Fair Market Value with Moral and Exemplary Damages
5

filed in 1997 by the Heirs of Fr. Rallos before the Regional Trial Court (RTC) of Cebu
City, Branch 9, against the City of Cebu relative to two parcels of land
6
with a total area
of 4,654 square meters located in Barangay Sambag I which were expropriated in 1963
for road construction purposes.
Antecedent Facts

At the root of the controversy are Lots 485-D and 485-E of the Banilad Estate, Sambag
I, Cebu City, which were expropriated to be used as a public road in 1963. The Heirs of
Fr. Rallos alleged that the City of Cebu occupied the lots in bad faith sans the authority
of the formers predecessors-in-interest, who were the registered owners of the subject
parcels of land.

On June 11, 1997, the Heirs of Fr. Rallos filed before the RTC a Complaint for Forfeiture
of Improvements or Payment of Fair Market Value with Moral and Exemplary Damages
against the City of Cebu.

In its Answer filed on October 6, 1997, the City of Cebu contended that the subject
parcels of land are road lots and are not residential in character. They have been
withdrawn from the commerce of men and were occupied by the City of Cebu without
expropriation proceedings pursuant to Ordinance No. 416 which was enacted in 1963 or
more than 35 years before the Heirs of Fr. Rallos instituted their complaint.

On January 14, 2000, the RTC rendered a Decision,
7
which found the City of Cebu liable
to pay the Heirs of Fr. Rallos just compensation in the amount still to be determined by
a board of three commissioners, one each to be designated by the contending parties
and the court.

To assail the Decision rendered on January 14, 2000, the City of Cebu filed a Motion for
Reconsideration, which was however denied by the RTC on February 5, 2001.
8
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The members of the Board of Commissioners thereafter submitted their respective
appraisal reports. On July 24, 2001, the RTC rendered a Decision,
9
the dispositive
portion of which, in part, reads:
WHEREFORE, the [RTC] hereby renders judgment, ordering [the City of Cebu] to pay
[the Heirs of Fr. Rallos] as just compensation for Lots 485-D and 485-E the amount of
Php34,905,000.00 plus interest at 12% per annum to start 40 days from [the] date of
this decision and to continue until the whole amount shall have been fully paid. [The
City of Cebu] is further ordered to pay [the Heirs of Fr. Rallos] the following
amounts:cralawlibrary

1. Php50,000.00 as reimbursement for attorneys fees;chanr0blesvirtualawlibrary

2. Php50,000.00 as reimbursement for litigation expenses.
10
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The contending parties both moved for the reconsideration of the Decision rendered on
July 24, 2001. The City of Cebu argued that the reckoning period for the computation of
just compensation should be at least not later than 1963 when the said lots were
initially occupied. On the other hand, the Heirs of Fr. Rallos insisted that the amount of
just compensation payable by the City of Cebu should be increased from Php 7,500.00
to Php 12,500.00 per sq m, the latter being the fair market value of the subject lots.
They also prayed for the award of damages in the amount of Php 16,186,520.00, which
was allegedly the value of the loss of usage of the properties involved from 1963 to
1997 as computed by Atty. Fidel Kwan, the commissioner appointed by the RTC.

On March 21, 2002, the RTC issued a Consolidated Order
11
denying the Motion for
Reconsideration filed by the City of Cebu, but modifying the Decision rendered on July
24, 2001. Through the said order, the RTC increased the amount of just compensation
payable to the Heirs of Fr. Rallos from Php 7,500.00 to Php 9,500.00 per sq m.

The City of Cebu filed with the RTC a Notice of Appeal, which was opposed by the Heirs
of Fr. Rallos.

In the Decision
12
rendered on May 29, 2007, which resolved the appeal
13
filed by the
City of Cebu, the CA opined that the RTC erred in holding that the reckoning point for
the determination of the amount of just compensation should be from 1997, the time
the complaint for just compensation was filed by the Heirs of Fr. Rallos.
Notwithstanding the foregoing, the CA still dismissed on procedural grounds the appeal
filed by the City of Cebu. The CA pointed out that pursuant to Sections 2
14
and 9,
15
Rule
41 and Section 1,
16
Rule 50 of the Rules of Court, a record on appeal and not a notice
of appeal should have been filed before it by the City of Cebu to assail the RTCs
Decisions rendered on January 14, 2000 and July 24, 2001 and the Orders issued on
February 5, 2001 and March 21, 2002.

The City of Cebu filed before this Court a Petition for Review on Certiorari
17
to assail the
Decision rendered by the CA on May 29, 2007. This Court denied the same through a
Minute Resolution
18
issued on December 5, 2007. The said Minute Resolution was
recorded in the Book of Entries of Judgments on April 21, 2008.
19
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The Heirs of Fr. Rallos thereafter filed before the RTC a Motion for Execution relative to
the Decision rendered on July 24, 2001. They claimed that in 2001, the City of Cebu
paid them Php 34,905,000.00, but there remained a balance of Php 46,546,920.00 left
to be paid, computed as of September 2, 2008. On its part, the City of Cebu admitted
still owing the Heirs of Fr. Rallos but only in the amount of Php 16,893,162.08.
20
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On December 4, 2008, the RTC issued a writ of execution in favor of the Heirs of Fr.
Rallos, which in part, reads:
NOW, THEREFORE, you are hereby commanded to serve a copy hereof to judgment
obligor City of Cebu and demand for the immediate payment of Php 44,213,000.00, less
the partial payment of Php 34,905,000.00 plus interest at 12% per annum to start 40
days from date of the July 24, 2001 Decision and to continue until the whole amount
has been fully paid; Php 50,000.00 as attorneys fees; and Php 50,000.00 as litigation
expenses. x x x.
21
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Sheriff Antonio Bellones (Sheriff Bellones) then served upon the City of Cebu a demand
letter, dated December 4, 2008, and which was amended on January 26, 2009,
indicating that:
DEMAND is hereby made for the judgment obligor City of Cebu x x x to facilitate the
prompt payment of the following: (a) just compensation of Lots 485-D and 485-E in the
amount of Php 44,213,000.00 plus interest of 12% per annum starting 40 days from
the July 24, 2001 Decision and to continue until the whole amount has been duly paid
less partial payment of Php 34,905,000.00 x x x.
22
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The City of Cebu sought the reiteration of the directives stated in the Writ of Execution
issued on December 4, 2008 and the setting aside of the amended demand letter
served upon it by Sheriff Bellones.

On March 16, 2009, the RTC issued an Order
23
denying the City of Cebus motion for
the reiteration of the writ of execution. The RTC, however, set aside the demand letter
served upon the City of Cebu by Sheriff Bellones and interpreted the directives of the
writ of execution issued on December 4, 2008 as:
[T]he entire amount of Php 44,213,000.00 shall be subjected to a 12% interest per
annum to start 40 days from the date the decision on July 24, 2001 [was rendered]
until the amount of Php 34,905,000.00 was partially paid by the City of Cebu. After the
payment by the City of Cebu of a partial amount, the balance shall again be subjected
to 12% interest until the same shall have been fully paid.
24
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The Heirs of Fr. Rallos assailed the abovementioned order on the ground that it
effectively modified the final and executory Decision rendered on July 24, 2001. They
likewise sought the application of Article 2212
25
of the New Civil Code and jurisprudence
so as to entitle them to legal interest on the interest due to them pursuant to the
Decision rendered on July 24, 2001. In the Order issued on May 20, 2009, the RTC did
not favorably consider the preceding claims.

A Petition for Certiorari and Mandamus
26
was then filed by the Heirs of Fr. Rallos before
the CA to challenge the Orders issued by the RTC on March 16, 2009 and May 20,
2009. The CA granted the petition after finding that the two assailed orders effectively
modified the final and executory disposition made by the RTC on March 21, 2002. The
CA likewise ruled that the case calls for the application of Article 2212 of the New Civil
Code, hence, it directed the City of Cebu to pay interest at the rate of 12% per annum
upon the interest due, to be computed from the date of the filing of the complaint until
full satisfaction of the obligation. The CA stated:
Note that the final and executory consolidated decision of July 24, 2001 as modified by
the final and executory order of March 21, 2002, clearly directed herein respondent
Cebu City to pay interest at the rate of 12% per annum based on the amount of
[Php]9,500.00 per square meter starting 40 days from the date of the decision and to
continue until the entire amount shall have been fully paid. Yet, the assailed orders x x
x, now directed that the 12% interest per annum be paid on the declining balance
contrary to the directive in the final and executory judgment x x x.

x x x x

x x x [The Heirs of Fr. Rallos] are without a doubt entitled to 12% interest per annum
on the interest due from finality until its satisfaction x x x. The same is proper even if
not expressly stated in the final and executory judgment x x x.
27
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The City of Cebu assailed the Decision in CA-G.R. SP No. 04418 by way of a Petition for
Review on Certiorari
28
filed before this Court. The same was denied through a Minute
Resolution
29
issued on December 6, 2010. The said resolution was recorded in this
Courts Book of Entries of Judgments on June 16, 2011.
30
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The Heirs of Fr. Rallos then moved for execution relative to Civil Case No. CEB-20388.
The RTC granted the motion through the Order
31
issued on September 23, 2011.

The City of Cebu thereafter filed the following: (1) Urgent Omnibus Motions to Quash
the Writ of Execution, and to Set Aside the Notice of Garnishment; (2) Supplemental
Urgent Omnibus Motions to Quash the Writ of Execution, and to Set Aside the Notice of
Garnishment; (3) Motion for Issuance of Status Quo Order Pending Resolution of [the
City of Cebus] Urgent Omnibus Motions to Quash the Writ of Execution and to Set
Aside the Notice of Garnishment;
32
and (4) Motion to Strike out or Expunge Urgent
Omnibus Motion and Supplemental Urgent Omnibus Motion with Manifestation and
Reservation. The RTC denied the four motions in the Order
33
issued on October 26,
2011. The RTCs Order
34
issued on January 26, 2012 likewise did not favorably consider
the motion for reconsideration filed by the City of Cebu. The RTC emphasized that the
Convenio
35
already existed way back in 1940, hence, it cannot be considered as a
supervening event which transpired after the judgment in Civil Case No. CEB-20388 had
become final and executory. The City of Cebu no longer filed any motion or action to
assail the RTC Orders issued on October 26, 2011 and January 26, 2012.

Meanwhile, in response to Mayor Ramas query, the Commission on Audits (COA)
Regional Director Delfin P. Aguilar wrote the former a letter
36
dated October 27, 2011
opining that:
Under Administrative Circular No. 10-2000
37
issued by the Supreme Court, it was clearly
stated that the prosecution, enforcement or satisfaction of state liability must be
pursued in accordance with the rules and procedures laid down in Presidential Decree
No. 1445, otherwise known as the Government Auditing Code of the Philippines,
wherein it is provided that all money claims against the government must first be filed
with the [COA]. x x x.

Clearly, based on the aforementioned Supreme Court issuance and in the line with the
rulings of the Supreme Court in various cases against garnishment of public funds or
property to satisfy money judgment against the government, we are of the view that
the issuance of the writ of execution for the satisfaction of the money judgment against
the City of Cebu may be considered beyond the powers of the court.

On the other hand, Section 1, Rule VIII of the 2009 Revised Rules of Procedure of the
COA provides that a money judgment is considered as a money claim which is within
the original jurisdiction of the Commission Proper (CP) of the COA and which shall be
filed directly with the Commission Secretary x x x.
38
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On February 27, 2012, the RTC issued another Order
39
directing under pain of contempt
the Cebu branches of Philippine Veterans Bank and Postal Savings Bank to release to
the concerned RTC sheriff certifications indicating the correct account names and
numbers maintained by the City of Cebu in the said banks. The Order also directed the
Sangguniang Panlungsod to enact an appropriation ordinance relative to the money
judgment. Upon presentment of the ordinance, the above-mentioned banks were
expected to release the amounts stated therein to satisfy the judgment rendered in
favor of the Heirs of Fr. Rallos. The City of Cebu filed a Motion for Reconsideration
40

against the Order dated February 27, 2012.

Even before the Motion for Reconsideration to the Order dated February 27, 2012 can
be resolved by the RTC, the City of Cebu filed before the CA a Petition for Annulment of
Final Decision/s and Order/s with prayer for the issuance of injunctive reliefs.
41
The City
of Cebu claimed that the act of the Heirs of Fr. Rallos of suppressing the existence of
the Convenio amounted to extrinsic fraud which would justify the annulment of the
RTCs decisions and orders relative to Civil Case No. CEB-20388. In praying for the
issuance of injunctive reliefs, the City of Cebu stressed that it had already paid the Heirs
of Fr. Rallos Php 56,196,369.42 for a 4,654 sq m property or at a price of Php
12,074.85 per sq m. Further, the procedures prescribed in Presidential Decree (P.D.)
No. 1445, this Courts Administrative Circular (Admin. Circular) No. 10-2000 and Rule
VIII of the COAs Revised Rules of Procedure were not yet complied with, hence, public
funds cannot be released notwithstanding the rendition of the decisions and issuance of
the orders by the RTC relative to Civil Case No. CEB-20388.

On April 13, 2012, the CA, through a Resolution,
42
granted the City of Cebus application
for the issuance of a temporary restraining order (TRO) relative to CA-G.R. SP No.
06676. Subsequently, a writ of preliminary injunction was likewise issued through the
Resolution
43
dated June 26, 2012.

Lucena then filed the following petitions for indirect contempt, all of which in relation
with Civil Case No. CEB-20388:
Title
Docket
Number
Date Filed Forum

Lucina B. Rallos v.
Mayor Michael Rama,
Eileen Mangubat and
Doris Bongcac
44


SCA No.
CEB-38121
October 3,
2011
RTC of Cebu
City, Branch 10





Lucina B. Rallos v.
Nicanor Valles,
Ricardo Balbido, Jr.,
and Mayor Michael
Rama
45


SCA No.
CEB-38196
October 25,
2011
RTC of Cebu
City, Branch 14





Lucina B. Rallos v.
Philippine Veterans
Bank, et al.

SCA No.
CEB-38212
November 4,
2011
RTC of Cebu
City, Branch 7





Lucina B. Rallos v.
City of Cebu, Michael
Rama, et al.
46


SCA No.
CEB-38292
December 6,
2011
RTC of Cebu
City, Branch 14





Lucena B. Rallos v.
Honorable Justices
Gabriel T. Ingles,
Pamela Ann Abella
Maxino and Carmelita
Salandanan
Manahan
47


G.R. No.
202515
July 19,
2012
This Court




The instant petition

G.R. No.
202651
August 1,
2012
This Court

Issue and the Contending Parties Claims

Lucena anchors the instant petition on the sole issue of whether or not the City of
Cebu, Mayor Rama, the presiding officer and members of the Sangguniang Panlungsod
and the lawyers from the Office of the City Attorney committed several acts of indirect
contempt all geared towards preventing the execution of final and executory judgments
rendered by this Court in G.R. Nos. 179662 and 194111.

Lucena enumerates the allegedly contumacious acts of the respondents as the filing:
(a) with the CA of a Petition for Annulment of Final Decision/s and Order/s
48
again on
the basis of the Convenio, which was already presented and considered in the
proceedings before the RTC, and despite the finality of the decisions and orders
rendered or issued relative to Civil Case No. CEB-20388; and (b) of several motions
49

before the RTC in Civil Case No. CEB-20388 for the purpose of preventing or delaying
the execution of decisions and orders which had already attained finality.

The respondents, on the other hand, seek the dismissal of the instant action contending
that: (a) the rules on litis pendentia and forum shopping bar this Court from giving due
course to Lucenas petition since there are five other contempt proceedings filed
involving the same issues and parties; (b) the injunctive writs granted to the City of
Cebu by the CA in CA-G-R. SP No. 06676 relative to the execution of the decisions and
orders in Civil Case No. CEB-20388 rendered the instant action as moot and academic;
(c) the legal remedies they availed of were all pursued to protect public funds; (d) the
RTC sheriff, in attempting to execute the decisions and orders in Civil Case No. CEB-
20388, miserably failed to comply with the requirements provided for by law, to wit,
Section 305(a)
50
of the Local Government Code, this Courts Admin. Circular No. 10-
2000,
51
P.D. No. 1445 and Rule VIII of COAs Revised Rules of Procedure; (e) in Parel v.
Heirs of Simeon Prudencio,
52
this Court declared that a writ of execution may be
assailed when it varies the judgment, where there has been a change in the situation of
parties making execution unjust or inequitable, or when the judgment debt has been
paid or satisfied; (f) it would unduly overburden the City of Cebu to pay Php
133,469,962.55 for the subject lots the huge portions of which are now occupied by
settlers and establishments claiming to be owners, practically leaving a very small and
insignificant area for use; (g) in the case of City of Caloocan v. Hon. Allarde,
53
this
Court ruled that government funds maintained in any official depository may not be
garnished in the absence of a corresponding appropriation as required by law; and (h)
the Sangguniang Panlungsod cannot be compelled to pass an appropriations ordinance
to satisfy the claims of the Heirs of Fr. Rallos for to do otherwise would be to intrude
into the exercise of a discretionary authority to decide a political question.
This Courts Disquisition

The instant petition lacks merit.

Lucena engaged in forum shopping.

Forum shopping is the act of litigants who repetitively avail themselves of multiple
judicial remedies in different fora, simultaneously or successively, all substantially
founded on the same transactions and the same essential facts and circumstances; and
raising substantially similar issues either pending in or already resolved adversely by
some other court; or for the purpose of increasing their chances of obtaining a
favorable decision, if not in one court, then in another.
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Forum shopping exists when the elements of litis pendentia are present or where a
final judgment in one case will amount to res judicata in another. Litis pendentia
requires the concurrence of the following requisites: (1) identity of parties, or at least
such parties as those representing the same interests in both actions; (2) identity of
rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and
(3) identity with respect to the two preceding particulars in the two cases, such that
any judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case.
55
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In the Verification and Non-Forum Shopping Certification
56
attached to the instant
petition and executed by Lucena, she admitted that there are five other pending actions
for indirect contempt which she filed relative to Civil Case No. CEB-20388. She,
however, claims that the issues in the other five petitions are different from that raised
before this Court now.

Lucenas claim cannot be sustained.

A comparison of the instant petition with SCA No. CEB-38292
57
filed before the RTC of
Cebu City, Branch 14 follows:

Instant Petition

SCA No. CEB-38292

Nature of
Action
Petition for Indirect
Contempt of Court


Petition for Indirect Contempt

Petitioner Lucena B. Rallos

Lucina B. Rallos

Respondents City of Cebu
Mayor Michael Rama
City Councilors


City of Cebu
Mayor Michael Rama
City Councilors

Joy Augustus Young
Sisinio Andales
Rodrigo Abellanosa
Alvin Arcilla
Raul Alcoseba
Ma. Nida Cabrera
Roberto Cabarrubias
Alvin Dizon
Ronald Cuenco
Lea Japson
Jose Daluz III
Edgardo Labella
Margarita Osmena
Augustus Pe
Richard Osmena
Noel Wenceslao
Eduardo Rama, Jr.
Michael Ralota
John Philip Echavez-Po


Joy Augustus Young
Sisinio Andales
Rodrigo Abellanosa
Alvin Arcilla
Raul Alcoseba
Ma. Nida Cabrera
Roberto Cabarrubias
Alvin Dizon
Ronald Cuenco
Lea Japson
Jose Daluz III
Edgardo Labella
Margarita Osmena
Augustus Pe
Richard Osmena
Noel Wenceslao
Eduardo Rama, Jr.
Michael Ralota
John Philip Echavez-Po

Lawyers from the Office
of the City Attorney
Atty. Joseph Bernaldez
Atty. Jun Maratas
Atty. Jerone Castillo
Atty. Mary Ann Suson
Atty. Leslie Ann Reyes
Atty. Carlo Vincent
Gimena
Atty. Ferdinand Canete
Atty. Ismael Garaygay III
Atty. Lecel Llamedo
Atty. Marie Velle Abella


Prayer Respondents be declared
guilty of indirect
contempt in relation to
their non-compliance with
the directives contained
in the dispositive portion
of the Consolidated Order
issued on March 21, 2002
by the RTC in Civil Case
No. CEB-20388.
58



Respondents, except the City of
Cebu, be imprisoned until they
perform the said act of complying
or causing the compliance with the
specific directives contained in the
dispositive portion of the final and
executory Consolidated Order
dated March 21, 2002.
59


In Arevalo,
60
this Court enumerated the three requisites of litis pendentia. There is a
confluence of these requisites relative to the instant petition and SCA No. CEB-38292.

Litis pendentia does not require the exact identity of parties involved in the actions.
Although the lawyers from the Office of the City Attorney are parties herein but are not
made respondents in SCA No. CEB-38292, they do not in any way represent any
interest distinct or separate from that of the City of Cebu and the public officers
involved. Further, the instant petition superficially makes reference to the Minute
Resolutions rendered by this Court in G.R. Nos. 179662 and 194111 which Lucena
claims had lapsed into finality and should thus be executed. However, stripped of the
unnecessary details, the reliefs saliently sought in both the instant petition and SCA No.
CEB-38292 are founded on the same set of facts, to wit, the alleged non compliance by
the respondents with the directives contained in the dispositive portion of the
Consolidated Order issued by the RTC on March 21, 2002 relative to Civil Case No. CEB-
20388. Finally, citation for indirect contempt in either the instant petition or SCA No.
CEB-38292 would amount to res judicata in the other considering the identities of the
parties and issues involved.

Since the elements of litis pendentia concur in the instant petition and SCA No. CEB-
38292, this Court so holds Lucena guilty of forum shopping.

[T]he grave evil sought to be avoided by the rule against forum shopping is the
rendition by two competent tribunals of two separate and contradictory decisions. To
avoid any confusion, this Court adheres strictly to the rules against forum shopping, and
any violation of these rules results in the dismissal of a case.
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Further, once there is a finding of forum shopping, the penalty is summary dismissal
not only of the petition pending before this Court, but also of the other case that is
pending in a lower court. This is so because twin dismissal is a punitive measure to
those who trifle with the orderly administration of justice.
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Even if in the higher interest of justice, this Court were to be exceptionally
liberal and gloss over Lucenas act of forum shopping, the instant petition
would still be susceptible to dismissal.

While this Court does not intend to downplay the rights accruing to the owners of
properties expropriated by the government, it bears stressing that the exercise and
enforcement of those rights are subject to compliance with the requirements provided
for by law to protect public funds.

Lucena avers that the respondents willfully and maliciously defy the execution of final
and executory decisions and orders rendered or issued relative to Civil Case No. CEB-
20388.

Such averment is untenable.

The respondents allege and Lucena does not refute, that the City of Cebu had already
paid the Heirs of Fr. Rallos Php 56,196,369.42 for a 4,654 sq m property or at a price of
Php 12,074.85 per sq m. The controversy remains and the parties resort to all legal
maneuverings because the Heirs of Fr. Rallos obdurately insist that they are still entitled
to collect from the City of Cebu a balance of Php 133,469,962.55.

The Heirs of Fr. Rallos are bent on collecting the amount allegedly still unpaid by the
City of Cebu in accordance with the computations stated in the decisions and orders in
Civil Case No. CEB-20388. However, the Heirs of Fr. Rallos are impervious to the
requisites laid down by law in enforcing their claims. The requisites are two-fold as
discussed below.

An appropriation ordinance should be passed prior to the disbursement of
public funds.

Even though the rule as to immunity of a state from suit is relaxed, the power of the
courts ends when the judgment is rendered. Although the liability of the state has been
judicially ascertained, the state is at liberty to determine for itself whether to pay the
judgment or not, and execution cannot issue on a judgment against the state. Such
statutes do not authorize a seizure of state property to satisfy judgments recovered,
and only convey an implication that the legislature will recognize such judgment as final
and make provision for the satisfaction thereof.
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Section 4(1) of P.D. No. 1445 and Section 305(a) of the Local Government Code both
categorically state that no money shall be paid out of any public treasury or depository
except in pursuance of an appropriation law or other specific statutory authority. Based
on considerations of public policy, government funds and properties may not be seized
under writs of execution or garnishment to satisfy judgments rendered by the courts
and disbursements of public funds must be covered by the corresponding appropriation
as required by law.
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In the case at bar, no appropriation ordinance had yet been passed relative to the
claims of the Heirs of Fr. Rallos. Such being the case, the respondents, as public
officers, are acting within lawful bounds in refusing the execution of the decisions and
orders in Civil Case No. CEB-20388.

Despite the rendition of a final and executory judgment validating a money
claim against an agency or instrumentality of the Government, its filing with
the COA is a sine qua non condition before payment can be effected.

Section 26 of P.D. No. 1445 states that the COA has jurisdiction to examine, audit and
settle all debts and claims of any sort due from or owing to the Government or any of
its subdivisions, agencies and instrumentalities. Under Section 5(b), Rule II of COAs
Revised Rules of Procedure, local government units are expressly included as among
the entities within the COAs jurisdiction. Section 2,
65
Rule VIII lays down the procedure
in filing money claims against the Government. Section 4, Rule X provides that any case
brought to the COA shall be decided within 60 days from the date it is submitted for
decision or resolution. Section 1, Rule XII allows the aggrieved party to file a petition
for certiorari before this Court to assail any decision, order or resolution of the COA
within 30 days from receipt of a copy thereof.

This Court, in the case of University of the Philippines v. Dizon,
66
thus held that despite
the existence of a final and executory judgment validating the claim against an agency
or instrumentality of the Government, the settlement of the said claim is still subject to
the primary jurisdiction of the COA. Ineluctably, the claimant has to first seek the COAs
approval of the monetary claim.
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Without compliance by Lucena and the Heirs of Fr. Rallos with the provisions of P.D.
No. 1445 and the COAs Revised Rules of Procedure, their lamentations that the
respondents are unjustly refusing the execution of the decisions and orders in Civil Case
No. CEB-20388 do not hold any water.

IN VIEW OF THE FOREGOING, the instant petition is DISMISSED. Further, on
account of Lucena Rallos act of forum shopping, the Regional Trial Court of Cebu City,
Branch 14, is likewise directed to dismiss her petition for contempt, docketed as SCA
No. CEB-38292, which she filed against the respondents.
SO ORDERED
SECOND DIVISION
G.R. No. 196723, August 28, 2013
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner, v.
SUMITOMO CORPORATION, Respondent.
G.R. No. 196728, August 28, 2013

SUMITOMO CORPORATION, Petitioner, v. ASIAN CONSTRUCTION AND
DEVELOPMENT CORPORATION, Respondent.
D E C I S I O N
PERLAS-BERNABE, J.:
Before the Court are consolidated petitions for review on certiorari which assail separate
issuances of the Court of Appeals (CA) in relation to the partial and final awards
rendered by the Construction Industry Arbitration Commissions (CIAC) Arbitral Tribunal
(Arbitral Tribunal) in CIAC Case No. 28-2008.

In particular, the petition in G.R. No. 196723
1
filed by Asian Construction and
Development Corporation (Asian Construction) seeks to annul and set aside the CAs
Resolutions dated July 23, 2010
2
and April 18, 2011
3
in CA-G.R. SP No. 112127 which
dismissed its appeal from the Arbitral Tribunals Partial Award
4
dated December 15,
2009 (Partial Award) on the ground of forum shopping; while the petition in G.R. No.
196728
5
filed by Sumitomo Corporation (Sumitomo) seeks to annul and set aside the
CAs Decision
6
dated January 26, 2011 and Resolution
7
dated April 29, 2011 in CA-G.R.
SP No. 113828 which modified the Arbitral Tribunals Final Award
8
dated March 17,
2010 (Final Award) by way of deleting the award of attorneys fees in Sumitomos favor.
The Facts

On March 15, 1996, Asian Construction entered into a Civil Work Agreement
9

(Agreement) with Sumitomo for the construction of a portion of the Light Rail Transit
System along the Epifanio Delos Santos Avenue, specifically, from Shaw Boulevard,
Mandaluyong City to Taft Avenue, Pasay City for a total cost of US$19,982,000.00
(Project).
10
The said Agreement provides that the validity, interpretation,
enforceability, and performance of [the same] shall be governed by and construed in
accordance with the law of the State of New York, U.S.A. [(New York State Law)],
without regard to, or legal effect of, the conflicts of law provisions thereof
11
and that
any dispute, controversy or claim arising therefrom shall be solely and finally settled by
arbitration.
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In May 1996, Sumitomo paid Asian Construction the amount of US$2,997,300.00 as
advance payment to be recovered in accordance with the terms of the Agreement.
Later, an additional advance payment of US$1,998,200.00 was made in October 1997.
13

In all, Asian Construction received from Sumitomo the amount of US$9,731,606.62,
inclusive of the advance payments (before withholding tax of US$97,308.44).
14
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On September 1, 1998, Sumitomo informed Asian Construction that it was terminating
the Agreement effective September 5, 1998 due to the following reasons: (a) Asian
Constructions failure to perform and complete the civil work for [Notice to Proceed]
issued construction areas within the duration of the Time Schedule in [the] Contract
Specification of Civil and Architectural Works (Station No. 8 to Station No. 13) x x x;
(b) Asian Constructions failure to provide adequate traffic management as required in
the Scope of Works [pursuant to] subparagraph 5.2.4 of the Contract Specification of
Civil and Architectural Work; and (c) Asian Constructions failure to [pay] the suppliers
of certain materials and equipment used in the construction of the Project in violation of
[p]aragraph 3.1.3[,] Article 3 of the Agreement.
15
In view of the foregoing, Sumitomo
requested Asian Construction to make the necessary arrangements for the proper
turnover of the Project x x x.
16
Asian Construction, however, claimed that the
accomplishments under Progress Billing No. (PB) 018
17
dated June 10, 1998 and PB
019
18
dated July 6, 1998, as well as other various claims, were still left unpaid.
19
Hence,
on December 22, 1998, it sent Sumitomo a letter,
20
demanding payment of the total
amount of US$6,371,530.89. This was followed by several correspondences between
the parties through 1999 to 2007 but no settlement was achieved.
21
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The Proceedings Before the Arbitral Tribunal

On September 2, 2008, Asian Construction filed a complaint
22
with the CIAC, docketed
as CIAC Case No. 28-2008, seeking payment for its alleged losses and reimbursements
amounting to US$9,501,413.13, plus attorneys fees in the amount of P2,000,000.00.
23

As a matter of course, an Arbitral Tribunal was constituted, with Alfredo F. Tadiar being
designated as Chairman, and Salvador P. Castro and Jesse B. Grove as
Members.
24
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For its part, Sumitomo filed a Motion to Dismiss,
25
questioning the CIACs jurisdiction
over the dispute on the ground that the arbitration should proceed in accordance with
the Commercial Arbitration Rules of Japan.
26
However, the aforesaid motion was
denied.
27
As such, Sumitomo filed an Answer,
28
reiterating the CIACs alleged lack of
jurisdiction and further asserting that the claim was already time-barred. It added that
had Asian Construction discharged its obligations under the Agreement to itemize and
justify its claims, the same could have been amicably settled years ago. In this respect,
it made a counterclaim for the unutilized portion of the advance payments, attorneys
fees and costs of litigation in the amount of at least P10,000,000.00.
29
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Subsequently, the parties signed a TOR,
30
stipulating the admitted facts and defining
the issues to be determined in the arbitration proceedings.

On December 15, 2009, the Arbitral Tribunal rendered the Partial Award
31
which
affirmed its jurisdiction over the dispute but held that the parties were bound by their
Agreement that the substantive New York State Law shall apply in the resolution of the
issues.
32
It proceeded to dismiss both the claims and counterclaims of the parties on
the ground that these had already prescribed under New York State Laws six-year
statute of limitations
33
and ruled that, in any case, were it to resolve the same on the
merits, it would not produce an affirmative recovery for the claimant.
34
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Aggrieved, Asian Construction filed before the CA, on January 5, 2010, a Rule 43
Petition for Review,
35
docketed as CA-G.R. SP No. 112127 (First CA Petition), seeking
the reversal of the Partial Award.

Meanwhile, notwithstanding its dismissal of the claims and counterclaims, the Arbitral
Tribunal further directed the parties to itemize their respective claims for costs and
attorneys fees and to submit factual proof and legal bases for their entitlement
thereto.
36
Pursuant to this directive, Sumitomo submitted evidence to prove the costs it
had incurred and paid as a result of the arbitration proceedings.
37
Asian Construction,
on the other hand, did not present any statement or document to substantiate its
claims but, instead, submitted an Opposition
38
dated March 8, 2010 (opposition) to
Sumitomos claim for costs. The Arbitral Tribunal did not act upon the opposition
because it was treated, in effect, as a motion for reconsideration which was prohibited
under the CIAC Revised Rules of Procedure Governing Construction Arbitration (CIAC
Revised Rules).
39
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On March 17, 2010, the Arbitral Tribunal rendered the Final Award
40
which granted
Sumitomos claim for attorneys fees in the amount of US$200,000.00. It held that while
the filing of the arbitration suit cannot be regarded as clearly unfounded because of
the two progress billings that were left unpaid, Asian Constructions disregard of the
Agreement to have the dispute resolved in accordance with New York State Law had
forced Sumitomo to incur attorneys fees in order to defend its interest.
41
It further
noted that if Asian Construction had accepted the settlement offered by Sumitomo,
then, the arbitration proceedings would have even been aborted.
42
On the other hand,
a similar claim for attorneys fees made by Asian Construction was denied by reason of
the latters failure to submit, as directed, proof of its entitlement thereto.
43
As to the
matter of costs, the Arbitral Tribunal declared Sumitomo relieved from sharing pro-rata
in the arbitration costs and, consequently, directed Asian Construction to shoulder the
same costs in full and reimburse Sumitomo the amount of P849,532.45. However, it
ordered Sumitomo to bear all the expenses related to the appointment of the foreign
arbitrator considering that such service was secured upon its own initiative and without
the participation and consent of Asian Construction.
44
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Dissatisfied with the Arbitral Tribunals ruling, Asian Construction filed another Rule 43
Petition for Review
45
before the CA, on May 3, 2010, docketed as CA-G.R. SP No.
113828 (Second CA Petition), this time, to set aside the Final Award. In this light, it
claimed gross negligence and partiality on the part of the Arbitral Tribunal and asserted,
inter alia, that, apart from being a non-arbitrable issue, an award of attorneys fees
would be premature since the prevailing party can only be determined when the case is
decided with finality. Moreover, it maintained that both claims of Asian Construction and
the counterclaims of Sumitomo had already been dismissed for being time-
barred.
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The CA Ruling

On July 23, 2010, the CA rendered a Resolution
47
(July 23, 2010 Resolution), dismissing
Asian Constructions First CA Petition against the Partial Award on the ground of forum-
shopping, after it was shown that: (a) the aforesaid petition was filed while the
arbitration case was still pending final resolution before the Arbitral Tribunal; and (b)
Asian Constructions opposition to Sumitomos claim for costs filed before the Arbitral
Tribunal had, in fact, effectively sought for the same relief and stated the same
allegations as those in its First CA Petition. The CA also noted Asian Constructions
premature resort to a petition for review because what was sought to be nullified was
not a final award, but only a partial one. The CA eventually denied Asian Constructions
motion for reconsideration in a Resolution
48
dated April 18, 2011. Hence, Asian
Constructions petition before the Court, docketed as G.R. No. 196723.

Meanwhile, the CA gave due course to Asian Constructions Second CA Petition assailing
the Final Award and rendered a Decision
49
on January 26, 2011, upholding the Arbitral
Tribunals ruling except the award of attorneys fees in favor of Sumitomo. The CA held
that the fact that Asian Construction initiated an action or refused to compromise its
claims cannot be considered unjustified or made in bad faith as to entitle Sumitomo to
the aforesaid award. Consequently, Sumitomo moved for reconsideration,
50
asserting
that Asian Constructions Second CA Petition should have instead been dismissed in its
entirety considering their Agreement that the Arbitral Tribunals decisions and awards
would be final and non-appealable. However, in a Resolution
51
dated April 29, 2011, the
CA denied the motion for reconsideration. Thus, Sumitomos petition before the Court,
docketed as G.R. No. 196728.
The Issues Before the Court

The essential issues for the Courts resolution are as follows: (a) in G.R. No. 196723,
whether or not the CA erred in dismissing Asian Constructions First CA Petition on the
ground of forum shopping; and (b) in G.R. No. 196728, whether or not the CA erred in
reviewing and modifying the Final Award which Sumitomo insists to be final and
unappealable.
The Courts Ruling

The petitions should be denied.

A. Dismissal of Asian Constructions First CA Petition; forum shopping.

Forum shopping is the act of a litigant who repetitively availed of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and circumstances, and all raising
substantially the same issues, either pending in or already resolved adversely by some
other court, to increase his chances of obtaining a favorable decision if not in one court,
then in another. More particularly, forum shopping can be committed in three ways,
namely: (a) by filing multiple cases based on the same cause of action and with the
same prayer, the previous case not having been resolved yet (where the ground for
dismissal is litis pendentia); (b) by filing multiple cases based on the same cause of
action and with the same prayer, the previous case having been finally resolved (where
the ground for dismissal is res judicata); and (c) by filing multiple cases based on the
same cause of action but with different prayers (splitting of causes of action, where the
ground for dismissal is also either litis pendentia or res judicata).
52
Forum shopping is
treated as an act of malpractice and, in this accord, constitutes a ground for the
summary dismissal of the actions involved.
53
To be sure, the rule against forum
shopping seeks to prevent the vexation brought upon the courts and the litigants by a
party who asks different courts to rule on the same or related causes and grant the
same or substantially the same reliefs and in the process creates the possibility of
conflicting decisions being rendered by the different fora upon the same issues.
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In this case, the Court finds that the CA committed no reversible error in dismissing
Asian Constructions First CA Petition on the ground of forum shopping since the relief
sought (i.e., the reconsideration of the Partial Award) and the allegations stated therein
are identical to its opposition to Sumitomos claim for costs filed before the Arbitral
Tribunal while CIAC Case No. 28-2008 was still pending. These circumstances clearly
square with the first kind of forum shopping which thereby impels the dismissal of the
First CA Petition on the ground of litis pendentia.

On this score, it is apt to point out that Asian Constructions argument that it merely
complied with the directive of the Arbitral Tribunal cannot be given any credence since
it (as well as Sumitomo) was only directed to submit evidence to prove the costs it had
incurred and paid as a result of the arbitration proceedings. However, at variance with
the tribunals directive, Asian Construction, in its opposition to Sumitomos claim for
costs, proceeded to seek the reversal of the Partial Award in the same manner as its
First CA Petition. It cannot, therefore, be doubted that it treaded the course of forum
shopping, warranting the dismissal of the aforesaid petition.

In any case, the Court observes that the First CA Petition remains dismissible since the
CIAC Revised Rules provides for the resort to the remedy of a petition for review only
against a final arbitral award,
55
and not a partial award, as in this case.

In fine, the Court upholds the CAs dismissal of Asian Constructions petition in CA-G.R.
SP No. 112127 (First CA Petition) and based on this, denies its petition in G.R. No.
196723.

B. Review and modification of the Final Award.

Sumitomo Corporation faults the CA for reviewing and modifying a final and non-
appealable arbitral award and insists that the Asian Constructions Second CA Petition
should have been, instead, dismissed outright. It mainly argues that by entering into
stipulations in the arbitration clause which provides that the order or award of the
arbitrators will be the sole and exclusive remedy between the parties regarding any and
all claims and counterclaims with respect to the matter of the arbitrated dispute
56
and
that the order or award rendered in connection with an arbitration shall be final and
binding upon the parties.
57
Asian Construction effectively waived any and all appeals
from the Arbitral Tribunals decision or award.

Sumitomos argument is untenable.

A brief exegesis on the development of the procedural rules governing CIAC cases
clearly shows that a final award rendered by the Arbitral Tribunal is not absolutely
insulated from judicial review.

To begin, Executive Order No. (EO) 1008,
58
which vests upon the CIAC original and
exclusive jurisdiction over disputes arising from, or connected with, contracts entered
into by parties involved in construction in the Philippines, plainly states that the arbitral
award shall be final and inappealable except on questions of law which shall be
appealable to the [Court].
59
Later, however, the Court, in Revised Administrative
Circular (RAC) No. 1-95,
60
modified this rule, directing that the appeals from the arbitral
award of the CIAC be first brought to the CA on questions of fact, law or mixed
questions of fact and law. This amendment was eventually transposed into the present
CIAC Revised Rule which directs that a petition for review from a final award may be
taken by any of the parties within fifteen (15) days from receipt thereof in accordance
with the provisions of Rule 43 of the Rules of Court.
61
Notably, the current provision is
in harmony with the Courts pronouncement that despite statutory provisions making
the decisions of certain administrative agencies final, [the Court] still takes cognizance
of petitions showing want of jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice or erroneous interpretation of the law and that, in
particular, voluntary arbitrators, by the nature of their functions, act in a quasi-judicial
capacity, such that their decisions are within the scope of judicial review.
62
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In this case, the Court finds that the CA correctly reviewed and modified the Arbitral
Tribunals Final Award insofar as the award of attorneys fees in favor of Sumitomo is
concerned since the same arose from an erroneous interpretation of the law.

To elucidate, jurisprudence dictates that in the absence of a governing stipulation,
attorneys fees may be awarded only in case the plaintiff's action or defendant's stand is
so untenable as to amount to gross and evident bad faith.
63
This is embodied in Article
2208 of the Civil Code which states:chanrobles virtua1aw 1ibrary
Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:

x x x x

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's
64
plainly valid, just and demandable claim;

x x x x
In this case, the parties agreed that reasonable attorneys fees shall be paid by the
defaulting party if it fails to perform any of its obligations under the Agreement or by
the party not prevailing, if any dispute concerning the meaning and interpretation
thereto arises.
65
However, since the parties respective claims under the Agreement had
already prescribed pursuant to New York State Law, considering as well that the dispute
was not regarding the meaning or construction of any provision under the Agreement,
66

their stipulation on attorneys fees should remain inoperative. Therefore, discounting
the application of some stipulation, the Court proceeds to examine the matter under the
lens of bad faith pursuant to the above-discussed rules on attorneys fees.

After a careful scrutiny of the records, the Court observes that there was no gross and
evident bad faith on the part of Asian Construction in filing its complaint against
Sumitomo since it was merely seeking payment of its unpaid works done pursuant to
the Agreement. Neither can its subsequent refusal to accept Sumitomos offered
compromise be classified as a badge of bad faith since it was within its right to either
accept or reject the same owing to its contractual nature.
67
Verily, absent any other just
or equitable reason to rule otherwise,
68
these incidents are clearly off-tangent with a
finding of gross and evident bad faith which altogether negates Sumitomos entitlement
to attorneys fees.

Hence, finding the CAs review of the Final Award and its consequent deletion of the
award of attorneys fees to be proper, the Court similarly denies Sumitomos petition in
G.R. No. 196728.

WHEREFORE, the petitions are DENIED. The Resolutions dated July 23, 2010 and
April 18, 2011 of the Court of Appeals in CA-G.R. SP No. 112127, as well as its Decision
dated January 26, 2011 and Resolution dated April 29, 2011 in CA-G.R. SP No. 113828
are hereby AFFIRMED.chanroblesvirtualawlibrary

SO ORDERED.





THIRD DIVISION
A.M. No. P-09-2726 [Formerly OCA IPI No. 08-2923-P], August 28, 2013
A.M. No. P-10-2884 [Formerly OCA IPI No. 08-2750-P]

JUDGE ROBERTO P. BUENAVENTURA, METROPOLITAN TRIAL COURT,
BRANCH 63, MAKATI CITY, Complainant, v. FE A. MABALOT, CLERK OF COURT
III, METROPOLITAN TRIAL COURT, BRANCH 63, MAKATI CITY, Respondent.
D E C I S I O N
MENDOZA, J.:
This pertains to the Integrated Report and Recommendation,
1
dated June 15, 2012, of
Executive Judge Benjamin T. Pozon (Judge Pozon), Regional Trial Court, Makati City, in
the above entitled administrative matters, submitted through the Office of the Court
Administrator (OCA), finding that respondent Fe A. Mabalot (Mabalot) had committed
simple misconduct and conduct prejudicial to the best interest of the service.
The Facts

OCA I.P.I. No. 08-2750-P (Now A.M. No. P-10-2884)

In a letter,
2
dated December 12, 2007, Judge Roberto P. Buenaventura (Judge
Buenaventura), Presiding Judge, Metropolitan Trial Court, Branch 63, Makati City
(MeTC), requested the transfer of Mabalot, Clerk of Court (CoC) III of the same branch,
for Conduct Prejudicial to the Best Interest of the Service and Act Violative of Section
3(a) of Republic Act (R.A.) No. 3019 or the Anti-Graft and Corrupt Practices Act.

Judge Buenaventura learned about a text message sent by Mabalot to Felipe De Sesto,
Jr. (De Sesto), one of his staff assigned as Chairman of the Committee on Revision, in
an election case, Gaviola v. Torres, pending in his sala. The text message intimated
that she personally knew Atty. Gaviola, the husband of the protestant in the said case.
It concerned the delivery of something to De Sesto from Gaviolas husband, who was
the former boss of Mabalot. Its tenor suggested a bribery which Mabalot was trying to
mediate relative to the case. The text message reads:chanrobles virtua1aw 1ibrary
Manong Jun nabigay ba sa yo yong pinabibigay ni Atty. Gaviola dating boss ko sa
Landbank asawa ng protestant ni Torres dagdagan daw sa pasko dont worry dworry di
malalaman ni Judge pinabibigay sa akin pero pinadidiretso ko sa yoo sa yo.
3

Judge Buenaventura averred that the said matter caused grave concern on his part
considering that the credibility of the whole process of the election protest pending in
his sala was at stake. For said reason, he stated that he had lost his trust and
confidence in Mabalot. There was, therefore, a need for her immediate transfer to
protect the integrity of his office.

On December 13, 2007, the said letter-request was endorsed as a complaint by MeTC
Executive Judge Henry Laron (Judge Laron) to the OCA, for appropriate action and
disposition, with a manifestation that Mabalot had already been detailed to the Office of
the Clerk of Court, MeTC, Makati City, per Memorandum, dated December 13, 2007.
4

The said administrative complaint was docketed as OCA IPI No. 08-2750-P.

In her Comment,
5
dated February 1, 2008, Mabalot denied the allegation that she was
involved in a bribery or corrupt act alluded to in the said text message. She argued that
had it been true that she intended to favor the protestant, she could have simply taken
the keys to the padlocks of the ballot boxes which were left by Grace Beltran in the
chambers during the recount of votes. Analyzing the text message, she pointed out that
the message sender had not a hand in the bribery as the text message was only a
query if De Sesto had received whatever Atty. Gaviola gave and it was not even clear
from the message what he would give. She categorically denied that she was the
author of the text message which could be the doing of some individuals who took the
opportunity of using her cellular phone when she left the said phone on her table.

She further claimed, among others, that in her long years of government service, she
had performed her duties with utmost responsibility and efficiency, guided by the
principle that public office is a public trust; that in her entire service, it was the first
time that she was charged with an administrative offense which was obviously
motivated by personal ire; and that as she was nearing her mandatory retirement age,
she would not risk her long years of government service by peddling a bribe from a
party in a case. Confirming the manifestation of Judge Laron, she added that inasmuch
as she could no longer work effectively with Judge Buenaventura, considering the
strained relations, she requested to be detailed to another position where she could
serve her salarys worth.
6
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Pursuant to the recommendation of the OCA, the Court in a Resolution,
7
dated March 4,
2009, referred the matter to then Executive Judge Maria Cristina J. Cornejo of RTC,
Makati City, for investigation, report and recommendation within sixty (60) days from
notice. The latter, however, recused herself and the case was referred to then Vice
Executive Judge Pozon, Presiding Judge, RTC, Makati.

On October 9, 2009, the pre-hearing conference was held and the parties agreed to
dispense with a formal hearing and presentation of witnesses or other evidence, and
considered the matter closed and submitted for resolution.

As agreed upon, the only issue was whether or not Mabalot had some participation in
the suspected bribery.

On October 12, 2009, Judge Buenaventura furnished the Investigating Judge with a
copy of his Reply to Mabalots Comment, which he had filed with the OCA on October
17, 2008, but was not included in the records endorsed by the Court.

Thereafter, Judge Pozon submitted his Report and Recommendation,
8
dated November
13, 2009. In the said Report, it was established that the subject text message was sent
from a cellular phone with number 0928-7787724 belonging to Mabalot. Nonetheless,
the facts showed that Mabalot did not accept any offer or promise or receive a gift or
present. Thus, some elements of the crime of direct bribery under Article 210 of the
Revised Penal Code (RPC) were lacking.

The report concluded that Mabalot could not be criminally liable for direct bribery.
Neither could she be liable for indirect bribery, as defined and penalized under the RPC,
as what was offered by Atty. Gaviola was not intended for her but for De Sesto. Judge
Pozon, however, found Mabalot liable for violation of the Code of Conduct for Court
Personnel. [I]nstead of suggesting to Atty. Gaviola to directly give that something to
Felipe De Sesto as [she] should have discouraged, if not totally reject or decline the
said offer intended for De Sesto. Being the Branch CoC, she should be the first among
the court employees to zealously guard the public trust character of her office.
9

Mabalots acts, according to Judge Pozon, constituted misconduct.
OCA IPI No. 08-2923-P (Now A. M. No. P-09-2726)

In his letter-complaint,
10
dated May 19, 2008, Judge Buenaventura reported to Judge
Laron the disturbing actuations of Mabalot. In his Affidavit,
11
dated May 22, 2008,
Judge Buenaventura claimed, among others, that on May 6, 2008, Mabalot went to his
chamber, rudely accused him of being the cause of all her miseries and threatened to
harm or kill him; and that, in the presence of other staff members of Branch 63, she
hurled insulting words at him, mocking even his religious practice of praying regularly;
that sensing that she was not in her right frame of mind, he avoided any discussion
with her and just let what she wanted to say until she left his chambers; that after she
left his office, she made a threat, in the presence of other court personnel, that she was
going to kill him; that this threat was confirmed by Rowena Soller (Soller), Branch COC,
MeTC, Branch 65, who reported that she (Mabalot) stated in her presence that she was
going to kill Judge Buenaventura and then kill herself afterwards; and that a series of
text messages to him then followed, threatening that she would get even with him by
destroying him and his family.

Judge Buenaventura averred that Mabalots actuations in making threats against his life
and her attempts to blackmail him were not only acts unbecoming of a court
personnel but should be given serious attention in the light of judicial-related killings
where a number of judges had already been killed.

Judge Buenaventura observed that Mabalot appeared to be very mentally disturbed and
suggested that an evaluation of her mental capacity or fitness to carry out court duties
and responsibilities be conducted.

In her Affidavit and Counter-Affidavit,
12
dated June 2, 2008, Mabalot alleged, among
others, that on May 6, 2008, she went to MeTC, Branch 63, to get her own personal law
books and to talk to Judge Buenaventura to tell him that her illegal detail was about to
expire as well as her intention to report her situation to the Chief Justice as advised by
some judges who were her friends; that she was also to tell Judge Buenaventura to
stop Liza Pamittan from spreading the rumor that she was being dismissed from the
service; that she was, however, unprofessionally driven away by Judge Buenaventura
as he was busy with the election cases; that in tears, she asked Judge Buenaventura if
he felt fulfillment, having ruined her career, dignity and life.

Mabalot also claimed that on the same day, she went to Soller for the approval and
signature of the MeTC Executive Judge on her leave application; that she was so
desperate and hopeless because her salary had been withheld since March 2008 and
she was surviving with only P500.00 allowance a week from her sister; that in addition,
she was being required to refund the excess of the Sheriffs Trust Fund in the amount
of P59,000.00; that she was heavily indebted due to her sisters operation and incurred
relocation expenses when she transferred to Quezon City; and that with all these
problems, she thought of dying and eliminating the source of all her miseries which,
according to her, was just a normal human reaction, but remote to happen as she had
always been a practicing Catholic.

Mabalot also admitted that she texted Judge Buenaventura as he arrogantly refused to
talk to her.

On July 16, 2008,
13
Judge Laron referred to the OCA the Resolution,
14
dated July 8,
2008, of the Employee Grievance Committee, MeTC, Makati City, finding that the said
complaint was not an appropriate subject of the grievance body and that the case
should be resolved in accordance with the Revised Uniform Rules on Administrative
Cases in the Civil Service (Civil Service Rules) as the actuations described by Judge
Buenaventura amounted to grave misconduct, gross insubordination and conduct
prejudicial to the best interest of the service.

Mabalot, in her Comment,
15
dated September 19, 2008, insisted that the Employee
Grievance Committee was the proper body to handle the complaint as the issue
pertained to matters about employee dissatisfaction and discontentment. She denied
and refuted the accusations and charges against her.

In his Reply to Comment,
16
Judge Buenaventura insisted that Mabalots disclosure of
her intention to kill and exact revenge against him was not merely an employee
dissatisfaction which should be taken lightly. He asserted that Mabalots actuations were
directly related to his previous complaint against her involving a bribery charge which
was the subject of a pending administrative case, OCA IPI No. 08-2750-P.

Considering that the issues in the two cases were intertwined, and that Mabalot had
adopted the pleadings she filed in that case as her comment in this case, the OCA, in its
Report,
17
dated October 26, 2009, recommended the consolidation of the two cases.

On December 7, 2009, the Court re-docketed this administrative complaint as a regular
administrative matter, A.M. No. P-09-2726 and consolidated it with OCA IPI No. 08-
2750-P, which had not been re-docketed yet as an administrative matter.
18
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According to the OCA, prior to the issuance of the resolution ordering the consolidation
of the two cases, the Investigating Judge had concluded the investigation and had
submitted his Report and Recommendation in OCA IPI No. 08-2750-P on November 20,
2009. Notwithstanding the termination of the investigation and the submission of the
report and recommendation, the OCA, however, reiterated its view that the issues
therein were intertwined with those of A.M. No. P-09-2726, inasmuch as Mabalot
adopted the pleadings she had filed in the earlier case as her comment in the latter
case.

On December 15, 2010, the Court resolved to re-docket A.M. OCA IPI No. 08-2750-P,
as a regular administrative matter, (now A.M. No. P-10-2884) and to forward the
records of both cases to Judge Pozon for the investigation of the issues raised in A.M.
No. P-09-2726 and the submission of an integrated report and recommendation on the
two (2) consolidated cases within sixty (60) days from receipt of the records.

On March 7, 2011, the pre-hearing conference was held and attended by Judge
Buenaventura and Mabalot without the assistance of counsel. Both parties agreed not
to present any testimonial evidence and adopted all the relevant pleadings filed in
connection with A.M. No. P-10-2884. Thus, Judge Pozon dispensed with the formal
hearing and presentation of witnesses, and considered the matter closed and submitted
for resolution. He limited the issue on whether Mabalot was guilty of gross misconduct,
gross insubordination, and conduct prejudicial to the best interest of the service.

On March 25, 2011, Mabalot filed her Judicial Memorandum.
19
Judge Buenaventura
then submitted his Position Paper on March 31, 2011. Mabalots Comment to Judge
Buenaventuras position paper was thereafter filed on April 19, 2011.

In its Memorandum,
20
dated June 26, 2012, the OCA submitted for the Courts
consideration the Integrated Report and Recommendation of Judge Pozon, dated June
15, 2012.

Judge Pozon, in the said report, adopted the statement of proceedings, findings of fact
and conclusions of law of the Report and Recommendation he submitted in A.M. No. P-
10-2884.

As regards A.M. No. P-09-2726, Judge Pozon found that Mabalot indeed made threats
to kill Judge Buenaventura, but opined that the said act did not constitute misconduct
as it was not directly related to, or connected with, the performance of her official
duties as Branch CoC, citing Manuel v. Calimag, Jr.
21
It was, thus, concluded that
Mabalot, having acted in her private capacity, could not be liable for misconduct.
Neither could she be held liable for gross insubordination as there was no order issued
by Judge Buenaventura which she willfully or intentionally disregarded or disobeyed.
Judge Pozon, however, found that the acts complained of constituted conduct
prejudicial to the best interest of the service. He cited, as basis for her liability, the
Code of Conduct and Ethical Standards for Public Officials and Employees, which
enunciates, inter alia, the State policy of promoting high standard of ethics and utmost
responsibility in the public service. He quoted Section 4(c) of the Code which
commands, that [public officials and employees] shall at all times respect the rights of
others and shall refrain from doing acts contrary to law, good morals, good customs,
public policy, public order, public safety and public interest. By uttering threatening
remarks towards Judge Buenaventura, Mabalot failed to live up to such standard.

Based on these findings, Judge Pozon came up with the following recommendation.
Thus:chanrobles virtua1aw 1ibrary
In view of the foregoing findings in both administrative cases, the undersigned is of the
opinion that respondent Clerk of Court Fe Mabalot has committed simple misconduct in
A.M. No. P-10-2884 and conduct prejudicial to the best interest of the service in A.M.
No. P-09-2726, and hereby recommends that Fe A. Mabalot, who is now 64 yrs. old and
is about to retire in less than 1 year, be suspended from office.

Considering her health condition, that she has undergone bypass operation and her
thirty two (32) years (now 34 years) of service in the government, the undersigned
hereby considers the same in recommending the proper penalty to be imposed upon
the respondent. Likewise, pursuant to Section 55 of Rule IV of the Civil Service
Commission Memorandum Circular No. 19, series of 1999, which provides that if the
respondent is found guilty of two or more charges or counts, the penalty to be imposed
should be that corresponding to the most serious charge and the rest shall be
considered as aggravating circumstances, the undersigned hereby recommends the
suspension of six (6) months and 1 day to one (1) year without pay pursuant
to Section 52 of the said Rule, the penalty for the more serious charge of conduct
prejudicial to the best interest of the service.
22

The Courts Ruling

The Court adopts the findings of the Investigating Judge as contained in his Integrated
Report and Recommendation.

As can be inferred from the tenor of Judge Buenaventuras letter-complaint and as
agreed upon by the parties during the preliminary conference, Judge Buenaventura
charged Mabalot with possible bribery on the basis of a text message sent by her to De
Sesto.

As correctly opined by the Investigating Judge, Mabalot cannot be criminally liable for
either direct or indirect bribery penalized under the RPC, there being no evidence that
she did in fact accept or receive anything from Atty. Gaviola in connection with the
election protest of his wife pending in their branch. As can be gleaned from the subject
text message, the something offered by Atty. Gaviola was intended not for her, but
for De Sesto. She cannot be liable for qualified bribery either as this crime requires that
the offender be a public officer entrusted with law enforcement who refrains from
arresting or prosecuting an offender in consideration of any promise, gift or present.

As settled, an accusation of bribery is easy to concoct but difficult to prove. The
complainant must present a panoply of evidence in support of such an accusation.
23

Bare allegation would not suffice to hold Mabalot liable. Here, no direct and convincing
evidence, other than the text message, was presented which can prove her alleged
bribery. Hence, she cannot be held guilty of said charge.

