07 JUN 2017 | CIVIL LAW | JUST COMPENSATION | RULES OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL

BY CERTIORARI TO THE SUPREME COURT

Republic of the Philippines, represented by the Department of Public Works and Highways
(DPWH) Vs. Spouses Senando F. Salvador and Josefina R. Salvador; G.R. No. 205428; June 7, 2017

We resolve the Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the August 23,
2012 Decision[1] and the January 10, 2013 Order[2] of the Regional Trial Court (RTC), Branch 270, Valenzuela
City, in Civil Case No. 175-V-11 which directed petitioner Republic of the Philippines (Republic) to pay
respondents spouses Senando F. Salvador and Josefina R. Salvador consequential damages equivalent to the
value of the capital gains tax and other taxes necessary for the transfer of the expropriated property in the
Republic’s name.

The Antecedent Facts

Respondents are the registered owners of a parcel of land with a total land area of 229 square meters, located
in Kaingin Street, Barangay Parada, Valenzuela City, and covered by Transfer Certificate of Title No. V-
77660.[3]

On November 9, 2011, the Republic, represented by the Department of Public Works and Highways
(DPWH), filed a verified Complaint[4] before the RTC for the expropriation of 83 square meters of said parcel
of land (subject property), as well as the improvements thereon, for the construction of the C-5 Northern
Link Road Project Phase 2 (Segment 9) from the North Luzon Expressway (NLEX) to McArthur Highway.[5]

On February 10, 2012, respondents received two checks from the DPWH representing 100% of the zonal
value of the subject property and the cost of the one-storey semi-concrete residential house erected on the
property amounting to P161,850.00[6] and P523,449.22,[7] respectively.[8] The RTC thereafter issued the
corresponding Writ of Possession in favor of the Republic.[9]

On the same day, respondents signified in open court that they recognized the purpose for which their
property is being expropriated and interposed no objection thereto.[10] They also manifested that they have
already received the total sum of P685,349.22 from the DPWH and are therefore no longer intending to claim
any just compensation.[11]

Ruling of the Regional Trial Court

In its Decision[12] dated August 23, 2012, the RTC rendered judgment in favor of the Republic condemning
the subject property for the purpose of implementing the construction of the C-5 Northern Link Road
Project Phase 2 (Segment 9) from NLEX to McArthur Highway, Valenzuela City.[13]

The RTC likewise directed the Republic to pay respondents consequential damages equivalent to the value of
the capital gains tax and other taxes necessary for the transfer of the subject property in the Republic’s
name.[14]

The Republic moved for partial reconsideration,[15] specifically on the issue relating to the payment of the
capital gains tax, but the RTC denied the motion in its Order[16] dated January 10, 2013 for having been
belatedly filed. The RTC also found no justifiable basis to reconsider its award of consequential damages in
favor of respondents, as the payment of capital gains tax and other transfer taxes is but a consequence of the
expropriation proceedings.[17]

As a result, the Republic filed the present Petition for Review on Certiorari assailing the RTC’s August 23,
2012 Decision and January 10, 2013 Order.

Issues

In the present Petition, the Republic raises the following issues for the Court’s resolution: first,
whether the RTC correctly denied the Republic’s Motion for Partial Reconsideration for having
been filed out of time;[18] and second, whether the capital gains tax on the transfer of the expropriated
property can be considered as consequential damages that may be awarded to respondents.[19]
The Court’s Ruling

The Petition is impressed with merit.

“Section 3, Rule 13 of the Rules of Court provides that if a pleading is filed by registered mail, x x x the date
of mailing shall be considered as the date of filing. It does not matter when the court actually receives the
mailed pleading.”[20]

In this case, the records show that the Republic filed its Motion for Partial Reconsideration before the RTC
via registered mail on September 28, 2012.[21] Although the trial court received the Republic’s motion only on
October 5, 2012,[22] it should have considered the pleading to have been filed on September 28, 2012, the date
of its mailing, which is clearly within the reglementary period of 15 days to file said motion, [23] counted from
September 13, 2012, or the date of the Republic’s receipt of the assailed Decision.[24]

Given these circumstances, we hold that the RTC erred in denying the Republic’s Motion for Partial
Reconsideration for having been filed out of time.

We likewise rule that the RTC committed a serious error when it directed the Republic to pay respondents
consequential damages equivalent to the value of the capital gains tax and other taxes necessary for the
transfer of the subject property.

“Just compensation [is defined as] the full and fair equivalent of the property sought to be expropriated. x x x
The measure is not the taker’s gain but the owner’s loss. [The compensation, to be just,] must be fair not only
to the owner but also to the taker.”[25]

In order to determine just compensation, the trial court should first ascertain the market value of the property
by considering the cost of acquisition, the current value of like properties, its actual or potential uses, and in
the particular case of lands, their size, shape, location, and the tax declarations thereon.[26] If as a result of the
expropriation, the remaining lot suffers from an impairment or decrease in value, consequential damages may
be awarded by the trial court, provided that the consequential benefits which may arise from the
expropriation do not exceed said damages suffered by the owner of the property.[27]

While it is true that “the determination of the amount of just compensation is within the court’s discretion, it
should not be done arbitrarily or capriciously. [Rather,] it must [always] be based on all established rules,
upon correct legal principles and competent evidence.”[28] The court cannot base its judgment on mere
speculations and surmises.[29]

In the present case, the RTC deemed it “fair and just that x x x whatever is the value of the capital gains tax
and all other taxes necessary for the transfer of the subject property to the [Republic] are but consequential
damages that should be paid by the latter.”[30] The RTC further explained in its assailed Order that said award
in favor of respondents is but equitable, just, and fair, viz.:

As aptly pointed out by [respondents], they were merely forced by circumstances to be dispossessed of [the] subject
property owing to the exercise of the State of its sovereign power to expropriate. The payment of capital gains
tax and other transfer taxes is a consequence of the expropriation proceedings. It is in the sense
of equity, justness and fairness, and as upheld by the Supreme Court in the case of Capitol Subdivision, Inc. vs.
Province of Negros Occidental, G.R. No. L-16257, January 31, 1963, that the assailed consequential damages was
awarded by the court.[31]

This is clearly an error. It is settled that the transfer of property through expropriation proceedings is a
sale or exchange within the meaning of Sections 24(D) and 56(A)(3) of the National Internal
Revenue Code, and profit from the transaction constitutes capital gain.[32] Since capital gains tax is a tax on
passive income, it is the seller, or respondents in this case, who are liable to shoulder the tax.[33]

In fact, the Bureau of Internal Revenue (BIR), in BIR Failing No. 476-2013 dated December 18, 2013, has
constituted the DPWH as a withholding agent tasked to withhold the 6% final withholding tax in the
expropriation of real property for infrastructure projects. Thus, as far as the government is concerned, the
capital gains tax In expropriation proceedings remains a liability of the seller, as it is a tax on the
seller’s gain from the sale of real property.[34]

Besides, as previously explained, consequential damages are only awarded if as a result of the expropriation, the
remaining property of the owner suffers from an impairment or decrease in value. [35] In this case, no evidence was
submitted to prove any impairment or decrease in value of the subject property as a result of the
expropriation. More significantly, given that the payment of capital gains tax on the transfer of the subject
property has no effect on the increase or decrease in value of the remaining property, it can hardly be
considered as consequential damages that may be awarded to respondents.

WHEREFORE, we GRANT the Petition for Review on Certiorari. The Decision dated August 23, 2012 and
the Order dated January 10, 2013 of the Regional Trial Court, Branch 270, Valenzuela City, in Civil Case No.
175-V-11, are hereby MODIFIED, in that the award of consequential damages is DELETED. In addition,
spouses Senando F. Salvador and Josefina R. Salvador are hereby ORDERED to pay for the capital gains tax
due on the transfer of the expropriated property.

SO ORDERED.
05 JUN 2017 | SUBJECT | CRIMINAL LAW | ART. 248 - MURDER |

People of the Philippines Vs. Marlon Soriano y Narag; G.R. No. 216063; June 5, 2017

It must be stated at the outset that appellant Marlon Soriano y Narag does not deny that he
stabbed to death Perfecto Narag (Perfecto), his 71-year old maternal uncle who was a retired
Philippine Army officer, that fateful day of February 9, 2004 at Linao East, Tuguegarao City.
Appellant insists nonetheless that he killed Perfecto in legitimate self-defense and that treachery
did not attend the killing, hence he could not be convicted of murder.

Factual Antecedents

Appellant was indicted for murder before the Regional Trial Court (RTC) of Tuguegarao City
under an Information which states:

That on February 09, 2004, in the City of Tuguegarao, Province of Cagayan and within
the jurisdiction of this Honorable Court, accused MARLON SORIANO y NARAG, armed
with a bladed weapon, with intent to kill and with evident premeditation and treachery,
did then and there willfully, unlawfully and feloniously, stab to death victim PERFECTO
NARAG, husband of complainant EDERLINA A. NARAG, inflicting upon him mortal stab
wounds which caused his untimely death.

That the crime was committed with the aggravating circumstance[s] of dwelling, and in
disregard of the respect due to the offended party on account of his age, being an old
man.

Contrary to law.[1]

Arraigned thereon, appellant entered a plea of “not guilty”. Trial on the merits ensued.

The prosecution presented the following as witnesses:

Ederlina A. Narag (Ederlina), widow of Perfecto; Villamor Pagulayan (Villamor), a tricycle driver;
SPO4 Avelino Guinucay (SPO4 Guinucay) of the Philippine National Police (PNP) of
Tuguegarao City; and Dr. Eugenio P. Dayag (Dr. Dayag), former City Health Officer of
Tuguegarao City.

Ederlina testified that on the afternoon of February 9, 2004, appellant arrived at their house and
asked where her husband Perfecto was. Surprised at his arrival, Ederlina asked appellant why
he was looking for Perfecto. Instead of replying to her query, appellant barged into their house
and proceeded to Perfecto’s room. Seeing that appellant was carrying a bladed weapon,
Ederlina shouted to Perfecto to close the door to his room.

While Perfecto was attempting to close the door to his room, appellant grabbed his neck and
immediately stabbed him at the right chest while uttering the words “I will kill you.” Ederlina tried
to stop the appellant from stabbing her husband but he pushed her away and stabbed her
instead at the right wrist and forehead. She pleaded with appellant to stop stabbing his uncle,
Perfecto, but appellant did not heed her plea. Perfecto also pleaded with him to stop his
stabbing frenzy, but he paid no attention to his pleas.

Ederlina narrated that at this point, Villamor, the tricycle driver in their employ, came in and
forced appellant out of Perfecto’s room. However, appellant was able to return inside the room
and stabbed Perfecto at the back again, Ederlina added that after appellant left their house, she
saw him and his brother Martin Soriano (Martin) at the street, with appellant himself yelling
“Winner.”

Corroborating Ederlina’s testimony, Villamor testified that he was at the garage of the victim’s
house when he heard Ederlina’s screams. He ran inside the house and saw appellant, Perfecto,
and Ederlina inside Perfecto’s room. He saw appellant stab Perfecto several times. So he
grabbed appellant by the neck and brought him outside the room. But appellant freed himself
from his (Villamor’s) hold and returned to Perfecto’s room and again repeatedly stabbed the
latter until he died. Appellant also turned his ire against Villamor and tried to stab him, too, but
Villamor succeeded in avoiding serious injury by rushing out of the house. On his way out he
ran into Martin, appellant’s brother, whom he entreated to help pacify appellant. But Martin
instead grabbed Villamor’s neck and warned him not to report the incident to the police.
However, Villamor broke off from Martin, and went to the police station where he reported the
incident.

SPO4 Guinucay testified that he and a fellow police officer went to the scene of the crime to
investigate the reported incident. There they found the lifeless Perfecto in a pool of blood, with
multiple stab wounds.

Dr. Dayag, testified that he conducted an autopsy upon the 71-year old Perfecto. His autopsy
yielded the following results:

Findings:

 Multiple stab wounds, head, chest & back region

 Laceration on the left hand

 Lacerated wound on the left side of the face

Cause of Death:

Severe internal injuries due to multiple stab wounds, head, chest and back region

Dr. Dayag described the injuries, as follows:

 two (2) stab wounds on the forehead:

 1. stab wound measuring .8 inches by 2 inches caused by sharp
pointed instrument but non-penetrating;

2. stab wound measuring 1.02 inches by .2 inches deep hitting the

skull but non-penetrating caused by a sharp pointed instrument;

 one laceration on the cheek measuring 2 inches wide and 1.2 inches
deep caused by sharp bladed instrument;

 three (3) internal hematomas on the chest which were not fatal or more
or less, superficial;

 one stab wound just below the nipple measuring 3.2 inches that hit the
Lungs which could cause internal hemorrhage; inflicted with use of
sharp pointed knife; a fatal wound

 a stab wound on the abdomen just at the left umbilicus measuring 1.2
by 3 inches hitting the large and small intestines; non-fatal wound;

 contusions on the abdomen just below the rib; superficial;

 a stab wound caused by a knife on the inguinal area measuring 1.2

inches by 3 inches in thickness; possibly caused by sharp pointed
instrument; inflicted injuries to the large intestines and urinary bladder
which, if not immediately attended to, would be fatal;

 another stab wound measuring 1.2 inches by 3 inches caused by

sharp pointed instrument; inflicted injuries to the large intestines and
urinary bladder which, if not immediately attended to, would be fatal

 four (4) stab wounds on the back region:

1. stab wound measuring 2 by 2.4 inches hitting the lungs; possibly

caused by a sharp pointed instrument; fatal wound;

2. Stab wound measuring 2 x 2.2 inches deep hitting the left kidney;
caused by a sharp pointed instrument; fatal wound;

3. Stab wound measuring 2 inches deep and 2 inches wide; on level

with the lumbar area on the left hitting the large intestines; possibly
caused by a sharp bladed instrument;

4. Stab wound measuring 2 inches by 3 inches deep on the right side

of the lumbar area hitting the large and small intestines; possibly
caused by sharp bladed pointed instrument; non-fatal;
On cross-examination x x x Dr. Dayag [declared] that when he conducted the autopsy,
[Perfecto’s] cadaver was already [in] rigos mortis x x x[; that it] is possible that the
wounds [inflicted] on the back of the victim were caused by a chisel[; t]he Autopsy
Report does not bear the depths and sizes of the wounds but he had them in his
notebook x x x.[2]

On the other hand, the appellant claimed that there had been a longstanding bad blood between
his (appellant’s) family and his now deceased uncle, Perfecto, who was an elder brother of his
mother; and that this family feud was caused by Perfecto’s desire to deprive appellant’s mother
of her legitimate share in the common residential compound at Linao East, Tuguegarao City. He
claimed that on that fateful day of February 9, 2004, Perfecto went near a store he was tending
right inside the common residential compound; that at a distance of about five meters, Perfecto
yelled at him to step outside; that when he stepped outside their store, Perfecto swung his knife
at him and injured his knee; that he ran inside the kitchen and armed himself with a chisel; that
when Perfecto tried to hurt him again, he was able to stab him first; that several persons
witnessed the incident but nobody tried to interfere; that after the stabbing incident, he
surrendered to Barangay Councilman Benigno Lucas who brought him to the police station in
Annaturan, Tuguegarao City where he was investigated; and that afterwards, he was brought to
a hospital for treatment but said hospital did not issue a medical certificate.

On cross-examination, appellant admitted that Ederlina was present during the stabbing incident
in question, and that when Ederlina intervened, she was in fact injured by him; that later,
Ederlina filed against him a criminal case for frustrated murder before Branch I of the RTC in
Tuguegarao City, to which criminal case he pleaded guilty.

Riding, of ike Regional Trial Court

The RTC of Tuguegarao City, Branch 3, synthesized the evidence at bar in this wise:

The totality of the circumstances leads to the inevitable conclusion that the victim was
caught unaware and unable to defend himself and the accused deliberately chose a
manner of attack that insured the attainment of his violent intention with no risk to
himself.

The fact that Ederlina Narag was able to shout at the victim to close his room does not
rule out the presence of treachery. It has been ailed that while a victim may have been
warned of possible danger to his person, [there is treachery nonetheless when] the
attack was executed in such a manner as to make it impossible for the victim to
retaliate. The case at bar typifies this doctrine for the victim had no opportunity to
defend himself precisely because it was simply unexpected to be the subject of an
attack right inside his own abode and he was unarmed, with no opportunity to put up a
defense. It must also be noted that the victim was already old and that his reflexes could
have been worn down by age so he could not have been in a position to swiftly and
sufficiently ward off the attack. It is worthy to note the injuries sustained by the victim.
According to Dr. Dayag, the victim sustained various injuries not only in front of [his]
body but also [on] his forehead and at his back and that the cause of his death is severe
internal injuries due to multiple stab wounds, head, chest, and back region.

The version of the accused that the stabbing incident happened outside their house
cannot be given credence. First, it is uncorroborated even if accused claimed that there
were persons outside their house during the incident. Second, the testimony of
prosecution witnesses Villamor Pagulayan and Ederlina Narag that the accused [stab]
the victim inside the latter’s room was corroborated by SPO4 Avelino Guinucay who
testified that he found the victim’s body with multiple stabbed wounds lying inside his
room [in a] pool of blood. Defense conveniently did not present evidence on what
happened to the victim after the stabbing incident that should have explained why the
victim’s body was found in his room even if the stabbing incident happened outside the
house of the accused.

To warrant a finding of evident premeditation, the prosecution must establish the

confluence of She following requisites: (a) the time when the offender determined to
commit the crime; (b) an act manifestly indicating that the offender clung to his
determination [to commit the crime]; and (c) a sufficient interval of time between the
determination and the execution of the crime to allow him to reflect upon the
consequences of his act.

Prosecution evidence [failed] to show when the accused planned to commit the offense
and mat he reflected on the means to bring about its execution following an appreciable
length of time. The Court cannot rest easy in appreciating this aggravating
circumstance.

Dwelling aggravates a felony where the crime was committed in the dwelling of the
offended party, if the latter has not given provocation or if the victim was killed inside his
house. Dwelling is considered aggravating primarily because of the sanctity of privacy
[that] the law accords to [the] human abode. He who goes to another’s house to hurt
him or do him wrong is more guilty than he who offends him elsewhere. The offense of
Murder may be committed without the necessity of trespassing the sanctity of the
offended party’s house.

The victim was killed not merely in his house but in his own room. The accused could
have killed him elsewhere but he decided to commit the crime at the victim’s home; thus
the aggravating circumstance of dwelling should be appreciated against the accused.

The Court is also convinced that the offense was committed in disregard of the respect
due to the age of the victim. The accused knew fully well that the victim was already old
because he is his uncle. The accused perpetrated the act against his ageing uncle
knowing that by himself, said victim’s physical condition due to old age would not allow
him to sufficiently defend himself anymore.
The mitigating circumstance of voluntary surrender is appreciated in favor of the
accused. Police officer Tangan testified that police officers x x x Remolacio, Batulan and
Abadu, who brought accused to PTU Don Domingo where he was on duty informed him
that he accused surrendered to Barangay Councilman Benigno Lucas, Linao East,
Tuguegarao City. The reason why the accused was no longer at the place of incident
when police officer Guinucay investigated and that the accused did not give himself up
to any of the police officers was sufficiently explained by the accused upon his
testimony that he left the place of incident and proceeded to the barangay hall where he
surrendered to Barangay Councilman Benigno Lucas. It is significant to note that there
is no evidence to show that the police or any law enforcement agency exerted any effort
to locate the accused. By 5:00 o’clock in the afternoon, the accused was already turned
over to PTU Don Domingo.

The information alleges two (2) qualifying aggravating circumstances, to wit: treachery
and evident premeditation and two (2) generic aggravating circumstances of dwelling
and disrespect to the victim who is already old. Only one qualifying circumstance of
treachery with the two generic aggravating circumstances were proved. Applying the
provision of paragraph 4, Article 64 of the Revised Penal Code, the mitigating
circumstance of voluntary surrender offsets one generic aggravating circumstance, thus
leaving one more generic aggravating circumstance. Under Article 248 of the Revised
Penal Code, as amended by R.A. No. 7659, murder is punishable by reclusion
perpetua to death, which are both indivisible penalties. Article 63 of the same Code
provides that in all cases in which the law prescribes a penalty composed of two
indivisible penalties, the greater penalty shall be applied when the commission of the
deed is attended by one aggravating circumstance. Under this state of facts, the proper
penalty to be imposed upon the accused should be death.

However, in view of the enactment of Republic Act No. 9346 or the Act Prohibiting the
Imposition of Death Penalty on June 24, 2006, the penalty that should be meted
is reclusion perpetua x x x

xxxx

Pursuant to the same law, the accused shall not be eligible for parole x x x. [3]

The dispositive portion of the trial court’s Judgment[4] reads as follows:

WHEREFORE, the accused MARLON SORIANO y Narag is found GUILTY beyond

reasonable doubt of MURDER as defined in Article 248 of the Revised Penal Code, as
amended by Republic Act No. 7659 and is hereby sentenced to suffer the penalty of
Reclusion Perpetua without possibility of parole. Said accused is ORDERED to pay the
heirs of Perfecto Narag the amounts of P75,000.00 as civil indemnity; P75,000.00 as
stipulated actual damages; P50,000.00 as moral damages; and P25,000.00 as
exemplary damages; and to pay the costs of suit.
SO ORDERED.[5]

Aggrieved, appellant sought recourse before the Court of Appeals.

Ruling of the Court of Appeals

The appellate court however threw out the appellant’s appeal ratiocinating as follows:

Testimonies of Prosecution’s Witnesses More Credible than Accused-Appellant’s

It has been held time and again that factual findings of the trial court, its assessment of
the credibility of witnesses and the probative weight of their testimonies and the
conclusions based on these factual findings are to be given the highest respect because
it had the better opportunity to observe the witnesses firsthand and note their
demeanor, conduct and attitude under grueling examination. On the other hand, the
reviewing magistrate has none of the advantages peculiar to the trial judge’s position,
and could rely only on the cold records of the case and on the judge’s discretion. Thus,
the trial court’s assessment of the credibility of witnesses and their testimonies would
not be disturbed absent any showing that it has overlooked, misapprehended or
misapplied certain facts or circumstances of weight and substance which could
substantially affect the outcome of the case. We assiduously examined the records and
We find no reason to either depart from this established doctrine or to review, much
less, overturn the factual findings of the court a quo.

Marlon tried to destroy the credibility of the prosecution’s witnesses by belaboring on

their relationship with the victim, Ederlina and Villamor being Perfecto’s wife and
nephew, respectively. Such emphasis is misplaced. Blood relationship between a
witness and the victim does not, by itself, impair the credibility of the witness. In fact, the
relationship with the victim would render the testimony more credible as it would be
unnatural for a relative who is interested in vindicating the crime to accuse somebody
[else] other than the real culprit. There is absolutely nothing in our laws to disqualify a
person from testifying in a criminal case in which said person’s relative was involved, if
the former was really at the scene of the crime and was a witness to the execution of
the criminal act. Indisputably, Ederlina was with Perfecto in their home when Marlon
attacked his uncle. She clearly described the events that took place before, during, and
after her husband was stabbed and her testimony remained consistent and unwavering
even on cross-examination. Thus, her positive testimony is enough to convict Marlon of
the crime charged.

Further, Marlon’s claim that the stabbing occurred outside of their respective houses
does not inspire belief. We quote with approval the following disquisition of the
RTC, viz.:
The version of the accused that the stabbing incident happened outside their house
cannot be given credence. First, it is uncorroborated even if accused claimed that there
were persons outside their house during the incident. Second, the testimony of
prosecution witnesses Villamor Pagulayan and Ederlina Narag that the accused
stabbed the victim inside the latter’s room was corroborated by SPO4 Avelino Guinucay
who testified that lie found the victim’s body with multiple stabbed (sic) wounds lying
inside his room [in] a pool of blood, Defense conveniently did not present evidence on
what happened to the victim after the stabbing incident that should have explained why
the victim’s body was found in his room even if the stabbing incident happened outside
the house of the accused.

There is also no merit in Marlon’s contention that his testimony was corroborated by
SPO1 Tangan, It bears stressing that SPO1 Tangan did not witness the stabbing
incident; his testimony surrounding Perfecto’s killing was purely based on Marlon’s
narration and not of his own personal knowledge. As such, Ms testimony regarding the
killing is inadmissible for being hearsay. It is a basic rule in evidence that a witness can
testify [to] the facts that he knows of his own personal knowledge or those which are
derived from his own perception. He may not testify [to] what lie merely learned, read or
heard from others because such testimony is considered hearsay and may not be
received as proof of the truth of what he has learned, read or heard.[6]

With particular reference to the qualifying circumstance of treachery, which according to the
appellant did not at all attend his stabbing-to-death of his uncle Perfecto, the appellate court
postulated thus:

Treachery: Duly Established; Qualified the Killing to Murder

xxxx

It may be said, as postulated herein, that the suddenness of the attack would not, by
itself, suffice to support a finding of treachery. However, where proof obtains that the
victim was completely deprived of a real chance to defend himself against the attack, as
in the instant case, thereby ensuring its commission without risk to the aggressor, and
without the slightest provocation on the part of the victim, the qualifying circumstance of
treachery ought to and should be appreciated. Verily, what is decisive is that the attack
was executed in a manner mat the victim was rendered defenseless and unable to
retaliate.

As earlier discussed at length, the positive testimony of Ederlina established that Marlon
purposely sought the unsuspecting Perfecto with intent to inflict mortal wound on him.
Perfecto was unarmed at that time and there was no means of escape because he was
trapped inside his room. In fact, Perfecto was about to close the door to his room when
Marlon suddenly and swiftly stabbed him. Lastly, Marlon aimed at Perfecto’s head,
chest and back ensuring that he would not have a chance to retaliate. Obviously, the
way it was executed made it impossible for the victim to respond or defend himself. He
just had no opportunity to repel the sudden attack, rendering him completely helpless.

The following observation of the RTC is also apt:

The fact that Ederlina Narag was able to shout at the victim to close his room does not
rule out the presence of treachery. It has been ruled that while a victim may have been
warned of possible danger to his person, in treachery what is decisive is that the attack
was executed in such a manner as to make it impossible for the victim to retaliate. The
case at bar typifies this doctrine for the victim had no opportunity to defend himself
precisely because it was simply unexpected to be the subject of an attack right inside
his own abode and he was unarmed, with no opportunity to put up a defense. It must
also be noted that the victim was already old and that his reflexes could have been worn
down by age so he could not have been in a position to swiftly and sufficiently ward off
the attack. x x x

Accordingly, We sustain the findings of the RTC that Marlon is guilty beyond reasonable
doubt of murder.[7]

The appellate court nonetheless modified the sums awarded by the RTC in concept of actual
damages and exemplary damages, to wit:

Damages

However, We find it necessary to modify accused-appellant’s civil liability. The RTC

correctly awarded P75,000.00 civil indemnity and P50,000.00 moral damages but the
actual damages should be reduced to P25,000.00 which is the amount of expenses
stipulated by Ederlina in her testimony. The awarded exemplary damages should also
be increased to P30,000.00 in line with recent jurisprudence.

All the foregoing monetary awards shall earn interest at the legal rate of 6% per annum
from the date of finality of this decision until fully paid.[8]

The decretal portion of the appellate court’s Decision[9] reads as follows:

WHEREFORE, the appeal is DENIED and the October 30, 2009 Judgment of the
Regional Trial Court Branch 3, Tuguegarao City, Cagayan in Criminal Case No. 10121
is AFFIRMED with MODIFICATIONS. As modified, accused-appellant MARLON
SORIANO Y NARAG is hereby ordered to pay the Heirs of Perfecto Narag P25,000.00
actual damages and P30,000.00 exemplary damages, and all monetary awards are
subject to 6% per annum from the time of finality of this Decision until fully paid. All
other aspects of the October 30, 2009 Judgment stand.

SO ORDERED.[10]
Our Ruling
It is almost trite to say that the factual findings of the trial court, its assessment of the credibility
of the witnesses, the probative weight of their testimonies and the conclusions drawn from these
factual findings are accorded the highest respect by the appellate court, whose revisory power
and authority is limited to the bare and cold records of the case. This explains why this Court,
which is not a trial court, is loathe to re-examine and re-evaluate the evidence that had been
analyzed and dissected by the trial court, and sustained and affirmed by the appellate court. In
the case at bench, we see no reason at all to overturn the findings of facts and the conclusions
of law made by both the trial court and the appellate court relative to the fact that treachery or
alevosia in fact attended the stabbing-to-death of Perfecto by the appellant at the time and place
alleged in the Information.

The awards for damages can stand some modification, however. Notably, the appellate court
awarded P25,000.00 as actual damages which is the amount stipulated by the
parties.[11] However, it is settled that “only expenses supported by receipts and which appear to
have been actually expended in connection with the death of the [victim] may be
allowed.”[12] Hence, the award of P25,000.00 as actual damages is deleted. In lieu thereof, “it is
proper to award temperate damages x x x since the heirs of the victim suffered a loss but could
not produce documentary evidence to support their claims.”[13] In line with prevailing
jurisprudence, we award P50,000.00 as temperate damages. As regards the awards for civil
indemnity, moral damages and exemplary damages, it was held in People v. Jugueta[14] that for
a felony like murder where the penalty imposed is death, but reduced to reclusion
perpetua because of Republic Act No. 9346, the amount is fixed at P100,000.00 each for civil
indemnity, moral damages, and exemplary damages.

WHEREFORE, the appeal is hereby DISMISSED. The Decision of the Court of Appeals in CA-
G.R. CR-HC No. 04241 is AFFIRMED with MODIFICATIONS. Appellant Marlon. Soriano y
Narag is ORDERED to pay the heirs of Perfecto Narag the amounts of P100,000.00 as civil
indemnity, P100,000.00 as moral damages, P100,000.00 as exemplary damages, and
P50,000.00 as temperate damages.

SO ORDERED.
05 JUN 2017 | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE
SUPREME COURT

Department of Public Works and Highways (DPWH) Secretary Simeon A. Datumanong, et al. Vs.
Maria Elena L. Malaga; G.R. No. 204906; June 5, 2017

Assailed in this Petition for Review on Certiorari[1] are the March 26, 2012 Decision[2] of the Court
of Appeals (CA) in CA-G.R. CV No. 00889 which set aside the March 23, 2004 Order[3] of the
Regional Trial. Court (RTC) of Iloilo City, Branch 29 m Civil Case No. 27059, and the CA’s
November 9, 2012 Resolution[4] denying herein petitioners’ Motion for Reconsideration.[5]

Factual Antecedents

Respondent Maria Elena L. Malaga owns B.E. Construction, a private contractor and the lowest
bidder for two concreting projects of the Department of Public Works and Highways (DPWH),
particularly:

a. Mandurriao-San Miguel Road, Barangay Hibao-an Section in Iloilo City; and

b. Mandurriao-San Miguel Road, Guzman-Jesena Section in Iloilo City as well.

The bidding for the above projects was held on November 6, 2001, and was based upon an
August 2001 published invitation to bid.

However, it appears that after the publication of the invitation to bid but prior to the scheduled
November 6, 2001 bidding, the road condition of the Mandurriao-San Miguel Road
in Barangay Hibao-an severely deteriorated to an almost impassable state on account of the
prevailing typhoon and monsoon season, prompting calls for immediate repairs and other
appropriate action from local government units (LGUs), a Member of the House of
Representatives, and concerned private citizens and interest groups.[6] Petitioner Vicente M.
Tingson, Jr. (Tingson), DPWH Iloilo City District Engineer, thus requested his immediate
superior, herein petitioner and DPWH Region VI Director Wilfredo B. Agustino (Agustino), that
the Mandurriao-San Miguel Road, Barangay Hibao-an Section and Mandurriao-San Miguel
Road, Guzman-Jesena Section projects be implemented by administration, that is, that these
projects be undertaken directly and immediately by the government, on account of urgency, and
thus taken out of the list of projects bid out to private contractors. In turn, Agustino sent an
August 23, 2001 1st Indorsement to then DPWH Secretary Simeon A. Datumanong
(Datumanong), reiterating Tingson’s request that the said projects be implemented by
administration.[7]

On August 23 and 24, 2001, DPWH Undersecretary and herein petitioner Manuel M. Bonoan
(Bonoan) personally inspected the area covered by the proposed projects, and in an August 29,
2001 Memorandum to Datumanong, he recommended that the subject projects be undertaken
by administration.[8]
Agustino sent an October 23, 2001 letter to Datumanong reiterating his earlier request
contained in the August 23, 2001 1st Indorsement.[9]

Since no response was forthcoming from Datumanong, the DPWH Regional Office VI
proceeded with the dropping and opening of bids as scheduled. Thus, respondent won as the
lowest bidder for the above-mentioned projects.

On November 7, 2001, Datumanong issued a Memorandum[10] of even date approving the

DPWH Regional Office VI request, but only with respect to the Mandurriao-San Miguel
Road, Barangay Hibao-an Section considering the exigent circumstances prevailing. The
DPWH Regional Office VI received a copy of this Memorandum on November 12, 2001.

Pursuant to Datumanong’s November 7, 2001 Memorandum, herein petitioners Ruby P. Lagoc

(Lagoc), Mavi V. Jerecia (Jerecia) and Elizabeth Gardose (Gardose), Bids and Awards
Committee members, conducted the post-evaluation/qualification of respondent’s firm, but only
for the Mandurriao-San Miguel Road, Guzman-Jesena Section project. Respondent was
declared post-qualified for the project, and the same was awarded to her.

On November 15, 2001, Lagoc informed respondent that the Mandurriao-San Miguel
Road, Barangay Hibao-an Section project may not be awarded to her, in view of Datumanong’s
November 7, 2001 Memorandum. Respondent replied with formal written demands that the
project be awarded to her in spite of Datumanong’s directive, under pain of civil action and claim
for damages.[11] Lagoc wrote back disavowing any liability and claiming that Datumanong’s
directive was a supervening event that prevented the award of the subject project to
respondent, and until it is nullified or set aside, the Mandurriao-San Miguel
Road, Barangay Hibao-an Section project shall be undertaken by administration as directed.[12]

Ruling of the Regional Trial Court

On February 14, 2002, respondent filed Civil Case No. 27059 with the RTC. In her
Complaint[13] for damages against the herein individual petitioners, respondent claimed that the
individual petitioners, “acting together, in cooperation and collusion with each other, have
manipulated things and circumstances in a manner deliberately intended to deprive and deny
her the x x x project even if she was the lowest and complying bidder thereof;” [14] that individual
petitioners’ “clear intention has been indisputably to implement the project ‘by contract’ if the
bidding is won by any other bidder, and to implement it ‘by administration'” [15] if respondent won;
that the real reason behind individual petitioners’ refusal to award the Mandurriao-San Miguel
Road, Barangay Hibao-an Section project to her is to deny and deprive her, “harass and teach
her a lesson not to file cases against the defendants even when there are valid and lawful
reasons to do so;”[16] that it was more expedient to implement the project by bid contract than by
administration; that individual petitioners are guilty of malice and bad faith and intentionally
delayed the processes relative to the bidding for the said project in order to defeat her valid
claim thereto; and as a result, she was deprived of the said project and the reasonable profits
she would have gained therefrom. Thus, she prayed, as follows:

WHEREFORE, it is most respectfully prayed that judgment be rendered for the plaintiff
and against the defendants, ordering the defendants, jointly and solidarily, to pay the
plaintiff the sums of P855,000.00 as actual damages; at least P200,000.00 as moral
damages; P200,000.00 as attorney’s fees plus P3,000.00 per hearing as appearance
fee; P50,000.00 as miscellaneous litigation and other expenses; such amount of
exemplary damages this Honorable Court may fix as just and proper; and to pay the
costs.

Other reliefs just and proper are also prayed for.[17]

In their Answer,[18] herein individual petitioners prayed for the dismissal of the case, arguing that
respondent has no valid cause of action; that the decision to undertake the subject project by
administration was legal and justified, and was not arrived at in bad faith and with malice; that
respondent had no right to the project since under the Implementing Rules and Regulations
(IRR) of Presidential Decree No. 1594,[19] a contractor is not automatically entitled to an award of
a project subject to bidding by the mere fact that he is the lowest bidder as he must still undergo
a mandatory post-qualification procedure regarding his legal, technical and financial capability
and other qualifications as outlined under said IB 10.5 of the IRR;[20] that under the published
Invitation to Bid[21] for the subject project, it is particularly stated that government reserved the
right to reject any or all bids, waive any minor defect therein, and accept the offer most
advantageous to it; that respondent had a mere inchoate right but which does not give her a
valid cause of action; that respondent was awarded the other project she bid for, which indicates
lack of bad faith and malice on their part; and that the case is clearly an unauthorized suit
against the State, as no prior consent to be sued was shown in the complaint.

The parties were directed to file their respective position papers on the issue of whether the
case was one against the State, or one against the individual petitioners in their respective
personal capacities.

On March 23, 2004, the RTC issued an Order dismissing Civil Case No. 27059 on the
conclusion that it was an unauthorized suit against the State. It held, as follows:

The instant case is a suit against the state and therefore dismissible for it cannot be
sued without its consent.

The plaintiff, being the lowest bidder of the San Miguel-Mandurriao Road
(Barangay Hibao-an) Project, has no automatic right to be awarded of [sic] the said
project since the plaintiff has still to undergo post-qualification regarding his legal,
technical and financial capability as mandated by law and the government reserves the
right to reject any or all bids, waive any minor defect therein, and accept the offer most
advantageous to it. The rejection of the government to award the project to the herein
plaintiff is well within its prerogative to best serve the interest of the citizenry. It is worth
stressing that when the project was taken ‘by administration’, it passed thru proper
procedures. Due to public clamor of the impassable [sic] status of the said San Miguel-
Mandurriao Road, the drivers of public utility vehicles plying the said route, the
Mandurriao Transport Integrated Association, Inc. (MITAD), and the residents of the
said community were howling protest and indignant words against the office of DPWH.
This prompted x x x Tingson x x x to recommend that the said project be undertaken by
administration which was favorably endorsed by x x x Agustino to x x x Datumanong.
Thus, on August 23-24, 2001, x x x Bonoan inspected the said road and submitted a
memorandum to x x x Datumanong, confirming the unbearable and hazardous
conditions of the said road and recommended that the project be undertaken ‘by
administration’, x x x Datumanong issued a memorandum to x x x Agustino dated
November 12, 2001, directing the implementation of the concreting of Mandurriao-San
Miguel Road (Barangay Hibao-an Section) ‘by administration’. Hence, x x x Lagoc, x x x
Jerecia and x x x Gardose, in their capacities as BAC Chairman and members,
respectively, did not conduct the post evaluation/qualification of plaintiff’s firm for the
said project. The foregoing acts of the above-named defendants were all committed in
the performance of their official functions and cannot be said to have been tainted with
malice and bad faith as it [sic] passed thru proper procedures as mandated by law.

WHEREFORE, the defendants’ affirmative defenses is [sic] granted and this case is
hereby DISMISSED.

SO ORDERED.[22]

Respondent moved to reconsider, but the RTC held its ground.

Ruling of the Court of Appeals

Respondent interposed an appeal before the CA, docketed as CA-G.R. CV No. 00889, arguing
that when the DPWH entered into contract with her, it descended to the level of an ordinary
person and impliedly gave its consent to sue and be sued; that her complaint did not seek relief
from the State, but against individual petitioners in their respective personal capacities on the
ground that they acted in bad faith and with malice in dealing with her.

On March 26, 2012, the CA rendered the assailed Decision, declaring as follows:

We perceive merit in plaintiff-appellant’s postulations.

An unincorporated government agency such as the DPWH is without any separate

juridical personality of its own and hence enjoys immunity from suit. Even in the
exercise of proprietary functions incidental to its primarily governmental functions, an
unincorporated agency still cannot be sued without its consent.

‘While the doctrine appears to prohibit only suits against the state without its consent, it
is also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment
against such officials will require the state itself to perform an affirmative act to satisfy
the same, such as the appropriation of the amount needed to pay the damages
awarded against them, the suit must be regarded as against the state itself although it
has not been formally impleaded.’
It bears emphasis that when the suit is against an officer of the State, enquiry must be
made whether in fact ultimate liability will fall on the officer or on the government. If it is
the government which will ultimately be accountable, the suit must be considered as
one against the state itself.

In the case at bench, plaintiff-appellant reasoned that no relief was claimed against the
government. The Complaint showed that the Republic was not impleaded and only the
public officers were made parties thereto. The gist of the initiatory pleading was to
ascertain and adjudicate defendants-appellees’ joint and several liability for damages.
There was no express mention whatsoever of State liability. What was explicit was
plaintiff-appellant’s allegation of bad faith on the part of the public officers who denied
her the award of the project which resultantly deprived her of prospective profits.

On this score, it cannot be concluded that the Complaint was barred by immunity of the
State from suit inasmuch as no appropriation or liability was sought from the
government coffer. On the contrary, liability was directly limited to the public officers as
an incident of their alleged wanton and malicious acts.

‘The doctrine of immunity from suit will not apply and may not be invoked where the
public official is being sued in his private and personal capacity as an ordinary citizen.
The cloak of protection afforded the officers and agents of the government is removed
the moment they are sued in their individual capacity. This situation usually arises
where the public official acts without authority or in excess of the powers vested in him.
It is a well-settled principle of law that a public official may be liable in his personal
private capacity for whatever damage he may have caused by Ms act done with malice
and in bad faith, or beyond the scope of his authority or jurisdiction.

Of primordial significance was the fact that no contract was inked between DPWH and
plaintiff-appellant with respect to the disputed project. In fact, the instant suit was
intended to compel the public officers to compensate plaintiff-appellant for the
prospective profits she would have earned had she been awarded the project as the
bidder who submitted the lowest numerical bid.

It was defendants-appellees’ contention that the submission of the lowest bid alone
does not give the plaintiff-appellant the right to insist that the contract be awarded to
her. Citing IB 10.5 of the Implementing Rules and Regulations of Presidential Decree
No. (P.D.) No. 1594, x x x, defendants-appellees posited that the bid was still subject to
post evaluation and acceptance of the Government which reserved in the Invitation to
Bid (ITB) the right to reject any and all bids that are not deemed responsive or compliant
to its requirements.

Indeed, the executive department is acknowledged to have wide latitude to accept or

reject a bid, or even after an award has been made, to revoke such award. From these
options, the court will not generally interfere with the exercise of discretion by the
executive department, unless it is apparent that the exercise of discretion is used to
shield unfairness or injustice.

The Court, the parties, and the public at large are bound to respect the fact that official
acts of the Government, including those performed by governmental agencies such as
the DPWH, are clothed with the presumption of regularity in the performance of official
duty and cannot be summarily, prematurely and capriciously set aside.

However, the presumption that official duty has been regularly performed is among the
disputable presumptions. ‘It is settled that a disputable presumption is a species of
evidence that may be accepted and acted on where there is no other evidence to
uphold the contention for which it stands, or one which may be overcome by other
evidence. One such disputable/rebuttable presumption is that an official act or duty has
been regularly performed…’ Such, presumption of regularity of official acts may be
rebutted by affirmative evidence of irregularity or failure to perform a duty.

True, the Government’s reservation subjected the bidders to its right to reject, and
consequently accept any and all bids at its discretion. Unless such discretion has been
arbitrarily exercised causing patent injustice, the Court will not supplant its decision to
that of the agency or instrumentality which is presumed to possess the technical
expertise on the matters within its authority.

Yet, it is worthy of consideration that ‘Our legal framework allows the pursuit of
remedies against errors of the State or its components available to those entitled by
reason of damage or injury sustained. Such litigation involves demonstration of legal
capacity to sue or be sued, an exhaustive trial on the merits, and adjudication that has
basis in duly proven facts and law.’

In this case, in order to properly determine the supposed existence of capricious

exercise of governmental discretion, in the guise of performance of official duty, this
Court deemed it best that the matter of damages be fairly litigated before the trial court.
In the process, the plaintiff-appellant can refute, by way of competent evidence, the
presumptive regularity in the performance by defendants-appellees of official functions.

WHEREFORE, the appeal is GRANTED. Hence, the Order of March 23, 2004 rendered
by the Regional Trial Court, Branch 29, Iloilo City in Civil [Case] No. 27059 is hereby
SET ASIDE. Let this case be remanded to the trial court for proper disposition on its
merits.

SO ORDERED.[23] (Citations omitted)

Petitioners sought to reconsider, but were rebuffed. Hence, the present Petition.

Issues
In a June 22, 2015 Resolution,[24] this Court resolved to give due course to the Petition,
which contains the following assignment of errors:
I.

THE COURT OF APPEALS ERRED IN SETTING ASIDE THE ORDER OF

DISMISSAL BY THE LOWER COURT BECAUSE THE COMPLAINT WAS A
SUIT AGAINST THE STATE TO WHICH IT HAS NOT GIVEN ITS CONSENT
TO BE SUED.
II.

THE COURT OF APPEALS ERRED IN GRANTING THE RESPONDENT’S

APPEAL AND REMANDING THE CASE TO THE LOWER COURT FOR
TRIAL BECAUSE RESPONDENT FAILED TO ALLEGE ANY ACTIONABLE
WRONG THAT WOULD ENTITLE HER TO THE DAMAGES CLAIMED.
III.

THE COURT OF APPEALS ERRED IN REQUIRING THAT THE MATTER OF

DAMAGES BE LITIGATED BEFORE THE LOWER COURT BECAUSE THE
PRESUMPTION OF GOOD FAITH AND REGULARITY IN THE
PERFORMANCE OF OFFICIAL DUTY, WHILE ADMITTEDLY DISPUTABLE,
NEED NOT ALWAYS BE THRESHED OUT IN A FULL-BLOWN TRIAL
ESPECIALLY WHERE THE FACTS ARE UNDISPUTED.[25]
Petitioners’ Arguments

In praying that the assailed CA dispositions be set aside and that, instead, Civil Case No. 27059
be dismissed as ordered by the RTC, petitioners argue in their Petition and Reply[26] that
respondent’s case for damages is actually an unauthorized suit against the State, as the
individual petitioners are being sued in relation to acts committed in the performance of their
official duties; that as such, individual petitioners should be protected by the mantle of state
immunity and allowed to perform their functions without fear of unwarranted lawsuits in order to
better serve the public; that respondent should not be allowed to circumvent the principle of
state immunity by the expedient of impleading the individual petitioners in their private
capacities; that the individual petitioners were indubitably acting within the bounds of their
official mandate when they implemented the subject project by administration instead of
awarding the same to respondent; that the decision to undertake the project by administration
was not made capriciously but with utmost consideration and legal justification; that there is no
actionable wrong committed against respondent; that she is not entitled to relief as her bid was
not subjected to the required post-qualification process; that her claim of being singled out with
malice and bad faith is belied by the fact that she was awarded one of the projects by the
petitioners; and that the presumption of regularity in the performance of official duty should
prevail in this case, as against respondent’s claims and arguments to the contrary.

Respondent’s Arguments
Respondent, on the other hand, counters in her Comment[27] that as the individual petitioners
conspired in bad faith to deprive her of the subject project and unduly utilized their official
functions to achieve such end, they opened themselves to a damage suit in their respective
individual capacities; that by their actions, individual petitioners waived the cloak or protection
afforded by their office; and that, as correctly held by the CA, the issue of existence of an
actionable wrong resulting from the individual petitioners’ acts is for the RTC to determine after
trial on the merits, and cannot be passed upon summarily in the proceedings before the CA or
this Court.

Our Ruling

The Court grants the Petition.

The procurement process basically involves the following steps: (1) pre-procurement
conference; (2) advertisement of the invitation to bid; (3) pre-bid conference; (4)
eligibility check of prospective bidders; (5) submission and receipt of bids; (6)
modification and withdrawal of bids; (7) bid opening and examination; (8) bid
evaluation; (9) post qualification; (10) award of contract and notice to proceed. x x
x[28]

Thus, before a government project is awarded to the lowest calculated bidder, his bid must
undergo a mandatory post-qualification procedure whereby the “procuring entity verifies,
validates, and ascertains all statements made and documents submitted by the bidder with the
lowest calculated or highest rated bid using a non[-]discretionary criteria as stated in the bidding
documents.”[29]

Public bidding as a method of government procurement is governed by the principles of

transparency, competitiveness, simplicity and accountability. These principles permeate
the provisions of R.A. No. 9184 from the procurement process to the implementation of
awarded contracts. It is particularly relevant in this case to distinguish between the
steps in the procurement process, such as the declaration of eligibility of prospective
bidders, the preliminary examination of bids, the bid evaluation, and the post-
qualification stage, which the Bids and Awards Committee (BAC) of all
government procuring entities should follow.

xxxx

After the preliminary examination stage, the BAC opens, examines, evaluates and ranks
all bids and prepares the Abstract of Bids which contains, among others, the names of
the bidders and their corresponding calculated bid prices arranged from lowest to
highest. The objective of the bid evaluation is to identify the bid with the lowest
calculated price or the Lowest Calculated Bid. The Lowest Calculated Bid shall then
be subject to post-qualification to determine its responsiveness to the eligibility
and bid requirements. If, after post-qualification, the Lowest Calculated Bid is
determined to be post-qualified, it shall be considered the Lowest Calculated
Responsive Bid and the contract shall be awarded to the bidder. [30] (Emphasis
supplied)
In one case, bidders in a government project sought to enjoin the award and implementation
thereof, arguing that as the bidders who submitted the lowest numerical bid, they were entitled
to the award. This Court disagreed, for the reason, among others, that mere submission of the
lowest bid did not automatically entitle them to an award; their bid must still undergo post-
qualification/evaluation. Thus, the Court held in said case that –

In the case at bar, the petitioners pray for the issuance of a writ of preliminary
mandatory injunction to direct public respondent BAC Region VII to award the contract
to the Flyover Project to the petitioners. The petitioners claim that they are entitled to
the award as the lowest bidder for the construction of the said infrastructure project of
the Government. In support of their claim, the petitioners allege fraud and bad faith on
the part of public respondent BAC Region VII. They allege conspiracy, forgery and fraud
on the part of the public respondent in awarding the subject contract to private
respondent WTG. These grave allegations were not sufficiently substantiated.

As correctly pointed out by the respondents, the mere submission of the lowest bid
does not automatically entitle the petitioners to the award of the contract. The bid
must still undergo evaluation and post qualification in order to be declared the
lowest responsive bid and thereafter be awarded the contract. As provided in the
Invitation to Apply for Eligibility and to Bid, ‘the Government reserve[s] the right to reject
any and all bids, waive any minor defect therein, and accept the offer most
advantageous to the Government.’ Such reservation subjects the bidders to the right of
the Government to reject, and consequently accept, any and all bids at its discretion.
Unless such discretion has been arbitrarily exercised causing patent injustice, the Court
will not supplant its decision to that of the agency or instrumentality which is presumed
to possess the technical expertise on the matters within its authority.

In the case of the petitioners, while both the technical and financial envelopes were
opened in accordance with the May 28, 2003 Decision of the DPWH Secretary, a post
evaluation and qualification of the said bids is still essential in order to determine
whether the lowest bid is responsive to and in compliance with the requirements
of the project, the laws, rules and regulations. x x x[31] (Emphasis supplied; citations
omitted)

From the foregoing, it must be concluded that since respondent’s lowest calculated bid for the
subject project did not undergo the required post-qualification process, then she cannot claim
that the project was awarded to her. And if the project was never awarded to her, then she has
no right to undertake the same. If she has no right to the project, then she cannot demand
indemnity for lost profits or actual damages suffered in the event of failure to carry out the same.
Without a formal award of the project in her favor, such a demand would be premature.
Consequently, she has no right of action against petitioners, and no cause of action in Civil
Case No. 27059. Indeed, “only when there is an invasion of primary rights, not before, does the
adjective or remedial law become operative. Verily, a premature invocation of the court’s
intervention renders the complaint without a cause of action and dismissible on such ground.”[32]
It may be argued that respondent’s claim for damages is likewise potentially premised on Article
27 of the Civil Code, which provides that –

Art. 27. Any person suffering material or moral loss because a public servant or
employee refuses or neglects, without just cause, to perform his official duty may file an
action for damages and other relief against the latter, without prejudice to any
disciplinary administrative action that may be taken.

In this case, respondent may claim that individual petitioners’ refusal or neglect to award the
project to her is the cause of her injury. However, this Court still finds that respondent has no
cause of action. Individual petitioners could not have awarded the project to her precisely for the
reason that her bid still had to undergo a post-qualification procedure required under the law.
However, such post-qualification was overtaken by events, particularly Datumanong’s
November 7, 2001 Memorandum.

In short, respondent’s causes of action solely and primarily based on a supposed award, actual
or potential, do not exist. This is so for the precise reason that such an award and the whole
bidding process for that matter, no longer exist, as they were mooted and superseded by the
DPWH’s decision to undertake the subject project by administration, as well as by the
reservation contained in the Invitation to Bid that at any time during the procurement process,
government has the right to reject any or all bids.

The proper remedy for respondent should have been to seek reconsideration or the setting
aside of Datumanong’s November 7, 2001 Memorandum, and then a reinstatement of the
bidding or post-qualification process with a view to securing an award of the contract and notice
to proceed therewith. After all, said Memorandum enjoys the same presumption of regularity
that is attached to all official acts of government.

With the foregoing disquisition, the Court finds no need to resolve the other issues and
arguments raised by the parties.

WHEREFORE, the Petition is GRANTED. The March 26, 2012 Decision and November 9, 2012
Resolution of the Court of Appeals in CA-G.R. CV No. 00889 are REVERSED and SET ASIDE.
Civil Case No. 27059 before the Regional Trial Court of Iloilo City, Branch 29 is
ordered DISMISSED.

SO ORDERED.
25 APR 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL DISMISSAL | SUBJECT | RULES OF COURT |
CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Dutch Movers, Inc., Cesar Lee and Yolanda Lee Vs. Edilberto Lequin, et al.; G.R. No. 210032; April
25, 2017

Before the Court is a Petition for Review on Certiorari assailing the July 1, 2013 Decision[3] of the
Court of Appeals in CA-G.R. SP No. 113774. The CA reversed and set aside the October 29,
2009[4] and January 29, 2010[5]Resolutions of the National Labor Relations Commission (NLRC),
which in turn reversed and set aside the Order[6]dated September 4, 2009 of Labor Arbiter Lilia
S. Savari (LA Savari).

Also challenged is the November 13, 2013 CA Resolution.[7] which denied the Motion for
Reconsideration on the assailed Decision.

Factual Antecedents

This case is an offshoot of the illegal dismissal Complaint[8] filed by Edilberto Lequin (Lequin),
Christopher Salvador, Reynaldo Singsing, and Raffy Mascardo (respondents) against Dutch
Movers, Inc. (DMI), and/or spouses Cesar Lee and Yolanda Lee (petitioners), its alleged
President/Owner, and Manager respectively.

In their Amended Complaint and Position Paper,[9] respondents stated that DMI, a domestic
corporation engaged in hauling liquefied petroleum gas, employed Lequin as truck driver and
the rest of respondents as helpers; on December 28, 2004, Cesar Lee, through the Supervisor
Nazario Furio, informed them that DMI would cease its hauling operation for no reason; as such,
they requested DMI to issue a formal notice regarding the matter but to no avail. Later, upon
respondents’ request, the DOLE NCR[10] issued a certification[11] revealing that DMI did not file
any notice of business closure. Thus, respondents argued that they were illegally dismissed as
their termination was without cause and only on the pretext of closure.

On October 28, 2005, LA Aliman D. Mangandog dismissed[12] the case for lack of cause of
action.

On November 23, 2007, the NLRC reversed and set aside the LA Decision. It ruled that
respondents were illegally dismissed because DMI simply placed them on standby, and no
longer provide them with work. The dispositive portion of the NLRC Decision[13] reads:

WHEREFORE, the Decision dated October 28, 2005 is hereby REVERSED and SET
ASIDE and a new judgment is hereby rendered ordering respondent Dutch Movers, Inc.
to reinstate complainants to their former positions without loss of seniority rights and
other privileges. Respondent corporation is also hereby ordered to pay complainants
their full backwages from the time they were illegally dismissed up to the date of their
actual reinstatement and ten (10%) percent of the monetary award as for attorney’s
fees.
SO ORDERED.[14]

The NLRC Decision became final and executory on December 30, 2007.[15] And, on February
14, 2008, the NLRC issued an Entry of Judgment[16] on the case.

Consequently, respondents filed a Motion for Writ of Execution.[17] Later, they submitted a
Reiterating Motion for Writ of Execution with Updated Computation of Full
Backwages.[18] Pending resolution of these motions, respondents filed a Manifestation and
Motion to Implead[19] stating that upon investigation, they discovered that DMI no longer
operates. They, nonetheless, insisted that petitioners – who managed and operated DMI, and
consistently represented to respondents that they were the owners of DMI – continue to work at
Toyota Alabang, which they (petitioners) also own and operate. They further averred that the
Articles of Incorporation (AOI) of DMI ironically did not include petitioners as its directors or
officers; and those named directors and officers were persons unknown to them. They likewise
claimed that per inquiry with the SEC[20] and the DOLE, they learned that DMI did not tile any
notice of business closure; and the creation and operation of DMI was attended with fraud
making it convenient for petitioners to evade their legal obligations to them.

Given these developments, respondents prayed that petitioners, and the officers named in
DMI’s AOI, which included Edgar N. Smith and Millicent C. Smith (spouses Smith), be
impleaded, and be held solidarity liable with DMI in paying the judgment awards.

In their Opposition to Motion to Implead,[21] spouses Smith alleged that as part of their services
as lawyers, they lent their names to petitioners to assist them in incorporating DMI. Allegedly,
after such undertaking, spouses Smith promptly transferred their supposed rights in DMI in favor
of petitioners.

Spouses Smith stressed that they never participated in the management and operations of DMI,
and they were not its stockholders, directors, officers or managers at the time respondents were
terminated. They further insisted that they were not afforded due process as they were not
impleaded from the inception of the illegal dismissal case; and hence, thy cannot be held liable
for the liabilities of DMI.

On April 1, 2009, LA Savari issued an Order[22] holding petitioners liable for the judgment
awards. LA Savari decreed that petitioners represented themselves to respondents as the
owners of DMI; and were the ones who managed the same. She further noted that petitioners
were afforded due process as they were impleaded from the beginning of this case.

Later, respondents filed anew a Reiterating Motion for Writ of Execution and Approve[d)
Updated Computation of Full Backwages.[23]

On July 31, 2009, LA Savari issued a Writ of Execution, the pertinent portion of which reads:

NOW THEREFORE, you [Deputy Sheriff] are commanded to proceed to respondents

DUTCH MOVERS and/or CESAR LEE and YOLANDA LEE with address at c/o Toyota
Alabang, Alabang Zapote Road, Las Piñas City or wherever they may be found within
the jurisdiction of the Republic of the Philippines and collect from said respondents the
amount of THREE MILLION EIGHT HUNDRED EIGHTEEN THOUSAND ONE
HUNDRED EIGHTY SIX PESOS & 66/100 (Php3,818,186.66) representing
Complainants’ awards plus 10%, Attorney’s fees in the amount of THREE HUNDRED
EIGHTY ONE THOUSAND EIGHT HUNDRED EIGHTEEN PESOS & 66/100
(Php381,818.66) and execution fee in the amount of FORTY THOUSAND FIVE
HUNDRED PESOS (Php40,500.00) or a total of FOUR MILLION TWO HUNDRED
FORTY THOUSAND FIVE HUNDRED FIVE PESOS & 32/100 (Php4,240,505.32) x x
x[24]

Petitioners moved[25] to quash the Writ of Execution contending that the April 1, 2009 LA Order
was void because the LA has no jurisdiction to modify the final and executory NLRC Decision
and the same cannot anymore be altered or modified since there was no finding of bad faith
against them.

Ruling of the Labor Arbiter

On September 4, 2009, LA Savari denied petitioners’ Motion to Quash because it did not
contain any ground that must be set forth in such motion.

Thus, petitioners appealed to the NLRC.

Ruling of the National Labor Relations Commission

On October 29, 2009, the NLRC quashed the Writ of Execution insofar as it held petitioners
liable to pay the judgment awards. The decretal portion of the NLRC Resolution reads:

WHEREFORE, in view of the foregoing, the assailed Order dated September 4, 2009
denying respondents’ Motion to Quash Writ is hereby REVERSED and SET ASIDE.
The Writ of Execution dated July 13,[26] 2009 is hereby QUASHED insofar as it holds
individual respondents Cesar Lee and Yolanda Lee liable for the judgment award
against the complainants.

Let the entire record of the case be forwarded to the Labor Arbiter of origin for
appropriate proceedings.

SO ORDERED.[27]

The NLRC ruled that the Writ of Execution should only pertain to DMI since petitioners were not
held liable to pay the awards under the final and executory NLRC Decision. It added that
petitioners could not be sued personally for the acts of DMI because the latter had a separate
and distinct personality from the persons comprising it; and, there was no showing that
petitioners were stockholders or officers of DMI; or even granting that they were, they were not
shown to have acted in bad faith against respondents.
On January 29, 2010, the NLRC denied respondents’ Motion for Reconsideration.

Undaunted, respondents filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion against the NLRC in quashing the Writ of Execution insofar as it held petitioners liable
to pay the judgment awards.

Ruling of the Court of Appeals

On July 1, 2013, the CA reversed and set aside the NLRC Resolutions, and accordingly
affirmed the Writ of Execution impleading petitioners as party-respondents liable to answer for
the judgment awards.

The CA ratiocinated that as a rule, once a judgment becomes final and executory, it cannot
anymore be altered or modified; however, an exception to this rule is when there is a
supervening event, which renders the execution of judgment unjust or impossible. It added that
petitioners were afforded due process as they were impleaded from the beginning of the case;
and, respondents identified petitioners as the persons who hired them, and were the ones
behind DMI. It also noted that such participation of petitioners was confirmed by DIVII’s two
incorporators who attested that they lent their names to petitioners to assist the latter in
incorporating DMI; and, after their undertaking, these individuals relinquished their purported
interests in DMI in favor of petitioners.

On November 13, 2013, the CA denied the Motion for Reconsideration on the assailed
Decision.

Thus, petitioners filed this Petition raising the following grounds:

THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN

RULING THAT RESPONDENTS SHOULD BE LIABLE FOR THE JUDGMENT AWARD
TO RESPONDENTS BASED ON THE FOLLOWING:

THE VALDERAMA VS. NLRC AND DAVID VS. CA ARE NOT APPLICABLE
IN THE INSTANT CASE.
II

THERE IS NO LEGAL BASIS TO PIERCE THE VEIL OF CORPORATE

FICTION OF DUTCH MOVERS, INC.[28]
Petitioners argue that the circumstances in Valderrama v. National Labor Relations
Commission[29] differ with those of the instant case. They explain that in Valderrama, the LA
therein granted a motion for clarification. In this case, however, the LA made petitioners liable
through a mere manifestation and motion to implead filed by respondents. They further stated
that in Valderrama, the body of the decision pointed out the liability of the individual respondents
therein while here, there was no mention in the November 23, 2007 NLRC Decision regarding
petitioners’ liability. As such they posit that they cannot be held liable under said NLRC
Decision.

In addition, petitioners claim that there is no basis to pierce the veil of corporate fiction because
DMI had a separate and distinct personality from the officers comprising it. They also insist that
there was no showing that the termination of respondents was attended by bad faith.

In fine, petitioners argue that despite the allegation that they operated and managed the affairs
of DMI, they cannot be held accountable for its liability in the absence of any showing of bad
faith on their part.

Respondents, on their end, counter that petitioners were identified as the ones who owned and
managed DMI and therefore, they should be held liable to pay the judgment awards. They also
stress that petitioners were consistently impleaded since the filing of the complaint and thus,
they were given the opportunity to be heard.

Issue

Whether petitioners are personally liable to pay the judgment awards in favor of
respondents

Our Ruling

The Court denies the Petition.

To begin with, the Court is not a trier of facts and only questions of law may be raised in a
petition under Rule 45 of the Rules of Court. This rule, nevertheless, allows certain exceptions,
which include such instance where the factual findings of the CA are contrary to those of the
lower court or tribunal. Considering the divergent factual findings of the CA and the NLRC in this
case, the Court deems it necessary to examine, review and evaluate anew the evidence on
record.[30]

Moreover, after a thorough review of the records, the Court finds that contrary to petitioners’
claim, Valderrama v. National Labor Relations Commission,[31] and David v. Court of
Appeals[32] are applicable here. In said cases, the Court held that the principle of immutability of
judgment, or the rule that once a judgment has become final and executory, the same can no
longer be altered or modified and the court’s duty is only to order its execution, is not absolute.
One of its exceptions is when there is a supervening event occurring after the judgment
becomes final and executory, which renders the decision unenforceable.[33]

To note, a supervening event refers to facts that transpired after a judgment has become final
and executory, or to new situation that developed after the same attained finality. Supervening
events include matters that the parties were unaware of before or during trial as they were not
yet existing during that time.[34]

In Valderrama, the supervening event was the closure of Commodex, the company therein,
after the decision became final and executory, and without any showing that it filed any
proceeding for bankruptcy. The Court held that therein petitioner, the owner of Commodex, was
personally liable for the judgment awards because she controlled the company.

Similarly, supervening events transpired in this case after the NLRC Decision became final and
executory, which rendered its execution impossible and unjust. Like in Valderrama, during the
execution stage, DMI ceased its operation, and the same did not file any formal notice regarding
it. Added to this, in their Opposition to the Motion to Implead, spouses Smith revealed that they
only lent their names to petitioners, and they were included as incorporators just to assist the
latter in forming DMI; after such undertaking, spouses Smith immediately transferred their rights
in DMI to petitioners, which proved that petitioners were the ones in control of DMI, and used
the same in furthering their business interests.

In considering the foregoing events, the Court is not unmindful of the basic tenet that a
corporation has a separate and distinct personality from its stockholders, and from other
corporations it may be connected with. However, such personality may be disregarded, or the
veil of corporate fiction may be pierced attaching personal liability against responsible person if
the corporation’s personality “is used to defeat public convenience, justify wrong, protect fraud
or defend crime, or is used as a device to defeat the labor laws x x x.” [35] By responsible person,
we refer to an individual or entity responsible for, and who acted in bad faith in committing illegal
dismissal or in violation of the Labor Code; or one who actively participated in the management
of the corporation. Also, piercing the veil of corporate fiction is allowed where a corporation is a
mere alter ego or a conduit of a person, or another corporation.[36]

Here, the veil of corporate fiction must be pierced and accordingly, petitioners should be held
personally liable for judgment awards because the peculiarity of the situation shows that they
controlled DMI; they actively participated in its operation such that DMI existed not as a
separate entity but only as business conduit of petitioners. As will be shown be shown below,
petitioners controlled DMI by making it appear to have no mind of its own,[37] and used DMI as
shield in evading legal liabilities, including payment of the judgment awards in favor of
respondents.[38]

First, petitioners and DMI jointly filed their Position Paper, [39] Reply,[40] and Rejoinder[41] in
contesting respondents’ illegal dismissal. Perplexingly, petitioners argued that they were not
part of DMI and were not privy to its dealings;[42]yet, petitioners, along with DMI, collectively
raised arguments on the illegal dismissal case against them.

Stated differently, petitioners denied having any participation in the management and operation
of DMI; however, they were aware of and disclosed the circumstances surrounding
respondents’ employment, and propounded arguments refuting that respondents were illegally
dismissed.

To note, petitioners revealed the annual compensation of respondents and their length of
service; they also set up the defense that respondents were merely project employees, and
were not terminated but that DMI’s contract with its client was discontinued resulting in the
absence of hauling projects for respondents.

If only to prove that they were not part of DMI, petitioners could have revealed who operated it,
and from whom they derived the information embodied in their pleadings. Such failure to reveal
thus gives the Court reasons to give credence to respondents’ firm stand that petitioners are no
strangers to DMI, and that they were the ones who managed and operated it.

Second, the declarations made by spouses Smith further bolster that petitioners and no other
controlled DMI, to wit:

Complainants [herein respondents] in their own motion admit that they never saw
[spouses Smith] at the office of [DMI], and do not know them at all. This is because
[spouses Smith’s] services as lawyers had long been dispensed by the Spouses Lee
and had no hand whatsoever in the management of the company. The Smiths, as
counsel of the spouses at [that] time, [lent] their names as incorporators to facilitate the
[incorporation of DMI.] Respondent Edgard Smith was then counsel of Toyota Alabang
and acts as its corporate secretary and as favor to his former client and employer,
Respondent Cesar Lee, agreed to help incorporate [DMI] and even asked his wife
Respondent, Millicent Smith, to act as incorporator also [to] complete the required 5
man incorporators. After the incorporation they assigned and transferred all their
purported participation in the company to the Respondents Spouses Cesar and Yolanda
Lee, who acted as managers and are the real owners of the corporation. Even at the
time complainant[s were] fired from [their] employment respondents Spouses Smith had
already given up their shares. The failure to an1end the Articles of Incorporation of
[DMI], and to apply for closure is the fault of the new board, if any was constituted
subsequently, and not of Respondents Smiths. Whatever fraud committed was not
committed by the Respondents Smiths, hence they could not be made solidarily liable
with Respondent Corporation or with the spouses Lee. If bad faith or fraud did attend
the termination of complainant[s], respondents Smiths would know nothing of it because
they had ceased any connection with [DMI] even prior to such time. And they had at the
inception of the corporation never exercised management prerogatives in the selection,
hiring, and firing of employees of [DMI].[43]

Spouses Smith categorically identified petitioners as the owners and managers of DMI. In their
Motion to Quash, however, petitioners neither denied the allegation of spouses Smith nor
adduced evidence to establish that they were not the owners and managers of DMI. They
simply insisted that they could not be held personally liable because of the immutability of the
final and executory NLRC Decision, and of the separate and distinct personality of DMI.

Furthermore, the assailed CA Decision heavily relied on the declarations of spouses Smith but
still petitioners did not address the matters raised by spouses Smith in the instant Petition with
the Court.

Indeed, despite sufficient opportunity to clarify matters and/or to refute them, petitioners simply
brushed aside the allegations of spouses Smith that petitioners owned and managed DMI.
Petitioners just maintain that they did not act in bad faith; that the NLRC Decision is final and
executory; and that DMI has a distinct and separate personality. Hence, for failure to address,
clarify, or deny the declarations of spouses Smith, the Court finds respondents’ position that
petitioners owned, and operated DMI with merit.
Third, piercing the veil of corporate fiction is allowed, and responsible persons may be
impleaded, and be held solidarily liable even after final judgment and on execution, provided
that such persons deliberately used the corporate vehicle to unjustly evade the judgment
obligation, or resorted to fraud, bad faith, or malice in evading their obligation.[44]

In this case, petitioners were impleaded from the inception of this case. They had ample
opportunity to debunk the claim that they illegally dismissed respondents, and that they should
be held personally liable for having controlled DMI and actively participated in its management,
and for having used it to evade legal obligations to respondents.

While it is true that one’s control does not by itself result in the disregard of corporate fiction;
however, considering the irregularity in the incorporation of DMI, then there is sufficient basis to
hold that such corporation was used for an illegal purpose, including evasion of legal duties to
its employees, and as such, the piercing of the corporate veil is warranted. The act of hiding
behind the cloak of corporate fiction will not be allowed in such situation where it is used to
evade one’s obligations, which “equitable piercing doctrine was formulated to address and
prevent.”[45]

Clearly, petitioners should be held liable for the judgment awards as they resorted to such
scheme to countermand labor laws by causing the incorporation of DMI but without any
indication that they were part thereof. While such device to defeat labor laws may be deemed
ingenious and imaginative, the Court will not hesitate to draw the line, and protect the right of
workers to security of tenure, including ensuring that they will receive the benefits they deserve
when they fall victims of illegal dismissal.[46]

Finally, it appearing that respondents’ reinstatement is no longer feasible by reason of the

closure of DMI, then separation pay should be awarded to respondents instead.[47]

WHEREFORE, the Petition is DENIED. The July 1, 2013 Decision and November 13, 2013
Resolution of the Court of Appeals in CA-G.R. SP 113774 are AFFIRMED with
MODIFICATION that instead of reinstatement, Dutch Movers, Inc. and spouses Cesar Lee and
Yolanda Lee are solidarily liable to pay respondents’ separation pay for every year of service.

SO ORDERED.
25 APR 2017 | SUBJECT | CIVIL LAW | RECOVERY OF POSSESSION | SUBJECT | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Rodante F. Guyamin, et al. Vs. Jacinto G. Flores and Maximo G. Flores represented by Ramon G.
Flores; G.R. No. 202189; April 25, 2017

This Petition for Review on Certiorari[1] seeks to set aside the May 23, 2012 Decision[2] of the
Court of Appeals (CA) in CA-G.R. CV. No. 92924 which affirmed the October 21, 2008
Decision[3] of the Regional Trial Court (RTC) of Trece Martires City, Branch 23 in Civil Case No.
TMCV-0040-06.

Factual Antecedents

In 2006, respondents Jacinto G. Flores and Maximo G. Flores, represented by their brother and
attorney-in-fact Ramon G. Flores, filed a Complaint[4] for Recovery of Possession against
petitioners Rodante F. Guyamin (Rodante), Lucinia F. Guyamin (Lucinia), and Eileen G. Gatari
(Eileen). The case was docketed as Civil Case No. TMCV-0040-06 and assigned to Branch 23
of the RTC of Trece Martires City.

Respondents alleged in their Complaint that they are the registered owners of a 984-square
meter lot in BarangaySantiago, General Trias, Cavite covered by Transfer Certificate of Title No.
T-308589 (the subject property);[5] that petitioners are their relatives who for many years have
been occupying the subject property by mere tolerance of respondents’ predecessors and
parents, the original owners of the same; that petitioners have been “reminded x x x to vacate
the premises”[6] because respondents have decided to sell the property; that petitioners failed to
vacate; that respondents made several attempts to settle the matter through conciliation before
the Punong Barangay but the same proved futile; that the Punong Barangay was constrained to
issue a Certification To File Action;[7] that respondents were thus compelled to file the Complaint
and incur legal expenses, for which they pray that petitioners be ordered to vacate the subject
property and pay P20,000.00 attorney’s fees, P5,000.00 litigation expenses, and costs.

On September 25, 2006, summons and a copy of the Complaint were served upon petitioners
through Eileen, who nonetheless refused to sign and acknowledge receipt thereof. This fact was
noted in the court process server’s Return of Summons dated September 26, 2006.[8]

On January 9, 2007, respondents filed a Motion to Declare Defendants in Default, arguing that
despite service of summons on September 25, 2006, petitioners failed to file their answer.

On May 28, 2007, petitioners filed their Answer with Motion to Dismiss.

On June 5, 2007, respondents filed their Reply to Answer, arguing that petitioners’ Answer was
belatedly filed, which is why they filed a motion to declare petitioners in default; and for this
reason, they prayed that the Answer be stricken off the record.

On December 26, 2007, the RTC issued an Order decreeing as follows:

WHEREFORE, for failure to file their responsive answer within the reglementary period
of fifteen (15) days, defendants are hereby declared in default. The pleadings filed by
the defendant on May 30, 2007 is [sic] hereby denied.[9]

Petitioners moved to reconsider, but the trial court was unmoved. It proceeded to receive
respondents’ evidence ex parte.

Ruling of the Regional Trial Court

On October 21, 2008, the RTC issued a Decision[10] declaring as follows:

The plaintiffs as represented by their attorney-in-fact, Ramon G. Flores when presented

in Court reiterated the allegations in the complaint and presented in evidence the
Transfer Certificate of Title No. T-308589 in the names of Jacinto Flores and Maximo
Flores (Exhibit “B”); the tax declaration (Exhibit “C”) of the property; and the Certification
(Exhibit “F”) issued by Brgy. Justice Lito R. Sarte of Barangay Santiago, Bayan ng
Heneral Trias, Cavite.

xxxx

In the case at bar, by a preponderance of evidence, plaintiffs have proven their case.

On September 26, 2006 the Return of Summons by the process server of this Court,
Rozanno L. Morabe, as certified, stated, to wit:

This is to certify that on September 25, 2006 the undersigned cause [sic] the service of
Summons together with a copy of the complaint upon defendants x x x thru EILEEN
GATARIN, one of the defendants, who received a copy of the Summons for all the
defendants who refused to sign and acknowledge receipt of said summons.

This served as a proof of receipt by the defendants of the copy of the complaint upon
them. However defendants filed their answer with motion to dismiss way beyond the
reglementary period on May 28, 2007 which prompted this Court to deny their motion.
Defendants, if indeed having a good defense, could have been vigilant in this case
instead of resorting to delays in the prosecution thereof.

WHEREFORE, judgment is rendered in favor of the plaintiffs as against the defendants

herein and hereby orders, to wit:

1) Ordering the defendants and their respective families and or any other persons
claiming rights under them, to vacate subject parcel of land and deliver the same
peacefully to the possession of the plaintiffs;
2) Ordering the defendants to pay the plaintiffs the amount of P10,000.00 as reasonable
attorney’s fees, P5,000.00 as litigation expenses, plus the costs of suit.

SO ORDERED.[11]

Ruling of the Court of Appeals

Petitioners filed an appeal before the CA which was docketed as CA G.R. CV. No. 92924. On
May 23, 2012, the CA rendered the assailed Decision containing the following pronouncement:

Aggrieved, the Guyamins filed this instant appeal raising the following assignment of
errors:

1. The trial court erred in not dismissing the complaint on the ground of lack of
cause of action or prematurity;

2. The trial court erred in declaring the defendants in default and proceeding
to receive plaintiffs’ evidence ex-parte; and

3. The trial court erred and abused its discretion when it rendered its Decision
favorable to the plaintiffs prior or without the filing of the plaintiffs’ Formal
Offer of Evidence.

xxxx

The Guyamins argue that the case should have been dismissed for failure of the
Floreses to give notice or demand to vacate and to observe conciliation process in the
barangay. They further argued that based on the averments in the complaint the
Floreses merely reminded them to vacate but no actual demand to vacate has been
given.

In this jurisdiction, there are three kinds of actions for the recovery of possession of real
property and one is accion publiciana or the plenary action for the recovery of the real
right of possession, which should be brought in the proper Regional Trial Court when
the dispossession has lasted for more than one year.

After a review of the averments of the complaint, we find that the court-a-quo did not err
in assuming jurisdiction over the case. From the allegations of the complaint it appears
that the land subject of the case was originally owned by the Floreses’ grandmother,
Damasa Vda. De Guzman and was later acquired by their mother, Julia Guyamin who
in turn transferred the ownership of the property to them. Based on the attached
Transfer Certificate of Title, the property was transferred to the Floreses on May 10,
1991. The Floreses averred in the complaint that since the time the ownership of the
property was transferred to them, they have been reminding the Guyamins to vacate the
premises because they wanted to sell the property.

While it is true that the complaint uses the word “reminding” instead of the word
“demanding”, it still does not mean that no demand to vacate was made by the
Floreses. It is clear on the records that the Floreses filed a complaint for the Guyamins
to vacate the premises before Office of the Barangay Chairman of Barangay Santiago,
General Trias, Cavite. On the subject line of the complaint the following words are
clearly written: “Ukol sa: Pagpapaalis sa bahay na nakatirik sa lupa na hindi naman
kanila” which is clearly a demand to vacate.

On March 11, 2006 the Office of the Barangay Chairman issued a certificate to file
action because the parties were unable to settle their dispute. Contrary to the argument
of’ the Guyamins, the records also show that there was an attempt to settle the issues
between the parties before the Office of the Barangay Chairman.

Anent the second grow1d raised by the Guyamins, records will also show that Return of
Summons was filed by the Process Server, Rozanno L. Morabe on September 25, 2006
certifying that a copy of the summons was received on September 26, 2006 by one of
the defendants Eileen Gatarin, who received a copy for all the defendants.[12] It was only
on May 28, 2007 that the Guyamins filed an Answer with a Motion to Dismiss, or more
than 8 months after receiving the summons, hence the court-a-quo did not commit any
error in declaring the Guyamins in default.

As to the last error raised, it is settled that for evidence to be considered, the same must
be formally offered. However, in People v. Napat-a, the Supreme Court relaxed the
foregoing rule and allowed evidence not formally offered to be admitted and considered
by the trial court provided the following requirements are present, viz: first, the same
must have been duly identified by testimony duly recorded and, second, the same must
have been incorporated in the records of the case.

