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DBP POOL OF ACCREDITED INSURANCE COMPANIES vs.

RADIO MINDANAO
NETWORK
G.R. No. 147039 January 27 2006

This refers to the petition for certiorari under Rule 45 of the Rules of Court seeking the review of the
Decision[1] dated November 16, 2000 of the Court of Appeals (CA) in CA-G.R. CV No. 56351, the
dispositive portion of which reads:

Wherefore, premises considered, the appealed Decision of


the Regional Trial Court of Makati City, Branch 138 in Civil Case No. 90-602 is hereby AFFIRMED with
MODIFICATION in that the interest rate is hereby reduced to 6% per annum.

Costs against the defendants-appellants.

SO ORDERED.[2]

The assailed decision originated from Civil Case No. 90-602 filed by Radio Mindanao Network, Inc.
(respondent) against DBP Pool of Accredited Insurance Companies (petitioner) and Provident Insurance
Corporation (Provident) for recovery of insurance benefits. Respondent owns several broadcasting stations
all over the country. Provident covered respondents transmitter equipment and generating set for the amount
of P13,550,000.00 under Fire Insurance Policy No. 30354, while petitioner covered respondents
transmitter, furniture, fixture and other transmitter facilities for the amount of P5,883,650.00 under Fire
Insurance Policy No. F-66860.

In the evening of July 27, 1988, respondents radio station located in SSS Building, Bacolod City, was razed
by fire causing damage in the amount of P1,044,040.00. Respondent sought recovery under the two
insurance policies but the claims were denied on the ground that the cause of loss was an excepted risk
excluded under condition no. 6 (c) and (d), to wit:

6. This insurance does not cover any loss or damage occasioned by or through or in consequence, directly
or indirectly, of any of the following consequences, namely:
(c) War, invasion, act of foreign enemy, hostilities, or warlike operations (whether war be declared or not),
civil war.
(d) Mutiny, riot, military or popular rising, insurrection, rebellion, revolution, military or usurped power.[3]

The insurance companies maintained that the evidence showed that the fire was caused by members of the
Communist Party of the Philippines/New Peoples Army (CPP/NPA); and consequently, denied the
claims. Hence, respondent was constrained to file Civil Case No. 90-602 against petitioner and Provident.
After trial on the merits, the Regional Trial Court of Makati, Branch 138, rendered a decision in favor of
respondent. The dispositive portion of the decision reads:

IN VIEW THEREOF, judgment is rendered in favor of plaintiff. Defendant Provident Insurance


Corporation is directed to pay plaintiff the amount of P450,000.00 representing the value of the destroyed
property insured under its Fire Insurance Policy plus 12% legal interest from March 2, 1990 the date of the
filing of the Complaint. Defendant DBP Pool Accredited Insurance Companies is likewise ordered to pay
plaintiff the sum of P602,600.00 representing the value of the destroyed property under its Fire Insurance
Policy plus 12% legal interest from March 2, 1990.

SO ORDERED.[4]
Both insurance companies appealed from the trial courts decision but the CA affirmed the decision, with
the modification that the applicable interest rate was reduced to 6% per annum. A motion for
reconsideration was filed by petitioner DBP which was denied by the CA per its Resolution dated January
30, 2001.[5]
Hence, herein petition by DBP Pool of Accredited Insurance Companies,[6] with the following assignment
of errors:
Assignment of Errors

THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD THAT THERE WERE NO
SUFFICIENT EVIDENCE SHOWING THAT THE APPROXIMATELY TENTY [sic] (20) ARMED
MEN WHO CUSED [sic] THE FIRE AT RESPONDENTS RMN PROPERTY AT BACOLOD CITY
WERE MEMBERS OF THE CPP-NPA.

THE HONORABLE COURT OF APPEALS ERRED WHEN IT ADJUDGED THAT RESPONDENT


RMN CANNOT BEHELD [sic] FOR DAMAGES AND ATTORNEYS FEES FOR INSTITUTING THE
PRESENT ACTION AGAINST THE PETITIONER UNDER ARTICLES 21, 2208, 2229 AND 2232 OF
THE CIVIL CODE OF THE PHILIPPINES.[7]

Petitioner assails the factual finding of both the trial court and the CA that its evidence failed to support its
allegation that the loss was caused by an excepted risk, i.e., members of the CPP/NPA caused the fire. In
upholding respondents claim for indemnity, the trial court found that:

The only evidence which the Court can consider to determine if the fire was due to the intentional act
committed by the members of the New Peoples Army (NPA), are the testimony [sic] of witnesses Lt. Col.
Nicolas Torres and SPO3 Leonardo Rochar who were admittedly not present when the fire occurred. Their
testimony [sic] was [sic] limited to the fact that an investigation was conducted and in the course of the
investigation they were informed by bystanders that heavily armed men entered the transmitter house,
poured gasoline in (sic) it and then lighted it. After that, they went out shouting Mabuhay ang NPA (TSN,
p. 12., August 2, 1995). The persons whom they investigated and actually saw the burning of the station
were not presented as witnesses. The documentary evidence particularly Exhibits 5 and 5-C do not
satisfactorily prove that the author of the burning were members of the NPA. Exhibit 5-B which is a letter
released by the NPA merely mentions some dissatisfaction with the activities of some people in the media
in Bacolod. There was no mention there of any threat on media facilities.[8]

The CA went over the evidence on record and sustained the findings of the trial court, to wit:

To recapitulate, defendants-appellants presented the following to support its claim, to wit: police blotter of
the burning of DYHB, certification of the Negros Occidental Integrated National Police, Bacolod City
regarding the incident, letter of alleged NPA members Celso Magsilang claiming responsibility for the
burning of DYHB, fire investigation report dated July 29, 1988, and the testimonies of Lt. Col. Nicolas
Torres and SFO III Leonardo Rochas. We examined carefully the report on the police blotter of the burning
of DYHB, the certification issued by the Integrated National Police of Bacolod City and the fire
investigation report prepared by SFO III Rochas and there We found that none of them categorically stated
that the twenty (20) armed men which burned DYHB were members of the CPP/NPA. The said documents
simply stated that the said armed men werebelieved to be or suspected of being members of the said
group. Even SFO III Rochas admitted that he was not sure that the said armed men were members of the
CPP-NPA, thus:

In fact the only person who seems to be so sure that that the CPP-NPA had a hand in the burning
of DYHB was Lt. Col. Nicolas Torres. However, though We found him to be persuasive in his testimony
regarding how he came to arrive at his opinion, We cannot nevertheless admit his testimony as conclusive
proof that the CPP-NPA was really involved in the incident considering that he admitted that he did not
personally see the armed men even as he tried to pursue them. Note that when Lt. Col. Torres was presented
as witness, he was presented as an ordinary witness only and not an expert witness. Hence, his opinion on
the identity or membership of the armed men with the CPP-NPA is not admissible in evidence.

Anent the letter of a certain Celso Magsilang, who claims to be a member of NPA-NIROC, being an
admission of person which is not a party to the present action, is likewise inadmissible in evidence under
Section 22, Rule 130 of the Rules of Court. The reason being that an admission is competent only when the
declarant, or someone identified in legal interest with him, is a party to the action.[9]

The Court will not disturb these factual findings absent compelling or exceptional reasons. It should
be stressed that a review by certiorari under Rule 45 is a matter of discretion. Under this mode of review,
the jurisdiction of the Court is limited to reviewing only errors of law, not of fact.[10]

Moreover, when supported by substantial evidence, findings of fact of the trial court as affirmed
by the CA are conclusive and binding on the parties,[11] which this Court will not review unless there are
exceptional circumstances. There are no exceptional circumstances in this case that would have impelled
the Court to depart from the factual findings of both the trial court and the CA.

Both the trial court and the CA were correct in ruling that petitioner failed to prove that the loss
was caused by an excepted risk.

Petitioner argues that private respondent is responsible for proving that the cause of the damage/loss
is covered by the insurance policy, as stipulated in the insurance policy, to wit:

Any loss or damage happening during the existence of abnormal conditions (whether physical or
otherwise) which are occasioned by or through in consequence directly or indirectly, of any of the said
occurrences shall be deemed to be loss or damage which is not covered by the insurance, except to the
extent that the Insured shall prove that such loss or damage happened independently of the existence of
such abnormal conditions.

In any action, suit or other proceeding where the Companies allege that by reason of the provisions
of this condition any loss or damage is not covered by this insurance, the burden of proving that such loss
or damage is covered shall be upon the Insured.[12]

An insurance contract, being a contract of adhesion, should be so interpreted as to carry out the
purpose for which the parties entered into the contract which is to insure against risks of loss or damage to
the goods. Limitations of liability should be regarded with extreme jealousy and must be construed in such
a way as to preclude the insurer from noncompliance with its obligations.[13]

The burden of proof contemplated by the aforesaid provision actually refers to the burden of
evidence (burden of going forward).[14] As applied in this case, it refers to the duty of the insured to show
that the loss or damage is covered by the policy. The foregoing clause notwithstanding, the burden of proof
still rests upon petitioner to prove that the damage or loss was caused by an excepted risk in order to escape
any liability under the contract.

Burden of proof is the duty of any party to present evidence to establish his claim or defense by the
amount of evidence required by law, which is preponderance of evidence in civil cases. The party, whether
plaintiff or defendant, who asserts the affirmative of the issue has the burden of proof to obtain a favorable
judgment. For the plaintiff, the burden of proof never parts.[15] For the defendant, an affirmative defense is
one which is not a denial of an essential ingredient in the plaintiffs cause of action, but one which, if
established, will be a good defense i.e. an avoidance of the claim.[16]

Particularly, in insurance cases, where a risk is excepted by the terms of a policy which insures
against other perils or hazards, loss from such a risk constitutes a defense which the insurer may urge, since
it has not assumed that risk, and from this it follows that an insurer seeking to defeat a claim because of
an exception or limitation in the policy has the burden of proving that the loss comes within the
purview of the exception or limitation set up. If a proof is made of a loss apparently within a contract of
insurance, the burden is upon the insurer to prove that the loss arose from a cause of loss which is excepted
or for which it is not liable, or from a cause which limits its liability.[17]

Consequently, it is sufficient for private respondent to prove the fact of damage or loss. Once
respondent makes out a prima facie case in its favor, the duty or the burden of evidence shifts to petitioner
to controvert respondents prima facie case.[18] In this case, since petitioner alleged an excepted risk, then
the burden of evidence shifted to petitioner to prove such exception. It is only when petitioner has
sufficiently proven that the damage or loss was caused by an excepted risk does the burden of evidence
shift back to respondent who is then under a duty of producing evidence to show why such excepted risk
does not release petitioner from any liability. Unfortunately for petitioner, it failed to discharge its
primordial burden of proving that the damage or loss was caused by an excepted risk.

Petitioner however, insists that the evidence on record established the identity of the author of the
damage. It argues that the trial court and the CA erred in not appreciating the reports of witnesses Lt. Col
Torres and SFO II Rochar that the bystanders they interviewed claimed that the perpetrators were members
of the CPP/NPA as an exception to the hearsay rule as part of res gestae.

A witness can testify only to those facts which he knows of his personal knowledge, which means
those facts which are derived from his perception.[19] A witness may not testify as to what he merely learned
from others either because he was told or read or heard the same. Such testimony is considered hearsay and
may not be received as proof of the truth of what he has learned. The hearsay rule is based upon serious
concerns about the trustworthiness and reliability of hearsay evidence inasmuch as such evidence are not
given under oath or solemn affirmation and, more importantly, have not been subjected to cross-
examination by opposing counsel to test the perception, memory, veracity and articulateness of the out-of-
court declarant or actor upon whose reliability on which the worth of the out-of-court statement depends.[20]

Res gestae, as an exception to the hearsay rule, refers to those exclamations and statements made
by either the participants, victims, or spectators to a crime immediately before, during, or after the
commission of the crime, when the circumstances are such that the statements were made as a spontaneous
reaction or utterance inspired by the excitement of the occasion and there was no opportunity for the
declarant to deliberate and to fabricate a false statement. The rule in res gestae applies when the declarant
himself did not testify and provided that the testimony of the witness who heard the declarant complies with
the following requisites: (1) that the principal act, the res gestae, be a startling occurrence; (2) the statements
were made before the declarant had the time to contrive or devise a falsehood; and (3) that the statements
must concern the occurrence in question and its immediate attending circumstances.[21]

The Court is not convinced to accept the declarations as part of res gestae. While it may concede
that these statements were made by the bystanders during a startling occurrence, it cannot be said however,
that these utterances were made spontaneously by the bystanders and before they had the time to
contrive or devise a falsehood. Both SFO III Rochar and Lt. Col. Torres received the bystanders
statements while they were making their investigations during and after the fire. It is reasonable to assume
that when these statements were noted down, the bystanders already had enough time and opportunity to
mill around, talk to one another and exchange information, not to mention theories and speculations, as is
the usual experience in disquieting situations where hysteria is likely to take place. It cannot therefore be
ascertained whether these utterances were the products of truth. That the utterances may be mere idle talk
is not remote.

At best, the testimonies of SFO III Rochar and Lt. Col. Torres that these statements were made may
be considered as independently relevant statements gathered in the course of their investigation, and are
admissible not as to the veracity thereof but to the fact that they had been thus uttered.[22]

Furthermore, admissibility of evidence should not be equated with its weight and
sufficiency.[23] Admissibility of evidence depends on its relevance and competence, while the weight of
evidence pertains to evidence already admitted and its tendency to convince and persuade. [24] Even
assuming that the declaration of the bystanders that it was the members of the CPP/NPA who caused the
fire may be admitted as evidence, it does not follow that such declarations are sufficient proof.These
declarations should be calibrated vis--vis the other evidence on record. And the trial court aptly noted that
there is a need for additional convincing proof, viz.:

The Court finds the foregoing to be insufficient to establish that the cause of the fire was the intentional
burning of the radio facilities by the rebels or an act of insurrection, rebellion or usurped power. Evidence
that persons who burned the radio facilities shouted Mabuhay ang NPA does not furnish logical conclusion
that they are member [sic] of the NPA or that their act was an act of rebellion or insurrection. Additional
convincing proof need be submitted. Defendants failed to discharge their responsibility to present adequate
proof that the loss was due to a risk excluded.[25]

While the documentary evidence presented by petitioner, i.e., (1) the police blotter; (2) the
certification from the Bacolod Police Station; and (3) the Fire Investigation Report may be considered
exceptions to the hearsay rule, being entries in official records, nevertheless, as noted by the CA, none of
these documents categorically stated that the perpetrators were members of the CPP/NPA.[26] Rather, it was
stated in the police blotter that: a group of persons accompanied by one (1) woman all believed to be
CPP/NPA more or less 20 persons suspected to be CPP/NPA,[27] while the certification from the Bacolod
Police station stated that some 20 or more armed men believed to be members of the New Peoples Army
NPA,[28] and the fire investigation report concluded that (I)t is therefore believed by this Investigating Team
that the cause of the fire is intentional, and the armed men suspected to be members of the CPP/NPA where
(sic) the ones responsible [29] All these documents show that indeed, the suspected executor of the fire were
believed to be members of the CPP/NPA. But suspicion alone is not sufficient, preponderance of evidence
being the quantum of proof.

All told, the Court finds no reason to grant the present petition.

WHEREFORE, the petition is DISMISSED. The Court of Appeals Decision dated November 16,
2000 and Resolution dated January 30, 2001 rendered in CA-G.R. CV No. 56351 are AFFIRMED in toto.

SO ORDERED.
PEOPLE vs. FRANK LOBRIGAS
G.R. No. 147649 December 17, 2002
This is an appeal from the decision[1] of the Regional Trial Court of Bohol, Branch 3, in Criminal Case
No. 9694, convicting accused-appellant Frank Lobrigas of the crime of Murder, sentencing him to suffer
the penalty of reclusion perpetua and ordering him to indemnify the heirs of the victim the amount of
P50,000.00 as actual, exemplary and moral damages.
Frank Lobrigas, Marlito Lobrigas and Teodorico Mante were charged under an information which
reads:[2]

That on or about the 19th day of February, 1996 in the municipality of Loon, province of Bohol, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, conspiring, confederating
and mutually helping one another, with intent to kill and without justifiable cause, with treachery by
attacking the victim without affording the latter an opportunity to defend himself and with abuse or taking
advantage of superior strength, did then and there willfully, unlawfully and feloniously attack, assault and
box one Felix Taylaran who was already 76 years old and could no longer put up an effective defense,
thereby inflicting injuries on the vital parts of the body of the said victim which resulted in his death; to the
damage and prejudice of the heirs of the victim.

Acts committed contrary to the provisions of Article 248 of the Revised Penal Code as amended by Rep.
Act. No. 7659.

Accused-appellant Frank Lobrigas and accused Teodorico Mante were arrested while Marlito
Lobrigas, the brother of accused-appellant, remains at large. Thereafter, accused-appellant escaped while
under detention in the Municipal Jail of Loon INP. Thus, trial proceeded only as against accused Teodorico
Mante. Shortly after the prosecution rested its case, herein accused-appellant was re-arrested.
Upon arraignment on October 10, 1997, accused-appellant duly assisted by counsel, pleaded not
guilty. Thereafter, separate trial was conducted against him.
The antecedent facts, as culled from the records, are as follows:
The victim Felix Taylaran was a regular farmhand of Castor Guden. On February 19, 1996, he asked
for permission not to work for it was raining and he had to go to the store of Teodorico Mante. At 4:00
p.m., Felix returned to Castor Gudens house with bruises on his face and injuries all over his body. He told
Castor that he was mauled by accused-appellant Frank Lobrigas, accused Marlito Lobrigas and Teodorico
Mante at the store. Felix spent the night in Castors house and left the following morning to go to the seaside
house of Lorie Aguilar, his cousin, to heal his wounds in the saltwater. However, the next day, Felix
Taylaran died.
Rosa Taylaran Solarte, daughter of the victim, testified that a day after the mauling, her father came to
her house and told her that he was beaten up by Frank Lobrigas, Marlito Lobrigas and Teodorico Mante. He
told her that he was in pain and felt weak. He then went to the house of Lorie Aguilar apparently to
recuperate.
Dr. Tito Miranda of the Municipal Health unit of Loon, Bohol conducted an autopsy on the body of
the victim and concluded that the immediate cause of death was internal hemorrhage caused by the severe
beating and mauling on the chest portion of the victim’s body.
On the other hand, accused-appellant had a different version of the events. He denied the accusation
and alleged that he was asleep at the time the incident took place. He admitted that he was at the store of
Teodorico Mante having a drinking spree with his companions, Dennis Palma, Mario Granderos, Marlito
Lobrigas and Rufo Creta, Jr. They were later joined by the victim, Felix Taylaran. When Felix had too
much to drink, he became rowdy and drew his knife. This was snatched from him by Mario Granderos and
turned over to Mante, who was a barangay councilman. Mante admonished Felix and accused-appellant
told him to go home. When Felix left, Mante and Marlito Lobrigas followed him. Accused-appellant stayed
behind and lay down on a bench outside the store until he fell asleep. He only learned about the mauling
incident later from Mario Granderos.
Accused-appellant likewise denied that he left his house to evade arrest. He claimed that he did not
know about the charge against him. He did not leave his house for one month after the incident upon his
fathers advice, for he might be investigated by the police. He went to Cebu City on March 10, 1996 to work
at Southern Island Hospital. When he came home months later to attend the fiesta celebration on May 15,
1996, it was then that he came to know of the case filed against him. Then on May 18, 1996, he was arrested
and detained at the Municipal Jail of Loon. Two months and four days later, he left his cell as the door was
opened by a co-prisoner and nobody was guarding them at that time.
After trial, the court a quo rendered judgment, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing, the Court is morally convinced and so finds herein accused
Frank Lobrigas GUILTY beyond reasonable doubt of the crime of MURDER, as charged, qualified by the
circumstance of abuse of superior strength as the victim was an old man of seventy six years of age. Thus,
he is hereby sentenced to suffer imprisonment of Reclusion Perpetua in accordance with Art. 248 of the
Revised Penal Code under which the instant case falls. He is further ordered to indemnify the heirs of the
victim the amount of P50,000.00 as actual, exemplary and moral damages put in one. SO ORDERED.[3]

Hence, this appeal based on the following assigned errors:


I

THE TRIAL COURT GRAVELY ERRED WHEN IT CONVICTED THE ACCUSED ANCHORING
MAINLY ON THE EVIDENCE OF FLIGHT;

II

THE TRIAL COURT ERRED WHEN IT SEEKED (sic) ACCUSED CONVICTION ABSENT OF ANY
EVIDENCE TAGGING THE ACCUSED FRANK LOBRIGAS;

III

THE TRIAL COURT ERRED IN FINDING THE ACCUSED GUILTY WHEN THERE WAS NO
EVIDENCE THAT POINTS THE ACCUSED FIST BLOW THAT PROXIMATELY CAUSED THE
VICTIMS DEATH.
The issue to be resolved is whether the testimonies of the prosecution witnesses and the evidence of
flight are sufficient to establish the guilt of accused-appellant beyond reasonable doubt.
Accused-appellant contends that there was no direct evidence linking him as one of the assailants. He
claims that while there were ante-mortem declarations made by the victim to the two prosecution witnesses
pointing to him as one of the maulers, the trial court, nevertheless, dismissed them as invalid dying
declaration since they were uttered by the victim not under a consciousness of an impending death. Neither
should such declarations be considered as part of res gestae since the victim was drunk and very mad at
Teodorico Mante for confiscating his knife while he was being attacked by his assailants. Lastly, the
evidence of flight is not sufficient to overcome the constitutional presumption of innocence.
On the other hand, the prosecution argues that: (1) the victims declarations naming accused-appellant
as one of the assailants are admissible in evidence as part of the res gestae since they were made
immediately after a startling occurrence; (2) the flight of accused-appellant after the incident and his
subsequent escape from custody were indicative of his guilt; and (3) there was no improper motive on the
part of the prosecution witnesses when they testified against accused-appellant.
In order to warrant a conviction, direct evidence is not always required. Conviction can be had on the
basis of circumstantial evidence if the established circumstances constitute an unbroken chain leading to a
fair and reasonable conclusion proving that the appellant is the author of the crime to the exclusion of all
others.[4] The rules on evidence and jurisprudence sustain the conviction of an accused through
circumstantial evidence when the following requisites concur: (1) there is more than one circumstance; (2)
the inference must be based on proven facts; and (3) the combination of all the circumstances is such as to
produce a conviction beyond reasonable doubt.[5]
The circumstances proved by the prosecution and relied upon by the trial court to convict accused-
appellant clearly satisfied the foregoing requirements. First, the victim, accused appellant and others were
together having a drinking spree on the day the mauling happened. Second, the victim declared to Castor
Guden immediately after the incident that accused-appellant and two others mauled him can be considered
as part of the res gestae. Third, the victim told his daughter immediately after the incident, that accused-
appellant was one of the persons who mauled him. Fourth, Dr. Tito L. Miranda found that the victim died
due to massive hemorrhage in his thoracic cavity caused by severe beating of his breast. Lastly, accused-
appellant evaded arrest and subsequently escaped from detention. The foregoing circumstances knitted
together proved accused-appellants culpability beyond reasonable doubt.
Accused-appellant insists that the statements made by the victim to Castor Guden and Rosa Solarte
cannot be considered dying declarations for they were made not under the consciousness of an impending
death. Neither can they be deemed part of the res gestae because the victim was drunk and mad at Teodorico
Mante for taking away his knife.
We agree in part with accused-appellant. Prosecution witness Castor Guden testified on what the
victim told him after the mauling incident, thus:
FISCAL:
xxxxxxxxx
Q. What time did you arrive at your house coming from your farm that afternoon?
A. 4:00 p.m. more or less.
Q. Upon arrival, what did you see?
A. I saw Felix Taylaran whose face was swollen.
Q. Seeing Felix Taylarans face swollen, what did you ask him?
A. I asked him and he told me that he was beaten by three persons.
Q. Did he mention the names of that three persons?
A. Yes, Teodorico Mante, Frank Lobrigas and Marlito Lobrigas.
xxxxxxxxx
FISCAL:
Q. You mentioned about Frank Lobrigas, Marlito Lobrigas and Teodorico Mante, as the names
given to you by Felix Taylaran, are these the same persons whom you identified a while ago?
A. Yes.
Q. What else did you ask of Felix Taylaran?
A. I asked him what was his offense committed why he was beaten?
Q. What was his answer?
A. He said, I did not know what was the cause but I saw when I passed by the store, they were
drinking and they told me to join them and even bought biscuit and cigarettes.
Q. Did Felix Taylaran tell you how he was mauled?
xxxxxxxxx
A. By boxing and kicking.
Q. What else, if any, you can remember your topic that afternoon?
A. That was all, but I told him to stay because it was getting dark.
The above testimony of Castor Guden was corroborated by Rosa Solarte, the daughter of the victim,
who testified in this wise:
Prosecutor Ligason:
xxxxxxxxx
Q. Now, do you remember having met your father on February 20, 1996?
A. Yes, Sir.
Q. Where did you meet?
A. In our house, he came to me.
xxxxxxxxx
Q. What was the purpose of your father in going to your house on February 20, 1996?
A. He reported to me about his bruises.
Q. What time was that, in the morning or in the afternoon?
A. In the afternoon.
Q. Did you see also bruises in the part of his body?
A. Yes, Sir.
Q. Where?
A. At his face and body.
Q. Did he tell you also who cause the bruises?
A. Yes, Sir.
Q. What did he tell you?
A. Frank Lobrigas, Marlito Lobrigas and Teodorico Mante.
The trial court held that although the foregoing declarations cannot be deemed a dying declaration
since they do not appear to have been made by the declarant under the expectation of a sure and impending
death, the same are nonetheless part of the res gestae. However, only the declaration made to Castor Guden
are admissible in evidence as such.
A declaration is deemed part of the res gestae and admissible in evidence as an exception to the
hearsay rule when the following requisites concur: (1) the principal act, theres gestae, is a startling
occurrence; (2) the statements were made before the declarant had time to contrive or devise; and (3) the
statements must concern the occurrence in question and its immediately attending circumstances. [6] All
these requisites concur in the case at bar. The principal act, the mauling of the victim, was a startling
occurrence. The declarations were made shortly after the mauling incident while the victim was still under
the exciting influence of the startling occurrence, without any prior opportunity to contrive a story
implicating accused-appellant. The declaration concerns the circumstances surrounding the mauling of
Felix Taylaran. However, the declaration made by the victim to his daughter does not satisfy the second
requirement of spontaneity because they were made a day after the incident and the exciting influence of
the startling occurrence was no longer present. Nevertheless, we hold that Rosa Solartes testimony on what
her father told her constitutes independent relevant statements distinct from hearsay, and are thus admissible
not as to the veracity thereof, but as proof of the fact that they had been uttered.
Under the doctrine of independently relevant statements, only the fact that such statements were made
is relevant, and the truth or falsity thereof is immaterial. The hearsay rule does not apply, hence, the
statements are admissible as evidence. Evidence as to the making of such statement is not secondary but
primary, for the statement itself may constitute a fact in issue or be circumstantially relevant as to the
existence of such a fact.[7]
Finally, accused-appellants argument that the trial courts reliance solely on the evidence of flight
cannot overcome the constitutional presumption of innocence is not well-taken. In criminal law, flight
means an act of evading the course of justice by voluntarily withdrawing oneself to avoid arrest or detention
or the institution or continuance of criminal proceedings. The unexplained flight of the accused person may,
as a general rule, be taken as evidence having tendency to establish his guilt.[8]
In the case at bar, not only did accused-appellant evade arrest when he went to Cebu under the pretext
that he was going to work at Southern Island Hospital, but justice was further frustrated when he escaped
from detention with the flimsy excuse that no one was guarding them. These two instances of flight by
accused-appellant, taken together with the other circumstances established by the prosecution, support the
trial courts finding of accused-appellants guilt beyond reasonable doubt. Courts go by the biblical truism
that the wicked flee when no man pursueth but the righteous are as bold as a lion.[9]
However, we do not agree with the trial court that the crime committed was murder qualified by the
aggravating circumstance of abuse of superior strength. To appreciate abuse of superior strength, there must
be a deliberate intent on the part of the malefactors to take advantage of their greater number. They must
have notoriously selected and made use of superior strength in the commission of the crime. To take
advantage of superior strength is to use excessive force that is out of proportion to the means for self-
defense available to the person attacked; thus, the prosecution must clearly show the offenders deliberate
intent to do so.[10]
There was no clear indication in this case that the accused-appellant and his companions purposely
used their joint efforts to consummate the crime. Consequently, the crime committed by accused-appellant
was only homicide.
The penalty for homicide is reclusion temporal. There being no aggravating or mitigating
circumstance, the same shall be imposed in its medium period from fourteen (14) years, eight (8) months
and one (1) day to seventeen (17) years and four (4) months. Applying the Indeterminate Sentence Law,
accused-appellant shall be entitled to a minimum term to be taken from the penalty next lower, prision
mayor from six (6) years and one (1) day to twelve (12) years.[11]
The trial court awarded P50,000.00 as cumulated actual, exemplary and moral damages. We cannot
award actual damages considering that the expenses which the heirs allegedly incurred were not
substantiated by evidence other than the sole testimony of the Rosa Solarte. The award of actual damages
cannot rest on the bare allegation of the heirs of the victim. Failure to substantiate such claim negates the
award for actual damage.[12] The award of exemplary damages must likewise be deleted considering the
absence of any aggravating circumstance. Thus, the heirs of Felix Taylaran are only entitled to P50,000.00
as moral damages, which needs no proof other than the fact of death of the victim.[13]
WHEREFORE, in view of all the foregoing, the decision of the Regional Trial Court of Bohol,
Branch 3, in Criminal Case No. 9694, is MODIFIED. Accused-appellant Frank Lobrigas is found GUILTY
beyond reasonable doubt of Homicide for the death of Felix Taylaran and is sentenced to suffer the
indeterminate penalty of eight (8) years and one (1) day of prision mayor, as minimum, to fourteen (14)
years, eight (8) months and one (1) day of reclusion temporal, as maximum. Accused-appellant is
ORDERED to pay the heirs of the victim moral damages in the amount of P50,000.00 and to pay the
cost. The awards of actual and exemplary damages are DELETED for lack of factual and legal basis.
SO ORDERED.
G.R. No. 146161 July 17, 2006
PEPITO CAPILA vs. THE PEOPLE OF THE PHILIPPINES
For our resolution is the Petition for Review on Certiorari of the Decision1 dated November 10, 2000 of the
Court of Appeals in CA-G.R. CR No. 18903, entitled "The People of the Philippines v. Pepito Capila y
Yruma."

On August 24, 1993, an Information for robbery was filed with the Regional Trial Court, Branch 148,
Makati City, against Pepito Capila y Yruma, herein petitioner, his brother Bonifacio Capila y Yruma,
Deogenio Caparoso y Porfero, and Dimas dela Cruz y Lorena.

The Information, docketed as Criminal Case No. 93-7117, is quoted as follows:

That on or about the 9th day of August 1993, in the Municipality of Makati, Metro Manila, Philippines and
within the jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating
together with alias Jose and alias Gil, whose true identities and present whereabouts are still unknown and
all of them mutually helping and aiding one another, with intent to gain and by means of force, violence
and intimidation, did then and there willfully, unlawfully and feloniously take, steal and carry away cash
money amounting to P1.3 million and three (3) caliber paltik firearms in the total amount of P18,000.00,
belonging to Pilipinas Bank represented by Juan Iglesia y Orgil and Lanting Security Agency represented
by Edgar Lucero y Iribayen, respectively, to the damage and prejudice of the complainants in the
aforementioned amount of P1.3 million and P18,000.00, respectively.

Upon being arraigned, all the accused, assisted by counsel, pleaded not guilty. Trial commenced thereafter.
The evidence for the prosecution, as culled from the testimonies of Edgardo Irigayen, Ariel Arellano, SPO2
Dioscorro Asinas, Jr., and SPO4 Romualdo Maximo, is summarized as follows:2

Petitioner Pepito Capila was a security guard of the Lanting Security and Watchman Agency assigned in
the Meralco Collection Office on J.P. Rizal Street, Makati City.

On May 9, 1992, Ariel Arellano and Lani Imperio, both employees of the Pilipinas Bank, Libertad Branch
in Pasay City, went to the Meralco Collection Office to receive and deposit cash collections from Meralco's
27 collectors. The total collection for that day amounted to P1,292,991.12. They then placed the money
inside a duffle bag table and had it padlocked. Then they waited for the Pilipinas Bank's armored car to
arrive. The security guard posted at the Meralco Collection Office at the time was Dimas dela Cruz, also
from the Lanting Security and Watchman Agency.

Before the armored car could arrive, two armed men suddenly entered the Meralco Collection Office. They
hit Dimas on the nape with a handgun. Then they ordered Ariel and Lani to lie on the floor face down and
immediately took the duffle bag containing Meralco's cash collections. They also seized three .38 caliber
revolvers, valued atP6,000.00 each, owned by the Lanting Security and Watchman Agency, including the
service handgun issued to Dimas.

After the malefactors fled, Dimas told Ariel that petitioner was one of those who robbed the office. Then
Dimas called the Makati Police Sub-Station 9, the Meralco Security Division, and the Lanting Security and
Watchman Agency to report the incident. The Makati Police dispatched SPO4 Romualdo Maximo to
investigate the robbery, while the Lanting Security and Watchman Agency instructed its intelligence
officer, Edgardo Irigayen, to talk to the guard on duty.

