Decisions and Opinions Penned by

Justice Velasco
Ownership of A Trademark Is Not Based on An Earlier Filing Date (EY vs Shen Dar, 2010)
EY Industrial Sales vs Shen Dar
Case Digest GR 184850 Oct 20 2010
Full Text
Facts:
EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors
and other industrial tools and equipment. On the other hand, Shen Dar is a Taiwan-based foreign
manufacturer of air compressors. From 1997 to 2004, EYIS imported air compressors from Shen
Dar. Both of them sought to register the mark VESPA for use on air compressors, but it was Shen
Dar who first filed the application on June 1997. EYIS application was first granted on 2004, so Shen
Dar sought for its cancellation on the ground of Sec 123 of the Intellectual Property Code which
provides that the registration of a similar mark is prevented with the filing of an earlier application for
registration. On the other hand, EYIS contended that Shen Dar is not entitled to register the mark
VESPA on its products because EYIS has been using it as the sole assembler and distributor of air
compressors since the 1990s. EYIS was able to prove such fact.
Issue: W/N EYIS is the true owner of the mark VESPA
Yes. EYIS is the true owner because it is the prior and continuous user of the mark VESPA.
Section 123.1 of the IPC should not be interpreted to mean that ownership is based upon an earlier
filing date. While RA 8293 removed the previous requirement of proof of actual use prior to the filing
of an application for registration of a mark, proof of prior and continuous use is necessary to
establish ownership of a mark. Ownership of a mark or trade name may be acquired not necessarily
by registration but by adoption and use in trade or commerce.
As between actual use of a mark without registration, and registration of the mark without actual use
thereof, the former prevails over the latter. Hence, EYIS is entitled to the registration of the mark in its
name. ##
Notes
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SECTION 122. How Marks are Acquired.

The rights in a mark shall be acquired through registration made validly in accordance
with the provisions of this law. (Sec. 2-A, R.A. No. 166a)
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SECTION 123. Registrability.
123.1. A mark cannot be registered if it:
a. Consists of immoral, deceptive or scandalous matter, or matter which may disparage
or falsely suggest a connection with persons, living or dead, institutions, beliefs, or
national symbols, or bring them into contempt or disrepute;
b. Consists of the flag or coat of arms or other insignia of the Philippines or any of its
political subdivisions, or of any foreign nation, or any simulation thereof;
c. Consists of a name, portrait or signature identifying a particular living individual
except by his written consent, or the name, signature, or portrait of a deceased
President of the Philippines, during the life of his widow, if any, except by written
consent of the widow;
d. Is identical with a registered mark belonging to a different proprietor or a
mark with an earlier filing or priority date, in respect of:
i. The same goods or services, or
ii. Closely related goods or services, or
iii. If it nearly resembles such a mark as to be likely to deceive or cause confusion;
e. Is identical with, or confusingly similar to, or constitutes a translation of a mark which
is considered by the competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is registered here, as being
already the mark of a person other than the applicant for registration, and used for
identical or similar goods or services:
Provided, That in determining whether a mark is well-known, account shall be taken of
the knowledge of the relevant sector of the public, rather than of the public at large,
including knowledge in the Philippines which has been obtained as a result of the
promotion of the mark;

f. Is identical with, or confusingly similar to, or constitutes a translation of a mark

considered well-known in accordance with the preceding paragraph, which is registered
in the Philippines with respect to goods or services which are not similar to those with
respect to which registration is applied for:
Provided, That use of the mark in relation to those goods or services would indicate a
connection between those goods or services, and the owner of the registered mark:
Provided further, That the interests of the owner of the registered mark are likely to be
damaged by such use;
g. Is likely to mislead the public, particularly as to the nature, quality, characteristics or
geographical origin of the goods or services;
h. Consists exclusively of signs that are generic for the goods or services that they seek
to identify;
i. Consists exclusively of signs or of indications that have become customary or usual to
designate the goods or services in everyday language or in bona fide and established
trade practice;
j. Consists exclusively of signs or of indications that may serve in trade to designate the
kind, quality, quantity, intended purpose, value, geographical origin, time or production
of the goods or rendering of the services, or other characteristics of the goods or
services;
k. Consists of shapes that may be necessitated by technical factors or by the nature of
the goods themselves or factors that affect their intrinsic value;
l. Consists of color alone, unless defined by a given form; or
m. Is contrary to public order or morality.
123.2. As regards signs or devices mentioned in paragraphs (j), (k), and (l), nothing
shall prevent the registration of any such sign or device which has become distinctive in
relation to the goods for which registration is requested as a result of the use that have
been made of it in commerce in the Philippines. The Office may accept as prima facie
evidence that the mark has become distinctive, as used in connection with the
applicants goods or services in commerce, proof of substantially exclusive and

continuous use thereof by the applicant in commerce in the Philippines for five (5) years
before the date on which the claim of distinctiveness is made.
123.3. The nature of the goods to which the mark is applied will not constitute an
obstacle to registration. (Sec. 4, R.A. No. 166a)
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Registration is Only Presumptive of Ownership (Shangri-la vs Developers, 2006)
Registration, without more, does not confer upon the registrant an absolute right to the
registered mark. The certificate of registration is merely a prima facie proof that the
registrant is the owner of the registered mark or trade name. Evidence of prior and
continuous use of the mark or trade name by another can overcome the presumptive
ownership of the registrant and may very well entitle the former to be declared owner in
an appropriate case.
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Registration is Not A Mode of Acquiring Ownership
By itself, registration is not a mode of acquiring ownership. When the applicant is not
the owner of the trademark being applied for, he has no right to apply for registration of
the same. Registration merely creates a prima facie presumption of the validity of the
registration, of the registrants ownership of the trademark and of the exclusive right to
the use thereof. Such presumption, just like the presumptive regularity in the
performance of official functions, is rebuttable and must give way to evidence to the
contrary.
Hide
Actual Use In Commerce is Required to Establish Right of Ownership
Ownership of a mark or trade name may be acquired not necessarily by registration but
by adoption and use in trade or commerce. As between actual use of a mark without
registration, and registration of the mark without actual use thereof, the former prevails
over the latter. For a rule widely accepted and firmly entrenched, because it has come
down through the years, is thatactual use in commerce or business is a pre-requisite to
the acquisition of the right of ownership.

Options of Landowner Under Art 449450 If the Builder and Third Party
Purchasers Were In Bad Faith (BPI vs
Sanchez, 2014)
BPI vs Sanchez
Case Digest GR 179518 Nov 19 2014
Full Text
Facts:
The Sanchezes entered into an agreement with Garcia (doing business in the name of
TSEI) to sell for P 1.850 million their parcel of land, with an earnest money of 50k. They
agreed that Garcia shall pay the purchase price in cash once the property is vacated.
The Sanchezes entrusted to Garcia the owners copy of TCT because it was agreed that
he shall take care of all the documentations necessary for the transaction.
Immediately after the property was vacated, Garcia took possession and began
constructing townhouses thereon without the Sanchezes knowledge and consent. While
these developments were ongoing, Garcia failed to pay the purchase price.
Subsequently, the Sanchezes were given six checks representing the amount of the
purchase price. Four of these checks were postdated, thus further delaying their
overdue payment. To properly document the check payments, they made an agreement
stipulating that if one of the checks were dishonored, the Sanchezes may rescind the
contract.
The last two checks were dishonored, so the Sanchezes rescinded the contract and
demanded from Garcia the return of the TCT. However, Garcia refused to return the
documents and vacate the property.
Meanwhile, the Sanchezes found out that Garcia/TSEI were selling townhouses situated
in the property. So they informed the HLURB, the City Building Official and the RD in
Quezon City, of the illegal constructions being made thereon. The HLURB issued a Cease
and Decease Order enjoining Garcia / TSEI from further developing and selling the
townhouses. Such orders were left unheeded. In fact, Garcia were already able to sell