This does not mean, however, that Mabalot is relieved of any liability. Her defense that
her text message was only a query as to De Sestos receipt of whatever Atty. Gaviola
intended to give him cannot exonerate her from administrative liability. The Court
agrees with the view of the Investigating Judge that she committed misconduct. A
perusal of the said text message reveals that Mabalot acted contrary to the norms of
conduct required of her position. As Branch CoC, she serves as a sentinel of justice and
any act of impropriety on her part immeasurably affects the honor and dignity of the
Judiciary and the peoples confidence in it.
24
As the highest ranked court personnel next
to the presiding judge, she should have prevented or deterred Atty. Gaviola from giving
something to De Sesto. She knew very well that such offer was improper for, otherwise,
she would not have added the following phrase in her text message, dont worry d
worry di malalaman ni Judge

Mabalot should be reminded that a public servant must exhibit the highest sense of
honesty and integrity for no less than the Constitution mandates that a public office is a
public trust and public officers and employees must at all times be accountable to the
people, serve them with utmost responsibility, integrity, loyalty and efficiency, act with
patriotism and justice, and lead modest lives. This constitutionally-enshrined principles,
oft-repeated in our case law, are not mere rhetorical flourishes or idealistic sentiments.
They should be taken as working standards by all in the public service.
25
Mabalots
failure to prevent the illicit offer or corrupt act of Atty. Gaviola undoubtedly violates the
norm of decency and diminishes or tends to diminish the peoples respect for those in
the government service.
26
Indeed, such act constitutes misconduct. To constitute
misconduct, the act or acts must have a direct relation to, and be connected with, the
performance of her official duties.
Misconduct in office has been authoritatively defined by Justice Tuazon in Lacson v.
Lopez in these words: "Misconduct in office has a definite and well-understood legal
meaning. By uniform legal definition, it is a misconduct such as affects his performance
of his duties as an officer and not such only as affects his character as a private
individual. In such cases, it has been said at all times, it is necessary to separate the
character of the man from the character of the officer x x x It is settled that
misconduct, misfeasance, or malfeasance warranting removal from office of an officer
must have direct relation to and be connected with the performance of official duties
amounting either to maladministration or willful, intentional neglect and failure to
discharge the duties of the office x x x.
27

The Court further defines misconduct as "a transgression of some established and
definite rule of action, more particularly, unlawful behavior or gross negligence by a
public officer.
28
The misconduct is gross if it involves any of the additional elements of
corruption, willful intent to violate the law, or to disregard established rules, which must
be proven by substantial evidence. As distinguished from simple misconduct, the
elements of corruption, clear intent to violate the law, or flagrant disregard of
established rule, must be manifest in a charge of grave misconduct. Corruption, as an
element of grave misconduct, consists in the act of an official or fiduciary person who
unlawfully and wrongfully uses his station or character to procure some benefit for
himself or for another person, contrary to duty and the rights of others.
29
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In the present case, there was no evidence to show that Mabalot unlawfully or
wrongfully used her official function as Branch CoC for her own benefit or personal
gain. Her text message to De Sesto reads in part x x x pinabibigay sa akin pero
pinadidiretso ko sa yo. It is clear from the said message that the something offered
by Atty. Gaviola, in connection with the pending election protest, was not intended for
her but for De Sesto. No corrupt or wrongful motive can be attributed on her part
because she did not receive or accept that something. As the qualifying element of
corruption was not established, the Investigating Judge was correct in giving her the
benefit of the doubt and finding her guilty of simple misconduct only.

With respect to the utterance of a grave threat, in her Judicial Memorandum, Mabalot
admitted that she talked to Soller on May 6, 2008 and told her about the case involving
their 56-hectare family property; the stress she experienced in seeing her family
members fighting in court, and the extreme stress brought about by this case, which
caused her three blocked arteries requiring an open heart surgery. She denied having
made any threatening remarks against the life of Judge Buenaventura as narrated in
the affidavit,
30
to wit, If our lot will be foreclosed, I will commit suicide but before I kill
myself I will kill Buenaventura.

During the pre-hearing conference between the parties on March 7, 2011, however,
Mabalot admitted that she uttered those words out of depression but without intention
to make good such threat. The Court believes that such categorical admission prevails
over her negative allegation that she did not utter threatening words against Judge
Buenaventura. It is settled that denial is inherently a weak defense. To be believed, it
must be buttressed by a strong evidence of non-culpability; otherwise, such denial is
purely self-serving and without evidentiary value.
31
As correctly concluded by the
Investigating Judge, Mabalots earlier denial crumbles in the light of her own admission
that she indeed uttered threats to kill Judge Buenaventura. Her act of threatening the
life of her superior certainly demonstrated lack of respect.

The Court, however, agrees with the Investigating Judge that the act committed by
Mabalot cannot be considered as misconduct, not being related to the discharge of
her official functions. There is no proof that her act of threatening Judge Buenaventura
through words and text messages were related to, or performed by taking advantage
of, her position as Branch CoC. In administrative proceedings, the burden of proving the
acts complained of, particularly the relation to the official functions of the public officer,
rests on the complainant.
32
In this regard, Judge Buenaventura failed to prove such
relation. The Investigating Judge was, therefore, correct in concluding that Mabalot
acted in her private capacity. Thus, she cannot be held liable for misconduct, much less
for gross misconduct.

The Investigating Judge likewise was correct when he recommended that Mabalot be
absolved from the charge of gross insubordination. Insubordination is defined as a
refusal to obey some order, which a superior officer is entitled to give and have obeyed.
The term imports a willful or intentional disregard of the lawful and reasonable
instructions of the employer.
33
In this case, there was no order or directive issued by
Judge Buenaventura that was willfully or intentionally disregarded or not complied with
by Mabalot so as to constitute gross insubordination.

Nevertheless, the complained act constituted conduct prejudicial to the best interest of
the service which, as held in Largo v. Court of Appeals,
34
need not be related or
connected to a public officers official functions.

The rules do not enumerate the acts constituting conduct prejudicial to the best interest
of the service. In Ito v. De Vera,
35
the Court wrote that it referred to acts or omissions
that violate the norm of public accountability and diminish - or tend to diminish - the
peoples faith in the Judiciary.
36
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Time and again, this Court has declared that the image of a court of justice is mirrored
by the conduct, official or otherwise, of its personnel from the judge to the lowest of
its rank and file who are all bound to adhere to the exacting standard of morality and
decency in both their professional and private actions.
37
In the case of Consolacion v.
Gambito,
38
quoting the pronouncement in Hernando v. Bengson,
39
the Court stressed
that:chanrobles virtua1aw 1ibrary
The conduct of every court personnel must be beyond reproach and free from suspicion
that may cause to sully the image of the Judiciary. They must totally avoid any
impression of impropriety, misdeed or misdemeanor not only in the performance of
their official duties but also in conducting themselves outside or beyond the duties and
functions of their office. Court personnel are enjoined to conduct themselves toward
maintaining the prestige and integrity of the Judiciary for the very image of the latter is
necessarily mirrored in their conduct, both official and otherwise. They must not forget
that they are an integral part of that organ of the government sacredly tasked in
dispensing justice. Their conduct and behavior, therefore, should not only be
circumscribed with the heavy burden of responsibility but at all times be defined by
propriety and decorum, and above all else beyond any suspicion.
In the case at bench, Mabalots utterances and text messages of threats to get even
indeed demonstrated conduct unbecoming of a court personnel. Doubtless, such acts
tarnished not only the image and integrity of her public office but also the public
perception of the very image of the Judiciary of which she was a part. The Investigating
Judge, thus, correctly adjudged her guilty of conduct prejudicial to the best interest of
the service.

As regards the imposition of the proper penalty, the Civil Service Rules classifies
conduct prejudicial to the best interest of the service as a grave offense. Under Section
52(A)(20), Rule IV of the said Civil Service Rules, it is punishable by suspension for six
(6) months and one (1) day to one year, for the first offense, and by dismissal for the
second offense. On the other hand, Section 52(B)(2), Rule IV of the same Rules
classifies simple misconduct as a less grave offense punishable with a corresponding
penalty of suspension for one (1) month and one (1) day to six (6) months for the first
offense, and by dismissal for the second offense.

In this case, Mabalot was found guilty of two civil service offenses, simple misconduct
and conduct prejudicial to the best interest of the service. Section 55, Rule IV of the
Civil Service Rules provides that in cases where the respondent is found guilty of two or
more charges or counts, the penalty to be imposed should be that corresponding to the
most serious charge, with the rest considered as aggravating circumstances. Thus,
Mabalots conviction for the two (2) offenses merits the imposition of the penalty of
suspension of six (6) months and one (1) day to one year without pay, which is the
penalty for the more serious charge of conduct prejudicial to the best interest of the
service with simple misconduct as aggravating circumstance.

The rules allow the consideration of mitigating and aggravating circumstances and
provide for the manner of imposition of the proper penalty. Section 54 of the Civil
Service Rules provides:chanrobles virtua1aw 1ibrary
Section 54. Manner of imposition. When applicable, the imposition of the penalty may
be made in accordance with the manner provided herein below:

a. The minimum of the penalty shall be imposed where only mitigating and no
aggravating circumstances are present.

b. The medium of the penalty shall be imposed where no mitigating and aggravating
circumstances are present.

c. The maximum of the penalty shall be imposed where only aggravating and no
mitigating circumstances are present.

d. Where aggravating and mitigating circumstances are present, paragraph (a) shall be
applied where there are more mitigating circumstances present; paragraph (b) shall be
applied when the circumstances equally offset each other; and paragraph (c) shall be
applied when there are more aggravating circumstances.
40
(Underscoring supplied)
In the case under consideration, Mabalots health condition, with her having undergone
bypass operation and her long years in government service are appreciated as
mitigating factors in her favor. Taking into consideration these mitigating circumstances
and the aggravating circumstance of simple misconduct, paragraph (d) of Section 54
applies. Accordingly, the minimum penalty of suspension for six (6) months is the
appropriate penalty for her administrative transgression.

Considering Mabalots compulsory retirement on October 6, 2012, however, the penalty
of suspension is no longer feasible. Thus, in lieu of suspension, the penalty of fine in
the amount of Forty Thousand Pesos (P40,000.00)
41
would be appropriate under the
circumstances.

On a final note, this Court cannot tolerate Mabalots actuations which indubitably fell
short of the standard of conduct required of her as a civil servant in the court of justice.
Her retirement notwithstanding, she should and must be held accountable. When an
officer or employee is disciplined, the object is the improvement of the public service
and the preservation of the publics faith and confidence in the government.
42
cralaw
virtualaw library

WHEREFORE, Fe A. Mabalot, formerly Clerk of Court III, MeTC, Branch 63, Makati
City, is hereby declared GUILTY of simple misconduct and conduct prejudicial to the
best interest of the service and is hereby ordered to pay a FINE of P40,000.00, to be
deducted from her retirement benefits.chanroblesvirtualawlibrary

SO ORDERED.





FIRST DIVISION
G.R. No. 194948, September 02, 2013
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. FREDDY SALONGA Y
AFIADO, Accused-Appellant.

D E C I S I O N
SERENO, C.J.:

Before this Court is an appeal from the Decision
1
of the Court of Appeals (CA) in CA-
G.R. CR-H.C. No. 03754 affirming in toto the Decision
2
in Criminal Case Nos. 03-336
and 03-337. The Regional Trial Court of Binangonan, Rizal, Branch 67 (RTC) Decision
found Freddy Salonga y Afiado guilty of violating Sections 5 and 11, Article II of
Republic Act No. 9165 (R.A. 9165), otherwise known as the Comprehensive Dangerous
Drugs Act of 2002.
The Facts

The accused was charged under two separate Informations
3
docketed as Criminal Case
Nos. 03-336 and 03-337 for violation of Sections 5 and 11, Article II of Republic Act
(R.A.) No. 9165 (illegal sale and possession of dangerous drugs, respectively).

Version of the Prosecution

Police Officer (PO) 3 Gabriel Santos (PO3 Santos) testified that confidential information
was obtained that the accused was selling illegal drugs at his residence in Barangay
Libis, Wawa, Binangonan, Rizal. Consequently, a buy-bust operation was conducted on
7 October 2003, whereupon the accused was arrested for selling methamphetamine
hydrochloride or shabu.
4
cralawlibrary

PO2 Bernardo T. Suarez (PO2 Suarez), who acted as poseur-buyer, went to the house
of the accused accompanied by a police asset. The asset told the accused that they
were going to buy drugs, and upon agreement, PO2 Suarez gave accused two (2)
marked P100 bills. In return, the accused gave PO2 Suarez a deck of shabu. PO2
Suarez then lit a cigarette, which was the agreed signal that the transaction was
completed. Thereafter, the accused was arrested by the team.
5
cralawlibrary

The police officers, who introduced themselves as members of the CIDG, informed the
accused of the reason of his arrest, after which accused was frisked and three (3) more
sachets of shabu were seized from him. Thereafter, they proceeded to the police
station, where the sachets of shabu were marked and later brought to the Philippine
National Police (PNP) Crime Laboratory.
6
cralawlibrary

PO2 Suarez testified that he was the one who marked the sachets with his own initials
and who prepared the letter-request for laboratory examination of the specimens.
7
The
seized sachets were then delivered to Eastern Police District Crime Laboratory for
examination.
8
Police Senior Inspector Annalee R. Forro (P/S Insp. Forro), PNP Forensic
Chemical Officer, admitted in her testimony that she personally received the drug
specimens
9
which tested positive for methamphetamine hydrochloride.
10
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Version of the Defense

The defense presented the accused and Virginia Agbulos (Agbulos) as their witnesses.

Accused testified that at around 5 oclock in the afternoon of 7 October 2003, while he
was in front of his elder brothers house with Larry Ocaya and a certain Apple,
11
two
persons arrived looking for his brother Ernie Salonga (Ernie).
12
The accused was held by
the shirt by one named Suarez and was forced to point to the house of his elder
brother.
13
Upon reaching the house of Ernie, they were informed that Ernie was not
there. Thereafter, the police officers arrested the accused.
14
cralawlibrary

To corroborate the testimony of the accused, Agbulos testified that she was with the
buy-bust operation team together with Myleen Cerda, who was a police asset, and two
police officers. The team was initially looking for Ernie, and it was to her surprise that
accused was arrested when Ernie was not found. The accused was then brought to and
detained at the CIDG at Karangalan, Cainta, Rizal.
15
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After the parties stipulated that the testimony of the proposed witness Larry Ocaya was
corroborative of the statements given by the accused, the defense dispensed with his
testimony.
16
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Upon arraignment, the accused pleaded not guilty to both charges.
17
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The Rtc Ruling

After trial on the merits, the RTC rendered a Decision
18
finding the accused guilty
beyond reasonable doubt of violation of Sections 5 and 11, Article II of R.A. 9165. The
trial court ruled that corpus delicti was presented in the form of shabu samples and the
chemistry report. The testimony of prosecution witness PO2 Suarez was found by the
trial court as having presented a clear picture detailing the transaction. The testimonies
of the police officers were given credence in consideration of the presumption of
regularity in the performance of their duties. On the other hand, the denials of the
accused were found to be negative, weak, and self-serving. The RTC likewise observed
that apart from her incredible testimony, witness Agbulos demeanour in court of being
quick to answer, though questions were not yet finished, indicated coaching, which
added to her lack of credibility. Indubitably, the accused was caught in flagrante delicto
of selling shabu which led to a warrantless arrest and search which yielded the
possession of more illegal drugs.
The CA Ruling

On appeal, the CA affirmed in toto the Decision of the RTC and dismissed the appeal.
19

The appellate court ruled that the prosecution was able to sufficiently bear out the
statutory elements of the crime. It held that in the absence of proof of any odious
intent on the part of the police operatives to falsely impute a serious crime against the
accused, the court will not allow the testimonies of the prosecution to be overcome by a
self-serving claim of frame-up.
20
Factual findings of the trial court are accorded respect
and great weight, unless there is a misapprehension of facts.
21
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With respect to the question on chain of custody, the appellate court found that the
drugs confiscated from the accused were properly accounted for and forthrightly
submitted to the Crime Laboratory. The CA further ruled that nothing invited the
suspicion that the integrity and evidentiary value of the seized articles were
jeopardized.
22
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The Issue

Whether or not the RTC and the CA erred in finding that the evidence of the
prosecution was sufficient to convict the accused of the alleged sale and possession of
methamphetamine hydrochloride, in violation of Sections 5 and 11, respectively, of R.A.
9165.
The Ruling of the Court

The accused maintains that there was no clear and convincing evidence warranting his
conviction, as the prosecution failed to establish the actual exchange of the alleged
shabu and the buy-bust money. It was not clearly shown how the buy-bust operation
transpired.
23
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The accused further argues that the prosecution failed to prove that the subject items
allegedly confiscated from him were the same ones submitted to the forensic chemist
for examination;
24
thus, they were not able to establish the unbroken chain of custody
of the illegal drugs.
25
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After a careful scrutiny of the records, the Court finds the appeal to be impressed with
merit.

It has been consistently ruled that the elements needed to be proven to successfully
prosecute a case of illegal sale of drugs are: (1) the identity of the buyer and the seller,
the object, and the consideration; and (2) the delivery of the thing sold and the
payment therefor.
26
cralawlibrary

Simply put, the prosecution must establish that the illegal sale of the dangerous drugs
actually took place together with the presentation in court of the corpus delicti or the
dangerous drugs seized in evidence.
27
Central to this requirement is the question of
whether the drug submitted for laboratory examination and presented in court was
actually recovered from the accused.
28
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The Court has adopted the chain of custody rule, a method of authenticating evidence
which requires that the admission of an exhibit be preceded by evidence sufficient to
support a finding that the matter in question is what the proponent claims it to be. It
would include testimony about every link in the chain, from the moment the item was
picked up to the time it is offered in evidence, in such a way that every person who
touched the exhibit would describe how and from whom it was received, where it was
and what happened to it while in the witness possession, the condition in which it was
received and the condition in which it was delivered to the next link in the chain. These
witnesses would then describe the precautions taken to ensure that there had been no
change in the condition of the item and no opportunity for someone not in the chain to
have possession of the same.
29
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Contrary to the claim of accused, the prosecution was able to clearly recount how the
buy-bust operation was conducted. However, the Court finds that the chain of custody
was broken in view of several infirmities in the procedure and the evidence presented.

Section 21 of R.A. 9165 delineates the mandatory procedural safeguards in buy-bust
operations, which reads:nadcralaw
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:nadcralaw
(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; xxx.
In People v. Salonga,
30
we held that it is essential for the prosecution to prove that the
prohibited drug confiscated or recovered from the suspect is the very same substance
offered in court as an exhibit. This Court, however, finds reasonable doubt on the
evidence presented to prove an unbroken chain of custody.

First, it is not clear from the evidence that the marking, which was done in the police
station, was made in the presence of the accused or his representative. Although we
have previously ruled that the marking upon immediate confiscation of the prohibited
items contemplates even that which was done at the nearest police station or office of
the apprehending team,
31
the same must always be done in the presence of the
accused or his representative. Thus, there is already a gap in determining whether the
specimens that entered into the chain were actually the ones examined and offered in
evidence.

Crucial 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 after seizure is the
starting point in the custodial link, thus it is vital that the seized contrabands are
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 criminal proceedings,
obviating switching, planting, or contamination of evidence.
32
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Second, the prosecution failed to duly accomplish the Certificate of Inventory and to
take photos of the seized items pursuant to the above-stated provision. There is
nothing in the records that would show at least an attempt to comply with this
procedural safeguard; neither was there any justifiable reason propounded for failing to
do so.

Third, we find conflicting testimony and glaring inconsistencies that would cast doubt
on the integrity of the handling of the seized drugs. The material inconsistency of who
actually received the specimens in the Crime Laboratory creates a cloud of doubt as to
whether the integrity and evidentiary value of the seized items were preserved.

PO3 Santos testified on direct examination:nadcralaw
Q What did you do with the 3 plastic sachets containing white crystalline substance
recovered from the accused?
A We brought them to the office and we made some markings on the specimens and
they were brought to the PNP Crime Laboratory.
33

To corroborate the same, P/S Insp. Forro, the Forensic Chemical Officer, testified as
follows:nadcralaw
Q Who brought those specimens to your office?
A It was a certain PO2 Santos.

Q Who received the specimens?
A I received it personally.
34
(Emphasis supplied)
However, a perusal of the Request for Laboratory Examination presented by the
prosecution shows:nadcralaw
EPD CRIME LABORATORY
SAINT FRANCIS ST. MANDALUYONG CITY
CONTROL NR. 3392-03
CASE NR: D-1908-03
TIME & DATE RECVD: 1315H 08 OCT 03
RECORDED BY: PO3 KAYAT
RECEIVED BY: PSI CARIO
D/by: PO3 SANTOS
35
(Emphasis supplied)
The marked discrepancy between the testimony of P/S Insp. Forro and the
documentary evidence, which shows that a certain PSI Cario received the specimens,
was not explained by the prosecution. This material and glaring inconsistency creates
doubt as to the preservation of the seized items.

Moreover, although PO2 Suarez testified that he was the one who marked the
specimens with his own initials,
36
he did not identify the seized items in open court to
prove that the ones he marked were the same specimens brought to the laboratory for
testing and eventually presented in open court. Neither did PO3 Santos, the one who
delivered the request and the specimens to the laboratory, identify in open court that
the specimens presented are the same specimens he delivered to the laboratory for
testing.

While P/S Insp. Forro testified that the specimens she received for testing were the
same ones presented in court,
37
this Court cannot accurately determine whether the
tested specimens were the same items seized from the accused and marked by PO2
Suarez. The failure of the police officers to identify the seized drugs in open court
created another gap in the link. Thus, the identity of the corpus delicti was not proven.

The gaps in the chain of custody creates a reasonable doubt as to whether the
specimens seized from the accused were the same specimens brought to the laboratory
and eventually offered in court as evidence. Without adequate proof of the corpus
delicti, the conviction cannot stand.

In People v. De Guzman,
38
this Court ruled:nadcralaw
Accordingly, the failure to establish, through convincing proof, that the integrity of the
seized items has been adequately preserved through an unbroken chain of custody is
enough to engender reasonable doubt on the guilt of an accused. Reasonable doubt is
that doubt engendered by an investigation of the whole proof and an inability after such
investigation to let the mind rest upon the certainty of guilt. Absolute certainty of guilt
is not demanded by the law to convict a person charged with a crime, but moral
certainty is required as to every proposition of proof requisite to constitute the offense.
A conviction cannot be sustained if there is a persistent doubt on the identity of the
drug.
39

Finally, the presumption of regularity in the performance of official duty cannot be
invoked by the prosecution where the procedure was tainted with material lapses.
These lapses effectively produced serious doubts on the integrity and identity of the
corpus delicti, especially in the face of allegations of frame-up which was testified to by
a third party witness.
40
The presumption of regularity in the performance of official duty
cannot by itself overcome the presumption of innocence nor constitute proof beyond
reasonable doubt.
41
cralawlibrary

The inconsistency in the evidence and the weak presentation of the prosecution leaves
a gaping hole in the chain of custody, which creates a reasonable doubt on the guilt of
the accused. In view of the prosecutions failure to adduce justifiable grounds on their
procedural lapses and the unexplained conflicting inconsistencies in the evidence
presented, we are constrained to reverse the finding of the court a quo.

As held in People v. Umipang,
42
x x x, we reiterate our past rulings calling upon the
authorities to exert greater efforts in combating the drug menace using the safeguards
that our lawmakers have deemed necessary for the greater benefit of our society. The
need to employ a more stringent approach to scrutinizing the evidence of the
prosecution especially when the pieces of evidence were derived from a buy-bust
operation redounds to the benefit of the criminal justice system by protecting civil
liberties and at the same time instilling rigorous discipline on prosecutors.

WHEREFORE, the appealed CA Decision dated 3 June 2010 in CA-G.R. CR-H.C. No.
03754 affirming the RTC Decision in Crim. Case Nos. 03-336 and 03-337 dated 29
November 2008 is SET ASIDE. Accused Freddy Salonga y Afiado is hereby
ACQUITTED of the charges on the ground of reasonable doubt. The Director of the
Bureau of Corrections is hereby ORDERED to immediately RELEASE the accused from
custody, unless he is detained for some other lawful cause.

SO ORDERED.









FIRST DIVISION
G.R. No. 157943, September 04, 2013
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. GILBERT REYES WAGAS,
Accused-Appellant.

D E C I S I O N
BERSAMIN, J.:

The Bill of Rights guarantees the right of an accused to be presumed innocent until the
contrary is proved. In order to overcome the presumption of innocence, the Prosecution
is required to adduce against him nothing less than proof beyond reasonable doubt.
Such proof is not only in relation to the elements of the offense, but also in relation to
the identity of the offender. If the Prosecution fails to discharge its heavy burden, then
it is not only the right of the accused to be freed, it becomes the Courts constitutional
duty to acquit him.
The Case

Gilbert R. Wagas appeals his conviction for estafa under the decision rendered on July
11, 2002 by the Regional Trial Court, Branch 58, in Cebu City (RTC), meting on him the
indeterminate penalty of 12 years of prision mayor, as minimum, to 30 years of
reclusion perpetua, as maximum.
Antecedents

Wagas was charged with estafa under the information that reads:nadcralaw
That on or about the 30th day of April, 1997, and for sometime prior and subsequent
thereto, in the City of Cebu, Philippines, and within the jurisdiction of this Honorable
Court, the said accused, with deliberate intent, with intent to gain and by means of
false pretenses or fraudulent acts executed prior to or simultaneously with the
commission of the fraud, to wit: knowing that he did not have sufficient funds
deposited with the Bank of Philippine Islands, and without informing Alberto Ligaray of
that circumstance, with intent to defraud the latter, did then and there issue Bank of
the Philippine Islands Check No. 0011003, dated May 08, 1997 in the amount of
P200,000.00, which check was issued in payment of an obligation, but which check
when presented for encashment with the bank, was dishonored for the reason drawn
against insufficient funds and inspite of notice and several demands made upon said
accused to make good said check or replace the same with cash, he had failed and
refused and up to the present time still fails and refuses to do so, to the damage and
prejudice of Alberto Ligaray in the amount aforestated.

CONTRARY TO LAW.
1

After Wagas entered a plea of not guilty,
2
the pre-trial was held, during which the
Defense admitted that the check alleged in the information had been dishonored due to
insufficient funds.
3
On its part, the Prosecution made no admission.
4
cralawlibrary

At the trial, the Prosecution presented complainant Alberto Ligaray as its lone witness.
Ligaray testified that on April 30, 1997, Wagas placed an order for 200 bags of rice over
the telephone; that he and his wife would not agree at first to the proposed payment of
the order by postdated check, but because of Wagas assurance that he would not
disappoint them and that he had the means to pay them because he had a lending
business and money in the bank, they relented and accepted the order; that he
released the goods to Wagas on April 30, 1997 and at the same time received Bank of
the Philippine Islands (BPI) Check No. 0011003 for P200,000.00 payable to cash and
postdated May 8, 1997; that he later deposited the check with Solid Bank, his
depository bank, but the check was dishonored due to insufficiency of funds;
5
that he
called Wagas about the matter, and the latter told him that he would pay upon his
return to Cebu; and that despite repeated demands, Wagas did not pay
him.
6
cralawlibrary

On cross-examination, Ligaray admitted that he did not personally meet Wagas because
they transacted through telephone only; that he released the 200 bags of rice directly
to Robert Caada, the brother-in-law of Wagas, who signed the delivery receipt upon
receiving the rice.
7
cralawlibrary

After Ligaray testified, the Prosecution formally offered the following: (a) BPI Check No.
0011003 in the amount of P200,000.00 payable to cash; (b) the return slip dated May
13, 1997 issued by Solid Bank; (c) Ligarays affidavit; and (d) the delivery receipt signed
by Caada. After the RTC admitted the exhibits, the Prosecution then rested its
case.
8
cralawlibrary

In his defense, Wagas himself testified. He admitted having issued BPI Check No.
0011003 to Caada, his brother-in-law, not to Ligaray. He denied having any telephone
conversation or any dealings with Ligaray. He explained that the check was intended as
payment for a portion of Caadas property that he wanted to buy, but when the sale
did not push through, he did not anymore fund the check.
9
cralawlibrary

On cross-examination, the Prosecution confronted Wagas with a letter dated July 3,
1997 apparently signed by him and addressed to Ligarays counsel, wherein he
admitted owing Ligaray P200,000.00 for goods received, to wit:nadcralaw
This is to acknowledge receipt of your letter dated June 23, 1997 which is self-
explanatory. It is worthy also to discuss with you the environmental facts of the case
for your consideration, to wit:nadcralaw
1. It is true that I obtained goods from your client worth P200,000.00 and I
promised to settle the same last May 10, 1997, but to no avail. On this point, let
me inform you that I sold my real property to a buyer in Manila, and promised to
pay the consideration on the same date as I promised with your client.
Unfortunately, said buyer likewise failed to make good with such obligation.
Hence, I failed to fulfill my promise resultant thereof. (sic)
2. Again, I made another promise to settle said obligation on or before June 15,
1997, but still to no avail attributable to the same reason as aforementioned.
(sic)
3. To arrest this problem, we decided to source some funds using the subject
property as collateral. This other means is resorted to for the purpose of settling
the herein obligation. And as to its status, said funds will be rele[a]sed within
thirty (30) days from today.
In view of the foregoing, it is my sincere request and promise to settle said obligation
on or before August 15, 1997.

Lastly, I would like to manifest that it is not my intention to shy away from any financial
obligation.

x x x x

Respectfully yours,

(SGD.)

GILBERT R. WAGAS
10

Wagas admitted the letter, but insisted that it was Caada who had transacted with
Ligaray, and that he had signed the letter only because his sister and her husband
(Caada) had begged him to assume the responsibility.
11
On redirect examination,
Wagas declared that Caada, a seafarer, was then out of the country; that he signed
the letter only to accommodate the pleas of his sister and Caada, and to avoid
jeopardizing Caadas application for overseas employment.
12
The Prosecution
subsequently offered and the RTC admitted the letter as rebuttal
evidence.
13
cralawlibrary
Decision of the RTC

As stated, the RTC convicted Wagas of estafa on July 11, 2002, viz:nadcralaw
WHEREFORE, premises considered, the Court finds the accused GUILTY beyond
reasonable doubt as charged and he is hereby sentenced as follows:nadcralaw
1. To suffer an indeterminate penalty of from twelve (12) years of pris[i]on mayor,
as minimum, to thirty (30) years of reclusion perpetua as maximum;
2. To indemnify the complainant, Albert[o] Ligaray in the sum of P200,000.00;
3. To pay said complainant the sum of P30,000.00 by way of attorneys fees; and
4. the costs of suit.
SO ORDERED.
14

The RTC held that the Prosecution had proved beyond reasonable doubt all the
elements constituting the crime of estafa, namely: (a) that Wagas issued the postdated
check as payment for an obligation contracted at the time the check was issued; (b)
that he failed to deposit an amount sufficient to cover the check despite having been
informed that the check had been dishonored; and (c) that Ligaray released the goods
upon receipt of the postdated check and upon Wagas assurance that the check would
be funded on its date.

Wagas filed a motion for new trial and/or reconsideration,
15
arguing that the
Prosecution did not establish that it was he who had transacted with Ligaray and who
had negotiated the check to the latter; that the records showed that Ligaray did not
meet him at any time; and that Ligarays testimony on their alleged telephone
conversation was not reliable because it was not shown that Ligaray had been familiar
with his voice. Wagas also sought the reopening of the case based on newly discovered
evidence, specifically: (a) the testimony of Caada who could not testify during the trial
because he was then out of the country, and (b) Ligarays testimony given against
Wagas in another criminal case for violation of Batas Pambansa Blg. 22.

On October 21, 2002, the RTC denied the motion for new trial and/or reconsideration,
opining that the evidence Wagas desired to present at a new trial did not qualify as
newly discovered, and that there was no compelling ground to reverse its
decision.
16
cralawlibrary

Wagas appealed directly to this Court by notice of appeal.
17
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Prior to the elevation of the records to the Court, Wagas filed a petition for admission to
bail pending appeal. The RTC granted the petition and fixed Wagas bond at
P40,000.00.
18
Wagas then posted bail for his provisional liberty pending
appeal.
19
cralawlibrary

The resolution of this appeal was delayed by incidents bearing on the grant of Wagas
application for bail. On November 17, 2003, the Court required the RTC Judge to
explain why Wagas was out on bail.
20
On January 15, 2004, the RTC Judge submitted
to the Court a so-called manifestation and compliance which the Court referred to the
Office of the Court Administrator (OCA) for evaluation, report, and recommendation.
21

On July 5, 2005, the Court, upon the OCAs recommendation, directed the filing of an
administrative complaint for simple ignorance of the law against the RTC Judge.
22
On
September 12, 2006, the Court directed the OCA to comply with its July 5, 2005
directive, and to cause the filing of the administrative complaint against the RTC Judge.
The Court also directed Wagas to explain why his bail should not be cancelled for
having been erroneously granted.
23
Finally, in its memorandum dated September 27,
2006, the OCA manifested to the Court that it had meanwhile filed the administrative
complaint against the RTC Judge.
24
cralawlibrary
Issues

In this appeal, Wagas insists that he and Ligaray were neither friends nor personally
known to one other; that it was highly incredible that Ligaray, a businessman, would
have entered into a transaction with him involving a huge amount of money only over
the telephone; that on the contrary, the evidence pointed to Caada as the person with
whom Ligaray had transacted, considering that the delivery receipt, which had been
signed by Caada, indicated that the goods had been Ordered by ROBERT CAADA,
that the goods had been received by Caada in good order and condition, and that
there was no showing that Caada had been acting on behalf of Wagas; that he had
issued the check to Caada upon a different transaction; that Caada had negotiated
the check to Ligaray; and that the element of deceit had not been established because
it had not been proved with certainty that it was him who had transacted with Ligaray
over the telephone.

The circumstances beg the question: did the Prosecution establish beyond reasonable
doubt the existence of all the elements of the crime of estafa as charged, as well as the
identity of the perpetrator of the crime?
Ruling

The appeal is meritorious.

Article 315, paragraph 2(d) of the Revised Penal Code, as amended, provides:nadcralaw
Article 315. Swindling (estafa). Any person who shall defraud another by any of the
means mentioned hereinbelow shall be punished by:nadcralaw

x x x x

2. By means of any of the following false pretenses or fraudulent acts executed prior to
or simultaneously with the commission of the fraud:nadcralaw

x x x x

(d) By postdating a check, or issuing a check in payment of an obligation when the
offender had no funds in the bank, or his funds deposited therein were not sufficient to
cover the amount of the check. The failure of the drawer of the check to deposit the
amount necessary to cover his check within three (3) days from receipt of notice from
the bank and/or the payee or holder that said check has been dishonored for lack or
insufficiency of funds shall be prima facie evidence of deceit constituting false pretense
or fraudulent act.
In order to constitute estafa under this statutory provision, the act of postdating or
issuing a check in payment of an obligation must be the efficient cause of the
defraudation. This means that the offender must be able to obtain money or property
from the offended party by reason of the issuance of the check, whether dated or
postdated. In other words, the Prosecution must show that the person to whom the
check was delivered would not have parted with his money or property were it not for
the issuance of the check by the offender.
25
cralawlibrary

The essential elements of the crime charged are that: (a) a check is postdated or issued
in payment of an obligation contracted at the time the check is issued; (b) lack or
insufficiency of funds to cover the check; and (c) damage to the payee thereof.
26
It is
the criminal fraud or deceit in the issuance of a check that is punishable, not the non-
payment of a debt.
27
Prima facie evidence of deceit exists by law upon proof that the
drawer of the check failed to deposit the amount necessary to cover his check within
three days from receipt of the notice of dishonor.

The Prosecution established that Ligaray had released the goods to Caada because of
the postdated check the latter had given to him; and that the check was dishonored
when presented for payment because of the insufficiency of funds.

In every criminal prosecution, however, the identity of the offender, like the crime itself,
must be established by proof beyond reasonable doubt.
28
In that regard, the
Prosecution did not establish beyond reasonable doubt that it was Wagas who had
defrauded Ligaray by issuing the check.

Firstly, Ligaray expressly admitted that he did not personally meet the person with
whom he was transacting over the telephone, thus:
Q: On April 30, 1997, do you remember having a transaction with the accused in this
case?

A: Yes, sir. He purchased two hundred bags of rice from me.

Q: How did this purchase of rice transaction started? (sic)

A: He talked with me over the phone and told me that he would like to
purchase two hundred bags of rice and he will just issue a check.
29

Even after the dishonor of the check, Ligaray did not personally see and meet whoever
he had dealt with and to whom he had made the demand for payment, and that he had
talked with him only over the telephone, to wit:nadcralaw
Q: After the check was (sic) bounced, what did you do next?

A: I made a demand on them.

Q: How did you make a demand?

A: I called him over the phone.

Q: Who is that him that you are referring to?

A: Gilbert Wagas.
30

Secondly, the check delivered to Ligaray was made payable to cash. Under the
Negotiable Instruments Law, this type of check was payable to the bearer and could be
negotiated by mere delivery without the need of an indorsement.
31
This rendered it
highly probable that Wagas had issued the check not to Ligaray, but to somebody else
like Caada, his brother-in-law, who then negotiated it to Ligaray. Relevantly, Ligaray
confirmed that he did not himself see or meet Wagas at the time of the transaction and
thereafter, and expressly stated that the person who signed for and received the stocks
of rice was Caada.

It bears stressing that the accused, to be guilty of estafa as charged, must have used
the check in order to defraud the complainant. What the law punishes is the fraud or
deceit, not the mere issuance of the worthless check. Wagas could not be held guilty of
estafa simply because he had issued the check used to defraud Ligaray. The proof of
guilt must still clearly show that it had been Wagas as the drawer who had defrauded
Ligaray by means of the check.

Thirdly, Ligaray admitted that it was Caada who received the rice from him and who
delivered the check to him. Considering that the records are bereft of any showing that
Caada was then acting on behalf of Wagas, the RTC had no factual and legal bases to
conclude and find that Caada had been acting for Wagas. This lack of factual and legal
bases for the RTC to infer so obtained despite Wagas being Caadas brother-in-law.

Finally, Ligarays declaration that it was Wagas who had transacted with him over the
telephone was not reliable because he did not explain how he determined that the
person with whom he had the telephone conversation was really Wagas whom he had
not yet met or known before then. We deem it essential for purposes of reliability and
trustworthiness that a telephone conversation like that one Ligaray supposedly had with
the buyer of rice to be first authenticated before it could be received in evidence.
Among others, the person with whom the witness conversed by telephone should be
first satisfactorily identified by voice recognition or any other means.
32
Without the
authentication, incriminating another person just by adverting to the telephone
conversation with him would be all too easy. In this respect, an identification based on
familiarity with the voice of the caller, or because of clearly recognizable peculiarities of
the caller would have sufficed.
33
The identity of the caller could also be established by
the callers self-identification, coupled with additional evidence, like the context and
timing of the telephone call, the contents of the statement challenged, internal
patterns, and other distinctive characteristics, and disclosure of knowledge of facts
known peculiarly to the caller.
34
cralawlibrary

Verily, it is only fair that the caller be reliably identified first before a telephone
communication is accorded probative weight. The identity of the caller may be
established by direct or circumstantial evidence. According to one ruling of the Kansas
Supreme Court:nadcralaw
Communications by telephone are admissible in evidence where they are relevant to the
fact or facts in issue, and admissibility is governed by the same rules of evidence
concerning face-to-face conversations except the party against whom the conversations
are sought to be used must ordinarily be identified. It is not necessary that the witness
be able, at the time of the conversation, to identify the person with whom the
conversation was had, provided subsequent identification is proved by direct or
circumstantial evidence somewhere in the development of the case. The mere
statement of his identity by the party calling is not in itself sufficient proof of
such identity, in the absence of corroborating circumstances so as to render
the conversation admissible. However, circumstances preceding or following
the conversation may serve to sufficiently identify the caller. The
completeness of the identification goes to the weight of the evidence rather
than its admissibility, and the responsibility lies in the first instance with the
district court to determine within its sound discretion whether the threshold
of admissibility has been met.
35
(Bold emphasis supplied)
Yet, the Prosecution did not tender any plausible explanation or offer any proof to
definitely establish that it had been Wagas whom Ligaray had conversed with on the
telephone. The Prosecution did not show through Ligaray during the trial as to how he
had determined that his caller was Wagas. All that the Prosecution sought to elicit from
him was whether he had known and why he had known Wagas, and he answered as
follows:nadcralaw
Q: Do you know the accused in this case?

A: Yes, sir.

Q: If he is present inside the courtroom []

A: No, sir. He is not around.
Q: Why do you know him?

A: I know him as a resident of Compostela because he is an ex-mayor of
Compostela.
36

During cross-examination, Ligaray was allowed another opportunity to show how he
had determined that his caller was Wagas, but he still failed to provide a satisfactory
showing, to wit:nadcralaw
Q: Mr. Witness, you mentioned that you and the accused entered into [a] transaction
of rice selling, particularly with these 200 sacks of rice subject of this case, through
telephone conversation?

A: Yes, sir.

Q: But you cannot really ascertain that it was the accused whom you are
talking with?

A: I know it was him because I know him.

Q: Am I right to say [that] that was the first time that you had a transaction
with the accused through telephone conversation, and as a consequence
of that alleged conversation with the accused through telephone he
issued a check in your favor?
A: No. Before that call I had a talk[ ] with the accused.

Q: But still through the telephone?

A: Yes, sir.

Q: There was no instant (sic) that the accused went to see you personally
regarding the 200 bags rice transaction?

A: No. It was through telephone only.

Q: In fact[,] you did not cause the delivery of these 200 bags of rice through
the accused himself?

A: Yes. It was through Robert.

Q: So, after that phone call[,] you deliver[ed] th[ose] 200 sacks of rice
through somebody other than the accused?

A: Yes, sir.
37

Ligarays statement that he could tell that it was Wagas who had ordered the rice
because he know[s] him was still vague and unreliable for not assuring the certainty
of the identification, and should not support a finding of Ligarays familiarity with Wagas
as the caller by his voice. It was evident from Ligarays answers that Wagas was not
even an acquaintance of Ligarays prior to the transaction. Thus, the RTCs conclusion
that Ligaray had transacted with Wagas had no factual basis. Without that factual basis,
the RTC was speculating on a matter as decisive as the identification of the buyer to be
Wagas.

The letter of Wagas did not competently establish that he was the person who had
conversed with Ligaray by telephone to place the order for the rice. The letter was
admitted exclusively as the States rebuttal evidence to controvert or impeach the denial
of Wagas of entering into any transaction with Ligaray on the rice; hence, it could be
considered and appreciated only for that purpose. Under the law of evidence, the court
shall consider evidence solely for the purpose for which it is offered,
38
not for any other
purpose.
39
Fairness to the adverse party demands such exclusivity. Moreover, the high
plausibility of the explanation of Wagas that he had signed the letter only because his
sister and her husband had pleaded with him to do so could not be taken for granted.

It is a fundamental rule in criminal procedure that the State carries the onus probandi in
establishing the guilt of the accused beyond a reasonable doubt, as a consequence of
the tenet ei incumbit probation, qui dicit, non qui negat, which means that he who
asserts, not he who denies, must prove,
40
and as a means of respecting the
presumption of innocence in favor of the man or woman on the dock for a crime.
Accordingly, the State has the burden of proof to show: (1) the correct identification of
the author of a crime, and (2) the actuality of the commission of the offense with the
participation of the accused. All these facts must be proved by the State beyond
reasonable doubt on the strength of its evidence and without solace from the weakness
of the defense. That the defense the accused puts up may be weak is inconsequential
if, in the first place, the State has failed to discharge the onus of his identity and
culpability. The presumption of innocence dictates that it is for the Prosecution to
demonstrate the guilt and not for the accused to establish innocence.
41
Indeed, the
accused, being presumed innocent, carries no burden of proof on his or her shoulders.
For this reason, the first duty of the Prosecution is not to prove the crime but to prove
the identity of the criminal. For even if the commission of the crime can be established,
without competent proof of the identity of the accused beyond reasonable doubt, there
can be no conviction.
42
cralawlibrary

There is no question that an identification that does not preclude a reasonable
possibility of mistake cannot be accorded any evidentiary force.
43
Thus, considering that
the circumstances of the identification of Wagas as the person who transacted on the
rice did not preclude a reasonable possibility of mistake, the proof of guilt did not
measure up to the standard of proof beyond reasonable doubt demanded in criminal
cases. Perforce, the accuseds constitutional right of presumption of innocence until the
contrary is proved is not overcome, and he is entitled to an acquittal,
44
even though his
innocence may be doubted.
45
cralawlibrary

Nevertheless, an accused, though acquitted of estafa, may still be held civilly liable
where the preponderance of the established facts so warrants.
46
Wagas as the admitted
drawer of the check was legally liable to pay the amount of it to Ligaray, a holder in
due course.
47
Consequently, we pronounce and hold him fully liable to pay the amount
of the dishonored check, plus legal interest of 6% per annum from the finality of this
decision.

WHEREFORE, the Court REVERSES and SETS ASIDE the decision rendered on July
11, 2002 by the Regional Trial Court, Branch 58, in Cebu City; and ACQUITS Gilbert R.
Wagas of the crime of estafa on the ground of reasonable doubt, but ORDERS him to
pay Alberto Ligaray the amount of P200,000.00 as actual damages, plus interest of 6%
per annum from the finality of this decision.

No pronouncement on costs of suit.

SO ORDERED.










THIRD DIVISION
G.R. No. 198174, September 02, 2013
ALPHA INSURANCE AND SURETY CO., Petitioner, v. ARSENIA SONIA CASTOR,
Respondent.

D E C I S I O N
PERALTA, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the Decision
1
dated May 31, 2011 and Resolution
2
dated August 10, 2011 of
the Court of Appeals (CA) in CA-G.R. CV No. 93027.

The facts follow.

On February 21, 2007, respondent entered into a contract of insurance, Motor Car
Policy No. MAND/CV-00186, with petitioner, involving her motor vehicle, a Toyota Revo
DLX DSL. The contract of insurance obligates the petitioner to pay the respondent the
amount of Six Hundred Thirty Thousand Pesos (P630,000.00) in case of loss or damage
to said vehicle during the period covered, which is from February 26, 2007 to February
26, 2008.

On April 16, 2007, at about 9:00 a.m., respondent instructed her driver, Jose Joel
Salazar Lanuza (Lanuza), to bring the above-described vehicle to a nearby auto-shop
for a tune-up. However, Lanuza no longer returned the motor vehicle to respondent
and despite diligent efforts to locate the same, said efforts proved futile. Resultantly,
respondent promptly reported the incident to the police and concomitantly notified
petitioner of the said loss and demanded payment of the insurance proceeds in the
total sum of P630,000.00.

In a letter dated July 5, 2007, petitioner denied the insurance claim of respondent,
stating among others, thus:nadcralaw
Upon verification of the documents submitted, particularly the Police Report and your
Affidavit, which states that the culprit, who stole the Insure[d] unit, is employed with
you. We would like to invite you on the provision of the Policy under Exceptions to
Section-III, which we quote:nadcralaw

1.) The Company shall not be liable for:nadcralaw
x x x x

(4) Any malicious damage caused by the Insured, any member of his family or by A
PERSON IN THE INSUREDS SERVICE.
In view [of] the foregoing, we regret that we cannot act favorably on your claim.
In letters dated July 12, 2007 and August 3, 2007, respondent reiterated her claim and
argued that the exception refers to damage of the motor vehicle and not to its loss.
However, petitioners denial of respondents insured claim remains firm.

Accordingly, respondent filed a Complaint for Sum of Money with Damages against
petitioner before the Regional Trial Court (RTC) of Quezon City on September 10, 2007.

In a Decision dated December 19, 2008, the RTC of Quezon City ruled in favor of
respondent in this wise:nadcralaw
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff
and against the defendant ordering the latter as follows:nadcralaw
1. To pay plaintiff the amount of P466,000.00 plus legal interest of 6% per annum
from the time of demand up to the time the amount is fully settled;
2. To pay attorneys fees in the sum of P65,000.00; and
3. To pay the costs of suit.
All other claims not granted are hereby denied for lack of legal and factual basis.
3

Aggrieved, petitioner filed an appeal with the CA.

On May 31, 2011, the CA rendered a Decision affirming in toto the RTC of Quezon Citys
decision. The fallo reads:nadcralaw
WHEREFORE, in view of all the foregoing, the appeal is DENIED. Accordingly, the
Decision, dated December 19, 2008, of Branch 215 of the Regional Trial Court of
Quezon City, in Civil Case No. Q-07-61099, is hereby AFFIRMED in toto.

SO ORDERED.
4

Petitioner filed a Motion for Reconsideration against said decision, but the same was
denied in a Resolution dated August 10, 2011.

Hence, the present petition wherein petitioner raises the following grounds for the
allowance of its petition:nadcralaw
1. WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, IT ERRED AND
GROSSLY OR GRAVELY ABUSED ITS DISCRETION WHEN IT ADJUDGED IN
FAVOR OF THE PRIVATE RESPONDENT AND AGAINST THE PETITIONER AND
RULED THAT EXCEPTION DOES NOT COVER LOSS BUT ONLY DAMAGE BECAUSE
THE TERMS OF THE INSURANCE POLICY ARE [AMBIGUOUS] EQUIVOCAL OR
UNCERTAIN, SUCH THAT THE PARTIES THEMSELVES DISAGREE ABOUT THE
MEANING OF PARTICULAR PROVISIONS, THE POLICY WILL BE CONSTRUED BY
THE COURTS LIBERALLY IN FAVOR OF THE ASSURED AND STRICTLY AGAINST
THE INSURER.
2. WITH DUE RESPECT TO THE HONORABLE COURT OF APPEALS, IT ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT [AFFIRMED] IN TOTO
THE JUDGMENT OF THE TRIAL COURT.
5

Simply, the core issue boils down to whether or not the loss of respondents vehicle is
excluded under the insurance policy.

We rule in the negative.

Significant portions of Section III of the Insurance Policy states:nadcralaw
SECTION III LOSS OR DAMAGE

The Company will, subject to the Limits of Liability, indemnify the Insured against loss
of or damage to the Schedule Vehicle and its accessories and spare parts whilst
thereon:nadcralaw
(a) by accidental collision or overturning, or collision or overturning consequent upon
mechanical breakdown or consequent upon wear and tear;

(b) by fire, external explosion, self-ignition or lightning or burglary, housebreaking or
theft;

(c) by malicious act;

(d) whilst in transit (including the processes of loading and unloading) incidental to
such transit by road, rail, inland waterway, lift or elevator.

x x x x
EXCEPTIONS TO SECTION III

The Company shall not be liable to pay for:nadcralaw
1. Loss or Damage in respect of any claim or series of claims arising out of one
event, the first amount of each and every loss for each and every vehicle insured
by this Policy, such amount being equal to one percent (1.00%) of the Insureds
estimate of Fair Market Value as shown in the Policy Schedule with a minimum
deductible amount of Php3,000.00;
2. Consequential loss, depreciation, wear and tear, mechanical or electrical
breakdowns, failures or breakages;
3. Damage to tires, unless the Schedule Vehicle is damaged at the same time;
4. Any malicious damage caused by the Insured, any member of his family or by
a person in the Insureds service.
6

In denying respondents claim, petitioner takes exception by arguing that the word
damage, under paragraph 4 of Exceptions to Section III, means loss due to injury or
harm to person, property or reputation, and should be construed to cover malicious
loss as in theft. Thus, it asserts that the loss of respondents vehicle as a result of it
being stolen by the latters driver is excluded from the policy.

We do not agree.

Ruling in favor of respondent, the RTC of Quezon City scrupulously elaborated that theft
perpetrated by the driver of the insured is not an exception to the coverage from the
insurance policy, since Section III thereof did not qualify as to who would commit the
theft. Thus:nadcralaw
Theft perpetrated by a driver of the insured is not an exception to the coverage from
the insurance policy subject of this case. This is evident from the very provision of
Section III Loss or Damage. The insurance company, subject to the limits of liability,
is obligated to indemnify the insured against theft. Said provision does not qualify as to
who would commit the theft. Thus, even if the same is committed by the driver of the
insured, there being no categorical declaration of exception, the same must be covered.
As correctly pointed out by the plaintiff, (A)n insurance contract should be interpreted
as to carry out the purpose for which the parties entered into the contract which is to
insure against risks of loss or damage to the goods. Such interpretation should result
from the natural and reasonable meaning of language in the policy. Where restrictive
provisions are open to two interpretations, that which is most favorable to the insured
is adopted. The defendant would argue that if the person employed by the insured
would commit the theft and the insurer would be held liable, then this would result to
an absurd situation where the insurer would also be held liable if the insured would
commit the theft. This argument is certainly flawed. Of course, if the theft would be
committed by the insured himself, the same would be an exception to the coverage
since in that case there would be fraud on the part of the insured or breach of material
warranty under Section 69 of the Insurance Code.
7

Moreover, contracts of insurance, like other contracts, are to be construed according to
the sense and meaning of the terms which the parties themselves have used. If such
terms are clear and unambiguous, they must be taken and understood in their plain,
ordinary and popular sense.
8
Accordingly, in interpreting the exclusions in an insurance
contract, the terms used specifying the excluded classes therein are to be given their
meaning as understood in common speech.
9
cralawlibrary

Adverse to petitioners claim, the words loss and damage mean different things in
common ordinary usage. The word loss refers to the act or fact of losing, or failure to
keep possession, while the word damage means deterioration or injury to property.

Therefore, petitioner cannot exclude the loss of respondents vehicle under the
insurance policy under paragraph 4 of Exceptions to Section III, since the same refers
only to malicious damage, or more specifically, injury to the motor vehicle caused by
a person under the insureds service. Paragraph 4 clearly does not contemplate loss of
property, as what happened in the instant case.

Further, the CA aptly ruled that malicious damage, as provided for in the subject
policy as one of the exceptions from coverage, is the damage that is the direct result
from the deliberate or willful act of the insured, members of his family, and any person
in the insureds service, whose clear plan or purpose was to cause damage to the
insured vehicle for purposes of defrauding the insurer, viz.:nadcralaw
This interpretation by the Court is bolstered by the observation that the subject policy
appears to clearly delineate between the terms loss and damage by using both
terms throughout the said policy. x x x

x x x x

If the intention of the defendant-appellant was to include the term loss within the
term damage then logic dictates that it should have used the term damage alone in
the entire policy or otherwise included a clear definition of the said term as part of the
provisions of the said insurance contract. Which is why the Court finds it puzzling that in
the said policys provision detailing the exceptions to the policys coverage in Section III
thereof, which is one of the crucial parts in the insurance contract, the insurer, after
liberally using the words loss and damage in the entire policy, suddenly went
specific by using the word damage only in the policys exception regarding malicious
damage. Now, the defendant-appellant would like this Court to believe that it really
intended the word damage in the term malicious damage to include the theft of the
insured vehicle.

The Court does not find the particular contention to be well taken.

True, it is a basic rule in the interpretation of contracts that the terms of a contract are
to be construed according to the sense and meaning of the terms which the parties
thereto have used. In the case of property insurance policies, the evident intention of
the contracting parties, i.e., the insurer and the assured, determine the import of the
various terms and provisions embodied in the policy. However, when the terms of
the insurance policy are ambiguous, equivocal or uncertain, such that the
parties themselves disagree about the meaning of particular provisions, the
policy will be construed by the courts liberally in favor of the assured and
strictly against the insurer.
10

Lastly, a contract of insurance is a contract of adhesion. So, when the terms of the
insurance contract contain limitations on liability, courts should construe them in such a
way as to preclude the insurer from non-compliance with his obligation. Thus, in Eternal
Gardens Memorial Park Corporation v. Philippine American Life Insurance Company,
11

this Court ruled
It must be remembered that an insurance contract is a contract of adhesion which must
be construed liberally in favor of the insured and strictly against the insurer in order to
safeguard the latters interest. Thus, in Malayan Insurance Corporation v. Court of
Appeals, this Court held that:nadcralaw
Indemnity and liability insurance policies are construed in accordance with the general
rule of resolving any ambiguity therein in favor of the insured, where the contract or
policy is prepared by the insurer. A contract of insurance, being a contract of
adhesion, par excellence, any ambiguity therein should be resolved against
the insurer; in other words, it should be construed liberally in favor of the insured and
strictly against the insurer. Limitations of liability should be regarded with extreme
jealousy and must be construed in such a way as to preclude the insurer from non-
compliance with its obligations.
In the more recent case of Philamcare Health Systems, Inc. v. Court of Appeals, we
reiterated the above ruling, stating that:nadcralaw
When the terms of insurance contract contain limitations on liability, courts should
construe them in such a way as to preclude the insurer from non-compliance with his
obligation. Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract, the insurer. By reason
of the exclusive control of the insurance company over the terms and phraseology of
the insurance contract, ambiguity must be strictly interpreted against the insurer and
liberally in favor of the insured, especially to avoid forfeiture.
12

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is
DENIED. Accordingly, the Decision dated May 31, 2011 and Resolution dated August
10, 2011 of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.


