SPO4 Maximo, accompanied by a police photographer, a fingerprint technician, and another policeman,
arrived within ten minutes at the Meralco Collection Office. He questioned Ariel and Lani, but they could
not identify the robbers as they were lying face down on the floor. Upon inquiry by SPO4 Maximo, Dimas
told him that one of the robbers is petitioner, also a security guard of the Lanting Security and Watchman
Agency assigned in the Meralco Collection Office. Thereafter, SPO4 Maximo invited Dimas, Lani and
Ariel to the police station for the purpose of taking their sworn statements.

Irigayen, the intelligence officer of the Lanting Security and Watchman Agency, also questioned Dimas.
The latter reported that Pepito Capila is one of the robbers.

After the incident, petitioner fled to his hometown in Palapag, Northern Samar. The Lanting Security and
Watchman Agency then requested SPO4 Maximo and his team to go to Northern Samar to apprehend
Capila.

In Northern Samar, the police operatives, with the assistance of the Citizens Armed Forces Geographical
Unit, arrested petitioner, his brother Bonifacio Capila, and Deogenio Caparoso. The police found P5,000.00
in possession of petitioner allegedly part of the loot. All the suspects were arrested without warrants.

SPO4 Maximo interrogated petitioner who admitted that he participated in the commission of the crime;
that his share of the loot is P45,000.00; and that Dimas is the mastermind.

After the prosecution had rested its case, all the accused, through counsel, filed a Demurrer to Evidence but
it was denied by the trial court.
When the case was called for the continuation of the hearing on November 15, 1994, the accused waived
their right to present their evidence, opting to submit their respective memoranda instead.

On January 3, 1995, the trial court rendered its Decision acquitting all the accused, except petitioner, thus:

WHEREFORE, premises considered:

1. And finding that the prosecution failed to prove the guilt of accused Bonifacio Capila, Deogenes
Caparoso, and Dimas dela Cruz beyond reasonable doubt, they are hereby acquitted.
2. And finding Pepito Capila guilty beyond reasonable doubt of the crime of Robbery defined under Article
293 and penalized under Article 294 par. 5 of the Revised Penal Code, with the presence of the aggravating
circumstance of abuse of confidence, use of a firearm, and betrayal of trust, he is hereby sentenced to an
indeterminate prision term of from EIGHT (8) years as minimum to TEN (10) years as maximum.

Pepito Capila is also ordered to pay:

1. Lanting Security Agency the sum of P18,000 for the value of the three firearms not recovered and
belonging to said agency;
2. The sum of P1,292,991.12 to Pilipinas Bank, the amount taken and not recovered. With costs against
accused Pepito Capila.
In his appeal to the Court of Appeals, petitioner alleged that the trial court erred in admitting in evidence
the statement of Dimas that he (petitioner) is one of the robbers. He was denied due process because he was
not able to cross-examine Dimas as the latter did not testify.
On November 10, 2000, the Court of Appeals promulgated its Decision affirming the assailed judgment of
the trial court, thus:
WHEREFORE, premises considered, the appealed decision (dated January 3, 1995) of the Regional Trial
Court (Branch 148) in Makati, Metro Manila in Criminal Case No. 93-7217 is hereby AFFIRMED with
costs against the accused-appellant. SO ORDERED.

Hence, the instant petition for Review on Certiorari.

The fundamental issue for our resolution is whether the prosecution was able to prove the guilt of herein
petitioner beyond reasonable doubt.

A careful scrutiny of the records shows that the prosecution relied heavily on the testimony of SPO4
Maximo that immediately after the incident, Dimas reported to him that one of the robbers is petitioner.
The Court of Appeals, in affirming the court a quo's judgment convicting petitioner, ruled that Dimas'
statement is part of the res gestae.

In the appellee's brief, the Solicitor General reiterated the appellate court's ruling.

Res gestae is a Latin phrase which literally means "things done." As an exception to the hearsay rule, it
refers to those exclamations and statements by either the participants, victims, or spectators to a crime
immediately before, during or immediately after the commission of the crime, when the circumstances are
such that the statements were made as spontaneous reactions or utterances inspired by the excitement of the
occasion, and there was no opportunity for the declarant to deliberate and fabricate a false statement.3 The
reason for the rule is human experience. It has been shown that under certain external circumstances of
physical or mental shock, the state of nervous excitement which occurs in a spectator may produce a
spontaneous and sincere response to the actual sensations and perceptions produced by the external shock.
As the statements or utterances are made under the immediate and uncontrolled domination of the senses,
rather than reason and reflection, such statements or utterances may be taken as expressing the real belief
of the speaker as to the facts he just observed. The spontaneity of the declaration is such that the declaration
itself may be regarded as the event speaking through the declarant rather than the declarant speaking for
himself.4

The rule on res gestae is provided under Section 42, Rule 130 of the Revised Rules of Court, thus:

SEC. 42. Part of the res gestae. – Statements made by a person while a startling occurrence is
taking place or immediately prior or subsequent thereto with respect to the circumstances thereof,
may be given in evidence as part of the res gestae. So, also statements accompanying an equivocal
act material to the issue, and giving it a legal significance, may be received as part of the res gestae.

For the admission of the res gestae in evidence, the following requisites must be met: (1) that the principal
act or the res gestae be a startling occurrence; (2) the statement is spontaneous or was made before the
declarant had time to contrive or devise, and the statement is made during the occurrence or immediately
or subsequent thereto; and (3) the statement made must concern the occurrence in question and its
immediately attending circumstances.5

The Court of Appeals found that all the above requisites are present, thus:

First. The principal act is a startling occurrence which is the robbery in question.

Second. Dimas Dela Cruz informed the investigating officers that it was appellant who robbed the Meralco
office immediately after the incident occurred and before he had the time to contrive a story.

The robbery happened at around eight o'clock in the evening of August 9, 1993 (p. 4, TSN, February 24,
1994). Immediately after the incident, dela Cruz called up the police station (p. 17, TSN, January 31, 1994).
In ten minutes, SPO4 Maximo and his companion were in the Meralco office where they immediately
conducted an investigation (pp. 3-9, TSN, February 24, 1994). During this investigation, DELA Cruz
pointed to appellant as one of the perpetrators of the crime.

Further, immediately after the robbers fled, dela Cruz informed Ariel Arellano (the bank representative
detailed at the Meralco office) that appellant was one of those who robbed the office (pp. 15-17, TSN,
January 31, 1994).

In other words, statement of dela Cruz was spontaneous as correctly observed by the trial court.

Third. The statement of dela Cruz refers to the robbery or incident subject matter of this case.

We are in accord with the Court of Appeals in its conclusion that all the requisites of the rule on Res
gestae are present. The principal act, which by any measure is undoubtedly a startling occurrence, is the
robbery of which petitioner is being charged. Immediately after the robbery, Dimas dela Cruz, the security
guard then on duty, informed Ariel that one of the perpetrators is herein petitioner. Dimas likewise reported
at once the incident to the police and to the security agency. When questioned by SPO4 Maximo, Dimas,
who was still shocked, named petitioner herein as one of the robbers. His statements to Ariel and SPO4
Maximo were made before he had the time and opportunity to concoct and contrive a false story. We note
that Dimas personally knows petitioner considering that both worked in the same security agency and
assigned in the same office.
Petitioner contends that since Dimas dela Cruz did not take the witness stand, he (petitioner) was deprived
of his right to cross-examine him. Thus, the Court of Appeals should not have considered Dimas' statement
as part of the Res gestae. Our ruling in Ilocos Norte Electric Company v. Court of Appeals6 is relevant.

In this case, it appears that in the evening of June 28 until the early morning of June 29, 1967, a strong
typhoon (Gening) occurred in Ilocos Norte, bringing heavy rains and consequent flooding. While one Isabel
Lao Juan was wading in waist-deep flood along Guerrero Street, Laoag City, suddenly she screamed, "Ay"
and quickly sank into the water. Her two companions, Aida Bulong and Linda Estavillo, shouted for help.
Ernesto dela Cruz arrived and tried to approach Isabel who was electrocuted. But at four meters away from
her, Ernesto turned back shouting, "the water is grounded." This Court ruled that the Court of Appeals
properly applied the principle of Res gestae. The testimonies of Aida and Linda that Ernesto dela Cruz tried
to approach the victim, but he turned back and shouted, "the water is grounded," are not hearsay although
he (Ernesto) was not presented as a witness. His declaration is part of the Res gestae.

Applying the above ruling on the instant case, we cannot consider the testimony of SPO4 Maximo as
hearsay since the statement of Dimas that petitioner is one of the robbers is part of the Res gestae.

Moreover, despite the damaging testimonies of the witnesses for the prosecution, petitioner did not testify
to rebut them. Such posture is admission in silence.

Section 32, Rule 130 of the New Rules on Evidence provides:

Sec. 32. Admission by silence. – An act or declaration made in the presence and within the hearing
or observation of a party who does or says nothing when the act or declaration is such as naturally
to call for action or comment if not true, and when proper and possible for him to do so, may be
given in evidence against him.

Another factor that militates against petitioner's innocence is his flight to Samar after the commission of
the crime. Obviously, such flight is an indication of guilt.

Verily, we hold that the prosecution, by its evidence, has established the guilt of petitioner beyond
reasonable doubt.

WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals in CA-G.R. CR
No. 18903 finding petitioner PEPITO CAPILA y YRUMA guilty beyond reasonable doubt of the crime
of robbery is AFFIRMED.

With costs de oficio.

SO ORDERED.

G.R. No. 214453 June 17, 2015


PEOPLE OF THE PHILIPPINES vs. BERNABE P. PALANAS alias "ABE”

Before the Court is an ordinary appeal1 filed by accused-appellant Bernabe P. Palanas alias "Abe" (Palanas)
assailing the Decision2 dated January 16, 2014 of the Court of Appeals (CA) in CA-G.R. CR HC No. 04925,
which affirmed the Decision3 dated October 20, 2010, of the Regional Trial Court of Pasig City, Branch
157 (RTC) in Criminal Case No. 133352-H finding Palanas guilty beyond reasonable doubt of the crime of
Murder under the Revised Penal Code (RPC).
The Facts

An Information4 was filed before the R TC charging Palanas of the murder ofSP02 Ramon Borrey Orio
(SP02 Borre), viz.:

On or about March 26, 2006, in Pasig City, and within the jurisdiction of this Honorable Court, the accused
[Palanas], acting in conspiracy with one male person who is at-large, whose true identity and where about[s]
are still unknown acted as co-principal in the killing of one SPO2 Ramon Borre y Orio, committed as
follows: said male person, armed with a gun, with intent to kill and with the qualifying circumstances of
treachery and evident premeditation, did then and there willfully, unlawfully and feloniously attack, assault,
and shot one SPO2 Ramon Borre yOrio on his head and different parts of his body which directly caused
his death, and thereafter, took the firearm of the said victim, boarded a motorcycle driven by the accused
who thereafter, drove the motorcycle away from the scene of the crime.

Contrary to Law.5

The prosecution presents the following version of the facts:

At around 6:40 in the morning of March 26, 2006, SPO2 Borre took his five (5)-month-old grandson outside
his residence at Block 14, Kenneth Street corner Eusebio Avenue, Pasig City. PO3 Leopoldo Zapanta (PO3
Zapanta), who slept at SPO2 Borre’s residence, was watching television when four (4) successive gunshots
rang out. PO3 Zapanta looked through the open door of SPO2 Borre’s house and saw two (2) men armed
with .38 caliber revolvers standing a meter away from SPO2 Borre. He saw Palanas deliver the fourth shot
to SPO2 Borre, but he could not identify the other shooter. Thereafter, the two (2) assailants fled on a
motorcycle.6 PO3 Zapanta, together with SPO2 Borre’s stepson Ramil Ranola (Ramil), brought SPO2
Borre to the Pasig City General Hospital. On the way to the hospital, SPO2 Borre told Ramil and PO3
Zapanta that it was "Abe," "Aspog," or "Abe Palanas" – referring to his neighbor, Palanas – who shot him.
This statement was repeated to his wife, Resurreccion Borre (Resurreccion), who followed him at the
hospital. At around 11 o’clock in the morning of even date, SPO2 Borre died due to gunshot wounds on his
head and trunk.7

For his part, Palanas interposed the defense of denial and alibi. He claimed that on March 25, 2006 he was
in Parañaque City attending to the needs of his sick father. The next day, he went to a baptism in Tondo,
Manila and stayed there from morning until 9 o’clock in the evening, after which he returned to his father
in Parañaque City. He maintained that he was not aware of the death of SPO2 Borre until he was informed
by a neighbor that Resurreccion was accusing him of killing her husband. He also denied any knowledge
why Resurreccion would blame him for SPO2 Borre’s death.8

The RTC Ruling

In a Decision9 dated October 20, 2010, the RTC convicted Palanas of the crime of Murder and sentenced
him to suffer the penalty of reclusion perpetua, and ordered him to pay the heirs of SPO2 Borre the amounts
of: (a)P50,000.00 as civil indemnity; (b) P25,000.00 as exemplary damages; (c) P50,000.00 as moral
damages; and (d)P2,464,865.0710 as actual damages.11

The RTC found that the prosecution had established beyond reasonable doubt that Palanas and his
companion were the ones who killed SPO2 Borre through the positive identification of the eyewitnesses to
the incident. Moreover, SPO2 Borre’s statements that Palanas shot him constituted an ante mortem
statement and formed part of the res gestae, and, thus, admissible as evidence against Palanas. It further
opined that treachery attended SPO2 Borre’s killing as he had no inkling that the attack would take place,
and that he was in no position to mount any feasible defense.12 The RTC, however, did not appreciate
evident premeditation because of the absence of the following elements: (a) the time when the offender
determined to commit the crime; (b) an act manifestly indicating that the accused clung to his determination;
and (c) a sufficient lapse of time between determination and execution to allow himself time to reflect upon
the consequences of his act.13

On the other hand, the RTC gave no credence to Palanas’s defense of alibi. It observed that it was not
physically impossible for Palanas to be at the locus criminis as his own witness even stated that the distance
between Pasig City and Parañaque City could be traversed in less than one (1) hour.14

Dissatisfied, Palanas appealed his conviction to the CA.15

The CA Ruling

In a Decision16 dated January 16, 2014, the CA affirmed the RTC’s ruling with modification increasing the
amounts awarded to the heirs of SPO2 Borre to P75,000.00 as civil indemnity, and P30,000.00 as
exemplary damages.

The CA found all the elements of the crime of Murder to be present, giving probative weight to the dying
declaration of SPO2 Borre that it was Palanas who shot him. It also found the presence of treachery as
SPO2 Borre was in no position to defend himself when he was successively shot.17

Aggrieved, Palanas filed the instant appeal.18

The Issue Before the Court

The issue for the Court’s resolution is whether or not Palanas’s conviction for the crime of Murder should
be upheld.

The Court's Ruling

The appeal is bereft of merit.

Murder is defined and penalized under Article 248 of the RPC, as amended by Republic Act No. (RA)
7659,19 as follows:

Art. 248. Murder. — Any person who, not falling within the provisions of Article 246, shall kill another,
shall be guilty of murder and shall be punished by reclusion perpetua to death if committed with any of the
following attendant circumstances:

1. With treachery, taking advantage of superior strength, with the aid of armed men, or employing means
to weaken the defense, or of means or persons to insure or afford impunity.

xxxx

Treachery is a well-established concept in criminal law. "There is treachery when the offender commits any
of the crimes against a person, employing means, methods or forms in the execution thereof which tend
directly and specially to insure its execution, without risk to himself arising from the defense which the
offended party might make."20 There are two (2) conditions therefore that must be met for treachery to be
appreciated: (a) the employment of means of execution that gives the person attacked no opportunity to
defend himself or to retaliate; and (b) the means of execution was deliberately or consciously adopted.21

The essence of treachery is that the attack comes without warning in a swift, deliberate, and unexpected
manner, granting the victim no chance to resist or escape.1avvphi1 The attack must be sudden and
unexpected rendering the victim unable and unprepared to put up a defense.22 With the foregoing in mind,
the Court agrees with the findings of the RTC and the CA that Palanas killed SPO2 Borre, and that the
qualifying circumstance of treachery attended the same. The records show that SPO2 Borre was outside
carrying his grandson when two (2) assailants shot him. During the attack, SPO2 Borre had no opportunity
to raise any meaningful defense against his assailants; and consequently, he suffered multiple gunshot
wounds on his head and trunk, causing his death.23

The CA is also correct in admitting SPO2 Borre’s statements on his way to the hospital as evidence, both
as a dying declaration and as part of the res gestae.

For a dying declaration24 to constitute an exception to the hearsay evidence rule,25 four (4) conditions must
concur: (a) the declaration must concern the cause and surrounding circumstances of the declarant’s death;
(b) that at the time the declaration was made, the declarant is conscious of his impending death; (c) the
declarant was competent as a witness; and (d) the declaration is offered in a criminal case for Homicide,
Murder, or Parricide where the declarant is the victim.26 On the other hand, a statement to be deemed to
form part of the res gestae,27and thus, constitute another exception to the rule on hearsay evidence, requires
the concurrence of the following requisites: (a) the principal act, the res gestae, is a startling occurrence;
(b) the statements were made before the declarant had time to contrive or devise; and (c) the statements
must concern the occurrence in question and its immediately attending circumstances.28

In the case at bar, SPO2 Borre’s statements constitute a dying declaration, given that they pertained to the
cause and circumstances of his death and taking into consideration the number and severity of his wounds,
it may be reasonably presumed that he uttered the same under a fixed belief that his own death was already
imminent.29This declaration is considered evidence of the highest order and is entitled to utmost credence
since no person aware of his impending death would make a careless and false accusation.30 Verily, because
the declaration was made in extremity, when the party is at the point of death and when every motive of
falsehood is silenced and the mind is induced by the most powerful considerations to speak the truth, the
law deems this as a situation so solemn and awful as creating an obligation equal to that which is imposed
by an oath administered in court.31

In the same vein, SPO2 Borre’s statements may likewise be deemed to form part of the res gestae. "Res
gestae refers to the circumstances, facts, and declarations that grow out of the main fact and serve to
illustrate its character and are so spontaneous and contemporaneous with the main fact as to exclude the
idea of deliberation and fabrication. The test of admissibility of evidence as a part of the res gestae is,
therefore, whether the act, declaration, or exclamation is so intimately interwoven or connected with the
principal fact or event that it characterizes as to be regarded as a part of the transaction itself, and also
whether it clearly negates any premeditation or purpose to manufacture testimony."32 In this case, SPO2
Borre’s statements refer to a startling occurrence, i.e., him being shot by Palanas and his companion. While
on his way to the hospital, SPO2 Borre had no time to contrive the identification of his assailants. Hence,
his utterance was made in spontaneity and only in reaction to the startling occurrence. Definitely, such
statement is relevant because it identified Palanas as one of the authors of the crime. Therefore, the killing
of SPO2 Borre, perpetrated by Palanas, is adequately proven by the prosecution.33

On the other hand, the Court does not find credence in Palanas’s defense of alibi. It is axiomatic that alibi
is an inherently weak defense,34 and may only be considered if the following circumstances are shown: (a)
he was somewhere else when the crime occurred; and (b) it would be physically impossible for him to be
at the locus criminis at the time of the alleged crime.35 In this case, the RTC correctly observed that aside
from the admission that travel from Parañaque Cityto Pasig City only takes about one (1) hour, the incident
occurred on a Sunday when traffic is not usually heavy. Moreover, Palanas had access to a motorcycle that
allowed him to travel faster on the date and time of the incident.36 Under the circumstances, there is the
possibility that Palanas could have been present at the locus criminis at the time of the shooting.
Accordingly, his defense of alibi must fall.

Anent the proper penalty to be imposed upon Palanas, Section 3 of RA 934637 provides that "[p]ersons
convicted of offenses punished with reclusion perpetua, or whose sentences will be reduced to reclusion
perpetua, by reason of this Act, shall not be eligible for parole under Act No. 4103, otherwise known as the
Indeterminate Sentence Law, as amended." Pursuant thereto, Palanas should be sentenced to suffer the
penalty of reclusion perpetua, without eligibility for parole.38

Finally, to conform with prevailing jurisprudence, the Court increases the amounts of damages awarded to
the heirs of SPO2 Borre, as follows: (a) P75,000.00 as civil indemnity; (b) P75,000.00 as moral damages;
and (c)P30,000.00 as exemplary damages,39 all with interest at the rate of six percent (6%) per annum from
the date of finality of judgment until the same are fully paid.40

WHEREFORE, the appeal is DENIED. The Decision dated January 16, 2014 of the Court of Appeals in
CA-G.R. CR HC No. 04925 finding accused-appellant Bernabe P. Palanas alias "Abe", GUILTY beyond
reasonable doubt of the crime of Murder as defined and punished under Article 248 of the Revised Penal
Code is hereby AFFIRMED WITH MODIFICATION, in that he is sentenced to suffer the penalty of
reclusion perpetua without eligibility for parole, and ordered to pay the heirs of SPO2 P2,464,865.07 as
actual damages, all with legal interest at the rate of six percent (6%) per annum from the finality of judgment
until full payment.

SO ORDERED.
TALIDANO vs. FALCON MARITIME & ALLIED SERVICES
G.R. No. 172031 July 14, 2008

This Petition for Certiorari[1] under Rule 65 of the Rules of Court seeks to annul the Decision[2] and
Resolution[3] of the Court of Appeals, dated 16 November 2005 and 2 February 2006, respectively, which
upheld the validity of the dismissal of Juanito Talidano (petitioner). The challenged decision reversed and
set aside the Decision[4] of the National Labor Relations Commission (NLRC) and reinstated that of the
Labor Arbiter.[5]

Petitioner was employed as a second marine officer by Falcon Maritime and Allied Services, Inc.
(private respondent) and was assigned to M/V Phoenix Seven, a vessel owned and operated by Hansu
Corporation (Hansu) which is based in Korea. His one (1)-year contract of employment commenced on 15
October 1996 and stipulated the monthly wage at $900.00 with a fixed overtime pay of $270.00 and leave
pay of $75.00.[6]

Petitioner claimed that his chief officer, a Korean, always discriminated against and maltreated the
vessels Filipino crew. This prompted him to send a letter-complaint to the officer-in-charge of the
International Transport Federation (ITF) in London, a measure that allegedly was resented by the chief
officer. Consequently, petitioner was dismissed on 21 January 1997. He filed a complaint for illegal
dismissal on 27 October 1999.[7]

Private respondent countered that petitioner had voluntarily disembarked the vessel after having
been warned several times of dismissal from service for his incompetence, insubordination, disrespect and
insulting attitude toward his superiors. It cited an incident involving petitioners incompetence wherein the
vessel invaded a different route at the Osaka Port in Japan due to the absence of petitioner who was then
supposed to be on watch duty. As proof, it presented a copy of a fax message, sent to it on the date of
incident, reporting the vessels deviation from its course due to petitioners neglect of duty at the bridge, [8] as
well as a copy of the report of crew discharge issued by the master of M/V Phoenix Seven two days after
the incident.[9]

Private respondent stated that since petitioner lodged the complaint before the Labor Arbiter two
(2) years and nine (9) months after his repatriation, prescription had already set in by virtue of Revised
POEA Memorandum Circular No. 55, series of 1996 which provides for a one-year prescriptive period for
the institution of seafarers claims arising from employment contract.[10]
On 5 November 2001, the Labor Arbiter rendered judgment dismissing petitioners complaint,
holding that he was validly dismissed for gross neglect of duties. The Labor Arbiter relied on the fax
messages presented by private respondent to prove petitioners neglect of his duties, thus:

x x x The fax message said that the Master of M/V Phoenix Seven received an emergency warning
call from Japan Sisan Sebo Naika Radio Authority calling attention to the Master of the vessel M/V Phoenix
Seven that his vessel is invading other route [sic]. When the Master checked the Bridge, he found out that
the Second Officer (complainant) did not carry out his duty watch. There was a confrontation between the
Master and the Complainant but the latter insisted that he was right. The argument of the Complainant
asserting that he was right cannot be sustained by this Arbitration Branch. The fact that there was an
emergency call from the Japanese port authority that M/V Phoenix Seven was invading other route simply
means that Complainant neglected his duty. The fax message stating that Complainant was not at the bridge
at the time of the emergency call was likewise not denied nor refuted by the Complainant. Under our
jurisprudence, any material allegation and/or document which is not denied specifically is deemed
admitted. If not of the timely call [sic] from the port authority that M/V Phoenix Seven invaded other route,
the safety of the vessel, her crew and cargo may be endangered. She could have collided with other vessels
because of complainants failure to render watch duty.[11]

On appeal, the NLRC reversed the ruling of the Labor Arbiter and declared the dismissal as illegal. The
dispositive portion of the NLRCs decision reads:

WHEREFORE, premises considered, the decision appealed from is hereby reversed and set aside
and a new one entered declaring the dismissal of the complainant as illegal. Respondents Falcon Maritime
& Allied Services, Inc. and Hansu Corporation are hereby ordered to jointly and severally pay complainant
the amount equivalent to his three (3) months salary as a result thereof.[12]

The NLRC held that the fax messages in support of the alleged misbehavior and neglect of duty by petitioner
have no probative value and are self-serving. It added that the ships logbook should have been submitted
in evidence as it is the repository of all the activities on board the vessel, especially those affecting the
performance or attitude of the officers and crew members, and, more importantly, the procedures
preparatory to the discharge of a crew member. The NLRC also noted that private respondent failed to
comply with due process in terminating petitioners employment.[13]

Private respondent moved for reconsideration,[14] claiming that the complaint was filed beyond the one-year
prescriptive period. The NLRC, however, denied reconsideration in a Resolution dated 30 August
2002.[15] Rejecting the argument that the complaint had already prescribed, it ruled:

Records show that respondent in this case had filed a motion to dismiss on the ground of
prescription before the Labor Arbiter a quo who denied the same in an Order datedAugust 1, 2000. Such
an Order being unappealable, the said issue of prescription cannot be raised anew specially in a motion for
reconsideration. (Citations omitted)[16]
It appears that respondent received a copy of the NLRC Resolution[17] on 24 September 2002 and that said
resolution became final and executory on 7 October 2002.[18]

Private respondent brought the case to the Court of Appeals via a Petition for Certiorari [19] on 8
October 2002. The petition, docketed as CA-G.R. Sp. No. 73521, was dismissed on technicality in a
Resolution dated 29 October 2002. The pertinent portion of the resolution reads:

(1) [T]he VERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING was


signed by one Florida Z. Jose, President of petitioner Falcon Maritime and Allied Services, Inc.,
without proof that she is the duly authorized representative of petitioner-corporation;
(2) [T]here is no affidavit of service of the petition to the National Labor Relations
Commission and to the adverse party;
(3) [T]here is no explanation to justify service by mail in lieu of the required personal
service. (Citations omitted)[20]

An entry of judgment was issued by the clerk of court on 23 November 2002 stating that the 29
October 2002 Resolution had already become final and executory.[21] Meanwhile, on 12 November 2002,
private respondent filed another petition before the Court of Appeals, [22] docketed as CA G.R. SP No.
73790. This is the subject of the present petition.

Petitioner dispensed with the filing of a comment.[23] In his Memorandum,[24] however, he argued
that an entry of judgment having been issued in CA-G.R. SP No. 73521, the filing of the second petition
hinging on the same cause of action after the first petition had been dismissed violates not only the rule on
forum shopping but also the principle of res judicata. He highlighted the fact that the decision subject of
the second petition before the Court of Appeals had twice become final and executory, with entries of
judgment made first by the NLRC and then by the Court of Appeals.

The appellate court ultimately settled the issue of prescription, categorically declaring that the one-
year prescriptive period applies only to employment contracts entered into as of 1 January 1997 and not
those entered prior thereto, thus:

x x x The question of prescription is untenable. Admittedly, POEA Memorandum Circular [No.]


55 prescribing the standard terms of an employment contract of a seafarer was in effect when the respondent
was repatriated on January 21, 1997. This administrative issuance was released in accordance with
Department Order [No.] 33 of the Secretary of Labor directing the revision of the existing Standard
Employment Contract to be effective by January 1, 1997. Section 28 of this revised contract states: all
claims arising therefrom shall be made within one year from the date of the seafarers return to the point of
hire.

It is crystal clear that the one-year period of prescription of claims in the revised standard contract applies
only to employment contracts entered into as of January 1, 1997.If there is still any doubt about this, it
should be removed by the provision of Circular [No.] 55 which says that the new schedule of benefits to be
embodied in the standard contract will apply to any Filipino seafarer that will be deployed on or after the
effectivity of the circular.

The respondent was deployed before January 1, 1997. As acknowledged by the petitioners, the rule
prior to Circular [No.] 55 provided for a prescriptive period of three years. We cannot avoid the ineluctable
conclusion that the claim of the respondent was filed within the prescriptive period.[25]

Despite ruling that prescription had not set in, the appellate court nonetheless declared petitioners
dismissal from employment as valid and reinstated the Labor Arbiters decision.

The appellate court relied on the fax messages issued by the ship master shortly after petitioner had
committed a serious neglect of his duties. It noted that the said fax messages constitute the res gestae. In
defending the non-presentation of the logbook, it stated that three years had already passed since the
incident and Hansu was no longer the principal of private respondent.

Petitioners motion for reconsideration was denied. Hence he filed this instant petition.

Citing grave abuse of discretion on the part of the Court of Appeals, petitioner reiterates his
argument that the appellate court should not have accepted the second petition in view of the fact that a
corresponding entry of judgment already has been issued. By filing the second petition, petitioner believes
that private respondent has engaged in forum shopping.[26]

Private respondent, for its part, defends the appellate court in taking cognizance of the second
petition by stressing that there is no law, rule or decision that prohibits the filing of a new petition for
certiorari within the reglementary period after the dismissal of the first petition due to technicality. [27] It
rebuts petitioners charge of forum shopping by pointing out that the dismissal of the first petition due to
technicality has not ripened into res judicata, which is an essential element of forum shopping.[28]

In determining whether a party has violated the rule against forum shopping, the test to be applied
is whether the elements of litis pendentia are present or whether a final judgment in one case will amount
to res judicata in the other.[29] This issue has been thoroughly and extensively discussed and correctly
resolved by the Court of Appeals in this wise:

The respondents two arguments essay on certain developments in the case after the NLRC rendered
its decision. He points out with alacrity that an entry of judgment was issued twice first by the NLRC with
respect to its decision and then by the Ninth Division of the Court of Appeals after it dismissed on technical
grounds the first petition for certiorari filed by the petitioner. Neither event, for sure, militates against the
institution of a second petition for certiorari. A decision of the NLRC is never final for as long as it is the
subject of a petition for certiorari that is pending with a superior court. A contrary view only demeans our
certiorari jurisdiction and will never gain currency under our system of appellate court review. It is more to
the point to ask if a second petition can stand after the first is dismissed, but under the particular
circumstances in which the second was brought, we hold that it can. The theory of res judicata invoked by
the respondent to bar the filing of the second petition does not apply. The judgment or final resolution in
the first petition must be on the merits for res judicata to inhere, and it will not be on the merits if it is
founded on a consideration of only technical or collateral points. Yet this was exactly how the first petition
was disposed of. SP 73521 was dismissed as a result of the failure of the petitioner to comply with the
procedural requirements of a petition for certiorari. The case never touched base. There was no occasion
for the determination of the substantive rights of the parties and, in this sense, the merits of the case were
not involved. The petitioner had actually the option of either refilling [sic] the case or seeking
reconsideration in the original action. It chose to file SP 73790 after realizing that it still had enough time
left of the original period of 60 days under Rule 65 to do so.

Since the dismissal of the first petition did not ripen into res judicata, it may not be said that there
was forum shopping with the filing of the second. The accepted test for determining whether a party violated
the rule against forum shopping insofar as it is applicable to this setting is whether the judgment or final
resolution in the first case amounts tores judicata in the second. Res judicata is central to the idea of forum
shopping. Without it, forum shopping is non-existent. The dismissal of the first petition, moreover, if it
does not amount to res judicata, need not be mentioned in the certification of non-forum shopping
accompanying the second action. The omission will not be fatal to the viability of the second case.
(Citations omitted)[30]

Private respondent, in turn, questions the propriety of the instant certiorari petition and avers that
the issues raised by petitioner can only be dealt with under Rule 45 of the Rules of Court. [31] Against this
thesis, petitioner submits that the acceptance of the petition is addressed to the sound discretion of this
Court.[32]

The proper remedy to assail decisions of the Court of Appeals involving final disposition of a case is through
a petition for review under Rule 45. In this case, petitioner filed instead a certiorari petition under Rule
65. Notwithstanding this procedural lapse, this Court resolves to rule on the merits of the petition in the
interest of substantial justice,[33] the underlying consideration in this petition being the arbitrary dismissal
of petitioner from employment.