In the instant case, we find that the requirements have been satisfied. The exhibits were
presented and marked during the ex-parte hearing of August 7, 2008. Therefore,
notwithstanding the fact that exhibits “A” to “F” were not formally offered prior to the
rendition of the Decision in Civil Case No. TMCV-0040-06 by the court-a-quo, the trial
court judge committed no error when he admitted and considered them in the resolution
of the case.

WHEREFORE, in view of the foregoing, the Decision dated October 21, 2008 of the
Regional Trial Court of Trece Martires City in Civil Case No. TMCV-0040-06 is
AFFIRMED.

SO ORDERED.[13] (Citations omitted)

Hence, the present Petition

Issues

In an April 23, 2014 Resolution,[14] this Court resolved to give due course to the Petition,
which contains the following assignment of errors:
1. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE
REGIONAL TRIAL COURT COMMITTED A REVERSIBLE ERROR IN
NOT DISMISSING THE COMPLAINT ON THE GROUND OF LACK OF
CAUSE OF ACTION OR PREMATURITY.

2. THE COURT OF APPEALS ERRED IN FINDING THAT THE REGIONAL

TRIAL COURT WAS CORRECT IN DECLARING THE PETITIONERS IN
DEFAULT AND PROCEEDING TO RECEIVE RESPONDENTS’
EVIDENCE EX PARTE.

3. THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE

REGIONAL TRIAL COURT VALIDLY RENDERED ITS DECISION
FAVORABLE TO THE RESPONDENTS WITHOUT THE FILING OF THE
FORMAL OFFER OF EVIDENCE.[15]

Petitioners’ Arguments

In their Petition and Reply,[16] petitioners insist that there is no demand to vacate the subject
property, and the lack of such demand renders the action against them premature; that the filing
of a conciliation case before the barangaycaptain (or barangay chairman) and the issuance of a
certificate to file action in court cannot take the place of the required notice to vacate; that only
Rodante was made respondent in the barangay conciliation process when Lucinia and Eileen
should have been impleaded as well; that the Return of Summons dated September 26, 2006 is
a sham; that summons was improperly served upon Rodante and Lucinia through Eileen or by
substituted service; that it was impossible for Eileen to have received the summons and
complaint at her residence on September 25, 2006, as she was then teaching in school; that
when summons was served, Lucinia was then abroad, and so summons should have been
made through publication; and that the filing of their Answer prior to respondents’ motion to
declare them in default, and the latter’s filing of a reply to their answer, cured the defective
answer.

Petitioners add that it was error for the lower courts to have ruled in favor of respondents in
spite of the fact that the latter made no formal offer of their evidence; that respondents’ evidence
cannot therefore be considered, since it is a settled maxim that “courts will only consider as
evidence that which has been formally offered”;[17] that the purposes of a formal offer are to 1)
enable the trial court to know the purpose or purposes for which the proponent is presenting the
evidence, 2) allow opposing parties to examine the evidence and object to its admissibility, and
3) facilitate review as the appellate court will not be required to review documents not previously
scrutinized by the trial court; and that the evidence presented ex parte is insufficient to prove
respondents’ case, as it failed to show how the latter came into ownership of the subject
property and it failed to prove the identity of the property.
Petitioners thus pray that the CA Decision be reversed and set aside and that a new judgment
be rendered ordering the dismissal of Civil Case No. TMCV-0040-06.

Respondents’ Argument

Respondents simply point out in their single-page Comment[18] that the arguments raised in the
instant Petition have been adequately passed upon by the lower courts; thus, there is no cogent
reason to reverse their decisions.

Our Ruling

The Court denies the Petition.

The Court notes that petitioners raise purely procedural questions and nothing more. In other
words, petitioners aim to win their case not on the merit, but on pure technicality. But in order for
this Court to even consider their arguments, petitioners should have at least shown that they
have a substantial defense to respondents’ claim. There must be a semblance of validity in their
resistance to respondents’ Complaint. However, there appears to be none at all. The fact
remains that respondents are the registered owners of the subject property, per Transfer
Certificate of Title No. T-308589 and the tax declaration in their names;[19] that petitioners are
respondents’ relatives who have been occupying the property by mere tolerance and liberality of
the latter; that several times in the past, they have been “reminded” to vacate the property; and
that they have failed and refused to do so, even after the conduct of conciliation proceedings
before the Barangay Chairman.

As owners, respondents’ substantive rights must be protected in the first instance; they cannot
be defeated by a resort to procedural hairsplitting that gets the parties and this Court nowhere.
The Court will not pretend to engage in a useless discussion of the virtues of adhering strictly to
procedure, when to do so would promote a clear injustice and violation of respondents’
substantive rights. More so when the result would be the same, that is, petitioners would
eventually and ultimately lose their case.

To be sure, while petitioners attached every other pleading filed and order issued below to the
instant Petition, they did not attach a copy of their Answer to the Complaint if only to
demonstrate to this Court that they have a plausible and substantial defense against the
respondents’ Complaint. To repeat, this Court will not waste its precious time and energy in a
futile exercise where the result would be for naught; petitioners will not be indulged when it
appears that they have no valid claim in the first place. Quite the contrary, the Court must give
respondents the justice they deserve. As owners of the subject property who have been
deprived of the use thereof for so many years owing to petitioners’ continued occupation, and
after all these years of giving unconditionally to the petitioners who are their relatives,
respondents must now enjoy the fruits of their ownership. Respondents have been more than
cordial in dealing with petitioners; they have shown only respect and reverence to the latter,
even to the extent of using less offensive language in their complaint for fear of generating more
enmity than is required. Thus, instead of using “demand”, respondents chose “‘remind”. The
parties being relatives and the context and circumstances being the way they are, the choice of
words is understandable. The Court will treat respondents’ act as a polite demand; indeed, the
law never required a harsh or impolite demand but only a categorical one.
With the clear realization that they are settling on land that they do not own, occupants of
registered private lands by mere tolerance of the owners should always expect that one day,
they would have to vacate the same. Their time is merely borrowed; they have no right to the
property whatsoever, and their presence is merely tolerated and under the good graces of the
owners. As it were, they 1ive under constant threat of being evicted; they cannot pretend that
this threat of eviction does not exist. It is never too much to ask them to give a little leeway to
the property owners; after all, they have benefited from their tolerated use of the lands, while the
owners have clearly lost by their inability to use the same.

Thus, this Court need only reiterate the CA’s pronouncement that there could be no more
categorical demand by respondents than the filing of a case against petitioners before
the Barangay Chairman to cause the latter’s eviction from the property. The fact that only
Rodante was made respondent in the conciliation process is of no moment; given the context,
relation, circumstances, lack of a visible defense, and the above pronouncement, this claim of
the petitioners must be treated as undue hairsplitting. This Court’s “duty is to dispel any vestige
of doubt rather than indulge in subtle distinctions.”[20]

Regarding the claim of improper service of summons, the record reveals that the contrary itrue.
The court process servers Return of Summons dated September 26, 2006 exists, and must be
presumed regular. The mere fact that the RTC, and even the respondents, requested at
different stages in the proceedings that summons be served once more upon petitioners does
not prove that the service thereof made on September 25, 2006 was invalid; it only means that
the court and parties desire the service of summons anew which was clearly unnecessary. The
claim that Lucinia was then abroad is of no moment either; there is no evidence to support this
self-serving claim.

The filing of petitioners’ answer prior to respondents’ motion to declare them in default, and the
latter’s filing of a reply, do not erase the fact that petitioners’ answer is late. Respondents’ reply
filed thereafter is, like the belated answer, a mere scrap of paper, as it proceeds from the said
answer.

Finally, the Court supports the CA’s pronouncement that since respondents’ exhibits were
presented and marked during the ex parte hearing of August 7, 2008, the trial com1 judge
committed no error when he admitted and considered them in the resolution of the case
notwithstanding that no formal offer of evidence was made. The pieces of evidence were
identified during the ex parte hearing and marked as Exhibits “A” to “F” for respondents and
were incorporated into the records of the case. As a matter of fact, the RTC Judge referred to
them in his October 21, 2008 Decision. If they were not included in the record, the RTC Judge
could not have referred to them in arriving at judgment.

While it is true that the rules of procedure are intended to promote rather than frustrate
the ends of justice, and the swift unclogging of court docket is a laudable objective, it
nevertheless must not be met at the expense of substantial justice. This Court has time
and again reiterated the doctrine that the rules of procedure are mere tools aimed at
facilitating the attainment of justice, rather than its frustration. A strict and rigid
application of the rules must always be eschewed when it would subvert the
primary objective of the rules, that is, to enhance fair trials and expedite justice.
Technicalities should never be used to defeat the substantive rights of the other
party.Every party-litigant must be afforded the amplest opportunity for the proper and
just determination of his cause, free from the constraints of technicalities. Considering
that there was substantial compliance, a liberal interpretation of procedural rules in
this x x x case is more in keeping with the constitutional mandate to secure social
justice.[21](Emphasis supplied)

By not attaching a copy of their Answer to their Petition, petitioners are shielding themselves
from a perusal of their defense; in a sense, this is quite revealing of the merits of their claim, and
in another, it is an ingenious scheme that this Court censures. Indeed, they failed to realize that
this Court is not composed of machines that will mindlessly and mechanically solve a problem at
the touch of a button; it will not be forced into motion on petitioners’ turn of a key. They must be
reminded that –

The Rules of Court was conceived and promulgated to set forth guidelines in the
dispensation of justice, but not to bind and chain the hand that dispenses it, for
otherwise, courts will be mere slaves to or robots of technical rules, shorn of
judicial discretion. That is precisely why courts, in rendering justice, have always
been, as they in fact ought to be, conscientiously guided by the norm that on the
balance, technicalities take a backseat to substantive rights, and not the other
way around. As applied to the instant case, in the language of then Chief Justice
Querube Makalintal, technicalities ‘should give way to the realities of the
situation’.[22] (Emphasis supplied)

WHEREFORE, the Petition is DENIED. The May 23, 2012 Decision of the Court of Appeals in
CA-G.R. CV. No. 92924 is AFFIRMED.
24 APR 2017 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL CASTILLO | SUBJECT | CIVIL LAW |
RECOVERY OF POSSESSION | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY
CERTIORARI TO THE SUPREME COURT

William Anghian Siy Vs. Alvin Tomlin; G.R. No. 205998; April 24, 2017

This Petition for Review on Certiorari[1] assails the October 9, 2012 Decision[2] and February
19,2013 Resolution[3]of the Court of Appeals (CA) which respectively granted the respondent’s
Petition for Certiorari and denied petitioner’s Motion for Reconsideration[4] in CA-G.R. SP No.
124967.

Factual Antecedents

In July, 2011, petitioner William Anghian Siy filed before the Regional Trial Court of Quezon City
(RTC) a Complaint for Recovery of Possession with Prayer for Replevin[5] against Frankie
Domanog Ong (Ong), Chris Centeno (Centeno), John Co Chua (Chua), and herein respondent
Alvin Tomlin. The case was docketed as Civil Case No. Q-11-69644 and assigned to RTC
Branch 224.

In his Complaint, petitioner alleged that he is the owner of a 2007 model Range Rover with
Plate Number ZMG 272 which he purchased from Alberto Lopez III (Lopez) on July 22, 2009;
that in 2010, he entrusted the said vehicle to Ong, a businessman who owned a second-hand
car sales showroom (“Motortrend” in Katipunan, Quezon City), after the latter claimed that he
had a prospective buyer therefor; that Ong failed to remit the proceeds of the purported sale nor
return the vehicle; that petitioner later found out that the vehicle had been transferred to Chua;
that in December, 2010, petitioner filed a complaint before the Quezon City Police District’s Anti-
Carnapping Section; that Ong, upon learning of the complaint, met with petitioner to arrange the
return of the vehicle; that Ong still failed to surrender the vehicle; that petitioner learned that the
vehicle was being transferred to respondent; and that the vehicle was later impounded and
taken into custody by the PNP-Highway Patrol Group (HPG) at Camp Crame, Quezon City after
respondent attempted to process a PNP clearance of the vehicle with a view to transferring
ownership thereof. Petitioner thus prayed that a writ of replevin be issued for the return of the
vehicle to him, and that the defendants be ordered to pay him P100,000.00 attorney’s fees and
the costs of suit.

After hearing the application, the trial court issued a July 29, 2011 Order[6] decreeing as follows:

WHEREFORE, in view of the foregoing, and with the ADMISSION of the plaintiff’s
Documentary Exhibits in support of this Application, issue a Writ of Replevin in favor of
the plaintiff subject to the posting of the bond in the amount of EIGHT MILLION PESOS
(Php8,000,000.00) to be executed in favor of the defendants for the return of the said
property if such return be adjudged, and for the payment to the adverse parties of such
sum as they may recover from the applicant in this action.

SO ORDERED.[7]

Petitioner posted the required P8 million bond[8] which was approved by the trial court.[9] A Writ of
Replevin[10] was then issued.
The subject vehicle was seized by the court-appointed special sheriff who then filed the
corresponding Sheriffs Return.[11]

On August 17, 2011, respondent filed an Omnibus Motion[12] seeking to quash the Writ of
Replevin, dismiss the Complaint, and turn over or return the vehicle to him. Respondent claimed
that he is the lawful and registered owner of the subject vehicle, having bought the same and
caused registration thereof in his name on March 7, 2011; that the Complaint in Civil Case No.
Q-11-69644 should be dismissed for failure to pay the correct amount of docket fees; that the
Complaint is defective for failing to allege the correct and material facts as to ownership,
possession/detention by defendant, warranty against distraint/levy/seizure, and actual value of
the vehicle; and that the implementation of the writ was attended by procedural irregularities.

Particularly, respondent argued that petitioner could not prove his ownership of the vehicle as
the only pieces of evidence he presented in this regard were a manager’s check and cash
voucher as proof of payment, and the affidavit of Lopez attesting to the sale between him and
petitioner which are insufficient; that in fact, he is the registered owner of the vehicle, as shown
by the Official Receipt and Certificate of Registration[13] dated March 7, 2011 issued in his name
by the Land Transportation Office (LTO); that it has not been shown that he wrongfully detained
the vehicle, as petitioner was never in possession thereof, since the same was already detained
and seized by the HPG at the time; that petitioner failed to allege, as required under Section 2 of
Rule 60 of the 1997 Rules of Civil Procedure[14] (1997 Rules), that the vehicle has not been
distrained or taken for a tax assessment or a fine pursuant to law, or seized under a writ of
execution or preliminary attachment, or otherwise placed under custodia legis, or if so seized,
that it is exempt from such seizure or custody; and that petitioner failed to allege the actual
market value (P4 million) of the vehicle, and instead, he intentionally understated its value at
only P2 million in order to avoid paying the correct docket fees.

As for the alleged procedural defects, respondent claimed that the sheriff implemented the writ
against the HPG, which is not a party to the case; that the Complaint must be dismissed for
failure to pay the correct docket tees based on the actual value of the vehicle; and that the trial
court acted with undue haste in granting the writ of replevin.

Finally, respondent argued that he is the true owner of the subject vehicle as he was able to
register the transfer in his favor and obtain a certificate of registration in his name; and that as
between petitioner’s documentary evidence and his official registration documents, the latter
should prevail.

Petitioner filed his Opposition/Comment[15] to the omnibus motion.

Ruling of the Regional Trial Court

On November 21, 2011, the trial court issued an Order[16] denying respondent’s Omnibus Motion
for lack of merit. It held that respondent’s remedy is not to move to quash the writ of replevin,
but to post a counterbond within the reglementary period allowed under the 1997 Rules; that for
failure to post said counterbond, respondent’s prayer for the return of the vehicle to him is
premature; that the issues of ownership and insufficiency of the allegations in the complaint are
best determined during trial; and that an allegation of undervaluation of the vehicle cannot divest
the court of jurisdiction.
Respondent moved for reconsideration, but he was rebuffed just the same.

Ruling of the Court of Appeals

Respondent filed a Petition for Certiorari[17] before the CA docketed as CA G.R. SP No. 124967
claiming as he did in his Omnibus Motion that the trial court should have dismissed Civil Case
No. Q-11-69644 on account of failure to pay the correct docket fees, defective complaint,
procedural irregularities in the service of the writ of replevin, the fact that he is the registered
owner of the subject vehicle, and for the reason that the trial court irregularly took cognizance of
the case during the period for inventory of its cases. Respondent sought injunctive relief as well.

On October 9, 2012, the CA rendered the assailed Decision granting the Petition. It held that the
trial court did not acquire jurisdiction over the instant case for failure of petitioner to pay the
correct docket fees, since petitioner misdeclared the value of the subject vehicle at only P2
million in his Complaint, when the market value thereof was around P4.5 million to P5 million;
that this misdeclaration was undertaken with the clear intention to defraud the government; and
that petitioner failed to comply with the requirements under Section 2, Rule 60 of the 1997
Rules, in that he gave a grossly inadequate value for the subject vehicle in the Complaint and
failed to allege therein that the vehicle has not been distrained or taken for a tax assessment or
a fine pursuant to law, or seized under a writ of execution or preliminary attachment, or
otherwise placed under custodia legis.

The CA added that it was improper for the sheriff to serve a copy of the writ of replevin upon the
respondent on the day following the seizure of the subject vehicle, and not prior to the taking
thereof; that the trial court is deemed to have acted without or in excess of its jurisdiction when it
seized and detained the vehicle on the basis of an improperly served writ; and that respondent
was correct in moving to quash the writ, as the proper remedy in case of an improperly served
writ of replevin is to file a motion to quash the same or a motion to vacate the order of seizure,
and not to file a counterbond as the trial court declared.

The CA thus decreed:

WHEREFORE, premises considered, the instant Petition for Certiorari is hereby

GRANTED with the following effects:

1) [T]he Order dated 21 November 2011 rendered by the Regional Trial Court of Quezon City, Branch
224 is REVERSED and SET ASIDE;

2) [T]he Order dated 13 March 2012 similarly rendered by the Regional Trial Court of Quezon City,
Branch 224 is REVERSED and SET ASIDE;

3) Civil Case No. Q-11-69644 pending before the Regional Trial Court of Quezon City, Branch 224 is
 hereby DISMISSED for want of jurisdiction;

4) The subject Range Rover with plate number ZMG 272 should be RETURNED to the Philippine
National Police-Highway Patrol Group for its proper disposition and finally;

5) Prayer for the Issuance of Temporary Restraining Order and/or Preliminary Injunction is DENIED
for being moot and academic.

SO ORDERED.[18]

Petitioner moved to reconsider, but in its assailed February 19, 2013 Resolution, the CA
remained unconvinced. Hence, the present Petition.

In a November 10, 2014 Resolution,[19] this Court resolved to give due course to the Petition.

Issues

Petitioner pleads the following assignment of errors:

I

WHETHER X X X THE TRIAL COURT HAS ACQUIRED JURISDICTION

OVER THE SUBJECT MATTER OF THE COMPLAINT FOR RECOVERY OF
POSSESSION WITH PRAYER FOR REPLEVIN.
II.

WHETHER X X X THE PETITIONER FAILED TO ALLEGE ALL THE

MATERIAL FACTS IN THE COMPLAINT FOR REPLEVIN AND AFFIDAVIT
OF MERIT UNDER SECTIONS 2 & 4, RULE 60 OF THE REVISED RULES
OF COURT.
III.

WHETHER X X X THE SHERIFF PROPERLY IMPLEMENTED THE WRIT

OF REPLEVIN BY SERVING THE SAME TO ANY PERSON WHO IS IN
POSSESSION OF THE PROPERTY SUBJECT THEREOF.[20]
Petitioner’s Arguments

Praying that the assailed CA dispositions be reversed and set aside and that, instead, Civil
Case No. Q-11-69644 be reinstated, petitioner argues that the trial court acquired jurisdiction
over the replevin case considering the payment of docket fees based on a valuation of the
subject vehicle arrived at in good faith by petitioner, who in estimating the vehicle’s value took
into consideration various factors such as depreciation, actual condition, year model, and other
circumstances; that the payment of an inadequate docket fee is not a ground for dismissal of a
case, and the trial court may simply allow the plaintiff to complete the payment of the correct
docket fees within a reasonable time;[21]and that his eventual submission to the trial court’s
valuation of P4 million and his willingness to pay the bond and corresponding docket fee proves
his good faith and sincerity.

On the issue relating to his supposed defective complaint on account of insufficient allegations
made therein, petitioner contends that there is nothing in the 1997 Rules which requires him to
copy the requirements in Section 2 of Rule 60 and incorporate them to the letter in his
complaint, as the rule merely requires an applicant in replevin to show the circumstances in his
complaint or affidavit of merit, which he claims he did.

Finally, petitioner insists that the writ of replevin was properly served upon respondent. He did
not address the issue relating to the sheriff’s service of summons, the writ of replevin, and the
corresponding order of the trial court on the day following the seizure and detention of the
subject vehicle, arguing rather sweepingly that it is sufficient for the sheriff to have served
respondent with a copy of the writ of replevin, together with the complaint, affidavit, and bond.
He conceded that respondent was in constructive possession of the vehicle, as he was the
registered owner thereof.

In his Reply,[22] petitioner retorts that the Petition is grounded on questions of law; that even
though respondent was able to register the vehicle in his name, he is nonetheless a buyer and
possessor in bad faith, and thus, the transfer of ownership over the subject vehicle in his favor is
illegal; that a criminal case for estafa relative to the vehicle is pending against Ong, Chua, and
Centeno; that Lopez’s purported sale to Chua was anomalous; and that respondent should have
filed a counterbond.

Respondent’s Arguments

In his Comment,[23] respondent essentially counters that the Petition should be dismissed as it
raises issues of fact; that a liberal application of the rule requiring the payment of correct docket
fees cannot apply to petitioner’s case since he intentionally defrauded the court in misdeclaring
the value of the subject vehicle; that while they need not be stated verbatim, the enumeration of
required allegations under Section 2 of Rule 60 must still be specifically included in a complaint
for replevin or in the accompanying affidavit of merit; that petitioner failed to show that he is the
owner of the vehicle or that he is entitled to its possession, and that the vehicle is wrongfully
detained by him, and that it has not been distrained, seized or placed under custodia legis; and
that he is a buyer in good faith and for value.

Our Ruling

The Petition must be denied.

“In a complaint for replevin, the claimant must convincingly show that he is either the owner or
clearly entitled to the possession of the object sought to be recovered, and that the defendant,
who is in actual or legal possession thereof, wrongfully detains the same.”[24] “Rule 60 x x x
allows a plaintiff, in an action for the recovery of possession of personal property, to apply for a
writ of replevin if it can be shown that he is ‘the owner of the property claimed … or is entitled to
the possession thereof.’ The plaintiff need not be the owner so long as he is able to specify his
right to the possession of the property and his legal basis therefor.”[25]

In Filinvest Credit Corporation v. Court of Appeals,[26] this Court likewise held that –

x x x It is not only the owner who can institute a replevin suit. A person “entitled to the
possession” of the property also can, as provided in the same paragraph cited by the
trial court, which reads:

Sec. 2. Affidavit and bond. – Upon applying for such order the plaintiff must show …

(a) That the plaintiff is the owner of the property claimed, particularly describing it, or is
entitled to the possession thereof; x x x

As correctly cited by respondent in his Comment:[27]

x x x [A] party praying for the recovery of possession of personal property must show by
his own affidavit or that of some other person who personally knows the facts that he is
the owner of the property claimed, particularly describing it, or is entitled to the
possession thereof. It must be borne in mind that replevin is a possessory action the
gist of which focuses on the right of possession that, in tum, is dependent on a legal
basis that, not infrequently, looks to the ownership of the object sought to be replevied.
Wrongful detention by the defendant of the properties sought in an action for replevin
must be satisfactorily established. If only a mechanistic averment thereof is offered, the
writ should not be issued.[28]

Petitioner admits and claims in his pleadings that on July 22, 2009, he purchased the subject
vehicle from Lopez, who executed and signed in blank a deed of sale and surrendered all
documents of title to him;[29] that he did not register the sale in his favor, such that the vehicle
remained in the name of Lopez;[30] that in September, 2010, he delivered the subject vehicle,
together with all its documents of title and the blank deed of sale, to Ong, with the express
intention of selling the vehicle through the latter as broker/second hand car dealer; that Ong
appears to have issued in his favor two guarantee checks amounting to P4.95 million; and that
these checks bounced.[31]Thereafter, Ong was able to sell the vehicle using the deed of sale
executed and signed in blank by Lopez to Chua, who secured a certificate of registration in his
name.[32] Chua then sold the vehicle, via a Deed of Sale of Motor Vehicle dated December 7,
2010, to respondent, who caused registration of the vehicle in his name on March 7,
2011.[33] Apparently, Ong did not remit Chua’s payment to petitioner, prompting the latter to file
formal complaints/charges for 1) estafa and carnapping on May 18, 2011 before the Office of
the City Prosecutor of Quezon City, and 2) carnapping on June 15, 2011 before the PNP-HPG
in Camp Crame, Quezon City against Ong and Centeno.[34] It appears as well that prior to the
filing of these formal complaints, or sometime in November, 2010, petitioner appeared before
the Quezon City Anti-Carnapping Unit based in Camp Karingal, Quezon City and, claiming that
the subject vehicle was carnapped, filed a “Failed to Return Vehicle” report; that on February
23, 2011, petitioner, respondent, Ong, and Chua appeared at Camp Karingal to shed light on
the claimed carnapping; that the parties were requested to voluntarily surrender the subject
vehicle, but the request proved futile; and that petitioner was instead advised to file appropriate
charges and file a complaint with the PNP-HPG in order to include the subject vehicle in the
“hold order list”.

This Court is not unaware of the practice by many vehicle buyers and second-hand car traders
of not transferring registration and ownership over vehicles purchased from their original
owners, and rather instructing the latter to execute and sign in blank deeds of sale covering
these vehicles, so that these buyers and dealers may freely and readily trade or re-sell the
vehicles in the second-hand car market without difficulty. This way, multiple transfers, sales, or
trades of the vehicle using these undated deeds signed in blank become possible, until the
latest purchaser decides to actually transfer the certificate of registration in his name. For many
car owners-sellers, this is an easy concession; so long as they actually receive the sale price,
they will sign sale deeds in blank and surrender them to the buyers or dealers; and for the latter,
this is convenient since they can “flip” or re-sell the vehicles to the public many times over with
ease, using these blank deeds of sale.

In many cases as well, busy vehicle owners selling their vehicles actually leave them, together
with all the documents of title, spare keys, and deeds of sale signed in blank, with second-hand
car traders they know and trust, in order for the latter to display these vehicles for actual viewing
and inspection by prospective buyers at their lots, warehouses, garages, or showrooms, and to
enable the traders to facilitate sales on-the-spot, as-is-where-is, without having to
inconvenience the owners with random viewings and inspections of their vehicles. For this kind
of arrangement, an agency relationship is created between the vehicle owners, as principals,
and the car traders, as agents. The situation is akin to an owner of jewelry who sells the same
through an agent, who receives the jewelry in trust and offers it for sale to his/her regular clients;
if a sale is made, the agent takes payment under the obligation to remit the same to the jewelry
owner, minus the agreed commission or other compensation.

From petitioner’s own account, he constituted and appointed Ong as his agent to sell the
vehicle, surrendering to the latter the vehicle, all documents of title pertaining thereto, and a
deed of sale signed in blank, with full understanding that Ong would offer and sell the same to
his clients or to the public. In return, Ong accepted the agency by his receipt of the vehicle, the
blank deed of sale, and documents of title, and when he gave bond in the form of two guarantee
checks worth P4.95 million. AH these gave Ong the authority to act for and in behalf of
petitioner. Under the Civil Code on agency,

Art. 1869. Agency may be express, or implied from the acts of the principal, from his
silence or Jack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority.

Agency may be oral, unless the law requires a specific form.

Art. 1870. Acceptance by the agent may also be express, or implied from his
acts which carry out the agency, or from his silence or inaction according to the
circumstances. (Emphasis and underscoring supplied)
“The basis of agency is representation and the same may be constituted expressly or impliedly.
In an implied agency the principal can be bound by the acts of the implied agent.”[35] The same is
true with an oral agency.

Acting for and in petitioner’s behalf by virtue of the implied or oral agency, Ong was thus able to
sell the vehicle to Chua, but he failed to remit the proceeds thereof to petitioner; his guarantee
checks bounced as well. This entitled petitioner to sue for estafa through abuse of confidence.
This is exactly what petitioner did: on May 18, 2011, he tiled a complaint for estafa and
carnapping against Ong before the Quezon City Prosecutor’s Office.

Since Ong was able to sell the subject vehicle to Chua, petitioner thus ceased to be the owner
thereof. Nor is he entitled to the possession of the vehicle; together with his ownership,
petitioner lost his right of possession over the vehicle. His argument that respondent is a buyer
In bad faith, when the latter nonetheless proceeded with the purchase and registration of the
vehicle on March 7, 2011, despite having been apprised of petitioner’s earlier November, 2010
“Failed to Return Vehicle” report filed with the PNP-HPG, is unavailing. Petitioner had no right to
file said report, as he was no longer the owner of the vehicle at the time; indeed, his right of
action is only against Ong, for collection of the proceeds of the sale.

Considering that he was no longer the owner or rightful possessor of the subject vehicle at the
time he filed Civil Case No. Q-11-69644 in July, 2011, petitioner may not seek a return of the
same through replevin. Quite the contrary, respondent, who obtained the vehicle from Chua and
registered the transfer with the Land Transportation Office, is the rightful owner thereof, and as
such, he is entitled to its possession. For this reason, the CA was correct in decreeing the
dismissal of Civil Case No. Q-11-69644, although it erred in ordering the return of the vehicle to
the PNP-HPG, which had no further right to hold the vehicle in its custody. As the registered and
rightful owner of the subject vehicle, the trial court must return the same to respondent.

Petitioner cannot be allowed to cut his losses by ostensibly securing the recovery of the subject
vehicle in lieu of its price, which Ong failed and continues to fail to remit. On the other hand,
Ong’s declarations contained in his Affidavit,[36] to the effect that petitioner remains the owner of
the vehicle, and that Chua came into illegal possession and ownership of the same by
unlawfully appropriating the same for himself without paying for it, are unavailing. Faced with a
possible criminal charge for estafa initiated by petitioner for failing or refusing to remit the price
for the subject vehicle, Ong’s declarations are considered self-serving, that is, calculated to free
himself from the criminal charge. The premise is that by helping petitioner to actually recover his
vehicle by insisting that the same was unlawfully taken from him, instead of remitting its price to
petitioner, Ong expects that he and petitioner may redeem themselves from their bad judgment;
for the petitioner, the mistake of bestowing his full faith and confidence upon Ong, and blindly
surrendering the vehicle, its documents of title, and a deed of sale executed and signed in
blank, to the latter; and for Ong, his failure to remit the proceeds of the sale to petitioner; and
petitioner might then opt to desist from pursuing the estafa and other criminal charges against
him.

Having disposed of the case in the foregoing manner, there is no need to discuss the other
issues raised by the parties.
WHEREFORE, the Petition is DENIED. The October 9, 2012 Decision and February 19, 2013
Resolution of the Court of Appeals in CA-G.R SP No. 124967 are AFFIRMED WITH
MODIFICATION, in that the subject Land Rover Range Rover, with Plate Number ZMG 272 and
particularly described in and made subject of these proceedings, is ORDERED RETURNED to
respondent Alvin Tomlin as its registered owner.

19 APR 2017| CRIMINAL LAW | TAXATION

Asia Trust Development Bank, Inc. Vs. Commissioner of Internal Revenue/Commissioner of

Internal Revenue Vs. Asia Trust Development Bank, Inc.; G.R. No. 201530/G.R. Nos. 201680-81;
April 19, 2017

An application for tax abatement is deemed approved only upon the issuance of a termination
letter by the Bureau of Internal Revenue (BIR).

These consolidated Petitions for Review on Certiorari[1] under Ru1e 45 of the Rules of Court
assail the November 16, 2011 Decision[2] and the April 16, 2012 Resolution[3] of the Court of Tax
Appeals (CTA) En Banc in CTA EB Case Nos. 614 and 677.

Factual Antecedents

On separate dates in February 2000, Asiatrust Development Bank, Inc. (Asiatrust) received
from the Commissioner of Internal Revenue (CIR) three Formal Letters of Demand (FLD) with
Assessment Notices[4] for deficiency internal revenue taxes in the amounts of P131,909,161.85,
P83,012,265.78, and P144,012,918.42 for fiscal years ending June 30, 1996, 1997, and 1998,
respectively.[5]

On March 17, 2000, Asiatrust timely protested the assessment notices.[6]

Due to the inaction of the CIR on the protest, Asiatrust filed before the CTA a Petition for
Review[7] docketed as CTA Case No. 6209 praying for the cancellation of the tax assessments
for deficiency income tax, documentary stamp tax (DST) – regular, DST – industry issue, final
withholding tax, expanded withholding tax, and fringe benefits tax issued against it by the CIR.

On December 28, 2001, the CIR issued against Asiatrust new Assessment Notices for
deficiency taxes in the amounts of P112,816,258.73, P53,314,512.72, and P133,013,458.73,
covering the fiscal years ending June 30, 1996, 1997, and 1998, respectively.[8]

On the same day, Asiatrust partially paid said deficiency tax assessments thus leaving the
following balances:

Fiscal Year 1996

Documentary Stamp Tax P 13,497,227.80

Final Withholding Tax – Trust 8,770,265.07

Documentary Stamp Tax – Industry Issue 88,584,931.39

TOTAL P 110,852,424.26

Fiscal Year 1997

Documentary Stamp Tax P 10,156,408.63

Documentary Stamp Tax – Industry Issue 39,163,539.57

TOTAL P 49,319,948.20

Fiscal year 1998

Documentary Stamp Tax P 20,425,770.07

Final Withholding Tax – Trust 10,183,367.80

Documentary Stamp Tax – Industry Issue 93,430,878.54

TOTAL P 124,040,016.41[9]

On April 19, 2005, the CIR approved Asiatrust’s Offer of Compromise of DST – regular
assessments for the fiscal years ending June 30, 1996, 1997, and 1998.[10]

During the trial, Asiatrust manifested that it availed of the Tax Abatement Program for its
deficiency final withholding tax – trust assessments for fiscal years ending June 30, 1996 and
1998; and that on June 29, 2007, it paid the basic taxes in the amounts of P4,187,683.27 and
P6,097,825.03 for the said fiscal years, respectively.[11] Asiatrust also claimed that on March 6,
2008, it availed of the provisions of Republic Act (RA) No. 9480, otherwise known as the Tax
Amnesty Law of 2007.[12]

Ruling of the Court of Tax Appeals Division

On January 20, 2009, the CTA Division rendered a Decision[13] partially granting the Petition.
The CTA Division declared void the tax assessments for fiscal year ending June 30, 1996 for
having been issued beyond the three-year prescriptive period.[14] However, due to the failure of
Asiatrust to present documentary and testimonial evidence to prove its availment of the Tax
Abatement Program and the Tax Anmesty Law, the CTA Division affirmed the deficiency DST –
Special Savings Account (SSA) assessments for the fiscal years ending June 30, 1997 and
1998 and the deficiency DST – Interbank Call Loans (IBCL) and deficiency final withholding tax
– trust assessments for fiscal year ending June 30, 1998, in the total amount of
P142,777,785.91.[15] Thus:
WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY
GRANTED. Accordingly, Assessment Notices issued against [Asiatrust] for deficiency documentary
stamp, final withholding, expanded withholding, and fringe benefits tax assessments for the
fiscal year ended June 30, 1996 are VOID for being [issued] beyond the prescriptive period allowed
by law.

The Assessment Notices issued by [CIR] against [Asiatrust] for deficiency income, documentary stamp
– regular, documentary stamp – trust, and fringe benefits tax assessments for the fiscal years
ended June 30, 1997 & 1998 are hereby ordered CANCELLED and WITHDRAWN. Moreover,
[Asiatrust’s]
deficiency documentary stamp tax IBCL assessment for the fiscal year ended June 30,
1997 is ordered CANCELLED and WITHDRAWN.

However, [Asiatrust’s] deficiency documentary stamp tax – Special Savings Account assessments for
the fiscal years ended June 30, 1997 & 1998, and deficiency documentary stamp tax – IBCL
and deficiency final withholding tax – trust assessments for the fiscal year ended June 30, 1998,
in the aggregate amount of P142,777,785.91 are hereby AFFIRMED. The said amount is
broken down as follows:
Fiscal Year 1997
Documentary Stamp Tax – Industry Issue P 39,163,539.57

Fiscal Year 1998

Final Withholding Tax – Trust 10,183,367.80

Documentary Stamp Tax – Industry Issue 93,430,878.54

Total Deficiency Tax P 142,777,785.91

SO ORDERED.[16]

Asiatrust filed a Motion for Reconsideration[17] attaching photocopies of its Application for
Abatement Program, BIR Payment Form, BIR Tax Payment Deposit Slip, Improved Voluntary
Assessment Program Application Forms, Tax Amnesty Return, Tax Amnesty Payment Form,
Notice of Availment of Tax Amnesty and Statement of Assets and Liabilities and Networth
(SALN) as of June 30, 2005.

The CIR, on the other hand, filed a Motion for Partial Reconsideration of the assessments
assailing the CTA Division’s finding of prescription and cancellation of assessment notices for
deficiency income, DST – regular, DST trust, and fringe benefit tax for fiscal years ending June
30, 1997 and 1998.[18]
On July 6, 2009, the CTA Division issued a Resolution[19] denying the motion of the CIR while
partially granting the motion of Asiatrust. The CTA Division refused to consider Asiatrust’s
availment of the Tax Abatement Program due to its failure to submit a termination letter from the
BIR.[20] However, as to Asiatrust’s availment of the Tax Amnesty Law, the CTA Division resolved
to set the case for hearing for the presentation of the originals of the documents attached to
Asiatrust’s motion for reconsideration.[21]

Meanwhile, the CIR appealed the January 20, 2009 Decision and the July 6, 2009 Resolution
before the CTA En Banc via a Petition for Review[22] docketed as CTA EB No. 508. The CTA En
Banc however dismissed the Petition for being premature considering that the proceedings
before the CTA Division was still pending.[23]

On December 7, 2009, Asiatrust filed a Manifestation[24] informing the CTA Division that the BIR
issued a Certification[25] dated August 20, 2009 certifying that Asiatrust paid the amounts of
P4,187,683.27 and P6,097,825.03 at the Development Bank of the Philippines in connection
with the One-Time Administrative Abatement under Revenue Regulations (RR) No. 15-2006.[26]

On March 16, 2010, the CTA Division rendered an Amended Decision[27] finding that Asiatrust is
entitled to the immunities and privileges granted in the Tax Amnesty Law.[28] However, it
reiterated its ruling that in the absence of a termination letter fium the BIR, it cannot consider
Asiatrust’s availment of the Tax Abatement Program.[29] Thus, the CTA Division disposed of the
case in this wise:

WHEREFORE, premises considered, [Asiatrust’s] Motion for Reconsideration is hereby PARTIALLY

GRANTED and this Court’s Decision dated January 20, 2009 is hereby MODIFIED. Accordingly,
the above captioned case as regards [Asiatrust’s] liability for deficiency documentary stamp tax is
CLOSED and

TERMINATED, subject to the provisions of R.A. No. 9480. However, [Asiatrust’s] liability for deficiency
final withholding tax assessment for fiscal year ended June 30, 1998, subject of this litigation, in
the amount of P10,183,367.80, is hereby REAFFIRMED.

SO ORDERED.[30]

Still unsatisfied, Asiatrust moved for partial reconsideration[31] insisting that the Certification
issued by the BIR is sufficient proof of its availment of the Tax Abatement Program considering
that the CIR, despite Asiatrust’s request, has not yet issued a termination letter. Asiatrust
attached to the motion photocopies of its letter[32] dated March 17, 2009. requesting the BIR to
issue a termination letter, Payment Form[33] BIR Tax Payment Deposit Slips,[34] Improved
Voluntary Assessment Program (IVAP) Payment Form,[35] and a letter[36] dated October 17, 2007
issued by Revenue District Officer (RDO) Ms. Clavelina S. Nacar.

On July 28, 2010, the CTA Division issued a Resolution[37] denying Asiatrust’s motion. The CTA
Division maintained that it cannot consider Asiatrust’s availment of the Tax Abatement Program
in the absence of a termination letter from the BIR.[38] As to the Certification issued by BIR, the
CTA Division noted that it pertains to fiscal period July 1, 1995 to June 30, 1996.[39]
Both parties appealed to CTA En Banc.

Ruling of the Court of Tax Appeals En Banc

On November 16, 2011, the CTA En Banc denied both appeals. It denied the CIR’s appeal for
failure to file a prior motion for reconsideration of the Amended Decision, [40] while it denied
Asiatrust’s appeal for lack of merit.[41] The CTA En Banc sustained the ruling of the CTA Division
that in the absence of a termination letter, it cannot be established that Asiatrust validly availed
of the Tax Abatement Program.[42] As to the Certification issued by the BIR, the CTA En Banc
noted that it only covers the fiscal year ending June 30, 1996.[43] As to the letter issued by RDO
Nacar and the various BIR Tax Payment Deposit Slips, the CTA En Banc pointed out that these
have no probative value because these were not authenticated nor formally offered in evidence
and are mere photocopies of the purported documents.[44]

On April 16, 2012, the CTA En Banc denied the motions for partial reconsideration of the CIR
and Asiatrust.[45]

Issues

Hence, the instant consolidated Petitions under Rule 45 of the Rules of Court, with the following
issues:
G.R. No. 201530

I.

WHETHER X X X THE [CTA] EN BANC ERRED IN FINDING THAT [ASIATRUST] IS LIABLE FOR
DEFICIENCY FINAL WITHHOLDING TAX FOR FISCAL YEAR ENDING JUNE 30, 1998.

II.

WHETIIER X X X THE ORDER OF THE [CTA] EN BANC FOR PETITIONER TO PAY AGAIN THE
FINAL WITHHOLDING TAX FOR FISCAL YEAR ENDING JUNE 30, 1998 WOULD AMOUNT
TO DOUBLE TAXATION.

III.

WHETHER X X X THE [CTA] EN BANC ERRED IN RESOLVING THE ISSUE OF ALLEGED

DEFICIENCY FINAL WITHHOLDING TAX FOR FISCAL YEAR ENDING JUNE 30, 1998
BASED ON MERE TECHNICALITIES.[46]

G.R. Nos. 201680-81

I.
WHETHER X X X THE [CTA] EN BANC COMMITTED REVERSIBLE ERROR WHEN IT
DISMISSED [THE CIR’S] PETITION FOR REVIEW ON THE GROUND THAT THE LATTER
ALLEGEDLY FAILED TO COMPLY WITH SECTION 1, RULE 8 OF THE REVISED RULES OF
THE [CTA].

II.

WHETHER X X X THE [CTA] EN BANC COMMITTED REVERSIBLE ERROR WHEN IT

SUSTAINED THE AMENDED DECISION DATED 16 MARCH 2010 OF THE FIRST DIVISION
DECLARING CLOSED AND TERMINATED RESPONDENT’S LIABILITY FOR DEFICIENCY
DOCUMENTARY STAMP TAX FOR TAXABLE YEARS 1997 AND 1998.[47]

G.R. No. 201530

Asiatrust’s Arguments

Asiatrust contends that the CTA En Banc erred in affirming the assessment for deficiency final
withholding tax for fiscal year ending June 30, 1998 considering that it already availed of the
Tax Abatement Program as evidenced by the Certification issued by the BIR the letter issued by
RDO Nacar, and the BIR Tax Payment Deposit Slips.[48] Asiatrust maintains that the BIR
Certification is sufficient proof of its availment of the Tax Abatement Program considering CIR’s
unjustifiable refusal to issue a termination letter.[49] And although the letter and the BIR Tax
Payment Deposit Slips were not formally offered in evidence, Asiatrust insists that the CTA En
Banc should have relaxed the rules as the Supreme Court in several cases has relaxed
procedural rules in the interest of substantial justice.[50] Moreover, Asiatrust posits that since it
already paid the basic taxes, the affirmance of the deficiency fmal withholding tax assessment
for fiscal year ending June 30, 1998 would constitute double taxation as Asiatrust would be
made to pay the basic tax twice.[51]

The CIR’s Arguments

The CIR, however, points out that the BIR Certification relied upon by Asiatrust does not cover
fiscal year ending June 30, 1998.[52] And even if the letter issued by RDO Nacar and the BIR Tax
Payment Deposit Slips were admitted in evidence, the result would still be the same as these
are not sufficient to prove that Asiatrust validly availed of the Tax Abatement Program. [53]

G.R. Nos. 201680-81

The CIR’s Arguments

The CIR contends that the CTA En Banc erred in dismissing his appeal for failing to file a
motion for reconsideration on the Amended Decision as a perusal of the Amended Decision
shows that it is a mere resolution, modifying the original Decision.[54]
Furthermore, the CIR claims that Asiatrust is not entitled to a tax amnesty because it failed to
submit its income tax returns (ITRs).[55] The CIR likewise imputes bad faith on the part of
Asiatrust in belatedly submitting the documents before the CTA Division.[56]

Asiatrust’s Arguments

Asiatrust on the other hand argues that the CTA En Banc correctly dismissed the CIR’s appeal
for failure to file a motion for reconsideration on the Amended Decision.[57] It asserts that an
amended decision is not a mere resolution but a new decision.[58]

Asiatrust insists that the CIR can no longer assail the Amended Decision of the CTA Division
before the Court considering the dismissal ofhis appeal for failing to file a motion for
reconsideration on the Amended Decision.[59] In any case, Asiatrust claims that the submission
of its ITRs is not required as the Tax Amnesty Law only requires the submission of a SALN as
of December 31, 2005,[60] As to its belated submission of the documents, Asiatrust contends that
recent jurisprudence allows the presentation of evidence before the CTA En Banc even after
trial.[61] Thus, it follows that the presentation of evidence before the CTA Division should likewise
be allowed.[62]

Our Ruling

The Petitions lack merit.

G.R. No. 201530

An application for tax abatement is considered approved only upon the issuance of a
termination letter.

Section 204(B)[63] of the 1997 National Internal Revenue Code (NIRC) empowers the CIR to
abate or cancel a tax liability.

On Septembr 27, 2006 the BIR issued RR No. 15-06 prescribing tho guidelines on the
implementation of the one-time administrative abatement of all penalties/surcharges and
interest on delinquent accounts and assessments (preliminary or final, disputed or not) as of
June 30, 2006. Section 4 of RR No. 15-06 provides:

SECTION 4. Who May Avail. – Any person/taxpayer, natural or juridical, may settle thru this
abatement program any delinquent account or assessment which has been released as of June
30, 2006, by paying an amount equal to One Hundred Percent (100%) of the Basic Tax
assessed with the Accredited Agent Bank (AAB) of the Revenue District Office (RDO)/Large
Taxpayers Service (LTS)/Large Taxpayers District Office (LTDO) that has jurisdiction over the
taxpayer. In the absence of an AAB, payment may be made with the Revenue Collection
Officer/Deputized Treasurer of the RDO that has jurisdiction over the taxpayer. After payment of
the basic tax, the assessment for penalties/surcharge and interest shall be cancelled by the
concerned BIR Office following existing rules and procedures. Thereafter, the docket of the case
shall be fmwarded to the Office of the Commissioner, thru the Deputy Commissioner for
Operations Group, for issuance of Termination Letter.
Based on the guidelines, the last step in the tax abatement process is the issuance of the
termination letter. The presentation of the termination letter is essential as it proves that the
taxpayer’s application for tax abatement has been approved. Thus, without a termination letter,
a tax assessment cannot be considered closed and terminated.

In this case, Asiatrust failed to present a termination letter from the BIR. Instead, it presented a
Certification issued by the BIR to prove that it availed of the Tax Abatement Program and paid
the basic tax. It also attached copies of its BIR

‘I’ax Payment Deposit Slips and a letter issued by RDO Nacar. These documents, however, do
not prove that Asiatrust’s application for tax abatement has been approved. If at all, these
documents only prove Asiatrust’s payment of basic taxes, which is not a ground to consider its
deficiency tax assessment closed and terminated.

Since no tennination letter has been issued by the BIR, there is no reason tor the Court to
consider as closed and terminated the tax assessment on Asiatrust’s fmal withholding tax for
fiscal year ending June 30, 1998. Asiatrust’s application for tax abatement will be deemed
approved only upon the issuance of a termination letter, and only then will the deficiency tax
assessment be considered closed and terminated. However, in case Asiatrust’s application for
tax abatement is denied, any payment made by it would be applied to its out ding tax liability.
For this reason, Asiatrust’s allegation of double taxation must also fail.

Thus, the Court finds no error on the part of the CTA En Banc in affirming the said tax
assessment.

G.R. Nos. 201680-81

An appeal to the CTA En Banc must be preceded by the filing of a timely motion for
reconsideration or new trial with the CTA Division.

Section 1, Rule 8 of the Revised Rules of the CTA states:

SECTION 1. Review of cases in the Court en banc. – In cases falling under the exclusive
appellate jurisdiction of the Court en banc, the petition for review of a decision or resolution of
the Court in Division must be preceded by the filing of a timely motion for reconsideration or new
trial With the pivision.
Thus, in order for the CTA En Banc to take cognizance of an appeal via a petition for review, a
timely motion for reconsideration or new trial must first be filed with the CTA Division that issued
the assailed decision or resolution. Failure to do so is a ground for the dismissal of the appeal
as the word “must” indicates that the filing of a prior motion is mandatory, and not merely
directory.[64]

The same is true in the case of an amended decision. Section 3, Rule 14 of the same rules
defines an amended decision as “[a]ny action modifying or reversing a decision of the Court en
banc or in Division.” As explained in CE Luzon Geothermal Power Company, Inc. v.
Commissioner of Internal Revenue,[65] an amended decision is a different decision, and thus, is a
proper subject of a motion for reconsideration.

In this case, the CIR’s failure to move for a reconsideration of the Amended Decision of the CTA
Division is a ground for the dismissal of its Petition for Review before the CTA En Banc. Thus,
the CTA En Banc did not err in denying the CIR’s appeal on procedural grounds.

Due to this procedural lapse, the Amended Decision has attained fmality insofar as the CIR is
concerned. The CIR, therefore, may no longer question the merits of the. case before this Court.
Accordingly, there is no reason for the Court to discuss the other issues raised by the CIR

As the Court has often held, procedural rules exist to be followed, not to be trifled with, and thus,
may be relaxed only for the most persua.Sive reasons.[66]

WHEREFORE, the Petitions are hereby DENIED. The assailed November 16, 2011 Decision
and the April 16, 2012 Resolution of the Court of Tax Appeals En Banc in CTA EB Case Nos.
614 and 677 are hereby AFFIRMED, without prejudice to the action of the Bureau of Internal
Revenue on Asiatrust Development Bank, Inc.’s application for abatement. The Bureau of
Internal Revenue is DIRECTED to act on Asiatrust Development Bank, Inc.’s applicationfor
abatementin view of Section 5, Revenue Regulations No. 13-2001.

SO ORDERED.

19 APR 2017 | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | JURISPRUDENCE | PONENTE | JUSTICE
MARIANO C. DEL CASTILLO

Bankard, Inc. Vs. Luz P. Alarte; G.R. No. 202573; April 19, 2017

This Petition for Review on Certiorari[1] assails the September 28, 2011 Decision[2] of the Court of
Appeals (CA) denying the Petition for Review in CA G.R. SP No. 114345, and its July 4, 2012
Resolution[3] denying herein petitioner’s Motion for Reconsideration[4] in said case.

Factual Antecedents

Petitioner Bankard, Inc. (Bankard, now RCBC Bankard Services Corporation) is a duly
constituted domestic corporation doing business as a credit card provider, extending credit
accommodations to its member-cardholders for the purchase of goods and services obtained
from Bankard accredited business establishments, to be paid later on by the member-
cardholders following billing.

In 2007, petitioner filed a collection case against respondent Luz P. Alarte before the
Metropolitan Trial Court of Pasig City (MeTC). The case was docketed as Civil Case No. 13956
and ultimately assigned to Branch 72. In its Complaint,[5] petitioner alleged that respondent
applied for and was granted credit accommodations under Bankard myDream JCB Card No.
3562-8688-5155-1006; that respondent, using the said Bankard myDream JCB credit card,
availed herself of credit accommodations by “purchasing various products”;[6] that per Statement
of Account[7] dated July 9, 2006, respondent’s credit availments amounted to a total of
P67,944.82, inclusive of unbilled monthly installments, charges and penalties or at least the
minimum amount due under the credit card; and that respondent failed and refuses to pay her
obligations despite her receipt of a written demand.[8] Thus, it prayed that respondent be ordered
to pay the amount of P67,944.82, with interest, attorney’s fees equivalent to 25% of the sum
due, and costs of suit.

Despite service of summons, respondent failed to file her answer. For this reason, petitioner
filed a Motion to Render Judgment[9] which was granted.

Ruling of the Metropolitan Trial Court

On July 15, 2009, the MeTC issued its Decision[10] dismissing the case, thus:
Inasmuch as this case falls under the Rule on Summary Procedure, judgment shall be rendered
as may be warranted by the facts alleged in the complaint and limited to what was prayed for.

For decision is whether x x x plaintiff is entitled to its claims against herein defendant.

It bears stressing that in civil cases, the party having the burden of proof must establish his case
by preponderance of evidence. As mentioned in the case of Amoroso vs. Alegre (G.R. No.
142766, June 15, 2007), “Preponderance of evidence” is the weight, credit, and value of the
aggregate evidence on either side and is usually considered to be synonymous with the term
“greater weight of the evidence” or “greater weight of the credible evidence” If plaintiff claims a
right granted or created by law, he must prove his claim by competent evidence. He must rely
on the strength of his own evidence and not upon the weakness of that of his opponent.

Scrutiny of the pieces of evidence submitted by plaintiff, particularly the single statement of
account dated July 7[,] 2006, discloses that what were merely reflected therein are the amounts
imposed as late charges and interest charges. Nothing in the said document would indicate the
alleged purchases made by defendant. Considering that there is sans [sic] of evidence showing
that defendant made use [sic] plaintiff’s credit facilities, it could no [sic] be said then that the amount
of P67,944.82 alleged to be defendant’s outstanding balance was the result of the latter’s
availment of plaintiff’s credit card.

WHEREFORE, judgment is hereby rendered, DISMISSING herein complaint for lack of

preponderance of evidence.

SO ORDERED.[11]

Ruling of the Regional Trial Court

Petitioner appealed before the Regional Trial Court (RTC) which, in a May 6, 2010 Decision, [12]
affirmed the MeTC. It held:
In essence, Appellant argued that the Lower Court erred in dismissing the case on the ground of
insufficiency of evidence. Accordingly, the evidence presented by Appellant is enough to pass
the requirement of preponderance of evidence based on the disputable presumption enunciated
under Rule 131, Section 3 (q) of the Revised Rules of Court. Appellant added that the account
of the defendant-appellee Luz Alarte x x x could not have incurred penalties and interest
charges if no purchases were made thereon. That likewise, Appellee was deemed to have
admitted her obligation when she did not object to the amounts stated on the statement of
accounts sent by the Appellant in the regular course of its business and as well, upon receiving
the demand letter dated 03 October 2007 tor the payment of Php67,944.82.

A careful review of the Decision appealed from reveals that there really was no clear proof on
how the amount claimed by the Appellant was incurred by the Appellee. This is so became if
ever, the disputable presumption under the Rule only showed to the Court that the statement of
accounts were indeed sent by the Appellant to the Appellee on a “regular basis” but not the
details itself of the purchase transactions showing the fact that Appellee made use of the
Appellant’s credit facilities up to the amount claimed together with the imposition of
unconscionable interest and penalties as basis for the grant thereof. In short, the presumed
existence of the statement of accounts cannot be considered as repository of the truth of the
facts stated in the single statement of account dated 07 July 2006 presented by the Appellant
considering that only the presentation of the detailed purchase transactions had by the Appellee
in using the credit card facilities of the Appellant can show that the amount claimed by the latter
was actually incurred by the former.

Appellant further argued that the Lower Court should have issued an order setting a clarificatory
hearing to establish the principal amount due and required the plaintiff to submit affidavits on
that matter pursuant to Section 10 of the Rules on Summary Procedure.

Section 10 of the Revised Rules of Summary Procedure speaks of matters that requires [sic]
c1arification in the affidavits and position papers which the Court might require the parties
through an order, [sic] it does not in any way speak of the appreciation of evidence by the Court
as subject matter for clarificatory hearing. Be that as it may, the Order of the Lower Court dated
29 April 2009 was enough in giving the Appellant the opportunity to submit supporting details of
the monthly statement to prove its case.

WHEREFORE, premises considered, finding no reversible error on [sic] the Decision of the Court
a quo, being supported by substantial evidence as basis thereof, the same is hereby
AFFIRMED in toto. Costs against the Plaintiff-Appellant.

SO ORDERED.[13]

Ruling of the Court of Appeals

Petitioner filed a Petition for Review[14] before the CA docketed as CA-G.R. SP No. 114345. In a
September 28, 2011 Decision, however, the CA affirmed the Decisions of the MeTC and RTC. It
held:
Petitioner posits that the RTC erred in sustaining the [MeTC] in dismissing the case for lack of
evidence since it was able to prove its claim by preponderance of evidence.
Section 1, Rule 133 of the Revised Rules of Court provides:

‘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. x x x.’

Based on the facts and circumstances in this case, there is indeed no basis for the claim. As
aptly observed by the RTC, there was no clear proof on how the amount claimed by petitioner
was incurred by respondent, thus:
‘xxx xxx xxx

A careful review of the Decision appealed from reveals that there really was no clear proof on
how the amount claimed by the Appellant was incurred by the appellee. This is so because if
ever, the disputable presumption under the Rule only showed to the Court that the statement of
accounts were indeed sent by the Appellant to the Appellee on a ‘regular basis’ but not the
details itself of the purchase transactions showing the fact that Appellee made use of the
Appellant’s credit facilities up to the amount claimed together with the imposition of
unconscionable interest and penalties as basis for the grant thereof. In short, the presumed
existence of the statement of accounts cannot be considered as repository of the truth of the
facts stated in the single statement of account dated 07 July 2006 presented by the Appellant
considering that only the presentation of the detailed purchase transactions had by the Appellee
in using the credit card facilities of the Appellant can show that the amount claimed by the latter
was actually incurred by the former.

xxx xxx xxx’

Burden of proof is the duty of a 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. As a
rule, he who alleges the affirmative of the issue has the burden of proof Here, the burden of
proof lies with the petitioner. As such, it has the obligation to present such quantum of evidence
necessary to prove its claim. Unfortunately, the petitioner not only failed to overturn this burden
but also failed to adduced [sic] the evidence required to prove such claim. While it may be true
that respondent applied for and was granted a credit accommodation by petitioner, the latter
failed to adduce enough evidence to establish that it is entitled to the payment of the amount of
Php67,944.82. The Statement of Account submitted by petitioner showing the alleged obligation
of the respondent merely states the late charges and penalty incurred but did not enumerate the
alleged purchases/transactions made by the respondent while using the credit card issued by
the petitioner. Thus, having failed to establish its claim by preponderance of evidence, the
dismissal of the petition is warranted.

WHEREFORE, premises considered, the petition under consideration is DISMISSED and the
assailed Decision dated May 06, 2010 of Regional Trial Court of Pasig, Branch 167 is hereby
AFFIRMED.

SO ORDERED.[15]

Petitioner moved to reconsider, but in a July 4, 2012 Resolution, the CA held its ground. Hence,
the present Petition.
The Court notes that all throughout the proceedings, respondent did not participate. She did not
file her answer in the MeTC. Nor did she file any comment or position paper in the RTC appeal,
as well as the CA petition for review. Just as well, she failed to submit her Comment to the
instant Petition for which reason fine was imposed upon her by the Court on two occasions. And
in an August 27, 2015 Manifestation,[16] petitioner declared that it is submitting the instant case
for resolution on the basis of the pleadings on record.

Issue and Arguments

Petitioner simply submits that it has presented sufficient evidence to support its pecuniary claim.
It claims that the July 9, 2006 Statement of Account[17] properly reflected the respondent’s
obligation; that respondent is estopped from questioning the said statement of account as it
contains a waiver, stating that if respondent does not question the same within 20 days from
receipt, “Bankard, Inc. will deem the Statement true and correct”;[18] that respondent’s failure to
file her Answer in the MeTC and Comment before the RTC and the CA likewise results in the
validation of the statement of account; that with her failure to answer, all the material allegations
in the Complaint are deemed admitted, especially the statement of account which should have
been specifically denied under oath; that if judgment is not rendered in its favor, this would
result in the unjust enrichment of respondent at its expense; and that if the MeTC, RTC, and CA
are affirmed, this would result in a situation where credit card holders could evade their
obligations by simply ignoring cases filed against them, as in this case where, despite proper
notice, respondent failed and refused to file her Answer to the Complaint, her respective
comments to the RTC appeal. CA petition, and the instant Petition.

Petitioner thus prays that the questioned CA dispositions be reversed and set aside, and that
judgment be rendered granting its prayer as stated in its Complaint, that is, that respondent be
ordered to pay the amount of P67,944.82, with interest; attorney’s fees equivalent to 25% of the
sum due; and costs of suit.

Our Ruling

The Petition is partially granted.

A perusal of the July 9, 2006 Statement of Account sent to respondent would indeed show that
it does not contain the particulars of purchase transactions entered into by the latter; it merely
contains the following information:

PREVIOUS STATEMENT BALANCE P64,615.64

3562-8688-5155-1006 LUZ TATEL ALARTE

07/04/06 07/047/0 LATE CHARGES 1,484.84

07/07/06 07/07/06 INTEREST CHARGES 1,844.34

SUB TOTAL 3,329.18

BALANCE END P67,944.82

*** END OF STATEMENT – PAGE 1 ***[19]

However, the manner in which the statement of account is worded indicates that it is a running
balance, a continuing and mounting bill of charges consisting of a combined principal amount
with finance and penalty charges imposed, which respondent appears to have failed to pay in
the past. This is shown by the fact that respondent has failed to pay a past bill amounting to
P64,615.64 – the “previous statement balance” in the very first line of the above-quoted
statement of account. This could mean that there really were no immediate purchase
transactions made by respondent for the month that needed to be specified in the July 9, 2006
Statement of Account; that instead, she simply repeatedly failed and continues to fail to pay her
credit card debt arising out of past credit card purchase transactions to petitioner, which thus
resulted in a mounting pile of charges imposed upon her outstanding account as reflected in a
statement or bill of charges or accounts regularly sent to her.

Petitioner’s fault appears to lie in the fact that its Complaint was not well-prepared, and its cause
is not well-argued; for this reason, the courts below misunderstood both. Upon being apprised of
the MeTC’s Decision dismissing the case for failure to “indicate the alleged purchases made
by”[20] respondent, petitioner could have simply included in its RTC appeal a simple summary of
respondent’s account; the source of her debt, such as the credit card transactions she made in
the past and, her past statements of account to prove that the July 9, 2006 statement of account
was merely a running or accumulated balance and did not necessarily involve immediate credit
card purchases. Instead, petitioner made the mistake of laying blame upon the MeTC and RTC
for not conducting a clarificatory hearing and for not requiring it to submit affidavits “on that
matter”,[21] when enlightenment should have come primarily from it as it is precisely engaged in
the credit card business and is therefore presumed to be an expert on the subject.

While it can be said that, from the point of view of petitioner’s business dealings with
respondent, the former is not obliged, each and every time, to send a statement of account to
the latter containing a detailed list of all the credit card transactions she made in the past which
remain unsettled and outstanding as of the date of issuance of the latest statement of account,
as she is presumed to know these from past statements of account received. The matter,
however, is not so simple from the viewpoint of someone who is not privy to their transactions,
such as the courts.

This Court cannot completely blame the MeTC, RTC, and CA for their failure to understand or
realize the fact that a monthly credit card statement of account does not always necessarily
involve purchases or transactions made immediately prior to the issuance of such statement;
certainly, it may be that the card holder did not at all use the credit card for the month, and the
statement of account sent to him or her refers to principal, interest, and penalty charges
incurred from past transactions which are too multiple or cumbersome to enumerate but
nonetheless remain unsettled by the card holder. This Court cannot judge them for their lack of
experience or practical understanding of credit card arrangements, although it would have
helped if they just endeavored to derive such an understanding of the process.

Thus, it would not hurt the cause of justice to remand the case to the MeTC where petitioner
would be required to amend its Complaint and adduce additional evidence to prove its case;
that way, the lower court can better understand the nature of the claim, and this time it may
arrive at a just resolution of the case. This is to say that while the Court believes that petitioner’s
claim may be well-founded, it is not enough as to allow judgment in its favor on the basis of
extant evidence. It must prove the validity of its claim; this it may do by amending its Complaint
and adducing additional evidence of respondent’s credit history and proving the loan
transactions between them. After all, credit card arrangements are simple loan arrangements
between the card issuer and the card holder.
Simply put, every credit card transaction involves three contracts, namely: (a) the sales contract
between the credit card holder and the merchant or the business establishment which accepted
the credit card; (b) the loan agreement between the credit card issuer and the credit card holder;
and lastly, (c) the promise to pay between the credit card issuer and the merchant or business
establishment.[22]

WHEREFORE, the Petition is PARTIALLY GRANTED. The September 28, 2011 Decision and
July 4, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 114345 are REVERSED and
SET ASIDE. Civil Case No. 13956 is reinstated, and the Metropolitan Trial Court of Pasig City,
Branch 72 is ORDERED to conduct further proceedings in accordance with the foregoing
disquisition of the Court and allow petitioner Bankard, Inc. (now RCBC Bankard Services
Corporation) to amend its Complaint and/or present additional evidence to prove its case.

SO ORDERED.

17 APR 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL DISMISSAL | SUBJECT | RULES OF COURT |
CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Herma Shipyard, Inc. and Mr. Herminio Esguerra Vs. Danilo Oliveros, et al.; G.R. No. 208936; April
17, 2017

This Petition for Review on Certiorari[1] assails the Decision[2] dated May 30, 2013 of the Court of
Appeals (CA) in CA-G.R. SP No. 118068 that reversed the Decisions of the National Labor
Relations Commission (NLRC) and the Labor Arbiter and declared that Danilo Oliveros, Jojit
Besa, Arnel Sabal, Camilo Oliveros, Robert Nario, Frederick Catig, Ricardo Ontalan, Ruben
Delgado, Segundo Labosta, Exequiel Oliveria, Oscar Tirol and Romeo Trinidad (respondents)
are regular employees of petitioner Herma Shipyard, Inc. (Herma Shipyard).

Factual Antecedents

Herma Shipyard a domestic corporation engaged in the business of shipbuilding and repair. The
respondents were its employees occupying various positions such as welder, leadman, pipe
fitter, laborer, helper, etc.

On June 17, 2009, the respondents filed before the Regional Arbitration Branch III, San
Fernando City, Pampanga a Complaint[3] for illegal dismissal, regularization, and non-payment of
service incentive leave pay with prayer for the payment of full backwages and attorney’s fees
against petitioners. Respondents alleged that they are Herma Shipyard’s regular employees
who have been continuously performing tasks usually necessary and desirable in its business.
On various dates, however, petitioners dismissed them from employment.

Respondents further alleged that as a condition to their continuous and uninterrupted

employment, petitioners made them sign employment contracts for a fixed period ranging from
one to four months to make it appear that they were project-based employees. Per respondents,
petitioners resorted to this scheme to defeat their right to security of tenure, but in truth there
was never a time when they ceased working for Herma Shipyard due to expiration of project-
based employment contracts. In fact, if they were indeed project employees, petitioners should
have reported to the Department of Labor and Employment (DOLE) the completion of such
project. But petitioners have never submitted such report to the DOLE.

For their defense, petitioners argued that respondents were its project-based employees in its
shipbuilding projects and that the specific project for which they were hired had already been
completed. In support thereof, Herma Shipyard presented contracts of employment, some of
which are written in the vernacular and denominated as Kasunduang Paglilingkod (Pang-
Proyektong Kawani).[4]

Ruling of the Labor Arbiter

On May 24, 2010the Labor Arbiter rendered a Decision[5] dismissing respondents’ Complaint.
The Labor Arbiter held that respondents were project based employees whose services were
validly terminated upon the completion of the specific work for which they were individually
hired. The dispositive portion of the Labor Arbiter’s Decision reads:

WHEREFORE, premises considered, let the instant complaint be, as it is hereby

ORDERED dismissed for lack of merit.

All the money claims as well as moral and exemplary damages and attorney’s fees
raised by the complainants in their complaint are likewise DENIED for lack of merit.

SO ORDERED.[6]

Respondents thus appealed to the NLRC.

Ruling of the National Labor Relations Commission

On September 7, 2010, the NLRC rendered its Decision[7] denying respondents’ appeal and
affirming in toto the Decision of the Labor Arbiter. It sustained the finding of the Labor Arbiter
that based on their employment contracts, respondents were project-based employees hired to
do a particular project for a specific period of time.

Respondents moved tor reconsideration but the NLRC denied their Motion for
Reconsideration[8] in its November 11, 2010 Resolution.[9]
Unfazed, respondents filed a Petition for Certiorari[10] before the CA imputing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the labor tribunals in finding
that they were project-based employees and in not awarding them service incentive leaves.
Respondents contended that the labor tribunals grievously erred in relying on the project
employment contracts which were tor a uniform duration of one month. They argued that if it
were true that they were project-based employees, the duration of their employment should
have coincided with the completion of the project for which they were hired and not for a uniform
period of one month.

Ruling of the Court of Appeals

On May 30, 2013, the CA rendered its assailed Decision[11] granting respondents’ Petition
for Certiorari and setting aside the labor tribunals’ Decisions. It held that even if the contracts of
employment indicated that respondents were hired as project-based workers, their employment
status have become regular since: they were performing tasks that are necessary, desirable,
and vital to the operation of petitioners’ business; petitioners failed to present proof that
respondents were hired for a specit1c period or that their employment was coterminous with a
specific project; it is not clear from the contracts of employment presented that the completion or
termination of the project or undertaking was already determined at the time petitioners
engaged the services of respondents; respondents were made to work not only in one project
but also in different projects and were assigned to different departments of Herma Shipyard;
respondents were repeatedly and successively rehired as employees of Herma Shipyard;
except with regard to respondents’ last employment, petitioners failed to present proof that they
reported to the nearest public employment office the termination of respondents’ previous
employment or every time a project or a phase thereof had been completed; and, petitioners
failed to file as many reports of termination as there were shipbuilding and repair projects
actually completed. The CA concluded that the project employment contracts were indeed used
as a device to circumvent respondents’ right to security of tenure. The fallo of the assailed CA
Decision reads:

WHEREFORE, the instant petition for certiorari is GRANTED. The assailed decision
and resolution of the respondent National Labor Relations Commission are REVERSED
and SET ASIDE, and a new judgment is hereby rendered holding petitioners as regular
employees and declaring their dismissal as illegal. Accordingly, private respondents are
hereby ordered to REINSTATE petitioners to their former employment. Should
reinstatement be not possible due to strained relations, private respondents are ordered
to pay petitioners their separation pay equivalent to one-month pay or one-half-month
pay for very year of service, whichever is higher, with full backwages computed from the
time of dissmissal up to the finality of the decision. For this purpose, the case is hereby
REMANDED to the respondent NLRC for the computation of the amounts due
petitioners.

SO ORDERED.[12]

Petitioners moved for reconsideration. In a Resolution[13] dated August 30, 2013, however, the
CA denied their Motion for Reconsideration.[14]
Hence, this Petition for Review on Certiorari assailing the May 30, 20l3 Decision and August 30,
2013 Resolution of the CA, Petitioners anchor their Petition on the following arguments:

PREVAILING JURISPRUDENCE DICTATES THAT RESPONDENTS ARE

NOT REGULAR EMPLOYEES OF PETITIONER [HERMA SHIPYARD].
THEY ARE PROJECT EMPLOYEES WHOSE TERMS OF EMPLOYMENT
WERE VALIDLY TERMINATED UPON THE EXPIRATION OF THE TERM
OF THEIR PROJECT EMPLOYMENT CONTACTS.
B

THE ASSAILED DECISION AND ASSAILED RESOLUTION RULED ON

ISSUES WHICH WERE NEITHER DISPUTED IN RESPONDENTS’
PETITION FOR CERTIORARI NOR RAISED IN THE DECISION OF THE
HONORABLE [NLRC].
C

AS BORNE BY THE PROJECT EMPLOYMENT CONTRACTS OF

RESPONDENTS AND TERMINATION REPORTS SUBMITTED TO THE
DEPARTMENT OF LABOR AND EMPLOYMENT, RESPONDENTS ARE
UNDOUBTEDLY PROJECT EMPLOYEES OF PETITIONER [HERMA
SHIPYARD].
D

THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT

RESPONDENTS’ PETITION FOR CERTIORARI DID NOT RAISE AS AN
ISSUE THE ACTS COMMITTED BY THE HONORABLE [NLRC] WHICH
AMOUNTED TO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION.
E

BY VIRTUE OF THE DOCTRINE OF SEPARATE JURIDICAL

PERSONALITY, PETITIONER ESGUERRA SHOULD NOT BE HELD LIABLE
IN THE INSTANT LABOR COMPLAINT
F

THE HONORABLE COURT OF APPEALS FAILED TO GIVE WEIGHT AND

RESPECT TO THE FACTUAL FINDINGS OF THE HONORABLE NATIONAL
LABOR RELATIONS COMMISSION AND THE HONORABLE LABOR
ARBITER.
 G

THE HONORABLE COURT OF APPEALS DID NOT ACQUIRE

JURISDICTION OVER THE INSTANT CASE AS THE HONORABLE NLRC’S
DECISION AND RESOLUTION ALREADY BECAME EXECUTORY
CONSIDERING THAT RESPONDENTS’ PETITION FOR CERTIORARI WAS
FILED BEYOND THE REGLEMENTARY PERIOD PRESCRIBED BY THE
RULES.[15]
Petitioners contend, among others, that necessity and desirability of respondents’ services in
Herma Shipyard’s business are not the only factors to be considered in determining the nature
of respondents’ employment. They assert that the CA should have also taken into consideration
the contracts of employment signed by the respondents apprising them of the fact that their
services were engaged for a particular project only and that their employment was coterminous
therewith. The authenticity and genuineness of said contracts, according to petitioners, were
never disputed by the respondents during the pendency of the case before the labor tribunals. It
was only in their Comment[16] to the instant Petition that respondents disavow said contracts of
employment for allegedly being fictitious.

Petitioners aver that the CA also erred in ruling that the duration of respondents’ employment
depends upon a progress accomplishment as paragraph 10 of the employment contract readily
shows that the same is dependent upon the completion of the project indicated therein.

With regard to the repeated rehiring of the respondents, petitioners insist that the same will not
result in respondents becoming regular employees because length of service does not
determine employment status. What is controlling of project-based employment is whether the
employment has been fixed for a specific project or undertaking, its completion having been
determined and made known to the employees at the time of their engagement. Thus,
regardless of the number of projects for which respondents had been repeatedly hired, they
remained project-based employees because their engagements were limited to a particular
project only. Petitioners emphasize that Herma Shipyard merely accepts contracts for
shipbuilding and for repair of vessels. It is not engaged in the continuous production of vessels
for sale which would necessitate the hiring of a large number of permanent employees.

Respondents, for their part, deny having worked for a specific project or undertaking. They insist
that the employment contracts presented by petitioners purportedly showing that they were
project-based employees are fictitious designed to circumvent the law. In any case, said
contracts are not valid project employment contracts because the completion of the project had
not been determined therein or at the time of their engagement. In fact, the duration of their
contracts with Herma Shipyard may be extended as needed for the completion of various
projects and not for a definite duration. And even assuming that they were previously hired as
project employees, their employment ceased to be coterminous with a specific project and
became a regular after they were repeatedly rehired by the petitioners for various projects.

Our Ruling

The Petition is impressed with merit.

At the outset, the issue of whether petitioners were project-based employees is a question of
fact that, generally, cannot be passed and ruled upon by this Court in a petition for review
on certiorari filed under Rule 45 of the Rules of Court. It is settled that the jurisdiction of this
Court in a Rule 45 petition is generally limited to reviewing errors of law. Nevertheless, in view
of the opposing views of the tribunals below, this Court shall take cognizance of and resolve the
factual issues involved in this case.[17]

Who are project-based employees?

A project employee under Article 280 (now Article 294)[18] of the Labor Code, as amended, is
one whose employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee.
Thus:

Art, 280. Regular and Casual Employment. – The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of
the season.

x x x x (Emphasis supplied)

The services of project-based employees are co-terminous with the project and may be
terminated upon the end or completion of the project or a phase thereof for which they were
hired.[19] The principal test in determining whether particular employees were engaged as
project-based employees, as distinguished from regular employees, is whether they were
assigned to carry out a specific project or undertaking, the duration and scope of which was
specified at, and made known to them, at the time of their engagement.[20] It is crucial that the
employees were informed of their status as project employees at the time of hiring and that the
period of their employment must be knowingly and voluntarily agreed upon by the parties,
without any force, duress, or improper pressure being brought to bear upon the employees or
any other circumstances vitiating their consent.[21]

Respondents knowingly and voluntarily entered into and signed the project-based
employment contracts.

The records of this case reveal that for each and every project respondents were hired, they
were adequately informed of their employment status as project-based employees at least at
the time they signed their employment contract They were fully apprised of the nature and
scope of their work whenever they affixed their signature to their employment contract. Their
contracts of employment (mostly written in the vernacular) provide in no uncertain terms that
they were hired as project based employees whose services are coterminous with the
completion of the specific task indicated therein. All their contracts of employment state clearly
the date of the commencement of the specific task and the expected completion date thereof.
They also contain a provision expressly stating that respondents’ employment shall end upon
the arrival of the target completion date or upon the completion of such project. Except for the
underlined portions, the contracts of employment read:

KASUNDUAN NG PAGLILINGKOD
(PANG-PROYEKTONG KAWANI)

ALAMIN NG LAHAT NA:

HERMA SHIPYARD, INC., isang Korporasyon na itinatag at nananatili sa ilalim ng
batas ng Pilipinas at may tanggapan sa Herma Industrial Complex, Mariveles, Bataan
na kinakatawan [ni] EDUARDO S. CARANCIO ay makikilala bilang KUMPANYA;

OLIVEROS, CAMILO IBAÑEZ, sapat ang gulang, Pilipino, may asawa/walang asawa
na tubong _______, nainirahan sa BASECO Country Aqwawan, Mariveles, Bataan dito
ay makikilala bilang PANG-PROYEKTONG KAWANI;

NAGSASAYSAY NA:

NA, ang Kumpanya ay nangangailangan ng paglilingkod ng isang Ship Fitter

Class A sa panandaliang panahon at bilang pang suporta sa paggawa at
pagsasaayos ng proyekto para sa MT Masinop.
NA, ang PANG-PROYEKTONG KAWANI ay nagpapahayag ng kanyang kakayahan at
kagustuhang isagawa ang proyektong iniaalok ng KUMPANYA at handing tuparin ang
nasabing Gawain sa KUMPANYA sa ilaalim ng sumusunod na kondisyon;

Bilang pagkilala sa maga nasabing batayan, ang mga kinauukulang partido ay

nagkakasundo at nagtatakda ng mga sumusunod:

1) Ang KUMPANYA ay pumapayag na bayaran ang serbisyo ng PANG-PROYEKTONG KAWANI

bilang isang Ship Fitter Class A sa nasabing proyekto simula 4/1/2009 hanggang 4/30/2009 o sa
sandaling matapos ang nasabing gawain o anumang bahagi nito kung saan siya ay inupahan o
kung saan ang kanyang serbisyo ay kailangan at ang PANG-PROYEKTONG KAWANI ay
sumasang-ayon. Ang mga gawaing nabanggit sa kasunduang ito ay hindi pangkaraniwang
ginagawa ng KUMPANYA kundi para lamang sa itinakdang panahon o hanggang matapos ang
nasabing proyekto;

2) Ang KUMPANYA ay may karapatan na pawalang bisa o kanselahin ang kasunduang ito anomang
oras kung mapatutunayan na ang PANG-PROYEKTONG KAWANI ay walang kakayahan na
gawin ang naturang gawain kung saan siya ay inupahan nang naaayon sa pamantayan o sa
kagustuhan ng KUMPANYA o sa anumang dahilan na naaayon sa batas, kasama na rito ang
 paglabag ng PANG PROYEKTONG KAWANI sa mga alituntunin ng KUMPANYA;

3) Ang PANG-PROYEKTONG KAWANI ay sumasang-ayon na gampanan ang mga gawaing ito para
sa KUMPANYA buong katapatan at husay;

4) Ang PANG-PROYEKTONG KAWANI ay magtratrabaho ng walong (8) oras sa bawat araw ng

trabaho ayon sa oras na itinakda ng KUMPANYA at siya ay babayaran ng P405 (P397.00/basic +
8/ecola) bawat araw at ito ay kanyang matatanggap tuwing ika-labinlimang araw at katapusan ng
buwan na kanyang ipinagtrabaho. Ang PANGPROYEKTONG KAWANI ay hindi babayaran sa
rnga araw na hindi siya pumasok sa trabaho sa KUMPANYA;

5) Lahat ng kaalaman o impormasyon na maaaring mabatid ng PANGPROYEKTONG KAWANI

habang siya ay may kaugnayan sa KUMPANYA ay iingatan niya at hindi maaaring gamitin, ipasipi
o ipaalam sa kaninuman ng walang kaukulang pahintulot lalo na kung ito ay maaaring makapinsala
sa KUMPANYA;

6) Ang PANG-PROYEKTONG KAWANI ay nangangako na ibibigay ang kanyang panahon at buong

kakayahan para sa kapakanan ng KUMPANYA, tutugon sa lahat ng alituntunin ng KUMPANYA,
susunod sa utos ng mga namumuno na naaayon sa batas, at tatanggapin ang pananagutan sa lahat ng
kanyang mga galaw na maaaring makapinsala o makasakit sa kapwa kawani at sa ari-arian ng
KUMPANYA, ganun din ang kapakanan at ari-arian ng ibang tao;

7) Nababatid at nauunawaan ng bawat partido sa kasunduang ito na ang PANG-PROYEKTO

KAWANI ay hindi maituturing na pampirmihan or “regular” na kawani ano man at gaano man
katagal ang kanyang paglingkod sa Kumpanya. Sa ganitong kadahilanan, ang PANG-
PROYEKTO KAWANI ay hindi tatanggap ng karaniwang benepisyo na ipinagkakaloob sa
pampirmihan o “regular” na kawani; katulad ng bonuses, medical insurance, at retirement
benefits, maliban sa ilang benepisyo na pinagkakaloob ng batas.