SECOND DIVISION
G.R. No. 184732, September 09, 2013
CORAZON S. CRUZ UNDER THE NAME AND STYLE,VILLA CORAZON CONDO
DORMITORY, Petitioner, v. MANILA INTERNATIONAL AIRPORT AUTHORITY,
Respondent.
R E S O L U T I O N
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari
1
are the Decision
2
dated November 27,
2007 and Resolution
3
dated September 26, 2008 of the Court of Appeals in CA-G.R. CV
No. 88308 which dismissed the appeal filed by petitioner Corazon S. Cruz (Cruz),
affirming with modification the court a quos dismissal of Civil Case No. 70613 on the
ground of improper venue.
The Facts

On December 7, 2005, Cruz filed before the Regional Trial Court (RTC) of Pasig City,
Branch 68 (RTC-Pasig City) a complaint
4
for breach of contract, consignation, and
damages (complaint for breach of contract) against respondent Manila International
Airport Authority( MIAA), docketed as Civil Case No. 70613 (Pasig case). In her
complaint,Cruz alleged that on August 12, 2003, she executed a Contract of Lease
(lease contract) with MIAA over a 1,411.98 square meter-property, situated at BAC 1-
11, Airport Road, Pasay City, in order to establish a commercial arcade for sublease to
other businesses.
5
She averred that MIAA failed to inform her that part of the leased
premises is subject to an easement of public use
6
(easement) since the same was
adjacent to the Paraaque River.
7
As a result, she was not able to obtain a building
permit as well as a certificate of electrical inspection from the Manila Electric Company,
leading to her consequent failure to secure an electrical connection for the entire leased
premises.
8
Due to the lack of electricity,Cruzs tenants did not pay rent; hence, she was
unable to pay her own rental obligations to MIAA from December 2004 onwards.
9

Further, since some of Cruzs stalls were located in the easement area, the Metropolitan
Manila Development Authority demolished them, causing her to suffer actual damages
in the amount of P633,408.64.
10
In view of the foregoing, Cruz sent MIAA her rental
computation, pegged at the amount of P629,880.02,wherein the aforesaid damages
have been deducted. However, instead of accepting Cruzs payment, MIAA sent a letter
terminating the lease contract.
11
cralaw virtualaw library

For its part, MIAA filed a Motion to Dismiss
12
(motion to dismiss) hinged on the
following grounds: (a) violation of the certification requirement against forum shopping
under Section 5, Rule 7
13
of the Rules of Court, given that the lease contract subject of
the Pasig case is the same actionable document subject of Civil Case No. 1129918
(Manila case) which is a complaint for partial annulment of contract (complaint for
annulment of contract)also filed by Cruz before the RTC of Manila, Branch 1;
14
and (b)
improper venue, since in the complaint for annulment of contract,as well as the
verification/certification and the annexes attached thereto,it is indicated that Cruz is a
resident of 506, 2
nd
Street, San Beda Subdivision, San Miguel, Manila.
15
cralaw virtualaw
library
The RTC Ruling

On August 15, 2006, the RTC-Pasig City issued an Order
16
dismissing Cruzs complaint
for breach of contract due to forum shopping since both the Pasig and Manila cases are
founded on the same actionable document between the same parties. In addition, it
observed that the Pasig case was not being prosecuted by the real party-in-interest
since the lessee named in the lease contract is one Frederick Cruz and not Cruz. It did
not, however, sustain MIAAs argument on improper venue since Cruz alleged to be a
resident of San Juan, Metro Manila; therefore,unless proven otherwise, the complaint
shall be taken on its face value.
17
cralaw virtualaw library

Aggrieved, petitioner filed a motion for reconsideration
18
which was, however, denied
by the RTC-Pasig City in an Order
19
dated October 2, 2006. Thus, Cruz filed a notice of
appeal.
20
cralaw virtualaw library
The Proceedings Before the CA

In her Appellants Brief,
21
Cruz assigned the following errors: (a) that the RTC-Pasig City
erred in holding that there was forum shopping, considering that the causes of action in
the complaints for breach of contract and annulment of contract are separate and
distinct; (b) that the RTC-Pasig City erred in ruling that Cruz is not the real party-in-
interest considering that Frederick Cruz merely signed the lease contract as her
attorney-in-fact; and (c) that the RTC-Pasig City erred in not denying MIAAs motion to
dismiss since it was set for hearing more than 10 days from its filing.
22
cralaw virtualaw
library

On the other hand, MIAA filed its Defendant-Appellees Brief
23
refuting the foregoing
arguments. In addition, MIAA raised before the CA its argument on improper venue
24

which had been previously denied by the RTC-Pasig City.

On November 27, 2007, the CA rendered a Decision,
25
affirming with modification the
RTC-Pasig Citys dismissal of the Pasig case. It held that while Cruz did not commit
forum shopping (since the Pasig and Manila cases involve distinct causes of action and
issues
26
) and that Cruz should be considered as a real party-in-interest in the Pasig case
(since Frederick Cruz was merely her appointed attorney-in-fact in connection with the
execution of the lease contract
27
), the Pasig case remains dismissible on the ground of
improper venue as Cruz was bound by her judicial admission that her residence was
actually in Manila and not in San Juan.
28
cralaw virtualaw library

Dissatisfied, Cruz moved for reconsideration
29
but was denied by the CA in a
Resolution
30
dated September 26, 2008. Hence, this petition.
The Issue Before the Court

The essential issue in this case is whether or not the CA erred in dismissing Cruzs
appeal on the basis of improper venue.

Cruz contends that the CA may only resolve errors assigned by the appellant and,
conversely, cannot rule on a distinct issue raised by the appellee.
31
In this accord, she
argues that in ruling on the issue of improper venue, the CA practically allowed MIAA to
pursue a lost appeal, although the latter did not file a notice of appeal within the proper
reglementary period nor pay the prescribed docket fees.
32
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On the other hand, MIAA maintains, inter alia, that despite raising the issue on
improper venue before the CA, the RTC-Pasig City did not categorically rule on the said
issue. As such, it claims that it could raise the foregoing ground as one of the issues
before the CA.
33
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The Courts Ruling
The petition is meritorious.

Jurisprudence dictates that the appellees role in the appeal process is confined only to
the task of refuting the assigned errors interposed by the appellant. Since the appellee
is not the party who instituted the appeal and accordingly has not complied with the
procedure prescribed therefor,he merely assumes a defensive stance and his interest
solely relegated to the affirmance of the judgment appealed from. Keeping in mind that
the right to appeal is essentially statutory in character, it is highly erroneous for the
appellee to either assign any error or seek any affirmative relief or modification of the
lower courts judgment without interposing its own appeal.As held in the case of Medida
v. CA:
34

An appellee who has not himself appealed cannot obtain from the appellate
court any affirmative relief other than the ones granted in the decision of the
court below. He cannot impugn the correctness of a judgment not appealed
from by him. He cannot assign such errors as are designed to have the
judgment modified. All that said appellee can do is to make a counter-assignment of
errors or to argue on issues raised at the trial only for the purpose of sustaining the
judgment in his favor, even on grounds not included in the decision of the court a quo
nor raised in the appellant's assignment of errors or arguments.
35
(Emphasis supplied)
In the case at bar, the Court finds that the CA committed a reversible error in
sustaining the dismissal of the Pasig case on the ground of improper venue because the
same was not an error raised by Cruz who was the appellant before it. Pursuant to the
above-mentioned principles, the CA cannot take cognizance of MIAAs position that the
venue was improperly laid since, being the appellee, MIAAs participation was confined
to the refutation of the appellants assignment of errors. As MIAAs interest was limited
to sustaining the RTC-Pasig Citys judgment, it cannot, without pursuing its own appeal,
deviate from the pronouncements made therein. In particular, records bear out that the
RTC-Pasig City, while granting MIAAs motion to dismiss, found the latters argument on
improper venue to be erroneous. Hence, given that the said conclusion was not
properly contested by MIAA on appeal, the RTC-Pasig Citys ruling on the matter should
now be deemed as conclusive. Corollary, the CA should not have taken this ground into
consideration when it appreciated the case before it. By acting otherwise, it therefore
committed a reversible error, which thereby warrants the reversal of its Decision.

WHEREFORE, the petition is GRANTED. The Decision dated November 27, 2007 and
Resolution dated September 26, 2008 of the Court of Appeals in CA-G.R. CV No.
88308are hereby SET ASIDE. Accordingly, the case is REMANDED to the Regional
Trial Court of Pasig City, Branch 68 for further proceedings.chanroblesvirtualawlibrary

SO ORDERED.









SECOND DIVISION
G.R. No. 187731, September 18, 2013
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. SPO1 ALFREDO ALAWIG,
Accused-Appellant.
D E C I S I O N
DEL CASTILLO, J.:
For final review is the November 3, 2008 Decision
1
of the Court of Appeals (CA),
affirming with modification the May 17, 2005 Decision
2
of the Regional Trial Court
(RTC), Branch 11, Manila, finding SPO1 Alfredo Alawig (appellant) and SPO2 Enrique M.
Dabu (SPO2 Dabu) guilty beyond reasonable doubt of the crime of murder.

Factual Antecedents

Appellant, along with PO3 Romeo Ventinilla (PO3 Ventinilla), was initially charged with
homicide for the killing of PO3 Miel de Ocampo Cafe (victim). Upon motion of Percelita
Cafe (Percelita), the victims mother,
3
a reinvestigation of the case was conducted.
Subsequently, the Deputy Ombudsman for the Military approved the filing of an
Amended Information
4
against appellant, PO3 Ventinilla together with SPO4 Ponciano
Miraples (SPO4 Miraples), PO2 Armando de Vera (PO2 De Vera), SPO2 Dabu and PO2
Vivencio Corpuz (PO2 Corpuz). The Department of Justice accordingly moved for the
admission of said Amended Information,
5
which the RTC Manila, Branch 18 granted.
6

The accusatory portion of the Amended Information reads as follows:chanrobles
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The undersigned Ombudsman Investigator, Office of the Deputy Ombudsman for the
Military, hereby accuses SPO4 PONCIANO MIRAPLES, SPO1 ALFREDO ALAWIG, PO3
ROMEO VENTINILLA, PO2 ARMANDO DE VERA, SPO2 ENRIQUE DABU and PO2
VIVENCIO CORPUZ of the crime of MURDER, defined and penalized under Article 248 of
the Revised Penal Code, committed as follows:chanrobles virtua1aw 1ibrary
That on or about November 30, 1996, or for sometime subsequent thereto, in Marulas,
Valenzuela, Metro Manila, Philippines and within the jurisdiction of this Honorable Court,
the above-named accused (SPO1 Alawig and PO3 VENTINILLA), both public officers,
being then members of the Philippine National Police (PNP) Force assigned at the
Valenzuela Police Station, armed with various firearms, with evident premeditation,
treachery and with deliberate intent to kill, conspiring and confederating with their co-
accused (SPO4 MIRAPLES, PO2 DE VERA, SPO2 DABU and PO2 CORPUZ), committing
the offense in relation to their Office, did then and there willfully, unlawfully and
feloniously shoot PO3 MIEL DE OCAMPO CAFE, causing multiple gunshot wounds on the
vital parts of his body which were the direct and immediate cause of his death, to the
damage and prejudice of the latters heirs.
Contrary to law.
7

SPO2 Dabu pleaded not guilty when arraigned on July 1, 1999 as did appellant when
arraigned on July 29, 1999. SPO4 Miraples, PO2 De Vera and PO2 Corpuz were never
apprehended and remain at large while PO3 Ventinilla met his violent death on
February 27, 2001.
8
Per letter
9
of Police Chief Inspector Isidro C. Suyo, Jr. dated March
5, 2001, PO3 Ventinilla who was tagged as member of the dreaded GAPOS GANG was
killed during the encounter with the [police] elements x x x at Rodriguez, Rizal.
Accordingly, the case against PO3 Ventinilla was dismissed per Order
10
dated January
31, 2005.

The prosecution presented as witnesses Dr. Fernando Mandapat (Dr. Mandapat), Dr.
Valentin Bernales (Dr. Bernales), Aida Pascual (Pascual), MacGregor Reyes (Reyes),
Percelita, Sr. Insp. Edison Lopez (Lopez), Joel Lester Valdez (Valdez) and Dr. Olga
Bausa (Dr. Bausa), whose collective testimonies established the facts of this case as
hereunder summarized.

In the early morning of November 30, 1996, the victim and Reyes went to a nearby
market. Upon their return, Reyes left the victim at the latters residence and came back
at noon. He did not immediately enter the house as he noticed several policemen
strategically positioned on the premises. He saw appellant and PO3 Ventinilla standing
by the door shortly before entering the victims house. He also saw SPO2 Dabu standing
at the front gate while PO2 De Vera was on top of the septic tank. Standing at the main
door was PO2 Corpuz. To avoid being noticed, Reyes used the alternative road and
went inside the house through the back gate. From his position, he could hear the
conversation among appellant, PO3 Ventinilla and the victim. The latter who just woke
up was told to dress up and bring his firearm as he was summoned by SPO4 Miraples to
join a police team in an operation regarding illegal drugs. After the group left the
victims residence, Reyes entered the house. While inside, he received a telephone call
from the victim telling him, Pare wala pala kaming tatrabahuhin, ako pala ang
tatrabahuhin, tulungan mo ako, sumundo ka ng tao na tutulong sa akin. But before
Reyes could say anything, the telephone conversation was cut. Not long after, Reyes
learned that the victim died from gunshot wounds in different parts of his body while
inside the premises of Police Kababayan Center I in Doa Ata Subdivision, Marulas,
Valenzuela City.

Dr. Mandapat, the physician on duty at the time the victim was brought to the Fatima
Hospital (now Fatima Medical Center), conducted the initial post mortem examination.
He noticed that the victim had no upper clothing and shoes when he was brought to
the hospital by PO2 Corpuz. He identified the Medico-Legal Record
11
and Medico-Legal
Report
12
that he prepared.

Dr. Bernales, a medico-legal officer from the National Bureau of Investigation (NBI),
corroborated the initial medical findings of Dr. Mandapat. His autopsy report
13
indicates
that the victim sustained three gunshot wounds, contusions on the chest, subclavicular
area and the forearm, lacerated wounds on the ear and posterior axillary line, and
abrasions in post aurical and anterolateral.

Lopez was the Team Leader of the Scene of the Crime Operatives which investigated
the shooting incident. The team took photographs and other physical evidence at the
crime scene some of which were disturbed and tampered with. Lopez noticed a pool of
blood leading to the door of the police station. Six spent shells taken from the office of
SPO4 Miraples were placed on the floor by the members of the police station contingent
when the team was about to take pictures. He also noticed that the holes on the wall
were not caused by gunshots but by a concrete nail. He invited all the members of the
police station contingent to undergo paraffin examination but only appellant and PO3
Ventinilla acquiesced to be paraffin tested. Both of them were positive for gunpowder
nitrates.

Dr. Bausa, a medico-legal officer of the PNP Crime Laboratory, conducted a forensic
examination on the blood-stained hat, face towel and T-shirt worn by the victim and
submitted by the Valenzuela police. According to her, the T-shirt had no bullet holes on
the areas where the victim was apparently shot and had no trace of blood.

Percelita testified that sometime in September 1996, the victim confided to her that he
earned the ire of his superior and fellow police officers after he apprehended a drug
pusher in Valenzuela. She likewise recalled that on November 28, 1996, the victim told
her, Inay[,] ang Valenzuela ay bulok as some high-ranking officials were involved in a
drug syndicate. The victim even told her that some unknown persons were following
him from time to time. As a result of her sons death, she testified that she suffered
moral damages and actual damages amounting to P104,000.00. She also spent
P221,000.00 as attorneys fees.

On the other hand, the version of appellant and SPO2 Dabu as summarized by the CA is
quoted hereunder:chanrobles virtua1aw 1ibrary
On November 30, 1996, at around 1:00 oclock in the afternoon, accused-appellant
Alawig, accused PO3 Ventinilla and PO2 De Vera were dispatched by their Precinct
Commander SPO4 Miraples to ARTY Subdivision to respond to a report involving illegal
drugs. However, they were not able to proceed to the assigned operation because
SPO4 Miraples directed them to go to Gumamela Street to investigate on a reported
trouble in the area. When they arrived at the area, the reported trouble was already
over, thus, they proceeded to the house of the victim which was also within the vicinity
and also to inquire on the trouble which occurred there. They reached the house of the
victim while the latter was playing dart with a certain Tomas Beroy. The victim invited
the police officers to get inside the house but only the accused-appellant Alawig and
Ventinilla entered. The victim admitted to them that he had a quarrel with his wife
which caused him to shoot the thermos bottle. Thereafter, the victim joined them in
reporting back to the police station in order to explain the alleged trouble that took
place in the area where he also resided. The victim brought his armalite rifle and .45
pistol and boarded the owner-type jeep of Ventinilla. When they were about to leave,
Ventinilla noticed that the victim was holding a plastic sachet containing shabu. There,
Ventinilla said to the victim, Matagal ka nang tinatrabaho ng DILG Parak. Upon arrival
at the police station, the accused-appellant Alawig went to a store to buy cigarette and,
when he returned, he saw the victim and the accused Ventinilla having a heated
argument. During the occurrence, Dabu and De Vera left the station to respond to a
reported illegal gambling while the victim and Ventinilla went inside the station.

Inside the station, the victim made a telephone call and thereafter the heated argument
between the victim and Ventinilla resumed. Alawig could see the events from outside
the station where he was seated. He saw the victim [kick] his armalite rifle and [point]
it at Ventinilla which the latter tried to impede by holding the end part of the weapon
and pointed it upward. At the same time, Ventinilla kicked the table towards the victim
which caused the latter to fall down to his knees. At that moment, the victim fired his
armalite rifle and, in retaliation thereto, Ventinilla shot the victim x x x several times.
Thereafter, Alawig told Ventinilla to stop[,] after which the latter left the scene.
14
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x x x x

For his part, Dabu testified that he was not among those who fetched the victim at his
house. He remained at the police station to wait for De Vera before they would respond
to a reported illegal gambling somewhere in Pasong Balete Hills. Immediately after De
Vera arrived, Dabu left the station with De Vera. They apprehended three (3) persons
in their operation and brought them to their station. Upon their arrival at the station,
Dabu learned that a shooting incident transpired between the victim and Ventinilla while
they were away. Due to the incident, Dabu released the persons he apprehended in an
illegal gambling pursuant to an order of his superior, SPO4 Miraples.
Ruling of the Regional Trial Court

On May 17, 2005, the RTC convicted appellant and SPO2 Dabu of murder qualified by
treachery. The RTC also considered the killing of the victim as attended by the
aggravating circumstance of evident premeditation. Accordingly, they were sentenced
to suffer the penalty of death.

The dispositive portion of the RTC Decision reads:chanrobles virtua1aw 1ibrary
WHEREFORE, judgment is hereby rendered in this case, finding accused Alfredo Alawig
and Enrique M. Dabu guilty beyond reasonable doubt of the crime of Murder qualified
by treachery. There being attendant in the commission of the offense the aggravating
circumstance of evident premeditation without any mitigating circumstance present, the
greater penalty shall be applied (Art. 63, par. 1, RPC). Under Art. 48 of the Revised
Penal Code as amended by R.A. 7659, the maximum penalty of the crime of Murder is
death. Accordingly, both accused Alawig and Dabu, who stand trial, are hereby
sentenced to suffer the penalty of death.

Accused Dabu and Alawig are likewise ordered to pay jointly and severally the heirs of
the victim, Miel Cafe, compensatory damage in the amount of P50,000.00, actual
damages in the amount of P325,000.00, moral damages in the amount of P50,000.00
and exemplary damages in the amount of P25,000.00

SO ORDERED.
15

Considering, however, the failure of SPO2 Dabu to appear during the promulgation of
the Decision, the RTC issued an Order
16
directing the issuance of a warrant of arrest.
Thereafter, SPO2 Dabu filed a Motion for Reconsideration
17
of the RTC Decision but the
same was denied in an Order
18
dated October 25, 2005.

Ruling of the Court of Appeals

SPO2 Dabu then filed with the CA a Compliance (With Omnibus Motion to (a) Give Due
Course to the Appeal, (b) Lift and Set Aside Warrant of Arrest and (c) Allow Accused to
Post Bail.
19
However, in a Resolution
20
dated March 22, 2006, the CA denied due course
to SPO2 Dabus appeal. Hence, the CAs disposition was limited to the appeal interposed
by appellant.

The CA agreed with the factual presentation of the prosecution and discredited the
version of the defense. On November 3, 2008, the CA promulgated its Decision
affirming the RTC Decision but reduced the penalty from death to reclusion perpetua,
viz:chanrobles virtua1aw 1ibrary
WHEREFORE, in view of the foregoing premises, the assailed decision of the Regional
Trial Court, Branch 11, in Manila rendered on May 17, 2005 in Criminal Case No. 99-
170722 finding the accused-appellant guilty of the crime of murder is hereby
AFFIRMED by us with the MODIFICATION that the penalty of death imposed is
reduced to reclusion perpetua.chanroblesvirtualawlibrary

SO ORDERED.
21

Hence, this appeal
Issues

In his Brief,
22
appellant contends that in affirming his conviction, the CA -
1. X X X erred in its factual finding that [APPELLANT] claimed self-defense despite
evidence showing that his defense was total denial.
2. X X X erred in not resolving the following issues raised to it on appeal from the
trial court, to wit:
A. WHETHER X X X THE TRIAL COURT ERRED IN HOLDING THAT THE
GUILT OF THE [APPELLANT] WAS PROVEN BEYOND REASONABLE DOUBT
BASED ON CIRCUMSTANTIAL EVIDENCE

ii. whether x x x the trial court erred in ruling that there exists sufficient
circumstantial evidence to prove that the [APPELLANT] conspired in killing
the victim
iii. whether x x x the trial court erred in ruling that there was motive on the
part of the [APPELLANT]

X X X ERRED IN APPRECIATING THE QUALIFYING CIRCUMSTANCE OF
TREACHERY.
X X X ERRED IN APPRECIATING THE AGGRAVATING CIRCUMSTANCE OF
EVIDENT PREMEDITATION.
X X X ERRED IN NOT RESOLVING THE ISSUE AS TO WHETHER X X X THE TRIAL
COURT ERRED IN APPRECIATING FLIGHT ON THE PART OF [APPELLANT].
23

Self-defense

Appellant faults the CA when it imposed on him the burden of proving the elements of
self-defense. He claims it was PO3 Ventinilla who acted in self-defense and, therefore, it
was incumbent upon the latter to establish such fact. He avers that his defense is denial
as found by the trial court.

Obviously, appellant was confused. It must be noted that he was the only witness who
testified on the circumstances surrounding the tragic death of the victim. It was he who
supplied the necessary evidence showing that there was unlawful aggression on the
part of the victim. Contrary to the undisputed finding of Dr. Bernales that there are
more than one assailant in view of the multiple bullet wounds on the body of the victim,
appellant insists it was only PO3 Ventinilla who killed the victim. However, neither PO3
Ventinilla nor the victim could be resurrected from their graves to controvert appellants
version of the story.

Besides, it has not escaped our attention that in the Counter-Affidavit
24
of SPO4
Miraples, appellants co-accused, he stated therein that appellant acted in self-defense
when the victim allegedly went berserk.
25
More important, in his Answer
26
to the
administrative complaint filed by the victims widow, appellant interposed self-defense
by alleging that it was the victim who initiated the attack through unlawful aggression.

Hence, the CA committed no error in imposing upon him the burden of proving the
elements of self-defense.

At any rate, appellants claim of self-defense deserves no credence at all. Aside from
the fact that the defense presented absolutely no credible evidence to establish self-
defense, this was belied by appellants assertion that he was outside the police station
premises when the victim was killed. But even the appellants denial equally deserves
scant consideration. The physical evidence presented by the prosecution put appellant
in the crime scene. He tested positive for gunpowder nitrates which proved that he fired
his firearm. Dr. Bernales also testified that the victim was killed by more than one
assailant. Clearly, appellant was with PO3 Ventinilla when the victim was killed.

Circumstantial evidence

Appellant also claims that the circumstantial evidence presented by the prosecution was
not sufficient to convict him. He argues that the prosecution failed to establish an
unbroken chain of events that showed his guilt beyond reasonable doubt. Thus, he is
entitled to enjoy the constitutional presumption of innocence.

We find the contention unconvincing.

Indeed, no prosecution witness has actually seen the commission of the crime. But
jurisprudence tells us that direct evidence of the crime is not the only matrix from which
a trial court may draw its conclusion and finding of guilt. The rules on evidence allow a
trial court to rely on circumstantial evidence to support its conclusion of guilt.
27

Circumstantial evidence is that evidence which indirectly proves a fact in issue through
an inference which the fact-finder draws from the evidence established.
28
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In this case, the Office of the Solicitor General (OSG) correctly synthesized the
circumstances constituting circumstantial evidence as culled from the entire testimony
of Reyes, the prosecutions key witness, to wit:chanrobles virtua1aw 1ibrary
1. Around x x x noon of November 30, 1996, Reyes saw appellant and the late PO3 x x
x Ventinilla enter the house of [the victim] after the latters friend Tomas Beroy, opened
the door upon the instruction of [the victim];

2. Reyes saw appellant and [PO3] Ventinilla carrying [an] armalite [rifle] and [a] .38
caliber [pistol];

3. Reyes heard appellant and [PO3] Ventinilla tell [the victim] that he was being
instructed by SPO4 x x x Miraples, the Chief of Police of Police Kababayan Center I,
Doa Ata Subdivision Station, Marulas, Valenzuela, [to join a team of police which will
apprehend] a big person x x x involved in illegal drugs in Malanday, Valenzuela;

4. Because of the alleged instruction of [the victims] superior, Reyes saw [the victim]
leave his house together with appellant and PO3 Ventinilla around 1:00 [p.m.] of
November 30, 1996;

5. [A f]ew minutes thereafter, Reyes received a telephone call from [the victim who]
nervously told him, Pare wala pala kaming tatrabahuhin, ako pala ang tatrabahuhin.
Tulungan mo ako sumundo ka ng tao na tutulong sa akin. But before Reyes could
respond, the line at the other end of the telephone was suddenly cut x x x; and

6. Later in the afternoon, Reyes learned from his friend that [the victim] was already
dead.
29

The prosecution likewise presented corroborating evidence which constitute an
unbroken chain leading to the inevitable conclusion that appellant is guilty of killing the
victim. For instance, the presence of gunpowder nitrates on appellant after a paraffin
test;
30
the firearm used in the killing which could either be a .38 caliber or 9 mm pistol
31

dovetails with the testimony of Reyes that he saw appellant carrying a .38 caliber short
firearm which was later found to have been recently fired; and the absence of
gunpowder nitrates on the hands of the victim after a paraffin test
32
which belies
appellants claim that he was shot by the victim or that the latter exchanged fire with
PO3 Ventinilla.

[C]ircumstantial evidence is sufficient to sustain a conviction if (i) there is more than
one circumstance; (ii) the facts from which the inference is derived are proven; and (iii)
the combination of all circumstances is such as to produce conviction beyond
reasonable doubt.
33
All the foregoing elements were sufficiently established in this
case.

Conspiracy

Under Article 8 of the Revised Penal Code [RPC], there is conspiracy if two or more
persons agree to commit a felony and decide to commit it. [It] must be proven during
trial with the same quantum of evidence as the felony subject of the agreement of the
parties [either] by direct or circumstantial evidence [of the conspirators conduct]
before, during and after the commission of the felony to achieve a common design or
purpose.
34
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We affirm the findings of the RTC that all of the accused conspired to commit the crime,
viz:chanrobles virtua1aw 1ibrary
x x x In the case at bar, the record of the case is enmeshed with various acts of the
accused, before, during, and after the killing of Cafe that are indicative of a joint
purpose, concerted action, and concurrence of sentiments. Before the victim was
fetched by Alawig, Ventinilla, Dabu, de Vera and Corpuz, as witnessed by Reyes,
accused made it appear in Exh. KK-1 that on November 30, 1996 at 2:45 p.m.,
accused Alawig, Vent[i]nilla, de Vera, Corpuz and a certain Cario who is not a member
of PKC-1 and without including accused Dabu, they were dispatched to an unnamed
place to conduct surveillance on a suspect involved in drugs. A cursory reading of said
entry presupposes that said accused were already dispatched at the place at 2:45 p.m.
Although it appears strange that the subject area and the subject person are not
specified in the entry contrary to the standard practices in making entry in a Dispatch
Log Book, accused Alawig, however, when confronted with the said entry during the
trial, had a different tale to tell. He claims that another instruction was made by their
Police Precinct Commander, co-accused Ponciano Miraples, to proceed instead to
Gumamela Street where there was a reported trouble. Thus, his group according to him
proceeded to Gumamela St. at 1:00 oclock p.m. on the said date but said [change] of
dispatch was not recorded in the Dispatch Log Book of the PKC-1. Interestingly, the
court finds the version of Alawig incredible. For how can a later dispatch instruction
(2:45 p.m. dispatch) be changed by another instruction that occurred earlier (1:00 p.m.
dispatch to Gumamela St. per accused Alawig) than the first? The Court likewise notes
the entry on Exh. LL-1. The same is a clear indication of orchestrating the purported
activities of the accused on the day of the killing of the victim. Accused entered in the
police blotter at 3:00 p.m. about a call regarding a trouble in Gumamela St. to which
the group of Alawig according to him responded. If indeed they were dispatched to the
said place at 1:00 p.m., how then could it be possible, when the call about the reported
incident happened at 3:00 p.m.? To the Courts mind, the latter entry (Exh. LL-1)
further strengthen the theory of the prosecution that the police operation before and
after the killing of the victim, which the accused want to dramatize are nothing but
falsehood and are part of the grand design where each of the accused are made to
appear doing acts that are independent of each other in order to muddle the events
that actually transpired when Cafe was killed.

Moreover, the Court also observes that the alleged call claimed by Dabu to have been
received by accused Miraples on the same day at 3:20 p.m. about people playing tong-
its was not recorded in the PKC-1 Police Blotter (Exh. LL). Strangely, it was the
dispatch for the purpose that was recorded in the Dispatch Log Book (Exh. 8-A, Dabu)
at a very precise time at 3:28 p.m., November 30, 1996 by accused de Vera. How then
can accused de Vera record such dispatch when according to Alawig upon their arrival
at the PKC-1 from Gumamela St., accused Dabu and de Vera immediately left without
the latter entering the police precinct? It is also noted that such entry (Exh. 8-A) has
signs of peculiarity from the rest of the entries in the Dispatch Log Book. The time
written was precise up to the last minute (3:28 p.m.) unlike the other entries the time is
rounded-off to 3:25 or 3:30. Also, the time is written in bold stroke. Compared with the
other entries, the same bears signs of alterations. Such entry therefore supports the
view that there was actually no dispatch made to Pasong Balete Hills. The alleged arrest
of three (3) people playing tong-its in the area never happened there being [no] such
entry in the PKC-1 Police Blotter. Gleaned from the foregoing, every entry made in the
record books could not be accomplished by just one or two accused without the
concurrence of the rest of the accused assigned at the PKC-1 and the imprimatur of the
Police Precinct Commander, accused Ponciano Miraples.

After the victim was brought to the PKC-1, accused Alawig tried to make the Court
[believe] that his co-accused Ventinilla, who is already deceased, was the sole
perpetrator in killing Cafe, exculpating himself and the rest of the accused. The version
of Alawig, however, is [diametrically at odds with the conclusion of] Dr. Bernales of the
NBI that there were more than one assailant in slaying Cafe. From the evidence
adduced by the defense, there is no iota of credible evidence to show that one or two
accused at least attempted to prevent the slaying of Cafe. To the Court[]s mind, there
was indeed a concurrence of sentiments among the accused for the attainment of evil
purpose.

The joint purpose and concurrence of sentiments among the accused is further
demonstrated when accused Alawig again tried to mislead the Court in claiming that it
was [he] who brought the victim to the hospital after being shot when in truth and in
fact as shown in Exh. A, it was his co-accused Vivencio Corpuz who brought the victim
to the hospital. The most outrageous act done by the accused, as police officers, was
when they tampered with the evidence to cover-up the crime while the team of P/Insp.
Lopez was still conducting investigation in the PKC-1 premises. The accused placed six
(6) spent ammunition cartridges coming from the office of accused Miraples that were
not initially found lying on the floor. Likewise, they submitted a T-shirt (Exh. OO)
allegedly worn by the victim at the time of the shooting for forensic examination. It was
found out, however, by Dr. Bausa that despite the gunshot wounds sustained by the
victim, the submitted T-shirt does not bear a single bullet hole that would match the
location of any of the gunshot wounds in the body of Cafe. To top it all, the accused
failed to record the killing of Cafe in the PKC-1 police blotter, which should have been
done as a matter of standard operating procedure.

In light of the foregoing, it is inescapable to conclude that conspiracy is attendant in the
commission of the offense. Thus, the guilt of one is the guilt of all and the accused are
equally liable for the offense committed.
35

Thus, by manipulating the entries in the logbook, the accused conspired to make it
appear that they were in some place other than where the killing took place and that
they were performing acts independent of each other. The entries were recorded with
the concurrence of all the accused. With PO3 Ventinilla dead, appellant painted him as
the sole perpetrator and tried to exculpate himself and the rest of the accused. Records
also show that none of the accused attempted to prevent the killing of the victim. More
telling is their act of placing six empty cartridges at the crime scene to make it appear
that the victim fired his firearm and was the unlawful aggressor. As borne out by the
Firearms Identification Report No. FAID-212-96:
36
the two cartridges were fired from an
M16 rifle with Serial No. RP154135; two other cartridges were fired using an M16 rifle
with Serial No. RP144440; while the last two cartridges were fired from an M16 rifle
with Serial No. RP138254. Per the Initial Investigation Report
37
of SPO1 Angeles I.
Miranda, the M16 rifle with Serial No. RP144440 belonged to appellant as well as a 0.38
caliber revolver with Serial No. BBW4740; the M16 rifle with Serial No. RP154135 and
the 0.38 caliber revolver with Serial No. AUS1926 belonged to PO3 Ventinilla; while the
M16 rifle with Serial No. RP138254 and 0.45 caliber pistol with Serial No. 162457
belonged to the victim. Significantly, the Physical Sciences Report No. 0-552-96
38

indicated that all the aforementioned firearms were fired. However, as already
mentioned, the victim tested negative for gunpowder nitrates hence the possibility that
he fired his weapons is remote. Besides, as already testified to by Dr. Bernales, the
possible firearm used could be caliber 0.38 of which both the appellant and PO3
Ventinilla were equipped at the time the victim was killed.

Finally, the accused presented a T-shirt allegedly worn by the victim which, however,
did not bear any holes compatible to the gunshot wounds sustained by the victim. In
fact, Dr. Bausa testified that the T-shirt did not even contain traces of human blood.

All these taken together suffice to show that appellant conspired with the other accused
in the killing of the victim. There is evidence that the accused performed specific acts in
the furtherance of the conspiracy to kill the victim as well as to cover-up the same. The
evidence is adequate to establish unity of purpose at the time of the commission of the
offense and unity in its execution.

Treachery

Appellant disputes the CAs finding affirming that of the RTC that treachery attended
the commission of the crime as shown by the medical evidence submitted by the NBI.
The CA found that the location of the wounds and the victims stooping or kneeling
position coincide with the concept of treachery regarding the means or modes of
execution tending to insure their execution without risk to the perpetrators. The latter
reflected on the means they adopted in killing the victim while he was not given
sufficient time to defend himself from the attack.

For [treachery] to qualify the crime to murder, it must be shown that: a) the
malefactor employed such means, method or manner of execution as to ensure his or
her safety from the defensive or retaliatory acts of the victim; and b) the said means,
method and manner of execution were deliberately adopted.
39
The circumstances
surrounding the [killing] must be proved as indubitably as the crime itself.
40
Treachery
cannot be presumed.

We agree with the RTC finding as affirmed by the CA that treachery attended the
killing. The Medico-Legal Record
41
showed that the victim sustained two puncture
wounds at his lower neck and three gunshot wounds. The Autopsy Report
42
also
showed that the victim had contusion on his chest, upper quadrant and contused-
abrasion on his left forearm. As regards the gunshot wounds, the prosecution was able
to establish that the same were inflicted by more than one assailant using three
different firearms in view of their size and location. On September 10, 1997, SA
Danielito Q. Lalusis of the NBI requested Dr. Bernales to enlighten them on the
following: (1) What was the relative position of the [v]ictim when he was fired upon by
the assailants?; (2) What was the relative position of the assailants when they fired at
the [v]ictim?; (3) What could have been the distance of the firearms of the assailants to
the [v]ictim?; (4) How many firearms could have been used in killing [the v]ictim?; and
(5) What was the trajectory of the bullets that hit the body of the [v]ictim?
43
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In compliance with the directive, Dr. Bernales opined that:chanrobles virtua1aw 1ibrary
THE APPROXIMATE RELATIVE POSITION OF THE VICTIM AND THE ASSAILANT.

In determining the relative positions, we assumed that both are standing, in anatomical
position and that, the assailant is a right-handed person.

In gunshot wound No. (1), based on the trajectory of the projectile from the entrance
wound to the exit wound, which was BACKWARD, DOWNWARD AND LATERALLY; the
assailant and the victim are both facing each other, with the assailant positioned more
to the left side of the victim and that, he could be on a stooping position or the
assailant is taller and/or positioned in a higher level.

In gunshot wound No. (2), based on the trajectory of the projectiles, from the entrance
wound to exit wound, which was MEDIALLY, SLIGHTLY FORWARD AND DOWNWARD;
the assailant is at the left side and more to the back of the victim, with the victim
leaning to the left or the assailant is positioned on a higher level.

In gunshot wound No. (3), based on the trajectory of the projectile, from the entrance
wound to exit wound, which was MEDIALLY, DOWNWARD AND SLIGHTLY BACKWARD;
the assailant is at the right side of the victim with the assailant positioned on a higher
level.

THE APPROXIMATE DISTANCE BETWEEN THE VICTIM AND THE MUZZLE OF THE GUN.

Based on negative findings of any products of explosion of a bullet, with exception of
the projectile, the approximate distance could be more than one (1) foot, to a small
firearm and more than two (2) to three (3) feet, to a high powered firearm.

THE POSSIBLE CALIBER OF FIREARM USED IN KILLING THE VICTIM,

Based on the sizes of the entrance wounds, the possible caliber used could be caliber
32 to 38, including 9 mm. caliber pistol.

The trajectory of the bullet that hit the body of the victim was already mentioned in the
above paragraph relative to the positions of the victims and the assailant.
44

Considering the contusions, abrasions, and puncture wounds sustained by the victim, it
is clear that he was first manhandled prior to the shooting. The location of the gunshot
wounds likewise is indicative of the relative positions of the assailants vis--vis the
victim. As noted by Dr. Bernales, the first assailant was facing the victim but more to
his left; the second assailant was at the left side but more at the back of the victim;
while the third assailant was at the right side of the victim. More importantly, the
assailants were positioned on a higher level than the victim which could mean that the
victim was in a kneeling or stooping position. Thus, as correctly pointed out by the RTC,
[b]ased on the nature and location of the wounds sustained, the victim definitely
would not be able to put up any defense even if he was armed with armalite rifle and
caliber .45 at the time. This explains why he was found negative of gunpowder nitrate
in both hands x x x when he was killed. He was not able to fire his gun to defend
himself. The conclusion, therefore, is inescapable that the attack on the victim was
perpetrated with alevosia, hence, qualifying the killing to murder.
45
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library

Evident Premeditation

In order for evident premeditation to be appreciated, the following [requisites must
concur]: (1) the time when accused [decided] to commit the crime; (2) an overt act
manifestly indicating that [he] has clung to his determination; and, (3) sufficient lapse
of time between [such a determination and the actual] execution to allow the accused
time to reflect upon the consequences of his act.
46
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In this case, the courts below based their finding of evident premeditation on the
entries in the Dispatch Logbook, the alleged pretense made by the appellant and
cohorts that they were going to conduct a police operation regarding illegal drugs, as
well as the telephone call made by the victim to his friend Reyes before the incident. To
our mind, however, these circumstances do not constitute clear and positive evidence
of outward acts showing a premeditation to kill. At most, these circumstances are
indicative only of conspiracy among the accused. Settled is the rule that when it is not
shown how and when the plan to kill was hatched or how much time had elapsed
before it was carried out, evident premeditation cannot be considered.
47
[I]t must
appear not only that the accused decided to commit the crime prior to the moment of
its execution but also that this decision was the result of meditation, calculation,
reflection or persistent attempt.
48
Notably, even the OSG admitted that the lapse of
time from the moment the victim was fetched until the shooting cannot be considered
sufficient for appellant to reflect upon the consequences of his act.

Flight

The trial court properly disregarded appellants non-flight. While it has been ruled that
an accuseds decision not to flee after the crime despite an opportunity to do so is not
characteristic of a guilty person, the opposite has also been upheld in some cases.
Appellant may not have indeed fled from the scene of the crime as he even allowed
himself to be subjected to paraffin test, but the same are not necessarily indicative of a
clear conscience. Non-flight is not proof of innocence as ruled in People v. Del
Castillo.
49
Thus, the fact that appellant did not flee may be a badge of innocence,
nevertheless, it is not a sufficient ground to exculpate him from his proven criminal
liability.

The Crime Committed and The Imposable Penalty

In view of the qualifying circumstance of treachery, the crime committed is murder. In
the absence of any attendant circumstance, appellant is hereby sentenced to suffer the
penalty of reclusion perpetua in accordance with Article 248 in relation to Article 63,
paragraph 2, of the RPC. He is not eligible for parole pursuant to Republic Act No. 9346,
Section 3.

The Civil Liability

In conformity with prevailing jurisprudence, we affirm the award of P50,000.00 as civil
indemnity to the heirs of the victim. This is given without need of proof other than the
fact of death as a result of the crime and proof of appellants responsibility for
it.
50
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We also affirm the grant of P50,000.00 as moral damages. This is mandatory in cases
of murder and homicide without need of allegation and proof other than the death of
the victim.
51
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In addition, we sustain the award of actual damages but only to the amount of
P103,472.00 representing expenses incurred during the wake of the victim supported
by uncontroverted receipts. Credence can be given only to claims which are duly
supported by receipts or other credible evidence.
52
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We also sustain the award of exemplary damages but in the increased amount of
P30,000.00 to conform to prevailing jurisprudence.
53
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We note, however, that no indemnity for loss of earning capacity was awarded to the
heirs of the victim as a consequence of his untimely death. Under Article 2206 of the
Civil Code, the heirs of the victim are entitled to indemnity for loss of earning capacity.
The evidence
54
shows that the victims annual gross income as a police officer was
P88,530.00 computed from his monthly rate of P7,377.50. There being no proof of his
living expenses, the net income is deemed equivalent to 50% of the gross income,
hence, his estimated annual net income is P44,265.00. As computed on the basis of the
usual formula adopted by the Court in cases similarly awarding compensation for loss of
earning to wit:chanrobles virtua1aw 1ibrary
Net
Earning

Capacity
= Life expectancy x
Gross Annual Income
Living Expenses

= [2/3 (80-age of
death)] x (GAI)
50% of GAI)
55

the loss of earning capacity of the victim who died at the age of 31 would be
P1,445,990.00 computed as: 2/3 x (80-31) x (P88,530.00 P44,265.00).

Finally, in conformity with current policy, we impose interest at the rate of 6% per
annum on all damages awarded from date of finality of this Decision until fully
paid.
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WHEREFORE, the Decision of the Court of Appeals dated November 3, 2008 which
affirmed with modification the May 17, 2005 Decision of the Regional Trial Court,
Manila, Branch 11, convicting appellant of the crime of Murder is further MODIFIED as
follows: Appellant SPO1 Alfredo Alawig is found GUILTY beyond reasonable doubt of
the crime of Murder and is sentenced to suffer the penalty of reclusion perpetua
without eligibility for parole; to pay the heirs of the victim PO3 Miel de Ocampo Cafe the
amount of P103,472.00 as actual damages; P1,445,990.00 as indemnity for the victims
loss of earning capacity and to pay the costs of suit. The award of exemplary damages
is increased to P30,000.00 while the awards of P50,000.00 civil indemnity and
P50,000.00 as moral damages stand. All damages awarded shall earn interest at the
rate of 6% per annum from date of finality of this judgment until fully
paid.chanroblesvirtualawlibrary

SO ORDERED.



SECOND DIVISION
G.R. Nos.195011-19 September 30, 2013
GREGORIO SINGIAN, JR., Petitioner,
vs.
SANDIGANBAYAN (3RD DIVISION), THE PEOPLE OF THE PHILIPPINES, and
THE PRESIDENTIAL COMMISSIONON GOOD GOVERNMENT, Respondents.
D E C I S I O N
DEL CASTILLO, J.:
The grant or denial of a Demurrer to Evidence is left to the sound discretion of the
court, and its ruling on the matter shall not be disturbed in the absence of a grave
abuse of such discretion. This Petition for Certiorari Ad Cautelam
1
seeks to set aside the
August 5, 2010 Resolution
2
of the Sandiganbayan in Criminal Case Nos. 26297-
26305,denying petitioner Gregorio Singian, Jr.'s Demurrer to Evidence
3
and the
November 18, 2010 Resolution
4
denying reconsideration thereof.
Antecedents
The criminal cases involved in the present Petition have been the subject of a previous
disposition of the Court, specifically Singian, Jr. v. Sandiganbayan.
5
In said case, the
Court made the following recital of facts:
Atty. Orlando L. Salvador was Presidential Commission On Good Government Consultant
on detail with the Presidential Ad Hoc Committee on Behest Loans (Committee). He was
also the coordinator of the Technical Working Group composed of officers and
employees of government financing institutions to examine and study the reports and
recommendations of the Asset Privatization Trust relating to loan accounts in all
government financing institutions. Among the accounts acted upon by the Committee
were the loans granted to Integrated Shoe, Inc. (ISI) by the Philippine National Bank
(PNB).
It would appear that on 18 January 1972, ISI applied for a five-year confirmed
irrevocable deferred letter of credit amounting to US$2,500,000.00 (P16,287,500.00) to
finance its purchase of a complete line of machinery and equipment. The letter of credit
was recommended to the PNB Board of Directors by then Senior Vice[-]President, Mr.
Constantino Bautista.
On 27 January 1972, the PNB approved the loan, subject to certain stipulations. The
said letter of credit was to be secured by the following collaterals: a) a second
mortgage on a 10,367-square meter lot under Transfer Certificate of Title No. 218999
with improvements, machinery and equipment; b) machinery and equipment to be
imported under the subject letter of credit; and c) assignment of US$0.50 per pair of
shoes of ISIs export sales. It was further subjected to the following pertinent
conditions: a) that the letter of credit be subject to joint and several signatures of Mr.
Francisco J. Teodoro, Mrs. Leticia T. Teodoro, Marfina T. Singian, Tomas Teodoro, and
Gregorio Singian, Jr.; b) that ISI, which has a paid-up capital amounting to
P1,098,750.00 as of January1972, shall increase its authorized capital to P5,000,000.00,
and in the event that cash receipts do not come up to the projections, or as may be
required by the bank, ISI will further increase its capitalization and the present
stockholders will subscribe to their present holdings; and c) that ISI shall submit other
collaterals incase the appraised value of the new machinery and equipment be
insufficient.
ISI was further extended the following subsequent loan accommodations:
1. P1,500,000.00 on 10 February 1972 for the purchase of raw materials;
2. P1,000,000.00 on 18 January 1973 as export advance;
3. P1,500,000.00 on 21 March 1973 as export advance;
4. P600,000.00 on 06 March 1974 as credit line;
5. P2,500,000.00 renewed on 15 December 1976;
6. P5,000,000.00 on 19 November 1978 as export advance;
7. P1,500,000.00 on 04 August 1980 as export advance; and
8. P7,000,000.00 on 15 December 1980 also as an export advance.
The Committee found that the loans extended to ISI bore characteristics of behest
loans specifically for not having been secured with sufficient collaterals and obtained
with undue haste.
As a result, Atty. Orlando Salvador filed with the Office of the Ombudsman a sworn
complaint dated 20 March 1996, for violation of Section 3, paragraphs (e) and (g), of
Republic Act No. 3019, as amended, against the following: Panfilo Domingo, former
PNB President, Constantino Bautista, former PNB Senior Vice-President, Domingo Ingco,
former member of the PNB Board of Directors, John Does, former members of the PNB
Board of Directors, Francisco Teodoro, President of ISI, Leticia Teodoro, Vice-President
of ISI, Marfina Singian, Incorporator of ISI, Tomas Teodoro, General Manager of ISI,
and Gregorio Singian, Jr., Executive Vice-President of ISI. The complaint, docketed as
OMB-0-96-0967, was assigned to Graft Investigation Officer I Atty. Edgar R. Navales
(Investigator Navales) of the Evaluation and Preliminary Investigation Bureau (EPIB) for
investigation.
x x x x
Hence, the corresponding eighteen (18) Informations against petitioner and his co-
accused for violation of Section 3(e) and (g) of Rep. Act No. 3019,docketed as Criminal
Cases No. 26297 to No. 26314, were filed before the Sandiganbayan and were raffled
to the Third Division thereof. The eighteen (18)Informations correspond to the nine (9)
loan accommodations granted to ISI, each loan being the subject of two informations
alleging violations of both paragraphs of Section 3 of Rep. Act No. 3019.
6

Thus, herein petitioner was charged with nine counts of violation of Section 3(e),
7
and
another nine counts of violation of Section 3(g),
8
of Republic Act No.3019 (RA 3019), or
the Anti-Graft and Corrupt Practices Act. Docketed as Criminal Case Nos. 26297-26314,
the cases involved the purported granting of behest loans by the governments
Philippine National Bank (PNB) to Integrated Shoes, Inc. (ISI), in various amounts and
on different dates as above-enumerated.
The Informations
9
covering Section 3(e) charged that Panfilo Domingo(Domingo), then
PNB Director/President/Vice-President (Europe); Domingo C. Ingco (Ingco), then PNB
Director; and Constantino Bautista (Bautista), then PNB Senior Executive Vice-President,
while in the performance of their official functions and taking advantage of their official
positions, conspired with private individuals, specifically officers of ISI, including
petitioner, who was ISIs Executive Vice-President, in willfully, unlawfully and criminally
causing undue injury to the government and giving unwarranted benefits, advantage
and preference to ISI by accommodating and granting several loans and advances to
the latter, despite knowing that it lacked sufficient capitalization, or failed to give
adequate collateral or raise its working capital to secure the governments interest in
case it failed to pay said loans, as in fact it failed to pay these loans.
On the other hand, the Informations
10
covering Section 3(g) charged the above
individuals, including petitioner, with conspiring, confederating, and willfully, unlawfully
and criminally entering into the above-mentioned loan transactions which are grossly
and manifestly disadvantageous to the government, for lack of sufficient capitalization
or adequate collateral, and for failure of ISI to raise its working capital to secure the
governments interest in case it failed to pay said loans, which indeed ISI failed to pay.
On January 27, 2004, petitioner entered a plea of not guilty on all counts. All the other
accused were arraigned as well, except for Bautista, who passed away prior to his
scheduled arraignment.
On April 29, 2005, the Sandiganbayan dismissed Criminal Case Nos.26306-26314.
11
On
October 6, 2007, the accused Ingco passed away; as a result, the cases against him
were dismissed as well. Accused Domingo likewise passed away on June 26, 2008
resulting in an October 29, 2008 Resolution wherein the Sandiganbayan dropped the
cases against him.
Trial with respect to the remaining cases ensued. For its testimonial evidence, the
prosecution called to the stand nine witnesses:
1. Director Danilo R.V. Daniel, then Coordinator of the Technical Working Group
on Behest Loans (TWG) and Director of the Research Division of the Presidential
Commission on Good Government (PCGG), who testified on the investigation
conducted by the TWG of the ISI account and on various documents relative
thereto, including the Fourteenth (14th) Report of Presidential Ad Hoc Fact-
Finding Committee on Behest Loans
12
(Ad Hoc Committee) dated July15, 1993
which he drafted, and which characterized the ISI account as a behest loan;
13

2. Atty. Reginald Bacolor from the Legal Department, Privatization Management
Office of the Asset Privatization Trust (APT), who testified on the deeds,
documents and titles covering the foreclosed properties offered as collaterals in
the ISI account and thereafter sold by the government through the APT;
14

3. Atty. Edwin Flor V. Barroga, then Deputy Registrar of Deeds of Binangonan,
Rizal, who testified on the property offered as collateral by ISI, which was the
subject of a prior encumbrance to the Government Service Insurance System
(GSIS);
15

4. Atty. Cinderella Benitez, Securities Counsel II of the Securities and Exchange
Commission (SEC), who testified on ISIs SEC documents, specifically its
capitalization and financial status. She identified certified copies of ISIs Articles
of Incorporation, By-Laws, Amended Articles of Incorporation, Certificates of
Increase of Capital Stock, etc.;
16

5. Atty. Mary Ann B. Morales, SEC Securities Counsel III from its Registration and
Monitoring Department, who likewise testified on ISIs SEC documents. She
identified ISIs General Information Sheets, Schedule of Stockholders, Subscribed
and Paid-Up Capital, Certificate of Corporate Filing/Information, etc. She
testified, among others, that as of 1973, ISIs subscribed capital stock was only
P1.6 million, while its paid-up capital was merelyP1,298,750.00;
17

6. Cesar Luis Pargas, of the Privatization Management Office, APT, custodian of
ISIs loan documents, who testified on and brought with him the loan
documents, deeds, titles, notes, etc. covering the ISI account;
18

7. Claro Bernardino, Senior Manager of PNBs Human Resource Group, who
brought the personnel records/certificates of employment of the accused
Domingo and Ingco;
19

8. Ramonchito Bustamante, Manager of the Loans and Implementing Services
Division of PNB, expert witness on banking policy and PNBs loan policies, as well
as ISIs loan data; and
20

9. Stephen Tanchuling, Chief Administrative Officer of the Records Division of the
Research Department of the PCGG, custodian of documents turned over to PCGG
by the Ad Hoc Committee. He testified that his function was to authenticate
documents in his custody, which consisted of records transmitted to the Ad Hoc
Committee by different government agencies. He identified as well the Executive
Summary
21
of the ISI account; the Fourteenth (14th) Report of Presidential Ad
Hoc Fact-Finding Committee on Behest Loans dated July 15, 1993; the Executive
Summary of the Ad Hoc Committee Findings; and other relevant documents.
22

For its documentary evidence, the prosecution presented the following, among others:
1) Photocopy of the Fourteenth (14th) Report of Presidential Ad Hoc Fact-Finding
Committee on Behest Loans
23
which listed ISI as among the corporations with
loans obtained from the government or government banks (in this case,
PNB)which were found to possess the characteristics of a behest loan;
2) Photocopy of an Executive Summary of Findings of the Ad Hoc Committee,
24

detailing the particulars of the ISI account;
3) Photocopy of the certified true copy of the January 10, 1972 Memorandum
25

from Bautista to the PNB Board of Directors, detailing Bautistas findings and
recommendations regarding ISIs application for a $2.5 million(P16,287,500.00)
letter of credit for the purpose of purchasing machinery and equipment for a new
shoe factory then being built in Bataan.
4) Certified photocopy of a Deed of Undertaking and Conformity to Bank
Conditions
26
(Deed of Undertaking) dated March 24, 1972 executed by ISI in
favor of PNB;
5) Certified photocopy of a Deed of Assignment
27
dated March 24,
1972,assigning $0.50 per pair of shoes of all export sales of ISI in favor of PNB;
6) Certified photocopy of Chattel Mortgage with Power of Attorney
28
executed by
ISI in favor of PNB;
7) Certified true copy of Certificate of Filing of Certificate of Increase of Capital
Stock
29
issued by the SEC dated February 6, 1974, showing that ISI increased its
authorized capital stock from P3 million to P7 million; and
8) Certified true copy of the By-Laws of Integrated Pacific, Inc. (ISIs
predecessor corporation).
30

After the presentation of its testimonial and documentary evidence, the prosecution
rested its case and filed its Formal Offer of Exhibits.
31
The respondent court admitted in
toto the States documentary exhibits.
Petitioners Demurrer to Evidence
On February 17, 2010, petitioner, with prior leave, filed a Demurrer to Evidence
32

anchored on the following grounds: (1) lack of proof of conspiracy with any PNB official;
(2) the contracts with PNB contained provisions that are beneficial, and not manifestly
and grossly disadvantageous, to the government; (3)the loans could not be
characterized as behest loans because they were secured by sufficient collaterals and
ISI increased its capitalization; and (4) assuming the loans are behest loans, petitioner
could not be held liable for lack of any participation.
33

In particular, petitioner claimed that the prosecution failed to adduce evidence of
conspiracy to defraud the government because his co-accused from PNB had no power
to approve the alleged behest loans; that if a theory of conspiracy were to be pursued,
then all the members of the PNBs Board of Directors at the time the loans and credit
accommodations to ISI were approved, and not only Domingo and Ingco, should have
been impleaded as they were the ones who directed PNBs affairs; that the prosecution
failed to show that he exercised any kind of influence over PNBs Board of Directors in
order to ensure the grant of the loans and accommodations applied for; and for failure
to present evidence that the accused colluded with each other in entering into the loan
agreements and accommodations.
Petitioner contended further that the contracts and agreements entered into by and
between PNB and ISI were standard contracts used by PNB in its dealings with its
clients; that the terms thereof were couched in words and fashioned in a manner that
favored the bank; that the agreements guaranteed repayment of the loan and the
putting up of sufficient collateral, and provided for interest and penalties in the event of
breach, and thus were not grossly and manifestly disadvantageous to the government.
Next, petitioner argued that the subject loans were not undercollateralized; that ISI was
not undercapitalized as the corresponding increase in its authorized capital stock and
paid-up capital was timely made; and that the loans could not have been characterized
as behest loans considering the following stipulations: a) the assets intended for
acquisition through the letter of credit would serve as the collateral therefor; b) the
officers and majority stockholders of ISI were made jointly and severally liable for its
obligations; c) ISI may not declare dividends while the loans are subsisting; d) PNB is
given the right to designate its Comptroller in ISI; and e) even if it is assumed for the
sake of argument that the subject loans were undercollateralized, this fact standing
alone does not make for a behest loan, as the presence of at least two (2) criteria out
of the eight enumerated in Presidential Memorandum Order No. 61 dated November 9,
1992is required to characterize the loans as behest loans.
Assuming that the loan agreements are behest loans, petitioner claimed that he may
not be held liable because his indictment was based solely on the Deed of Undertaking
which was altered such that his name was stricken out and instead the name "Gregorio
T. Teodoro" was inserted; that the accountee-mortgagor-assignor under said deed was
ISI; that the obligations were assumed by ISI; that ISI had already fully complied with
all its obligations under the deed; and that he was not a member of ISIs Board of
Directors, which alone was tasked as ISIs governing body with the observance of
the obligations set forth under the deed; nor may he seek to compel action thereon at a
stockholders meeting, as he is not a shareholder of ISI either.
Finally, petitioner claimed that the Ad Hoc Committee documents specifically the
Executive Summary and Fourteenth (14th) Report of Presidential Ad Hoc Fact-Finding
Committee on Behest Loans are inadmissible for not being photocopies of the
originals, but mere copies of photocopies in the custody of the PCGG; and that they
were prepared and issued by individuals who have no personal knowledge of the facts
and circumstances which transpired during the proceedings adverted to.
Petitioner thus prayed that as against him, Criminal Case Nos. 26297-26305 be
dismissed for insufficiency of evidence.
Prosecutions Opposition
In its Opposition,
34
the prosecution insisted that conspiracy may be inferred from the
following pattern of events:
a. The frequency of the loans or closeness of the dates at which they were
granted;
b. The quantity of the loans granted;
c. The failure of PNB to verify and to take any action on ISIs failure to put up
additional capitalization and additional collaterals; and d. The eventual absence
of any action by PNB to collect full payment from ISI.
35

