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G.R. No.

L-11390

March 26, 1918

EL BANCO ESPAOL-FILIPINO, plaintiff-appellant,


vs.
VICENTE PALANCA, administrator of the estate of Engracio Palanca Tanquinyeng, defendantappellant.
Aitken and DeSelms for appellant.
Hartigan and Welch for appellee.
STREET, J.:
This action was instituted upon March 31, 1908, by "El Banco Espanol-Filipino" to foreclose a mortgage
upon various parcels of real property situated in the city of Manila. The mortgage in question is dated June
16, 1906, and was executed by the original defendant herein, Engracio Palanca Tanquinyeng y Limquingco,
as security for a debt owing by him to the bank. Upon March 31, 1906, the debt amounted to P218,294.10
and was drawing interest at the rate of 8 per centum per annum, payable at the end of each quarter. It
appears that the parties to this mortgage at that time estimated the value of the property in question at
P292,558, which was about P75,000 in excess of the indebtedness. After the execution of this instrument
by the mortgagor, he returned to China which appears to have been his native country; and he there died,
upon January 29, 1810, without again returning to the Philippine Islands.
As the defendant was a nonresident at the time of the institution of the present action, it was necessary for
the plaintiff in the foreclosure proceeding to give notice to the defendant by publication pursuant to
section 399 of the Code of Civil Procedure. An order for publication was accordingly obtained from the
court, and publication was made in due form in a newspaper of the city of Manila. At the same time that
the order of the court should deposit in the post office in a stamped envelope a copy of the summons and
complaint directed to the defendant at his last place of residence, to wit, the city of Amoy, in the Empire of
China. This order was made pursuant to the following provision contained in section 399 of the Code of
Civil Procedure:
In case of publication, where the residence of a nonresident or absent defendant is known, the
judge must direct a copy of the summons and complaint to be forthwith deposited by the clerk in
the post-office, postage prepaid, directed to the person to be served, at his place of residence
Whether the clerk complied with this order does not affirmatively appear. There is, however, among the
papers pertaining to this case, an affidavit, dated April 4, 1908, signed by Bernardo Chan y Garcia, an
employee of the attorneys of the bank, showing that upon that date he had deposited in the Manila postoffice a registered letter, addressed to Engracio Palanca Tanquinyeng, at Manila, containing copies of the
complaint, the plaintiff's affidavit, the summons, and the order of the court directing publication as
aforesaid. It appears from the postmaster's receipt that Bernardo probably used an envelope obtained
from the clerk's office, as the receipt purports to show that the letter emanated from the office.
The cause proceeded in usual course in the Court of First Instance; and the defendant not having
appeared, judgment was, upon July 2, 1908, taken against him by default. Upon July 3, 1908, a decision
was rendered in favor of the plaintiff. In this decision it was recited that publication had been properly
made in a periodical, but nothing was said about this notice having been given mail. The court, upon this
occasion, found that the indebtedness of the defendant amounted to P249,355. 32, with interest from
March 31, 1908. Accordingly it was ordered that the defendant should, on or before July 6, 1908, deliver
said amount to the clerk of the court to be applied to the satisfaction of the judgment, and it was declared
that in case of the failure of the defendant to satisfy the judgment within such period, the mortgage
property located in the city of Manila should be exposed to public sale. The payment contemplated in said

order was never made; and upon July 8, 1908, the court ordered the sale of the property. The sale took
place upon July 30, 1908, and the property was bought in by the bank for the sum of P110,200. Upon
August 7, 1908, this sale was confirmed by the court.
About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a motion was
made in this cause by Vicente Palanca, as administrator of the estate of the original defendant, Engracio
Palanca Tanquinyeng y Limquingco, wherein the applicant requested the court to set aside the order of
default of July 2, 1908, and the judgment rendered upon July 3, 1908, and to vacate all the proceedings
subsequent thereto. The basis of this application, as set forth in the motion itself, was that the order of
default and the judgment rendered thereon were void because the court had never acquired jurisdiction
over the defendant or over the subject of the action.
At the hearing in the court below the application to vacate the judgment was denied, and from this action
of the court Vicente Planca, as administrator of the estate of the original defendant, has appealed. No
other feature of the case is here under consideration than such as related to the action of the court upon
said motion.
The case presents several questions of importance, which will be discussed in what appears to be the
sequence of most convenient development. In the first part of this opinion we shall, for the purpose of
argument, assume that the clerk of the Court of First Instance did not obey the order of the court in the
matter of mailing the papers which he was directed to send to the defendant in Amoy; and in this
connection we shall consider, first, whether the court acquired the necessary jurisdiction to enable it to
proceed with the foreclosure of the mortgage and, secondly, whether those proceedings were conducted in
such manner as to constitute due process of law.
The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in several different,
though related, senses since it may have reference (1) to the authority of the court to entertain a
particular kind of action or to administer a particular kind of relief, or it may refer to the power of the court
over the parties, or (2) over the property which is the subject to the litigation.
The sovereign authority which organizes a court determines the nature and extent of its powers in general
and thus fixes its competency or jurisdiction with reference to the actions which it may entertain and the
relief it may grant.
Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his submission
to its authority, or it is acquired by the coercive power of legal process exerted over the person.
Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the
property under legal process, whereby it is brought into the actual custody of the law, or it may result from
the institution of legal proceedings wherein, under special provisions of law, the power of the court over
the property is recognized and made effective. In the latter case the property, though at all times within
the potential power of the court, may never be taken into actual custody at all. An illustration of the
jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at
the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of
the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding
to register the title of land under our system for the registration of land. Here the court, without taking
actual physical control over the property assumes, at the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against
all the world.
In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in
rem, by which is expressed the idea that while it is not strictly speaking an action in rem yet it partakes of
that nature and is substantially such. The expression "action in rem" is, in its narrow application, used only

with reference to certain proceedings in courts of admiralty wherein the property alone is treated as
responsible for the claim or obligation upon which the proceedings are based. The action quasi rem differs
from the true action in rem in the circumstance that in the former an individual is named as defendant,
and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the
property. All proceedings having for their sole object the sale or other disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus
designated. The judgment entered in these proceedings is conclusive only between the parties.
In speaking of the proceeding to foreclose a mortgage the author of a well known treaties, has said:
Though nominally against person, such suits are to vindicate liens; they proceed upon seizure; they
treat property as primarily indebted; and, with the qualification above-mentioned, they are
substantially property actions. In the civil law, they are styled hypothecary actions, and their sole
object is the enforcement of the lien against the res; in the common law, they would be different in
chancery did not treat the conditional conveyance as a mere hypothecation, and the creditor's right
ass an equitable lien; so, in both, the suit is real action so far as it is against property, and seeks the
judicial recognition of a property debt, and an order for the sale of the res. (Waples, Proceedings In
Rem. sec. 607.)
It is true that in proceedings of this character, if the defendant for whom publication is made appears, the
action becomes as to him a personal action and is conducted as such. This, however, does not affect the
proposition that where the defendant fails to appear the action is quasi in rem; and it should therefore be
considered with reference to the principles governing actions in rem.
There is an instructive analogy between the foreclosure proceeding and an action of attachment,
concerning which the Supreme Court of the United States has used the following language:
If the defendant appears, the cause becomes mainly a suit in personam, with the added incident,
that the property attached remains liable, under the control of the court, to answer to any demand
which may be established against the defendant by the final judgment of the court. But, if there is
no appearance of the defendant, and no service of process on him, the case becomes, in its
essential nature, a proceeding in rem, the only effect of which is to subject the property attached to
the payment of the defendant which the court may find to be due to the plaintiff. (Cooper vs.
Reynolds, 10 Wall., 308.)
In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is
to, be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the
property is acquired by the seizure; and the purpose of the proceedings is to subject the property to that
lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is
not necessary; and the court proceeds to enforce such lien in the manner provided by law precisely as
though the property had been seized upon attachment. (Roller vs. Holly, 176 U. S., 398, 405; 44 L. ed.,
520.) It results that the mere circumstance that in an attachment the property may be seized at the
inception of the proceedings, while in the foreclosure suit it is not taken into legal custody until the time
comes for the sale, does not materially affect the fundamental principle involved in both cases, which is
that the court is here exercising a jurisdiction over the property in a proceeding directed essentially in rem.
Passing now to a consideration of the jurisdiction of the Court of First Instance in a mortgage foreclosure, it
is evident that the court derives its authority to entertain the action primarily from the statutes organizing
the court. The jurisdiction of the court, in this most general sense, over the cause of action is obvious and
requires no comment. Jurisdiction over the person of the defendant, if acquired at all in such an action, is
obtained by the voluntary submission of the defendant or by the personal service of process upon him
within the territory where the process is valid. If, however, the defendant is a nonresident and, remaining
beyond the range of the personal process of the court, refuses to come in voluntarily, the court never

acquires jurisdiction over the person at all. Here the property itself is in fact the sole thing which is
impleaded and is the responsible object which is the subject of the exercise of judicial power. It follows that
the jurisdiction of the court in such case is based exclusively on the power which, under the law, it
possesses over the property; and any discussion relative to the jurisdiction of the court over the person of
the defendant is entirely apart from the case. The jurisdiction of the court over the property, considered as
the exclusive object of such action, is evidently based upon the following conditions and considerations,
namely: (1) that the property is located within the district; (2) that the purpose of the litigation is to subject
the property by sale to an obligation fixed upon it by the mortgage; and (3) that the court at a proper
stage of the proceedings takes the property into custody, if necessary, and expose it to sale for the
purpose of satisfying the mortgage debt. An obvious corollary is that no other relief can be granted in this
proceeding than such as can be enforced against the property.
We may then, from what has been stated, formulated the following proposition relative to the foreclosure
proceeding against the property of a nonresident mortgagor who fails to come in and submit himself
personally to the jurisdiction of the court: (I) That the jurisdiction of the court is derived from the power
which it possesses over the property; (II) that jurisdiction over the person is not acquired and is
nonessential; (III) that the relief granted by the court must be limited to such as can be enforced against
the property itself.
It is important that the bearing of these propositions be clearly apprehended, for there are many
expressions in the American reports from which it might be inferred that the court acquires personal
jurisdiction over the person of the defendant by publication and notice; but such is not the case. In truth
the proposition that jurisdiction over the person of a nonresident cannot be acquired by publication and
notice was never clearly understood even in the American courts until after the decision had been
rendered by the Supreme Court of the United States in the leading case of Pennoyer vs. Neff (95 U. S. 714;
24 L. ed., 565). In the light of that decision, and of other decisions which have subsequently been rendered
in that and other courts, the proposition that jurisdiction over the person cannot be thus acquired by
publication and notice is no longer open to question; and it is now fully established that a personal
judgment upon constructive or substituted service against a nonresident who does not appear is wholly
invalid. This doctrine applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment is rendered; and the only
exception seems to be found in the case where the nonresident defendant has expressly or impliedly
consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S. ], 292; see also 50 L .R. A.,
585; 35 L. R. A. [N. S.], 312
The idea upon which the decision in Pennoyer vs. Neff (supra) proceeds is that the process from the
tribunals of one State cannot run into other States or countries and that due process of law requires that
the defendant shall be brought under the power of the court by service of process within the State, or by
his voluntary appearance, in order to authorize the court to pass upon the question of his personal liability.
The doctrine established by the Supreme Court of the United States on this point, being based upon the
constitutional conception of due process of law, is binding upon the courts of the Philippine Islands.
Involved in this decision is the principle that in proceedings in rem or quasi in rem against a nonresident
who is not served personally within the state, and who does not appear, the relief must be confined to the
res, and the court cannot lawfully render a personal judgment against him. (Dewey vs. Des Moines, 173 U.
S., 193; 43 L. ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S., 294; 28 L. ed., 729.) Therefore in an
action to foreclose a mortgage against a nonresident, upon whom service has been effected exclusively by
publication, no personal judgment for the deficiency can be entered. (Latta vs. Tutton, 122 Cal., 279;
Blumberg vs. Birch, 99 Cal., 416.)
It is suggested in the brief of the appellant that the judgment entered in the court below offends against
the principle just stated and that this judgment is void because the court in fact entered a personal
judgment against the absent debtor for the full amount of the indebtedness secured by the mortgage. We
do not so interpret the judgment.

In a foreclosure proceeding against a nonresident owner it is necessary for the court, as in all cases of
foreclosure, to ascertain the amount due, as prescribed in section 256 of the Code of Civil Procedure, and
to make an order requiring the defendant to pay the money into court. This step is a necessary precursor
of the order of sale. In the present case the judgment which was entered contains the following words:
Because it is declared that the said defendant Engracio Palanca Tanquinyeng y Limquingco, is
indebted in the amount of P249,355.32, plus the interest, to the 'Banco Espanol-Filipino' . . .
therefore said appellant is ordered to deliver the above amount etc., etc.
This is not the language of a personal judgment. Instead it is clearly intended merely as a compliance with
the requirement that the amount due shall be ascertained and that the evidence of this it may be
observed that according to the Code of Civil Procedure a personal judgment against the debtor for the
deficiency is not to be rendered until after the property has been sold and the proceeds applied to the
mortgage debt. (sec. 260).
The conclusion upon this phase of the case is that whatever may be the effect in other respects of the
failure of the clerk of the Court of First Instance to mail the proper papers to the defendant in Amoy, China,
such irregularity could in no wise impair or defeat the jurisdiction of the court, for in our opinion that
jurisdiction rest upon a basis much more secure than would be supplied by any form of notice that could
be given to a resident of a foreign country.
Before leaving this branch of the case, we wish to observe that we are fully aware that many reported
cases can be cited in which it is assumed that the question of the sufficiency of publication or notice in a
case of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to
acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally adopted by
the court because of the analogy between service by the publication and personal service of process upon
the defendant; and, as has already been suggested, prior to the decision of Pennoyer vs. Neff (supra) the
difference between the legal effects of the two forms of service was obscure. It is accordingly not
surprising that the modes of expression which had already been molded into legal tradition before that
case was decided have been brought down to the present day. But it is clear that the legal principle here
involved is not effected by the peculiar language in which the courts have expounded their ideas.
We now proceed to a discussion of the question whether the supposed irregularity in the proceedings was
of such gravity as to amount to a denial of that "due process of law" which was secured by the Act of
Congress in force in these Islands at the time this mortgage was foreclosed. (Act of July 1, 1902, sec. 5.) In
dealing with questions involving the application of the constitutional provisions relating to due process of
law the Supreme Court of the United States has refrained from attempting to define with precision the
meaning of that expression, the reason being that the idea expressed therein is applicable under so many
diverse conditions as to make any attempt ay precise definition hazardous and unprofitable. As applied to
a judicial proceeding, however, it may be laid down with certainty that the requirement of due process is
satisfied if the following conditions are present, namely; (1) There must be a court or tribunal clothed with
judicial power to hear and determine the matter before it; (2) jurisdiction must be lawfully acquired over
the person of the defendant or over the property which is the subject of the proceeding; (3) the defendant
must be given an opportunity to be heard; and (4) judgment must be rendered upon lawful hearing.
Passing at once to the requisite that the defendant shall have an opportunity to be heard, we observe that
in a foreclosure case some notification of the proceedings to the nonresident owner, prescribing the time
within which appearance must be made, is everywhere recognized as essential. To answer this necessity
the statutes generally provide for publication, and usually in addition thereto, for the mailing of notice to
the defendant, if his residence is known. Though commonly called constructive, or substituted service of
process in any true sense. It is merely a means provided by law whereby the owner may be admonished
that his property is the subject of judicial proceedings and that it is incumbent upon him to take such steps

as he sees fit to protect it. In speaking of notice of this character a distinguish master of constitutional law
has used the following language:
. . . if the owners are named in the proceedings, and personal notice is provided for, it is rather from
tenderness to their interests, and in order to make sure that the opportunity for a hearing shall not
be lost to them, than from any necessity that the case shall assume that form. (Cooley on Taxation
[2d. ed.], 527, quoted in Leigh vs. Green, 193 U. S., 79, 80.)
It will be observed that this mode of notification does not involve any absolute assurance that the absent
owner shall thereby receive actual notice. The periodical containing the publication may never in fact come
to his hands, and the chances that he should discover the notice may often be very slight. Even where
notice is sent by mail the probability of his receiving it, though much increased, is dependent upon the
correctness of the address to which it is forwarded as well as upon the regularity and security of the mail
service. It will be noted, furthermore, that the provision of our law relative to the mailing of notice does not
absolutely require the mailing of notice unconditionally and in every event, but only in the case where the
defendant's residence is known. In the light of all these facts, it is evident that actual notice to the
defendant in cases of this kind is not, under the law, to be considered absolutely necessary.
The idea upon which the law proceeds in recognizing the efficacy of a means of notification which may fall
short of actual notice is apparently this: Property is always assumed to be in the possession of its owner, in
person or by agent; and he may be safely held, under certain conditions, to be affected with knowledge
that proceedings have been instituted for its condemnation and sale.
It is the duty of the owner of real estate, who is a nonresident, to take measures that in some way
he shall be represented when his property is called into requisition, and if he fails to do this, and
fails to get notice by the ordinary publications which have usually been required in such cases, it is
his misfortune, and he must abide the consequences. (6 R. C. L., sec. 445 [p. 450]).
It has been well said by an American court:
If property of a nonresident cannot be reached by legal process upon the constructive notice, then
our statutes were passed in vain, and are mere empty legislative declarations, without either force,
or meaning; for if the person is not within the jurisdiction of the court, no personal judgment can be
rendered, and if the judgment cannot operate upon the property, then no effective judgment at all
can be rendered, so that the result would be that the courts would be powerless to assist a citizen
against a nonresident. Such a result would be a deplorable one. (Quarl vs. Abbett, 102 Ind., 233; 52
Am. Rep., 662, 667.)
It is, of course universally recognized that the statutory provisions relative to publication or other form of
notice against a nonresident owner should be complied with; and in respect to the publication of notice in
the newspaper it may be stated that strict compliance with the requirements of the law has been held to
be essential. In Guaranty Trust etc. Co. vs. Green Cove etc., Railroad Co. (139 U. S., 137, 138), it was held
that where newspaper publication was made for 19 weeks, when the statute required 20, the publication
was insufficient.
With respect to the provisions of our own statute, relative to the sending of notice by mail, the requirement
is that the judge shall direct that the notice be deposited in the mail by the clerk of the court, and it is not
in terms declared that the notice must be deposited in the mail. We consider this to be of some
significance; and it seems to us that, having due regard to the principles upon which the giving of such
notice is required, the absent owner of the mortgaged property must, so far as the due process of law is
concerned, take the risk incident to the possible failure of the clerk to perform his duty, somewhat as he
takes the risk that the mail clerk or the mail carrier might possibly lose or destroy the parcel or envelope
containing the notice before it should reach its destination and be delivered to him. This idea seems to be

strengthened by the consideration that placing upon the clerk the duty of sending notice by mail, the
performance of that act is put effectually beyond the control of the plaintiff in the litigation. At any rate it is
obvious that so much of section 399 of the Code of Civil Procedure as relates to the sending of notice by
mail was complied with when the court made the order. The question as to what may be the consequences
of the failure of the record to show the proof of compliance with that requirement will be discussed by us
further on.
The observations which have just been made lead to the conclusion that the failure of the clerk to mail the
notice, if in fact he did so fail in his duty, is not such an irregularity, as amounts to a denial of due process
of law; and hence in our opinion that irregularity, if proved, would not avoid the judgment in this case.
Notice was given by publication in a newspaper and this is the only form of notice which the law
unconditionally requires. This in our opinion is all that was absolutely necessary to sustain the proceedings.
It will be observed that in considering the effect of this irregularity, it makes a difference whether it be
viewed as a question involving jurisdiction or as a question involving due process of law. In the matter of
jurisdiction there can be no distinction between the much and the little. The court either has jurisdiction or
it has not; and if the requirement as to the mailing of notice should be considered as a step antecedent to
the acquiring of jurisdiction, there could be no escape from the conclusion that the failure to take that step
was fatal to the validity of the judgment. In the application of the idea of due process of law, on the other
hand, it is clearly unnecessary to be so rigorous. The jurisdiction being once established, all that due
process of law thereafter requires is an opportunity for the defendant to be heard; and as publication was
duly made in the newspaper, it would seem highly unreasonable to hold that failure to mail the notice was
fatal. We think that in applying the requirement of due process of law, it is permissible to reflect upon the
purposes of the provision which is supposed to have been violated and the principle underlying the
exercise of judicial power in these proceedings. Judge in the light of these conceptions, we think that the
provision of Act of Congress declaring that no person shall be deprived of his property without due process
of law has not been infringed.
In the progress of this discussion we have stated the two conclusions; (1) that the failure of the clerk to
send the notice to the defendant by mail did not destroy the jurisdiction of the court and (2) that such
irregularity did not infringe the requirement of due process of law. As a consequence of these conclusions
the irregularity in question is in some measure shorn of its potency. It is still necessary, however, to
consider its effect considered as a simple irregularity of procedure; and it would be idle to pretend that
even in this aspect the irregularity is not grave enough. From this point of view, however, it is obvious that
any motion to vacate the judgment on the ground of the irregularity in question must fail unless it shows
that the defendant was prejudiced by that irregularity. The least, therefore, that can be required of the
proponent of such a motion is to show that he had a good defense against the action to foreclose the
mortgage. Nothing of the kind is, however, shown either in the motion or in the affidavit which
accompanies the motion.
An application to open or vacate a judgment because of an irregularity or defect in the proceedings is
usually required to be supported by an affidavit showing the grounds on which the relief is sought, and in
addition to this showing also a meritorious defense to the action. It is held that a general statement that a
party has a good defense to the action is insufficient. The necessary facts must be averred. Of course if a
judgment is void upon its face a showing of the existence of a meritorious defense is not necessary. (10 R.
C. L., 718.)
The lapse of time is also a circumstance deeply affecting this aspect of the case. In this connection we
quote the following passage from the encyclopedic treatise now in course of publication:
Where, however, the judgment is not void on its face, and may therefore be enforced if permitted to
stand on the record, courts in many instances refuse to exercise their quasi equitable powers to
vacate a judgement after the lapse of the term ay which it was entered, except in clear cases, to