Petitioner submits that the Court of Appeals erred in relying merely on fax messages to support the validity
of his dismissal from employment. He maintains that the first fax message containing the information that
the vessel encroached on a different route was a mere personal observation of the ship master and should
have thus been corroborated by evidence, and that these fax messages cannot be considered as res
gestae because the statement of the ship master embodied therein is just a report. He also contends that he
has not caused any immediate danger to the vessel and that if he did commit any wrongdoing, the incident
would have been recorded in the logbook. Thus, he posits that the failure to produce the logbook reinforces
the theory that the fax messages have been concocted to justify his unceremonious dismissal from
employment. Hence, he believes that his dismissal from employment stemmed from his filing of the
complaint with the ITF which his superiors resented.[34]

Private respondent insists that the appellate court is correct in considering the fax messages as res
gestae statements. It likewise emphasizes that non-presentment of the logbook is justified as the same could
no longer be retrieved because Hansu has already ceased to be its principal. Furthermore, it refutes the
allegation of petitioner that he was dismissed because he filed a complaint with the ITF in behalf of his
fellow crew members. It claims that petitioners allegation is a hoax because there is no showing that the
alleged complaint has been received by the ITF and that no action thereon was ever taken by the ITF.[35]

Private respondent also asserts that petitioner was not dismissed but that he voluntarily asked for his
repatriation. This assertion, however, deserves scant consideration. It is highly illogical for an employee to
voluntarily request for repatriation and then file a suit for illegal dismissal. As voluntary repatriation is
synonymous to resignation, it is proper to conclude that repatriation is inconsistent with the filing of a
complaint for illegal dismissal.[36]

The paramount issue therefore boils down to the validity of petitioners dismissal, the determination of
which generally involves a question of fact. It is not the function of this Court to assess and evaluate the
facts and the evidence again, our jurisdiction being generally limited to reviewing errors of law that might
have been committed by the trial court or administrative agency. Nevertheless, since the factual findings of
the Court of Appeals and the Labor Arbiter are at variance with those of the NLRC, we resolve to evaluate
the records and the evidence presented by the parties.[37]

The validity of an employee's dismissal hinges on the satisfaction of two substantive requirements,
to wit: (1) the dismissal must be for any of the causes provided for in Article 282 of the Labor Code; and
(2) the employee was accorded due process, basic of which is the opportunity to be heard and to defend
himself.[38]

The Labor Arbiter held that petitioners absence during his watch duty when an emergency call was
received from the Japanese port authority that M/V Phoenix Seven was invading other route constituted
neglect of duty, a just cause for terminating an employee. Records reveal that this information was related
to private respondent via two fax messages sent by the captain of M/V Phoenix Seven. The first fax message
dated 18 January 1997 is reproduced below:

JUST RECEIVED PHONE CALL FROM MASTER N C/OFFICER THAT THEY DECIDED TO
DISCHARGE 2/OFFICER AT OSAKA PORT.

DUE TO MIS-BEHAVIOUR N RESEST [SIC] TO OFFICIAL ORDER.


CAPT. HAD RECEIVED EMERGENCY WARNING CALL FROM JAPAN BISAN SETO
NAIKAI RADIO AUTHORITY THAT SHIP IS INVADING OTHER ROUTE.

SO, HE WAS SURPRISED N CAME TO BRIDGE N FOUND 2/O NOT CARRY OUT HIS
WATCH DUTY.

MASTER SCOLD HIM ABOUT THIS N CORRECT HIS ERROR BUT HE RESIST [SIC] THAT
HE IS RIGHT AND THEN SAID THAT HE WILL COME BACK HOME.

FURTHER MORE HE ASKED MASTER TO PAY HIM I.T.F. WAGE SCALE.

MASTER N/CIO STRONGLY ASKED US HIS REPATRIATION WITH I.E.U.

PLS. CONFIRM YOUR OPINION ON THIS HAPPENING.[39]

The second fax message dated 20 January 1997 pertained to a report of crew discharge essentially
containing the same information as the first fax message. The Court of Appeals treated these fax messages
as part of the res gestae proving neglect of duty on the part of petitioner.

Section 42 of Rule 130[40] of the Rules of Court mentions two acts which form part of the res gestae,
namely: spontaneous statements and verbal acts. In spontaneous exclamations, the res gestae is the startling
occurrence, whereas in verbal acts, the res gestae are the statements accompanying the equivocal act.[41] We
find that the fax messages cannot be deemed part of the res gestae.

To be admissible under the first class of res gestae, it is required that: (1) the principal act be a
startling occurrence; (2) the statements were made before the declarant had the time to contrive or devise a
falsehood; and (3) that the statements must concern the occurrence in question and its immediate attending
circumstances.[42]

Assuming that petitioners negligencewhich allegedly caused the ship to deviate from its courseis
the startling occurrence, there is no showing that the statements contained in the fax messages were made
immediately after the alleged incident. In addition, no dates have been mentioned to determine if these
utterances were made spontaneously or with careful deliberation. Absent the critical element of spontaneity,
the fax messages cannot be admitted as part of the res gestae of the first kind.

Neither will the second kind of res gestae apply. The requisites for its admissibility are: (1) the
principal act to be characterized must be equivocal; (2) the equivocal act must be material to the issue; (3)
the statement must accompany the equivocal act; and (4) the statements give a legal significance to the
equivocal act.[43]
Petitioners alleged absence from watch duty is simply an innocuous act or at least proved to be
one. Assuming arguendo that such absence was the equivocal act, it is nevertheless not accompanied by
any statement more so by the fax statements adverted to as parts of the res gestae. No date or time has been
mentioned to determine whether the fax messages were made simultaneously with the purported equivocal
act.

Furthermore, the material contents of the fax messages are unclear. The matter of route
encroachment or invasion is questionable. The ship master, who is the author of the fax messages, did not
witness the incident. He obtained such information only from the Japanese port authorities. Verily, the
messages can be characterized as double hearsay.
In any event, under Article 282 of the Labor Code,[44] an employer may terminate an employee for
gross and habitual neglect of duties. Neglect of duty, to be a ground for dismissal, must be both gross and
habitual. Gross negligence connotes want of care in the performance of ones duties. Habitual neglect
implies repeated failure to perform ones duties for a period of time, depending upon the circumstances. A
single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.[45]

Petitioners supposed absence from watch duty in a single isolated instance is neither gross nor habitual
negligence. Without question, the alleged lapse did not result in any untoward incident. If there was any
serious aftermath, the incident should have been recorded in the ships logbook and presented by private
respondent to substantiate its claim. Instead, private respondent belittled the probative value of the logbook
and dismissed it as self-serving. Quite the contrary, the ships logbook is the repository of all activities and
transactions on board a vessel. Had the route invasion been so serious as to merit petitioners dismissal, then
it would have been recorded in the logbook. Private respondent would have then had all the more reason to
preserve it considering that vital pieces of information are contained therein.

In Haverton Shipping Ltd. v. NLRC,[46] the Court held that the vessels logbook is an official record
of entries made by a person in the performance of a duty required by law.[47] In Abacast Shipping and
Management Agency, Inc. v. NLRC,[48] a case cited by petitioner, the logbook is a respectable record that
can be relied upon to authenticate the charges filed and the procedure taken against the employees prior to
their dismissal.[49] In Wallem Maritime Services, Inc. v. NLRC,[50] the logbook is a vital evidence as Article
612 of the Code of Commerce requires the ship captain to keep a record of the decisions he had adopted as
the vessel's head.[51]Therefore, the non-presentation of the logbook raises serious doubts as to whether the
incident did happen at all.

In termination cases, the burden of proving just or valid cause for dismissing an employee rests on
the employer.[52] Private respondent miserably failed to discharge this burden. Consequently, the petitioners
dismissal is illegal.

We also note that private respondent failed to comply with the procedural due process requirement
for terminating an employee. Such requirement is not a mere formality that may be dispensed with at will.
Its disregard is a matter of serious concern since it constitutes a safeguard of the highest order in response
to man's innate sense of justice. The Labor Code does not, of course, require a formal or trial type
proceeding before an erring employee may be dismissed. This is especially true in the case of a vessel on
the ocean or in a foreign port. The minimum requirement of due process in termination proceedings, which
must be complied with even with respect to seamen on board a vessel, consists of notice to the employees
intended to be dismissed and the grant to them of an opportunity to present their own side of the alleged
offense or misconduct, which led to the management's decision to terminate. To meet the requirements of
due process, the employer must furnish the worker sought to be dismissed with two written notices before
termination of employment can be legally effected, i.e., (1) a notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice after due hearing
which informs the employee of the employers decision to dismiss him.[53]

Private respondents sole reliance on the fax messages in dismissing petitioner is clearly insufficient as these
messages were addressed only to itself. No notice was ever given to petitioner apprising him in writing of
the particular acts showing neglect of duty. Neither was he informed of his dismissal from
employment.Petitioner was never given an opportunity to present his side. The failure to comply with the
two-notice rule only aggravated respondents liability on top of dismissing petitioner without a valid cause.

Pursuant to Section 10 of Republic Act No. 8042[54] or the Migrant Workers Act, employees who
are unjustly dismissed from work are entitled to an amount representing their three (3) months salary
considering that their employment contract has a term of exactly one (1) year plus a full refund of his
placement fee, with interest at 12% per annum.[55]

IN LIGHT OF THE FOREGOING, the petition is GRANTED. The Decision of the Court of
Appeals is REVERSED and SET ASIDE. The Decision of theNLRC is REINSTATED with the
MODIFICATION that in addition to the payment of the sum equivalent to petitioners three (3) months
salary, the full amount of placement fee with 12% legal interest must be refunded.

SO ORDERED.

JOSE, JR. vs. MICHAELMAR PHILS., INC.


G.R. No. 169806 November 27, 2009

The Case

This is a petition[1] for review on certiorari under Rule 45 of the Rules of Court. The petition
challenges the 11 May 2005 Decision[2] and 5 August 2005 Resolution[3] of the Court of Appeals in
CA-G.R. SP No. 83272. The Court of Appeals set aside the 19 January[4] and 22 March[5] 2004
Resolutions of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 036666-03
and reinstated the 18 June 2003 Decision[6] of the Labor Arbiter in NLRC NCR OFW Case No.
(M)02-12-3137-00.

The Facts

Michaelmar Philippines, Inc. (MPI) is the Philippine agent of Michaelmar Shipping Services, Inc.
(MSSI). In an undertaking[7] dated 2 July 2002 and an employment contract[8] dated 4 July 2002, MSSI
through MPI engaged the services of Bernardo B. Jose, Jr. (Jose, Jr.) as oiler of M/T Limar. The
employment contract stated:

That the employee shall be employed on board under the following terms and conditions:

1.1 Duration of Contract EIGHT (8) MONTHS


Position OILER
Basic Monthly Salary US$ 450.00 & US$ 39.00 TANKER ALLOWANCE
Hours of Work 48 HOURS/WEEK
Overtime US$ 386.00 FIXED OT. 105 HRS/ MOS.
Vacation Leave with Pay US$ 190.00 & US$ 150 OWNERS BONUS
Point of Hire MANILA, PHILIPPINES[9]
In connection with the employment contract, Jose, Jr. signed a declaration [10] dated 10 June 2002 stating
that:

In order to implement the Drug and Alcohol Policy on board the managed vessels the following with [sic]
apply:

All alcoholic beverages, banned substances and unprescribed drugs including but not limited to the
following: Marijuana Cocaine Phencyclidine Amphetamines Heroin Opiates are banned from Stelmar
Tankers (Management) Ltd. managed vessels.

Disciplinary action up to and including dismissal will be taken against any employee found to be in
possession of or impaired by the use of any of the above mentioned substances.

A system of random testing for any of the above banned substances will be used to enforce this policy. Any
refusal to submit to such tests shall be deemed as a serious breach of the employment contract and shall
result to the seamans dismissal due to his own offense.

Therefore any seaman will be instantly dismissed if:


xxx
They are found to have positive trace of alcohol or any of the banned substances in any random testing
sample.

Jose, Jr. began performing his duties on board the M/T Limar on 21 August 2002. On 8 October 2002, a
random drug test was conducted on all officers and crew members of M/T Limar at the port of
Curacao. Jose, Jr. was found positive for marijuana. Jose, Jr. was informed about the result of his drug test
and was asked if he was taking any medication. Jose, Jr. said that he was taking Centrum vitamins.

Jose, Jr. was allowed to continue performing his duties on board the M/T Limar from 8 October to 29
November 2002. In the Sea Going Staff Appraisal Report[11] on Jose Jr.s work performance for the period
of 1 August to 28 November 2002, Jose, Jr. received a 96% total rating and was described as very
hardworking, trustworthy, and reliable.

On 29 December 2002, M/T Limar reached the next port after the random drug test and Jose, Jr. was
repatriated to the Philippines. When Jose, Jr. arrived in the Philippines, he asked MPI that a drug test be
conducted on him. MPI ignored his request. On his own, Jose, Jr. procured drug tests from Manila Doctors
Hospital,[12]S.M. Lazo Medical Clinic, Inc.,[13] and Maritime Clinic for International Services, Inc.[14] He
was found negative for marijuana.

Jose, Jr. filed with the NLRC a complaint against MPI and MSSI for illegal dismissal with claim for his
salaries for the unexpired portion of the employment contract.

The Labor Arbiter’s Ruling

In her 18 June 2003 Decision, the Labor Arbiter dismissed the complaint for lack of merit. The Labor
Arbiter held that:

Based from the facts and evidence, this office inclined [sic] to rule in favor of the respondents: we
find that complainants termination from employment was valid and lawful. It is established that
complainant, after an unannounced drug test conducted by the respondent principal on the officers
and crew on board the vessel, was found positive of marijuana, a prohibited drug. It is a universally
known fact the menace that drugs bring on the user as well as to others who may have got on his
way. It is noted too that complainant worked on board a tanker vessel which carries toxic materials
such as fuels, gasoline and other combustible materials which require delicate and careful handling
and being an oiler, complainant is expected to be in a proper disposition. Thus, we agree with
respondents that immediate repatriation of complainant is warranted for the safety of the vessel as
well as to complainants co-workers on board. It is therefore a risk that should be avoided at all
cost.Moreover, under the POEA Standard Employment Contract as cited by the respondents (supra),
violation of the drug and alcohol policy of the company carries with it the penalty of dismissal to be
effected by the master of the vessel. It is also noted that complainant was made aware of the results
of the drug test as per Drug Test Certificate dated October 29, 2002. He was not dismissed right there
and then but it was only on December 29, 2002 that he was repatriated for cause.

As to the complainants contention that the ship doctors report can not be relied upon in the absence of other
evidence supporting the doctors findings for the simple reason that the ship doctor is under the control of
the principal employer, the same is untenable. On the contrary, the findings of the doctor on board should
be given credence as he would not make a false clarification. Dr. A.R.A Heath could not be said to have
outrageously contrived the results of the complainants drug test. We are therefore more inclined to believe
the original results of the unannounced drug test as it was officially conducted on board the vessel rather
than the subsequent testing procured by complainant on his own initiative. The result of the original drug
test is evidence in itself and does not require additional supporting evidence except if it was shown that the
drug test was conducted not in accordance with the drug testing procedure which is not obtaining in this
particular case.[H]ence, the first test prevails.

We can not also say that respondents were motivated by ill will against the complainant considering that
he was appraised to be a good worker. For this reason that respondents would not terminate [sic] the services
of complainant were it not for the fact that he violated the drug and alcohol policy of the company. [T]hus,
we find that just cause exist [sic] to justify the termination of complainant.[15]

Jose, Jr. appealed the Labor Arbiters 18 June 2003 Decision to the NLRC. Jose, Jr. claimed that the Labor
Arbiter committed grave abuse of discretion in ruling that he was dismissed for just cause.

The NLRC’s Ruling

In its 19 January 2004 Resolution, the NLRC set aside the Labor Arbiters 18 June 2003 Decision. The
NLRC held that Jose, Jr.s dismissal was illegal and ordered MPI and MSSI to pay Jose, Jr. his
salaries for the unexpired portion of the employment contract. The NLRC held that:

Here, a copy of the purported drug test result for Complainant indicates, among others, the following
typewritten words Hoofd: Drs. R.R.L. Petronia Apotheker and THC-COOH POS.; the handwritten
word Marihuana; and the stamped words Dr. A.R.A. Heath, MD, SHIPS DOCTOR and 29 OKT.
2002. However, said test result does not contain any signature, much less the signature of any of the
doctors whose names were printed therein (Page 45, Records). Verily, the veracity of this purported
drug test result is questionable, hence, it cannot be deemed as substantial proof that Complainant
violated his employers no alcohol, no drug policy. In fact, in his November 14, 2002 message to
Stelmar Tanker Group, the Master of the vessel where Complainant worked, suggested that another
drug test for complainant should be taken when the vessel arrived [sic] in Curacao next call for final
findings (Page 33, Records), which is an indication that the Master, himself, was in doubt with the
purported drug test result. Indeed there is reason for the Master of the vessel to doubt that
Complainant was taking in the prohibited drug marihuana. The Sea Going Staff Appraisal Report
signed by Appraiser David A. Amaro, Jr. and reviewed by the Master of the vessel himself on
complainants work performance as Wiper from August 1, 2002 to November 28, 2002 which included
a two-month period after the purported drug test, indicates that out of a total score of 100% on Safety
Consciousness (30%), Ability (30%), Reliability (20%) and Behavior & Attitude (20%), Complainant
was assessed a score of 96% (Pages 30-31, Records). Truly, a worker who had been taking in
prohibited drug could not have given such an excellent job performance. Significantly, under the
category Behavior & Attitude (20%), referring to his personal relationship and his interactions with
the rest of the ships staff and his attitude towards his job and how the rest of the crew regard him,
Complainant was assessed the full score of 20% (Page 31, Records), which belies Respondents
insinuation that his alleged offense directly affected the safety of the vessel, its officers and crew
members. Indeed, if Complainant had been a threat to the safety of the vessel, officers and crew
members, he would not be been [sic] allowed to continue working almost three (3) months after his
alleged offense until his repatriation on December 29, 2002. Clearly, Respondents failed to present
substantial proof that Complainants dismissal was with just or authorized cause.

Moreover, Respondents failed to accord Complainant due process prior to his dismissal. There is no
showing that Complainants employer furnished him with a written notice apprising him of the particular
act or omission for which his dismissal was sought and a subsequent written notice informing him of the
decision to dismiss him, much less any proof that Complainant was given an opportunity to answer and
rebut the charges against him prior to his dismissal. Worse, Respondents invoke the provision in the
employment contract which allows summary dismissal for cases provided therein. Consequently,
Respondents argue that there was no need for him to be notified of his dismissal. Such blatant violation of
basic labor law principles cannot be permitted by this Office. Although a contract is law between the parties,
the provisions of positive law which regulate such contracts are deemed included and shall limit and govern
the relations between the parties (Asia World Recruitment, Inc. vs. NLRC, G.R. No. 113363, August 24,
1999).

Relative thereto, it is worth noting Section 10 of Republic Act No. 8042, which provides that In cases of
termination of overseas employment without just, valid or authorized cause as defined by law or contract,
the worker shall be entitled to the full reimbursement of his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.[16]

MPI and MSSI filed a motion for reconsideration. In its 22 March 2004 Resolution, the NLRC denied
the motion for lack of merit. MPI and MSSI filed with the Court of Appeals a petition[17] for certiorari
under Rule 65 of the Rules of Court. MPI and MSSI claimed that the NLRC gravely abused its
discretion when it (1) reversed the Labor Arbiters factual finding that Jose, Jr. was legally dismissed;
(2) awarded Jose, Jr. his salaries for the unexpired portion of the employment contract; (3) awarded
Jose, Jr. $386 overtime pay; and (4) ruled that Jose, Jr. perfected his appeal within the reglementary
period.

The Court of Appeals Ruling

In its 11 May 2005 Decision, the Court of Appeals set aside the 19 January and 22 March 2004 Resolutions
of the NLRC and reinstated the 18 June 2003 Decision of the Labor Arbiter. The Court of Appeals held
that:

The POEA standard employment contract adverted to in the labor arbiters decision to which all seamens
contracts must adhere explicitly provides that the failure of a seaman to obey the policy warrants a penalty
of dismissal which may be carried out by the master even without a notice of dismissal if there is a clear
and existing danger to the safety of the vessel or the crew. That the petitioners were implementing a no-
alcohol, no drug policy that was communicated to the respondent when he embarked is not in question. He
had signed a document entitled Drug and Alcohol Declaration in which he acknowledged that alcohol
beverages and unprescribed drugs such as marijuana were banned on the vessel and that any employee
found possessing or using these substances would be subject to instant dismissal. He undertook to comply
with the policy and abide by all the relevant rules and guidelines, including the system of random testing
that would be employed to enforce it.

We can hardly belabor the reasons and justification for this policy. The safety of the vessel on the high seas
is a matter of supreme and unavoidable concern to all the owners, the crew and the riding public. In the
ultimate analysis, a vessel is only as seaworthy as the men who sail it, so that it is necessary to maintain at
every moment the efficiency and competence of the crew. Without an effective no alcohol, no drug policy
on board the ship, the vessels safety will be seriously compromised. The policy is, therefore, a reasonable
and lawful order or regulation that, once made known to the employee, must be observed by him, and the
failure or refusal of a seaman to comply with it should constitute serious misconduct or willful
disobedience that is a just cause for the termination of employment under the Labor Code (Aparente vs.
National Labor Relations Commission, 331 SCRA 82). As the labor arbiter has discerned, the seriousness
and earnestness in the enforcement of the ban is highlighted by the provision of the POEA Standard
Employment Contract allowing the ship master to forego the notice of dismissal requirement in effecting
the repatriation of the seaman violating it.
xxxx

Under legal rules of evidence, not all unsigned documents or papers fail the test of admissibility. There are
kinds of evidence known as exceptions to the hearsay rule which need not be invariably signed by the
author if it is clear that it issues from him because of necessity and under circumstances that safeguard the
trustworthiness of the paper. A number of evidence of this sort are called entries in the course of business,
which are transactions made by persons in the regular course of their duty or business. We agree with the
labor arbiter that the drug test result constitutes entries made in the ordinary or regular course of duty of a
responsible officer of the vessel. The tests administered to the crew were routine measures of the vessel
conducted to enforce its stated policy, and it was a matter of course for medical reports to be issued and
released by the medical officer. The ships physician at Curacao under whom the tests were conducted was
admittedly Dr. Heath. It was under his name and with his handwritten comments that the report on the
respondent came out, and there is no basis to suspect that these results were issued other than in the ordinary
course of his duty. As the labor arbiter points out, the drug test report is evidence in itself and does not
require additional supporting evidence except if it appears that the drug test was conducted not in
accordance with drug testing procedures. Nothing of the sort, he says, has even been suggested in this
particular case.

The regularity of the procedure observed in the administration and reporting of the tests is the very
assurance of the reports admissibility and credibility under the laws of the evidence. We see no reason why
it cannot be considered substantial evidence, which, parenthetically, is the lowest rung in the ladder of
evidence. It is from the fact that a report or entry is a part of the regular routine work of a business or
profession that it derives its value as legal evidence.

Then the respondent was notified of the results and allowed to explain himself. He could not show any
history of medication that could account for the traces of drugs in his system. Despite his lack of plausible
excuses, the ship captain came out in support of him and asked his superiors to give him another
chance. These developments prove that the respondent was afforded due process consistent with the
exigencies of his service at sea. For the NLRC to annul the process because he was somehow not furnished
with written notice is already being pedantic. What is the importance to the respondent of the difference
between a written and verbal notice when he was actually given the opportunity to be heard? x x x

The working environment in a seagoing vessel is sui generis which amply justifies the difference in
treatment of seamen found guilty of serious infractions at sea. The POEA Standard Employment Contract
allows the ship master to implement a repatriation for just cause without a notice of dismissal if this is
necessary to avoid a clear and existing danger to the vessel. The petitioners have explained that that [sic] it
is usually at the next port of call where the offending crewman is made to disembark. In this case, a month
had passed by after the date of the medical report before they reached the next port. We may not second-
guess the judgment of the master in allowing him to remain at his post in the meantime. It is still reasonable
to believe that the proper safeguards were taken and proper limitations observed during the period when
the respondent remained on board.

Finally, the fact that the respondent obtained negative results in subsequent drug tests in the Philippines
does not negate the findings made of his condition on board the vessel. A drug test can be negative if the
user undergoes a sufficient period of abstinence before taking the test. Unlike the tests made at his instance,
the drug test on the vessel was unannounced. The credibility of the first test is, therefore, greater than the
subsequent ones.[18]

Jose, Jr. filed a motion[19] for reconsideration. In its 5 August 2005 Resolution, the Court of Appeals denied
the motion for lack of merit. Hence, the present petition.

In a motion[20] dated 1 August 2007, MPI and MSSI prayed that they be substituted by OSG Ship
Management Manila, Inc. as respondent in the present case. In a Resolution[21] dated 14 November 2007,
the Court noted the motion.

The Issues

In his petition dated 13 September 2005, Jose, Jr. claims that he was illegally dismissed from employment
for two reasons: (1) there is no just cause for his dismissal because the drug test result is unsigned by the
doctor, and (2) he was not afforded due process. He stated that:

2. The purported drug test result conducted to petitioner indicates, among others, the following: [sic]
typwritten words Hool: Drs. R.R.L.. [sic] Petronia Apotheker [sic] and :THC-COOH POS. [sic]; the
handwritten word Marihuana; and the stamped words Dr. A.R.A Heath, MD, SHIPS DOCTOR and 29
OKT. 2002. However, said test result does not contain any signature, much less the signature of any of the
doctors whose name [sic] were printed therein. This omission is fatal as it goes to the veracity of the said
purported drug test result. Consequently, the purported drug test result cannot be deemed as substantial
proof that petitioner violated his employers no alcohol, no drug policy [sic].

xxxx

Even assuming arguendo that there was just cause, respondents miserably failed to show that the
presence of the petitioner in the vessel constitutes a clear and existing danger to the safety of the crew
or the vessel. x x x

xxxx

It is a basic principle in Labor Law that in termination disputes, the burden is on the employer to show that
the dismissal was for a just and valid cause. x x x
xxxx

x x x [T]he Honorable Labor Arbiter as well as the Honorable Court of Appeals clearly erred in ruling that
there was just cause for the termination of petitioners employment. Petitioners employment was terminated
on the basis only of a mere allegation that is unsubstantiated, unfounded and on the basis of the drug test
report that was not even signed by the doctor who purportedly conducted such test.

5. Moreover, respondents failed to observe due process in terminating petitioners employment. There is no
evidence on record that petitioner was furnished by his employer with a written notice apprising him of the
particular act or omission which is the basis for his dismissal. Furthermore, there is also no evidence on
record that the second notice, informing petitioner of the decision to dismiss, was served to the
petitioner. There is also no proof on record that petitioner was given an opportunity to answer and rebut the
charges against him prior to the dismissal.[22]

The Court’s Ruling

In its 11 May 2005 Decision, the Court of Appeals held that there was just cause for Jose, Jr.s dismissal. The
Court of Appeals gave credence to the drug test result showing that Jose, Jr. was positive for marijuana. The
Court of Appeals considered the drug test result as part of entries in the course of business. The Court of
Appeals held that:

Under legal rules of evidence, not all unsigned documents or papers fail the test of admissibility. There are
kinds of evidence known as exceptions to the hearsay rule which need not be invariably signed by the
author if it is clear that it issues from him because of necessity and under circumstances that safeguard the
trustworthiness of the paper. A number of evidence of this sort are called entries in the course of business,
which are transactions made by persons in the regular course of their duty or business. We agree with the
labor arbiter that the drug test result constitutes entries made in the ordinary or regular course of duty
of a responsible officer of the vessel. The tests administered to the crew were routine measures of the
vessel conducted to enforce its stated policy, and it was a matter of course for medical reports to be
issued and released by the medical officer. The ships physician at Curacao under whom the tests were
conducted was admittedly Dr. Heath. It was under his name and with his handwritten comments that
the report on the respondent came out, and there is no basis to suspect that these results were issued
other than in the ordinary course of his duty. As the labor arbiter points out, the drug test report is
evidence in itself and does not require additional supporting evidence except if it appears that the
drug test was conducted not in accordance with drug testing procedures. Nothing of the sort, he says,
has even been suggested in this particular case.[23] (Emphasis supplied)

Jose, Jr. claims that the Court of Appeals erred when it ruled that there was just cause for his dismissal. The
Court is not impressed. In a petition for review on certiorari under Rule 45 of the Rules of Court, a mere
statement that the Court of Appeals erred is insufficient. The petition must state the law or jurisprudence
and the particular ruling of the appellate court violative of such law or jurisprudence. In Encarnacion v.
Court of Appeals,[24] the Court held that:

Petitioner asserts that there is a question of law involved in this appeal. We do not think so. The appeal
involves an appreciation of facts, i.e., whether the questioned decision is supported by the evidence and the
records of the case. In other words, did the Court of Appeals commit a reversible error in considering the
trouble record of the subject telephone? Or is this within the province of the appellate court to
consider? Absent grave abuse of discretion, this Court will not reverse the appellate courts findings of fact.
In a petition for review under Rule 45, Rules of Court, invoking the usual reason, i.e., that the Court
of Appeals has decided a question of substance not in accord with law or with applicable decisions of
the Supreme Court, a mere statement of the ceremonial phrase is not sufficient to confer merit on
the petition. The petition must specify the law or prevailing jurisprudence on the matter and the
particular ruling of the appellate court violative of such law or previous doctrine laid down by the
Supreme Court. (Emphasis supplied)

In the present case, Jose, Jr. did not show that the Court of Appeals ruling is violative of any law or
jurisprudence. Section 43, Rule 130, of the Rules of Court states:

SEC. 43. Entries in the course of business. Entries made at, or near the time of the transactions to which
they refer, by a person deceased, or unable to testify, who was in a position to know the facts therein stated,
may be received as prima facie evidence, if such person made the entries in his professional capacity or in
the performance of duty and in the ordinary or regular course of business or duty.

In Canque v. Court of Appeals,[25] the Court laid down the requisites for admission in evidence of entries in
the course of business: (1) the person who made the entry is dead, outside the country, or unable to testify;
(2) the entries were made at or near the time of the transactions to which they refer; (3) the person who
made the entry was in a position to know the facts stated in the entries; (4) the entries were made in a
professional capacity or in the performance of a duty; and (5) the entries were made in the ordinary or
regular course of business or duty.

Here, all the requisites are present: (1) Dr. Heath is outside the country; (2) the entries were made near the
time the random drug test was conducted; (3) Dr. Heath was in a position to know the facts made in the
entries; (4) Dr. Heath made the entries in his professional capacity and in the performance of his duty; and
(5) the entries were made in the ordinary or regular course of business or duty.

The fact that the drug test result is unsigned does not necessarily lead to the conclusion that Jose, Jr. was
not found positive for marijuana. In KAR ASIA, Inc. v. Corona,[26] the Court admitted in evidence unsigned
payrolls. In that case, the Court held that:

Entries in the payroll, being entries in the course of business, enjoy the presumption of regularity under
Rule 130, Section 43 of the Rules of Court. It is therefore incumbent upon the respondents to adduce clear
and convincing evidence in support of their claim. Unfortunately, respondents naked assertions without
proof in corroboration will not suffice to overcome the disputable presumption.

In disputing the probative value of the payrolls for December 1994, the appellate court observed that the
same contain only the signatures of Ermina Daray and Celestino Barreto, the paymaster and the president,
respectively. It further opined that the payrolls presented were only copies of the approved payment, and
not copies disclosing actual payment.

The December 1994 payrolls contain a computation of the amounts payable to the employees for the given
period, including a breakdown of the allowances and deductions on the amount due, but the signatures of
the respondents are conspicuously missing. Ideally, the signatures of the respondents should appear
in the payroll as evidence of actual payment. However, the absence of such signatures does not
necessarily lead to the conclusion that the December 1994 COLA was not received. (Emphasis
supplied)

In the present case, the following facts are established (1) random drug tests are regularly conducted on all
officers and crew members of M/T Limar; (2) a random drug test was conducted at the port of Curacao on 8
October 2002; (3) Dr. Heath was the authorized physician of M/T Limar; (4) the drug test result of Jose, Jr.
showed that he was positive for marijuana; (5) the drug test result was issued under Dr. Heaths name and
contained his handwritten comments. The Court of Appeals found that:

The tests administered to the crew were routine measures of the vessel conducted to enforce its stated
policy, and it was a matter of course for medical reports to be issued and released by the medical officer. The
ships physician at Curacao under whom the tests were conducted was admittedly Dr. Heath. It was under
his name and with his handwritten comments that the report on the respondent came out, and there is no
basis to suspect that these results were issued other than in the ordinary course of his duty. As the labor
arbiter points out, the drug test report is evidence in itself and does not require additional supporting
evidence except if it appears that the drug test was conducted not in accordance with drug testing
procedures. Nothing of the sort, he says, has even been suggested in this particular case.[27]

Factual findings of the Court of Appeals are binding on the Court. Absent grave abuse of discretion, the
Court will not disturb the Court of Appeals factual findings.[28] In Encarnacion,[29] the Court held that,
unless there is a clearly grave or whimsical abuse on its part, findings of fact of the appellate court will not
be disturbed.The Supreme Court will only exercise its power of review in known exceptions such as gross
misappreciation of evidence or a total void of evidence. Jose, Jr. failed to show that the Court of Appeals
gravely abused its discretion.