The prosecution noted that without ISI putting up additional capitalization or collateral,
PNB kept granting loans to it, such that in 1973, its in debtedness already rose to
P16,360,000.00 while its capital stock stood at only P7 million; that petitioner is
intimately connected with the incorporators and officers of ISI Leticia Teodoro is his
mother-in-law, while Francisco Teodoro is his father-in-law; and Marfina Teodoro-
Singian is his wife; that as of 1983, ISIs debt to PNB amounted to P71,847,217.00, as a
result of the undercapitalized and undercollateralized loans extended to it; and that as
signatory to the Deed of Undertaking, petitioner assumed the obligations of a surety.
Finally, the prosecution noted that petitioners arguments in his Demurrer to Evidence
constitute matters of defense which should be passed upon only after trial on the
merits.
Ruling of the Sandiganbayan
On August 5, 2010, the Sandiganbayan issued the first assailed Resolution, which
decreed as follows:
WHEREFORE, considering all the foregoing, this Court DENIES the Demurrer to
Evidence filed by accused Gregorio Singian, Jr. as the evidence for the prosecution
sufficiently established the essential elements of the offense charged and overcame the
presumption of innocence in favor of said accused.
SO ORDERED.
36

Petitioners Motion for Reconsideration
37
having been denied on November 18, 2010 by
the respondent court, he filed the present Petition for Certiorari.
Issues
Petitioner raises the following issues:
THE RESPONDENT SANDIGANBAYAN ACTED WITH GRAVE ABUSEOF DISCRETION
AMOUNTING TO LACK OR EXCESS OFJURISDICTION WHEN IT ISSUED THE ASSAILED
RESOLUTIONS XX X CONSIDERING THAT:
I.
THE FIRST ELEMENT OF SECTION 3(G) OF R.A. 3019 IS NOT PRESENTBECAUSE THE
EXISTENCE OF CONSPIRACY IS NEGATED BY THEFACT THAT THE PUBLIC OFFICERS
WHO WERE RESPONSIBLE FOR GRANTING THE LOANS IN QUESTION WERE NEVER
CHARGED, ACCUSED OR INCLUDED IN THE INFORMATIONS SUBJECT OFTHESE
CASES.
II.
EVEN IF IT IS PRESUMED, PURELY IN GRATIA ARGUMENT IS, THAT ACONSPIRACY
ATTENDED THE GRANT OF THE QUESTIONED LOANSTO ISI, THERE IS,
NEVERTHELESS, NO OVERT ACT ATTRIBUTABLETO THE PETITIONER THAT EVEN
REMOTELY JUSTIFIES HISINCLUSION IN THE PROSECUTIONS CONSPIRACY
DRAGNET.
III.
THE PROSECUTIONS EXHIBITS "C" (ALSO MARKED AS EXHIBIT"RR") AND "QQ"
WHICH THE PROSECUTION FOISTED TO MAKE ITAPPEAR THAT THE CREDIT
ACCOMMODATIONS SUBJECT OF THECRIMINAL CASES BELOW ARE BEHEST LOANS,
DO NOT HAVE ANYPROBATIVE VALUE AND ARE COMPLETELY INADMISSIBLEBECAUSE
THEY ARE UNDISPUTABLY AND BLATANTLYHEARSAY.
38

Petitioners Arguments
Essentially, petitioner reiterates all his arguments in his Demurrer to Evidence and
Motion for Reconsideration of the respondent courts denial thereof. He emphasizes,
however, that he had nothing to do with the application and grant of the questioned
loans, since he was never a member of ISIs Board of Directors which, under the law
and ISI by-laws, had the sole power and authority to approve and obtain loans and give
collaterals to secure the same; nor is he a stockholder of ISI. Nor has it been shown
from the testimonial and documentary evidence that as Executive Vice-President, he
participated in ISIs loan and credit transactions, or that he actively participated in the
commission of the crimes of which he is charged. Without such proof, petitioner
believes that he may not be charged with conspiracy.
Petitioner adds that no evidence was presented as well to show that he had any
participation in PNBs failure to verify and take action against ISI to compel it to put up
additional capital and collaterals, or that he was responsible for PNBs failure to collect
or secure full payment of the ISI credit.
Finally, petitioner justifies his resort to certiorari on the argument that the collective
acts of the prosecution and the respondent court constitute a denial of his constitutional
right to due process, which gives ground for the availment of the extraordinary
remedy.
39

Respondents Arguments
In its Comment,
40
the prosecution asserts that the respondent court did not commit
grave abuse of discretion in denying the Demurrer to Evidence arguing that in
petitioners case, all the elements under Section 3(g) exist to hold petitioner liable. It
adds that petitioner was part of the conspiracy to defraud the government, as
evidenced by his participation and signature in the Deed of Undertaking, the terms of
which ISI violated and PNB failed to enforce.
On the other hand, the PCGG in its Comment
41
adopts the arguments of the
prosecution and asserts that the respondent court arrived at its conclusion after careful
examination of the record and the evidence, which justify a finding sustaining
petitioners indictment. It adds that all the elements of the crime under Section 3(g)
have been proved, which thus justifies a denial of petitioners Demurrer to Evidence.
Our Ruling
The Court dismisses the Petition.
Demurrer to evidence
"A demurrer to the evidence is an objection by one of the parties in an action, to the
effect that the evidence which his adversary produced is in sufficient in point of law,
whether true or not, to make out a case or sustain the issue. The party demurring
challenges the sufficiency of the whole evidence to sustain a verdict. The court, in
passing upon the sufficiency of the evidence raised in a demurrer, is merely required to
ascertain whether there is competent or sufficient evidence to sustain the indictment or
to support a verdict of guilt."
42

"Sufficient evidence for purposes of frustrating a demurrer thereto is such evidence in
character, weight or amount as will legally justify the judicial or official action
demanded according to the circumstances. To be considered sufficient therefore, the
evidence must prove: (a) the commission of the crime, and (b) the precise degree of
participation therein by the accused."
43

Elements of Section 3(g), RA 3019
For one to be successfully prosecuted under Section 3(g) of RA 3019, the following
elements must be proven: "1) the accused is a public officer; 2) the public officer
entered into a contract or transaction on behalf of the government; and 3) the contract
or transaction was grossly and manifestly disadvantageous to the government."
44

However, private persons may likewise be charged with violation of Section 3(g) of RA
3019 if they conspired with the public officer. Thus, "if there is an allegation of
conspiracy, a private person may be held liable together with the public officer, in
consonance with the avowed policy of the Anti-Graft and Corrupt Practices Act which is
to repress certain acts of public officers and private persons alike which may constitute
graft or corrupt practices or which may lead thereto."
45

The Sandiganbayan found competent
or sufficient evidence to sustain the
indictment or to support a verdict of
guilt for violation of Section 3(g), RA 3019
The Sandiganbayan found that the prosecution presented sufficient or competent
evidence to establish the three material elements of Section 3(g) of RA3019. First,
although petitioner is a private person, he was shown to have connived with his co-
accused. Second, ISI and PNB entered into several loan transactions and credit
accommodations. Finally, the loan transactions proved disadvantageous to the
government.
There is no grave abuse of discretion on
the part of the Sandiganbayan in
denying petitioners Demurrer to
Evidence
At the outset, we emphasize that "the resolution of a demurrer to evidence should be
left to the exercise of sound judicial discretion. A lower courts order of denial shall not
be disturbed, that is, the appellate courts will not review the prosecutions evidence and
precipitately decide whether such evidence has established the guilt of the accused
beyond a reasonable doubt, unless accused has established that such judicial discretion
has been gravely abused, there by amounting to a lack or excess of jurisdiction. Mere
allegations of such abuse will not suffice."
46

"Grave abuse of discretion is the capricious and whimsical exercise of judgment on the
part of the public officer concerned which is equivalent to an excess or lack of
jurisdiction. The abuse of discretion must be so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to
act at all in contemplation of law as where the power is exercised in an arbitrary and
despotic manner by reason of passion or hostility."
47

In this case, petitioner miserably failed to present an iota of evidence to show that the
Sandiganbayan abused, much more, gravely abused, its discretion in denying
petitioners Demurrer to Evidence. We agree with the PCGGs observation that the
Sandiganbayan arrived at its conclusion after a careful and deliberate examination and
assessment of all the evidence submitted. A closer scrutiny of the assailed Resolutions
would indeed show that the Sandiganbayan meticulously discussed both testimonial and
documentary evidence presented by the prosecution.
48
It was only after a careful
analysis of the facts and evidence presented did the respondent court lay down its
findings and conclusions.
49

Based on the evidence presented, the Sandiganbayan was convinced that all three
elements of Section 3(g), RA 3019 were satisfactorily established. It found that PNB and
ISI entered into several contracts or loan transactions. The Sandiganbayan also
assessed that petitioner conspired with his co-accused in defrauding the government
considering "(1) the frequency of the loans or closeness of the dates at which they
were granted; (2) the quantity of the loans granted; (3) the failure of the bank to verify
and to take any action on the failure of ISI to put up additional capitalization and
additional collaterals; and (4) the eventual absence of any action by the Bank to collect
full payment from ISI."
50
The Sandiganbayan ratiocinated that
x x x the loans subject of this case refer to not just one but several loans. The first two
loans were granted in a span of two months x x x The first loan was in the amount of
P16,287,500.00 when the capital stock of ISI amounted to onlyP1,000,000.00. This was
followed by two additional loans in January and March 1973 x x x then another loan x x
x in the following year x x x. Two years later x x x ISI obtained another loan x x x
which was succeeded by an additional loan x x x. Still, ISI was granted two more loans
x x x.
x x x x
However, all loans subject of this case were granted despite failure of ISI to raise its
working capital, and to put up additional collateral. The Certificate of Filing of Amended
Articles of Incorporation and the Amended Articles of Incorporation likewise show that
ISI last increased its authorized capital stock toP7,000,000.00 on April 27, 1973, when
the indebtedness of the corporation was already P16,360,000.00. Indeed, it would
appear that inaction on the part of the PNB to notify ISI to further increase its capital
and the corresponding inaction on the part of ISI to comply with its undertaking
indicate conspiracy between the accused.
Accused-movant further negates his liability by asserting that his name does not appear
in the Deed of Undertaking, and neither has he signed the same. A cursory examination
of the Deed, however, reveals otherwise. It also bears stressing at this point that as he
has never denied his position as Executive Vice-President of ISI, he would undeniably
have participation in its transactions, especially where loan accommodations of the
corporation are concerned.
51

The Sandiganbayan also found that the loan transactions were grossly and manifestly
disadvantageous to the government. Based on the documentary evidence presented by
the prosecution, it noted that ISI was undercapitalized while the loans were
undercollateralized. It also noted that the government was only able to foreclose
properties amounting to P3 million whereas ISIs indebtedness stood at more than P71
million.
Based on the foregoing, we find no showing that "the conclusions made by the
Sandiganbayan on the sufficiency of the evidence of the prosecution at the time the
prosecution rested its case, were manifestly mistaken."
52
The Sandiganbayan did not
exercise its judgment in a whimsical or capricious manner.1wphi1 As we aptly held:
Given the sufficiency of the testimonial and documentary evidence against petitioner, it
would, therefore, be premature at this stage of the proceedings to conclude that the
prosecutions evidence failed to establish petitioners participation in the alleged
conspiracy to commit the crime. Likewise, the Court cannot, at this point, make a
categorical pronouncement that the guilt of the petitioner has not been proven beyond
reasonable doubt. As there is competent and sufficient evidence to sustain the
indictment for the crime charged, it behooves petitioner to adduce evidence on his
behalf to controvert the asseverations of the prosecution. Withal, respondent court did
not gravely abuse its discretion when it found that there was a prima facie case against
petitioner warranting his having to go forward with his defensive evidence.
The determination of the sufficiency or insufficiency of the evidence presented by the
prosecution as to establish a prima facie case against an accused is left to the exercise
of sound judicial discretion. Unless there is a clear showing of a grave abuse of
discretion amounting to lack or excess of jurisdiction, the trial courts denial of a motion
to dismiss or a demurrer to evidence may not be disturbed.
53

Similarly, we have also ruled that:
When there is no showing of such grave abuse, certiorari is not the proper remedy.
Rather, the appropriate recourse from an order denying a demurrer to evidence is for
the court to proceed with the trial, after which the accused may file an appeal from the
judgment of the lower court rendered after such trial. In the present case, we are not
prepared to rule that the Sandiganbayan has gravely abused its discretion when it
denied petitioners demurrer to evidence. Public respondent found that the
prosecutions evidence satisfactorily established the elements of the crime charged.
Correspondingly, there is nothing in the records of this case nor in the pleadings of
petitioner that would show otherwise.
54

At this juncture, it is worth mentioning that the issues raised herein are almost the
same as those raised by petitioner before the Court when he questioned the
Sandiganbayans denial of his Motion for Re-determination of Existence of Probable
Cause.
55
In resolving petitioners contention that he should not be made liable for ISIs
failure to put up additional capitalization and collaterals because he is not a member of
the Board of Directors, the Court declared that:
True, the power to increase capitalization and to offer or give collateral to secure
indebtedness are lodged with the corporations Board of Directors. However, this does
not mean that the officers of the corporation other than the Board of Directors cannot
be made criminally liable for their criminal acts if it can be proven that they participated
therein. In the instant case, there is evidence that petitioners participated in the loan
transactions when he signed the undertaking. x x x
56

Anent the issue regarding the sufficiency of ISIs collateral, we also declared the same
to be "a matter of defense which should be best ventilated in a full-blown trial."
57

Moreover, we declared that
Fifth. It is petitioner's view that the prosecution failed to adduce evidence that he took
part in any conspiracy relative to the grant of the loan transactions. Suffice it to state
that the alleged absence of any conspiracy among the accused is evidentiary in nature
and is a matter of defense, the truth of which can be best passed upon after a full-
blown trial on the merits.
58

In fine, we hold that "the presence or absence of the elements of the crime is
evidentiary in nature and is a matter of defense that may be passed upon after a full-
blown trial on the merits," and "the validity and merits of a party's defense or
accusation, as well as admissibility of testimonies and evidence, are better ventilated
during trial proper."
59
Petitioner's claims and defenses in his Demurrer to Evidence can
best be tackled during trial. In the presentation of his defense, he shall have the
opportunity to explain or show why he should not be made liable. For example, if there
is any truth to the allegation in his Demurrer of Evidence that the Deed of Undertaking
was altered, or that the signature therein affixed is not his own, such that there arise
serious doubts as to his participation in the execution of said document, this can be
resolved only upon proof presented during trial. Petitioner must present evidence
regarding such claim, the truth of which he can demonstrate during trial. Since this
Court is not a trier of facts, there is no way that this issue can be resolved by this Court
at this stage of he proceedings.
In light of the foregoing, the Court finds that the respondent court did not commit
grave abuse of discretion in denying petitioner's Demurrer to Evidence; it was done in
the proper exercise of its jurisdiction.
WHEREFORE, the Petition is DISMISSED.
SO ORDERED.





SECOND DIVISION
G.R. No. 179259 September 25, 2013
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
PHILIPPINE AIRLINES, INC. (PAL), Respondent.
D E C I S I O N
PEREZ, J.:
Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside
the 19 July 2007 Decision
1
and 23 August 2007 Resolution
2
of the Court of Tax Appeals
(CTA) En Bane in CTA EB No. 271 which affirmed the cancellation and withdrawal of
Assessment Notice No. INC-FY -99-2000-000085 and Formal Letter of Demand for the
payment by the respondent Philippine Airlines, Inc. (respondent), of deficiency
Minimum Corporate Income Tax (MCIT) in the amount of P326,778,723.35, covering
the fiscal year ending 31 March 2000.
The Facts
The factual antecedents of the case are undisputed:
Petitioner, the Commissioner of Internal Revenue, has the power to assess and collect
national internal revenue taxes, fees, and charges, including the 2% per centum MCIT
imposed under Section 27(E) of the National Internal Revenue Code (NIRC) of 1997, as
amended. Respondent, on the other hand, is a domestic corporation duly organized and
existing under and by virtue of the laws of the Philippines.
For the fiscal year that ended 31 March 2000, respondent filed on 17July 2000 its
Tentative Corporate Income Tax Return, reflecting a creditable tax withheld for the
fourth quarter amounting to P524,957.00, and a zero taxable income for said year.
Hence, respondent filed on 16 July 2001 a written claim for refund before the
petitioner.
As a consequence thereof, respondent received on 10 September 2001the Letter of
Authority No. 200000002247 from the Bureau of Internal Revenue (BIR) Large
Taxpayers Service, dated 3 September 2001,authorizing the revenue officers named
therein to examine respondents books of accounts and other accounting records for the
purpose of evaluating respondents "Claim for Refund on Creditable Withholding Tax
Income Tax" covering the fiscal year ending 31 March 2000.
Numerous correspondences between respondent and the Group Supervisor of the BIR
Large Taxpayers Service, the revenue officers examining its accounting records, and the
Chief of LT Audit & Investigation Division I of the BIR ensued, particularly as to the
submission of various supporting documents and presentation of records.
On 16 July 2003, respondent received a "Summary of Creditable Withholding Tax at
Source Certified by RAD Fiscal Year Ending March 31,2000," together with a
computation labeled "Compromise Penalties for Late Filing of Return." Likewise, on
same date, respondent received a letter dated 8 July 2003 issued by the Chief of LT
Audit & Investigation Division I, informing the former that the results of the
investigation of its claim for refund on creditable withholding tax for fiscal year ending
31 March 2000had already been submitted, and that an informal conference was set on
17July 2003 to be held on the latters office.
On 11 August 2003, respondent received from the same revenue officers a computation
of their initial deficiency MCIT assessment in the amount of P537,477,867.64.
Consequently, respondent received on 20October 2003 a Preliminary Assessment Notice
and Details of Assessment issued by the Large Taxpayers Service dated 22 September
2003, assessing respondent deficiency MCIT including interest, in the aggregate amount
of P315,566,368.68. A written protest to said preliminary assessment was filed by
respondent on 3 November 2003.
Thereafter, on 16 December 2003, respondent received a Formal Letter of Demand and
Details of Assessment dated 1 December 2003 from the Large Taxpayers Service
demanding the payment of the total amount of P326,778,723.35, inclusive of interest,
as contained in Assessment Notice No. INC-FY-99-2000-000085. In response thereto,
respondent filed its formal written protest on 13 January 2004 reiterating the following
defenses:(1) that it is exempt from, or is not subject to, the 2% MCIT by virtue of its
charter, Presidential Decree No. (PD) 1590;
3
and (2) that the three-year period allowed
by law for the BIR to assess deficiency internal revenue taxes for the taxable year
ending 31 March 2000 had already lapsed on 15July 2003.
Since no final action has been taken by petitioner on respondents formal written
protest, respondent filed a Petition for Review before the Second Division of the CTA on
4 August 2004 docketed as CTA Case No.7029.
The Ruling of the CTA Second Division
In a Decision dated 22 August 2006,
4
the CTA Second Division granted respondents
petition and accordingly ordered for the cancellation and withdrawal of Assessment
Notice No. INC-FY-99-2000-000085 and Formal Letter of Demand for the payment of
deficiency MCIT in the amount of P326,778,723.35, covering the fiscal year ending 31
March 2000, issued against respondent.
The CTA Second Division made the following factual and legal findings, to wit:
(a) Section 13 of PD 1590 acquiring and limiting the extent of the tax liability of
respondent under its franchise is coached in a clear, plain and unambiguous
manner, and needs no further interpretation or construction;
(b) Section 13 clearly provides that respondent is liable only for either the basic
corporate income tax based on its annual net taxable income, or the 2%
franchise tax based on gross revenue, whichever is lower;
(c) Respondent-grantee must only choose between the two alternatives
mentioned in Section 13 in the payment of its tax liability to the government, and
its choice must be that which will result in a lower tax liability;
(d) Since the income tax return of respondent reflected a zero taxable income for
the fiscal year ending 31 March 2000,obviously being lower than the 2%
franchise tax, its choice of the former is definitely a better alternative as basis for
its tax liability to the government;
5

(e) The basic corporate income tax mentioned in Section 13 of PD1590 does not
refer to the MCIT under Section 27(E) of the NIRC of 1997, as amended, but
particularly to the applicable rate of 32% income tax under Section 27(A) of the
same Code, on the taxable income of domestic corporations;
(f) The MCIT is regarded to belong to "other taxes" as it was not included in the
choices provided by the franchise. To hold otherwise would be to give another
option to respondent which is evidently not within the ambit of PD 1590;
6

(g) The "in lieu of all other taxes" clause under Section 13 of respondents
legislative franchise exempts it from all taxes necessary in the conduct of its
business covered by the franchise, except the tax on its real property for which
respondent is expressly made payable;
7
and
(h) The rationale or purpose for the exemption from all other taxes except the
income tax and real property tax granted to respondent upon the payment of the
basic corporate income tax or the 2% franchise tax is that such tax exemption is
part of inducement for the acceptance of the franchise and the rendition of
public service by the grantee.
8

Simply put, it pronounced that the only qualification provided for in the law is the option
given to respondent to choose between the taxes which will yield the lesser liability.
Thus, if as a result of the exercise of the option, the respondent ends up without any
tax liability, it should not be held liable for any other tax, such as the MCIT, except for
real property tax.
9

On 30 January 2007, the CTA Second Division denied petitioners Motion for
Reconsideration for lack of merit.
10

Aggrieved, petitioner appealed to the CTA En Banc by filing a Petition for Review
pursuant to Section 18 of Republic Act (RA) No. 9282(should be RA No. 1125, as
amended by RA No. 9282)
11
on 1 March 2007,docketed as CTA EB No. 271.
12

The Ruling of the CTA En Banc
The CTA En Banc affirmed both the aforesaid Decision and Resolution rendered by the
CTA Second Division in CTA Case No. 7029,ruling that under Section 13 of PD 1590,
respondent, as consideration for the franchise, is indeed granted the privilege to choose
between two options in the payment of its tax liability to the government. Naturally, its
choice will be that which will result in a lower tax liability since such choice is "in lieu of
all other taxes" imposed by all government entities in the country.
13
The only exception
is the real property tax.
The appellate court pointed out that even if respondent opted to be covered by the
Income Tax provisions of the NIRC, it does not follow that it is covered by the MCIT
provisions of the same Code. There is nothing in PD 1590 which obliges the respondent
to pay other taxes, much less the MCIT, in case it suffers a net operating loss.
Otherwise, it would negate the tax relief granted under Section 13 of its franchise and
would render it useless. The tax relief allows respondent to carry over as a deduction
from taxable income any net loss incurred in any year up to five years following the
year of such loss.
14

Likewise, it elucidated that the MCIT is not the basic corporate income tax referred to in
Section 13 of PD 1590. There is a distinction between the MCIT and the basic corporate
income tax. The MCIT under Section 27(E)(1) of the NIRC of 1997, as amended, is
imposed upon gross income; while the basic corporate income tax refers to the 32%
income tax on the taxable income of domestic corporations under Section 27(A) of the
same Code. In other words, the court a quo ruled that since the MCIT is imposed upon
gross income, it cannot be made to apply to respondent by virtue of the express
provision in its franchise that its basic corporate income tax shall be based on its annual
net taxable income. Hence, it is in this sense that the MCIT qualifies as "other taxes"
from which the respondent had been granted tax exemption by its franchise.
15

Moreover, the provision on MCIT, Section 27(E) of the NIRC of 1997, as amended, did
not repeal respondents franchise considering that it is a general law which cannot
impliedly repeal, alter, or amend PD 1590, being a special law. Neither can Revenue
Memorandum Circular (RMC) No. 66-2003 amend respondents franchise as it is merely
an administrative issuance.
Lastly, there is no provision in RA No. 8424
16
which provides and specifies that the
MCIT shall be in addition to the taxes for which respondent is liable. To rule otherwise
would be violative of Section 24 of PD 1590 which states that respondents franchise
may only be modified, amended, or repealed expressly by a special law or decree that
shall specifically modify, amend or repeal the franchise or any section or provision
thereof. Therefore, in the absence of a law expressly repealing PD1590 at the time the
subject assessment was issued and for the period covered by the assessment,
respondents tax exemption privilege under the "in lieu of all other taxes" clause of
Section 13 thereof must be applied.
Upon denial of petitioners Motion for Reconsideration of the 19 July2007 Decision of
the CTA En Banc, it filed this Petition for Review on Certiorari before this Court seeking
the reversal of the aforementioned Decision and the 23 August 2007 Resolution
17

rendered in CTA EB No. 271.
The Issues
The issues submitted before this Court for consideration are as follows:
(1) Whether or not the CTA En Banc erred in holding that the MCIT is properly
categorized as "other taxes" pursuant to respondents charter; and
(2) Whether or not the CTA En Banc erred in ruling that respondent is not liable
for the 2% MCIT deficiency for the fiscal year ending 31March 2000.
18

The above mentioned issues may be consolidated and restated as follows: whether or
not the CTA En Banc erred when it affirmed the cancellation of Assessment Notice No.
INC-FY-99-2000-000085 and Formal Letter of Demand issued by petitioner against
respondent for the payment of deficiency MCIT in the amount of P326,778,723.35,
covering the fiscal year ending 31 March 2000.
In support thereof, petitioner submits the following arguments: (a) respondent clearly
opted to be covered by the income tax provision of the NIRC of 1997, as amended;
hence, it is covered by the MCIT provision of the same Code and liable to pay the
same; (b) the MCIT does not belong to the category of "other taxes" which may enable
respondent to avail of the "in lieu of all other taxes" clause under Section 13 of PD 1590
because it is a category of an income tax pursuant to Section 27 (E) (1) of the NIRC of
1997,as amended; (c) the MCIT provision of the NIRC of 1997, as amended, is not an
amendment of respondents charter, but an amendment of the same Code. Hence,
respondents obligation to pay the MCIT is not the result of an implied amendment of
PD 1590, but rather, the consequence of respondents option of paying income tax
rather than franchise tax; (d) respondent is not only given the privilege to choose
between what will give it the benefit of a lower tax, but also the responsibility of paying
its share of the tax burden. Otherwise stated, it is the legislative intent to give
respondent a privilege in the form of an option in paying its taxes which would result in
paying a lower tax liability, but not in dispensing the sharing of a tax burden to which
every taxpayer is obligated to bear; and (e) a claim for exemption from taxation is
never presumed; thus, respondent is liable for the deficiency MCIT.
Respondent, in its Comment thereto, counters among others, that there is nothing in
PD 1590 which obliges respondent to pay other taxes, much less the MCIT, in case it
suffers a net operating loss. Since the MCIT is not the basic corporate income tax, nor
the 2% franchise tax, nor the real property tax mentioned by Section 13 thereof, then it
is but logical to conclude that the MCIT belongs to the category of "other taxes" for
which respondent is not liable.
Our Ruling
Respondents exemption from the MCIT is already a settled matter.
Section 27 of the NIRC of 1997, as amended, provides as follows:
SEC. 27. Rates of Income Tax on Domestic Corporations.
(A) In General. Except as otherwise provided in this Code, an income tax of thirty-
five percent (35%) is hereby imposed upon the taxable income derived during each
taxable year from all sources within and without the Philippines by every corporation, as
defined in Section 22(B) of this Code and taxable under this Title as a corporation,
organized in, or existing under the law of the Philippines: Provided, That effective
January 1, 1998, the rate of income tax shall be thirty-four percent (34%); effective
January 1, 1999, the rate shall be thirty-three percent (33%); and effective January 1,
2000 and thereafter, the rate shall be thirty-two percent (32%).
x x x x
(E) Minimum Corporate Income Tax on Domestic Corporations.
(1) Imposition of Tax A minimum corporate income tax of two percent (2%) of the
gross income as of the end of the taxable year, as defined herein, is hereby imposed on
a corporation taxable under this Title, beginning on the fourth taxable year immediately
following the year in which such corporation commenced its business operations, when
the minimum income tax is greater than the tax computed under Subsection(A) of this
Section for the taxable year. (Emphasis supplied)
Based on the foregoing, a domestic corporation must pay whichever is the higher of:
(1) the income tax under Section 27(A) of the NIRC of 1997,as amended, computed by
applying the tax rate therein to the taxable income of the corporation; or (2) the MCIT
under Section 27(E), also of the same Code, equivalent to 2% of the gross income of
the corporation. The Court would like to underscore that although this may be the
general rule in determining the income tax due from a domestic corporation under the
provisions of the NIRC of 1997, as amended, such rule can only be applied to
respondent only as to the extent allowed by the provisions of its franchise.
Relevant thereto, PD 1590, the franchise of respondent, contains the following pertinent
provisions governing its taxation:
Section 13. In consideration of the franchise and rights hereby granted, the grantee
shall pay to the Philippine Government during the life of this franchise whichever of
subsections (a) and (b) hereunder will result in a lower tax:
(a) The basic corporate income tax based on the grantees annual net taxable
income computed in accordance with the provisions of the National Internal
Revenue Code; or
(b) A franchise tax of two per cent (2%) of the gross revenues derived by the
grantee from all sources, without distinction as to transport or non transport
operations; provided, that with respect to international air-transport service, only
the gross passenger, mail, and freight revenues from its outgoing flights shall be
subject to this tax.
The tax paid by the grantee under either of the above alternatives shall be in lieu of all
other taxes, duties, royalties, registration, license, and other fees and charges of any
kind, nature, or description, imposed, levied, established, assessed, or collected by any
municipal, city, provincial, or national authority or government agency, now or in the
future, including but not limited to the following:
x x x x
The grantee, shall, however, pay the tax on its real property in conformity with existing
law.
For purposes of computing the basic corporate income tax as provided herein, the
grantee is authorized:
(a) To depreciate its assets to the extent of not more than twice as fast the
normal rate of depreciation; and
(b) To carry over as a deduction from taxable income any net loss incurred in
any year up to five years following the year of such loss.
Section 14. The grantee shall pay either the franchise tax or the basic corporate income
tax on quarterly basis to the Commissioner of Internal Revenue. Within sixty (60) days
after the end of each of the first three quarters of the taxable calendar or fiscal year,
the quarterly franchise or income-tax return shall be filed and payment of either the
franchise or income tax shall be made by the grantee.
A final or an adjustment return covering the operation of the grantee for the preceding
calendar or fiscal year shall be filed on or before the fifteenth day of the fourth month
following the close of the calendar or fiscal year. The amount of the fiscal franchise or
income tax to be paid by the grantee shall be the balance of the total franchise or
income tax shown in the final or adjustment return after deducting therefrom the total
quarterly franchise or income taxes already paid during the preceding first three
quarters of the same taxable year.
Any excess of the total quarterly payments over the actual annual franchise of income
tax due as shown in the final or adjustment franchise or income-tax return shall either
be refunded to the grantee or credited against the grantees quarterly franchise or
income-tax liability for the succeeding taxable year or years at the option of the
grantee.
The term "gross revenue" is herein defined as the total gross income earned by the
grantee; (a) transport, nontransport, and other services; (b) earnings realized from
investments in money-market placements, bank deposits, investments in shares of
stock and other securities, and other investments; (c) total gains net of total losses
realized from the disposition of assets and foreign-exchange transactions; and (d) gross
income from other sources. (Emphasis supplied)
From the foregoing provisions, during the lifetime of the franchise of respondent, its
taxation shall be strictly governed by two fundamental rules, to wit: (1) respondent
shall pay the Government either the basic corporate income tax or franchise tax,
whichever is lower; and (2) the tax paid by respondent, under either of these
alternatives, shall be in lieu of all other taxes, duties, royalties, registration, license, and
other fees and charges, except only real property tax.
Parenthetically, the basic corporate income tax of respondent shall be based on its
annual net taxable income, computed in accordance with the NIRC of 1997, as
amended. PD 1590 also explicitly authorizes respondent, in the computation of its basic
corporate income tax, to: (1) depreciate its assets twice as fast the normal rate of
depreciation;
19
and (2) carry over deduction from taxable income any net loss incurred
in any year up to five years following the year of such loss.
20

The franchise tax, on the other hand, shall be 2% of the gross revenues derived by
respondent from all sources, whether transport or nontransport operations. However,
with respect to international air-transport service, the franchise tax shall only be
imposed on the gross passenger, mail, and freight revenues of respondent from its
outgoing flights.
21

Accordingly, considering the foregoing precepts, this Court had the opportunity to
finally settle this matter and categorically enunciated in Commissioner of Internal
Revenue v. Philippine Airlines, Inc.,
22
that respondent cannot be subjected to MCIT for
the following reasons:
First, Section 13(a) of [PD] 1590 refers to "basic corporate income tax." In
Commissioner of Internal Revenue v. Philippine Airlines, Inc.,
23
the Court already settled
that the "basic corporate income tax, "under Section 13(a) of [PD] 1590, relates to the
general rate of 35%(reduced to 32% by the year 2000) as stipulated in Section 27(A)
of the NIRC of 1997.
Section 13(a) of [PD] 1590 requires that the basic corporate income tax be computed in
accordance with the NIRC. This means that PAL shall compute its basic corporate
income tax using the rate and basis prescribed by the NIRC of 1997 for the said tax.
There is nothing in Section 13(a) of [PD] 1590 to support the contention of the CIR that
PAL is subject to the entire Title II of the NIRC of 1997, entitled "Tax on Income."
Second, Section 13(a) of Presidential Decree No. 1590 further provides that the basic
corporate income tax of PAL shall be based on its annual net taxable income. This is
consistent with Section 27(A) of the NIRC of 1997, which provides that the rate of basic
corporate income tax, which is 32% beginning 1 January 2000, shall be imposed on the
taxable income of the domestic corporation.
Taxable income is defined under Section 31 of the NIRC of 1997as the pertinent items
of gross income specified in the said Code, less the deductions and/or personal and
additional exemptions, if any, authorized for such types of income by the same Code or
other special laws.
The gross income, referred to in Section 31, is described in Section32 of the NIRC of
1997 as income from whatever source, including compensation for services; the
conduct of trade or business or the exercise of profession; dealings in property;
interests; rents; royalties; dividends; annuities; prizes and winnings; pensions; and a
partners distributive share in the net income of a general professional partnership.
Pursuant to the NIRC of 1997, the taxable income of a domestic corporation may be
arrived at by subtracting from gross income deductions authorized, not just by the NIRC
of 1997, but also by special laws. [PD] 1590 may be considered as one of such special
laws authorizing PAL, in computing its annual net taxable income, on which its basic
corporate income tax shall be based, to deduct from its gross income the following: (1)
depreciation of assets at twice the normal rate; and (2) net loss carry-over up to five
years following the year of such loss.
In comparison, the 2% MCIT under Section 27 (E) of the NIRC of 1997 shall be based
on the gross income of the domestic corporation. The Court notes that gross income, as
the basis for MCIT, is given a special definition under Section 27(E) (4) of the NIRC of
1997, different from the general one under Section 34 of the same Code.
According to the last paragraph of Section 27 (E) (4) of the NIRC of 1997, gross income
of a domestic corporation engaged in the sale of service means gross receipts, less
sales returns, allowances, discounts and cost of services. "Cost of services" refers to all
direct costs and expenses necessarily incurred to provide the services required by the
customers and clients including (a) salaries and employee benefits of personnel,
consultants, and specialists directly rendering the service; and (b) cost of facilities
directly utilized in providing the service, such as depreciation or rental of equipment
used and cost of supplies. Noticeably, inclusions in and exclusions/deductions from
gross income for MCIT purposes are limited to those directly arising from the conduct of
the taxpayers business. It is, thus, more limited than the gross income used in the
computation of basic corporate income tax.
In light of the foregoing, there is an apparent distinction under the NIRC of 1997
between taxable income, which is the basis for basic corporate income tax under
Section 27(A); and gross income, which is the basis for the MCIT under Section 27(E).
The two terms have their respective technical meanings, and cannot be used
interchangeably. The same reasons prevent this Court from declaring that the basic
corporate income tax, for which PAL is liable under Section 13(a) of [PD] 1590, also
covers MCIT under Section 27(E) of the NIRC of 1997, since the basis for the first is the
annual net taxable income, while the basis for the second is gross income.
Third, even if the basic corporate income tax and the MCIT are both income taxes
under Section 27 of the NIRC of 1997, and one is paid in place of the other, the two are
distinct and separate taxes.
The Court again cites Commissioner of Internal Revenue v. Philippine Airlines, Inc.,
24

wherein it held that income tax on the passive income of a domestic corporation, under
Section 27(D) of the NIRC of 1997, is different from the basic corporate income tax on
the taxable income of a domestic corporation, imposed by Section 27(A), also of the
NIRC of 1997. Section 13 of [PD] 1590 gives PAL the option to pay basic corporate
income tax or franchise tax, whichever is lower; and the tax so paid shall be in lieu of
all other taxes, except real property tax. The income tax on the passive income of PAL
falls within the category of "allot her taxes" from which PAL is exempted, and which, if
already collected, should be refunded to PAL.
The Court herein treats MCIT in much the same way. Although both are income taxes,
the MCIT is different from the basic corporate income tax, not just in the rates, but also
in the bases for their computation. Not being covered by Section 13(a) of [PD]
1590,which makes PAL liable only for basic corporate income tax, then MCIT is included
in "all other taxes" from which PAL is exempted.
That, under general circumstances, the MCIT is paid in place of the basic corporate
income tax, when the former is higher than the latter, does not mean that these two
income taxes are one and the same. The said taxes are merely paid in the alternative,
giving the Government the opportunity to collect the higher amount between the two.
The situation is not much different from Section 13 of [PD] 1590, which reversely allows
PAL to pay, whichever is lower of the basic corporate income tax or the franchise tax. It
does not make the basic corporate income tax in distinguishable from the franchise tax.
Given the fundamental differences between the basic corporate income tax and the
MCIT, presented in the preceding discussion, it is not baseless for this Court to rule
that, pursuant to the franchise of PAL, said corporation is subject to the first tax, yet
exempted from the second.
Fourth, the evident intent of Section 13 of [PD] 1520 (sic) is to extend to PAL tax
concessions not ordinarily available to other domestic corporations. Section 13 of [PD]
1520 (sic) permits PAL to pay whichever is lower of the basic corporate income tax or
the franchise tax; and the tax so paid shall be in lieu of all other taxes, except only real
property tax. Hence, under its franchise, PAL is to pay the least amount of tax possible.
Section 13 of [PD] 1520 (sic) is not unusual. A public utility is granted special tax
treatment (including tax exceptions/exemptions) under its franchise, as an inducement
for the acceptance of the franchise and the rendition of public service by the said public
utility. In this case, in addition to being a public utility providing air-transport service,
PAL is also the official flag carrier of the country.
The imposition of MCIT on PAL, as the CIR insists, would result in a situation that
contravenes the objective of Section 13 of [PD] 1590. In effect, PAL would not just
have two, but three tax alternatives, namely, the basic corporate income tax, MCIT, or
franchise tax. More troublesome is the fact that, as between the basic corporate income
tax and the MCIT, PAL shall be made to pay whichever is higher, irrefragably, in
violation of the avowed intention of Section 13 of [PD] 1590 to make PAL pay for the
lower amount of tax.
Fifth, the CIR posits that PAL may not invoke in the instant case the "in lieu of all other
taxes" clause in Section 13 of [PD] No. 1520 (sic),if it did not pay anything at all as
basic corporate income tax or franchise tax. As a result, PAL should be made liable for
"other taxes" such as MCIT. This line of reasoning has been dubbed as the Substitution
Theory, and this is not the first time the CIR raised the same. The Court already
rejected the Substitution Theory in
Commissioner of Internal Revenue v. Philippine Airlines, Inc.,
25
to wit:
"Substitution Theory"
of the CIR Untenable
A careful reading of Section 13 rebuts the argument of the CIR that the "in lieu of all
other taxes "proviso is a mere incentive that applies only when PAL actually pays
something.
It is clear that PD 1590 intended to give respondent the option to avail itself of
Subsection (a) or (b) as consideration for its franchise. Either option excludes the
payment of other taxes and dues imposed or collected by the national or the local
government. PAL has the option to choose the alternative that results in lower taxes. It
is not the fact of tax payment that exempts it, but the exercise of its option.
Under Subsection (a), the basis for the tax rate is respondents annual net taxable
income, which (as earlier discussed) is computed by subtracting allowable deductions
and exemptions from gross income. By basing the tax rate on the annual net taxable
income, PD 1590 necessarily recognized the situation in which taxable income may
result in a negative amount and thus translate into a zero tax liability.
Notably, PAL was owned and operated by the government at the time the franchise was
last amended. It can reasonably be contemplated that PD 1590 sought to assist the
finances of the government corporation in the form of lower taxes. When respondent
operates at a loss(as in the instant case), no taxes are due; in this instances, it has a
lower tax liability than that provided by Subsection (b).
The fallacy of the CIRs argument is evident from the fact that the payment of a measly
sum of one peso would suffice to exempt PAL from other taxes, whereas a zero liability
arising from its losses would not. There is no substantial distinction between a zero tax
and a one-peso tax liability. (Emphasis theirs)
Based on the same ratiocination, the Court finds the Substitution Theory unacceptable
in the present Petition.
The CIR alludes as well to Republic Act No. 9337, for reasons similar to those behind
the Substitution Theory. Section 22 of Republic Act No. 9337, more popularly known as
the Expanded Value Added Tax(E-VAT) Law, abolished the franchise tax imposed by the
charters of particularly identified public utilities, including [PD] 1590 of PAL. PAL may no
longer exercise its options or alternatives under Section 13 of [PD] 1590, and is now
liable for both corporate income tax and the 12% VAT on its sale of services. The CIR
alleges that Republic Act No. 9337reveals the intention of the Legislature to make PAL
share the tax burden of other domestic corporations.
The CIR seems to lose sight of the fact that the Petition at bar involves the liability of
PAL for MCIT for the fiscal year ending 31March 2001. Republic Act No. 9337, which
took effect on 1 July 2005,cannot be applied retroactively and any amendment
introduced by said statute affecting the taxation of PAL is immaterial in the present
case.
And sixth, [PD] 1590 explicitly allows PAL, in computing its basic corporate income tax,
to carry over as deduction any net loss incurred in any year, up to five years following
the year of such loss. Therefore, [PD] 1590 does not only consider the possibility that,
at the end of a taxable period, PAL shall end up with zero annual net taxable income
(when its deductions exactly equal its gross income), as what happened in the case at
bar, but also the likelihood that PAL shall incur net loss (when its deductions exceed its
gross income). If PAL is subjected to MCIT, the provision in [PD] 1590 on net loss
carry-over will be rendered nugatory. Net loss carry-over is material only in computing
the annual net taxable income to be used as basis for the basic corporate income tax of
PAL; but PAL will never be able to avail itself of the basic corporate income tax option
when it is in a net loss position, because it will always then be compelled to pay the
necessarily higher MCIT.
Consequently, the insistence of the CIR to subject PAL to MCIT cannot be done without
contravening [PD] 1520 (sic).
Between [PD] 1520 (sic), on one hand, which is a special law specifically governing the
franchise of PAL, issued on 11 June 1978;and the NIRC of 1997, on the other, which is
a general law on national internal revenue taxes, that took effect on 1 January 1998,
the former prevails. The rule is that on a specific matter, the special law shall prevail
over the general law, which shall be resorted to only to supply deficiencies in the
former. In addition, where there are two statutes, the earlier special and the later
general the terms of the general broad enough to include the matter provided for in
the special the fact that one is special and the other is general creates a presumption
that the special is to be considered as remaining an exception to the general, one as a
general law of the land, the other as the law of a particular case. It is a canon of
statutory construction that a later statute, general in its terms and not expressly
repealing a prior special statute, will ordinarily not affect the special provisions of such
earlier statute.
x x x x
The MCIT was a new tax introduced by Republic Act No.8424. Under the doctrine of
strict interpretation, the burden is upon the CIR to primarily prove that the new MCIT
provisions of the NIRC of 1997, clearly, expressly, and unambiguously extend and apply
to PAL, despite the latters existing tax exemption. To do this, the CIR must convince
the Court that the MCIT is a basic corporate income tax, and is not covered by the "in
lieu of all other taxes" clause of [PD] 1590. Since the CIR failed in this regard, the Court
is left with no choice but to consider the MCIT as one of "all other taxes," from which
PAL is exempt under the explicit provisions of its charter. (Emphasis supplied)
Based on the foregoing pronouncements, it is clear that respondent is exempt from the
MCIT imposed under Section 27(E) of the NIRC of 1997,as amended. Thus, respondent
cannot be held liable for the assessed deficiency MCIT of P326,778,723.35 for fiscal
year ending 31 March 2000.1wphi1
More importantly, as to petitioners contention that respondent needs to actually pay a
certain amount as basic corporate income tax or franchise tax before it can enjoy the
tax exemption granted to it since it should retain the responsibility of paying its share of
the tax burden, this Court has categorically ruled in the above-cited cases that it is not
the fact of tax payment that exempts it, but the exercise of its option..
Notably, in another case involving the same parties,
26
the Court further expressed that
a strict interpretation of the word "pay" in Section 13of PD 1590 would effectively
render nugatory the other rights categorically conferred upon the respondent by its
franchise. Hence, there being no qualification to the exercise of its options under
Section 13, then respondent is free to choose basic corporate income tax, even if it
would have zero liability for the same in light of its net loss position for the taxable
year.
By way of, reiteration, although it appears that respondent is not completely exempt
from all forms of taxes under PD 1590 considering that Section 13 thereof requires it to
pay, either the lower amount of the basic corporate income tax or franchise tax (which
are both direct taxes), at its option, mere exercise of such option already relieves
respondent of liability for all other taxes and/or duties, whether direct or indirect taxes.
This is an expression of the same thought in Our ruling that, to repeat, it is not the fact
of tax payment that exempts it, but the exercise of its option. All told, the CTA En Bane
was correct in dismissing the petition in CTA EB No. 271, and affirming the CTA Second
Division's Decision and Resolution dated 22 August 2006 and 30 January 2007,
respectively, in CTA Case No. 7029.
WHEREFORE, the petition is DENIED for lack of merit. No costs.
SO ORDERED.




EN BANC
B.M. No. 2540 September 24, 2013
IN RE: PETITION TO SIGN IN THE ROLL OF ATTORNEYS
MICHAEL A. MEDADO, Petitioner.
R E S O L U T I O N
SERENO, CJ.:
We resolve the instant Petition to Sign in the Roll of Attorneys filed by petitioner
Michael A. Medado (Medado).
Medado graduated from the University of the Philippines with the degree of Bachelor of
Laws in 1979
1
and passed the same year's bar examinations with a general weighted
average of 82.7.
2

On 7 May 1980, he took the Attorneys Oath at the Philippine International Convention
Center (PICC) together with the successful bar examinees.
3
He was scheduled to sign in
the Roll of Attorneys on 13 May 1980,
4
but he failed to do so on his scheduled date,
allegedly because he had misplaced the Notice to Sign the Roll of Attorneys
5
given by
the Bar Office when he went home to his province for a vacation.
6

Several years later, while rummaging through his old college files, Medado found the
Notice to Sign the Roll of Attorneys. It was then that he realized that he had not signed
in the roll, and that what he had signed at the entrance of the PICC was probably just
an attendance record.
7

By the time Medado found the notice, he was already working. He stated that he was
mainly doing corporate and taxation work, and that he was not actively involved in
litigation practice. Thus, he operated "under the mistaken belief that since he had
already taken the oath, the signing of the Roll of Attorneys was not as urgent, nor as
crucial to his status as a lawyer";
8
and "the matter of signing in the Roll of Attorneys
lost its urgency and compulsion, and was subsequently forgotten."
9

In 2005, when Medado attended Mandatory Continuing Legal Education (MCLE)
seminars, he was required to provide his roll number in order for his MCLE compliances
to be credited.
10

Not having signed in the Roll of Attorneys, he was unable to provide his roll number.
About seven years later, or on 6 February 2012, Medado filed the instant Petition,
praying that he be allowed to sign in the Roll of Attorneys.
11

The Office of the Bar Confidant (OBC) conducted a clarificatory conference on the
matter on 21 September 2012
12
and submitted a Report and Recommendation to this
Court on 4 February 2013.
13
The OBC recommended that the instant petition be denied
for petitioners gross negligence, gross misconduct and utter lack of merit.
14
It
explained that, based on his answers during the clarificatory conference, petitioner
could offer no valid justification for his negligence in signing in the Roll of Attorneys.
15

After a judicious review of the records, we grant Medados prayer in the instant petition,
subject to the payment of a fine and the imposition of a penalty equivalent to
suspension from the practice of law.
At the outset, we note that not allowing Medado to sign in the Roll of Attorneys would
be akin to imposing upon him the ultimate penalty of disbarment, a penalty that we
have reserved for the most serious ethical transgressions of members of the Bar.
In this case, the records do not show that this action is warranted.
For one, petitioner demonstrated good faith and good moral character when he finally
filed the instant Petition to Sign in the Roll of Attorneys. We note that it was not a third
party who called this Courts attention to petitioners omission; rather, it was Medado
himself who acknowledged his own lapse, albeit after the passage of more than 30
years. When asked by the Bar Confidant why it took him this long to file the instant
petition, Medado very candidly replied:
Mahirap hong i-explain yan pero, yun bang at the time, what can you say? Takot ka
kung anong mangyayari sa yo, you dont know whats gonna happen. At the same
time, its a combination of apprehension and anxiety of whats gonna happen. And,
finally its the right thing to do. I have to come here sign the roll and take the oath as
necessary.
16

For another, petitioner has not been subject to any action for disqualification from the
practice of law,
17
which is more than what we can say of other individuals who were
successfully admitted as members of the Philippine Bar. For this Court, this fact
demonstrates that petitioner strove to adhere to the strict requirements of the ethics of
the profession, and that he has prima facie shown that he possesses the character
required to be a member of the Philippine Bar.
Finally, Medado appears to have been a competent and able legal practitioner, having
held various positions at the Laurel Law Office,
18
Petron, Petrophil Corporation, the
Philippine National Oil Company, and the Energy Development Corporation.
19

All these demonstrate Medados worth to become a full-fledged member of the
Philippine Bar.1wphi1 While the practice of law is not a right but a privilege,
20
this
Court will not unwarrantedly withhold this privilege from individuals who have shown
mental fitness and moral fiber to withstand the rigors of the profession.
That said, however, we cannot fully exculpate petitioner Medado from all liability for his
years of inaction.
Petitioner has been engaged in the practice of law since 1980, a period spanning more
than 30 years, without having signed in the Roll of Attorneys.
21
He justifies this
behavior by characterizing his acts as "neither willful nor intentional but based on a
mistaken belief and an honest error of judgment."
22

We disagree.
While an honest mistake of fact could be used to excuse a person from the legal
consequences of his acts
23
as it negates malice or evil motive,
24
a mistake of law cannot
be utilized as a lawful justification, because everyone is presumed to know the law and
its consequences.
25
Ignorantia factiexcusat; ignorantia legis neminem excusat.
Applying these principles to the case at bar, Medado may have at first operated under
an honest mistake of fact when he thought that what he had signed at the PICC
entrance before the oath-taking was already the Roll of Attorneys. However, the
moment he realized that what he had signed was merely an attendance record, he
could no longer claim an honest mistake of fact as a valid justification. At that point,
Medado should have known that he was not a full-fledged member of the Philippine Bar
because of his failure to sign in the Roll of Attorneys, as it was the act of signing therein
that would have made him so.
26
When, in spite of this knowledge, he chose to continue
practicing law without taking the necessary steps to complete all the requirements for
admission to the Bar, he willfully engaged in the unauthorized practice of law.
Under the Rules of Court, the unauthorized practice of law by ones assuming to be an
attorney or officer of the court, and acting as such without authority, may constitute
indirect contempt of court,
27
which is punishable by fine or imprisonment or both.
28

Such a finding, however, is in the nature of criminal contempt
29
and must be reached
after the filing of charges and the conduct of hearings.
30
In this case, while it appears
quite clearly that petitioner committed indirect contempt of court by knowingly
engaging in unauthorized practice of law, we refrain from making any finding of liability
for indirect contempt, as no formal charge pertaining thereto has been filed against
him.
Knowingly engaging in unauthorized practice of law likewise transgresses Canon 9 of
'the Code of Professional Responsibility, which provides:
CANON 9 -A lawyer shall not, directly or indirectly, assist in the unauthorized practice of
law.
While a reading of Canon 9 appears to merely prohibit lawyers from assisting in the
unauthorized practice of law, the unauthorized practice of law by the lawyer himself is
subsumed under this provision, because at the heart of Canon 9 is the lawyer's duty to
prevent the unauthorized practice of law. This duty likewise applies to law students and
Bar candidates. As aspiring members of the Bar, they are bound to comport themselves
in accordance with the ethical standards of the legal profession.
Turning now to the applicable penalty, previous violations of Canon 9have warranted
the penalty of suspension from the practice of law.
31
As Medado is not yet a full-fledged
lawyer, we cannot suspend him from the practice of law. However, we see it fit to
impose upon him a penalty akin to suspension by allowing him to sign in the Roll of
Attorneys one (1) year after receipt of this Resolution. For his transgression of the
prohibition against the unauthorized practice of law, we likewise see it fit to fine him in
the amount of P32,000. During the one year period, petitioner is warned that he is not
allowed to engage in the practice of law, and is sternly warned that doing any act that
constitutes practice of law before he has signed in the Roll of Attorneys will be dealt
with severely by this Court.
WHEREFORE, the instant Petition to Sign in the Roll of Attorneys is hereby GRANTED.
Petitioner Michael A. Medado is ALLOWED to sign in the Roll of Attorneys ONE (1) YEAR
after receipt of this Resolution. Petitioner is likewise ORDERED to pay a FINE of
P32,000 for his unauthorized practice of law. During the one year period, petitioner is
NOT ALLOWED to practice law, and is STERNLY WARNED that doing any act that
constitutes practice of law before he has signed in the Roll of Attorneys will be dealt will
be severely by this Court.
Let a copy of this Resolution be furnished the Office of the Bar Confidant, the
Integrated Bar
of the Philippines, and the Office of the Court Administrator for circulation to all courts
in the country.
SO ORDERED.