many of the units to different individuals and entities, and even mortgaged the property.
Consequently, the Sanchezes filed before the RTC a complaint for rescission, restitution
and damages with TRO.
The purchasers and mortgagee who are the intervenors in this case were found by the
court to be in bad faith. On the other hand, the Sanchezes were held to be in good faith
and not negligent.
Issue 1: W/N rescission of the contract was barred by the subsequent transfer
of the property
No. Under Article 1191 of the Civil Code, rescission is available to a party in a reciprocal
obligation where one party fails to comply with it. As an exception to this rule, Article
1385 provides that rescission shall not take place if the subject matter of the prior
agreement is already in the hands of a third party who did not act in bad faith.
Here, the failure of Garcia/TSEI to pay the consideration for the sale of the property
entitled the Sanchezes to rescind the Agreement. And in view of the finding that the
intervenors acted in bad faith in purchasing the property from Garcia, the subsequent
transfer in their favor did not and cannot bar rescission.
Issue 2: W/N Article 449 450 of the Civil Code is applicable to the Sanchezes
Yes. Bad faith on the part of the purchasers leads to the application of Art 449-450.
Consequently, the Sanchezes have the following options: (1) acquire the property with
the townhouses and other buildings and improvements that may be thereon without
indemnifying TSEI or the intervenors; (2) demand from TSEI or the intervenors to
demolish what has been built on the property at the expense of TSEI or the intervenors;
or (3) ask the intervenors to pay the price of the land.
As such, the Sanchezes must choose from among these options within 30 days from
finality of the decision. Should the Sanchezes opt to ask from the intervenors the value
of the land, the case shall be remanded to the RTC for the sole purpose of
determining the fair market value of the lot at the time the same were taken from
the Sanchezes. If the Sanchezes decide to appropriate the townhouses,
other structures and improvements as their own pursuant to Art 449, then the
intervenors-purchasers shall be ordered to vacate said premises within a reasonable
time from notice of the finality of the decision by the Sanchezes. They have a right to
recover their investment in the townhouses from Garcia and TSEI. If the Sanchezes do

not want to make use of the townhouses and improvements on the subject lot, then the
purchasers can be ordered to demolish said townhouses or if they dont demolish the
same within a reasonable time, then it can be demolished at their expense. On the
3rd option, if the Sanchezes do not want to appropriate the townhouses or have the
same demolished, then they can ask that the townhouse purchasers pay to them the
fair market value of the respective areas allotted to their respective townhouses subject
of their deeds of sale. ##
Relevant Provisions
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Rescission and Exceptions
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.
Article 1385. Rescission creates the obligation to return the things which were the
object of the contract, together with their fruits, and the price with its interest;
consequently, it can be carried out only when he who demands rescission can return
whatever he may be obliged to restore.
Neither shall rescission take place when the things which are the object of the contract
are legally in the possession of third persons who did not act in bad faith.
In this case, indemnity for damages may be demanded from the person causing the
loss.
Hide

Builders in Bad Faith

Article 449. He who builds, plants or sows in bad faith on the land of another, loses
what is built, planted or sown without right to indemnity.
Article 450. The owner of the land on which anything has been built, planted or sown
in bad faith may demand the demolition of the work, or that the planting or sowing be
removed, in order to replace things in their former condition at the expense of the
person who built, planted or sowed; or he may compel the builder or planter to pay the
price of the land, and the sower the proper rent.

Promotional Appointment from Commissioner to Chairman Does Not Constitute

Reappointment (Funa vs Villar, 2012)
Funa vs Villar
Case Digest GR 192791 April 24 2012
Full Text
Facts:
On February 15, 2001, Pres Arroyo appointed Carague as Chairman of the COA for a term of 7
years. Caragues term of office started on February 2, 2001 to end on February 2, 2008. On
February 7, 2004, Villar was appointed as the third member of the COA for a term of 7 years starting
February 2, 2004 until February 2, 2011.
Following the retirement of Carague on February 2, 2008 and during the fourth year of Villar as COA
Commissioner, Villar was designated as Acting Chairman of COA from February 4, 2008 to April 14,
2008. Subsequently, on April 18, 2008, Villar was nominated and appointed as Chairman of the
COA. Shortly thereafter, the Commission on Appointments confirmed his appointment. He was to
serve as Chairman of COA, as expressly indicated in the appointment papers, until the expiration of
the original term of his office as COA Commissioner or on February 2, 2011.
Issue 1: W/N a promotional appointment from the position of Commissioner to Chairman is
constitutionally permissible and does NOT constitute reappointment as barred by the Article
IX (D), Sec 1 (2) of the Constitution
Yes. A commissioner who resigns after serving in the Commission for less than seven years is
eligible for an appointment to the position of Chairman for the unexpired portion of the term of the
departing chairman. Such appointment is not covered by the ban on reappointment, provided that

the aggregate period of the length of service as commissioner and the unexpired period of the term
of the predecessor will not exceed 7 years and provided further that the vacancy in the position of
Chairman resulted from death, resignation, disability or removal by impeachment.
Reappointment found in Sec. 1(2), Art. IX(D) means a movement to one and the same office
(Commissioner to Commissioner or Chairman to Chairman). On the other hand, an appointment
involving a movement to a different position or office (Commissioner to Chairman) would constitute a
new appointment and, hence, not, in the strict legal sense, a reappointment barred under the
Constitution.
Issue 2: W/N the appointment of Villar to the position of COA Chairman which is made vacant
by the expiration of term of the predecessor is valid
No. The Constitution clearly provides that if the vacancy results from the expiration of the term of the
predecessor, the appointment of a COA member shall be for a fixed 7-year term.
Here, the vacancy in the position of COA chairman left by Carague in February 2, 2008 resulted from
the expiration of his 7-year term. Under that circumstance, there can be no unexpired portion of the
term of the predecessor to speak of. Hence, in light of the 7-year aggregate rule, Villars
appointment to a full term is not valid as he will be allowed to serve more than seven 7 years under
the constitutional ban.
Villar had already served 4 years of his 7-year term as COA Commissioner. A shorter term, however,
to comply with the 7-year aggregate rule would also be invalid as the corresponding appointment
would effectively breach the clear purpose of the Constitution of giving to every appointee so
appointed subsequent to the first set of commissioners, a fixed term of office of 7 years.
Notes:
A. One of the doctrinal guidelines outlined in Matibag vs Benipayo has been
effectively abandoned by the Courts pronouncement in this case.
Hide
In Matibag vs Benipayo, the Court outlined the following formulations in which the
constitutional ban on reappointment may apply:
1.

The first situation is where an ad interim appointee after confirmation by the

Commission on Appointments serves his full 7-year term. Such person cannot be
reappointed whether as a member or as chairman because he will then be actually
serving more than 7 years.

2.

The second situation is where the appointee, after confirmation, serves part of
his term and then resigns before his 7-year term of office ends. Such person cannot be
reappointed whether as a member or as chair to a vacancy arising from retirement
because a reappointment will result in the appointee serving more than 7 years.

3.

The third situation is where the appointee is confirmed to serve the unexpired
portion of someone who died or resigned, and the appointee completes the unexpired
term. Such person cannot be reappointed whether as a member or as chair to a
vacancy arising from retirement because a reappointment will result in the appointee
also serving more than 7 years.

4.