Article 282(a) of the Labor Code states that the employer may terminate an employment for serious
misconduct. Drug use in the premises of the employer constitutes serious misconduct. In Bughaw, Jr. v.
Treasure Island Industrial Corporation,[30] the Court held that:

The charge of drug use inside the companys premises and during working hours against petitioner
constitutes serious misconduct, which is one of the just causes for termination. Misconduct is improper
or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not merely an error in
judgment. The misconduct to be serious within the meaning of the Act must be of such a grave and
aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must
nevertheless, in connection with the work of the employee, constitute just cause for his separation. This
Court took judicial notice of scientific findings that drug abuse can damage the mental faculties of
the user. It is beyond question therefore that any employee under the influence of drugs cannot
possibly continue doing his duties without posing a serious threat to the lives and property of his co-
workers and even his employer. (Emphasis supplied)

Jose, Jr. claims that he was not afforded due process. The Court agrees. There are two requisites for a valid
dismissal: (1) there must be just cause, and (2) the employee must be afforded due process.[31] To meet the
requirements of due process, the employer must furnish the employee with two written notices a notice
apprising the employee of the particular act or omission for which the dismissal is sought and another notice
informing the employee of the employers decision to dismiss. In Talidano v. Falcon Maritime & Allied
Services, Inc.,[32] the Court held that:

[R]espondent failed to comply with the procedural due process required for terminating the employment of
the employee. Such requirement is not a mere formality that may be dispensed with at will. Its disregard is
a matter of serious concern since it constitutes a safeguard of the highest order in response to mans innate
sense of justice. The Labor Code does not, of course, require a formal or trial type proceeding before an
erring employee may be dismissed. This is especially true in the case of a vessel on the ocean or in a foreign
port. The minimum requirement of due process termination proceedings, which must be complied
with even with respect to seamen on board a vessel, consists of notice to the employees intended to be
dismissed and the grant to them of an opportunity to present their own side of the alleged offense or
misconduct, which led to the managements decision to terminate. To meet the requirements of due
process, the employer must furnish the worker sought to be dismissed with two written notices before
termination of employment can be legally effected, i.e., (1) a notice which apprises the employee of
the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice after
due hearing which informs the employee of the employers decision to dismiss him. (Emphasis
supplied)
In the present case, Jose, Jr. was not given any written notice about his dismissal. However, the propriety
of Jose, Jr.s dismissal is not affected by the lack of written notices. When the dismissal is for just cause, the
lack of due process does not render the dismissal ineffectual but merely gives rise to the payment of P30,000
in nominal damages.[33]

WHEREFORE, the petition is DENIED. The 11 May 2005 Decision and 5 August 2005 Resolution of
the Court of Appeals in CA-G.R. SP No. 83272 areAFFIRMED with the MODIFICATION that OSG
Ship Management Manila, Inc. is ordered to pay Bernardo B. Jose, Jr. P30,000 in nominal damages.

SO ORDERED.

LAND BANK OF THE PHILIPPINES vs. MONETS EXPORT


G.R. No. 184971 April 19, 2010

This case is about the evidence required to prove how much a borrower still owes the bank when
he has multiple loan accounts with it that had all fallen due.
The Facts and the Case

On June 25, 1981 petitioner Land Bank of the Philippines (Land Bank) and respondent Monets
Export and Manufacturing Corporation (Monet) executed an Export Packing Credit Line Agreement
(Agreement) under which the bank gave Monet a credit line of P250,000.00, secured by the proceeds of its
export letters of credit, promissory notes, a continuing guaranty executed by respondent spouses Vicente
V. Tagle, Sr. and Ma. Consuelo G. Tagle (the Tagles), and a third-party mortgage executed by one Pepita
C. Mendigoria. Land Bank renewed and amended this credit line agreement several times until it reached a
ceiling of P5 million.
Land Bank claims that by August 31, 1992 Monets obligation under the Agreement had swelled
to P11,464,246.19. Since Monet failed to pay despite demands, the bank filed a collection suit against
Monet and the Tagles before the Regional Trial Court (RTC) of Manila.[1] In their answer, Monet and the
Tagles claimed that Land Bank had refused to collect the US$33,434.00 receivables on Monets export letter
of credit against Wishbone Trading Company of Hong Kong while making an unauthorized payment of
US$38,768.40 on its import letter of credit to Beautilike (H.K.) Ltd. This damaged Monets business
interests since it ran short of funds to carry on with its usual business. In other words, Land Bank
mismanaged its clients affairs under the Agreement.
After trial or on July 15, 1997 the RTC rendered a decision[2] that, among other things, recognized
Monet and the Tagles obligations to Land Bank in the amount reflected in Exhibit 39, the banks Schedule
of Amortization from its Loans and Discount Department, but sans any penalty. The RTC ordered
petitioners to pay Land Bank the same.
On appeal to the Court of Appeals (CA),[3] the latter rendered judgment on October 9, 2003,
affirming the RTC decision.[4] Land Bank filed a petition for review with this Court[5] and on March 10,
2005 the Court rendered a Decision[6] that, among other things, remanded the case to the RTC for the
reception of additional evidence. The pertinent portion reads:
Insofar as the amount of indebtedness of the respondents [Monet and the Tagles] to the
petitioner [Land Bank] is concerned, the October 9, 2003 decision and theJanuary 20,
2004 resolution of the Court of Appeals in CA-G.R. CV No. 57436, are SET ASIDE. The case is
hereby remanded to its court of origin, the Regional Trial Court of Manila, Branch 49, for the
reception of additional evidence as may be needed to determine the actual amount of indebtedness of
the respondents to the petitioner. x x x
In remanding the case, the Court noted that Exhibit 39, the Summary of Availment and Schedule
of Amortization, on which both the RTC and the CA relied, covered only Monets debt of P2.5 million under
Promissory Note P-981, a small amount compared to the P11,464,246.19 that Land Bank sought to collect
from it. The records showed, however, that Monet executed not only one but several promissory notes in
varying amounts in favor of the bank. Indeed, the bank submitted a Consolidated Statement of Account
dated August 31, 1992 in support of its claim of P11,464,246.19 but both the RTC and the CA merely
glossed over it. Land Bank also submitted a Summary of Availments and Payments from 1981 to 1989 that
detailed the series of availments and payments Monet made.
The Court explained its reason for remanding the case for reception of additional evidence, thus:
Unfortunately, despite the pieces of evidence submitted by the parties, our review of the same
is inconclusive in determining the total amount due to the petitioner. The petitioner had failed to
establish the effect of Monets Exhibit 39 to its own Consolidated Statement of Account as of August
31, 1992, nor did the respondents categorically refute the said statement of account vis--vis its Exhibit
39. The interest of justice will best be served if this case be remanded to the court of origin for the
purpose of determining the amount due to petitioner. The dearth in the records of sufficient evidence
with which we can utilize in making a categorical ruling on the amount of indebtedness due to the
petitioner constrains us to remand this case to the trial court with instructions to receive additional
evidence as neededin order to fully thresh out the issue and establish the rights and obligations of the
parties. From the amount ultimately determined by the trial court as the outstanding obligation of
the respondents to the petitioner, will be deducted the award of opportunity losses granted to the
respondents in the amount of US$15,000.00 payable in Philippine pesos at the official exchange rate
when payment is to be made.[7]
On remand, the RTC held one hearing on October 30, 2006, at which the lawyer of Land Bank told
the court that, apart from what the bank already adduced in evidence, it had no additional documents to
present. Based on this, the RTC issued an order on the same day,[8] affirming its original decision of July
15, 1997. The pertinent portion of the order reads:
At todays hearing of this case, the lawyer for Land Bank stated on record that he has no more
documents to present. Therefore, the obligation of the defendants would be those stated in the
schedule of amortization from the Loans & Discount Department of the Land Bank (Exhibit 39) as
well as the interest mentioned therein, as provided in the Decision of this Court. From the said
obligation shall be deducted in favor of the defendants the REDUCED amount of US$15,000.00
representing the award of opportunity losses, as determined by the Supreme Court, payable in
Philippine Pesos at the official exchange rate when payment is to be made.[9]
In effect, the RTC stood by Exhibit 39 as the basis of its finding that Monet and the Tagles owed
Land Bank only P2.5 million as opposed to the latters claim ofP11,464,246.19. Effectively, the RTC
reinstated the portion of its July 15, 1997 decision that the Court struck down with finality in G.R. 161865
as baseless for determining the amount due the bank.
Land Bank filed a motion for reconsideration, actually a motion to reopen the hearing, to enable it
to adduce in evidence a Consolidated Billing Statement as ofOctober 31, 2006 to show how much Monet
and the Tagles still owed the bank. But the trial court denied the motion. Land Bank appealed the order to
the CA[10] but the latter rendered a decision on May 30, 2008,[11] affirming the RTC orders.[12] Land Bank
moved for reconsideration, but the CA denied it in its October 10, 2008resolution,[13] hence, the present
petition by Land Bank.
Issue Presented
The sole issue presented in this case is whether or not the RTC and the CA acted correctly in
denying petitioner Land Banks motion to reopen the hearing to allow it to present the banks updated
Consolidated Billing Statement as of October 31, 2006 that reflects respondents Monet and the Tagles
remaining indebtedness to it.
The Courts Ruling
The CA conceded that the RTC needed to receive evidence that would enable it to establish Monets
actual indebtedness to Land Bank in compliance with the Courts decision in G.R. 161865. But since Land
Bank, which had the burden of proving the amount of that indebtedness, told the RTC, when it set the matter
for hearing, that it had no further documentary evidence to present, it was but right for that court to issue
its assailed order of October 30, 2006, which reiterated its original decision of July 15, 1997.
The CA also held that the RTC did right in denying Land Banks motion to reopen the hearing to
allow it to present its Consolidated Billing Statement as ofOctober 31, 2006 involving Monets loans. Such
billing statement, said the CA, did not constitute sufficient evidence to prove Monets total indebtedness for
the simple reason that this Court in G.R. 161865 regarded a prior Consolidated Statement of Account for
1992 insufficient for that purpose.
But what the RTC and the CA did not realize is that the original RTC decision of July 15, 1997 was
an incomplete decision since it failed to resolve the main issue that the collection suit presented: how much
Monet and the Tagles exactly owed Land Bank. As the Court noted in its decision in G.R. 161865, the
evidence then on record showed that the credit line Land Bank extended to Monet began at P250,000.00
but, after several amendments, eventually rose up to P5 million. Monet availed itself of these credit lines
by taking out various loans evidenced by individual promissory notes that had diverse terms of payment.
As it happened, however, in its original decision, the RTC held that Monet still owed Land Bank
only P2.5 million as reported in the banks Schedule of Amortization (Exhibit 39). But that schedule covered
only one promissory note, Promissory Note P-981. Noting this, the Court rejected Exhibit 39 as basis for
determining Monets total obligation, given that it undeniably took out more loans as evidenced by the other
promissory notes it executed in favor of Land Bank.
And, although the bank presented at the trial its Consolidated Statement of Account for 1992
covering Monets loans, the Court needed to know how the balance of P2.5 million in Exhibit 39, dated
April 29, 1991, which the RTC regarded as true and correct, impacted on that consolidated statement that
the bank prepared a year later. The Court thus remanded the case so the RTC can receive evidence that
would show, after reconciliation of all of Monets loan accounts, exactly how much more it owed Land
Bank.
The CA of course places no value on the Consolidated Billing Statement that Land Bank would
have adduced in evidence had the RTC granted its motion for reconsideration and reopened the
hearing. Apparently, both courts believe that Land Bank needed to present in evidence all original
documents evidencing every transaction between Land Bank and Monet to prove the current status of the
latters loan accounts. But a bank statement, properly authenticated by a competent bank officer, can serve
as evidence of the status of those accounts and what Monet and the Tagles still owe the bank. Under Section
43, Rule 130[14] of the Rules of Court, entries prepared in the regular course of business are prima
facie evidence of the truth of what they state. The billing statement reconciles the transaction entries entered
in the bank records in the regular course of business and shows the net result of such transactions.
Entries in the course of business are accorded unusual reliability because their regularity and continuity are
calculated to discipline record keepers in the habit of precision. If the entries are financial, the records are
routinely balanced and audited. In actual experience, the whole of the business world function in reliance
of such kind of records.[15]
Parenthetically, consider a borrower who takes out a loan of P10,000.00 from a bank and executes
a promissory note providing for interests, charges, and penalties and an undertaking to pay the loan in 10
monthly installments of P1,000.00. If he pays the first five months installments but defaults in the rest, how
will the bank prove in court that the debtor still owes it P5,000.00 plus interest.
The bank will of course present the promissory note to establish the scope of the debtors primary
obligations and a computation of interests, charges, and penalties based on its terms. It must then show by
the entries in its record how much it had actually been paid. This will in turn establish how much the
borrower still owes it. The bank does not have to present all the receipts of payment it issued to all its clients
during the entire year, thousands of them, merely to establish the fact that only five of them, rather than ten,
pertains to the borrower. The original documents need not be presented in evidence when it is numerous,
cannot be examined in court without great loss of time, and the fact sought to be established from them is
only the general result.[16]
Monet and the Tagles can of course dispute the banks billing statements by proof that the bank had
exaggerated what was owed it and that Monet had made more payments than were reflected in those
statements. They can do this by presenting evidence of those greater payments. Notably, Monet and the
Tagles have consistently avoided stating in their letters to the bank how much they still owed it. But,
ultimately, it is as much their obligation to prove this disputed point if they deny the banks statements of
their loan accounts.
In reverting back to Exhibit 39, which covers just one of many promissory notes that Monet and
the Tagles executed in favor of Land Bank, the RTC and the CA have shown an unjustified obstinacy and
a lack of understanding of what the Court wanted done to clear up the issue of how much Monet and the
Tagles still owed the bank. The bank lawyer who claimed that Land Bank had no further evidence to present
during the hearing was of course in error and it probably warranted a dismissal of the banks claim for failure
to prosecute. But the banks motion for reconsideration, asking for an opportunity to present evidence of the
status of the loans, opened up a chance for the RTC to abide by what the Court required of it. It committed
error, together with the CA, in ruling that a reopening of the hearing would serve no useful purpose.
WHEREFORE, the Court GRANTS the petition, SETS ASIDE the Court of Appeals decision in
CA-G.R. CV 88782 dated May 30, 2008 and resolution dated October 10, 2008 and the Regional Trial
Court order in Civil Case 93-64350 dated October 30, 2006, REMANDS the case to the same Regional
Trial Court of Manila for the reception of such evidence as may be needed to determine the actual amount
of indebtedness of respondents Monets Export and Manufacturing Corp. and the spouses Vicente V. Tagle,
Sr. and Ma. Consuelo G. Tagle and adjudicate petitioner Land Bank of the Philippines claims as such
evidence may warrant. SO ORDERED.
SECURITY BANK AND TRUST COMPANY vs. GAN
G.R. No. 150464 June 27, 2006

This petition for review on certiorari[1] seeks the reversal of the decision[2] of the Court of Appeals (CA)
dated October 18, 2001 in CA-G.R. CV No. 45701, the dispositive portion of which read:
WHEREFORE, finding no reversible error therefrom, the Decision now on appeal is hereby
AFFIRMED in toto. SO ORDERED.[3]
The factual antecedents follow:
Petitioner Security Bank and Trust Company is a banking institution duly organized and existing under the
laws of the Philippines. In 1981, respondent Eric Gan opened a current account with petitioner at
its Soler Branch in Santa Cruz, Manila. Petitioner alleged that it had an agreement with respondent wherein
the latter would deposit an initial amount in his current account and he could draw checks on said account
provided there were sufficient funds to cover them. Furthermore, under a special arrangement with
petitioners branch manager then, Mr. Qui,[4] respondent was allowed to transfer funds from his account to
another person’s account also within the same branch.[5] Respondent availed of such arrangement several
times by depositing checks in his account and even before they cleared, he withdrew the proceeds thereof
and transferred them to the other account. These transactions were covered by what were known as debit
memos since respondent had no sufficient funds to cover the amounts he transferred.[6]
Later on, respondent purportedly incurred an overdraft or negative balance in his account. As of December
14, 1982, the overdraft balance came up to P153,757.78. According to petitioner, respondent refused to
heed petitioners repeated demands for payment. For the period December 14, 1982 to September 15, 1990,
the total obligation of respondent reached P297,060.01, inclusive of interest.[7]
Thus, in 1991, petitioner filed a complaint for sum of money against respondent to recover the P297,060.01
with 12% interest per annum from September 16, 1990 until fully paid, attorney’s fees, litigation expenses
and costs of suit. The case was docketed as Civil Case No. 91-55605 with the Regional Trial Court of
Manila, Branch 13.[8]
Respondent denied liability to petitioner for the said amount. He contended that the alleged overdraft
resulted from transactions done without his knowledge and consent.

In a decision dated March 31, 1993, the trial court dismissed the complaint. It held that petitioner was not
able to prove that respondent owed it the amount claimed considering that the ledger cards it presented were
merely hearsay evidence. On petitioner’s appeal, the CA affirmed the trial court’s decision.

Hence, this petition anchored on the following grounds:

I. The honorable Court of Appeals erred in not ruling that petitioner has sufficiently proved its cause of
action against respondent; and that the ledger cards and the testimony of Mr. Patricio Mercado constituted
the best evidence of the transactions made by the respondent relative to his account.
II. The honorable Court of Appeals erred in not applying the principle of estoppel against respondent who
has benefited from the special arrangement accorded to him by petitioner which resulted in an overdraft /
negative balance.
III. The honorable Court of Appeals erred in affirming the decision of the trial court.[9]

We deny the petition for lack of merit.

It is well established that under Rule 45 of the Rules of Court, only questions of law, not of fact,
may be raised before the Supreme Court. It must be stressed that this Court is not a trier of facts and it is
not its function to re-examine and weigh anew the respective evidence of the parties. Factual findings of
the trial court, especially those affirmed by the CA, are conclusive on this Court when supported by the
evidence on record.[10]
Here, both the trial court and the CA found that petitioner failed to substantiate its claim that
respondent knowingly incurred an overdraft against his account. We see no reason to disturb this finding.

To prove its claim, petitioner presented Patricio Mercado who was the bookkeeper who handled the account
of respondent and recorded his transactions in a ledger. Based on this ledger, respondent allegedly had a
negative balance of P153,757.78. This resulted from transfers of funds from respondents current account to
another person’s account. These transfers were made under the authority of Qui.[11] Respondent
categorically denied that he ever authorized these funds transfers.[12]
The entries in the ledger, as testified to by Mercado, were not competent evidence to prove that
respondent consented to the transfers of funds. These entries merely showed that the transfers were indeed
made and that Qui approved them. Petitioners claim that respondent availed of a special arrangement to
transfer funds from his account to another person’s account was a bare allegation that was never
substantiated. Admittedly, Mercado had no personal knowledge of this arrangement.[13] In fact, when asked
about the details of the alleged consent given by respondent to the transfers, he stated that he could not
remember because respondent talked to Qui and not to him.[14] Petitioner could have presented Qui whom
they alleged allowed the special arrangement with respondent. But it did not.
Neither can we accept petitioner’s argument that the entries made by Mercado in the ledger were
competent evidence to prove how and when the negative balance was incurred. Petitioner invokes Section
43 of Rule 130:
Entries in the course of business. Entries made at, or near the time of the transactions to which they
refer, by a person deceased, or unable to testify, who was in a position to know the facts therein stated, may
be received as prima facie evidence, if such person made the entries in his professional capacity or in the
performance of duty and in the ordinary or regular course of business or duty.

Under this exception to the hearsay rule, the admission in evidence of entries in corporate books required
the satisfaction of the following conditions:
1. the person who made the entry must be dead, or unable to testify;
2. the entries were made at or near the time of the transactions to which they refer;
3. the entrant was in a position to know the facts stated in the entries;
4. the entries were made in his professional capacity or in the performance of a duty, whether legal,
contractual, moral or religious; and
5. the entries were made in the ordinary or regular course of business or duty.[15]
The ledger entries did not meet the first and third requisites.

Mercado, petitioner’s bookkeeper who prepared the entries, was presented to testify on the transactions
pertaining to the account of respondent. It was in the course of his testimony that the ledger entries were
presented. There was, therefore, neither justification nor necessity for the presentation of the entries as the
person who made them was available to testify in court.[16]

Moreover, Mercado had no personal knowledge of the facts constituting the entries, particularly those
entries which resulted in the negative balance. He had no knowledge of the truth or falsity of these
entries. We agree entirely with the following discussion of the trial court which was affirmed by the CA:

The plaintiff submits that the ledger cards constituted the best evidence of the transactions made
by the defendant with the bank relative to his account, pursuant to Section 43 of Rule 130 of the Revised
Rules on Evidence. There is no question that the entries in the ledgers were made by one whose duty it was
to record transactions in the ordinary or regular course of the business. But for the entries to be prima facie
evidence of the facts recorded, the Rule interpose[s] a very important condition, one which we think is truly
indispensable to the probative worth of the entries as an exception to the hearsay rule, and that is that the
entrant must be in a position to know the facts therein stated. Undeniably, Mr. Mercado was in a position
to know the facts of the check deposits and withdrawals. But the transfers of funds through the debit memos
in question?

Let us be clear, at the outset, what the transactions covered by the debit memos are. They are, at bottom,
credit accommodations said to have been granted by the bank’s branch manager Mr. Qui to the defendant,
and they are, therefore loans, to prove which competent testimonial or documentary evidence must be
presented. In the face of the denial by the defendant of the existence of any such agreement, and the absence
of any document reflecting it, the testimony of a party to the transaction, i.e., Mr. Qui, or of any witness to
the same, would be necessary. The plaintiff failed to explain why it did not or could not present any party
or witness to the transactions, but even if it had a reason why it could not, it is clear that the existence of
the agreements cannot be established through the testimony of Mr. Mercado, for he was [not in] a position
to [know] those facts. As a subordinate, he could not have done more than record what was reported to him
by his superior the branch manager, and unless he was allowed to be privy to the latter’s dealings with the
defendant, the information that he received and entered in the ledgers was incapable of being confirmed by
him.
There is good reason why evidence of this nature is incorrigibly hearsay. Entries in business records which
spring from the duty of other employees to communicate facts occurring in the ordinary course of business
are prima facie admissible, the duty to communicate being itself a badge of trustworthiness of the entries,
but not when they purport to record what were independent agreements arrived at by some bank officials
and a client. In this case, the entries become mere casual or voluntary reports of the official concerned. To
permit the ledgers, prepared by the bank at its own instance, to substitute the contract as proof of the
agreements with third parties, is to set a dangerous precedent. Business entries are allowed as an exception
to the hearsay rule only under certain conditions specified in Section 43, which must be scrupulously
observed to prevent them from being used as a source of undue advantage for the party preparing
them.[17](citations omitted)

Thus, petitioner did not prove that respondent had incurred a negative balance in his account. Consequently,
there was nothing to show that respondent was indebted to it in the amount claimed.
Petitioners next argument is that respondent was estopped from denying the claim of petitioner since he
benefited from the special arrangement accorded to him resulting in the negative balance. This must
likewise fail. The so-called special arrangement was never established. In addition, there was no evidence
that respondent benefited from it. As held by the CA:

The trial court satisfactorily explained the reason for not applying the principle of estoppel. As held by the
trial court:
There is no scope here for the application of estoppel against the defendant-appellee, since it was not
established that he had ever received copies of the ledgers, and therefore given the opportunity to review
the correctness of the entries. As we see it, the case of the [plaintiff suffers from its failure to document its]
transactions with its clients, and it is hardly right to close our eyes to that infirmity at the expense of the
defendant-appellee.
The temporary overdraft allegedly accorded by plaintiff-appellant to defendant-appellee has not benefited
the defendant-appellee in any manner. The 3 debit memos amounting to P150,000.00 appearing on
defendant-appellees ledger consisted of fund transfers from and not to defendant-appellees account. The
transfers resulted [in] the benefit of other accounts, not that of defendant-appellee.[18]
In view of the foregoing, the CA did not err in affirming the decision of the trial court.

WHEREFORE, the petition is hereby DENIED. The assailed decision of the Court of Appeals
dated October 18, 2001 in CA-G.R. CV No. 45701 is AFFIRMED in toto. Costs against petitioner. SO
ORDERED.
G.R. No. 198627 January 13, 2016
DST MOVERS CORPORATION vs. PEOPLE'S GENERAL INSURANCE CORPORATION

A determination of where the preponderance of evidence lies is a factual issue which, as a rule, cannot be
entertained in a Rule 45 petition. When, however, the sole basis of the trial court for ruling on this issue is
evidence that should not have been admitted for being hearsay, this court will embark on its own factual
analysis and will, if necessary, reverse the rulings of the lower courts. A traffic accident investigation report
prepared by a police officer relying solely on the account of a supposed eyewitness and not on his or her
personal knowledge is not evidence that is admissible as an exception to the Hearsay Rule.

This resolves a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure
praying that the assailed May 11, 2011 Decision2 and September 8, 2011 Resolution3 of the Court of
Appeals Former Twelfth Division in CA-G.R. SP No. 109163 be reversed and set aside, and that a new one
be entered dismissing respondent People’s General Insurance Corporation’s (PGIC) Complaint for Sum of
Money.4

In its assailed May 11, 2011 Decision, the Court of Appeals affirmed with modification the ruling of Branch
47 of the Regional Trial Court of Manila in Civil Case No. 07-118093 which, in turn, affirmed in toto the
ruling of Branch 22 of the Metropolitan Trial Court of Manila in Civil Case No. 181900. In its assailed
September 8, 2011 Resolution, the Court of Appeals denied petitioner DST Movers Corporation’s (DST
Movers) Motion for Reconsideration.5

The Metropolitan Trial Court of Manila found DST Movers liable to pay PGIC the amount of P90,000.00
by way of actual damages plus interest as well as P10,000.00 for attorney’s fees and costs of suit. 6 The
Court of Appeals ordered DST Movers to pay PGIC the amount of P25,000.00 as temperate damages in
lieu of the original award of P90,000.00 as actual damages.7

In a Complaint for Sum of Money filed before the Metropolitan Trial Court of Manila, PGIC alleged that
at about 10:30 p.m. on February 28, 2002, along the South Luzon Expressway and in the area of Bilibid,
Muntinlupa City, a Honda Civic sedan with plate number URZ-976 (sedan) was hit on the rear by an Isuzu
Elf truck with plate number UAL-295 (truck). PGIC underscored that the sedan was on a stop position when
it was hit. The sedan was then allegedly pushed forward, thereby hitting a Mitsubishi Lancer. The driver of
the truck then allegedly escaped.8

In support of its recollection of the events of February 28, 2002, PGIC relied on a Traffic Accident
Investigation Report (Report) prepared by PO2 Cecilio Grospe Tomas (PO2 Tomas) of the Muntinlupa City
Traffic Enforcement Unit of the Philippine National Police. This was attached as Annex "E" 9 of PGIC’s
Complaint and also as Annex "E"10 of its Position Paper. It stated:

TRAFFIC ACCIDENT INVESTIGATION REPORT


(Entry No. 805-285-0202)

Time and date : At about 10:30 p.m. February 28, 2002


Place : along SLEX, Bilibid N/B, Muntinlupa City
Weather con : Fair
Nature : RIR/DTP/PI (hit and run)
Inv vehicle (3)
Vehicle-1 : Honda civic
Plate no. : URZ-976
Driver : MA. ADELINE YUBOCO Y DELA CRUZ
(injured)
Lic. no. : N03-96-213671
Address : 24 Hernandez st., BF Homes Paranaque City
Reg. Owner : Fidel Yuboco
Address : same as driver
Damage : rear & front portion, whole right side portion
Vehicle-2 : Mits. Lancer
Plate no. : CMM-373
Driver : HARRISON TUQUERO Y VALDEZ
Lic. no. : 014-02-032855
Address : 13-16 Carolina st., Villasol Subd., Angeles City
Reg. Owner : Edgardo Tuquero
Address : 518 Obio st., Villasol Subd., Angeles City
Damage : left side rear portion
Vehicle-3 : Truck
Plate no. : UAL-295
Driver : Unidentified
Damage : Undetermine [sic]
Reportee : G. Simbahon of PNCC/SLEX

F A C T S:

It appears that while V1 was on stop position facing north at the aforesaid place of occurrence when the
rear portion of the same was allegedly hit/bumped by V3 which was moving same direction on the same
place due to strong impact V1 pushed forward and hit the left side rear portion of V2 causing damages and
injuries thereon. After the impact, V3 escaped towards undisclosed direction and left V1 & V2 at the place
of accident. During investigation V1 & V2 driver gave voluntary handwritten statement and they were
advised to submit medical certificate, estimate/photos of damages as annexes.

Status of the case: For follow-up. . . . . . . . . . . . . .

(sgd.)
PO2 Cecilio Grospe Tomas PNP
- on case -11

The truck was supposedly subsequently discovered to be owned by DST Movers.12 The sedan was covered
by PGIC’s insurance under Policy No. HAL-PC-1314.13 As a result of the February 28, 2002 incident, the
sedan’s owner, Fidel Yuboco, filed a total loss claim with PGIC in the amount of P320,000.00. PGIC paid
Fidel Yuboco the entire amount of P320,000.00.14

Asserting that it was subrogated to Fidel Yuboco’s rights and that the proximate cause of the mishap was
the negligence of the driver of the truck, PGIC, through counsel, sent DST Movers demand letters. PGIC
demanded from DST Movers the amount of P90,000.00, which represented the difference between the
P320,000.00 paid by PGIC to Yuboco and the salvage price of P230,000.00, at which PGIC was supposedly
able to sell what remained of the sedan.15

Its demands not having been satisfied, PGIC proceeded to file its Complaint16 for Sum of Money before the
Metropolitan Trial Court of Manila. This case was docketed as Civil Case No. 181900.17

In its Answer,18 DST Movers acknowledged that it was the owner of the truck. However, it claimed that the
truck did not make any trips on February 28, 2002 as it was undergoing repairs and maintenance.19 In
support of this affirmative defense, DST Movers attached as Annexes "1" to "1-F"20 copies of invoices,
receipts, and cash vouchers relating to repairs and maintenance procedures that were undertaken on the
truck on specific dates, which included February 28, 2002.

Following the submission of the parties’ position papers, Branch 22 of the Metropolitan Trial Court Manila
rendered its Decision21 favoring PGIC’s version of events and finding DST Movers liable. The dispositive
portion of this Decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant ordering to
pay the latter to pay the [sic] of Php90,000.00 as actual damages plus interest of 12% per annum from the
date of filing of the complaint and the sum of Php10,000.00 as and for attorney’s fees and the costs of suit.

SO ORDERED.22

On appeal, the ruling of the Metropolitan Trial Court was affirmed in toto by Branch 47 of the Regional
Trial Court of Manila.23

DST Movers then filed before the Court of Appeals a Petition for Review under Rule 42 of the 1997 Rules
of Civil Procedure.

In its assailed May 11, 2011 Decision, the Court of Appeals affirmed the rulings of the Regional Trial Court
and the Metropolitan Trial Court. However, it noted that PGIC failed to prove actual loss with reasonable
certainty. As such, the Court of Appeals deleted the award of P90,000.00 in actual damages and replaced it
with an award of P25,000.00 in temperate damages.

In its assailed September 8, 2011 Resolution,24 the Court of Appeals denied DST Movers’ Motion for
Reconsideration.

Hence, DST Movers filed the present Petition insisting that its liability was not established by a
preponderance of evidence. Specifically, it faults the Metropolitan Trial Court for ruling in favor of PGIC
despite how its version of events was supported by nothing more the Traffic Accident Investigation Report.
It asserts that reliance on this Report was misplaced as it was supposedly "improperly identified [and]
uncorroborated."25
For resolution is the issue of whether petitioner DST Movers Corporation’s liability was established by a
preponderance of evidence. Subsumed in this is whether it was an error for the Metropolitan Trial Court to
admit and lend evidentiary weight to the piece of evidence chiefly relied upon by respondent People’s
General Insurance Corporation: the Traffic Accident Investigation Report prepared by PO2 Tomas.

Petitioner comes to this court through a Petition for Review on Certiorari under Rule 45 of the 1997 Rules
of Civil Procedure. It invites this court to reconsider the consistent rulings of the Court of Appeals, the
Regional Trial Court, and the Metropolitan Trial Court that petitioner’s liability arising from the February
28, 2002 incident was established by a preponderance of evidence.

A Rule 45 petition pertains to questions of law and not to factual issues. Rule 45, Section 1 of the 1997
Rules of Civil Procedure is unequivocal:

SECTION 1. Filing of Petition with Supreme Court. — A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court
or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review
on certiorari. The petition shall raise only questions of law which must be distinctly set forth.