FIRST DIVISION
G.R. No. 166330 September 11, 2013
SMART COMMUNICATIONS, INC., Petitioner,
vs.
ARSENIO ALDECOA, JOSE B. TORRE, CONRADO U. PUA, GREGORIO V.
MANSANO, JERRY CORPUZ and ESTELITAACOSTA, Respondents.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court filed by petitioner Smart Communications, Inc., seeking the reversal of the
Decision
1
dated July 16, 2004 and Resolution
2
dated December 9, 2004 of the Court of
Appeals in CA-G.R. CV No. 71337. The appellate court (I) reversed and set aside the
Order
3
dated January 16, 2001 of the Regional Trial Court (RTC), Branch 23, of Roxas,
Isabela, in Civil Case No. Br. 23-632-2000 dismissing the complaint for abatement of
nuisance and injunction against petitioner, and (2) entered a new judgment declaring
petitioner's cellular base station located in Barangay Vira, Municipality of Roxas,
Province of Isabela, a nuisance and ordering petitioner to cease and desist from
operating the said cellular base station.
The instant Petition arose from the following facts:
Petitioner is a domestic corporation engaged in the telecommunications business. On
March 9, 2000, petitioner entered into a contract of lease
4
with Florentino Sebastian in
which the latter agreed to lease to the former a piece of vacant lot, measuring around
300 square meters, located in Barangay Vira, Roxas, Isabela (leased
property).Petitioner, through its contractor, Allarilla Construction, immediately
constructed and installed a cellular base station on the leased property. Inside the
cellular base station is a communications tower, rising as high as150 feet, with
antennas and transmitters; as well as a power house open on three sides containing a
25KVA diesel power generator. Around and close to the cellular base station are houses,
hospitals, clinics, and establishments, including the properties of respondents Arsenio
Aldecoa, Jose B. Torre, Conrado U. Pua, Gregorio V. Mansano, Jerry Corpuz, and
Estelita Acosta.
Respondents filed before the RTC on May 23, 2000 a Complaint against petitioner for
abatement of nuisance and injunction with prayer for temporary restraining order and
writ of preliminary injunction, docketed as Civil Case No. Br. 23-632-2000. Respondents
alleged in their Complaint that:
5. Petitioners communications tower is 150 feet in height equivalent to a 15-
storey building. It is a tripod-type tower made of tubular steel sections and the
last section, to which the huge and heavy antenna/transponder array will be
attached, about to be bolted on. Weight of the antenna mast is estimated at one
(1) to three (3) tons, more or less. As designed, the antenna/transponder array
are held only by steel bolts without support of guy wires;
6. This SMART tower is no different from the Mobiline tower constructed at Reina
Mercedes, Isabela which collapsed during a typhoon that hit Isabela in October
1998, an incident which is of public knowledge;
7. With its structural design, SMARTs tower being constructed at Vira, Roxas,
Isabela, is weak, unstable, and infirm, susceptible to collapse like the Mobiline
tower which fell during a typhoon as earlier alleged, and its structural integrity
being doubtful, and not earthquake proof, this tower poses great danger to life
and limb of persons as well as their property, particularly, the respondents
whose houses a but, or are near or within the periphery of the communications
tower;
8. This tower is powered by a standby generator that emitsnoxious and
deleterious fumes, not to mention the constant noise it produces, hence, a
hazard to the health, not only of the respondents, but the residents in the area
as well;
9. When in operation, the tower would also pose danger to the life and health of
respondents and residents of the barangay, especially children, because of the
ultra high frequency (UHF) radio wave emissions it radiates. Only recently, Cable
News Network (CNN) reported that cell phones, with minimal radiated power, are
dangerous to children, so more it is for this communications tower, whose
radiated power is thousands of times more than that of a cellphone;
10. Worse, and in violation of law, petitioner constructed the tower without the
necessary public hearing, permit of the barangay, as well as that of the
municipality, the Environmental Compliance Certificate of the [Department of
Environment and Natural Resources (DENR)],construction permit, and other
requirements of the National Telecommunications Commission (NTC), and in fact
committed fraud in its application by forging an undated certification " that
Barangay Vira does not interpose any objection to the proposed construction of a
150 ft. tower & site development, " as this certification was never issued
byrespondent Jose Torre, the Barangay Captain of Vira, Roxas, Isabela, and
without the official barangay seal, attached as Annex "A" and Certification of the
Barangay Officer of the Day that no public hearing was held, attached as Annex
"B" made integral part hereof;
11. Not being armed with the requisite permits/authority as above mentioned,
the construction of the tower is illegal and should be abated;
12. Respondents and petitioner should not wait for the occurrence of death,
injuries and damage on account of this structure and judicial intervention is
needed to ensure that such event will not happen.
5

Respondents thus prayed for the RTC to:
1. Issue a temporary restraining order and after due hearing to issue a
writ of preliminary mandatory injunction;
2. Render judgment:
- Making the writ of preliminary mandatory injunction permanent;
- Declaring the construction of the SMART tower as a nuisance per
se or per accidens;
- Ordering the abatement of this nuisance by ordering the removal
and/or demolition of petitioners communication tower;
- Condemning petitioner to pay respondents moral damages in the
sum of P150,000.00 and exemplary damages in the sum of
P30,000.00;
- Ordering petitioner to pay attorneys fees in the amount of
P20,000.00 plus trial honoraria of P1,000.00 for every appearance
in Court;
- Ordering petitioner to refund to respondents litigation expenses in
the amount of not less than P10,000.00;
3. And for such other reliefs as are just and equitable in the premises.
6

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

In the end, petitioner sought the dismissal of respondents Complaint; the denial of
respondents prayer for the issuance of a temporary restraining order and writ of
preliminary mandatory injunction; the award of moral, nominal, and exemplary
damages in the amounts which the court deem just and reasonable; and the award of
attorneys fees in the sum of P500,000.00 and litigation expenses as may be proven at
the trial.
Respondents then contested petitioners allegations and averred in their Reply and
Answer to Counterclaim that:
- Petitioners cell site relay antenna operates on the ultra high frequency (UHF)
band, or gigabyte band, that is much higher than that of TV and radio
broadcasts which operates only on the Very High Frequency (VHF) band, hence,
petitioners equipment generates dangerously high radiation and emission that is
hazardous to the people exposed to it like respondents, whose houses are
clustered around petitioners cell site antenna/communications tower;
- As admitted, petitioner has not secured the required Environmental Compliance
Certificate (ECC). It has not even obtained the initial compliance certificate (ICC).
In short,petitioner should have waited for these documents before constructing
its tower, hence, it violated the law and such construction is illegal and all the
more sustains the assertions of respondents;
- The alleged building permit issued to petitioner is illegal because of the lack of
an ECC and that petitioners application for a building permit covered only a
building and not a cell site antenna tower. Moreover, the petitioner failed to
obtain a National Telecommunications Commission (NTC) Clearance to construct
the communications tower. As will be seen in the application and permit, the
documents are dated April, 2000 while the construction begun in March, 2000;
- The technical data that served as the basis of the Radio Frequency Radiation
Evaluation of petitioners mobile telephone base station was provided solely by
the petitioner and in fact misled the DOH Radiation Health Service. It states an
absurdly low transmitted power of twenty (20) watts for a dual band mobile
phone service such as petitioner Smarts GSM 900/1800 Dual Band which is the
standard service it offers to the public;
- The Stress Analysis Report is self-serving and tested against the
communications tower, the structural integrity is flawed;
- While respondents may yield to the mandate of Republic Act No.7925,
otherwise known as the Telecommunications Act of 1995,extending and
improving or upgrading of basic services to are as not yet served, this should not
be taken as a license to gamble and/or destroy the health and well-being of the
people;
- Petitioners alleged certification (Annex "D", should be Annex "4") is the very
same certification appended to respondents complaint which they have assailed
as a forgery and which respondent Jose Torre, the Barangay Captain of Vira,
Roxas, Isabela, emphatically denies having signed and/or issued the same.
Moreover, the certification gives petitioner away because respondent Jose Torre
has no technical education using the telecommunications term "SMART GSM &
ETACS project," in said falsified certification;
- Petitioners claim that it is not liable for fraud or bad faith, proudly stating that
it has painstakingly secured the consent of the majority of the residents
surrounding the tower site, is belied by the alleged Conformity of Host
Community (Residential) Annex "C" should be Annex "3" where only a
handful of residents signed the document prepared by petitioner and the
contents of which were misrepresented by a Sangguniang Bayan Member in the
person of Nick Sebastian who is an interested party being the owner of the land
where the tower is constructed. It was misrepresented to Linaflor Aldecoa, wife
of respondent Arsenio Aldecoa that it was already anyway approved and signed
by Barangay Captain Jose Torre when in truth his signature was again forged by
the petitioner and/or its employees or agents or person working for said
company. Also, there are persons who are not residents of Vira, Roxas, Isabela
who signed the document such as Melanio C. Gapultos of Rizal, Roxas, Isabela,
Carlito Castillo of Nuesa, Roxas, Isabela, and another, Gennie Feliciano from San
Antonio, Roxas, Isabela. Certainly six (6) persons do not constitute the
conformity of the majority of the residents of Vira, Roxas, Isabela, and those
immediately affected by the cellsite tower like respondents. This document is
likewise flawed and cannot help petitioners cause. Besides, respondents and
other residents, sixty-two (62) of them, communicated their protest against the
erection of the cell tower specifying their reasons therefor and expressing their
sentiments and fears about petitioners communications tower, xerox copy
attached as Annex "A" and made integral part hereof;
- Respondents likewise specifically deny the truth of the allegation in paragraph
12 of the answer, the truth being that the lot leased to petitioner is owned by SB
Member Nick Sebastian and that Florentino Sebastian is dummying for the
former in avoidance of possible anti-graft charges against his son concerning this
project. It is also further denied for lack of knowledge or information sufficient to
form a belief as to the truth thereof. Moreover, the lease contract, copy not
annexed to petitioners answer, would automatically be terminated or ended in
the event of complaints and/or protests from the residents.
8

Civil Case No. Br. 23-632-2000 was set for pre-trial on September 28, 2000.
9

On September 11, 2000, petitioner filed its Pre-Trial Brief in which it identified the
following issues:
4.1. Whether respondents have a cause of action against the petitioner SMART
for this Honorable Court to issue a Preliminary Mandatory Injunction over the
SMART tower in Roxas, Isabela as it allegedly poses a threat to the lives and
safety of the residents within the area and if respondents are entitled to moral
and exemplary damages as well as attorneys fees and expenses of litigation.
4.2 Whether the complaint should be dismissed in that the claim or demand set
forth in the Complaint is fictitious, imaginary, sham and without any real basis.
4.3. What petitioner SMART is entitled under its compulsory counterclaim against
respondents for moral and exemplary damages, attorneys fees, and other
expenses of litigation.
10

On even date, petitioner filed a Motion for Summary Judgment that reads:
Petitioner SMART Communications Inc., thru counsel, respectfully manifests that:
1. There is no need for a full-blown trial as the causes of action and issues have
already been identified in all the pleadings submitted to this Honorable court by
both respondents and petitioner
2. There is clearly no genuine issue as to any material fact or cause in the action.
3. There is no extreme urgency to issue a Preliminary Mandatory Injunction as
stated in an affidavit executed by SMART Senior Supervisor Andres V. Romero in
an affidavit hereto attached as Annex "A"
4. Petitioner seeks immediate declaratory relief from respondents contrived
allegations as set forth in their complaint;
Wherefore, it is most respectfully prayed of this Honorable Court that summary
judgment be rendered pursuant to Rule 35 of the Revised Rules of Court.
11

Respondents filed their Pre-Trial Brief on September 21, 2000, proposing to limit the
issues,
viz:
- Whether petitioners communications tower is a nuisance per se/per accidens
and together with its standby generator maybe abated for posing danger to the
property and life and limb of the residents of Vira, Roxas, Isabela more
particularly the respondents and those whose houses are clustered around or in
the periphery of the cell site.
- Damages, attorneys fees, litigation expenses and other claims.
12

Respondents likewise filed on September 21, 2000 their Opposition to petitioners
Motion for Summary Judgment, maintaining that there were several genuine issues
relating to the cause of action and material facts of their Complaint. They asserted that
there was a need for a full blown trial to prove the allegations in their Complaint, as
well as the defenses put up by petitioner.
13

In its Order
14
dated September 28, 2000, the RTC indefinitely postponed the pre-trial
until it has resolved petitioners Motion for Summary Judgment. In the same Order, the
RTC directed the counsels of both parties to submit their memoranda, including
supporting affidavits and other documents within 30 days.
Petitioner submitted its Memorandum
15
on October 26, 2000; while respondents,
following several motions for extension of time, filed their Memorandum
16
on November
22, 2000. In their Memorandum, respondents additionally alleged that:
The cellsite base station is powered by a roaring 25 KVA power generator. Operated 24
hours since it started more than a month ago, it has sent "jackhammers into the brains"
of all the inhabitants nearby. Everyone is going crazy. A resident just recently operated
for breast cancer is complaining that the noise emanating from the generator is fast
tracking her appointment with death. She can no longer bear the unceasing and
irritating roar of the power generator.
For this, the residents, led by the respondents, sought a noise emission test of the
power generator of petitioner SMART Communications with the DENR. The test was
conducted on November 14 and 15, 2000 and the result shows that the petitioners
power generator failed the noise emission test, day and night time. Result of this test
was furnished the Municipal Mayor of Roxas, Isabela (See Communication of DENR
Regional Director Lorenzo C. Aguiluz to Mayor Benedicto Calderon dated November 16,
2000 and the Inspection Monitoring Report).
With these findings, the power generator is also a nuisance. It must also be abated.
17

On January 16, 2001, the RTC issued its Order granting petitioners Motion for
Summary Judgment and dismissing respondents Complaint. The RTC ruled as follows:
What is of prime importance is the fact that contrary to the respondents speculation,
the radio frequency radiation as found out by the Department of Health is much lower
compared to that of TV and radio broadcast. The respondents counter to this claim is
that the Department of Health was misled. This is a mere conclusion of the
respondents.
The respondents in opposing the Smarts construction of their cellsite is anchored on
the supposition that the operation of said cellsite tower would pose a great hazard to
the health of the alleged cluster of residents nearby and the perceived danger that the
said tower might also collapse in case of a strong typhoon that fell the Mobiline Cellsite
tower of Mobiline (sic). The structured built of the Smarts Cellsite tower is similar to
that of the Mobiline.
Now, as to the Courts assessment of the circumstances obtaining, we find the claim of
the respondents to be highly speculative, if not an isolated one. Elsewhere, we find
several cellsite towers scattered (sic) allover, both of the Smart, Globe, and others, nay
even in thickly populated areas like in Metro Manila and also in key cities nationwide,
yet they have not been outlawed or declared nuisance as the respondents now want
this Court to heed. To the thinking of the Court, the respondents are harping imagined
perils to their health for reason only known to them perhaps especially were we to
consider that the Brgy. Captain of Vira earlier gave its imprimatur to this project.
Noteworthy is the fact that the alleged cluster of residential houses that abut the
cellsite tower in question might be endangered thereby, the respondents are but a few
of those residents. If indeed, all those residents in Vira were adversely affected for the
perceived hazards posed by the tower in question, they should also have been joined in
as respondents in a class suit. The sinister motive is perhaps obvious.
All the foregoing reasons impel this Court to grant the petitioners motion for the
dismissal of the complaint, the perceived dangers being highly speculative without any
bases in fact. Allegations in the complaint being more imaginary than real, do not
constitute factual bases to require further proceeding or a trial. As to the claim that
there is no certification or clearance from the DENR for the petitioner to lay in wait
before the construction, suffice it to say that no action as yet has been taken by said
office to stop the ongoing operation of said cellsite now in operation. There has been
no hue and cry from among the greater majority of the people of Roxas, Isabela,
against it. Al contrario, it is most welcome to them as this is another landmark towards
the progress of this town.
18

The dispositive portion of the RTC Order reads:
WHEREFORE, in view of the foregoing considerations, the Court hereby renders
judgment dismissing the complaint as the allegations therein are purely speculative and
hence no basis in fact to warrant further proceedings of this case.
The Court finds no compelling grounds to award damages.
Without costs.
19

In another Order
20
dated February 27, 2001, the RTC denied respondents Motion for
Reconsideration.
Respondents filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No.
71337.
The Court of Appeals rendered its Decision on July 16, 2004. The appellate court
declared the cellular base station of petitioner a nuisance that endangered the health
and safety of the residents of Barangay Vira, Roxas, Isabela because: (1) the locational
clearance granted to petitioner was a nullity due to the lack of approval by majority of
the actual residents of the
barangay and a barangay resolution endorsing the construction of the cellular base
station; and (2) the sound emission of the generator at the cellular base station
exceeded the Department of Environment and Natural Resources (DENR) standards.
Consequently, the Court of Appeals decreed:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. A new one is
entered declaring the communications tower or base station of petitioner Smart
Communications, Inc. located at Brigido Pascual Street in Vira, Municipality of Roxas,
Province of Isabela, a nuisance. Petitioner is ordered to cease and desist from operating
the said tower or station.
21

Petitioner filed its Motion for Reconsideration arguing that: (1) the basis for the
judgment of the appellate court that the cellular base station was a nuisance had been
extinguished as the generator subject of the Complaint was already removed; and (2)
there had been substantial compliance in securing all required permits for the cellular
base station.
22

The Court of Appeals, in a Resolution dated December 9, 2004,refused to reconsider its
earlier Decision, reasoning that:
Petitioner principally anchors its pleas for reconsideration on the Certification issued by
Roxas, Isabela Municipal Engineer Virgilio Batucal, declaring that upon actual
inspection, no Denyo Generator Set has been found in the companys cell site in Roxas,
Isabela. We hold, however, that the certification dated August 12, 2004, taken on its
own, does not prove Smarts allegation that it has abandoned using diesel- powered
generators since January 2002. Respondents current photographs of the cell site clearly
shows (sic) that Smart continues to use a mobile generator emitting high level of noise
and fumes.
We have gone over [petitioners] other arguments and observed that they are merely
repetitive of previous contentions which we have judiciously ruled upon.
23
(Citations
omitted.)
Petitioner seeks recourse from the Court through the instant Petition, assigning the
following errors on the part of the Court of Appeals:
21.0 The Court of Appeals erred when it encroached upon an executive function
of determining the validity of a locational clearance when it declared, contrary to
the administrative findings of the Housing Land Use and Regulatory Board
("HLURB"), that the locational clearance of Petitioner was void.
22.0 The Court of Appeals erred when it resolved an issue that was not
submitted to it for resolution and in the process had usurped a purely executive
function.
23.0 The Court of Appeals erred in declaring Petitioners entire base station a
nuisance considering that it was only a small part of the base station, a
generator that initially powered the base station, that was reportedly producing
unacceptable levels of noise.
24.0 The Court of Appeals erred in not considering that the supervening event of
shut down and pull out of the generator in the base station, the source of the
perceived nuisance, made the complaint for abatement of nuisance academic.
24

The Petition is partly meritorious. While the Court agrees that the Court of Appeals
should not have taken cognizance of the issue of whether the locational clearance for
petitioners cellular base station is valid, the Court will still not reinstate the RTC Order
dated January 16, 2001 granting petitioners Motion for Summary Judgment and
entirely dismissing Civil Case No. Br. 23-632-2000. The issues of (1) whether
petitioners cellular base station is a nuisance, and (2) whether the generator at
petitioners cellular base station is, by itself, also a nuisance, ultimately involve disputed
or contested factual matters that call for the presentation of evidence at a full-blown
trial.
On the finding of the Court of
Appeals that petitioners locational
clearance for its cellular base station
is a nullity
Based on the principle of exhaustion of administrative remedies and its corollary
doctrine of primary jurisdiction, it was premature for the Court of Appeals to take
cognizance of and rule upon the issue of the validity or nullity of petitioners locational
clearance for its cellular base station.
The principle of exhaustion of administrative remedies and the doctrine of primary
jurisdiction were explained at length by the Court in Province of Zamboanga del Norte
v. Court of Appeals,
25
as follows:
The Court in a long line of cases has held that before a party is allowed to seek the
intervention of the courts, it is a pre-condition that he avail himself of all administrative
processes afforded him. Hence, if a remedy within the administrative machinery can be
resorted to by giving the administrative officer every opportunity to decide on a matter
that comes within his jurisdiction, then such remedy must be exhausted first before the
court's power of judicial review can be sought. The premature resort to the court is
fatal to one's cause of action. Accordingly, absent any finding of waiver or estoppel, the
case may be dismissed for lack of cause of action.
The doctrine of exhaustion of administrative remedies is not without its practical and
legal reasons. Indeed, resort to administrative remedies entails lesser expenses and
provides for speedier disposition of controversies. Our courts of justice for reason of
comity and convenience will shy away from a dispute until the system of administrative
redress has been completed and complied with so as to give the administrative agency
every opportunity to correct its error and to dispose of the case.
x x x x
The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence.
We have held that while the administration grapples with the complex and multifarious
problems caused by unbridled exploitation of our resources, the judiciary will stand
clear. A long line of cases establishes the basic rule that the court will not interfere in
matters which are addressed to the sound discretion of government agencies entrusted
with the regulation of activities coming under the special technical knowledge and
training of such agencies.
In fact, a party with an administrative remedy must not merely initiate the prescribed
administrative procedure to obtain relief, but also pursue it to its appropriate conclusion
before seeking judicial intervention. The underlying principle of the rule on exhaustion
of administrative remedies rests on the presumption that when the administrative body,
or grievance machinery, is afforded a chance to pass upon the matter, it will decide the
same correctly. (Citations omitted.)
The Court again discussed the said principle and doctrine in Addition Hills Mandaluyong
Civic & Social Organization, Inc. v. Megaworld Properties & Holdings, Inc., et al.,
26
citing
Republic v. Lacap,
27
to wit:
We have consistently declared that the doctrine of exhaustion of administrative
remedies is a cornerstone of our judicial system. The thrust of the rule is that courts
must allow administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence. The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the
speedier resolution of controversies. Comity and convenience also impel courts of
justice to shy away from a dispute until the system of administrative redress has been
completed.
In the case of Republic v. Lacap, we expounded on the doctrine of exhaustion of
administrative remedies and the related doctrine of primary jurisdiction in this wise:
The general rule is that before a party may seek the intervention of the court, he
should first avail of all the means afforded him by administrative processes. The issues
which administrative agencies are authorized to decide should not be summarily taken
from them and submitted to a court without first giving such administrative agency the
opportunity to dispose of the same after due deliberation.
Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of
primary jurisdiction; that is, courts cannot or will not determine a controversy involving
a question which is within the jurisdiction of the administrative tribunal prior to the
resolution of that question by the administrative tribunal, where the question demands
the exercise of sound administrative discretion requiring the special knowledge,
experience and services of the administrative tribunal to determine technical and
intricate matters of fact. (Citations omitted.)
The Housing and Land Use Regulatory Board (HLURB)
28
is the planning, regulatory, and
quasi-judicial instrumentality of government for land use development.
29
In the exercise
of its mandate to ensure rational land use by regulating land development, it issued
HLURB Resolution No.R-626, series of 1998, Approving the Locational Guidelines for
Base Stations of Cellular Mobile Telephone Service, Paging Service, Trunking Service,
Wireless Loop Service and Other Wireless Communication Services (HLURB Guidelines).
Said HLURB Guidelines aim to protect" providers and users, as well as the public in
general while ensuring efficient and responsive communication services."
Indeed, the HLURB Guidelines require the submission of several documents for the
issuance of a locational clearance for a cellular base station, including:
IV. Requirements and Procedures in Securing Locational Clearance
A. The following documents shall be submitted in duplicate:
x x x x
g. Written Consent:
g.1 Subdivisions
x x x x
g. 1.2 In the absence of an established Homeowners Association, consent/affidavit of
non-objection from majority of actual occupants and owners of properties within a
radial distance equivalent to the height of the proposed base station measured from its
base, including all those whose properties is adjoining the proposed site of the base
station.(Refer to Figure 2)
x x x x
h. Barangay Council Resolution endorsing the base station.
Correlatively, the HLURB provides administrative remedies for non-compliance with its
requirements.
In 2000, when factual precedents to the instant case began to take place, HLURB
Resolution No. R-586, series of 1996, otherwise known as the 1996 HLURB Rules of
Procedure, as amended, was in effect. The original 1996 HLURB Rules of Procedure was
precisely amended by HLURB Resolution No. R-655, series of 1999, "so as to afford
oppositors with the proper channel and expeditious means to ventilate their objections
and oppositions to applications for permits, clearances and licenses, as well as to
protect the rights of applicants against frivolous oppositions that may cause undue
delay to their projects. "Under the 1996 HLURB Rules of Procedure, as amended, an
opposition to an application for a locational clearance for a cellular base station or a
complaint for the revocation of a locational clearance for a cellular base station already
issued, is within the original jurisdiction of the HLURB Executive Committee. Relevant
provisions read:
RULE III
Commencement of Action, Summons and Answer
x x x x
SECTION 2. Opposition to Application for Permit/License/ Clearance. When an
opposition is filed to an application for a license, permit or clearance with the Board or
any of its Regional Field Office, the Regional Officer shall make a preliminary evaluation
and determination whether the case is impressed with significant economic, social,
environmental or national policy implications. If he/she determines that the case is so
impressed with significant economic, social, environmental or national policy
implications, such as, but not limited to:
1) Projects of national significance, for purposes of this rule, a project is of
national significance if it is one or falls under any of those enumerated in Rule
III, Section 3 of these Rules, as amended;
2) Those involving zoning variances and exceptions;
3) Those involving significant public interest or policy issues;
4) Those endorsed by the zoning administrators of local government units.
The Regional Officer shall cause the records of the case to be transmitted to the
Executive Committee which shall assume original jurisdiction over the case, otherwise,
the Regional Officer shall act on and resolve the Opposition.
SECTION 3. A project is of national significance if it involves any of the following:
a) Power generating plants (e.g., coal-fired thermal plants)and related facilities
(e.g., transmission lines);
b) Airport/seaports; dumping sites/sanitary landfills; reclamation projects;
c) Large-scale piggery and poultry projects;
d) Mining/quarrying projects;
e) National government centers;
f) Golf courses;
g) Fish ponds and aqua culture projects;
h) Cell sites and telecommunication facilities;
i) Economic zones, regional industrial centers, regional agro-industrial centers,
provincial industrial centers;
j) All other industrial activities classified as high-intensity uses (1-3 Projects).
SECTION 4. Any party aggrieved, by reason of the elevation or non-elevation of any
contested application by the Regional Officer, may file a verified petition for review
thereof within thirty (30) days from receipt of the notice of elevation or non-elevation of
the contested application with the Executive Committee which shall resolve whether it
shall assume jurisdiction thereon.
The contested application for clearance, permit or license shall be treated as a
complaint and all other provisions of these rules on complaints not inconsistent with the
preceding section shall, as far as practicable, be made applicable to oppositions except
that the decision of the Board en banc on such contested applications shall be final and
executory as provided in Rule XIX, Section 2 of these Rules, as amended.
The Rules pertaining to contested applications for license, permit or clearance shall, by
analogy, apply to cases filed primarily for the revocation thereof.
x x x x
RULE XVII
Proceedings Before the Board of Commissioners
x x x x
SECTION 15. The Executive Committee. The Executive Committee shall be composed
of the four regular Commissioners and the Ex-Officio Commissioner from the
Department of Justice.
x x x x
The Executive Committee shall act for the Board on policy matters, measures or
proposals concerning the management and substantive administrative operations of the
Board subject to ratification by the Board en banc, and shall assume original jurisdiction
over cases involving opposition to an application for license, permit or clearance for
projects or cases impressed with significant economic, social, environmental or national
policy implications or issues in accordance with Section 2, Rule II of these Rules, as
amended. It shall also approve the proposed agenda of the meetings of the Board en
banc. (Emphases supplied.)
After the HLURB Executive Committee had rendered its Decision, the aggrieved party
could still avail itself of a system of administrative appeal, also provided in the 1996
HLURB Rules of Procedure, as amended:
RULE XII
Petition for Review
SECTION 1. Petition for Review. Any party aggrieved by the Decision of the Regional
Officer, on any legal ground and upon payment of the review fee may file with the
Regional Office a verified Petition for Review of such decision within thirty (30) calendar
days from receipt thereof.
In cases decided by the Executive Committee pursuant to Rule II, Section 2 of these
Rules, as amended, the verified Petition shall be filed with the Executive Committee
within thirty (30) calendar days from receipt of the Committees Decision. Copy of such
petition shall be furnished the other party and the Board of Commissioners. No motion
for reconsideration or mere notice of petition for review of the decision shall be
entertained.
Within ten (10) calendar days from receipt of the petition, the Regional Officer, or the
Executive Committee, as the case may be, shall elevate the records to the Board of
Commissioner together with the summary of proceedings before the Regional Office.
The Petition for Review of a decision rendered by the Executive Committee shall
betaken cognizance of by the Board en banc.
RULE XVIII
Appeal from Board Decisions
SECTION 1.
Motion for Reconsideration. Within the period for filing an appeal from a Board
decision, order or ruling of the Board of Commissioners, any aggrieved party may file a
motion for reconsideration with the Board only on the following grounds: (1) serious
errors of law which would result in grave injustice if not corrected; and (2) newly
discovered evidence.
Only one (1) motion for reconsideration shall be entertained.
Motions for reconsideration shall be assigned to the division from which the decision,
order or ruling originated.
SECTION 2. Appeal. Any party may upon notice to the Board and the other party
appeal a decision rendered by the Board of Commissioners en banc or by one of its
divisions to the Office of the President within fifteen (15) calendar days from receipt
thereof, in accordance with P.D. No. 1344 and A.O. No. 18 Series of 1987.
RULE XIX
Entry of Judgment
x x x x
SECTION 2. Rules on Finality. For purposes of determining when a decision or order
has become final and executory for purposes of entry in the Book of Judgment, the
following shall be observed:
a. Unless otherwise provided in a decision or resolution rendered by the Regional
Officer, the Executive Committee, or the Board of Commissioners, as the case may be,
the orders contained therein shall become final as regards a party thirty (30) calendar
days after the date of receipt thereof and no petition for review or appeal therefrom
has been filed within the said period. (Emphases supplied.)
There is no showing that respondents availed themselves of the afore-mentioned
administrative remedies prior to instituting Civil Case No. Br. 23-632-2000 before the
RTC. While there are accepted exceptions to the principle of exhaustion of
administrative remedies and the doctrine of primary jurisdiction,
30
respondents never
asserted nor argued any of them. Thus, there is no cogent reason for the Court to apply
the exceptions instead of the general rule to this case.
Ordinarily, failure to comply with the principle of exhaustion of administrative remedies
and the doctrine of primary jurisdiction will result in the dismissal of the case for lack of
cause of action. However, the Court herein will not go to the extent of entirely
dismissing Civil Case No. Br. 23-632-2000. The Court does not lose sight of the fact that
respondents Complaint in Civil Case No. Br. 23-632-2000 is primarily for abatement of
nuisance; and respondents alleged the lack of HLURB requirements for the cellular base
station, not to seek nullification of petitioners locational clearance, but to support their
chief argument that said cellular base station is a nuisance which needs to be abated.
The issue of whether or not the locational clearance for said cellular base station is valid
is actually separate and distinct from the issue of whether or not the cellular base
station is a nuisance; one is not necessarily determinative of the other. While the first is
within the primary jurisdiction of the HLURB and, therefore, premature for the courts to
rule upon in the present case, the latter is within the jurisdiction of the courts to
determine but only after trial proper.
On the declaration of the Court of
Appeals that petitioners cellular
base station is a nuisance that must
be abated
Article 694 of the Civil Code defines nuisance as:
ART. 694. A nuisance is any act, omission, establishment, business, condition of
property, or anything else which:
(1) Injures or endangers the health or safety of others; or
(2) Annoys or offends the senses; or
(3) Shocks, defies or disregards decency or morality; or
(4) Obstructs or interferes with the free passage of any public highway or street,
or any body of water; or
(5) Hinders or impairs the use of property.
The term "nuisance" is so comprehensive that it has been applied to almost all ways
which have interfered with the rights of the citizens, either in person, property, the
enjoyment of his property, or his comfort.
31

The Court, in AC Enterprises, Inc. v. Frabelle Properties Corporation,
32
settled that a
simple suit for abatement of nuisance, being incapable of pecuniary estimation, is
within the exclusive jurisdiction of the RTC. Although respondents also prayed for
judgment for moral and exemplary damages, attorneys fees, and litigation expenses,
such claims are merely incidental to or as a consequence of, their principal relief.
Nonetheless, while jurisdiction over respondents Complaint for abatement of nuisance
lies with the courts, the respective judgments of the RTC and the Court of Appeals
cannot be upheld.
At the outset, the RTC erred in granting petitioners Motion for Summary Judgment and
ordering the dismissal of respondents Complaint in Civil Case No. Br. 23-632-2000.
Summary judgments are governed by Rule 35 of the Rules of Court, pertinent
provisions of which state:
SEC. 2. Summary judgment for defending party. A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any
time, move with supporting affidavits, depositions or admissions for a summary
judgment in his favor as to all or any part thereof.
SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten (10)
days before the time specified for the hearing. The adverse party may serve opposing
affidavits, depositions, or admissions at least three (3) days before the hearing. After
the hearing, the judgment sought shall be rendered forthwith if the pleadings,
supporting affidavits, depositions, and admissions on file, show that, except as to the
amount of damages, there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law. (Emphases supplied.)
In Rivera v. Solidbank Corporation,
33
the Court discussed extensively when a summary
judgment is proper:
For a summary judgment to be proper, the movant must establish two requisites: (a)
there must be no genuine issue as to any material fact, except for the amount of
damages; and (b) the party presenting the motion for summary judgment must be
entitled to a judgment as a matter of law. Where, on the basis of the pleadings of a
moving party, including documents appended thereto, no genuine issue as to a material
fact exists, the burden to produce a genuine issue shifts to the opposing party. If the
opposing party fails, the moving party is entitled to a summary judgment.
A genuine issue is an issue of fact which requires the presentation of evidence as
distinguished from an issue which is a sham, fictitious, contrived or a false claim.
The trial court can determine a genuine issue on the basis of the pleadings, admissions,
documents, affidavits or counter affidavits submitted by the parties. When the facts as
pleaded appear uncontested or undisputed, then there is no real or genuine issue or
question as to any fact and summary judgment called for. On the other hand, where
the facts pleaded by the parties are disputed or contested, proceedings for a summary
judgment cannot take the place of a trial. The evidence on record must be viewed in
light most favorable to the party opposing the motion who must be given the benefit of
all favorable inferences as can reasonably be drawn from the evidence.
Courts must be critical of the papers presented by the moving party and not of the
papers/documents in opposition thereto. Conclusory assertions are insufficient to raise
an issue of material fact. A party cannot create a genuine dispute of material fact
through mere speculations or compilation of differences. He may not create an issue of
fact through bald assertions, unsupported contentions and conclusory statements. He
must do more than rely upon allegations but must come forward with specific facts in
support of a claim. Where the factual context makes his claim implausible, he must
come forward with more persuasive evidence demonstrating a genuine issue for trial.
(Emphases supplied; citations omitted.)
Judging by the aforequoted standards, summary judgment cannot be rendered in this
case as there are clearly factual issues disputed or contested by the parties. As
respondents correctly argued in their Opposition to petitioners Motion for Summary
Judgment:
1. Contrary to the claim of petitioner, there are several genuine issues as to the cause
of action and material facts related to the complaint. For one there is an issue on the
structural integrity of the tower, the ultra high frequency (UHF) radio wave emission
radiated by the communications tower affecting the life, health and well being of
the[respondents] and the barangay residents, especially their children. Also, the
noxious/deleterious fumes and the noise produce[d] by the standby generator and the
danger posted by the tower if it collapses in regard to life and limb as well as the
property of the [respondents] particularly those whose houses abut, or are near/within
the periphery of the communications tower. x x x
34

Likewise constituting real or genuine issues for trial, which arose from subsequent
events, are the following: whether the generator subject of respondents Complaint had
been removed; whether said generator had been replaced by another that produces as
much or even more noise and fumes; and whether the generator is a nuisance that can
be abated separately from the rest of the cellular base station.
Furthermore, the Court demonstrated in AC Enterprises, Inc. the extensive factual
considerations of a court before it can arrive at a judgment in an action for abatement
of nuisance:
Whether or not noise emanating from a blower of the air conditioning units of the Feliza
Building is nuisance is to be resolved only by the court in due course of
proceedings.1wphi1 The plaintiff must prove that the noise is a nuisance and the
consequences thereof. Noise is not a nuisance per se. It may be of such a character as
to constitute a nuisance, even though it arises from the operation of a lawful business,
only if it affects injuriously the health or comfort of ordinary people in the vicinity to an
unreasonable extent. Injury to a particular person in a peculiar position or of especially
sensitive characteristics will not render the noise an actionable nuisance. In the
conditions of present living, noise seems inseparable from the conduct of many
necessary occupations. Its presence is a nuisance in the popular sense in which that
word is used, but in the absence of statute, noise becomes actionable only when it
passes the limits of reasonable adjustment to the conditions of the locality and of the
needs of the maker to the needs of the listener. What those limits are cannot be fixed
by any definite measure of quantity or quality; they depend upon the circumstances of
the particular case. They may be affected, but are not controlled, by zoning ordinances.
The delimitation of designated areas to use for manufacturing, industry or general
business is not a license to emit every noise profitably attending the conduct of any one
of them.
The test is whether rights of property, of health or of comfort are so injuriously affected
by the noise in question that the sufferer is subjected to a loss which goes beyond the
reasonable limit imposed upon him by the condition of living, or of holding property, in
a particular locality in fact devoted to uses which involve the emission of noise although
ordinary care is taken to confine it within reasonable bounds; or in the vicinity of
property of another owner who, though creating a noise, is acting with reasonable
regard for the rights of those affected by it.
Commercial and industrial activities which are lawful in themselves may become
nuisances if they are so offensive to the senses that they render the enjoyment of life
and property uncomfortable. The fact that the cause of the complaint must be
substantial has often led to expressions in the opinions that to be a nuisance the noise
must be deafening or loud or excessive and unreasonable. The determining factor when
noise alone is the cause of complaint is not its intensity or volume. It is that the noise is
of such character as to produce actual physical discomfort and annoyance to a person
of ordinary sensibilities, rendering adjacent property less comfortable and valuable. If
the noise does that it can well be said to be substantial and unreasonable in degree,
and reasonableness is a question of fact dependent upon all the circumstances and
conditions. There can be no fixed standard as to what kind of noise constitutes a
nuisance.
The courts have made it clear that in every case the question is one of reasonableness.
What is a reasonable use of ones property and whether a particular use is an
unreasonable invasion of anothers use and enjoyment of his property so as to
constitute a nuisance cannot be determined by exact rules, but must necessarily
depend upon the circumstances of each case, such as locality and the character of the
surroundings, the nature, utility and social value of the use, the extent and nature of
the harm involved, the nature, utility and social value of the use or enjoyment invaded,
and the like.
Persons who live or work in thickly populated business districts must necessarily endure
the usual annoyances and of those trades and businesses which are properly located
and carried on in the neighborhood where they live or work. But these annoyances and
discomforts must not be more than those ordinarily to be expected in the community or
district, and which are incident to the lawful conduct of such trades and businesses. If
they exceed what might be reasonably expected and cause unnecessary harm, then the
court will grant relief.
A finding by the LGU that the noise quality standards under the law have not been
complied with is not a prerequisite nor constitutes indispensable evidence to prove that
the defendant is or is not liable for a nuisance and for damages. Such finding is merely
corroborative to the testimonial and/or other evidence to be presented by the parties.
The exercise of due care by the owner of a business in its operation does not constitute
a defense where, notwithstanding the same, the business as conducted, seriously
affects the rights of those in its vicinity.
35
(Citations omitted.)
A reading of the RTC Order dated January 16, 2001 readily shows that the trial court
did not take into account any of the foregoing considerations or tests before summarily
dismissing Civil Case No. Br. 23-632-2000. The reasoning of the RTC that similar cellular
base stations are scattered in heavily populated areas nationwide and are not declared
nuisances is unacceptable. As to whether or not this specific cellular base station of
petitioner is a nuisance to respondents is largely dependent on the particular factual
circumstances involved in the instant case, which is exactly why a trial for threshing out
disputed or contested factual issues is indispensable. Evidently, it was the RTC which
engaged in speculations and unsubstantiated conclusions.
For the same reasons cited above, without presentation by the parties of evidence on
the contested or disputed facts, there was no factual basis for declaring petitioner's
cellular base station a nuisance and ordering petitioner to cease and desist from
operating the same.
Given the equally important interests of the parties in this case, i.e., on one hand,
respondents' health, safety, and property, and on the other, petitioner's business
interest and the public's need for accessible and better cellular mobile telephone
services, the wise and prudent course to take is to remand the case to the RTC for trial
and give the parties the opportunity to prove their respective factual claims.
WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED. The
Decision dated July 16, 2004 and Resolution dated December 9, 2004 of the Court of
Appeals in CA-G.R. CV No. 71337 are REVERSED and SET ASIDE. Let the records of the
case be REMANDED to the Regional Trial Court, Branch 23, of Roxas, Isabela, which is
DIRECTED to reinstate Civil Case No. Br. 23-632-2000 to its docket and proceed with
the trial and adjudication thereof with appropriate dispatch in accordance with this
Decision.
SO ORDERED.




FIRST DIVISION
G.R. No. 166836 September 4, 2013
SAN MIGUEL PROPERTIES, INC., PETITIONER,
vs.
SEC. HERNANDO B. PEREZ, ALBERT C. AGUIRRE, TEODORO B. ARCENAS, JR.,
MAXY S. ABAD, JAMES G. BARBERS, STEPHEN N. SARINO, ENRIQUE N.
ZALAMEA, JR., MARIANO M. MARTIN, ORLANDO O. SAMSON, CATHERINE R.
AGUIRRE, AND ANTONIO V. AGCAOILI, RESPONDENTS.
D E C I S I O N
BERSAMIN, J.:
The pendency of an administrative case for specific performance brought by the buyer
of residential subdivision lots in the Housing and Land Use Regulatory Board (HLURB) to
compel the seller to deliver the transfer certificates of title (TCTs) of the fully paid lots is
properly considered a ground to suspend a criminal prosecution for violation of Section
25 of Presidential Decree No. 957
1
on the ground of a prejudicial question. The
administrative determination is a logical antecedent of the resolution of the criminal
charges based on non-delivery of the TCTs.
Antecedents
Petitioner San Miguel Properties Inc. (San Miguel Properties), a domestic corporation
engaged in the real estate business, purchased in 1992, 1993 and April 1993 from B.F.
Homes, Inc. (BF Homes), then represented by Atty. Florencio B. Orendain (Orendain) as
its duly authorized rehabilitation receiver appointed by the Securities and Exchange
Commission (SEC),
2
130 residential lots situated in its subdivision BF Homes Paraaque,
containing a total area of 44,345 square meters for the aggregate price of
P106,248,000.00. The transactions were embodied in three separate deeds of sale.
3

The TCTs covering the lots bought under the first and second deeds were fully
delivered to San Miguel Properties, but 20 TCTs covering 20 of the 41 parcels of land
with a total area of 15,565 square meters purchased under the third deed of sale,
executed in April 1993 and for which San Miguel Properties paid the full price of
P39,122,627.00, were not delivered to San Miguel Properties.
On its part, BF Homes claimed that it withheld the delivery of the 20 TCTs for parcels of
land purchased under the third deed of sale because Atty. Orendain had ceased to be
its rehabilitation receiver at the time of the transactions after being meanwhile replaced
as receiver by FBO Network Management, Inc. on May 17, 1989 pursuant to an order
from the SEC.
4

BF Homes refused to deliver the 20 TCTs despite demands. Thus, on August 15, 2000,
San Miguel Properties filed a complaint-affidavit in the Office of the City Prosecutor of
Las Pias City (OCP Las Pias) charging respondent directors and officers of BF Homes
with non-delivery of titles in violation of Section 25, in relation to Section 39, both of
Presidential Decree No. 957 (I.S. No. 00-2256).
5

At the same time, San Miguel Properties sued BF Homes for specific performance in the
HLURB (HLURB Case No. REM-082400-11183),
6
praying to compel BF Homes to release
the 20 TCTs in its favor.
In their joint counter-affidavit submitted in I.S. No. 00-2256,
7
respondent directors and
officers of BF Homes refuted San Miguel Properties assertions by contending that: (a)
San Miguel Properties claim was not legally demandable because Atty. Orendain did not
have the authority to sell the 130 lots in 1992 and 1993 due to his having been
replaced as BF Homes rehabilitation receiver by the SEC on May 17, 1989; (b) the
deeds of sale conveying the lots were irregular for being undated and unnotarized; (c)
the claim should have been brought to the SEC because BF Homes was under
receivership; (d) in receivership cases, it was essential to suspend all claims against a
distressed corporation in order to enable the receiver to effectively exercise its powers
free from judicial and extra-judicial interference that could unduly hinder the rescue of
the distressed company; and (e) the lots involved were under custodia legis in view of
the pending receivership proceedings, necessarily stripping the OCP Las Pias of the
jurisdiction to proceed in the action.
On October 10, 2000, San Miguel Properties filed a motion to suspend proceedings in
the OCP Las Pias,
8
citing the pendency of BF Homes receivership case in the SEC. In
its comment/opposition, BF Homes opposed the motion to suspend. In the meantime,
however, the SEC terminated BF Homes receivership on September 12, 2000,
prompting San Miguel Properties to file on October 27, 2000 a reply to BF Homes
comment/opposition coupled with a motion to withdraw the sought suspension of
proceedings due to the intervening termination of the receivership.
9

On October 23, 2000, the OCP Las Pias rendered its resolution,
10
dismissing San
Miguel Properties criminal complaint for violation of Presidential Decree No. 957 on the
ground that no action could be filed by or against a receiver without leave from the SEC
that had appointed him; that the implementation of the provisions of Presidential
Decree No. 957 exclusively pertained under the jurisdiction of the HLURB; that there
existed a prejudicial question necessitating the suspension of the criminal action until
after the issue on the liability of the distressed BF Homes was first determined by the
SEC en banc or by the HLURB; and that no prior resort to administrative jurisdiction had
been made; that there appeared to be no probable cause to indict respondents for not
being the actual signatories in the three deeds of sale.
On February 20, 2001, the OCP Las Pias denied San Miguel Properties motion for
reconsideration filed on November 28, 2000, holding that BF Homes directors and
officers could not be held liable for the non-delivery of the TCTs under Presidential
Decree No. 957 without a definite ruling on the legality of Atty. Orendains actions; and
that the criminal liability would attach only after BF Homes did not comply with a
directive of the HLURB directing it to deliver the titles.
11

San Miguel Properties appealed the resolutions of the OCP Las Pias to the Department
of Justice (DOJ), but the DOJ Secretary denied the appeal on October 15, 2001,
holding:
After a careful review of the evidence on record, we find no cogent reason to disturb
the ruling of the City Prosecutor of Las Pias City. Established jurisprudence supports
the position taken by the City Prosecutor concerned.
There is no dispute that aside from the instant complaint for violation of PD 957, there
is still pending with the Housing and Land Use Resulatory Board (HLURB, for short) a
complaint for specific performance where the HLURB is called upon to inquire into, and
rule on, the validity of the sales transactions involving the lots in question and entered
into by Atty. Orendain for and in behalf of BF Homes.
As early as in the case of Solid Homes, Inc. vs. Payawal, 177 SCRA 72, the Supreme
Court had ruled that the HLURB has exclusive jurisdiction over cases involving real
estate business and practices under PD 957. This is reiterated in the subsequent cases
of Union Bank of the Philippines versus HLURB, G.R. [No.] 953364, June 29, 1992 and
C.T. Torres Enterprises vs. Hilionada, 191 SCRA 286.
The said ruling simply means that unless and until the HLURB rules on the validity of
the transactions involving the lands in question with specific reference to the capacity of
Atty. Orendain to bind BF Homes in the said transactions, there is as yet no basis to
charge criminally respondents for non-delivery of the subject land titles. In other words,
complainant cannot invoke the penal provision of PD 957 until such time that the
HLURB shall have ruled and decided on the validity of the transactions involving the lots
in question.
WHEREFORE, the appeal is hereby DENIED.
SO ORDERED.
12
(Emphasis supplied)
The DOJ eventually denied San Miguel Properties motion for reconsideration.
13

Ruling of the CA
Undaunted, San Miguel Properties elevated the DOJs resolutions to the CA on certiorari
and mandamus (C.A.-G.R. SP No. 73008), contending that respondent DOJ Secretary
had acted with grave abuse in denying their appeal and in refusing to charge the
directors and officers of BF Homes with the violation of Presidential Decree No. 957.
San Miguel Properties submitted the issue of whether or not HLURB Case No. REM-
082400-11183 presented a prejudicial question that called for the suspension of the
criminal action for violation of Presidential Decree No. 957.
In its assailed decision promulgated on February 24, 2004 in C.A.-G.R. SP No. 73008,
14

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

The CA denied San Miguel Properties motion for reconsideration on January 18, 2005.
16

Issues
Aggrieved, San Miguel Properties is now on appeal, raising the following for
consideration and resolution, to wit:
THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE ERRORS
WHEN IT DISMISSED PETITIONERS CERTIORARI AND MANDAMUS PETITION TO
ORDER AND DIRECT RESPONDENT SECRETARY TO INDICT RESPONDENTS FOR
VIOLATION OF SECTION 25, PD. 957 IN THAT:
THE OBLIGATION OF PRIVATE RESPONDENTS TO DELIVER TO PETITIONER THE
TITLES TO 20 FULLY-PAID LOTS IS MANDATED BY SECTION 25, PD 957. IN FACT, THE
OFFICE OF THE PRESIDENT HAD DULY CONFIRMED THE SAME PER ITS DECISION
DATED 27 JANUARY 2005 IN O.P. CASE NO. 03-E-203, ENTITLED "SMPI V. BF HOMES,
INC.".
A FORTIORI, PRIVATE RESPONDENTS FAILURE AND/OR REFUSAL TO DELIVER TO
PETITIONER THE SUBJECT TITLES CONSTITUTES CRIMINAL OFFENSE PER SECTIONS
25 AND 39, PD 957 FOR WHICH IT IS THE MINISTERIAL DUTY OF RESPONDENT
SECRETARY TO INDICT PRIVATE RESPONDENTS THEREFOR.
IN ANY EVENT, THE HLURB CASE DOES NOT PRESENT A "PREJUDICIAL QUESTION"
TO THE SUBJECT CRIMINAL CASE SINCE THE FORMER INVOLVES AN ISSUE SEPARATE
AND DISTINCT FROM THE ISSUE INVOLVED IN THE LATTER. CONSEQUENTLY, THE
HLURB CASE HAS NO CORRELATION, TIE NOR LINKAGE TO THE PRESENT CRIMINAL
CASE WHICH CAN PROCEED INDEPENDENTLY THEREOF.
IN FACT, THE CRIMINAL CULPABILITY OF PRIVATE RESPONDENTS EMANATE FROM
THEIR MALA PROHIBITA NON-DELIVERY OF THE TITLES TO TWENTY (20) FULLY-PAID
PARCELS OF LAND TO PETITIONER, AND NOT FROM THEIR NON-COMPLIANCE WITH
THE HLURBS RULING IN THE ADMINISTRATIVE CASE.
NONETHELESS, BY DECREEING THAT PETITIONERS CRIMINAL COMPLAINT IS
PREMATURE, BOTH THE COURT OF APPEALS AND RESPONDENT SECRETARY HAD
IMPLIEDLY ADMITTED THE EXISTENCE OF SUFFICIENT PROBABLE CAUSE AGAINST
PRIVATE RESPONDENTS FOR THE CRIME CHARGED.
17

It is relevant at this juncture to mention the outcome of the action for specific
performance and damages that San Miguel Properties instituted in the HLURB
simultaneously with its filing of the complaint for violation of Presidential Decree No.
957. On January 25, 2002, the HLURB Arbiter ruled that the HLURB was inclined to
suspend the proceedings until the SEC resolved the issue of Atty. Orendains authority
to enter into the transactions in BF Homes behalf, because the final resolution by the
SEC was a logical antecedent to the determination of the issue involved in the
complaint before the HLURB. Upon appeal, the HLURB Board of Commissioners (HLURB
Board), citing the doctrine of primary jurisdiction, affirmed the HLURB Arbiters decision,
holding that although no prejudicial question could arise, strictly speaking, if one case
was civil and the other administrative, it nonetheless opted to suspend its action on the
cases pending the final outcome of the administrative proceeding in the interest of good
order.
18

Not content with the outcome, San Miguel Properties appealed to the Office of the
President (OP), arguing that the HLURB erred in suspending the proceedings. On
January 27, 2004, the OP reversed the HLURB Boards ruling, holding thusly:
The basic complaint in this case is one for specific performance under Section 25 of the
Presidential Decree (PD) 957 "The Subdivision and Condominium Buyers Protective."
As early as August 1987, the Supreme Court already recognized the authority of the
HLURB, as successor agency of the National Housing Authority (NHA), to regulate,
pursuant to PD 957, in relation to PD 1344, the real estate trade, with exclusive original
jurisdiction to hear and decide cases "involving specific performance of contractual and
statutory obligation filed by buyers of subdivision lots against the owner, developer,
dealer, broker or salesman," the HLURB, in the exercise of its adjudicatory powers and
functions, "must interpret and apply contracts, determine the rights of the parties under
these contracts and award[s] damages whenever appropriate."
Given its clear statutory mandate, the HLURBs decision to await for some forum to
decide if ever one is forthcoming the issue on the authority of Orendain to dispose
of subject lots before it peremptorily resolves the basic complaint is unwarranted, the
issues thereon having been joined and the respective position papers and the evidence
of the parties having been submitted. To us, it behooved the HLURB to adjudicate, with
the usual dispatch, the right and obligation of the parties in line with its own
appreciation of the obtaining facts and applicable law. To borrow from Mabubha Textile
Mills Corporation vs. Ongpin, it does not have to rely on the finding of others to
discharge this adjudicatory functions.
19

After its motion for reconsideration was denied, BF Homes appealed to the CA (C.A.-
G.R. SP No. 83631), raising as issues: (a) whether or not the HLURB had the
jurisdiction to decide with finality the question of Atty. Orendains authority to enter into
the transaction with San Miguel Properties in BF Homes behalf, and rule on the rights
and obligations of the parties to the contract; and (b) whether or not the HLURB
properly suspended the proceedings until the SEC resolved with finality the matter
regarding such authority of Atty. Orendain.
The CA promulgated its decision in C.A.-G.R. SP No. 83631,
20
decreeing that the
HLURB, not the SEC, had jurisdiction over San Miguel Properties complaint. It affirmed
the OPs decision and ordered the remand of the case to the HLURB for further
proceedings on the ground that the case involved matters within the HLURBs
competence and expertise pursuant to the doctrine of primary jurisdiction, viz:
[T]he High Court has consistently ruled that the NHA or the HLURB has jurisdiction over
complaints arising from contracts between the subdivision developer and the lot buyer
or those aimed at compelling the subdivision developer to comply with its contractual
and statutory obligations.
Hence, the HLURB should take jurisdiction over respondents complaint because it
pertains to matters within the HLURBs competence and expertise. The proceedings
before the HLURB should not be suspended.
While We sustain the Office of the President, the case must be remanded to the
HLURB. This is in recognition of the doctrine of primary jurisdiction. The fairest and
most equitable course to take under the circumstances is to remand the case to the
HLURB for the proper presentation of evidence.
21

Did the Secretary of Justice commit grave abuse of discretion in upholding the dismissal
of San Miguel Properties criminal complaint for violation of Presidential Decree No. 957
for lack of probable cause and for reason of a prejudicial question?
The question boils down to whether the HLURB administrative case brought to compel
the delivery of the TCTs could be a reason to suspend the proceedings on the criminal
complaint for the violation of Section 25 of Presidential Decree No. 957 on the ground
of a prejudicial question.
Ruling of the Court
The petition has no merit.
1.
Action for specific performance, even if pending in the HLURB, an administrative
agency, raises a prejudicial question BF Homes posture that the administrative case for
specific performance in the HLURB posed a prejudicial question that must first be
determined before the criminal case for violation of Section 25 of Presidential Decree
No. 957 could be resolved is correct.
A prejudicial question is understood in law to be that which arises in a case the
resolution of which is a logical antecedent of the issue involved in the criminal case, and
the cognizance of which pertains to another tribunal. It is determinative of the criminal
case, but the jurisdiction to try and resolve it is lodged in another court or tribunal. It is
based on a fact distinct and separate from the crime but is so intimately connected with
the crime that it determines the guilt or innocence of the accused.
22
The rationale
behind the principle of prejudicial question is to avoid conflicting decisions.
23
The
essential elements of a prejudicial question are provided in Section 7, Rule 111 of the
Rules of Court, to wit: (a) the previously instituted civil action involves an issue similar
or intimately related to the issue raised in the subsequent criminal action, and (b) the
resolution of such issue determines whether or not the criminal action may proceed.
The concept of a prejudicial question involves a civil action and a criminal case. Yet,
contrary to San Miguel Properties submission that there could be no prejudicial
question to speak of because no civil action where the prejudicial question arose was
pending, the action for specific performance in the HLURB raises a prejudicial question
that sufficed to suspend the proceedings determining the charge for the criminal
violation of Section 25
24
of Presidential Decree No. 957. This is true simply because the
action for specific performance was an action civil in nature but could not be instituted
elsewhere except in the HLURB, whose jurisdiction over the action was exclusive and
original.
25

The determination of whether the proceedings ought to be suspended because of a
prejudicial question rested on whether the facts and issues raised in the pleadings in
the specific performance case were so related with the issues raised in the criminal
complaint for the violation of Presidential Decree No. 957, such that the resolution of
the issues in the former would be determinative of the question of guilt in the criminal
case. An examination of the nature of the two cases involved is thus necessary.
An action for specific performance is the remedy to demand the exact performance of a
contract in the specific form in which it was made, or according to the precise terms
agreed upon by a party bound to fulfill it.
26
Evidently, before the remedy of specific
performance is availed of, there must first be a breach of the contract.
27
The remedy
has its roots in Article 1191 of the Civil Code, which reads:
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible. x x x
(Emphasis supplied)
Accordingly, the injured party may choose between specific performance or rescission
with damages. As presently worded, Article 1191 speaks of the remedy of rescission in
reciprocal obligations within the context of Article 1124 of the former Civil Code which
used the term resolution. The remedy of resolution applied only to reciprocal
obligations, such that a partys breach of the contract equated to a tacit resolutory
condition that entitled the injured party to rescission. The present article, as in the
former one, contemplates alternative remedies for the injured party who is granted the
option to pursue, as principal actions, either the rescission or the specific performance
of the obligation, with payment of damages in either case.
28

On the other hand, Presidential Decree No. 957 is a law that regulates the sale of
subdivision lots and condominiums in view of the increasing number of incidents
wherein "real estate subdivision owners, developers, operators, and/or sellers have
reneged on their representations and obligations to provide and maintain properly" the
basic requirements and amenities, as well as of reports of alarming magnitude of
swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators,
29
such as failure to deliver titles to the buyers or
titles free from liens and encumbrances. Presidential Decree No. 957 authorizes the
suspension and revocation of the registration and license of the real estate subdivision
owners, developers, operators, and/or sellers in certain instances, as well as provides
the procedure to be observed in such instances; it prescribes administrative fines and
other penalties in case of violation of, or non-compliance with its provisions.
Conformably with the foregoing, the action for specific performance in the HLURB
would determine whether or not San Miguel Properties was legally entitled to demand
the delivery of the remaining 20 TCTs, while the criminal action would decide whether
or not BF Homes directors and officers were criminally liable for withholding the 20
TCTs. The resolution of the former must obviously precede that of the latter, for should
the HLURB hold San Miguel Properties to be not entitled to the delivery of the 20 TCTs
because Atty. Orendain did not have the authority to represent BF Homes in the sale
due to his receivership having been terminated by the SEC, the basis for the criminal
liability for the violation of Section 25 of Presidential Decree No. 957 would evaporate,
thereby negating the need to proceed with the criminal case.
Worthy to note at this juncture is that a prejudicial question need not conclusively
resolve the guilt or innocence of the accused. It is enough for the prejudicial question
to simply test the sufficiency of the allegations in the information in order to sustain the
further prosecution of the criminal case. A party who raises a prejudicial question is
deemed to have hypothetically admitted that all the essential elements of the crime
have been adequately alleged in the information, considering that the Prosecution has
not yet presented a single piece of evidence on the indictment or may not have rested
its case. A challenge to the allegations in the information on the ground of prejudicial
question is in effect a question on the merits of the criminal charge through a non-
criminal suit.
30

2.
Doctrine of primary jurisdiction is applicable
That the action for specific performance was an administrative case pending in the
HLURB, instead of in a court of law, was of no consequence at all. As earlier mentioned,
the action for specific performance, although civil in nature, could be brought only in
the HLURB. This situation conforms to the doctrine of primary jurisdiction. There has
been of late a proliferation of administrative agencies, mostly regulatory in function. It
is in favor of these agencies that the doctrine of primary jurisdiction is frequently
invoked, not to defeat the resort to the judicial adjudication of controversies but to rely
on the expertise, specialized skills, and knowledge of such agencies in their resolution.
The Court has observed that one thrust of the proliferation is that the interpretation of
contracts and the determination of private rights under contracts are no longer a
uniquely judicial function exercisable only by the regular courts.
31

The doctrine of primary jurisdiction has been increasingly called into play on matters
demanding the special competence of administrative agencies even if such matters are
at the same time within the jurisdiction of the courts. A case that requires for its
determination the expertise, specialized skills, and knowledge of some administrative
board or commission because it involves technical matters or intricate questions of fact,
relief must first be obtained in an appropriate administrative proceeding before a
remedy will be supplied by the courts although the matter comes within the jurisdiction
of the courts. The application of the doctrine does not call for the dismissal of the case
in the court but only for its suspension until after the matters within the competence of
the administrative body are threshed out and determined.
32

To accord with the doctrine of primary jurisdiction, the courts cannot and will not
determine a controversy involving a question within the competence of an
administrative tribunal, the controversy having been so placed within the special
competence of the administrative tribunal under a regulatory scheme. In that instance,
the judicial process is suspended pending referral to the administrative body for its view
on the matter in dispute. Consequently, if the courts cannot resolve a question that is
within the legal competence of an administrative body prior to the resolution of that
question by the latter, especially where the question demands the exercise of sound
administrative discretion requiring the special knowledge, experience, and services of
the administrative agency to ascertain technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the purposes of the regulatory statute
administered, suspension or dismissal of the action is proper.
33

3.
Other submissions of petitioner are unwarranted
It is not tenable for San Miguel Properties to argue that the character of a violation of
Section 25 of Presidential Decree No. 957 as malum prohibitum, by which criminal
liability attached to BF Homes directors and officers by the mere failure to deliver the
TCTs, already rendered the suspension unsustainable.
34
The mere fact that an act or
omission was malum prohibitum did not do away with the initiative inherent in every
court to avoid an absurd result by means of rendering a reasonable interpretation and
application of the procedural law. Indeed, the procedural law must always be given a
reasonable construction to preclude absurdity in its application.
35
Hence, a literal
application of the principle governing prejudicial questions is to be eschewed if such
application would produce unjust and absurd results or unreasonable consequences.
San Miguel Properties further submits that respondents could not validly raise the
prejudicial question as a reason to suspend the criminal proceedings because
respondents had not themselves initiated either the action for specific performance or
the criminal action.1wphi1 It contends that the defense of a prejudicial question
arising from the filing of a related case could only be raised by the party who filed or
initiated said related case.
The submission is unfounded. The rule on prejudicial question makes no distinction as
to who is allowed to raise the defense. Ubi lex non distinguit nec nos distinguere
debemos. When the law makes no distinction, we ought not to distinguish.
36