8) Sa pagtupad ng mga nasabing gawa, nalalaman at inaasahan ng PANG-PROYEKTONG KAWANI

ang ilang kaakibat na peligro sa maayos na pagganap ng naturang rnga gawa. Alam ng PANG-
PROYEKTONG KAWANI na ang KUMPANYA ay walang kinalaman sa bagay na ito at hindi
dapat panagutin ukol dito;

9) Ang lahat ng mga nakasaad at nasusulat na mga kondisyon sa kasunduang ito ay nauunawaan at
 naiintindihan ng PANG-PROYEKTONG KAWANI;

10) Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring kailanganin
para sa matagumpay na pagtatapos ng mga gawa o proyektong pinagkasunduan;

BILANG SAKSI sa kasundang ito, ang mga partido ay lumagda ngayong ika-
1 ng Abril 2009 sa Mariveles, Bataan, Pilipinas;[22] (Emphases supplied)

There is no indication that respondents were coerced into signing their employment contracts or
that they affixed their signature thereto against their will. While they claim that they signed the
said contracts in order to securee continuous employment, they have not, however, presented
sufficient evidence to support the same other than their bare allegations. It is settled that
“[c]ontracts for project employment are valid under the law.”[23] Thus, in Jamias v. National Labor
Relations Commission,[24] this Court upheld the project employment contracts which were
knowingly and voluntarily signed by the employees for want of proof that the employers
employed force, intimidation, or fraudulently manipulated them into signing the same. Similarly
in this case, by voluntarily entering into the aforementioned project employment contracts,
respondents are deemed to have understood that their employment is coterminous with the
particular project indicated therein. They cannot expect to be employed continuously beyond the
completion of such project because a project employment terminates as soon as it is completed.

Performance by project-based employees of tasks necessary and desirable to the usual

business operation of the employer will not automatically result in their regularization.

ln disregarding the project employment contracts and ruling that respondents are regular
employees, the CA took into consideration that respondents were performing tasks necessary
and desirable to the business operation of Herma Shipyard and that they were repeatedly hired.
Thus:

[I]t is significant to note that even if the contract of employment indicates that
[respondents] were hired a project workers, they are still considered regular employees
on the ground that as welder, ship fitter, pipe fitter, expediter and helper, [respondents’]
services are all necessary, desirable and vital to the operation of the ship building and
repair business of [petitioners]. A confirmation of the necessity and desirability of their
services is the fact that [respondents] were continually and successively assigned to the
different projects of private respondents even after the completion of a particular project
to which they were previously assigned. On this score, it cannot be denied that
petitioners were regular employees.[25]

It is settled, however, that project-based employees may or may not be performing tasks usually
necessary or desirable in the usual business or trade of the employer. The fact that the job is
usually necessary or desirable in the business operation of the employer does not automatically
imply regular employment; neither does it impair the validity of the project employment contract
stipulating fixed duration of employment.[26] As this Court held in ALU-TUCP v. National Labor
Relations Commission:[27]

In the realm of business and industry, we note that ‘project’ could refer to one or the
other of at least two (2) distinguishable types of activities. Firstly, a project could refr to
a particular job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company. Such job or undertaking begins and ends at
determined or determinable times. The typical example of this first type of project is a
particulr construction job or project of a construction company. A construction company
ordinarily carries out two or more discrete identifiable construction projects: e.g., a
twenty-five storey hotel in Makati; a residential condominium building in Baguio City;
amd a domestic air terminal in Iloilo City. Employees who are hired for the carrying out
of one of these separate projects, the scope and duration of which has been determined
and made known to the employees at the time of employment, are properly treated as
‘project employees,’ and their services may be lawfully terminated at completion of the
project.

The term ‘project’ could also refer to, secondly, particular job or undertaking that is not
within the regular business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations of the
employer. The job or undertaking also begins and ends at determined or determinable
times.[28]

Here, a meticulous examination of the contracts of employment reveals that while the tasks
assignd to the respondents were indeed necessary and desirable in the usual business of
Herma Shipyard, the same were distinct, separate, and identifiable from the other projects or
contract services. Below is the summary of respondents’ employment contracts indicating the
positions they held, the specific projects for which they were hired, and the duration or expected
completion thereof:

Names Positions Projects Durations

1. Ricardo J. Pipe Fitter MT Masinop 03/18/09-03/31/09[29]

Ontolan Pipe Fitter 12mb_phase 3 09/15/08-12/20/08[30]
Pipe Fitter 12mb/Petrotrade 6 05/29/08-08/31/08[31]
Pipe Fitter Alcem Calaca 04/29/08-completion[32]
Pipe Fitter Hull 0102-phase 6 12/17/07-03/03/08[33]
Pipe Fitter Hull 0103 & Hull 0104-phase 1 09/11/07-12/11/07[34]

2. Robert T. Nario Welder 6G MT Masinop 03/18/09-03/31/09[35]

Welder 6G 12mb/Matikas/Red Dragon 06/02/08-07/31/08[36]
Welder 6GWelder 22mb/12mb/Galapagos/Petrotrade 03/04/08-
7/Ma Oliva/Solid 06/05/08[37]10/18/07-
 6G Sun/Hagonoy/Banga Uno/Bigaa 12/18/07[38]
Hull 0102-phase 5

3. Oscar J. Tirol Pipe Fitter Class B Red Dragon (installation of lube 01/16/09-02/15/09[39]
oil, diesel oil, air compressed line, 06/27/08-completion[40]
02/08/08[41]-02/08/08[42]
Pipe Fitter freshwater cooling, lavatory, sea
———– water pipe line)
MT Magino/MV Diana
Petrotrade 7/Solid Gold

4. Exequiel R. Leadman 12mb/Petrotrade 6 05/29/08-08/31/08[43]

Oliveria Leadman Red Dragon 04/29/08-05/31/08[44]
Leadman Hull 0102-phase 6 12/01/07[45]
Leadman Hull 0102-phase 5 03/03/08[46]
Leadman Hull 0102-phase 4 09/11/07-11/30/07[47]
06/07/07-08/27/07[48]

5. Arnel S. Sabal Leadman MT Masinop 03/18/09-03/31/09[49]

Leadman 12mb-phase 3 09/15/08[50]-12/20/08[51]
Leadman 12mb/Petrotrade 6 05/29/08-08/31/08[52]
LeadmanLeadman 22mb/12mb/Galapagos/Petrotrade 03/04/08-
Leadman 7/Ma Oliva/Solid 06/05/08[53]12/01/2007[54]-
Pipe Fitter Sun/Hagonoy/Banga Uno/Bigaa 3/03/08[55]
———- Hull 0102-phase 6 9/11/07-11/30/07[56]
Pipe Fitter Hull 0102-phase 5 6/13/07-09/04/07[57]
Pipe Fitter Hull 0102-phase 4 01/15/07-03/30/07[58]
Pipe Fitter Hull 0102-phase 2 01/08/07-completion[59]
Pipe Fitter Hull 0102 05/17/06-completion[60]
Pipe Fitter Petro Trade 8/EUN HEE 06/02/05[61]-06/25/05[62]
Pipe Fitter MT Angat 12/08/04-completion[63]
M/T Pandi 11/08/04-completion[64]
M/T Makisig 08/12/04[65]-09/13/04[66]
Petro Trade – 7

6. Segundo Q. ABS Welder 6G MT Masinop

13/18/09-03/31/09[67]
Labosta, Jr. ABS Welder 6G 12mb-phase 3
09/26/08-12/20/08[68]
ABS Welder 6G Petrotrade 6/12 mb
08/01/08-10/31/08[69]
ABS Welder 6G Cagayan de Oro/Petrotrade
16/01/08-07/31/08[70]
6/Plaridel

7. Jojit A. Besa Leadman – ABS MT Masinop 03/18/09-03/31/09[71]

6G 12mb/Barge Kwan Sing/Solid 01/16/09-03/14/09[72]
Leadman – ABS Pearl 10/10/08-12/20/08[73]
6G 12mb-phase 3 12/01/07-02/29/08[74]
Leadman – ABS Hull 0102-phase 6 06/07/07-08/29/07[75]
6G Hull 0102-phase 4 06/01/07-08/27/07[76]
ABS Welder 6G Hull 0102-phase 4 08/07/06-completion[77]
Pipe Welder MT Matilde/M/Tug Mira 04/15/06-completion[78]
Pipe Welder MT Marangal/MT Masikap/MT 03/01/06-completion[79]
 Pipe Fitter Maginoo/Petro Trade 8 11/03/05-
Pipe FitterPipe MV ST Ezekiel Moreno completion[80]05/31/05-
Fitter/Welder Pipe MT Plaridel/Monalinda 06/30/05
Fitter 95/Tug Boat Sea Lion 11/08/04-completion[81]
Pipe Fitter MT Angat/Banga Dos 10/18/04-completion[82]
Pipe Fitter M/T Makisig 9/17/04-one
Pipe Fitter M/T Baliuag Oceantique month/completion[83]
Pipe Fitter Pedro Trade-7 08/03/04-two
Petro Trade V/Guiguinto months/completion[84]
07/03/04-one
Pipe Fitter month/completion[85]
Pipe Fitter
Pipe Fitter

8. Camilo I. Ship Fitter MT Masinop 04/01/09-04/30/09[86]

Oliveros Class A Petrotrade 6/Plaridel/Red Dragon 06/03/08-09/10/08[87]
Leadman Hull 0102/0103 01/15/08-completion[88]
ABS Welder 6G Hull 0102-phase 5 09/11/07-12/04/07[89]
Welder Hull 0102-phase 4 06/06/07-08/28/07[90]
Hull 0102-phase 3 04/12/07-06/12/07[91]
Welder
Hull 0102-phase 2 01/24/07-03/30/07[92]
Welder 22 mb oil tanker 09/06/06-completion[93]
Welder
Ship Welder

9. Romeo I. Helper Modernization project – painting 01/24/07-01/28/07[94]

Trinidad Laborer of prod’n bldg. and overhead 09/10/07-12/10/07[95]
crane
Laborer Pin Jiq assembly, building table 04/23/07-05/31/07[96]
construction, painting of ex-
oxygen bldg, frabrication of
Electrician/Laborer 12/04/06-completion[97]
slipway railings
Ground level of main entrance
road & CHB wall
plastering/repair of warehouse no
1 for conversion to training bldg.
Construction of launchway and
perimeter fence

10. Ruben F. Leadman Red Dragon (water tight door 01/16/09-12/15/09[98]

Delgado Leadman installation, soft batch) 10/13/08-12/20/08[99]
Leadman Red Dragon 06/28/08-completion[100]
Ship Fitter MV Ma. Diana 05/30/07-08/26/07[101]
Ship Fitter Hull 0102-Phase 4 12/03/07-completion[102]
Ship Fitter 03/10/07-completion[103]
Thomas Cloma
02/01/07[104]-02/21/07[105]
MV Solid Jade/Construction of 01/09/07-completion[106]
Ship Fitter New Caisson Gate 12/18/06[107]-1/07/07[108]
Ship Fitter MT Hagonoy
Ship Fitter MT Mabiuag
MT Ma Xenia
11. Danilo I. Welder 3G & 4G MT Hagonoy/MT Masinop/MT
04/01/09-04/15/09[109]
Oliveros Welder 3G & 4G Matikas
03/20/09-03/31/09[110]
Welder 3G & 4G Hagonoy
09/25/08-12/20/08[111]
Welder 12mb-phase 3
07/01/08-09/30/08[112]
Welder 3G & 4G 12mb/Petrotrade 6
12/08/07-03/08/08[113]
Welder Hull 0102-phase 6
09/10/07-12/10/07[114]
Welder Hull 0102-phase 5
12/19/06-completion[115]
Hull 0102

12. Frederick C. Pipe Fitter Class C MT Masinop 02/06/09-02/28/09[116]

Catig Pipe Fitter Class C 12mb 01/08/09-01/31/09[117]
Helper 12mb-phase 3 19/15/08-completion[118]
Helper 12mb/Petrotrade 6 05/29/08-08/31/08[119]
Helper Hull 0102-phase 6 01/02/08-03/31/08[120]
Helper Hull 0102, Hull 0103, Hull 0104 10/01/07-12/31/07[121]
Helper Hull 0103 phase 1 07/25/07-09/31/07[122]
As shown aboverespondents were hired for various projects which are distinct, separate, and
identifiable from each other. The CA thus erred in immediately concluding that since
respondents were performing tasks necessary, desirable, and vital to Herma Shipyard’s
business operation, they are regular employees.

Repeated rehiring of project employees to different projects does not ipso facto make
them regular employees.

“[T]he repeated and successive rehiring [of respondents as project-based employees] does not
[also], by and of itself, qualify them as regular employees. Case law states that length of service
(through rehiring) is not the controlling detenninant of the employment tenure [of project-based
employees but, as earlier mentioned], whether the employment has been fixed for a specific
project or undertaking, with its completion having been determined at the time of [their]
engagement.”[123] Stated otherwise, the rule that employees initially hired on a tempormy basis
may become permanent employees by reason of their length of service is not applicable to
project-based employees. Our ruling in Villa v. National Labor Relations Commission[124] is
instructive on the matter, viz.:

Thus, the fact that petitioners worked for NSC under different project employment
contracts for several years cannot be made a basis to consider them as regular
employees, for they remain project employees regardless of the number of projects in
which they have worked. Length of service is not the controlling determinant of the
employment tenure of a project employee. In the case of Mercado Sr. v. NLRC, this
court ruled that the proviso in the second paragraph of Article 280, providing that an
employee who has served for at least one year, shall be considered a regular
employee, relates only to casual employees and not to project employees.

The rationale for the inapplicability of this rule to project-based employees was discussed
in Dacles v. Millenium Erectors Corporation,[125] to wit:
x x x While generally, length of service provides a fair yardstick for determining when an
employee initially hired on a temporary basis becomes a permanent one, entitled to the
security and benefits of regularization, this standard will not be fair, if applied to the
construction industry because construction firms cannot guarantee work and funding for
its payrolls beyond the life of each project as they have no control over the decisions
ard resources of project proponents or owners. Thus, once the project is completed it
would be unjust to require the employer to maintain these employees in their payroll
since this would be tantamount to making the employee a privileged retainer who
collects payment from his employer for work not done, and amounts to labor coddling at
the expense of management.[126]

Indeed, if we consider the nature of Herma Shipyard’s business, it is clear that Herma Shipyard
only hires workers when it has existing contracts for shipbuilding and repair. It is not engaged in
the business of building vessels for sale which would require it to continuously construct vessels
for its inventory and consequently hire a number of pemmnent employees. In Sandoval
Shipyards, Inc. v. National Labor Relations Commission[127] where therein petitioner was
engaged in a similar kind of business, this Court opined that:

It is significant to note that the corporation does not construct vessels for sale or
otherwise which will demand continuous productions of ships and will need permanent
or regular workers. It merely accepts contracts for shipbuilding or for repair of vessels
from the third parties and, only, on occasion when it has work contract of this nature that
it hires workers to do the job which, needless to say, lasts only for less than a year or
longer.[128]

The completion of their work or project automatically terminates their employment, in

which case, the employer is, under the law, only obliged to render a report on the
termination of the employment.

Hence, Herma Shipyard should be allowed “to reduce [its] work force into a number suited for
the remaining work to be done upon the completion or proximate accomplishment of [each
particular] project.”[129] As for respondents, since they were assigned to a project or a phase
thereof which begins and ends at determined or determinable times, their services were lawfully
terminated upon the completion of such project or phase thereof.[130]

Moreover, our examination of the records revealed other circumstances that convince us that
respondents were and remained project-based employees, albeit repeatedly rehired. Contrary
to their claim, respondents’ employment were neither continuous and uninterrupted nor for a
uniform period of one month; they were intermittent with varying durations, as well as gaps
ranging from a few days to several weeks or months. These gaps coincide with the completion
of a particular project and the start of a new specific and distinct project for which they were
individually rehired. And for each completed project, petitioners submitted the required
Establishment Employment Records to the DOLE which is a clear indicator of project
employment.[131] The records also show that respondents’ employment had never been extended
beyond the completion of each project or phase thereof for which they had been engaged.
The project employment contract is not subject to a condition.

The CA likewise erred in holding that paragraph 10 of the employment contract allowing the
extension of respondents’ employment violates the second requisite of project employment that
the completion or termination of such project or undertaking be determined at the time of
engagement of the employee. It reads:

10 Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring kailanganin
para sa matagumpay na pagtatapos ng mga gawa o proyektong pinagkasunduan;[132]

To our mind, paragraph 10 is in harmony with the agreement of the parties that respondents’
employment is coterminous with the particular project stated in their contract. It was placed
therein to ensure the successful completion of the specific work for which respondents were
hired. Thus, in case of delay or where said work is not finished within the estimated date of
completion, respondents’ period of emplqyrnent can be extended until it is completed. In which
casethe duration and nature of their employment remains the same as previously determined in
the project employment contract; it is still coterminous with the particular project for which they
were fully apprised of at the time of their engagement.

As to the requirement that the completion or termination of the specific project or undertaking or
which respondents were hired should be determined at the time of their engagement, we rule
and so hold that it is enough that Herma Shipyard gave the approximate or target completion
date in the project employment contract. Given the nature of its business and the scope of its
projects which take months or even years to finish, we cannot expect Herma Shipyard to give a
definite and exact completion date. It can only approximate or estimate the completion date.
What is important is that the respondents were apprised at the time of their engagement that
their employment is coterminous with the specific project and that should their employment be
extended by virtue of paragraph 10 the purpose of the extension is only to complete the same
specific project, and not to keep them employed even after the completion thereof. Put
differently, paragraph 10 does not allow the partis to extend the period of respondents’
employment after the completion of the specific project for which they were hired. Their
employment can only be extended if that particular project, to which their employment depends,
remains unfinished.

In sum, the CA erred in disregarding the project employment contracts and in concluding that
respondents have become regular employees because they were performing tasks necessary
and desirable to the business of Herma Shipyard and were repeatedly rehired. The Labor
Arbiter and the NLRC, which have expertise in their specific and specialized jurisdiction, did not
err, much less commit grave abuse of discretion in holding that respondents were project-based
employees. Their uniform conclusion is supported by substantial evidence and should,
therefore, be accorded not only respect, but even finality.

WHEREFORE, the instant Petition for Review on Certiorari is GRANTED. The assailed
Decision dated May 30, 2013 of the Court of Appeals in CA-G.R. SP No. 118068 is REVERSED
and SET ASIDE. The May 24, 2010 Decision of the Labor Arbiter dismissing respondents’
Complaint and affirmed by the National Labor Relations Commission in its Decision dated
September 7, 2010 is REINSTATED and AFFIRMED.
29 MAR 2017 | SUBJECT | CRIMINAL LAW | ART. 248 - MURDER |

People of the Philippines Vs. Tirso Sibbu; G.R. No. 214757; March 29, 2017

This resolves the appeal from the January 6, 2014 Decision[1] of the Court of Appeals (CA) in
CA-G.R. CR HC No. 04127 which affirmed with modification the May 15, 2009 Decision[2] of
Branch 11, Regional Trial Court (RTC) of Laoag City finding Tirso Sibbu (appellant) guilty
beyond reasonable doubt of attempted murder in Criminal Case No. 11722 and of murder in
Criminal Case Nos. 11721, 11723, and 11724.

In Criminal Case No. 11722, appellant, together with Benny Barid (Benny) and John Does
charged with attempted murder allegedly committed as follows:

That on or about the 6th day of December 2004, in Brgy. Elizabeth, Municipality of Marcos,
Province of Ilocos Norte, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, armed with an unlicensed firearm, conspiring and confederating
together and mutually helping one another, with intent to kill and treachery, did then and there
willfully, unlawfully, and feloniously shot BRYAN JULIAN y VILLANUEVA, twice but missed,
thereby commencing the commission of the crime of Murder directly by overt acts, but did not
perform all the acts of execution which should have produced the said crime, by reason of some
cause independent of his will, that is, accused are poor shooters, to the damage and prejudice
of the above-named victim.

That the crime was committed [in] the dwelling x x x of the victim at nighttime and disguise was
employed, with accused Sibbu wearing a bonnet on his face.[3]

In Criminal Case Nos. 11721, 11723 and 11724, and except for the names of the victims and
the location of their gunshot wounds, appellant together with Benny and John Does, was
charged with murder in three similarly worded Informations[4] allegedly committed as follows:

That on or about the 6th day of December 2004, in Brgy. Elizabeth, Municipality of Marcos,
Province of Ilocos Norte, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, armed with an unlicensed firearm, conspiring and confederating
together and mutually helping one another, with intent to kill and treachery, did then and there
willfully, unlawfully, and feloniously shot [Trisha May Julian y Villanueva, Ofelia Julian y
Bagudan, and Warlito Julian y Agustin], inflicting upon [her/him] gunshot wounds, which caused
[her/his] instantaneous death, to the damage and prejudice of the heirs of the above-named
victim.

That the crime was committed in the dwelling x x x of the victim at nighttime and disguise was
employed, with accused Sibbu wearing a bonnet on his face.

During arraignment held on July 22, 2005, appellant pleaded not guilty to the charges against
him. After pre-trial was conducted, trial on the merits followed. On May 31, 2008, appellant’s co-
accused Benny was arrested. However, his trial was held separately considering that the trial
with respect to the appellant was almost finished with the prosecution already presenting
rebuttal evidence.[5]
 Version of the Prosecution

Bryan Julian (Bryan), the private complainant in Criminal Case No. 11722 and a common
witness to all the cases, testified that between 6:30 and 7:00 p.m. of December 6, 2004, he was
with his three year old daughter, Trisha May Julian (Trisha), the victim in Criminal Case No.
11721; his mother Ofelia Julian (Ofelia), the victim in Criminal Case No. 11723; and his father,
Warlito Julian (Warlito), the victim in Criminal Case No. 11724 in the azotea of his parents’
house in Barangay Elizabeth, Marcos, Ilocos Norte when he saw from a distance of about five
meters a person in camouflage uniform with a long firearm slung across his chest and a black
bonnet over his head. When the armed man inched closer to the house, he tried to fix his
bonnet thereby providing Bryan the opportunity to see his face; Bryan had a clear look at the
armed man because there were Christmas lights hanging from the roof of their porch. Bryan
recognized the armed man as the appellant.[6] Bryan also saw two men in crouching position at
a distance of three meters away from the appellant. Fearing the worst, Bryan shouted a warning
to his family. Appellant then fired upon them killing Trisha, Ofelia and Warlito.

Bryan ran inside the house where he saw his brother, Warlito Julian, Jr. (Warlito Jr.) coming out
of the bathroom. Bryan then proceeded to the pigpen at the back of the house to hide.

Another prosecution witness, Eddie Bayudan (Eddie), testified that on December 6, 2004, he
was by a well near his house when he heard gunshots coming from the house of Warlito and
Ofelia. When he turned towards the direction of the gunshots, he saw a man about five meters
away wearing a black bonnet and a long-sleeved camouflage uniform and holding a long
firearm. He also saw another man crouching on the ground whom he recognized as the
accused Benny. Eddie went inside his house for his and his family’s safety. Afterwards, he
heard Bryan shouting for help. When he went out to investigate, he saw the dead bodies of
Warlito, Ofelia, and Trisha.

Warlito Jr. also testified that he heard gunshots coming from outside their house. When he went
out of the bathroom, Bryan told him that appellant gunned down their parents and his niece. In
his cross-examination, Warlito, Jr. claimed to have seen the appellant shooting at the porch of
their house.[7]

Police Superintendent Benjamin M. Lusad (P/Supt. Lusad), chief of the provincial intelligence
and investigation branch of Ilocos Norte, testified that at 7:00 a.m. of December 7, 2004, he
conducted an investigation and an ocular inspection at the crime scene. He found bloodstains
on the floor of the porch, the cadavers of the victims laid side by side in the sala, and bullet
holes in the cemented portion at the front of the house below the window grill.[8] During his
interview with Bryan, the latter pointed to appellant as the gunman.[9]

SPO1 Eugenio Navarro (SPO1 Navarro) also testified that he went to the crime scene together
with Senior Police Inspector Arnold Dada, PO2 Danny Ballesteros, and SPO1 Lester Daoang,
where they found 13 spent shells and slugs of a caliber .30 carbine. Police Superintendent
Philip Camti Pucay who conducted the ballistic examination confirmed that the recovered shells
and slugs were fired from a caliber .30 carbine.

Version of the Defense

The appellant interposed the defense of denial and alibi.

Appellant’s father-in-law, Eladio Ruiz (Eladio), testified that on December 6, 2004, appellant did
not leave their house because they had a visitor, Elpidio Alay (Elpidio); moreover, appellant
tended to his child. Eladio stated that the distance between his house and Warlito’s is
approximately two kilometers and that it would take an hour to negotiate the distance by
foot.[10]

Eufrecina Ruiz (Eufrecina), mother-in-law of the appellant, also testified that appellant had been
living with them for two years before he was arrested.[11] She narrated that on December 6,
2004, appellant did not leave their house the whole night as he was tending to his sick child.
She also claimed that they had a visitor who delivered firewood. Eufrecina alleged that appellant
did not own any firearm and that he did not know Benny.

Elpidio testified that on December 6, 2004, he went to the house of Eladio to deliver a wooden
divider.[12] He arrived at around 6:00 p.m. and left at 7:00 a.m. the following day. Elpidio stated
that the appellant did not leave the house that night and that appellant was inside the house
when he heard explosions.

Appellant denied the charges against him. He testified that on December 6, 2004, he never left
the house of his in-laws because he was taking care of his sick son. He claimed to have heard
the explosions but thought that those were sounds of firecrackers since it was nearing
Christmas.[13] Appellant denied having any misunderstanding with the Julian family, or knowing
Bryan and Benny personally, or possessing camouflage clothing.

Ruling of the Regional Trial Court

On May 15, 2009, the RTC rendered judgment finding appellant guilty beyond reasonable doubt
of murder in Criminal Case Nos. 11721, 11723, and 11724, and of attempted murder in Criminal
Case No. 11722. The RTC gave credence to Bryan’s positive identification of appellant as the
person who shot at him and killed his daughter, mother and father. On the other hand, the RTC
found appellant’s defense of denial and alibi weak.

The dispositive part of the RTC’s Decision reads:

WHEREFORE, judgment is hereby rendered as follows:

1) In Criminal Case No. 11721, accused TIRSO SIBBU is hereby declared GUILTY BEYOND
REASONABLE DOUBT of the crime of murder. He is hereby sentenced to suffer the penalty of
RECLUSION PERPETUA. Further, he is hereby ORDERED to pay the heirs of Trisha Mae
Julian y Villanueva the [amounts] of P50,000.00 as civil indemnity, P50,000.00 as moral
damages and P25,000.00 as exemplary damages;

2) In Criminal Case No. 11722, accused TIRSO SIBBU is hereby declared GUILTY BEYOND
REASONABLE DOUBT of the crime of attempted murder. He is hereby sentenced to suffer the
penalty of SIX (6) YEARS of prision correccional as minimum to TEN (10) YEARS of prision
mayor as maximum.

3) In Criminal Case No. 11723, accused TIRSO SIBBU is hereby declared GUILTY BEYOND
REASONABLE DOUBT of the crime of murder. He is hereby sentenced to suffer the penalty of
RECLUSION PERPETUA. Further, he is hereby ORDERED to pay the heirs of Ofelia Julian y
Bayudan the [amounts] of P50,000.00 as civil indemnity, P50,000.00 as moral damages and
P25,000.00 as exemplary damages; and

4) In Criminal Case No. 11724, accused TIRSO SIBBU is hereby declared GUILTY BEYOND
REASONABLE DOUBT of the crime of murder. He is hereby sentenced to suffer the penalty of
RECLUSION PERPETUA. Further, he is hereby ORDERED to pay the heirs of Warlito Julian y
Agustin the [amounts] of P50,000.00 as civil indemnity, P50,000.00 as moral damages and
P25,000.00 as exemplary damages.

In Criminal Case Nos. 11721, 11723 and 11724, accused TISO SIBBU is hereby ordered to pay
the heirs of Trisha Mae Julian y Villanueva; Ofelia Julian y Bayudan; and Warlito Julian y
Agustin the amount of P55,602.00 as actual damages.

SO ORDERED.[14]

Aggrieved by the RTC’s Decision, appellant appealed to the CA.

Ruling of the Court of Appeals

On January 6, 2014, the CA affirmed the RTC’s Decision with modification as follows:

WHEREFORE, in light of the foregoing discussion, the appeal is DISMISSED. The Decision
dated May 15, 2009, issued by the Regional Trial Court, Branch 11, Laoag City in Criminal Case
Nos. 11721, 11722, 11723 and 11724, is AFFIRMED with MODIFICATION, as follows:

1. In Criminal Case No. 11721, appellant Tirso Sibbu is hereby declared Guilty beyond
reasonable doubt of the crime of murder. He is hereby sentenced to suffer the penalty of
RECLUSION PERPETUA. Further, he is hereby ordered to pay the heirs of Trisha May Julian y
Villanueva the [amounts] of P75,000.00 as civil indemnity, P50,000.00 as moral damages and
P30,000.00 as exemplary damages, with interest at the legal rate of 6% percent from the finality
of this judgment until fully paid;

2. In Criminal Case No. 11723, appellant Tirso Sibbu is hereby declared Guilty beyond
reasonable doubt of the crime of murder. He is hereby sentenced to suffer the penalty of
RECLUSION PERPETUA. Further, he is hereby ordered to pay the heirs of Ofelia Julian y
Bayudan the [amounts] of P75,000.00 as civil indemnity, P50,000.00 as moral damages and
P30,000.00 as exemplary damages, with interest at the legal rate of 6% percent from the finality
of this judgment until fully paid; and
3. In Criminal Case No. 11724, appellant Tirso Sibbu is hereby declared Guilty beyond
reasonable doubt of the crime of murder. He is hereby sentenced to suffer the penalty of
RECLUSION PERPETUA. Further, he is hereby ordered to pay the heirs of Ofelia Julian y
Bayudan the [amounts] of P75,000.00 as civil indemnity, P50,000.00 as moral damages and
P30,000.00 as exemplary damages, with interest at the legal rate of 6% percent from the finality
of this judgment until fully paid.

No costs.

SO ORDERED.[15]

Dissatisfied with the CA’s Decision, appellant elevated his case to this Court. On February 9,
2015, the Court issued a Resolution requiring the parties to submit their respective
Supplemental Briefs. However, the appellant opted not to file a supplemental brief since he had
exhaustively discussed his arguments before the CA. The Office of the Solicitor General also
manifested that there was no longer any need to file a supplemental brief since the appellant did
not raise any new issue in his appeal before this Court.[16]

Issues

The main issue raised in the Appellant’s Brief concerns Bryan’s identification of the appellant as
the assailant. The appellant contends that the trial court erred in (1) giving undue credence to
the testimony of the alleged eyewitness Bryan; and (2) in finding him guilty beyond reasonable
doubt as charged because the prosecution failed to overthrow the constitutional presumption of
innocence in his favor.[17] Further, appellant argues that the aggravating circumstances of
treachery, dwelling, and use of disguise were not sufficiently established.

Our Ruling

The appeal is unmeritorious.

We uphold the findings of the RTC, which were affirmed by the CA, that Bryan positively
identified appellant as the person who shot at him and killed Warlito, Ofelia, and Trisha. We
have consistently ruled that factual findings of trial courts, especially when affirmed by the
appellate court, are entitled to respect and generally should not be disturbed on appeal unless
certain substantial facts were overlooked which, if considered, may affect the outcome of the
case. After due consideration of the records of the case and the evidence adduced, the Court
finds that the RTC and the CA did not err in their appreciation of the facts and evidence.

We find that Bryan was able to identify the appellant as the assailant in the shooting incident;
there is no reason to doubt his positive testimony. As aptly observed by the RTC, Bryan’s
narration of how he was able to recognize the appellant was credible and convincing, to wit:

q
You said somebody [shot] at you, your father, your mother, and your daughter while you were at
the azotea of the home of your father on December 6, 2004. Did you see the person who shot at
you, your father, your mother, and your daughter?
a
Yes, ma’am.

xxxx

q
How far was [the gunman] when you saw him at the west side?
a
Around five (5) meters away, ma’am.

q
What was his position at the time you first saw him?
a
He was at this position, ma’am. (Witness is showing as if a gun was slung on his neck) Then I
told my family, ”Somebody would shoot us, let us all run and hide,” and then he shot [at] me
twice, ma’am.

xxxx

q
How about [his] face x x x, can you x x x describe [it] to us?
a
When he came near us he fixed his bonnet which covered one eye only that is why I recognized
him; and even though his face was covered with [a] bonnet, I could still recognize him because I
usually mingled with him, ma’am.

xxxx

q
You said you were able to recognize his face because you were familiar with him. Who was that
person whom you recognized?
a
Tirso Sibbu, ma’am.
q
If this Tirso Sibbu is inside the courtroom today, would you be able to recognize him?
a
Yes, ma’am.
q
Kindly look around the courtroom and point to us if he is inside the courtroom?
a
(Witness is pointing to a man wearing a black T-shirt with blue denim pants who when asked his
name answered Tirso Sibbu)
q
You said you were able to recognize the face of this man Tirso Sibbu because you are familiar
with him? Can you tell us why you were familiar with him? What were the circumstances where
you mingled with him?
a
He was a jueteng collector and he came to our place three (3) times a day to get the bets,
ma’am.

xxxx

q
Considering, Mr. Witness, that it was already x x x 6:30 [to] 7:00 in the evening, how were you
able to see the face of Tiso Sibbu?
a
There was a light in front of the azotea, ma’am.
q
What was the light in your azotea you are referring to?
a
Christmas lights that were not blinking, ma’am.[18]

xxxx

q
Now, Mr. Witness, how far [was the accused when you first noticed his presence]?
a
More or less 5 meters, sir.

xxxx

q
By the way, that was the first time [you noticed the presence of] the accused. Was that in the
same place you saw him fire his gun?
a
He came nearer, sir.

xxxx

q
Now, Mr. Witness, [how did you recognize the accused]?
a
He fixed his bonnet [his] face was partly covered, sir.

xxxx

q
That bonnet x x x covered the face, is that correct?
a
Only one eye was covered so he fixed it sir.
q
And the whole face was covered except one eye, is that what you want to impress the
Honorable Court?
a
The hole that was meant for his left eye went at his right eye so he stretched the bonnet and his
face was uncovered that is why I recognized him, sir.
q
You said that his face was uncovered, are you referring, to the whole face that was uncovered?
a
Because of the stretching, the eyes and the nose were uncovered, sir.[19]
From Bryan’s testimony above, it is clear that he was only five meters away from the appellant
when the shooting incident happened. While the appellant was seen wearing a bonnet over his
head, Bryan was able to get a glimpse of appellant’s face when the latter fixed his bonnet. In
addition, Christmas lights hanging from the roof of the porch provided illumination enabling
Bryan to identify the appellant. Moreover, Bryan is familiar with the appellant’s built, height, and
body movements. As correctly pointed out by the CA:

It is equally of common knowledge that the eyes readily [adjust] to the surrounding darkness
even if one stands in a lighted area, and the distance of five meters is not an impossible or
improbable way as to preclude identification. Besides, Bryan’s identification did not solely rely
on facial recognition but also from appellant’s body built and height, and the way he walked and
moved, all proper standards of identification as corroborated in the testimony of an experienced
police officer and PMA graduate Police Superintendent Benjamin M. Lusad, chief of the
provincial intelligence and investigation unit of Ilocos Norte.[20]

Based on the foregoing, the Court is convinced that the RTC and the CA were correct in holding
that Bryan positively identified the appellant as the person who shot at him and killed Warlito,
Ofelia, and Trisha.

Appellant also questions the RTC’s appreciation of the aggravating circumstances of treachery,
dwelling, and use of disguise. Citing People v. Catbagan,[21] appellant argues that “[t]reachery
cannot be considered when there is no evidence that the accused had resolved to commit the
crime prior to the moment of the killing; or that the death of the victim was the result of
premeditation, calculation, or reflection.”

We disagree. Treachery was correctly appreciated as qualifying circumstance in the instant

case.

Treachery is present “when the offender commits any of the crimes against 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.”[22]

The case of Catbagan has an entirely different factual context with the case at bar. In Catbagan,
the accused was a police officer who investigated reported gunshots during an election gun ban
in the residence of one of the victims. Prior to the shooting, Catbagan had no intention of killing
anyone. It just so happened that during a heated exchange, Catbagan drew his firearm and shot
the victims. In this case however, before the shooting incident, appellant was seen with a gun
slung over his neck and a bonnet covered his face to conceal his identity. It is clear that
appellant’s purpose is to harm and kill his victims.
In this case, the evidence on record reveals that at the time of the shooting incident, Warlito,
Ofelia, Trisha, and Bryan were at the porch of their house totally unaware of the impending
attack. In addition, they were all unarmed thus unable to mount a defense in the event of an
attack. On the other hand, appellant and his cohorts were armed. They also surreptitiously
approached the residence of the victims. Appellant, in particular, wore camouflage uniform to
avoid detection. Although Bryan was able to warn his family about the impending attack, it was
too late for the victims to scamper for safety or to defend themselves. At the time Bryan became
aware of appellant’s presence, the latter was already in the vicinity of about five meters. In fine,
appellant employed deliberate means to ensure the accomplishment of his purpose of killing his
victims with minimal risk to his safety. There can be no other conclusion than that the
appellant’s attack was treacherous.

With regard to the aggravating circumstance of dwelling, the trial court correctly held:

In the instant cases, the victims were at their azotea in their house when accused Tirso Sibbu
fired shots at them. Tirso Sibbu was outside the house of the victims. Under these
circumstances, the aggravating circumstance of dwelling can be appreciated against Tirso
Sibbu. Thus, the Supreme Court ruled:

xxxx

The aggravating circumstance of dwelling should be taken into account. Although the
triggerman fired the shot from outside the house, his victim was inside. For this circumstance to
be considered it is not necessary that the accused should have actually entered the dwelling of
the victim to commit the offense; it is enough that the victim was attacked inside his own house,
although the assailant may have devised means to perpetrate the assault from without x x x.[23]

The use of disguise was likewise correctly appreciated as an aggravating circumstance in this
case. Bryan testified that the appellant covered his face with a bonnet during the shooting
incident. There could be no other possible purpose for wearing a bonnet over appellant’s face
but to conceal his identity, especially since Bryan and appellant live in the same barangay and
are familiar with each other.[24]

As for the defense put up by the appellant that he was inside the house of his in-laws during the
shooting, the Court is unconvinced by his denial and alibi. Aside from being the weakest of all
defenses, appellant was not able to establish that it was physically impossible for him to be at
the scene of the crime at the time the shooting incident happened. We have consistently ruled
that “for the defense of alibi to prosper, the accused must prove not only that he was at some
other place when the crime was committed, but also that it was physically impossible for him to
be at the scene of the crime or its immediate vicinity through clear and convincing
evidence.”[25]

In this case, the crime was committed in the residence of the victims which is located within the
same barangay where appellant resides. In fact, appellant’s father-in-law testified that the
distance between the crime scene and his house is “more or less 1 kilometer,”[26] or two
kilometers as he later amended and that said distance could be traversed in one hour by
foot.[27] Verily, appellant’s alibi must fail for failure to show that it was physically impossible for
him to be at the crime scene or its immediate vicinity at the time of its commission.
The Court also upholds appellant’s conviction for attempted murder. Appellant commenced the
commission of murder through overt acts such as firing his firearm at the residence of the
victims but did not perform all the acts of execution which should produce murder by reason of
some cause other than his own spontaneous desistance. Appellant simply missed his target; he
failed to perform all the acts of execution to kill Bryan. Appellant is therefore guilty of attempted
murder, Unfortunately, Warlito, Ofelia and Trisha had to bear the brunt of appellant’s firearm.

All told, appellant was correctly convicted of three counts of murder considering the qualifying
circumstance of treachery and one count of attempted murder. Since two aggravating
circumstances of dwelling and use of disguise attended the commission of the crime of murder,
appellant should be sentenced to death in accordance with Article 63[28] of the Revised Penal
Code. Under Article 248[29] of the Revised Penal Code, murder is punishable by reclusion
perpetua to death. Thus under Article 63, the higher penalty should be imposed. However,
because of the passage of Republic Act No. 9346, or An Act Prohibiting the Imposition of Death
Penalty in the Philippines, the imposition of death penalty is now prohibited. The law provides
that in lieu of the death penalty, the penalty of reclusion perpetua shall be imposed with no
eligibility for parole. Accordingly, appellant should suffer the penalty of reclusion perpetua
without eligibility for parole in lieu of the death penalty in Criminal Case Nos. 11721, 11723,
11724.

In People v. Jugueta,[30] the Court held that:

x x x [F]or crimes where the imposable penalty is death in view of the attendance of an ordinary
aggravating circumstance but due to the prohibition to impose the death penalty, the actual
penalty imposed is reclusion perpetua, the latest jurisprudence pegs the amount of P100,000.00
as civil indemnity and P100,000.00 as moral damages. For the qualifying aggravating
circumstance and/or the ordinary aggravating circumstances present, the amount of
P100,000.00 is awarded as exemplary damages aside from civil indemnity and moral damages.
Regardless of the attendance of qualifying aggravating circumstance, the exemplary damages
shall be fixed at P100,000.00. x x x

xxxx

Aside from those discussed earlier, the Court also awards temperate damages in certain cases.
x x x Under Article 2424 of the Civil Code, temperate damages may be recovered, as it cannot
be denied that the heirs of the victims suffered pecuniary loss although the exact amount was
not proved. In this case, the Court now increases the amount to be awarded as temperate
damages to P50,000.00.

xxxx

In summary:

l. For those crimes like, Murder, Parricide, Serious Intentional Mutilation, Infanticide, and other
crimes involving death of a victim where the penalty consists of indivisible penalties:

1.1 Where the penalty imposed is death but reduced to reclusion perpetua because of RA 9364:
Civil indemnity – P100,000.00
Moral damages – P100,000.00
Exemplary damages – P100,000.00
1.2 Where the crime committed was not consummated:

Frustrated:

Civil indemnity – P75,000.00

Moral damages – P75,000.00
Exemplary damages – P75,000.00

Attempted:

Civil indemnity – P50,000.00

Moral damages – P50,000.00
Exemplary damages – P50,000.00
Hence, in Criminal Case Nos. 11721, 11723 and 11724 where the appellant was convicted of
murder, the crime being attended by the qualifying circumstance of treachery and by the
aggravating circumstances of dwelling and disguise, we further modify the awards of civil
indemnity, moral damages, and exemplary damages to P100,000.00 each for each case.
Moreover, since the award of actual damages in the amount of P55,602.00 pertained to all three
cases, the same should be modified to P50,000.00 for each case.

In Criminal Case No. 11722 for attempted murder, the RTC as affirmed by the CA imposed the
penalty of six (6) years of prision correccional as minimum to ten (10) years as prision mayor as
maximum.

In People v. Jugueta,[31] the Court en banc held as follows:

In view of the attendant ordinary aggravating circumstance, the Court must modify the penalties
imposed on appellant. Murder is punishable by reclusion perpetua to death, thus, with an
ordinary aggravating circumstance of dwelling, the imposable penalty is death for each of two
(2) counts of murder. However, pursuant to Republic Act (RA) No. 9346, proscribing the
imposition of the death penalty, the penalty to be imposed on appellant should be reclusion
perpetua for each of the two (2) counts of murder without eligibility for parole. With regard to the
four (4) counts of attempted murder, the penalty prescribed for each count is prision mayor.
With one ordinary aggravating circumstance, the penalty should be imposed in its maximum
period. Applying the Indeterminate Sentence Law, the maximum penalty should be from two
(10) years and one (1) day to twelve (12) years of prision mayor, while the minimum shall be
taken from the penalty next lower in degree, i.e., prision correccional, in any of its periods, or
anywhere from six (6) months and one (1) day to six (6) years. This Court finds it apt to impose
on appellant the indeterminate penalty of four (4) years, two (2) months and one (1) day of
prision correccional, as minimum, to ten (10) years and one (1) day of prision mayor, as
minimum, for each of the four (4) counts of attempted murder. (Emphasis supplied)

Applying the foregoing, the proper imposable penalty for attempted murder and considering the
attendant aggravating circumstances of dwelling and disguise, is four (4) years, two (2) months
and one (1) day of prision correccional, as minimum, to ten (10) years and one (1) day of prision
mayor as maximum. In addition, appellant is liable to pay civil indemnity, moral damages, and
exemplary damages at P50,000.00 each. Finally, these monetary awards shall earn interest at
the rate of 6% per annum from the date of finality of this Decision until fully paid.

WHEREFORE, the January 6, 2014 Decision of the Court of Appeals in CA-G.R. CR-HC No.
04127 is AFFIRMED with FURTHER MODIFICATIONS as follows:

In Criminal Case No. 11721, appellant Tirso Sibbu is hereby declared guilty beyond reasonable
doubt of the crime of Murder. He is sentenced to suffer the penalty of reclusion perpetua with no
eligibility for parole. Further, he is ordered to pay the heirs of Trisha May Julian y Villanueva the
amounts of P100,000.00 as civil indemnity, P100,000.00, as moral damages, P100,000.00 as
exemplary damages, and P50,000.00 as temperate dmnages, all with interest at the rate of 6%
per annum from the date of finality of this Decision until fully paid.

In Criminal Case No. 11723, appellant Tirso Sibbu is hereby declared guilty beyond reasonable
doubt of the crime of Murder. He is sentenced to suffer the penalty of reclusion perpetua with no
eligibility for parole. Further, he is ordered to pay the heirs of Ofelia Julian y Bayudan the
amounts. of P100,000.00 as civil indemnity, P100,000.00 as moral damages, P100,000.00 as
exemplary damages, and P50,000.00 as temperate damages, all with interest at the rate of 6%
per annum from date of finality of this Decision until fully paid.

In Criminal Case No. 11724, appellant Tirso Sibbu is hereby declared guilty beyond reasonable
doubt of the crime of murder. He is sentenced to suffer the penalty of reclusion perpetua with no
eligibility for parole. Further, he is ordered to pay the heirs of Warlito Julian, Sr. y Agustin the
amounts of P100,000.00 as civil indemnity, P100,000.00 as moral damages, P100,000.00 as
exemplary damages, and P50,000.00 as temperate damages, all with interest at the rate of 6%
per annum from date of finality of this Decision until fully paid.

In Criminal Case No. 11722, appellant Tirso Sibbu is hereby declared guilty beyond reasonable
doubt of attempted murder and is sentenced to suffer the penalty of four (4) years, two (2)
months and one (1) day of prision correccional, as minimum, to ten (10) years and one (1) day
of prision mayor, as maximum, Further, he is ordered to pay Bryan Julian y Villanueva civil
indemnity, moral damages, and exemplary damages each in the amount of P50,000.00, with
interest at the rate of 6% per annum from the date of finality of this Decision until fully paid.

SO ORDERED.

29 MAR 2017 | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE
SUPREME COURT

Land Bank of the Philippines Vs. Sps. Esteban and Cresencia Chu; G.R. No. 192345; March 29, 2017

Petitioner Land Bank of the Philippines (LBP) is assailing the January 18, 2010 Decision[1] of
the Court of Appeals (CA) in CA G.R. SP No. 93518 over the amount of just compensation
awarded to respondents Esteban and Cresencia Chu, as well as its May 24, 2010 Resolution[2]
which denied LBP’s Motion for Reconsideration of the said Decision.

Factual Antecedents

Respondents were the registered owners of two parcels of agricultural land located in San
Antonio, Pilar, Sorsogon which were acquired by the government pursuant to its agrarian reform
program.[3] The first parcel of land covered by Transfer Certificate of Title (TCT) Nos. T-27060
and 27062 and with an area of 14.9493 hectares (14.9493 has.) was acquired under
Presidential Decree No. 27[4] (PD 27-acquired land) and initially valued by the LBP at
P177,657.98.[5] The second parcel of land covered by TCT No. T-27060 (pt.) was acquired
under Republic Act No. 6657[6] (RA 6657-acquired property) and has an area of 7.7118
hectares (7.7118 has.). LBP valued the same at P263,928.57.[7]

Respondents rejected LBP’s valuation; hence summary administrative proceedings were

conducted before the Provincial Agrarian Reform Adjudication Board (PARAD) to determine the
just compensation. The administrative proceedings were docketed as Land Valuation Case No.
LV-30-’03 for the RA 6657-acquired property and Land Valuation Case No. LV-48-’03 for the PD
27- acquired land.

Ruling of the Provincial Agrarian Reform Adjudicator

On April 11, 2003, the PARAD issued two separate Decisions[8] recomputing the valuations
arrived at by the LBP. The PARAD recomputed the value of the RA 6657-acquired property at
P1,542,360.00 (or P200,000.00/ha.) based on the comparable sales transaction of similar
nearby lots as well as Municipal Resolution No. 79, series of 2002, declaring Hacienda Chu as
industrial area. In addition, it considered the subject property’s good production, topography,
and accessibility. As regards the PD 27-acquired land, the PARAD valued the subject property
at P983,663.94 using the formula: Land Value= AGP x ASP x 2.5 (or Average Gross Production
of 75.2 x Actual Support Price of P350.00 x 2.5).

LBP’s Motion for Reconsideration was denied by the DARAB in its June 19, 2003 Order.[9]

Ruling of the Regional Trial Court (RTC) as Special Agrarian Court (SAC)

Dissatisfied, LBP filed a Petition for Determination of Just Compensation before the RTC of
Sorsogon City, Branch 52, docketed as Civil Case No. 2003- 7205.[10]

In its September 21, 2005 Decision,[11] the RTC fixed the just compensation at P2,313,478.00
for the RA 6657-acquired property and P1,155,173.00 for the PD 27-acquired land.[12]

In arriving at these amounts, the RTC took cognizance of the factors considered by the LBP and
the PARAD. In addition, it considered the “potentials” of the subject properties, to wit:

The Court considers the decision of the Provincial Adjudicator of Sorsogon, the testimony of the
witnesses presented by the Private Respondent namely the Secretary of the Sangguniang
Bayan and the Municipal Assessor of the Municipality of Pilar, Sorsogon who testified on the
Municipal Ordinance/Resolution specifically declaring x x x the land of the private respondents
including the subject landholding x x x is the subject [of] Municipal Expansion for Agri-Economic
Cum Industrial Area The Court also consider[ed] the applicable law and jurisprudence on the
matter in arriving [at] the just compensation of the subject property. The Court further
consider[ed] the present economic condition of the country as well as the present assessed
value of the acquired property. The subject property is very near the industrial center that was
planned by the local government thus transforming the area adjacent to the acquired property
into an economic hub of the province of Sorsogon partly thru industrial program, eco-tourism
development and agricultural productivity into an Agri-Economic Zone to serve as the backbone
of a comprehensive and sustainable program of community[;] thus it will provide enormous
livelihood opportunities and tremendous economic multiplier effect not only for residents of
barangay San Antonio (Sapa) but also for the entire citizenry of Pilar, Sorsogon.

According to the answer filed by the private respondents, the property is fully planted to coconut
(TCT-T-27060) and only more or less 20 meters away from the provincial road and is more or
less half [a] kilometer away from the barangay poblacion. These characteristics are likewise true
[for] TCT No. T-27062. That the area covered under P.D. 27 yields an average of 73 sacks of
clean palay per harvest while that covered under R.A. 6657 x x x yields an average of 10 nuts
per tree every 45 days at 110 fruit[-]bearing trees per hectare. For all the foregoing potentials of
the property, the Court not only took into consideration the amount of just compensation fixed by
the Provincial Adjudicator of Sorsogon but further took into account such potentials of the
acquired property which can command a price of not less than P100,000.00 per hectare. The
Provincial Adjudicator valued the 7.7118 hectares acquired under TCT No. T-27060 [at]
P1,542,360.00 under R.A. 6657 while that portion acquired inside the property titled under TCT
No. T-27062 [at] P983,663.94 under P.D. 27 and considering the potentials of the land in terms
of the enormous livelihood opportunities and tremendous economic multiplier effect not only for
the residents of [B]arangay San Antonio but also the entire municipality of Pilar, Sorsogon, the
Court further valued the acquired property in the amount of P100,000.00 per hectare. Adding
the value of the land in terms of the fair market value as determined by the Provincial
Adjudicator of Sorsogon, which includes the value of the actual production of the coconut trees
and the palay produced, to wit: P1,542,360.00 and P983,663.94 respectively and the potentials
of the property [at] P100,000.00 per hectare or the value of P771,118.00 for the 7.7118 hectares
and P171,510.00 for the 1.7151 hectares, we get the total of P2,313,478.00 as just
compensation for the 7.7118 hectares and the just compensation in the amount of
P1,155,173.94 for the 1.7151 hectares.[13]

The dispositive portion of the RTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Fixing the amount of TWO MILLION THREE HUNDRED THIRTEEN THOUSAND FOUR
HUNDRED SEVENTY EIGHT (P2,313,478.00)[14] Pesos, Philippine Currency for the
7.7118[15] hectares and the amount of ONE MILLION ONE HUNDRED FIFTY FIVE
THOUSAND AND ONE HUNDRED SEVENTY THREE (P1,155,173.00) Pesos, Philippine
currency for the 1.7151 hectares,[16] to be the just compensation of said acquired portions
which agricultural land are situated [in] San Antonio (Sapa) Pilar, Sorsogon, covered by TCT
No. T-27060 and TCT No. T-27062 in the name of the Sps. Esteban and Cresencia Chu, which
property was taken by the government pursuant to the Agrarian Reform Program provided by
R.A. 6657.

2) Ordering the Petitioner Land Bank of the Philippines to pay the Private Respondents the total
amount of just compensation in the sum of THREE MILLION FOUR HUNDRED SIXTY EIGHT
THOUSAND AND SIX HUNDRED FIFTY ONE (P3,468,651.00) Pesos, Philippine currency, in
the manner provided by R.A. No. 6657 by way of full payment of the said just compensation
after deducting whatever amount previously received by the Private Respondents from the
Petitioner Land Bank as part of the just compensation.

3) Ordering the Private Respondents to pay whatever deficiency in the docket fees to the Clerk
of Court based on the valuation fixed by the Court.

4) Without pronouncement as to cost.

SO ORDERED.[17]

LBP’s motion for reconsideration[18] was denied by the RTC in its Order[19] dated February 13,
2006.

Ruling of the Court of Appeals

On appeal, the CA modified the RTC’s ruling. The CA noted that the formula used by the
PARAD (i.e., LV= AGP x ASP x 2.5) in computing the valuation for the PD 27-acquired land is
correct. However, the amount used for the ASP, which is P350, is erroneous. According to the
CA, the mandated ASP in Executive Order No. 228[20] (EO 228) is only P35, not P350,
pursuant to our ruling in Gabatin v. Land Bank of the Philippines.[21] Moreover, the CA opined
that this formula remains applicable to PD 27-acquired lands notwithstanding the passage of RA
6657, citing as basis EO 229.[22] In addition, interest at the rate of 12% per annum must be
imposed to compensate for the delay. Accordingly, it upheld LBP’s valuation for the PD 27-
acquired land at P177,657.98 but awarded legal interest at the rate of 12% per annum.[23]

On the other hand, for the property acquired under RA 6657, the CA opined that Section 17
thereof, as well as Department of Agrarian Reform Administrative Order No. 5,[24] series of
1998 (DAR A.O. 05-98), must be considered in fixing just determination. As such, the formula to
be used is LV= (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) where LV is land value; CNI is capitalized
net income; CS is comparable sales; and, MV is market value per tax declaration. The
alternative formula of LV= (CNI x 0.9) + (MV x 0.1) may be used if the CS factor is not present.
The CA found that although the LBP used this formula, it, however, failed to consider the rising
values of the lands in Pilar, Sorsogon which resulted from the economic developments
mentioned in the municipal resolution and the current assessment of industrial lands in the area
– this, despite the fact that evidence was presented to show that comparable sales (the CS in
the formula) have gone up to at least P200,000.00 per hectare. Thus, it affirmed the estimate
that the RA 6657-acquired property may be priced at P200,000.00 per hectare as fixed by the
PARAD.[25]

The CA disposed of the case, thus:

IN VIEW OF TIIE FOREGOING, the RTC decision dated September 21, 2005 is modified in
that:

1) Just compensation for the PD 27-acquired property of 14.9 3 hectares shall be P177,657.98
with interest of 12 percent per annum from November 1994 until paid, and

2) Just compensation for the RA 6657-acquired property of 7.7118 hectares shall be computed
at P200,000 per hectare, or P1,542,360.

The petitioner is ordered to pay the respondents the amounts as set forth herein. All other
aspects of the decision stand.

SO ORDERED.[26]

The LBP filed a Motion for Reconsideration[27] which was denied by the appellate court in its
Resolution dated May 24, 2010.

Thus, the present Petition for Review on Certiorari.

Issues

The HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW WHEN:

A.

INSOFAR AS THE RA 6657-ACQUIRED LAND, IT DISREGARDED THE VALUATION

FACTORS UNDER SECTION 17 OF RA 6657 AND THE PERTINENT DAR ADMINISTRATIVE
ORDERS IN FIXING ITS VALUE AT P1,542,360.00.

B.

INSOFAR AS THE PD 27-ACQUIRED LAND, IT REFUSED TO REMAND THE INSTANT

CASE TO THE TRIAL COURT FOR A RECOMPUTATION OF ITS VALUE PURSUANT TO
SECTION 17 OF RA 6657, AS AMENDED.

C.

IT IMPOSED THE PAYMENT OF INTEREST AT 12% PER ANNUM ON THE VALUE OF THE
PD 27-ACQUIRED LAND.[28]

LBP’s Argument

The LBP posits that the appellate court improperly relied on extraneous factors, such as the
rising value of the lands in Pilar, Sorsogon, potentials of the subject property considering its
strategic location, livelihood opportunities and economic multiplier effect to the community, in
determining the just compensation for the subject properties. The LBP insists on the mandatory
application of RA 6657 vis-à-vis the formula provided in DAR A.O. No. 05-98.

Likewise, the LBP avers that the computation of the just compensation for the PD 27-acquired
land must be revised in view of the enactment of RA 9700.[29] In particular, Section 5 thereof
provides that all previously acquired lands, the valuation of which is subject to challenge by the
landowners, shall be completed and finally resolved pursuant to Section 17 of RA 6657, as
amended. LBP posits that the contested valuation of the PD 27-acquired land, should now be
computed in accordance with Section 17 of RA 6657, as amended; hence, the need to remand
the case to the RTC for a re-computation of its value.

Lastly, the LBP contends that the CA’s award of 12% interest per annum is without basis. It
posits that with the enactment of RA 9700 vis-à-vis RA 6657, interest should no longer be
imposed since the valuation of the PD 27-acquired land would no longer be pegged at 1972
prices but would be brought to current values pursuant to Section 5 of RA 9700 in relation to
Section 17 of RA 6657, as amended, vis-à-vis DAR A.O. Nos. 02-09[30] and 01-10.[31]

Respondents did not file a comment to the Petition and were deemed to have waived the filing
thereof.[32]

Our Ruling

We grant the Petition in part.

Only questions of law may be raised in

a Petition for Review Under Rule 45,
exceptions thereto

Under Rule 45 of the Rules of Court, only questions of law may be raised as this Court is not a
trier of facts; it is not our function to re-examine and weigh anew the evidence of the parties.
This Court shall examine or evaluate the evidence again only in the exercise of its discretion
and for compelling reasons,[33] as when the judgment is based on a misapprehension of facts
and when the findings of fact are conflicting.[34] Here, we find that the judgment arrived at by
the PARAD and the RTC, which rulings were subsequently affirmed in toto and with
modifications, respectively, by the CA, as to the RA 6657-acquired property, was to some extent
based on a misapprehension or erroneous appreciation of facts. As regards the PARAD’s and
the CA’s ruling, on one hand, and the RTC’s on the other, on the PD 27-acquired land, their
findings thereon are conflicting. Additionally, the PARAD’s and the CA’s reliance on PD 27 and
its implementing rules, which formed the basis of their respective Decisions, are now
inapplicable thereto.

RA 6657-acquired property

The LBP correctly argued that consideration of the valuation factors under Section 17 of RA
6657 and the formula under DAR A.O. No. 05-98[35] is mandatory in ascertaining just
compensation for purposes of agrarian reform cases. In Land Bank of the Philippines v.
Gonzalez,[36] we held that although the determination of just compensation is fundamentally a
judicial function vested in the RTC, the judge must still exercise his discretion within the bounds
of law. He ought to take into full consideration the factors specifically identified in RA 6657 and
its implementing rules, as contained under the pertinent Administrative Orders of the DAR, such
as DAR A.O. No. 05-98, which contains the basic formula of the factors enumerated under said
law. He may not disregard the procedure laid down therein because unless an administrative
order is declared invalid courts have no option but to apply it. Otherwise, the judge runs the risk
of violating the agrarian reform law should he choose not to use the formula laid down by the
DAR for the determination of just compensation. The Court reaffirmed this established
jurisprudential rule in Alfonso v. Land Bank of the Philippines[37] when it categorically gave “full
constitutional presumptive weight and credit to Section 17 of RA 6657, DAR AO No.5 (1998)
and the resulting DAR basic formulas.”[38]

The Court then made the following pronouncement:

For clarity, we restate the body of rules as follows: The factors listed under Section 17 of RA
6657 and its resulting formulas provide a uniform framework or structure for the computation of
just compensation which ensures that the amounts to be paid to affected landowners are not
arbitrary, absurd or even contradictory to the objectives of agrarian reform. Until and unless
declared invalid in a proper case, the DAR formulas partake of the nature of statutes, which
under the 2009 amendment became law itself, and thus have in their favor the presumption of
legality, such that courts shall consider, and not disregard, these formulas in the determination
of just compensation for properties covered by the CARP. When faced with situations which do
not warrant the formula’s strict application, courts may, in the exercise of their judicial discretion,
relax the formula’s application to fit the factual situations before them, subject only to condition
that they clearly explain in their Decision their reasons (as borne by the evidence on record) for
the deviation undertaken. It is thus entirely allowable for a court to allow a landowner’s claim for
an amount higher than what would otherwise have been offered (based on an application of the
formula) for as long as there is evidence on record sufficient to support the award.

xxxx

For the guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for
the DAR’s expertise as the concerned implementing agency, courts should henceforth consider
the factors stated in Section 17 of RA 6657, as amended, as translated into the applicable DAR
formulas in their determination of just compensation for the properties covered by the said law.
If, in the exercise of their judicial discretion, courts find that a strict application of said formulas is
not warranted under the specific circumstances of the case before them, they may deviate or
depart therefrom provided that this departure or deviation is supported by a reasoned
explanation grounded on the evidence on record. In other words, courts of law possess the
power to make a final determination of just compensation.[39]

Be that as it may, we cannot sustain LBP’s valuation of P263,928.57 as just compensation for
the RA 6657-acquired property for failure to substantiate the same.

In Land Bank of the Philippines v. Livioco,[40] we held that “in determining just compensation,
LBP must substantiate its valuation.” This pronouncement is a reiteration of our ruling in Land
Bank of the Philippines v. Luciano[41] that:
Clearly, Land Bank’s valuation of lands covered by CARL is considered only as an initial
determination, which is not conclusive, as it is the RTC, sitting as a [SAC], that should make the
final determination of just compensation, taking into consideration the factors enumerated in
Section 17 of RA 6657 and the applicable DAR regulations. Land Bank’s valuation had to be
substantiated during the hearing before it could be considered sufficient in accordance with
Section 17 of RA No. 6657 and DAR AO No. x x x (Emphasis supplied)

In this case, we hold that the LBP was not able to justify its valuation. Although the LBP
maintained that it stringently applied the pertinent law and its relevant implementing rules in
arriving at its computation, it failed to adduce sufficient evidence to prove the truthfulness or
correctness of its assertions. Its Formal Offer of Exhibits, and the reasons therefor, consisted
only of the following:

1) Exhibit A – Field Investigation Report for the 7.7118 hectares

– To prove that an actual investigation of the area subject matter of the case was conducted
and participated by the personnel of the Department of Agrarian Reform, Land Bank of the
Philippines and the representative of the Agrarian Reform Committee that will show the actual
condition of the property at the time of the voluntary offer of the landowner of her property to the
government;

2) Exhibit B – Market Value per Ocular Inspection for the 7.7118 hectares

– To prove where the location adjustment factor is taken which is used in the computation of
valuation

xxxx

4) Exhibit D – Claims Valuation and Processing Form for the 7.7118 hectares

– To show the detailed computation/valuation made on the properties subject matter of this case
under DAR Administrative Order No. 5, series of 1998 using the formula LV= (CNI x .90) + (MV
x .10)

– To show the date of receipt of LANDBANK of the claim folder from the Department of Agrarian
Reform which is used as the basis [in] determining the average price of the crops found in the
property at the time of the field investigation/ocular inspection

xxxx

7) Exhibit G – PCA Municipal Selling Price for Coconut (Sorsogon Province)

– T[o] show the average selling price of copra per kilo for the municipality of Pilar[,] Sorsogon for
the period October 2001 to September 2002 which is P9.97 per kilo.[42] (Emphasis supplied)
The LBP used the formula LV = (CNI x. 90) + (MV x .10). Concededly, it was able to sufficiently
establish the Capitalized Net Income (CNI) factor[43] of the formula. However, the same is not
true regarding the Market Value (MV) component thereof. While the CNI factor, as computed in
the Claims Valuation and Processing Form (Claims Form), finds support from and can be
adequately explained by a simple perusal of the documents forming part of the records of this
case,[44] the MV component, on the other hand, does not have any similar support and basis as
a thorough search of the records failed to produce the same.

The Claims Form, which the LBP insists embodies a detailed computation using the formula
earlier cited, did not reflect how the data and figures were arrived at and if they were indeed
correct. The LBP did not present any testimonial evidence before the RTC which could explain
or corroborate how it came up with the figures and what credence ought to be accorded to
them. All that the Claims Form showed is the LBP’s computation, and nothing more. As we held
in Land Bank of the Philippines v. Livioco,[45] “the computation in the Form may be
mathematically correct, but there is no way of knowing if the values or data used in the
computation are true.” For this reason we cannot uphold the LBP’s valuation. Besides, LBP’s
Formal Offer of Exhibits was admitted only when respondents failed to offer any objection. In
any case, even considering the absence of objection on the part of respondents, LBP must still
prove the basis and correctness of its computation. LBP miserably failed in this regard.

We cannot agree to the valuations fixed by the PARAD and the RTC, valuations that found their
way into rulings that were affirmed in toto and with modification by the CA, respectively. These
rulings were arrived at in clear disregard of the formula set forth under DAR A.O. No. 05-98. As
borne out by their respective Decisions, these tribunals considered only the Comparable Sales
(CS) factor to the exclusion of the other factors, namely, the CNI and MV.

Aggravating the situation, the CS factor was not determined pursuant to the guidelines laid
down in DAR A.O. No. 05-98. Respondents merely submitted a notarized Deed of Absolute
Sale between them and Wilson Tarog reflecting an amount of P200,000.00[46] per hectare. A
second notarized Deed of Voluntary Land Transfer executed between Rudy Balisalisa and
Abegail Sapanza was submitted fixing the amount per hectare at P241,462.00.[47] Additionally,
respondents proffered in evidence Municipal Resolution No. 79, Series of 2002,[48] declaring
the intent of Pilar, Sorsogon to develop Hacienda Chu as an agri-economic-industrial site in
accordance with its town expansion program. All of these, however, are irrelevant as DAR A.O.
No. 05-98 itself categorically enumerates the guidelines for determining the CS factor, thus:

C.1. The following rules shall be observed in the computation of CS:

a. As a general rule, there shall be at least three (3) Sales Transactions.

At least one comparable sales transaction must involve land whose area is at least ten percent
(10%) of the area being offered or acquired but in no case less than one hectare. The other
transaction/s should involve land whose area is/are at least one hectare each.

b. If there are more than three (3) STs available in the same barangay, all of them shall be
considered.
c. If there are less than three (3) STs available, the use of STs may be allowed only if AC and/or
MVM are/is present.

xxxx

C. 2. The criteria in the selection of the comparable sales transactions (ST) shall be as follows:

a. When the required number of STs is not available at the barangay level, additional STs may
be secured from the municipality where the land being offered/covered is situated to complete
the required three comparable STs. In case there are more STs available than what is required
at the municipal level, the most recent transactions shall be considered. The same rule shall
apply at the provincial level when no STs are available at the municipal level. In all cases, the
combination of STs sourced from the barangay, municipality and province shall not exceed
three transactions.

b. The land subject of acquisition as well as those subject of comparable sales transactions
should be similar in topography, land use, i.e., planted to the same crop. Furthermore, in case of
permanent crops, the subject properties should be more or less comparable in terms of their
stages of productivity and plant density.

c. The comparable sales transactions should have been executed within the period January 1,
1985 to June 15, 1988, and registered within the period January 1, 1985 to September 13,
1988.

d. STs shall be grossed up from the date of registration up to the date of receipt of CF by LBP
from DAR for processing, in accordance with Items II.A.9.

Respondents presented only two comparable sales transactions. This falls short of the
requirements of DAR A.O. No. 05-98.

The PARAD erroneously considered the municipal resolution as the third comparable sales
transaction when it noted and held that:

x x x And, last is a Municipal Resolution No. 79 Series of2002 declaring the entire Hacienda
Chu [in] San Antonio Sapa, Pilar, Sorsogon as Town Expansion and classified the same as an
Industrial Area (Annex “C”). That the subject property is very productive, with good location,
very near x x x the Poblacion, and, accessible by land and water x x x

It is a well-settled rule that in determining the valuation of the properties a comparable sale
transaction of similar nearby places is admissible in evidence x x x. Thus from the evidence
submitted by the landowner, the Board is convinced that the valuation by the Land Bank of the
Philippines is in fact unreasonable, considering that the subject property [has] good production,
topography and [is] accessible on both land and water. The Board however cannot grant the
prayer for Three Hundred Fifty Thousand Pesos per hectare considering that in comparable
sales transactions the Board can only grant the lowest among those presented as [evidence].
And, therefore the Board can only grant the amount of Two Hundred Thousand Pesos per
hectare (Annex A).[49] (Emphasis supplied)

The municipal resolution could not in any manner be regarded as a comparable sales
transaction precisely because no sale transaction ever took place. At best, the said resolution
merely manifested the formal intention of the local government of Pilar to acquire certain
portions of the subject properties.

Equally glaring is the fact that none of the tribunals below took into full consideration the factors
laid down in Section 17 of RA 6657 – a necessary requirement which no court of law is at liberty
to disregard if sound judicial discretion is to be exercised at all in determining just
compensation. Instead, this Court notes that the RTC, not to mention the CA, primarily took
account of an extraneous factor – potentials of the land – to justify the award of P200,000.00
per hectare. Discounting respondents’ evidence on the comparable sales transactions, the
potentials of the landholding may then be said to have become the main factor supporting the
valuation thereof. This conclusion is even borne out by the Decisions of the PARAD, the RTC,
and the CA whose discussions centered thereon. However, this Court has already reiterated in
Land Bank of the Philippines v. Livioco[50] that, such factor, standing alone, has already been
dismissed as improper basis for assessing the just compensation in the expropriation of
agricultural lands. Thus:

x x x While the potential use of an expropriated property is sometimes considered in cases

where there is a great improvement in the general vicinity of the expropriated property, it should
never control the determination of just compensation (which appears to be what the lower courts
have erroneously done). The potential use of a property should not be the principal criterion for
determining just compensation for this will be contrary to the well-settled doctrine that the fair
market value of an expropriated property is determined by its character and its price at the time
of taking, not its potential uses. If at all, the potential use of the property or its “adaptability for
conversion in the future is a factor, not the ultimate in determining just compensation.[51]
(Emphasis supplied)

Despite the foregoing, the PARAD, the RTC, and the CA, proceeded to rule in respondents’
favor on the basis of their evidence and, with meager evidence to support their
pronouncements, pegged the price of the RA 6657-acquired property at P200,000.00 and
P300,000.00, respectively, per hectare. We cannot uphold the same.

As may be gleaned from the above discussion, the respective evidence of both parties are
insufficient to enable this Court to come up with a correct computation on the just compensation
to which respondents are entitled. However, as this Court is not a trier of facts, this Court cannot
receive new evidence from the parties that would aid or assist it in the prompt resolution of this
case. Thus, this Court is constrained to remand the case to the RTC for the reception of
evidence and the determination of just compensation in accordance with our pronouncement in
Alfonso v. Land Bank of the Philippines.[52]

PD 27-acquired land
a.
Remand case to the RTC for determination of just compensation
b.
Award of interest
a. Remand case to the RTC for determination of just compensation

The appellate court also incorrectly ruled that the formula under EO 228 should be followed for
purposes of computing just compensation in relation to PD 27-acquired lands. Citing Land Bank
of the Philippines v. Imperial,[53] the CA held that the guidelines provided under PD 27 and EO
228 remained operative despite the passage of RA 6657 given that EO 229 states that PD 27
shall continue to operate with respect to rice and corn lands.

In a number of cases, such as Land Bank of the Philippines v. Hon. Natividad,[54] Lubrica v.
Land Bank of the Philippines,[55] Land Bank of the Philippines v. Gallego, Jr.,[56] Land Bank of
the Philippines v. Heirs of Maximo and Gloria Puyat,[57] and Land Bank of the Philippines v.
Santiago, Jr.,[58] we definitively ruled that when the agrarian reform process is still incomplete
as the just compensation due the landowner has yet to be settled, just compensation should be
determined, and the process concluded, under Section 17 of RA 6657, which contains the
specific factors to be considered in ascertaining just compensation, viz.:

SECTION 17. Determination of Just Compensation. —

In determining just compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the owner, the tax
declarations, the assessment made by government assessors shall be considered. The social
and economic benefits contributed by the farmers and the farmworkers and by the Government
to the property as wel1 as the non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors to determine its
valuation.

In Land Bank of the Philippines v. Gallego, Jr.,[59] we explained that:

The Court has already ruled on the applicability of agrarian laws, namely, P.D. No. 27/E.O. No.
228 in relation to Republic Act (R.A.) No. 6657, in prior cases concerning just compensation.

In Paris v. Alfeche, the Court held that the provisions of R.A. No. 6657 are also applicable to the
agrarian reform process of lands placed under the coverage of P.D. No. 27/E.O. No. 228, which
has not been completed upon the effectivity of R.A. No. 6657. Citing Land Bank of the
Philippines v. Court of Appeals, the Court in Paris held that P.D. No. 27 and E.O. No.228 have
suppletory effect to R.A. No.6657, to wit:

We cannot see why Sec. 18 of RA [No.] 6657 should not apply to rice and com lands under PD
[No.] 27. Section 75 of RA [No.] 6657 clearly states that the provisions of PD [No.] 27 and EO
[No.] 228 shall only have a suppletory effect. Section 7 of the Act also provides –

Sec. 7. Priorities. The DAR, in coordination with the PARC shall plan and program the
acquisition and distribution of all agricultural lands through a period of (10) years from the
effectivity of this Act. Lands shall be acquired and distributed as follows:
Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private lands
voluntarily offered by the owners of agrarian reform; x x x and all other lands owned by the
government devoted to or suitable for agriculture, which shall be acquired and distributed
immediately upon the effectivity of this Act, with the implementation to be completed within a
period of not more than four (4) years x x x.

This eloquently demonstrates that RA (No.) 6657 includes PD [No.] 27 lands among the
properties which the DAR shall acquire and distribute to the landless. And to facilitate the
acquisition and distribution thereof, Secs.16, 17 and 18 of the Act should be adhered to. In
Association of Small Landowners of the Philippines v. Secretary of Agrarian Reform[,] this Court
applied the provisions (of) RA 6657 to rice and corn lands when it upheld the constitutionality of
the payment of just compensation for PD [No.] 27 lands through the different modes stated in
Sec. 18.

Particularly, in Land Bank of the Philippines v. Natividad, where the agrarian reform process in
said case “is still incomplete as the just compensation to be paid private respondents has yet to
be settled,” the Court held therein that just compensation should be determined and the process
concluded under R.A No. 6657.

The retroactive application of RA. No. 6657 is not only statutory but is also founded on equitable
considerations. In Lubrica v. Land Bank of the Philippines, the Court declared that it would be
highly inequitable on the part of the landowners therein to compute just compensation using the
values at the time of taking in 1972, and not at the time of payment, considering that the
government and the farmer-beneficiaries have already benefited from the land although
ownership thereof bas not yet been transferred in their names. The same equitable
consideration is applicable to the factual milieu of the instant case. The records show that
respondents’ property had been placed under the agrarian reform program in 1972 and had
already been distributed to the beneficiaries but respondents have yet to receive just
compensation due them. (Emphases supplied)

It bears stressing that while this case was pending, Congress enacted RA 9700 entitled “An Act
Strengthening the Comprehensive Agrarian Reform Program [CARP], Extending the Acquisition
and Distribution of All Agricultural Lands, Instituting Necessary Reforms, Amending for the
Purpose Certain Provisions of Republic Act No. 6657, Otherwise known as The Comprehensive
Agrarian Reform Law of 1988, as amended, and Appropriating Funds Therefor.”

Significantly, just as RA 6657 had so provided, RA 9700 also provides that it shall apply even to
PD 27-acquired lands, albeit those that are yet to be acquired and distributed by the DAR. It
likewise provided for further amendments to RA 6657, as amended, including Section 17
thereof, by including two new factors in the determination of just compensation, namely (a) the
value of the standing crop and (b) seventy percent (70%) of the zonal valuation of the Bureau of
Internal Revenue, translated into basic formula by the DAR, subject to the final decision of the
proper court.