The fourth situation is where the appointee has previously served a term of less
than 7 years, and a vacancy arises from death or resignation. Even if it will not result in
his serving more than seven years, a reappointment of such person to serve an
unexpired term is also prohibited because his situation will be similar to those
appointed under the second sentence of Sec. 1(20), Art. IX-C of the Constitution
[referring to the first set of appointees (the 5 and 3 year termers) whose term of office
are less than 7 years but are barred from being reappointed under any situation].
The fourth formulation is basically predicated on the postulate that reappointment of
any kind is prohibited under any and all circumstances. Since the principles laid down in
this case is contrary to that, the constitutional ban on reappointment under the fourth
situation depicted in the Matibag vs Benipayo case is now therefore effectively
abandoned. As held by the Court, a promotional appointment from the position of
Commissioner to that of Chairman is constitutionally permissible and not barred by Sec.
1(2), Art. IX (D) of the Constitution.
B. Article IX (D), Sec 1 (2) of the Constitution is re-outlined as follows:
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1. The appointment of members of any of the three constitutional commissions, after
the expiration of the uneven terms of office of the first set of commissioners, shall
always be for a fixed term of seven (7) years; an appointment for a lesser period is void
and unconstitutional.
The appointing authority cannot validly shorten the full term of seven (7) years in case
of the expiration of the term as this will result in the distortion of the rotational system
prescribed by the Constitution.
2. Appointments to vacancies resulting from certain causes (death, resignation,
disability or impeachment) shall only be for the unexpired portion of the term of the

predecessor, but such appointments cannot be less than the unexpired portion as this
will likewise disrupt the staggering of terms laid down under Sec. 1(2), Art. IX(D).
3. Members of the Commission, e.g. COA, COMELEC or CSC, who were appointed for a
full term of seven years and who served the entire period, are barred from
reappointment to any position in the Commission. Corollarily, the first appointees in the
Commission under the Constitution are also covered by the prohibition against
reappointment.
4. A commissioner who resigns after serving in the Commission for less than seven
years is eligible for an appointment to the position of Chairman for the unexpired
portion of the term of the departing chairman. Such appointment is not covered by the
ban on reappointment, provided that the aggregate period of the length of service as
commissioner and the unexpired period of the term of the predecessor will not exceed
seven (7) years and provided further that the vacancy in the position of Chairman
resulted from death, resignation, disability or removal by impeachment. The Court
clarifies that reappointment found in Sec. 1(2), Art. IX(D) means a movement to one and
the same office (Commissioner to Commissioner or Chairman to Chairman). On the
other hand, an appointment involving a movement to a different position or office
(Commissioner to Chairman) would constitute a new appointment and, hence, not, in
the strict legal sense, a reappointment barred under the Constitution.
5. Any member of the Commission cannot be appointed or designated in a temporary or
acting capacity. ##

Coco Levy Fund Belongs Not to the

Coco Farmers in Their Private
Capacities But to the Government
(Cocofed vs Rep, 2012)

Cocofed vs Republic
Case Digest GR 177857-58 Jan 24 2012
Full Text
Facts:
In 1971, RA 6260 created the Coconut Investment Company (CIC) to administer the
Coconut Investment Fund, a fund to be sourced from levy on the sale of copra. The
copra seller was, or ought to be, issued COCOFUND receipts. The fund was placed at the
disposition of COCOFED, the national association of coconut producers having the
largest membership.
When martial law started in 1972, several presidential decrees were issued to improve
the coconut industry through the collection and use of the coconut levy fund:
PD 276 established the Coconut Consumers Stabilization Fund (CCSF) and declared the
proceeds of the CCSF levy as trust fund, to be utilized to subsidize the sale of coconutbased products, thus stabilizing the price of edible oil.
PD 582 created the Coconut Industry Development Fund (CIDF) to finance the operation
of a hybrid coconut seed farm.
In 1973, PD 232 created the Philippine Coconut Authority (PCA) to accelerate the growth
and development of the coconut and palm oil industry.
Then came P.D. No. 755 in July 1975, providing under its Section 1 the policy to provide
readily available credit facilities to the coconut farmers at preferential rates. Towards
achieving this, Section 2 of PD 755 authorized PCA to utilize the CCSF and the CIDF
collections to acquire a commercial bank and deposit the CCSF levy collections in said
bank, interest free, the deposit withdrawable only when the bank has attained a certain
level of sufficiency in its equity capital. It also decreed that all levies PCA is
authorized to collect shall not be considered as special and/or fiduciary funds
or form part of the general funds of the government.
Both P.D. Nos. 961 and 1468 also provide that the CCSF shall not be construed by any
law as a special and/or trust fund, the stated intention being that actual ownership of
the said fund shall pertain to coconut farmers in their private capacities.
Shortly before the issuance of PD 755 however, PCA had already bought from Peping
Cojuangco 72.2% of the outstanding capital stock of FUB / UCPB. In that contract, it was
also stipulated that Danding Cojuanco shall receive equity in FUB amounting to 10%, or

7.22 % of the 72.2%, as consideration for PCAs buy-out of what Danding Conjuanco
claim as his exclusive and personal option to buy the FUB shares.
The PCA appropriated, out of its own fund, an amount for the purchase of the said
72.2% equity. It later reimbursed itself from the coconut levy fund.
While the 64.98% (72.2 % 7.22%) portion of the option shares ostensibly pertained to
the farmers, the corresponding stock certificates supposedly representing the farmers
equity were in the name of and delivered to PCA. There were, however, shares forming
part of the 64.98% portion, which ended up in the hands of non-farmers. The remaining
27.8% of the FUB capital stock were not covered by any of the agreements.
Through the years, a part of the coconut levy funds went directly or indirectly to various
projects and/or was converted into different assets or investments. Of particular
relevance to this was their use to acquire the FUB / UCPB, and the acquisition by UCPB,
through the CIIF and holding companies, of a large block of San Miguel Corporation
(SMC) shares.
Issue 1: W/N the mandate provided under PD 755, 961 and 1468 that the CCSF
shall not be construed by any law as a special and/or trust fund is valid
No. The coconut levy funds can only be used for the special purpose and the balance
thereof should revert back to the general fund.
Article VI, Section 29 (3) of the Constitution provides that all money collected
on any tax levied for a special purpose shall be treated as a special fund
and paid out for such purpose only, and if the purpose for which a special fund was
created has been fulfilled or abandoned, the balance, if any, shall be transferred to the
general funds of the Government. Here, the CCSF were sourced from forced exactions
with the end-goal of developing the entire coconut industry. Therefore, the subsequent
reclassification of the CCSF as a private fund to be owned by private individuals in their
private capacities under P.D. Nos. 755, 961 and 1468 is unconstitutional.
Not only is it unconstitutional, but the mandate is contrary to the purpose or policy for
which the coco levy fund was created.
Issue 2:
W/N the coco levy fund may be owned by the coconut farmers in their private capacities

No. The coconut levy funds are in the nature of taxes and can only be used for public
purpose. They cannot be used to purchase shares of stocks to be given for free
to private individuals. Even if the money is allocated for a special purpose and raised by
special means, it is still public in character.
Accordingly, the presidential issuances which authorized the PCA to distribute, for free,
the shares of stock of the bank it acquired to the coconut farmers under such rules and
regulations the PCA may promulgate is unconstitutional.
It is unconstitutional because first, it have unduly delegated legislative power to the
PCA, and second, it allowed the use of the CCSF to benefit directly private interest by
the outright and unconditional grant of absolute ownership of the FUB/UCPB shares paid
for by PCA entirely with the CCSF to the undefined coconut farmers, which negated or
circumvented the national policy or public purpose declared by P.D. No. 755.
Hence, the so-called Farmers shares do not belong to the coconut farmers in their
private capacities, but to the Government. The coconut levy funds are special public
funds and any property purchased by means of the coconut levy funds should likewise
be treated as public funds or public property, subject to burdens and restrictions
attached by law to such property. ##

Execution Pending Appeal Not

Applicable in Expropriation Proceedings
(Curata vs PPA, 2014)
Curata vs Philippine Ports Authority
Case Digest GR 154211-12 June 22 2009
Full Text
Facts:
EO 385 and EO 431 Series of 1990 delineated the Batangas Port Zone and placed it
under the Philippine Ports Authority for administrative jurisdiction of its proper zoning,
planning, development, and utilization. Pursuant thereto, the PPA instituted a complaint
for expropriation of 185 lots before the RTC. Owned by some 231 individuals or entities,
the 185 lots, with a total area of about 1,298,340 sqm, were intended for the