This court’s Decision in Cheesman v. Intermediate Appellate Court26 distinguished questions of law from
questions of fact:

As distinguished from a question of law — which exists "when the doubt or difference arises as to what the
law is on a certain state of facts" — "there is a question of fact when the doubt or difference arises as to the
truth or the falsehood of alleged facts;" or when the "query necessarily invites calibration of the whole
evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding
circumstances, their relation to each other and to the whole and the probabilities of the
situation."27 (Citations omitted)

Seeking recourse from this court through a petition for review on certiorari under Rule 45 bears significantly
on the manner by which this court shall treat findings of fact and evidentiary matters. As a general rule, it
becomes improper for this court to consider factual issues: the findings of fact of the trial court, as affirmed
on appeal by the Court of Appeals, are conclusive on this court. "The reason behind the rule is that [this]
Court is not a trier of facts and it is not its duty to review, evaluate, and weigh the probative value of the
evidence adduced before the lower courts."28

A determination of whether a matter has been established by a preponderance of evidence is, by definition,
a question of fact. It entails an appreciation of the relative weight of the competing parties’ evidence. Rule
133, Section 1 of the Revised Rules on Evidence provides a guide on what courts may consider in
determining where the preponderance of evidence lies:

SECTION 1. Preponderance of evidence, how determined. — In civil cases, the party having the burden of
proof must establish his case by a preponderance of evidence. In determining where the preponderance or
superior weight of evidence on the issues involved lies, the court may consider all the facts and
circumstances of the case, the witnesses' manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify,
the probability or improbability of their testimony, their interest or want of interest, and also their personal
credibility so far as the same may legitimately appear upon the trial. The court may also consider the number
of witnesses, though the preponderance is not necessarily with the greater number.
Consistent with Cheesman, such determination is a "query [that] necessarily invites calibration of the whole
evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding
circumstances, their relation to each other and to the whole and the probabilities of the situation."29

On point as regards civil liability for damages, this court in Caina v. People of the Philippines30 explained:

Questions on whether or not there was a preponderance of evidence to justify the award of damages or
whether or not there was a causal connection between the given set of facts and the damage suffered by the
private complainant or whether or not the act from which civil liability might arise exists are questions of
fact.31

Equally on point, this court has explained in many instances that a determination of the causes of and
circumstances relating to vehicular accidents is a factual matter that this court may not revisit when the
findings of the trial court and the Court of Appeals are completely in accord.

In Industrial Insurance Co. v. Bondad:32

Questions regarding the cause of the accident and the persons responsible for it are factual issues which we
cannot pass upon. It is jurisprudentially settled that, as a rule, the jurisdiction of this Court is limited to a
review of errors of law allegedly committed by the appellate court. It is not bound to analyze and weigh all
over again the evidence already considered in the proceedings below.33

Likewise, in Viron Transportation v. Delos Santos:34

The rule is settled that the findings of the trial court especially when affirmed by the Court of Appeals, are
conclusive on this Court when supported by the evidence on record. The Supreme Court will not assess and
evaluate all over again the evidence, testimonial and documentary adduced by the parties to an appeal
particularly where, such as here, the findings of both the trial court and the appellate court on the maker
coincide.35(Citation omitted)

However, there are exceptions that leave room for this court to make a factual determination for itself and,
ultimately, to overturn the factual findings with which it is confronted:

(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed
by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence
and contradicted by the evidence on record.36

In Dela Llana v. Biong,37 this court conducted its own (re-) examination of the evidence as the findings of
the Regional Trial Court conflicted with those of the Court of Appeals. The Regional Trial Court held that
the proximate cause of the injuries suffered by the petitioner was the supposed reckless driving of the
respondent’s employee; the Court of Appeals held otherwise. On review, this court sustained the findings
of the Court of Appeals.

In Standard Insurance v. Cuaresma,38 the ruling of the Metropolitan Trial Court was reversed by the
Regional Trial Court. The latter was then sustained by the Court of Appeals. On review, this court affirmed
the decision of the Court of Appeals. This court noted that the Metropolitan Trial Court erroneously gave
weight to the traffic accident investigation report presented by the petitioner as proof of the proximate cause
of the damage sustained by a motor vehicle.

II

Here, petitioner insists that the Traffic Accident Investigation Report prepared by PO2 Tomas should not
have been admitted and accorded weight by the Metropolitan Trial Court as it was "improperly identified
[and] uncorroborated."39 Petitioner, in effect, asserts that the non-presentation in court of PO2 Tomas, the
officer who prepared the report, was fatal to respondent’s cause.

Unlike in Dela Llana and Standard Insurance, the findings of the Metropolitan Trial Court, the Regional
Trial Court, and the Court of Appeals in this case are all in accord. They consistently ruled that the
proximate cause of the damage sustained by the sedan was the negligent driving of a vehicle owned by
petitioner. As with Standard Insurance, however, this conclusion is founded on the misplaced probative
value accorded to a traffic accident investigation report. In the first place, this Report should not have been
admitted as evidence for violating the Hearsay Rule. Bereft of evidentiary basis, the conclusion of the lower
courts cannot stand as it has been reduced to conjecture. Thus, we reverse this conclusion.

Rule 130, Section 36 of the Revised Rules on Evidence provides for the Hearsay Rule. It renders
inadmissible as evidence out-of-court statements made by persons who are not presented as witnesses but
are offered as proof of the matters stated. This rule proceeds from the basic rationale of fairness, as the
party against whom it is presented is unable to cross-examine the person making the statement:40

SECTION 36. Testimony generally confined to personal knowledge; hearsay excluded. — A witness can
testify only to those facts which he knows of his personal knowledge; that is, which are derived from his
own perception, except as otherwise provided in these rules.

The Hearsay Rule, however, is not absolute. Sections 37 to 47 of Rule 130 of the Revised Rules on Evidence
enumerate the exceptions to the Hearsay Rule. Of these, Section 44—regarding entries in official records—
is particularly relevant to this case:

SECTION 44. Entries in official records. — Entries in official records made in the performance of his duty
by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law,
are prima facie evidence of the facts therein stated.

Precisely as an exception to the Hearsay Rule, Rule 130, Section 44 does away with the need for presenting
as witness the public officer or person performing a duty specially enjoined by law who made the entry.
This, however, is only true, for as long the following requisites have been satisfied:

(a) that the entry was made by a public officer or by another person specially enjoined by law to do so;

(b) that it was made by the public officer in the performance of his duties, or by such other person in the
performance of a duty specially enjoined by law; and
(c) that the public officer or other person had sufficient knowledge of the facts by him stated, which must
have been acquired by him personally or through official information.41
Respondent, the Metropolitan Trial Court, the Regional Trial Court, and the Court of Appeals are all of the
position that the Report prepared by PO2 Tomas satisfies these requisites.1âwphi1 Thus, they maintain that
it is admissible as prima facie evidence of the facts it states. This despite the admitted fact that neither PO2
Tomas, nor the person who supposedly reported the events of February 28, 2002 to PO2 Tomas – the person
identified as "G. Simbahon of PNCC/SLEX"42 – gave a testimony in support of the Report.

They are in serious error.

The statements made by this court in Standard Insurance are on point:

[F]or the Traffic Accident Investigation Report to be admissible as prima facie evidence of the facts therein
stated, the following requisites must be present:

. . . (a) that the entry was made by a public officer or by another person specially enjoined by law to do so;
(b) that it was made by the public officer in the performance of his duties, or by such other person in the
performance of a duty specially enjoined by law; and (c) that the public officer or other person had sufficient
knowledge of the facts by him stated, which must have been acquired by him personally or through official
information.

Regrettably, in this case, petitioner failed to prove the third requisite cited above. As correctly noted by the
courts below, while the Traffic Accident Investigation Report was exhibited as evidence, the investigating
officer who prepared the same was not presented in court to testify that he had sufficient knowledge of the
facts therein stated, and that he acquired them personally or through official information. Neither was there
any explanation as to why such officer was not presented. We cannot simply assume, in the absence of
proof, that the account of the incident stated in the report was based on the personal knowledge of the
investigating officer who prepared it.

Thus, while petitioner presented its assured to testify on the events that transpired during the vehicular
collision, his lone testimony, unsupported by other preponderant evidence, fails to sufficiently establish
petitioner's claim that respondents' negligence was, indeed, the proximate cause of the damage sustained
by Cham's vehicle.43[Emphasis supplied]

Respondent presented proof of the occurrence of an accident that damaged Fidel Yuboco’s Honda Civic
sedan,44that the sedan was insured by respondent,45 and that respondent paid Fidel Yuboco’s insurance
claims.46 As to the identity, however, of the vehicle or of the person responsible for the damage sustained
by the sedan, all that respondent relies on is the Report prepared by PO2 Tomas.

It is plain to see that the matters indicated in the Report are not matters that were personally known to PO2
Tomas. The Report is candid in admitting that the matters it states were merely reported to PO2 Tomas by
"G. Simbahon of PNCC/SLEX."47 It was this "G. Simbahon," not PO2 Tomas, who had personal knowledge
of the facts stated in the Report. Thus, even as the Report embodies entries made by a public officer in the
performance of his duties, it fails to satisfy the third requisite for admissibility for entries in official records
as an exception to the Hearsay Rule.

To be admitted as evidence, it was thus imperative for the person who prepared the Report—PO2 Tomas—
to have himself presented as a witness and then testify on his Report. However, even as the Report would
have been admitted as evidence, PO2 Tomas’ testimony would not have sufficed in establishing the identity
of the motor vehicle and/or the person responsible for the damage sustained by the sedan. For this purpose,
the testimony of G. Simbahon was necessary.

Of course, we are aware that this case was decided by the Metropolitan Trial Court pursuant to the Revised
Rule on Summary Procedure (considering that petitioner’s total claims amounted to less than
P200,000.0048). Accordingly, no trial was conducted as, after the conduct of a preliminary conference, the
parties were made to submit their position papers. There was, thus, no opportunity to present witnesses
during an actual trial. However, Section 9 of the Revised Rule on Summary Procedure calls for the
submission of witnesses’ affidavits together with a party’s position paper and after the conduct of a
preliminary conference:

SECTION 9. Submission of Affidavits and Position Papers. — Within ten (10) days from receipt of the
order mentioned in the next preceding section,49 the parties shall submit the affidavits of their witnesses
and other evidence on the factual issues defined in the order, together with their position papers setting
forth the law and the facts relied upon by them.

These affidavits take the place of actual testimony in court and serve to expedite the resolution of cases
covered by the Revised Rule on Summary Procedure. Thus, it was still insufficient for respondent to have
merely annexed the Report to its Position Paper. By its lonesome, and unsupported by an affidavit executed
by PO2 Tomas, the Report was hearsay and, thus, inadmissible.

As the sole evidence relied upon by respondent as to the identity of the responsible motor vehicle or person
has been rendered unworthy of even the slightest judicial consideration, there is no basis for holding-as the
Metropolitan Trial Court did-that the motor vehicle responsible for the damage sustained by the sedan was
owned by petitioner. Not only this, petitioner has even adduced proof that on February 28, 2002, its Isuzu
Elf truck with plate number UAL-295 was undergoing repairs and maintenance and, thus, could not have
been at the South Luzon Expressway. The weight of evidence is clearly in petitioner's favor.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The assailed May 11, 2011 Decision
and September 8, 2011 Resolution of the Court of Appeals Former Twelfth Division in CA-G.R. SP No.
109163 areREVERSED and SET ASIDE. Respondent People's General Insurance Corporation's
Complaint is DISMISSED.

No pronouncement as to costs. SO ORDERED.

BARCELON ROXAS vs. CIR


G.R. No. 157064 August 7, 2006

This is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeking to set aside the
Decision of the Court of Appeals in CA-G.R. SP No. 60209 dated 11 July 2002,[1] ordering the petitioner
to pay the Government the amount of P826,698.31 as deficiency income tax for the year 1987 plus 25%
surcharge and 20% interest per annum. The Court of Appeals, in its assailed Decision, reversed the Decision
of the Court of Tax Appeals (CTA) dated 17 May 2000[2] in C.T.A. Case No. 5662.
Petitioner Barcelon Roxas Securities Inc. (now known as UBP Securities, Inc.) is a corporation engaged in
the trading of securities. On 14 April 1988, petitioner filed its Annual Income Tax Return for taxable year
1987. After an audit investigation conducted by the Bureau of Internal Revenue (BIR), respondent
Commissioner of Internal Revenue (CIR) issued an assessment for deficiency income tax in the amount
of P826,698.31 arising from the disallowance of the item on salaries, bonuses and allowances in the amount
of P1,219,093,93 as part of the deductible business expense since petitioner failed to subject the salaries,
bonuses and allowances to withholding taxes. This assessment was covered by Formal Assessment Notice
No. FAN-1-87-91-000649 dated 1 February 1991, which, respondent alleges, was sent to petitioner through
registered mail on 6 February 1991. However, petitioner denies receiving the formal assessment notice.[3]
On 17 March 1992, petitioner was served with a Warrant of Distraint and/or Levy to enforce collection of
the deficiency income tax for the year 1987. Petitioner filed a formal protest, dated 25 March 1992, against
the Warrant of Distraint and/or Levy, requesting for its cancellation. On 3 July 1998, petitioner received a
letter dated 30 April 1998 from the respondent denying the protest with finality.[4]

On 31 July 1998, petitioner filed a petition for review with the CTA. After due notice and hearing, the CTA
rendered a decision in favor of petitioner on 17 May 2000. The CTA ruled on the primary issue of
prescription and found it unnecessary to decide the issues on the validity and propriety of the assessment. It
maintained that while a mailed letter is deemed received by the addressee in the course of mail, this is
merely a disputable presumption. It reasoned that the direct denial of the petitioner shifts the burden of
proof to the respondent that the mailed letter was actually received by the petitioner. The CTA found the
BIR records submitted by the respondent immaterial, self-serving, and therefore insufficient to prove that
the assessment notice was mailed and duly received by the petitioner.[5]The dispositive portion of this
decision reads:
WHEREFORE, in view of the foregoing, the 1988 deficiency tax assessment against petitioner is
hereby CANCELLED. Respondent is hereby ORDERED TO DESIST from collecting said deficiency
tax. No pronouncement as to costs.[6]

On 6 June 2000, respondent moved for reconsideration of the aforesaid decision but was denied by the CTA
in a Resolution dated 25 July 2000. Thereafter, respondent appealed to the Court of Appeals on 31 August
2001. In reversing the CTA decision, the Court of Appeals found the evidence presented by the respondent
to be sufficient proof that the tax assessment notice was mailed to the petitioner, therefore the legal
presumption that it was received should apply.[7] Thus, the Court of Appeals ruled that:

WHEREFORE, the petition is hereby GRANTED. The decision dated May 17, 2000 as well as the
Resolution dated July 25, 2000 are hereby REVERSED and SET ASIDE, and a new on entered ordering
the respondent to pay the amount of P826,698.31 as deficiency income tax for the year 1987 plus 25%
surcharge and 20% interest per annum from February 6, 1991 until fully paid pursuant to Sections 248 and
249 of the Tax Code.[8]

Petitioner moved for reconsideration of the said decision but the same was denied by the Court of Appeals
in its assailed Resolution dated 30 January 2003.[9]
Hence, this Petition for Review on Certiorari raising the following issues:

WHETHER OR NOT LEGAL BASES EX IST FOR THE COURT OF APPEALS FINDING
THAT THE COURT OF TAX APPEALS COMMITTED GROSS ERROR IN THE
APPRECIAT ION OF FACTS.
II
WHETHER OR NOT THE COURT OF APPEALS WAS CORRECT IN REVERSING THE SUBJECT
DECISION OF THE COURT OF TAX APPEALS.

III
WHETHER OR NOT THE RIGHT OF THE BUREAU OF INTERNAL REVENUE TO ASSESS
PETITIONER FOR ALLEGED DEFICIENCY INCOME TAX FOR 1987 HAS PRESCRIBED.

IV
WHETHER OR NOT THE RIGHT OF THE BUREAU OF INTERNAL REVENUE TO COLLECT THE
SUBJECT ALLEGED DEFICIENCY INCOME TAX FOR 1987 HAS PRESCRIBED.

WHETHER OR NOT PETITIONER IS LIABLE FOR THE ALLEGED DEFICIENCY INCOME TAX
ASSESSMENT FOR 1987.

VI

WHETHER OR NOT THE SUBJECT ASSESSMENT IS VIOLATIVE OF THE RIGHT OF


PETITIONER TO DUE PROCESS.[10]

This Court finds the instant Petition meritorious.


The core issue in this case is whether or not respondents right to assess petitioners alleged
deficiency income tax is barred by prescription, the resolution of which depends on reviewing the findings
of fact of the Court of Appeals and the CTA.

While the general rule is that factual findings of the Court of Appeals are binding on this Court, there are,
however, recognized exceptions[11] thereto, such as when the findings are contrary to those of the trial court
or, in this case, the CTA.[12]
In its Decision, the CTA resolved the issues raised by the parties thus:
Jurisprudence is replete with cases holding that if the taxpayer denies ever having received an
assessment from the BIR, it is incumbent upon the latter to prove by competent evidence that such notice
was indeed received by the addressee. The onus probandi was shifted to respondent to prove by contrary
evidence that the Petitioner received the assessment in the due course of mail. The Supreme Court has
consistently held that while a mailed letter is deemed received by the addressee in the course of mail, this
is merely a disputable presumption subject to controversion and a direct denial thereof shifts the burden to
the party favored by the presumption to prove that the mailed letter was indeed received by the
addressee (Republic vs. Court of Appeals, 149 SCRA 351). Thus as held by the Supreme Court in Gonzalo
P. Nava vs. Commissioner of Internal Revenue, 13 SCRA 104, January 30, 1965:

The facts to be proved to raise this presumption are (a) that the letter was properly addressed with
postage prepaid, and (b) that it was mailed. Once these facts are proved, the presumption is that the letter
was received by the addressee as soon as it could have been transmitted to him in the ordinary course of the
mail. But if one of the said facts fails to appear, the presumption does not lie. (VI, Moran, Comments on
the Rules of Court, 1963 ed, 56-57 citing Enriquez vs. SunlifeAssurance of Canada, 41 Phil 269).
In the instant case, Respondent utterly failed to discharge this duty. No substantial evidence was
ever presented to prove that the assessment notice No. FAN-1-87-91-000649 or other supposed notices
subsequent thereto were in fact issued or sent to the taxpayer. As a matter of fact, it only submitted the BIR
record book which allegedly contains the list of taxpayers names, the reference number, the year, the nature
of tax, the city/municipality and the amount (see Exh. 5-a for the Respondent). Purportedly, Respondent
intended to show to this Court that all assessments made are entered into a record book in chronological
order outlining the details of the assessment and the taxpayer liable thereon. However, as can be gleaned
from the face of the exhibit, all entries thereon appears to be immaterial and impertinent in proving that the
assessment notice was mailed and duly received by Petitioner. Nothing indicates therein all essential facts
that could sustain the burden of proof being shifted to the Respondent. What is essential to prove the fact
of mailing is the registry receipt issued by the Bureau of Posts or the Registry return card which would have
been signed by the Petitioner or its authorized representative. And if said documents cannot be located,
Respondent at the very least, should have submitted to the Court a certification issued by the Bureau of
Posts and any other pertinent document which is executed with the intervention of the Bureau of Posts. This
Court does not put much credence to the self serving documentations made by the BIR personnel especially
if they are unsupported by substantial evidence establishing the fact of mailing. Thus:
While we have held that an assessment is made when sent within the prescribed period, even if
received by the taxpayer after its expiration (Coll. of Int. Rev. vs. Bautista, L-12250 and L-12259, May 27,
1959), this ruling makes it the more imperative that the release, mailing or sending of the notice be clearly
and satisfactorily proved. Mere notations made without the taxpayers intervention, notice or control,
without adequate supporting evidence cannot suffice; otherwise, the taxpayer would be at the mercy of the
revenue offices, without adequate protection or defense. (Nava vs. CIR, 13 SCRA 104, January 30, 1965)
xxx
The failure of the respondent to prove receipt of the assessment by the Petitioner leads to the
conclusion that no assessment was issued. Consequently, the governments right to issue an assessment for
the said period has already prescribed. (Industrial Textile Manufacturing Co. of the Phils., Inc. vs. CIR CTA
Case 4885, August 22, 1996).[13]
Jurisprudence has consistently shown that this Court accords the findings of fact by the CTA with
the highest respect. In Sea-Land Service Inc. v. Court of Appeals[14] this Court recognizes that the Court of
Tax Appeals, which by the very nature of its function is dedicated exclusively to the consideration of tax
problems, has necessarily developed an expertise on the subject, and its conclusions will not be overturned
unless there has been an abuse or improvident exercise of authority. Such findings can only be disturbed
on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on
the part of the Tax Court.[15] In the absence of any clear and convincing proof to the contrary, this Court
must presume that the CTA rendered a decision which is valid in every respect.
Under Section 203[16] of the National Internal Revenue Code (NIRC), respondent had three (3)
years from the last day for the filing of the return to send an assessment notice to petitioner. In the case
of Collector of Internal Revenue v. Bautista,[17] this Court held that an assessment is made within the
prescriptive period if notice to this effect is released, mailed or sent by the CIR to the taxpayer within said
period. Receipt thereof by the taxpayer within the prescriptive period is not necessary. At this point, it
should be clarified that the rule does not dispense with the requirement that the taxpayer should actually
receive, even beyond the prescriptive period, the assessment notice which was timely released, mailed and
sent.
In the present case, records show that petitioner filed its Annual Income Tax Return for taxable
year 1987 on 14 April 1988.[18] The last day for filing by petitioner of its return was on 15 April
1988,[19] thus, giving respondent until 15 April 1991 within which to send an assessment notice. While
respondent avers that it sent the assessment notice dated 1 February 1991 on 6 February 1991, within the
three (3)-year period prescribed by law, petitioner denies having received an assessment notice from
respondent. Petitioner alleges that it came to know of the deficiency tax assessment only on 17 March
1992 when it was served with the Warrant of Distraint and Levy.[20]
In Protectors Services, Inc. v. Court of Appeals,[21] this Court ruled that when a mail matter is sent
by registered mail, there exists a presumption, set forth under Section 3(v), Rule 131 of the Rules of
Court, [22] that it was received in the regular course of mail. The facts to be proved in order to raise this
presumption are: (a) that the letter was properly addressed with postage prepaid; and (b) that it was
mailed. While a mailed letter is deemed received by the addressee in the ordinary course of mail, this is still
merely a disputable presumption subject to controversion, and a direct denial of the receipt thereof shifts
the burden upon the party favored by the presumption to prove that the mailed letter was indeed received
by the addressee.[23]
In the present case, petitioner denies receiving the assessment notice, and the respondent was
unable to present substantial evidence that such notice was, indeed, mailed or sent by the respondent before
the BIRs right to assess had prescribed and that said notice was received by the petitioner. The respondent
presented the BIR record book where the name of the taxpayer, the kind of tax assessed, the registry receipt
number and the date of mailing were noted. The BIR records custodian, Ingrid Versola, also testified that
she made the entries therein. Respondent offered the entry in the BIR record book and the testimony of its
record custodian as entries in official records in accordance with Section 44, Rule 130 of the Rules of
Court,[24] which states that:

Section 44. Entries in official records. - Entries in official records made in the performance of his duty
by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined
by law, are prima facie evidence of the facts therein stated.

The foregoing rule on evidence, however, must be read in accordance with this Courts
pronouncement in Africa v. Caltex (Phil.), Inc.,[25] where it has been held that an entrant must have personal
knowledge of the facts stated by him or such facts were acquired by him from reports made by persons
under a legal duty to submit the same.
There are three requisites for admissibility under the rule just mentioned: (a) that the entry was
made by a public officer, or by another person specially enjoined by law to do so; (b) that it was made
by the public officer in the performance of his duties, or by such other person in the performance of
a duty specially enjoined by law; and (c) that the public officer or other person had sufficient
knowledge of the facts by him stated, which must have been acquired by him personally or through
official information x x x.
In this case, the entries made by Ingrid Versola were not based on her personal knowledge as she
did not attest to the fact that she personally prepared and mailed the assessment notice. Nor was it stated in
the transcript of stenographic notes[26] how and from whom she obtained the pertinent
information. Moreover, she did not attest to the fact that she acquired the reports from persons under a legal
duty to submit the same. Hence, Rule 130, Section 44 finds no application in the present case. Thus, the
evidence offered by respondent does not qualify as an exception to the rule against hearsay evidence.
Furthermore, independent evidence, such as the registry receipt of the assessment notice, or a
certification from the Bureau of Posts, could have easily been obtained. Yet respondent failed to present
such evidence.

In the case of Nava v. Commissioner of Internal Revenue, [27] this Court stressed on the importance
of proving the release, mailing or sending of the notice.
While we have held that an assessment is made when sent within the prescribed period, even if received by
the taxpayer after its expiration (Coll. of Int. Rev. vs. Bautista, L-12250 and L-12259, May 27, 1959), this
ruling makes it the more imperative that the release, mailing, or sending of the notice be clearly and
satisfactorily proved. Mere notations made without the taxpayer’s intervention, notice, or control, without
adequate supporting evidence, cannot suffice; otherwise, the taxpayer would be at the mercy of the revenue
offices, without adequate protection or defense.
In the present case, the evidence offered by the respondent fails to convince this Court that Formal
Assessment Notice No. FAN-1-87-91-000649 was released, mailed, or sent before 15 April 1991, or before
the lapse of the period of limitation upon assessment and collection prescribed by Section 203 of the
NIRC. Such evidence, therefore, is insufficient to give rise to the presumption that the assessment notice
was received in the regular course of mail. Consequently, the right of the government to assess and collect
the alleged deficiency tax is barred by prescription.

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision of
the Court of Appeals in CA-G.R. SP No. 60209 dated 11 July 2002, is hereby REVERSED and SET
ASIDE, and the Decision of the Court of Tax Appeals in C.T.A. Case No. 5662, dated 17 May
2000, cancelling the 1988 Deficiency Tax Assessment against Barcelon, Roxas Securitites, Inc. (now
known as UPB Securities, Inc.) for being barred by prescription, is hereby REINSTATED.No costs.

SO ORDERED.
DIMAGUILA vs. MONTEIRO
G.R. No. 201011 January 27, 2014
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the August 15,
2011Decision1 and the March 5, 2012 Resolution2 of the Court of Appeals (CA), in CA-G.R. CV No.
92707, which affirmed the August 23, 2007 Decision3 of the Regional Trial Court, Branch 27, Santa Cruz,
Laguna (RTC), in Civil Case No. SC-3108.
The Facts
On July 5, 1993, the respondent spouses, Jose and Sonia Monteiro (Spouses Monteiro), along with Jose,
Gerasmo, Elisa, and Clarita Nobleza, filed their Complaint for Partition and Damages before the RTC,
against the petitioners, Theresita, Juan, Asuncion, Patrocinia, Ricardo, and Gloria Dimaguila (The
Dimaguilas), together with Rosalina, Jonathan, Eve, Sol, Venus, Enrique, Nina, Princess Arieta, and
Evangelina Borlaza. The complaint alleged that all the pmiies were co-owners and prayed for the pmiition
of a residential house and lot located at Gat. Tayaw St., Liliw, Laguna, with an area of 489 square meters,
and covered by Tax Declaration No. 1453. Spouses Monteiro anchored their claim on a deed of sale
executed in their favor by the heirs of Pedro Dimaguila (Pedro).

In their Answer, the Dimaguilas and the other defendants countered that there was no co-ownership to speak
of in the first place. They alleged that the subject property, then owned by Maria Ignacio Buenaseda, had
long been partitioned equally between her two sons, Perfecto and Vitaliano Dimaguila, through a Deed of
Extrajudicial Partition, with its southern-half portion assigned to Perfecto and the northern-half portion to
Vitaliano. They claimed that they were the heirs of Vitaliano and that Spouses Monteiro had nothing to do
with the property as they were not heirs of either Perfecto or Vitaliano.

During the course of the proceedings, several incidents were initiated, namely: (a) Motion to Dismiss for
lack of legal capacity to sue of Spouses Monteiro and for lack of cause of action; (b) Motion for
Reconsideration of the Order of denial thereof, which was denied; (c) Motion for Production and Inspection
of Documents; (d) Motion for Reconsideration of the Order granting the same, which was denied; (e)
Motion to Defer Pre-trial; (f) Notice of Consignation by the petitioners in the exercise of their alleged right
of redemption of the share being claimed by the Spouses Monteiro in light of the deed of sale they produced
and claimed to have been executed by the heirs of Pedro in their favor; (g) Motion to Remove Sonia
Monteiro (Sonia) as plaintiff, which was denied; (h) Motion for Reconsideration thereof, which was also
denied; (i) Motion for Clarification and/or Extended Resolution; and (j) Motion to Suspend Proceedings
due to a pending Petition for Certiorari before the CA assailing several of the RTC orders. The proceedings
resumed after the promulgation by the CA of its April 5, 2000 Resolution in CA-G.R. No. SP 52833, which
upheld the assailed RTC orders.

On January 2, 2001, upon resumption of the proceedings, Spouses Monteiro filed their Motion for Leave
to Amend and/or Admit Amended Complaint.4 The RTC granted their motion. The amended complaint
abandoned the original claim for partition and instead sought the recovery of possession of a portion of the
subject property occupied by the Dimaguilas and other defendants, specifically, the portion sold to the
couple by the heirs of Pedro. Furthermore, only Spouses Monteiro were retained as plaintiffs and the
Dimaguilas as defendants.

In amending their complaint, Spouses Montiero adopted the Dimaguilas' admission in their original answer
that the subject propetiy had already been partitioned between Perfecto and Vitaliano, through a Deed of
Extrajudicial Partition, dated October 5, 1945, and that during their lifetime, the brothers agreed that
Perfecto would become the owner of the southern-hal f portion and Vitaliano of the northern-half portion,
which division was observed and respected by them as well as their heirs and successors-in-interest.

Spouses Monteiro further averred that Perfecto was survived by Esperanza, Leandro and Pedro, who had
divided the southern-half portion equally amongst themselves, with their respective 1 /3 shares measuring
81.13 square meters each; that Pedro's share pertains to the 1 /3 of the southern-half immediately adjacent
to the northern-half adjudicated to the Dimaguilas as heirs of Vitaliano; that on September 29, 1992, Pedro's
share was sold by his heirs to them through a Bilihan ng Lahat Naming Karapatan (Bilihan) with the
acquiescence of the heirs of Esperanza and Leandro appearing in an Affidavit of Conformity and Waiver;
and that when they attempted to take possession of the share of Pedro, they discovered that the subject
portion was being occupied by the Dimaguilas.

In their Answer5 to the amended complaint, the Dimaguilas admitted that the subject property was inherited
by, and divided equally between Perfecto and Vitaliano, but denied the admission in their original answer
that it had been actually divided into southern and nmihern portions. Instead, they argued that the
Extrajudicial Partition mentioned only the division of the subject property "into two and share and share
alike." In effect, they argued the existence of a co-owenrship, contrary to their original position. The
Dimaguilas further argued that the Bilihan did not specify the metes and bounds of the property sold, in
violation of Article 1458 of the Civil Code. Even assuming that such had been specified, they averred that
the sale of a definite portion of a property owned in common was void since a co-owner could only sell his
undivided share in the property.

During the trial, Spouses Monteiro presented Pedrito Adrieta, brother of Sonia Monteiro (Sonia), who
testified that Perfecto was his grandfather and that at the time of Perfecto's death, he had two properties,
one of which was the subject property in Liliw, Laguna, which went to his children, Esperanza, Leonardo
and Pedro. Pedro was survived by his children Pedrito, Theresita, Francisco, and Luis, who, in turn, sold
their rights over the subject property to Sonia.

Sonia testified that she was approached by Pedro's son, Francisco, and was asked if she was interested in
purchasing Pedro's 1/3 share of the southern portion of the Bahay na Sato, and that he showed her a deed
of extrajudicial partition executed by and between Perfecto and Vitaliano, as well as the tax declaration of
the property to prove that the property had already been partitioned between the two brothers.

Engineer Baltazar F. Mesina testified that he was the geodetic engineer hired by Spouses Monteiro to survey
the property in Liliw, and recounted that he checked the boundary of the subject property, subdivided the
lot into two and came up with a survey plan.

Crisostomo Arves, an employee from the Office of the Municipal Assessor, presented a certified true copy
of the cadastral map of Liliw and a list of claimants/owners.

Dominga Tolentino, a record officer of the Department of Environment and Natural Resources (DENR),
testified that as part of her duties, she certifies and safekeeps the records of surveyed land, including
cadastral maps from the region.

One of the Dimaguilas, Asuncion, was the sole witness for the defendants. She testified that their first
counsel made a mistake when he alleged in their original answer that the property had already been
partitioned into n01ihern and southern portions between the two brothers, as the original answer had been
rushed and they were never given a copy of it. She claimed that the mistake was only pointed out to her by
their new counsel after their former counsel withdrew due to cancer. She further testified that there was no
intention to partition the "bahay na bato" which stood on the subject property, in order to preserve its
historical and sentimental value.

Ruling of the RTC

In its August 23, 2007 Decision, the RTC ruled in favor of Spouses Monteiro and ordered the Dimaguilas
to turn over the possession of the subject 1 /3 portion of the southern-half of the property, to wit:

WHEREOF, judgment is hereby rendered in favor of the plaintiffs and against the defendants:

a. Ordering the defendants and all persons claiming rights under them to peacefully vacate and turn-over
possession of 1/ 3 of the southern portion of the property covered by Tax Declaration No. 1453, specifically
described as "A" of Lot 877 in the sketch plan marked as Exhibit "I", within 60 days from the finality of
this Decision, failing which let a writ of possession issue;

b. Ordering the defendants to pay the plaintiffs, jointly and solidarily, the amount of ?500 per month in the
form of rent for the use of the property from July 1993 until the property is vacated;

c. Ordering the defendants to pay the plaintiffs, jointly and solidarily, attorney's fees of P30,000 and
litigation expense of P20,000.