Nevertheless, despite the enactment of RA 9700, we take the view that this case still falls within
the ambit of Section 17 of RA 6657, as amended. To emphasize, RA 9700 applies to
landholdings that are yet to be acquired and distributed by the DAR. In addition, RA 9700 itself
contains the qualification that “previously acquired lands wherein valuation is subject to
challenge,” such as the landholding subject of this case, “shall be completed and resolved
pursuant to Section 17 of RA 6657, as amended,”[60] thus:

Section 5. Section 7 of Republic Act No. 6657, as amended, is hereby further amended to read
as follows:

SEC. 7. Priorities. – The DAR, in coordination with the Presidential Agrarian Reform Council
(PARC) shall plan and program the final acquisition and distribution of all remaining unacquired
and undistributed agricultural lands from the effectivity of this Act until June 30, 2014. Lands
shall be acquired and distributed as follows:

Phase One: During the five (5)-year extension period hereafter all remaining lands above fifty
(50) hectares shall be covered for purposes of agrarian reform upon the effectivity of this Act. All
private agricultural lands of landowners with aggregate landholdings in excess of fifty (50)
hectares which have already been subjected to a notice of coverage issued on or before
December 10, 2008; rice and corn lands under Presidential Decree No. 27; all idle or
abandoned lands; all private lands voluntarily offered by the owners for agrarian reform:
Provided, That with respect to voluntary land transfer, only those submitted by June 30, 2009
shall be allowed Provided, further, That after June 30, 2009, the modes of acquisition shall be
limited to voluntary offer to sell and compulsory acquisition: Provided, furthermore, That all
previously acquired lands wherein valuation is subject to challenge by landowners shall be
completed and finally resolved pursuant to Section 17 of Republic Act No. 6657, as amended: x
x x (Emphases supplied.)

Our ruling further finds support in DAR A.O. No. 02-09, the implementing rules of RA 9700,
Chapter VI (Transitory Provision) of which specifically provides:

VI. Transitory Provision

With respect to cases where the Master List of ARBs has been finalized on or before July 1,
2009 pursuant to Administrative Order No.7, Series of 2003, the acquisition and distribution of
landholdings shall continue to be processed under the provisions of R.A No. 6657 prior to its
amendment by R.A. No. 9700.

However, with respect to land valuation, all Claim Folders received by LBP prior to July 1, 2009
shall be valued in accordance with Section 17 of R.A. No. 6657 prior to its amendment by R.A.
No. 9700. (Emphasis supplied)

From the foregoing, it is evident that DAR A.O. No. 02-09 requires that landholdings, the claim
folders of which had been received by LBP prior to July 1, 2009, be valued pursuant to the old
Section 17 of RA 6657, as amended,[61] or prior to its further amendment by RA 9700.

Here, the Claim Folder was received on November 27, 2002, as evidenced by the Memorandum
Request to Value the Land.[62] Hence, by express mandate of RA 9700 vis-à-vis DAR A.O. No,
02-09, Section 17 of RA 6657, as amended, shall apply for purposes of ascertaining just
compensation.
This pronouncement finds support in the Court’s ruling in Land Bank of the Philippines v.
Kho,[63] viz.:

Case law dictates that when the acquisition process under PD 27 is still incomplete, such as in
this case where the just compensation due to the landowner has yet to be settled, just
compensation should be determined and the process concluded under RA 6657, as amended.

For the purposes of determining just compensation, the fair market value of an expropriated
property is determined by its character and its price at the time of taking, or the time when the
landowner was deprived of the use and benefit of his property, such as when the title is
transferred in the name of the beneficiaries. In addition, the factors enumerated under Section
17 of RA 6657, as amended, i.e., (a) the acquisition cost of the land, (b) the current value of like
properties, (c) the nature and actual use of the property, and the income therefrom, (d) the
owner’s sworn valuation, (e) the tax declarations, (f) the assessment made by government
assessors, (g) the social and economic benefits contributed by the farmers and the
farmworkers, and by the government to the property, and (h) the nonpayment of taxes or loans
secured from any government financing institution on the said land, if any, must be equally
considered.

However, it bears pointing out that while Congress passed RA 9700 on August 7, 2009, further
amending certain provisions of RA 6657, as amended, among them, Section 17, and declaring
‘[t]hat all previously acquired lands wherein valuation is subject to challenge by landowners shall
be completed and finally resolved pursuant to Section 17 of [RA 6657], as amended,’ DAR AO
2, series of 2009, which is the implementing rules of RA 9700, had clarified that the said law
shall not apply to claims/cases where the claim folders were received by the LBP prior to July 1,
2009. In such situation, just compensation shall be determined in accordance with Section 17 of
RA 6657, as amended, prior to its further amendment by RA 9700.

xxxx

It is significant to stress x x x that DAR AO 1, series of 2010 which was issued in line with
Section 31 of RA 9700 empowering the DAR to provide the necessary rules and regulations for
its implementation, became effective only subsequent to July 1, 2009. Consequently, it cannot
be applied in the determination of just compensation for the subject land where the claim folders
were undisputedly received by the LBP prior to July 1, 2009, and, as such, should be valued in
accordance with Section 17 of RA 6657 prior to its further amendment by RA 9700 pursuant to
the cut-off date set under DARAO 2, series of 2009 (cut-off rule). Notably, DAR AO 1, series of
2010 did not expressly or impliedly repeal the cut-off rule set under DAR AO 2, series of 2009,
having made no reference to any cut-off date with respect to land valuation for previously
acquired lands under PA 27 and EO 228 wherein valuation is subject to challenge by
landowners. Consequently, the application of DAR AO 1, series of 2010 should be, thus, limited
to those where the claim folders were received on or subsequent to July 1, 2009.

In this case, x x x [s]ince the claim folders were received by the LBP prior to July 1, 2009, the
RTC should have computed just compensation using pertinent DAR regulations applying
Section 17 of RA 6657 prior to its amendment by RA 9700 instead of adopting the new DAR
issuance, absent any cogent justifications otherwise. Therefore, as it stands, the RTC and the
CA were duty-bound to utilize the basic formula prescribed and laid down in pertinent DAR
regulations existing prior to the passage of RA 9700, to determine just compensation.

Nonetheless, the RTC, acting as a SAC, is reminded that it is not strictly bound by the different
[formulas] created by the DAR if the situations before it do not warrant their application. To insist
on a rigid application of the formula goes beyond the intent and spirit of the law, bearing in mind
that the valuation of property or the determination of just compensation is essentially a judicial
function which is vested with the courts, and not with administrative agencies. Therefore, the
RTC must still be able to reasonably exercise its judicial discretion in the evaluation of the
factors for just compensation, which cannot be restricted by a formula dictated by the DAR
when faced with situations that do not warrant its strict application. However, the RTC must
explain and justify in clear the reason for any deviation from the prescribed factors and formula.
(Emphasis in the original)

b. Award of interest

We also agree with the LBP’s stance that the award of compounded interest is not proper.

In Land Bank of the Philippines v. Spouses Chico,[64] we held that “when just compensation is
determined under R.A. No. 6657, no incremental, compounded interest of six percent (6%) per
annum shall be assessed x x x as the same applies only to lands taken under P.D. No. 27 and
E.O. No. 228, pursuant to DAR A.O. No. [13-94], x x x and not Sec. 26 of R.A. No. 6657 x x x.”

The rationale for this is explained in Land Bank of the Philippines v. Court of Appeals[65] to wit:
that DAR A.O. No. 13-94 aims to compensate the landowners for unearned interests because
had payment been made in 1972 when the GSP for rice was pegged at P35.00, and this
amount was deposited in a bank, it would have earned a compounded interest of 6% per
annum:

x x x Thus, if the PARAD used the 1972 GSP, then the product of (2.5 x AGP x P35 x x x) could
be multiplied by (1.06)n to determine the value of the land plus the additional 6% compounded
interest it would have earned from 1972. However, since the PARAD already increased the
GSP from P35.00 to P300.00/cavan of palay x x x, there is no more need to add any interest
thereon, much less compound it. To the extent that it granted 6% compounded interest to
private respondent Jose Pascual, the Court of Appeals erred.[66] (Emphasis supplied)

If upon remand of this case the LBP is found to be in delay in the payment of just compensation,
then it is bound to pay interest. In Land Bank of the Philippines v. Santiago, Jr.,[67] we ruled
that interest may be awarded in expropriation cases, particularly where delay attended the
payment of just compensation. There, we categorically stressed that the interest imposed in
case of delay in payments in agrarian cases is in the nature of damages for delay in payment
which, “in effect, makes the obligation on the part of the government one of forbearance.”[68]
Upon this point, nothing could be any clearer than our pronouncement in Land Bank of the
Philippines v. Santiago, Jr., thus:

Quoting Republic v. Court of Appeals this Court, in Land Bank of the Philippines v. Rivera, held:
The constitutional limitation of just compensation is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market
in the usual and ordinary course of legal action and competition or the fair value of the property
as between one who receives and one who desires to sell, if fixed at the time of the actual
taking by the government. Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final compensation must include
interest on its just value to be computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In fine, between the taking of the
property and actual payment, legal interests accrue in order to place the owner in a position as
good as (but not better than) the position he was in before the taking occurred.

xxxx

The Court, in Republic, recognized that the just compensation due to the landowners for their
expropriated property amounted to an effective forbearance on the part of the State. x x x[69]
(Emphases supplied)

Be that as it may, the LBP is bound to pay interest at 12% per annum “from the time of taking
until June 30, 2013. Thereafter, or beginning July 1, 2013, until fully paid, the just compensation
due the landowners shall earn interest at the new legal rate of 6% per annum x x x.[70] In Nacar
v. Gallery Frames,[71] citing Eastern Shipping Lines v. Court of Appeals[72] which has been
modified to reflect Bangko Sentral ng Pilipinas-Monetary Board Circular No. 799,[73] we held
that:

x x x [T]he guidelines laid down in the case of Eastern Shipping Lines are accordingly modified
to embody BSP-MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quai-delicts is breached, the contravenor can be held liable for damages. ‘The provisions under
Title XVIII on “Damages” of the Civil Code govern in determining the measure of recoverable
damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated
in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code. (Emphasis supplied)

Against the foregoing backdrop, a 12% interest per annum computed from the date of the taking
of the subject property until June 30, 2013, and 6% interest per annum from July 1, 2013 until
fully paid, on the just compensation to be ascertained by the RTC, shall be imposed although
not specifically prayed for by respondents. In Prince Transport, Inc. v. Garcia,[74] citing BPI
Family Bank v. Buenaventura,[75] we recognized that “the general prayer is broad enough to
justify [the grant] of a remedy different from or together with the specific remedy” sought.
Moreover, we stressed in Prince Transport, Inc. v. Garcia that even if a specific remedy is not
prayed for, we may confer on the party the proper relief if the facts alleged in the complaint and
the evidence presented so warrant as “[t]he prayer in the complaint for other reliefs equitable
and just in the premises justifies the grant of a relief not otherwise specifically prayed for.”[76]
This is the situation here.

Guidelines in the remand of the case

The Court notes that the date of taking of both of respondents’ property cannot be reasonably
ascertained from the records of the case as neither the pleadings filed by the parties nor the
Decisions rendered by the lower tribunals contained any allegations nor findings thereon. Thus,
the Court hereby resolves to order the RTC to determine the date of taking – it being an
indispensable component of just compensation – of the subject landholdings. Accordingly, the
LBP may submit in evidence the Certificates of Land Ownership Award (for the RA 6657-
acquired property) and Emancipation Patents (for the PD 27-acquired land), which are
conclusive proof of actual taking of the properties, granted to the farmer-beneficiaries of said
lands. Alternatively, it may present the Notice of Coverage, Notice of Valuation, Letter of
Invitation to A Preliminary Conference and Notice of Acquisition issued by the DAR to confirm
symbolic compulsory taking of the RA 6657-acquired property.[77]

It bears emphasis that despite the enactment of RA 9700, the determination of just
compensation for both landholdings shall be pursuant to Section 17 of RA 6657, as amended, in
view of the qualifications imposed by RA 9700.

It must be reiterated too that the factors laid down in Section 17 of RA 6657, as amended, and
the formula as translated by the DAR in its implementing rules, are mandatory and may not be
disregarded by the RTC. Both parties are reminded that they ought to present evidence in
accordance with the requirements set forth in the relevant DAR issuances. For this reason, this
Court restates that even if the landowner fails to prove a higher amount as just compensation,
the LBP must substantiate its valuation and prove the correctness of its claims. Naturally, it
behooves the LBP to present clear and convincing documentary and, if necessary, testimonial,
evidence to justify its valuation and how this was arrived at.

Moreover, as regards the RA 6657-acquired property, the RTC must be reminded that although
the potential use of an expropriated property may be factored in, especially in instances where
there is a significant improvement in the locality of the expropriated property, that factor,
however, should not be the controlling component in the determination of just compensation.
Otherwise, it will run afoul of the well-settled principle that the fair market value of an
expropriated property is determined essentially by its character and by its price at the time of
taking, not by its potential uses.

Finally, the RTC may not award compounded interest on the PD 27- acquired land, considering
that RA 6657, which is now applicable even to landholdings covered by PD 27, does not itself
expressly grant it; what is allowed is the grant of interest in the nature of delay in payment of just
compensation. Hence, the LBP is obliged to pay interest at 12% per annum from the date of
taking until June 30, 2013, and 6% per annum from July 1, 2013 until fully paid, in the event it is
found to be in delay in the payment of just compensation.
WHEREFORE, the Petition is hereby PARTLY GRANTED. The January 18, 2010 Decision and
May 24, 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 93518 are REVERSED
and SET ASIDE. Land Valuation Case Nos. LV-30-’03 and LV-48-’03 are hereby REMANDED
to the Regional Trial Court of Sorsogon City, Branch 52, for the determination of the just
compensation strictly in accordance with the guidelines set forth in this Decision.

27 MAR 2017 | SUBJECT | CRIMINAL LAW | ILLEGAL DRUGS |

In criminal prosecutions for the illegal sale and possession of shabu, primordial importance must
be given to “the preservation of the integrity and the evidentiary value of the seized items as
they will be used to determine the guilt or innocence of the accused.”[1]

This is an appeal from the June 23, 2011 Decision[2] of the Court of Appeals (CA) in CA-G.R.
CR-HC No. 00744 that affirmed in toto the April 12, 2007 Decision[3] of the Regional Trial Court
(RTC) of Guiuan, Eastern Samar, Branch 3, in Criminal Case Nos. 2079 and 2078, finding
Myrna Gayoso y Arguelles (appellant) guilty beyond reasonable doubt of violating Sections 5
(illegal sale of a dangerous drug) and 11 (illegal possession of a dangerous drug), Article II of
Republic Act (RA) No. 9165, respectively, and imposing upon her the penalty of life
imprisonment and a fine of P500,000.00 for selling shabu, and the indeterminate prison term of
eight (8) years and one (1) day, as minimum, to fourteen (14) years, eight (8) months and one
(1) day, as maximum, for possessing 0.53 gram of shabu.

Factual Antecedents

The Information in Criminal Case No. 2078 contained the following accusatory allegations
against appellant:

That on or about the 24th day of March, 2004, at about 5:30 o’clock in the morning at Jetty,
Brgy. Hollywood, Guian, Eastern Samar, Philippines, within the jurisdiction of this Honorable
Court, the abovementioned accused who acted without the necessary permit from proper
authorities whatsoever, did then and there willfully, unlawfully and feloniously have in her
possession, control and custody eleven (11) x x x sachets [containing] Methamphetamine
Hydrochloride commonly known as “shabu” weighing 0.53 [gram], a dangerous drug.

Contrary to law.[4]

The Information in Criminal Case No. 2079 charged appellant in the following manner:

That on or about the 24th day of March, 2004, at about 5:00 o’clock in the morning at Jetty,
Brgy. Hollywood, Guian, Eastern Samar, Philippines, within the jurisdiction of this Honorable
Court, the abovementioned accused who acted without the necessary permit or authority
whatsoever, did then and there willfully, unlawfully and criminally sell, deliver and dispense one
(1) pc. small heat sealed sachet of Methamphetamine Hydrochloride commonly known as
“shabu” weighing 0.06 [gram], a dangerous drug.

Contrary to law.[5]
During arraignment, appellant entered a plea of ”not guilty” in both cases. Joint trial then
ensued.

Version of the Prosecution

Based on the testimonies of SPO3 Victorino de Dios (SPO3 De Dios), SPO3 Rolando G.
Salamida (SPO3 Salamida), PO2 Rex Isip (PO2 Isip), SPO4 Josefina Bandoy (SPO4 Bandoy),
P/Insp. Eleazar Barber, Jr. (PI Barber), PS/Insp. Benjamin Cruto (PSI Cruto), and the
documentary exhibits, the following facts emerged:

PI Barber of the PNP[6] Guiuan Police Station directed SPO3 De Dios to conduct a surveillance
on appellant after receiving several reports that she was peddling prohibited drugs. Three
weeks later, SPO3 De Dios confirmed that appellant was indeed engaged in illegal drug
activities. PI Barber filed for and was issued a search warrant. However, prior to implementing
the search warrant, PI Barber decided to conduct a “confirmatory test-buy” designating SPO3
De Dios as poseur-buyer and giving him P200.00 marked money for the operation.

On March 24, 2004, SPO3 De Dios and a civilian asset proceeded to the house of appellant and
asked her if they could buy shabu. The sale was consummated when appellant took the marked
money from SPO3 De Dios after giving him a sachet of shabu. SPO3 De Dios immediately
informed PI Barber by text message about the successful “confirmatory test-buy”. PI Barber and
his team of police officers who were positioned 100 meters away rushed towards the house of
appellant. He also instructed SPO3 De Dios and the civilian asset to summon the Barangay
Chairman to witness the search of the house. When he arrived together with a kagawad and a
media representative, SPO3 Salamida read the search warrant to appellant.

During the search of the house, SPO4 Bandoy found a tin foil under the mattress. SPO3 De
Dios took it from SPO4 Bandoy and gave it to SPO3 Salamida who found seven sachets of
shabu inside, in addition to the four sachets of shabu found inside the right pocket of the short
pants of appellant. The search of the house also revealed several drug paraphernalia. An
inventory of seized items was prepared and the same was signed by the Barangay Chairman,
PO2 Isip, SPO4 Bandoy, and appellant. The sachets of shabu were brought to the Philippine
Drug Enforcement Agency (PDEA) then to the PNP Crime Laboratory for qualitative
examination. The results of the examination verified that the seized sachets contained shabu.

Version of Appellant

Appellant denied the charges against her. She claimed that on March 24, 2004, somebody
forcibly kicked the front door of her house and tried to break it open. When she opened the
door, PI Barber pushed her aside and told his companions to move quickly. They went directly
to her room; when PO2 Isip emerged therefrom seconds later, he was holding a substance that
looked like tawas. SPO3 De Dios and SPO3 Salamida went in and out of her house. She
maintained that the search warrant was shown to her only after an hour and that the sachets of
shabu were planted. She argued that the police officers fabricated the charges against her since
her family had a quarrel with a police officer named Rizalina Cuantero regarding the fence
separating their houses.
 The Ruling of the Regional Trial Court

The RTC found appellant guilty beyond reasonable doubt of illegal sale and illegal possession
of shabu. It declared that the prosecution ably established the elements of illegal sale and
possession of shabu through the testimonies of its witnesses who arrested appellant after
selling a sachet of the illegal drug in a “test-buy operation” and for possessing 11 sachets of the
same drug in her house after enforcing a search warrant immediately thereafter. Appellant had
no evidence that she had license or authority to possess the shabu.

The RTC ruled that the evidence sufficiently established the chain of custody of the sachets of
shabu from the time they were bought from appellant and/or seized from her house, to its
turnover to the PDEA and submission to the PNP Crime Laboratory for examination. The RTC
rejected appellant’s defense of denial and frame-up in view of her positive identification by
eyewitnesses as the criminal offender.

The RTC therefore sentenced appellant to life imprisonment and to pay a fine of P500,000.00
for the illegal sale of shabu. It also sentenced appellant to suffer the indeterminate prison term
of eight (8) years and one (1) day, as minimum to fourteen (14) years, eight (8) months and one
(1) day, as maximum and a fine of P300,000 for illegal possession of shabu.

From this judgment, appellant appealed to the CA. In her Brief,[7] she assailed the validity of the
search warrant claiming that it was not issued by the RTC upon determination of probable
cause. She argued that the “confirmatory test-buy” conducted by the poseur buyer and the
confidential asset was not valid since they forced her to engage in a drug sale. She maintained
that the shabu presented during trial was inadmissible in evidence due to several gaps in its
chain of custody.

The Office of the Solicitor General (OSG) filed its Brief for the Appellee[8] praying for the
affirmance of the appealed Decision. It argued that the evidence on which the RTC based its
determination of probable cause was sufficient for the issuance of the search warrant. It
asserted that the “‘test buy operation” was an entrapment and not an inducement. The OSG
maintained that the shabu confiscated from appellant was admissible in evidence since the
prosecution established the proper chain of custody.

The Ruling of the Court of Appeals

The CA affirmed in toto the RTC ruling finding appellant guilty of unauthorized sale and
possession of shabu. The CA ruled that all the elements for the sale of shabu were established
during the “test-buy operation”. It held that the illegal sale of shabu was proven by SPO3 De
Dios who participated in said operation as the designated poseur buyer. His offer to buy shabu
with marked money and appellant’s acceptance by delivering the illegal drug consummated the
offense. The CA likewise declared that the elements for possession of shabu were present in
the case against appellant. After appellant’s arrest for illegal sale of shabu, a valid search
resulted in the discovery of 11 sachets of shabu inside her house, which were under her
possession and control. She did not have legal authority to possess the same and failed to
overcome the presumption that she consciously knew she was in possession of the illegal drug
discovered in her home.
The CA noted that the examination by the trial judge established probable cause in issuing the
search warrant. The deposition of PO3 Salamida shows that he had personal knowledge of
appellant’s drug activities, and the same served as basis for the finding of probable cause for
the purpose of issuing a search warrant.

The CA was not swayed by appellant’s contention that the “test-buy operation” amounted to
instigation since it is settled jurisprudence that a ”decoy solicitation” is not tantamount to
inducement or instigation. The CA was also unconvinced by appellant’s claim that the proof
against her was inadmissible since the prosecution failed to show strict compliance with Section
21 of RA 9165 and its implementing rules on the custody and disposition of the evidence.

Appellant filed a Notice of Appeal.[9] On July 15, 2013,[10] the Court notified the parties to file
their supplemental briefs. However, appellant opted not to file a supplemental brief since she
had extensively argued her cause in her appellants’ brief.[11] For its part, the OSG manifested
that it would not file a supplemental brief since its appellee’s brief filed in the CA had already
discussed and refuted the arguments raised by appellant.[12]

Our Ruling

The RTC Issued A Search Warrant After

Finding Probable Cause

Appellant contends that there was no probable cause for the issuance of the search warrant.
She claims that PI Barber had no personal knowledge of her alleged drug dealings.

There is no merit in this contention.

Probable cause for a valid search warrant is defined “as such facts and circumstances which
would lead a reasonably discreet and prudent man to believe that an offense has been
committed, and that objects sought in connection with the offense are in the place sought to be
searched.”[13] The probable cause must be “determined personally by the judge, after
examination under oath or affirmation of the complainant and the witnesses he may produce,
and particularly describing the place to be searched and the persons or things to be seized.”[14]
Probable cause does not mean actual and positive cause, nor does it import absolute certainty.
The determination of the existence of probable cause is concerned only with the question of
whether the affiant has reasonable grounds to believe that the accused committed or is
committing the crime charged.[15]

Here, the records reveal that the trial court issued the search warrant after deposing two
witnesses, namely PI Barber and SPO3 Salamida. In particular, the deposition of SPO3
Salamida shows that he had personal knowledge of appellant’s drug pushing activities which
served as basis for the finding of probable cause for the issuance of the search warrant. Thus,
whether or not PI Barber had personal knowledge of the illegal drug activities committed by
appellant will not adversely affect the findings of probable cause for the purpose of issuance of
search warrant.
 Confirmatory test-buy solicitation does
not constitute instigation.

Appellant argues that the “confirmatory test-buy” by the police officers was not valid since she
was induced by the designated poseur buyer, SPO3 De Dios, and the confidential informant to
sell the seized shabu.

There is no merit in this argument.

In inducement or instigation —

the criminal intent originates in the mind of the instigator and the accused is lured into the
commission of the offense charged in order to prosecute him. The instigator practically induces
the would-be accused into the commission of the offense and himself becomes a co-principal.
[This is distinguished from entrapment wherein] ways and means are resorted to for the purpose
of capturing the lawbreaker in flagrante delicto.[16]

The “test-buy” operation conducted by the police officers is not prohibited by law. It does not
amount to instigation. As in this case, the solicitation of drugs from appellant by the poseur
buyer merely furnishes evidence of a course of conduct.[17] The police received an intelligence
report that appellant habitually deals with shabu. They designated a poseur buyer to confirm the
report by engaging in a drug transaction with appellant. There was no proof that the poseur
buyer induced appellant to sell illegal drugs to him.

Notwithstanding the foregoing disquisition, appellant still deserves an acquittal as will be

discussed below.

The chain of custody of evidence was not

established

Appellant impugns the prosecution’s failure to establish the charges of illegal sale and
possession of shabu against her due to the gaps in the chain of custody and the assailable
integrity of the evidence in view of non-compliance with Section 21, Article II of RA 9165.

There is merit in this protestation.

The offense of illegal sale of shabu has the following elements: “(1) the identities of the buyer
and the seller, the object and consideration of the sale; and (2) the delivery of the thing sold and
the payment therefor.”[18] On the other hand, the offense of illegal possession of shabu has the
following elements: “(1) the accused is in possession of an item or an object which is identified
to be a prohibited drug; (2) such possession is not authorized by law; and (3) the accused freely
and consciously possessed said drug.”[19] In the prosecution for illegal sale and possession of
shabu, there must be proof that these offenses were actually committed, coupled with the
presentation in court of evidence of corpus delicti.[20]
In both illegal sale and illegal possession of [shabu,] conviction cannot be sustained if there is a
persistent doubt on the identity of said drug. The identity of the [shabu] must be established with
moral certainty. Apart from showing that the elements of possession or sale are present, the fact
that the [shabu] illegally possessed and sold x x x is the same [shabu] offered in court as exhibit
must likewise be established with the same degree of certitude as that needed to sustain a
guilty verdict.[21]

“‘The chain of custody requirement performs this function in that it ensures that unnecessary
doubts concerning the identity of the evidence are removed.”[22]

Chain of custody is defined as “duly recorded authorized movements and custody of seized
drugs or controlled chemicals or plant sources of dangerous drugs or laboratory equipment of
each stage, from the time of seizure/confiscation to receipt in the forensic laboratory to
safekeeping, to presentation in court for destruction.”[23] In People v. Havana,[24] the Court
expounded on the custodial chain procedure in this wise:

As a method of authenticating evidence, the chain of custody rule requires that the admission of
an exhibit be preceded by evidence sufficient to support a finding that the matter in question is
what the proponent claims it to be. It would include testimony about every link in the chain, from
the moment the item was picked up to the time it is offered in evidence, in such a way that every
person who touched the exhibit would describe how and from whom it was received, where it
was and what happened to it while in the witness’ possession, the condition in which it was
received and the condition in which it was delivered to the next link in the chain. These
witnesses would then describe the precautions taken to ensure that there had been no change
in the condition of the item and no opportunity for someone not in the chain to have possession
of the same.

While the testimony about a perfect chain is not always the standard because it is almost
always impossible to obtain, an unbroken chain of custody becomes indispensable and
essential when the item of real evidence is not distinctive and is not readily identifiable, or when
its condition at the time of testing or trial is critical, or when a witness has failed to observe its
uniqueness. The same standard obtains in case the evidence is susceptible of alteration,
tampering, contamination and even substitution and exchange. In other words, the exhibit’s
level of susceptibility to fungibility, alteration or tampering -without regard to whether the same is
advertent or otherwise not – dictates the level of strictness in the application of the chain of
custody rule.

Thus, as a general rule, four links in the chain of custody of the confiscated item must be
established:

first, the seizure and marking, if practicable, of the illegal drug recovered from the accused by
the apprehending officer; second, the turnover of the illegal drug seized by the apprehending
officer to the investigating officer; third, the turnover by the investigating officer of the illegal drug
to the forensic chemist for laboratory examination; and fourth, the turnover and submission of
the marked illegal drug seized from the forensic chemist to the court.[25]

Marking is the placing by the arresting officer or the poseur-buyer of his/her initials and
signature on the items after they have been seized. It is the starting point in the custodial link. It
is vital that the seized items be marked immediately since the succeeding handlers thereof will
use the markings as reference.[26] The chain of custody rule also requires that the marking of
the seized contraband be done “(1) in the presence of the apprehended violator, and (2)
immediately upon confiscation.”[27]

In this case, the records do not show that the arresting officers marked the seized items with
their initials in the presence of appellant and immediately upon confiscation. While PO2 Isip
testified that the seized sachets of shabu were marked in the police station,[28] no evidence
was presented to show that the marking was accomplished in the presence of appellant.
Moreover, the author of the markings on said items was never identified. None of the police
officers admitted placing the markings. There was therefore a complete absence of evidence to
prove authorship of the markings.

While marking of the evidence is allowed in the nearest police station, this contemplates a case
of warrantless searches and seizures.[29] Here, the police officers secured a search warrant
prior to their operation. They therefore had sufficient time and opportunity to prepare for its
implementation. However, the police officers failed to mark immediately the plastic sachets of
shabu seized inside appellant’s house in spite of an Inventory of Property Seized that they
prepared while still inside the said house. The failure of the arresting officers to comply with the
marking of evidence immediately after confiscation constitutes the first gap in the chain of
custody.

The turnover of the seized shabu from the arresting officers to the investigating officer in the
police station constitutes the second link in the chain of custody. In this regard, the Court takes
note that the testimonies of the prosecution witnesses failed to identify the person to whom the
seized items were turned over at the police station. While SPO3 Salamida was identified as the
property custodian of the police station, this does not necessarily mean that he is also the
investigating officer. There is nothing in the records to substantiate this presumption. This total
want of evidence gains importance considering that none of the arresting officers presented as
witnesses identified the shabu presented during trial as the same shabu seized from appellant.
Thus, the second link in the chain of custody is missing.

The transfer of the seized shabu from the investigating officer to the forensic chemist in the
crime laboratory is the third link in the chain of custody. While the seized shabu was turned over
by PI Barber to the PDEA, he no longer had any personal knowledge of the manner it was
handled therein. He also did not identify the police officer in whose custody the seized sachets
of shabu were placed at the PDEA. He left it to the responsibility of the PDEA to forward the
seized shabu to the crime laboratory. The request for laboratory examination of the PDEA
identifies the police officer who delivered the seized shabu as a certain SPO1 Asis, but he was
not presented to testify that the shabu delivered to the crime laboratory was the same shabu
confiscated from appellant. There is a third break in the chain of custody.

Nothing also can be gained from the testimony of the forensic chemist PSI Cruto. His testimony
is not clear and positive since he failed to assert that the alleged packs of chemical substance
presented for laboratory examination and tested positive for shabu were the very same
substance allegedly recovered from appellant. His testimony was limited to the result of the
examination he conducted and not on the source of the substance.
From the foregoing, it appears that no chain of custody was established at all. What we have
here are individual links with breaks in-between which could not be seamlessly woven or tied
together. The so-called links in the chain of custody show that the seized shabu was not
handled properly starting from the actual seizure, to its turnover in the police station and the
PDEA, as well as its transfer to the crime laboratory for examination. The Court therefore cannot
conclude with moral certainty that the shabu confiscated from appellant was the same as that
presented tor laboratory examination and then presented in court.

It is indeed desirable that the chain of custody should be perfect and unbroken. In reality
however, this rarely occurs. The legal standard that must therefore be observed “is the
preservation of the integrity and the evidentiary value of the seized items as they will be used to
determine the guilt or innocence of the accused.”[30] Here, the Court finds that the
apprehending officers failed to properly preserve the integrity and evidentiary value of the
confiscated shabu. There are just too many breaks and gaps to the effect that a chain of
custody could not be established at all. Failure of the prosecution to offer testimony to establish
a substantially complete chain of custody of the shabu and the inappropriate manner of handling
the evidence prior to its offer in court diminishes the government’s chance of successfully
prosecuting a drug case.[31]

Aside from the failure of the prosecution to establish an unbroken chain of custody, another
procedural lapse casts further uncertainty on the identity and integrity of the subject shabu. This
refers to the non-compliance by the arresting officers with the most basic procedural safeguards
relative to the custody and disposition of the seized item under Section 21(1), Article II of RA
9165, which reads as follows:

SEC. 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered Dangerous
Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and Essential Chemicals,
Instruments/Paraphernalia and/or Laboratory Equipment. – The PDEA shall take charge and
have custody of all dangerous drugs, plant sources of dangerous drugs, controlled precursors
and essential chemicals, as well as instruments/paraphernalia and/or laboratory equipment so
confiscated, seized and/or surrendered, for proper disposition in the following manner:

(1) The apprehending team having initial custody and control of the drug shall, immediately after
seizure and confiscation, physically inventory and photograph the same in the presence of the
accused or the person/s from whom such items were confiscated and/or seized, or his/her
representative or counsel, a representative from the media and the Department of Justice
(DOJ), and any elected public official who shall be required to sign the copies of the inventory
and be given a copy thereof.

Corollarily, Section 21(a) of the Implementing Rules and Regulations provides as follows:

Section 21(a) The apprehending officer/team having initial custody and control of the drug shall,
immediately after seizure and confiscation, physically inventory and photograph the same in the
presence of the accused or the person/s from whom such items were confiscated and/or seized,
or his/her representative or counsel, a representative from the media, the Department of Justice
(DOJ), and a public official who shall be required to sign the copies of the inventory and be
given a copy thereof: Provided, that the physical inventory and photograph shall be conducted
at the place where the search warrant is served; or at the nearest office of the apprehending
officer/team, whichever is practicable, in case of warrantless seizures; Provided, further, that
non-compliance with these requirements under justifiable grounds, as long as the integrity and
the evidentiary value of the seized items are properly preserved by the apprehending
officer/team, shall not render void and invalid such seizure of and custody over said items.

In this case, the apprehending team never conducted a physical inventory of the seized items at
the place where the search warrant was served in the presence of a representative of the
Department of Justice, nor did it photograph the same in the presence of appellant after their
initial custody and control of said drug, and after immediately seizing and confiscating the same.
Neither was an explanation offered for such failure. While this directive of rigid compliance has
been tempered in certain cases, “such liberality, as stated in the Implementing Rules and
Regulations can be applied only when the evidentiary value and integrity of the illegal drug are
properly preserved.”[32] Such an exception does not obtain in this case. “Serious uncertainty is
generated on the identity of the [shabu] in view of the broken linkages in the chain of custody.
[Thus,] the presumption of regularity in the performance of official duty accorded to the
[apprehending officers] by the courts below cannot arise.”[33]

WHEREFORE, the appeal is GRANTED. The Decision of the Court of Appeals in CA-G.R. CR-
HC No. 00744 dated June 23, 2011 is REVERSED and SET ASIDE. Appellant Myrna Gayoso y
Arguelles is hereby ACQUITTED of the charges, her guilt not having been established beyond
reasonable doubt.

The Superintendent for the Correctional Institute for Women is hereby ORDERED to
immediately RELEASE the appellant from custody, unless she is held for another lawful cause.

SO ORDERED.

22 MAR 2017 | SUBJECT | CRIMINAL LAW | ILLEGAL GAMBLING | SUBJECT | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

The Constitution guarantees the right of the people to be secure in their persons, houses,
papers, and effects against unreasonable searches and seizures of whatever nature and for any
purpose.[1] A mere tip from an unnamed informant does not vest police officers with the
authority to barge into private homes without first securing a valid warrant of arrest or search
warrant. While there are instances where arrests and searches may be made without a warrant,
the Court finds that the constitutionally-protected right against unreasonable searches and
seizures was violated in the case at bar.

This Petition for Review under Rule 45 of the Rules of Court seeks to set aside the June 13,
2011 Decision[2] of the Court of Appeals (CA) in CA-G.R. CR No. 30457 which affirmed the
October 25, 2006 Judgment[3] of the Regional Trial Court (RTC), Branch 43 of Virac,
Catanduanes in Criminal Case Nos. 3463 and 3464, convicting both petitioners for Violation of
Presidential Decree (PD) No. 1602 as amended by Republic Act (RA) No. 9287, otherwise
known as “An Act Increasing the Penalties for Illegal Numbers Games Amending Certain
Provisions of PD 1602 and for Other Purposes.” Petitioner Martin T. Villamor (Villamor) was
convicted as a collector of bets in the illegal numbers game of “lotteng” under Section 3(c) of RA
9287, while petitioner Victor G. Bonaobra (Bonaobra) was convicted as a coordinator, controller,
or supervisor under Section 3(d) of the said law. The RTC sentenced Villamor to suffer the
penalty of imprisonment from eight (8) years and one (1) day as minimum to nine (9) years as
maximum, while Bonaobra was sentenced to suffer the penalty of imprisonment of ten (10)
years and one (1) day as minimum to eleven (11) years as maximum.

Factual Antecedents

Villamor was charged with violation of Section 3(c) of RA 9287 for collecting and soliciting bets
for an illegal numbers game locally known as “lotteng” and possessing a list of various numbers,
a calculator, a cellphone, and cash. The charge stemmed from the following Information:[4]

That on or about the 17th day of June 2005 in the morning, in barangay Francia, municipality of
Virac, province of Catanduanes, Philippines, within the jurisdiction of this Honorable Court the
said accused with intent [to] gain thru illegal means did then and there, [willfully], unlawfully and
feloniously engage, collect [and] solicit x x x bets for illegal numbers game locally known as
“Lotteng” by having in his possession [a] calculator, cellphone, [list] of various numbers and
money and lotteng paraphernalias.

CONTRARY TO LAW.

Another Information[5] was filed in the same court charging Bonaobra with violation of the same
law, committed as follows:

That on or about the 17th day of June 2005 in the morning, in barangay Francia, municipality of
Virac, province of Catanduanes, Philippines, within the jurisdiction of this Honorable Court the
said accused with intent [to] gain thru illegal means did then and there, [willfully], unlawfully and
feloniously maintain and operate illegal numbers game locally known as “lotteng” while in
possession of gambling paraphernalias, such as [a] calculator, cellphone, list of various
numbers and cash in the amount of P1,500.00 representing collection of bets.

CONTRARY TO LAW.

Petitioners filed their respective Motions for Reinvestigation, which were both granted by the
RTC. Subsequently, the Office of the Provincial Prosecutor issued separate Resolutions both
dated September 13, 2005 amending the Informations in both cases.

In the Amended Information, the phrase “acting as a collector” was included to charge Villamor
as a collector in an illegal numbers game. The Amended Information[6] provides:

That on or about the 17th day of June 2005 in the morning, in barangay Francia, municipality of
Virac, province of Catanduanes, Philippines, within the jurisdiction of this Honorable Court the
said accused acting as a collector with intent [to] gain thru illegal means[,] did then and there,
willfully, unlawfully and feloniously engage, collect and solicit bets for illegal numbers game
locally known as “Lotteng” by having in his possession [a] calculator, cellphone, [list] of various
numbers and money and lotteng paraphernalias.
CONTRARY TO LAW.

On the other hand, Bonaobra was charged as a manager or operator in the Amended
Information,[7] the incriminatory paragraph of which states:

That on or about the 17th day of June 2005 in the morning, in barangay Francia, municipality of
Virac, province of Catanduanes, Philippines, within the jurisdiction of this Honorable Court the
said accused acting as manager and operator with intent [to] gain thru illegal means did then
and there, [willfully], unlawfully and feloniously maintain and operate illegal numbers game
locally known as “lotteng” while in possession of gambling paraphernalia, such as [a] calculator,
cellphone, lists of various numbers and cash in the amount of P1,500.00 representing collection
of bets.

CONTRARY TO LAW.

When separately arraigned, Villamor, on October 4, 2005 and Bonaobra, on November 29,
2005, both pleaded not guilty to the respective charges filed against them. After the pre-trial
conference, a joint trial on the merits followed.

Version of the Prosecution

The prosecution presented four witnesses, namely: Domingo Tejerero (Tejerero), Provincial
Director, Police Superintendent Francisco Peñaflor (PD Peñaflor), SPO4 Severino Malasa, Jr.,
and PO1 David Adrian Saraspi (PO1 Saraspi). Culled from the records were the following facts:

On June 17, 2005, at around 9:00a.m., PD Peñaflor received a call from an informant regarding
an ongoing illegal numbers game at Barangay Francia, Virac, Catanduanes, specifically at the
residence of Bonaobra. A team composed of PD Peñaflor, Saraspi, PO1 Rolando Ami, a driver,
and a civilian asset proceeded to Bonaobra’s residence to confirm the report.

Upon arrival at the target area, the team parked their service vehicle outside the compound
fenced by bamboo slats installed two inches apart which allowed them to see the goings on
inside. According to the police officers, they saw petitioners in the act of counting bets,
described by the Bicol term “revisar,” which means collating and examining numbers placed in
“papelitos,” which are slips of paper containing bet numbers, and counting money bets.

When they entered the gate of the compound, they introduced themselves as police officers and
confiscated the items found on the table consisting of cash amounting to P1,500.00 in different
denominations, the “papelitos,” a calculator, a cellular phone, and a pen. Petitioners were then
brought to Camp Francisco Camacho where they were investigated for illegal gambling.
Subsequently, a case was filed against the petitioners before the Office of the Provincial
Prosecutor.

Version of the Defense

The defense presented six witnesses, namely Villamor, Bonaobra, Demetrio Bonaobra, the
brother of Bonaobra, Florencio Bonaobra (Florencio), the father of Bonaobra, Juan Vargas, and
Jonah Bonaobra (Jonah), the wife of Bonaobra. Their testimonies are summarized below.

On June 17, 2005, at around 8:30a.m., Villamor went to Bonaobra’s house to pay a debt he
owed to the latter’s wife, Jonah. At that time, Bonaobra was having coffee with his father
Florencio inside their house. Villamor gave Bonaobra P2,000.00 which the latter placed on top
of the table. Bonaobra then went outside the house to answer his cellphone. When Bonaobra
was at the door, a man later identified as PD Peñaflor kicked the fence of Bonaobra’s house,
grabbed Bonaobra’s right arm, and said, “Caught in the act ka!” Florencio went outside and
asked PD Peñaflor if he had a search warrant. Two more men entered the house and took the
money from the table. Petitioners were then made to board the service vehicle and brought in
for investigation at the police headquarters.

Ruling of the Regional Trial Court

On October 25, 2006, the RTC of Virac, Catanduanes, Branch 43 rendered its Judgment finding
petitioners guilty beyond reasonable doubt of committing illegal numbers game locally known as
”lotteng,” a variant of the game Last Two,[8] respectively as a collector or agent under Section
3(c), and as a coordinator, controller, or supervisor under Section 3(d), of RA 9287.

The RTC gave credence to the testimonies of the arresting officers and held that petitioners
were caught in flagrante delicto committing an illegal numbers game locally known as “lotteng,”
a variant of Last Two. The RTC held that petitioners were seen by the arresting officers in the
act of counting bets before the arrest was made inside Bonaobra’s compound. The petitioners
were also caught holding “papelitos,” which contained the three rows of two-number
combinations. Since the winning combination in “lotteng” is taken from the first two numbers of
the winning combinations in the daily draw of the lotto in the Philippine Charity Sweepstakes,
the RTC held that the number combinations shown in the “papelitos” were meant to correspond
to the lotto results.

The RTC further held that Villamor’s participation in the illegal numbers game was that of a
collector since he brought bet money to Bonaobra while the latter was that of a coordinator,
controller, or supervisor after it was shown that he received the money from Villamor.

The dispositive part of the Judgment of the RTC reads:

WHEREFORE, applying the Indeterminate Sentence Law, this Court hereby SENTENCES
Martin Villamor to suffer a penalty of imprisonment from eight (8) years and one (1) day as
minimum to nine (9) years as maximum, and Victor Bonaobra to suffer a penalty of ten (10)
years and one (1) day as minimum to e1even (11) years as maximum. Likewise, the money
amounting to P1,500.00 and the other personal properties used as gambling paraphernalia, like
the calculator, ballpen and cellular phone are confiscated in favor of the state.

SO ORDERED[9]

Ruling of the Court of Appeals

On June 13, 2011, the CA affirmed the RTC’s Decision. The CA brushed aside Bonaobra’s
argument that his right to due process was violated when he was convicted of a crime different
from that with which he was charged. The CA held that the classification of a maintainer,
manager, or operator includes a coordinator, controller or supervisor.[10] The CA ratiocinated
that to hold a maintainer guilty of the lesser offense of acting as a coordinator will not be
violative of his right to be informed of the nature and cause of his accusation since the graver
offense of acting as a maintainer necessarily includes being a coordinator.

With respect to Villamor, the CA gave more weight and credence to the testimonies of the
arresting officers who were presumed to have acted regularly in the performance of their official
functions. The CA held that Villamor’s denials cannot prevail over the positive assertions of the
police officers who caught him in the act of revising and counting bets.

The CA disposed the case as follows:

IN VIEW OF THE FOREGOING, the decision appealed from is affirmed.

SO ORDERED.[11]

Hence, this Petition.

Issue

The main issue in this case is whether the petitioners’ conviction for violation of RA 9287 as
collector or agent under Section 3(c) for Villamor, and as coordinator, controller, or supervisor
under Section 3(d) for Bonaobra, should be upheld.

Our Ruling

We find the Petition meritorious.

In criminal cases, an appeal throws the entire “case wide open for review and the reviewing
tribunal can correct errors, though unassigned in the appealed judgment, or even reverse the
trial court’s decision [based on] x x x grounds other than those that the parties raised as
errors.”[12]

The Court finds that the right of the petitioners against unreasonable searches and seizures was
violated by the arresting officers when they barged into Bonaobra’s compound without a valid
warrant of arrest or a search warrant. While there are exceptions to the rule requiring a warrant
for a valid search and seizure, none applies in the case at bar. Consequently, the evidence
obtained by the police officers is inadmissible against the petitioners, the same having been
obtained in violation of the said right.

Section 2, Article III of the 1987 Constitution requires a judicial warrant based on the existence
of probable cause before a search and an arrest may be effected by law enforcement agents.
Without the said warrant, a search or seizure becomes unreasonable within the context of the
Constitution and any evidence obtained on the occasion of such unreasonable search and
seizure shall be inadmissible in evidence for any purpose in any proceeding.[13] “Evidence
obtained and confiscated on the occasion of such an unreasonable search and seizure is
tainted and should be excluded for being the proverbial fruit of the poisonous tree.”[14]

In this case, the apprehending officers claim that petitioners were caught in flagrante delicto, or
caught in the act of committing an offense. PD Peñaflor and his team of police officers claim that
petitioners were committing the offense of illegal numbers game when they were arrested
without a warrant.

We are not persuaded.

Under Section 5 of Rule 113 of the Rules of Court, a lawful arrest may be effected even without
a warrant of arrest in the following instances:

Sec. 5. Arrest without warrant; when lawful. – A peace officer or a private person may, without a
warrant, arrest a person:

(a) When, in his presence, the person to be arrested has committed, is actually committing, or is
attempting to commit an offense;

(b) When an offense has in fact just been committed, and he has probable cause to believe
based on personal knowledge of facts or circumstances that the person to be arrested has
committed it; and

(c) When the person to be arrested is a prisoner who has escaped from a penal establishment
or place where he is serving final judgment or temporarily confined while his case is pending, or
has escaped while being transferred from one confinement to another.

In cases falling under paragraphs (a) and (b) above, the person arrested without a warrant shall
be forthwith delivered to the nearest police station or jail and shall be proceeded against in
accordance with Section 7 of Rule 112.

In warrantless arrests made pursuant to Section 5(a), Rule 113, two elements must concur,
namely “(a) the person to be arrested must execute an overt act indicating that he has just
committed, is actually committing, or is attempting to commit a crime; and (b) such overt act is
done in the presence or within the view of the arresting officer.”[15]

After a judicious review of the records of the case, the Court finds that there was no valid
warrantless arrest on petitioners. It was not properly established petitioners had just committed,
or were actually committing, or attempting to commit a crime and that said act or acts were done
in the presence of the arresting officers. Based on the testimonies of PO1 Saraspi and PD
Peñaflor, they were positioned some 15 to 20 meters away from petitioners. PO1 Saraspi’s
testimony during cross examination reveals the following:

ATTY. SAMONTE:
Q
While you were outside the compound of Bonaobra, what was your distance to accused Martin
Villamor and Victor Bonaobra?
A
More or less fifteen (15) to twenty (20) meters.

Q
Is it not that the compound of Bonaobra is surrounded with fence?
A
Yes, sir.

Q
Bamboo fence, right?
A
Yes, sir, without a gate.

Q
Are you sure it’s without a gate?
A
Probably it was open.

Q
Can you determine the height of the fence?
A
Between 5’7″ to 5’9”.

Q
More than your height?
A
Yes, sir.

Q
Can you tell us whether you can see what the person is doing inside the compound while you
are outside?
A
The fence is made up [sic] of bamboo and there were gaps as far as the fence is concerned that
is why when we alighted from the Frontier we saw what was inside the compound.

Q
And the space of each bamboo, can you determine [sic]?
A
One and half to two inches apart.

Q
When you were already outside the compound what were the accused doing?
A
They were sitting and they were revising.
Q
Were they seated with [sic] a table?
A
They were sitting and Victor Bonaobra was without a shirt.

Q
What were they holding?
A
‘Papelitos’.

Q
What else?
A
While they were holding ‘papelitos’ the monies were just on the table.

Q
At the distance of 15 to 10 meters can you determine the contents of the ‘papelitos’?
A
No, sir.

Q
So you are not sure whether those are gambling paraphelnalia?
A
No, sir.

Q
Because you do not know the contents of that and you are not sure whether those are gambling
paraphernalia you went inside, is that right?
A
After we introduced ourselves that we are [sic] police officers we entered the compound.

Q
Meaning to say you were outside the compound and saying you are policemen?
A
We entered first and we introduced ourselves.

Q
Which is first, going inside or introducing yourselves?
A
While entering we were also introducing ourselves simultaneously.

Q
When you reached inside, what did you determine?
A
We determined that there were lotteng paraphernalia on the table.
Q
That is the only time that you determined that those were gambling paraphernalia?
A
No, even on the [sic] outside we identified it already.

Q
A while ago you said at a distance of 15 to 10 meters you can determine whether they were in
possession of the illegal gambling paraphernalia?
A
What I am trying to say is that I cannot identify those that are written on the ‘papelitos’ at the
distance and I saw the calculator, the money bets.

Q
So what you saw within a distance of 15 to 10 meters are calculators, money and cellphone?
A
Yes, sir.

Q
Do you consider money gambling paraphernalia?
A
Yes, sir.

Q
So every time you see money you will consider that a gambling paraphernalia?
A
In other situations.

Q
How about calculator, do you consider calculator gambling paraphernalia?
A
Yes, sir.

Q
When you go to a department store there are calculators, do you consider those calculators
gambling paraphernalia?
A
If you are going to consolidate all these items in a table all of these are gambling paraphernalia.

Q
So when you consolidate these items and papers and calculators, if you see those items at
Century Trading, will you consider those as gambling paraphernalia?[16]
Considering that 15 to 20 meters is a significant distance between the police officers and the
petitioners, the Court finds it doubtful that the police officers were able to determine that a
criminal activity was ongoing to allow them to validly effect an in flagrante delicto warrantless
arrest and a search incidental to a warrantless arrest thereafter. The police officers even
admitted that the compound was surrounded by a bamboo fence 5’7″ to 5’9″ in height, which
made it harder to see what was happening inside the compound. It appears that the police
officers acted based solely on the information received from PD Peñaflor’s informant and not on
personal knowledge that a crime had just been committed, was actually being committed, or
was about to be committed in their presence. The Court finds it doubtful that the police officers
witnessed any overt act before entering the private home of Bonaobra immediately preceding
the arrest. PO1 Saraspi even admitted that from his position outside the compound, he could
not read the contents of the so-called “papelitos;” yet, upon seeing the calculator, phone, papers
and money on the table, he readily concluded the same to be gambling paraphernalias.

On the part of PD Peñaflor, he likewise admitted that from his position outside the compound,
he could not determine the activities of the persons inside. It was only after he had illegally
entered the compound, since he was not armed with a warrant, that he supposedly saw the
gambling paraphernalia. PD Peñaflor’s testimony in this regard is as follows:

Q
Can you tell the Honorable Court, Mr. Witness, the distance of the house of Victor Bonaobra to
that place where you parked your vehicle when you arrived in the vicinity?
A
When I parked my vehicle in front of the compound because that is a street, the distance from
the street to that place where there is an on-going ‘revisar’ of ‘lotteng’, more or less 15 to 20
meters, I believe, from the gate.

Q
So, you did not immediately go inside the compound of Victor Bonaobra?
A
Yes, sir. I verified first if there is really [sic] persons in the compound.

Q
So, at that distance of 15 to 20 meters, you were able to verify what they were doing on the
particular time, Mr. Witness?
A
No, sir.[17]
During his direct examination, Bonaobra testified that he was only answering his cellphone
when PD Peñaflor barged into his compound and arrested him. The relevant portions of his
testimony reveals the following:

ATTY SAMONTE:

Q
At around 9:00 a.m. of June 17, 2005, what were you doing if you still remember?
A
I stood up and I went out and made [sic] three steps from the door to answer the cellphone and
later on I was surprised when the police whom I could not identify, kicked the door.

Q
Mr. Witness, which door [are you] referring to [that] was kicked by the police?
A
A The gate outside of our fence.
xxxx

Q
You said a while ago that the policeman kicked the door of your fence x x x who was that
policeman, if you know him?
A
Provincial Director Peñaflor.

Q
Who was with PD Peñaflor on [sic] that particular time, if any, Mr. Witness?
A
Two (2) persons in civilian clothes.

xxxx

Q
After PD Peñaflor kicked the door of your fence, what happened next, Mr. Witness?
A
He held my hand and he seized my cellphone.

xxxx

Q
After PD Peñaflor seized your cellphone, what else did he do?
A
He said, “caught in the act.”

Q
Which comes first, Mr. Witness, the utterance made by PD Peñaflor that you were caught in the
act or the utterance made by your father whether they had a warrant?
A
When my father asked them whether they have a warrant.

Q
And what was the answer of PD Peñaflor when your father asked that question?
A
He said, “caught in the act.”

Q
And what was the reply of your father?
A
My father said that what you are doing is wrong, that is prohibited.

Q
And what did PD Peñaflor answered [sic] to your father?
A
He shouted at my father, “Di na kailangan yan”(That is not needed).[18]
From the circumstances above, it is highly suspect that PD Peñaflor had witnessed any overt
act indicating that the petitioners were actually committing a crime. While PD Peñaflor claims
that he caught the petitioners in the act of collecting bets and counting bet money, this
observation was highly improbable given the distance of the police from the petitioners and the
fact that the compound was surrounded by a bamboo fence.

For his part, Villamor claimed that he was at the Bonaobra compound to repay his loan to
Jonah. The prosecution, through Prosecutor Tañon, even admitted this fact during Jonah’s
direct examination. The following exchange between the prosecution and the defense was quite
revealing:

ATTY. SAMONTE:

Your Honor, please, [may] I respectfully offer the testimony of Jona[h] Bonaobra to show that
she is the wife of Victor Bonaobra; that at around 8:30 a.m. of June 17, 2005 she was inside
their residence at Bonaobra’s compound, Francia, Virac, Catanduances and on that particular
time and date, Martin Villamor arrived to pay his debt and she personally witnessed the unlawful
act committed by the policemen who entered their dwelling on that particular time and date and
such other matters relative thereto, Your Honor.

COURT:

Any comment from the prosecution?

PROS. TAÑON:

We will admit that she is the wife of Victor Bonaobra; that on June 17, 2005 at 8:30 in the
morning she was inside the residence of Bonaobra’s compound; that accused Martin Villamor
arrived to pay his debt. We are to contest on that she personally witnessed the unlawful act.

ATTY. SAMONTE:

To clarify that, the prosecution is admitting the fact that Martin arrived to pay the loan on that
particular day?

PROS. TAÑON:

Yes, Your Honor.

COURT:

Okay, so that we can proceed to the other matter.[19] (Emphasis supplied)

From the exchange above, it is clear that the prosecution admitted that Villamor went to
Bonaobra’s house to pay his loan to Jonah. Thus, at the exact moment of the arrest, neither
Bonaobra, who was answering his cellphone, nor Villamor, who was paying his loan, was
performing any overt act constitutive of a crime.

Verily, the warrantless arrest conducted by PD Peñaflor and his team was unlawful as the same
does not satisfy the requirements of an in flagrante delicto arrest. Consequently, the search and
seizure of the effects found inside the house of Bonaobra are likewise illegal since there could
be no valid search incident to an illegal warrantless arrest. Thus, evidence seized from
Bonaobra’s house is inadmissible for being a fruit of the poisonous tree.

The Court is aware that any question regarding the legality of a warrantless arrest must be
raised before arraignment. Failure to do so constitutes a waiver of the right to question the
legality of the arrest especially when the accused actively participated during trial as in this
case. However, we have clarified that such waiver is only confined to the defects of the arrest
and not on the inadmissibility of the evidence seized during an illegal arrest. In People v.
Racho,[20] the Court held that:

Obviously, this is an instance of seizure of the ‘fruit of the poisonous tree’, hence, the
confiscated item is inadmissible in evidence consonant with Article III, Section 3(2) of the 1987
Constitution, ‘any evidence obtained in violation of this or the preceding section shall be
inadmissible for any purpose in any proceeding’.

Without the confiscated shabu, appellant’s conviction cannot be sustained based on the
remaining evidence. Thus, an acquittal is warranted, despite the waiver of appellant of his right
to question the illegality of his arrest by entering a plea and his active participation in the trial of
the case. As earlier mentioned, the legality of an arrest affects only the jurisdiction of the court
over the person of the accused. A waiver of an illegal, warrantless arrest does not carry with it a
waiver of the inadmissibility of evidence seized during an illegal warrantless arrest. (Emphasis
supplied)

In this case, the prosecution failed to clearly establish the acts that constitute the offense of
illegal gambling as a collector or an agent under Section 3(c), and as a coordinator, controller,
or supervisor under Section 3(d), of RA 9287. Under the said law, a collector or agent is “any
person who collects, solicits or produces bets in behalf of his/her principal for any illegal
numbers game who is usually in possession of gambling paraphernalia.”[21] On the other hand,
a coordinator, controller, or supervisor is defined as, “any person who exercises control and
supervision over the collector or agent.”[22] The prosecution merely relied on the alleged illegal
gambling paraphernalia found and confiscated inside the house of Bonaobra and not on the
specific overt acts that constitute the offense.

All told, the evidence purportedly seized from the Bonaobra compound is inadmissible in
evidence since it was obtained in violation of Section 3(2), Article III of the 1987 Constitution.
Since the alleged illegal gambling paraphernalia is the very corpus delicti of the crime charged,
the Court acquits petitioners.

WHEREFORE, the June 13, 2011 Decision of the Court of Appeals in CA-G.R. CR No. 30457
which affirmed the Judgment of the Regional Trial Court of Virac, Catanduanes, Branch 43 in
Criminal Case Nos. 3463 and 3464 is hereby REVERSED and SET ASIDE. Petitioners Martin
Villamor y Tayson and Victor Bonaobra y Gianan are ACQUITTED and are ordered to be
immediately RELEASED from detention, unless they are confined for any other lawful cause.

The Director of the Bureau of Corrections is DIRECTED to IMPLEMENT this Decision and to
report to this Court the action taken hereon within five days from receipt.

22 MAR 2017 | SUBJECT | CIVIL LAW | LAND TITLES AND DEEDS | SUBJECT | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Alexis C. Almendras Vs. South Davao Development Corporation, Inc. (SODACO), et al.; G.R. No.
198209; March 22, 2017

This Petition for Review on Certiorari[1] filed by petitioner Alexis C. Almendras (petitioner)
assails the Orders dated March 28, 2011[2] and August 9, 2011[3] of the Regional Trial Court
(RTC), Digos, Davao del Sur, Branch 20. The abovementioned Orders respectively dismissed
petitioner’s Amended Complaint for Annulment of Deed of Sale, Damages and Attorney’s fees
and the reconsideration sought.

Antecedent Facts

On September 13, 2004, petitioner fi1ed an Amended Complaint[4] seeking to annul the Deed
of Sale (DOS) executed by and among respondents Caridad C. Almendras (Caridad), Rolando
C. Sanchez (Rolando) and Leonardo Dalwampo over a parcel of unregistered land located at
Inawayan, Sta. Cruz, Davao del Sur containing approximately 6.3087 hectares. Petitioner
alleged that he owned and had occupied said parcel of land since September 21, 1978 until he
was forcibly dispossessed by respondent South Davao Development Company, Inc. (SODACO)
on April 23, 1994. Petitioner claimed that Caridad sold the property to Rolando, a purported
dummy of SODACO.

During the proceedings on March 16, 2010, Rolando filed a Request for Admission[5]
addressed to petitioner. The said Request for Admission reads in parts:

I. That the following Resolutions/Orders of the Regional Trial Court, Branch 18, Digos City,
acting as a Guardianship Court in Special Proceeding No. 830, are genuine, which copies
thereof are furnished or served to your counsel, Atty. Rodolfo B. Ta-asan, Jr. and Atty. Lorenzo
B. Ta-asan III, to wit:

(a) The Resolution dated January 8, 1993, approving the Petition for Guardianship over the
person and properties of Alejandro D. Almendras, Sr., filed by petitioners Caridad C. Almendras,
Alexis C. Almendras, Manuel. C. Almendras, Elizabeth Almendras-Alba, Rosalinda Almendras-
Unson, Alejandro C. Almendras, Jr., Chuchi Almendras-Aguinaldo, and Paul C. Almendras, and
appointing Rosalinda D. Almendras-Unson as the Guardian over the person of Alejandro D.
Almendras, Sr., and Paul C. Almendras and Elizabeth Almendras-Alba as Guardians over the
properties of said Alejandro D. Almendras, Sr.;
(b) The Order dated October 14, 1993, granting authority to the Judicial Guardians Paul C.
Almendras and Elizabeth Almendras-Alba to sell the agricultural properties indicated in the said
Order;

(c) The Order dated October 29, 1993, approving the sale made by the Judicial Guardians Paul
C. Almendras and Elizabeth Almendras-Alba under the authority of the Guardianship Court over
the following agricultural properties in favor of the individual vendees, to wit:

Lot No. 59, Pcs-5021 in favor of Jose C. Gahuman;

Lot Nos. 48, 49 and 60, Pcs-5021 in favor of Ruel D. Sevilla;
Lot No. 50, Pcs-5021 in favor of Leonardo M. Dalwampo;
Lot No. 53, Pcs-5021 in favor of Rolando C. Sanchez;
Lot No. 47, Pcs-5021 in favor of Magno B. Villaflores;

II. That the following documents are genuine, which copies are likewise furnished or served to
your counsels Atty. Rodolfo B. Ta-asan, Jr. and Lorenzo B. Ta-asan III, to wit:

(d) The Deed of Sale dated October 15, 1993, between the vendors: Caridad C. Almendras,
Judicial Guardians Paul C. Almendras and Elizabeth Almendras-Alba and the vendee: Rolando
C. Sanchez, over the parcel of agricultural land denominated as Lot No. 53, Pcs-5021, situated
at Quinocol, Inawayan, Sta. Cruz, Davao del Sur, and duly acknowledged before notary public
Raul O. Tolentino, as Doc. No. 257, Page No. 52; Book No. XXIX; Series of 1993;

III. That each of the following matters of fact are true.

xxxx

(c) That sometime in November, 1992, the late Alejandro D. Almendras, Sr. then suffered a
‘cerebrovascular accident’ or a ‘stroke’ which left him physically and mentally incapacitated;

(d) That when Alejandro D. Almendras, Sr. was then recuperating at the Cebu Doctor’s Hospital,
the plaintiff, together with his mother, brothers and sisters, held a family conference and decided
to institute a guardianship proceeding and nominated Rosalinda Almendras-Unson to be the
guardian over the person of Alejandro D. Almendras, Sr. and Paul C. Almendras and Elizabeth
Almendras-Alba as the guardians over the properties and Alejandro D. Almendras, Sr.;

(e) That the plaintiff, together with his mother and brothers and sisters did, in fact, institute a
guardianship proceeding over the person and properties of Alejandro D. Almendras, Sr.,
sometime in December, 1992, then pending before the Regional Trial Court, Branch 18, Digos,
Davao del Sur, and docketed as Special Proceeding No. 830;

(f) That the Almendras coconut plantation situated at Upper Quinocol, Inawayan, Sta, Cruz,
Davao del Sur, comprising seven (7) adjoining cadastral lots, was among the properties
belonging to Alejandro D. Almendras, Sr. and placed under the jurisdiction of the Guardianship
Court in Special Proceeding No. 830, to wit:
Lot No. 50, Pcs-5021 with an area of 5.1403 has.
Lot No. 59, Pcs-5021 with an area of 3.4710 has.
Lot Nos. 48, 49, 60, Pcs-5021, with an area of 5.1664 has.
Lot No.53, Pcs-5021, with an area of 6.3080 has.
Lot No.47, Pcs-5021, with an area of 3.4461 has.

(g) That plaintiff ALEXIS C. ALMENDRAS did not oppose the inclusion of the subject property
denominated as Lot. No. 53, Pcs-5021, under the Guardianship Court in Special Proceeding
No.830;

(h) That plaintiff ALEXIS C. ALMJENDRAS did not oppose the grant of authority to the judicial
guardians Paul C. Almendras and Elizabeth Almendras-Alba to sell the individual lots
comprising the Almendras coconut plantation to different vendees, particularly, the subject
property denominated as Lot No. 53, Pcs-5021 in favor of defendant ROLANDO C.SANCHEZ;

(i) That plaintiff ALEXIS C. ALMENDRAS did not seek a reconsideration nor appeal the Order of
the Guardianship Court dated October 29, 1993, approving the sale of the individual lots
comprising the Almendras coconut plantation to different vendees;[6] (Emphasis supplied)

Petitioner, however, failed to file a sworn statement specifically denying the matters therein or
setting forth in detail the reasons why he cannot either deny or admit said matters. Thus,
Rolando filed a Motion for Summary Judgment.[7] He alleged that there being no genuine issue
as to any material fact, and the issue of ownership raised by petitioner being sham or fictitious,
except as to the issue of damages, he is entitled to a summary judgment. Rolando prayed that
the complaint be dismissed, that the validity of the DOS as well as his ownership and
possession of the subject property be upheld, and that a hearing be conducted solely for the
purpose of determining the propriety of his counterclaim for damages.

Petitioner opposed the Motion for Summary Judgment claiming that he was not personally
served a copy of the Request for Admission. Moreover, he averred that the same was fatally
defective for failure to comply with Section 5, Rule 15 of the Rules of Court on notice of
hearing.[8]

In the assailed March 28, 2011 Order, the RTC held that contrary to petitioner’s claim, he was in
fact served a copy of the Motion for Summary Judgment via registered mail and that he
received a copy thereof on March 24, 2010[9] while his counsel was furnished a copy thereof on
March 17, 2010.[10] The RTC also held that there was a faithful compliance on the notice of
hearing requirement. It noted that the motion was filed on June 29, 2010 while the hearing was
scheduled on July 9, 2010. Thus, it cannot be said that there was violation of Section 5, Rule 15
of the Rules of Court.

The RTC then concluded that by petitioner’s failure to respond to the Request for Admission, he
was deemed to have admitted or impliedly admitted the matters specified therein. In particular,
petitioner is deemed to have admitted the fact that the property in question had been validly sold
to Rolando thereby rendering the complaint without any cause of action.[11]

The dispositive portion of the March 28, 2011 Order reads:

WHEREFORE, partial summary judgment is hereby rendered in favour of defendant Sanchez
decreeing the dismissal of the complaint against him. The issue on damages will be heard on
July 18, 2011 at 8:30 in the morning.

With regard to defendants Caridad Almendras and SODACO, set this case for initial
presentation of plaintiff’s evidence on July 18, 2011 at 8:30 in the morning.

SO ORDERED.[12]

Petitioner filed a Motion for Reconsideration[13] insisting that he cannot be considered to have
admitted the matters specified in the Request for Admission. SODACO also sought
reconsideration of the March 28, 2011 Order claiming that the complaint filed against it should
likewise be dismissed considering that petitioner could not maintain a suit against him after the
dropping of the suit against Rolando.

In an Order[14] dated August 9, 2011, the RTC denied petitioner’s Motion for Reconsideration
but granted that of SODACO, viz.:

WHEREFORE, the motion for reconsideration filed by the plaintiff is DENIED. The motion for
reconsideration filed by SODACO is GRANTED. Consequently, the Order dated March 28, 2011
is hereby modified in the sense that the complaint against all defendants including the
counterclaims, are Ordered DISMISSED.

SO ORDERED.[15]

Aggrieved by the RTC’s Orders, petitioner sought recourse directly to this Court via the instant
Petition for Review.

We DENY the Petition for Review.

The instant Petition denominated as a petition for review, wrongfully alleged grave abuse of
discretion on the part of the RTC. A petition for review on certiorari under Rule 45 of the Rules
of Court is glaringly different from a petition for certiorari under Rule 65 of the Rules of Court. “A
petition for review under Rule 45 of the x x x Rules of Court is generally limited only to questions
of law or errors of judgment. On the other hand; a petition for certiorari under Rule 65 may be
availed of to correct errors of jurisdiction including the commission of grave abuse of discretion
amounting to lack or excess of jurisdiction.”[16]

Here, petitioner ascribed grave abuse of discretion to the RTC claiming that contrary to the
lower court’s ruling, he could not have received the motion on March 24, 2010 (as stated in the
postmaster’s certification) given that the motion was filed only on June 26, 2010.

It must be stressed that only questions of law may be properly raised in a petition for review.
Whether or not petitioner received a copy of the motion on March 24, 2010 is a factual issue
and such is not within the ambit of a petition for review.
In any case, it may be well to remind petitioner that he never raised the issue of lack of service
of the Motion for Summary of Judgment to him. His petition mainly rests on the failure to serve
him a copy of the Request for Admission. Given that the Request for Admission was dated
March 11, 2010, it would be logical to think that the registry return card was for the said
Request.

A perusal of the March 28, 2011 Order would readily show that the RTC meant to refer to the
Request for Admission vis-a-vis the applicability of the registry return card and the letter-
certification of the postmaster:

Plaintiff through counsel opposed the motion on the grounds that the motion is fatally defective
for failure to comply with Section 5 of Rule 15 and that the request for admission was not
directly served on him but copy furnished only upon his counsel.[17] (Underscoring supplied)

Despite this being beyond the ambit of a petition for review, we find that such error does not
constitute grave abuse of discretion. Petitioner should read the March 28, 2011 Order in its
entirety to see that the said “absurdity” would not have caused him great damage and prejudice.
If he were really keen on protecting his rights after noting the flaw in the March 28, 2011 Order,
it would have been prudent for him to file a Motion for Correction of Judgment or to seek a
different mode of appeal (i.e. Petition for Certiorari) but he did not.

The determination of whether an issue involves a question of law or a question of fact has been
discussed in Republic v. Malabanan[18] where this Court explained:

x x x A question of law arises when there is doubt as to what the law is on a certain state of
facts, while there is a question of fact when the doubt arises as to the truth or falsity of the
alleged facts. For a question to be one of law, the same must not involve an examination of the
probative value of the evidence presented by the litigants or any of them. The resolution of the
issue must rest solely on what the law provides on the given set of circumstances. Once it is
clear that the issue invites a review of the evidence presented, the question posed is one of fact.
Thus, the test of whether a question is one of law or of fact is not the appellation given to such
question by the party raising the same; rather, it is whether the appellate court can determine
the issue raised without reviewing or evaluating the evidence, in which case, it is a question of
law; otherwise it is a question of fact.[19]

Petitioner raises three issues in his Petition, namely:

I.

WHETHER OR NOT AFTER THE FILING OF A MOTION FOR SUMMARY JUDGMENT AND
DENYING PETITIONER’S MOTION FOR RECONSIDERATION, THE TRIAL COURT COULD
DISMISS THE PETITIONER’S COMPLAINT MOTU PROPRIO FOR PETITIONER’S FAILURE
TO FILE HIS OBJECTIONS TO REQUEST FOR ADMISSION WHICH WAS ONLY
FURNISHED TO HIS COUNSEL?

II.
WHETHER OR NOT THE TRIAL COURT COULD INTERPRETE [sic] THAT FOR [sic]
PETITIONER’S FAILURE TO FILE HIS OBJECTIONS TO [THE] REQUEST FOR ADMISSION
WHICH WAS ONLY FURNISHED TO HIS COUNSEL IS AN IMPLIED ADMISSION OF THE
MATTERS SPECIFIED IN THE REQUEST?

III.

WHETHER OR NOT SUMMARY JUDGMENT IS APPLICABLE?[20]

At first blush, the first two issues would seem to be purely questions of law. However, the
alleged failure to serve the Request for Admission to petitioner is disputed. Addressing the first
two issues would require this Court to examine the veracity of petitioner’s claim that the Request
for Admission was unserved, given the supposed ambiguity of the March 28, 2011 Order. Such
would go beyond this Court’s jurisdiction in a petition for review on certiorari. In any case, we
have already explained that the RTC already ruled that petitioner was already served a copy of
the Request for Admission.

As to the third issue, determining the applicability of a summary judgment would require a
review of the issues of fact involved which is likewise beyond the ambit of this Petition and
which we find unnecessary to discuss given our previous disquisition.

Finally, as if the abovementioned procedural flaws were not enough, petitioner went straight to
this Court when he had the more appropriate remedy of appealing before the CA. Hence, it
would be proper to conclude that petitioner had forgone his right to open the entire case for
review on any matter concerning a question of fact.

In Five Star Marketing Company, Inc. v. Booc,[21] this Court distinguished the different modes
of appealing RTC decisions, to wit:

The Court, in Murillo v. Consul, Suarez v. Villarama, Jr. and VelayoFong v. Velayo, had the
occasion to clarify the three modes of appeal from decisions of the RTC, namely: a) ordinary
appeal or appeal by writ of error, where judgment was rendered in a civil or criminal action by
the RTC in the exercise of its original jurisdiction; b) petition for review, where judgment was
rendered by the RTC in the exercise of its appellate jurisdiction; and c) petition for review to this
Court. The first mode of appeal is governed by Rule 41, and is taken to the CA on questions of
fact or mixed questions of fact and law. The second mode, covered by Rule 42, is brought to the
CA on questions of fact, of law, or mixed questions of fact and law. The third mode, provided for
by Rule 45, is elevated to this Court only on questions of law.

xxxx

Section 4 of Circular 2-90 in effect provides that an appeal taken either to this Court or to the CA
by the wrong mode or inappropriate mode shall be dismissed. This rule is now incorporated in
Section 5, Rule 56 of the Rules of Court. Moreover, the filing of the case directly with this Court
departs from the hierarchy of courts. Normally, direct resort from the lower courts to this Court
will not be entertained unless the appropriate remedy cannot be obtained in the lower tribunals.
As the instant Petition was filed without resorting to a more appropriate remedy before the CA,
the same should be dismissed following our ruling above.

WHEREFORE, premises considered, the Petition for Review on Certiorari is DENIED.

The Resolution dated August 27, 2014 directing petitioner to file a Consolidated Reply is
RECALLED and SET ASIDE.

The Motion for Leave to Enter Appearance as Collaborating Counsel with Manifestation filed by
Atty. Edgar Y. Torres, Jr. which did not bear the conformity of petitioner is NOTED WITHOUT
ACTION.

SO ORDERED.

20 MAR 2017 | | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE
SUPREME COURT

TSM Shipping Phils., Inc. and/or Dampskibsselskabet Norden A/S and/or Capt. Castillo Vs. Louie
L. Patiño; G.R. No. 210289; March 20, 2017

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the July 25, 2013 Decision[2] and November 28,
2013 Resolution[3] of the Court of Appeals (CA) in CA-G.R SP No. 128415 affirming the
October 17, 2012 Decision[4] and April 25, 2013 Resolution[5] of the National Labor Relations
Commission (NLRC), which ordered TSM Shipping Phils., Inc. (TSM), Dampskibsselskabet
Norden A/S (DNAS), and Capt. Castillo (collectively petitioners) to pay Louie L. Patiño
(respondent) US$60,000.00 as permanent total disability benefits and 10% thereof as attorney’s
fees.
Antecedent Facts

On January 13, 2010, TSM, for and in behalf of its foreign principal, DNAS, entered into a
Contract of Employment[6] with respondent for a period of six months as GP2/OS (General
Purpose 2/Ordinary Seaman) for the vessel Nord Nightingale.

On May 20, 2010, while working on board the vessel, respondent injured his right hand while
securing a mooring rope. He was brought to a medical facility in Istanbul, Turkey, where X-ray
showed a fracture on his 5th metacarpal bone. Respondent’s right hand was placed in a cast
and thereafter he was repatriated.

Upon arrival in Manila on May 24, 2010, petitioners referred respondent to the company-
designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz), for further treatment. Respondent was
also referred to an orthopedic surgeon who recommended surgical operation to correct the
malunited fractured metacarpal bone. On June 8, 2010, respondent underwent Open Reduction
and Internal Fixation of the fractured 5th metacarpal bone at Manila Doctors Hospital.[7] He
then went through physical therapy.

After extensive medical treatments, therapy, and follow-up examinations, Dr. Cruz, on August
17, 2010, rendered an interim assessment of respondent’s disability under the Philippine
Overseas Employment Administration – Standard Employment Contract (POEA-SEC),[8] at
Grade 10, or loss of grasping power for small objects between the fold of the finger of one hand.
Despite continuing physical therapy sessions with the company-designated physician,
respondent filed on September 8, 2010 a complaint[9] with the NLRC against petitioners for total
and permanent disability benefits, damages, and attorney’s fees. Thereafter, in a Medical
Report dated October 11, 2010,[10] Dr. Cruz declared respondent to have reached the
maximum medical cure after rendering a final disability rating of Grade 10 on September 29,
2010.[11]

On November 19, 2010, respondent consulted Dr. Nicanor Escutin (Dr. Escutin), who assessed
him to have permanent disability unfit for sea duty in whatever capacity as a seaman.[12] The
following were Dr. Escutin’s findings:

DISABILITY RATING:
Based on the physical examination and supported by laboratory examinations, he injured his
right hand while working. His right hand was injured by the mooring rope which he was
securing. He sustained a fracture on his 5th metacarpal bone. He had medical attention after 2
days. His right hand was placed on a cast and he was repatriated. In Manila, he had another x-
ray which showed his 5th metacarpal is not aligned properly, so he had operation on his right
hand to fix the 5th metacarpal. He later on had physical therapy up to the time of examination.
He has difficulty in flexing his fingers adequately. His thumb cannot touch his small finger. His
grip is weak and cannot hold objects for a long time. His job as a seaman entails constant
usage of both his hands. At present, he cannot fully flex his fingers which mean [sic] he cannot
hold small objects or turn knobs. He cannot fully perform his job as a seaman. He is not
physically fit to perform the job of a seaman.[13]

Proceedings before the Labor Arbiter

In his position paper, respondent asked for permanent total disability benefits in the sum of
US$80,000.00 under the Associated Marine Officers and Seamen’s Union of the Philippines
Collective Bargaining Agreement (AMOSUP CBA) since, according to him, he never recovered
completely nor returned to his usual duties and responsibilities, as attested by the medical
findings of Dr. Escutin, his own physician.

Petitioners, however, claimed that respondent is only entitled to US$10,075.00 corresponding to

Grade 10 disability under the POEA-SEC, as assessed, on the other hand, by Dr. Cruz who
made an extensive evaluation of respondent’s injury. They maintained that this assessment
deserves greater weight than the belated medical report rendered by Dr. Escutin after a single
examination on respondent. Petitioners also stressed that respondent cannot claim benefits
under the CBA since he has not proven that he is a member of AMOSUP.

In a Decision[14] dated April 18, 2012, the Labor Arbiter awarded respondent total and
permanent disability benefits under the AMOSUP CBA in the amount of US$80,000.00,
sickness allowance of US$1,732.00, attorney’s fees equivalent to 1 0% of the award or
US$8,173.20, and moral and exemplary damages of P100,000.00 and P50,000.00,
respectively, for the fraud and malice that attended the denial of his claims.