promote the ends of justice, and where it appears that the party making the application is himself
without fault and has acted in good faith and with ordinary diligence. Laches on the part of the
applicant, if unexplained, is deemed sufficient ground for refusing the relief to which he might
otherwise be entitled. Something is due to the finality of judgments, and acquiescence or
unnecessary delay is fatal to motions of this character, since courts are always reluctant to interfere
with judgments, and especially where they have been executed or satisfied. The moving party has
the burden of showing diligence, and unless it is shown affirmatively the court will not ordinarily
exercise its discretion in his favor. (15 R. C. L., 694, 695.)
It is stated in the affidavit that the defendant, Engracio Palanca Tanquinyeng y Limquingco, died January
29, 1910. The mortgage under which the property was sold was executed far back in 1906; and the
proceedings in the foreclosure were closed by the order of court confirming the sale dated August 7, 1908.
It passes the rational bounds of human credulity to suppose that a man who had placed a mortgage upon
property worth nearly P300,000 and had then gone away from the scene of his life activities to end his
days in the city of Amoy, China, should have long remained in ignorance of the fact that the mortgage had
been foreclosed and the property sold, even supposing that he had no knowledge of those proceedings
while they were being conducted. It is more in keeping with the ordinary course of things that he should
have acquired information as to what was transpiring in his affairs at Manila; and upon the basis of this
rational assumption we are authorized, in the absence of proof to the contrary, to presume that he did
have, or soon acquired, information as to the sale of his property.
The Code of Civil Procedure, indeed, expressly declares that there is a presumption that things have
happened according to the ordinary habits of life (sec. 334 [26]); and we cannot conceive of a situation
more appropriate than this for applying the presumption thus defined by the lawgiver. In support of this
presumption, as applied to the present case, it is permissible to consider the probability that the defendant
may have received actual notice of these proceedings from the unofficial notice addressed to him in Manila
which was mailed by an employee of the bank's attorneys. Adopting almost the exact words used by the
Supreme Court of the United States in Grannis vs. Ordeans (234 U. S., 385; 58 L. ed., 1363), we may say
that in view of the well-known skill of postal officials and employees in making proper delivery of letters
defectively addressed, we think the presumption is clear and strong that this notice reached the
defendant, there being no proof that it was ever returned by the postal officials as undelivered. And if it
was delivered in Manila, instead of being forwarded to Amoy, China, there is a probability that the recipient
was a person sufficiently interested in his affairs to send it or communicate its contents to him.
Of course if the jurisdiction of the court or the sufficiency of the process of law depended upon the mailing
of the notice by the clerk, the reflections in which we are now indulging would be idle and frivolous; but the
considerations mentioned are introduced in order to show the propriety of applying to this situation the
legal presumption to which allusion has been made. Upon that presumption, supported by the
circumstances of this case, ,we do not hesitate to found the conclusion that the defendant voluntarily
abandoned all thought of saving his property from the obligation which he had placed upon it; that
knowledge of the proceedings should be imputed to him; and that he acquiesced in the consequences of
those proceedings after they had been accomplished. Under these circumstances it is clear that the merit
of this motion is, as we have already stated, adversely affected in a high degree by the delay in asking for
relief. Nor is it an adequate reply to say that the proponent of this motion is an administrator who only
qualified a few months before this motion was made. No disability on the part of the defendant himself
existed from the time when the foreclosure was effected until his death; and we believe that the delay in
the appointment of the administrator and institution of this action is a circumstance which is imputable to
the parties in interest whoever they may have been. Of course if the minor heirs had instituted an action in
their own right to recover the property, it would have been different.
It is, however, argued that the defendant has suffered prejudice by reason of the fact that the bank
became the purchaser of the property at the foreclosure sale for a price greatly below that which had been
agreed upon in the mortgage as the upset price of the property. In this connection, it appears that in article

nine of the mortgage which was the subject of this foreclosure, as amended by the notarial document of
July 19, 1906, the parties to this mortgage made a stipulation to the effect that the value therein placed
upon the mortgaged properties should serve as a basis of sale in case the debt should remain unpaid and
the bank should proceed to a foreclosure. The upset price stated in that stipulation for all the parcels
involved in this foreclosure was P286,000. It is said in behalf of the appellant that when the bank bought in
the property for the sum of P110,200 it violated that stipulation.
It has been held by this court that a clause in a mortgage providing for a tipo, or upset price, does not
prevent a foreclosure, nor affect the validity of a sale made in the foreclosure proceedings. (Yangco vs.
Cruz Herrera and Wy Piaco, 11 Phil. Rep., 402; Banco-Espaol Filipino vs. Donaldson, Sim and Co., 5 Phil.
Rep., 418.) In both the cases here cited the property was purchased at the foreclosure sale, not by the
creditor or mortgagee, but by a third party. Whether the same rule should be applied in a case where the
mortgagee himself becomes the purchaser has apparently not been decided by this court in any reported
decision, and this question need not here be considered, since it is evident that if any liability was incurred
by the bank by purchasing for a price below that fixed in the stipulation, its liability was a personal liability
derived from the contract of mortgage; and as we have already demonstrated such a liability could not be
the subject of adjudication in an action where the court had no jurisdiction over the person of the
defendant. If the plaintiff bank became liable to account for the difference between the upset price and the
price at which in bought in the property, that liability remains unaffected by the disposition which the court
made of this case; and the fact that the bank may have violated such an obligation can in no wise affect
the validity of the judgment entered in the Court of First Instance.
In connection with the entire failure of the motion to show either a meritorious defense to the action or
that the defendant had suffered any prejudice of which the law can take notice, we may be permitted to
add that in our opinion a motion of this kind, which proposes to unsettle judicial proceedings long ago
closed, can not be considered with favor, unless based upon grounds which appeal to the conscience of
the court. Public policy requires that judicial proceedings be upheld. The maximum here applicable is non
quieta movere. As was once said by Judge Brewer, afterwards a member of the Supreme Court of the
United States:
Public policy requires that judicial proceedings be upheld, and that titles obtained in those
proceedings be safe from the ruthless hand of collateral attack. If technical defects are adjudged
potent to destroy such titles, a judicial sale will never realize that value of the property, for no
prudent man will risk his money in bidding for and buying that title which he has reason to fear may
years thereafter be swept away through some occult and not readily discoverable defect. (Martin
vs. Pond, 30 Fed., 15.)
In the case where that language was used an attempt was made to annul certain foreclosure proceedings
on the ground that the affidavit upon which the order of publication was based erroneously stated that the
State of Kansas, when he was in fact residing in another State. It was held that this mistake did not affect
the validity of the proceedings.
In the preceding discussion we have assumed that the clerk failed to send the notice by post as required
by the order of the court. We now proceed to consider whether this is a proper assumption; and the
proposition which we propose to establish is that there is a legal presumption that the clerk performed his
duty as the ministerial officer of the court, which presumption is not overcome by any other facts
appearing in the cause.
In subsection 14 of section 334 of the Code of Civil Procedure it is declared that there is a presumption
"that official duty has been regularly performed;" and in subsection 18 it is declared that there is a
presumption "that the ordinary course of business has been followed." These presumptions are of course in
no sense novelties, as they express ideas which have always been recognized. Omnia presumuntur rite et
solemniter esse acta donec probetur in contrarium. There is therefore clearly a legal presumption that the

clerk performed his duty about mailing this notice; and we think that strong considerations of policy
require that this presumption should be allowed to operate with full force under the circumstances of this
case. A party to an action has no control over the clerk of the court; and has no right to meddle unduly
with the business of the clerk in the performance of his duties. Having no control over this officer, the
litigant must depend upon the court to see that the duties imposed on the clerk are performed.
Other considerations no less potent contribute to strengthen the conclusion just stated. There is no
principle of law better settled than that after jurisdiction has once been required, every act of a court of
general jurisdiction shall be presumed to have been rightly done. This rule is applied to every judgment or
decree rendered in the various stages of the proceedings from their initiation to their completion (Voorhees
vs. United States Bank, 10 Pet., 314; 35 U. S., 449); and if the record is silent with respect to any fact
which must have been established before the court could have rightly acted, it will be presumed that such
fact was properly brought to its knowledge. (The Lessee of Grignon vs. Astor, 2 How., 319; 11 L. ed., 283.)
In making the order of sale [of the real state of a decedent] the court are presumed to have
adjudged every question necessary to justify such order or decree, viz: The death of the owners;
that the petitioners were his administrators; that the personal estate was insufficient to pay the
debts of the deceased; that the private acts of Assembly, as to the manner of sale, were within the
constitutional power of the Legislature, and that all the provisions of the law as to notices which are
directory to the administrators have been complied with. . . . The court is not bound to enter upon
the record the evidence on which any fact was decided. (Florentine vs. Barton, 2 Wall., 210; 17 L.
ed., 785.) Especially does all this apply after long lapse of time.
Applegate vs. Lexington and Carter County Mining Co. (117 U. S., 255) contains an instructive discussion in
a case analogous to that which is now before us. It there appeared that in order to foreclose a mortgage in
the State of Kentucky against a nonresident debtor it was necessary that publication should be made in a
newspaper for a specified period of time, also be posted at the front door of the court house and be
published on some Sunday, immediately after divine service, in such church as the court should direct. In a
certain action judgment had been entered against a nonresident, after publication in pursuance of these
provisions. Many years later the validity of the proceedings was called in question in another action. It was
proved from the files of an ancient periodical that publication had been made in its columns as required by
law; but no proof was offered to show the publication of the order at the church, or the posting of it at the
front door of the court-house. It was insisted by one of the parties that the judgment of the court was void
for lack of jurisdiction. But the Supreme Court of the United States said:
The court which made the decree . . . was a court of general jurisdiction. Therefore every
presumption not inconsistent with the record is to be indulged in favor of its jurisdiction. . . . It is to
be presumed that the court before making its decree took care of to see that its order for
constructive service, on which its right to make the decree depended, had been obeyed.
It is true that in this case the former judgment was the subject of collateral , or indirect attack, while in the
case at bar the motion to vacate the judgment is direct proceeding for relief against it. The same general
presumption, however, is indulged in favor of the judgment of a court of general jurisdiction, whether it is
the subject of direct or indirect attack the only difference being that in case of indirect attack the judgment
is conclusively presumed to be valid unless the record affirmatively shows it to be void, while in case of
direct attack the presumption in favor of its validity may in certain cases be overcome by proof extrinsic to
the record.
The presumption that the clerk performed his duty and that the court made its decree with the knowledge
that the requirements of law had been complied with appear to be amply sufficient to support the
conclusion that the notice was sent by the clerk as required by the order. It is true that there ought to be
found among the papers on file in this cause an affidavit, as required by section 400 of the Code of Civil
Procedure, showing that the order was in fact so sent by the clerk; and no such affidavit appears. The

record is therefore silent where it ought to speak. But the very purpose of the law in recognizing these
presumptions is to enable the court to sustain a prior judgment in the face of such an omission. If we were
to hold that the judgment in this case is void because the proper affidavit is not present in the file of
papers which we call the record, the result would be that in the future every title in the Islands resting
upon a judgment like that now before us would depend, for its continued security, upon the presence of
such affidavit among the papers and would be liable at any moment to be destroyed by the disappearance
of that piece of paper. We think that no court, with a proper regard for the security of judicial proceedings
and for the interests which have by law been confided to the courts, would incline to favor such a
conclusion. In our opinion the proper course in a case of this kind is to hold that the legal presumption that
the clerk performed his duty still maintains notwithstanding the absence from the record of the proper
proof of that fact.
In this connection it is important to bear in mind that under the practice prevailing in the Philippine Islands
the word "record" is used in a loose and broad sense, as indicating the collective mass of papers which
contain the history of all the successive steps taken in a case and which are finally deposited in the
archives of the clerk's office as a memorial of the litigation. It is a matter of general information that no
judgment roll, or book of final record, is commonly kept in our courts for the purpose of recording the
pleadings and principal proceedings in actions which have been terminated; and in particular, no such
record is kept in the Court of First Instance of the city of Manila. There is, indeed, a section of the Code of
Civil Procedure which directs that such a book of final record shall be kept; but this provision has, as a
matter of common knowledge, been generally ignored. The result is that in the present case we do not
have the assistance of the recitals of such a record to enable us to pass upon the validity of this judgment
and as already stated the question must be determined by examining the papers contained in the entire
file.
But it is insisted by counsel for this motion that the affidavit of Bernardo Chan y Garcia showing that upon
April 4, 1908, he sent a notification through the mail addressed to the defendant at Manila, Philippine
Islands, should be accepted as affirmative proof that the clerk of the court failed in his duty and that,
instead of himself sending the requisite notice through the mail, he relied upon Bernardo to send it for him.
We do not think that this is by any means a necessary inference. Of course if it had affirmatively appeared
that the clerk himself had attempted to comply with this order and had directed the notification to Manila
when he should have directed it to Amoy, this would be conclusive that he had failed to comply with the
exact terms of the order; but such is not this case. That the clerk of the attorneys for the plaintiff
erroneously sent a notification to the defendant at a mistaken address affords in our opinion very slight
basis for supposing that the clerk may not have sent notice to the right address.
There is undoubtedly good authority to support the position that when the record states the evidence or
makes an averment with reference to a jurisdictional fact, it will not be presumed that there was other or
different evidence respecting the fact, or that the fact was otherwise than stated. If, to give an illustration,
it appears from the return of the officer that the summons was served at a particular place or in a
particular manner, it will not be presumed that service was also made at another place or in a different
manner; or if it appears that service was made upon a person other than the defendant, it will not be
presumed, in the silence of the record, that it was made upon the defendant also (Galpin vs. Page, 18
Wall., 350, 366; Settlemier vs. Sullivan, 97 U. S., 444, 449). While we believe that these propositions are
entirely correct as applied to the case where the person making the return is the officer who is by law
required to make the return, we do not think that it is properly applicable where, as in the present case,
the affidavit was made by a person who, so far as the provisions of law are concerned, was a mere
intermeddler.
The last question of importance which we propose to consider is whether a motion in the cause is
admissible as a proceeding to obtain relief in such a case as this. If the motion prevails the judgment of
July 2, 1908, and all subsequent proceedings will be set aside, and the litigation will be renewed,
proceeding again from the date mentioned as if the progress of the action had not been interrupted. The

proponent of the motion does not ask the favor of being permitted to interpose a defense. His purpose is
merely to annul the effective judgment of the court, to the end that the litigation may again resume its
regular course.
There is only one section of the Code of Civil Procedure which expressly recognizes the authority of a Court
of First Instance to set aside a final judgment and permit a renewal of the litigation in the same cause. This
is as follows:
SEC. 113. Upon such terms as may be just the court may relieve a party or legal representative
from the judgment, order, or other proceeding taken against him through his mistake, inadvertence,
surprise, or excusable neglect; Provided, That application thereof be made within a reasonable
time, but in no case exceeding six months after such judgment, order, or proceeding was taken.
An additional remedy by petition to the Supreme Court is supplied by section 513 of the same Code. The
first paragraph of this section, in so far as pertinent to this discussion, provides as follows:
When a judgment is rendered by a Court of First Instance upon default, and a party thereto is
unjustly deprived of a hearing by fraud, accident, mistake or excusable negligence, and the Court of
First Instance which rendered the judgment has finally adjourned so that no adequate remedy exists
in that court, the party so deprived of a hearing may present his petition to the Supreme Court
within sixty days after he first learns of the rendition of such judgment, and not thereafter, setting
forth the facts and praying to have judgment set aside. . . .
It is evident that the proceeding contemplated in this section is intended to supplement the remedy
provided by section 113; and we believe the conclusion irresistible that there is no other means recognized
by law whereby a defeated party can, by a proceeding in the same cause, procure a judgment to be set
aside, with a view to the renewal of the litigation.
The Code of Civil Procedure purports to be a complete system of practice in civil causes, and it contains
provisions describing with much fullness the various steps to be taken in the conduct of such proceedings.
To this end it defines with precision the method of beginning, conducting, and concluding the civil action of
whatever species; and by section 795 of the same Code it is declared that the procedure in all civil action
shall be in accordance with the provisions of this Code. We are therefore of the opinion that the remedies
prescribed in sections 113 and 513 are exclusive of all others, so far as relates to the opening and
continuation of a litigation which has been once concluded.
The motion in the present case does not conform to the requirements of either of these provisions; and the
consequence is that in our opinion the action of the Court of First Instance in dismissing the motion was
proper.
If the question were admittedly one relating merely to an irregularity of procedure, we cannot suppose that
this proceeding would have taken the form of a motion in the cause, since it is clear that, if based on such
an error, the came to late for relief in the Court of First Instance. But as we have already seen, the motion
attacks the judgment of the court as void for want of jurisdiction over the defendant. The idea underlying
the motion therefore is that inasmuch as the judgment is a nullity it can be attacked in any way and at any
time. If the judgment were in fact void upon its face, that is, if it were shown to be a nullity by virtue of its
own recitals, there might possibly be something in this. Where a judgment or judicial order is void in this
sense it may be said to be a lawless thing, which can be treated as an outlaw and slain at sight, or ignored
wherever and whenever it exhibits its head.
But the judgment in question is not void in any such sense. It is entirely regular in form, and the alleged
defect is one which is not apparent upon its face. It follows that even if the judgment could be shown to be
void for want of jurisdiction, or for lack of due process of law, the party aggrieved thereby is bound to

resort to some appropriate proceeding to obtain relief. Under accepted principles of law and practice, long
recognized in American courts, a proper remedy in such case, after the time for appeal or review has
passed, is for the aggrieved party to bring an action to enjoin the judgment, if not already carried into
effect; or if the property has already been disposed of he may institute suit to recover it. In every situation
of this character an appropriate remedy is at hand; and if property has been taken without due process,
the law concedes due process to recover it. We accordingly old that, assuming the judgment to have been
void as alleged by the proponent of this motion, the proper remedy was by an original proceeding and not
by motion in the cause. As we have already seen our Code of Civil Procedure defines the conditions under
which relief against a judgment may be productive of conclusion for this court to recognize such a
proceeding as proper under conditions different from those defined by law. Upon the point of procedure
here involved, we refer to the case of People vs. Harrison (84 Cal., 607) wherein it was held that a motion
will not lie to vacate a judgment after the lapse of the time limited by statute if the judgment is not void on
its face; and in all cases, after the lapse of the time limited by statute if the judgment is not void on its
face; and all cases, after the lapse of such time, when an attempt is made to vacate the judgment by a
proceeding in court for that purpose an action regularly brought is preferable, and should be required. It
will be noted taken verbatim from the California Code (sec. 473).
The conclusions stated in this opinion indicate that the judgment appealed from is without error, and the
same is accordingly affirmed, with costs. So ordered.
Separate Opinions
MALCOLM, J., dissenting:
I dissent. It will not make me long to state my reasons. An immutable attribute the fundamental idea
of due process of law is that no man shall be condemned in his person or property without notice and an
opportunity of being heard in his defense. Protection of the parties demands a strict and an exact
compliance with this constitutional provision in our organic law and of the statutory provisions in
amplification. Literally hundreds of precedents could be cited in support of these axiomatic principles.
Where as in the instant case the defendant received no notice and had no opportunity to be heard,
certainly we cannot say that there is due process of law. Resultantly, "A judgment which is void upon its
face, and which requires only an inspection of the judgment roll to demonstrate its want of vitality is a
dead limb upon the judicial tree, which should be lopped off, if the power so to do exists. It can bear no
fruit to the plaintiff, but is a constant menace to the defendant." (Mills vs. Dickons, 6 Rich [S. C.], 487.)
El Banco Espanol-Filipino vs. Vicente Palanca G.R. No. L-11390, March 26, 1918
El Banco Espanol-Filipino vs. Palanca
G.R. No. L-11390, March 26, 1918
* JURISDICTION, HOW ACQUIRED: Jurisdiction over the property which is the subject of the litigation may
result either from a seizure of the property under legal process, whereby it is brought into the actual
custody of the law, or it may result from the institution of legal proceedings wherein, under special
provisions of law, the power of the court over the property is recognized and made effective.
* The action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is expressed the
idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is substantially
such.
* DUE PROCESS IN FORECLOSURE PROCEEDINGS: Property is always assumed to be in the possession of its
owner, in person or by agent; and he may be safely held, under certain conditions, to be affected with
knowledge that proceedings have been instituted for its condemnation and sale.
FACTS:
Engracio Palanca Tanquinyeng y Limquingco mortgaged various parcels of real property in Manila to El
Banco Espanol-Filipino. Afterwards, Engracio returned to China and there he died on January 29, 1810
without returning again to the Philippines. The mortgagor then instituted foreclosure proceeding but since

defendant is a non-resident, it was necessary to give notice by publication. The Clerk of Court was also
directed to send copy of the summons to the defendants last known address, which is in Amoy, China. It is
not shown whether the Clerk complied with this requirement. Nevertheless, after publication in a
newspaper of the City of Manila, the cause proceeded and judgment by default was rendered. The decision
was likewise published and afterwards sale by public auction was held with the bank as the highest bidder.
On August 7, 1908, this sale was confirmed by the court. However, about seven years after the
confirmation of this sale, a motion was made by Vicente Palanca, as administrator of the estate of the
original defendant, wherein the applicant requested the court to set aside the order of default and the
judgment, and to vacate all the proceedings subsequent thereto. The basis of this application was that the
order of default and the judgment rendered thereon were void because the court had never acquired
jurisdiction over the defendant or over the subject of the action.
ISSUE:
* Whether or not the lower court acquired jurisdiction over the defendant and the subject matter of the
action
* Whether or not due process of law was observed
RULING:
On Jurisdiction
The word jurisdiction is used in several different, though related, senses since it may have reference (1)
to the authority of the court to entertain a particular kind of action or to administer a particular kind of
relief, or it may refer to the power of the court over the parties, or (2) over the property which is the
subject to the litigation.
The sovereign authority which organizes a court determines the nature and extent of its powers in general
and thus fixes its competency or jurisdiction with reference to the actions which it may entertain and the
relief it may grant.
How Jurisdiction is Acquired
Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his submission
to its authority, or it is acquired by the coercive power of legal process exerted over the person.
Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the
property under legal process, whereby it is brought into the actual custody of the law, or it may result from
the institution of legal proceedings wherein, under special provisions of law, the power of the court over
the property is recognized and made effective. In the latter case the property, though at all times within
the potential power of the court, may never be taken into actual custody at all. An illustration of the
jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at
the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of
the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding
to register the title of land under our system for the registration of land. Here the court, without taking
actual physical control over the property assumes, at the instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against
all the world.
In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in
rem, by which is expressed the idea that while it is not strictly speaking an action in rem yet it partakes of
that nature and is substantially such. The expression "action in rem" is, in its narrow application, used only
with reference to certain proceedings in courts of admiralty wherein the property alone is treated as
responsible for the claim or obligation upon which the proceedings are based. The action quasi rem differs
from the true action in rem in the circumstance that in the former an individual is named as defendant,
and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the
property. All proceedings having for their sole object the sale or other disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus
designated. The judgment entered in these proceedings is conclusive only between the parties.

It is true that in proceedings of this character, if the defendant for whom publication is made appears, the
action becomes as to him a personal action and is conducted as such. This, however, does not affect the
proposition that where the defendant fails to appear the action is quasi in rem; and it should therefore be
considered with reference to the principles governing actions in rem.

G.R. No. 131482

July 3, 2002

REGALADO P. SAMARTINO, petitioner,


vs.
LEONOR B. RAON, AGUSTIN G. CRISOSTOMO, THE MUNICIPAL TRIAL COURT OF NOVELETA,
CAVITE, HON. MANUEL A. MAYO, REGIONAL TRIAL COURT, BRANCH 16, CAVITE CITY, HON.
ROLANDO D. DIAZ, REGIONAL TRIAL COURT, BRANCH 17, CAVITE CITY, SHERIFF DANILO G.
LAPUZ, CAVITE CITY and THE HON. COURT OF APPEALS, respondents.
YNARES-SANTIAGO, J.:
Respondents Leonor Bernardo-Raon and Agustin G. Crisostomo are the surviving sister and spouse,
respectively, of the late Filomena Bernardo-Crisostomo, who passed away on May 17, 1994. Among the
properties left by the deceased was her one-half share in a parcel of land in Noveleta, Cavite, registered
under Transfer Certificate of Title No. T- 131898 in the name of co-owners Lido Beach Corporation and
Filomena Bernardo.
On January 25, 1996, respondents instituted against petitioner Regalado P. Samartino a complaint for
ejectment, docketed as Civil Case No. 744 of the Municipal Trial Court of Noveleta, Cavite. 1 They alleged
that during the lifetime of Filomena Bernardo, she leased her share in the property to petitioner for a
period of five years counted from 1986; that the said lease expired and was not extended thereafter; and
that petitioner refused to vacate the property despite demands therefor.
Summons was served on Roberto Samartino, brother of petitioner.2 At the time of service of summons at
petitioners house, he was not at home as he was then confined at the National Bureau of Investigation
Treatment and Rehabilitation Center (NBI-TRC), Tagaytay City since January 19, 1996, where he was
undergoing treatment and rehabilitation for drug dependency. Thus, on February 2, 1996, a liaison officer
of the NBI-TRC appeared before the trial court with a certification that petitioner will be unable to comply
with the directive to answer the complaint within the reglementary period, inasmuch as it will take six
months for him to complete the rehabilitation program and before he can be recommended for discharge
by the Rehabilitation Committee.3
The trial court, despite the written certification from NBI-TRC, granted respondents motion to declare
petitioner in default and ordered them to present evidence ex-parte. On March 21, 1996, the trial court
rendered judgment in favor of respondents as follows:
FROM THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in favor of the plaintiffs and
against the defendant ordering the latter and other person/s claiming rights under him:
1. To vacate immediately the land in question after the finality of the decision.
2. For the defendant to pay the plaintiffs the sum of P5,000.00 monthly from January, 1992
up to the time he surrenders the premises considered as damages for the use of the subject
land.
3. For the defendant to pay the plaintiffs P 10,000.00 as and for attorneys fees with an
additional P800.00 as appearance fees.