SO ORDERED.6

The RTC found that although the extrajudicial partition merely divided the property into two share and
share alike, evidence aliunde was appreciated to show that there was an actual division of the property into
south and north between Perfecto and Vitaliano, and that such partition was observed and honored by their
heirs. These pieces of evidence were the cadastral map of Liliw7 and a corresponding list of claimants,
which showed that the subject property had long been registered as Lot 876 (northern-half), claimed by
Buenaventura Dimaguila (Buenaventura), an heir of Vitaliano, and Lot 877 (southern-half), claimed by
Perfecto.

The RTC held that the manner of partition was admitted by the Dimaguilas themselves in their original
answer. It gave no credence to the claim of Asuncion that such admission was an error of their fonner
counsel and that she was unaware of the contents of their original answer. It noted that the Dimaguilas had
strongly maintained their theory of partition from 1992 when the complaint was first filed, and only changed
their defense in 2001 when Spouses Monteiro filed their amended complaint. It keenly observed that it was
precisely their admission which propelled Spouses Monteiro to amend their complaint from one of partition
to recovery of possession. Thus, the RTC concluded that there was indeed a partition of the subject property
into southern-half and northern-half portions between Perfecto and Vitaliano and that the Dimaguilas were
estopped from denying the same.

As to the authenticity of the Bilihan, where the 1 /3 share of Pedro was sold to Spouses Monteiro, the RTC
found the document to be regular and authentic absent any piece of evidence to the contrary. It stated that
the proper persons to contest the sale were not the Dimaguilas, who were the heirs of Vitaliano, but the
heirs of Perfecto. It noted that the records showed that the heirs of Esperanza and Leandro (Pedro's siblings),
had signified their conformity to the pa1iition and to the sale of Pedro's 1 /3 portion.

Ruling of the CA
In its assailed August 15, 2011 Decision, the CA affirmed the ruling of the RTC.

The CA found that Spouses Monteiro had established their case by a preponderance of evidence thru their
presentation of the Deed of Extrajudicial Partition,8 the cadastral map and the municipal assessor's
records.9 It noted, more importantly, that the Dimaguilas themselves corroborated the claim of partition in
their original answer. It likewise ruled that the petitioners were estopped from denying their admission of
partition after the respondent spouses had relied on their judicial admission.

The Dimaguilas also insisted on their argument, which was raised before the RTC, but not addressed, that
the Bilihan should not have been admitted as evidence for lack of a documentary stamp tax, in accordance
with Section 201 of the National Internal Revenue Code (N!RC). Citing Gabucan v. Manta 10 and Del
Rosario v. Hamoy,11 the CA, however, ruled that if a document which did not bear the required documentary
stamp was presented in evidence, the court should require the proponent to affix the requisite stamp. The
CA noted that the RTC had failed to direct Spouses Monteiro to affix the stamp and merely reminded the
presiding judge to be more vigilant on similar situations in the future. Nonetheless, it held that the
petitioners did not possess the necessary personality to assail the sale between Spouses Monteiro and the
heirs of Pedro because it pe1iained to the southern-half of the property to which they had no claim.

The CA likewise found sufficient basis for the award of rentals as compensatory damages since Spouses
Monteiro were wrongfully deprived of possession of the 1/3 portion of the southern-half of the subject
property. It also upheld the award of attorney's fees and litigation expenses by the RTC, considering that
Spouses Monteiro were compelled to litigate and incur expenses to protect their rights and interest.

In its assailed March 5, 2012 Resolution, the CA denied the petitioners' motion for reconsideration for lack
of merit.

Hence, this petition.

I
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THERE WAS AN ACTUAL
PARTITION OF THE PROPERTY COVERED BY TAX DECLARATION NO. 1453.

II
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE 1/3 PORTION OF THE
SOUTHERN HALF OF THE PROPERTY WAS SOLD TO THE RESPONDENTS.

III
THE COURT OF APPEALS GRAVELY ERRED IN ADMITTING IN EVIDENCE EXHIBIT C, THE
BIL/HAN NG LAHA T NAMING KARAPATAN.

IV
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE RESPONDENTS ARE
ENTITLED TO RECOVER POSSESSION OF THE 1/3 PORTION OF THE SOUTHERN HALF OF THE
PROPERTY.

V
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THE PETITIONERS LIABLE FOR
RENTALS FOR THE USE OF THE PROPERTY FROM JULY 1993 UNTIL VACATED.

VI
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THE PETITIONERS LIABLE FOR
ATTORNEY'S FEES AND LITIGATION EXPENSES.

VII
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO CONSIDER THE
PETITIONERS' SUPPLEMENTAL ANSWER TO AMENDED COMPLAINT AND TO GRANT THE
COUNTERCLAIMS INTERPOSED THEREIN.12

The Dimaguilas argue that their original allegation regarding the partition of the subject property into
northern and southern portions was a mistake of their former counsel, and it was not their intention to
partition the property because to do so would damage the house thereon. Even assuming an admission was
made, the petitioners aver that such was made only by some, but not all, of the co-owners; and that partition
can only be made by all co-owners, and allowing the admission is tantamount to effecting partition by only
some co-owners. Spouses Monteiro themselves, in their original complaint, made an admission that they
were co-owners of the property and asserted that there was no partition. The evidence aliunde considered
by the RTC, consisting of the cadastral map and the list of claimants, were timely objected to during the
trial as hearsay and a violation of the best evidence rule.

The petitioners reiterate that the Bilihan should not have been admitted into evidence because it lacked the
documentary stamp tax required by Section 201 of the NIRC, providing that no document shall be admitted
in evidence until the requisite stamps have been affixed thereto. They argue that the ruling of petitioners'
lack of personality to assail the deed of sale is different from the issue of the deed of sale's admissibility as
evidence. They conclude that considering that no documentary stamp was ever affixed on the deed of sale,
such should never have been admitted into evidence and consequently, should not have been relied upon
by the lower courts to prove the sale of 1/3 of the southern portion; and that considering that the Bilihan is
inadmissible as evidence, the respondent spouses have no basis for their claim to the subject 1/3 portion of
the southern-half of the property. Thus, they insist that the lower courts erred in awarding to Spouses
Monteiro the possession of the subject prope1iy, the rentals, attorney's fees and litigation expenses, and in
failing to rule on their counterclaim for demolition of improvements and payment of damages.

The assignment of errors boils down to two main issues:

I. Whether there was a pa1iition of the subject property; and


2. Whether the 1/3 portion of the southern-half of the subject property was sold to the respondent spouses.

Ruling of the Court

At the outset, it must be pointed out that the petitioners' assignment of errors calls for the Court to again
evaluate the evidence to determine whether there was a partition of the property and whether the 1/3 portion
of the southern half was sold to the respondent spouses. These clearly entail questions of fact which are
beyond the Court's ambit of review under Rule 45 of the Rules of Court, especially considering that the
findings of fact of the RTC were affirmed by the CA.13 On this ground alone, the present petition must be
denied. Nonetheless, the Court shall delve into these factual issues to finally put this case to rest.

Partition of the Subject Property

Spouses Monteiro, as plaintiffs in the original case, had the burden of proof to establish their case by a
preponderance of evidence, which is the weight, credit, and value of the aggregate evidence on either side,
synonymous with the term "greater weight of the evidence." Preponderance of evidence is evidence which
is more convincing to the court as worthy of belief than that which is offered in opposition thereto.14
To prove their claim of partition, the respondent spouses presented the following: (1) the Deed of
Extrajudicial Partition, dated October 5, 1945, executed by and between the brothers Perfecto and Vitaliano;
(2) the cadastral map of Liliw Cadm-484,15 dated August 6, 1976, showing that the subject property had
been divided into southern and northern portions, registered as Lot Nos. 876 and 877; and (3) the Municipal
Assessor's records16 showing that the said lots were respectively claimed by Buenaventura and Perfecto.

It is undisputed that the Deed of Extrajudicial Partition stated that Perfecto and Vitaliano agreed "to divide
between them into two and share and share alike" the subject property, including the house situated thereon.
It appears, however, that the property was actually partitioned into definite portions, namely, southern and
northern halves, as reflected in the cadastral map of Liliw, which were respectively claimed by an heir of
Vitaliano and Perfecto himself. It, thus, appears that the subject property had already been partitioned into
definite portions more than 20 years prior to the original complaint for partition filed in 1993, and that such
division had been observed by the brothers' heirs. As earlier pointed out, the petitioners themselves admitted
to this very fact in their original answer, to wit:

(b) On September 5, 1945 the brothers PERFECTO and VITALIANO DIMAGUILA executed a deed of
EXTRA JUDICIAL PARTITION of the aforedescribed property dividing the same into two (2) equal parts
as indicated in the aforesaid deed as follows, to wit:

xxx

(c) As a result of the foregoing partition and as known by all the parties in this case from the beginning or
as soon as they reached the age of discernment PERFECTO DIMAGUILA became the sole and exclusive
owner of the southern half of the aforedescribed property and VITALIANO DIMAGUILA became the sole
owner of the northern half of the same property; the house that was built thereon and still existing up to this
time was likewise equally divided between the two (2) DIMAGUILA brothers in accordance with the
extrajudicial partition of half equal shares;

xxx

2. In other words, the share of VITALIANO DIMAGUILA in the above described property has already
been long segregated and had passed on to his heirs as is very well known by all the parties in this case;17

xxx

(Emphases in the Original)

Section 418 of Rule 129 of the Rules of Court provides that an admission made by a pa1iy in the course of
the proceedings in the same case does not require proof, and may be contradicted only by showing that it
was made through palpable mistake. The petitioners argue that such admission was the palpable mistake of
their former counsel in his rush to file the answer, a copy of which was not provided to them. Petitioner
Asuncion testified:

Q So, why was that allegations (sic) made in the Answer?

A May be, (sic) in his rush to file the Answer, Atty. Paredes filed the same without giving us a copy ...19

This contention is unacceptable. It is a purely self-serving claim unsupported by any iota of evidence. Bare
allegations, unsubstantiated by evidence, are not equivalent to proof.20 Furthermore, the Court notes that
this position was adopted by the petitioners only almost eight (8) years after their original answer was filed,
in response to the amended complaint of the respondent spouses. In their original answer to the complaint
for partition, their claim that there was already a partition into northern-half and southern-half portions, was
the very essence of their defense. It was precisely this admission which moved the respondent spouses to
amend their complaint. The petitioners cannot now insist that the very foundation of their original defense
was a palpable mistake.

Article 143121 of the Civil Code provides that through estoppel, an admission is rendered conclusive upon
the person making it, and cannot be denied or disproved as against the person relying thereon. The
respondent spouses had clearly relied on the petitioners' admission and so amended their original complaint
for partition to one for recovery of possession of a portion of the subject property. Thus, the petitioners are
now estopped from denying or attempting to prove that there was no partition of the property.

Considering that an admission does not require proof, the admission of the petitioners would actually be
sufficient to prove the partition even without the documents presented by the respondent spouses. If
anything, the additional evidence they presented only served to corroborate the petitioners' admission.

The petitioners argue that they timely objected to the cadastral map and the list of claimants presented by
the respondent spouses, on the ground that they violated the rule on hearsay and the best evidence rule.

Anent the best evidence rule, Section 3( d) of Rule 130 of the Rules of Court provides that when the subject
of inquiry is the contents of a document, no evidence shall be admissible other than the original document
itself, except when the original is a public record in the custody of a public officer or is recorded in a public
office.22Section 7 of the same Rule provides that when the original of a document is in the custody of a
public officer or is recorded in a public office, its contents may be proved by a certified copy issued by the
public officer in custody thereof.23 Section 24 of Rule 132 provides that the record of public documents
may be evidenced by a copy attested by the officer having the legal custody or the record.24

Certified true copies of the cadastral map of Liliw and the corresponding list of claimants of the area covered
by the map were presented by two public officers. The first was Crisostomo Arves, Clerk III of the
Municipal Assessor's Office, a repository of such documents. The second was Dominga Tolentino, a DENR
employee, who, as a record officer, certifies and safekeeps records of surveyed land involving cadastral
maps. The cadastral maps and the list of claimants, as ce1iified true copies of original public records, fall
under the exception to the best evidence rule.

As to the hearsay rule, Section 44 of Rule 130 of the Rules of Court similarly provides that entries in official
records are an exception to the rule.25 The rule provides that entries in official records made in the
performance of the duty of a public officer of the Philippines, or by a person in the performance of a duty
specially enjoined by law, are prima facie evidence of the facts therein stated. The necessity of this rule
consists in the inconvenience and difficulty of requiring the official's attendance as a witness to testify to
the innumerable transactions in the course of his duty. The document's trustworthiness consists in the
presumption of regularity of performance of official duty.26

Cadastral maps are the output of cadastral surveys. The DENR is the department tasked to execute,
supervise and manage the conduct of cadastral surveys.27 It is, therefore, clear that the cadastral map and
the corresponding list of claimants qualify as entries in official records as they were prepared by the DENR,
as mandated by law. As such, they are exceptions to the hearsay rule and are primafacie evidence of the
facts stated therein.
Even granting that the petitioners had not admitted the partition, they presented no evidence to contradict
the evidence of the respondent spouses. Thus, even without the admission of the petitioners, the respondent
spouses proved by a preponderance of evidence that there had indeed been a partition of the subject
property.

Sale of 1/3 Portion of the Southern-half

To prove that 1/3 of the southern-half portion of the subject property was sold to them, Spouses Monteiro
presented a deed of sale entitled Bilihan ng Lahat Naming Karapatan,28 dated September 29, 1992, wherein
Pedro's share was sold by his heirs to them, with the acquiescence of the heirs of Esperanza and Leandro in
an Affidavit of Conformity and Waiver.29 The petitioners argue that the Bilihan should not have been
admitted into evidence because it lacked the documentary stamp tax required by Section 201 of the NIRC.

On August 29, 1994, the petitioners filed a motion for the production and/or inspection of
documents,30 praying that Spouses Monteiro be ordered to produce the deed of sale, which they cited as the
source of their rights as co-owners. On November 20, 1995, Spouses Monteiro submitted their
compliance,31 furnishing the RTC and the petitioners with a copy32 of the Bilihan. On January 3, 1996, the
petitioners filed a notice of consignation,33manifesting that they had attempted to exercise their right of
redemption as co-owners of the 1/3 portion of the southern half of the property under Article 162334 of the
Civil Code by sending and tendering payment of redemption to Spouses Monteiro, which was, however,
returned.

By filing the notice of consignation and tendering their payment for the redemption of the 1/3 portion of
the southern-half of the property, the petitioners, in effect, admitted the existence, due execution and
validity of the Bilihan. Consequently, they are now estopped from questioning its admissiblity in evidence
for relying on such for their right of redemption. Additionally, the Court notes that the copy35 of the Bilihan
which was originally submitted by Spouses Monteiro with its compliance filed on November 20, 1995,
does in fact bear a documentary stamp tax. It could only mean that the documentary stamp tax on the sale
was properly paid. The Bilihan was, therefore, properly admitted into evidence and considered by the RTC.

In any case, as correctly held by the lower cou1is, the petitioners, as heirs of Vitaliano, who inherited the
northern-half po1iion of the subject property, do not possess the necessary personality to assail the sale of
the southern-half portion between Spouses Monteiro and the heirs of Pedro.1âwphi1 They are not real
parties-in-interest who stand to be benefited or injured by the sale of the 1/3 portion of the southern-half
over which they have absolutely no right. As correctly ruled by the courts below, only fellow co-owners
have the personality to assail the sale, namely, the heirs of Pedro's siblings, Esperanza and Leandro. They
have, however, expressly aquiesced to the sale and waived their right to the property in the affidavit
presented by Spouses Monteiro.36 As such, the petitioners have no right to their counterclaims of demolition
of improvements and payment of damages.

With Spouses Monteiro having sufficiently proved their claim over the subject I /3 portion of the southern-
half of the prope1iy through the Bilihan, the lower courts did not err in awarding possession, rentals,
attorney's fees, and litigation expenses to them.

The Court, however, finds that the award of rentals should be reckoned from January 2, 2001, the date the
Spouses Monteiro filed their Amended Complaint seeking recovery of the subject portion. Interest at the
rate of 6% per annum shall also be imposed on the total amount of rent due from finality of this Decision
until fully paid.37
WHEREFORE, the petition is DENIED. The August 15, 2011 Decision and the March 15, 2012 Resolution
of the Court of Appeals, in CA-G .R. CV No. 92707 are AFFIRMED with MODIFICATION, in that:

a. The award of rent at the rate of P500.00 per month shall be reckoned from January 2, 2001 until
the property is vacated; and

b. Interest at the rate of 6% per annum shall be imposed on the total amount of rent due from finality
of this Decision until fully paid.

SO ORDERED.
MERALCO
MERALCO vs. QUISUMBING
G.R. No. 127598 February 22, 2000

In the Decision promulgated on January 27, 1999, the Court disposed of the case as follows:

WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August
19, 1996 and December 28, 1996 are set aside to the extent set forth above. The parties are directed to
execute a Collective Bargaining Agreement incorporating the terms and conditions contained in the
unaffected portions of the Secretary of Labor's orders of August 19, 1996 and December 28, 1996, and the
modifications set forth above. The retirement fund issue is remanded to the Secretary of Labor for reception
of evidence and determination of the legal personality of the MERALCO retirement fund.1

The modifications of the public respondent's resolutions include the following:

January 27, 1999 decision Secretary's resolution


Wages - P1,900.00 for 1995-96 P2,200.00
X'mas bonus - modified to one month 2 months
Retirees - remanded to the Secretary granted
Loan to coops - denied granted
GHSIP, HMP and
Housing loans - granted up to P60,000.00 granted
Signing bonus - denied granted
Union leave - 40 days (typo error) 30 days
High voltage/pole - not apply to those who are members of a team
not exposed to the risk
Collectors - no need for cash bond, no
need to reduce quota and MAPL
CBU - exclude confidential employees include
Union security - maintenance of membership closed shop
Contracting out - no need to consult union consult first
All benefits - existing terms and conditions all terms
Retroactivity - Dec. 28, 1996-Dec. 27, 199(9) from Dec. 1, 1995

Dissatisfied with the Decision, some alleged members of private respondent union (Union for brevity) filed
a motion for intervention and a motion for reconsideration of the said Decision. A separate intervention
was likewise made by the supervisor's union (FLAMES2) of petitioner corporation alleging that it has bona
fide legal interest in the outcome of the case.3 The Court required the "proper parties" to file a comment to
the three motions for reconsideration but the Solicitor-General asked that he be excused from filing the
comment because the "petition filed in the instant case was granted" by the Court.4 Consequently, petitioner
filed its own consolidated comment. An "Appeal Seeking Immediate Reconsideration" was also filed by
the alleged newly elected president of the Union.5 Other subsequent pleadings were filed by the parties and
intervenors.

The issues raised in the motions for reconsideration had already been passed upon by the Court in the
January 27, 1999 decision. No new arguments were presented for consideration of the Court. Nonetheless,
certain matters will be considered herein, particularly those involving the amount of wages and the
retroactivity of the Collective Bargaining Agreement (CBA) arbitral awards.

Petitioner warns that if the wage increase of P2,200.00 per month as ordered by the Secretary is allowed, it
would simply pass the cost covering such increase to the consumers through an increase in the rate of
electricity. This is a non sequitur. The Court cannot be threatened with such a misleading argument. An
increase in the prices of electric current needs the approval of the appropriate regulatory government agency
and does not automatically result from a mere increase in the wages of petitioner's employees. Besides, this
argument presupposes that petitioner is capable of meeting a wage increase. The All Asia Capital report
upon which the Union relies to support its position regarding the wage issue cannot be an accurate basis
and conclusive determinant of the rate of wage increase. Section 45 of Rule 130 Rules of Evidence provides:

Commercial lists and the like. — Evidence of statements of matters of interest to persons engaged in an
occupation contained in a list, register, periodical, or other published compilation is admissible as tending
to prove the truth of any relevant matter so stated if that compilation is published for use by persons engaged
in that occupation and is generally used and relied upon by them therein.

Under the afore-quoted rule, statement of matters contained in a periodical, may be admitted only "if that
compilation is published for use by persons engaged in that occupation and is generally used and relied
upon by them therein." As correctly held in our Decision dated January 27, 1999, the cited report is a mere
newspaper account and not even a commercial list. At most, it is but an analysis or opinion which carries
no persuasive weight for purposes of this case as no sufficient figures to support it were presented. Neither
did anybody testify to its accuracy. It cannot be said that businessmen generally rely on news items such as
this in their occupation. Besides, no evidence was presented that the publication was regularly prepared by
a person in touch with the market and that it is generally regarded as trustworthy and reliable. Absent
extrinsic proof of their accuracy, these reports are not admissible.6 In the same manner, newspapers
containing stock quotations are not admissible in evidence when the source of the reports is available.7 With
more reason, mere analyses or projections of such reports cannot be admitted. In particular, the source of
the report in this case can be easily made available considering that the same is necessary for compliance
with certain governmental requirements.

Nonetheless, by petitioner's own allegations, its actual total net income for 1996 was P5.1 billion.8 An
estimate by the All Asia financial analyst stated that petitioner's net operating income for the same year was
about P5.7 billion, a figure which the Union relies on to support its claim. Assuming without admitting the
truth thereof, the figure is higher than the P4.171 billion allegedly suggested by petitioner as its projected
net operating income. The P5.7 billion which was the Secretary's basis for granting the P2,200.00 is higher
than the actual net income of P5.1 billion admitted by petitioner. It would be proper then to increase this
Court's award of P1,900.00 to P2,000.00 for the two years of the CBA award. For 1992, the agreed CBA
wage increase for rank-and-file was P1,400.00 and was reduced to P1,350.00; for 1993; further reduced to
P1,150.00 for 1994. For supervisory employees, the agreed wage increase for the years 1992-1994 are
P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the foregoing figures, the P2,000.00 increase
for the two-year period awarded to the rank-and-file is much higher than the highest increase granted to
supervisory employees.9 As mentioned in the January 27, 1999 Decision, the Court does "not seek to
enumerate in this decision the factors that should affect wage determination" because collective bargaining
disputes particularly those affecting the national interest and public service "requires due consideration and
proper balancing of the interests of the parties to the dispute and of those who might be affected by the
dispute."10 The Court takes judicial notice that the new amounts granted herein are significantly higher than
the weighted average salary currently enjoyed by other rank-and-file employees within the community. It
should be noted that the relations between labor and capital is impressed with public interest which must
yield to the common good.11 Neither party should act oppressively against the other or impair the interest
or convenience of the public.12 Besides, matters of salary increases are part of management prerogative.13

On the retroactivity of the CBA arbitral award, it is well to recall that this petition had its origin in the
renegotiation of the parties' 1992-1997 CBA insofar as the last two-year period thereof is concerned. When
the Secretary of Labor assumed jurisdiction and granted the arbitral awards, there was no question that these
arbitral awards were to be given retroactive effect. However, the parties dispute the reckoning period when
retroaction shall commence. Petitioner claims that the award should retroact only from such time that the
Secretary of Labor rendered the award, invoking the 1995 decision in Pier 8 case 14 where the Court,
citing Union of Filipino Employees v. NLRC,15said:

The assailed resolution which incorporated the CBA to be signed by the parties was promulgated on June
5, 1989, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should
be agreed upon by the parties. But since no agreement to that effect was made, public respondent did not
abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is
within the ambit of its authority vested by existing law.

On the other hand, the Union argues that the award should retroact to such time granted by the Secretary,
citing the 1993 decision of St. Luke's.16

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the
previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A
cannot be properly applied to herein case. As correctly stated by public respondent in his assailed Order of
April 12, 1991 dismissing petitioner's Motion for Reconsideration —

Anent the alleged lack of basis for the retroactivity provisions awarded; we would stress that the provision
of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by and between the
parties, and not arbitral awards . . .

Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral
awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein
involved, public respondent is deemed vested with plenary and discretionary powers to determine the
effectivity thereof.

In the 1997 case of Mindanao Terminal,17 the Court applied the St. Luke's doctrine and ruled that:

In St. Luke's Medical Center v. Torres, a deadlock also developed during the CBA negotiations between
management and the union. The Secretary of Labor assumed jurisdiction and ordered the retroaction of the
CBA to the date of expiration of the previous CBA. As in this case, it was alleged that the Secretary of
Labor gravely abused its discretion in making his award retroactive. In dismissing this contention this Court
held:

Therefore, in the absence of a specific provision of law prohibiting retroactive of the effectivity of arbitral
awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein
involved, public respondent is deemed vested with plenary and discretionary powers to determine the
effectivity thereof.

The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective for a period of 2 years
counted from December 28, 1996 up to December 27, 1999." Parenthetically, this actually covers a three-
year period. Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary had
assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact. In general, a CBA
negotiated within six months after the expiration of the existing CBA retroacts to the day immediately
following such date and if agreed thereafter, the effectivity depends on the agreement of the parties. 18 On
the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue
of the mutual agreement of the parties but by intervention of the government. Despite the silence of the law,
the Court rules herein that CBA arbitral awards granted after six months from the expiration of the last
CBA shall retroact to such time agreed upon by both employer and the employees or their union. Absent
such an agreement as to retroactivity, the award shall retroact to the first day after the six-month period
following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the
Secretary's determination of the date of retroactivity as part of his discretionary powers over arbitral awards
shall control.

It is true that an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the
parties because it requires the interference and imposing power of the State thru the Secretary of Labor
when he assumes jurisdiction. However, the arbitral award can be considered as an approximation of a
collective bargaining agreement which would otherwise have been entered into by the parties. 19 The terms
or periods set forth in Article 253-A pertains explicitly to a CBA. But there is nothing that would prevent
its application by analogy to an arbitral award by the Secretary considering the absence of an applicable
law. Under Article 253-A: "(I)f any such agreement is entered into beyond six months, the parties shall
agree on the duration of retroactivity thereof." In other words, the law contemplates retroactivity whether
the agreement be entered into before or after the said six-month period. The agreement of the parties need
not be categorically stated for their acts may be considered in determining the duration of retroactivity. In
this connection, the Court considers the letter of petitioner's Chairman of the Board and its President
addressed to their stockholders, which states that the CBA "for the rank-and-file employees covering the
period December 1, 1995 to November 30, 1997 is still with the Supreme Court,"20 as indicative of
petitioner's recognition that the CBA award covers the said period. Earlier, petitioner's negotiating panel
transmitted to the Union a copy of its proposed CBA covering the same period inclusive. 21 In addition,
petitioner does not dispute the allegation that in the past CBA arbitral awards, the Secretary granted
retroactivity commencing from the period immediately following the last day of the expired CBA. Thus,
by petitioner's own actions, the Court sees no reason to retroact the subject CBA awards to a different date.
The period is herein set at two (2) years from December 1, 1995 to November 30, 1997.

On the allegation concerning the grant of loan to a cooperative, there is no merit in the union's claim that it
is no different from housing loans granted by the employer. The award of loans for housing is justified
because it pertains to a basic necessity of life. It is part of a privilege recognized by the employer and
allowed by law. In contrast, providing seed money for the establishment of the employee's cooperative is a
matter in which the employer has no business interest or legal obligation. Courts should not be utilized as
a tool to compel any person to grant loans to another nor to force parties to undertake an obligation without
justification. On the contrary, it is the government that has the obligation to render financial assistance to
cooperatives and the Cooperative Code does not make it an obligation of the employer or any private
individual.22
Anent the 40-day union leave, the Court finds that the same is a typographical error. In order to avoid any
confusion, it is herein declared that the union leave is only thirty (30) days as granted by the Secretary of
Labor and affirmed in the Decision of this Court.

The added requirement of consultation imposed by the Secretary in cases of contracting out for six (6)
months or more has been rejected by the Court. Suffice it to say that the employer is allowed to contract
out services for six months or more. However, a line must be drawn between management prerogatives
regarding business operations per se and those which affect the rights of employees, and in treating the
latter, the employer should see to it that its employees are at least properly informed of its decision or modes
of action in order to attain a harmonious labor-management relationship and enlighten the workers
concerning their rights.23 Hiring of workers is within the employer's inherent freedom to regulate and is a
valid exercise of its management prerogative subject only to special laws and agreements on the matter and
the fair standards of justice.24 The management cannot be denied the faculty of promoting efficiency and
attaining economy by a study of what units are essential for its operation. It has the ultimate determination
of whether services should be performed by its personnel or contracted to outside agencies. While there
should be mutual consultation, eventually deference is to be paid to what management
decides.25 Contracting out of services is an exercise of business judgment or management
prerogative.26 Absent proof that management acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.27 As mentioned in the January 27, 1999 Decision,
the law already sufficiently regulates this matter.28 Jurisprudence also provides adequate limitations, such
that the employer must be motivated by good faith and the contracting out should not be resorted to
circumvent the law or must not have been the result of malicious or arbitrary actions.29 These are matters
that may be categorically determined only when an actual suit on the matter arises.

WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision is
MODIFIED as follows: (1) the arbitral award shall retroact from December 1, 1995 to November 30, 1997;
and (2) the award of wage is increased from the original amount of One Thousand Nine Hundred Pesos
(P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 1995 and 1996. This Resolution is subject to
the monetary advances granted by petitioner to its rank-and-file employees during the pendency of this case
assuming such advances had actually been distributed to them. The assailed Decision is AFFIRMED in all
other respects.1âwphi1.nêt

SO ORDERED.
G.R. No. 207257 February 3, 2015
PAJE vs. CASIÑO

Before this Court are consolidated Petitions for Review on Certiorari1 assailing the Decision2 dated January
30, 2013 and the Resolution3 dated May 22, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 00015,
entitled "Hon. Teodoro A. Casiño, et al. v. Hon. Ramon Jesus P. Paje, et al."