The Labor Arbiter observed that respondent is indeed suffering from a total and permanent
disability since his rehabilitation took five months or more than 120 days and there was no offer
on the part of petitioners to rehire him. The Labor Arbiter found credible Dr. Escutin’s finding
that respondent’s injury had rendered him inutile as an ordinary seaman and although total
disability does not mean absolute helplessness, his incapacity to work resulted in the
impairment of his earning capacity. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondents

TSM Shipping (Phils.), Inc./Dampskibsselskabet Norden A.S./Capt. Castillo to jointly and
severally pay complainant Louie Patiño the amount of EIGHTY NINE THOUSAND EIGHT
HUNDRED FIVE US DOLLARS & 20/100 (US$89,805.20) or its equivalent in Philippine Peso at
the prevailing rate of exchange at the time of actual payment representing his total permanent
disability benefits, sickness allowance and attorney’s fees.

Respondents are further ordered to pay complainant the amount of ONE HUNDRED FIFTY
THOUSAND PESOS (P150,000.00) representing moral and exemplary damages. All other
claims are DISMISSED for lack of merit.

SO ORDERED.[15]

Proceedings before the National Labor Relations Commission

On appeal, petitioners attributed serious error to the Labor Arbiter for awarding full disability
benefits under the CBA. They argued that an illness which lasted for more than 120 days does
not necessarily mean that a seafarer is entitled to full disability benefits, and that the company-
designated physician’s partial disability grading is still binding and controlling. Further, there was
no concrete medical evidence that respondent suffers from a Grade 1 disability and that no third
doctor was appointed to resolve any doubts as to the true state of health of respondent.
Petitioners also disputed respondent’s entitlement to damages and attorney’s fees by denying
that they acted with malice and fraud.

In a Decision[16] dated October 17, 2012, the NLRC agreed with the Labor Arbiter that
respondent is entitled to permanent total disability benefits because his injury had rendered him
incapable of using his right hand, based on the last medical report of Dr. Cruz, where the latter
acknowledged that respondent’s right grip is poor. The NLRC ruled that disability should not be
understood based on its medical significance but on the loss of earning capacity. It, however,
held that respondent cannot claim benefits under the CBA there being no evidence that he was
a member of AMOSUP; likewise, it found no basis in awarding attorney’s fees and damages
after finding that petitioners did not act in bad faith. It, thus, awarded respondent total and
permanent disability benefits in the amount of US$60,000.00 under the POEA-SEC and deleted
the award of damages and attorney’s fees, thus:
WHEREFORE, the appeal is partly GRANTED. The Decision of the Labor Arbiter dated April
18, 2012 is AFFIRMED with MODIFICATION; finding appellee entitled to permanent disability
benefits under the POEA-SEC. Accordingly appellants are ordered to jointly and severally pay
appellee the amount of Sixty Thousand US Dollars (US$60,000.00) or its peso equivalent at the
time of payment. The award of attorney’s fees is deleted.

The award for moral and exemplary damages are deleted.

SO ORDERED .[17]

Both parties filed their respective motions for reconsideration.[18] Petitioners, for their part,
questioned the NLRC’s award despite lack of proof that respondent suffers from a Grade 1
disability. Respondent, on the other hand, maintained that he is covered by the AMOSUP CBA
and that petitioners are also liable for damages and attorney’s fees in view of their bad faith.

In a Resolution[19] dated November 23, 2012, the NLRC denied petitioners’ motion for
reconsideration. In a subsequent Resolution[20] dated April 25, 2013, the NLRC partly granted
respondent’s motion for reconsideration by reinstating the Labor Arbiter’s award of attorney’s
fees on the ground that he was forced to litigate his claims. The NLRC made the following
disposition in its April 25, 2013 Resolution:

WHEREFORE, apppellee’s motion for reconsideration is PARTLY GRANTED. Our Decision

dated October 17, 2012 is Modified in that, respondents-appellants are ordered to pay appellee
ten percent (10%) of the award as attorney’s fees.

SO ORDERED.[21]

Proceedings before the Court of Appeals

Petitioners filed a Petition for Certiorari with Prayer for the Issuance of a Writ of Preliminary
Injunction and/or Temporary Restraining Order[22] docketed as CA-G.R. SP No. 128415 to
enjoin the enforcement/execution of the NLRC judgment. Petitioners attributed grave abuse of
discretion on the NLRC in awarding respondent US$60,000.00 without providing any substantial
evidence to prove that he was suffering from Grade 1 disability and for unreasonably awarding
attorney’s fees despite absence of bad faith on their part.[23]

The CA, on July 25, 2013, rendered a Decision[24] dismissing the Petition for Certiorari and
affirming the October 17, 2012 Decision and April 25, 2013 Resolution of the NLRC. The CA
agreed with the findings of both the NLRC and Labor Arbiter that respondent is entitled to a
Grade 1 or total permanent disability benefit under the POEA-SEC and that the assessment of
respondent’s chosen physician, Dr. Escutin, is credible. The CA ratiocinated that both labor
tribunals did not merely base their findings on the mere lapse of the 120-day threshold period
but on respondent’s inability to perform the duties for which he was trained to do, resulting in the
impairment of his earning capability. Besides, it held that factual findings of these administrative
agencies should be accorded great respect, if not finality, if supported by substantial evidence.
Petitioners sought reconsideration[25] of this Decision but was denied by the CA in its
Resolution[26] of November 28, 2013.

Issues

Hence, the present Petition raising the following issues:

Whether the Court of Appeals decided in a way not in accord with law or with the applicable
decisions of the Supreme Court in affirming the questioned Decision and Resolution of the
Court of Appeals [sic] which held herein petitioners liable for a total of US$60,000.00 as
disability benefits despite the glaring fact that the private respondent was declared as merely
suffering from a Grade 10 disability as recommended by the company-designated physician;

Whether the sole claim of ‘loss of earning capacity’ and the ‘120-day rule’ should equate to an
award of US$60,000.00 despite the lack of substantial evidence to support the allegation that he
is actually suffering from a Grade 1 disability and despite the undisputed evidence that he was
actually suffering from a Grade 10 disability;

Whether the medical findings of the company-designated physician should be upheld over that
issued by the physician appointed by the private respondent;

Whether the Court of Appeals decided in a way not in accord with law or with the applicable
decisions of the Supreme Court in affirming the award for 10% attorney’s fees despite the fact
that the private respondents [sic] failed to prove that herein petitioners acted in bad faith.[27]

Petitioners assert that the mere lapse of the 120-day period does not automatically vest an
award of full disability benefits and that the assessment of the company designated physician is
controlling in measuring the degree of the seafarer’s disability. At any rate, the 120-day period
may be extended to 240 days if the seafarer requires further medical attention, as in this case.
Therefore, the partial disability grading rendered by Dr. Cruz within the 240-day medical
treatment prevails over the single and belated opinion of Dr. Escutin. Besides, no referral was
made to a third doctor who should have rendered a binding third opinion. There was, thus no
basis for respondent to claim total and permanent disability benefits.

Petitioners also insist that the award of attorney’s fees had likewise no basis in the absence of
any evidence that they acted in bad faith, which brought about this present litigation.

Our Ruling

We find merit in the Petition.

Respondent’s complaint for disability

benefits was premature.
Because of lack of proof that respondent is covered by the AMOSUP CBA, settled is the finding
that his entitlement to disability benefits is governed by the POEA-SEC and relevant labor laws,
which are deemed written in the contract of employment with petitioners.

Article 192(c)(1) of the Labor Code provides that:

Art. 192. Permanent total disability.- x x x

(c) The following disabilities shall be deemed total and permanent:

(1) Temporary total disability lasting continuously for more than one hundred twenty days,
except as otherwise provided for in the Rules;

The Rule referred to in this Labor Code provision is Section 2, Rule X of the Amended Rules on
Employees’ Compensation Implementing Title II, Book IV of the Labor Code, which states:

Sec. 2. Period of Entitlement — (a) The income benefit shall be paid beginning on the first day
of such disability. If caused by an injury or sickness it shall not be paid longer than 120
consecutive days except where such injury or sickness still requires medical attendance beyond
120 days but not to exceed 240 days from onset of disability in which case benefit for temporary
total disability shall be paid. However, the System may declare the total and permanent status
at any time after 120 days of continuous temporary total disability as may be warranted by the
degree of actual loss or impairment of physical or mental functions as determined by the
System.

Section 20 B(3) of the POEA-SEC also provides that:

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness
allowance equivalent to his basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated physician but in no case
shall this period exceed one hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment medical examination
by a company-designated physician within three working days upon his return except when he
is physically incapacitated to do so, in which case, a written notice to the agency within the
same period is deemed as compliance. Failure of the seafarer to comply with the mandatory
reporting requirement shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be
agreed jointly between the employer and the seafarer. The third doctor’s decision shall be final
and binding on both parties.

In Vergara v. Hammonia Maritime Services, Inc.,[28] the Court ruled that the aforequoted
provisions should be read in harmony with each other. The Court held:
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and treatment.
For the duration of the treatment but in no case to exceed 120 days, the seaman is on
temporary total disability as he is totally unable to work. He receives his basic wage during this
period until he is declared fit to work or his temporary disability is acknowledged by the
company to be permanent, either partially or totally, as his condition is defined under the POEA
Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period
is exceeded and no such declaration is made because the seafarer requires further medical
attention, then the temporary total disability period may be extended up to a maximum of240
days, subject to the right of the employer to declare within this period that a permanent partial or
total disability already exists. The seaman may of course also be declared fit to work at any time
such declaration is justified by his medical condition.[29]

Thus, based on this pronouncement in Vergara, the Court then held, in the case of C.F. Sharp
Crew Management, Inc. v. Taok,[30] that a seafarer may have basis to pursue an action for total
and permanent disability benefits in any of the following conditions:

(a) the company-designated physician failed to issue a declaration as to his fitness to engage in
sea duty or disability even after the lapse of the 120-day period and there is no indication that
further medical treatment would address his temporary total disability, hence, justify an
extension of the period to 240 days;

(b) 240 days had lapsed without any certification being issued by the company-designated
physician;

(c) the company-designated physician declared that he is fit for sea duty within the 120-day or
240-day period, as the case may be, but his physician of choice and the doctor chosen under
Section 20-B(3) of the POEA-SEC are of a contrary opinion;

(d) the company-designated physician acknowledged that he is partially permanently disabled

but other doctors whom he consulted, on his own and jointly with his employer, believed that his
disability is not only permanent but total as well;

(e) the company-designated physician recognized that he is totally and permanently disabled
but there is a dispute on the disability grading;

(f) the company-designated physician determined that his medical condition is not compensable
or work-related under the POEA SEC but his doctor-of-choice and the third doctor selected
under Section 20-B(3) of the POEA-SEC found otherwise and declared him unfit to work;

(g) the company-designated physician declared him totally and permanently disabled but the
employer refuses to pay him the corresponding benefits; and

(h) the company-designated physician declared him partially and permanently disabled within
the 120-day or 240-day period but he remains incapacitated to perform his usual sea duties
after the lapse of the said periods.[31]
Upon respondent’s repatriation on May 24, 2010, he was given extensive medical attention by
the company-designated physician. On August 17, 2010, an interim assessment of Grade 10
was given by Dr. Cruz as respondent was still undergoing further treatment and physical
therapy. However, on September 8, 2010, or 107 days since repatriation, respondent filed a
complaint tor total and permanent disability benefits. During this time, he was considered under
temporary total disability inasmuch as the 120/240-day period had not yet lapsed. Evidently, the
complaint was prematurely filed.

Moreover it is significant to note that when he filed his complaint, respondent was armed only
with the interim medical assessment of the companydesignated physician and his belief that his
injury had already rendered him permanently disabled. It was only after the filing of such
complaint or on November 9, 2010 that he sought the opinion of Dr. Escutin, his own physician.
As such the Labor Arbiter should have dismissed at the first instance the complaint for lack of
cause of action.

Respondent is not entitled to total and

permanent disability compensation.

We find serious error in the rulings of the Labor Arbiter, NLRC, and CA that respondent’s
disability is considered permanent and total based on the 120-day rule and on his inability to
work resulting in the loss of earning capacity.

“To stress, the rule is that a temporary total disability only becomes permanent when the
company-designated physician, within the 240-day period, declares it to be so, or when after the
lapse of the said period, he fails to make such declaration.”[32] After the initial interim
assessment of Dr. Cruz, respondent continued with his medical treatment. Dr. Cruz then
rendered on September 29, 2010 a final assessment of Grade 10 upon reaching the maximum
medical cure. Counting from the date of repatriation on May 24, 2010 up to September 29,
2010, this assessment was made within the 240-day period. Clearly, before the maximum 240-
day medical treatment period expired, respondent was issued a Grade 10 disability rating which
is merely equivalent to a permanent partial disability under the POEA-SEC. Thus, respondent
could not have been suffering from a permanent total disability as would entitle him to the
maximum benefit of US$60,000.00.

The Court finds the labor tribunals’ rulings seriously flawed as they were rendered in total
disgregard of the provisions of the POEA-SEC, which is the law between the parties. The
medical opinion of Dr. Escutin ought not to be given more weight than the disability grading
given by Dr. Cruz. The POEA-SEC clearly provides that when a seafarer sustains a work-
related illness or injury while on board the vessel, his fitness or unfitness for work shall be
determined by the company-designated physician. However, if the doctor appointed by the
seafarer makes a finding contrary to that of the assessment of the company-designated
physician, a third doctor may be agreed jointly between the employer and the seafarer and the
latter’s decision shall be final and binding on both of them.[33] The Court has held that non-
observance of the requirement to have the conflicting assessments determined by a third doctor
would mean that the assessment of the company-designated physician prevails. As decreed by
this Court in Veritas Maritime Corporation v. Gepanaga, Jr.:[34]
x x x Gepanaga failed to observe the prescribed procedure of having the conflicting
assessments on his disability referred to a third doctor for a binding opinion. Consequently, the
Court applies the following pronouncements laid down in Vergara:

The POEA Standard Employment Contract and the CBA dearly provide that when a seafarer
sustains a work-related illness or injury while on board the vessel, his fitness or unfitness for
work shall be determined by the company-designated physician. If the physician appointed by
the seafarer disagrees with the company-designated physician’s assessment, the opinion of a
third doctor may be agreed jointly between the employer and the seafarer to be the decision
final and binding on them.

Thus, while petitioner had the right to seek a second and even a third opinion, the final
determination of whose decision must prevail must be done in accordance with an agreed
procedure. Unfortunately, the petitioner did not avail of this procedure; hence, we have no
option but to declare that the company-designated doctor’s certification is the final determination
that must prevail. x x x.

Indeed, for failure of Gepanaga to observe the procedures laid down in the POEA-SEC and the
CBA, the Court is left without a choice but to uphold the certification issued by the company-
designated physician that the respondent was fit to go back to work.[35]

In the absence of a third and binding opinion, the Court has no option but to hold Dr. Cruz’s
assessment of respondent’s disability final and binding. At any rate, more weight should be
given to this assessment as Dr. Cruz was able to closely monitor respondent’s condition from
the time he was repatriated in May 2010 until his last follow-up examination in October 2010.
The extensive medical attention given by Dr. Cruz enabled him to acquire a detailed knowledge
of respondent’s medical condition. Under the supervision of Dr. Cruz, respondent underwent
surgery and physical therapy. On the basis of the medical records and the results obtained from
the medical treatments, Dr. Cruz arrived at a definite assessment of respondent’s condition.
Having extensively monitored and treated respondent’s injury, the company-designated
physician’s diagnosis deserves more weight than respondent’s own doctor.

Moreover, we further find without basis the pronouncement of the Labor Arbiter that petitioners’
failure to rehire respondent is conclusive proof of his disability. There was no showing that
respondent sought re-employment with petitioners or that it was a matter of course for
petitioners to re-hire him. There was also no evidence or allegation that respondent sought
employment elsewhere but was denied because of his condition.

In sum, respondent is not entitled to total and permanent disability compensation. The filing of
his complaint is premature and in breach of his contractual obligation with the petitioners. Dr.
Cruz’s Grade 10 disability rating prevails for failure to properly dispute it in accordance with an
agreed procedure. Respondent is thus entitled to the amount corresponding to Grade 10 based
on the certification issued by Dr. Cruz.

Section 32 of the POEA-SEC provides for a schedule of disability compensation which is often
ignored or overlooked in maritime compensation cases. Section 32 laid down a Schedule of
Disability or Impediment for Injuries Suffered and Diseases including Occupational Diseases or
Illness Contracted, in conjunction with Section 20 (B)(6) which provides that in case of a
permanent total or partial disability, the seafarer shall be compensated in accordance with
Section 32. Section 32 further declares that any item in the schedule classified under Grade 1
shall be considered or shall constitute total and permanent disability. Therefore, any other
grading constitutes otherwise. We stressed in Splash Philippines, Inc. v. Ruizo[36] that it is
about time that the schedule of disability compensation under Section 32 be seriously observed.

WHEREFORE, the Petition is GRANTED. The July 25, 2013 Decision and November 28, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 128415 are SET ASIDE. Petitioners TSM
Shipping Phils., Inc., Dampskibsselskabet Norden A/S and Capt. Castillo are ordered to jointly
and solidarily pay respondent Louie L. Patiño US$10,075.00 (US$50,000.00 x 20.15%) or its
equivalent amount in Philippine currency at the time of payment.

SO ORDERED.

15 MAR 2017 | SUBJECT | CRIMINAL LAW | ART. 335 - RAPE* | JURISPRUDENCE | PONENTE | JUSTICE MARIANO
C. DEL CASTILLO

People of the Philippines Vs. Jessie Gabriel y Gajardo; G.R. No. 213390; March 15, 2017

This is an appeal from the March 25, 2014 Decision[1] of the Court of Appeals (CA) in CA-G.R.
CR-HC No. 05147 which affirmed with modification the July 19, 2011 Decision[2] of the
Regional Trial Court (RTC) of Dagupan City, Branch 43, in Criminal Case No. 2010-0118-D
finding appellant Jessie Gabriel y Gajardo guilty of the crime of rape and imposing upon him the
penalty of reclusion perpetua.

The facts of the case are as follows:

Appellant was indicted for rape in an Information which alleged:

That on or about the 17th day of February 2010, in the City of Dagupan, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused JESSIE GABRIEL y
GAJARDO, with force and intimidation, did then and there, willfully, unlawfully and criminally,
have carnal knowledge upon one [“AAA”],[3] a 17-year old minor, against her will and consent,
to the damage and prejudice of the latter.

Contrary to Article 266-A par. 1-a, in relation to the 2nd par. of Article 266-B of the Revised
Penal Code as amended by RA 8353.[4]

Arraigned thereon, appellant entered a negative plea.

“AAA” at the time material to this case is a 17-year old first-year nursing student at the Colegio
de Dagupan and temporarily resides at the boarding house of appellant in Dagupan City. “AAA”
testified that at about 6:00 p.m. of February 17, 2010, she, with her cousin and co-boarder
“BBB,” was inside their room at the second floor of the said boarding house when appellant
suddenly entered their room and accused them of having stolen items of merchandise from his
store located near the said boarding house. “AAA” and “BBB” vehemently denied this
accusation, but appellant did not believe them. Instead, appellant directed them to see him in
his room at the first floor of the boarding house to talk about the matter. When “AAA” went
inside appellant’s room, the latter renewed his insistence that “AAA” own up to having stolen the
merchandise in question, otherwise he would bring her to the Police Station and have a theft
case against her blottered. He then told her to sit on his lap and began caressing her back.
“AAA” demanded that he stop what he was doing because she did not like it, but he paid no
heed to her demand. When “AAA” stood up to leave, appellant pulled her back, compelled her
to sit on his lap anew, and then proceeded to unhook her bra. What took place after this, “AAA”
herself graphically recounted thus:

PROS. PERALTA:

xxxx

Q We go back to that incident when he removed the hook of your bra, what happened after
that?

A He made me lie down, Madam.

Q What happened next?

A [T]hen he forced me, he raped me, Madam.

Q When you said he raped you, what do you mean by that?

A He made me lie down, he made me spread my legs and he undressed me, Madam.

Q What were you wearing at that time?

A I was wearing t-shirt and pajama, madam.

Q And x x x after spreading your legs, what did he do next?

A He x x x inserted his penis [into] my vagina, Madam.

Q What happened when he inserted his penis [into] your vagina?

A I[cried] and I told him that I don’t like [what he was doing] but he insisted, Madam.

Q When you refused, what did he do, if any?

A I just cried, Madam.

Q How about the accused?

A He continued what he was doing, Madam.

Q What was he doing?

A He was raping me, Madam.

Q For how long did it happen?

A Minutes, Madam.

Q When you said minutes, you mean one (1) minute?

A Around thirty (30) minutes, madam.

Q What was his position at that time?

A He was on top of me, madam.

Q While he was on top of[you], what did [he] do?

A He raped me, Madam.

Q When you said he raped you, what do you mean by that?

A He inserted his penis [into] my vagina, Madam.

Q What did you feel at that time when he inserted his penis [into] your vagina?

A None, [M]adan1.

Q What, if any, did you feel or notice while his penis was inside your vagina?

A None, [M]adam.

Q You said that you were crying while he was raping you, why were you crying?

A I was afraid and I don’t like it, Madam.

Q When he started to insert his penis [into] your vagina, did you feel anything?
A Yes, [M]adam.

Q What did you feel?

A It was painful,[M]adam.

COURT:

Q Why did you not push him while he was on top of you?

A He was forceful, [M]adam.

Q What do you mean when you said her was forceful?

A He [was strong], [M]adam.·[5]

Appellant’s lecherous assault upon “AAA” ceased only when his child knocked on the door and
called for him. When he heard his child’s knocking, he released “AAA” from his clutches, told
her to get dressed and leave the room. “AAA” then went to the bathroom to wash and then
returned to her room at the second floor where she continued to cry. “BBB” asked her why she
was crying but she could not tell her of her forcible violation. Later that evening, ‘”AAA’s” aunt,
“CCC,” and her husband “DDD,” together with “BBB’s mother “EEE” (who was earlier texted by
“BBB” to come to the boarding house) arrived. They confronted appellant about his accusation
that “AAA” and “BBB” had stolen certain items from his store. It was then that “AAA” told “CCC”
and “ODD” that she had been raped by appellant. A call was then made to the city police
department which deployed SPO1 Esteban Martinez and POl Ramon Valencerina, Jr. who,
upon reaching the boarding house, were informed that “AAA” had been raped by appellant.
These police officers arrested appellant and brought him to the police station. After this, “AAA”
submitted herself to physical examination at the Region 1 Medical Center in that city.

The other prosecution witnesses, namely “BBB,” “EEE” and “CCC,” not having actually
witnessed “AAA’s” violation, claimed that they came to know of “AAA’s” rape from “AAA” herself.
However, they were present just outside the boarding house when “CCC”, “AA.A’s” aunt,
exploded into hystetical outburst on hearing from “AAA” that she had been raped by appellant.
The Medico-Legal Report issued by Pr. Marlene Quiramol moreover showed tell-tale evidence
that “AAA” had indeed been sexually abused, as there were erythema and fossa navicularis at
the external genitalia, as well as multiple fresh lacerations at the 3, 6, 9 and 12 o’clock positions
in “AAA’s” hymen.

Appellant denied that he raped “AAA”. He claimed that on the morning of February 17, 2010, he
noticed that some items of merchandise in his store were missing and he suspected that “AAA”
and “BBB” were the culprits; hence, he went to their room to confront them. These two however
denied his accusation, so he confronted them with the pictures of the missing items which he
earlier took in the locker inside the room rented by “AAA” and “BBB.”
Appellant nevertheless admitted that on said occasion, he talked with “AAA” inside his room at
the first floor of the boarding house for some 15 minutes, but stressed that after their
conversation, “AAA” went outside while he proceeded to his store.

The only other witness presented by appellant, one Sandro Montañez, a boarder in the former’s
boarding house, simply testified that on the day in question (February 17, 2010), he saw “AAA”
doing her laundry and that he did not notice anything unusual in her appearance at all.

Ruling of the Regional Trial Court

Synthesizing the conflicting contentions of the prosecution and the defense, the RTC held:

The instant rape case is one of multifarious cases where there are no identified witnesses, and
where the evidence effectively boils down to the complainant’s word against the accused’s.
However, a pronouncement of guilt arising from the sole testimony of the victim is not unheard
of so long as her testimony meets the test of credibility. This is especially true in the crime of
rape the evidentiary character of which demands so much on the part of the victim-it entails her
to submit to an examination of her private parts, and to subject the sordid details of her story to
a public trial and against a given presumption of the accused’s innocence.

To establish the crime of Rape under the article cited above, two elements must be shown to
exist. And these are ‘that the accused had carnal knowledge of the offended party; and that the
coitus was done through the use of force or intimidation.’

AAA cried profusely while recounting her awful experience at the hands of her abuser. As has
been repeatedly held, ‘no young girl would concoct a sordid tale of so serious a crime rare,
undergo medical examination, then subject herself to the stigma and embarrassment of a public
trial, if her motive was other than a fervent desire to seek justice.’ AAA had revealed the incident
to her relatives. If it is not rape, what is it?

Accused’s attempt to characterize the testimony of ‘AAA’ as incredible lacks merit. Accused[‘s]
defense of denial must crumble in light of AAA’s positive and specific testimony. It is an
established jurisprudential rule that denial, like alibi, being negative self serving defense, cannot
prevail over the affirmative allegations of the victim and her categorical and positive
identification of the accused as her assailru1t. ‘Denial must be proved by the accused with clear
and convincing evidence otherwise they cannot prevail over the positive testimony of credible
witnesses who testify on affirmative matters.’

Moreover, AAA’s testimony is corroborated by the findings of the examining physician, Dr.
Marlene Quiramol x x x viz[.]; (+)Erythema at the peri hymenal and fossa navicularis; (+)
Multiple fresh lacerations at 3, 6, 9 & 12 o’clock positions. Medical examination showed
evidence of sexual abuse. “When a rape victim’s account is straightforward and candid, and is
corroborated by the medical findings of the examining physician, the same is sufficient to
support a conviction for rape.’ As the Highest Court succinctly stated in People vs. Borja, ‘a
victim who says she has been raped almost always says all there is to be said.’
The defense made it appear x x x that there were other people at the time of the incident.
Granting arguendo that there were other people in the house when the rape was committed,
rapists are not deterred from committing their odious act by the presence of people nearby or
the members of the family. Lust, being a very powerful human urge is, to borrow from People v.
Virgilio Bernabe, ‘no respecter of time and place.’ For the crime of rape to be committed, it is not
necessary for the place to be ideal or the weather to be fine, for rapists bear no respect for
locale and time when they carry out their evil deed. Rape can be committed in even the
unlikeliest places and circumstances and by the most unlikely persons. The beast in a man
bears no respect for time and place, driving him to commit rape anywhere – even in places
where people congregate, in parks, along the roadsides, in school premises, in a house where
there are other occupants, in the same room where other members of the family are also
sleeping, and even in places which to many would appear unlikely and high risk venues for its
commission. Besides, there is no rule that rape can be committed only in seclusion.

In stark contrast to AAA.’s firm declaration, the defense of denial invoked by the accused rests
on shaky grounds. The accused insists that ‘the accusation is a lie’ and claims that he did not
rape the victim, It should be noted however that accused himself admitted having a one on one
confrontation with AA.A in his room about the alleged missing items as he required her to see
him in his room and it lasted tor around 15 minutes. Why would he require her to go to his room
when he had already confronted them inside their room if not for his bestial desire and
intention? Besides, he already went to the extent of taking pictures of the alleged missing items
inside the locker of the victim and her cousin in their absence so as to compel them to admit the
crime. Why did he not complain right away to the police if indeed his accusation against the
victim is true?

Judicial experience has taught this Court that denial like alibi are the common defenses in rape
cases. Denial is an intrinsically weak defense which must be buttressed with strong evidence of
non-culpability to merit credibility. It is a negative self-serving assertion that deserves no weight
in law if unsubstantiated by clear and convincing evidence. ‘The barefaced denial of the charge
by the accused even if one of his boarder had testified cannot prevail over the positive and
forthright identification of him as the perpetrator of the dastardly act.

In rape, force and intimidation must be viewed in the light of the victim’s perception and
judgment at the time of the commission of the crime. AAA’s failure to shout or to tenaciously
resist accused should not be taken against her since such negative assertion would not ipso
facto make voluntary her submission to accused’s criminal act As already settled in our
jurisprudence, not all victims react the same way. Some people may cry out, some may faint,
some may be shocked into insensibility, while others may appear to yield to the intrusion. Some
may offer strong resistance while others may be too intimidated to offer any resistance at all.
Moreover, resistance is not an element of rape. A rape victim has no burden to prove that she
did all within her power to resist the force or intimidation employed upon her. As long as the
force or intimidation present, whether it was more or less irresistible is beside the point. Though
man puts no hand on a woman, yet if by the use of mental and moral coercion and intimidation,
the accused so overpowers her mind out of fear that as a result she dare not resist the dastardly
act inflicted on her person, accused is guilty of the crime imputed to him. In this case, the threat
of reporting her to the police and have the incident blottered regarding his accusation of theft
against her speaks loudly of accused’s use of force and intimidation.
Moreover, AAA said she was not able to do anything to resist the accused [when] he was raping
her. She told him to stop what he was doing [because] she didn’t like it but he [persisted]. The
most that she did was to cry. Owing to the minority of AAA and her physique as compared to
her molester, the Court believes that she was cowed by the accused’s act of forcing himself
upon her especially so when he threatened to report them to the authorities. ‘Physical
resistance need not be established in rape when threats and intimidation are employed and the
victim submits herself to her attacker because of fear – physical resistance is not the sole test to
ascertain whether or not a woman involuntarily yielded to the lust of her attacker.’

AAA’s account evinced sincerity and truthfulness and she never wavered in her story,
consistently pointing to accused as her rapist. Besides, no woman would willingly submit herself
to the rigors, humiliation and stigma attendant in a rape case if she was not motivated by an
earnest desire to punish the culprit. While there may be inconsistencies in AAA’s testimony,
they refer only to trivial matters which did not affect at all her account of the incident. ‘Errorless
recollection of a traumatic and agonizing incident cannot be expected of a witness when she is
recounting details of an experience as humiliating and as painful as rape.'[6]

Against this backdrop, the RTC disposed thus-

WHEREFORE, in the light of the foregoing, judgment is hereby rendered finding accused
JESSIE GABRIEL GUILTY beyond reasonable doubt of the crime of Rape, defined and
penalized under Article 266-A (a) of the Revised Penal Code as amended by Republic Act No.
8353, or the Anti Rape Law of 1997 and is hereby imposed with the penalty of Reclusion
Perpetua. He is ordered to pay AAA the sum of FIFTY THOUSAND PESOS (P50,000.00), by
way of civil indemnity, FIFTY THOUSAND PESOS (P50,000.00), as moral damages and
THIRTY THOUSAND PESOS (P30,000.00) as exemplary damages.

SO ORDERED. [7]

Ruling of the Court of Appeals

From this judgment, appellant appealed to the CA maintaining that the RTC erred in finding him
guilty of the crime of rape.

But the CA thumbed down the appeal, anchoring its verdict on the RTC’s aforequoted
ratiocination, and more particularly on “AAA’s” testimony-in-chief relative to the actual assault on
her person in the manner quoted. Indeed, the CA’s findings that “AAA” was raped by appellant
were a virtual reiteration of the RTC’s own summation as regards the rape.

The CA characterized “AAA’s” testimony in this wise:

The testimony of AAA, is simple, candid, straightforward, and consistent on material points,
detailing the act of rape against her by appellant. It is corroborated by the physical evidence of
fresh hymenal lacerations. The medico-legal report revealed that AAA’s perihymenal areal and
fossa navicularis had erythema and her hymen had multiple fresh lacerations at 3, 6, 9 & 12
o’clock positions. In short, the medical examination showed evidence of sexual abuse. x x x[8]
After this, t.he CA addressed appellant’s assault upon “AAA’s” credibility, to wit:

Appellant, however, casts doubts on the credibility of AAA He contends that AAA was motivated
by revenge because he had accused her of stealing and insisted that she admit the act. He also
assails the credibility of AAA’s account of the rape by pointing out that: AAA offered no
resistance; she first claimed that she did not feel appellant’s penis inside her vagina but later
abandoned her claim; x x x she did not tell her boardmate Montañez, “BBB”, and her aunt
“CCC” [about the alleged rape] but confided to them, except Montañez, that appellant was
forcing her to admit to the theft; AAA did not immediately reveal the rape to the police but first
talked to her uncle after which the latter confronted appellant[9]

The CA however found appellant’s contentions unconvincing:

It is highly improbable that a young, decent woman taking up nursing would concoct a rape
story against a man who is accusing her of a petty crime which she denies. A woman who
claims rape exposes herself to the spectacle of a public trial where she would recount the sordid
details of her ordeal. Thus, it has been repeatedly ruled that no young and decent woman in her
right mind would concoct a story of defloration, allow an examination of her private parts, and
thereafter pervert herself by being subjected to a public trial if she was not motivated solely by
her desire to obtain justice for the wrong committed against her.

Even assuming that AAA did not tenaciously resist the sexual assault[,] that docs not negate
rape. In rape, the force and intimidation must be viewed in the light of the victim’s perception
and judgment at the time of the commission of the crime. It ls settled that not all victims react
the same way. Some victims may cry out, some may faint, some may be shocked into
insensibility, while others may appear to yield to the intrusion. Some may offer strong resistance
while others may be too intimidated to after any resistance at all. Moreover, resistance is not an
element of rape. A rape victim has no burden to prove that she did all within her power to resist
the force or intimidation employed upon her. As long as the force or intimidation is present,
whether it was more or less irresistible is beside the point. In this case, what is important is that
AAA did not consent to the intercourse. She cried as appellant ravished her and told her uncle
about the rape at the first opportunity.

xxxx

That AAA did not immediately report the rape to the police when they came to the house but to
her uncle enhances rather than weakens her testimony. It is consistent with human experience
for a woman to prefer to reveal the assault on her honor to her kin first rather than to strangers,
including the police. [10]

Expounding on the usual reason for the seeming inability of the prosecution to assemble a
number of witnesses to establish a rape case, like the present case, the CA posited:

Inasmuch as the crime of rape is essentially committed in relative isolation or even secrecy, it is
usually the victim alone who can testify on the forced sexual intercourse. Therefore, in a
prosecution for rape, the credibility of the victim is almost always the single and most important
point to consider. If the victim’s testimony meets the test of credibility, the accused can
justifiably be convicted on the basis of her lone testimony.[11]

In the end, the CA sustained the factual underpinnings of the RTC’s verdict, harking back to the
well-settled dictum that the trial court is the best assayer and evaluator of witnesses and their
testimonies, thus:

The trial court gave credence to AAA and her testimony. Since the trial court had the opportunity
to examine her demeanor and conduct on the stand, We do not find any reason to depart from
its findings. Time and time again, it has been ruled that the assessment of the credibility of
witnesses and their testimonies is a matter best undertaken by the trial court because of its
unique firsthand opportunity to observe them under examination. x x x

There is no showing that the trial court overlooked misapprehended, or misinterpreted some
facts; or circumstances of weight and substance in convicting appellant. Its decision must be
upheld. Besides, appellant’s defense is in the nature of a denial which hardly creates
reasonable doubt of his guilt in light of his testimony that he was at the place and time of the
rape. Appellant’s denial cannot prevail over AAA’s direct, positive and categorical assertion that
rings with truth. Denial is inherently a weak defense which cannot outweigh positive testimony.
As between a categorical statement that has the earmarks of truth on the one hand and bare
denial, on the other, the former is generally held to prevail. [12]

The dispositive portion of the CA Decision reads:

WHEREFORE, premises considered, the Decision of the Regional Trial Court of Dagupan City,
Branch 43, dated July 19, 2011, in Criminal Case No. 2010-0118-D is AFFIRMED with
modification in that accused-appellant Jessie Gabriel is further ordered to pay interest on all
damages awarded at the rate of 6% per annum from the date of finality of judgment until fully
paid.

SO ORDERED.[13]

Our Ruling

We find no reason to disturb the CA’s above-mentioned findings and conclusion, especially so
because in the case at bench the CA and the RTC have uniformly given short shift to appellant’s
bare denial.

In the 1901 case of United States v. Ramos,[14] this Court had already declared that “[w]hen a
woman testifies that she has been raped she says, in effect, that all that is necessary to
constitute the commission of this crime has been committed. It is merely a question then,
whether or not this court accepts her statement.” Jurisprudence has clung with unrelenting
grasp to tills precept.

The trial court’s assessment and evaluation of the credibility of witnesses vis-a-vis their
testimonies ought to be upheld as a matter of course because of its direct, immediate and first
hand opportunity to observe the deportment of witnesses as they delivered their testimonies in
open court. Thus, the trial court’s findings bearing on the credibility of witnesses on these
matters are invariably binding and conclusive upon the appellate court unless of course, there is
a showing that the trial court had overlooked, misapprehended or misconstrued some fact or
circumstance of weight or substance, or had failed to accord or assign such fact or
circumstance its due import or significance. Here, it bears stressing that the CA itself declared in
its Decision that:

There is no showing that the trial court overlooked, misapprehended or misinterpreted some
facts or circumstances of weight and substance in convicting appellant. Its decision must be
upheld. Besides, appellant’s defense is in the nature of a denial which hardly creates
reasonable doubt of his guilt in light of his testimony that he was at the place and time of the
rape. Appellant’s denial cannot prevail over “AAA’s” direct positive and categorical assertion that
rings with truth. Denial is inherently a weak defense which cannot outweigh positive testimony.
As between a categorical statement that has the earmarks of truth on the one hand and bare
denial, on the other, the former is generally held to prevail.[15]

To these postulations by the CA, we give our unreserved assent.

Nonetheless, we have to modify the awards for civil indemnity, moral damages, and exemplary
damages. Conformably to this Court’s holding in People v. Jugueta,[16] the awards tor civil
indemnity, moral damages, and exemplary damages should be upgraded to P75,000.00 each.
The CA, however correctly imposed interest at the rate of six percent (6%) per annum on all
monetary awards.

WHEREFORE, the appeal is DISMISSED. The assailed March 25, 2014 Decision of the Court
of Appeals in CA-G.R. CR-HC No. 05147 finding appellant Jessie Gabriel y Gajardo guilty of the
crime of rape and sentencing him to suffer the penalty of reclusion perpetua is AFFIRMED with
FURTHER MODIFICATIONS that the awards for civil indemnity, moral damages and exemplary
damages are increased to P75,000.00 each.

15 MAR 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL DISMISSAL | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Ernesto Brown Vs. Marswin Marketing, Inc. and Sany Tan; G.R. No. 206891; March 15, 2017

This Petition for Review on Certiorari[1] assails the January 18, 2013 Decision[2] of the Court of
Appeals (CA) in CA-GR. SP No. 124098. The CA annulled and set aside the December 19,
2011[3] and January 31, 2012[4] Resolutions of the National Labor Relations Commission (NLRC),
which affirmed the June 30, 2011 Decision[5] of the Labor Arbiter (LA) declaring illegal the
dismissal from work of Ernesto Brown (Brown). Likewise assailed is the April 23, 2013 CA
Resolution[6] denying Brown’s Motion for Reconsideration.

Factual Antecedents
On June 7, 2010, Brown filed a Complaint[7] for illegal dismissal, nonpayment of salary and 13th
month pay as well as claim for moral and exemplary damages and attorney’s fees against
Marswin Marketing, Inc. (Marswin) and Sany Tan (Tan), its owner and President. He prayed for
reinstatement with full backwages and payment of his other monetary claims.

In his Position Paper,[8] Brown alleged that on October 5, 2009, Marswin employed, him as
building maintenance/ electrician with, a salary of P500.00 per day; he was assigned at
Marswin’s warehouse in Valenzuela, and was tasked to maintain its sanitation and make
necessary electrical repairs thereon.

Brown further averred that on May 28,2010, he reported, at the Main Office of Marswin, and was
told that it was already his last day of work. Allegedly, he was made to sign a document that he
did not understand; and, thereafter, he was no longer admitted back to work. Thus, he Insisted
that he was terminated without due process of law.

For their part, Marswin/Tan argued in their Position Paper[9] and Comment[10] that on October 4,
2009, Marswin, a domestic corporation engaged in wholesale trade of construction materials,
employed Brown as electrician; during his eight-month stay, Marswin received negative reports
anent Brown’s work ethics, competence, and efficiency. On May 28, 2010, they summoned him
at its Main Office to purportedly discuss the complaints of the Warehouse Manager and the
Warehouse Supervisor; during the meeting, they informed .Brown of the following charges
against him:

1. x x x [Disobedience to instructions given by the Electrical Engineer and

Contractor during the time [of] the renovation of the staff room at the
Valenzuela warehouse; making himself scarce and worse not responding
to calls for errands regarding electrical connections at the warehouse;

2. Exposing the office to possible criminal liability for installing a jumper at the
Valenzuela warehouse without being told to [make such installation];

3. Not performing his job well as electrician, thus, resulting to additional

expenses to the company, when it could have been avoided had he been
following x x x orders given to him;

4. Unreasonable refusal to perform his assigned tasks despite being

repeatedly ordered to do so x x x.[11]

Marswin/Tan stated that during the meeting, Brown excused himself purportedly to get in touch
with his wife; however, he never returned and no longer reported for work.

According to Marswin/Tan, Brown’s work as electrician did not involve an activity usually
necessary or desirable in the usual business of Marswin; thus, he was not its regular employee.
They also contended that during the May 28, 2010 meeting, Bernadette S. Azucena (Azucena),
its Accounting Supervisor and Human Resource Head, only admonished Brown but he left the
meeting and no longer returned to work. They attached in their Position Paper the Sinumpaang
Salaysay[12] executed by Azucena stating the alleged complaints she received against Brown,
and the events that transpired during the May 28, 2010 meeting, to wit:

xxxx

11. x x x [Si] Ernesto Brown ay aking pinatawag sa main office noong Mayo 28,
2010 para kausapin dahil sa mga nasabing reklamo sa kanyang
pagtatrabaho; noong aking binanggit sa kanya [ang] mga nasabing
reklamo ay wala man lang siyang kaimik imik; sinabi ko sa kanya na kung
ipagpapatuloy [nya] ang maling pagtrabaho at hindi pagsunod sa mga
pinagagawa sa kanya ay walang magagawa ang opisina kundi tanggalin
na siya; nanatili siyang walang imik at nagsabi siya na tatawag siya sa
kanyang asawa at umalis sya; hindi na siya bumalik noon at hindi na
pumasok magmula noon at nakatanggap na nga lang kami ng reklamo
[mula] sa tanggapa[n] ng Labor Arbiter. x x x.

12. Hindi totoo ang kanyang reklamo na siya ay dinismis; may legal na
kadahilanan na para siya ay dismisin pero hindi pa siya dinismis noong
Mayo 28, 2010; siya mismo ang hindi na bumalik sa tanggapan x x x[13]

Ruling of the Labor Arbiter

On June 30, 2011, the LA rendered a Decision declaring Brown’s dismissal illegal, the decretal
portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring

complainant Ernesto Brown to have been illegally dismissed from work.

Respondents are directed to reinstate complainant Brown to his former position without
loss of seniority rights and to notify this Office of their compliance thereto within ten (10)
days from receipt of this Decision. Further respondent Marswin Marketing, Inc. is hereby
directed to pay complainant Brown’s backwages computed from the time he was
illegally dismissed from work until his actual reinstatement pursuant to Article 279 of the
Labor Code and to pay his 13th month pay computed as follows:

a) backwages – P188,335,98

b) 13th month
– P 5,308.33
pay

All other claims are dismissed for lack of merit.

SO ORDERED.[14]
The LA held that Brown was a regular employee of Marswin because Marswin/Tan confirmed
hiring him on October 4, 2009; they paid him salary; they had the power to control bis conduct,
especially on how he should do his work; and, they had the power to dismiss him.

In ruling that Brown was illegally dismissed, the LA noted that the alleged complaints against
Brown were embodied in Azucena’s affidavit yet no actual complaints or reports against him
were adduced in evidence. The LA was also unconvinced that Brown left Marswin’s premises
and abandoned his work considering that he filed this illegal dismissal case; and his employer
failed to notify’ him to report back to work.

Ruling of the National Labor Relations Commission

On appeal,[15] the NLRC, through its Resolution dated December 19, 2011, affirmed the LA
Decision.

The NLRC held that the purported complaints against Brown were only gathered by Azucena
from the reports she supposedly received from the Warehouse Manager and Supervisor; thus,
her affidavit was hearsay and of poor evidentiary value. It ratiocinated that Marswin/Tan did not
give Brown the opportunity to confront his accusers, and did not observe due process in
terminating him. it also declared that there was no showing that Brown abandoned his work as
Marswin/Tan did not cite him for his alleged refusal to return to work.

On January 31, 2012, the NLRC denied the Motion for Reconsideration filed by Marswin/Tan.

Ruling of ike Court of Appeals

Undaunted, Marswin/Tan filed a Petition for Certiorari with the CA argumg that the NLRC
committed grave abase of discretion amounting to lack or excess of jurisdiction hi affirming the
LA Decision.

On January 18, 2013, the CA annulled and set aside the NLRC Resolutions. It entered a new
judgment declaring that Brown was legally dismissed, and therefore not entitled to backwages
and 13th month pay.

According to the CA, aside from his allegation that he was unceremoniously terminated, Brown
presented no evidence supporting such claim. It also held that there was no showing that Brown
was prevented from returning or was deprived of work. It likewise gave weight to the affidavit of
Azucena, which asserted that during the May 28, 2010 meeting, Brown was not dismissed but
was only informed of the complaints against him.

In sum, the CA decreed that this case did not involve the dismissal of an employee on the
ground of abandonment, there being no evidence proving that Brown was actually dismissed.

In its Resolution dated April 23, 2013, the CA denied the Motion for Reconsideration filed by
Brown.
 Issue

Aggrieved, Brown filed this Petition raising the sole issue as follows:
WHETHER THE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED
THE NLRC3S RESOLUTIONS AFFIRMING THE LABOR ARBITER’S DECISION
THAT THE PETITIONER ERNESTO BROWN WAS ILLEGALLY DISMISSED BY THE
PRIVATE RESPONDENTS.[16]

Brown contends that Marswin failed to discharge its burden to prove that he committed
abandonment. He argues that the fact that he challenges his dismissal disproves that he
abandoned his employment. He also stresses that the reliance of the CA on Azucena’s affidavit
is unwarranted as no actual complaints as regards his supposed infractions were adduced in
evidence. He posits that the bare allegations of Azucena are hearsay, and are not proof that he
committed any infraction.

Marswin/Tan, on their end, counter that the Court should not give due course to this Petition
because it raises factual issues which are not within the ambit of a petition under Rule 45 of the
Rules of Court.

Our Ruling

The Court grants the Petition.

As a rule, the Court, is not a trier of facts and only questions of law may be raised in a petition
under Rule 45 of the Rules of Court. A departure from this rule is nevertheless allowed where
the factual findings of the CA are contrary to those of the lower courts or tribunals. In this case,
the findings of the CA vary with those of the NLRC and LA. As such, the Court deems it
necessary to review the records and determine which findings and conclusion truly conform with
the evidence .adduced by the parties.[17]

Moreover, in dismissal cases, the employer bears the burden of proving that the employee was
not terminated, qr if dismissed, that the dismissal was legal. Resultantly, the failure of fee
employer to discharge such burden would mean that the dismissal is unjustified and thus,
illegal.[18] The employer cannot simply discharge such burden by its plain assertion that it did not
dismiss the employee; and it is highly absurd if the employer will escape liability by its mere
claim that the employee abandoned his or her work. In fine, where there is no clear and valid
cause for termination, the law treats it as a case of illegal dismissal.[19]

Thus, in order for the employer to discharge its burden to prove that the employee committed
abandonment, which constitutes neglect of duty, and is a just cause for dismissal, the employer
must prove that the employee 1) failed to report for work or had been absent without valid
reason; and 2) had a clear intention to discontinue his or her employment. The second
requirement must be manifested by overt acts and is more determinative in concluding that the
employee is guilty of abandonment. This is because abandonment is a matter of intention and
cannot be lightly presumed from indefinite acts.[20]

Here, Brown contends that on May 28, 2010, his employer informed him that it was already his
last day of work; and, thereafter, he was no longer admitted back to work. On the other hand,
Marswin/Tan confirmed having summoned Brown on May 28, 2010 but they denied that he was
dismissed, but that he left the meeting and since then never returned for work.

Nonetheless, apart from the allegation of abandonment, Marswin/Tan presented no evidence

proving that Brown felled to return without justifiable reasons and had clear intentions to
discontinue his work.

In fact, in her affidavit, Azucena did not specify any overt act on the part of Brown showing that
he intended to cease working for Marswin. At the same time, Azucena did not establish feat
Marswin, on its end, exerted effort to convince Brown to return for work, if only to show that
Marswin did not dismiss him and it was Brown who actually refused to return to work. [21] And
neither did Marswin send any notice to Brown to warn him that his supposed failure to report
would be deemed as abandonment of work.[22] Clearly from the foregoing, Marswin failed to
discharge the burden of proving that Brown abandoned his work.

In addition, on June 7, 2010, or just ten days after Brown’s last day at work (May 28, 2010), he
already filed an illegal dismissal suit against his employer, Such filing conveys his desire to
return, and strengthens his assertion that he did not abandon his work. To add, in his
Complaint, Brown prayed for reinstatement, which further bolsters his intention to continue
working for Marswin, and. negates abandonment.[23] Indeed, the immediate filing of an illegal
dismissal case especially so when it includes a prayer for reinstatement is totally contrary to the
charge of abandonment.[24]

Furthermore, Marswin/Tan presented the affidavit of Azucena, their Accounting Supervisor and
HR Head, as proof that Brown committed abandonment. However, aside from being insufficient,
self-serving, and unworthy of credence,[25] such affidavit did not allege any actual complaint
against Brown, when Marswin summoned him on May 28, 2010. In said affidavit, Azucena did
not at all specify the name of any officer or employee against whom Brown allegedly committed
an infraction, and neither did any of these persons submit their own affidavits to prove that
Brown should be disciplined by his employer. As stated by Azucena:

5. Na tumanggap ako ng mga reklamo sa aming Warehouse Manager at

Warehouse Supervisor ng aming bodega sa Valenzuela na [si] Ernesto
Brown ay madalas na maraming dahilan kapag ito ay pinapapunta sa
Valenzuela para maggawa; x x x

6. Na noong buwan ng Enero hanggang Marso ng taong ito (2010) ay ginawa

ang opisina ng staff sa bodega sa Valenzuela at bilang elek[t]risyan ay
inatasan siyang gawin ang ‘electrical wireline’ doon; Na nakarating [sa
amin] ang sumbong nina Electrical Engineer at Contraktor x x x na si
Ernesto Brown ay hindi sumusunod sa mga pinauutos nila at madalas na
makagalitan dahil doon;

7. Na noong nawalan ng electric power ang bodega sa Valenzuela dahil sa

electric shortage ay pinatingnan ito sa kanya, ngunit sa halip na ayusin ng
tarna ang problems, sa electrical wireline ay nilagyan niya ito ng ‘jumper’ at
ito ay nakita ng taga Meralco x x x;
 8. Nito lang buwan ng Abril 2010 ay gumawa na naman ng kapalpakan si
Ernesto Brown dito naman sa main office sa Binondo; iyong electronic lock
ng front door ng office sa third floor x x x ay nagmalfunction at nasira; ang
nasabing electronic lock ay covered pa ng warranty x x x; [n]ang suriin ang
nasabing electronic lock ay nalaman nami[n] na may nakialam sa loob ng
lock kung kaya hindi ito nakober ng warranty at nagbayad ang kumpanya
ng halagang P6,000.0[0] a pagsasaayos nito; x x x

9. x x x [Nang] ipatawag nami[n] ang security guard ay doon lang namin

nalaman na pinakialaman pala ni Ernesto Brown ang loob ng nasabing
electronic lock samantalang hindi naman ito pinagagawa sa kanya;

10. Na noong ipasuri ang electrical wireline sa bodega ng Valenzuela, nakita

ang sala-salabat o ‘spaghetti type’ na wiring nito; ilan[g] beses iniutos sa
kanya na ayusin at iwasto [ang] nasabing wiring pero hindi nya ito
ginagawa x x x;

11. Dahil dito si Ernesto Brown ay aldng pinatawag sa main office noong Mayo
28, 2010 para kausapin dahil sa mga nasabing reklamo sa kanyang
pagtatrabaho x x x[.][26]

Given all these, there is clearly no showing that Brown committed abandonment instead,
evidence proved that he was illegally dismissed from work.

Thus, as properly found by the LA and affirmed by the NLR.C, by reason of his illegal
termination, Brown is entitled to reinstatement without loss of seniority rights, and to full
backwages, which include allowances and other benefits or their monetary equivalent, from the
time his compensation was withheld until his actual reinstatement.[27]

At the same time, Brown is entitled to attorney’s fees of 10% of the total monetary award, as he
was compelled to litigate to protect his rights and interest The legal interest of 6% per annum
shall also be imposed on the total monetary awards from the finality of this Decision until fully
paid.[28]

WHEREFORE, the Petition is GRANTED. The January 18, 2013 Decision and April 23, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 124098 are REVERSED and SET
ASIDE.

Accordingly, the June 30, 2011 Decision of the Labor Arbiter, as affirmed by the December 19,
2011 Resolution of fee National Labor Relations Commission, is REINSTATED and AFFIRMED
with MODIFICATIONS in that Ernesto Brown is also entitled to receive attorney’s fees of 10% of
the total monetary awards. The legal interest of 6% per annum shall be imposed on the
monetary grants from the date of finality of this Decision until fully paid.
20 FEB 2017 | SUBJECT | CIVIL LAW | OBLIGATIONS AND CONTRACTS | SUBJECT | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Sps. Romeo Pajares and Ida T. Pajares Vs. Remarkable Laundry and Dry Cleaning, represented by
Archemedes G. Solis; G.R. No. 212690; February 20, 2017

Breach of contract may give rise to an action for specific performance or rescission of
contract.[1] It may also be the cause of action in a complaint for damages filed pursuant
to Art. 1170 of the Civil Code.[2] In the specific performance and rescission of contract
cases, the subject matter is incapable of pecuniary estimation, hence jurisdiction
belongs to the Regional Trial Court (RTC). In the case for damages, however, the court
that has jurisdiction depends upon the total amount of the damages claimed.Assailed in
this Petition for Review on Certiorari[3] is the December 11, 2013 Decision[4] of the Court
of Appeals (CA) in CA-G.R. CEB SP No. 07711 that set aside the February 19, 2013
Order[5] of the RTC, Branch 17, Cebu City dismissing Civil Case No. CEB-39025 for lack
of jurisdiction.
Factual Antecedents

On September 3, 2012, Remarkable Laundry and Dry Cleaning (respondent) filed a Complaint
denominated as “Breach of Contract and Damages”[6] against spouses Romeo and Ida Pajares
(petitioners) before the RTC of Cebu City, which was docketed as Civil Case No. CEB-39025
and assigned to Branch 17 of said court. Respondent alleged that it entered into a Remarkable
Dealer Outlet Contract[7] with petitioners whereby the latter, acting as a dealer outlet, shall
accept and receive items or materials for laundry which are then picked up and processed by
the former in its main plant or laundry outlet; that petitioners violated Article IV (Standard
Required Quota & Penalties) of said contract, which required them to produce at least 200 kilos
of laundry items each week, when, on April 30, 2012, they ceased dealer outlet operations on
account of lack of personnel; that respondent made written demands upon petitioners for the
payment of penalties imposed and provided for in the contract, but the latter failed to pay; and,
that petitioners’ violation constitutes breach of contract. Respondent thus prayed, as fol1ows:

WHEREFORE, premises considered, by reason of the above-mentioned breach of the

subject dealer contract agreement made by the defendant, it is most respectfully prayed
of the Honorable Court to order the said defendant to pay the following incidental and
consequential damages to the plaintiff., to wit:

a) TWO HUNDRED THOUSAND PESOS (PHP200,000.00) plus legal interest as

incidental and consequential [sic] for violating Articles IV and XVI of the Remarkable
Laundry Dealer Contract dated 08 September 2011.

b) Thirty Thousand Pesos (P30,000.00) as legal expenses.

c) Thirty Thousand Pesos (P30,000.00) as exemplary damages.

d) Twenty Thousand Pesos (P20,000.00) as cost of suit.

e) Such other reliefs that the Honorable Court deems as just and equitable. [8] (Italics in
the original)

Petitioners submitted their Answer,[9] to which respondent filed its Reply.[10]

During pre-trial, the issue of jurisdiction was raised, and the parties were required to submit their
respective position papers.

Ruling of the Regional Trial Court

On February 19, 2013, the RTC issued an Order dismissing Civil Case No. CEB-39025 for lack
of jurisdiction, stating:

In the instant case, the plaintiff’s complaint is for the recovery of damages for the
alleged breach of contract. The complaint sought the award of P200,000.00 as
incidental and consequential damages; the amount of P30,000.00 as legal expenses;
the amount of P30,000.00 as exemplary damages; and the amount of P20,000.00 as
cost of the suit, or for the total amount of P280,000.00 as damages.

Under the provisions of Batas Pambansa Blg. 129 as amended by Republic Act No.
7691, the amount of demand or claim in the complaint for the Regional Trial Courts
(RTCs) to exercise exclusive original jurisdiction shall exceed P300,000.00; otherwise,
the action shall fall under the jurisdiction of the Municipal Trial Courts. In this case, the
total amount of demand in the complaint is only P280,000.00, which is less than the
jurisdictional amount of the RTCs. Hence, this Court (RTC) has no jurisdiction over the
instant case.

WHEREFORE, premises considered, the instant case is hereby DISMISSED for lack of
jurisdiction.

Notify the counsels.

SO ORDERED.[11] (Emphasis in the original)

Respondent filed its Motion for Reconsideration,[12] arguing that as Civil Case No. CEB-39025 is
for breach of contract, or one whose subject is incapable of pecuniary estimation, jurisdiction
thus falls with the RTC. However, in an April29, 2013 Order,[13] the RTC held its ground.

Ruling of the Court of Appeals

Respondent filed CA-G.R. CEB SP No. 07711, a Petition for Certiorari[14] seeking to nullify the
RTC’s February 19, 2013 and April 29, 2013 Orders. It argued that the RTC acted with grave
abuse of discretion in dismissing Civil Case No. CEB-39025. According to respondent, said
case is one whose subject matter is incapable of pecuniary estimation and that the damages
prayed for therein are merely incidental thereto. Hence, Civil Case No. CEB-39025 falls within
the jurisdiction of the RTC pursuant to Section 19 of Batas Pambansa Blg. 129, as Amended
(BP 129).

On December 11, 2013, the CA rendered the assailed Decision setting aside the February 19,
2013 Order of the RTC and remanding the case to the court a quo for further proceedings. It
held as follows:

In determining the jurisdiction of an action whose subject is incapable of pecuniary

estimation, the nature of the principal action or remedy sought must first be ascertained.
If it is primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation and the jurisdiction of the court depends on the amount of the
claim. But, where the primary issue is something other than the right to recover a sum of
money, where the money claim is purely incidental to, or a consequence of the principal
relief sought, such are actions whose subjects are incapable of pecuniary estimation,
hence cognizable by the RTCs.[15]

xxxx

Verily, what determines the nature of the action and which court has jurisdiction over it
are the allegations of the complaint and the character of the relief sought. [16]

In our considered view, the complaint, is one incapable of pecuniary estimation; thus,
one within the RTC’s jurisdiction. x x x

xxxx

A case for breach of contract [sic] is a cause of action either for specific performance or
rescission of contracts. An action for rescission of contract, as a counterpart of an action
for specific performance, is incapable of pecuniary estimation, and therefore falls under
the jurisdiction of the RTC.[17]

Thus, the totality of damages principle finds no application in the instant case since the
same applies only when damages is principally and primarily demanded in accordance
with the specification in Administrative Circular No. 09-94 which reads: ‘in cases where
the claim for damages is the main cause of action…the amount of such claim shall be
considered in determining the jurisdiction of the court.’

Thus, the court a quo should not have dismissed the instant case.

WHEREFORE, in view of the foregoing, the Order dated February 19, 2013 of the
Regional Trial Court, 7th Judicial Region, Branch 17, Cebu City in Civil Case No. CEB-
39025 for Breach of Contract and Damages is hereby REVERSED and SET ASIDE.
This case is hereby REMANDED to the RTC which is ORDERED to PROCEED with the
trial on the merits with dispatch.

SO ORDERED.[18]

Petitioners sought to reconsider, but were denied. Hence, the present Petition.

Issue

In a June 29, 2015 Resolution,[19] this Court resolved to give due course to the Petition, which
claims that the CA erred in declaring that the RTC had jurisdiction over respondent’s Complaint
which, although denominated as one for breach of contract, is essentially one for simple
payment of damages.

Petitioners’ Arguments

In praying that the assailed CA dispositions be set aside and that the RTC’s February 19, 2013
Order dismissing Civil Case No. CEB-39025 be reinstated, petitioners in their Petition and
Reply[20] espouse the original findings of the RTC that Civil Case No. CEB-39025 is for the
recovery of a sum of money in the form of damages. They asserted that in determining
jurisdiction over the subject matter, the allegations in the Complaint and the principal relief in the
prayer thereof must be considered; that since respondent merely prayed for the payment of
damages in its Complaint and not a judgment on the claim of breach of contract, then
jurisdiction should be determined based solely on the total amount of the claim or demand as
alleged in the prayer; that while breach of contract may involve a claim for specific performance
or rescission, neither relief was sought in respondent’s Complaint; and, that respondent “chose
to focus his [sic] primary relief on the payment of damages,”[21] which is “the true, actual, and
principal relief sought, and is not merely incidental to or a consequence of the alleged breach of
contract.”[22] Petitioners conclude that, applying the totality of claims rule, respondent’s
Complaint should be dismissed as the claim stated therein is below the jurisdictional amount of
the RTC.

Respondent’s Arguments

Respondent, on the other hand, counters in its Comment[23] that the CA is correct in declaring
that Civil Case No. CEB-39025 is primarily based on breach of contract, and the damages
prayed for are merely incidental to the principal action; that the Complaint itself made reference
to the Remarkable Dealer Outlet Contract and the breach committed by petitioners, which gave
rise to a cause of action against the latter; and, that with the filing of the case, the trial court was
thus called upon to determine whether petitioners violated the dealer outlet contract, and if so,
the amount of damages that may be adjudged in respondent’s favor.

Our Ruling

The Court grants the Petition. The RTC was correct in categorizing Civil Case No. CEB-39025
as an action for damages seeking to recover an amount below its jurisdictional limit.
Respondent’s complaint denominated
as one for ”Breach of Contract &
Damages” is neither an action for
specific performance nor a complaint
for rescission of contract.

In ruling that respondent’s Complaint is incapable of pecuniary estimation and that the RTC has
jurisdiction, the CA comported itself with the following ratiocination:

A case for breach of contract [sic] is a cause of action either for specific performance or
rescission of contracts. An action for rescission of contract, as a counterpart of an action
for specific performance, is incapable of pecuniary estimation, and therefore falls under
the jurisdiction of the RTC.[24]

without, however, determining whether, from the four corners of the Complaint, respondent
actually intended to initiate an action for specific performance or an action for rescission of
contract. Specific performance is ”[t]he remedy of requiring exact performance of a contract in
the specific form in which it was made, or according to the precise terms agreed upon. [It is t]he
actual accomplishment of a contract by a party bound to fulfill it.”[25] Rescission of contract under
Article 1191 of the Civil Code, on the other hand, is a remedy available to the obligee when the
obligor cannot comply with what is incumbent upon him.[26] It is predicated on a breach of faith by
the other party who violates the reciprocity between them. Rescission may also refer to a
remedy granted by law to the contracting parties and sometimes even to third persons in order
to secure reparation of damages caused them by a valid contract, by means of restoration of
things to their condition in which they were prior to the celebration of the contract.[27]

In a line of cases, this Court held that —

In determining whether an action is one the subject matter of which is not capable of
pecuniary estimation this Court has adopted the criterion of first ascertaining the nature
of the principal action or remedy sought. If it is primarily for the recovery of a sum of
money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal trial courts or in the courts of first instance would depend
on the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and
are cognizable exclusively by courts of first instance (now Regional Trial Courts). [28]

To write finis to this controversy, therefore, it is imperative that we first determine the real nature
of respondent’s principal action, as well as the relief sought in its Complaint, which we quote in
haec verba:

REPUBLIC OF THE PHILIPPNES

REGIONAL TRIAL COURT
BRANCH ____
CEBUCITY

Remarkable Laundry
Civil Case No. ____
and Dry Cleaning

herein represented by
For: Breach of Contract & Damages
Archemedes G. Solis,

Plaintiff,

vs.

Spouses Romeo
Pajares and Ida T.
Pajares,

Defendants.

——————————————————————————–

COMPLAINT

Plaintiff, by counsels, to the Honorable Court most respectfully states THAT:

l. Plaintiff Remarkable Laundry and Dry Cleaning Services, is a sole proprietorship

business owned by Archemedes Solis with principal office address at PREDECO CMPD
AS-Ostechi Bldg. Banilad, Hernan Cortes St., Mandaue City.

2. Defendant Ida Pajares is of legal age, Filipino, married with address at Hermag
Village, Basak Mandaue City where she can be served with summons and other
processes of the Honorable Court.

3. On 08 SEP 2011, parties entered and signed a Remarkable Laundry Dealer Outlet
Contract for the processing of laundry materials, plaintiff being the owner of Remarkable
Laundry and the defendant being the authorized dealer of the said business. (Attached
and marked as Annex “A” is a copy of the Remarkable Laundry Dealer Outlet Contract.)
CAUSES OF ACTION:

4. Sometime on [sic] the second (2nd) quarter of 2012, defendant failed to follow the
required standard purchase quota mentioned in Article IV of the subject dealership
agreement.

5. Defendant through a letter dated April 24, 2012 said it [sic] would CEASE
OPERATION. It [sic] further stated that they [sic] would just notify or advise the office
when they are [sic] ready for the business again making the whole business endeavor
totally dependent upon their [sic] whims and caprices. (Attached and marked as Annex
“B” is a copy of letter of the defendant dated April 24, 2012.)

6. The aforementioned act of unilateral cessation of operation by the defendant

constitutes a serious breach to [sic] the contract because it totally, whimsically and
grossly disregarded the Remarkable Laundry Dealer Outlet Contract, which resulted to
[sic] failure on its part in obtaining the minimum purchase or delivery of 200 kilos per
week for the entire duration of its cessation of operations.

7. Under the aforementioned Dealer Contract, specifically m Article XV of the same are
classified as BREACH BY THE OUTLETS:

‘The parties agree that the happening of any of the stipulation and events by the dealer
outlet is otherwise [sic] in default of any of its obligations or violate any of the terms and
condition under this agreement.

Any violation of the above-mentioned provisions shall result in the immediate

termination of this agreement, without prejudice to any of the RL Main Operators rights
or remedies granted to it by law.

THE DEALER OUTLET SHALL ALSO BE LIABLE TO PAY A FINE OF TWENTY FIVE
THOUSAND PESOS, (P25,000.00) FOR EVERY VIOLATION AND PHP 50,000 IF
PRE-TERMINATION BY THE RL MAIN OPERATOR DUE TO BREACH OF THIS
AGREEMENT.’

8. Likewise it is provided in the said contract that:

… The DEALER OUTLET must have a minimum 200 kilos on a six-day or per week
pick-up for the entire duration of the contract to free the dealer outlet from being
charge[d] Php 200/week on falling below required minimum kilos per week of laundry
materials. Automatic charging shall become part of the billing on the services of the
dealer outlet on cases where the minimum requirements on required kilos are not met.[‘]
9. The cessation of operation by the defendant, which is tantamount to gross infraction
to [sic] the subject contract, resulted to [sic] incidental damages amounting to Two
Hundred Thousand Pesos (PHP200,000.00). Defendant should have opted to comply
with the Pre-termination clause in the subject contract other than its [sic] unilateral and
whimsical cessation of operations.

10. The plaintiff formally reminded the defendant of her obligations under the subject
contract through demand letters, but to no avail. The defendant purposely ignored the
letters by [sic] the plaintiff. (Attached and marked as Annex “C” to “C-2” are the Demand
Letters dated May 2, 2012, June 2, 2012 and June 19, 2012 respectively.)

11. To reiterate, the defendant temporarily stopped its business operation prior to the
two-year contract duration had elapsed to the prejudice of the plaintiff, which is a clear
disregard of its two-year obligation to operate the business unless a pre-termination is
called.

12. Under Article 1159 of the Civil Code of the Philippines provides [sic]:

‘Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith’

13. Likewise, Article 1170 of the Civil Code of the Philippines [provides] that:

‘Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof are liable for
damages.’

14. That the above-mentioned violations by the defendant to the Remarkable Laundry
Dealer Contract, specifically Articles IV and XVI thereof constitute gross breach of
contract which are unlawful and malicious under the Civil Code of the Philippines, which
caused the plaintiff to incur incidental and consequential damages as found in the
subject dealer contract in the total amount of Two Hundred Thousand Pesos
(PHP200,000.00) and incidental legal expenses to protect its rights in the amount of
P30,000.00

PRAYER:

WHEREFORE, premises considered, by reason of the above-mentioned breach of the

subject dealer contract agreement made by the defendant, it is most respectfully prayed
of the Honorable Court to order the said defendant to pay the following incidental and
consequential damages to the plaintiff, to wit:
a) TWO HUNDRED THOUSAND PESOS (PHP200,000.00) plus legal interest as
incidental and consequential [damages] for violating Articles IV and XVI of the
Remarkable Laundry Dealer Contract dated 08 SEP 2011;

b) Thirty Thousand Pesos (P30,000.00) as legal expenses;

c) Thirty Thousand Pesos (P30,000.00) as exemplary damages;

d) Twenty Thousand Pesos (P20,000.00) as cost of suit;

e) Such other reliefs that the Honorable Court deems as just and equitable.

August 31, 2012, Cebu City, Philippines.[29]

An analysis of the factual and material allegations in the Complaint shows that there is nothing
therein which would support a conclusion that respondent’s Complaint is one for specific
performance or rescission of contract. It should be recalled that the principal obligation of
petitioners under the Remarkable Laundry Dealership Contract is to act as respondent’s dealer
outlet. Respondent, however, neither asked the RTC to compel petitioners to perform such
obligation as contemplated in said contract nor sought the rescission thereof. The Complaint’s
body, heading, and relief are bereft of such allegation. In fact, neither phrase appeared on or
was used in the Complaint when, for purposes of clarity, respondent’s counsels, who are
presumed to be learned in law, could and should have used any of those phrases to indicate the
proper designation of the Complaint. To the contrary, respondent’s counsels designated the
Complaint as one for “Breach of Contract & Damages,” which is a misnomer and inaccurate.
This erroneous notion was reiterated in respondent’s Memorandum[30] wherein it was stated that
“the main action of CEB 39025 is one for a breach of contract.”[31] There is no such thing as an
“action for breach of contract.” Rather, “[b]reach of contract is a cause of action, [32] but not the
action or relief itself”[33] Breach of contract may be the cause of action in a complaint for specific
performance or rescission of contract, both of which are incapable of pecuniary estimation and,
therefore, cognizable by the RTC. However, as will be discussed below, breach of contract may
also be the cause of action in a complaint for damages.

A complaint primarily seeking to enforce the accessory obligation contained in the penal clause is
actually an action for damages capable of pecuniary estimation.

Neither can we sustain respondent’s contention that its Complaint is incapable of pecuniary
estimation since it primarily seeks to enforce the penal clause contained in Article IV of the
Remarkable Dealer Outlet Contract, which reads:

Article IV: STANDARD REQUIRED QUOTA & PENALTIES

In consideration [sic] for such renewal of franchise-dealership rights, the dealer outlet
must have a minimum 200 kilos on a six-day or per week pick-up for the entire duration
of the contract to FREE the dealer outlet from being charge [sic] Php200/week on falling
below required minimum kilos per week of laundry materials. Automatic charging shall
become part of the billing on the services of the dealer outlet on cases where the
minimum requirements on required kilos are not met.

The RL Main Operator has the option to cancel, terminate this dealership outlet
contract, at its option should [sic] in the event that there are unpaid services equivalent
to a two-week minimum required number of kilos of laundry materials but not P8,000
worth of collectibles, for services performed by the RL Main Operator or its assigned
Franchise Outlet, unpaid bills on ordered and delivered support products, falling below
required monthly minimum number of kilos.

Ten [percent] (10%) interest charge per month will be collected on all unpaid obligations
but should not be more than 45 days or an additional 10% on top of uncollected amount
shall be imposed and shall earn additional 10% on the next succeeding months if it still
remains unpaid. However, if the cause of default is due to issuance of a bouncing check
the amount of such check shall earn same penalty charge with additional 5% for the first
two weeks and 10% for the next two weeks and its succeeding two weeks thereafter
from the date of dishonor until fully paid without prejudice to the filling of appropriate
cases before the courts of justice. Violation of this provision if remained unsettled for
two months shall be considered as violation [wherein] Article XV of this agreement shall
be applied.[34]

To Our mind, petitioners’ responsibility under the above penal clause involves the payment of
liquidated damages because under Article 2226[35] of the Civil Code the amount the parties
stipulated to pay in case of breach are liquidated damages. “It is attached to an obligation in
order to ensure performance and has a double function:(1) to provide for liquidated damages,
and (2) to strengthen the coercive force of the obligation by the threat of greater responsibility in
the event of breach.”[36]

Concomitantly, what respondent primarily seeks in its Complaint is to recover aforesaid

liquidated damages (which it termed as “incidental and consequential damages”) premised on
the alleged breach of contract committed by the petitioners when they unilaterally ceased
business operations. Breach of contract may also be the cause of action in a complaint for
damages filed pursuant to Article 1170 of the Civil Code. It provides:

Art. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof; are
liable for damages. (Emphasis supplied)

In Pacmac, Inc. v. Intermediate Appellate Court,[37] this Court held that the party who unilaterally
terminated the exclusive distributorship contract without any legal justification can be held liable
for damages by reason of the breach committed pursuant to Article 1170.

In sum, after juxtaposing Article IV of the Remarkable Dealer Outlet Contract vis-à-vis the
prayer sought in respondent’s Complaint, this Court is convinced that said Complaint is one for
damages. True, breach of contract may give rise to a complaint for specific performance or
rescission of contract. In which case, the subject matter is incapable of pecuniary estimation
and, therefore, jurisdiction is lodged with the RTC. However, breach of contract may also be the
cause of action in a complaint for damages. Thus, it is not correct to immediately conclude, as
the CA erroneously did, that since the cause of action is breach of contract, the case would only
either be specific performance or rescission of contract because it may happen, as in this case,
that the complaint is one for damages.

In an action for damages, the court

which has jurisdiction is determined by
the total amount of damages claimed.

Having thus determined the nature of respondent’s principal action, the next question brought to
fore is whether it is the RTC which has jurisdiction over the subject matter of Civil Case No.
CEB-39025.

Paragraph 8, Section 19[38] of BP 129, as amended by Republic Act No. 7691,[39] provides that
where the amount of the demand exceeds P100,000.00, exclusive of interest, damages of
whatever kind, attorney’s fees, litigation expenses, and costs, exclusive jurisdiction is lodged
with the RTC. Otherwise, jurisdiction belongs to the Municipal Trial Court.[40]

The above jurisdictional amount had been increased to P200,000.00 on March 20, 1999 and
further raised to P300,000.00 on February 22, 2004 pursuant to Section 5 of RA 7691.[41]

Then in Administrative Circular No. 09-94[42] this Court declared that “where the claim for
damages is the main cause of action, or one of the causes of action, the amount of such claim
shall be considered in determining the jurisdiction of the court.” In other words, where the
complaint primarily seeks to recover damages, all claims for damages should be considered in
determining which court has jurisdiction over the subject matter of the case regardless of
whether they arose from a single cause of action or several causes of action.

Since the total amount of the damages claimed by the respondent in its Complaint filed with the
RTC on September 3, 2012 amounted only to P280,000.00, said court was correct in refusing to
take cognizance of the case.

WHEREFORE, the Petition is GRANTED and the December 11, 2013 Decision and March 19,
2014 Resolution of the Court of Appeals in CA-G.R. CEB SP No. 07711 are REVERSED and
SET ASIDE. The February 19, 2013 Order of the Regional Trial Court, Branch 17, Cebu City
dismissing Civil Case No. CEB-39025 for lack of jurisdiction is REINSTATED.

SO ORDERED.

20 FEB 2017 | SUBJECT | CRIMINAL LAW | ILLEGAL DRUGS |

People of the Philippines Vs. Salim Ismael y Radang; G.R. No. 208093; February 20, 2017
This is an appeal from the June 14, 2013 Decision[1] of the Court of Appeals (CA) in CA-GR CR
H.C. No. 00902, which affirmed the August 31, 2010 Judgment[2] of Branch 12, Regional Trial
Court (RTC) of Zamboanga City in Criminal Case Nos. 5021 (19952) and 5022 (19953), finding
appellant Salim Ismael y Radang (Salim) guilty beyond reasonable doubt of violating Sections 5
and 11, Article II of Republic Act No. 9165 (RA 9165), otherwise known as the Comprehensive
Dangerous Drugs Act of 2002. In Criminal Case No. 5021 (19952), Salim was sentenced to
suffer the penalty of life imprisonment and to pay a fine of P500,000.00 for illegal sale of shabu
under Section 5, Article II of RA 9165; and in Criminal Case No. 5022 (19953), he was
sentenced to suffer the penalty of imprisonment of twelve (12) years and one (1) day to fifteen
(15) years and pay a fine of P300,000.00 for illegal possession of shabu under Section 11 of the
said law.

Factual Antecedents

Salim was charged with violation of Sections 5 and II, Article II of RA 9165 for selling and
possessing methamphetamine hydrochloride (shabu). The twin Informations[3] instituted therefor
alleged:

In Criminal Case No. 5021 (19952)

That on or about August 25,2003, in the City of Zamboanga, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, not being authorized by
law to sell, deliver, transport, distribute or give away to another any dangerous drug, did
then and there willfully, unlawfully and feloniously, sell and deliver to SPO1 Roberto
Alberto Santiago, PNP, Culianan Police Station, who acted as poseur buyer, one (1)
small size transparent plastic pack containing white crystalline substance as certified to
by PO1 Rodolfo Dagalea Tan as METHAMPHETAMINE HYDROCHLORIDE (SHABU),
said accused knowing the same to be a dangerous drug.

CONTRARY TO LAW.

In Criminal Case No. 5022 (19953)

That on or about August 25, 2003, in the City of Zamboanga, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, not being authorized by
law, did then and there willfully, unlawfully and feloniously have in his possession and
under his custody and control, two (2) small size heat-sealed transparent plastic packs
each containing white crystalline substance as certified to by PO1 Rodolfo Dagalea Tan
as METHAMPHETAMINE HYDROCHLORIDE (SHABU), said accused knowing the
same to be a dangerous drug.

CONTRARY TO LAW.

Arraigned on July 6, 2004, Salim, assisted by counsel, pleaded not guilty to both charges. Upon
termination of the joint pre-trial conference, trial on the merits followed.
Version of the Prosecution

Culled from the records[4] were the following operative facts:

On August 25, 2003, at around 1:00 o’clock in the afternoon, a confidential informant
reported to SPO4 Menardo Araneta [SPO4 Araneta], Chief of the Intelligence Division of
the Culianan Police Station 4 [at Zamboanga City], that a certain “Ismael Salim” was
engaged in selling shabu at Barangay Talabaan near the Muslim [c]emetery [in that
city].

To verify the report, SPO4 Araneta instructed the said informant to [monitor] the area.
After the informant confirmed that the said Ismael Salim was indeed selling illegal drugs
in the reported area, SPO4 Araneta formed a buy-bust team composed of SPO1
Enriquez, SPO1 Eduardo N. Rodriguez (SPO1 Rodriguez), SPO1 Roberto A. Santiago
(SPO1 Santiago) and PO2 Rodolfo Dagalea Tan (PO2 Tan). It was then agreed that
SPO1 Santiago would act as poseur buyer with SPO1 Rodriguez as back-up. For the
purpose, SPO4 Araneta gave SPO1 Santiago a [P100] bill bearing Serial No. M419145
as marked money [to be used] in the buy-bust operation.