4. To pay the plaintiffs P 100.00 as filing fee.


SO ORDERED.4
After learning of the adverse decision against him, petitioners counsel filed with the Regional Trial Court of
Cavite City, Branch 16, a motion to set aside judgment. The motion was treated as an appeal and docketed
as Civil Case No. N-6281. On July 18, 1996, the RTC affirmed the decision of the MTC. 5
The aforesaid decision became final. Accordingly, the court of origin issued on September 17, 1996 a writ
of execution.6 Petitioner was given a grace period of one month within which to vacate the premises. His
real property situated in Noveleta, Cavite, covered by Transfer Certificate of Title No. T-283572, was levied
and sold at public auction to respondents in full satisfaction of the monetary award. 7
On November 25, 1996, petitioner filed with the Regional Trial Court of Cavite City, a petition for relief from
judgment, docketed as Civil Case No. N-6393.8 In support thereof, petitioner submitted an affidavit of
merit,9alleging in fine that the parcel of land from which he was being evicted had been sold to him by
Filomena Bernardo-Crisostomo, as evidenced by the Deed of Absolute Sale dated December 13, 1988. 10
The following day, November 26, 1996, the RTC issued an Order dismissing the petition for relief from
judgment.11 Petitioners Motion for Reconsideration was denied on December 12, 1996. A second Motion
for Reconsideration was likewise denied on January 14, 1997. 12 On the same day, a writ of demolition was
issued commanding the sheriff to remove the building and improvements made by petitioner on the
subject premises and to deliver the possession thereof to respondents. 13
Petitioner thus filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
432O2.14 On August 29, 1997, the Court of Appeals dismissed the petition. 15 Petitioners Motion for
Reconsideration was denied on November 14, 1997.16 Hence this petition for review.
The petition is impressed with merit.
In actions in personam, summons on the defendant must be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive it, by tendering it to him. If efforts to serve the summons
personally to defendant is impossible, service may be effected by leaving copies of the summons at the
defendants dwelling house or residence with some person of suitable age and discretion residing therein,
or by leaving the copies at the defendants office or regular place of business with some competent person
in charge thereof. Otherwise stated, service of summons upon the defendant shall be by personal service
first and only when the defendant cannot be promptly served in person will substituted service be availed
of.17
Rule 14 of the 1997 Rules of Civil Procedure clearly provides:
Sec. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by
handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
Sec. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a
reasonable time as provided in the preceding section, service may be effected (a) by leaving copies
of the summons at the defendants residence with some person of suitable age and discretion then
residing therein, or (b) by leaving the copies at defendants office or regular place of business with
some competent person in charge thereof.
We have long held that the impossibility of personal service justifying availment of substituted service
should be explained in the proof of service; why efforts exerted towards personal service failed. The

pertinent facts and circumstances attendant to the service of summons must be stated in the proof of
service or Officers Return; otherwise, the substituted service cannot be upheld. It is only under
exceptional terms that the circumstances warranting substituted service of summons may be proved by
evidence aliunde. It bears stressing that since service of summons, especially for actions in personam, is
essential for the acquisition of jurisdiction over the person of the defendant, the resort to a substituted
service must be duly justified. Failure to do so would invalidate all subsequent proceedings on jurisdictional
grounds.18
In this connection, Supreme Court Administrative Circular No. 59 was issued on November 19, 1989 to
stress the importance of strict compliance with the requisites for a valid substituted service, to wit:
Delays in court proceedings have been caused by faulty and erroneous implementation of Section
8, Rule 14, Rules of Court on Substituted Service of Summons.
The Trial Judges of all lower courts, as well as the Clerks of Court in their capacity as Ex-Officio
Sheriffs together with the Deputy Sheriffs are reminded of the provision of Section 8, Rule 14, Rules
of Court on substituted service as follows:
xxx

xxx

xxx

The manner of effecting substituted service as prescribed in Venturanza vs. Court of Appeals,
156 SCRA 305, must be strictly complied with, thus:
"The substituted service should be availed only when the defendant cannot be served
promptly in person. Impossibility of prompt service should be shown by stating the efforts
made to find the defendant personally and the failure of such efforts. The statement should
be made in the proof of service. This is necessary because substituted service is in
derogation of the usual method of service.
Substituted service is a method extraordinary in character, and hence may be used only as
prescribed in the circumstances authorized by statute. Thus, the statutory requirements of
substituted service must be followed strictly, faithfully and any substituted service other
than authorized by the statute is considered ineffective."
For immediate compliance.
In the case at bar, the sheriffs Return of Summons simply states:
This is to certify that on this date: 26th day of January I have caused the service of summons,
together with the attached complaint and its annexes issued in the above entitled case upon
defendant REGALADO SAMARTINO thru ROBERTO SAMARTINO, Brother of the defendant
acknowledge receipt of said court processes by affixing his signature at the lower left portion of the
original summons hereto attached.
WHEREFORE, the attached original summons is hereby respectfully returned to the court of origin
duly served for information and record purposes.
Noveleta, Cavite, February 9, 1996.19
Clearly, the above return failed to show the reason why personal service could not be made. It failed to
state that prompt and personal service on the defendant was rendered impossible. It was not shown that
efforts were made to find the defendant personally and that said efforts failed; hence the resort to
substituted service. As stated above, these requirements are indispensable because substituted service is

in derogation of the usual method of service. It is an extraordinary method since it seeks to bind the
defendant to the consequences of a suit even though notice of such action is served not upon him but
upon another whom law could only presume would notify him of the pending proceedings. For this reason,
failure to faithfully, strictly, and fully comply with the requirements of substituted service renders said
service ineffective.20
Furthermore, nowhere in the return of summons or in the records of this case is it shown that petitioners
brother, on whom substituted service of summons was effected, was a person of suitable age and
discretion residing at petitioners residence.
There being no valid substituted service of summons, the trial court did not acquire jurisdiction over the
person of petitioner. It should be emphasized that the service of summons is not only required to give the
court jurisdiction over the person of the defendant, but also to afford the latter an opportunity to be heard
on the claim made against him. Thus, compliance with the rules regarding the service of summons is as
much an issue of due process as of jurisdiction. The essence of due process is to be found in the
reasonable opportunity to be heard and submit any evidence one may have in support of his defense. It is
elementary that before a person can be deprived of his property, he should first be informed of the claim
against him and the theory on which such claim is premised. 21
By reason of the ineffective service of summons, petitioner was not duly apprised of the action against
him. Consequently, he was prevented from answering the claims against him. He was not given a chance
to be heard on his defenses. What made matters worse was that the trial court had actual knowledge that
petitioner was then indisposed and unable to file his answer to the complaint, as he was then confined at
the NBI-TRC. The trial courts failure to give petitioner a reasonable opportunity to file his answer violated
his right to due process. Perforce, the judgment rendered against petitioner is nugatory and without effect.
The trial court should not have been too rash in declaring petitioner in default, considering it had actual
notice of valid reasons that prevented him from answering. Well-settled is the rule that courts should be
liberal in setting aside orders of default for default judgments are frowned upon, unless in cases where it
clearly appears that the reopening of the case is intended for delay. The issuance of orders of default
should be the exception rather than the rule, to be allowed only in clear cases of obstinate refusal by the
defendant to comply with the orders of the trial court.22
Suits should as much as possible be decided on the merits and not on technicalities. In this regard,
we have often admonished courts to be liberal in setting aside orders of default as default
judgments are frowned upon and not looked upon with favor for they may amount to a positive and
considerable injustice to the defendant and the possibility of such serious consequences
necessitates a careful examination of the grounds upon which the defendant asks that it be set
aside. Since rules of procedure are mere tools designed to facilitate the attainment of justice, it is
well recognized that this Court is empowered to suspend its operation, or except a particular case
from its operation, when the rigid application thereof tends to frustrate rather than promote the
ends of justice. We are not unmindful of the fact that during the pendency of the instant petition,
the trial court has rendered judgment against petitioners. However, being the court of last resort,
we deem it in the best interest that liberality and relaxation of the Rules be extended to petitioners
by setting aside the order of default issued by the trial court and the consequent default judgment;
otherwise, great injustice would result if petitioners are not afforded an opportunity to prove their
claims.23
In addition, the Regional Trial Court committed reversible error in dismissing the petition for relief from
judgment for having been filed out of time. According to the Regional Trial Court, the petition for relief, filed
on November 25, 1996, was late because petitioner had actual knowledge of the judgment in the
ejectment case since March 1996. The period within which to file a petition for relief should have been
reckoned from the date petitioner learned of the judgment of the Regional Trial Court. It should not have

been counted from the date of the Municipal Trial Courts decision because, precisely, petitioner appealed
the same. It was the Regional Trial Courts decision that became final and, hence, was the proper subject of
the petition for relief from judgment. It is axiomatic that a petition for relief is only available against a final
and executory judgment.24
Section 3, Rule 38, of the 1997 Rules of Civil Procedure provides that a verified petition for relief must be
filed within sixty (60) days after the petitioner learns of the judgment, final order, or other proceeding to
be set aside and not more than six (6) months after such judgment or final order has been entered or such
proceeding has been taken. It must be accompanied with affidavits showing the fraud, accident, mistake,
or excusable negligence relied upon, and the facts constituting petitioners good and substantial cause of
action or defense.25
It is not clear from the records of the case at bar when petitioner learned of the decision of the Regional
Trial Court affirming the judgment of the Municipal Trial Court. What appears is that the said decision
became final only on August 15, 1996, and must have been entered sometime thereafter. Hence, the
petition for relief filed on November 25, 1996 was well within the six-month period prescribed by the Rules.
Finally, the records show that petitioner raised a meritorious defense in his affidavit of merit. He alleged
therein that the property from which he was being ejected had been sold to him by its registered owner.
Ownership is a valid defense in unlawful detainer cases. While possession is the main issue in ejectment, it
is also one of the essential attributes of ownership. It follows that an owner of real property is entitled to
possession of the same. Petitioner can, therefore, properly plead his right of possession to defeat that of
respondents. Indeed, an owner who cannot exercise the seven "juses" or attributes of ownership - the right
to possess, to use and enjoy, to abuse or consume, to accessories, to dispose or alienate, to recover or
vindicate and to the fruits - is a crippled owner.26
All told, the Municipal Trial Court of Noveleta and the Regional Trial Court of Cavite City did not have
jurisdiction over the person of petitioner. Hence, all proceedings had as regards petitioner were null and
void. Necessarily, the enforcement of the writ of execution as well as the sale at public auction of
petitioners real property to satisfy the void judgment must also be declared of no legal effect.
There is a real need to resolve the issue of ownership over the premises in order to determine who, as
between petitioner and respondents, has a better right to possess the property in dispute. This can only be
done in the proper proceeding before the trial court wherein petitioner will be afforded every right to
present evidence in his behalf.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals in
CA-G.R. SP No. 43202 is REVERSED and SET ASIDE. This case is REMANDED to the Municipal Trial Court
of Noveleta, Cavite, which is directed to continue proceedings in Civil Case No. 744 by affording petitioner
Regalado P. Samartino a chance to file his answer and present evidence in his defense, and thereafter to
hear and decide the case. The Writ of Execution dated September 17, 1996, the Writ of Demolition dated
January 14, 1997, and the certificate of sale over Transfer Certificate of Title No. T-283572, as well as all
acts and deeds incidental to the judgment in Civil Case No. 744, are declared NULL AND VOID.
SO ORDERED.
Facts:
Respondents Leonor Bernardo-Raon and Agustin G. Crisostomo are the surviving sister and spouse,
respectively, of the late Filomena Bernardo-Crisostomo, who passed away on May 17, 1994. Among the
properties left by the deceased was her one-half share in a parcel of land in Noveleta, Cavite, registered
under the name of co-owners Lido Beach Corporation and Filomena Bernardo. On January 25, 1996,
respondents instituted against petitioner Regalado P. Samartino a complaint for ejectment alleging that

during the lifetime of Filomena Bernardo, she leased her share in the property to petitioner for a period of
five years counted from 1986; that the said lease expired and was not extended thereafter; and that
petitioner refused to vacate the property despite demands therefor. Summons was served on Roberto
Samartino, brother of petitioner. At the time of service of summons at petitioners house, he was not at
home as he was then confined at the National Bureau of Investigation Treatment and Rehabilitation Center
(NBI-TRC), Tagaytay City since January 19, 1996, where he was undergoing treatment and rehabilitation for
drug dependency. Thus, on February 2, 1996, a liaison officer of the NBI-TRC appeared before the trial court
with a certification that petitioner will be unable to comply with the directive to answer the complaint
within the reglementary period, inasmuch as it will take six months for him to complete the rehabilitation
program and before he can be recommended for discharge by the Rehabilitation Committee.
Issue:
Whether or not the right of petitioner to due process is violated.
Ruling:
Yes. The trial courts failure to give petitioner a reasonable opportunity to file his answer violated his right
to due process. There being no valid substituted service of summons, the trial court did not acquire
jurisdiction over the person of petitioner. It should be emphasized that the service of summons is not only
required to give the court jurisdiction over the person of the defendant, but also to afford the latter an
opportunity to be heard on the claim made against him. Thus, compliance with the rules regarding the
service of summons is as much an issue of due process as of jurisdiction. The essence of due process is to
be found in the reasonable opportunity to be heard and submit any evidence one may have in support of
his defense. It is elementary that before a person can be deprived of his property, he should first be
informed of the claim against him and the theory on which such claim is premised.

G.R. No. 111397

August 12, 2002

HON. ALFREDO LIM and RAFAELITO GARAYBLAS, petitioners,


vs.
THE COURT OF APPEALS, HON. WILFREDO REYES and BISTRO PIGALLE, INC., respondents.
CARPIO, J.:
The Case
Before us is a petition for review on certiorari 1 of the Decision of the Court of Appeals dated March 25,
1993,2and its Resolution dated July 13, 19933 which denied petitioners motion for reconsideration. The
assailed Decision sustained the orders dated December 29, 1992, January 20, 1993 and March 2,
1993,4 issued by Branch 36 of the Regional Trial Court of Manila. The trial courts orders enjoined petitioner
Alfredo Lim ("Lim" for brevity), then Mayor of Manila, from investigating, impeding or closing down the
business operations of the New Bangkok Club and the Exotic Garden Restaurant owned by respondent
Bistro Pigalle Inc. ("Bistro" for brevity).
The Antecedent Facts
On December 7, 1992 Bistro filed before the trial court a petition5 for mandamus and prohibition, with
prayer for temporary restraining order or writ of preliminary injunction, against Lim in his capacity as
Mayor of the City of Manila. Bistro filed the case because policemen under Lims instructions inspected and
investigated Bistros license as well as the work permits and health certificates of its staff. This caused the
stoppage of work in Bistros night club and restaurant operations. 6 Lim also refused to accept Bistros

application for a business license, as well as the work permit applications of Bistros staff, for the year
1993.7
In its petition, Bistro argued that Lims refusal to issue the business license and work permits violated the
doctrine laid down this Court in De la Cruz vs. Paras,8 to wit:
"Municipal corporations cannot prohibit the operation of nightclubs. They may be regulated, but not
prevented from carrying on their business."
Acting on Bistros application for injunctive relief, the trial court issued the first assailed temporary
restraining order on December 29, 1992, the dispositive portion of which reads:
"WHEREFORE, respondent and/or his agents and representatives are ordered to refrain from
inspecting or otherwise interfering in the operation of the establishments of petitioner (Bistro
Pigalle, Inc.)."9
At the hearing, the parties submitted their evidence in support of their respective positions. On January 20,
1993, the trial court granted Bistros application for a writ of prohibitory preliminary injunction. The
dispositive portion of the trial courts order declared:
"WHEREFORE, in view of all the foregoing, Petitioners application for a writ of prohibitory
preliminary injunction is granted, and Respondent, and any/all persons acting under his authority,
are and (sic) ordered to cease and desist from inspecting, investigating and otherwise closing or
impeding the business operations of Petitioner Corporations establishments while the petition here
is pending resolution on the merits.
Considering that the Respondent is a government official and this injunction relates to his official
duties, the posting of an injunction bond by the Petitioners is not required.
On the other hand, Petitioners application for a writ of mandatory injunction is hereby denied, for
to grant the same would amount to granting the writ of mandamus prayed for. The Court reserves
resolution thereof until the parties shall have been heard on the merits." 10
However, despite the trial courts order, Lim still issued a closure order on Bistros operations effective
January 23, 1993, even sending policemen to carry out his closure order.
On January 25, 1993, Bistro filed an "Urgent Motion for Contempt" against Lim and the policemen who
stopped Bistros operations on January 23, 1993. At the hearing of the motion for contempt on January 29,
1993, Bistro withdrew its motion on condition that Lim would respect the courts injunction.
However, on February 12, 13, 15, 26 and 27, and on March 1 and 2, 1993, Lim, acting through his agents
and policemen, again disrupted Bistros business operations.
Meanwhile, on February 17, 1993, Lim filed a motion to dissolve the injunctive order of January 20, 1993
and to dismiss the case. Lim insisted that the power of a mayor to inspect and investigate commercial
establishments and their staff is implicit in the statutory power of the city mayor to issue, suspend or
revoke business permits and licenses. This statutory power is expressly provided for in Section 11 (l),
Article II of the Revised Charter of the City of Manila and in Section 455, paragraph 3 (iv) of the Local
Government Code of 1991.
The trial court denied Lims motion to dissolve the injunction and to dismiss the case in an order dated
March 2, 1993, the dispositive portion of which stated:

"WHEREFORE, premises considered, the Court hereby orders:


(1) The denial of respondents motion to dissolve the writ of preliminary prohibitory injunction or the
dismissal of the instant case;
(2) Petitioner-corporation is authorized to remove the wooden cross-bars or any other impediments
which were placed at its establishments, namely, New Bangkok Club and Exotic Garden Restaurant
on February 12, 1993 and February 15, 1993, respectively, and thereafter said establishments are
allowed to resume their operations;
(3) All the other petitioners are allowed to continue working in the aforenamed establishments of
petitioner-corporation if they have not yet reported; and
(4) The hearing on the contempt proceedings is deferred to give sufficient time to respondent to
elevate the matters assailed herein to the Supreme Court." 11
On March 10, 1993, Lim filed with the Court of Appeals a petition for certiorari, prohibition and mandamus
against Bistro and Judge Wilfredo Reyes. Lim claimed that the trial judge committed grave abuse of
discretion amounting to lack of jurisdiction in issuing the writ of prohibitory preliminary injunction.
On March 25, 1993, the Court of Appeals rendered the assailed decision. 12 In a resolution dated July 13,
1993, the Court of Appeals denied Lims motion for reconsideration. 13
On July 1, 1993, Manila City Ordinance No. 778314 took effect. On the same day, Lim ordered the Western
Police District Command to permanently close down the operations of Bistro, which order the police
implemented at once.15
The Ruling of the Court of Appeals
In denying Lims petition, the Court of Appeals held that the trial court did not commit grave abuse of
discretion since it issued the writ after hearing on the basis of the evidence adduced.
The Court of Appeals reasoned thus:
"x x x. A writ of preliminary injunction may issue if the act sought to be enjoined will cause
irreparable injury to the movant or destroy the status quo before a full hearing can be had on the
merits of the case.
A writ of preliminary injunction, as an ancillary or preventive remedy, may only be resorted to by a
litigant to protect or preserve his rights or interests and for no other purpose during the pendency
of the principal action. It is primarily intended to maintain the status quo between the parties
existing prior to the filing of the case.
In the case at bar, We find that the respondent Judge did not act improvidently in issuing the
assailed orders granting the writ of preliminary injunction in order to maintain the status quo, while
the petition is pending resolution on the merits. The private respondent correctly points out that the
questioned writ was regularly issued after several hearings, in which the parties were allowed to
adduce evidence, and argue their respective positions.
The issuance of a writ of preliminary injunction is within the limits of the sound exercise of
discretion of the court and the appellate court will not interfere, except, in a clear case of abuse
thereof. x x x.

WHEREFORE, the petition is DENIED DUE COURSE and is accordingly DISMISSED." 16


Hence, this petition.
The Issues
In their Memorandum, petitioners raise the following issues:
1. "DID RESPONDENT JUDGE COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN ISSUING HIS SAID ASSAILED ORDERS OF DECEMBER 29, 1992, JANUARY
20, 1993 AND MARCH 2, 1993?"
2. "DID RESPONDENT COURT OF APPEALS COMMIT REVERSIBLE ERRORS IN RENDERING ITS
ASSAILED DECISION OF MARCH 25, 1993 AND ITS ASSAILED RESOLUTION OF JULY 13, 1993?"
3. "DID SAID CIVIL CASE NO. 92-63712 AND SAID CA-G.R. SP NO. 30381 BECOME MOOT AND
ACADEMIC WHEN THE NEW BANGKOK CLUB AND THE EXOTIC GARDEN RESTAURANT OF PRIVATE
RESPONDENT WERE CLOSED ON JULY 1, 1993 PURSUANT TO ORDINANCE NO. 7783?"
The Ruling of the Court
The petition is without merit.
Considering that the constitutionality of Ordinance No. 7783 was not raised before the trial court or the
Court of Appeals, and this issue is still under litigation in another case, 17 the Court will deal only with the
first two issues raised by petitioner.
Validity of the Preliminary Injunction
Bistros cause of action in the mandamus and prohibition proceedings before the trial court is the violation
of its property right under its license to operate. The violation consists of the work disruption in Bistros
operations caused by Lim and his subordinates as well as Lims refusal to issue a business license to Bistro
and work permits to its staff for the year 1993. The primary relief prayed for by Bistro is the issuance of
writs of mandatory and prohibitory injunction. The mandatory injunction seeks to compel Lim to accept
Bistros 1993 business license application and to issue Bistros business license. Also, the mandatory
injunction seeks to compel Lim to accept the applications of Bistros staff for work permits. The writ of
prohibitory injunction seeks to enjoin Lim from interfering, impeding or otherwise closing down Bistros
operations.
The trial court granted only the prohibitory injunction. This enjoined Lim from interfering, impeding or
otherwise closing down Bistros operations pending resolution of whether Lim can validly refuse to issue
Bistros business license and its staffs work permits for the year 1993.
Lim contends that the Court of Appeals erred in upholding the prohibitory injunction. Lim relies primarily on
his power, as Mayor of the City of Manila, to grant and refuse municipal licenses and business permits as
expressly provided for in the Local Government Code and the Revised Charter of the City of Manila. Lim
argues that the powers granted by these laws implicitly include the power to inspect, investigate and close
down Bistros operations for violation of the conditions of its licenses and permits.
On the other hand, Bistro asserts that the legal provisions relied upon by Lim do not apply to the instant
case. Bistro maintains that the Local Government Code and the Revised Charter of the City of Manila do
not expressly or impliedly grant Lim any power to prohibit the operation of night clubs. Lim failed to specify