development of Phase II of the BPZ. The PPA alleged that, per evaluation of the Land
Acquisition Committee for Phase II of the BPZ project, the lots had a fair market value of
P 336.83 per sqm. Prior to the filing of the complaint, PPA offered PhP 336.40 per sqm as
just compensation, but the lot owners rejected the offer. PPA prayed to be placed in
possession upon its deposit of the amount equivalent to the assessed value for real
estate taxation of the lots in question.
After proceedings, the RTC issued a compensation order directing PPA to pay the lot
owners the amount of P 5,500 per sqm as just compensation. Upon motion, the RTC
granted the issuance of a writ of execution pending appeal and issued the writ of
execution thereafter. Subsequently, the sheriff served the Notice of Garnishment to the
LBP Batangas City Branch.
Issue 1: W/N execution pending appeal is applicable to expropriation
proceedings
No. Discretionary execution of judgments pending appeal under Sec. 2(a) of Rule 39
simply does not apply to eminent domain proceedings. Since PPAs monies, facilities and
assets are government properties, they are exempt from execution whether by virtue of
a final judgment or pending appeal.
It is a universal rule that where the State gives its consent to be sued by private parties
either by general or special law, it may limit the claimants action only up to the
completion of proceedings anterior to the stage of execution and that the power of the
Courts ends when the judgment is rendered, since government funds and properties
may not be seized under writs of execution or garnishment to satisfy such judgments.
This is based on obvious considerations of public policy. Disbursements of public funds
must be covered by the corresponding appropriation as required by law. The functions
and public services rendered by the State cannot be allowed to be paralyzed or
disrupted by the diversion of public funds from their legitimate and specific objects, as
appropriated by law. (Commissioner of Public Highways vs San Diego, 1970)
Issue 2: W/N RA 8974 is a substantial law that cannot be reapplied
retroactively
Yes. The appropriate standard of just compensation inclusive of the manner of payment
thereof and the initial compensation to the lot owners is a substantive, not merely a
procedural, matter. This is because the right of the owner to receive just compensation
prior to acquisition of possession by the State of the property is a proprietary right. RA
8974, which specifically prescribes the new standards in determining the amount of just

compensation in expropriation cases relating to national government infrastructure

projects, as well as the payment of the provisional value as a prerequisite to the
issuance of a writ of possession, is a substantive law.
Further, there is nothing in RA No. 8974 which expressly provides that it should have
retroactive effect. Neither is retroactivity necessarily implied from RA No. 8974 or in any
of its provisions. Hence, it cannot be applied retroactively in relation to this case.
Note:
RA 8974 amended Rule 67 effective November 26, 2000, but only with regard to the
expropriation of right-of-way sites and locations for national government infrastructure
projects. On the other hand, in all other expropriation cases outside of right-of-way sites
or locations for national government infrastructure projects, the provisions of Rule 67 of
the Rules of Court shall still govern. #

Lower Courts Must Observe Judicial

Courtesy When Issue is Pending
Resolution By A Higher Court (Nicart vs
Titong, 2014)
Conrado Nicart, as Gov of Eastern Samar vs Titong and
Abrugar
Case Digest GR 207682 Dec 10 2014
Full Text
Facts:
Titong and Abrugar, together with 93 others, were appointed as department heads by
the then Governor Evardone of Samar a few days before the end of his term.Their
appointments were disapproved by the CSC Regional Office for violation of CSC rules
and for not having met the requirements laid down in Nazareno vs City of
Dumaguete case. Titong and Abrugar filed a petition for review before the CSC Main,
which granted and declared their appointments as valid. The new Governor Nicart

sought for reconsideration, but it was denied. Before the CA, he appealed arguing that
their appointments cannot be valid since there was no need to fill up the positions and
that their appointments were en masse.
Meanwhile, the CSC Main issued a writ of execution ordering Gov Nicart and the
provincial government to pay the salaries and emoluments of Titong and Abrugar. Gov
Nicart refused, so they filed a petition for mandamus before the RTC even while the case
before the CA was still pending.
The RTC decided the petition on the basis of the CSC memo circular 82 which states
that the non-issuance of a restraining order or injunction would make the CSC
resolution executory pending appeal. Since there was no TRO or injunction, and its
opinion that the CA decision would not constitute res judicata or in any way affect the
petition for mandamus, the RTC issued a writ of mandamus and went even further in
deciding that the appointments were valid.
Issue: W/N it is proper for the RTC to take cognizance of the petition for
mandamus even while the issues involved is still pending resolution before
the CA
Held:
No. First, it is erroneous for the RTC to opine that the CA decision would not affect the
petition before it because clearly, the mandamus petition heavily relies on the validity
or invalidity of the appointments which issue is yet to be resolved by the CA. Second,
even while there is no preliminary injunction or TRO issued by the higher court,
ordinarily it would be proper for a lower court or a court of origin to suspend the
proceedings on the precept of judicial courtesy. Hence, the RTC erred when it decided
on the mandamus petition for disregarding such principle. ##

Existence of a Priorly-Issued Title Must

be Established in Order to Grant
Reconstitution under RA 26 (Rep vs
Sanchez, 2014)

Republic vs Heirs of Donato Sanchez

Case Digest GR 212388 Dec 10 2014
Full Text
Facts:
When Spouses Sanchez died intestate, their Heirs executed a deed of extrajudicial
partition over a lot of which owners copy of the OCT is missing. Since they cannot
register the Deed without the OCT, they sought for the reconstitution, pursuant to RA
26, of the said OCT. They alleged in their petition that OCT 45361 covers a lot that was
issued in the name of their predecessors-in-interest Spouses Sanchez pursuant to
Decree 418121 which was in relation to a court decision in 1930. Among the evidences
presented are: (1) a certification from the RD that the copies of the OCT and the decree
which issued it cannot be found among its records, (2) the court decision in 1930
adjudicating the lot in the name of spouses Sanchez, and (3) certified true copy of the
Registrars Index Card containing the notation that the OTC was listed under the name
of one of the spouse Sanchez. Since there is no copy of the OCT in the RD records, there
was no certification from the RD that the OCT was eitherlost or destroyed.
Issue 1: W/N reconstitution of OCT 45361 should be granted
No. Under RA 26, a petition for reconstitution of lost or destroyed title requires, as a
condition precedent, that a certificate of title has indeed been issued. Here, the court
decision and the Registrars Index Card containing the notation on OCT No. 45361 do
not cite nor mention that Decree No. 418121 was issued to support the issuance of the
said OCT. Since there was no clear and convincing evidence adduced to prove the
existence of the OTC, RA 26 cannot apply.
For obvious reasons, reconstitution cannot be made on a title that never existed in the
first place.
Issue 2: W/N reconstitution of OCT is proper when the only evidences
presented to support its existence are derivative titles
No. Assuming that there was sufficient evidence to prove the existence of the OCT
considering the totality of evidence presented, still, reconstitution of the OCT is not
warranted. Under Sec 15 of RA 26, before a certificate of title which has been lost or
destroyed may be reconstituted, it must first be proved by the claimants that

the certificate of title was still in force at the time it was lost or destroyed, among
others.
First, the mere existence of the derivative titles which contain the notations that the
name of the registered owner of OCT 45361 is not available as per certification of the
RD clearly shows that the OCT which the Heirs seek to be reconstituted is no longer in
force, rendering the procedure, if granted, a mere superfluity
Second, the necessary certification from the RD that said OCT was in force at the time it
was lost or destroyed is lacking. The presentation of alleged derivative titles will not
suffice to replace this certification because the titles do not authenticate the issuance of
OCT No. 45361 having been issued by the RD without any basis from its official records.
Hence, the OCT cannot be reconstituted because clearly it was no longer in force.
Notes:
The proper procedure when seeking the reconstitution of an Original Certificate of
Title is to file a petition for the cancellation of the decree, re-issuance of the decree and
issuance of OCT pursuant to the re-issued decree.
Hide
1.

Within the premise that a decree has been validly issued, the proper procedure is
to file a petition for the cancellation of the Old decree, reissuance of the decree and
issuance of OCT pursuant to the reissued decree.
Why should a decree be canceled and re-issued when the same is valid and intact?
Within the context of this discussion, there is no dispute that a decree has been validly
issued. And in fact, in some instances, a copy of such decree is intact. What is not
known is whether or not an OCT is issued pursuant to that decree. If such decree is
valid, why is there a need to have it cancelled and re-issued?
This is because Section 39 of PD 1529 states that: The original certificate of title shall
be a true copy of the decree of registration. This provision is significant because it
contemplates an OCT which is an exact replica of the decree. If the old decree will not
be canceled and no new decree issued, the corresponding OCT issued today will bear
the signature of the present Administrator while the decree upon which it was based
shall bear the signature of the past Administrator. This is not consistent with the clear
intention of the law which states that the OCT shall be true copy of the decree of
registration. Ostensibly, therefore, the cancellation of the old decree and the issuance
of a new one is necessary.