Upon arrival at Barangay Talabaan, the team parked their service vehicle along the
road. SPO1 Santiago, the confidential informant and SPO1 Rodriguez alighted from the
vehicle and walked towards the [area fronting] the Muslim cemetery. As they
approached the area, the informant pointed to a man wearing a brown T-shirt and black
short pants with white towel around his neck [whom he identified] as appellant Ismael
Salim, the target of the operation.

SPO1 Santiago then [walked] towards appellant and [told] the latter that he [wanted] to
buy shabu; to this appellant replied “how much?” SPO1 Santiago answered that he
[wanted to buy P100.00 worth of the shabu, and gave appellant] the P100.00 marked
money; [whereupon appellant] took from his left pocket one plastic sachet containing a
white crystalline substance [which he] handed over to SPO1 Santiago.

Upon seeing the exchange, SPO1 Rodriguez, who was positioned [some 10] meters
away, rushed in and arrested appellant[.] SPO1 Rodriguez made a precautionary
search of appellant’s body for any concealed weapon[, and found none]. Instead, SPO1
Rodriguez found, tucked inside [appellant’s left front pocket the P100.00] marked
money and two (2) more plastic sachets containing white crystalline substance wrapped
in a golden cigarette paper.

The police officers then brought appellant to the Culianan Police Station [in Zamboanga
City] with SPO1 Santiago keeping personal custody of the items confiscated from [him].
At the [police] station, the plastic sachet containing white crystalline substance subject
of the buy-bust operation, the two (2) plastic sachets also containing white crystalline
substance[, and the P100.00] marked money bearing Serial No. M419145 recovered
from appellant’s left pocket, were respectively turned over by SPO1 Santiago and SPO1
Rodriguez to the Desk Officer, PO3 Floro Napalcruz [PO3 Napalcruz], who likewise
turned [these over] to the Duty Investigator, [PO2 Tan]. PO2 Tan then placed his initial
“RDT” on the items recovered from appellant.

PO2 Tan also prepared a request to the PNP Regional Crime Laboratory 9, [at]
Zamboanga City for laboratory examination of the plastic sachet containing the white
crystalline substance subject of the sale between appellant and SPO1 Santiago, and
the other two (2) plastic sachet[s] found inside appellant’s pocket by SPO1 Rodriguez.

After conducting qualitative examination on the said specimens, Police Chief Inspector
[PCI] Mercedes D. Diestro, Forensic Chemist [Forensic Chemist Diestro], issued
Chemistry Report No. D-367-2003 dated August 25, 2003, finding [the above-
mentioned] plastic sachets positive for Methamphetamine Hydrochloride (shabu), a
dangerous drug.

Version of the Defense

The defense presented appellant as its lone witness. Appellant denied both charges; he denied
selling shabu to SPO1 Santiago, just as he denied having shabu in his possession when he was
arrested on August 25, 2003.

According to appellant, on August 25, 2003, he went to a store to buy cellphone load so that he
could call his wife. After buying the cellphone load, he went back to his house on board a sikad-
sikad, a bicycle-driven vehicle with a sidecar. When he was about 160 meters away from the
Muslim cemetery in Barangay Talabaan, he was arrested by five persons in civilian attire who
introduced themselves as police officers. The police officers conducted a search on his person
but did not find any dangerous drugs. Thereafter, he was brought to Culianan Police Station
where he was detained for two days. Appellant insisted that he never sold shabu to the police
officers who arrested him. He said that the first time he saw the alleged shabu was when it was
presented before the trial court. He denied that the police officers had confiscated a cellular
phone from him. He also asserted that all these police officers took away from him was his
money and that he had never met the said police officers prior to his arrest.

Ruling of the Regional Trial Court

On August 31, 2010, the RTC of Zamboanga City, Branch 12 rendered its Judgment finding
appellant guilty beyond reasonable doubt of having violated Sections 5 and 11, Article II of RA
9165.

The RTC gave full credence to the testimonies of SPO1 Santiago and SPO1 Rodriguez who
conducted the buy-bust operation against appellant; it rejected appellant’s defense of denial and
frame-up. The RTC noted that the defense of frame-up is easily concocted and is commonly
used as a standard line of defense in most prosecutions arising from violations of the
comprehensive dangerous drugs act.[5] Moreover, other than the self-serving statements of
appellant, no clear and convincing exculpatory evidence was presented in the present case.
The dispositive part of the Judgment of the RTC reads:

WHEREFORE, IN VIEW OF ALL THE FOREGOING this Court hereby finds the
accused herein, SALIM ISMAEL y RADANG guilty beyond reasonable doubt in both
cases, for violation of Sections 5 and 11, Article II of Republic Act No. 9165 otherwise
known as the Comprehensive Dangerous Drugs Act of 2002 and hereby sentences the
said accused, in Criminal Case No. 5021 (19952) for Violation of Section 5, Article II of
Republic Act No. 9165, to suffer the penalty of LIFE IMPRISONMENT and to pay a fine
of Five Hundred Thousand Pesos (P500,000.00), and in Criminal Case No. 5022
(19953) for Violation of Section 11, Article II of Republic Act No. 9165, to suffer the
penalty of Imprisonment of TWELVE (12) YEARS and ONE (1) DAY to FIFTEEN (15)
YEARS and to pay a fine of Three Hundred Thousand Pesos (P300,000.00).

The dangerous drugs seized and recovered from the accused in these cases are
hereby ordered confiscated and forfeited in favor of the government to be disposed in
accordance with the pertinent provisions of Republic Act No. 9165 and its implementing
rules and guidelines.

Cost against the accused.

SO ORDERED.[6]

Ruling of the Court of Appeals

Dissatisfied with the RTC’s verdict, appellant appealed to the CA, but on June 14, 2013, the CA
affirmed in toto the RTC’s Judgment. The CA held that the elements of both illegal sale and
illegal possession of dangerous drugs had been duly proven in the instant case. The CA joined
the RTC in giving full credence to the testimonies of the aforementioned police officers, as they
are presumed to have performed their duties in a regular manner, no evidence to the contrary
having been adduced in the twin cases. Moreover, the CA found that in these cases, the
integrity and evidentiary value of the seized drugs had not at all been compromised, but were in
fact duly preserved.

The CA disposed as fol1ows:

WHEREFORE, the assailed Judgment of the Regional Trial Court, 9th Judicial Region,
Branch 12, Zamboanga City finding accused-appellant Salim Ismael y Radang guilty
beyond reasonable doubt of Sections 5 and 11, Article II of Republic Act No. 9165,
otherwise known as the Comprehensive Dangerous Drugs Act of 2002 is AFFIRMED in
toto.

SO ORDERED.[7]
Taking exception to the CA’s Decision, appellant instituted the present appeal before this Court
and in his Appellant’s Brief[8] argues that:

THE COURT A QUO GRAVELY ERRED IN CONVICTING THE ACCUSED-

APPELLANT WHEN [HIS] GUILT WAS NOT PROVEN BEYOND REASONABLE
DOUBT.[9]

It is appellant’s contention that his guilt had not been proven beyond reasonable doubt because
the prosecution: (1) failed to establish the identity of the prohibited drugs allegedly seized from
him and; (2) likewise failed to comply with the strict requirements of Section 21 of RA 9165.

Our Ruling

The appeal is meritorious.

To secure a conviction for illegal sale of dangerous drugs under Section 5, Article II of RA 9165,
the prosecution must establish the following elements: (1) the identity of the buyer and the
seller, the object of the sale and its consideration; and (2) the delivery of the thing sold and the
payment therefor.[10] What is important is that the sale transaction of drugs actually took place
and that the object of the transaction is properly presented as evidence in court and is shown to
be the same drugs seized from the accused.

On the other hand, for illegal possession of dangerous drugs, the following elements must be
established: ” [1] the accused was in possession of dangerous drugs; [2] such possession was
not authorized by law; and [3] the accused was freely and consciously aware of being in
possession of dangerous drugs.”[11]

In cases of illegal sale and illegal possession of dangerous drugs, the dangerous drug seized
from the accused constitutes the corpus delicti of the offense. Thus, it is of utmost importance
that the integrity and identity of the seized drugs must be shown to have been duly preserved.
“The chain of custody rule performs this function as it ensures that necessary doubts concerning
the identity of the evidence are removed.”[12]

After a careful examination of the records of the case, we find that the prosecution failed to
establish an unbroken chain of custody of the seized drugs in violation of Section 21, Article II of
RA 9165.

The pertinent provisions of Section 21 state:

Section 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered

Dangerous Drugs, Plant Sources of Dangerous Drugs. Controlled Precursors and
Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. – The
PDEA shall take charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so confiscated, seized and/or
surrendered, for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of the drugs shall,
immediately after seizure and confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any elected public official who
shall be required to sign the copies of the inventory and be given a copy thereof;

Similarly, the Implementing Rules and Regulations (IRR) further elaborate on the proper
procedure to be followed in Section 21(a) of RA 9165. It states:

(a) The apprehending office/team having initial custody and control of the drugs shall,
immediately after seizure and confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any elected public official who
shall be required to sign the copies of the inventory and be given a copy thereof:
Provided, that the physical inventory and photograph shall be conducted at the place
where the search warrant is served; or at the nearest police station or at the nearest
office of the apprehending officer/team, whichever is practicable, in case of warrantless
seizures; Provided, further that non-compliance with these requirement” under justifiable
grounds, as long as the integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not render void and invalid
such seizures of and custody over said items;

In Mallillin v. People,[13] the Court exp1ained the chain of custody rule as follows:

As a method of authenticating evidence, the chain of custody rule requires that the
admission of an exhibit be preceded by evidence sufficient to support a finding that the
matter in question is what the proponent claims it to be. It would include testimony
about every link in the chain, from the moment the item was picked up to the time
it is offered into evidence, in such a way that every person who touched the
exhibit would describe how and from whom it was received, where it was and
what happened to it while in the witness’ possession, the condition in which it
was received and the condition in which it was delivered to the next link in the
chain. These witnesses would then describe the precautions taken to ensure that there
had been no change in the condition of the item and no opportunity for someone not in
the chain to have possession of the same. (Emphasis supplied)

The first link in the chain is the marking of the seized drug. We have previously held that:

x x x Marking after seizure is the starting point in the custodial link, thus it is vital that the
seized contraband are immediately marked because succeeding handlers of the
specimen will use the markings as reference. The marking of the evidence serves to
separate the marked evidence from the corpus of all other similar or related evidence
from the time they are seized from the accused until they are disposed of at the end of
the criminal proceedings, obviating switching, ‘planting,’ or contamination of evidence.[14]

It is important that the seized drugs be immediately marked, if possible, as soon as they are
seized from the accused.

Furthermore, in People v. Gonzales,[15] the Court explained that:

The first stage in the chain of custody rule is the marking of the dangerous drugs or related
items. Marking, which is the affixing on the dangerous drugs or related items by the
apprehending officer or the poseur buyer of his initials or signature or other identifying
signs, should be made in the presence of the apprehended violator immediately upon
arrest. The importance of the prompt marking cannot be denied, because succeeding handlers
of dangerous drugs or related items will use the marking as reference. Also, the marking
operates to set apart as evidence the dangerous drugs or related items from other material from
the moment they are confiscated until they are disposed of at the close of the criminal
proceedings, thereby forestalling switching, planting or contamination of evidence. In short, the
marking immediately upon confiscation or recovery of the dangerous drugs or related
items is indispensable in the preservation of their integrity and evidentiary value.
(Emphasis supplied)

In this case, SPO1 Rodriguez testified on the seizure of the sachets of shabu he found in
appellant’s possession after the latter was arrested. SPO1 Rodriguez shared the details of how
the seized drugs were handled following its confiscation as follows:

RSP II Ivan C. Mendoza, Jr.:

Q: You are telling the Honorable Court that instead of finding concealed weapon, you x x x found two
small sized heat-sealed transparent plastic bag[s]?

A: Yes, sir.

Q: Where [were] these two small[-]sized heat-sealed transparent plastic [packs] found?

A: [In] his left-front pocket.

Q: Were they wrapped further in another piece of paper or were they just found in that pocket?
A: [They were] wrapped in a [golden-colored] cigarette paper.

Q: Would you x x x be able to remember that [golden- colored] cigarette paper? The wrapper of plastic
pack?

A: Yes, sir.

Q: Why will you be able to remember it?

A: Because I turned it over to the desk officer and the desk officer turned it over to the
investigator, the investigator marked it.

Q: Who is the investigator?

A: PO2 Rodolfo Tan.

Q: So did you see anything that the investigator Rodolfo Tan do in that golden paper?

A: He marked his initial [sic].

Q: Ah, you saw him [mark] an initial?

A: Yes, sir.

Q: What did you see him [mark] on the paper?

A: RDT.
Q: And do you know the meaning of RDT?

A: Yes, Rodolfo Dagalea Tan.[16]

The testimony of SPO1 Rodriguez on the chain of custody of the seized drugs leaves much to
be desired. It is evident that there was a break in the very first link of the chain when he failed to
mark the sachets of shabu immediately upon seizing them from the appellant. According to
SPO1 Rodriguez, after finding sachets of shabu in appellant’s possession, he turned the drugs
over to the desk officer. SPO1 Rodriguez did not even explain why he failed to mark or why he
could not have marked the seized items immediately upon confiscation. Allegedly, the desk
officer, after receiving the seized items from SPO1 Rodriguez, in turn handed them over to PO2
Tan. Notably, this desk officer was not presented in court thereby creating another break in the
chain of custody. Again, no explanation was offered for the non-presentation of the desk officer
or why he himself did not mark the seized items. It was only upon receipt by PO2 Tan, allegedly
from the desk officer, of the seized drugs that the same were marked at the police station. This
means that from the time the drugs were seized from appellant until the time PO2 Tan marked
the same, there was already a significant gap in the chain of custody. Because of this gap, there
is no certainty that the sachets of drugs presented as evidence in the trial court were the same
drugs found in appellant’s possession.

SPO1 Santiago, the poseur-buyer in the buy-bust operation, was presented to corroborate the
testimony of SPO1 Rodriguez. However, his testimony likewise showed that the arresting
officers did not mark the seized drug immediately after the arrest and in the presence of the
appellant. Similarly, no explanation was given for the lapse. SPO1 Santiago testified as follows:

Q: So what did you do with the small transparent sachet after police officer Rodriguez came to assist
you?

A: After the arrest of a certain Ismael we proceeded to our police station when we arrived there I
turnover [sic] the transparent sachet to our desk officer.

Q: Who was the desk officer?

A: At that time it was PO3 Floro Napalcruz.

Q: Did you notice anything that he did with the specimen that you turnover [sic] to him, if any?
COURT: You are referring to the desk officer?

RSPII IVAN C. MENDOZA, JR.: Yes, Your Honor.

A: During that time, Your Honor, I gave to him the, [sic] which I buy from him [sic] the one (1) piece of
transparent small sachet of shabu then after that I get [sic] out from the office.[17]

During cross-examination, SPO1 Santiago reiterated that he did not mark the seized drugs. The
sachets were marked after they were received by PO2 Tan.

Q: Now, you said that this plastic sachet taken from the suspect, you turned it over to the desk officer of
the police station?

A: Yes, sir.

Q: After turning it over, you left?

A: Yes, sir.

Q: You do not know what happened to the sachet?

A: Yes, sir.

Q: You did not place your markings there?

A: None, sir.[18]

It is clear from the above that SPO1 Rodriguez and SPO1 Santiago did not mark the seized
drugs immediately after they were confiscated from appellant. No explanations were given why
markings were not immediately made. At this stage in the chain, there was already a significant
break such that there can be no assurance against switching, planting, or contamination. The
Court has previously held that, “failure to mark the drugs immediately after they were seized
from the accused casts doubt on the prosecution evidence warranting an acquittal on
reasonable doubt.”[19]
Both arresting officers testified that they turned over the sachets of shabu to a desk officer in the
person of PO3 Napalcruz at the police station. Notably, PO3 Napalcruz was not presented in
court to testify on the circumstances surrounding the alleged receipt of the seized drugs. This
failure to present PO3 Napalcruz is another fatal defect in an already broken chain of custody.
Every person who takes possession of seized drugs must show how it was handled and
preserved while in his or her custody to prevent any switching or replacement.

After PO3 Napalcruz, the seized drugs were then turned over to PO2 Tan. It was only at this
point that marking was done on the seized drugs. He revealed in his testimony the following:

4th ACP RAY Z. BONGABONG:

Q: [After the apprehension] of the accused in this case, what happened?

A: SPO1 Roberto Santiago turned over to the Desk Officer one (1) small size heat-sealed transparent
plastic pack containing shabu, allegedly a buy[-]bust stuff confiscated from the subject person and
marked money while SPO1 Eduardo Rodriguez turned over two (2) small size heat[]sealed
transparent plastic packs allegedly confiscated from the possession of the subject person during a
body search conducted and one (1) Nokia cellphone 3310 and cash money of P710.00.

xxxx

Q: You as investigator of the case what did you do, if any, upon the turn over of those items?

A: I prepared a request for laboratory examination addressed to the Chief PNP Crime Laboratory 9, R.
T. Lim Boulevard, this City.

Q: This small heat[-]sealed transparent plastic sachet if you can see this again, will you be able to
identify the same?

A: Yes, Sir.

Q: How?
A: Through my initial, Sir.

Q: What initial?

A: RDT

Q: What does RDT stands [sic] for?

A: It stands for my name Rodolfo Dagalea Tan.[20]

In fine, PO2 Tan claimed during his direct examination that he received the seized items from
the desk officer.

During cross-examination, however, PO2 Tan contradicted his previous statement on who
turned over the sachets of shabu to him, viz.:

ATTY. EDGARDO D. GONZALES:

Q: Santiago told you that he was the poseur buyer?

A: Yes, Sir.

Q: He turned over to you, what?

A: He turned over to me small size heat[-]sealed transparent plastic pack containing white crystalline
substance, containing shabu.

xxxx

Q: You also identified two other pieces of sachet, correct, Sir?

A: Yes, Sir.

Q: Who turned over to you?

A: SPO1 Eduardo Rodriguez.[21]

Due to the apparent breaks in the chain of custody, it was possible that the seized item subject
of the sale transaction was switched with the seized items subject of the illegal possession
case. This is material considering that the imposable penalty for illegal possession of shabu
depends on the quantity or weight of the seized drug.

Aside from the failure to mark the seized drugs immediately upon arrest, the arresting officers
also failed to show that the marking of the seized drugs was done in the presence of the
appellant. This requirement must not be brushed aside as a mere technicality. It must be shown
that the marking was done in the presence of the accused to assure that the identity and
integrity of the drugs were properly preserved. Failure to comply with this requirement is fatal to
the prosecution’s case.

The requirements of making an inventory and taking of photographs of the seized drugs were
likewise omitted without offering an explanation for its non-compliance. This break in the chain
tainted the integrity of the seized drugs presented in court; the very identity of the seized drugs
became highly questionable.

To recap, based on the evidence of the prosecution, it is clear that no markings were made
immediately after the arrest of the appellant. The seized drugs were allegedly turned over to
desk officer PO3 Napalcruz but the prosecution did not bother to present him to testify on the
identity of the items he received from SPO1 Rodriguez and SPO1 Santiago. PO3 Napalcruz
supposedly turned over the drugs to PO2 Tan who marked the same at the police station.

During his direct testimony, PO2 Tan claimed that he received the drugs from PO3 Napalcruz.
However, during his cross examination, PO2 Tan contradicted himself when he admitted receipt
of the seized drugs from SPO1 Santiago and SPO1 Rodriguez. Aside from these glaring
infirmities, there was no inventory made, or photographs taken, of the seized drugs in the
presence of the accused or his representative, or in the presence of any representative from the
media, Department of Justice or any elected official, who must sign the inventory, or be given a
copy of the inventory as required by RA 9165 and its IRR.

Lastly, we note that the trial court, in its November 12, 2007 Order, already denied the
admission of Exhibits ”B-1″ and “B-2” or the drugs subject of the illegal possession case. The
relevant portions of the Order are as follows:

Plaintiff’s Exhibits “B-1” and “B-2” however are DENIED admission on the grounds that
Exhibit “B-1” submitted by the prosecution in evidence is merely a cigarette foil,
whereas Exhibit “B-2” is a heat sealed transparent plastic sachet containing 0.0135
gram of methamphetamine hydrochloride which are inconsistent with its offer that
Exhibits “B-1” and “B-2” are two (2) plastic heat sealed transparent plastic sachets
containing shabu with a total weight of 0.0310 gram.[22]

Surprisingly, however, the trial court rendered a verdict convicting the appellant of violating
Section 11, RA 9165 on illegal possession of dangerous drugs based on the same pieces of
evidence it previously denied.

In sum, we find that the prosecution failed to: (1) overcome the presumption of innocence which
appellant enjoys; (2) prove the corpus delicti of the crime; (3) establish an unbroken chain of
custody of the seized drugs; and (3) offer any explanation why the provisions of Section 21, RA
9165 were not complied with. This Court is thus constrained to acquit the appellant based on
reasonable doubt.

WHEREFORE, the appeal is GRANTED. The assailed June 14, 2013 Decision of the Court of
Appeals in CA-G.R. CR HC No. 00902, which affirmed the August 31, 2010 Judgment of Branch
12, Regional Trial Court of Zamboanga City in Criminal Case Nos. 5021 (19952) and 5022
(19953) is REVERSED and SET ASIDE.

Accordingly, appellant Salim R. Ismael is ACQUITTED based on reasonable doubt.

The Director of the Bureau of Corrections is directed to cause the immediate release of
appellant, unless the latter is being lawfully held for another cause, and to inform the Court of
the date of his release or reason for his continued confinement within five days from notice.

SO ORDERED.

15 FEB 2017 | SUBJECT | CRIMINAL LAW | ART. 335 - RAPE*

People of the Philippines Vs. Juan Richard Tionloc y Marquez; G.R. No. 212193; February 15, 2017

When the evidence fails to establish all the elements of the crime, the verdict must be one of
acquittal of the accused. This basic legal precept applies in this criminal litigation for rape.

Factual Antecedents

Juan Richard Tionloc y Marquez (appellant) appeals the September 26, 2013 Decision[1] of the
Court of Appeals (CA) in CA-G.R. CR.-H.C. No. 05452 which affirmed with modification the
February 15, 2012 Decision[2] of the Regional Trial Court (RTC) of Manila, Branch 37, in
Criminal Case No. 08-264453. The RTC found appellant guilty beyond reasonable doubt of the
crime of rape committed against “AAA”[3] under paragraph 1 of Article 266-A of the Revised
Penal Code (RPC). The designation of the crime in the Information against appellant is rape by
sexual assault under paragraph 2, Article 266-A of the RPC. However, the accusatory portion of
the Information charges appellant with rape through sexual intercourse under paragraph 1(b),
Article 266-A, to wit:
That on or about September 29, 2008 in the City of Manila, Philippines, the said accused,
conspiring and confederating with one whose true name, real identity and present whereabouts
are still unknown and mutually helping each other, did then and there wilfully, unlawfully and
feloniously, with lewd design and by means of force and intimidation, commit sexual abuse upon
the person of “AAA” by then and there making her drink liquor which made her dizzy and drunk,
depriving her of reason or otherwise unconsciousness, bringing her to a room and succeeded in
having carnal knowledge of her, against her will.

Contrary to law.[4]

When arraigned, appellant pleaded “not guilty.” Elvis James Meneses (Meneses) was involved
in the commission of the crime but could not be prosecuted due to his minority. He was only 14
years old at the time of the incident.

Version of the Prosecution

“AAA” testified that at around 9:30 p.m. of September 29, 2008, she was having a drinking
session with appellant and Meneses in the house of appellant. After some time, she felt dizzy so
she took a nap. At around 11:00 p.m., she was roused from her sleep by Meneses who was
mounting her and inserting his penis into her vagina. She felt pain but could only cry in silence
for fear that the knife which they used to cut hotdog and now lying on top of a table nearby
would be used to kill her if she resisted. Meneses left after raping her. While still feeling dizzy,
afraid and shivering, appellant approached her and asked if he could also have sex with her.
When she did not reply appellant mounted and raped her. Appellant stopped only when she
tried to reposition her body. “AAA” then left appellant’s house and immediately returned to the
house she shared with her live-in partner.

The following day, “AAA” reported the incident to the police. She also underwent a medical
examination and the results revealed two lacerations in her hymen.

Version of the Defense

Appellant denied raping “AAA.” He claimed that on that fateful night, he was having a drinking
session with his cousin, Gerry Tionloc. After a while, Meneses and “AAA” arrived and joined in
their drinking session. Meneses and “AAA” then went inside his bedroom and continued drinking
while he went out of the house to buy food. When he returned and entered his bedroom, he saw
Meneses and “AAA” having sex. They asked him to leave, so he went to the kitchen. Meneses
then came out of the bedroom followed by “AAA” who was holding a bottle of “rugby,” which she
brought home with her. Appellant contended that nothing more happened that night. Meneses
corroborated his version of the incident.

Ruling of the Regional Trial Court

In its Decision[5] dated February 15,2012, the RTC clarified that appellant is charged with rape
through sexual intercourse under paragraph 1, Article 266-A of the RPC based on the
allegations in the Information and not with rape by sexual assault under paragraph 2 of the
same provision of law, as the designation in the Information suggests. The RTC stressed that
this is consistent with the legal precept that it is the allegations or recital in the Information that
determine the nature of the crime committed. Thus, the RTC ruled that appellant was guilty
beyond reasonable doubt of rape through sexual intercourse against “AAA.” It held that the
prosecution successfully established the crime through the testimony of “AAA,” which was
credible, natural, convincing and consistent with human nature and the normal course of things.
The dispositive portion of the Decision reads as follows:

WHEREFORE, the Court finds the accused Juan Richard Tionloc y Marquez GUlLTY beyond
reasonable doubt of the crime of rape punishable under paragraph 1 of Article 266-A of the
Revised Penal Code and hereby sentences him to suffer the penalty of reclusion perpetua. He
is ordered to pay the private complainant Php50,000.00 as civil indemnity and Php50,000.00 as
moral damages.

SO ORDERED.[6]

Appellant appealed the RTC’s Decision arguing that discrepancies in the sworn statement of
“AAA” and her testimony diminished her credibility. Appellant contended that “AAA” alleged in
her sworn statement that: (1) appellant held her hands while Meneses was on top of her; and
(2) she slept after Meneses raped her and awakened only when he was on top of her. However,
“AAA” did not mention these allegations during her direct examination. Appellant maintained
that “AAA” failed to refute his assertions that her aunt and uncle fabricated the charges against
him for having previous affairs with two of her cousin.

Ruling of the Court of Appeals

In its Decision[7] dated September 26, 2013, the CA ruled that discrepancies between the
affidavit and testimony of “AAA” did not impair her credibility since the former is taken ex parte
and is often incomplete or inaccurate for lack or absence of searching inquiries by the
investigating officer. The inconsistencies even preclude the possibility that the testimony given
was rehearsed. Moreover, the CA held that a rape victim like “AAA” is not expected to make an
errorless recollection of the incident, so humiliating and painful that she might even try to
obliterate it from her memory. The CA gave scant consideration to the appellant’s claim of ill
motive of the aunt and uncle of”AAA,” as well as his denial of raping her which cannot overcome
her positive, candid and categorical testimony that he was the rapist. The CA therefore affirmed
the Decision of the RTC with modification that interest at the rate of 6% per annum is imposed
on all damages awarded from the date of finality of the CA’s Decision until fully paid. The
dispositive portion of the CA’s Decision reads as follows:

WHEREFORE, premises considered, the appeal is DENIED. The Decision dated 15 February
2012 of the Regional Trial Court, National Capital Judicial Region. Manila, Branch 37, in Crim.
Case No. 08-264453 finding accused-appellant Juan Richard Tionloc y Marquez guilty beyond
reasonable doubt for the crime of rape under paragraph 1 of Article 266-A of the Revised Penal
Code, as amended, and sentencing him to suffer the penalty of reclusion perpetua and to pay
Php50,000.00 as civil indemnity and another Php50,000.00 as moral damages in favor of
private complainant AAA is AFFIRMED with MODIFICATION in that interest at the rate of 6%
per annum is imposed on all damages awarded from the date of finality of this judgment until
fully paid.
SO ORDERED.[8]

Still insisting on his innocence, appellant comes to this Court through this appeal.

Assignment of Error

Appellant adopts the same assignment of error he raised before the CA, viz.:

THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY

BEYOND REASONABLE DOUBT OF THE CRIME CHARGED.[9]

Appellant asserts that he should be acquitted of rape since the prosecution was not able to
establish the required quantum of evidence in order to overcome the presumption of innocence.

Our Ruling

The appeal is meritorious.

The Facts Recited In The Information Determine the Crime Charged.

It is apparent that there is a discrepancy in the designation of the crime in the Information (rape
by sexual assault under paragraph 2 of Article 266-A of the RPC) and the recital in the
Information (rape through sexual intercourse under paragraph 1 of the same provision of law).
However, this discrepancy does not violate appellant’s right to be informed of the nature and
cause of the accusation against him. As ruled correctly by the RTC, the allegations in the
Information charged appellant with rape through sexual intercourse under paragraph 1 of Article
266-A of the RPC and said allegations or recital in the Information determine the nature of the
crime committed. “[T]he character of the crime is not determined by the caption or preamble of
the Information nor from the specification of the provision of law alleged to have been violated,
but by the recital of the ultimate facts and circumstances in the complaint or information.”[10]

The Use Of Force, Threat or Intimidation Causes Fear on the Part of the Rape Victim.

Be that as it may, the prosecution had to overcome the presumption of innocence of appellant
by presenting evidence that would establish the elements of rape by sexual intercourse under
paragraph 1, Article 266-A of the RPC, to wit: (1) the offender is a man; (2) the offender had
carnal knowledge of a woman; (3) such act was accomplished by using force, threat or
intimidation. “In rape cases alleged to have been committed by force, threat or intimidation, it is
imperative for the prosecution to establish that the element of voluntariness on the part of the
victim be absolutely lacking. The prosecution must prove that force or intimidation was actually
employed by accused upon his victim to achieve his end. Failure to do so is fatal to its
cause.”[11]

Force, as an element of rape, must be sufficient to consummate the purposes which the
accused had in mind. On the other hand, intimidation must produce fear that if the victim does
not yield to the bestial demands of the accused, something would happen to her at that moment
or even thereafter as when she is threatened with death if she reports the incident.[12]
“Intimidation includes the moral kind as the fear caused by threatening the girl with a knife or
pistol.”[13]

It this case, the prosecution established that appellant was an 18-year old man who had sexual
intercourse with “AAA,” a woman who was 24 years old during the incident. However, there was
no evidence to prove that appellant used force, threat or intimidation during his sexual congress
with “AAA.” She testified that appellant and Meneses are her good friends. Thus, she
frequented the house of appellant. At around 7:00p.m. of September 29, 2008, she again went
to the house of appellant and chatted with him and Meneses while drinking liquor. From that
time up to about 11 p.m. when she took a nap, there is no showing that appellant or Meneses
forced, threatened or intimidated her.

As to how appellant and Meneses had sexual intercourse with her, “AAA” merely testified as
follows:

Q–

Madam Witness, you said that it was Elvis James who raped you first.

And then after he left this Juan Richard Tionloc [accused] approached you and asked if you can
do it?
A–

Yes, Ma’am; he asked me but I did not answer because I was still shivering.

Q–

And then what else happened after that?

A–

That is it; he was the one who did it.[14]

No allegation whatsoever was made by “AAA” that Meneses or appellant employed force, threat
or intimidation against her. No claim was ever made that appellant physically overpowered, or
used or threatened to use a weapon against, or uttered threatening words to “AAA.” While
“AAA” feared for her life since a knife lying on the table nearby could be utilized to kill her if she
resisted, her fear was a mere product of her own imagination. There was no evidence that the
knife was placed nearby precisely to threaten or intimidate her. We cannot even ascertain
whether said knife can be used as a weapon or an effective tool to intimidate a person because
it was neither presented nor described in court. These findings are clear from the following
testimony of “AAA:”

Q–
While Elvis James was inserting his penis to [sic] your vagina, what are [sic] you doing?
A–

I was crying, Ma’am.

Q–

You did not shout for help?

A–

I did not because I was afraid, Ma’am.

Q–

Why were you afraid, madam witness?

A–

Because there was a knife inside the room which we used in cutting the hotdog and then [I] did
not shout anymore because I was afraid that they might stab me, Ma’am.[15]

Even assuming in the nil possibility that Meneses was able to force or instill fear in “AAA’s”
mind, it should be noted that he was already gone when appellant asked “AAA” for a sexual
favor. In other words, the source of the feigned force, threat or intimidation was no longer
present when appellant casually asked his friend, “AAA,” if she “can do it” one more time. “AAA”
did not respond either in the affirmative or in the negative.

Resistance Should be Made Before the Rape is Consummated.

Later on, appellant went on top of “AAA” without saying anything or uttering threatening words.
For her part, “AAA” neither intimated any form of resistance nor expressed any word of rejection
to appellant’s advances. It was only when she felt something painful minutes during their sexual
intercourse that “AAA” tried to move. Thus:

A–

During the intercourse that was about few minutes and when I felt the pain that was the time
when I tried to move.

Q–

When you tried to move, what else happened?

A–

When I tried to move he released himself.

Q–

And then what happened?

A–

He went out of the room.[16]

Three things are thus clear from the testimony of “AAA:” first, appellant never employed the
slightest force, threat or intimidation against her; second, “AAA” never gave the slightest hint of
rejection when appellant asked her to have sex with him; and, third, appellant did not act with
force since he readily desisted when “AAA” felt the slightest pain and tried to move during their
sexual congress.

“AAA” could have resisted right from the start. But she did not, and chose not to utter a word or
make any sign of rejection of appellant’s sexual advances. It was only in the middle of their
sexual congress when “AAA” tried to move which can hardly be considered as an unequivocal
manifestation of her refusal or rejection of appellant’s sexual advances.

In People v. Amogis,[17] this Court held that resistance must be manifested and tenacious. A
mere attempt to resist is not the resistance required and expected of a woman defending her
virtue, honor and chastity. And granting that it was sufficient, “AAA” should have done it earlier
or the moment appellant’s evil design became manifest. In other words, it would be unfair to
convict a man of rape committed against a woman who, after giving him the impression thru her
unexplainable silence of her tacit consent and allowing him to have sexual contact with her,
changed her mind in the middle and charged him with rape.

The Age Gap Between the Victim and Appellant Negates Force, Threat or Intimidation.

“AAA’s” state of”shivering” could not have been produced by force, threat or intimidation. She
insinuates that she fell into that condition after Meneses had sexual intercourse with her.
However, their age gap negates force, threat or intimidation; he was only 14 while “AAA” was
already 24, not to mention that they were friends. In addition, per “AAA’s” own declaration,
Meneses and appellant did not also utter threatening words or perform any act of intimidation
against her.

Drunkeness Should Have Deprived the Victim of Her Will Power to Give her Consent.

The fact that “AAA” was tipsy or drunk at that time cannot be held against the appellant. There
is authority to the effect that “where consent is induced by the administration of drugs or liquor,
which incites her passion but does not deprive her of her will power, the accused is not guilty of
rape.”[18]

Here, and as narrated by “AAA” on the witness stand, appellant and Meneses were her friends.
Thus, as usual, she voluntarily went with them to the house of appellant and chatted with them
while drinking liquor for about four hours. And while “AAA” got dizzy and was “shivering,” the
prosecution failed to show that she was completely deprived of her will power.
“AAA’s” degree of dizziness or “shivering” was not that grave as she portrays it to be. “AAA” is
used to consuming liquor.[19] And if it is true that the gravity of her “shivering” at that time
rendered her immobile such that she could not move her head to signal her rejection of
appellant’s indecent proposal or to whisper to him her refusal, then she would have been
likewise unable to stand up and walk home immediately after the alleged rape.

It has been ruled repeatedly that in criminal litigation, the evidence of the prosecution must
stand or fall on its own merits and cannot draw strength from the weakness of the defense. The
burden of proof rests on the State. Thus, the failure of the prosecution to discharge its burden of
evidence in this case entitles appellant to an acquittal.

WHEREFORE, the appeal is GRANTED. The September 26, 2013 Decision of the Court of
Appeals in CA-G.R. C.R.-H.C. No. 05452 affirming with modification the Decision of the
Regional Trial Court of Manila, Branch 37, in Criminal Case No. 08-264453 is REVERSED and
SET ASIDE. Accused-appellant Juan Richard Tionloc y Marquez is ACQUITTED due to
insufficiency of evidence. His immediate RELEASE from detention is hereby ORDERED, unless
he is being held for another lawful cause. Let a copy of this Decision be furnished to the Director
of the Bureau of Corrections, Muntinlupa City for immediate implementation, who is then
directed to report to this Court the action he has taken within five days from receipt hereof.

SO ORDERED.

15 FEB 2017 | | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE
SUPREME COURT

Julieta B. Sta. Ana Vs. Manila Jockey Club, Inc.; G.R. No. 208459; February 15, 2017

Before the Court is a Petition for Review on Certiorari assailing the July 11, 2012 Decision[1] of
the Court of Appeals (CA) in CA-G.R. SP No. 114861. The CA affirmed the February 26,
2010[2] and April 30, 2010[3] Resolutions of the National Labor Relations Commission (NLRC),
which in turn affirmed the September 28, 2009 Decision[4] of the Labor Arbiter (LA) dismissing
the illegal dismissal case against Manila Jockey Club, Inc. (MJCI)/Atty. Alfonso Reyno (Atty.
Reyno). Also challenged is the July 31, 2013 CA Resolution[5] denying the Motion for
Reconsideration on the assailed Decision.

Factual Antecedents

In May 1977, MJCI, a domestic corporation with legislative franchise to operate horse race
betting,[6] hired Julieta B. Sta. Ana (Sta. Ana) as outlet teller of its off-track betting (OTB) station
in Tayuman, Manila (OTB Tayuman). Because horse racing was not on a daily basis, Sta. Ana’s
work schedule was only for 12 days per month with shifts from 5 p.m. to 10:30 p.m. on
weekdays, and 1 p.m. to 7 p.m. on weekends.[7]

As teller, Sta. Ana performed the following duties and functions:

1. Waits on [OTB] tellers’ booth for customers/clients; sells betting tickets.

2. Answers bettor’s inquiries, provides information on racing events, assists patrons with
information, and takes bet orders.

3. Processes cash payments through terminal registers; balances registers and makes daily
ticket sales reports after the races.

4. Handles cash and transactions with due diligence and honesty to the bettors and to the
company as well.

5. Coordinates with the Betting Operations Department (BOD) on matters beyond the standard
operating procedure of the BOD.

6. Strictly observes and implements company policies and procedures to protect the interests of
the company against unscrupulous bettors and operators

7. Reports incidents to the company on matters pertaining to the operations.

8. Submits or remits the cash sales for the day to the official collection team and/or to the
assigned banks with night depository box.

9. May be assigned to different OTBs as necessary to the company’s operations.

10. Performs miscellaneous job-related duties as assigned.[8]

On November 13, 2008, however, MJCI issued a Memorandum[9] stating that its Treasury
Department was discovered to have been illegally appropriating funds and lending it out to the
employees of MJCI As a result, MJCI required its officers and employees to report any loan
obtained from said department or any of its personnel.

On December 21, 2008, MJCI’s Internal Auditing Department (IAD) submitted its Preliminary
Report[10] indicating that its Agudo OTB Branch (OTB Agudo) had unaccounted check
remittances amounting to P44,377,455.00 for the period January 10, 2008 to November 30,
2008.

On January 8, 2009, MJCI, through its Special Disciplinary Committee (SDC), formally
charged[11] Sta. Ana with the following infractions:

x x x Julieta Sta. Ana – OTB Teller

DISHONESTY AND OTHER FRAUDULENT ACTS

[A.] Stealing or attempting to steal corporate property or money/corporate assets – 1st offense:
dismissal
[B.] Malversation – 1st offense; dismissal

[C.] Engaging/conniving in anomalous transactions – 1st offense: dismissal[12]

In her Explanation,[13] Sta. Ana denied committing any offense. She contended that even prior
to the takeover of the new management of MJCI, she had been engaged in the lending
business to augment her income.

Later, MJCI served upon Sta. Ana a Notice of Investigation[14] reiterating the accusations
against her, and narrating the circumstances surrounding her case, viz.:

Initial investigation revealed that there were unaccounted shortages incurred by the Cashier
Department. The Balance Sheet as of November 2008 indicated that the Cash on Hand
amounted to around P198 million; actual counting of the cash in vault revealed, however, that
the actual amount is only around P3.1 million. At the center of this irregularity and/or fraud is
Josephine Tejada.

It has been reported that Josephine Tejada, without authority, has been lending large amount
[sic] of money to some MJCI personnel using corporate funds. It has likewise been reported that
you [Sta. Ana] were abetting Josephine Tejada in the said unauthorized lending or that you
yourself has also been lending to some MJCI personnel using corporate funds and without any
authority from management.[15]

The Notice further informed Sta. Ana of her 30-day suspension without pay effective January
16, 2009.

In her Answer,[16] Sta. Ana averred that she did not know anything regarding MJCI’s
unaccounted money and that her suspension was unjust. She maintained that she did not
violate any company rule by engaging in the lending business.

On January 30, 2009, Sta. Ana attended the hearing conducted by MJCI.[17]

Sta. Ana and Josephine Tejada (Tejada), also submitted a Joint Affidavit[18] dated January 20,
2009. Therein, Tejada, MJCI’s Assistant Head/Cashier, Treasury Department, denied doing
business with Sta. Ana while Sta. Ana asserted that she had been in the money lending
business for 15 years, or even prior to the takeover by the new management of MJCI, and that
her capital was sourced from the sale of her fishing boats.

Sta. Ana likewise submitted a Supplement Affidavit[19] dated February 2, 2009 alleging that in
August 2008, Benjie Sunga (Sunga) proposed to borrow money from her but since she could
not personally attend to him, she requested Tejada to give Sunga the money he needed. The
following day, she paid Tejada the amount the latter lent to Sunga. According to Sta. Ana, that
was her only transaction with Tejada.

In its February 13, 2009 Report,[20] the SDC found that Sta. Ana extended loans to the
employees of MJCI during office hours using its personnel as messenger. It further stated that
on one occasion, Sta. Ana used corporate funds without MJCI’s authority, and with the
assistance of Tejada.[21]

Consequently, the SDC found Sta. Ana guilty of conspiring to defraud, illegally take funds, and
cause irreparable damage to MJCI; as such, MJCI lost its trust on her. It also declared that even
granting that there was no conspiracy, Sta. Ana, nonetheless, committed gross inexcusable
negligence for failure to perform her duties and protect the interest of MJCI. SDC recommended
the dismissal of Sta. Ana and the filing of criminal cases for qualified theft and other appropriate
charges.

On February 16, 2009, MJCI issued a Notice of Termination[22] to Sta. Ana.

On February 25, 2009, Sta. Ana filed a Complaint[23] for illegal dismissal and payment of
actual, moral and exemplary damages, and attorney’s fees against MJCI/Atty. Reyno, its
President.

In her Position Paper,[24] Sta. Ana averred that she had been in the service for 31 years prior to
her dismissal. She stressed that she had bank deposits, real properties and fishing business to
fund her lending business; and, the fact that she lent money to her co-employees is not proof
that she used MJCI’s funds for her business. She further insisted that there was no company
rule prohibiting employees from engaging in their own businesses. In addition, Sta. Ana
contended that she had no direct access to her employer’s money; thus, she could not have
stolen it. She pointed out that she never incurred a shortage in remitting the income of her OTB
Branch or the OTB Tayuman Branch. Lastly, Sta. Ana stated that her one-time request for
Tejada to accommodate Sunga is not evidence of any complicity with Tejada. Similarly, she
should not be dragged into the controversy in the Cashier/Treasury Department of MJCI just
because she was a “kumare” of Tejada.

On the other hand, MJCI/Atty. Reyno countered in their Position Paper[25] that it as incredible
that the money that Tejada advanced to Sunga came from Tejada’s own fund. They insisted
that the salary of Sta. Ana (of P6,700.00 per month), even including that of Tejada, was
insufficient to fund a money lending business; hence, the only logical conclusion was that the
amount lent to Sunga came from MJCI’s funds.

MJCI/Atty. Reyno remained firm that Sta. Ana committed dishonesty and connived with Tejada
in an anomalous transaction. They further declared that in its Report[26] dated April 22, 2009,
the SDC reiterated the charge against Sta. Ana of operating a lending business and using a
personnel of MJCI as conduit even during office hours. That Sta. Ana supposedly used MJCI
personnel in her business was derived from the statements of two employees of MJCI, namely,
Ramon Santos (Santos) and Ramon Pimentel (Pimentel).

Later, Sta. Ana argued in her Reply[27] that MJCI/Atty. Reyno maliciously and hastily concluded
that she was in cahoots with Tejada based only on the single transaction relating to Sunga. She
also denied using MJCI’s personnel as conduit during office hours; she pointed out that
considering her office schedule, she had enough free time to engage in a lending business.
For their part, MJCI/Atty. Reyno attached in their Reply[28] the Affidavit[29] of Sunga alleging
that Sta. Ana advised him to get money from Tejada. Thus, MJCI/Atty. Reyno maintained that
Sta. Ana and Tejada were business partners, and they committed dishonesty and connived in
perpetrating an anomalous transaction against MJCI.

The parties filed their respective Rejoinders[30] reiterating the contentions in their Position
Papers and Replies.

Ruling of the Labor Arbiter

On September 28, 2009, the LA dismissed the Complaint for lack of merit. He declared that Sta.
Ana conspired with the other tellers against MJCI by issuing reports intended to conceal
discrepancies in the remittance which resulted in the unlawful taking of MJCI’s funds, and that
the money obtained by Sta. Ana was used in her lending business.

The LA noted that Sta. Ana claimed that her capital was sourced from the proceeds of the sale
of her fishing vessels two years ago; yet, she also alleged that she started her lending business
15 years prior to the takeover of the new management. The LA also concluded, based on the
declarations of two employees, that the amounts they borrowed from Sta. Ana were delivered
by an employee of MJCI, that Sta. Ana had used an MJCI’s employee and company time in her
business.

Lastly, the LA held that Sta. Ana’s salary alone could not support her lending business. He also
decreed that the filing by MJCI of criminal cases against Sta. Ana proved its loss of trust and
confidence in her, a valid ground for dismissal from work.

Ruling of the National Labor Relations Commission

The NLRC affirmed the LA Decision. It ruled that MJCI validly dismissed Sta. Ana for loss of
trust and confidence; that although Sta. Ana might not have been directly involved in the
discrepancies of the remittances and in the preparation of reports to cover up such
discrepancies, she was nonetheless a recipient of the stolen money which she used in her
lending business; that Sta. Ana’s claim that her lending business was funded by the sale of her
fishing vessels two years ago contradicted her declaration that she commenced her business 15
years earlier; and that Sta. Ana’s statement, anent her co-employees who had loans from her,
did not indicate the dates when the borrowers obtained their loans from Sta.Ana.

Furthermore, the NLRC decreed that conspiracy between Sta. Ana and Tejada was established
by Sunga’s admission that the money he borrowed from Sta. Ana came from Tejada; that Sta.
Ana deliberately engaged in a lending business and used corporate funds without MJCI’s
authority; and that the filing of a criminal case against Sta. Ana proved the employer’s loss of
trust and confidence in her.

Lastly, the NLRC held that Atty. Reyno must be dropped as party respondent because there
was no showing that he acted maliciously in furtherance of any illegal act of MJCI. It also
affirmed the finding of the LA that MJCI complied with the procedural requirements in dismissing
Sta. Ana.
On April 30, 2010, the NLRC denied the Motion for Reconsideration filed by Sta. Ana.

Ruling of the Court of Appeals

Sta. Ana filed with the CA a Petition for Certiorari contending that the NLRC committed grave
abuse of discretion amounting to lack or excess of jurisdiction when it ruled that she was validly
dismissed from work.

On July 11, 2012, the CA affirmed the NLRC Resolutions.

The CA held that Sta. Ana regularly handled a large amount of money belonging to MJCI; thus,
she occupied a position of trust. The CA gave credence to Sunga’s Affidavit where he declared
that Sta. Ana told him that Tejada was her (Sta. Ana) business partner. The CA further ruled
that it could not see how Sta. Ana, with her meager salary, could finance her lending business.
It likewise sustained the view that Sta. Ana’s statement that she funded her business from the
sale of her fishing boats two years ago contradicted her assertion that her lending business
commenced 15 years earlier.

In sum, the CA held that Sta. Ana connived with Tejada in stealing MJCI’s funds and using it to
finance her lending business.

On July 31, 2013, the CA denied Sta. Ana’s Motion for Reconsideration.

Undeterred, Sta. Ana filed this Petition for Review on Certiorari raising the following grounds:

THE RESPONDENT COURT OF APPEALS – 6TH DIVISION COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN AFFIRMING
THE DECISION AND THE RESOLUTION OF THE NATIONAL LABOR RELATIONS
COMMISSION[;]

THE RESPONDENT COURT OF APPEALS – 6TH DIVISION COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN FINDING THAT
PETITIONER WAS LEGALLY DISMISSED ON THE BASIS OF THE LONE TESTIMONY OF
MR. BENJIE SUNGA AND ON THE SPECIAL DISCIPLINARY COMMITTEE REPORT DATED
FEBRUARY 13, 2009[; AND,]

THE RESPONDENT COURT OF APPEALS – 6TH DIVISION COMMITTED GRAVE ABUSE

OF DISCRETION [AMOUNTING TO LACK] OR EXCESS OF JURISDICTION IN THEORIZING
THAT PETITIONER AND THE OTHER EMPLOYEES CONSPIRED [TO COMMIT] AN
OFFENSE PUNISHABLE BY DISMISSAL.[31]

Sta. Ana maintains that MJCI failed to substantiate its allegation of conspiracy between her and
Tejada. She argues that the SDC found shortages in remittances in the OTB Agudo only, and
not OTB Tayuman where she was assigned. She also stresses that she was never assigned to
the Agudo Branch and that she had no transactions or dealings with said branch.
In addition, Sta. Ana avers that she never incurred any shortage in her remittances of the
income of OTB Tayuman. She likewise claims that her relationship with Tejada as “magkumare”
should not be used as basis to conclude that she was involved in the infraction committed by
Tejada.

Sta. Ana insists that she has the financial capacity to engage in the lending business and MJCI
did not conduct any investigation on her financial background. She adds that she sold her
fishing boats to infuse additional capital into her business.

Furthermore, Sta. Ana asserts that she had no direct access to the vaults and bank accounts of
MJCI; thus, it is impossible that she could have used its funds.

Finally, Sta. Ana contends that she did not conduct her lending business during office hours or
use an MTCI’s employee as conduit thereto. She reiterates that her work schedule permitted
her to conduct her lending business outside office hours, and there was no prohibition in the
Employee’s Handbook regarding extending of loans to her co-employees.

On the other hand, MJCI counters that the instant Petition for Review on Certiorari ascribing
grave abuse of discretion against the CA must be dismissed because only questions of law may
be raised in a petition under Rule 45 of the Rules of Court.

In any event, MJCI argues that the Petition lacks merit because the CA did not commit any
reversible error as MJCI had sufficient basis for dismissing Sta. Ana on the ground of loss of
trust and confidence. It reiterates that Sta. Ana stole money from MJCI, and she abetted the
commission of defalcation by Tejada in furtherance of their illegal lending business.

In a Resolution[32] dated October 13, 2014, the Court gave due course to the Petition and
required the parties to submit their respective memoranda.

Issue

Whether Sta. Ana was validly dismissed on the ground of loss of trust and confidence.

Our Ruling

The Petition is with merit.

As a rule, a petition under Rule 45 covers only questions of law as the tactual findings of the CA
are final and binding upon the Court However, this rule allows certain exceptions including a
situation where the CA manifestly overlooked undisputed relevant facts, which if properly
considered would support a different conclusion,[33] as in this case, In particular, the uniform
finding of the LA, NLRC, and CA that Sta. Ana was validly dismissed is unjustified because
salient facts were overlooked, which, if properly considered, will prove the absence of just cause
in dismissing her from work.
It is settled that the employer has the right to dismiss an employee for just causes, which
include willful breach of trust and confidence. Complementary to such right is the burden of the
employer to prove that the employee’s dismissal is for a just cause, and the employer afforded
the latter due process before termination.[34]

In this regard, to legally dismiss an employee on the ground of loss of trust, the employer must
establish that a) the employee occupied a position of trust and confidence, or has been routinely
charged with the care and custody of the employer’s money or property; b) the employee
committed a willful breach of trust based on clearly established facts; and, c) such loss of trust
relates to the employee’s performance of duties.[35] In fine, there must be actual breach of duty
on the part of the employee to justify his or her dismissal on the ground of loss of trust and
confidence.[36]

In Manila Jockey Club, Inc. v. Trajano,[37] where therein respondent was also a teller working
for MJCI, like Sta. Ana, the Court determined that the position of a selling teller is a position of
trust and confidence since it requires the handling and custody of tickets issued and bets made
in the teller’s station. Thus, Sta. Ana undoubtedly occupied a position of trust and confidence.

However, while Sta. Ana occupied such position of trust and MJCI afforded her procedural due
process, her dismissal is still unwarranted because MJCI failed to discharge its burden of
proving that she willfully breached its trust, and such loss of trust relates to Sta. Ana’s
performance of duties.

To recall, MJCI issued a formal charge against Sta. Ana for dishonesty and other fraudulent
acts for stealing or attempting to steal corporate assets; malversation; and engaging in
anomalous transactions. In its Report dated February 13, 2009, the SDC specifically accused
her of having used a co-employee in her personal business during office hours; and, having lent
money to another using MJCI’s fund without authority, to wit

x x x The SDC found other irregularities prejudicial to MJCI. [T]ejada and Purificacion were
extending unauthorized loans to MJCI personnel using corporate funds. This was confirmed by
Atty. Juan S. Bm.m and Mr. Noli Valencia. Ms. Purificacion also admitted overpaying late
dividends and not reporting the same. Another teller, x x x Julieta Sta. Ana has a personal
lending operation within MJCI using MJCI personnel as conduit and messenger apparently
during office hours. [In] one instance, she also used corporate funds without authority and with
the assistance of x x x Tejada to lend to Benjamin Sunga.[38] (Emphasis supplied)

These allegations, however, are not supported by clear and convincing evidence.

One, MJCI argued that Sta. Ana used its personnel in her lending business during office hours.
It will be recalled that Sta. Ana was dismissed on February 16, 2009 pursuant to the SDC
Report dated February 13, 2009. Notably, however, the specific statements as regards the
accusation that Sta. Ana used in her lending business an MJCI employee were mentioned for
the first time only in the SDC Report dated April 22, 2009, as follows:

x x x RAMON SANTOS
Mr. Santos is a Racetrack and Starting Gate Supervisor of MJCI. In his testimony, he admitted
obtaining [a] loan in the amount of P20,000.00, not from Tejada but from Sta. Ana. The loan
was received [in] October 2008, in time for the enrolment of his children. The loan [was]
delivered by an MJCI employee, driver Lito Maingat.

x x x RAMON PIMENTEL

Mr. Pimentel is the Head of the Food and Beverages at SLLBP, Cannona, Cavite. When asked
if he obtained any loan from any personnel of MJCI, he replied that while in Carmona, Cavite,
he asked for [a] loan in the amount of P4,000.00 from Sta. Ana through Atty. Juan Baun. The
money was handed [to him] by Lito Maingat, less 5% for the interest. He paid the loan with two
post-dated checks.[39]

The statements of Santos and Pimentel only proved that they borrowed money from Sta. Ana,
and the same was delivered by Maingat. Significantly, there was no narration as to when the
money was delivered. Otherwise stated, there is no evidence that Sta. Ana engaged the
services of an MJCI personnel during office hours. Clearly, to accuse Sta. Ana of having used
MJCI’s personnel in her business during office hours remains a bare allegation without
corresponding proof.

Also worth stressing is the fact that MJCI did not refute Sta. Ana’s assertion that the company
rules do not prohibit its employees from engaging in their own personal businesses. Likewise,
the investigation conducted by MJCI pertained only to OTB Agudo, which was not the branch
where Sta. Ana was assigned. Moreover, there was no showing that Sta. Ana’s branch (OTB
Tayuman) had incurred any shortage in its remittance to MJCI.

Two, MJCI alleged that in one occasion and with Tejada’s assistance, Sta. Ana used its money
to lend to Sunga. This accusation is pursuant to the Affidavit of Sunga, the pertinent portions of
which read:

I am the Fleet Head of the Manila Jockey Club, Inc. (‘MJCI’) and I have been serving MJCI as
such since May 2003.

Sometime June 2008, approached Ms. Julieta Sta. Ana to x x x borrow some money from her x
x x.

When I talked to Ms. Sta. Ana on the phone regarding my need to borrow the amount of
P10,000.00, she said that she did not have that amount at that time. She advised me that I can
get the money from her business partner, Ms. Josephine Tejada at the Cashier Department of
MJCI in Strata 100, as they have an arrangement for such loan requests.

Ms. Sta. Ana said I can pay her and she will settle with Ms. Tejada.

A few days after I talked to Ms. Sta. Ana, I went to see Ms. Tejada and she gave me personally
the P10,000.00 I needed. She said that she has already talked to Ms. Sta. Ana regarding the
loan.
I have already paid in full the amount I borrowed from Ms. Tejada and Ms. Sta. Ana which I paid
on installments.[40]

According to Sunga, he borrowed money from Sta. Ana but it was Tejada who gave it to him;
and Sta. Ana told him that Tejada was her business partner. However, there was neither
allegation nor proof that the amount involved was derived from the funds of MJCI.

The mere allegation that Tejada is the business partner of Sta. Ana does not by itself establish
that Tejada is involved in the business of Sta. Ana. Even granting for argument’s sake that
Tejada is involved in said business, no evidence worthy of credence was adduced showing that
this business derived capital from the funds of MJCI.

The LA, NLRC, and the CA concluded that Sta. Ana was in conspiracy with Tejada because a)
she made an inconsistent declaration that she funded her business from the sale of her fishing
vessels two years ago (from the time she executed her Affidavit dated February 2, 2009) yet
she also stated that she started her business 15 years prior to the takeover of MJCI’s new
management; and b) Sta. Ana’s salary was insufficient to support her business.

Such conclusion, however, is untenable.

From the narration of the SDC, during the hearing, Sta. Ana admitted owning fishing vessels as
evidenced by a permit to operate them; also, the SDC stated that Sta. Ana confirmed that these
vessels were eventually sold and their proceeds were used in her business. This only means
that MJCI, through the SDC, was fully aware that the sale of Sta. Ana’s fishing vessels was for
the purpose of infusing additional capital into her lending business.

In addition, from the time Sta. Ana was under investigation, she made readily available
documents to justify the amount of her capital for her lending business. As noted by the SDC in
its February 13, 2009 Report:

During the formal hearing, [Sta. Ana] submitted additional documents to show her capability to
engage in loan operations: These are: (1) Certification from PS Bank that x x x Sta. Ana, has
existing housing loan with outstanding balance of P439,421.65, (2) Permit to Operate fishing
vessels issued by [the] Maritime Industry Authority, (3) various statement of accounts from BPI,
HSBC, Citibank, BDO, Standard Chartered, Metrobank credit cards. The three fishing vessels
were already sold, according to her, and she used the proceeds in her lending business.[41]

In her Position Paper, Sta. Ana attached the Certification[42] from Philippine Savings Bank (PS
Bank) indicating that she already paid interest and the principal amount of P80,984.15 and
P560,578.35 respectively, and her outstanding balance to PS Bank was P439,421.65. Likewise,
the annotations[43] in Transfer Certificate of Title No. T-389599 under the name of Sta. Ana and
her spouse proved that they had been mortgaging their real property since 2003. The latest of
such mortgage was on August 23, 2007 to secure the loan of One Million Pesos from PS Bank.

Based on the foregoing, Sta. Ana derived capital from the bank loans she obtained secured by
real estate mortgage on her property; and from the income of her fishing business; later, her
fishing vessels were sold and the proceeds thereof were infused as additional capital in her
lending business. Simply put, she had funds derived from sources other than her monthly
salary; and, there was no direct linkage shown between Sta. Ana’s business and the alleged
stolen funds of MJCI.

It is a cardinal rule that loss of trust and confidence should be genuine, and not simulated; it
must arise from dishonest or deceitful conduct, and must not be arbitrarily asserted in the face
of overwhelming contrary evidence.[44] While proof beyond reasonable doubt is not required;
loss of trust must have some basis or such reasonable ground for one to believe that the
employee committed the infraction, and the latters participation makes him or her totally
unworthy of the trust demanded by the position.[45]

Here, MJCI failed to prove that Sta. Ana committed willful breach of its trust. Particularly, it failed
to establish that Sta. Ana used its employee for her personal business during office hours, and
used its money; without authority, to lend money to another. Hence, to dismiss her on the
ground of loss of trust and confidence is unwarranted.[46]

Under these circumstances, Sta. Ana is entitled to receive backwages and separation pay.

An illegally dismissed employee is entitled to two separate reliefs: full backwages and
reinstatement. In such case where reinstatement is no longer an option, payment of separation
pay is justified. The Court considers “considerable time,” which includes the lapse of eight years
or more (from the filing of the complaint up to the resolution of the case) to support the grant of
separation pay in lieu of reinstatement. Considering that about eight years had passed from the
time that Sta. Ana filed her complaint on February 25, 2009 then, her reinstatement is an
impractical option. Thus, instead of reinstatement, the Court grants her separation pay of one
month for every year of service. As regards backwages, she is entitled to receive full
backwages, which include allowances and other benefits due her or their monetary equivalent,
computed from the time her compensation was withheld up to the finality of this Decision.[47]

Finally, the Court finds that Sta. Ana is entitled to moral and exemplary damages as well as
attorney’s fees as she prayed for in her Complaint.

The grant of moral damages is allowed where the employer acted in bad faith or in such a
manner oppressive to labor.[48]

During the administrative hearing, MJCI received in evidence relevant documents establishing
her capacity to engage in a lending business, and proving that she did not engage in any activity
to defraud MJCI. Also a plain reading of the statements of Santos and Pimentel would show that
they did not explicitly declare that Sta. Ana used another employee during office hours as
conduit in her business. However, despite all these clear pieces of evidence, and only on mere
allegation of loss of trust, MJCI still dismissed her.

Therefore, for acting in “bad faith or such conscious design to do a wrongful act for a dishonest
purpose,”[49] MJCI is liable to pay Sta. Ana P50,000.00 as moral damages. It is also liable to
pay her P50,000.00 as exemplary damages to deter other employers from committing the same
or similar act. At the same time, the Court awards in her favor attorney’s fees equivalent to 10%
of the total monetary award as she was compelled to litigate in order to protect her rights.[50]
The legal interest of 6% per annum shall be imposed on the total monetary awards from the
finality of this Decision until its full satisfaction.[51]

WHEREFORE, the Petition is GRANTED. The Decision dated July 11, 2012 and Resolution
dated July 31, 2013 of the Court of Appeals in CA-G.R. SP No. 114861 are REVERSED and
SET ASIDE. Petitioner Julieta B. Sta. Ana is declared to have been illegally dismissed from
service. Accordingly, Manila Jockey Club, Inc. is ordered to pay Julieta B. Sta. Ana the
following: 1) full backwages inclusive of allowances and other benefits or their monetary
equivalent, computed from February 16, 2009, the date of her dismissal, until the finality of this
Decision; 2) separation pay equivalent to one month pay per year of service in lieu of
reinstatement; 3) P50,000.00 as moral damages; 4) P50,000.00 as exemplary damages; and, 5)
attorney’s fees equivalent to 10% of the total monetary awards. These awards shall also earn
legal interest at the rate of 6% per annum from the finality of this Decision until its full
satisfaction.

SO ORDERED.

13 FEB 2017 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL CASTILLO | SUBJECT | RULES OF
COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT | SUBJECT |
TAXATION

Commissioner of Internal Revenue Vs. St. Luke’s Medical Center, Inc.; G.R. No. 203514; February
13, 2017

The doctrine of stare decisis dictates that “absent any powerful countervailing considerations,
like cases ought to be decided alike.”[1]

This Petition for Review on Certiorari[2] under Rule 45 of the Rules of Court assails the May 9,
2012 Decision[3] and the September 17, 2012 Resolution[4] of the Court of Tax Appeals (CTA)
in CTA EB Case No. 716.

Factual Antecedents

On December 14, 2007, respondent St. Luke’s Medical Center, Inc. (SLIVIC) received from the
Large Taxpayers Service-Documents Processing and Quality Assurance Division of the Bureau
of Internal Revenue (BIR) Audit Results/Assessment Notice Nos. QA-07-000096[5] and QA-07-
000097,[6] assessing respondent SLMC deficiency income tax under Section 27(B)[7] of the
1997 National Internal Revenue Code (NIRC), as amended, for taxable year 2005 in the amount
of P78,617,434.54 and for taxable year 2006 in the amount of P57,119,867.33.

On January 14, 2008, SLMC filed with petitioner Commissioner of Internal Revenue (CIR) an
administrative protest[8] assailing the assessments. SLMC claimed that as a non-stock, non-
profit charitable and social welfare organization under Section 30(E) and (G)[9] of the 1997
NIRC, as amended, it is exempt from paying income tax.
On April 25, 2008, SLMC received petitioner CIR’s Final Decision on the Disputed
Assessment[10] dated April 9, 2008 increasing the deficiency income for the taxable year 2005
tax to P82,419,522.21 and for the taxable year 2006 to P60,259,885.94, computed as follows:

For Taxable Year 2005:

ASSESSMENT NO. QA-07-000096

PARTICULARS

AMOUNT
Sales/Revenues/Receipts/Fees
P3,623,511,616.00

Less: Cost of Sales/Services

2,643,049,769.00
Gross Income From Operation
980,461,847.00

Add: Non-Operating & Other Income

–
Total Gross Income
980,461,847.00

Less: Deductions

481,266,883.00
Net Income Subject to Tax
499,194,964.00

X Tax Rate

10%
Tax Due
49,919,496.40

Less: Tax Credits

–
Deficiency Income Tax
49,919,496.40
Add: Increments

25% Surcharge

12,479,874.10

20% Interest Per Annum (4/15/06-4/15/08)

19,995,151.71

Compromise Penalty for Late Payment

25,000.00

Total increments

32,500,025.81
Total Amount Due
P82,419,522.21

For Taxable Year 2006:

ASSESSMENT NO. QA-07-000097

PARTICULARS

[AMOUNT]
Sales/Revenues/Receipts/Fees
P3,815,922,240.00

Less: Cost of Sales/Service

2,760,518,437.00
Gross Income From Operation
1,055,403,803.00

Add: Non-Operating & Other Income

–
Total Gross Income
1,055,403,803.00

Less: Deductions
640,147,719.00
Net Income Subject to Tax
415,256,084.00

X Tax Rate

10%
Tax Due
41,525,608.40

Less: Tax Credits

–
Deficiency Income Tax
41,525,608.40

Add: Increments

25% Surcharge

10,381,402.10

20% Interest Per Annum (4/15/07-4/15/08)

8,327,875.44

Compromise Penalty for Late Payment

25,000.00

Total increments

18,734,277.54
Total Amount Due
P60,259,885.94[11]

Aggrieved, SLMC elevated the matter to the CTA via a Petition for Review,[12] docketed as
CTA Case No. 7789.

Ruling of the Court of Tax Appeals Division

On August 26, 2010, the CTA Division rendered a Decision[13] finding SLMC not liable for
deficiency income tax under Section 27(B) of the 1997 NIRC, as amended, since it is exempt
from paying income tax under Section 30(E) and (G) of the same Code. Thus:

WHEREFORE, premises considered, the Petition for Review is hereby GRANTED. Accordingly,
Audit Results/Assessment Notice Nos. QA-07-000096 and QA-07-000097, assessing petitioner
for alleged deficiency income taxes for the taxable years 2005 and 2006, respectively, are
hereby CANCELLED and SET ASIDE.

SO ORDERED.[14]

CIR moved for reconsideration but the CTA Division denied the same in its December 28, 2010
Resolution.[15]

This prompted CIR to file a Petition for Review[16] before the CTA En Banc.

Ruling of the Court of Tax Appeals En Banc

On May 9, 2012, the CTA En Banc affirmed the cancellation and setting aside of the Audit
Results/Assessment Notices issued against SLMC. It sustained the findings of the CTA Division
that SLMC complies with all the requisites under Section 30(E) and (G) of the 1997 NIRC and
thus, entitled to the tax exemption provided therein.[17]

On September 17, 2012, the CTA En Banc denied CIR’s Motion for Reconsideration.

Issue

Hence, CIR filed the instant Petition under Rule 45 of the Rules of Court contending that the
CTA erred in exempting SLMC from the payment of income tax.

Meanwhile, on September 26, 2012, the Court rendered a Decision in G.R. Nos. 195909 and
195960, entitled Commissioner of Internal Revenue v. St. Luke’s Medical Center, Inc.,[18]
finding SLMC not entitled to the tax exemption under Section 30(E) and (G) of the NIRC of 1997
as it does not operate exclusively for charitable or social welfare purposes insofar as its
revenues from paying patients are concerned. Thus, the Court disposed of the case in this
manner:

WHEREFORE, the petition of the Commissioner of Internal Revenue in G.R. No. 195909 is
PARTLY GRANTED. The Decision of the Court of Tax Appeals En Banc dated 19 November
2010 and its Resolution dated 1 March 2011 in CTA Case No. 6746 are MODIFIED. St Luke’s
Medical Center, Inc. is ORDERED TO PAY the deficiency income tax in 1998 based on the 10%
preferential income tax rate under Section 27(B) of the National h1ternal Revenue Code.
However, it is not liable for surcharges and interest on such deficiency income tax under
Sections 248 and 249 of the National Internal Revenue Code. All other parts of the Decision and
Resolution of the Court of Tax Appeals are AFFIRMED.
The petition of St. Luke’s Medical Center, Inc. in G.R. No. 195960 is DENIED for violating
Section I, Rule 45 of the Rules of Court.

SO ORDERED.[19]

Considering the foregoing, SLMC then filed a Manifestation and Motion[20] informing the Court
that on April 30, 2013, it paid the BIR the amount of basic taxes due for taxable years 1998,
2000-2002, and 2004-2007, as evidenced by the payment confirmation[21] from the BIR, and
that it did not pay any surcharge,

interest, and compromise penalty in accordance with the above-mentioned Decision of the
Court. In view of the payment it made, SLMC moved for the dismissal of the instant case on the
ground of mootness.

CIR opposed the motion claiming that the payment confirmation submitted by SLMC is not a
competent proof of payment as it is a mere photocopy and does not even indicate the quarter/s
and/or year/s said payment covers.[22]

In reply,[23] SLMC submitted a copy of the Certification[24] issued by the Large Taxpayers
Service of the BIR dated May 27, 2013, certifying that, “[a]s far as the basic deficiency income
tax for taxable years 2000, 2001, 2002, 2004, 2005, 2006, 2007 are concerned, this Office
considers the cases closed due to the payment made on April 30, 2013.” SLMC likewise
submitted a letter[25] from the BIR dated November 26, 2013 with attached Certification of
Payment[26] and application for abatement,[27] which it earlier submitted to the Court in a
related case, G.R. No. 200688, entitled Commissioner of Internal Revenue v. St. Luke’s Medical
Center, Inc.[28]

Thereafter, the parties submitted their respective memorandum.

CIR’s Arguments

CIR argues that under the doctrine of stare decisis SLMC is subject to 10% income tax under
Section 27(B) of the 1997 NIRC.[29] It likewise asserts that SLMC is liable to pay compromise
penalty pursuant to Section 248(A)[30] of the 1997 NIRC for failing to file its quarterly income
tax returns.[31]

As to the alleged payment of the basic tax, CIR contends that this does not render the instant
case moot as the payment confirmation submitted by SLMC is not a competent proof of
payment of its tax liabilities.[32]

SLMC’s Arguments

SLMC, on the other hand, begs the indulgence of the Court to revisit its ruling in G.R. Nos.
195909 and 195960 (Commissioner of Internal Revenue v. St. Luke’s Medical Center, Inc.)[33]
positing that earning a profit by a charitable, benevolent hospital or educational institution does
not result in the withdrawal of its tax exempt privilege.[34] SLMC further claims that the income
it derives from operating a hospital is not income from “activities conducted for profit.”[35] Also,
it maintains that in accordance with the ruling of the Court in G.R. Nos. 195909 and 195960
(Commissioner of Internal Revenue v. St. Luke’s Medical Center, Inc.),[36] it is not liable for
compromise penalties.[37]

In any case, SLMC insists that the instant case should be dismissed in view of its payment of
the basic taxes due for taxable years 1998, 2000-2002, and 2004-2007 to the BIR on April 30,
2013.[38]

Our Ruling

SLMC is liable for income tax under Section 27(B) of the 1997 NIRC insofar as its revenues
from paying patients are concerned.

The issue of whether SLMC is liable for income tax under Section 27(B) of the 1997 NIRC
insofar as its revenues from paying patients are concerned has been settled in G.R. Nos.
195909 and 195960 (Commissioner of Internal Revenue v. St. Luke’s Medical Center, Inc.),[39]
where the Court ruled that:

xxx We hold that Section 27(B) of the NIRC does not remove the income tax exemption of
proprietary non-profit hospitals under Section 30(E) and (G). Section 27(B) on one hand, and
Section 30(E) and (G) on the other hand, can be construed together without the removal of such
tax exemption. The effect of the introduction of Section 27(B) is to subject the taxable income of
two specific institutions, namely, proprietary non-profit educational institutions and proprietary
non-profit hospitals, among the institutions covered by Section 30, to the 10% preferential rate
under Section 27(B) instead of the ordinary 30% corporate rate under the last paragraph of
Section 30 in relation to Section 27(A)(1).

Section 27(B) of the NIRC imposes a 10% preferential tax rate on the income of (1) proprietary
non-profit educational institutions and (2) proprietary non-profit hospitals. The only qualifications
for hospitals are that they must be proprietary and non-profit. ‘Proprietary’ means private,
following the definition of a ‘proprietary educational institution’ as ‘any private school maintained
and administered by private individuals or groups’ with a government permit. ‘Non-profit’ means
no net income or asset accrues to or benefits any member or specific person, with all the net
income or asset devoted to the institution’s purposes and all its activities conducted not for
profit.

‘Non-profit’ does not necessarily mean ‘charitable.’ In Collector of Internal Revenue v. Club
Filipino, Inc. de Cebu, this Court considered as non-profit a sports club organized for recreation
and entertainment of its stockholders and members. The club was primarily funded by
membership fees and dues. If it had profits, they were used for overhead expenses and
improving its golf course. The club was non-profit because of its purpose and there was no
evidence that it was engaged in a profit-making enterprise.

The sports club in Club Filipino, Inc. de Cebu may be non-profit, but it was not charitable. The
Court defined ‘charity’ in Lung Center of the Philippines v. Quezon City as ‘a gift, to be applied
consistently with existing laws, for the benefit of an indefinite number of persons, either by
bringing their minds and hearts under the influence of education or religion, by assisting them to
establish themselves in life or [by] otherwise lessening the burden of government.’ A non-profit
club for the benefit of its members fails this test. An organization may be considered as non-
profit if it does not distribute any part of its income to stockholders or members. However,
despite its being a tax exempt institution, any income such institution earns from activities
conducted for profit is taxable, ad expressly provided in the last paragraph of Section 30.

To be a charitable institution, however, an organization must meet the substantive test of charity
in Lung Center. The issue in Lung Center concerns exemption from real property tax and not
income tax. However, it provides for the test of charity in our jurisdiction. Charity is essentially a
gift to an indefinite number of persons which lessens the burden of government. In other words,
charitable institutions provide for free goods and services to the public which would otherwise
fall on the shoulders of government. Thus, as a matter of efficiency, the government forgoes
taxes which should have been spent to address public needs, because certain private entities
already assume a part of the burden. This is the rationale for the tax exemption of charitable
institutions. The loss of taxes by the government is compensated by its relief from doing public
works which would have been funded by appropriations from the Treasury.

Charitable institutions, however, are not ipso facto entitled to a tax exemption. The requirements
for a tax exemption are specified by the law granting it. The power of Congress to tax implies
the power to exempt from tax. Congress can create tax exemptions, subject to the constitutional
provision that ‘[n]o law granting any tax exemption shall be passed without the concurrence of a
majority of all the Members of Congress.’ The requirements for a tax exemption are strictly
construed against tl1e taxpayer because an exemption restricts the collection of taxes
necessary for the existence of the government.

The Court in Lung Center declared that the Lung Center of the Philippines is a charitable
institution for the purpose of exemption from real property taxes. This ruling uses the same
premise as Hospital de San Juan and Jesus Sacred Heart College which says that receiving
income from paying patients does not destroy the charitable nature of a hospital.

As a general principle, a charitable institution does not lose its character as such and its
exemption from taxes simply because it derives income from paying patients, whether out-
patient, or confined in the hospital, or receives subsidies from the government, so long as the
money received is devoted or used altogether to the charitable object which it is intended to
achieve; and no money inures to the private benefit of the persons managing or operating the
institution.

For real property taxes, the incidental generation of income is permissible because the test of
exemption is the use of the property. The Constitution provides that ‘[c]haritable institutions,
churches and personages or convents appurtenant thereto, mosques, non-profit cemeteries,
and all lands, buildings, and improvements, actually, directly, and exclusively used for religious,
charitable, or educational purposes shall be exempt from taxation.’ The test of exemption is not
strictly a requirement on the intrinsic nature or character of the institution. The test requires that
the institution use property in a certain way, i.e., for a charitable purpose. Thus, the Court held
that the Lung Center of the Philippines did not lose its charitable character when it used a
portion of its lot for commercial purposes. The effect of failing to meet the use requirement is
simply to remove from the tax exemption that portion of the property not devoted to charity.
The Constitution exempts charitable institutions only from real property taxes. In the NIRC,
Congress decided to extend the exemption to income taxes. However, the way Congress
crafted Section 30(E) of the NIRC is materially different from Section 28(3), Article VI of the
Constitution. Section 30(E) of the NIRC defines the corporation or association that is exempt
from income tax. On the other hand, Section 28(3), Article VI of the Constitution does not define
a charitable institution, but requires that the institution ‘actually, directly and exclusively’ use the
property for a charitable purpose.

Section 30(E) of the NIRC provides that a charitable institution must be:

(1) A non-stock corporation or association;

(2) Organized exclusively for charitable purposes;

(3) Operated exclusively for charitable purposes; and

(4) No part of its net income or asset shall belong to or inure to the benefit of any member,
organizer, officer or any specific person.

Thus, both the organization and operations of the charitable institution must be devoted
‘exclusively’ for charitable purposes. The organization of the institution refers to its corporate
form, as shown by its articles of incorporation, by-laws and other constitutive documents.
Section 30(E) of the NIRC specifically requires that the corporation or association be non-stock,
which is defined by the Corporation Code as ‘one where no part of its income is distributable as
dividends to its members, trustees, or officers’ and that any profit ‘obtain[ed] as an incident to its
operations shall, whenever necessary or proper, be used tor the furtherance of the purpose or
purposes for which the corporation was organized.’ However, under Lung Center, any profit by a
charitable institution must not only be plowed back ‘whenever necessary or proper,’ but must be
‘devoted or used altogether to the charitable object which it is intended to achieve.’

The operations of the charitable institution generally refer to its regular activities. Section 30(E)
of the NIRC requires that these operations be exclusive to charity. There is also a specific
requirement that ‘no part of [the] net income or asset shall belong to or inure to the benefit of
any member, organizer, officer or any specific person.’ The use of lands, buildings and
improvements of the institution is but a part of its operations.

There is no dispute that St. Luke’s is organized as a non-stock and non profit charitable
institution. However, this does not automatically exempt St Luke’s from paying taxes. This only
refers to the organization of St. Luke’s. Even if St. Luke’s meets the test of charity, a charitable
institution is not ipso facto tax exempt To be exempt from real property taxes, Section 28(3),
Article VI of the Constitution requires that a charitable institution use the property ‘actually,
directly and exclusively’ for charitable purposes. To be exempt from income taxes, Section
30(E) of the NIRC requires that a charitable institution must be ‘organized and operated
exclusively’ for charitable purposes. Likewise, to be exempt from income taxes, Section 30(G) of
the NIRC requires that the institution be ‘operated exclusively’ for social welfare.
However, the last paragraph of Section 30 of the NIRC qualifies the words ‘organized and
operated exclusively’ by providing that:

Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and
character of the foregoing organizations from any of their properties, real or personal, or from
any of their activities conducted for profit regardless of the disposition made of such income,
shall be subject to tax imposed under this Code.