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




EN BANC
G.R. No. 209185 October 25, 2013
MARC DOUGLAS IV C. CAGAS, Petitioner,
vs.
COMMISSION ON ELECTIONS represented by its CHAIRMAN ATTY. SIXTO
BRILLANTES JR. and the PROVINCIAL ELECTION OFFICER OF DAVAO DEL
SUR, represented by ATTY. MA. FEBES BARLAAN, Respondents.
R E S O L U T I O N
CARPIO, J.:
This Resolution resolves the Petition for Prohibition,
1
filed by Marc Douglas IV C. Cagas
(Cagas), in his capacity as taxpayer, to prohibit the Commission on Elections
(COMELEC) from conducting a plebiscite for the creation of the province of Davao
Occidental simultaneously with the 28 October 2013 Barangay Elections within the
whole province of Davao del Sur, except in Davao City.
Cagas, while he was representative of the first legislative district of Davao del Sur, filed
with Hon. Franklin Bautista, then representative of the second legislative district of the
same province, House Bill No. 4451 (H.B. No. 4451), a bill creating the province of
Davao Occidental. H.B. No. 4451 was signed into law as Republic Act No. 10360 (R.A.
No. 10360), the Charter of the Province of Davao Occidental.
Sections 2 and 7 of R.A. No. 10360 provide for the composition of the new provinces of
Davao Occidental and Davao del Sur:
Sec. 2. Province of Davao Occidental. There is hereby created a new province from
the present Province of Davao del Sur to be known as the Province of Davao
Occidental, consisting of the municipalities of Sta. Maria, Malita, Don Marcelino, Jose
Abad Santos and Sarangani. The territorial jurisdiction of the Province of Davao
Occidental shall be within the present metes and bounds of all the municipalities that
comprise the Province of Davao Occidental.
x x x x
Sec. 7. Legislative District. The Province of Davao Occidental shall have its own
legislative district to commence in the next national and local elections after the
effectivity of this Charter. Henceforth, the municipalities of Sta. Maria, Malita, Don
Marcelino, Jose Abad Santos and Sarangani shall comprise the Lone Legislative District
of the Province of Davao Occidental while the City of Digos and the municipalities of
Malalag, Sulop, Kiblawan, Padada, Hagonoy, Sta. Cruz, Matanao, Bansalan and
Magsaysay shall comprise the Lone Legislative District of the Province of Davao del Sur.
x x x x
Section 46 of R.A. No. 10360 provides for the date of the holding of a plebiscite.
Sec. 46. Plebiscite. The Province of Davao Occidental shall be created, as provided for
in this Charter, upon approval by the majority of the votes cast by the voters of the
affected areas in a plebiscite to be conducted and supervised by the Commission on
Elections (COMELEC) within sixty (60) days from the date of the effectivity of this
Charter.
The amount necessary for the conduct of the plebiscite shall be borne by the COMELEC.
R.A. No. 10360 was passed by the House of Representatives on 28 November 2012,
and by the Senate on 5 December 2012. President Benigno S. Aquino III approved R.A.
No. 10360 on 14 January 2013.
2
R.A. No. 10360 was published in the Philippine Star
and the Manila Bulletin only on 21 January 2013. Considering that R.A. No. 10360 shall
take effect 15 days after its publication in at least two newspapers of general and local
circulation,
3
COMELEC, therefore, only had until 6 April 2013 to conduct the plebiscite.
4

As early as 27 November 2012, prior to the effectivity of R.A. No. 10360, the COMELEC
suspended the conduct of all plebiscites as a matter of policy and in view of the
preparations for the 13 May 2013 National and Local Elections.
5
On 9 July 2013, the
COMELEC extended
the policy on suspension of the holding of plebiscites by resolving to defer action on the
holding of all plebiscites until after the 28 October 2013 Barangay Elections.
6
During a
meeting held on 31 July 2013, the COMELEC decided to hold the plebiscite for the
creation of Davao Occidental simultaneously with the 28 October 2013 Barangay
Elections to save on expenses
7
. The COMELEC, in Minute Resolution No. 13-0926,
approved the conduct of the Concept of Execution for the conduct of the plebiscite on 6
August 2013.
8
On 14 August 2013, Bartolome J. Sinocruz, Jr., the Deputy Executive
Director for Operations of the COMELEC, issued a memorandum furnishing a copy of
Minute Resolution No. 13-0926 to Atty. Remlane M. Tambuang, Regional Election
Director of Region XI; Atty. Ma. Febes M. Barlaan, Provincial Election Supervisor of
Davao del Sur; and to all election officers of Davao del Sur. On 6 September 2013, the
COMELEC promulgated Resolution Nos. 9771
9
and 9772.
10
Resolution No. 9771
provided for the following calendar of activities:
DATE/PERIOD ACTIVITIES PROHIBITED ACTS
SEPT. 09, 2013
(MON)
Last day to constitute the
Plebiscite Board of Canvassers

SEPT. 28, 2013
(SAT) NOV. 12,
2013 (TUE) (30
DAYS BEFORE THE
DATE OF
PLEBISCITE AND
15 DAYS
THEREAFTER
PLEBISCITE PERIOD Bearing, carrying or
transporting firearms or
other deadly weapons in
public places, including
any building, street, park,
private vehicle or public
conveyance, or even if
licensed to possess or
carry the same, unless
authorized in writing by
the Commission (Sec. 261
(p) (q) OEC, as amended
by Sec. 32, RA 7166);
Suspension of local
elective officials (Sec. 261
(x), OEC); Transfer of
officers and employees in
the civil service (Sec. 261
(h), OEC);
Alteration of territory of a
precinct or establishment
of a new precinct (Sec. 5,
R.A. 8189)
Organizing or maintaining
reaction/strike forces or
similar forces (Sec. 261,
(u), OEC);
Illegal release of prisoners
(Sec. 261 (n), OEC);
Use of security personnel
or bodyguards by
candidates, whether or not
such bodyguards are
regular members or
officers of the Philippine
National Police or Armed
Forces of the Philippines
or other law enforcement
agency (Sec. 261 (t), OEC,
as amended by Sec. 33,
RA 7166);
1
Release, disbursement or
expenditures of public
funds (Sec. 261 (v),
OEC);Construction of
public works, delivery of
materials for public works
and issuance of treasury
warrants or similar devices
for a future undertaking
chargeable against public
funds (Sec. 261, (w) OEC).
SEPTEMBER 28,
2013 (SAT) to
OCTOBER 26, 2013
(SAT)
INFORMATIONCAMPAIGN
PERIOD
Making any donation or
gift in cash or in kind, etc.
(Sec. 104, OEC);Use of
armored/ land/ water/ air
craft. (Sec. 261 (r),
OEC);Appointing or using
special policemen, special/
confidential agents or the
like. (Sec. 261 (m), OEC);
SEPTEMBER 28,
2013 (SAT) to
OCTOBER 28, 2013
(MON)
Issuance of appointments,
promotions, creation of
new positions, or giving of
salary increases.
OCTOBER 27, 2013
(SUN)
EVE OF PLEBISCITE DAY Campaigning (Sec. 3,
OEC);
Giving, accepting free
transportation, foods,
drinks, and things of value
(Sec. 89, OEC);
Selling, furnishing,
offering, buying, serving
or taking intoxicating
liquor (Sec. 261 (dd), (1),
OEC).(NOTE: Acts
mentioned in the three (3)
preceding paragraphs are
prohibited until election
day.)
OCTOBER 28, 2013
(MON)
PLEBISCITE DAYCasting of
votes- (from 7:00 a.m. to 3:00
p.m. simultaneous with the
voting for the Barangay and SK
Elections)Counting of votes shall
be after the counting of votes for
Barangay and SK
Elections)Convening of the City
Plebiscite Board of Canvassers
(6:00 p.m.)
Vote-buying and vote
selling (Sec. 261 (a),
OEC);Voting more than
once or in substitution of
another (Sec. 261 (z) (2)
and (3),
OEC);Campaigning (Sec.
3, OEC);Soliciting votes or
undertaking any
propaganda for or against
any candidate or any
political party within the
polling place or within
thirty (30) meters thereof
(Sec. 261 (cc) (6),
OEC);Selling, furnishing,
offering, buying, serving
or taking intoxicating
liquor, etc. (Sec. 261 (dd)
(1), OEC);Opening of
booths or stalls for the
sale, etc., of wares,
merchandise or
refreshments, within thirty
(30) meters radius from
the polling place. (Sec.
261 (dd) (2) OEC);Giving
and/or accepting free
transportation, food,
drinks and things of value
(Sec. 89, OEC);Holding of
fairs, cockfights, boxing,
horse races or similar
sports. (Sec. 261 (dd) (3),
OEC).
Resolution No. 9772, on the other hand, provided that copies of R.A. No. 10360 be
posted
11
and that information campaigns be conducted prior to the plebiscite.
12

On 9 October 2013, Cagas filed the present petition for prohibition. Cagas cites three
causes of action:
1. COMELEC is without authority or legal basis to AMEND or MODIFY Section 46 of
Republic Act No. 10360 by mere MINUTE RESOLUTION because it is only CONGRESS
who can validly amend, repel [sic] or modify existing laws, thus COMELEC [sic] act in
suspending the holding of a plebiscite is unconstitutional;
13

2. COMELEC is without authority or legal basis to hold a plebiscite this coming October
28, 2013 for the creation of the Province of Davao Occidental because Section 46 of
Republic Act No. 10360 has already lapsed;
14
and
3. Petitioner has no other adequate remedy to prevent the COMELEC from holding the
Plebiscite on October 28, 2013 for the creation of the Province of Davao Occidental
except through the issuance of Temporary Restraining Order and Preliminary Injunction
because COMELEC had already commenced the preparation for holding of the Plebiscite
for the creation of the Province of Davao Occidental synchronizing it with that of the
Barangay and SK elections this coming October 28, 2013.
15

On 17 October 2013, we issued a Resolution requiring respondents COMELEC,
represented by its Chairperson, Hon. Sixto Brillantes, Jr., and the Provincial Election
Officer of Davao del Sur, represented by Atty. Ma. Febes Barlaan, to file their comment
to Cagas petition not later than 21 October 2013.
The respondents, through the Office of the Solicitor General (OSG), filed their comment
on 21 October 2013. The OSG raises the following arguments:
1. The 1987 Constitution does not fix the period to hold a plebiscite for the
creation of a local government unit;
2. There was logistical and financial impossibility for the COMELEC to hold a
plebiscite at a mere two months notice;
3. Legislative intent is for R.A. No. 10360 to be implemented;
4. Public interest demands that the plebiscite be conducted; and
5. The COMELEC did not abuse its discretion in issuing the questioned
Resolutions.
16

In this Resolution, we simplify the issues raised by the parties, thus: Did the COMELEC
act without or in excess of its jurisdiction or with grave abuse of discretion amounting
to lack or excess of jurisdiction when it resolved to hold the plebiscite for the creation of
the Province of Davao Occidental on 28 October 2013, simultaneous with the Barangay
Elections?
We answer in the negative.
The COMELECs power to administer elections
includes the power to conduct a plebiscite beyond the schedule
prescribed by law.
The conduct of a plebiscite is necessary for the creation of a province. Sections 10 and
11 of Article X of the Constitution provide that:
Sec. 10. No province, city, municipality, or barangay may be created, divided, merged,
abolished, or its boundary substantially altered, except in accordance with the criteria
established in the local government code and subject to approval by a majority of the
votes cast in a plebiscite in the political units directly affected.
Sec. 11. The Congress may, by law, create special metropolitan political subdivisions,
subject to a plebiscite as set forth in Section 10 hereof. The component cities and
municipalities shall retain their basic autonomy and shall be entitled to their own local
executive and legislative assemblies. The jurisdiction of the metropolitan authority that
will thereby be created shall be limited to basic services requiring coordination. Section
10, Article X of the Constitution emphasizes the direct exercise by the people of their
sovereignty. After the legislative branchs enactment of a law to create, divide, merge
or alter the boundaries of a local government unit or units, the people in the local
government unit or units directly affected vote in a plebiscite to register their approval
or disapproval of the change.
17

The Constitution does not specify a date as to when plebiscites should be held. This is
in contrast with its provisions for the election of members of the legislature in Section 8,
Article VI
18
and of the President and Vice-President in Section 4, Article VII.
19
The
Constitution recognizes that the power to fix the date of elections is legislative in
nature, which is shown by the exceptions in previously mentioned Constitutional
provisions, as well as in the election of local government officials.
20

Section 10 of R.A. No. 7160 furnishes the general rule as to when a plebiscite may be
held:
Sec. 10. Plebiscite Requirement. No creation, division, merger, abolition, or
substantial alteration of boundaries of local government units shall take effect unless
approved by a majority of the votes cast in a plebiscite called for the purpose in the
political unit or units directly affected. Said plebiscite shall be conducted by the
Commission on Elections (COMELEC) within one hundred twenty (120) days from the
date of effectivity of the law or ordinance effecting such action, unless said law or
ordinance fixed another date.
Section 46 of R.A. No. 10360, however, specifically provides that the plebiscite for the
creation of the province of Davao Occidental be held within 60 days from the effectivity
of R.A. No. 10360, or until 6 April 2013.
21
Cagas claims that R.A. No. 10360 "did not
confer express or implied power to COMELEC to exercise discretion when the plebiscite
for the creation of the Province of Davao Occidental will be held. On the contrary, said
law provides a specific period when the COMELEC should conduct a plebiscite."
22
Cagas
views the period "60 days from the effectivity" in R.A. No. 10360 as absolute and
mandatory; thus, COMELEC has no legal basis to hold a plebiscite on 28 October 2013.
The Constitution, however, grants the COMELEC the power to "enforce and administer
all laws and regulations relative to the conduct of an election, plebiscite, initiative,
referendum and recall."
23
The COMELEC has "exclusive charge of the enforcement and
administration of all laws relative to the conduct of elections for the purpose of ensuring
free, orderly and honest elections."
24
The text and intent of Section 2(1) of Article IX(C)
is to give COMELEC "all the necessary and incidental powers for it to achieve the
objective of holding free, orderly, honest, peaceful and credible elections."
25

Sections 5 and 6 of Batas Pambansa Blg. 881 (B.P. Blg. 881) the Omnibus Election
Code, provide the COMELEC the power to set elections to another date.
Sec. 5. Postponement of election.- When for any serious cause such as violence,
terrorism, loss or destruction of election paraphernalia or records, force majeure, and
other analogous causes of such a nature that the holding of a free, orderly and honest
election should become impossible in any political subdivision, the Commission, motu
proprio or upon a verified petition by any interested party, and after due notice and
hearing, whereby all interested parties are afforded equal opportunity to be heard, shall
postpone the election therein to a date which should be reasonably close to the date of
the election not held, suspended or which resulted in a failure to elect but not later than
thirty days after the cessation of the cause for such postponement or suspension of the
election or failure to elect.
Sec. 6. Failure of election. - If, on account of force majeure, violence, terrorism, fraud,
or other analogous causes the election in any polling place has not been held on the
date fixed, or had been suspended before the hour fixed by law for the closing of the
voting, or after the voting and during the preparation and the transmission of the
election returns or in the custody or canvass thereof, such election results in a failure to
elect, and in any of such cases the failure or suspension of election would affect the
result of the election, the Commission shall, on the basis of a verified petition by any
interested party and after due notice and hearing, call for the holding or continuation of
the election not held, suspended or which resulted in a failure to elect on a date
reasonably close to the date of the election not held, suspended or which resulted in a
failure to elect but not later than thirty days after the cessation of the cause of such
postponement or suspension of the election or failure to elect.
The tight time frame in the enactment, signing into law, and effectivity of R.A. No.
10360 on 5 February 2013, coupled with the subsequent conduct of the National and
Local Elections on 13 May 2013 as mandated by the Constitution, rendered impossible
the holding of a plebiscite for the creation of the province of Davao Occidental on or
before 6 April 2013 as scheduled in R.A. No. 10360. We also take judicial notice of the
COMELECs burden in the accreditation and registration of candidates for the Party-List
Elections.
26
The logistic and financial impossibility of holding a plebiscite so close to the
National and Local Elections is unforeseen and unexpected, a cause analogous to force
majeure and administrative mishaps covered in Section 5 of B.P. Blg. 881. The
COMELEC is justified, and did not act with grave abuse of discretion, in postponing the
holding of the plebiscite for the creation of the province of Davao Occidental to 28
October 2013 to synchronize it with the Barangay Elections.
The OSG illustrated the COMELECs predicament in this manner:
To be sure, at the time R.A. No. 10360 was approved, the COMELEC had to deliver and
accomplish the following, among many others, for the May 2013 National and Local
Elections:
1. Preparation of the Project of Precincts indicating the total number of
established precincts and the number of registered voters per precincts [sic] in a
city or municipality.
2. Constitution of the Board of Election Inspectors including the precincts where
they will be assigned and the barangay where the precinct is located.
3. Inspection, verification and sealing of the Book of Voters containing the
approved voter registration records of registered voters in the particular precinct
which must be inspected, verified, and sealed.
4. Finalization and printing of the computerized voters list for use on election
day.
5. The preparation, bidding, printing and distribution of the voters information.
6. Configuration, testing, and demonstration of the PCOS machines and their
distribution to the different precincts.
To comply with the 60-day period to conduct the plebiscite then, as insisted, petitioner
would have the COMELEC hold off all of its above tasks. If COMELEC abandoned any of
its tasks or did not strictly follow the timetable for the accomplishment of these tasks
then it could have put in serious jeopardy the conduct of the May 2013 National and
Local Elections. The COMELEC had to focus all its attention and concentrate all its
manpower and other resources on its preparation for the May 2013 National and Local
Elections, and to ensure that it would not be derailed, it had to defer the conduct of all
plebiscites including that of R.A. No. 10360.
Parenthetically, for the COMELEC to hold the plebiscite for the ratification of R.A. No.
10360 within the fixed period, it would have to reconfigure for said purpose some of the
PCOS machines that were already configured for the May 2013 National and Local
Elections; or in the alternative, conduct the plebiscite manually.
However, conducting the plebiscite manually would require another set of ballots and
other election paraphernalia. Besides, another set of election materials would also
require additional logistics for printing, checking, packing, and deployment thereof. Lest
it be forgotten, that all of these things should undergo public bidding.
Since the plebiscite would be a separate undertaking, the COMELEC would have to
appoint separate sets of boards of election inspectors, tellers, and other personnel to
canvass the result of the plebiscite all of which would have entailed further cost for
the COMELEC whose budget had already been overly stretched to cover the May 2013
National and Local Elections.
More importantly, it bears stressing that the COMELEC was not given a special budget
to defray the cost of the plebiscite. In fact, the COMELEC had to take P11 million from
its savings and from the Barangay Elections budget to finance the plebiscite to ratify
R.A. No. 10360 on October 28, 2013.
The COMELECs questioned Resolution then directing the holding of the plebiscite for
the ratification of R.A. No. 10360 simultaneously with the Barangay Elections was not
an abuse of its discretion, as alleged, but simply an exercise of prudence, because as
the COMELEC itself noted, doing so "will entail less expense than holding it separately."
[p. 9, Resolution No. 13-0926, Annex B, Petition.]
The determination of the feasibility of holding a plebiscite on a given date is within the
competence and discretion of the COMELEC. Petitioner cannot therefore simply insist
that the COMELEC should have complied with the period specified in the law when
doing so would be virtually impossible under the circumstances.
27

This Court has rejected a too literal interpretation of election laws in favor of holding
free, orderly, honest, peaceful and credible elections.
In Pangandaman v. COMELEC,
28
Lining Pangandaman (Pangandaman) filed a petition
for certiorari and prohibition with prayer for temporary restraining order and preliminary
injunction to challenge the Omnibus Order of the COMELEC En Banc. The COMELEC En
Banc ordered the conduct of special elections in certain municipalities in Lanao del Sur
on 18 and 25 July 1998, or more than 30 days after the failure of elections on 11 May
1998. Like Cagas, Pangandaman insisted on a strict compliance with the schedule of the
holding of special elections. Pangandaman asserted that COMELECs authority to call a
special election was limited by the 30-day period and that Congress had the power to
call a special election after the 30th day. We admonished Pangandaman against a too
literal interpretation of the law, and protected COMELECs powers against the
straitjacketing by procedural rules.
It is a basic precept in statutory construction that a statute should be interpreted in
harmony with the Constitution and that the spirit, rather than the letter of the law
determines its construction; for that reason, a statute must be read according to its
spirit and intent. Thus, a too literal interpretation of the law that would lead to
absurdity prompted this Court to
x x x admonish against a too-literal reading of the law as this is apt to constrict rather
than fulfill its purpose and defeat the intention of its authors. That intention is usually
found not in the letter that killeth but in the spirit that vivifieth x x x
Section 2(1) of Article IX(C) of the Constitution gives the COMELEC the broad power to
"enforce and administer all laws and regulations relative to the conduct of an election,
plebiscite, initiative, referendum and recall." There can hardly be any doubt that the
text and intent of this constitutional provision is to give COMELEC all the necessary and
incidental powers for it to achieve the objective of holding free, orderly, honest,
peaceful and credible elections.
Pursuant to this intent, this Court has been liberal in defining the parameters of the
COMELECs powers in conducting elections. As stated in the old but nevertheless still
very much applicable case of Sumulong v. COMELEC:
Politics is a practical matter, and political questions must be dealt with realistically
not from the standpoint of pure theory. The Commission on Elections, because of its
fact-finding facilities, its contacts with political strategists, and its knowledge derived
from actual experience in dealing with political controversies, is in a peculiarly
advantageous position to decide complex political questions x x x. There are no ready
made formulas for solving public problems. Time and experience are necessary to
evolve patterns that will serve the ends of good government. In the matter of the
administration of laws relative to the conduct of election x x x we must not by any
excessive zeal take away from the Commission on Elections that initiative which by
constitutional and legal mandates properly belongs to it.
More pointedly, this Court recently stated in Tupay Loong v. COMELEC, et al., that "Our
elections are not conducted under laboratory conditions. In running for public offices,
candidates do not follow the rules of Emily Post. Too often, COMELEC has to make snap
judgments to meet unforeseen circumstances that threaten to subvert the will of our
voters. In the process, the actions of COMELEC may not be impeccable, indeed, may
even be debatable. We cannot, however, engage in a swivel chair criticism of these
actions often taken under very difficult circumstances."
The purpose of the governing statutes on the conduct of elections
x x x is to protect the integrity of elections to suppress all evils that may violate its
purity and defeat the will of the voters. The purity of the elections is one of the most
fundamental requisites of popular government. The Commission on Elections, by
constitutional mandate, must do everything in its power to secure a fair and honest
canvass of the votes cast in the elections. In the performance of its duties, the
Commission must be given a considerable latitude in adopting means and methods that
will insure the accomplishment of the great objective for which it was created to
promote free, orderly, and honest elections. The choice of means taken by the
Commission on Elections, unless they are clearly illegal or constitute grave abuse of
discretion, should not be interfered with.
Guided by the above-quoted pronouncement, the legal compass from which the
COMELEC should take its bearings in acting upon election controversies is the principle
that " clean elections control the appropriateness of the remedy."
In fixing the date for special elections the COMELEC should see to it that: 1.] it should
not be later than thirty (30) days after the cessation of the cause of the postponement
or suspension of the election or the failure to elect; and, 2.] it should be reasonably
close to the date of the election not held, suspended or which resulted in the failure to
elect.1avvphi1 The first involves a question of fact. The second must be determined in
the light of the peculiar circumstances of a case. Thus, the holding of elections within
the next few months from the cessation of the cause of the postponement, suspension
or failure to elect may still be considered "reasonably close to the date of the election
not held."
In this case, the COMELEC can hardly be faulted for tardiness. The dates set for the
special elections were actually the nearest dates from the time total/partial failure of
elections was determined, which date fell on July 14, 1998, the date of promulgation of
the challenged Omnibus Order. Needless to state, July 18 and 25, the dates chosen by
the COMELEC for the holding of special elections were only a few days away from the
time a total/partial failure of elections was declared and, thus, these were "dates
reasonably close" thereto, given the prevailing facts herein. Furthermore, it bears
stressing that in the exercise of the plenitude of its powers to protect the integrity of
elections, the COMELEC should not and must not be straitjacketed by procedural rules
in the exercise of its discretion to resolve election disputes.
29

In Sambarani v. COMELEC,
30
petitioners were candidates for punong barangay in
different barangays in Lanao del Sur. There was a failure of elections in the 15 July
2002 Synchronized Barangay and Sangguniang Kabataan (SK) Elections, and special
elections were set on 13 August 2002 in the affected barangays. No special elections
were held on 13 August 2002, so petitioners asked the COMELEC to declare a failure of
elections in their barangays and to hold another special election. The COMELEC,
however, directed the Department of Interior and Local Government to appoint the
Barangay Captains, Barangay Kagawads, SK Chairmen, and SK
Kagawads in the affected barangays. The COMELEC stated that it is no longer in a
position to call for another special election since Section 6 of the Omnibus Election Code
provides that "special elections shall be held on a date reasonably close to the date of
the election not held, but not later than thirty days after cessation of the cause of such
postponement."
We directed the COMELEC to conduct special elections and stated that the deadline
cannot defeat the right of suffrage of the people.
The prohibition on conducting special elections after thirty days from the cessation of
the cause of the failure of elections is not absolute.1wphi1 It is directory, not
mandatory, and the COMELEC possesses residual power to conduct special elections
even beyond the deadline prescribed by law. The deadline in Section 6 cannot defeat
the right of suffrage of the people as guaranteed by the Constitution. The COMELEC
erroneously perceived that the deadline in Section 6 is absolute. The COMELEC has
broad power or authority to fix other dates for special elections to enable the people to
exercise their right of suffrage. The COMELEC may fix other dates for the conduct of
special elections when the same cannot be reasonably held within the period prescribed
by law.
31

It is thus not novel for this Court to uphold the COMELECs broad power or authority to
fix other dates for a plebiscite, as in special elections, to enable the people to exercise
their right of suffrage. The COMELEC thus has residual power to conduct a plebiscite
even beyond the deadline prescribed by law. The date 28 October 2013 is reasonably
close to 6 April 2013, and there is no reason why the plebiscite should not proceed as
scheduled by the COMELEC. The OSG points out that public interest demands that the
plebiscite be conducted.
At this point, there is nothing more for the COMELEC to do except to hold the plebiscite
as scheduled on October 18, [sic] 2013. In fact, the COMELEC already scheduled the
shipment and deployment of the election paraphernalia to all the precincts in Davao del
Sur, except Davao City.
The COMELEC had put so much work and effort in its preparation for the conduct of the
plebiscite. A substantial amount of funds have also been defrayed for the following
election undertakings:
1 Bidding for election paraphernalia;
2 Cleansing of voters registration list;
3 Preparation, bidding, printing and distribution of the voters information;
4 Preparation and completion of the projects of precincts;
5 Printing of ballots;
6 Constitution of the Board of Election Inspectors;
7 Training and assignment of personnel; and
8 Information dissemination campaign.
To demand now that the COMELEC desist from holding the plebiscite would be an utter
waste of time, effort and resources, not to mention its detriment to public interest given
that public funds are involved.
32

In election law, the right of suffrage should prevail over mere scheduling mishaps in
holding elections or plebiscites. Indeed, Cagas insistence that only Congress can cure
the alleged legal infirmity in the date of holding the plebiscite for the creation of the
Province of Davao Occidental fails in light of the absence of abuse of discretion of the
COMELEC. Finally, this Court finds it unacceptable to utilize more of our taxpayers time
and money by preventing the COMELEC from holding the plebiscite as now scheduled.
WHEREFORE, we DISMISS the petition for lack of merit.
SO ORDERED.


FIRST DIVISION
G.R. No. 202847 October 23, 2013
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
vs.
ANTERO GAMEZ y BALTAZAR, Accused-Appellant.
R E S O L U T I O N
REYES, J.:
For review
1
is the Decision
2
dated May 25, 2011 of the Court of Appeals CA) in CA-G.R.
CR-H.C. No. 00671 which affirmed the Judgment
3
dated May 9, 2006 of the Regional
Trial Court RTC) of Burauen, Leyte, Branch 15 convicting and sentencing accused-
appellant Antero Gamez y Baltazar accused-appellant) to reclusion perpetua for the
crime of parricide.
The Facts
Accused-appellant was accused of killing his own father, Apolinario Gamez (Apolinario)
through an Information articulating the following criminal charges, viz:
That on or about the 21st day of August, 2004, in the Municipality of Burauen, Province
of Leyte, Philippines and within the jurisdiction of this Honorable Court, the above-
named accused, with intent to kill and with treachery, did then and there willfully,
unlawfully and feloniously attack, assault, hack and wound one APOLINARIO GAMEZ y
AMORILLO, his father, with the use of a long bladed weapon (sundang) and sickle
(sarad) which the accused provided himself for the purpose, thereby hitting and
inflicting upon Apolinario Gamez y Amorillo multiple hacking and incised wounds on the
different parts of his body which were the direct and approximate cause of his death.
CONTRARY TO LAW.
4

When arraigned, he entered a "Not Guilty" plea. He thereafter desired to amend his
plea to "Guilty" during the pre-trial conference held on September 26, 2005 but the RTC
denied the said plea bargaining. In view however of the accused-appellants invocation
of self-defense, an inverted trial scheme ensued.
5

Through the testimonies of the accused-appellant himself, Dr. Irene Astilla Dacut, his
attending physician, and eyewitness Bienvenido Buhalog, the defense narrated the
events that culminated into the encounter that claimed Apolinarios life.
6

The accused-appellant and 69-year old Apolinario had a less than ideal father and son
relationship with the former claiming that the latter did not treat him well when he was
a child. Their relationship got more strained when Apolinario meddled with the accused-
appellants personal relationship with his wife. Apolinario apparently told the accused-
appellant that his wife was being unfaithful. The unsolicited information irked the
accused-appellant.
On August 21, 2004, the accused-appellant had a drinking spree in his house at
Barangay Gamay, Burauen, Leyte, with his two brothers, Nicolas and Cornelio from 12
noon until 3:00 p.m. As he was about to go out of the kitchen door, the accused-
appellant saw Apolinario standing at the doorway with a long bolo. Apolinario appeared
to be drunk.
To prevent any commotion, Nicolas held Apolinario but he was able to free himself from
his sons grip. The accused-appellant then spoke to Apolinario: " I think that you are
looking for me and I believe it is since last night ." An argument ensued between them.
In order not to prolong the spat, the accused-appellant and his brothers took their
father to his nipa hut about 500 meters away. But before the accused-appellant could
leave, he got into another argument with Apolinario.
The accused-appellant then set out to the place where he gathered tuba while his
brothers went back to his house. After gathering tuba and tethering his carabao, the
accused-appellant proceeded home. He met Apolinario along a pathway. With no one to
pacify them, they decided to resume their quarrel.
The accused-appellant first remarked: "Father, what are the words that you uttered?"
to which Apolinario responded, "It is better if one of us will perish." Apolinario then
instantaneously hacked the accused-appellant with a long bolo hitting him twice on the
head for which he sustained a 5-centimeter long and scalp-deep incised wound with
fracture of the underlying bone and another 5-cm long incised wound on the frontal
right portion of his head.
The accused-appellant fell to his knees as Apolinario delivered another blow which the
former was able to parry by raising his left arm. The accused-appellant was wounded
on the left 3rd interdigital space posterior to his palm.
The accused-appellant then held Apolinarios hands, grabbed the bolo and used the
same to hack the latter several times, the count of which escaped the accused-
appellants consciousness as he was already dizzy. The accused-appellant thereafter left
the scene and went home. His brother brought him to the hospital upon seeing that his
head was teeming with blood. He was hospitalized for six (6) days before he was taken
to the municipal hall by the police officers.
The rebuttal evidence for the prosecution, on the other hand, principally consisted of
the testimony of Maura Anadia (Maura), Apolinarios daughter and the accused-
appellants sister. According to Maura, at around 4:30 p.m. of August 21, 2004, she was
with her father at their house located at Barangay Gamay, Burauen, Leyte when his
elder brother, the accused-appellant, arrived. He was carrying a long bolo and a scythe
was tucked on his waist.
He approached her and said: "Will you join the killing spree today including your child
that you are carrying? "before turning to Apolinario with this query: "What are the
stories that you were talking?"
Frightened, Maura ran away and hid at a grassy portion near the house. She then saw
her father flee but the accused-appellant gave him a chase. Apolinario was able to run
for about 20 m before the accused-appellant was able to catch up.
The accused-appellant then hacked the unarmed Apolinario on the right side of his
head using the bolo. Apolinario fell down and the accused-appellant finished him off by
slashing his neck with the scythe. Maura thereafter left to report the incident to the
police.
The autopsy conducted on Apolinarios cadaver by Dr. Leonita Azores, MD,
7
showed
that he sustained two (2) fatal wounds one of which almost decapitated his head while
the other hit the parietal aspect thereof exposing the skin and connective tissue.
Apolinario also obtained two (2) incised wounds on his neck and left forearm and two
(2) lacerations on his fingers. He perished at the crime scene.
8

Ruling of the RTC
In its Judgment
9
dated May 9, 2006, the RTC found that both the prosecution and the
defense deliberately withheld vital details of the incident. The prosecution did not reveal
that the initial unlawful aggression was committed by Apolinario who, based on medical
records, hacked the accused-appellant in the parietal area of his head. The defense, on
the other hand, concealed that accused-appellant pursued the victim after the latter
fled. These findings completed the sequence of the incident and revealed that the
accused-appellants claim of self-defense is unmeritorious.
The RTC held that when accused-appellant hacked and killed Apolinario, the unlawful
aggression which the latter initially perpetrated has already ceased because he has
already ran away for 20 m. Hence, accused-appellants act was not self-defense but
rather one of retaliation which, in turn, props up the conclusion that he intentionally
killed his father. The decretal portion of the RTC decision thus reads:
WHEREFORE, premises considered, this Court finds the accused ANTERO GAMEZ y
Baltazar GUILTY BEYOND REASONABLE DOUBT of the crime of Parricide penalized
under Art. 246 of the Revised Penal Code and considering the presence of one (1)
mitigating circumstance without any aggravating to offset it, hereby sentences him to
suffer imprisonment of RECLUSION PERPETUA; to pay the Heirs of Apolinario Gamez
Php50,000.00 as civil indemnity for his death and to pay the costs of this suit.
The accused who underwent preventive imprisonment since August 21, 2004 shall be
credited with the full time during which he was deprived of his liberty if he agreed
voluntarily and in writing to abide by the same disciplinary rules imposed upon
convicted prisoners, otherwise, he will be entitled to only four-fifths (4/5) thereof.
10

Ruling of the CA
The CA adopted the RTCs findings and similarly concluded that the accused-appellant
put up retaliation and not self-defense because the aggression proffered by the victim
has already ended when the accused-appellant attacked him. From the time Apolinario
ran away and was disarmed by the accused-appellant, the aggression originally heaved
by the former has ceased. Hence, when the accused-appellant chased and hacked
Apolinario several times, self-defense can no longer be invoked. The CA affirmed the
conviction and sentence rendered by the RTC as well as the award of civil indemnity but
an additional award of moral damages was granted for Apolinarios heirs. The CA
Decision
11
dated May 25, 2011 disposed thus:
WHEREFORE, in view of the foregoing premises, the assailed May 9, 2006 Decision of
the Regional Trial Court of Burauen, Leyte, Branch 15, in CRIM. CASE NO. Bn-05-03-
4125, is hereby AFFIRMED with modification. Aside from the civil indemnity already
awarded, the accused is also hereby directed to pay the heirs of Apolinario Gamez the
amount of Php50,000.00 as moral damages in accordance with the recent
jurisprudence.
No pronouncement as to cost.
SO ORDERED.
12

The accused-appellant manifested before the Court that in the present review, he is
adopting the arguments contained in his Brief filed before the CA whereby he argued
that his guilt for the crime of parricide was not proved beyond reasonable doubt and
that the trial court erred in ruling that he failed to prove self-defense.
The Courts Ruling
The Court affirms the accused-appellants conviction.
The arguments proffered by the accused-appellant essentially attack the evaluation by
the trial court of the testimony of the prosecutions principal witness, Maura, and its
ruling that the same satisfactorily repudiate his claim of self-defense.
This Court has consistently adhered to the rule that the matter of assigning values to
declarations on the witness stand is best and most competently performed by the trial
judge, who had the unmatched opportunity to observe the witnesses and to assess
their credibility by the various indicia available but not reflected on the record. Hence,
the corollary principle that absent any showing that the trial court overlooked
substantial facts and circumstances that would affect the final disposition of the case,
appellate courts are bound to give due deference and respect to its evaluation of the
credibility of an eyewitness and his testimony as well as its probative value amidst the
rest of the other evidence on record.
13

We see no compelling reason to depart from the foregoing tenets especially in view of
the accused-appellants failure to identify significant details, which if considered, will
alter the outcome of the trial courts judgment and the affirmation accorded it by the
CA. At any rate, an examination of the records at hand shows that the factual basis of
accused-appellants plea of self-defense cannot relieve him from criminal liability.
Self-defense, when invoked, as a justifying circumstance implies the admission by the
accused that he committed the criminal act.
14
Generally, the burden lies upon the
prosecution to prove the guilt of the accused beyond reasonable doubt rather than
upon the accused that he was in fact innocent. However, if the accused admits killing
the victim, but pleads self-defense, the burden of evidence is shifted to him to prove
such defense by clear, satisfactory and convincing evidence that excludes any vestige of
criminal aggression on his part.
15

In order to escape criminal liability, it becomes incumbent upon the accused to prove by
clear and convincing evidence the concurrence of the following requisites under the
second paragraph of Article 11 of the Revised Penal Code, viz: (1) unlawful aggression;
(2) reasonable necessity of the means employed to prevent or repel it; and (3) lack of
sufficient provocation on the part of the person defending himself.
16

Unlawful aggression is a condition sine qua non for the justifying circumstance of self-
defense. Without it, there can be no self-defense, whether complete or incomplete, that
can validly be invoked.
17
"There is an unlawful aggression on the part of the victim
when he puts in actual or imminent danger the life, limb, or right of the person invoking
self-defense. There must be actual physical force or actual use of a weapon."
18
It is
present only when the one attacked faces real and immediate threat to ones life. It
must be continuous; otherwise, it does not constitute aggression warranting self-
defense.
19

Here, the accused-appellant, miserably failed to discharge his burden of proving that
unlawful aggression justifying self-defense was present when he killed Apolinario.
The aggression initially staged by Apolinario was not of the continuous kind as it was no
longer present when the accused-appellant injured Apolinario. As testified by the
accused-appellant himself, he was able to grab the bolo from Apolinario. From that
point on, the aggression initially staged by Apolinario ceased to exist and the perceived
threat to the accused-appellants life was no longer attendant.
Hence, the accused-appellant was no longer acting in self-defense, when he, despite
having already disarmed Apolinario, ran after the latter for about 20 m and then
stabbed him. The accused-appellants claim of self-defense is further negated by the
fatal incision on Apolinarios neck that almost decapitated his head, a physical evidence
which corroborates Mauras testimony that after stabbing Apolinario with the bolo, the
accused-appellant pulled out the scythe on his waist and used the same to slash
Apolinarios neck. The use of a weapon different from that seized from the victim and
the nature of the injury inflicted show the accused-appellants determined resolve to kill
Apolinario.
When unlawful aggression ceases, the defender no longer has any justification to kill or
wound the original aggressor. The assailant is no longer acting in self-defense but in
retaliation against the original aggressor. Retaliation is not the same as self-defense. In
retaliation, the aggression that was begun by the injured party already ceased when the
accused attacked him; while in self-defense the aggression still existed when the
aggressor was injured by the accused.
20

The CA was thus correct in upholding the findings and conclusions of the RTC, thus:
Although, it is supported by the medical report, that the accused-appellant was indeed
initially attacked by the victim, the act of the accused-appellant of going after the
victim, who was already running away from the accused-appellant after the latter has
gained possession of the weapon, is anathema to the self-defense theory invoked by
the accused appellant.
x x x x
In the instant case, the trial court gave credence to the testimony of the prosecution
witness that the victim tried to run away from the accused-appellant but the accused-
appellant ran after him. When the accused-appellant was able to overtake the victim,
the latter was hacked on the right side of his head. To finish him off, the accused-
appellant slashed the victims neck with the use of a scythe until the victim (his own
father) died. Thus, assuming arguendo that the father was indeed the first aggressor,
the aggression ceased the moment the accused-appellant disarmed him and the victim
tried to run away from the accused-appellant. When the accused-appellant then
continued to chase his 69 year-old father and hacked several times the already
disarmed victim, self-defense can no longer be invoked.
21

In fine, there is no justifiable cause exempting the accused-appellant from criminal
liability and the courts a quo were correct in convicting him for parricide.
Parricide is committed when: (1) a person is killed; (2) the deceased is killed by the
accused; and (3) the deceased is the father, mother, or child, whether legitimate or
illegitimate, or a legitimate other ascendant or other descendant, or the legitimate
spouse of the accused.
22
Here, it is an undisputed fact that Apolinario was the accused-
appellants father.
Under Article 246 of the Revised Penal, the crime of parricide is punishable by reclusion
perpetua to death.1wphi1 It must be noted that the declaration of the RTC in its
Judgment dated May 9, 2006 on the presence of a mitigating circumstance is not
supported by any allegation or evidence on record. Nonetheless, in view of Republic Act
(R.A.) No. 9346
23
prohibiting the imposition of death penalty, the courts a quo correctly
sentenced the accused-appellant to reclusion perpetua.
24

It must be emphasized, however, that the accused-appellant shall not be eligible for
parole pursuant to Section 3 of R.A. No. 9346 which states that "persons convicted of
offenses punished with reclusion perpetua , or whose sentences will be reduced to
reclusion perpetua , by reason of this Act, shall not be eligible for parole under Act No.
4180, otherwise known as the Indeterminate Sentence Law, as amended."
25

The award of P50,000.00 as civil indemnity to the heirs of Apolinario is proper and in
line with current jurisprudence.
26
Civil indemnity is mandatory upon proof of the fact of
death of the victim and the culpability of the accused for such death.
27
The award of
P50,000.00
28
as moral damages is likewise correct. Even in the absence of any
allegation and proof of the heirs emotional suffering, it has been recognized that the
loss of a loved one to a violent death brings emotional pain and anguish.
29

The Court finds that an award of exemplary damages in the amount of P30,000.00
30
is
in order considering that the qualifying circumstance of relationship is present in the
crime of parricide.
31

Lastly, in conformity with current policy, we impose on all the monetary awards for
damages an interest at the legal rate of six percent (6%) per annum from the date of
finality of this judgment until fully paid.
32

WHEREFORE, premises considered, the Decision dated May 25, 2011 of the Court of
Appeals in CA-G.R. CR-H.C. No. 00671 finding the accused-appellant, Antero Gamez y
Baltazar, guilty beyond reasonable doubt of the crime of Parricide, is hereby AFFIRMED
WITH MODIFICATIONS. Antero Gamez y Baltazar is sentenced to suffer the penalty of
reclusion perpetua without eligibility for parole and ordered to pay the heirs of the
victim, Apolinario Gamez, the amounts of P50,000.00 as civil indemnity, P50,000.00 as
moral damages and P30,000.00 as exemplary damages. The award of damages shall
earn legal interest at the rate of six percent (6) per annum from the finality of this
judgment until fully paid.
SO ORDERED.





FIRST DIVISION
G.R. No. 198261 October 16, 2013
HECHANOVA BUGAY VILCHEZ LAWYERS, HECHANOVA & CO., INC., ATTY.
EDITHA R. HECHANOVA, Petitioners,
vs.
ATTY. LENY O. MATORRE, Respondent.
D E C I S I O N
VILLARAMA, JR., J.:
On appeal under Rule 45 is the March 14 2011 Decision
1
of the Court of Appeals CA)
which upheld the Decision
2
of the National Labor Relations Commission NLRC) that set
aside the Decision
3
of the Labor Arbiter in NLRC-NCR Case No. 09-12260-08. Likewise
challenged is the Resolution
4
denying reconsideration of the said CA decision.
The assailed CA decision upheld the finding of the NLRC that respondent Atty. Leny 0
Matorre Atty. Matorre) was constructively dismissed by petitioners Hechanova Bugay
Vilchez Lawyers HBV Law Firm), Hechanova Co., Inc. and Atty. Editha R. Hechanova
Atty. Hechanova). The Labor Arbiter, whose decision was overturned by the NLRC had
earlier dismissed the complaint filed by Atty. Matorre alleging that she was
constructively dismissed.
5

The facts follow:
Atty. Matorre claimed that on August 1, 2008, she was employed by HBV Law Firm as a
Senior Associate Attorney. Due to her work experience, her probationary period was
waived and she was immediately employed as a regular employee of the said law firm
with a monthly salary of P40,000, consultancy fee of P5,000, and an incentive pay
equivalent to 8% of P1,500 per billable hour.
6

As the managing partner of HBV Law Firm, Atty. Hechanova was the one who
supervised Atty. Matorre and gave her work assignments.
On August 11, 2008, Atty. Matorre, orally or through e-mails, started to express her
feelings of being harassed by Atty. Hechanova.
In an e-mail
7
sent to Atty. Hechanova on August 11, 2008, Atty. Matorre wrote:
Maam Edith,
I cannot register yet the corporate name of Big Flick Animation with SEC online because
the steps to be done require a lot of time and its system or our system is very slow
before I proceed to the next step [sic].
I regret to realize [sic] that you seem to be not pleased with my work output so far,
even if I am trying and doing my best to adjust with your work style here, x x x.
Honestly, I get seriously offended every time you speak to me because you always get
irritated about the things I say, that I hesitate now to approach you personally to find
out what I need to know about a certain assignment.
I feel so humiliated whenever you scold me or whenever you raise your voice within the
hearing [sic] of x x x other associate lawyers at a distance [sic]. I feel so embarrassed
because it seems that you make it appear I am so stupid x x x.
x x x x
Hoping for your understanding and I pray that you would have a not-so-stressful work
schedule, so that you can keep your cool at all times.
Thanks a lot.
Leny
Atty. Matorre also explained
8
that she intended to improve her work and that she was
not making excuses when she could not accomplish assigned tasks on time.
During a meeting between Atty. Matorre and Atty. Hechanova on August 19, 2008,
9

Atty. Matorre told Atty. Hechanova that since she (Atty. Hechanova) was not satisfied
with her work and because they were frequently arguing with each other, it would be
best if she (Atty. Matorre) resigns from the firm.
10
Atty. Matorre requested that her
resignation be made effective on September 30, 2008, but thinking that the said date
was too far off, Atty. Hechanova accepted the resignation, with the condition that it be
made effective on September 15, 2008.
11

Atty. Matorre, in her own Position Paper
12
which she submitted to the NLRC, admitted
to the fact of her resignation. She recalled the conversation between her and Atty.
Hechanova thus:
Complainant [Atty. Matorre]: Maam kung sa tingin po ninyo, wala akong ginagawa o
magagawang trabaho, kahit na kung tutuusin araw-araw akong may natatapos na
trabaho, mas mabuti pa po sigurong mag-resign na lang ho ako, kasi lagi na lang po
ninyo akong hinahanapan ng mali at kinagagalitan kahit hindi naman kailangang
pagalitan.1wphi1 Hindi po tayo nagkakasundo sa trabaho.
Respondent [Atty. Hechanova]: Okay, if that is what you like!
Complainant [Atty. Matorre]: Pero Maam kung pwede po sana sa katapusan na lang
ang effectivity, sa katapusan po ng September, kasi alanganin po kung katapusan ng
August, para may enough time pa po ako maghanap ng new job.
Respondent [Atty. Hechanova]: No, you make it earlier! Pumunta ka na ng SEC habang
maaga pa kasi almost 2:00 p.m. na!
Complainant [Atty. Matorre]: Sige po.
13

On September 1, 2008, Atty. Matorre received a letter
14
from Atty. Hechanova
conveying the latters acceptance of her oral resignation. Atty. Hechanovas secretary,
Gladies Nepomuceno, attested
15
that when Atty. Matorre received the aforementioned
letter, Atty. Matorre merely said "okay" without displaying any sign of protest.
On September 1, 2008, Atty. Matorre filed a complaint for constructive illegal dismissal,
nonpayment of separation pay, and for payment of moral and exemplary damages and
attorneys fees against HBV Law Firm.
During the mandatory conference on September 18, 2008, Atty. Matorre stated that her
demands consist of damages in the amount of P850,000 and a public apology.
16

During the conciliation conference on October 23, 2008, HBV Law Firm stated that it
has no offer for settlement.
17

On November 13, 2008, during the conciliation conference, upon previous order of the
Labor Arbiter, HBV Law Firm gave Atty. Matorres last pay, consultancy fee, and
incentive pay in the total amount of P48,492.35.
18

In a Decision
19
dated April 22, 2009, the Labor Arbiter rendered judgment in favor of
HBV Law Firm by dismissing Atty. Matorres complaint for lack of merit. It held that
Atty. Matorre voluntarily resigned from her employment on August 19, 2008, and that
Atty. Hechanova readily accepted Atty. Matorres oral resignation "when as Atty.
Matorre was in the process of orally tendering her resignation, Atty. Hechanova
intimated her intention of shortening the period of effectivity of Atty. Matorres
resignation from 30 September 2008 to 15 September 2008."
20

The Labor Arbiter cited jurisprudence stating that "once resignation is accepted, the
employee no longer has any right to the job. It, therefore, goes without saying that
resignation terminates the employer-employee relationship."
21

The Labor Arbiter also denied Atty. Matorres monetary claims since she was not
illegally dismissed, holding that these claims could not be awarded because of her
"failure to prove that she was terminated from her employment with the requisite
malice and/or bad faith."
22

On May 13, 2010, the NLRC reversed
23
the Decision of the Labor Arbiter and declared
that Atty. Matorre was illegally dismissed.
The NLRC held inter alia that a written resignation is the proper proof of her alleged
voluntary resignation.
24
The NLRC also reasoned that Atty. Hechanovas act of moving
Atty. Matorres last day of employment with HBV Law Firm from September 30, 2008 to
September 15, 2008 is an act of harassment.
25
This act, according to the NLRC, pushed
Atty. Matorre, leaving her with no other option or time to save her job or look for
another one.
26
The NLRC stated that this, along with Atty. Hechanovas refusal to give
Atty. Matorre any assignment, her assignment of a subordinate to perform Atty.
Matorres function while the latter was still in the office, Atty. Hechanovas continuing
harassment are "all clear acts constituting constructive dismissal."
27

The NLRC thus awarded to Atty. Matorre full back wages and benefits from the time of
illegal dismissal amounting to P936,000, separation pay amounting to P90,000, moral
damages amounting to P200,000, exemplary damages amounting to P100,000, and
attorneys fees equivalent to 10% of the monetary award.
28

Aggrieved, HBV Law Firm filed a petition for certiorari with the CA alleging that the
NLRC committed grave abuse of discretion in holding that Atty. Matorre was
constructively dismissed. The CA posed this query to resolve the matter: Whether Atty.
Matorres utterance during her conversation with Atty. Hechanova on August 19, 2008
constitutes voluntary resignation on her part.
29
If said resignation was a forced one, the
CA continued, it is a clear case of constructive dismissal equivalent to illegal dismissal.
30

On March 14, 2011, the CA upheld the ruling of the NLRC and held that no voluntary
resignation took place.
31
It ruled in favor of Atty. Matorre, saying that she was illegally
dismissed in light of the circumstances surrounding the supposed resignation.
32

The CA cited jurisprudence saying that constructive dismissal is a cessation of work
because continued employment has been rendered impossible, unreasonable, or
unlikely, as when there is a demotion in rank or diminution in pay or both or when a
clear discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee.
33

The CA justified the existence of constructive dismissal by arguing that first, Atty.
Hechanova belittled Atty. Matorre regarding her work performance thus causing her
emotional strain; second, when Atty. Matorre allegedly tendered her resignation, HBV
Law Firm moved the period of effectivity thereof to an earlier date, thus making it more
difficult for Atty. Matorre to find employment elsewhere; and third, the refusal of HBV
Law Firm to give assignments to Atty. Matorre while she was still at the office is
indicative of harassment on their part.
34
The CA held that all these circumstances, taken
together, constitute constructive dismissal.
35

Petitioners are now before this Court asserting that the CA erred in not finding that
Atty. Matorres resignation was voluntary and that she was not constructively dismissed.
It should be noted that the fact of resignation is now undisputed. What remains to be
determined is whether Atty. Matorre voluntarily resigned or was constructively
dismissed by petitioners.
We find the petition meritorious. The resignation of Atty. Matorre was voluntary and
she was not constructively dismissed.
Atty. Matorre failed to prove that her resignation was not voluntary, and that Atty.
Hechanova and other members of HBV Law Firm committed acts against her that would
constitute constructive dismissal.
Atty. Matorre was not able to prove her allegations of harassment, insults, and verbal
abuse on the part of Atty. Hechanova.
The case of Vicente v. Court of Appeals (Former 17th Div.)
36
is instructive on this
matter. In the case at bar and in Vicente, the fact of resignation is not disputed, but
only the voluntariness thereof. In Vicente, the employee alleged that her employer
forced her to resign. The Court held that she voluntarily resigned and was not
constructively dismissed. The Court said, Hence, petitioner cannot take refuge in the
argument that it is the employer who bears the burden of proof that the resignation is
voluntary and not the product of coercion or intimidation.
Having submitted a resignation letter, it is then incumbent upon her to prove that the
resignation was not voluntary but was actually a case of constructive dismissal with
clear, positive, and convincing evidence. Petitioner failed to substantiate her claim of
constructive dismissal.
x x x x
We agree with the Court of Appeals that it was grave error on the part of the NLRC to
rely on the allegation that Mr. Tecson threatened and forced petitioner to resign. Other
than being unsubstantiated and self-serving, the allegation does not suffice to support
the finding of force, intimidation, and ultimately constructive dismissal.
Bare allegations of constructive dismissal, when uncorroborated by the evidence on
record, cannot be given credence.
37
(Emphases supplied.)
Digitel Telecommunications Philippines, Inc. v. Soriano
38
is similarly enlightening. In
that case, the employee, a Director for Market and Communications, claimed that her
employers harassed her to compel her to resign. This Court found that the employee
failed to present a single witness to substantiate her claims of harassment and that her
narration of events was unbelievable and contrary to human experience. It was then
held that she failed to prove that she was constructively dismissed.
In relation to the two abovementioned decided cases, in the case of Atty. Matorre, she
also presented no evidence of constructive dismissal, apart from her self-serving and
uncorroborated allegations.
First, Atty. Matorre was not able to present a single witness to corroborate her claims of
verbal abuse and insults from Atty. Hechanova. She was only able to adduce
transcriptions
39
of what she claims were conversations between her and Atty.
Hechanova, and nothing more. These are indeed self-serving and uncorroborated and
should not be given evidentiary weight.
On the other hand, the body of evidence presented by HBV Law Firm would show
affidavits demonstrating that the other personnel in the said law firm neither heard nor
saw any inappropriate behavior on the part of Atty. Hechanova towards Atty. Matorre.
The Affidavit of Gladies Nepomuceno,
40
the secretary of HBV Law Firm, states that the
said affiant did "not believe that Atty. Matorre was treated like a slave" by the firm, as
Atty. Matorre argued.
The Affidavit of Gladys C. Vilchez,
41
a partner at HBV Law Firm, states that Atty. Vilchez,
whose room was near Atty. Matorres, never heard Atty. Hechanova shout at Atty.
Matorre nor speak to her in an offensive manner.
Second, the act of HBV Law Firm of moving the effectivity date of Atty. Matorres
resignation from September 30, 2008 to September 15, 2008 is not an act of
harassment, as Atty. Matorre would have us believe. The 30-day notice requirement for
an employees resignation is actually for the benefit of the employer who has the
discretion to waive such period. Its purpose is to afford the employer enough time to
hire another employee if needed and to see to it that there is proper turn-over of the
tasks which the resigning employee may be handling. As one author
42
puts it,
x x x The rule requiring an employee to stay or complete the 30-day period prior to the
effectivity of his resignation becomes discretionary on the part of management as an
employee who intends to resign may be allowed a shorter period before his resignation
becomes effective. (Emphasis supplied.)
Moreover, the act of HBV Law Firm of moving the effectivity date of Atty. Matorres
resignation to an earlier date cannot be seen as a malicious decision on the part of the
firm in order to deprive Atty. Matorre of an opportunity to seek new employment. This
decision cannot be viewed as an act of harassment but rather merely the exercise of
the firms management prerogative. Surely, we cannot expect employers to maintain in
their employ employees who intend to resign, just so the latter can have continuous
work as they look for a new source of income.
Third, the fact that HBV Law Firm was no longer assigning new work to Atty. Matorre
after her resignation is not an act of harassment, but is also an exercise of
management prerogative. Expecting that Atty. Matorre would no longer be working for
HBV Law Firm after three to four weeks, she was no longer given additional
assignments to ensure a smooth turn-over of duties and work. Indeed, having an
employee focus on her remaining tasks and not assigning new ones to her would be
beneficial on the part of HBV Law Firm as there would in fact be less tasks to be turned
over to Atty. Matorres replacement. Said actuation is well within the ambit of the firms
management prerogative, and is certainly not an act of harassment.
To reiterate, in line with settled jurisprudence,
43
since Atty. Matorre admittedly
resigned, it was incumbent upon her to prove that her resignation was not voluntary,
but was actually a case of constructive dismissal, with clear, positive, and convincing
evidence.
As shown above, Atty. Matorre failed to present any evidence of constructive dismissal,
such as proof of the alleged harassment, insults, and verbal abuse she allegedly
received during her stay at HBV Law Firm that led her to terminate her employment.
Thus, it can be concluded that she resigned voluntarily.
Since Atty. Matorre failed to prove that she was illegally or constructively dismissed,
there is no need to discuss the issue of her monetary claims due to her lack of
entitlement thereto.
WHEREFORE, the petition is GRANTED. The Decision dated March 14, 2011 and
Resolution dated August 12, 2011 of the Court of Appeals in CA-G.R. SP No. 115266 are
REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated April 22, 2009 is
hereby REINSTATED. The complaint of respondent Atty. Leny O. Matorre for illegal
dismissal is DISMISSED in its entirety for lack of merit.
No pronouncement as to costs.
SO ORDERED.