any violation by Bistro of the conditions of its licenses and permits. In refusing to accept Bistros business
license application for the year 1993, Bistro claims that Lim denied Bistro due process of law.
The Court of Appeals held that the trial court did not commit grave abuse of discretion in issuing the
prohibitory preliminary injunction.
We uphold the findings of the Court of Appeals.
The authority of mayors to issue business licenses and permits is beyond question. The law expressly
provides for such authority. Section 11 (l), Article II of the Revised Charter of the City of Manila, reads:
"Sec. 11. General duties and powers of the mayor. The general duties and powers of the
mayor shall be:
x x x.
(l) To grant and refuse municipal licenses or permits of all classes and to revoke the
same for violation of the conditions upon which they were granted, or if acts prohibited by
law or municipal ordinances are being committed under the protection of such licenses or in the
premises in which the business for which the same have been granted is carried on, or for any other
reason of general interest." (Emphasis supplied)
On the other hand, Section 455 (3) (iv) of the Local Government Code provides:
"Sec. 455. Chief Executive, Powers, Duties and Compensation: xxx.
(b) For efficient, effective and economical governance the purpose of which is the general welfare
of the City and its inhabitants pursuant to Section 16 of this Code, the City Mayor shall:
(3) x x x.
(iv) Issue licenses and permits and suspend or revoke the same for any violation
of the condition upon which said licenses or permits had been issued, pursuant to
law or ordinance." (Emphasis supplied)
From the language of the two laws, it is clear that the power of the mayor to issue business licenses and
permits necessarily includes the corollary power to suspend, revoke or even refuse to issue the same.
However, the power to suspend or revoke these licenses and permits is expressly premised on the violation
of the conditions of these permits and licenses. The laws specifically refer to the "violation of the
condition(s)" on which the licenses and permits were issued. Similarly, the power to refuse to issue such
licenses and permits is premised on non-compliance with the prerequisites for the issuance of such
licenses and permits. The mayor must observe due process in exercising these powers, which means that
the mayor must give the applicant or licensee notice and opportunity to be heard.
True, the mayor has the power to inspect and investigate private commercial establishments for any
violation of the conditions of their licenses and permits. However, the mayor has no power to order a police
raid on these establishments in the guise of inspecting or investigating these commercial establishments.
Lim acted beyond his authority when he directed policemen to raid the New Bangkok Club and the Exotic
Garden Restaurant. Such act of Lim violated Ordinance No. 7716 18 which expressly prohibits police raids
and inspections, to wit:
"Section 1. No member of the Western Police District shall conduct inspection of food and other
business establishments for the purpose of enforcing sanitary rules and regulations, inspecting

licenses and permits, and/or enforcing internal revenue and customs laws and regulations. This
responsibility should be properly exercised by Local Government Authorities and other concerned
agencies." (Emphasis supplied)
These local government officials include the City Health Officer or his representative, pursuant to the
Revised City Ordinances of the City of Manila,19 and the City Treasurer pursuant to Section 470 of the Local
Government Code.20
Lim has no authority to close down Bistros business or any business establishment in Manila without due
process of law. Lim cannot take refuge under the Revised Charter of the City of Manila and the Local
Government Code. There is no provision in these laws expressly or impliedly granting the mayor authority
to close down private commercial establishments without notice and hearing, and even if there is, such
provision would be void. The due process clause of the Constitution requires that Lim should have given
Bistro an opportunity to rebut the allegations that it violated the conditions of its licenses and permits.
The regulatory powers granted to municipal corporations must always be exercised in accordance with law,
with utmost observance of the rights of the people to due process and equal protection of the law. 21 Such
power cannot be exercised whimsically, arbitrarily or despotically. In the instant case, we find that Lims
exercise of this power violated Bistros property rights that are protected under the due process clause of
the Constitution.
Lim did not charge Bistro with any specific violation of the conditions of its business license or permits.
Still, Lim closed down Bistros operations even before the expiration of its business license on December
31, 1992. Lim also refused to accept Bistros license application for 1993, in effect denying the application
without examining whether it complies with legal prerequisites.
Lims zeal in his campaign against prostitution is commendable. The presumption is that he acted in good
faith and was motivated by his concern for his constituents when he implemented his campaign against
prostitution in the Ermita-Malate area. However, there is no excusing Lim for arbitrarily closing down,
without due process of law, the business operations of Bistro. For this reason, the trial court properly
restrained the acts of Lim.
Consequently, the Court of Appeals did not err in upholding the trial courts orders. The sole objective of a
writ of preliminary injunction is to preserve the status quo until the merits of the case can be heard fully. It
is generally availed of to prevent actual or threatened acts, until the merits of the case can be disposed
of.22 In the instant case, the issuance of the writ of prohibitory preliminary injunction did not dispose of the
main case for mandamus. The trial court issued the injunction in view of the disruptions and stoppage in
Bistros operations as a consequence of Lims closure orders. The injunction was intended to maintain
the status quo while the petition has not been resolved on the merits.
WHEREFORE, the petition is denied for lack of merit. The assailed Decision of the Court of Appeals in CAG.R. SP NO. 30381 is AFFIRMED in toto.
SO ORDERED.
G.R. No. 93891
March 11, 1991
POLLUTION ADJUDICATION BOARD, petitioner
vs.
COURT OF APPEALS and SOLAR TEXTILE FINISHING CORPORATION, respondents.
Oscar A. Pascua and Charemon Clio L. Borre for petitioner.
Leonardo A. Aurelio for respondent Solar Textile Finishing Corp.
RESOLUTION

FELICIANO, J.:
Petitioner Pollution Adjudication Board ("Board") asks us to review the Decision and Resolution
promulgated on 7 February 1990 and 10 May 1990, respectively, by the Court of Appeals in C.A.-G R. No.
SP 18821 entitled "Solar Textile Finishing Corporation v. Pollution Adjudication Board." In that Decision and
Resolution, the Court of Appeals reversed an order of the Regional Trial Court, Quezon City, Branch 77, in
Civil Case No. Q-89-2287 dismissing private respondent Solar Textile Finishing Corporation's ("Solar")
petition for certiorari and remanded the case to the trial court for further proceedings.
On 22 September 1988, petitioner Board issued an ex parte Order directing Solar immediately to cease
and desist from utilizing its wastewater pollution source installations which were discharging untreated
wastewater directly into a canal leading to the adjacent Tullahan-Tinejeros River. The Order signed by Hon.
Fulgencio Factoran, Jr., as Board Chairman, reads in full as follows:
Respondent, Solar Textile Finishing Corporation with plant and place of business at 999 General
Pascual Avenue, Malabon, Metro Manila is involved in bleaching, rinsing and dyeing textiles with
wastewater of about 30 gpm. being directly discharged untreated into the sewer. Based on findings
in the Inspections conducted on 05 November 1986 and 15 November 1986, the volume of
untreated wastewater discharged in the final out fall outside of the plant's compound was even
greater. The result of inspection conducted on 06 September 1988 showed that respondent's
Wastewater Treatment Plant was noted unoperational and the combined wastewater generated
from its operation was about 30 gallons per minute and 80% of the wastewater was being directly
discharged into a drainage canal leading to the Tullahan-Tinejeros River by means of a by-pass and
the remaining 20% was channelled into the plant's existing Wastewater Treatment Plant (WTP).
Result of the analyses of the sample taken from the by-pass showed that the wastewater is highly
pollutive in terms of Color units, BOD and Suspended Solids, among others. These acts of
respondent in spite of directives to comply with the requirements are clearly in violation of Section
8 of Presidential Decree No. 984 and Section 103 of its Implementing Rules and Regulations and the
1982 Effluent Regulations.
WHEREFORE, pursuant to Section 7 of P.D. 984 and Section 38 of its Implementing Rules and
Regulations, respondent is hereby ordered to cease and desist from utilizing its wastewater
pollution source installation and discharging its untreated wastewater directly into the canal leading
to the Tullahan-Tinejeros River effective immediately upon receipt hereof and until such time when
it has fully complied with all the requirements and until further orders from this Board.
SO ORDERED.1
We note that the above Order was based on findings of several inspections of Solar's plant:
a. inspections conducted on 5 November 1986 and 12 November 1986 by the National Pollution
Control Commission ("NPCC"), the predecessor of the Board ;2 and
b. the inspection conducted on 6 September 1988 by the Department of Environment and Natural
Resources ("DENR").
The findings of these two (2) inspections were that Solar's wastewater treatment plant was nonoperational and that its plant generated about 30 gallons per minute of wastewater, 80% of which was
being directly discharged into a drainage canal leading to the Tullahan-Tinejeros River. The remaining 20%
of the wastewater was being channeled through Solar's non-operational wastewater treatment plant.
Chemical analysis of samples of Solar's effluents showed the presence of pollutants on a level in excess of
what was permissible under P.D. No. 984 and its Implementing Regulations.
A copy of the above Order was received by Solar on 26 September 1988. A Writ of Execution issued by the
Board was received by Solar on 31 March 1989.
Meantime, Solar filed a motion for reconsideration/appeal with prayer for stay of execution of the Order
dated 22 September 1988. Acting on this motion, the Board issued an Order dated 24 April 1989 allowing
Solar to operate temporarily, to enable the Board to conduct another inspection and evaluation of Solar's
wastewater treatment facilities. In the same Order, the Board directed the Regional Executive Director of
the DENR/ NCR to conduct the inspection and evaluation within thirty (30) days.
On 21 April 1989, however, Solar went to the Regional Trial Court of Quezon City, Branch 77, on petition for
certiorari with preliminary injunction against the Board, the petition being docketed as Civil Case No. Q-892287.
On 21 July 1989, the Regional Trial Court dismissed Solar's petition upon two (2) grounds, i.e., that appeal
and not certiorari from the questioned Order of the Board as well as the Writ of Execution was the proper
remedy, and that the Board's subsequent Order allowing Solar to operate temporarily had rendered Solar's
petition moot and academic.
Dissatisfied, Solar went on appeal to the Court of Appeals which, in the Decision here assailed, reversed
the Order of dismissal of the trial court and remanded the case to that court for further proceedings. In

addition, the Court of Appeals declared the Writ of Execution null and void. At the same time, the Court of
Appeals said in the dispositive portion of its Decision that:
. . .. Still and all, this decision is without prejudice to whatever action the appellee [Board] may take
relative to the projected 'inspection and evaluation' of appellant's [Solar's] water treatment
facilities. 3
The Court of Appeals, in so ruling, held that certiorari was a proper remedy since the Orders of petitioner
Board may result in great and irreparable injury to Solar; and that while the case might be moot and
academic, "larger issues" demanded that the question of due process be settled. Petitioner Board moved
for reconsideration, without success.
The Board is now before us on a Petition for Review basically arguing that:
1. its ex parte Order dated 22 September 1988 and the Writ of Execution were issued in accordance
with law and were not violative of the requirements of due process; and
2. the ex parte Order and the Writ of Execution are not the proper subjects of a petition for
certiorari.
The only issue before us at this time is whether or not the Court of Appeals erred in reversing the trial
court on the ground that Solar had been denied due process by the Board.
Petitioner Board claims that under P.D. No. 984, Section 7(a), it has legal authority to issue ex parte orders
to suspend the operations of an establishment when there is prima facie evidence that such establishment
is discharging effluents or wastewater, the pollution level of which exceeds the maximum permissible
standards set by the NPCC (now, the Board). Petitioner Board contends that the reports before it
concerning the effluent discharges of Solar into the Tullahan-Tinejeros River provided prima facie evidence
of violation by Solar of Section 5 of the 1982 Effluent Code.
Solar, on the other hand, contends that under the Board's own rules and regulations, an ex parte order
may issue only if the effluents discharged pose an "immediate threat to life, public health, safety or
welfare, or to animal and plant life." In the instant case, according to Solar, the inspection reports before
the Board made no finding that Solar's wastewater discharged posed such a threat.
The Court is not persuaded by Solar's contention. Section 7(a) of P.D. No. 984 authorized petitioner Board
to issue ex parte cease and desist orders under the following circumstances:
P.D. 984, Section 7, paragraph (a), provides:
(a) Public Hearing. . . . Provided, That whenever the Commission finds prima facie evidence that the
discharged sewage or wastes are of immediate threat to life, public health, safety or welfare, or to
animal or plant life, or exceeds the allowable standards set by the Commission, the Commissioner
may issue an ex-parte order directing the discontinuance of the same or the temporary suspension
or cessation of operation of the establishment or person generating such sewage or wastes without
the necessity of a prior public hearing. The said ex-parte order shall be immediately executory and
shall remain in force until said establishment or person prevents or abates the said pollution within
the allowable standards or modified or nullified by a competent court. (Emphasis supplied)
We note that under the above-quoted portion of Section 7(a) of P.D. No. 984, an ex parte cease and desist
order may be issued by the Board (a) whenever the wastes discharged by an establishment pose an
"immediate threat to life, public health, safety or welfare, or to animal or plant life," or (b) whenever such
discharges or wastes exceed "the allowable standards set by the [NPCC]." On the one hand, it is not
essential that the Board prove that an "immediate threat to life, public health, safety or welfare, or to
animal or plant life" exists before an ex parte cease and desist order may be issued. It is enough if the
Board finds that the wastes discharged do exceed "the allowable standards set by the [NPCC]." In respect
of discharges of wastes as to which allowable standards have been set by the Commission, the Board may
issue an ex parte cease and desist order when there is prima facieevidence of an establishment exceeding
such allowable standards. Where, however, the effluents or discharges have not yet been the subject
matter of allowable standards set by the Commission, then the Board may act on an ex parte basis when it
finds at least prima facie proof that the wastewater or material involved presents an "immediate threat to
life, public health, safety or welfare or to animal or plant life." Since the applicable standards set by the
Commission existing at any given time may well not cover every possible or imaginable kind of effluent or
waste discharge, the general standard of an "immediate threat to life, public health, safety or welfare, or to
animal and plant life" remains necessary.
Upon the other hand, the Court must assume that the extant allowable standards have been set by the
Commission or Board precisely in order to avoid or neutralize an "immediate threat to life, public health,
safety or welfare, or to animal or plant life.''
Section 5 of the Effluent Regulations of 1982 4 sets out the maximum permissible levels of physical and
chemical substances which effluents from domestic wastewater treatment plants and industrial plants"
must not exceed "when discharged into bodies of water classified as Class A, B, C, D, SB and SC in
accordance with the 1978 NPCC Rules and Regulations." The waters of Tullahan-Tinejeros River are

classified as inland waters Class D under Section 68 of the 1978 NPCC Rules and Regulations 5 which in
part provides that:
Sec. 68. Water Usage and Classification. The quality of Philippine waters shall be maintained in a
safe and satisfactory condition according to their best usages. For this purpose, all water shall be
classified according to the following beneficial usages:
(a) Fresh Surface Water
Classification
Best usage
xxx
xxx
xxx
Class D
For agriculture, irrigation, livestock watering
and industrial cooling and processing.
xxx
xxx
xxx
(Emphases supplied)
The reports on the inspections carried on Solar's wastewater treatment facilities on 5 and 12 November
1986 and 6 September 1988 set forth the following Identical finding:
a. For legal action in [view of] implementing rules and regulations of P.D. No. 984 and Section 5 of
the Effluent Regulations of 1982. 6
Placing the maximum allowable standards set in Section 5 of the Effluent Regulations of 1982 alongside
the findings of the November 1986 and September 1988 inspection reports, we get the following results:
"Inland
Waters
(Class C & D7
a) Color in
platinum
cobalt
units
b) pH
c) Temperature in C
d) Phenols in
mg.1
e) Suspended
solids in
mg./1.
f) BOD in
mg./1.
g) oil/Grease
in mg./1.
h) Detergents
mg./1."

November
1986
Report8
Station 1
100

a)

6-8.5
40

b)
c)

Color units
(Apparent
Color)

250

September
1988
Report9
Station 1
125

pH
9.3
8.7
Temperature
(C)
0.1
d) Phenols in
mg./1.
75
e) Suspended
340
80
solids in
mg./1.
80
f)
BOD (5-day)
1,100
152
mg./1
10
g) Oil/Grease
mg./1.
5
h) Detergents
2.93
mg./1. MBAS
i)
Dissolved
0
oxygen, mg./1.
j)
Settleable
0.4
1.5
Matter, mg./1.
k) Total Dis
800
610
solved Solids
mg./1.
l)
Total Solids
1,400
690
3
m) Turbidity
NTU / ppm, SiO
70
The November 1986 inspections report concluded that:
Records of the Commission show that the plant under its previous owner, Fine Touch Finishing
Corporation, was issued a Notice of Violation on 20 December 1985 directing same to cease and
desist from conducting dyeing operation until such time the waste treatment plant is already
completed and operational. The new owner Solar Textile Corporation informed the Commission of
the plant acquisition thru its letter dated March 1986 (sic).
The new owner was summoned to a hearing held on 13 October 1986 based on the adverse
findings during the inspection/water sampling test conducted on 08 August 1986. As per instruction

of the Legal Division a re- inspection/sampling text should be conducted first before an appropriate
legal action is instituted; hence, this inspection.
Based on the above findings, it is clear that the new owner continuously violates the directive of
the Commission by undertaking dyeing operation without completing first and operating its existing
WTP. The analysis of results on water samples taken showed that the untreated wastewater from
the firm pollutes our water resources. In this connection, it is recommended that appropriate legal
action be instituted immediately against the firm. . . . 10
The September 1988 inspection report's conclusions were:
1. The plant was undertaking dyeing, bleaching and rinsing operations during the inspection. The
combined wastewater generated from the said operations was estimated at about 30 gallons per
minute. About 80% of the wastewater was traced directly discharged into a drainage canal leading
to the Tullahan-Tinejeros river by means of a bypass. The remaining 20% was channeled into the
plant's existing wastewater treatment plant (WTP).
2. The WTP was noted not yet fully operational- some accessories were not yet
installed.1wphi1 Only the sump pit and the holding/collecting tank are functional but appeared
seldom used. The wastewater mentioned channeled was noted held indefinitely into the collection
tank for primary treatment. There was no effluent discharge [from such collection tank].
3. A sample from the bypass wastewater was collected for laboratory analyses. Result of the
analyses show that the bypass wastewater is polluted in terms of color units, BOD and suspended
solids, among others. (Please see attached laboratory resul .)11
From the foregoing reports, it is clear to this Court that there was at least prima facie evidence before the
Board that the effluents emanating from Solar's plant exceeded the maximum allowable levels of physical
and chemical substances set by the NPCC and that accordingly there was adequate basis supporting
the ex parte cease and desist order issued by the Board. It is also well to note that the previous owner of
the plant facility Fine Touch Finishing Corporation had been issued a Notice of Violation on 20 December
1985 directing it to cease and refrain from carrying out dyeing operations until the water treatment plant
was completed and operational. Solar, the new owner, informed the NPCC of the acquisition of the plant on
March 1986. Solar was summoned by the NPCC to a hearing on 13 October 1986 based on the results of
the sampling test conducted by the NPCC on 8 August 1986. Petitioner Board refrained from issuing an ex
parte cease and desist order until after the November 1986 and September 1988 re-inspections were
conducted and the violation of applicable standards was confirmed. In other words, petitioner Board
appears to have been remarkably forbearing in its efforts to enforce the applicable standards vis-a-vis
Solar. Solar, on the other hand, seemed very casual about its continued discharge of untreated, pollutive
effluents into the Tullahan- Tinerejos River, presumably loath to spend the money necessary to put its
Wastewater Treatment Plant ("WTP") in an operating condition.
In this connection, we note that in Technology Developers, Inc. v. Court of appeals, et al.,12 the Court very
recently upheld the summary closure ordered by the Acting Mayor of Sta. Maria, Bulacan, of a pollutioncausing establishment, after finding that the records showed that:
1. No mayor's permit had been secured. While it is true that the matter of determining whether
there is a pollution of the environment that requires control if not prohibition of the operation of a
business is essentially addressed to the then National Pollution Control Commission of the Ministry
of Human Settlements, now the Environmental Management Bureau of the Department of
Environment and Natural Resources, it must be recognized that the mayor of a town has as much
responsibility to protect its inhabitants from pollution, and by virtue of his police power, he may
deny the application for a permit to operate a business or otherwise close the same unless
appropriate measures are taken to control and/or avoid injury to the health of the residents of the
community from the emission in the operation of the business.
2. The Acting Mayor, in a letter of February l6, 1989, called the attention of petitioner to the
pollution emitted by the fumes of its plant whose offensive odor "not only pollute the air in the
locality but also affect the health of the residents in the area," so that petitioner was ordered to
stop its operation until further orders and it was required to bring the following:
xxx
xxx
xxx
(3) Region III-Department of Environment and Natural Resources Anti-Pollution permit.
(Annex A-2, petition)
3. This action of the Acting Mayor was in response to the complaint of the residents of Barangay
Guyong, Sta. Maria, Bulacan, directed to the Provincial Governor through channels (Annex A-B,
petition).. . .
4. The closure order of the Acting Mayor was issued only after an investigation was made by Marivic
Guina who in her report of December 8, 1988 observed that the fumes emitted by the plant of
petitioner goes directly to the surrounding houses and that no proper air pollution device has been
installed. (Annex A-9, petition)

xxx
xxx
xxx
6. While petitioner was able to present a temporary permit to operate by the then National Pollution
Control Commission on December 15,1987, the permit was good only up to May 25,1988 (Annex A12, petition). Petitioner had not exerted any effort to extend or validate its permit much less to
install any device to control the pollution and prevent any hazard to the health of the residents of
the community."
In the instant case, the ex parte cease and desist Order was issued not by a local government official but
by the Pollution Adjudication Board, the very agency of the Government charged with the task of
determining whether the effluents of a particular industrial establishment comply with or violate applicable
anti-pollution statutory and regulatory provisions.
Ex parte cease and desist orders are permitted by law and regulations in situations like that here
presented precisely because stopping the continuous discharge of pollutive and untreated effluents into
the rivers and other inland waters of the Philippines cannot be made to wait until protracted litigation over
the ultimate correctness or propriety of such orders has run its full course, including multiple and
sequential appeals such as those which Solar has taken, which of course may take several years. The
relevant pollution control statute and implementing regulations were enacted and promulgated in the
exercise of that pervasive, sovereign power to protect the safety, health, and general welfare and comfort
of the public, as well as the protection of plant and animal life, commonly designated as the police power.
It is a constitutional commonplace that the ordinary requirements of procedural due process yield to the
necessities of protecting vital public interests like those here involved, through the exercise of police
power. The Board's ex parte Order and Writ of Execution would, of course, have compelled Solar
temporarily to stop its plant operations, a state of affairs Solar could in any case have avoided by simply
absorbing the bother and burden of putting its WTP on an operational basis. Industrial establishments are
not constitutionally entitled to reduce their capitals costs and operating expenses and to increase their
profits by imposing upon the public threats and risks to its safety, health, general welfare and comfort, by
disregarding the requirements of anti- pollution statutes and their implementing regulations.
It should perhaps be made clear the Court is not here saying that the correctness of the ex parte Order and
Writ of Execution may not be contested by Solar in a hearing before the Board itself. Where the
establishment affected by an ex parte cease and desist order contests the correctness of the prima
facie findings of the Board, the Board must hold a public hearing where such establishment would have an
opportunity to controvert the basis of suchex parte order. That such an opportunity is subsequently
available is really all that is required by the due process clause of the Constitution in situations like that we
have here. The Board's decision rendered after the public hearing may then be tested judicially by an
appeal to the Court of Appeals in accordance with Section 7(c) of P.D. No. 984 and Section 42 of the
Implementing Rules and Regulations. A subsequent public hearing is precisely what Solar should have
sought instead of going to court to seek nullification of the Board's Order and Writ of Execution and instead
of appealing to the Court of Appeals. It will be recalled the at the Board in fact gave Solar authority
temporarily to continue operations until still another inspection of its wastewater treatment facilities and
then another analysis of effluent samples could be taken and evaluated.
Solar claims finally that the petition for certiorari was the proper remedy as the questioned Order and Writ
of Execution issued by the Board were patent nullities. Since we have concluded that the Order and Writ of
Execution were entirely within the lawful authority of petitioner Board, the trial court did not err when it
dismissed Solar's petition for certiorari. It follows that the proper remedy was an appeal from the trial court
to the Court of Appeals, as Solar did in fact appeal.
ACCORDINGLY, the Petition for Review is given DUE COURSE and the Decision of the Court of Appeals
dated 7 February 1990 and its Resolution dated 10 May 1990 in A.C.-G.R. No. SP 18821 are hereby SET
ASIDE. The Order of petitioner Board dated 22 September 1988 and the Writ of Execution, as well as the
decision of the trial court dated 21 July 1989, are hereby REINSTATED, without prejudice to the right of
Solar to contest the correctness of the basis of the Board's Order and Writ of Execution at a public hearing
before the Board.
G.R. No. L-61689 June 20, 1988
RURAL BANK OF BUHI, INC., and HONORABLE JUDGE CARLOS R. BUENVIAJE, petitioners,
vs.
HONORABLE COURT OF APPEALS, CENTRAL BANK OF THE PHILIPPINES and CONSOLACION
ODRA,respondents.
Manuel B. Tomacruz and Rustico Pasilavan for petitioners.