2.

As long as the decree issued in an ordinary or cadastral registration case has not
yet been entered, meaning, it has not yet been transcribed in the Registration Book of
the concerned Registrar of Deeds, such decree has not yet attained finality and
therefore may still be subject to cancellation in the same land registration case.
Upon cancellation of such decree, the decree owner (adjudicatee or his heirs) may then
pray for the issuance of a new decree number and, consequently, pray for the issuance
of an original certificate of title based on the newly issued decree of registration.
For as long as a decree has not yet been transcribed (entered in registration book of the
RD), the court which adjudicated and ordered for the issuance of such decree continues
to be clothed with jurisdiction. The reason for this is that the judgment is merely
declaratory in character and does not need to be asserted or enforced against the
adverse party. Furthermore, the issuance of a decree is a ministerial duty both of the
judge and of the Land Registration Commission; failure of the court or of the clerk to
issue the decree for the reason that no motion therefore has been filed cannot prejudice
the owner, or the person in whom the land is ordered to be registered. (Sta Ana vs
Menla)
Unlike ordinary civil actions, the adjudication of land in a cadastral or land registration
proceeding does not become final, in the sense of incontrovertibility, until after the
expiration of one (1) year after the entry of the final decree of registration. As long as a
final decree has not been entered by the Land Registration Commission (now NLTDRA)
and the period of one (1) year has not elapsed from the date of entry of such decree,
the title is not finally adjudicated and the decision in the registration proceeding
continues to be under the control and sound discretion of the court rendering it. (Gomez
vs CA, 1988)

Circumstantial Evidence Must

Show Culpability Belongs Only to
the Accused to the Exclusion of
Others (Zabala vs People, 2015)

Kyle Zabala vs People

Case Digest GR 210670 Jan 26 2015
Full Text
Facts:
Alas accused Zabala of theft. During the trial, Alas testified that he and Zabala were not
only neighbors, but kumpares as well, and would often invite the latter to drinking
sessions inside his house. At times, he would also call Zabala to repair his vehicle and
allow Zabala to follow him to his bedroom to get cash whenever spare parts are to be
bought for the repair of his vehicle. One day when he returned from work, he found that
his P68k which he kept in an envelope inside his closet was missing. There were only
five persons living in the house that time, he together with his parents, his 9-year old
son, and his aunt.
Witness Pinon also testified that, being Zabalas girlfriend, she were with him at the
store which was near Alas house at that time. She saw Zabala climb the fence, scale
and enter Alas house, and noticed that when he returned, he had a bulge in his pocket.
Day after that, they went to Greenhills, where Zabala bought two Nokia phones worth
about P8,500.
Issue 1: W/N the corpus delicti of the crime was established in this case
No. In theft, corpus delicti has two elements, namely: (1) that the property was lost by
the owner, and (2) that it was lost by felonious taking.
First, nobody saw Zabala entered the room of Alas where the money was hidden. Pinon
merely saw that Zabala scaled the fence of Alas house and entered it. Second, all that
Pinon saw was the bulge in Zabalas pocket; her testimony does not show that the bulge
was the P68k which was supposedly stolen. These testimonies failed to prove the fact
that the P68k was lost and that Zabala unlawfully took it. Hence, the evidence
presented was not sufficient to prove the fact of the crime of theft.
Issue 2: W/N the circumstantial evidence presented is sufficient to prove Zabalas guilt
beyond reasonable doubt
No. The rule in circumstantial evidence cases is that the evidence must exclude the
possibility that some other person committed the crime.
In this case, the prosecution failed to adduce evidence that at the time the theft was
committed, there was no other person inside the house of Alas, or that no other person
could have taken the money from the closet of Alas. They failed to prove that culpability
could only belong to Zabala, and not to some other person. Hence, Zabala must be
acquitted in the absence of proof beyond reasonable doubt. ##

Hide
Relevant Laws
Rules of Court
Sec. 4. Circumstantial evidence, when sufficient. Circumstantial evidence is sufficient
for conviction if: (1)There is more than one circumstance; (2)The facts from which the
inferences are derived are proven; (3)The combination of all the circumstances is such
as to produce a conviction beyond a reasonable doubt.
Lozano vs People, 2010
To sustain a conviction based on circumstantial evidence, it is essential that the
circumstantial evidence presented must constitute an unbroken chain which leads one
to a fair and reasonable conclusion pointing to the accused, to the exclusion of the
others, as the guilty person. The circumstantial evidence must exclude the possibility
that some other person has committed the crime.

Illegal Termination is Inconsistent with

Resignation (Fonterra vs Largado,
2015)

Fonterra Brand Phils, Inc. vs Largado and Estrellado

Case Digest GR 205300 March 18 2015
Full Text
Facts:
Fonterra contracted the services of Zytron to provide for trade merchandising
representatives (TMRs) in the marketing and promotion of its milk and dairy products.
Among those TMRs whose services were engaged are Largado and Estrellado, who are
the respondents in this case. After 4 years, Fonterra terminated its contract with Zytron
and entered into an agreement for manpower supply with AC Sicat. Desirous of
continuing their work as TMRs in Fonterra, Largado and Estrellado submitted their job
application with AC Sicat, a legitimate job contracting company. AC Sicat hired their
services as TMRs for a term of 5 months.

When their 5-month contract with AC Sicat were about to expire, they allegedly sought
renewal thereof, which was allegedly refused. This prompted them to file for complaints
of illegal dismissal, regularization, nonpayment of service incentive leave, 13 thmonth
pay, and actual and moral damages against Fonterra, Zytron and AC Sicat.
Issue 1: W/N Largado and Estrellado were illegally terminated by Zytron
No. When Largado and Estrella refused to renew their contract with Zytron by applying
with AC Sicat, they effectively resigned from Zytron. Hence, they were not illegally
dismissed because they voluntary terminated their employment with the latter.
Issue 2: W/N Largado and Estrellado were illegally terminated by AC Sicat
No. There is no illegal dismissal to speak of since AC Sicat is a legitimate job contractor
and their termination is merely brought about by the expiration of their employment
contracts with AC Sicat.
First, Largado and Estrellado were hired as fixed-term or project employees of AC Sicat.
The determining factor of such employment is not the duty of the employee but the day
certain agreed upon by the parties for the commencement and termination of the
employment relationship. Second, the non-renewal of their contracts by AC Sicat is
a management prerogative, and failure of respondents to prove that such was done in
bad faith militates against their contention that they were illegally dismissed.
Hence, the expiration of their contract with AC Sicat simply caused the natural cessation
of their fixed-term employment thereat. ##

Mere Similarity in Classification Not

Equate with Relatedness of Goods or
Services (Taiwan vs Kolin Electronics,
2015)

Taiwan Kolin vs Kolin Electronics

Case Digest GR 209843 March 25 2015
Full Text
Facts:
Taiwan Kolin Corp sought to register the trademark KOLIN in Class 9 on the following
combination of goods: television sets, cassette recorder, VCD Amplifiers, camcorders
and other audio/video electronic equipment, flat iron, vacuum cleaners, cordless
handsets, videophones, facsimile machines, teleprinters, cellular phones and automatic
goods vending machine.
Kolin Electronics opposed the application on the ground that the trademark KOLIN is
identical, if not confusingly similar, with its registered trademark KOLIN which covers
the following products under Class 9 of the Nice Classification (NCL): automatic voltage
regulator, converter, recharger, stereo booster, AC-DC regulated power supply, stepdown transformer, and PA amplified AC-DC. Kolin Electronics argued that the products
are not only closely-related because they fall under the same classification, but also
because they are inherently similar for being electronic products and are plugged into
electric sockets and perform a useful function.
Issue: W/N the products are closely-related
Held:
No, the products are not related and the use of the trademark KOLIN on them would not
likely cause confusion. To confer exclusive use of a trademark, emphasis should be on
the similarity or relatedness of the goods and/or services involved and not on the
arbitrary classification or general description of their properties or characteristics.
First, products classified under Class 9 can be further classified into five categories.
Accordingly, the goods covered by the competing marks between Taiwan Kolin and Kolin
Electronics fall under different categories. Taiwan Kolins goods are categorized as
audio visual equipments, while Kolin Electronics goods fall under devices for controlling
the distribution and use of electricity. Thus, it is erroneous to assume that all electronic
products are closely related and that the coverage of one electronic product necessarily
precludes the registration of a similar mark over another.
Second, the ordinarily intelligent buyer is not likely to be confused. The distinct visual
and aural differences between the two trademarks KOLIN, although appear to be
minimal, are sufficient to distinguish between one brand or another. The casual buyer is
predisposed to be more cautious, discriminating, and would prefer to mull over his

purchase because the products involved are various kind of electronic products which
are relatively luxury items and not considered affordable. They are not ordinarily
consumable items such as soy sauce, ketsup or soap which are of minimal cost. Hence,
confusion is less likely. ##