THIRD DIVISION
G.R. No. 190814 October 9, 2013
MICHELLE LANA BROWN- ARANETA, for herself and representing her minor
daughters, ARABELLA MARGARITA B. ARANET A and A V ANGELINAMYKAELA
B. ARANETA, Petitioners,
vs.
JUAN IGNACIO ARANETA, Respondent.
D E C I S I O N
VELASCO, J.:
The Case
Assailed and sought to be set aside in this Petition for Review on Certiorari under Rule
45 are the May 11, 2009 Decision
1
of the Court of Appeals (CA) in CA-G .R. SP No.
105442 and its Resolution
2
of December28, 2009 denying petitioner's motion for
reconsideration of said decision.
The assailed decision ordered the dismissal of Civil Case No. 08-023 of the Regional
Trial Court (RTC), Branch 207 in Muntinlupa City and nullified all the issuances it made
in that case, a petition for protection order under Republic Act No. (RA) 9262, otherwise
known as the Anti-Violence Against Women and Their Children Act of 2004, commenced
by petitioner Michelle Lana Brown-Araneta (Michelle) against respondent Juan Ignacio
Araneta (Juan Ignacio) before that court.
The facts
On April 14, 2000, Juan Ignacio and Michelle were married in Las Vegas, Nevada, USA.
The union produced two (2) children, namely: Arabella Margarita (Ara) and Avangelina
Mykaela (Ava), born on February 22, 2003 and April 15, 2005, respectively. After a little
over seven years of disharmonious relationship, husband and wife separated. Since the
couples estrangement and de facto separation, Ara and Ava have remained in
Michelles custody.
In November 2007 before the RTC of Makati City, Juan Ignacio filed, pursuant to A.M.
No. 03-04-04-SC
3
or The Rule on Custody of Minors and Writ of Habeas Corpus in
Relation to Custody of Minors (Rule on Custody of Minors), a Petition for the Custody of
the Minors Arabella Margarita Araneta and Avangelina Mykaela Araneta (Petition for
Custody), with prayer for visitation rights against Michelle and her mother, Glenda B.
Santos (Santos). Docketed as SP PROC. Case No. M-6543, this petition was eventually
raffled to Branch 60 of the Makati City RTC (Makati RTC), presided over by Judge
Marissa Macaraig-Guillen (Judge Macaraig-Guillen).
1. Immediately issue a Provisional Order granting [him]visitation rights with
respect to the minors [Ava and Ara] x x x during the pendency of these
proceedings;
2. Immediately issue an ex parte Hold Departure Order preventing the departure
of [both] minors x x x from the country; and
3. After appropriate proceedings, render judgment granting him joint custody, or
alternatively, granting him permanent visitation rights, over both his legitimate
children x x x.
4

To facilitate service of summons, Juan Ignacio, via a Motion and Urgent Manifestation
of November 27, 2007, would inform the Makati RTC that Michelle and Santos may
have transferred to No. 408 Anonas Street, Ayala Alabang Village, Muntinlupa City
(Anonas residence), an address different from what he provided in his basic petition,
referring to the Molave Drive residence in the same village. In her Officers Return
dated December 10, 2007,
5
process server Linda Fallorin stated the following: (1) she
initially attempted to serve the summons upon Michelle and Santos on December
7,2007 at the Anonas residence, only to be told by one Roberto Anonas, who refused to
receive the summons, that both were out at that time; and (2) on December 10, 2007,
she was finally able to serve the summons upon Michelle and Santos by substituted
service through the driver of Santos husband.
On December 18, 2007, Juan Ignacio moved for the issuance of provisional visitorial
order. After a hearing on this motion, the Makati RTC issued on December 21, 2007 an
Order
7
allowing Juan Ignacio to visit her daughters on Christmas Day and New Years
Day. The visiting grant came after the court, taking stock of the Officers Return,
declared that it has acquired jurisdiction over the person of Michelle, but despite being
given the opportunity to file a responsive pleading, she has failed to do so.
Christmas and New Years Day 2008 came and went, but Juan Ignacio was unable to
see his little girls in those days for reasons of little materiality to this narration.
On January 2, 2008, Michelle filed in SP PROC. Case No. M-6543 a Motion to Admit
Answer and an Answer (with Affirmative Defenses and With Very Urgent Ex-Parte
Motion for Issuance of Protection Order).
8

In her Motion to Admit Answer, Michelle acknowledged learning from her mother about
the delivery of the summons and a copy of the petition for custody to their Anonas
Residence. She, however, disregarded said summons thinking, so she claimed, that it
was improperly served upon her person. It was, she added, only upon learning of the
issuance of the provisional order of visitation rights that she gathered enough courage
to come out to present her side.
9

In her Answer, on the other hand, Michelle owned up sole responsibility for the decision
not to allow her husband to see their daughters. In support of her plea for the dismissal
of his petition for custody, the denial of visitation rights pendente lite, and in the
meanwhile the ex parte issuance in her favor of a temporary protection order (TPO),
10

she recounted in lurid details incidents characterizing the painful life she and her
children allegedly had to endure from her husband whom she tagged as a drug user,
sexual pervert, emotionally unstable and temperamental, among other names. In her
words, Juan Ignacios "wild, decadent, irresponsible lifestyle makes him unfit to exercise
parental authority and even enjoy visitation rights."
11

During the January 4, 2008 hearing on Michelles prayer for a TPO, Judge Macaraig-
Guillen expressed her bent to maintain her jurisdiction over SP PROC. Case No. M-6543
and her disinclination to issue the desired TPO. In her Order of even date, she directed
that the ensuing observations she earlier made be entered into the records:
1. She is not inclined to issue a [TPO] in favor of respondent at this time because
she initially questioned the jurisdiction of this Court over her person and only
resorted to this Urgent Ex-Parte Motion for a Protective Order after she realized
that the Court had every intention of maintaining jurisdiction over this case x x x.
It was emphasized that the Court does not issue Protective Orders over a person
who has not bothered to appear in Court x x x. Until the respondent herself
shows up in order to recognize the jurisdiction of this Court over her and in order
to substantiate the allegations in her Urgent Motion, there is no basis for this
Court to address the matters contained in the said Urgent Ex-Parte Motion.
2. Secondly, x x x even assuming for the sake of argument that the petitioner is,
as respondent described him to be, temperamental, violent, a habitual drug user
and a womanizer, these qualities cannot, per se, prevent him from exercising
visitation rights over his children because these are rights due to him inherently,
he being their biological father.
12

During the same hearing, the Makati RTC granted Juan Ignacio visitation rights on one
(1) Saturday and Sunday in January 2008 considering that he was unable to see his
children on the days granted under the December 21, 2007 Order.
Subsequently, by its Order of January 21, 2008, as would later be effectively reiterated
by another Order
13
of March 7, 2008, the Makati RTC resolved to deny admission of
Michelles answer to the petition for custody and declared her in default, pertinently
disposing thusly:
WHEREFORE, in view of the foregoing, respondent Aranetas Motion to Admit Answer of
January 2, 2008 is herein DENIED for lack of merit.
Because of respondent Aranetas failure to file her responsive pleading within the
reglementary period, x x x respondent Araneta isherein declared in DEFAULT in this
proceedings.
As a consequence of this ruling, x x x the petitioner is allowed to present evidence ex-
parte to substantiate the allegation in his Petition x x x.
14

On January 21, 2008 also, Michelle interposed a Motion to Withdraw Urgent Ex-Parte
Motion for Protective Order, there pointing out that no right of Juan Ignacio, if any, will
be affected if the said urgent motion is withdrawn or expunged from her answer. And
obviously to sway the Makati RTCs mind of the resulting insignificance of such
withdrawal, if approved, Michelle cited the ensuing observation thus made by the court
during the hearing on January 4, 2008:
COURT:
Well, I agree, she should really appear but whether or not she should really appear
here and substantiate her allegations for the issuance of a protective order as far as I
am concerned is irrelevant insofar as the enforcement of petitioners visitation rights are
concerned, this case is for custody, this is not a case for the issuance of protective
orders that is only a counter manifestation that she is seeking.
15

It is upon the foregoing set of events and proceedings that Michelle, on March 25,
2008, instituted, pursuant to RA 9262, a Petition For Temporary and Permanent
Protection Order
16
(Petition for Protection Order) before the RTC in Muntinlupa City,
docketed as Civil Case No. 08-023.Thereat, Michelle claimed, among other things, that
in the course of their marriage, Juan Ignacio made her and their children engage in
sexual acts inimical to their emotional, physical and psychological development and
well-being; that he engaged in perverted sexual acts with friends, victimizing her and
the children; that he has consistently failed and refused to support their family; and
that he has a violent temper and was consistently harassing and threatening her to get
sole custody of the children. Michelle volunteered the information that, per her
therapist, she is suffering from Battered Womans Syndrome.
17

In the verification portion of her petition for protection order, Michelle stated that "there
is x x x a pending petition for the custody of our children in the [RTC] Br. 60, Makati
City, x x x Civil Case No. M-6543."
18

The following events and proceedings then transpired:
1. On March 31, 2008, the Muntinlupa RTC granted Michelles prayer for a TPO
which, at its most basic, ordered Juan Ignacio (1) to stay away at a specified
distance from Michelle and the children, inclusive of their present residence and
other places they frequent; and (2) to desist from calling or otherwise
communicating with Michelle.
(2) On April 14, 2008, Juan Ignacio filed in Civil Case No. M-6543 a "Motion to
Dismiss Petition with Prayer to Lift [TPO]"
19
anchored on several grounds,
foremost of which are the following: (a) litis pendentia, Juan Ignacio noting in
this regard that the Makati RTC is competent to grant in its SP PROC. Case No.
M-6543 the very same reliefs Michelle seeks in Civil Case No. M-6543, pursuant
to Sections 17 and 18 of the Rule on Custody of Minors;
20
(b) in view of item (a)
above, the Makati RTC, having first assumed jurisdiction over identical subject
matters, issues and parties, does so to the exclusion of the Muntinlupa RTC; and
(c) Michelles act of filing her petition for protection order before the Muntinlupa
RTC constitutes, under the premises, forum shopping, a practice proscribed
owing to the possibility of different courts arriving at conflicting decisions. Juan
Ignacio would in fact stress that the TPO thus issued by the Muntinlupa RTC
directing him to stay at least a kilometer away from his children already
conflicted with the Makati RTC-issued provisional orders granting him visitation
rights over them.
(3) By Order of May 12, 2008, the Muntinlupa RTC, conceding the exclusionary
effect of the assumption at the first instance by the Makati RTC of jurisdiction on
the issue of custody on Ava and Ara and the likelihood of the issuance by either
court of clashing decisions, partially granted Juan Ignacios motion to dismiss and
accordingly modified the TPO issued on March 31, 2008. As thus modified, the
protection order, or to be precise, the reliefs provided in favor of Michelle in said
TPO shall exclude from its coverage the orders issued by the Makati RTC in the
exercise of its jurisdiction on the pending custody case.
In another Order of June 30, 2008, the Muntinlupa RTC denied Juan Ignacios
Motion for Reconsideration of the earlier May 12, 2008 Order on the ground that
such a motion is a prohibited pleading.
21

(4) Meanwhile, Michelle, in connection with certain orders of the Makati RTC in
the custody case, denying her motion to admit answer and its jurisdictional issue
pronouncements, went to the CA on certiorari via a petition docketed as CA-G.R.
SP No. 103392.
On August 28, 2008, in CA-G.R. SP No. 103392, the CA rendered a judgment finding
partly for Michelle, as petitioner, it being the appellate courts determination that the
substituted service of summons upon her in the custody suit was defective and
irregular. Accordingly, the period within which Michelle was to file an answer, so the CA
declared, did not start to run and, hence, the denial by the Makati RTC of her motion to
admit answer in the custody case and corollarily, its holding that she is in default, by
virtue of its Orders dated January 21, 2008 and March 7, 2008, were unwarranted and
ought to be nullified. Neither of the parties appealed the foregoing Decision. The CA
Decision, thus, became final. The fallo of the said CA Decision reads:
WHEREFORE, the foregoing considered, the instant petition is hereby PARTLY
GRANTED. Accordingly, the assailed Orders of 21January 2008 and 7 March 2008 are
REVERSED and SET ASIDE while the Orders of 29 February 2008 and 31 March 2008, in
so far as the denial of petitioners Motion for Inhibition is concerned, are AFFIRMED. No
costs.
SO ORDERED.
22

Partly, the CA wrote:
x x x The pivotal issue x x x is whether the Makati RTC had acquired jurisdiction over
the person of the petitioner, and if so, whether the disposition of the respondent Makati
RTC judge in declaring her in default has factual and legal basis. Admittedly, the
summons and the copy of the petition were not personally served upon the petitioner
as explicitly required under Section 5 of A.M. No. 03-04-04-SC x x x.
Indeed, the records would show that the summons and the petition were served upon
the petitioner x x x by substituted service as they were received by x x x a certain Nilo
Santos at said Anonas residence, an address belatedly supplied by private respondent
himself. However, x x x petitioner had actually been informed of such substituted
service sometime in the second week of December 2007 and that she had opted to
simply disregard the same since she had thought that such service is invalid x x x.
Despite the fact that she had known of the existence of the petition a quo and the fact
that the service of summons had been made upon her by substituted service, petitioner
made a decision whether it be an informed one or not, not to move for its dismissal on
the ground of lack of jurisdiction over her person x x x. It was only upon the issuance
of the Provisional Order that she had opted to participate in the proceeding by filing her
responsive pleading to the petition. Unfortunately though, the respondent Makati RTC
judge denied her motion to admit and declared her in default on the basis of its
disquisition that the failure of the petitioner to file her responsive pleading is not due to
excusable negligence or other circumstances beyond her control.
Still and all, it cannot be denied that the trial court, previous to or at the time the
petitioner had filed her responsive pleading, has yet to acquire jurisdiction over the
person of the latter. The Rule on Custody of Minors specifically requires that service of
summons be made personally on the respondent and yet the trial court served the
same upon the person of the petitioner by substituted service without proof of
exhaustion of means to personally serve the same or the impossibility thereof to
warrant the extraordinary method of substituted service.
Surely, while the Rule on Custody of Minors provides that the Rules of Court shall apply
suppletorily in custody proceedings, the express provision requiring personal service
and the very nature of custody cases should have caused the respondent judge x x x to
adhere to the evident intention of the rules, that is to have both parties in a custody
case participate therein.
Regrettably, the respondent judge, relying on the Officers Return x x x, precipitately
declared x x x that the trial court had already acquired jurisdiction over the person of
the petitioner. x x x
Sadly though, respondent judge, in grave abuse of discretion, assumed jurisdiction over
the person of the petitioner and proceeded to act on the petition. Worse, x x x the
respondent judge denied the motion to admit filed by the petitioner and declared the
latter in default. While the petitioner had already submitted herself to the jurisdiction of
the trial court by way of her voluntary act of filing a responsive pleading to the petition
a quo, the period to file said responsive pleading, as already stated, in so far as the
petitioner is concerned has yet to commence, and thus, the filing of her motion to
admit answer cannot plausibly be considered as to have been filed beyond the
reglementary period. In this light, the denial of said motion and the issuance of the
default order are unwarranted and are reversible errors of jurisdiction x x x.
23

(Emphasis added.)
(5) From the adverse May 12, 2008 and June 30, 2008 Orders of the Muntinlupa RTC in
Civil Case No. M-6543, Juan Ignacio also repaired to the CA on a petition for certiorari.
Docketed as CA-G.R. SP. No. 105442, the petition prayed that the Muntinlupa RTC be
enjoined from further taking cognizance of Michelles protection order petition as the
said case will infringe or intrude upon the Makati RTCs disposition of the custody
case.
24

Michelle opposed and sought the dismissal of the certiorari petition on the ground that
it is a prohibited pleading under Sec. 22(j) of RA 9262.
Eventually, the CA issued, on May 11, 2009, the assailed Decision which, on one hand,
found Michelle guilty of forum shopping, a sufficient cause for summary dismissal of a
case, but viewed, on the other, Juan Ignacios petition for certiorari as a prohibited
pleading which, ordinarily, would then render it dismissible. In the veritable clash under
the premises of the effects of forum shopping and the rule on prohibited pleading, the
CA nonetheless ruled for Juan Ignacio, as petitioner, pertinently disposing as follows:
ACCORDINGLY, the petition is GIVEN DUE COURSE. Civil Case No. 08-023 is ORDERED
DISMISSED and all issuances made by RTC, Branch 207, Muntinlupa City, are declared
void. The RTC Branch 60, Makati City is DIRECTED to proceed with the case with
dispatch.
25

The CA extricated itself from the foregoing legal bind on the basis of the following
ratiocination and the plausible suppositions interjected thereat:
In resolving the present petition, the Court had to consider two (2) things. First,
pursuant to Section 22 (j) of A.M. No. 04-10-11-SC, a petition for certiorari against any
interlocutory order issued by a family court is a prohibited pleading. Accordingly, if this
Court were to strictly follow [said] Section 22 (j) x x x, then the present petition for
certiorari must be dismissed. Second, the Private Respondent had first moved that the
Makati RTC issue a TPO and that when her motion was denied, she filed a petition
before the Muntinlupa RTC asking that the said court issue a TPO. In short, the Private
Respondent committed forum-shopping. And when forum-shopping is committed, the
case(s) must be dismissed with prejudice.
Thus, it falls upon this Court to balance the conflict.
This Court notes that the Muntinlupa RTC tried to balance out the conflicting
jurisdictional issues with the Makati RTC by stating in its first assailed Order that the
reliefs provided in favor of herein private respondent in the TPO x x x are modified, to
exclude from its coverage those Orders issued by the Makati Court in the exercise of its
jurisdiction on the pending custody case. Be that as it may, the Muntinlupa RTC itself
recognized the jurisdiction of the Makati RTC and that the case before it would, in fact,
impinge upon the jurisdiction of the latter court when it stated that the disposition on
the matter by this Court may result in the possibility of conflicting decisions/orders. In
short, the Muntinlupa RTC itself acknowledges the fact that any future issuances,
including its eventual decision on the petition before it, would affect the custody case
pending before the Makati RTC and might even result to conflicting decisions.
Thus, in the interest of judicial stability, it is incumbent upon this Court to ensure that
this eventuality will not come to pass.
x x x x
To test the argument that a petition for certiorari is an absolutely prohibited pleading,
let us push the present case to its logical extreme.
What if a woman claiming to be a battered wife leaves one of her children with her
parents and another with a sibling of hers? She then went to another place, transferred
residency, and filed a petition for TPO. Her parents and sibling, who reside in another
locality, likewise files a petition for TPO in behalf of the grandchild and nephew/niece
entrusted]in their custody. x x x What if the family courts refuse consolidation? Is the
man devoid of any remedy and would have to spend his time shuttling between three
(3) localities since a petition for certiorari is a prohibited pleading?
What if the woman went to another locality purposely in order to find a friendly venue x
x x? Again, if we are to strictly construe Section22 (j) of A.M. No. 04-10-11-SC that man
would just have to bear the consequences since he cannot seek the extraordinary writ
of certiorari. Or, what if both of the spouses do not reside within the courts jurisdiction,
but the judge refuses to grant a motion to dismiss due to his zeal? What remedy would
a man have since he cannot resort to a petition for certiorari?
The rules are not sacrosanct. If they go in the way of the smooth and orderly
administration of justice, then magistrates should apply their best judgment. If not,
courts would be so hideously bound or captives to the stern and literal provisions of the
law that they themselves would, wittingly or otherwise, become administrators of
injustice.
On the one hand, this Court hereby notes that Private Respondent herself recognizes
the jurisdiction of the Makati RTC to issue a TPO. It was only after the Makati RTC
denied her prayer for a TPO when she filed a petition before the Muntinlupa RTC asking
for the issuance of a TPO. It is thus highly disturbing that the Private Respondent
sought another forum in order to try to obtain a favorable judgment. Thus, as aptly
pointed out by the Petitioner, some sort of forum-shopping was committed.
On the other hand, if the Court were to dismiss the present petition on the ground that
a petition for certiorari is a prohibited pleading, it would have to close its eyes to the
fact that the Private Respondent willfully committed forum-shopping. To dismiss the
present petition would, in effect, "reward" her for this negative act. This, the Court
cannot countenance.
x x x x
Accordingly, x x x Civil Case No. 08-023 must not be allowed to proceed any further.
Imperatively, to ensure that the jurisdiction of the Makati RTC remains unshackled, all
of the issuances of the Muntinlupa RTC should, by all means, be nullified.
26
(Emphasis
added.)
The CA denied Michelles motion for reconsideration per its equally assailed Resolution
of December 28, 2009.
Aggrieved, Michelle, for herself and for her minor daughters, filed the instant recourse,
her submissions revolving on the twin issues of forum shopping and the prohibition
under Sec. 22 of the Rule on Violence Against Women and Children
27
against the filing
of petitions for certiorari to defeat TPOs issued to promote the protection of victims of
violence against women and their children.
Michelle presently argues that the assailed Decision of the CA is based on an erroneous
appreciation of the facts of the case. To her, there was no forum shopping when she
filed her Petition for Protection Order in the Muntinlupa RTC while the custody case was
pending in the Makati RTC. Her stated reason: the absence in both cases of identity of
parties and rights asserted, on top of which the reliefs sought and prayed for are
different and not founded on the same set of facts.
To downplay the application of the litis pendentia principle, she argues that it was
impossible for her to apply for and secure a protective order under RA 9262 in the
custody case before the Makati RTC being, first, a respondent, not a petitioner in the
Makati case; and second, the venue for an application for protection order is, under RA
9262, the place where the woman or the offended party resides, which in her case is
Muntinlupa.
28

Michelle would invite attention to her having withdrawn her motion for protective order
in the custody case before the Makati RTC before she filed her Petition for Protective
Order with the Muntinlupa RTC. Additionally, she points to the CAs Decision of August
28, 2008 in CA-G.R. SP No. 103392 (2008 CA Decision), which held that the Makati RTC
did not acquire jurisdiction over her so that all issuances of the Makati RTC were void.
All these, Michelle claims, argue against the existence of litis pendentia.
The Issue
The issue to be resolved in this case is whether or not petitioner, in filing her Petition
for Protection Order before the Muntinlupa RTC, violated the rule on forum shopping,
given the pendency of the respondents Petition for Custody before the Makati RTC and
considering incidentally that she filed said petition for protection order after the Makati
RTC had denied her application for protection order in the custody case.
The Courts Ruling
Before anything else, however, the Court wishes to point out disturbing developments
in this proceeding which ought not to be swept under the rug on the simplistic pretext
that they may not be determinative of the outcome of this case. But first, some basic
premises on record.
First, as correctly stated in this petition, Michelle withdrew her Ex Parte Motion for
Issuance of Protective Order in the custody case prior to her filing of her Petition for
Protection Order with the Muntinlupa RTC. It should be made clear, however, that she
filed said motion to withdraw on January 21, 2008, or after the Makati RTC, in its Order
dated January 4,2008, had, for all intents and purposes, denied the said ex parte
motion. To recapitulate, the Makati RTC judge made it of record that she was not
inclined to issue a protective order in favor of a person, i.e., petitioner Michelle, who
has not bothered to appear in court, even assuming, she adds, that the person against
whom the protection order is directed, i.e., Juan Ignacio, is prone to violence, a drug
user and a womanizer.
Second, there is absolutely nothing in the 2008 CA Decision declaring that all issuances
of the Makati RTC were void. In order to bolster her position that the rule against forum
shopping was not breached in this case, Michelle matter-of-factly alleged in this
recourse that since in the 2008 CA Decision it was ruled that the Makati RTC did not
acquire jurisdiction over her person due to the irregularity in the service of summons,
then "all the issuances or orders of the Makati RTC in the custody case were void;"
29

and "therefore, there was no litis pendentia to begin with since the RTC of Makati City
Branch 60 had no jurisdiction from the start."
30

For perspective, the 2008 CA Decision did not rule that the Makati RTC did not acquire
jurisdiction over Michelle. Quite the contrary. As a matter of record, the CA in that
disposition found and thus declared Michelle to have voluntarily submitted herself to the
jurisdiction of the Makati RTC when she filed her Answer in SP. PROC. Case No. 6543
on January 2, 2008.But to be precise about things, the CA in that 2008 Decision found,
as having been tainted with of grave abuse of discretion, only that part of the Makati
RTCs disposition denying Michelles motion to admit answer for belated filing and the
consequent default order. Along this line, the CA merely nullified the Makati RTCs
Orders dated January 21, 2008 and March 7, 2008 which declared Michelle in default
and denied her motion for reconsideration, respectively. The ensuing excerpts of the
2008 CA Decision speak for themselves:
Sadly though, respondent judge, in grave abuse of discretion, assumed jurisdiction over
the person of the petitioner and proceeded to act on the petition. Worse, without due
regard to the plain intention of the rule in ensuring the adjudication of the controversy
surrounding a custody case based on its merits, the respondent judge denied the
motion to admit filed by the petitioner and declared the latter in default. While the
petitioner had already submitted herself to the jurisdiction of the trial court by way of
her voluntary act of filing a responsive pleading to the petition a quo, the period to file
said responsive pleading, as already stated, in so far as the petitioner is concerned has
yet to commence, and thus, the filing of her motion to admit answer cannot plausibly
be considered as to have been filed beyond the reglementary period. In this light, the
denial of said motion and the issuance of the default order are unwarranted and are
reversible errors of jurisdiction, therefore correctible by a writ of certiorari. (Emphasis
supplied.)
x x x x
WHEREFORE, the foregoing considered, the instant petition is hereby PARTLY
GRANTED. Accordingly, the assailed Orders of 21January 2008 and 7 March 2008 are
REVERSED and SET ASIDE while the Orders of 29 February 2008 and 31 March 2008, in
so far as the denial of petitioners Motion for Inhibition is concerned, are AFFIRMED. No
costs.
SO ORDERED.
31

Withal, the Court finds it downright offensive and utterly distasteful that petitioner
raised the following as one of the issues in this appellate proceeding:
Whether or not the petitioners are guilty of forum-shopping when the Petition for
Custody of private respondent Araneta was dismissed by the Court of Appeals on the
ground that the RTC of Makati City Branch60 did not acquire jurisdiction because the
summons was not served personally upon herein Petitioner Michelle Lana Brown
Araneta.
32
(Emphasis supplied.)
Petitioners above posture smacks of bad faith, taken doubtless to deceive and mislead
the Court. Indeed, nothing in either the body or the fallo of the 2008 CA Decision would
yield the conclusion that the petition for custody is being dismissed, as petitioner
unabashedly would have the Court believe.
Was there forum shopping? Did petitioner forum shop?
A circumstance of forum shopping occurs when, as a result or in anticipation of an
adverse decision in one forum, a party seeks a favorable opinion in another forum
through means other than appeal or certiorari by raising identical causes of action,
subject matter and issues. Stated a bit differently, forum shopping is the institution of
two or more actions involving the same parties for the same cause of action, either
simultaneously or successively, on the supposition that one or the other court would
come out with a favorable disposition.
33
An indicium of the presence of, or the test for
determining whether a litigant violated the rule against, forum shopping is where the
elements of litis pendentia are present or where a final judgment in one case will
amount to res judicata in the other case.
34

Litis pendentia,
35
as a ground for the dismissal of a civil suit, refers to that situation
wherein another action is pending between the same parties for the same cause of
action, such that the second action becomes vexatious and unnecessary.
36
For the bar
of litis pendentia to be invoked, the concurring requisites must be present: (1) identity
of parties, or at least such parties as represent the same interests in both actions; (2)
identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (3) the identity of the two preceding particulars is such that any judgment
rendered in the pending case, regardless of which party is successful would amount to
res judicata in the other.
37

Thus, it has been held that there is forum shopping (1) whenever as a result of an
adverse decision in one forum, a party seeks a favorable decision (other than by appeal
or certiorari) in another; or (2) if, after he has filed a petition before the Supreme
Court, a party files another before the CA since in such case said party deliberately
splits appeals "in the hope that even as one case in which a particular remedy is sought
is dismissed, another case(offering a similar remedy) would still be open"; or (3) where
a party attempts to obtain a preliminary injunction in another court after failing to
obtain it from the original court.
38

The evil sought to be avoided by the rule against forum shopping is the rendition by
two competent tribunals of two separate and contradictory decisions. Unscrupulous
party litigants, taking advantage of a variety of competent tribunals, may repeatedly try
their luck in several different fora until a favorable result is reached. To avoid the
resultant confusion, the Court adheres to the rules against forum shopping, and a
breach of these rules results in the dismissal of the case.
39

Considering the above doctrinal pronouncements on forum shopping, We find all the
badges of this deplorable, docket-clogging practice present in this case.
As a result or in anticipation of an adverse ruling of the Makati RTC,
petitioner sought the favorable opinion of the Muntinlupa RTC
As discussed above, the presiding judge of the Makati RTC, in the custody case, made
of record that she was not inclined to issue a protection order in favor of Michelle
because she did not bother to appear in Court and that the allegations against Juan
Ignacio cannot, per se, prevent him from exercising visitation rights over his children.
After this adverse ruling, Michelle sought the favorable opinion of the Muntinlupa RTC
by filing an independent Petition for Protection Order.
The cases have identical parties
Clearly, the Petition for Custody and the Petition for Protection Order have the same
parties who represent the same interests. The fact that Avaand Ara, who are parties in
the Petition for Protection Order, are not impleaded in the Petition for Custody is of no
moment because they are precisely the very subjects of the Petition for Custody and
their respective rights are represented by their mother, Michelle. In a long line of cases
on forum shopping, the Court has held that absolute identity of the parties is not
required, it being enough that there is substantial identity of the parties
40
or at least
such parties represent the same interests in both actions. It does not matter, as here,
that in the Petition for Custody, Juan Ignacio is the petitioner and Michelle is the
respondent while in the Petition for Protection Order, their roles are reversed. That a
party is the petitioner in one case and at the same time, the respondent in the other
case does not, without more, remove the said cases from the ambit of the rules on
forum shopping. So did the Court hold, for example in First Philippine International
Bank v. Court of Appeals, that forum shopping exists even in cases like this where
petitioners or plaintiffs in one case were impleaded as respondents or defendants in
another.
41
Moreover, this Court has constantly held that the fact that the positions of
the parties are reversed, i.e., the plaintiffs in the first case are the defendants in the
second case or vice versa, does not negate the identity of parties for purposes of
determining whether the case is dismissible on the ground of litis pendentia.
42

The rights asserted and reliefs prayed for are based on the same facts
Further, the rights asserted and reliefs prayed for in Civil Case No. 08-023 are
practically based on the same facts and are so intertwined with that in SP. PROC. Case
No. 6543, such that any judgment rendered in the pending cases, regardless of which
party is successful, will amount to res judicata.
In the custody case, Juan Ignacio mainly asserted his right, as father, to visit his
children and enjoy joint custody over them. He prayed for a judgment granting him
joint custody, or alternatively, permanent visitation rights over Ava and Ara.
In disposing of the custody case, the Makati RTC is expected, following the rationale
behind the issuance of the Rule on Custody of Minors, to consider, among others, the
best interest of the children,
43
any threat or danger of physical, mental, sexual or
emotional violence which endangers their safety and best interest, their health, safety
and welfare,
44
any history of child or spousal abuse by the person seeking custody,
45

habitual use of alcohol, dangerous drugs or regulated substances,
46
marital
misconduct,
47
and the most suitable physical, emotional, spiritual, psychological and
educational environment for the holistic development and growth of the minor.
48

Michelles answer and motion for issuance of protection order in the custody case
contained allegations of psychological, sexual, emotional and economic abuse she and
her children suffered at the hands of Juan Ignacio to defeat his asserted right to have
joint custody over Ava and Ara and as argument that the grant of visitation rights in his
favor will not be in the best interest of the children. These allegations of abuse were in
substance the very same ones she made in her Petition for Protection Order.
Juan Ignacios rights and reliefs prayed for are dependent on and, to be sure, would be
predicated on the question of whether or not granting him the desired custody or at
least visitations rights over the children are in their best interest. In deciding this issue,
the Makati RTC will definitely have to reckon with and make a finding on Michelles
allegations of psychological, sexual, emotional and economic abuse.
Similarly, the Muntinlupa RTC must necessarily consider and make a determination
based on the very same facts and allegations on whether or not Michelle shall be
entitled to the relief she prayed for in her own petition, in particular, a permanent
protection order against Juan Ignacio.
Elements of litis pendentia are present and any judgment
in the pending cases would amount to res judicata
Any judgment rendered in the pending cases, regardless of which party is successful,
would amount to res judicata. Consider: If the Makati RTC were to grant Juan Ignacios
petition for custody, this would necessarily mean that it would be in the best interest of
the children if he were allowed to visit and spend time with them and that granting
Juan Ignacio visitation rights would not pose any danger or threat to the children.
On the other hand, a grant by the Muntinlupa RTC of Michelles prayer for a permanent
protection order would presuppose at the minimum that it would be to the childrens
best interest if Juan Ignacio is directed to keep away from them, necessary implying
that he is unfit even to visit Araand Ava. Conversely, if Juan Ignacios Petition for
Custody were denied, then it would mean that the Makati RTC gave weight and
credence to Michelles allegations of abuse and found them to be in the best interest of
the children to bar Juan Ignacio from visiting them. Thus, the Muntinlupa RTC should
have no ground to deny Michelles Petition for Protection Order pending before it.
The evil sought to be avoided by the rule against
forum shopping is present in this case
The grave mischief sought to be avoided by the rule against forum shopping, i.e., the
rendition by two competent tribunals of two separate and contradictory decisions, is
well-nigh palpable in this case. If the Muntinlupa RTC were to rule that Michelle was
entitled to a Protection Order, this would necessarily conflict with any order or decision
from the Makati RTC granting Juan Ignacio visitation rights over Ava and Ara. As aptly
pointed out by Juan Ignacio in his Comment such a conflict had already occurred, as
the TPO issued by the Muntinlupa RTC actually conflicted with the Orders issued by the
Makati RTC granting Juan Ignacio temporary visitation rights over his children. There
now exists an Order from the Muntinlupa RTC which, among others, directed Juan
Ignacio to stay at least one (1) kilometer away from Ava and Ara, even as the Makati
RTC recognized, in two (2) separate Orders, that he had the right, albeit temporarily to
see his children.
49

In fact, Michelle was very much aware of the possible conflicts between the orders of
Makati RTC and Muntinlupa RTC. In her Opposition (to Urgent Motion for Immediate
Enforcement of Visitation Orders dated December 21, 2007 and January 4, 2008), she
recognized that the granting of visitation rights in favor of Juan Ignacio would conflict
the TPO and, therefore, the Makati Court would be rendering a conflicting decision with
that of the Muntinlupa RTC, viz:
x x x There is therefore, no conflict of jurisdiction in this case but since the petitioner
filed a Petition for Certiorari in the Court of Appeals, which includes the issue of
custody, we submit that the matter of custody pendente lite including visitation, should
not and can not be resolved by this Honorable Court without conflicting with the
Temporary Protection Order of a co-equal court, the RTC of Muntinlupa City. x x xx
x x x
If the petitioner is granted visitation rights, the Honorable Court, with due respect
would be allowing him to violate the TPO against him; the Honorable Court would then
be rendering a conflicting decision.
50
(Emphasis supplied.)
No less than the Muntinlupa RTC itself recognized the resulting aberration of its orders
conflicting with that/those of the Makati RTC. As it were, the former, in its Order of May
12, 2008, resolving Juan Ignacios Motion to Dismiss with Prayer to Lift Temporary
Protection Order, categorically stated that there may be orders in the protection order
case that would possibly conflict with the orders issued by the Makati RTC in the
custody case. So it was that to address these possible conflicts, the Muntinlupa RTC
partially granted Juan Ignacios Motion to Dismiss by modifying the reliefs provided
under the TPO by excluding from its coverage those orders issued by the Makati RTC in
the exercise of its jurisdiction over the custody case. Pursuant to the foregoing Order of
the Muntinlupa RTC, the December 21, 2007 and January 4, 2008 Orders of the Makati
RTC, granting Juan Ignacio visitation rights on Christmas Day and New Years Day and
one (1) Saturday and Sunday in January 2008, are not covered by the reliefs under the
TPO. Hence, despite the TPO directing Juan Ignacio to stay at least one (1) kilometer
away from Ava and Ara, Juan Ignacio would still have the right to see his children by
virtue of the orders issued by the Makati RTC granting him temporary visitation rights.
The said Muntinlupa RTC Order reads:
Based on the pleadings filed, this (Muntinlupa) Court holds that since the Makati Court
first acquired jurisdiction over the issue of custody, the latter continues to exercise it, so
that any disposition on the matter by this Court may result in the possibility of
conflicting decisions/orders.
Wherefore, this Court partially grants respondents Motion to Dismiss insofar as those
matters covered by A.M. No. 03-04-04-SC, Rule on Custody of Minors and Writ of
Habeas corpus in Relation to Custody of Minors are concerned, which are within the
jurisdiction of the Makati Court, but continues to take cognizance on matters not
included therein (A.M. No. 03-04-04-SC) but within the protective mantle of R.A. No.
9262.
Consequently, the reliefs provided in favor of the petitioner in the Temporary Protection
Order dated March 31, 2008 are modified, to exclude from its coverage those Orders
issued by the Makati Court in the exercise of its jurisdiction on the pending custody
case.
The motions to lift the temporary protection order (except on those matter stated
above) and to cite petitioner in contempt of court are denied for lack of merit.
51

(Emphasis supplied.)
Verily, the Muntinlupa RTC was aware that its issuances and its eventual final
disposition on the Petition for Protection Order would affect the custody case before the
Makati RTC, if not totally clash with the latter courts decision. We agree with the CAs
ensuing observation:
This Court notes that the Muntinlupa RTC tried to balance out the conflicting
jurisdictional issues with the Makati RTC by stating in its first assailed Order that the
reliefs provided in favor of herein private respondent in the TPO dated March 31, 2008
are modified, to exclude from its coverage those Orders issued by the Makati Court in
the exercise of its jurisdiction on the pending custody case. Be that as it may, the
Muntinlupa RTC itself recognized the jurisdiction of the Makati RTC and that the case
before it would, in fact, impinge upon the jurisdiction of the latter court when it stated
that the disposition on the matter by this Court may result in the possibility of
conflicting decisions/orders. In short, the Muntinlupa RTC itself acknowledges the fact
that any future issuances, including its eventual decision on the petition before it, would
affect the custody case pending before the Makati RTC and might even result to
conflicting decisions. Thus, in the interest of judicial stability, it is incumbent upon this
Court to ensure that this eventuality will not come to pass.
52

Civil Case No. 08-023 should, thus, be dismissed with prejudice for being a clear case of
forum shopping.
WHEREFORE, premises considered, the appealed May 11, 2009Decision and the
December 28, 2009 Resolution of the Court of Appeals in C A-G.R. SP. No. 105442,
particularly insofar as these ordered the dismissal or subject Civil Case No. 08-023 and
the nullification of the orders made in that case, are hereby AFFIRMED.
No costs.
SO ORDERED.




FIRST DIVISION
G.R. No. 196051 October 2, 2013
PEOPLE OF THE PHILIPPINES, Plaintiff -Appellee,
vs.
JADE CUAYCONG y REMONQUILLO, Accused-Appellant.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
Before Us is an appeal from the Decision
1
dated November 25, 2010 of the Court of
Appeals in CA-G.R. CR.-H.C. No. 03619, entitled People of the Philippines v. Jade
Cuaycong y Remonquillo which affirmed with modification the Joint Decision
2
dated July
25, 2008 of the Regional Trial Court of Las Pias City, Branch 254 in Criminal Case Nos.
02-0575 and 02-0576. The trial court found appellant Jade Cuaycong y Remonquillo
guilty beyond reasonable doubt of the crime of two counts of statutory rape as defined
and penalized under Article 266-A, paragraph 1 in relation to Article 266-B, paragraph
6(5) of the Revised Penal Code. However, the Court of Appeals modified this to one
count of statutory rape under the aforesaid penal provisions and one count of acts of
lasciviousness as defined and penalized under Article 336 of the Revised Penal Code.
The pertinent portions of the two Informations both dated July 9, 2002 and which
charge appellant with the felony of statutory rape read:
[In Criminal Case No. 02-0575]
That on or about the 4th day of July 2002, in the City of Las Pias, Philippines and
within the jurisdiction of this Honorable Court, the above-named accused, by means of
force, violence and intimidation, did then and there willfully, unlawfully and feloniously
have carnal knowledge with one [AAA
3
], seven (7)[-]year old girl, against her will and
consent.
4

[In Criminal Case No. 02-0576] That on or about during the month of June 2001, in the
City of Las Pias, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, by means of force, violence and intimidation, did then and there
willfully, unlawfully and feloniously have carnal knowledge with one [AAA], seven (7)[-
]year old girl, against her will and consent.
5

Appellant pleaded "NOT GUILTY" to both charges when he was arraigned on August 27,
2002.
6

The testimonies and the evidence presented by both sides were summed in the assailed
July 25, 2008 Joint Decision of the trial court in this wise:
[AAA] was born on August 20, 1994 (Exh. "A") and is the daughter of [BBB] from a
previous relationship. Appellant became [BBB]s partner and they lived together,
tagging along [AAA], who was then 7 years old, at the formers residence at Real St.,
Aldana Plaza, Las Pias City. Their relationship produced a son, named [DDD] born on
January 22, 2002. Eight (8) months, after the birth of their son, they transferred
residence and lived at Bernabe Compound, Pulang Lupa, of the same city.
[BBB] worked as a Guest Relation Officer (GRO) at the Buendia Kia Karaoke Bar from
9:00 p.m. to 10:00 a.m. While [BBB] was at work, the [appellant] would take care of
[AAA] and their son.
On July 4, 2002 at about 10:00 oclock in the evening, [AAA] and her brother was
asleep. She felt that [appellant] laid himself beside her and started to remove her
shorts. She told him not to remove it but appellant did not listen. [Appellant] also
removed his pants, afterwards, he laid on top of her and kissed her. Then he inserted
his penis to her vagina and kept it inside for a long time. [AAA] felt pain and cried.
[Appellant] threatened to kill her mother if she will not keep quiet. Then she saw that
her vagina was bleeding.
With the light coming from the adjacent house of their neighbor, [AAA] had a good
glance at appellants sex organ. She described it as long as a ballpen or about five
centimeters in length, brown and big.
The following day, [AAA] went to the house of [CCC], sister of her mother. [CCC]s
house was also located at the same Bernabe Compound near [AAA]s house. [CCC]
noticed that [AAA], unlike before, was unhappy and could not walk straight. She asked
[AAA] what was the matter with her but the child just shook her head and did not
answer. [CCC] even asked her what breakfast she wanted but the child did not answer
instead she cried. Then she excused herself and went to the comfort room. While she
was inside the comfort room, [CCC] heard her shouting. [CCC] asked her why she
shouted and, [AAA] replied that her vagina was painful. [CCC] and her son [EEE]
immediately ran towards the comfort room. Inside the comfort room, [CCC] saw fresh
blood coming from [AAA]s vagina. [CCC] asked [AAA] who touched her and the child
said "Jade". [CCC] decided to bring [AAA] to the nearby Health Center of Bernabe
Compound. At the Center, a certain Dr. Norma Velasco saw [AAA] and found out that
[AAA] had a hymenal laceration. Without issuing however any medical certification to
that effect, Dr. Velasco referred [CCC] and [AAA] to the District Hospital at Pulanglupa,
Las Pias City.
Meanwhile, Dr. Velasco called the Womens Desk and Childrens Welfare Section of the
Las Pias City Police Headquarters and reported the matter. Upon receipt of the report,
P/S Insp Marilyn Samarita, head of the Section, immediately radioed SPO1 Fernando
Gasgonia and PO2 Edmund Alfonso and instructed them to proceed to Bernabe Health
Center. At the Health Center, SPO1 Gasgonia and PO2 Alfonso talked to [CCC] and
[AAA] and thereafter together with the two, proceeded to the house of the [appellant].
Reaching the house, the police officers saw the [appellant] and [BBB] seated beside
each other. Everything seemed normal between them. The police officers arrested the
[appellant] after [AAA] had pointed to him. Bringing along [AAA], [BBB], [CCC] and the
[appellant], the police officers proceeded to their headquarters and turned over the
[appellant] to P/S Insp Samarita.
Upon learning what happened to her daughter and with a referral from the police
station, [BBB] brought her to the crime laboratory in Camp Crame, where [AAA]
underwent genital examination. The Medico-Legal Report No. M-2000-02 issued by
Medico-Legal Officer of the PNP Crime Laboratory, Police Chief Inspector Pierre Paul F.
Carpio contains, among others, a finding that reads: Hymen; shallow fresh laceration at
3 oclock position. [AAA] was also seen to have warts in the vagina and was advised to
proceed to the PGH-Child Protection Unit. At the Philippine General Hospital, they had
[AAA] examined and thereafter, set her for the removal of the warts after the bleeding.
The procedure took place on August 6, 2002 (Exhs. "C" and "C-1").
With the medical findings, PO2 Lucia C. Conmigo, also of the Womens Desk and
Childrens Welfare Section, prepared the investigation reports (Exhibit "G") and on the
basis thereof, two counts of statutory rape were filed against the [appellant].
[AAA] likewise recalled that the same thing happened to her, at night, sometime in the
month of June 2001 at the store which they also utilized as their residence. At that
time, [AAA] was tending their store while the [appellant] was then sleeping beside her
brother. When [appellant] woke up, he approached her and removed her shorts and
standing from behind, he inserted his penis to her anus. She felt pain and cried, so that
[appellant] was forced to stop. She also disclosed the incident to [CCC].
The [appellant] denied the accusations hurled against him. He could not have raped
[AAA] in June 2001 because he and [BBB] were not yet living-in together. [BBB] and
her daughter [AAA] were then staying with the formers mother and siblings at Bernabe
Compound, Pulanglupa, Las Pias City while he lived with his parents at Plaza Quezon,
also of the same city. In order to get to their place, [appellant] has to take a jeep for a
ride.
In denying having raped [AAA] on July 4, 2002, [appellant] alleged that at around 6
oclock in the evening, he went to visit his parents and returned home at around 10
oclock in the evening. His coming home late made [BBB] furious since he could have
come home earlier that night to take care of his son and [AAA], so she can go to work
on time. Nonetheless, [BBB] left for work just the same. Not long after, [BBB] left the
house, the [appellant] saw [AAA] scratching her vagina. To relieve her of the itchiness,
he ordered her to wash her vagina. Instead of obeying him, [AAA] cried and threatened
him by saying "magsusumbong ako". Irritated, [appellant] stood up and dragged her
outside the house and closed the door. [AAA] nevertheless did what the [appellant] told
her to do. After washing her vagina, she entered the house and then laid herself to
sleep on the floor beside her brother. [Appellant] also laid himself at the other side of
[DDD] who at that time was sick.
[Appellant] woke up at around 9 oclock in the morning of the following day, July 5,
2002. He was about to fix their bed, when two policemen arrived. The policemen
invited him to go with them to the District Hospital because somebody wanted to talk to
him. Before [appellant] could go with the policemen, [BBB] arrived. Together with
[BBB] who was also invited by the policemen to go with them, [appellant] boarded the
police mobile car. He was brought to the emergency room of the Las Pias City District
Hospital where he was asked by the policemen to sign a white paper which the
[appellant] claimed he did not know, and he refused. From the Hospital, he was
brought to the police sub-station at Zapote where [appellant] was again asked by the
policemen to just admit the complaint; however, the policemen did not tell him what
the complaint was. [Appellant] again refused. From the sub-station, [appellant] was
brought by the policemen to the Womens Desk and Childrens Welfare Section of the
Las Pias City Police Headquarters.
After several days at the police headquarters, [appellant] was finally brought to the
Office of the City Prosecutor of Las Pias City and it was only during this time that the
[appellant] learned that he was being charged of rape by [AAA].
[Appellant] surmised that the reason why [BBB] and [AAA] charged him was to get rid
of him as he was jobless and that [BBB] also wanted to live with her new lover, a
German national named Jester, who offered to bring her and [AAA] abroad to become
citizens of his country. [Appellant] had not personally met this German national but he
knew of their relationship from the text messages which [appellant] read on [BBB]s
cellphone. They quarreled most of the time because of other men with whom [BBB]
used to flirt. However, [appellant] knew that [BBB] could do anything she wanted with
her life because she was not married to him.
To support the theory that the charges were just based on a concocted story, the
[appellant] presented his father, Jesus Cuaycong. He testified that when he learned
that his son was detained, he immediately went to [BBB] to inquire what happened.
During their conversation, he alleged that [BBB] admitted that the charges against his
son were just [a] concoction of her mother and in due time, she would certainly
arrange for their dismissal. While he was talking with [BBB], Jesus saw [AAA] playing
outside their house like any normal child.
7

At the end of the trial, the RTC convicted appellant on two counts of statutory rape
under Article 266-A, paragraph 1, in relation to Article 266-B, paragraph 6(5) of the
Revised Penal Code. The dispositive portion of the assailed July 25, 2008 Joint Decision
of the trial court reads:
WHEREFORE, premises considered, there being proof beyond reasonable doubt that
herein accused, JADE CUAYCONG y REMONQUILLO, has committed two (2) counts of
Rape with the private complainant who at that time was under 12 years of age, defined
and penalized under Article 266-A, paragraph 1, in relation to Article 266-B, 6th
paragraph (5) of the Revised Penal Code, as amended by Republic Act No. 8353, the
Court pronounced him GUILTY and accordingly, sentenced him to suffer the penalty of
RECLUSION PERPETUA, for each case. Accused is likewise ordered to pay private
complainant [AAA], for each count of rape, Php75,000.00 as civil indemnity;
Php75,000.00 as moral damages and Php25,000.00 as exemplary damages. Cost
against the accused.
8

Appellant then submitted his case for review to the Court of Appeals. However, the
appellate court denied his appeal and affirmed with modifications the ruling of the trial
court. We quote the dispositive portion of the assailed November 25, 2010 Decision of
the Court of Appeals here:
WHEREFORE, in the light of the foregoing, we DENY the instant appeal. The Joint
Decision appealed from is AFFIRMED with the modifications that the award of
exemplary damages in Criminal Case No. 02-0575 is increased to P30,000.00, the
penalty of reclusion perpetua and the other monetary awards are maintained; and that
in Criminal Case No. 02-0576, the appellant is found guilty beyond reasonable doubt of
the crime of acts of lasciviousness for which he is sentenced to suffer an indeterminate
penalty of six (6) months of arresto mayor, as minimum, to four (4) years and two (2)
months of prision correccional, as maximum and that he is ordered to pay AAA
P20,000.00 as civil indemnity, P30,000.00 as moral damages and P15,000.00 as
exemplary damages.
9

The Court of Appeals affirmed appellants conviction of the felony of statutory rape in
Criminal Case No. 02-0575. However, it did not uphold the conviction in Criminal Case
No. 02-0576 because, while the Information alleged rape by carnal knowledge, the
prosecution was able to prove rape by sexual assault since the rape incident at issue
involved penile penetration of the victims anus. Citing the seminal case of People v.
Abulon,
10
the Court of Appeals modified the conviction of appellant from a charge of
statutory rape to a charge of acts of lasciviousness. Having lost in both the trial and
appellate courts, appellant comes to us for a final appeal relying on the same
assignment of error in his Appellants Brief, to wit:
THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY
BEYOND REASONABLE DOUBT OF THE CRIMES CHARGED.
11

Appellant argues that the credibility of the victim in this case is very much suspect
considering the following purportedly inconsistent facets of her testimony: (1) the
description of how the victim was supposedly raped; (2) the total number of instances
of rape committed against her by appellant; (3) the uncertainty of whether or not the
victim saw appellants penis; and (4) the doubt with respect to whether or not the
victim was able to touch appellants sexual organ.
Appellant further highlights the testimony of Dr. Pierre Paul Carpio (Dr. Carpio), the
medico-legal officer who examined AAA, to the effect that the victim informed him that
the accused inserted his finger into her vagina as contradictory to AAAs testimony.
The petition is without merit.
Appellants contention that the inconsistencies found in the victims testimony warrant a
finding of exculpating reasonable doubt deserves scant consideration.
Jurisprudence tells us that for a discrepancy or inconsistency in the testimony of a
witness to serve as a basis for acquittal, it must establish beyond doubt the innocence
of the appellant for the crime charged since the credibility of a rape victim is not
diminished, let alone impaired, by minor inconsistencies in her testimony.
12
We have
also declared that inconsistencies in the testimonies of witnesses, when referring only
to minor details and collateral matters, do not affect the substance of their declaration,
their veracity or the weight of their testimonies, moreover, they do not impair the
credibility of the witnesses where there is consistency in relating the principal
occurrence and positive identification of the assailants.
13

In the case at bar, the alleged inconsistencies in AAAs testimony do not deviate from
the fact that AAA categorically identified appellant as the one who raped her on July 4,
2002 and earlier sexually assaulted her sometime in June of the year 2001. The
inconsistent statements pointed out by appellant merely affect minor and tangential
aspects of AAAs testimony which do not significantly alter the integrity of her narrative
concerning the incidents of rape and sexual assault which are the subject matter of this
case.
With regard to the credibility of AAAs declarations against appellant as well as that of
other prosecution witnesses, we see no cogent reason to veer away from the
jurisprudential principle of affording great respect and even finality to the trial courts
assessment of the credibility of witnesses. In People v. Morante,
14
we elaborated on this
often reiterated doctrine in this manner:
When the decision hinges on the credibility of witnesses and their respective
testimonies, the trial courts observations and conclusions deserve great respect and are
often accorded finality. The trial judge has the advantage of observing the witness
deportment and manner of testifying. Her "furtive glance, blush of conscious shame,
hesitation, flippant or sneering tone, calmness, sigh, or the scant or full realization of an
oath" are all useful aids for an accurate determination of a witness honesty and
sincerity. The trial judge, therefore, can better determine if witnesses are telling the
truth, being in the ideal position to weigh conflicting testimonies. Unless certain facts of
substance and value were overlooked which, if considered, might affect the result of
the case, its assessment must be respected for it had the opportunity to observe the
conduct and demeanor of the witnesses while testifying and detect if they were lying.
The rule finds an even more stringent application where said findings are sustained by
the [Court of Appeals]. (Emphases omitted.)
We find that the circumstance that two other judges heard the testimonies of BBB, the
medico-legal officer, and a portion of AAAs testimony to be of no moment. The fact
remains that the trial court judge who penned the RTC decision had the opportunity to
also observe AAAs demeanor on the stand, as well as that of three other prosecution
witnesses and all the defense witnesses. In any event, the Court has likewise minutely
scrutinized the evidence on record and we have found no basis to overturn the factual
findings of the trial court as affirmed by the Court of Appeals.
As for appellants allegations and insinuations regarding ill motive on the part of AAAs
mother, BBB, absent concrete supporting evidence, this argument has failed to convince
us that the trial courts assessment of the credibility of the victim and her supporting
witnesses was tainted with arbitrariness or blindness to a fact of consequence.
In this case, we uphold the legal doctrine which states that it is unnatural for a parent,
more so for a mother, to use her offspring as an engine of malice especially if it will
subject her child to humiliation, disgrace and even stigma attendant to a prosecution
for rape, if she were not motivated solely by the desire to incarcerate the person
responsible for her childs defilement.
15

Likewise, we reiterate the principle that no young girl, such as AAA, would concoct a
sordid tale, on her own or through the influence of BBB as per appellants intimation,
undergo an invasive medical examination then subject herself to the stigma and
embarrassment of a public trial, if her motive was other than a fervent desire to seek
justice. We explained this rule, yet again, in People v. Garcia
16
where we held:
Testimonies of child-victims are normally given full weight and credit, since when a girl,
particularly if she is a minor, says that she has been raped, she says in effect all that is
necessary to show that rape has in fact been committed. When the offended party is of
tender age and immature, courts are inclined to give credit to her account of what
transpired, considering not only her relative vulnerability but also the shame to which
she would be exposed if the matter to which she testified is not true. Youth and
immaturity are generally badges of truth and sincerity. A young girls revelation that she
had been raped, coupled with her voluntary submission to medical examination and
willingness to undergo public trial where she could be compelled to give out the details
of an assault on her dignity, cannot be so easily dismissed as mere concoction.
(Citations omitted.)
Moreover, it is worthy to note that AAA broke down in tears when she was narrating the
ordeal that she endured in the hands of appellant.
17
We have established in
jurisprudence that the crying of a victim during her testimony is evidence of the truth of
the rape charges because the display of such emotion indicates the pain that the victim
feels when asked to recount her traumatic experience.
18
Thus, not unlike the minor
inconsistencies in her testimony, this barefaced expression of grief serves only to
strengthen AAAs credibility.
With regard to appellants assertion that Dr. Carpios testimony indicated that the
shallow hymenal laceration present in AAAs vagina rules out the probability of any
penetration by a male sexual organ and could only have been caused by the insertion
of a finger, we rule that the said testimony does not negate the occurrence of rape. A
perusal of the transcript would reveal that the same medico-legal officer did not totally
discount the possibility of rape and, in fact, he admitted that he was not competent to
conclude what really caused the shallow hymenal laceration. The pertinent portion of
Dr. Carpios testimony reads:
[PROSECUTOR MONTESA]
Q In your professional opinion, was the minor whom you examined a victim of sexual
abuse or rape?
A Sir, I am not in a position to qualify if it is a rape or a sexual abuse.
Q I am asking your opinion? A As per examination, there is a recent loss of virginity and
as per statistics in Crame, in our examination, that finding laceration, it is usually
related to sexual abuse or rape.
19

During cross-examination by defense counsel, Dr. Carpio even gave the inference that
partial penetration of the penis could have caused the shallow hymenal laceration found
inside AAAs vagina, to wit:
[ATTY. SION]
Q In your expert opinion Mr. Witness, if in the event a penis is inserted would it cause a
shallow fresh laceration at 3 oclock position?
A It depends on the penetration, Maam.
Q A full penetration, Mr. Witness?
A A full penetration will cause deeper laceration.
Q Not shallow laceration?
A Yes, Maam. It will cause more laceration with the hymen and it is very post
fourchette the open parts of the genital at the lower and it is more fragile. It is usually
abraded or lacerated if penis was inserted.
Q But in this case that part of the vagina was preserved?
A Yes, Maam.
20

Jurisprudence states that carnal knowledge as an element of rape does not require full
penetration since all that is necessary for rape to be consummated is for the penis of
the accused to come into contact with the lips of the pudendum of the victim.
21

Moreover, it is equally settled that hymenal rupture, vaginal laceration or genital injury
is not indispensable because the same is not an element of the crime of rape.
22

Anent Dr. Carpios testimony that AAA told him that a finger, not a penis, was inserted
inside her vagina,
23
we rule that this does not seriously affect AAAs credibility nor
diminish the straightforward and consistent statements that she made in open court
which tells otherwise. During AAAs lengthy direct examination by the prosecutor and,
especially, during her strenuous cross-examination by defense counsel, she never
wavered from her conviction that, on July 4, 2002, appellant inserted his penis inside
her sex organ. The relevant portions of AAAs testimony during her cross-examination
are reproduced here:
[ATTY. SION]
Q And in fact, you said that it was inserted because you can feel that something was
inserted into your vagina?
A Yes, Maam.
Q And you were sure that it was the penis of your Kuya Jade?
A Yes, Maam.
x x x x
Q During the last incident on July 4, 2002, you were very certain that the penis of the
accused was inserted into your vagina?
A Yes, Maam.
x x x x
Q But the truth is that the accused has repeatedly inserted his entire penis into your
vagina during those times? .
A Yes, Maam.
24

In addition, we have previously ruled that expert testimony is merely corroborative in
character and not essential to conviction since an accused can still be convicted of rape
on the basis of the sole testimony of the private complainant.
25
In other words, the
medico-legal officers testimony cannot be considered to possess comparative weight to
that of the victims assertions of rape and, thus, can be disregarded without affecting
the finding of guilt imposed upon the accused.
It is settled in jurisprudence that in a prosecution for rape, the accused may be
convicted solely on the basis of the testimony of the victim that is credible, convincing
and consistent with human nature and the normal course of things.
26

We agree with the findings of the trial court, which was affirmed by the Court of
Appeals, that AAAs testimony clearly and convincingly narrated the details of how she
was raped by appellant.1wphi1 The significant snippets of her testimony read:
[PROSECUTOR MONTESA]
Q You said that at that time you were sleeping, what happened next after that?
A He lay beside me.
Q Who lay beside you, AAA?
A Jade, sir.
Q And after Jade lay beside you, what happened next?
A He removed my shorts.
Q And then what else did he do, if any?
A He laid on top of me.
Q And after he laid on top of you, what else happened?
A (no answer)
x x x x
[COURT]
Q According to you when the accused went to you he removed your shorts, is this true?
A Yes, your honor.
Q Now, when he was removing your shorts, did you say anything?
A Yes, your honor.
Q What did you tell him?
A That he should not remove my shorts.
x x x x
Q Now, what did the accused do to his pants after he laid on top of you?
A He removed also the pants.
x x x x
Q Now, according to you, Kuya Jade removed his pants and he laid on top of you, now,
what did Kuya Jade do to you after he removed his pants?
A "Tinusok niya ang kanyang titi sa akin."
x x x x
[PROSECUTOR MONTESA]
Q What part of your body was the organ "tinusok"? Was it "tinusok sa private part or
pepe"?
A Yes, in my "pepe".
Q And what else did he do after he, as you said, "tinusok" his private organ to your
"pepe"?
A He was kissing me.
Q And after that, what happened next?
A And he told me to keep quiet.
Q And did you say anything to him after he told you to keep quiet?
A He said I should keep silent or else he will kill my Mama.
27

With respect to appellants denial of all the charges against him, we ascribe no weight
to such an assertion considering that his claim lacked sufficient corroboration. We have
consistently stated in jurisprudence that denial is an intrinsically weak defense which
must be buttressed by strong evidence of non-culpability to merit credibility because
mere denial, without any strong evidence to support it, can scarcely overcome the
positive declaration by the child-victim of the identity of the appellant and his
involvement in the crime attributed to him.
28

As for the Court of Appeals ruling that the charge of rape in Criminal Case No. 02-0576
should be downgraded to an act of lasciviousness, we find no justification to disturb the
same. As correctly cited by the Court of Appeals, it was settled in Abulon that:
In view of the material differences between the two modes of rape, the first mode is
not necessarily included in the second, and vice versa. Thus, since the charge in the
Information in Criminal Case No. SC-7424 is rape through carnal knowledge, appellant
cannot be found guilty of rape by sexual assault although it was proven, without
violating his constitutional right to be informed of the nature and cause of the
accusation against him.
However, following the variance doctrine embodied in Section 4, in relation to Section
5, Rule 120, Rules of Criminal Procedure, appellant can be found guilty of the lesser
crime of acts of lasciviousness. Said provisions read:
SEC. 4. Judgment in case of variance between allegation and proof. When there is a
variance between the offense charged in the complaint or information and that proved,
and the offense as charged is included in or necessarily includes the offense proved, the
accused shall be convicted of the offense proved which is included in the offense
charged, or of the offense charged which is included in the offense proved.
SEC. 5. When an offense includes or is included in another. An offense charged
necessarily includes the offense proved when some of the essential elements or
ingredients of the former, as alleged in the complaint or information, constitutes the
latter. And an offense charged is necessarily included in the offense proved when the
essential ingredients of the former constitute or form part of those constituting the
latter.
Indeed, acts of lasciviousness or abusos dishonestos are necessarily included in rape.
29

On the basis of the foregoing disquisition, we affirm the conviction of appellant of one
(1) count of statutory rape for which he is to suffer the penalty of reclusion perpetua
and one (1) count of act of lasciviousness for which he is to suffer an indeterminate
penalty of six ( 6) months of arresto mayor as minimum, to four (4) years and two (2)
months of prision correccional as maximum. The award of damages is likewise affirmed.
WHEREFORE, premises considered, the Decision dated November 25, 2010 of the Court
of Appeals in CA-G.R. CR.-H.C. No. 03619, finding appellant Jade Cuaycong in Criminal
Case Nos. 02-0575 and 02-0576, is hereby AFFIRMED with MODIFICATION that
appellant is ordered to pay the private offended party interest on all damages awarded
at the legal rate of six percent (6) per annum from the date of finality of this judgment.
No pronouncement as to costs.
SO ORDERED.