In short, the last paragraph of Section 30 provides that if a tax exempt charitable institution
conducts ‘any’ activity for profit, such activity is not tax exempt even as its not-for-profit activities
remain tax exempt. This paragraph qualifies the requirements in Section 30(E) that the [n]on-
stock corporation or association [must be] organized and operated exclusively for . . . charitable
. . . purposes . . . It likewise qualifies the requirement in Section 30(G) that the civic organization
must be ‘operated exclusively’ for the promotion of social welfare.

Thus, even if the charitable institution must be ‘organized and operated exclusively’ for
charitable purposes, it is nevertheless allowed to engage in ‘activities conducted for profit’
without losing its tax exempt status for its not for profit activities. The only consequence is that
the ‘income of whatever kind and character’ of a charitable institution ‘from any of its activities
conducted for profit, regardless of the disposition made of such income, shall be subject to tax.’
Prior to the introduction of Section 27(B), the tax rate on such income from for profit activities
was the ordinary corporate rate under Section 27(A). With the introduction of Section 27(B), the
tax rate is now 10%.

In 1998, St. Luke’s had total revenues of P1,730,367,965 from services to paying patients. It
cannot be disputed that a hospital which receives approximately P1.73 billion from paying
patients is not an institution ‘operated exclusively’ for charitable purposes. Clearly, revenues
from paying patients are income received from ‘activities conducted for profit.’ Indeed, St. Luke’s
admits that it derived profits from its paying patients. St. Luke’s declared P1,730,367,965 as
‘Revenues from Services to Patients’ in contrast to its ‘Free Services’ expenditure of
P218,187,498. In its Comment in G.R. No. 195909, St. Luke’s showed the following ‘calculation’
to support its claim that 65.20% of its ‘income after expenses was allocated to free or charitable
services’ in 1998.

xxxx

In Lung Center, this Court declared:

‘[e]xclusive’ is defined as possessed and enjoyed to the exclusion of others; debarred from
participation or enjoyment; and ‘exclusively’ is defined, ‘in a manner to exclude; as enjoying a
privilege exclusively.’ … The words ‘dominant use’ or ‘principal use’ cannot be substituted for
the words ‘used exclusively’ without doing violence to the Constitution and the law. Solely is
synonymous with exclusively.

The Court cannot expand the meaning of the words ‘operated exclusively’ without violating the
NIRC. Services to paying patients are activities conducted for profit. They cannot be considered
any other way. There is a ‘purpose to make profit over and above the cost’ of services. The
P1.73 billion total revenues :from paying patients is not even incidental to St. Luke’s charity
expenditure of P218,187,498 for non-paying patients.

St Luke’s claims that its charity expenditure of P218,187,498 is 65.20% of its operating income
in 1998. However, if a part of the remaining 34.80% of the operating income is reinvested in
property, equipment or facilities used for services to paying and non-paying patients, then it
cannot be said that the income is ‘devoted or used altogether to the charitable object which it is
intended to achieve.’ The income is plowed back to the corporation not entirely for charitable
purposes, but for profit as well. In any case, the last paragraph of Section 30 of the NIRC
expressly qualifies that income from activities for profit is taxable ‘regardless of the disposition
made of such income.’

Jesus Sacred Heart College declared that there is no official legislative record explaining the
phrase ‘any activity conducted for profit.’ However, it quoted a deposition of Senator Mariano
Jesus Cuenco, who was a member of the Committee of Conference for the Senate, which
introduced the phrase ‘or from any activity conducted for profit.’

P. Cuando ha hablado de la Universidad de Santo Tomas que tiene un hospital, no cree Vd.
que es una actividad esencial dicho hospital para el funcionamiento del colegio de medicina de
medicina de dicha universidad?

xxx xxx xxx

R. Si el hospital se limita a recibir enformos pobres, mi contestacion seria afirmativa; pero

considerando que el hospital tiene cuartos de pago, y a los mismos generalmente van enformos
de buena posicion social economica, lo que se paga por estos enformos debe estar sujeto a
‘income tax’, y es una de las razones que hemos tenido para insertar las palabras o frase ‘or
from any activity conducted for profit.’

The question was whether having a hospital is essential to an educational institution like the
College of Medicine of the University of Santo Tomas. Senator Cuenco answered that if the
hospital has paid rooms generally occupied by people of good economic standing, then it should
be subject to income tax. He said that this was one of the reasons Congress inserted the phrase
‘or any activity conducted for profit.’

The question in Jesus Sacred Heart College involves an educational institution. However, it is
applicable to charitable institutions because Senator Cuenco’s response shows an intent to
focus on the activities of charitable institutions. Activities for profit should not escape the reach
of taxation. Being a non-stock and non-profit corporation does not, by this reason alone,
completely exempt an institution from tax. An institution cannot use its corporate form to prevent
its profitable activities from being taxed.

The Court finds that St. Luke’s is a corporation that is not ‘operated exclusively’ for charitable or
social welfare purposes insofar as its revenues from paying patients are C.Qncemed. This ruling
is bacred not only on a strict interpretation of a provision granting tax exemption, but also on the
clear and plain text of Section 30(E) and (G). Section 30(E) and (G) of the NIRC requires that an
institution be ‘operated exclusively’ for charitable or social welfare purposes to be completely
exempt from income tax. An institution tmder Section 30(E) or (G) does not lose its tax
exemption if it earns income from its for-profit activities. Such income from for-profit activities,
tmder the last paragraph of Section 30, is merely subject to income tax, previously at the
ordinary corporate rate but now at the preferential tO% rate pursuant to Section 27(B).

A tax exemption is effectively a social subsidy granted by the State because an exempt
institution is spared from sharing in the expenses of government and yet benefits from them.
Tax exemptions for charitable institutions should therefore be limited to institutions beneficial to
the public and those which improve social welfare. A profit-making entity should not be allowed
to exploit this subsidy to the detriment of the government and other taxpayers.

St. Luke’s fails to meet the requirements tmder Section 30(E) and (G) of the NlRC to be
completely tax exempt from all its income. However, it remains a proprietary non-profit hospital
tmder Section 27(B) of the NIRC as long as it does not distribute any of its profits to its
members and such profits are reinvested pursuant to its corporate purposes. St. Luke’s, as a
proprietary non-profit hospital, is entitled to the preferential tax rate of 10% on its net income
from its for-profit activities.

St. Luke’s is therefore liable for deficiency income tax in 1998 tmder Section 27(B) of the NIRC.
However, St. Luke’s has good reasons to rely on the letter dated 6 June 1990 by the BIR, which
opined that St. Luke’s is ‘a corporation for purely charitable and social welfare purposes’ and
thus exempt from income tax. In Michael J. Lhuillier, Inc. v. Commissioner of Internal Revenue,
the Court said that ‘good faith and honest belief that one is not subject to tax on the basis of
previous interpretation of government agencies tasked to implement the tax law, are sufficient
justification to delete the imposition of surcharges and interest.'[40]

A careful review of the pleadings reveals that there is no countervailing consideration for the
Court to revisit its aforequoted ruling in G.R. Nos. 195909 and 195960 (Commissioner of
Internal Revenue v. St. Luke’s Medical Center, Inc.). Thus, under the doctrine of stare decisis,
which states that “[o]nce a case has been decided in one way, any other case involving exactly
the same point at issue xxx should be decided in the same manner,”[41] the Court finds that
SLMC is subject to 10% income tax insofar as its revenues from paying patients are concerned.

To be clear, for an institution to be completely exempt from income tax, Section 30(E) and (G) of
the 1997 NIRC requires said institution to operate exclusively for charitable or social welfare
purpose. But in case an exempt institution under Section 30(E) or (G) of the said Code earns
income from its for-profit activities, it will not lose its tax exemption. However, its income from for
profit activities will be subject to income tax at the preferential 10% rate pursuant to Section
27(B) thereof.

SLMC is not liable for Compromise Penalty.

As to whether SLMC is liable for compromise penalty under Section 248(A) of the 1997 NIRC
for its alleged failure to file its quarterly income tax returns, this has also been resolved in G.R.
Nos. 195909 and 195960 (Commissioner of Internal Revenue v. St. Luke’s Medical Center,
Inc.),[42] where the imposition of surcharges and interest under Sections 248[43] and 249[44] of
the 1997 NIRC were deleted on the basis of good faith and honest belief on the part SLMC that
it is not subject to tax. Thus, following the ruling of the Court in the said case, SLMC is not liable
to pay compromise penalty under Section 248(A) of the 1997 NIRC.

The Petition is rendered moot by the payment made by SLMC on April 30, 2013.

However, in view of the payment of the basic taxes made by SLMC on April 30, 2013, the
instant Petition has become moot.

While the Court agrees with the CIR that the payment confirmation from the BIR presented by
SLMC is not a competent proof of payment as it does not indicate the specific taxable period the
said payment covers, the Court fmds that the Certification issued by the Large Taxpayers
Service of the BIR dated May 27, 2013, and the letter from the BIR dated November 26, 2013
with attached Certification of Payment and application for abatement are sufficient to prove
payment especially since CIR never questioned the authenticity of these documents. In fact, in a
related case, G.R. No. 200688, entitled Commissioner of Internal Revenue v. St. Luke’s Medical
Center, Inc.,[45] the Court dismissed the petition based on a letter issued by CIR confirming
SLMC’s payment of taxes, which is the same letter submitted by SLMC in the instant case.

In fine, the Court resolves to dismiss the instant Petition as the same has been rendered moot
by the payment made by SLMC of the basic taxes for the taxable years 2005 and 2006, in the
amounts of P49,919,496.40 and P41,525,608.40, respectively.[46]

WHEREFORE, the Petition is hereby DISMISSED.

SO ORDERED.

30 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL DISMISSAL | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Jack C. Valencia Vs. Classique Vinyl Products Corporation, et al.; G.R. No. 206390; January 30, 2017

This Petition for Review on Certiorari assails the December 5, 2012 Decision[1] and March 18,
2013 Resolution[2] of the Court of Appeals (CA) in CA G.R. SP No. 120999, which respectively
denied the Petition for Certiorari filed therewith by petitioner Jack C. Valencia (Valencia) and the
motion for reconsideration thereto.

Factual Antecedents

On March 24, 2010, Valencia filed with the Labor Arbiter a Complaint[3] for Underpayment of
Salary and Overtime Pay; Non-Payment of Holiday Pay, Service Incentive Leave Pay,
13th Month Pay; Regularization; Moral and Exemplary Damages; and, Attorney’s Fees against
respondents Classique Vinyl Products Corporation (Classique Vinyl) and its owner Johnny
Chang (Chang) and/or respondent Cantingas Manpower Services (CMS). When Valencia,
however, asked permission from Chang to attend the hearing in connection with the said
complaint on April 17, 2010, the latter allegedly scolded him and told him not to report for work
anymore. Hence, Valencia amended his complaint to include illegal dismissal.[4]

In his Sinumpaang Salaysay,[5] Valencia alleged that he applied for work with Classique Vinyl
but was told by the latter’s personnel office to proceed to CMS, a local manpower agency, and
therein submit the requirements for employment. Upon submission thereof, CMS made him sign
a contract of employment[6] but no copy of the same was given to him. He then proceeded to
Classique Vinyl for interview and thereafter started working for the company in June 2005 as
felitizer operator. Valencia claimed that he worked 12 hours a day from Monday to Saturday and
was receiving P187.52 for the first eight hours and an overtime pay of P117.20 for the next four
hours or beyond the then minimum wage mandated by law. Five months later, he was made to
serve as extruder operator but without the corresponding increase in salary. He was neither
paid his holiday pay, service incentive leave pay, and 13th month pay. Worse, premiums for
Philhealth and Pag-IBIG Fund were not paid and his monthly deductions for Social Security
System (SSS) premiums were not properly remitted. He was also being deducted the amounts
of P100.00 and 60.00 a week for Cash Bond and Agency Fee, respectively. Valencia averred
that his salary was paid on a weekly basis but his pay slips neither bore the name of Classique
Vinyl nor of CMS; that all the machineries that he was using/operating in connection with his
work were all owned by Classique Vinyl; and, that his work was regularly supervised by
Classique Vinyl. He further averred that he worked for Classique Vinyl for four years until his
dismissal. Hence, by operation of law, he had already attained the status of a regular employee
of his true employer, Classique Vinyl, since according to him, Civ1S is a mere labor only
contractor. Valencia, therefore, argued that Classique Vinyl should be held guilty of illegal
dismissal for failing to comply with the twin-notice requirement when it dismissed him from the
service and be made to pay for his monetary claims.

Classique Vinyl, for its part, denied having hired Valencia and instead pointed to CMS as the
one who actually selected, engaged, and contracted out Valencia’s services. It averred that
CMS would only deploy Valencia to Classique Vinyl whenever there was an urgent specific task
or temporary work and these occasions took place sometime in the years 2005, 2007, 2009 and
2010. It stressed that Valencia’s deployment to Classique Vinyl was intermittent and limited to
three to four months only in each specific year. Classique Vinyl further contended that
Valencia’s performance was exclusively and directly supervised by CMS and that his wages and
other benefits were also paid by the said agency. It likewise denied dismissing Valencia from
work and instead averred that on April 16, 2010, while deployed with Classique Vinyl, Valencia
went on a prolonged absence from work for reasons only known to him. In sum, Classique Vinyl
asserted that there was no employer-employee relationship between it and Valencia, hence, it
could not have illegally dismissed the latter nor can it be held liable for Valencia’s monetary
claims. Even assuming that Valencia is entitled to monetary benefits, Classique Vinyl averred
that it cannot be made to pay the same since it is an establishment regularly employing less
than 10 workers. As such, it is exempted from paying the prescribed wage orders in its area and
other benefits under the Labor Code. At any rate, Classique Vinyl insisted that Valencia’s true
employer was CMS, the latter being an independent contractor as shown by the fact that it was
duly incorporated and registered not only with the Securities and Exchange Commission but
also with the Department of Labor and Employment; and, that it has substantial capital or
investment in connection with the work performed and services rendered by its employees to
clients.
CMS, on the other hand, denied any employer-employee relationship between it and Valencia. It
contended that after it deployed Valencia to Classique Vinyl, it was already the latter which
exercised full control and supervision over him. Also, Valencia’s wages were paid by Classique
Vinyl only that it was CMS which physically handed the same to Valencia.

Ruling of the Labor Arbiter

On September 13, 2010, the Labor Arbiter issued a Decision,[7] the pertinent portions of which
read:

Is [Valencia] a regular employee of respondent [Classique Vinyl]?

The Certificate of Business Name Registration issued by the Department of Trade and
Industry dated 17 August 2007 and the Renewal of PRPA License No. M-08-03-269 for
the period 29 August 2008 to 28 August 2010 issued by the Regional Director of the
National Capital Region of the Department of Labor and Employment [on the] 1 st day of
September 2008 are pieces of evidence to prove that respondent [CMS] is a legitimate
Private Recruitment and Placement Agency.

Pursuant to its business objective, respondent CMS entered into several Employment
Contracts with complainant Valencia as Contractual Employee for deployment to
respondent [Classique Vinyl], the last of which was signed by [Valencia] on 06 February
2010.

The foregoing Employment Contract for a definite period supports respondent

[Classique Vinyl’s] assertion that [Valencia] was not hired continuously but intermittently
ranging from 3 months to 4 months for the years 2005, 2007, 2009 and 2010. Notably,
no controverting evidence was offered to dispute respondent [Classiquc Vinyl’s]
assertion.

Obviously, [Valencia] was deployed by CMS to [Classique Vinyl] for a fixed period.

In Pangilinan v. General Milling Corporation, G.R. No. 149329, July 12, 2004, the
Supreme Court ruled that it does not necessarily follow that where the duties of the
employee consist of activities usually necessary or desirable in the usual business of
the employer, the parties are forbidden from agreeing on a period of time for the
performance of such activities. There is thus nothing essentially contradictory between a
definite period of employment and the nature of the employee’s duties.

Thus, even if respondent [Classique Vinyl] exercises full control and supervision over
the activities performed by [Valencia], the latter’s employment cannot be considered as
regular.
Likewise, even if [Valencia] is considered the regular employee of respondent CMS, the
complaint for illegal dismissal cannot prosper as [the] employment was not terminated
by respondent CMS.

On the other hand, there is no substantial evidence to support [Valencia’s] view that he
was actually dismissed from his employment by respondent [Classique Vinyl]. After all,
it is elementary that he who makes an affirmative allegation has the burden of proof. On
this score, [Valencia] failed to establish that he was actually dismissed from his job by
respondent [Classique Vinyl], aside from his bare allegation.

With regard to underpayment of salary, respondent CMS admitted that it received from
respondent [Classique Vinyl] the salary for [Valencia’s] deployment. Respondent CMS
never contested that the amount received was sufficient for the payment of [Valencia’s]
salary.

Furthermore, respondent [Classique Vinyl] cannot be obliged to pay [Valencia’s]

overtime pay, holiday pay, service incentive leave and 13 th month pay as well as the
alleged illegal deduction on the following grounds:

a) [Valencia] is not a rank-and-file employee of [Classique Vinyl];

b) No proof was offered to establish that [Valencia] actually rendered overtime services;

c) [Valencia had] not [worked] continuously or even intermittently for [one whole] (1)
year[-]period during the specific year of his deployment with respondent [Classique
Vinyl] to be entitled to service incentive leave pay.

d) [Valencia] failed to offer substantia1 evidence to prove that respondent [Classique

Vinyl] illegally deducted fiom his salary the alleged agency and cash bond.

Moreover, as against respondent CMS[,] the record is bereft of factual basis for the
exact computation of [Valencia’s] money claims as it has remained uncontroverted that
[Valencia] was not deployed continuously neither with respondent [Classique Vinyl]
and/or to such other clientele.

WHEREFORE, premises considered, judgment is hereby rendered [d]ismissing the

above-entitled case fur lack of merit and/or factual basis.

SO ORDERED.[8]

Ruling of the National Labor Relations Commission

Valencia promptly appealed to the National Labor Relations Commission (NLRC). Applying the
four-fold test, the NLRC, however, declared CMS as Valencia’s employer in its
Resolution[9] dated April 14, 2011, viz.:

In Order to determine the existence of an employer-employee relationship, the following

yardstick had been consistently applied: (1) the selection and engagement; (2) payment
of wages; (3) power of dismissal and; (4) the power to control the employee[‘]s conduct.

In this case, [Valencia] admitted that he applied for work with respondent [CMS] x x x.
Upon the acceptance of his application, he was made to sign an employment contract x
x x. [Valencia] also admitted that he received his wages from respondent [CMS] x x x.
As a matter of tact, respondent [CMS] argued that [Valencia] was given a non-cash
wage in the approximate amount of Php3,000.00 x x x.

Notably, it is explicitly stated in the employment contract of [Valencia] that he is required

to observe all the rules and regulations of the company as well as [the] lawful
instructions of the management during his employment. That failure to do so would
cause the termination of his employment contract. The pertinent provision of the
contract reads:

2. The employee shall observe all the rules and regulations of the company during the
period of employment and [the] lawful instructions of the management or its
representatives. Failure to do so or if performance is below company standards,
management [has] the right to immediately cancel this contract. x x x

The fact that [Valencia] was subjected to such restriction is an evident exercise of the
power of control over [Valencia].

The power of control of respondent [CMS] over Valencia was further bolstered by the
declaration of the former that they will not take against [Valencia] his numerous
tardiness and absences at work and[;] his nonobservance of the company rules. The
statement of [CMS] reads:

Needless to say that [Valencia] in the course of his employment has incurred many
infractions like tardiness and absences, non-observance of company rules, but
respondent [CMS], in reiteration will not take this up as leverage against [Valencia]. x x
x

Though [Valencia] worked in the premises of Classique Vinyl x x x and that the
[equipment] he used in the performance of his work was provided by the latter, the
same is not sufficient to establish employer-employee relationship between [Valencia]
and Classique Vinyl x x x in view of the foregoing circumstances earlier reflected.
Besides, as articulated by jurisprudence, the power of control does not require actual
exercise of the power but the power to wield that power x x x.
With the foregoing chain of events, it is evident that [Valencia] is an employee of
respondent [CMS].

x x x x[10]

Accordingly, the NLRC held that there is no basis for Valencia to hold Classique Vinyl liable for
his alleged illegal dismissal as well as for his money claims. Hence, the NLRC dismissed
Valencia’s appeal and affirmed the decision of the Labor Arbiter.

Valencia’s motion for reconsideration thereto was likewise denied for lack of merit in the
Resolution[11] dated June 8, 2011.

Ruling of the Court of Appeals

When Valencia sought recourse from the CA, the said court rendered a Decision[12] dated
December 5, 2012 denying his Petition for Certiorari and affirming the ruling of the NLRC.

Valencia’s motion for reconsideration was likewise denied in a Resolution[13] dated March 18,
2013.

Hence, this Petition tor Review on Certiorari imputing upon the CA the following errors:

WITH DUE RESPECT, IT IS A SERIOUS ERROR WHICH CONSITITUTE[S] GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION
ON THE PART OF THE HONORABLE COURT OF APPEALS TO HAVE RULED THAT
PETITIONER IS AN EMPLOYEE OF CMS AND FURTHER RULED THAT HE IS NOT
ENTITLED TO HIS MONETARY CLAIMS.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS[‘] DECISION AND

RESOLUTION ARE CONTRARY TO LAW AND WELL-SETTLED RULE.[14]

Valencia points out that the CA, in ruling that he was an employee of CMS, relied heavily on the
employment contract which the latter caused him to sign. He argues, however, that the said
contract deserves scant consideration since aside from being improperly filled up (there were
many portions without entries), the same was not notarized, Valencia likewise stresses that the
burden of proving that CMS is a legitimate job contractor lies with respondents. Here, neither
Classique Vinyl nor CMS was able to present proof that the latter has substantial capital to do
business as to be considered a legitimate independent contractor. Hence, CMS is presumed to
be a mere labor-only contractor and Classique Vinyl, as CMS’ principal, was Valencia’s true
employer. As to his alleged dismissal, Valencia argues that respondents failed to establish just
or authorized cause, thus, his dismissal was illegal Anent his monetary claims, Valencia invokes
the principle that he who pleads payment has the burden of proving it. Since respondents failed
to present even a single piece of evidence that he has been paid his labor standards benefits,
he believes that he is entitled to recover them from respondents who must be held jointly and
severally liable tor the same. Further, Valencia contends that respondents should be assessed
moral and exemplary damages for circumventing pertinent labor laws by preventing him from
attaining regular employment status. Lastly, for having been compelled to engage the services
of counsel, Valencia claims that he is likewise entitled to attorney’s fees.

For their part, respondents Classique Vinyl and Chang point out that the issues raised by
Valencia involve questions of fact which are not within the ambit of a petition for review
on certiorari. Besides, findings of facts of the labor tribunals when affirmed by the CA are
generally binding on this Court. At any rate, the said respondents reiterate the arguments they
raised before the labor tribunals and the CA.

With respect to respondent CMS, the Court dispensed with the filing of its comment[15] when the
resolution requiring it to file one was returned to the Court unserved[16] and after Valencia
informed the Court that per Certification[17] of the Office of the Treasurer of Valenzuela City
where CMS’s office was located, the latter had already closed down its business on March 21,
2012.

Our Ruling

There is no merit in the Petition.

The core issue here is whether there exists an employer-employee relationship between
Classique Vinyl and Valencia. Needless to state, it is from the said determination that the other
issues raised, i.e., whether Valencia was illegally dismissed by Classique Vinyl and whether the
latter is liable for his monetary claims, hinge. However, as correctly pointed out by Classique
Vinyl, “[t]he issue of whether or not an employer-employee relationship existed between
[Valencia] and [Classique Vinyl] is essentially a question of fact.” [18] “The Court is not a trier of
facts find will not review the factual findings of the lower tribunals as these are generally binding
and conclusive.”[19] While there are recognized exceptions,[20] none of them applies in this case.

Even if otherwise, the Court is not inclined to depart from the uniform findings of the Labor
Arbiter, the NLRC and the CA.

“It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial
proceedings, ‘the quantum of proof necessary is substantial evidence, or such amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.’
‘The burden of proof rests upon the party who asserts the affirmative of an issue’.” [21] Since it is
Valencia here who is claiming to be an employee of Classique Vinyl, it is thus incumbent upon
him to proffer evidence to prove the existence of employer-employee relationship between
them. He “needs to show by substantial evidence that he was indeed an employee of the
company against which he claims illegal dismissal.”[22] Corollary, the burden to prove the
element of an employer employee relationship, viz.: (l) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control,
lies upon Valencia.

Indeed, there is no hard and fast rule designed to establish the aforementioned elements of
employer-employee relationship.[23] “Any competent and relevant evidence to prove the
relationship may be admitted.”[24] In this case however, Valencia failed to present competent
evidence, documentary or otherwise, to support his claimed employer employee relationship
between him and Classique Vinyl. All he advanced were mere tactual assertions unsupported
by proof.
In fact, most of Valencia’s allegations even militate against his claim that Classique Vinyl was
his true employer. For one, Valencia stated in his Sinumpaang Salaysay that his application was
actually received and processed by CMS which required him to submit the necessary
requirements for employment. Upon submission thereof, it was CMS that caused him to sign an
employment contract, which upon perusal, is actually a contract between him and CMS. It was
only after he was engaged as a contractual employee of CMS that he was deployed to
Classique Vinyl. Clearly, Valencia’s selection and engagement was undertaken by CMS and
conversely, this negates the existence of such element insofar as Classique Vinyl is concerned.
It bears to state, in addition, that as opposed to Valencia’s argument, the lack of notarization of
the said employment contract did not adversely affect its veracity and effectiveness since
significantly, Valencia does not deny having signed the same.[25] The CA, therefore, did not err in
relying on the said employment contract in its determination of the merits of this case. For
another, Valencia himself acknowledged that the pay slips[26] he submitted do not bear the name
of Classique Vinyl. While the Court in Vinoya v. National Labor Relations Commission[27] took
judicial notice of the practice of employer to course through the purported contractor the act of
paying wages to evade liabilities under the Labor Code, hence, the non-appearance of
employer’s name in the pay slip, the Court is not inclined to rule that such is the case here. This
is considering that although CMS claimed in its supplemental Position Paper/Comment that the
money it used to pay Valencia’s wages came from Classique Vinyl,[28] the same is a mere
allegation without proof. Moreover, such allegation is inconsistent with CMS’s earlier assertion
in its Position Paper[29] that Valencia received from it non-cash wages in an approximate amount
of P3,000.00. A clear showing of the element of payment of wages by Classique Vinyl is
therefore absent.

Aside from the afore-mentioned inconsistent allegations of Valencia, his claim that his work was
supervised by Classique Vinyl does not hold water. Again, the Court finds the same as a self-
serving assertion unworthy of credence. On the other hand, the employment contract which
Valencia signed with CMS categorically states that the latter possessed not only the power of
control but also of dismissal over him, viz.:

xxxx

2. That the employee shall observe all rules and regulations of the company during the
period of employment and [the] lawful instructions of the management or its
representatives. Failure to do so or if performance is below company standards,
management [has] the right to immediately cancel this contract.

x x x x[30]

Clearly, therefore, no error can be attributed on the part of the labor tribunals and the CA in
ruling out the existence of employer-employee relationship between Valencia and Classique
Vinyl.

Further, the Court finds untenable Valencia’s argument that neither Classique Vinyl nor CMS
was able to present proof that the latter is a legitimate independent contractor and therefore
unable to rebut the presumption that a contractor is presumed to be a labor-only contractor.
“Generally, the presumption is that the contractor is a labor-only [contractor] unless such
contractor overcomes the burden of proving that it has the substantial capital, investment, tools
and the like.”[31] Here, to prove that CMS was a legitimate contractor, Classique Vinyl presented
the former’s Certificate of Registration[32] with the Department of Trade and Industry and,
License[33] as private recruitment and placement agency from the Department of Labor and
Employment. Indeed, these documents are not conclusive evidence of the status of CMS as a
contractor. However, such fact of registration of CMS prevented the legal presumption of it
being a mere labor-only contractor from arising.[34] In any event, it must be stressed that “in
labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered
merely an agent of the principal employer and the latter is responsible to the employees of the
labor-only contractor as if such employees had been directly employed by the principal
employer. The principal employer therefore becomes solidarity liable with the labor-only
contractor for all the rightful claims of the employees.”[35] The facts of this case, however, failed
to establish that there is any circumvention of labor laws as to call for the creation by the statute
of an employer-employee relationship between Classique Vinyl and Valencia. In fact, even as
against CMS, Valencia’s money claims has been debunked by the labor tribunals and the CA.
Again, the Court is not inclined to disturb the same.

In view of the above disquisition, the Court finds no necessity to dwell on the issue of whether
Valencia was illegally dismissed by Classique Vinyl and whether the latter is liable for Valencia’s
money claims.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed December 5,
2012 Decision and March 18, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
120999 are AFFIRMED.

SO ORDERED.

25 JAN 2017 | SUBJECT | CRIMINAL LAW | ART. 248 - MURDER |

People of the Philippines Vs. Gregorio Quita alias “Greg”; G.R. No. 212818; January 25, 2017

This is an appeal from the January 10, 2014 Decision[1] of the Court of Appeals (CA) in
CA-G.R. CR-HC No. 04782, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the appeal is hereby DENIED for lack of merit.
The Decision dated December 1, 2010 rendered by the Regional Trial Court of
Parañaque City, Branch 195, in Criminal Case No. 06-0294 is hereby MODIFIED,
increasing the amount of civil indemnity ex delicto to P75,000.00, moral damages to
P50,000.00 and exemplary damages to P30,000.00.

SO ORDERED.[2]

Factual Antecedents
The two accused in this case, Gregorio Quita, alias Greg (Gregorio), and Fleno Quita, alias
Eddie Boy (Fleno)were indicted for Murder before the Regional Trial Court (RTC) of Parañaque
City, in an Information which alleged:

That on or about the 17th day of November[,] 2002, in the City of Parañaque, Philippines,
and within the jurisdiction of this Honorable Court, the above-named accused, armed
with bladed weapon, conspiring and confederating together and both of them mutually
helping and aiding one another, and with treachery and abuse of superior strength, did
then and there willfully, unlawfully and feloniously attack, assault and stab one
ROBERTO SOLAYAO, thereby inflicting upon the latter mortal wounds which directly
caused his death.

CONTRARY TO LAW.[3]

As these accused were not promptly apprehended when the foregoing Information was filed,
this case was ordered archived by the RTC. But on January 8, 2007, Gregorio was arrested,
hence the case was revived on the said date.

On January 17, 2007, Gregorio, assisted by counsel, was arraigned and entered a negative
plea to the charge against him.[4] Pre-trial was held,[5] after which trial on the merits followed.

Version of the Prosecution

The case for the prosecution is built upon the testimonies of Paquito Solayao (Paquito) and Dr.
Edgardo Vida (Dr. Vida).

Paquito testified that the deceased victim in this case, Roberto Solayao (Roberto), was his
eldest son. He claimed that he had known Gregorio and Fleno for about a year prior to the
killing of Roberto, because these two were the ones who delivered water in their locality; that on
November 17, 2002 at around 8:30 in the evening he was at home at Greenland Street, Better
Living Subdivision, Parañaque City having just arrived from work, when his daughter told him
that Roberto was having a drinking session nearby; that while on his way to fetch Roberto, he
saw three persons fighting; that when he went near the trio he saw Gregorio holding Roberto’s
hand at the back while Roberto was being stabbed by Fleno; that when he shouted, his son’s
assailants took to their heels; and that he ran after them, but when the two reached a dark alley
he no longer pursued them. He then went back to where Roberto was lying, and with the help of
his neighbors, brought the stricken Roberto to the hospital. But when they arrived at the hospital
the doctor told him that Roberto was already dead. He spent about P40,000.00 for Roberto’s
funeral and burial expenses, but only the expenses amounting to 25,000.00 were covered by
receipts. Paquito claimed that Roberto’s death was very painful to him.

Dr. Vida, former NBI[6] Medico-Legal Officer, testified that he was the one who conducted an
autopsy on Roberto’s cadaver. His findings were embodied in the Autopsy Report,[7] wherein he
affirmed that the victim sustained six contused abrasions, three incised wounds, and six stab
wounds. According to this witness, the most fatal wound, labeled Wound No. 1, was the one
inflicted at the deceased’s right shoulder (or deltoid area) which penetrated the large vessels of
the axillary artery. Without this Wound No. 1, the victim might have survived as the other
wounds were only superficial. Dr. Vida opined that the wounds inflicted on the deceased could
have been inflicted by one and the same weapon, possibly a double-bladed instrument.

Version of the Defense

The defense presented Gregorio and his wife Analyn Quita (Analyn).

Gregorio made a total denial of the charge against him. He denied that he had ever known the
victim or met him even once. He claimed that prior to the incident in question he was residing at
No. 10 SMI Compound, Sucat, Kupang, Muntinlupa City; that he used to work as a truck driver
for Leslie Corporation but that on the date of the incident, November 17, 2002, he was no longer
employed with Leslie, and was looking for a job; that it was only in December 2002 that he was
able to find a job as a driver for a trucking company, the name of which he could no longer
remember; that he worked for this trucking company until 2004; that his job was to deliver cup
noodles in Metro Manila and in the provinces; that he was assisted in this job by a “pahinante”
named Danilo; that on the date of the incident, he left their house at 10:30 in the morning and
together with his brother, Fleno, went to Better Living Subdivision in Parañaque City where their
“kababayans” Gerry Virtudazo (Gerry) and Jose Virtudazo (Jose) were working as water
delive1y boys; and, that when they got to that subdivision, Gerry and Jose invited them to a
birthday celebration. He heard that the birthday celebrant was the child of the owner of the
house where the celebration was taking place. But he was not introduced, either to the birthday
celebrant, or to the owner of the house. After they had eaten and had partaken of liquor, they
sang songs inside the house of the birthday celebrant. While they were singing, four men, not
one of whom he knew, arrived. One of these four, he later heard, was named “Berto”. After
these four had finished eating, they went outside the house. At this point, the owner of the
house told his group that this “Berto” was angry with them. To avoid trouble, he and his
companions decided to leave the place of celebration at around 4 p.m. Not far away from the
celebrant’s house, however, he and his companions saw “Berto’s” group waiting for them along
the road. A fight erupted, and someone gave him a blow at the right side of his face.
Fortunately, the residents of the place were able to pacify the protagonists. He and his
companions then left the place on board a tricycle. He reached his house at Sucat, Kupang,
Muntinlupa City between 6:30 to 7 p.m. and told his wife about the incident that happened that
day; his wife advised him not to go to that place anymore. In 2004 he transferred his family to
Paliparan 3, Dasmariñas City in Cavite, where his parents had a piece of land. Here, he found
work as a tricycle driver. Sometime in the early part of January 2007, while driving his tricycle,
someone told him to go to Parañaque City because a warrant for his arrest was waiting for him
there. He went with that person to Parañaque City because he knew he did not commit any
crime. But when he got there, he was at once brought to the Special Investigation Division at the
Parañaque Coastal Area, where he was told to sign a blank piece of paper, which, according to
the person who brought him there, meant that he had killed somebody from the Better Living
Subdivision in Parañaque City. After signing the blank piece of paper he was detained in jail and
was told that if he believed he was innocent of the accusation against him, he should prove his
innocence in court. He said that he was never brought to the prosecutor’s office in Parañaque
City. He insisted that there was never a time that he left Kupang, Muntinlupa City from
November 17, 2002 up to the time he transferred to Dasmariñas City in Cavite in 2004. He
claimed that at the time of the incident, the other accused, his brother Fleno, was residing at
Bicutan in Taguig City, and that Fleno left Bicutan only in 2003.

Analyn corroborated her husband’s testimony in its entirety.

Ruling of the Regional Trial Court[8]

The RTC sustained the factuality of the treacherous killing of Roberto, labeling it as murder, viz.:

The fact of death of the victim was duly established by his death certificate (exhibit “C”).
Accused Gregorio was one of those who killed the victim. The killing was qualified by
treachery. Obviously, the killing was neither parricide nor infanticide.

This Court finds Paquito Solayao’s eyewitness account of the incident worthy of belief.
His positive, straightforward, categorical[,] and unequivocal testimony that accused
Gregorio held both hands of the victim at the back while being stabbed by his co-
accused Fleno who is his brother, deserves full credence. It is worthy of note that
Paquito was not shown to have been impelled by ill motive to testify falsely against both
accused and indict them for a crime as serious as murder. All that was shown was his
ardent desire to give justice to his murdered son. When there is no showing of any
improper motive on the part of the prosecution witnesses to testify falsely against the
accused, the logical conclusion is that no such improper motive exists and that their
positive and categorical testimonies and declarations on the witness stand under the
solemnity of an oath are worthy of full faith and credence (Buenaventura vs. People,
493 SCRA 223; People vs. Cabbab, Jr., 527 SCRA 589). In the instant case, absent
any evidence of improper motive on Paquito’s part to testify as principal witness, his
testimony deserves credit (Nerpito vs. People, 528 SCRA 93).

Paquito’s testimony that both hands of the victim were held at the back by accused
Gregorio while being stabbed by accused Fleno shows the presence of treachery
because under such situation the victim was deprived of any real chance to fight back
and defend himself. In the cases of People vs. Pascual, 512 SCRA and People vs.
Concepcion, 514 SCRA 660[,] the Supreme Court held that treachery is present when
the offender commits any crime against persons employing means, methods, or form in
the execution thereof which tend directly and especially to insure its execution without
risk to the offender arising from any defense which the offended party might make. In
the instant case, holding the hands of the victim while being stabbed was the means
employed by the accused to insure that the former could not fight back and defend
himself.

The defense of denial interposed by accused Gregorio, on the other hand, cannot
prevail over Paquito’s positive, direct[,] and categorical declarations made in a
straightforward manner while in the witness stand that he held both hands of the victim
while being stabbed by his brother, accused Fleno. It must be noted that aside from his
self[-]serving testimony that on the date in question, he just stayed home after coming
from Better Living, Parañaque City where he attended a birthday party and that when
they left the house of the birthday celebrant, the group of Berto waited for them on the
road and that when they passed in front of them he was allegedly punched by one of
Berto’s companions, no other clear and convincing evidence was presented to
substantiate the same. His “kababayans”, Jose and Gerry Vertudaso, were not even
presented to establish at least the fact that he indeed was with them from 10:30 in the
morning up to 4:00 in the afternoon of November 17, 2002. Neither was his testimony
that he was employed as a truck driver with Leslie Corporation prior to the date in
question nor that he was employed as delivery boy (driver) of a certain company from
December 2002 up to 2004 was duly established. His alleged pahinante, Danilo, was
not presented to corroborate such testimony. Even the tricycle driver, who[,] according
to his wife Analyn, was the one who informed her that he was arrested while driving his
tricycle in Dasmariñas, Cavite, was not presented to corroborate this testimony.

The Supreme Court, in a long line of cases, ruled that evidence[,] to be believed[,] must
not only proceed from the mouth of a credible witness but x x x must [also] be credible
in itself[,] such as the common experience and observation of mankind can approve as
probable under the circumstances. Unfortunately, the evidence presented by the
accused did not pass this test.[9]

Upon these facts, the RTC disposed as follows:

WHEREFORE, this Court finds accused Gregorio Quita, GUILTY BEYOND

REASONABLE DOUBT of the crime of murder and hereby sentences him to suffer the
penalty of reclusion perpetua which carries with it the accessory penalties of civil
interdiction for life and that of perpetual absolute disqualification which he shall suffer
even though pardoned unless the same shall have been expressly remitted therein.

Accused Gregorio Quita is likewise ordered to pay the heirs of the victim the amounts of
Fifteen Thousand Pesos (P15,000.00) as actual damages; Fifty Thousand Pesos
(P50,000.00) as civil indemnity ex delicto; Forty Thousand Pesos (P40,000.00) as moral
damages; and Twenty Thousand Pesos (P20,000.00) as exemplary damages.

The City Jail Warden of Parañaque City is hereby ordered to transfer said accused to
the National Penitentiary in Muntinlupa City, immediately upon receipt of this Decision.

As regards accused Fleno Quita, this case shall remain in archive. The alias warrant of
arrest issued against him stays.

SO ORDERED.[10]

Ruling of the Court of Appeals

From this judgment, Gregorio interposed an appeal to the CA anchored on a single assignment
of error to wit:

THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSEDAPPELLANT

GUILTY OF THE CRIME CHARGED DESPITE THE PROSECUTION’S FAILURE TO
ESTABLISH HIS GUILT BEYOND REASONABLE DOUBT.[11]
But the CA predictably sustained the RTC’s factual underpinnings of the case, thus:

Paquito Solayao, the victim’s father who was an eyewitness to the incident, positively
identified Accused-Appellant Gregorio Quita to be the person who held the hands of the
victim while the other accused Fleno Quita stabbed the victim. He knew the two
accused because they were water delivery boys in the water station three streets away
from their place. He saw the accused in the water delivery station one month before and
also one week before the incident happened [on] November 17, 2002. The faces of the
accused had become familiar to the witness that it is believable for him to recognize
them when he saw them ganging up on his son that fateful night. The incident
happened in the middle of the street in front of a lamp post so that the witness, who was
but five (5) meters away, clearly saw Gregorio Quita holding both the hands of his son,
who was struggling, at the back while Fleno Quita stabbed his son.

The positive identification of an accused where categorical and consistent, without any
showing of ill motive on the part of the eyewitness testifying, should prevail over the alibi
and denial of appellant whose testimony was not substantiated by clear and convincing
evidence.

Accused appellant failed to show any ill motive on the part of the eyewitness to falsely
accuse him of the crime. He tried to discredit the eyewitness’s testimony because he
was the victim’s father but the same would not hold.

By and large, relationship by itself does not give rise to a presumption of bias or ulterior
motive, nor does it ipso factodiminish the credibility or tarnish the testimony of a
witness. On the contrary, a witness’ relationship to a victim of a crime would even make
his or her testimony more credible as it would be unnatural tor a relative who is
interested in vindicating the crime to accuse somebody other than the culprit. The
natural interest of witnesses, who are relatives of the victim, in securing the conviction
of the guilty would actually deter them from implicating persons other than the true
culprits.

Furthermore, Paquito Solayao’s eyewitness account of the incident was steadfast and
unequivocal, viz.:

xxx

Pros. Robles

Q Now, what happened Mr. Witness when you left your house and immediately proceeded to fetch
 your son Roberto?

Witness

A When I went out of my house and I was in the middle of the street of Annex 40, I saw three (3)
persons having a fight ma’am.

Q When you saw these three persons having a fight, Mr. Witness, how far were you from them?

A More or less ten (10) meters, ma’am.

Q What did you do, Mr. Witness, upon seeing that there are three persons along Annex 40 who are
having a tight?

A I walked faster to know who they were.

Q What happened next after that, Mr. Witness?

A I saw Gregorio Quita holding the hand of my son while being stabbed by the other accused Fleno
Quita alias Eddie Boy.

Q And at the time, Mr. Witness, that you saw the incident, how far were you from them?

A More or less five (5) meters, ma’am.

xxx

Q Are you sure, Mr. Witness, at that time that it was the two accused who stabbed and held the hand of
your son?
A Yes, ma’am.

Q And what made you so sure of that, Mr. Witness?

A Because in that area the two accused deliver water in Annex 22 and in Annex 40.

xxx
His positive, straightforward[,] and unequivocal manner of recounting what he
witnessed on the date of the incident led the trial court to find his testimony to be
worthy of belief. The rule is that findings of the trial court on the credibility of
witnesses deserve great weight, given the clear advantage of a trial judge in the
appreciation of testimonial evidence. The trial court is in the best position to
assess the credibility of witnesses because of [its] unique opportunity to observe
the witnesses first hand and to note their demeanor, conduct and attitude under
grueling examination. These are significant factors in evaluating the sincerity of
witnesses in the process of unearthing the truth. Thus, except for compelling
reasons, We are doctrinally bound by the trial court’s assessment of the
credibility of witnesses.

The testimony of the witness that the assailant was in front of the victim when he
was stabbed was corroborated by the testimony of the medico-legal officer who
conducted the autopsy on the victim that since the wounds were located
anteriorly, it is possible for the assailant to inflict the fatal wound in front of the
victim, although he did not discount the fact that the assailant could be at the
back of the victim holding [his] body x x x.

And, because of the positive identification of the accused-appellant, his alibi

deserved scant consideration.For alibi to prosper, it is not enough for the accused to
prove that he was somewhere else when the crime was committed. He must likewise
prove that he could not have been physically present at the scene of the crime or its
immediate vicinity at the time of its commission.

Accused-appellant recounted that on the date of the incident, he attended a birthday

party in Annex Better Living, Parañaque City, which is where the victim also had a
drinking spree. While he claimed that he arrived home in Sucat, Muntinlupa at around
6:30 to 7:00 in the evening, it does not discount the possibility that he was at the scene
of the crime in Better Living, Parañaque City at around 8:30 in the evening of the same
day, especially so when he narrated in his testimony an account of an altercation with a
group led by a certain “Berto” which happened in the street near Annex 22 where the
birthday party was held.
With respect to the alleged delay in indicting accused-appellant, Paquito Solayao
explained that he filed a complaint in 2002 against the siblings Gregorio Quita and
Fleno Quita but when he learned that the accused escaped, he did not pursue the case
anymore. When he learned later on that the suspects were already in Manila, he
decided to pursue the case again by giving a statement on January 23, 2006.

The Information charged accused-appellant, in conspiracy with Fleno Quita, with the
crime of Murder, qualified by treachery and abuse of superior strength.

The elements of murder that the prosecution must establish are (1) that a person was
killed; (2) that the accused killed him; (3) that the killing was attended by any of the
qualifying circumstances mentioned in Article 248 of the Revised Penal Code (RPC);
and (4) that the killing is not parricide or infanticide.

The fact of death was duly established by the death certificate of the victim
Roberto Solayao as well as the autopsy report prepared by Dr. Edgardo Vida
indicating that the fatal stab wound inflicted on the victim’s right shoulder caused
his death.

There is treachery when ‘the offender commits any of the crimes against persons,
employing means, methods, or forms in the execution, which tend directly and
specially to insure its execution, without risk to the offender arising from the
defense which the offended party might make.’ These means or methods are
made in the form of a swift, deliberate and unexpected attack, without any
warning and affording the victim, which is usually unarmed and unsuspecting, no
chance at all to resist or escape the impending attack.

Holding the hands of the victim to his back while he was being stabbed rendered
him defenseless against the perpetrators thereby insuring the execution of the
crime without risk to the offenders of any defense that the victim might make.

The Information likewise alleged conspiracy between Gregorio Quita and Fleno Quita in
committing the crime. There is conspiracy when two or more persons come to an
agreement concerning the commission of a felony and decide to commit it. Actions
indicating close personal association and shared sentiment among the accused can
prove its presence. Proof that the perpetrators met beforehand and decided to commit
the crime is not necessary as long as their acts manifest a common design and
oneness of purpose.

Although Paquito Solayao testified that it was Fleno Quita whom he saw stab the victim,
the act of Gregorio Quita in holding the hands of the victim while he was being stabbed
by Fleno Quita showed a common design and oneness of purpose to inflict harm upon
the victim. Hence, the basic principle of conspiracy that ‘the act of one is the act of all’
applies in this case.
By reason of the foregoing, the prosecution has sufficiently established, beyond
reasonable doubt, accused-appellant’s culpability. His conviction of the crime of
murder, therefore, must be upheld.[12](Emphasis supplied)

But the CA modified Gregorio’s civil liability to reflect the recent jurisprudential teaching. That
CA thereafter disposed as follows:

WHEREFORE, in view of the foregoing, the appeal is hereby DENIED for lack of merit.
The Decision dated December 1, 2010 rendered by the Regional Trial Court of
Parañaque City, Branch 195, in Criminal Case No. 06-0294 is hereby MODIFIED,
increasing the amount of civil indemnity ex delicto to P75,000.00, moral damages to
P50,000.00 and exemplary damages to P30,000.00.

SO ORDERED.[13]

In a Resolution[14] dated July 28, 2014, both parties were required to simultaneously file their
respective supplemental briefs. However, both filed Manifestations[15] stating that the filing of a
supplemental brief is no longer necessary because they have already exhaustively discussed all
issues.

Our Ruling

Gregorio’s appeal before this Court is predicated essentially upon the self same lone
assignment of error set forth in his Brief with the CA. Since the factual findings by the
CA are binding upon this Court, especially when the CA’s findings unite with the RTC’s
factual findings, as in this case, this Court is not at liberty to reject or disturb the factual
findings of both lower courts. Indeed, this Court is satisfied that the factual findings of
both lower courts are in accord with the evidence on record. However, with reference to
the civil liability, the same must be modified to conform strictly to the teachings of recent
jurisprudence. Thus, the award of P15,000.00 as actual damages is deleted and in lieu
thereof, temperate damages in the amount of P50,000.00 is awarded; the awards of
moral damages and exemplary damages are increased to P75,000.00 each; and the
award of P75,000.00 as civil indemnity is maintained. Finally, all damages shall earn
interest at the rate of 6% per annum from the date of finality of this judgment until fully
paid.[16]
WHEREFORE, the appeal is DISMISSED for lack of merit. The January 10,2014 Decision of the
Court of Appeals in CA-G.R. CR-HC No. 04782 finding appellant Gregorio Quita alias “Greg”
guilty of murder and sentencing him to suffer the penalty of reclusion perpetua is AFFIRMED
with MODIFICATIONS that he is ordered to pay the heirs of Roberto Solayao P75,000.00 as
civil indemnity, P75,000.00 as moral damages, P75,000.00 as exemplary damages, and
P50,000.00 as temperate damages, all with legal interest of 6% per annum from date of finality
of this Resolution until full payment.

SO ORDERED.
23 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | CERTIFICATION ELECTION | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Asian Institute of Management Vs. Asian Institute of Management Faculty Association; G.R. No.
207971; January 23, 2017

This Petition for Review on Certiorari[1] assails the January 8, 2013 Decision[2] of the Court of
Appeals (CA) which dismissed the Petition for Certiorari[3] in CA-G.R. SP No. 114122, and its
subsequent June 27, 2013 Resolution[4] denying herein petitioner’s Motion for Reconsideration.[5]

Factual Antecedents

Petitioner Asian Institute of Management (AIM) is a duly registered non stock, non-profit
educational institution. Respondent Asian Institute of Management Faculty Association (AFA) is
a labor organization composed of members of the AIM faculty, duly registered Certificate of
Registration No. NCR-UR-12-4076-2004.

On May 16, 2007, respondent Hied a petition for certification election[6] seeking to represent
a bargaining unit in AIM consisting of forty (40) faculty members. The case was docketed as
DOLE Case No. NCR-OD-M-0705-007. Petitioner opposed the petition, claiming that
respondent’s members are neither rank-and-file nor supervisory, but rather, managerial
employees.[7]

On July 11, 2007, petitioner filed a petition for cancellation of respondent’s certificate of
registration[8] – docketed as DOLE Case No. NCR-OD-0707-001-LRD – on the grounds of
misrepresentation in registration and that respondent is composed of managerial employees
who are prohibited from organizing as a union.

On August 30, 2007, the Med-Arbiter in DOLE Case No. NCR-OD-M-0705-007 issued an
Order[9] denying the petition for certification election on the ground that AIM’s faculty members
are managerial employees. This Order was appealed by respondent before the Secretary of the
Department of Labor and Employment (DOLE),[10] who reversed the same via a February 20,
2009 Decision[11] and May 4, 2009 Resolution,[12] decreeing thus:

WHEREFORE, the appeal filed by the Asian Institute of Management Faculty

Association (AIMFA) is GRANTED. The Order dated 30 August 2007 of DOLE-NCR
Mediator-Arbiter Michael T. Parado is hereby REVERSED and SET ASIDE.

Accordingly, let the entire records of the case be remanded to DOLE-NCR for the
conduct of a certification election among the faculty members of the Asian Institute of
Management (AIM), with the following choices:

1. ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION (AIMFA); and

2. No Union.
SO ORDERED.[13]

Meanwhile, in DOLE Case No. NCR-OD-0707-001-LRD, an Order[14] dated February 16, 2009
was issued by DOLE-NCR Regional Director Raymundo G. Agravante granting AIM’s petition
for cancellation of respondent’s certificate of registration and ordering its delisting from the
roster of legitimate labor organizations. This Order was appealed by respondent before the
Bureau of Labor Relations[15] (BLR), which, in a December 29, 2009 Decision,[16] reversed the
same and ordered respondent’s retention in the roster of legitimate labor organizations. The
BLR held that the grounds relied upon in the petition for cancellation are not among the grounds
authorized under Article 239 of the Labor Code,[17] and that respondent’s members are not
managerial employees. Petitioner moved to reconsider, but was rebuffed in a March 18, 2010
Resolution.[18]

CA-G.R.SP No. 109487 and G.R. No. 197089

Petitioner filed a Petition for Certiorari before the CA, questioning the DOLE Secretary’s
February 20, 2009 Decision and May 4, 2009 Resolution relative to DOLE Case No. NCR-OD-
M-0705-007, or respondent’s petition for certification election. Docketed as CA G.R. SP No.
109487, the petition is based on the arguments that 1) the bargaining unit within AIM sought to
be represented is composed of managerial employees who are not eligible to join, assist, or
form any labor organization, and 2) respondent is not a legitimate labor organization that may
conduct a certification election.

On October 22, 2010, the CA rendered its Decision[19] containing the following pronouncement:

AIM insists that the members of its tenure-track faculty are managerial employees, and
therefore, ineligible to join, assist or form a labor organization. It ascribes grave abuse
of discretion on SOLE[20] for its rash conclusion that the members of said tenure-track
faculty are not managerial employees solely because the faculty’s actions are still
subject to evaluation, review or final approval by the board of trustees (“BOT”). AIM
argues that the BOT does not manage the day-to-day affairs, nor the making and
implementing of policies of the Institute, as such functions are vested with the tenure-
track faculty.

We agree.

Article 212(m) of the Labor Code defines managerial employees as:

‘ART. 212. Definitions. – x x x

(m) ‘Managerial employee‘ is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions if
the exercise of such authority is not merely routinary or clerical in nature but requires
the use of independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of this Book.’

There are, therefore, two (2) kinds of managerial employees under Art. 212(m) of the
Labor Code. Those who ‘lay down x x x management policies’, such as the Board of
Trustees, and those who ‘execute management policies and/or hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees’.

xxxx

On its face, the SOLE’s opinion is already erroneous because in claiming that the ‘test
of supervisory’ or ‘managerial status’ depends on whether a person possesses authority
to act in the interest of his employer in the matter specified in Article 212(m) of the
Labor Code and Section 1(m) of its Implementing Rules, he obviously was referring to
the old definition of a managerial employee. Such is evident in his use of
‘supervisory or managerial status’, and reference to ‘Section 1(m) of its Implementing
Rules’. For presently, as aforequoted in Article 212(m) of the Labor Code and as
amended by Republic Act 6715 which took effect on March 21, 1989, a managerial
employee is already different from a supervisory employee. x x x

xxxx

In further opining that a managerial employee is one whose ‘authority is not merely
routinary or clerical in nature but requires the use of independent judgment‘, a
description which fits now a supervisory employee under Section 1(t), Rule I, Book V
of the Omnibus Rules Implementing the Labor Code, it then follows that the SOLE was
not aware of the change in the law and thus gravely abused its discretion amounting to
lack of jurisdiction in concluding that AIM’s ‘tenure-track‘ faculty are not managerial
employees.

SOLE further committed grave abuse of discretion when it concluded that said tenure-
track faculty members are not managerial employees on the basis of a ‘footnote’ in
AIM’s Policy Manual, which provides that ‘the policy[-]making authority of the faculty
members is merely recommendatory in nature considering that the faculty standards
they formulate are still subject to evaluation, review or final approval by the [AIM]’s
Board of Trustees‘. x x x

xxxx

Clearly, AIM’s tenure-track faculty do not merely recommend faculty standards. They
‘determine all faculty standards‘, and are thus managerial employees. The standards’
being subjected to the approval of the Board of Trustees would not make AIM’s tenure-
track faculty non-managerial because as earlier mentioned, managerial employees are
now of two categories: (1) those who ‘lay down policies’, such as the members of the
Board of Trustees, and those who ‘execute management policies (etc.)’, such as AIM’s
tenure-track faculty.

xxxx

It was also grave abuse of discretion on the part of the SOLE when he opined that
AIM’s tenure-track faculty members are not managerial employees, relying on an
impression that they were subjected to rigid observance of regular hours of work as
professors. x x x

xxxx

More importantly, it behooves the SOLE to deny AFA’s appeal in light of the
February 16, 2009 Order of Regional Director Agravante delisting AFA from the
roster of legitimate labor organizations. For, only legitimate labor organizations
are given the right to be certified as sole and exclusive bargaining gent in an
establishment.

xxxx

Here, the SOLE committed grave abuse of discretion by giving due course to AFA’s
petition for certification election, despite the fact that: (1) AFA’s members are
managerial employees; and (2) AFA is not a legitimate labor organization. These facts
rendered AFA ineligible, and without any right to file a petition for certification election,
the object of which is to determine the sole and exclusive bargaining representative of
qualified AIM employees.

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated February
20, 2009 and Resolution dated May 4, 2009 are hereby REVERSED and SET ASIDE.
The Order dated August 30, 2007 of Mediator-Arbiter Parado is hereby REINSTATED.

SO ORDERED.[21] (Emphasis in the original)

Respondent sought reconsideration, but was denied. It thus instituted a Petition for Review on
Certiorari before this Court on July 4, 2011. The Petition, docketed as G.R. No. 197089,
remains pending to date.

The Assailed Ruling of the Court of Appeals

Meanwhile, relative to DOLE Case No. NCR-OD-0707-001-LRD or petitioner AIM’s petition for
cancellation of respondent’s certificate of registration, petitioner filed on May 24, 2010 a Petition
for Certiorari[22] before the CA, questioning the BLR’s December 29, 2009 decision and March
18, 2010 resolution. The petition, docketed as CA-G.R. SP No. 114122, alleged that the BLR
committed grave abuse of discretion in granting respondent’s appeal and affirming its certificate
of registration notwithstanding that its members are managerial employees who may not join,
assist, or form a labor union or organization.

On January 8, 2013, the CA rendered the assailed Decision, stating as follows:

The petition lacks merit

xxxx

It is therefore incumbent upon the Institute to prove that the BLR committed grave
abuse of discretion in issuing the questioned Decision. Towards this end, AIM must lay
the basis by showing that

Article 239. Grounds for cancellation of union registration. The following may constitute
grounds for cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or

ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification;

(b) Misrepresentation, false statements or fraud in connection with the election of

officers, minutes of the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

Article 238 of the Labor Code provides that the enumeration of the grounds for
cancellation of union registration, is exclusive; in other words, no other grounds for
cancellation is acceptable, except for the three (3) grounds stated in Article 239. The
scope of the grounds for cancellation has been explained –

For the purpose of de-certifying a union such as respondent, it must be shown that
there was misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto; the minutes of
ratification; or, in connection with the election of officers, the minutes of the election of
officers, the list of voters, or failure to submit these doctm1ents together with the list of
the newly elected-appointed officers and their postal addresses to the BLR.

The bare fact that two signatures appeared twice on the list of those who participated in
the organizational meeting would not, to our mind, provide a valid reason to cancel
respondent’s certificate of registration. The cancellation of a union’s registration
doubtless has an impairing dimension on the right of labor to self-organization. For fraud
and misrepresentation to be grounds tor cancellation of union registration under the
Labor Code, the nature of the fraud and misrepresentation must be grave and
compelling enough to vitiate the consent of a majority of union members. [23]

In this regard, it has also been held that:

Another factor which militates against the veracity of the allegations in the Sinumpaang
Petisyon is the lack of particularities on how, when and where respondent union
perpetrated the alleged fraud on each member. Such details are crucial for, in the
proceedings for cancellation of union registration on the ground of fraud or
misrepresentation, what needs to be established is that the specific act or omission of
the union deprived the complaining employees-members of their right to choose.[24]

A cursory reading of the Petition shows that AIM did NOT allege any specific act of
fraud or misrepresentation committed by AFA. What is clear is that the Institute seeks
the cancellation of the registration of AFA based on Article 245 of the Labor Code on
the ineligibility of managerial employees to form or join labor unions. Unfortunately for
the petitioner, even assuming that there is a violation of Article 245, such violation will
not result in the cancellation of the certificate of registration of a labor organization.

It should be stressed that a Decision had already been issued by the DOLE in the
Certification Election case; and the Decision ordered the conduct of a certification
election an1ong the faculty members of the Institute, basing its directive on the finding
that the members of AFA were not managerial employees and are therefore eligible to
form, assist and join a labor union. As a matter of fact, the certification election had
already been held on October 16, 2009, albeit the results have not yet been resolved as
inclusion/exclusion proceedings are still pending before the DOLE. The remedy
available to the Institute is not the instant Petition, but to question the status of the
individual union members of the AFA in the inclusion/exclusion proceedings pursuant to
Article 245-A of the Labor Code, which reads:

Article 245-A. Effect of inclusion as members of employees outside the bargaining unit.
– The inclusion as union members of employees outside the bargaining unit shall not be
a ground for the cancellation of the registration of the union. Said employees are
automatically deemed removed from the list of membership of said union.

Petitioner insists that Article 245-A is not applicable to this case as all AFA members
are managerial employees. We are not persuaded.

The determination of whether any or all of the members of AFA should be considered
as managerial employees is better left to the DOLE because,

It has also been established that in the determination of whether or not certain
employees arc managerial employees, this Court accords due respect and therefore
sustains the findings of fact made by quasi-judicial agencies which are supported by
substantial evidence considering their expertise in their respective fields. [25]

From the discussion, it is manifestly clear that the petitioner failed to prove that the BLR
committed grave abuse of discretion; consequently, the Petition must fail.

WHEREFORE, the Petition is hereby DENIED. The Decision and Resolution of public
respondent Bureau of Labor Relations in BLR-A-C-19-3-6-09 (NCR-OD-0707-001) are
hereby AFFIRMED.

SO ORDERED.[26] (Emphasis in the original)

Petitioner filed its Motion for Reconsideration, which was denied by the CA via its June 27, 2013
Resolution. Hence, the instant Petition.

In a November 10, 2014 Resolution,[27] the Court resolved to give due course to the Petition.

Issue

Petitioner claims that the CA seriously erred in affirming the dispositions of the BLR and
thus validating the respondent’s certificate of registration notwithstanding the fact that its
members are all managerial employees who are disqualified from joining, assisting, or
forming a labor organization.
Petitioner’s Arguments

Praying that the assailed CA dispositions be set aside and that the DOLE-NCR Regional
Director’s February 16, 2009 Order granting AIM’s petition for cancellation of respondent’s
certificate of registration and ordering its delisting from the roster of legitimate labor
organizations be reinstated instead, petitioner maintains in its Petition and Reply[28] that
respondent’s members are all managerial employees; that the CA erred in declaring that even if
respondent’s members are all managerial employees, this alone is not a ground for cancellation
of its certificate of registration; that precisely, the finding in DOLE Case No. NCR-OD-M-0705-
007, which the CA affirmed in CA-G.R. SP No. 109487, is that respondent’s members are
managerial employees; that respondent’s declaration that its members are eligible to join,
assist, or form a labor organization is an act of misrepresentation, given the finding in CA-G.R.
SP No. 109487 that they are managerial employees; and that the grounds for cancellation of
union registration enumerated in Article 239 of the Labor Code are not exclusive.

Respondent’s Arguments

In its Comment,[29] respondent maintains that the CA was right to treat petition rs case for
cancellation of its union registration with circumspection; that petitioner’s ground tor tiling the
petition for cancellation is not recognized under Article 239; that petitioner’s accusation of
misrepresentation is unsubstantiated, and is being raised for the first time at this stage; that its
members are not managerial employees; and that petitioner’s opposition to respondent’s
attempts at self-organization constitutes harassment, oppression, and violates the latter’s rights
under the Labor Code and the Constitution.

Our Ruling

In Holy Child Catholic School v. Hon. Sto, Tomas,[30] this Court declared that “[i]n case of
alleged inclusion of disqualified employees in a union, the proper procedure for an
employer like petitioner is to directly file a petition for cancellation of the union’s
certificate of registration due to misrepresentation, false statement or fraud under the
circumstances enumerated in Article 239 of the Labor Code, as amended.”
On the basis of the ruling in the above-cited case, it can be said that petitioner was correct in
filing a petition tor cancellation of respondent’s certificate of registration. Petitioner’s sole ground
for seeking cancellation of respondent’s certificate of registration – that its members are
managerial employees and for this reason, its registration is thus a patent nullity for being an
absolute vio1ation of Article 245 of the Labor Code which declares that managerial employees
are ineligible to join any labor organization – is, in a sense, an accusation that respondent is
guilty of misrepresentation for registering under the claim that its members are not managerial
employees.

However, the issue of whether respondent’s members are managerial employees is still pending
resolution by way of petition for review on certiorari in G.R. No. 197089, which is the culmination
of all proceedings in DOLE Case No. NCR-OD-M-0705-007 – where the issue relative to the
nature of respondent’s membership was first raised by petitioner itself and is there fiercely
contested.

The resolution of this issue cannot be pre-empted; until it is determined with finality in G.R. No.
197089, the petition for cancellation of respondent’s certificate of registration on the grounds
alleged by petitioner cannot be resolved. As a matter of courtesy and in order to avoid
conflicting decisions, We must await the resolution of the petition in G.R. No. 197089.

x x x if a particular point or question is in issue in the second action, and the judgment
will depend on the determination of that particular point or question, a former judgment
between the same parties or their privies will be final and conclusive in the second if
that same point or question was in issue and adjudicated in1he first suit. x x x Identity of
cause of action is not required, but merely identity of issues.[31] (Citation omitted)

WHEREFORE, considering that the outcome of this case depends on the resolution of the issue
relative to the nature of respondent’s membership pending in G.R. No. 197089, this case is
ordered CONSOLIDATED with G.R. No. 197089.

SO ORDERED.
18 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL DISMISSAL | | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Rutcher T. Dagasdas Vs. Grand Placement and General Services Corporation; G.R. No. 205727;
January 18, 2017

Before us is a Petition for Review on Certiorari assailing the September 26, 2012 Decision1 of
the Court of Appeals (CA) in CA-G.R. SP No. 115396, which annulled and set aside the March
29, 20102 and June 2, 20103 Resolutions of the National Labor Relations Commission (NLRC)
in NLRC LAC OFW-L-02-000071-10, and concomitantly reinstated the November 27, 2009
Decision4 of the Labor Arbiter (LA) dismissing the Complaint for lack of merit.

Also challenged is the January 28, 2013 Resolution5 denying the Motion for Reconsideration
filed by Rutcher T. Dagasdas (Dagasdas ).

Factual Antecedents

Grand Placement and General Services Corp. (GPGS) is a licensed

recruitment or placement agency in the Philippines while Saudi Aramco (Aramco) is its
counterpart in Saudi Arabia. On the other hand, Industrial & Management Technology Methods
Co. Ltd. (ITM) is the principal of GPGS, a company existing in Saudi Arabia. 6

In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network
Technician. He was to be deployed in Saudi Arabia under a one-year contract7 with a monthly
salary of Saudi Riyal (SR) 5,112.00. Before leaving the Philippines, Dagasdas underwent skill
training8 and pre-departure orientation as Network Technician.9Nonetheless, his Job
Offer10 indicated that he was accepted by Aramco and ITM for the position of “Supt.”

Dagasdas contended that although his position under his contract was as a Network
Technician, he actually applied for and was engaged as a Civil Engineer considering that his
transcript of records, 11 diploma 12 as well as his curriculum vitae 13 showed that he had a
degree in Civil Engineering, and his work experiences were all related to this field. Purportedly9
the position of Network Technician was only for the purpose of securing a visa for Saudi Arabia
because ITM could not support visa application for Civil Engineers. 14

On February 8, 2008, Dagasdas arrived in Saudi Arabia.15 Thereafter, he signed with ITM a
new employment contract16 which stipulated that the latter contracted him as Superintendent or
in any capacity within the scope of his abilities with salary of SR5,112.00 and allowance of
SR2,045.00 per month. Under this contract, Dagasdas shall be placed under a three-month
probationary period; and, this new contract shall cancel all contracts prior to its date from any
source.

On February 11, 2008, Dagasdas reported at ITM’s worksite in Khurais, Saudi Arabia. 17 There,
he was allegedly given tasks suited for a Mechanical Engineer, which were foreign to the job he
applied for and to his work experience. Seeing that he would not be able to perform well in his
work, Dagasdas raised his conce1n to his Supervisor in the Mechanical Engineering
Department. Consequently, he was transferred to the Civil Engineering Department, was
temporarily given a position as Civil Construction Engineer, and was issued anidentification card
good for one month. Dagasdas averred that on March 9, 2008, he was directed to exit the
worksite but Rashid H. Siddiqui (Siddiqui), the Site Coordinator Manager, advised him to remain
in the premises, and promised to secure him the position he applied for. However, before
Dagasdas’ case was investigated, Siddiqui had severed his employment with ITM. 18

In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office.19 Later, 11M gave
him a termination notice20 indicating that his last day of work was on April 30, 2008, and he was
dismissed pursuant to clause 17.4.3 of his contract, which provided that ITM reserved the right
to terminate any employee within the three-month probationary period without need of any
notice to the employee.21

Before his repatriation, Dagasdas signed a Statement of Quitclaim22 with Final

Settlement23 stating that ITM paid him all the salaries and benefits for his services from
February 11, 2008 to April 30, 2008 in the total amow1t of SR7,156.80, and ITM was relieved
from all financial obligations due to Dagasdas.

On June 24, 2008, Dagasdas returned to the Philippines.24 Thereafter, he filed an illegal
dismissal case against GPGS, ITM, and Aramco.

Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which resulted in the
mismatch in the work assigned to him. He contended that such claim was supported by
exchanges of electronic mail (e-mail) establishing that GPGS, ITM, and Aramco were aware of
the job mismatch that had befallen him. 25 He also argued that although he was engaged as a
project employee, he was still entitled to security of tenure for the duration of his contract. He
maintained that GPGS, ITM, and Aramco merely invented “imaginary cause/s” to terminate him.
Thus, he claimed that he was dismissed without cause and due process of law.26

GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They explained that
Dagasdas was aware that he was employed as Network Technician but he could not perform
his work in accordance with the standards of his employer. They added that Dagasdas was
informed of his poor performance, and he conformed to his termination as evidenced by his
quitclaim. 27 They also stressed that Dagasdas was only a probationary employee since he
worked for ITM for less than three months.28

Ruling of the Labor Arbiter

On November 27, 2009, the LA dismissed the case for lack of merit. The LA pointed out that
when Dagasdas signed his new employment contract in Saudi Arabia, he accepted its
stipulations, including the fact that he had to undergo probationary status. She declared that this
new contract was more advantageous for Dagasdas as his position was upgraded to that of a
Superintendent, and he was likewise given an allowance of SR 2,045.00 aside from his salary of
SR 5,112.00 per month. According to the LA, for being more favorable, this new contract was
not prohibited by law. She also decreed that Dagasdas fell short of the expected work
performance; as such, his employer dismissed him as part of its management prerogative.
Consequently, Dagasdas appealed to the NLRC.

Ruling of the National Labor Relations Commission

On March 29, 2010, the NLRC issued a Resolution finding Dagasdas’ dismissal illegal. The
decretal portion of the NLRC Resolution reads:

WHEREFORE, the decision appealed from is hereby REVERSED, and the

respondent[s] are hereby ordered to pay the complainant the salaries corresponding to
the unexpired portion of his contract amounting to SR 46,008 (SR 5112 x 9 months, or
from May 1, 2008 to January 31, 2009), plus ten percent (10%) thereof as attorney’s
foes. The respondents are jointly and severally liable for the judgment awards, which
are payable in Philippine currency converted on the basis of the exchange rate
prevailing at the time of actual payment.

SO ORDERED.29

The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was “recruited on
paper” by GPGS as Network Technician but the real understanding between the parties was to
hire him as Superintendent. It held that GPGS erroneously recruited Dagasdas, and failed to
inform him that he was hired as a “Mechanical Superintendent” meant for a Mechanical
Engineer. It declared that while ITM has the prerogative to continue the employment of
individuals only if they were qualified, Dagasdas’ dismissal amounted to illegal termination since
the mismatch between his qualifications and the job given him was no fault of his.

The NLRC added that Dagasdas should not be made to suffer the consequences of the
miscommunication between GPGS and ITM considering that the government obligates
employment agencies recruiting Filipinos for overseas work to “select only medically and
technically qualified recruits.”30

On June 2, 2010, the NLRC denied the Motion for Reconsideration of its Resolution dated
March 29, 2010.

Undeterred, GPGS filed a Petition for Certiorari with the CA ascribing grave abuse of discretion
on the part of the NLRC in ruling that Dagasdas was illegally dismissed.

Ruling of the Court of Appeals

On September 26, 2012, the CA set aside the NLRC Resolutions and reinstated the LA
Decision dismissing the case for lack of merit.

The CA could not accede to the conclusion that the real agreement between the parties was to
employ Dagasdas as Superintendent. It stressed that Dagasdas left the Philippines pursuant to
his employment contract indicating that he was to work as a Network Technician; when he
arrived in Saudi Arabia and signed a new contract for the position of a Superintendent, the
agreement was with no participation of GPGS, and said new contract was only between
Dagasdas and ITM. It emphasized that after commencing work as Superintendent, Dagasdas
realized that he could not perform his tasks, and “[s]eemingly, it was [Dagasdas] himself who
voluntarily withdrew from his assigned work for lack of competence.”31 It faulted the NLRC for
falling to consider that Dagasdas backed out as Superintendent on the excuse that the same
required the skills of a Mechanical Engineer.

In holding that Dagasdas’ dismissal was legal, the CA gave credence to Dagasdas’ Statement
of Quitclaim and Final Settlement. It ruled that for having voluntarily accepted money from his
employer, Dagasdas accepted his termination and released his employer from future financial
obligations arising from his past employment with it.

On January 28, 2013, the CA denied Dagasdas’ Motion for Reconsideration.

Hence, Dagasdas filed this Petition raising these grounds:

[1] THE HONORABLE COURT OF APPEALS COMMITIED A REVERSIBLE ERROR WHEN IT

REVERSED THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATION’S
COMMISSION.32

[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED WITH ITS FINDINGS THAT
THE CONTRACT SIGNED BY DAGASDAS IN ALKHOBAR IS MORE ADVANTAGEOUS TO
THE LATTER AND THAT IT WAS [H]IS PERSONAL ACT OR DECISION [TO SIGN] THE
SAME.33

[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN FAULTING THE
NLRC FOR ITS FAILURE TO INVALIDATE OR DISCUSS THE FINAL SETTLEMENT AND
STATEMENT OF QUITCLAIM SIGNED BY [DAGASDAS].34

Dagasdas reiterates that he was only recruited “on paper” as a Network Technician but the real
agreement between him and his employer was to engage him as Superintendent in t’1e field of
Civil Engineering, he being a Civil Engineering graduate with vast experience in said field. He
stresses that he was terminated because of a “discipline mismatch” as his employer actually
needed a Mechanical (Engineer) Superintendent, not a Civil Engineer.

In addition, Dagasdas insists that he did not voluntarily back out from his work. If not for the
discipline mismatch, he could have performed his job as was expected of him. He also denies
that the new employment contract he signed while in Saudi Arabia was more advantageous to
him since the basic salary and allowance stipulated therein are just the same with that in his Job
Offer. He argues that the new contract was even disadvantageous because it was inserted
therein that he still had to undergo probationary status for three months.
Finally, Dagasdas contends that the new contract he signed while in Saudi Arabia was void
because it was not approved by the Philippine Overseas Employment Administration (POEA).
He also claims that CA should have closely examined his quitclaim because he only signed it to
afford his plane ticket for his repatriation.

On the other hand, GPGS maintains that Dagasdas was fully aware that he applied for and was
accepted as Network Technician. It also stresses that it was Dagasdas himself who decided to
accept from ITM a new job offer when he arrived in Saudi Arabia. It further declares that
Dagasdas’ quitclaim is valid as there is no showing that he was compelled to sign it.

Issue

Was Dagasdas validly dismissed from work?

Our Ruling

The Petition is with merit.

As a rule, only questions of law may be raised in a petition under Rule 45 of the Rules of Court.
However, this rule allows certain exceptions, including a situation where the findings of fact of
the courts or tribunals below are conflicting.35 In this case, the CA and the NLRC arrived at
divergent factual findings anent Dagasdas’ termination. As such, the Court deems it necessary
to re-examine these findings and detemline whether the CA has sufficient basis to annul the
NLRC Decision, and set aside its finding that Dagasdas was illegally dismissed from work.

Moreover, it is well-settled that employers have the prerogative to impose standards on the work
quantity and quality of their employees and provide measures to ensure compliance therewith.
Non-compliance with work standards may thus be a valid cause for dismissing an employee.
Nonetheless, to ensure that employers will not abuse their prerogatives, the same is tempered
by security of tenure whereby the employees are guaranteed substantive and procedural due
process before they are dismissed from work. 36

Security of tenure remains even if employees, particularly the overseas Filipino workers (OFW),
work in a different jurisdiction. Since the employment contracts of OFWs are perfected in the
Philippines, and following the principle of lex loci contractus (the law of the place where the
contract is made), these contracts are governed by our laws, primarily the Labor Code of the
Philippines and its implementing rules and regulations.37 At the same time, our laws generally
apply even to employment contracts of OFWs as our Constitution explicitly provides that the
State shall afford full protection to labor, whether local or overseas.38 Thus, even if a Filipino is
employed abroad, he or she is entitled to security of tenure, among other constitutional rights.39

In this case, prior to his deployment and while still in the Philippines, Dagasdas was made to
sign a POEA-approved contract with GPGS, on behalf of ITM; and, upon arrival in Saudi Arabia,
ITM made him sign a new employment contract. Nonetheless, this new contract, which was
used as basis for dismissing Dagasdas, is void.
First, Dagasdas’ new contract is in clear violation of his right to security of tenure.

Under the Labor Code of the Philippines the following are the just causes for dismissing an
employee:

ARTICLE 297. [282] Termination by Employer. – An employer may terminate an

employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative;
and

(e) Other causes analogous to the foregoing.40

However, per the notice of termination given to Dagasdas, ITM terminated him for violating
clause 17.4.3 of his new contract, viz.:

17.4 The Company reserves the right to terminate this agreement without serving any
notice to the Consultant in the following cases:

xxxx

17.4.3 If the Consultant is terminated by company or its client within the probation
period of 3 months.41

Based on the foregoing, there is no clear justification for the dismissal of Dagasdas other than
the exercise of ITM’s right to terminate him within the probationary period. While our Civil Code
recognizes that parties may stipulate in their contracts such terms and conditions as they may
deem convenient, these terms and conditions must not be contrary to law, morals, good
customs, public order or policy.42 The above-cited clause is contrary to law because as
discussed, our Constitution guarantees that employees, local or overseas, are entitled to
security of tenure. To allow employers to reserve a right to terminate employees without cause
is violative of this guarantee of security of tenure.

Moreover, even assuming that Dagasdas was still a probationary employee when he was
terminated, his dismissal must still be with a valid cause. As regards a probationary employee,
his or her dismissal may be allowed only if there is just cause or such reason to conclude that
the employee fails to qualify as regular employee pursuant to reasonable standards made
known to the employee at the time of engagement.43

Here, ITM failed to prove that it informed Dagasdas of any predetermined

standards from which his work will be gauged.44 In the contract he signed while still in the
Philippines, Dagsadas was employed as Network Technician; on the other hand, his new
contract indicated that he was employed as Superintendent. However, no job description – or
such duties and responsibilities attached to either position – was adduced in evidence. It thus
means that the job for which Dagasdas was hired was not definite from the beginning.

Indeed, Dagasdas was not sufficiently informed of the work standards for which his performance
will be measured. Even his position based on the job title given him was not fully explained by
his employer. Simply put, ITM failed to show that it set and communicated work standards for
Dagasdas to follow, and on which his efficiency (or the lack thereof) may be determined.