I.B. Regalado, Jr. and Pacifica T. Torres for respondents.

PARAS, J.:
This is a petition for review on certiorari with preliminary mandatory injunction seeking the reversal of the
orders of the Court of Appeals dated March 19, 1982 and March 24, 1982 and its decision * (HATOL)
promulgated on June 17,1982 in CA-G.R. No. 13944 entitled "Banko Central ng Pilipinas at Consolacion
Odra Laban Kina Rural Bank of Buhi (Camarines Sur), Inc." and praying for a restraining order or a
preliminary mandatory injunction to restrain respondents from enforcing aforesaid orders and decision of
the respondent Court, and to give due course to the petitioners' complaint in IR-428, pending before Hon.
Judge Carlos R. Buenviaje of Branch VII, CFI, Camarines Sur.
The decretal portion of the appealed decision reads:
DAHIL DITO, ang utos ng pinasasagot sa Hukom noong ika-9 ng Marso, 1982, ay isinasangtabi. Kapalit nito, isang utos and ipinalabas na nag-uutos sa pinasasagot sa Hukom na itigil
ang anumang pagpapatuloy o pagdidinig kaugnay sa usaping IR-428 na pinawawalang
saysay din ng Hukumang ito.
SIYANG IPINAG-UUTOS.
The antecedent facts of the case are as follows:
The petitioner Rural Bank of Buhi, Inc. (hereinafter referred to as Buhi) is a juridical entity existing under
the laws of the Philippines. Buhi is a rural bank that started its operations only on December 26,1975
(Rollo, p. 86).
In 1980, an examination of the books and affairs of Buhi was ordered conducted by the Rural Banks and
Savings and Loan Association (DRBSLA), Central Bank of the Philippines, which by law, has charge of the
supervision and examination of rural banks and savings and loan associations in the Philippines. However,
said petitioner refused to be examined and as a result thereof, financial assistance was suspended.
On January 10, 1980, a general examination of the bank's affairs and operations was conducted and there
were found by DRBSLA represented by herein respondent, Consolacion V. Odra, Director of DRBSLA, among
others, massive irregularities in its operations consisting of loans to unknown and fictitious borrowers,
where the sum of P 1,704,782.00 was past due and another sum of P1,130,000.00 was also past due in
favor of the Central Bank (Rollo, p. 86). The promissory notes evidencing these loans were rediscounted
with the Central Bank for cash. As a result thereof, the bank became insolvent and prejudiced its
depositors and creditors.
Respondent, Consolacion V. Odra, submitted a report recommending to the Monetary Board of the Central
Bank the placing of Buhi under receivership in accordance with Section 29 of Republic Act No. 265, as
amended, the designation of the Director, DRBSLA, as receiver thereof. On March 28, 1980, the Monetary
Board, finding the report to be true, adopted Resolution No. 583 placing Buhi, petitioner herein, under
receivership and designated respondent, Consolacion V. Odra, as Receiver, pursuant to the provisions of
Section 29 of Republic Act No. 265 as amended (Rollo, p. 111).
In a letter dated April 8, 1980, respondent Consolacion V. Odra, as receiver, implemented and carried out
said Monetary Board Resolution No. 583 by authorizing deputies of the receiver to take control, possession
and charge of Buhi, its assets and liabilities (Rollo, p. 109).

Imelda del Rosario, Manager of herein petitioner Buhi, filed a petition for injunction with Restraining Order
dated April 23, 1980, docketed as Special Proceedings IR-428 against respondent Consolacion V. Odra and
DRBSLA deputies in the Court of First Instance of Camarines Sur, Branch VII, Iriga City, entitled Rural Bank
of Buhi vs. Central Bank, which assailed the action of herein respondent Odra in recommending the
receivership over Buhias a violation of the provisions of Sections 28 and 29 of Republic Act No. 265 as
amended, and Section 10 of Republic Act No. 720 (The Rural Banks Act) and as being ultra vires and done
with grave abuse of discretion and in excess of jurisdiction (Rollo, p. 120).
Respondents filed their motion to dismiss dated May 27, 1980 alleging that the petition did not allege a
cause of action and is not sufficient in form and substance and that it was filed in violation of Section 29,
Republic Act No. 265 as amended by Presidential Decree No. 1007 (Rollo, p. 36).
Petitioners, through their counsel, filed an opposition to the motion to dismiss dated June 17, 1980 averring
that the petition alleged a valid cause of action and that respondents have violated the due process clause
of the Constitution (Rollo, p. 49).
Later, respondents filed a reply to the opposition dated July 1, 1980, claiming that the petition is not
proper; that Imelda del Rosario is not the proper representative of the bank; that the petition failed to state
a cause of action; and, that the provisions of Section 29 of Republic Act No. 265 had been faithfully
observed (Rollo, p. 57).
On August 22, 1980, the Central Bank Monetary Board issued a Resolution No. 1514 ordering the
liquidation of the Rural Bank of Buhi (Rollo, p. 108).
On September 1, 1981, the Office of the Solicitor General, in accordance with Republic Act No. 265, Section
29, filed in the same Court of First Instance of Camarines Sur, Branch VII, a petition for Assistance in the
Liquidation of Buhi, which petition was docketed as SP-IR-553, pursuant to the Monetary Board Resolution
No. 1514 (Rollo, pp. 89; 264).
Meanwhile, respondent Central Bank filed on September 15, 1981, in Civil Case No. IR-428 a Supplemental
Motion To Dismiss on the ground that the receivership of Buhi, in view of the issuance of the Monetary
Board Resolution No. 1514 had completely become moot and academic (Rollo, p. 68) and the fact that
Case SP-IR-553 for the liquidation of Buhi was already pending with the same Court (Rollo, p. 69).
On October 16, 1981, petitioners herein filed their amended complaint in Civil Case No. IR-428 alleging
that the issuance of Monetary Board Resolution No. 583 was plainly arbitrary and in bad faith under
aforequoted Section 29 of Republic Act No. 265 as amended, among others (Rollo, p. 28). On the same
day, petitioner herein filed a rejoinder to its opposition to the motion to dismiss (Rollo, p. 145).
On March 9,1982, herein petitioner Judge Buenviaje, issued an order denying the respondents' motion to
dismiss, supplemental motion to dismiss and granting a temporary restraining order enjoining respondents
from further managing and administering the Rural Bank of Buhi and to deliver the possession and control
thereof to the petitioner Bank under the same conditions and with the same financial status as when the
same was taken over by herein respondents (defendants) on April 16, 1980 and further enjoining petitioner
to post a bond in the amount of three hundred thousand pesos (P300,000.00) (Rollo, p. 72).
The dispositive portion of said decision reads:
WHEREFORE, premises considered, the motion to dismiss and supplemental motion to
dismiss, in the light of petitioners' opposition, for want of sufficient merit is denied.
Respondents are hereby directed to file their answer within ten (10) days from receipt of a
copy of this order. (Rollo, p. 4).

On March 11, 1982, petitioner Buhi through counsel, conformably with the above-mentioned order, filed a
Motion to Admit Bond in the amount of P300,220.00 (Rollo, pp. 78-80).
On March 15,1982, herein petitioner Judge issued the order admitting the bond of P300,220.00 filed by the
petitioner, and directing the respondents to surrender the possession of the Rural Bank of Buhi, together
with all its equipments, accessories, etc. to the petitioners (Rollo, p. 6).
Consequently, on March 16, 1982, herein petitioner Judge issued the writ of execution directing the Acting
Provincial Sheriff of Camarines Sur to implement the Court's order of March 9, 1982 (Rollo, p. 268).
Complying with the said order of the Court, the Deputy Provincial Sheriff went to the Buhi premises to
implement the writ of execution but the vault of the petitioner bank was locked and no inventory was
made, as evidenced by the Sheriffs Report (Rollo, pp. 83-84). Thus, the petitioner herein filed with the
Court an "Urgent Ex-Parte Motion to Allow Sheriff Calope to Force Open Bank Vault" on the same day (Rollo,
p. 268). Accordingly, on March 17, 1982, herein petitioner Judge granted the aforesaid Ex-Parte Motion to
Force Open the Bank Vault (Rollo, p. 269).
On March 18, 1982, counsel for petitioner filed another "Urgent Ex-Parte Motion to Order Manager of City
Trust to Allow Petitioner to Withdraw Rural Bank Deposits" while a separate "Urgent Ex-Parte Motion to
Order Manager of Metrobank to Release Deposits of Petitioners" was filed on the same date. The motion
was granted by the Court in an order directing the Manager of Metro Bank-Naga City (Rollo, p. 269) to
comply as prayed for.
In view thereof, herein respondents filed in the Court of Appeals a petition for certiorari and prohibition
with preliminary injunction docketed as CA-G.R. No. 13944 against herein petitioners, seeking to set aside
the restraining order and reiterating therein that petitioner Buhi's complaint in the lower court be
dismissed (Rollo, p. 270).
On March 19, 1982, the Court of Appeals issued a Resolution (KAPASIYAHAN) in tagalog, restraining the
Hon. Judge Carlos R. Buenviaje, from enforcing his order of March 9,1982 and suspending further
proceedings in Sp. Proc. No. IR-428 pending before him while giving the Central Bank counsel, Atty. Ricardo
Quintos, authority to carry out personally said orders and directing the "Punong Kawani" of the Court of
Appeals to send telegrams to the Office of the President and the Supreme Court (Rollo, p. 168).
Herein petitioners did not comply with the Court of Appeals' order of March 19, 1982, but filed instead on
March 21, 1982 a motion for reconsideration of said order of the Court of Appeals, claiming that the lower
court's order of March 9, 1982 referred only to the denial of therein respondents' motion to dismiss and
supplemental motion to dismiss and that the return of Buhi to the petitioners was already an accomplished
fact. The motion was denied by the respondent court in a resolution dated June 1, 1982 (Rollo, p. 301).
In view of petitioners' refusal to obey the Court of Appeals' Order of March 19, 1982, herein respondents
filed with the Court of Appeals a Motion to Cite Petitioners in Contempt, dated April 22, 1982 (Rollo, p.
174).
The Court of Appeals issued on May 24, 1982 an order requiring herein petitioner Rural Bank of Buhi, Inc.,
through its then Acting Manager, Imelda del Rosario and herein petitioner Judge Carlos Buenviaje, as well
as Manuel Genova and Rodolfo Sosa, to show cause within ten (10) days from notice why they should not
be held in contempt of court and further directing the Ministry of National Defense or its representative to
cause the return of possession and management of the Rural Bank to the respondents Central Bank and
Consolacion Odra (Rollo, p. 180).
On June 9, 1982, petitioners filed their objection to respondents' motion for contempt dated June 5, 1982
claiming that the properties, subject of the order, had already been returned to the herein petitioners who
are the lawful owners thereof and that the returning could no longer be undone (Rollo, p. 181).

Later, petitioners filed another motion dated June 17, 1982 for the reconsideration of the resolution of June
1, 1982 of the Court of Appeals alleging that the same contravened and departed from the rulings of the
Supreme Court that consummated acts or acts already done could no longer be the subject of mandatory
injunction and that the respondent Court of Appeals had no jurisdiction to issue the order unless it was in
aid of its appellate jurisdiction, claiming that the case (CA-G.R. No. 13944) did not come to it on appeal
(Rollo, p. 302).
As aforestated, on June 17, 1982, respondent Court of Appeals rendered its decision (HATOL) setting aside
the lower court's restraining order dated March 9,1982 and ordering the dismissal of herein petitioners'
amended complaint in Civil Case No. IR-428 (Rollo, p. 186).
On July 9, 1982, petitioners (respondents in CA-G.R. No. 13944) filed a Motion for Reconsideration of the
Decision dated June 17, 1982 insofar as the complaint with the lower court (Civil Case No. IR-428 was
ordered dismissed (Rollo, p. 305).
On August 23, 1982, the respondent Court of Appeals issued its Resolution denying for lack of merit, herein
petitioners' motion for reconsideration of the resolution issued by the respondent Court of Appeals on June
1, 1982 and set on August 31, 1982 the hearing of the motion to cite the respondents in CA-G.R. No. SP13944 (herein petitioner) for contempt (Rollo, p. 193).
At said hearing, counsel for Rural Bank of Buhi agreed and promised in open court to restore and return to
the Central Bank the possession and control of the Bank within three (3) days from August 31, 1982.
However on September 3,1982, Rosalia Guevara, Manager thereof, vigorously and adamantly refused to
surrender the premises unless she received a written order from the Court.
In a subsequent hearing of the contempt incident, the Court of Appeals issued its Order dated October
13,1982, but Rosalia Guevara still refused to obey, whereupon she was placed under arrest and the Court
of Appeals ordered her to be detained until she decided to obey the Court's Order (Rollo, pp. 273-274).
Earlier, on September 14, 1982 petitioners had filed this petition even while a motion for reconsideration of
the decision of June 17,1982 was still pending consideration in the Court of Appeals.
In the resolution of October 20, 1982, the Second Division of this Court without giving due course to the
petition required respondents to COMMENT (Rollo, p. 225).
Counsel for respondents manifested (Rollo, p. 226) that they could not file the required comment because
they were not given a copy of the petition. Meanwhile, they filed an urgent motion dated October 28, 1982
with the Court of Appeals to place the bank through its representatives in possession of the Rural Bank of
Buhi (Camarines Sur), Inc. (Rollo, p. 237).
On December 9, 1982, petitioners filed a Supplemental Petition with urgent motion for the issuance of a
restraining order dated December 2, 1982 praying that the restraining order be issued against respondent
court (Rollo, p. 229).
In the resolution of December 15,1982, the Court resolved to require petitioners to furnish the respondents
with a copy of the petition and to require the respondents to comment on both the original and the
supplemental petitions (Rollo, p. 243).
In a resolution of February 21, 1983, the Court NOTED Rosalia V. Guevara's letter dated February 4, 1983
(Rollo, p. 252) addressed to Hon. Chief Justice Enrique M. Fernando, requesting that she be allowed to file a
petition for the issuance of a writ of habeas corpus (Rollo, p. 256).

At the hearing of the said petition on February 23, 1983 where the counsel of both parties appeared, this
Court noted the Return of the Writ of Habeas Corpus as well as the release of petitioner Rosalia V. Guevara
from detention by the National Bureau of Investigation. After hearing aforesaid counsel and petitioner
herself, and it appearing that the latter had resigned since January 18,1983 as Manager of the Rural Bank
of Buhi, Inc. and that the Central Bank might avail of more than adequate legal measures to take over the
management, possession and control of the said bank (and not through contempt proceedings and
detention and confinement of petitioner), with Assistant Solicitor General Andin manifesting that
respondents were not insisting on the continued detention of petitioner, the Court Resolved to SET the
petitioner at liberty and to consider the contempt incident closed (Rollo, p. 339).
On April 11, 1983, respondents filed their comment on the original and supplemental petitions.
Meanwhile, the Court of Appeals, acting on respondents' urgent motion filed on October 28, 1982 ordered
on April 13, 1983 the return to the petitioners (herein respondents) or their duly authorized representatives
of the possession, management and control of subject Rural Bank (Rollo, p. 319), together with its
properties.
On April 28, 1983, petitioner filed an urgent motion: (1) to give due course to the petition and (2) for
immediate issuance of a Restraining Order against the respondent court to prevent it from enforcing its
aforesaid resolution dated April 13, 1983 and from further proceeding in AC-G.R. No. 13944-SP (Rollo, p.
315).
On May 16, 1983, this Court resolved to deny the petition for lack of merit (Rollo, p. 321). On July 25, 1983,
petitioners filed their verified Motion for Reconsideration (Rollo, p. 337) praying that the HATOL dated June
17, 1982 of the Court of Appeals be set aside as null and void and that Special Proceedings No. IR-428 of
CFI-Camarines Sur, Iriga City, Branch VII, be ordered remanded to the RTC of Camarines Sur, Iriga City, for
further proceedings.
A Motion for Early Resolution was filed by herein petitioners on March 12,1984 (Rollo, p. 348).
Petitioners raised the following legal issues in their motion for reconsideration:
I. UNDER SEC. 29, R.A. 265, AS AMENDED, MAY THE MONETARY BOARD (MB) OF THE CENTRAL BANK (CB)
PLACE A RURAL BANK UNDER RECEIVERSHIP WITHOUT PRIOR NOTICE TO SAID RURAL BANK TO ENABLE IT
TO BE HEARD ON THE GROUND RELIED UPON FOR SUCH RECEIVERSHIP?
II. UNDER THE SAME SECTION OF SAID LAW, WHERE THE MONETARY BOARD (MB) OF THE CENTRAL BANK
(CB) HAS PLACED A RURAL BANK UNDER RECEIVERSHIP, IS SUCH ACTION OF THE MONETARY BOARD (MB)
SUBJECT TO JUDICIAL REVIEW? IF SO, WHICH COURT MAY EXERCISE SUCH POWER AND WHEN MAY IT
EXERCISE THE SAME?
III. UNDER THE SAID SECTION OF THE LAW, SUPPOSE A CIVIL CASE IS INSTITUTED SEEKING ANNULMENT OF
THE RECEIVERSHIP ON THE GROUND OF ARBITRARINESS AND BAD FAITH ON THE PART OF THE MONETARY
BOARD (MB), MAY SUCH CASE BE DISMISSED BY THE IAC (THEN CA) ON THE GROUND OF INSUFFICIENCY
OF EVIDENCE EVEN IF THE TRIAL COURT HAS NOT HAD A CHANCE YET TO RECEIVE EVIDENCE AND THE
PARTIES HAVE NOT YET PRESENTED EVIDENCE EITHER IN THE TRIAL COURT OR IN SAID APPELLATE COURT?
(Rollo, pp. 330-331).
I. Petitioner Rural Bank's position is to the effect that due process was not observed by the Monetary Board
before said bank was placed under receivership. Said Rural Bank claimed that it was not given the chance
to deny and disprove such claim of insolvency and/or any other ground which the Monetary Board used in
justification of its action.

Relative thereto, the provision of Republic Act No. 265 on the proceedings upon insolvency reads:
SEC. 29. Proceedings upon insolvency. Whenever, upon examination by the head of the
appropriate supervising and examining department or his examiners or agents into the
condition of any banking institution, it shall be disclosed that the condition of the same is
one of insolvency, or that its continuance in business would involve probable loss to its
depositors or creditors, it shall be the duty of the department head concerned forthwith, in
writing, to inform the Monetary Board of the facts, and the Board may, upon finding the
statements of the department head to be true, forbid the institution to do business in the
Philippines and shall designate an official of the Central Bank, or a person of recognized
competence in banking, as receiver to immediately take charge of its assets and liabilities,
as expeditiously as possible collect and gather all the assets and administer the same for
the benefit of its creditors, exercising all the powers necessary for these purposes including,
but not limited to, bringing suits and foreclosing mortgages in the name of the banking
institution.
The Monetary Board shall thereupon determine within sixty days whether the institution may
be recognized or otherwise placed in such a condition so that it may be permitted to resume
business with safety to its depositors and creditors and the general public and shall
prescribe the conditions under which such redemption of business shall take place as the
time for fulfillment of such conditions. In such case, the expenses and fees in the collection
and administration of the assets of the institution shall be determined by the Board and shall
be paid to the Central Bank out of the assets of such banking institution.
If the Monetary Board shall determine and confirm within the said period that the banking
institution is insolvent or cannot resume business with safety to its depositors, creditors and
the general public, it shall, if the public interest requires, order its liquidation, indicate the
manner of its liquidation and approve a liquidation plan. The Central Bank shall, by the
Solicitor General, file a petition in the Court of First Instance reciting the proceedings which
have been taken and praying the assistance of the court in the liquidation of the banking
institution. The Court shall have jurisdiction in the same proceedings to adjudicate disputed
claims against the bank and enforce individual liabilities of the stockholders and do all that is
necessary to preserve the assets of the banking institution and to implement the liquidation
plan approved by the Monetary Board. The Monetary Board shall designate an official of the
Central Bank or a person of recognized competence in banking, as liquidator who shall take
over the functions of the receiver previously appointed by the Monetary Board under this
Section. The liquidator shall, with all convenient speed, convert the assets of the banking
institution to money or sell, assign or otherwise dispose of the same to creditors and other
parties for the purpose of paying the debts of such bank and he may, in the name of the
banking institution, institute such actions as may be necessary in the appropriate court to
collect and recover accounts and assets of the banking institution.
The provisions of any law to the contrary notwithstanding the actions of the Monetary Board
under this Section and the second paragraph of Section 34 of this Act shall be final and
executory, and can be set aside by the court only if there is convincing proof that the action
is plainly arbitrary and made in bad faith. No restraining order or injunction shall be issued
by the court enjoining the Central Bank from implementing its actions under this Section and
the second paragraph of Section 34 of this Act, unless there is convincing proof that the
action of the Monetary Board is plainly arbitrary and made in bad faith and the petitioner or
plaintiff files with the clerk or judge of the court in which the action is pending a bond
executed in favor of the Central Bank, in an amount to be fixed by the court. The restraining
order or injunction shall be refused or, if granted, shall be dissolved upon filing by the
Central Bank of a bond, which shall be in the form of cash or Central Bank cashier's check, in

an amount twice the amount of the bond of the petitioner, or plaintiff conditioned that it will
pay the damages which the petitioner or plaintiff may suffer by the refusal or the dissolution
of the injunction. The provisions of Rule 58 of the New Rules of Court insofar as they are
applicable and not inconsistent with the provisions of this Section shall govern the issuance
and dissolution of the restraining order or injunction contemplated in this Section.
Insolvency, under this Act, shall be understood to mean the inability of a banking institution
to pay its liabilities as they fall due in the usual and ordinary course of business: Provided,
however, that this shall not include the inability to pay of an otherwise non-insolvent bank
caused by extraordinary demands induced by financial panic commonly evidenced by a run
on the banks in the banking community.
The appointment of a conservator under Section 28-A of this Act or the appointment of
receiver under this Section shall be vested exclusively with the Monetary Board, the
provision of any law, general or special, to the contrary not withstanding.
It will be observed from the foregoing provision of law, that there is no requirement whether express or
implied, that a hearing be first conducted before a banking institution may be placed under receivership.
On the contrary, the law is explicit as to the conditions prerequisite to the action of the Monetary Board to
forbid the institution to do business in the Philippines and to appoint a receiver to immediately take charge
of the bank's assets and liabilities. They are: (a) an examination made by the examining department of the
Central Bank; (b) report by said department to the Monetary Board; and (c) prima facie showing that the
bank is in a condition of insolvency or so situated that its continuance in business would involve probable
loss to its depositors or creditors.
Supportive of this theory is the ruling of this Court, which established the authority of the Central Bank
under the foregoing circumstances, which reads:
As will be noted, whenever it shall appear prima facie that a banking institution is in "a
condition of insolvency" or so situated "that its continuance in business would involved
probable loss to its depositors or creditors," the Monetary Board has authority:
First, to forbid the institution to do business and appoint a receiver therefor; and
Second, to determine, within 60 days, whether or not:
1) the institution may be reorganized and rehabilitated to such an extent as to
be permitted to resume business with safety to depositors, creditors and the
general public; or
2) it is indeed insolvent or cannot resume business with safety to depositors,
creditors and the general public, and public interest requires that it be
liquidated.
In this latter case (i.e., the bank can no longer resume business with safety to depositors, creditors and the
public, etc.) its liquidation will be ordered and a liquidator appointed by the Monetary Board. The Central
Bank shall thereafter file a petition in the Regional Trial Court praying for the Court's assistance in the
liquidation of the bank." ... (Salud vs. Central Bank, 143 SCRA 590 [1986]).
Petitioner further argues, that there is also that constitutional guarantee that no property shall be taken
without due process of law, so that Section 29, R.A. 265, as amended, could not have intended to disregard
and do away with such constitutional requirement when it conferred upon the Monetary Board the power
to place Rural Banks under receivership (Rollo, p. 333).