Factual Antecedents

In February 2006, Subic Bay Metropolitan Authority· (SBMA), a government agency organized and
established under Republic Act No. (RA) 7227,4 and Taiwan Cogeneration Corporation (TCC) entered into
a Memorandum of Understanding (MOU) expressing their intention to build a power plant in Subic Bay
which would supply reliable and affordable power to Subic Bay Industrial Park (SBIP).5

On July 28, 2006, SBMA and TCC entered into another MOU, whereby TCC undertook to build and operate
a coal-fired power plant.6 In the said MOU, TCC identified 20 hectares of land at Sitio Naglatore, Mt.
Redondo, Subic Bay Freeport Zone (SBFZ) as the suitable area for the project and another site of
approximately 10 hectares to be used as an ash pond.7 TCC intends to lease the property from SBMA for a
term of 50 years with rent fixed at $3.50 per square meter, payable in 10 equal 5-year installments.8

On April 4, 2007, the SBMA Ecology Center issued SBFZ Environmental Compliance Certificate (ECC)
No. EC-SBFZ-ECC-69-21-500 in favor of Taiwan Cogeneration International Corporation (TCIC), a
subsidiary of TCC,9 for the construction, installation, and operation of 2x150-MW Circulating Fluidized
Bed (CFB) Coal-Fired Thermal Power Plant at Sitio Naglatore.10

On June 6, 2008, TCC assigned all its rights and interests under the MOU dated July 28, 2006 to Redondo
Peninsula Energy, Inc. (RP Energy),11 a corporation duly organized and existing under the laws of the
Philippines with the primary purpose of building, owning, and operating powerplants in the Philippines,
among others.12Accordingly, an Addendum to the said MOU was executed by SBMA and RP Energy.13

RP Energy then contracted GHD Pty, Ltd. (GHD) to prepare an Environmental Impact Statement (EIS) for
the proposed coal-fired power plant and to assist RP Energy in applying for the issuance of an ECC from
the Department of Environment and Natural Resources (DENR).14 On August 27, 2008, the Sangguniang
Panglungsod of Olongapo City issued Resolution No. 131, Series of 2008, expressing the city government’s
objection to the coal-fired power plant as an energy source and urging the proponent to consider safer
alternative sources of energy for Subic Bay.15

On December 22, 2008, the DENR, through former Secretary Jose L. Atienza, Jr., issued an ECC for the
proposed 2x150-MW coal-fired power plant.16
Sometime thereafter, RP Energy decided to include additional components in its proposed coal-fired power
plant. Due to the changes in the project design, which involved the inclusion of a barge wharf, seawater
intake breakwater, subsea discharge pipeline, raw water collection system, drainage channel improvement,
and a 230kV double-circuit transmission line,17 RP Energy requested the DENR Environmental
Management Bureau(DENR-EMB) to amend its ECC.18 In support of its request, RP Energy submitted to
the DENR-EMBan Environmental Performance Report and Management Plan (EPRMP), which was
prepared by GHD.19

On June 8, 2010, RP Energy and SBMA entered into a Lease and Development Agreement (LDA) over a
380,004.456-square meter parcel of land to be used for building and operating the coal-fired power plant.20

On July 8, 2010, the DENR-EMB issued an amended ECC (first amendment) allowing the inclusion of
additional components, among others.21

Several months later, RP Energy again requested the DENR-EMB to amend the ECC.22 Instead of
constructing a 2x150-MW coal-fired power plant, as originally planned, it now sought toconstruct a 1x300-
MWcoal-fired power plant.23 In support of its request, RP Energy submitted a Project Description Report
(PDR) to the DENR-EMB.24

On May 26, 2011, the DENR-EMB granted the request and further amended the ECC (second
amendment).25

On August 1, 2011, the Sangguniang Panglalawigan of Zambales issued Resolution No. 2011-149,
opposing the establishment of a coal-fired thermal power plant at SitioNaglatore, Brgy. Cawag, Subic,
Zambales.26

On August 11, 2011, the Liga ng mga Barangay of Olongapo City issued Resolution No. 12, Series of 2011,
expressing its strong objection to the coal-fired power plant as an energy source.27

On July 20, 2012, Hon. Teodoro A. Casiño, Hon. Raymond V. Palatino, Hon. Rafael V. Mariano, Hon.
Emerenciana A. De Jesus, Clemente G. Bautista, Jr., Hon. Rolen C. Paulino,Hon. Eduardo Piano, Hon.
James de los Reyes, Hon. Aquilino Y. Cortez, Jr., Hon. Sarah Lugerna Lipumano-Garcia, Noraida
Velarmino, Bianca Christine Gamboa Espinos, Charo Simons, Gregorio Llorca Magdaraog, Rubelh Peralta,
Alex Corpus Hermoso,Rodolfo Sambajon, Rev. Fr. Gerardo Gregorio P. Jorge, Carlito A. Baloy, Ofelia D.
Pablo, Mario Esquillo, Elle Latinazo, Evangeline Q. Rodriguez, and John Carlo delos Reyes (Casiño Group)
filed before this Court a Petition for Writ of Kalikasan against RP Energy, SBMA, and Hon. Ramon Jesus
P. Paje, in his capacity as Secretary of the DENR.28

On July 31, 2012, this Court resolved, among others, to: (1) issue a Writ of Kalikasan; and (2) refer the case
to the CA for hearing and reception of evidence and rendition of judgment.29 While the case was pending,
RP Energy applied for another amendment to its ECC (third amendment) and submitted another EPRMP
to the DENR-EMB, proposing the construction and operation of a 2x300-MW coal-fired power plant.30

On September 11, 2012, the Petition for Writ of Kalikasanwas docketed as CA-G.R. SP No. 00015 and
raffled to the Fifteenth Division of the CA.31 In the Petition, the Casiño Group alleged, among others, that
the power plant project would cause grave environmental damage;32 that it would adversely affect the health
of the residents of the municipalities of Subic, Zambales, Morong, Hermosa, and the City of
Olongapo;33 that the ECC was issued and the LDA entered into without the prior approval of the concerned
sanggunians as required under Sections 26 and 27 of the Local Government Code (LGC); 34 that the LDA
was entered into without securing a prior certification from the National Commission on Indigenous
Peoples (NCIP) as required under Section 59 of RA8371 or the Indigenous Peoples’ Rights Act of 1997
(IPRA Law);35 that Section 8.3 of DENR Administrative Order No. 2003-30 (DAO 2003-30) which
allowsamendments of ECCs is ultra viresbecause the DENR has no authority to decide on requests for
amendments of previously issued ECCs in the absence of a new EIS;36 and that due to the nullity of Section
8.3 of DAO 2003-30, all amendments to RP Energy’s ECC are null and void.37

On October 29, 2012, the CA conducted a preliminary conference wherein the parties, with their respective
counsels, appeared except for Hon. Teodoro A. Casiño, Hon. Rafael V. Mariano, Hon. Emerencia A. De
Jesus, Clemente G. Bautista, Mario Esquillo, Elle Latinazo,Evangeline Q. Rodriguez, and the SBMA.38 The
matters taken up during the preliminary conference were embodied in the CA’s Resolution dated November
5, 2012, to wit:

I. ISSUES

A. Petitioners (Casiño Group)

1. Whether x x x the DENR Environmental Compliance Certificate (‘ECC’ x x x) in favor of RP Energy


for a 2x150 MW Coal-Fired Thermal Power Plant Project (‘Power Plant,’ x x x ) and its amendment to
1x300 MW Power Plant, and the Lease and Development Agreement between SBMA and RP Energy
complied with the Certification Precondition as required under Section 59 of Republic Act No. 8371 or
the Indigenous People’s Rights Act of 1997 (‘IPRA Law,’ x x x);

2. Whether x x x RP Energy can proceed with the construction and operation of the 1x300 MW Power
Plant without prior consultation with and approval of the concerned local government units (‘LGUs,’ x
x x ), pursuant to Sections 26 and 27 of Republic Act No. 7160 or the Local Government Code;

3. Whether x x x Section 8.3 of DENR Administrative Order No. 2003-30 (‘DAO No. 2003-30,’ x x x )
providing for the amendment of an ECC is null and void for being ultra vires; and

4. Whether x x x the amendment of RPEnergy’s ECC under Section 8.3 of DAO No. 2003-30 is null
and void.

B. Respondent RP Energy

1. Whether x x x Section 8.3 of DAO No. 2003-30 can be collaterally attacked;

1.1 Whether x x x the same is valid until annulled;

2. Whether x x x petitioners exhausted their administrative remedies with respect to the amended ECC
for the 1x300 MW Power Plant;

2.1 Whether x x x the instant Petition is proper;

3. Whether x x x RP Energycomplied with all the procedures/requirements for the issuance of the DENR
ECC and its amendment;

3.1 Whether x x x a Certificate of Non-Overlap from the National Commission on Indigenous Peoples
is applicable in the instant case;
4. Whether x x x the LGU’s approval under Sections 26 and 27 of the Local Government Code is
necessaryfor the issuance of the DENR ECC and its amendments, and what constitutes LGU approval;

5. Whether x x x there is a threatened or actual violation of environmental laws to justify the Petition;

5.1 Whether x x x the approved 1x300 MW Power Plant complied with the accepted legal standards on
thermal pollution of coastal waters, air pollution, water pollution, and acid deposits on aquatic and
terrestrial ecosystems; and

6. Whether x x x the instant Petition should be dismissed for failure to comply with the requirements of
properverification and certification of nonforum shopping with respect to some petitioners.

C. Respondent DENR Secretary Paje

1. Whether x x x the issuance of the DENR ECC and its amendment in favor of RP Energy requires
compliance with Section 59 of the IPRA Law, as well as Sections 26 and 27 of the Local Government
Code;

2. Whether x x x Section 8.3 of DAO No. 2003-30 can be collaterally attacked in this proceeding; and

3. Whether x x x Section 8.3 of DAO No. 2003-30 is valid.

II. ADMISSIONS/DENIALS

Petitioners, through Atty. Ridon, admittedall the allegations in RP Energy’s Verified Return, except the
following:

1. paragraphs 1.4 to 1.7;


2. paragraphs 1.29 to 1.32; and
3. paragraphs 1.33 to 1.37.

Petitioners made no specific denial withrespect to the allegations of DENR Secretary Paje’s Verified
Return. x x x

Respondent RP Energy proposed the following stipulations, which were all admitted by petitioners, through
Atty. Ridon, viz:

1. The 1x300 MW Power Plant is not yet operational;


2. At present, there is no environmental damage;
3. The 1x300 MW Power Plant project is situated within the Subic Special Economic Zone; and
4. Apart from the instant case, petitioners have not challenged the validity of Section 8.3 of DAO No. 2003-
30.

Public respondent DENR Secretary Paje did not propose any matter for stipulation.39

Thereafter, trial ensued.

The Casiño Group presented three witnesses, namely: (1) Raymond V. Palatino, a two-term representative
of the Kabataan Partylist in the House of Representatives;40 (2) Alex C. Hermoso, the convenor of the
Zambales-Olongapo City Civil Society Network,a director of the PREDA41 Foundation, and a member of
the Zambales Chapter of the Kaya Natin Movement and the Zambales Chapter of the People Power
Volunteers for Reform;42 and (3) Ramon Lacbain, the ViceGovernor of the Province of Zambales.43

RP Energy presented five witnesses, namely: (1) JunisseP. Mercado (Ms. Mercado), an employee of GHD
and the Project Directorof ongoing projects for RP Energy regarding the proposed power plant project;44 (2)
Juha Sarkki (Engr. Sarkki), a Master of Science degree holder inChemical Engineering; 45 (3) Henry K.
Wong, a degree holder of Bachelor of Science Major in Mechanical Engineering from Worcester
Polytechnic Institute;46 (4) Dr. Ely Anthony R. Ouano (Dr. Ouano), a licensed Chemical Engineer, Sanitary
Engineer, and Environmental Planner in the Philippines;47 and (5) David C. Evangelista (Mr. Evangelista),
a Business Development Analyst working for RP Energy.48

SBMA, for its part, presented its Legal Department Manager, Atty. Von F. Rodriguez (Atty. Rodriguez).49

The DENR, however, presented no evidence.50

Meanwhile, on October 31, 2012, a Certificate of Non-Overlap (CNO) was issued in connection with RP
Energy’s application for the 2x300-MW coal-fired power plant.51

On November 15, 2012, the DENR-EMB granted RP Energy’s application for the third amendment to its
ECC, approving the construction and operation of a 2x300-MW coal-fired power plant, among others.52

Ruling of the Court of Appeals

On January 30, 2013, the CA rendered a Decision denying the privilege of the writ of kalikasan and the
application for an environment protection order due to the failure of the Casiño Group to prove that its
constitutional right to a balanced and healthful ecology was violated or threatened.53 The CA likewise found
no reason to nullify Section 8.3 ofDAO No. 2003-30. It said that the provision was not ultra vires,as the
express power of the Secretary of the DENR, the Director and Regional Directors of the EMB to issue an
ECC impliedly includes the incidental power to amend the same.54 In any case, the CA ruled that the validity
of the said section could not becollaterally attacked in a petition for a writ of kalikasan.55

Nonetheless, the CA resolved to invalidate the ECC dated December 22, 2008 for non-compliance with
Section 59 of the IPRA Law56 and Sections 26 and 27 of the LGC57 and for failure of Luis Miguel Aboitiz
(Mr. Aboitiz), Director of RP Energy, to affix his signature in the Sworn Statement of Full Responsibility,
which is an integral part of the ECC.58 Also declared invalid were the ECC first amendment dated July 8,
2010 and the ECC second amendment dated May 26, 2011 in view of the failure of RP Energy to comply
with the restrictions set forth in the ECC, which specifically require that "any expansion of the project
beyond the project description or any change in the activity x x x shall be subject to a new Environmental
Impact Assessment."59 However, as to the ECC third amendment dated November 15, 2012, the CA decided
not to rule on its validity since it was not raised as an issue during the preliminary conference.60

The CA also invalidated the LDA entered into by SBMA and RP Energy as it was issued without the prior
consultation and approval of all the sanggunians concerned as required under Sections 26 and 27 of the
LGC,61and in violation of Section 59, Chapter VIII ofthe IPRA Law, which enjoins all departments and
other governmental agencies from granting any lease without a prior certification that the area affected does
not overlap with any ancestral domain.62 The CA noted that no CNO was secured from the NCIP prior to
the execution of the LDA,63 and that the CNO dated October 31, 2012 was secured during the pendency of
the case and was issued in connection with RP Energy’s application for a 2x300-MW coalfired power
plant.64
Thus, the CA disposed of the case in this wise:

WHEREFORE, premises considered, judgment is hereby rendered DENYING the privilege of the writ of
kalikasan and the application for an environmental protection order. The prayer to declare the nullity of
Section 8.3 of the DENR Administrative Order No. 2003-30 for being ultra vires is DENIED; and the
following are all declared INVALID:

1. The Environmental Compliance Certificate (ECC Ref. Code: 0804-011-4021) dated 22 December 2008
issued in favor of respondent Redondo Peninsula Energy, Inc. by former Secretary Jose L. Atienza, Jr. of
the Department of Environment and Natural Resources;

2. The ECC first amendment dated 08 July 2010 and ECC second amendment dated 26 May 2011, both
issued in favor ofrespondent Redondo Peninsula Energy, Inc. by OIC Director Atty. Juan Miguel T. Cunaof
the Department of Environment and Natural Resources, Environmental Management Bureau; and

3. The Lease and Development Agreement dated 08 June 2010 entered into by respondents Subic Bay
Metropolitan Authority and Redondo Peninsula Energy, Inc. involving a parcel of land consisting
of P380,004.456 square meters.

SO ORDERED.65

The DENR and SBMA separately moved for reconsideration.66 RP Energy filed a Motion for Partial
Reconsideration,67 attaching thereto a signed Statement of Accountability.68 The Casiño Group, on the other
hand, filed Omnibus Motions for Clarification and Reconsideration.69

On May 22, 2013, the CA issued a Resolution70 denying the aforesaid motions for lack of merit. The CA
opined that the reliefs it granted in its Decision are allowed under Section 15, Rule 7 of the Rules of
Procedure for Environmental Cases as the reliefs enumerated therein are broad, comprehensive, and
nonexclusive.71 In fact, paragraph (e) of the saidprovision allows the granting of "such other reliefs" in
consonance with the objective, purpose, and intent of the Rules.72 SBMA’s contention that the stoppage of
a project for non-compliance with Section 59 of the IPRA Law may only be done by the indigenous cultural
communities or indigenous peoples was also brushed aside by the CA as the Casiño Group did not file a
case under the IPRA Law but a Petition for a Writ of Kalikasan, which is available to all natural or juridical
persons whose constitutional right to a balanced and healthful ecology is violated, or threatened to be
violated.73 As to RP Energy’s belated submission of a signed Statement of Accountability, the CA gaveno
weight and credenceto it as the belated submission of such document, long after the presentation of evidence
of the parties had been terminated, is not in accord with the rules of fair play.74 Neither was the CA swayed
by the argument that the omitted signature of Luis Miguel Aboitiz is a mere formal defect, which does not
affect the validity of the entire document.75 The dispositive portion of the Resolution reads:
WHEREFORE,premises considered, respondents Subic Bay Metropolitan Authority’s Motion for
Reconsideration dated 18 February 2013, Department of Environment and Natural Resources Secretary
Ramon Jesus P. Paje’s Motion for Reconsideration dated 19 February 2013, and Redondo Peninsula
Energy, Inc.’s Motion for Partial Reconsideration dated 22 February 2013, as well as petitioners’
OmnibusMotions for Clarification and Reconsideration dated 25 February 2013,are all DENIED for lack
of merit.

SO ORDERED.76

Unsatisfied, the parties appealed to this Court.


The Casiño Group’s arguments

The Casiño Group, in essence, argues that it is entitled to a Writ of Kalikasan as it was able to prove that
the operation of the power plant would cause environmental damage and pollution, and that this would
adversely affect the residents of the provinces of Bataan and Zambales, particularly the municipalities of
Subic, Morong, Hermosa, and the City of Olongapo. It cites as basis RP Energy’s EIS, which allegedly
admits that acid rain may occur in the combustion of coal;77 that the incidence of asthma attacks among
residents in the vicinity of the project site may increasedue to exposure to suspended particles from plant
operations;78 and that increased sulfur oxides (SOx) and nitrogen oxides (NOx) emissions may occur during
plant operations.79 It also claims that when the SBMA conducted Social Acceptability Policy Consultations
with different stakeholders on the proposed power plant, the results indicated that the overall persuasion of
the participants was a clear aversion to the project due to environmental, health, economic and socio-
cultural concerns.80 Finally, it contends that the ECC third amendment should also be nullified for failure
to comply with the procedures and requirements for the issuance of the ECC.81

The DENR’s arguments

The DENR imputes error on the CAin invalidating the ECC and its amendments, arguing that the
determination of the validity of the ECC as well as its amendments is beyond the scope of a Petition for a
Writ of Kalikasan.82 And even if it is within the scope, there is no reason to invalidate the ECC and its
amendments as these were issued in accordance with DAO No. 2003-30.83 The DENR also insists that
contrary to the view of the CA, a new EIS was no longer necessary since the first EIS was still within the
validity period when the first amendment was requested, and that this is precisely the reason RP Energy
was only required to submit an EPRMP in support of its application for the first amendment. 84 As to the
second amendment, the DENR-EMB only required RP Energy to submit documents to support the proposed
revision considering that the change in configuration of the power plant project, from 2x150MW to
1x300MW, was not substantial.85 Furthermore, the DENR argues that no permits, licenses, and/or
clearances from other government agencies are required in the processing and approval of the ECC.86 Thus,
non-compliance with Sections 26 and 27 of the LGC as well as Section 59 ofthe IPRA Law is not a ground
to invalidate the ECC and its amendments.87 The DENR further posits that the ECC is not a concession,
permit, or license but is a document certifying that the proponent has complied with all the requirements of
the EIS System and has committed to implement the approved Environmental Management Plan.88 The
DENR invokes substantial justice so that the belatedly submitted certified true copy of the ECC containing
the signature of Mr. Aboitiz on the Statement of Accountability may be accepted and accorded weight and
credence.89

SBMA’s arguments

For its part, SBMA asserts that since the CA did not issue a Writ of Kalikasan, it should not have invalidated
the LDA and that in doing so, the CA acted beyond its powers.90 SBMA likewise puts in issue the legal
capacity of the Casiño Group to impugn the validity of the LDA91 and its failure to exhaust administrative
remedies.92 In any case, SBMA contends that there is no legal basis to invalidate the LDA as prior
consultation under Sections 26 and 27 of the LGC is not required in this case considering that the area is
within the SBFZ.93 Under RA 7227, it is the SBMA which has exclusive jurisdiction over projects and
leases within the SBFZ and that in case of conflict between the LGC and RA 7227, it is the latter, a special
law, which must prevail.94 Moreover, the lack of prior certification from the NCIP is alsonot a ground to
invalidate a contract.95 If at all, the only effect of non-compliance with the said requirement under Section
59 of the IPRA Law is the stoppage or suspension of the project.96 Besides, the subsequent issuance of a
CNO has cured any legal defect found in the LDA.97
RP Energy’s arguments

RP Energy questions the proprietyof the reliefs granted by the CA considering that it did not issue a writ of
kalikasanin favor of the Casiño Group.98 RP Energy is of the view that unless a writ of kalikasanis issued,
the CA has no power to grant the reliefs prayed for in the Petition.99 And even if it does, the reliefs are
limited to those enumerated in Section 15, Rule 7 of the Rules of Procedure for Environmental Cases and
that the phrase "such other reliefs" in paragraph (e) should be limited only to those of the same class or
general nature as the four other reliefs enumerated.100 As to the validity of the LDA, the ECC and its
amendments, the arguments of RP Energy are basically the same arguments interposed by SBMA and the
DENR. RP Energy maintains that the ECC and its amendments were obtained in compliance with the
DENR rules and regulations;101 that a CNO is not necessary in the execution of anLDA and in the issuance
of the ECC and its amendments;102 and that prior approval of the local governments, which may be affected
by the project, are not required because under RA 7227, the decision of the SBMA shall prevail in matters
affecting the Subic Special Economic Zone (SSEZ), except in matters involving defense and security.103 RP
Energy also raises the issue of non-exhaustion of administrative remedies on the part of the Casiño
Group.104 Preliminaries

This case affords us an opportunity to expound on the nature and scope of the writ of kalikasan. It presents
some interesting questions about law and justice in the context of environmental cases, which we will tackle
in the main body of this Decision.

But we shall first address some preliminary matters, in view of the manner by which the appellate court
disposed of this case.

The Rules on the Writ of Kalikasan,105 which is Part III of the Rules of Procedure for Environmental
Cases,106 was issued by the Court pursuant to its power to promulgate rules for the protection and
enforcement of constitutional rights,107 in particular, the individual’s rightto a balanced and healthful
ecology.108 Section 1 of Rule 7 provides:

Section 1. Nature of the writ.- The writ is a remedy available to a natural or juridical person, entity
authorized by law, people’s organization, nongovernmental organization, or any public interest group
accredited by or registered with any government agency, on behalf of persons whose constitutional right to
a balanced and healthful ecology is violated, or threatened with violation by an unlawful act or omission of
a public official or employee, or private individual or entity, involving environmental damage of such
magnitude as to prejudice the life, health or property of inhabitants in two or more cities or provinces.

The writ is categorized as a special civil action and was, thus, conceptualized as an extraordinary
remedy,which aims to provide judicial relief from threatened or actual violation/s of the constitutional right
to a balanced and healthful ecology of a magnitude or degree of damage that transcends political and
territorial boundaries.109 It is intended "to provide a strongerdefense for environmental rights through
judicial efforts where institutional arrangements of enforcement, implementation and legislation have fallen
short"110 and seeks "to address the potentially exponential nature of large-scale ecological threats."111

Under Section 1 of Rule 7, the following requisites must be present to avail of this extraordinary remedy:
(1) there is an actual or threatened violation of the constitutional right to a balanced and healthful ecology;
(2) the actual or threatened violation arises from an unlawful act or omission of a public official or
employee, or private individual or entity; and (3) the actual or threatened violation involves or will lead to
an environmental damage of such magnitude as to prejudice the life, health or property ofinhabitants in two
or more cities or provinces.
Expectedly, the Rules do not definethe exact nature or degree of environmental damage but only that it
must be sufficientlygrave, in terms of the territorial scope of such damage, so as tocall for the grant ofthis
extraordinary remedy. The gravity ofenvironmental damage sufficient to grant the writ is, thus, to be
decided on a case-to-case basis.

If the petitioner successfully proves the foregoing requisites, the court shall render judgment granting the
privilege of the writ of kalikasan. Otherwise, the petition shall be denied. If the petition is granted, the court
may grant the reliefs provided for under Section 15of Rule 7, to wit: Section 15. Judgment.- Within sixty
(60) daysfrom the time the petition is submitted for decision, the court shall render judgment granting or
denying the privilege of the writ of kalikasan.

The reliefs that may be granted under the writ are the following:

(a) Directing respondent to permanently cease and desist from committing acts or neglecting the
performance of a duty in violation of environmental laws resulting in environmental destruction or damage;
(b) Directing the respondent public official, government agency, private person or entity to protect,
preserve, rehabilitate or restore the environment;
(c) Directing the respondent public official, government agency, private person or entity to monitor strict
compliance with the decision and orders of the court;
(d) Directing the respondent public official, government agency, or private person or entity to make periodic
reports on the execution of the final judgment; and
(e) Such other reliefs which relate to the right of the people to a balanced and healthful ecology or to the
protection, preservation, rehabilitation or restoration of the environment, except the award of damages to
individual petitioners.

It must be noted, however, that the above enumerated reliefs are non-exhaustive. The reliefs that may be
granted under the writ are broad, comprehensive and non-exclusive.112

Prescinding from the above, the DENR, SBMA and RP Energy are one in arguing that the reliefs granted
by the appellate court, i.e. invalidating the ECC and its amendments, are improper because it had deniedthe
Petition for Writ of Kalikasanupon a finding that the Casiño Group failed to prove the alleged environmental
damage, actual or threatened, contemplated under the Rules.

Ordinarily, no reliefs could and should be granted. But the question may be asked, could not the appellate
court have granted the Petition for Writ of Kalikasanon the ground of the invalidity of the ECC for failure
to comply with certain laws and rules?

This question is the starting point for setting up the framework of analysis which should govern writ of
kalikasan cases.

In their Petition for Writ of Kalikasan,113 the Casiño Group’s allegations, relative to the actual or threatened
violation of the constitutional right to a balanced and healthful ecology, may be grouped into two.

The first set of allegations deals withthe actual environmental damage that will occur if the power plant
project isimplemented. The Casiño Group claims that the construction and operation of the power plant will
result in (1) thermal pollution of coastal waters, (2) air pollution due to dust and combustion gases, (3)
water pollution from toxic coal combustion waste, and (4) acid deposition in aquatic and terrestrial
ecosystems, which will adversely affect the residents of the Provinces of Bataan and Zambales, particularly
the Municipalities of Subic, Morong and Hermosa, and the City of Olongapo.
The second set of allegations deals with the failure to comply with certain laws and rules governing or
relating to the issuance of an ECC and amendments thereto. The Casiño Group claims that the ECC was
issued in violation of (1) the DENR rules on the issuance and amendment of an ECC, particularly, DAO
2003-30 and the Revised Procedural Manual for DAO 2003-30 (Revised Manual), (2) Section 59 of the
IPRA Law,and (3) Sections 26 and 27 of the LGC. In addition, it claims that the LDA entered into between
SBMA and RP Energy violated Section 59 of the IPRA Law.

As to the first set of allegations, involving actual damage to the environment, it is not difficult to discern
that, if they are proven, then the Petition for Writ of Kalikasan could conceivably be granted.

However, as to the second set of allegations, a nuanced approach is warranted. The power of the courts to
nullify an ECC existed even prior to the promulgation of the Rules on the Writ of Kalikasanfor judicial
review of the acts of administrative agencies or bodies has long been recognized114 subject, of course, to
the doctrine of exhaustion of administrative remedies.115

But the issue presented before us is nota simple case of reviewing the acts of an administrative agency, the
DENR, which issued the ECC and its amendments. The challenge to the validity ofthe ECC was raised in
the context of a writ of kalikasancase. The question then is, can the validity of an ECC be challenged viaa
writ of kalikasan?

We answer in the affirmative subject to certain qualifications.

As earlier noted, the writ of kalikasanis principally predicated on an actual or threatened violation of the
constitutional right to a balanced and healthful ecology, which involves environmental damage of a
magnitude that transcends political and territorial boundaries. A party, therefore, who invokes the writ based
on alleged defects or irregularities in the issuance of an ECC must not only allege and prove such defects
or irregularities, but must also provide a causal link or, at least, a reasonable connection between the defects
or irregularities in the issuance of an ECC and the actual or threatened violation of the constitutional right
to a balanced and healthful ecology of the magnitude contemplated under the Rules. Otherwise, the petition
should be dismissed outright and the action re-filed before the proper forum with due regard to the doctrine
of exhaustion of administrative remedies. This must be so ifwe are to preserve the noble and laudable
purposes of the writ against those who seek to abuse it.

An example of a defect or an irregularity in the issuance of an ECC, which could conceivably warrant the
granting of the extraordinary remedy of the writ of kalikasan, is a case where there are serious and
substantial misrepresentations or fraud in the application for the ECC, which, if not immediately nullified,
would cause actual negative environmental impacts of the magnitude contemplated under the Rules,
because the government agencies and LGUs, with the final authority to implement the project, may
subsequently rely on such substantially defective or fraudulent ECC in approving the implementation of
the project.

To repeat, in cases of defects or irregularities in the issuance of an ECC, it is not sufficient to merely allege
such defects or irregularities, but to show a causal link or reasonable connection with the environmental
damage of the magnitude contemplated under the Rules. In the case at bar, no such causal link or reasonable
connection was shown or even attempted relative to the aforesaid second set of allegations. It is a mere
listing of the perceived defects or irregularities in the issuance of the ECC. This would have been sufficient
reason to disallow the resolution of such issues in a writ of kalikasan case.

However, inasmuch as this is the first time that we lay down this principle, we have liberally examined the
alleged defects or irregularities in the issuance of the ECC and find that there is only one group of
allegations, relative to the ECC, that can be reasonably connected to an environmental damage of the
magnitude contemplated under the Rules. This is with respect to the allegation that there was no
environmental impact assessment relative to the first and second amendments to the subject ECC. If this
were true, then the implementation of the project can conceivably actually violate or threaten to violate the
right to a healthful and balanced ecology of the inhabitants near the vicinity of the power plant. Thus, the
resolution of such an issue could conceivably be resolved in a writ of kalikasan case provided that the case
does not violate, or is an exception to the doctrine of exhaustion of administrative remedies and primary
jurisdiction.116

As to the claims that the issuance of the ECC violated the IPRA Law and LGC and that the LDA, likewise,
violated the IPRA Law, we find the same not to be within the coverage of the writ of kalikasan because,
assuming there was non-compliance therewith, no reasonable connection can be made to an actual or
threatened violation of the right to a balanced and healthful ecology of the magnitude contemplated under
the Rules.

To elaborate, the alleged lack of approval of the concerned sanggunians over the subject project would not
lead toor is not reasonably connected with environmental damage but, rather, it is an affront to the local
autonomy of LGUs. Similarly, the alleged lack of a certificate precondition that the project site does not
overlap with an ancestral domain would not result inor is not reasonably connected with environmental
damage but, rather, it is an impairment of the right of Indigenous Cultural Communities/Indigenous Peoples
(ICCs/IPs) to their ancestral domains. These alleged violations could be the subject of appropriate remedies
before the proper administrative bodies (like the NCIP) or a separate action to compel compliance before
the courts, as the case may be. However, the writ of kalikasan would not be the appropriate remedy to
address and resolve such issues.

Be that as it may, we shall resolve both the issues proper in a writ of kalikasan case and those which are
not, commingled as it were here, because of the exceptional character of this case. We take judicial notice
of the looming power crisis that our nation faces. Thus, the resolution of all the issues in this case is of
utmost urgency and necessity in order to finally determine the fate of the project center of this controversy.
If we were to resolve only the issues proper in a writ of kalikasan case and dismiss those not proper therefor,
that will leave such unresolved issues open to another round of protracted litigation. In any case, we find
the records sufficient to resolve all the issues presented herein. We also rule that, due to the extreme urgency
of the matter at hand, the present case is an exception to the doctrine of exhaustion of administrative
remedies.117 As we have often ruled, in exceptional cases, we can suspend the rules of procedure in order
to achieve substantial justice, and to address urgent and paramount State interests vital to the life of our
nation.

Issues

In view of the foregoing, we shall resolve the following issues:

1. Whether the Casiño Group was able to prove that the construction and operation of the power plant
will cause grave environmental damage.

1.1. The alleged thermal pollution of coastal waters, air pollution due to dust and combustion gases,
water pollution from toxic coal combustion waste, and acid deposition to aquatic and terrestrial
ecosystems that will becaused by the project.

1.2. The alleged negative environmental assessment of the project by experts in a report generated during
the social acceptability consultations.
1.3. The alleged admissions of grave environmental damage in the EIS itself of the project.

2. Whether the ECC is invalid for lackof signature of Mr. Luis Miguel Aboitiz, as representative of RP
Energy, in the Statement of Accountability of the ECC.

3. Whether the first and second amendments to the ECC are invalid for failure to undergo a new
environmental impact assessment (EIA) because of the utilization of inappropriate EIA documents.

4. Whether the Certificate of Non-Overlap, under Section 59 of the IPRA Law, is a precondition to the
issuanceof an ECC and the lack of its prior issuance rendered the ECC invalid.

5. Whether the Certificate of Non-Overlap, under Section 59 of the IPRA Law, is a precondition to the
consummation of the Lease and Development Agreement (LDA) between SBMA and RPEnergy and
the lack of its prior issuance rendered the LDA invalid.

6. Whether compliance with Section 27, in relation to Section 26, of the LGC (i.e., approval of the
concerned sanggunianrequirement) is necessary prior to the implementation of the power plant project.

7. Whether the validity of the third amendment to the ECC can be resolved in this case.

Ruling

The parties to this case appealed from the decision of the appellate court pursuant to Section 16, Rule7 of
the Rules of Procedure for Environmental Cases, viz:

Section 16. Appeal.- Within fifteen (15) days from the date of notice of the adverse judgment or denialof
motion for reconsideration, any party may appeal to the Supreme Court under Rule45 of the Rules of Court.
The appeal may raise questions of fact. (Emphasis supplied)

It is worth noting that the Rules on the Writ of Kalikasan allow the parties to raise, on appeal, questions of
fact— and, thus, constitutes an exception to Rule 45 of the Rules of Court— because ofthe extraordinary
nature of the circumstances surrounding the issuance of a writ of kalikasan.118 Thus, we shall review both
questions of law and fact in resolving the issues presented in this case.

We now rule on the above-mentioned issues in detail.

I.

Whether the Casiño Group was able to prove that the construction and operation of the power plant will
cause grave environmental damage.

The alleged thermal pollution of coastal waters, air pollution due to dust and combustion gases, water
pollution from toxic coal combustion waste, and acid deposition in aquatic and terrestrial ecosystems that
will be caused by the project.

As previously noted, the Casiño Group alleged that the construction and operation of the power plant shall
adversely affect the residents of the Provinces of Bataan and Zambales, particularly, the Municipalities of
Subic, Morong and Hermosa, and the City of Olongapo, as well as the sensitive ecological balance of the
area. Their claims of ecological damage may be summarized as follows:
1. Thermal pollution of coastal waters. Due to the discharge of heated water from the operation of the plant,
they claim that the temperature of the affected bodies of water will rise significantly. This will have adverse
effects on aquatic organisms. It will also cause the depletion of oxygen in the water. RP Energy claims that
there will beno more than a 3°C increase in water temperature but the Casiño Group claims that a 1°C to
2°C rise can already affect the metabolism and other biological functions of aquatic organisms such
asmortality rate and reproduction.

2. Air pollution due to dust and combustion gases. While the Casiño Group admits that Circulating
Fluidized Bed (CFB) Coal technology, which will be used in the power plant, is a clean technology because
it reduces the emission of toxic gases, it claims that volatile organic compounds, specifically, polycyclic
aromatic hydrocarbons (PAHs) will also be emitted under the CFB. PAHs are categorized as pollutants
with carcinogenic and mutagenic characteristics. Carbon monoxide, a poisonous gas, and nitrous oxide, a
lethal global warming gas, will also be produced.

3. Water pollution from toxic coal combustion waste. The waste from coal combustion or the residues from
burning pose serious environmental risk because they are toxic and may cause cancer and birth defects.
Their release to nearby bodies of water will be a threatto the marine ecosystem of Subic Bay. The project
is located in a flood-prone area and is near three prominent seismic faults as identified by Philippine
Institute of Volcanology and Seismology. The construction of an ash pond in an area susceptible to flooding
and earthquake also undermines SBMA’s duty to prioritize the preservation of the water quality in Subic
Bay.