Second, the new contract was not shown to have been processed through the POEA. Under our
Labor Code, employers hiring OFWs may only do so through entities authorized by the
Secretary of the Department of Labor and Employment.45 Unless the employment contract of
an OFW is processed through the POEA, the same does not bind the concerned OFW because
if the contract is not reviewed by the POEA, certainly the State has no means of determining the
suitability of foreign laws to our overseas workers. 46

This new contract also breached Dagasdas’ original contract as it was entered into even before
the expiration of the original contract approved by the POEA. Therefore, it cannot supersede the
original contract; its terms and conditions, including reserving in favor of the employer the right
to terminate an employee without notice during the probationary period, are void.47

Third, under this new contract, Dagasdas was not afforded procedural due process when he
was dismissed from work.

As cited above, a valid dismissal requires substantive and procedural due process. As regards
the latter, the employer must give the concerned employee at least two notices before his or her
termination. Specifically, the employer must inform the employee of the cause or causes for his
or her termination, and thereafter, the employer’s decision to dismiss him. Aside from the notice
requirement, the employee must be accorded the opportunity to be heard.48

Here, no prior notice of purported infraction, and such opportunity to explain on any accusation
against him was given to Dagasdas. He was simply given a notice of termination. In fact, it
appears that ITM intended not to comply with the twin notice requirement. As above-quoted,
under the new contract, ITM reserved in its favor the right to terminate the contract without
serving any notice to Dagasdas in specified cases, which included such situation where the
employer decides to dismiss the employee within the probationary period. Without doubt, ITM
violated the due process requirement in dismissing an employee.
Lastly, while it is shown that Dagasdas executed a waiver in favor of his employer, the same
does not preclude him from filing this suit.

Generally, the employee’s waiver or quitclaim cannot prevent the employee from demanding
benefits to which he or she is entitled, and from filing an illegal dismissal case. This is because
waiver or quitclaim is looked upon with disfavor, and is frowned upon for being contrary to public
policy. Unless it can be established that the person executing the waiver voluntarily did so, with
full understanding of its contents, and with reasonable and credible consideration, the same is
not a valid and binding undertaking. Moreover, the burden to prove that the waiver or quitclaim
was voluntarily executed is with the employer.49

In this case, however, neither did GPGS nor its principal, ITM, successfully discharged its
burden. GPGS and/or ITM failed to show that Dagasdas indeed voluntarily waived his claims
against the employer.

Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely and
voluntarily agreed to waive all his claims against his employer. Besides, there was no
reasonable consideration stipulated in said quitclaim considering that it only determined the
actual payment due to Dagasdas from February 11, 2008 to April 30, 2008. Verily, this
quitclaim, under the semblance of a final settlement, cannot absolve GPGS nor ITM from liability
arising from the employment contract of Dagasdas.50

All told, the dismissal of Dagasdas was without any valid cause and due process of law. Hence,
the NLRC properly ruled that Dagasdas was illegally dismissed. Evidently, it was an error on the
part of the CA to hold that the NLRC committed grave abuse of discretion amounting to lack or
excess of jurisdiction when the NLRC ruled for Dagasdas.

WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and
Resolution dated January 28, 2013 of the Court of Appeals in CA-G.R. SP No. 115396
are REVERSED and SET ASIDE. Accordingly, the March 29, 2010 and June 2, 2010
Resolutions of the National Labor Relations Commission in NLRC LAC OFW-L-02-000071-10
are REINSTATED.

SO ORDERED.

18 JAN 2017 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL CASTILLO | SUBJECT | CIVIL LAW | LAND
TITLES AND DEEDS | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO
THE SUPREME COURT

FCD Pawnshop and Merchandising Company, et al. Vs. Union Bank of the Philippines, et al.; G.R.
No. 207914; January 18, 2017

Assailed in this Petition for Review on Certiorari1 are the February 28, 2013 Decision2 of the
Court of Appeals (CA) dismissing the herein petitioners’ Petition for Certiorari3in CA-,G.R. SP.
No. 126075, and its June 28, 2013 Resolution 4 denying their Motion for Reconsideration5 in
said case.
Factual Antecedents

Together with Felicitas Dionisio-Juguilon and Adelaida Dionisio, petitioners Fortunato C.

Dionisio, Jr, (Fortunato) and Franklin C. Dionisio (Franklin) owned FCD Pawnshop and
Merchandising Company, which in turn was the registered owner of a pared of fond in Makati
under Transfer Certificate of Title No. (168302) S-3664, or TCT (168302) S-3664.

In 2009, Fortunato and Franklin entrusted the original owner’s copy of TCT (168302) S-3664 to
Atty. Rowena Dionisio. It was later discovered that the said title was used as collateral by
Sunyang Mining Corporation (Sunyang) to obtain a ₱20 million loan from from respondent
Union Bank of the Philippines (UBP).

Civil Case No. 11-116 – for annulment of mortgage

On February 9, 2011, Fortunato and Franklin filed against UBP, Sunyang, the Registry of Deeds
of Makati, and several others Civil Case No. 11-116, a Petition6 to annul the Sunyang mortgage
and claim for damages, based on the premise that TCT (168302) S-3664 was fraudulently
mortgaged. The case was assigned to Branch 57 of the Regional Trial Court (RTC) of Makati
(Branch 57).

Meanwhile, UBP caused the extrajudicial foreclosure of the subject property, and it bought the
same at the auction sale. In the Notice of Extrajudicial Sale 7 published prior to the auction sale,
however, the title to the subject property was at one point erroneously indicated as “Transfer
Certificate of Title No. 163302 (S-3664);” but elsewhere in the notice, the title was correctly
indicated as “Transfer Certificate of Title No. 168302 (S-3664).” The publisher later circulated an
Erratum8 admitting its mistake, and it made the corresponding correction.

Civil Case No. 11-1192 – for annulment of foreclosure sale and certificate of sale

On account of perceived irregularities in the foreclosure and sale proceedings, Fortunato and
Franklin filed in December 2011 a Complaint9 against UBP, the Registry of Deeds of Makati,
and several others for annulment of the extrajudicial foreclosure and certificate of sale issued,
with injunctive relief The case was docketed as Civil Case No. l 1 -1192 and assigned to Branch
133 of the Makati RTC (Branch 133).

In a written opposition, UBP claimed that the filing of Civil Case No. 11-1192 violated the rule
against forum shopping.

Ruling of the Regional Trial Court in Civil Case No. l1-1192

On March 26, 2012, Branch 133 issued an Order10 dismissing Civil Case No. 11-1192 on the
ground of forum shopping. It held:

The instant case involves the Annulment of Extra-Judicial Foreclosure Sale and
Certificate of Sale with Prayer for Temporary Restraining Order and Preliminary
Injunction, and Damages. However, a case for Annulment of Mortgage is still pending
before the Regional Trial Court Makati City, Branch 57. The Annulment of Extra-Judicial
Foreclosure Sale and the Annulment of Mortgage involves (sic) the same subject
property described in the Transfer Certificate of Title No. (168302)-S-3664. While the
plaintiffs alleged that the issue in the case before HTC 57 deals with the validity of the
mortgage and the issue in the instant case deals with the validity of the foreclosure sale,
this Court finds the same to be interrelated. The ruling on the validity of the Foreclosure
Sale would also deal with the validity of the mortgage. Thus, there would be a possibility
that the ruling on the said validity by this Court would be in conflict with ruling on the
Annulment of Mortgage case which is now pending before the RTC Makati Branch 57.

As the Supreme Court consistently held x x x there is forum shopping when a party
repetitively avails of several judicial remedies in different courts, simultaneously or
successively, all substantially founded on the same transactions and the same essential
facts and circumstances, and all raising substantially the same issues either pending in
or already resolved adversely by some other court,’ Hence, there is a clear showing of
forum shopping which is a ground for the dismissal of this case.

WHEREFORE, in view of the foregoing[,] the instant case is hereby DISMISSED on the
ground of forum shopping.

SO ORDERED.11

Fortunato and Franklin moved to reconsider, but the trial court, in a June 14, 2012 Order,12
held its ground, stating among others that-

In the present case, there is no dispute that the plaintiffs clearly violated Section 4, Rule
2, of the Rules of Court apparently for splitting a cause of action by filing separately and
independently the instant action which can be best pleaded in the annulment of
mortgage earlier lodged.

Certainly, it would be for the best interest and benefit of the parties herein if the present
action (annulment of foreclosure proceeding) is just pleaded as plaintiff’s cause of
action in the annulment of mortgage first lodged and now pending before RTC Branch
57, instead of being filed separately to save time and effort. x x x

xxxx

In the final analysis, although it may seem that the two cases contain two separate
remedies that arc both available to the plaintiffs, it cannot be said that the two remedies
which arose from one wrongful act can be pursued in two different cases.

The rule against splitting a cause of action is intended to prevent repeated litigation
between the same parties in regard to the same subject of controversy, to protect the
defendant from unnecessary vexation; and to avoid the costs and expenses incident to
numerous suits. It comes from the old maxim nemo debet bis vexari, pro una et eadem
causa (no man shall be twice vexed for one and the same cause).13

Ruling of the Court of Appeals

Petitioners filed an original Petition for Certiorari14before the CA docketed as CA-G.R. SP. No.
l26075. Claiming that there is no forum shopping, they argued that Civil Case No. 11-116
(annulment of mortgage) and Civil Case No. 11-1192 (annulment of foreclosure and sale
proceedings) involve different subject matters; in the first, the subject is the mortgage
constituted on the property and its validity, while the second covers the foreclosure and sale
thereof, as well as the validity thereof; that the evidence required to prove the first case is not
the same as that which must prove the second; that judgments obtained in the two cases will
not be inconsistent with each other; and that the causes of action in both cases are not the
same, as in fact the cause of action in the second case did not exist yet when they filed the first,
but accrued only later. They added that there is no splitting of a single cause of action, and that
as between the two cases, there is no identity of reliefs sought.

On February 28, 2013, the CA rendered the assailed Decision dismissing the Petition, stating
thus –

In sum, the lone issue to be resolved is whether petitioners Fortunato and Franklin were
guilty of forum-shopping when they successively filed the Annulment of Mortgage case
mid Annulment of Foreclosure Sale case.

xxxx

Given the foregoing considerations, We hold that petitioners Fortunato and Franklin
clearly violated the rule on forum-shopping as the elements of litis pendentia are
present in the case at bench. Consider the following:

Firstly, it is undisputed that there is identity of parties representing the same interests in
the two cases, both involving petitioners x x x and private respondent Bank.
Notwithstanding that in the first case, FCD Pawnshop x x x was not indicated as a party
and respondent Sunyang was not impleaded therein, it is evident that the primary
litigants in the two actions are the same.

Secondly, in finding that the other elements of litis pendentia were present in the instant
case, We deem it necessary the case of Goodland Company, Inc. vs. Asia United Bank,
et al.15

In Goodland, petitioner initially filed a Complaint for Annulment of Mortgage on the

ground that the Real Estate Mortgage (REM) contract was falsified and irregularly
executed. Subsequently, it filed a second case where it prayed for injunctive relief
and/or nullification of the extrajudicial foreclosure sale by reason of, among others,
defective publication of the Notice of Sale and falsification of the REM contract which
was the basis of foreclosure, thus, rendering the latter as similarly null and void. The
High Court found petitioner guilty of forum-shopping ratiocinating that there can be no
detem1ination of the validity of the extrajudicial foreclosure and the propriety of the
injunction in the Injunction case without necessarily ruling on the validity of the REM.

We stress, however, that unlike the Goodland case, the instant controversy involved a
situation wherein the allegations in the Complaint for Annulment of Foreclosure did not
explicitly and categorically raise the falsification of the REM contract as one of the
grounds for declaring the annulment of the said foreclosure sale. Here, petitioners
anchored their arguments on the alleged irregularities in the foreclosure proceedings,
i.e., different title numbers in the documents used or issued in the auction sale and that
the Petition for Extrajudicial Foreclosure Sale was filed without authority. Nonetheless,
after a careful study of the Goodland case, We are ever more convinced that the same
is still instructive on the issue at hand. Consider the following pertinent portions of the
case:

‘x x x There can be no dispute that the prayer for relief in the two cases was based on
the same attendant facts in the execution of REMs over petitioner’s properties in favor
of AUB. While the extrajudicial foreclosure of mortgage, consolidation of
ownership in AUB and issuance of title in the latter’s name were set forth only in
the second case x x x, these were simply the expected consequences of the REM
transaction in the first case x x x. These eventualities are precisely what
petitioner sought to avert when it filed the first case. Undeniably then, the
injunctive relief sought against the extrajudicial foreclosure, as well as the
cancellation of the new title in the name of the creditor- mortgagee AUB, were all
premised on the alleged nullity of the REM due to its allegedly fraudulent and
irregular execution and registration – the same facts set forth in the first case. In
both cases, petitioner asserted its right as owner of the property subject of the
REM, while AUB invoked the rights of a foreclosing creditor-mortgagee, x x x

x x x In the first case, petitioner alleged the fraudulent and irregular execution and
registration of the REM which violated its right as owner who did not consent
thereto, while in the second case petitioner cited further violation of its right as
owner when AUB foreclosed the property, consolidated its ownership and
obtained a new TCT in its name. Considering that the aforesaid violations of
petitioner’s right as owner in the two cases both hinge on the binding effect of
the REM, i.e., both cases will rise or fall on the issue of the validity of the REM, it
follows that the same evidence will support and establish the first and second
causes of action. The procedural infirmities or non-compliance with legal requirements
for extrajudicial foreclosure raised in second case were but additional grounds in
support of the injunctive relief sought against the foreclosure which was, in the first
place, illegal on account of the mortgage contract’s nullity. Evidently, petitioner never
relied solely on the alleged procedural irregularities in the extrajudicial foreclosure when
it sought the reliefs in the second case. x x x’
While in the instant case, the Annulment of Foreclosure Sale was merely founded on
irregularities in the foreclosure proceedings, witl1out deliberately raising the alleged
nullity of the REM, the foregoing clearly suggests that in resolving the said Annulment of
Foreclosure Sale case, its determination will still be anchored upon and premised on the
issue of the validity of REM. Parenthetically, should it be found that the mortgage
contract is null and void, the proceedings based thereon shall likewise become
ineffectual. The resolution of the Annulment of Foreclosure Sale case, therefore, is
inevitably dependent on the effectivity of the REM transaction, thus, it can be said that
both cases shall be substantially founded on the same transactions, same essential
facts and circumstances.

In addition, as correctly pointed out by the private respondent Bank, a careful scrutiny of
the Complaint for Annulment of Foreclosure shows petitioners Fortunato and Franklin’s
repeated reference to the subject property as unlawfully and fraudulently mortgaged. As
such, insofar as the determination of the validity of foreclosure proceedings is
concerned, same evidence will have to be utilized as the antecedent facts that gave rise
to both cases were the same.

xxxx

Thirdly, a judgment in the Annulment of Mortgage case will amount to res judicata in the
Annulment of Foreclosure Sale case. It is a principle in res judicata that once a final
judgment has been rendered, the prevailing party also has an interest in the stability of
that judgment. To allow relitigation creates the risk of inconsistent results and presents
the embarrassing problem of determining which of two conflicting decisions is to be
preferred. Here, conflicting decisions may result should the Annulment of Foreclosure
case be allowed to proceed.

To stress once again, should RTC Br. 57 rule that the REM contract is null and void, the
proceedings based thereon shall likewise become ineffectual. Considering that both
RTC Brs. 57 and 133 will be confronted (sic) to discuss or make any pronouncement
regarding the validity of the REM, the possibility of conflicting rulings or decisions may
be rendered with respect to the said issue. With that, We deem it proper that petitioners
Fortunato and Franklin should have just amended their Complaint for Annulment of
Mortgage, pleading therein the subsequent extrajudicial foreclosure and include in the
prayer the nullification of the said extrajudicial foreclosure.

In view of the foregoing, no grave abuse of discretion can be imputed to public

respondent RTC Br. 133 in finding that petitioners Fortunato and Franklin committed
forum-shopping. The instant petition, therefore, indubitably warrants denial.

WHEREFORE, the petition is DENIED. The a5sailed Orders dated March 26, 2012 and
June 14, 2012 of the x x x Regional Trial Court of Makati City, Branch 133, in Civil Case
No. 11-1192, are hereby AFFIRMED.
Costs against petitioners.

SO ORDERED.16 (Emphasis in the original)

A Motion for Reconsideration was filed, but the same was denied in a June 28, 2013 Resolution
of the CA. Hence, the present Petition.

In a September 1, 2014 Resolution, 17 the Court resolved to give due course to the instant
Petition.

Issues

Petitioners essentially point out that in maintaining Civil Case Nos. 11-116 and 11-1192, they
are not guilty of forum shopping, nor did they violate the rule on litis pendentia.

Petitioners’ Arguments

In praying that the assailed CA dispositions be set aside, petitioners in their Petition and
Reply18 reiterate the arguments in their CA Petition that, as between Civil Case No. 11-116
(annulment of mortgage) and Civil Case No. 11-1192 (annulment of foreclosure and sale
proceedings), there is no identity of causes of action, subject matter, issues, and reliefs sought;
that both cases require different evidence as proof; and that judgments obtained in the two
cases will not be inconsistent with each other, and any decision obtained in one will not
constitute res judicata on the other.

Respondent UBP’s Arguments

Respondent UBP, on the other hand, essentially argues in its Comment19 that the Petition
should be denied, for being a mere rehash of the arguments in petitioners’ CA Petition which
have been thoroughly passed upon by the appellate court; that as correctly held by the CA, Civil
Case No. 11-1192 (annulment of foreclosure and sale proceedings) is anchored on a
determination of the validity or binding effect of the real estate mortgage in Civil Case No. 11-
116 (annulment of mortgage case), and both cases are supported by, and will rise and fall on,
the same evidence; that the necessary consequence of Civil Case No. 11-1192 is determined
solely by the decision in Civil Case No. 11-116 in that if it is found that the mortgage is null and
void, then the foreclosure arid sale proceedings bas thereon would likewise become ineffectual;
that the grow1ds for annulment of the foreclosure and sale proceedings merely constitute
additional reasons for seeking injunctive relief: if any, in the annulment of mortgage case, but
cannot form the basis of a separate cause of action; and that a judgment in Civil Case No. 11-
116 on the validity of the mortgage should thus amount to res judicata in Civil Case No. 11-1192
on the effect of the foreclosure and sale, but with the pendency of both cases, a possibility of
conflicting rulings by different courts on the validity of the mortgage exists.

Our Ruling

The Court denies the Petition.

This ponente has had the occasion to rule on a case20 where a party instituted two cases
against the same set of defendants – one for the annulment of a real estate mortgage, and a
second for injunction and nullification of the extrajudicial foreclosure and consolidation of title,
rooted in the same real estate mortgage – who moved to dismiss the second case on the
ground of forum shopping, claiming that both cases relied on a determination of the same issue:
that is, the validity of the real estate mortgage. The trial court dismissed the second case, but
the CA ordered its reinstatement. This ponente affirmed the trial court, declaring as follows:

There is forum shopping ‘when a party repetitively avails of several judicial remedies in
different courts, simultaneously or successively, all substantially founded on the same
transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already resolved adversely by some
other court.’ The different ways by which forum shopping may be committed were
explained in Chua v. Metropolitan Bank & Trust Company:

Forum shopping can be committed in three ways: (1) filing multiple cases based on the
same cause of action and with the same prayer, the previous case not having been
resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases
based on the same cause of action and the same prayer, the previous case having
been finally resolved (where the ground for dismissal is res judicata); and (3) filing
multiple cases based on the same cause of action but with different prayers
(splitting causes of action, where the ground for dismissal is also either litis
pendentia or res judicata).

Common in these types of forum shopping is the identity of the cause of action in the
different cases filed. Cause of action is defined as ‘the act or omission by which a party
violates the right of another.’

The cause of action in the earlier Annulment Case is the alleged nullity of the
REM (due to its allegedly falsified or spurious nature) which is allegedly violative
of Goodland’s right to the mortgaged property. It serves as the basis for the
prayer for the nullification of the REM. The Injunction Case involves the same
cause of action, inasmuch as it also invokes the nullity of the REM as the basis
for the prayer for the nullification of the extrajudicial foreclosure and for
injunction against consolidation of title. While the main relief sought in the
Annulment Case (nullification of the REM) is ostensibly different from the main
relief sought in the Injunction Case (nullification of the extrajudicial foreclosure
and injunction against consolidation of title), the cause of action which serves as
the basis for the said reliefs remains the same – the alleged nullity of the REM.
Thus, what is involved here is the third way of committing forum shopping, i.e.,
filing multiple cases based on the same cause of action, but with different
prayers. As previously held by the Court, there is still forum shopping even if the reliefs
prayed for in the two cases are different, so long as both cases raise substantially the
same issues.

There can be no determination of the validity of the extrajudicial foreclosure and

the propriety of injunction in the Injunction Case without necessarily ruling on the
validity of the REM, which is already the subject of the Annulment Case. The
identity of the causes of action in the two cases entails that the validity of the mortgage
will be ruled upon in both, and creates a possibility that the two rulings will conflict
with each other. This is precisely what is sought to be avoided by the rule against
forum shopping.

The substantial identity of the two cases remains even if the parties should add different
grounds or legal theories for the nullity of the REM or should alter the designation or
form of the action. The well-entrenched rule is that ‘a party cannot, by varying the
form of action, or adopting a different method of presenting his case, escape the
operation of the principle that one and the same cause of action shall not be
twice litigated.’21 (Emphasis supplied)

The foregoing view was reiterated in a subsequent pronouncement,22 which happens to form
the underlying premise of the CA’s disposition.

The factual milieu in the present case is the same as in the above-cited cases. The plaintiffs in
both cases first filed a case for annulment of the mortgage, followed by the case for annulment
of the foreclosure proceedings. For this reason, the underlying principle in these previously
decided cases must apply equally to the instant case. Thus, the Court completely agrees with
the CA’s findings that in the event that the court in Civil Case No. 11-116 (annulment of
mortgage case) should nullify the Sunyang mortgage, then subsequent proceedings based
thereon, including the foreclosure, shall also be nullified. Notably as well, the CA’s observation
in Civil Case No. 11-1192 (case for annulment of foreclosure and sale) – that since the
complaint therein repeatedly makes reference to an “unlawful” and “fraudulent” Sunyang
mortgage, then the same evidence in Civil Case No. 11-116 will have to be utilized- is well-
taken.

Petitioners maintain that Civil Case No. 11-1192 (case for annulment of foreclosure and sale) is
grounded on specific irregularities committed during the foreclosure proceedings. However, their
Complaint in said case reiterates the supposed illegality of the Sunyang mortgage, thus
presenting the court in said case with the opportunity and temptation to resolve the issue of
validity of the mortgage. There is therefore a danger that a decision might be rendered by the
court in Civil Case No. 11-1192 that contradicts the eventual ruling in Civil Case No. 11-116, or
the annulment of mortgage case.

The rules of procedure are geared toward securing a just, speedy, and inexpensive disposition
of every action and proceeding.23 “Procedural law has its own rationale in the orderly
administration of justice, namely, to ensure the effective enforcement of substantive rights by
providing for a system that obviates arbitrariness, caprice, despotism, or whimsicality in the
settlement of disputes.”24 With these principles in mind, the Court would rather have petitioners
try their cause of action in Civil Case No. 11-116, rather than leave the trial court in danger of
committing error by issuing a decision or resolving an issue in Civil Case No. 11-1192 that
should properly be rendered or resolved by the court trying Civil Case No. 11-116.

WHEREFORE, the Petition is DENIED. The February 28, 2013 Decision and June 28, 2013
Resolution of the Court of Appeals in CA-G.R. SP. No. 126075 are AFFIRMED.

SO ORDERED.

16 JAN 2017 | SUBJECT | CIVIL LAW | COLLECTION OF SUM OF MONEY | RULES OF COURT | CIVIL PROCEDURE |
RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Malayan Insurance Co., Inc., et al. Vs. Emma Concepcion L. Lin; G.R. No. 207277; January 16, 2017

Assailed in this Petition for Review on Certiorari4 are the December 21, 2012 Decision5 of the
Court of Appeals (CA) and its May 22, 2013 Resolution6 in CA-GR. SP No. 118894, both of
which found no grave abuse of discretion in the twin Orders issued by the Regional Trial Court
(RTC) of Manila, Branch 52, on September 29, 20107 and on January 25, 20118 in Civil Case
No. 10-122738.

Factual Antecedents

On January 4, 2010, Emma Concepcion L. Lin (Lin) filed a Complaint9 for Collection of Sum of
Money with Damages against Malayan Insurance Co., Inc. (Malayan), Yvonne Yuchengco
(Yvonne), Atty. Emmanuel Villanueva, Sonny Rubin, Engr. Francisco Mondelo, Michael Angelo
Requijo (collectively, the petitioners), and the Rizal Commercial and Banking Corporation
(RCBC). This was docketed as Civil Case No. 10-122738 of Branch 52 of the Manila RTC.

Lin alleged that she obtained various loans from RCBC secured by six clustered warehouses
located at Plaridel, Bulacan; that the five warehouses were insured with Malayan against fire for
₱56 million while the remaining warehouse was insured for ₱2 million; that on February 24,
2008, the five warehouses were gutted by fire; that on April 8, 2008 the Bureau of Fire
Protection (BFP) issued a Fire Clearance Certification to her (April 8, 2008 FCC) after having
determined that the cause of fire was accidental; that despite the foregoing, her demand for
payment of her insurance claim was denied since the forensic investigators hired by Malayan
claimed that the cause of the fire was arson and not accidental; that she sought assistance from
the Insurance Commission (IC) which, after a meeting among the parties and a conduct of
reinvestigation into the cause/s of the fire, recommended that Malayan pay Lin’s insurance
claim and/or accord great weight to the BFP’s findings; that in defiance thereof, Malayan still
denied or refused to pay her insurance claim; and that for these reasons, Malayan’s corporate
officers should also be held liable for acquiescing to Malayan’s unjustified refusal to pay her
insurance claim.

As against RCBC, Lin averred that notwithstanding the loss of the mortgaged properties, the
bank refused to go after Malayan and instead insisted that she herself must pay the loans to
RCBC, otherwise, foreclosure proceedings would ensue; and that to add insult to injury, RCBC
has been compounding the interest on her loans, despite RCBC’s failure or refusal to go after
Malayan.

Lin thus prayed in Civil Case No. 10-122738 that judgment be rendered ordering petitioners to
pay her insurance claim plus interest on the amounts due or owing her; that her loans and
mortgage to RCBC be deemed extinguished as of February 2008; that RCBC be enjoined from
foreclosing the mortgage on the properties put up as collaterals; and that petitioners he ordered
to pay her ₱l,217,928.88 in the concept of filing foes, costs of suit,₱l million as exemplary
damages, and ₱500,000.00 as attorney’s fees.

Some five months later, or on June 17, 2010, Lin filed before the IC an administrative case 10
against Malayan, represented this time by Yvonne. This was docketed as Administrative Case
No. 431.

In this administrative case, Lin claimed that since it had been conclusively found that the cause
of the fire was “accidental,” the only issue left to be resolved is whether Malayan should be held
liable for unfair claim settlement practice under Section 241 in relation to Section 247 of the
Insurance Code due to its unjustified refusal to settle her claim; and that in consequence of the
foregoing failings, Malayan’s license to operate as a non-life insurance company should be
revoked or suspended, until such time that it fully complies with the IC Resolution ordering it to
accord more weight to the BFP’s findings.

On August 17, 2010, Malayan filed a motion to dismiss Civil Case No. 10-122738 based on
forum shopping. It argued that the administrative case was instituted to prompt or incite IC into
ordering Malayan to pay her insurance claim; that the elements of forum shopping are present
in these two cases because there exists identity of parties since Malayan’s individual officers
who were impleaded in the civil case are also involved in the administrative case; that the same
interests are shared and represented in both the civil and administrative cases; that there is
identity of causes of action and reliefs sought in the two cases since the administrative case is
merely disguised as an unfair claim settlement charge, although its real purpose is to allow Lin
to recover her insurance claim from Malayan; that Lin sought to obtain the same reliefs in the
administrative case as in the civil case; that Lin did not comply with her sworn undertaking in the
Certification on Non-Forum Shopping which she attached to the civil case, because she
deliberately failed to notify the RTC about the pending administrative case within five days from
the filing thereof.

This motion to dismiss drew a Comment/Opposition, 11 which Lin filed on August 31, 2010.

Ruling of the Regional Trial Court

In its Order of September 29, 2010,12 the RTC denied the Motion to Dismiss, thus:

WHEREFORE, the MOTION TO DISMISS filed by [petitioners] is hereby DENIED for

lack of merit.

Furnish the parties through their respective [counsels] with a copy each [of] the Order.
SO ORDERED.13

The RTC held that in the administrative case, Lin was seeking a relief clearly distinct from that
sought in the civil case; that while in the administrative case Lin prayed for the suspension or
revocation of Malayan’s license to operate as a non-life insurance company, in the civil case Lin
prayed for the collection of a sum of money with damages; that it is abundantly clear that any
judgment that would be obtained in either case would not be res judicata to the other, hence,
there is no forum shopping to speak of.

In its Order of January 25, 2011, 14 the RTC likewise denied, for lack of merit, petitioners’
Motion for Reconsideration.

Ruling of the Court of Appeals

Petitioners thereafter sued out a Petition for Certiorari and Prohibition15 before the CA.
However, in a Decision 16 dated December 21, 2012, the CA upheld the RTC, and disposed as
follows:

WHEREFORE absent grave abuse of discretion on the part of respondent Judge, the
Petition for Certiorari and Prohibition (with Temporary Restraining Order and
Preliminary Injunction) is DISMISSED.

SO ORDERED.17

The CA, as did the RTC, found that Lin did not commit forum shopping chiefly for the reason
that the issues raised and the reliefs prayed for in the civil case were essentially different from
those in the administrative case, hence Lin had no duty at all to inform the RTC about the
institution or pendency of the administrative case.

The CA ruled that forum shopping exists where the elements of litis pendentia concurred, and
where a final judgment in one case will amount to res judicata in the other. The CA held that of
the three elements of forum shopping viz., (l) identity of parties, or at least such parties as would
represent the same interest in both actions, (2) identity of rights asserted and reliefs prayed for,
the relief being founded on the same facts, and (3) identity of the two proceedings such that any
judgment rendered in one action will, regardless of which party is successful, amount to res
judicata in the other action under consideration, only the first element may be deemed present
in the instant case. The CA held that there is here identity of parties in the civil and
administrative cases because Lin is the complainant in both the civil and administrative cases,
and these actions were filed against the same petitioners, the same RCBC and the same
Malayan, represented by Yvonne, respectively. It held that there is however no identity of rights
asserted and reliefs prayed for because in the civil case, it was Lin’s assertion that petitioners
had violated her rights to recover the full amount of her insurance claim, which is why she
prayed/demanded that petitioners pay her insurance claim plus damages; whereas in the
administrative case, Lin’s assertion was that petitioners were guilty of unfair claim settlement
practice, for which reason she prayed that Malayan’s license to operate as an insurance
company be revoked or suspended; that the judgment in the civil case, regardless of which
party is successful, would not amount to res judicata in the administrative case in view of the
different issues involved, the dissimilarity in the quantum of evidence required, and the distinct
mode or procedure to be observed in each case.

Petitioners moved for reconsideration 18 of the CA’s Decision, but this motion was denied by
the CA in its Resolution of May 22, 2013.19

Issues

Before this Court, petitioners instituted the present Petition,20 which raises the following issues:

The [CA] not only decided questions of substance contrary to law and the applicable
decisions of this Honorable Court, it also sanctioned a flagrant departure from the
accepted and usual course of judicial proceedings.

A.

The [CA] erred in not dismissing the Civil Case on the ground of willful and deliberate
[forum shopping] despite the fact that the civil case and the administrative case both
seek the payment of the same fire insurance claim.

B.

The [CA] erred in not dismissing the civil case for failure on the part of [Lin] to comply
with her undertaking in her verification and certification of non-forum shopping
appended to the civil complaint.21

Petitioners’ Arguments

In praying for the reversal of the CA Decision, petitioners argue that regardless of
nomenclature, it is Lin and no one else who filed the administrative case, and that she is
not a mere complaining witness therein; that it is settled that only substantial identity of
parties is required for res judicata to apply; that the sharing of the same interest is
sufficient to constitute identity of parties; that Lin has not denied that the subject of both
the administrative case and the civil case involved the same fire insurance claim; that
there is here identity of causes of action, too, because the ultimate objective of both the
civil case and the administrative case is to compel Malayan to pay Lin’s fire insurance
claim; that although the reliefs sought in the civil case and those in the administrative
case are worded differently, Lin was actually asking for the payment of her insurance
claim in both cases; that it is well-entrenched that a party cannot escape the operation
of the principle in res judicata that a cause of action cannot be litigated twice just by
varying the form of action or the method of presenting the case; that Go v. Office of the
Ombudsman22is inapplicable because the issue in that case was whether there was
unreasonable delay in withholding the insured’s claims, which would warrant the
revocation or suspension of the insurers’ licenses, and not whether the insurers should
pay the insured’s insurance claim; that Almendras Mining Corporation v. Office of the
Insurance Commission23does not apply to this case either, because the parties in said
case agreed to submit the case for resolution on the sole issue of whether the
revocation or suspension of the insurer’s license was justified; and that petitioners will
suffer irreparable injury as a consequence of having to defend themselves in a case
which should have been dismissed on the ground of forum shopping.

Respondents Arguments

Lin counters that as stressed in Go v. Office of the Ombudsman, 24 an administrative

case for unfair claim settlement practice may proceed simultaneously with, or
independently of, the civil case for collection of the insurance proceeds filed by the
same claimant since a judgment in one will not amount to res judicata to the other, and
vice versa, due to the variance or differences in the issues, in the quantum of evidence,
and in the procedure to be followed in prosecuting the cases; that in this case the CA
cited the teaching in Go v. Office of the Ombudsman that there was no grave abuse of
discretion in the RTC’s dismissal of petitioners’ motion to dismiss; that the CA correctly
held that the RTC did not commit grave abuse of discretion in denying petitioners’
motion to dismiss because the elements of forum shopping were absent; that there is
here no identity of parties because while she (respondent) is the plaintiff in the civil
case, she is only a complaining witness in the administrative case since it is the IC that
is the real party in interest in the administrative case; that the cause of action in the civil
case consists of Malayan’s failure or refusal to pay her insurance claim, whereas in the
administrative case, it consists of Malayan’s unfair claim settlement practice; that the
issue in the civil case is whether Malayan is liable to pay Lin’s insurance claim, while the
issue in the administrative case is whether Malayan’s license to operate should be
revoked or suspended for engaging in unfair claim settlement practice; and that the
relief sought in the civil case consists in the payment of a sum of money plus damages,
while the relief in the administrative case consists of the revocation or suspension of
Malayan’s license to operate as an insurance company. According to Lin, although in
the administrative case she prayed that the IC Resolution ordering Malayan to accord
weight to the BFP’s findings be declared final, this did not mean that she was therein
seeking payment of her insurance claim, but rather that the IC can now impose the
appropriate administrative sanctions upon Malayan; that if Malayan felt compelled to
pay Lin’s insurance claim for fear that its license to operate as an insurance firm might
be suspended or revoked, then this is just a logical result of its failure or refusal to pay
the insurance claim; that the judgment in the civil case will not amount to res judicata in
the administrative case, and vice versa, pursuant to the case law ruling in Go v. Office
of the Ombudsman25and in Almendras v. Office of the Insurance Commission, 26 both
of which categorically allowed the insurance claimants therein to file both a civil and an
administrative case against insurers; that the rule against forum shopping was designed
to serve a noble purpose, viz., to be an instrument of justice, hence, it can in no way be
interpreted to subvert such a noble purpose.

Our Ruling
We deny this Petition. We hold that the case law rulings in the Go and Almendras
cases27 control and govern the case at bench.

First off, it is elementary that “an order denying a motion to dismiss is merely
interlocutory and, therefore, not appealable, x x x to x x x avoid undue inconvenience to
the appealing party by having to assail orders as they are promulgated by the court,
when all such orders may be contested in a single appeal.”28

Secondly, petitioners herein utterly failed to prove that the RTC, in issuing the assailed
Orders, acted with grave abuse of discretion amounting to lack or excess of jurisdiction.
“It is well-settled that an act of a court or tribunal may only be considered to have been
done in grave abuse of discretion when the same was performed in a capricious or
whimsical exercise of judgment which is equivalent to lack or excess of jurisdiction.”29
“[F]or grave abuse of discretion to exist, the abuse of discretion must be patent and
gross so as to amount to an evasion of a positive duty or a virtual refusal to perform a
duty enjoined by law, or to act at all in contemplation of law.”30

In the present case, petitioners basically insist that Lin committed willful and deliberate
forum shopping which warrants the dismissal of her civil case because it is not much
different from the administrative case in terms of the parties involved, the causes of
action pleaded, and the reliefs prayed for. Petitioners also posit that another ground
warranting the dismissal of the civil case was Lin’s failure to notify the RTC about the
pendency of the administrative case within five days from the filing thereof.

These arguments will not avail. The proscription against forum shopping is found in
Section 5, Rule 7 of the Rules of Court, which provides:

SEC. 5. Certification against forum shopping. –The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a
sworn certification annexed thereto and simultaneously filed therewith; (a) that he has
not theretofore commenced any action or filed any claim involving the same issues in
any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he should thereafter
learn that the same or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court wherein his aforesaid
complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to the
corresponding administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a
cause for administrative sanctions. (n)

The above-stated rule covers the very essence of forum shopping itself, and the
constitutive elements thereof viz., the cognate concepts of litis pendentia and res
judicata –

x x x [T]he essence of forum shopping is the filing of multiple suits involving the same
parties for the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment. It exists where the elements of litis
pendentia are present or where a final judgment in one case will amount to res judicata
in another. On the other hand, for litis pendentia to be a ground for the dismissal of an
action, the following requisites must concur: (a) identity of parties, or at least such
parties who represent the same interests in both actions; (b) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (c) the identity with
respect to the two preceding particulars in the two cases is such that any judgment that
may be rendered in the pending case, regardless of which party is successful, would
amount to res judicata in the other case.31

Res judicata, in turn, has the following requisites: “(1) the former judgment must be final;
(2) it must have been rendered by a court having jurisdiction over the subject matter and
over the parties; (3) it must be a judgment on the merits; and (4) there must be,
between the first and second actions, (a) identity of parties, (b) identity of subject
matter, and (c) identity of cause of action.”32

“The settled rule is that criminal and civil cases are altogether different from
administrative matters, such that the disposition in the first two will not inevitably govern
the third and vice versa.”33In the context of the case at bar, matters handled by the IC
are delineated as either regulatory or adjudicatory, both of which have distinct
characteristics, as postulated in Almendras Mining Corporation v. Office of the
Insurance Commission:34

The provisions of the Insurance Code (Presidential Decree [P.D.] No. 1460), as
amended, clearly indicate that the Office of the [IC] is an administrative agency vested
with regulatory power as well as with adjudicatory authority. Among the several
regulatory or non-quasi-judicial duties of the Insurance Commissioner under the
Insurance Code is the authority to issue, or refuse issuance of, a Certificate of Authority
to a person or entity desirous of engaging in insurance business in the Philippines, and
to revoke or suspend such Certificate of Authority upon a finding of the existence of
statutory grounds for such revocation or suspension. The grounds for revocation or
suspension of an insurer’s Certificate of Authority are set out in Section 241 and in
Section 247 of the Insurance Code as amended. The general regulatory authority of the
Insurance Commissioner is described in Section 414 of the Insurance Code, as
amended, in the following terms:
‘Section 414. The Insurance Commissioner shall have the duty to see that all laws
relating to insurance, insurance companies and other insurance matters, mutual benefit
associations, and trusts for charitable uses are faithfully executed and to perform the
duties imposed upon him by this Code, and shall, notwithstanding any existing laws to
the contrary, have sole and exclusive authority to regulate the issuance and sale of
variable contracts as defined in section two hundred thirty-two and to provide for the
licensing of persons selling such contracts, and to issue such reasonable rules and
regulations governing the same.

The Commissioner may issue such rulings, instructions, circulars, orders[,] and
decisions as he may deem necessary to secure the enforcement of the provisions of
this Code, subject to the approval of the Secretary of Finance [DOF Secretary]. Except
as otherwise specified, decisions made by the Commissioner shall be appealable to the
[DOF Secretary].’ (Italics supplied)

which Section also specifies the authority to which a decision of the Insurance
Commissioner rendered in the exercise of its regulatory function may be appealed.

The adjudicatory authority of the Insurance Commissioner is generally described in

Section 416 of the Insurance Code, as amended, which reads as follows:

‘Sec. 416. The Commissioner shall have the power to adjudicate claims and complaints
involving any loss, damage or liability for which an insurer may be answerable under
any kind of policy or contract of insurance, or for which such insurer may be liable under
a contract of suretyship, or for which a reinsurer may be sued under any contract or
reinsurance it may have entered into, or for which a mutual benefit association may be
held liable under the membership certificates it has issued to its members, where the
amount of any such loss, damage or liability, excluding interests, cost and attorney’s
fees, being claimed or sued upon any kind of insurance, bond, reinsurance contract, or
membership certificate does not exceed in any single claim one hundred thousand
pesos.

xxxx

The authority to adjudicate granted to the Commissioner under this section shall be
concurrent with that of the civil courts, but the filing of a complaint with the
Commissioner shall preclude the civil courts from taking cognizance of a suit involving
the same subject matter.’ (Italics supplied)

Continuing, Section 416 (as amended by Batas Pambansa (B.P.) Blg. 874) also
specifies the authority to which appeal may be taken from a final order or decision of the
Commissioner given in the exercise of his adjudicatory or quasi-judicial power:
‘Any decision, order or ruling rendered by the Commissioner after a hearing shall have
the force and effect of a judgment. Any party may appeal from a final order, ruling or
decision of the Commissioner by filing with the Commissioner within thirty days from
receipt of copy of such order, ruling or decision a notice of appeal to the Intermediate
Appellate Court (now the Court of Appeals) in the manner provided for in the Rules of
Court for appeals from the Regional Trial Court to the Intermediate Appellate Court
(now the Court of Appeals)

x x x x’

It may be noted that under Section 9 (3) of B.P. Big. 129, appeals from a final decision
of the Insurance Commissioner rendered in the exercise of his adjudicatory authority
now fall within the exclusive appellate jurisdiction of the Court of Appeals.35

Go v. Office of the Ombudsman36reiterated the above-stated distinctions vis-a-vis the principles

enunciating that a civil case before the trial court involving recovery of payment of the insured’s
insurance claim plus damages, can proceed simultaneously with an administrative case before
the IC.37 Expounding on the foregoing points, this Court said –

**The findings of the trial court will not necessarily foreclose the administrative case
before the [IC], or [vice versa]. True, the parties are the same, and both actions are
predicated on the same set of facts, and will require identical evidence. But the issues
to be resolved, the quantum of evidence, the procedure to be followed[,] and the reliefs
to be adjudged by these two bodies are different.

Petitioner’s causes of action in Civil Case No. Q-95-23135 are predicated on the
insurers’ refusal to pay her fire insurance claims despite notice, proofs of losses and
other supporting documents. Thus, petitioner prays in her complaint that the insurers be
ordered to pay the full-insured value of the losses, as embodied in their respective
policies. Petitioner also sought payment of interests and damages in her favor caused
by the alleged delay and refusal of the insurers to pay her claims. The principal issue
then that must be resolved by the trial court is whether or not petitioner is entitled to the
payment of her insurance claims and damages. The matter of whether or not there is
unreasonable delay or denial of the claims is merely an incident to be resolved by the
trial court, necessary to ascertain petitioner’s right to claim damages, as prescribed by
Section 244 of the Insurance Code.

On the other hand, the core, if not the sole bone of contention in Adm. Case No. RD-
156, is the issue of whether or not there was unreasonable delay or denial of the claims
of petitioner, and if in the affirmative, whether or not that would justify the suspension or
revocation of the insurers’ licenses.

Moreover, in Civil Case No. Q-95-23135, petitioner must establish her case by a
preponderance of evidence, or simply put, such evidence that is of greater weight, or
more convincing than that which is offered in opposition to it. In Adm. Case No. RD-156,
the degree of proof required of petitioner to establish her claim is substantial evidence,
which has been defined as that amount of relevant evidence that a reasonable mind
might accept as adequate to justify the conclusion.

In addition, the procedure to be followed by the trial court is governed by the Rules of
Court, while the [IC] has its own set of rules and it is not bound by the rigidities of
technical rules of procedure. These two bodies conduct independent means of
ascertaining the ultimate facts of their respective cases that will serve as basis for their
respective decisions.

If, for example, the trial court finds that there was no unreasonable delay or denial of her
claims, it does not automatically mean that there was in fact no such unreasonable
delay or denial that would justify the revocation or suspension of the licenses of the
concerned insurance companies. It only means that petitioner failed to prove by
preponderance of evidence that she is entitled to damages. Such finding would not
restrain the [IC], in the exercise of its regulatory power, from making its own finding of
unreasonable delay or denial as long as it is supported by substantial evidence.

While the possibility that these two bodies will come up with conflicting resolutions on
the same issue is not far-fetched, the finding or conclusion of one would not necessarily
be binding on the other given the difference in the issues involved, the quantum of
evidence required and the procedure to be followed.

Moreover, public interest and public policy demand the speedy and inexpensive
disposition of administrative cases.

Hence, Adm. Case No. RD-156 may proceed alongside Civil Case No. Q-95-23135.38

As the aforecited cases are analogous in many aspects to the present case, both in respect to
their factual backdrop and in their jurisprudential teachings, the case law ruling in the Almendras
and in the Go cases must apply with implacable force to the present case. Consistency alone
demands – because justice cannot be inconsistent – that the final authoritative mandate in the
cited cases must produce an end result not much different from the present case.

All told, we find that the CA did not err in holding that the petitioners utterly failed to prove that
the RTC exhibited grave abuse of discretion, amounting to lack or excess of jurisdiction, which
would justify the issuance of the extraordinary writ of certiorari.39

WHEREFORE, the Petition is DENIED. The December 21, 2012 Decision and the May 22, 2013
Resolution of the Court of Appeals in CA-GR. SP No. 118894 are hereby AFFIRMED.

Costs against petitioners.

16 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL DISMISSAL | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Turks Shawarma Company/Gem Zeñarosa Vs. Feliciano Z. Pajaron and Larry A. Carbonilla; G.R.
No. 207156; January 16, 2017

The liberal interpretation of the rules applies only to justifiable causes and meritorious
circumstances.

By this Petition for Review on Certiorari,[1] petitioner Turks Shawarma Company and its owner,
petitioner Gem Zeñarosa (Zeñarosa), assail the May 8, 2013 Decision[2] of the Court of Appeals
(CA) in CA-G.R. SP No. 121956, which affirmed the Orders dated March 18, 2011[3] and
September 29, 2011[4] of the National Labor Relations Commission (NLRC) dismissing their
appeal on the ground of non-perfection for failure to post the required bond.

Factual Antecedents

Petitioners hired Feliciano Z. Pajaron (Pajaron) in May 2007 as service crew and Larry A.
Carbonilla (Carbonilla) in April 2007 as head crew. On April 15, 2010, Pajaron and Carbonilla
filed their respective Complaints[5] for constructive and actual illegal dismissal, non-payment of
overtime pay, holiday pay, holiday premium, rest day premium, service incentive leave pay and
13th month pay against petitioners. Both Complaints were consolidated.

Pajaron alleged that on April 9, 2010, Zeñarosa asked him to sign a piece of paper [6] stating that
he was receiving the correct amount of wages and that he had no claims whatsoever from
petitioners. Disagreeing to the truthfulness of the statements, Pajaron refused to sign the paper
prompting Zeñarosa to fire him from work. Carbonilla, on the other hand, alleged that sometime
in June 2008, he had an altercation with his supervisor Conchita Marcillana (Marcillana) while at
work. When the incident was brought to the attention of Zeñarosa, he was immediately
dismissed from service. He was also asked by Zeñarosa to sign a piece of paper acknowledging
his debt amounting to P7,000.00.

Both Pajaron and Carbonilla claimed that there was no just or authorized cause for their
dismissal and that petitioners also failed to comply with the requirements of due process. As
such, they prayed for separation pay in lieu of reinstatement due to strained relations with
petitioners and backwages as well as nominal, moral and exemplary damages. Petitioners also
claimed for non payment of just wages, overtime pay, holiday pay, holiday premium, service
incentive leave pay and 13th month pay.

Petitioners denied having dismissed Pajaron and Carbonilla; they averred that they actually
abandoned their work. They alleged that Pajaron would habitually absent himself from work for
an unreasonable length of time without notice; and while they rehired him several times
whenever he returned, they refused to rehire him this time after he abandoned work in April
2009. As for Carbonilla, he was reprimanded and admonished several times for misbehavior
and disobedience of lawful orders and was advised that he could freely leave his work if he
could not follow instructions. Unfortunately, he left his work without any reason and without
settling his unpaid obligation in the an1ount of P78,900.00, which compelled them to file a
criminal case[7] for estafa against him. In addition, criminal complaints[8] tor slander were filed
against both Pajaron and Carbonilla for uttering defamatory words that allegedly compromised
Zeñarosa’s reputation as a businessman. Petitioners, thus, insisted that their refusal to rehire
Pajaron and Carbonilla was for valid causes and did not amount to dismissal from employment.
Finally, petitioners claimed that Pajaron and Carbonilla failed to substantiate their claims that
they were not paid labor standards benefits.

Proceedings before the Labor Arbiter

In a Decision[9] dated December 102010, the Labor Arbiter found credible Pajaron and
Carbonilla’s version and held them constructively and illegally dismissed by petitioners. The
Labor Arbiter found it suspicious for petitioners to file criminal cases against Pajaron and
Carbonilla only after the complaints for illegal dismissal had been filed. Pajaron and Carbonilla
were thus awarded the sum of P148,753.61 and P49,182.66, respectively, representing
backwages, separation pay in lieu of reinstatement, holiday pay, service incentive leave pay and
13th month pay, The dispositive portion of the Labor Arbiter’s Decision reads:

WHEREFORE, in light of the foregoing, judgment is hereby rendered declaring

respondent TURKS SHAWARMA COMPANY, [liable] to pay complainants as follows:

I. FELICIANO Z. PAJARON, JR.

1. Limited backwages computed from April 9, 2010 up to the date of this

Decision, in the amount of SIXTY EIGHT THOUSAND NINE HUNDRED
NINETY EIGHT PESOS & 74/100 (Php68,998.74)

2. Separation pay, in lieu of reinstatement equivalent to one month’s salary

for every year of service computed from May 1, 2007 up to the date of this
decision, in the amount of THIRTY ONE THOUS[A]ND FIVE HUNDRED
TWELVE PESOS (Php31,512.00);

3. Holiday pay, in the amount of TWELVE THOUSAND SIX HUNDRED

EIGHTY ONE PESOS (Php12,681.00);

4. Service incentive leave pay, in the amount of FIVE THOUSAND FOUR

HUNDRED THREE PESOS & 46/100 (Php5,403.46); and

5. Thirteenth month pay, in the amount of THIRTY THOUSAND ONE

HUNDRED FIFTY EIGHT PESOS & 41/100 (Php30,158.41).

II. LARRY A. CARBONILLA

1. Separation pay, in lieu of reinstatement equivalent to one month’s salary

for every year of service computed from April 1, 2007 up to the date of this
decision, in the amount of FORTY TWO THOUSAND AND SIXTEEN
PESOS (Php42,016.00);
 2. Holiday pay, in the amount of TWO THOUSAND PESOS (Php2,000.00);

3. Service incentive leave pay, in the amount of EIGHT HUNDRED THIRTY

THREE PESOS & 33/100 (Php833.33); and

4. Thirteenth month pay, in the amount of FOUR THOUSAND THREE

HUNDRED THIRTY THREE PESOS & 33/100 (Php4,333.33).

Other claims herein sought and prayed for are hereby denied for lack of legal and
factual bases.

SO ORDERED.[10]

Proceedings before the National Labor Relations Commission

Due to alleged non-availability of counsel, Zeñarosa himself filed a Notice of Appeal with
Memorandum and Motion to Reduce Bond[11] with the NLRC. Along with this, Zeñarosa posted a
partial cash bond in the amount of P15,000.00,[12] maintaining that he cannot afford to post the
full amount of the award since he is a mere backyard micro-entrepreneur. He begged the NLRC
to reduce the bond.

The NLRC, in an Order[13] dated March 18, 2011, denied the motion to reduce bond. It ruled that
financial difficulties may not be invoked as a valid ground to reduce bond; at any rate, it was not
even substantiated by proof. Moreover, the partial bond in the amount of P15,000.00 is not
reasonable in relation to the award which totalled to P197,936.27. Petitioners’ appeal was thus
dismissed by the NLRC for non-perfection.

On April 7, 2011, petitioners, through a new counsel, filed a Motion for Reconsideration (with
plea to give due course to the appeal)[14] averring that the outright dismissal of their appeal was
harsh and oppressive considering that they had substantially complied with the Rules through
the posting of a partial bond and their willingness to post additional bond if necessary.
Moreover, their motion to reduce bond was meritorious since payment of the full amount of the
award will greatly affect the company’s operations; besides the appeal was filed by Zeñarosa
without the assistance of a counsel. Petitioners thus implored for a more liberal application of
the Rules and prayed that their appeal be given due course. Along with this motion for
reconsideration, petitioners tendered the sum of P207,435.53 representing the deficiency of the
appeal bond.[15]

In an Order[16] dated September 29, 2011, the NLRC denied the Motion for Reconsideration,
reiterating that the grounds for the reduction of the appeal bond are not meritorious and that the
partial bond posted is not reasonable. The NLRC further held that the posting of the remaining
balance on April 7, 2011 or three months and eight days from receipt of the Labor Arbiter’s
Decision on December 30, 2010 cannot be allowed, otherwise, it will be tantamount to
extending the period to appeal which is limited only to 10 days from receipt of the assailed
Decision.
Proceedings before the Court of Appeals

Petitioners filed a Petition for Certiorari with application for Writ of Preliminary Injunction and
Temporary Restraining Order[17] with the CA. They insisted that the NLRC gravely abused its
discretion in dismissing the appeal for failure to post the required appeal bond.

On May 8, 2013, the CA rendered a Decision[18] dismissing the Petition for Certiorari. It held that
the NLRC did not commit any grave abuse of discretion in dismissing petitioners’ appeal for
non-perfection because petitioners failed to comply with the requisites in filing a motion to
reduce bond, namely, the presence of a meritorious ground and the posting of a reasonable
amount of bond. The CA stated that financial difficulties is not enough justification to dispense
with the mandatory posting of a bond inasmuch as there is an option of posting a surety bond
from a reputable bonding company duly accredited by the NLRC, which, unfortunately,
petitioners failed to do. The CA noted that the lack of assistance of a counsel is not an excuse
because petitioners ought to know the Rules in filing an appeal; moreover, ignorance of the law
does not excuse them from compliance therewith.

Hence, this present Petition.

Issue

Petitioners insist that the CA erred in affirming the NLRC’s dismissal of their appeal for
the following reasons: first, there was substantial compliance with the Rules on
perfection of appeal; second, the surrounding facts and circumstances constitute
meritorious grounds to reduce the appeal bond; third, they exhibited willingness and
good faith by posting a partial bond during the reglementary period; and lastly, a liberal
interpretation of the requirement of an appeal bond would serve the desired objective of
resolving controversies on the merits. Petitioners claim that there is a necessity to
resolve the merits of their appeal since the Labor Arbiter’s Decision declaring Pajaron
and Carbonilla illegally terminated from employment was not based on substantial
evidence.
Our Ruling

The Petition has no merit.

The Court has time and again held that “[t]he right to appeal is neither a natural right nor is it a
component of due process. It is a mere statutory privilege, and may be exercised only in the
manner and in accordance with the provisions of the law.”[19] “The party who seeks to avail of the
same must comply with the requirements of the rules. Failing to do so the right to appeal is
lost.”[20]

Article 223 of the Labor Code, which sets forth the rules on appeal from the Labor Arbiter’s
monetary award, provides:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including graft
and corruption;

(c) If made purely on questions of law; and

(d) If serious errors in the finding of facts are raised which would cause grave or
irreparable damage or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer

may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from.

x x x x. (Emphasis supplied)

Meanwhile, Sections 4 and 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC,
which were in effect when petitioners filed their appeal, provide:

Section 4. Requisites for perfection of appeal. – (a) The Appeal shall be: 1) filed within
the reglementary period as provided in Section 1 of this Rule; 2) verified by the
appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as
amended; 3) in the form of a memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof, the relief prayed for, and with a
statement of the date the appellant received the appealed decision, resolution or order;
4) in three (3) legibly typewritten or printed copies; and 5) accompanied by i) proof of
payment of the required appeal fee; ii) posting of a cash or surety bond as provided in
Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service
upon the other parties.

b) A mere notice of appeal without complying with the other requisites aforestated shall
not stop the running of the period for perfecting an appeal.

xxxx

Section 6. Bond. – In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon the
posting of a bond, which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of damages and attorney’s fees.

xxxx

No motion to reduce bond shall be entertained except on meritorious grounds, and upon
the posting of a bond in a reasonable amount. The mere filing of a motion to reduce
bond without complying with the requisites in the preceding paragraphs shall not stop
the running of the period to perfect an appeal.

“It is clear from both the Labor Code and the NLRC Rules of Procedure that there is legislative
and administrative intent to strictly apply the appeal bond requirement, and the Court should
give utmost regard to this intention.”[21]The posting of cash or surety bond is therefore mandatory
and jurisdictional; failure to comply with this requirement renders the decision of the Labor
Arbiter final and executory.[22] This indispensable requisite for the perfection of an appeal “is to
assure the workers that if they finally prevail in the case[,] the monetary award will be given to
them upon the dismissal of the employer’s appeal [and] is further meant to discourage
employers from using the appeal to delay or evade payment of their obligations to the
employees.”[23]

However, the Court, in special and justified circumstances, has relaxed the requirement of
posting a supersedeas bond for the perfection of an appeal on technical considerations to give
way to equity and justice.[24] Thus, under Section 6 of Rule VI of the 2005 NLRC Revised Rules
of Procedure, the reduction of the appeal bond is allowed, subject to the following conditions: (1)
the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted by the appellant. Compliance with these two
conditions will stop the running of the period to perfect an appeal.

In the case at bar, petitioners filed a Motion to Reduce Bond together with their Notice of Appeal
and posted a cash bond ofP15,000.00 within the 10-day reglementary period to appeal. The CA
correctly found that the NLRC did not commit grave abuse of discretion in denying petitioners’
motion to reduce bond as such motion was not predicated on meritorious and reasonable
grounds and the amount tendered is not reasonable in relation to the award. The NLRC
correctly held that the supposed ground cited in the motion is not well-taken tor there was no
evidence to prove Zeñarosa’s claim that the payment of the full amount of the award would
greatly affect his business due to financial setbacks. Besides, “the law does not require outright
payment of the total monetary award; [the appellant has the option to post either a cash or
surety bond. In the latter case, appellant must pay only a] moderate and reasonable sum for the
premium to ensure that the award will be eventually paid should the appeal fail.”[25]Moreover, the
absence of counsel is not a valid excuse for non-compliance with the rules. As aptly observed
by the CA, Zeñarosa cannot feign ignorance of the law considering that he was able to post a
partial bond and ask for a reduction of the appeal bond. At any rate, petitioners did not advance
any reason for the alleged absence of counsel except that they were simply abandoned. Neither
did petitioners explain why they failed to procure a new counsel to properly assist them in filing
the appeal. Moreover, the partial bond posted was not reasonable. In the case of McBurnie v.
Ganzon,[26] the Court has set a provisional percentage of 10% of the monetary award (exclusive
of damages and attorney’s fees) as reasonable amount of bond that an appellant should post
pending resolution by the NLRC of a motion for a bond’s reduction. Only after the posting of this
required percentage shall an appellant’s period to perfect an appeal be suspended. Applying
this parameter, the P15,000.00 partial bond posted by petitioners is not considered reasonable
in relation to the total monetary award of P197,936.27.

Petitioners, nevertheless, rely on a number of cases wherein the Court allowed the relaxation of
the stringent requirement of the rule. In Nicol v. Footjoy Industrial Corporation,[27] the Court
reversed the NLRC’s denial of the appellant’s motion to reduce bond upon finding adequate
evidence to justify the reduction. In Rada v. National Labor Relations
Commission[28] and Blancaflor v. National Labor Relations Commission,[29] the NLRC allowed the
late payment of the bond because the appealed Decision of the Labor Arbiter did not state the
exact amount to be awarded, hence there could be no basis for determining the amount of the
bond to be filed. It was only after the amount of superseades bond was specified by the NLRC
that the appellants filed the bond. In YBL (Your Bus Line) v. National Labor Relations
Commission,[30] the Court was propelled to relax the requirements relating to appeal bonds as
there were valid issues raised in the appeal. In Dr. Postigo v. Philippine Tuberculosis Society,
Inc.,[31] the respondent therein deferred the posting of the bond and instead filed a motion to
reduce bond on the ground that the Labor Arbiter’s computation of the award is erroneous which
circumstance justified the relaxation of the appeal bond requirement. In all of these cases,
though, there were meritorious grounds that warranted the reduction of the appeal bond, which,
as discussed, is lacking in the case at bench.

Petitioners, furthermore, claim that the NLRC’s outright dismissal of their appeal was harsh and
oppressive since they should still be given opportunity to complete the required bond upon the
filing of their motion for reconsideration. Thus, they insist that their immediate posting of the
deficiency when they filed a motion for reconsideration constituted substantial compliance with
the Rules.

The contention is untenable.

The NLRC exercises full discretion in resolving a motion for the reduction of bond[32] in
accordance with the standards of meritorious grounds and reasonable amount. The “reduction
of the bond is not a matter of right on the part of the movant [but] lies within the sound discretion
of the NLRC x x x.”[33]

In order to give full effect to the provisions on motion to reduce bond, the appellant must
be allowed to wait for the ruling of the NLRC on the motion even beyond the 10-day
period to perfect an appeal. If the NLRC grants the motion and rules that there is indeed
meritorious ground and that the amount of the bond posted is reasonable, then the
appeal is perfected. If the NLRC denies the motion, the appellant may still file a motion
tor reconsideration as provided under Section 15, Rule VII of the Rules. If the NLRC
grants the motion for reconsideration and rules that there is indeed meritorious ground
and that the amount of the bond posted is reasonable, then the appeal is perfected. If
the NLRC denies the motion. then the decision of the Labor Arbiter becomes final and
executory.[34]

The rulings in Garcia v. KJ Commercial[35] and Mendoza v. HMS Credit Corporation[36] cannot
dissuade this Court from relaxing the rules. In Garcia, the NLRC initially denied the appeal of
respondent therein due to the absence of meritorious grounds in its motion to reduce bond and
unreasonable amount of partial bond posted. However, upon the posting of the full amount of
bond when respondent filed its motion for reconsideration, the NLRC granted the motion for
reconsideration on the ground of substantial compliance with the rules after considering the
merits of the appeal. Likewise, in Mendoza, the NLRC initially denied respondents’ Motion to
Reduce Appeal Bond with a partial bond. Respondents thereafter promptly complied with the
NLRC’s directive to post the differential amount between the judgment award and the sum
previously tendered by them. The Court held that the appeal was filed timely on account of
respondents’ substantial compliance with the requirements on appeal bond. In
both Garcia and Mendoza, however, the NLRC took into consideration the substantial merits of
the appealed cases in giving due course to the appeals. It, in fact, reversed the Labor Arbiters’
rulings in both cases. In contrast, petitioners in the case at bench have no meritorious appeal as
would convince this Court to liberally apply the rule.

Stated otherwise, petitioners’ case will still fail on its merits even if we are to allow their appeal
to be given due course. After scrupulously examining the contrasting positions and arguments
of the parties, we find that the Labor Arbiter’s Decision declaring Pajaron and Carbonilla illegally
dismissed was supported by substantial evidence. While petitioners vehemently argue that
Pajaron and Carbonilla abandoned their work, the records are devoid of evidence to show that
there was intent on their part to forego their employment. In fact, petitioners adamantly admitted
that they refused to rehire Pajaron and Carbonilla despite persistent requests to admit them to
work. Hence, petitioners essentially admitted the fact of dismissal. However, except tor their
empty and general allegations that the dismissal was for just causes, petitioners did not proffer
any evidence to support their claim of misconduct or misbehavior on the part of Pajaron and
Carbonilla. “In termination cases, the burden of proof rests on the employer to show that the
dismissal is for a Just cause.”[37] For lack of any clear, valid, and just cause in terminating
Pajaron and Carbonilla’s employment, petitioners are indubitably guilty of illegal dismissal.

All told, we find no error on the part of the CA in ruling that the NLRC did not gravely abused its
discretion in dismissing petitioners’ appeal for non-perfection due to non compliance with the
requisites of filing a motion to reduce bond.

[T]he merit of [petitioners’] case does not warrant the liberal application of the x x x rules
x x x. While it is true that litigation is not a game of technicalities and that rules of
procedure shall not be strictly enforced at the cost of substantial justice, it must be
emphasized that procedural rules should not likewise be belittled or dismissed simply
because their non-observance might result in prejudice to a party’s substantial rights.
Like all rules, they are required to be followed, except only for the most persuasive of
reasons.[38]

WHEREFORE, the Petition is DENIED. The May 8, 2013 Decision of the Court of Appeals in
CA-G.R SP No. 121956 is AFFIRMED.
10 JAN 2017 | SUBJECT | ADMINISTRATIVE CODE | DISHONESTY | SUBJECT | ADMINISTRATIVE CODE |
FALSIFICATION OF PUBLIC DOCUMENTS | SUBJECT | CRIMINAL LAW | FORGERY |

Wyna Marie P. Garingan-Ferreras Vs. Eduardo T. Umblas; A.M. No. P-11-2989; January 10, 2017

Aggrieved by what she believed was a case of falsification of public documents in the supposed
Civil Case No. 33-398C-2006, Regional Trial Court (RTC), Branch 33, Ballesteros, Cagayan,
complainant Wyna Marie G. Ferreras filed this case against respondent Eduardo T. Umblas,
Legal Researcher II of the said RTC.

Factual Antecedents

Complainant narrated in her letter-complaint[1] that she received in June, 2009 an e-mail with an
attachment purportedly a Certificate of Finality dated March 24, 2006 of Civil Case No. 33-
398C-2006 entitled “Reynaldo Z. Ferreras v. Wyna Marie G. Ferreras” for Declaration of Nullity
of Marriage issued by RTC, Branch 33, Ballesteros, Cagayan. The Certificate of Finality which
bore the signature of respondent as Officer-in-Charge (OIC) Clerk of Court[2] stated that the
Decision, declaring void ab initio the marriage contracted by complainant with Reynaldo Z.
Ferreras (Reynaldo) on the ground of psychological capacity, granting complainant custody to
their child, and dissolving their conjugal property regime, had already become final and
executory.

Fearing foul play since she had absolutely no knowledge about said case nor received any
summons/notices regarding the same, complainant asked for a Certification from the National
Statistics Office which confirmed an annotation on the records of her marriage:

PURSUANT TO THE DECISION DATED JANUARY 19, 2006 RENDERED BY JUDGE

EUGENIO M. TANGONAN OF THE REGIONAL TRIAL COURT, SECOND JUDICIAL
REGION, BRANCH 33, BALLESTEROS, CAGAYAN UNDER CIVIL CASE NO. 33-
398C-2006, THE MARRIAGE BETWEEN HEREIN PARTIES CELEBRATED ON JULY
16, 1993 IN BAYOMBONG, NUEVA VIZCAYA IS HEREBY DECLARED NULL AND
VOID AB INITIO.[3]

Proceeding on her quest for the truth of such declaration, she asked for copy of all documents
relative to the annulment case[4] from Branch 33, RTC, Ballesteros, Cagayan, from which the
Declaration of Nullity of Marriage supposedly originated. On August 18, 2009, Jacqueline C.
Fernandez, Court Interpreter III, issued one, stating in part:

THIS IS TO CERTIFY that according to available records, Civil Case No. 33-398C-2006
entitled REYNALDO Z. FERRERAS versus WYNA MARIE P. GARINGAN-FERRERAS
for DECLARATION OF NULLITY OF MARRIAGE, is NOT ON FILE.[5]

On October 21, 2009, the Office of the Court Administrator (OCA) referred the said complaint to
respondent for comment.[6]
In his Comment,[7] respondent denied the material allegations of the complaint, stating, among
others, that the Decision and Certification of Finality were fraudulent and that his purported
signatures thereto were spurious and not of his own handwriting and accord. Furthermore, he
countered that he was no longer acting as the OIC Clerk of Court and responsible for such
issuances as he had been replaced prior to the date of issuance.

On September 19, 2011, the Court resolved to re-docket the complaint as an administrative
matter and referred the same to the Executive Judge of the RTC of Tuguegarao City for
Investigation, Report and Recommendation.[8]

Report and Recommendation of the Investigating Judge

Despite calendaring several settings, no actual confrontation was had between the parties.
Notably, complainant, who hails from Nueva Vizcaya, would travel all the way to Tuguegarao
City to attend all the scheduled hearings, except in one instance when she moved for its
postponement as she had to accompany her son to Manila. On the other hand, respondent did
not honor any of the scheduled hearings with his presence despite receipt of summons.[9] So,
the case revolved substantially on the documents submitted by the parties, particularly on the
signature of the respondent. According to the Investigating Judge and per records, complainant
submitted the following documents:

x x x (1) A Certificate of Finality dated March 24, 2006 signed by the respondent and
du1y authenticated by the National Statistics Office at the dorsal portion; (2) A duly
authenticated copy of the Decision in Civil Case No. 33-398C-2006; (3) A certified true
copy of the Certification issued by Jacqueline Fernandez, Court Interpreter II of RTC
Ballesteros; (4) A certification by the Office of the Municipal Civil Registrar of
Ballesteros stating that their office had received a copy of the said Certificate of Finality
and Decision on October 3, 2007; (5) The authenticated NSO copy of the petitioner’s
marriage contract beating the annotation that the marriage of the petitioner was
declared null and void ab initio; and (6) the Affidavit of Edna Forto.[10]

In her Report and Recommendation[11] dated February 1, 2013, Investigating Judge Vilma T.
Pauig found respondent guilty of falsification of official document based on the following
ratiocination:

Contrary to the respondent’s vehement denial of his participation in the annulment of

the petitioner’s marriage, the evidence on record substantially proves that his signature
in the Certificate of Finality bears a striking resemblance to the signature he uses when
compared to his signature in the Comment he submitted dated February 18, 2013. x x x

xxxx

From a mere examination of the signature of respondent Umblas in the Certificate of

Finality and in the Comment he submitted before this investigator, the similarity of
stroke creates a reasonable inference that only one and the same person could have
made this signature. His mere denial that he participated in the fraud because no such
case was filed before their Court is rather flimsy especially that it is precisely that fact
that the petitioner contends – how could her marriage be dissolved when no case for
annulment was truly filed?

xxxx

Other than the respondent’s claim that he did not participate in the annulment of
petitioner’s marriage and that the signature in the Certificate of Finality was a
simulation, he did not present any evidence or witnesses to prove that his signature in
the Certificate of Finality was forged. Since it was the respondent who alleged forgery, it
falls upon him to produce clear, positive and convincing evidence to prove the same.
However, he failed to do so.[12]

The Investigating Judge thus recommended that respondent be dismissed from service for
committing the grave offense of falsification.[13]

On July 1, 2013, the Court resolved to refer this matter to the OCA for evaluation, report and
recommendation.[14]

Report and Recommendation of the Office of the Court Administrator

The OCA shared the view of the Investigating Judge that there is more than substantial
evidence to prove that respondent falsified the subject Certificate of Finality and that he be
dismissed from service for committing said infraction, viz.:

We agree with the findings and conclusions of Judge Pauig.

Complainant was able to adduce evidence to support her allegations of fraud against
respondent whose signature appears in the Certificate of Finality dated 24 March 2006
in Civil Case No. 33-398C 2006, which case was declared as nonexistent by Branch 33,
RTC, Ballesteros, Cagayan, the court where it was supposedly filed.

Complainant was able to submit certified true copies of the Decision dated 19 January
2006 in Civil Case No. 33-398C-2006 and the Certificate of Finality dated 24 March
2006 obtained from the Office of the Civil Registrar General, NSO. The Office of the
Municipal Civil Registrar of Ballesteros, Cagayan likewise certified that these were the
documents they received on 3 October 2007. These were made the basis of the NSO
for making the corresponding annotation on the marriage contract of complainant and
her husband, the named petitioner in the contested civil case.

Respondent, on the other hand, failed to controvert the authenticity of his signature on
the Certificate of Finality. He argued that his signature thereon had been forged yet he
failed to validate his claim by any evidence or witnesses. Not only that, he himself failed
to attend the hearings conducted by Judge Pauig. Of the seven scheduled hearings, not
once did respondent appear. Four of these hearings were postponed at the instance of
his counsel. Considering the gravity of the charge respondent was facing, his indifferent
attitude toward the case is contrary to the natural reaction of an innocent man who
would go to great lengths to defend his honor.

Instead, respondent lamely contended that it must be the petitioner who was
responsible for the falsified documents since it was incumbent upon him, as the
successful petitioner, to have the decree/order registered in the civil registrar. Petitioner,
however, could not have acted alone and must surely have had someone who was privy
to the court processes, court decisions and court personnel. The falsified documents did
not utilize fictitious persons but contained the names of Judge Eugenio M. Tangonan,
Jr., then the Presiding Judge of Branch 33, and of respondent who, being the court
Legal Researcher and the designated Officer-in-Charge of Branch 33 from January 16,
1997 to July 31, 2005, was in a position of power and authority to confirm the
authenticity of the documents should the local civil registrar or the NSO seek
verification. His assertion that he was no longer the Officer-in-Charge at the time the
Certificate of Finality was purportedly issued on 24 March 2006 as his designation
ended on 12 July 2005 could not be given weight as he was not precluded from issuing
the said document. In fact, being privy to, if not the cause of the fraudulent transaction,
he was compelled to sign it himself and not the incumbent branch clerk of court who
would have looked for the records herself.

Judge Pauig observed that the signatures of respondent in the Certificate of Finality and
in his Comment submitted before her are similar in stroke from which can be inferred
that only one and the same person executed the same. We share the same view. A
careful perusal of respondent’s 201 file kept by the Records Division, Office of
Administrative Services, OCA, containing his performance rating forms and applications
for leave executed before, during and after the date of the questioned document, shows
that his signatures therein are also very similar to, if not the same as, those appearing in
the Certificate of Finality.

Having failed to adduce clear and convincing evidence to contradict complainant’s

evidence on record, respondent should he held accountable for issuing the fraudulent
Certificate of Finality which bears his signature.[15]

Issue
The central issue around which this case revolves is whether the respondent fraudulently,
maliciously, and willfully caused the preparation of, and signed, a Certificate of Finality of a non-
existent case from Branch 33, RTC Ballesteros, Cagayan that led to the declaration of nullity of
the marriage between Ferreras and complainant and its subsequent annotation in the marriage
certificate on file with the National Statistics Office.

The Court’s Ruling

We adopt the findings of the Investigating Judge and the OCA.

Indeed, having affirmatively raised the defense of forgery the burden rests upon respondent to
prove the same. Plainly, he cannot discharge this burden by simply claiming that no such Civil
Case No. 33-398C-2006 was on file with the RTC, Ballesteros, Cagayan. As correctly noted by
the Investigating Judge, that was precisely the issue raised by complainant. How could there be
a Certificate of Finality which bore the signature of respondent when there was no pending Civil
Case No. 33-398C-2006 in the first place? Aside from his bare denial, respondent did not even
make any attempt to show that the signature appearing in the Certificate of Finality was not his
signature or that it was dissimilar to his real signature. We therefore lend credence to the
conclusions reached by both the Investigating Judge, (after comparing the subject signature
with respondent’s signature in his comment), and the OCA, (after making a comparison of the
subject signature with respondent’s signatures in his 201 file), that the signature in the
Certificate of Finality was affixed by respondent himself Section 22, Rule 132, Rules of Court
instructs that genuineness of handwriting may be proved “by a comparison, made by the
witness or the court, with writings admitted or treated as genuine by a party against whom the
evidence is offered, or proved to be genuine to the satisfaction of the Judge.”

x x x The rule is that he who disavows the authenticity of his signature on a public
document bears the responsibility of presenting evidence to that effect. Mere disclaimer
is not sufficient. x x x At the very least, he should present corroborating evidence to
prove his assertion. At best, he should present an expert witness. As a rule, forgery
cannot be presumed and must be proved by clear, positive and convincing evidence
and the burden of proof lies on the party alleging forgery.[16]

Respondent’s cavalier and lackadaisical attitude regarding this administrative matter further
strengthens our view that he was indeed guilty of the falsification. As pointed out by the OCA,
respondent was never present during any of the seven hearings set by the Investigating Judge.
For four times, he moved for postponement for ambiguous and lame grounds. During all this
time, complainant would travel all the way from Nueva Vizcaya only to find out that the hearing
was again cancelled or postponed. To be sure, respondent was fully aware of the gravity of the
offense of which he was charged. If it was established that he committed the falsification, he
could be dismissed from service or even criminally prosecuted. Yet, he did not give the
complaint the requisite attention it needed thereby impressing upon this Court that he did not
have any viable defense to offer and that he is guilty as charged.

The OCA correctly held that:

Under the Revised Rules on Administrative Cases in the Civil Service (RRACCS),
falsification of an official document is considered a grave offense warranting the penalty
of dismissal from the service. It also amounts to serious dishonesty due to the presence
of attendant circumstances such as respondent’s abuse of authority in order to commit
the dishonest act and his employment of fraud or falsification of an official document in
the commission of the dishonest act related to his or her employment. Serious
dishonesty is considered a grave offense warranting the penalty of dismissal from the
service.[17]

“Falsification of an official document such as court records is considered a grave offense. It also
amounts to dishonesty. Under Section 23, Rule XIV of the Administrative Code of 1987,
dishonesty (par. a) and falsification (par. f) are considered grave offenses warranting the penalty
of dismissal from service”[18] even if committed for the first time.

Court employees, from the presiding judge to the lowliest clerk, being public servants in
an office dispensing justice, should always act with a high degree of professionalism
and responsibility. Their conduct must not only be characterized by propriety and
decorum, but must also be in accordance with the law and court regulations. No position
demands greater moral righteousness and uprightness from its holder than an office in
the judiciary. Court employees should be models of uprightness, fairness and honesty
to maintain the people’s respect and faith in the judiciary. They should avoid any act or
conduct that would diminish public trust and confidence in the courts. Indeed, those
connected with dispensing justice bear a heavy burden of responsibility.[19]

Respondent’s infraction would have merited the penalty of dismissal from service. However, we
note that in the recent case of Office of the Court Administrator v. Umblas,[20] this Court found
respondent guilty of grave misconduct and violation of Republic Act No. 6713 or the Code of
Conduct and Ethical Standards for Public Officials and Employees for similarly unlawfully
producing spurious court documents, particularly the purported June 20, 2005 RTC Decision
and the December 18, 2005 Certificate of Finality in Civil Case No. 33-328C-2005. In said case,
respondent was accordingly meted the penalty of dismissal from service with forfeiture of all
benefits, except accrued leave credits, with prejudice to re-employment in any branch or
instrumentality of the government, including government-owned or controlled corporations.
Thus, considering his earlier dismissal from service and its accessory penalties, the penalty
applicable in this case, which is also dismissal, is no longer relevant or feasible. In lieu thereof,
we find it proper to impose a fine of P40,000.00 to be deducted from his accrued leave credits.[21]

WHEREFORE, respondent EDUARDO T. UMBLAS is found GUILTY of falsification of public

document and dishonesty. In lieu of dismissal, he is hereby ORDERED to pay a fine of
P40,000.00 to be deducted from his accrued leave credits. In case his leave credits be found
insufficient, respondent is directed to pay the balance within ten (10) days from receipt of this
Decision.

The Office of the Court Administrator is enjoined to file the appropriate criminal charge against
respondent.

SO ORDERED.