The contention is without merit. It has long been established and recognized in this jurisdiction that the
closure and liquidation of a bank may be considered as an exercise of police power. Such exercise may,
however, be subject to judicial inquiry and could be set aside if found to be capricious, discriminatory,
whimsical, arbitrary, unjust or a denial of the due process and equal protection clauses of the Constitution
(Central Bank vs. Court of Appeals, 106 SCRA 155 [1981]).
The evident implication of the law, therefore, is that the appointment of a receiver may be made by the
Monetary Board without notice and hearing but its action is subject to judicial inquiry to insure the
protection of the banking institution. Stated otherwise, due process does not necessarily require a prior
hearing; a hearing or an opportunity to be heard may be subsequent to the closure. One can just imagine
the dire consequences of a prior hearing: bank runs would be the order of the day, resulting in panic and
hysteria. In the process, fortunes may be wiped out, and disillusionment will run the gamut of the entire
banking community.
In Mendiola vs. Court of Appeals, (106 SCRA 130), the Supreme Court held:
The pivotal issue raised by petitioner is whether or not the appointment of a receiver by the
Court of First Instance on January 14, 1969 was in order.
Respondent Court correctly stated that the appointment of a receiver pendente lite is a
matter principally addressed to and resting largely on the sound discretion of the court to
which the application is made. This Tribunal has so held in a number of cases. However,
receivership being admittedly a harsh remedy, it should be granted with extreme caution.
Sound reasons for receivership must appear of record, and there should be a clear showing
of a necessity therefor. Before granting the remedy, the court is advised to consider the
consequence or effects thereof in order to avoid irreparable injustice or injury to others who
are entitled to as much consideration as those seeking it.
xxx xxx xxx
This is not to say that a hearing is an indispensable requirement for the appointment of a
receiver. As petitioner correctly contends in his first assignment of error, courts may appoint
receivers without prior presentation of evidence and solely on the basis of the averments of
the pleadings. Rule 59 of the Revised Rules of Court allows the appointment of a receiver
upon an ex parte application.
There is no question that the action of the Monetary Board in this regard may be subject to judicial review.
Thus, it has been held that the courts may interfere with the Central Bank's exercise of discretion in
determining whether or not a distressed bank shall be supported or liquidated. Discretion has its limits and
has never been held to include arbitrariness, discrimination or bad faith (Ramos vs. Central Bank of the
Philippines, 41 SCRA 567 [1971]).
It has likewise been held that resolutions of the Monetary Board under Section 29 of the Central Bank Act,
such as: forbidding bank institutions to do business on account of a "condition of insolvency" or because its
continuance in business would involve probable loss to depositors or creditors; or appointing a receiver to
take charge of the bank's assets and liabilities, or determining whether the bank may be rehabilitated or
should be liquidated and appointing a liquidator for that purpose, are under the law "final and executory"
and may be set aside only on one ground, that is "if there is convincing proof that the action is plainly
arbitrary and made in bad faith" (Salud vs. Central Bank, supra).
There is no dispute that under the above-quoted Section 29 of the Central Bank Act, the Regional Trial
Court has jurisdiction to adjudicate the question of whether or not the action of the Monetary Board

directing the dissolution of the subject Rural Bank is attended by arbitrariness and bad faith. Such position
has been sustained by this Court in Salud vs. Central Bank of the Philippines (supra).
In the same case, the Court ruled further that a banking institution's claim that a resolution of the
Monetary Board under Section 29 of the Central Bank Act should be set aside as plainly arbitrary and made
in bad faith, may be asserted as an affirmative defense (Sections 1 and 4[b], Rule 6, Rules of Court) or a
counterclaim (Section 6, Rule 6; Section 2, Rule 72 of the Rules of Court) in the proceedings for assistance
in liquidation or as a cause of action in a separate and distinct action where the latter was filed ahead of
the petition for assistance in liquidation (ibid; Central Bank vs. Court of Appeals, 106 SCRA 143 [1981]).
III. It will be noted that in the issuance of the Order of the Court of First Instance of Camarines Sur, Branch
VII, Iriga City, dated March 9, 1982 (Rollo, pp. 72-77), there was no trial on the merits. Based on the
pleadings filed, the Court merely acted on the Central Bank's Motion to Dismiss and Supplemental Motion
to Dismiss, denying both for lack of sufficient merit. Evidently, the trial court merely acted on an incident
and has not as yet inquired, as mandated by Section 29 of the Central Bank Act, into the merits of the
claim that the Monetary Board's action is plainly arbitrary and made in bad faith. It has not appreciated
certain facts which would render the remedy of liquidation proper and rehabilitation improper, involving as
it does an examination of the probative value of the evidence presented by the parties properly belonging
to the trial court and not properly cognizable on appeal (Central Bank vs. Court of Appeals, supra, p. 156).
Still further, without a hearing held for both parties to substantiate their allegations in their respective
pleadings, there is lacking that "convincing proof" prerequisite to justify the temporary restraining order
(mandatory injunction) issued by the trial court in its Order of March 9, 1982.
PREMISES CONSIDERED, the decision of the Court of Appeals is MODIFIED; We hereby order the remand of
this case to the Regional Trial Court for further proceedings, but We LIFT the temporary restraining order
issued by the trial court in its Order dated March 9, 1982.
SO ORDERED.
G.R. No. L-46496

February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and


NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents.
Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial
Relations.
Antonio D. Paguia for National Labor Unon.
Claro M. Recto for petitioner "Ang Tibay".
Jose M. Casal for National Workers' Brotherhood.
LAUREL, J.:
The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-entitled case
has filed a motion for reconsideration and moves that, for the reasons stated in his motion, we reconsider
the following legal conclusions of the majority opinion of this Court:
1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o que no
sea para una determinada, termina o bien por voluntad de cualquiera de las partes o cada vez que
ilega el plazo fijado para el pago de los salarios segun costumbre en la localidad o cunado se
termine la obra;

2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya
colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus tarbajos por
haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan de ser empleados u obreros
de la misma;
3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus osbreros
sin tiempo fijo de duracion y sin ser para una obra determiminada y que se niega a readmitir a
dichos obreros que cesaron como consecuencia de un paro forzoso, no es culpable de practica
injusta in incurre en la sancion penal del articulo 5 de la Ley No. 213 del Commonwealth, aunque su
negativa a readmitir se deba a que dichos obreros pertenecen a un determinado organismo obrero,
puesto que tales ya han dejado deser empleados suyos por terminacion del contrato en virtud del
paro.
The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the judgement
rendered by the majority of this Court and the remanding of the case to the Court of Industrial Relations for
a new trial, and avers:
1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of leather soles in
ANG TIBAY making it necessary for him to temporarily lay off the members of the National Labor
Union Inc., is entirely false and unsupported by the records of the Bureau of Customs and the Books
of Accounts of native dealers in leather.
2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme to
systematically prevent the forfeiture of this bond despite the breach of his CONTRACT with the
Philippine Army.
3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re supposed
delay of leather soles from the States) was but a scheme to systematically prevent the forfeiture of
this bond despite the breach of his CONTRACT with the Philippine Army.
4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer union dominated
by Toribio Teodoro, the existence and functions of which are illegal. (281 U.S., 548, petitioner's
printed memorandum, p. 25.)
5. That in the exercise by the laborers of their rights to collective bargaining, majority rule and
elective representation are highly essential and indispensable. (Sections 2 and 5, Commonwealth
Act No. 213.)
6. That the century provisions of the Civil Code which had been (the) principal source of dissensions
and continuous civil war in Spain cannot and should not be made applicable in interpreting and
applying the salutary provisions of a modern labor legislation of American origin where the
industrial peace has always been the rule.
7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating against
the National Labor Union, Inc., and unjustly favoring the National Workers' Brotherhood.
8. That the exhibits hereto attached are so inaccessible to the respondents that even with the
exercise of due diligence they could not be expected to have obtained them and offered as
evidence in the Court of Industrial Relations.
9. That the attached documents and exhibits are of such far-reaching importance and effect that
their admission would necessarily mean the modification and reversal of the judgment rendered
herein.

The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the respondent
National Labor Union, Inc.
In view of the conclusion reached by us and to be herein after stead with reference to the motion for a new
trial of the respondent National Labor Union, Inc., we are of the opinion that it is not necessary to pass
upon the motion for reconsideration of the Solicitor-General. We shall proceed to dispose of the motion for
new trial of the respondent labor union. Before doing this, however, we deem it necessary, in the interest
of orderly procedure in cases of this nature, in interest of orderly procedure in cases of this nature, to make
several observations regarding the nature of the powers of the Court of Industrial Relations and emphasize
certain guiding principles which should be observed in the trial of cases brought before it. We have reexamined the entire record of the proceedings had before the Court of Industrial Relations in this case, and
we have found no substantial evidence that the exclusion of the 89 laborers here was due to their union
affiliation or activity. The whole transcript taken contains what transpired during the hearing and is more of
a record of contradictory and conflicting statements of opposing counsel, with sporadic conclusion drawn
to suit their own views. It is evident that these statements and expressions of views of counsel have no
evidentiary value.
The Court of Industrial Relations is a special court whose functions are specifically stated in the law of its
creation (Commonwealth Act No. 103). It is more an administrative than a part of the integrated judicial
system of the nation. It is not intended to be a mere receptive organ of the Government. Unlike a court of
justice which is essentially passive, acting only when its jurisdiction is invoked and deciding only cases that
are presented to it by the parties litigant, the function of the Court of Industrial Relations, as will appear
from perusal of its organic law, is more active, affirmative and dynamic. It not only exercises judicial or
quasi-judicial functions in the determination of disputes between employers and employees but its
functions in the determination of disputes between employers and employees but its functions are far
more comprehensive and expensive. It has jurisdiction over the entire Philippines, to consider, investigate,
decide, and settle any question, matter controversy or dispute arising between, and/or affecting employers
and employees or laborers, and regulate the relations between them, subject to, and in accordance with,
the provisions of Commonwealth Act No. 103 (section 1). It shall take cognizance or purposes of
prevention, arbitration, decision and settlement, of any industrial or agricultural dispute causing or likely to
cause a strike or lockout, arising from differences as regards wages, shares or compensation, hours of
labor or conditions of tenancy or employment, between landlords and tenants or farm-laborers, provided
that the number of employees, laborers or tenants of farm-laborers involved exceeds thirty, and such
industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or by any or both of
the parties to the controversy and certified by the Secretary of labor as existing and proper to be by the
Secretary of Labor as existing and proper to be dealth with by the Court for the sake of public interest.
(Section 4,ibid.) It shall, before hearing the dispute and in the course of such hearing, endeavor to
reconcile the parties and induce them to settle the dispute by amicable agreement. (Paragraph 2, section
4, ibid.) When directed by the President of the Philippines, it shall investigate and study all industries
established in a designated locality, with a view to determinating the necessity and fairness of fixing and
adopting for such industry or locality a minimum wage or share of laborers or tenants, or a maximum
"canon" or rental to be paid by the "inquilinos" or tenants or less to landowners. (Section 5, ibid.) In fine, it
may appeal to voluntary arbitration in the settlement of industrial disputes; may employ mediation or
conciliation for that purpose, or recur to the more effective system of official investigation and compulsory
arbitration in order to determine specific controversies between labor and capital industry and in
agriculture. There is in reality here a mingling of executive and judicial functions, which is a departure from
the rigid doctrine of the separation of governmental powers.
In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated September 13,
1939, we had occasion to joint out that the Court of Industrial Relations et al., G. R. No. 46673,
promulgated September 13, 1939, we had occasion to point out that the Court of Industrial Relations is not
narrowly constrained by technical rules of procedure, and the Act requires it to "act according to justice
and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not

be bound by any technicalities or legal forms and shall not be bound by any technical rules of legal
evidence but may inform its mind in such manner as it may deem just and equitable." (Section 20,
Commonwealth Act No. 103.) It shall not be restricted to the specific relief claimed or demands made by
the parties to the industrial or agricultural dispute, but may include in the award, order or decision any
matter or determination which may be deemed necessary or expedient for the purpose of settling the
dispute or of preventing further industrial or agricultural disputes. (section 13, ibid.) And in the light of this
legislative policy, appeals to this Court have been especially regulated by the rules recently promulgated
by the rules recently promulgated by this Court to carry into the effect the avowed legislative purpose. The
fact, however, that the Court of Industrial Relations may be said to be free from the rigidity of certain
procedural requirements does not mean that it can, in justifiable cases before it, entirely ignore or
disregard the fundamental and essential requirements of due process in trials and investigations of an
administrative character. There are primary rights which must be respected even in proceedings of this
character:
(1) The first of these rights is the right to a hearing, which includes the right of the party interested
or affected to present his own case and submit evidence in support thereof. In the language of Chief
Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and
property of the citizen shall be protected by the rudimentary requirements of fair play.
(2) Not only must the party be given an opportunity to present his case and to adduce evidence
tending to establish the rights which he asserts but the tribunal must consider the evidence
presented. (Chief Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) In
the language of this court inEdwards vs. McCoy, 22 Phil., 598, "the right to adduce evidence,
without the corresponding duty on the part of the board to consider it, is vain. Such right is
conspicuously futile if the person or persons to whom the evidence is presented can thrust it aside
without notice or consideration."
(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a
necessity which cannot be disregarded, namely, that of having something to support it is a nullity, a
place when directly attached." (Edwards vs. McCoy, supra.) This principle emanates from the more
fundamental is contrary to the vesting of unlimited power anywhere. Law is both a grant and a
limitation upon power.
(4) Not only must there be some evidence to support a finding or conclusion (City of Manila vs.
Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G. 1335), but the evidence
must be "substantial." (Washington, Virginia and Maryland Coach Co. v. national labor Relations
Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means such relevant evidence as
a reasonable mind accept as adequate to support a conclusion." (Appalachian Electric Power v.
National Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v.
Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National Labor
Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The statute provides that "the rules of evidence
prevailing in courts of law and equity shall not be controlling.' The obvious purpose of this and
similar provisions is to free administrative boards from the compulsion of technical rules so that the
mere admission of matter which would be deemed incompetent inn judicial proceedings would not
invalidate the administrative order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24
S. Ct. 563, 568, 48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R. Co.,
227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and Southern Ry. Co. S.
Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable flexibility in administrative
procedure does not go far as to justify orders without a basis in evidence having rational probative
force. Mere uncorroborated hearsay or rumor does not constitute substantial evidence.
(Consolidated Edison Co. v. National Labor Relations Board, 59 S. Ct. 206, 83 Law. ed. No. 4, Adv.
Op., p. 131.)"

(5) The decision must be rendered on the evidence presented at the hearing, or at least contained
in the record and disclosed to the parties affected. (Interstate Commence Commission vs. L. & N. R.
Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by confining the administrative tribunal to
the evidence disclosed to the parties, can the latter be protected in their right to know and meet
the case against them. It should not, however, detract from their duty actively to see that the law is
enforced, and for that purpose, to use the authorized legal methods of securing evidence and
informing itself of facts material and relevant to the controversy. Boards of inquiry may be
appointed for the purpose of investigating and determining the facts in any given case, but their
report and decision are only advisory. (Section 9, Commonwealth Act No. 103.) The Court of
Industrial Relations may refer any industrial or agricultural dispute or any matter under its
consideration or advisement to a local board of inquiry, a provincial fiscal. a justice of the peace or
any public official in any part of the Philippines for investigation, report and recommendation, and
may delegate to such board or public official such powers and functions as the said Court of
Industrial Relations may deem necessary, but such delegation shall not affect the exercise of the
Court itself of any of its powers. (Section 10, ibid.)
(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the views
of a subordinate in arriving at a decision. It may be that the volume of work is such that it is literally
Relations personally to decide all controversies coming before them. In the United States the
difficulty is solved with the enactment of statutory authority authorizing examiners or other
subordinates to render final decision, with the right to appeal to board or commission, but in our
case there is no such statutory authority.
(7) The Court of Industrial Relations should, in all controversial questions, render its decision in such
a manner that the parties to the proceeding can know the various issues involved, and the reasons
for the decision rendered. The performance of this duty is inseparable from the authority conferred
upon it.
In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to the
alleged agreement between the Ang Tibay and the National Worker's Brotherhood (appendix A), the record
is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a national way, a
conclusion of law.
This result, however, does not now preclude the concession of a new trial prayed for the by respondent
National Labor Union, Inc., it is alleged that "the supposed lack of material claimed by Toribio Teodoro was
but a scheme adopted to systematically discharged all the members of the National Labor Union Inc., from
work" and this avernment is desired to be proved by the petitioner with the "records of the Bureau of
Customs and the Books of Accounts of native dealers in leather"; that "the National Workers Brotherhood
Union of Ang Tibay is a company or employer union dominated by Toribio Teodoro, the existence and
functions of which are illegal." Petitioner further alleges under oath that the exhibits attached to the
petition to prove his substantial avernments" are so inaccessible to the respondents that even within the
exercise of due diligence they could not be expected to have obtained them and offered as evidence in the
Court of Industrial Relations", and that the documents attached to the petition "are of such far reaching
importance and effect that their admission would necessarily mean the modification and reversal of the
judgment rendered herein." We have considered the reply of Ang Tibay and its arguments against the
petition. By and large, after considerable discussions, we have come to the conclusion that the interest of
justice would be better served if the movant is given opportunity to present at the hearing the documents
referred to in his motion and such other evidence as may be relevant to the main issue involved. The
legislation which created the Court of Industrial Relations and under which it acts is new. The failure to
grasp the fundamental issue involved is not entirely attributable to the parties adversely affected by the
result. Accordingly, the motion for a new trial should be and the same is hereby granted, and the entire
record of this case shall be remanded to the Court of Industrial Relations, with instruction that it reopen the

case, receive all such evidence as may be relevant and otherwise proceed in accordance with the
requirements set forth hereinabove. So ordered.
TERESITA L. VERTUDES,[1] G.R. No. 153166
Petitioner,
Present:
Puno, J.,

Chairman, - versus - Austria-Martinez,

Callejo, Sr.,
Tinga, and Chico-Nazario, JJ.
JULIE BUENAFLOR and
BUREAU OF IMMIGRATION, Promulgated:
Respondents.
December 16, 2005
x--------------------------------------------------x
DECISION
PUNO, J.:
Before us is a petition for review by certiorari under Rule 45 of the Rules of Court, seeking to review and
set aside the decision[2] and resolution[3] of the Court of Appeals (CA), which affirmed the decision of the
Civil Service Commission (CSC) finding petitioner guilty of grave misconduct and dismissing her from
government service.
Petitioner Teresita L. Vertudes was a fingerprint examiner at the Alien Registration Division of the
Bureau of Immigration (BI). In a facsimile letter [4] dated July 27, 1998, a certain Peng Villas, a news editor
of the Philippine Weekly Newspaper, referred to then BI Commissioner Rufus Rodriguez the complaints of
private respondent Julie Buenaflor, Amy Cosino and Manuelito Lao, against petitioner.
According to Villas, private respondent Buenaflor complained of having been convinced by
petitioner into paying the total amount of P79,000.00 in exchange for the processing of her visa, passport
and other travel documents for Japan. Private respondent delivered to petitioner Security Bank (SB) Check
Nos. 0014797 and 0014798 in the amounts of P30,000.00 and P20,000.00, respectively, and cash
worth P29,000.00. However, no visa was delivered. Private respondent insisted that petitioner return her
money, to no avail.
Villas also referred to Commissioner Rodriguez the complaint of Lao who allegedly told him that he
paid P60,000.00 to petitioner in exchange for a Chinese Visa and a passport for Taiwan. Likewise, Villas
referred Cosinos complaint that the latter collected from Virfinia Dumbrique, Jaime Santos Flores and
Mariano Evangelista, the amounts ofP20,000.00 each, upon petitioner's word that they would be in
exchange for tourist visas. Both Lao and Cosino claimed that the promised passport and visas did not
materialize and despite many requests for the return of the amounts paid to petitioner, she refused to
comply. Allegedly, "Vertudez threatened them that they cannot force her to pay back the said amount as
she has the back up [of] higher BID officials."
Acting upon Villas' letter, Commissioner Rodriguez issued a memorandum, [5] directing the
petitioner to submit a sworn written explanation. In her sworn written memorandum, [6] petitioner assailed
the credibility of Villas. She alleged that Villas was not a member of the National Press Club as he claimed
to be. She averred that the sum ofP50,000.00, as evidenced by SB Check Nos. 0014797 and 0014798, was
extended to her by private respondent Buenaflor as a loan. She was constrained to borrow money from
private respondent and other close friends when her brother became seriously ill. However, she claimed
that she had fully settled her obligation to private respondent through installment. She also claimed that
private respondent was the one engaged in illegal recruitment through the use of falsified or forged
passports. Private respondent was allegedly using petitioners name in dealing with some immigration
officials and employees to expedite the processing of the documents of her (private respondents) clients.
Petitioner allegedly informed said officers and employees that she was not connected to private
respondent in any way. Private respondent allegedly resented this "abrupt disassociation." Also, her
repeated refusal to "escort" private respondent's clients who were leaving for abroad using falsified travel
documents allegedly led private respondent to threaten her that she could easily use SB Check Nos.
0014797 and 0014798 as evidence to file charges against petitioner by making it appear that she (private
respondent) gave the money because of petitioner's promise to facilitate her travel to Japan. Petitioner
denied having received the sum of P29,000.00 from private respondent, contending that such claim is