4. Acid deposition in aquatic and terrestrial ecosystems. The power plant will release 1,888 tons of nitrous
oxides and 886 tons of sulfur dioxide per year. These oxides are responsible for acid deposition. Acid
deposition directly impacts aquatic ecosystems. It is toxic to fish and other aquatic animals. It will also
damage the forests near Subic Bay as well as the wildlife therein. This will threaten the stability of the
biological diversity of the Subic Bay Freeport which was declared as one of the ten priority sites among the
protected areas in the Philippines and the Subic Watershed and Forest Reserve. This will also have an
adverse effect on tourism.119

In its January 30, 2013 Decision, the appellate court ruled that the Casiño Group failed to prove the above
allegations.

We agree with the appellate court.

Indeed, the three witnesses presented by the Casiño Group are not experts on the CFB technology or on
environmental matters. These witnesses even admitted on cross-examination that theyare not competent to
testify on the environmental impact of the subject project. What is wanting in their testimonies is their
technical knowledgeof the project design/implementation or some other aspects of the project, even those
not requiring expertknowledge, vis-à-vis the significant negative environmental impacts which the Casiño
Group alleged will occur. Clearly, the Casiño Group failed to carry the onusof proving the alleged
significant negative environmental impacts of the project. In comparison, RP Energy presented several
experts to refute the allegations of the Casiño Group.

As aptly and extensively discussed by the appellate court:

Petitioners120 presented three (3) witnesses, namely, Palatino, Hermoso, and Lacbain, all of whom are not
experts on the CFB technology or even on environmental matters. Petitioners did not present any witness
from Morong or Hermosa. Palatino, a former freelance writer and now a Congressman representing the
Kabataan Partylist, with a degree of BS Education major in Social Studies, admitted that he is not a technical
expert. Hermoso, a Director of the PREDA foundation which is allegedly involved on environmental
concerns, and a member of Greenpeace, is not an expert on the matter subject of this case. He is a graduate
of BS Sociology and a practicing business director involved in social development and social welfare
services. Lacbain, incumbent ViceGovernor of the Province of Zambales, anaccounting graduate with a
Master in Public Administration, was a former BancoFilipino teller, entertainment manager, disco manager,
marketing manager and college instructor, and is also not an expert on the CFB technology. Lacbain also
admitted that he is neither a scientist nor an expert on matters of the environment.

Petitioners cited various scientific studies or articles and websites culled from the internet. However, the
said scientific studies and articles including the alleged Key Observations and Recommendations on the
EIS of the Proposed RPE Project by Rex Victor O. Cruz (Exhibit "DDDDD") attached to the Petition, were
not testified to by an expert witness, and are basically hearsay in nature and cannot be given probative
weight. The article purportedly written by Rex Victor O. Cruz was not even signed by the said author,
which fact was confirmed by Palatino. Petitioners’ witness, Lacbain, admitted that he did not personally
conduct any study on the environmental or health effects of a coal-firedpower plant, but only attended
seminars and conferences pertaining to climate change; and that the scientific studies mentioned in the
penultimate whereas clause of Resolution No. 2011-149 (Exhibit "AAAAA") of the Sangguniang
Panlalawiganof Zambales is based on what he read on the internet, seminars he attended and what he heard
from unnamed experts in the field of environmental protection.

In his Judicial Affidavit (Exhibit "HHHHH"), Palatino stated that he was furnished by the concerned
residents the Key Observations and Recommendations on the EIS of Proposed RPE Project by Rex Victor
O. Cruz, and that he merely received and read the five (5) scientific studies and articles which challenge
the CFB technology. Palatino also testified that: he was only furnished by the petitioners copies of the
studies mentioned in his Judicial Affidavit and he did not participate in the execution, formulation or
preparation of any of the said documents; he does not personally know Rex Cruz or any of the authors of
the studies included in his Judicial Affidavit; he did not read other materials about coal-fired power plants;
he is not aware of the acceptable standards as far as the operation of a coal-fired power plant is concerned;
petitioner Velarmino was the one who furnished him copies of the documents in reference to the MOU and
some papers related to the case; petitioner Peralta was the one who e-mailed to him the soft copy ofall the
documents [letters (a) to (o) of his Judicial Affidavit], except the LGU Resolutions; and he has never been
at the actual Power Plant projectsite. It must be noted that petitioners Velarmino and Peralta were never
presented as witnesses in this case. In addition, Palatino did not identify the said studies but
simplyconfirmed that the said studies were attached to the Petition.

Indeed, under the rules of evidence, a witness can testify only to those facts which the witness knows of his
orher personal knowledge, that is, which are derived from the witness’ own perception. Concomitantly, a
witness may not testify on matters which he or she merely learned from others either because said witness
was told or read or heard those matters. Such testimony is considered hearsay and may not be received as
proof of the truth of what the witness has learned. This is known as the hearsay rule. Hearsay is notlimited
to oral testimony or statements; the general rule that excludes hearsay as evidence applies to written, as
well as oral statements. There are several exceptions to the hearsay rule under the Rules of Court, among
which are learned treatises under Section 46 of Rule 130, viz:

"SEC. 46. Learned treatises. -A published treatise, periodical or pamphlet on a subjectof history, law,
science, or art is admissible as tending to prove the truth of a matter stated therein if the court takes judicial
notice, or a witness expert in the subject testifies, that the writer of the statement in the treatise, periodical
or pamphlet is recognized in his profession or calling as expert in the subject."
The alleged scientific studies mentioned in the Petition cannot be classified as learned treatises. We cannot
take judicial notice of the same, and no witness expert in the subject matter of this case testified, that the
writers of the said scientific studies are recognized in their profession or calling as experts in the subject.

In stark contrast, respondent RP Energy presented several witnesses on the CFB technology.

In his Judicial Affidavit, witness Wong stated that he obtained a Bachelor of Science, Major in Mechanical
Engineering from Worcester Polytechnic Institute; he is a Consulting Engineer of Steam Generators of
URS; he was formerly connected with Foster Wheeler where he held the positions of site commissioning
engineer, testing engineer, instrumentation and controls engineer, mechanical equipment department
manager, director of boiler performance and mechanical design engineering and pulverized coal product
director. He explained that: CFB stands for Circulating Fluidized Bed; it is a process by which fuel is fed
to the lower furnace where it is burned in an upward flow of combustion air; limestone, which is used as
sulfur absorbent, is also fed to the lower furnace along with the fuel; the mixture offuel, ash, and the boiler
bed sorbent material is carried to the upper part of the furnace and into a cyclone separator; the heavier
particles which generally consist of the remaining uncombusted fuel and absorbent material are separated
in the cyclone separator and are recirculated to the lower furnace to complete the combustion of any
unburned particles and to enhance SO2 capture by the sorbent; fly ash and flue gas exit the cyclone and the
fly ash is collected in the electrostatic precipitator; furnace temperature is maintained in the range of 800°
to 900° C by suitable heat absorbing surface; the fuel passes through a crusher that reduces the size to an
appropriate size prior to the introduction into the lower furnace along with the limestone; the limestone is
used as a SO2 sorbent which reacts with the sulfur oxides to form calcium sulfate, an inert and stable
material; air fans at the bottom of the furnace create sufficient velocity within the steam generator to
maintain a bed of fuel, ash, and limestone mixture; secondary air is also introduced above the bed to
facilitate circulation and complete combustion of the mixture; the combustion process generates heat, which
then heats the boiler feedwater flowing through boiler tube bundles under pressure; the heat generated in
the furnace circuit turns the water to saturated steam which is further heated to superheated steam; this
superheated steam leaves the CFB boiler and expands through a steam turbine; the steam turbine is directly
connected to a generator that turns and creates electricity; after making its way through the steam turbine,
the low-pressure steam is exhausted downwards into a condenser; heat is removed from the steam, which
cools and condenses into water (condensate); the condensate is then pumped back through a train of
feedwater heaters to gradually increase its temperature beforethis water is introduced to the boiler to start
the process all over again; and CFB technology has advantagesover pulverized coal firing without backend
cleanup systems, i.e., greater fuel flexibility, lower SO2 and NOx emissions. Moreover, Wong testified,
inter alia, that: CFBs have a wider range of flexibility so they can environmentally handle a wider range of
fuel constituents, mainly the constituent sulfur; and is capable of handling different types of coal within the
range of the different fuelconstituents; since CFB is the newer technology than the PC or stalker fire, it has
better environmental production; 50 percent ofthe electric generation in the United States is still produced
by coal combustion; and the CFB absorbs the sulfur dioxide before it is emitted; and there will be a lower
percentage of emissions than any other technology for the coal.

In his Judicial Affidavit, Sarrki, stated that: he is the Chief Engineer for Process Concept in FosterWheeler;
he was a Manager of Process Technology for Foster Wheeler from 1995 to 2007; and he holds a Master of
Science degree in Chemical Engineering.He explained that: CFB boilers will emit PAHs but only in
minimal amounts, while BFB will produce higher PAH emissions; PAH is a natural product of any
combustion process; even ordinary burning, such as cooking or driving automobiles, will have some
emissions that are not considered harmful; it is only when emissions are of a significant level that damage
may be caused; a CFB technology has minimal PAH emissions; the high combustion efficiency of CFB
technology, due to long residence time of particles inside the boiler, leads to minimal emissions of PAH;
other factors such as increase in the excess air ratio[,] decrease in Ca/S, as well as decrease in the sulfur
and chlorine contents of coal will likewise minimize PAH production; and CFB does not cause emissions
beyond scientificallyacceptable levels. He testified, inter alia, that: the CFB technology is used worldwide;
they have a 50% percent share of CFB market worldwide; and this will be the first CFB by Foster Wheeler
in the Philippines; Foster Wheeler manufactures and supplies different type[s] of boilers including BFB,
but CFB is always applied on burning coal, so they do not apply any BFB for coal firing; CFB has features
which have much better combustion efficiency, much lower emissions and it is more effective as a boiler
equipment; the longer the coal stays inthe combustion chamber, the better it is burned; eight (8) seconds is
already beyond adequate but it keeps a margin; in CFB technology, combustion technology is uniform
throughout the combustion chamber; high velocity is used in CFB technology, that is vigorous mixing or
turbulence; turbulence is needed to get contact between fuel and combustion air; and an important feature
of CFB is air distribution.

In his Judicial Affidavit, Ouano stated that: he is a licensed Chemical Engineer, Sanitary Engineer and
Environmental Planner in the Philippines; he is also a chartered Professional Engineer inAustralia and a
member of the colleges of environmental engineers and chemical engineers of the Institution of Engineers
(Australia); he completed his Bachelor in Chemical Engineering in 1970, Master of Environmental
Engineering in 1972 and Doctor of Environmental Engineering in 1974; he also graduated from the
University of Sydney Law School with the degree of Master of Environmental Law in 2002 and PhD in
Law from Macquarie University in 2007. He explained in his Judicial Affidavit that: the impacts identified
and analyzed in the EIA process are all potential or likely impacts; there are a larger number of EIA
techniques for predicting the potential environmental impacts; it is important to note that all those methods
and techniques are only for predicting the potential environmental impacts, not the real impacts; almost all
environmental systems are non-linear and they are subject to chaotic behavior that even the most
sophisticated computer could not predict accurately; and the actual or real environmental impact could only
be established when the project is in actual operation. He testified, inter alia, that: the higher the temperature
the higher the nitrous oxide emitted; in CFB technology, the lower the temperature, the lower is the nitrogen
oxide; and it still has a nitrogen oxide but not as high as conventional coal; the CFB is the boiler; from the
boiler itself,different pollution control facilities are going to be added; and for the overall plant with the
pollution control facilities, the particulate matters, nitrogen oxide and sulfur dioxide are under control.
(Citations omitted)121

We also note that RP Energy controverted in detail the afore-summarized allegations of the Casiño Group
on the four areas of environmental damage that will allegedly occur upon the construction and operation of
the power plant:

1. On thermal pollution of coastal waters.

As to the extent of the expected rise in water temperature once the power plant is operational, Ms. Mercado
stated in her JudicialAffidavit thus:

Q: What was the result of the Thermal Plume Modeling that was conducted for RP Energy?

A: The thermal dispersion modeling results show that largest warming change (0.95°C above ambient) is
observed in the shallowest (5 m) discharge scenario. The warmest surface temperature change for the
deepest (30 m) scenario is 0.18°C. All the simulated scenarios comply with the DAO 90-35 limit for
temperature rise of 3°C within the defined 70 x 70 m mixing zone. The proposed power plant location is
near the mouth of Subic Bay, thus the tidal currents influence the behavior of thermal discharge plume.
Since the area is well-flushed, mixing and dilution of the thermal discharge is expected.
It also concluded that corals are less likely to be affected by the cooling water discharge as corals may
persist in shallow marine waterswith temperatures ranging from 18°C to 36°C. The predicted highest
temperature of 30.75°C, from the 0.95°C increase in ambient in the shallowest (5 m) discharge scenario, is
within this range.122

In the same vein, Dr. Ouano stated in his Judicial Affidavit:

Q: In page 41, paragraph 99 of the Petition, it was alleged that: "x x x a temperature change of 1°C to 2°C
canalready affect the metabolism and other biological functions of aquatic organisms such as mortality rate
and reproduction." What is your expert opinion, if any, on this matter alleged by the Petitioners?

A: Living organisms have proven time and again that they are very adaptable to changes in the environment.
Living organisms have been isolated in volcanic vents under the ocean living on the acidic nutrient soup of
sulfur and other minerals emitted by the volcano to sub-freezing temperature in Antarctica. Asa general
rule, metabolism and reproductive activity [increase] with temperature until a maximum is reached after
which [they decline]. For this reason, during winter, animals hibernate and plants become dormant after
shedding their leaves. It is on the onset of spring that animals breed and plants bloom when the air and
water are warmer. At the middle of autumn when the temperature drops to single digit, whales, fish, birds
and other living organisms, which are capable of migrating, move to the other end of the globe where spring
is just starting. In the processes of migration, those migratory species have to cross the tropics where the
temperature is not just one or two degrees warmer but 10 to 20 degrees warmer. When discussing the impact
of 1 to 2 degrees temperature change and its impact on the ecosystem, the most important factors to consider
are – (1) Organism Type – specifically its tolerance to temperature change (mammals have higher
tolerance); (2) Base Temperature – it is the temperature over the optimum temperature such that an
increasewill result in the decline in number of the organisms; (3) Mobility or Space for Migration (i.e., an
aquarium with limited space or an open ocean that the organism can move to a space more suited to [a]
specific need, such as the migratory birds); and (4) Ecosystem Complexity and Succession. The more
complex the ecosystem the more stable it is as succession and adaptation [are] more robust.

Normally, the natural variation in water temperature between early morning to late afternoon could be
several degrees (four to five degrees centigrade and up to ten degrees centigrade on seasonal basis).
Therefore, the less than one degree centigrade change predicted by the GHD modeling would have minimal
impact.123

On cross-examination, Dr. Ouano further explained—

ATTY. AZURA:

x x x When you say Organism Type – you mentioned that mammals have a higher tolerance for temperature
change?

DR. OUANO: Yes.

ATTY. AZURA:

What about other types of organisms, Dr. Ouano? Fish for example?

DR. OUANO:
Well, mammals have high tolerance because mammals are warm[- ]blooded. Now, when it comes to cold[-
]blooded animals the tolerance is much lower. But again when you are considering x x x fish [e]specially
in open ocean you have to remember that nature by itself is x x x very brutal x x x where there is always
the prey-predator relationship. Now, most of the fish that we have in open sea [have] already a very strong
adaptability mechanism.And in fact, Kingman back in 1964 x x x studied the coal reefaround the gulf of
Oman where the temperature variation on day to day basis varied not by 1 degree to 2 degrees but by almost
12 degrees centigrade. Now, in the Subic Bay area which when you’re looking at it between daytime
variation, early dawn when it is cold, the air is cold, the sea temperature, sea water is quite cold. Then by
3:00 o’clock in the afternoon it starts to warm up. Sothe variation [in the] Subic Bay area is around 2 to 4
degrees by natural variation from the sun as well as from the current that goes around it. So when you are
talking about what the report has said of around 1 degree change, the total impact x x x on the fishes will
be minimal. x x x

ATTY. AZURA:

x x x So, you said, Dr. Ouano, that fish, while they have a much lower tolerance for temperature variation,
are still very adaptable. What about other sea life, Dr. Ouano, for example, sea reptiles?

DR. OUANO:

That’s what I said. The most sensitive part of the marine ecology is physically the corals because corals are
non-migratory, they are fix[ed]. Second[ly] x x x corals are also highly dependent on sunlight penetration.
If they are exposed out of the sea, they die; if theyare so deep, they die. And that is why I cited Kingman in
his studies of coral adaptability [in] the sea ofOman where there was a very high temperature variation,
[they] survived.

ATTY. AZURA:

Would you be aware, Dr. Ouano, if Kingman has done any studies in Subic Bay?

DR. OUANO:

Not in Subic Bay but I have reviewedthe temperature variation, natural temperature variation from the solar
side, the days side as well as the seasonal variation. There are two types of variation since temperatures are
very critical. One is the daily, which means from early morning to around 3:00 o’clock, and the other one
is seasonal variation because summer, December, January, February are the cold months and then by April,
May we are having warm temperature where the temperature goes around 32-33 degrees; Christmas time,
it drops to around 18 to 20 degrees so it[']sa variation of around seasonal variation of 14 degrees although
some of the fish might even migrate and that is why I was trying to put in corals because they are the ones
that are really fix[ed]. They are not in a position to migrate in this season.

ATTY. AZURA:

To clarify. You said that the most potentially sensitive part of the ecosystem would be the corals. DR.
OUANO:

Or threatened part because they are the ones [that] are not in a position to migrate.

ATTY AZURA:
In this case, Dr. Ouano, with respectto this project and the projected temperature change, will the corals in
Subic Bay be affected?

DR. OUANO:

As far as the outlet is concerned, they have established it outside the coral area. By the time it reaches the
coral area the temperature variation, as per the GHD study is very small, it[’]s almost negligible.

ATTY AZURA:

Specifically, Dr. Ouano, what does negligible mean, what level of variation are we talking about?

DR. OUANO:

If you are talking about a thermometer, you might be talking about, normally about .1 degrees centigrade.
That’sthe one that you could more or less ascertain. x x x

ATTY. AZURA:

Dr. Ouano, you mentioned in youranswer to the same question, Question 51, that there is a normal variation
in water temperature. In fact, you said there is a variation throughout the day, daily and also throughout the
year, seasonal. Just to clarify, Dr. Ouano. When the power plant causes the projected temperature change
of 1 degree to 2 degrees Celsius this will be in addition to existing variations? What I mean, Dr. Ouano,
just so I can understand, how will that work? How will the temperature change caused by the power plant
work with the existing variation?

DR. OUANO:

There is something like what we call the zonal mixing. This is an area of approximately one or two hectares
where the pipe goes out, the hot water goes out. So that x x x, we have to accept x x x that [throughout it]
the zone will be a disturb[ed] zone. After that one or two hectares park the water temperature is well mixed
[so] that the temperature above the normal existing variation now practically drops down to almost the
normal level.124
QUIANAY vs. MAPILE
G.R. No. 154087 October 25, 2005

This Petition for Review on Certiorari[1] assails the Decision[2] of the Court of Appeals in CA-G.R. CV
50923 which sustained the trial court decision in declaring that the property subject of this case rightfully
belongs to respondent herein.
The following facts are condensed from the decisions of the Court of Appeals and the trial court.
Subject of this case is a parcel of land situated in Sta. Cruz, Manila and covered by Transfer
Certificate of Title No. 48529 (TCT No. 48529) in the name of the deceased Simplicio Ilao (Ilao). In the
course of the judicial settlement of Ilaos estate, his heirs found out that the title of the subject property had
an annotation of adverse claim filed by a certain Juanito Ibarra (Ibarra). Respondent herein, Atty. Rodolfo
Mapile (respondent), filed a motion to exclude the property from the inventory on the ground that the same
no longer formed part of Ilaos estate having been disposed of during the latters lifetime in favor of Ibarra.
Acting upon respondents allegation, the heirs of Ilao, through petitioners herein, promptly filed on
December 8, 1976 a civil case for Quieting of Title and Damages, docketed as Civil Case No. 105865 of
the Regional Trial Court (RTC) of Manila, Branch 37.
The Court of First Instance of Manila, Branch 12, in Special Proceedings No. 93674, denied
respondents motion and, in an order dated February 7, 1978, authorized the sale of the subject property to
Virgilio Sevilla subject to the outcome of Civil Case No. 105865.
Relevantly, it appears that in 1974, Ibarra filed a petition for the issuance of a new owners duplicate copy
of the title of the subject property, claiming that he was in possession of said owners duplicate but that he
lost the same in a fire that took place in Bo. Sta. Ignacia, Camiling, Tarlac on April 26, 1974. The case was
docketed as LRC Cad. Rec. No. 271 of the RTC of Manila. This allegation was, however, uncovered by the
trial court to be false when, upon the courts subpoena, Ilaos heirs appeared and presented the certificate of
title Ibarra claimed to have been lost.
On October 3, 1983, respondent filed Civil Case No. 83-20520 for Specific Performance and Declaration
of Nullity of Contract, claiming that the subject property had been sold by Ilao to Ibarra pursuant to a Deed
of Absolute Sale (deed of sale) dated February 7, 1972, and that Ibarra, in turn, sold the property to him.
Civil Case No. 105865 and Civil Case No. 83-20520 were consolidated. After trial, the court rendered
judgment in favor of respondent, finding that the deed of sale was genuine and ordering, among others, that
petitioners herein surrender the owners duplicate copy of TCT No. 48529 and all documents appurtenant
thereto in their possession.[3] The decision was primarily anchored on the trial courts finding that the
conflicting testimonies of the handwriting experts[4] presented by both parties left it no choice but to favor
the notarized deed of sale and to rule that the same is genuine.
Petitioners filed a motion for reconsideration, which respondent countered with an omnibus motion
to strike out the motion for reconsideration for being pro forma and to seek the issuance of a writ of
execution. The trial court denied petitioners motion for reconsideration, granted respondents omnibus
motion, and ordered the issuance of a writ of execution.[5]
The decision was appealed to the Court of Appeals. Meanwhile, the order denying the motion for
reconsideration became the subject of a petition for certiorari also with the appellate court. The petition for
certiorari, docketed as CA-G.R. SP. No. 38421, was denied because the trial court had already ordered the
elevation of the records of the case to the appellate court, and in view of respondents manifestation that he
would not move for execution pending appeal.
The errors assigned on appeal dwell on the twin findings that the deed of sale between Ilao and
Ibarra was genuine and that the subject property was validly transferred to respondent. As previously
mentioned, the Court of Appeals affirmed the decision of the trial court and denied petitioners motion for
reconsideration
Petitioners[6] herein argue that the appellate court erred in disregarding the testimonies of the expert
witnesses allegedly to the effect that Ilaos signature on the deed of sale was forged. While the two experts
initially disagreed in that whereas petitioners witness categorically declared that the signature on the deed
of sale was a forgery based on the specimen signatures, respondents witness expressed doubts whether the
specimen signatures were themselves genuine, the latter allegedly agreed to exclude the specimen
signatures to which he expressed reservation and came up with the same conclusion that the signature in
the deed of sale was indeed forged.
Moreover, petitioners question the probative value given by the trial court and the Court of Appeals
to the notarized deed of sale. They stress that the trial court even went to the extent of admitting in evidence
the transcript of the testimony of the notary public who purportedly notarized the document taken in LRC
Cad. Rec. No. 271 in which petitioners were not named parties, while the appellate court for its part
sustained the lower courts action.
They assail as hearsay the factual findings of the trial court on the circumstances surrounding the
sale of the property to Ibarra which were based only on respondents narration, without Ibarra actually
testifying thereon. These circumstances, i.e., that it was Ibarras father who paid for the property allegedly
to induce Ibarra to marry a girl his father had wanted for him; that instead of marrying the girl, Ibarra fled
to Mindanao; and that he later returned and was advised by a lawyer, who turned out to be an impostor, to
file a petition claiming that the certificate of title had been destroyed by fire, which petition was the subject
of LRC Cad. Rec. No. 271, were adopted by the appellate court as the factual backdrop of the case.
The trial court and the Court of Appeals also allegedly erred in certain matters crucial to the case,
such as the fact that Ibarra neither took possession of the subject property nor of the certificate of title
covering it; that Ibarra never paid the real estate taxes on the property as the tax declarations have remained
in the name of Ilao; and that no capital gains tax, documentary stamps tax and other transfer taxes were
ever paid pursuant to the supposed deed of sale. These circumstances are allegedly known to respondent
who has never denied knowledge thereof.
Notably, these arguments are the very same ones raised before the Court of Appeals albeit
petitioners purposively rearranged the order in which they made their assignment of errors in this petition.
Respondent[7] avers at the outset that the instant petition should be denied because it raises
questions of fact not proper in a petition for review.
On the objection to the admission in evidence of the testimony of the notary public taken in another
case and as regards the hearsay nature of his testimony on the circumstances surrounding the sale of the
property to Ibarra, respondent cites the decision of the appellate court ruling that these testimonies may be
admitted as independently relevant evidence and as part of respondents narration.
Respondent further claims that the disagreement of the expert witnesses on the matter of whether
the specimen signatures are themselves authentic is insurmountable such that both testimonies should be
disregarded as was done in this case.
Finally, he claims that he is a buyer in good faith because he bought the property after procuring a
certified true copy of the deed of sale from the clerk of court of the then Court of First Instance of Manila
and ascertaining from the transcript taken of the testimony of the notary public who notarized the document
that Ibarras claim of ownership is valid.
The question of whether Ilaos signature on the deed of sale is a forgery is a question of fact which
requires an appraisal and re-evaluation of the evidence presented by the parties. As a rule, however, such a
procedure is beyond the Courts dominion because factual findings of trial courts, especially when affirmed
by the Court of Appeals, as in this case, are binding on the Supreme Court. The review of such findings is
not a function that this Court normally undertakes.
Under the 1997 Rules of Civil Procedure, only questions of law may be raised in a petition for
review before this Court. However, this Rule is not absolute; it admits of exceptions, such as: (1) when
the findings of a trial court are grounded entirely on speculation, surmises or conjectures; (2) when a lower
courts inference from its factual findings is manifestly mistaken, absurd or impossible; (3) when there is
grave abuse of discretion in the appreciation of facts; (4) when the findings of the appellate court go beyond
the issues of the case, run contrary to the admissions of the parties to the case, or fail to notice certain
relevant facts which, if properly considered, will justify a different conclusion; (5) when there is a
misappreciation of facts; (6) when the findings of fact are conclusions without mention of the specific
evidence on which they are based, are premised on the absence of evidence, or are contradicted by evidence
on record.[8]
Petitioners argue that the trial court and the appellate court failed to take into account the fact that
the handwriting expert presented by respondent as his witness, after agreeing to exclude the specimen
signatures which he doubted, finally agreed with the finding of petitioners own expert witness that Ilaos
signature on the deed of sale was forged. Allegedly, both courts misappreciated the evidence and
consequently came up with the erroneous conclusion affirming the validity of the deed of sale.
We find, however, that petitioners contention is not entirely accurate. The trial court and the Court
of Appeals did take into account the entirety of the testimonies of the handwriting experts and reckoned
that neither should be accorded probative value because the expert witnesses have conflicting opinions on
the genuineness of the signatures used as standards against which the alleged forged signature on the deed
of sale would be measured. The assailed Decision succinctly summarizes:

Both experts agree, as logic and commons sense demand, with one absolute proposition. A
conclusion that the specimen signatures and the questioned signature were not signed by the same person
is based on the assumption that all the exemplars were written by one and the same person. Otherwise, the
conclusion does not deserve a scant consideration.
Constantino testified he was sure that all the standard signatures W-5, W-11, W-13 and W-14,
included were written by one and the same person.
Cruz, however, disagreed. He doubted that the signatures marked as W-5, W-11, W-13 and W-14
by the same author of the rest of the exemplars. To him, the specimen signatures consisted of two sets
signed by two different persons. Worse, he does not know which of the two sets of specimen signatures is
the authentic signature to serve as the standard. If on the exemplars alone, there is already an unbridgeable
divergence of opinion when there should be none, it is safe to expect greater polarization, in fact, confusion
to use Cruzs term, of conclusions with respect to the questioned signature.

With this irreconcilable stand, it is a superfluity to further discuss the appellants arguments on the
claim of forgery. Constantino and Cruz, sincere in their espousal of their respective opinion, disparaged,
discredited and neutralized each other completely that the assistance experts are supposed to extend to
courts is nowhere in sight. The appellants stratagem to FIRST DISREGARD the doubtful signatures and
THEN ADD additional specimens in order for Cruz to conclude that the questioned signature and the
exemplars were not written by one person amuses but does not relieve the confusion. Constantino remains
sure that the four signatures were signed by the author of all the exemplars. The doubtful signatures cannot
be removed without impeaching Constantino. Neither could the latter be believed without making Cruz
look ludicrous and unskilled. Experts are presented to enlighted not confuse the courts and for this reason,
We do not fault the lower court for disregarding, in its exasperation, their testimony on record, no doubt,
relying on the leeway extended to all courts that they are not bound to submit their findings necessarily to
such testimony; they are FREE to weigh them and they can give or REFUSE to give them any value as
proof (Salonga, Philippine Law on Evidence, p. 507, emphasis supplied).[9]
Indeed, courts are not bound by expert testimonies. They may place whatever weight they choose
upon such testimonies in accordance with the facts of the case. The relative weight and sufficiency of expert
testimony is peculiarly within the province of the trial court to decide, considering the ability and character
of the witness, his actions upon the witness stand, the weight and process of the reasoning by which he has
supported his opinion, his possible bias in favor of the side for whom he testifies, and any other matters
which serve to illuminate his statements. The opinion of an expert should be considered by the court in
view of all the facts and circumstances of the case. The problem of the evaluation of expert testimony is
left to the discretion of the trial court whose ruling thereupon is not reviewable in the absence of an abuse
of that discretion.[10]
We find that the trial court and the Court of Appeals did not commit an error in their evaluation of
the testimonies of the handwriting experts. In fact, we quite agree that the conflicting testimonies should be
completely disregarded.
The validity of the deed of sale should, therefore, be recognized, the only opposition thereto being
the alleged forgery of Ilaos signature which, as discussed above, was not satisfactorily demonstrated. There
is no doubt that the deed of sale was duly acknowledged before a notary public. As a notarized document,
it has in its favor the presumption of regularity and it carries the evidentiary weight conferred upon it with
respect to its due execution. It is admissible in evidence without further proof of its authenticity and is
entitled to full faith and credit upon its face.[11]
In this connection, we have to say that petitioners objection to the admission in evidence of the
testimony of the notary public who supposedly notarized the deed of sale taken in another case in which
petitioners were not parties is persuasive. Such testimony does not qualify as an exception to the hearsay
rule under Sec. 47, Rule 130 of the Rules of Court, which provides:
Sec. 47. Testimony or deposition at a former proceeding. The testimony or deposition of a witness
deceased or unable to testify, given at a former case or proceeding, judicial or administrative, involving the
same parties and subject matter, may be given in evidence against the adverse party who had the opportunity
to cross-examine him.
None of the circumstances for the admission of the testimony given at a former proceeding obtains
in this case. Not only were petitioners not parties to the former proceeding and hence without opportunity
to cross-examine the notary public, there was also no proof that the notary public was already deceased or
unable to testify. Hence, the testimony should not have been accorded any probative weight.
The same cannot be said, however, of the testimony of respondent relevant to the circumstances
surrounding the execution of the deed of sale between Ilao and Ibarra. It should be noted that what was
sought to be admitted in evidence, and what was actually admitted in evidence, was the fact that the
statements were made by Ibarra, not necessarily that the matters stated were true. The utterances are in the
nature of independently relevant statements which may be admitted in evidence as such, but not necessarily
to prove the truth thereof.[12]
It has been said that where, regardless of the truth or falsity of a statement, the fact that it has been
made is relevant, the hearsay rule does not apply, and the statement may be shown. Evidence as to the
making of such statement is not secondary but primary, for the statement itself may constitute a fact in
issue, or be circumstantially relevant as to the existence of such a fact. [13] On this basis, the statements
attributed to Ibarra regarding the circumstances surrounding the execution of the deed of sale related to the
court by respondent are admissible if only to establish the fact that such statements were made and the tenor
thereof.
As regards petitioners contention that at no time did Ibarra exercise ownership over the subject
property as neither the property nor the certificate of title covering it were delivered to Ibarra, these
circumstances do not necessarily warrant a conclusion that the property was not validly transferred to Ibarra.
It has been held that ownership of the thing sold is acquired only from the delivery thereof, either
actual or constructive. Article 1498 of the Civil Code provides that when the sale is made through a public
instrument, as in this case, the execution thereof shall be equivalent to the delivery of the thing which is the
object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. The
execution of the public instrument, even without actual delivery of the thing, transfers the ownership from
the vendor to the vendee, who may thereafter exercise the rights of an owner over the same.[14]
In this case, a public instrument was executed through which constructive delivery of the subject
property was made transferring ownership thereof to Ibarra. As the new owner, Ibarra acted perfectly within
his rights when he sold the property to respondent.
IN VIEW OF THE FOREGOING, the petition is hereby DENIED. Costs against petitioners.

SO ORDERED.