Stock Distribution Scheme Consistent

with the Constitutions Agrarian Reform
(Hacienda Luisita vs PARC, 2011)

Full Text
Hacienda Luisita vs PARC
Case Digest GR 171101 July 5 2011 Nov 22 2011
Facts:
In 1988, RA 6657 or the CARP law was passed. It is a program aimed at redistributing
public and private agricultural lands to farmers and farmworkers who are landless. One
of the lands covered by this law is the Hacienda Luisita, a 6,443-hectare mixed
agricultural-industrial-residential expanse straddling several municipalities of Tarlac.
Hacienda Luisita was bought in 1958 from the Spanish owners by the Tarlac
Development Corporation (TADECO), which is owned and/or controlled by Jose Cojuanco
Sr., Group. Back in 1980, the Martial Law administration filed an expropriation suit
against TADECO to surrender the Hacienda to the then Ministry of Agrarian Reform (now
DAR) so that the land can be distributed to the farmers at cost. The RTC rendered
judgment ordering TADECO to surrender Hacienda Luisita to the MAR.
In 1988, the OSG moved to dismiss the governments case against TADECO. The CA
dismissed it, but the dismissal was subject to the condition that TADECO shall obtain the
approval of FWB (farm worker beneficiaries) to the SDP (Stock Distribution Plan) and to
ensure its implementation.
Sec 31 of the CARP Law allows either land transfer or stock transfer as two alternative
modes in distributing land ownership to the FWBs. Since the stock distribution scheme
is the preferred option of TADECO, it organized a spin-off corporation, the Hacienda
Luisita Inc. (HLI), as vehicle to facilitate stock acquisition by the farmers.

After conducting a follow-up referendum and revision of terms of the Stock Distribution
Option Agreement (SDOA) proposed by TADECO, the Presidential Agrarian Reform
Council (PARC), led by then DAR Secretary Miriam Santiago, approved the SDP of
TADECO/HLI through Resolution 89-12-2 dated Nov 21, 1989.
From 1989 to 2005, the HLI claimed to have extended those benefits to the
farmworkers. Such claim was subsequently contested by two groups representing the
interests of the farmers the HLI Supervisory Group and the AMBALA. In 2003, each of
them wrote letter petitions before the DAR asking for the renegotiation of terms and/or
revocation of the SDOA. They claimed that they havent actually received those benefits
in full, that HLI violated the terms, and that their lives havent really improved contrary
to the promise and rationale of the SDOA.
The DAR created a Special Task Force to attend to the issues and to review the terms of
the SDOA and the Resolution 89-12-2. Adopting the report and the recommendations of
the Task Force, the DAR Sec recommended to the PARC (1) the revocation of
Resolution 89-12-2 and (2) the acquisition of Hacienda Luisita through
compulsory acquisition scheme. Consequently, the PARC revoked the SDP of
TADECO/HLI and subjected those lands covered by the SDP to the mandated land
acquisition scheme under the CARP law. These acts of the PARC was assailed by HLI via
Rule 65.
On the other hand, FARM, an intervenor, asks for the invalidation of Sec. 31 of RA 6657,
insofar as it affords the corporation, as a mode of CARP compliance, to resort to stock
transfer in lieu of outright agricultural land transfer. For FARM, this modality of
distribution is an anomaly to be annulled for being inconsistent with the basic concept
of agrarian reform ingrained in Sec. 4, Art. XIII of the Constitution.
Administrative Law
Hide
Issue 1: W/N PARC has the authority to revoke the Stock Distribution Plan or
SDP
Yes. Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the
plan for stock distribution of the corporate landowner belongs to PARC. It may be that
RA 6657 or other executive issuances on agrarian reform do not explicitly vest the PARC
with the power to revoke/recall an approved SDP, but such power or authority is
deemed possessed by PARC under the principle of necessary implication, a basic

postulate that what is implied in a statute is as much a part of it as that which is

expressed.
Following this doctrine, the conferment of express power to approve a plan for stock
distribution of the agricultural land of corporate owners necessarily includes the power
to revoke or recall the approval of the plan.

Constitutional Law
Hide
Issue 2: W/N the Court may exercise its power of judicial review over the
constitutionality of Sec 31 of RA 6657
No. First, the intervenor FARM failed to challenged the constitutionality of RA 6657, Sec
31 at the earliest possible opportunity. It should have been raised as early as Nov
21, 1989, when PARC approved the SDP of HLI or at least within a reasonable time
thereafter.
Second, the constitutionality of RA 6657 is not the very lis mota of this case. Before
the SC, the lis mota of the petitions filed by the HLI is whether or not the PARC acted
with grave abuse of discretion in revoking the SDP of HLI. With regards to the original
positions of the groups representing the interests of the farmers, their very lis mota is
the non-compliance of the HLI with the SDP so that the the SDP may be revoked. Such
issues can be resolved without delving into the constitutionality of RA 6657.
Hence, the essential requirements in passing upon the constitutionality of acts of the
executive or legislative departments have not been met in this case.

Statutory Construction
Hide
Issue 3: W/N Sec 31 of RA 6657 is consistent with the Constitutions concept of
agrarian reform
Yes. The wording of the Art XIII, Sec 4 of the Constitution is unequivocal: the farmers
and regular farmworkers have a right toown directly or collectively the lands they till.
The basic law allows two (2) modes of land distribution: direct and indirect ownership.
Direct transfer to individual farmers is the most commonly used method by DAR and

widely accepted. Indirect transfer through collective ownership of the agricultural land is
the alternative to direct ownership of agricultural land by individual farmers. Sec. 4
EXPRESSLY authorizes collective ownership by farmers. No language can be found in the
1987 Constitution that disqualifies or prohibits corporations or cooperatives of farmers
from being the legal entity through which collective ownership can be exercised.
The word collective is defined as indicating a number of persons or things considered as
constituting one group or aggregate, while collectively is defined as in a collective sense
or manner; in a mass or body. By using the word collectively, the Constitution allows for
indirect ownership of land and not just outright agricultural land transfer. This is in
recognition of the fact that land reform may become successful even if it is done
through the medium of juridical entities composed of farmers.
The stock distribution option devised under Sec. 31 of RA 6657 hews with the agrarian
reform policy, as instrument of social justice under Sec. 4 of Article XIII of the
Constitution. Albeit land ownership for the landless appears to be the dominant theme
of that policy, the Court emphasized that Sec. 4, Article XIII of the Constitution, as
couched, does not constrict Congress to passing an agrarian reform law planted on
direct land transfer to and ownership by farmers and no other, or else the enactment
suffers from the vice of unconstitutionality. If the intention were otherwise, the framers
of the Constitution would have worded said section in a manner mandatory in character.

* The SC, through a resolution dated Nov 21 2011 of the motion for reconsideration filed
by HLI, affirmed the revocation of HLIs SDP and the placing of Hacienda Luisita under
the compulsory land distribution scheme of the CARP law. It was also held that the date
of taking was Nov 21 1989, when the PARC, by Resolution 89-12-2, approved the SDP of
HLI. ##
Secretary of DPWH vs Heracleo
Velasco Dissent GR 179334 Apr 21 2015
Summary
The States power of eminent domain is not absolute; the Constitution is clear that no person shall be
deprived of life, liberty and property without due process of law. As such, failure of the government to
institute the necessary proceedings should lead to failure of taking an individuals property. In this
case, since the property was already taken, the complainants must be equitably compensated for the
loss thereof.