"pure falsehood because of the absence of document to prove the alleged receipt." As regards the
complaints of Lao and Cosino, petitioner denied having met or known said persons.
Finding petitioners explanation "unsatisfactory and [her] defense weak," Commissioner Rodriguez
issued Personnel Order No. RBR 98-60, [7] preventively suspending her for sixty (60) days pending the
investigation of the case. The instant case was assigned to Special Prosecutor Norberto dela Cruz, who
issued a subpoena[8] ordering private respondent and petitioner to appear before him on October 15, 1998
for the formal investigation of the case. It appears that in the meantime, Villas died and private
respondent personally took on the instant complaint with the BI for Grave Misconduct against petitioner,
docketed as Administrative Charge No. 0004. Lao and Cosino filed their respective complaintaffidavits[9] with the BI which became the subject of another administrative case against petitioner. [10]
On August 21, 1998, petitioner filed a Motion for Reconsideration (Re: Personnel Order No. RBR-9860) with Motion to Dismiss.[11] On September 2, 1998, petitioner filed a Manifestation with Urgent Prayer to
Resolve Motion to Dismiss,[12] averring that the complaint instituted by Villas in behalf of private
respondent was a harassment case against her. Petitioner sought the dismissal of the instant action on the
ground that in addition to the instant administrative case, private respondent had personally filed her
complaint-affidavit "of similar nature and character" with the Manila City Prosecutor's Office, docketed as
98-H-44000-1, and with the Office of the Ombudsman, docketed as OMB-98-1701.
Private respondent narrated the pertinent events in her complaint-affidavit [13] as follows:
1. That I met Ms. Teresita Vertudes, an employee of the Bureau of Immigration and
Deportation, Intramuros, Manila sometime in the middle part of 1996;
2. That from that time on, we became friends because we come from the same
region and that she used to tell us that she is capable of deploying job applicants to Japan;
3. That during one of those times that I dropped by her office, she intimated to me
that a group of Immigration Officers are scheduled to leave for Japan for training and that
she was the one who received a call from a Japanese Consul;
4. That Ms. Teresita Vertudes asked me if I am interested in going to Japan because
she will find a way to accommodate me and I told her that I am deeply interested but my
problem was that my passport was left in Bacolod City and she volunteered to work-out
[and] facilitate the processing of my passport and visa and that [all] I need to do is give her
my picture which I did;
5. That she even added that she has a brother in Japan who could also help me find
a job and I will be going there along with her son, Jimmy V[e]rtudes Santos. She showed to
me her son's passport and application for a Visa, copies of which are attached and marked
as Annexes "A", "B" and "C";
6. That according to Ms. Vertudes I will be receiving a salary of one lapad per day as
a factory worker and that should I accept to her offer, all that will be required of me is to
give her the amount of P80,000.00;
7. That on December 24, 1997 Ms. Vertudes received from me Security Bank Check
No. 0014797 in the amount of P30,000.00 which she was able to encash and likewise
Security Bank Check No. 0014798 in the amount of P20,000.00 x x x Annexes "D" and "E";
8. That on February 8, 1998, because of her insistence and persistence that I should
deliver the balance of P30,000.00 to her so that I could leave in a week's time, I was forced
to produce the said amount by requesting a friend to pawn my jewelry in the amount
of P29,000.00 and the aforesaid amount was handed to Ms. Vertudes in the presence of Ms.
Joy Gutierrez at her office in (BID), Intramuros, Manila;
9. That after that last payment, I have been asking her as to when I am suppose[d]
to leave because I was already prepared to leave and have in fact told my relatives and
friends that I will be leaving soon for Japan but she did not stop making promises;
10. That upon the advi[c]e of a lawyer and to be able to know once and for all
whether I could still leave, I requested my lawyer to write a letter to Ms. Vertudes for her to
refund the sums of money which I delivered to her in the total amount of P79,000.00 for the
processing of my Passport and Visa for job deployment abroad but she did not even answer
the letter and neither called up my lawyer to explain her side; letter is attached as Annex
"E";
11. That for Ms. Teresita Vertudes' failure to make good her promise to deploy me
after receiving the amount of P79,000.00 in consideration of a job placement in Japan, I
hereby charge her for the crime of Illegal Recruitment and Estafa; x x x
Annexed to private respondent's complaint-affidavit were: a) the affidavit of a certain Jessilyn
Gutierrez[14] who attested that she accompanied private respondent in going to the office of petitioner and
she was with private respondent when the latter delivered to petitioner the checks amounting

to P50,000.00 and cash worth P29,000.00 for private respondent's job placement to Japan; b) copies of the
passport and application for a visa of petitioner's son, to prove that petitioner showed these documents to
her so she would believe that she would be going to Japan with petitioner's son; c) copies of SB Check Nos.
0014797 and 0014798, to prove petitioner's receipt of the total amount of P50,000.00 from private
respondent; and d) letter of private respondent's counsel to petitioner demanding the refund
of P79,000.00 from petitioner.
On October 15, 1998, petitioner, accompanied by her counsel, and private respondent appeared
before Special Prosecutor dela Cruz for the formal investigation of the case. [15] The second hearing took
place on October 27, 1998, during which, petitioner submitted her Counter-Affidavit [16] and the affidavits of
her witnesses. Her version was:
4.1. I first met Ms. Buenaflor sometime in 1996 when I was still assigned at the
General Services Division of the Bureau of Immigration;
4.2. At that time, Ms. Buenaflor represented to me that she was connected with a
travel agency assigned to process/facilitate documents of their clients in the Buereau of
Immigration;
4.3. Indeed, I saw Ms. Buenaflor processing and making follow-ups of documents in
the different Divisions/Departments of the Bureau of Immigration similar to what were
being done by the representatives of other travel agencies transacting business therewith;
4.4. During that period, Ms. Buenaflor and me became close friends because she
frequently visited me in my office at General Services Division and would even stay thereat
while processing documents and waiting for their release. In fact, she often took her lunch
and merienda with me and sometimes, with the other employees of our division;
4.5. Sometime in the third week of December 1997, I was informed by my relatives
in our hometown that my brother, Mariano "Dido" Vertudes was seriously ill and was
thereafter confined on December 22, 1997 at Gingoog General Hospital located at Gingoog
City, Misamis Oriental;
4.6. The type of illness of my brother required extensive treatment and medication;
and for this reason, they requested for financial assistance to defray the expenses therefor;
4.7. Since I was then in financial distress, I was constrained to borrow money with
interests from Ms. Buenaflor and other close friends of mine. As a kind gesture on the part
of Ms. Buenaflor she extended to me a loan in the total amount of P50,000.00 as
represented by Security Bank check nos. 0014797 and 0014798 in the respective amounts
of P30,000.00 and P20,000.00 (citation omitted);
4.8. It is however our agreement that I would pay the amount of P50,000.00 with
the additional amount of P10,000.00 representing the interests therefore for a total
of P60,000.00;
4.9. We further agreed that I would pay my financial obligation to Ms. Buenaflor on
or before the last day of May 1998 from December 1997 on installment basis;
4.10. With the aforementioned amount of P50,000.00 loaned to me by Julie
Buenaflor and the other amounts x x x from other friends, I was able to contribute the total
amount of P100,000.00 for the treatment and hospitalization of my brother. It was,
however, to no avail because my brother died on January 6, 1998;
4.11. Pursuant to our agreement, I was able to pay Ms. Buenaflor on installment
basis the total amount of P60,000.00 at my earlier indicated address on the following dates:
DATE AMOUNT
February 28, 1998 P15,000.00
March 31, 1998 15,000.00
April 30, 1998 15,000.00
May 30, 1998 15,000.00
4.12. I tendered the said payments to Ms. Buenaflor at my residence on the dates
earlier enumerated in the presence of my housemaids, Eliza Compo and Jocelyn Reyes; x x
x
Petitioner averred that private respondent misrepresented to her (petitioner's) son, Jimmy Santos, Jr., that
she (private respondent) would facilitate his travel to and employment in Japan. She also assailed the
credibility of private respondent by accusing her of using several passports under different names.
Attached to petitioner's counter-affidavit were: a) a copy of a passport application in the name of Honna
Sumadia Araneta showing the photographs of private respondent; b) referral slip of the Pasay City Police
Station and the sworn statement of a certain Armando Gambala charging private respondent with Estafa
and Illegal Recruitment;[17] c) affidavits of petitioner's son, Jimmy Santos, Jr., [18] and a certain Enrico
Tuazon, showing that they likewise filed a case for Estafa and Illegal Recruitment against private

respondent; and d) a copy of the Certificate of Business Name and Certification [19] issued by Prudential
Bank, to prove that private respondent misstated the address of her business establishment. Petitioner
also submitted to Special Prosecutor dela Cruz the Pinagsamang Sinumpaang Salaysay[20] of her two
housemaids, Eliza Compo and Jocelyn Reyes, to prove that she had fully paid her obligation to private
respondent. Likewise, she submitted the handwritten joint sworn statement [21] of Ernesto V. Cloma and
Jhun M. Romero, media practitioners, to prove that Villas asked for petitioners forgiveness before he died,
admitting that he only sent his letter dated July 27, 1998 to Commissioner Rodriguez in consideration of
the amount given by private respondent.
On the same hearing, the parties agreed to submit the instant case for resolution. [22] Thus, in his
Resolution dated November 12, 1998,[23] Special Prosecutor dela Cruz found petitioner guilty of grave
misconduct and recommended her dismissal from the service.
Meantime, the case instituted by private respondent with the Office of the Ombudsman was
referred to the Office of the City Prosecutor, thus:
After evaluation, the undersigned finds that the charges imputed against the
respondent are not office related and that the administrative aspect of the case had
already been undertaken by the Bureau of Immigration.
In view thereof, it is respectfully recommended that the instant complaint
be referred to the Office of the City Prosecutor of Manila for appropriate action.
SO ORDERED.[24] (emphases supplied)
Petitioner filed a Motion to Re-open [25] with the BI, contending that the finding of the Ombudsman that "the
charges imputed against [petitioner] are not office related" clearly shows that she is not administratively
liable for grave misconduct. She moved for the re-opening of the case "to allow her to adduce further
evidence mainly based on the findings of the Ombudsman." The motion, however, was denied for lack of
merit.[26]
On January 12, 1999, Commissioner Rodriguez issued an order, adopting the resolution of Special
Prosecutor dela Cruz, viz:
WHEREFORE, respondent Teresita L. Vertudez is hereby found liable for grave misconduct
under PD No. 807 and the Administrative Code of 1987. Accordingly, she is ordered
dismissed from the service effective immediately with forfeiture of all benefits under the
law, with prejudice to her reinstatement in this Bureau and all its branches.
SO ORDERED.[27]
The order quoted the pertinent portion of Special Prosecutor dela Cruz's resolution, viz:
After carefully weighing and evaluating the versions of the complainant and the
respondent, this Office is more incline[d] to give credence to complainant's declarations
that she was indeed duped by the respondent into parting with the hard-earned money
of P79,000.00 on the promise of the respondent that she would secure a passport and visa
for the complainant to Japan.
Respondent's alibi that the said amount was a loan from the complainant, who is her friend,
is highly unbelievable. Complainant does not appear to be a rich person who would so
easily part with such big amount of money without any security without any hope or
assurance of being re-paid.
The fact that complainant paid P79,000.00 to the respondent so she could get a passport
and a visa to work in Japan as a factory worker clearly showed that she was desperately in
need of a job. For her to give such amount to the respondent as an unsecured loan is
extremely incredulous.
Respondent's claim that the present complaint is pure harassment by the complainant is
completely bereft of credence. What benefit or advantage would the complainant achieve
in fabricating charges against the respondent?
If the complainant filed this complaint, it was because she was wronged by the
respondent.
Likewise, respondent's allegation that the P50,000.00 she received from the complainant
was a loan because she (respondent) was then in a financial distress and she needed
money to help her sick brother in the province was belied by her own son, Jimmy V. Santos,
Jr., who declared in his Affidavit that sometime in December 1997, he gave P50,000.00 to
the complainant so that the latter could obtain a tourist visa for him to Japan. Why should
the respondent bother to get a P50,000.00 loan from the complainant to assist her ailing
brother when she could readily obtain this amount from her own son?
As to respondent's assertion that she was able to pay the P50,000.00 to the complainant,
there is nothing to support such payment. The statements of her two (2) maids -- Eliza

C[o]mpo and Jocelyn Reyes -- in their Sinumpaang Salaysay that respondent paid to the
complainant the total amount of P60,000.00 during the months of February 1998 to May
1998 cannot be believed. Being the housemaids of the respondent, it is but natural and to
be expected of these persons to come to the aid of their employe[r]. [28]
Petitioner filed a Motion for Reconsideration and/or New Trial, [29] reiterating her argument in her
Motion to Re-open. Again, the motion was denied. [30] Subsequently, the assailed order of dismissal was
affirmed by then Department of Justice Secretary Serafin Cuevas.[31]
Petitioner appealed to the CSC,[32] raising the issues of lack of due process and lack of substantial
evidence. On November 19, 1999, the CSC dismissed petitioner's appeal. It held, in part, that:
A careful study of the records in the light of the arguments of appellant reveals that
the requirements of due process have been duly observed in the proceedings had in this
case.
xxx
As to the second issue, the Commission finds substantial evidence to prove that
respondent receive[d] money in exchange for her services in facilitating the issuance of
passport and visa of Julie Bernardo (sic).
The complaint-affidavit of Julie Buenaflor is reproduced in part as follows: x x x
In the absence of any improper motive or malice on the part of the witness to foist
said charges on respondent, the Commission is inclined to give credence to the statements
of witness Bernardo (sic). In fact Vertudez has admitted that she received money from
Buenaflor but argued that the money was a mere loan. However, if this were true, Buenaflor
should have demanded for a collateral, considering the amount involved. Vertudez failed to
present any evidence that she gave any security in return for said loan which makes her
version highly incredible. x x x[33]
Petitioner filed a motion for reconsideration[34] of the CSC's Resolution, to no avail. The CSC held:
In so far as Vertudez'[s] illegal recruitment activities are concerned, the Commission
finds the existence of clear substantial evidence to establish the same. Evidence presented
all point to the fact that Vertudez solicited money from BI clients in return for a visa to
Japan. The witnesses against Vertudez include Peng Villas (Deceased), Julie Buenflor (sic),
Amy Cosino, Virginia Lubriano, Manuelito Lao and Jaime Santos Flores. The affidavits of said
witnesses all speak of the modus operandi of Vertudez at the BI, where she approaches BI
clients and offers them a visa, passport and an employment contract in exchange
for P120,000.00. In the case of witness Julie Buenaflor, she testified that respondent
assured her of a visa, a passport and a job in Japan for a fee of P80,000.00 and that
Vertudez after getting paid failed to fulfill her promise.
It is observed that Vertudez seeks to destroy the credibility of witness Buenaflor by
implying that the former has a pending case for illegal recruitment and estafa. Records,
however, show that the charges against witness Buenaflor all came up after Vertudez was
formally charged by the BI and that such charges have no reasonable connection with her
administrative case pending before the Commission. In this regard, "There being nothing in
record to show that witnesses were actuated by any improper motive, their testimony shall
be entitled to full faith and credit." (People v. Flores, 252 SCRA 31)[35]
Thereafter, petitioner filed a petition for review before the CA, raising the issues of: a) whether or
not the BI and CSC violated petitioner's right to due process; b) whether or not respondents erred in
finding that the alleged illegal recruitment activity of the petitioner had a direct relation to and connected
with the performance of her duties and responsibilities as an employee of the BI; and c) whether or not
there is substantial evidence to support the finding that petitioner is an illegal recruiter, thus, warranting
her removal from public service.[36]
On February 12, 2002, the CA dismissed the petition for lack of merit. The CA found that "petitioner
was given more than ample opportunity to ventilate her defense and disprove the charges leveled against
her, hence, there can be no denial of her right to due process." [37] Moreover, it held that "there is more
than substantial evidence proving the charge of grave misconduct against petitioner." [38] The CA
ratiocinated that:
In the proceedings a quo, it was established that petitioner, indeed, received and
encashed the two (2) checks given by private respondent in the total amount of
Php50,000.00. This fact, therefore, gives credence to the claim of private respondent that
she gave petitioner two (2) checks in consideration of the latter's promise to facilitate her

employment abroad. This being the case, the burden was shifted to petitioner to refute this
established fact through equally weighty and competent evidence.
Now, petitioner admitted having received, and encashed, the two checks from
private respondent but offered the excuse that the same was extended to her as a loan.
Aside from her testimony and that of her household helpers to prove this assertion, no
other independent and unbiased evidence was offered to prove the fact of loan. As it is, her
theory of loan stands on flimsy ground and is not sufficient enough to overthrow the fact
established by complainant. This considering that it is highly improbable and even contrary
to human experience for a person to loan a huge amount of money as Php50,000.00
without any document evidencing such loan nor a collateral to secure its payment. Note
even that the two checks were made payable to "cash," a bearer instrument, and was not
even crossed on its face, hence, can be encashed by any person holding the negotiable
instrument. If, indeed, private respondent gave the two checks to petitioner as a clean loan
(without any collateral) without any separate document embodying their loan agreement,
the latter should have at least been made the payee of the checks and a memorandum
written at the back of the check to the effect that it is being extended as a loan, in order to
protect the interest of the lender. This is conventional business practice which is altogether
absent in the case at bar, hence, petitioner's theory of loan must necessarily crumble. [39]
Petitioner filed a Motion for Reconsideration, [40] contending that the CA failed to resolve the issue of
whether petitioner's alleged illegal recruitment activities are directly connected with her duties and
responsibilities as a Fingerprint Examiner of the BI. This motion was denied. [41]
Undaunted, petitioner filed this petition, summing up the issues as follows:
1. WHETHER OR NOT THE HONORABLE SUPREME COURT MAY REVIEW THE DECISION OF
THE COURT OF APPEALS IN CA-G.R. SP NO. 58766;
2. WHETHER OR NOT THE COURT OF APPEALS RESOLVED THE SECOND ISSUE RAISED IN
THE PETITION FOR REVIEW FILED BEFORE IT;
3. WHETHER OR NOT THERE IS SUBSTANTIAL EVIDENCE TO SUPPORT THE FINDINGS THAT
PETITIONER IS GUILTY OF GRAVE MISCONDUCT;
4. WHETHER OR NOT A PROMISE TO FACILITATE EMPLOYMENT OF ANOTHER ABROAD
CONSTITUTES GRAVE MISCONDUCT[;]
5. WHETHER OR NOT PETITIONER WAS ACCORDED DUE PROCESS;
6. WHETHER OR NOT THE ACT CONSTITUTING GRAVE MISCONDUCT MUST HAVE A DIRECT
RELATION TO THE FUNCTION OF THE PUBLIC OFFICE HELD BY RESPONDENTS IN
ADMINISTRATIVE CASES; AND
7. WHETHER OR NOT THE ALLEGED ACT COMMITTED BY THE PETITIONER IS DIRECTLY
RELATED TO ANY OF HER FUNCTIONS AS FINGERPRINT EXAMINER AT THE BUREAU OF
IMMIGRATION.[42]
The petition is denied.
We shall first resolve the issue of due process. Petitioner contends that the essential requirements
of due process as laid down in Ang Tibay v. Court of Industrial Relations [43] and Doruelo v.
COMELEC[44] were violated in the case at bar. First, she contends that she was denied of her right to a full
hearing when she was not accorded the opportunity to cross-examine the witnesses against her, as
provided under Section 48, par. 5, Title I, Book V of the Administrative Code of 1987. She allegedly raised
this issue in her appeal before the CSC.[45]
The argument is unmeritorious.
We have explained the meaning of the right to cross-examination as a vital element of due process
as follows:
The right of a party to confront and cross-examine opposing witnesses in a judicial
litigation, be it criminal or civil in nature, or in proceedings before administrative tribunals
with quasi-judicial powers, is a fundamental right which is part of due process.
However, the right is a personal one which may be waived expressly or impliedly
by conduct amounting to a renunciation of the right of cross-examination. Thus,
where a party has had the opportunity to cross-examine a witness but failed to
avail himself of it, he necessarily forfeits the right to cross-examine and the
testimony given on direct examination of the witness will be received or allowed to remain
in the record.[46] (emphasis supplied)
In the case at bar, petitioner cannot argue that she was deprived of due process simply because no
cross-examination took place. Nothing on record shows that petitioner asked for cross-examination during

the formal investigation conducted by Special Prosecutor dela Cruz. Notably, two hearings were
conducted, during which, both private respondent and petitioner appeared. During the hearing dated
October 27, 1998, both parties agreed to submit the case for resolution after petitioner submitted her
counter-affidavit and the affidavits of her witnesses. In fact, when petitioner filed her Motion to Re-open
the case with the BI, she did not question the lack of cross-examination during the investigation
proceedings. She merely based her motion on the order of the Office of the Ombudsman finding the
charge against her as "not office related." In the same pleading, she admitted that "[a]s early as October
27, 1998, the instant administrative action has been submitted for resolution after the contending
parties have submitted their respective evidence" and that her move for the re-opening of the
administrative case was merely "to allow her to adduce further evidence mainly based on the
findings of the Office of the Ombudsman." Again, in her Motion for Reconsideration and/or New Trial
of Commissioner Rodriguez's order of dismissal, she merely reiterated her arguments in her Motion to Reopen. She never complained that she was deprived of her right to cross-examination during the
investigation of Special Prosecutor dela Cruz. The right to cross-examination being a personal right,
petitioner must be deemed to have waived this right by agreeing to submit the case for resolution and not
questioning the lack of it in the proceedings before the BI.
More importantly, it is well-settled that the essence of due process in administrative proceedings is
an opportunity to explain one's side or an opportunity to seek reconsideration of the action or ruling
complained of.[47] This was clearly satisfied in the case at bar. Records show that petitioner not only gave
her sworn written explanation of the charges against her during the initial stage of the investigation, she
also submitted: a) a sworn counter-affidavit refuting the charges against her, with all the attached annexes
as evidence; b) a Motion to Re-open the case with the BI; c) a Motion for Reconsideration and/or New Trial
with the BI; d) an Appeal to the CSC; e) a Motion for Reconsideration with the CSC; f) an Appeal to the CA;
g) a Motion for Reconsideration with the CA; and h) the instant petition for review.
Second, petitioner contends that Commissioner Rodriguez violated the principle that "the tribunal
or body or any of its judges must act on its or his own independent consideration of the law and facts of
the controversy and not simply accept the views of a subordinate in arriving at a decision" when his denial
of her Motion to Re-open and his order finding her guilty of grave misconduct were based exclusively on
the resolution of Special Prosecutor dela Cruz.[48]
This argument is likewise unavailing.
There is nothing essentially wrong in the head of a bureau adopting the recommendation of a
subordinate. Section 47, Book V of the Administrative Code of 1987 gives thechief of bureau or office or
department the power to delegate the task of investigating a case to a subordinate. [49] What due process
demands is for the chief of the bureau to personally weigh and assess the evidence which the subordinate
has gathered and not merely to rely on the recommendation of said investigating officer. [50]
In the case at bar, the order of Commissioner Rodriguez enjoys the disputable presumption that official
duties have been regularly performed. That his decision quotes the resolution of Special Prosecutor dela
Cruz does not necessarily imply that he did not personally examine the affidavits and evidence presented
by the parties. Petitioner's bare assertion that Commissioner Rodriguez did not personally examine the
evidence, without more, is not sufficient to overcome this presumption.
Third, petitioner contends that the CSC did not have basis in finding: a) that the affidavits of "Peng
Villas (Deceased), Julie Buenaflor, Amy Cosino, Virginia Lubriano, Manuelito Lao and Jaime Santos Flores x
x x all speak of the modus operandi of Vertudez at the BI" as these affidavits were not submitted to the
CSC; and b) that petitioner "solicited money from BI clients" inasmuch as private respondent never alleged
that she was a BI client. Moreover, the CSC's finding that private respondent "testified that respondent
assured her of a visa, a passport and a job in Japan for a fee of P80,000.00 and that Vertudez, after getting
paid, failed to fulfill her promise" is not supported by the complaint-affidavit of private respondent which
merely stated that petitioner "volunteered to work-out and facilitate the processing of [private
respondent's] passport and visa" and that petitioner "has a brother in Japan who could also help [private
respondent] find a job." [51] Petitioner also assails the failure of the BI and CSC to consider the handwritten
joint sworn statement of media practitioners Cloma and Romero and the joint affidavit of the housemaids
of petitioner, Compo and Reyes.[52]
Again, these arguments fail to impress.
It is settled that only questions of law are entertained in petitions for review on certiorari under Rule
45 of the Rules of Court.[53] It is not the function of this Court, in a petition under Rule 45, to scrutinize,
weigh and analyze evidence all over again. [54] Well-settled is the rule that the findings of fact of quasijudicial agencies, like the BI and the CSC, are accorded not only respect but even finality if such findings
are supported by substantial evidence.[55] Substantial evidence is such amount of relevant evidence which
a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable
minds might conceivably opine otherwise.[56]

In the case at bar, we note that contrary to petitioner's stance, the affidavits of Lao and Cosino do
appear in the records of the CSC. [57] In any case, the affidavits of Villas, Cosino, Lubriano, Lao and Flores
are of little relevance to the case at bar. If any, they are merely corroborating evidence. Note that it was
only in the CSC's resolution on petitioner's Motion for Reconsideration that said affidavits were mentioned.
These affidavits were not used as basis for the decision rendered by the BI, the main decision of the CSC
denying the appeal of petitioner and the decision of the CA. We find the unanimous finding of guilt of the
BI, the CSC and the CA amply supported by the following evidence on record: a) the complaint-affidavit of
private respondent; b) the affidavit of Jessilyn Gutierrez; c) copies of the passport and application for a visa
of petitioner's son; d) copies of SB Check Nos. 0014797 and 0014798; and e) letter of private respondent's
counsel to petitioner demanding from petitioner the refund of the P79,000.00 that private respondent paid
to petitioner.
As to the other contentions, we note that in addition to the self-serving quotations of petitioner
from the complaint-affidavit of private respondent, said complaint-affidavit categorically alleged that
petitioner told private respondent that the latter would "be receiving a salary of one lapad per day as a
factory worker and that should [she] accept [petitioner's] offer, all that [would] be required of [her was] to
give [petitioner] the amount of P80,000.00." Private respondent also categorically alleged that she was
charging petitioner for her "failure to make good her promise to deploy [her] after receiving the amount
of P79,000.00 in consideration of a job placement in Japan." Thus, contrary to petitioner's stance, the
assailed findings of the CSC are supported by private respondent's complaint-affidavit.
Moreover, it is well-settled that it is not for the appellate court to substitute its own judgment for
that of the administrative agency on the sufficiency of the evidence and the credibility of the witnesses.
Administrative decisions on matters within their jurisdiction are entitled to respect and can only be set
aside on proof of grave abuse of discretion, fraud or error of law. None of these vices has been shown in
this case.[58]
We shall now proceed to the other issue: whether petitioner is guilty of grave misconduct
warranting her removal from government service.
Citing Sarigumba v. Pasok,[59] petitioner contends that "[m]isconduct, warranting removal from
office of a public officer, must have a direct relation to and connected with the performance of official
duties, amounting either to maladministration or willful, intentional neglect and failure to discharge the
duties of the office." Since the BI is a government agency principally responsible for the administration
and enforcement of immigration, citizenship and alien admission and registration laws, "by no stretch of
imagination" can there be a direct relation between the function of a fingerprint examiner and the alleged
promise to facilitate private respondent's employment abroad. [60]Petitioner also capitalizes on the
allegation of private respondent in her complaint-affidavit that she and petitioner "became friends" to
contend that the acts being imputed against her are personal and not office-related. [61]
These arguments lack merit.
The allegations in private respondents complaint-affidavit indicate that petitioner used her position
as a BI employee to assure private respondent that she could facilitate petitioner's deployment to Japan.
Private respondent alleged that "during one of those times that [she] dropped by [petitioner's] office,
[petitioner] intimated to [her] that a group of Immigration officers [were] scheduled to leave for
Japan for training and that [petitioner] was the one who received a call from a Japanese
Consul." Petitioner "asked [private respondent] if [she was] interested in going to Japan
because [petitioner] will find a way to accommodate [her]."
Even petitioner's own admissions show that her position as an employee of the BI may be utilized
in connection with illegal recruitment. In her memorandum to Commissioner Rodriguez, as reiterated in
her counter-affidavit, petitioner alleged that private respondent was engaged in illegal recruitment and
"was using [petitioner's] name in her dealings with some immigration officials and employees,
presumably to expedite the processing of the documents belonging to her clients." Petitioner
likewise claimed that she "declined [private respondent's] proposal that [she] 'escort' some of
[private respondent's] clients who would be leaving for foreign countries but with falsified
travel documents." Private respondent even told her that the "proposed scheme could easily be
done because being an employee of this Bureau, [petitioner has] several connections not only
at the Ninoy Aquino International Airport (NAIA) but also in Mactan International Airport."
That her position is designated as "fingerprint examiner" is not determinative of the issue of whether the
charge against her is work-related. The allegations in the complaint against petitioner and her own
admissions show that her duties go beyond her job title and that the charge against her is connected with
her position as an employee of the BI.
Finally, petitioner contends that "a promise to find a way to accommodate private respondent and
a representation that petitioner has a brother who could help private respondent find a job are not
misconduct warranting the dismissal of petitioner from office" but, "[a]t most," only "entitle[s] private
respondent to civil indemnity." Petitioner contends that the CA's finding that petitioner merely made a

"promise to facilitate" private respondent's employment abroad, as distinguished from the CSC's finding
that petitioner committed "shameful illegal recruitment activities," practically absolved petitioner from the
charge of grave misconduct.
This argument deserves scant consideration.