EN BANC
A.M. No. 13-09-08-SC October 1, 2013
RE: REQUEST FOR GUIDANCE/CLARIFICATION ON SECTION 7, RULE III OF
REPUBLIC ACT NO. 10154 REQUIRING RETIRING GOVERNMENT EMPLOYEES
TO SECURE A CLEARANCE OF PENDENCY/NON-PENDENCY OF CASE/S FROM
THE CIVIL SERVICE COMMISSION.
R E S O L U T I O N
PERLAS-BERNABE, J.:
Before the Court is a Memorandum dated September 18, 2013 from Atty. Eden T.
Candelaria, Deputy Clerk of Court and Chief Administrative Officer, Office of
Administrative Services of the Supreme Court, requesting guidance/clarification on the
applicability to the Judiciary of Section 7, Rule III of the Implementing Rules and
Regulations of Republic Act No. (RA) 10154
1
which states:
Section 7. Notice of Pendency of Case. The retiring employee shall seek Clearance of
Pendency/Non-Pendency of Administrative Case from his/her employer agency, Civil
Service Commission (CSC), Office of the Ombudsman, or in case of presidential
appointees, from the Office of the President.
Section 6,
2
Article VIII of the 1987 Philippine Constitution (Constitution) exclusively
vests in the Court administrative supervision over all courts and court personnel.
3
As
such, it oversees the court personnels compliance with all laws and takes the proper
administrative action against them for any violation thereof.
4
As an adjunct thereto, it
keeps in its custody records pertaining to the administrative cases of retiring court
personnel.1wphi1
In view of the foregoing, the Court rules that the subject provision which requires
retiring government employees to secure a prior clearance of pendency/non-pendency
of administrative case/s from, among others, the CSC should not be made to apply to
employees of the Judiciary.1wphi1 To deem it otherwise would disregard the Courts
constitutionally-enshrined power of administrative supervision over its personnel.
Besides, retiring court personnel are already required to secure a prior clearance of the
pendency/non-pendency of administrative case/s from the Court which makes the CSC
clearance a superfluous and non-expeditious requirement contrary to the declared state
policy of RA 10154.
5

To further clarify the matter, the same principles dictate that a prior clearance of
pendency/non-pendency of administrative case/s from the Office of the President
(albeit some court personnel are presidential appointees, e.g., Supreme Court Justices)
or the Office of the Ombudsman should not equally apply to retiring court personnel.
Verily, the administrative supervision of court personnel and all affairs related thereto
fall within the exclusive province of the Judiciary.
It must, however, be noted that since the Constitution only accords the Judiciary
administrative supervision over its personnel, a different treatment of the clearance
requirement obtains with respect to criminal cases. As such, a clearance requirement
which pertains to criminal cases may be imposed by the appropriate government
agency, i.e., the Office of the Ombudsman,
6
on retiring court personnel as it is a matter
beyond the ambit of the Judiciarys power of administrative supervision.
WHEREFORE, the requirement of seeking a Clearance of Pendency/Non-Pendency of
Administrative Case from the Civil Service Commission embodied in Section 7, Rule III
of the Implementing Rules and Regulations of Republic Act No. 10154 is declared
INAPPLICABLE to retiring employees of the Judiciary.
SO ORDERED.




SECOND DIVISION
G.R. No. 186433 November 27, 2013
NUCCIO SAVERIO and NS INTERNATIONAL INC., Petitioners,
vs.
ALFONSO G. PUYAT, Respondent.
D E C I S I O N
BRION, J.:
We resolve the petition for review on certiorari,1 filed by petitioners Nuccio Saverio and
NS International, Inc. (NS) against respondent Alfonso G. Puyat, challenging the
October 27, 2008 decision2 and the February 10, 2009 resolution3 of the Court of
Appeals (CA) in CA-G.R. CV. No. 87879. The CA decision affirmed the December 15,
2004 decision4 of the Regional Trial Court RTC) of Makati City, Branch 136, in Civil Case
No. 00-594. The CA subsequently denied the petitioners motion for reconsideration.
The Factual Antecedents
On July 22, 1996, the respondent granted a loan to NSI. The loan was made pursuant
to the Memorandum of Agreement and Promissory Note (MOA)5 between the
respondent and NSI, represented by Nuccio. It was agreed that the respondent would
extend a credit line with a limit of P500,000.00 to NSI, to be paid within thirty (30) days
from the time of the signing of the document. The loan carried an interest rate of 17%
per annum, or at an adjusted rate of 25% per annum if payment is beyond the
stipulated period. The petitioners received a total amount of P300,000.00 and certain
machineries intended for their fertilizer processing plant business (business). The
proposed business, however, failed to materialize.
On several occasions, Nuccio made personal payments amounting to P600,000.00.
However, as of December 16, 1999, the petitioners allegedly had an outstanding
balance of P460,505.86. When the petitioners defaulted in the payment of the loan, the
respondent filed a collection suit with the RTC, alleging mainly that the petitioners still
owe him the value of the machineries as shown by the Breakdown of Account6 he
presented.
The petitioners refuted the respondents allegation and insisted that they have already
paid the loan, evidenced by the respondents receipt for the amount of P600,000.00.
They submitted that their remaining obligation to pay the machineries value, if any,
had long been extinguished by their business failure to materialize. They posited that,
even assuming without conceding that they are liable, the amount being claimed is
inaccurate, the penalty and the interest imposed are unconscionable, and an
independent accounting is needed to determine the exact amount of their liability.
The RTC Ruling
In its decision dated December 15, 2004, the RTC found that aside from the cash loan,
the petitioners obligation to the respondent also covered the payment of the
machineries value. The RTC also brushed aside the petitioners claim of partnership.
The RTC thus ruled that the payment of P600,000.00 did not completely extinguish the
petitioners obligation.
The RTC also found merit in the respondents contention that the petitioners are one
and the same. Based on Nuccios act of entering a loan with the respondent for
purposes of financing NSIs proposed business and his own admission during cross-
examination that the word "NS" in NSIs name stands for "Nuccio Saverio," the RTC
found that the application of the doctrine of piercing the veil of corporate fiction was
proper.
The RTC, moreover, concluded that the interest rates stipulated in the MOA were not
usurious and that the respondent is entitled to attorneys fees on account of the
petitioners willful breach of the loan obligation. Thus, principally relying on the
submitted Breakdown of Account, the RTC ordered the petitioners, jointly and severally,
to pay the balance of P460,505.86, at 12% interest, and attorneys fees equivalent to
25% of the total amount due.
The CA Ruling
The petitioners appealed the RTC ruling to the CA. There, they argued that in view of
the lack of proper accounting and the respondents failure to substantiate his claims,
the exact amount of their indebtedness had not been proven. Nuccio also argued that
by virtue of NSIs separate and distinct personality, he cannot be made solidarily liable
with NSI.
On October 27, 2008, the CA rendered a decision7 declaring the petitioners jointly and
severally liable for the amount that the respondent sought. The appellate court likewise
held that since the petitioners neither questioned the delivery of the machineries nor
their valuation, their obligation to pay the amount of P460,505.86 under the Breakdown
of Account remained unrefuted.
The CA also affirmed the RTC ruling that petitioners are one and the same for the
following reasons: (1) Nuccio owned forty percent (40%) of NSI; (2) Nuccio personally
entered into the loan contract with the respondent because there was no board
resolution from NSI; (3) the petitioners were represented by the same counsel; (4) the
failure of NSI to object to Nuccios acts shows the latters control over the corporation;
and (5) Nuccios control over NSI was used to commit a wrong or fraud. It further
adopted the RTCs findings of bad faith and willful breach of obligation on the
petitioners part, and affirmed its award of attorneys fees.
The Petition
The petitioners submit that the CA gravely erred in ruling that a proper accounting was
not necessary. They argue that the Breakdown of Account - which the RTC used as a
basis in awarding the claim, as affirmed by the CA - is hearsay since the person who
prepared it, Ramoncito P. Puyat, was not presented in court to authenticate it. They
also point to the absence of the awards computation in the RTC ruling, arguing that
assuming they are still indebted to the respondent, the specific amount of their
indebtedness remains undetermined, thus the need for an accounting to determine
their exact liability.
They further question the CAs findings of solidary liability. They submit that in the
absence of any showing that corporate fiction was used to defeat public convenience,
justify a wrong, protect fraud or defend a crime, or where the corporation is a mere
alter ego or business conduit of a person, Nuccios mere ownership of forty percent
(40%) does not justify the piercing of the separate and distinct personality of NSI.
The Case for the Respondent
The respondent counters that the issues raised by the petitioners in the present petition
pertaining to the correctness of the calibration of the documentary and testimonial
evidence by the RTC, as affirmed by the CA, in awarding the money claims are
essentially factual, not legal. These issues, therefore, cannot, as a general rule, be
reviewed by the Supreme Court in an appeal by certiorari. In other words, the
resolution of the assigned errors is beyond the ambit of a Rule 45 petition.
The Issue
The case presents to us the issue of whether the CA committed a reversible error in
affirming the RTCs decision holding the petitioners jointly and severally liable for the
amount claimed.
Our Ruling
After a review of the parties contentions, we hold that a remand of the case to the
court of origin for a complete accounting and determination of the actual amount of the
petitioners indebtedness is called for.
The determination of questions of fact is improper in a Rule 45 proceeding; Exceptions.
The respondent questions the present petitions propriety, and contends that in a
petition for review on certiorari under Rule 45 of the Rules of Court, only questions of
law may be raised. He argues that the petitioners are raising factual issues that are not
permissible under the present petition and these issues have already been extensively
passed upon by the RTC and the CA. The petitioners, on the other hand, assert that the
exact amount of their indebtedness has not been determined with certainty. They insist
that the amount of P460,505.86 awarded in favor of the respondent has no basis
because the latter failed to substantiate his claim. They also maintain that the
Breakdown of Account used by the lower courts in arriving at the collectible amount is
unreliable for the respondents failure to adduce supporting documents for the alleged
additional expenses charged against them. With no independent determination of the
actual amount of their indebtedness, the petitioners submit that an order for a proper
accounting is imperative.
We agree with the petitioners. While we find the fact of indebtedness to be undisputed,
the determination of the extent of the adjudged money award is not, because of the
lack of any supporting documentary and testimonial evidence. These evidentiary issues,
of course, are necessarily factual, but as we held in The Insular Life Assurance
Company, Ltd. v. Court of Appeals,8 this Court may take cognizance even of factual
issues under exceptional circumstances. In this cited case, we held:
It is a settled rule that in the exercise of the Supreme Court's power of review, the
Court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial of the case considering
that the findings of facts of the CA are conclusive and binding on the Court. However,
the Court had recognized several exceptions to this rule, to wit: (1) when the findings
are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5) when
the findings of facts are conflicting; (6) when in making its findings the Court of Appeals
went beyond the issues of the case, or its findings are contrary to the admissions of
both the appellant and the appellee; (7) when the findings are contrary to the trial
court; (8) when the findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent; (10) when the
findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record; and (11) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered, would
justify a different conclusion.
We note in this regard that the RTC, in awarding the amount of P460,505.86 in favor of
the respondent, principally relied on the Breakdown of Account. Under this document,
numerous entries, including the cash loan, were enumerated and identified with their
corresponding amounts. It included the items of expenses allegedly chargeable to the
petitioners, the value of the machineries, the amount credited as paid, and the interest
and penalty allegedly incurred.
A careful perusal of the records, however, reveals that the entries in the Breakdown of
Account and their corresponding amounts are not supported by the respondents
presented evidence. The itemized expenses, as repeatedly pointed out by the
petitioners, were not proven, and the remaining indebtedness, after the partial payment
of P600,000.00, was merely derived by the RTC from the Breakdown of Account.
Significantly, the RTC ruling neither showed how the award was computed nor how the
interest and penalty were calculated. In fact, it merely declared the petitioners liable for
the amount claimed by the respondent and adopted the breakdown of liability in the
Breakdown of Account. This irregularity is even aggravated by the RTCs explicit refusal
to explain why the payment of P600,000.00 did not extinguish the debt. While it may
be true that the petitioners indebtedness, aside from the cash loan of P300,000.00,
undoubtedly covered the value of the machineries, the RTC decision was far from clear
and instructive on the actual remaining indebtedness (inclusive of the machineries
value, penalties and interests) after the partial payment was made and how these were
all computed.
We, thus, find it unacceptable for the RTC to simply come up with a conclusion that the
payment of P600,000.00 did not extinguish the debt, or, assuming it really did not, that
the remaining amount of indebtedness amounts exactly to P460,505.86, without any
showing of how this balance was arrived at. To our mind, the RTCs ruling, in so far as
the determination of the actual indebtedness is concerned, is incomplete.
What happened at the RTC likewise transpired at the CA when the latter affirmed the
appealed decision; the CA merely glossed over the contention of the petitioners, and
adopted the RTCs findings without giving any enlightenment. To reiterate, nowhere in
the decisions of the RTC and the CA did they specify how the award, including the
penalty and interest, was determined. The petitioners were left in the dark as to how
their indebtedness of P300,000.00, after making a payment of P600,000.00, ballooned
to P460,505.86. Worse, unsubstantiated expenses, appearing in the Breakdown of
Account, were charged to them.
We, therefore, hold it inescapable that the prayer for proper accounting to determine
the petitioners actual remaining indebtedness should be granted. As this requires
presentation of additional evidence, a remand of the case is only proper and in order.
Piercing the veil of corporate fiction is not justified. The petitioners are not one and the
same.
At the outset, we note that the question of whether NSI is an alter ego of Nuccio is a
factual one. This is also true with respect to the question of whether the totality of the
evidence adduced by the respondent warrants the application of the piercing the veil of
corporate fiction doctrine. As we did in the issue of accounting, we hold that the Court
may properly wade into the piercing the veil issue although purely factual questions are
involved.
After a careful study of the records and the findings of both the RTC and the CA, we
hold that their conclusions, based on the given findings, are not supported by the
evidence on record.
The rule is settled that a corporation is vested by law with a personality separate and
distinct from the persons composing it. Following this principle, a stockholder, generally,
is not answerable for the acts or liabilities of the corporation, and vice versa. The
obligations incurred by the corporate officers, or other persons acting as corporate
agents, are the direct accountabilities of the corporation they represent, and not theirs.
A director, officer or employee of a corporation is generally not held personally liable for
obligations incurred by the corporation9 and while there may be instances where
solidary liabilities may arise, these circumstances are exceptional.10
Incidentally, we have ruled that mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stocks of the corporation is not, by itself, a
sufficient ground for disregarding the separate corporate personality. Other than mere
ownership of capital stocks, circumstances showing that the corporation is being used
to commit fraud or proof of existence of absolute control over the corporation have to
be proven. In short, before the corporate fiction can be disregarded, alter-ego elements
must first be sufficiently established.
In Hi-Cement Corporation v. Insular Bank of Asia and America (later PCI-Bank, now
Equitable PCI-Bank),11 we refused to apply the piercing the veil doctrine on the ground
that the corporation was a mere alter ego because mere ownership by a stockholder of
all or nearly all of the capital stocks of a corporation does not, by itself, justify the
disregard of the separate corporate personality. In this cited case, we ruled that in
order for the ground of corporate ownership to stand, the following circumstances
should also be established: (1) that the stockholders had control or complete
domination of the corporations finances and that the latter had no separate existence
with respect to the act complained of; (2) that they used such control to commit a
wrong or fraud; and (3) the control was the proximate cause of the loss or injury.
Applying these principles to the present case, we opine and so hold that the attendant
circumstances do not warrant the piercing of the veil of NSIs corporate fiction.
Aside from the undisputed fact of Nuccios 40% shareholdings with NSI, the RTC
applied the piercing the veil doctrine based on the following reasons. First, there was no
board resolution authorizing Nuccio to enter into a contract of loan. Second, the
petitioners were represented by one and the same counsel. Third, NSI did not object to
Nuccios act of contracting the loan.
Fourth, the control over NSI was used to commit a wrong or fraud. Fifth, Nuccios
admission that "NS" in the corporate name "NSI" means "Nuccio Saverio."
We are not convinced of the sufficiency of these cited reasons. In our view, the RTC
failed to provide a clear and convincing explanation why the doctrine was applied. It
merely declared that its application of the doctrine of piercing the veil of corporate
fiction has a basis, specifying for this purpose the act of Nuccios entering into a
contract of loan with the respondent and the reasons stated above.
The records of the case, however, do not show that Nuccio had control or domination
over NSIs finances.1wphi1 The mere fact that it was Nuccio who, in behalf of the
corporation, signed the MOA is not sufficient to prove that he exercised control over the
corporations finances. Neither the absence of a board resolution authorizing him to
contract the loan nor NSIs failure to object thereto supports this conclusion. These may
be indicators that, among others, may point the proof required to justify the piercing
the veil of corporate fiction, but by themselves, they do not rise to the level of proof
required to support the desired conclusion. It should be noted in this regard that while
Nuccio was the signatory of the loan and the money was delivered to him, the proceeds
of the loan were unquestionably intended for NSIs proposed business plan. That the
business did not materialize is not also sufficient proof to justify a piercing, in the
absence of proof that the business plan was a fraudulent scheme geared to secure
funds from the respondent for the petitioners undisclosed goals.
Considering that the basis for holding Nuccio liable for the payment of the loan has
been proven to be insufficient, we find no justification for the RTC to hold him jointly
and solidarily liable for NSIs unpaid loan. Similarly, we find that the CA ruling is
wanting in sufficient explanation to justify the doctrines application and affirmation of
the RTCs ruling. With these points firmly in mind, we hold that NSIs liability should not
attach to Nuccio.
On the final issue of the award of attorneys fees, Article 1229 of the New Civil Code
provides:
Article 1229. The judge shall equitably reduce the penalty when the principal obligation
has been partly or irregularly complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.
Under the circumstances of the case, we find the respondents entitlement to attorneys
fees to be justified. There is no doubt that he was forced to litigate to protect his
interest, i.e., to recover his money. We find, however, that in view of the partial
payment of P600,000.00, the award of attorneys fees equivalent to 25% should be
reduced to 10% of the total amount due. The award of appearance fee of P3,000.00
and litigation cost of P10,000.00 should, however, stand as these are costs necessarily
attendant to litigation.
WHEREFORE, the petition is GRANTED. The October 27, 2008 decision and the
February 10, 2009 resolution of the Court of Appeals in CA-G.R. CV. No. 87879 are
REVERSED AND SET ASIDE. The case is REMANDED to the Regional Trial Court of
Makati City, Branch 136, for proper accounting and reception of such evidence as may
be needed to determine the actual amount of petitioner NS International, Inc.s
indebtedness, and to adjudicate respondent Alfonso G. Puyats claims as such evidence
may warrant.
SO ORDERED.


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SECOND DIVISION
G.R. No. 165585 November 20, 2013
GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,
vs.
PRUDENTIAL GUARANTEE AND ASSURANCE, INC., DEVELOPMENT BANK OF
THE PHILIPPINES and LAND BANK OF THE PHILIPPINES, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - x
G.R. No. 176982
GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,
vs.
PRUDENTIAL GUARANTEE AND ASSURANCE, INC., Respondent.
D E C I S I O N
PERLAS-BERNABE, J.:
Assailed in these consolidated petitions for review on Certiorari1 are separate issuances
of the Court of Appeals (CA) in relation to the complaint for sum of money filed by
Prudential Guarantee and Assurance, Inc. (PGAI) against the Government Service
Insurance System (GSIS) before the Regional Trial Court of Makati City, Branch 149
(RTC), docketed as Civil Case No. 01-1634.
In particular, the petition in G.R. No. 165585 assails the Decision2 dated May 26, 2004
and Resolution3 dated October 6, 2004 of the CA in CA-G.R. SP No. 69289 which
affirmed the Order4 dated February 14, 2002, as well as the Order,5 Notices of
Garnishment,6 and Writ of Execution,7 all dated February 19, 2002, issued by the RTC
authorizing execution pending appeal.
On the other hand, the petition in G.R. No. 176982 assails the Decision8 dated October
30, 2006 and Resolution9 dated March 12, 2007 of the CA in CA-G.R. CV No. 73965
which dismissed the appeal filed by GSIS, affirming with modification the Order10 dated
January 11, 2002 of the RTC rendering judgment on the pleadings.
The Facts
Sometime in March 1999, the National Electrification Administration (NEA) entered into
a Memorandum of Agreement11 (MOA) with GSIS insuring all real and personal
properties mortgaged to it by electrical cooperatives under an Industrial All Risks Policy
(IAR policy).12 The total sum insured under the IAR policy was P16,731,141,166.80,
out of which, 95% or P15,894,584,108.40 was reinsured by GSIS with PGAI for a period
of one year or from March 5, 1999 to March 5, 2000.13 As reflected in Reinsurance
Request Note No. 99-15014 (reinsurance cover) and the Reinsurance Binder15 dated
April 21, 1999 (reinsurance binder), GSIS agreed to pay PGAI reinsurance premiums in
the amount of P32,885,894.52 per quarter or a total of P131,543,578.08.16 While GSIS
remitted to PGAI the reinsurance premiums for the first three quarters, it, however,
failed to pay the fourth and last reinsurance premium due on December 5, 1999 despite
demands. This prompted PGAI to file, on November 15, 2001, a Complaint17 for sum of
money (complaint) against GSIS before the RTC, docketed as Civil Case No. 01-1634.
In its complaint, PGAI alleged, among others, that: (a) after it had issued the IAR
policy, it further reinsured the risks covered under the said reinsurance with reputable
reinsurers worldwide such as Lloyds of London, Copenhagen Re, Cigna Singapore, CCR,
Generali, and Arig;18 (b) the first three reinsurance premiums were paid to PGAI by
GSIS and, in the same vein, NEA paid the first three reinsurance premiums due to
GSIS;19 (c) GSIS failed to pay PGAI the fourth and last reinsurance premium due on
December 5, 1999;20 (d) the IAR policy remained in full force and effect for the entire
insurable period and, in fact, the losses/damages on various risks reinsured by PGAI
were paid and accordingly settled by it;21 (e) PGAI is under continuous pressure from
its reinsurers in the international market to settle the matter;22 and (f) GSIS
acknowledged its obligation to pay the last reinsurance premium as it, in turn,
demanded from NEA the fourth and last reinsurance premium.23
In its Answer,24 GSIS admitted, among others, that: (a) its request for reinsurance
cover was accepted by PGAI in a reinsurance binder;25 (b) it remitted to PGAI the first
three reinsurance premiums which were paid by NEA;26 and (c) it failed to remit the
fourth and last reinsurance premium to PGAI.27 It, however, denied, inter alia, that: (a)
it had acknowledged its obligation to pay the last quarters reinsurance premium to
PGAI;28 and (b) the IAR policy remained in full force and effect for the entire insurable
period of March 5, 1999 to March 5, 2000.29 GSIS also proffered the following
affirmative defenses: (a) the complaint states no cause of action against GSIS because
the non-payment of the last reinsurance premium only renders the reinsurance contract
ineffective, and does not give PGAI a right of action to collect;30 (b) pursuant to the
regulations issued by the Commission on Audit, GSIS is prohibited from advancing
payments to PGAI occasioned by the failure of the principal insured, NEA, to pay the
insurance premium;31 and (c) PGAIs cause of action lies against NEA since GSIS
merely acted as a conduit.32 By way of counterclaim, GSIS prayed that PGAI be
ordered to pay exemplary damages, including litigation expenses, and costs of suit.33
On December 18, 2001, PGAI filed a Motion for Judgment on the Pleadings34 averring
that GSIS essentially admitted the material allegations of the complaint, such as: (a)
the existence of the MOA between NEA and GSIS; (b) the existence of the reinsurance
binder between GSIS and PGAI; (c) the remittance by GSIS to PGAI of the first three
quarterly reinsurance premiums; and (d) the failure/refusal of GSIS to remit the fourth
and last reinsurance premium.35 Hence, PGAI prayed that the RTC render a judgment
on the pleadings pursuant to Section 1, Rule 34 of the Rules of Court (Rules). GSIS
opposed36 the foregoing motion by reiterating the allegations and defenses in its
Answer.
On January 11, 2002, the RTC issued an Order37 (January 11, 2002 Order) granting
PGAIs Motion for Judgment on the Pleadings. It observed that the admissions of GSIS
that it paid the first three quarterly reinsurance premiums to PGAI affirmed the validity
of the contract of reinsurance between them. As such, GSIS cannot now renege on its
obligation to remit the last and remaining quarterly reinsurance premium.38 It further
pointed out that while it is true that the payment of the premium is a requisite for the
validity of an insurance contract as provided under Section 77 of Presidential Decree
No. (PD) 612,39 otherwise known as "The Insurance Code," it was held in Makati
Tuscany Condominium Corp. v. CA40 (Makati Tuscany) that insurance policies are valid
even if the premiums were paid in installments, as in this case.41 Thus, in view of the
foregoing, the RTC ordered GSIS to pay PGAI the last quarter reinsurance premium in
the sum of P32,885,894.52, including interests amounting to P6,519,515.91 as of July
31, 2000 until full payment, attorneys fees, and costs of suit.42 Dissatisfied, GSIS filed
a notice of appeal.43
Meanwhile, PGAI filed a Motion for Execution Pending Appeal44 based on the following
reasons: (a) GSIS appeal was patently dilatory since it already acknowledged the
validity of PGAIs claim;45 (b) GSIS posted no valid defense as its Answer raised no
genuine issues;46 and (c) PGAI would suffer serious and irreparable injury as it may be
blacklisted as a consequence of the non-payment of premiums due.47 PGAI also
manifested its willingness to post a sufficient surety bond to answer for any resulting
damage to GSIS.48 The latter opposed49 the motion asserting that there lies no
sufficient ground or urgency to justify execution pending appeal. It also claimed that all
its funds and properties are exempted from execution citing Section 39 of Republic Act
No. (RA) 8291,50 otherwise known as "The Government Service Insurance System Act
of 1997."51
On February 14, 2002, the RTC issued an Order52 (February 14, 2002 Order) granting
PGAIs Motion for Execution Pending Appeal, conditioned on the posting of a bond. It
further held that only the GSIS Social Insurance Fund is exempt from execution.
Accordingly, PGAI duly posted a surety bond which the RTC approved through an
Order53 dated February 19, 2002, resulting to the issuance of a writ of execution54 and
notices of garnishment55 (February 19, 2002 issuances), all of even date, against GSIS.
The CA Proceedings Antecedent to G.R. No. 165585
Aggrieved by the RTCs February 14, 2002 Order, as well as the February 19, 2002
issuances, GSIS without first filing a motion for reconsideration (from the said order
of execution) or a sufficient supersedeas bond56 filed on February 26, 2002 a petition
for certiorari57 before the CA, docketed as CA-G.R. SP No. 69289, against the RTC and
PGAI. It also impleaded in the said petition the Land Bank of the Philippines (LBP) and
the Development Bank of the Philippines (DBP) as nominal parties so as to render them
subject to the writs and processes of the CA.58
In its petition, GSIS argued that: (a) none of the grounds proffered by PGAI justifies the
issuance of a writ of execution pending appeal;59 and (b) all funds and assets of GSIS
are exempt from execution and levy in accordance with RA 8291.60
On April 4, 2002, the CA issued a temporary restraining order (TRO)61 enjoining the
garnishment of GSIS funds with LBP and DBP. Nevertheless, since the TROs effectivity
lapsed, GSIS funds with the LBP were eventually garnished.62
On May 26, 2004, the CA rendered a Decision63 dismissing GSIS petition, upholding,
among others, the validity of the execution pending appeal pursuant to the RTCs
February 14, 2002 Order as well as the February 19, 2002 issuances. It found that the
impending blacklisting of PGAI constitutes a good reason for allowing the execution
pending appeal (also known as "discretionary execution") considering that the
imposition of international sanctions on any single local insurance company puts in
grave and immediate jeopardy not only the viability of that company but also the
integrity of the entire local insurance system including that of the state insurance
agency. It pointed out that the insurance business thrives on credibility which is
maintained by honoring financial commitments.
On the claimed exemption of GSIS funds from execution, the CA held that such
exemption only covers funds under the Social Insurance Fund which remains liable for
the payment of benefits like retirement, disability and death compensation and not
those covered under the General Insurance Fund, as in this case, which are meant for
investment in the business of insurance and reinsurance.64
GSIS motion for reconsideration65 was denied by the CA in a Resolution66 dated
October 6, 2004. Hence, the petition for review on certiorari in G.R. No. 165585.67
The CA Proceedings Antecedent to G.R. No. 176982
Separately, GSIS also assailed the RTCs January 11, 2002 Order which granted PGAIs
Motion for Judgment on the Pleadings through an appeal68 filed on October 7, 2002,
docketed as CA G.R. CV No. 73965.
GSIS averred that the RTC gravely erred in: (a) rendering judgment on the pleadings
since it specifically denied the material allegations in PGAIs complaint; (b) ordering
execution pending appeal since there are no justifiable reasons for the same; and (c)
effecting execution against funds and assets of GSIS given that RA 8291 exempts the
same from levy, execution and garnishment.69
For its part, PGAI maintained that: (a) the judgment on the pleadings was in order
given that GSIS never disputed the facts as alleged in its complaint; (b) the
discretionary execution was proper in view of the dilatory methods employed by GSIS in
order to evade the payment of a valid obligation; and (c) the general insurance fund of
GSIS, which was attached and garnished by the RTC, is not exempt from execution.70
In a Decision71 dated October 30, 2006, the CA sustained the RTCs January 11, 2002
Order but deleted the awards of interest and attorneys fees for lack of factual and legal
basis.72
The CA ruled that judgment on the pleadings was proper since GSIS did not specifically
deny the genuineness, due execution, and perfection of its reinsurance contract with
PGAI.73 In fact, PGAI even settled reinsurance claims during the covering period
rendering the reinsurance contract not only perfected but partially executed as well.74
Passing on the issue of the exemption from execution of GSIS funds, the CA, citing
Rubia v. GSIS75 (Rubia), held that the exemption provided for by RA 8291 is not
absolute since it only pertains to the social security benefits of its members; thus, funds
used by the GSIS for business investments and commercial ventures, as in this case,
may be attached and garnished.76
GSIS motion for reconsideration77 was denied by the CA in a Resolution78 dated
March 12, 2007. Hence, the present petition for review on certiorari in G.R. No.
176982.79
The Issues Before the Court
In these consolidated petitions, the essential issues are the following: (a) in G.R. No.
165585, whether the CA erred in (1) upholding the RTCs February 14, 2002 Order
authorizing execution pending appeal, and (2) ruling that only the Social Insurance
Fund and not the General Fund of the GSIS is exempt from garnishment; and (b) in
G.R. No. 176982, whether the CA erred in sustaining the RTCs January 11, 2002 Order
rendering judgment on the pleadings.
The Courts Ruling
The petitions are partly meritorious.
A. Good reasons to allow execution pending appeal and the nature of the exemption
under Section 39 of RA 8291.
The execution of a judgment pending appeal is an exception to the general rule that
only a final judgment may be executed.80 In order to grant the same pursuant to
Section 2,81 Rule 39 of the Rules, the following requisites must concur: (a) there must
be a motion by the prevailing party with notice to the adverse party; (b) there must be
a good reason for execution pending appeal; and (c) the good reason must be stated in
a special order.82
Good reasons call for the attendance of compelling circumstances warranting immediate
execution for fear that favorable judgment may yield to an empty victory. In this
regard, the Rules do not categorically and strictly define what constitutes "good
reason," and hence, its presence or absence must be determined in view of the peculiar
circumstances of each case. As a guide, jurisprudence dictates that the "good reason"
yardstick imports a superior circumstance that will outweigh injury or damage to the
adverse party.83 Corollarily, the requirement of "good reason" does not necessarily
entail unassailable and flawless basis but at the very least, an invocation thereof must
be premised on solid footing.84
In the case at bar, the RTC, as affirmed by the CA, granted PGAIs motion for execution
pending appeal on the ground that the impending sanctions against it by foreign
underwriters/reinsurers constitute good reasons therefor. It must, however, be
observed that PGAI has not proffered any evidence to substantiate its claim, as it
merely presented bare allegations thereon. It is hornbook doctrine that mere allegations
do not constitute proof. As held in Real v. Belo,85 "it is basic in the rule of evidence
that bare allegations, unsubstantiated by evidence, are not equivalent to proof. In
short, mere allegations are not evidence."86 Hence, without any sufficient basis to
support the existence of its alleged "good reasons," it cannot be said that the second
requisite to allow an execution pending appeal exists. To reiterate, the requirement of
"good reasons" must be premised on solid footing so as to ensure that the "superior
circumstance" which would impel immediate execution is not merely contrived or based
on speculation. This, however, PGAI failed to demonstrate in the present case. In fine,
the Court therefore holds that the CAs affirmance of the RTCs February 14, 2002 Order
authorizing execution pending appeal, as well as the February 19, 2002 issuances
related thereto, was improper.
Nevertheless, while an execution pending appeal should not lie in view of the above-
discussed reasons, it must be noted that the funds and assets of GSIS may after the
resolution of the appeal and barring any provisional injunction thereto be subject to
execution, attachment, garnishment or levy since the exemption under Section 39 of RA
829187 does not operate to deny private entities from properly enforcing their
contractual claims against GSIS.88 This has been established in the case of Rubia
wherein the Court held as follows:
The declared policy of the State in Section 39 of the GSIS Charter granting GSIS an
exemption from tax, lien, attachment, levy, execution, and other legal processes should
be read together with the grant of power to the GSIS to invest its "excess funds" under
Section 36 of the same Act. Under Section 36, the GSIS is granted the ancillary power
to invest in business and other ventures for the benefit of the employees, by using its
excess funds for investment purposes. In the exercise of such function and power, the
GSIS is allowed to assume a character similar to a private corporation. Thus, it may sue
and be sued, as also explicitly granted by its charter.
Needless to say, where proper, under Section 36, the GSIS may be held liable for the
contracts it has entered into in the course of its business investments. For GSIS cannot
claim a special immunity from liability in regard to its business ventures under said
Section.
Nor can it deny contracting parties, in our view, the right of redress and the
enforcement of a claim, particularly as it arises from a purely contractual relationship of
a private character between an individual and the GSIS.89 (Emphases supplied and
citations omitted)
Thus, the petition in G.R. No. 165585 is partly granted.
B. Propriety of judgment on the pleadings.
Judgment on the pleadings is appropriate when an answer fails to tender an issue, or
otherwise admits the material allegations of the adverse partys pleading. The rule is
stated in Section 1, Rule 34 of the Rules which reads as follows:
Sec. 1. Judgment on the pleadings. Where an answer fails to tender an issue, or
otherwise admits the material allegations of the adverse partys pleading, the court
may, on motion of that party, direct judgment on such pleading. x x x.
In this relation, jurisprudence dictates that an answer fails to tender an issue if it does
not comply with the requirements of a specific denial as set out in Sections 890 and
10,91 Rule 8 of the Rules, resulting in the admission of the material allegations of the
adverse partys pleadings.92
As such, it is a form of judgment that is exclusively based on the submitted pleadings
without the introduction of evidence as the factual issues remain uncontroverted.93
In this case, records disclose that in its Answer, GSIS admitted the material allegations
of PGAIs complaint warranting the grant of the relief prayed for. In particular, GSIS
admitted that: (a) it made a request for reinsurance cover which PGAI accepted in a
reinsurance binder effective for one year;94 (b) it remitted only the first three
reinsurance premium payments to PGAI;95 (c) it failed to pay PGAI the fourth and final
reinsurance premium installment;96 and (d) it received demand letters from PGAI.97 It
also did not refute the allegation of PGAI that it settled reinsurance claims during the
reinsured period. On the basis of these admissions, the Court finds that the CA did not
err in affirming the propriety of a judgment on the pleadings.
GSIS affirmative defense that the non-payment of the last reinsurance premium merely
rendered the contract ineffective pursuant to Section 7798 of PD 612 no longer involves
any factual issue, but stands solely as a mere question of law in the light of the
foregoing admissions hence allowing for a judgment on the pleadings. Besides, in the
case of Makati Tuscany, the Court already ruled that the non-payment of subsequent
installment premiums would not prevent the insurance contract from taking effect; that
the parties intended to make the insurance contract valid and binding is evinced from
the fact that the insured paid and the insurer received several reinsurance
premiums due thereon, although the former refused to pay the remaining balance, viz:
We hold that the subject policies are valid even if the premiums were paid on
installments. The records clearly show that petitioner and private respondent intended
subject insurance policies to be binding and effective notwithstanding the staggered
payment of the premiums. The initial insurance contract entered into in 1982 was
renewed in 1983, then in 1984. In those three (3) years, the insurer accepted all the
installment payments. Such acceptance of payments speaks loudly of the insurers
intention to honor the policies it issued to petitioner. Certainly, basic principles of equity
and fairness would not allow the insurer to continue collecting and accepting the
premiums, although paid on installments, and later deny liability on the lame excuse
that the premiums were not prepaid in full.
We therefore sustain the Court of Appeals. We quote with approval the well-reasoned
findings and conclusion of the appellate court contained in its Resolution denying the
motion to reconsider its Decision
While the import of Section 77 is that prepayment of premiums is strictly required as a
condition to the validity of the contract, We are not prepared to rule that the request to
make installment payments duly approved by the insurer, would prevent the entire
contract of insurance from going into effect despite payment and acceptance of the
initial premium or first installment . Section 78 of the Insurance Code in effect allows
waiver by the insurer of the condition of prepayment by making an acknowledgment in
the insurance policy of receipt of premium as conclusive evidence of payment so far as
to make the policy binding despite the fact that premium is actually unpaid. Section 77
merely precludes the parties from stipulating that the policy is valid even if premiums
are not paid, but does not expressly prohibit an agreement granting credit extension,
and such an agreement is not contrary to morals, good customs, public order or public
policy (De Leon, the Insurance Code, at p. 175). So is an understanding to allow
insured to pay premiums in installments not so proscribed. At the very least, both
parties should be deemed in estoppel to question the arrangement they have
voluntarily accepted.
[I]n the case before Us, petitioner paid the initial installment and thereafter made
staggered payments resulting in full payment of the 1982 and 1983 insurance
policies.1wphi1 For the 1984 policy, petitioner paid two (2) installments although it
refused to pay the balance.
It appearing from the peculiar circumstances that the parties actually intended to make
three (3) insurance contracts valid, effective and binding, petitioner may not be allowed
to renege on its obligation to pay the balance of the premium after the expiration of the
whole term of the third policy (No. AH-CPP-9210651) in March 1985. Moreover, as
correctly observed by the appellate court, where the risk is entire and the contract is
indivisible, the insured is not entitled to a refund of the premiums paid if the insurer
was exposed to the risk insured for any period, however brief or momentary.99
(Emphases supplied and citation omitted)
Thus, owing to the identical complexion of Makati Tuscany with the present case, the
Court upholds PGAIs right to be paid by GSIS the amount of the fourth and last
reinsurance premium pursuant to the reinsurance contract between them. All told, the
petition in G.R. No. 176982 is denied.
WHEREFORE, the petition in G.R. No. 165585 is PARTLY GRANTED. The Decision dated
May 26, 2004 and Resolution dated October 6, 2004 of the Court of Appeals in CA-G.R.
SP No. 69289 are MODIFIED only insofar as it upheld the validity of Prudential
Guarantee and Assurance, Inc.s execution pending appeal. In this respect, the Order
dated February 14, 2002 of the Regional Trial Court of Makati, Branch 149 as well as all
other issuances related thereto are set aside.
On the other hand, the petition in G.R. No. 176982 is DENIED. The Decision dated
October 30, 2006 and Resolution dated March 12, 2007 in CA-G.R. CV No. 73965 are
hereby AFFIRMED.
SO ORDERED.




SECOND DIVISION
G.R. No. 176702 November 13, 2013
OFFICE OF THE OMBUDSMAN, Petitioner,
vs.
MARCELINO A. DECHAVEZ, Respondent.
D E C I S I O N
BRION, J.:
The petitioner, Office of the Ombudsman (Ombudsman), seeks in this Rule 45 petition
for review on certiorari1 the reversal of the Court of Appeals (CA s) decision2 and
resolution3 reversing the Ombudsmans rulings4 that dismissed respondent Marcelino A.
Dechavez (Dechavez) from the service for dishonesty.
THE FACTS
The attendant facts are not complicated and, in fact, involve the oft-repeated scenario
in the public service workplace -a complaint by subordinate employees against their
superior officer for misconduct in office. In a twist of fortune (or misfortune), an
accident triggered the whole train of events that led to the present case.
Dechavez was the president of the Negros State College of Agriculture (NSCA) from
2001 until his retirement on April 9, 2006. On May 5, 2002, a Sunday, Dechavez and his
wife, Amelia M. Dechavez (Mrs. Dechavez), used the college service Suzuki Vitara to go
to Pontevedra, Negros Occidental. Dechavez drove the vehicle himself. On their way
back to the NSCA, they figured in a vehicular accident in Himamaylan City, resulting in
minor injuries to the occupants and damage to the vehicle.
To support his claim for insurance, Dechavez executed an affidavit5 before the
Government Service Insurance System (GSIS). The GSIS subsequently granted
Dechavez's claims amounting to P308,000.00, while the NSCA shouldered P71,000.00
as its share in the vehicle's depreciation expense. The GSIS released P6,000.00 for Mrs.
Dechavez's third-party liability claim for bodily injuries.
On November 11 2002, twenty (20) faculty and staff members of the NSCA
(complainants) asked the Commission on Audit (COA) to conduct an audit investigation
of NSCAs expenditures in the May 5, 2002 vehicular accident. The COA dismissed the
complaint for lack of merit.
The complainants then sought recourse with the Ombudsman, Visayas, through a
verified complaint7 charging Dechavez with Dishonesty under Section 46(b)(l), Chapter
6, Tile I of the Administrative Code of 1987.8
THE OMBUDSMAN S RULING
The Ombudsman dismissed Dechavez from the service with all accessory penalties after
finding him guilty.9 The Ombudsman ruled that the complainants sufficiently
established their allegations, while Dechavez's defenses had been successfully rebutted.
The motion for reconsideration that Dechavez filed was subsequently denied.10
THE CAS RULING
The CA examined the same pieces of evidence that the Ombudsman considered and
reversed the Ombudsman s findings.11
In complete contrast with the Ombudsman's rulings, the CA found that the
complainants failed to sufficiently show that Dechavez had deliberately lied in his May
10, 2002 affidavit. Dechavez sufficiently proved that he went on an official trip, based
on the reasons outlined below and its reading of the evidence:
First, there was nothing wrong if Dechavez worked on a Sunday; he must, in fact, be
commended for his dedication.
Second, the Ombudsman should have accorded greater belief on the NSCA drivers
positive assertion that they were not available to drive for Mr. and Mrs. Dechavez (as
they had serviced other faculty members at that time), as against the NSCA security
guards allegation that these drivers were available then (because they allegedly saw the
drivers within the college premises on that Sunday); speculations on the nature of the
trip should not arise simply because Dechavez personally drove the vehicle.
Third, the certifications of Mr. Larry Parroco (Pontevedra Sanggunian Bayan Member)
and Mr. Cornelio Geanga (Chair of the Education Committee and Head Teacher of the
M.H. Del Pilar Elementary School) should have persuaded the Ombudsman that the
affiants are public officials who would not lightly issue a certification or falsely execute
affidavits as they know the implications and consequences of any falsity.
Fourth, and lastly the two lists of teaching instructors had been prepared by the same
person, and if the second list had indeed been questionable, Mr. Pablito Cuizon (NSCA s
Chairman for Instructions) would have not attached the second list to his affidavit.
On February 7, 2007, the CA denied12 the motion for reconsideration filed by the
Ombudsman.
THE PARTIES ARGUMENTS
The Ombudsman argues that the guilt of Dechavez has been proven by substantial
evidence -the quantum of evidence required in administrative proceedings. It likewise
invokes its findings and posits that because they are supported by substantial evidence,
they deserve great weight and must be accorded full respect and credit.
Dechavez counters that the present petition raises factual issues that are improper for a
petition for review on certiorari under Rule 45. He adds that the present case has been
mooted by his retirement from the service on April 9, 2006, and should properly be
dismissed.
THE COURTS RULING
The Court finds the petition meritorious.
The CAs factual findings are conclusive exceptions
The rule that the Court will not disturb the CA' s findings of fact is not an absolute rule
that admits of no exceptions. 13 A notable exception is the presence of conflict of
findings of fact between or among the tribunals' rulings on questions of fact. The case
before us squarely falls under this exception as the tribunals below made two critical
conflicting factual findings. We are thus compelled to undertake our own factual
examination of the evidence presented.
This Court cannot be any clearer in laying down the rule on the quaritum of evidence to
support an administrative ruling: In administrative cases, substantial evidence is
required to support any findings. Substantial evidence is such relevant evidence as a
reasonable mind may accept as adequate to support a conclusion. The requirement is
satisfied where there is reasonable ground to believe that the petitioner is guilty of the
act or omission complained of, even if the evidence might not be overwhelming."14
Our own examination of the records tells us that the Ombudsman's findings and
appreciation of the presented evidence are more in accord with reason and common
experience so that it successfully proved, by the required quantum of evidence,
Dechavez's dishonesty, at the same time that we find the respondent's reading of the
evidence to be stretched to the point of breaking, as our analysis below shows.
We start with our agreement with the CA's view that the Ombudsman's finding that
Dechavez was not on official business on May 5, 2002 because it was a Sunday (a non-
working day) -by itself, is not sufficient basis for the conclusion that Dechavez's
business on that day was not official. We, nevertheless, examined the other
surrounding facts and are convinced that the spouses Dechavez's trip was a personal
one; thus, Dechavez had been dishonest when he made the claim that he went on
official business. The dishonesty, of course, did not arise simply from the nature of the
trip, but from the claim for insurance that brought the spouses a substantial sum. First,
Dechavez alleged that the trip was urgent, and there were no drivers available; hence,
he drove the vehicle himself. He added that the fact that the trip ticket was
accomplished on May 5, 2002, a Sunday, and that it was typewritten, are not material
as he was not prohibited from driving the car himself.
We do not agree with Dechavez's claim about the immateriality of the trip ticket; it was
presented as evidence and, as such, carries implications far beyond what Dechavez
claims. The fact alone that the ticket, for a trip that was allegedly urgent, was
typewritten already speaks volumes about the integrity of this piece of evidence. We
agree with the Ombudsman, based on common experience and probability, that had
the trip really been urgent and had the trip ticket been accomplished on the date of the
trip, May 5, 2002, it would have been handwritten. The trip ticket, however, was
typewritten, indicating that it had been prepared ahead of time, or thereafter, not on
that Sunday immediately before leaving on an urgent trip. In fact, if it had been
prepared ahead of time, then the trip could not have been urgent as there was advance
planning involved.
In other words, if the trip ticket had been prepared ahead of time, the trip should have
been scheduled ahead of time, and necessary arrangements should have been made
for the availability of a driver. Therefore, it was unlikely that Dechavez would have
known that no driver would be available for him on the date of the trip.
On another note, if the trip ticket had been prepared after the trip, the Ombudsman
was correct in observing that Dechavez had no authority to drive the vehicle in the
absence of the requisite trip ticket.15 Worse, if it had been prepared after the trip after
an accident had intervened, then there had been a. conscious attempt to sanitize the
incidents of the trip. It is at this point where the claim for insurance becomes material;
the trip ticket removed all questions about the regularity and official character of the
trip.
After examining the testimonies, too, we lean in favor of the view that there were
available drivers on May 5, 2002, contrary to what Dechavez claimed. As between the
assertion of the security guards that they had seen available drivers on the day of the
trip, and the drivers' denial (and assertion that they had serviced other faculty members
at that time), the settled evidentiary rule is that as between a positive and categorical
testimony which has a ring of truth, on one hand, and a bare denial, on the other, the
former is generally held to prevail.16 Furthermore, while Dechavez insists that the
allegations of the drivers were corroborated by the teachers they had driven for, the
attestations of these teachers remained to be hearsay: Dechavez failed to present their
attestations in evidence.
Dechavez additionally argues that the way the trip ticket was accomplished bears no
significance in these circumstances, insisting further that it is of no moment that he
drove the vehicle himself, as he was not prohibited from doing so. Read in isolation, the
Court might just have found these positions convincing. Read with the other attendant
circumstances, however, the argument becomes shaky.
If Dechavez thought that there was nothing wrong in driving the vehicle himself, why
would he indicate that the reason he drove the vehicle himself was that there were no
available drivers, and that it was urgent? Finally, if indeed it was true that Dechavez
used to perform his extension service or confer with the NSCA's linkages during
weekends, how come the trip became urgent and the driver had not been assigned
beforehand?
Second. We cannot give weight to the certification of Mr. Parroco that Dechavez used
to visit the Pontevedra District to coordinate with his office, and that Dechavez also
visited his office on May 5, 2002. We likewise disregard the statement of Mr. Geanga
that Dechavez appeared before his office on May 5, 2002. The certifications of these
two witnesses were submitted only in October 2004 or two (2) years after the case was
filed with the Ombudsman. The time lag alone already renders the certifications suspect
and this inconsistency has not been satisfactorily explained. The late use of the
certifications also deprived the complainants of the opportunity to refute them and the
Ombudsman the chance to examine the affiants. As the Ombudsman observed, too, it
is hard to believe that all four (4) of them -Mr. and Mrs. Dechavez, Mr. Parroco, and Mr.
Geanga -happened to agree to work on a Sunday, a non-working day; this story simply
stretches matters beyond the point of believability in the absence of supporting proof
that this kind of arrangement has been usual among them.
Finally we find that Mrs. Dechavez was not on official business on May 5, 2002; in fact,
she was not teaching at that time. We note in this regard that the parties presented
two (2) conflicting instructor's summer teaching loads for 2002: the first one, dated
April 1, 2002, which did not include Mrs. Dechavez, while the other, an undated one,
included Mrs. Dechavez's name. Curiously, the same person who prepared both
documents, Mr. Cuizon, failed to explain why there were two (2) versions of the same
document. Considering the highly irregular and undated nature of the list that contained
the name of Mrs. Dechavez, we again concur with the Ombudsman's reading that while
we can presume that the undated list had been prepared before the start of the
summer classes, we can also presume that the other list had been prepared
subsequently to conveniently suit the defense of the respondent.17
Likewise, Ms. Fe Ulpiana, a teacher at the NSCA, whose name appears in the second
document, attested that she had never been assigned to register and assess the
students' school fees, contrary to what appeared thereon. We find it worth mentioning
that Dechavez's witness, Mr. Cuizon, despite being subpoenaed by the Ombudsman,
failed to furnish the Schedule of Classes for Summer 2002 and the Actual Teaching
Load for Summer 2002.18 Dechavez also failed to provide the Ombudsman with the
subpoenaed daily time record (DTR) of Mrs. Dechavez for summer 2002 as the DTR
supposedly could not be located.
All told, too many gaps simply existed in Dechavez's tale and supporting evidence for
his case to be convincing.
Retirement from the service
during the pendency of an
administrative case does not
render the case moot and academic
As early as 1975, we have upheld the rule that the jurisdiction that was Ours at the
time of the filing of the administrative complaint was not lost by the mere fact that the
respondent public official had ceased to be in office during the pendency of his case.
The Court retains its jurisdiction either to pronounce the respondent official innocent of
the charges or declare him guilty thereof. A contrary rule would be fraught with
injustices and pregnant with dreadful and dangerous implications."19
Arguably, the cited case above is not applicable as it involved a judge who retired four
(4) days after a charge of grave misconduct, gross dishonesty and serious inefficiency
was filed against him.1wphi1 The wisdom of citing this authority in the present case
can be found, however, in its ruling that: "If innocent, respondent official merits
vindication of his name and integrity as he leaves the government which he served well
and faithfully; if guilty, he deserves to receive the corresponding censure and a penalty
proper and imposable under the situation."20
Recently, we emphasized that in a case that a public official's cessation from service
does not render moot an administrative case that was filed prior to the official's
resignation. In the 2011 case of Office of the Ombudsman v. Andutan Jr.21 we
reiterated the doctrine and laid down the line of cases supporting this principle when
we ruled:
To recall, we have held in the past that a public official's resignation does not render
moot an administrative case that was filed prior to the official's resignation. In Pagano
v. Nazarro, Jr., we held that:
In Office of the Court Administrator v. Juan [A.M. No. P-03-1726, 22 July 2004, 434
SCRA 654, 658], this Court categorically ruled that the precipitate resignation of a
government employee charged with an offense punishable by dismissal from the service
does not render moot the administrative case against him. Resignation is not a way out
to evade administrative liability when facing administrative sanction. The resignation of
a public servant does not preclude the finding of any administrative liability to which he
or she shall still be answerable-[Baquerfo v. Sanchez A.M. No. P-05-1974, 6 April 2005,
455 SCRA 13, 19-20]. [Italics supplied, citation omitted]
Likewise, in Baquerfo v. Sanchez22 we held:
Cessation from office of respondent by resignation or retirement neither warrants the
dismissal of the administrative complaint filed against him while he was still in the
service nor does it render said administrative case moot and academic. The jurisdiction
that was this Court's at the time of the filing of the administrative complaint was not
lost by the mere fact that the respondent public official had ceased in office during the
pendency of his case. Respondent's resignation does not preclude the finding of any
administrative liability to which he shall still be answerable. [Emphases ours; citations
omitted]
Thus, from the strictly legal point of view and as we have held in a long line of cases,
jurisdiction, once it attaches, cannot be defeated by the acts of the respondent save
only where death intervenes and the action does not survive.
WHEREFORE, under these premises we hereby GRANT the petition for review on
certiorari Accordingly we REVERSE AND SET ASIDE the decision dated March 31, 2006
and the resolution dated February 7, 2007 of the Court of Appeals in CA-G.R. SP. No.
00673 and REINSTATE the decision dated October 29 2004 and the order dated April 6
2005 of the Office of the Ombudsman.
Costs against respondent Marcelino A. Dechavez.
SO ORDERED.