For purposes of just compensation, the value of the land should be determined from the time the
property owners filed the initiatory complaint, earning interest therefrom. To hold otherwise would
validate the States act as one of expropriation in spite of procedural infirmities which, in turn, would
amount to unjust enrichment on its part. To continue condoning such acts would be licensing
the government to continue dispensing with constitutional requirements in taking private
property.

Despite Lack of Proceedings, Compensation-Determined-at-the-Time-of-Taking Rule Remains

Secretary of DPWH vs Heracleo
Case Digest GR 179334 Apr 21 2015
Facts:
Spouses Heracleo are the co-owners of a land which is among the private properties traversed by
MacArthur Highway in Bulacan, a government project undertaken sometime in 1940. The taking
was taken without the requisite expropriation proceedings and without their consent. In 1994,
Heracleo demanded the payment of the fair market value of the property. The DPWH offered to pay
0.70 centavos per sqm., as recommended by the appraiser committee of Bulacan. Unsatisfied,
Heracleo filed a complaint for recovery of possession with damages. Favorable decisions were
rendered by the RTC and the CA, with valuation of P 1,500 per sqm and 6% interest per annum from
the time of filing of the until full payment. The SC Division reversed the CA ruling and held that
computation should be based at the time the property was taken in 1940, which is 0.70 per sqm. But
because of the contrasting opinions of the members of the Division and transcendental importance
of the issue, the case was referred to the En Banc for resolution.
Issue 1: W/N the taking of private property without due process should be nullified
No. The governments failure to initiate the necessary expropriation proceedings prior to actual
taking cannot simply invalidate the States exercise of its eminent domain power, given
that the property subject of expropriation is indubitably devoted for public use, and public policy
imposes upon the public utility the obligation to continue its services to the public. To hastily nullify
said expropriation in the guise of lack of due process would certainly diminish or weaken one of the
States inherent powers, the ultimate objective of which is to serve the greater good.
Thus, the non-filing of the case for expropriation will not necessarily lead to the return of the property
to the landowner. What is left to the landowner is the right of compensation.

Issue 2: W/N compensation is based on the market value of the property at the time of taking
Yes. While it may appear inequitable to the private owners to receive an outdated valuation, the longestablished rule is that the fair equivalent of a property should be computed not at the time of
payment, but at the time of taking. This is because the purpose of just compensation is not to
reward the owner for the property taken but to compensate him for the loss thereof. The
owner should be compensated only for what he actually loses, and what he loses is the actual value
of the property at the time it is taken.
Issue 3: W/N the principle of equity should be applied in this case
No. The Court must adhere to the doctrine that its first and fundamental duty is the application of the
law according to its express terms, interpretation being called for only when such literal application is
impossible. To entertain other formula for computing just compensation, contrary to those
established by law and jurisprudence, would open varying interpretation of economic policies a
matter which this Court has no competence to take cognizance of. Equity and equitable principles
only come into full play when a gap exists in the law and jurisprudence.
Velasco Dissent: Just Compensation Should be Determined at the Time of Judicial
Demand When Property Was Illegally Taken
The States power of eminent domain is not absolute; the Constitution is clear that no person shall be
deprived of life, liberty and property without due process of law. As such, failure of the government to
institute the necessary proceedings should lead to failure of taking an individuals property. In this
case, since the property was already taken, the complainants must be equitably compensated for the
loss thereof.
For purposes of just compensation, the value of the land should be determined from the time the
property owners filed the initiatory complaint, earning interest therefrom. To hold otherwise would
validate the States act as one of expropriation in spite of procedural infirmities which, in turn, would
amount to unjust enrichment on its part. To continue condoning such acts would be licensing
the government to continue dispensing with constitutional requirements in taking private
property.

Government May be Estopped When

Injustice is Perpetrated As a Result of
Its Own Acts (SM Land vs BCDA, 2015)

SM Land vs BCDA
GR 203655 March 18, 2015 En Banc
GR 203655 August 13, 2014
Full Text
Facts:
When BCDA opened for disposition its Bonifacio South Property pursuant to RA 7227,
SMLI offered to undertake the development of said property by submitting a succession
of unsolicited proposals to BCDA. BCDA then entered into negotiations with SMLI until
the BCDA finally accepted the terms of the final unsolicited proposal. Their agreement
was thereafter reduced into writing through the issuance of the Certification of
Successful Negotiations in 2010.
It was agreed that BCDA accepted SMLIs unsolicited proposal and declared SMLI eligible
to enter into the proposed Joint Venture activity. It also agreed to subject SMLIs
Original Proposal to Competitive Challenge pursuant to NEDA Joint Venture Guidelines,
which competitive challenge process shall be immediately implemented following the
Terms of Reference. Moreover, said Certification provides that the BCDA shall
commence the activities for the solicitation for comparative proposals. Years later
however, the BCDA through the issuance of Supplemental Notice No. 5 terminated the
competitive challenge for the selection of BCDAs joint venture partner for the
development of a portion of Fort Bonifacio.
SMLI, through a petition for CPM, argued that BCDAs unilateral termination of the
competitive challenge is a violation of SMLIs rights as an original proponent and
constitutes abandonment of BCDAs contractual obligations. BCDA, on the other hand,
responded that it is justifiable since NEDA JV Guidelines is a mere guideline and not a
law, and that the Government has a right to terminate the competitive challenge when
the terms are disadvantageous to public interest.

Issue 1: W/N the NEDA JV Guidelines has the binding effect and force of law
Yes. Administrative issuances, such as the NEDA JV Guidelines, duly promulgated
pursuant to the rule-making power granted by statute, have the force and effect of law.
Being an issuance in compliance with an executive edict, the NEDA JV Guidelines has
the same binding effect as if it were issued by the President himself, who parenthetically
is a member of NEDA. As such, no agency or instrumentality covered by the JV
Guidelines can validly deviate from the mandatory procedures set forth therein, even if
the other party acquiesced therewith or not.
Hide
Under the Administrative Code of 1987, acts of the President providing for rules of a
general or permanent character in implementation or execution of constitutional or
statutory powers shall be promulgated in Executive Orders. It is through these orders
that the President ensures that laws are faithfully executed, by handing out instructions
to subordinate executive officials and the public, in the form of implementing rules and
regulations, on how the law should be executed by subordinate officials and complied
with by the public.
For government contracts and procurement in the Philippines, then President Gloria
Macapagal-Arroyo, adopting the recommendation of the NEDA, issued EO 10918 on May
27, 2002. As its title indicates, EO 109 streamlined the rules and procedures on the
review and approval of all contracts of departments, bureaus, offices and agencies of
the government, including GOCCs and their subsidiaries. This executive issuance was,
however, later amended by EO 109-A, to conform to RA 9184 which was enacted barely
two months after the issuance of EO 109. Two years later, or on April 30, 2005, EO
42321 was issued, repealing EO 109-A and simplifying the procurement process. Section
4 of EO 423 was later amended by EO 645.
Amidst the changes effected on procurement rules, the NEDAs duty to issue a JV
Guidelines under the said executive orders remained unaffected. Through Section 5 of
EO 109, Section 8 of EO 109-A and now Section 8 of EO 423, the President effectively
delegated her inherent executive power to issue rules and regulations on procurement
to her subordinate executive officials, her alter egos. Pursuant to said repeated
directives from no less than the Chief Executive, the NEDA issued the JV Guidelines
providing the procedures for the coagulation of joint ventures between the government
and a private entity.