Misconduct has been defined as an intentional wrongdoing or deliberate violation of a rule of law or
standard of behavior, especially by a government official.[62] 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. [63] 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. [64] An act
need not be tantamount to a crime for it to be considered as grave misconduct as in fact, crimes involving
moral turpitude are treated as a separate ground for dismissal under the Administrative Code. [65]
In the case at bar, petitioner cannot downplay the charges against her. Whether the charges
against petitioner satisfy the elements of illegal recruitment to make her criminally liable for such crime is
not the issue at bar. At the very least, petitioner was found to have taken advantage of her position as an
employee of the BI to falsely promise, for pecuniary gain, the facilitation of private respondent's travel to
Japan, including the processing of her passport, visa and other travel documents. Worse, she was found to
have refused to reimburse the amounts paid to her by private respondent even when the promised
passport, visa, and travel documents did not materialize. Undoubtedly, these acts involve "corruption,
clear intent to violate the law or flagrant disregard of established rule." Under Section 23(c), Rule XIV the
Omnibus Civil Service Rules and Regulations, these acts constitute a grave offense for which petitioner
must suffer the penalty of dismissal.
IN VIEW WHEREOF, the petition is DENIED. The Court of Appeals Decision dated February 12,
2002 and Resolution dated April 16, 2002 in CA-G.R. SP No. 58766 are AFFIRMED.
SO ORDERED.
G.R. No. L-68288

July 11, 1986

DIOSDADO GUZMAN, ULYSSES URBIZTONDO, and ARIEL RAMACULA, petitioners,


vs.
NATIONAL UNIVERSITY and DOMINGO L. JHOCSON in his capacity as President of National
University,respondents.
Efren H. Mercado and Haydee Yorac for petitioners.
Samson S. Alcantara for respondents.

DECISION
NARVASA, J.:
Petitioners Diosdado Guzman, Ulysses Urbiztondo and Ariel Ramacula, students of respondent National
University, have come to this Court to seek relief from what they describe as their schools continued and
persistent refusal to allow them to enroll. In their petition for extraordinary legal and equitable remedies
with prayer for preliminary mandatory injunction dated August 7, 1984, they allege:
1) that respondent Universitys avowed reason for its refusal to re-enroll them in their respective courses is
the latters participation in peaceful mass actions within the premises of the University;
2) that this attitude of the (University) is simply a continuation of its cavalier if not hostile attitude to the
students exercise of their basic constitutional and human rights already recorded in Rockie C. San Juan vs.
National University, S.C. G.R. No. 65443 (1983) and its utter contempt for the principle of due process of
law to the prejudice of petitioners; and

3) that in effect petitioners are subjected to the extreme penalty of expulsion without cause or if there be
any, without being informed of such cause and without being afforded the opportunity to defend
themselves. Berina v. Philippine Maritime Institute (117 SCRA 581 [1983]).
In the comment filed on September 24, 1986 for respondent University and its President pursuant to this
Courts requirement therefor, 1 respondents make the claim:
1) that petitioners failure to enroll for the first semester of the school year 1984-1985 is due to their own
fault and not because of their alleged exercise of their constitutional and human rights;
2) that petitioner Urbiztondo, sought to re-enroll only on July 5, 1986 when the enrollment period was
already closed;
3) that as regards petitioner Guzman, his academic showing was poor, due to his activities in leading
boycotts of classes; that when his father was notified of this development sometime in August, 1982, the
latter had demanded that his son reform or else we will recall him to the province; that Guzman was one
of the petitioners in G.R. No. 65443 entitled Rockie San Juan, et al. vs. National University, et al., at the
hearing of which on November 23, 1983 this Court had admonished the students involved (to) take
advantage and make the most of the opportunity given to them to study; that Guzman however
continued to lead or actively participate in activities within the university premises, conducted without
prior permit from school authorities, that disturbed or disrupted classes therein; that moreover, Guzman
is facing criminal charges for malicious mischief before the Metropolitan Trial Court of Manila (Crim. Case
No. 066446) in connection with the destruction of properties of respondent University on September 12,
1983 , and is also one of the defendants in Civil Case No. 8320483 of the Regional Trial Court of Manila
entitled National University, Inc. vs. Rockie San Juan et al. for damages arising from destruction of
university properties
4) that as regards petitioner Ramacula, like Guzman he continued to lead or actively participate, contrary
to the spirit of the Resolution dated November 23, 1983 of this Court (in G.R. No. 65443 in which he was
also one of the petitioners) and to university rules and regulations, within university premises but without
permit from university officials in activities that disturbed or disrupted classes; and
5) that petitioners have failures in their records, (and) are not of good scholastic standing.
Respondents close their comment with the following assertions, to wit:
1) By their actuations, petitioners must be deemed to have forfeited their privilege, if any, to seek
enrollment in respondent university. The rights of respondent university, as an institution of higher
learning, must also be respected. It is also beyond comprehension why petitioners, who continually despise
and vilify respondent university and its officials and faculty members, should persist in seeking enrollment
in an institution that they hate.
2) Under the circumstances, and without regard to legal technicalities, it is not to the best interest of all
concerned that petitioners be allowed to enroll in respondent university.
3) In any event, petitioners enrollment being on the semestral basis, respondents cannot be compelled to
enroll them after the end of the semester.
On October 2, 1984 this Court issued a resolution reading as follows:
Acting on the Comment submitted by respondent, the Court Resolved to NOTE the same and to require
a REPLY to such Comment. The Court further Resolved to ISSUE a MANDATORY INJUNCTION, enjoining
respondent to allow the enrolment of petitioners for the coming semester without prejudice to any

disciplinary proceeding to which any or all of them may be subjected with their right to lawful defense
recognized and respected. As regards petitioner Diosdado Guzman, even if it be a fact that there is a
pending criminal charge against him for malicious mischief, the Court nonetheless is of the opinion that, as
above-noted, without prejudice to the continuation of any disciplinary proceeding against him, that he be
allowed to resume his studies in the meanwhile. As shown in Annex 2 of the petition itself, Mr. Juan P.
Guzman, father of said petitioner, is extending full cooperation with petitioners to assure that whatever
protest or grievance petitioner Guzman may have would be ventilated in a lawful and peaceful manner.
Petitioners REPLY inter alia
1) denied that Urbiztondo attempted to enroll only on July 5, 1984 (when enrollment was already closed), it
being alleged that while he did try to enroll that day, he also attempted to do so several times before that
date, all to no avail, because respondents persistently refused to allow him to do so respondents
ostensible reason being that Urbiztondo (had) participated in mass actions within the school premises,
although there were no existing disciplinary charge against petitioner Urbiztondo at the time;
2) asserted that neither the text nor the context of the resolution 2 justifies the conclusion that
petitioners right to exercise their constitutional freedoms had thereby been restricted or limited; and
3) alleged that the holding of activities (mass action) in the school premises without the permission of the
school can be explained by the fact that the respondents persistently refused to issue such permit
repeatedly sought by the students.
On November 23, 1984, this Court promulgated another resolution, this time reading as follows:
The Court, after considering the pleadings filed and deliberating on the issues raised in the petition for
extraordinary legal and equitable remedies with prayer for preliminary mandatory injunction as well as the
respondents comment on the petition and the reply of counsel for petitioners to the respondents
comment, Resolved to (a) give DUE COURSE to the petition; (b) consider the respondents comment as
ANSWER to the petition; and (c) require the parties to file their respective MEMORANDA within twenty (20)
days from notice. .
Immediately apparent from a reading of respondents comment and memorandum is the fact that they had
never conducted proceedings of any sort to determine whether or not petitioners-students had indeed led
or participated in activities within the university premises, conducted without prior permit from school
authorities, that disturbed or disrupted classes therein 3 or perpetrated acts of vandalism, coercion and
intimidation, slander, noise barrage and other acts showing disdain for and defiance of University
authority. 4 Parenthetically, the pendency of a civil case for damages and a criminal case for malicious
mischief against petitioner Guzman, cannot, without more, furnish sufficient warrant for his expulsion or
debarment from re-enrollment. Also apparent is the omission of respondents to cite this Court to any duly
published rule of theirs by which students may be expelled or refused re-enrollment for poor scholastic
standing.
Under the Education Act of 1982, 5 the petitioners, as students, have the right among others to freely
choose their field of study subject to existing curricula and to continue their course therein up to
graduation, except in case of academic deficiency, or violation of disciplinary regulations. 6 Petitioners
were being denied this right, or being disciplined, without due process, in violation of the admonition in the
Manual of Regulations for Private Schools7 that (n)o penalty shall be imposed upon any student except for
cause as defined in (the) Manual and/or in the school rules and regulations as duly promulgated and
only after due investigation shall have been conducted. 8 This Court is therefore constrained, as in Berina
v. Philippine Maritime Institute, 9 to declare illegal this act of respondents of imposing sanctions on
students without due investigation.

Educational institutions of course have the power to adopt and enforce such rules as may be deemed
expedient for (its) government, (this being) incident to the very object of incorporation, and
indispensable to the successful management of the college. 10 The rules may include those governing
student discipline. Indeed, the maintenance of good school discipline is a duty specifically enjoined on
every private school by the Manual of Regulations for Private Schools; 11 and in this connection, the
Manual further provides that The school rules governing discipline and the corresponding sanctions therefor must be clearly specified
and defined in writing and made known to the students and/or their parents or guardians. Schools shall
have the authority and prerogative to promulgate such rules and regulations as they may deem necessary
from time to time effective as of the date of their promulgation unless otherwise specified. 12
But, to repeat, the imposition of disciplinary sanctions requires observance of procedural due process. And
it bears stressing that due process in disciplinary cases involving students does not entail proceedings and
hearings similar to those prescribed for actions and proceedings in courts of justice. The proceedings in
student discipline cases may be summary; and cross-examination is not, contrary to petitioners view, an
essential part thereof. There are withal minimum standards which must be met to satisfy the demands of
procedural due process; and these are, that (1) the students must be informed in writing of the nature and
cause of any accusation against them; (2) they shall have the right to answer the charges against them,
with the assistance of counsel, if desired; (3) they shall be informed of the evidence against them; (4) they
shall have the right to adduce evidence in their own behalf; and (5) the evidence must be duly considered
by the investigating committee or official designated by the school authorities to hear and decide the case.
WHEREFORE, the petition is GRANTED and the respondents are directed to allow the petitioners to reenroll or otherwise continue with their respective courses, without prejudice to any disciplinary
proceedings to which any or all of them may be subjected in accordance with the standards herein set
forth.
SO ORDERED.

In 1984, Diosdado Guzman and two others complained that the National University (NU) barred them from
enrolling in the said university. NU argued that their failure to enroll was due to the students fault. It was
alleged that Guzman et al spearheaded illegal mass actions within the university premises; that such mass
actions were violative of school policies; that due to their mass actions, Guzman et al incurred bad grades;
that Guzman et al hated NU anyway so why should they be allowed to enroll; that it is in the best interest
of both parties for the students not to be enrolled.
ISSUE: Whether or not National University may not admit the Diosdado Guzman et al in the case at bar.
HELD: No. Guzman et al were deprived of due process. In the first place, NU never showed which school
policies or duly published rules did Guzman et al violate upon which they may be expelled from. NU failed
to show that it conducted any sort of proceedings (not necessarily a trial type one) to determine Guzman
et als liability or alleged participation in the said mass actions.
Under the Education Act of 1982, Guzman et al, as students, have the right among others to freely choose
their field of study subject to existing curricula and to continue their course therein up to graduation,
except in case of academic deficiency, or violation of disciplinary regulations. Guzman et al were being
denied this right, or being disciplined, without due process, in violation of the Manual of Regulations for
Private Schools which provides that no penalty shall be imposed upon any student except for cause as
defined in the Manual and/or in the school rules and regulations as duly promulgated and only after due
investigation shall have been conducted.

Therefore, in effect, NU, by barring the enrollment of Guzman et al imposed sanction upon the students
without due investigation such act is illegal.
The Supreme Court also emphasized the minimum standards which must be met to satisfy the demands of
procedural due process; and these are:
1. That the students must be informed in writing of the nature and cause of any accusation against them;
2. That they shall have the right to answer the charges against them, with the assistance of counsel, if
desired;
3. That they shall be informed of the evidence against them;
4. That they shall have the right to adduce evidence in their own behalf; and
5. That the evidence must be duly considered by the investigating committee or official designated by the
school authorities to hear and decide the case.
DE LA SALLE UNIVERSITY VS. COURT OF APPEALS, HON.WILFREDO D. REYES, in his capacityas
Presiding Judge of Branch 36, Regional Trial Court of Manila, THE COMMISSION ON
HIGHEREDUCATION, THE DEPARTMENT OF EDUCATION CULTURE AND SPORTS, ALVIN AGUILAR,
JAMES PAUL BUNGUBUNG, RICHARD REVERENTE and ROBERTO VALDES, JR., G.R. No. 127980,
December 19, 2007
REYES, R.T., J.:
THE FACTS:
PRIVATE respondents Alvin Aguilar, James Paul Bungubung, Richard Reverente and Roberto Valdes, Jr. are
members of Tau Gamma Phi Fraternity who were expelled by the De La Salle University (DLSU) and College
of Saint Benilde (CSB)[1][1] Joint Discipline Board because of their involvement in an offensive action causing
injuries to petitioner James Yap and three other student members of Domino Lux Fraternity.
On March 29, 1995, James Yap was eating his dinner alone in Manangs Restaurant near La Salle, when
he overheard two men bad-mouthing and apparently angry at Domino Lux. He ignored the comments of
the two. When he arrived at his boarding house, he mentioned the remarks to his two other brods while
watching television. These two brods had earlier finished eating their dinner at Manangs. Then, the three,
together with four other persons went back to Manangs and confronted the two who were still in the
restaurant. By admission of respondent Bungubung in his testimony, one of the two was a member of the
Tau Gamma Phi Fraternity. There was no rumble or physical violence then.
After this incident, a meeting was conducted between the two heads of the fraternity through the
intercession of the Student Council. The Tau Gamma Phi Fraternity was asking for an apology. Kailangan
ng apology in the words of respondent Aguilar. But no apology was made.
On March 25, 1995, Ten minutes before his next class at 6:00 p.m., James Yap went out of the campus
using the Engineering Gate to buy candies across Taft Avenue. As he was about to re-cross Taft Avenue, he
heard heavy footsteps at his back. Eight to ten guys were running towards him. He panicked. He did not
know what to do. Then, respondent Bungubung punched him in the head with something heavy in his
hands parang knuckles. Respondents Reverente and Lee were behind Yap, punching him.
Respondents Bungubung and Valdes who were in front of him, were also punching him. As he was lying on
the street, respondent Aguilar kicked him. People shouted; guards arrived; and the group of attackers left.
Yap could not recognize the other members of the group who attacked him. With respect to respondent

Papio, Mr. Yap said hindi ko nakita ang mukha niya, hindi ko nakita sumuntok siya. What Mr. Yap saw was
a long haired guy also running with the group.
The mauling incidents were a result of a fraternity war. The victims, namely: petitioner James Yap and
Dennis Pascual, Ericson Cano, and Michael Perez, are members of the Domino Lux Fraternity, while the
alleged assailants, private respondents Alvin Aguilar, James Paul Bungubung, Richard Reverente and
Roberto Valdes, Jr. are members of Tau Gamma Phi Fraternity, a rival fraternity.
The next day, March 30, 1995, petitioner Yap lodged a complaint [2][7] with the Discipline Board of DLSU
charging private respondents with direct assault. Similar complaints[3][8] were also filed by Dennis
Pascual and Ericson Cano against Alvin Lee and private respondents Valdes and Reverente. Thus, cases
entitled De La Salle University and College of St. Benilde v. Alvin Aguilar (AB-BSM/9152105), James Paul
Bungubung (AB-PSM/9234403), Robert R. Valdes, Jr. (BS-BS-APM/9235086), Alvin Lee (EDD/9462325),
Richard Reverente (AB-MGT/9153837) and Malvin A. Papio (AB-MGT/9251227) were docketed as Discipline
Case No. 9495-3-25121.
The Director of the DLSU Discipline Office sent separate notices to private respondents Aguilar, Bungubung
and Valdes, Jr. and Reverente informing them of the complaints and requiring them to answer. Private
respondents filed their respective answers.[4][9]
Said notices issued by De La Salle Discipline Board uniformly stated as follows:
Please be informed that a joint and expanded Discipline Board had been constituted to hear and deliberate
the charge against you for violation of CHED Order No. 4 arising from the written complaints of James Yap,
Dennis C. Pascual, and Ericson Y. Cano.
You are directed to appear at the hearing of the Board scheduled on April 19, 1995 at 9:00 a.m. at the Bro.
Connon Hall for you and your witnesses to give testimony and present evidence in your behalf. You may
be assisted by a lawyer when you give your testimony or those of your witnesses.
On or before April 18, 1995, you are further directed to provide the Board, through the Discipline Office,
with a list of your witnesses as well as the sworn statement of their proposed testimony.
Your failure to appear at the scheduled hearing or your failure to submit the list of witnesses and the sworn
statement of their proposed testimony will be considered a waiver on your part to present evidence and as
an admission of the principal act complained of.
During the proceedings before the Board on April 19 and 28, 1995, private respondents interposed the
common defense of alibi. No full-blown hearing was conducted nor the students allowed to cross-examine
the witnesses against them.
On May 3, 1995, the DLSU-CSB Joint Discipline Board issued a Resolution [5][18] finding private respondents
guilty. They were meted the supreme penalty of automatic expulsion,[6][19]pursuant to CHED Order No. 4.[7]
[20]
The dispositive part of the resolution reads:
WHEREFORE, considering all the foregoing, the Board finds respondents ALVIN AGUILAR (ABBSM/9152105), JAMES PAUL BUNGUBUNG (AB-PSM/9234403), ALVIN LEE (EDD/94623250) and RICHARD V.
REVERENTE (AB-MGT/9153837) guilty of having violated CHED Order No. 4 and thereby orders their
automatic expulsion.
In the case of respondent MALVIN A. PAPIO (AB-MGT/9251227), the Board acquits him of the charge.
I SSUE

Were private respondents accorded due process of law because there was no full-blown hearing nor were
they allowed to cross-examine the witnesses against them?
H E L D:
Private respondents right to due process of law was not violated.
In administrative cases, such as investigations of students found violating school discipline, [t]here are
withal minimum standards which must be met before to satisfy the demands of procedural due process
and these are: that (1) the students must be informed in writing of the nature and cause of any accusation
against them; (2) they shall have the right to answer the charges against them and with the assistance if
counsel, if desired;
(3) they shall be informed of the evidence against them; (4) they shall have the
right to adduce evidence in their own behalf; and (5) the evidence must be duly considered by the
investigating committee or official designated by the school authorities to hear and decide the case. [8][66]
Where a party was afforded an opportunity to participate in the proceedings but failed to do so, he cannot
complain of deprivation of due process.[9][67] Notice and hearing is the bulwark of administrative due
process, the right to which is among the primary rights that must be respected even in administrative
proceedings.[10][68] The essence of due process is simply an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain ones side or an opportunity to seek reconsideration
of the action or ruling complained of.[11][69] So long as the party is given the opportunity to advocate her
cause or defend her interest in due course, it cannot be said that there was denial of due process. [12][70]
A formal trial-type hearing is not, at all times and in all instances, essential to due process it is enough
that the parties are given a fair and reasonable opportunity to explain their respective sides of the
controversy and to present supporting evidence on which a fair decision can be based.[13][71] To be heard
does not only mean presentation of testimonial evidence in court one may also be heard through
pleadings and where the opportunity to be heard through pleadings is accorded, there is no denial of due
process.[14][72]
Private respondents were duly informed in writing of the charges against them by the DLSU-CSB Joint
Discipline Board through petitioner Sales. They were given the opportunity to answer the charges against
them as they, in fact, submitted their respective answers. They were also informed of the evidence
presented against them as they attended all the hearings before the Board. Moreover, private
respondents were given the right to adduce evidence on their behalf and they did. Lastly, the Discipline
Board considered all the pieces of evidence submitted to it by all the parties before rendering its resolution
in Discipline Case No. 9495-3-25121.
Private respondents cannot claim that they were denied due process when they were not allowed to crossexamine the witnesses against them. This argument was already rejected inGuzman v. National
University[15][73] where this Court held that x x x the imposition of disciplinary sanctions requires
observance of procedural due process. And it bears stressing that due process in disciplinary cases
involving students does not entail proceedings and hearings similar to those prescribed for actions and
proceedings in courts of justice. The proceedings in student discipline cases may be summary; and cross
examination is not, x x x an essential part thereof.