Issue 2: W/N BCDA committed grave abuse of discretion in issuing

Supplemental Notice No. 5
Yes. Being an instrumentality of the government, it is incumbent upon the BCDA to
abide by the laws, rules and regulations, and perform its obligations with utmost good
faith. It cannot, under the guise of protecting the public interest, disregard the clear
mandate of the NEDA JV Guidelines and unceremoniously disregard the very
commitments it made to the prejudice of the SMLI that innocently relied on such
promises.
It is in instances such as thiswhere an agency, instrumentality or officer of the
government evades the performance of a positive duty enjoined by lawwherein the
exercise of judicial power is warranted. Consistent with the Courts solemn obligation to
afford protection by ensuring that grave abuses of discretion on the part of a branch or
instrumentality of the government do not go unchecked, the Petition for Certiorari must
be granted and the corresponding injunctive relief be made permanent.
Issue 3: W/N the BCDA is in estoppel
Yes. Although as a general rule, the government cannot be estopped by the mistakes or
errors of its officials or agents, such will not apply if injustice is perpetrated.
To allow BCDA to renege on its statutory and contractual obligations would cause grave
prejudice to petitioner, who already invested time, effort, and resources in the study
and formulation of the proposal, in the adjustment thereof, as well as in the
negotiations. To permit BCDA to suddenly cancel the procurement process and strip
SMLI of its earlier-enumerated rights as an Original Proponent at this pointafter the
former has already benefited from SMLIs proposal through the acquisition of
information and ideas for the development of the subject propertywould unjustly
enrich the agency through the efforts of petitioner. What is worse, to do so would be
contrary to BCDAs representations and assurances that it will respect SMLIs earlier
acquired rights, which statements SMLI reasonably and innocently believed. All told,
the BCDAs acceptance of the unsolicited proposal and the successful in-depth
negotiation cannot be written off as mere mistake or error that respondents claim to be
reversible and not susceptible to the legal bar of estoppel. The subsequent cancellation
of the Competitive Challenge on grounds that infringe the contractual rights of SMLI and
violate the NEDA JV Guidelines cannot be shrouded with legitimacy by invoking the
estoppel rule. ##

Grandfather Rule may be Applied

Jointly with the Control Test to
Determine Corporate Ownership (Narra
vs Redmont, 2015)
Narra Nickel Mining vs Redmont
G.R. No. 195580, January 28, 2015
Full Text
Facts:
Narra and its co-petitioner corporations Tesoro and MacArthur, filed a motion before
the SC to reconsider its April 21, 2014 Decision which upheld the denial of their MPSA
applications. The SC affirmed the CA ruling that there is a doubt to their nationality,
and that in applying the Grandfather Rule, the finding is that MBMI, a 100% Canadianowned corporation, effectively owns 60% of the common stocks of petitioners by owning
equity interests of the petitioners other majority corporate shareholders. Narra, Tesoro
and MacArthur argued that the application of the Grandfather Rule to determine their
nationality is erroneous and allegedly without basis in the Constitution, the FIA, the
Philippine Mining Act, and the Rules issued by the SEC. These laws and rules
supposedly espouse the application of the Control Test in verifying the Philippine
nationality of corporate entities for purposes of determining compliance with Sec. 2, Art.
XII of the Constitution that only corporations or associations at least 60% of whose
capital is owned by such Filipino citizens may enjoy certain rights and privileges, like the
exploration and development of natural resources.
Issue: W/N the application by the SC of the grandfather resulted to the
abandonment of the control test
Held:
No. The control test can be applied jointly with the Grandfather Rule to determine the
observance of foreign ownership restriction in nationalized economic activities. The
Control Test and the Grandfather Rule are not incompatible ownership-determinant
methods that can only be applied alternative to each other. Rather, these methods can,
if appropriate, be used cumulatively in the determination of the ownership and control

of corporations engaged in fully or partly nationalized activities, as the mining operation

involved in this case or the operation of public utilities.
The Grandfather Rule, standing alone, should not be used to determine the Filipino
ownership and control in a corporation, as it could result in an otherwise foreign
corporation rendered qualified to perform nationalized or partly nationalized activities.
Hence, it is only when the Control Test is first complied with that the Grandfather Rule
may be applied. Put in another manner, if the subject corporations Filipino equity falls
below the threshold 60%, the corporation is immediately considered foreign-owned, in
which case, the need to resort to the Grandfather Rule disappears.
In this case, using the control test, Narra, Tesoro and MacArthur appear to have
satisfied the 60-40 equity requirement. But the nationality of these corporations and
the foreign-owned common investor that funds them was in doubt, hence, the need to
apply the Grandfather Rule. ##
Related:
GR 195580 Narra Nickel vs Redmont, 2014 Case Digest

Grandfather Rule Rules When the

Required 60-40 Filipino-foreign Equity
Ownership is In Doubt (Narra vs
Redmont, 2014)

Full Text
Narra Nickel Mining vs Redmont
Case Digest GR 185590, Apr 21 2014
Facts:
Redmont is a domestic corporation interested in the mining and exploration of some
areas in Palawan. Upon learning that those areas were covered by MPSA applications of
other three (allegedly Filipino) corporations Narra, Tesoro, and MacArthur, it filed a
petition before the Panel of Arbitrators of DENR seeking to deny their permits on the

ground that these corporations are in reality foreign-owned. MBMI, a 100% Canadian
corporation, owns 40% of the shares of PLMC (which owns 5,997 shares of Narra), 40%
of the shares of MMC (which owns 5,997 shares of McArthur) and 40% of the shares of
SLMC (which, in turn, owns 5,997 shares of Tesoro).
Aside from the MPSA, the three corporations also applied for FTAA with the Office of the
President. In their answer, they countered that (1) the liberal Control Test must be used
in determining the nationality of a corporation as based on Sec 3 of the Foreign
Investment Act which as they claimed admits of corporate layering schemes, and that
(2) the nationality question is no longer material because of their subsequent
application for FTAA.
Commercial / Political Law
Hide
Issue 1: W/N the Grandfather Rule must be applied in this case
Yes. It is the intention of the framers of the Constitution to apply the Grandfather Rule
in cases where corporate layering is present.
First, as a rule in statutory construction, when there is conflict between the Constitution
and a statute, the Constitution will prevail. In this instance, specifically pertaining to the
provisions under Art. XII of the Constitution on National Economy and Patrimony, Sec. 3
of the FIA will have no place of application. Corporate layering is admittedly allowed by
the FIA, but if it is used to circumvent the Constitution and other pertinent laws, then it
becomes illegal.
Second, under the SEC Rule1 and DOJ Opinion2 , the Grandfather Rule must be applied
when the 60-40 Filipino-foreign equity ownership is in doubt. Doubt is present in the
Filipino equity ownership of Narra, Tesoro, and MacArthur since their common investor,
the 100% Canadian-owned corporation MBMI, funded them.
Under the Grandfather Rule, it is not enough that the corporation does have the
required 60% Filipino stockholdings at face value. To determine the percentage of the
ultimate Filipino ownership, it must first be traced to the level of the investing
corporation and added to the shares directly owned in the investee corporation.
Applying this rule, it turns out that the Canadian corporation owns more than 60% of the
equity interests of Narra, Tesoro and MacArthur. Hence, the latter are disqualified to
participate in the exploration, development and utilization of the Philippines natural
resources.

1 DOJ Opinion No. 020 Series of 2005 (paragraph 7)

2 SEC Opinion May 13, 1990

Remedial Law
Hide
Issue 2: W/N the case has become moot as a result of the MPSA conversion to
FTAA
No. There are certain exceptions to mootness principle and the mere raising of an
issue of mootness will not deter the courts from trying a case when there is a valid
reason to do so.
The SC noted that a grave violation of the Constitution is being committed by a foreign
corporation through a myriad of corporate layering under different, allegedly, Filipino
corporations. The intricate corporate layering utilized by the Canadian company, MBMI,
is of exceptional character and involves paramount public interest since it undeniably
affects the exploitation of our Countrys natural resources. The corresponding actions of
petitioners during the lifetime and existence of the instant case raise questions as what
principle is to be applied to cases with similar issues. No definite ruling on such
principle has been pronounced by the Court; hence, the disposition of the issues or
errors in the instant case will serve as a guide to the bench, the bar and the public.
Finally, the instant case is capable of repetition yet evading review, since the Canadian
company, MBMI, can keep on utilizing dummy Filipino corporations through various
schemes of corporate layering and conversion of applications to skirt the constitutional
prohibition against foreign mining in Philippine soil. ##